Perhaps you’ve taken note of the cultural shift occurring in our country where the feeling of shame in some cases actually seems to be turning into a badge of honor. Remember the days when filing for bankruptcy was stigmatized in our society? Bankruptcy and default are no longer considered taboo, and this new way of thinking will have huge ramifications.

 In today’s economy, we’re seeing this type of behavior more so than ever before. Timely bill payment is becoming less of a priority, as there is less dependence on credit scores today. Some borrowers, who were able to pay, deliberately allowed their loans to go into default to take advantage of required “arbitration” which reduced required payments… The news program 60 Minutes even highlighted the ability and willingness of scores of borrowers to default on their mortgages.

 Personal responsibility for debt is being diminished by government intervention, which is disastrous for our economy. How will our society function if everyone assumes the debt contract they signed is basically meaningless? How will businesses function if the repayment of debt becomes optional? We are setting a bad example for future generations by shrugging off a late payment or by taking on debt without serious consideration as to whether it could be paid back.

 Government is partially responsible for this mentality by suggesting there will be “bailouts” for those who overreach and fail. This results in unfairness for those who try hard to keep their bills current. Essentially there is encouragement for borrowers who would normally honor their responsibilities to simply ignore bills, as they watch neighbors and friends take advantage of the “system.”

 If the government begins deciding who should pay back debt and who shouldn’t, we will likely see some severe unintended consequences, as we are seeing with the recent discussions on forcing banks to reduce principal amounts on loans to subprime borrowers. Banks will have no choice in this environment, but to constrain credit.

It cannot be expected that credit will flow easily if there is no intentional desire to pay it back. Banks make credit decisions based on the consumer’s ability and total responsibility to pay back the loan. With this new shift in a public that is shirking its responsibilities, banks need the ability to go after those who default, and there must be a more expedited process for banks to recover their assets. An 18 – 24 month foreclosure process, with a possible six to eight month extension because of a last-minute bankruptcy, does not help the system, and in my opinion actually hurts everyone by increasing the cost and desirability of lending.

Maybe we should ask ourselves – is this the culture we really want?

Our strategy of smart, stable and continuing growth has translated into our most profitable quarter since our inception. The following demonstrate our continuing creation of shareholder value:

• Total Assets increased $42 million to $565 million over the 1^st Quarter of 2010
• Total Loans increased $24 million to $435 million over the 1^st Quarter of 2010
• Net Income before payment of our Preferred Dividend increased $193 thousand to a record $1,095,243 over the 1^st Quarter of 2010
• Book value per share increased from $13.60 to $14.14, an all time high…

Earning over a $1 million this quarter with our book value moving north of $14/share has positioned our bank at the top of our peer group…

Our “Client First” management style has enabled NJCB to continue to capture market share and profitably grow our balance sheet, while capturing the attention of the national news media. Recently, NJCB was featured as it hosted CNBC’s Power Lunch from our headquarters building, where we discussed recent trends in banking and financial regulatory reform with guest host Sue Herera. Please see our website to view this segment if you have not already seen it.

While new customer acquisition has been strong, we have also worked hard to increase the depth of the relationships we currently have with our existing clients. The 2^nd Quarter saw an unprecedented increase of new Demand Deposit Checking account opening from existing customers. While this has always been a focus of NJCB, our entire branch staff led by our new Chief Retail Officer Michele Calise has refined this mission and demonstrated that by being “a better place to be” for our customers with products such as Totally Free Checking, Simply better Savings, and Simply Better Money Market not only enhance our customer experience, but increase our bottom line.

(To see our entire Second Quarter Report, click here)

2009… In a year that most would use the words challenging, difficult, disastrous, or turmoil to describe, North Jersey Community Bank had the vision to see through the fog of the economic and financial collapse to record its finest year.

The highlights of our accomplishments are as follows:

Growth of our total Assets of $137 million to $515 million

Growth of our total loans of $93 million to $393 million

Growth of our total deposits of $115 million to $429 million

The acquisition of Citizen’s Community Bank in Ridgewood through the FDIC

The opening of our first Hudson County branch in West New York

The re-location of our Corporate Headquarters

Raising of  $10.5 million dollars in capital

 This was accomplished while earning over $2.2 million in profit or almost $1.00 per share. 

 Unlike many other struggling community banks, NJCB has been able to realize these results without the use of any TARP funds, or any other government assistance. Our model has been a simple one; we take in deposits, and make sound loans to qualified borrowers in the communities we serve. We have certainly taken advantage of the market place that is littered with the national banks that while being “Too Big to Fail” are also “Too Big to Serve” and have left many long term relationship customers twisting in the wind.  Our local community bank competitors have likewise frozen up in their ability to make any decisions, and have equally hurt their loyal customer base. These factors combined with our award winning customer service and technological prowess have created the best performing and fastest growing bank in the State.

 North Jersey Community Bank recently celebrated its Five Year Anniversary, and as we advance into 2010 look to take advantage of additional market opportunities.  Our network of customers spans the entire Northern part of NJ from Route 195 to the New York State Border, and beyond. We have developed some of the most robust product offerings in the industry, and have been recognized in the press and media for our proactive, innovative business plan.

 This has translated into value creation for our shareholders. Our Book Value per common share has increased from inception, an unprecedented 40 % to over $13.20 per share common. We appreciate all your support and look forward to continuing to serve you in 2010.

 Sincerely,

 Frank Sorrentino III

Chairman /CEO

Before we can seek to fix all the ills of the financial crises, we should first look to a simple task; define “what is a bank?”

The recent announcements and discussion about Glass/Steagall  by President Obama, and Paul Volker although soothing to the populist movement , only serve to confuse an issue that is poorly understand by the vast majority of people.  That populist rage has been further demonstrated recently by movements such as Arianna Huffington’s “Move Your Money” campaign.

There are many types of banks and financial institutions in the United States. The vast majority of them in number are the community oriented commercial banks and thrifts. They number over 5,000 strong and have never been the subject of any inquiry due to excessive compensation, risky trading activity, securitization issues, sub-prime loan funding or investing, or any of the issues we see in the newspapers each day. These banks should be placed in class all to themselves, and should not have to fight or pay for the sins of the other much riskier institutions.  This “A” class of banks should live in a world that encourages the lending required in the communities they serve. As for the rest, some difficult, expensive and bold decisions need to be made, namely:

• Definitive segregation of banks that use Federal Guarantees such as FDIC and borrowing capability at the Federal Reserve and those that do not
• The breakup or dissolution of any company determined to be Too Big to Fail, based not just on size, rather complexity and interconnectedness.
• An additional “FDIC” type of insurance fund for banks based on total assets that are not in the “A” Class and have riskier balance sheets
• An increasing capital structure for banks as they increase in size, and complexity
• A regulatory environment that creates tougher realistic stress testing
• The ability to wind down or place into receivership any company or bank
• An onerous tax to be levied on any company or bank that decides to undo or “giveback” any government assistance that was beneficial during the financial crises, which created a windfall profit

So, let’s first work to segregate what are called banks, and start to work on a regulatory environment which makes sense for each of these different classes. Only then can we move from the morass we are in, to an environment that encourages healthy growth in our economy and without people asking where to purchase a pitchfork.