BCB BANCORP INC

Previous wording

BCB Bancorp, Inc. is a New Jersey corporation, and is the holding company parent of BCB Community Bank, or the Bank. The Company has not engaged in any significant business activity other than owning all of the outstanding common stock of BCB Community Bank. Our executive office is located at 104-110 Avenue C, Bayonne, New Jersey 07002. At June 30, 2024, we had $3.794 billion in consolidated assets, $2.935 billion in deposits and $320.7 million in consolidated stockholders’ equity.

Current wording

BCB Bancorp, Inc. is a New Jersey corporation, and is the holding company parent of BCB Community Bank, or the Bank. The Company has not engaged in any significant business activity other than owning all of the outstanding common stock of BCB Community Bank. Our executive office is located at 104-110 Avenue C, Bayonne, New Jersey 07002. At September 30, 2024, we had $3.614 billion in consolidated assets, $2.725 billion in deposits and $328.1 million in consolidated stockholders’ equity.

Previous wording

BCB Community Bank opened for business on November 1, 2000 as Bayonne Community Bank, a New Jersey chartered commercial bank. The Bank changed its name from Bayonne Community Bank to BCB Community Bank in April 2007. At June 30, 2024, the Bank operated at twenty-three branches in Bayonne, Edison, Jersey City, Hoboken, Fairfield, Holmdel, Lyndhurst, Maplewood, Monroe Township, Newark, Parsippany, Plainsboro, River Edge, Rutherford, South Orange, Union, and Woodbridge, New Jersey, as well as four branches in Hicksville and Staten Island, NY, and through executive offices located at 104-110 Avenue C and an administrative office located at 591-595 Avenue C, Bayonne, New Jersey 07002. The Bank’s deposit accounts are insured by the FDIC, and the Bank is a member of the Federal Home Loan Bank System.

Current wording

BCB Community Bank opened for business on November 1, 2000 as Bayonne Community Bank, a New Jersey chartered commercial bank. The Bank changed its name from Bayonne Community Bank to BCB Community Bank in April 2007. At September 30, 2024, the Bank operated at twenty-three branches in Bayonne, Edison, Jersey City, Hoboken, Fairfield, Holmdel, Lyndhurst, Maplewood, Monroe Township, Newark, Parsippany, Plainsboro, River Edge, Rutherford, South Orange, Union, and Woodbridge, New Jersey, as well as three branches in Hicksville and Staten Island, NY, and through executive offices located at 104-110 Avenue C and an administrative office located at 591-595 Avenue C, Bayonne, New Jersey 07002. The Bank’s deposit accounts are insured by the FDIC, and the Bank is a member of the Federal Home Loan Bank System.

Previous wording

Total assets decreased by $38.5 million, or 1.0 percent, to $3.794 billion at June 30, 2024, from $3.832 billion at December 31, 2023. The decrease in total assets was mainly related to a decrease in loans, offset, somewhat, by an increase in cash and cash equivalents.

Current wording

Total assets decreased by $218.6 million, or 5.7 percent, to $3.614 billion at September 30, 2024, from $3.832 billion at December 31, 2023. The decrease in total assets was mainly related to a decrease in loans of $191.8 million. The decrease was primarily from loan payoffs/paydowns that exceeded loan originations.

Previous wording

Total cash and cash equivalents increased by $47.3 million, or 16.9 percent, to $326.9 million at June 30, 2024, from $279.5 million at December 31, 2023. The increase was primarily cash flows from loan payoffs/paydowns that were not redeployed.

Current wording

Total cash and cash equivalents decreased by $36.4 million, or 13.0 percent, to $243.1 million at September 30, 2024, from $279.5 million at December 31, 2023. The decrease was primarily due to the withdrawal of brokered deposits.

Previous wording

Loans receivable, net, decreased by $117.8 million, or 3.6 percent, to $3.162 billion at June 30, 2024, from $3.280 billion at December 31, 2023. Total loan decreases during the period included decreases of $93.7 million in commercial real estate and multi-family loans and $19.6 million in construction loans due primarily to payoffs/paydowns. 1-4 family residential loans also declined $5.6 million for the same period. Offsetting this was an increase in commercial business loans of $3.2 million. The allowance for credit losses increased $1.6 million to $35.2 million, or 108.6 percent of non-accruing loans and 1.10 percent of gross loans, at June 30, 2024, as compared to an allowance for credit losses of $33.6 million, or 178.9 percent of non-accruing loans and 1.01 percent of gross loans, at December 31, 2023.

Current wording

Loans receivable, net, decreased by $191.8 million, or 5.8 percent, to $3.088 billion at September 30, 2024, from $3.280 billion at December 31, 2023. Total loan decreases during the period included decreases of $137.2 million in commercial real estate multi-family loans, $46.3 million in construction loans and $7.2 million in 1-4 family residential loans for the same period. Commercial business loans also decreased $837 thousand. The allowance for credit losses increased $1.1 million to $34.7 million, or 98.2 percent of non-accruing loans and 1.11 percent of gross loans, at September 30, 2024, as compared to an allowance for credit losses of $33.6 million, or 178.9 percent of non-accruing loans and 1.01 percent of gross loans, at December 31, 2023.

Previous wording

Debt obligations increased by $275 thousand to$510.7 millionat June 30, 2024 from $510.4 million at December 31, 2023. The weighted average interest rate of FHLB advances was 4.21 percent at June 30, 2024 and 4.21 percent at December 31, 2023. The weighted average maturity of FHLB advances as of June 30, 2024 was 1.44 years. The interest rate of the Company’s subordinated debt balances was 8.31 percent at June 30, 2024 and 8.36 percent at December 31, 2023.

Current wording

Total borrowings increased by $23.0 million to$533.4 millionat September 30, 2024 from $510.4 million at December 31, 2023. The increase in borrowings was primarily due to the successful completion of the $40 million subordinated debt offering during the third quarter of 2024. The weighted average interest rate of FHLB advances was 4.26 percent at September 30, 2024 and 4.21 percent at December 31, 2023. The weighted average maturity of FHLB advances as of September 30, 2024 was 1.20 years. The interest rate of the Company’s subordinated debt balances was 8.87 percent at September 30, 2024 and 8.36 percent at December 31, 2023.

Previous wording

Stockholders’ equity increased by $6.7 million, or 2.1 percent, to $320.7 million at June 30, 2024, from $314.1 million at December 31, 2023. The increase was attributable to an increase in the additional paid in capital attributable to its preferred stock of $3.4 million, or 13.4 percent, to $28.4 million at June 30, 2024, and an increase in retained earnings of $2.4 million, or 1.8 percent, to $138.3 million at June 30, 2024 from $135.9 million at December 31, 2023. The increase in its preferred stock paid in capital was due to the issuance of 336 shares of its Series J Noncumulative Perpetual Preferred Stock during the six-month period.

Current wording

Stockholders’ equity increased by $14.1 million, or 4.5 percent, to $328.1 million at September 30, 2024, from $314.1 million at December 31, 2023. The increase was attributable to an increase in additional paid in capital attributable to the issuance of additional shares of preferred stock of $4.7 million during 2024, or 18.8 percent, to $29.8 million at September 30, 2024, and an increase in retained earnings of $5.8 million, or 4.3 percent, to $141.8 million at September 30, 2024 from $135.9 million at December 31, 2023. The increase in preferred stock paid in capital was due to the issuance of 472 shares of its Series J Noncumulative Perpetual Preferred Stock during the nine-month period.

Previous wording

Net interest income decreased by $3.4 million, or 12.4 percent, to $23.6 million for the second quarter of 2024, from $27.0 million for the second quarter of 2023. The decrease in net interest income resulted from higher interest expense which was partially offset by higher interest income.

Current wording

Net interest income decreased by $2.6 million, or 10.3 percent, to $23.0 million for the third quarter of 2024, from $25.7 million for the third quarter of 2023. The decrease in net interest income resulted from higher interest expense and lower interest income.

Previous wording

The net interest margin was 2.60 percent for the second quarter of 2024 compared to 2.92 percent for the second quarter of 2023. The decrease in the net interest margin compared to the second quarter of 2023 was the result of the increase in the cost of interest-bearing liabilities partially offset by the increase in the yield on interest-earning assets.

Current wording

The net interest margin was 2.58 percent for the third quarter of 2024 compared to 2.78 percent for the third quarter of 2023. The decrease in the net interest margin compared to the third quarter of 2023 was the result of the increase in the cost of interest-bearing liabilities partially offset by the increase in the yield on interest-earning assets.

Previous wording

During the second quarter of 2024, the Company recognized $1.8 million in net charge-offs compared to $27 thousand in net charge offs for the second quarter of 2023. A majority of the charge-offs were commercial business and business express loans. Within the commercial loan portfolio, management has seen an uptick in charge-offs of business express loans, that are now reported as a separate segment. The Bank had non-accrual loans totaling $32.4 million, or 1.01 percent of gross loans, at June 30, 2024 as compared to $18.8 million, or 0.57 percent of gross loans, at December 31, 2023. The allowance for credit losses on loans was $35.2 million, or 1.10 percent of gross loans, at June 30, 2024, and $33.6 million, or 1.01 percent of gross loans, at December 31, 2023. The provision for credit losses was $2.4 million for the second quarter of 2024 compared to $1.4 million for the second quarter of 2023. Management continues to actively monitor the performance of its business express loans and has ensured that adequate reserves are maintained against these loans. The uptick in loss experience in the business express loans primarily resulted in an increased loan loss provisioning expense and an increase in the loan loss reserves. Management believes that the allowance for credit losses on loans was adequate at June 30, 2024 and December 31, 2023.

Current wording

During the third quarter of 2024, the Company recognized $3.4 million in net charge-offs compared to $496 thousand in net charge offs for the third quarter of 2023. The Bank had non-accrual loans totaling $35.3 million, or 1.11 percent of gross loans, at September 30, 2024 as compared to $18.8 million, or 0.57 percent of gross loans, at December 31, 2023. The allowance for credit losses on loans was $34.7 million, or 1.11 percent of gross loans, at September 30, 2024, and $33.6 million, or 1.01 percent of gross loans, at December 31, 2023. The provision for credit losses was $2.9 million for the third quarter of 2024 compared to $2.2 million for the third quarter of 2023. Management believes that the allowance for credit losses on loans was adequate at September 30, 2024 and December 31, 2023.

Previous wording

Non-interest income decreased by $4.4 million to a net loss of $3.2 million for the second quarter of 2024 from a net gain of $1.1 million in the second quarter of 2023. The decrease in total non-interest income was mainly related to the aforementioned $4.9 million loss on the sale of loans.

Current wording

Non-interest income increased by $1.7 million to $3.1 million for the third quarter of 2024 from $1.4 million in the third quarter of 2023. The increase in total non-interest income was mainly related to gains on equity investments of $1.1 million in the current quarter compared to losses of $494 thousand in the third quarter of 2023.

Previous wording

Non-interest expense decreased by $719 thousand, or 4.9 percent, to $14.0 million for the second quarter of 2024 from $14.7 million for the second quarter of 2023. The decrease in these expenses for the second quarter of 2024 was primarily driven by a lesser amount of salaries and employee benefits expense, which declined $719 thousand.

Current wording

Non-interest expense decreased by $1.5 million, or 9.9 percent, to $13.9 million for the third quarter of 2024 from $15.5 million for the third quarter of 2023. The decrease in these expenses for the third quarter of 2024 was driven by lower regulatory assessment fees of $445 thousand, salaries and employee benefits expense, which declined $385 thousand, and advertising and promotion costs, which declined by $135 thousand.

Previous wording

The income tax provision decreased by $2.3 million, or 66.3 percent, to $1.2 million for the second quarter of 2024 from $3.4 million for the second quarter of 2023. The consolidated effective tax rate was 29.2 percent for the second quarter of 2024 compared to 28.6 percent for the second quarter of 2023.

Current wording

The income tax provision decreased by $22 thousand, or 0.8 percent, to $2.7 million for the third quarter of 2024. The provision was $2.7 million for the third quarter of 2023. The consolidated effective tax rate was 28.7 percent for both the third quarter of 2024 and for the third quarter of 2023.

Previous wording

Results of Operations Comparison for Six Months Ended June 30, 2024 and 2023

Current wording

Results of Operations Comparison for Nine Months Ended September 30, 2024 and 2023

Previous wording

Net income decreased by $8.0 million, or 48.0 percent, to $8.7 million for the first six months of 2024 from $16.7 million for the first six months of 2023. The decrease in net income was driven, primarily, by lower net interest income of $7.7 million, or 14.1 percent.

Current wording

Net income decreased by $8.1 million, or 34.5 percent, to $15.4 million for the first nine months of 2024 from $23.4 million for the first nine months of 2023. The decrease in net income was driven, primarily, by lower net interest income of $10.3 million, or 12.9 percent.

Previous wording

Net interest income decreased by $7.7 million, or 14.1 percent, to $46.8 million for the first six months of 2024 from $54.5 million for the first six months of 2023. The decrease in net interest income resulted from an increase in interest expense of $16.8 million, partly offset by an increase in interest income of $9.1 million.

Current wording

Net interest income decreased by $10.3 million, or 12.9 percent, to $69.8 million for the first nine months of 2024 from $80.1 million for the first nine months of 2023. The decrease in net interest income resulted from an increase in interest expense of $19.0 million, partly offset by an increase in interest income of $8.7 million.

Previous wording

Interest income increased by $9.1 million, or 10.2 percent, to $98.7 million for the first six months of 2024, from $89.6 million for the first six months of 2023. The average balance of interest-earning assets increased $79.7 million, or 2.2 percent, to $3.669 billion for the first six months of 2024, from $3.590 billion for the first six months of 2023, while the average yield increased 39 basis points to 5.38 percent from 4.99 percent for the same comparable period. The increase in the average balance of interest-earning assets mainly related to an increase in the Company’s level of average interest- bearing bank balances and loans receivable for the first six months of 2024, as compared to the same period in 2023.

Current wording

Interest income increased by $8.7 million, or 6.3 percent, to $147.4 million for the first nine months of 2024, from $138.7 million for the first nine months of 2023. The average balance of interest-earning assets increased $12.7 million, or 0.4 percent, to $3.639 billion for the first nine months of 2024, from $3.626 billion for the first nine months of 2023, while the average yield increased 30 basis points to 5.40 percent from 5.10 percent for the same comparable period. The increase in average cash balances mainly related to the increase in the Company’s level of average interest-bearing bank balances, partially offset by a decline in loan receivables and investments for the first nine months of 2024, as compared to the same period in 2023.

Previous wording

Interest expense increased by $16.8 million, or 47.9 percent, to $51.9 million for 2024, from $35.1 million for 2023. This increase resulted primarily from an increase in the average rate on interest-bearing liabilities of 102 basis points to 3.55 percent for the first six months of 2024, from 2.53 percent for the first six months of 2023, and an increase in the average balance of interest-bearing liabilities of $150.6 million, or 5.4 percent, to $2.927 billion from $2.777 billion over the same period. The increase in the average cost of funds primarily resulted from the higher interest rate environment in the first six months of 2024 compared to the same period in 2023.

Current wording

Interest expense increased by $19.0 million, or 32.5 percent, to $77.5 million for 2024, from $58.5 million for 2023. This increase resulted primarily from an increase in the average rate on interest-bearing liabilities of 82 basis points to 3.57 percent for the first nine months of 2024, from 2.75 percent for the first nine months of 2023, and an increase in the average balance of interest-bearing liabilities of $58.4 million, or 2.1 percent, to $2.892 billion from $2.834 billion over the same period. The increase in the average cost of funds primarily resulted from the higher interest rate environment in the first nine months of 2024 compared to the same period in 2023.

Previous wording

Net interest margin was 2.55 percent for the first six months of 2024, compared to 3.03 percent for the first six months of 2023. The decrease in the net interest margin compared to the prior period was the result of an increase in the cost of the Bank’s interest-bearing liabilities.

Current wording

Net interest margin was 2.56 percent for the first nine months of 2024, compared to 2.95 percent for the first nine months of 2023. The decrease in the net interest margin compared to the prior period was the result of an increase in the cost of the Bank’s interest-bearing liabilities.

Previous wording

During the first six months of 2024, the Company experienced $2.9 million in net charge offs compared to $25 thousand in net recoveries for the same period in 2023. The provision for credit losses was $4.5 million for the first six months of 2024 compared to $2.0 million for the same period in 2023.

Current wording

During the first nine months of 2024, the Company experienced $6.3 million in net charge offs compared to $471 thousand in net recoveries for the same period in 2023. The provision for credit losses was $7.4 million for the first nine months of 2024 compared to $4.2 million for the same period in 2023.

Previous wording

Non-interest income decreased by $579 thousand to a loss of $1.1 million for the first six months of 2024 from a loss of $546 thousand for the first six months of 2023. Losses on sale of loans increased $4.8 million which was partially offset by an increase in realized and unrealized gains and losses on equity securities of $3.8 million, and an increase in BOLI income of $658 thousand. The realized and unrealized gains or losses on equity investments are based on market conditions.

Current wording

Non-interest income increased by $1.1 million to $2.0 million for the first nine months of 2024 from $860 thousand for the first nine months of 2023. Realized and unrealized gains on equity securities and income on Bank Owned Life Insurance (BOLI) increased $5.4 million and $844 thousand, respectively. Offsetting this were losses on the sale of loans of $4.8 million. The realized and unrealized gains or losses on equity investments are based on prevailing market conditions.

Previous wording

Non-interest expense increased by $265 thousand, or 0.9 percent, to $28.8 million for the first six months of 2024 from $28.6 million for the same period in 2023. The increase in operating expenses for 2024 was driven primarily by increases in the off-balance sheet reserves and regulatory assessments of $921 thousand and $763 thousand, respectively. This was partially offset by the Bank recording $1.4 million less in salaries and employee benefits.

Current wording

Non-interest expense decreased by $1.3 million, or 2.9 percent, to $42.8 million for the first nine months of 2024 from $44.0 million for the same period in 2023. The decrease in operating expenses for 2024 was driven primarily by decreases in salaries and employee benefits of $1.7 million. This was partially offset by regulatory assessment costs being $318 thousand greater in 2024.

Previous wording

The income tax provision decreased by $3.0 million or 45.7 percent, to $3.6 million for the first six months of 2024 from $6.7 million for the same period in 2023. The decrease in the income tax provision was a result of the lower taxable income for the six months ended June 30, 2024 compared to the same period in 2023. The consolidated effective tax rate was 29.4 percent for the first six months of 2024 compared to 28.5 percent for the first six months of 2023.

Current wording

The income tax provision decreased by $3.1 million, or 32.7 percent to $6.3 million for the first nine months of 2024 from $9.4 million for the same period in 2023. The consolidated effective tax rate was 29.1 percent for the first nine months of 2024 compared to 28.6 percent for the first nine months of 2023.

Previous wording

At June 30, 2024 and December 31, 2023, the Company had no overnight borrowings outstanding with the FHLB. The Company utilizes overnight borrowings from time to time to fund short-term liquidity needs. The Company had total outstanding borrowings of $510.7 million at June 30, 2024 ascompared to $510.4 million at December 31, 2023.

Current wording

At September 30, 2024 and December 31, 2023, the Company had no overnight borrowings outstanding with the FHLB. The Company utilizes overnight borrowings from time to time to fund short-term liquidity needs. The Company had total outstanding borrowings of $533.5 million at September 30, 2024 ascompared to $510.4 million at December 31, 2023.

Previous wording

At June 30, 2024, the Company had the ability to obtain additional funding from the FHLB of $220.1 million and $480.6 million from the Federal Reserve Bank Discount Window, utilizing unencumbered loan collateral. The Company expects to have sufficient funds available to meet current loan commitments in the normal course of business through typical sources of liquidity. Time deposits scheduled to mature in one year or less totaled $1.210 billion at June 30, 2024. Based upon historical experience data, management estimates that a significant portion of such deposits will remain with the Company.

Current wording

At September 30, 2024, the Company had the ability to obtain additional funding of $189.2 million from the FHLB and $405.9 million from the Federal Reserve Bank Discount Window, utilizing unencumbered loan collateral. The Company expects to have sufficient funds available to meet current loan commitments in the normal course of business through typical sources of liquidity. Time deposits scheduled to mature in one year or less totaled $1.023 billion at September 30, 2024. Based upon historical experience data, management estimates that a significant portion of such deposits will remain with the Company.

Previous wording

The Company also has $4.1 million of mandatory redeemable Trust Preferred securities outstanding. Effective September 18, 2023, the interest rate on these floating rate junior subordinated debentures adjusts quarterly based on the three-month CME Term SOFR, as adjusted by the spread adjustment of 0.26161 percent, plus 2.650%. Prior to September 18, 2023 the rate was based on the three-month LIBOR. The rate paid as of June 30, 2024 and 2023 was 8.251% and 8.160%, respectively. The trust preferred debenture became callable, at the Company’s option, on June 17, 2009, and quarterly thereafter.

Current wording

The Company also has $4.1 million of mandatory redeemable Trust Preferred securities outstanding. Effective September 18, 2023, the interest rate on these floating rate junior subordinated debentures adjusts quarterly based on the three-month CME Term SOFR, as adjusted by the spread adjustment of 0.26161 percent, plus 2.650%. Prior to September 18, 2023 the rate was based on the three-month LIBOR. The rate paid as of September 30, 2024 and 2023 was 7.853% and 8.320%, respectively. The trust preferred debenture became callable, at the Company’s option, on June 17, 2009, and quarterly thereafter.