Bogota Financial Corp. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparisons are with the year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter earnings report. Bogota Financial Corp. is the holding company for Bogota Savings Bank, a New Jersey community bank focused primarily on residential real estate lending.
Financial performance and condition
| Metric | FY2023 / Dec. 31, 2023 | FY2022 / Dec. 31, 2022 |
|---|---|---|
| Total assets | $939.3 million | $951.1 million |
| Deposits | $625.3 million | $701.4 million |
| Loans, net | $714.7 million | $719.0 million |
| FHLB borrowings | $167.7 million | $102.3 million |
| Total equity | $137.2 million | $139.7 million |
| Interest income | $37.3 million | $30.3 million |
| Interest expense | $22.3 million | $7.3 million |
| Net interest income | $15.0 million | $23.1 million |
| Net income | $643,000; diluted EPS $0.05 | $6.9 million; diluted EPS $0.51 |
| Net interest margin | 1.71% | 2.76% |
| Return on average assets | 0.07% | 0.77% |
| Return on average equity | 0.46% | 4.76% |
| Efficiency ratio | 97.04% | 59.03% |
Cash flow: Operating activities provided $1.4 million; investing activities provided $21.5 million; financing activities used $14.9 million. Cash and cash equivalents rose $8.1 million to $24.9 million.
Credit and capital: Non-accrual loans reached $12.8 million, or 1.78% of loans, versus $857,000, or 0.12%, a year earlier. The allowance for credit losses was $2.8 million (0.39% of loans). The Bank reported a 13.96% leverage ratio and was classified as well capitalized.
Liquidity and funding: Certificates of deposit were 78.9% of deposits; $430.8 million of CDs mature in 2024. Brokered deposits were about $53.3 million (8.5% of deposits). The Bank reported $140.4 million of remaining FHLB borrowing availability and $54.0 million of unused correspondent-bank lines. Uninsured deposits were estimated at approximately $185.5 million across account categories in the filing.
Material changes from FY2022
- Net income fell 90.7%, chiefly as net interest income declined $8.1 million. Deposit costs rose sharply: average cost of interest-bearing deposits increased to 2.85% from 0.85%, while total interest expense more than tripled.
- Deposits declined $76.1 million (10.8%), including a marked reduction in NOW, money market and savings balances. FHLB borrowings increased $65.4 million, partially replacing deposit funding.
- Loan balances declined modestly overall. Commercial and multifamily real estate loans grew to $175.4 million, while residential and construction balances declined. Commercial/multifamily loans increased to 24.5% of loans from 22.5%.
- Credit quality weakened: non-accrual loans rose substantially, including a $10.9 million non-performing commercial construction loan. The filing says interest income was reduced by a $1.2 million reserve for non-accrual interest on a delinquent construction loan.
- Non-interest expense increased 10.3%, including higher salaries and benefits, FDIC premiums and other expenses. Management cited severance related to the CEO transition and a customer-account wire-fraud incident under insurance review. The efficiency ratio rose to 97.04%.
- The Company adopted CECL on January 1, 2023, recording an increase in the loan allowance and an unfunded-commitment reserve; the filing reports a roughly $222,000 after-tax reduction to retained earnings.
- The Company repurchased 418,786 shares during 2023 at a total cost of approximately $3.8 million. It reported $216,837 shares repurchased under the approved program as of year-end, with 33,083 shares remaining under that authorization.
Outlook, risks and other notable items
- Management expects moderate organic growth and plans to continue residential lending while emphasizing commercial and multifamily lending, core deposits, expense controls and technology investment. A seventh branch in Upper Saddle River was planned for the second quarter of 2024; this is a stated plan, not a reported completed opening.
- Management said liquidity was sufficient at year-end, but highlighted the substantial volume of CDs maturing in 2024 and the possibility that replacement funding could cost more.
- Interest-rate exposure is material. The Bank’s one-year simulation estimated net interest income would decline 10.21% under an immediate 100-basis-point rate increase and 41.48% under a 400-basis-point increase. These are model scenarios, not forecasts.
- Key risks include local real-estate concentration, commercial and multifamily property credit exposure, the non-performing construction loan, deposit competition and funding costs, interest-rate sensitivity, and market-value losses on securities. Available-for-sale securities had $9.2 million of gross unrealized losses at year-end; management attributed these principally to rates and market conditions, not credit losses.
- The Company does not anticipate paying dividends in the foreseeable future, citing restrictions affecting dividend waivers by its mutual holding company. The MHC owned a majority of the Company’s shares.
- The filing reports no material pending legal proceedings. The independent auditor gave an unqualified opinion on the financial statements; management concluded disclosure controls and internal control over financial reporting were effective. The auditor did not attest to internal-control effectiveness.
- After year-end, the Bank entered into a CEO employment agreement with Kevin Pace, with a $380,000 annual base salary and specified severance provisions.
Important facts for investors to verify
- Progress in resolving or recovering the $10.9 million non-performing construction loan, and any collateral valuation, loss exposure or further non-accrual interest effects.
- Deposit retention and repricing as $430.8 million of CDs mature in 2024; monitor uninsured, brokered and municipal deposit balances alongside borrowing reliance.
- Whether net interest margin stabilizes as deposit costs and FHLB funding reprice, and how actual results compare with the filing’s interest-rate sensitivity scenarios.
- Details and recovery status of the wire-fraud incident, including any insurance proceeds or additional costs.
- Execution and cost of the planned Upper Saddle River branch, and whether commercial real estate growth changes portfolio concentration or credit quality.
- Review the filing’s CECL adoption disclosures and related amounts: the narrative gives slightly different figures for the after-tax retained-earnings adjustment, so the precise value should be confirmed against the audited notes.