Dear Customers and Shareholders,
2013 was a year of transition. Weighed down by non-performing loans and Other Real Estate Owned Properties (OREO), we knew we had to eliminate these burdens in order to re-position CBBC for growth. Therefore, we sold $3.2 million in non-performing loans and $1.84 million in OREO properties. Losses incurred by these sales, while significant, were one-time losses and necessary to help improve our long term financial standing.
We also suffered an unexpected loss of approximately $300,000, with the closing of the Garfield branch, due to storm damage.
Numerous cost savings initiatives allowed the bank to start our turnaround. We launched new products and services, including our Prestige Fixed Rate Mortgages, to help drive revenue. We increased our Net Interest Margin to 3.66 percent from 3.57 percent and reduced staffing costs. All of this, coupled with a 39 percent reduction in non-accrual loans, helped strengthen CBBC’s financial position and allowed us to end the year on a positive note.
As of December 31, 2013, the Bank remains well capitalized under all applicable bank regulations, with its Tier 1 leverage ratio at 7.50 percent, its Tier 1 risk-based capital ratio at 11.11 percent and its Total risk-based capital ratio at 12.37 percent. It is to be noted, however, that regulatory capital ratios for 2013 are lower than those reported for 2012 mainly as a result of the net operating losses incurred this year. Although much of the loss generated a significant increase in the Bank’s deferred tax asset, most of that asset is disallowed for the purpose of calculating the Bank’s regulatory capital ratios. We are confident that the Bank will generate sufficient net operating income in the coming years to be able to fully utilize its large deferred tax asset.
In the midst of strengthening our financial footing, we continue to expand our portfolio of products and services. We launched BankExpress, our new mobile banking app for our online banking service, offering customers a simple and convenient way to manage their accounts on the go. In September, we introduced our Prestige Fixed Rate Mortgages, offering 15, 20 or 30 year loans at competitive rates and with no points.
We also maintained a strong presence in our community through our support of various charitable and educational initiatives including Community Garden, the Annual PBA Holiday Toy Drive, Read Across America, the Summer Food Drive, the Senior Housing Crime Prevention Foundation and our bi-annual Shred Day.
This year we began to support the NJ Business Volunteer Council’s Project Homeless Connect, sponsoring and serving breakfast to 200 homeless clients of the Bergen County Housing, Health and Human Services Center in Hackensack. We also sponsored several local high school senior classes with the financial literacy program, “How To Do Your Banking.” We invited local Boy Scouts, Girl Scouts, Brownies and neighborhood schools into the Bank for a tour of the branches and a session explaining how a bank operates and the importance of saving money. The Bank also visited local senior clubs to raise awareness and help seniors mitigate identity theft.
In an attempt to encourage and support local businesses, CBBC sponsored two CPA Continuing Education Seminars where we brought in a certified speaker to address issues relevant to local CPAs.
On the management side, we continue to provide the best leadership possible with the election of two new board members – Walter E. Loeffler and Dominick J. D’Agosta. Mr. Loeffler is a certified public accountant, an accredited business valuation specialist and a certified financial forensic accountant with more than 20 years of experience. Mr. D’Agosta, now retired, is a banking industry veteran with more than 55 years of experience working with various financial institutions including National Westminster Corporation, Summit Bank Corporation, Fleet Bank Boston, Bank of America and Capital One. Mr. D’Agosta replaced C. Fred Semken who passed away in December.
As we set our sights on 2014, we are confident that the bank is on course for continued improvement. We have a full staff dedicated to building and expanding the Bank. We are conscientiously working towards creating an enhanced suite of online banking products and services to better serve our existing and potential customers. In fact, we will soon launch an online mortgage banking application process offering a streamlined and convenient online option for customers.
We are prepared and poised for growth. It’s been a long journey, but we are happily back on track. We continue to strive to be a modern bank with traditional values.
On behalf of our management team, I want to thank you for your continued support and patronage. We look forward to serving you in 2014 and beyond.
Peter A. Michelotti, CFP®
President & CEO