BCB Bancorp, Inc. (the “Company”), (NASDAQ: BCBP), the holding
company for BCB Community Bank (the “Bank”), today reported net
income of $2.7 million for the second quarter of 2020, compared to
$2.5 million in the first quarter of 2020, and $5.2 million for the
second quarter of 2019. Earnings per diluted share for the second
quarter of 2020 were $0.14, compared to $0.12 in the preceding
quarter and $0.30 in the second quarter of 2019. For the first six
months of the year, net income was $5.2 million, or $0.26 per
diluted common share, compared with $10.7 million, or $0.62 per
diluted common share, for the first six months of 2019.
The Company’s Board of Directors declared a
quarterly cash dividend of $0.14 per share on July 8, 2020. The
dividend will be payable August 21, 2020 to shareholders of record
August 7, 2020. The current annualized dividend yield is 6.45
percent, based upon the Company’s closing price on July 20,
2020.
“Our second quarter results reflect strong loan
and deposit growth in an unprecedented operating environment.
Earnings for the quarter, however, were affected by a number of
items including the impact of the COVID-19 pandemic on the economy,
and the subsequent increase in our loan loss reserve, as well as
the low interest rate environment” stated Thomas Coughlin,
President and Chief Executive Officer. “While our asset quality at
quarter end remained solid, we evaluated factors related to the
COVID-19 pandemic and its impact on our New Jersey and New York
markets. Consequently, we recorded $3.3 million to our provision
for loan losses in the second quarter, due to the risk of potential
loan defaults directly related to COVID-19 factors, bringing our
total reserves to $28.8 million.
“The safety and well-being of our customers and
employees remains a top priority,” Coughlin continued. “We have
taken a structured approach to resuming all branch activity and are
still encouraging the use of drive-up services and ATM machines,
Digital Banking and Call Center operations. Our employees will
continue to primarily work remotely while maintaining our high
level of customer service.
“Our participation in the Paycheck Protection
Program (“PPP”) offered through the Small Business Administration
(“SBA”) helped service the needs of our business customers,” said
Coughlin. “As a result, through July 17, 2020 we have helped
approximately 1,000 customers receive $127 million in PPP
funding. We are also assisting small businesses with other
borrowing options as they become available, including the Main
Street Lending Program and other government sponsored lending
programs.”
Executive Summary
- Net income was $2.7 million in the second quarter of 2020
compared to $5.2 million in the second quarter a year ago.
- Earnings per diluted share were $0.14 in the second quarter of
2020, compared to $0.30 in the second quarter of 2019.
- Total assets increased 9.1 percent to $2.987 billion at June
30, 2020 from $2.738 billion a year earlier.
- Loans receivable, net of allowance for loan losses, increased
by 1.9 percent, to $2.344 billion at June 30, 2020, from $2.300
billion a year earlier.
- The provision for loan losses increased by $2.5 million, to
$3.3 million for the second quarter of 2020, from $755,000 for the
second quarter of 2019, primarily due to factors related to the
COVID-19 pandemic.
- Allowance for loan losses as a percentage of non-accrual loans
was 641.7 percent at June 30, 2020, compared to 433.5 percent at
June 30, 2019.
- Total deposits increased 10.6 percent, to $2.442 billion at
June 30, 2020 from $2.208 billion a year ago.
- On July 8, 2020 the Company’s Board of Directors declared a
regular quarterly cash dividend of $0.14 per share. The dividend
will be payable August 21, 2020, to common shareholders of record
on August 7, 2020.
Balance Sheet Review
Total assets increased by $44.9 million, or 1.5
percent, to $2.987 billion at June 30, 2020, from $2.942 billion at
March 31, 2020, and increased by $248.7 million, or 9.1 percent,
from $2.738 billion at June 30, 2019. The increase in total assets
during the quarter mainly related to increases in loans receivable
and investment securities, partly offset by a decrease in total
cash and cash equivalents.
Loans receivable, net increased by $179.5
million, or 8.3 percent, to $2.344 billion at June 30, 2020 from
$2.164 billion at March 31, 2020, and increased by $43.8 million,
or 1.9 percent compared to $2.300 billion at June 30, 2019. The
increase in loans during the quarter included $48.4 million of
purchased loans and $127 million from the Bank’s participation in
the federal PPP loan program. The growth in total loans during the
first six months of 2020 included increases of $131.6 million in
commercial business loans, which include PPP loans, $37.0 million
in commercial real estate and multi-family loans, and $6.4 million
in construction loans, partly offset by decreases of $1.1 million
in home equity loans, $910,000 in residential one-to-four family
loans, and $79,000 in consumer loans.
Total investment securities increased by $43.2
million, or 44.5 percent, to $140.2 million at June 30, 2020 from
$97.0 million at March 31, 2020, representing purchases of $56.5
million in securities, partly offset by repayments, calls, and
maturities.
Total deposits increased by $66.5 million, or
2.8 percent, to $2.442 billion at June 30, 2020, from $2.376
billion at March 31, 2020, and increased by $234.1 million, or 10.6
percent, from $2.208 billion at June 30, 2019. The increases in
deposits was primarily related to the continued maturation of the
branches opened over the last four years as well as the funds
provided to certain depositors as a result of the PPP loan program.
Total increases for the first six months of 2020 included $119.2
million in non-interest-bearing deposit accounts, $78.0 million in
NOW deposit accounts, $15.0 million in savings and club accounts,
and $13.3 million in money market checking accounts, partly offset
by a decrease of $145.4 million in certificates of deposit
(“CD’s”), including listing service and brokered deposit accounts.
Listing service and brokered reciprocal certificates of deposit,
which were used as additional sources of deposit liquidity to fund
loan growth, totaled $3.9 million and $69.1 million, respectively,
at June 30, 2020.
Stockholders’ equity increased by $381,000, or
0.2 percent, to $241.0 million at June 30, 2020 from $240.6 million
three months earlier, and increased $19.9 million, or 9.0 percent,
from $221.2 million a year ago. Additional paid-in-capital
increased $3.6 million to $219.1 million at June 30, 2020 from
$215.5 million at March 31, 2020, and increased $17.3 million
compared to $201.8 million at June 30, 2019. The increases
primarily related to the issuance of $3.1 million of Series H
preferred stock in the second quarter of 2020 and the issuance of
$12.5 million of common stock in the fourth quarter of 2019.
Treasury stock increased $3.6 million to $26.9 million at June 30,
2020 from $23.3 million at March 31, 2020, and increased $4.9
million compared to $22.0 million at June 30, 2019, reflecting the
repurchase of Company common shares. Accumulated other
comprehensive income increased $453,000 to $724,000 at June 30,
2020 from $271,000 at March 31, 2020, and increased $2.7 million
when compared to a loss of $1.9 million at June 30, 2019 related to
significant improvements in the value of available-for-sale
securities, as a result of the general decrease in market interest
rates.
Second Quarter 2020 Income Statement
Review
Net interest income decreased by $2.9 million,
or 13.8 percent, to $18.0 million for the second quarter of 2020
from $20.9 million for the second quarter of 2019. The decrease in
net interest income resulted primarily from a decrease in the
average yield on interest-earning assets of 95 basis points to 3.71
percent for the second quarter of 2020, from 4.66 percent for the
second quarter of 2019, which was partly offset by an increase in
the average balance of interest-earning assets of $296.5 million,
or 11.2 percent, to $2.934 billion for the second quarter of 2020,
compared to $2.638 billion for the second quarter of 2019. Interest
expense decreased related to a decrease in the average rate on
interest-bearing liabilities of 25 basis points to 1.55 percent for
the second quarter of 2020 from 1.80 percent for the second quarter
of 2019, partly offset by an increase in the average balance of
interest-bearing liabilities of $185.8 million, or 8.5 percent, to
$2.380 billion for the second quarter of 2020 from $2.194 billion
for the second quarter of 2019. The Company has been aggressively
managing the cost of funds and it anticipates the opportunity for
further reductions. Approximately $480 million of certificates of
deposit, with an average rate of 2.19%, will mature in the next
four months and is projected to be replaced at significantly lower
rates. The lower rates for interest income and interest
expense were driven by the reduction of the federal funds rate by
225 basis points during the second half of 2019 and first quarter
of 2020 and average rates for interest income were affected by the
inclusion of PPP loans at 1%. Interest income on loans also
included $271,000 of amortization of purchase credit fair value
adjustments related to the acquisition of IA Bancorp (“IAB”) for
the three months ended June 30, 2020, which added approximately
four basis points to the average yield on interest earning
assets.
Net interest margin was 2.45 percent for the
second quarter of 2020, compared to 2.63 percent for the first
quarter of 2020 and 3.16 percent for the second quarter of 2019.
The primary factor in the net interest margin decrease from the
first quarter to the second quarter was the effect of the Fed rate
reductions towards the end of the first quarter of 2020, which was
an average 120 basis point drop on $551 million in average
interest-earning deposits, and served to lower the net interest
margin by 23 basis points. Interest income recorded from
non-accruing loans in the first quarter, and the addition of $127
million in PPP loans earning one percent in the second quarter,
resulted in a net decrease of approximately nine basis points for
these two items when comparing the second and first quarters. The
Bank substantially reduced deposit rates late in the second
quarter, the impact of which was not immediately recognized in the
margin calculation. The deposit rate reductions, combined
with the CD maturity repricing coming in the last half of 2020,
should generate an improvement in the net interest margin. “The net
interest margin contraction during the second quarter also resulted
from high levels of liquidity that are earning record low rates,
the current volatile financial market attributable to the COVID-19
pandemic and the resulting low interest rate environment. We
believe that the effective execution of these initiatives should
begin to raise the net interest margin in near future quarters,”
said Coughlin.
Total non-interest income decreased by $220,000,
or 16.6 percent, to $1.1 million for the second quarter of 2020,
from $1.3 million for the second quarter of 2019. The decrease in
total non-interest income was mainly related to a decrease of
$380,000 in gains on sales of loans, a decrease of $265,000 in fees
and service charges, partially offset by a net increase of $468,000
in unrealized gains on equity securities. The lower level of loan
sales was attributable to the curtailment of loan growth, while
unrealized gains or losses on equity securities are based on market
conditions. The decline in fees and service charges related in part
to the pandemic condition as well as lower servicing fee income
resulting from fewer loan sales.
Total non-interest expense decreased by $1.9
million, or 14.0 percent, to $12.0 million for the second quarter
of 2020 from $13.9 million for the second quarter of 2019. Salaries
and employee benefits expense decreased by $1.2 million, or 17.9
percent, to $5.7 million for the second quarter of 2020 from $6.9
million for the second quarter of 2019, primarily related to $1.1
million of costs deferred for PPP loans and fewer full-time
equivalent employees, partly offset by traditional annual
compensation increases. Occupancy and equipment expense increased
by $261,000, or 9.9 percent, to $2.9 million for the second quarter
of 2020, from $2.6 million for the second quarter of 2019, largely
related to costs incurred for an upcoming de novo branch set to
open later in the year, as well as the opening of two de novo
branches and the relocation of one of our existing branches during
2019. Data processing and service fees increased by $220,000, or
30.1 percent, to $951,000 for the second quarter of 2020 from
$731,000 for the second quarter of 2019. The increase was largely
attributable to additional branches and system applications.
Regulatory assessments decreased by $166,000, or 39.8 percent, to
$251,000 for the second quarter of 2020 from $417,000 for the
second quarter of 2019. The decrease was primarily due to a
decrease in the FDIC assessment rate, partly offset by an increase
in the FDIC assessment base.
The income tax provision decreased by $1.2
million, or 51.6 percent, to $1.1 million for the second quarter of
2020 from $2.3 million for the second quarter of 2019. The decrease
in the income tax provision was a result of lower taxable income
for the second quarter of 2020 as compared with that same period
for 2019. The consolidated effective tax rate for the second
quarter of 2020 was 29.1 percent compared to 30.7 percent for the
second quarter of 2019. The lower rate in the current period
related primarily to a one percent reduction in the New Jersey
surtax rate.
Year to Date Income Statement
Review
Net interest income decreased by $5.0 million,
or 12.0 percent, to $36.8 million for the first six months of 2020
from $41.8 million for the first six months of 2019. Net interest
margin was 2.54 percent for the first six months of 2020 and 3.17
percent for the first six months of 2019. The decrease in net
interest income resulted primarily from a decrease in the average
yield on interest-earning assets of 74 basis points to 3.91 percent
for the six months ended June 30, 2020 from 4.65 percent for the
six months ended June 30, 2019, partly offset by an increase in the
average balance of interest-earning assets of $262.8 million, or
10.0 percent, to $2.896 billion for the six months ended June 30,
2020 from $2.633 billion for the six months ended June 30, 2019.
Interest expense increased related to an increase in the average
balance of interest-bearing liabilities of $185.5 million, or 8.4
percent, to $2.387 billion for the six months ended June 30, 2020
from $2.201 billion for the six months ended June 30, 2019, partly
offset by a decrease in the average rate on interest-bearing
liabilities of 11 basis points to 1.66 percent for the six months
ended June 30, 2020 from 1.77 percent for the six months ended June
30, 2019. The decrease in the net interest margin was the result of
the current volatile financial markets attributable to the COVID-19
pandemic, the low interest rate environment and high levels of
liquidity that are earning record low rates. Interest income on
loans also included $736,000 of amortization of purchase credit
fair value adjustments related to the acquisition of IAB for the
six months ended June 30, 2020, which added approximately four
basis points to the average yield on interest earning assets.
Total non-interest income decreased by $1.2
million, or 40.1 percent, to $1.8 million for the first six months
of 2020 from $3.0 million for the first six months of 2019. The
decrease in total non-interest income was mainly related to a
decrease of $637,000 in gains on sales of loans, a decrease of
$422,000 in fees and service charges, a decrease of $263,000 in
unrealized gains on equity securities, and a decrease of $107,000
in gains on sales of impaired loans, partly offset by an increase
in other non-interest income of $266,000. The lower level of loan
sales was attributable to the curtailment of loan growth, while
unrealized gains or losses on equity securities are based on market
conditions. The decline in fees and service charges related in part
to the pandemic condition as well as lower servicing fee income
resulting from fewer loan sales. The increase in other non-interest
income related primarily to the reversal of certain liabilities
previously recorded for IAB acquired loans that paid during the
first six months of 2020.
Total non-interest expense decreased by $1.4
million, or 4.9 percent, to $26.3 million for the first six months
of 2020 from $27.7 million for the first six months of 2019.
Salaries and employee benefits expense decreased by $762,000, or
5.5 percent, to $13.1 million for the first six months of 2020 from
$13.8 million for the first six months of 2019, primarily related
to $1.1 million of costs deferred for PPP loans and fewer full-time
equivalent employees, partly offset by normal compensation
increases. The PPP costs deferred represent current period salaries
and benefit costs associated with direct PPP loan origination
costs, which are amortized over the life of the loan.
The income tax provision decreased by $2.6
million, or 53.9 percent, to $2.2 million for the first six months
of 2020 from $4.8 million for the first six months of 2019. The
decrease in the income tax provision was a result of lower taxable
income for the first six months of 2020 as compared to that same
period for 2019. The consolidated effective tax rate for the first
six months of 2020 was 29.5 percent compared to 30.8 percent for
the same period of 2019. The lower rate in the current period
related primarily to a one percent reduction in the New Jersey
surtax rate.
Asset Quality
The provision for loan losses increased by $2.5
million, to $3.3 million for the second quarter of 2020, compared
to $755,000 for the second quarter of 2019, primarily due to
factors related to the COVID-19 pandemic. In the first quarter of
2020, the provision for loan losses was $1.5 million. Year-to-date,
the provision for loan losses increased by $3.2 million to $4.8
million for the first six months of 2020 from $1.6 million for the
first six months of 2019.
The Bank had non-accrual loans totaling $4.5
million, or 0.19 percent, of gross loans at June 30, 2020 compared
to $5.5 million, or 0.24 percent, of gross loans a year ago, and
$4.4 million, or 0.20 percent of gross loans, at March 31,
2020.
Performing troubled debt restructured (“TDR”)
loans that were not included in nonaccrual loans at June 30, 2020,
were $16.2 million, compared to $16.3 million at March 31, 2020 and
$21.8 million at June 30, 2019. Borrowers who are in
financial difficulty and who have been granted concessions
(excluding COVID-19 modifications) that may include interest rate
reductions, term extensions, or payment alterations are categorized
as TDR loans.
The allowance for loan losses was $28.8 million,
or 1.22 percent of gross loans, at June 30, 2020, as compared to an
allowance for loan losses of $23.8 million, or 1.02 percent of
gross loans, at June 30, 2019.
During the second quarter of 2020, the Company
recognized $7,000 in net recoveries compared to $30,000 in net
recoveries for the second quarter of 2019 and $300,000 in net
recoveries during the first quarter of 2020.
The temporary COVID-19 pandemic has clearly
caused disruption to the global economy, but the extent and
duration of the disruption is uncertain at this time. Management
will continue to monitor the activity for loan deferment requests
and delinquencies on a regular basis.
COVID-19 Overview:
With the global outbreak of COVID-19 and the
declaration of a pandemic by the World Health Organization on March
11, 2020, 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.
“We believe we have sufficient liquidity on hand
to continue business operations during this volatile period,” said
Coughlin. As of June 30, 2020, the Company had over $400
million of cash on hand and available wholesale borrowing capacity
of over $700 million.”
COVID-19 Response
Operational Initiatives
- The Pandemic response team meets on a weekly basis and actively
monitors guidance released by regulators, and banking
associations.
- In-person meetings are closely managed and are held on an as
needed basis only.
- Employees are working remotely, temporarily relocated or are
working alternate days to increase social distancing.
- Branch and operational offices are cleaned and sanitized
weekly. This practice will continue until further notice. Employees
have access to masks, gloves and disinfectant.
- Most branch lobbies are open to the public. Masks are required
for entry and social distancing is strictly enforced.
- Management provides updates to employees on a regular
basis.
- The Call Center is open seven days a week to assist with
customer inquiries.
Allowance for Loan Losses
(“ALLL”)
- Although several of the Company’s asset quality metrics have
not been adversely affected in a significant manner during the
first six months of 2020, management determined it is prudent to
increase its loan loss reserves through the addition of $3.3
million and $4.8 million in loan loss provisions for the three and
six-month periods ended June 30, 2020, respectively, due
primarily to the economic downturn as a result of the COVID-19
pandemic. This compares to $755,000 and $1.6 million in loan loss
provisions for the three and six-month periods ended June 30, 2019,
respectively. The loan loss reserve to total loans ratio was 1.22
percent at June 30, 2020 compared to 1.02 percent at June 30, 2019.
The increased reserve includes provisions taken in response to
changes in risks associated with loan classification assignments
and a declining economy in New Jersey and New York.
- The Bank considered qualitative factors, such as changes in
underwriting policies, current economic conditions, delinquency
statistics, the adequacy of the underlying collateral and the
financial strength of borrowers. All of these factors are likely to
be affected by the COVID-19 pandemic. Individual deferred loans
were stress tested to assess potential credit risks. Based upon a
review of this assessment, management determined that probable
COVID-19 related losses that can be reasonably estimated
approximated $4.8 million. The impact of COVID-19 is likely
to be felt over the next several quarters. Adjustments to the ALLL
may be required as the full impact of COVID-19 on the Bank’s
borrowers’ capacity to make payments and the value of the
underlying collateral becomes known.
Loan Deferments
- The Bank, like other financial institutions, has received a
significant number of requests to defer principal and/or interest
payments, and has agreed to such deferrals or is in the process of
doing so on a case by case basis. The banking regulatory agencies,
through an Interagency Statement dated April 7, 2020, are
encouraging financial institutions to work prudently with borrowers
who request loan modifications or deferrals as a result of
COVID-19.
- The Coronavirus Aid, Relief, and Economic Security Act, or
CARES Act, was signed into law on March 27, 2020, and provided over
$2.0 trillion in emergency economic relief to individuals and
businesses impacted by the COVID-19 pandemic. Under Section 4013 of
the CARES Act, loans less than 30 days past due as of December 31,
2019 will be considered current for COVID-19 modifications. A
financial institution can then suspend the requirements under GAAP
for loan modifications related to COVID-19 that would otherwise be
categorized as a troubled debt restructuring (“TDR”), and suspend
any determination of a loan modified as a result of COVID-19 as
being a TDR, including the requirement to determine impairment for
accounting purposes. These loans are accruing interest, but the
Bank is reserving for these loans separately.
- The Bank began receiving requests for loan deferments on March
13, 2020. The forbearance period provided by the Bank is generally
three months with the Bank retaining the sole option to extend the
forbearance period for an additional three months. Payments
received upon the expiration of the forbearance period will first
be applied to interest accrued, then towards escrow advances, and
any remaining amount towards principal.
The following is a summary of deferments by loan type (dollars
in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
June 30,
2020 |
|
|
July 21,
2020 |
| |
Number of
Loans |
|
Balance |
|
Weighted Average
Interest Rate |
|
|
Number of Loans |
|
Balance |
|
Weighted
Average Interest Rate |
|
|
|
Residential one-to-four family |
131 |
|
$ |
50,073 |
|
4.3 |
% |
|
69 |
|
$ |
27,979 |
|
4.5 |
% |
|
|
Commercial and multi-family |
371 |
|
|
473,861 |
|
4.4 |
|
|
284 |
|
|
384,736 |
|
4.4 |
|
|
|
Construction |
3 |
|
|
17,959 |
|
5.5 |
|
|
4 |
|
|
13,645 |
|
5.5 |
|
|
|
Commercial business |
81 |
|
|
32,185 |
|
5.7 |
|
|
63 |
|
|
33,077 |
|
5.7 |
|
|
|
Home equity |
35 |
|
|
4,388 |
|
4.6 |
|
|
20 |
|
|
2,229 |
|
4.8 |
|
|
| |
621 |
|
$ |
578,466 |
|
4.6 |
% |
|
440 |
|
$ |
461,666 |
|
4.5 |
% |
|
Loan deferments peaked at $730.1 million in
mid-June. The Company has worked diligently with our customers by
reaching out to them as the end of the three-month deferral term
was approaching, and to understand the need for any prudent
requests of an extension of the deferral period. The Company has
been encouraged with the results as we have experienced a 37%
decline in loan deferment balances through July 21 since the peak
in June. The remaining deferred loans will reach the end of their
deferrals as follows:
|
Loan Deferment Maturities(in
Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Through July 31 |
|
August |
|
September |
|
October |
|
November |
|
Total |
| Call Report
Categories |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1st
Deferment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial construction and
land loans |
$ |
2,692 |
|
$ |
- |
|
$ |
9,969 |
|
$ |
1,877 |
|
$ |
- |
|
$ |
14,538 |
| Home equity lines of
credit |
|
212 |
|
|
1,191 |
|
|
- |
|
|
- |
|
|
- |
|
|
1,403 |
| Primary residential
mortgage |
|
1,140 |
|
|
35,757 |
|
|
9,478 |
|
|
1,796 |
|
|
269 |
|
|
48,440 |
| Junior lien loan on
residence |
|
385 |
|
|
425 |
|
|
102 |
|
|
52 |
|
|
- |
|
|
964 |
| Multifamily property |
|
314 |
|
|
19,812 |
|
|
992 |
|
|
350 |
|
|
- |
|
|
21,468 |
| Owner-occupied commercial real
estate |
|
2,880 |
|
|
52,613 |
|
|
975 |
|
|
3,439 |
|
|
- |
|
|
59,907 |
| Investment commercial real
estate |
|
18,759 |
|
|
115,428 |
|
|
13,431 |
|
|
1,059 |
|
|
140 |
|
|
148,817 |
| Commercial and industrial |
|
341 |
|
|
7,208 |
|
|
8,323 |
|
|
- |
|
|
- |
|
|
15,872 |
| Consumer and other loans |
|
- |
|
|
98 |
|
|
- |
|
|
- |
|
|
- |
|
|
98 |
| Total |
$ |
26,723 |
|
$ |
232,532 |
|
$ |
43,270 |
|
$ |
8,573 |
|
$ |
409 |
|
$ |
311,507 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2nd
Deferment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial construction and
land loans |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
| Home equity lines of
credit |
|
- |
|
|
- |
|
|
250 |
|
|
69 |
|
|
60 |
|
|
379 |
| Primary residential
mortgage |
|
- |
|
|
2,410 |
|
|
947 |
|
|
10,540 |
|
|
1,670 |
|
|
15,567 |
| Junior lien loan on
residence |
|
- |
|
|
- |
|
|
- |
|
|
250 |
|
|
32 |
|
|
282 |
| Multifamily property |
|
- |
|
|
3,447 |
|
|
2,011 |
|
|
15,747 |
|
|
227 |
|
|
21,432 |
| Owner-occupied commercial real
estate |
|
- |
|
|
1,909 |
|
|
4,530 |
|
|
27,544 |
|
|
12,139 |
|
|
46,122 |
| Investment commercial real
estate |
|
- |
|
|
5,604 |
|
|
2,253 |
|
|
34,305 |
|
|
15,288 |
|
|
57,450 |
| Commercial and industrial |
|
- |
|
|
225 |
|
|
525 |
|
|
7,302 |
|
|
875 |
|
|
8,927 |
| Consumer and other loans |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
| Total |
$ |
- |
|
$ |
13,595 |
|
$ |
10,516 |
|
$ |
95,757 |
|
$ |
30,291 |
|
$ |
150,159 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Loan
Deferments |
$ |
26,723 |
|
$ |
246,127 |
|
$ |
53,786 |
|
$ |
104,330 |
|
$ |
30,700 |
|
$ |
461,666 |
Management continues to perform detail stress
testing of loan deferments related to various loan to value and
cash flow scenarios. The specific ALLL reserves allocated to these
stress tests are adequate and will continue to be analyzed as the
economic conditions progress.
Paycheck Protection Program
(PPP)
- As a qualified Small Business Association (“SBA”) lender, we
were automatically authorized to originate PPP loans.
- Due to the volume of applications received, the Bank had to
suspend accepting any additional requests for PPP loans as of April
10, 2020, but resumed the program shortly thereafter.
- Through July 15, 2020, the Bank had closed and funded
approximately $127 million for almost 1,000 PPP loans.
- The Company had received approximately $4.2 million of
processing fees from the SBA through June 30, 2020. These fees, net
of direct costs relating to the origination of these loans, have
been deferred and are being amortized over the life of the loans.
The amount of net deferred fees recorded to interest income through
June 30, 2020 was approximately $275,000. Loan forgiveness payments
will be treated as prepayments and recognized as they occur. It is
now likely that the majority of loan forgiveness will occur in
2021, as the SBA recently extended the period that borrowers can
spend the funds from eight weeks to 24 weeks. Once the customer
applies for the forgiveness, the Company then has 60 days to
approve and then the SBA has 90 days to approve on its end. The
Company anticipates recognizing $370,000 of net deferred fee income
in each of the third and fourth quarters in 2020, excluding any
amounts resulting from loan forgiveness.
Main Street Lending Program
- The Main Street Lending Program is a program announced on April
9, 2020, under which the Federal Reserve will purchase loans that
banks give to small and mid-sized businesses. The Fed will purchase
95% of each loan.
- The program is designed to keep credit flowing to small and
mid-sized businesses that were in good financial standing before
the onset of the COVID-19 crisis, but which are now under extreme
stress due to stay-at-home and business closure orders from state
and local governments. The Bank has been approved as an eligible
lender, and has received inquiries since the program became
operational on July 8, 2020.
Industry Exposure
·The Company has identified
various industries that may be particularly adversely impacted by
the COVID-19 pandemic. Though the hotspots may change through the
progression of the pandemic, the following sectors are currently
being disproportionately impacted: Strip Retail,
Hospitality/Hotels, Golf Courses and Banquet Halls, Restaurants,
and Retail. At June 30, 2020, the Bank’s portfolio and deferment
balances for these industries, as a percent of the total loan
portfolio, were as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
| Description |
|
Portfolio
Balance($000’s) |
|
Percentage of Loan
Portfolio |
|
|
DefermentBalance($000’s) |
|
Percentage of Loan
Portfolio |
| Strip Retail |
$ |
124,831 |
|
5 |
% |
|
$ |
68,134 |
|
3 |
% |
| Hospitality/Hotels |
|
71,407 |
|
3 |
|
|
|
32,032 |
|
1 |
|
| Golf Courses and Banquet Halls |
|
49,835 |
|
2 |
|
|
|
17,789 |
|
1 |
|
| Restaurant (standalone) |
|
43,972 |
|
2 |
|
|
|
17,261 |
|
1 |
|
| Retail (one-to-three units) |
|
71,519 |
|
3 |
|
|
|
14,158 |
|
1 |
|
|
|
$ |
361,564 |
|
15 |
% |
|
$ |
149,374 |
|
7 |
% |
IT Changes
- To protect the well-being of our staff and customers, the
Company has set up resources for some employees to work from home.
To facilitate the move, we allocated laptop computers to staff and
enhanced our ability to access the network offsite.
Liquidity and Capital
Resources
- The Company was well positioned with adequate levels of cash
and liquid assets as of June 30, 2020, as well as wholesale
borrowing capacity of over $700 million, to cover the lack of
payments for COVID-19 loan deferments. At June 30, 2020, the
Company’s equity to asset ratio was 8.1% and the Bank’s capital was
in excess of regulatory requirements. The Company issued $3.1
million of Series H 3.5% preferred stock in the second quarter of
2020, which will serve to replace most of the scheduled redemption
of $3.9 million of Series C 6.0% preferred stock in August, 2020.
The Company had $4.9 million of stock repurchases for the first six
months of 2020, and the program concluded in May, 2020. The Company
will continue to monitor the effects of COVID-19 in determining
future cash dividends and any requirement for additional capital
each quarter.
About BCB Bancorp, Inc.
Established in 2000 and headquartered in
Bayonne, N.J., BCB Community Bank is the wholly-owned subsidiary of
BCB Bancorp, Inc. (NASDAQ: BCBP). The Bank has 31 branch offices in
Bayonne, Carteret, Colonia, Edison, Hoboken, Fairfield, Holmdel,
Jersey City, Lodi, Lyndhurst, Maplewood, Monroe Township, Newark,
Parsippany, Plainsboro, River Edge, Rutherford, South Orange,
Union, and Woodbridge, New Jersey, three branches in Hicksville and
Staten Island, New York, and a loan production office in Hoboken.
The Bank provides businesses and individuals a wide range of loans,
deposit products, and retail and commercial banking services.
For more information, please go to www.bcb.bank.
In September 2019, the Company announced its
inclusion into the prestigious Sandler O'Neill Sm-All Stars Class
of 2019, an elite group of 30 publicly traded small-cap banks and
thrifts, based on growth, profitability, credit quality and capital
strength.
Forward-Looking Statements
This release, like many written and oral
communications presented by BCB Bancorp, Inc., and our authorized
officers, may contain certain forward-looking statements regarding
our prospective performance and strategies within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. We intend
such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this
statement for purposes of said safe harbor provisions.
Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies, and expectations of the
Company, are generally identified by use of words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “plan,” “project,”
“seek,” “strive,” “try,” or future or conditional verbs such as
“could,” “may,” “should,” “will,” “would,” or similar expressions.
Our ability to predict results or the actual effects of our plans
or strategies is inherently uncertain. Accordingly, actual results
may differ materially from anticipated results.
In addition to factors previously disclosed in
the Company’s reports filed with the U.S. Securities and Exchange
Commission (the "SEC") and those identified elsewhere in this
release, the following factors, among others, could cause actual
results to differ materially from forward-looking statements or
historical performance: changes in asset quality and credit risk;
the inability to sustain revenue and earnings growth; changes in
interest rates and capital markets; inflation; customer acceptance
of the Bank’s products and services; customer borrowing, repayment,
investment and deposit practices; customer disintermediation; the
introduction, withdrawal, success and timing of business
initiatives; competitive conditions; the inability to realize cost
savings or revenues or to implement integration plans and other
consequences associated with mergers, acquisitions and
divestitures; economic conditions; and the impact, extent and
timing of technological changes, capital management activities, and
actions of governmental agencies and legislative and regulatory
actions and reforms.
As the result of the COVID-19 pandemic and the
related adverse local and national economic consequences, the
Company could be subject to any of the following additional risks,
any of which could have a material, adverse effect on our business,
financial condition, liquidity, and results of operations:
- demand for our products and services may decline, making it
difficult to grow assets and income;
- if the economy is unable to substantially reopen, and high
levels of unemployment continue for an extended period of time,
loan delinquencies, problem assets, and foreclosures may increase,
resulting in increased charges and reduced income;
- collateral for loans, especially real estate, may decline
in value, which could cause loan losses to increase;
- our allowance for loan losses may have to be increased if
borrowers experience financial difficulties beyond forbearance
periods, which will adversely affect our net income;
- the net worth and liquidity of loan guarantors may decline,
impairing their ability to honor commitments to us;
- as the result of the decline in the Federal Reserve Board’s
target federal funds rate to near 0%, the yield on our assets may
decline to a greater extent than the decline in our cost of
interest-bearing liabilities, reducing our net interest margin and
spread and reducing net income;
- a material decrease in net income over several quarters could
result in a decrease in the rate of our quarterly cash
dividend;
- our cyber security risks are increased as the result of an
increase in the number of employees working remotely;
- we rely on third party vendors for certain services and the
unavailability of a critical service due to the COVID-19 outbreak
could have an adverse effect on us; and
- FDIC premiums may increase if the agency experiences additional
resolution costs.
Annualized, pro forma, projected and estimated
numbers are used for illustrative purpose only, are not forecasts
and may not reflect actual results.
Explanation of Non-GAAP Financial
Measures
Reported amounts are presented in accordance
with accounting principles generally accepted in the United States
of America ("GAAP"). This press release also contains certain
supplemental non-GAAP information that the Company’s management
uses in its analysis of the Company’s financial results. The
Company’s management believes that providing this information to
analysts and investors allows them to better understand and
evaluate the Company’s core financial results for the periods in
question.
The Company provides measurements and ratios
based on tangible stockholders' equity and efficiency ratios. These
measures are utilized by regulators and market analysts to evaluate
a company’s financial condition and, therefore, the Company’s
management believes that such information is useful to
investors.
For a reconciliation of GAAP to Non-GAAP
financial measures included in this press release, see
"Reconciliation of GAAP to Non-GAAP Financial Measures" below.
| |
Statements of Income (unaudited) - Three Months
Ended, |
|
|
| |
June 30, 2020 |
March 31, 2020 |
June 30, 2019 |
June 30, 2020 vs. March 31, 2020 |
June 30, 2020 vs. June 30, 2019 |
| Interest and dividend
income: |
(In thousands, except share amounts) |
|
|
|
Loans, including fees |
$ |
26,123 |
$ |
26,814 |
|
$ |
28,634 |
|
-2.6 |
% |
-8.8 |
% |
|
Mortgage-backed securities |
|
494 |
|
563 |
|
|
738 |
|
-12.3 |
% |
-33.1 |
% |
|
Other investment securities |
|
246 |
|
8 |
|
|
197 |
|
2975.0 |
% |
24.9 |
% |
|
FHLB stock and other interest earning assets |
|
343 |
|
2,034 |
|
|
1,173 |
|
-83.1 |
% |
-70.8 |
% |
|
Total interest and dividend income |
|
27,206 |
|
29,419 |
|
|
30,742 |
|
-7.5 |
% |
-11.5 |
% |
| |
|
|
|
|
|
| Interest expense: |
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
Demand |
|
1,562 |
|
2,208 |
|
|
1,750 |
|
-29.3 |
% |
-10.7 |
% |
|
Savings and club |
|
106 |
|
105 |
|
|
110 |
|
1.0 |
% |
-3.6 |
% |
|
Certificates of deposit |
|
5,695 |
|
6,432 |
|
|
6,097 |
|
-11.5 |
% |
-6.6 |
% |
| |
|
7,363 |
|
8,745 |
|
|
7,957 |
|
-15.8 |
% |
-7.5 |
% |
|
Borrowings |
|
1,852 |
|
1,896 |
|
|
1,920 |
|
-2.3 |
% |
-3.5 |
% |
|
Total interest expense |
|
9,215 |
|
10,641 |
|
|
9,877 |
|
-13.4 |
% |
-6.7 |
% |
| |
|
|
|
|
|
| Net interest
income |
|
17,991 |
|
18,778 |
|
|
20,865 |
|
-4.2 |
% |
-13.8 |
% |
| Provision for loan losses |
|
3,300 |
|
1,500 |
|
|
755 |
|
120.0 |
% |
337.1 |
% |
| |
|
|
|
|
|
| Net interest income after provision for loan
losses |
|
14,691 |
|
17,278 |
|
|
20,110 |
|
-15.0 |
% |
-26.9 |
% |
| |
|
|
|
|
|
| Non-interest income: |
|
|
|
|
|
|
Fees and service charges |
|
537 |
|
726 |
|
|
802 |
|
-26.0 |
% |
-33.0 |
% |
|
Gain on sales of loans |
|
57 |
|
61 |
|
|
437 |
|
-6.6 |
% |
-87.0 |
% |
|
Gain on sales of other real estate owned |
|
- |
|
- |
|
|
45 |
|
0.0 |
% |
-100.0 |
% |
|
Gain on sale of investment securities |
|
40 |
|
- |
|
|
21 |
|
0.0 |
% |
90.5 |
% |
|
Unrealized gain (loss) on equity investments |
|
442 |
|
(440 |
) |
|
(26 |
) |
200.5 |
% |
1800.0 |
% |
|
Other |
|
32 |
|
336 |
|
|
49 |
|
-90.5 |
% |
-34.7 |
% |
|
Total non-interest income |
|
1,108 |
|
683 |
|
|
1,328 |
|
62.2 |
% |
-16.6 |
% |
| |
|
|
|
|
|
| Non-interest expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
5,682 |
|
7,389 |
|
|
6,918 |
|
-23.1 |
% |
-17.9 |
% |
|
Occupancy and equipment |
|
2,910 |
|
2,824 |
|
|
2,649 |
|
3.0 |
% |
9.9 |
% |
|
Data processing and service fees |
|
951 |
|
938 |
|
|
731 |
|
1.4 |
% |
30.1 |
% |
|
Professional fees |
|
398 |
|
470 |
|
|
473 |
|
-15.3 |
% |
-15.9 |
% |
|
Director fees |
|
365 |
|
358 |
|
|
316 |
|
2.0 |
% |
15.5 |
% |
|
Regulatory assessment fees |
|
251 |
|
321 |
|
|
417 |
|
-21.8 |
% |
-39.8 |
% |
|
Advertising and promotional |
|
26 |
|
61 |
|
|
123 |
|
-57.4 |
% |
-78.9 |
% |
|
Other real estate owned, net |
|
21 |
|
26 |
|
|
124 |
|
19.2 |
% |
-83.1 |
% |
|
Other |
|
1,348 |
|
1,977 |
|
|
2,143 |
|
-31.8 |
% |
-37.1 |
% |
|
Total non-interest expense |
|
11,952 |
|
14,364 |
|
|
13,894 |
|
-16.8 |
% |
-14.0 |
% |
| |
|
|
|
|
|
| Income before income tax provision |
|
3,847 |
|
3,597 |
|
|
7,544 |
|
7.0 |
% |
-49.0 |
% |
| Income tax provision |
|
1,121 |
|
1,076 |
|
|
2,317 |
|
4.2 |
% |
-51.6 |
% |
| |
|
|
|
|
|
| Net Income |
|
2,726 |
|
2,521 |
|
|
5,227 |
|
8.1 |
% |
-47.8 |
% |
|
Preferred stock dividends |
|
341 |
|
341 |
|
|
342 |
|
0.0 |
% |
-0.3 |
% |
| Net Income available to common
stockholders |
$ |
2,385 |
$ |
2,180 |
|
$ |
4,885 |
|
9.4 |
% |
-51.2 |
% |
|
|
|
|
|
|
|
| Net Income per common share-basic and
diluted |
|
|
|
|
|
|
Basic |
$ |
0.14 |
$ |
0.12 |
|
$ |
0.30 |
|
16.7 |
% |
-53.3 |
% |
|
Diluted |
$ |
0.14 |
$ |
0.12 |
|
$ |
0.30 |
|
16.7 |
% |
-53.3 |
% |
|
|
|
|
|
|
|
| Weighted average number of common shares
outstanding |
|
|
|
|
|
|
Basic |
|
17,179 |
|
17,502 |
|
|
16,413 |
|
-1.8 |
% |
4.7 |
% |
|
Diluted |
|
17,183 |
|
17,551 |
|
|
16,471 |
|
-2.1 |
% |
4.3 |
% |
| |
|
|
|
|
|
| |
Statements of Income (unaudited) - Six Months
Ended, |
|
| |
June 30, 2020 |
June 30, 2019 |
June 30, 2020 vs. June 30, 2019 |
| Interest and dividend
income: |
(In thousands, except share amounts) |
|
|
Loans, including fees |
$ |
52,937 |
$ |
56,867 |
-6.9 |
% |
|
Mortgage-backed securities |
|
1,057 |
|
1,508 |
-29.9 |
% |
|
Other investment securities |
|
254 |
|
325 |
-21.8 |
% |
|
FHLB stock and other interest earning assets |
|
2,377 |
|
2,520 |
-5.7 |
% |
|
Total interest and dividend income |
|
56,625 |
|
61,220 |
-7.5 |
% |
| |
|
|
|
| Interest expense: |
|
|
|
|
Deposits: |
|
|
|
|
Demand |
|
3,770 |
|
3,326 |
13.3 |
% |
|
Savings and club |
|
211 |
|
223 |
-5.4 |
% |
|
Certificates of deposit |
|
12,127 |
|
12,087 |
0.3 |
% |
| |
|
16,108 |
|
15,636 |
3.0 |
% |
|
Borrowings |
|
3,748 |
|
3,817 |
-1.8 |
% |
|
Total interest expense |
|
19,856 |
|
19,453 |
2.1 |
% |
| |
|
|
|
| Net interest
income |
|
36,769 |
|
41,767 |
-12.0 |
% |
| Provision for loan losses |
|
4,800 |
|
1,644 |
192.0 |
% |
| |
|
|
|
| Net interest income after provision for loan
losses |
|
31,969 |
|
40,123 |
-20.3 |
% |
| |
|
|
|
| Non-interest income: |
|
|
|
|
Fees and service charges |
|
1,263 |
|
1,685 |
-25.0 |
% |
|
Gain on sales of loans |
|
118 |
|
755 |
-84.4 |
% |
|
Gain on bulk sale of impaired loans held in portfolio |
|
- |
|
107 |
-100.0 |
% |
|
Gain on sales of other real estate owned |
|
- |
|
53 |
-100.0 |
% |
|
Gain on sale of investment securities |
|
40 |
|
21 |
90.5 |
% |
|
Unrealized gain on equity investments |
|
2 |
|
265 |
-99.2 |
% |
|
Other |
|
368 |
|
102 |
260.8 |
% |
|
Total non-interest income |
|
1,791 |
|
2,988 |
-40.1 |
% |
| |
|
|
|
| Non-interest expense: |
|
|
|
|
Salaries and employee benefits |
|
13,071 |
|
13,833 |
-5.5 |
% |
|
Occupancy and equipment |
|
5,734 |
|
5,279 |
8.6 |
% |
|
Data processing and service fees |
|
1,889 |
|
1,452 |
30.1 |
% |
|
Professional fees |
|
868 |
|
1,006 |
-13.7 |
% |
|
Director fees |
|
723 |
|
634 |
14.0 |
% |
|
Regulatory assessments |
|
572 |
|
874 |
-34.6 |
% |
|
Advertising and promotional |
|
87 |
|
196 |
-55.6 |
% |
|
Other real estate owned, net |
|
47 |
|
108 |
-56.5 |
% |
|
Other |
|
3,325 |
|
4,289 |
-22.5 |
% |
|
Total non-interest expense |
|
26,316 |
|
27,671 |
-4.9 |
% |
| |
|
|
|
| Income before income tax provision |
|
7,444 |
|
15,440 |
-51.8 |
% |
| Income tax provision |
|
2,197 |
|
4,762 |
-53.9 |
% |
| |
|
|
|
| Net Income |
|
5,247 |
|
10,678 |
-50.9 |
% |
| Preferred stock dividends |
|
682 |
|
659 |
3.5 |
% |
| Net Income available to common
stockholders |
$ |
4,565 |
$ |
10,019 |
-54.4 |
% |
| |
|
|
|
| Net Income per common share-basic and
diluted |
|
|
|
| Basic |
$ |
0.26 |
$ |
0.62 |
-58.1 |
% |
| Diluted |
$ |
0.26 |
$ |
0.62 |
-58.1 |
% |
| |
|
|
|
| Weighted average number of common shares
outstanding |
|
|
|
| Basic |
|
17,340 |
|
16,245 |
6.7 |
% |
| Diluted |
|
17,366 |
|
16,290 |
6.6 |
% |
| |
|
|
|
| Statements of
Financial Condition (unaudited) |
June 30, 2020 |
March 31, 2020 |
June 30, 2019 |
June 30, 2020 vs. March 31, 2020 |
June 30, 2020 vs. June 30, 2019 |
| ASSETS |
(In thousands, except share amounts) |
|
|
| Cash and
amounts due from depository institutions |
$ |
18,799 |
|
$ |
24,292 |
|
$ |
20,660 |
|
-22.6 |
% |
-9.0 |
% |
| Interest-earning deposits |
|
393,450 |
|
|
570,894 |
|
|
206,982 |
|
-31.1 |
% |
90.1 |
% |
|
Total cash and cash equivalents |
|
412,249 |
|
|
595,186 |
|
|
227,642 |
|
-30.7 |
% |
81.1 |
% |
| |
|
|
|
|
|
| Interest-earning time deposits |
|
735 |
|
|
735 |
|
|
735 |
|
- |
|
- |
|
| Debt securities available for
sale |
|
127,518 |
|
|
95,429 |
|
|
116,258 |
|
33.6 |
% |
9.7 |
% |
| Equity investments |
|
12,683 |
|
|
1,580 |
|
|
5,901 |
|
702.7 |
% |
114.9 |
% |
| Loans held for sale |
|
760 |
|
|
838 |
|
|
- |
|
-9.3 |
% |
- |
|
| Loans receivable, net of allowance for loan losses |
|
|
|
|
|
|
of $28,842, $25,534, and $23,789 respectively |
|
2,343,593 |
|
|
2,164,057 |
|
|
2,299,765 |
|
8.3 |
% |
1.9 |
% |
| Federal Home Loan Bank of New York stock, at cost |
|
13,529 |
|
|
14,586 |
|
|
13,821 |
|
-7.2 |
% |
-2.1 |
% |
| Premises and equipment,
net |
|
18,653 |
|
|
19,292 |
|
|
19,482 |
|
-3.3 |
% |
-4.3 |
% |
| Operating lease right-of-use asset |
|
13,335 |
|
|
14,084 |
|
|
14,650 |
|
-5.3 |
% |
-9.0 |
% |
| Accrued interest
receivable |
|
16,569 |
|
|
8,936 |
|
|
9,315 |
|
85.4 |
% |
77.9 |
% |
| Other real estate owned |
|
1,623 |
|
|
1,623 |
|
|
1,235 |
|
0.0 |
% |
31.4 |
% |
| Deferred income taxes |
|
11,339 |
|
|
10,653 |
|
|
12,962 |
|
6.4 |
% |
-12.5 |
% |
| Goodwill and other intangibles |
|
5,519 |
|
|
5,535 |
|
|
5,587 |
|
-0.3 |
% |
-1.2 |
% |
| Other assets |
|
8,771 |
|
|
9,469 |
|
|
10,777 |
|
-7.4 |
% |
-18.6 |
% |
|
Total Assets |
$ |
2,986,876 |
|
$ |
2,942,003 |
|
$ |
2,738,130 |
|
1.5 |
% |
9.1 |
% |
| |
|
|
|
|
|
| LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
| |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
| Non-interest bearing deposits |
$ |
390,912 |
|
$ |
293,174 |
|
$ |
278,602 |
|
33.3 |
% |
40.3 |
% |
| Interest bearing deposits |
|
2,051,321 |
|
|
2,082,547 |
|
|
1,929,620 |
|
-1.5 |
% |
6.3 |
% |
|
Total deposits |
|
2,442,233 |
|
|
2,375,721 |
|
|
2,208,222 |
|
2.8 |
% |
10.6 |
% |
| FHLB advances |
|
242,800 |
|
|
262,800 |
|
|
245,800 |
|
-7.6 |
% |
-1.2 |
% |
|
Subordinated debentures |
|
36,926 |
|
|
36,868 |
|
|
36,693 |
|
0.2 |
% |
0.6 |
% |
|
Operating lease liability |
|
13,521 |
|
|
14,246 |
|
|
14,724 |
|
-5.1 |
% |
-8.2 |
% |
|
Other liabilities |
|
10,377 |
|
|
11,730 |
|
|
11,538 |
|
-11.5 |
% |
-10.1 |
% |
|
Total Liabilities |
|
2,745,857 |
|
|
2,701,365 |
|
|
2,516,977 |
|
1.6 |
% |
9.1 |
% |
| |
|
|
|
|
|
| STOCKHOLDERS'
EQUITY |
|
|
|
|
|
| Preferred stock: $0.01 par
value, 10,000,000 shares authorized |
|
- |
|
|
- |
|
|
- |
|
- |
|
- |
|
|
Additional paid-in capital preferred stock |
|
27,956 |
|
|
24,876 |
|
|
25,016 |
|
12.4 |
% |
11.8 |
% |
| Common stock: no par value,
40,000,000 shares authorized |
|
- |
|
|
- |
|
|
- |
|
- |
|
- |
|
|
Additional paid-in capital common stock |
|
191,160 |
|
|
190,658 |
|
|
176,767 |
|
0.3 |
% |
8.1 |
% |
| Retained earnings |
|
48,097 |
|
|
48,168 |
|
|
43,347 |
|
-0.1 |
% |
11.0 |
% |
| Accumulated other comprehensive (loss) |
|
724 |
|
|
271 |
|
|
(1,929 |
) |
167.2 |
% |
-137.5 |
% |
| Treasury stock, at cost |
|
(26,918 |
) |
|
(23,335 |
) |
|
(22,048 |
) |
15.4 |
% |
22.1 |
% |
|
Total Stockholders' Equity |
|
241,019 |
|
|
240,638 |
|
|
221,153 |
|
0.2 |
% |
9.0 |
% |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders'
Equity |
$ |
2,986,876 |
|
$ |
2,942,003 |
|
$ |
2,738,130 |
|
1.5 |
% |
9.1 |
% |
| |
|
|
|
|
|
| Outstanding common
shares |
|
17,057 |
|
|
17,407 |
|
|
16,461 |
|
-2.0 |
% |
3.6 |
% |
| |
|
|
|
|
|
| |
Three Months Ended June 30, |
| |
|
2020 |
|
|
|
2019 |
|
| |
Average Balance |
Interest Earned/Paid |
Average Yield/Rate (3) |
|
Average Balance |
Interest Earned/Paid |
Average Yield/Rate (3) |
| |
|
| |
(Dollars in
thousands) |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
Loans Receivable |
$ |
2,276,740 |
$ |
26,123 |
4.59 |
% |
|
$ |
2,329,209 |
$ |
28,634 |
4.92 |
% |
|
Investment Securities |
|
106,777 |
|
740 |
2.77 |
% |
|
|
124,520 |
|
935 |
3.00 |
% |
|
Interest-earning deposits |
|
550,929 |
|
343 |
0.25 |
% |
|
|
184,266 |
|
1,173 |
2.55 |
% |
|
Total Interest-earning assets |
|
2,934,446 |
|
27,206 |
3.71 |
% |
|
|
2,637,995 |
|
30,742 |
4.66 |
% |
|
Non-interest-earning assets |
|
83,651 |
|
|
|
|
78,478 |
|
|
|
Total assets |
$ |
3,018,097 |
|
|
|
$ |
2,716,473 |
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
Interest-bearing demand accounts |
$ |
466,565 |
$ |
797 |
0.68 |
% |
|
$ |
341,418 |
$ |
648 |
0.76 |
% |
| Money
market accounts |
|
327,533 |
|
765 |
0.93 |
% |
|
|
253,633 |
|
1,102 |
1.74 |
% |
| Savings
accounts |
|
269,299 |
|
106 |
0.16 |
% |
|
|
259,398 |
|
110 |
0.17 |
% |
|
Certificates of Deposit |
|
1,029,281 |
|
5,695 |
2.21 |
% |
|
|
1,056,375 |
|
6,097 |
2.31 |
% |
|
Total interest-bearing deposits |
|
2,092,677 |
|
7,363 |
1.41 |
% |
|
|
1,910,823 |
|
7,957 |
1.67 |
% |
| Borrowed
funds |
|
287,347 |
|
1,852 |
2.58 |
% |
|
|
283,424 |
|
1,920 |
2.71 |
% |
|
Total interest-bearing liabilities |
|
2,380,024 |
|
9,215 |
1.55 |
% |
|
|
2,194,247 |
|
9,877 |
1.80 |
% |
|
Non-interest-bearing liabilities |
|
399,638 |
|
|
|
|
304,681 |
|
|
|
Total liabilities |
|
2,779,662 |
|
|
|
|
2,498,928 |
|
|
|
Stockholders' equity |
|
238,435 |
|
|
|
|
217,545 |
|
|
|
Total liabilities and stockholders' equity |
$ |
3,018,097 |
|
|
|
$ |
2,716,473 |
|
|
| Net
interest income |
|
$ |
17,991 |
|
|
|
$ |
20,865 |
|
| Net
interest rate spread(1) |
|
|
2.16 |
% |
|
|
|
2.86 |
% |
| Net
interest margin(2) |
|
|
2.45 |
% |
|
|
|
3.16 |
% |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| (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. |
|
|
|
|
|
|
|
| |
Six Months Ended June 30, |
| |
|
2020 |
|
|
|
2019 |
|
| |
Average Balance |
Interest Earned/Paid |
Average Yield/Rate (3) |
|
Average Balance |
Interest Earned/Paid |
Average Yield/Rate (3) |
| |
|
| |
(Dollars in
thousands) |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
Loans Receivable |
$ |
2,230,683 |
$ |
52,937 |
4.75 |
% |
|
$ |
2,322,674 |
$ |
56,867 |
4.90 |
% |
|
Investment Securities |
|
99,542 |
|
1311 |
2.63 |
% |
|
|
125,139 |
|
1833 |
2.93 |
% |
|
Interest-earning deposits |
|
565,776 |
|
2,377 |
0.84 |
% |
|
|
185,368 |
|
2,520 |
2.72 |
% |
|
Total Interest-earning assets |
|
2,896,001 |
|
56,625 |
3.91 |
% |
|
|
2,633,181 |
|
61,220 |
4.65 |
% |
|
Non-interest-earning assets |
|
79,193 |
|
|
|
|
70,550 |
|
|
|
Total assets |
$ |
2,975,194 |
|
|
|
$ |
2,703,731 |
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
Interest-bearing demand accounts |
$ |
436,952 |
$ |
1,655 |
0.76 |
% |
|
$ |
341,538 |
$ |
1,252 |
0.73 |
% |
| Money
market accounts |
|
324,383 |
|
2,115 |
1.30 |
% |
|
|
245,368 |
|
2,074 |
1.69 |
% |
| Savings
accounts |
|
264,510 |
|
210 |
0.16 |
% |
|
|
259,958 |
|
223 |
0.17 |
% |
|
Certificates of Deposit |
|
1,074,671 |
|
12,128 |
2.26 |
% |
|
|
1,070,757 |
|
12,087 |
2.26 |
% |
|
Total interest-bearing deposits |
|
2,100,516 |
|
16,108 |
1.53 |
% |
|
|
1,917,621 |
|
15,636 |
1.63 |
% |
| Borrowed
funds |
|
286,089 |
|
3,748 |
2.62 |
% |
|
|
283,442 |
|
3,817 |
2.69 |
% |
|
Total interest-bearing liabilities |
|
2,386,605 |
|
19,856 |
1.66 |
% |
|
|
2,201,063 |
|
19,453 |
1.77 |
% |
|
Non-interest-bearing liabilities |
|
349,707 |
|
|
|
|
290,511 |
|
|
|
Total liabilities |
|
2,736,312 |
|
|
|
|
2,491,574 |
|
|
|
Stockholders' equity |
|
238,882 |
|
|
|
|
212,157 |
|
|
|
Total liabilities and stockholders' equity |
$ |
2,975,194 |
|
|
|
$ |
2,703,731 |
|
|
| Net
interest income |
|
$ |
36,769 |
|
|
|
$ |
41,767 |
|
| Net
interest rate spread(1) |
|
|
2.25 |
% |
|
|
|
2.88 |
% |
| Net
interest margin(2) |
|
|
2.54 |
% |
|
|
|
3.17 |
% |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| (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. |
|
|
|
|
|
|
|
| |
Financial Condition data by quarter |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| |
|
|
|
|
|
| |
(In thousands, except tangible book value) |
| Total
assets |
$ |
2,986,876 |
|
$ |
2,942,003 |
|
$ |
2,907,468 |
|
$ |
2,825,499 |
|
$ |
2,738,130 |
|
| Cash and cash equivalents |
|
412,249 |
|
|
595,186 |
|
|
550,353 |
|
|
376,611 |
|
|
227,642 |
|
| Securities |
|
140,201 |
|
|
97,009 |
|
|
94,113 |
|
|
104,075 |
|
|
122,159 |
|
| Loans receivable, net |
|
2,343,593 |
|
|
2,164,057 |
|
|
2,178,407 |
|
|
2,253,699 |
|
|
2,299,765 |
|
| Deposits |
|
2,442,233 |
|
|
2,375,721 |
|
|
2,362,063 |
|
|
2,263,457 |
|
|
2,208,222 |
|
| Borrowings |
|
279,726 |
|
|
299,668 |
|
|
282,610 |
|
|
312,552 |
|
|
282,493 |
|
| Stockholders’ equity |
|
241,019 |
|
|
240,638 |
|
|
239,473 |
|
|
223,719 |
|
|
221,153 |
|
| Book value per common share1 |
$ |
14.13 |
|
$ |
13.82 |
|
$ |
13.67 |
|
$ |
13.58 |
|
$ |
13.43 |
|
| Tangible book value per share2 |
$ |
12.18 |
|
$ |
12.09 |
|
$ |
11.94 |
|
$ |
11.72 |
|
$ |
11.58 |
|
| |
|
|
|
|
|
| |
Operating data by quarter |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| |
|
|
|
|
|
| |
(In thousands, except for per share amounts) |
| Net interest income |
$ |
17,991 |
|
$ |
18,778 |
|
$ |
20,077 |
|
$ |
20,760 |
|
$ |
20,865 |
|
| Provision (credit) for loan losses |
|
3,300 |
|
|
1,500 |
|
|
(475 |
) |
|
900 |
|
|
755 |
|
| Non-interest income |
|
1,108 |
|
|
683 |
|
|
1,020 |
|
|
1,383 |
|
|
1,328 |
|
| Non-interest expense |
|
11,952 |
|
|
14,364 |
|
|
14,260 |
|
|
13,652 |
|
|
13,894 |
|
| Income tax expense |
|
1,121 |
|
|
1,076 |
|
|
2,188 |
|
|
2,359 |
|
|
2,317 |
|
| Net income |
$ |
2,726 |
|
$ |
2,521 |
|
$ |
5,124 |
|
$ |
5,232 |
|
$ |
5,227 |
|
| Net income per diluted share |
$ |
0.14 |
|
$ |
0.12 |
|
$ |
0.29 |
|
$ |
0.30 |
|
$ |
0.30 |
|
| Common Dividends declared per share |
$ |
0.14 |
|
$ |
0.14 |
|
$ |
0.14 |
|
$ |
0.14 |
|
$ |
0.14 |
|
| |
|
|
|
|
|
| |
Financial Ratios3 |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| Return on average assets |
|
0.36 |
% |
|
0.34 |
% |
|
0.72 |
% |
|
0.75 |
% |
|
0.77 |
% |
| Return on average stockholder’s equity |
|
4.57 |
% |
|
4.21 |
% |
|
9.12 |
% |
|
9.44 |
% |
|
9.61 |
% |
| Net interest margin |
|
2.45 |
% |
|
2.63 |
% |
|
2.88 |
% |
|
3.06 |
% |
|
3.16 |
% |
| Stockholder’s equity to total assets |
|
8.07 |
% |
|
8.18 |
% |
|
8.24 |
% |
|
7.92 |
% |
|
8.08 |
% |
| Efficiency Ratio4 |
|
62.58 |
% |
|
73.81 |
% |
|
67.59 |
% |
|
61.65 |
% |
|
62.61 |
% |
| |
|
|
|
|
|
| |
Asset
Quality Ratios |
| |
(In thousands, except for ratio %) |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| Non-Accrual Loans |
$ |
4,495 |
|
$ |
4,362 |
|
$ |
4,160 |
|
$ |
5,074 |
|
$ |
5,488 |
|
| Non-Accrual Loans as a % of Total Loans |
|
0.19 |
% |
|
0.20 |
% |
|
0.19 |
% |
|
0.22 |
% |
|
0.24 |
% |
| ALLL as % of Non-Accrual Loans |
|
641.65 |
% |
|
585.37 |
% |
|
570.53 |
% |
|
486.62 |
% |
|
433.47 |
% |
| Impaired Loans |
|
26,839 |
|
|
23,022 |
|
|
26,912 |
|
|
30,856 |
|
|
37,275 |
|
| Classified Loans |
|
13,584 |
|
|
9,882 |
|
|
13,483 |
|
|
15,998 |
|
|
22,679 |
|
| |
|
|
|
|
|
| (1) Calculated by
dividing stockholders' equity to shares outstanding. |
| (2) Calculated by
dividing tangible stockholders’ common equity, a non-GAAP measure,
by shares outstanding. Tangible stockholders’ common equity is
stockholders’ equity less goodwill and preferred stock. See
“Reconciliation of GAAP to Non-GAAP Financial Measures by
quarter”. |
| (3) Ratios are
presented on an annualized basis, where appropriate. |
| (4) The
Efficiency Ratio, a non-GAAP measure, was calculated by dividing
non-interest expense by the total of net interest income and
non-interest income. See “Reconciliation of GAAP to Non-GAAP
Financial Measures by quarter”. |
| |
Recorded Investment in Loans Receivable by
quarter |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| |
(In thousands) |
| Residential
one-to-four family |
$ |
247,471 |
|
$ |
268,137 |
|
$ |
248,381 |
|
$ |
252,971 |
|
$ |
258,688 |
|
| Commercial and multi-family |
|
1,643,954 |
|
|
1,577,816 |
|
|
1,606,976 |
|
|
1,668,982 |
|
|
1,702,132 |
|
| Construction |
|
111,463 |
|
|
101,692 |
|
|
104,996 |
|
|
131,697 |
|
|
134,963 |
|
| Commercial business |
|
309,284 |
|
|
177,146 |
|
|
177,642 |
|
|
161,649 |
|
|
164,569 |
|
| Home equity |
|
63,481 |
|
|
64,857 |
|
|
64,638 |
|
|
63,645 |
|
|
63,927 |
|
| Consumer |
|
603 |
|
|
1,029 |
|
|
682 |
|
|
728 |
|
|
727 |
|
| |
$ |
2,376,256 |
|
$ |
2,190,677 |
|
$ |
2,203,315 |
|
$ |
2,279,672 |
|
$ |
2,325,006 |
|
| Less: |
|
|
|
|
|
|
Deferred loan fees, net |
|
(3,821 |
) |
|
(1,086 |
) |
|
(1,174 |
) |
|
(1,282 |
) |
|
(1,452 |
) |
|
Allowance for loan loss |
|
(28,842 |
) |
|
(25,534 |
) |
|
(23,734 |
) |
|
(24,691 |
) |
|
(23,789 |
) |
| |
|
|
|
|
|
| Total loans, net |
$ |
2,343,593 |
|
$ |
2,164,057 |
|
$ |
2,178,407 |
|
$ |
2,253,699 |
|
$ |
2,299,765 |
|
| |
|
|
|
|
|
| |
Non-Accruing Loans in Portfolio by quarter |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| |
(In thousands) |
| Originated loans: |
|
|
|
|
|
| Residential one-to-four family |
$ |
788 |
|
$ |
788 |
|
$ |
590 |
|
$ |
814 |
|
$ |
1,022 |
|
| Commercial and multi-family |
|
218 |
|
|
218 |
|
|
761 |
|
|
1,584 |
|
|
1,881 |
|
| Commercial business |
|
1,129 |
|
|
1,189 |
|
|
1,428 |
|
|
887 |
|
|
745 |
|
| Home equity |
|
608 |
|
|
294 |
|
|
347 |
|
|
350 |
|
|
129 |
|
| Sub-total: |
$ |
2,743 |
|
$ |
2,489 |
|
$ |
3,126 |
|
$ |
3,635 |
|
$ |
3,777 |
|
| |
|
|
|
|
|
| Acquired loans initially recorded at fair
value: |
|
|
|
|
| Residential one-to-four family |
$ |
544 |
|
$ |
602 |
|
$ |
291 |
|
$ |
1,046 |
|
$ |
1,116 |
|
| Commercial and multi-family |
|
631 |
|
|
758 |
|
|
217 |
|
|
- |
|
|
- |
|
| Commercial business |
|
513 |
|
|
513 |
|
|
513 |
|
|
378 |
|
|
378 |
|
| Home equity |
|
64 |
|
|
- |
|
|
13 |
|
|
15 |
|
|
217 |
|
| Sub-total: |
$ |
1,752 |
|
$ |
1,873 |
|
$ |
1,034 |
|
$ |
1,439 |
|
$ |
1,711 |
|
| |
|
|
|
|
|
| Total: |
$ |
4,495 |
|
$ |
4,362 |
|
$ |
4,160 |
|
$ |
5,074 |
|
$ |
5,488 |
|
| |
|
|
|
|
|
| |
Distribution of Deposits by quarter |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| |
(In thousands) |
| Demand: |
|
|
|
|
|
|
Non-Interest Bearing |
$ |
390,912 |
$ |
293,174 |
$ |
271,702 |
$ |
276,203 |
$ |
278,002 |
|
Interest Bearing |
|
472,064 |
|
428,683 |
|
394,074 |
|
344,385 |
|
337,362 |
|
Money Market |
|
319,113 |
|
321,973 |
|
305,790 |
|
272,139 |
|
267,213 |
| Sub-total: |
$ |
1,182,089 |
$ |
1,043,830 |
$ |
971,566 |
$ |
892,727 |
$ |
882,577 |
|
Savings and Club |
|
275,567 |
|
260,291 |
|
260,545 |
|
256,531 |
|
257,774 |
|
Certificates of Deposit |
|
984,577 |
|
1,071,600 |
|
1,129,952 |
|
1,114,199 |
|
1,067,871 |
| Total Deposits: |
$ |
2,442,233 |
$ |
2,375,721 |
$ |
2,362,063 |
$ |
2,263,457 |
$ |
2,208,222 |
| |
|
|
|
|
|
| |
Reconciliation of GAAP to Non-GAAP Financial Measures by
quarter |
| |
|
|
|
|
|
| |
Tangible Book Value per Share |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| |
(In thousands, except per share amounts) |
| Total
Stockholders' Equity |
$ |
241,019 |
|
$ |
240,638 |
|
$ |
239,473 |
|
$ |
223,719 |
|
$ |
221,153 |
|
| Less: goodwill |
|
5,253 |
|
|
5,253 |
|
|
5,253 |
|
|
5,570 |
|
|
5,587 |
|
| Less: preferred stock |
|
27,956 |
|
|
24,876 |
|
|
25,016 |
|
|
25,016 |
|
|
25,016 |
|
| Total tangible stockholders' equity |
|
207,810 |
|
|
210,509 |
|
|
209,204 |
|
|
193,133 |
|
|
190,550 |
|
| Shares outstanding |
|
17,057 |
|
|
17,407 |
|
|
17,517 |
|
|
16,477 |
|
|
16,461 |
|
| Book value per share |
$ |
14.13 |
|
$ |
13.82 |
|
$ |
13.67 |
|
$ |
13.58 |
|
$ |
13.43 |
|
| Tangible book value per share |
$ |
12.18 |
|
$ |
12.09 |
|
$ |
11.94 |
|
$ |
11.72 |
|
$ |
11.58 |
|
| |
|
|
|
|
|
| |
Efficiency Ratios |
| |
Q2 2020 |
Q1 2020 |
Q4 2019 |
Q3 2019 |
Q2 2019 |
| |
(In thousands, except for ratio %) |
| Net interest income |
$ |
17,991 |
|
$ |
18,778 |
|
$ |
20,077 |
|
$ |
20,760 |
|
$ |
20,865 |
|
| Non-interest income |
|
1,108 |
|
|
683 |
|
|
1,020 |
|
|
1,383 |
|
|
1,328 |
|
| Total income |
|
19,099 |
|
|
19,461 |
|
|
21,097 |
|
|
22,143 |
|
|
22,193 |
|
| Non-interest expense |
|
11,952 |
|
|
14,364 |
|
|
14,260 |
|
|
13,652 |
|
|
13,894 |
|
| Efficiency Ratio |
|
62.58 |
% |
|
73.81 |
% |
|
67.59 |
% |
|
61.65 |
% |
|
62.61 |
% |
| |
|
|
|
|
|
Contact: Thomas Coughlin, President &
CEOThomas Keating, CFOMichael Lesler, COO(201) 823-0700
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