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Community Partners Bancorp Reports Operating Results (10-Q)

November 16, 2009 | About:

10qk

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Community Partners Bancorp (CPBC) filed Quarterly Report for the period ended 2009-09-30.

Community Partners Bancorp operates as the holding company for Two River Community Bank and The Town Bank, which provide commercial, retail, and community banking products and services primarily in Monmouth and Union Counties, New Jersey. The Banks provide these services to small and medium-sized businesses, not-for-profit organizations, professionals, and individuals. The bank offers a range of banking services, including a variety of business and consumer lending products, as well as corporate services for businesses and professionals. It also offers deposit products, including checking, savings, and money market accounts plus certificates of deposit. In addition, the Bank participates in the Certificate Account Registry Service. Other products and services include remote deposit capture, safe deposit boxes, automated clearing house services, debit and automated teller machine card services and Visa gift cards, traveler's checks, money orders, treasurer's checks, and direct d Community Partners Bancorp has a market cap of $28.32 million; its shares were traded at around $3.95 with and P/S ratio of 0.87.

Highlight of Business Operations:

For the quarter ended September 30, 2009, the Company reported net loss of $6.2 million, as compared to net income of $329 thousand reported for the quarter ended September 30, 2008. Diluted loss per common share after preferred stock dividends and discount accretion was $(0.88) for the third quarter of 2009 as compared to diluted earnings of $0.05 for the same period in 2008. Diluted loss per common share was impacted by accrued preferred stock dividends and accretion on the preferred stock issued to the United States Treasury on January 30, 2009, of $145 thousand ($0.02 per common share) and the goodwill impairment charge of $6.7 million ($0.93 per common share) for the third quarter of 2009 discussed under the heading “Financial Condition – Goodwill” below and in Note 3 to the Consolidated Financial Statements. Weighted average shares and earnings for all referenced reporting periods have been adjusted for a 3% stock dividend declared on August 25, 2009 and paid on October 23, 2009 to shareholders of record as of September 25, 2009.

For the nine months ended September 30, 2009, the Company reported net loss of $5.5 million, compared to net income of $1.3 million reported for the nine months ended September 30, 2008. This represents a decrease in net income of $6.8 million primarily attributed to the goodwill impairment charge of $6.7 million. Diluted loss per common share after preferred stock dividends and discount accretion was $(0.82) for the nine months ended September 30, 2009, as compared to diluted earnings per common share of $0.18 for the same period in 2008.

Non-interest expenses for the three months ended September 30, 2009 totaled $11.4 million, an increase of $7.0 million over the same period in 2008 which primarily relates to the $6.7 million goodwill impairment charge. Non-interest expenses for the nine months ended September 30, 2009 totaled $20.7 million, an increase of $8.0 million over the same period in 2008. This increase is attributed to the $6.7 million goodwill impairment charge and is partially attributable to one-time costs of the FDIC Special Assessment and regular FDIC Insurance premium increases ($694 thousand), data processing costs ($192 thousand) related to the database conversion of a former banking subsidiary into the Two River operations and the $6.7 goodwill impairment charge. In addition, there were increased salary and benefit costs ($255 thousand) in the first nine months of 2009, which was primarily attributable to two new branch offices that opened in March and June of 2008.

Total assets at September 30, 2009 were $620.3 million, up 8.8% from total assets of $570.2 million at December 31, 2008 and up 10.0% from total assets of $563.9 at September 30, 2008. This increase principally represents the organic growth that the Company has experienced in its primary business lines since the beginning of the third quarter of 2008. Total deposits were $515.6 million at September 30, 2009, compared with $474.8 million at December 31, 2008 and $464.0 million at September 30, 2008, an increase of 8.6% and 11.1%, respectively. Total loans for the third quarter of 2009 rose 12.9% to $506.5 million, compared with $448.8 at December 31, 2008, and rose 14.2% compared with $443.7 million at September 30, 2008.

Interest and fees on loans increased by $259 thousand, or 3.7%, to $7.2 million for the three months ended September 30, 2009 compared to $6.9 million for the corresponding period in 2008. Of the $259 thousand increase in interest and fees on loans, $920 thousand is attributable to volume-related increases which were partially offset by $661 thousand attributable to interest rate-related decreases. The Company experienced reduced yields on its loan portfolio, as interest rates on its new and variable rate loans decreased as the Federal Reserve reduced the Federal funds rate. The average balance of the loan portfolio for the three months ended September 30, 2009 increased by $58.2 million, or 13.3%, to $497.3 million from $439.1 million for the corresponding period in 2008. The average annualized yield on the loan portfolio was 5.74% for the quarter ended September 30, 2009 compared to 6.26% for the quarter ended September 30, 2008. Also contributing to the decrease in yield on the Company s loan portfolio was the increase in the balance of non-accruing loans, which amounted to $16.9 million and $5.9 million at September 30, 2009 and 2008, respectively.

During 2008 and through the first nine months of 2009, management employed promotional programs designed to increase core deposit growth in the Company. These programs included remote deposit capture, the offering of health savings accounts, “prestige savings” accounts for new branch promotional purposes, and the “CDARS” product, which is a deposit-gathering tool that supplies customers with higher limits for insured certificate of deposit balances. In addition, uniform products and services were offered throughout our expanding branch network. Also during this period, as the Federal funds rate was decreasing, management restructured the mix of our interest-bearing liabilities portfolio by decreasing our funding dependence on high-cost time deposits to lower-cost money market deposit products, savings account deposit products and to a lesser extent, borrowed funds. The average balance of our deposit accounts and agreements to repurchase securities products, excluding certificates of deposit, was $408.8 million for the three months ended September 30, 2009 compared to $339.1 million for the three months ended September 30, 2008, an increase of $69.7 million, or 20.6%. The major components of our average deposit mix changed from $94.9 million in savings deposits, $114.4 million in money market account deposits, $137.5 million in time deposits and $73.3 million in non-interest demand deposits during the third quarter of 2008 to $177.1 million in savings deposits, $98.2 million in money market account deposits, $128.3 million in time deposits and $75.9 million in non-interest demand deposits during the third quarter of 2009. This represents an increase of $82.2 million, or 86.6%, in savings deposits; a decrease of $16.2 million, or 14.2% in money market account deposits; a decrease of $9.2 million, or 6.7% in time deposits; and an increase of $2.6 million, or 3.5%, in non-interest bearing demand deposits. For the three months ended September 30, 2009, the average interest cost for all interest-bearing liabilities was 1.72%, compared to 2.89% for the three months ended September 30, 2008.

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