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Bogota Financial Corp. - Quarter Report: 2022 March (Form 10-Q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _______________

 

Commission File No. 001-39180

 

Bogota Financial Corp.

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

 

84-3501231

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

 

819 Teaneck Road

Teaneck, New Jersey

 

 

07666

(Address of Principal Executive Offices)

 

(Zip Code)

 

(201) 862-0660

(Registrant’s Telephone Number, Including Area Code)

 

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange
on which registered

Common Stock, $0.01 par value per share

 

BSBK

 

The Nasdaq Stock Market, LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. YesNo

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YesNo

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO

 

As of April 30, 2022, there were 14,631,679 shares issued and outstanding of the registrant’s common stock, par value $0.01 per share

 

 


Bogota Financial Corp.

Form 10-Q

 

Table of Contents

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

 

Financial Statements

 

1

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition at March 31, 2022 and December 31, 2021(unaudited)

 

1

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three Months Ended March 31, 2022 and 2021 (unaudited)

 

2

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2022 and 2021 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Equity for the Three Months Ended March 31, 2022 and 2021 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (unaudited)

 

5

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

7

 

 

 

 

 

Item 2.

 

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

 

27

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

37

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

37

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

38

 

 

 

 

 

Item 1A.

 

Risk Factors

 

38

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

38

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

38

 

 

 

 

 

Item 5.

 

Other Information

 

38

 

 

 

 

 

Item 6.

 

Exhibits

 

39

 

 

 

 

 

 

 

SIGNATURES

 

40

 

 

 

i


 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

 

 

As of

 

 

As of

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Assets

 

(unaudited)

 

 

 

 

Cash and due from banks

 

$

15,233,627

 

 

$

14,446,792

 

Interest-bearing deposits in other banks

 

 

53,820,627

 

 

 

90,621,993

 

Cash and cash equivalents

 

 

69,054,254

 

 

 

105,068,785

 

Securities available for sale

 

 

91,591,740

 

 

 

41,838,798

 

Securities held to maturity (fair value of $78,414,506 and $74,081,059,
   respectively)

 

 

81,314,630

 

 

 

74,053,099

 

Loans held for sale

 

 

450,000

 

 

 

1,152,500

 

Loans, net of allowance of $2,153,174 and $2,153,174, respectively

 

 

564,426,841

 

 

 

570,209,669

 

Premises and equipment, net

 

 

8,060,909

 

 

 

8,127,979

 

Federal Home Loan Bank (FHLB) stock and other restricted securities

 

 

4,514,700

 

 

 

4,851,300

 

Accrued interest receivable

 

 

2,770,432

 

 

 

2,712,605

 

Core deposit intangibles

 

 

318,347

 

 

 

336,364

 

Bank-owned life insurance

 

 

24,667,417

 

 

 

24,524,122

 

Other assets

 

 

3,520,871

 

 

 

4,486,366

 

Total Assets

 

$

850,690,141

 

 

$

837,361,587

 

Liabilities and Equity

 

 

 

 

 

 

Non-interest bearing deposits

 

$

42,935,960

 

 

$

39,317,500

 

Interest bearing deposits

 

 

576,996,588

 

 

 

558,162,278

 

Total Deposits

 

 

619,932,548

 

 

 

597,479,778

 

FHLB advances

 

 

78,003,974

 

 

 

85,051,736

 

Advance payments by borrowers for taxes and insurance

 

 

2,931,998

 

 

 

2,856,120

 

Other liabilities

 

 

4,795,689

 

 

 

4,397,742

 

Total liabilities

 

 

705,664,209

 

 

 

689,785,376

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

Preferred stock $0.01 par value 1,000,000 shares authorized, none
  issued and outstanding at March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock $0.01 par value, 30,000,000 shares authorized,
   
14,425,308 issued and outstanding at March 31, 2022 and
   
14,605,809 at December 31, 2021

 

 

144,252

 

 

 

146,057

 

Additional paid-in capital

 

 

66,580,931

 

 

 

68,247,204

 

Retained earnings

 

 

86,280,709

 

 

 

84,879,812

 

Unearned ESOP shares (456,644 shares at March 31, 2022 and
   
463,239 shares at December 31, 2021)

 

 

(5,348,905

)

 

 

(5,424,206

)

Accumulated other comprehensive loss

 

 

(2,631,055

)

 

 

(272,656

)

Total stockholders’ equity

 

 

145,025,932

 

 

 

147,576,211

 

Total liabilities and stockholders’ equity

 

$

850,690,141

 

 

$

837,361,587

 

 

See accompanying notes to unaudited consolidated financial statements.

1


 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

 

 

 

Three months ended
March 31,

 

 

 

2022

 

 

2021

 

Interest income

 

 

 

 

 

 

Loans

 

$

5,537,080

 

 

$

5,464,961

 

Securities

 

 

 

 

 

 

Taxable

 

 

637,121

 

 

 

673,547

 

Tax-exempt

 

 

20,996

 

 

 

12,585

 

Other interest-earning assets

 

 

83,813

 

 

 

123,004

 

Total interest income

 

 

6,279,010

 

 

 

6,274,097

 

Interest expense

 

 

 

 

 

 

Deposits

 

 

826,184

 

 

 

1,263,682

 

FHLB advances

 

 

329,833

 

 

 

431,125

 

Total interest expense

 

 

1,156,017

 

 

 

1,694,807

 

Net interest income

 

 

5,122,993

 

 

 

4,579,290

 

Provision (credit) for loan losses

 

 

 

 

 

(59,000

)

Net interest income after provision for loan losses

 

 

5,122,993

 

 

 

4,638,290

 

Non-interest income

 

 

 

 

 

 

Fees and service charges

 

 

39,318

 

 

 

52,527

 

Gain on sale of loans

 

 

87,130

 

 

 

236,037

 

Bargain purchase gain

 

 

 

 

 

1,933,397

 

Bank-owned life insurance

 

 

155,993

 

 

 

89,666

 

Other

 

 

61,982

 

 

 

6,979

 

Total non-interest income

 

 

344,423

 

 

 

2,318,606

 

Non-interest expense

 

 

 

 

 

 

Salaries and employee benefits

 

 

2,063,347

 

 

 

1,538,920

 

Occupancy and equipment

 

 

344,429

 

 

 

266,479

 

FDIC insurance assessment

 

 

54,000

 

 

 

45,000

 

Data processing

 

 

278,347

 

 

 

208,309

 

Advertising

 

 

121,145

 

 

 

60,000

 

Director fees

 

 

214,791

 

 

 

198,239

 

Professional fees

 

 

144,263

 

 

 

258,917

 

Merger fees

 

 

 

 

 

318,265

 

Core conversion costs

 

 

 

 

 

360,000

 

Other

 

 

320,953

 

 

 

178,317

 

Total non-interest expense

 

 

3,541,275

 

 

 

3,432,446

 

Income before income taxes

 

 

1,926,141

 

 

 

3,524,450

 

Income tax expense

 

 

525,244

 

 

 

518,143

 

Net income

 

$

1,400,897

 

 

$

3,006,307

 

Earnings per Share - basic

 

$

0.10

 

 

$

0.23

 

Earnings per Share - diluted

 

$

0.10

 

 

$

0.23

 

Weighted average shares outstanding - basic

 

 

13,858,884

 

 

 

13,107,593

 

Weighted average shares outstanding - diluted

 

 

13,878,304

 

 

 

13,107,593

 

See accompanying notes to unaudited consolidated financial statements.

2


 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)

 

 

 

Three months ended
March 31,

 

 

 

 

2022

 

 

2021

 

 

Net income

 

$

1,400,897

 

 

$

3,006,307

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

Net of unrealized gains/(loss) on securities available for sale:

 

 

 

 

 

 

 

Net of unrealized holding (loss) gain arising during the
   period

 

 

(3,338,417

)

 

 

16,068

 

 

Tax effect

 

 

938,429

 

 

 

(4,517

)

 

Net of tax

 

 

(2,399,988

)

 

 

11,551

 

 

Defined benefit retirement plans:

 

 

 

 

 

 

 

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

 

 

57,850

 

 

 

43,652

 

 

Tax effect

 

 

(16,261

)

 

 

(12,271

)

 

Net of tax

 

 

41,589

 

 

 

31,381

 

 

Total other comprehensive (loss) income

 

 

(2,358,399

)

 

 

42,932

 

 

Comprehensive (loss) income

 

$

(957,502

)

 

$

3,049,239

 

 

See accompanying notes to unaudited consolidated financial statements.

3


 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)

 

 

Common
Stock
Shares

 

 

Common
Stock

 

 

Additional Paid-in
Capital

 

 

 

Retained
Earnings

 

 

Unearned
ESOP shares

 

 

Accumulated
Other
Comprehensive
Income
(Loss)

 

 

Total stockholders'
Equity

 

Balance January 1, 2021

 

 

13,157,525

 

 

$

131,575

 

 

$

56,975,187

 

 

 

$

77,359,737

 

 

$

(5,725,410

)

 

$

(273,013

)

 

$

128,468,076

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

3,006,307

 

 

 

 

 

 

 

 

 

3,006,307

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,932

 

 

 

42,932

 

Issuance of common stock to Bogota MHC

 

 

1,267,916

 

 

 

12,679

 

 

 

11,487,321

 

 

 

 

 

 

 

 

 

 

 

 

 

11,500,000

 

ESOP Shares released (25,789 shares)

 

 

 

 

 

 

 

 

(14,466

)

 

 

 

 

 

 

75,301

 

 

 

 

 

 

60,835

 

Balance March 31, 2021

 

 

14,425,441

 

 

$

144,254

 

 

$

68,448,042

 

 

 

$

80,366,044

 

 

$

(5,650,109

)

 

$

(230,081

)

 

$

143,078,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 1, 2022

 

 

14,605,809

 

 

$

146,057

 

 

$

68,247,204

 

 

 

$

84,879,812

 

 

$

(5,424,206

)

 

$

(272,656

)

 

$

147,576,211

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

1,400,897

 

 

 

 

 

 

 

 

 

1,400,897

 

Stock Based Compensation

 

 

 

 

 

 

 

 

233,193

 

 

 

 

 

 

 

 

 

 

 

 

 

233,193

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,358,399

)

 

 

(2,358,399

)

Stock purchased and retired

 

 

(180,501

)

 

 

(1,805

)

 

 

(1,890,310

)

 

 

 

 

 

 

 

 

 

 

 

 

(1,892,115

)

ESOP Shares released (25,789 shares)

 

 

 

 

 

 

 

 

(9,156

)

 

 

 

 

 

 

75,301

 

 

 

 

 

 

66,145

 

Balance March 31, 2022

 

 

14,425,308

 

 

$

144,252

 

 

$

66,580,931

 

 

 

$

86,280,709

 

 

$

(5,348,905

)

 

$

(2,631,055

)

 

$

145,025,932

 

 

See accompanying notes to unaudited consolidated financial statements.

4


 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

For the three months ended
March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

1,400,897

 

 

$

3,006,307

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

Bargain purchase gain

 

 

 

 

 

(1,933,397

)

Amortization of intangible assets

 

 

(36,955

)

 

 

 

Credit for loan losses

 

 

 

 

 

(59,000

)

Depreciation of premises and equipment

 

 

115,751

 

 

 

69,966

 

Amortization of deferred loan(fees) costs, net

 

 

(50,202

)

 

 

210,063

 

Amortization of premiums and accretion of discounts on securities, net

 

 

21,590

 

 

 

52,278

 

Deferred income tax expense

 

 

 

 

 

350,680

 

Gain on sale of loans

 

 

(87,130

)

 

 

(236,037

)

Proceeds from sale of loans

 

 

4,402,073

 

 

 

6,269,562

 

Increase in cash surrender value of bank owned life insurance

 

 

(143,296

)

 

 

(89,666

)

Employee stock ownership plan expense

 

 

66,146

 

 

 

60,835

 

Stock based compensation

 

 

233,193

 

 

 

 

Changes in:

 

 

 

 

 

 

Accrued interest receivable

 

 

(57,827

)

 

 

155,368

 

Net changes in other assets

 

 

1,887,663

 

 

 

67,006

 

Net changes in other liabilities

 

 

455,797

 

 

 

971,930

 

Net cash provided by operating activities

 

 

8,207,700

 

 

 

8,895,895

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of securities held to maturity

 

 

(11,395,678

)

 

 

(7,090,519

)

Purchases of securities available for sale

 

 

(54,117,158

)

 

 

 

Maturities, calls, and repayments of securities available for sale

 

 

1,004,209

 

 

 

253,175

 

Maturities, calls, and repayments of securities held to maturity

 

 

4,134,147

 

 

 

11,194,107

 

Net decrease in loans

 

 

2,216,500

 

 

 

18,518,194

 

Net cash acquired in merger

 

 

 

 

 

19,393,090

 

Purchases of premises and equipment

 

 

(48,681

)

 

 

(117,678

)

Redemption of FHLB stock

 

 

336,600

 

 

 

417,600

 

Net cash (used in) provided by investing activities

 

 

(57,870,061

)

 

 

42,567,969

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.

5


 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) continued

 

 

 

For the three months ended
March 31,

 

 

 

2022

 

 

2021

 

Cash flows from financing activities

 

 

 

 

 

 

Net increase in deposits

 

 

22,491,367

 

 

 

496,385

 

Net decrease in short-term FHLB advances

 

 

(6,000,000

)

 

 

(9,000,000

)

Proceeds from long-term FHLB non-repo advances

 

 

 

 

 

3,000,000

 

Repayments of long-term FHLB non-repo advances

 

 

(1,027,300

)

 

 

(723,273

)

Repurchase of common stock

 

 

(1,892,115

)

 

 

 

Net increase in advance payments from borrowers for taxes
   and insurance

 

 

75,878

 

 

 

357,510

 

Net cash provided by (used in) financing activities

 

 

13,647,830

 

 

 

(5,869,378

)

Net (decrease) increase in cash and cash equivalents

 

 

(36,014,531

)

 

 

45,594,486

 

Cash and cash equivalents at beginning of year

 

 

105,068,785

 

 

 

80,385,739

 

Cash and cash equivalents at March 31

 

$

69,054,254

 

 

$

125,980,225

 

Supplemental cash flow information

 

 

 

 

 

 

Income taxes paid

 

$

 

 

$

 

Interest paid

 

$

1,164,604

 

 

$

1,673,840

 

 

 

 

 

 

 

 

Non-cash investment and financing activities

 

 

 

 

 

 

Fair value of assets acquired, net of cash and cash equivalents acquired

 

$

 

 

$

87,352,754

 

Fair value of liabilities assumed

 

$

 

 

$

93,312,447

 

 

6


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation: On January 15, 2020, Bogota Financial Corp. (the “Company,” “we” or “our”) became the mid-tier stock holding company for Bogota Savings Bank (the “Bank”) in connection with the reorganization of Bogota Savings Bank into the two-tier mutual holding company structure.

The Bank maintains two subsidiaries. Bogota Securities Corp. was formed for the purpose of buying, selling and holding investment securities. Bogota Properties, LLC was inactive at March 31, 2022 and December 31, 2021.

The Bank generally originates residential, commercial and consumer loans to, and accepts deposits from, customers in New Jersey. The debtors’ ability to repay the loans is dependent upon the region’s economy and the borrowers’ circumstances. The Bank is also subject to the regulations of certain federal and state agencies and undergoes periodic examination by those regulatory authorities.

The Company completed its stock offering in connection with the mutual holding company reorganization of the Bank on January 15, 2020. Shares of the Company’s common stock began trading on January 16, 2020 on the Nasdaq Capital Market under the trading symbol “BSBK.”

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders' equity.

Earnings per Share: Basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. 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. Diluted EPS is computed using the same method as basic EPS and reflects the potential dilution which could occur if stock options shares 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-month period ended March 31, 2022, options to purchase 526,119 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. The Company did not have any outstanding stock options or shares of restricted stock for the three month period ended March 31, 2021.

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, 2022 and 2021.

 

 

For the three months ended March 31, 2022

 

 

For the three months ended March 31, 2021

 

Numerator

 

 

 

 

 

 

  Net income

 

$

1,400,897

 

 

$

3,006,307

 

Denominator:

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

13,858,884

 

 

 

13,107,593

 

Effect of stock plans

 

 

19,420

 

 

 

 

Weighted average shares outstanding - diluted

 

 

13,878,304

 

 

 

13,107,593

 

Earnings per common share:

 

 

 

 

 

 

Basic

 

$

0.10

 

 

$

0.23

 

Diluted

 

 

0.10

 

 

 

0.23

 

 

 

7


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ under different conditions than those assumed.

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting in Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards. These financial statements include the accounts of the Company, the Bank and its subsidiaries, and all significant intercompany balances and transactions are eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) and disclosures necessary for the fair presentation of the accompanying consolidated financial statements have been included. The results of operations for any interim periods are not necessarily indicative of the results which may be expected for the entire year or any other period.

The unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements, and related notes, of Bogota Financial Corp. at and for the year ended December 31, 2021.

 

 

8


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Not Yet Effective Accounting Pronouncements: In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate reform” if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or re assess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and results of operations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative-effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This Update is effective for SEC filers that qualify as smaller reporting companies, non-SEC filers, and all other companies, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We expect to recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

 

NOTE 2 ACQUISITION OF GIBRALTAR BANK

On February 28, 2021, the Company completed its acquisition of Gibraltar Bank. Pursuant to the terms of the Merger Agreement, Gibraltar Bank merged with and into the Bank, with the Bank as the surviving entity. Under the terms of the merger agreement, depositors of Gibraltar Bank became depositors of the Bank and have the same rights and privileges in Bogota Financial MHC as if their accounts had been established at the Bank on the date established at Gibraltar Bank. The Company issued 1,267,916 shares of its common stock to Bogota Financial, MHC in conjunction with the acquisition.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of February 28, 2021 based on management’s best estimate using the information available as of the merger date. The application of the acquisition method of accounting resulted in the recognition of bargain purchase gain of $1.9 million and a core deposit intangible of $400,000 in 2021.

9


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 2 ACQUISITION OF GIBRALTAR BANK (Continued)

Merger-related expenses of $392,000 for the first quarter of 2021 are recorded in the Consolidated Statements of Income and were expensed as incurred. The following table sets forth assets acquired and liabilities assumed in the acquisition of the Gibraltar Bank, at their estimated fair values as of the closing date of the transaction:

 

 

 

 As recorded by
Gibraltar Bank

 

 

 Fair value
adjustments

 

 

 As recorded
at acquisition

 

Fair value of Equity acquired

 

 

 

 

 

 

 

$

11,500,000

 

Assets Acquired

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

19,393,090

 

 

$

 

 

$

19,393,090

 

Securities held to maturity

 

 

7,250,000

 

 

 

(208,051

)

(a)

 

7,041,949

 

Federal Home Loan Bank stock and other
   restricted stock

 

 

603,500

 

 

 

 

 

 

603,500

 

Loans receivable

 

 

77,683,903

 

 

 

(920,497

)

(b)

 

76,763,406

 

Allowance for loan loss

 

 

(640,232

)

 

 

640,232

 

(c)

 

 

Accrued interest receivable

 

 

302,927

 

 

 

 

 

 

302,927

 

Premises and equipment, net

 

 

348,714

 

 

 

1,079,647

 

(d)

 

1,428,361

 

Core deposit intangible

 

 

 

 

 

400,000

 

(e)

 

400,000

 

Deferred taxes

 

 

913,303

 

 

 

(184,973

)

(f)

 

728,330

 

Other assets

 

 

362,636

 

 

 

(278,355

)

(g)

 

84,281

 

Total assets acquired

 

$

106,217,841

 

 

$

528,003

 

 

$

106,745,844

 

Liabilities assumed

 

 

 

 

 

 

 

 

 

Deposits

 

$

81,558,612

 

 

$

386,865

 

(h)

$

81,945,477

 

Borrowings

 

 

10,000,000

 

 

 

273,721

 

(i)

 

10,273,721

 

Advance payments by borrowers for taxes and
   insurance

 

 

646,661

 

 

 

 

 

 

646,661

 

Accrued expenses and other liabilities

 

 

446,588

 

 

 

 

 

 

446,588

 

Total liabilities assumed

 

$

92,651,861

 

 

$

660,586

 

 

$

93,312,447

 

Net assets acquired

 

 

 

 

 

 

 

$

13,433,397

 

Bargain purchase gain recorded at merger

 

 

 

 

 

 

 

 

1,933,397

 

 

Explanation of certain fair value related adjustments:

(a)

Represents the fair value adjustments on investment securities at the acquisition date.

(b)

Represents the fair value adjustments on the net book value of loans, which includes an interest rate mark and credit mark adjustment and the reversal of deferred fees/costs and premiums over estimated useful life.

 

(c)

Represents the elimination of Gibraltar Bank allowance for loan losses.

(d)

Represents the fair value adjustments to reflect the fair value of land and buildings and premises and equipment, which will be amortized on a straight-line basis over the estimated useful lives of the individual assets.

 

(e)

Represents the intangible assets recorded to reflect the fair value of core deposits. The core deposit asset was recorded as an identifiable intangible asset and will be amortized on an accelerated basis over the estimated average life of the deposit base.

(f)

Represents an adjustment to net deferred tax assets resulting from the fair value adjustments related to the acquired assets, liabilities assumed and identifiable intangible assets recorded.

 

(g)

Represents an adjustment to other assets acquired.

(h)

Represents fair value adjustments on time deposits, which will be treated as a reduction of interest expense over the remaining term of the time deposits.

 

(i)

Represents FHLB borrowing calculation to prepay borrowings, which will be treated as a reduction of interest expense.

 

 

10


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 3 – SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost, fair value, and gross unrealized gains and losses of securities available for sale at March 31, 2022 and December 31, 2021:

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

U.S treasury bills less than one year

 

$

5,073,594

 

 

$

 

 

$

(146

)

 

 

5,073,448

 

U.S. government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

 

6,000,000

 

 

 

 

 

 

(249,414

)

 

 

5,750,586

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

 

3,005,646

 

 

 

5,579

 

 

 

(1,678

)

 

 

3,009,547

 

Five through ten years

 

 

15,195,199

 

 

 

783

 

 

 

(253,305

)

 

 

14,942,677

 

MBSs – residential

 

 

48,028,711

 

 

 

48,828

 

 

 

(2,016,370

)

 

 

46,061,169

 

MBSs – commercial

 

 

17,603,140

 

 

 

 

 

 

(848,827

)

 

 

16,754,313

 

Total

 

$

94,906,290

 

 

$

55,190

 

 

$

(3,369,740

)

 

$

91,591,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

$

3,000,000

 

 

$

 

 

$

(18,270

)

 

$

2,981,730

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

 

6,375,068

 

 

 

17,594

 

 

 

(636

)

 

 

6,392,026

 

Five through ten years

 

 

1,002,542

 

 

 

3,050

 

 

 

 

 

 

1,005,592

 

MBSs – residential

 

 

21,695,539

 

 

 

89,297

 

 

 

(24,591

)

 

 

21,760,245

 

MBSs – commercial

 

 

9,741,782

 

 

 

 

 

 

(42,577

)

 

 

9,699,205

 

Total

 

$

41,814,931

 

 

$

109,941

 

 

$

(86,074

)

 

$

41,838,798

 

 

All of the mortgaged-backed securities (“MBSs”) are issued by the following government sponsored agencies: Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Government National Mortgage Association (“GNMA”).

11


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 3 – SECURITIES AVAILABLE FOR SALE (Continued)

There were no sales of securities during the three months ended March 31, 2022 or March 31, 2021.

The age of unrealized losses and the fair value of related securities as of March 31, 2022 and December 31, 2021 were as follows:

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S treasury bills

 

$

5,073,448

 

 

$

(146

)

 

$

 

 

$

 

 

$

5,073,448

 

 

$

(146

)

U.S. government and agency obligations

 

 

5,750,586

 

 

 

(249,414

)

 

 

 

 

 

 

 

 

5,750,586

 

 

 

(249,414

)

Corporate bonds

 

 

14,168,651

 

 

 

(254,983

)

 

 

 

 

 

 

 

 

14,168,651

 

 

 

(254,983

)

MBSs – residential

 

 

44,496,290

 

 

 

(2,014,175

)

 

 

249,487

 

 

 

(2,195

)

 

 

44,745,777

 

 

 

(2,016,370

)

MBSs – commercial

 

 

16,754,313

 

 

 

(848,827

)

 

 

 

 

 

 

 

 

16,754,313

 

 

 

(848,827

)

Total

 

$

86,243,288

 

 

$

(3,367,545

)

 

$

249,487

 

 

$

(2,195

)

 

$

86,492,775

 

 

$

(3,369,740

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

2,981,730

 

 

$

(18,270

)

 

$

 

 

$

 

 

$

2,981,730

 

 

$

(18,270

)

Corporate bonds

 

 

1,006,523

 

 

 

(636

)

 

 

 

 

 

 

 

 

1,006,523

 

 

 

(636

)

MBSs – residential

 

 

10,000,558

 

 

 

(22,652

)

 

 

250,581

 

 

 

(1,939

)

 

 

10,251,139

 

 

 

(24,591

)

MBSs – commercial

 

 

9,699,205

 

 

 

(42,577

)

 

 

 

 

 

 

 

 

9,699,205

 

 

 

(42,577

)

Total

 

$

23,688,016

 

 

$

(84,135

)

 

$

250,581

 

 

$

(1,939

)

 

$

23,938,597

 

 

$

(86,074

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on corporate bonds available for sale have not been recognized into income 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 is largely due to changes in interest rates and other market conditions. At March 31, 2022, 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 is 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 securities to be other-than-temporary impaired at March 31, 2022. At March 31, 2022 securities available for sale with a carrying value of $151,887 were pledged to secure public deposits. There were no securities available for sale and pledged to secure public deposits at December 31, 2021. There were 40 securities in a loss position at March 31, 2022, none of which were considered to be other-than-temporally impaired

12


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 4 – SECURITIES HELD TO MATURITY

The following table summarizes the amortized cost, fair value, and gross unrecognized gains and losses of securities held to maturity at March 31, 2022 and December 31, 2021:

 

 

 

Amortized
Cost

 

 

Gross
Unrecognized
Gains

 

 

Gross
Unrecognized
Losses

 

 

Fair
Value

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

$

10,000,000

 

 

$

 

 

$

 

 

$

10,000,000

 

Five through ten years

 

$

3,000,000

 

 

$

 

 

$

(177,120

)

 

$

2,822,880

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

Five through ten years

 

 

12,752,169

 

 

 

202,327

 

 

 

(210,344

)

 

 

12,744,152

 

Municipal obligations due in:

 

 

 

 

 

 

 

 

 

 

 

 

Less than one year

 

 

4,005,595

 

 

 

4,171

 

 

 

(1,227

)

 

 

4,008,539

 

One through five years

 

 

903,250

 

 

 

 

 

 

(43,381

)

 

 

859,869

 

Five through ten years

 

 

375,000

 

 

 

10,193

 

 

 

 

 

 

385,193

 

Greater than ten years

 

 

1,731,343

 

 

 

 

 

 

(213,090

)

 

 

1,518,253

 

MBSs:

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

17,125,728

 

 

 

37,447

 

 

 

(812,311

)

 

 

16,350,864

 

Commercial

 

 

31,421,545

 

 

 

12,322

 

 

 

(1,709,111

)

 

 

29,724,756

 

Total

 

$

81,314,630

 

 

$

266,460

 

 

$

(3,166,584

)

 

$

78,414,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized
Cost

 

 

Gross
Unrecognized
Gains

 

 

Gross
Unrecognized
Losses

 

 

Fair
Value

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

Five through ten years

 

$

3,000,000

 

 

$

 

 

$

 

 

$

3,000,000

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

Five through ten years

 

 

13,681,053

 

 

 

410,726

 

 

 

(39,870

)

 

 

14,051,909

 

Municipal obligations due in:

 

 

 

 

 

 

 

 

 

 

 

 

Less than one year

 

 

4,006,006

 

 

 

12,668

 

 

 

(2,776

)

 

 

4,015,898

 

One through five years

 

 

903,483

 

 

 

 

 

 

(15,399

)

 

 

888,084

 

Five through ten years

 

 

375,000

 

 

 

27,353

 

 

 

 

 

 

402,353

 

Greater than ten years

 

 

1,732,386

 

 

 

9,527

 

 

 

 

 

 

1,741,913

 

MBSs:

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

16,913,787

 

 

 

75,094

 

 

 

(240,797

)

 

 

16,748,084

 

Commercial

 

 

33,441,384

 

 

 

287,278

 

 

 

(495,844

)

 

 

33,232,818

 

Total

 

$

74,053,099

 

 

$

822,646

 

 

$

(794,686

)

 

$

74,081,059

 

 

All of the MBSs are issued by the following government sponsored agencies: FHLMC, FNMA and GNMA.

 

13


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 4 – SECURITIES HELD TO MATURITY (Continued)

The age of unrecognized losses and the fair value of related securities were as follows:

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

12,822,880

 

 

$

(177,120

)

 

$

 

 

$

 

 

$

12,822,880

 

 

$

(177,120

)

Corporate bonds

 

 

3,500,000

 

 

 

(154,095

)

 

 

750,000

 

 

 

(56,250

)

 

 

4,250,000

 

 

 

(210,345

)

Municipal bonds

 

 

5,584,593

 

 

 

(257,698

)

 

 

 

 

 

 

 

 

5,584,593

 

 

 

(257,698

)

MBSs – residential

 

 

8,812,437

 

 

 

(473,815

)

 

 

5,704,579

 

 

 

(338,496

)

 

 

14,517,016

 

 

 

(812,311

)

MBSs – commercial

 

 

15,494,054

 

 

 

(995,504

)

 

 

4,939,748

 

 

 

(713,606

)

 

 

20,433,802

 

 

 

(1,709,110

)

Total

 

$

46,213,964

 

 

$

(2,058,232

)

 

$

11,394,327

 

 

$

(1,108,352

)

 

$

57,608,291

 

 

$

(3,166,584

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

3,710,120

 

 

$

(39,870

)

 

$

 

 

$

 

 

$

3,710,120

 

 

$

(39,870

)

Municipal bonds

 

 

3,835,309

 

 

 

(18,175

)

 

 

 

 

 

 

 

 

3,835,309

 

 

 

(18,175

)

MBSs – residential

 

 

10,720,544

 

 

 

(141,726

)

 

 

2,701,345

 

 

 

(99,071

)

 

 

13,421,889

 

 

 

(240,797

)

MBSs – commercial

 

 

7,898,509

 

 

 

(197,720

)

 

 

4,653,364

 

 

 

(298,124

)

 

 

12,551,873

 

 

 

(495,844

)

Total

 

$

26,164,482

 

 

$

(397,491

)

 

$

7,354,709

 

 

$

(397,195

)

 

$

33,519,191

 

 

$

(794,686

)

Unrecognized losses have not been recognized into income because the issuers of the securities are of high credit quality, management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The fair value is expected to recover as the securities approach maturity. At March 31, 2022 and December 31, 2021, securities held to maturity with a carrying amount of $8,012,648 and $8,363,997, respectively, were pledged to secure repurchase agreements at the Federal Home Loan Bank of New York. There were 31 securities in a loss position at March 31, 2022, none of which were considered to be other-than-temporally impaired At March 31, 2022 and December 31, 2021, securities held to maturity with a carrying value of $2,102,027 and $3,976,629, respectively, were pledged to secure public deposits.

14


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS

Loans are summarized as follows at March 31, 2022 and December 31, 2021:

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Real estate:

 

 

 

 

 

 

Residential

 

$

316,657,570

 

 

$

319,968,234

 

Commercial and multi-family real estate

 

 

177,225,830

 

 

 

175,375,419

 

Construction

 

 

43,639,387

 

 

 

41,384,687

 

Commercial and industrial

 

 

3,494,447

 

 

 

7,905,524

 

Consumer:

 

 

 

 

 

 

Home equity and other

 

 

25,562,781

 

 

 

27,728,979

 

Total loans

 

 

566,580,015

 

 

 

572,362,843

 

Allowance for loan losses

 

 

(2,153,174

)

 

 

(2,153,174

)

Net loans

 

$

564,426,841

 

 

$

570,209,669

 

 

As a qualified Small Business Administration lender, the Bank was automatically authorized to originate loans under the Paycheck Protection Program (“PPP”). During 2020, the Bank received and processed 113 PPP applications totaling approximately $10.5 million. The Bank participated in the second round of PPP loans and during the first half of 2021, the Bank received and processed 54 applications totaling $6.9 million. All outstanding PPP loans are included in the table above under commercial and industrial loans. Since origination, the Bank has processed forgiveness applications for $13.4 million and the outstanding balance of PPP loans at March 31, 2022 and December 31, 2021 was $1.4 million and $5.8 million, respectively.

 

The Bank has granted loans to officers and directors of the Bank. At March 31, 2022 and December 31, 2021, such loans totaled approximately $563,669 and $577,143, respectively. At March 31, 2022 and December 31, 2021 deferred loan fees were $1,353,820 and $1,249,233, respectively.

 

PCI loans are loans acquired at a discount primarily due to deteriorated credit quality. These loans are initially recorded at fair value at acquisition, based upon the present value of expected future cash flows, with no related allowance for loan losses. PCI loans acquired in the Gibraltar Bank acquisition totaled $5.7 million at March 31, 2022.

 

The following table presents changes in accretable yield for PCI loans for the three months ended March 31, 2022 and 2021.

 

 

 

Three months ended
March 31, 2022

 

 

Three months ended
March 31, 2021

 

Balance at the beginning of period

 

$

170,075

 

 

$

 

Acquisition

 

 

 

 

 

217,789

 

Accretion

 

 

9,618

 

 

 

 

Reclassification of non-accretable discount

 

 

 

 

 

 

Balance at the end of period

 

$

160,457

 

 

$

217,789

 

 

 

 

 

15


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

The following table presents the activity in the allowance for loan losses by portfolio segments for the three months ended March 31, 2022 and 2021.

 

 

 

Residential
First
Mortgage

 

 

Commercial
and Multi-
Family Real
Estate

 

 

Construction

 

 

Commercial
and
Industrial

 

 

Home equity & other

 

 

Total

 

Three months
 March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,092,474

 

 

$

768,600

 

 

$

195,000

 

 

$

9,400

 

 

$

87,700

 

 

$

2,153,174

 

(Credit) provision for loan losses

 

 

(17,400

)

 

 

11,400

 

 

 

13,000

 

 

 

(100

)

 

 

(6,900

)

 

 

 

Loans charged off

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

$

1,075,074

 

 

$

780,000

 

 

$

208,000

 

 

$

9,300

 

 

$

80,800

 

 

$

2,153,174

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,254,174

 

 

$

841,000

 

 

$

45,000

 

 

$

14,000

 

 

$

87,000

 

 

$

2,241,174

 

(Credit) provision for loan losses

 

 

(68,500

)

 

 

8,000

 

 

 

3,000

 

 

 

(1,000

)

 

 

(500

)

 

 

(59,000

)

Loans charged off

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

$

1,185,674

 

 

$

849,000

 

 

$

48,000

 

 

$

13,000

 

 

$

86,500

 

 

$

2,182,174

 

 

16


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – 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, 2022 and December 31, 2021:

 

 

 

Residential
First
Mortgage

 

 

Commercial
and Multi-
Family Real
Estate

 

 

Construction

 

 

Commercial
and
Industrial

 

 

Home equity & other consumer

 

 

Total

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance
   attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for
   impairment

 

$

35,859

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

35,859

 

Collectively evaluated for
   impairment

 

 

1,039,215

 

 

 

780,000

 

 

 

208,000

 

 

 

9,300

 

 

 

80,800

 

 

 

2,117,315

 

Acquired with deteriorated
   credit quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

$

1,075,074

 

 

$

780,000

 

 

$

208,000

 

 

$

9,300

 

 

$

80,800

 

 

$

2,153,174

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated
   for impairment

 

$

839,620

 

 

$

 

 

$

 

 

$

 

 

$

39,394

 

 

$

879,014

 

Loans collectively evaluated
   for impairment

 

 

312,109,117

 

 

 

175,829,775

 

 

 

43,639,387

 

 

 

3,494,447

 

 

 

25,486,127

 

 

 

560,558,853

 

Loans acquired with deteriorated
   credit quality

 

 

3,708,833

 

 

 

1,396,055

 

 

 

 

 

 

 

 

 

37,260

 

 

 

5,142,148

 

Total ending loan balance

 

$

316,657,570

 

 

$

177,225,830

 

 

$

43,639,387

 

 

$

3,494,447

 

 

$

25,562,781

 

 

$

566,580,015

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance
   attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for
   impairment

 

$

35,859

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

35,859

 

Collectively evaluated for
   impairment

 

 

1,056,615

 

 

 

768,600

 

 

 

195,000

 

 

 

9,400

 

 

 

87,700

 

 

 

2,117,315

 

Total ending allowance balance

 

$

1,092,474

 

 

$

768,600

 

 

$

195,000

 

 

$

9,400

 

 

$

87,700

 

 

$

2,153,174

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated
   for impairment

 

$

1,099,793

 

 

$

 

 

$

 

 

$

 

 

$

18,507

 

 

$

1,118,300

 

Loans collectively evaluated
   for impairment

 

 

314,754,870

 

 

 

173,962,424

 

 

 

41,384,687

 

 

 

7,866,263

 

 

 

27,710,472

 

 

 

565,678,716

 

Loans acquired with deteriorated
   credit quality

 

 

4,113,571

 

 

 

1,412,995

 

 

 

 

 

 

39,261

 

 

 

 

 

 

5,565,827

 

Total ending loan balance

 

$

319,968,234

 

 

$

175,375,419

 

 

$

41,384,687

 

 

$

7,905,524

 

 

$

27,728,979

 

 

$

572,362,843

 

 

 

17


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

 

Impaired loans for the three months ended March 31, 2022 were as follows:

 

 

 

Loans
With no related
allowance
recorded

 

 

Loans
with an
allowance
recorded

 

 

Amount of
allowance for
loan
losses allocated

 

Residential first mortgages

 

$

1,223,436

 

 

$

173,925

 

 

$

35,859

 

Commercial and Multi-Family

 

 

488,654

 

 

 

 

 

 

 

Construction

 

 

 

 

 

 

 

 

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

Home equity & other consumer

 

 

39,574

 

 

 

 

 

 

 

 

 

$

1,751,664

 

 

$

173,925

 

 

$

35,859

 

 

 

 

Average
Of individually
Impaired
loans for the

 

 

 

Three months ended
March 31, 2022

 

Residential first mortgages

 

$

1,529,303

 

Commercial and Multi-Family

 

 

488,329

 

Construction

 

 

 

Commercial & Industrial

 

 

 

Home equity & other consumer

 

 

29,040

 

 

 

$

2,046,672

 

 

Impaired loans as of December 31, 2021 and for the three months ended March 31, 2021 were as follows:

 

 

 

Loans
With no related
allowance
recorded

 

 

Loans
with an
allowance
recorded

 

 

Amount of
allowance for
loan
losses allocated

 

Residential first mortgages

 

$

1,486,469

 

 

$

174,776

 

 

$

35,859

 

Commercial and Multi-Family

 

 

488,003

 

 

 

 

 

 

 

Construction

 

 

 

 

 

 

 

 

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

Home equity & other consumer

 

 

18,507

 

 

 

 

 

 

 

 

 

$

1,992,979

 

 

$

174,776

 

 

$

35,859

 

 

 

 

Average
Of individually
Impaired
loans for the

 

 

 

Three months ended March 31, 2021

 

Residential first mortgages

 

$

1,217,094

 

Commercial and Multi-Family

 

 

222,534

 

Construction

 

 

 

Commercial & Industrial

 

 

 

Home equity & other consumer

 

 

18,980

 

 

 

$

1,236,074

 

 

18


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

 

The Bank has three residential loans totaling $472,455 that were troubled debt restructurings (“TDRs”) as of March 31, 2022, with one loan totaling $173,925 with a specific reserve of $35,859. At December 31, 2021, the Bank had four residential loans totaling $728,288 that were TDRs and one loan totaling $173,925 with a specific reserve of $35,859. The Bank has not committed to lend additional amounts as of March 31, 2022 or December 31, 2021 to customers with outstanding loans that are classified as TDRs. There were no loans modified as TDRs during the three-month periods ended March 31, 2022 or 2021. There were no TDRs in payment default within twelve months following the modification during the three months ended March 31, 2022 or 2021.

Interest income recognized on impaired loans for the three months ended March 31, 2022 and March 31, 2021 was nominal.

The following table presents the recorded investment in nonaccrual and loans past due 90 days or more and still on accrual by class of loans as of March 31, 2022 and December 31, 2021:

 

 

 

Nonaccrual

 

 

Loans Past
Due 90 Days
or More Still
Accruing

 

March 31, 2022

 

 

 

 

 

 

Residential

 

$

839,620

 

 

$

 

Commercial and multi-family

 

 

 

 

 

 

Home equity and other consumer

 

 

39,394

 

 

 

 

Total

 

$

879,014

 

 

$

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

Residential

 

$

846,037

 

 

$

 

Commercial and multi-family

 

 

 

 

 

 

Home equity and other consumer

 

 

18,507

 

 

 

 

Total

 

$

864,544

 

 

$

 

 

The Bank had no other real estate owned at either March 31, 2022 or December 31, 2021.

19


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

 

The following table presents the aging of the recorded investment in past due loans as of March 31, 2022 and December 31, 2021, by class of loans:

 

 

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

Greater than
89 Days
Past Due

 

 

Total
Past
Due

 

 

Loans Not
Past Due

 

 

PCI loans

 

 

Total

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

368,542

 

 

$

217,737

 

 

$

151,621

 

 

$

737,900

 

 

$

312,210,837

 

 

$

3,708,833

 

 

$

316,657,570

 

Commercial and multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

175,829,775

 

 

 

1,396,055

 

 

 

177,225,830

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,639,387

 

 

 

 

 

 

43,639,387

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,494,447

 

 

 

 

 

 

3,494,447

 

Home equity and other consumer

 

 

 

 

 

21,025

 

 

 

 

 

 

21,025

 

 

 

25,504,496

 

 

 

37,260

 

 

 

25,562,781

 

Total

 

$

368,542

 

 

$

238,762

 

 

$

151,621

 

 

$

758,925

 

 

$

560,678,942

 

 

$

5,142,148

 

 

$

566,580,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

 

 

$

312,616

 

 

$

857,676

 

 

$

1,170,292

 

 

$

314,684,371

 

 

$

4,113,571

 

 

$

319,968,234

 

Commercial and multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

173,962,424

 

 

 

1,412,995

 

 

 

175,375,419

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41,384,687

 

 

 

 

 

 

41,384,687

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,905,524

 

 

 

 

 

 

7,905,524

 

Home Equity & Consumer

 

 

27,529

 

 

 

 

 

 

 

 

 

27,529

 

 

 

27,662,189

 

 

 

39,261

 

 

 

27,728,979

 

Total

 

$

27,529

 

 

$

312,616

 

 

$

857,676

 

 

$

1,197,821

 

 

$

565,599,195

 

 

$

5,565,827

 

 

$

572,362,843

 

 

Loans greater than 89 days past due are considered to be nonperforming.

Credit Quality Indicators

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. Commercial and multi-family real estate, commercial and industrial and construction loans are graded on an annual basis. Residential and consumer loans are primarily evaluated based on performance. Refer to the immediately preceding table for the aging of the recorded investment of these loan segments. The Bank uses the following definitions for risk ratings:

Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above are considered to be Pass rated loans.

20


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

Based on the most recent analysis performed, the risk category of loans by class is as follows:

 

 

 

Pass

 

 

Special
Mention

 

 

Substandard

 

 

Doubtful

 

 

Totals

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

315,817,950

 

 

$

378,210

 

 

$

461,410

 

 

$

 

 

$

316,657,570

 

Commercial and multi-family

 

 

176,029,021

 

 

 

 

 

 

1,196,809

 

 

 

 

 

 

177,225,830

 

Construction

 

 

43,639,387

 

 

 

 

 

 

 

 

 

 

 

 

43,639,387

 

Commercial and industrial

 

 

3,494,447

 

 

 

 

 

 

 

 

 

 

 

 

3,494,447

 

Home equity and other consumer

 

 

25,522,484

 

 

 

21,928

 

 

 

18,369

 

 

 

 

 

 

25,562,781

 

Total

 

$

564,503,289

 

 

$

400,138

 

 

$

1,676,588

 

 

$

 

 

$

566,580,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

318,868,440

 

 

$

383,034

 

 

$

716,760

 

 

$

 

 

$

319,968,234

 

Commercial and multi-family

 

 

174,173,925

 

 

 

 

 

 

1,201,494

 

 

 

 

 

 

175,375,419

 

Construction

 

 

41,384,687

 

 

 

 

 

 

 

 

 

 

 

 

41,384,687

 

Commercial and industrial

 

 

7,905,524

 

 

 

 

 

 

 

 

 

 

 

 

7,905,524

 

Home equity and other consumer

 

 

27,710,472

 

 

 

 

 

 

18,507

 

 

 

 

 

 

27,728,979

 

Total

 

$

570,043,048

 

 

$

383,034

 

 

$

1,936,761

 

 

$

 

 

$

572,362,843

 

 

NOTE 6 STOCK BASED COMPENSATION

At the annual meeting held on May 27, 2021, stockholders of the Company approved 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. common stock.

On September 2, 2021, 226,519 shares of restricted stock were awarded, with a grant date fair value of $10.45 per share. To fund the grant of restricted common stock, the Company issued shares from authorized but unissued shares. Restricted shares granted under the 2021 Plan vest in equal installments, over a service period of five years, beginning one year from the date of grant. 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, 2022, approximately $118,000 in expense was recognized in regard to these awards. There was no restricted stock expense recorded for the three months ended March 31, 2021. The expected future compensation expense related to the 226,519 non-vested restricted shares outstanding at March 31, 2022 was approximately $2.1 million over a weighted average period of 4.3 years.

The following is a summary of the Company's restricted stock activity during the three months ended March 31, 2022:

 

 

 

Number of non-vested Restricted Shares

 

 

Weighted Average Grant Date Fair Value

 

Outstanding, January 1, 2022

 

 

226,519

 

 

$

10.45

 

Granted

 

 

 

 

 

 

Vested

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

Outstanding, March 31, 2022

 

 

226,519

 

 

$

10.45

 

 

21


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 6 STOCK BASED COMPENSATION (Continued)

On September 2, 2021, options to purchase 526,119 shares of Company common stock were awarded, with a grant date fair value of $4.37 per option. 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 represents the fair value of the Company's common stock price on the grant date based on the closing market price, and have an expiration period of 10 years.

The fair value of stock options granted was estimated utilizing the Black-Scholes option pricing model using the following assumptions: expected life of 6.5 years, risk-free rate of return of 0.904%, volatility of 41.10%, and a dividend yield of 0.00%.

The expected life of the options represents the period of time that stock options are expected to be outstanding and is estimated using the simplified approach, which assumes that all outstanding options will be exercised at the midpoint of the vesting date and full contractual term. The risk-free rate of return is based on the rates on the grant date of a U.S. Treasury Note with a term equal to the expected option life. Since the Company recently converted to a public Company and does not have sufficient historical price data, the expected volatility is based on the historical daily stock prices of a peer group of similar entities based on factors such as industry, stage of life cycle, size and financial leverage. The Company has not paid any cash dividends on its common stock.

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, 2022, approximately $115,000 in expense was recognized in regard to these awards. There was no stock option expense recorded for the three months ended March 31, 2021. The expected future compensation expense related to the 526,119 non-vested options outstanding at March 31, 2022 was $2.0 million over the vesting period of five years.

The following is a summary of the Company's option activity during the three months ended March 31, 2022:

 

 

 

Number of Stock Options

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Contractual Term (in years)

 

 

Aggregate Intrinsic Value

 

Outstanding, January 1, 2022

 

$

523,619

 

 

$

10.45

 

 

 

6.5

 

 

$

136,791

 

Granted

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, March 31, 2022

 

 

523,619

 

 

$

10.45

 

 

 

6.2

 

 

$

136,791

 

Options exercisable at March 31, 2022

 

$

 

 

 

 

 

 

 

 

$

 

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.

NOTE 7 – EMPLOYEE STOCK OWNERSHIP PLAN

In connection with our mutual-to-stock reorganization and stock offering, the Bank established an employee stock ownership plan (“ESOP”), which acquired 515,775 shares of the Company’s common stock equaling 3.92% of the Company's outstanding shares. The ESOP is a tax-qualified retirement plan providing employees the opportunity to own Company stock. Bank contributions to the ESOP are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The number of shares to be allocated annually is 25,789 through 2039. During the three months ended March 31, 2022 and 2021, $66,000 and $61,000 was incurred as expense for the plan, respectively.

22


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

Note 8 Commitments and Contingencies

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments primarily include commitments to extend credit. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The contractual amounts of these instruments reflect the extent of involvement the Bank has in those particular classes of financial instruments.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

23


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

Note 8 Commitments and Contingencies (Continued)

The Bank had outstanding firm commitments, all of which expire within three months, to originate, loans at March 31, 2022 and December 31, 2021 as follows:

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Fixed Rate

 

 

 

 

 

 

Residential mortgage loans

 

$

33,857,575

 

 

$

2,986,250

 

Commercial real estate

 

 

250,000

 

 

 

 

Construction

 

 

675,000

 

 

 

 

Home equity

 

 

190,000

 

 

 

170,000

 

Total

 

$

34,972,575

 

 

$

3,156,250

 

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Variable Rate

 

 

 

 

 

 

Residential mortgage loans

 

$

2,094,500

 

 

$

 

Commercial real estate

 

 

 

 

 

1,400,000

 

Commercial and industrial

 

 

500,000

 

 

 

 

Construction

 

 

 

 

 

7,522,375

 

Home equity

 

 

330,000

 

 

 

1,060,000

 

Total

 

$

2,924,500

 

 

$

9,982,375

 

 

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 2.88% to 4.50% and maturities ranging from 10 years to 30 years.

At March 31, 2022 and December 31, 2021, undisbursed funds from approved lines of credit under a homeowners’ equity lending program amounted to $49,251,452 and $48,028,579, respectively. At March 31, 2022 and December 31, 2021, undisbursed funds from approved lines of credit under a business line of credit program amounted to $7,922,290 and $7,938,827, respectively. Unless they are specifically cancelled by notice from the Bank, these funds represent firm commitments available to the respective borrowers on demand.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but primarily includes commercial and residential real estate.

The Bank leases certain Bank properties and equipment under operating leases. Rent expense was $43,815 and $25,751 for the three months ended March 31, 2022 and 2021, respectively.

NOTE 9 – FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

24


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

Level 3 – Significant unobservable inputs that reflect a bank’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Bank used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

The Bank’s available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. The securities available-for-sale portfolio consists of corporate bonds and mortgage-backed securities. The fair values of these securities are obtained from an independent nationally recognized pricing service. An independent pricing service provides prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities.

Assets measured at fair value on a recurring basis are summarized below:

 

 

 

Carrying
Value

 

 

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

As of March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury bills

 

$

5,073,448

 

 

$

5,073,449

 

 

$

 

 

$

 

U.S. government and agency obligations

 

 

5,750,586

 

 

 

 

 

 

5,750,586

 

 

 

 

Corporate bonds

 

 

17,952,224

 

 

 

 

 

 

17,952,224

 

 

 

 

MBSs - residential

 

 

46,061,169

 

 

 

 

 

 

46,061,169

 

 

 

 

MBSs - commercial

 

 

16,754,313

 

 

 

 

 

 

16,754,313

 

 

 

 

 

 

$

91,591,740

 

 

$

5,073,449

 

 

$

86,518,292

 

 

$

 

As of December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

2,981,730

 

 

$

 

 

$

2,981,730

 

 

 

 

Corporate bonds

 

 

7,397,618

 

 

 

 

 

 

7,397,618

 

 

 

 

MBSs - residential

 

 

21,760,245

 

 

 

 

 

 

21,760,245

 

 

 

 

MBSs - commercial

 

 

9,699,205

 

 

 

 

 

 

9,699,205

 

 

 

 

 

 

$

41,838,798

 

 

$

 

 

$

41,838,798

 

 

$

 

 

There were no transfers between level 1 and level 2 during the three months ended March 31, 2022.

25


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 9 – FAIR VALUE (Continued)

The carrying amounts and estimated fair values of financial instruments not measured at fair value, at March 31, 2022 and December 31, 2021, were as follows:

 

 

 

Carrying

 

 

Fair

 

 

Fair Value Measurement Placement

 

 

 

Amount

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

69,504

 

 

$

69,504

 

 

$

69,504

 

 

$

 

 

$

 

Investment securities held-to-maturity

 

 

81,315

 

 

 

78,415

 

 

 

 

 

 

78,415

 

 

 

 

Loans

 

 

564,877

 

 

 

547,123

 

 

 

 

 

 

 

 

 

547,123

 

Financial instruments - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

339,933

 

 

 

340,655

 

 

 

 

 

 

340,655

 

 

 

 

Borrowings

 

 

78,004

 

 

 

78,000

 

 

 

 

 

 

78,000

 

 

 

 

 

 

 

Carrying

 

 

Fair

 

 

Fair Value Measurement Placement

 

 

 

Amount

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

105,069

 

 

$

105,069

 

 

$

105,069

 

 

$

 

 

$

 

Investment securities held-to-maturity

 

 

74,053

 

 

 

74,081

 

 

 

 

 

 

74,081

 

 

 

 

Loans

 

 

571,363

 

 

 

569,845

 

 

 

 

 

 

 

 

 

569,845

 

Financial instruments - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

366,396

 

 

 

365,452

 

 

 

 

 

 

365,452

 

 

 

 

Borrowings

 

 

85,052

 

 

 

86,657

 

 

 

 

 

 

86,657

 

 

 

 

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. The fair value of off-balance sheet items is not considered material.

NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss included in equity (net of tax) for the three months ended March 31, 2022 and 2021 was as follows:

 

 

 

Unrealized gain
and losses on
available for
sale
securities

 

 

Benefit plans

 

 

Total

 

Three months ended

 

 

 

 

 

 

 

 

 

Beginning balance at January 1, 2022

 

$

(289,814

)

 

$

17,158

 

 

$

(272,656

)

Other comprehensive (loss) gain before reclassification

 

 

(2,399,988

)

 

 

41,589

 

 

 

(2,358,399

)

Amounts reclassified

 

 

 

 

 

 

 

 

 

Net period comprehensive (loss) income

 

 

(2,399,988

)

 

 

41,589

 

 

 

(2,358,399

)

Ending balance March 31, 2022

 

$

(2,689,802

)

 

$

58,747

 

 

$

(2,631,055

)

 

 

 

 

 

 

 

 

 

 

Beginning balance at January 1, 2021

 

$

100,569

 

 

$

(373,582

)

 

$

(273,013

)

Other comprehensive gain before reclassification

 

 

11,551

 

 

 

31,381

 

 

 

42,932

 

Amounts reclassified

 

 

 

 

 

 

 

 

 

Net period comprehensive income

 

 

11,551

 

 

 

31,381

 

 

 

42,932

 

Ending balance March 31, 2021

 

$

112,120

 

 

$

(342,201

)

 

$

(230,081

)

 

 

 

26


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis of financial condition and results of operations at March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and March 31, 2021 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.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

statements of our goals, intentions and expectations;
statements regarding our business plans, prospects, growth and operating strategies;
statements regarding the quality of our loan and investment portfolios; and
estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

general economic conditions, either nationally or in our market area, that are worse than expected;
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 loan losses;
our ability to access cost-effective funding;
fluctuations in real estate values and both residential and commercial real estate market conditions;
demand for loans and deposits in our market area;
our ability to continue to implement our business strategies;
competition among depository and other financial institutions;
inflation and changes in market interest rates that reduce our margins and yields, reduce the fair value of financial instruments or reduce our volume of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary market;
adverse changes in the securities markets;
changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
our ability to manage market risk, credit risk and operational risk;

27


 

our ability to enter new markets successfully and capitalize on growth opportunities;
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 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;
our ability to retain key employees;
risks as it relates to cyber security against our information technology and those of our third-party providers and vendors.
our compensation expense associated with equity allocated or awarded to our employees; and
changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

 

Given its ongoing and dynamic nature, it is difficult to predict the continuing impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including if the coronavirus can be controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

demand for our products and services may decline, making it difficult to grow assets and income;
if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
our allowance for loan losses may be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;
the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
our cyber security risks are increased as the result of an increase in the number of employees working remotely;
we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 pandemic could have an adverse effect on us; and
Federal Deposit Insurance Corporation premiums may increase if the agency experience additional resolution costs.

Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to the pandemic could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

28


 

 

Acquisition of Gibraltar

On February 28, 2021, the Company completed its acquisition of Gibraltar Bank. As a part of the transaction, the Company issued 1,267,916 shares of its common stock to Bogota Financial, MHC. The conversion and consolidation of data processing platforms, systems and customer files occurred on August 16, 2021.

As of February 28, 2021, Gibraltar had $106.2 million of assets, loans of $77.7 million and deposits of $81.6 million and operated from three offices located in Newark, Oak Ridge and Parsippany, New Jersey in Morris and Essex Counties, New Jersey.

Critical Accounting Policies

A summary of our accounting policies is described in Note 1 to the consolidated financial statements included with our Annual Report on Form 10-K at and for the year ended December 31, 2021. Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. 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. Management believes that the most critical accounting policy, which involves the most complex or subjective decisions or assessments, is as follows:

Allowance for Loan Losses. The allowance for loan losses is the amount estimated by management as necessary to absorb credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the relevant balance sheet date. The amount of the allowance is based on significant estimates, and the ultimate losses may vary from such estimates as more information becomes available or conditions change. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions used and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.

As a substantial percentage of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans are critical in determining the amount of the allowance required for specific loans. Assumptions are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property securing a loan and the related allowance. Management reviews the assumptions supporting such appraisals to determine that the resulting values reasonably reflect amounts realizable on the related loans.

Management performs an evaluation of the adequacy of the allowance for loan losses at least quarterly. We consider a variety of factors in establishing this estimate including current and forecasted economic conditions, delinquency statistics, the size and composition of the loan portfolio, geographic concentrations, and the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic and real estate market conditions.

The evaluation has specific and general components. The specific component relates to loans that are classified as special mention, substandard, doubtful, or loss. For such loans that are also classified as impaired, an allowance is generally established when the collateral value of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors.

Actual loan losses may be significantly more than the allowance we have established, which could have a material negative effect on our financial results. See Note 1 to the Notes to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2021 for a complete discussion of the allowance for loan losses.

29


 

COVID-19

The Company’s business is dependent upon the willingness and ability of its employees and customers to conduct banking and other financial transactions. If the global response to contain COVID-19 is unsuccessful or the effects of the pandemic continue or worsen, the Company may experience a material adverse effect on its business, financial condition, results of operations and cash flows.

Financial position and results of operations

 

The Company’s fee income has been and may continue to be reduced due to COVID-19. In keeping with the guidance from regulators, the Company has actively worked with COVID-19 affected customers to waive fees from a variety of sources, such as, but not limited to, insufficient funds, account maintenance, minimum balance, and ATM fees. These reductions in fees are thought to be temporary in conjunction with the length of the COVID-19 related economic crisis.

 

Credit and asset quality

 

As of March 31, 2022, the Bank had granted 172 loan modifications totaling $67.9 million, which represented 11.6% of the total loan portfolio, allowing customers who were affected by the COVID-19 pandemic to defer principal and/or interest payments. These short-term loan modifications were treated in accordance with Section 4013 of the Coronavirus Aid Relief and Economic Security (“CARES”) Act and, as such, are not treated as troubled debt restructurings during the short-term modification period if the loan was not in arrears at December 31, 2019. Furthermore, these loans will continue to accrue interest. Of the 172 loans to which loan modifications were granted only one one-to-four family residential real estate loan totaling $117,000 or 0.2% of net loans, is still on deferral.

 

As a result of the COVID-19 pandemic, the Company is engaging in more frequent communication with borrowers to better understand their situation and challenges faced. The extent to which industries, or the tangential impact of those industries to other borrowers or industries, are impacted will likely be in direct proportion to the duration and depth of the COVID-19 pandemic.

 

The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) program called the Paycheck Protection Program (“PPP”). PPP loans have: (a) an interest rate of 1.0%, (b) a five-year loan term to maturity for loans made on or after June 5, 2020 (loans made prior to June 5, 2020 have a two-year term, however borrowers and lenders may mutually agree to extend the maturity for such loans to five years); and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be forgiven under the PPP if employee and compensation levels of the business are maintained and 60% of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses.

As a qualified SBA lender, the Bank was automatically authorized to originate loans under the PPP. During 2020, the Bank received and processed 113 PPP applications totaling $10.5 million. The Bank participated in the second round of PPP loans and during the first half of 2021, the Bank received and processed 54 PPP applications totaling $6.9 million. The Bank had $1.4 million in outstanding PPP loans at March 31, 2022.

Comparison of Financial Condition at March 31, 2022 and December 31, 2021

Total Assets. Total assets increased $13.3 million, or 1.6%, from December 31, 2021 to $850.7 million at March 31, 2022 primarily due to purchase of investment securities. The increase in assets reflected a $49.8 million, or 118.9%, increase in securities available for sale and a $7.3 million or 9.8%, increase in securities held to maturity, offset by a $36.0 million, or 34.3%, decrease in cash and cash equivalents and a $5.8 million, or 1.0%, decrease in net loans.

Cash and Cash Equivalents. Total cash and cash equivalents decreased $36.0 million, or 34.3%, to $69.1 million at March 31, 2022 from $105.1 million at December 31, 2021. The decrease was primarily due to $65.5 million of investment security purchases during the three months ended March 31, 2022.

30


 

Securities Available for Sale. Total securities available for sale increased $49.8 million, or 118.9%, to $91.6 million at March 31, 2022 from $41.8 million at December 31, 2021. The increase was due to $54.2 million purchases of mortgage-backed securities and corporate bonds with excess cash. The increase in securities available for sale reflected a $10.6 million increase in corporate bonds, a $5.1 million increase in U.S. treasury bills, a $2.8 million increase in U.S. government agency obligations, and a $49.1 million increase in mortgage-backed securities.

Securities Held to Maturity. Total securities held to maturity increased $7.3 million, or 9.8%, to $81.3 million at March 31, 2022 from $74.1 million at December 31, 2021, primarily due to $11.4 million in purchases of securities which was offset by repayments in mortgage-backed securities. The increase in securities held to maturity reflected a $929,000 decrease in corporate bonds, a $10.0 million increase in U.S. government agency obligations, a $2,000 decrease in municipal bonds and a $1.8 million decrease in mortgage-backed securities.

Net Loans. Net loans decreased $5.8 million, or 1.0%, to $564.4 million at March 31, 2022 from $570.2 million at December 31, 2021. The decrease was due to a $4.4 million, or 55.8%, decrease in commercial and industrial loans to $3.5 million at March 31, 2022 from $7.9 million as of December 31, 2021, a decrease of $3.3 million, or 1.0%, in one-to four-residential real estate loans to $316.7 million at March 31, 2022 from $320.0 million at December 31, 2021, and a decrease of $2.2 million, or 7.8%, in consumer loans to $25.6 million at March 31, 2022 from $27.7 million at December 31, 2021. This was partially offset by an increase of $1.9 million, or 1.1%, increase in commercial and multi-family real estate loans to $177.2 million at March 31, 2022 from $175.4 million at December 31, 2021, and an increase of $2.3 million, or 5.4%, in construction loans to $43.6 million at March 31, 2022 from $41.4 million at December 31, 2021. The decrease in commercial and industrial loans was due to the forgiveness and repayment of $9.2 million in PPP loans that were originated in 2020 and 2021. As of March 31, 2022, the Bank had $450,000 in loans held for sale compared $1.2 million loans held for sale as of December 31, 2021.

Deposits. Total deposits increased $22.5 million, or 3.8%, to $619.9 million at March 31, 2022 from $597.5 million at December 31, 2021 reflecting a new $20.0 million interest bearing checking municipal relationship. The increase in deposits reflected an increase in interest-bearing deposits of $18.8 million, or 3.4%, to $577.0 million as of March 31, 2022 from $558.2 million at December 31, 2021 and an increase in non-interest bearing deposits of $3.6 million, or 9.2%, to $42.9 million as of March 31, 2022 from $39.3 million as of December 31, 2021.

At March 31, 2022, municipal deposits totaled $49.1 million, which represented 7.9% of total deposits, and brokered deposits totaled $54.7 million, which represented 8.8% of total deposits. At December 31, 2021, municipal deposits totaled $31.5 million, which represented 5.3% of total deposits, and brokered deposits totaled $52.9 million, which represented 7.5% of total deposits.

Borrowings. Federal Home Loan Bank of New York borrowings decreased $7.0 million, or 8.3%, to $78.0 million at March 31, 2022 from $85.1 million at December 31, 2021, as short-term advances decreased $6.0 million and repayments of long-term advances were $1.0 million. The weighted average rate of borrowings was 1.80% and 1.69% as of March 31, 2022 and December 31, 2021, respectively.

Total Equity. Stockholders’ equity decreased $2.6 million to $145.0 million, primarily due increased accumulated other comprehensive loss for securities available for sale of $2.4 million and the repurchase of 182,001 shares of stock during the quarter at a cost of $1.9 million, offset by $1.4 million of net income for the three months ended March 31, 2022. At March 31, 2022, the Company’s ratio of average stockholders’ equity-to-total assets was 17.35%, compared to 17.55% at December 31, 2021.

31


 

Average Balance Sheets and Related Yields and Rates

The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using daily balances. Nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and are not material.

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

Average
Balance

 

 

Interest and
Dividends

 

 

Yield/
Cost
(3)

 

 

Average
Balance

 

 

Interest and
Dividends

 

 

Yield/
Cost
(3)

 

 

 

(Dollars in thousands)

 

Assets:

 

(unaudited)

 

Cash and cash equivalents

 

$

71,541

 

 

$

29

 

 

 

0.17

%

 

$

88,314

 

 

$

49

 

 

 

0.23

%

Loans

 

 

571,827

 

 

 

5,537

 

 

 

3.90

%

 

 

574,071

 

 

 

5,465

 

 

 

3.81

%

Securities

 

 

138,798

 

 

 

658

 

 

 

1.90

%

 

 

74,842

 

 

 

686

 

 

 

3.72

%

Other interest-earning assets

 

 

4,834

 

 

 

55

 

 

 

4.50

%

 

 

6,039

 

 

 

74

 

 

 

4.97

%

Total interest-earning assets

 

 

787,000

 

 

 

6,279

 

 

 

3.21

%

 

 

743,266

 

 

 

6,274

 

 

 

3.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-earning assets

 

 

50,802

 

 

 

 

 

 

 

 

 

32,171

 

 

 

 

 

 

 

Total assets

 

$

837,802

 

 

 

 

 

 

 

 

$

775,437

 

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

143,453

 

 

$

220

 

 

 

0.62

%

 

$

90,461

 

 

$

109

 

 

 

0.49

%

Savings accounts

 

 

66,583

 

 

 

43

 

 

 

0.26

%

 

 

41,892

 

 

 

22

 

 

 

0.21

%

Certificates of deposit

 

 

351,027

 

 

 

563

 

 

 

0.65

%

 

 

367,036

 

 

 

1,133

 

 

 

1.25

%

Total interest-bearing deposits

 

 

561,063

 

 

 

826

 

 

 

0.60

%

 

 

499,389

 

 

 

1,264

 

 

 

1.03

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank
   advances

 

 

82,280

 

 

 

330

 

 

 

1.63

%

 

 

104,449

 

 

 

431

 

 

 

1.67

%

Total interest-bearing liabilities

 

 

643,343

 

 

 

1,156

 

 

 

0.73

%

 

 

603,838

 

 

 

1,695

 

 

 

1.14

%

Non-interest-bearing deposits

 

 

42,936

 

 

 

 

 

 

 

 

 

27,502

 

 

 

 

 

 

 

Other non-interest-bearing
   liabilities

 

 

5,265

 

 

 

 

 

 

 

 

 

10,307

 

 

 

 

 

 

 

Total liabilities

 

 

691,544

 

 

 

 

 

 

 

 

 

641,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

146,258

 

 

 

 

 

 

 

 

 

133,790

 

 

 

 

 

 

 

Total liabilities and equity

 

$

837,802

 

 

 

 

 

 

 

 

$

775,437

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

5,123

 

 

 

 

 

 

 

 

$

4,579

 

 

 

 

Interest rate spread (1)

 

 

 

 

 

 

 

 

2.48

%

 

 

 

 

 

 

 

 

2.28

%

Net interest margin (2)

 

 

 

 

 

 

 

 

2.64

%

 

 

 

 

 

 

 

 

2.50

%

Average interest-earning assets
   to average interest-bearing
   liabilities

 

 

122.33

%

 

 

 

 

 

 

 

 

123.09

%

 

 

 

 

 

 

 

(1)
Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(2)
Net interest margin represents net interest income divided by average total interest-earning assets.
(3)
Annualized.

 

 

 

 

 

32


 

Rate/Volume Analysis

The following table sets forth the effects of changing rates and volumes on net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. 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,
2022 Compared to Three
Months Ended March 31, 2021

 

 

 

Increase (Decrease) Due to

 

 

 

Volume

 

 

Rate

 

 

Net

 

 

 

(In thousands)

 

Interest income:

 

(unaudited)

 

Cash and cash equivalents

 

$

(8

)

 

$

(12

)

 

$

(20

)

Loans receivable

 

 

(136

)

 

 

208

 

 

 

72

 

Securities

 

 

1,715

 

 

 

(1,743

)

 

 

(28

)

Other interest earning assets

 

 

(13

)

 

 

(6

)

 

 

(19

)

Total interest-earning assets

 

 

1,558

 

 

 

(1,553

)

 

 

5

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

 

76

 

 

 

35

 

 

 

111

 

Savings accounts

 

 

15

 

 

 

6

 

 

 

21

 

Certificates of deposit

 

 

(47

)

 

 

(523

)

 

 

(570

)

Federal Home Loan Bank advances

 

 

(91

)

 

 

(10

)

 

 

(101

)

Total interest-bearing liabilities

 

 

(47

)

 

 

(492

)

 

 

(539

)

Net increase (decrease) in net
   interest income

 

$

1,605

 

 

$

(1,061

)

 

$

544

 

 

Comparison of Operating Results for the Three Months Ended March 31, 2022 and March 31, 2021

General. Net income decreased by $1.6 million, or 53.4%, to $1.4 million for the three months ended March 31, 2022 from $3.0 million for the three months ended March 31, 2021. The decrease was due to a decrease in non-interest income of $2.0 million offset by an increase in net interest income of $544 thousand. Excluding the one-time bargain purchase gain of $1.9 million that occurred in 2021 in connection with the Gibraltar Bank acquisition, net income would have increased $300,000 for the three months ended March 31, 2022 as compared to the comparable period in 2021.

Interest Income. Interest income increased $5,000, or 0.1%, to $6.3 million for the three months ended March 31, 2022. The increase reflected a $43.7 million increase in the average balance of interest-earnings assets, offset by a 21 basis points decrease in the average yield on interest-earning assets to 3.21% for the three months ended March 31, 2022 from 3.42% for the three months ended March 31, 2021.

Interest income on cash and cash equivalents decreased $20,000, or 40.8%, to $29,000 for the three months ended March 31, 2022 from $49,000 for the three months ended March 31, 2021 due to a six basis point decrease in the average yield on cash and cash equivalents from 0.23% for the three months ended March 31, 2021 to 0.17% for the three months ended March 31, 2022 due to the lower interest rate environment. The decrease was also due to a $16.8 million decrease in the average balance of cash and cash equivalents to $71.5 million for the three months ended March 31, 2022 from $88.3 million for the three months ended March 31, 2021, reflecting excess liquidity as deposit growth exceeded loan growth.

Interest income on loans increased $72,000, or 1.3%, to $5.5 million for the three months ended March 31, 2022 from $5.5 million for the three months ended March 31, 2021 due to a nine basis point increase in the average yield on loans from 3.81% for the three months ended March 31, 2021 to 3.90% for the three months ended March 31, 2022, offset by a $2.2 million decrease in the average balance of loans to $571.8 million for the three months ended

33


 

March 31, 2022 from $574.1 million for the three months ended March 31, 2021. The decrease in the average balance of loans reflected a higher repayment rate of residential loans.

Interest income on securities decreased $28,000, or 4.1%, to $658,000 for the three months ended March 31, 2022 from $686,000 for the three months ended March 31, 2021 due to a 182 basis point decrease in the average yield from 3.72% for the three months ended March 31, 2021 to 1.90% for the three months ended March 31, 2022. The decrease was offset by a $64.0 million increase in the average balance of securities to $138.8 million for the three months ended March 31, 2022 from $74.8 million for the three months ended March 31, 2021, reflecting the purchase of investments with excess liquidity as deposit growth exceeded loan growth.

Interest Expense. Interest expense decreased $539,000, or 31.8%, to $1.2 million for the three months ended March 31, 2022 from $1.7 million for the three months ended March 31, 2022. The decrease primarily reflected a 41 basis point decrease in the average cost of interest-bearing liabilities to 0.73% for the three months ended March 31, 2022 from 1.14% for the three months ended March 31, 2021.

Interest expense on interest-bearing deposits decreased $438,000, or 34.6%, to $826,000 for the three months ended March 31, 2022 from $1.3 million for the three months ended March 31, 2021. The decrease was due primarily to a 43 basis point decrease in the average cost of interest-bearing deposits to 0.60% for the three months ended March 31, 2022 from 1.03% for the three months ended March 31, 2021. The decrease in the average cost of deposits was due to the lower interest rate environment and an increase in the average balance of lower-cost transaction accounts and a decrease in the average balance of higher cost certificates of deposit. This decrease was offset by a $61.7 million increase in the average balance of deposits to $561.1 million for the three months ended March 31, 2022 from $499.4 million for the three months ended March 31, 2021.

Interest expense on Federal Home Loan Bank borrowings decreased $101,000, or 23.5%, from $431,000 for the three months ended March 31, 2021 to $330,000 for the three months ended March 31, 2022. The decrease was due to a decrease in the average cost of borrowings of four basis point to 1.63% for the three months ended March 31, 2022 from 1.67% for the three months ended March 31, 2021 due to the lower interest environment and a decrease in the average balance of borrowings of $22.2 million to $82.3 million for the three months ended March 31, 2022 from $104.4 million for the three months ended March 31, 2022.

Net Interest Income. Net interest income increased $544,000, or 11.9%, to $5.1 million for the three months ended March 31, 2022 from $4.6 million for the three months ended March 31, 2021. The increase reflected a 20 basis point increase in our net interest rate spread to 2.48% for the three months ended March 31, 2022 from 2.28% for the three months ended March 31, 2021. Our net interest margin increased 14 basis points to 2.64% for the three months ended March 31, 2022 from 2.50% for the three months ended March 31, 2021.

Provision for Loan Losses. We recorded no provision for loan losses for the three months ended March 31, 2022 and recorded a $59,000 credit for the three-month period ended March 31, 2021. Lower balances of residential loans, a more positive economic environment and continued strong asset quality metrics were the reasons for the absence of a provision during the three months ended March 31, 2022. The Bank continues to have a low level of delinquent and non-accrual loans in the portfolio, as well as no charge-offs. Non-performing assets were $1.9 million, or 0.23% of total assets, at March 31, 2022. The allowance for loan losses was $2.2 million, or 0.38% of loans outstanding and 111.8% of nonperforming loans, at March 31, 2022.

Non-Interest Income. Non-interest income decreased by $2.0 million or 85.1%, to $344,000 for the three months ended March 31, 2022 from $2.3 million for the three months ended March 31, 2021. Gain on sale of loans decreased $149,000 offset by a $66,000 increase in bank-owned life insurance. The decrease was primarily due to a $1.9 million decrease in bargain purchase gain recognized in the Gibraltar acquisition in 2021.

Non-Interest Expense. For the three months ended March 31, 2022, non-interest expense increased $109,000, or 3.2%, to $3.5 million, over the comparable 2021 period. Salaries and employee benefits increased $524,000, or 34.1%, attributable to adding the new Gibraltar employees and the new Hasbrouck Heights branch office. Data processing expense increased $70,000, or 33.6%, due to higher data processing expense from the merger. Professional fees decreased $115,000, or 44.3%, due in part to lower legal expense associated with the merger in 2021. The increase of other general operating expenses was mainly due to increase occupancy costs for the acquired Gibraltar Bank branches and the new Hasbrouck Heights branch office.

34


 

Income Tax Expense. Income tax expense increased $7,000, or 1.4%, to $525,000 for the three months ended March 31, 2022 from $518,000 for the three months ended March 31, 2021. The increase was due to $109,000 of higher taxable income.

Management of Market Risk

General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage our exposure to changes in market interest rates. Accordingly, our board of directors has established an Asset/Liability Management Committee (the “ALCO”), which is comprised of three members of executive management and two independent directors, which oversees the asset/liability management processes and related procedures. The ALCO meets on at least a quarterly basis and reviews asset/liability strategies, liquidity positions, alternative funding sources, interest rate risk measurement reports, capital levels and economic trends at both national and local levels. Our interest rate risk position is also monitored quarterly by the board of directors.

We manage our interest rate risk to minimize the exposure of our earnings and capital to changes in market interest rates. We have implemented the following strategies to manage our interest rate risk: originating and purchasing loans with adjustable interest rates; promoting core deposit products; 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; diversifying our loan portfolio; and strengthening our capital position. By following these strategies, we believe that we are better positioned to react to changes in market interest rates.

Net Portfolio Value Simulation. We analyze our sensitivity to changes in interest rates through a net portfolio value of equity (“NPV”) model. NPV represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities, adjusted for the value of off-balance sheet contracts. The NPV ratio represents the dollar amount of our NPV divided by the present value of our total assets for a given interest rate scenario. NPV attempts to quantify our economic value using a discounted cash flow methodology while the NPV ratio reflects that value as a form of capital ratio. We estimate what our NPV would be at a specific date. We then calculate what the NPV would be at the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. 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 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 March 31, 2022. All estimated changes presented in the table are within the policy limits approved by the board of directors.

 

 

 

NPV

 

 

NPV as Percent of Portfolio
Value of Assets

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

Basis Point (“bp”) Change in
Interest Rates

 

Dollar
Amount

 

 

Dollar
Change

 

 

Percent
Change

 

 

NPV Ratio

 

 

Change

 

400 bp

 

$

126,690

 

 

$

517

 

 

 

0.48

%

 

 

16.86

%

 

 

(20.43

)%

300 bp

 

 

131,826

 

 

 

5,653

 

 

 

4.48

 

 

 

17.07

 

 

 

14.33

 

200 bp

 

 

134,625

 

 

 

8,452

 

 

 

6.70

 

 

 

16.93

 

 

 

13.40

 

100 bp

 

 

133,559

 

 

 

7,386

 

 

 

5.85

 

 

 

16.30

 

 

 

9.18

 

 

 

126,173

 

 

 

 

 

 

 

 

 

14.93

 

 

 

 

(100) bp

 

 

127,641

 

 

 

1,468

 

 

 

1.16

 

 

 

14.68

 

 

 

(1.67

)

 

35


 

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The above table assumes that the composition of our interest-sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results.

Net Interest Income Analysis. We also use income simulation to measure interest rate risk inherent in our balance sheet at a given point in time by showing the effect on net interest income, over specified time frames and using different interest rate shocks and ramps. The assumptions include management’s best assessment of the effect of changing interest rates on the prepayment speeds of certain assets and liabilities, projections for account balances in each of the product lines offered and the historical behavior of deposit rates and balances in relation to changes in interest rates. These assumptions are subject to change, and as a result, the model is not expected to precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. Actual results will differ from the simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in the balance sheet composition and market conditions. Assumptions are supported with quarterly back testing of the model to actual market rate shifts.

As of March 31, 2022, 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:

 

Changes in Interest Rates
(basis points)
(1)

 

Change in Net Interest Income Year One
(% change from year one base)

400

 

(7.92)%

300

 

(5.99)

200

 

(4.09)

100

 

(1.94)

 

(100)

 

(0.17)

 

(1)
The calculated change in net interest income assumes an instantaneous parallel shift of the yield curve.

The preceding simulation analyses does not represent a forecast of actual results and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions, which are subject to change, including: the nature and timing of interest rate levels including the yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. Also, as market conditions vary, prepayment/refinancing levels, the varying impact of interest rate changes on caps and floors embedded in adjustable-rate loans, early withdrawal of deposits, changes in product preferences, and other internal/external variables will likely deviate from those assumed.

Liquidity and Capital Resources

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from calls, maturities and sales of securities and sales of loans. We also have the ability to borrow from the Federal Home Loan Bank of New York. At March 31, 2022, we had the ability to borrow up to $243.5 million, of which $78.0 million was outstanding and $1.5 million was utilized as collateral for letters of credit issued to secure municipal deposits. At March 31, 2022, we had $51.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.

36


 

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 enough sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2022.

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. 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, 2022, cash and cash equivalents totaled $69.1 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $91.6 million at March 31, 2022.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate we will have sufficient funds to meet our current funding commitments. Certificates of deposit due within one year of March 31, 2022 totaled $229.0 million, or 36.9% 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. Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay. We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Capital Resources. 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, 2022, 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. 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 a result of the CARES Act, the ratio was temporarily reduced to 8% for calendar year 2020 and 8.5% for calendar year 2021 in response to COVID-19. As of March 31, 2022, the Bank is reporting as a qualifying community bank with a ratio of 17.67%.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information with respect to quantitative and qualitative disclosures about market risk can be found in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Management of Market Risk.”

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2022. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the three months ended March 31, 2022, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

At March 31, 2022 we are not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, the outcome of which would be material to our financial condition or results of operations.

Item 1A. Risk Factors

 

There have been no material changes in risk factors applicable to the Company from those disclosed in “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On June 16, 2021, the Company’s Board of Directors approved the repurchase of 296,044 shares of its common stock, which is approximately 5% of its outstanding common stock (excluding shares held by Bogota Financial, MHC). The program does not have a scheduled expiration date and the Board of Directors has the right to suspend or discontinue the program at any time.

The following table provides information on repurchase by the Company of its common stock under the Company's Board approved program

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period

 

Total Number of Shares Purchased

 

 

Average Price Paid per Share

 

 

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

 

 

Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

 

January 1 - 31, 2022

 

 

8,001

 

 

$

10.45

 

 

 

8,001

 

 

 

241,894

 

February 1 - 28, 2022

 

 

44,875

 

 

 

10.43

 

 

 

44,875

 

 

 

197,019

 

March 1 - 31, 2022

 

 

129,125

 

 

 

10.51

 

 

 

129,125

 

 

 

67,894

 

Total

 

 

182,001

 

 

$

10.49

 

 

$

182,001

 

 

 

 

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

 

Exhibit

Number

 

Description

 

 

 

  3.1

 

Articles of Incorporation of Bogota Financial Corp. (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-233680))

 

 

 

  3.2

 

Bylaws of Bogota Financial Corp. (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-233680))

 

 

 

  4.1

 

Form of Common Stock Certificate of Bogota Financial Corp. (incorporated by reference to Exhibit 4 of the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-233680))

 

 

 

31.1

 

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

31.2

 

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

32.1

 

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

101.0

 

The following materials for the quarter ended March 31, 2022, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements*

 

 

 

104

 

Cover Page Interactive Data File (formatted in XBRL and contained in Exhibit 101)

 

* Furnished, not filed.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

BOGOTA FINANCIAL CORP.

 

 

 

 

 

 

Date: May 13, 2022

 

/s/ Joseph Coccaro

 

 

Joseph Coccaro

 

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

Date: May 13, 2022

 

/s/ Brian McCourt

 

 

Brian McCourt

 

 

Executive Vice President and Chief Financial Officer

 

 

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