Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Estimates

Critical accounting estimates are those accounting policies that can have a significant impact on the Company's financial position and results of operations that require the use of complex and subjective estimates based upon past experiences and management's judgment. Because of the uncertainty inherent in such estimates, actual results may differ from these estimates. Below are those policies applied in preparing the Company's consolidated financial statements that management believes are the most dependent on the application of estimates and assumptions. For additional accounting policies, see Note 2 of "Notes to Consolidated Financial Statements."

Allowance for Credit losses

On January 1, 2023, the Company adopted ASU 2016-13 (Topic 326), which replaced the incurred loss methodology with a current expected credit losses ("CECL") model for financial instruments measured at amortized cost and other commitments to extend credit. Loans receivable are presented net of an allowance for credit losses and net deferred loan fees. In determining the appropriate level of the allowance, management considers a combination of factors, such as economic and industry trends, real estate market conditions, size and type of loans in portfolio, nature and value of collateral held, borrowers' financial strength and credit ratings, and prepayment and default history. The calculation of the appropriate allowance for credit losses relies on econometric models to estimate the quantitative reserves and also the use of qualitative factors to supplement the quantitative calculation. The process of establishing allowance for credit losses is complex and requires a substantial amount of judgment regarding the impact of the aforementioned factors, as well as other factors, on the ultimate realization of loans receivable. In addition, our determination of the amount of the allowance for credit losses is subject to review by the New Jersey Department of Banking and Insurance and the FDIC, as part of their examination process. After a review of the information available, our regulators might require the establishment of an additional allowance. Any increase in the allowance for loan loss required by regulators would have a negative impact on our earnings. Refer to Note 5 of the accompanying consolidated financial statements for additional information on the Company's allowance for credit loss process.

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other, which allows an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. Based on a quantitative assessment, management determined that the Company's recorded goodwill totaling $5.2 million, is not impaired as of December 31, 2025.

Financial Condition at December 31, 2025 and 2024

Total assets decreased by $319.7 million, or 8.9 percent, to $3.279 billion at December 31, 2025, from $3.599 billion at December 31, 2024. This decrease is largely the result of a successful strategic initiative to enhance our capital ratios. The decrease in total assets was mainly driven by decreases in cash and cash equivalents and net loans.

Total cash and cash equivalents decreased by $40.7 million, or 12.8 percent, to $276.6 million at December 31, 2025, from $317.3 million at December 31, 2024. The decrease in cash was primarily due to the reduction of the Bank's exposure to wholesale funding by running off higher cost brokered deposits and paying down FHLB advances.

Loans receivable, net, decreased by $305.2 million, or 10.2 percent, to $2.691 billion at December 31, 2025, from $2.996 billion at December 31, 2024, due to payoffs, paydowns and charge-offs. Total loan decreases during the period included decreases totaling $151.0 million in commercial real estate and multi-family loans, $90.6 in commercial business loans, $61.5 million in construction loans and $5.6 million in 1-4 family residential loans and home equity loans. The allowance for credit losses decreased $1.1 million to $33.7 million, or 53.3 percent of non-accruing loans and 1.24 percent of gross loans, at December 31, 2025, as compared to an allowance for credit losses of $34.8 million, or 77.8 percent of non-accruing loans and 1.15 percent of gross loans, at December 31, 2024.

Total investments increased by $24.4 million, or 21.9 percent, to $135.6 million at December 31, 2025, from $111.2 million at December 31, 2024, representing current year purchases, net of investments called during 2025.

Deposits decreased by $77.3 million, or 2.8 percent, to $2.674 billion at December 31, 2025, from $2.751 billion at December 31, 2024. Brokered deposits, transaction accounts and savings accounts decreased $97.1 million, $41.8 million and $8.8 million, respectively, and were offset by increases in money market accounts and certificate of deposit accounts which totaled $70.7 million.

Debt obligations decreased by $220.1 million to $278.2 million at December 31, 2025, from $498.3 million at December 31, 2024, due to maturities and paydowns of our FHLB advances. The weighted average interest rate of FHLB advances was 4.53 percent at December 31, 2025, and 4.35 percent at December 31, 2024. The weighted average maturity of FHLB advances as of December 31, 2025 was 0.46 years. The interest rate of our subordinated debt balances was 9.25 percent at December 31, 2025 and December 31, 2024.

Stockholders' equity decreased by $19.6 million, or 6.1 percent, to $304.3 million at December 31, 2025, from $323.9 million at December 31, 2024. The decrease was attributable to the decrease in retained earnings of $25.4 million, or 17.9 percent, to $116.4 million at December 31, 2025, from $141.9 million at December 31, 2024, caused largely by the $12.5 million net loss in 2025, due to additions to the allowance for credit losses and the $15.1 million (pre-tax) write down of the cannabis-related OREO property. Offsetting this was a decrease in our accumulated other comprehensive loss and an increase in our additional paid in capital.

Analysis of Net Interest Income

Net interest income is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Net interest income depends on the relative amounts of interest-earning assets and interest-bearing liabilities and the interest ratesearned or paid on them, respectively.

The following table sets forth average balance sheets, yields and costs, and certain other information for the years indicated. All average balances are daily average balances. No tax-equivalent yield adjustments have been made as the amounts are not significant. The yields set forth below include the effect of deferred fees, discounts and premiums, which are included in interest income.

(1) Excludes allowance for credit losses.

(2) Includes nonaccrual loans which are immaterial to the yield.

(3) Includes Federal Home Loan Bank of New York stock.

(4) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

Rate/Volume Analysis

The table below sets forth certain information regarding changes in our interest income and interest expense for the years indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in average volume (changes in average volume multiplied by old rate); (ii) changes in rate (change in rate multiplied by old average volume); (iii) changes due to combined changes in rate and volume; and (iv) the net change.

Results of Operations for the Years Ended December 31, 2025 and 2024

Net income decreased by $31.2 million to a net loss of $12.5 million for the twelve months ended December 31, 2025, from earnings of $18.6 million for the twelve months ended December 31, 2024. The decrease in net income was driven primarily by provisioning for loan loss expense being $30.4 million higher and non-interest expense being $20.8 million higher. This was offset by the tax provision being $13.4 million lower, non-interest income being $5.6 million higher, and the net interest income being $1.0 million higher.

Net interest income was $1.0 million higher as interest expense decreased by $22.1 million, or 21.6 percent, to $79.9 million for the twelve months ended December 31, 2025, from $102.0 million for the twelve months ended December 31, 2024. Offsetting the decrease in interest expense, interest income decreased by $21.1 million, or 10.9 percent, to $173.0 million for 2025, from $194.0 million for 2024. The average balance of interest-earning assets decreased $308.5 million, or 8.6 percent, to $3.296 billion at December 31, 2025, from $3.605 billion at December 31, 2024. The average yield decreased 13 basis points to 5.25 percent from 5.38 percent when comparing the twelve months ended December 31, 2025, with the twelve months ended December 31, 2024. The decrease in interest earning assets was primarily a result of loans and interest-bearing bank balances declining, on average, $298.6 million and $38.8 million, respectively. This was offset by an increase in average investment securities of $28.9 million.

Net interest margin increased to 2.82 percent for the twelve months ended December 31, 2025, compared to 2.55 percent for the twelve months ended December 31, 2024. The increase in the net interest margin compared to the prior period was the result of a decrease in the cost of the Company's interest-bearing liabilities by 43 basis points to 3.14 percent. Offsetting that, somewhat, was a decrease in the rate earned on earning assets, which decreased 13 basis points to 5.25 percent.

During the twelve months ended December 31, 2025, the Company experienced $43.1 million in net charge-offs compared to $10.4 million in net charge-offs for the twelve months ended December 31, 2024. The elevated net charge-offs were partly driven by the $12.7 million of net charge-off recorded in connection with the elimination of specific reserves for a cannabis-related relationship. Additionally, the Bank recorded higher net charge-offs in the C&I portfolio of $29.2 million of which $9.8 million were related to the Bank's Business Express loans. The provision for credit losses increased from $11.6 million for the twelve months ended December 31, 2024, to $42.0 million for the twelve months ended December 31, 2025.

The following table summarizes the Company's classified loans greater than $5 million at December 31, 2025 (in thousands):

(1)Based on the most recent appraised values available.

Non-interest income increased by $5.6 million to $8.6 million for the twelve months ended December 31, 2025, from $2.9 million for the twelve months ended December 31, 2024. In 2024, the Bank recorded a loss on sale of loans of $5.3 million compared to a slight gain in 2025. BOLI income and fees and service charges also increased $692 thousand and $245 thousand, respectively, in 2025. Offsetting these items was a decrease in 2025 on realized and unrealized losses and gains on equity investments of $679 thousand.

Non-interest expense increased by $20.8 million, or 36.3 percent, to $77.9 million for the twelve months ended December 31, 2025, from $57.1 million for the twelve months ended December 31, 2024. The increase in operating expenses for 2025 was driven primarily by the Bank recording a one-time $15.1 million expense on the previously disclosed cannabis-related OREO property in the fourth quarter of 2025 and salaries and employee benefits increasing $3.2 million for the twelve months ended December 31, 2025, compared to the same period in 2024. Data processing costs also increased $959 thousand when comparing the twelve months ended December 31, 2025 with the same period one year earlier.

The income tax provision decreased by $13.4 million to an income tax benefit of $5.8 million for the twelve months ended December 31, 2025 when compared to a $7.6 million provision for the twelve-month period ended December 31, 2024.

Results of Operations for the Years Ended December 31, 2024 and 2023

The results of operations comparison of 2024 compared to 2023 can be found in the Company's previously filed Annual Report on Form 10-K for the year-ended December 31, 2024 under Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations"- Results of Operations for the Years Ended December 31, 2024 and 2023 on pages 29 and 30.

Liquidity and Capital Resources

The overall objective of our liquidity management practices is to ensure the availability of sufficient funds to meet financial commitments and to take advantage of lending and investment opportunities. The Company manages liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings and other obligations as they mature, and to fund loan and investment portfolio opportunities as they arise.

The Company's primary sources of funds to satisfy its objectives are net growth in deposits (primarily retail), principal and interest payments on loans and investment securities, proceeds from the sale of originated loans and FHLB and other borrowings. The scheduled amortization of loans is a predictable source of funds. Deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including unsecured overnight lines of credit and other collateralized borrowings from the Federal Reserve Bank Discount Window, the FHLB and other correspondent banks. Our Asset / Liability Management Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs of our customers as well as unanticipated contingencies.

At December 31, 2025 and 2024, the Company had no overnight borrowings outstanding with the FHLB, respectively. The Company utilizes overnight borrowings from time to time to fund short-term liquidity needs. The Company had total outstanding borrowings of $278.2 million at December 31, 2025 as compared to $498.3 million at December 31, 2024.

At December 31, 2025, the Company had the ability to obtain additional funding from the FHLB of $382.4 million and $198.7 million from the Federal Reserve Bank Discount Window, utilizing unencumbered loan collateral. The Company expects to have sufficient funds available to meet current loan commitments in the normal course of business through typical sources of liquidity. Time deposits scheduled to mature in one year or less totaled $954.1 million at December 31, 2025. Based upon historical experience data, management estimates that a significant portion of such deposits will remain with the Company.

Forward-Looking Statements

This report on Form 10-K contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of BCB Bancorp, Inc. and subsidiaries. This document may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of said safe harbor provisions. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in this Annual Report on Form 10-K and in other documents filed with the Securities and Exchange Commission. These forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of the words "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "seek," "strive," "try," or future or conditional verbs such as "will," "would," "should," "could," "may," or similar expressions. Although we believe that our plans, intentions, and expectations, as reflected in these forward-looking statements are reasonable, we can give no assurance that these plans, intentions, or expectations will be achieved or realized. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Important factors that could cause our actual results and financial condition to differ from those indicated in the forward-looking statements include, among others, changes in market interest rates, general economic conditions, legislation, and regulation; changes in monetary and fiscal policies of the United States Government, including policies of the United States Treasury and Federal Reserve Board; changes in the quality or composition of the loan or investment portfolios; changes in deposit flows, competition, and demand for financial services, loans, deposits and investment products in our local markets; changes in accounting principles and guidelines; war or terrorist activities; and other economic, competitive, governmental, regulatory, geopolitical and technological factors affecting the our operations, pricing and services, and those discussed under "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K.Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this report. We do not assume any obligation to revise forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as may be required by law.

‎