BCB Bancorp in Bayonne, N.J., lost money in the first quarter after setting funds aside to cover issues with a borrower in the cannabis sector.
The billion-asset company said in a press release that it lost $8.3 million, after earnings $5.9 million a year earlier. The first quarter included a $13.7 million specific reserve tied to a $34.2 million loan in the cannabis sector.
“Although the borrower remains current, the significant deterioration in their financial condition warranted a downgrade to nonaccrual status and the establishment of the reserve,” Michael Shriner, BCB’s president and CEO, said in the release.
BCB also increased reserves for its discontinued Business Express Loan portfolio by $3.1 million, reflecting the portfolio’s “continued elevated deterioration and broader macroeconomic headwinds.”
The company said it recently bolstered its credit risk team with new hires.
“These efforts are part of a broader initiative to strengthen our credit quality oversight,” Shriner said. “Following a comprehensive portfolio review using a conservative risk framework, we’ve adjusted the risk ratings on a number of loans to better reflect current market realities.”