BCB Bancorp(BCBP) - 2022 Q4 - Annual Report

Financial Performance - Total assets increased by $578.7 million, or 19.5%, to $3.546 billion at December 31, 2022, from $2.968 billion at December 31, 2021[117] - Loans receivable, net, increased by $740.4 million, or 32.1%, to $3.045 billion at December 31, 2022, from $2.305 billion at December 31, 2021[117] - Stockholders' equity increased by $17.2 million, or 6.3%, to $291.3 million at December 31, 2022, from $274.0 million at December 31, 2021[117] - Net interest income for 2022 was $131.441 million, with a net interest margin of 4.37%[119] - Net interest income increased by $16.6 million, or 17.0 percent, to $113.9 million for the year of 2022 from $97.4 million for 2021[123] - Interest income rose by $18.9 million, or 16.8 percent, to $131.4 million for 2022, compared to $112.6 million for 2021[123] - The average balance of interest-earning assets increased by $197.4 million, or 7.0 percent, to $3.011 billion for 2022[123] - The increase in retained earnings was $33.9 million, or 41.8%, to $115.1 million at December 31, 2022, related to net income less dividends paid[117] Loan and Deposit Information - Deposit liabilities increased by $250.2 million, or 9.8%, to $2.812 billion at December 31, 2022, from $2.561 billion at December 31, 2021[117] - The allowance for loan losses decreased by $4.7 million to $32.4 million, representing 633.6% of non-accruing loans and 1.05% of gross loans at December 31, 2022[117] - The allowance for loan losses was $32.4 million, or 1.05 percent of gross loans at December 31, 2022[123] - The company had $335.0 million in brokered certificate deposits and $35 million in brokered demand deposits as of December 31, 2022[81] - Approximately 92.0% of the company's total loans were secured by real estate as of December 31, 2022, indicating a high concentration in real estate collateral[78] Interest Rates and Expenses - The weighted average interest rate of FHLB advances increased to 4.07% at December 31, 2022, from 1.39% at December 31, 2021[117] - The average yield on loans receivable increased to 4.70% in 2022, compared to 4.63% in 2021[120] - Interest expense increased by $2.3 million, or 15.3 percent, to $17.5 million for 2022, from $15.2 million for 2021[123] - Noninterest income decreased by $7.1 million, or 81.7 percent, to $1.6 million for 2022 from $8.7 million for 2021[123] - Noninterest expense increased by $1.5 million, or 2.8 percent, to $55.5 million for the year ended December 31, 2022[123] - The income tax provision increased by $3.5 million or 25.1 percent, to $17.5 million for 2022 from $14.0 million in 2021[124] Borrowings and Capital Requirements - The Company had total outstanding borrowings of $419.8 million at December 31, 2022, compared to $109.0 million at December 31, 2021[125] - Federal regulations require a common equity Tier 1 capital to risk-based assets ratio of 4.5%, with additional capital conservation buffer requirements impacting capital distributions[89] - The Bank opted into the community bank leverage ratio (CBLR) framework at 9.0% effective March 31, 2020, which was adjusted to 8.0% in 2020 and returned to 9.0% on January 1, 2022[90] - The Bank's ability to comply with stringent capital requirements may affect its return on equity and ability to pay dividends[89] Risks and Challenges - The company faces risks from inflation, which could increase non-interest expenses and affect customers' ability to repay loans[73] - The company is exposed to geographic risks, particularly in New Jersey and the New York metropolitan area, which could impact credit quality and business operations[78] - Market conditions, including unemployment and price levels, may adversely affect consumer confidence and lead to increased delinquencies and default rates[88] - The Bank operates in a highly competitive environment in New Jersey and the New York metropolitan area, facing competition from various financial institutions with greater resources[96] - Economic downturns may lead to substantial credit losses, particularly affecting small to mid-sized businesses that the Bank serves[96] Strategic Initiatives - The company has expanded its cannabis-related business offerings to include limited lending on real estate and deposit services to licensed recreational dispensaries[77] - The company relies primarily on net interest income for earnings, with less dependence on fee income from traditional sources[79] - The Bank's strategy of pursuing acquisitions involves significant risks, including finding suitable candidates and maintaining asset quality[95] Compliance and Security - The company acknowledges that system failures or security breaches could adversely affect its earnings and customer trust[80] - The use of social media poses risks of noncompliance with regulations and potential harm to the Bank's reputation and financial condition[87] - Changes in federal, state, and local regulations could materially impact the Bank's operations and financial condition[92] - The Company expects to adopt the Current Expected Credit Loss methodology during the first quarter of 2023[69] - The company intends to continue paying a quarterly cash dividend of $0.16 per share, subject to earnings and financial condition[71]