Benefits Plans

12 Months Ended

Dec. 31, 2024

Note 12- Benefits Plans

Pension Plan

The Company acquired, through the merger with Pamrapo Bancorp, Inc. a non-contributory defined benefit pension plan (“Pension Plan”) covering all eligible employees of Pamrapo Savings Bank. Effective January 1, 2010, the 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. The benefits are based on years of service and employee’s compensation. The Pension Plan is funded in conformity with funding requirements of applicable government regulations. Prior service costs for the Pension Plan generally are amortized over the estimated remaining service periods of employees.

The following tables set forth the Pension Plan's funded status at December 31, 2024, 2023 and 2022 and components of net periodic pension cost for the years ended December 31, 2024, 2023 and 2022:


Change in Benefit Obligation:	December 31,
		2024		2023		2022
	(In Thousands)
Benefit obligation, beginning of year	$	4,802	$	4,935	$	6,492
Interest cost		224		238		178
Actuarial gain ⁽¹⁾		(256)		(25)		(1,362)
Benefits paid		(363)		(346)		(363)
Lump sum distributions		(179)		-		(10)
Benefit obligation, ending	$	4,228	$	4,802	$	4,935
Change in Plan Assets:
Fair value of assets, beginning of year	$	6,012	$	5,965	$	7,144
Actual return on plan assets		612		393		(806)
Benefits paid		(363)		(346)		(363)
Lump sum distributions		(179)		-		(10)
Fair value of assets, ending	$	6,082	$	6,012	$	5,965
Fair value of assets	$	6,082	$	6,012	$	5,965
Projected benefit obligation		4,228		4,802		4,935
Funded status, included in other assets, net	$	1,854	$	1,210	$	1,030
Valuation assumptions used to determine benefit obligation at period end:
Discount rate		5.54%		4.83%		5.02%
Salary increase rate		N/A		N/A		N/A

(1) Actuarial gain comes about when the actual plan results are more favorable than the actuarial assumptions used to perform the calculations. The primary actuarial assumptions used are interest and mortality as well as the rate of return on the plan assets. Differences between expected and actual results in each year are included in the net actuarial gain.


Net Periodic Pension Expense:	December 31,
		2024		2023		2022
	(In Thousands)
Interest cost	$	224	$	238	$	178
Expected return on assets		(350)		(346)		(417)
Amortization of net loss		-		55		66
Net periodic pension benefit	$	(126)	$	(53)	$	(173)
Valuation assumptions used to determine net periodic benefit for the year:
Discount rate		4.83%		5.02%		2.83%
Long term rate of return on plan assets		6.00%		6.00%		6.00%
Salary increase rate		N/A		N/A		N/A

At December 31, 2024, 2023 and December 31, 2022, unrecognized net losses of $62,000, $580,000 and $559,000, respectively, were included, net of deferred income tax, in accumulated other comprehensive loss in accordance with ASC 715-20 and ASC 715-30.

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Note 12 - Benefits Plan (continued)

Plan Assets

Investment Policies and Strategies

The primary long-term objective for the Pension Plan is to maintain assets at a level that will sufficiently cover future beneficiary obligations. The Pension Plan is structured to include a volatility reducing component (the fixed income commitment) and a growth component (the equity commitment).

To achieve the Bank’s long-term investment objectives, the trustee invests the assets of the Pension Plan in a diversified combination of asset classes, investment strategies, and pooled vehicles. The asset allocation guidelines in the table below reflect the Bank’s risk tolerance and long-term objectives for the Pension Plan. These parameters will be reviewed on a regular basis and subject to change following discussions between the Bank and the trustee.

The following asset allocation targets and ranges guides the trustee in structuring the overall allocation in the Pension Plan’s investment portfolio. The Bank or the trustee may amend these allocations to reflect the most appropriate standards consistent with changing circumstances. Any such fundamental amendments in strategy will be discussed between the Bank and the trustee prior to implementation.

Based on the above considerations, the following asset allocation ranges will be implemented:



Asset Allocation Parameters by Asset Class
	Minimum	Target	Maximum
Equity
Large-Cap U.S.		42%
Mid/Small-Cap U.S.		11%
Non-U.S.		26%
Total-Equity	40%	55%	60%

Fixed Income
Long/Short Duration		43%
Money Market/Certificates of Deposit		2%
Total-Fixed Income	40%	45%	60%

The parameters for each asset class provide the trustee with the latitude for managing the Pension Plan within a minimum and maximum range. The trustee has full discretion to buy, sell, invest and reinvest in these asset segments based on these guidelines which includes allowing the underlying investments to fluctuate within the stated policy ranges. The Pension Plan maintains a cash equivalents component (not to exceed 3 percent under normal circumstances) within the fixed income allocation for liquidity purposes.

The trustee monitors the actual asset segment exposures of the Pension Plan on a regular basis and, periodically, may adjust the asset allocation within the ranges set forth above as it deems appropriate. Periodic reallocations of assets are based on the trustee’s perception of the changing risk/return opportunities of the respective asset classes.

Determination of Long-Term Rate of Return

The long-term rate of return on assets assumption was set based on historical returns earned by equities and fixed income securities, adjusted to reflect expectations of future returns as applied to the Pension Plan’s target allocation of asset classes. Equities and fixed income securities were assumed to earn real rates of return in the ranges of 6.0 to 10.0 percent and 2.0 to 6.0 percent, respectively. The long-term inflation rate was estimated to be 3.0 percent. When these overall return expectations are applied to the Pension Plan’s target allocation, the result is an expected rate of return of 4.0 to 7.0 percent.

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Note 12 - Benefits Plan (continued)

The fair values of the Pension Plan assets at December 31, 2024, by asset category (see Note 2 for the definitions of levels), are as follows (In Thousands):



Asset Category		Total		(Level 1)		(Level 2)		(Level 3)
Mutual funds-Equity
Large-Cap Value (a)	$	1,035	$	1,035	$	-	$	-
Large-Cap Growth (b)		-		-		-		-
Diversified Emerging Markets (f)		88		88		-		-
Large Blend (d)		1,253		1,253		-		-
Technology (g)		168		168		-		-
Mutual Funds-Fixed Income
Long Government (h)		38		38		-		-
Multi-Sector Bond (c)		1,181		1,181		-		-
High Yield Bond (e)		622		622		-		-
Intermediate Core Bond (i)		595		595
BCB Common Stock		590		590		-		-
Cash Equivalents
Money Market		512		512		-		-
Total	$	6,082	$	6,082	$	-	$	-

The fair values of the Company’s pension plan assets at December 31, 2023, by asset category (see Note 2 for the definitions of levels), are as follows (In Thousands):




Asset Category		Total		(Level 1)		(Level 2)		(Level 3)
Mutual funds-Equity
Large-Cap Value (a)	$	1,120	$	1,120	$	-	$	-
Large-Cap Growth (b)		261		261		-		-
Diversified Emerging Markets (f)		95		95		-		-
Large Blend (d)		1,025		1,025		-		-
Technology (g)		137		137		-		-
Mutual Funds-Fixed Income
Long Government (h)		46		46		-		-
Multi-Sector Bond (c)		1,244		1,244		-		-
High Yield Bond (e)		648		648		-		-
Intermediate Core Bond (i)		656		656		-		-
BCB Common Stock		666		666		-		-
Cash Equivalents
Money Market		114		114		-		-
Total	$	6,012	$	6,012	$	-	$	-

a)Large Cap value portfolios invest primarily in big U.S. companies that are less expensive or growing more slowly than other large-cap stocks. Stocks in the top 70 percent of the capitalization of the U.S. equity market are defined as large cap. Value is defined based on low valuations (low price ratios and high dividend yields) and slow growth (low growth rates for earnings, sales, book value, and cash flow).

b)Large Cap Growth Stocks of large cap companies that are projected to grow faster than other large cap stocks. Stocks in the top 70% of the capitalization of the U.S. equity market defined as large cap. Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price ratios and low dividend yields).

c)Multi Sector portfolios seek income by diversifying their assets among several fixed-income sectors, usually U.S. government obligations, foreign bonds, and high-yield domestic debt securities.

d)This fund invests in 500 of the largest U.S. companies, which span many different industries and account for about three-fourths of the U.S. Stock Markets value.

e)High Yield Bond funds invest at least 65 percent of assets in bonds rated below BBB. This fund seeks to provide shareholders with a high level of current income with capital growth as a secondary objective.

f)The fund invests at least 80% of the value of its assets in equity securities and equity related instruments that are tied economically to emerging markets.

g)The fund normally invests at least 80% of the fund’s net assets in securities of issuers principally engaged in offering, using or developing products, processes or services that will provide or benefit significantly from technological advances and improvements.

h)The fund normally invests at least 80% of assets in securities included in the Bloomberg Barclays U.S. Long Treasury Bond Index.

i)Intermediate term core bond portfolios invest primarily in investment grade U.S. fixed-income issues including government, corporate, and securitized debt, and hold less than 5% in below-investment grade exposures.

Note 12 - Benefits Plan (continued)

The Company does not expect to contribute, based upon actuarial estimates, to the Pension Plan in 2025.

Benefit payments are expected to be paid for the years ended December 31 as follows (In thousands):



2025	$	374
2026		373
2027		374
2028		371
2029		361
2030-2034		1,619

Equity Incentive Plans

The Company, under the plan approved by its shareholders on April 27, 2023 (“2023 Equity Incentive Plan”), authorized the issuance of up to 1,000,000 shares of common stock of the Company pursuant to grants of stock options, restricted stock awards, restricted stock units, and performance awards. Employees and directors of the Company and the Bank are eligible to participate in the 2023 Equity Incentive Plan. All stock options are 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.

The Company, under the plan approved by its shareholders on April 26, 2018 (“2018 Equity Incentive Plan”), authorized the issuance of up to 1,000,000 shares of common stock of the Company pursuant to grants of stock options and restricted stock units. Employees and directors of the Company and the Bank are eligible to participate in the 2018 Stock Plan. All stock options are 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.

The Company, under the plan approved by its shareholders 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 were 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 April 25, 2024, awards of 30,000 and 20,000 shares of restricted stock were declared for an executive officer of the Bank and the Company, which vest over a 2 and 3-year period, respectively, commencing on the anniversary date of the awards.

On January 31, 2023, awards of 27,000 shares of restricted stock, in aggregate were declared for members of the Board of Directors of the Bank and the Company, which vest over a 4-year period, commencing on the anniversary of the award date.

On June 30, 2023, an award of 25,252 shares of restricted stock was declared for a director and executive officer of the Bank and the Company, which fully vests on the anniversary of the award date.

The following table presents the share-based compensation expense for the years ended December 31, 2024, 2023 and 2022 (In Thousands).



	Years Ended December 31,
		2024		2023		2022
Stock Option Expense	$	128	$	133	$	216
Restricted Stock Expense		639		460		916
Total share-based compensation expense	$	767	$	593	$	1,132

The following is a summary of the status of the Company’s restricted shares as of December 31, 2024.



	Number of Shares Awarded	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2023	86,752	$ 14.98
Granted	50,000	9.44
Vested	(50,227)	13.85
Forfeited	(1,725)	14.92
Non-vested at December 31, 2024	84,800	$ 12.38

The remaining non-vested restricted shares outstanding as of December 31, 2024, will be charged to expense in 2025-2027, totaling $636,000.

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Note 12 - Benefits Plan (continued)

A summary of stock option activity, follows:


	Number of Options		Range of Exercise Price		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (000's)
Outstanding at January 1, 2023	1,036,975	$	9.03-13.68	$	11.72	4.47	$	6,502
Options forfeited	-		-		-	-		-
Options exercised ⁽¹⁾	(61,000)		9.03		9.03	-		-
Options granted	-		-		-	-		-
Options expired	-		-		-	-		-
Outstanding at December 31, 2023	975,975	$	10.55-13.68	$	11.89	3.83	$	984
Options forfeited	-		-		-	-		-
Options exercised ⁽²⁾	(2,000)		12.19		12.19	-		-
Options granted	-		-		-	-		-
Options expired	(80,000)		13.32		13.32	-		-
Outstanding at December 31, 2024	893,975	$	10.55-13.68	$	11.76	3.16	$	355
Exercisable at December 31, 2024	799,955

(1) Includes 9,628 cashless exercise of options during 2023.

(2) Includes 2,000 cashless exercise of options during 2024.

It is Company policy to issue new shares upon share option exercise. Expected future compensation expense relating to the 94,020 shares of unvested options outstanding as of December 31, 2024, is $150,000 and will be recognized over a weighted average period of 2.14 years.

There were no options awarded during the years ended December 31, 2024, and 2023.

Supplemental Executive Retirement Plan

The Bank entered into a Supplemental Executive Retirement Agreement (the “SERP Agreement”) with its former Chief Executive Officer (“the CEO”) in December 2021, payable in the form of a life annuity.

The SERP Agreement was an unfunded arrangement maintained primarily to provide supplemental retirement benefits and comply with Section 409A of the Internal Revenue Code. The cost of the benefit is being amortized over a three-year vesting period beginning in 2021. The Bank recorded compensation expense of $45,000, $350,000, and $328,000 related to the Plan during the years ended December 31, 2024, 2023 and 2022, respectively. For each of the years ended December 31, 2025, and 2026, the anticipated expense is $50,000 and $49,000, respectively. The Bank has elected to fund the retirement benefit by purchasing annuities that have been designed to provide a future source of funds for the lifetime retirement benefits of the SERP Agreement, totaling $1.80 million, which is included in other assets.