Cape Bancorp, Inc. Reports


The following excerpt is from the company's SEC filing.

Cape May Court House, New Jersey, October 24, 2013—Cape Bancorp, Inc. (“Cape Bancorp” or the “Company”) (NASDAQ: “CBNJ”), the parent company of Cape Bank (the “Bank”), announces its operating results for the three and nine months ended September 30, 2013.

For the quarter ended September 30, 2013, Cape Bancorp reported net income of $1.9 million, or $0.16 per common and fully diluted share, and $5.0 million, or $0.41 per common and fully diluted share for the nine months ended September 30, 2013. This compares to net income of $1.5 million, or $0.12 per common and fully diluted share for the third quarter o f 2012, and $4.1 million, or $0.33 per common and fully diluted share for the nine months ended September 30, 2012.

“This quarter continued the positive trend for Cape with improvement in both earnings and loan growth. Loan activity was generated from the Bank’s existing South Jersey markets with growing support from the Philadelphia production office. The loan pipeline suggests further growth in outstanding loans may continue.

“We continued to see improvement in credit quality with the percentage of non-performing loans to total gross loans dropping to 1.26% at September 30, 2013, down from 2.67% at December 31, 2012. All credit metrics improved again this quarter with the adversely classified asset ratio at 21% compared to 30% at December 31, 2012 and 35% at September 30, 2012.

“We were also pleased with the completion on October 3, 2013 of the second stock repurchase program announced on July 19, 2013 which authorized the repurchase of 5%, or approximately 633,877 shares, of the Company’s issued and outstanding common stock. The repurchase of these shares was at an average price of $9.38 per share. We will continue our efforts to prudently manage capital levels.

“As part of our Asset/Liability monitoring process, with the approval of the Board of Directors, the Company, at September 30, 2013, reclassified $10.1 million of municipal bonds with extended maturities from “available for sale” securities to “held to maturity” securities which provides flexibility in managing our balance sheet. Management’s ongoing monitoring of the balance sheet may result in the reclassification of additional securities to “held to maturity”.

“Rising interest rates have underscored the possibility of a steepening of the yield curve in the future and increased extension risk for fixed rate loans. Even the fairly modest increases earlier this year have brought a dramatic reduction in the residential refinance business. In addition, increasing regulations are adding compliance costs particularly as it relates to consumer real estate transactions. In response to these developments, the Bank has decided to exit the residential mortgage loan origination business. As a result, during the fourth quarter, the residential mortgage department will be wound down.”

  •   The net interest margin was 3.75% for the three months ended September 30, 2013, a decrease of 10 basis points from the three months ended September 30, 2012. Average interest-earning assets increased $18.8 million for the three months ended September 30, 2013 compared to the 2012 period while interest-bearing liabilities increased $10.5 million over the same period. The yield on interest-earning assets declined 38 basis points to 4.28% for the three months ended September 30, 2013 compared to 4.66% for the same three month period a year ago, while the cost of interest-bearing liabilities declined 32 basis points to 0.63% for the three months ended September 30, 2013 compared to 0.95% for the 2012 three month period. For the nine months ended September 30, 2013, the net interest margin was 3.76%, an increase of 1 basis point from the nine months ended September 30, 2012. Average interest-earning assets declined $7.4 million for the nine months ended September 30, 2013 compared to the 2012 period, while interest-bearing liabilities declined $20.9 million during the same period. The yield on interest-earning assets declined 26 basis points to 4.34% for the nine months ended September 30, 2013 compared to 4.68% for the same nine month period a year ago, while the cost of interest-bearing liabilities declined 40 basis points to 0.68% for the nine months ended September 30, 2013 compared to 1.08% for the 2012 nine month period. The three and nine months ended September 30, 2013 benefited from the previously disclosed debt extinguishment in the second quarter of 2012 and the further restructuring of debt in the third quarter of 2012.

  •   The loan loss provision for the three months ended September 30, 2013 totaled $449,000 compared to $710,000 for the three months ended September 30, 2012. Loan charge-offs for the third quarter of 2013 totaled $286,000 compared to $926,000 for the three months ended September 30, 2012. For the nine months ended September 30, 2013, the loan loss provision totaled $1.1 million compared to $2.6 million for the nine month period ended September 30, 2012. Loan charge-offs totaled $1.1 million for the nine months ended September 30, 2013 compared to $2.9 million for the nine months ended September 30, 2012.

  •   Net gains on the sale of loans totaled $346,000 and $227,000 for the three months ended September 30, 2013 and 2012, respectively. For the nine months ended September 30, 2013, net gains on the sale of loans totaled $929,000 compared to $400,000 for the nine months ended September 30, 2012.

  •   The three months ended September 30, 2013 included net gains on the sale of other real estate owned (“OREO”) totaling $17,000 compared to net gains of $44,000 for the three months ended September 30, 2012. The nine months ended September 30, 2013 included net gains on the sale of OREO totaling $57,000 compared to net losses on the sale of OREO totaling $257,000 for the nine months ended September 30, 2012.

  •   The three and nine months ended September 30, 2013 included a gain on the sale of a parcel of unused land, previously classified as assets held for sale, in the amount of $569,000.

  •   Net gains on sales of investment securities totaled $290,000 and $963,000 for the nine months ended September 30, 2013 and 2012, respectively.

  •   Other operating income included OREO rental income totaling $40,000 and $242,000 for the nine months ended September 30, 2013 and 2012, respectively.

  •   The nine months ended September 30, 2012 included a previously deferred gain of $425,000 on the sale of bank premises and a $325,000 gain on the sale of the Company’s merchant card business. There were no similar gains or losses for the three or nine months ended September 30, 2013.

  •   Employment costs for the nine months ended September 30, 2013 totaled $11.9 million compared to $10.9 million for the nine months ended September 30, 2012. The increase is primarily attributable to incentive based compensation programs and the expansion of the commercial loan functions.

  •   Loan related expenses (real estate taxes, insurance, legal and other loan related expenses) totaled $446,000 for the three months ended September 30, 2013 compared to $392,000 for the same period in 2012. For the nine months ended September 30, 2013, loan related expenses totaled $1.2 million compared to $1.6 million for the nine months ended September 30, 2012.

  •   Federal deposit insurance premiums totaled $215,000 and $347,000 for the three months ended September 30, 2013 and 2012, respectively. For the nine months ended September 30, 2013 and 2012, these insurance premiums totaled $735,000 and $1.1 million, respectively.

  •   OREO expenses totaled $403,000 for the three months ended September 30, 2013 compared to $670,000 for the three months ended September 30, 2012. For the nine months ended September 30, 2013, OREO expenses totaled $882,000 compared to $1.6 million for the nine months ended September 30, 2012.

  •   The nine months ended September 30, 2012 included a prepayment penalty of $921,000 related to the previously disclosed extinguishment of debt in the second quarter of 2012.

Cape Bancorp’s total assets at September 30, 2013 totaled $1.074 billion, an increase of $33.6 million from the December 31, 2012 level of $1.041 billion. This increase was primarily attributable to loan growth.

Total net loans increased $50.2 million to $764.6 million at September 30, 2013, from $714.4 million at December 31, 2012 for an annualized growth rate of 9.4%. This change resulted primarily from increases in commercial loans of $36.8 million and increases in mortgage loans totaling $16.4 million. Consumer loans declined $3.0 million. The allowance for loan losses totaled 1.29% of gross loans and 102.37% of non-performing loans at September 30, 2013. The Company’s adversely classified asset ratio at September 30, 2013 was 21% compared to 30% at December 31, 2012 and 35% at September 30, 2012.

At September 30, 2013, the Company had $9.8 million in non-performing loans, or 1.26% of total gross loans, a decrease of $9.6 million from $19.4 million, or 2.67% of total gross loans at December 31, 2012. Included in non-performing loans are troubled debt restructurings totaling $1.9 million at September 30, 2013 and $3.5 million at December 31, 2012, respectively.

Other real estate owned increased $139,000 from $7.22 million at December 31, 2012 to $7.36 million at September 30, 2013, and consisted at September 30, 2013 of twelve commercial properties and twenty-five residential properties (including eighteen building lots). During the quarter ended September 30, 2013, the Company added one commercial property and two residential properties to OREO with an aggregate carrying value of $1.2 million. In addition, three commercial OREO properties and six residential OREO properties with aggregate carrying values totaling $1.1 million were sold during the quarter ended September 30, 2013 with recognized net gains of $17,000.

At September 30, 2013, Cape Bancorp’s core deposits totaled $552.0 million, an increase of $9.6 million from the December 31, 2012 level of $542.4 million. Interest-bearing checking accounts increased $14.4 million, non-interest bearing checking accounts increased $8.1 million and savings accounts increased $874,000 while money market deposit accounts declined $13.8 million. Certificates of deposit totaled $266.6 million, an increase of $27.9 million from December 31, 2012 reflecting an increase in brokered deposits of $21.5 million. At September 30, 2013, deposits totaled $828.4 million compared to $784.6 million at December 31, 2012, an increase of $43.8 million.

Cape Bancorp’s total equity decreased $10.3 million to $140.5 million at September 30, 2013 from $150.8 million at December 31, 2012 which primarily resulted from an $11.0 million decrease related to the Company’s stock repurchase programs and an increase of $3.0 million in the accumulated other comprehensive loss, partially offset by a net increase of $3.0 million (earnings less dividends declared) in retained earnings. Tangible equity to tangible assets decreased to 11.19% at September 30, 2013 compared to 12.57% at December 31, 2012. At September 30, 2013, Cape Bank’s regulatory capital ratios for Tier I Leverage Ratio, Tier I Risk-Based Capital and Total Risk-Based Capital were 9.50%, 12.88% and 14.13%, respectively, all of which exceed well capitalized status.

NOTE: Excluded from the table above are $835,000 of commercial loans classified as Loans Held for Sale all of which are over 90 days delinquent.

The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions, which may be made to any forward looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Further information on factors that could affect Cape Bancorp’s financial results can be found in the filings listed below with the Securities and Exchange Commission.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

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