BCB Bancorp, Inc. — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023; balance-sheet figures are as of that date. The filing reports full-year results, not standalone fourth-quarter results. BCB Bancorp is the holding company for BCB Community Bank, a community bank operating in New Jersey and New York.
Key financial results
| Metric | 2023 | 2022 |
|---|---|---|
| Total assets | $3.832 billion | $3.546 billion |
| Net interest income | $104.1 million | $113.9 million |
| Net interest margin | 2.85% | 3.78% |
| Net income | $29.5 million | $45.6 million |
| Diluted earnings per common share | $1.70 | $2.58 |
| Provision for credit losses | $6.1 million | $(3.1) million benefit |
| Non-interest income | $4.1 million | $1.6 million |
| Non-interest expense | $60.6 million | $55.5 million |
| Operating cash flow | $35.2 million | $40.9 million |
Interest income rose 43.3% to $188.4 million, but interest expense increased to $84.3 million from $17.5 million, reducing net interest income. Average interest-earning asset yield was 5.16%; average cost of interest-bearing liabilities rose to 2.93% from 0.79%. The reported effective tax rate was 28.9%, versus 27.8%.
Financial position, funding and asset quality
- Loans: Gross loans were $3.317 billion and net loans $3.280 billion, up 7.6% and 7.7%, respectively. Commercial and multifamily real estate loans were $2.434 billion, 73.4% of gross loans. Total deposits were $2.979 billion, up 6.0%.
- Liquidity: Cash and cash equivalents were $279.5 million, up $50.2 million. The Company reported $408.3 million of additional FHLB borrowing capacity and $309.2 million available from the Federal Reserve discount window, subject to collateral and availability. Certificates of deposit totaling $1.199 billion mature within one year.
- Debt and capital: Total debt obligations were $510.4 million, including $472.8 million of FHLB advances and $37.6 million of subordinated debentures. Stockholders’ equity was $314.1 million. The Bank’s community bank leverage ratio was 9.09%, above the 9.00% well-capitalized threshold stated in the filing.
- Credit quality: The allowance for credit losses was $33.6 million, 1.01% of gross loans. Nonaccrual loans increased to $18.8 million, or 0.57% of loans, from $5.1 million, or 0.17%, in 2022. Classified assets were $85.7 million, compared with $17.8 million a year earlier; $56.1 million were special mention. Net charge-offs were $0.7 million.
- Securities: Available-for-sale debt securities had a fair value of $87.8 million and a pretax unrealized loss of $9.4 million. Management attributed the losses to interest-rate movements and considered them temporary. Equity investments were $9.1 million.
- Cash flows: Investing activities used $233.3 million, primarily reflecting net loan growth; financing activities provided $248.3 million, including deposit growth and borrowing activity. Cash increased by $50.2 million to $279.5 million.
Changes, outlook and risks
- Net income fell 35.3% and net interest margin declined 93 basis points year over year. Management attributed the earnings decline principally to lower net interest income and a higher credit-loss provision.
- Higher funding costs reflected increased deposit rates and borrowing. Certificates of deposit rose $417.9 million; non-interest-bearing, interest-bearing demand, and savings balances declined by a combined $315.8 million. Brokered certificate deposits were $505.4 million; uninsured deposits were $1.112 billion.
- Non-interest income improved partly because equity-security losses narrowed. Non-interest expense rose 9.2%, including higher salaries and benefits, regulatory assessments, and data-processing costs. 2023 salaries and benefits included a one-time $1.17 million payment to the former CEO.
- The Company adopted CECL on January 1, 2023. It recorded a $2.9 million after-tax increase to opening retained earnings; prior-year results were not restated. The allowance estimate depends on economic forecasts, models and management judgment, and was identified as a critical audit matter.
- Management says it is slowing balance-sheet growth to strengthen liquidity and capital and reduce reliance on costly wholesale funding. The filing provides no numerical earnings or margin guidance. Management described liquidity as adequate at year-end; this is not a guarantee of future funding availability.
- Principal risks include concentrated commercial real estate exposure, regional economic and property-market weakness, higher funding costs and interest-rate sensitivity, uninsured and brokered deposit retention, and possible losses if securities must be sold for liquidity. The Company’s CRE concentration measure was 480.6% of risk-based capital.
- The Company declared and paid $0.16 per common share quarterly in 2023 and declared another $0.16 dividend in January 2024. Future dividends depend on earnings, liquidity, capital, Board decisions and regulatory restrictions. The Company issued $15.27 million of Series J preferred stock and redeemed $11.23 million of Series H preferred stock in 2023.
- No material adverse legal proceedings were reported. The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The Bank reported no significant cybersecurity compromise or material cybersecurity-related financial loss, while warning that threats and third-party risks remain.
Important facts for investors to verify
- Whether the rise in nonaccrual loans and classified assets persists, and whether the $33.6 million allowance remains adequate as commercial real estate conditions evolve.
- Deposit mix, renewal pricing and retention—especially brokered and uninsured deposits—and the cost and availability of contingent borrowing capacity.
- Whether net interest margin and earnings stabilize as deposits and borrowings reprice; assess the effect of the subordinated debt’s floating-rate costs.
- The likelihood of realizing securities’ carrying values without sale, given the $9.4 million pretax unrealized loss and potential liquidity needs.
- Whether capital, regulatory conditions and Bank dividend capacity support planned common dividends and share repurchases; the Company repurchased 266,753 shares in 2023.
- The effect of the one-time former-CEO payment and the Chief Risk Officer’s March 2024 resignation on expenses, leadership and risk oversight.