EXHIBIT 13
CONSOLIDATED FINANCIAL STATEMENTS
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
(With Independent Auditors' Report Thereon)
December 31, 2003
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
(With Independent Auditors' Report Thereon)
December 31, 2003
------------------------------------
INDEX
Page
----
Management Responsibility Statement 1
Independent Auditors' Report 2
Consolidated Statements of Financial Condition as of December 31, 2003 and 2002 3
Consolidated Statements of Operations for Each of the Years in the Three-Year
Period Ended December 31, 2003 4
Consolidated Statements of Changes in Stockholders' Equity for Each of the Years
in the Three-Year Period Ended December 31, 2003 5
Consolidated Statements of Cash Flows for Each of the Years in the Three-Year
Period Ended December 31, 2003 6
Notes to Consolidated Financial Statements 7 - 29
All schedules are omitted because they are not required or applicable, or the
required information is shown in the consolidated financial statements or the
notes thereto.
[LETTERHEAD OF BAYONNE COMMUNITY BANK]
February 2, 2004
Management Responsibility Statement
Management of BCB Bancorp, Inc., (the "Company") and subsidiary is responsible
for the preparation, integrity and fair representation of the Company's
consolidated financial statements. The consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America applied on a consistent basis and, accordingly, include
the informed judgments and estimates of management.
Management is responsible for establishing and maintaining effective internal
control over financial reporting that includes personnel selection, the
appropriate division of responsibilities and formal procedures and policies
consistent with high standards of accounting and administrative practice.
Consideration has been given to the necessary balance between costs of systems
of internal control and the benefits derive. The internal control system
includes the services of an outsourced internal auditor who reports to the Audit
Committee of the Board of Directors.
There are inherent limitations in the effectiveness of any system of internal
control, including the possibility of human error and the circumvention or
overriding of controls. Accordingly, an effective internal control system can
only provide reasonable assurance in regard to financial statement preparation.
Additionally, because of changing conditions, the effectiveness of internal
controls may vary over time. Management reviews and modifies systems of
accounting and internal control in light of such changes in conditions as well
as in response to findings and recommendations of both the internal auditor and
the independent external auditor. Management believes that the accounting and
internal control systems provide reasonable assurance that the consolidated
financial statements are reliable.
The Board of Directors, through its Audit Committee comprised of non-management
directors, is responsible for determining that management fulfills its
responsibilities in the preparation of consolidated financial statements and the
control of operations. The Audit Committee appoints and the Board of Directors
ratifies the internal auditor and the independent external auditor. The Audit
Committee meets with management and the auditors to approve the overall audit
scope and related fee arrangements and reviews all audit reports, findings and
recommendations.
/s/ Donald Mindiak
- ---------------------------------------------------
Donald Mindiak
President and Chief Executive Officer
/s/ Thomas Coughlin
- ---------------------------------------------------
Thomas Coughlin
Chief Operating Officer and Chief Financial Officer
1.
[LETTERHEAD OF RADICS & CO. LLC]
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Stockholders
BCB Bancorp, Inc. and Subsidiary
We have audited the accompanying consolidated statements of financial condition
of BCB Bancorp, Inc. (the "Company") and Subsidiary as of December 31, 2003 and
2002, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to in the second
preceding paragraph present fairly, in all material respects, the consolidated
financial position of BCB Bancorp, Inc. and Subsidiary at December 31, 2003 and
2002, and the results of their operations and cash flows for each of the years
in the three-year period ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Radics & Co., LLC
February 2, 2004
2.
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31,
---------------------------------
Assets Note(s) 2003 2002
--------------- ------------- -------------
Cash and amounts due from depository institutions $ 2,895,594 $ 1,232,139
Interest-bearing deposits 8,890,689 3,911,847
------------- -------------
Total cash and cash equivalents 2 and 16 11,786,283 5,143,986
Securities held to maturity 2, 4 and 16 90,313,420 50,602,306
Loans receivable 2, 5 and 16 188,785,530 122,084,802
Premises and equipment 2, 3 and 6 5,704,085 2,627,106
Federal Home Loan Bank of New York stock 1,250,000 760,400
Interest receivable 2, 7 and 16 1,855,854 1,130,097
Deferred income taxes 2 and 13 697,212 532,716
Other assets 283,864 226,292
------------- -------------
Total assets $ 300,676,248 $ 183,107,705
============= =============
Liabilities and stockholders' equity
Liabilities
Deposits 8 and 16 $ 253,650,119 $ 163,519,276
Borrowed money 9 and 16 25,000,000 --
Other liabilities 859,095 816,808
------------- -------------
Total liabilities 279,509,214 164,336,084
------------- -------------
Commitments and contingencies 15 and 16 -- --
Stockholders' equity 1, 2, 10, 11 and 12
Common stock, $0.10 stated value and $5 par value,
respectively; 10,000,000 shares authorized; 2,296,984
shares (2003) and 1,898,057 shares (2002) issued and
outstanding 229,698 9,490,285
Additional paid-in capital 26,483,975 9,781,972
Accumulated deficit (5,546,639) (500,636)
------------- -------------
Total stockholders' equity 21,167,034 18,771,621
------------- -------------
Total liabilities and stockholders' equity $ 300,676,248 $ 183,107,705
============= =============
See notes to consolidated financial statements.
3.
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
---------------------------------------------
Note(s) 2003 2002 2001
----------- ----------- ----------- -----------
Interest income:
Loans 2 and 5 $10,745,093 $ 6,118,633 $ 1,555,226
Securities 2 3,299,452 2,949,327 1,295,462
Other interest-earning assets 90,708 272,310 1,206,598
----------- ----------- -----------
Total interest income 14,135,253 9,340,270 4,057,286
----------- ----------- -----------
Interest expense:
Deposits: 8
Demand 249,278 230,195 146,211
Savings and club 3,235,449 2,760,777 1,726,190
Certificates of deposit 807,772 389,370 398,079
----------- ----------- -----------
4,292,499 3,380,342 2,270,480
Borrowed money 43,589 -- --
----------- ----------- -----------
Total interest expense 4,336,088 3,380,342 2,270,480
----------- ----------- -----------
Net interest income 9,799,165 5,959,928 1,786,806
Provision for loan losses 2 and 5 880,000 843,000 382,000
----------- ----------- -----------
Net interest income after provision for loan losses 8,919,165 5,116,928 1,404,806
----------- ----------- -----------
Non-interest income:
Fees and service charges 366,958 314,087 95,572
Gain on sales of loans originated for sale 94,460 -- --
Gain on sales of securities available for sale -- 7,500 42,969
Other 19,494 14,441 13,014
----------- ----------- -----------
Total non-interest income 480,912 336,028 151,555
----------- ----------- -----------
Non-interest expenses:
Salaries and employee benefits 2 2,812,962 1,551,741 990,971
Occupancy expense of premises 2, 3 and 6 410,745 246,885 201,049
Equipment 2 939,861 646,119 373,386
Advertising 169,430 78,782 74,216
Other 2 and 14 1,057,943 748,684 365,281
----------- ----------- -----------
Total non-interest expenses 5,390,941 3,272,211 2,004,903
----------- ----------- -----------
Income (loss) before income tax (benefit) 4,009,136 2,180,745 (448,542)
Income tax (benefit) 2 and 13 1,613,723 871,655 (172,663)
----------- ----------- -----------
Net income (loss) $ 2,395,413 $ 1,309,090 $ (275,879)
=========== =========== ===========
Net income (loss) per common share: 2
Basic $ 1.04 $ 0.68 $ (0.23)
=========== =========== ===========
Diluted $ 1.01 $ 0.67 $ (0.23)
=========== =========== ===========
Weighted average number of common shares
outstanding: 2
Basic 2,296,984 1,938,006 1,220,344
=========== =========== ===========
Diluted 2,380,651 1,949,418 1,220,344
=========== =========== ===========
See notes to consolidated financial statements.
4.
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Additional Accumulated
Common Stock Paid-in Capital Deficit Total
------------ --------------- ------------ ------------
Balance, December 31, 2000 $ 3,804,185 $ 3,653,701 $ (253,865) $ 7,204,021
Net sale of common stock 2,013,380 2,361,693 -- 4,375,073
Net (loss) for the year ended
December 31, 2001 -- -- (275,879) (275,879)
------------ ------------ ------------ ------------
Balance, December 31, 2001 5,817,565 6,015,394 (529,744) 11,303,215
Issuance of stock dividend 581,810 698,172 (1,279,982) --
Net sale of common stock 3,090,910 3,068,406 -- 6,159,316
Net income for the year ended
December 31, 2002 -- -- 1,309,090 1,309,090
------------ ------------ ------------ ------------
Balance, December 31, 2002 9,490,285 9,781,972 (500,636) 18,771,621
Issuance of stock dividends 971,584 6,469,832 (7,441,416) --
Exchange of Bank stock for
Company stock (10,232,171) 10,232,171 -- --
Net income for year ended
December 31, 2003 -- -- 2,395,413 2,395,413
------------ ------------ ------------ ------------
Balance, December 31, 2003 $ 229,698 $ 26,483,975 $ (5,546,639) $ 21,167,034
============ ============ ============ ============
See notes to consolidated financial statements.
5.
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
-----------------------------------------------------
2003 2002 2001
------------- ------------- -------------
Cash flows from operating activities:
Net income (loss) $ 2,395,413 $ 1,309,090 $ (275,879)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation of premises and equipment 148,292 98,290 86,274
Amortization (accretion), net (232,307) 44,864 (6,238)
Provision for loan losses 880,000 843,000 382,000
Deferred income tax (benefit) (164,496) (136,766) (172,863)
Gain on sales of securities available for sale -- (7,500) (42,969)
Loans originated for sale (8,557,540) -- --
Proceeds from sales of loans originated for sale 8,652,000 -- --
Gain on sales of loans originated for sale (94,460) -- --
(Increase) in interest receivable (725,757) (619,158) (505,386)
(Increase) decrease in other assets (57,572) (56,566) 630,176
Increase (decrease) in accrued interest payable 66,034 14,777 (3,947)
(Decrease) increase in other liabilities (23,747) 616,953 (225,366)
------------- ------------- -------------
Net cash provided by (used in) operating activities 2,285,860 2,106,984 (134,198)
------------- ------------- -------------
Cash flows from investing activities:
Purchase of securities available for sale -- (1,989,375) (4,996,094)
Proceeds from sale of securities available for sale -- 1,996,875 5,039,063
Proceeds from calls of securities held to maturity 20,000,000 2,500,000 --
Purchases of securities held to maturity (75,947,037) (25,102,383) (40,931,313)
Proceeds from repayments on securities held to maturity 16,282,221 10,576,690 2,368,523
Proceeds from sales of participation interests in loans 3,480,000 1,599,259 --
Purchases of loans (5,429,854) (3,093,670) (5,656,466)
Net (increase) in loans receivable (65,444,865) (76,519,532) (38,240,693)
Additions to premises and equipment (3,225,271) (1,281,188) (108,019)
Purchase of Federal Home Loan Bank of New York stock (489,600) (760,400) --
------------- ------------- -------------
Net cash (used in) investing activities (110,774,406) (92,073,724) (82,524,999)
------------- ------------- -------------
Cash flows from financing activities:
Net increase in deposits 90,130,843 61,783,877 79,817,423
Proceeds from borrowed money 25,000,000 -- --
Net proceeds from sales of common stock -- 6,159,316 4,375,073
------------- ------------- -------------
Net cash provided by financing activities 115,130,843 67,943,193 84,192,496
------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents 6,642,297 (22,023,547) 1,533,299
Cash and cash equivalents - beginning 5,143,986 27,167,533 25,634,234
------------- ------------- -------------
Cash and cash equivalents - ending $ 11,786,283 $ 5,143,986 $ 27,167,533
============= ============= =============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes $ 2,143,734 $ 550,706 $ 200
============= ============= =============
Interest $ 4,270,054 $ 3,365,565 $ 2,274,427
============= ============= =============
See notes to consolidated financial statements.
6.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND STOCK OFFERINGS
After the close of business on April 30, 2003, the Company, a New Jersey
corporation, became a bank holding company in accordance with the terms of an
Agreement and Plan of Acquisition, dated September 12, 2002 (the "Agreement"),
by and between Bayonne Community Bank (the "Bank"), a New Jersey commercial
bank, and the Company. Pursuant to the Agreement and N.J.S.A. 17:19A-355, the
Company was organized as a wholly owned subsidiary of the Bank and by operation
of law the outstanding shares of common stock, par value $5.00 per share, of the
Bank became, on a one-for-one basis, common stock, $0.10 stated value, of the
Company. The common stock of the Company held by the Bank was cancelled.
Accordingly, the Bank became a wholly-owned subsidiary of the Company and the
shareholders of the Bank became the shareholders of the Company.
The common stock of the Bank was previously registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the
Federal Deposit Insurance Corporation. Pursuant to Rule 12(g)(3) promulgated
under the Exchange Act, the Company's common stock was deemed automatically
registered under the Exchange Act. In addition, the common stock of the Company
was substituted for the common stock of the Bank on the Nasdaq Electronic
Bulletin Board and trades under the new symbol "BCBP."
The Bank sold 618,182 shares at $10.00 per share and 402,676 shares at $11.00
per share of its common stock through offering circulars dated May 1, 2002 and
May 23, 2001, respectively, at various closing dates. Net proceeds of the
secondary offerings, after expenses thereof, totalled $6,159,000 and $4,375,000
for the years ended December 31, 2002 and 2001, respectively.
The primary business of the Company is the operation of the Bank. The Bank is a
New Jersey commercial bank which, as of December 31, 2003, operates at three
locations in Bayonne, New Jersey. The Bank is subject to regulation,
supervision, and examination by the New Jersey Department of Banking and
Insurance and the Federal Deposit Insurance Corporation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidated financial statement presentation
The consolidated financial statements of the Company have been prepared in
conformity with accounting principles generally accepted in the United
States of America. In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the
consolidated statement of financial condition and revenues and expenses
for the periods then ended. Actual results could differ significantly from
those estimates. A material estimate that is particularly susceptible to
significant change relates to the determination of the allowance for loan
losses. Management believes that the allowance for loan losses is
adequate. While management uses available information to recognize losses
on loans, future additions to the allowance for loan losses may be
necessary based on changes in economic conditions in the market area.
7.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of consolidated financial statement presentation (Cont'd.)
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan
losses. Such agencies may require the Bank to recognize additions to the
allowance based on their judgments about information available to them at
the time of their examination.
Cash and cash equivalents
Cash and cash equivalents include cash and amounts due from depository
institutions, interest-bearing deposits in other banks having original
maturities of three months or less and federal funds sold. Generally,
federal funds sold are sold for one day periods.
Securities available for sale and held to maturity
Investments in debt securities that the Company has the positive intent
and ability to hold to maturity are classified as held-to-maturity
securities and reported at amortized cost. Debt and equity securities that
are bought and held principally for the purpose of selling them in the
near term are classified as trading securities and reported at fair value,
with unrealized holding gains and losses included in earnings. Debt and
equity securities not classified as trading securities nor as
held-to-maturity securities are classified as available for sale
securities and reported at fair value, with unrealized holding gains or
losses, net of applicable deferred income taxes, reported in the
accumulated other comprehensive income component of retained earnings.
Premiums and discounts on all securities are amortized/accreted to
maturity using the interest method. Interest and dividend income on
securities, which includes amortization of premiums and accretion of
discounts, is recognized in the financial statements when earned. Gains or
losses on sales are recognized based on the specific identification
method.
Loans receivable
Loans receivable are carried at unpaid principal balances less net
deferred loan origination fees and the allowance for loan losses. Loan
origination fees and certain direct loan origination costs are deferred
and amortized, as an adjustment of yield, over the contractual lives of
the related loans.
Accrued interest on loans that are contractually delinquent ninety days or
more is charged off and the related loans placed on nonaccrual status.
Income is subsequently recognized only to the extent that cash payments
are received until delinquency status is reduced to less than ninety days,
in which case the loan is returned to an accrual status.
Allowance for loan losses
The allowance for loan losses is increased through provisions charged to
operations and by recoveries, if any, on previously charged-off loans and
reduced by charge-offs on loans which are determined to be a loss in
accordance with Bank policy.
8.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
The allowance for loan losses is maintained at a level considered adequate
to absorb loan losses. Management, in determining the allowance for loan
losses, considers the risks inherent in its loan portfolio and changes in
the nature and volume of its loan activities, along with the general
economic and real estate market conditions. The Bank utilizes a two tier
approach: (1) identification of impaired loans and establishment of
specific loss allowances on such loans; and (2) establishment of general
valuation allowances on the remainder of its loan portfolio. The Bank
maintains a loan review system which allows for a periodic review of its
loan portfolio and the early identification of potentially impaired loans.
Such system takes into consideration, among other things, delinquency
status, size of loans, and types and value of collateral and financial
condition of the borrowers. Specific loan loss allowances are established
for identified loans based on a review of such information and/or
appraisals of the underlying collateral. General loan loss allowances are
based upon a combination of factors including, but not limited to, actual
loan loss experience, composition of the loan portfolio, and current
economic conditions and management's judgment. Although management
believes that adequate specific and general allowances for loan losses are
established, actual losses are dependent upon future events and, as such,
further additions to the level of specific and general loan loss
allowances may be necessary.
Impaired loans are measured based on the present value of expected future
cash flows discounted at the loan's effective interest rate, or as a
practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. A loan
evaluated for impairment is deemed to be impaired when, based on current
information and events, it is probable that the Bank will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. All loans identified as impaired are evaluated independently.
The Bank does not aggregate such loans for evaluation purposes. Payments
received on impaired loans are applied first to accrued interest
receivable and then to principal. The Bank has not had any loans deemed to
be impaired during the three-year period ended December 31, 2003.
Concentration of risk
At December 31, 2003 and 2002, interest-bearing deposits include
$6,000,000 and $2,000,000, respectively, invested in a money market
account with one security broker/dealer organization.
The Bank's lending activity is concentrated in loans secured by real
estate located in the State of New Jersey and contiguous states.
Premises and equipment
Land is carried at cost. Buildings, building improvements, leasehold
improvements and furniture, fixtures and equipment are carried at cost,
less accumulated depreciation and amortization. Significant renovations
and additions are charged to the property and equipment account.
Maintenance and repairs are charged to expense in the period incurred.
Depreciation charges are computed on the straight-line method over the
following estimated useful lives of each type of asset.
Buildings 40 years
Building improvements 7 to 40 years
Furniture, fixtures and equipment 3 to 40 years
Leasehold improvements Shorter of useful life of term of lease
9.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Interest-rate risk
The Bank is principally engaged in the business of attracting deposits
from the general public and using these deposits, together with other
funds, to make loans secured by real estate and to purchase securities.
The potential for interest-rate risk exists as a result of the difference
in duration of the Bank's interest-sensitive liabilities compared to its
interest-sensitive assets. For this reason, management regularly monitors
the maturity structure of the Bank's interest-earning assets and
interest-bearing liabilities in order to measure its level of
interest-rate risk and to plan for future volatility.
Income taxes
The Company and the Bank file a consolidated federal income tax return.
Income taxes are allocated to the Company and the Bank based upon their
respective income or loss included in the consolidated income tax return.
Separate state income tax returns are filed by the Company and the Bank.
Federal and state income tax expense (benefit) has been provided on the
basis of reported income (loss). The amounts reflected on the tax return
differs from these provisions due principally to temporary differences in
the reporting of certain items for financial reporting and income tax
reporting purposes. The tax effect of these temporary differences is
accounted for as deferred taxes applicable to future periods. Deferred
income tax expense or (benefit) is determined by recognizing deferred tax
assets and liabilities for the estimated future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized
in earnings in the period that includes the enactment date. The
realization of deferred tax assets is assessed and a valuation allowance
provided, when necessary, for that portion of the asset which is not more
likely than not to be realized.
Net income (loss) per common share
Basic net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of shares of common stock
outstanding. The diluted net income (loss) per common share is computed by
adjusting the weighted average number of shares of common stock
outstanding to include the effects of outstanding stock options, if
dilutive, using the treasury stock method.
In October 2003, the Company's Board of Directors authorized a 10% stock
dividend to stockholders of record on November 3, 2003. Such dividend was
distributed on November 17, 2003. The weighted average number of common
shares outstanding and the net income (loss) per common share presented in
the consolidated statements of operations have been restated to give
retroactive effect to the stock dividend.
10.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Stock-based compensation plans
The Company, under plans approved by its stockholders in 2003 and 2002,
has granted stock options to employees and outside directors. See note 11
for additional information as to option grants. The Company accounts for
options granted using the intrinsic value method, in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees", and related interpretations. No compensation expense has
been reflected in net income for the options granted as all such grants
have an exercise price equal to the market price of the underlying stock
at the date of grant. The following table provides information as to net
income and earnings per share as if the Company had applied the fair value
recognition provisions of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation", as amended, to all option
grants.
Year Ended December 31,
---------------------------------
2003 2002
------------- -------------
Net income as reported $ 2,395,413 $ 1,309,090
Less: Total stock-based compensation expense,
net of income taxes, included in reported
net income -- --
Add: Total stock-based compensation expense,
net of income taxes, that would have been
included in the determination of net income
if the fair value method had been applied to
all grants (424,689) (66,697)
------------- -------------
Pro forma net income $ 1,970,724 $ 1,242,393
============= =============
Net income per commons share, as reported:
Basic $ 1.04 $ 0.68
Diluted 1.01 0.67
============= =============
Pro forma net income per common share:
Basic $ 0.86 $ 0.64
Diluted 0.83 0.64
============= =============
Comprehensive income
The Company has had, since inception, no items of other comprehensive
income.
Reclassification
Certain amounts for prior periods have been reclassified to conform to the
current period's presentation.
11.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. RELATED PARTY TRANSACTIONS
The Bank leases a property from NEW BAY LLC ("NEW BAY"), a limited liability
corporation 100% owned by a majority of the directors and officers of the Bank.
In conjunction with the lease, NEW BAY substantially removed the pre-existing
structure on the site and constructed a new building suitable to the Bank for
its banking operations. Under the terms of the lease, the cost of this project
was reimbursed to NEW BAY by the Bank. The amount reimbursed, which occurred
during the year 2000, was approximately $943,000, and is included in property
and equipment under the caption "Building and improvements". See note 6 to
consolidated financial statements.
The original lease term began on November 1, 2000, and concludes on October 31,
2005, and provides for an annual base rent of $108,000 for the first three years
and $111,240 for the remaining two years. The Bank has the option to renew the
lease for four consecutive five-year periods, subject to a rent escalation
clause. In addition, at each renewal date, the Bank has the option to purchase
the property from NEW BAY, at the then current fair market value less a credit
equal to the lesser of (a) the funds previously reimbursed to NEW BAY, for the
new building construction, less any subsequent depreciation, or (b) $750,000.
The authority to exercise the purchase option is solely vested in an officer who
has no ownership interest in NEW BAY.
On July 1, 2002, the Bank acquired a tract of real estate in the Bergen Point
section of the City of Bayonne, New Jersey. The property was purchased for
$889,686 from 104 L.L.C., a limited liability corporation 100% owned by a
majority of the directors and officers of the Bank. This property is included in
land at December 31, 2003, and construction in progress at December 31, 2002.
See Note 6 to consolidated financial statements.
4. SECURITIES HELD TO MATURITY
December 31, 2003
--------------------------------------------------------------
Gross Unrealized
Carrying ---------------------------- Estimated
Value Gains Losses Fair Value
----------- ----------- ----------- -----------
U.S. Government Agencies:
Due after one year through five years $ 2,500,000 $ 15,625 $ -- $ 2,515,625
Due after five years through ten years 19,982,238 111,550 285,592 19,808,196
Due after ten years 49,500,000 655,829 84,375 50,071,454
----------- ----------- ----------- -----------
71,982,238 783,004 369,967 72,395,275
----------- ----------- ----------- -----------
Mortgage-backed securities:
Due after five years through ten years 856,185 54,825 -- 911,010
Due after ten years 17,474,997 436,561 20,471 17,891,087
----------- ----------- ----------- -----------
18,331,182 491,386 20,471 18,802,097
----------- ----------- ----------- -----------
$90,313,420 $ 1,274,390 $ 390,438 $91,197,372
=========== =========== =========== ===========
12.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. SECURITIES HELD TO MATURITY
December 31, 2002
--------------------------------------------------------------
Gross Unrealized
Carrying --------------------------- Estimated
Value Gains Losses Fair Value
----------- ----------- ----------- -----------
U.S. Government Agencies:
Due after one year through five years $ 4,496,810 $ 19,508 $ -- $ 4,516,318
Due after ten years 17,492,694 203,400 -- 17,696,094
----------- ----------- ----------- -----------
21,989,504 222,908 -- 22,212,412
----------- ----------- ----------- -----------
Mortgage-backed securities:
Due after five years through ten years 1,908,096 112,638 -- 2,020,734
Due after ten years 26,704,706 1,109,422 -- 27,814,128
----------- ----------- ----------- -----------
28,612,802 1,222,060 -- 29,834,862
----------- ----------- ----------- -----------
$50,602,306 $ 1,444,968 $ -- $52,047,274
=========== =========== =========== ===========
There were no sales of securities held to maturity during the years ended
December 31, 2003 and 2002. At December 31, 2003, mortgage-backed securities
with a carrying value of approximately $1,664,000 and $2,113,000, respectively,
were pledged to secure public deposits. See also Note 9 for securities pledged
to secure borrowings.
13.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. LOANS RECEIVABLE
December 31,
-------------------------------
2003 2002
------------ ------------
Real estate mortgage:
Residential $ 33,913,366 $ 25,474,696
Commercial 115,160,296 65,841,573
Construction 10,009,008 4,277,676
------------ ------------
159,082,670 95,593,945
------------ ------------
Commercial:
Business loans 6,108,783 4,228,303
Lines of credit 7,938,744 8,705,846
------------ ------------
14,047,527 12,934,149
------------ ------------
Consumer:
Passbook or certificate 449,702 51,124
Home equity lines of credit 2,438,809 1,499,474
Home equity 14,385,288 12,606,855
Automobile 366,489 547,883
Personal 98,569 84,701
------------ ------------
17,738,857 14,790,037
------------ ------------
Deposit overdrafts 268,619 117,090
------------ ------------
Total loans 191,137,673 123,435,221
------------ ------------
Less: Deferred loan fees, net 238,855 117,131
Allowance for loan losses 2,113,288 1,233,288
------------ ------------
2,352,143 1,350,419
------------ ------------
$188,785,530 $122,084,802
============ ============
At December 31, 2003 and 2002, loans serviced by the Bank for the benefit of
others, which consist of participation interests in loans originated by the
Bank, totalled approximately $5,020,000 and $1,575,000, respectively.
14.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. LOANS RECEIVABLE (Cont'd.)
The Bank grants loans to its officers and directors and to their associates.
Related party loans are made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with unrelated persons and do not involve more than normal risk of
collectibility. The activity with respect to loans to directors, officers and
associates of such persons, is as follows:
Year Ended December 31,
-----------------------
2003 2002
-------- --------
(In Thousands)
Balance - beginning $ 9,078 $ 3,892
Loans originated 14,997 7,165
Collections of principal (16,257) (1,750)
Loans from person no longer associated -- (229)
-------- --------
Balance - ending $ 7,818 $ 9,078
======== ========
The following is an analysis of the allowance for loan losses:
Year Ended December 31,
--------------------------------------------
2003 2002 2001
----------- ----------- -----------
Balance - beginning $ 1,233,288 $ 412,000 $ 30,000
Provision charged to operations 880,000 843,000 382,000
Loans charged off -- (21,712) --
----------- ----------- -----------
Balance - ending $ 2,113,288 $ 1,233,288 $ 412,000
=========== =========== ===========
At both December 31, 2003 and 2002, nonaccrual loans for which the accrual of
interest had been discontinued totalled approximately $67,000. Had these loans
been performing in accordance with their original terms, the interest income
recognized for both the years ended December 31, 2003 and 2002 would have been
approximately $6,000. Interest income recognized on such loans was approximately
$ -0- and $2,000, respectively. The Bank is not committed to lend additional
funds to the borrowers whose loans have been placed on a nonaccrual status.
There were no nonaccrual loans at December 31, 2001.
15.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. PREMISES AND EQUIPMENT
December 31,
------------------------------
2003 2002
----------- -----------
Land $ 890,236 $ --
Buildings and improvements 3,426,338 1,105,446
Leasehold improvements 331,654 --
Furniture, fixtures and equipment 1,401,464 494,007
Construction in progress -- 1,224,968
----------- -----------
6,049,692 2,824,421
Accumulated depreciaiton and amrotiation (345,607) (197,315)
----------- -----------
$ 5,704,085 $ 2,627,106
=========== ===========
Buildings and improvements includes a building constructed on property leased
from a related party. Construction in progress includes land purchased from a
related party. See note 3 to consolidated financial statements.
Rental expenses related to the occupancy of premises totalled $170,000, $113,000
and $108,000 for the years ended December 31, 2003, 2002 and 2001, respectively.
The minimum obligation under lease agreements for each of the years ended
December 31 is as follows:
Year Amount
--------- --------
2004 $170,000
2005 156,000
2006 64,000
2007 62,000
--------
$452,000
========
7. INTEREST RECEIVABLE
December 31,
--------------------------
2003 2002
---------- ----------
Loans $ 890,420 $ 575,952
Securities 962,827 554,145
Other 2,607 --
---------- ----------
$1,855,854 $1,130,097
========== ==========
16.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. DEPOSITS
December 31,
-------------------------------
2003 2002
------------ ------------
Demand:
Non-interest bearing $ 16,626,235 $ 14,006,528
NOW 17,201,365 10,656,061
Money Market 2,162,685 2,546,234
------------ ------------
35,990,285 27,208,823
Savings and club 162,832,122 116,328,441
Certificates of deposit 54,827,712 19,982,012
------------ ------------
$253,650,119 $163,519,276
============ ============
At December 31, 2003 and 2002, certificates of deposit of $100,000 or more
totalled approximately $16,330,000 and $4,397,000, respectively.
The scheduled maturities of certificates of deposit were as follows:
December 31,
----------------------------
2003 2002
----------- -----------
One year or less $41,455,558 $16,940,811
After one year to three years 11,604,529 2,773,802
After three years 1,767,625 267,399
----------- -----------
$54,827,712 $19,982,012
=========== ===========
9. BORROWED MONEY
Borrowed money at December 31, 2003, consists of the following:
Lender Maturity Interest Rate Amount
------ -------- ------------- ------
Federal Home Loan Bank
of New York November 19, 2004 1.48% $ 25,000,000
============
At December 31, 2003, securities held to maturity with a carrying value of
approximately $32,494,000 were pledged to secure the above noted borrowing.
There were no borrowings outstanding at December 31, 2002.
17.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. REGULATORY CAPITAL
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the Bank.
Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. The
Bank's capital amounts and classifications are also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors.
Quantitative measures, established by regulation to ensure capital adequacy,
require the Bank to maintain minimum amounts and ratios of Total and Tier 1
capital, (as defined in the regulations), to risk-weighted assets, (as defined),
and of Tier 1 capital to total assets, (as defined).
As a newly formed State chartered institution, the Bank was initially required
to maintain a ratio of Tier 1 capital to total assets of not less than ten
percent for a period of five years. The Bank subsequently requested and
received, from the State of New Jersey Department of Banking and Insurance, a
waiver reducing the Tier 1 capital to total assets requirement to 8% at December
31, 2002. During 2003, the requirement to maintain additional capital was
removed. The following table presents information as to the Bank's capital
levels.
To Be Well
Capitalized Under
Minimum Capital Prompt Corrective
Actual Requirements Actions Provisions
--------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(Dollars in Thousands)
December 31, 2003
Total Capital
(to risk-weighted assets) $23,230 11.51% $16,142 8.00% $20,178 10.00%
Tier 1 Capital
(to risk-weighted assets) 21,117 10.47% -- -- 12,107 6.00%
Tier 1 Capital
(to adjusted total assets) 21,117 7.02% 12,028 4.00% 15,034 5.00%
December 31, 2002
Total Capital
(to risk-weighted assets) $20,005 15.99% $10,008 8.00% $12,510 10.00%
Tier 1 Capital
(to risk-weighted assets) 18,772 15.01% -- -- 7,504 6.00%
Tier 1 Capital
(to adjusted total assets) 18,772 10.25% 14,651 8.00% 9,157 5.00%
18.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. BENEFITS PLAN
Stock Options
Stock options granted under stockholder approved stock option plans may be
either options that qualify as incentive stock options as defined in Section 422
of the Internal Revenue Code of 1986, as amended, or non-statutory options.
Options granted will vest and will be exercisable on a cumulative basis in equal
installments at the rate of 20% per year commencing on the date of grant and
continuing through the next four anniversary dates. Vested options may be
exercised up to ten years from the date of grant. All options granted will be
exercisable in the event the optionee terminates his employment due to death or
disability. A summary of stock option activity follows:
Number of Range of Weighted Average
Option Shares Exercise Price Exercise Price
------------- -------------- ----------------
December 31, 2001 -- $ -- $ --
Options granted 153,906 8.26 8.26
Options exercised -- -- --
---------
December 31, 2002 153,906 8.26 8.26
Options granted 207,285 14.59-14.77 14.59
Options exercised -- -- --
---------
December 31, 2003 361,191 8.26-14.77 11.90
=========
Exercisable at:
December 31, 2003 103,019 8.26-14.77 10.81
December 31, 2002 30,781 8.26 8.26
At December 31, 2003, the stock options outstanding had a weighted-average
remaining contractual life of 9.2 years. At December 31, 2003 and 2002, stock
options for up to 23,377 and 960 shares, respectively, of common stock were
available for future grants. No options were forfeited during 2003 and 2002.
The Company, as permitted by Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 123, recognizes
compensation cost for stock options granted based on the intrinsic value method
instead of the fair value based method. The grant-date fair values of the stock
options granted during 2003 and 2002, which have exercise prices equal to the
market price of the common stock at the grant date, were estimated using the
Black-Scholes option-pricing model. Such fair value and the assumptions used for
estimating fair value are as follows:
19.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. BENEFITS PLAN (Cont'd.
Stock Options (Cont'd.)
Year Ended December 31,
------------------------
2003 2002
--------- ---------
Grant-date fair value per share $ 9.72 $ 2.36
Expected common stock dividend yield 0.00% 0.00%
Expected option life 7.0 years 6.5 years
Risk-free interest rate 4.05% 4.18%
Volatility 56.20% None
12. DIVIDEND RESTRICTIONS
Payment of cash dividends is conditioned on earnings, financial condition, cash
needs, the discretion of the Board of Directors, and compliance with regulatory
requirements. State and Federal law and regulations impose substantial
limitations on the Bank's ability to pay dividends to the Company. Under New
Jersey law, the Bank is permitted to declare dividends on its common stock only
if, after payment of the dividend, the capital stock of the Bank will be
unimpaired and either the Bank will have a surplus of not less than 50% of its
capital stock or the payment of the dividend will not reduce the Bank's surplus.
Current regulatory policies impose more stringent capital requirements on new
banks for their first five years of operations than are imposed on more
established banks. Such policies also have the effect of restricting dividends.
For example, under the regulatory policies of the New Jersey Department of
Banking and Insurance, a new bank such as the Bank may not pay cash dividends
until such time as it becomes profitable and has earned back its initial capital
deficit.
13. INCOME TAXES
The components of income tax expense (benefit) are summarized as follows:
Year Ended December 31,
------------------------------------------
2003 2002 2001
----------- ----------- -----------
Current income tax expense:
Federal $ 1,341,752 $ 752,813 $ --
State 436,467 255,608 200
----------- ----------- -----------
1,778,219 1,008,421 200
----------- ----------- -----------
Deferred income tax (benefit):
Federal (96,921) (78,513) (132,852)
State (67,575) (58,253) (40,011)
----------- ----------- -----------
(164,496) (136,766) (172,863)
----------- ----------- -----------
$ 1,613,723 $ 871,655 $ (172,663)
=========== =========== ===========
20.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. INCOME TAXES (Cont'd.)
The tax effects of existing temporary difference that give rise to significant
portions of the deferred income tax assets and deferred income tax liabilities
are as follows:
December 31,
----------------------------
2003 2002
----------- -----------
Deferred income tax assets
Allowance for loan losses $ 844,047 $ 492,575
Net operating loss carryforward 21,894 21,894
Organization expense 41,164 63,616
Other 3,351 11,278
----------- -----------
910,456 589,363
----------- -----------
Deferred income tax liabilities
Depreciation 211,011 48,732
Other 2,233 7,915
----------- -----------
213,244 56,647
----------- -----------
Net deferred tax asset $ 697,212 $ 532,716
=========== ===========
The following table presents a reconciliation between the reported income tax
expense (benefit) and the income tax expense (benefit) which would be computed,
by applying the normal federal income tax rate of 34%, to income (loss) before
income tax expense (benefit):
Year Ended December 31,
-------------------------------------------
2003 2002 2001
---------- ---------- ----------
Federal income tax expense (benefit) at statutory rate $1,363,106 $ 741,453 $ (152,504)
Increases (reductions) in income taxes resulting from:
State income tax,
net of federal income tax effect 243,469 130,254 (26,275)
Other items, net 7,148 (52) 6,116
---------- ---------- ----------
Effective income tax (benefit) $1,613,723 $ 871,655 $ (172,663)
========== ========== ==========
At December 31, 2003, the Bank has a net operating loss carryforward of
approximately $369,000 expiring in the year 2008 for State income tax purposes.
21.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. OTHER EXPENSES
The following is an analysis of other expenses:
Year Ended December 31,
------------------------------------------
2003 2002 2001
---------- ---------- ----------
Directors' fees $ 263,100 $ 134,150 $ --
Stationery, forms and printing 172,575 116,249 57,493
Professional fees 216,260 198,980 84,450
Check printing 41,250 25,871 47,836
Correspondent bank fees 67,881 55,130 39,316
Telephone and communications 58,372 31,546 22,180
Other 238,505 186,758 114,006
---------- ---------- ----------
$1,057,943 $ 748,684 $ 365,281
========== ========== ==========
15. COMMITMENTS AND CONTINGENCIES
The Bank is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments primarily include commitments to extend credit. The Bank's
exposure to credit loss, in the event of nonperformance by the other party to
the financial instrument for commitments to extend credit, is represented by the
contractual amount of those instruments. The Bank uses the same credit policies
in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
Outstanding loan related commitments were as follows (in thousands):
December 31,
--------------------------
2003 2002
---------- ----------
Loan origination $ 16,282 $ 15,037
Construction loans in process 9,492 3,362
Unused lines of credit 7,379 3,601
---------- ----------
$ 33,153 $ 22,000
========== ==========
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, total commitment amounts do not necessarily represent
future cash requirements. The Bank evaluates each customer's creditworthiness on
a case-by-case basis. The amount of collateral obtained, if deemed necessary by
the Bank upon extension of credit, is based on management's credit evaluation of
the counterparty. Collateral held varies but primarily includes residential real
estate properties.
22.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. COMMITMENTS AND CONTINGENCIES (Cont'd.)
The Company and the Bank also have, in the normal course of business,
commitments for services and supplies. Management does not anticipate losses on
any of these transactions.
The Company and the Bank, from time to time, may be party to litigation which
arises primarily in the ordinary course of business. In the opinion of
management, the ultimate disposition of such litigation should not have a
material effect on the financial statements. As of December 31, 2003, the
Company and the Bank were not parties to any material litigation.
16. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is defined as the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than a forced or liquidation sale. Significant estimations were used for
the purposes of this disclosure. Estimated fair values have been determined
using the best available data and estimation methodology suitable for each
category of financial instruments. For those loans and deposits with floating
interest rates, it is presumed that estimated fair values generally approximate
their recorded book balances. The estimation methodologies used and the
estimated fair values and carrying values of financial instruments are set forth
below:
Cash and cash equivalents and interest receivable
The carrying amounts for cash and cash equivalents and interest and
dividends receivable approximate fair value.
Securities
The fair values for securities, both available for sale and held to
maturity, are based on quoted market prices or dealer prices, if
available. If quoted market prices or dealer prices are not available,
fair value is estimated using quoted market prices or dealer prices for
similar securities.
Loans
The fair value of loans is estimated by discounting future cash flows,
using the current rates at which similar loans with similar remaining
maturities would be made to borrowers with similar credit ratings.
23.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont'd.)
Deposits
For demand, savings and club accounts, fair value is the carrying amount
reported in the financial statements. For certificates of deposit, fair
value is estimated by discounting future cash flows, using rates currently
offered for deposits of similar remaining maturities.
Borrowed money
The fair value of borrowed money is estimated by discounting future cash
flows using rates currently available for liabilities of similar remaining
maturities.
Commitments to extend credit
The fair value of credit commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties. For fixed-rate loan commitments, fair value also considers
the difference between current levels of interest rates and the committed
rates.
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
December 31,
---------------------------------------------------
2003 2002
----------------------- -----------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
-------- ---------- -------- ----------
Financial assets
Cash and cash equivalents $ 11,786 $ 11,786 $ 5,144 $ 5,144
Securities held to maturity 90,313 91,197 50,602 52,047
Loans receivable 188,786 190,575 122,085 123,282
Interest receivable 1,856 1,856 1,130 1,130
Financial liabilities
Deposits 253,650 254,207 163,519 163,621
Borrowed money 25,000 24,987 -- --
Commitments
Loan origination 16,286 16,282 15,037 15,037
Unused lines of credit and loans in process 16,871 16,871 6,963 6,963
24.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont'd.)
Fair value estimates are made at a specific point in time based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the entire holdings of a particular financial instrument.
Because no market value exists for a significant portion of the financial
instruments, fair value estimates are based on judgments regarding future
expected loss experience, current economic conditions, risk characteristics of
various financial instruments, and other factors. These estimates are subjective
in nature, involve uncertainties and matters of judgment and, therefore, cannot
be determined with precision. Changes in assumptions could significantly affect
the estimates.
In addition, fair value estimates are based on existing on-and-off balance sheet
financial instruments without attempting to estimate the value of anticipated
future business, and exclude the value of assets and liabilities that are not
considered financial instruments. Other significant assets and liabilities that
are not considered financial assets and liabilities include premises and
equipment, real estate owned and advance payments by borrowers for taxes and
insurance. In addition, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in any of the estimates.
Finally, reasonable comparability between financial institutions may not be
likely due to the wide range of permitted valuation techniques and numerous
estimates which must be made given the absence of active secondary markets for
many of the financial instruments. This lack of uniform valuation methodologies
introduces a greater degree of subjectivity to these estimated fair values.
25.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. PARENT ONLY FINANCIAL INFORMATION
STATEMENT OF FINANCIAL CONDITION
December 31,
2003
------------
Assets:
Cash and due from banks $ 50,000
Investment in subsidiary 21,117,034
------------
Total assets $ 21,167,034
------------
Liabilities $ --
------------
Stockholders' equity:
Common stock 229,698
Additional paid-in capital 26,483,975
Accumulated deficit (5,546,639)
------------
21,167,034
------------
Total liabilities and stockholders' equity $ 21,167,034
============
26.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. PARENT ONLY FINANCIAL INFORMATION (Cont'd.)
STATEMENT OF INCOME
Year Ended
December 31, 2003
-----------------
Dividend form subsidiary $ 50,000
----------
Total income 50,000
Non-interest expenses --
----------
Income before income tax and equity in
undistributed earnings of subsidiary 50,000
Income tax --
----------
Income before equity in undistributed
earnings of subsidiary 50,000
Equity in undistributed earnings of subsidiary 1,582,817
----------
Net income $1,632,817
==========
27.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. PARENT ONLY FINANCIAL INFORMATION (Cont'd.)
STATEMENT OF CASH FLOWS
Year Ended
December 31, 2003
-----------------
Cash flows from operating activities:
Net income $ 1,632,817
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of subsidiaries (1,582,817)
-----------
Net cash provided by operating activities 50,000
Cash and cash equivalents - beginning --
-----------
Cash and cash equivalents - ending $ 50,000
===========
28.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter Ended
----------------------------------------------------
March 31, June 30, September 30, December 31,
2003 2003 2003 2003
--------- -------- ------------- ------------
(In thousands, except for per share amounts)
Total interest income $ 3,070 $ 3,351 $ 3,586 $ 4,128
Total interest expense 936 1,012 1,102 1,286
-------- -------- -------- --------
Net interest income 2,134 2,339 2,484 2,842
Provision for loan losses 225 225 210 220
Non-interest income 88 88 133 172
Non-interest expenses 1,048 1,249 1,415 1,679
Income taxes 376 381 396 461
-------- -------- -------- --------
Net income $ 573 $ 572 $ 596 $ 654
======== ======== ======== ========
Net income per common share:
Basic $ 0.25 $ 0.25 $ 0.26 $ 0.28
Diluted 0.24 0.24 0.25 0.27
======== ======== ======== ========
Weighted average number of
common shares outstanding:
Basic 2,297 2,297 2,297 2,297
Diluted 2,371 2,362 2,365 2,425
Quarter Ended
----------------------------------------------------
March 31, June 30, September 30, December 31,
2002 2002 2002 2002
--------- -------- ------------- ------------
(In thousands, except for per share amounts)
Total interest income $ 1,816 $ 2,211 $ 2,519 $ 2,794
Total interest expense 726 831 892 931
-------- -------- -------- --------
Net interest income 1,090 1,380 1,627 1,863
Provision for loan losses 138 195 255 255
Non-interest income 49 66 73 148
Non-interest expenses 710 778 814 970
Income taxes 107 199 251 315
-------- -------- -------- --------
Net income $ 184 $ 274 $ 380 $ 471
======== ======== ======== ========
Net income per common share:
Basic $ 0.12 $ 0.17 $ 0.17 $ 0.21
Diluted 0.12 0.17 0.17 0.20
======== ======== ======== ========
Weighted average number of
common shares outstanding:
Basic 1,549 1,640 2,265 2,297
Diluted 1,549 1,640 2,273 2,336
29.