NJ bank’s losses to mushroom as loan cleanup accelerates

• Key takeaway: An equity capital raise and an associated loan sale are intended to decisively address credit-quality issues that have dogged BCB Bancorp.
• Forward look: The company’s third-quarter loss will likely fall between $126 million and $136 million, it said.
• Expert quote:  “This is frankly the price to be paid for moving quickly as opposed to letting credit issues and market uncertainty linger.” — Piper Sandler analyst Justin Crowley

Veteran turnaround specialist Thomas O’Brien promised to deal aggressively with BCB Bancorp’s bulging portfolio of problem loans when he signed on as CEO of the $3.1 billion-asset company on June 1.

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O’Brien has begun delivering on that pledge, which will lead to short-term pain and could culminate in BCB’s sale, according to analysts.

O’Brien last week announced the sale of 12.65 million shares of common stock at a significant discount to BCB’s tangible book value per share. He also disclosed that BCB intends to use the proceeds, nearly $100 million, to dispose of hundreds of millions of dollars of troubled credits.

BCB plans to sell $210 million of commercial loans, and to designate another $96 million worth — including the bank’s entire cannabis portfolio — as available-for-sale, which will trigger a fair-market write-down. As a result, the Bayonne, New Jersey-based bank expects to report a third-quarter loss in the range of $126.2 million to $136.1 million. 

“While we anticipate a difficult financial result this quarter, I believe that outcome is consistent with our commitment to work through the credit portfolios and put transparent, actionable solutions in place promptly,” O’Brien said in a press release. 

Though loan buyers haven’t entered into binding commitments, BCB stated in the release that it has lined up multiple buyers and expects to close the transactions before the end of the third quarter. The commercial loans up for sale include commercial real estate loans.

In its second-quarter financial report, BCB reported a tangible book value per share of $14.73 as of June 30. In a prospectus outlining the equity sale, it priced shares at $7.75, a 47% discount. 

Justin Crowley, an analyst at Piper Sandler, described the stock sale as “highly dilutive,” but he added that it was necessary, given the scale of BCB’s credit issues. Nonaccrual loans totaled $72 million, or 2.37% of total loans, on June 30. That was more than double the industry-wide average of 0.93%, according to Federal Deposit Insurance Corp. statistics.

“Though aggressive and costly, this is frankly the price to be paid for moving quickly as opposed to letting credit issues and market uncertainty linger,” Crowley wrote.  

Still, last week’s announcement didn’t hurt the company’s stock price. In fact, the share price has risen by about 1.5% over the seven days.

Like Crowley, Brean Capital analyst Christopher Marinac characterized BCB’s stock offering as “large and dilutive,” but added that it should help reduce total criticized loans to $70 million at year-end, down from $380 million on June 30.

Sale talk

BCB’s credit woes have been mounting for some time. A $12 million loss during the fourth-quarter of 2025 traced back to a write-down in the value of cannabis-related real estate, along with chargeoffs in the bank’s commercial-and-industrial portfolio.

BCB reported a $14.8 million loss in the second quarter of 2026, driven in large part by a $19 million provision for credit losses. Losses on some commercial loans were “near total,” O’Brien revealed on a conference call with analysts. At the same time, he noted that BCB had engaged outside consultants to perform a “comprehensive loan review,” and mentioned the prospect of “select” loan sales.

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O’Brien has remained mum publicly about a potential endgame for BCB, but he’s previously orchestrated sales of several ailing banks after nursing them back to health.
Southfield, Michigan-based Sterling Financial was acquired by the $46.7 billion-asset EverBank Financial for $261 million in cash in April 2025. Sun Bancorp in Vineland, New Jersey, sold to $23.3 billion-asset OceanFirst Financial in Red Bank, New Jersey, for approximately $475 million in 2018.

Marinac said that BCB “should be in position to be sold in early to mid 2027” as a result of the actions the company announced last week.