UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended
September 30, 2007
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number: 000-52749
BANCORP OF NEW JERSEY, INC.
(Exact name of registrant as specified in its charter)
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New Jersey
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20-8444387
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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1365 Palisade Ave, Fort Lee, New Jersey
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07024
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(Address of principal executive offices)
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(Zip Code)
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(201) 944-8600
(Registrants telephone number, including area code)
204 Main Street, Fort Lee, New Jersey 07024
(Registrants former address)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
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
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or
a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule
12b-2 of the Exchange Act: (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act.):
Yes
o
No
þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
As of November 2, 2007 there were 2,458,864 outstanding shares of the issuers class of common
stock, no par value.
BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
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September 30, 2007
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December 31, 2006
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ASSETS
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Cash and due from banks
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$
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3,049
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$
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284
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Interest bearing deposits
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623
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1,569
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Federal funds sold
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6,986
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Total cash and cash equivalents
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3,672
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8,839
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Securities available for sale
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100
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9,699
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Securities held to maturity, (estimated fair value
of $2,008 in 2007 and $2,002 in 2006)
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1,996
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1,993
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Loans receivable
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167,519
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80,638
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Deferred loan fees and unamortized costs, net
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97
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47
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Less: allowance for loan losses
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(1,772
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)
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(866
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Net loans
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165,844
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79,819
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Premises and equipment, net
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7,994
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4,612
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Accrued interest receivable
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911
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439
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Other assets
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1,228
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646
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TOTAL ASSETS
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$
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181,745
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$
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106,047
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LIABILITIES AND STOCKHOLDERS EQUITY
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LIABILITIES:
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Deposits:
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Non-interest bearing
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$
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18,873
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$
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10,244
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Savings and interest-bearing transaction accounts
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51,453
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40,667
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Time deposits under $100
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4,864
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1,189
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Time deposits $100 and over
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54,889
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9,767
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Total deposits
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130,079
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61,867
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Federal funds purchased
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6,000
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Other liabilities
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664
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1,141
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TOTAL LIABILITIES
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136,743
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63,008
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Commitments and contingencies
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Stockholders equity:
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Common stock, no par value, authorized 20,000,000
shares; issued and outstanding 2,458,535 shares at
September 30, 2007; $10 par value, authorized
5,000,000 shares; issued and outstanding 2,399,838
shares at December 31, 2006
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44,989
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23,998
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Additional Paid in Capital
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19,667
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Retained earnings (accumulated deficit)
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13
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(665
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Accumulated other comprehensive income
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39
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TOTAL STOCKHOLDERS EQUITY
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45,002
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43,039
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
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$
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181,745
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$
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106,047
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See accompanying notes to consolidated financial statements
3
BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
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For the Three Months Ended September 30,
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2007
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2006
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(In thousands, except per share data)
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INTEREST INCOME
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Loans, including fees
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$
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2,839
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$
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634
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Securities
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25
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111
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Federal funds sold
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22
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341
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TOTAL INTEREST INCOME
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2,886
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1,086
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INTEREST EXPENSE
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Savings and money markets
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493
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135
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Time deposits
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606
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14
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Short term borrowings
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143
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TOTAL INTEREST EXPENSE
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1,242
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149
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NET INTEREST INCOME
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1,644
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937
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Provision for loan losses
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278
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367
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
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1,366
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570
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NONINTEREST INCOME
principally fees and service charges
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46
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5
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NONINTEREST EXPENSE
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Salaries and employee benefits
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645
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406
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Occupancy and equipment expense
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224
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121
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Other expenses
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243
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145
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TOTAL NONINTEREST EXPENSE
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1,112
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672
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Income (loss) before provision for income taxes
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300
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(97
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Income tax benefit
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(144
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NET INCOME (LOSS)
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$
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444
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$
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(97
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PER SHARE OF COMMON STOCK
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Basic earnings (loss)
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$
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0.18
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$
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(0.04
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Diluted earnings (loss)
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$
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0.18
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$
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(0.04
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Share data has been adjusted to reflect the 10% stock distribution paid during January, 2007.
See accompanying notes to consolidated financial statements.
4
BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
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For the Nine Months Ended September 30,
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2007
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2006
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(In thousands, except per share data)
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INTEREST INCOME
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Interest on escrow funds
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$
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$
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624
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Loans, including fees
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6,916
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718
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Securities
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240
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114
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Federal funds sold
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86
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709
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TOTAL INTEREST INCOME
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7,242
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2,165
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INTEREST EXPENSE
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Savings and money markets
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1,409
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153
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Time deposits
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1,116
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15
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Short term borrowings
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261
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43
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TOTAL INTEREST EXPENSE
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2,786
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211
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NET INTEREST INCOME
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4,456
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1,954
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Provision for loan losses
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906
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564
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
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3,550
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1,390
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NONINTEREST INCOME
principally fees and service charges
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106
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6
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NONINTEREST EXPENSE
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Salaries and employee benefits
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1,676
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693
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Occupancy and equipment expense
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546
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193
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Other expenses
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793
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913
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TOTAL NONINTEREST EXPENSE
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3,015
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1,799
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Income (loss) before provision for income taxes
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641
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(403
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Income tax benefit
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(37
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NET INCOME (LOSS)
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$
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678
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$
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(403
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PER SHARE OF COMMON STOCK
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Basic earnings(loss)
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$
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0.28
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$
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(0.17
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)
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Diluted earnings(loss)
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$
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0.28
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$
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(0.17
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Share data has been adjusted to reflect the 10% stock distribution paid during January, 2007.
See accompanying notes to consolidated financial statements.
5
BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the Nine Months Ended
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September 30,
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2007
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2006
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(in thousands)
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income (loss)
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$
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678
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$
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(403
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)
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Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
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Depreciation and amortization
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109
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31
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Provision for loan losses
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906
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564
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Recognition of stock option expense
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58
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Changes in operating assets and liabilities:
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(Increase)decrease in accrued interest receivable
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(472
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)
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334
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(Decrease)increase in other assets
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(582
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)
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(218
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(Decrease)increase in other liabilities
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(477
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33
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NET CASH PROVIDED BY OPERATING ACTIVITIES
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220
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341
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CASH FLOWS FROM INVESTING ACTIVITIES
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Purchases of securities
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(10,551
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Sales of securities available for sale
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9,557
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Net increase in loans
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(86,931
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)
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(49,612
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Purchases of premises and equipment
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(3,491
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(3,994
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NET CASH USED IN INVESTING ACTIVITIES
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(80,865
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(64,157
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CASH FLOWS FROM FINANCING ACTIVITIES
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Net increase in deposits
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68,212
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38,192
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Proceeds from issuance of common stock
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500
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42,736
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Increase in federal funds purchased
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6,000
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Exercise of stock options and warrants
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766
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NET CASH PROVIDED BY FINANCING ACTIVITIES
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75,478
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80,928
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Net (decrease) increase in cash and cash equivalents
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(5,167
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)
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17,112
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Cash and cash equivalents, beginning of year
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8,839
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12
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CASH AND CASH EQUIVALENTS, END OF PERIOD
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$
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3,672
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$
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17,124
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Cash paid during the period for:
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Interest
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$
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2,423
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$
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204
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Income taxes
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$
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679
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$
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See accompanying consolidated notes to financial statements
6
BANCORP OF NEW JERSEY, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
Note 1. Significant Accounting Policies
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Basis of Financial Statement Presentation
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The accompanying consolidated financial statements include the accounts of Bancorp of New
Jersey, Inc., (the Company) and its direct wholly-owned subsidiary, Bank of New Jersey (the
Bank). These financial statements include the effect of the holding company reorganization
which took place on July 31, 2007 pursuant to a plan of acquisition that was approved by the
boards of directors of the Company and the Bank and adopted by the shareholders of the Bank
at a special meeting held July 19, 2007.
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The holding company reorganization is accounted for as a reorganization under common control
and the assets, liabilities, and shareholders equity of the Bank immediately prior to the
holding company reorganization have been carried forward on the Companys consolidated
financials statements at the amounts carried on the Banks books at the effective date of the
holding company reorganization. The consolidated capitalization, assets, liabilities,
results of operations and other financial data of the Company immediately following the
reorganization were substantially the same as those of the Bank immediately prior to the
holding company reorganization. Accordingly, these consolidated financial statements of the
Company include the Banks historical recorded values.
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The Companys class of common stock has no par value and the Banks class of common stock has
par value of $10 per share. As a result of the holding company reorganization, amounts
previously recognized as additional paid in capital on the Banks financial statements have
been reclassified into the Companys consolidated financial statements.
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These financial statements reflect all adjustments and disclosures which management believes
are necessary for a fair presentation of interim results. All significant inter-company
accounts and transactions have been eliminated in consolidation. The results of operations
for the quarter and nine months presented do not necessarily indicate the results that the
Company will achieve for the 2007 fiscal year. You should read these consolidated unaudited
interim financial statements in conjunction with the financial statements and accompanying
notes that are presented in the Banks registration statement on Form 10, filed with the
Federal Deposit Insurance Corporation on April 30, 2007.
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The financial information in this quarterly report has been prepared in accordance with U.S.
generally accepted accounting principles; these financial statements have not been audited.
Certain information and footnote disclosures required under generally accepted accounting
principles have been condensed or omitted, as permitted by rules and regulations of the
Securities and Exchange Commission.
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Certain reclassifications have been made to the prior period financial statements to conform
to the September 30, 2007 presentation.
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7
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Organization
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The Company is a New Jersey corporation and bank holding company registered with the Board of
Governors of the Federal Reserve System. The Bank is a community bank which provides a full
range of banking services to individuals and corporate customers in New Jersey. Both the
Company and the Bank are subject to competition from other financial institutions. The Bank
is regulated by state and federal agencies and is subject to periodic examinations by those
regulatory authorities. The Bank conducts a traditional commercial banking business,
accepting deposits from the general public, including individuals, businesses, non-profit
organizations, and governmental units. The Bank makes commercial loans, consumer loans, and
both residential and commercial real estate loans. In addition, the Bank provides other
customer services and makes investments in securities, as permitted by law. The Bank has
sought to offer an alternative, community-oriented style of banking in an area, that is
presently dominated by larger, statewide and national institutions. The Banks focus is on
establishing and retaining customer relationships by offering a broad range of traditional
financial services and products, competitively-priced and delivered in a responsive manner to
small businesses, professionals and individuals in the local market. As a community bank,
the Bank endeavors to provide superior customer service that is highly personalized,
efficient and responsive to local needs. To better serve its customers and expand it market
reach, the Bank provides for the delivery of certain of its financial products and services
to its local customers and to a broader market through the use of mail, telephone and
internet banking. The Bank seeks to deliver these products and services with the care and
professionalism expected of a community bank and with a special dedication to personalized
customer service.
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Note 2. Stockholders Equity and related transactions
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A 10% stock distribution was made during January, 2007 (the 2007 stock distribution).
Earnings per share and all share data have been restated to reflect the effect of the 2007
stock distribution
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On September 7, 2007, the Company issued and sold an aggregate of 21,739 shares of its class
of common stock, no par value per share, for a per share sale price of $23.00, and an
aggregate sale price of $499,997, in cash. The purchasers consisted of one of the directors
of the Company and certain of his family members. The purchasers acquired the shares for
investment purposes only and not with a view to or for sale in connection with any
distribution of shares. The purchase price was equal to the fair market value of the common
stock at the time of the sale, as determined by the board of directors of the Company, based
upon the most recent trading information available to the Company and other information.
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Note 3. Benefit Plans and Stock-Based Compensation
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During 2006, the Banks stockholders approved the 2006 Stock Option Plan (the 2006 Option
Plan), which was assumed by the Company in connection with the holding company
reorganization effective July 31, 2007. (See Note 11 for additional information regarding
the holding company reorganization.) The 2006 Option Plan allows employees of the Company to
purchase up to 119,992 shares of the Companys common stock. The option price per share is
the market value of the common stock underlying the option on the date of grant. The number
of shares available under the 2006 Option Plan, as well as the option price and number of shares underlying options outstanding on the date of the 2007 stock distribution have been
equitably adjusted to account for the 2007 stock distribution. During 2006, incentive stock
options to purchase 62,150 shares were issued to employees. The Company has no option awards
with market or performance conditions attached to them.
|
8
|
|
During 2006, the Bank awarded incentive stock options (ISO) which vested over a 2 year period
and ISO options which vested over a 3 year period. The per share weighted-average fair
values of stock options granted during 2006, which vest over a 2 year period and a 3 year
period, were $2.52 and $4.34, respectively, on the date of grant using the Black Scholes
option-pricing model, as adjusted for the 2007 stock distribution. The options which vest
over a 2 year period used the following assumptions in determining the grant date fair value
of the 2006 option grants: expected dividend yields of 0.00%, risk-free interest rates of
4.77%, expected volatility of 16.00%; and average expected lives of 2 years. The options
which vest over a 3 year period used the following assumptions used in determining the grant
date fair value of the 2006 option grants: expected dividend yields of 0.00%, risk-free
interest rates of 4.77%, expected volatility of 22.00%; and average expected lives of 3.5
years.
|
|
|
|
Share based compensation expense was $18,000 and $58,000 for the three months and nine months
ended September 30, 2007, respectively, compared to no share based compensation for the same
periods in 2006. No stock options were granted during the first nine months of 2007 or 2006.
|
|
|
|
At a special meeting of stockholders of the Bank held on July 19, 2007, the stockholders of
the Bank adopted the 2007 Non-Qualified Stock Option Plan for Directors (the 2007 Director
Plan). The 2007 Director Plan was assumed by the Company in connection with the holding
company reorganization effective July 31, 2007. (See Note 11 for additional information
regarding the holding company reorganization.) The 2007 Director Plan provides for 240,000
options to purchase shares of common stock to non-employee directors. At September 30, 2007,
there have been no grants to non-employee directors under the 2007 Director Plan.
|
|
|
|
Option activity under the Companys stock option plans for the nine months ended September
30, 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
price
|
|
|
Number of
|
|
per
|
|
|
shares
|
|
share
|
Outstanding, January 1, 2007
|
|
|
62,150
|
|
|
$
|
18.18
|
|
Granted
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(11,000
|
)
|
|
|
18.18
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, end of quarter
|
|
|
51,150
|
|
|
$
|
18.18
|
|
|
|
|
Options exercisable at September 30, 2007
|
|
|
11,000
|
|
|
$
|
18.18
|
|
|
|
|
9
Note 4. Earnings Per Share.
Basic earnings per share
is calculated by dividing net income by the weighted average number of
common shares outstanding during that period.
Diluted earnings per share
is calculated by dividing net income by the weighted average number of
outstanding common shares and common share equivalents. Outstanding common share equivalents
include options and warrants to purchase its common stock.
All weighted average, actual shares and per share information have been adjusted retroactively for
the effects of the 2007 stock distribution. The following schedule shows earnings per share for
the three month periods presented:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
September 30,
|
(In thousands except per share data)
|
|
2007
|
|
2006
|
|
|
|
Net income (loss) applicable to
common stock
|
|
$
|
444
|
|
|
$
|
(97
|
)
|
Weighted average number of common
shares outstanding basic
|
|
|
2,425
|
|
|
|
2,400
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings(loss) per share
|
|
$
|
0.18
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to
common stock
|
|
$
|
444
|
|
|
$
|
(97
|
)
|
Weighted average number of common
shares and common share equivalents
- diluted
|
|
|
2,456
|
|
|
|
2,400
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings(loss) per share
|
|
$
|
0.18
|
|
|
$
|
(0.04
|
)
|
|
Options to purchase 51,150 shares of common stock at a weighted average price of $18.18 and
453,351 warrants to purchase shares of common stock at a weighted average price of $21.82 per share
were outstanding and were included in the computation of diluted earnings per share for the third
quarter of 2007. During the three months ended September 30, 2007, 23,231 warrants were exercised,
which added approximately $507 thousand to stockholders equity. There were no warrants exercised
during the three months ended September 30, 2006. There were no dilutive common share equivalents
during the third quarter of 2006 due to net loss incurred.
10
All weighted average, actual shares and per share information have been adjusted retroactively
for the effects of the 2007 stock distribution. The following schedule shows earnings per share
for the nine month periods presented:
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
September 30,
|
(In thousands except per share data)
|
|
2007
|
|
2006
|
|
|
|
Net income (loss) applicable to
common stock
|
|
$
|
678
|
|
|
$
|
(403
|
)
|
Weighted average number of common
shares outstanding basic
|
|
|
2,414
|
|
|
|
2,400
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings(loss) per share
|
|
$
|
0.28
|
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to
common stock
|
|
$
|
678
|
|
|
$
|
(403
|
)
|
Weighted average number of common
shares and common share equivalents
diluted
|
|
|
2,442
|
|
|
|
2,400
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings(loss) per share
|
|
$
|
0.28
|
|
|
$
|
(0.17
|
)
|
|
Options to purchase 51,150 shares of common stock at a weighted average price of $18.18 and
453,351 warrants to purchase shares of common stock at a weighted average price of $21.82 per share
were outstanding and were included in the computation of diluted earnings for the nine month period
ended September 30, 2007. During the nine months ended September 30, 2007, 25,958 warrants were
exercised, which added approximately $567 thousand to stockholders equity. There were no warrants
exercised during the nine months ended September 30, 2006. There were no dilutive common share
equivalents during the nine months ended September 30, 2006 due to the net loss incurred.
11
Note 5. Comprehensive Income
Total comprehensive income is presented for the three month and the nine month periods ended
September 30, 2007, and 2006, respectively (in thousands) as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
|
|
2007
|
|
|
2006
|
|
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
444
|
|
|
$
|
(97
|
)
|
|
Gross unrealized holding losses on
securities available for sale
|
|
|
|
|
|
|
|
|
Gain realized on sale of securities
available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized holding losses on
securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income(loss)
|
|
$
|
444
|
|
|
$
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
|
2007
|
|
|
2006
|
|
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
678
|
|
|
$
|
(403
|
)
|
|
Gross unrealized holding losses on
securities available for sale
|
|
|
(42
|
)
|
|
|
|
|
Gain realized on sale of securities
available for sale
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding losses on
securities available for sale (net
of taxes $(15))
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss)
|
|
$
|
639
|
|
|
$
|
(403
|
)
|
|
|
|
|
|
|
|
12
Note 6. Securities Available for Sale and Investment Securities
|
|
A summary of securities available for sale at September 30, 2007 and at December 31, 2006 is
as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
Fair
|
September 30, 2007
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
|
|
|
Government Sponsored
Enterprise obligations
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
Equity Securities
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
Total available for sale
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
Fair
|
December 31, 2006
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
|
|
|
Government Sponsored
Enterprise obligations
|
|
$
|
9,560
|
|
|
|
39
|
|
|
|
|
|
|
$
|
9,599
|
|
Equity Securities
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
Total available for sale
|
|
$
|
9,660
|
|
|
|
39
|
|
|
|
|
|
|
$
|
9,699
|
|
|
|
|
|
|
A summary of held to maturity securities at September 30, 2007 and at December 31, 2006 is as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
Fair
|
September 30, 2007
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
|
|
|
Obligations of U.S. Treasury
|
|
$
|
1,996
|
|
|
|
12
|
|
|
|
|
|
|
$
|
2,008
|
|
|
|
|
Total held to maturity
|
|
$
|
1,996
|
|
|
|
12
|
|
|
|
|
|
|
$
|
2,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
Fair
|
December 31, 2006
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
|
|
|
Obligations of U.S. Treasury
|
|
$
|
1,993
|
|
|
|
9
|
|
|
|
|
|
|
$
|
2,002
|
|
|
|
|
Total held to maturity
|
|
$
|
1,993
|
|
|
|
9
|
|
|
|
|
|
|
$
|
2,002
|
|
|
|
|
13
Note 7. Loans.
|
|
The components of the loan portfolio at September 30, 2007 and December 31, 2006 are
summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
Real estate
|
|
$
|
115,602
|
|
|
$
|
50,787
|
|
Commercial
|
|
|
24,008
|
|
|
|
14,678
|
|
Credit lines
|
|
|
23,681
|
|
|
|
13,519
|
|
Consumer
|
|
|
4,228
|
|
|
|
1,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
167,519
|
|
|
$
|
80,638
|
|
|
|
|
|
|
|
|
|
|
The Bank grants commercial, mortgage and installment loans primarily to New Jersey residents
and businesses within its local trading area. Its borrowers abilities to repay or otherwise
satisfy their obligations are dependent upon various factors, including the borrowers income
and net worth, cash flows generated by the underlying collateral, value of the underlying
collateral and priority of the Banks lien on the collateral. Such factors are dependent
upon various economic conditions and individual circumstances beyond the Banks control; the
Bank is therefore subject to risk of loss. The Bank believes its lending policies and
procedures reasonably account for the potential exposure to such risks and that adequate
provisions for loan losses are provided for all known and inherent risks. Management
believes that the allowance for loan losses is maintained at a level adequate to provide for
losses inherent in the loan portfolio.
|
14
|
|
The following tables present the activity in the allowance for loan losses during the periods
indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
Balance at beginning of period
|
|
$
|
1,494
|
|
|
$
|
197
|
|
Provision charged to expense
|
|
|
278
|
|
|
|
367
|
|
Loans charged off
|
|
|
0
|
|
|
|
0
|
|
Recoveries
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
1,772
|
|
|
$
|
564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
|
2007
|
|
|
2006
|
|
Balance at beginning of period
|
|
$
|
866
|
|
|
$
|
0
|
|
Provision charged to expense
|
|
|
906
|
|
|
|
564
|
|
Loans charged off
|
|
|
0
|
|
|
|
0
|
|
Recoveries
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
1,772
|
|
|
$
|
564
|
|
|
|
|
|
|
|
|
|
|
There were no impaired loans at September 30, 2007 or at December 31, 2006. As of September
30, 2007 and December 31, 2006, the Bank also had no non-accrual loans or non-performing
loans.
|
Note 8. Income Taxes
The income tax provision reflected a $144 thousand benefit for the quarter ended September 30, 2007
and a $37 thousand benefit for the nine months ended September 30, 2007. These credits reflect the
effect of a $310 thousand adjustment to reverse the deferred tax valuation allowance previously
recorded on our net deferred tax asset. Due to our sustained profitability, it is more likely than
not that our net deferred tax asset will be realized. Net of the $310 thousand benefit adjustment,
the income tax expense for the three months and the nine months ended September 30, 2007 was $166
thousand and $273 thousand, respectively. The Companys effective tax rate for the nine months
ended September 30, 2007 was 42%.
15
Note 9. Guarantees
The Company does not issue any guarantees that would require liability recognition or disclosure,
other than the Banks standby letters of credit. Standby letters of credit are conditional
commitments issued by the Bank to guarantee the performance of a customer to a third party.
Generally, all letters of credit, when issued have expiration dates within one year. The credit
risk involved in issuing letters of credit is essentially the same as those that are involved in
extending loan facilities to customers. The Bank generally holds collateral and/or personal
guarantees supporting these commitments. As of September 30, 2007, the Bank had $805 thousand of
commercial and similar letters of credit. Management believes that the proceeds obtained through a
liquidation of collateral and the enforcement of guarantees would be sufficient to cover the
potential amount of future payment required under the corresponding guarantees. Management
believes that the current amount of the liability as of September 30, 2007 for guarantees under
standby letters of credit issued is not material.
Note 10. Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 157, Fair Value Measurements which is effective for fiscal years
beginning after November 15, 2007 and for interim periods within those years. This statement
defines fair value, establishes a framework for measuring fair value and expands the related
disclosure requirements. Although it is not expected to have a material impact on the financial
statements, the Company is currently evaluating the impact the adoption of SFAS No. 157 will have
on its 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-Including an amendment of FASB
Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments
and certain other items at fair value. SFAS No. 159 is effective as of the beginning of an entitys
first fiscal year that begins after November 15, 2007 but earlier adoption is permitted provided
the entity also elects to apply the provisions of SFAS No. 157 during the same time period.
Although it is not expected to have a material impact on the financial statements, the Company is
currently evaluating the impact the adoption of SFAS No. 159 will have on its financial statements.
The Company did not elect early adoption of SFAS No. 159.
Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN 48). The Interpretation provides clarification
on accounting for uncertainty in income taxes recognized in an enterprises financial statements in
accordance with SFAS No. 109, Accounting for Income Taxes. The Interpretation prescribes a
recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. As a result of the
Companys evaluation of the implementation of FIN 48, no significant income tax uncertainties were
identified.
In May 2007, the FASB issued FASB Staff Position (FSP) FIN 48-1 Definition of Settlement in FASB
Interpretation No. 48 (FSP FIN 48-1). FSP FIN 48-1 provides guidance on how to determine whether a
tax position is effectively settled for the purpose of recognizing previously unrecognized tax
benefits. FSP FIN 48-1 is effective retroactively to January 1, 2007. This interpretation did not
have an impact on our consolidated financial position or results of operations.
16
In March 2007, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 06-11, Accounting
for Income Tax Benefits of Dividends on Share-Based Payment Awards. EITF 06-11 requires companies
to recognize the income tax benefit realized from dividends or dividend equivalents that are
charged to retained earnings and paid to employees for non-vested equity-classified employee
share-based payment awards as an increase to additional paid-in capital. EITF 06-11 is effective
for fiscal years beginning after September 15, 2007. The Company does not expect EITF 06-11 will
have a material impact on its financial position, results of operations or cash flows.
Note 11. Holding Company Reorganization
On July 31, 2007, the Company became the bank holding company of the Bank pursuant to a plan of
acquisition that was approved by the boards of directors of the Company and the Bank and adopted by
the shareholders of the Bank at a special meeting held July 19, 2007.
Pursuant to the plan of acquisition, the holding company reorganization has been affected through a
contribution of all of the outstanding shares of Banks class of common stock to the Company in a
one-to-one exchange for shares of the Companys class of common stock. Upon consummation of the
reorganization, the Bank became the wholly-owned subsidiary of the Company and all of the former
shareholders of the Bank became shareholders of the Company. The Company did not engage in any
operations, other than organizational activities, or issue any shares of its class of common stock
prior to consummation of the holding company reorganization. As a result, these financial
statements include the effect of the holding company reorganization and represent consolidated
financial statements.
17
ITEM 2
Managements Discussion and Analysis of
Financial Condition and Results of Operations
You should read this discussion and analysis in conjunction with the consolidated unaudited interim
financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, and with
the audited financial statements of the Bank for the year ended December 31, 2006 and Managements
Discussion and Analysis of Financial Condition and Results of Operations presented in the Banks
registration statement on Form 10, filed with the Federal Deposit Insurance Corporation on April
30, 2007. Such information filed by the Bank with the FDIC is available for inspection at the
offices of the FDICs Accounting and Securities Disclosure Section located at Room F-6043, 550 17th
Street, N.W., Washington, DC 20429. All weighted average, actual shares and per share information
set forth in this quarterly report on Form 10-Q has been adjusted for the effect of the 2007 stock
distribution
Statements Regarding Forward Looking Information
The information disclosed in this document includes various forward-looking statements with
respect to credit quality, corporate objectives, and other financial and business matters. The
words anticipates, projects, intends, estimates, expects, believes, plans, may,
will, should, could, and other similar expressions are intended to identify such
forward-looking statements. We caution that these forward-looking statements are necessarily
speculative and speak only as of the date made, and are subject to numerous assumptions, risks and
uncertainties, all of which may change over time. Actual results could differ materially from such
forward-looking statements.
In addition to the factors we disclose elsewhere in this document, the following factors,
among others, could cause our actual results to differ materially and adversely from such
forward-looking statements: [pricing pressures on loan and deposit products; competition; changes
in economic conditions nationally, regionally and in our markets; the extent and timing of actions
of the Federal Reserve Board; changes in levels of market interest rates; customer acceptance of
our products and services; credit risks of lending activities; changes in the conditions of the
capital markets in general and in the capital markets for financial institutions; and the extent
and timing of legislative and regulatory actions and reforms;] and other risks and uncertainties
detailed from time to time in our regulatory filings.
The above-listed risk factors are not necessarily exhaustive, particularly as to possible
future events, and new risk factors may emerge from time to time. Certain events may occur that
could cause our actual results to be materially different than those described in forward-looking
statements. Any statements made that are not historical facts should be considered to be
forward-looking statements. You should not place undue reliance on any forward-looking statements,
which only reflect managements analysis as of the date of this quarterly report. We undertake no
obligation to update forward-looking statements or to make any public announcement when we consider
forward-looking statements in this quarterly report to no longer be accurate, whether as a result
of new information of future events, except as may be required by applicable law or regulation.
18
Critical Accounting Policies, Judgments and Estimates
|
|
The financial statements have been prepared in conformity with U.S. generally accepted
accounting principles. In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and liabilities as of
the date of the statement of financial condition and revenues and expenses for the period
indicated. Actual results could differ significantly from those estimates. Management
believes the following critical accounting policies encompass the more significant judgments
and estimates used in the preparation of the consolidated financial statements.
|
|
|
|
Allowance for Loan Losses
|
|
|
|
Material estimates that are particularly susceptible to significant change in the near term
relate to the determination of the allowance for loan losses. Losses on loans are charged to
the allowance for loan losses. Additions to this allowance are made by recoveries of loans
previously charged off and by a provision charged to expense. The determination of the
balance of the allowance for loan losses is based on an analysis of the loan portfolio,
economic conditions and other factors warranting recognition. Management believes that the
allowance for loan losses is maintained at an adequate level to provide for losses inherent
in the loan portfolio. While management uses available information to recognize losses on
loans, future additions may be necessary based on changes in economic conditions,
particularly in New Jersey. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Banks allowance for loan losses. Such
agencies may require the Bank to recognize additions to the allowance based on their
judgments about information available to them at the time of their examinations.
|
|
|
|
Deferred Income Taxes
|
|
|
|
We recognize deferred tax assets and liabilities for future tax effects of temporary
differences. Deferred tax assets are subject to managements judgment based upon available
evidence that future realization is more likely than not. If management determines that we
may be unable to realize all of part of net deferred tax assets in the future, a direct
charge to income tax expense may be required to reduce the value of the net deferred tax
asset to the expected realizable amount.
|
19
Results of Operations
Three Months Ended September 30, 2007 and 2006 and
Nine Months Ended September 30, 2007 and 2006
Upon receipt of regulatory approvals, the Bank commenced normal operations during the second
quarter of 2006 and, during 2007, opened three additional branches. Accordingly, the primary
reason for the material changes in our results of operations for the three months ended September
30, 2007 compared to the three months ended September 30, 2006, is the impact of the new branches
during 2007. The material changes for the nine months ended September 30, 2007, compared to the
nine months ended September 30, 2006, is the combined effect of commencement of normal operations
during 2006 as well as the impact of the three additional branches during 2007.
Results of operations depend primarily on net interest income, which is the difference between
interest income on interest earning assets and interest expense in interest bearing liabilities.
Interest earning assets consist principally of loans and investment securities, while interest
bearing liabilities consist primarily of deposits and borrowings. Net income is also affected by
the provision for loan losses and the level of non-interest income as well as by non-interest
expenses, including salary and employee benefits, occupancy expenses, and other operating expenses.
Net Income
Net income for the third quarter of 2007 was $444 thousand compared to net loss of $97
thousand for the third quarter of 2006. The net income for the third quarter of 2007 included a
$278 thousand provision for loan losses as well as a $310 thousand adjustment to reverse the
deferred tax valuation allowance previously recorded on our net deferred tax asset. The $310
thousand reversal of the deferred tax valuation allowance plus the income tax provision of $166
thousand resulted in an income tax benefit of $144 thousand during the quarter. The expense
recorded for the loan loss provision is reflective of the increase in total loans during the
quarter ended September 30, 2007. The reversal of the deferred tax valuation allowance is
reflective of our sustained profitability as well as other data which supports the expected
realization of the deferred tax asset.
Net income for the nine months ended September 30, 2007 was $678 thousand compared to net loss
of $403 thousand for the nine months ended September 30, 2007. The net income for the first nine
months of 2007 included a $906 thousand provision for loan losses as well as the previously
mentioned $310 thousand reversal of the deferred tax valuation allowance. The expense recorded for
the loan loss provision is reflective of the increase in total loans during the nine months ended
September 30, 2007.
On a per share basis, basic and diluted earnings per share were $0.18 for the third quarter of
2007 as compared to basic and diluted loss per share of $0.04 for the third quarter of 2006. Basic
and diluted earnings per share were $0.28 for the nine months ended September 30, 2007 as compared
to basic and diluted loss per share of $0.17 for the nine months ended September 30, 2006. All per
share data has been restated to reflect the ten percent stock distribution paid to shareholders
during January, 2007.
20
Net Interest Income
Net interest income represents the difference between income on interest-earning assets and
expense on interest-bearing liabilities. Net interest income depends upon the volume of
interest-earning assets and interest bearing liabilities and the interest rate earned or paid on
them. During the third quarter 2007, net interest income reached $1.6 million from $937 thousand
during the third quarter 2006, primarily due to the Companys continued growth.
During the nine months ended September 30, 2007, net interest income reached $4.4 million
compared to $2.0 million in 2006, primarily due to the Companys continued growth. This increase
reflects the effect of nine months of operations during 2007 as compared to the initial 140 days of
operations after opening for business on May 10, 2006.
Provision for Loan Losses
The provision for loan losses was $278 thousand for the three months ended September 30, 2007
as compared to $367 thousand for the three months ended September 30, 2006. During the nine months
ended September 30, 2007, the provision for loan losses was $906 thousand as compared to $564
thousand during the nine months ended September 30, 2007. The increases in the provision during
the three and nine month periods are reflective of the increased growth and composition of the loan
portfolio. The quarterly and nine month provision amounts are directly related to the production
and closing of loans during those period.
Non-interest Income
Non-interest income, primarily service fees, reached $46 thousand during the three months
ended September 30, 2007 and reached $106 thousand during the nine months ended September 30. 2007,
compared to $5 thousand and $6 thousand, respectively, for the three and nine month periods ended
September 30, 2006. As these fees are related, primarily, to deposits accounts, the increase
between periods is reflective of the deposit growth and related customer activity.
21
Non-interest Expense
Non-interest expense increased from $672 thousand in the third quarter of 2006 to $1.1 million
in the third quarter of 2007, an increase of $440 thousand. Non-interest expense also increased
from $1.8 million during the five months of operations through September 30, 2006 to $3.0 million
during the first nine months of 2007. The increase during both the three month period and the nine
month period is reflective of salary and benefit costs increasing and occupancy costs increasing.
Salary and benefit costs and occupancy costs increased as a result of normal operations during 2007
compared to the initial operational period during 2006 as well as the effect of staffing and
occupancy costs related to three additional branches which opened during the second and third
quarters of 2007.
Income Tax Expense
The income tax provision reflected a $144 thousand benefit for the quarter ended September 30,
2007 and a $37 thousand benefit for the nine months ended September 30, 2007. These credits
reflect the effect of a $310 thousand adjustment to reverse the deferred tax valuation allowance
previously recorded on our net deferred tax asset. Due to our sustained profitability, it is more
likely than not that our net deferred tax asset will be realized. Net of the $310 thousand benefit
adjustment, the income tax expense for the three months and the nine months ended September 30,
2007 was $166 thousand and $273 thousand, respectively. The Companys effective tax rate for the
nine months ended September 30, 2007 was 42%. Due to the net loss during both the three month
period and the nine month period ended September 30, 2006, no income tax provision was recorded for
the respective periods.
22
FINANCIAL CONDITION
Total consolidated assets increased $75.7 million, or 71.4%, from $106.0 million at
December 31, 2006, to $181.7 million at September 30, 2007. Total deposits increased from $61.9
million on December 31, 2006 to $130.1 million on September 30, 2007, an increase of $68.2 million,
or 110.3
%.
Total loans increased from $80.6 million at December 31, 2006 to $167.5 million at
September 30, 2007, an increase of 107.7%.
Loans
Our loan portfolio is the primary component of our assets. Total loans increased by 107.7% since
year end to reach $167.5 million at September 30, 2007. At December 31, 2006, our total loans,
excluding net deferred fees and costs, were approximately $80 million, all of which were originated
during 2006. This growth in the loan portfolio continues to be primarily attributable to
recommendations and referrals from members of our board of directors, our shareholders, our
executive officers, and selective marketing by our management and staff. We believe that we will
continue to have similar opportunities for loan growth within the Bergen and Hudson County markets
of northern New Jersey, due in part, to consolidation of banking institutions within our markets.
We believe that it is not cost-efficient for large institutions, many of which are headquartered
out of state, to provide the level of personal service to small business borrowers that these
customers seek and that we intend to provide.
Our loan portfolio consists of commercial loans, real estate loans, and consumer loans. Commercial
loans are made for the purpose of providing working capital, financing the purchase of equipment or
inventory, as well as for other business purposes. Real estate loans consist of loans secured by
commercial or residential real property and loans for the construction of commercial or residential
property. Consumer loans are made for the purpose of financing the purchase of consumer goods,
home improvements, and other personal needs, and are generally secured by the personal property
being owned or being purchased.
Our loans are primarily to businesses and individuals located in Bergen and Hudson Counties, New
Jersey. We have not made loans to borrowers outside of the United States. We have not made any
sub-prime loans. Commercial lending activities are focused primarily on lending to small business
borrowers. We believe that our strategy of customer service, competitive rate structures, and
selective marketing have enabled us to gain market entry to local loans. Further, we believe that
bank mergers and lending restrictions at larger financial institutions with which we compete have
also contributed to the success of our efforts to attract borrowers.
For more information on the loan portfolio, see Note 7 in Notes to the Financial Statements in this
Quarterly Report on Form 10-Q.
Loan Quality
As mentioned above, our principal assets are our loans. Inherent in the lending function is the
risk of the borrowers inability to repay a loan, either under its existing terms or at all. Risk
elements include non-accrual loans, past due and restructured loans, potential problem loans, loan
concentrations, and other real estate owned.
23
Non-performing assets include loans that are not accruing interest (non-accrual loans) as a result
of principal or interest being in default for a period of 90 days or more and accruing loans that
are 90 days past due. When a loan is classified as non-accrual, interest accruals discontinue and
all past due interest, including interest applicable to prior years, is reversed and charged
against current income. Until the loan becomes current, any payments received from the borrower
are applied to outstanding principal until such time as management determines that the financial
condition of the borrower and other factors merit recognition of such payments as interest.
We attempt to minimize overall credit risk through loan diversification and our loan approval
procedures. Due diligence begins at the time we begin to discuss the origination of a loan with a
borrower. Documentation, including a borrowers credit history, materials establishing the value
and liquidity of potential collateral, the purpose of the loan, the source and timing of the
repayment of the loan, and other factors are analyzed before a loan is submitted for approval.
Loans made are also subject to periodic audit and review.
At September 30, 2007 and December 31, 2006, we had no non-performing assets and no information
about possible credit problems of borrowers which would cause us to have serious doubts as to the
ultimate ability to collect their loans. While we do attempt to minimize credit risk, these
conditions are partially attributable to our limited operating history.
As of September 30, 2007 and December 31, 2006, there were no concentrations of loans exceeding 10%
of the Companys total loans and the Company had no foreign loans. Furthermore, our loan portfolio
does not contain any sub-prime loans. The Companys loans are primarily to businesses and
individuals located in Bergen and Hudson Counties, New Jersey.
Investment Securities
Securities held to maturity remained level at approximately $1.9 million at December 31, 2006 and
September 30, 2007, while securities held in the available for sale (AFS) category experienced a
decrease of $9.5 million. This decrease in the AFS category represented the sale of securities to
fund loan growth during the period.
Deposits
Deposits are currently our primary source of funds. Total deposits increased from $61.9 million on
December 31, 2006 to $130.0 million on September 30, 2007, an increase of $68.1 million, or 110.3%.
This deposit growth continues to be accomplished primarily through the combined effect of referrals
from the members of the board of directors, shareholders and management, as well as selective
marketing by our management and staff.
Borrowings and Federal Funds Purchased
Federal Funds Purchased increased to $6.0 million at September 30, 2007. This increase is
attributed to increased borrowings under our overnight line of credit facilities with our
correspondent banks to fund loan growth. The Company had no borrowings at December 31, 2006.
24
Liquidity
Our liquidity is a measure of our ability to fund loans, withdrawals or maturities of deposits, and
other cash outflows in a cost-effective manner. Our principal sources of funds are deposits,
scheduled amortization and prepayments of loan principal, maturities of investment securities, and
funds provided by operations. While scheduled loan payments and maturing investments are
relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced
by general interest rates, economic conditions, and competition. We also have the ability to use
overnight lines of credit with our correspondent banks.
Our total deposits equaled $130.0 million at September 30, 2007 as compared to $61.9 million at
December 31, 2006.
Through the investment portfolio, we will seek to obtain a safe, yet slightly higher yield than
would have been available to us as a net seller of overnight federal funds, while still maintaining
liquidity. Through our investment portfolio, we also attempt to manage our maturity gap by seeking
maturities of investments which coincide as closely as possible with maturities of deposits. The
investment portfolio also includes securities available for sale to provide liquidity for
anticipated loan demand and liquidity needs. During the second quarter of 2007, we sold most of
our available for sale portfolio in order to support loan demand. Due to the loan demand
experienced, we are not in a position to be investing.
Although we were a net seller of federal funds during 2006, we were a purchaser of federal funds
for the September 30, 2007 period. We utilized $6.0 million of the $22 million available to us in
credit facilities with First Tennessee Bank and Atlantic Central Bankers Bank. As of September 30,
2007, we have a $12 million overnight line of credit with First Tennessee Bank and a $10 million
overnight line of credit with Atlantic Central Bankers Bank for the purchase of federal funds in
the event that temporary liquidity needs arise.
Capital Resources
A significant measure of the strength of a financial institution is its capital base. Our federal
regulators have classified and defined our capital into the following components: Tier 1 Capital,
which includes tangible shareholders equity for common stock and qualifying preferred stock, and
Tier 2 Capital, which includes a portion of the allowance for possible loan losses, certain
qualifying long-term debt, and preferred stock which does not qualify for Tier 1 Capital. Minimum
capital levels are regulated by risk-based capital adequacy guidelines, which require certain
capital as a percent of our assets and certain off-balance sheet items, adjusted for predefined
credit risk factors, referred to as risk-adjusted assets.
25
We are required to maintain, at a minimum, Tier 1 Capital as a percentage of risk-adjusted assets
of 4.0% and combined Tier 1 and Tier 2 Capital, or Total Capital, as a percentage of
risk-adjusted assets of 8.0%.
In addition to the risk-based guidelines, our regulators require that an institution which meets
the regulators highest performance and operation standards maintain a minimum leverage ratio (Tier
1 Capital as a percentage of tangible assets) of 3.0%. For those institutions with higher levels
of risk or that are experiencing or anticipating significant growth, the minimum leverage ratio
will be evaluated through the ongoing regulatory examination process.
The following table summarizes the Banks risk-based capital and leverage ratios at September 30,
2007, as well as the applicable minimum ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum
|
|
|
September 30,
|
|
Regulatory
|
|
|
2007
|
|
Requirements
|
Risk-Based Capital :
|
|
|
|
|
|
|
|
|
Tier 1 Capital Ratio
|
|
|
28.59
|
%
|
|
|
4.0
|
%
|
Total Capital Ratio
|
|
|
29.71
|
%
|
|
|
8.0
|
%
|
Leverage Ratio
|
|
|
25.94
|
%
|
|
|
8.0
|
%
|
In addition to the above, as part of the Banks application for deposit insurance with the FDIC and
as part of the bank charter approval by the New Jersey Department of Banking, the Bank is required
to maintain not less than 8% Tier 1 Capital to total assets, as defined, throughout the first three
years of operation.
The capital levels detailed above reflect the success of our initial stock offering as well as our
results of operations. As we employ our capital and continue to grow our operations, we expect
that our capital levels will decrease, but that we will remain a well-capitalized institution.
26
ITEM 3. Quantitative and Qualitative Disclosures about Market/Interest Risk
We manage our assets and liabilities based on our evaluation of the interest-rate risk included in
certain balance sheet accounts; to maintain an appropriate level of risk given our business focus,
operating environment, capital and liquidity requirements; in accordance with our established asset
concentration guidelines; and to manage risk consistent with guidelines approved by our board of
directors. We seek to reduce the vulnerability of our operations to changes in interest rates and
to manage the ratio of interest-rate sensitive assets to interest-rate sensitive liabilities within
specified maturities or re-pricing dates. Our actions in this regard are taken under the guidance
of the asset/liability committee of our board of directors, or ALCO. ALCO generally reviews our
liquidity, cash flow needs, maturities of investments, deposits and borrowings, and current market
conditions and interest rates.
One of the monitoring tools used by ALCO is an analysis of the extent to which assets and
liabilities are interest rate sensitive which measures our interest rate sensitivity gap. An
asset or liability is said to be interest rate sensitive within a specific time period if it will
mature or re-price within that time period. A gap is considered positive when the amount of
interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is
considered negative when the amount of interest rate sensitive liabilities exceeds the amount of
interest rate sensitive assets. Accordingly, during a period of rising rates, a negative gap may
result in the yield on assets increasing at a slower rate than the increase in the cost of
interest-bearing liabilities, resulting in a decrease in net interest income. Conversely, during a
period of falling interest rates, an institution with a negative gap would experience a re-pricing
of its assets at a slower rate than its interest-bearing liabilities which, consequently, may
result in its net interest income growing.
27
The following table sets forth the amounts of interest-earning assets and interest-bearing
liabilities outstanding at the periods indicated which we anticipate, based upon certain
assumptions, will re-price or mature in each of the future time periods presented. Except as
noted, the amount of assets and liabilities which re-price or mature during a particular period
were determined in accordance with the earlier of the term to re-pricing or the contractual terms
of the asset or liability. Because we have no interest bearing liabilities with a maturity greater
than five years, we believe that a static gap for the over five year time period reflects an
accurate assessment of interest rate risk. Our loan maturity assumptions are based upon actual
maturities within the loan portfolio. Equity securities have been included in Other Assets as
they are not interest rate sensitive. At September 30, 2007, we were within the target gap range
established by ALCO.
Cumulative Rate Sensitive Balance Sheet
September 30, 2007
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 3
|
|
|
0 6
|
|
|
0 1
|
|
|
0 5
|
|
|
5 15
|
|
|
|
|
|
|
|
|
|
Months
|
|
|
Months
|
|
|
Year
|
|
|
Years
|
|
|
Years
|
|
|
All Others
|
|
|
TOTAL
|
|
Securities, excluding
equity securities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,996
|
|
|
$
|
1,996
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
15,246
|
|
|
|
17,245
|
|
|
|
17,572
|
|
|
|
22,211
|
|
|
|
1,819
|
|
|
|
|
|
|
|
24,030
|
|
Real Estate
|
|
|
29,321
|
|
|
|
29,321
|
|
|
|
30,336
|
|
|
|
74,513
|
|
|
|
5,369
|
|
|
|
35,778
|
|
|
|
115,660
|
|
Credit Lines
|
|
|
20,874
|
|
|
|
23,601
|
|
|
|
23,601
|
|
|
|
23,601
|
|
|
|
|
|
|
|
|
|
|
|
23,601
|
|
Consumer
|
|
|
620
|
|
|
|
639
|
|
|
|
917
|
|
|
|
2,100
|
|
|
|
563
|
|
|
|
1,565
|
|
|
|
4,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Funds Sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,230
|
|
|
|
12,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
66,061
|
|
|
$
|
70,806
|
|
|
$
|
74,422
|
|
|
$
|
124,421
|
|
|
$
|
7,751
|
|
|
$
|
49,573
|
|
|
$
|
181,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction /
Demand Accounts
|
|
$
|
8,110
|
|
|
$
|
8,110
|
|
|
$
|
8,110
|
|
|
$
|
8,110
|
|
|
|
|
|
|
|
|
|
|
$
|
8,110
|
|
Money Market
|
|
|
40,481
|
|
|
|
40,481
|
|
|
|
40,481
|
|
|
|
40,481
|
|
|
|
|
|
|
|
|
|
|
|
40,481
|
|
Savings
|
|
|
2,862
|
|
|
|
2,862
|
|
|
|
2,862
|
|
|
|
2,862
|
|
|
|
|
|
|
|
|
|
|
|
2,862
|
|
Time Deposits
|
|
|
15,192
|
|
|
|
26,768
|
|
|
|
58,645
|
|
|
|
59,752
|
|
|
|
|
|
|
|
|
|
|
|
59,752
|
|
Fed Funds Purchased
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
Other Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,538
|
|
|
|
19,538
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,002
|
|
|
|
45,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
|
72,645
|
|
|
$
|
84,221
|
|
|
$
|
116,098
|
|
|
$
|
117,205
|
|
|
$
|
|
|
|
$
|
64,540
|
|
|
$
|
181,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar Gap
|
|
|
(6,584
|
)
|
|
|
(13,415
|
)
|
|
|
(41,676
|
)
|
|
|
7,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gap / Total Assets
|
|
|
(3.62
|
%)
|
|
|
(7.38
|
%)
|
|
|
(22.93
|
%)
|
|
|
3.97
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Gap Range
|
|
|
+/- 35.00
|
|
|
|
+/- 30.00
|
|
|
|
+/- 25.00
|
|
|
|
+/- 25.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSA / RSL
|
|
|
90.94
|
%
|
|
|
84.07
|
%
|
|
|
64.10
|
%
|
|
|
106.16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(Rate Sensitive Assets to
Rate Sensitive Liabilities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
ITEM 4. Controls and Procedures
Evaluation of disclosure controls and procedures.
We maintain disclosure controls and procedures that are designed to ensure that information we are
required to disclose in our reports filed or submitted pursuant to the Securities Exchange Act of
1934, as amended, the Exchange Act, is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange Commission, and that
information we are required to disclose in our Exchange Act reports is accumulated and communicated
to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely
decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule
13a-15(b) as of September 30, 2007. Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures were effective as of
September 30, 2007.
Changes in internal controls over financial reporting.
There was no change in our internal control over financial reporting identified during the quarter
ended September 30, 2007 that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting.
29
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A.Risk Factors
There have been no material changes from risk factors as previously disclosed in the Banks
registration statement on Form 10, filed with the Federal Deposit Insurance Corporation on April
30, 2007 and the Companys registration statement on Form S-4 (File No. 333-141124), filed with the
Securities and Exchange Commission on March 7, 2007, as amended by Amendment No. 1 on Form S-4/A,
filed on April 27, 2007 and Amendment No. 2 on Form S-4/A, filed on May 15, 2007. We will file our
first annual report on Form 10-K for the fiscal year ending December 31, 2007.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
.
On September 7, 2007, the Company issued and sold an aggregate of 21,739 shares of its class of
common stock, no par value per share, for a per share sale price of $23.00, and an aggregate sale
price of $499,997, in cash. The shares were sold in a private transaction, in reliance upon Rule
506 of Regulation D of the Securities Act of 1933, as amended, and constitute less than one percent
of the outstanding shares of the Companys class of common stock. The purchasers consisted of one
of the directors of the Company and certain of his family members. The purchasers acquired the
shares for investment purposes only and not with a view to or for sale in connection with any
distribution of shares. The purchase price was equal to the fair market value of the common stock
at the time of the sale, as determined by the board of directors of the Company, based upon the
most recent trading information available to the Company and other information. There were no
underwriters or placement agents employed in connection with the transactions described in this
Item 2.
Item 3. Defaults Upon Senior Securities
None.
30
Item 4. Submission of Matters to a Vote of Securities Holders
On July 19, 2007, a Special Meeting of Stockholders of Bank of New Jersey was held. The following
items were submitted and voted upon, with the number of votes cast for and against, abstentions and
broker non-votes as specified.
|
1.
|
|
A proposal to adopt a Plan of Acquisition, pursuant to which the Bank would adopt
a bank holding company structure, the Bank would become a wholly-owned subsidiary of the
Company, and the shareholders of the Bank would become shareholders of the Company
through a one-to-one exchange of their Bank common stock for shares of Company common
stock.
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
Broker Non-Votes
|
1,805,975
|
|
4,675
|
|
3,410
|
|
none
|
|
2.
|
|
A proposal to approve the number of authorized shares of the Company as set forth
in the Companys certificate of incorporation (i.e., 20,000,000 shares of common stock,
no par value).
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
Broker Non-Votes
|
1,802,125
|
|
8,525
|
|
3,410
|
|
none
|
|
3.
|
|
A proposal to approve a provision in the Company certificate of incorporation
providing for a classified board of directors with one-third of the directors being
elected each year.
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
Broker Non-Votes
|
1,803,445
|
|
7,205
|
|
3,410
|
|
none
|
|
4.
|
|
A proposal to adopt the 2007 Non-Qualified Stock Option Plan for Directors, which
provides for options to purchase shares of common stock to be issued to non-employee
directors of the Bank.
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
Broker Non-Votes
|
1,783,295
|
|
17,930
|
|
12,834
|
|
none
|
All matters listed above were approved by the shareholders as required under the by-laws of the
Company and the Bank.
Item 5. Other Information
None.
Item 6. Exhibits
The exhibits filed or incorporated by reference as part of this report are listed in the Exhibit
Index, which appears at page 33.
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
Bancorp of New Jersey, Inc.
|
|
Date: November 14, 2007
|
By:
|
/s/ Albert F. Buzzetti
|
|
|
|
Albert F. Buzzetti
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
By:
|
/s/ Michael Lesler
|
|
|
|
Michael Lesler
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
32
EXHIBIT INDEX
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
|
10.1
|
|
2007 Non-Qualified Stock Option Plan For Directors*
|
|
|
|
10.2
|
|
Form of Stock Option Agreement under the 2007 Non-Qualified Stock Option Plan For Directors
|
|
|
|
31.1
|
|
Rule 13a-14(a) Certification of the Principal Executive Officer
|
|
|
|
31.2
|
|
Rule 13a-14(a) Certification of the Principal Financial Officer
|
|
|
|
32
|
|
Section 1350 Certifications
|
|
|
|
*
|
Incorporated by reference to the Companys Registration Statement on Form S-4 (Registration
No. 333-141124), filed with the Securities and Exchange Commission on March 7, 2007, as amended by
Amendment No. 1 on Form S-4/A, filed on April 27, 2007, and Amendment No. 2 on Form S-4/A, filed on
May 15, 2007
|
33
Exhibit 10.2
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE
2007 NON-QUALIFIED STOCK OPTION PLAN FOR DIRECTORS
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this
Agreement
) is made between BANCORP
OF NEW JERSEY, INC., a New Jersey corporation (the
Company
) and [
] (the
Optionee
).
WHEREAS, the Company, by assumption from Bank of New Jersey, maintains the 2007 Non-Qualified
Stock Option Plan for Directors (the
Plan
) for the benefit of Non-Employee Directors of
the Company and its Affiliates; and
WHEREAS, the Plan permits the award of Non-Qualified Stock Options to purchase Shares, subject
to the terms of the Plan; and
WHEREAS, the Company desires to grant the Optionee Non-Qualified Stock Options under the Plan
to further align the Optionees personal financial interests with those of the Companys
stockholders.
NOW, THEREFORE, in consideration of these premises and the agreements set forth herein and
intending to be legally bound hereby, the parties agree as follows:
1. Award of Option
. This Agreement evidences the grant to the Optionee of an option (the
Option
) to purchase
[
]
(
[
]
) Shares (the
Option Shares
). The Option
is subject to the terms set forth herein, and in all respects is subject to the terms and
provisions of the Plan applicable to Non-Qualified Stock Options, which terms and provisions are
incorporated herein by this reference. Except as otherwise specified herein or unless the context
herein requires otherwise, the terms defined in the Plan will have the same meanings herein.
2. Nature of the Option
. The Option is intended to be a nonstatutory stock option and is
not
intended to be an Incentive Stock Option within the meaning of Section 422 of the
Internal Revenue Code (the
Code
), or to otherwise qualify for any special tax benefits to
the Optionee.
3. Date of Grant; Term of Option
. The Option was granted on [
, 20___] (the
Effective Date
) and may not be exercised later than the date that is ten (10) years after
that date, subject to earlier termination in accordance with the Plan.
4. Option Exercise Price
. The per share exercise price of the Option is $[
] (the
Exercise Price), which is the Fair Market Value per Share on the Effective Date.
5. Exercise of Option
. The Option will become exercisable only in accordance with the terms
and provisions of the Plan and this Agreement, as follows:
(a) Right to Exercise
. Option shares will become exercisable if the Optionee remains in
continuous service to the Company through the applicable vesting date as follows: (1) the Option
shall become exercisable with respect to 33% of the Option Shares on the first anniversary of the
Effective Date, (2) an additional 33% of the Option Shares will become exercisable on the second
anniversary of the Effective Date, and (3) the remaining 34% of the Option Shares will become
exercisable on the third anniversary of the Effective Date.
Upon a termination of the Optionees service with the Company, the Option will be exercisable
only to the extent specified in Section 6 of the Plan. Solely for purposes of this Option, service
with the Company will be deemed to include service with an Affiliate of the Company for so long as
that entity remains an Affiliate of the Company.
(b) Method of Exercise
. The Optionee may exercise the Option by providing written notice to
the Company stating the election to exercise the Option. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company
or such other person as may be designated by the Company, and shall be accompanied by payment of
the Exercise Price and an amount equal to any required tax withholding. Payment of the Exercise
Price will be made in cash or such other form as may be accepted by the Board in accordance with
the Plan.
34
(c) Share Legends
. Any certificate evidencing an Option Share will contain such legends as
may be required or appropriate under any applicable stockholder agreement or stock purchase
agreement, in addition to any other legend that may be required or appropriate under applicable
law, the Plan or otherwise.
(d) Partial Exercise
. The Option may be exercised in whole or in part;
provided, however
,
that any exercise may apply only with respect to a whole number of Option Shares.
(e) Restrictions on Exercise
. The Option may not be exercised, and any purported exercise
will be void, if the issuance of the Option Shares upon such exercise would constitute a violation
of any applicable federal or state securities laws or other laws or regulations.
6. Investment Representations
. The Optionee represents and warrants to the Company that:
(a)
he or she is acquiring the Option (and upon exercise of the Option, will be acquiring the
Option Shares) for investment for his or her own account, not as a nominee or agent, and not with a
view to, or for resale in connection with, any distribution thereof; and
(b)
he or she has a preexisting personal or business relationship with the Company or one of
its directors, officers or controlling persons and by reason of his or her business or financial
experience, has, and could be reasonably assumed to have, the capacity to protect his or her
interests in connection with the acquisition of this Option and the Option Shares.
In addition, as a further condition to the exercise of the Option, the Company may require the
Optionee to make any representation or warranty to the Company as may be required by or advisable
under any applicable law or regulation
7. Non-Transferability of Option
. The Option may not be sold, pledged, assigned,
hypothecated, gifted, transferred or disposed of in any manner either voluntarily or involuntarily
by operation of law, other than by will or by the laws of descent or distribution. During the
Optionees lifetime, the Option is exercisable only by the Optionee. Subject to the foregoing and
the terms of the Plan, the terms of the Option will be binding upon the executors, administrators
and heirs of the Optionee.
8. Tax Consequences
. The Optionee has reviewed with the Optionees own tax advisors the
federal, state, local and foreign tax consequences of the Option. The Optionee is relying solely
on such advisors and not on any statements or representations of the Company or any of its agents
or affiliates. The Optionee understands that he or she (and not the Company) will be responsible
for his or her own tax liabilities arising in connection with this award or the transactions
contemplated by this Agreement.
9. No Continuation of Service
. Neither the Plan nor this Option will confer upon the Optionee
any right to continue in the service of the Company or any of its Affiliates, or limit in any
respect the right of the Company or its Affiliates to discharge the Optionee at any time, with or
without Cause and with or without notice.
10. The Plan
. The Optionee has received a copy of the Plan (a copy of which is attached
hereto), has read the Plan and is familiar with its terms, and hereby accepts the Option subject to
the terms and provisions of the Plan, as amended from time to time. Pursuant to the Plan, the
Board is authorized to interpret the Plan and to adopt rules and regulations not inconsistent with
the Plan as it deems appropriate. The Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board with respect to questions arising under the
Plan or this Award Agreement.
11. Call upon Cessation of Service.
(a)
If the Optionees service with the Company ceases for any reason, the Company or its
assignee may repurchase up to all of the Option Shares that the Optionee (and/or his estate, heirs
or permitted transferees) then holds (or thereafter acquires). The price payable by the Company or
its assignee to repurchase Shares pursuant to this Section 12(a) will be the Fair Market Value of
those Shares at the time the right described in this Section 12 is exercised. Notwithstanding the
foregoing, if the cessation of the Optionees service is due to a termination by the Company for
Cause, the price payable by the Company or its assignee to repurchase Shares pursuant to this
Section 12(a) will be lesser of (i) the Fair Market Value of those Shares at the time the right
described in this Section 12 is exercised, or (ii) the price paid by the Optionee (and/or his
estate or heirs) to acquire such Shares.
35
(b)
With respect to each share subject to repurchase pursuant to this Section 12, the Company
(or its assignee) may exercise its repurchase right by delivery of written notice to the holder of
such share at any time during the 180-day period beginning on the later of (i) the date the
Optionees employment or engagement with the Company ceases, or (ii) six months following the date
the Option was exercised with respect to that Option Share. All the rights of the holder of any
such shares, other than the right to receive payment in the manner described in Section 12(a) or
(b), will terminate as of the date of delivery by the Company of the written notice described in
this paragraph. The only representations, warranties or covenants which the holder of such shares
will be required to make in connection with a sale pursuant to Section 12(a) or (b) are with
respect to his or her ownership of the shares, his or her ability to convey title thereto free and
clear of liens, claims or encumbrances, and the due execution, validity and binding nature of the
sale documentation.
(c)
If a holder of shares becomes obligated to transfer those shares to the Company or its
assignee pursuant to this Agreement, that holder will endorse in blank the certificates evidencing
the shares to be sold and deliver those certificates to the Company or its assignee within 15 days
of receipt of the notice described above in Section 12(c). If a holder of shares fails to deliver
those shares in accordance with the terms of this Agreement, the Company or its assignee may, at
its option, in addition to all other remedies it may have, either (i) send to that holder the
purchase price for such shares, as specified in Section 12(a) or (b), or (ii) deposit such amount
with a trustee or escrow agent for the benefit of that holder for release upon delivery of shares
in accordance with the terms of this Agreement. Thereupon, the Company or its assignee, upon
written notice to the holder, will (x) cancel on its books the certificate or certificates
representing the shares required to be transferred, and (y) issue, in lieu thereof, in the name of
the Company (or its assignee) a new certificate or certificates representing such shares.
(d)
Any repurchase price payable under this Section 12 may be paid (i) in cash; (ii) by offset
of any obligation of the Optionee to the Company or its Affiliates; or (iii) to the extent that
payment in cash would give rise to an event of default under the Companys principal credit
agreement then in effect, by delivery of a promissory note with interest accruing at the prime
rate published in
The Wall Street Journal
on the date of issuance, which interest will be payable
annually in arrears through maturity. Such note will mature and be payable five years from the
date of issuance or, if earlier, when such payment would not give rise to an event of default
under the Companys principal credit agreement then in effect.
12. Market Stand Off
. The Optionee agrees that, in connection with any public offering by the
Company of its equity securities pursuant to a registration statement filed under the Securities
Act of 1933, not to sell, make any short sale of, loan, hypothecate, pledge, grant any option for
the purchase of or otherwise dispose of any Shares without the prior written consent of the Company
or its underwriters, for such period of time before or after the effective date of such
registration statement as may be requested by the Company or such underwriters.
13. Entire Agreement
. This Agreement, together with the Plan, and other exhibits attached
thereto or hereto, represents the entire agreement between the parties and supersedes any and all
prior or contemporaneous discussions, understandings or any agreements of any nature, written or
otherwise, relating to the subject matter hereof.
14. Governing Law
. This Agreement will be construed in accordance with the laws of the State
of New Jersey, without regard to the application of the principles of conflicts of laws.
15. Execution
. This Agreement may be executed, including execution by facsimile signature, in
one or more counterparts, each of which will be deemed an original, and all of which together shall
be deemed to be one and the same instrument.
[
This space intentionally left blank; signature page follows.
]
36
IN WITNESS WHEREOF, this Agreement has been executed by the parties on the ___day of
, 20___.
|
|
|
|
|
|
|
|
|
|
|
|
BANCORP OF NEW JERSEY, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
[PARTICIPANT]
|
|
|
|
|
|
|
|
|
|
Signature
|
|
|
|
|
|
|
|
|
|
Address
|
|
|
|
|
|
|
|
|
|
|
|
|
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES HAVE NOT BEEN ACQUIRED WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF, BY
GIFT OR OTHERWISE, OR IN ANY WAY ENCUMBERED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS,
OR A SATISFACTORY OPINION OF COUNSEL SATISFACTORY TO BANCORP OF NEW JERSEY, INC. THAT REGISTRATION
IS NOT REQUIRED UNDER SUCH ACT AND UNDER APPLICABLE STATE SECURITIES LAWS.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF THE PLAN, THIS
AGREEMENT OR ANY OTHER AGREEMENT REQUIRED HEREBY.
37