BCB Bancorp, Inc. (NJ)

Hello, everyone. Thank you for joining us and welcome to the BCB Bancorp, Inc.'s 2026 Third Quarter Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Thomas O'Brien, President and Chief Executive Officer. Thomas, please go ahead.

Thank you, and good morning all. Appreciate you joining the third quarter earnings call for the company. Obviously, before I begin, I encourage you to read the forward-looking statement as contained in our press release. So, I guess I can begin by stating the obvious. I've never quite reported a quarter like this in my career. It was momentous for the company in many ways. But I think it's fair to say we successfully accomplished everything that was set out on my June 1st call when I joined the bank, and actually more than that. I also believe that the results of the quarter pretty closely followed the guidance we provided, and all of the recent filings and announcements around the capital issuance and Loan Sales. For this call, I don't see much value in discussing these telephone book numbers for net income. To the extent you want to, it's certainly too odd. We'll be able to give you as much color as you want on that. But honestly, the numbers are so big as to disappear, I'm not sure I can even count that high. As I said, I think the numbers, while admitted to be huge, hopefully are self-explanatory given our previous disclosures on the strategic plan, capital, and asset quality. So, I thought I'd just confine my quick remarks here on the outcomes and the expectations for the period ahead. I think it's probably worthwhile to focus some initial attention on our Margins came in at $303, slightly higher than the estimated range of $290 to $3 that we had previewed. And this was in spite of the reversal of several interest receivable accruals approximating around $1 million. Deposit costs trended lower, further supporting than them. Not surprisingly, ASSET QUALITY IMPROVED ALONG WITH THE RESERVE COVERAGE RATIOS. THE FAIL OF MOSTLY CRITICIZED AND CLASSIFIED LOANS AGGREGATING OVER $200 MILLION, ALONG WITH THE RIGHT DOWN TO FAIR MARKET VALUE OF ANOTHER $100 MILLION, HAVE GONE A LONG WAY TO CLEANING UP THE LOAN QUALITY PROBLEMS THAT HAVE DOGGED BCB IN THE RECENT PAST. We begin the fourth quarter with a $70 million ACL over 3% of loans and a low $22 million in NPLs. We continue to forecast the sale of our remaining cannabis portfolio of loans and deposits in the fourth quarter. All of the loans were marked to market at September 30th. During the third quarter and in anticipation of the capital raise, Our team went through the loan book to identify any needed risk rating changes to more properly align our enhanced process with potential future problems. And so doing, we identified another 77 million of previously passed rated loans that were subsequently downgraded to either special mention or substandard. We believe that this discipline will continue to focus our attention and our disclosures on the residual credit risk. We believe that the loan by loan process that we followed has properly surfaced residual credit risk and accounted for the potential for loss. In the fourth quarter, we anticipated additional problem loans being favorably resolved in a few one-off type transactions, individual loans being resolved I should also point out that two larger problem loans were paid in full during the quarter. As a consequence of the restructuring and prior year losses, we established a 100% valuation allowance against our deferred tax asset, so that was $60 million. That is reversible when we have determined that our profitability over the next several quarters and prospectively support a change. Our capital raise was very successful and the stock price has reacted favorably since. While dilution is something that I would never take likely, the alternative for BCEB was much more pessimistic. We believe the interest of all shareholders is best served by protecting the bank and the company with a strong capital structure and by confronting legacy problems head on. Welcome our new investors and appreciate your support. You, together with our existing shareholders, will find us to be working tirelessly in our collective best interests, transparently and proactively. I've strengthened the executive ranks of the bank and welcome two new directors, both with extensive public company experience. I'm confident that the painful decisions that we have made will yield the kind of results of the coming quarters that fully validate our expectations. It's probably more than enough of my thoughts here and then as typical I suspect the questions are going to be more focused and you know we're going to be happy to take those jawads on the call with me and so operator we're ready to take questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Justin Crowley with Piper Sandler. Your line is open. Please go ahead.