##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the transition period from  to
 Commission File No. 001-33934
 Cape Bancorp, Inc.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    26-1294270(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)225 North Main Street, Cape May Court House, New Jersey
    
    08210(Address of Principal Executive Offices)
    
    Zip Code
 (609) 465-5600
(Registrants telephone number)
 N/A
(Former name or former address, if changed since last report)
 o þ
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller Reporting Company o(Do not check if smaller reporting company)
 YES o NO þ




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##### 



CAPE BANCORP, INC.
FORM 10-Q
 Index
 PagePart I. Financial InformationItem 1. Financial Statements
    
    
    3Consolidated Balance Sheets as of March 31, 2009 (unaudited) and December 31, 2008
    
    
    3Consolidated Statements of Income for the Three Months Ended March 31, 2009 and
March 31, 2008 (unaudited)
    
    
    4Consolidated Statements of Changes in Stockholders Equity for the Twelve Months
Ended December 31, 2008 and Three Months Ended March 31, 2009 (unaudited)
    
    
    5Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and
March 31, 2008 (unaudited)
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27Part II. Other InformationItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3. Defaults upon Senior Securities
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    29Signature Page
    
    
    30Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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##### Table of Contents



Item 1. Financial Statements
 CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (unaudited)March 31,
    
    
    December 31,2009
    
    
    2008(in thousands)ASSETSCash & due from financial institutions
    
    $
    12,176
    
    
    $
    10,117Federal funds sold
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    12,176
    
    
    
    10,117Interest-earning deposits in other financial institutions
    
    
    10,332
    
    
    
    17,918Investment securities available for sale, at fair value (amortized
cost of $133,186 at March 31, 2009 and $123,831 at December 31, 2008)
    
    
    124,792
    
    
    
    114,655Investment securities held to maturity (fair value of $51,568
at March 31, 2009 and $49,938 at December 31, 2008)
    
    
    50,337
    
    
    
    48,825Loans held for sale
    
    
    576
    
    
    
    Loans, net of allowance of $11,924 and $11,240
    
    
    794,226
    
    
    
    783,869Accrued interest receivable
    
    
    5,048
    
    
    
    4,736Premises and equipment, net
    
    
    27,233
    
    
    
    27,342Other real estate owned
    
    
    538
    
    
    
    798Federal Home Loan Bank (FHLB) stock, at cost
    
    
    8,614
    
    
    
    11,602Deferred income taxes
    
    
    17,557
    
    
    
    17,247Bank owned life insurance (BOLI)
    
    
    26,701
    
    
    
    26,446Goodwill
    
    
    22,575
    
    
    
    22,575Intangible assets, net
    
    
    731
    
    
    
    786Assets held for sale
    
    
    2,026
    
    
    
    2,026Other assets
    
    
    2,248
    
    
    
    1,793Total assets
    
    $
    1,105,710
    
    
    $
    1,090,735LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesDepositsNoninterest-bearing deposits
    
    $
    64,628
    
    
    $
    63,258Interest-bearing deposits
    
    
    725,718
    
    
    
    647,872Borrowings
    
    
    168,058
    
    
    
    234,484Advances from borrowers for taxes and insurance
    
    
    600
    
    
    
    585Accrued interest payable
    
    
    827
    
    
    
    778Other liabilities
    
    
    4,656
    
    
    
    3,033Total liabilities
    
    
    964,487
    
    
    
    950,010Stockholders EquityCommon stock, $.01 par value: authorized 100,000,000 shares; issued
and outstanding 13,313,521 shares
    
    
    133
    
    
    
    133Additional paid-in capital
    
    
    126,775
    
    
    
    126,801Unearned ESOP shares
    
    
    (10,126
    )
    
    
    (10,232
    )Accumulated other comprehensive income (loss), net
    
    
    (5,505
    )
    
    
    (6,022
    )Retained earnings
    
    
    29,946
    
    
    
    30,045Total stockholders equity
    
    
    141,223
    
    
    
    140,725Total liabilities & stockholders equity
    
    $
    1,105,710
    
    
    $
    1,090,735
   3




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##### Table of Contents



CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (unaudited)
 Three months ended March 31,2009
    
    
    2008(dollars in thousands, except share data)Interest income:Interest on loans
    
    $
    11,627
    
    
    $
    11,048Interest and dividends on investmentsTaxable
    
    
    855
    
    
    
    1,235Tax-exempt
    
    
    345
    
    
    
    268Interest on mortgage-backed securities
    
    
    1,116
    
    
    
    903Total interest income
    
    
    13,943
    
    
    
    13,454Interest expense:Interest on deposits
    
    
    3,611
    
    
    
    4,788Interest on borrowings
    
    
    1,596
    
    
    
    1,429Total interest expense
    
    
    5,207
    
    
    
    6,217Net interest income before provision for loan losses
    
    
    8,736
    
    
    
    7,237Provision for loan losses
    
    
    745
    
    
    
    283Net interest income after provision for loan losses
    
    
    7,991
    
    
    
    6,954Non-interest income:Service fees
    
    
    709
    
    
    
    666Net gains on sale of loans
    
    
    27
    
    
    
    19Net income from BOLI
    
    
    292
    
    
    
    266Net rental income
    
    
    86
    
    
    
    84Gain/ (loss) on sales of investment
securities available for sale, net
    
    
    
    
    
    
    Other than temporary impairment
    
    
    (1,539
    )
    
    
    Loss on disposal of other assets
    
    
    
    
    
    
    Loss on sale of OREO
    
    
    (29
    )
    
    
    Other
    
    
    21
    
    
    
    64Total non-interest income
    
    
    (433
    )
    
    
    1,099Non-interest expense:Salaries and employee benefits
    
    
    4,727
    
    
    
    3,353Occupancy and equipment
    
    
    856
    
    
    
    743Federal insurance premiums
    
    
    854
    
    
    
    152Data processing
    
    
    279
    
    
    
    318Charitable foundation contribution
    
    
    
    
    
    
    6,256Advertising
    
    
    51
    
    
    
    182Telecommunications
    
    
    202
    
    
    
    175Professional services
    
    
    223
    
    
    
    210OREO write-down
    
    
    68
    
    
    
    Other operating
    
    
    824
    
    
    
    885Total non-interest expense
    
    
    8,084
    
    
    
    12,274Income (loss) before income taxes
    
    
    (526
    )
    
    
    (4,221
    )Income tax expense (benefit)
    
    
    (427
    )
    
    
    (1,975
    )Net income (loss)
    
    $
    (99
    )
    
    $
    (2,246
    )Earnings (loss) per share (see Note 9):Basic
    
    $
    (0.01
    )
    
    $
    (0.22
    )Diluted
    
    $
    (0.01
    )
    
    $
    (0.22
    )Weighted average number of shares outstanding:Basic
    
    
    12,296,879
    
    
    
    12,311,190Diluted
    
    
    12,296,879
    
    
    
    12,311,190
   4




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##### Table of Contents



CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Year ended December 31, 2008 and three months ended March 31, 2009
(unaudited)
 AccumulatedOther
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Unearned ESOP
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Shares
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Equity(in thousands)Balance, January 1, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    72,536
    
    
    $
    293
    
    
    $
    72,829Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,491
    )
    
    
    
    
    
    
    (42,491
    )Net unrealized losses, net of reclassification
adjustments and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,315
    )
    
    
    (6,315
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,806
    )Conversion from mutual to stock company and
simultaneous acquisition of Boardwalk Bancorp
    
    
    133
    
    
    
    126,832
    
    
    
    (10,658
    )
    
    
    
    
    
    
    
    
    
    
    116,307ESOP shares earned
    
    
    
    
    
    
    (31
    )
    
    
    426
    
    
    
    
    
    
    
    
    
    
    
    395Balance, December 31, 2008
    
    
    133
    
    
    
    126,801
    
    
    
    (10,232
    )
    
    
    30,045
    
    
    
    (6,022
    )
    
    
    140,725Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (99
    )
    
    
    
    
    
    
    (99
    )Net unrealized losses, net of reclassification
adjustments and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    517
    
    
    
    517Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    418ESOP shares earned
    
    
    
    
    
    
    (26
    )
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    80Balance, March 31, 2009
    
    $
    133
    
    
    $
    126,775
    
    
    $
    (10,126
    )
    
    $
    29,946
    
    
    $
    (5,505
    )
    
    $
    141,223
   5




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##### Table of Contents



CAPE BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three months ended March 31,2009
    
    
    2008(in thousands)Cash
flows from operating activitiesNet income (loss)
    
    $
    (99
    )
    
    $
    (2,246
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Provision for loan losses
    
    
    745
    
    
    
    283Net gain on the sale of loans
    
    
    (27
    )
    
    
    (19
    )Net loss on the sale of other real estate owned
    
    
    29
    
    
    
    Write-down of other real estate owned
    
    
    68
    
    
    
    Loss on impairment of securities
    
    
    1,539
    
    
    
    Earnings on BOLI
    
    
    (255
    )
    
    
    (229
    )Depreciation and amortization
    
    
    519
    
    
    
    135ESOP compensation expense
    
    
    80
    
    
    
    76Stock issuance for charitable contribution
    
    
    
    
    
    
    5,474Deferred income taxes
    
    
    (576
    )
    
    
    (1,486
    )Changes in assets and liabilities that (used) provided cash:Origination of loans held for sale
    
    
    (2,586
    )
    
    
    (939
    )Proceeds from sale of loans
    
    
    2,010
    
    
    
    1,289Accrued interest receivable
    
    
    (312
    )
    
    
    (1
    )Other assets
    
    
    (420
    )
    
    
    336Accrued interest payable
    
    
    49
    
    
    
    34Other liabilities
    
    
    1,623
    
    
    
    (4,368
    )Net cash provided by operating activities
    
    
    2,387
    
    
    
    (1,661
    )Cash
flows from investing activitiesProceeds from calls, maturities, and principal repayments of investment securities and
mortgage-backed
securities
    
    
    14,454
    
    
    
    11,523Purchases of investment securities and mortgage-backed securities
    
    
    (26,835
    )
    
    
    (11,257
    )Redemption of Federal Home Loan Bank stock
    
    
    2,988
    
    
    
    (1,439
    )Proceeds from sale of other real estate owned
    
    
    163
    
    
    
    (Increase) decrease in interest-earning deposits in other financial institutions
    
    
    7,586
    
    
    
    (909
    )Increase in loans, net
    
    
    (11,287
    )
    
    
    (15,814
    )Purchase of property and equipment, net
    
    
    (277
    )
    
    
    (504
    )Acquisition of Boardwalk Bancorp
    
    
    
    
    
    
    (46,839
    )Net cash used in investing activities
    
    
    (13,208
    )
    
    
    (65,239
    )Cash flows from financing activitiesNet increase in deposits
    
    
    79,265
    
    
    
    2,540Increase in advances from borrowers for taxes and insurance
    
    
    15
    
    
    
    34Borrowings
    
    
    35,000
    
    
    
    37,758Payments on borrowings
    
    
    (101,400
    )
    
    
    (5,000
    )Net proceeds from stock issuance in conversion
    
    
    
    
    
    
    39,883Net cash provided by financing activities
    
    
    12,880
    
    
    
    75,215Net increase (decrease) in cash and cash equivalents
    
    
    2,059
    
    
    
    8,315Cash and cash equivalents at beginning of period
    
    
    10,117
    
    
    
    15,631Cash and cash equivalents at end of period
    
    $
    12,176
    
    
    $
    23,946Supplementary disclosure of cash flow information:Cash paid during period for:Interest
    
    $
    5,158
    
    
    $
    5,660Income taxes, net of refunds
    
    $
    (586
    )
    
    $
    Supplementary disclosure of non-cash financing and investing activities:Stock subscriptions applied to equity
    
    
    n/a
    
    
    $
    21,500Issuance of stock to charitable foundation
    
    
    n/a
    
    
    $
    5,474Issuance of stock for acquisition of Boardwalk Bancorp
    
    
    n/a
    
    
    $
    49,461
   6




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##### Table of Contents



Notes to Financial Statements (Unaudited)
 NOTE 1  ORGANIZATION
        NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Financial Statement Presentation:
  Use of Estimates:
 Cash and Cash Equivalents:
 Interest-Bearing Deposits in Other Financial Institutions:
  7




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##### Table of Contents



Investment Securities:
  Loans Held for Sale:
 Loans and Allowance for Loan Losses:
     Other Real Estate Owned:
 Premises and Equipment:
  8




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##### Table of Contents



Federal Home Loan Bank (FHLB) Stock:
 Bank Owned Life Insurance (BOLI):
 Goodwill and Other Intangible Assets:
  Loan Commitments and Related Financial Instruments:
 Defined Benefit Plan:
 4 01(k) Plan:
 Employee Stock Ownership Plan (ESOP):
 Income Taxes: Accounting for
Uncertainty in Income Taxes
  9




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##### Table of Contents



Comprehensive Income (Loss):
 Before Tax
    
    
    Tax Benefit
    
    
    Net of TaxAmount
    
    
    (Expense)
    
    
    Amount(in thousands)Three months ended March 31, 2009Unrealized losses on securitiesUnrealized holding losses arising during the period
    
    $
    (756
    )
    
    $
    257
    
    
    $
    (499
    )Reclassification adjustment for net losses realized in net income
    
    
    1,539
    
    
    
    (523
    )
    
    
    1,016Other comprehensive income, net
    
    $
    783
    
    
    $
    (266
    )
    
    $
    517Three months ended March 31, 2008Unrealized losses on securitiesUnrealized holding losses arising during the period
    
    $
    (954
    )
    
    $
    342
    
    
    $
    (612
    )Reclassification adjustment for net losses realized in net income
    
    
    
    
    
    
    
    
    
    
    Other comprehensive loss, net
    
    $
    (954
    )
    
    $
    342
    
    
    $
    (612
    )
  10




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##### Table of Contents



Operating Segments:
 Recent Accounting Pronouncements: Determining the Fair Value of a Financial Asset when the
Market for That Asset Is Not Active.
   Effect of Newly Issued Accounting Standards:
     11




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##### Table of Contents



NOTE 3  INVESTMENT SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(in thousands)March 31, 2009Investment securities held to maturityMunicipal bonds
    
    $
    24,566
    
    
    $
    598
    
    
    $
    (33
    )
    
    $
    25,131Mortgage-backed securitiesGNMA pass-through certificates
    
    
    17
    
    
    
    1
    
    
    
    
    
    
    
    18FHLMC pass-through certificates
    
    
    2,060
    
    
    
    51
    
    
    
    
    
    
    
    2,111FNMA pass-through certificates
    
    
    10,584
    
    
    
    431
    
    
    
    
    
    
    
    11,015Collateralized mortgage obligations
    
    
    12,372
    
    
    
    289
    
    
    
    (106
    )
    
    
    12,555Grantor Trust (certificates of deposit)
    
    
    738
    
    
    
    
    
    
    
    
    
    
    
    738Total securities held to maturity
    
    $
    50,337
    
    
    $
    1,370
    
    
    $
    (139
    )
    
    $
    51,568Investment securities available for saleDebt securitiesU.S. Government and agency
obligations
    
    $
    42,248
    
    
    $
    470
    
    
    $
    (29
    )
    
    $
    42,689Municipal bonds
    
    
    11,054
    
    
    
    19
    
    
    
    (505
    )
    
    
    10,568Collateralized
debt obligations
    
    
    10,301
    
    
    
    
    
    
    
    (8,937
    )
    
    
    1,364Corporate bonds
    
    
    7,011
    
    
    
    8
    
    
    
    (163
    )
    
    
    6,856Total debt securities
    
    
    70,614
    
    
    
    497
    
    
    
    (9,634
    )
    
    
    61,477Mortgage-backed securitiesGNMA pass-through certificates
    
    $
    747
    
    
    $
    7
    
    
    $
    (1
    )
    
    $
    753FHLMC pass-through certificates
    
    
    19,538
    
    
    
    544
    
    
    
    (12
    )
    
    
    20,070FNMA pass-through certificates
    
    
    32,797
    
    
    
    852
    
    
    
    (291
    )
    
    
    33,358Collateralized mortgage obligations
    
    
    9,490
    
    
    
    90
    
    
    
    (446
    )
    
    
    9,134Total mortgage-backed securities
    
    
    62,572
    
    
    
    1,493
    
    
    
    (750
    )
    
    
    63,315Total securities available for sale
    
    $
    133,186
    
    
    $
    1,990
    
    
    $
    (10,384
    )
    
    $
    124,792
  12




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Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(in thousands)December 31, 2008Investment securities held to maturityMunicipal bonds
    
    $
    24,582
    
    
    $
    604
    
    
    $
    (32
    )
    
    $
    25,154Mortgage-backed securitiesGNMA pass-through certificates
    
    
    17
    
    
    
    1
    
    
    
    
    
    
    
    18FHLMC pass-through certificates
    
    
    2,670
    
    
    
    45
    
    
    
    
    
    
    
    2,715FNMA pass-through certificates
    
    
    10,897
    
    
    
    323
    
    
    
    (17
    )
    
    
    11,203Collateralized mortgage obligations
    
    
    9,922
    
    
    
    199
    
    
    
    (10
    )
    
    
    10,111Grantor Trust (certificates of deposit)
    
    
    737
    
    
    
    
    
    
    
    
    
    
    
    737Total securities held to maturity
    
    $
    48,825
    
    
    $
    1,172
    
    
    $
    (59
    )
    
    $
    49,938Investment securities available for saleDebt securitiesU.S. Government and agency obligations
    
    $
    31,296
    
    
    $
    480
    
    
    $
    (10
    )
    
    $
    31,766Municipal bonds
    
    
    11,024
    
    
    
    26
    
    
    
    (336
    )
    
    
    10,714Collateralized debt obligations
    
    
    11,832
    
    
    
    
    
    
    
    (8,799
    )
    
    
    3,033Corporate bonds
    
    
    4,975
    
    
    
    
    
    
    
    (197
    )
    
    
    4,778Total debt securities
    
    
    59,127
    
    
    
    506
    
    
    
    (9,342
    )
    
    
    50,291Mortgage-backed securitiesGNMA pass-through certificates
    
    $
    773
    
    
    $
    2
    
    
    $
    (12
    )
    
    $
    763FHLMC pass-through certificates
    
    
    20,449
    
    
    
    352
    
    
    
    (31
    )
    
    
    20,770FNMA pass-through certificates
    
    
    33,465
    
    
    
    472
    
    
    
    (539
    )
    
    
    33,398Collateralized mortgage obligations
    
    
    10,017
    
    
    
    31
    
    
    
    (615
    )
    
    
    9,433Total mortgage-backed securities
    
    
    64,704
    
    
    
    857
    
    
    
    (1,197
    )
    
    
    64,364Total securities available for sale
    
    $
    123,831
    
    
    $
    1,363
    
    
    $
    (10,539
    )
    
    $
    114,655
   13




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##### Table of Contents



NOTE 4  LOANS RECEIVABLE
  March 31,
    
    
    December 31,2009
    
    
    2008(in thousands)Commercial mortgage
    
    $
    429,380
    
    
    $
    411,809Residential mortgage
    
    
    235,474
    
    
    
    226,963Construction
    
    
    41,261
    
    
    
    54,187Home equity loans and lines of credit
    
    
    46,571
    
    
    
    46,850Commercial business loans
    
    
    52,440
    
    
    
    54,319Other consumer loans
    
    
    1,356
    
    
    
    1,388Total loans
    
    
    806,482
    
    
    
    795,516Less:Allowance for loan losses
    
    
    11,924
    
    
    
    11,240Deferred loan fees
    
    
    332
    
    
    
    407Loans receivable, net
    
    $
    794,226
    
    
    $
    783,869
  14




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##### Table of Contents



March 31,
    
    
    December 31,2009
    
    
    2008(in thousands)Balance at beginning of year
    
    $
    11,240
    
    
    $
    4,121Allowance from acquired entity
    
    
    
    
    
    
    3,791Provisions charged to operations
    
    
    745
    
    
    
    9,009Charge-offs
    
    
    (70
    )
    
    
    (5,708
    )Recoveries
    
    
    9
    
    
    
    27Balance at end of period
    
    $
    11,924
    
    
    $
    11,240
  March 31,
    
    
    March 31,2009
    
    
    2008(in thousands)Period-end loans with no allocated allowance for loan losses
    
    $
    28,539
    
    
    $
    Period-end loans with allocated allowance for loan losses
    
    
    991
    
    
    
    14,637Total
    
    $
    29,530
    
    
    $
    14,637Amount of the allowance for loan losses allocated
    
    $
    127
    
    
    $
    1,331
 March 31,
    
    
    March 31,2009
    
    
    2008(in thousands)Average of impaired loans during the period
    
    $
    27,264
    
    
    $
    10,659Interest income recognized during impairment
    
    
    21
    
    
    
    Cash-basis interest income recognized
    
    
    15
    
    
    
    
 NOTE 5  FAIR VALUE
       15




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##### Table of Contents



Financial Assets and Liabilities Measured on a Recurring Basis
  Fair Value Measurements
    
    
    Fair Value Measurementsat March 31, 2009
    
    
    at December 31, 2008Quoted
    
    
    
    
    
    
    
    
    
    
    QuotedPrices
    
    
    
    
    
    
    
    
    
    
    Prices inin Active
    
    
    Significant
    
    
    Significant
    
    
    Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    Other
    
    
    Markets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    Unobservable
    
    
    Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs
    
    
    Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(in thousands)
    
    
    (in thousands)Assets:Available for sale securities
    
    $
    53,257
    
    
    $
    70,171
    
    
    $
    1,364
    
    
    $
    42,481
    
    
    $
    69,141
    
    
    $
    3,033
  Fair Value MeasurementsUsing Significant UnobservableInputs (Level 3)CDO SecuritiesAvailable for Sale(in thousands)Beginning balance, January 1, 2009
    
    $
    3,033Accretion/amortization of discount or premium
    
    
    10Payments received
    
    
    (2
    )Decrease in market value of securities included in
other comprehensive income
    
    
    (138
    )Other-than-temporary impairment included in
earnings
    
    
    (1,539
    )Transfers in and/or out of Level 3
    
    
    Ending balance, March 31, 2009
    
    $
    1,364
  16




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Financial Assets and Liabilities Measured on a Non-Recurring Basis
  Fair Value Measurements
    
    
    Fair Value Measurementsat March 31, 2009
    
    
    at December 31, 2008Quoted
    
    
    
    
    
    
    
    
    
    
    QuotedPrices
    
    
    
    
    
    
    
    
    
    
    Prices inin Active
    
    
    Significant
    
    
    Significant
    
    
    Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    Other
    
    
    Markets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    Unobservable
    
    
    Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs
    
    
    Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(in thousands)
    
    
    (in thousands)Assets:Impaired loans
    
    $
    
    
    
    $
    29,530
    
    
    $
    
    
    
    $
    
    
    
    $
    24,998
    
    
    $
    
 Non-Financial Assets and Liabilities Measured on a Non-Recurring Basis
  Fair Value Measurementsat March 31, 2009QuotedPricesin Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(in thousands)Assets:Other real estate owned
    
    $
    
    
    
    $
    
    
    
    $
    538
   17




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##### Table of Contents



NOTE 6  OTHER REAL ESTATE OWNED
   NOTE 7  ACQUISITION OF BOARDWALK BANCORP
     Securities available for sale
    
    $
    92,949Loans, net
    
    
    314,471Goodwill
    
    
    54,523Core deposit and other intangibles
    
    
    1,050Other assets
    
    
    40,027Total assets acquired
    
    
    503,020Deposits
    
    
    (320,520
    )Borrowings
    
    
    (82,729
    )Other liabilities
    
    
    (848
    )Total liabilities assumed
    
    
    (404,097
    )Net assets acquired
    
    $
    98,923
  18




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##### Table of Contents



NOTE 7  ACQUISITION OF BOARDWALK BANCORP
  Three months endedMarch 31, 2008(in thousands)Interest and dividend income
    
    $
    15,887Interest expense
    
    
    7,574Net interest income
    
    
    8,313Provision for loan losses
    
    
    282Net interest income after provision for
loan losses
    
    
    8,031Non-interest income
    
    
    1,128Non-interest expense
    
    
    14,802Income (loss) before income taxes
    
    
    (5,643
    )Income tax expense (benefit)
    
    
    (2,181
    )Net income (loss)
    
    $
    (3,462
    )Basic EPS
    
    $
    (0.22
    )
  NOTE 8  DEPOSITS
  March 31,
    
    
    December 31,2009
    
    
    2008(in thousands)Savings accounts
    
    $
    79,804
    
    
    $
    79,494NOW accounts and money market funds
    
    
    236,282
    
    
    
    212,185Non-interest bearing checking
    
    
    64,628
    
    
    
    63,258Certificates of deposit of less than $100,000
    
    
    244,777
    
    
    
    229,533Certificates of deposit of $100,000 or more
    
    
    164,855
    
    
    
    126,660$
    790,346
    
    
    $
    711,130
  19




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##### Table of Contents



NOTE 9  EARNINGS PER SHARE
   For the three months ended
    
    
    For the two months endedMarch 31, 2009
    
    
    March 31, 2008(dollars in thousands, except share data)Net income (loss)
    
    $
    (99
    )
    
    $
    (2,246
    )Less: Net income from January 1,
2008 to January 31, 2008
    
    
    
    
    
    
    (402
    )Net income (loss) post conversion
for earnings per share
    
    $
    (99
    )
    
    $
    (2,648
    )Weighted average shares outstanding
    
    
    12,296,879
    
    
    
    12,311,190Basic earnings (loss) per share
    
    $
    (0.01
    )
    
    $
    (0.22
    )
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
   Overview
   Comparison of Financial Condition at March 31, 2009 and December 31, 2008
    20




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21




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##### Table of Contents



For the Three Months Ended March 31,2009
    
    
    2008Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Yield
    
    
    Balance
    
    
    Expense
    
    
    Yield(dollars in thousands)AssetsInterest-earning deposits
    
    $
    15,022
    
    
    $
    66
    
    
    
    1.76
    %
    
    $
    7,116
    
    
    $
    74
    
    
    
    4.18
    %Investments
    
    
    187,947
    
    
    
    2,250
    
    
    
    4.79
    %
    
    
    172,004
    
    
    
    2,332
    
    
    
    5.45
    %Loans
    
    
    800,169
    
    
    
    11,627
    
    
    
    5.89
    %
    
    
    677,393
    
    
    
    11,048
    
    
    
    6.56
    %Total interest-earning assets
    
    
    1,003,138
    
    
    
    13,943
    
    
    
    5.64
    %
    
    
    856,513
    
    
    
    13,454
    
    
    
    6.32
    %Noninterest-earning assets
    
    
    106,462
    
    
    
    
    
    
    
    
    
    
    
    124,783Allowance for loan losses
    
    
    (11,340
    )
    
    
    
    
    
    
    
    
    
    
    (6,717
    )Total assets
    
    $
    1,098,260
    
    
    
    
    
    
    
    
    
    
    $
    974,579Liabilities and Stockholders EquityInterest-bearing demand accounts
    
    $
    104,083
    
    
    
    107
    
    
    
    0.42
    %
    
    $
    107,782
    
    
    
    309
    
    
    
    1.15
    %Savings accounts
    
    
    79,460
    
    
    
    117
    
    
    
    0.60
    %
    
    
    81,265
    
    
    
    313
    
    
    
    1.55
    %Money market accounts
    
    
    117,055
    
    
    
    428
    
    
    
    1.48
    %
    
    
    109,975
    
    
    
    904
    
    
    
    3.31
    %Certificates of deposit
    
    
    381,019
    
    
    
    2,959
    
    
    
    3.15
    %
    
    
    325,059
    
    
    
    3,262
    
    
    
    4.04
    %Borrowings
    
    
    205,162
    
    
    
    1,596
    
    
    
    3.16
    %
    
    
    141,948
    
    
    
    1,429
    
    
    
    4.05
    %Total interest-bearing liabilities
    
    
    886,779
    
    
    
    5,207
    
    
    
    2.38
    %
    
    
    766,029
    
    
    
    6,217
    
    
    
    3.26
    %Noninterest-bearing deposits
    
    
    63,840
    
    
    
    
    
    
    
    
    
    
    
    56,682Other liabilities
    
    
    6,230
    
    
    
    
    
    
    
    
    
    
    
    3,502Total liabilities
    
    
    956,849
    
    
    
    
    
    
    
    
    
    
    
    826,213Stockholders equity
    
    
    141,411
    
    
    
    
    
    
    
    
    
    
    
    148,366Total liabilities & stockholders equity
    
    $
    1,098,260
    
    
    
    
    
    
    
    
    
    
    $
    974,579Net interest income
    
    
    
    
    
    $
    8,736
    
    
    
    
    
    
    
    
    
    
    $
    7,237Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.26
    %
    
    
    
    
    
    
    
    
    
    
    3.06
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.53
    %
    
    
    
    
    
    
    
    
    
    
    3.40
    %Net interest income and margin (tax equivalent basis) (1)
    
    
    
    
    
    $
    8,892
    
    
    
    3.59
    %
    
    
    
    
    
    $
    7,352
    
    
    
    3.45
    %Ratio of average interest-earning assets to average
interest-bearing liabilities
    
    
    113.12
    %
    
    
    
    
    
    
    
    
    
    
    111.81
    %
 (1)
    
    In order to present pre-tax income and resultant yields on tax-exempt investments on a basis comparable to those on
taxable investments, a tax equivalent yield adjustment is made to interest income. The tax equilvalent adjustment has been
computed using a Federal income tax rate of 34%, and has the effect of increasing interest income by $156,000, and $115,000
for the three month period ended March 31, 2009 and 2008, respectively. The average yield on investments increased to
5.19% from 4.79% for the three month period ended March 31, 2009 and increased to 5.78% from 5.45% for the
three month period ended March 31, 2008.  22




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##### Table of Contents



Rate/Volume Analysis
  For the Three Months Ended March 31, 2009Compared to March 31, 2008Increase (decrease) due to changes in:Average
    
    
    Average
    
    
    NetVolume
    
    
    Rate
    
    
    Change(in thousands)Interest-Earning AssetsInterest-earning deposits
    
    $
    50
    
    
    $
    (58
    )
    
    $
    (8
    )Investments
    
    
    205
    
    
    
    (287
    )
    
    
    (82
    )Loans
    
    
    1,777
    
    
    
    (1,198
    )
    
    
    579Total interest income
    
    
    2,032
    
    
    
    (1,543
    )
    
    
    489Interest-Bearing LiabilitiesInterest-bearing demand accounts
    
    
    (10
    )
    
    
    (192
    )
    
    
    (202
    )Savings accounts
    
    
    (7
    )
    
    
    (189
    )
    
    
    (196
    )Money market accounts
    
    
    53
    
    
    
    (529
    )
    
    
    (476
    )Certificates of deposit
    
    
    487
    
    
    
    (791
    )
    
    
    (304
    )Borrowings
    
    
    527
    
    
    
    (359
    )
    
    
    168Total interest expense
    
    
    1,050
    
    
    
    (2,060
    )
    
    
    (1,010
    )Total net interest income
    
    $
    982
    
    
    $
    517
    
    
    $
    1,499
  23




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##### Table of Contents



Comparison of Operating Results for the Three Months Ended March 31, 2009 and 2008
 General.
 Interest Income.
  Interest Expense.
   Net Interest Income.
  Provision for Loan Losses.
   24




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##### Table of Contents



Non-Interest Income.
 Non-Interest Expense .
 Income Tax Benefit.
 Critical Accounting Policies
   Allowance for Loan Losses.
 Accounting for
Contingencies, Accounting by Creditors for Impairment of a Loan, an Amendment of FASB Statements No. 5 and 15 Accounting by Creditors for Impairment of a Loan  Income Recognition and
Disclosures, an Amendment of SFAS No. 114
  25




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##### Table of Contents



Securities Impairment.
 Goodwill Impairment.
 Deferred Income Taxes.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 General.
  
    
    originating commercial mortgage loans that generally tend to have shorter maturities
and higher interest rates;
    
    investing in shorter duration investment grade corporate securities, government
agency debt and mortgage-backed securities;
    
    originating adjustable-rate and short-term consumer loans;
    
    selling our long-term residential mortgage loans to our correspondent banks;
    
    obtaining general financing through lower cost deposits;
    
    utilizing both fixed term advances and an overnight line of credit with the Federal
Home Loan Bank of New York; and
    
    utilizing low cost short term brokered deposits as an alternative funding source.
  Net Interest Income Analysis.
  26




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##### Table of Contents



Net Interest IncomeEstimated
    
    
    Increase (decrease) inChange in Interest Rates
    
    Net Interest
    
    
    Estimated Net Interest Income(basis points)(1)
    
    Income
    
    
    Amount
    
    
    Percent(dollars in thousands)+200
    
    $
    38,537
    
    
    $
    (799
    )
    
    
    -2.03
    %+100
    
    
    39,033
    
    
    
    (303
    )
    
    
    -0.77
    %0
    
    
    39,336-100
    
    
    40,012
    
    
    
    676
    
    
    
    1.72
    %-200
    
    
    39,634
    
    
    
    298
    
    
    
    0.76
    %
 
 (1)
    
    Assumes an instantaneous and sustained uniform change in interest rates at all
maturities.   
 Item 4. Controls and Procedures
   
 Part II  Other Information
 
 Item 1. Legal Proceedings
   27




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##### Table of Contents



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    There were no sales of unregistered securities during the period covered by this Report.(b)
    
    The Company commenced its initial stock offering on or about November 23, 2007, and the
offering closed on January 31, 2008. Subscriptions received in the offering earned interest at
Cape Banks passbook savings rate. There has been no material changes in the Companys
projected use of the offering proceeds as from what was disclosed in the section entitled Use
of Proceeds in the Companys Registration Statement on Form S-1 (Commission File
No. 333-146178).(c)
    
    There were no issuer repurchases of securities during the period covered by this Report.
 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
   28




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##### Table of Contents



Item 6. Exhibits
  3.1
    
    
    Charter of Cape Bancorp, Inc. *3.2
    
    
    Amended and Restated Bylaws of Cape Bancorp, Inc. * *4
    
    
    Form of Common Stock Certificate of Cape Bancorp, Inc. *10.1
    
    
    Form of Employee Stock Ownership Plan *10.2
    
    
    Form of Change in Control Agreement *10.3
    
    
    Amended and Restated Phantom Incentive Stock Option Plan *10.4
    
    
    Amended and Restated Phantom Restricted Stock Plan *10.5
    
    
    Form of Director Retirement Plan *10.6
    
    
    Benefit Equalization Plan *31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 *
    
    Filed as exhibits to the Companys Registration Statement on Form S-1, and any amendments
thereto, with the Securities and Exchange Commission (Registration No. 333-146178).**
    
    Filed as an exhibit to the Companys Current Report Form 8-K with the Securities and Exchange
Commission on July 18, 2008.  29




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##### Table of Contents



SIGNATURES
  CAPE BANCORP, INC.Date: May 11, 2009
    /s/ Michael D. DevlinMichael D. DevlinPresident and Chief Executive OfficerDate: May 11, 2009
    /s/ Guy HackneyGuy HackneySenior Vice President and Chief Financial Officer  30




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
  31