BAYONNE, N.J., Jan. 28, 2021 (GLOBE NEWSWIRE) -- BCB Bancorp, Inc. (the “Company”), (NASDAQ: BCBP), the holding company for BCB Community Bank (the “Bank”), today reported net income of $20.9 million for the year ended December 31, 2020, compared with $21.0 million for 2019. Earnings per diluted share for 2020 were $1.14, as compared to $1.20 in 2019. In the fourth quarter of 2020, the Company earned $7.3 million, compared with $5.1 million in the fourth quarter of 2019, and $8.3 million in the third quarter of 2020. Earnings per diluted share were $0.41 in the fourth quarter of 2020, compared to $0.29 per diluted share in the fourth quarter of 2019, and $0.47 per diluted share in the preceding quarter.

“We generated solid earnings for the fourth quarter and for the full year 2020, fueled by solid net interest income generation, despite the pandemic, and from capitalizing on operating efficiencies,” stated Thomas Coughlin, President and Chief Executive Officer. “Our continued efforts to deleverage the balance sheet and deploy excess capital helped expand our net interest margin by 37 basis points during the fourth quarter of 2020, as compared to the prior quarter. To emphasize the success of our strategy, we were able to expand our net interest margin by 90 basis points over the last two quarters as compared to the second quarter of 2020. In the coming year, we will remain focused on disciplined balance sheet growth and managing our cost of funds, while delivering consistent operating results to our shareholders.

“During the course of the year, we successfully completed a number of high-profile projects that directly contributed to our bottom line and are expected to enhance future quarters’ revenue streams and capital levels. These included the sale-leaseback of one of our properties, the purchase of $60 million in bank-owned life insurance (“BOLI”), the redemption of our Series C 6% and Series F 6% preferred stock, and the issuance of our Series H 3.5% preferred stock. We recognized a gain of approximately $4.4 million related to the sale-leaseback, which was completed in the third quarter. The investment in BOLI provides a new form of non-interest income, which is nontaxable, and helps to diversify our revenue streams.

“During the fourth quarter, we completed the final issuance of our Series H 3.5% Noncumulative Perpetual Preferred Stock. Over the last seven months, we issued a total of $11.2 million of such stock over three rounds of funding. We also redeemed $10.5 million of our other outstanding preferred stock during 2020, which included the Company’s Series C 6% Noncumulative Perpetual Preferred Stock and Series F 6% Noncumulative Perpetual Preferred Stock. As a result of these strategic transactions, we have further strengthened our capital position, and our dividend costs have been reduced. Overall, we anticipate saving approximately $55,000 in dividend costs per quarter,” said Coughlin.

“Results for the fourth quarter and the year were affected by increases to the loan loss provision as a result of the COVID-19 pandemic effect on the economy and its impact on our New Jersey and New York markets,” said Coughlin. “We recorded a $1.9 million provision for loan losses in the fourth quarter, and a $9.4 million provision for the year, bringing our total reserves to $33.6 million, and our allowance for loan losses to 1.44 percent of total loans at year-end. We believe this reserve level is adequate to cover loan losses incurred from the pandemic through the 2021 year end.

“We were an active participant in the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) from its inception in April, until the initial program completed on August 8, 2020. Our success in executing this relief effort allowed us to assist approximately 1,100 customers to receive $133 million in PPP funding. As the regulations and guidance for PPP loans and the forgiveness process continued to evolve, management recognized the operational risk and complexity associated with this portfolio and decided to sell the PPP loan portfolio to a third party better suited to support and serve our PPP clients through the loan forgiveness process. This loan sale allows our team to focus on serving our clients and proactively monitor and address credit risk brought on by the pandemic. As a result, we recorded interest and fee income related to PPP loans of $1.7 million during 2020, as well as a gain on the sale of these loans of $333,000,” said Coughlin.

The Company also announced plans to particpate in the lateset round of PPP lending pursuant to the Consolidated Appropriations Act, 2021 (“CAA”), which was signed into law on December 27, 2020. The CAA is providing new COVID-19 stimulus relief, and it includes $284 billion allocated for another round of PPP lending, extending the program to March 31, 2021. The program offers new PPP loans for companies that did not receive a PPP loan in 2020, and also second draw loans targeted at hard-hit businesses that have already spent their initial PPP proceeds. “We plan to be participants in this new round of PPP proceeds by partnering with an SBA Small Business Lending Company, The Loan Source Inc., for the application, forgiveness and ongoing service process of our PPP loans, helping our business customers as we did during the first round of funding,” said Coughlin.

Executive Summary

• Net interest margin was 3.35 percent for the fourth quarter of 2020, compared to 2.98 percent for the third quarter of 2020, and 2.88 percent for the fourth quarter of 2019.• Net interest margin expanded by 90 basis points from the second quarter of 2020.• Total yield on interest-earning assets increased 12 basis points to 4.18 percent for the fourth quarter of 2020, compared to 4.06 percent for the third quarter of 2020 and decreased 26 basis points from 4.44 percent for the fourth quarter of 2019.• Total cost of interest-bearing liabilities decreased 31 basis points to 1.04 percent for the fourth quarter of 2020, compared to 1.35 percent for the third quarter of 2020 and decreased 83 basis points from 1.87 percent for the fourth quarter of 2019.
• Net income was $7.3 million in the fourth quarter of 2020, compared to $8.3 million in the prior quarter and $5.1 million in the fourth quarter a year ago.
• Earnings per diluted share were $0.41 in the fourth quarter of 2020, compared to $0.47 in the prior quarter and $0.29 in the fourth quarter of 2019.
• Loans receivable, net of allowance for loan losses, increased by 5.4 percent, to $2.295 billion at December 31, 2020, from $2.178 billion a year earlier.
• The provision for loan losses increased by $2.4 million, to $1.9 million for the fourth quarter of 2020, compared to a credit to the provision for loan losses of $475,000 for the fourth quarter of 2019; this increase was primarily due to factors related to the COVID-19 pandemic.
• Allowance for loan losses as a percentage of non-accrual loans was 205.2 percent at December 31, 2020, compared to 570.5 percent at December 31, 2019, as total non-accrual loans increased to $16.4 million at year-end as compared to $4.2 million at December 31, 2019.
• Total deposits were $2.318 billion at December 31, 2020, down from $2.362 billion a year ago.
• The Company purchased $60.0 million of BOLI during the third quarter of 2020.
• The Company redeemed $10.5 million of its outstanding preferred stock during the third quarter of 2020, which included the Company’s Series C 6% Noncumulative Perpetual Preferred Stock and Series F 6% Noncumulative Perpetual Preferred Stock, and issued $11.2 million of Series H 3.5% Noncumulative Perpetual Preferred Stock in 2020. The Company anticipates savings approximately $55,000 in dividend costs per quarter.
• The Bank sold substantially all of its PPP loans in December 2020. In addition to recognizing $908,000 of net fee income in 2020 on these loans, the Company also recognized a net gain of $333,000 on the sale.
• On January 13, 2021 the Company’s Board of Directors declared a regular quarterly cash dividend of $0.14 per share. The dividend will be payable February 15, 2021, to common shareholders of record on February 3, 2021.

Balance Sheet ReviewTotal assets decreased by $83.8 million, or 2.9 percent, to $2.824 billion at December 31, 2020, from $2.907 billion at December 31, 2019. The decrease in total assets from last year was mainly related to decreases in total cash and cash equivalents due to, among other things, the reduction in deposits and repayment of FHLB advances discussed below, partly offset by increases in loans receivable.

Loans receivable, net increased by $116.6 million, or 5.4 percent to $2.295 billion at December 31, 2020 from $2.178 billion at December 31, 2019. Total loan increases for the year ended December 31, 2020 included increases of $83.9 million in commercial real estate and multi-family loans, $51.0 million in construction loans, $6.7 million in commercial business loans, and $140,000 in consumer loans, partly offset by decreases of $11.0 million in home equity loans and $4.0 million in residential one-to-four family loan. Included within the net increase in loans receivable were $48.4 million of purchased loans, which the Company bought in the second quarter of 2020.

Total investment securities increased $23.4 million, or 24.8 percent, to $117.5 million at December 31, 2020, from $94.1 million at December 31, 2019.

Total deposits decreased by $44.0 million, or 1.9 percent, to $2.318 billion at December 31, 2020, from $2.362 billion at December 31, 2019. The decrease in deposits in the current year was primarily related to the maturity of certain high-rate, promotional certificate of deposit accounts in the third and fourth quarters. Some of these matured deposits went into other forms of deposits while others were withdrawn from the Bank.

Debt obligations decreased by $51.8 million, or 18.3 percent, to $230.8 million at December 31, 2020 from $282.6 million at December 31, 2019. The weighted average interest rate of FHLB advances was 1.63 percent at December 31, 2020 and 2.16 percent at December 31, 2019. During the year ended December 31, 2020, the Company opted to extinguish $47.0 million in FHLB advances, which held a weighted average rate of 2.24 percent. The advances were originally set to mature in 2021 and 2022. The effect of the extinguishment of the debt reduced the weighted average cost of FHLB borrowings by approximately 12 basis points on an annualized basis. The related non-recurring expense for the extinguishment of this debt is included in noninterest expense.

Stockholders’ equity increased by $9.7 million, or 4.1 percent, to $249.2 million at December 31, 2020, from $239.5 million a year ago. The increase in stockholders’ equity over the prior year included an increase in retained earnings of $9.9 million, representing earnings net of dividends paid. Accumulated other comprehensive income increased $2.0 million over the prior year, based upon favorable market conditions. Treasury stock was $26.9 million at December 31, 2020, an increase of $4.9 million from $22.0 million at December 31, 2019, related to the repurchase of Company common shares.

Fourth Quarter 2020 Income Statement Review

Net interest income increased by $2.7 million, or 13.3 percent, to $22.8 million for the fourth quarter of 2020, from $20.1 million for the fourth quarter of 2019. The increase in net interest income resulted primarily from a $5.3 million decrease in interest expense related to a decrease of 83 basis points in the average rate on interest-bearing liabilities to 1.04 percent for the fourth quarter of 2020, from 1.87 percent for the fourth quarter of 2019, as well as a $183.3 million, or 7.9 percent, decrease in the average balance of interest-bearing liabilities for the fourth quarter of 2020 to $2.151 billion, from $2.334 billion for the fourth quarter of 2019. Interest income was $2.6 million lower than the prior year, related to a decrease of 26 basis points in the average yield on interest-earning assets to 4.18 percent for the fourth quarter of 2020, from 4.44 percent for the fourth quarter of 2019, as well as a $77.8 million decrease, or 2.8 percent, in the average balance of interest-earning assets to $2.714 billion for the fourth quarter of 2020, from $2.792 billion for the fourth quarter of 2019. The lower rates for interest income and interest expense were driven by the reduction of the federal funds rate by 175 basis points from October, 2019 through March, 2020. Interest income on loans for the fourth quarter of 2020 included $214,000 of amortization of purchase credit fair value adjustments. The fair value adjustments relate to the 2018 acquisition of IA Bancorp, Inc. (“IAB”), which added approximately three basis points to the average yield on interest earning assets. Interest income on loans also included $268,000 of net fees related to the Bank’s PPP loans.

Net interest margin was 3.35 percent for the fourth quarter of 2020, compared to 2.88 percent for the fourth quarter of 2019. The significant improvement in net interest margin was the result of the effective deployment of cash and aligning our cost of funds with the market. The increase in the net interest margin compared to the fourth quarter of 2019 was the result of managing and reducing our cost of funds to reflect the current low interest rate environment. The Company’s average yield on interest-earning assets decreased by 26 basis points to 4.18 percent for the fourth quarter of 2020, compared to 4.44 percent for the fourth quarter of 2019, highlighting the impact market volatility surrounding the pandemic has had on rates. Management has been proactive in managing its cost of funds and decreased the average cost on total interest-bearing liabilities by 83 basis points to 1.04 percent for the fourth quarter of 2020, compared to 1.87 percent for the fourth quarter of 2019.

Total noninterest income increased by $2.7 million, or 267.1 percent, to $3.7 million for the fourth quarter of 2020, from $1.0 million for the fourth quarter of 2019. The increase in total noninterest income was mainly related to a higher unrealized gain of equity securities of $989,000, higher gains on the sale of investment securities of $700,000, BOLI income of $648,000, and higher gains on the sale of loans of $408,000. The unrealized gains or losses on equity securities, and the decision to recognize gains on the sales of securities, are based on market conditions. The increase in BOLI income relates to an initial purchase of $60.0 million of BOLI product in the third quarter of 2020. The increase in the gain on sale of loans primarily came as a result of the sale of our PPP loan portfolio in December, 2020.

Total noninterest expense increased by $118,000, or 0.8 percent, to $14.4 million for the fourth quarter of 2020, from $14.3 million for the fourth quarter of 2019 largely due to a loss related to the prepayment of FHLB borrowings, an increase in FDIC assessments and increased occupancy expense, all discussed below. Salaries and employee benefits expense decreased by $869,000, or 11.9 percent, to $6.5 million for the fourth quarter of 2020, from $7.4 million for the fourth quarter of 2019, primarily related to fewer full-time equivalent employees, partly offset by normal compensation increases. The number of full-time equivalent employees for the fourth quarter of 2020 was 302, as compared with 365 for the same period in 2019. Occupancy and equipment expense increased by $284,000, or 10.4 percent, to $3.0 million for the fourth quarter of 2020, from $2.7 million for the fourth quarter of 2019, largely related to building sanitization costs associated with the COVID-19 pandemic and the opening of a new branch in the third quarter of this year. Professional fees expense decreased $266,000, or 40.4 percent, to $393,000 for the fourth quarter of 2020, from $659,000 for the fourth quarter of 2019, primarily related to a legal matter settled in the prior-year period. Regulatory assessments increased by $330,000 to $461,000 for the fourth quarter of 2020, from $131,000 for the fourth quarter of 2019. The increase was primarily related to the receipt of a FDIC Small Bank Assessment Credit in the fourth quarter of 2019, and increases in the FDIC assessment rate and assessment base. The Company recognized a non-recurring expense of $837,000 for a loss on extinguishment of debt, related to the prepayment of high-cost FHLB borrowings in 2020. Other noninterest expense decreased by $185,000, or 9.3 percent, to $1.8 million for the fourth quarter of 2020, from $2.0 million for the fourth quarter of 2019. Other noninterest expense consisted of loan expense, business development, office supplies, correspondent bank fees, telephone and communication and miscellaneous fees and expenses. The decrease in the current period was primarily related to a reduction of business development and loan-related expenses, largely attributable to the current pandemic condition.

The income tax provision increased by $716,000, or 32.7 percent, to $2.9 million for the fourth quarter of 2020, from $2.2 million for the fourth quarter of 2019. The increase in the income tax provision was a result of higher taxable income for the fourth quarter of 2020 as compared with that same period for 2019. The consolidated effective tax rate for the fourth quarter of 2020 was 28.5 percent, compared to 29.9 percent for the fourth quarter of 2019. The lower rate in the current period related primarily to non-taxable BOLI income and lower non-deductible costs in the current year period.

Full Year 2020 Income Statement Review

Net interest income decreased by $2.2 million, or 2.7 percent, to $80.4 million for the year 2020, from $82.6 million for 2019. The decrease in interest and dividend income resulted primarily from a decrease in the average yield on interest-earning assets of 60 basis points to 3.99 percent for 2020, from 4.59 percent for 2019, partly offset by an increase in the average balance of interest-earning assets of $147.7 million, or 5.5 percent, to $2.840 billion for 2020, from $2.692 billion for 2019. Interest income on loans receivable decreased by $6.8 million, or 6.0 percent, to $107.2 million for 2020, from $114.0 million for 2019. The decrease was primarily attributable to a decrease in the average yield on loans of 32 basis points to 4.62 percent for 2020, from 4.94 percent for 2019, partly offset by an increase in the average balance of loans receivable of $14.3 million, or 0.6 percent, to $2.320 billion for 2020, from $2.305 billion for 2019. Interest income on loans also included $1.2 million of amortization of purchase credit fair value adjustments, which added approximately six basis points to the average yield on interest earning assets. The fair value adjustments relate to the 2018 acquisition of IAB. Interest income on loans also included $908,000 of net fees related to the Bank’s PPP loans. Interest expense decreased related to a decrease in the average rate on interest-bearing liabilities of 38 basis points to 1.44 percent for the year 2020, from 1.82 percent for 2019, partly offset by an increase in the average balance of interest-bearing liabilities of $41.2 million, or 1.8 percent, to $2.292 billion for 2020, from $2.251 billion for 2019. The decrease in the average cost of funds related to the declining interest rate environment. The increase in the average balance of interest-bearing liabilities primarily resulted from increased deposits, including those from new branches opened over the last few years.

Net interest margin was 2.83 percent for the year 2020, and 3.07 percent for the year 2019. The decrease in the net interest margin was the result of the current volatile financial market attributable to the COVID-19 pandemic, which has fueled the low interest rate environment.

Total noninterest income increased by $7.1 million, or 131.7 percent, to $12.5 million for 2020, from $5.4 million for 2019. The increase in total noninterest income was mainly related to a gain on sale of premises of $4.4 million, an increase in the realized and unrealized gain on equity securities of $1.6 million, BOLI income of $1.0 million, an increase in the gain on sale of investment securities of $702,000, and an increase in other noninterest income of $248,000, partly offset by a decrease in fees and service charges of $411,000, a decrease in gains on the sale of other real estate owned properties of $215,000, a decrease of $144,000 in gains on the sale of loans, and a decrease in the gains on the sale of impaired loans of $81,000. The gain on sale of premises relates to the completion of a sale/leaseback of certain offices that the Company sold to a private investor group in September, 2020. The unrealized gains or losses on equity securities are based on market conditions. The BOLI income relates to an initial purchase of $60.0 million of BOLI product in the third quarter of 2020. The increase in other noninterest income related primarily to the reversal of $295,000 of liabilities previously recorded for IAB acquired loans that paid off in 2020. The lower level of loan sales was attributable to the curtailment of loan growth, while the decline in fees and service charges related in part to the pandemic condition as well as lower servicing fee income resulting from fewer loan sales.

Total noninterest expense decreased by $1.5 million, or 2.8 percent, to $54.0 million for the year 2020, from $55.5 million for 2019.

Salaries and employee benefits expense decreased by $2.5 million, or 8.9 percent, to $25.9 million for 2020, from $28.4 million for 2019, primarily related to $1.3 million of costs deferred for PPP loans and fewer full-time equivalent employees, partly offset by normal compensation increases. The costs deferred represent current period salaries and benefit costs associated with direct PPP loan origination costs. The average number of full-time equivalent employees for the year 2020 was 329, as compared with 361 in 2019.

Occupancy and equipment expense increased by $1.1 million, or 10.2 percent, to $11.7 million for 2020, from $10.6 million for 2019, largely related to building sanitization costs associated with the COVID-19 pandemic and the addition of the Newark branch during 2020.

Professional fees expense decreased $351,000, or 17.3 percent, to $1.7 million for the year 2020, from $2.0 million for 2019, primarily related to a legal matter settled in the prior-year period.

Data processing and service fees increased by $625,000, or 19.6 percent, to $3.8 million for 2020 from $3.2 million for 2019, largely attributable to additional branches and system applications.

Regulatory assessments increased by $430,000, or 47.0 percent, to $1.3 million for 2020, from $914,000 for 2019. The increase was primarily related to the receipt of FDIC Small Bank Assessment Credits of $548,000 in 2019, and increases in the assessment rate and in the assessment base.

The Company recognized an expense of $1.1 million for a loss on extinguishment of debt for 2020, related to prepayments of high-cost FHLB borrowings.

Other noninterest expense decreased by $1.9 million, or 22.7 percent, to $6.6 million for 2020, from $8.5 million for 2019. Other noninterest expense consisted of loan expense, business development, office supplies, correspondent bank fees, telephone and communication and miscellaneous fees and expenses. The decrease in the current period was primarily related to a reduction of business development and loan-related expenses, largely attributable to the current pandemic condition.

The income tax provision decreased by $743,000, or 8.0 percent, to $8.6 million for 2020, from $9.3 million for 2019. The decrease in the income tax provision was a result of lower taxable income for 2020, as compared to 2019. The consolidated effective tax rate for 2020 was 29.1 percent compared to 30.7 percent for 2019. The lower rate in the current period related primarily to non-taxable BOLI income and lower non-deductible costs in the current year period.

Asset Quality

During the fourth quarter of 2020, the Company recognized $464,000 in net recoveries, compared to $482,000 in net charge-offs for the fourth quarter of 2019.

The COVID-19 pandemic has caused disruption to the global economy, but the extent and duration of the disruption is uncertain at this time. Management will continue to monitor any activity for loan deferment requests and delinquencies on a regular basis.

The provision for loan losses increased by $2.4 million, to $1.9 million, for the fourth quarter of 2020, compared to a credit of $475,000 for the fourth quarter of 2019; this increase was primarily due to COVID-19 related factors. The provision for loan losses increased by $7.4 million to $9.4 million for the year 2020 from $2.1 million for 2019. The Bank had non-accrual loans totaling $16.4 million, or 0.70 percent, of gross loans at December 31, 2020, as compared to $4.2 million, or 0.19 percent, of gross loans at December 31, 2019.

Performing troubled debt restructured (“TDR”) loans that were not included in nonaccrual loans at December 31, 2020, were $13.8 million, compared to $17.0 million at December 31, 2019. Borrowers who are in financial difficulty and who have been granted concessions (excluding COVID-19 modifications) that may include interest rate reductions, term extensions, or payment alterations, are categorized as TDR loans.

The allowance for loan losses was $33.6 million, or 1.44 percent of gross loans at December 31, 2020, and $23.7 million, or 1.08 percent of gross loans at December 31, 2019. The allowance for loan losses was 205.17 percent of non-accrual loans at December 31, 2020, and 570.53 percent of non-accrual loans at December 31, 2019.

COVID-19 Response

With the global outbreak of COVID-19, the Company remains focused on protecting the health and wellbeing of its employees and the communities in which it operates while assuring the continuity of its business operations. 

The Company activated its dedicated pandemic team that proactively implemented its business continuity plans and has taken a variety of measures to ensure the ongoing availability of services, while taking health and safety measures, including enhanced cleaning and hygiene protocols in all of its facilities and remote work policies, where possible. To date, as a result of these business continuity measures, the Company has not experienced significant disruptions in its operations. 

• Operational Initiatives

• The pandemic response team meets on an as-needed basis and actively monitors guidance released by regulators and banking associations.
• In-person meetings are closely managed and are held on an as needed basis only.
• Many employees are working remotely, temporarily relocated or are working alternate days to increase social distancing.
• Barriers have been installed in branches and back offices to provide protection.
• Branch and operational offices are cleaned and sanitized biweekly and employees have access to masks, gloves and disinfectant.
• Masks are required for entry and social distancing is strictly enforced.  
• Management provides updates to employees on a regular basis.
• The Call Center is open seven days a week to assist with customer inquiries.
• Beginning on January 11, 2021, branch offices began offering appointment banking services to lessen the spread of the virus and to protect employees and customers. We have recommended that our customers utilize our ATM and drive-through services wherever possible.

• Allowance for Loan Losses (“ALLL”)

• As several of the Company’s asset quality metrics have been adversely affected in 2020, management determined it is prudent to increase its loan loss reserves through the addition of $1.9 million and $9.4 million in loan loss provisions for the three-month and full-year periods ended December 31, 2020, respectively, due primarily to the economic downturn as a result of the COVID-19 pandemic. This compares to a credit of $475,000 and $2.1 million in loan loss provisions for the three-month and full-year periods ended December 31, 2019, respectively. The loan loss reserve to total loans ratio was 1.44 percent at December 31, 2020, compared to 1.08 percent at December 31, 2019. The increased reserve includes provisions taken in response to changes in risks associated with loan classification assignments, increases in impaired loans and a declining economy in New Jersey and New York.
• The Bank considered qualitative factors, such as changes in underwriting policies, current economic conditions, delinquency statistics, the adequacy of the underlying collateral and the financial strength of borrowers in arriving at its loan loss provision. All of these factors are likely to be affected by the COVID-19 pandemic. Individual deferred loans were stress tested to assess potential credit risks. The impact of COVID-19 is likely to be felt over the next several quarters. Adjustments to the ALLL may be required as the full impact of COVID-19 on the borrowers’ capacity to make payments and the value of the underlying collateral becomes known.

Loan Deferments

• The Bank, like other financial institutions, has received a significant number of requests to defer principal and/or interest payments, and has agreed to such deferrals or is in the process of doing so on a case by case basis. The banking regulatory agencies, through an Interagency Statement dated April 7, 2020, encouraged financial institutions to work prudently with borrowers who request loan modifications or deferrals as a result of COVID-19.
• The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and provided over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 modifications. A financial institution can then suspend the requirements under GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a TDR, and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Most of these loans are accruing interest and the Bank is considering the loans within the overall allowance for loan loss analysis.
• The Bank began receiving requests for loan deferments on March 13, 2020. The forbearance period provided by the Bank was generally three months with the Bank retaining the sole option to extend the forbearance period for an additional three months. Payments received upon the expiration of the forbearance period were first applied to interest accrued, then towards escrow advances, and any remaining amount towards principal.

The Bank has worked diligently with its customers by reaching out to them as the end of the three-month deferral term was approaching, and to understand the need for any prudent requests of an extension of the deferral period. The Bank has been encouraged with the results. The status of active loans at December 31, 2020 that had requested deferrals is as follows:

Description	Number of Loans			Owned Balance ($000s)		Percentage of Total
2nd Deferment	2		$	162		Enhanced Investments, Inc. 329 South Oyster Bay Road #2085 Plainview, NY 11803 team@eninvs.com Performance About Strategies Team Screener Global Commodities Trending Ideas Rising Stars U.S. Leaders Eastern European Strategy Important disclosures Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance. All the strategies assume investments in equity invstrumenta only and are more relevant for "agressive investment profile". Eastern European flagship strategy assumes using up to 20% leverage of total portfolio. GlobalCommodities and US Growth strategy currently assume no leverage. Results for the Enhanced Investments strategies as compared to the performance of Illustrative Benchmarks is for informational purposes only. Our investment program does not mirror that of the Illustrative Benchmarks and the volatility may be materially different from the volatility of Illustrative Benchmarks. Reference or comparison to an Illustrative Benchmark does not imply that strategies of Enhanced Investments will be constructed in the same way as the Illustrative Benchmark or achieve returns, volatility, or other results similar to those of the Illustrative Benchmark. The S&P 500 is an unmanaged market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. 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Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance. All the strategies assume investments in equity invstrumenta only and are more relevant for "agressive investment profile". Eastern European flagship strategy assumes using up to 20% leverage of total portfolio. GlobalCommodities and US Growth strategy currently assume no leverage. Results for the Enhanced Investments strategies as compared to the performance of Illustrative Benchmarks is for informational purposes only. Our investment program does not mirror that of the Illustrative Benchmarks and the volatility may be materially different from the volatility of Illustrative Benchmarks. Reference or comparison to an Illustrative Benchmark does not imply that strategies of Enhanced Investments will be constructed in the same way as the Illustrative Benchmark or achieve returns, volatility, or other results similar to those of the Illustrative Benchmark. The S&P 500 is an unmanaged market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request. All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is  for informational and general educational purposes only and is not investment or financial advice. © Enhanced Investments Inc. All rights reserved, 2023