UNITED
STATES
|
SECURITIES
AND EXCHANGE COMMISSION
|
Washington,
D.C. 20549
|
|
FORM
10-Q
|
x
QUARTERLY REPORT UNDER SECTION 13 OR
15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
|
For
the quarterly period ended December 31, 2008
|
|
o
TRANSITION REPORT UNDER SECTION
13 OR
15(d)
OF
THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from __ to __
Commission
file number 000-51500
|
AMERICAN
BANCORP OF NEW JERSEY, INC.
|
(Exact
name of registrant as specified in its
charter)
|
|
New
Jersey
|
|
|
|
55-0897507
|
|
(State
or other jurisdiction
|
|
(I.R.S.
Employer
|
of
incorporation or organization)
|
|
Identification
Number)
|
|
365
Broad Street, Bloomfield, New Jersey 07003
|
|
|
(Address
of Principal Executive Offices)
|
|
|
(973)
748-3600
|
|
(Registrant’s
telephone number, including area
code)
|
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Yes
x
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
|
|
|
|
Large
accelerated
|
Accelerated
|
Non-accelerated
|
Smaller
reporting
|
filer
o
|
filer
x
|
filer
o
|
company
o
|
|
|
(Do
not check if a smaller
reporting
company)
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.):
Yes
o
No
x
As of
February 2, 2009, there were 10,855,829 outstanding shares of the Registrant’s
Common Stock.
AMERICAN
BANCORP OF NEW JERSEY, INC.
Table
of Contents
|
|
|
PART
I – FINANCIAL INFORMATION (UNAUDITED)
|
|
|
|
Item
1.
|
Financial
Statements
|
3
|
|
|
|
|
Notes
to Financial Statements
|
9
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
17
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
35
|
|
|
|
Item
4.
|
Controls
and Procedures
|
40
|
|
|
|
PART
II – OTHER INFORMATION
|
|
|
|
Item
1.
|
Legal
Proceedings
|
41
|
Item
1A.
|
Risk
Factors
|
41
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
41
|
Item
3.
|
Defaults
Upon Senior Securities
|
41
|
Item
4.
|
Submission
of Matters to a Vote of Securities Holders
|
41
|
Item
5.
|
Other
Information
|
41
|
Item
6.
|
Exhibits
|
42
|
|
|
|
FORM
10-Q SIGNATURE PAGE
|
43
|
|
|
|
CERTIFICATIONS
|
|
PART
I – FINANCIAL INFORMATION
|
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
|
|
American
Bancorp of New Jersey, Inc.
|
Statements
of Financial Condition
|
(in
thousands, except share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
September
30,
|
|
|
|
2008
|
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$
|
3,896
|
|
|
$
|
5,158
|
|
Interest-earning
deposits
|
|
|
14,037
|
|
|
|
15,217
|
|
Federal
funds sold
|
|
|
—
|
|
|
|
—
|
|
Total
cash and cash equivalents
|
|
|
17,933
|
|
|
|
20,375
|
|
|
|
|
|
|
|
|
|
|
Securities
available-for-sale
|
|
|
79,316
|
|
|
|
81,163
|
|
Securities
held-to-maturity (fair value, December 31, 2008 -
$7,260 September 30, 2008 - $7,443)
|
|
|
7,178
|
|
|
|
7,509
|
|
Loans
held for sale
|
|
|
—
|
|
|
|
—
|
|
Loans
receivable, net of allowance for loan losses December 31, 2008 -
$3,097, September 30, 2008 - $3,035)
|
|
|
491,405
|
|
|
|
478,574
|
|
Premises
and equipment
|
|
|
11,763
|
|
|
|
11,894
|
|
Federal
Home Loan Bank stock, at cost
|
|
|
2,473
|
|
|
|
2,743
|
|
Cash
surrender value of life insurance
|
|
|
13,910
|
|
|
|
13,761
|
|
Accrued
interest receivable
|
|
|
2,384
|
|
|
|
2,391
|
|
Other
assets
|
|
|
2,465
|
|
|
|
3,223
|
|
Total
assets
|
|
$
|
628,827
|
|
|
$
|
621,633
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
Non-interest-bearing
|
|
$
|
29,077
|
|
|
$
|
31,447
|
|
Interest-bearing
|
|
|
430,141
|
|
|
|
416,240
|
|
Total
deposits
|
|
|
459,218
|
|
|
|
447,687
|
|
|
|
|
|
|
|
|
|
|
Advance
payments by borrowers for taxes and insurance
|
|
|
2,657
|
|
|
|
2,811
|
|
Borrowings
|
|
|
69,530
|
|
|
|
75,547
|
|
Accrued
expenses and other liabilities
|
|
|
5,001
|
|
|
|
4,740
|
|
Total
liabilities
|
|
$
|
536,406
|
|
|
$
|
530,785
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Preferred
stock, $.10 par value, 10,000,000 shares
authorized
at
December 31, 2008 and September 30, 2008;
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Common
stock, $.10 par value, 20,000,000 shares authorized,
14,527,953
shares issued at December 31, 2008 and September 30, 2008;
10,859,692
outstanding at December 31, 2008 and September 30, 2008;
|
|
|
1,453
|
|
|
|
1,453
|
|
|
|
|
|
|
|
|
|
|
Additional
paid in capital
|
|
|
116,081
|
|
|
|
115,661
|
|
Unearned
ESOP shares
|
|
|
(7,537
|
)
|
|
|
(7,649
|
)
|
Retained
earnings
|
|
|
23,515
|
|
|
|
23,648
|
|
Treasury
Stock; 3,668,261 shares at December 31, 2008 and September 30,
2008
|
|
|
(41,724
|
)
|
|
|
(41,724
|
)
|
Accumulated
other comprehensive loss
|
|
|
633
|
|
|
|
(541
|
)
|
Total
equity
|
|
|
92,421
|
|
|
|
90,848
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
|
$
|
628,827
|
|
|
$
|
621,633
|
|
See
accompanying notes to unaudited consolidated financial
statements
American
Bancorp of New Jersey, Inc.
|
Statements
of Income
|
(in
thousands, except share data)
|
(unaudited)
|
|
|
Three
Months Ended
|
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Interest
and dividend income
|
|
|
|
|
|
|
Loan,
including fees
|
|
$
|
6,973
|
|
|
$
|
6,738
|
|
Securities
|
|
|
1,029
|
|
|
|
646
|
|
Federal
funds sold and other
|
|
|
40
|
|
|
|
450
|
|
Total
interest income
|
|
|
8,042
|
|
|
|
7,834
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
NOW
and money market
|
|
|
441
|
|
|
|
1,214
|
|
Savings
|
|
|
429
|
|
|
|
605
|
|
Certificates
of deposit
|
|
|
2,617
|
|
|
|
2,419
|
|
Borrowings
|
|
|
583
|
|
|
|
494
|
|
Total
interest expense
|
|
|
4,070
|
|
|
|
4,732
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
3,972
|
|
|
|
3,102
|
|
|
|
|
|
|
|
|
|
|
Provision
for loan losses
|
|
|
153
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
Net
interest income after provision for loan losses
|
|
|
3,819
|
|
|
|
2,963
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
Deposit
service fees and charges
|
|
|
223
|
|
|
|
226
|
|
Income
from cash surrender value of life insurance
|
|
|
149
|
|
|
|
133
|
|
Gain
on sale of loans
|
|
|
—
|
|
|
|
7
|
|
Loss
on sales of securities available-for-sale
|
|
|
—
|
|
|
|
(5
|
)
|
Other
|
|
|
68
|
|
|
|
34
|
|
Total
noninterest income
|
|
|
440
|
|
|
|
395
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
Salaries,
benefits and director fees
|
|
|
2,022
|
|
|
|
2,142
|
|
Occupancy
and equipment
|
|
|
491
|
|
|
|
454
|
|
Data
processing
|
|
|
214
|
|
|
|
180
|
|
Advertising
and marketing
|
|
|
37
|
|
|
|
85
|
|
Professional
and consulting
|
|
|
106
|
|
|
|
102
|
|
Legal
|
|
|
164
|
|
|
|
51
|
|
Other
|
|
|
379
|
|
|
|
262
|
|
Total
noninterest expense
|
|
|
3,413
|
|
|
|
3,276
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes
|
|
|
846
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
291
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
555
|
|
|
$
|
93
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
1,729
|
|
|
$
|
295
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
Diluted
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
See
accompanying notes to unaudited consolidated financial
statements
American
Bancorp of New Jersey, Inc.
|
Statements
of Shareholders’ Equity
|
Three
months ended December 31, 2007
|
(in
thousands, except share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Compre-
|
|
|
|
|
|
|
Additional
|
|
|
Unearned
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
hensive
|
|
|
|
Common
|
|
|
Paid-In
|
|
|
ESOP
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Total
|
|
|
Income
|
|
|
|
Stock
|
|
|
Capital
|
|
|
Shares
|
|
|
Earnings
|
|
|
Loss
|
|
|
Stock
|
|
|
Equity
|
|
|
(Loss)
|
|
Balance
at
September 30,
2007
|
|
$
|
1,453
|
|
|
$
|
113,607
|
|
|
$
|
(8,099
|
)
|
|
$
|
24,258
|
|
|
$
|
(273
|
)
|
|
$
|
(30,353
|
)
|
|
$
|
100,593
|
|
|
|
|
RSP
shares earned
including
tax benefit
of
vested awards
|
|
|
—
|
|
|
|
278
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
278
|
|
|
|
|
Tax
benefit on dividends
paid
on unvested RSP
shares
|
|
|
—
|
|
|
|
54
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54
|
|
|
|
|
Share
purchases
(436,474
shares)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,553
|
)
|
|
|
(4,553
|
)
|
|
|
|
Stock
options earned
|
|
|
|
|
|
|
141
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
141
|
|
|
|
|
ESOP
shares earned
|
|
|
—
|
|
|
|
27
|
|
|
|
112
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
139
|
|
|
|
|
Cash
dividends paid –
$0.04
per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(429
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(429
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
Net
income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
93
|
|
|
|
—
|
|
|
|
—
|
|
|
|
93
|
|
|
$
|
93
|
|
Change
in unrealized
loss
on securities
available-for-sale,
net
of
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
202
|
|
|
|
—
|
|
|
|
202
|
|
|
|
202
|
|
Total
comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at
December
31, 2007
|
|
$
|
1,453
|
|
|
$
|
114,107
|
|
|
$
|
(7,987
|
)
|
|
$
|
23,922
|
|
|
$
|
(71
|
)
|
|
$
|
(34,906
|
)
|
|
$
|
96,518
|
|
|
|
|
|
See
accompanying notes to unaudited consolidated financial statements
American
Bancorp of New Jersey, Inc.
|
Statements
of Shareholders’ Equity
|
Three
months ended December 31, 2008
|
(in
thousands, except share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Compre-
|
|
|
|
|
|
|
Additional
|
|
|
Unearned
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
hensive
|
|
|
|
Common
|
|
|
Paid-In
|
|
|
ESOP
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Total
|
|
|
Income
|
|
|
|
Stock
|
|
|
Capital
|
|
|
Shares
|
|
|
Earnings
|
|
|
Loss
|
|
|
Stock
|
|
|
Equity
|
|
|
(Loss)
|
|
Balance
at
September 30,
2008
|
|
$
|
1,453
|
|
|
$
|
115,661
|
|
|
$
|
(7,649
|
)
|
|
$
|
23,648
|
|
|
$
|
(541
|
)
|
|
$
|
(41,724
|
)
|
|
$
|
90,848
|
|
|
|
|
Cumulative
effect of
adoption
of EITF 06-04
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(193
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(193
|
)
|
|
|
|
Balance
at
October 1,
2008
|
|
|
1,453
|
|
|
|
115,661
|
|
|
|
(7,649
|
)
|
|
|
23,455
|
|
|
|
(541
|
)
|
|
|
(41,724
|
)
|
|
|
90,655
|
|
|
|
|
RSP
shares earned
including
tax benefit
of
vested awards
|
|
|
—
|
|
|
|
264
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
264
|
|
|
|
|
Tax
benefit on dividends
paid
on unvested RSP
shares
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
|
Stock
options earned
|
|
|
|
|
|
|
134
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
134
|
|
|
|
|
Stock
options exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
ESOP
shares earned
|
|
|
—
|
|
|
|
16
|
|
|
|
112
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
128
|
|
|
|
|
Cash
dividends paid –
$0.05
per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(495
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
Net
income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
555
|
|
|
|
—
|
|
|
|
—
|
|
|
|
555
|
|
|
$
|
555
|
|
Change
in unrealized
loss
on securities
available-for-sale,
net
of
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,174
|
|
|
|
—
|
|
|
|
1,174
|
|
|
|
1,174
|
|
Total
comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at
December
31, 2008
|
|
$
|
1,453
|
|
|
$
|
116,081
|
|
|
$
|
(7,537
|
)
|
|
$
|
23,515
|
|
|
$
|
633
|
|
|
$
|
(41,724
|
)
|
|
$
|
92,421
|
|
|
|
|
|
See
accompanying notes to unaudited consolidated financial
statements
American
Bancorp of New Jersey, Inc.
|
Statements
of Cash Flows
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
Net
Income
|
|
$
|
555
|
|
|
$
|
93
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
150
|
|
|
|
122
|
|
Net
amortization and accretion of premiums and discounts
|
|
|
(12
|
)
|
|
|
(20
|
)
|
Losses
on sales of securities available-for-sale
|
|
|
—
|
|
|
|
5
|
|
ESOP
compensation expense
|
|
|
128
|
|
|
|
139
|
|
RSP
compensation expense
|
|
|
264
|
|
|
|
277
|
|
SOP
compensation expense
|
|
|
134
|
|
|
|
141
|
|
Provision
for loan losses
|
|
|
153
|
|
|
|
139
|
|
Increase
in cash surrender value of life insurance
|
|
|
(149
|
)
|
|
|
(133
|
)
|
Gain
on sale of loans
|
|
|
—
|
|
|
|
(7
|
)
|
Proceeds
from sales of loans
|
|
|
—
|
|
|
|
1,623
|
|
Origination
of loans held for sale
|
|
|
—
|
|
|
|
(372
|
)
|
Decrease
(increase) in accrued interest receivable
|
|
|
7
|
|
|
|
(5
|
)
|
Decrease
(increase) in other assets
|
|
|
170
|
|
|
|
772
|
|
Change
in deferred income taxes
|
|
|
(185
|
)
|
|
|
(290
|
)
|
Increase
(Decrease) in other liabilities
|
|
|
68
|
|
|
|
(169
|
)
|
Net
cash provided by operating activities
|
|
|
1,283
|
|
|
|
2,315
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
Net
increase in loans receivable
|
|
|
(12,983
|
)
|
|
|
(11,349
|
)
|
Purchases
of securities held-to-maturity
|
|
|
—
|
|
|
|
(1,108
|
)
|
Principal
paydowns on securities held-to-maturity
|
|
|
328
|
|
|
|
271
|
|
Purchases
of securities available-for-sale
|
|
|
—
|
|
|
|
(4,814
|
)
|
Sales
of securities available-for-sale
|
|
|
—
|
|
|
|
11,510
|
|
Principal
paydowns on securities available-for-sale
|
|
|
3,808
|
|
|
|
4,058
|
|
Redemption
of Federal Home Loan Bank stock
|
|
|
270
|
|
|
|
45
|
|
Purchase
of premises and equipment
|
|
|
(19
|
)
|
|
|
(748
|
)
|
Net
cash used in investing activities
|
|
|
(8,596
|
)
|
|
|
(2,135
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
Net
increase in deposits
|
|
|
11,531
|
|
|
|
388
|
|
Net
change in advance payments by borrowers for taxes and
insurance
|
|
|
(154
|
)
|
|
|
(166
|
)
|
Repayment
of borrowings
|
|
|
(6,017
|
)
|
|
|
(1,016
|
)
|
RSP
tax benefit of vested awards
|
|
|
—
|
|
|
|
1
|
|
Tax
benefit on dividends paid on unvested RSP shares
|
|
|
6
|
|
|
|
54
|
|
Cash
dividends paid
|
|
|
(495
|
)
|
|
|
(429
|
)
|
RSP
and treasury share purchases
|
|
|
—
|
|
|
|
(4,553
|
)
|
Net
cash provided by financing activities
|
|
|
4,871
|
|
|
|
(5,721
|
)
|
Net
change in cash and cash equivalents
|
|
|
(2,442
|
)
|
|
|
(5,541
|
)
|
Cash
and cash equivalents at beginning of year
|
|
|
20,375
|
|
|
|
37,421
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
17,933
|
|
|
$
|
31,880
|
|
(Continued)
American
Bancorp of New Jersey, Inc.
|
Statements
of Cash Flows
|
(in
thousands)
|
(unaudited)
|
|
|
Three
Months Ended
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
Cash
paid during the period for
|
|
|
|
|
|
|
Interest
|
|
$
|
4,071
|
|
|
$
|
4,747
|
|
Income
taxes, net of refunds
|
|
|
175
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of non-cash financing transaction:
|
|
|
|
|
|
|
|
|
Cumulative
effect of adoption of EITF 06-04
|
|
|
(193
|
)
|
|
|
—
|
|
See
accompanying notes to unaudited financial statements
American
Bancorp of New Jersey, Inc.
|
Notes
To Unaudited Financial Statements
|
(in
thousands)
|
Note 1 -
Basis of Presentation
American
Bancorp of New Jersey, Inc. (the “Company”) is a New Jersey chartered
corporation organized in May 2005 that was formed for the purpose of acquiring
all of the capital stock of American Bank of New Jersey, a federally chartered
Bank, (the “Bank”), which was previously owned by ASB Holding Company (“ASBH”).
ASBH was a federally chartered corporation organized in June 2003 that was
formed for the purpose of acquiring all of the capital stock of the Bank, which
was previously owned by American Savings, MHC (the “MHC”), a federally chartered
mutual holding company. The Bank had previously converted from a mutual to a
stock savings bank in a mutual holding company reorganization in 1999 in which
no stock was issued to any person other than the MHC.
On
October 3, 2003, ASB Holding Company, the predecessor of American Bancorp of New
Jersey, Inc., completed a minority stock offering and sold 1,666,350 shares of
common stock in a subscription offering at $10 per share and received proceeds
of $16,060,000, net of offering costs of $603,000. ASBH contributed $9,616,000,
or approximately 60% of the net proceeds, to the Bank in the form of a capital
contribution. ASBH loaned $1,333,080 to the Bank’s employee stock ownership plan
(“ESOP”) and the ESOP used those funds to acquire 133,308 shares of common stock
at $10 per share.
After the
sale of the stock, the MHC held 70%, or 3,888,150 shares, of the outstanding
stock of ASBH with the remaining 30% or, 1,666,350 shares, held by persons other
than the MHC. ASBH held 100% of the Bank’s outstanding common
stock.
On
October 5, 2005, the Company completed a second step conversion in which the
3,888,150 shares of ASB Holding Company held by the MHC were converted and sold
in a subscription offering. Through this transaction, ASBH ceased to exist and
was replaced by American Bancorp of New Jersey, Inc. as the holding company for
the Bank. A total of 9,918,750 shares of common stock were sold in the offering
at $10 per share through which the Company received proceeds of $97,524,302, net
of offering costs of $1,663,198. The Company contributed $48,762,151 or
approximately 50% of the net proceeds to the Bank in the form of a capital
contribution. The Company loaned $7,935,000 to the Bank’s ESOP which used those
funds to acquire 793,500 shares of common stock at $10 per share.
As part
of the second step conversion, each of the 1,666,350 outstanding shares of ASBH
held by public shareholders was exchanged for 2.55102 of the Company’s shares.
This exchange resulted in an additional 4,250,719 shares of the Company being
issued, for a total of 14,169,469 outstanding shares.
The
accompanying unaudited consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, the Bank and ASB Investment Corp.
(the “Investment Corp.”) as of December 31, 2008 and September 30, 2008 and for
the three months ended December 31, 2008 and December 31, 2007. Significant
intercompany accounts and transactions have been eliminated in consolidation.
References in this Quarterly Report on Form 10-Q to the Company generally refer
to the Company and the Bank, unless the context indicates otherwise. References
to “we,” “us,” or “our” refer to the Bank or Company, or both, as the context
indicates.
The
primary business of the Company is the ownership of the Bank and the Investment
Corp. The Bank provides a full range of banking services to individual and
corporate customers located primarily in the New Jersey and New York
metropolitan area. The Bank is subject to competition from other financial
institutions and to the regulations of certain federal and state agencies and
undergoes periodic examinations by those regulatory authorities. The Investment
Corp. was organized for the purpose of selling insurance and investment
products, including annuities, to customers of the Bank and the general public,
with initial activities limited to the sale of fixed rate annuities. The
Investment Corp. has had limited activity to date.
The
accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all the
information and notes required by accounting principles generally accepted in
the United States of America for complete financial statements. These interim
statements should be read in conjunction with the consolidated financial
statements and notes included in the Company’s Annual Report on Form 10-K for
the year ended September 30, 2008. The September 30, 2008 balance sheet
presented herein has been derived from the audited financial statements included
in the consolidated financial statements and notes included in the Annual Report
on Form 10-K filed with the Securities and Exchange Commission, but does not
include all disclosures required by accounting principles generally accepted in
the United States of America.
To
prepare financial statements in conformity with accounting principles generally
accepted in the United States of America, management makes estimates and
assumptions based on available information. These estimates and assumptions
affect the amounts reported in the financial statements and the disclosures
provided, and future results could differ. The allowance for loan losses,
prepayment speeds on mortgage–backed securities, and status of contingencies are
particularly subject to change.
Interim
statements are subject to possible adjustment in connection with the annual
audit of the Company for the year ending September 30, 2009. In the opinion of
management of the Company, the accompanying unaudited interim consolidated
financial statements reflect all of the adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the consolidated
financial position and consolidated results of operations for the periods
presented.
The
results of operations for the three months ended December 31, 2008 are not
necessarily indicative of the results to be expected for the full year or any
other period.
Note 2 -
Earnings Per Share (EPS)
Amounts
reported as basic earnings per share of common stock reflect earnings available
to common shareholders for the period divided by the weighted average number of
common shares outstanding during the period less unearned ESOP and restricted
stock plan shares. Diluted EPS reflects the potential dilution that could occur
if securities or other contracts to issue common stock (such as stock awards and
options) were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. Diluted
EPS is computed by dividing income by the weighted-average number of shares
outstanding for the period plus common-equivalent shares computed using the
treasury stock method.
The
factors used in the earnings per share computation follow (in thousands except
share data).
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
Basic
|
|
|
|
|
|
|
Net
income
|
|
$
|
555
|
|
|
$
|
93
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
9,738,770
|
|
|
|
10,524,894
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
555
|
|
|
$
|
93
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding for basic earnings per common
share
|
|
|
9,738,770
|
|
|
|
10,524,894
|
|
|
|
|
|
|
|
|
|
|
Add:
Dilutive effects of assumed exercises of stock
options
|
|
|
127,185
|
|
|
|
137,225
|
|
|
|
|
|
|
|
|
|
|
Add:
Dilutive effects of full vesting of stock awards
|
|
|
7,863
|
|
|
|
18,708
|
|
|
|
|
|
|
|
|
|
|
Average
shares and dilutive potential common shares
|
|
|
9,873,818
|
|
|
|
10,680,827
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
For the
three months ended December 31, 2008 and December 31, 2007, stock options and
restricted stock awards for 918,405 and 998,758 shares of common stock,
respectively, were not considered in computing diluted earnings per common share
because they were antidilutive.
Note 3 -
Other Stock-Based Compensation
At
December 31, 2008, all shares and options available under the 2005 Restricted
Stock Plan, 2005 Stock Option Plan and the 2006 Equity Incentive Plan had been
awarded to participants.
A summary
of the activity in the Company’s stock option plans for the three months ended
December 31, 2008 and 2007 is as follows.
|
|
For
the three months ended
|
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
Exercise
|
|
|
|
Shares
|
|
|
Price
|
|
|
Shares
|
|
|
Price
|
|
Outstanding
at beginning of period
|
|
|
1,412,782
|
|
|
$
|
9.27
|
|
|
|
1,416,948
|
|
|
$
|
9.26
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of period
|
|
|
1,412,782
|
|
|
$
|
9.27
|
|
|
|
1,416,948
|
|
|
$
|
9.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercisable at period end
|
|
|
736,944
|
|
|
$
|
8.84
|
|
|
|
420,912
|
|
|
$
|
8.46
|
|
Weighted
average remaining contractual life
|
|
|
|
|
|
6.7
years
|
|
|
|
|
|
|
7.5
years
|
|
A summary
of the status of the Company’s nonvested restricted stock plan shares as of
December 31, 2008 and 2007 and changes during the three months ended December
31, 2008 and 2007 are as follows.
|
|
For
the three months ended
|
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
Date
Fair
|
|
|
|
|
|
Date
Fair
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
Outstanding
at beginning of period
|
|
|
285,169
|
|
|
$
|
10.25
|
|
|
|
414,281
|
|
|
$
|
10.13
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
(1,250
|
)
|
|
|
11.87
|
|
|
|
(1,249
|
)
|
|
|
11.87
|
|
Forfeited
or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of period
|
|
|
283,919
|
|
|
$
|
10.25
|
|
|
|
413,032
|
|
|
$
|
10.12
|
|
Note 4 –
Recent Accounting Pronouncements
In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157 “Fair Value Measurements” (“SFAS No. 157”), which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007. In February 2008, the FASB issued Staff
Position (FSP) 157-2, Effective Date of FASB Statement No. 157. This FSP delays
the effective date of FAS 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value on a
recurring basis (at least annually) to fiscal years beginning after November 15,
2008, and interim periods within those fiscal years. The adoption of SFAS No.
157 did not have a material impact on the Company’s consolidated financial
statements.
In
February 2007, the FASB issued Statement of Financial Accounting Standards No.
159 “The Fair Value Option for Financial Assets and Financial Liabilities”
(“SFAS No. 159”), SFAS No. 159 permits entities to choose to measure certain
financial assets and financial liabilities at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. SFAS No. 159 is effective for financial statements issued for fiscal
years beginning after November 15, 2007. The adoption of SFAS No. 159 became
effective for the Company on October 1, 2008 and did not have a material impact
on the Company’s consolidated financial statements. The Company did not adopt
the fair value option under SFAS No. 159 as of October 1, 2008.
At its
September 2006 meeting, the Emerging Issues Task Force (“EITF”) reached a final
consensus on Issue 06-04, “Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements.” The consensus stipulates that an agreement by an employer to
share a portion of the proceeds of a life insurance policy with an employee
during the postretirement period is a postretirement benefit arrangement
required to be accounted for under SFAS No. 106 or Accounting Principles Board
Opinion (“APB”) No. 12, “Omnibus Opinion – 1967.” The consensus concludes that
the purchase of a split-dollar life insurance policy does not constitute a
settlement under SFAS No. 106 and, therefore, a liability for the postretirement
obligation must be recognized under SFAS No. 106 if the benefit is offered under
an arrangement that constitutes a plan or under APB No. 12 if it is not part of
a plan. Issue 06-04 is effective for annual or interim reporting periods
beginning after December 15, 2007. The provisions of Issue 06-04 should be
applied through either a cumulative effect adjustment to retained earnings as of
the beginning of the year of adoption or retrospective application. The Company
recorded a cumulative effect adjustment to retained earnings of $193,281 on
October 1, 2008 resulting from the adoption of EITF 06-04.
On
November 5, 2007, the SEC issued Staff Accounting Bulletin No. 109, Written Loan
Commitments Recorded at Fair Value through Earnings (“SAB 109”). Previously, SAB
105, Application of Accounting Principles to Loan Commitments, stated that in
measuring the fair value of a derivative loan commitment, a company should not
incorporate the expected net future cash flows related to the associated
servicing of the loan. SAB 109 supersedes SAB 105 and indicates that the
expected net future cash flows related to the associated servicing of the loan
should be included in measuring fair value for all written loan commitments that
are accounted for at fair value through earnings. SAB 105 also indicated that
internally-developed intangible assets should not be recorded as part of the
fair value of a derivative loan commitment, and SAB 109 retains that view. SAB
109 is effective for derivative loan commitments issued or modified in fiscal
quarters beginning after December 15, 2007. The impact of the adoption of this
standard was not material.
In
December 2007, the SEC issued SAB No. 110, which expresses the views of the SEC
regarding the use of a “simplified” method, as discussed in SAB No. 107, in
developing an estimate of expected term of “plain vanilla” share options in
accordance with SFAS No. 123(R), Share-Based Payment. The SEC concluded that a
company could, under certain circumstances, continue to use the simplified
method for share option grants after December 31, 2007. The Company does not use
the simplified method for share options and therefore SAB No. 110 has no impact
on the Company’s consolidated financial statements.
In
December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations
(“FAS 141(R)”), which establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. FAS No. 141(R) is effective for fiscal years beginning on
or after December 15, 2008. Earlier adoption is prohibited. The adoption of this
standard is not expected to have a material effect on the Corporation’s results
of operations or financial position.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS No. 160”),
which will change the accounting and reporting for minority interests, which
will be recharacterized as noncontrolling interests and classified as a
component of equity within the consolidated balance sheets. FAS No. 160 is
effective as of the beginning of the first fiscal year beginning on or after
December 15, 2008. Earlier adoption is prohibited and the Corporation does not
expect the adoption of FAS No. 160 to have a significant impact on its results
of operations or financial position.
Note 5 –
Fair Value
Effective
October 1, 2008, the Company adopted SFAS No. 157 “Fair Value Measurements” as
described in Note 4 above. SFAS No. 157 applies only to fair value measurements
already required or permitted by other accounting standards and does not impose
requirements for additional fair value measures. SFAS No. 157 was issued to
increase consistency and comparability in reporting fair values. As noted
earlier, our adoption of SFAS No. 157 did not have a material impact on our
financial condition or results of operation.
The
following disclosures are generally not required in interim period financial
statements. However, they are included herein as a result of our adoption of
SFAS No. 157 during the current reporting period.
Fair
values generally reflect the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between willing market
participants at the measurement date. Statement 157 establishes a fair value
hierarchy which requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. The standard
describes three levels of inputs that may be used to measure fair
value:
|
|
|
Level
1: Quoted prices (unadjusted) for identical assets or liabilities in
active markets that the entity has the ability to access as of the
measurement date.
|
|
|
|
Level
2: Significant other observable inputs other than Level 1 prices such as
quoted prices for similar assets or liabilities; quoted prices in markets
that are not active; or other inputs that are observable or can be
corroborated by observable market data.
|
|
|
|
Level
3: Significant unobservable inputs that reflect a reporting entity’s own
assumptions about the assumptions that market participants would use in
pricing an asset or liability.
|
We use
fair value measurements on both a recurring and nonrecurring basis to record
fair value adjustments to certain assets and liabilities and to present fair
value disclosures in our financial statements. Assets currently subject to
recurring fair value measurement are limited to the Company’s available-for-sale
securities. Our available-for-sale portfolio is carried at an estimated fair
value on a recurring basis with any unrealized gains and losses, net of taxes,
reported as accumulated other comprehensive income/loss in stockholder’s equity.
The fair values of available for sale securities are generally obtained from an
independent pricing service utilizing matrix pricing. Matrix pricing is a form
of Level 2 input which utilizes a mathematical technique widely used in the
industry to value debt securities without relying exclusively on quoted prices
for the specific securities but relying instead on the securities’ relationship
to other benchmark quoted securities. At December 31, 2008, the Company recorded
a unrealized gain, net of taxes, of $633,000 to stockholder’s equity based upon
the fair value of the available-for-sale securities portfolio as of that
date.
We also
regularly review and evaluate the available-for-sale portfolio to determine if
the fair value of any security has declined below its amortized cost and if such
impairment in fair value is “other-than temporary”. Other than temporary
impairments in a security’s fair value would require the Company to reduce the
carrying value of the security to its fair value at the date of measurement by
recognizing an impairment valuation through the income statement. Where
appropriate, the Company may utilize Level 1 inputs to validate
other-than-temporary impairments of fair value. No other-than-temporary
impairments of fair value were identified in the Company’s available-for-sale
securities portfolio at December 31, 2008.
The
following table reports the level of valuation assumptions used to determine the
carrying value of our assets measured at fair value on a recurring basis at
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements
|
|
|
|
|
at
December 31, 2008 Using
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
|
|
|
|
|
|
|
|
|
Prices
in
|
|
|
|
|
|
|
|
|
Active
|
|
Significant
|
|
|
|
|
|
|
Markets
for
|
|
Other
|
|
Significant
|
|
|
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
December
31,
|
|
Assets
|
|
Inputs
|
|
Inputs
|
|
|
2008
|
|
(Level
1)
|
|
(Level
2)
|
|
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
securities
|
|
$
|
79,316
|
|
|
|
$
|
79,316
|
|
|
Assets
generally subject to nonrecurring fair value measurement may include the
Company’s held-to-maturity securities, certain loans receivable and real estate
owned, which are reviewed for impairment using fair value measurements, where
applicable. The held-to-maturity securities portfolio is generally carried at
amortized cost. However, we periodically review and evaluate the
held-to-maturity portfolio for “other-than temporary” impairment of fair value
utilizing the same inputs applied to the valuation of the available-for-sale
portfolio. No other-than-temporary impairments of fair value were identified in
the Company’s held-to-maturity securities portfolio at December 31,
2008.
The
Company evaluates certain “non-homogeneous” loans for impairment in accordance
with SFAS No. 114. The Company’s non-homogeneous loans generally comprise its
commercial loans including construction and land loans, multifamily and
nonresidential mortgage loans and business loans. An eligible loan is determined
by the Company to be impaired if it is probable that payment of all amounts owed
by the borrower will not be made in accordance with the contractual terms of the
loan agreement. Our impaired loans are generally collateral dependent and, as
such, are carried at lower of historical cost or the estimated fair value of the
collateral less estimated selling costs. All real estate owned taken in full or
partial settlement of a loan obligation is also carried at the lower of the
original loan’s historical cost or the estimated fair value of the collateral
less estimated selling costs. The fair value of collateral securing an impaired
loan or real estate owned is estimated through current appraisals and adjusted
as necessary by management to reflect current market conditions - a form of
Level 3 input. During the quarter ended December 31, 2008, the Company recorded
an additional $92,000 valuation allowance against an impaired loan based upon
the updated fair value of the collateral securing that loan.
The
following table reports the level of valuation assumptions used to determine the
carrying value of our assets measured at fair value on a nonrecurring basis at
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements
|
|
|
|
|
|
|
at
December 31, 2008 Using
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
Prices in
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Active
Markets
|
|
Other
|
|
Significant
|
|
|
|
|
|
for
Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
December
31,
|
|
Assets
|
|
Inputs
|
|
Inputs
|
|
|
|
2008
|
|
(Level
1)
|
|
(Level
2)
|
|
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
loans
|
|
$
|
152
|
|
|
|
|
|
$
|
152
|
|
The
Company’s may have commitments to fund loans held for sale and commitments to
sell such loans relating to its mortgage banking activities which are generally
considered free-standing derivative instruments subject to fair value
measurement. Additionally, the sale of mortgage loans on a servicing retained
basis results in the recognition of mortgage servicing rights which are also
generally subject to fair value measurement. However, the fair values of these
instruments are not material to our financial condition or results of operations
and are therefore excluded from the Company’s fair value
disclosures.
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Forward-Looking
Statements
This
report contains certain 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. The Company intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 as
amended and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies, and expectations of the Company, are
generally identifiable by use of the words “believe,” “expect,” “intend,”
“anticipate,” “estimate,” “project,” or similar expressions. The Company’s
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors that could have a material adverse affect on the
operations and future prospects of the Company and its wholly-owned subsidiaries
include, but are not limited to, changes in: interest rates; general economic
conditions; legislative/regulatory provisions; monetary and fiscal policies of
the U.S. Government, including policies of the U.S. Treasury and the Federal
Reserve Board; the quality or composition of the loan or investment portfolios;
demand for loan products; deposit flows; competition; and demand for financial
services in the Company’s market area. These risks and uncertainties should be
considered in evaluating forward-looking statements, and undue reliance should
not be placed on such statements.
Announcement
of Proposed Merger
On
December 15, 2008, American Bancorp of New Jersey, Inc. and Investors Bancorp,
Inc. jointly announced the signing of a definitive agreement under which
Investors Bancorp will acquire American Bancorp of New Jersey for $140 million
in stock and cash, or $12.50 per share.
Under the
terms of the agreement, 70% of American Bancorp of New Jersey shares will be
converted into Investors Bancorp common stock and the remaining 30% will be
converted into cash. American Bancorp of New Jersey’s stockholders will have the
option to elect to receive either 0.9218 shares of Investors Bancorp common
stock or $12.50 in cash for each American Bancorp of New Jersey common share,
subject to proration to ensure that in the aggregate 70% of the American Bancorp
of New Jersey shares will be converted into stock. The transaction is intended
to qualify as a reorganization for federal income tax purposes. As a result, the
shares of American Bancorp exchanged for Investors Bancorp stock will be
transferred on a tax-free basis.
The
transaction has been approved by the boards of directors of each company and is
expected to close in the second calendar quarter of 2009, subject to customary
closing conditions including regulatory approvals and approval by American
Bancorp of New Jersey’s shareholders.
After the
transaction is completed, James H. Ward III, American Bancorp of New Jersey’s
Vice Chairman, will join the board of directors of Investors
Bancorp.
Citigroup
Global Markets Inc. acted as financial advisor to Investors Bancorp, and Luse,
Gorman, Pomerenk & Schick, P.C. acted as legal advisor. Keefe, Bruyette
& Woods, Inc. acted as financial advisor to American Bancorp of New Jersey,
and Silver, Freedman & Taff, L.L.P. as legal advisor.
Business
Strategy
Historically,
our business strategy has been to operate as a well-capitalized independent
financial institution dedicated to providing convenient access and quality
service at competitive prices. Until the closing date of the proposed merger
described above, we will continue to operate as a well-capitalized, independent
financial institution pursuing goals and objectives of our business plan through
the strategies outlined in this section.
During
recent years, we have experienced significant loan and deposit growth. Our
current strategy seeks to continue that growth while we evolve from a
traditional thrift institution into a full service, community bank. Our key
business strategies are highlighted below accompanied by a brief overview of our
progress in implementing each of these strategies:
|
•
|
Grow and diversify the deposit
mix by emphasizing non-maturity account relationships acquired through de
novo branching and existing deposit growth. Our current business plan
calls for us to open up to three de novo branches over approximately the
next five years.
|
Having
opened three full service branches located in Verona, Nutley and Clifton, New
Jersey during fiscal 2007, the Company did not open additional de novo deposit
branches during fiscal 2008. Rather, the Company directed significant strategic
effort during fiscal 2008 toward achieving and enhancing profitability of these
three branches. Based on the Company’s internal branch profitability model, the
Verona branch, which opened in December 2006, achieved profitability during the
quarter ended March 31, 2008. The Bank’s Nutley branch, which opened in May
2007, achieved quarterly profitability during the quarter ended September 30,
2008. Both Verona and Nutley continued to operate profitably through December
31, 2008. The quarterly operating loss for the Clifton branch, which opened in
August 2007, continued to decrease through the most recent quarter ended
December 31, 2008 compared with prior quarters. The Company expects the Clifton
branch to achieve profitability during fiscal 2009. While the Company currently
has no commitments to open additional de novo deposit branches during the next
fiscal year, the Company would consider additional branching projects during
fiscal 2009 if appropriate opportunities were to arise.
|
•
|
Increase and diversify the loan
mix by increasing commercial loan origination volume while increasing the
balance of such loans as a percentage of total
loans.
|
For the
three months ended December 31, 2008, our commercial loans, including
multi-family, nonresidential real estate, construction and business loans,
increased $3.2 million, or 1.8%, from $181.8 million to $185.0 million with such
balances continuing to represent approximately 38% of loans receivable, net. We
expect to continue our strategic emphasis on multifamily and nonresidential real
estate lending throughout the remainder of fiscal 2009 while reducing our
strategic focus on originating new construction loans over the near
term.
|
•
|
Continue to implement or
enhance alternative delivery channels for the origination and servicing of
loan and deposit products.
|
In
support of this objective, we previously completed a significant overhaul of our
Internet website which serves as a portal through which our customers access a
growing menu of online services. Having enhanced our online services for retail
customers, we are currently addressing the growth in business demand for such
services. Toward that end, we have expanded our business online banking product
and service offerings to now include remote check deposit, online cash
management and online bill payment services for business.
|
•
|
Broaden and strengthen customer
relationships by bolstering cross marketing strategies and tactics with a
focus on multiple account/service
relationships.
|
We will
continue to cross market other products and services to promote multiple
account/service relationships and the retention of long term customers and core
deposits. These efforts will be directed to customers within all five of the
Bank’s branches.
|
•
|
Utilize capital markets tools
to effectively manage capital and enhance shareholder
value.
|
Toward
that end, the Company completed two previous share repurchase plans during
fiscal 2007 through which it repurchased ten percent and five percent,
respectively, of its outstanding shares. During fiscal 2008, the Company
completed its third and fourth share repurchase programs through each of which
it repurchased an additional five percent of its outstanding shares. A fifth
share repurchase plan for an additional five percent of its outstanding shares
was announced in August 2008 and remains ongoing at December 31, 2008.
Additionally, the Company increased its regular quarterly cash dividend paid to
shareholders from $0.04 per share to $0.05 per share during the quarter ended
June 30, 2008 and continued paying a quarterly dividend of $0.05 per share
during the quarters ended September 30, 2008 and December 31, 2008.
A number
of the strategies outlined above have historically had a detrimental impact on
short term earnings. Notwithstanding, we expect to continue to execute these
growth and diversification strategies designed to enhance future earnings and
resist adverse changes in market conditions toward the goal of enhancing
shareholder value. Toward that end, our deposit pricing strategy through the
first half of fiscal 2008 continued to reduce interest costs by incrementally
lowering interest rates paid on de novo branch deposits acquired during fiscal
2007 from the higher promotional rates initially offered. At December 31, 2008,
the deposits acquired through those de novo branches no longer reflected the
effects of grand opening promotional pricing. However, the Company did continue
to offer highly competitive certificate of deposit rates on select products at
its Nutley and Clifton branches during the first quarter of fiscal 2009 to
achieve its branch growth and profitability objectives.
In
general, we expect that the reductions in market interest rates and overall
steepening of the yield curve that occurred during fiscal 2008 may continue to
have a beneficial impact on earnings during fiscal 2009. However, the resiliency
of the Bank’s branch deposits to future movements in market interest rates
and/or competitive pricing pressures – and their respective impact on earnings -
cannot be assured. In particular, recent volatility in the financial markets has
resulted in competitors seeking to attract and/or retain liquidity through their
retail deposit product offerings. Such strategies have resulted in significant
upward pressure on retail deposit rates in relation to the general level of
market interest rates.
Executive
Summary
The
Company’s results of operations depend primarily on its net interest income. Net
interest income is the difference between the interest income we earn on our
interest-earning assets and the interest we pay on our interest-bearing
liabilities. It is a function of the average balances of loans and investments
versus deposits and borrowed funds outstanding in any one period and the yields
earned on those loans and investments versus the cost of those deposits and
borrowed funds. Our loans consist primarily of residential mortgage loans,
comprising first and second mortgages and home equity lines of credit, and
commercial loans, comprising multi-family and nonresidential real estate
mortgage loans, construction loans and business loans. Our investments primarily
include U.S. Agency residential mortgage-related securities but may also include
U.S. Agency debentures and U.S. Government debentures and mortgage-related
securities. Our interest-bearing liabilities consist primarily of retail
deposits, advances from the Federal Home Loan Bank of New York and other
borrowings associated with reverse repurchase agreement transactions with
institutional counterparties.
For the
first three months of fiscal 2009, the Company’s net interest rate spread
increased 28 basis points to 2.15% in comparison to 1.87% during fiscal 2008.
The increase in net interest rate spread was largely attributable to a reduction
in the Company’s cost of interest-bearing liabilities of 45 basis points to
3.28% from 3.73% for those same comparative periods. The reduction in interest
costs resulted from continued decreases in the cost of retail deposits augmented
by reductions in the overall cost of borrowings. The decrease in retail deposit
interest costs continued to reflect the overall reduction in market interest
rates coupled with the downward adjustment of promotional interest rates paid on
de novo branch deposits during the first half of fiscal 2008. The decrease in
borrowing costs primarily reflected the cumulative, combined effects of repaying
higher cost borrowings at maturity and the addition of lower cost borrowings
arising from a wholesale growth transaction executed in March 2008.
The
decrease in interest costs was partially offset by a reduction in the Company’s
yield on earning assets which declined 16 basis points to 5.43% from 5.59% for
the same comparative periods. This reduction in yield reflected the effects of
lower market interest rates on the Company’s adjustable rate loans, including
construction loans, business loans and home equity lines of credit, as well as
its yield on cash and cash equivalents.
The
factors resulting in the widening of the Company’s net interest rate spread also
positively impacted the Company’s net interest margin. However, the impact of
improved net interest rate spread was substantially offset by the impact of the
Company’s share repurchase program on the Company’s net interest margin. The
foregone interest income on the earning assets used to fund share repurchases
contributed significantly to limiting the increase in the Company’s net interest
margin which increased 18 basis points to 2.68% for the three months ended
December 31, 2008 from 2.50% for all of fiscal 2008.
Our net
interest rate spread and margin may be adversely affected throughout several
possible interest rate environments. The risks presented by movements in
interest rates is addressed more fully under Item 3. Quantitative and
Qualitative Disclosures About Market Risk found later in this
report.
Our
results of operations are also affected by our provision for loan losses. For
the three months ended December 31, 2008, the Company recorded a net loan loss
provision of $153,000. Approximately $61,000 of that provision was attributable
to the overall growth in the loan portfolio for the period. However, the
provision for loan losses also reflected a specific provision of $92,000
attributable to one impaired loan, a portion of which was deemed uncollectible
by management and was therefore charged off in the current quarter. No other
additions to the allowance for loan losses attributable to nonperforming loans
were required during the first quarter of fiscal 2009.
The
overall performance of the Bank’s loan portfolio remained strong during the
first quarter of fiscal 2009 with nonperforming loan balances totaling $1.9
million, or 0.30% of total assets at December 31, 2008 – an increase from $1.1
million or 0.18% of total assets from September 30, 2008. In addition to those
loans reported as nonperforming at December 31, 2008, the Company is carefully
monitoring one fully disbursed construction loan on a completed project whose
outstanding principal balance of $6.8 million may be classified as nonperforming
by the Bank during the next quarter ending March 31, 2009.
In
summary, annualized net loan loss provision expense, reflected as a percentage
of average earning assets, was reported as 0.10% for the three months ended
December 31, 2008 compared with 0.09% for all of fiscal 2008.
Our
results of operations also depend on our noninterest income and noninterest
expense. Noninterest income includes deposit service fees and charges, income on
the cash surrender value of life insurance, gains on sales of loans and
securities, gains on sales of other real estate owned and loan related fees and
charges. Noninterest income as a percentage of average assets decreased two
basis points to 0.28% for the three months ended December 31, 2008 from 0.30%
for all of fiscal 2008. This decrease was largely attributable to comparative
decreases in branch fee income due, in large part, to lower annuity sales and
associated fee income.
Gains and
losses on sale of assets, included in noninterest income, typically resulted
from the Company selling long term, fixed rate mortgage loan originations into
the secondary market. Demand for such loans typically fluctuates with market
interest rates. As interest rates rise, market demand for long term, fixed rate
mortgage loans diminishes in favor of hybrid ARMs which the Company has
historically retained in its portfolio rather than selling into the secondary
market. Consequently, the gains and losses on sale of loans reported by the
Company have historically fluctuated with market conditions. Additionally,
changes to the Company’s asset/liability management strategy - such as those
implemented during fiscal 2008 by which all loans originated were added to the
portfolio - will also cause fluctuations in gains and losses on sale of loans.
Additionally, such gains and losses also reflected the impact of infrequent
investment security sales for asset/liability management purposes. As a
percentage of average total assets, the Company reported no gains and losses on
asset sales for the three months ended December 31, 2008 while such gains and
losses totaled less than 0.01% for all of fiscal 2008.
Noninterest
expense includes salaries and employee benefits, occupancy and equipment
expenses, data processing and other general and administrative expenses. As a
percentage of average total assets, noninterest expense for the three months
ended December 31, 2008 totaled 2.18% representing a nine basis point reduction
from 2.27% reported for all of fiscal 2008.
A
significant portion of the improvement in noninterest expense was attributable
to various compensation-related factors. For example, during the first quarter
of fiscal 2008, the Company enacted a reduction in workforce resulting in the
elimination of five managerial and administrative support positions. Throughout
the remainder of fiscal 2008, additional staffing adjustments were made as
opportunities to reduce branch and non-branch staffing levels arose through
general attrition. Additional adjustments to the Company’s non-branch staffing
levels were initiated in the first quarter of fiscal 2009 resulting in further
reductions in the Company’s number of full time equivalent employees. Through
December 31, 2008, the Company has reduced its number of full time equivalent
employees by over 13% since the beginning of fiscal 2008. The Company will
continue to monitor its employee staffing levels in relation to the goals and
objectives of its business plan and may consider further opportunities to adjust
such staffing levels, as appropriate, to support the achievement of those goals
and objectives.
Additionally,
in 2008, the Company recognized an increase in compensation expense attributable
to the death of a Director Emeritus of the Company during the second fiscal
quarter. Under the terms of the Company’s restricted stock and stock option
plans, the vesting of the remaining unearned benefits accruing to the director
through these plans was automatically accelerated. As such, the Company incurred
an acceleration of the remaining pre-tax expenses associated with these benefits
totaling approximately $254,000 during fiscal 2008 for which no comparable
expense has been recorded in fiscal 2009.
The
noninterest expense reported for both comparative periods fully reflects the
ongoing costs of the three full-service branches opened during fiscal 2007. In
general, management expects occupancy and equipment expense to increase in the
future as we continue to implement our de novo branching strategy to expand our
branch office network. As noted earlier, while the Company currently has no
commitments to open additional de novo deposit branches during the next fiscal
year, the Company would consider additional branching projects during fiscal
2009 if appropriate opportunities were to arise. Our current business plan
targets the opening of up to three additional de novo branches over
approximately the next five years. The costs for land purchases or leases,
branch construction costs and ongoing operating costs for additional branches
will impact future earnings.
The
Company also expects occupancy expense to continue to reflect the costs
associated with the relocation of the Bank’s Bloomfield branch which opened in
April 2008. This relocation has significantly upgraded and modernized the
Bloomfield branch facility, supporting the Company’s deposit growth and customer
service enhancement objectives. The relocation will also support potential
expansion of the administrative and lending office space within the Company’s
existing headquarters facility, where the branch had previously been located,
should such expansion be required to support the Company’s business
plan.
Notwithstanding
the comparative improvements in compensation-related expenses and overall
consistency in occupancy and equipment expense between fiscal 2008 and the first
three months of fiscal 2009, the Company does expect to report continuing
increases in legal and professional and consulting expenses in the coming
quarters as it incurs expenses relating to the upcoming merger with Investors
Bancorp announced on December 15, 2008.
In total,
our return on average assets increased 15 basis points to 0.36% for the three
months ended December 31, 2008 from 0.21% for all of fiscal 2008, while return
on average equity increased 116 basis points to 2.47% from 1.31% for the same
comparative periods.
Comparison
of Financial Condition at December 31, 2008 and September 30, 2008
Our total
assets increased by $7.2 million, or 1.2%, to $628.8 million at December 31,
2008 from $621.6 million at September 30, 2008. The increase primarily reflected
comparatively higher balances of loans receivable, net partially offset by lower
balances of cash and cash equivalents and investment securities.
Cash and
cash equivalents decreased by $2.4 million, or 12.0%, to $17.9 million at
December 31, 2008 from $20.4 million at September 30, 2008. The net decrease in
cash and cash equivalents primarily reflects cash outflows funding growth in
loans receivable, net and repayment of maturing and amortizing borrowings
partially offset by cash inflows from investment security maturities and
repayments and continued net growth in deposits.
The
Company expects to continue reinvesting the proceeds received through its growth
in deposits into the loan portfolio over time as lending opportunities arise. To
the extent supported by loan demand and origination volume, the Company expects
to reinvest deposit proceeds into its commercial loan portfolio. However, the
net addition of residential mortgages to the loan portfolio, including longer
term, fixed rate one- to four-family mortgages which were historically sold into
the secondary market, may continue augmenting the growth in the Company’s
commercial loans. (See further discussion in the subsequent section titled
“Quantitative and Qualitative Disclosures About Market Risk”.)
Securities
classified as available-for-sale decreased $1.8 million, or 2.3%, to $79.3
million at December 31, 2008 from $81.2 million at September 30, 2008 while
securities held-to-maturity decreased approximately $331,000, or 4.4% to $7.2
million from $7.5 million for those same comparative periods.
The
balance of available-for-sale securities includes investments acquired in a
wholesale growth transaction executed during fiscal 2008 through which the
Company purchased approximately $50.0 million of mortgage-related investment
securities funded by an equivalent amount of borrowings. The ongoing net
interest income resulting from this transaction continues to augment the
Company’s earnings to offset a portion of the near term costs associated with
executing its business plan. Through this transaction, the Company took
advantage of the opportunity to acquire agency, AAA-rated mortgage-related
securities at historically wide interest rate spreads in relation to the cost of
wholesale funding sources.
The
following table compares the composition of the Company’s investment securities
portfolio by security type as a percentage of total assets at December 31, 2008
with that of September 30, 2008. Amounts reported exclude unrealized gains and
losses on the available for sale portfolio.
|
|
|
December
31, 2008
|
|
|
September
30, 2008
|
|
|
|
|
|
|
|
Percent
of
|
|
|
|
|
|
Percent
of
|
|
Type
of
Securities
|
|
|
Amount
|
|
|
Total
Assets
|
|
|
Amount
|
|
|
Total
Assets
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
rate MBS
|
|
$
|
46,876
|
|
|
|
7.46
|
%
|
|
$
|
48,669
|
|
|
|
7.83
|
%
|
ARM
MBS
|
|
|
9,100
|
|
|
|
1.45
|
|
|
|
9,454
|
|
|
|
1.52
|
|
Fixed
rate CMO
|
|
|
27,823
|
|
|
|
4.42
|
|
|
|
29,699
|
|
|
|
4.78
|
|
Floating
rate CMO
|
|
|
1,649
|
|
|
|
0.26
|
|
|
|
1,750
|
|
|
|
0.28
|
|
Fixed
rate agency debentures
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
85,448
|
|
|
|
13.59
|
%
|
|
$
|
89,572
|
|
|
|
14.41
|
%
|
Assuming
no change in interest rates, the estimated average life of the investment
securities portfolio was 3.09 years and 4.42 years, respectively, at December
31, 2008 and September 30, 2008. Assuming a hypothetical immediate and permanent
increase in interest rates of 300 basis points, the estimated average life of
the portfolio would have extended to 5.91 years and 6.03 years at December 31,
2008 and September 30, 2008, respectively.
Loans
receivable, net increased by $12.8 million, or 2.7%, to $491.4 million at
December 31, 2008 from $478.6 million at September 30, 2008. The growth was
comprised of net increases in commercial loans totaling $3.2 million or 1.8%.
Such loans include multi-family, nonresidential real estate, construction and
business loans. The increase in loans receivable, net also included net
increases in one- to four-family first mortgages of $7.9 million, net increases
in home equity loans and home equity lines of credit totaling $1.2 million and
net increases in consumer loans of $522,000. Offsetting the growth in these
categories was a net increase to the allowance for loan losses totaling $62,000
due to overall growth in the loan portfolio.
One- to
four-family mortgage loans are generally grouped by the Bank into one of three
categories based upon underwriting criteria: “Prime”, “Alt-A” and “Sub-prime”
mortgages. Sub-prime loans are generally defined by the Bank as loans to
borrowers with deficient credit histories and/or higher debt-to-income ratios.
Loans falling within the Alt-A category, as defined by the Bank, include loans
to borrowers with blemished credit credentials that are less severe than those
characterized by Sub- prime loans but otherwise preclude the loan from being
considered Prime. Alt-A loans may also be characterized by other underwriting or
documentation exceptions such as reduced or limited loan documentation. Loans
without the deficiencies or exceptions characterizing Sub-prime and Alt-A loans
are considered Prime and comprise over 97% of the one- to four-family mortgages
within the Bank’s loan portfolio.
The Bank
does not currently offer Sub-prime loan programs. Prior to fiscal 2007, the Bank
had offered a limited number of one- to four-family loan programs through which
it originated and retained Sub-prime loans to borrowers with deficient credit
histories or higher debt-to-income ratios. At December 31, 2008 and September
30, 2008, the remaining balance and number of these loans were approximately
$1.2 million and 9 loans, respectively, at each date. Two Sub-prime loans with
balances of $305,312 and $155,485 were each one payment past due at December 31,
2008. The remaining seven loans were performing in accordance with their terms
for the periods reported.
Through
fiscal 2007, the Bank offered an Alt-A stated income loan program by which it
originated and retained loans to borrowers whose income was affirmatively stated
at the time of application, but not verified by the Bank. The Bank discontinued
that program in the first quarter of fiscal 2008. At December 31, 2008 and
September 30, 2008, the remaining balance and number of these loans were
approximately $6.8 million and 25 loans, respectively, at each date. One Alt-A
loan with a remaining balance of $415,868 was two payments past due at December
31, 2008. The remaining 24 loans were performing in accordance with their terms
for the periods reported.
The Bank
continues to offer a limited Alt-A program through which it originates and sells
all such loans to Fannie Mae under its Expanded Approval program on a
non-recourse, servicing retained basis. A significant portion of the loans
originated under this remaining Alt-A program support the procurement of
mortgage financing for first time home buyers.
At
December 31, 2008 and September 30, 2008, respectively, the balance of one- to
four-family mortgage loans included $21.5 million and $22.5 million of thirty
year adjustable rate loans with initial fixed interest rate periods of three to
ten years during which time monthly loan payments comprise interest only. After
the initial period, the monthly payments on such loans are adjusted to reflect
the collection of both interest and principal over the loan’s remaining term to
maturity.
As noted
earlier, the Company is carefully monitoring one fully disbursed construction
loan on a completed project which has an outstanding principal balance of $6.8
million which may be classified as nonperforming by the Bank during the next
quarter ending March 31, 2009. The loan is secured by a completed 13 unit
condominium project located in Wildwood Crest, New Jersey. The loan includes
personal guarantees for all indebtedness.
The
following two tables compare the composition of the Company’s loan portfolio by
loan type as a percentage of total assets at December 31, 2008 with that of
September 30, 2008. Amounts reported exclude allowance for loan losses and net
deferred origination costs.
The table
below generally defines loan type by loan maturity and/or repricing
characteristics:
|
|
December
31, 2008
|
|
|
September
30, 2008
|
|
|
|
|
|
|
Percent
of
|
|
|
|
|
|
Percent
of
|
|
Type
of Loans
|
|
|
Amount
|
|
|
Total
Assets
|
|
|
Amount
|
|
|
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
(1)
|
|
$
|
39,664
|
|
|
|
6.31
|
%
|
|
$
|
40,119
|
|
|
|
6.45
|
%
|
Prime-indexed
Land
|
|
|
3,695
|
|
|
|
0.59
|
|
|
|
3,666
|
|
|
|
0.59
|
|
1/1
and 3/3 ARMs
|
|
|
5,457
|
|
|
|
0.87
|
|
|
|
7,275
|
|
|
|
1.17
|
|
3/1
and 5/1 ARMs
|
|
|
135,604
|
|
|
|
21.56
|
|
|
|
128,984
|
|
|
|
20.75
|
|
5/5
and 10/10 ARMs
|
|
|
48,208
|
|
|
|
7.67
|
|
|
|
46,565
|
|
|
|
7.49
|
|
7/1
and 10/1 ARMs
|
|
|
6,417
|
|
|
|
1.02
|
|
|
|
5,489
|
|
|
|
0.88
|
|
15
year fixed or less
|
|
|
150,619
|
|
|
|
23.95
|
|
|
|
150,117
|
|
|
|
24.15
|
|
Greater
than 15 year fixed
|
|
|
71,001
|
|
|
|
11.29
|
|
|
|
68,850
|
|
|
|
11.08
|
|
Prime-indexed
HELOC
|
|
|
22,707
|
|
|
|
3.61
|
|
|
|
20,836
|
|
|
|
3.35
|
|
Consumer
(2)
|
|
|
1,681
|
|
|
|
0.27
|
|
|
|
1,159
|
|
|
|
0.19
|
|
Business
(3)
|
|
|
8,424
|
|
|
|
1.34
|
|
|
|
7,543
|
|
|
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
493,477
|
|
|
|
78.48
|
%
|
|
$
|
480,603
|
|
|
|
77.31
|
%
|
(1)
|
Construction
loans are generally floating rate with original maturities of two years or
less.
|
|
|
(2)
|
Consumer
loans are generally fixed rate with original maturities of less than five
years.
|
|
|
(3)
|
Business
loans are generally fixed or floating rate with original maturities of
five years or less.
|
The table
below generally defines loan type by collateral or purpose:
|
|
December
31, 2008
|
|
|
September
30, 2008
|
|
|
|
|
|
|
Percent
of
|
|
|
|
|
|
Percent
of
|
|
Type
of Loans
|
|
|
Amount
|
|
|
Total
Assets
|
|
|
Amount
|
|
|
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
(1)
|
|
$
|
39,664
|
|
|
|
6.31
|
%
|
|
$
|
40,119
|
|
|
|
6.45
|
%
|
1-4
family mortgage
|
|
|
283,959
|
|
|
|
45.15
|
|
|
|
276,690
|
|
|
|
44.51
|
|
Multifamily
(5+) mortgage
|
|
|
38,157
|
|
|
|
6.07
|
|
|
|
36,869
|
|
|
|
5.93
|
|
Nonresidential
mortgage
|
|
|
94,675
|
|
|
|
15.06
|
|
|
|
90,704
|
|
|
|
14.59
|
|
Land
|
|
|
4,210
|
|
|
|
0.67
|
|
|
|
6,683
|
|
|
|
1.08
|
|
1-4
family HELOC
|
|
|
22,707
|
|
|
|
3.61
|
|
|
|
20,836
|
|
|
|
3.35
|
|
Consumer
(2)
|
|
|
1,681
|
|
|
|
0.27
|
|
|
|
1,159
|
|
|
|
0.19
|
|
Business
(3)
|
|
|
8,424
|
|
|
|
1.34
|
|
|
|
7,543
|
|
|
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
493,477
|
|
|
|
78.48
|
%
|
|
$
|
480,603
|
|
|
|
77.31
|
%
|
(1)
|
Construction
loans generally include loans collateralized by land and one- to four
family, multifamily and commercial buildings in process of
construction.
|
|
|
(2)
|
Consumer
loans generally include secured account loans and unsecured overdraft
protection balances.
|
|
|
(3)
|
Business
loans generally include secured and unsecured business lines of credit and
term notes.
|
Total
deposits increased by $11.5 million, or 2.6%, to $459.2 million at December 31,
2008 from $447.7 million at September 30, 2008. This net growth reflected
increases in certificates of deposit of $23.1 million offset by reductions in
the balance of interest-bearing checking, including money market checking,
savings, and noninterest-bearing checking accounts of $7.3 million, $1.9 million
and $2.4 million, respectively. These net changes reflect, in part, the
disintermediation of a portion of the non-maturity deposits generated through
the three branches opened during fiscal 2007 on which interest rates have been
reduced from the higher, promotional levels originally. Additionally, such
changes also reflect the Company continuing to offer highly competitive
certificate of deposit rates on select products at its Nutley and Clifton
branches during the first quarter of fiscal 2009 to achieve its branch growth
and profitability objectives.
The
following table compares the composition of the Company’s deposit portfolio by
category as a percentage of total assets at December 31, 2008 with that of
September 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
September
30, 2008
|
|
Deposit
category
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
bearing checking
|
|
$
|
29,077
|
|
|
|
4.62
|
%
|
|
$
|
31,447
|
|
|
|
5.06
|
%
|
Money
market checking
|
|
|
52,993
|
|
|
|
8.43
|
|
|
|
60,580
|
|
|
|
9.75
|
|
Interest
bearing checking
|
|
|
15,017
|
|
|
|
2.39
|
|
|
|
14,727
|
|
|
|
2.37
|
|
Money
market savings
|
|
|
8,207
|
|
|
|
1.31
|
|
|
|
8,355
|
|
|
|
1.34
|
|
Other
savings
|
|
|
74,985
|
|
|
|
11.92
|
|
|
|
76,737
|
|
|
|
12.34
|
|
Certificates
of deposit
|
|
|
278,939
|
|
|
|
44.36
|
|
|
|
255,841
|
|
|
|
41.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
459,218
|
|
|
|
73.03
|
%
|
|
$
|
447,687
|
|
|
|
72.02
|
%
|
The
following table compares the composition of the Company’s deposit portfolio by
branch as a percentage of total assets at December 31, 2008 with that of
September 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
September
30, 2008
|
|
Branch
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bloomfield
|
|
$
|
222,843
|
|
|
|
35.44
|
%
|
|
$
|
220,421
|
|
|
|
35.45
|
%
|
Cedar
Grove
|
|
|
114,332
|
|
|
|
18.18
|
|
|
|
111,876
|
|
|
|
18.00
|
|
Verona
|
|
|
|
46,256
|
|
|
|
7.36
|
|
|
|
46,298
|
|
|
|
7.45
|
|
Nutley
|
|
|
|
40,441
|
|
|
|
6.43
|
|
|
|
37,789
|
|
|
|
6.08
|
|
Clifton
|
|
|
|
35,346
|
|
|
|
5.62
|
|
|
|
31,303
|
|
|
|
5.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
459,218
|
|
|
|
73.03
|
%
|
|
$
|
447,687
|
|
|
|
72.02
|
%
|
Borrowings
decreased $6.0 million, or 8.0%, to $69.5 million at December 31, 2008 from
$75.5 million at September 30, 2008. The reduction in borrowings was
attributable to net repayment of maturing and amortizing fixed rate FHLB term
advances of which $5.0 million had originally been drawn in connection with the
$50 million wholesale growth strategy executed in fiscal 2008.
The
following table compares the composition of the Company’s borrowing portfolio by
remaining term to maturity as a percentage of total assets at December 31, 2008
with that of September 30, 2008. Scheduled principal payments on amortizing
borrowings are reported as maturities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
September
30, 2008
|
|
Remaining
Term
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overnight
|
|
$
|
—
|
|
|
|
—
|
%
|
|
$
|
—
|
|
|
|
—
|
%
|
One
year or less
|
|
|
7,530
|
|
|
|
1.20
|
|
|
|
12,547
|
|
|
|
2.02
|
|
Greater
than one to two years
|
|
|
16,000
|
|
|
|
2.54
|
|
|
|
16,000
|
|
|
|
2.57
|
|
Greater
than two to three years
|
|
|
6,000
|
|
|
|
0.95
|
|
|
|
6,000
|
|
|
|
0.97
|
|
Greater
than three to four years
|
|
|
5,000
|
|
|
|
0.80
|
|
|
|
5,000
|
|
|
|
0.80
|
|
Greater
than four to five years
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000
|
|
|
|
0.16
|
|
More
than five years
(1)
|
|
|
35,000
|
|
|
|
5.57
|
|
|
|
35,000
|
|
|
|
5.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
69,530
|
|
|
|
11.06
|
%
|
|
$
|
75,547
|
|
|
|
12.15
|
%
|
(1)
Borrowing category includes two reverse repurchase agreements totaling
$35.0 million originally drawn in March 2008 and maturing in March 2018 whose
terms enable the counterparty, at their option, to require full repayment of the
borrowing at par prior to maturity. Early repayment may be required on one $25.0
million borrowing on or after the two year anniversary of its original funding.
Similarly, early repayment may be required on the remaining $10.0 million
borrowing on or after the four year anniversary of its original
funding.
Equity increased
$1.6 million, or 1.7% to $92.4 million at December 31, 2008 from $90.8 million
at September 30, 2008. The reported increase in equity was primarily
attributable to an increase in accumulated other comprehensive income
attributable to a $1.2 million after-tax improvement in the market value of
available-for-sale investments augmented by earnings, net of dividends paid, and
other credits to additional paid-in–capital.
Comparison
of Operating Results for the Three Months Ended December 31, 2008 and December
31, 2007
General.
The Company recorded
net income of $555,000 for the three months ended December 31, 2008, an increase
of $462,000, or 496.8% from the three months ended December 31, 2007 when the
Company reported net income of $93,000. The increase in net income resulted from
increases in net interest income and noninterest income partially offset by
increases in noninterest expense, the provision for loan losses and the
provision for income taxes.
Interest Income.
Total
interest income increased $208,000 or 2.7% to $8.0 million for the three months
ended December 31, 2008 from $7.8 million for the three months ended December
31, 2007. For those same comparative periods, the average yield on
interest-earning assets decreased 41 basis points to 5.43% from 5.84% while the
average balance of interest-earning assets increased $55.1 million to $592.0
million from $536.9 million.
Interest
income on loans increased $235,000 or 3.5%, to $7.0 million for the three months
ended December 31, 2008 from $6.7 million for the three months ended December
31, 2007. This increase was due, in part, to a $39.9 million increase in the
average balance of loans receivable, including loans held for sale, to $483.3
million for the three months ended December 31, 2008 from $443.4 million for the
three months ended December 31, 2007. The impact of the higher average balance
was partially offset by a reduction in the average yield on loans which
decreased 31 basis points to 5.77% from 6.08% for those same comparative
periods.
Interest
income on securities increased $383,000 or 59.3% to $1.0 million for the three
months ended December 31, 2008 from $646,000 for the three months ended December
31, 2007. The increase was due, in part, to a 17 basis point increase in the
yield on investment securities which increased to 4.67% for the three months
ended December 31, 2008 from 4.50% for the three months ended December 31, 2007.
The increase in yield primarily resulted from the maturity and repayment of
lower yielding investment securities coupled with higher yields on newly
purchased securities, including those relating to the $50.0 million wholesale
growth transaction completed in fiscal 2008. The impact on interest income
attributable to the increase in the yield was augmented by a $30.7 million
increase in the average balance of investment securities, excluding the
available for sale mark to market adjustment, to $88.2 million for the three
months ended December 31, 2008 from $57.4 million for the three months ended
December 31, 2007.
Interest
and dividend income on federal funds sold, other interest-earning deposits and
FHLB stock decreased $411,000 to $40,000 for the three months ended December 31,
2008 from $451,000 for the three months ended December 31, 2007. This decrease
in income was due, in part, to a decline in the average yield on these assets
which decreased 422 basis points to 0.77% from 4.99% for the same comparative
periods reflecting reductions in short term market interest rates. A $15.5
million decline in the average balance of these assets to $20.6 million for the
three months ended December 31, 2008 from $36.1 million for the three months
ended December 31, 2007 also contributed to the reduced interest income reported
for these assets. The average balances reported and used for yield calculations
reflect, where appropriate, the reduction for outstanding checks issued against
such accounts. This has the effect of increasing the reported yield on such
assets.
Interest Expense.
Total
interest expense decreased by $662,000 or 14.0% to $4.1 million for the three
months ended December 31, 2008 from $4.7 million for the three months ended
December 31, 2007. For those same comparative periods, the average cost of
interest-bearing liabilities decreased 105 basis points from 4.33% to 3.28%,
while the average balance of interest-bearing liabilities increased $58.7
million or 13.4% to $495.7 million for the three months ended December 31, 2008
from $437.0 million for the three months ended December 31, 2007.
Interest
expense on deposits decreased $751,000 or 17.7% to $3.5 million for the three
months ended December 31, 2008 from $4.2 million for the three months ended
December 31, 2007. This decrease was largely attributable to a reduction in the
Company’s overall cost of interest-bearing deposits which decreased 95 basis
points to 3.29% for the three months ended December 31, 2008 from 4.24% for the
three months ended December 31, 2007. The components of this decrease include a
195 basis point reduction in the average cost of interest-bearing checking
accounts to 2.46% from 4.41%, a 57 basis point reduction in the average cost of
savings accounts to 2.05% from 2.62% and a 102 basis point reduction in the cost
of certificates of deposit to 3.89% from 4.91%. The decrease in the cost of
interest-bearing deposits was primarily attributable to two related factors.
First, the Company has reduced the interest rates paid on deposits generated
through the three full-service branches opened during fiscal 2007 on which
promotional interest rates had continued to be paid during a portion of fiscal
2008. Deposits acquired through those de novo branches no longer reflect the
effects of promotional pricing. Second, reductions in market interest rates
enabled the Company to reduce rates paid on many interest-bearing deposit types
across all branches.
The
effect of the reduction in deposit costs on interest expense was partially
offset by growth in the average balance of interest-bearing deposits which
increased $25.1 million to $424.4 million for the three months ended December
31, 2008 from $399.4 million for the three months ended December 31, 2007. The
reported net growth in the average balance of interest-bearing deposits
comprised a $71.7 million increase in the average balance of certificates of
deposit partially offset by declines of $38.3 million and $8.3 million,
respectively, in the average balances of interest-bearing checking accounts and
savings accounts. Such declines reflect the disintermediation of such deposits
into higher yielding time deposits.
Interest
expense on borrowings increased $89,000 to $583,000 for the three months ended
December 31, 2008 from $494,000 for the three months ended December 31, 2007.
This increase in interest expense reflects a $33.6 million increase in the
average balance of borrowings to $71.2 million for the three months ended
December 31, 2008 from $37.6 million for the three months ended December 31,
2007. The impact on interest expense attributable to this increase in average
balance was partially offset by a decline in cost of borrowings which decreased
198 basis points to 3.28% for the three months ended December 31, 2008 from
5.26% for the three months ended December 31, 2007. The changes in the average
cost and average balance of borrowings between the two comparative periods
generally reflects the addition of $50.0 million of comparatively lower costing
borrowings relating to the wholesale growth transaction noted earlier, partially
offset by the repayment of all maturing FHLB term advances, including a portion
of those related to that transaction, since the close of the earlier comparative
period.
Net Interest Income.
Net
interest income increased by $870,000 or 28.0%, to $4.0 million for the three
months ended December 31, 2008 from $3.1 million for the three months ended
December 31, 2007. For those same comparative periods, the Company’s net
interest rate spread widened 65 basis points to 2.15% from 1.50% while the net
interest margin increased 37 basis points to 2.68% from 2.31%. As noted earlier,
the change in the Company’s net interest margin was significantly impacted by
the Company’s share repurchase plans. The average balance of the Company’s
treasury stock increased $9.9 million to $41.7 million for the three months
ended December 31, 2008 from $31.9 million for the three months ended December
31, 2007. Based upon that growth in the average balance of the Company’s
treasury stock account and its average yield on interest-earning assets reported
for the earlier comparative period, the Company estimates that the net increase
of $870,000 in net interest income was reduced by approximately $144,000
attributable to interest earned during the earlier comparative period on the
interest-earning assets that were subsequently utilized to fund share
repurchases.
Provision for Loan Losses.
Using the loan loss allowance methodology described under Critical
Accounting Policies found later in this discussion, the provision for loan
losses totaled $153,000 for the three months ended December 31, 2008,
representing an increase of $14,000 from the three months ended December 31,
2007. The expense for the first quarter of fiscal 2009 reflected a provision of
$92,000 attributable to one impaired construction loan, that portion of which
was deemed uncollectible by management during its asset quality review conducted
at December 31, 2008 and therefore charged off. Excluding this adjustment, the
provision for loan losses for both comparative periods resulted from the
application of historical and environmental loss factors against the net growth
in loans in accordance with the Bank’s loan loss methodology.
In total,
the allowance for loan losses as a percentage of gross loans outstanding
remained at 0.63% for the periods ended December 31, 2008 and September 30,
2008. These ratios reflect allowance for loan loss balances of $3.1 million and
$3.0 million, respectively. Notwithstanding the consistency between linked
periods, the overall increase in the ratio of allowance to gross loans reported
over the past several quarters continues to reflect the changing composition of
the portfolio with greater strategic emphasis on loans with higher risk
factors.
As noted
earlier, nonperforming loans increased to 0.30% of total assets at December 31,
2008 compared with 0.18% at September 30, 2008. The level of the allowance is
based on estimates and the ultimate losses may vary from those
estimates.
Noninterest Income.
Noninterest income increased $45,000 or 11.4% to $440,000 for the three months
ended December 31, 2008 from $395,000 for the three months ended December 31,
2007. The growth in noninterest income was largely attributable to an increase
of $16,000 in income from the cash surrender value of life insurance
attributable to a combination of higher average balances and improved yields on
those assets. Additionally, the Company reported an increase of $34,000 in other
noninterest income attributable, in part, to growth in loan-related fees and
charges including, but not limited to, increases in prepayment penalties and
loan withdrawal fees. Additionally, the Company recognized an additional $17,000
in other noninterest income attributable to a partial recovery of losses
incurred several years earlier relating to assets held by the Bank’s retirement
plan.
Noninterest
Expense.
Noninterest expense increased $137,000 or 4.2% to $3.4 million
for the three months ended December 31, 2008 from $3.3 million for the three
months ended December 31, 2007. This growth in noninterest expense was primarily
attributable to comparative increases in occupancy and equipment, data
processing, legal, and other non interest expenses of $37,000, $34,000, $112,000
and $117,000, respectively. These increases in noninterest expense were
partially offset by comparative reductions in compensation expenses and
advertising and marketing expenses of $120,000 and $48,000,
respectively.
The
reported increase in occupancy and equipment expense was largely attributable to
additional depreciation costs arising from the Bank’s Bloomfield branch which
was relocated from the administrative headquarters to a new facility in April
2008. Such increases also reflect a comparative increase in recurring and
non-recurring costs associated with the maintenance, testing and repair of the
Bank’s internal IT infrastructure. Increases in data processing expense
generally reflect the additional core processing and item processing costs
resulting from the growth in accounts and transaction volume coupled with the
added data processing infrastructure costs associated with the relocated
Bloomfield branch.
The
increase in legal expense was largely attributable to costs incurred associated
with the Company’s upcoming merger with Investors Bancorp announced on December
15, 2008. Through December 31, 2008, the Company has incurred approximately
$135,000 in legal expense associated with the merger. Excluding these
merger-related expenses, legal expense for the three months ended December 31,
2008 totaled $28,000 reflecting a reduction of $23,000 from the same comparative
period in fiscal 2008.
The
reported increase in other noninterest expense resulted primarily from increases
in FDIC insurance expense. This increase was attributable, in part, to overall
growth in the balance of FDIC-insured deposits. However, the increase also
reflects the expiration of FDIC insurance credits which had previously reduced
the Bank’s net cost of FDIC deposit insurance throughout a portion of fiscal
2008.
Partially
offsetting these increases in noninterest expense was a comparative net
reduction in employee and director compensation expense which comprised several
offsetting components. The most significant of these was a reduction of $115,000
in employee wages and salaries, including overtime compensation, which generally
reflects the expense reductions resulting from the employee staffing adjustments
reviewed earlier in this discussion.
Finally,
the reported decrease in advertising and marketing expense reflects the higher
level of such expenditures during the earlier comparative period attributable to
the continued promotion of the Bank’s Nutley and Clifton branches which opened
in May 2007 and August 2007, respectively.
Provision for Income Taxes
.
The provision for income taxes increased $302,000 for the three months ended
December 31, 2008 compared with the three months ended December 31, 2007. For
the more recent period, the Company’s effective income tax rate was 34.4%
compared with an effective income tax benefit rate of 13.4% for the earlier
comparative period. The tax expense in the current and prior period,
respectively, reflects the comparative levels of pre-tax income coupled with the
level of “tax favored” income reported by the Company during each period. “Tax
favored” income arises from revenue sources on which the Company pays income
taxes at a comparatively lower effective tax rate than it generally pays on
other sources of income.
Specifically,
the Company’s effective tax rate is influenced by the level of interest income
on investment securities held by the Bank’s investment subsidiary, American
Savings Investment Corporation (“ASIC”). ASIC is a wholly owned New Jersey
investment subsidiary formed in August 2004 by American Bank of New Jersey. The
purpose of this subsidiary is to invest in stocks, bonds, notes and all types of
equity, mortgages, debentures and other investment securities. Interest income
from this subsidiary is taxed by the state of New Jersey at an effective rate
lower than the statutory corporate state income tax rate. Additionally, the
Company also recognizes tax exempt income from the cash surrender value of bank
owned life insurance.
The
Company recognized income from these two “tax favored” sources during both
comparative periods. However, the comparatively lower pretax net income reported
for earlier comparative period resulted in the items discussed above having a
proportionally greater net beneficial impact on the Company’s reported effective
tax rate in the current period.
Critical
Accounting Policies
Various
elements of our accounting policies, by their nature, are inherently subject to
estimation techniques, valuation assumptions and other subjective assessments.
The following is a description of our critical accounting policy and an
explanation of the methods and assumptions underlying its
application.
Allowance for Loan Losses.
Our
policy with respect to the methodologies used to determine the allowance for
loan losses is our most critical accounting policy. This policy is important to
the presentation of our financial condition and results of operations, and it
involves a higher degree of complexity and requires management to make difficult
and subjective judgments, which often require assumptions or estimates about
highly uncertain matters. The use of different judgments, assumptions, and
estimates could result in material differences in our results of operations or
financial condition.
In
evaluating the level of the allowance for loan losses, management considers the
Company’s historical loss experience as well as various “environmental factors”
including the types of loans and the amount of loans in the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, estimated
value of any underlying collateral, industry condition information, and
prevailing economic conditions. Large groups of smaller balance homogeneous
loans, such as residential real estate and home equity and consumer loans, are
evaluated in the aggregate using historical loss factors adjusted for current
economic conditions. Large balance and/or more complex loans, such as
multi-family, nonresidential real estate, construction and business loans, are
evaluated individually for impairment. This evaluation is inherently subjective,
as it requires estimates that are susceptible to significant revision, as more
information becomes available or as projected events change.
Management
assesses the allowance for loan losses quarterly. While management uses
available information to recognize losses on loans, future loan loss provisions
may be necessary based on changes in economic conditions. In addition,
regulatory agencies, as an integral part of their examination process,
periodically review the allowance for loan losses and may require the Bank to
recognize additional provisions based on their judgment of information available
to them at the time of their examination. The allowance for loan losses in the
periods presented was maintained at a level that represented management’s best
estimate of losses in the loan portfolio to the extent they were both probable
and reasonable to estimate.
Application
of the Bank’s loan loss methodology outlined above results, in part, in
historical and environmental loss factors being applied to the outstanding
balance of homogeneous groups of loans to estimate probable credit losses. Both
historical and environmental loss factors are reviewed and updated quarterly,
where appropriate, as part of management’s assessment of the allowance for loan
losses.
During
fiscal 2008, changes to environmental factors used in the Bank’s allowance for
loan loss calculations were made reflecting the Company’s increased strategic
focus on commercial lending within an increasingly challenging economic and
lending environment. Environmental factors applied to the outstanding balance of
commercial loans reflected the changes to overall lending policies, procedures
and practices associated with that strategic emphasis, the increased volume of
commercial loans in relation to total loan originations, changes in credit
concentration reflecting larger loan balances to borrowers and concerns about
deteriorating economic conditions and their impact on regional real estate
values. The impact of these increases were largely offset by reductions in
environmental factors attributable to tightened underwriting standards within
the one- to four-family mortgage loan portfolio. No changes to environmental
loss factors were enacted during the first three months of fiscal
2009.
Management
generally expects the allowance for loan losses to continue to increase to the
extent that the Company’s strategic emphasis on commercial lending, coupled with
its traditional one- to four-family lending activities, continues to result in
net loan growth given the currently challenging economic and lending
environment.
Liquidity and
Commitments
We are
required to have enough investments that qualify as liquid assets in order to
maintain sufficient liquidity to ensure a safe and sound operation. Liquidity
may increase or decrease depending upon the availability of funds and
comparative yields on investments in relation to the return on loans.
Historically, we have maintained liquid assets above levels believed to be
adequate to meet the requirements of normal operations, including potential
deposit outflows. Cash flow projections are regularly reviewed and updated to
assure that adequate liquidity is maintained.
The
Bank’s short term liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Bank’s primary
sources of funds are deposits, amortization, prepayments and maturities of
outstanding loans and mortgage-backed securities, maturities of investment
securities and other short-term investments and funds provided from operations.
While scheduled payments from the amortization of loans and mortgage-backed
securities and maturing investment securities and short-term investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by the level of market interest rates, economic conditions,
and competition. In addition, the Bank invests excess funds in short-term
interest-earning assets, which provide liquidity to meet lending requirements.
The Bank also generates cash through borrowings. The Bank utilizes Federal Home
Loan Bank advances and reverse repurchase agreements to leverage its capital
base by providing funds for its lending and investing activities, and to enhance
its interest rate risk management.
Liquidity
management is both a daily and long-term function of business management. Excess
liquidity is generally invested in short-term investments such as overnight
deposits or U.S. Agency securities. On a longer-term basis, the Bank maintains a
strategy of investing in various loan products and in securities collateralized
by loans. The Bank uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing certificates of deposit and savings withdrawals, to
fund loan commitments and to maintain its portfolio of mortgage-backed
securities and investment securities. At December 31, 2008, the total approved
loan origination commitments outstanding amounted to $15.4 million. At the same
date, unused lines of credit were $30.5 million and loans in process were $12.9
million.
Certificates
of deposit scheduled to mature in one year or less at December 31, 2008, totaled
$256.1 million. Management’s policy is to maintain deposit rates at levels that
are competitive with other local financial institutions. Based on the
competitive rates and on historical experience, management believes that a
significant portion of maturing deposits will remain with the Bank.
Additionally, at December 31, 2008 the Bank has $7.5 million of borrowings from
the Federal Home Loan Bank of New York (“FHLB”) maturing in one year or less all
of which are currently expected to be repaid without renewal at maturity.
Repayment of such advances increases the Bank’s unused borrowing capacity from
the FHLB which totaled $122.6 million as of December 31, 2008. In calculating
our borrowing capacity, the Bank utilizes the FHLB’s guideline, which generally
limits advances secured by residential mortgage collateral to 25% of the Bank’s
total assets. On that basis, the total collateralized borrowing limit from the
FHLB was $157.2 million of which we had $34.5 million outstanding.
The
following tables disclose our contractual obligations and commercial commitments
as of December 31, 2008. Scheduled principal payments on amortizing borrowings
are reported as maturities.
|
|
|
|
|
Less
Than
|
|
|
|
|
|
|
|
|
After
|
|
|
|
Total
|
|
|
1
Year
|
|
|
1-3
Years
|
|
|
4-5
Years
|
|
|
5
Years
|
|
|
(In
thousands)
|
|
Time
Deposits
|
|
$
|
278,939
|
|
|
$
|
256,050
|
|
|
$
|
9,157
|
|
|
$
|
4,713
|
|
|
$
|
9,019
|
|
Borrowings
(1)
|
|
|
69,530
|
|
|
|
7,530
|
|
|
|
22,000
|
|
|
|
5,000
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
348,469
|
|
|
$
|
263,580
|
|
|
$
|
31,157
|
|
|
$
|
9,713
|
|
|
$
|
44,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
|
|
|
Less
Than
|
|
|
|
|
|
|
|
|
|
|
Over
|
|
|
|
Committed
|
|
|
1
Year
|
|
|
1-3
Years
|
|
|
4-5
Years
|
|
|
5
Years
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lines
of credit
(1)
|
|
$
|
30,519
|
|
|
$
|
3,881
|
|
|
$
|
2,183
|
|
|
$
|
994
|
|
|
$
|
23,461
|
|
Land
lease - Bloomfield
|
|
|
2,256
|
|
|
|
139
|
|
|
|
277
|
|
|
|
300
|
|
|
|
1,540
|
|
Building
lease - Nutley
|
|
|
1,393
|
|
|
|
92
|
|
|
|
184
|
|
|
|
191
|
|
|
|
926
|
|
Loans
in process
(1)
|
|
|
12,900
|
|
|
|
7,190
|
|
|
|
5,710
|
|
|
|
—
|
|
|
|
—
|
|
Other
commitments to extend credit
(1)
|
|
|
15,442
|
|
|
|
15,442
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,510
|
|
|
$
|
26,744
|
|
|
$
|
8,354
|
|
|
$
|
1,485
|
|
|
$
|
25,927
|
|
|
|
|
|
|
(1)
|
Represents
amounts committed to
customers.
|
In
addition to the commitment included in the table above, the Bank has one
outstanding standby letter of credit totaling $247,320. The standby letter of
credit, which represents a contingent liability to the Bank, expires in June
2009.
Regulatory
Capital
Consistent
with its goals to operate a sound and profitable financial organization,
American Bank of New Jersey actively seeks to maintain its classification as a
“well capitalized” institution in accordance with regulatory standards. The
Bank’s total equity was $75.9 million at December 31, 2008, or 12.07% of total
assets on that date. As of December 31, 2008, the Bank exceeded all capital
requirements of the Office of Thrift Supervision. The Bank’s regulatory capital
ratios at December 31, 2008 were as follows: core capital 11.98%; Tier I
risk-based capital, 18.41%; and total risk-based capital, 19.17%. The regulatory
capital requirements to be considered well capitalized are 5.0%, 6.0% and 10.0%,
respectively.
Impact
of Inflation
The
consolidated financial statements presented herein have been prepared in
accordance with accounting principles generally accepted in the United States of
America. These principles require the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation.
Our
primary assets and liabilities are monetary in nature. As a result, interest
rates have a more significant impact on our performance than the effects of
general levels of inflation. Interest rates, however, do not necessarily move in
the same direction or with the same magnitude as the price of goods and
services, since such prices are affected by inflation. In a period of rapidly
rising interest rates, the liquidity and maturity structure of our assets and
liabilities are critical to the maintenance of acceptable performance
levels.
The
principal effect of inflation, as distinct from levels of interest rates, on
earnings is in the area of noninterest expense. Such expense items as employee
compensation, employee benefits and occupancy and equipment costs may be subject
to increases as a result of inflation. An additional effect of inflation is the
possible increase in the dollar value of the collateral securing loans that we
have made. We are unable to determine the extent, if any, to which properties
securing our loans have appreciated in dollar value due to
inflation.
Recent
Accounting Pronouncements
See Note
4 - Recent Accounting Pronouncements within the Notes to Unaudited Financial
Statements included in this report.
ITEM 3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Qualitative Analysis.
Because
the income on the majority of our assets and the cost of the majority of our
liabilities are sensitive to changes in interest rates, a significant form of
market risk for us is interest rate risk. Changes in interest rates may have a
significant, adverse impact on our net interest income.
Our
ability to make a profit largely depends on our net interest income, which could
be negatively affected by changes in interest rates. Net interest income is the
difference between:
|
|
|
|
•
|
The
interest income we earn on our interest-earning assets such as loans and
securities; and
|
|
|
|
|
•
|
The
interest expense we pay on our interest-bearing liabilities such as
deposits and amounts we
borrow.
|
The
rates we earn on our assets and the rates we pay on our liabilities are
generally fixed for a contractual period of time. We, like many savings
institutions, have liabilities that generally have shorter contractual
maturities than our assets. This imbalance can create significant earnings
volatility, because market interest rates change over time. In a period of
rising interest rates, the interest income earned on our assets may not increase
as rapidly as the interest paid on our liabilities. In a period of declining
interest rates the interest income earned on our assets may decrease more
rapidly, due to accelerated prepayments, than the interest paid on our
liabilities.
The
prepayment characteristics of our loans and mortgage-backed and related
securities are greatly influenced by movements in market interest rates. For
example, a reduction in interest rates results in increased prepayments of loans
and mortgage-backed and related securities, as borrowers refinance their debt in
order to reduce their borrowing cost. This causes reinvestment risk, because we
are generally not able to reinvest prepayment proceeds at rates that are
comparable to the rates we previously earned on the prepaid loans or securities.
By contrast, increases in interest rates reduce the incentive for borrowers to
refinance their debt. In such cases, prepayments on loans and mortgage-backed
and related securities may decrease thereby extending the average lives of such
assets and reducing the cash flows that are available to be reinvested by the
Company at higher interest rates.
Tables
presenting the composition and allocation of the Company’s interest-earning
assets and interest-costing liabilities from an interest rate risk perspective
are set forth in the preceding section of this report titled “Comparison of
Financial Condition at December 31, 2008 and September 30, 2008.” These tables
present the Company’s investment securities, loans, deposits, and borrowings by
categories that reflect certain characteristics of the underlying assets or
liabilities that impact the Company’s interest rate risk. Shown as a percentage
of total assets, the comparative data presents changes in the composition and
allocation of those interest-earning assets and interest-bearing liabilities
that have influenced the level of interest rate risk embedded within the
Company’s balance sheet.
Our
net interest margin may be adversely affected throughout several possible
interest rate environments. For example, during fiscal 2007, the continued
inversion of the yield curve, by which shorter term market interest rates exceed
those of longer term rates, triggered further increases in the Bank’s cost of
interest-bearing liabilities that outpaced our increase in yield on earning
assets causing further net interest rate spread compression. Such compression
resulted in a 36 basis point reduction in our net interest rate spread to 1.44%
for fiscal 2007 from 1.80% for the fiscal year ended September 30,
2006.
By
contrast, the steepening of the yield curve during fiscal 2008, by which shorter
term market interest rates fall below those of longer term rates, contributed
significantly to the 43 basis point increase in our net interest spread which
widened to 1.87% for year ended September 30, 2008. This improvement resulted
from reductions in the Company’s cost of interest-bearing liabilities that
outpaced that of the reductions in our yield on earning assets. In large part,
the improvements in net interest rate spread for fiscal 2008 resulted from the
Company’s ability to support its yield on loans through its commercial lending
strategies while it decreased its cost of retail deposits. The reduction in
retail deposit interest costs reflects the overall reduction in shorter term
market interest rates, but also reflected the downward adjustment of interest
rates paid on deposits acquired through the de novo branches opened during
fiscal 2007 on which the Company originally paid higher, promotional interest
rates.
Our
earnings may be impacted by an “earnings squeeze” in the future resulting from
further movements in market interest rates. For example, we are vulnerable to an
increase in interest rates because the majority of our loan portfolio consists
of longer-term, fixed rate loans and adjustable rate mortgages, most of which
are fixed rate for an initial period of time. At December 31, 2008, excluding
allowance for loan losses and net deferred origination costs and including loans
held for sale, loans totaled $493.5 million comprising 78.5% of total assets. As
presented in the loan-related tables in the preceding section of this report
titled “Comparison of Financial Condition at December 31, 2008 and September 30,
2008”, loans reported as fixed rate mortgages totaled $221.6 million or 35.2% of
total assets while adjustable rate mortgages (“ARMs”) totaled $195.7 million or
31.1% of total assets. In a rising rate environment, our cost of funds may
increase more rapidly than the interest earned on our loan portfolio and
investment securities portfolio because our primary source of funds is deposits
with substantially greater repricing sensitivity than that of our loans and
investment securities. Having interest-bearing liabilities that reprice more
frequently than interest-earning assets is detrimental during periods of rising
interest rates and could cause our net interest rate spread to shrink because
the increase in the rates we would earn on our securities and loan portfolios
would be less than the increase in the rates we would pay on deposits and
borrowings.
Notwithstanding
the risks presented by the flat to inverted yield curve that was prevalent
during fiscal 2007, or those resulting from increases to short term interest
rates, a significant decrease in market interest rates could, by contrast,
trigger a new wave of loan refinancing that could result in the margin
compression experienced in prior years when rates fell to their historical lows
at that time. This risk is particularly relevant at December 31, 2008, given the
recent reductions in certain market interest rates to new, historical
lows.
The Bank
also faces the risk of continued disintermediation of our deposits into higher
cost accounts and/or the potential for additional net deposit outflows.
Specifically, we were successful in growing non-maturity deposits during fiscal
2007 due, in part, to higher promotional interest rates paid at the Bank’s three
newest branches. Our ability to retain such deposits as rates on such accounts
were incrementally adjusted to “non-promotional” levels was rigorously tested
throughout fiscal 2008. While some expected outflows of the most price sensitive
deposits was experienced – as evidenced particularly within the Verona branch –
we also experienced noteworthy disintermediation of deposits across all branches
into higher yielding accounts, such as certificates of deposit. That trend
continued into the first quarter of fiscal 2009. Moreover, as noted earlier,
recent volatility in the financial markets has resulted in competitors seeking
to attract and/or retain liquidity through their retail deposit product
offerings. Such strategies have resulted in significant upward pressure on
retail deposit rates in relation to the general level of market interest
rates.
Quantitative Aspects of Market Risk.
The following table presents American Bank of New Jersey’s net portfolio
value as of September 30, 2008 – the latest date for which information is
available. The net portfolio value was calculated by the Office of Thrift
Supervision, based on information provided by the Bank.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Portfolio Value
|
|
Net
Portfolio
Value
as % of
Present
Value of Assets
|
|
|
|
|
Board
Established
Limits
|
|
Changes
in
Rates
|
|
$
Amount
|
|
$
Change
|
|
%
Change
|
|
Net
Portfolio
Value
Ratio
|
|
Basis
Point
Change
|
|
Net
Portfolio
Value
Ratio
|
|
Basis
Point
Change
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+300
bp
|
|
|
54,270
|
|
|
-27,544
|
|
|
-34
|
%
|
|
9.09
|
%
|
|
-379bp
|
|
|
5.00
|
%
|
|
-450bp
|
|
+200
bp
|
|
|
64,193
|
|
|
-17,621
|
|
|
-22
|
%
|
|
10.53
|
%
|
|
-236bp
|
|
|
6.00
|
%
|
|
-300bp
|
|
+100
bp
|
|
|
73,474
|
|
|
-8,341
|
|
|
-10
|
%
|
|
11.80
|
%
|
|
-108bp
|
|
|
7.00
|
%
|
|
-150bp
|
|
0
bp
|
|
|
81,814
|
|
|
|
|
|
|
|
|
12.89
|
%
|
|
|
|
|
8.00
|
%
|
|
|
|
-100
bp
|
|
|
86,530
|
|
|
4,716
|
|
|
+6
|
%
|
|
13.42
|
%
|
|
+54bp
|
|
|
7.00
|
%
|
|
-150bp
|
|
Future
interest rates or their effect on net portfolio value or net interest income are
not predictable. Computations of prospective effects of hypothetical interest
rate changes are based on numerous assumptions, including relative levels of
market interest rates, prepayments, and deposit run-offs, and should not be
relied upon as indicative of actual results. Certain shortcomings are inherent
in this type of computation. Although certain assets and liabilities may have
similar maturity or periods of repricing, they may react at different times and
in different degrees to changes in the market interest rates. The interest rate
on certain types of assets and liabilities such as demand deposits and savings
accounts, may fluctuate in advance of changes in market interest rates, while
rates on other types of assets and liabilities may lag behind changes in market
interest rates. Certain assets such as adjustable rate mortgages generally have
features, which restrict changes in interest rates on a short-term basis and
over the life of the asset. In the event of a change in interest rates,
prepayments and early withdrawal levels could deviate significantly from those
assumed in making calculations set forth above. Additionally, an increased
credit risk may result as the ability of many borrowers to service their debt
may decrease in the event of an interest rate increase.
Strategies for the Management of
Interest Rate Risk and Market Risk.
The Board of Directors has
established an Asset/Liability Management Committee which is responsible for
monitoring interest rate risk. The committee comprises the Bank’s Chief
Executive Officer, the Bank’s President and Chief Operating Officer, the Bank’s
Senior Vice President and Chief Financial Officer, the Bank’s Senior Vice
President and Chief Lending Officer, the Bank’s Senior Vice President Commercial
Real Estate, the Bank’s VP Branch Administration and the Bank’s Vice President
and Controller. Management conducts regular, informal meetings, generally on a
weekly basis, to address the day-to-day management of the assets and liabilities
of the Bank, including review of the Bank’s short term liquidity position; loan
and deposit pricing and production volumes and alternative funding sources;
current investments; average lives, durations and repricing frequencies of loans
and securities; and a variety of other asset and liability management topics.
The committee generally meets quarterly to formally review such matters. The
results of the committee’s quarterly review are reported to the full Board,
which makes adjustments to the Bank’s interest rate risk policy and strategies,
as it considers necessary and appropriate.
The
qualitative and quantitative interest rate analyses presented above indicate
that various foreseeable movements in market interest rates may have an adverse
effect on our net interest margin and earnings. The growth and diversification
strategies outlined in the Company’s current business plan are designed not only
to enhance earnings, but also to better support the resiliency of those earnings
throughout various movements in interest rates. Toward that end, implementation
of the Company’s business plan over time is expected to result in a better
matching of the repricing characteristics of its interest-earning assets and
interest-bearing liabilities. Specific business plan strategies to achieve this
objective include:
(1) Open
up to three de novo branches over the next five years with an emphasis on growth
in non-maturity deposits;
(2) Attract
and retain lower cost business transaction accounts by expanding and enhancing
business deposit services including online cash management and remote deposit
capture services;
(3) Attract
and retain lower cost personal checking and savings accounts through expanded
and enhanced cross selling efforts;
(4) Originate
and retain commercial loans with terms that increase overall loan portfolio
repricing frequency and cash flows while reducing call risk through prepayment
compensation provisions;
(5) Originate
and retain one- to four-family home equity loans and variable rate lines of
credit to increase loan portfolio repricing frequency and cash
flows;
(6) Originate
both fixed and adjustable rate one- to four-family first mortgage loans eligible
for sale in the secondary market and, if warranted, sell such loans on either a
servicing retained or servicing released basis. The strategy reduces the balance
of longer duration and/or non-prepayment protected loans while enhancing
noninterest income.
At
December 31, 2008, the Bank did not have any outstanding contracts to sell
mortgage loans into the secondary market. During the first quarter of fiscal
2009, the Bank continued its strategy of retaining most one- to four-family
mortgage loan originations for a period of time to augment the growth in
commercial loans. The Bank also continued to offer a limited Alt-A program
through which it originates and sells all such loans to Fannie Mae under its
Expanded Approval program on a non-recourse, servicing retained basis. The Bank
carefully monitors the earnings, liquidity, and balance sheet allocation impact
of these strategies and will make interim adjustments, as necessary, to support
achievement of the Company’s business plan goals and objectives. Toward that
end, the Bank is in the process of reevaluating its current strategy of
retaining most one- to four-family mortgage loan originations. Such reevaluation
may result in the Bank returning to a strategy of selling longer term, fixed
rate conforming mortgage loan originations into the secondary
market.
In
addition to the strategies noted above, we may utilize other strategies aimed at
improving the matching of interest-earning asset maturities to interest-bearing
liability maturities. Such strategies may include:
(1) Purchase
short to intermediate term securities and maintain a securities portfolio that
provides a stable cash flow, thereby providing investable funds in varying
interest rate cycles;
(2) Lengthen
the maturities of our liabilities through utilization of FHLB advances and other
wholesale funding alternatives.
The Bank
will also selectively consider certain strategies to enhance net interest income
as opportunities arise to do so in a manner that supports the goals and
objectives of the Company’s business plan. Notwithstanding the discussion above,
the implementation of these strategies may result in an acceptable and
manageable increase to the level of interest rate risk within the balance sheet.
Such an opportunity arose during the second quarter of fiscal 2008 when the
Company completed a wholesale growth transaction through which the Company
purchased approximately $50.0 million of mortgage-related investment securities
funded by an equivalent amount of borrowings. Through this transaction, the
Company took advantage of the opportunity presented by the turmoil in the
mortgage securities markets at that time to acquire agency, AAA-rated
mortgage-related securities at historically wide interest rate spreads in
relation to the cost of wholesale funding sources. The ongoing net interest
income resulting from this transaction continues to augment the Company’s core
earnings.
ITEM 4.
|
CONTROLS
AND PROCEDURES
|
|
(a)
|
Evaluation
of disclosure controls and procedures: An evaluation of the Company’s
disclosure controls and procedures (as defined in Section 13(a)-15(e) of
the Securities Exchange Act of 1934 (“the Act”) was carried out under the
supervision and with the participation of the Company’s Chief Executive
Officer, Chief Financial Officer and several other members of the
Company’s senior management. Based on such evaluation, the Company’s Chief
Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures in effect as of the end of the period
covered by this quarterly report are effective in ensuring that the
information required to be disclosed by the Company in the reports it
files or submits under the Act is (i) accumulated and communicated to the
Company’s management (including the Chief Executive Officer and Chief
Financial Officer) in a timely manner, and (ii) recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms.
|
|
|
|
|
(b)
|
Changes
in internal controls: In the last fiscal quarter, there was no change in
the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial
reporting.
|
PART
II — OTHER INFORMATION
|
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
At
December 31, 2008, the Company and its subsidiaries were not involved in any
pending proceedings other than the legal proceedings occurring in the ordinary
course of business. Such legal proceedings in the aggregate are believed by
management to be immaterial to the Company’s financial condition and results of
operations.
There
have been no material changes to the factors disclosed in Item 1A., Risk
Factors, in our Annual Report on Form 10-K for the year ended September 30,
2008.
|
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
The
following table summarizes our share repurchase activity during the three months
ended December 31, 2008 and additional information regarding our share
repurchase program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
Total Number
|
|
|
|
|
|
|
|
|
of
Shares (or
|
|
(d)
Maximum Number
|
|
|
(a)
Total
|
|
|
|
Units)
Purchased
|
|
(or
Approximate Dollar
|
|
|
Number
|
|
(b)
|
|
as
Part Of
|
|
Value)
of Shares (or
|
|
|
Of
Shares (or
|
|
Average
Price
|
|
Publicly
|
|
Units)
that May Yet Be
|
|
|
Units)
|
|
Paid
per Share
|
|
Announced
Plans
|
|
Purchased
Under
|
Period
|
|
|
Purchased
|
|
(or
Unit)
|
|
or
Programs
|
|
Plans
or Programs
(1)
|
|
|
|
|
|
|
|
|
|
Repurchases
for the Month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
1 – October 31, 2008
|
|
—
|
|
—
|
|
—
|
|
468,214
|
November
1 – November 30, 2008
|
|
—
|
|
—
|
|
—
|
|
468,214
|
December
1 – December 31, 2008
|
|
—
|
|
—
|
|
—
|
|
468,214
|
|
|
|
|
|
|
|
|
|
Total
repurchases
|
|
—
|
|
—
|
|
|
|
|
(1)
The
shares reported were repurchased under a share repurchase plan announced by the
Company on January 2, 2008 through which five percent, or approximately 575,000,
of the Company’s outstanding shares would be repurchased through open market or
privately negotiated transactions.
|
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
|
|
|
None
|
|
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITIES HOLDERS
|
|
|
|
None
|
|
|
ITEM
5.
|
OTHER
INFORMATION
|
|
|
|
None
|
|
(a)
|
Exhibits
|
|
|
|
|
|
|
2
|
Agreement
and Plan of Merger dated as of December 14, 2008, by and between Investors
Bancorp, Inc. and American Bancorp of New Jersey, Inc.
(1)
|
|
|
|
|
|
|
3.1
|
Certificate
of Incorporation of American Bancorp of New Jersey, Inc.
(2)
|
|
|
|
|
|
|
3.2
|
Amended
and Restated Bylaws of American Bancorp of New Jersey, Inc.
(3)
|
|
|
|
|
|
|
4
|
Specimen
Stock Certificate of American Bancorp of New Jersey, Inc.
(2)
|
|
|
|
|
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14a and
15d-14a.
|
|
|
|
|
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14a and
15d-14a.
|
|
|
|
|
|
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
(1)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K (File No.
0-51500) filed with the SEC on December 16, 2008.
|
|
|
|
|
(2)
|
Incorporated
by reference to the Company’s Registration Statement on Form S-1 (File No.
333-125957) filed with the SEC on June 20, 2005.
|
|
|
|
|
(3)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K (File No.
0-51500) filed with the SEC on December 10,
2007.
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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American
Bancorp of New Jersey, Inc.
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(Registrant)
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Date:
February 9, 2009
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/s/Joseph
Kliminski
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Joseph
Kliminski
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Chief
Executive Officer
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Date:
February 9, 2009
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/s/Eric
B.Heyer
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Eric
B. Heyer
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Senior
Vice President and Chief Financial
Officer
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43
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