Business Context and Reporting Period
Bogota Financial Corp. (BSBK) is a Maryland corporation and the bank holding company for Bogota Savings Bank, a New Jersey-chartered savings bank. The company operates seven branch offices and one loan production office in northern and central New Jersey. The filing covers the fiscal year ended December 31, 2024. The company is classified as a non-accelerated filer, a smaller reporting company, and an emerging growth company.
Key Financial Metrics
| Metric | 2024 | 2023 |
|---|---|---|
| Total Assets | $971.5 million | $939.3 million |
| Total Loans (Gross) | $714.3 million | $717.5 million |
| Total Deposits | $642.2 million | $625.3 million |
| Net Interest Income | $10.6 million | $15.0 million |
| Net Interest Margin | 1.16% | 1.71% |
| Net Income (Loss) | ($2.2 million) | $0.6 million |
| Stockholders' Equity | $137.3 million | $137.2 million |
| Allowance for Credit Losses | $2.6 million | $2.8 million |
| Non-Performing Assets | $14.0 million (1.44% of assets) | $12.8 million (1.36% of assets) |
Material Changes vs. Prior Period
- Profitability Decline: The company reported a net loss of $2.2 million in 2024, a reversal from a net income of $0.6 million in 2023. This was primarily driven by a $4.4 million decrease in net interest income.
- Net Interest Margin Compression: Net interest margin contracted by 55 basis points to 1.16%. While interest income on assets increased due to higher yields, interest expense on liabilities rose significantly (39.9% increase) due to higher rates on deposits and borrowings.
- Securities Portfolio Restructuring: The company sold approximately $66.0 million of securities (amortized cost) in Q4 2024, realizing a pre-tax loss of $8.9 million. Proceeds were reinvested into higher-yielding securities with longer durations. All remaining held-to-maturity securities were reclassified as available-for-sale.
- Real Estate Transaction: The bank completed a sale-leaseback transaction for three branch offices in Q4 2024, resulting in a $9.0 million pre-tax gain.
- Deposit Mix: Brokered deposits increased significantly to $101.6 million (15.8% of total deposits) from $53.3 million (8.5%) in 2023, reflecting a strategy to manage liquidity in a competitive rate environment.
Guidance, Outlook, and Risks
- Dividend Policy: The company does not anticipate paying dividends in the foreseeable future. Federal Reserve Board regulations effectively prohibit the mutual holding company (Bogota Financial, MHC) from waiving dividends, which would be required to pay dividends to public shareholders without dilution.
- Stock Repurchases: The company has an active repurchase program. As of December 31, 2024, 188,047 shares had been repurchased for $1.4 million, with approximately 49,000 shares remaining available under the program.
- Key Risks:
- Interest Rate Risk: The company is asset-sensitive but faces margin compression as funding costs rise faster than asset yields in certain segments. A 400 basis point increase in rates is projected to decrease Net Portfolio Value by 39.09%.
- Concentration Risk: 99.1% of the loan portfolio is secured by real estate in New Jersey. Commercial and multi-family real estate loans comprise 26.9% of the portfolio, exposing the bank to local economic downturns.
- Liquidity: Heavy reliance on certificates of deposit (76.8% of deposits) and brokered deposits creates refinancing risk if rates remain elevated or depositors withdraw funds.
Investor Verification Checklist
- Non-Performing Construction Loan: Verify the status of the $10.9 million non-performing construction loan, which is currently well-secured (41% LTV) but has no specific reserve recorded.
- Brokered Deposit Reliance: Assess the sustainability of the 15.8% brokered deposit ratio and the associated cost of funds (weighted average cost of 4.52% for brokered deposits).
- Securities Loss Realization: Review the impact of the $8.9 million realized loss on securities sales and the subsequent reinvestment strategy on future earnings.
- Dividend Restrictions: Confirm the ongoing regulatory constraints preventing dividend payments to public shareholders due to the mutual holding company structure.
- Capital Adequacy: Note that the bank elected the Community Bank Leverage Ratio (CBLR) framework and maintained a leverage ratio of 13.34%, well above the 9% requirement.