EXHIBIT 13
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
(With Report of Registered Public Accounting Firm Thereon)
December 31, 2004
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
(With Report of Registered Public Accounting Firm Thereon)
December 31, 2004
----------------------------------------------------------
INDEX
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Page
---------
Management Responsibility Statement 1
Report of Independent Registered Public Accounting Firm 2
Consolidated Statements of Financial Condition as of December 31, 2004 and 2003 3
Consolidated Statements of Income for Each of the Years in the Three-Year
Period Ended December 31, 2004 4
Consolidated Statements of Changes in Stockholders' Equity for Each of the Years
in the Three-Year Period Ended December 31, 2004 5
Consolidated Statements of Cash Flows for Each of the Years in the Three-Year
Period Ended December 31, 2004 6
Notes to Consolidated Financial Statements 7 - 30
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.
BCB
BAYONNE COMMUNITY BANK
860 BROADWAY
January 28, 2005 BAYONNE, N.J. 07002
201-823-0700
FAX 201-339-5602
Management Responsibility Statement DONALD MINDIAK
----------------------------------- President & CEO
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 of
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.
Radics & CO., LLC
- --------------------------------------------------------------------------------
Certified public Accountants and Consultants
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
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, 2004 and
2003, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2004. 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 of the Public
Company Accounting Oversight Board (United States). 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, 2004 and
2003, and the results of their operations and cash flows for each of the years
in the three-year period ended December 31, 2004, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Radics & Co., LLC
Pine Brook, New Jersey
January 28, 2005
55 US Highwasy 46 East, Post Office Box 676, Pine Brook, NJ 07058-0676
Voice: 973-575-9696 Fax: 973-575-9695
Internet: www.radics.com
2.
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
December 31,
-------------------------
Note(s) 2004 2003
----------- --------- ---------
Assets (In Thousands)
- ------
Cash and amounts due from depository institutions $ 2,353 $ 2,895
Interest-bearing deposits 2,181 8,891
--------- ---------
Total cash and cash equivalents 2 and 16 4,534 11,786
Securities held to maturity 2, 4 and 16 117,036 90,313
Loans receivable 2, 5 and 16 246,380 188,786
Premises and equipment 2, 3 and 6 5,679 5,704
Federal Home Loan Bank of New York stock 944 1,250
Interest receivable 2, 7 and 16 2,329 1,856
Deferred income taxes 2 and 13 772 697
Other assets 615 284
--------- ---------
Total assets $ 378,289 $ 300,676
========= =========
Liabilities and stockholders' equity
- ------------------------------------
Liabilities
- -----------
Deposits 8 and 16 $ 337,243 $ 253,650
Borrowed money 9 and 16 14,124 25,000
Other liabilities 886 859
--------- ---------
Total liabilities 352,253 279,509
--------- ---------
Commitments and contingencies 15 and 16 -- --
Stockholders' equity 1, 2, 10, 11 and 12
- --------------------
Common stock, $0.08 (2004) and $0.10 (2003) stated
value; 10,000,000 shares authorized
2,993,538 shares (2004) and 2,296,984 shares
(2003) issued and outstanding 239 230
Additional paid-in capital 27,725 26,484
Accumulated deficit (1,928) (5,547)
--------- ---------
Total stockholders' equity 26,036 21,167
--------- ---------
Total liabilities and stockholders' equity $ 378,289 $ 300,676
========= =========
See notes to consolidated financial statements.
3.
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
Year Ended December 31,
----------------------------------------
Note(s) 2004 2003 2002
----------- --------- --------- ---------
(In Thousands, Except Per Share Amounts)
Interest income:
Loans 2 and 5 $ 14,784 $ 10,745 $ 6,119
Securities 2 5,757 3,299 2,949
Other interest-earning assets 159 91 272
--------- --------- ---------
Total interest income 20,700 14,135 9,340
--------- --------- ---------
Interest expense:
Deposits: 8
Demand 351 249 230
Savings and club 3,981 3,235 2,761
Certificates of deposit 2,153 808 389
--------- --------- ---------
6,485 4,292 3,380
Borrowed money 460 44 --
--------- --------- ---------
Total interest expense 6,945 4,336 3,380
--------- --------- ---------
Net interest income 13,755 9,799 5,960
Provision for loan losses 2 and 5 690 880 843
--------- --------- ---------
Net interest income after provision for loan losses 13,065 8,919 5,117
--------- --------- ---------
Non-interest income:
Fees and service charges 517 367 314
Gain on sales of loans originated for sale 136 94 --
Loss on sale of non-performing loans (56) -- --
Gain on sales of securities available for sale -- -- 8
Other 26 19 14
--------- --------- ---------
Total non-interest income 623 480 336
--------- --------- ---------
Non-interest expenses:
Salaries and employee benefits 2 3,976 2,813 1,552
Occupancy expense of premises 2, 3 and 6 655 411 247
Equipment 2 1,428 940 646
Advertising 161 169 79
Other 2 and 14 1,441 1,057 748
--------- --------- ---------
Total non-interest expenses 7,661 5,390 3,272
--------- --------- ---------
Income before income taxes 6,027 4,009 2,181
Income taxes 2 and 13 2,408 1,614 872
--------- --------- ---------
Net income $ 3,619 $ 2,395 $ 1,309
========= ========= =========
Net income per common share: 2
Basic $ 1.22 $ 0.83 $ 0.54
========= ========= =========
Diluted $ 1.17 $ 0.80 $ 0.54
========= ========= =========
Weighted average number of common shares
outstanding: 2
Basic 2,970 2,871 2,423
========= ========= =========
Diluted 3,102 2,976 2,437
========= ========= =========
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
------------ --------------- ----------- ----------
(In Thousands)
Balance, December 31, 2001 $ 5,818 $ 6,015 $ (530) $ 11,303
Issuance of stock dividend 581 698 (1,279) --
Net sale of common stock 3,091 3,069 -- 6,160
Net income for the year ended
December 31, 2002 -- -- 1,309 1,309
---------- ---------- ---------- ----------
Balance, December 31, 2002 9,490 9,782 (500) 18,772
Issuance of stock dividends 972 6,470 (7,442) --
Exchange of Bank stock for
Company stock (10,232) 10,232 -- --
Net income for year ended
December 31, 2003 -- -- 2,395 2,395
---------- ---------- ---------- ----------
Balance, December 31, 2003 230 26,484 (5,547) 21,167
Exercise of stock options 9 1,062 -- 1,071
Tax benefit from exercise of
stock options -- 179 -- 179
Net income for the year ended
December 31, 2004 -- -- 3,619 3,619
---------- ---------- ---------- ----------
Balance, December 31, 2004 $ 239 $ 27,725 $ (1,928) $ 26,036
========== ========== ========== ==========
See notes to consolidated financial statements.
5.
BCB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Year Ended December 31,
-----------------------------------------
2004 2003 2002
--------- --------- ---------
(In Thousands)
Cash flows from operating activities:
Net income $ 3,619 $ 2,395 $ 1,309
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of premises and equipment 342 148 98
Amortization (accretion), net (369) (232) 45
Provision for loan losses 690 880 843
Deferred income tax (benefit) (74) (164) (137)
Gain on sales of securities available for sale -- -- (8)
Loans originated for sale (12,031) (8,558) --
Proceeds from sales of loans originated for sale 12,167 8,652 --
Gain on sales of loans originated for sale (136) (94) --
Loss on sale of nonperforming loans 56 -- --
(Increase) in interest receivable (473) (726) (619)
(Increase) in other assets (152) (58) (56)
Increase in accrued interest payable 81 66 15
(Decrease) increase in other liabilities (55) (24) 616
--------- --------- ---------
Net cash provided by operating activities 3,665 2,285 2,106
--------- --------- ---------
Cash flows from investing activities:
Purchase of securities available for sale -- -- (1,989)
Proceeds from sale of securities available for sale -- -- 1,997
Proceeds from calls of securities held to maturity 42,000 20,000 2,500
Purchases of securities held to maturity (75,823) (75,947) (25,102)
Proceeds from repayments on securities held to maturity 7,112 16,282 10,577
Proceeds from sales of participation interests in loans 1,747 3,480 1,599
Proceeds from sale of nonperforming loans 1,072 -- --
Purchases of loans (12,739) (5,430) (3,094)
Net (increase) in loans receivable (48,063) (65,444) (76,520)
Additions to premises and equipment (317) (3,225) (1,281)
Redemption (purchase) of Federal Home Loan Bank of
New York stock 306 (490) (760)
--------- --------- ---------
Net cash (used in) investing activities (84,705) (110,774) (92,073)
--------- --------- ---------
Cash flows from financing activities:
Net increase in deposits 83,593 90,131 61,784
Proceeds of long-term debt 4,124 -- --
Net change in short-term borrowings (15,000) 25,000 --
Net proceeds from sales of common stock 1,071 -- 6,160
--------- --------- ---------
Net cash provided by financing activities 73,788 115,131 67,944
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (7,252) 6,642 (22,023)
Cash and cash equivalents - beginning 11,786 5,144 27,167
--------- --------- ---------
Cash and cash equivalents - ending $ 4,534 $ 11,786 $ 5,144
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes $ 2,606 $ 2,144 $ 551
========= ========= =========
Interest $ 6,863 $ 4,270 $ 3,365
========= ========= =========
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 of the Bank became, on a
one-for-one basis, common stock 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 of its common stock through an
offering circular dated May 1, 2002, at various closing dates. Net proceeds of
the secondary offering, after expenses thereof, totalled $6,159,000.
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, 2004, 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 and interest-bearing deposits in other banks having original
maturities of three months or less.
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 is 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, interest-bearing deposits include $6,000,000
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 has been provided on the basis of
reported income. 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 per common share
---------------------------
Basic net income per common share is computed by dividing net income by
the weighted average number of shares of common stock outstanding. The
diluted net income 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 2004, the Company's Board of Directors authorized a 25% stock
dividend to stockholders of record on November 8, 2004. Such dividend was
distributed on November 22, 2004. The weighted average number of common
shares outstanding and the net income per common share presented in the
consolidated statements of income 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
("SFAS") No. 123, "Accounting for Stock-Based Compensation", as amended,
to all option grants.
Year Ended December 31,
--------------------------------------------
2004 2003 2002
---------- ---------- ----------
(In Thousands, Except for Per Share Amounts)
Net income as reported $ 3,619 $ 2,395 $ 1,309
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 (540) (486) (89)
---------- ---------- ----------
Pro forma net income $ 3,079 $ 1,909 $ 1,220
========== ========== ==========
Net income per commons share, as reported:
Basic $ 1.22 $ 0.83 $ 0.54
Diluted 1.17 0.80 0.54
========== ========== ==========
Pro forma net income per common share:
Basic $ 1.04 $ 0.66 $ 0.50
Diluted 0.99 0.64 0.50
========== ========== ==========
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. See Note 6 to consolidated financial statements.
4. SECURITIES HELD TO MATURITY
- ------------------------------
December 31, 2004
----------------------------------------------------------
Gross Unrealized
Carrying -------------------------- Estimated
Value Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
U.S. Government Agencies:
Due after one year through five years $ 7,499 $ 20 $ -- $ 7,519
Due after five years through ten years 29,228 67 173 29,122
Due after ten years 41,293 8 175 41,126
---------- ---------- ---------- ----------
78,020 95 348 77,767
---------- ---------- ---------- ----------
Mortgage-backed securities:
Due after five years through ten years 529 29 -- 558
Due after ten years 38,487 438 143 38,782
---------- ---------- ---------- ----------
39,016 467 143 39,340
---------- ---------- ---------- ----------
$ 117,036 $ 562 $ 491 $ 117,107
========== ========== ========== ==========
12.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
4. SECURITIES HELD TO MATURITY
- ------------------------------
December 31, 2003
----------------------------------------------------------
Gross Unrealized
Carrying -------------------------- Estimated
Value Gains Losses Fair Value
---------- ---------- ---------- ----------
(In Thousands)
U.S. Government Agencies:
Due after one year through five years $ 2,500 $ 16 $ -- $ 2,516
Due after five years through ten years 19,982 111 285 19,808
Due after ten years 49,500 656 85 50,071
---------- ---------- ---------- ----------
71,982 783 370 72,395
---------- ---------- ---------- ----------
Mortgage-backed securities:
Due after five years through ten years 856 55 -- 911
Due after ten years 17,475 436 20 17,891
---------- ---------- ---------- ----------
18,331 491 20 18,802
---------- ---------- ---------- ----------
$ 90,313 $ 1,274 $ 390 $ 91,197
========== ========== ========== ==========
There were no sales of securities held to maturity during the years ended
December 31, 2004 and 2003. At December 31, 2004 and 2003, mortgage-backed
securities with a carrying value of approximately $1,510,000 and $1,664,000,
respectively, were pledged to secure public deposits. See also Note 9 for
securities pledged to secure borrowings.
The age of unrealized losses and fair value of related securities held to
maturity were as follows:
Less Than 12 Months 12 Months or More Total
-------------------------- ------------------------- -------------------------
Unrealized Unrealized Unrealized
Fair Value Losses Fair Value Losses Fair Value Losses
---------- ---------- ---------- ---------- ---------- ----------
(In Thousands)
December 31, 2004
-----------------
U.S. Government Agencies $ 28,789 $ 232 $ 9,000 $ 116 $ 37,789 $ 348
Mortgage-backed securities 13,492 131 1,035 12 14,527 143
--------- --------- --------- --------- --------- ---------
42,281 363 10,035 128 52,316 491
========= ========= ========= ========= ========= =========
December 31, 2003
-----------------
U.S. Government Agencies $ 19,995 $ 370 $ -- $ -- $ 19,995 $ 370
Mortgage-backed securities 4,618 20 -- -- 4,618 20
--------- --------- --------- --------- --------- ---------
$ 24,613 $ 390 $ -- $ -- $ 24,613 $ 390
========= ========= ========= ========= ========= =========
13.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
5. LOANS RECEIVABLE
- -------------------
December 31,
-------------------------
2004 2003
--------- ---------
(In Thousands)
Real estate mortgage:
Residential $ 34,855 $ 33,913
Commercial 158,755 115,160
Construction 19,209 10,009
--------- ---------
212,819 159,082
--------- ---------
Commercial:
Business loans 3,917 6,109
Lines of credit 11,206 7,939
--------- ---------
15,123 14,048
--------- ---------
Consumer:
Passbook or certificate 105 450
Home equity lines of credit 1,477 2,439
Home equity 19,152 14,386
Automobile 194 366
Personal 308 99
--------- ---------
21,236 17,740
--------- ---------
Deposit overdrafts 137 268
--------- ---------
Total loans 249,315 191,138
--------- ---------
Less: Deferred loan fees, net 429 239
Allowance for loan losses 2,506 2,113
--------- ---------
2,935 2,352
--------- ---------
$ 246,380 $ 188,786
========= =========
At December 31, 2004 and 2003, loans serviced by the Bank for the benefit of
others, which consist of participation interests in loans originated by the
Bank, totalled approximately $6,003,000 and $5,020,000, 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,
---------------------------
2004 2003
---------- ----------
(In Thousands)
Balance - beginning $ 7,818 $ 9,078
Loans originated 4,294 14,997
Collections of principal (2,759) (16,257)
Loans from person no longer associated (2,754) --
---------- ----------
Balance - ending $ 6,599 $ 7,818
========== ==========
The following is an analysis of the allowance for loan losses:
Year Ended December 31,
-------------------------------------------
2004 2003 2002
---------- ---------- ----------
(In Thousands)
Balance - beginning $ 2,113 $ 1,233 $ 412
Provision charged to operations 690 880 843
Recoveries of loans previously charged off 35 -- --
Loans charged off (332) -- (22)
---------- ---------- ----------
Balance - ending $ 2,506 $ 2,113 $ 1,233
========== ========== ==========
At December 31, 2004 and 2003, nonaccrual loans for which the accrual of
interest had been discontinued totalled approximately $553,000 and $67,000,
respectively. Had these loans been performing in accordance with their original
terms, the interest income recognized for the years ended December 31, 2004,
2003 and 2002 would have been approximately $43,000, $6,000 and $6,000,
respectively. Interest income recognized on such loans was approximately
$29,000, $ -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.
15.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
6. PREMISES AND EQUIPMENT
- -------------------------
December 31,
---------------------------
2004 2003
---------- ----------
(In Thousands)
Land $ 890 $ 890
Buildings and improvements 3,538 3,426
Leasehold improvements 338 332
Furniture, fixtures and equipment 1,601 1,402
---------- ----------
6,367 6,050
Accumulated depreciation and amortization (688) (346)
---------- ----------
$ 5,679 $ 5,704
========== ==========
Buildings and improvements includes a building constructed on property leased
from a related party. See note 3 to consolidated financial statements.
Rental expenses related to the occupancy of premises totalled $170,000, $170,000
and $113,000 for the years ended December 31, 2004, 2003 and 2002, respectively.
The minimum obligation under lease agreements for each of the years ended
December 31 is as follows (in thousands):
Year Amount
---- -------
2005 $ 156
2006 64
2007 62
-------
$ 282
=======
7. INTEREST RECEIVABLE
- ----------------------
December 31,
--------------------------
2004 2003
---------- ----------
(In Thousands)
Loans $ 1,219 $ 890
Securities 1,110 963
Other -- 3
---------- ----------
$ 2,329 $ 1,856
========== ==========
16.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
8. DEPOSITS
- -----------
December 31,
--------------------------
2004 2003
---------- ----------
(In Thousands)
Demand:
Non-interest bearing $ 20,557 $ 16,626
NOW 23,155 17,201
Money Market 2,483 2,163
---------- ----------
46,195 35,990
Savings and club 197,868 162,832
Certificates of deposit 93,180 54,828
---------- ----------
$ 337,243 $ 253,650
========== ==========
At December 31, 2004 and 2003, certificates of deposit of $100,000 or more
totalled approximately $34,801,000 and $16,330,000, respectively.
The scheduled maturities of certificates of deposit were as follows:
December 31,
--------------------------
2004 2003
---------- ----------
(In Thousands)
One year or less $ 54,367 $ 41,456
After one year to three years 32,761 11,605
After three years 6,052 1,767
---------- ----------
$ 93,180 $ 54,828
========== ==========
17.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
9. BORROWED MONEY
- -----------------
Borrowed money consists of the following:
December 31,
--------------------------
2004 2003
---------- ----------
(In Thousands)
Long-term borrowings:
Trust preferred floating rate junior
subordinated debenture maturing
June 17, 2034; interest rate adjusts
quarterly to LIBOR plus 2.65% (5.15%
at December 31, 2004) $ 4,124 $ --
---------- ----------
Short-term borrowings:
Federal Home Loan Bank of New York 1.48%
advance maturing November 19, 2004 -- 25,000
Federal Home Loan Bank of New York 2.47%
advance maturing February 22, 2005 5,000 --
Federal Home Loan Bank of New York 2.68%
advance maturing May 19, 2005 5,000 --
---------- ----------
10,000 25,000
---------- ----------
$ 14,124 $ 25,000
========== ==========
Additional information regarding short-term borrowings is as follows:
At or for the Year
Ended December 31,
---------------------------
2004 2003
---------- ----------
(Dollars in Thousands)
Average balance outstanding during the year $ 23,440 $ 2,945
Highest month-end balance during the year 25,000 25,000
Average interest rate during the year 1.54% 1.48%
Weighted average interest rate at year end 2.58% 1.48%
The trust preferred debenture is callable, at the Company's option, on June 17,
2009, and quarterly thereafter.
At December 31, 2004, securities held to maturity with a carrying value of
approximately $32,477,000 were pledged to secure the above noted Federal Home
Loan Bank of New York borrowings.
18.
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). 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, 2004
- -----------------
Total Capital
(to risk-weighted assets) $32,368 12.83% $20,117 8.00% $25,222 10.00%
Tier 1 Capital
(to risk-weighted assets) 29,862 11.84% -- -- 15,133 6.00%
Tier 1 Capital
(to adjusted total assets) 29,862 7.89% 15,124 4.00% 18,906 5.00%
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%
19.
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, adjusted to retroactively
reflect subsequent stock dividends, follows:
Number of Range of Weighted Average
Option Shares Exercise Price Exercise Price
------------- -------------- --------------
December 31, 2001 -- $ -- $ --
Options granted 192,383 6.61 6.61
Options exercised -- -- --
---------
December 31, 2002 192,383 6.61 6.61
Options granted 259,631 11.67-12.73 11.67
Options exercised -- -- --
---------
December 31, 2003 452,014 6.61-12.73 9.52
Options granted 148,418 14.80 14.80
Options exercised (122,232) 6.61-12.73 8.77
Options cancelled (122,658) 6.61-11.67 10.49
---------
December 31, 2004 355,542 6.61-14.80 11.65
========
Exercisable at:
December 31, 2004 84,409 6.61-14.80 11.23
December 31, 2003 128,879 6.61-12.73 8.65
December 31, 2002 38,476 6.61 6.61
At December 31, 2004 and 2003, the stock options outstanding had a
weighted-average remaining contractual life of 8.7 years and 9.2 years,
respectively. At December 31, 2004 and 2003, stock options for up to 584 shares
and 28,709 shares, respectively, of common stock were available for future
grants.
The Company, as permitted by 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 2004, 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:
20.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
11. BENEFITS PLAN (Cont'd.
- --------------------------
Stock Options (Cont'd.)
- -----------------------
Year Ended December 31,
---------------------------------------------
2004 2003 2002
----------- ---------- ----------
Grant-date fair value per share (a) $ 9.57 $ 7.07 $ 1.56
Expected common stock dividend yield 0.00% 0.00% 0.00%
Expected option life 7.0 years 7.0 years 6.5 years
Risk-free interest rate 3.92% 4.05% 4.18%
Volatility 62.58% 56.20% None
(a) Adjusted for subsequent stock dividends.
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 are summarized as follows:
Year Ended December 31,
--------------------------------------
2004 2003 2002
---------- ---------- ----------
(In Thousands)
Current income tax expense:
Federal $ 1,931 $ 1,342 $ 753
State 551 436 256
---------- ---------- ----------
2,482 1,778 1,009
---------- ---------- ----------
Deferred income tax (benefit):
Federal (88) (97) (79)
State 14 (67) (58)
---------- ---------- ----------
(74) (164) (137)
---------- ---------- ----------
$ 2,408 $ 1,614 $ 872
========== ========== ==========
21.
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,
-----------------------------
2004 2003
---------- ----------
(In Thousands)
Deferred income tax assets
- --------------------------
Allowance for loan losses $ 1,001 $ 844
Net operating loss carryforward -- 22
Organization expense 19 41
Other 5 3
---------- ----------
1,025 910
---------- ----------
Deferred income tax liabilities
- -------------------------------
Depreciation 253 211
Other -- 2
---------- ----------
253 213
---------- ----------
Net deferred tax asset $ 772 $ 697
========== ==========
The following table presents a reconciliation between the reported income tax
expense and the income tax expense which would be computed by applying the
normal federal income tax rate of 34%, to income before income tax expense:
Year Ended December 31,
-------------------------------------------
2004 2003 2002
---------- ---------- ----------
(In Thousands)
Federal income tax expense at statutory rate $ 2,049 $ 1,363 $ 742
Increases (reductions) in income taxes resulting from:
State income tax,
net of federal income tax effect 373 244 130
Other items, net (14) 7 --
---------- ---------- ----------
Effective income tax $ 2,408 $ 1,614 $ 872
========== ========== ==========
22.
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,
--------------------------------------
2004 2003 2002
---------- ---------- ----------
(In Thousands)
Directors' fees $ 164 $ 263 $ 134
Legal fees 226 75 81
Stationery, forms and printing 203 172 116
Professional fees 242 141 118
Other 606 406 299
---------- ---------- ----------
$ 1,441 $ 1,057 $ 748
========== ========== ==========
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:
December 31,
--------------------------
2004 2003
---------- ----------
(In Thousands)
Loan origination $ 18,760 $ 16,282
Construction loans in process 10,795 9,492
Unused lines of credit 9,217 7,379
---------- ----------
$ 38,772 $ 33,153
========== ==========
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.
23.
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, 2004, 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.
24.
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:
December 31,
--------------------------------------------------------------
2004 2003
---------------------------- ----------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
----------- ----------- ----------- -----------
(In Thousands)
Financial assets
----------------
Cash and cash equivalents $ 4,534 $ 4,534 $ 11,786 $ 11,786
Securities held to maturity 117,036 117,107 90,313 91,197
Loans receivable 246,380 247,350 188,786 190,575
Interest receivable 2,329 2,329 1,856 1,856
Financial liabilities
---------------------
Deposits 337,243 336,423 253,650 254,207
Borrowed money 14,124 14,164 25,000 24,987
Commitments
-----------
Loan origination 18,760 18,760 16,282 16,282
Unused lines of credit and loans in process 20,012 20,012 16,871 16,871
25.
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.
26.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
17. PARENT ONLY FINANCIAL INFORMATION
- -------------------------------------
STATEMENTS OF FINANCIAL CONDITION
---------------------------------
December 31,
-------------------------
2004 2003
---------- ----------
(In Thousands)
Assets:
Cash and due from banks $ 14 $ 50
Investment in subsidiary 29,862 21,117
Restricted common stock 124 --
Other assets 218 --
---------- ----------
Total assets $ 30,218 $ 21,167
========== ==========
Liabilities
Borrowed money 4,124 --
Due to subsidiary 47 --
Other liabilities 11 --
---------- ----------
4,182 --
---------- ----------
Stockholders' equity:
Common stock 239 230
Additional paid-in capital 27,725 26,484
Accumulated deficit (1,928) (5,547)
---------- ----------
26,036 21,167
---------- ----------
Total liabilities and stockholders' equity $ 30,218 $ 21,167
========== ==========
27.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
17. PARENT ONLY FINANCIAL INFORMATION (Cont'd.)
- -----------------------------------------------
STATEMENTS OF INCOME
--------------------
Year Ended December 31,
------------------------
2004 2003
---------- ----------
(In Thousands)
Dividend from subsidiary $ -- $ 50
---------- ----------
Total income -- 50
---------- ----------
Interest expense-borrowed money 98 --
---------- ----------
Total expense 98 --
---------- ----------
(Loss) income before income tax and equity in
undistributed earnings of subsidiary (98) 50
Income tax benefit 38 --
---------- ----------
(Loss) income before equity in undistributed
earnings of subsidiary (60) 50
Equity in undistributed earnings of subsidiary 3,679 1,583
---------- ----------
Net income $ 3,619 $ 1,633
========== ==========
28.
BCB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
17. PARENT ONLY FINANCIAL INFORMATION (Cont'd.)
- -----------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Year Ended December 31,
------------------------
2004 2003
---------- ----------
Cash flows from operating activities:
Net income $ 3,619 $ 1,633
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of subsidiaries (3,679) (1,583)
Increase in other assets (39) --
Increase in due to subsidiary 47 --
Increase in other liabilities 11 --
---------- ----------
Net cash (used in) provided by operating activities (41) 50
---------- ----------
Cash flow from investing activities:
Purchase of restricted common stock (124) --
Additional investment in subsidiary (5,066) --
---------- ----------
Net cash used in investing activities (5,190) --
---------- ----------
Cash flow from financing activities:
Proceeds of long-term debt 4,124 --
Proceeds from sales of common stock 1,071 --
---------- ----------
Net cash provided by financing activities 5,195 --
---------- ----------
Net (decrease) increase in cash and cash equivalents (36) 50
---------- ----------
Cash and cash equivalents - beginning 50 --
---------- ----------
Cash and cash equivalents - ending $ 14 $ 50
========== ==========
29.
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,
2004 2004 2004 2004
---------- ---------- ------------- ------------
(In thousands, except for per share amounts)
Total interest income $ 4,599 $ 5,061 $ 5,395 $ 5,645
Total interest expense 1,483 1,671 1,836 1,955
---------- ---------- ---------- ----------
Net interest income 3,116 3,390 3,559 3,690
Provision for loan losses 200 150 90 250
Non-interest income 153 135 189 146
Non-interest expenses 1,898 2,093 1,923 1,747
Income taxes 471 512 692 733
---------- ---------- ---------- ----------
Net income $ 700 $ 770 $ 1,043 $ 1,106
========== ========== ========== ==========
Net income per common share:
Basic $ 0.24 $ 0.26 $ 0.35 $ 0.37
Diluted 0.23 0.25 0.34 0.35
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 2,900 2,993 2,993 2,993
Diluted 3,110 3,110 3,068 3,120
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 $ 0.20 $ 0.20 $ 0.21 $ 0.23
Diluted 0.19 0.19 0.20 0.22
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 2,871 2,871 2,871 2,871
Diluted 2,964 2,952 2,956 3,031
30.