10-Q 1 bcbp-20170331x10q.htm 10-Q 10Q 20170331_Taxonomy2015



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

Or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 0-50275

 

BCB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

New Jersey

 

26-0065262

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

I.D. No.)

 

 

104-110 Avenue C Bayonne, New Jersey

 

07002

(Address of principal executive offices)

 

(Zip Code)

(201) 823-0700

(Registrant’s telephone number, including area code)

 



Not Applicable

(Former name, former address and former fiscal year if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes       No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).       Yes       No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer, larger accelerated filer, non-accelerated filer, smaller reporting company, or emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

Large Accelerated Filer

 

  

Accelerated Filer

 

 

 

 

 

 

Non-Accelerated Filer

 

 (Do not check if a smaller reporting company)

  

Smaller Reporting Company   

 

 



 

 

 

 

 

 



 

 

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).      Yes      No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 3rd, 2017, BCB Bancorp, Inc., had 11,289,585 shares of common stock, no par value, outstanding.

 

 


 



 

BCB BANCORP INC. AND SUBSIDIARIES

INDEX

 



 

 

 

 

 

 

 

 

 

 

  

Page

 

PART I. CONSOLIDATED FINANCIAL INFORMATION

  

 

 

 

 

 

Item 1. Consolidated Financial Statements

  

 

 

 

 

 

Consolidated Statements of Financial Condition as of March 31, 2017 (unaudited) and December 31, 2016

  

 

  

 

 

Consolidated Statements of Income for the three months ended March 31, 2017 and 2016 (unaudited)

  

 

  



 

 

 

 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016 (unaudited)

 

 

 

 

 

Consolidated Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2017 and 2016 (unaudited)

  

 

  



Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016 (unaudited)

  

 

  



Notes to Unaudited Consolidated Financial Statements

  

 

  

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

 

38 

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

  

 

42 

 

 

 

Item 4. Controls and Procedures

  

 

42 

  

 

 

PART II. OTHER INFORMATION

  

 

44 

 

 

 

Item 1. Legal Proceedings

  

 

44 

  

 

 

Item 1A. Risk Factors

  

 

44 

  

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

  

 

44 

  

 

 

Item 3. Defaults Upon Senior Securities

  

 

44 

  

 

 

Item 4. Mine Safety Disclosures

  

 

44 

  

 

 

Item 5. Other Information

  

 

44 

  

 

 

Item 6. Exhibits

  

 

44 

  





 

 

 


 

PART I. CONSOLIDATED FINANCIAL INFORMATION

ITEM I. CONSOLIDATED FINANCIAL STATEMENTS

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(In  Thousands, Except Share and Per Share Data, Unaudited)



 



 

 

 

 

 



 

 

 

 

 



March 31,

 

December 31,



2017

 

2016



 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and amounts due from depository institutions

$

15,252 

 

$

12,121 

Interest-earning deposits

 

99,170 

 

 

52,917 

  Total cash and cash equivalents

 

114,422 

 

 

65,038 



 

 

 

 

 

Interest-earning time deposits

 

980 

 

 

980 

Securities available for sale

 

106,183 

 

 

94,765 

Loans held for sale

 

770 

 

 

4,153 

Loans receivable, net of allowance for loan losses of $17,526 and

 

 

 

 

 

  $17,209 respectively

 

1,528,756 

 

 

1,485,159 

Federal Home Loan Bank of New York stock, at cost

 

8,991 

 

 

9,306 

Premises and equipment, net

 

20,255 

 

 

19,382 

Accrued interest receivable

 

5,714 

 

 

5,573 

Other real estate owned

 

2,585 

 

 

3,525 

Deferred income taxes

 

8,649 

 

 

9,953 

Other assets

 

8,027 

 

 

10,374 

   Total Assets

$

1,805,332 

 

$

1,708,208 



 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 



 

 

 

 

 

LIABILITIES

 

 

 

 

 

Non-interest bearing deposits

$

175,462 

 

$

158,523 

Interest bearing deposits

 

1,338,382 

 

 

1,233,682 

 Total deposits

 

1,513,844 

 

 

1,392,205 

Short-term debt

 

 -

 

 

20,000 

Long-term debt

 

155,000 

 

 

155,000 

Subordinated debentures

 

4,124 

 

 

4,124 

Other liabilities and accrued interest payable

 

5,353 

 

 

5,798 

   Total Liabilities

 

1,678,321 

 

 

1,577,127 



 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

Preferred stock: $0.01 par value, 10,000,000 shares authorized,

 

 

 

 

 

   issued and outstanding 916 shares of series C 6% and series D 4.5% noncumulative perpetual

 

 

 

 

 

 preferred stock (liquidation value $10,000 per share) at March 31, 2017 and 1,560

 

 

 

 

 

 shares of series A, series B, series C 6% at December 31, 2016

 

 -

 

 

 -

Additional paid-in capital preferred stock

 

8,981 

 

 

15,464 

Common stock; no par value; 20,000,000 shares authorized, issued 13,820,048 and 13,797,088

 

 

 

 

 

 at March 31, 2017 and December 31, 2016, respectively, outstanding 11,289,585 shares and

 

 

 

 

 

   11,267,225 shares, respectively

 

 -

 

 

 -

Additional paid-in capital common stock

 

120,761 

 

 

120,417 

Retained earnings

 

29,377 

 

 

28,159 

Accumulated other comprehensive (loss)

 

(2,997)

 

 

(3,856)

Treasury stock, at cost, 2,530,463 and 2,529,863 shares, respectively, at March 31, 2017 and December 31, 2016

 

(29,111)

 

 

(29,103)

   Total Stockholders' Equity

 

127,011 

 

 

131,081 



 

 

 

 

 

    Total Liabilities and Stockholders' Equity

$

1,805,332 

 

$

1,708,208 



 

 

 

 

 



See accompanying notes to unaudited consolidated financial statements.





 



1

 


 

BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Income 

(In Thousands, except for per share amounts, Unaudited)





 

 

 

 

 



 

 

 

 

 



Three Months Ended March 31,



 

2017

 

 

2016



 

 

 

 

 

Interest income:

 

 

 

 

 

 Loans, including fees

$

17,542 

 

$

17,493 

 Investments, taxable

 

665 

 

 

200 

 Investments, non-taxable

 

103 

 

 

 -

 Other interest-earning assets

 

145 

 

 

138 

    Total interest income

 

18,455 

 

 

17,831 



 

 

 

 

 

Interest expense:

 

 

 

 

 

 Deposits:

 

 

 

 

 

    Demand

 

673 

 

 

362 

    Savings and club

 

99 

 

 

89 

    Certificates of deposit

 

2,011 

 

 

2,034 



 

2,783 

 

 

2,485 

    Borrowed money

 

1,067 

 

 

1,648 

      Total interest expense

 

3,850 

 

 

4,133 



 

 

 

 

 

Net interest income

 

14,605 

 

 

13,698 

Provision for loan losses

 

498 

 

 

189 



 

 

 

 

 

Net interest income after provision for loan losses

 

14,107 

 

 

13,509 



 

 

 

 

 

Non-interest income:

 

 

 

 

 

  Fees and service charges

 

796 

 

 

711 

  Gain on sales of loans

 

338 

 

 

924 

  Gain on sales of other real estate owned

 

1,151 

 

 

 -

  Other

 

28 

 

 

19 

     Total non-interest income

 

2,313 

 

 

1,654 



 

 

 

 

 

Non-interest expense:

 

 

 

 

 

  Salaries and employee benefits

 

6,090 

 

 

6,024 

  Occupancy and equipment

 

2,158 

 

 

1,872 

  Data processing and service fees

 

653 

 

 

1,062 

  Professional fees

 

363 

 

 

427 

  Director fees

 

180 

 

 

153 

  Regulatory assessments

 

361 

 

 

350 

  Advertising and promotional

 

143 

 

 

363 

  Other real estate owned, net

 

42 

 

 

16 

  Other

 

1,572 

 

 

1,470 

     Total non-interest expense

 

11,562 

 

 

11,737 



 

 

 

 

 

Income before income tax provision

 

4,858 

 

 

3,426 

Income tax provision

 

1,945 

 

 

1,391 



 

 

 

 

 

Net Income

$

2,913 

 

$

2,035 

Preferred stock dividends

 

118 

 

 

234 

Net Income available to common stockholders

$

2,795 

 

$

1,801 



 

 

 

 

 

Net Income per common share-basic and diluted

 

 

 

 

 

Basic

$

0.25 

 

$

0.16 

Diluted

$

0.25 

 

$

0.16 



 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

Basic

 

11,278 

 

 

11,217 

Diluted

 

11,360 

 

 

11,219 



See accompanying notes to unaudited consolidated financial statements.

 

2

 


 

BCB BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In Thousands, Unaudited)







 

 

 

 

 



Three Months Ended March 31,



2017

 

2016



 

 

 

 

 



 

 

 

 

 

Net Income

$

2,913 

 

$

2,035 

Other comprehensive income, net of tax:

 

 

 

 

 

Unrealized gains on available-for-sale securities:

 

 

 

 

 

Unrealized holding gains arising during the period (a)

 

859 

 

 

106 

Other comprehensive income

 

859 

 

 

106 

Comprehensive income

$

3,772 

 

$

2,141 





(a)

Represents the net change of the unrealized gain on available-for-sale securities. Represents unrealized gains of $1,453,000 and $179,000, respectively, less deferred taxes of $594,000 and $73,000,  respectively.



See accompanying notes to unaudited consolidated financial statements.







 

3

 


 





BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders’ Equity

(In Thousands, except share and per share data, Unaudited)

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Preferred Stock

 

Common Stock

 

Additional             Paid-In Capital

 

Retained Earnings

 

Treasury Stock

 

Accumulated Other Comprehensive Income (Loss)

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance at January 1, 2017

$

 -

 

$

 -

 

$

135,881 

 

$

28,159 

 

$

(29,103)

 

$

(3,856)

 

$

131,081 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemption of Series A and B Preferred Stock

 

 -

 

 

 -

 

 

(11,720)

 

 

 -

 

 

 -

 

 

 -

 

 

(11,720)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series D Preferred Stock

 

 -

 

 

 -

 

 

5,237 

 

 

 -

 

 

 -

 

 

 -

 

 

5,237 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 -

 

 

 -

 

 

30 

 

 

 -

 

 

 -

 

 

 -

 

 

30 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury Stock purchases

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(8)

 

 

 -

 

 

(8)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends payable on Series C 6% and Series D 4.5% noncumulative perpetual preferred stock

 

 -

 

 

 -

 

 

 -

 

 

(118)

 

 

 -

 

 

 -

 

 

(118)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends on common stock ($0.14 per share declared)

 

 -

 

 

 -

 

 

 -

 

 

(1,505)

 

 

 -

 

 

 -

 

 

(1,505)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Reinvestment Plan

 

 -

 

 

 -

 

 

72 

 

 

(72)

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan

 

 -

 

 

 -

 

 

242 

 

 

 -

 

 

 -

 

 

 -

 

 

242 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 -

 

 

 -

 

 

 -

 

 

2,913 

 

 

 -

 

 

 -

 

 

2,913 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

859 

 

 

859 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance at March 31, 2017

$

 -

 

$

 -

 

$

129,742 

 

$

29,377 

 

$

(29,111)

 

$

(2,997)

 

$

127,011 











 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Preferred Stock

 

Common Stock

 

Additional             Paid-In Capital

 

Retained Earnings

 

Treasury Stock

 

Accumulated Other Comprehensive Income (Loss)

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance at January 1, 2016

$

 -

 

$

 -

 

$

136,856 

 

$

27,382 

 

$

(29,096)

 

$

(1,598)

 

$

133,544 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemption of Series A Preferred Stock

 

 -

 

 

 -

 

 

(1,710)

 

 

 -

 

 

 -

 

 

 -

 

 

(1,710)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 -

 

 

 -

 

 

18 

 

 

 -

 

 

 -

 

 

 -

 

 

18 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends payable on Series A, B and C 6% noncumulative perpetual preferred stock

 

 -

 

 

 -

 

 

 -

 

 

(234)

 

 

 -

 

 

 -

 

 

(234)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends on Common Stock ($0.14 per share) declared

 

 -

 

 

 -

 

 

 -

 

 

(1,502)

 

 

 -

 

 

 -

 

 

(1,502)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Reinvestment Plan

 

 -

 

 

 -

 

 

67 

 

 

(67)

 

 

 -

 

 

 -

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Purchase Plan

 

 -

 

 

 -

 

 

54 

 

 

 -

 

 

 -

 

 

 -

 

 

54 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 -

 

 

 -

 

 

 -

 

 

2,035 

 

 

 -

 

 

 -

 

 

2,035 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

106 

 

 

106 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance at March 31, 2016

$

 -

 

$

 -

 

$

135,285 

 

$

27,614 

 

$

(29,096)

 

$

(1,492)

 

$

132,311 

See accompanying notes to unaudited consolidated financial statements.

 

















4

 


 



































 



BCB BANCORP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)





 

 

 

 

 



Three Months Ended March 31,



2017

 

2016

Cash Flows from Operating Activities :

 

 

 

 

 

  Net Income

$

2,913 

 

$

2,035 

  Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

        Depreciation of premises and equipment

 

688 

 

 

564 

        Amortization and accretion, net

 

(347)

 

 

(515)

        Provision for loan losses

 

498 

 

 

189 

        Deferred income tax

 

710 

 

 

(62)

        Loans originated for sale

 

(6,476)

 

 

(5,582)

        Proceeds from sales of loans originated for sale

 

10,197 

 

 

7,841 

        Gain on sales of loans originated for sale

 

(338)

 

 

(924)

        Stock compensation expense

 

30 

 

 

18 

        (Increase) in interest receivable

 

(141)

 

 

(386)

        Decrease (increase) in other assets

 

2,347 

 

 

(1,115)

        (Decrease) increase in accrued interest payable

 

(40)

 

 

59 

        (Decrease) increase in other liabilities

 

(405)

 

 

2,425 

Net Cash Provided by Operating Activities

 

9,636 

 

 

4,547 

Cash flows from investing activities:

 

 

 

 

 

        Proceeds from calls on securities available for sale

 

5,052 

 

 

159 

        Purchases of securities available for sale

 

(15,048)

 

 

 -

        Proceeds from sales of other real estate owned

 

2,091 

 

 

 -

        Gains on sales of other real estate owned

 

(1,151)

 

 

 -

        Redemption of interest-bearing time deposits

 

 -

 

 

258 

        Net increase in loans receivable

 

(43,717)

 

 

(9,558)

        Additions to premises and equipment

 

(1,561)

 

 

(494)

        Redemption of Federal Home Loan Bank of New York stock

 

315 

 

 

(450)

Net Cash Used In Investing Activities

 

(54,019)

 

 

(10,085)

Cash flows from financing activities:

 

 

 

 

 

        Net increase in deposits

 

121,639 

 

 

76,491 

        Net change in long-term debt

 

 -

 

 

10,000 

        Net change in short-term debt

 

(20,000)

 

 

 -

        Purchases/adjustments of treasury stock

 

(8)

 

 

 -

        Cash dividend paid on common stock

 

(1,505)

 

 

(1,502)

        Cash dividend paid on preferred stock

 

(118)

 

 

(234)

        Net proceeds from issuance of common stock

 

242 

 

 

54 

        Net proceeds from issuance of preferred stock

 

5,237 

 

 

 -

        Net payment on redemption of preferred stock

 

(11,720)

 

 

(1,710)

Net Cash Provided by Financing Activities

 

93,767 

 

 

83,099 



 

 

 

 

 

Net Increase In Cash and Cash Equivalents

 

49,384 

 

 

77,561 

Cash and Cash Equivalents-Beginning

 

65,038 

 

 

132,635 



 

 

 

 

 

Cash and Cash Equivalents-Ending

$

114,422 

 

$

210,196 



 

 

 

 

 

Supplementary Cash Flow Information:

 

 

 

 

 

     Cash paid during the year for:

 

 

 

 

 

        Income taxes

$

71 

 

$

452 

        Interest

$

3,890 

 

$

4,074 



 

 

 

 

 



 

 

 

 

 

Non-cash items:

 

 

 

 

 

        Transfer of loans to other real estate owned

$

 -

 

$

457 



















5

 


 



BCB Bancorp Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of BCB Bancorp, Inc. (the “Company”) and the Company’s wholly owned subsidiaries, BCB Community Bank (the “Bank”), BCB Holding Company Investment Company, BCB New York Asset Management, Inc. and Pamrapo Service Corporation. The Company’s business is conducted principally through the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and, therefore, do not necessarily include all information that would be included in audited financial statements. The information furnished reflects all adjustments that are, in the opinion of management, necessary for a fair presentation of consolidated financial condition and results of operations. All such adjustments are of a normal recurring nature. These results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or any other future period. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management 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.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2016, which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission. In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred between March  31, 2017, and the date these consolidated financial statements were issued.





Recent Accounting Pronouncements



In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year.  The new guidance will be effective for public companies for periods beginning after December 15, 2017 with private companies provided a one-year deferral until periods beginning after December 15, 2018. The ASU permits application of the new revenue recognition guidance to be applied using one of two retrospective application methods. The Company has not yet determined which application method it will use or the potential effects of the new standard on the financial statements, if any. The Company is currently assessing the impacts this new standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will supersede the current lease requirements in Topic 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of income. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new guidance will be effective for years beginning after December 15, 2018 for public companies and for years beginning after December 15, 2019 for private companies. Once effective, the standard will be applied using a modified retrospective transition method to the beginning of the earliest period presented. The Company is currently assessing the impacts this new standard will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718).  This ASU was issued as part of FASB’s Simplification Initiative.  The areas for simplification in this Update include income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows for share-based payment transactions.  For public companies, this ASU will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  For all other entities, the amendments will be effective for annual periods beginning after December 31, 2017, and interim periods within annual periods beginning after December 15, 2018.  Early adoption is permitted.  The Company is currently assessing the impacts this new standard will have on its consolidated financial statements.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. For public business entities that are U.S. Securities and Exchange Commission filers, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations.



6

 


 



Note 2 – Reclassification



Certain amounts as of December 31, 2016 and the three month period ended March  31, 2016 have been reclassified to conform to the current period’s presentation. These changes had no effect on the Company’s results of operations or financial position.





Note 3 – Pension and Other Postretirement Plans

The Company assumed, through the merger with Pamrapo Bancorp, Inc., a non-contributory defined benefit pension plan covering all eligible employees of Pamrapo Savings Bank. Effective January 1, 2010, the defined benefit pension plan (“Pension Plan”), was frozen by Pamrapo Savings Bank. All benefits for eligible participants accrued in the “Pension Plan” to the freeze date have been retained. Accordingly, no employees are permitted to commence participation in the Pension Plan and future salary increases and future years of service are not considered when computing an employee’s benefits under the Pension Plan. The Pension Plan is funded in conformity with the funding requirements of applicable government regulations. The Company also acquired through the merger with Pamrapo Bancorp, Inc. a supplemental executive retirement plan (“SERP”) in which certain former employees of Pamrapo Savings Bank are covered. A SERP is an unfunded non-qualified deferred retirement plan. Participants who retire at the age of 65 (the “Normal Retirement Age”), are entitled to an annual retirement benefit equal to 75% of compensation reduced by their retirement plan annual benefits. Participants retiring before the Normal Retirement Age receive the same benefits reduced by a percentage based on years of service to the Company and the number of years prior to the Normal Retirement Age that participants retire.



Periodic pension and SERP cost, which is recorded as part of salaries and employee benefits expense in our Consolidated Statements of Income, is comprised of the following. (In Thousands):





 



 

 

 

 

 



 

 

 

 

 



Three months ended March 31,



 

2017

 

 

2016



 

 

 

 

 

Pension plan:

  

 

 

  

 

Interest cost

$

75 

 

$

82 

Expected return on plan assets

  

(113)

 

  

(131)

Amortization of unrecognized loss

  

29 

 

  

36 



 

 

 

 

 

Net periodic pension benefit

  

(9)

 

  

(13)



  

 

 

  

 

SERP plan:

  

 

 

  

 

Interest cost

$

 

$



  

 

 

  

 

Net periodic postretirement cost

$

 

$





7

 


 

Note 3 – Pension and Other Postretirement Plans (Continued) 



The Company, under the plan approved by its stockholders on April 28, 2011 (“2011 Stock Plan”), authorized the issuance of up to 900,000 shares of common stock of the Company pursuant to grants of stock options. Employees and directors of the Company and the Bank are eligible to participate in the 2011 Stock Plan. All stock options will be granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code.  Only employees are permitted to receive incentive stock options. On September 16, 2016, a grant of 110,000 options was declared for members of the Board of Directors which vest at a rate of 10% per year commencing on the first anniversary of the grant date. On December 2, 2015, a grant of 120,000 options and on March 7, 2014, a grant of 110,000 options was declared for certain members of the Board of Directors which vest at a rate of 10% per year, over ten years commencing on the first anniversary of the grant date.









 

 

 

 

 

 

 

 



 

Number of  Option

 

 

 

 

 

 



  

Shares

 

 

Range of Exercise Prices

 

 

Weighted Average Exercise Price



 

 

 

 

 

 

 

 

Outstanding at December 31, 2016

 

575,000 

 

$

8.93-13.32

 

$

10.78



 

 

 

 

 

 

 

 

Options granted                                         

 

 -

 

 

 

 

 

 

Options exercised                                        

 

(500)

 

 

10.55

 

 

10.55

Options forfeited                                    

 

(35,000)

 

 

8.93-13.32

 

 

8.93-13.32

Options expired                                      

 

 -

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Outstanding at March 31, 2017

 

539,500 

 

$

8.93-13.32

 

$

10.79













As of March 31, 2017, stock options which were granted and were exercisable totaled 107,900 stock options.





It is Company policy to issue new shares upon share option exercise. Expected future compensation expense relating to the 431,600 shares outstanding as of March  31, 2017 was $1,016,000 over a weighted average period of 6.99 years.











 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

Number of  Option

 

 

 

 

 

 



  

Shares

 

 

Range of Exercise Prices

 

 

Weighted Average Exercise Price



 

 

 

 

 

 

 

 

Outstanding at December 31, 2015

 

417,000 

 

$

8.93-15.65

 

$