BCB BANCORP INC - Quarter Report: 2022 March (Form 10-Q)

bcbp-20220331x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2022

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 Number: 0-50275

BCB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

New Jersey		26-0065262
(State or other jurisdiction of incorporation or organization)		(IRS Employer I.D. No.)

104-110 Avenue C Bayonne, New Jersey		07002
(Address of principal executive offices)		(Zip Code)

(201) 823-0700

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year if changed since last report)

Securities registered pursuant to section 12(b) of the Securities and Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	BCBP	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. T Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

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


Large Accelerated Filer	o	Accelerated Filer	x

Non-Accelerated Filer	o	Smaller Reporting Company	x

		Emerging Growth Company	o

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). o Yes T No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 2, 2022, BCB Bancorp, Inc., had 16,991,284 shares of common stock, no par value, outstanding.

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BCB BANCORP INC. AND SUBSIDIARIES

INDEX



	Page
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition as of March 31, 2022 (unaudited) and December 31, 2021 (unaudited)		1
Consolidated Statements of Income for the three months ended March 31, 2022 and 2021 (unaudited)		2
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021 (unaudited)		3
Consolidated Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2022 and 2021 (unaudited)		4
Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)		5
Notes to Unaudited Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3. Quantitative and Qualitative Disclosures about Market Risk		30
Item 4. Controls and Procedures		30

PART II. OTHER INFORMATION		31
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Defaults Upon Senior Securities		31
Item 4. Mine Safety Disclosures		31
Item 5. Other Information		31
Item 6. Exhibits		32

PART I. CONSOLIDATED FINANCIAL INFORMATION

ITEM I. CONSOLIDATED FINANCIAL STATEMENTS

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(In thousands, Except Share and Per Share Data, Unaudited)



	March 31,		December 31,
	2022		2021

ASSETS
Cash and amounts due from depository institutions	$	8,448	$	9,606
Interest-earning deposits		388,205		402,023
Total cash and cash equivalents		396,653		411,629

Interest-earning time deposits		735		735
Debt securities available for sale		86,307		85,186
Equity investments		21,269		25,187
Loans held for sale		325		952
Loans receivable, net of allowance for loan losses
of $33,980 and $37,119 respectively		2,395,930		2,304,942
Federal Home Loan Bank of New York stock, at cost		6,128		6,084
Premises and equipment, net		11,646		12,237
Accrued interest receivable		9,593		9,183
Other real estate owned		75		75
Deferred income taxes		13,016		12,959
Goodwill and other intangibles		5,417		5,431
Operating lease right-of-use assets		11,883		12,457
Bank-owned life insurance ("BOLI")		73,240		72,485
Other assets		8,093		7,986
Total Assets	$	3,040,310	$	2,967,528

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Non-interest -bearing deposits	$	621,402	$	588,207
Interest bearing deposits		2,009,773		1,973,195
Total deposits		2,631,175		2,561,402
FHLB advances		71,848		71,711
Subordinated debentures		37,333		37,275
Operating lease liability		12,180		12,752
Other liabilities		11,615		10,364
Total Liabilities		2,764,151		2,693,504

STOCKHOLDERS' EQUITY
Preferred stock: $0.01 par value, 10,000,000 shares authorized; issued and outstanding 2,645 shares of Series D 4.5%, Series H 3.5% and Series I 3.0%, (liquidation value $10,000 per share) noncumulative perpetual preferred stock at March 31, 2022 and 2,916 shares of Series D 4.5%, Series G 6%, Series H 3.5% and Series I 3% (liquidation value $10,000 per share) noncumulative perpetual preferred stock at December 31, 2021		-		-
Additional paid-in capital preferred stock		26,213		28,923
Common stock: no par value; 40,000,000 shares authorized; issued 19,753,295 and 19,708,375 at March 31, 2022 and December 31, 2021, respectively, outstanding 16,984,538 and 16,940,133, at March 31, 2022 and December 31, 2021, respectively		-		-
Additional paid-in capital common stock		194,222		193,927
Retained earnings		88,132		81,171
Accumulated other comprehensive loss		(1,275)		1,128
Treasury stock, at cost, 2,768,757 and 2,768,242 shares at March 31, 2022 and December 31, 2021, respectively		(31,133)		(31,125)
Total Stockholders' Equity		276,159		274,024
Total Liabilities and Stockholders' Equity	$	3,040,310	$	2,967,528

See accompanying notes to unaudited consolidated financial statements.

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BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, Except for Per Share Amounts, Unaudited)


	Three Months Ended March 31,
	2022		2021
Interest and dividend income:
Loans, including fees	$	26,321	$	26,863
Mortgage-backed securities		159		206
Other investment securities		948		784
FHLB stock and other interest earning assets		296		222
Total interest income		27,724		28,075

Interest expense:
Deposits:
Demand		758		1,198
Savings and club		108		118
Certificates of deposit		980		1,992
		1,846		3,308
Borrowings		806		1,205
Total interest expense		2,652		4,513

Net interest income		25,072		23,562
(Reversal) provision for loan losses		(2,575)		1,865

Net interest income after (reversal) provision for loan losses		27,647		21,697

Non-interest income:
Fees and service charges		1,214		1,111
BOLI income		755		701
Gain on sales of loans		65		274
Realized and unrealized (losses) on equity investments		(2,685)		(196)
Other		51		60
Total non-interest income		(600)		1,950

Non-interest expense:
Salaries and employee benefits		6,736		6,545
Occupancy and equipment		2,695		2,953
Data processing and communications		1,465		1,456
Professional fees		494		412
Director fees		321		247
Regulatory assessments		304		376
Advertising and promotional		141		83
Other real estate owned, net		1		4
Loss from extinguishment of debt		-		540
Other		802		967
Total non-interest expense		12,959		13,583

Income before income tax provision		14,088		10,064
Income tax provision		4,136		2,947

Net Income	$	9,952	$	7,117
Preferred stock dividends		276		283
Net Income available to common stockholders	$	9,676	$	6,834

Net Income per common share-basic and diluted
Basic	$	0.57	$	0.40
Diluted	$	0.56	$	0.40

Weighted average number of common shares outstanding
Basic		16,980		17,115
Diluted		17,343		17,232

See accompanying notes to unaudited consolidated financial statements.

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands, Unaudited)


	Three Months Ended March 31,
	2022		2021


Net Income	$	9,952	$	7,117
Other comprehensive loss, net of tax:
Unrealized losses on available-for-sale debt securities:
Unrealized holding losses arising during the period		(3,195)		(192)
Tax Effect		792		48
Other comprehensive loss		(2,403)		(144)
Comprehensive income	$	7,549	$	6,973

See accompanying notes to unaudited consolidated financial statements.

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders’ Equity

(In thousands, Except Share and Per Share Data, Unaudited)


	Preferred ‎Stock		Common ‎Stock		Additional ‎Paid-In ‎Capital		Retained ‎Earnings		Treasury ‎Stock		Accumulated ‎Other ‎Comprehensive ‎Income ‎(Loss)		Total

Balance at January 1, 2022	$	-	$	-	$	222,850	$	81,171	$	(31,125)	$	1,128	$	274,024
Net income		-		-		-		9,952		-		-		9,952
Other comprehensive income		-		-		-		-		-		(2,403)		(2,403)
Stock-based compensation expense		-		-		95		-		-		-		95
Treasury Stock Purchases (515 shares)		-		-		-		-		(8)		-		(8)
Dividends payable on Series D 4.5%, Series H 3.5%, and Series I 3.0% noncumulative perpetual preferred stock		-		-		-		(276)		-		-		(276)
Redemption of Series G Preferred Stock		-		-		(5,330)		-		-		-		(5,330)
Issuance of Series I Preferred Stock		-		-		2,620		-		-		-		2,620
Cash dividends on common stock ($0.16 per share declared)		-		-		-		(2,601)		-		-		(2,601)
Dividend reinvestment plan						114		(114)						-
Stock Purchase Plan		-		-		86		-		-		-		86
Balance at March 31, 2022	$	-	$	-	$	220,435	$	88,132	$	(31,133)	$	(1,275)	$	276,159

	Preferred ‎Stock		Common ‎Stock		Additional ‎Paid-In ‎Capital		Retained ‎Earnings		Treasury ‎Stock		Accumulated ‎Other ‎Comprehensive ‎Income (Loss)		Total

Balance at January 1, 2021	$	-	$	-	$	217,999	$	58,335	$	(26,918)	$	(205)	$	249,211
Net income		-		-		-		7,117		-		-		7,117
Other comprehensive income		-		-		-		-		-		(144)		(144)
Stock-based compensation expense		-		-		135		-		-		-		135
Treasury Stock Purchases (32,093 shares)		-		-		-		-		(412)		-		(412)
Dividends payable on Series D 4.5%, Series G 6%, and Series H 3.5% noncumulative perpetual preferred stock		-		-		-		(283)		-		-		(283)
Cash dividends on common stock ($0.14 per share declared)		-		-		-		(2,281)		-		-		(2,281)
Dividend reinvestment plan		-		-		111		(111)		-		-		-
Stock Purchase Plan		-		-		111		-		-		-		111
Balance at March 31, 2021	$	-	$	-	$	218,356	$	62,777	$	(27,330)	$	(349)	$	253,454

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BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands, Unaudited)


	Three Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities:
Net Income	$	9,952	$	7,117
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of premises and equipment		629		634
Amortization and accretion, net		(375)		(191)
(Reversal) provision for loan losses		(2,575)		1,865
Deferred income tax expense (benefit)		735		(617)
Loans originated for sale		(2,452)		(10,074)
Proceeds from sales of loans		3,144		12,731
Gain on sales of loans originated for sale		(65)		(274)
Realized and unrealized losses on equity investments		2,685		196
Stock-based compensation expense		95		135
BOLI income		(755)		(701)
(Increase) decrease in accrued interest receivable		(410)		868
(Increase) decrease in other assets		(107)		3,124
Decrease in accrued interest payable		(497)		(656)
Increase in other liabilities		1,748		211
Net Cash Provided by Operating Activities		11,752		14,368
Cash flows from investing activities:
Proceeds from repayments, calls, and maturities on securities		3,068		5,843
Purchases of securities		(7,488)		(757)
Proceeds from sales of securities		1,233		-
Proceeds from sale of impaired loans		-		180
Net increase in loans receivable		(87,723)		(2,891)
Purchases of BOLI		-		(8,500)
Additions to premises and equipment		(38)		(158)
(Purchase) sale of Federal Home Loan Bank of New York stock		(44)		2,404
Net Cash Used In Investing Activities		(90,992)		(3,879)
Cash flows from financing activities:
Net increase in deposits		69,773		86,085
Net proceeds from Federal Home Loan Bank of New York Advances		-		10,000
Repayments of Federal Home Loan Bank of New York Advances		-		(68,000)
Purchases of treasury stock		(8)		(412)
Cash dividends paid on common stock		(2,601)		(2,281)
Cash dividends paid on preferred stock		(276)		(283)
Net proceeds from issuance of common stock		86		111
Net proceeds from issuance of preferred stock		2,620		-
Payments for redemption of preferred stock		(5,330)		-
Net Cash Provided by Financing Activities		64,264		25,220

Net (Decrease) Increase in Cash and Cash Equivalents		(14,976)		35,709
Cash and Cash Equivalents-Beginning		411,629		261,229

Cash and Cash Equivalents-Ending	$	396,653	$	296,938

Supplementary Cash Flow Information:
Cash paid during the period for:
Income taxes	$	411	$	375
Interest		3,150		5,169

See accompanying notes to unaudited consolidated financial statements

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BCB Bancorp Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of BCB Bancorp, Inc. (the “Company”) and the Company’s wholly owned subsidiaries, BCB Community Bank (the “Bank”), BCB Holding Company Investment Corporation, Special Asset REO I, LLC., and Special Asset REO II, LLC. The Company’s business is conducted principally through the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and, therefore, do not necessarily include all information that would be included in audited consolidated financial statements. The information furnished reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of consolidated financial condition and results of operations. All such adjustments are of a normal recurring nature. These results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2022 or any other future period. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission. In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred between December 31, 2021 and the date these consolidated financial statements were issued.

Risks and Uncertainties - We are subject to risks and uncertainties as a result of the COVID-19 pandemic. The full fallout from the pandemic and its long-term impact on economies, markets, industries and financial institutions is not known at this time, and it may take years to fully determine COVID-19’s economic impact.

The occurrence of events which adversely affect the global, national and regional economies may have a negative impact on our business. Like other financial institutions, our business relies upon the ability and willingness of our customers to transact business with us, including banking, borrowing and other financial transactions. A strong and stable economy at each of the local, federal and global levels is often a critical component of consumer confidence and typically correlates positively with our customers’ ability and willingness to transact certain types of business with us. Local and global events outside of our control which disrupt the New Jersey, New York, United States and/or global economy may therefore negatively impact our business and financial condition. A public health crisis such as the COVID-19 pandemic is no exception, and its adverse health and economic effects may adversely impact our business and financial condition. As of the date of issuance of the condensed consolidated financial statements, the extent to which the COVID-19 pandemic may impact the Company’s financial condition, liquidity, or results of operations is uncertain.

Note 2 - Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses ASU 2016-13, and related guidance, requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the consolidated financial statements. The amendments are effective for the Company in 2023. The Company has begun evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations. The effect of this change cannot be ascertained at this point, and will depend upon factors including asset components, asset quality and market conditions at the adoption date. The Company has created a Current Expected Credit Loss (“CECL”) task group comprised of members of its finance, credit administration, lending, internal audit, loan operations, compliance, and information systems units. The CECL task group has become familiar with the provisions of ASU 2016-13 and is in the process of implementing the new guidance, which includes, but is not limited to: (1) identifying segments and sub-segments within the loan portfolio that have similar risk characteristics; (2) determining the appropriate methodology for each segment; (3) implementing changes that are necessary to its core operating system and interfaces to be able to capture appropriate data requirements; and (4) evaluating qualitative and economic factors to develop appropriate forecasts for integration into the model. The Company is currently evaluating the effect this guidance may have on its operating results and/or financial position, including assessing any potential impact on its capital.

Note 3 – Reclassification

Certain amounts for the three month period March 31, 2021 have been reclassified to conform to the current period’s presentation. These changes had no effect on the Company’s results of operations or financial position.

Note 4 – Equity Incentive Plans

Equity Incentive Plans

The Company, under the plan approved by its shareholders on April 28, 2011 (“2011 Stock Plan”), authorized the issuance of up to 900,000 shares of common stock of the Company pursuant to grants of stock options. Employees and directors of the Company and the Bank were eligible to participate in the 2011 Stock Plan. All stock options were granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees were permitted to receive incentive stock options. No awards may be granted under this Plan after April 28, 2021.

The Company, under the plan approved by its shareholders on April 26, 2018 (“2018 Equity Incentive Plan”), authorized the issuance of up to 1,000,000 shares of common stock of the Company pursuant to grants of stock options and restricted stock units. Employees and directors of the Company and the Bank are eligible to participate in the 2018 Stock Plan. All stock options will be granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are permitted to receive incentive stock options.

Under the 2018 Equity Incentive Plan, on February 10, 2021, grants of 66,000 options, in aggregate, were declared for members of the Board of Directors of the Bank and the Company which vest over a 5-year period, commencing on the first anniversary of the grant date. The exercise price was recorded as of close of business on February 10, 2021. On February 10, 2021, awards of 26,400 shares of restricted stock, in aggregate, were declared for members of the Board of Directors of the Bank and the Company, which vest over a 4-year period, commencing on the anniversary of the award date. On February 19, 2021, an award of 300 shares of restricted stock was declared for an officer of the Bank and the Company, which vests over a 2-year period, commencing on the anniversary of the award date.

Further, on April 26, 2021, grants of 6,800 options, in aggregate, were declared for certain officers of the Bank and the Company, which vest over a 5-year period commencing on the first anniversary of the grant date. The exercise price was recorded as of close of business on April 26, 2021.

On January 12, 2022, awards of 33,000 shares of restricted stock, in aggregate, were declared for members of the Board of Directors of the Bank and the Company, which vest over a 4-year period, commencing on the anniversary of the award date.

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Note 4 – Equity Incentive Plans (Continued)

The following table presents a summary of the status of the Company’s restricted shares as of March 31, 2022 and 2021.


	Number of Shares Awarded		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2022	26,700	$	12.89
Granted	33,000		16.00
Vested	(6,750)		12.89
Forfeited	-		-
Non-vested at March 31, 2022	52,950	$	14.83


	Number of Shares Awarded		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2021	22,304	$	12.46
Granted	26,700		12.89
Vested	-		-
Forfeited	-		-
Non-vested at March 31, 2021	49,004	$	12.70

Expected future expenses relating to the non-vested restricted shares outstanding as of March 31, 2022 was approximately $690,000 over a weighted average period of 3.47 years.

The following tables present a summary of the status of the Company’s outstanding stock option awards as of March 31, 2022 and 2021.


	Number of Option Shares		Range of Exercise Prices		Weighted Average Exercise Price

Outstanding at January 1, 2022	1,194,425	$	9.02-13.68	$	11.64

Options granted	-		-		-
Options exercised	-		-		-
Options forfeited	-		-		-
Options expired	-		-		-

Outstanding at March 31, 2022	1,194,425	$	9.02-13.68	$	11.64

As of March 31, 2022, stock options which were granted and were exercisable totaled 890,325. It is Company policy to issue new shares upon share option exercise.

Compensation expense for the three months ended March 31, 2022 and March 31, 2021 was $45,000 and $50,000, respectively. Expected future compensation expense relating to the 304,000 shares of unvested options outstanding as of March 31, 2022 was $534,000 over a weighted average period of 4.31 years.

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Note 5 – Net Income per Common Share

Basic net income per common share is computed by dividing net income less dividends on preferred stock by the weighted average number of shares of common stock outstanding. The diluted net income per common share is computed by adjusting the weighted average number of shares of common stock outstanding to include the effects of outstanding stock options, if dilutive, using the treasury stock method. Dilution is not applicable in periods of net loss. For the three months ended March 31, 2022 and 2021, the difference in the weighted average number of basic and diluted common shares was due solely to the effects of outstanding stock options. No adjustments to net income were necessary in calculating basic and diluted net income per share. For the three months ended March 31, 2022 and 2021, the weighted average number of outstanding options considered to be anti-dilutive were 0 and 0, respectively.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:



	For the Three Months Ended March 31,
	2022					2021
		Income	Shares		Per Share		Income	Shares		Per Share
		(Numerator)	(Denominator)		Amount		(Numerator)	(Denominator)		Amount
	(In Thousands, except per share data)
Net income available to common stockholders	$	9,676				$	6,834

Basic earnings per share:
Income available to common stockholders	$	9,676	16,980	$	0.57	$	6,834	17,115	$	0.40

Effect of dilutive securities:
Stock options		-	363				-	117

Diluted earnings per share:
Income available to common stockholders	$	9,676	17,343	$	0.56	$	6,834	17,232	$	0.40

Note 6 - Securities

Equity Securities

Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interest in entities at fixed or determinable prices.

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three months ended March 31, 2022 and 2021:


	For the three months ended March 31,
(In Thousands)	2022		2021
Net losses recognized during the period on equity securities held at the reporting period	$	(2,626)	$	(196)
Net losses recognized during the period on equity securities sold during the period		(59)		-
Realized and unrealized losses on equity investments during the reporting period	$	(2,685)	$	(196)

Note 6 - Securities (continued)

Debt Securities Available for Sale

The following tables present by maturity the amortized cost, gross unrealized gains and losses on, and fair value of, securities available for sale as of March 31, 2022 and December 31, 2021:




	March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In Thousands)
Residential Mortgage-backed securities:
Less than one year	$	2,930	$	-	$	115	$	2,815
More than one to five years		28		-		-		28
More than five to ten years		5,817		1		133		5,685
More than ten years		24,983		22		1,101		23,904
Sub-total:		33,758		23		1,349		32,432

Corporate Debt securities:
More than five to ten years		49,226		1,104		560		49,770
Sub-total:		49,226		1,104		560		49,770

Municipal obligations:
More than ten years		4,078		27		-		4,105
Sub-total:		4,078		27		-		4,105

Total securities	$	87,062	$	1,154	$	1,909	$	86,307



	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In Thousands)
Residential Mortgage-backed securities:
Due within one year	$	2,952	$	-	$	114	$	2,838
More than one to five years		53		-		-		53
More than five to ten years		6,317		165		27		6,455
More than ten years		21,555		298		287		21,566
Sub-total:		30,877		463		428		30,912

Corporate Debt securities:
More than five to ten years		47,765		2,465		159		50,071
Sub-total:		47,765		2,465		159		50,071

Municipal obligations:
Due after ten years		4,104		99		-		4,203
Sub-total:		4,104		99		-		4,203

Total Debt Securities Available	$	82,746	$	3,027	$	587	$	85,186

‎

Note 6 - Securities (continued)

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



	12 Months or Less				More than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In Thousands)
March 31, 2022
Residential mortgage-backed securities	$	24,077	$	783	$	5,178	$	566	$	29,255	$	1,349
Corporate Debt securities		17,883		560		-		-		17,883		560
	$	41,960	$	1,343	$	5,178	$	566	$	47,138	$	1,909

December 31, 2021
Residential mortgage-backed securities	$	7,801	$	159	$	4,681	$	269	$	12,482	$	428
Corporate Debt Securities		12,324		159		-		-		12,324		159
	$	20,125	$	318	$	4,681	$	269	$	24,806	$	587

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Company intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery. At March 31, 2022 and December 31, 2021, management performed an assessment for possible OTTI of the Company’s residential mortgage-backed securities and corporate debt on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Company’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of these securities, at March 31, 2022 and December 31, 2021, to be temporary.

Note 7 - Loans Receivable and Allowance for Loan Losses

The following tables present the recorded investment in loans receivable as of March 31, 2022 and December 31, 2021 by segment and class:



	March 31, 2022		December 31, 2021
		(In Thousands)
Residential one-to-four family	$	233,251	$	224,534
Commercial and multi-family		1,804,815		1,720,174
Construction		141,082		153,904
Commercial business⁽¹⁾		198,216		191,139
Home equity⁽²⁾		52,279		50,469
Consumer		2,726		3,717
		2,432,369		2,343,937

Less:
Deferred loan fees, net		(2,459)		(1,876)
Allowance for loan losses		(33,980)		(37,119)

Total Loans, net	$	2,395,930	$	2,304,942
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

‎

Note 7 – Loans Receivable and Allowance for Loan Losses (Continued)

Allowance for Loan Losses

The allowance for loan loss is evaluated regularly by management and reflects consideration of all significant factors that affect the collectability of the loan portfolio. The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key elements. These elements include a general allocated reserve for performing loans, a specific reserve for impaired loans and an unallocated portion.

The Company consistently applies the following comprehensive methodology. During the quarterly review of the allowance for loan losses, the Company considers a variety of qualitative factors that include:

Lending policies and procedures;

Personnel responsible for the particular portfolio - relative to experience and ability of staff;

Trend for past due, criticized and classified loans;

Relevant economic factors;

Quality of the loan review system;

Value of collateral for collateral dependent loans;

The effect of any concentrations of credit and the changes in the level of such concentrations; and

Other external factors.

The methodology includes the segregation of the loan portfolio into two divisions: performing loans and loans determined to be impaired. Loans which are performing are evaluated homogeneously by loan class or loan type. The allowance for performing loans is evaluated based on historical loan loss experience with an adjustment for the qualitative factors listed above. Impaired loans can be loans which are more than 90 days delinquent, troubled debt restructurings, in the process of foreclosure, or a forced bankruptcy plan. These loans are individually evaluated for loan loss either by current appraisal, or net present value of expected cash flows. Management reviews the overall estimate for feasibility and bases the loan loss provision accordingly. During 2022 and 2021, additional stress tests were performed to model a potential collateral deficiency on those loans that are in sectors that have demonstrated a weakness in the current COVID environment. These stress tests supported an additional allowance by estimating probable losses for loans in sectors that are specifically challenged in the pandemic condition.

The Bank also maintains an unallocated allowance to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio. Management must make estimates using assumptions and information that is often subjective and subject to change.

The loan portfolio is segmented into the following loan segments, where the risk level for each class is analyzed when determining the allowance for loan losses:

Residential one-to-four family real estate loans involve certain risks such as interest rate risk and risk of non-repayment. Adjustable-rate residential real estate loans decrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying properties may be adversely affected by higher interest rates. Repayment risk may be affected by a number of factors including, but not necessarily limited to, job loss, divorce, illness and personal bankruptcy of the borrower.

Commercial and multi-family real estate lending entails additional risks as compared with residential family property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as general economic conditions.

Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of the general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Bank than construction loans to individuals on their personal residence.

Commercial business lending, including lines of credit, is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business. Commercial business loans are primarily secured by inventories and other business assets. In many cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.

Home equity lending entails certain risks such as interest rate risk and risk of non-repayment. The marketability of the underlying property may be adversely affected by higher interest rates, decreasing the collateral value securing the loan. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy of the borrower. Home equity line of credit lending entails securing an equity interest in the borrower’s home. In many cases, the Bank’s position in these loans is as a junior lien holder to another institution’s superior lien. This type of lending is often priced on an adjustable rate basis with the rate set at or above a predefined index. Adjustable-rate loans decrease the interest rate risk to the Bank that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default.

Other consumer loans generally have more credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. Consumer loans generally have shorter terms and higher interest rates than other lending. In addition, consumer lending collections are dependent on the borrower’s continuing financial

stability, and thus are more likely to be adversely affected by job loss, divorce, illness and personal bankruptcy. In many cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.

‎

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended March 31, 2022, and the related portion of the allowances for loan losses that is allocated to each loan class, as of March 31, 2022 (in thousands):


	Residential			Commercial & Multi-family	Construction		Commercial Business ⁽¹⁾		Home Equity ⁽²⁾		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning Balance, January 1, 2022	$	4,094	$	22,065	$	2,231	$	8,000	$	533	$	14		182	$	37,119

Charge-offs:		-		-		-		(766)		-		-		-		(766)
Recoveries:		-		-		-		1		3		198		-		202
(Reversals) provisions:		(1,593)		(1,245)		(266)		901		(202)		(197)		27		(2,575)
Ending Balance, March 31, 2022		2,501		20,820		1,965		8,136		334		15		209		33,980

Ending Balance attributable to loans:
Individually evaluated for impairment		221		618		295		6,000		10		-		-		7,144
Collectively evaluated for impairment		2,280		20,202		1,670		2,136		324		15		209		26,836
Ending Balance, March 31, 2022		2,501		20,820		1,965		8,136		334		15		209		33,980

Loans Receivables:
Individually evaluated for impairment		4,836		24,901		2,954		7,517		747		-		-		40,955
Collectively evaluated for impairment		228,415		1,779,914		138,128		190,699		51,532		2,726		-		2,391,414
Total Gross Loans:	$	233,251	$	1,804,815	$	141,082	$	198,216	$	52,279	$	2,726	$	-	$	2,432,369
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

The following table sets forth the activity in the Company’s allowance for loan losses for the three months ended March 31, 2021 (in thousands):


	Residential			Commercial & Multi-family	Construction		Commercial Business ⁽¹⁾			Home Equity⁽²⁾	Consumer		Unallocated		Total
Allowance for credit losses:
Beginning Balance, January 1, 2021	$	3,293	$	21,772	$	1,977	$	6,306	$	286	$	-	$	5	$	33,639

Charge-offs:		(57)		-		-		-		-		-		-		(57)
Recoveries:		27		-		-		-		3		-		-		30
(Reversals) provisions:		(426)		1,347		25		275		4		-		640		1,865
Ending Balance, March 31, 2021	$	2,837	$	23,119	$	2,002	$	6,581	$	293	$	-	$	645	$	35,477

Ending Balance attributable to loans:
Individually evaluated for impairment		302		381		-		4,601		23		-		-		5,307
Collectively evaluated for impairment		2,535		22,738		2,002		1,980		270		-		645		30,170
Ending Balance, March 31, 2021		2,837		23,119		2,002		6,581		293		-		645		35,477

Loans Receivables:
Individually evaluated for impairment		5,509		44,086		2,787		13,269		1,693		-		-		67,344
Collectively evaluated for impairment		228,866		1,656,027		164,437		164,071		51,667		851		-		2,265,919
Total Gross Loans:		234,375		1,700,113		167,224		177,340		53,360		851		-		2,333,263
_____________________________
(1) Includes business lines of credit.
(2) Includes home equity lines of credit.

‎

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table sets forth the amount recorded in loans receivable at December 31, 2021. The table also details the amount of total loans receivable that are evaluated individually, and collectively, for impairment and the related portion of the allowance for loan losses that is allocated to each loan class (in thousands):


		Residential		Commercial & Multi-family		Construction		Commercial Business ⁽¹⁾		Home Equity ⁽²⁾		Consumer		Unallocated		Total
Allowance for credit losses:
Ending Balance attributable to loans:
Individually evaluated for impairment	$	265	$	1,690	$	210	$	5,650	$	13	$	-	$	-	$	7,828
Collectively evaluated for impairment		3,829		20,375		2,021		2,350		520		14		182		29,291
Ending Balance, December 31, 2021	$	4,094	$	22,065	$	2,231	$	8,000	$	533	$	14	$	182	$	37,119

Loans Receivables:
Individually evaluated for impairment	$	4,961	$	31,745	$	2,847	$	8,746	$	1,083	$	-	$	-	$	49,382
Collectively evaluated for impairment		219,573		1,688,429		151,057		182,393		49,386		3,717		-		2,294,555
Total Gross Loans:	$	224,534	$	1,720,174	$	153,904	$	191,139	$	50,469	$	3,717	$	-	$	2,343,937

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

‎

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The following table summarizes the average recorded investment and interest income recognized on impaired loans with no related allowance recorded by portfolio class for the three months ended March 31, 2022 and 2021 (in thousands):


		Three Months Ended March 31,
		2022		2022		2021		2021

	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Loans with no related allowance recorded:
Residential one-to-four family	$	2,935	$	37	$	3,453	$	34
Commercial and Multi-family		21,220		263		44,958		282
Construction		-		-		1,394		36
Commercial business⁽¹⁾		1,952		65		5,171		13
Home equity⁽²⁾		613		5		1,196		10
Consumer		-		-		-		-
Total Impaired Loans with no allowance recorded:	$	26,720	$	370	$	56,172	$	375

Loans with an allowance recorded:
Residential one-to-four family	$	1,964	$	-	$	2,943	$	32
Commercial and Multi-family		7,103		-		8,013		129
Construction		2,901		2		-		-
Commercial business⁽¹⁾		6,180		9		7,710		93
Home equity⁽²⁾		303		-		438		2
Consumer		-		-		-		-
Total Impaired Loans with an allowance recorded:	$	18,451	$	11	$	19,104	$	256

Total Impaired Loans:	$	45,171	$	381	$	75,276	$	631

__________

(1)Includes business lines of credit.

(2)Includes home equity lines of credit.

The following table summarizes the recorded investment by portfolio class at March 31, 2022 and December 31, 2021. (in thousands):



		As of March 31, 2022						As of December 31, 2021
		Recorded		Unpaid Principal		Related		Recorded		Unpaid Principal		Related
		Investment		Balance		Allowance		Investment		Balance		Allowance
Loans with no related allowance recorded:
Residential one-to-four family	$	2,920	$	3,272	$	-	$	2,950	$	3,300	$	-
Commercial and multi-family		21,525		22,832		-		20,915		22,100		-
Construction		-		-		-		-		-		-
Commercial business⁽¹⁾		1,790		5,783		-		2,114		6,905		-
Home equity⁽²⁾		446		446		-		779		780		-
Total Impaired Loans with no related allowance recorded:	$	26,681	$	32,333	$	-	$	26,758	$	33,085	$	-

Loans with an allowance recorded:
Residential one-to-four family	$	1,916	$	1,937	$	221	$	2,011	$	2,032	$	265
Commercial and Multi-family		3,376		6,930		618		10,830		14,494		1,690
Construction		2,954		2,954		295		2,847		2,847		210
Commercial business⁽¹⁾		5,727		16,529		6,000		6,632		17,514		5,650
Home equity⁽²⁾		301		301		10		304		304		13
Total Impaired Loans with an allowance recorded:	$	14,274	$	28,651	$	7,144	$	22,624	$	37,191	$	7,828

Total Impaired Loans:	$	40,955	$	60,984	$	7,144	$	49,382	$	70,276	$	7,828

__________

(1) Includes business lines of credit.
‎(2) Includes home equity lines of credit.

‎

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

A troubled debt restructured loan (“TDR”) is a loan that has been modified whereby the Company has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Company to maximize the ultimate recovery of a loan. A TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a concession that would otherwise not be granted to the borrower. All TDRs were considered impaired and therefore were individually evaluated for impairment in the calculation of the allowance for loan losses. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the allowance for loan losses.


		At March 31, 2022		At December 31, 2021
		(In thousands)
Recorded investment in TDRs:
Accrual status	$	14,659	$	12,402
Non-accrual status		390		3,570
Total recorded investment in TDRs	$	15,049	$	15,972

The Company originated one TDR loan totaling $115,388 and one TDR loan totaling $96,532 for the three-months ended March 31, 2022 and March 31, 2021, respectively.

For the three-months ended March 31, 2022 and March 31, 2021, TDRs, for which there was a payment default within twelve months of restructuring, totaled $0 and $127,449 for one loan, respectively.

The following table sets forth the delinquency status of total loans receivable as of March 31, 2022:



													Loans Receivable
	30-59 Days		60-90 Days		Greater Than		Total Past				Total Loans		>90 Days
	Past Due		Past Due		90 Days		Due		Current		Receivable		and Accruing
		(In Thousands)

Residential one-to-four family	$	327	$	-	$	86	$	413	$	232,838	$	233,251	$	-
Commercial and multi-family		1,983		-		757		2,740		1,802,075		1,804,815		-
Construction		-		-		2,954		2,954		138,128		141,082		-
Commercial business⁽¹⁾		3,623		4		2,932		6,559		191,657		198,216		-
Home equity⁽²⁾		188		-		-		188		52,091		52,279		-
Consumer		-		-		-		-		2,726		2,726		-
Total	$	6,121	$	4	$	6,729	$	12,854	$	2,419,515	$	2,432,369	$	-

_________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

The following table sets forth the delinquency status of total loans receivable at December 31, 2021:



													Loans Receivable
	30-59 Days		60-90 Days		Greater Than		Total Past				Total Loans		>90 Days
	Past Due		Past Due		90 Days		Due		Current		Receivable		and Accruing
		(In Thousands)

Residential one-to-four family	$	1,063	$	-	$	86	$	1,149	$	223,385	$	224,534	$	-
Commercial and multi-family		1,181		-		5,167		6,348		1,713,826		1,720,174		-
Construction		2,899		-		2,847		5,746		148,158		153,904		-
Commercial business⁽¹⁾		405		166		6,775		7,346		183,793		191,139		3,124
Home equity⁽²⁾		190		-		27		217		50,252		50,469		-
Consumer		-		-		-		-		3,717		3,717		-

Total	$	5,738	$	166	$	14,902	$	20,806	$	2,323,131	$	2,343,937	$	3,124

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

The table below sets forth the amounts and types of non-accrual loans in the Bank’s loan portfolio at March 31, 2022 and December 31, 2021, respectively. Loans are placed on non-accrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest become doubtful. As of March 31, 2022, and December 31, 2021, non-accrual loans differed from the amount of total loans past due greater than 90 days due to troubled debt restructuring of loans, loans 90 days past due and still accruing, or loans that were previously 90 days past due which are maintained on non-accrual status for a minimum of six months until the borrower has demonstrated its ability to satisfy the terms of the loan. There were $3.3 million at March 31, 2022 and $3.8 million at December 31, 2021 in nonaccrual loans that were less than ninety days past due. Nonaccrual loans do not include loans acquired with deteriorated credit quality which were recorded at their fair value at acquisition and totaled $665,000 at March 31, 2022 and $668,000 at December 31, 2021.



		As of March 31, 2022		As of December 31, 2021
		(In Thousands)		(In Thousands)
Non-Accruing Loans:

Residential one-to-four family	$	278	$	282
Commercial and multi-family		757		8,601
Construction		2,954		2,847
Commercial business⁽¹⁾		5,243		3,132
Home equity⁽²⁾		-		27

Total	$	9,232	$	14,889

_________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

Had non-accrual loans been performing in accordance with their original terms, the interest income recognized for the three months ended March 31, 2022 and the twelve months ended December 31, 2021 would have been approximately $246,000 and $1.3 million, respectively. The Bank has not committed to lend additional funds to the borrowers whose loans have been placed on nonaccrual status. At March 31, 2022 and December 31, 2021 there were $0 and $3.1 million, respectively, of loans which were more than ninety days past due and still accruing interest.

‎

Note 7 - Loans Receivable and Allowance for Loan Losses (Continued)

Criticized and Classified Assets

Company policies provide for a classification system for problem assets. Under this classification system, problem assets are classified as “substandard,” “doubtful,” or “loss.”

When the Company classifies problem assets, the Company may establish general allowances for loan losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. A portion of general loss allowances established to cover possible losses related to assets classified as substandard or doubtful may be included in determining our regulatory capital. Specific valuation allowances for loan losses generally do not qualify as regulatory capital. The loans classified as substandard are secured either by residential real estate, commercial real estate or heavy equipment. The loans that have been classified substandard were classified as such primarily due to payment status, because updated financial information has not been timely provided, or the collateral underlying the loan is in the process of being revalued.

The Company’s internal credit risk grades are based on the definitions currently utilized by the banking regulatory agencies. The grades assigned and definitions are as follows, and loans graded excellent, above average, good and watch list (risk ratings 1-5) are treated as “pass” for grading purposes. The “criticized” risk rating (6) and the “classified” risk ratings (7-9) are detailed below:

6 – Special Mention- Loans currently performing but with potential weaknesses including adverse trends in borrower’s operations, credit quality, financial strength, or possible collateral deficiency.

7 – Substandard- Loans that are inadequately protected by current sound worth, paying capacity, and collateral support. Loans on “nonaccrual” status. The loan needs special and corrective attention.

8 – Doubtful- Weaknesses in credit quality and collateral support make full collection improbable, but pending reasonable factors remain sufficient to defer the loss status.

9 – Loss- Continuance as a bankable asset is not warranted. However, this does not preclude future attempts at partial recovery.

The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention and substandard within the Company’s internal risk rating system as of March 31, 2022 (in thousands). As of March 31, 2022, the Company had no loans with the classified rating of doubtful or loss.


	Pass		Special Mention		Substandard		Total

Residential one-to-four family	$	232,476	$	498	$	277	$	233,251
Commercial and multi-family		1,741,596		43,908		19,311		1,804,815
Construction		138,128		-		2,954		141,082
Commercial business⁽¹⁾		186,148		4,972		7,096		198,216
Home equity⁽²⁾		52,067		-		212		52,279
Consumer		2,726		-		-		2,726

Total Gross Loans	$	2,353,141	$	49,378	$	29,850	$	2,432,369

_________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

The following table presents the loan portfolio types summarized by the aggregate pass rating and the classified ratings of special mention and substandard within the Company’s internal risk rating system as of December 31, 2021 (in thousands). As of December 31, 2021, the Company had no loans with the classified rating of doubtful or loss.



	Pass		Special Mention		Substandard		Total

Residential one-to-four family	$	223,660	$	505	$	369	$	224,534
Commercial and multi-family		1,647,701		45,087		27,386		1,720,174
Construction		151,057		-		2,847		153,904
Commercial business⁽¹⁾		178,056		4,767		8,316		191,139
Home equity⁽²⁾		50,230		-		239		50,469
Consumer		3,717		-		-		3,717

Total Gross Loans	$	2,254,421	$	50,359	$	39,157	$	2,343,937

________

(1) Includes business lines of credit.

(2) Includes home equity lines of credit.

‎

Note 8 – Stockholders’ Equity

On March 24, 2022, BCB Bancorp, Inc. (the “Company”) closed a round of private placement of Series I Noncumulative Perpetual Stock, par value $0.01 per share (the “Series I Preferred Stock”), resulting in gross proceeds of $2,620,000 for 260 shares.

On February 4, 2022, the Company redeemed all 533 outstanding shares of its Series G 6.0% Noncumulative Perpetual Preferred Stock, at their face value of $10,000 per share, for a total redemption amount of $5.3 million.

On December 21, 2021, BCB Bancorp, Inc. (the “Company”) closed a round of private placement of Series I Noncumulative Perpetual Stock, par value $0.01 per share (the “Series I Preferred Stock”), resulting in gross proceeds of $3,200,000 for 320 shares.

Note 9 – Bank Owned Life Insurance

The Bank purchased an additional $8.5 million of bank owned life insurance (“BOLI”) in January, 2021. BOLI involves life insurance purchased by the Bank on a chosen group of employees, and the Bank is owner and beneficiary of the policies. At March 31, 2022 the Bank had $73.2 million in BOLI. BOLI is accounted for using the cash surrender value method and is recorded at its net realizable value.

Note 10 – Goodwill and Other Intangible Assets

The Company’s intangible assets consist of goodwill and core deposit intangibles in connection with the acquisition of IA Bancorp, Inc. as of April 17, 2018. The initial recording of goodwill and other intangible assets requires subjective judgments concerning estimates of the fair value of the acquired assets and assumed liabilities. Goodwill is not amortized but is subject to annual tests for impairment or more often if events or circumstances indicate it may be impaired.

The Company’s core deposit intangibles are amortized on an accelerated basis using an estimated life of 10 years and in accordance with U.S. GAAP are evaluated annually for impairment. An impairment loss will be recognized if the carrying amount of the intangible asset is not recoverable and exceeds fair value. The carrying amount of the intangible asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset.

The Company believes that the fair values of our goodwill and other intangible assets were in excess of their carrying amounts and there was no impairment at March 31, 2022.

Amortization expense of the core deposit intangibles was $14,000 and $16,000 for the three months ended March 31, 2022 and 2021, respectively. The unamortized balance of the core deposit intangibles and the amount of goodwill at March 31, 2022 was $164,000 and $5.2 million, respectively. The unamortized balance of the core deposits intangibles and the amount of goodwill at December 31, 2021 was $178,000 and $5.2 million, respectively.

Note 11 – Fair Values of Financial Instruments

Guidance on fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).

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

Assets that the Company measured at fair value on a recurring basis were as follows (In thousands):


			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
As of March 31, 2022:
Securities
Debt Securities Available for Sale	$	86,307	$	-	$	86,307	$	-
Marketable Equities	$	21,269	$	21,269	$	-	$	-
Total Securities	$	107,576	$	21,269	$	86,307	$	-

As of December 31, 2021:
Securities
Debt Securities Available for Sale	$	85,186	$	-	$	85,186	$	-
Marketable Equities	$	25,187	$	25,187	$	-	$	-
Total Securities	$	110,373	$	25,187	$	85,186	$	-

The Company’s policy is to recognize transfers between levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers of assets or liabilities into or out of Level 1, Level 2, or Level 3 of the fair value hierarchy during the three months ended March 31, 2022 and 2021.

There were no liabilities measured at fair value on a recurring basis at March 31, 2022 or December 31, 2021.

Note 11 – Fair Values of Financial Instruments (Continued)

Assets that the Company measured at fair value on a nonrecurring basis were as follows. (In thousands):




			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
As of March 31, 2022
Impaired Loans	$	7,130	$	-	$	-	$	7,130
Other real estate owned	$	75	$	-	$	-	$	75

As of December 31, 2021:
Impaired Loans	$	14,796	$	-	$	-	$	14,796
Other real estate owned	$	75	$	-	$	-	$	75

There were no liabilities measured at fair value on a nonrecurring basis at March 31, 2022 or December 31, 2021.

‎

Note 11 – Fair Values of Financial Instruments (Continued)

The following tables present additional quantitative information as of March 31, 2022 and December 31, 2021 about assets measured at fair value on a nonrecurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value. (Dollars in thousands):


Quantitative Information about Level 3 Fair Value Measurements
		Fair Value	Valuation	Unobservable
		Estimate	Techniques	Input	Range
March 31, 2022:
Impaired Loans	$	7,130	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-10%
Other real estate owned	$	75	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-10%


		Fair Value	Valuation	Unobservable
		Estimate	Techniques	Input	Range
December 31, 2021:
Impaired Loans	$	14,796	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-10%
Other real estate owned	$	75	Appraisal of collateral (1)	Appraisal adjustments (2)	0%-10%

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not objectively determinable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments as of March 31, 2022 and December 31, 2021.

Cash and Cash Equivalents and Interest-Earning Time Deposits (Carried at Cost)

The carrying amounts reported in the consolidated statements of financial condition for cash and short-term instruments approximate fair values.

Securities (Carried at Fair Value)

The fair value of securities is determined by obtaining quoted market prices on nationally recognized security exchanges (Level 1) or, by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Held for Sale (Carried at Cost)

The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for specific attributes of that loan. Loans held for sale are carried at the lower of cost or fair value.

Loans Receivable (Carried at Cost)

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

Note 11 – Fair Values of Financial Instruments (Continued)

Impaired Loans (Generally Carried at Fair Value)

Impaired loans are those for which the Company has measured and recorded an impairment generally based on the fair value of the loan’s collateral, less estimated costs to sell. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value at March 31, 2022 and December 31, 2021 consisted of the loan balances of $14.3 million net of a valuation allowance of $7.1 million and $22.6 million net of a valuation of loan allowance of $7.8 million, respectively.

Other Real Estate Owned (Generally Carried at Lower of Cost or Fair Value)

Real Estate Owned is generally carried at fair value less estimated costs to sell which is determined based upon independent third-party appraisals of the properties or based upon the expected proceeds from a pending sale. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

FHLB of New York Stock (Carried at Cost)

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

Accrued Interest Receivable and Payable (Carried at Cost)

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

Deposits (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings and money market accounts1) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Debt Including Subordinated Debentures (Carried at Cost)

Fair values of debt are estimated using discounted cash flow analysis, based on quoted prices for new long-term debt with similar credit risk characteristics, terms and remaining maturity. Prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair values for the Company’s off-balance sheet financial instruments (lending commitments and unused lines of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these commitments was deemed immaterial and is not presented in the accompanying table.

‎

Note 11 – Fair Values of Financial Instruments (Continued)

The carrying values and estimated fair values of financial instruments were as follows as of March 31, 2022 and December 31, 2021:


		As of March 31, 2022

					Quoted Prices in Active		Significant		Significant
	Carrying				Markets for Identical Assets		Other Observable Inputs		Unobservable Inputs
	Value		Fair Value		(Level 1)		(Level 2)		(Level 3)

	(In Thousands)
Financial assets:
Cash and cash equivalents	$	396,653	$	396,653	$	396,653	$	-	$	-
Interest-earning time deposits		735		735		-		735		-
Debt securities available for sale		86,307		86,307		-		86,307		-
Equity investments		21,269		21,269		21,269		-		-
Loans held for sale		325		325		-		325		-
Loans receivable, net		2,395,930		2,333,896		-		-		2,333,896
FHLB of New York stock, at cost		6,128		6,128		-		6,128		-
Accrued interest receivable		9,593		9,593		-		9,593		-

Financial liabilities:
Deposits		2,631,175		2,532,283		1,949,169		583,114		-
Borrowings		71,848		68,572		-		68,572		-
Subordinated debentures		37,333		43,354		-		43,354		-
Accrued interest payable		553		553		-		553		-


		As of December 31, 2021

					Quoted Prices in Active		Significant		Significant
	Carrying				Markets for Identical Assets		Other Observable Inputs		Unobservable Inputs
	Value		Fair Value		(Level 1)		(Level 2)		(Level 3)

	(In Thousands)
Financial assets:
Cash and cash equivalents	$	411,629	$	411,629	$	411,629	$	-	$	-
Interest-earning time deposits		735		735		-		735		-
Debt securities available for sale		85,186		85,186		-		85,186		-
Equity investments		25,187		25,187		25,187		-		-
Loans held for sale		952		952		-		952		-
Loans receivable, net		2,304,942		2,313,204		-		-		2,313,204
FHLB of New York stock, at cost		6,084		6,084		-		6,084		-
Accrued interest receivable		9,183		9,183		-		9,183		-

Financial liabilities:
Deposits		2,561,402		2,520,191		1,881,121		639,070		-
Debt		71,711		71,214		-		71,214		-
Subordinated debentures		37,275		45,020		-		45,020		-
Accrued interest payable		1,051		1,051		-		1,051		-

‎

Note 12 – Subordinated debt

On July 30, 2018, the Company issued $33.5 million of fixed-to-floating rate subordinated debentures (the “Notes”) in a private placement. The Notes have a 10-year term and bear interest at a fixed annual rate of 5.625% for the first five years of the term (the "Fixed Interest Rate Period"). From and including August 1, 2023, the interest rate will adjust to a floating rate based on the three-month LIBOR plus 2.72% until redemption or maturity (the "Floating Interest Rate Period"). The Notes are scheduled to mature on August 1, 2028. Subject to limited exceptions, the Company cannot redeem the Notes for the first five years of the term. The Company will pay interest in arrears semi-annually during the Fixed Interest Rate Period and quarterly during the Floating Interest Rate Period during the term of the Notes. The Notes constitute an unsecured and subordinated obligation of the Company and rank junior in right of payment to any senior indebtedness and obligations to general and secured creditors. The Notes qualify as Tier 2 capital for the Company for regulatory purposes, when applicable, and the portion that the Company contributes to the Bank will qualify as Tier 1 capital for the Bank. The additional capital is used for general corporate purposes including organic growth initiatives. Subordinated debt includes associated deferred costs of $291,000 and $349,000 at March 31, 2022 and December 31, 2021, respectively.

The Company also has $4,124,000 of mandatory redeemable trust preferred securities. The interest rate on these floating rate junior subordinated debentures adjusts quarterly, equal to the three-month LIBOR plus 2.65%.

As it is anticipated that LIBOR would not be supported in its current form after June 30, 2023, the Company is reviewing the agreements for the above debentures to determine alternative reference rates and does not anticipate there will be a significant financial statement impact.

Note 13 – Lease Obligations

The Company leases 28 of its offices under various operating lease agreements. The leases have remaining terms of one year to 10 years. The leases contain provisions for the payment by the Company of its pro-rata share of real estate taxes, insurance, common area maintenance and other variable expenses. The Company will allocate payments made under such leases between lease and non-lease components. Some leases contain renewal options and options to purchase the assets.

The Company has elected not to recognize a lease liability and a right of use asset for leases with a lease term of 12 or fewer months.

The following tables present certain information related to the Company’s leases (in thousands):


		Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Operating lease cost	$	902	$	952
Variable lease cost-operating leases	$	218	$	246

		At March 31, 2022		At December 31, 2021
Supplemental balance sheet information related to leases:
Operating Leases
Operating lease right-of-use assets	$	11,883	$	12,457

Current liabilities	$	3,123	$	3,296
Operating lease liabilities (noncurrent portion)		10,057		10,529
Imputed Interest		(1,000)		(1,073)
Total operating lease liabilities	$	12,180	$	12,752

The weighted average remaining lease term for operating leases at March 31, 2022 and December 31, 2021 was 5.86 years and 5.99 years, respectively. The weighted average discount rate for operating leases at March 31, 2022 and December 31, 2021 was 2.58 percent and 2.60 percent, respectively.

The following table summarizes the Company’s maturity of lease obligations for operating leases at March 31, 2022 and December 31, 2021 (in thousands):


Maturities of lease liabilities:
		At March 31, 2022		At December 31, 2021
		Operating Leases		Operating Leases
One year or less	$	3,123	$	3,296
Over one year through three years		4,322		4,455
Over three years through five years		2,986		3,012
Over five years		2,749		3,062
Gross Operating Lease Liabilities	$	13,180	$	13,825
Imputed Expenses		(1,000)		(1,073)
Total Operating Lease Liabilities	$	12,180	$	12,752

Note 14 – Subsequent Events

On April 13, 2022, the Board of Directors of the Company declared a cash dividend of $0.16 per share to shareholders of record of its common stock on May 2, 2022 with a payment date of May 16, 2022.

On May 1, 2022, the Company redeemed all 940 outstanding shares of its Series D 4.5% Noncumulative Perpetual Preferred Stock, at their face value of $10,000 per share, for a total redemption of $9.4 million.

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report on Form 10-Q contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, or the PSLRA. Such forward-looking statements, in addition to historical information, involve risk and uncertainties, and are based on the beliefs, assumptions and expectations of our management team. Words such as “expects,” “believes,” “should,” “plans,” “anticipates,” “will,” “potential,” “could,” “intend,” “may,” “outlook,” “predict,” “project,” “would,” “estimated,” “assumes,” “likely,” and variation of such similar expressions are intended to identify such forward-looking statements. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that we anticipated in our forward-looking statements and future results could differ materially from historical performance.

Factors that could cause future results to vary from current management expectations as reflected in our forward-looking statements include, but are not limited to:

unfavorable economic conditions in the United States generally and particularly in our primary market area;

the effects of declines in housing markets and real estate values that may adversely impact the collateral underlying our loans;

increase in unemployment levels and slowdowns in economic growth;

our level of non-performing assets and the costs associated with resolving any problem loans including litigation and other costs;

the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of our loan and investment securities portfolios;

the credit risk associated with our loan portfolio;

changes in the quality and composition of the Bank’s loan and investment portfolios;

changes in our ability to access cost-effective funding;

deposit flows;

legislative and regulatory changes, including increases in Federal Deposit Insurance Corporation, or FDIC, insurance rates;

monetary and fiscal policies of the federal and state governments;

changes in tax policies, rates and regulations of federal, state and local tax authorities;

inflation;

demands for our loan products;

demand for financial services;

competition;

changes in the securities or secondary mortgage markets;

changes in management’s business strategies;

our ability to enter new markets successfully;

our ability to successfully integrate acquired businesses;

changes in consumer spending;

our ability to retain key employees;

the effects of any reputational, credit, interest rate, market, operational, legal, liquidity, or regulatory risk;

expanded regulatory requirements as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which could adversely affect operating results;

civil unrest in the communities that we serve;

the global spread of the Coronavirus Disease 2019 (“COVID-19”) and the impact that it is having on the United States, in general, and New Jersey and New York, in particular (see Item 1.A. Risk Factors in the Company’s Annual Report on Form 10-K); and

other factors discussed elsewhere in this report, and in other reports we filed with the SEC, including under “Risk Factors” in Part I, Item 1A of our annual Report on Form 10-K, in Part II, Item 1A of our quarterly reports on Form 10-Q, and our other periodic reports that we file with the SEC.

You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Form 10-Q. We do not assume any obligation to revise forward-looking statements except as may be required by law.

Overview

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 March 31, 2022, we had approximately $3.040 billion in consolidated assets, $2.631 billion in deposits and $276.2 million in consolidated stockholders’ equity.

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 March 31, 2022, the Bank operated through 29 branches in Bayonne, Carteret, 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.

We are a community-oriented financial institution. Our business is to offer FDIC-insured deposit products and to invest funds held in deposit accounts at the Bank, together with funds generated from operations, in loans and investment securities. We offer our customers:

loans, including commercial and multi-family real estate loans, one- to four-family mortgage loans, home equity loans, construction loans, consumer loans and commercial business loans. In recent years the primary growth in our loan portfolio has been in loans secured by commercial real estate and multi-family properties;

FDIC-insured deposit products, including savings and club accounts, interest and non-interest bearing demand accounts, money market accounts, certificates of deposit and individual retirement accounts; and

retail and commercial banking services including wire transfers, money orders, safe deposit boxes, a night depository, debit cards, online banking, mobile banking, gift cards, fraud detection (positive pay), and automated teller services.

Critical Accounting Estimates

Estimates and assumptions are necessary in the application of certain accounting policies and can be susceptible to significant change. Critical accounting estimates are defined as those that involve a significant level of estimation uncertainty and have had, or could have, a material impact on the Company’s financial conditions or results of operation. At March 31, 2022, the Company considers the allowance for credit losses to be its critical accounting estimate.

See further discussion of this critical accounting estimate in our Annual Report on Form 10-K for the year ended December 31, 2021.

COVID-19 Response

The Company remains focused on protecting the health and well-being of its employees and the communities in which it operates while assuring the continuity of its business operations.

The Company activated its dedicated pandemic team that proactively implemented its business continuity plans and has taken a variety of measures to ensure the ongoing availability of services, while taking health and safety measures, including enhanced cleaning and hygiene protocols in all of its facilities and remote work policies, where possible. To date, as a result of these business continuity measures, the Company has not experienced significant disruptions in its operations.

Operational Initiatives

oManagement meets on an as-needed basis and actively monitors guidance released by regulators, banking associations as well as state and local government.

oMost employees have returned to work, however social distancing is still encouraged for those that are unvaccinated.

oBarriers are in place in branches and back offices to provide protection.

oBranch and operational offices are cleaned and sanitized as needed and employees have access to masks, gloves and disinfectant.

oManagement provides updates to employees as needed.

oThe Call Center is open seven days a week to assist with customer inquiries.

oBranch offices are open; however, customers have the ability to make an appointment if they choose. The Bank is encouraging customers to utilize the ATM, drive-through, mobile and electronic banking services whenever possible.

Allowance for Loan Losses (“ALLL”)

oThe Bank lowered its loan loss reserves through a $2.6 million credit in loan loss provisions for the first quarter of 2022, as compared to $1.9 million of provision expense for the same period last year. 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 in arriving at its loan loss provision. All of these factors were affected by the COVID-19 pandemic. Loan categories for specific business types were stressed due to rising delinquencies within those market sectors (restaurants, industrial, and mixed use/warehouse) to determine the potential for collateral shortfalls. At March 31, 2022, the stress test resulted in collateral shortfalls and costs associated with foreclosure that were lower than the previous three quarters by approximately $3.0 million. Should the impact of COVID-19 worsen, adjustments to the ALLL may be required if it adversely impacts our borrowers’ capacity to make payments or the value of the underlying collateral.

IT Changes

oTo 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 access the network offsite. We have taken additional steps to minimize the increased risk of security breaches (including privacy breaches and cyber-attacks), given the increased number of employees working remotely.

Liquidity and Capital Resources

oThe Company was well positioned with adequate levels of cash and liquid assets as of March 31, 2022, as well as wholesale borrowing capacity of over $850 million. At March 31, 2022, the Company’s equity to assets ratio was 9.09 percent and the Bank is considered “well capitalized” under its 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.

Financial Condition

Total assets increased by $72.8 million, or 2.5 percent, to $3.040 billion at March 31, 2022, from $2.968 billion at December 31, 2021. The increase in total assets was mainly related to increases in total loans partially offset by decreases in cash and cash equivalents.

Total cash and cash equivalents decreased by $15.0 million, or 3.6 percent, to $396.7 million at March 31, 2022, from $411.6 million at December 31, 2021. This decrease was primarily due to an increase in loans, partly offset by an increase in deposits.

Loans receivable, net, increased by $91.0 million, or 3.95 percent, to $2.396 billion at March 31, 2022, from $2.305 billion at December 31, 2021. Total loan increases for the first three months of 2022 included increases of $84.5 million in commercial real estate and multi-family loans, $8.6 million in residential one-to-four family loans, $7.0 million in commercial business loans, and $1.7 million in home equity loans, partly offset by decreases of $12.9 million in construction loans, and $1.0 million in consumer loans. The allowance for loan losses decreased $3.1 million to $34.0 million, or 368.1 percent of non-accruing loans and 1.40 percent of gross loans, at March 31, 2022, as compared to an allowance for loan losses of $37.1 million, or 249.3 percent of non-accruing loans and 1.58 percent of gross loans, at December 31, 2021.

Total investment securities decreased by $2.8 million, or 2.5 percent, to $107.6 million at March 31, 2022, from $110.4 million at December 31, 2021, representing repayments, calls and maturities, and sales of $1.2 million, partly offset by purchases of $7.5 million.

Deposit liabilities increased by $69.8 million, or 2.7 percent, to $2.631 billion at March 31, 2022, from $2.561 billion at December 31, 2021. Total increases for the three months ended March 31, 2022, included $55.8 million in NOW deposit accounts, $33.2 million in non-interest-bearing deposit accounts, $17.2 million in money market checking accounts, and $11.8 million in savings and club accounts. The increase in deposits was partly offset by a decrease of $48.2 million in certificates of deposit, including listing service and brokered deposit accounts. The weighted average interest rate of certificates of deposit was 0.64 percent at March 31, 2022 and 0.72 percent at December 31, 2021.

Debt obligations remained relatively flat at $109.2 million at March 31, 2022, and $109.0 million at December 31, 2021, and consisted of both Federal Home Loan Bank (“FHLB”) borrowings and subordinated debt balances. The weighted average interest rate of FHLB advances was 1.39 percent at March 31, 2022, and December 31, 2021. The fixed interest rate of our subordinated debt balances was 5.625 percent at March 31, 2022, and December 31, 2021.

Stockholders’ equity increased by $2.1 million, or 0.8 percent, to $276.2 million at March 31, 2022, from $274.0 million at December 31, 2021. The increase was primarily attributable to the increase in retained earnings of $7.0 million, or 8.6 percent, to $88.1 million at March 31, 2022, from $81.2 million at December 31, 2021, related to the net effect of net income less dividends paid for the three months ended March 31, 2022. Additional paid-in-capital for preferred stock decreased by $2.7 million to $26.2 million at March 31,2022, from $28.9 million at December 31, 2021, primarily related to the redemption of $5.3 million of the Company’s then-outstanding Series G 6.0% preferred stock, partially offset by the issuance of $2.6 million of Series I 3.0% preferred stock. Accumulated other comprehensive income decreased by $2.4 million over the prior year, based upon unfavorable market conditions related to the Company’s available for sale debt securities.

Net Interest Income Analysis

Net interest income represents the difference between income earned on our interest-earning assets and the expense incurred on our interest-bearing liabilities, and is analyzed and monitored by the Company on a regular basis. The following tables set forth average balance sheets, yields, and costs. The yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or expense.


		Three Months Ended March 31,
		2022					2021
		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 ^{(4) (5)}	$	2,343,845	$	26,321	4.49%	$	2,326,230	$	26,863	4.62%
Investment securities⁽⁶⁾		108,960		1,107	4.06%		114,461		990	3.46%
Interest earnings assets		447,080		296	0.26%		264,308		222	0.34%
Total interest-earning assets		2,899,885		27,724	3.82%		2,704,999		28,075	4.15%
Non-interest-earning assets		102,118					109,987
Total assets	$	3,002,003				$	2,814,986
Interest-bearing liabilities:
Interest-bearing demand accounts	$	706,067	$	398	0.23%	$	610,893	$	757	0.50%
Money market accounts		345,564		360	0.42%		317,151		441	0.56%
Savings accounts		336,575		108	0.13%		302,741		118	0.16%
Certificates of Deposit		611,813		979	0.64%		682,975		1,992	1.17%
Total interest-bearing deposits		2,000,019		1,845	0.37%		1,913,760		3,308	0.69%
Borrowed funds		109,105		806	2.95%		205,956		1,205	2.34%
Total interest-bearing liabilities		2,109,124		2,651	0.50%		2,119,716		4,513	0.85%
Non-interest-bearing liabilities		621,574					444,787
Total liabilities		2,730,698					2,564,503
Stockholders' equity		271,305					250,483
Total liabilities and stockholders' equity	$	3,002,003				$	2,814,986
Net interest income			$	25,073				$	23,562
Net interest rate spread⁽¹⁾					3.32%					3.30%
Net interest margin⁽²⁾					3.46%					3.48%

(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.

(4)Excludes allowance for loan losses.

(5)Includes non-accrual loans which are immaterial to the yield.

(6)Includes Federal Home Loan Bank of New York Stock

Results of Operations comparison for the Three Months Ended March 31, 2022 and 2021

Net income increased by $2.8 million, or 39.8 percent, to $10.0 million for the three months ended March 31, 2021 from $7.1 million for the three months ended March 31, 2021. The increase in net income was primarily related to a decrease in total interest expense, a decrease in the provision for loan losses, and a decrease in total noninterest expense, partly offset by a decrease in interest income, a decrease in total noninterest income, and an increase in the income tax provision for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Net interest income increased by $1.5 million, or 6.4 percent, to $25.1 million for the first quarter of 2022, from $23.6 million for the first quarter of 2021. The increase in net interest income resulted from a $1.9 million decrease in interest expense, partly offset by a decrease of $351,000 in interest income.

Interest income decreased by $351,000, or 1.3 percent, to $27.7 million for the first quarter of 2022, from $28.1 million for the first quarter of 2021. The average balance of interest-earning assets increased $194.9 million, or 7.2 percent, to $2.900 billion for the first quarter of 2022, from $2.705 billion for the first quarter of 2021, while the average yield decreased 33 basis points to 3.82 percent for the first quarter of 2022, from 4.15 percent for the first quarter of 2021. The increase in the average balance of interest-earning deposits mainly relates to an increase in the Company’s level of average cash balances for the first quarter of 2022, as compared to the first quarter of 2021, relating to increases in the average balances of deposits.

The decrease in interest income mainly related to a decrease in the average yield on loans of 13 basis points to 4.49 percent for the first quarter of 2022, from 4.62 percent for the first quarter of 2021. The decrease in the average yield on loans was result of loan payoffs that occurred during the low interest rate environment of 2021. The decrease in interest income was partly offset by an increase in interest income on investment securities, mainly related to an increase in the average rate of 60 basis points to 4.06 percent for the first quarter of 2022, from 3.46 percent for the first quarter of 2021. Interest income on loans also included $147,000 of amortization of purchase

credit fair value adjustments related to a prior acquisition for the first quarter of 2022, which added approximately three basis points to the average yield on interest earning assets.

Interest expense decreased by $1.9 million, or 41.2 percent, to $2.7 million for the first quarter of 2022, from $4.5 million for the first quarter of 2021. This decrease resulted primarily from a decrease in the average rate on interest-bearing liabilities of 35 basis points to 0.50 percent for the first quarter of 2022, from 0.85 percent for the first quarter of 2021, as well as a decrease in the average balance of interest-bearing liabilities of $10.6 million, or 0.5 percent, to $2.109 billion for the first quarter of 2022, from $2.120 billion for the first quarter of 2021. The decrease in the average cost of funds primarily resulted from the low interest rate environment and the Company’s focus on managing funding costs.

Net interest margin was 3.46 percent for the first quarter of 2022, compared to 3.48 percent for the first quarter of 2021. The slight decrease in the net interest margin compared to the first quarter of 2021 was the result of a decrease in the average yield on loans based on the continued low interest rate environment, partly offset by a decrease in funding costs. Higher core deposit balances resulted in a decrease in the cost of funding liabilities which positively affected our interest rate spread and net interest margin during the quarter. Management has been proactive in managing the Company’s balance sheet to all credit cycles and has significantly decreased the average cost of total interest-bearing liabilities, while improving our interest rate spread, which increased by two basis points between the first quarter of 2021 and 2022.

The provision for loan losses decreased by $4.4 million, to a credit of $2.6 million for the first quarter of 2022, from $1.9 million for the first quarter of 2021, primarily due to positive quantitative and qualitative factors related to the pandemic in the Company’s ALLL methodology. During the first quarter of 2022, the Company experienced $564,000 in net charge offs compared to $27,000 in net charge offs for the first quarter of 2021. The Bank had non-accrual loans totaling $9.2 million, or 0.38 percent of gross loans at March 31, 2022, as compared to $14.4 million, or 0.62 percent of gross loans at March 31, 2021. The allowance for loan losses was $34.0 million, or 1.40 percent of gross loans at March 31, 2022, and $35.5 million, or 1.52 percent of gross loans at March 31, 2021.

Noninterest income decreased by $2.6 million, or 130.8 percent, to an expense of $600,000 for the first quarter of 2022, from $2.0 million for first quarter of 2021. The decrease in total noninterest income was mainly related to an increase in the unrealized loss of equity securities and a lower gain on sale of loans, partly offset by an increase in other non-interest income. The unrealized loss on equity securities increased $2.5 million to $2.7 million for the first quarter of 2022, from $196,000 for the first quarter 2021. The unrealized gains or losses on equity securities are based on market conditions. Gains on sales of loans decreased by $209,000, or 76.3%, to $65,000 for the first quarter of 2022, from $274,000 for the first quarter of 2021. Factors considered when deciding to sell loans include market conditions, demand, and the loan portfolio. These decreases were partly offset by an increase in fees and service charge income resulting from servicing income, ATM, and other customer account fees.

Noninterest expense decreased by $624,000, or 4.6 percent, to $13.0 million for the first quarter of 2022, from $13.6 million for the first quarter of 2021. Salaries and employee benefits expense increased by $191,000, or 2.9 percent, to $6.7 million for the first quarter of 2022, from $6.5 million for the first quarter of 2021. The increase related to normal compensation increases, and was partly offset by fewer full-time equivalent employees. The number of full-time equivalent employees for the first quarter of 2022 was 303, as compared to 312 for the same period in 2021. Occupancy and equipment expense decreased by $258,000 or 8.7% to $2.7 million for the first quarter of 2022, from $3.0 million for the first quarter of 2021, largely related to building sanitation costs associated with the COVID-19 pandemic in the first quarter of 2021. In the first quarter of 2021, the Company recognized an expense of $540,000 for a loss on extinguishment of debt, related to the prepayment of higher-cost FHLB borrowings with no comparable expense in the first quarter of 2022.

The income tax provision increased by $1.2 million, or 40.3 percent, to $4.1 million for the first quarter of 2022, from $2.9 million for the first quarter of 2021. The increase in the income tax provision was a result of higher taxable income for the first quarter of 2022, as compared with that same period for 2021. The consolidated effective tax rate for the first quarter of 2022 was 29.4 percent compared to 29.3 percent for the first quarter of 2021.

Liquidity and Capital Resources

Liquidity

The overall objective of our liquidity management practices is to ensure the availability of sufficient funds to meet financial commitments and to take advantage of lending and investment opportunities. The Company manages liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings and other obligations as they mature, and to fund loan and investment portfolio opportunities as they arise.

The Company’s primary sources of funds to satisfy its objectives are net growth in deposits (primarily retail), principal and interest payments on loans and investment securities, proceeds from the sale of originated loans and FHLB and other borrowings. The scheduled amortization of loans is a predictable source of funds. Deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including unsecured overnight lines of credit and other collateralized borrowings from the FHLB and other correspondent banks.

At March 31, 2022 and December 31, 2021, 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 FHLB borrowings of $71.8 million at March 31, 2022 and $71.7 million at December 31, 2021. The average rate of FHLB advances was 1.38 percent at March 31, 2022 and 1.39 percent at December 31, 2021. The subordinated debentures have a ten-year term and bear interest at a fixed annual rate of 5.625% for the first five years of the term. From and including August 1, 2023, the interest rate will adjust to a floating rate based on the LIBOR plus 2.72% until redemption or maturity. The Notes are scheduled to mature on August 1, 2028.

The Company had the ability at March 31, 2022 to obtain additional funding from the FHLB of up to $263.2 million, 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 $531.1 million at March 31, 2022. Based upon historical experience, management estimates that a significant portion of such deposits will remain with the Company.

The Company was well positioned with adequate levels of cash and liquid assets as of March 31, 2022, as well as wholesale borrowing capacity of over $800 million.

Capital Resources

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.

On September 17, 2019, the FDIC passed a final rule providing qualifying community banking organizations the ability to opt-in to a new community bank leverage ratio (tier 1 capital to average consolidated assets) (“CBLR”) framework, with a minimum requirement of 9% for institutions under $10 billion in assets. Such institutions

meeting that requirement may elect to utilize the CBLR in lieu of the general applicable risk-based capital requirements under Basel III. Such institutions that meet the CBLR and certain other qualifying criteria will automatically be deemed to be well-capitalized. The Bank decided to opt-in to the new CBLR, effective for the quarter ended March 31, 2020. Pursuant to the CARES Act, the federal banking regulators in April 2020 issued interim final rules to set the CBLR at 8.0% beginning in the second quarter of 2020 through the end of 2020. Beginning in 2021, the CBLR increased to 8.5% for the calendar year. At January 1, 2022, the CBLR requirement returned to 9%.

At March 31, 2022 and December 31, 2021, BCB Community Bank exceeded all of its regulatory capital requirements to which it was subject. The following table sets forth the regulatory capital ratios for BCB Community Bank as well as regulatory capital requirements for the periods presented.


		Actual				For Capital Adequacy Purposes				For Well Capitalized Under Prompt Corrective Action
	Dollars in Thousands
As of March 31, 2022:
Bank
Community Bank Leverage Ratio	$	303,859	10.15	%	$	239,412	8.00	%		269,338	9.00	%

As of December 31, 2021:
Bank
Community Bank Leverage Ratio	$	299,247	9.92	%	$	211,177	7.00	%	$	256,429	8.50	%

The Company will continue to monitor the effects of COVID-19 in determining future cash dividends and any requirement for additional capital each quarter.

‎

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

ITEM 4. Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Interim Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and Interim Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There has been no change in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

‎

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved, from time to time, as plaintiff or defendant in various legal actions arising in the normal course of business. As of March 31, 2022, we were not involved in any material legal proceedings the outcome of which, if determined in a manner adverse to the Company, would have a material adverse effect on our financial condition or results of operations.

ITEM 1.A. RISK FACTORS

There have been no material changes to the risk factors set forth under the Item 1.A. Risk Factors as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

At March 31, 2022, the Company closed a second round private placement of its Series I Noncumulative Perpetual Preferred Stock, par value $0.01 per share, resulting in gross proceeds of $2,620,000 for 262 shares. The purchase price was $10,000.00 per share. The company relied on the exemption from registration with the Securities and Exchange Commission provided under SEC Rule 506 of Regulation D.

The Company’s repurchase of equity securities for the three months ended March 31, 2022 were as follows:


Period	Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - January 31, 2022	515	$	15.28	515	198,461
February 1 - February 28, 2022	-		-	-	-
March 1 - March 31, 2022	-		-	-	-
Total	515	$	15.28	515	198,461

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFTEY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None.

‎

ITEM 6. EXHIBITS



Exhibit 10.1	Employment Agreement with Kenneth G. Emerson (Incorporated by reference to Exhibit 10.2 to the Form 8-K files with the Securities and Exchange Commission (“SEC”) on February 23, 2022.
Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32	Officers’ Certification filed pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101.INS	XBRL Instance Document
Exhibit 101.SCH	XBRL Taxonomy Extension Schema
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation LinkBase
Exhibit 101.DEF	XBRL Taxonomy Extension Definition LinkBase
Exhibit 101.LAB	XBRL Taxonomy Extension Label LinkBase
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation LinkBase
Exhibit 104	Cover page Interactive Data File (embedded within the Inline XBRL document)

‎

Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.



	BCB BANCORP, INC.

Date: May 4, 2022	By:	/s/ Thomas Coughlin
		Thomas Coughlin
		President and Chief Executive Officer (Principal Executive Officer)

Date: May 4, 2022	By:	/s/ Karen M. Duran
		Karen M. Duran Interim Chief Financial Officer
		(Principal Accounting and Financial Officer)