BCBP BCB Bancorp Inc

BCB Bancorp, Inc., Bayonne, NJ (NASDAQ:BCBP), the holding company for BCB Community Bank (the “Bank”), announced net income of $3.1 million for the three months ended June 30, 2017, as compared with net income of $1.6 million for the three months ended June 30, 2016. Basic and diluted earnings per share were $0.26 for the three months ended June 30, 2017, compared with $0.12 for the three months ended June 30, 2016.

Net income was $6.0 million for the six months ended June 30, 2017, compared with $3.6 million for the six months ended June 30, 2016. Basic and diluted earnings per share were $0.51 and $0.50, respectively, for the six months ended June 30, 2017, compared with $0.28 for the six months ended June 30, 2016.

Total assets increased by $107.2 million, or 6.3 percent, to $1.815 billion at June 30, 2017, from $1.708 billion at December 31, 2016. The increase in total assets was primarily as a result of increases in total cash and cash equivalents, net loans receivable and securities available for sale. This net increase in assets was funded primarily from a $104.1 million, or 7.5 percent, increase in deposits. Management is focused on maintaining adequate liquidity in anticipation of funding loans from a very healthy pipeline as demand continues to be strong.  We continue to consider all growth opportunities afforded us but at a pace consistent with our targeted capital levels. 

Thomas Coughlin, President and Chief Executive Officer, commented, "We are very pleased with our results for the second quarter and year to date. Our performance is meeting the expectations set through our strategic plan. We achieved growth in several key indices, including net income, asset quality and earnings per share. Net interest income increased by approximately 12.7 percent, or $1.7 million, due to our aggressive growth in loans while adhering to strict lending parameters. This has been enhanced by our cost-reduction initiative, which yielded a reduction in non-interest expenses for the first six months of 2017 of 8.4 percent, or $1.0 million, as compared to the same period last year.

"Our asset quality improvement reflects a 27 percent decrease of non-accrual loans from $21.1 million at June 30, 2016 down to $15.5 million at June 30, 2017. The allowance for losses as a percentage of non-accrual loans is at approximately 116 percent as compared to approximately 87 percent for the same period last year, as we remain vigilant in addressing these loans. In addition, we enjoyed strong growth in loans across multiple categories in both the commercial and residential sectors.

"We continue to deliver added value to our shareholders, as our earnings per share continues to improve," Coughlin continued. "We continue to strategically manage our capital position in support of our strategic plans. In 2017, after redeeming $11.7 million of Series A and B 6.0 percent Preferred Stock, we issued $9.5 million of Series D 4.5 percent Preferred Stock.

"In addition, we continue to grow the Bank both organically through the opening of new branches – five in the last 12 months – and through acquisition. Recently, we announced that we have entered into a definitive agreement with IA Bancorp, Inc., pursuant to which the Company will acquire IAB and its wholly owned subsidiary, Indus-American Bank. Upon consummation of the merger, Indus-American Bank will merge with BCB Community Bank and will operate as a division of BCB Community Bank. This merger will allow us to both further develop existing markets where BCB Community Bank and Indus-American Bank share similar footprints and expand into new, attractive geographies. The merger will add approximately $235 million to the Company's asset base, based on IAB's assets as of March 31, 2017. Following completion of the merger, the Company will have total assets of more than $2 billion, based on BCB's and IAB's respective assets as of March 31, 2017."

Operations for the three months ended June 30, 2017, compared with the three months ended June 30, 2016

Net income increased $1.5 million, or 95.7 percent, to $3.1 million for the three months ended June 30, 2017, compared with $1.6 million for the three months ended June 30, 2016. The increase in net income was primarily related to an increase in total interest income, a decrease in total interest expense, an increase in total non-interest income, and a decrease in total non-interest expense, partly offset by a higher provision for loan loss and a higher income tax provision for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016.

Net interest income increased by $1.7 million, or 12.7 percent, to $15.1 million for the three months ended June 30, 2017 from $13.4 million for the three months ended June 30, 2016. The increase in net interest income resulted primarily from an increase in the average balance on total interest earning assets of $72.1 million, or 4.31 percent, to $1.747 billion for the three months ended June 30, 2017 from $1.675 billion for the three months ended June 30, 2016, as well as an increase in the average yield on total interest earning assets of 15 basis points, or 3.40 percent, to 4.37 percent for the three months ended June 30, 2017 from 4.22 percent for the three months ended June 30, 2016.

Interest income on loans receivable increased by $763,000, or 4.4 percent, to $18.0 million for the three months ended June 30, 2017 from $17.3 million for the three months ended June 30, 2016. The increase was primarily attributable to an increase in the average balance of loans receivable of $129.3 million, or 8.9 percent, to $1.578 billion for the three months ended June 30, 2017 from $1.448 billion for the three months ended June 30, 2016, partly offset by a decrease in the average yield on loans receivable of 20 basis points, or 4.14 percent, to 4.57 percent for the three months ended June 30, 2017 from 4.77 percent for the three months ended June 30, 2016. The increase in the average balance of loans receivable was in accordance with the Company’s growth strategy, which included growing the Bank’s geographic footprint vis-à-vis our organic branching strategy and the hiring of seasoned loan and business development officers. The decrease in average yield on loans reflected the competitive price environment prevalent in the Company’s primary market area on loan facilities, as well as the repricing downward of certain variable rate loans.

Interest income on investment securities increased by $712,000, to $762,000 for the three months ended June 30, 2017 from $50,000 for the three months ended June 30, 2016. The increase is primarily attributable to an increase in the average balance of investment securities of $83.5 million, or 388.8 percent, to $105.0 million for the three months ended June 30, 2017 from $21.5 million for the three months ended June 30, 2016, and an decrease in the average yield on investment securities of 34 basis points, or 17.3 percent, to 2.30 percent, for the three months ended June 30, 2017 from 1.96 percent for the three months ended June 30, 2016.

Interest income on other interest-earning assets decreased by $87,000, or 23.6 percent, to $281,000 for the three months ended June 30, 2017 from $368,000 for the three months ended June 30, 2016. The decrease is primarily attributable to a decrease in the average balance of other interest-earning deposits of $140.8 million, or 68.8 percent, to $63.9 million for the three months ended June 30, 2017 from $204.7 million for the three months ended June 30, 2016, partly offset by an increase in the average yield on other interest-earning assets of 108 basis points, or 158.0 percent, to 1.76 percent for the three months ended June 30, 2017 from 0.68 percent for the three months ended June 30, 2016. The decrease in the average balance of other interest-earning assets related to a decrease in cash as funds were deployed for repayment of Federal Home Loan Bank (“FHLB”) borrowings, purchases of investment securities and to fund loan growth, while the increase in the average yield primarily resulted from increases in the Fed Funds rate.

Total interest expense decreased by $312,000, or 7.2 percent, to $4.0 million for the three months ended June 30, 2017 from $4.3 million for the three months ended June 30, 2016. Despite an increase in the average balance of interest-cost liabilities of $49.7 million, or 3.5 percent, to $1.472 billion for the three months ended June 30, 2017 from $1.422 billion for the three months ended June 30, 2016, the average cost of funds decreased 12 basis points, or 10.4 percent, to 1.09 percent for the three months ended June 30, 2017 from 1.21 percent for the three months ended June 30, 2016. The average balance of total deposit liabilities increased by $94.2 million, or 7.8 percent, to $1.306 billion for the three months ended June 30, 2017 from $1.212 billion for the three months ended June 30, 2016, and the average cost of deposits remained unchanged at .89 percent for both three-month periods. The average balance of high-cost borrowings decreased by $44.5 million, or 21.2 percent, to $165.5 million for the three months ended June 30, 2017 from $210.0 million for the three months ended June 30, 2016, and the average cost of borrowings decreased 47 basis points, or 15.4 percent, to 2.63 percent, for the three months ended June 30, 2017 from 3.10 percent for the three months ended June 30, 2016. The decrease in borrowings was the result of scheduled repayments of Federal Home Loan Bank advances.

Mr. Coughlin stated “The repayment of $55.0 million of Federal Home Loan Bank Advances with a weighted average rate of 4.34 percent in mid-2016, and the scheduled repayments of another $55.0 million, of which $20 million was paid in May, 2017 and $35 million is due in July 2017, having a weighted average rate of 4.45 percent, contributes positively to our net interest margin.”

Net interest margin was 3.45 percent for the three-month period ended June 30, 2017 and 3.19 percent for the three-month period ended June 30, 2016. The improvement in the net interest margin was the result of the repayment of higher cost FHLB borrowings in mid-2016, partly offset by competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and an increase in the average cost of deposits.

The provision for loan losses increased by $739,000, to $776,000 for the three months ended June 30, 2017 from $37,000 for the three months ended June 30, 2016. The provision for loan losses is established based upon management’s review of the Company’s loans and consideration of a variety of factors, including but not limited to: (1) the risk characteristics of the loan portfolio; (2) current economic conditions; (3) actual losses previously experienced; (4) the dynamic activity and fluctuating balance of loans receivable; and (5) the existing level of reserves for loan losses that are probable and estimable. During the three months ended June 30, 2017, the Company experienced $338,000 in net charge-offs compared to $133,000 in net recoveries for the three months ended June 30, 2016. The Bank had non-performing loans totaling $15.5 million, or 0.97 percent, of gross loans at June 30, 2017 and $15.7 million, or 1.04 percent, of gross loans at December 31, 2016. The allowance for loan losses was $18.0 million, or 1.13 percent, of gross loans at June 30, 2017, $17.2 million, or 1.15 percent, of gross loans at December 31, 2016 and $18.3 million, or 1.27 percent, of gross loans at June 30, 2016. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. Management believes that the allowance for loan losses was adequate at June 30, 2017 and December 31, 2016.

Total non-interest income increased by $516,000, or 34.3 percent, to $2.0 million for the three months ended June 30, 2017 from $1.5 million for the three months ended June 30, 2016. The increase was primarily attributable to income gained from sales on other real estate owned properties of $197,000 for the three months ended June 30, 2017 with no comparable figure for the three months ended June 30, 2016, an increase in fees and service charges of $102,000, or 13.9 percent, to $838,000 for the three months ended June 30, 2017 from $736,000 for the three months ended June 30, 2016, a loss on bulk sale of impaired loans held in the portfolio of $285,000 for the three months ended June 30, 2016 with no comparable figure for the three months ended June 30, 2017, as well as an increase in other non-interest income of $228,000, or 876.9 percent, to $254,000 for the three months ended June 30, 2017 from $26,000 for the three months ended June 30, 2016. The increase in total non-interest income was partly offset by a decrease in gains on sale of loans of $296,000, or 28.8 percent, to $733,000 for the three months ended June 30, 2017 from $1.0 million for the three months ended June 30, 2016. The increase in other non-interest income related to $237,000 of proceeds from a legal settlement in the second quarter.

Total non-interest expense decreased by $1.0 million, or 8.4 percent, to $11.1 million for the three months ended June 30, 2017 from $12.1 million for the three months ended June 30, 2016. Salaries and employee benefits decreased by $282,000, or 4.6 percent, to $5.9 million for the three months ended June 30, 2017 from $6.2 million for the three months ended June 30, 2016, primarily related to a reduction in workforce over the last 12 months. Data processing expense decreased by $155,000, or 18.6 percent, to $678,000 for the three months ended June 30, 2017 from $833,000 for the three months ended June 30, 2016, primarily related to cost efficiencies achieved with the conversion to a new core system. Professional fee expense decreased by $100,000, or 20.7 percent, to $383,000 for the three months ended June 30, 2017 from $483,000 for the three months ended June 30, 2016, primarily related to a reduction in the utilization of third party providers. Advertising expense decreased by $275,000, or 70.5 percent, to $115,000 for the three months ended June 30, 2017 from $390,000 for the three months ended June 30, 2016, partly related to advertising efforts with the opening of several de novo branches in 2016. Other non-interest expense consisted of occupancy and equipment, director fees, regulatory assessments, other real estate owned (net), and other fees/expenses.

The income tax provision increased by $982,000, or 90.5 percent, to $2.1 million for the three months ended June 30, 2017 from $1.1 million for the three months ended June 30, 2016. The increase in income tax provision was a result of higher taxable income during the three-month period ended June 30, 2017 as compared with the three months ended June 30, 2016. The consolidated effective tax rate for the three months ended June 30, 2017 was 40.1 percent compared to 40.7 percent for the three months ended June 30, 2016.

Operations for the six months ended June 30, 2017, compared with the six months ended June 30, 2016

Net income increased $2.4 million, or 66.1 percent, to $6.0 million for the six months ended June 30, 2017 compared with $3.6 million for the six months ended June 30, 2016. The increase in net income was primarily related to increases in net interest income and non-interest income, and a decrease in non-interest expense, partly offset by an increase in the provision for loan loss and a higher income tax provision for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016.

Net interest income increased by $2.6 million, or 9.6 percent, to $29.7 million for the six months ended June 30, 2017 from $27.1 million for the six months ended June 30, 2016. The increase in net interest income is primarily related to an increase in the average balance of total interest-earning assets of $74.3 million, or 4.5 percent, to $1.724 billion for the six months ended June 30, 2017 as compared to $1.650 billion for the six months ended June 30, 2016 as well as an increase in the average yield in total interest-earning assets of 4 basis points, or 1.1 percent, to 4.35 percent for the six months ended June 30, 2017 from 4.31 percent for the six months ended June 30, 2016.

Interest income on loans receivable increased by $812,000, or 2.3 percent, to $35.6 million for the six months ended June 30, 2017 from $34.8 million for the six months ended June 30, 2016. The increase was primarily attributable to an increase in the average balance of loans receivable of $105.2 million, or 7.3 percent, to $1.550 billion for the six months ended June 30, 2017 from $1.445 billion for the six months ended June 30, 2016, partly offset by a decrease in the average yield on loans receivable of 22 basis points, or 4.6 percent, to 4.59 percent for the six months ended June 30, 2017 from 4.81 percent for the six months ended June 30, 2016. The increase in the average balance of loans receivable was in accordance with the Company’s growth strategy, which included the hiring of additional loan production and business development personnel and the opening of seven additional branches over the last 18 months. The decrease in average yield on loans reflected the competitive price environment prevalent in the Company’s primary market area on loan facilities, as well as the repricing downward of certain variable rate loans.

Interest income on investment securities increased by $1.3 million, to $1.4 million for the six months ended June 30, 2017 from $124,000 for the six months ended June 30, 2016. The increase in interest income on investment securities is primarily related to an increase in the average balance of investment securities of $79.5 million, or 378.8 percent, to $100.5 million for the six months ended June 30, 2017 from $21.0 million for the six months ended June 30, 2016 and an increase in the average yield of 38 basis points, or 13.1 percent, to 3.27 percent, for the six months ended June 30, 2017 from 2.89 percent for the six months ended June 30, 2016.

Interest income on other interest-earning assets decreased by $71,000, or 11.2 percent, to $561,000 for the six months ended June 30, 2017 from $632,000 for the six months ended June 30, 2016. The decrease was primarily related to a decrease in the average balance of other interest-earning assets of $110.5 million, or 60.1 percent, to $73.3 million for the six months ended June 30, 2017 from $183.8 million for the six months ended June 30, 2016, partly offset by an increase in the average yield on other interest-earning assets of 43 basis points, or 104.3 percent, to 0.85 percent, for the six months ended June 30, 2017 from 0.42 percent for the six months ended June 30, 2016. The decrease in the average balance of other interest-earning assets related to a decrease in cash as funds were deployed for repayment of Federal Home Loan Bank (“FHLB”) borrowings, purchases of investment securities, and to fund loan growth, while the increase in the average yield resulted primarily from increases in the Fed Funds rate.

Total interest expense decreased by $595,000, or 7.0 percent, to $7.9 million for the six months ended June 30, 2017 from $8.5 million for the six months ended June 30, 2016. Despite an increase in the average balance of interest-cost liabilities of $61.1 million, or 4.4 percent, to $1.460 billion for the six months ended June 30, 2017 from $1.399 billion for the six months ended June 30, 2016, the average cost of funds decreased 13 basis points, or 11.0 percent, to 1.08 percent for the six months ended June 30, 2017 from 1.21 percent for the six months ended June 30, 2016. The average balance of total deposit liabilities increased by $106.7 million, or 9.0 percent, to $1.296 billion for the six months ended June 30, 2017 from $1.190 billion for the six months ended June 30, 2016, and the average cost of deposits increased 1 basis point to 0.88 percent for the six months ended June 30, 2017 from 0.87 percent for the six months ended June 30, 2016. The average balance of high-cost borrowings decreased by $45.7 million, or 21.8 percent, to 163.7 million for the six months ended June 30, 2017 from $209.4 million for the six months ended June 30, 2016, and the average cost of borrowings decreased 50 basis points, or 16.0 percent, to 2.63 percent for the six months ended June 30, 2017 from 3.13 percent for the six months ended June 30, 2016. The decrease in borrowings was the result of scheduled repayments of Federal Home Loan Bank advances.

The net interest margin was 3.44 percent for the six-month period ended June 30, 2017 and 3.28 percent for the six month period ended June 30, 2016. The improvement in the net interest margin was partly the result of the repayment of higher cost FHLB borrowings in mid-2016, partly offset by competitive pressures in attracting new loans and deposits, as evidenced by a decline in the average yield on loans and an increase in the average cost of deposits.

The provision for loan losses increased by $1.0 million, or 463.7 percent, to $1.3 million for the six months ended June 30, 2017 from $226,000 for the six months ended June 30, 2016. The provision for loan losses is established based upon management’s review of the Company’s loans and consideration of a variety of factors, including but not limited to: (1) the risk characteristics of the loan portfolio; (2) current economic conditions; (3) actual losses previously experienced; (4) the dynamic activity and fluctuating balance of loans receivable; and (5) the existing level of reserves for loan losses that are probable and estimable. During the six months ended June 30, 2017, the Company experienced $519,000 in net charge-offs compared to $70,000 in net recoveries for the six months ended June 30, 2016. The Bank had non-performing loans totaling $15.5 million, or 0.97 percent, of gross loans at June 30, 2017 and $15.7 million, or 1.04 percent, of gross loans at December 31, 2016. The allowance for loan losses was $18.0 million, or 1.13 percent, of gross loans at June 30, 2017, $17.2 million, or 1.15 percent, of gross loans at December 31, 2016 and $18.3 million, or 1.27 percent, of gross loans at June 30, 2016.  The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in the aforementioned criteria. In addition various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require the Company to recognize additional provisions based on their judgment of information available to them at the time of their examination. The increase in the allowance for loan loss reflected growth in the loan portfolio. Management believes that the allowance for loan losses was adequate at June 30, 2017 and December 31, 2016.

Total non-interest income increased by $1.1 million, or 37.2 percent, to $4.3 million for the six months ended June 30, 2017 from $3.2 million for the six months ended June 30, 2016. Total non-interest income increased primarily as a result of increased gain on sale of other real estate owned properties increased by $1.3 million for the six months ended June 30, 2017 with no comparable gain for the six months ended June 30, 2016, an increase in fees and service charges of $187,000, or 12.9 percent, to $1.6 million for the six months ended June 30, 2017 from $1.4 million for the six months ended June 30, 2016, an increase in other non-interest income of $237,000, or 526.7 percent, to $282,000 for the six months ended June 30, 2017 from $45,000 for the six months ended June 30, 2017 and a loss on the bulk sale of impaired loans held in the portfolio of $285,000 for the six months ended June 30, 2016 with no comparable sale for the six months ended June 30, 2017. The increase in total non-interest income was partly offset by a decrease in gain on sale of loans of $882,000, or 45.2 percent, to $1.1 million for the six months ended June 30, 2017 from $2.0 million for the six months ended June 30, 2016. The sales of loans and other real estate loans is generally based on market conditions. The increase in other non-interest income related to $237,000 of proceeds from a legal settlement in the second quarter.

Total non-interest expense decreased by $1.2 million, or 5.0 percent, to $22.7 million for the six months ended June 30, 2017 from $23.9 million for the six months ended June 30, 2016. Salaries and benefits expense decreased by $216,000, or 1.8 percent, to $12.0 million for the six months ended June 30, 2017 from $12.2 million for the six months ended June 30, 2016, primarily related to a reduction in workforce over the last 12 months. Data processing expense decreased by $564,000, or 29.8 percent, to $1.3 million for the six months ended June 30, 2017 from $1.9 million for the six months ended June 30, 2016, primarily related to cost efficiencies achieved with the conversion to a new core system. Professional fee expense decreased by $164,000, or 18.0 percent, to $746,000 for the six months ended June 30, 2017 from $910,000 for the six months ended June 30, 2016, primarily related to a reduction in the utilization of third party providers. Advertising expense decreased by $495,000, or 65.7 percent, to $258,000 for the six months ended June 30, 2017 from $753,000 for the six months ended June 30, 2016, partly related to advertising efforts with the opening of several de novo branches in 2016. Other non-interest expense consisted of occupancy and equipment, director fees, regulatory assessments, other real estate owned (net), and other fees/expenses.

Income tax provision increased by $1.5 million, or 62.0 percent, to $4.0 million for the six months ended June 30, 2017 from $2.5 million for the six months ended June 30, 2016. The increase in income tax provision was a result of higher taxable income during the six months ended June 30, 2017 as compared with the six months ended June 30, 2016. The consolidated effective tax rate for the six months ended June 30, 2017 was 40.0 percent compared to 40.6 percent for the six months ended June 30, 2016.

Financial Condition

Total assets increased by $107.2 million, or 6.3 percent, to $1.815 billion at June 30, 2017 from $1.708 billion at December 31, 2016. The increase in total assets occurred primarily as a result of an increase in loans receivable of $92.0 million, an increase in cash and cash equivalents of $10.0 million, and an increase in securities available for sale of $11.0 million. Management is concentrating on maintaining adequate liquidity in anticipation of funding loans in the loan pipeline as well as seeking opportunities to purchase securities in the secondary market that provide competitive returns in a risk-mitigated environment. It is our intention to grow our assets at a measured pace consistent with our capital levels and as business opportunities permit.

Loans receivable increased by $92.0 million, or 6.2 percent, to $1.577 billion at June 30, 2017 from $1.485 billion at December 31, 2016, and is consistent with the Company’s growth strategy for 2017. The increase resulted primarily from increases of $18.5 million in residential real estate loans, $65.6 million in commercial real estate and multi-family loans, $2.5 million in construction loans, $4.1 million in commercial business loans and $2.1 million in home equity loans and home equity lines of credit. As of June 30, 2017, the allowance for loan losses was $18.0 million, or 116.2 percent, of non-performing loans and 0.97 percent of gross loans.

Total cash and cash equivalents increased by $10.0 million, or 15.4 percent, to $75.0 million at June 30, 2017 from $65.0 million at December 31, 2016 due to the Company’s strategy to increase our deposit base and success of our 17-month promotional CD product in the first quarter of 2017.

Securities available for sale increased by $11.0 million, or 11.6 percent, to $105.8 million at June 30, 2017 from $94.8 million at December 31, 2016 as the Company deployed excess cash to improve returns on earning assets and liquidity.

Deposit liabilities increased by $104.1 million, or 7.5 percent, to $1.496 billion at June 30, 2017 from $1.392 billion at December 31, 2016. The increase resulted primarily from increases of $69.5 million in certificates of deposit, $11.1 million in NOW deposit accounts, $10.4 million in non-interest bearing deposit accounts, $9.3 million in money market checking accounts and $6.5 million in savings and club accounts. In addition to organic deposit growth resulting from the opening of seven additional branches over the last 18 months, the Company has also added listing service certificates of deposit and brokered certificates of deposit to fund loan growth, which totaled $31.8 million and $17.9 million, respectively, at June 30, 2017.

Long-term debt increased by $8.0 million, or 5.2 percent, to $163.0 million at June 30, 2017 from $155.0 million at December 31, 2016. The purpose of these borrowings reflected the use of long-term Federal Home Loan Bank advances to augment deposits as the Company’s funding source for originating loans and investing in investment securities. Short-term debt decreased by $9.0 million, or 45.0 percent, to $11.0 million at June 30, 2017 from $20.0 million at December 31, 2016. The weighted average interest rate of borrowings was 2.26 percent at June 30, 2017.

Stockholders’ equity increased by $2.3 million, or 1.7 percent, to $133.4 million at June 30, 2017 from $131.1 million at December 31, 2016. The increase in stockholders’ equity was primarily attributable to proceeds received from the issuance of $9.5 million of series D 4.5 percent non-cumulative perpetual preferred stock, as well as an increase in retained earnings of $2.6 million for the six months ended June 30, 2017, partly offset by the redemption of $11.7 million of series A and B 6 percent noncumulative perpetual preferred stock that occurred in the first quarter of 2017. The Company accrued a dividend payable for the second quarter on our outstanding preferred stock of $166,000 which will be paid in the third quarter.

Mr. Coughlin added “After redeeming $11.7 million of Series A and B 6.0 percent non-cumulative perpetual preferred stock at the beginning of the year, we were successful in raising $9.5 million of private placement Series D 4.5 percent non-cumulative perpetual preferred stock in the first six months of 2017, in furtherance of our strategic capital plan.”

BCB BANCORP INC., AND SUBSIDIARIES
	Financial condition data by quarter
	(In thousands)
	Q2 2017				Q1 2017				Q4 2016				Q3 2016				Q2 2016
Total assets	$	1,815,424			$	1,805,332			$	1,708,208			$	1,678,936			$	1,738,343
Cash and cash equivalents		75,047				114,422				65,038				137,707				235,774
Securities available for sale		105,803				106,183				94,765				52,907				18,365
Loans receivable, net		1,577,181				1,528,756				1,485,159				1,431,211				1,424,891
Deposits		1,496,260				1,513,844				1,392,205				1,380,385				1,394,305
Borrowings		174,000				155,000				175,000				155,000				200,000
Stockholders’ equity		133,362				127,011				131,081				132,299				132,306
	Operating data by quarter
	(In thousands, except for per share amounts)
	Q2 2017				Q1 2017				Q4 2016				Q3 2016				Q2 2016
Net interest income	$	15,063			$	14,605			$	14,402			$	13,597			$	13,363
Provision for loan losses		776				498				102				(301	)			37
Non-interest income		2,022				2,313				1,433				1,530				1,506
Non-interest expense		11,148				11,562				11,649				12,343				12,166
Income tax expense		2,067				1,945				1,611				1,171				1,085
Net income	$	3,094			$	2,913			$	2,473			$	1,914			$	1,581
Net income per share:	$	0.26			$	0.25			$	0.20			$	0.15			$	0.12
Common Dividends declared per share	$	0.14			$	0.14			$	0.14			$	0.14			$	0.14
	Financial Ratios
	Q2 2017				Q1 2017				Q4 2016				Q3 2016				Q2 2016
Return on average assets		0.69	%			0.68	%			0.60	%			0.44	%			0.36	%
Return on average stockholder’s equity		9.73	%			9.48	%			7.64	%			5.84	%			4.80	%
Net interest margin		3.45	%			3.43	%			3.48	%			3.22	%			3.19	%
Stockholder’s equity to total assets		7.35	%			7.04	%			7.67	%			7.88	%			7.61	%
	Asset Quality Ratios
	(In thousands, except for per share amounts)
	Q2 2017				Q1 2017				Q4 2016				Q3 2016				Q2 2016
Non-Accrual Loans	$	15,456			$	16,987			$	15,652			$	19,345			$	21,067
Non-Accrual Loans as a % of Total Loans		0.97	%			1.10	%			1.04	%			1.33	%			1.45	%
ALLL as % of Non-Accrual Loans		116.23	%			103.17	%			109.95	%			90.93	%			87.05	%
Impaired Loans		43,326				45,830				45,419				48,547				49,349
Classified Loans		42,311				44,408				48,231				59,440				51,249

BCB Community Bank presently operates 22 branches in Bayonne, Carteret, Colonia, Edison, Hoboken, Fairfield, Holmdel, Jersey City, Lodi, Lyndhurst, Monroe Township, Rutherford, South Orange, Union, and Woodbridge, New Jersey, and two branches in Staten Island, New York.

Forward-looking Statements and Associated Risk Factors

This release, like many written and oral communications presented by BCB Bancorp, Inc., and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions.

Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “could,” “may,” “should,” “will,” “would,” or similar expressions. Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results.

There are a number of factors, many of which are beyond our control, that could cause actual conditions, events, or results to differ significantly from those described in our forward-looking statements. These factors include, but are not limited to: general economic conditions and trends, either nationally or in some or all of the areas in which we and our customers conduct our respective businesses; conditions in the securities markets or the banking industry; changes in interest rates, which may affect our net income, prepayment penalties and other future cash flows, or the market value of our assets; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services in the markets we serve; changes in the financial or operating performance of our customers’ businesses; changes in real estate values, which could impact the quality of the assets securing the loans in our portfolio; changes in the quality or composition of our loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; changes in our customer base; potential exposure to unknown or contingent liabilities of companies targeted for acquisition; our ability to retain key members of management; our timely development of new lines of business and competitive products or services in a changing environment, and the acceptance of such products or services by our customers; any interruption or breach of security resulting in failures or disruptions in customer account management, general ledger, deposit, loan or other systems; any interruption in customer service due to circumstances beyond our control; the outcome of pending or threatened litigation, or of other matters before regulatory agencies, or of matters resulting from regulatory exams, whether currently existing or commencing in the future; environmental conditions that exist or may exist on properties owned by, leased by, or mortgaged to the Company; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; changes in legislation, regulation, and policies, including, but not limited to, those pertaining to banking, securities, tax, environmental protection, and insurance, and the ability to comply with such changes in a timely manner; changes in accounting principles, policies, practices, or guidelines; operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which we are highly dependent; the ability to keep pace with, and implement on a timely basis, technological changes; changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; war or terrorist activities; and other economic, competitive, governmental, regulatory, and geopolitical factors affecting our operations, pricing and services.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Except as required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In Thousands, Except Share and Per Share Data, Unaudited)
	June 30,				December 31,
	2017				2016
ASSETS
Cash and amounts due from depository institutions	$	15,961			$	12,121
Interest-earning deposits		59,086				52,917
Total cash and cash equivalents		75,047				65,038
Interest-earning time deposits		980				980
Securities available for sale		105,803				94,765
Loans held for sale		536				4,153
Loans receivable, net of allowance for loan losses
of $17,964 and $17,209 respectively		1,577,181				1,485,159
Federal Home Loan Bank of New York stock, at cost		9,913				9,306
Premises and equipment, net		19,679				19,382
Accrued interest receivable		5,666				5,573
Other real estate owned		2,626				3,525
Deferred income taxes		8,414				9,953
Other assets		9,579				10,374
Total Assets	$	1,815,424			$	1,708,208
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Non-interest bearing deposits	$	168,885			$	158,523
Interest bearing deposits		1,327,375				1,233,682
Total deposits		1,496,260				1,392,205
Short-term debt		11,000				20,000
Long-term debt		163,000				155,000
Subordinated debentures		4,124				4,124
Other liabilities and accrued interest payable		7,678				5,798
Total Liabilities		1,682,062				1,577,127
STOCKHOLDERS' EQUITY
Preferred stock: $0.01 par value, 10,000,000 shares authorized,
issued and outstanding 1,342 shares of series C 6 percent and series D 4.5 percent noncumulative
perpetual preferred stock (liquidation value $10,000 per share) at June 30, 2017 and 1,560 shares
of series A, B, C 6 percent noncumulative preferred stock at December 31, 2016		-				-
Additional paid-in capital preferred stock		13,241				15,464
Common stock; no par value; 20,000,000 shares authorized, issued 13,831,203 and 13,797,088
at June 30, 2017 and December 31, 2016, respectively, outstanding 11,300,740 shares and
11,267,225 shares, respectively		-				-
Additional paid-in capital common stock		120,980				120,417
Retained earnings		30,725				28,159
Accumulated other comprehensive income (loss)		(2,473	)			(3,856	)
Treasury stock, at cost, 2,530,463 and 2,529,863 shares, respectively, at June 30, 2017 and December 31, 2016		(29,111	)			(29,103	)
Total Stockholders' Equity		133,362				131,081
Total Liabilities and Stockholders' Equity	$	1,815,424			$	1,708,208

BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In Thousands, except for per share amounts, Unaudited)
	Three Months Ended June 30,							Six Months Ended June 30,
		2017			2016				2017			2016
Interest income:
Loans, including fees	$	18,026		$	17,263			$	35,568		$	34,756
Mortgage-backed securities		603			50				1,131			124
Municipal bonds and other debt		159			-				264			-
FHLB stock and other interest earning assets		281			368				561			632
Total interest income		19,069			17,681				37,524			35,512
Interest expense:
Deposits:
Demand		677			470				1,350			832
Savings and club		100			93				199			182
Certificates of deposit		2,142			2,126				4,153			4,160
		2,919			2,689				5,702			5,174
Borrowed money		1,087			1,629				2,154			3,277
Total interest expense		4,006			4,318				7,856			8,451
Net interest income		15,063			13,363				29,668			27,061
Provision for loan losses		776			37				1,274			226
Net interest income after provision for loan losses		14,287			13,326				28,394			26,835
Non-interest income:
Fees and service charges		838			736				1,634			1,447
Gain on sales of loans		733			1,029				1,071			1,953
Loss on bulk sale of impaired loans held in portfolio		-			(285	)			-			(285	)
Gain on sales of other real estate owned		197			-				1,348			-
Other		254			26				282			45
Total non-interest income		2,022			1,506				4,335			3,160
Non-interest expense:
Salaries and employee benefits		5,878			6,160				11,968			12,184
Occupancy and equipment		1,989			2,043				4,147			3,915
Data processing and service fees		678			833				1,331			1,895
Professional fees		383			483				746			910
Director fees		198			183				378			336
Regulatory assessments		331			360				692			710
Advertising and promotional		115			390				258			753
Other real estate owned, net		13			94				55			110
Other		1,563			1,620				3,135			3,090
Total non-interest expense		11,148			12,166				22,710			23,903
Income before income tax provision		5,161			2,666				10,019			6,092
Income tax provision		2,067			1,085				4,012			2,476
Net Income	$	3,094		$	1,581			$	6,007		$	3,616
Preferred stock dividends		165			234				283			468
Net Income available to common stockholders	$	2,929		$	1,347			$	5,724		$	3,148
Net Income per common share-basic and diluted
Basic	$	0.26		$	0.12			$	0.51		$	0.28
Diluted	$	0.26		$	0.12			$	0.50		$	0.28
Weighted average number of common shares outstanding
Basic		11,295			11,229				11,287			11,223
Diluted		11,405			11,233				11,383			11,226

 

Contact
Thomas Keating, Senior Vice President and Chief Financial Officer – 201.823.0700
or
Thomas Coughlin, President and Chief Executive Officer – 201.823.0700