Central Jersey Bancorp Reports An 18 Percent Increase in 4th Quarter 2007 Net Income


LONG BRANCH, N.J., Jan. 23, 2008 (PRIME NEWSWIRE) -- Central Jersey Bancorp (Nasdaq:CJBK), the parent company of Central Jersey Bank, N.A., reported net income of $740,000 for the three months ended December 31, 2007, as compared to $629,000 for the same period in 2006. This represents an increase of $111,000, or 18%. Basic and diluted earnings per share were both $0.08 for the three months ended December 31, 2007 and were both $0.07 for the same period in 2006. Per share earnings have been adjusted in all periods to reflect the 5% stock dividends paid on July 2, 2007 and July 1, 2006.

For the year ended December 31, 2007, Central Jersey Bancorp reported net income of $844,000, as compared to $2.5 million for 2006. Basic and diluted earnings per share for the year ended December 31, 2007 were $0.10 and $0.09, respectively, as compared to $0.28 and $0.27, respectively, for the prior year. The modest net income reported for the year ended December 31, 2007 is primarily due to the balance sheet restructuring initiative announced on April 30, 2007, which resulted in a one-time pre-tax charge of approximately $1.96 million and was reflected in Central Jersey Bancorp's first quarter 2007 consolidated financial statements.

James S. Vaccaro, Chairman, President and CEO, commented, "The current and anticipated general economic environment creates unique challenges and opportunities for the financial services industry. In recognition of those market dynamics, Central Jersey Bancorp, in 2007, implemented a number of strategic initiatives. Each initiative, including our balance sheet restructuring, branch office consolidation and corporate realignment, was undertaken with an understanding that prospective quality balance sheet growth would be difficult to attain and, therefore, other measures were necessary to ensure that we remained positioned to maintain and leverage our high quality credit and banking relationships. To date, each initiative has achieved expected results.

"From an industry perspective in 2007, the equity markets generally punished the financial services sector. We are pleased, however, that of the approximately 560 publicly traded financial institutions in the United States, only 42 publicly traded financial institutions, including Central Jersey Bancorp, achieved share price appreciation in 2007."

Results of Operations

Net interest income was $4.3 million and $16.7 million, respectively, for the three months and year ended December 31, 2007, as compared to $4.1 million and $17.0 million, respectively, for the same prior year periods. Net interest income for the three months and year ended December 31, 2007 was comprised primarily of $5.7 million and $23.0 million, respectively, in interest and fees on loans, $1.7 million and $6.0 million, respectively, in interest on securities, and $227,000 and $1.5 million, respectively, in interest income on federal funds sold and due from banks, less interest expense on deposits of $3.0 million and $12.6 million, respectively, interest expense on borrowed funds of $206,000 and $746,000, respectively, and interest expense on subordinated debentures of $110,000 and $439,000, respectively.

For the three months and year ended December 31, 2007, the average yield on interest-earning assets was 6.48% and 6.54%, respectively, as compared to 6.36% for both periods in 2006. The average cost of deposits and interest-bearing liabilities for the three months and year ended December 31, 2007, was 2.98% and 3.10%, respectively, as compared to an average cost of 3.02% and 3.42%, respectively, for the same periods in 2006. The average net interest margin for the three months and year ended December 31, 2007 was 3.70% and 3.58%, respectively, as compared to 3.47% and 3.67%, respectively, for the same periods in 2006. The margin expansion experienced during the three months ended December 31, 2007, as compared to the same period in 2006, was primarily due to the previously disclosed balance sheet restructuring. The margin compression experienced during the year ended December 31, 2007, was primarily due to the competitive loan and deposit pricing environment during such year and reductions in the Prime Rate of interest.

For the three months and year ended December 31, 2007, the provision for loan losses was $0 and $165,000, respectively, as compared to $35,000 and $500,000, respectively, for the same prior year periods. The provision for loan losses recorded during the year ended December 31, 2007, is a direct result of the change in risk rating of certain commercial loans. Total gross loans outstanding totaling $315.2 million at December 31, 2007, decreased by approximately $149,000 from the December 31, 2006 total of $315.3 million.

Non-interest income (loss), which consists of service charges on deposit accounts, income from bank owned life insurance, gains on the sale of residential mortgages, gains on the sale of securities available-for-sale and the impairment of available-for-sale investment securities, was $425,000 and ($217,000), respectively, for the three months and year ended December 31, 2007, as compared to $415,000 and $1.7 million, respectively, for the same periods in 2006. The non-interest income (loss) for the year ended December 31, 2007, is directly related to the previously disclosed one-time balance sheet restructuring charge of $1.96 million, pre-tax, recorded in the first quarter of 2007.

Non-interest expense was $3.6 million and $14.4 million, respectively, for the three months and year ended December 31, 2007, as compared to $3.5 million and $14.3 million, respectively, for the same periods in 2006. Non-interest expense generally includes costs associated with employee salaries and benefits, occupancy expenses, data processing fees, core deposit intangible amortization and other operating expenses.

Financial Condition

Central Jersey Bancorp's assets, at December 31, 2007, totaled $503.5 million, a decrease of $12.8 million, or 2.5%, from the December 31, 2006 total of $516.3 million. The total assets figure of $503.5 million at December 31, 2007, is inclusive of $27.0 million in goodwill and $1.9 million in core deposit intangible.

Cash and cash equivalents were $14.9 million at December 31, 2007, a decrease of $22.9 million, or 60.6%, from the December 31, 2006 total of $37.8 million. The decrease is due primarily to the timing of cash flows related to the bank subsidiary's business activities.

Investment securities totaled $132.3 million at December 31, 2007, an increase of $15.7 million, or 13.5%, over the December 31, 2006 total of $116.6 million. The increase in investment securities is due to purchases of mortgage-backed securities made during the year ended December 31, 2007. For the year ended December 31, 2007, principal pay downs of mortgage-backed securities totaled $9.5 million and $2.0 million of fixed rate government-sponsored agency securities matured.

Loans held-for-sale, at December 31, 2007, totaled $658,000, as compared to $242,000 at December 31, 2006. The increase in loans held-for-sale is due primarily to the timing of residential mortgage loan closings.

Loans, net of the allowance for loan losses, totaled $311.8 million at December 31, 2007, a decrease of $300,000, or 0.1%, from the $312.1 million balance at December 31, 2006. The decrease in loan balances is reflective of general economic conditions resulting in a slowdown in loan origination volume throughout the banking industry.

Deposits, at December 31, 2007, totaled $403.3 million, a decrease of $24.0 million, or 5.6%, from the December 31, 2006 total of $427.3 million. The decrease in deposits is reflective of the general economic slowdown and highly competitive deposit pricing environment prevalent throughout the financial services industry.

Other borrowings were $24.6 million at December 31, 2007, as compared to $17.1 million at December 31, 2006, an increase of $7.5 million, or 43.9%. These borrowings are short-term in nature. The increase is due to growth in the bank subsidiary's sweep account product for business customers.

At December 31, 2007, book value per share and tangible book value per share were $7.88 and $4.57, respectively, as compared to $7.56 and $4.16, respectively, at December 31, 2006.

Asset Quality

The allowance for loan losses, which began the year at $3.23 million, or 1.02% of total loans, increased to $3.41 million at December 31, 2007, or 1.08% of total loans. Non-performing loans totaled $214,000 at December 31, 2007, as compared to $91,000 at December 31, 2006. Loan charge-offs during the three months and year ended December 31, 2007 totaled $84,000 and $88,000, respectively, as compared to $409,000 and $455,000, respectively, for the same periods in 2006.

Previously, Central Jersey Bancorp reported a significant increase in non-performing loans due primarily to one commercial mortgage loan totaling $2.0 million which was placed on non-accrual status in April 2007. During the three months ended December 31, 2007, the property securing this loan was sold and the loan was paid off.

About the Company

Central Jersey Bancorp is the holding company and sole shareholder of Central Jersey Bank, N.A. Central Jersey Bank, N.A. provides a full range of banking services to both individual and business customers through twelve branch facilities located in Monmouth and Ocean Counties, New Jersey. Central Jersey Bancorp is traded on the NASDAQ Global Market under the trading symbol "CJBK." Central Jersey Bank, N.A. can be accessed through the internet at CJBNA.com.

Forward-Looking Statements

Statements about the future expectations of Central Jersey Bancorp and its subsidiary, Central Jersey Bank, N.A., including future revenues and earnings, and all other statements in this press release other than historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Since these statements involve risks and uncertainties and are subject to change at any time, the companies' actual results could differ materially from expected results. Among these risks, trends and uncertainties are the effect of governmental regulation on Central Jersey Bank, N.A., the availability of working capital, the cost of personnel, and the competitive market in which Central Jersey Bank, N.A. competes.



                     CONSOLIDATED BALANCE SHEETS
         DECEMBER 31, 2007 (UNAUDITED) AND DECEMBER 31, 2006
                        (dollars in thousands)

                                              December 31, December 31,
                                                  2007        2006
                                              ------------ ------------
 ASSETS                                        (unaudited)
 ------

 Cash and due from banks                       $  11,198    $  16,162
 Federal funds sold                                3,679       21,634
                                               ----------   ---------
 Cash and cash equivalents                        14,877       37,796
 Investment securities available-for-sale,                 
  at market value                                114,824       95,735
 Investment securities held-to-maturity                    
  (market value of $17,379 (unaudited) and                 
  $20,454 at December 31, 2007 and                         
  December 31, 2006, respectively)                17,430       20,820
 Loans held-for-sale                                 658          242
 Loans, net                                      311,765      312,093
 Premises and equipment                            4,626        5,357
 Bank owned life insurance                         3,565        3,447
 Accrued interest receivable                       2,218        2,613
 Goodwill                                         26,957       26,957
 Core deposit intangible                           1,926        2,478
 Due from broker                                      --        3,527
 Other assets                                      4,660        5,234
                                               ----------   ---------

   Total assets                                $ 503,506    $ 516,299
                                               ==========   =========

 LIABILITIES AND SHAREHOLDERS' EQUITY
 ------------------------------------                      
 Deposits:                      
  Non-interest bearing                         $  73,955    $  83,482
  Interest bearing                               329,335      343,795
                                               ----------   ---------
                                                 403,290      427,277
                                                           
 Other borrowings                                 24,564       17,099
 Subordinated debentures                           5,155        5,155
 Accrued expenses and other liabilities            1,611        1,273
                                               ---------    ---------

   Total liabilities                             434,620      450,804
                                               ---------    ---------

 Shareholders' equity:
  Common stock, par value $0.01 per share.
   Authorized 100,000,000 shares and issued
   and outstanding 8,745,990 and 8,667,281
   shares at December 31, 2007 and
   December 31, 2006, respectively.                   87           87
 Additional paid-in capital                       60,791       60,501
 Accumulated other comprehensive income
 (loss), net of tax expense (benefit)                848       (1,409)
 Retained earnings                                 7,160        6,316
                                               ----------   ---------
   Total shareholders' equity                     68,886       65,495

                                               ----------   ---------
   Total liabilities and shareholders' equity  $ 503,506    $ 516,299
                                               ==========   =========


                  CONSOLIDATED STATEMENTS OF INCOME
    FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2007 AND 2006
           (dollars in thousands, except per share amounts)

                             Three months ended         Year ended
                                 December 31,           December 31,
                               2007       2006       2007       2006
                            ---------  ---------  ---------  ---------
                                (unaudited)           (unaudited)
 Interest and dividend 
  income:
  Interest and fees on
   loans                    $   5,654  $   5,813  $  22,975  $  23,159
  Interest on securities
   available for sale           1,478      1,084      5,100      4,465
  Interest on federal funds
   sold and due from banks        227        453      1,530        804
  Interest on securities
   held to maturity               210        241        883        991
                            ---------  ---------  ---------  ---------
   Total interest and
    dividend income             7,569      7,591     30,488     29,419

 Interest expense:
  Interest expense on
   deposits                     2,964      3,156     12,597     10,760
  Interest expense on other
   borrowings                     206        186        746      1,267
  Interest expense on
   subordinated debentures        110        111        439        429
                            ---------  ---------  ---------  ---------
   Total interest expense       3,280      3,453     13,782     12,456
                            ---------  ---------  ---------  ---------
   Net interest income          4,289      4,138     16,706     16,963
                            ---------  ---------  ---------  ---------

 Provision for loan losses:        --         35        165        500
                            ---------  ---------  ---------  ---------
   Net interest income
    after provision for
    loan losses                 4,289      4,103     16,541     16,463
                            ---------  ---------  ---------  ---------

 Other income:
  Impairment on available-
   for-sale securities             --         --     (1,957)        --
  Service charges on
   deposit accounts               386        364      1,479      1,412
  Income on bank owned life
   insurance                       30         27        118        109
  Gain on sale of securities
   available-for-sale              --         --         87         --
  Gain on sale of loans
   held-for-sale                    9         24         56        213
  Other service charges,
   commissions and fees            --         --         --          6
                            ---------  ---------  ---------  ---------
   Total other income
    (loss)                        425        415       (217)     1,740
                            ---------  ---------  ---------  ---------

 Operating expenses:
  Salaries and employee
   benefits                     1,866      1,782      7,146      7,345
  Net occupancy expenses          405        420      1,821      1,687
  Data processing fees            221        205        884        809
  Core deposit intangible
   amortization                   138        155        552        619
  Abandonment of leasehold
   improvements                    --         --        137         --
  Other operating expenses        941        965      3,830      3,849
                            ---------  ---------  ---------  ---------
   Total other expenses         3,571      3,527     14,370     14,309
                            ---------  ---------  ---------  ---------

 Income before provision
  for income taxes              1,143        991      1,954      3,894

 Income tax expense               403        362      1,110      1,428
                            ---------  ---------  ---------  ---------

  Net income                $     740  $     629  $     844  $   2,466
                            =========  =========  =========  =========

 Basic earnings per share   $    0.08  $    0.07  $     .10  $    0.28
                            =========  =========  =========  =========
 Diluted earnings per share $    0.08  $    0.07  $     .09  $    0.27
                            =========  =========  =========  =========
 Average basic shares
  outstanding               8,745,323  8,667,281  8,710,865  8,655,137
                            =========  =========  =========  =========
 Average diluted shares
  outstanding               9,139,034  9,130,682  9,132,772  9,156,428
                            =========  =========  =========  =========


 ---------------------------------------------------------------------
 Performance Ratios (unaudited) Three Months Ended      Year Ended
     (dollars in thousands)        December 31,        December 31,
 ---------------------------------------------------------------------
          Ratio                   2007      2006      2007      2006
 ---------------------------------------------------------------------
 Return on average assets           0.58%     0.48%     0.16%     0.48%
 Return on average tangible
  assets                            0.61%     0.51%     0.17%     0.51%
 Return on average equity           4.33%     3.84%     1.27%     3.88%
 Return on average tangible
  equity                            7.57%     7.04%     2.27%     7.32%
 Efficiency ratio                   75.8%     77.5%     87.2%     76.5%
 Efficiency ratio (less core
  deposit intangible
  amortization expense)             72.8%     74.1%     83.8%     73.2%
 Operating expense ratio            2.79%     2.68%     2.80%     2.78%
 Net interest margin                3.70%     3.47%     3.58%     3.67%

       Ratio Calculations
 Efficiency ratio:
  Net interest income             $4,289    $4,138   $16,706   $16,963
  Non-interest income (loss)         425       415      (217)    1,740
   Total revenue                   4,714     4,553    16,489    18,703

  Non-interest expense            $3,571    $3,527   $14,370   $14,309
 Ratio                              75.8%     77.5%     87.2%     76.5%

 Efficiency ratio (less core
  deposit intangible
  amortization expense):
  Net interest income             $4,289    $4,138   $16,706   $16,963
  Non-interest income (loss)         425       415      (217)    1,740
   Total revenue                   4,714     4,553    16,489    18,703
  Non-interest expense             3,571     3,527    14,370    14,309
  Less: Core deposit
   amortization expense             (138)     (155)     (552)     (619)
  Non-interest expense (less
   core deposit intangible
   amortization expense)          $3,433    $3,372   $13,818   $13,690
 Ratio                              72.8%     74.1%     83.8%     73.2%

 Operating expense ratio:
  Average assets                $507,117  $521,200  $513,191  $514,577
  Non-interest expense            $3,571    $3,527   $14,370   $14,309
 Ratio                              2.79%     2.68%     2.80%    2.78%

            

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