What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-14 compared with 2024-05-15 · 425 added, 182 removed, 979 unchanged (38% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

March 31, 2024

June 30, 2024

December 31, 2023

9 unchanged sentences

81,065,793 72,656,179

Loans, net of allowance of $ 2,785,949 and $ 2,785,949 , respectively

Loans, net of allowance for credit losses of $ 2,747,949 and $ 2,785,949 , respectively

707,645,118 714,688,635

29 unchanged sentences

Stockholders’ Equity

Preferred stock $ 0.01 par value 1,000,000 shares authorized, none issued and outstanding at March 31, 2024 and December 31, 2023

Common stock $ 0.01 par value, 30,000,000 shares authorized, 13,256,147 issued and outstanding at March 31, 2024 and 13,279,230 at December 31, 2023

Preferred stock $ 0.01 par value 1,000,000 shares authorized, none issued and outstanding at June 30, 2024 and December 31, 2023

Common stock $ 0.01 par value, 30,000,000 shares authorized, 13,148,824 issued and outstanding at June 30, 2024 and 13,279,230 at December 31, 2023

131,388 132,792

3 unchanged sentences

91,303,609 92,177,068

Unearned ESOP shares ( 403,082 shares at March 31, 2024 and 409,750 shares at December 31, 2023)

Unearned ESOP shares ( 396,415 shares at June 30, 2024 and 409,750 shares at December 31, 2023)

( 4,671,196 ) ( 4,821,798 )

9 unchanged sentences

Three Months Ended

Six Months Ended

Interest income

Loans, including fees

$ 8,299,404 $ 8,141,719 $ 16,506,796 $ 15,841,157

1,846,717 996,338 3,363,060 2,047,598

13,124 20,232 26,272 65,134

Other interest-earning assets

314,964 248,914 639,268 470,503

Total interest income

10,474,209 9,407,203 20,535,396 18,424,392

Interest expense

6,253,895 4,210,984 12,223,776 7,925,981

FHLB advances

1,476,600 902,839 2,916,669 1,680,193

Total interest expense

7,730,495 5,113,823 15,140,445 9,606,174

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

2,743,714 4,293,380 5,394,951 8,818,218

Provision (recovery) for credit losses

35,000 ( 125,000 ) 70,000 ( 125,000 )

Net interest income after provision (recovery) for credit losses

2,708,714 4,418,380 5,324,951 8,943,218

Non-interest income

Fees and service charges

49,203 45,700 107,790 97,852

Gain on sale of loans

— 16,150 — 29,375

Bank-owned life insurance

215,056 190,147 427,015 376,200

38,945 31,479 67,477 63,328

Total non-interest income

303,204 283,476 602,282 566,755

Non-interest expense

Salaries and employee benefits

2,143,388 2,301,236 4,301,953 4,463,605

Occupancy and equipment

366,908 358,757 738,025 741,544

FDIC insurance assessment

106,716 127,119 207,313 187,119

Data processing

318,520 235,095 622,125 512,192

115,100 96,083 225,200 243,383

Director fees

151,549 159,338 307,249 318,675

Professional fees

260,112 114,018 456,897 263,268

263,490 240,562 510,112 419,770

Total non-interest expense

3,725,783 3,632,208 7,368,874 7,149,556

(Loss) income before income taxes

( 713,865 ) 1,069,648 ( 1,441,641 ) 2,360,417

Income tax (benefit) expense

( 281,386 ) 213,007 ( 568,182 ) 511,069

Net (loss) income

$ ( 432,479 ) $ 856,641 $ ( 873,459 ) $ 1,849,348

(Loss) earnings per Share - basic

$ ( 0.03 ) $ 0.07 $ ( 0.07 ) $ 0.14

(Loss) earnings per Share - diluted

$ ( 0.03 ) $ 0.07 $ ( 0.07 ) $ 0.14

Weighted average shares outstanding - basic

12,803,925 13,079,302 12,828,428 13,137,522

Weighted average shares outstanding - diluted

12,803,925 13,081,158 12,828,428 13,162,056

See accompanying notes to unaudited consolidated financial statements.

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Six Months Ended

Net (loss) income

$ ( 432,479 ) $ 856,641 $ ( 873,459 ) $ 1,849,348

Other comprehensive (loss) income:

Net unrealized loss on securities available for sale:

Net unrealized gain (loss) on securities available for sale:

1,030,695 ( 702,617 ) ( 52,070 ) ( 861,321 )

( 289,728 ) 197,506 14,637 242,118

740,967 ( 505,111 ) ( 37,433 ) ( 619,203 )

Defined benefit retirement plans:

Reclassification adjustment for amortization of prior service cost and net (loss) gain included in salaries and employee benefits

— ( 23,016 ) 6,414 ( 46,032 )

— 6,470 ( 3,309 ) 12,940

— ( 16,546 ) 3,105 ( 33,092 )

Unrealized gain on swap contracts accounted for as cash flow hedges

Total other comprehensive (loss) income

Comprehensive income (loss) income

59,173 459,058 719,520 298,344

( 16,633 ) ( 129,042 ) ( 202,257 ) ( 83,865 )

42,540 330,016 517,263 214,479

Total other comprehensive income (loss)

783,507 ( 191,641 ) 482,935 ( 437,816 )

Comprehensive income (loss)

$ 351,028 $ 665,000 $ ( 390,524 ) $ 1,411,532

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Comprehensive

(Loss) Income

Balance January 1, 2023

13 unchanged sentences

13,572,356 $ 135,723 $ 57,928,185 $ 92,527,240 $ ( 5,047,701 ) $ ( 6,457,188 ) $ 139,086,259

— — — 856,641 — — 856,641

Other comprehensive loss

— — — — — ( 191,641 ) ( 191,641 )

Stock based compensation

— — 233,193 — — — 233,193

Stock purchased and retired

( 89,899 ) ( 899 ) ( 839,563 ) — — — ( 840,462 )

ESOP Shares released ( 25,789 shares)

— — ( 20,813 ) — 75,301 — 54,488

Balance June 30, 2023

13,482,457 $ 134,824 $ 57,301,002 $ 93,383,881 $ ( 4,972,400 ) $ ( 6,648,829 ) $ 139,198,478

Balance January 1, 2024

13 unchanged sentences

13,256,147 $ 132,461 $ 56,090,019 $ 91,736,088 $ ( 4,746,497 ) $ ( 6,765,346 ) $ 136,446,725

— — — ( 432,479 ) — — ( 432,479 )

Other comprehensive income

— — — — — 783,507 783,507

Stock based compensation

— — 237,093 — — — 237,093

Stock purchased and retired

( 107,323 ) ( 1,073 ) ( 733,660 ) — — — ( 734,733 )

ESOP shares released ( 6,447 shares)

— — ( 31,768 ) — 75,301 — 43,533

Balance June 30, 2024

13,148,824 $ 131,388 $ 55,561,684 $ 91,303,609 $ ( 4,671,196 ) $ ( 5,981,839 ) $ 136,343,646

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended

For the six months ended

Cash flows from operating activities

Adjustments to reconcile net income to net cash (used for) provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:

Amortization of intangible assets

Provision for credit losses

Provision (recovery) for credit losses

Depreciation of premises and equipment

Amortization (accretion) of deferred loan (fees) costs, net

Amortization of deferred loan costs, net

Amortization of premiums and accretion of discounts on securities, net

Deferred income tax (benefit)

Deferred income (benefit)

Gain on sale of loans

20 unchanged sentences

Net increase (decrease) in deposits

Net decrease in short-term FHLB advances

Net increase (decrease) in short-term FHLB advances

Proceeds from long-term FHLB non-repo advances

5 unchanged sentences

Cash and cash equivalents at beginning of year

Cash and cash equivalents at March 31,

Cash and cash equivalents at June 30,

Supplemental cash flow information

1 unchanged sentence

Interest paid

Fair value change in cash flow hedges

Fair value change in fair value hedges

See accompanying notes to unaudited consolidated financial statements.

9 unchanged sentences

Bogota Securities Corp.

was formed for the purpose of buying, selling and holding investment securities.

Bogota Properties, LLC was inactive at March 31, 2024 and December 31, 2023 .

was formed to buy, sell and hold investment securities.

Bogota Properties, LLC was inactive at June 30, 2024 and December 31, 2023 .

The Bank generally originates residential, commercial and consumer loans to, and accepts deposits from, customers in New Jersey.

7 unchanged sentences

For purposes of calculating basic EPS, weighted average common shares outstanding excludes unallocated employee stock ownership plan shares that have not been committed for release and non-vested shares of restricted stock.

Diluted EPS is computed using the same method as basic EPS, except it also reflects the potential dilution which could occur if stock options were exercised and converted into common stock.

Diluted EPS is computed using the same method as basic EPS, except it also reflects the potential dilution which could occur if non-vested restricted stock and stock options were exercised and converted into common stock.

The potentially diluted shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method.

For the three months ended March 31, 2024 and March 31, 2023 , options to purchase 523,619 common shares with an exercise price of $ 10.45 were outstanding but were not included in the computation of diluted earnings per common share because to do so would be anti-dilutive.

For the three and six months ended June 30, 2024 and June 30, 2023 , options to purchase 523,619 common shares with an exercise price of $ 10.45 were outstanding but were not included in the computation of diluted earnings per common share because to do so would be anti-dilutive.

Anti-dilutive options are those options with exercise prices in excess of the weighted average market value for the periods presented.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three months ended March 31, 2024 and 2023 .

For the three months ended March 31, 2024

For the three months ended March 31, 2023

All grants of non-vested restricted stock were also excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2024 , because to include such shares would be anti-dilutive.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and six months ended June 30, 2024 and 2023 .

For the three months ended June 30, 2024

For the three months ended June 30, 2023

For the six months ended June 30, 2024

For the six months ended June 30, 2023

Net (loss) income

3 unchanged sentences

Effect of stock options

— 1,856 — 24,534

Weighted average shares outstanding - diluted

12,803,925 13,081,158 12,828,428 13,162,056

Earnings per common share:

(Loss) earnings per common share:

$ ( 0.03 ) $ 0.07 $ ( 0.07 ) $ 0.14

28 unchanged sentences

This update is not expected to have a material impact on the Company’s financial statements.

BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In March 2024, the FASB issued ASU 2024 - 01, Compensation - Stock Compensation (Topic 718 ), which amended the guidance in ASC 718 to add an example showing how to apply the scope guidance to determine whether profits interest and similar awards should be accounted for as share-based payment arrangements.

For public business entities, the guidance is effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years.

For all other entities, it is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years.

This Update is not expected to have a significant impact on the Company's financial statements.

BOGOTA FINANCIAL CORP.

1 unchanged sentence

NOTE 2 – SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost, fair value, and gross unrealized gains and losses of securities available for sale, by contractual maturity, at March 31, 2024 and December 31, 2023 :

March 31, 2024

The following table summarizes the amortized cost, fair value, and gross unrealized gains and losses of securities available for sale, by contractual maturity, at June 30, 2024 and December 31, 2023 :

June 30, 2024

government and agency obligations

8 unchanged sentences

1,000,000 — ( 143,650 ) 856,350

MBSs – residential

MBS – residential

79,327,595 10,581 ( 5,937,193 ) 73,400,983

MBSs – commercial

MBS – commercial

18,535,809 — ( 2,587,685 ) 15,948,124

18 unchanged sentences

Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Government National Mortgage Association (“GNMA”).

There were no sales of securities during the three months ended March 31, 2024 or March 31, 2023 .

The age of unrealized losses and the fair value of related securities as of March 31, 2024 and December 31, 2023 were as follows:

There were no sales of securities during the three and six months ended June 30, 2024 or June 30, 2023 .

The age of unrealized losses and the fair value of related securities as of June 30, 2024 and December 31, 2023 were as follows:

Less Than 12 Months

12 Months or More

March 31, 2024

June 30, 2024

government and agency obligations

2 unchanged sentences

— — 7,927,638 ( 353,527 ) 7,927,638 ( 353,527 )

MBSs – residential

MBS – residential

34,861,639 ( 206,490 ) 32,893,712 ( 5,730,703 ) 67,755,351 ( 5,937,193 )

MBSs – commercial

MBS – commercial

— — 15,948,124 ( 2,587,685 ) 15,948,124 ( 2,587,685 )

7 unchanged sentences

1,999,940 ( 60 ) 9,818,816 ( 446,157 ) 11,818,756 ( 446,217 )

MBSs – residential

MBS – residential

- - 34,829,468 ( 5,703,143 ) 34,829,468 ( 5,703,143 )

MBSs – commercial

MBS – commercial

- - 16,116,840 ( 2,636,871 ) 16,116,840 ( 2,636,871 )

3 unchanged sentences

NOTE 2 – SECURITIES AVAILABLE FOR SALE (Continued)

Unrealized losses on corporate bonds available for sale are not considered to be credit losses because the issuer bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value was largely due to changes in interest rates and other market conditions.

At March 31, 2024 , 100% of the mortgage-backed securities were issued by U.S.

Unrealized losses on corporate bonds available for sale are not considered to be credit losses because the bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value was largely due to changes in interest rates and other market conditions.

At June 30, 2024 , 100% of the mortgage-backed securities were issued by U.S.

government-sponsored entities and agencies, primarily FNMA and FHLMC, institutions which the government has affirmed its commitment to support.

Because the decline in fair value was attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Bank does not consider these losses to be credit-related at March 31, 2024 .

As of March 31, 2024 , no ACL was required on available-for-sale securities.

At March 31, 2024 and December 31, 2023 , securities available for sale with a carrying value of $ 109,563 and $ 113,415 were pledged to secure public deposits.

There were 44 securities in a loss position at March 31, 2024 .

As of June 30, 2024 , no allowance for credit loss ("ACL") was required on available for sale securities.

At June 30, 2024 and December 31, 2023 , securities available for sale with a carrying value of $ 102,050 and $ 113,415 were pledged to secure public de posits.

There were 42 securities in a l oss position at June 30, 2024 .

NOTE 3 – SECURITIES HELD TO MATURITY

The following table summarizes the amortized cost, fair value, and gross unrecognized gains and losses of securities held to maturity by contractual maturity at March 31, 2024 and December 31, 2023 :

March 31, 2024

The following table summarizes the amortized cost, fair value, and gross unrecognized gains and losses of securities held to maturity by contractual maturity at June 30, 2024 and December 31, 2023 :

June 30, 2024

Government and agency obligations due in:

44 unchanged sentences

Effective January 1, 2023, the Company adopted ASC 326, which requires management to complete an evaluation of the held to maturity securities portfolio to identify whether any ACL is required.

Management completed an evaluation as of March 31, 2024 and December 31, 2023 , the results of which are presented in the below table which summarizes the allowance and provision for credit losses related to the Company's held-to-maturity securities portfolio by type:

Management completed an evaluation for the three and six months ended June 30, 2024 and 2023 , the results of which are presented in the below table, which summarizes the allowance and provision for credit losses related to the Company's held-to-maturity securities portfolio by type:

government and agency obligations

3 unchanged sentences

MBS – commercial

March 31, 2024

For the three months ended

June 30, 2024

Allowance for credit losses:

6 unchanged sentences

$ — $ 108,000 $ — $ — $ — $ 108,000

government and agency obligations Corporate bonds Municipal obligations MBS – residential MBS – commercial Total

March 31, 2023

government and agency obligations

Corporate bonds

Municipal obligations

MBS – residential

MBS – commercial

June 30, 2023

Allowance for credit losses:

6 unchanged sentences

$ — $ — $ — $ — $ — $ —

government and agency obligations

Corporate bonds

Municipal obligations

MBS – residential

MBS – commercial

For the six months ended

June 30, 2024

Allowance for credit losses:

Beginning balance

$ — $ — $ — $ — $ — $ —

Provision for credit losses

— 108,000 — — — 108,000

Securities losses

Total ending allowance balance

$ — $ 108,000 $ — $ — $ — $ 108,000

government and agency obligations

Corporate bonds

Municipal obligations

MBS – residential

MBS – commercial

June 30, 2023

Allowance for credit losses:

Beginning balance

$ — $ — $ — $ — $ — $ —

Impact of ASC 326 adoption

Provision for credit losses

Securities losses

Total ending allowance balance

$ — $ — $ — $ — $ — $ —

All of the MBSs are issued by the following government sponsored agencies:

9 unchanged sentences

MBS – commercial

March 31, 2024

June 30, 2024

Credit Rating

15 unchanged sentences

The fair value is expected to recover as the securities approach maturity.

At March 31, 2024 and December 31, 2023 , securities held to maturity with a carrying amount of $ 1,471,048 and $ 1,589,747 , respectively, were pledged to secure repurchase agreements at the Federal Home Loan Bank of New York.

There were 54 securities in a loss position at March 31, 2024 .

At March 31, 2024 and December 31, 2023 , securities held to maturity with a carrying value of $ 4,893,571 and $ 4,976,927 , respectively, were pledged to secure public deposits.

At June 30, 2024 and December 31, 2023 , securities held to maturity with a carrying amount of $ 1,350,225 and $ 1,589,747 , respectively, were pledged to secure repurchase agreements at the Federal Home Loan Bank of New York.

There we re 55 sec urities in a loss position at June 30, 2024 .

At June 30, 2024 and December 31, 2023 , securities held to maturity with a carrying value of $ 4,755,327 and $ 4,976,927 , respectively, were pledged to secure public deposits.

NOTE 4 – LOANS

Loans are summarized as follows at March 31, 2024 and December 31, 2023 :

Loans are summarized as follows at June 30, 2024 and December 31, 2023 :

Residential First Mortgage

16 unchanged sentences

The Bank has granted loans to officers and directors of the Bank.

At March 31, 2024 and December 31, 2023 , such loans totaled $ 2,042,728 and $ 1,610,688 , respectively.

At March 31, 2024 and December 31, 2023 , deferred loan fees were $ 2,780,716 and $ 2,873,724 , respectively.

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2024 and March 31, 2023 .

At June 30, 2024 and December 31, 2023 , such loans tota led $ 2,268,821 an d $ 1,610,688 , respectively.

At June 30, 2024 and December 31, 2023 , deferred loan fees were $ 2,822,574 and $ 2,873,724 , respectively.

The following table presents the activity in the ACL by portfolio segment for the three and six months ended June 30, 2024 and 2023 :

Residential First Mortgage

2 unchanged sentences

Commercial and Industrial

Three Months Ended March 31, 2024

Three months ended June 30, 2024

Allowance for credit losses:

12 unchanged sentences

Commercial and Industrial

March 31, 2023

Three Months Ended June 30, 2023

Allowance for credit losses:

1 unchanged sentence

$ 1,914,947 $ 423,002 $ 278,000 $ 241,000 $ 4,000 $ — $ 2,860,949

Provision for (recovery) of credit losses

( 103,400 ) 116,000 ( 13,000 ) ( 82,000 ) 7,400 — ( 75,000 )

Loans charged off

— — — — — — —

Total ending allowance balance

$ 1,811,547 $ 539,002 $ 265,000 $ 159,000 $ 11,400 $ — $ 2,785,949

Residential First Mortgage

Commercial Real Estate

Multi-Family Real Estate

Commercial and Industrial

Six Months Ended June 30, 2024

Allowance for credit losses:

Beginning balance

$ 1,851,969 $ 437,180 $ 317,300 $ 157,500 $ 22,000 $ — $ 2,785,949

Provision for (recovery) of credit losses

( 15,060 ) 19,718 ( 1,805 ) ( 52,074 ) 11,221 — ( 38,000 )

Loans charged off

— — — — — — —

Total ending allowance balance

$ 1,836,909 $ 456,898 $ 315,495 $ 105,426 $ 33,221 $ — $ 2,747,949

Residential First Mortgage

Commercial Real Estate

Multi-Family Real Estate

Commercial and Industrial

Six Months Ended June 30, 2023

Allowance for credit losses:

Beginning balance

$ 1,602,534 $ 381,180 $ 234,300 $ 258,500 $ 3,960 $ 97,700 $ 2,578,174

Impact of ASC 326 adoption

113,969 141,797 25,469 1,500 40 — 282,775

Provision for (recovery) of loan losses

Provision for (recovery) of credit losses

95,044 16,025 5,231 ( 101,000 ) 7,400 ( 97,700 ) ( 75,000 )

7 unchanged sentences

NOTE 4 – LOANS (Continued)

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segments and based on impairment method as of March 31, 2024 and December 31, 2023 :

The following table presents the balance in the ACL and the recorded investment in loans by portfolio segments and based on impairment method as of June 30, 2024 and December 31, 2023 :

Nonaccrual loans beginning of period

3 unchanged sentences

Interest recognized on nonaccrual loans

March 31, 2024

June 30, 2024

Residential First Mortgage

17 unchanged sentences

$ 856,659 $ 12,776,177 $ 12,776,177 $ — $ —

Collateral - dependent loans individually evaluated with the ACL by collateral type were as follows at March 31, 2024 and December 31, 2023:

March 31, 2024

Collateral - dependent loans individually evaluated with the ACL by collateral type were as follows at June 30, 2024 and December 31, 2023 :

June 30, 2024

Portfolio segment

16 unchanged sentences

$ 12,776,177 $ —

Interest income recognized during impairment and cash-basis interest income for the three months ended March 31, 2023 was nominal.

Interest income recognized during impairment and cash-basis interest income for the three and six months ended June 30, 2024 and 2023 was nominal.

BOGOTA FINANCIAL CORP.

1 unchanged sentence

NOTE 4 – LOANS (Continued)

No nonaccrual loans have specific reserves as of March 31, 2024 and the Bank had no other real estate owned at either March 31, 2024 or December 31, 2023 .

The following table presents the aging of the recorded investment in past due loans as of March 31, 2024 and December 31, 2023 , by class of loans:

March 31, 2024

No nonaccrual loans had specific reserves as of June 30, 2024 , as they were all well-secured and in the process of collection.

The Bank had no other real estate owned at either June 30, 2024 or December 31, 2023 .

The following table presents the aging of the recorded investment in past due loans as of June 30, 2024 and December 31, 2023 , by class of loans:

June 30, 2024

Residential First Mortgage

40 unchanged sentences

NOTE 4 – LOANS (Continued)

The following table presents loans, by risk category, loan class and year of origination as of March 31, 2024 and December 31, 2023 :

The following table presents loans, by risk category, loan class and year of origination as of June 30, 2024 and December 31, 2023 :

Term Loans by Origination Year

March 31, 2024

June 30, 2024

Revolving Loans

111 unchanged sentences

There were no loan modifications during the three -month period ended

March 31, 2024

June 30, 2024

BOGOTA FINANCIAL CORP.

2 unchanged sentences

The Company maintains the Bogota Financial Corp.

2021 Equity Incentive Plan ( "2021 Plan"), which provides for the issuance of up to 902,602 shares ( 257,887 restricted stock awards and 644,718 stock options) of Bogota Financial Corp.

2021 Equity Incentive Plan (the "2021 Plan"), which provides for the issuance of up to 902,602 shares ( 257,887 restricted stock awards and 644,718 stock options) of Bogota Financial Corp.

common stock.

4 unchanged sentences

Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.

During the three months ended March 31, 2024 and March 31, 2023 , approximately $ 120,000 and $ 118,000 in expense was recognized in regard to these awards, respectively.

The expected future compensation expense related to the 145,911 non-vested restricted shares outstanding at March 31, 2024 was approximately $ 1.2 million which is expected to be recognized over a weighted-average period of 2.57 years.

The following is a summary of the Company's restricted stock activity during the three months ended March 31, 2024 :

During the three and six months ended June 30, 2024 approximately $ 122,000 and $ 242,000 in expense was recognized in regard to these awards, respectively, compared to expense during the same periods ended June 30, 2023 , of approximately $ 118,000 and $ 236,000 , respectively.

The expected future compensation expense related to the 145,911 non-vested restricted shares outstanding at June 30, 2024 was approximately $ 1.1 million which is expected to be recognized over a weighted-average period of 2.33 years.

The following is a summary of the Company's restricted stock activity during the six months ended June 30, 2024 :

Number of Non-vested Restricted Shares

2 unchanged sentences

135,911 $ 10.45

Outstanding, March 31, 2024

Outstanding, June 30, 2024

145,911 $ 10.27

1 unchanged sentence

Stock options granted under the 2021 Plan vest in equal installments over a service period of five years beginning one year from the date of grant.

Stock options were granted at an exercise price of $ 10.45 , which was the Company's common stock price on the grant date and have an expiration period of 10 years.

Stock options were granted at an exercise price of $ 10.45 , which was the Company's common stock price on the grant date and had an expiration period of 10 years.

Management recognizes expense for the fair value of these awards on a straight-line basis over the requisite service period.

During the three months ended March 31, 2024 and March 31, 2023 , approximately $ 115,000 and $ 115,000 in expense was recognized in regard to these awards, respectively.

The expected future compensation expense related to the 526,119 non-vested options outstanding at March 31, 2024 was $ 1.1 million which is expected to be recognized over a weighted-average period of 2.50 years.

The following is a summary of the Company's option activity during the three months ended March 31, 2024 :

During the three and six months ended June 30, 2024 and June 30, 2023 , approximately $ 115,000 and $ 230,000 in expense was recognized in regard to these awards, respectively.

The expected future compensation expense related to the 314,171 non-vested options outstanding at June 30, 2024 was $ 1.1 million, which is expected to be recognized over a weighted-average period of 2.50 years.

The following is a summary of the Company's option activity during the six months ended June 30, 2024 :

Number of Stock Options

4 unchanged sentences

523,619 $ 10.45 5.5 $ —

Outstanding, March 31, 2024

Outstanding, June 30, 2024

523,619 $ 10.45 4.9 $ —

Options exercisable at March 31, 2024

Options exercisable at June 30, 2024

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options.

As of June 30, 2024 , there were no in-the-money options.

NOTE 6 – EMPLOYEE STOCK OWNERSHIP PLAN

3 unchanged sentences

The number of shares to be allocated annually is 25,789 through 2039.

During the three months ended March 31, 2024 and 2023 , $50,000 and $72,000 was incurred as expense for the plan, respectively.

As of March 31, 2024 , 112,693 shares have been allocated and 403,082 shares are unallocated with a fair value of $ 2.9 million.

During the three and six months ended June 30, 2024 , $ 44,000 and $ 93,809 was incurred as expense for the plan, respectively, compared to expense during the same periods ending June 30, 2023 of approximately $ 55,000 and $ 126,873 , respectively.

As of June 30, 2024 , 119,360 shares have been allocated and 396,415 shares are unallocated with a fair value of $ 2.7 million.

NOTE 7 – DERIVATIVES AND HEDGING ACTIVITES

23 unchanged sentences

Interest Rate Swaps.

At March 31, 2024 , the Company had four cash flow interest rate swaps with notional amounts of $ 55.0 million hedging on certain FHLB advances and brokered deposits.

At June 30, 2024 , the Company had four cash flow interest rate swaps with notional amounts of $ 55.0 million hedging certain FHLB advances and brokered deposits.

The Company also had two fair value interest rate swaps with notional amounts of $ 60.0 million hedging certain fixed-rate residential loans.

These interest rate swaps meet the cash flow hedge accounting requirements.

These interest rate swaps meet the hedge accounting requirements.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount.

2 unchanged sentences

The gain or loss on these derivatives, as well as the offsetting loss or gain on the hedged items attributable to the hedged risk, are recognized in interest income in the Company’s consolidated statements of income.

At December 31, 2023 , the Company had two interest rate swaps with a notional amount of $ 20.0 million to hedge certain FHLB advances.

At both March 31, 2024 and December 31, 2023 , the Company had no interest rate swaps in place with commercial banking customers.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the Consolidated Statements of Financial Condition at March 31, 2024 :

At December 31, 2023 , the Company had two interest rate swaps with a notional amount of $ 20.0 million to hedge certain FHLB advances and brokered deposits.

At both June 30, 2024 and December 31, 2023 , the Company had no interest rate swaps in place with commercial banking customers.

During the three and six months ended June 30, 2024 , the net effect on interest expense related to cash flow hedges was a reduced expense of $ 185,000 and $ 421,000 respectively, while the net effect on interest expense related to fair value hedge during the three and six months ended June 30, 2024 ,was a reduced expense of $ 103,000 and $ 327,000 respectively.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the Consolidated Statements of Financial Condition at June 30, 2024 :

Asset Derivative

3 unchanged sentences

$ 959,031 $ 239,510

Interest rate swaps

$ 600,181 $ —

Interest rate swaps

$ ( 616,462 ) $ —

Total derivative instruments

$ 942,750 $ 239,510

For the three months ended March 31, 2024 , unrealized gains of $ 1.2 million were recorded for changes in fair value of interest rate swaps with third parties and at March 31, 2024 , accrued interest was $ 180,000 .

For the six months ended June 30, 2024 , unrealized gains of $ 360,000 were recorded for changes in fair value of interest rate swaps with third parties and at June 30, 2024 , accrued interest was $ 215,000 .

The Company has agreements with counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default of its derivative obligations.

17 unchanged sentences

Quoted Prices

As of March 31, 2024

As of June 30, 2024

Securities available for sale:

3 unchanged sentences

11,939,647 — 11,939,647 —

MBSs - residential

MBS - residential

73,400,983 — 73,400,983 —

MBSs - commercial

MBS - commercial

15,948,124 — 15,948,124 —

Cash flow hedge

Cash flow and fair value hedges

1,559,212 — 1,559,212 —

6 unchanged sentences

11,818,756 — 11,818,756 —

MBSs - residential

MBS - residential

35,407,182 — 35,407,182 —

MBSs - commercial

MBS - commercial

16,116,840 — 16,116,840 —

2 unchanged sentences

$ 69,127,689 $ — $ 69,127,689 $ —

There were no transfers between level 1 and level 2 during the three months ended March 31, 2024 .

The carrying amounts and estimated fair values of financial instruments not measured at fair value, at March 31, 2024 and December 31, 2023 , were as follows:

There were no transfers between level 1 and level 2 during the six months ended June 30, 2024 .

The carrying amounts and estimated fair values of financial instruments not measured at fair value, at June 30, 2024 and December 31, 2023 , were as follows:

Fair Value Measurement Placement

(In thousands)

March 31, 2024

June 30, 2024

Financial instruments - assets

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Carrying amount is the estimated fair value for cash and cash equivalents.

The fair value of loans is determined using an exit price methodology.

Certificates of deposits fair value is estimated by using a discounted cash flow approach.

Fair value of FHLB advances is based on current rates for similar financing.

Other balance sheet instruments such as cash and cash equivalents, accrued interest receivable, accrued interest payable and Bank owned life insurance holding costs approximate fair value.

3 unchanged sentences

NOTE 9 – ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss included in equity (net of tax) for the three months ended March 31, 2024 and 2023 was as follows:

The components of accumulated other comprehensive loss included in equity (net of tax) for the three and six months ended June 30, 2024 and 2023 was as follows:

Unrealized gain

4 unchanged sentences

Three months ended

March 31, 2024

June 30, 2024

Beginning balance

7 unchanged sentences

$ ( 6,676,939 ) $ 5,654 $ 689,446 $ ( 5,981,839 )

March 31, 2023

Beginning balance at January 1, 2023

June 30, 2023

Beginning balance

$ ( 6,613,758 ) $ 39,138 $ 117,432 $ ( 6,457,188 )

4 unchanged sentences

( 505,111 ) ( 16,546 ) 330,016 ( 191,641 )

Ending balance at March 31, 2023

Ending balance

$ ( 7,118,869 ) $ 22,592 $ 447,448 $ ( 6,648,829 )

Unrealized gain and losses on available for sale securities

Benefit plans

Six Months Ended June 30, 2024

Beginning balance

$ ( 6,639,506 ) $ 2,549 $ 172,183 $ ( 6,464,774 )

Other comprehensive (loss) income before reclassification

( 37,433 ) 3,105 517,263 482,935

Amounts reclassified

Net period comprehensive (loss) income

( 37,433 ) 3,105 517,263 482,935

Ending balance

$ ( 6,676,939 ) $ 5,654 $ 689,446 $ ( 5,981,839 )

Six Months Ended June 30, 2023

Beginning balance

$ ( 6,499,666 ) $ 55,684 $ 232,969 $ ( 6,211,013 )

Other comprehensive (loss) income before reclassification

( 619,203 ) ( 33,092 ) 214,479 ( 437,816 )

Amounts reclassified

Net period comprehensive (loss) income

( 619,203 ) ( 33,092 ) 214,479 ( 437,816 )

Ending balance

$ ( 7,118,869 ) $ 22,592 $ 447,448 $ ( 6,648,829 )

BOGOTA FINANCIAL CORP.

1 unchanged sentence

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations at March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and March 31, 2023 is intended to assist in understanding the financial condition and results of operations of Bogota Financial Corp.

Management’s discussion and analysis of financial condition and results of operations at June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and June 30, 2023 is intended to assist in understanding the financial condition and results of operations of Bogota Financial Corp.

The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

10 unchanged sentences

general economic conditions, either nationally or in our market area, that are worse than expected, including potential recessionary conditions;

changes in the level and direction of loan delinquencies, charge-offs and non-performing and classified loans and changes in estimates of the adequacy of the allowance for credit losses;

changes in the amount and trend of loan delinquencies, charge-offs and non-performing and classified loans and changes in estimates of the adequacy of and the methodology for calculating the allowance for credit losses;

our ability to access cost-effective funding;

10 unchanged sentences

our ability to successfully integrate into our operations any assets, liabilities or systems we may acquire, as well as new management personnel or customers, and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;

changes in consumer spending, borrowing and savings habits;

changes in consumer spending, borrowing and saving habits;

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

5 unchanged sentences

Critical Accounting Policies

Our accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K at and for the year ended December 31, 2023 .

Our accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 .

Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change.

1 unchanged sentence

Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations.

Comparison of Financial Condition at March 31, 2024 and December 31, 2023

Comparison of Financial Condition at June 30, 2024 and December 31, 2023

Total Assets.

Assets increased $21.5 million, or 2.3%, from $939.3 million at December 31, 2023 to $960.9 million at March 31, 2024 primarily due to a $33.1 million, or 48.1%, increase in securities available for sale and, a $3.8 million, or 5.2%, increase in securities held-to-maturity, offset by a $6.4 million, or 0.89%, decrease in loans and a $10.5 million, or 42.1%, decrease in cash and cash equivalents.

Assets increased $35.4 million, or 3.8%, from $939.3 million at December 31, 2023 to $974.7 million at June 30, 2024 primarily due to a $38.0 million, or 55.1%, increase in securities available for sale and an $8.4 million, or 11.6%, increase in securities held-to-maturity, offset by a $7.1 million, or 1.0%, decrease in loans and a $7.3 million, or 29.4%, decrease in cash and cash equivalents.

Cash and Cash Equivalents.

Cash and cash equivalents decreased $10.5 million, or 42.1%, to $14.4 million at March 31, 2024 from $24.9 million at December 31, 2023 , as excess funds were used to purchase securities .

Cash and cash equivalents decreased $7.3 million, or 29.4%, to $17.6 million at June 30, 2024 from $24.9 million at December 31, 2023 , as excess funds were used to purchase securities.

Securities Available for Sale.

Securities availab le for sale increased $33.1 million, or 48.1%, to $102.0 million at March 31, 2024 from $68.9 million at December 31, 2023 .

The increase was primarily due to the purchase of mortgage-backed securities.

Securities available for sale increased $38.0 million, or 55.1%, to $106.9 million at June 30, 2024 from $68.9 million at December 31, 2023 .

The increase was primarily due to the purchase of mortgage-backed securities that were purchased with excess funds.

Securities Held to Maturity.

Securities held to maturity increased $3.8 million, or 5.2%, to $76.5 million at March 31, 2024 from $72.7 million at December 31, 2023 , primarily due to the purchase of mortgage-backed securities.

Net loans decreased $6.4 million, or 0.89%, to $708.3 million at March 31, 2024 from $714.7 million at December 31, 2023 .

The decrease was due to a decrease of $4.2 million, or 0.86%, in one- to four-residential real estate loans to $481.9 million from $486.1 million at December 31, 2023 and a decrease of $8.1 million, or 16.5%, in construction loans to $41.2 million at March 31, 2024 from $49.3 million at December 31, 2023 , offset by a $6.2 million, or 6.1%, increase in commercial real estate loans to $106.0 million at March 31, 2024 from $99.8 million at December 31, 2023 .

Securities held to maturity increased $8.4 million, or 11.6%, to $81.1 million at June 30, 2024 from $72.7 million at December 31, 2023 , primarily due to the purchase of mortgage-backed securities.

At June 30, 2024, the Company's allowance for credit losses related to held-to-maturity securities totaled $108,000 or 0.13% of the total held-to-maturity securities portfolio.

Net loans decreased $7.1 million, or 1.0%, to $707.6 million at June 30, 2024 from $714.7 million at December 31, 2023 .

The decrease was due to a decrease of $10.4 million, or 2.1%, in one- to four-residential real estate loans to $475.7 million from $486.1 million at December 31, 2023 and a decrease of $10.8 million, or 21.9%, in construction loans to $38.5 million at June 30, 2024 from $49.3 million at December 31, 2023 , offset by a $11.0 million, or 11.0%, increase in commercial real estate loans to $110.8 million at June 30, 2024 from $99.8 million at December 31, 2023 .

The decrease in one- to four-residential and construction loans reflect less opportunities and decreased demand due to the higher interest rate environment.

As of March 31, 2024 and December 31, 2023 , the Bank had no loans held for sale.

Delinquent loans increased $834,000 to $13.4 million, or 1.89% of total loans, at March 31, 2024 .

As of June 30, 2024 and December 31, 2023 , the Bank had no loans held for sale.

Delinquent loans increased $888,000 to $13.5 million, or 1.90% of total loans, at June 30, 2024 .

The increase was mostly due to one commercial real estate loan with a balance of $761,000 with a loan to value ratio of 59%.

During the same timeframe, non-performing assets decreased to $12.4 million and were 1.29% of total assets at March 31, 2024 .

The Company’s allowance for credit losses was 0.40% of total loans and 22.69% of non-performing loans at March 31, 2024 compared to 0.39% of total loans and 21.81% of non-performing loans at December 31, 2023 .

During the same timeframe, non-performing assets increased from $12.8 million at December 31, 2023 to $13.0 million, which represented 1.33% of total assets at June 30, 2024 .

The Company’s allowance for credit losses was 0.39% of total loans and 21.20% of non-performing loans at June 30, 2024 compared to 0.39% of total loans and 21.81% of non-performing loans at December 31, 2023 .

The Bank does not have any exposure to commercial real estate loans secured by office space.

The majority of the non-performing loans at June 30, 2024 was comprised of one construction loan with a balance of $10.9 million with a loan to value ratio of 45%.

Based on the well-secured nature of the loan, there was no associated specific reserve at June 30, 2024 .

The Company has commenced legal action against the client.

Total Liabilities.

Total liabilities increased $22.3 million, or 2.8%, to $824.4 million as of March 31, 2024 from $802.2 million as of December 31, 2023 , mainly due to a $40.2 million increase in deposits, offset by a $18.4 million decrease in borrowings.

Deposits increased $40.2 million, or 6.4%, to $665.5 million at March 31, 2024 from $625.3 million at December 31, 2023.

The increase in deposits reflected an increase in interest-bearing deposits of $16.2 million, or 15.9%, to $117.7 million as of March 31, 2024 from $101.5 million at December 31, 2023 due to the $24.8 million, or 5.0%, increase in certificates of deposit and increases of $16.7 million, or 19.2%, in checking and savings, offset by a $506,000 decrease in money market accounts.

Non-interest bearing deposits decreased $768,000, or 2.5%, to $29.8 million as of March 31, 2024 from $30.6 million as of December 31, 2023.

The decreases reflected customers’ desire for higher-yielding accounts in the higher interest rate environment.

At March 31, 2024 , municipal deposits totaled $59.4 million, which represented 8.9% of total deposits, and br okered deposits totaled $90.3 million, which represented 13.6% of deposits.

Total liabilities increased $36.2 million, or 4.5%, to $838.4 million as of June 30, 2024 from $802.2 million as of December 31, 2023 , primarily due to a $23.8 million increase in deposits and a $11.8 million increase in borrowings.

Deposits increased $23.8 million, or 3.8%, to $649.1 million at June 30, 2024 from $625.3 million at December 31, 2023 .

The increase in deposits reflected an increase in interest-bearing demand deposits of $1.7 million, or 1.6%, to $103.2 million as of June 30, 2024 from $101.5 million at December 31, 2023 due to the increases of $3.7 million, or 4.2%, in checking and savings accounts, offset by a $2.0 million, or 13.8%, decrease in money market accounts.

Certificates of deposit increased $19.3 million, or 3.9% to $512.6 million at June 30, 2024 from $493.3 million at December 31, 2023 .

Non-interest bearing deposits increased $2.8 million, or 9.1%, to $33.3 million as of June 30, 2024 from $30.6 million as of December 31, 2023.

The changes reflected customers’ desire for higher-yielding accounts in the higher interest rate environment.

At June 30, 2024 , municipal deposits totaled $35.4 million, which represented 5.5% of total deposits, and brokered deposits totaled $91.2 million, which represented 14.1% of deposits.

At December 31, 2023 , municipal deposits totaled $48.0 million, which represented 7.7% of deposits, and brokered deposits totaled $53.5 million, which represented 8.5% of total deposits.

At March 31, 2024 , uninsured deposits totaled $67.4 million, comprised of 303 account holders, which represented 10.1% of total deposits.

Federal Home Loan Bank of New York borrowings decreased $18.4 million, or 11.0%, to $149.3 million at March 31, 2024 from $167.7 million at December 31, 2023 , specifically long-term advances decreased $9.4 million, while short-term advances decreased by $9.0 million.

The weighted average rate of borrowings was 3.78% and 3.27% as of March 31, 2024 and December 31, 2023 , respectively.

Total borrowing capacity at the Federal Home Loan Bank was $316.5 million at March 31, 2024 , of which $149.3 million was advanced.

At June 30, 2024 , uninsured deposits totaled $69.3 million, comprised of 326 account holders, which represented 10.7% of total deposits.

Federal Home Loan Bank of New York borrowings increased $11.7 million, or 7.0%, to $179.4 million at June 30, 2024 from $167.7 million at December 31, 2023 , specifically short-term advances increased by $22.5 million while long-term advances decreased $10.7 million to better position the Company to take advantage of potential rate cuts.

The weighted average rate of borrowings was 4.71% and 4.54% as of June 30, 2024 and December 31, 2023 , respectively.

Total borrowing capacity at the Federal Home Loan Bank was $304.2 million at June 30, 2024 , of which $179.4 million was advanced.

Total Equity.

Stockholders’ equity decreased $726,000 to $136.4 million, primarily due to a net loss of $441,000, the repurchase of 33,083 shares of stock during the three months ended March 31, 2024 at a cost of $270,000, and a decrease in accumulated other comprehensive loss for securities available for sale of $300,000, partially offset by stock compensation of $234,000 for the three months ended March 31, 2024 .

At March 31, 2024 , the Company’s ratio of average stockholders’ equity-to-total assets was 14.24%, compared to 15.24% at December 31, 2023 .

Stockholders’ equity decreased $830,000 to $136.3 million, primarily due to a net loss of $873,000 and the repurchase of 140,406 shares of stock during the six months ended June 30, 2024 at a cost of $1.0 million, offset by an decrease in accumulated other comprehensive loss for securities available for sale of $483,000 and stock compensation of $472,000 for the six months ended June 30, 2024 .

At June 30, 2024 , the Company’s ratio of average stockholders’ equity-to-total assets was 13.65%, compared to 1 5.24% at December 31, 2023 .

Average Balance Sheets and Related Yields and Rates

4 unchanged sentences

Loan fees are included in interest income on loans and are not material.

Three Months Ended March 31,

Three Months Ended June 30,

Average Balance

24 unchanged sentences

(2) Cash flow hedges are used to manage interest rate risk.

During the three months ended March 31, 2024 , the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $288,000 and $47,000 respectively.

During the three months ended June 30, 2024 , the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $461,000 and $92,000 respectively.

(3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

Six Months Ended June 30,

Average Balance

Interest and Dividends

Average Balance

Interest and Dividends

(Dollars in thousands)

Cash and cash equivalents

Other interest-earning assets

Total interest-earning assets

Non-interest-earning assets

Liabilities and equity:

NOW and money market accounts

Savings accounts

Certificates of deposit (2)

Total interest-bearing deposits

Federal Home Loan Bank advances (2)

Total interest-bearing liabilities

Non-interest-bearing deposits

Other non-interest-bearing liabilities

Total liabilities

Total liabilities and equity

Net interest income

Interest rate spread (3)

Net interest margin (4)

Average interest-earning assets to average interest-bearing liabilities

(1) The average balance of loans includes non-accrual loans.

(2) Cash flow hedges are used to manage interest rate risk.

During the six months ended June 30, 2024 , the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $749,000 and $139,000 respectively.

(3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

Rate/Volume Analysis

4 unchanged sentences

Changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

Three Months Ended June 30, 2024

Six Months Ended June 30, 2024

Three Months Ended June 30, 2023

Six Months Ended June 30, 2023

Increase (Decrease) Due to

(In thousands)

11 unchanged sentences

Net decrease in net interest income

Comparison of Operating Results for the Three Months Ended March 31, 2024 and March 31, 2023

Net income decreased by $1.4 million, or 144.4%, to a net loss of $441,000 for the three months ended March 31, 2024 from net income of $993,000 for the three months ended March 31, 2023 .

Comparison of Operating Results for the Three Months Ended June 30, 2024 and June 30, 2023

Net income decreased by $1.3 million, or 150.5%, to a net loss of $432,000 for the three months ended June 30, 2024 from net income of $857,000 for the three months ended June 30, 2023 .

This decrease was primarily due to a decrease of $1.5 million in net interest income, partially offset by a decrease of $494,000 in income tax expense.

Interest Income.

Interest income increased $1.0 million, or 11.6%, from $9.0 million for the three months ended March 31, 2023 to $10.1 million for the three months ended March 31, 2024 due to higher yields on interest-earning assets, offset by a decrease in the average balance of loans.

Interest income on cash and cash equivalents increased $45,000, or 42.9%, to $150,000 for the three months ended March 31, 2024 from $105,000 for the three months ended March 31, 2023 due to a 126 basis point increase in the average yield from 4.84% for the three months ended March 31, 2023 to 6.10% for the three months ended March 31, 2024 due to the higher interest rate environment.

The increase was also due to a $1.1 million increase in the average balance to $9.9 million for the three months ended March 31, 2024 from $8.8 million for the three months ended March 31, 2023 , reflecting an increase in liquidity due to increased deposits and lower loan originations.

Interest income on loans increased $508,000, or 6.6%, to $8.2 million for the three months ended March 31, 2024 compared to $7.7 million for the three months ended March 31, 2023 due primarily to a 29 basis point increase in the average yield from 4.32% for the three months ended March 31, 2023 to 4.61% for the three months ended March 31, 2024 , offset by a $4.5 million decrease in the average balance to $713.4 million for the three months ended March 31, 2024 from $718.0 million for the three months ended March 31, 2023 .

Interest income on securities increased $433,000, or 39.5%, to $1.5 million for the three months ended March 31, 2024 from $1.1 million for the three months ended March 31, 2023 primarily due to a 96 basis point increase in the average yield from 2.71% for the three months ended March 31, 2023 to 3.67% for the three months ended March 31, 2024 , and to a lesser extent, to a $4.7 million increase in the average balance to $166.7 million for the three months ended March 31, 2024 from $162.0 million for the three months ended March 31, 2023 .

Interest income increased $1.1 million, or 11.3%, from $9.4 million for the three months ended June 30, 2023 to $10.5 million for the three months ended June 30, 2024 due to higher yields on interest-earning assets and an increase in the average balance of securities, partially offset by a decrease in the average balance of loans and cash and cash equivalents.

Interest income on cash and cash equivalents decreased $22,000, or 14.9%, to $127,000 for the three months ended June 30, 2024 from $149,000 for the three months ended June 30, 2023 due to a $3.8 million decrease in the average balance to $8.6 million for the three months ended June 30, 2024 from $12.4 million for the three months ended June 30, 2023 , reflecting the use of excess cash to purchase securities.

The decrease was offset by a 110 basis point increase in the average yield from 4.80% for the three months ended June 30, 2023 to 5.90% for the three months ended June 30, 2024 , due to the higher interest rate environment.

Interest income on loans increa sed $157,000, or 1.9%, to $8.3 million for the t hree months ended June 30, 2024 compared to $8.1 million for the three months ended June 30, 2023 due prim arily to an 11 basis point increase in the average yield from 4.59% for the three months ended June 30, 2023 to 4.70% for the three months ended June 30, 2024 , offset by a $2.1 million decrease in the average balance to $710.1 million for the three months ended June 30, 2024 from $712.2 million for the three months ended June 30, 2023 .

Interest income on securities increased $843,000, or 82.9%, to $1.9 million for the three months ended June 30, 2024 from $1.0 million for the three months ended June 30, 2023 primarily due to a 123 basis point increase in the average yield from 2.78% for the three months ended June 30, 2023 to 4.01% for the three months ended June 30, 2024 , and a $39.3 million increase in the average balance to $185.5 million for the three months ended June 30, 2024 from $146.2 million for the three months ended June 30, 2023 .

Interest Expense.

Interest expense increased $2.9 million, or 64.9%, from $4.5 million for the three months ended March 31, 2023 to $7.4 million for the three months ended March 31, 2024 due to higher costs and average balances on interest -bearing liabilities.

Interest expense on interest-bearing deposits increased $2.3 million, or 60.7%, to $6.0 million for the three months ended March 31, 2024 from $3.7 million for the three months ended March 31, 2023 .

The increase was due to a 157 basis point increase in the average cost of deposits to 3.82% for the three months ended March 31, 2024 from 2.25% for the three months ended March 31, 2023 .

Interest expense increased $2.6 million, or 51.2%, from $5.1 million for the three months ended June 30, 2023 to $7.7 million for the three months ended June 30, 2024 due to higher costs and average balances on interest -bearing liabilities.

Interest expense on interest-bearing deposits increased $2.0 million, or 48.5%, to $6.2 million for the three months ended June 30, 2024 from $4.2 million for the three months ended June 30, 2023 .

The increase was due to a 131 basis point increase in the average cost of deposits to 3.99% for the three months ended June 30, 2024 from 2.68% for the three months ended June 30, 2023 .

The increase in the average cost of deposits was due to the higher interest rate environment and a change in the composition of the deposit portfolio to a greater concentration of higher-costing certificates of deposit.

The average balances of certificates of deposit increased $13.1 million to $516.5 million for the three months ended March 31, 2024 from $503.4 million for the three months ended March 31, 2023 while average NOW and money market accounts and savings accounts decreased $43.3 million and $10.3 million for the three months ended March 31, 2024 , respectively, compared to the three months ended March 31, 2023 .

Interest expense on Federal Home Loan Bank borrowings increased $663,000, or 85.3%, from $777,000 for the three months ended March 31, 2023 to $1.4 million for the three months ended March 31, 2024 .

The increase was due to an increase in the average balance of borrowings of $56.7 million to $153.3 million for the three months ended March 31, 2024 .

The increase was also due to an increase in the average cost of borrowings of 51 basis points to 3.78% for the three months ended March 31, 2024 from 3.27% for the three months ended March 31, 2023 due to the new borrowings being at higher rates.

The average balances of certificates of deposit increased $23.9 million to $517.9 million for the three months ended June 30, 2024 from $494.0 million for the three months ended June 30, 2023 .

The average balance of savings accounts decreased by $4.8 million during the quarter, while the average balance of NOW and money market accounts decreased $20.6 million for the three months ended June 30, 2024 , compared to the three months ended June 30, 2023 .

Interest expense on Federal Home Loan Bank advances increased $573,000, or 63.6%, from $903,000 for the three months ended June 30, 2023 to $1.5 million for the three months ended June 30, 2024 .

The increase was due to an increase in the average balance of $49.8 million to $170.3 million for the three months ended June 30, 2024 .

The increase was also due to an increase in the average cost of borrowings of 48 basis points to 3.49% for the three months ended June 30, 2024 from 3.01% for the three months ended June 30, 2023 due to the new borrowings being at higher rates.

Net Interest Income.

Net interest income decreased $1.9 million, or 41.4%, to $2.7 million for the three months ended March 31, 2024 from $4.5 million for the three months ended March 31, 2023 .

The decrease reflected a 100 basis point decrease in our net interest rate spread to 0.68% for the three months ended March 31, 2024 from 1.68% for the three months ended March 31, 2023 .

Our net interest margin decreased 87 basis points to 1.18% for the three months ended March 31, 2024 from 2.05% for the three months ended March 31, 2023 .

Net interest income decreased $1.6 million, or 36.1%, to $2.7 million for the three months ended June 30, 2024 from $4.3 million for the three months ended June 30, 2023 .

The decrease reflected an 85 basis point decrease in our net interest rate spread to 0.72% for the three months ended June 30, 2024 from 1.57% for the three months ended June 30, 2023 .

Our net interest margin decreased 75 basis points to 1.21% for the three months ended June 30, 2024 from 1.96% for the three months ended June 30, 2023 .

Provision for Credit Losses.

We recorded a $35,000 provision for credit losses for the three months ended March 31, 2024 compared to no provision for credit losses for the three-month period ended March 31, 2023 .

The provision in the first quarter of 2024 was due to an increase in corporate securities.

We recorded a $35,000 provisio n for credit losses for the three months ended June 30, 2024 compared to a $125,000 recovery for credit losses for the three-month period ended June 30, 2023 .

During the three months ended June 30, 2024 the Company recorded a $73,000 provision for the held-to-maturity securities portfolio, which was partially offset by a credit to the provision for loans of $38,000, which was related to the increase in corporate securities and a decrease in the loan portfolio.

Non-Interest Income.

Non-interest income increased by $16,000, or 5.6%, to $299,000 for the three months ended March 31, 2024 from $283,000 for the three months ended March 31, 2023 .

Bank-owned life insurance income increased $26,000, or 14.0%, due to higher balances during 2024 , which was partially offset by a lower gain on sale of loans.

Non-interest income increased by $20,000, or 7.0%, to $303,000 for the three months ended June 30, 2024 from $283,000 for the three months ended June 30, 2023 .

Bank-owned life insurance income increased $25,000, or 13.1%, due to higher balances during 2024 , which was partially offset by no loan sales in 2024 compared to a $16,000 gain on sale of loans in 2023.

Non-Interest Expense.

For the three months ended March 31, 2024 , non-interest expense increased $126,000, or 3.6%, over the comparable 2023 period.

Professional fees increased $48,000, or 31.8%, due to higher consulting expense related to strategic business planning and the increase in FDIC insurance premiums by $41,000, or 67.7%, due to a higher assessment rate in 2024 .

For the three months ended June 30, 2024 , non-interest expense increas ed $94,000, or 2.6%, o ver the comparable 2023 period.

Professional fees increased $146,000, or 128.1% due to higher consulting expense related to strategic business planning.

Data processing expense increased $83,000, or 35.5%, due to higher processing costs.

The decrease in advertising expense of $37,000, or 25.3%, was due to reduced promotions for branch locations and less promotions on deposit and loan products.

Other expense increased $67,000, or 37.6%, due to higher loan expense.

Advertising expense also increased by $19,000, or 19.8%, which was related to promotions for our new branch location.

This was off set by a $158,000, or 6.9% decrease in salaries and employee benefits cost, which decreased due to lower headcount and increased expenses in 2023 related to the retirement of the Company's previous Chief Executive Officer.

Income Tax Expense.

Income tax expense decreased $585,000, or 196.2%, to a benefit of $287,000 for the three months ended March 31, 2024 from a $298,000 expense for the three months ended March 31, 2023 .

Income tax expense decreased $494,000, or 232.1%, to a benefit of $281,000 for the three months ended June 30, 2024 from a $213,000 expense for the three months ended June 30, 2023 .

The decrease was due to $1.8 million of lower taxable income.

Comparison of Operating Results for the Six Months Ended June 30, 2024 and June 30, 2023

Net income decreased by $2.7 million, or 147.2%, to a net loss of $873,000 for the six months ended June 30, 2024 from net income of $1.8 million for the six months ended June 30, 2023 .

This decrease was primarily due to a decrease of $3.4 million in net interest income, partially offset by a decrease of $1.1 million in income tax expense.

Interest Income.

Interest income increased $2.1 million, or 11.5%, from $18.4 million for the six months ended June 30, 2023 to $20.5 million for the six months ended June 30, 2024 due to higher yields on interest-earning assets, and to a lesser extent by an increase in the average balance of securities, partially offset by a decrease in the average balance of loans and cash and cash equivalents.

Interest income on cash and cash equivalents increased $22,000, or 8.7%, to $276,000 for the six months ended June 30, 2024 from $254,000 for the six months ended June 30, 2023 due to a 168 basis point increase in the average yield from 4.82% for the six months ended June 30, 2023 to 6.50% for the six months ended June 30, 2024 due to the higher interest rate environment.

The increase was offset by a $2.1 million decrease in the average balance to $8.5 million for the six months ended June 30, 2024 from $10.6 million for the six months ended June 30, 2023 .

Interest income on loans increased $666,000, or 4.2%, to $16.5 million for the six months ended June 30, 2024 compared to $15.8 million for the six months ended June 30, 2023 due primarily to a 19 basis point increase in the average yield from 4.45% for the six months ended June 30, 2023 to 4.64% for the six months ended June 30, 2024 , offset by a $3.3 million decrease in the average balance to $711.7 million for the six months ended June 30, 2024 from $715.1 million for the six months ended June 30, 2023 .

Interest income on securities increased $1.3 million, or 60.4%, to $3.4 million for the six months ended June 30, 2024 from $2.1 million for the six months ended June 30, 2023 primarily due to a 111 basis point increase in the average yield from 2.74% for the six months ended June 30, 2023 to 3.85% for the six months ended June 30, 2024 , and a $22.1 million increase in the average balance to $176.1 million for the six months ended June 30, 2024 from $154.0 million for the six months ended June 30, 2023 .

Interest Expense.

Interest expense increased $5.5 million, or 57.6%, from $9.6 million for the six months ended June 30, 2023 to $15.1 million for the six months ended June 30, 2024 primarily due to higher costs and average balances on certificates of deposit and borrowings.

Interest expense on interest-bearing deposits increased $4.3 million, or 54.2%, to $12.2 million for the six months ended June 30, 2024 from $7.9 million for the six months ended June 30, 2023 .

The increase was due to a 145 basis point increase in the average cost of deposits to 3.91% for the six months ended June 30, 2024 from 2.46% for the six months ended June 30, 2023 .

The average balances of certificates of deposit increased $18.5 million to $517.2 million for the six months ended June 30, 2024 from $498.7 million for the six months ended June 30, 2023 while average NOW and money market accounts and savings accounts decreased $31.9 million and $7.5 million for the six months ended June 30, 2024 , respectively, compared to the six months ended June 30, 2023 .

Interest expense on Federal Home Loan Bank advances increased $1.2 million, or 73.6%, from $1.7 million for the six months ended June 30, 2023 to $2.9 million for the six months ended June 30, 2024 .

The increase was due to an increase in the average balance of $54.2 million to $160.3 million for the six months ended June 30, 2024 .

The increase was also due to an increase in the average cost of borrowings of 47 basis points to 3.66% for the six months ended June 30, 2024 from 3.19% for the six months ended June 30, 2023 due to the new borrowings being at higher rates.

Net Interest Income.

Net interest income decreased $3.4 million, or 38.8%, to $5.4 million for the six months ended June 30, 2024 from $8.8 million for the six months ended June 30, 2023 .

The decrease reflected a 93 basis point decrease in our net interest rate spread to 0.68% for the six months ended June 30, 2024 from 1.61% for the six months ended June 30, 2023 .

Our net interest margin decreased 81 basis points to 1.20% for the six months ended June 30, 2024 from 2.01% for the six months ended June 30, 2023 .

Provision for Credit Losses.

We recorded a $70,000 provision for credit losses for the six months ended June 30, 2024 compared to a $125,000 recovery for credit losses for the six -month period ended June 30, 2023 .

The entire provision during the period was due to a $108,000 provision for held-to-maturity securities, which was offset by a $38,000 credit to the provision for loans, which was related to the increase in corporate securities a nd a decrease in the loan portfolio.

Non-Interest Income.

Non-interest income increased by $35,000, or 6.3%, to $602,000 for the six months ended June 30, 2024 from $567,000 for the six months ended June 30, 2023 .

Bank-owned life insurance income increased $51,000, or 13.5%, due to higher balances during 2024 , which was partially offset by no loan sales in 2024 compared to a $29,000 gain on sale of loans in 2023.

Non-Interest E xpense.

For the six months ended June 30, 2024 , non-interest expense increased $219,000, or 3.1%, over the comparable 2023 period.

Professional fees increased $194,000, or 73.5% due to higher consulting expense related to strategic business planning.

Data processing expense increased $110,000, or 21.5%, due to higher processing costs.

These were offset by a $162,000, or 3.6%, reduction in salaries and employee benefit costs, which decreased due to lower headcount and increase expenses in 2023 related to the retirement of the Company's previous Chief Executive Officer.

Income Tax Expense.

Income tax expense decreased $1.1 million, or 211.2%, to a benefit of $568,000 for the six months ended June 30, 2024 from a $511,000 expense for the six months ended June 30, 2023 .

The decrease was due to $3.8 million of lower taxable income.

Management of Market Risk

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monitoring the length of our borrowings with the Federal Home Loan Bank and brokered deposits depending on the interest rate environment;

maintaining a portion of our investments as available-for-sale;

maintaining a majority of our investments as available-for-sale;

diversifying our loan portfolio;

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We currently calculate NPV under the assumptions that interest rates increase 100, 200, 300 and 400 basis points from current market rates and that interest rates decrease 100, 200, 300 and 400 basis points from current market rates.

The following table presents the estimated changes in our net portfolio value that would result from changes in market interest rates as of March 31, 2024 .

The following table presents the estimated changes in our net portfolio value that would result from changes in market interest rates as of June 30, 2024 .

All estimated changes presented in the table are within the policy limits approved by the board of directors.

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Assumptions are supported with quarterly back testing of the model to actual market rate shifts.

As of March 31, 2024 , net interest income simulation results indicated that its exposure over one year to changing interest rates was within our guidelines.

As of June 30, 2024 , net interest income simulation results indicated that its exposure over one year to changing interest rates was within our guidelines.

The following table presents the estimated impact of interest rate changes on our estimated net interest income over one year:

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We also borrow from the Federal Home Loan Bank of New York.

At March 31, 2024 , we had the ability to borrow up to $316.5 million, of which $149.3 million was outstanding and $1.5 million was utilized as collateral for letters of credit issued to secure municipal deposits.

At March 31, 2024 , we had $54.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.

At June 30, 2024 , we had the ability to borrow up to $304.2 million, of which $179.4 million was outstanding and $1.4 million was utilized as collateral for letters of credit issued to secure municipal deposits.

At June 30, 2024 , we had $54.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.

The board of directors is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies.

We believe that we had ample sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2024 .

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition.

We believe that we had ample sources of liquidity to satisfy our short- and long-term liquidity needs as of June 30, 2024 .

While maturities and scheduled amortization of loans and securities are pre dictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition.

Our most liquid assets are cash and cash equivalents.

The levels of these assets are dependent on our operating, financing, lending and investing activities during any period.

At March 31, 2024 , cash and cash equivalents totaled $14.4 million.

Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $102.0 million at March 31, 2024 .

At June 30, 2024 , cash and cash equivalents totaled $17.6 million.

Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $106.9 million at June 30, 2024 .

We are committed to maintaining a strong liquidity position.

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We anticipate we will have sufficient funds to meet our current funding commitments.

Certificates of deposit due within one year of March 31, 2024 totaled $439.9 million, or 66.1% of total deposits.

Certificates of deposit due within one year of June 30, 2024 to taled $464.3 million, or 71.5% of total deposits.

If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and Federal Home Loan Bank of New York advances.

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We are subject to various regulatory capital requirements administered by the New Jersey Department of Banking and Insurance and the Federal Deposit Insurance Corporation.

At March 31, 2024 , we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines.

As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, as modified in April 2020, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank's Tier 1 “equity capital to average total consolidated assets) for financial institutions with less than $10 billion.

At June 30, 2024 , we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines.

As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, as modified in April 2020, the federal banking agencies were required to develop a “Community B ank Leverage Ratio” (the ratio of a bank's Tier 1 “equity capital to average total consolidated assets) for financial institutions with less than $10 billion.

A “qualifying community bank” with capital exceeding 9% will be considered compliant with all applicable regulatory capital and leverage requirements, including the capital requirements to be considered "well capitalized” under Prompt Corrective Action statutes.

As of March 31, 2024 , the Bank is reporting as a qualifying community bank with a ratio of 13.23%.

As of June 30, 2024 , the Bank is reporting as a qualifying community bank with a ratio of 13.07%.

Substantially all of the Company's assets and liabilities relate to banking activities and are monetary.

The consolidated financial statements and related financial data are presented following GAAP.

The consolidated financial statements and related financial data are presented in accordance with GAAP.

GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, except for securities available for sale, impaired loans, and other real estate loans that are measured at fair value.

Changes in the value of money due to rising inflation can cause purchasing power loss.

Changes in the value of money due to inflation can cause purchasing power loss.

Management's opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements