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Balance Sheet Review

Total assets decreased by $233.3 million, or 6.1 percent, to $3.599 billion at December 31, 2024, from $3.832 billion at December 31, 2023. The decrease in total assets was due to a decrease in loans of $283.4 million, offset by an increase of $37.8 million in cash and cash equivalents. The decrease in loans was primarily from loan sales and payoffs/paydowns that exceeded loan originations.

Total cash and cash equivalents increased by $37.8 million, or 13.5 percent, to $317.3 million at December 31, 2024, from $279.5 million at December 31, 2023. The increase was primarily due to loan sales and payoffs/paydowns that exceeded loan originations.

Loans receivable, net, decreased by $283.4 million, or 8.6 percent, to $2.996 billion at December 31, 2024, from $3.280 billion at December 31, 2023. Total loan decreases during the period included decreases of $187.4 million in commercial real estate multi-family loans, $57.4 million in construction loans, $29.4 million in commercial business loans, $8.4 million in residential 1-4 family loans, and $1.4 million in consumer loans. Home equity loans increased $438 thousand. The allowance for credit losses on loans increased $1.2 million to $34.8 million, or 77.8 percent of non-accruing loans and 1.15 percent of gross loans, at December 31, 2024, as compared to an allowance for credit losses on loans of $33.6 million, or 178.9 percent of non-accruing loans and 1.01 percent of gross loans, at December 31, 2023.

Total investment securities increased by $14.3 million, or 14.8 percent, to $111.2 million at December 31, 2024, from $96.9 million at December 31, 2023, as excess liquidity has been deployed into the securities portfolio.

Deposits decreased by $228.2 million, or 7.7 percent, to $2.751 billion at December 31, 2024, from $2.979 billion at December 31, 2023. A majority of the decline was due to a decrease in certificates of deposit of $193.5 million. The reduction in certificates of deposit was mainly caused by the withdrawal of brokered deposits which was partially offset by an increase in retail time deposits.

Total borrowings decreased by $12.1 million to $498.3 million at December 31, 2024 from $510.4 million at December 31, 2023. The decrease in borrowings was primarily due to the maturity of $18.0 million of FHLB debt that was paid off during 2024. The weighted average interest rate of the Company’s outstanding FHLB advances was 4.35 percent at December 31, 2024 and 4.21 percent at December 31, 2023. The weighted average maturity of such FHLB advances as of December 31, 2024 was 0.97 years. The interest rate of the Company’s subordinated debt balances was 9.25 percent at December 31, 2024 and 8.36 percent at December 31, 2023.

Stockholders’ equity increased by $9.9 million, or 3.1 percent, to $323.9 million at December 31, 2024, from $314.1 million at December 31, 2023. The increase was primarily attributable to the increase in retained earnings of $5.9 million, or 4.4 percent, to $141.9 million at December 31, 2024 from $135.9 million at December 31, 2023.

Fourth Quarter 2024 Income Statement Review

Net income was $3.3 million for the quarter ended December 31, 2024 and $6.1 million for the quarter ended December 31, 2023. In the fourth quarter of 2024, the Bank recorded $2.2 million more in loan loss provisioning, and net interest income declined by $1.7 million. Non-interest income was also lower by $2.3 million. Offsetting these declines was a decrease in non-interest expense of $2.2 million. The Bank also recorded $1.3 million less for income tax provisioning.

Net interest income decreased by $1.7 million, or 7.2 percent, to $22.2 million for the fourth quarter of 2024, from $23.9 million for the fourth quarter of 2023. The decrease in net interest income resulted from lower interest income, offset by lower interest expense.

Interest income decreased by $3.1 million, or 6.1 percent, to $46.7 million for the fourth quarter of 2024, from $49.7 million for the fourth quarter of 2023. The average balance of interest-earning assets decreased $226.6 million, or 6.1 percent. The rate of return remained flat at 5.33 percent.

Interest expense declined $1.3 million, to $24.5 million, for the fourth quarter of 2024, from $25.8 million for the fourth quarter of 2023. Average interest-bearing liabilities decreased $247.2 million, or 8.3 percent. The average yield on these liabilities was 3.57 percent, versus 3.45 percent from one year earlier.

The net interest margin was 2.53 percent for the fourth quarter of 2024 compared to 2.57 percent for the fourth quarter of 2023. The decrease in the net interest margin compared to the fourth quarter of 2023 was the result of the increase in the cost of interest-bearing liabilities. The yield on interest earning assets remained the same from one year earlier.

During the fourth quarter of 2024, the Company recognized $4.1 million in net charge-offs compared to $233 thousand in net charge offs for the fourth quarter of 2023. The Bank had non-accrual loans totaling $44.7 million, or 1.48 percent of gross loans, at December 31, 2024 as compared to $18.8 million, or 0.57 percent of gross loans, at December 31, 2023. The allowance for credit losses on loans was $34.8 million, or 1.15 percent of gross loans, at December 31, 2024, and $33.6 million, or 1.01 percent of gross loans, at December 31, 2023. The provision for credit losses on loans was $4.2 million for the fourth quarter of 2024 compared to $1.9 million for the fourth quarter of 2023. Management believes that the allowance for credit losses on loans was adequate at December 31, 2024 and December 31, 2023.

Non-interest income decreased by $2.3 million to $938 thousand for the fourth quarter of 2024 from $3.2 million in the fourth quarter of 2023. The decrease in total non-interest income was related to losses on equity investments of $661 thousand in the 2024 quarter as compared to a gain on such investments of $1.1 million in the 2023 quarter, as well as the recordation of a $570 thousand loss on the sale of a non-performing loan during the fourth quarter.

Non-interest expense decreased by $2.2 million, or 13.3 percent, to $14.4 million for the fourth quarter of 2024 from $16.6 million for the fourth quarter of 2023. The decrease in these expenses for the fourth quarter of 2024 was driven by lower salaries and benefits expense, which declined $857 thousand. The fourth quarter of 2023 salaries and benefits included a previously disclosed one-time payment of $1.17 million to a former executive officer. Professional fees, regulatory assessment fees and advertising and promotional costs also declined by $388 thousand, $373 thousand, and $191 thousand, respectively.

The income tax provision decreased by $1.3 million, or 48.4 percent, to $1.3 million for the fourth quarter of 2024. The provision was $2.6 million for the fourth quarter of 2023. The consolidated effective tax rate was 29.0 percent for the fourth quarter of 2024 and 29.9 percent for the fourth quarter of 2023.

Year-to-Date Income Statement Review

Net income decreased by $10.9 million, or 36.8 percent, to $18.6 million for the twelve months of 2024 from $29.5 million for the twelve months of 2023. The decrease in net income was driven, primarily, by lower net interest income of $12.0 million, or 11.6 percent, and an increase in the provision for credit losses by $5.5 million.

Net interest income decreased by $12.0 million, or 11.6 percent, to $92.0 million for the first twelve months of 2024 from $104.1 million for the twelve months of 2023. The decrease in net interest income resulted from an increase in interest expense of $17.7 million, partly offset by an increase in interest income of $5.6 million.

Interest income increased by $5.6 million, or 3.0 percent, to $194.0 million for the twelve months of 2024, from $188.4 million for the twelve months of 2023. The increase was due to an increase of 22 basis points on interest earning assets, from 5.16 percent to 5.38 percent. Offsetting this, somewhat, was a decrease in average interest earning assets of $47.5 million, for the comparable period, which was comprised of a decrease in average loans of $84.8 million offset by an increase in average other interest-earning assets of $37.6 million.

Interest expense increased by $17.7 million, or 21.0 percent, to $102.0 million for 2024, from $84.3 million for 2023. This increase resulted primarily from an increase in the average rate on interest-bearing liabilities of 64 basis points to 3.57 percent for the twelve months of 2024, from 2.93 percent for the twelve months of 2023. Offsetting this was a decrease in average interest bearing liabilities of $18.5 million over the same comparable time period.

Net interest margin was 2.55 percent for the twelve months of 2024, compared to 2.85 percent for the twelve months of 2023. The decrease in the net interest margin compared to the prior period was largely the result of an increase in the cost of the Bank’s interest-bearing liabilities.

During the twelve months of 2024, the Company experienced $10.4 million in net charge offs compared to $704 thousand in net charge offs for the same period in 2023. The provision for credit losses was $11.6 million for the twelve months of 2024 compared to $6.1 million for the same period in 2023.

Non-interest income decreased by $1.1 million to $2.9 million for the twelve months of 2024 from $4.1 million for the twelve months of 2023. The decrease was due to losses on sales of loans of $5.3 million. This was offset by realized and unrealized gains or losses on equity investments, which were $3.7 million greater, and income on Bank-owned Life Insurance (BOLI), which was $883 thousand higher, for the comparable period. The realized and unrealized gains or losses on equity investments are based on prevailing market conditions.

Non-interest expense decreased by $3.5 million, or 5.7 percent, to $57.1 million for the twelve months of 2024 from $60.6 million for the same period in 2023. The decrease in operating expenses for 2024 was driven primarily by decreases in salaries and employee benefits of $2.6 million and advertising and promotional costs of $485 thousand. The 2023 salaries and benefits expense included the payment to a former executive described above.

The income tax provision decreased by $4.3 million, or 36.6 percent to $7.6 million for the twelve months of 2024 from $12.0 million for the same period in 2023. The consolidated effective tax rate was 29.1 percent for the twelve months of 2024 compared to 28.9 percent for the twelve months of 2023.

Asset Quality

During the fourth quarter of 2024, the Company recognized $4.1 million in net charge offs, compared to $233 thousand in net charge offs for the fourth quarter of 2023.

The Bank had non-accrual loans totaling $44.7 million, or 1.48 percent of gross loans, at December 31, 2024, as compared to $18.8 million, or 0.57 percent of gross loans, at December 31, 2023. The allowance for credit losses on loans was $34.8 million, or 1.15 percent of gross loans, at December 31, 2024, and $33.6 million, or 1.01 percent of gross loans, at December 31, 2023. The allowance for credit losses on loans was 77.8 percent of non-accrual loans at December 31, 2024, and 178.9 percent of non-accrual loans at December 31, 2023.

About BCB Bancorp, Inc.

BCB Bancorp, Inc. is a New Jersey corporation established in 2003, and is the holding company parent of BCB Community Bank. The Company has not engaged in any significant business activity other than owning all of the outstanding common stock of the Bank. Established in 2000 and headquartered in Bayonne, N.J., the Bank is the wholly-owned subsidiary of BCB Bancorp, Inc. (NASDAQ: BCBP). The Bank has twenty-three New Jersey branch offices in Bayonne, Edison, Hoboken, Fairfield, Holmdel, Jersey City, Lyndhurst, Maplewood, Monroe Township, Newark, Parsippany, Plainsboro, River Edge, Rutherford, South Orange, Union, and Woodbridge, New Jersey, and four New York branch offices in Hicksville and Staten Island, New York. 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.

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.

The most significant factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the ongoing impact of higher inflation levels and higher interest rates concerns, all of which could impact economic growth and could cause a reduction in financial transactions and business activities, including decreased deposits and reduced loan originations, our ability to manage liquidity and capital in a rapidly changing and unpredictable market, and supply chain disruptions.. Other factors that could cause future results to vary materially from current management expectations as reflected in our forward-looking statements include, but are not limited to: the global impact of the military conflicts in the Ukraine and the Middle East; unfavorable economic conditions in the United States generally and particularly in our primary market area; the Company’s ability to effectively attract and deploy deposits; the impact of any future pandemics or other natural disasters; changes in the Company’s corporate strategies, the composition of its assets, or the way in which it funds those assets; shifts in investor sentiment or behavior in the securities, capital, or other financial markets, including changes in market liquidity or volatility; the effects of declines in real estate values that may adversely impact the collateral underlying our loans; increase in unemployment levels and slowdowns in economic growth; our level of non-performing assets and the costs associated with resolving any problem loans including litigation and other costs; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of our loan and investment securities portfolios; the credit risk associated with our loan portfolio; changes in the quality and composition of the Bank’s loan and investment portfolios; changes in our ability to access cost-effective funding; deposit flows; legislative and regulatory changes, including increases in Federal Deposit Insurance Corporation, or FDIC, insurance rates; monetary and fiscal policies of the federal and state governments; changes in tax policies, rates and regulations of federal, state and local tax authorities; demands for our loan products; demand for financial services; competition; changes in the securities or secondary mortgage markets; changes in management’s business strategies; changes in consumer spending; our ability to retain key employees; the effects of any reputational, credit, interest rate, market, operational, legal, liquidity, or regulatory risk; expanding regulatory requirements which could adversely affect operating results; civil unrest in the communities that we serve; and other factors discussed elsewhere in this report, and in other reports we filed with the SEC, including under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, and our other periodic reports that we file with the SEC.

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 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.