Edgar Filing: Bancorp of New Jersey, Inc.

bonj-10q_0512.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-34089

BANCORP OF NEW JERSEY, INC.

(Exact name of registrant as specified in its charter)

		New Jersey		20-8444387
		(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

		1365 Palisade Ave, Fort Lee, New Jersey		07024
		(Address of principal executive offices)		(Zip Code)

		(201) 944-8600
		(Registrant’s telephone number, including area code)

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

	Large accelerated filer	¨	Accelerated filer	¨
	Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 8, 2010 there were 5,206,932 outstanding shares of the issuer’s class of common stock, no par value.

INDEX

			PAGE
Part I Financial Information

Item 1.	Financial Statements:		3

	Unaudited Consolidated Statements of Financial Condition - March 31, 2010 and December 31, 2009		3

	Unaudited Consolidated Statements of Operations – Three Months Ended March 31, 2010 and 2009		4

	Unaudited Consolidated Statements of Cash Flows – Three Months Ended March 31, 2010 and 2009		5

	Notes to Unaudited Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		28

Item 4.	Controls and Procedures		28

Part II Other Information

Item 1.	Legal Proceedings		29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		29

Item 3.	Defaults Upon Senior Securities		29

Item 4.	(Removed and Reserved)		29

Item 5.	Other Information		29

Item 6.	Exhibits		29

Signatures			30

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements

BANCORP OF NEW JERSEY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except share data)

	March 31, 2010			December 31, 2009
ASSETS

Cash and due from banks	$	846		$	576
Interest bearing deposits		17,841			17,055
Federal funds sold		466			467
Total cash and cash equivalents		19,153			18,098

Restricted investment in bank stock, at cost		419			419
Securities available for sale, at fair value (amortized cost of $23,008 and $21,005, respectively)		23,044			21,111
Securities held to maturity (fair value of $0 and $4,297, respectively)		-			4,296

Loans receivable		275,615			263,931
Deferred loan fees and unamortized costs, net		16			13
Less: allowance for loan losses		(3,062	)		(2,792	)
Net loans		272,569			261,152

Premises and equipment, net		10,132			10,214
Accrued interest receivable		1,521			1,173
Other assets		3,071			3,145
TOTAL ASSETS	$	329,909		$	319,608

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits
Noninterest-bearing	$	32,105		$	36,687
Savings and interest bearing transaction accounts		51,490			50,372
Time deposits under $100		37,121			34,789
Time deposits $100 and over		157,796			145,295
Total deposits		278,512			267,143

Accrued interest payable and other liabilities		1,317			2,930
TOTAL LIABILITIES		279,829			270,073

Commitments and Contingencies
Stockholders' equity:
Common stock, no par value, authorized 20,000,000 shares; issued and outstanding 5,206,932 at March 31, 2010 and December 31, 2009		49,169			49,096
Retained Earnings		888			373
Accumulated other comprehensive income		23			66
Total stockholders' equity		50,080			49,535
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	329,909		$	319,608

See accompanying notes to unaudited consolidated financial statements

BANCORP OF NEW JERSEY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended March 31,
	2010		2009
	(in thousands, except per share data)
INTEREST INCOME
Loans, including fees	$	3,892	$	3,378
Securities		143		179
Federal funds sold and other		11		42
TOTAL INTEREST INCOME		4,046		3,599

INTEREST EXPENSE
Savings and money markets		41		124
Time deposits		1,004		1,605
TOTAL INTEREST EXPENSE		1,045		1,729

NET INTEREST INCOME		3,001		1,870
Provision for loan losses		270		61
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		2,731		1,809
NON-INTEREST INCOME- principally fees and service charges		38		38
NON-INTEREST EXPENSE
Salaries and employee benefits		987		916
Occupancy and equipment expense		382		342
FDIC premiums and related expenses		107		41
Data processing		92		79
Professional fees		128		76
Other expenses		208		183
TOTAL NON-INTEREST EXPENSE		1,904		1,637
Income before provision for income taxes		865		210

Income tax expense		351		94
Net income		514		116

PER SHARE OF COMMON STOCK
Basic and diluted earnings	$	0.10	$	0.02

See accompanying notes to unaudited consolidated financial statements

BANCORP OF NEW JERSEY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended March 31, 2009
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES	(in thousands)
Net income	$	514		$	116
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		104			97
Provision for loan losses		270			61
Recognition of stock option expense		74			104
Changes in operating assets and liabilities:
Increase in accrued interest receivable		(348	)		(424	)
Decrease in other assets		101			351
Decrease in other liabilities		(1,613	)		(1,142	)
NET CASH USED IN OPERATING ACTIVITIES		(898	)		(837	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale, net		(8,003	)		(14,064	)
Purchases of securities held to maturity, net		-			(4,296	)
Proceeds from sales or calls of securities available for sale		6,000			7,391
Maturities of securities held to maturity		4,296			-
Net increase in loans		(11,687	)		(5,876	)
Purchases of premises and equipment		(22	)		(99	)
NET CASH USED IN INVESTING ACTIVITIES		(9,416	)		(16,944	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		11,369			13,862
Exercise of stock options		-			23
Exercise of warrants		-			11
NET CASH PROVIDED BY FINANCING ACTIVITIES		11,369			13,896

Net increase (decrease) in cash and cash equivalents		1,055			(3,885	)
Cash and cash equivalents, beginning of year		18,098			40,480
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	19,153		$	36,595

Cash paid during the period for:
Interest	$	973		$	1,619
Income taxes	$	555		$	134

See accompanying notes to unaudited consolidated financial statements

BANCORP OF NEW JERSEY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.	Significant Accounting Policies

	Basis of Financial Statement Presentation The accompanying unaudited 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”), and the Bank’s wholly owned subsidiary, BONJ- New York Corp.. 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 on July 19, 2007. The holding company reorganization is accounted for as a reorganization under common control and the assets, liabilities, and stockholders’ equity of the Bank immediately prior to the holding company reorganization have been carried forward on the Company’s consolidated financials statements at the amounts carried on the Bank’s 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 unaudited consolidated financial statements of the Company include the Bank’s historical recorded values. The Company’s class of common stock has no par value. As a result of the holding company reorganization, amounts previously recognized as additional paid in capital on the Bank’s financial statements have been reclassified into the Company’s consolidated financial statements. 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 three month periods presented do not necessarily indicate the results that the Company will achieve for the 2010 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission. The financial information in this quarterly report has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”); 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. Certain reclassifications have been made to the prior period financial statements to conform to the March 31, 2010 presentation.

	Organization The Company is a New Jersey corporation and bank holding company registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). 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 Bank continues to focus 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.

Note 2.	Stockholders’ Equity and Related Transactions

	During the three month period ended March 31, 2010, the Company issued no shares of common stock. During the three month period ended March 31, 2009, the Company issued 2,000 shares of common stock upon exercises of options for an aggregate purchase price of approximately $23 thousand.

Note 3.	Benefit Plans and Stock-Based Compensation

	2006 Stock Option Plan During 2006, the Bank’s stockholders approved the 2006 Stock Option Plan. At the time of the holding company reorganization, the 2006 Stock Option Plan was assumed by the Company. The plan allows directors and employees of the Company to purchase up to 239,984 shares of the Company’s common stock. At March 31, 2010, incentive stock options to purchase 220,300 shares have been issued to employees of the Bank, of which options to purchase 187,900 shares were outstanding. Under the 2006 Stock Option Plan, there were a total of 54,000 unvested options at March 31, 2010 and approximately $157,000 remains to be recognized in expense over approximately the next three years. Under the 2006 Stock Option Plan, no options were granted, exercised, or forfeited during the first three months of 2010. 2007 Director Plan During 2007, the Bank’s stockholders approved the 2007 Non-Qualified Stock Option Plan for Directors. At the time of the holding company reorganization, the 2007 Non-Qualified Stock Option

Plan was assumed by the Company. This plan provides for 480,000 options to purchase shares of the Company’s common stock to be issued to non-employee directors of the Company. At March 31, 2010, non-qualified options to purchase 460,000 shares of the Company’s stock have been issued to non-employee directors of the Company and approximately 414,668 were outstanding at March 31, 2010. No options were granted, exercised or forfeited during the first three months of 2010.

Under the 2007 Director Plan, there were a total of approximately 172,666 unvested options at March 31, 2010 and approximately $363,000 remains to be recognized in expense over approximately three remaining years.

In connection with both the 2006 Stock Option Plan and the 2007 Director Plan, share based compensation totaled $74,000 and $104,000 for the three months ended March 31, 2010 and 2009, respectively.

The aggregate intrinsic value of options outstanding as of March 31, 2010 under the 2006 Stock Option Plan and the 2007 Director Plan was approximately $1.2 million.

The aggregate intrinsic value of options outstanding as of March 31, 2009 under the 2006 Stock Option Plan and the 2007 Director Plan was $0, as the per share exercise price of all such options exceeded the per share market value of the underlying common stock.

Note 4.	Earnings Per Share.

	Basic earnings per share is calculated by dividing the net income for a period by the weighted average number of common shares outstanding during that period. Diluted earnings per share is calculated by dividing the net income for a period by the weighted average number of outstanding common shares and dilutive common share equivalents during that period. Outstanding “common share equivalents” include options and warrants to purchase the Company’s common stock. The following schedule shows earnings per share for the three month periods presented:

	For the Three Months Ended March 31,
(In thousands except per share data)	2010		2009
Net income applicable to common stock	$	514	$	116
Weighted average number of common shares outstanding- basic		5,207		5,066
Basic earnings per share	$	0.10	$	0.02

Net income applicable to common stock	$	514	$	116
Weighted average number of common shares outstanding		5,207		5,066
Effect of dilutive options		29		-
Weighted average number of common shares and common share equivalents- diluted		5,236		5,066
Diluted earnings per share	$	0.10	$	0.02

Non-qualified options to purchase 414,668 shares of common stock at a weighted average price of $11.50; and 187,900 incentive stock options at a weighted average price of $10.24 were included in the computation of diluted earnings per share for the three months ended March 31, 2010.

Non-qualified options to purchase 414,668 shares of common stock at a weighted average price of $11.50; 777,498 warrants to purchase shares of common stock at a weighted average price of $10.91 per share; and 198,300 incentive stock options were not included in the computation of diluted earnings per share for the three months ended March 31, 2009 because they were anti-dilutive.

Note 5.	Comprehensive Income

	Accounting principles generally accepted in the United States of America requires the reporting of comprehensive income, which includes net income as well as certain other items, which result in changes to equity during the period. Total comprehensive income is presented for the three month periods ended March 31, 2010 and 2009, respectively, (in thousands) as follows:

	Three months ended March 31,
	2010			2009
Comprehensive Income
Net income	$	514		$	116
Unrealized holding loss on securities available for sale, net of taxes of $27 and $21 for 2010 and 2009, respectively		(43	)		(42	)

Total comprehensive income	$	471		$	74

Note 6.	Securities Available for Sale and Investment Securities

	A summary of securities available for sale at March 31, 2010 and December 31, 2009 is as follows (in thousands):

March 31, 2010	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury obligations	$	2,005	$	-	$	(7	)	$	1,998
Government Sponsored Enterprise obligations		21,003		109		(66	)		21,046
Total securities available for sale	$	23,008	$	109	$	(73	)	$	23,044

December 31, 2009	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury obligations	$	2,005	$	-	$	(5	)	$	2,000
Government Sponsored Enterprise obligations		19,000		127		(16	)		19,111
Total securities available for sale	$	21,005	$	127	$	(21	)	$	21,111

The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related securities available for sale are as follows:

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2010
U.S. Treasury obligations	$	1,998	$	7	$	-	$	-	$	1,998	$	7
Government Sponsored Enterpirse obligations		11,935		66		-		-		11,935		66
Total securities available for sale	$	13,933	$	73	$	-	$	-	$	13,933	$	73

December 31, 2009
U.S. Treasury obligations	$	2000	$	5	$	-	$	-	$	2000	$	5
Government Sponsored Enterpirse obligations		5,984		16		-		-		5,984		16
Total securities available for sale	$	7,984	$	21	$	-	$	-	$	7,984	$	21

The amortized cost and estimated fair value of securities available for sale at March 31, 2010 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

	Amortized Cost		Fair Value
One year or less	$	-	$	-
After one to five years		15,005		15,074
After five to ten years		8,003		7,970
After ten years		-		-
Total	$	23,008	$	23,044

Management evaluates securities for other-than-temporary-impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

In determining OTTI management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial condition and near term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary-impairment decline exists involves a high degree of subjectivity and judgment and is based on information available to management at a point in time. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

When OTTI for debt securities, occurs under the model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If any entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable tax benefit. The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

At March 31, 2010, the Company’s available for sale securities portfolio consisted of 13 securities, of which 8 were in an unrealized loss position for less than twelve months and none were in a loss position for more than twelve months. No OTTI charges were recorded for the three months ended March 31, 2010. The Company does not intend to sell these securities and it is not more likely than not that we will be required to sell these securities. Unrealized losses primarily relate to interest rate fluctuations and not credit concerns.

There were no securities held to maturity at March 31, 2010 due to the maturity of a bond anticipation note during the first quarter of 2010, in the amount of $4.3 million. At December 31, 2009, there was $4.3 million in securities held to maturity. A summary of held to maturity securities at December 31, 2009 is as follows (in thousands):

December 31, 2009		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
Obligations of states and political subdivisions		$	4,296			$	1			$	-			$	4,297

Securities with an amortized cost of $2.0 million, and a fair value of $2.0 million, were pledged to secure public funds on deposit at March 31, 2010 and December 31, 2009.

Note 7.	Loans.

	The components of the loan portfolio at March 31, 2010 and December 31, 2009 are summarized as follows (in thousands):

	March 31, 2010		December 31, 2009

Real estate	$	185,792	$	177,031
Commercial		36,665		34,036
Credit lines		48,688		47,536
Consumer		4,470		3,328

	$	275,615	$	261,931

The Bank grants commercial, mortgage and installment loans primarily to New Jersey residents and businesses within its local trading area. Each of its borrower’s ability to repay or otherwise satisfy its obligations is dependent upon various factors, including the borrower’s income and net worth and, if the obligations are secured by collateral, the cash flows generated by the underlying collateral, the value of the underlying collateral, and the priority of the Bank’s lien on the underlying collateral. Such factors are dependent upon various economic conditions and individual circumstances beyond the Bank’s 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 provisions for loan losses are made to maintain an allowance for loan losses which management believes is adequate to absorb probable losses inherent in the loan portfolio.

The following tables present the activity in the allowance for loan losses during the periods indicated (in thousands):

	Three months ended
	March 31, 2010		March 31, 2009

Balance at beginning of period	$	2,792	$	2,371
Provision charged to expense		270		61

Balance at end of period	$	3,062	$	2,432

Impaired loans and related amounts recorded in the allowance for loan losses are summarized as follows:

	March 31, 2010			December 31, 2009
Impaired loans without a valuation allowance	$	812		$	1,181
Impaired loans with a valuation allowance		2,777			2,777
Valuation allowance related to impaired loans		(175	)		(99	)
	$	3,414		$	3,859

	loan that met the definition of a troubled debt restructuring (“TDR”) loan. TDRs are loans where the contractual terms of the loan have been modified for a borrower experiencing financial difficulties. These modifications could include a reduction in the interest rate of the loan, payment extensions, forgiveness of principal or other actions to maximize collection. At March 31, 2010, the TDR loan has an outstanding balance of $477 thousand, has no specific reserve connected with it and is performing in accordance with its modified terms.

Note 8.	Guarantees

	The Company does not issue any guarantees that would require liability recognition or disclosure, other than the Bank’s 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 March 31, 2010, the Bank had $725 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 March 31, 2010 for guarantees under standby letters of credit issued is not material.

Note 9.	Fair Value Measurements

	The Company adopted the guidance on fair value measurement now codified as FASB ASC Topic 820, “Fair Value Measurement and Disclosures”, on January 1, 2008. Under ASC Topic 820, fair value measurements are not adjusted for transaction costs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below: Management uses its best judgment in estimating the fair value of the Company’s financial instruments, however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period end and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at the respective reporting dates. FASB ASC Topic 820, “Fair Value Measurement and Disclosures” establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

	• Level 1 Inputs - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. • Level 2 Inputs - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. • Level 3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).

	An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2010 and December 31, 2009, respectively, are as follows (in thousands):

Description		March 31, 2010				(Level 1) Quoted Prices in Active Markets for Identical				(Level 2) Significant Other Observable				(Level 3) Significant Unobservable Inputs
Securities available for sale		$	23,044			$	1,998			$	21,046			$	-

Description		December 31, 2009				(Level 1) Quoted Prices in Active Markets for Identical				(Level 2) Significant Other Observable				(Level 3) Significant Unobservable Inputs
Securities available for sale		$	21,111			$	2,000			$	19,111			$	-

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2010 and December 31, 2009, respectively, follows (in thousands):

Description		March 31, 2010				(Level 1) Quoted Prices in Active Markets for Identical				(Level 2) Significant Other Observable				(Level 3) Significant Unobservable Inputs
Impaired Loans		$	2,602			$	-			$	-			$	2,602

Description		December 31, 2009				(Level 1) Quoted Prices in Active Markets for Identical				(Level 2) Significant Other Observable				(Level 3) Significant Unobservable Inputs
Impaired Loans		$	2,678			$	-			$	-			$	2,678

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s finanical instruments at March 31, 2010 and December 31,2009:

Cash and Cash Equivalents (Carried at cost)

The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values.

Securities

The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining market prices on nationally recognized securities exchanges

(level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquiditiy and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Internal cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.

Restricted Investment in Bank Stock (Carried at Cost)

The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Loans Receivable (Carried at Cost)

The fair value of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and the interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired loans

Impaired loans are those that are accounted for under ASC Topic 310-4, Troubled Debt Restructuring, in which the Company has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally deteremined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Accrued Interest Receivable and Payable (Carried at Cost

The carrying amount of accrued interest receivable and accrued interest payable approximates fair value

Deposits (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities of time deposits.

The carrying amount approximates fair value.

Fair value estimates and assumptions are set forth below for the Company’s financial instruments at March 31, 2010 and December 31, 2009 (in thousands):

	March 31, 2010				December 31, 2009
	Carrying		Estimated Fair		Carrying		Estimated Fair

Cash and cash equivalents	$	19,153	$	19,153	$	18,098	$	18,098
Securities available for sale		23,004		23,044		21,111		21,111
Securities held to maturity		-		-		4,296		4,297
Restricted investment in bank		419		419		419		419
Net loans		272,569		272,907		261,152		261,329
Accrued interest receivable		1,521		1,521		1,173		1,173
Financial liabilities:
Deposits		278,512		273,578		267,143		268,101
Short term borrowings		–		–		–		–
Accrued interest payable		444		444		372		372

	Limitation The preceding fair value estimates were made at March 31, 2010 and December 31, 2009 based on pertinent market data and relevant information on the financial instrument. These estimates do not include any premium or discount that could result from an offer to sell at one time the Company’s entire holdings of a particular financial instrument or category thereof. Since no market exists for a substantial portion of the Company’s financial instruments, fair value estimates were necessarily based on judgments regarding future expected loss experience, current economic conditions, risk assessment of various financial instruments, and other factors. Given the innately subjective nature of these estimates, the uncertainties surrounding them and the matter of significant judgment that must be applied, these fair value estimates cannot be calculated with precision. Modifications in such assumptions could meaningfully alter these estimates. Since these fair value approximations were made solely for on- and off-balance-sheet financial instruments at March 31, 2010 and December 31, 2009, no attempt was made to estimate the value of anticipated future business. Furthermore, certain tax implications related to the realization of the unrealized gains and losses could have a substantial impact on these fair value estimates and have not been incorporated into the estimates.

Note 10.	Recent Accounting Pronouncements

	In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-01, Equity (Topic 505) – Accounting for Distributions to Shareholders with Components of Stock and Cash. The amendments in this update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. This update codifies the consensus reached in EITF Issue No. 09-E, “Accounting for Stock Dividends, Including Distributions to Shareholders with Components of Stock and Cash.” This update is effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The implementation of this standard did not have a material impact on our consolidated financial statements. In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810) – Accounting and Reporting for Decreases in Ownership of a Subsidiary – A Scope Clarification. This update clarifies that the scope of the decrease in ownership provisions of Subtopic 810-10 and related guidance applies to:
	●	A subsidiary or group of assets that is a business or nonprofit activity;

	●	A subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture; and
	●	An exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture).

	This update also clarifies that the decrease in ownership guidance in Subtopic 810-10 does not apply to (a) sales of in substance real estate; and (b) conveyances of oil and gas mineral rights, even if these transfers involve businesses.

	The amendments in this update expand the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets to include:

	●	The valuation techniques used to measure the fair value of any retained investment;
	●	The nature of any continuing involvement with the subsidiary or entity acquiring the group of assets; and
	●	Whether the transaction that resulted in the deconsolidation or derecognition was with a related party or whether the former subsidiary or entity acquiring the assets will become a related party after the transaction.

	This update is effective beginning in the period that an entity adopts FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB 51 (now included in Subtopic 810-10). If an entity has previously adopted Statement 160, the amendments are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopts Statement 160. The implementation of this standard did not have a material impact on our consolidated financial statements. The FASB has issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurements as set forth in Codification Subtopic 820-10. The FASB’s objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10 to now require:

	●	A reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and
	●	In the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements.

	In addition, ASU 2010-06 clarifies the requirements of the following existing disclosures:

	●	●For purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities; and
	●	●A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements.

	ASU 2010-06 is effective for interim and annual reporting period beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our financial position or results of operation.

ITEM 2. Management’s 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 our audited consolidated financial statements for the year ended December 31, 2009 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented in our Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission.

Statements Regarding Forward Looking Information

This document contains forward-looking statements, in addition to historical information. Forward looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. The U.S. Private Securities Litigation Reform Act of 1995 provides a safe harbor in regard to the inclusion of forward-looking statements in this document and documents incorporated by reference.

You should note that many factors, some of which are discussed elsewhere in this document and in the documents that are incorporated by reference, could affect the future financial results of Bancorp of New Jersey, Inc. and its subsidiary and could cause those results to differ materially from those expressed in the forward-looking statements contained or incorporated by reference in this document. These factors include, but are not limited, to the following:

Current economic crisis affecting the financial industry;

Volatility in interest rates and shape of the yield curve;

Increased credit risk and risks associated with the real estate market;

Operating, legal and regulatory risk;

Economic, political and competitive forces affecting the Company’s business; and

That management’s analysis of these risks and factors could be incorrect, and/or that the strategies developed to address them could be unsuccessful.

Bancorp of New Jersey, Inc., referred to as “we” or the “Company,” cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, all of which change over time, and we assume no duty to update forward-looking statements, except as may be required by applicable law or regulation, we do not undertake, and specifically disclaim any obligation, to publicly release any revisions to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. We caution readers not to place undue reliance on any forward-looking statements. These statements speak only as of the date made, and we advise readers that various factors, including those described above, could affect our financial performance and could cause actual results or circumstances for future periods to differ materially from those anticipated or projected.

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 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 evaluate the adequacy of the allowance for loan losses, increases to the allowance for loan losses may be necessary based on changes in economic conditions, particularly changes affecting New Jersey customers and small businesses. In addition to management’s review, various regulatory agencies, as an integral part of their examination process, periodically review our allowance for loan losses. Such agencies may require us to make additional provisions for loan losses, in order to increase the allowance, based on their judgments about information available to them at the time of their examinations.

Deferred Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the period in which the deferred tax asset or liability is expected to be settled or realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period in which the change occurs. Deferred tax assets are reduced, through a valuation allowance, if necessary, by the amount of such benefits that are not expected to be realized based on current available evidence.

Results of Operations

Three Months Ended March 31, 2010 compared to Three Months Ended March 31, 2009

Our results of operations depend primarily on net interest income, which is the difference between interest income on interest-earning assets and interest expense on 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 salaries and employee benefits, occupancy and equipment expense, and other expenses, and income taxes.

Net Income

Net income for the first quarter of 2010 reached $514 thousand compared to net income of $116 thousand for the first quarter of 2009. This increase was powered, primarily, by increased net interest income. During the first quarter of 2010, net interest income increased by 60.5%, or approximately $1.1 million, to $3.0 million from $1.9 million for the first quarter of 2009.

On a per share basis, basic and diluted earnings per share reached $0.10 for the first quarter of 2010 compared to $0.02 per share for the same period in 2009, an increase of 400%.

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. For the three month period ended March 31, 2010, the growth in net interest income has been, primarily, driven by increased interest income from loans, including fees, and a focus on lower cost deposits. During the first quarter of 2010, net interest income reached $3.0 million from $1.9 million during the first quarter of 2009. As a result of the increased net interest income, the Company was able to absorb increases in non-interest expense and the provision for loan losses of approximately $267 thousand, or 16.3%, up to $1.9 million for the first three months of 2010 from $1.6 million for the same period one year ago, and $209 thousand, or 342.6%, up to $270 thousand for the first three months of 2010, from $61 thousand for the first three months of 2009, respectively.

Provision for Loan Losses

The provision for loan losses was $270 thousand for the three months ended March 31, 2010 as compared to $61 thousand for the three months ended March 31, 2009. The increase in the provision is reflective of growth in the portfolio as well as an increase in the Bank’s non-accruing loans. At March 31, 2010, the Bank had non-accruing loans of $3.1 million as compared to $2.0 million at the same date last year.

Non-interest Income

Non-interest income, which was primarily attributable to service fees, was $38 thousand during the quarter ended March 31, 2010 and was unchanged from the same period in the prior year.

Non-interest Expense

Non-interest expense reached $1.9 million during the first quarter of 2010 compared to $1.6 million in the first quarter of 2009, an increase of approximately $267 thousand. This increase reflects increased salaries and employee benefits, occupancy and equipment expense, and other expenses related to opening and operating a new office location, as well as the overall growth of the Company. Additionally, the Federal Deposit Insurance Premiums increased as a result of the overall increase in deposits.

Income Tax Expense

The income tax provision increased $257 thousand up to $351 thousand for the quarter ended March 31, 2010, as compared to $94 thousand for the quarter ended March 31, 2009. The increase in the income tax expense for the quarter ended March 31, 2010 as compared to the quarter ended March 31, 2009, was due mostly to the increase in the Company’s pre-tax income which increased $655 thousand, year over year.

FINANCIAL CONDITION

Total consolidated assets increased $10.3 million, or approximately 3.2%, from $319.6 million at December 31, 2009 to $329.9 million at March 31, 2010. Total deposits increased from $267.1 million at December 31, 2009 to $278.5 million at March 31, 2010, an increase of $11.4 million, or approximately 4.3%. Loans receivable, or “total loans,” increased from $263.9 million at December 31, 2009 to $275.6 million at March 31, 2010, an increase of approximately $11.4 million, or 4.4%.

Loans

Our loan portfolio is the primary component of our assets. Total loans increased by 4.4% since December 31, 2009, to reach $275.6 million at March 31, 2010. At December 31, 2009, our total loans were approximately $263.9 million. While we have focused on conservative lending practices, the growth in the loan portfolio continues to be supported by 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 opportunities for loan growth within the Bergen County market of northern New Jersey, due in part, to continued and recent events surrounding larger banking institutions within our geographic region. 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 endeavor to provide. We also provide a level of service and decision making which we believe can only be provided by community banks. Our safety and capital levels have also led to certain opportunities within our market.

Our loan portfolio consists of commercial loans, real estate loans, and consumer loans. Commercial loans are made for the purpose of providing working capital and 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, which are generally secured by the personal property owned or being purchased by the borrowers.

Our loans are primarily to businesses and individuals located in Bergen County, New Jersey. We have not made loans to borrowers outside of the United States. We continue to focus on conservative lending practices. 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 prudent lending, 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 asset is our loans. Inherent in the lending function is the risk of the borrower’s inability to repay a loan under its existing terms. Risk elements include non-accrual loans, past due and restructured loans, potential problem loans, loan concentrations, and other real estate owned.

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 of 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 borrower’s 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.

As of March 31, 2010 the Bank had five impaired loans totaling approximately $3.6 million, of which two loans totaling approximately $2.8 million had specific reserves of $175 thousand and three loans totaling approximately $812 thousand had no specific reserve. If interest had been accrued, such income would have been approximately $60 thousand for the three month period ended March 31, 2010. Within its impaired loans at March 31, 2010, the Bank had one residential mortgage loan that met the definition of a troubled debt restructured (“TDR”) loan. TDRs are loans where the contractual terms of the loan have been modified for a borrower experiencing financial difficulties. These modifications could include a reduction in the interest rate of the loan, payment extensions, forgiveness of principal or other actions to maximize collection. At March 31, 2010, the TDR loan has an outstanding balance of $477 thousand, has no specific reserve connected with it and is performing in accordance with its modified terms.

As of March 31, 2010 and December 31, 2009, there were no concentrations of loans (other than those categories of loans disclosed in Note 7 in Notes to the Financial Statements in this Quarterly Report on Form 10-Q) which exceeded 10% of our total loans, and we had no foreign loans. Furthermore, our loan portfolio does not contain any sub-prime loans.

Investment Securities

Securities held as available for sale (“AFS”) were approximately $23.0 million at March 31, 2010 compared to $21.1 million at December 31, 2009. This increase in the AFS category represented the purchase of securities during the period with funds in excess of federal funds sold. There were no securities held to maturity at March 31, 2010 due to the maturity of a bond anticipation note during the first quarter of 2010, in the amount of $4.3 million. At December 31, 2009, there was $4.3 million in securities held to maturity.

Deposits

Deposits remain our primary source of funds. Total deposits increased from $267.1 million at December 31, 2009 to $278.5 million at March 31, 2010, an increase of $11.4 million, or 4.3%. This increase is directly attributable to an increase in our time deposit accounts, and we believe it reflects the public perception of our safety and soundness. During this interest rate environment, our attractive time deposit products have allowed the Bank to increase its overall deposits while still being able to reduce its overall cost of deposits and thereby increasing its net interest income.

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 $278.5 million at March 31, 2010 as compared to $267.1 million at December 31, 2009.

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 maintaining liquidity. Through our investment portfolio, we also attempt to manage our maturity gap, by seeking maturities of investments which coincide with maturities of deposits. The investment portfolio also includes securities available for sale to provide liquidity for anticipated loan demand and other liquidity needs.

As of March 31, 2010, 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. There are no amounts outstanding under either facility at March 31, 2010. The bank is also a member of the Federal Home Bank of New York (“FHLBNY”). The FHLBNY relationship could provide additional sources of liquidity, if required.

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 loan losses, certain qualifying long-term debt, and preferred stock which does not qualify as 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.”

Pursuant to federal regulation 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 regulator’s 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 applicable minimum leverage ratio will be evaluated and established through the ongoing regulatory examination process.

The following table summarizes the Bank’s risk-based capital and leverage ratios at March 31, 2010, as well as the applicable minimum ratios:

	March 31, 2010			Minimum Regulatory Requirements
Risk-Based Capital:
Tier 1 Capital Ratio		18.62	%		4.00	%
Total Capital Ratio		19.76	%		8.00	%
Leverage Ratio		15.44	%		4.00	%

The capital levels detailed above reflect the success of our initial stock offering as well as our results of operations. As we continue to employ our capital and grow our operations, we expect that our capital levels will decrease, but that we will remain a “well-capitalized” institution.

The Company is subject to regulatory capital requirements which are substantially similar to those of the Bank.

ITEM 3. Quantitative and Qualitative Disclosures about Market/Interest Risk

As a smaller reporting company, the Company is not required to provide the information otherwise required by this Item.

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 Operating 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 Operating 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 March 31, 2009. Based upon that evaluation, our Chief Executive Officer and Chief Operating Officer concluded that our disclosure controls and procedures were effective as of March 31, 2010.

Changes in internal controls over financial reporting.

There was no change in our internal control over financial reporting identified during the quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 1A. Risk Factors

As a smaller reporting company, the Company is not required to provide the information otherwise required by this Item.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. (Removed and Reserved)

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 28.

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.

Dated: May 14, 2010	By:	/s/ Albert F. Buzzetti
		Albert F. Buzzetti
		Chief Executive Officer


	By:	/s/ Michael Lesler
		Michael Lesler
		President and Chief Operating Officer

EXHIBIT INDEX

Exhibit Number		Description

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