BSBK

Bogota Financial Corp. 10-Q Summary: Q1 2025

Business Context and Reporting Period

This report covers the quarterly period ended March 31, 2025. Bogota Financial Corp. (BSBK) is a Maryland corporation operating as the mid-tier stock holding company for Bogota Savings Bank. The Company is classified as a non-accelerated filer, a smaller reporting company, and an emerging growth company. It operates a single retail banking segment, primarily serving customers in New Jersey with residential, commercial, and consumer loans.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Turnaround: The Company returned to profitability with net income of $731,000, reversing a net loss of $441,000 in Q1 2024. This was driven by a $942,000 increase in net interest income and a $590,000 surge in non-interest income.
• Net Interest Income (NII): NII increased 35.5% to $3.59 million. The Net Interest Margin (NIM) expanded 48 basis points to 1.66%, primarily due to higher yields on loans (4.88% vs 4.61%) and securities (5.05% vs 3.67%).
• Non-Interest Income: Increased 197.4% to $889,000. This was largely due to a $550,000 increase in Bank-Owned Life Insurance (BOLI) income from a death benefit receivable and a $29,000 gain on the sale of loans.
• Balance Sheet Contraction: Total assets decreased $41.3 million (4.3%) from year-end 2024. Cash and cash equivalents dropped $26.6 million as excess funds were used to pay down borrowings. Net loans decreased $10.2 million, driven by lower demand in residential and construction lending.
• Expense Management: Non-interest expense increased $217,000 (5.9%) year-over-year. This was due to a $300,000 increase in occupancy and equipment costs related to a sale-leaseback transaction, partially offset by a $78,000 reduction in salaries and benefits due to reduced headcount.
• Asset Quality: Non-performing loans decreased slightly to $13.9 million (1.49% of total assets). The portfolio is dominated by one $10.9 million construction loan for a catering hall (99% complete, 45% LTV) which is in foreclosure proceedings but is considered well-secured with no specific reserve.

Outlook, Risks, and Unusual Items

• Capital Position: The Company remains "well capitalized" with a Community Bank Leverage Ratio of 15.00%, exceeding the 9% threshold for qualifying community banks.
• Liquidity: Liquidity is considered ample with $25.6 million in cash and $137.7 million in available-for-sale securities. The Company has $261.9 million in total borrowing capacity at the Federal Home Loan Bank, with $139.8 million currently utilized.
• Interest Rate Risk: The Company uses derivatives (interest rate swaps) to hedge interest rate risk. Simulation models indicate that a 100 basis point increase in rates would decrease Net Portfolio Value (NPV) by 9.51%, while a 100 basis point decrease would increase NPV by 9.31%.
• Unusual Items: The significant increase in BOLI income ($762k vs $212k prior year) included a specific death benefit receivable, which is a non-recurring item. Additionally, the occupancy expense increase is tied to a specific lease transaction completed in Q4 2024.
• Risk Factors: Key risks include general economic conditions, changes in loan delinquencies, funding costs, and interest rate fluctuations. The Company notes no material changes to risk factors from the previous 10-K.

Investor Verification Checklist

• Sustainability of BOLI Income: Verify if the $550,000 increase in BOLI income is recurring or a one-time death benefit event.
• Construction Loan Resolution: Monitor the status of the $10.9 million non-performing construction loan and the progress of foreclosure proceedings.
• Deposit Stability: Assess the stability of the deposit base, noting that 69.5% of deposits (CDs) mature within one year and uninsured deposits represent 7.9% of the total.
• Occupancy Costs: Confirm the long-term impact of the sale-leaseback transaction on future occupancy expenses.
• Share Repurchases: Note that the Company repurchased 50,211 shares in Q1 2025 at an average price of $7.90, exhausting the previous program limit.