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Section 1: 8-K (FORM 8-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 27, 2020

BCB BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)


New Jersey
 
0-50275
 
26-0065262
(State or Other Jurisdiction
of Incorporation)
 
(Commission File No.)
 
(I.R.S. Employer
Identification No.)

104-110 Avenue C, Bayonne, New Jersey
 
07002
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (201) 823-0700

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
   
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On April 27, 2020, BCB Bancorp, Inc. (the “Company”) issued a press release reporting its financial results at and for the three months ended March 31, 2020.

A copy of the press release is attached as Exhibit 99.1 to this report and is being furnished to the Securities and Exchange Commission and shall not be deemed filed for any purpose.

Item 8.01               Other Events

On April 27, 2020, the Company announced that the Board of Directors declared a quarterly cash dividend on the Company’s outstanding shares of common stock of $0.14 per share.  The dividend will be payable to stockholders of record as of May 8, 2020 and is expected to be paid on May 22, 2020.

Item 9.01             Financial Statements and Exhibits

(a)
 
Financial statements of businesses acquired.  None.
     
(b)
 
Pro forma financial information.  None.
     
(c)
 
Shell company transactions: None.
     
(d)
 
Exhibits.
   
99.1
 


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, hereunto duly authorized.


   
BCB BANCORP, INC.
 
 
DATE: April 27, 2020
By:
 /s/ Thomas P. Keating
   
Thomas P. Keating
   
Senior Vice President and Chief Financial Officer

(Back To Top)

Section 2: EX-99.1 (PRESS RELEASE)


Contact: Thomas Coughlin,
President & CEO
Thomas Keating, CFO
Michael Lesler, COO
(201) 823-0700





BCB Bancorp, Inc. Reports First Quarter 2020 Net Income of $2.5 Million
Results Reflect Effects of COVID-19
Declares Quarterly Cash Dividend of $0.14 Per Share

BAYONNE, N.J., April 27, 2020 -- BCB Bancorp, Inc. (the “Company”), (NASDAQ: BCBP), the holding company for BCB Community Bank (the “Bank”), today reported net income was $2.5 million for the first quarter of 2020 compared to $5.1 million in the fourth quarter of 2019 and $5.5 million for the first quarter of 2019. Earnings per diluted share for the first quarter of 2020 were $0.12, compared to $0.29 in the preceding quarter and $0.32 in the first quarter of 2019. The Company also announced that its Board of Directors declared a regular quarterly cash dividend of $0.14 per share. The dividend will be payable May 22, 2020, to common shareholders of record on May 8, 2020.
“The success of our banking operation relies solely on the health and well-being of our employees and customers,” stated Thomas Coughlin, President and Chief Executive Officer. “To that end, we began preparations for the COVID-19 pandemic in mid-March by restricting lobby activities at all branches and encouraging the use of drive-up services and ATM machines, Digital Banking and Call Center operations. Much of our workforce is working remotely, or has been relocated, and we will continue with this structure until the mandated Stay-At-Home order has been lifted.
“While our asset quality at quarter end remains strong, we evaluated factors related to the COVID-19 pandemic and its impact on our New Jersey and New York markets,” Coughlin continued. “Consequently, we recorded a $1.5 million loan loss provision, due to the risk of potential loan defaults related to COVID-19 factors.”
“We have been working closely with our customers to educate and provide support on programs available for financial assistance,” said Coughlin. “We have also received inquiries from customers requesting loan payment deferments as well as many customers applying for loans under the Paycheck Protection Plan (“PPP”) offered through the Small Business Administration (“SBA”). We continue to focus on the needs of our small business customers and the retention of their employees. Our lending teams continue to work with our customers during these challenging economic conditions.”

Executive Summary
Net income was $2.5 million in the first quarter of 2020 compared to $5.5 million in the first quarter a year ago.
Earnings per diluted share were $0.12 in the first quarter of 2020, compared to $0.32 in the first quarter of 2019.
Net interest margin (NIM) was 2.63 percent for the first quarter 2020, compared to 2.88 percent in the preceding quarter and 3.18 percent for the first quarter 2019. The NIM compression during the first quarter of 2020 was primarily the result of the current volatile financial markets attributable to the COVID-19 pandemic and the resulting swift reduction in short term interest rates.
Total assets increased 8.2 percent to $2.942 billion at March 31, 2020 from $2.718 billion a year earlier.
Loans receivable, net decreased by 6.2 percent, to $2.164 billion at March 31, 2020 from $2.307 billion a year earlier, as the Company’s focus remains on repositioning the balance sheet.
Allowance for loan losses as a percentage of non-accrual loans was 585.4 percent at March 31, 2020, compared to 405.7 percent at March 31, 2019.
Total deposits increased 8.5 percent, to $2.376 billion at March 31, 2020 from $2.189 billion a year ago.
The Company’s Board of Directors declared a regular quarterly cash dividend of $0.14 per share. The dividend will be payable May 22, 2020, to common shareholders of record on May 8, 2020.
On December 30, 2019, the Company completed the sale of 1,020,408 shares of common stock, at an issuance price of $12.25 per share.
The Company issued $6.3 million of private placement common stock which closed in February 2019 and $5.3 million of preferred series G stock, which was issued in January 2019. The Company had also issued $33.5 million of subordinated debt in July 2018 which, for regulatory purposes, is treated as Tier 1 capital for the Bank and Tier 2 capital for the Company, when applicable.


BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 2
Balance Sheet Review
Total assets increased by $34.5 million, or 1.2 percent, to $2.942 billion at March 31, 2020 from $2.907 billion at December 31, 2019, and increased by $223.6 million, or 8.2 percent from $2.718 billion at March 31, 2019. The increase in total assets was mainly related to increases in total cash and cash equivalents, partly offset by a decrease in net loans receivable.
Loans receivable, net decreased by $14.4 million, or 0.7 percent, to $2.164 billion at March 31, 2020 from $2.178 billion at December 31, 2019, and decreased by $143.1 million, or 6.2 percent compared to $2.307 billion at March 31, 2019. The decrease in loans over the quarter was a result of management’s efforts to continue curtailing loan growth in 2020. Total loan decreases for the first quarter of 2020 included $29.2 million in commercial real estate and multi-family loans, $3.3 million in construction loans and $496,000 in commercial business loans, partly offset by increases of $19.8 million in residential one-to-four family loans, $347,000 in consumer loans and $219,000 in home equity loans.
Total deposits increased by $13.7 million, or 0.6 percent, to $2.376 billion at March 31, 2020 from $2.362 billion at December 31, 2019, and increased by $187.1 million, or 8.5 percent, from $2.189 billion at March 31, 2019. The increases in deposit liabilities mainly related to the continued maturation of the branches opened over the last four years. Total increases for the first quarter of 2020 included $34.6 million in NOW deposit accounts, $21.5 million in non-interest-bearing deposit accounts and $16.2 million in money market checking accounts, partly offset by a decrease of $58.3 million in certificates of deposit, including listing service and brokered deposits, as well as a decrease of $255,000 in savings and club accounts. Listing service and brokered reciprocal certificates of deposit, which were used as additional sources of deposit liquidity to fund loans, totaled $7.5 million and $73.3 million, respectively, at March 31, 2020.
Stockholders’ equity increased by $1.2 million, or 0.5 percent, to $240.7 million at March 31, 2020 from $239.5 million three months earlier, and increased $23.9 million, or 11.0 percent, from $216.7 million a year ago. Accumulated other comprehensive income increased $2.5 million to $271,000 at March 31, 2020 from a loss of $2.2 million at December 31, 2019, related to significant improvements in the value of available-for-sale securities due to the large decrease in interest rates. Treasury stock increased $1.3 million to $23.3 million at March 31, 2020 from $22.0 million at December 31, 2019, related to the repurchase of Company shares. Retained earnings decreased by $261,000 to $48.1 million at March 31, 2020 from $48.4 million at December 31, 2019, due to dividends paid and partially offset by net income in the current quarter.

First Quarter 2020 Income Statement Review
Net interest income decreased by $2.1 million, or 10.2 percent, to $18.8 million for the first quarter of 2020 from $20.9 million for the first quarter of 2019. The decrease in net interest income resulted primarily from a decrease in the average yield on interest-earning assets of 52 basis points to 4.12 percent for the first quarter of 2020 from 4.64 percent for the first quarter of 2019, partly offset by an increase in the average balance of interest-earning assets of $229.2 million, or 8.7 percent, to $2.859 billion for the first quarter of 2020 from $2.629 billion for the first quarter of 2019. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $185.2 million, or 8.4 percent, to $2.393 billion for the first quarter of 2020 from $2.208 billion for the first quarter of 2019, as well as an increase in the average rate on interest-bearing liabilities of five basis points to 1.78 percent for the first quarter of 2020 from 1.73 percent for the first quarter of 2019. Interest income on loans also included $465,000 of amortization of purchase credit fair value adjustments related to the acquisition of IAB for the three months ended March 31, 2020, which added approximately seven basis points to the average yield on interest earning assets.
Net interest margin was 2.63 percent for the first quarter of 2020, compared to 2.88 percent in the fourth quarter of 2019 and 3.18 percent for the first quarter of 2019. “The contraction in the net interest margin during the first quarter of 2020 was primarily the result of the current volatile financial markets attributable to the COVID-19 pandemic and the resulting swift reduction in short term interest rates, as well as competitive pressures on cost of funds over the last twelve months,” said Coughlin.
Total non-interest income decreased by $977,000, or 58.9 percent, to $683,000 for the first quarter of 2020 from $1.7 million for the first quarter of 2019. The decrease in total non-interest income was mainly related to a net increase of $731,000 in unrealized losses on equity securities which was the result of current market conditions, a decrease of $257,000 in gains on sales of loans, a decrease of $157,000 in fees and service charges, a decrease of $8,000 in gains on sales of other real estate owned, partly offset by an increase in other non-interest income of $283,000. The lower level of loan sales and fees and service charges was attributable to the curtailment of loan growth. The increase in other non-interest income related primarily to the reversal of certain liabilities previously recorded for IAB acquired loans that paid off this quarter.

BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 3

Total non-interest expense increased by $587,000, or 4.3 percent, to $14.4 million for the first quarter of 2020 from $13.8 million for the first quarter of 2019, including COVID-19 costs of approximately $100,000.  Salaries and employee benefits expense increased by $474,000, or 6.9 percent, to $7.4 million for the first quarter of 2020 from $6.9 million for the first quarter of 2019, primarily related to normal compensation increases and a lower deferral of costs (ASC 310 - $150,000) due to a much lower level of loan originations.  Occupancy and equipment expense increased by $194,000 or 7.4 percent, to $2.8 million for the first quarter of 2020 from $2.6 million for the first quarter of 2019, largely related to costs incurred for an upcoming de novo branch set to open later in the year, the opening of two de novo branches and the relocation of one of our existing branches during 2019.  Data processing and service fees increased by $217,000, or 30.1 percent, largely attributable to additional branches and system applications.
Regulatory assessments decreased by $136,000, or 29.8 percent, to $321,000 for the first quarter of 2020 from $457,000 for the first quarter of 2019, primarily due to a decrease in the FDIC assessment rate, which was partly offset by an increase in the FDIC assessment base.
The income tax provision decreased by $1.4 million, or 56.0 percent, to $1.1 million for the first quarter of 2020 from $2.5 million for the first quarter of 2019. The decrease in the income tax provision was a result of lower taxable income for the first quarter of 2020 as compared to that same period for 2019. The consolidated effective tax rate for the first quarter of 2020 was 29.9 percent compared to 31.0 percent for the first quarter of 2019. The lower rate in the current period related primarily to a one percent reduction in the New Jersey surtax rate.
Asset Quality
The provision for loan losses increased by $611,000, to $1.5 million for the first quarter of 2020 from $889,000 for the first quarter of 2019. In the fourth quarter of 2019, the Company recognized a credit to the provision for loan losses of $475,000. The increased reserve includes provisions taken in response to changes in risks associated with loan classification assignments and a declining New Jersey and New York economy as a result of the COVID-19 pandemic.
The Bank had non-accrual loans totaling $4.4 million, or 0.20 percent, of gross loans at March 31, 2020 compared to $5.7 million, or 0.24 percent, of gross loans a year ago, and $4.2 million, or 0.19 percent of gross loans, at December 31, 2019.
Performing troubled debt restructured (“TDR”) loans that were not included in nonaccrual loans at March 31, 2020, were $16.3 million, compared to $16.5 million at December 31, 2019 and $23.1 million at March 31, 2019.  Borrowers who are in financial difficulty and who have been granted concessions (excluding COVID-19 modifications) that may include interest rate reductions, term extensions, or payment alterations are categorized as TDR loans.
The allowance for loan losses was $25.5 million, or 1.17 percent of gross loans at March 31, 2020, compared to $23.0 million, or 0.99 percent of gross loans at March 31, 2019, and $23.7 million, or 1.08 percent of gross loans, at December 31, 2019.
During the first quarter of 2020, the Company recognized $301,000 in net recoveries compared to $244,000 in net charge-offs for the first quarter of 2019 and net charge-offs of $482,000 in the fourth quarter of 2019.
The temporary COVID-19 pandemic has clearly caused disruption to the global economy, but the extent and duration of the disruption is uncertain at this time. Accordingly, and in consideration of the relatively recent decline of the stock price below carrying value, management feels that it is not more likely than not that this circumstance indicates that the fair value of the Company is less than its carrying amount, including goodwill, as of March 31, 2020.  Management will continue to monitor the activity for loan deferment requests and delinquencies on a regular basis. Given the evolving situation, the need for further goodwill impairment testing will be assessed again as of June 30, 2020.

BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 4
Coronavirus (COVID-19) Response:
Due to the impact of COVID-19, the results of operations for the first quarter of 2020 are inconsistent with the Company’s historical performance. The spread of this virus has created uncertainty in our markets and in our communities. The Company has taken many steps to protect the health and safety of our employees and customers during this pandemic. Some of the initiatives implemented by the Bank, and other updates, include the following:
Operational Initiatives.
Pandemic response team meets on a weekly basis and actively monitors guidance released by regulators, and banking associations.
All in-person meetings have been cancelled until further notice.
Employees are working remotely, temporarily relocated or are working alternate days to increase social distancing.
Branch and operational offices are cleaned and sanitized regularly. This practice will continue through at least mid-May. Employees have access to masks, gloves and disinfectant.
Beginning on March 19, Branch lobbies were closed to lessen the spread of the virus and protect both our employees and customers. Drive through facilities remain open and branch lobby services are available by appointment. 
Management provides updates to employees on a regular basis.
Call Center is open seven days a week to assist with customer inquiries.

Loan Loss Reserve.  Although several of the Company’s asset quality metrics have not changed over the quarter, management determined it is prudent to increase its loan loss reserves through the addition of $1.5 million in loan loss provisions for the quarter ended March 31, 2020 due primarily to the weakening local economy as a result of the COVID-19 pandemic.  This compares to a credit to the provision for loan losses of $475,000 during the previous quarter and a $889,000 provision for loan losses in the first quarter a year ago. The loan loss reserve to total loans ratio was 1.17 percent at March 31, 2020 compared to 0.99 percent at March 31, 2019. The increased reserve includes provisions taken in response to changes in risks associated with loan classification assignments and a declining economy in New Jersey and New York. The Bank considered qualitative factors, such as changes in underwriting policies, current economic conditions, delinquency statistics, the adequacy of the underlying collateral and the financial strength of borrowers. All of these factors are likely to be affected by the COVID-19 pandemic.

Loan Deferment Requests.
The Bank, like other financial institutions, has received significant numbers of requests to defer principal and/or interest payments, and has agreed to such deferrals or is in the process of doing so. The banking regulatory agencies, through an Interagency Statement dated April 7, 2020, are encouraging financial institutions to work prudently with borrowers who request loan modifications or deferrals as a result of COVID-19.
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 modifications. A financial institution can then suspend the requirements under GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a troubled debt restructuring (“TDR”), and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Financial institutions wishing to utilize this authority must make a policy election, which applies to any COVID-19 modification made between March 1, 2020 and the earlier of either December 31, 2020 or the 60th day after the end of the COVID-19 national emergency. Similarly, the Financial Accounting Standards Board has confirmed that short-term modifications made on a good-faith basis in response to COVID-19 to loan customers who were current prior to any relief are not TDRs. Lastly, prior to the enactment of the CARES Act, the banking regulatory agencies provided guidance as to how certain short-term modifications would not be considered TDRs, and have subsequently confirmed that such guidance could be applicable for loans that do not qualify for favorable accounting treatment under Section 4013 of the CARES Act.
The Bank began receiving requests for loan deferments on March 13, 2020. The forbearance period provided by the Bank is generally three months with the Bank retaining the sole option to extend the forbearance period for an additional three months. Payments received upon the expiration of the forbearance period will first be applied to interest accrued, then towards escrow advances, and any remaining amount towards principal.

BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 5
As of April 17, 2020, the Bank had received 815 requests for loan payment deferral of approximately $687 million in loans, or 31% of the total loan portfolio.

Paycheck Protection Program (PPP).
As a qualified SBA lender, we were automatically authorized to originate PPP loans.
An eligible business can apply for a PPP loan up to the lesser of: (1) 2.5 times its average monthly “payroll costs;” or (2) $10.0 million. PPP loans will have: (a) an interest rate of 1.0%, (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 75% of the loan proceeds are used for payroll expenses, with the remaining 25% of the loan proceeds used for other qualifying expenses.
Through April 15, 2020, the Bank had closed and funded approximately $56 million in PPP loans.

Industry Exposure.  The Company has identified various industries that may be particuarly adversely impacted by the COVID-19 pandemic.  Though the hotspots may change through the progression of the pandemic, the following sectors are currently being disproportianetly impacted: Strip Retail, Hospitality/Hotel, Retail, Golf Courses, Restaurants, etc.  At March 31, 2020, the Bank’s exposure as a percent of the total loan portfolio to these industries was  6%, 4%, 3%, 3% and 2%, respectively.

IT Changes. To protect the well-being of our staff and customers, the Company has set up resources for some employees to work from home.  To facilitate the move, we allocated laptop computers to staff and enhanced our ability to network offsite via remote VPN with RSA-2 factor authentication.

Liquidity and Capital Resources.  The Company was well positioned with adequate levels of cash and liquid assets as of March 31, 2020, as well as wholesale borrowing capacity of over $700 million, to fund PPP loans in April, totaling approximately $100 million, and to cover the lack of payments for COVID-19 loan deferments. At March 31, 2020, the Company’s equity to asset ratio was 8.18% and the Bank’s capital was in excess of regulatory requirements. The Company will continue to monitor the effects of COVID-19 in determining future cash dividends and any requirement for additional capital each quarter. The Company had $1.3 million of stock repurchases for the first quarter of 2020, but intends to suspend the program by the end of April.
About BCB Bancorp, Inc.
Established in 2000 and headquartered in Bayonne, N.J., BCB Community Bank is the wholly-owned subsidiary of BCB Bancorp, Inc. (NASDAQ: BCBP). The Bank has 30 branch offices in Bayonne, Carteret, Colonia, Edison, Hoboken, Fairfield, Holmdel, Jersey City, Lodi, Lyndhurst, Maplewood, Monroe Township, Parsippany, Plainsboro, River Edge, Rutherford, South Orange, Union, and Woodbridge, New Jersey, three branches in Hicksville and Staten Island, New York, and a loan production office in Hoboken. The Bank provides businesses and individuals a wide range of loans, deposit products, and retail and commercial banking services.  For more information, please go to www.bcb.bank.
In September 2019, the Company announced its inclusion into the prestigious Sandler O'Neill Sm-All Stars Class of 2019, an elite group of 30 publicly traded small-cap banks and thrifts, based on growth, profitability, credit quality and capital strength.
Forward-Looking Statements
This release, like many written and oral communications presented by BCB Bancorp, Inc., and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “could,” “may,” “should,” “will,” “would,” or similar expressions. Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results.

BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 6
In addition to factors previously disclosed in the Company’s reports filed with the U.S. Securities and Exchange Commission (the "SEC") and those identified elsewhere in this release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of BCB products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and actions of governmental agencies and legislative and regulatory actions and reforms.
As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company could be subject to any of the following additional risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

demand for our products and services may decline, making it difficult to grow assets and income;
if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;
the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;
a material decrease in net income over several quarters could result in a decrease in the rate of our quarterly cash dividend;
our cyber security risks are increased as the result of an increase in the number of employees working remotely;
we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and
FDIC premiums may increase if the agency experiences additional resolution costs.
Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release also contains certain supplemental non-GAAP information that the Company’s management uses in its analysis of the Company’s financial results. The Company’s management believes that providing this information to analysts and investors allows them to better understand and evaluate the Company’s core financial results for the periods in question.
The Company provides measurements and ratios based on tangible stockholders' equity and efficiency ratios. These measures are utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, the Company’s management believes that such information is useful to investors.
For a reconciliation of GAAP to Non-GAAP financial measures included in this press release, see "Reconciliation of GAAP to Non-GAAP Financial Measures" below.

BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 7
   
Statements of Income (unaudited) - Three Months Ended,
 
   
March 31, 2020
   
December 31, 2019
   
March 31, 2019
   
March 31, 2020 vs. December 31, 2019
   
March 31, 2020 vs. March 31, 2019
 
Interest and dividend income:
 
(Dollars in thousands)
             
   Loans, including fees
 
$
26,814
   
$
28,254
   
$
28,233
     
-5.1
%
   
-5.0
%
   Mortgage-backed securities
   
563
     
583
     
770
     
-3.4
%
   
-26.9
%
   Other investment securities
   
8
     
135
     
128
     
-94.1
%
   
-93.8
%
   FHLB stock and other interest earning assets
   
2,034
     
1,994
     
1,347
     
2.0
%
   
51.0
%
     Total interest and dividend income
   
29,419
     
30,966
     
30,478
     
-5.0
%
   
-3.5
%
                                         
Interest expense:
                                       
Deposits:
                                       
   Demand
   
2,208
     
2,023
     
1,576
     
9.1
%
   
40.1
%
   Savings and club
   
105
     
103
     
113
     
1.9
%
   
-7.1
%
   Certificates of deposit
   
6,432
     
6,704
     
5,990
     
-4.1
%
   
7.4
%
     
8,745
     
8,830
     
7,679
     
-1.0
%
   
13.9
%
   Borrowings
   
1,896
     
2,059
     
1,897
     
-7.9
%
   
-0.1
%
       Total interest expense
   
10,641
     
10,889
     
9,576
     
-2.3
%
   
11.1
%
                                         
Net interest income
   
18,778
     
20,077
     
20,902
     
-6.5
%
   
-10.2
%
Provision (credit) for loan losses
   
1,500
     
(475
)
   
889
     
-415.8
%
   
68.7
%
                                         
Net interest income after provision for loan losses
   
17,278
     
20,552
     
20,013
     
-15.9
%
   
-13.7
%
                                         
Non-interest income:
                                       
   Fees and service charges
   
726
     
819
     
883
     
-11.4
%
   
-17.8
%
   Gain on sales of loans
   
61
     
192
     
318
     
-68.2
%
   
-80.8
%
   Gain on bulk sale of impaired loans held in portfolio
   
-
     
-
     
107
     
-
     
-100.0
%
   Gain on sales of other real estate owned
   
-
     
-
     
8
     
0.0
%
   
-100.0
%
   Loss on sale of investment securities
   
-
     
(42
)
   
-
     
-100.0
%
   
0.0
%
   Unrealized (loss) gain on equity investments
   
(440
)
   
(19
)
   
291
     
2215.8
%
   
-251.2
%
   Other
   
336
     
70
     
53
     
380.0
%
   
534.0
%
      Total non-interest income
   
683
     
1,020
     
1,660
     
-33.0
%
   
-58.9
%
                                         
Non-interest expense:
                                       
   Salaries and employee benefits
   
7,389
     
7,329
     
6,915
     
0.8
%
   
6.9
%
   Occupancy and equipment
   
2,824
     
2,734
     
2,630
     
3.3
%
   
7.4
%
   Data processing and service fees
   
938
     
959
     
721
     
-2.2
%
   
30.1
%
   Professional fees
   
470
     
659
     
533
     
-28.7
%
   
-11.8
%
   Director fees
   
358
     
391
     
318
     
-8.4
%
   
12.6
%
   Regulatory assessment fees
   
321
     
131
     
457
     
145.0
%
   
-29.8
%
   Advertising and promotional
   
61
     
74
     
73
     
-17.6
%
   
-16.4
%
  Other real estate owned, net
   
26
     
(6
)
   
(16
)
   
533.3
%
   
262.5
%
   Other
   
1,977
     
1,989
     
2,146
     
-0.6
%
   
-7.9
%
      Total non-interest expense
   
14,364
     
14,260
     
13,777
     
0.7
%
   
4.3
%
                                         
Income before income tax provision
   
3,597
     
7,312
     
7,896
     
-50.8
%
   
-54.4
%
Income tax provision
 
$
1,076
   
$
2,188
   
$
2,445
     
-50.8
%
   
-56.0
%
                                         
Net Income
   
2,521
     
5,124
     
5,451
     
-50.8
%
   
-53.8
%
   Preferred stock dividends
   
344
     
342
     
317
     
0.5
%
   
8.6
%
Net Income available to common stockholders
 
$
2,177
   
$
4,782
   
$
5,134
     
-54.5
%
   
-57.6
%
                                         
Net Income per common share-basic and diluted
                                       
   Basic
 
$
0.12
   
$
0.29
   
$
0.32
     
-57.1
%
   
-61.0
%
   Diluted
 
$
0.12
   
$
0.29
   
$
0.32
     
-56.9
%
   
-61.1
%
                                         
Weighted average number of common shares outstanding
                                       
   Basic
   
17,502
     
16,508
     
16,078
     
6.0
%
   
8.9
%
   Diluted
   
17,551
     
16,601
     
16,111
     
5.7
%
   
8.9
%


BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 8
Statements of Financial Condition (unaudited)
 
March 31, 2020
   
December 31, 2019
   
March 31, 2019
   
March 31, 2020 vs. December 31, 2019
 
 ASSETS
 
(Dollars in thousands)
             
 Cash and amounts due from depository institutions
 
$
24,292
   
$
24,985
   
$
18,610
     
-2.8
%
   
30.5
%
Interest-earning deposits
   
570,894
     
525,368
     
174,938
     
8.7
%
   
226.3
%
    Total cash and cash equivalents
   
595,186
     
550,353
     
193,548
     
8.1
%
   
207.5
%
                                         
 Interest-earning time deposits
   
735
     
735
     
735
     
-
     
-
 
Debt securities available for sale
   
95,429
     
91,613
     
117,942
     
4.2
%
   
-19.1
%
 Equity investments
   
1,580
     
2,500
     
7,963
     
-36.8
%
   
-80.2
%
Loans held for sale
   
838
     
917
     
1,347
     
-8.6
%
   
-37.8
%
 Loans receivable, net of allowance for loan losses
                                       
   of $25,534, $23,734, and $23,004 respectively
   
2,164,057
     
2,178,407
     
2,307,140
     
-0.7
%
   
-6.2
%
 Federal Home Loan Bank of New York stock, at cost
   
14,586
     
13,821
     
13,405
     
5.5
%
   
8.8
%
Premises and equipment, net
   
19,292
     
19,920
     
19,684
     
-3.2
%
   
-2.0
%
 Operating lease right-of-use asset
   
14,084
     
13,246
     
16,019
     
6.3
%
   
-12.1
%
Accrued interest receivable
   
8,936
     
8,318
     
9,750
     
7.4
%
   
-8.3
%
 Other real estate owned
   
1,623
     
1,623
     
1,746
     
0.0
%
   
-7.0
%
Deferred income taxes
   
10,653
     
11,180
     
13,302
     
-4.7
%
   
-19.9
%
 Goodwill and other intangibles
   
5,535
     
5,552
     
5,584
     
-0.3
%
   
-0.9
%
 Other assets
   
9,469
     
9,283
     
10,235
     
2.0
%
   
-7.5
%
     Total Assets
 
$
2,942,003
   
$
2,907,468
   
$
2,718,400
     
1.2
%
   
8.2
%
                                         
LIABILITIES AND STOCKHOLDERS' EQUITY
                                       
                                         
LIABILITIES
                                       
 Non-interest bearing deposits
 
$
293,174
   
$
271,901
   
$
273,370
     
7.8
%
   
7.2
%
Interest bearing deposits
   
2,082,547
     
2,090,162
     
1,915,263
     
-0.4
%
   
8.7
%
   Total deposits
   
2,375,721
     
2,362,063
     
2,188,633
     
0.6
%
   
8.5
%
FHLB advances
   
262,800
     
245,800
     
245,800
     
6.9
%
   
6.9
%
 Subordinated debentures
   
36,868
     
36,810
     
36,635
     
0.2
%
   
0.6
%
 Operating lease liability
   
14,246
     
13,380
     
16,059
     
6.5
%
   
-11.3
%
 Other liabilities
   
11,730
     
9,942
     
14,555
     
18.0
%
   
-19.4
%
     Total Liabilities
   
2,701,365
     
2,667,995
     
2,501,682
     
1.3
%
   
8.0
%
                                         
STOCKHOLDERS' EQUITY
                                       
Preferred stock: $0.01 par value, 10,000,000 shares authorized
   
-
     
-
     
-
     
-
     
-
 
 Additional paid-in capital preferred stock
   
24,876
     
25,016
     
25,016
     
-0.6
%
   
-0.6
%
Common stock: no par value, 40,000,000 shares authorized
   
-
     
-
     
-
     
-
     
-
 
 Additional paid-in capital common stock
   
190,658
     
190,294
     
176,379
     
0.2
%
   
8.1
%
Retained earnings
   
48,168
     
48,429
     
40,750
     
-0.5
%
   
18.2
%
 Accumulated other comprehensive (loss)
   
271
     
(2,218
)
   
(3,379
)
   
-112.2
%
   
-108.0
%
Treasury stock, at cost
   
(23,335
)
   
(22,048
)
   
(22,048
)
   
5.8
%
   
5.8
%
     Total Stockholders' Equity
   
240,638
     
239,473
     
216,718
     
0.5
%
   
11.0
%
                                         
      Total Liabilities and Stockholders' Equity
 
$
2,942,003
   
$
2,907,468
   
$
2,718,400
     
1.2
%
   
8.2
%
                                         
Outstanding common shares
   
17,407
     
17,517
     
16,398
     
-0.6
%
   
6.2
%


BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 9

   
Three Months Ended March 31,
 
   
2020
   
2019
 
   
Average Balance
   
Interest Earned/Paid
   
Average Yield/Rate (3)
   
Average Balance
   
Interest Earned/Paid
   
Average Yield/Rate (3)
 
   
(Dollars in thousands)
 
Interest-earning assets:
                                   
Loans Receivable
 
$
2,185,753
   
$
26,814
     
4.91
%
 
$
2,317,250
   
$
28,233
     
4.87
%
Investment Securities
   
92,306
     
571
     
2.47
%
   
139,171
     
898
     
2.58
%
Interest-earning deposits
   
580,623
     
2,034
     
1.40
%
   
173,076
     
1,347
     
3.11
%
   Total Interest-earning assets
   
2,858,682
     
29,419
     
4.12
%
   
2,629,497
     
30,478
     
4.64
%
Non-interest-earning assets
   
73,509
                     
60,740
                 
   Total assets
 
$
2,932,191
                   
$
2,690,238
                 
Interest-bearing liabilities:
                                               
Interest-bearing demand accounts
 
$
407,339
   
$
858
     
0.84
%
 
$
341,659
   
$
604
     
0.71
%
Money market accounts
   
321,233
     
1,350
     
1.68
%
   
237,011
     
972
     
1.64
%
Savings accounts
   
259,721
     
105
     
0.16
%
   
260,524
     
113
     
0.17
%
Certificates of Deposit
   
1,120,060
     
6,432
     
2.30
%
   
1,085,299
     
5,990
     
2.21
%
   Total interest-bearing deposits
   
2,108,353
     
8,745
     
1.66
%
   
1,924,493
     
7,679
     
1.60
%
Borrowed funds
   
284,830
     
1,896
     
2.66
%
   
283,460
     
1,897
     
2.68
%
   Total interest-bearing liabilities
   
2,393,184
     
10,641
     
1.78
%
   
2,207,953
     
9,576
     
1.73
%
Non-interest-bearing liabilities
   
299,679
                     
275,575
                 
   Total liabilities
   
2,692,862
                     
2,483,528
                 
Stockholders' equity
   
239,329
                     
206,710
                 
   Total liabilities and stockholders' equity
 
$
2,932,191
                   
$
2,690,238
                 
Net interest income
         
$
18,778
                   
$
20,902
         
Net interest rate spread(1)
                   
2.34
%
                   
2.90
%
Net interest margin(2)
                   
2.63
%
                   
3.18
%
                                                 
                                                 

(1)
Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.
(2)
Net interest margin represents net interest income divided by average total interest-earning assets.
(3)
Annualized.


BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 10
   
Financial condition data by quarter
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
                                         
   
(In thousands, except tangible book value)
 
Total assets
 
$
2,942,003
   
$
2,907,468
   
$
2,825,499
   
$
2,738,130
   
$
2,718,400
 
Cash and cash equivalents
   
595,186
     
550,353
     
376,611
     
227,642
     
193,548
 
Securities
   
97,009
     
94,113
     
104,075
     
122,159
     
125,905
 
Loans receivable, net
   
2,164,057
     
2,178,407
     
2,253,699
     
2,299,765
     
2,307,140
 
Deposits
   
2,375,721
     
2,362,063
     
2,263,457
     
2,208,222
     
2,188,633
 
Borrowings
   
299,668
     
282,610
     
312,552
     
282,493
     
282,435
 
Stockholders’ equity
   
240,638
     
239,473
     
223,719
     
221,153
     
216,718
 
Tangible book value per share
   
12.09
     
11.94
     
11.72
     
11.58
     
11.35
 
                                         
   
Operating data by quarter
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
                                         
   
(In thousands, except for per share amounts)
 
Net interest income
 
$
18,778
   
$
20,077
   
$
20,760
   
$
20,865
   
$
20,902
 
Provision for loan losses
   
1,500
     
(475
)
   
900
     
755
     
889
 
Non-interest income
   
683
     
1,020
     
1,383
     
1,328
     
1,660
 
Non-interest expense
   
14,364
     
14,260
     
13,652
     
13,894
     
13,777
 
Income tax expense
   
1,076
     
2,188
     
2,359
     
2,317
     
2,445
 
Net income
 
$
2,521
   
$
5,124
   
$
5,232
   
$
5,227
   
$
5,451
 
Net income per diluted share
 
$
0.12
   
$
0.29
   
$
0.30
   
$
0.30
   
$
0.32
 
Common Dividends declared per share
 
$
0.14
   
$
0.14
   
$
0.14
   
$
0.14
   
$
0.14
 
                                         
   
Financial Ratios
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
Return on average assets
   
0.34
%
   
0.72
%
   
0.75
%
   
0.77
%
   
0.81
%
Return on average stockholder’s equity
   
4.21
%
   
9.12
%
   
9.44
%
   
9.61
%
   
10.55
%
Net interest margin
   
2.63
%
   
2.88
%
   
3.06
%
   
3.16
%
   
3.18
%
Stockholder’s equity to total assets
   
8.18
%
   
8.24
%
   
7.92
%
   
8.08
%
   
7.97
%
Efficiency Ratio
   
73.81
%
   
67.59
%
   
61.65
%
   
62.61
%
   
61.06
%
                                         
   
Asset Quality Ratios
 
   
(In thousands, except for ratio %)
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
Non-Accrual Loans
 
$
4,362
   
$
4,160
   
$
5,074
   
$
5,488
   
$
5,670
 
Non-Accrual Loans as a % of Total Loans
   
0.20
%
   
0.19
%
   
0.22
%
   
0.24
%
   
0.24
%
ALLL as % of Non-Accrual Loans
   
585.37
%
   
570.53
%
   
486.62
%
   
433.47
%
   
405.71
%
Impaired Loans
   
23,022
     
26,912
     
30,856
     
37,275
     
40,533
 
Classified Loans
   
9,882
     
13,483
     
15,998
     
22,679
     
23,977
 

BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 11
   
Recorded Investment in Loans Receivable by quarter
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
   
(In Thousands)
 
Residential one-to-four family
 
$
268,137
   
$
248,381
   
$
252,971
   
$
258,688
   
$
258,184
 
Commercial and multi-family
   
1,577,816
     
1,606,976
     
1,668,982
     
1,702,132
     
1,724,326
 
Construction
   
101,692
     
104,996
     
131,697
     
134,963
     
114,462
 
Commercial business
   
177,146
     
177,642
     
161,649
     
164,569
     
167,067
 
Home equity
   
64,857
     
64,638
     
63,645
     
63,927
     
66,946
 
Consumer
   
1,029
     
682
     
728
     
727
     
731
 
   
$
2,190,677
   
$
2,203,315
   
$
2,279,672
   
$
2,325,006
   
$
2,331,716
 
Less:
                                       
   Deferred loan fees, net
   
(1,086
)
   
(1,174
)
   
(1,282
)
   
(1,452
)
   
(1,572
)
   Allowance for loan loss
   
(25,534
)
   
(23,734
)
   
(24,691
)
   
(23,789
)
   
(23,004
)
                                         
Total loans, net
 
$
2,164,057
   
$
2,178,407
   
$
2,253,699
   
$
2,299,765
   
$
2,307,140
 
                                         
   
Non-Accruing Loans in Portfolio by quarter
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
   
(In Thousands)
 
Originated loans:
                                       
Residential one-to-four family
 
$
788
   
$
590
   
$
814
   
$
1,022
   
$
1,415
 
Commercial and multi-family
   
218
     
761
     
1,584
     
1,881
     
1,364
 
Commercial business
   
1,189
     
1,428
     
887
     
745
     
256
 
Home equity
   
294
     
347
     
350
     
129
     
272
 
Sub-total:
 
$
2,489
   
$
3,126
   
$
3,635
   
$
3,777
   
$
3,307
 
                                         
Acquired loans initially recorded at fair value:
                                       
Residential one-to-four family
 
$
602
   
$
291
   
$
1,046
   
$
1,116
   
$
1,704
 
Commercial and multi-family
   
758
     
217
     
-
     
-
     
597
 
Commercial business
   
513
     
513
     
378
     
378
     
-
 
Home equity
   
-
     
13
     
15
     
217
     
62
 
Sub-total:
 
$
1,873
   
$
1,034
   
$
1,439
   
$
1,711
   
$
2,363
 
                                         
Total:
 
$
4,362
   
$
4,160
   
$
5,074
   
$
5,488
   
$
5,670
 



BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 12
   
Reconciliation of GAAP to Non-GAAP Financial Measures by quarter
 
                               
   
Tangible Book Value per Share
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
   
(In Thousands, except per share amounts)
 
Total Stockholders' Equity
 
$
240,638
   
$
239,473
   
$
223,719
   
$
221,153
   
$
216,718
 
Less: goodwill
   
5,253
     
5,253
     
5,570
     
5,587
     
5,584
 
Less: preferred stock
   
24,876
     
25,016
     
25,016
     
25,016
     
25,016
 
Total tangible stockholders' equity
   
210,509
     
209,204
     
193,133
     
190,550
     
186,118
 
Shares outstanding
   
17,407
     
17,517
     
16,477
     
16,461
     
16,398
 
Book value per share
 
$
13.82
   
$
13.67
   
$
13.58
   
$
13.43
   
$
13.22
 
Tangible book value per share
 
$
12.09
   
$
11.94
   
$
11.72
   
$
11.58
   
$
11.35
 
                                         
   
Efficiency Ratios
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
   
(In Thousands)
 
Net interest income
 
$
18,778
   
$
20,077
   
$
20,760
   
$
20,865
   
$
20,902
 
Non-interest income
   
683
     
1,020
     
1,383
     
1,328
     
1,660
 
Total income
   
19,461
     
21,097
     
22,143
     
22,193
     
22,562
 
Non-interest expense
   
14,364
     
14,260
     
13,652
     
13,894
     
13,777
 
Efficiency Ratio
   
73.81
%
   
67.59
%
   
61.65
%
   
62.61
%
   
61.06
%
                                         

BCBP Reports First Quarter 2020 Earnings
April 27, 2020
Page 13
   
Distribution of Deposits
 
     
Q1 2020
     
Q4 2019
     
Q3 2019
     
Q2 2019
     
Q1 2019
 
   
(In Thousands, except per share amounts)
 
Demand:
                                       
   Non-Interest Bearing
 
$
293,174
   
$
271,702
   
$
276,203
   
$
278,002
   
$
273,370
 
   Interest Bearing
   
428,683
     
394,074
     
344,385
     
337,362
     
322,361
 
   Money Market
   
321,973
     
305,790
     
272,139
     
267,213
     
248,310
 
   
$
1,043,830
   
$
971,566
   
$
892,727
   
$
882,577
   
$
844,041
 
   Savings and Club
   
260,290
     
260,545
     
256,531
     
257,774
     
262,943
 
   Certificates of Deposit
   
1,071,600
     
1,129,952
     
1,114,199
     
1,067,871
     
1,081,649
 
Total Deposits:
 
$
2,375,720
   
$
2,362,063
   
$
2,263,457
   
$
2,208,222
   
$
2,188,633
 
                                         

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