UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q10-Q/A
(Amendment No. 1)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30,March 31, 20222023
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 | (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 | ||
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. Yes ☒ No ☐
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). Yes ☒ No ☐
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 July 31, 2022,May 8, 2023, there were 14,142,62113,502,757 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. | 1 | |||
1 | ||||
2 | ||||
3 | ||||
4 | ||||
5 | ||||
| ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 | ||
Item 3. |
| |||
Item 4. |
| |||
PART II. OTHER INFORMATION | ||||
Item 1. |
| |||
Item 1A. |
| |||
Item 2. |
| |||
Item 3. |
| |||
Item 4. |
| |||
Item 5. |
| |||
Item 6. |
| |||
|
i
EXPLANATORY NOTE
Bogota Financial Corp., a Maryland corporation (the “Company”) is filing an Amendment to its Quarterly Report on Form 10-Q for the period ended March 31, 2023 (this “Amended Report”), which was originally filed on May 12, 2023 with the Securities and Exchange Commission (the “Original Report”). The purpose of this Amended Report is to revise the disclosure provided in Note 4 to the unaudited consolidated financial statements regarding nonaccrual loans as of March 31, 2023 (page 18 of the Original Report). The table inadvertently included $10,922,520 in nonaccrual loans under the consumer loan line item under both the “nonaccrual loans end of period” column and the “nonaccrual with no allowance for credit loss” column. The Company had no consumer loans that were on nonaccrual status at March 31, 2023. Accordingly, this Amended Report updates this table in Note 4 to the unaudited consolidated financial statements so that the amount for nonaccrual loans under the consumer loan line item provided under both the “nonaccrual loans end of period” column and the “nonaccrual with no allowance for credit loss” column is zero and the total for each of those columns is $12,908,173 instead of $23,830,693.
No other information in the Original Report has been amended. None of the changes reflected in this Amended Report required a change to the financial statements reported in the Original Report.
We are filing this Amended Report to amend the following items in our Original Report to the extent necessary to reflect the adjustments discussed above and to file new Exhibits 31.1, 31.2 and 32.1 dated as of the date of this Amended Report:
• Part I, Item 1. Financial Statements
• Part II, Item 6. Exhibits
In order to preserve the nature and character of the disclosures set forth in the Original Report, except as expressly noted above, this Amended Report speaks as of the date of the filing of the Original Report, and we have not updated the disclosures in this Amended Report to speak as of a later date. Accordingly, this Amended Report should be read in conjunction with our filings made with the Securities and Exchange Commission subsequent to the filing of the Original Report, including any amendment to these filings.
ii
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited)
|
| As of |
|
| As of |
| ||
|
| March 31, 2023 |
|
| December 31, 2022 |
| ||
Assets |
|
|
|
|
|
| ||
Cash and due from banks |
| $ | 11,423,093 |
|
| $ | 8,160,028 |
|
Interest-bearing deposits in other banks |
|
| 13,079,185 |
|
|
| 8,680,889 |
|
Cash and cash equivalents |
|
| 24,502,278 |
|
|
| 16,840,917 |
|
Securities available for sale |
|
| 82,051,189 |
|
|
| 85,100,578 |
|
Securities held to maturity (fair value of $71,201,953 and $70,699,651,respectively) |
|
| 78,207,206 |
|
|
| 77,427,309 |
|
Loans, net of allowance of $2,860,949 and $2,578,174, respectively |
|
| 711,890,347 |
|
|
| 719,025,762 |
|
Premises and equipment, net |
|
| 7,852,299 |
|
|
| 7,884,335 |
|
Federal Home Loan Bank (FHLB) stock and other restricted securities |
|
| 5,918,600 |
|
|
| 5,490,900 |
|
Accrued interest receivable |
|
| 3,777,228 |
|
|
| 3,966,651 |
|
Core deposit intangibles |
|
| 251,240 |
|
|
| 267,272 |
|
Bank-owned life insurance |
|
| 30,392,377 |
|
|
| 30,206,325 |
|
Other assets |
|
| 5,447,449 |
|
|
| 4,888,954 |
|
Total Assets |
| $ | 950,290,213 |
|
| $ | 951,099,003 |
|
Liabilities and Equity |
|
|
|
|
|
| ||
Non-interest bearing deposits |
| $ | 38,107,101 |
|
| $ | 38,653,349 |
|
Interest bearing deposits |
|
| 652,604,123 |
|
|
| 662,758,100 |
|
Total deposits |
|
| 690,711,224 |
|
|
| 701,411,449 |
|
FHLB advances-short term |
|
| 36,500,000 |
|
|
| 59,000,000 |
|
FHLB advances-long term |
|
| 75,531,931 |
|
|
| 43,319,254 |
|
Advance payments by borrowers for taxes and insurance |
|
| 3,499,731 |
|
|
| 3,174,661 |
|
Other liabilities |
|
| 4,961,068 |
|
|
| 4,534,516 |
|
Total liabilities |
|
| 811,203,954 |
|
|
| 811,439,880 |
|
|
|
|
|
|
|
| ||
Stockholders’ Equity |
|
|
|
|
|
| ||
Preferred stock $0.01 par value 1,000,000 shares authorized, none |
|
| — |
|
|
| — |
|
Common stock $0.01 par value, 30,000,000 shares authorized, |
|
| 135,723 |
|
|
| 136,989 |
|
Additional paid-in capital |
|
| 57,928,185 |
|
|
| 59,099,476 |
|
Retained earnings |
|
| 92,527,240 |
|
|
| 91,756,673 |
|
Unearned ESOP shares (429,900 shares at March 31, 2023 and |
|
| (5,047,701 | ) |
|
| (5,123,002 | ) |
Accumulated other comprehensive loss |
|
| (6,457,188 | ) |
|
| (6,211,013 | ) |
Total stockholders’ equity |
|
| 139,086,259 |
|
|
| 139,659,123 |
|
Total liabilities and stockholders’ equity |
| $ | 950,290,213 |
|
| $ | 951,099,003 |
|
|
| As of |
|
| As of |
| ||
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Assets |
| (unaudited) |
|
|
|
| ||
Cash and due from banks |
| $ | 6,781,706 |
|
| $ | 14,446,792 |
|
Interest-bearing deposits in other banks |
|
| 822,524 |
|
|
| 90,621,993 |
|
Cash and cash equivalents |
|
| 7,604,230 |
|
|
| 105,068,785 |
|
Securities available for sale |
|
| 97,507,693 |
|
|
| 41,838,798 |
|
Securities held to maturity (fair value of $79,858,396 and $74,081,059, |
|
| 86,432,340 |
|
|
| 74,053,099 |
|
Loans held for sale |
|
| 360,000 |
|
|
| 1,152,500 |
|
Loans, net of allowance of $2,253,174 and $2,153,174, respectively |
|
| 630,810,380 |
|
|
| 570,209,669 |
|
Premises and equipment, net |
|
| 8,006,717 |
|
|
| 8,127,979 |
|
Federal Home Loan Bank (FHLB) stock and other restricted securities |
|
| 6,076,700 |
|
|
| 4,851,300 |
|
Accrued interest receivable |
|
| 3,007,407 |
|
|
| 2,712,605 |
|
Core deposit intangibles |
|
| 300,827 |
|
|
| 336,364 |
|
Bank-owned life insurance |
|
| 29,836,866 |
|
|
| 24,524,122 |
|
Other assets |
|
| 5,001,976 |
|
|
| 4,486,366 |
|
Total Assets |
| $ | 874,945,136 |
|
| $ | 837,361,587 |
|
Liabilities and Equity |
|
|
|
|
|
| ||
Non-interest bearing deposits |
| $ | 39,442,245 |
|
| $ | 39,317,500 |
|
Interest bearing deposits |
|
| 571,847,021 |
|
|
| 558,162,278 |
|
Total Deposits |
|
| 611,289,266 |
|
|
| 597,479,778 |
|
FHLB advances |
|
| 115,278,743 |
|
|
| 85,051,736 |
|
Advance payments by borrowers for taxes and insurance |
|
| 3,431,613 |
|
|
| 2,856,120 |
|
Other liabilities |
|
| 4,484,720 |
|
|
| 4,397,742 |
|
Total liabilities |
|
| 734,484,342 |
|
|
| 689,785,376 |
|
|
|
|
|
|
|
| ||
Stockholders’ Equity |
|
|
|
|
|
| ||
Preferred stock $0.01 par value 1,000,000 shares authorized, NaN |
|
| — |
|
|
| — |
|
Common stock $0.01 par value, 30,000,000 shares authorized, |
|
| 142,078 |
|
|
| 146,057 |
|
Additional paid-in capital |
|
| 64,401,403 |
|
|
| 68,247,204 |
|
Retained earnings |
|
| 87,922,716 |
|
|
| 84,879,812 |
|
Unearned ESOP shares (449,977 shares at June 30, 2022 and |
|
| (5,273,604 | ) |
|
| (5,424,206 | ) |
Accumulated other comprehensive loss |
|
| (6,731,799 | ) |
|
| (272,656 | ) |
Total stockholders’ equity |
|
| 140,460,794 |
|
|
| 147,576,211 |
|
Total liabilities and stockholders’ equity |
| $ | 874,945,136 |
|
| $ | 837,361,587 |
|
See accompanying notes to unaudited consolidated financial statements.
1
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
| Three months ended |
|
| Six months ended |
|
| Three Months Ended |
| |||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Loans |
| $ | 5,848,522 |
|
| $ | 5,684,881 |
|
| $ | 11,385,602 |
|
| $ | 11,149,842 |
| ||||||||
Loans, including fees |
| $ | 7,699,438 |
|
| $ | 5,537,080 |
| ||||||||||||||||
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Taxable |
|
| 932,714 |
|
|
| 388,604 |
|
|
| 1,569,835 |
|
|
| 1,062,151 |
|
|
| 1,051,260 |
|
|
| 637,121 |
|
Tax-exempt |
|
| 46,282 |
|
|
| 12,798 |
|
|
| 67,278 |
|
|
| 25,383 |
|
|
| 44,902 |
|
|
| 20,996 |
|
Other interest-earning assets |
|
| 83,682 |
|
|
| 115,256 |
|
|
| 167,495 |
|
|
| 238,260 |
|
|
| 221,589 |
|
|
| 83,813 |
|
Total interest income |
|
| 6,911,200 |
|
|
| 6,201,539 |
|
|
| 13,190,210 |
|
|
| 12,475,636 |
|
|
| 9,017,189 |
|
|
| 6,279,010 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Deposits |
|
| 849,808 |
|
|
| 1,050,546 |
|
|
| 1,675,992 |
|
|
| 2,314,228 |
|
|
| 3,714,997 |
|
|
| 826,184 |
|
FHLB advances |
|
| 356,203 |
|
|
| 376,508 |
|
|
| 686,036 |
|
|
| 807,633 |
|
|
| 777,354 |
|
|
| 329,833 |
|
Total interest expense |
|
| 1,206,011 |
|
|
| 1,427,054 |
|
|
| 2,362,028 |
|
|
| 3,121,861 |
|
|
| 4,492,351 |
|
|
| 1,156,017 |
|
Net interest income |
|
| 5,705,189 |
|
|
| 4,774,485 |
|
|
| 10,828,182 |
|
|
| 9,353,775 |
|
|
| 4,524,838 |
|
|
| 5,122,993 |
|
Provision (credit) for loan losses |
|
| 100,000 |
|
|
| (54,000 | ) |
|
| 100,000 |
|
|
| (113,000 | ) | ||||||||
Net interest income after provision for loan losses |
|
| 5,605,189 |
|
|
| 4,828,485 |
|
|
| 10,728,182 |
|
|
| 9,466,775 |
| ||||||||
Provision for credit losses |
|
| — |
|
|
| — |
| ||||||||||||||||
Net interest income after provision for credit losses |
|
| 4,524,838 |
|
|
| 5,122,993 |
| ||||||||||||||||
Non-interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Fees and service charges |
|
| 50,478 |
|
|
| 68,576 |
|
|
| 89,796 |
|
|
| 121,103 |
|
|
| 52,152 |
|
|
| 39,318 |
|
(Loss) gain on sale of loans |
|
| (217 | ) |
|
| 284,065 |
|
|
| 86,913 |
|
|
| 520,102 |
| ||||||||
Bargain purchase gain |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,933,397 |
| ||||||||
Gain on sale of loans |
|
| 13,225 |
|
|
| 87,130 |
| ||||||||||||||||
Bank-owned life insurance |
|
| 169,449 |
|
|
| 145,167 |
|
|
| 325,442 |
|
|
| 234,833 |
|
|
| 186,053 |
|
|
| 155,993 |
|
Other |
|
| 34,007 |
|
|
| 35,480 |
|
|
| 95,989 |
|
|
| 42,459 |
|
|
| 31,849 |
|
|
| 61,982 |
|
Total non-interest income |
|
| 253,717 |
|
|
| 533,288 |
|
|
| 598,140 |
|
|
| 2,851,894 |
|
|
| 283,279 |
|
|
| 344,423 |
|
Non-interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Salaries and employee benefits |
|
| 2,098,897 |
|
|
| 2,035,467 |
|
|
| 4,162,244 |
|
|
| 3,574,387 |
|
|
| 2,162,369 |
|
|
| 2,063,347 |
|
Occupancy and equipment |
|
| 342,381 |
|
|
| 294,694 |
|
|
| 686,810 |
|
|
| 561,173 |
|
|
| 382,787 |
|
|
| 344,429 |
|
FDIC insurance assessment |
|
| 54,000 |
|
|
| 69,300 |
|
|
| 108,000 |
|
|
| 114,300 |
|
|
| 60,000 |
|
|
| 54,000 |
|
Data processing |
|
| 330,840 |
|
|
| 312,527 |
|
|
| 609,187 |
|
|
| 520,836 |
|
|
| 277,097 |
|
|
| 278,347 |
|
Advertising |
|
| 91,145 |
|
|
| 60,000 |
|
|
| 212,290 |
|
|
| 120,000 |
|
|
| 147,300 |
|
|
| 121,145 |
|
Director fees |
|
| 203,534 |
|
|
| 216,880 |
|
|
| 418,325 |
|
|
| 415,119 |
|
|
| 159,337 |
|
|
| 214,791 |
|
Professional fees |
|
| 151,490 |
|
|
| 208,849 |
|
|
| 295,753 |
|
|
| 467,766 |
|
|
| 149,250 |
|
|
| 144,263 |
|
Merger fees |
|
| — |
|
|
| 73,932 |
|
|
| — |
|
|
| 392,197 |
| ||||||||
Core conversion costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 360,000 |
| ||||||||
Other |
|
| 321,585 |
|
|
| 305,484 |
|
|
| 642,538 |
|
|
| 483,801 |
|
|
| 179,208 |
|
|
| 320,953 |
|
Total non-interest expense |
|
| 3,593,872 |
|
|
| 3,577,133 |
|
|
| 7,135,147 |
|
|
| 7,009,579 |
|
|
| 3,517,348 |
|
|
| 3,541,275 |
|
Income before income taxes |
|
| 2,265,034 |
|
|
| 1,784,640 |
|
|
| 4,191,175 |
|
|
| 5,309,090 |
|
|
| 1,290,769 |
|
|
| 1,926,141 |
|
Income tax expense |
|
| 623,027 |
|
|
| 345,916 |
|
|
| 1,148,271 |
|
|
| 864,059 |
|
|
| 298,062 |
|
|
| 525,244 |
|
Net income |
| $ | 1,642,007 |
|
| $ | 1,438,724 |
|
| $ | 3,042,904 |
|
| $ | 4,445,031 |
|
| $ | 992,707 |
|
| $ | 1,400,897 |
|
Earnings per Share - basic |
| $ | 0.12 |
|
| $ | 0.10 |
|
| $ | 0.22 |
|
| $ | 0.33 |
|
| $ | 0.08 |
|
| $ | 0.10 |
|
Earnings per Share - diluted |
| $ | 0.12 |
|
| $ | 0.10 |
|
| $ | 0.22 |
|
| $ | 0.33 |
|
| $ | 0.08 |
|
| $ | 0.10 |
|
Weighted average shares outstanding - basic |
|
| 13,662,222 |
|
|
| 13,945,423 |
|
|
| 13,760,002 |
|
|
| 13,528,822 |
|
|
| 13,013,492 |
|
|
| 13,858,884 |
|
Weighted average shares outstanding - diluted |
|
| 13,701,674 |
|
|
| 13,945,423 |
|
|
| 13,800,168 |
|
|
| 13,528,822 |
|
|
| 13,055,533 |
|
|
| 13,878,304 |
|
See accompanying notes to unaudited consolidated financial statements.
2
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) INCOME
(unaudited)
|
| Three months ended |
|
| Six months ended |
|
| Three Months Ended |
| |||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
Net income |
| $ | 1,642,007 |
|
| $ | 1,438,724 |
|
| $ | 3,042,904 |
|
| $ | 4,445,031 |
|
| $ | 992,707 |
|
| $ | 1,400,897 |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Net unrealized gains/(loss) on securities available for sale |
|
| (5,762,044 | ) |
|
| 12,814 |
|
|
| (9,100,460 | ) |
|
| 28,881 |
| ||||||||
Other comprehensive (loss): |
|
|
|
|
|
| ||||||||||||||||||
Net unrealized loss on securities available for sale |
|
| (158,702 | ) |
|
| (3,338,417 | ) | ||||||||||||||||
Tax effect |
|
| 1,619,711 |
|
|
| (3,602 | ) |
|
| 2,558,139 |
|
|
| (8,118 | ) |
|
| 44,610 |
|
|
| 938,429 |
|
Net of tax |
|
| (4,142,333 | ) |
|
| 9,212 |
|
|
| (6,542,321 | ) |
|
| 20,763 |
|
|
| (114,092 | ) |
|
| (2,399,988 | ) |
Defined benefit retirement plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Reclassification adjustment for amortization of |
|
| 57,850 |
|
|
| 43,652 |
|
|
| 115,700 |
|
|
| 87,306 |
| ||||||||
Reclassification adjustment for amortization of |
|
| (23,016 | ) |
|
| 57,850 |
| ||||||||||||||||
Tax effect |
|
| (16,261 | ) |
|
| (12,271 | ) |
|
| (32,522 | ) |
|
| (24,544 | ) |
|
| 6,470 |
|
|
| (16,261 | ) |
Net of tax |
|
| 41,589 |
|
|
| 31,381 |
|
|
| 83,178 |
|
|
| 62,762 |
|
|
| (16,546 | ) |
|
| 41,589 |
|
Total other comprehensive (loss) income |
|
| (4,100,744 | ) |
|
| 40,593 |
|
|
| (6,459,143 | ) |
|
| 83,525 |
| ||||||||
Comprehensive (loss) income |
| $ | (2,458,737 | ) |
| $ | 1,479,317 |
|
| $ | (3,416,239 | ) |
| $ | 4,528,556 |
| ||||||||
Derivatives, net of tax: |
|
|
|
|
|
| ||||||||||||||||||
Unrealized loss on swap contracts accounted for as cash flow hedges |
|
| (160,713 | ) |
|
| — |
| ||||||||||||||||
Tax effect |
|
| 45,176 |
|
|
| — |
| ||||||||||||||||
Net of tax |
|
| (115,537 | ) |
|
| — |
| ||||||||||||||||
Total other comprehensive loss |
|
| (246,175 | ) |
|
| (2,358,399 | ) | ||||||||||||||||
Comprehensive income (loss) |
| $ | 746,532 |
|
| $ | (957,502 | ) |
See accompanying notes to unaudited consolidated financial statements.
3
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
|
| Common |
|
| Common |
|
| Additional Paid-in |
|
| Retained |
|
| Unearned |
|
| Accumulated |
|
| Total stockholders' |
| |||||||||||||||||||||||||||||||||||||
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 |
| ||||||||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,438,724 |
|
|
| — |
|
|
| — |
|
|
| 1,438,724 |
| ||||||||||||||||||||||||||||||
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 40,593 |
|
|
| 40,593 |
| ||||||||||||||||||||||||||||||
ESOP shares released |
|
| — |
|
|
| — |
|
|
| (10,666 | ) |
|
| — |
|
|
| 75,301 |
|
|
| — |
|
|
| 64,635 |
| ||||||||||||||||||||||||||||||
Balance June 30, 2021 |
|
| 14,425,441 |
|
| $ | 144,254 |
|
| $ | 68,437,376 |
|
| $ | 81,804,768 |
|
| $ | (5,574,808 | ) |
| $ | (189,488 | ) |
| $ | 144,622,102 |
| ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common |
|
| Common |
|
| Additional Paid-in |
|
| Retained |
|
| Unearned |
|
| Accumulated |
|
| Total stockholders' |
| ||||||||||||||||||||||
Balance January 1, 2022 |
|
| 14,605,809 |
|
| $ | 146,057 |
|
| $ | 68,247,204 |
|
| $ | 84,879,812 |
|
| $ | (5,424,206 | ) |
| $ | (272,656 | ) |
| $ | 147,576,211 |
|
|
| 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 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,400,897 |
|
|
| — |
|
|
| — |
|
|
| 1,400,897 |
| ||
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,358,399 | ) |
|
| (2,358,399 | ) | ||||||||||||||||||||||||||||||
Stock based compensation |
|
| — |
|
|
| — |
|
|
| 233,193 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 233,193 |
|
|
| — |
|
|
| — |
|
|
| 233,193 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 233,193 |
| ||
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 |
| ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||
Balance January 1, 2023 |
|
| 13,699,016 |
|
| $ | 136,989 |
|
| $ | 59,099,476 |
|
| $ | 91,756,673 |
|
| $ | (5,123,002 | ) |
| $ | (6,211,013 | ) |
| $ | 139,659,123 |
| ||||||||||||||||||||||||||||||
Adoption of ASU 326 credit losses |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (222,140 | ) |
|
| — |
|
|
| — |
|
|
| (222,140 | ) | ||||||||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 992,707 |
|
|
| — |
|
|
| — |
|
|
| 992,707 |
| ||||||||||||||||||||||||||||||
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,358,399 | ) |
|
| (2,358,399 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (246,175 | ) |
|
| (246,175 | ) | ||
Stock based compensation |
|
| — |
|
|
| — |
|
|
| 233,193 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 233,193 |
| ||||||||||||||||||||||||||||||
Stock purchased and retired |
|
| (180,501 | ) |
|
| (1,805 | ) |
|
| (1,890,310 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,892,115 | ) |
|
| (126,660 | ) |
|
| (1,266 | ) |
|
| (1,401,568 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,402,834 | ) | ||
ESOP shares released (25,789 shares) |
|
| — |
|
|
| — |
|
|
| (9,156 | ) |
|
| — |
|
|
| 75,301 |
|
|
| — |
|
|
| 66,145 |
|
|
| — |
|
|
| — |
|
|
| (2,916 | ) |
|
| — |
|
|
| 75,301 |
|
|
| — |
|
|
| 72,385 |
| ||
Balance March 31, 2022 |
|
| 14,425,308 |
|
| $ | 144,252 |
|
| $ | 66,580,931 |
|
| $ | 86,280,709 |
|
| $ | (5,348,905 | ) |
| $ | (2,631,055 | ) |
| $ | 145,025,932 |
| ||||||||||||||||||||||||||||||
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,642,007 |
|
|
| — |
|
|
| — |
|
|
| 1,642,007 |
| ||||||||||||||||||||||||||||||
Stock based compensation |
|
| — |
|
|
| — |
|
|
| 233,193 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 233,193 |
| ||||||||||||||||||||||||||||||
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,100,744 | ) |
|
| (4,100,744 | ) | ||||||||||||||||||||||||||||||
Stock purchased and retired |
|
| (217,448 | ) |
|
| (2,174 | ) |
|
| (2,407,889 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,410,063 | ) | ||||||||||||||||||||||||||||||
ESOP shares released |
|
| — |
|
|
| — |
|
|
| (4,832 | ) |
|
| — |
|
|
| 75,301 |
|
|
|
|
|
| 70,469 |
| |||||||||||||||||||||||||||||||
Balance June 30, 2022 |
|
| 14,207,860 |
|
| $ | 142,078 |
|
| $ | 64,401,403 |
|
| $ | 87,922,716 |
|
| $ | (5,273,604 | ) |
| $ | (6,731,799 | ) |
| $ | 140,460,794 |
| ||||||||||||||||||||||||||||||
Balance March 31, 2023 |
|
| 13,572,356 |
|
| $ | 135,723 |
|
| $ | 57,928,185 |
|
| $ | 92,527,240 |
|
| $ | (5,047,701 | ) |
| $ | (6,457,188 | ) |
| $ | 139,086,259 |
|
See accompanying notes to unaudited consolidated financial statements.
4
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
| For the six months ended |
|
| For the three months ended |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 3,042,904 |
|
| $ | 4,445,031 |
|
| $ | 992,707 |
|
| $ | 1,400,897 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
| ||||||||||
Bargain purchase gain |
|
| — |
|
|
| (1,933,397 | ) | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||||||||||
Amortization of intangible assets |
|
| (119,059 | ) |
|
| (275,595 | ) |
|
| (29,410 | ) |
|
| (36,955 | ) |
Provision (credit) for loan losses |
|
| 100,000 |
|
|
| (113,000 | ) | ||||||||
Provision for credit losses |
|
| — |
|
|
| — |
| ||||||||
Depreciation of premises and equipment |
|
| 234,798 |
|
|
| 149,401 |
|
|
| 125,591 |
|
|
| 115,751 |
|
Amortization of deferred loan(fees) costs, net |
|
| (41,279 | ) |
|
| 331,462 |
| ||||||||
Amortization (accretion) of deferred loan (fees) costs, net |
|
| 96,560 |
|
|
| (50,202 | ) | ||||||||
Amortization of premiums and accretion of discounts on securities, net |
|
| 38,625 |
|
|
| 103,369 |
|
|
| 6,893 |
|
|
| 21,590 |
|
Deferred income tax expense |
|
| 76,209 |
|
|
| 350,680 |
|
|
| — |
|
|
| — |
|
Gain on sale of loans |
|
| (86,913 | ) |
|
| (520,102 | ) |
|
| (13,225 | ) |
|
| (87,130 | ) |
Proceeds from sale of loans |
|
| 4,640,081 |
|
|
| 15,659,195 |
|
|
| 649,225 |
|
|
| 4,402,073 |
|
Origination of loans held for sale |
|
| (3,760,668 | ) |
|
|
|
|
| (636,000 | ) |
|
| — |
| |
Increase in cash surrender value of bank owned life insurance |
|
| (312,745 | ) |
|
| (234,833 | ) |
|
| (186,052 | ) |
|
| (143,296 | ) |
Employee stock ownership plan expense |
|
| 136,615 |
|
|
| 125,471 |
|
|
| 72,385 |
|
|
| 66,146 |
|
Stock based compensation |
|
| 466,386 |
|
|
| — |
|
|
| 233,193 |
|
|
| 233,193 |
|
Changes in: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accrued interest receivable |
|
| (294,802 | ) |
|
| 467,536 |
|
|
| 189,423 |
|
|
| (57,827 | ) |
Net changes in other assets |
|
| 1,933,798 |
|
|
| (519,057 | ) |
|
| (536,090 | ) |
|
| 1,887,663 |
|
Net changes in other liabilities |
|
| 202,678 |
|
|
| 503,921 |
|
|
| 251,534 |
|
|
| 455,797 |
|
Net cash provided by operating activities |
|
| 6,256,628 |
|
|
| 18,540,082 |
|
|
| 1,216,734 |
|
|
| 8,207,700 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Purchases of securities held to maturity |
|
| (23,120,238 | ) |
|
| (27,261,578 | ) |
|
| (1,000,000 | ) |
|
| (11,395,678 | ) |
Purchases of securities available for sale |
|
| (67,461,181 | ) |
|
| (2,021,000 | ) |
|
| — |
|
|
| (54,117,158 | ) |
Maturities, calls, and repayments of securities available for sale |
|
| 2,653,200 |
|
|
| 2,593,807 |
|
|
| 2,883,794 |
|
|
| 1,004,209 |
|
Maturities, calls, and repayments of securities held to maturity |
|
| 10,740,997 |
|
|
| 14,151,334 |
|
|
| 220,103 |
|
|
| 4,134,147 |
|
Net (increase) decrease in loans |
|
| (60,612,691 | ) |
|
| 34,542,074 |
| ||||||||
Purchase of Bank Owned Life Insurance |
|
| (5,000,000 | ) |
|
| (8,000,000 | ) | ||||||||
Net cash acquired in merger |
|
| — |
|
|
| 19,393,090 |
| ||||||||
Net decrease in loans |
|
| 6,898,525 |
|
|
| 2,216,500 |
| ||||||||
Purchases of premises and equipment |
|
| (113,536 | ) |
|
| (945,972 | ) |
|
| (93,555 | ) |
|
| (48,681 | ) |
Purchase of FHLB stock |
|
| (2,204,600 | ) |
|
| (169,700 | ) |
|
| (2,024,300 | ) |
|
| — |
|
Redemption of FHLB stock |
|
| 979,200 |
|
|
| 1,194,200 |
|
|
| 1,596,600 |
|
|
| 336,600 |
|
Net cash (used in) provided by investing activities |
|
| (144,138,849 | ) |
|
| 33,476,255 |
| ||||||||
Net cash provided by (used in) investing activities |
|
| 8,481,167 |
|
|
| (57,870,061 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
| ||
Net (decrease) increase in deposits |
|
| (10,685,712 | ) |
|
| 22,491,367 |
|
Net decrease in short-term FHLB advances |
|
| (22,500,000 | ) |
|
| (6,000,000 | ) |
Proceeds from long-term FHLB non-repo advances |
|
| 36,000,000 |
|
|
| — |
|
Repayments of long-term FHLB non-repo advances |
|
| (3,773,064 | ) |
|
| (1,027,300 | ) |
Repurchase of common stock |
|
| (1,402,834 | ) |
|
| (1,892,115 | ) |
Net increase in advance payments from borrowers for taxes |
|
| 325,070 |
|
|
| 75,878 |
|
Net cash (used in) provided by financing activities |
|
| (2,036,540 | ) |
|
| 13,647,830 |
|
Net (decrease) increase in cash and cash equivalents |
|
| 7,661,361 |
|
|
| (36,014,531 | ) |
Cash and cash equivalents at beginning of year |
|
| 16,840,917 |
|
|
| 105,068,785 |
|
Cash and cash equivalents at March 31 |
| $ | 24,502,278 |
|
| $ | 69,054,254 |
|
Supplemental cash flow information |
|
|
|
|
|
| ||
Income taxes paid |
| $ | — |
|
| $ | — |
|
Interest paid |
| $ | 4,359,274 |
|
| $ | 1,164,604 |
|
|
|
|
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
5
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) continued
|
| For the six months ended |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cash flows from financing activities |
|
|
|
|
|
| ||
Net increase (decrease) in deposits |
|
| 13,876,424 |
|
|
| (14,593,415 | ) |
Net increase (decrease) in short-term FHLB advances |
|
| 43,220,000 |
|
|
| (12,000,000 | ) |
Proceeds from long-term FHLB non-repo advances |
|
| — |
|
|
| 3,000,000 |
|
Repayments of long-term FHLB non-repo advances |
|
| (12,952,073 | ) |
|
| (8,498,055 | ) |
Repurchase of common stock |
|
| (4,302,178 | ) |
|
| — |
|
Net increase in advance payments from borrowers for taxes |
|
| 575,493 |
|
|
| 360,205 |
|
Net cash provided by (used in) financing activities |
|
| 40,417,666 |
|
|
| (31,731,265 | ) |
Net (decrease) increase in cash and cash equivalents |
|
| (97,464,555 | ) |
|
| 20,285,072 |
|
Cash and cash equivalents at beginning of year |
|
| 105,068,785 |
|
|
| 80,385,739 |
|
Cash and cash equivalents at June 30 |
| $ | 7,604,230 |
|
| $ | 100,670,811 |
|
Supplemental cash flow information |
|
|
|
|
|
| ||
Income taxes paid |
| $ | 700,000 |
|
| $ | 1,355,000 |
|
Interest paid |
| $ | 2,322,057 |
|
| $ | 3,157,098 |
|
|
|
|
|
|
|
| ||
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 |
|
See accompanying notes to unaudited consolidated financial statements.
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 2two subsidiaries. Bogota Securities Corp. was formed for the purpose of buying, selling and holding investment securities. Bogota Properties, LLC was inactive at June 30, 2022March 31, 2023 and December 31, 2021.2022.
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 and non-vested shares of restricted stock. 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-and-sixthree month periods ended June 30,March 31, 2023 and 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 0t have any outstanding stockAnti-dilutive options or sharesare those options with weighted average exercise prices in excess of restricted stockthe weighted average market value for the three and six-month periods ended June 30, 2021.presented.
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and six months ended June 30, 2022March 31, 2023 and 2021.2022.
|
| For the three months ended June 30, 2022 |
|
| For the three months ended June 30, 2021 |
|
| For the six months ended June 30, 2022 |
|
| For the six months ended June 30, 2021 |
|
| For the three months ended March 31, 2023 |
|
| For the three months ended March 31, 2022 |
| ||||||
Numerator |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net income |
| $ | 1,642,007 |
|
| $ | 1,438,724 |
|
| $ | 3,042,904 |
|
| $ | 4,445,031 |
|
| $ | 992,707 |
|
| $ | 1,400,897 |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Weighted average shares outstanding - basic |
|
| 13,662,222 |
|
|
| 13,945,423 |
|
|
| 13,760,002 |
|
|
| 13,528,822 |
|
|
| 13,013,492 |
|
|
| 13,858,884 |
|
Effect of stock options |
|
| 39,452 |
|
|
| — |
|
|
| 40,166 |
|
|
| — |
|
|
| 42,041 |
|
|
| 19,420 |
|
Weighted average shares outstanding - diluted |
|
| 13,701,674 |
|
|
| 13,945,423 |
|
|
| 13,800,168 |
|
|
| 13,528,822 |
|
|
| 13,055,533 |
|
|
| 13,878,304 |
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Basic |
| $ | 0.12 |
|
| $ | 0.10 |
|
| $ | 0.22 |
|
| $ | 0.33 |
|
| $ | 0.08 |
|
| $ | 0.10 |
|
Diluted |
|
| 0.12 |
|
|
| 0.10 |
|
|
| 0.22 |
|
|
| 0.33 |
|
|
| 0.08 |
|
|
| 0.10 |
|
76
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”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, 2021.2022.
Allowance for Credit Losses - Loans and Leases: The current expected credit loss (“CECL”) approach requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). It replaces the incurred loss approach’s threshold that delayed the recognition of a credit loss until it was probable a loss event was incurred.
The estimate of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the historical period used. The Company considers future economic conditions and portfolio performance as part of a reasonable and supportable forecast.
Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses (“ACL”). The Company has designated six portfolio segments of residential loans, commercial, multi-family, construction, commercial and industrial and consumer. These portfolio segments are further disaggregated into classes, which represent loans and leases of similar type, risk characteristics, and methods for monitoring and assessing credit risk.
The Company has minimal history of credit losses and therefore will use the Weighted Average Remaining Maturity (WARM) method for all segments and rely on the use of qualitative factors to determine future credit losses.
The Company also considers qualitative adjustments to the quantitative baseline. For example, the Company considers the impact of current environmental factors at the reporting date that did not exist over the period from which historical experience was used. Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), economic trends and conditions, changes in underwriting standards, experience and depth of lending staff, trends in delinquencies, and the level of criticized
7
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
loans.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company also incorporates a one-year reasonable and supportable (“R&S”) loss forecast period to account for the effect of forecasted economic conditions and other factors on the performance of the commercial portfolio, which could differ from historical loss experience. The Company performs a quarterly asset quality review, which includes a review of forecasted gross charge-offs and recoveries, non-performing assets, criticized loans and leases, and risk rating migration. The asset quality review is reviewed by management and the results are used to consider a qualitative overlay to the quantitative baseline. After the one-year R&S loss forecast period, this overlay adjustment assumes an immediate reversion to historical loss rates for the remaining loan life period.
The Company establishes a specific reserve for individually evaluated loans which do not share similar risk characteristics with the loans included in the quantitative baseline. These individually evaluated loans are removed from the pooling approach discussed above for the quantitative baseline, and include non-accrual loans, and other loans as deemed appropriate by management.
A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans deemed collateral-dependent, the Company elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral consists of various types of real estate including: residential properties; commercial properties, such as retail centers, office buildings, and lodging; agriculture land; and vacant land.
The reserve for unfunded commitments (the “Unfunded Reserve”) represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The Unfunded Reserve is recognized as a liability (other liabilities in the consolidated statements of condition), with adjustments to the reserve recognized in other noninterest expense in the consolidated statements of income. The Unfunded Reserve is determined by estimating future draws and applying the expected loss rates on those draws. Future draws are based on historical averages of utilization rates (i.e., the likelihood of draws taken). To estimate future draws on unfunded balances, current utilization rates are compared to historical utilization rates. If current utilization rates are below historical utilization rates, the rate difference is applied to the committed balance to estimate the future draw. Loss rates are estimated by utilizing the same loss rates calculated for the allowance general reserves.
8
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Not Yet EffectiveAdoption of Accounting PronouncementsStandards: 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 (ASC 326), which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timeliermore timely 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 iswas 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. The Company expectshas no history of credit losses and therefore will use the Remaining Life (WARM) method and rely on the use of qualitative factors to recognizedetermine future credit losses. Upon adoption of the CECL method of calculating the allowance for credit losses on January 1, 2023, the Bank recorded a one-time cumulative-effect adjustmentdecrease, net of tax, in retained earnings of $222,000, an increase to the allowance for loancredit losses of $157,000, an increase in the reserve for unfunded liabilities of $152,000 and $0 related to available-for-sale securities. See note 4 for additional information. The below table includes $125,775 of credit losses on PCI loans that have been added to Allowance for credit losses as per the adoption of ASU 326.
The Bank adopted the provisions of ASC 326 related to financial assets purchased with credit deterioration (PCD) that were previously classified as purchased credit impaired (PCI) and accounted for under ASC 310-30 using the prospective transition approach. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2023. The Company cannot yet determine2023, the magnitude of any such one-time adjustment or the overall impactamortized cost basis of the new guidancePCD assets were adjusted to reflect the addition of $125,775 of the allowance for credit losses (ACL).
The Bank adopted the provisions of ASC 326 related to presenting other-than-temporary impairment on available-for-sale debt securities prior to January 1, 2023 using the prospective transition approach, though no such charges had been recorded 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, withsecurities held by the Bank as the surviving entity. Under the terms of the merger agreement, depositorsdate of Gibraltar Bank became depositorsadoption.
The effect of the Bank and have the same rights and privileges in Bogota Financial MHC as if their accounts had been established at the Bankadoption of ASC 326 on the date established at Gibraltar Bank. The Company issued allowance for credit losses by portfolio segment was:1,267,916
|
|
|
| |||||||||
|
| Pre Adoption |
|
| The effect of adoption |
|
| Post Adoption |
| |||
Real estate: |
| (unaudited) |
| |||||||||
Residential First Mortgage |
| $ | 466,100,627 |
|
| $ | 29,589,213 |
|
| $ | 495,689,840 |
|
Commercial and Multi-Family Real Estate |
|
| 162,338,669 |
|
|
| (162,338,669 | ) |
|
| — |
|
Commercial Real Estate |
|
| — |
|
|
| 96,030,721 |
|
|
| 96,030,721 |
|
Multi-Family Real Estate |
|
| — |
|
|
| 66,400,713 |
|
|
| 66,400,713 |
|
Construction |
|
| 61,825,478 |
|
|
| — |
|
|
| 61,825,478 |
|
Commercial and Industrial |
|
| 1,684,189 |
|
|
| — |
|
|
| 1,684,189 |
|
Consumer: |
|
|
|
|
|
|
|
|
| |||
Home Equity and Other Consumer |
|
| 29,654,973 |
|
|
| (29,654,973 | ) |
|
| — |
|
Consumer |
|
| — |
|
|
| 98,770 |
|
|
| 98,770 |
|
Total loans |
|
| 721,603,936 |
|
|
| 125,775 |
|
|
| 721,729,711 |
|
Allowance for credit losses |
|
| (2,578,174 | ) |
|
| (282,775 | ) |
|
| (2,860,949 | ) |
Net loans |
| $ | 719,025,762 |
|
| $ | (157,000 | ) |
| $ | 718,868,762 |
|
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 $
1.9NOTE 1 million and a core deposit intangible of $400,000– in 2021.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
9
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
| Pre Adoption |
|
| The effect of adoption |
|
| Post Adoption |
| |||
Assets |
| (unaudited) |
| |||||||||
ACL on loans |
|
|
|
|
|
|
|
|
| |||
Residential First Mortgage |
| $ | 1,602,534 |
|
| $ | 211,669 |
|
| $ | 1,814,203 |
|
Commercial and Multi-Family Real Estate |
|
| 615,480 |
|
|
| (615,480 | ) |
|
| — |
|
Commercial Real Estate |
|
| — |
|
|
| 522,977 |
|
|
| 522,977 |
|
Multi-Family Real Estate |
|
| — |
|
|
| 259,769 |
|
|
| 259,769 |
|
Construction |
|
| 258,500 |
|
|
| 1,500 |
|
|
| 260,000 |
|
Commercial and Industrial |
|
| 3,960 |
|
|
| 40 |
|
|
| 4,000 |
|
Home Equity and Other Consumer |
|
| 97,700 |
|
|
| (97,700 | ) |
|
| — |
|
|
|
|
|
|
|
|
|
|
| |||
Liabilities |
|
|
|
|
|
|
|
|
| |||
ACL for unfunded commitments |
|
| — |
|
|
| 152,000 |
|
|
| 152,000 |
|
Total |
| $ | 2,578,174 |
|
| $ | 434,775 |
|
| $ | 3,012,949 |
|
NOTE 2 – ACQUISITION OF GIBRALTAR BANKIn March 2022, the FASB issued ASU No. 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." (Continued)
Merger-related expensesThe amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted CECL and enhance the disclosure requirements for modifications of $392,000receivables made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs by year of origination for financing receivables and net investment in leases in the existing vintage disclosures. This ASU became effective on January 1, 2023 for the first quarterCorporation. The adoption of 2021are recordedthis ASU resulted in updated disclosures within our financial statements but otherwise did not have a material impact on 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:Corporation's financial statements.
|
| As recorded by |
|
| Fair value |
|
| As recorded |
| |||
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 |
|
| 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 |
|
| 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 32 – SECURITIES AVAILABLE FOR SALE
The following table summarizes the amortized cost, fair value, and gross unrealized gains and losses of securities available for sale, by contractual maturity, at June 30, 2022March 31, 2023 and December 31, 2021:2022:
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
| ||||||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
U.S treasury bills less than one year |
| $ | 9,910,459 |
|
| $ | — |
|
| $ | (40,027 | ) |
|
| 9,870,432 |
|
| $ | 4,994,975 |
|
| $ | — |
|
| $ | (11,211 | ) |
|
| 4,983,764 |
|
U.S. government and agency obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
One through five years |
|
| 6,000,000 |
|
|
| — |
|
|
| (432,891 | ) |
|
| 5,567,109 |
|
|
| 6,000,000 |
|
|
| — |
|
|
| (499,068 | ) |
|
| 5,500,932 |
|
Corporate bonds due in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Less than one year |
|
| 3,009,923 |
|
|
| — |
|
|
| (21,454 | ) |
|
| 2,988,469 |
| ||||||||||||||||
One through five years |
|
| 15,252,017 |
|
|
| 503 |
|
|
| (358,051 | ) |
|
| 14,894,469 |
|
|
| 11,199,122 |
|
|
| — |
|
|
| (469,648 | ) |
|
| 10,729,474 |
|
Five through ten years |
|
| 2,949,325 |
|
|
| — |
|
|
| (234,025 | ) |
|
| 2,715,300 |
|
|
| 1,000,000 |
|
|
| — |
|
|
| (81,130 | ) |
|
| 918,870 |
|
MBSs – residential |
|
| 46,918,907 |
|
|
| 11,912 |
|
|
| (5,546,864 | ) |
|
| 41,383,955 |
|
|
| 44,047,282 |
|
|
| 4,458 |
|
|
| (5,754,573 | ) |
|
| 38,297,167 |
|
MBSs – commercial |
|
| 25,553,578 |
|
|
| — |
|
|
| (2,477,150 | ) |
|
| 23,076,428 |
|
|
| 20,999,717 |
|
|
| — |
|
|
| (2,367,204 | ) |
|
| 18,632,513 |
|
Total |
| $ | 106,584,286 |
|
| $ | 12,415 |
|
| $ | (9,089,008 | ) |
| $ | 97,507,693 |
|
| $ | 91,251,019 |
|
| $ | 4,458 |
|
| $ | (9,204,288 | ) |
| $ | 82,051,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
| ||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
U.S. treasury bills |
| $ | 4,971,310 |
|
| $ | — |
|
| $ | (43,702 | ) |
| $ | 4,927,608 |
| ||||||||||||||||
U.S. government and agency obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
One through five years |
| $ | 3,000,000 |
|
| $ | — |
|
| $ | (18,270 | ) |
| $ | 2,981,730 |
|
|
| 6,000,000 |
|
|
| — |
|
|
| (534,846 | ) |
|
| 5,465,154 |
|
Corporate bonds due in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Less than one year |
|
| 3,022,044 |
|
|
| — |
|
|
| (37,230 | ) |
|
| 2,984,814 |
| ||||||||||||||||
One through five years |
|
| 6,375,068 |
|
|
| 17,594 |
|
|
| (636 | ) |
|
| 6,392,026 |
|
|
| 12,182,364 |
|
|
| 554 |
|
|
| (585,085 | ) |
|
| 11,597,833 |
|
Five through ten years |
|
| 1,002,542 |
|
|
| 3,050 |
|
|
| — |
|
|
| 1,005,592 |
|
|
| 1,000,000 |
|
|
| — |
|
|
| (76,600 | ) |
|
| 923,400 |
|
MBSs – residential |
|
| 21,695,539 |
|
|
| 89,297 |
|
|
| (24,591 | ) |
|
| 21,760,245 |
|
|
| 44,879,199 |
|
|
| 2,146 |
|
|
| (5,232,300 | ) |
|
| 39,649,045 |
|
MBSs – commercial |
|
| 9,741,782 |
|
|
| — |
|
|
| (42,577 | ) |
|
| 9,699,205 |
|
|
| 22,086,788 |
|
|
| — |
|
|
| (2,534,064 | ) |
|
| 19,552,724 |
|
Total |
| $ | 41,814,931 |
|
| $ | 109,941 |
|
| $ | (86,074 | ) |
| $ | 41,838,798 |
|
| $ | 94,141,705 |
|
| $ | 2,700 |
|
| $ | (9,043,827 | ) |
| $ | 85,100,578 |
|
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 32 – SECURITIES AVAILABLE FOR SALE (Continued)
There were 0no sales of securities during the three and six months ended June 30, 2022March 31, 2023 or June 30, 2021.March 31, 2022.
The age of unrealized losses and the fair value of related securities as of June 30, 2022March 31, 2023 and December 31, 20212022 were as follows:
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
| ||||||||||||||||||||||||||||||
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
| ||||||||||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
U.S treasury bills |
| $ | 9,870,432 |
|
| $ | (40,027 | ) |
| $ | — |
|
| $ | — |
|
| $ | 9,870,432 |
|
| $ | (40,027 | ) |
| $ | — |
|
| $ | — |
|
| $ | 4,983,764 |
|
| $ | (11,211 | ) |
| $ | 4,983,764 |
|
| $ | (11,211 | ) |
U.S. government and agency obligations |
|
| 5,567,109 |
|
|
| (432,891 | ) |
|
| — |
|
|
| — |
|
|
| 5,567,109 |
|
|
| (432,891 | ) |
|
| — |
|
|
| — |
|
|
| 5,500,932 |
|
|
| (499,068 | ) |
|
| 5,500,932 |
|
|
| (499,068 | ) |
Corporate bonds |
|
| 16,608,727 |
|
|
| (592,076 | ) |
|
| — |
|
|
| — |
|
|
| 16,608,727 |
|
|
| (592,076 | ) |
|
| — |
|
|
| — |
|
|
| 14,636,812 |
|
|
| (572,232 | ) |
|
| 14,636,812 |
|
|
| (572,232 | ) |
MBSs – residential |
|
| 40,333,985 |
|
|
| (5,541,734 | ) |
|
| 239,326 |
|
|
| (5,130 | ) |
|
| 40,573,311 |
|
|
| (5,546,864 | ) |
|
| 3,390,067 |
|
|
| (177,215 | ) |
|
| 34,373,999 |
|
|
| (5,577,358 | ) |
|
| 37,764,066 |
|
|
| (5,754,573 | ) |
MBSs – commercial |
|
| 23,076,428 |
|
|
| (2,477,150 | ) |
|
| — |
|
|
| — |
|
|
| 23,076,428 |
|
|
| (2,477,150 | ) |
|
| 4,188,975 |
|
|
| (149,428 | ) |
|
| 14,443,537 |
|
|
| (2,217,776 | ) |
|
| 18,632,512 |
|
|
| (2,367,204 | ) |
Total |
| $ | 95,456,681 |
|
| $ | (9,083,878 | ) |
| $ | 239,326 |
|
| $ | (5,130 | ) |
| $ | 95,696,007 |
|
| $ | (9,089,008 | ) |
| $ | 7,579,042 |
|
| $ | (326,643 | ) |
| $ | 73,939,044 |
|
| $ | (8,877,645 | ) |
| $ | 81,518,086 |
|
| $ | (9,204,288 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
| ||||||||||||||||||||||||||||||
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
| ||||||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
U.S treasury bills |
| $ | 4,927,608 |
|
| $ | (43,702 | ) |
| $ | — |
|
| $ | — |
|
| $ | 4,927,608 |
|
| $ | (43,702 | ) | ||||||||||||||||||||||||
U.S. government and agency obligations |
| $ | 2,981,730 |
|
| $ | (18,270 | ) |
| $ | — |
|
| $ | — |
|
| $ | 2,981,730 |
|
| $ | (18,270 | ) |
|
| 2,758,248 |
|
|
| (241,752 | ) |
|
| 2,706,906 |
|
|
| (293,094 | ) |
|
| 5,465,154 |
|
|
| (534,846 | ) |
Corporate bonds |
|
| 1,006,523 |
|
|
| (636 | ) |
|
| — |
|
|
| — |
|
|
| 1,006,523 |
|
|
| (636 | ) |
|
| 11,859,089 |
|
|
| (392,367 | ) |
|
| 2,647,402 |
|
|
| (306,548 | ) |
|
| 14,506,491 |
|
|
| (698,915 | ) |
MBSs – residential |
|
| 10,000,558 |
|
|
| (22,652 | ) |
|
| 250,581 |
|
|
| (1,939 | ) |
|
| 10,251,139 |
|
|
| (24,591 | ) |
|
| 16,474,573 |
|
|
| (1,557,718 | ) |
|
| 22,801,879 |
|
|
| (3,674,582 | ) |
|
| 39,276,452 |
|
|
| (5,232,300 | ) |
MBSs – commercial |
|
| 9,699,205 |
|
|
| (42,577 | ) |
|
| — |
|
|
| — |
|
|
| 9,699,205 |
|
|
| (42,577 | ) |
|
| 9,449,159 |
|
|
| (857,122 | ) |
|
| 10,103,565 |
|
|
| (1,676,942 | ) |
|
| 19,552,724 |
|
|
| (2,534,064 | ) |
Total |
| $ | 23,688,016 |
|
| $ | (84,135 | ) |
| $ | 250,581 |
|
| $ | (1,939 | ) |
| $ | 23,938,597 |
|
| $ | (86,074 | ) |
| $ | 45,468,677 |
|
| $ | (3,092,661 | ) |
| $ | 38,259,752 |
|
| $ | (5,951,166 | ) |
| $ | 83,728,429 |
|
| $ | (9,043,827 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses on corporate bonds available for sale haveare not been recognized into incomeconsidered to be credit losses because the issuer bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value was largely due to changes in interest rates and other market conditions. At June 30, 2022,March 31, 2023, 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 iswas attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Bank does not consider these losses to be credit-related at March 31, 2023. At December 31, 2022 the Bank does not consider these securities to be other-than-temporary impaired at June 30, 2022.impaired. At June 30,March 31, 2023 and December 31, 2022, securities available for sale with a carrying value of $144,705123,808 and $126,662 were pledged to secure public deposits. There were 0 securities available for sale and pledged to secure public deposits at December 31, 2021. There were 5350 securities in a loss position at June 30, 2022, none of which were considered to be other-than-temporally impaired.March 31, 2023.
12
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 43 – SECURITIES HELD TO MATURITY
The following table summarizes the amortized cost, fair value, and gross unrecognized gains and losses of securities held to maturity by contractual maturity at June 30, 2022March 31, 2023 and December 31, 2021:2022:
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
| ||||||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
U.S. Government and agency obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
One through five years |
| $ | 10,000,000 |
|
| $ | — |
|
| $ | (288,760 | ) |
| $ | 9,711,240 |
|
| $ | 10,000,000 |
|
| $ | — |
|
| $ | (428,570 | ) |
| $ | 9,571,430 |
|
Five through ten years |
|
| 3,000,000 |
|
|
| — |
|
|
| (340,374 | ) |
|
| 2,659,626 |
|
|
| 3,000,000 |
|
|
| — |
|
|
| (388,377 | ) |
|
| 2,611,623 |
|
Corporate bonds due in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
One through five years |
|
| 938,800 |
|
|
| — |
|
|
| (40,579 | ) |
|
| 898,221 |
|
|
| 2,447,722 |
|
|
| — |
|
|
| (57,009 | ) |
|
| 2,390,713 |
|
Five through ten years |
|
| 15,317,671 |
|
|
| 14,613 |
|
|
| (416,722 | ) |
|
| 14,915,562 |
|
|
| 17,277,373 |
|
|
| — |
|
|
| (1,511,930 | ) |
|
| 15,765,443 |
|
Municipal obligations due in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Less than one year |
|
| 8,453,894 |
|
|
| 595 |
|
|
| (40,660 | ) |
|
| 8,413,829 |
|
|
| 7,700,335 |
|
|
| — |
|
|
| (6,787 | ) |
|
| 7,693,548 |
|
One through five years |
|
| 1,223,015 |
|
|
| 499 |
|
|
| (71,658 | ) |
|
| 1,151,856 |
|
|
| 902,310 |
|
|
| — |
|
|
| (72,825 | ) |
|
| 829,485 |
|
Five through ten years |
|
| 375,000 |
|
|
| 128 |
|
|
| — |
|
|
| 375,128 |
|
|
| 375,000 |
|
|
| 1,961 |
|
|
| — |
|
|
| 376,961 |
|
Greater than ten years |
|
| 1,730,290 |
|
|
| — |
|
|
| (372,950 | ) |
|
| 1,357,340 |
|
|
| 1,727,132 |
|
|
| — |
|
|
| (309,700 | ) |
|
| 1,417,432 |
|
MBSs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Residential |
|
| 15,543,065 |
|
|
| 1,545 |
|
|
| (1,670,272 | ) |
|
| 13,874,338 |
|
|
| 13,991,428 |
|
|
| 840 |
|
|
| (1,530,638 | ) |
|
| 12,461,630 |
|
Commercial |
|
| 29,850,605 |
|
|
| — |
|
|
| (3,349,349 | ) |
|
| 26,501,256 |
|
|
| 20,785,906 |
|
|
| — |
|
|
| (2,702,218 | ) |
|
| 18,083,688 |
|
Total |
| $ | 86,432,340 |
|
| $ | 17,380 |
|
| $ | (6,591,324 | ) |
| $ | 79,858,396 |
|
| $ | 78,207,206 |
|
| $ | 2,801 |
|
| $ | (7,008,054 | ) |
| $ | 71,201,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Effective January 1, 2023, the company adopted the provision of ASC 326, which requires management to complete an evaluation of the HTM securities portfolio to identify whether any allowance for credit losses is required. Management completed an evaluation as of the adoption date and determined the allowance for credit losses on the HTM portfolio was not significant. This determination was based on financial review of securities and ratings of each security. | Effective January 1, 2023, the company adopted the provision of ASC 326, which requires management to complete an evaluation of the HTM securities portfolio to identify whether any allowance for credit losses is required. Management completed an evaluation as of the adoption date and determined the allowance for credit losses on the HTM portfolio was not significant. This determination was based on financial review of securities and ratings of each security. |
| ||||||||||||||||||||||||||||||
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair |
| |||||||||||||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
U.S. Government and agency obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
One through five years |
| $ | 10,000,000 |
|
| $ | — |
|
| $ | (456,850 | ) |
| $ | 9,543,150 |
| ||||||||||||||||
Five through ten years |
| $ | 3,000,000 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,000,000 |
|
|
| 3,000,000 |
|
|
| — |
|
|
| (466,866 | ) |
|
| 2,533,134 |
|
Corporate bonds due in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
One through five years |
|
| 2,444,729 |
|
|
| 1,269 |
|
|
| (55,836 | ) |
|
| 2,390,162 |
| ||||||||||||||||
Five through ten years |
|
| 13,681,053 |
|
|
| 410,726 |
|
|
| (39,870 | ) |
|
| 14,051,909 |
|
|
| 15,825,262 |
|
|
| 54,738 |
|
|
| (1,045,557 | ) |
|
| 14,834,443 |
|
Municipal obligations due in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Less than one year |
|
| 4,006,006 |
|
|
| 12,668 |
|
|
| (2,776 | ) |
|
| 4,015,898 |
|
|
| 7,706,402 |
|
|
| — |
|
|
| (36,250 | ) |
|
| 7,670,152 |
|
One through five years |
|
| 903,483 |
|
|
| — |
|
|
| (15,399 | ) |
|
| 888,084 |
|
|
| 902,545 |
|
|
| — |
|
|
| (84,742 | ) |
|
| 817,803 |
|
Five through ten years |
|
| 375,000 |
|
|
| 27,353 |
|
|
| — |
|
|
| 402,353 |
|
|
| 375,000 |
|
|
| 1,286 |
|
|
| — |
|
|
| 376,286 |
|
Greater than ten years |
|
| 1,732,386 |
|
|
| 9,527 |
|
|
| — |
|
|
| 1,741,913 |
|
|
| 1,728,184 |
|
|
| — |
|
|
| (346,586 | ) |
|
| 1,381,598 |
|
MBSs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Residential |
|
| 16,913,787 |
|
|
| 75,094 |
|
|
| (240,797 | ) |
|
| 16,748,084 |
|
|
| 14,425,827 |
|
|
| 410 |
|
|
| (1,431,861 | ) |
|
| 12,994,376 |
|
Commercial |
|
| 33,441,384 |
|
|
| 287,278 |
|
|
| (495,844 | ) |
|
| 33,232,818 |
|
|
| 21,019,360 |
|
|
| — |
|
|
| (2,860,813 | ) |
|
| 18,158,547 |
|
Total |
| $ | 74,053,099 |
|
| $ | 822,646 |
|
| $ | (794,686 | ) |
| $ | 74,081,059 |
|
| $ | 77,427,309 |
|
| $ | 57,703 |
|
| $ | (6,785,361 | ) |
| $ | 70,699,651 |
|
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 43 – 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 |
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
| ||||||||||||||||||||||||||||||
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
| ||||||||||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
U.S. government and agency obligations |
| $ | 12,370,866 |
|
| $ | (629,134 | ) |
| $ | — |
|
| $ | — |
|
| $ | 12,370,866 |
|
| $ | (629,134 | ) |
| $ | — |
|
| $ | — |
|
| $ | 12,183,053 |
|
| $ | (816,947 | ) |
| $ | 12,183,053 |
|
| $ | (816,947 | ) |
Corporate bonds |
|
| 11,431,670 |
|
|
| (374,801 | ) |
|
| 667,500 |
|
|
| (82,500 | ) |
|
| 12,099,170 |
|
|
| (457,301 | ) |
|
| 13,871,194 |
|
|
| (1,103,901 | ) |
|
| 4,284,963 |
|
|
| (465,038 | ) |
|
| 18,156,157 |
|
|
| (1,568,939 | ) |
Municipal bonds |
|
| 9,866,743 |
|
|
| (485,268 | ) |
|
| — |
|
|
| — |
|
|
| 9,866,743 |
|
|
| (485,268 | ) |
|
| 7,693,548 |
|
|
| (6,787 | ) |
|
| 2,246,917 |
|
|
| (382,525 | ) |
|
| 7,693,548 |
|
|
| (389,312 | ) |
MBSs – residential |
|
| 8,703,765 |
|
|
| (1,106,726 | ) |
|
| 4,934,374 |
|
|
| (563,546 | ) |
|
| 13,638,139 |
|
|
| (1,670,272 | ) |
|
| 932,470 |
|
|
| (27,773 | ) |
|
| 11,366,555 |
|
|
| (1,502,865 | ) |
|
| 12,299,025 |
|
|
| (1,530,638 | ) |
MBSs – commercial |
|
| 20,130,247 |
|
|
| (1,744,641 | ) |
|
| 6,371,009 |
|
|
| (1,604,708 | ) |
|
| 26,501,256 |
|
|
| (3,349,349 | ) |
|
| — |
|
|
| — |
|
|
| 18,083,688 |
|
|
| (2,702,218 | ) |
|
| 18,083,688 |
|
|
| (2,702,218 | ) |
Total |
| $ | 62,503,291 |
|
| $ | (4,340,570 | ) |
| $ | 11,972,883 |
|
| $ | (2,250,754 | ) |
| $ | 74,476,174 |
|
| $ | (6,591,324 | ) |
| $ | 22,497,212 |
|
| $ | (1,138,461 | ) |
| $ | 48,165,176 |
|
| $ | (5,869,593 | ) |
| $ | 68,415,471 |
|
| $ | (7,008,054 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
| ||||||||||||||||||||||||||||||
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
|
| Fair |
|
| Unrecognized |
| ||||||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
U.S. government and agency obligations |
| $ | 9,543,150 |
|
| $ | (456,850 | ) |
| $ | 2,533,134 |
|
| $ | (466,866 | ) |
| $ | 12,076,284 |
|
| $ | (923,716 | ) | ||||||||||||||||||||||||
Corporate bonds |
| $ | 3,710,120 |
|
| $ | (39,870 | ) |
| $ | — |
|
| $ | — |
|
| $ | 3,710,120 |
|
| $ | (39,870 | ) |
|
| 11,464,282 |
|
|
| (680,447 | ) |
|
| 3,329,054 |
|
|
| (420,946 | ) |
|
| 14,793,336 |
|
|
| (1,101,393 | ) |
Municipal bonds |
|
| 3,835,309 |
|
|
| (18,175 | ) |
|
| — |
|
|
| — |
|
|
| 3,835,309 |
|
|
| (18,175 | ) |
|
| 7,670,152 |
|
|
| (36,250 | ) |
|
| 2,199,401 |
|
|
| (431,328 | ) |
|
| 9,869,553 |
|
|
| (467,578 | ) |
MBSs – residential |
|
| 10,720,544 |
|
|
| (141,726 | ) |
|
| 2,701,345 |
|
|
| (99,071 | ) |
|
| 13,421,889 |
|
|
| (240,797 | ) |
|
| 2,008,303 |
|
|
| (101,341 | ) |
|
| 10,809,648 |
|
|
| (1,330,520 | ) |
|
| 12,817,951 |
|
|
| (1,431,861 | ) |
MBSs – commercial |
|
| 7,898,509 |
|
|
| (197,720 | ) |
|
| 4,653,364 |
|
|
| (298,124 | ) |
|
| 12,551,873 |
|
|
| (495,844 | ) |
|
| 7,383,822 |
|
|
| (282,984 | ) |
|
| 10,774,725 |
|
|
| (2,577,829 | ) |
|
| 18,158,547 |
|
|
| (2,860,813 | ) |
Total |
| $ | 26,164,482 |
|
| $ | (397,491 | ) |
| $ | 7,354,709 |
|
| $ | (397,195 | ) |
| $ | 33,519,191 |
|
| $ | (794,686 | ) |
| $ | 38,069,709 |
|
| $ | (1,557,872 | ) |
| $ | 29,645,962 |
|
| $ | (5,227,489 | ) |
| $ | 67,715,671 |
|
| $ | (6,785,361 | ) |
UnrecognizedNo allowance for credit losses on the securities above have not been recognized into incomerecorded 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 was largely due to changes in interest rates and other market conditions. The fair value is expected to recover as the securities approach maturity. At June 30, 2022March 31, 2023 and December 31, 2021,2022, securities held to maturity with a carrying amount of $6,643,6455,147,814 and $8,363,9975,293,804, respectively, were pledged to secure repurchase agreements at the Federal Home Loan Bank of New York. There were 5758 securities in a loss position at June 30,March 31, 2023. At December 31, 2022 none of which were consideredthe Bank does not consider these securities to be other-than-temporallyother-than-temporary impaired. At June 30, 2022March 31, 2023 and December 31, 2021,2022, securities held to maturity with a carrying value of $4,792,4545,311,643 and $3,976,6295,293,804, respectively, were pledged to secure public deposits.
14
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 54 – LOANS
In conjunction with the adoption of ASC 326, the Company made certain loan portfolio segment reclassifications to conform to the new allowance for credit losses methodology. Loans and these related reclassifications, are summarized as follows at June 30, 2022March 31, 2023 and December 31, 2021:2022:
|
|
| Post Adoption |
|
|
|
| Pre Adoption |
| |||||||||||||||
|
| June 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
|
| The effect of adoption |
|
| December 31, |
| ||||||
Real estate: |
| (unaudited) |
|
| (unaudited) |
| ||||||||||||||||||
Residential |
| $ | 379,776,653 |
|
| $ | 319,968,234 |
| ||||||||||||||||
Commercial and multi-family real estate |
|
| 173,619,693 |
|
|
| 175,375,419 |
| ||||||||||||||||
Residential First Mortgage |
| $ | 489,079,665 |
|
| $ | 495,689,840 |
|
| $ | 29,589,213 |
|
| $ | 466,100,627 |
| ||||||||
Commercial and Multi-Family Real Estate |
|
| — |
|
|
| — |
|
|
| (162,338,669 | ) |
|
| 162,338,669 |
| ||||||||
Commercial Real Estate |
|
| 95,343,455 |
|
|
| 96,030,721 |
|
|
| 96,030,721 |
|
|
| — |
| ||||||||
Multi-Family Real Estate |
|
| 71,414,226 |
|
|
| 66,400,713 |
|
|
| 66,400,713 |
|
|
| — |
| ||||||||
Construction |
|
| 51,799,501 |
|
|
| 41,384,687 |
|
|
| 57,379,095 |
|
|
| 61,825,478 |
|
|
| — |
|
|
| 61,825,478 |
|
Commercial and industrial |
|
| 2,068,871 |
|
|
| 7,905,524 |
| ||||||||||||||||
Commercial and Industrial |
|
| 1,523,380 |
|
|
| 1,684,189 |
|
|
| — |
|
|
| 1,684,189 |
| ||||||||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Home equity and other |
|
| 25,798,836 |
|
|
| 27,728,979 |
| ||||||||||||||||
Home Equity and Other Consumer |
|
| — |
|
|
| — |
|
|
| (29,654,973 | ) |
|
| 29,654,973 |
| ||||||||
Consumer |
|
| 11,475 |
|
|
| 98,770 |
|
|
| 98,770 |
|
|
| — |
| ||||||||
Total loans |
|
| 633,063,554 |
|
|
| 572,362,843 |
|
|
| 714,751,296 |
|
|
| 721,729,711 |
|
|
| 125,775 |
|
|
| 721,603,936 |
|
Allowance for loan losses |
|
| (2,253,174 | ) |
|
| (2,153,174 | ) | ||||||||||||||||
Allowance for credit losses |
|
| (2,860,949 | ) |
|
| (2,860,949 | ) |
|
| (282,775 | ) |
|
| (2,578,174 | ) | ||||||||
Net loans |
| $ | 630,810,380 |
|
| $ | 570,209,669 |
|
| $ | 711,890,347 |
|
| $ | 718,868,762 |
|
| $ | (157,000 | ) |
| $ | 719,025,762 |
|
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 June 30, 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 June 30, 2022March 31, 2023 and December 31, 2021,2022, such loans totaled $1,754,8151,756,594 and $577,143, respectively. At June 30, 2022March 31, 2023 and December 31, 20212022, deferred loan fees were $2,127,1702,894,450 and $1,249,233, respectively.
|
| Residential |
|
| Commercial |
|
| Multi- |
|
| Construction |
|
| Commercial |
|
| Consumer |
|
| Total |
| |||||||
Three months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Beginning balance |
| $ | 1,602,534 |
|
| $ | 381,180 |
|
| $ | 234,300 |
|
| $ | 258,500 |
|
| $ | 3,960 |
|
| $ | 97,700 |
|
| $ | 2,578,174 |
|
Impact of ASC 326 adoption |
|
| 113,969 |
|
|
| 141,797 |
|
|
| 25,469 |
|
|
| 1,500 |
|
|
| 40 |
|
|
| — |
|
|
| 282,775 |
|
Provision for recovery of credit losses (credit) |
|
| 198,444 |
|
|
| (99,975 | ) |
|
| 18,231 |
|
|
| (19,000 | ) |
|
| — |
|
|
| (97,700 | ) |
|
| — |
|
Loans charged off |
|
| — |
|
|
| — |
|
|
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| |
Recoveries |
|
| — |
|
|
| — |
|
|
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| |
Total ending allowance balance |
| $ | 1,914,947 |
|
| $ | 423,000 |
|
| $ | 278,000 |
|
| $ | 195,240 |
|
| $ | 4,000 |
|
| $ | — |
|
| $ | 2,860,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
| Residential |
|
| Commercial |
|
| Construction |
|
| Commercial |
|
| Home Equity & Other |
|
| Total |
|
|
|
| |||||||
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Beginning balance |
| $ | 1,092,474 |
|
| $ | 768,600 |
|
| $ | 195,000 |
|
| $ | 9,400 |
|
| $ | 87,700 |
|
| $ | 2,153,174 |
|
|
|
| |
Provision for loan losses (credit) |
|
| (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 |
|
|
|
|
Purchased credit impaired ("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 $4.7 million at June 30, 2022.
The following table presents changes in accretable yield for PCI loans for the six months ended June 30, 2022 and 2021.
|
| Three months ended |
|
| Six months ended |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||
Balance at the beginning of period |
| $ | 160,457 |
|
| $ | 170,075 |
|
| $ | 217,789 |
|
| $ | — |
|
Acquisition |
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| 217,789 |
|
Accretion |
|
| 8,603 |
|
|
| 18,221 |
|
|
| — |
|
|
| — |
|
Reclassification of non-accretable discount |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Balance at the end of period |
| $ | 151,854 |
|
| $ | 151,854 |
|
| $ | 217,789 |
|
| $ | 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 June 30, 2022 and 2021.
|
| Residential |
|
| Commercial |
|
| Construction |
|
| Commercial |
|
| Home equity & other |
|
| Total |
| ||||||
Three months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
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 |
|
| 159,450 |
|
|
| (88,600 | ) |
|
| 37,000 |
|
|
| (2,400 | ) |
|
| (5,450 | ) |
|
| 100,000 |
|
Loans charged off |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Recoveries |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total ending allowance balance |
| $ | 1,251,924 |
|
| $ | 680,000 |
|
| $ | 232,000 |
|
| $ | 7,000 |
|
| $ | 82,250 |
|
| $ | 2,253,174 |
|
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Beginning balance |
| $ | 1,185,674 |
|
| $ | 849,000 |
|
| $ | 48,000 |
|
| $ | 13,500 |
|
| $ | 86,000 |
|
| $ | 2,182,174 |
|
(Credit) provision for loan losses |
|
| (58,980 | ) |
|
| 4,000 |
|
|
| 6,000 |
|
|
| (5,020 | ) |
|
| — |
|
|
| (54,000 | ) |
Loans charged off |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Recoveries |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total ending allowance balance |
| $ | 1,126,694 |
|
| $ | 853,000 |
|
| $ | 54,000 |
|
| $ | 8,480 |
|
| $ | 86,000 |
|
| $ | 2,128,174 |
|
The following table presents the activity in the allowance for loan losses by portfolio segments for the six months ended June 30, 2022 and 2021.
|
| Residential |
|
| Commercial |
|
| Construction |
|
| Commercial |
|
| Home equity & other |
|
| Total |
| ||||||
Six months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Beginning balance |
| $ | 1,092,474 |
|
| $ | 768,600 |
|
| $ | 195,000 |
|
| $ | 9,400 |
|
| $ | 87,700 |
|
| $ | 2,153,174 |
|
Provision for loan losses (credit) |
|
| 159,450 |
|
|
| (88,600 | ) |
|
| 37,000 |
|
|
| (2,400 | ) |
|
| (5,450 | ) |
|
| 100,000 |
|
Loans charged off |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Recoveries |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total ending allowance balance |
| $ | 1,251,924 |
|
| $ | 680,000 |
|
| $ | 232,000 |
|
| $ | 7,000 |
|
| $ | 82,250 |
|
| $ | 2,253,174 |
|
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Beginning balance |
| $ | 1,254,174 |
|
| $ | 841,000 |
|
| $ | 45,000 |
|
| $ | 14,000 |
|
| $ | 87,000 |
|
| $ | 2,241,174 |
|
Provision for loan losses (credit) |
|
| (127,480 | ) |
|
| 12,000 |
|
|
| 9,000 |
|
|
| (5,520 | ) |
|
| (1,000 | ) |
|
| (113,000 | ) |
Loans charged off |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Recoveries |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total ending allowance balance |
| $ | 1,126,694 |
|
| $ | 853,000 |
|
| $ | 54,000 |
|
| $ | 8,480 |
|
| $ | 86,000 |
|
| $ | 2,128,174 |
|
16
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 54 – 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 June 30, 2022 and December 31, 2021:2022:
|
| Residential |
|
| Commercial |
|
| Construction |
|
| Commercial |
|
| Home equity & other consumer |
|
| Total |
|
| Residential |
|
| Commercial |
|
| Construction |
|
| Commercial |
|
| Home Equity & Other consumer |
|
| Total |
|
| |||||||||||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
Ending allowance balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
Individually evaluated for |
| $ | 35,859 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 35,859 |
| ||||||||||||||||||||||||||
Collectively evaluated for |
|
| 1,216,065 |
|
|
| 680,000 |
|
|
| 232,000 |
|
|
| 7,000 |
|
|
| 82,250 |
|
|
| 2,217,315 |
| ||||||||||||||||||||||||||
Acquired with deteriorated |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||
Total ending allowance balance |
| $ | 1,251,924 |
|
| $ | 680,000 |
|
| $ | 232,000 |
|
| $ | 7,000 |
|
| $ | 82,250 |
|
| $ | 2,253,174 |
| ||||||||||||||||||||||||||
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
Loans individually evaluated |
| $ | 832,754 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 18,239 |
|
| $ | 850,993 |
| ||||||||||||||||||||||||||
Loans collectively evaluated |
|
| 375,642,159 |
|
|
| 172,240,349 |
|
|
| 51,799,501 |
|
|
| 2,068,871 |
|
|
| 25,745,345 |
|
|
| 627,496,225 |
| ||||||||||||||||||||||||||
Loans acquired with deteriorated |
|
| 3,301,740 |
|
|
| 1,379,344 |
|
|
| — |
|
|
| — |
|
|
| 35,252 |
|
|
| 4,716,336 |
| ||||||||||||||||||||||||||
Total ending loan balance |
| $ | 379,776,653 |
|
| $ | 173,619,693 |
|
| $ | 51,799,501 |
|
| $ | 2,068,871 |
|
| $ | 25,798,836 |
|
| $ | 633,063,554 |
| ||||||||||||||||||||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Ending allowance balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Individually evaluated for |
| $ | 35,859 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 35,859 |
|
| $ | 33,000 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 33,000 |
|
| |
Collectively evaluated for |
|
| 1,056,615 |
|
|
| 768,600 |
|
|
| 195,000 |
|
|
| 9,400 |
|
|
| 87,700 |
|
|
| 2,117,315 |
|
|
| 1,569,534 |
|
|
| 615,480 |
|
|
| 258,500 |
|
|
| 3,960 |
|
|
| 97,700 |
|
|
| 2,545,174 |
|
| |
Total ending allowance balance |
| $ | 1,092,474 |
|
| $ | 768,600 |
|
| $ | 195,000 |
|
| $ | 9,400 |
|
| $ | 87,700 |
|
| $ | 2,153,174 |
|
| $ | 1,602,534 |
|
| $ | 615,480 |
|
| $ | 258,500 |
|
| $ | 3,960 |
|
| $ | 97,700 |
|
| $ | 2,578,174 |
|
| |
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Loans individually evaluated |
| $ | 1,099,793 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 18,507 |
|
| $ | 1,118,300 |
|
| $ | 819,590 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 37,069 |
|
| $ | 856,659 |
|
| |
Loans collectively evaluated |
|
| 314,754,870 |
|
|
| 173,962,424 |
|
|
| 41,384,687 |
|
|
| 7,866,263 |
|
|
| 27,710,472 |
|
|
| 565,678,716 |
|
|
| 462,439,940 |
|
|
| 160,990,186 |
|
|
| 61,825,478 |
|
|
| 1,684,189 |
|
|
| 29,586,787 |
|
|
| 716,526,580 |
|
| |
Loans acquired with deteriorated |
|
| 4,113,571 |
|
|
| 1,412,995 |
|
|
| — |
|
|
| 39,261 |
|
|
| — |
|
|
| 5,565,827 |
|
|
| 2,841,097 |
|
|
| 1,348,483 |
|
|
| — |
|
|
| — |
|
|
| 31,117 |
|
|
| 4,220,697 |
|
| |
Total ending loan balance |
| $ | 319,968,234 |
|
| $ | 175,375,419 |
|
| $ | 41,384,687 |
|
| $ | 7,905,524 |
|
| $ | 27,728,979 |
|
| $ | 572,362,843 |
|
| $ | 466,100,627 |
|
| $ | 162,338,669 |
|
| $ | 61,825,478 |
|
| $ | 1,684,189 |
|
| $ | 29,654,973 |
|
| $ | 721,603,936 |
|
|
16
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 4 – LOANS (Continued)
Impaired loans as of the three months ended December 31, 2022 were as follows:
|
| Loans |
|
| Loans with an |
|
| Average |
|
| Amount of |
| ||||
Residential First Mortgage |
| $ | 1,199,278 |
|
| $ | 171,616 |
|
| $ | 1,300,615 |
|
| $ | 33,000 |
|
Commercial and Multi-Family Real Estate |
|
| 488,222 |
|
|
| — |
|
|
| 488,196 |
|
|
| — |
|
Construction |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Commercial and Industrial |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Home Equity and Other Consumer |
|
| 37,069 |
|
|
| — |
|
|
| 26,298 |
|
|
| — |
|
|
| $ | 1,724,569 |
|
| $ | 171,616 |
|
| $ | 1,815,109 |
|
| $ | 33,000 |
|
Collateral - dependent loans individually evaluated with the Allowance for Credit Losses by collateral type were as follows at March 31, 2023:
Portfolio segment |
| Real estate |
|
| Other |
| ||
Residential First Mortgage |
| $ | — |
|
| $ | — |
|
Commercial Real Estate |
|
| — |
|
|
| — |
|
Multi-Family Real Estate |
|
| — |
|
|
| — |
|
Construction |
|
| 10,922,520 |
|
|
| — |
|
Commercial and Industrial |
|
| — |
|
|
| — |
|
Other Consumer |
|
| — |
|
|
| — |
|
|
| $ | 10,922,520 |
|
| $ | — |
|
17
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 54 – LOANS (Continued)
Impaired loans as of and for the three and six months ended June 30, 2022 were as follows:
|
| Loans |
|
| Loans |
|
| Amount of |
| |||
Residential first mortgages |
| $ | 1,215,530 |
|
| $ | 173,353 |
|
| $ | 35,859 |
|
Commercial and Multi-Family |
|
| 488,849 |
|
|
| — |
|
|
| — |
|
Construction |
|
| — |
|
|
| — |
|
|
| — |
|
Commercial & Industrial |
|
| — |
|
|
| — |
|
|
| — |
|
Home equity & other consumer |
|
| 18,239 |
|
|
| — |
|
|
| — |
|
|
| $ | 1,722,618 |
|
| $ | 173,353 |
|
| $ | 35,859 |
|
|
| Average |
| |||||
|
| Three months ended |
|
| Six months ended |
| ||
Residential first mortgages |
| $ | 1,393,122 |
|
| $ | 1,482,496 |
|
Commercial and Multi-Family |
|
| 488,752 |
|
|
| 488,504 |
|
Construction |
|
| — |
|
|
| — |
|
Commercial & Industrial |
|
| — |
|
|
| — |
|
Home equity & other consumer |
|
| 28,907 |
|
|
| 25,440 |
|
|
| $ | 1,910,781 |
|
| $ | 1,996,440 |
|
Impaired loans as of December 31, 2021 and for the three and six months ended June 30, 2021 were as follows:
|
| Loans |
|
| Loans |
|
| Amount of |
| |||
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 |
| |||||
|
| Three months ended June 30, 2021 |
|
| Six months ended June 30, 2021 |
| ||
Residential first mortgages |
| $ | 1,217,094 |
|
| $ | 1,231,099 |
|
Commercial and Multi-Family |
|
| 222,534 |
|
|
| 227,226 |
|
Construction |
|
| — |
|
|
| — |
|
Commercial & Industrial |
|
| — |
|
|
| — |
|
Home equity & other consumer |
|
| 18,980 |
|
|
| 19,353 |
|
|
| $ | 1,458,608 |
|
| $ | 1,477,678 |
|
18
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 5 – LOANS (Continued)
The Bank has 3 residential loans totaling $469,102that were troubled debt restructurings (“TDRs”) as of June 30, 2022, with one loan totaling $173,353 with a specific reserve of $35,859. At December 31, 2021, the Bank had 4 residential loans totaling $728,288 that were TDRs and 1 loan totaling $174,776 with a specific reserve of $35,859.The Bank has not committed to lend additional amounts as of June 30, 2022 or December 31, 2021 to customers with outstanding loans that are classified as TDRs. There were 0 loans modified as TDRs during the six-month periods ended June 30, 2022 or 2021. There were 0 TDRs in payment default within twelve months following the modification during the six months ended June 30, 2022 or 2021.
Interest income recognized on impaired loans for the three and six months ended June 30,March 31, 2022 and June 30, 2021 was nominal.
The following table presents the recorded investment in nonaccrual and loans past due 90 days or more and still on accrual, excluding PCI loans, by class of loans as of June 30, 2022 and December 31, 2021:2022:
|
| Nonaccrual |
|
| Loans Past |
| ||
June 30, 2022 |
|
|
|
|
|
| ||
Residential |
| $ | 832,754 |
|
| $ | — |
|
Home equity and other consumer |
|
| 18,239 |
|
|
| — |
|
Total |
| $ | 850,993 |
|
| $ | — |
|
|
|
|
|
|
|
| ||
December 31, 2021 |
|
|
|
|
|
| ||
Residential |
| $ | 846,037 |
|
| $ | — |
|
Home equity and other consumer |
|
| 18,507 |
|
|
| — |
|
Total |
| $ | 864,544 |
|
| $ | — |
|
|
| Nonaccrual |
|
| Loans Past |
|
|
|
|
|
|
| ||
December 31, |
|
|
|
|
|
|
|
|
|
|
|
| ||
Residential First Mortgage |
| $ | 819,590 |
|
| $ | — |
|
|
|
|
|
|
|
Home Equity and Other Consumer |
|
| 37,069 |
|
|
| — |
|
|
|
|
|
|
|
Total |
| $ | 856,659 |
|
| $ | — |
|
|
|
|
|
|
|
TheNo nonaccrual loans have specific reserves as of March 31, 2023 and the Bank had 0no other real estate owned at either June 30, 2022March 31, 2023 or December 31, 2021.2022.
|
| Nonaccrual loans beginning of period |
|
| Nonaccrual loans end of period |
|
| Nonaccrual with no Allowance for Credit Loss |
|
| Loans Past |
|
| Interest recognized on nonaccrual loans |
| |||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential First Mortgage |
| $ | 819,590 |
|
| $ | 1,497,898 |
|
| $ | 1,497,898 |
|
| $ | — |
|
| $ | — |
|
Commercial Real Estate |
|
|
|
| $ | 487,755 |
|
| $ | 487,755 |
|
|
|
|
|
|
| |||
Construction |
|
| — |
|
|
| 10,922,520 |
|
|
| 10,922,520 |
|
|
| — |
|
| $ | — |
|
Consumer |
|
| 37,069 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | — |
|
Total |
| $ | 856,659 |
|
| $ | 12,908,173 |
|
| $ | 12,908,173 |
|
| $ | — |
|
| $ | — |
|
1918
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 54 – LOANS (Continued)
The following table presents the aging of the recorded investment in past due loans as of June 30, 2022March 31, 2023 and December 31, 2021,2022, by class of loans:
|
| 30-59 Days |
|
| 60-89 Days |
|
| Greater than |
|
| Total |
|
| Loans Not |
|
| PCI loans |
|
| Total |
| |||||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Residential |
| $ | — |
|
| $ | 559,838 |
|
| $ | 286,744 |
|
| $ | 846,582 |
|
| $ | 375,628,331 |
|
| $ | 3,301,740 |
|
| $ | 379,776,653 |
|
Commercial and multi-family |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 172,240,349 |
|
|
| 1,379,344 |
|
|
| 173,619,693 |
|
Construction |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 51,799,501 |
|
|
| — |
|
|
| 51,799,501 |
|
Commercial and industrial |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,068,871 |
|
|
| — |
|
|
| 2,068,871 |
|
Home equity and other consumer |
|
| 137,112 |
|
|
| — |
|
|
| — |
|
|
| 137,112 |
|
|
| 25,626,472 |
|
|
| 35,252 |
|
|
| 25,798,836 |
|
Total |
| $ | 137,112 |
|
| $ | 559,838 |
|
| $ | 286,744 |
|
| $ | 983,694 |
|
| $ | 627,363,524 |
|
| $ | 4,716,336 |
|
| $ | 633,063,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
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 |
|
|
| 30-59 Days |
|
| 60-89 Days |
|
| Greater than |
|
| Total |
|
| Loans Not |
|
| Total |
|
|
|
| |||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Residential First Mortgage |
| $ | — |
|
| $ | 1,117,150 |
|
| $ | 783,376 |
|
| $ | 1,900,526 |
|
| $ | 487,179,139 |
|
| $ | 489,079,665 |
|
|
|
| |
Commercial Real Estate |
|
| — |
|
|
| — |
|
|
| 455,293 |
|
|
| 455,293 |
|
|
| 94,888,162 |
|
|
| 95,343,455 |
|
|
|
| |
Multi-Family Real Estate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 71,414,226 |
|
|
| 71,414,226 |
|
|
|
| |
Construction |
|
| — |
|
|
| — |
|
|
| 10,893,713 |
|
|
| 10,893,713 |
|
|
| 46,485,382 |
|
|
| 57,379,095 |
|
|
|
| |
Commercial and Industrial |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,523,380 |
|
|
| 1,523,380 |
|
|
|
| |
Consumer |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11,475 |
|
|
| 11,475 |
|
|
|
| |
Total |
| $ | — |
|
| $ | 1,117,150 |
|
| $ | 12,132,382 |
|
| $ | 13,249,532 |
|
| $ | 701,501,764 |
|
| $ | 714,751,296 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
| 30-59 Days |
|
| 60-89 Days |
|
| Greater than |
|
| Total |
|
| Loans Not |
|
| PCI loans |
|
| Total |
| |||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Residential First Mortgage |
| $ | — |
|
| $ | 360,849 |
|
| $ | 279,515 |
|
| $ | 640,364 |
|
| $ | 462,619,166 |
|
| $ | 2,841,097 |
|
| $ | 466,100,627 |
|
Commercial and Multi-Family Real Estate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 160,990,186 |
|
|
| 1,348,483 |
|
|
| 162,338,669 |
|
Construction |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 61,825,478 |
|
|
| — |
|
|
| 61,825,478 |
|
Commercial and Industrial |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,684,189 |
|
|
| — |
|
|
| 1,684,189 |
|
Home Equity and Other Consumer |
|
| 92,977 |
|
|
| — |
|
|
| 19,122 |
|
|
| 112,099 |
|
|
| 29,511,757 |
|
|
| 31,117 |
|
|
| 29,654,973 |
|
Total |
| $ | 92,977 |
|
| $ | 360,849 |
|
| $ | 298,637 |
|
| $ | 752,463 |
|
| $ | 716,630,776 |
|
| $ | 4,220,697 |
|
| $ | 721,603,936 |
|
Loans greater than 89 days past due and loans on non-accrual 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
19
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 54 – LOANS (Continued)
Based on the most recent analysis performed, the risk category of loans by class is as follows:
|
| Term Loans by Origination Year |
| |||||||||||||||||||||||||||||
March 31, 2023 |
| 2023 |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| Prior |
|
| Revolving Loans |
|
| Totals |
| ||||||||
Residential First Mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
|
| 1,356,565 |
|
|
| 116,300,705 |
|
|
| 40,276,075 |
|
|
| 29,878,332 |
|
|
| 28,409,680 |
|
|
| 129,243,964 |
|
|
| 141,925,437 |
|
| $ | 487,390,758 |
|
Special Mention |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 191,009 |
|
|
| 171,616 |
|
|
| 455,299 |
|
|
| 112,099 |
|
|
| 930,023 |
|
Substandard |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 469,749 |
|
|
| 289,135 |
|
|
| 758,884 |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| 1,356,565 |
|
|
| 116,300,705 |
|
|
| 40,276,075 |
|
|
| 30,069,341 |
|
|
| 28,581,296 |
|
|
| 130,169,012 |
|
|
| 142,326,671 |
|
|
| 489,079,665 |
|
Gross chargeoffs by vintage |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
|
| — |
|
|
| 3,116,904 |
|
|
| — |
|
|
| 6,634,424 |
|
|
| 5,605,765 |
|
|
| 12,726,031 |
|
|
| 66,772,576 |
|
|
| 94,855,700 |
|
Special Mention |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 487,755 |
|
|
| 487,755 |
|
Substandard |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| — |
|
|
| 3,116,904 |
|
|
| — |
|
|
| 6,634,424 |
|
|
| 5,605,765 |
|
|
| 12,726,031 |
|
|
| 67,260,331 |
|
|
| 95,343,455 |
|
Gross chargeoffs by vintage |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Multi-Family Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
|
| — |
|
|
| 2,435,157 |
|
|
| — |
|
|
| 1,202,368 |
|
|
| — |
|
|
| 2,177,677 |
|
|
| 65,599,024 |
|
|
| 71,414,226 |
|
Special Mention |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Substandard |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| — |
|
|
| 2,435,157 |
|
|
| — |
|
|
| 1,202,368 |
|
|
| — |
|
|
| 2,177,677 |
|
|
| 65,599,024 |
|
|
| 71,414,226 |
|
Gross chargeoffs by vintage |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 46,456,575 |
|
|
| 46,456,575 |
|
Special Mention |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Substandard |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10,922,520 |
|
|
| 10,922,520 |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 57,379,095 |
|
|
| 57,379,095 |
|
Gross chargeoffs by vintage |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commercial and Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
|
| — |
|
|
| — |
|
|
| 259,355 |
|
|
| 767,024 |
|
|
| 348,985 |
|
|
| 6,494 |
|
|
| 141,522 |
|
|
| 1,523,380 |
|
Special Mention |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Substandard |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| — |
|
|
| — |
|
|
| 259,355 |
|
|
| 767,024 |
|
|
| 348,985 |
|
|
| 6,494 |
|
|
| 141,522 |
|
|
| 1,523,380 |
|
Gross chargeoffs by vintage |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11,475 |
|
|
| 11,475 |
|
Special Mention |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Substandard |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11,475 |
|
|
| 11,475 |
|
Total loans |
| $ | 1,356,565 |
|
| $ | 121,852,766 |
|
| $ | 40,535,430 |
|
| $ | 38,673,157 |
|
| $ | 34,536,046 |
|
| $ | 145,079,214 |
|
| $ | 332,718,118 |
|
| $ | 714,751,296 |
|
|
| Pass |
|
| Special |
|
| Substandard |
|
| Doubtful |
|
| Totals |
| |||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential |
| $ | 378,943,899 |
|
| $ | 372,332 |
|
| $ | 460,422 |
|
| $ | — |
|
| $ | 379,776,653 |
|
Commercial and multi-family |
|
| 173,619,693 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 173,619,693 |
|
Construction |
|
| 51,799,501 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 51,799,501 |
|
Commercial and industrial |
|
| 2,068,871 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,068,871 |
|
Home equity and other consumer |
|
| 25,780,597 |
|
|
| — |
|
|
| 18,239 |
|
|
| — |
|
|
| 25,798,836 |
|
Total |
| $ | 632,212,561 |
|
| $ | 372,332 |
|
| $ | 478,661 |
|
| $ | — |
|
| $ | 633,063,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
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 |
|
|
| Pass |
|
| Special |
|
| Substandard |
|
| Totals |
| ||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential First Mortgage |
| $ | 465,089,495 |
|
| $ | 555,965 |
|
| $ | 455,167 |
|
| $ | 466,100,627 |
|
Commercial and Multi-Family Real Estate |
|
| 162,338,669 |
|
|
| — |
|
|
| — |
|
|
| 162,338,669 |
|
Construction |
|
| 61,825,478 |
|
|
| — |
|
|
| — |
|
|
| 61,825,478 |
|
Commercial and Industrial |
|
| 1,684,189 |
|
|
| — |
|
|
| — |
|
|
| 1,684,189 |
|
Home Equity and Other Consumer |
|
| 29,617,904 |
|
|
| 19,122 |
|
|
| 17,947 |
|
|
| 29,654,973 |
|
Total |
| $ | 720,555,735 |
|
| $ | 575,087 |
|
| $ | 473,114 |
|
| $ | 721,603,936 |
|
20
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
There have been no loan modifications for the three month period ended March 31, 2023.
NOTE 65 – 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. Grants of restricted common stock were issued 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 and six months ended June 30,March 31, 2023 and March 31, 2022, approximately $118,000 and $236,000118,000 in expense was recognized in regard to these awards. There was 0 restricted stock expense recorded for the three and six months ended June 30, 2021.awards, respectively. The expected future compensation expense related to the 226,519181,215 non-vested restricted shares outstanding at June 30, 2022March 31, 2023 was approximately $2.01.8 million over a weighted average period of four years.
The following is a summary of the Company's restricted stock activity during the sixthree months ended June 30, 2022:March 31, 2023:
|
| Number of non-vested Restricted Shares |
|
| Weighted Average Grant Date Fair Value |
|
| Number of Non-vested Restricted Shares |
|
| Weighted Average Grant Date Fair Value |
| ||||
Outstanding, January 1, 2022 |
|
| 226,519 |
|
| $ | 10.45 |
| ||||||||
Outstanding, January 1, 2023 |
|
| 181,215 |
|
| $ | 10.45 |
| ||||||||
Granted |
|
| 0 |
|
|
| 0 |
|
|
| — |
|
|
| — |
|
Vested |
|
| 0 |
|
|
| 0 |
|
|
| — |
|
|
| — |
|
Forfeited |
|
| 0 |
|
|
| 0 |
|
|
| — |
|
|
| — |
|
Outstanding, June 30, 2022 |
|
| 226,519 |
|
| $ | 10.45 |
| ||||||||
Outstanding, March 31, 2023 |
|
| 181,215 |
|
| $ | 10.45 |
|
21
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 65 – 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 0t 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 and six months ended June 30,March 31, 2023 and March 31, 2022, approximately $115,000 and $230,000115,000 in expense was recognized in regard to these awards, respectively. There was 0 stock option expense recorded for the three or six months ended June 30, 2021. The expected future compensation expense related to the 526,119418,895 non-vested options outstanding at June 30, 2022March 31, 2023 was $1.91.7 million over the vesting period of four years.
The following is a summary of the Company's option activity during the sixthree months ended June 30, 2022:March 31, 2023:
|
| Number of Stock Options |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Contractual Term (in years) |
|
| Aggregate Intrinsic Value |
|
| 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 |
|
| $ | 397,951 |
| ||||||||||||||||
Outstanding, January 1, 2023 |
|
| 523,619 |
|
| $ | 10.45 |
|
|
| 6.5 |
|
| $ | — |
| ||||||||||||||||
Granted |
|
| — |
|
|
|
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
| ||||||||||
Exercised |
|
| — |
|
|
|
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
| ||||||||||
Forfeited |
|
| — |
|
|
|
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
| ||||||||||
Outstanding, June 30, 2022 |
|
| 523,619 |
|
| $ | 10.45 |
|
|
| 5.9 |
|
| $ | 397,591 |
| ||||||||||||||||
Options exercisable at June 30, 2022 |
| $ | — |
|
|
|
|
|
| $ | — |
| ||||||||||||||||||||
Outstanding, March 31, 2023 |
|
| 523,619 |
|
| $ | 10.45 |
|
|
| 5.9 |
|
| $ | — |
| ||||||||||||||||
Options exercisable at March 31, 2022 |
|
| 104,724 |
|
|
|
|
|
| $ | — |
|
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 76 – 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 June 30,March 31, 2023 and 2022, and 2021, $70,00072,000 and $65,000 was incurred as expense for the plan, respectively. During the six months ended June 30, 2022 and 2021, $137,000 and $125,00066,000 was incurred as expense for the plan, respectively. As of June 30, 2022,March 31, 2023, 65,78972,539 shares have been allocated and 449,977429,900 shares are unallocated with a fair value of $5.14.3 million.
Note 7 – DERIVATIVES AND HEDGING ACTIVITES
The Company uses derivative financial instruments as components of its market risk management, principally to manage interest rate risk. Certain derivatives are entered into in connection with transactions with commercial customers. Derivatives are not used for speculative purposes. All derivatives are recognized as either assets or liabilities in the Consolidated Statements of Financial Condition, reported at fair value and presented on a gross basis. Until a derivative is settled, a favorable change in fair value results in an unrealized gain that is recognized as an asset, while an unfavorable change in fair value results in an unrealized loss that is recognized as a liability.
22
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 87 – DERIVATIVES AND HEDGING ACTIVITES Commitments and Contingencies(continued)
The BankCompany generally applies hedge accounting to its derivatives used for market risk management purposes. Hedge accounting is permitted only if specific criteria are met, including a partyrequirement that a highly effective relationship exists between the derivative instrument and the hedged item, both at inception of the hedge and on an ongoing basis. Changes in the fair value of effective fair value hedges are recognized in current earnings (with the change in fair value of the hedged asset or liability also recognized in earnings). Changes in the fair value of effective cash flow hedges are recognized in other comprehensive income (loss) until earnings are affected by the variability in cash flows of the designated hedged item. Ineffective portions of hedge results are recognized in current earnings. Changes in the fair value of derivatives for which hedge accounting is not applied are recognized in current earnings.
The Company formally documents at inception all relationships between the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transactions. This process includes linking all derivatives that are designated as hedges to specific assets and liabilities, or to specific firm commitments. The Company also formally assesses, both at inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair values or cash flows of the hedged items. If it is determined that a derivative is not highly effective or has ceased to be a highly effective hedge, the Company would discontinue hedge accounting prospectively. Gains or losses resulting from the termination of a derivative accounted for as a cash flow hedge remain in other comprehensive income (loss) and is (accreted) amortized to earnings over the remaining period of the former hedging relationship.
Certain derivative financial instruments with off-balance sheetare offered to certain commercial banking customers to manage their risk in the normal course of business to meet the financing needsexposure and risk management strategies. These derivative instruments consist primarily 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 creditcurrency forward contracts and interest rate swap contracts. The risk associated with these transactions is mitigated by simultaneously entering into similar transactions having essentially offsetting terms with a third party. In addition, the Company executes interest rate swaps with third parties in excessorder to hedge the interest rate risk of short-term FHLB advances.
Interest Rate Swaps. At March 31, 2023, the Company had two interest rate swaps with a notional amounts of $20.0 million hedging on certain FHLB advances and brokered deposits. This interest rate swap meets the cash flow hedge accounting requirements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. At March 31, 2023, the Company had one interest rate swap with a notional amount recognizedof $10.0 million hedging on certain FHLB advances and one interest rate swap with a notional amount of $10.0 million hedging on certain brokered deposits. At both March 31, 2023 and December 31, 2022, the Company had no interest rate swaps in place with commercial banking customers.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated statementsConsolidated Statements of financial condition. The contractual amountsFinancial Condition at March 31, 2023:
|
|
|
| March 31, |
|
| |
|
|
|
| Asset Derivative |
|
| |
|
| Consolidated Statements of Financial Condition |
| Fair Value |
|
| |
Interest rate swaps |
| Other Assets |
| $ | 163,349 |
|
|
Total derivative instruments |
|
|
| $ | 163,349 |
|
|
For the three months ended March 31, 2023, unrealized losses of these instruments reflect the extent$163,349 were recorded for changes in fair value of involvement the Bank has in those particular classes of financial instruments.interest rate swaps with third parties. At March 31, 2023, accrued interest was $12,000.
The Bank’s exposure to credit loss inCompany has agreements with counterparties that contain a provision that if the eventCompany defaults on any of nonperformanceits indebtedness, including default where repayment of the indebtedness has not been accelerated by the other party tolender, then the financial instruments for commitments to extend credit is represented by the contractual amountCompany could also be declared in default of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.its derivative
23
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Bank had outstanding firm commitments, all of which expire within three months, to originate, loans at June 30, 2022 and December 31, 2021 as follows:
|
| June 30, |
|
| December 31, |
| ||
Fixed Rate |
|
|
|
|
|
| ||
Residential mortgage loans |
| $ | 27,116,500 |
|
| $ | 2,986,250 |
|
Commercial real estate |
|
| 350,000 |
|
|
| — |
|
Construction |
|
| 675,000 |
|
|
| — |
|
Home equity |
|
| — |
|
|
| 170,000 |
|
Total |
| $ | 28,141,500 |
|
| $ | 3,156,250 |
|
|
| June 30, |
|
| December 31, |
| ||
Variable Rate |
|
|
|
|
|
| ||
Residential mortgage loans |
| $ | 25,144,739 |
|
| $ | — |
|
Commercial real estate |
|
| 3,040,000 |
|
|
| 1,400,000 |
|
Commercial and industrial |
|
| 500,000 |
|
|
| — |
|
Construction |
|
| — |
|
|
| 7,522,375 |
|
Home equity |
|
| 618,000 |
|
|
| 1,060,000 |
|
Total |
| $ | 29,302,739 |
|
| $ | 9,982,375 |
|
Commitments to make loans are generally made for periods of 90 days or less.obligations.
The fixed rate loan commitments have interest rates ranging from 3.50% to 6.00%and maturities ranging from 10 years to 30 years.
At June 30, 2022 and December 31, 2021, undisbursed funds from approved lines of credit under a homeowners’ equity lending program amounted to $47,745,830 and $48,028,579, respectively. At June 30, 2022 and December 31, 2021, undisbursed funds from approved lines of credit under a business line of credit program amounted to $8,176,073 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 $43,364 and $48,012 for the three months ended June 30, 2022 and 2021, respectively. Rent expense was $87,179 and $73,763 for the six months ended June 30, 2022 and 2021, respectively.
24
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 98 – 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.
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:
24
|
| Carrying |
|
| Quoted Prices |
|
| Significant |
|
| Significant |
| ||||
As of June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. treasury bills |
| $ | 9,870,432 |
|
| $ | 9,870,432 |
|
| $ | — |
|
| $ | — |
|
U.S. government and agency obligations |
|
| 5,567,109 |
|
|
| — |
|
|
| 5,567,109 |
|
|
| — |
|
Corporate bonds |
|
| 17,609,769 |
|
|
| — |
|
|
| 17,609,769 |
|
|
| — |
|
MBSs - residential |
|
| 41,383,955 |
|
|
| — |
|
|
| 41,383,955 |
|
|
| — |
|
MBSs - commercial |
|
| 23,076,428 |
|
|
| — |
|
|
| 23,076,428 |
|
|
| — |
|
|
| $ | 97,507,693 |
|
| $ | 9,870,432 |
|
| $ | 87,637,261 |
|
| $ | — |
|
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 |
|
| $ | — |
|
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
| Carrying |
|
| Quoted Prices |
|
| Significant |
|
| Significant |
| ||||
As of March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. treasury bills |
| $ | 4,983,764 |
|
| $ | 4,983,764 |
|
| $ | — |
|
| $ | — |
|
U.S. government and agency obligations |
|
| 5,500,932 |
|
|
| — |
|
|
| 5,500,932 |
|
|
| — |
|
Corporate bonds |
|
| 14,636,813 |
|
|
| — |
|
|
| 14,636,813 |
|
|
| — |
|
Cash flow hedge |
|
| 163,349 |
|
|
|
|
|
| 163,349 |
|
|
| — |
| |
MBSs - residential |
|
| 38,297,167 |
|
|
| — |
|
|
| 38,297,167 |
|
|
| — |
|
MBSs - commercial |
|
| 18,632,513 |
|
|
| — |
|
|
| 18,632,513 |
|
|
| — |
|
| $ | 82,214,538 |
|
| $ | 4,983,764 |
|
| $ | 77,230,774 |
|
| $ | — |
| |
As of December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. treasury bills |
| $ | 4,927,608 |
|
| $ | 4,927,608 |
|
| $ | — |
|
| $ | — |
|
U.S. government and agency obligations |
|
| 5,465,154 |
|
|
| — |
|
|
| 5,465,154 |
|
|
| — |
|
Corporate bonds |
|
| 15,506,047 |
|
|
| — |
|
|
| 15,506,047 |
|
|
| — |
|
Cash flow hedge |
|
| 324,062 |
|
|
|
|
|
| 324,062 |
|
|
| — |
| |
MBSs - residential |
|
| 39,649,045 |
|
|
| — |
|
|
| 39,649,045 |
|
|
| — |
|
MBSs - commercial |
|
| 19,552,724 |
|
|
| — |
|
|
| 19,552,724 |
|
|
| — |
|
|
| $ | 85,424,640 |
|
| $ | 4,927,608 |
|
| $ | 80,497,032 |
|
| $ | — |
|
There were 0no transfers between level 1 and level 2 during the sixthree months ended June 30, 2022.March 31, 2023.
25
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 98 – FAIR VALUE (Continued)
The carrying amounts and estimated fair values of financial instruments not measured at fair value, at June 30, 2022March 31, 2023 and December 31, 2021,2022, were as follows:
|
| Carrying |
|
| Fair |
|
| Fair Value Measurement Placement |
|
| Carrying |
|
| Fair |
|
| Fair Value Measurement Placement |
| ||||||||||||||||||||||
|
| Amount |
|
| Value |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
|
| Amount |
|
| Value |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||||||||
|
| (In thousands) |
|
| (In thousands) |
| ||||||||||||||||||||||||||||||||||
June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Financial instruments - assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Cash and due from banks |
| $ | 7,604 |
|
| $ | 7,604 |
|
| $ | 7,604 |
|
| $ | — |
|
| $ | — |
| ||||||||||||||||||||
Investment securities held-to-maturity |
|
| 86,432 |
|
|
| 79,858 |
|
|
| — |
|
|
| 79,858 |
|
|
| — |
|
| $ | 78,207 |
|
| $ | 71,202 |
|
| $ | — |
|
| $ | 71,202 |
|
| $ | — |
|
Loans and loans held for sale |
|
| 631,170 |
|
|
| 595,775 |
|
|
| — |
|
|
| — |
|
|
| 595,775 |
|
|
| 711,890 |
|
|
| 646,937 |
|
|
| — |
|
|
| — |
|
|
| 646,937 |
|
Financial instruments - liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Certificates of deposit |
|
| 367,866 |
|
|
| 369,394 |
|
|
| — |
|
|
| 369,394 |
|
|
| — |
|
|
| 498,165 |
|
|
| 498,240 |
|
|
| — |
|
|
| 498,240 |
|
|
| — |
|
Borrowings |
|
| 115,279 |
|
|
| 114,670 |
|
|
| — |
|
|
| 114,670 |
|
|
| — |
|
|
| 112,032 |
|
|
| 100,024 |
|
|
| — |
|
|
| 100,024 |
|
|
| — |
|
|
| Carrying |
|
| Fair |
|
| Fair Value Measurement Placement |
|
| Carrying |
|
| Fair |
|
| Fair Value Measurement Placement |
| ||||||||||||||||||||||
|
| Amount |
|
| Value |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
|
| Amount |
|
| Value |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||||||||
|
| (In thousands) |
|
| (In thousands) |
| ||||||||||||||||||||||||||||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
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 |
|
|
| — |
|
| $ | 77,427 |
|
| $ | 70,700 |
|
| $ | — |
|
| $ | 70,700 |
|
| $ | — |
|
Loans and loans held for sale |
|
| 571,363 |
|
|
| 569,845 |
|
|
| — |
|
|
| — |
|
|
| 569,845 |
|
|
| 719,026 |
|
|
| 658,250 |
|
|
| — |
|
|
| — |
|
|
| 658,250 |
|
Financial instruments - liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Certificates of deposit |
|
| 366,396 |
|
|
| 365,452 |
|
|
| — |
|
|
| 365,452 |
|
|
| — |
|
|
| 492,593 |
|
|
| 491,638 |
|
|
| — |
|
|
| 491,638 |
|
|
| — |
|
Borrowings |
|
| 85,052 |
|
|
| 86,657 |
|
|
| — |
|
|
| 86,657 |
|
|
| — |
|
|
| 102,319 |
|
|
| 98,885 |
|
|
| — |
|
|
| 98,885 |
|
|
| — |
|
Carrying amount is the estimated fair value for cash and cash equivalents. The fair value of loans is determined using an exit price methodology. Certificates of deposits fair value is estimated by using a discounted cash flow approach. Fair value of FHLB advances is based on current rates for similar financing. Other balance sheet instruments such as cash and cash equivalents, accrued interest receivable, accrued interest payable and Bank owned life insurance holding costs approximate fair value. The fair value of off-balance sheet items is not considered material.
26
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 109 – ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss included in equity (net of tax) for the three and six months ended June 30,March 31, 2023 and 2022 and 2021 was as follows:
|
| Unrealized gain |
|
| Benefit plans |
|
| Total |
| |||
Three months ended |
|
|
|
|
|
|
|
|
| |||
June 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Beginning balance at April 1, 2022 |
| $ | (2,689,802 | ) |
| $ | 58,747 |
|
| $ | (2,631,055 | ) |
Other comprehensive (loss) income before reclassification |
|
| — |
|
|
| — |
|
|
| — |
|
Amounts reclassified |
|
| (4,142,333 | ) |
|
| 41,589 |
|
|
| (4,100,744 | ) |
Net period comprehensive (loss) income |
|
| (4,142,333 | ) |
|
| 41,589 |
|
|
| (4,100,744 | ) |
Ending balance at June 30, 2022 |
| $ | (6,832,135 | ) |
| $ | 100,336 |
|
| $ | (6,731,799 | ) |
|
|
|
|
|
|
|
|
|
| |||
June 30, 2021 |
|
|
|
|
|
|
|
|
| |||
Beginning balance at April 1, 2021 |
| $ | 112,120 |
|
| $ | (342,201 | ) |
| $ | (230,081 | ) |
Other comprehensive income before reclassification |
|
| — |
|
|
| — |
|
|
| — |
|
Amounts reclassified |
|
| 9,212 |
|
|
| 31,381 |
|
|
| 40,593 |
|
Net period comprehensive income |
|
| 9,212 |
|
|
| 31,381 |
|
|
| 40,593 |
|
Ending balance at June 30, 2021 |
| $ | 121,332 |
|
| $ | (310,820 | ) |
| $ | (189,488 | ) |
|
| Unrealized gain |
|
| Benefit plans |
|
| Derivatives |
|
| Total |
| ||||
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
| ||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Beginning balance at January 1, 2023 |
| $ | (6,499,666 | ) |
| $ | 55,684 |
|
| $ | 232,969 |
|
| $ | (6,211,013 | ) |
Other comprehensive (loss) income before reclassification |
|
| (114,092 | ) |
|
| (16,546 | ) |
|
| (115,537 | ) |
|
| (246,175 | ) |
Amounts reclassified |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net period comprehensive (loss) income |
|
| (114,092 | ) |
|
| (16,546 | ) |
|
| (115,537 | ) |
|
| (246,175 | ) |
Ending balance at March 31, 2023 |
| $ | (6,613,758 | ) |
| $ | 39,138 |
|
| $ | 117,432 |
|
| $ | (6,457,188 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Beginning balance at January 1, 2022 |
| $ | (289,814 | ) |
| $ | 17,158 |
|
| $ | — |
|
| $ | (272,656 | ) |
Other comprehensive (loss) income before reclassification |
|
| (2,399,988 | ) |
|
| 41,589 |
|
|
| — |
|
|
| (2,358,399 | ) |
Amounts reclassified |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net period comprehensive income |
|
| (2,399,988 | ) |
|
| 41,589 |
|
|
| — |
|
|
| (2,358,399 | ) |
Ending balance at March 31, 2022 |
| $ | (2,689,802 | ) |
| $ | 58,747 |
|
| $ | — |
|
| $ | (2,631,055 | ) |
26
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
| Unrealized gain |
|
| Benefit plans |
|
| Total |
| |||
Six months ended |
|
|
|
|
|
|
|
|
| |||
Beginning balance at January 1, 2022 |
| $ | (289,814 | ) |
| $ | 17,158 |
|
| $ | (272,656 | ) |
Other comprehensive income before reclassification |
|
| — |
|
|
| — |
|
|
| — |
|
Amounts reclassified |
|
| (6,542,321 | ) |
|
| 83,178 |
|
|
| (6,459,143 | ) |
Net period comprehensive income |
|
| (6,542,321 | ) |
|
| 83,178 |
|
|
| (6,459,143 | ) |
Ending balance at June 30, 2022 |
| $ | (6,832,135 | ) |
| $ | 100,336 |
|
| $ | (6,731,799 | ) |
|
|
|
|
|
|
|
|
|
| |||
June 30, 2021 |
|
|
|
|
|
|
|
|
| |||
Beginning balance at January 1, 2021 |
| $ | 100,569 |
|
| $ | (373,582 | ) |
| $ | (273,013 | ) |
Other comprehensive income before reclassification |
|
| — |
|
|
| — |
|
|
| — |
|
Amounts reclassified |
|
| 20,763 |
|
|
| 62,762 |
|
|
| 83,525 |
|
Net period comprehensive income |
|
| 20,763 |
|
|
| 62,762 |
|
|
| 83,525 |
|
Ending balance at June 30, 2021 |
| $ | 121,332 |
|
| $ | (310,820 | ) |
| $ | (189,488 | ) |
27
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 June 30, 2022March 31, 2023 and December 31, 20212022 and for the three and six months ended June 30,March 31, 2023 and March 31, 2022 and June 30, 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:
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:
28
28
The COVID-19 pandemic has adversely impacted the global and nation economy and certain industries and geographies in which our clients operate. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on the business of the Company, its clients, employees and third-party service providers. The extent of such impact will depend on future developments, which are highly uncertain. Additionally, the responses of various governmental and nongovernmental authorities and consumers to the pandemic may have material long-term effects on the Company and its clients which are difficult to quantify in the near-term or long-term.
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.
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 assets of $106.2 million, 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, 2021.2022. 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. ThereSee Note 1, "Basis of Presentation" for additional information on the adoption of ASC 326, which changes the methodology under which management calculates its reserve for loans and investment securities, now referred to as the allowance for credit losses. Management considers the measurement of the allowance for credit losses to be a critical accounting policy. Other than the adoption of ASC 326, there have been no significant changes to the Company's critical accounting policies since December 31, 2021.
29
COVID-19
As of June 30, 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, were 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 continued to accrue interest.
As a qualified Small Business Administration (“SBA”) 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 $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 June 30, 2022.
Comparison of Financial Condition at June 30, 2022March 31, 2023 and December 31, 20212022
Total Assets. Total assets increased $37.6 million,decreased $809,000, or 4.5%0.1%, from December 31, 20212022 to $874.9$950.3 million at June 30, 2022March 31, 2023 primarily due to loan originationsdecreases in loans and purchase of investment securities with excess liquidity.available for sale offset by an increase in cash and cash equivalents. The increasedecrease in assets reflected a $60.6$7.1 million, or 10.6%1.0%, increasedecrease in loans and a $55.7$3.0 million, or 133.1%3.6%, increasedecrease in securities available for sale, offset by a $7.7 million, or 45.5%, increase in cash and cash equivalents and a $12.4 million$780,000 or 16.7%1.0%, increase in securities held to maturity, offset by a $97.5 million, or 92.8%, decrease in cash and cash equivalents.maturity.
Cash and Cash Equivalents. Total cash and cash equivalents decreased $97.5increased $7.7 million, or 92.8%45.5%, to $7.6$24.5 million at June 30, 2022March 31, 2023 from $105.1$16.8 million at December 31, 2021.2022. The decreaseincrease was primarily due to funding of loan originationsand
29
investment repayments and investment security purchasesexcess cash from the increase in long-term FHLB advances during the sixthree months ended June 30, 2022.March 31, 2023.
Securities Available for Sale. Total securities available for sale increased $55.7decreased $3.0 million, or 133.1%3.6%, to $97.5$82.1 million at June 30, 2022March 31, 2023 from $41.8$85.1 million at December 31, 2021.2022. The increasedecrease was due to $67.5 million of purchases of mortgage-backed securities, corporate bonds, U.S. treasury billsinvestment repayments and government agency obligations, with excess cash. The increase in securities available for sale reflected a $10.2 million increasean $869,000 decrease in corporate bonds a $9.9 million increase in U.S. treasury bills, a $2.6 million increase in U.S. government agency obligations, and a $33.0$2.3 million increasedecrease in mortgage-backed securities.
Securities Held to Maturity. Total securities held to maturity increased $12.4 million,$780,000, or 16.7%1.0%, to $86.4$78.2 million at June 30, 2022March 31, 2023 from $74.1$77.4 million at December 31, 2021,2022, primarily due to $23.1a $1.5 million in purchasespurchase of securitiesa corporate bond which was offset by repayments of mortgage-backed securities. The increase in securities held to maturity reflected a $2.5 million increase in corporate bonds, a $10.0 million increase in U.S. government agency obligations, a $4.8 million increase$7,000 decrease in municipal bonds and a $5.0 million$668,000 decrease in mortgage-backed securities.
Net Loans. Net loans increased $60.6decreased $7.1 million, or 10.6%1.0%, to $630.8$711.9 million at June 30, 2022March 31, 2023 from $570.2$719.0 million at December 31, 2021.2022. The increasedecrease was due to an increasea decrease of $59.8$23.0 million, or 18.7%4.9%, in one-to four-residential real estate loans to $379.8$489.1 million from $320.0$466.1 million at December 31, 2021, and an increase2022, a decrease of $10.4$4.4 million, or 25.2%7.2%, in construction loans to $51.8$57.4 million at June 30, 2022March 31, 2023 from $41.4$61.8 million at December 31, 2021 offset by2022, a $5.8decrease of $11.5 million, or 73.8%100.0%, in consumer loans to $11.5 million at March 31, 2023 from $29.7 million at December 31, 2022, a $161,000, or 9.5%, and a decrease in commercial and industrial loans to $2.1$1.5 million at June 30, 2022March 31, 2023 from $7.9$1.7 million as of December 31, 2021, a decrease2022 offset by an increase of $1.9$4.3 million, or 7.0%, in consumer loans to $25.8 million at June 30, 2022 from $27.7 million at December 31, 2021 and a decrease of $1.8 million, or 1.0%2.7%, in commercial and multi-family real estate loans to $173.6$166.8 million at June 30, 2022March 31, 2023 from $175.4$162.3 million at December 31, 2021. The decrease in commercial and industrial loans was due to the forgiveness and repayment of $5.5 million in PPP loans that were originated in 2021 and 2020.2022. As of June 30,March 31, 2023 and 2022, the Bank had $360,000 inno loans held for sale compared $1.2 million loans heldsale. Upon adoption of the CECL method of calculating the allowance for sale ascredit losses on January 1, 2023, the Bank recorded a one-time decrease, net of December 31, 2021.
Bank-Owned Life Insurance. Bank-owned life insurance increased $5.3 million or 21.7% duetax, in retained earnings of $220,000, an increase to a $5.0 million purchasethe allowance for credit losses of bank-owned life insurance during$157,000 and an increase in the six months ended June 30, 2022.reserve for unfunded liabilities of $152,000.
30
Deposits. Total deposits increased $13.8decreased $10.7 million, or 2.3%1.5%, to $611.3$690.7 million at June 30, 2022March 31, 2023 from $597.5$701.4 million at December 31, 2021 reflecting a new $11.0 million interest-bearing2022 due to decreases in checking, municipal relationshipsavings and money market accounts offset by an increase certificates of deposit. The increasedecrease in deposits reflected an increasea decrease in interest-bearing deposits of $13.7$10.2 million, or 2.5%1.5%, to $571.8$652.6 million as of June 30, 2022March 31, 2023 from $558.2$662.8 million at December 31, 2021 and an increase2022 offset by a decrease in non-interest bearingnon-interest-bearing deposits of $124,000,$546,000, or 0.3%1.4%, to $39.4$38.1 million as of June 30, 2022March 31, 2023 from $39.3$38.7 million as of December 31, 2021.2022.
At June 30, 2022,March 31, 2023, municipal deposits totaled $38.9$62.1 million, which represented 6.4%9.0% of total deposits, and brokered deposits totaled $48.7$50.4 million, which represented 8.0%7.3% of total deposits. At December 31, 2021,2022, municipal deposits totaled $31.5$57.5 million, which represented 5.3%8.2% of total deposits, and brokered deposits totaled $52.9$58.6 million, which represented 8.9%8.4% of total deposits. At March 31, 2023, uninsured deposits represented 8.4% of the Bank’s total deposits.
Borrowings. Federal Home Loan Bank of New York borrowings increased $30.2$9.7 million, or 35.5%9.5%, to $115.3$112.0 million at June 30, 2022March 31, 2023 from $85.1$102.3 million at December 31, 2021,2022, as long-term advances increased $32.2 million, offset by a decrease in short-term advances increased $43.2 million and repayments of long-term advances were $13.0$22.5 million. The weighted average rate of borrowings was 1.72%3.71% and 1.69%3.36% as of June 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. The increase in advances was used to offset withdrawals on deposits. Total borrowing capacity at the Federal Home Loan Bank is $336.8 million of which $112.0 million is advanced.
Total Equity. Stockholders’ equity decreased $7.1 million$573,000 to $140.5$139.1 million, primarily due to the repurchase of 126,660 shares of stock during the three months at a cost of $1.4 million and increased accumulated other comprehensive loss for securities available for sale of $6.5 million and the repurchase of 379,949 shares of stock during the six months at a cost of $4.3 million,$247,000 offset by $3.0 million$993,000 of net income for the sixthree months ended June 30, 2022.March 31, 2023. At June 30, 2022,March 31, 2023, the Company’s ratio of average stockholders’ equity-to-total assets was 17.08%14.69%, compared to 17.67%15.61% at December 31, 2021.2022.
3130
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 June 30, |
|
| Three Months Ended March 31, |
| ||||||||||||||||||||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||||||||||||||||||||||||||||||||
|
| Average |
|
| Interest and |
|
| Yield/ |
|
| Average |
|
| Interest and |
|
| Yield/ |
|
| Average |
|
| Interest and |
|
| Yield/ |
|
| Average |
|
| Interest and |
|
| Yield/ |
| ||||||||||||
|
| (Dollars in thousands) |
|
| (Dollars in thousands) |
| ||||||||||||||||||||||||||||||||||||||||||
Assets: |
| (unaudited) |
|
| (unaudited) |
| ||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
| $ | 20,723 |
|
| $ | 28 |
|
|
| 0.55 | % |
| $ | 99,956 |
|
| $ | 41 |
|
|
| 0.16 | % |
| $ | 8,799 |
|
| $ | 105 |
|
|
| 4.84 | % |
| $ | 71,541 |
|
| $ | 29 |
|
|
| 0.17 | % |
Loans |
|
| 593,705 |
|
|
| 5,849 |
|
|
| 3.95 | % |
|
| 591,134 |
|
|
| 5,685 |
|
|
| 3.86 | % |
|
| 717,964 |
|
|
| 7,699 |
|
|
| 4.32 | % |
|
| 571,827 |
|
|
| 5,537 |
|
|
| 3.90 | % |
Securities |
|
| 182,338 |
|
|
| 979 |
|
|
| 2.15 | % |
|
| 86,594 |
|
|
| 402 |
|
|
| 1.86 | % |
|
| 161,960 |
|
|
| 1,096 |
|
|
| 2.71 | % |
|
| 138,798 |
|
|
| 658 |
|
|
| 1.90 | % |
Other interest-earning assets |
|
| 4,891 |
|
|
| 55 |
|
|
| 4.53 | % |
|
| 5,740 |
|
|
| 74 |
|
|
| 5.16 | % |
|
| 5,338 |
|
|
| 117 |
|
|
| 8.74 | % |
|
| 4,834 |
|
|
| 55 |
|
|
| 4.50 | % |
Total interest-earning assets |
|
| 801,657 |
|
|
| 6,911 |
|
|
| 3.46 | % |
|
| 783,424 |
|
|
| 6,202 |
|
|
| 3.17 | % |
|
| 894,061 |
|
|
| 9,017 |
|
|
| 4.06 | % |
|
| 787,000 |
|
|
| 6,279 |
|
|
| 3.21 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Non-interest-earning assets |
|
| 54,038 |
|
|
|
|
|
|
|
|
| 41,827 |
|
|
|
|
|
|
|
|
| 54,810 |
|
|
|
|
|
|
|
|
| 50,802 |
|
|
|
|
|
|
| ||||||||
Total assets |
| $ | 855,695 |
|
|
|
|
|
|
|
| $ | 825,251 |
|
|
|
|
|
|
|
| $ | 948,871 |
|
|
|
|
|
|
|
| $ | 837,802 |
|
|
|
|
|
|
| ||||||||
Liabilities and equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
NOW and money market accounts |
| $ | 158,552 |
|
| $ | 217 |
|
|
| 0.55 | % |
| $ | 99,267 |
|
| $ | 142 |
|
|
| 0.59 | % |
| $ | 112,717 |
|
| $ | 380 |
|
|
| 1.37 | % |
| $ | 143,453 |
|
| $ | 220 |
|
|
| 0.62 | % |
Savings accounts |
|
| 66,095 |
|
|
| 43 |
|
|
| 0.26 | % |
|
| 64,341 |
|
|
| 26 |
|
|
| 0.16 | % |
|
| 53,618 |
|
|
| 70 |
|
|
| 0.53 | % |
|
| 66,583 |
|
|
| 43 |
|
|
| 0.26 | % |
Certificates of deposit |
|
| 354,600 |
|
|
| 590 |
|
|
| 0.67 | % |
|
| 375,373 |
|
|
| 883 |
|
|
| 0.94 | % |
|
| 503,369 |
|
|
| 3,265 |
|
|
| 2.63 | % |
|
| 351,027 |
|
|
| 563 |
|
|
| 0.65 | % |
Total interest-bearing deposits |
|
| 579,247 |
|
|
| 850 |
|
|
| 0.59 | % |
|
| 538,981 |
|
|
| 1,051 |
|
|
| 0.78 | % |
|
| 669,704 |
|
|
| 3,715 |
|
|
| 2.25 | % |
|
| 561,063 |
|
|
| 826 |
|
|
| 0.60 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Federal Home Loan Bank |
|
| 86,445 |
|
|
| 356 |
|
|
| 1.59 | % |
|
| 100,289 |
|
|
| 376 |
|
|
| 1.50 | % | ||||||||||||||||||||||||
Federal Home Loan Bank advances (1) |
|
| 96,532 |
|
|
| 777 |
|
|
| 3.27 | % |
|
| 82,280 |
|
|
| 330 |
|
|
| 1.63 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities |
|
| 665,692 |
|
|
| 1,206 |
|
|
| 0.73 | % |
|
| 639,270 |
|
|
| 1,427 |
|
|
| 0.90 | % |
|
| 766,236 |
|
|
| 4,492 |
|
|
| 2.38 | % |
|
| 643,343 |
|
|
| 1,156 |
|
|
| 0.73 | % |
Non-interest-bearing deposits |
|
| 38,132 |
|
|
|
|
|
|
|
|
| 26,736 |
|
|
|
|
|
|
|
|
| 37,224 |
|
|
|
|
|
|
|
|
| 42,936 |
|
|
|
|
|
|
| ||||||||
Other non-interest-bearing |
|
| 5,556 |
|
|
|
|
|
|
|
|
| 15,421 |
|
|
|
|
|
|
|
|
| 5,977 |
|
|
|
|
|
|
|
|
| 5,265 |
|
|
|
|
|
|
| ||||||||
Total liabilities |
|
| 709,380 |
|
|
|
|
|
|
|
|
| 681,427 |
|
|
|
|
|
|
|
|
| 809,437 |
|
|
|
|
|
|
|
|
| 691,544 |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Total equity |
|
| 146,315 |
|
|
|
|
|
|
|
|
| 143,824 |
|
|
|
|
|
|
|
|
| 139,434 |
|
|
|
|
|
|
|
|
| 146,258 |
|
|
|
|
|
|
| ||||||||
Total liabilities and equity |
| $ | 855,695 |
|
|
|
|
|
|
|
| $ | 825,251 |
|
|
|
|
|
|
|
| $ | 948,871 |
|
|
|
|
|
|
|
| $ | 837,802 |
|
|
|
|
|
|
| ||||||||
Net interest income |
|
|
|
| $ | 5,705 |
|
|
|
|
|
|
|
| $ | 4,775 |
|
|
|
|
|
|
|
| $ | 4,525 |
|
|
|
|
|
|
|
| $ | 5,123 |
|
|
|
| ||||||||
Interest rate spread |
|
|
|
|
|
|
| 2.73 | % |
|
|
|
|
|
|
|
| 2.28 | % |
|
|
|
|
|
|
| 1.68 | % |
|
|
|
|
|
|
|
| 2.48 | % | ||||||||||
Net interest margin |
|
|
|
|
|
|
| 2.85 | % |
|
|
|
|
|
|
|
| 2.44 | % |
|
|
|
|
|
|
| 2.05 | % |
|
|
|
|
|
|
|
| 2.64 | % | ||||||||||
Average interest-earning assets |
|
| 120.42 | % |
|
|
|
|
|
|
| 122.55 | % |
|
|
|
|
|
|
|
| 116.68 | % |
|
|
|
|
|
|
| 122.33 | % |
|
|
|
|
|
|
(1)
interest-bearing liabilities.
3231
|
| Six Months Ended June 30, |
| |||||||||||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||||||||||
|
| Average |
|
| Interest and |
|
| Yield/ |
|
| Average |
|
| Interest and |
|
| Yield/ |
| ||||||
|
| (Dollars in thousands) |
| |||||||||||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
| $ | 45,991 |
|
| $ | 57 |
|
|
| 0.25 | % |
| $ | 95,564 |
|
| $ | 91 |
|
|
| 0.19 | % |
Loans |
|
| 582,826 |
|
|
| 11,386 |
|
|
| 3.92 | % |
|
| 585,279 |
|
|
| 11,150 |
|
|
| 3.83 | % |
Securities |
|
| 160,688 |
|
|
| 1,637 |
|
|
| 2.04 | % |
|
| 78,485 |
|
|
| 1,088 |
|
|
| 2.77 | % |
Other interest-earning assets |
|
| 4,864 |
|
|
| 110 |
|
|
| 4.54 | % |
|
| 5,919 |
|
|
| 147 |
|
|
| 4.98 | % |
Total interest-earning assets |
|
| 794,369 |
|
|
| 13,190 |
|
|
| 3.33 | % |
|
| 765,247 |
|
|
| 12,476 |
|
|
| 3.27 | % |
Non-interest-earning assets |
|
| 52,429 |
|
|
|
|
|
|
|
|
| 35,878 |
|
|
|
|
|
|
| ||||
Total assets |
| $ | 846,798 |
|
|
|
|
|
|
|
| $ | 801,125 |
|
|
|
|
|
|
| ||||
Liabilities and equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
NOW and money market accounts |
| $ | 151,044 |
|
| $ | 437 |
|
|
| 0.58 | % |
| $ | 94,606 |
|
| $ | 251 |
|
|
| 0.54 | % |
Savings accounts |
|
| 66,338 |
|
|
| 86 |
|
|
| 0.26 | % |
|
| 53,344 |
|
|
| 48 |
|
|
| 0.18 | % |
Certificates of deposit |
|
| 352,824 |
|
|
| 1,153 |
|
|
| 0.66 | % |
|
| 373,355 |
|
|
| 2,015 |
|
|
| 1.09 | % |
Total interest-bearing deposits |
|
| 570,206 |
|
|
| 1,676 |
|
|
| 0.59 | % |
|
| 521,305 |
|
|
| 2,314 |
|
|
| 0.90 | % |
Federal Home Loan Bank |
|
| 84,374 |
|
|
| 686 |
|
|
| 1.64 | % |
|
| 103,897 |
|
|
| 808 |
|
|
| 1.57 | % |
Total interest-bearing liabilities |
|
| 654,580 |
|
|
| 2,362 |
|
|
| 0.73 | % |
|
| 625,202 |
|
|
| 3,122 |
|
|
| 1.01 | % |
Non-interest-bearing deposits |
|
| 40,545 |
|
|
|
|
|
|
|
|
| 27,820 |
|
|
|
|
|
|
| ||||
Other non-interest-bearing |
|
| 6,755 |
|
|
|
|
|
|
|
|
| 9,268 |
|
|
|
|
|
|
| ||||
Total liabilities |
|
| 701,880 |
|
|
|
|
|
|
|
|
| 662,290 |
|
|
|
|
|
|
| ||||
Total equity |
|
| 144,918 |
|
|
|
|
|
|
|
|
| 138,835 |
|
|
|
|
|
|
| ||||
Total liabilities and equity |
| $ | 846,798 |
|
|
|
|
|
|
|
| $ | 801,125 |
|
|
|
|
|
|
| ||||
Net interest income |
|
|
|
| $ | 10,828 |
|
|
|
|
|
|
|
| $ | 9,354 |
|
|
|
| ||||
Interest rate spread (1) |
|
|
|
|
|
|
|
| 2.61 | % |
|
|
|
|
|
|
|
| 2.27 | % | ||||
Net interest margin (2) |
|
|
|
|
|
|
|
| 2.75 | % |
|
|
|
|
|
|
|
| 2.46 | % | ||||
Average interest-earning assets |
|
| 121.36 | % |
|
|
|
|
|
|
|
| 122.40 | % |
|
|
|
|
|
|
33
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 June 30, |
|
| Six Months Ended June 30, |
|
| Three Months Ended March 31, |
| |||||||||||||||||||||||||||
|
| Increase (Decrease) Due to |
|
| Increase (Decrease) Due to |
|
| Increase (Decrease) Due to |
| |||||||||||||||||||||||||||
|
| Volume |
|
| Rate |
|
| Net |
|
| Volume |
|
| Rate |
|
| Net |
|
| Volume |
|
| Rate |
|
| Net |
| |||||||||
|
| (In thousands) |
|
| (In thousands) |
| ||||||||||||||||||||||||||||||
Interest income: |
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
| (unaudited) |
| |||||||||||||||||||||
Cash and cash equivalents |
| $ | (195 | ) |
| $ | 182 |
|
| $ | (13 | ) |
| $ | (92 | ) |
| $ | 58 |
|
| $ | (34 | ) |
| $ | (204 | ) |
| $ | 280 |
|
| $ | 76 |
|
Loans receivable |
|
| 26 |
|
|
| 138 |
|
|
| 164 |
|
|
| (124 | ) |
|
| 360 |
|
|
| 236 |
|
|
| 1,521 |
|
|
| 641 |
|
|
| 2,162 |
|
Securities |
|
| 506 |
|
|
| 71 |
|
|
| 577 |
|
|
| 1,354 |
|
|
| (805 | ) |
|
| 549 |
|
|
| 123 |
|
|
| 315 |
|
|
| 438 |
|
Other interest earning assets |
|
| (10 | ) |
|
| (9 | ) |
|
| (19 | ) |
|
| (25 | ) |
|
| (12 | ) |
|
| (37 | ) |
|
| 6 |
|
|
| 56 |
|
|
| 62 |
|
Total interest-earning assets |
|
| 327 |
|
|
| 382 |
|
|
| 709 |
|
|
| 1,113 |
|
|
| (399 | ) |
|
| 714 |
|
|
| 1,446 |
|
|
| 1,292 |
|
|
| 2,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
NOW and money market accounts |
|
| 139 |
|
|
| (64 | ) |
|
| 75 |
|
|
| 165 |
|
|
| 21 |
|
|
| 186 |
|
|
| (300 | ) |
|
| 460 |
|
|
| 160 |
|
Savings accounts |
|
| 1 |
|
|
| 16 |
|
|
| 17 |
|
|
| 13 |
|
|
| 25 |
|
|
| 38 |
|
|
| (53 | ) |
|
| 80 |
|
|
| 27 |
|
Certificates of deposit |
|
| (47 | ) |
|
| (246 | ) |
|
| (293 | ) |
|
| (105 | ) |
|
| (757 | ) |
|
| (862 | ) |
|
| 337 |
|
|
| 2,365 |
|
|
| 2,702 |
|
Federal Home Loan Bank advances |
|
| (140 | ) |
|
| 120 |
|
|
| (20 | ) |
|
| (216 | ) |
|
| 94 |
|
|
| (122 | ) |
|
| 66 |
|
|
| 381 |
|
|
| 447 |
|
Total interest-bearing liabilities |
|
| (47 | ) |
|
| (174 | ) |
|
| (221 | ) |
|
| (143 | ) |
|
| (617 | ) |
|
| (760 | ) |
|
| 50 |
|
|
| 3,286 |
|
|
| 3,336 |
|
Net increase (decrease) in net |
| $ | 374 |
|
| $ | 556 |
|
| $ | 930 |
|
| $ | 1,256 |
|
| $ | 218 |
|
| $ | 1,474 |
|
| $ | 1,396 |
|
| $ | (1,994 | ) |
| $ | (598 | ) |
Comparison of Operating Results for the Three Months Ended June 30,March 31, 2023 and March 31, 2022 and June 30, 2021
General. Net income increaseddecreased by $203,000,$408,000, or 14.1%29.1%, to $1.6 million$993,000 for the three months ended June 30, 2022March 31, 2023 from $1.4 million for the three months ended June 30, 2021. The increaseMarch 31, 2022. This decrease was due to an increasea decrease of $598,000 in net interest income and a decrease of $930,000,$61,000 in non-interest income, offset by a decrease of $24,000 in non-interest expense and a decrease of $227,000 in income of $280,000 and an increase of $154,000 in the provision for loan losses.tax expense.
Interest Income. Interest income increased $709,000,$2.7 million, or 11.4%43.6%, to $6.9$9.0 million for the three months ended June 30, 2022.March 31, 2023. The increase reflected an $18.2a $107.1 million increase in the average balance of interest-earnings assets, and a 29an 85 basis points increase in the average yield on interest-earning assets to 3.46%4.06% for the three months ended June 30, 2022March 31, 2023 from 3.17%3.21% for the three months ended June 30, 2021.March 31, 2022.
Interest income on cash and cash equivalents decreased $13,000,increased $76,000, or 31.7%262.1%, to $28,000$105,000 for the three months ended June 30, 2022March 31, 2023 from $41,000$29,000 for the three months ended June 30, 2021March 31, 2022 due a 467 basis point increase in the average yield on cash and cash equivalents from 0.17% for the three months ended March 31, 2022 to 4.84% for the three months ended March 31, 2023 due to the higher interest rate environment. This was offset by a $79.2$62.7 million decrease in the average balance of cash and cash equivalents to $20.7$8.8 million for the three months ended June 30, 2022March 31, 2023 from $100.0$71.5 million for the three months ended June 30, 2021,March 31, 2022, reflecting the use of excess liquidity to fund loan originations and purchase investment securities. This was offset by a 39 basis point increase in the average yield on cash and cash equivalents from 0.16% for the three months ended June 30, 2021 to 0.55% for the three months ended June 30, 2022 due to the higher interest rate environment.
Interest income on loans increased $164,000,$2.2 million, or 2.9%39.0%, to $5.8$7.7 million for the three months ended June 30, 2022March 31, 2023 compared to $5.7$5.5 million for the three months ended June 30, 2021March 31, 2022 due primarily to $146.1 million increase in the average balance of loans to $718.0 million for the three months ended March 31, 2023 from $571.8 million for the three months ended March 31, 2022 and a nine42 basis point increase in the average yield on loans from 3.86%3.90% for the three months ended June 30, 2021March 31, 2022 to 3.95%4.32% for the three months ended June 30, 2022 andMarch 31, 2023. The increase was offset by a $2.6 million increase in the average balance of loans to $593.7 million$347,000 reserve for the three months ended June 30, 2022 from $591.1 million for the three months ended June 30,nonaccrual interest on a delinquent construction
3432
2021.loan.
Interest income on securities increased $578,000,$438,000, or 143.9%66.6%, to $979,000$1.1 million for the three months ended June 30, 2022March 31, 2023 from $401,000$658,000 for the three months ended June 30, 2021March 31, 2022 due primarily to a 29 basis point increase in the average yield from 1.86% for the three months ended June 30, 2021 to 2.15% for the three months ended June 30, 2022. The increase was also due to a $95.7$23.2 million increase in the average balance of securities to $182.3$162.0 million for the three months ended June 30, 2022March 31, 2023 from $86.6$138.8 million for the three months ended June 30, 2021,March 31, 2022, reflecting the purchase of investments with excess liquidity.liquidity, and a 81 basis point increase in the average yield from 1.90% for the three months ended March 31, 2022 to 2.71% for the three months ended March 31, 2023.
Interest Expense. Interest expense decreased $221,000,increased $3.3 million, or 15.5%288.6%, to $4.5 million for the three months ended March 31, 2023 from $1.2 million for the three months ended June 30, 2022 from $1.4 million for the three months ended June 30, 2021.March 31, 2022. The decreaseincrease primarily reflected a 17165 basis point decreaseincrease in the average cost of interest-bearing liabilities to 2.38% for the three months ended March 31, 2023 from 0.73% for the three months ended June 30, 2022 from 0.90% for the three months ended June 30, 2021.March 31, 2022.
Interest expense on interest-bearing deposits decreased $201,000,increased $2.9 million, or 19.1%349.8%, to $850,000 for the three months ended June 30, 2022 from $1.1$3.7 million for the three months ended June 30, 2021.March 31, 2023 from $826,000 for the three months ended March 31, 2022. The decreaseincrease was due primarily to a 19165 basis point decreaseincrease in the average cost of interest-bearing deposits to 0.59%2.25% for the three months ended June 30, 2022March 31, 2023 from 0.78%0.60% for the three months ended June 30, 2021.March 31, 2022. The decreaseincrease in the average cost of deposits was due to lower average balancesthe higher interest rate environment and lower average costs of certificates of deposit. This decrease was offset by a $40.3 millionan increase in the average balancebalances of total depositscertificates of deposit of $152.3 million to $579.2$503.4 million for the three months ended June 30, 2022March 31, 2023 from $539.0$351.0 million for the three months ended June 30, 2021.March 31, 2022.
Interest expense on Federal Home Loan Bank borrowings decreased $20,000,increased $447,000, or 5.4%135.5%, from $376,000$330,000 for the three months ended June 30, 2021March 31, 2022 to $356,000$777,000 for the three months ended June 30, 2022.March 31, 2023. The decreaseincrease was due to a decrease in the average balance of borrowings of $13.8 million to $86.4 million for the three months ended June 30, 2022 from $100.3 million for the three months ended June 30, 2021. The decrease was offset by an increase in the average cost of borrowings of nine164 basis points to 1.59%3.27% for the three months ended June 30, 2022March 31, 2023 from 1.50%1.63% for the three months ended June 30, 2021March 31, 2022 due to new borrowings at higher rates. The increase was also due to an increase in the higher borrowing rates.average balance of borrowings of $14.3 million to $96.5 million for the three months ended March 31, 2023 from $82.3 million for the three months ended March 31, 2022.
Net Interest Income. Net interest income increased $930,000,decreased $598,000, or 19.5%11.7%, to $5.7$4.5 million for the three months ended June 30, 2022March 31, 2023 from $4.8$5.1 million for the three months ended June 30, 2021.March 31, 2022. The increasedecrease reflected a 45an 80 basis point increasedecrease in our net interest rate spread to 2.73%1.68% for the three months ended June 30, 2022March 31, 2023 from 2.28%2.48% for the three months ended June 30, 2021.March 31, 2022. Our net interest margin increased 41decreased 59 basis points to 2.85%2.05% for the three months ended June 30, 2022March 31, 2023 from 2.44%2.64% for the three months ended June 30, 2021.March 31, 2022.
Provision for LoanCredit Losses. We recorded a $100,000no provision for loancredit losses the three months ended June 30, 2022 and recorded a $54,000 credit for the three-month period ended June 30, 2021. Higher balances in residential loans were the reason for the provision for the three months ended June 30,March 31, 2023 or the three-month period ended March 31, 2022. As of January 1, 2023, the Bank adopted CECL and recorded a one-time adjustment of $157,000 to the allowance for credit losses. The absence of a provision reflects that the Bank continues to havehad a low level of delinquent and non-accrual loansdecrease in the size of the loan portfolio, as well as no charge-offs. Non-performing assets were $1.9$12.9 million, or 0.21%1.35% of total assets, at June 30, 2022.March 31, 2023. The allowance for loan losses was $2.3$2.7 million, or 0.36%0.38% of loans outstanding and 120.8%21.4% of nonperforming loans, at June 30, 2022.March 31, 2023. The Bank has one commercial construction loan located in Totowa, New Jersey that is collateral dependent with a balance of $10.9 million with a loan to value ratio of 46% based on a recent appraisal.
Non-Interest Income. Non-interest income decreased by $280,000,$61,000, or 52.4%17.8%, to $254,000$283,000 for the three months ended June 30, 2022March 31, 2023 from $533,000$344,000 for the three months ended June 30, 2021.March 31, 2022. Gain on sale of loans decreased $284,000$74,000 as the Bank decided to portfolio loans rather than sell loans. This decrease wasloan originations were lower in 2023 and fees and other income decreased $30,000. These decreases were partially offset by a $24,000, or 16.7%,an increase in income from bank-owned life insurance of $30,000, or 19.2%, due to $169,000 for the three months ended June 30, 2022 from $145,000 for the three months ended June 30, 2022.higher balances during 2023, and an increase in fee and service charges of $13,000.
Non-Interest Expense. For the three months ended June 30, 2022,March 31, 2023, non-interest expense increased $17,000,decreased $24,000, or 0.5%0.7%, over the comparable 20212022 period. Salaries and employee benefits increased $63,000,$99,000, or 3.1%4.8%, due to the new stock compensation plan established in September 2021. Data processing expense increased $18,000,a higher employee count and annual merit increases. Director fees decreased $55,000, or 5.9%25.8%, due to higher data processing expense associated with being a larger organization. Professional fees decreased $57,000, or 27.5%, due in part to lower legal expense in 2022. Merger fees expenses were $74,000 in 2021.pension expense. The increase in occupancy and equipment expensesadvertising expense of $48,000,$26,000, or 16.2%21.6%, was due to increased costsadditional promotions for the acquired Gibraltar Bank branchesbranch locations and the new Hasbrouck Heights branch office.promotions on deposit and loan products. Other expense decreased $142,000, or 44.2%, due to lower deferred compensation expense and other various expenses.
3533
Income Tax Expense. Income tax expense increased $277,000,decreased $227,000, or 80.1%43.3%, to $623,000$298,000 for the three months ended June 30, 2022March 31, 2023 from $346,000$525,000 for the three months ended June 30, 2021.March 31, 2022. The increase was due to $422,000$689,000 of higherlower taxable income. The effective tax rate for the three months ended June 30,March 31, 2023 and 2022 were 23.09% and 2021 were 27.51% and 19.38%27.27%, respectively.
Comparison of Operating Results for the Six Months Ended June 30, 2022 and 2021
General. Net income decreased by $1.4 million, or 31.5%, to $3.0 million for the six months ended June 30, 2022 from $4.4 million for the six months ended June 30, 2021. The decrease was due to a decrease in non-interest income of $2.3 million, an increase in non-interest expenses of $126,000, an increase in provision for loan losses of $213,000, an increase of $284,000 in income taxes offset by an increase in net interest income of $1.5 million.
Interest Income. Interest income increased $714,000, or 5.7%, to $13.2 million for the six months ended June 30, 2022 from $12.5 million for the six months ended June 30, 2021. The increase reflected a $29.1 million increase in the average balance of interest-earnings assets, and a six basis point increase in the average yield on interest-earning assets to 3.33% for the six months ended June 30, 2022 from 3.27% for the six months ended June 30, 2021.
Interest income on cash and cash equivalents decreased $34,000, or 37.4%, to $57,000 for the six months ended June 30, 2022 from $91,000 for the six months ended June 30, 2021 due to a $49.6 million decrease in the average balance of cash and cash equivalents to $46.0 million for the six months ended June 30, 2022 from $95.6 million for the six months ended June 30, 2021, reflecting the use of excess liquidity to fund loan originations and purchase investment securities. This was offset by a six basis point increase in the average yield on cash and cash equivalents from 0.19% for the six months ended June 30, 2021 to 0.25% for the six months ended June 30, 2022 due to the higher interest rate environment.
Interest income on loans increased $236,000, or 2.1%, to $11.4 million for the six months ended June 30, 2022 compared to $11.2 million for the six months ended June 30, 2021 due to a nine basis point increase in the average yield on loans from 3.83% for the six months ended June 30, 2021 to 3.92% for the six months ended June 30, 2022 offset by a $2.5 million decrease in the average balance of loans to $582.8 million for the six months ended June 30, 2022 from $585.3 million for the six months ended June 30, 2021.
Interest income on securities increased $550,000, or 51.7%, to $1.6 million for the six months ended June 30, 2022 from $1.1 million for the six months ended June 30, 2021 due to an $82.2 million increase in the average balance of securities to $160.7 million for the six months ended June 30, 2022 from $78.5 million for the six months ended June 30, 2021, reflecting the purchase of investments with excess liquidity. The increase was offset by a 73 basis point decrease in the average yield from 2.77% for the six months ended June 30, 2021 to 2.04% for the six months ended June 30, 2022.
Interest Expense. Interest expense decreased $760,000, or 24.3%, to $2.4 million for the six months ended June 30, 2022 from $3.1 million for the six months ended June 30, 2021. The decrease primarily reflected a 28 basis point decrease in the average cost of interest-bearing liabilities to 0.73% for the six months ended June 30, 2022 from 1.01% for the six months ended June 30, 2021, offset by a $29.4 million, or 4.7%, increase in the average balance of interest-bearing liabilities from $625.2 million for the six months ended June 30, 2021 to $684.6 million for the six months ended June 30, 2022.
Interest expense on interest-bearing deposits decreased $638,000, or 27.6%, to $1.7 million for the six months ended June 30, 2022 from $2.3 million for the six months ended June 30, 2021. The decrease was due primarily to a 31 basis point decrease in the average cost of interest-bearing deposits to 0.59% for the six months ended June 30, 2022 from 0.90% for the six months ended June 30, 2021. The decrease in the average cost of deposits was due to lower average balances and lower average costs of certificates of deposit. This decrease was offset by a $48.9 million increase in the average balance of deposits to $570.2 million for the six months ended June 30, 2022 from $521.3 million for the six months ended June 30, 2021.
Interest expense on Federal Home Loan Bank borrowings decreased $122,000, or 15.1%, from $808,000 for the six months ended June 30, 2021 to $686,000 for the six months ended June 30, 2022. The decrease was due to a
36
decrease in the average balance of borrowings of $19.5 million to $84.4 million for the six months ended June 30, 2022 from $103.9 million for the six months ended June 30, 2021. The decrease was offset by an increase in the average cost of borrowings of seven basis points to 1.64% for the six months ended June 30, 2022 from 1.57% for the six months ended June 30, 2021 due to the higher borrowing rates.
Net Interest Income. Net interest income increased $1.5 million, or 15.8%, to $10.8 million for the six months ended June 30, 2022 from $9.4 million for the six months ended June 30, 2021. The increase reflected a 34 basis point increase in our net interest rate spread to 2.61% for the six months ended June 30, 2022 from 2.27% for the six months ended June 30, 2021. Our net interest margin increased 29 basis points to 2.75% for the six months ended June 30, 2022 from 2.46% for the six months ended June 30, 2021.
Provision for Loan Losses. We recorded a $100,000 provision for loan losses for the six months ended June 30, 2022 compared to a $113,000 credit for the six month period ended June 30, 2021. Higher balances in residential and construction loans were the reason for the provision for the six months ended June 30, 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-Interest Income. Non-interest income decreased by $2.3 million, or 79.0%, to $598,000 for the six months ended June 30, 2022 from $2.9 million for the six months ended June 30, 2021. For the six months ended June 30, 2021, there was a $1.9 million bargain purchase gain recognized in the Gibraltar Bank acquisition in 2021. Gain on sale of loans decreased $433,000 or 83.3%, to $87,000 for the six months ended June 30, 2022 from $520,000 for the six months ended June 30, 2021. Bank-owned life insurance income increased $91,000, or 38.6% to $325,000 for the six months ended June 30, 2022 from $235,000 for the six months ended June 30, 2021.
Non-Interest Expense. For the six months ended June 30, 2022, non-interest expense increased $126,000, or 1.8%, to $7.1 million, over the comparable 2021 period. Salaries and employee benefits increased $588,000, or 16.4%, due to the new stock compensation plan started in September 2021. Data processing expense increased $88,000, or 17.0%, due to higher data processing expense associated with a larger company. Advertising expense increased $92,000 due to additional promotions for branch locations and new promotions. Professional fees decreased $172,000, or 36.8%, due to lower consulting expense. Merger fees and core conversion costs were $752,000 in 2021. The increase in equipment and occupancy expenses of $126,000, or 22.4%, was mainly due to the additional branch locations.
Income Tax Expense. Income tax expense increased $284,000, to $1.1 million for the six months ended June 30, 2022 from $864,000 for the six months ended June 30, 2021. The increase was due to $683,000 of higher taxable income. The effective tax rate for the six months ended June 30, 2022 and 2021 were 27.40% and 16.28% respectively.
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.deposits and borrowings. 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 significant 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.
37
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 and 200 basis points from current market rates.
The following table presents the estimated changes in our net portfolio value that would result from changes in market interest rates as June 30, 2022.March 31, 2023. All estimated changes presented in the table are within the policy limits approved by the board of directors.
|
| NPV |
|
| NPV as Percent of Portfolio |
|
| NPV |
|
| NPV as Percent of Portfolio |
| ||||||||||||||||||||||||||||
|
| (Dollars in thousands) |
|
|
|
|
|
|
|
| (Dollars in thousands) |
|
|
|
|
|
|
| ||||||||||||||||||||||
Basis Point (“bp”) Change in |
| Dollar |
|
| Dollar |
|
| Percent |
|
| NPV Ratio |
|
| Change |
|
| Dollar |
|
| Dollar |
|
| Percent |
|
| NPV Ratio |
|
| Change |
| ||||||||||
400 bp |
| $ | 95,325 |
|
| $ | (24,326 | ) |
|
| (20.33 | )% |
|
| 12.66 | % |
|
| (9.64 | )% |
| $ | 70,593 |
|
| $ | (51,023 | ) |
|
| (41.95 | )% |
|
| 8.59 | % |
|
| (34.86 | )% |
300 bp |
|
| 105,258 |
|
|
| (14,393 | ) |
|
| (12.03 | ) |
|
| 13.56 |
|
|
| (3.21 | ) |
|
| 83,324 |
|
|
| (38,292 | ) |
|
| (31.49 | ) |
|
| 9.87 |
|
|
| (24.89 | ) |
200 bp |
|
| 113,983 |
|
|
| (5,668 | ) |
|
| (4.74 | ) |
|
| 14.22 |
|
|
| 1.50 |
|
|
| 95,749 |
|
|
| (25,867 | ) |
|
| (21.27 | ) |
|
| 11.02 |
|
|
| (16.13 | ) |
100 bp |
|
| 119,476 |
|
|
| (175 | ) |
|
| (0.15 | ) |
|
| 14.43 |
|
|
| 3.00 |
|
|
| 109,674 |
|
|
| (11,942 | ) |
|
| (9.82 | ) |
|
| 12.23 |
|
|
| (6.93 | ) |
— |
|
| 119,651 |
|
|
| — |
|
|
| — |
|
|
| 14.01 |
|
|
|
|
|
| 121,616 |
|
|
| — |
|
|
| — |
|
|
| 13.14 |
|
|
|
| ||
(100) bp |
|
| 119,403 |
|
|
| (248 | ) |
|
| (1.16 | ) |
|
| 14.68 |
|
|
| 4.78 |
|
|
| 129,016 |
|
|
| 7,400 |
|
|
| 6.09 |
|
|
| 13.52 |
|
|
| 2.89 |
|
(200) bp |
|
| 119,001 |
|
|
| (650 | ) |
|
| (3.16 | ) |
|
| 14.71 |
|
|
| 6.78 |
|
|
| 137,342 |
|
|
| 15,726 |
|
|
| 12.93 |
|
|
| 13.96 |
|
|
| 6.24 |
|
34
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.
38
As of June 30, 2022,March 31, 2023, 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 |
| Change in Net Interest Income Year One |
|
| Change in Net Interest Income Year One |
| ||
400 |
| (15.09)% |
|
|
| (15.23 | )% | |
300 |
|
| (10.97 | ) |
|
| (11.47 | ) |
200 |
|
| (6.80 | ) |
|
| (7.79 | ) |
100 |
|
| (2.67 | ) |
|
| (3.84 | ) |
— |
| — |
|
| — |
| ||
(100) |
|
| (0.86 | ) |
|
| 2.74 |
|
(200) |
|
| 2.86 |
|
|
| 3.94 |
|
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 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 June 30, 2022,March 31, 2023, we had the ability to borrow up to $260.0$336.8 million, of which $115.0$112.6 million was outstanding and $1.5 million was utilized as collateral for letters of credit issued to secure municipal deposits. At June 30, 2022,March 31, 2023, we had $51.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.
35
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 enoughample sources of liquidity to satisfy our short- and long-term liquidity needs as of June 30, 2022.March 31, 2023.
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 June 30, 2022,March 31, 2023, cash and cash equivalents totaled $7.6$24.5 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $97.5$82.1 million at June 30, 2022.March 31, 2023.
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 June 30, 2022March 31, 2023 totaled $206.1$320.3 million, or 33.7%46.4% 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.
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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 June 30, 2022,March 31, 2023, 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 June 30, 2022,March 31, 2023, the Bank is reporting as a qualifying community bank with a ratio of 17.50%15.60%.
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 June 30, 2022.March 31, 2023. 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 sixthree months ended June 30, 2022,March 31, 2023, 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
Item 1. Legal Proceedings
At June 30, 2022March 31, 2023 we were 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
ThereExcept noted below, 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, 2021.2022.
Recent bank industry events involving financial institution failures may adversely affect our business and the market price of our common stock.
Recent developments and events in the financial services industry, including the failures of Silicon Valley Bank, Signature Bank and First Republic Bank and the voluntary liquidation of Silvergate Bank, have resulted in decreased confidence in banks among depositors, other counterparties and investors, as well as significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets. These events have occurred against the backdrop of a rapidly rising interest rate environment which, among other things, has resulted in unrealized losses in longer duration securities and loans held by banks, more competition for bank deposits and may increase the risk of a potential recession. These events and developments could materially and adversely impact our business or financial condition, including through potential liquidity pressures, reduced net interest margins, and potential increased credit losses. These recent events and developments have, and could continue to, adversely impact the market price and volatility of our common stock. These recent events may also result in changes to laws or regulations governing banks and bank holding companies or result in the impositions of restrictions through supervisory or enforcement activities, including higher capital requirements, which could have a material impact on our businesses. The cost of resolving the recent failures may prompt the FDIC to increase its premiums above the recently increased levels or to issue additional special assessments.
Lawmakers’ failure to address the federal debt ceiling in a timely manner, downgrades of the U.S. credit rating and uncertain credit and financial market conditions may affect the stability of securities issued or guaranteed by the federal government, which may affect the valuation or liquidity of our investment securities portfolio and increase future borrowing costs.
As a result of uncertain political, credit and financial market conditions, including the potential consequences of the federal government defaulting on its obligations for a period of time due to federal debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose credit default and liquidity risks. Given that future deterioration in the U.S. credit and financial markets is a possibility, no assurance can be made that losses or significant deterioration in the fair value of our U.S. government issued or guaranteed investments will not occur. At March 31, 2023, we had approximately $15.1 million and $50.8 million invested in U.S. government agency securities and residential mortgage-backed securities issued or guaranteed by government-sponsored enterprises, respectively, and $5.0 million in U.S. treasury securities. Downgrades to the U.S. credit rating could affect the stability of securities issued or guaranteed by the federal government and the valuation or liquidity of our portfolio of such investment securities, and could result in our counterparties requiring additional collateral for our borrowings. Further, unless and until U.S. political, credit and financial market conditions have been sufficiently resolved or stabilized, it may increase our future borrowing costs.
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 was approximately 5% of its then outstanding common stock (excluding shares held by Bogota Financial, MHC). On April 11,October 3, 2022, the Company announced it completed its initial 5% buyback plan, purchasing 296,044 shares.
On May 25, 2022, the Company’s Board of Directors approvedthat is has received regulatory approval for the repurchase of 292,568up to 556,631 shares of its common stock which is approximately 5%10% of its then outstanding common stock (excluding
37
(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. On May 5, 2023, the Company announced the completion of the repurchase program.
The following table provides information on repurchases by the Company of its common stock under the Company's Board approved programs for the second quarter:
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 |
| ||||
April 1 - 30, 2022 |
|
| 69,392 |
|
| $ | 10.81 |
|
|
| 69,392 |
|
|
| - |
|
May 1 - 31, 2022 |
|
| 2,000 |
|
|
| 11.15 |
|
|
| 2,000 |
|
|
| 290,568 |
|
June 1 - 30, 2022 |
|
| 146,056 |
|
|
| 11.17 |
|
|
| 146,056 |
|
|
| 144,512 |
|
Total |
|
| 217,448 |
|
| $ | 11.05 |
|
| $ | 217,448 |
|
|
|
|
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, 2023 |
|
| 71,460 |
|
| $ | 11.50 |
|
|
| 71,460 |
|
|
| 124,799 |
|
February 1 - 28, 2023 |
|
| - |
|
|
| — |
|
|
| - |
|
|
| 124,799 |
|
March 1 - 31, 2023 |
|
| 55,200 |
|
|
| 10.56 |
|
|
| 55,200 |
|
|
| 69,599 |
|
Total |
|
| 126,660 |
|
| $ | 11.09 |
|
|
| 126,660 |
|
|
|
|
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 | ||
3.2 | ||
4.1 | ||
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 | ||
101.0 | The following materials for the quarter ended | |
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: | /s/ Joseph Coccaro | |
Joseph Coccaro | ||
President and Chief Executive Officer | ||
Date: | /s/ Brian McCourt | |
Brian McCourt | ||
Executive Vice President and Chief Financial Officer |
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