EXHIBIT 13
CONSOLIDATED FINANCIAL STATEMENTS
Exhibit 13
BCB Bancorp, Inc. and Subsidiaries
Consolidated Financial Report
December 31, 2008
BCB Bancorp, Inc. and Subsidiaries
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Table of Contents
Page
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Report of Independent Registered Public Accounting Firm 1
Consolidated Financial Statement
Consolidated Statements of Financial Condition 2
Consolidated Statements of Income 3
Consolidated Statements of Changes in Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
[BMC LOGO]
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
BCB Bancorp, Inc.
Bayonne, New Jersey
We have audited the accompanying consolidated statements of financial
condition of BCB Bancorp, Inc. and Subsidiaries (the "Company") as of December
31, 2008 and 2007, 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, 2008. The Company's management is responsible for
these consolidated financial statements. 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.
The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, 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 above
present fairly, in all material respects, the consolidated financial position of
BCB Bancorp, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2008, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Beard Miller Company LLP
Beard Miller Company LLP
Clark, New Jersey
March 25, 2009
BCB Bancorp, Inc. and Subsidiaries
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Consolidated Statements of Financial Condition
December 31,
-------------------------------
2008 2007
---------- ----------
(In Thousands, except for share
data and per share data)
Assets
Cash and amounts due from depository institutions $ 3,495 $ 2,970
Interest-bearing deposits 3,266 8,810
---------- ----------
Cash and Cash Equivalents 6,761 11,780
Securities available for sale 888 2,056
Securities held to maturity, fair value $143,245 and $165,660
respectively 141,280 165,017
Loans held for sale 1,422 2,132
Loans receivable, net of allowance for loan losses of $5,304 and $4,065
respectively 406,826 364,654
Premises and equipment 5,627 5,929
Federal Home Loan Bank of New York stock 5,736 5,560
Interest receivable 3,884 3,776
Real Estate Owned 1,435 287
Deferred income taxes 3,113 1,352
Other assets 1,652 934
---------- ----------
Total Assets $ 578,624 $ 563,477
========== ==========
Liabilities and Stockholders' Equity
Liabilities
Non-interest bearing deposits $ 30,561 $ 35,897
Interest bearing deposits 379,942 362,922
---------- ----------
Total deposits 410,503 398,819
---------- ----------
Short-term borrowings 2,000 --
Long-term debt 114,124 114,124
Other liabilities 2,282 2,024
---------- ----------
Total Liabilities 528,909 514,967
---------- ----------
Stockholders' Equity
Common stock, stated value $0.064; 10,000,000 shares authorized;
5,183,731 and 5,078,858 shares, respectively, issued 331 325
Paid-in capital 46,864 45,795
Treasury stock, at cost, 533,680 and 440,651 shares, respectively (8,680) (7,385)
Retained earnings 11,325 9,749
Accumulated other comprehensive (loss) income (125) 26
---------- ----------
Total Stockholders' Equity 49,715 48,510
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Total Liabilities and Stockholders' Equity $ 578,624 $ 563,477
========== ==========
See notes to consolidated financial statements.
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2
BCB Bancorp, Inc. and Subsidiaries
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Consolidated Statements of Income
Years Ended December 31,
-----------------------------------------
2008 2007 2006
--------- --------- ---------
(In Thousands, Except for Per Share Data)
Interest Income
Loans, including fees $ 27,248 $ 24,365 $ 22,770
Securities 9,185 8,843 8,046
Other interest-earning assets 190 1,182 445
--------- --------- ---------
Total Interest Income 36,623 34,390 31,261
--------- --------- ---------
Interest Expense
Deposits:
Demand 1,046 1,006 426
Savings and club 1,370 1,866 2,611
Certificates of deposit 9,106 10,109 7,807
--------- --------- ---------
11,522 12,981 10,844
Borrowed money 5,141 4,236 2,633
--------- --------- ---------
Total Interest Expense 16,663 17,217 13,477
--------- --------- ---------
Net Interest Income 19,960 17,173 17,784
Provision for Loan Losses 1,300 600 625
--------- --------- ---------
Net Interest Income after Provision for Loan Losses 18,660 16,573 17,159
--------- --------- ---------
Non-Interest Income
Fees and service charges 689 629 595
Gain on sales of loans originated for sale 137 420 635
Gain on sale of real estate owned 1 13 --
Other than temporary impairment on security (2,915) -- --
Other 34 30 30
--------- --------- ---------
Total Non-Interest (Loss) Income (2,054) 1,092 1,260
--------- --------- ---------
Non-Interest Expenses
Salaries and employee benefits 5,492 5,699 5,210
Occupancy expense of premises 1,059 1,000 900
Equipment 2,019 1,906 1,734
Advertising 241 326 329
Loss on overdrafts 560 -- --
Other 1,943 1,787 1,459
--------- --------- ---------
Total Non-Interest Expenses 11,314 10,718 9,632
--------- --------- ---------
Income before Income Taxes 5,292 6,947 8,787
Income Taxes 1,820 2,509 3,220
--------- --------- ---------
Net Income $ 3,472 $ 4,438 $ 5,567
========= ========= =========
Net Income per Common Share
Basic $ 0.75 $ 0.92 $ 1.11
--------- --------- ---------
Diluted $ 0.74 $ 0.90 $ 1.08
--------- --------- ---------
Weighted Average Number of Common Shares Outstanding
Basic 4,629 4,818 5,005
--------- --------- ---------
Diluted 4,706 4,943 5,172
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See notes to consolidated financial statements.
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3
BCB Bancorp, Inc. and Subsidiaries
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Consolidated Statements of Changes in Stockholders' Equity
Accumulated
Other
Common Paid-In Treasury Comprehensive
Stock Capital Stock Retained Earnings Income (Loss) Total
------ ------- -------- ----------------- ------------- --------
(In Thousands, except for share and per share amounts)
Balance - December 31, 2005 $ 323 $45,518 $ (795) $ 2,801 $ -- $47,847
Stock-based compensation -- 25 -- -- -- 25
Stock issuance cost -- (9) -- -- -- (9)
Exercise of stock options (12,816 shares) 1 98 -- -- -- 99
Treasury stock purchases (3,977 shares) -- -- (64) -- -- (64)
Cash dividend ($0.30 per share) declared -- -- -- (1,502) -- (1,502)
Net income -- -- -- 5,567 -- 5,567
------ ------- -------- -------- ------------------------
Balance - December 31, 2006 324 45,632 (859) 6,866 -- 51,963
--------------------------------------------------------------------------
Stock-based compensation -- 6 -- -- -- 6
Exercise of stock options (15,426 shares) 1 157 -- -- -- 158
Treasury stock purchases (385,358 shares) -- -- (6,526) -- -- (6,526)
Cash dividend ($0.32 per share) declared -- -- -- (1,555) -- (1,555)
Net income -- -- -- 4,438 -- 4,438
Unrealized gain on securities available for
sale, net of deferred income tax of $18 -- -- -- -- 26 26
--------
Total Comprehensive income 4,460
------ ------- -------- -------- ------------------------
Balance - December 31, 2007 325 45,795 (7,385) 9,749 26 48,510
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Tax benefit from exercise of stock options -- 150 -- -- -- 150
Exercise of stock options (104,873 shares) 6 919 -- -- -- 925
Treasury stock purchases (93,029 shares) -- -- (1,295) -- -- (1,295)
Cash dividend ($0.41 per share) declared -- -- -- (1,896) -- (1,896)
Net income -- -- -- 3,472 -- 3,472
Loss on other than temporary impairment on
security, net of deferred income tax
benefit of $1,164 -- -- -- -- 1,751 1,751
Unrealized loss on securities available for
sale, net of deferred income tax of $1,266 -- -- -- -- (1,902) (1,902)
--------
Total Comprehensive income 3,321
------ ------- -------- -------- ------------------------
Balance - December 31, 2008 $ 331 $46,864 $ (8,680) $11,325 $ (125) $49,715
==========================================================================
See notes to consolidated financial statements.
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4
BCB Bancorp, Inc. and Subsidiaries
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Consolidated Statements of Cash Flows
Years Ended December 31,
---------------------------------
2008 2007 2006
--------- --------- ---------
(In Thousands)
Cash Flows from Operating Activities
Net income $ 3,472 $ 4,438 $ 5,567
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation of premises and equipment 401 394 342
Amortization (accretion), net (684) (664) (657)
Provision for loan losses 1,300 600 625
Stock-based compensation -- 6 25
Deferred income tax (benefit) (1,659) (132) (241)
Other than temporary impairment loss 2,915 -- --
Loans originated for sale (6,705) (22,993) (36,277)
Proceeds from sales of loans originated for sale 7,552 24,257 34,716
Gain on sales of loans originated for sale (137) (420) (635)
Gain on sale of real estate owned (1) (13) --
(Increase) in interest receivable (108) (79) (593)
Decrease in stock subscriptions receivable -- -- 2,353
(Increase) decrease in other assets (718) (258) 436
(Decrease) increase in accrued interest payable (59) 214 313
Increase (decrease) in other liabilities 317 (191) 268
--------- --------- ---------
Net Cash Provided by Operating Activities 5,886 5,159 6,242
--------- --------- ---------
Cash Flows from Investing Activities
Proceeds from repayments and calls on securities held to maturity 84,400 21,010 28,845
Proceeds from sales of securities held to maturity -- -- --
Purchases of securities held to maturity (60,606) (37,338) (37,500)
Purchases of securities available for sale (2,000) (2,012) --
Proceeds from sales of participation interests in loans 2,523 6,315 5,432
Proceeds from sale of real estate owned 288 1,172 --
Purchases of loans (113) (9,593) (7,007)
Net increase in loans receivable (46,449) (44,645) (32,087)
Improvements to real estate owned (241) -- --
Additions to premises and equipment (99) (438) (709)
Purchases of Federal Home Loan Bank of New York stock (176) (1,836) (946)
--------- --------- ---------
Net Cash Used in Investing Activities (22,473) (67,365) (43,972)
--------- --------- ---------
Cash Flows from Financing Activities
Net increase in deposits 11,684 16,072 19,896
Proceeds of long-term debt -- 55,000 70,000
Repayment of long-term debt -- (15,000) (50,000)
Net change in short-term borrowings 2,000 -- --
Purchase of treasury stock (1,295) (6,526) (64)
Cash dividends paid (1,896) (1,555) (1,502)
Net proceeds from issuance of common stock 925 158 90
Tax benefit from exercise of stock options 150 -- --
--------- --------- ---------
Net Cash Provided by Financing Activities 11,568 48,149 38,420
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents (5,019) (14,057) 690
Cash and Cash Equivalents - Beginning 11,780 25,837 25,147
--------- --------- ---------
Cash and Cash Equivalents - Ending $ 6,761 $ 11,780 $ 25,837
========= ========= =========
Supplementary Cash Flows Information
Cash paid during the year for:
Income taxes $ 3,903 $ 2,860 $ 3,120
Interest $ 16,722 $ 17,003 $ 13,164
Transfer of loans to real estate owned $ 1,194 $ 1,446 $ --
See notes to consolidated financial statements.
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5
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 1 - Organization and Stock Offerings
BCB Bancorp, Inc. (the "Company") is incorporated in the State of New Jersey and
is a bank holding company. The common stock of the Company is listed on the
Nasdaq Electronic Bulletin Board and trades under the symbol "BCBP."
On April 27, 2005, the Company announced that the Board of Directors had
approved a stock repurchase program for the repurchase of up to 5% of the
Company's outstanding common stock equal to approximately 187,096 shares. The
repurchases may be made from time to time as market conditions warrant. During
2006, 3,977 shares were purchased under the repurchase program at an approximate
cost of $64,000 or $15.93 per share. In 2007, the Company completed the initial
stock repurchase plan. On April 26, 2007, the Company announced a second stock
repurchase plan which provided for the repurchase of 5% or 249,080 shares of the
Company's common stock. During 2007, the Company began and completed the
repurchase of all of the shares associated with the second 5% stock repurchase
plan. Consequently, on November 20, 2007, the Company announced a third stock
repurchase plan which provided for the repurchase of 5% or 234,002 shares of the
Company's common stock. During 2008 and 2007, a total of 93,029 and 385,358
shares of the Company's common stock was repurchased at a cost of approximately
$1.3 and $6.5 million or $13.92 and $16.93 per share, respectively.
The Company's primary business is the ownership and operation of BCB Community
Bank (the "Bank"). The Bank is a New Jersey commercial bank which, as of
December 31, 2008, operated at four locations in Bayonne and Hoboken, New
Jersey, and is subject to regulation, supervision, and examination by the New
Jersey Department of Banking and Insurance and the Federal Deposit Insurance
Corporation. The Bank is principally engaged in the business of attracting
deposits from the general public and using these deposits, together with
borrowed funds, to invest in securities and to make loans collateralized by
residential and commercial real estate and, to a lesser extent, consumer loans.
BCB Holding Company Investment Corp. (the "Investment Company") was organized in
January 2005 under New Jersey law as a New Jersey investment company primarily
to hold investment and mortgage-backed securities.
See notes to consolidated financial statements.
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6
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies
Basis of Consolidated Financial Statement Presentation
The consolidated financial statements which include the accounts of the
Company and its wholly-owned subsidiaries, the Bank and the Investment
Company, have been prepared in conformity with accounting principles
generally accepted in the United States of America. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
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.
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 stockholders' equity.
On a quarterly basis, the Company makes an assessment to determine whether
there have been any events or economic circumstances to indicate that a
security on which there is an unrealized loss is impaired on an
other-than-temporary basis. The Company considers many factors including
the severity and duration of the impairment; the intent and ability of the
Company to hold the security for a period of time sufficient for a
recovery in value; recent events specific to the issuer or industry; and
for debt securities, external credit ratings and recent downgrades.
Securities on which there is an unrealized loss that is deemed to be
other-than-temporary are written down to fair value with the write-down
recorded as a realized loss.
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, are recognized in the consolidated financial statements when
earned. Gains or losses on sales are recognized based on the specific
identification method.
See notes to consolidated financial statements.
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7
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies (Continued)
Loans Held For Sale
Loans held for sale consist primarily of residential mortgage loans
intended for sale and are carried at the lower of cost or estimated fair
market value using the aggregate method. These loans are generally sold
with servicing rights released. Gains and losses recognized on loan sales
are based upon the cash proceeds received and the cost of the related
loans sold.
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.
The accrual of interest on loans that are contractually delinquent ninety
days or more is discontinued 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 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.
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 a system takes into consideration, but is not limited to, 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, 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.
See notes to consolidated financial statements.
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8
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies (Continued)
Concentration of Risk
Financial instruments which potentially subject the Company and its
subsidiaries to concentrations of credit risk consist of cash and cash
equivalents, investment and mortgage-backed securities and loans.
Cash and cash equivalents include amounts placed with highly rated
financial institutions. Securities include securities backed by the U.S.
Government and other highly rated instruments. The Bank's lending activity
is primarily concentrated in loans collateralized by real estate in the
State of New Jersey. As a result, credit risk is broadly dependent on the
real estate market and general economic conditions in the State.
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.
Years
----------------------
Buildings 40
Building improvements 7 - 40
Furniture, fixtures and equipment 3 - 40
Leasehold improvements Shorter of useful
life or term of lease
Federal Home Loan Bank ("FHLB") of New York Stock
Federal law requires a member institution of the FHLB system to hold stock
of its district FHLB according to a predetermined formula. Such stock is
carried at cost.
Real Estate Owned
Assets acquired through, or in lieu of, loan foreclosures are held for
sale and are initially recorded at fair value less cost to sell at the
date of foreclosure, establishing a new cost basis. Subsequent to
foreclosure, valuations are periodically performed by management and the
assets are carried at the lower of carrying amount or fair value less cost
to sell. Revenue and expenses from operations and changes in the valuation
allowance are included in net expenses from foreclosed assets. At December
31, 2008, the Bank owned one property totaling $1,435,000.
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.
See notes to consolidated financial statements.
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9
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies (Continued)
Income Taxes
The Company and its subsidiaries file a consolidated federal income tax
return. Income taxes are allocated to the Company and its subsidiaries
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 its subsidiaries.
Federal and state income tax expense has been provided on the basis of
reported income. The amounts reflected on the tax returns differ 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.
Effective January 1, 2007, the Company adopted the provisions of FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes." The
Interpretation provides clarification on accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in
accordance with FASB No. 109, "Accounting for Income Taxes." The
Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return, and also provides
guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. The Company has
evaluated its tax positions as of January 1, 2007, December 31, 2007 and
December 31, 2008, respectively. A tax position is recognized as a benefit
only if it is "more likely than not" that the tax position would be
sustained in a tax examination, with a tax examination being presumed to
occur. The amount recognized is the largest amount of tax benefit that has
a likelihood of being realized on examination of more than 50 percent. For
tax positions not meeting the "more likely than not" test, no tax benefit
is recorded. Under the "more-likely-than-not" threshold guidelines, the
Company believes no significant uncertain tax positions exist, either
individually or in the aggregate, that would give rise to the
non-recognition of an existing tax benefit. As of January 1, 2007,
December 31, 2007 and December 31, 2008, respectively, the Company had no
material unrecognized tax benefits or accrued interest and penalties. The
Company recognizes interest and penalties on unrecognized tax benefits in
income taxes expense in the Consolidated Statement of Income. The Company
did not recognize any interest and penalties for the year ended December
31, 2008 and 2007. The tax years subject to examination by the taxing
authorities are the years ended December 31, 2007, 2006, and 2005.
See notes to consolidated financial statements.
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10
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies (Continued)
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. For the years ended December 31, 2008, 2007 and 2006, the
difference in the weighted average number of basic and diluted common
shares was due solely to the effects of outstanding stock options. No
adjustments to net income were necessary in calculating basic and diluted
net income per share.
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 12
for additional information as to option grants. Through December 31, 2005,
the Company accounted for options granted using the intrinsic value
method, in accordance with Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees," and related
interpretations. Under APB No. 25, generally, when the exercise price of
the Company's stock options equaled the market price of the underlying
stock on the date of the grant, no compensation expense was recognized.
Accordingly, prior to January 1, 2006, 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.
On January 1, 2006, we adopted Statement of Financial Accounting Standards
("Statement") No. 123(R) using the modified prospective method and,
accordingly, implemented a policy of recording compensation expense for
all new awards granted and any awards modified after January 1, 2006. In
addition, the transition rules under Statement No. 123(R) require that,
for all awards outstanding at January 1, 2006, for which the requisite
service had not yet been rendered, compensation cost be recorded as such
service is rendered after January 1, 2006. Statement No. 123(R) also
requires that the benefits of realized tax deductions in excess of
previously recognized tax benefits on compensation expense are to be
reported as a financing cash flow rather than an operating cash flow, as
previously required. In accordance with Staff Accounting Bulletin ("SAB")
No. 107, the Company classifies share-based compensation within salaries
and employee benefits and directors compensation expenses to correspond
with the same line items as the cash compensation paid to such
individuals.
Compensation expense recognized for all option grants is net of estimated
forfeitures and is recognized over the awards' respective requisite
service periods. The fair values relating to all options granted are
estimated using a Black-Scholes option pricing model. Expected
volatilities are based on historical volatility of our stock and other
factors, such as implied market volatility. As permitted by SAB No. 110,
we use the mid-point of the original vesting period and original option
life to estimate the options' expected term, which represents the period
of time that the options granted are expected to be outstanding. The
risk-free rate for periods within the contractual life of the option is
based on the U.S. Treasury yield curve in effect at the time of grant. We
recognize compensation expense for the fair values of these option awards,
which have graded vesting, on a straight-line basis over the requisite
service period of these awards.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
11
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies (Continued)
Comprehensive Income
The Company records unrealized gains and losses, net of deferred income
taxes, on securities available for sale in accumulated other comprehensive
income. Realized gains and losses, if any, are reclassified to
non-interest income upon sale of the related securities or upon the
recognition of an impairment loss. The Company has elected to report the
effects of other comprehensive income in the consolidated statements of
changes in stockholders' equity.
Recent Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement No. 160 "Noncontrolling Interests in Consolidated Financial
Statements--an amendment of ARB No. 51". This Statement establishes
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. The guidance will
become effective as of the beginning of a company's fiscal year beginning
after December 15, 2008. The Company believes that this new pronouncement
will not have a material impact on its consolidated financial statements.
In May 2008, the FASB issued Statement No. 162, "The Hierarchy of
Generally Accepted Accounting Principles." This Statement identifies the
sources of accounting principles and the framework for selecting the
principles used in the preparation of financial statements. This Statement
is effective 60 days following the SEC's approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, "The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting
Principles." The Company believes that this new pronouncement will not
have a material impact on its consolidated financial statements.
In June 2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities." This FSP clarifies that all
outstanding unvested share-based payment awards that contain rights to
nonforfeitable dividends participate in undistributed earnings with common
shareholders. Awards of this nature are considered participating
securities and the two-class method of computing basic and diluted
earnings per share must be applied. This FSP is effective for fiscal years
beginning after December 15, 2008. The Company does not expect that EITF
03-6-1 will have an impact on its consolidated financial statements.
In November 2008, the SEC released a proposed roadmap regarding the
potential use by U.S. issuers of financial statements prepared in
accordance with International Financial Reporting Standards ("IFRS"). IFRS
is a comprehensive series of accounting standards published by the
International Accounting Standards Board ("IASB"). Under the proposed
roadmap, the Company may be required to prepare financial statements in
accordance with IFRS as early as 2014. The SEC will make a determination
in 2011 regarding the mandatory adoption of IFRS. The Company is currently
assessing the impact that this potential change would have on its
consolidated financial statements, and it will continue to monitor the
development of the potential implementation of IFRS.
In November 2008, the FASB ratified Emerging Issues Task Force ("EITF")
Issue No. 08-6, "Equity Method Investment Accounting Considerations". EITF
08-6 clarifies the accounting for certain transactions and impairment
considerations involving equity method investments. EITF 08-6 is effective
for fiscal years beginning after December 15, 2008, with early adoption
prohibited. The Company does not expect that EITF 08-6 will have an impact
on its consolidated financial statements.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
12
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies (Continued)
In November 2008, the FASB ratified EITF Issue No. 08-7, "Accounting for
Defensive Intangible Assets". EITF 08-7 clarifies the accounting for
certain separately identifiable intangible assets which an acquirer does
not intend to actively use but intends to hold to prevent its competitors
from obtaining access to them. EITF 08-7 requires an acquirer in a
business combination to account for a defensive intangible asset as a
separate unit of accounting which should be amortized to expense over the
period the asset diminishes in value. EITF 08-7 is effective for fiscal
years beginning after December 15, 2008, with early adoption prohibited.
This new pronouncement will impact the Company's accounting for any
defensive intangible assets acquired in a business combination completed
beginning January 1, 2009.
In December 2008, the FASB issued FSP SFAS 140-4 and FASB Interpretation
("FIN") 46(R)-8, "Disclosures by Public Entities (Enterprises) about
Transfers of Financial Assets and Interests in Variable Interest
Entities". FSP SFAS 140-4 and FIN 46(R)-8 amends FASB SFAS 140 "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities", to require public entities to provide additional disclosures
about transfers of financial assets. It also amends FIN 46(R),
"Consolidation of Variable Interest Entities", to require public
enterprises, including sponsors that have a variable interest in a
variable interest entity, to provide additional disclosures about their
involvement with variable interest entities. Additionally, this FSP
requires certain disclosures to be provided by a public enterprise that is
(a) a sponsor of a qualifying special purpose entity ("SPE") that holds a
variable interest in the qualifying SPE but was not the transferor of
financial assets to the qualifying SPE and (b) a servicer of a qualifying
SPE that holds a significant variable interest in the qualifying SPE but
was not the transferor of financial assets to the qualifying SPE. The
disclosures required by FSP SFAS 140-4 and FIN 46(R)-8 are intended to
provide greater transparency to financial statement users about a
transferor's continuing involvement with transferred financial assets and
an enterprise's involvement with variable interest entities and qualifying
SPEs. FSP SFAS 140-4 and FIN 46(R) is effective for reporting periods
(annual or interim) ending after December 15, 2008. The adoption of this
pronouncement did not have a material impact on our consolidated financial
statements.
In January 2009, the FASB issued FSP EITF 99-20-1, "Amendments to the
Impairment of Guidance of EITF Issue No. 99-20". FSP EITF 99-20-1 amends
the impairment guidance in EITF Issue No. 99-20, "Recognition of Interest
Income and Impairment on Purchased Beneficial Interests and Beneficial
Interests That Continue to Be Held by a Transferor in Securitized
Financial Assets", to achieve more consistent determination of whether an
other-than-temporary impairment has occurred. FSP EITF 99-20-1 also
retains and emphasizes the objective of an other-than-temporary impairment
assessment and the related disclosure requirements in SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", and
other related guidance. FSP EITF 99-20-1 is effective for interim and
annual reporting periods ending after December 15, 2008, and shall be
applied prospectively. Retrospective application to a prior interim or
annual reporting period is not permitted. The adoption of EITF 99-20-1 did
not have a material impact on our consolidated financial statements.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
13
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 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 NEWBAY 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 7).
The original lease term began on November 1, 2000, and concluded on
October 31, 2005. On May 1, 2006, the Company renegotiated the lease to a
twenty-five year term. The Company will pay NEW BAY $165,000 a year (
$13,750 per month) for the first 60 months. The rent shall be reset every
five years thereafter at the fair market rental value at the end of each
preceding five year period.
Note 4 - Securities Available for Sale
December 31, 2008
----------------------------------------------
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
------- ---------- ---------- ----------
(In Thousands)
Equity securities $ 1,097 $ -- $ 209 $ 888
======= ========== ========== ==========
December 31, 2007
----------------------------------------------
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
------- ---------- ---------- ----------
(In Thousands)
Equity securities $ 2,012 $ 44 $ -- $ 2,056
======= ========== ========== ==========
The age of unrealized losses and fair value of related securities available for
sale were as follows:
Less than 12 Months More than 12 Months Total
-------------------- -------------------- --------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
------- ---------- ------- ---------- ------- ----------
(In Thousands)
December 31, 2008
Preferred Stock $ 791 $ 209 $ -- $ -- $ 791 $ 209
======= ========== ======= ========== ======= ==========
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
14
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 4 - Securities Available for Sale (Continued)
At December 31, 2008, management concluded that the unrealized losses above
(which relate to one equity issue) are temporary in nature as they primarily
relate to general market fluctuations. Additionally, the Company has the ability
and intent to hold these securities for a time necessary to recover their cost.
During 2008, there was a pre-tax other than temporary impairment (OTTI) charge
recorded of $2.9 million on the $3.0 million investment in Federal National
Mortgage Association (FNMA) preferred stock. The OTTI charge resulted from a
significant decline in the market value of these securities following the
announcement by the Federal Housing Finance Agency (FHFA) that FNMA would be
placed under conservatorship. Additionally, the FHFA eliminated the payment of
dividends on common stock and preferred stock and assumed the powers of the
Board and management of FNMA. Based on these factors, the Company evaluated the
impairment as other than temporary.
Note 5 - Securities Held to Maturity
December 31, 2008
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
(In Thousands)
U.S. Government Agencies:
Due after one through five years $ 6,315 $ 323 $ -- $ 6,638
Due after five through ten years 6,000 6 -- 6,006
Due after ten years 86,292 449 198 86,543
--------- ---------- ---------- ----------
98,607 778 198 99,187
--------- ---------- ---------- ----------
Mortgage-backed securities:
Due after one year through five years 88 2 -- 90
Due after five years through ten years 2,336 81 -- 2,417
Due after ten years 40,249 1,144 -- 41,393
--------- ---------- ---------- ----------
42,673 1,227 -- 43,900
--------- ---------- ---------- ----------
$ 141,280 $ 2,005 $ 198 $ 143,087
========= ========== ========== ==========
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
15
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 5 - Securities Held to Maturity (Continued)
December 31, 2007
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
(In Thousands)
U.S. Government Agencies:
Due within one year $ 4,000 $ -- $ 1 $ 3,999
Due after one through five years 25,312 153 12 25,453
Due after five through ten years 15,988 25 20 15,993
Due after ten years 84,856 744 23 85,577
--------- ---------- ---------- ----------
130,156 922 56 131,022
--------- ---------- ---------- ----------
Mortgage-backed securities:
Due after one year through five years 157 3 -- 160
Due after five years through ten years 1,334 29 -- 1,363
Due after ten years 33,370 28 283 33,115
--------- ---------- ---------- ----------
34,861 60 283 34,638
--------- ---------- ---------- ----------
$ 165,017 $ 982 $ 339 $ 165,660
========= ========== ========== ==========
There were no sales of securities during the years ended December 31, 2008, 2007
and 2006. At December 31, 2008 and 2007, mortgage-backed securities with a
carrying value of approximately $759,000 and $924,000, respectively, were
pledged to secure public deposits (see Note 10 for information on securities
pledged for borrowings).
The age of unrealized losses and fair value of related securities held to
maturity were as follows:
Less than 12 Months More than 12 Months Total
-------------------- ------------------- -------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
------- ---------- ------ ---------- ------- ---------
(In Thousands)
December 31, 2008
U.S. Government
Agencies $16,301 $ 198 $ -- $ -- $16,301 $ 198
------- ---------- ------ ---------- ------- ---------
$16,301 $ 198 $ -- $ -- $16,301 $ 198
======= ========== ====== ========== ======= =========
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
16
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 5 - Securities Held to Maturity (Continued)
December 31, 2007:
U.S. Government
Agencies $ -- $ -- $11,440 $ 56 $11,440 $ 56
Mortgage-backed
securities 7,291 10 16,592 273 23,883 283
------ ----- ------- ---- ------- ----
$7,291 $ 10 $28,032 $329 $35,323 $339
====== ===== ======= ==== ======= ====
At December 31, 2008, management concluded that the unrealized losses above
(which related to 4 U.S. Government Agency bonds) are temporary in nature since
they are not related to the underlying credit quality of the issuers and the
Company has the ability and intent to hold these securities for a time necessary
to recover their cost. The losses above are primarily related to market interest
rates.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
17
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 6 - Loans Receivable
December 31,
-------------------
2008 2007
-------- --------
(In Thousands)
Real estate mortgage:
Residential $ 74,039 $ 55,248
Commercial 223,179 208,108
Construction 62,483 49,984
-------- --------
359,701 313,340
-------- --------
Commercial:
Business loans 10,859 17,933
Lines of credit 3,239 1,940
-------- --------
14,098 19,873
-------- --------
Consumer:
Passbook or certificate 297 92
Home equity lines of credit 5,564 4,343
Home equity 32,501 31,054
Automobile 93 51
Personal 76 93
-------- --------
38,531 35,633
-------- --------
Deposit overdrafts 454 503
-------- --------
Total Loans 412,784 369,349
-------- --------
Deferred loan fees, net (654) (630)
Allowance for loan losses (5,304) (4,065)
-------- --------
(5,958) (4,695)
-------- --------
$406,826 $364,654
======== ========
At December 31, 2008 and 2007, loans serviced by the Bank for the benefit of
others, which consist of participation interests in loans originated by the
Bank, totaled approximately $15,211,000 and $10,451,000.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
18
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 6 - Loans Receivable (Continued)
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:
Years Ended December 31,
------------------------
2008 2007
---------- -----------
(In Thousands)
Balance - beginning $ 6,825 $ 8,575
Loans originated 1,598 1,566
Collections of principal (1,362) (3,316)
---------- -----------
Balance - ending $ 7,061 $ 6,825
========== ===========
The following is an analysis of the allowance for loan losses:
Years Ended December 31,
----------------------------------
2008 2007 2006
------- ---------- -----------
(In Thousands)
Balance - beginning $ 4,065 $ 3,733 $ 3,090
Provision charged to operations 1,300 600 625
Recoveries of loans previously charged off 40 17 85
Loans charged off (101) (285) (67)
------- ---------- -----------
Balance - ending $ 5,304 $ 4,065 $ 3,733
======= ========== ===========
At December 31, 2008 and 2007, nonaccrual loans for which the accrual of
interest had been discontinued totaled approximately $3,728,000 and $3,754,000,
respectively. Had these loans been performing in accordance with their original
terms, the interest income recognized for the years ended December 31, 2008,
2007 and 2006 would have been approximately $289,000, $287,000, and $26,000,
respectively. Interest income recognized on such loans was approximately
$138,000, $64,000, and $6,000, respectively. The Bank is not committed to lend
additional funds to the borrowers whose loans have been placed on a nonaccrual
status. At December 31, 2008 and 2007, loans which were ninety days or more past
due and still accruing interest totaled $0 and $519,000, respectively.
At December 31, 2008 and 2007, impaired loans were $3,728,000 and $3,754,000,
respectively, and the related specific allocation of allowance for loan losses
totaled $881,000 and $728,000, respectively. There were no impaired loans which
did not have a specific allocation of the allowance for loan losses. During the
years ended December 31, 2008, 2007, and 2006, the average balance of impaired
loans was $2,759,000, $2,104,000, and $568,000 respectively, and interest income
recognized during the period of impairment totaled $138,000, $64,000, and
$6,000, respectively.
See notes to consolidated financial statements.
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19
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 7 - Premises and Equipment
December 31,
-----------------
2008 2007
------- -------
(In Thousands)
Land $ 890 $ 890
Buildings and improvements 3,572 3,558
Leasehold improvements 976 976
Furniture, fixtures and equipment 2,366 2,281
------- -------
7,804 7,705
Accumulated depreciation and amortization (2,177) (1,776)
------- -------
$ 5,627 $ 5,929
======= =======
Buildings and improvements include a building constructed on property leased
from a related party (see Note 3).
Rental expenses related to the occupancy of premises totaled $415,000, $413,000,
and $386,000 for the years ended December 31, 2008, 2007, and 2006,
respectively. The minimum obligation under lease agreements expiring through
April 30, 2031, for each of the years ended December 31 is as follows (in
thousands):
2009 $ 425
2010 366
2011 244
2012 237
2013 165
Thereafter 2,860
-------
$ 4,297
=======
Note 8 - Interest Receivable
December 31,
-----------------
2008 2007
------- -------
(In Thousands)
Loans $ 2,284 $ 2,048
Securities 1,600 1,728
------- -------
$ 3,884 $ 3,776
======= =======
See notes to consolidated financial statements.
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20
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 9 - Deposits
December 31,
------------------------
2008 2007
---------- ----------
(In Thousands)
Demand:
Non-interest bearing $ 30,561 $ 35,897
NOW 25,843 20,260
Money market 19,539 27,697
---------- ----------
75,943 83,854
Savings and club 99,586 100,441
Certificates of deposit 234,974 214,524
---------- ----------
$ 410,503 $ 398,819
========== ==========
At December 31, 2008 and 2007, certificates of deposit of $100,000 or more
totaled approximately $118,367,000 and $102,830,000, respectively.
The scheduled maturities of certificates of deposit at December 31, 2008, were
as follows (in thousands):
Amount
----------
2009 $ 188,112
2010 31,181
2011 7,396
2012 420
2013 7,815
Thereafter 50
----------
$ 234,974
==========
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
21
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 10 - Short-Term Borrowings and Long-Term Debt
Long-term debt consists of the following:
December 31,
------------------------
2008 2007
---------- ----------
(In Thousands)
Long-term debt:
Federal Home Loan Bank of New York ("FHLB") Fixed Rate
Repurchase Agreements:
4.50% maturing May 22, 2016 $ 10,000 $ 10,000
4.30% maturing August 16, 2016 20,000 20,000
4.17% maturing August 31, 2016 25,000 25,000
4.76% maturing June 18, 2017 20,000 20,000
4.30% maturing July 30, 2017 15,000 15,000
4.08% maturing July 30, 2017 20,000 20,000
Trust preferred floating rate junior
subordinated debenture maturing
June 17, 2034; interest rate adjusts
quarterly to LIBOR plus 2.65% (4.52% at
December 31, 2008 and 7.64% at
December 31, 2007) 4,124 4,124
---------- ----------
$ 114,124 $ 114,124
========== ==========
The trust preferred debenture is callable, at the Company's option, on June 17,
2009, and quarterly thereafter.
At December 31, 2008, the Bank has available to it two borrowing facilities
aggregating $113,059,000 from the FHLB of New York, an overnight line of credit
and a companion commitment, both of which expire on July 31, 2009. There was
$2,000,000 and $0 outstanding under these borrowing facilities at December 31,
2008 and 2007, respectively.
Additional information regarding short-term borrowings is as follows:
December 31,
---------------------------------
2008 2007 2006
---------------------------------
(In Thousands)
Average balance outstanding during the year $ 4,796 -- $ 705
Highest month-end balance during the year 20,500 -- 1,000
Average interest rate during the year 1.23% -- 4.93%
Weighted average interest rate at year-end 0.44% -- -
At December 31, 2008 and 2007 securities held to maturity with a carrying value
of approximately $140,519,000 and $146,811,000, respectively, were pledged to
secure the above noted Federal Home Loan Bank of New York borrowings.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
22
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 11 - Regulatory Matters
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 average assets (as defined). The following table
presents information as to the Bank's capital levels.
To be Well Capitalized
under Prompt
For Capital Adequacy Corrective Action
Actual Purposes Provisions
-------------------- ---------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
-------- --------- ----------- -------- ---------- ---------
(Dollars in Thousands)
As of December 31, 2008:
Total capital (to risk-weighted
assets) $ 58,667 14.63% $ 32,079 =>8.00% $ =>40,098 =>10.00%
Tier 1 capital (to risk-weighted
assets) 53,642 13.38 =>16,039 =>4.00 =>24,059 =>6.00
Tier 1 capital (to average assets) 53,642 9.22 =>23,282 =>4.00 =>29,102 =>5.00
As of December 31, 2007:
Total capital (to risk-weighted
assets) $ 53,761 14.12% $ =>30,457 =>8.00% $ =>38,072 =>10.00%
Tier 1 capital (to risk-weighted
assets) 49,696 13.05 =>15,228 =>4.00 =>22,843 =>6.00
Tier 1 capital (to average assets) 49,696 8.81 =>22,566 =>4.00 =>28,207 =>5.00
As of December 31, 2008, the most recent notification from the Bank's regulators
categorized the Bank as "well capitalized" under the regulatory framework for
prompt corrective action. There are no conditions or events occurring since that
notification that management believes have changed the Bank's category.
Note 12 - Benefits Plan
Stock Options
The Company has two stock-related compensation plans, the 2002 Stock
Option Plan and the 2003 Stock Option Plan (the "Plans"). All stock
options granted have a ten year term and were scheduled to vest and become
exercisable on a cumulative basis in equal installments (20% immediately
upon grant and an additional 20% at each of the four succeeding grant
anniversary dates). As of December 31, 2008, all options authorized under
the Plans had been granted.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
23
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 12 - Benefits Plan (Continued)
Stock Options (Continued)
In anticipation of the adoption of Statement No. 123(R) on January 1,
2006, the Board of Directors of the Company, on December 14, 2005,
approved the accelerated vesting and exercisability of all unvested and
unexercisable stock options granted as a part of the Plans held by
directors, officers or employees. As a result, options to purchase 218,195
shares of common stock, which would otherwise have vested and become
exercisable from time to time over the next three years, became fully
vested and immediately exercisable on December 20, 2005. The number of
shares and exercise prices of the options subject to acceleration were
unchanged. The accelerated options have exercise prices that range from
$5.29 to $11.84 per share. The accelerated options include 194,964 options
held by directors and executive officers and 23,231 options held by other
employees. The acceleration of the vesting and exercisability of these
options eliminates compensation expense, net of income tax, that would
otherwise have been recorded in the Company's income statements for the
years ending December 31, 2006, 2007, and 2008 of $379,000, $301,000, and
$128,000, respectively. As required, the Company estimated the number of
options that were expected to be exercised in the future which would not
have been exercisable under their original vesting terms and therefore
began recording additional compensation expense. This estimate is updated
on a quarterly basis.
During the years ended December 31, 2008, 2007 and 2006, the Company
recorded $0, $6,000 ($4,000 after tax) and $25,000 ($15,000 after tax) of
share-based compensation expense, respectively.
A summary of stock option activity, adjusted to retroactively reflect
subsequent stock dividends, follows:
Weighted
Number of Range of Average
Option Exercise Exercise
Shares Prices Price
--------- ---------- --------
Outstanding at December 31, 2006 415,638 5.29-15.65 9.86
Options granted 2,000 15.11 15.11
Options exercised (15,426) 5.29-15.65 10.42
Options cancelled (2,000) 15.60 15.60
---------
Outstanding at December 31, 2007 400,212 5.29-15.65 9.83
Options Exercised (104,873) 5.29-11.84 8.82
---------
Outstanding at December 31, 2008 295,339 5.29-15.65 10.19
=========
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
24
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 12 - Benefits Plan (Continued)
Stock Options (Continued)
At December 31, 2008, all stock options outstanding were exercisable,
having a weighted-average remaining contractual term of 4.8 years and an
aggregate intrinsic value of $393,000. The total intrinsic value of
options exercised during the years ended December 31, 2008, 2007 and 2006,
was $446,000, $85,000 and $102,000, respectively. It is Company policy to
issue new shares upon share option exercise.
The weighted average grant-date fair values of the stock options granted
during 2007, all of 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 weighted
average assumptions used for estimating fair value are as follows:
Years Ended December 31,
------------------------
2008 2007 2006
---- ---------- ----
Grant-date fair value per share N/A $ 2.91 N/A
Assumptions:
Expected common stock dividend yield N/A 2.38% N/A
Expected option life N/A 5.0 years N/A
Risk-free interest rate N/A 4.30% N/A
Volatility N/A 19.96% N/A
Note 13 - Dividend Restrictions
Payment of cash dividends is conditional 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.
During the 2007, the Bank paid the Company total dividends of $8,500,000. There
were no dividends paid to the Company in 2008. The Company's ability to declare
dividends is dependent upon the amount of dividends declared by the Bank.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
25
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 14 - Income Taxes
The components of income tax expense (benefit) are summarized as follows:
Years Ended December 31,
---------------------------
2008 2007 2006
------- ------- -------
(In Thousands)
Current income tax expense:
Federal $ 3,097 $ 2,391 $ 2,998
State 382 250 463
------- ------- -------
3,479 2,641 3,461
------- ------- -------
Deferred income tax benefit:
Federal (1,324) (102) (193)
State (335) (30) (48)
------- ------- -------
(1,659) (132) (241)
------- ------- -------
Total Income Taxes $ 1,820 $ 2,509 $ 3,220
======= ======= =======
The tax effects of existing temporary differences that give rise to significant
portions of the deferred income tax assets and deferred income tax liabilities
are as follows:
December 31,
-----------------
2008 2007
------- -------
(In Thousands)
Deferred income tax assets:
Allowance for loan losses $ 2,119 $ 1,623
Unrealized loss on securities available for sale 84 --
Other than temporary impairment on security 1,164 --
Other 33 10
------- -------
3,400 1,633
------- -------
Deferred income tax liabilities:
Depreciation 233 263
Unrealized gain on securities available for sale -- 18
Other 54 --
------- -------
287 281
------- -------
Net Deferred Tax Asset $ 3,113 $ 1,352
======= =======
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
26
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 14 - Income Taxes (Continued)
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:
Years Ended December 31,
---------------------------
2008 2007 2006
------- ------- -------
(In Thousands)
Federal income tax expense at statutory rate $ 1,799 $ 2,362 $ 2,988
Increases (reductions) in income taxes resulting from:
State income tax, net of federal income tax effect 31 145 274
Other items, net (10) 2 (42)
------- ------- -------
Effective Income Tax $ 1,820 $ 2,509 $ 3,220
======= ======= =======
Effective Income Tax Rate 34.4% 36.1% 36.6%
======= ======= =======
The Investment Company commenced operations in January 2005. Under New Jersey
tax law, the Investment Company is subject to a 3.6% state income tax rate as
compared to the 9.0% rate to which the Company and Bank are subject. The
presence of the Investment Company during the year ended December 31, 2008,
2007, and 2006, resulted in an income tax savings of approximately $285,000,
$297,000, and $282,000 respectively, and reduced the consolidated effective
income tax rate by approximately 5.4%, 4.3%, and 3.2%, respectively.
Note 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,
-----------------
2008 2007
------- -------
(In Thousands)
Loan origination $ 5,692 $ 2,885
Construction loans in process 25,676 40,023
Unused lines of credit 14,761 14,470
------- -------
$46,129 $57,378
======= =======
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
27
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 15- Commitments and Contingencies (Continued)
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.
The Company and its subsidiaries 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 its subsidiaries, 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, 2008, the
Company and its subsidiaries were not parties to any material litigation.
Note 16 - Fair Value Measurements and Fair Values of Financial Instruments
Management uses its best judgment in estimating the fair value of the Company's
financial instruments; however, there are inherent weaknesses in any estimation
technique. Therefore, for substantially all financial instruments, the fair
value estimates herein are not necessarily indicative of the amounts the Company
could have realized in a sales transaction on the dates indicated. The estimated
fair value amounts have been measured as of their respective year-ends and have
not been re-evaluated or updated for purposes of these consloidated financial
statements subsequent to those respective dates. As such, the estimated fair
values of these financial instruments subsequent to the respective reporting
dates may be different than the amounts reported at each year-end.
In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements",
which defines fair value, establishes a framework for measuring fair value under
GAAP, and expands disclosures about fair value measurements. Statement No. 157
applies to other accounting pronouncements that require or permit fair value
measurements. The Company adopted Statement No. 157 effective for its fiscal
year beginning January 1, 2008.
In December 2007, the FASB issued FSP 157-2, "Effective Date of FASB Statement
No. 157". FSP 157-2 delays the effective date of SFAS 157 for all non-financial
assets and liabilities, except those that are recognized or disclosed at fair
value on a recurring basis (at least annually) to fiscal years beginning after
November 15, 2008 and interim periods within those fiscal years. As such, the
Company only partially adopted the provisions of Statement No. 157, and will
begin to account and report for non-financial assets and liabilities in 2009. In
October 2008, the FASB issued FSP 157-3, "Determining the Fair Value of a
Financial Asset When the Market for that Asset is Not Active", to clarify the
application of the provisions of Statement No. 157 in an inactive market and how
an entity would determine fair value in an inactive market. FSP 157-3 is
effective immediately and applies to the Company's December 31, 2008
consolidated financial statements. The adoption of Statement No. 157 and FSP
157-3 had no impact on the amounts reported in the consolidated financial
statements.
Statement No. 157 establishes a fair value hierarchy that prioritizes the inputs
to valuation methods used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy
under Statement No. 157 are as follows:
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
28
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 16 - Fair Value Measurements and Fair Values of Financial Instruments
(Continued)
Level 1: Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical, unrestricted assets or
liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are
observable either directly or indirectly, for substantially the
full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both
significant to the fair value measurement and unobservable (i.e.,
supported with little or no market activity).
An asset's or liability's level within the fair value hierarchy is based on the
lowest level of input that is significant to the fair value measurement.
For financial assets measured at fair value on a recurring basis, the fair value
measurements by level within the fair value hierarchy used at December 31, 2008
are as follows:
(Level 1)
Quoted Prices (Level 2)
in Active Significant (Level 3)
Markets for Other Significant
December 31, Identical Observable Unobservable
Description 2008 Assets Inputs Inputs
- --------------------------------- ------------ ------------- ----------- ------------
(In Thousands)
Securities available for sale $ 888 $ 888 $ -- $ --
============ ============= =========== ============
For financial assets measured at fair value on a nonrecurring basis, the fair
value measurements by level within the fair value hierarchy used at December 31,
2008 are as follows:
(Level 1)
Quoted Prices (Level 2)
in Active Significant (Level 3)
Markets for Other Significant
December 31, Identical Observable Unobservable
Description 2008 Assets Inputs Inputs
- --------------------------------- ------------ ------------- ----------- ------------
(In Thousands)
Impaired loans $ 2,847 $ -- $ -- $ 2,847
============ ============= =========== ============
As discussed above, the Company has delayed its disclosure requirements of
non-financial assets and liabilities. Certain real estate owned with write-downs
subsequent to foreclosure are carried at fair value at the balance sheet date
for which the Company has not yet adopted the provisions of Statement No. 157.
The following information should not be interpreted as an estimate of the fair
value of the entire Company since a fair value calculation is only provided for
a limited portion of the Company's assets and liabilities. Due to a wide range
of valuation techniques and the degree of subjectivity used in making the
estimates, comparisons between the Company's disclosures and those of other
companies may not be meaningful. The following methods and
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
29
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 16 - Fair Value Measurements and Fair Values of Financial Instruments
(Continued)
assumptions were used to estimate the fair values of the Company's financial
instruments at December 31, 2008 and 2007:
Cash and Cash Equivalents (Carried at Cost)
The carrying amounts reported in the balance sheet for cash and short-term
instruments approximate those assets' fair values.
Securities
The fair value of securities available for sale (carried at fair value)
and held to maturity (carried at amortized cost) are determined by
obtaining quoted market prices on nationally recognized securities
exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical
technique used widely in the industry to value debt securities without
relying exclusively on quoted market prices for the specific securities
but rather by relying on the securities' relationship to other benchmark
quoted prices. For certain securities which are not traded in active
markets or are subject to transfer restrictions, valuations are adjusted
to reflect illiquidity and/or non-transferability, and such adjustments
are generally based on available market evidence (Level 3). In the absence
of such evidence, management's best estimate is used. Management's best
estimate consists of both internal and external support on certain Level 3
investments. Internal cash flow models using a present value formula that
includes assumptions market participants would use along with indicative
exit pricing obtained from broker/dealers (where available) were used to
support fair values of certain Level 3 investments.
Loans Held for Sale (Carried at Lower of Cost or Fair Value)
The fair value of loans held for sale is determined, when possible, using
quoted secondary-market prices. If no such quoted prices exist, the fair
value of a loan is determined using quoted prices for a similar loan or
loans, adjusted for specific attributes of that loan. Loans held for sale
are carried at their cost.
Loans Receivable (Carried at Cost)
The fair values of loans are estimated using discounted cash flow
analyses, using market rates at the balance sheet date that reflect the
credit and interest rate-risk inherent in the loans. Projected future cash
flows are calculated based upon contractual maturity or call dates,
projected repayments and prepayments of principal. Generally, for variable
rate loans that reprice frequently and with no significant change in
credit risk, fair values are based on carrying values.
Impaired Loans (Generally Carried at Fair Value)
Impaired loans are those that are accounted for under FASB Statement No.
114, "Accounting by Creditors for Impairment of a Loan", in which the
Company has measured impairment generally based on the fair value of the
loan's collateral. Fair value is generally determined based upon
independent third-party appraisals of the properties, or discounted cash
flows based upon the expected proceeds. These assets are included as Level
3 fair values, based upon the lowest level of input that is significant to
the fair value measurements. The fair value consists of the loan balances
of $3,728,000, net of a valuation allowance of $881,000. Additional
provisions of $881,000 for loan losses were recorded during the period.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
30
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 16 - Fair Value Measurements and Fair Values of Financial Instruments
(Continued)
FHLB of New York Stock (Carried at Cost)
The carrying amount of restricted investment in bank stock approximates
fair value, and considers the limited marketability of such securities.
Interest Receivable and Payable (Carried at Cost)
The carrying amount of interest receivable and interest payable
approximates its fair value.
Deposits (Carried at Cost)
The fair values disclosed for demand deposits (e.g., interest and
noninterest checking, passbook savings and money market accounts) are, by
definition, equal to the amount payable on demand at the reporting date
(i.e., their carrying amounts). Fair values for fixed-rate certificates of
deposit are estimated using a discounted cash flow calculation that
applies interest rates currently being offered in the market on
certificates to a schedule of aggregated expected monthly maturities on
time deposits.
Short-Term Borrowings (Carried at Cost)
The carrying amounts of short-term borrowings approximate their fair
values.
Long-Term Debt (Carried at Cost)
Fair values of long-term debt are estimated using discounted cash flow
analysis, based on quoted prices for new long-term debt with similar
credit risk characteristics, terms and remaining maturity. These prices
obtained from this active market represent a market value that is deemed
to represent the transfer price if the liability were assumed by a third
party.
Off-Balance Sheet Financial Instruments (Disclosed at Cost)
Fair values for the Bank's off-balance sheet financial instruments
(lending commitments and unused lines of credit) are based on fees
currently charged in the market to enter into similar agreements, taking
into account, the remaining terms of the agreements and the
counterparties' credit standing. The fair value of these commitments was
deemed immaterial and is not presented in the accompanying table.
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
31
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 16- Estimated Fair Value of Financial Instruments (Continued)
The carrying values and estimated fair values of financial instruments were as
follows at December 31, 2008 and 2007:
December 31,
-------------------------------------------------
2008 2007
----------------------- -----------------------
Carrying Carrying
Value Fair Value Value Fair Value
---------- ---------- ---------- ----------
(In Thousands)
Financial assets:
Cash and cash equivalents $ 6,761 $ 6,761 $ 11,780 $ 11,780
Securities available for sale 888 888 2,056 2,056
Securities held to maturity 141,280 143,087 165,017 165,660
Loans held for sale 1,422 1,437 2,132 2,141
Loans receivable 406,826 413,372 364,654 367,336
FHLB of New York stock 5,736 5,736 5,560 5,560
Interest receivable 3,884 3,884 3,776 3,776
Financial liabilities:
Deposits 410,503 409,370 398,819 399,178
Short-term borrowings 2,000 2,000 -- --
Long-term debt 114,124 116,317 114,124 115,679
Interest payable 967 967 1,026 1,026
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
32
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 17- Parent Only Condensed Financial Information
STATEMENTS OF FINANCIAL CONDITION
December 31,
----------------------
2008 2007
----------------------
Assets (In Thousands)
Cash and due from banks $ 323 $ 2,719
Investment in subsidiaries 53,180 49,722
Restricted common stock 124 124
Other assets 242 83
----------------------
Total Assets $ 53,869 $ 52,648
======================
Liabilities and Stockholders' Equity
Liabilities
Long-term debt $ 4,124 $ 4,124
Other liabilities 30 14
----------------------
Total Liabilities 4,154 4,138
----------------------
Stockholders' equity
Common stock 331 325
Paid-in capital 46,864 45,795
Treasury stock (8,680) (7,385)
Retained earnings 11,325 9,749
Accumulated other comprehensive (loss) income (125) 26
----------------------
Total Stockholders' Equity 49,715 48,510
----------------------
Total Liabilities and Stockholders' Equity $ 53,869 $ 52,648
======================
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
33
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 17- Parent Only Condensed Financial Information (Continued)
STATEMENTS OF INCOME
Years Ended in December 31,
-------------------------------
2008 2007 2006
-------------------------------
(In Thousands)
Dividends from subsidiary $ -- $ 8,500 $ --
Interest Income 3 10 27
-------------------------------
Total Income 3 8,510 27
Interest Expense, borrowed money 238 329 310
Stock-Based Compensation -- 6 25
Other -- -- 3
-------------------------------
Total Expense 238 335 338
-------------------------------
Income (Loss) before Income Tax Benefit and Equity
in Undistributed Earnings (Losses) of
Subsidiaries (235) 8,175 (311)
Income tax benefit 97 95 96
-------------------------------
Income (Loss) before Equity in Undistributed
Earnings (Losses) of Subsidiaries (138) 8,270 (215)
Equity in undistributed earnings (losses) of 3,610 (3,832) 5,782
-------------------------------
Net Income $ 3,472 $ 4,438 $ 5,567
===============================
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
34
BCB Bancorp, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
Note 17 - Parent Only Condensed Financial Information (Continued)
STATEMENTS OF CASH FLOW
Years Ended December 31,
---------------------------------
2008 2007 2006
---------------------------------
(In Thousands)
Cash Flows from Operating Activities
Net income $ 3,472 $ 4,438 $ 5,567
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Equity in undistributed (earnings) losses of subsidiaries (3,610) 3,832 (5,782)
Stock based compensation -- 6 25
(Increase) decrease in other assets (158) 8 5
(Increase) decrease in stock subscriptions receivable -- -- 2,353
Increase (decrease) in other liabilities 16 2 (142)
---------------------------------
Net Cash Provided By (Used in) Operating Activities (280) 8,286 2,026
---------------------------------
Cash Flows from Investing Activities
Additional investment in subsidiaries -- -- (13,000)
---------------------------------
Net Cash Used in Investing Activities -- -- (13,000)
---------------------------------
Cash Flows from Financing Activities
Proceeds from issuance of common stock 925 158 90
Tax benefit from exercise of stock options 150 -- --
Cash dividends paid (1,896) (1,555) (1,502)
Purchase of treasury stock (1,295) (6,526) (64)
---------------------------------
Net Cash Used in Financing Activities (2,116) (7,923) (1,476)
---------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (2,396) 363 (12,450)
Cash and Cash Equivalents - Beginning 2,719 2,356 14,806
---------------------------------
Cash and Cash Equivalents - Ending $ 323 $ 2,719 $ 2,356
=================================
See notes to consolidated financial statements.
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35
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 18 - Quarterly Financial Data (Unaudited)
Quarter Ended
---------------------------------------------------
March 31, June 30, September 30, December 31,
2008 2008 2008 2008
--------- -------- ------------- ------------
(In Thousands, Except Per Share Amounts)
Interest income $ 9,057 $ 9,012 $ 9,304 $ 9,250
Interest expense 4,380 4,142 4,087 4,054
--------- -------- ------------- ------------
Net Interest Income 4,677 4,870 5,217 5,196
Provision for loan losses 250 300 300 450
--------- -------- ------------- ------------
Net Interest Income after
Provision for Loan Losses 4,427 4,570 4,917 4,746
Non-interest income (loss) 248 173 (2,569) 94
Non-interest expenses 2,627 2,739 2,707 3,241
--------- -------- ------------- ------------
Income (Loss) before Income Taxes
(Benefit) 2,048 2,004 (359) 1,599
Income taxes (benefit) 744 728 890 (542)
--------- -------- ------------- ------------
Net Income (Loss) $ 1,304 $ 1,276 $ (1,249) $ 2,141
========= ======== ============= ============
Net income (loss) per common share:
Basic $ 0.28 $ 0.28 $ (0.27) $ 0.46
========= ======== ============= ============
Diluted $ 0.28 $ 0.27 $ (0.27) $ 0.46
========= ======== ============= ============
Weighted average number of common
shares outstanding:
Basic 4,617 4,604 4,640 4,656
========= ======== ============= ============
Diluted 4,721 4,691 4,640 4,699
========= ======== ============= ============
See notes to consolidated financial statements.
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36
BCB Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
Note 18 - Quarterly Financial Data (Unaudited) (Continued)
Quarter Ended
---------------------------------------------------
March 31, June 30, September 30, December 31,
2007 2007 2007 2007
--------- -------- ------------- ------------
(In Thousands, Except Per Share Amounts)
Interest income $ 8,088 $ 8,259 $ 8,947 $ 9,096
Interest expense 3,896 4,073 4,585 4,663
--------- -------- ------------- ------------
Net Interest Income 4,192 4,186 4,362 4,433
Provision for loan losses -- -- 200 400
--------- -------- ------------- ------------
Net Interest Income after
Provision for Loan Losses 4,192 4,186 4,162 4,033
Non-interest income 270 287 261 274
Non-interest expenses 2,477 2,723 2,777 2,741
--------- -------- ------------- ------------
Income before Income Taxes 1,985 1,750 1,646 1,566
Income taxes 722 624 616 547
--------- -------- ------------- ------------
Net Income $ 1,263 $ 1,126 $ 1,030 $ 1,019
========= ======== ============= ============
Net income per common share:
Basic $ 0.25 $ 0.23 $ 0.22 $ 0.22
========= ======== ============= ============
Diluted $ 0.25 $ 0.23 $ 0.21 $ 0.21
========= ======== ============= ============
Weighted average number of common
shares outstanding:
Basic 5,006 4,849 4,743 4,676
========= ======== ============= ============
Diluted 5,136 4,982 4,862 4,794
========= ======== ============= ============
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
37