UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

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

For the quarterly period ended June 30, 2022

 30, 2021

OR

OR

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

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

For the transition period from _______________ to _______________

 

Commission File No. 001-39180

 

Bogota Financial Corp.

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

 

84-3501231

(State or Other Jurisdiction of
Incorporation or Organization)

 

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

 

 

 

819 Teaneck Road

Teaneck, New Jersey

 

 

07666

(Address of Principal Executive Offices)

 

(Zip Code)

 

(201) (201) 862-0660

(Registrant’s Telephone Number, Including Area Code)

 

N/A

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

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange
on which registered

Common Stock, $0.01 par value per share

 

BSBK

 

The Nasdaq Stock Market, LLC

 

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

 

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

 

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

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

 

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

 

As of July 31, 2021, 2022, there were 14,425,44114,142,621 shares issued and outstanding of the registrant’s common stock, par value $0.01 per share

 

 


Bogota Financial Corp.

Form 10-Q

 

Table of Contents

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

 

Financial Statements

 

1

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition at June 30, 20212022 (unaudited) and December 31, 20202021.

 

1

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three and Six Months Ended June 30, 20212022 and 20202021 (unaudited)

 

2

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 20212022 and 20202021 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Equity for the Three and Six Months Ended June 30, 20212022 and 20202021 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 20212022 and 20202021 (unaudited)

 

5

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

7

 

 

 

 

 

Item 2.

 

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

 

2728

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

4140

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

4140

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

4241

 

 

 

 

 

Item 1A.

 

Risk Factors

 

4241

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

4241

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

4241

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

4241

 

 

 

 

 

Item 5.

 

Other Information

 

4241

 

 

 

 

 

Item 6.

 

Exhibits

 

4342

 

 

 

 

 

 

 

SIGNATURES

 

4443

 

 

 

i


 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

 

As of

 

 

As of

 

 

As of

 

 

As of

 

 

June 30, 2021

 

 

December 31, 2020

 

 

June 30, 2022

 

 

December 31, 2021

 

Assets

 

(unaudited)

 

 

 

 

 

 

(unaudited)

 

 

 

 

Cash and due from banks

 

$

6,153,193

 

 

$

5,957,564

 

 

$

6,781,706

 

 

$

14,446,792

 

Interest-bearing deposits in other banks

 

 

94,517,618

 

 

 

74,428,175

 

 

 

822,524

 

 

 

90,621,993

 

Cash and cash equivalents

 

 

100,670,811

 

 

 

80,385,739

 

 

 

7,604,230

 

 

 

105,068,785

 

Securities available for sale

 

 

11,223,212

 

 

 

11,870,508

 

 

 

97,507,693

 

 

 

41,838,798

 

Securities held to maturity (fair value of $78,486,099 and $58,872,451,

respectively)

 

 

77,656,637

 

 

 

57,504,443

 

Loan held for sale

 

 

893,600

 

 

 

 

Loans, net of allowance of $2,128,174 and $2,241,174, respectively

 

 

583,751,887

 

 

 

557,690,853

 

Securities held to maturity (fair value of $79,858,396 and $74,081,059,
respectively)

 

 

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

 

 

7,896,029

 

 

 

5,671,097

 

 

 

8,006,717

 

 

 

8,127,979

 

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

 

 

5,457,100

 

 

 

5,928,100

 

 

 

6,076,700

 

 

 

4,851,300

 

Accrued interest receivable

 

 

2,690,816

 

 

 

2,855,425

 

 

 

3,007,407

 

 

 

2,712,605

 

Core deposit intangibles

 

 

380,331

 

 

 

 

 

 

300,827

 

 

 

336,364

 

Bank-owned life insurance

 

 

25,150,470

 

 

 

16,915,637

 

 

 

29,836,866

 

 

 

24,524,122

 

Other assets

 

 

3,081,402

 

 

 

2,083,076

 

 

 

5,001,976

 

 

 

4,486,366

 

Total Assets

 

$

818,852,295

 

 

$

740,904,878

 

 

$

874,945,136

 

 

$

837,361,587

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

$

31,771,385

 

 

$

27,061,629

 

 

$

39,442,245

 

 

$

39,317,500

 

Interest bearing deposits

 

 

537,419,334

 

 

 

474,911,402

 

 

 

571,847,021

 

 

 

558,162,278

 

Total Deposits

 

 

569,190,719

 

 

 

501,973,031

 

 

 

611,289,266

 

 

 

597,479,778

 

FHLB advances

 

 

96,996,554

 

 

 

104,290,920

 

 

 

115,278,743

 

 

 

85,051,736

 

Advance payments by borrowers for taxes and insurance

 

 

3,566,955

 

 

 

2,560,089

 

 

 

3,431,613

 

 

 

2,856,120

 

Other liabilities

 

 

4,475,965

 

 

 

3,612,762

 

 

 

4,484,720

 

 

 

4,397,742

 

Total liabilities

 

 

674,230,193

 

 

 

612,436,802

 

 

 

734,484,342

 

 

 

689,785,376

 

Commitments and Contingencies-see note 6

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock $0.01 par value 1,000,000 shares authorized, 0ne issued

and outstanding at June 30, 2021 and December 31, 2020.

 

 

 

 

 

 

Common stock $0.01 par value, 30,000,000 shares authorized, 14,425,441

issued and outstanding at June 30, 2021 and 13,157,525 at December 31, 2020

 

 

144,254

 

 

 

131,575

 

Additional Paid-In capital

 

 

68,437,376

 

 

 

56,975,187

 

Preferred stock $0.01 par value 1,000,000 shares authorized, NaN
issued and outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock $0.01 par value, 30,000,000 shares authorized,
14,207,860 issued and outstanding at June 30, 2022 and
14,605,809 at December 31, 2021

 

 

142,078

 

 

 

146,057

 

Additional paid-in capital

 

 

64,401,403

 

 

 

68,247,204

 

Retained earnings

 

 

81,804,768

 

 

 

77,359,737

 

 

 

87,922,716

 

 

 

84,879,812

 

Unearned ESOP shares (476,721 at June 30, 2021 and 489,983 shares at

December 31, 2020)

 

 

(5,574,808

)

 

 

(5,725,410

)

Unearned ESOP shares (449,977 shares at June 30, 2022 and
463,239 shares at December 31, 2021)

 

 

(5,273,604

)

 

 

(5,424,206

)

Accumulated other comprehensive loss

 

 

(189,488

)

 

 

(273,013

)

 

 

(6,731,799

)

 

 

(272,656

)

Total stockholders’ equity

 

 

144,622,102

 

 

 

128,468,076

 

 

 

140,460,794

 

 

 

147,576,211

 

Total liabilities and stockholders’ equity

 

$

818,852,295

 

 

$

740,904,878

 

 

$

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

June 30,

 

 

Six months ended

June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Three months ended
June 30,

 

 

Six months ended
June 30,

 

 

(unaudited)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

5,684,881

 

 

$

5,245,931

 

 

$

11,149,842

 

 

$

10,343,182

 

 

$

5,848,522

 

 

$

5,684,881

 

 

$

11,385,602

 

 

$

11,149,842

 

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

388,604

 

 

 

405,146

 

 

 

1,062,151

 

 

 

836,199

 

 

 

932,714

 

 

 

388,604

 

 

 

1,569,835

 

 

 

1,062,151

 

Tax-exempt

 

 

12,798

 

 

 

13,220

 

 

 

25,383

 

 

 

24,881

 

 

 

46,282

 

 

 

12,798

 

 

 

67,278

 

 

 

25,383

 

Other interest-earning assets

 

 

115,256

 

 

 

151,913

 

 

 

238,260

 

 

 

529,276

 

 

 

83,682

 

 

 

115,256

 

 

 

167,495

 

 

 

238,260

 

Total interest income

 

 

6,201,539

 

 

 

5,816,210

 

 

 

12,475,636

 

 

 

11,733,538

 

 

 

6,911,200

 

 

 

6,201,539

 

 

 

13,190,210

 

 

 

12,475,636

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

1,050,546

 

 

 

2,041,512

 

 

 

2,314,228

 

 

 

4,357,833

 

 

 

849,808

 

 

 

1,050,546

 

 

 

1,675,992

 

 

 

2,314,228

 

FHLB advances

 

 

376,508

 

 

 

488,854

 

 

 

807,633

 

 

 

1,005,926

 

 

 

356,203

 

 

 

376,508

 

 

 

686,036

 

 

 

807,633

 

Total interest expense

 

 

1,427,054

 

 

 

2,530,366

 

 

 

3,121,861

 

 

 

5,363,759

 

 

 

1,206,011

 

 

 

1,427,054

 

 

 

2,362,028

 

 

 

3,121,861

 

Net interest income

 

 

4,774,485

 

 

 

3,285,844

 

 

 

9,353,775

 

 

 

6,369,779

 

 

 

5,705,189

 

 

 

4,774,485

 

 

 

10,828,182

 

 

 

9,353,775

 

(Credit) provision for loan losses

 

 

(54,000

)

 

 

225,000

 

 

 

(113,000

)

 

 

250,000

 

Net interest income after (credit) provision for loan losses

 

 

4,828,485

 

 

 

3,060,844

 

 

 

9,466,775

 

 

 

6,119,779

 

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

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

 

68,576

 

 

 

12,327

 

 

 

121,103

 

 

 

32,045

 

 

 

50,478

 

 

 

68,576

 

 

 

89,796

 

 

 

121,103

 

Gain on sale of loans

 

 

284,065

 

 

 

 

 

 

520,102

 

 

 

 

(Loss) gain on sale of loans

 

 

(217

)

 

 

284,065

 

 

 

86,913

 

 

 

520,102

 

Bargain purchase gain

 

 

 

 

 

 

 

 

1,933,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,933,397

 

Bank-owned life insurance

 

 

145,167

 

 

 

749,091

 

 

 

234,833

 

 

 

848,802

 

 

 

169,449

 

 

 

145,167

 

 

 

325,442

 

 

 

234,833

 

Other

 

 

35,480

 

 

 

6,228

 

 

 

42,459

 

 

 

8,182

 

 

 

34,007

 

 

 

35,480

 

 

 

95,989

 

 

 

42,459

 

Total non-interest income

 

 

533,288

 

 

 

767,646

 

 

 

2,851,894

 

 

 

889,029

 

 

 

253,717

 

 

 

533,288

 

 

 

598,140

 

 

 

2,851,894

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

2,035,467

 

 

 

1,202,387

 

 

 

3,574,387

 

 

 

2,459,986

 

 

 

2,098,897

 

 

 

2,035,467

 

 

 

4,162,244

 

 

 

3,574,387

 

Occupancy and equipment

 

 

294,694

 

 

 

159,376

 

 

 

561,173

 

 

 

328,916

 

 

 

342,381

 

 

 

294,694

 

 

 

686,810

 

 

 

561,173

 

FDIC insurance assessment

 

 

69,300

 

 

 

26,000

 

 

 

114,300

 

 

 

71,000

 

 

 

54,000

 

 

 

69,300

 

 

 

108,000

 

 

 

114,300

 

Data processing

 

 

312,527

 

 

 

165,211

 

 

 

520,836

 

 

 

311,237

 

 

 

330,840

 

 

 

312,527

 

 

 

609,187

 

 

 

520,836

 

Advertising

 

 

60,000

 

 

 

42,180

 

 

 

120,000

 

 

 

101,814

 

 

 

91,145

 

 

 

60,000

 

 

 

212,290

 

 

 

120,000

 

Director fees

 

 

216,880

 

 

 

178,894

 

 

 

415,119

 

 

 

365,176

 

 

 

203,534

 

 

 

216,880

 

 

 

418,325

 

 

 

415,119

 

Professional fees

 

 

208,849

 

 

 

192,572

 

 

 

467,766

 

 

 

324,906

 

 

 

151,490

 

 

 

208,849

 

 

 

295,753

 

 

 

467,766

 

Merger fees

 

 

73,932

 

 

 

 

 

 

392,197

 

 

 

 

 

 

 

 

 

73,932

 

 

 

 

 

 

392,197

 

Core conversion costs

 

 

 

 

 

 

 

 

360,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

360,000

 

Contribution to charitable foundation

 

 

 

 

 

 

 

 

 

 

 

2,881,500

 

Other

 

 

305,484

 

 

 

193,070

 

 

 

483,801

 

 

 

387,771

 

 

 

321,585

 

 

 

305,484

 

 

 

642,538

 

 

 

483,801

 

Total non-interest expense

 

 

3,577,133

 

 

 

2,159,690

 

 

 

7,009,579

 

 

 

7,232,306

 

 

 

3,593,872

 

 

 

3,577,133

 

 

 

7,135,147

 

 

 

7,009,579

 

Income (loss) before income taxes

 

 

1,784,640

 

 

 

1,668,800

 

 

 

5,309,090

 

 

 

(223,498

)

Income tax expense (benefit)

 

 

345,916

 

 

 

265,727

 

 

 

864,059

 

 

 

(288,988

)

Income before income taxes

 

 

2,265,034

 

 

 

1,784,640

 

 

 

4,191,175

 

 

 

5,309,090

 

Income tax expense

 

 

623,027

 

 

 

345,916

 

 

 

1,148,271

 

 

 

864,059

 

Net income

 

$

1,438,724

 

 

$

1,403,073

 

 

$

4,445,031

 

 

$

65,490

 

 

$

1,642,007

 

 

$

1,438,724

 

 

$

3,042,904

 

 

$

4,445,031

 

Earnings per Share (basic and diluted)

 

$

0.10

 

 

$

0.11

 

 

$

0.33

 

 

$

0.01

 

Weighted average shares outstanding

 

 

13,945,423

 

 

 

12,650,748

 

 

 

13,528,822

 

 

 

11,675,010

 

Earnings per Share - basic

 

$

0.12

 

 

$

0.10

 

 

$

0.22

 

 

$

0.33

 

Earnings per Share - diluted

 

$

0.12

 

 

$

0.10

 

 

$

0.22

 

 

$

0.33

 

Weighted average shares outstanding - basic

 

 

13,662,222

 

 

 

13,945,423

 

 

 

13,760,002

 

 

 

13,528,822

 

Weighted average shares outstanding - diluted

 

 

13,701,674

 

 

 

13,945,423

 

 

 

13,800,168

 

 

 

13,528,822

 

See accompanying notes to unaudited consolidated financial statements.


2


BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)

 

 

Three months ended

June 30,

 

 

Six months ended

June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Three months ended
June 30,

 

 

Six months ended
June 30,

 

 

(unaudited)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

1,438,724

 

 

$

1,403,073

 

 

$

4,445,031

 

 

$

65,490

 

 

$

1,642,007

 

 

$

1,438,724

 

 

$

3,042,904

 

 

$

4,445,031

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net of unrealized holding (loss) gain arising during the

period

 

 

12,814

 

 

 

138,947

 

 

 

28,881

 

 

 

(57,784

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(5,762,044

)

 

 

12,814

 

 

 

(9,100,460

)

 

 

28,881

 

Tax effect

 

 

(3,602

)

 

 

(39,057

)

 

 

(8,118

)

 

 

16,244

 

 

 

1,619,711

 

 

 

(3,602

)

 

 

2,558,139

 

 

 

(8,118

)

Net of tax

 

 

9,212

 

 

 

99,890

 

 

 

20,763

 

 

 

(41,540

)

 

 

(4,142,333

)

 

 

9,212

 

 

 

(6,542,321

)

 

 

20,763

 

Defined benefit retirement plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain arising during the period including

changes in assumptions

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amortization of

prior service cost and net gain/loss included in

salaries and employee benefits

 

 

43,653

 

 

 

38,803

 

 

 

87,306

 

 

 

77,606

 

 

 

57,850

 

 

 

43,652

 

 

 

115,700

 

 

 

87,306

 

Tax effect

 

 

(12,271

)

 

 

(10,908

)

 

 

(24,542

)

 

 

(21,813

)

 

 

(16,261

)

 

 

(12,271

)

 

 

(32,522

)

 

 

(24,544

)

Net of tax

 

 

31,381

 

 

 

27,895

 

 

 

62,762

 

 

 

55,793

 

 

 

41,589

 

 

 

31,381

 

 

 

83,178

 

 

 

62,762

 

Total other comprehensive income

 

 

40,593

 

 

 

127,785

 

 

 

83,525

 

 

 

14,253

 

Comprehensive income

 

$

1,479,317

 

 

$

1,530,858

 

 

$

4,528,556

 

 

$

79,743

 

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

 

See accompanying notes to unaudited consolidated financial statements.

3


 


BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)

 

 

Common
Stock
Shares

 

 

Common
Stock

 

 

Additional Paid-in
Capital

 

 

 

Retained
Earnings

 

 

Unearned
ESOP shares

 

 

Accumulated
Other
Comprehensive
Income
(Loss)

 

 

Total stockholders'
Equity

 

Balance January 1, 2021

 

 

13,157,525

 

 

$

131,575

 

 

$

56,975,187

 

 

 

$

77,359,737

 

 

$

(5,725,410

)

 

$

(273,013

)

 

$

128,468,076

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

3,006,307

 

 

 

 

 

 

 

 

 

3,006,307

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,932

 

 

 

42,932

 

Issuance of common stock to Bogota MHC

 

 

1,267,916

 

 

 

12,679

 

 

 

11,487,321

 

 

 

 

 

 

 

 

 

 

 

 

 

11,500,000

 

ESOP Shares released (25,789 shares)

 

 

 

 

 

 

 

 

(14,466

)

 

 

 

 

 

 

75,301

 

 

 

 

 

 

60,835

 

Balance March 31, 2021

 

 

14,425,441

 

 

$

144,254

 

 

$

68,448,042

 

 

 

$

80,366,044

 

 

$

(5,650,109

)

 

$

(230,081

)

 

$

143,078,150

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 1, 2022

 

 

14,605,809

 

 

$

146,057

 

 

$

68,247,204

 

 

 

$

84,879,812

 

 

$

(5,424,206

)

 

$

(272,656

)

 

$

147,576,211

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

1,400,897

 

 

 

 

 

 

 

 

 

1,400,897

 

Stock based compensation

 

 

 

 

 

 

 

 

233,193

 

 

 

 

 

 

 

 

 

 

 

 

 

233,193

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,358,399

)

 

 

(2,358,399

)

Stock purchased and retired

 

 

(180,501

)

 

 

(1,805

)

 

 

(1,890,310

)

 

 

 

 

 

 

 

 

 

 

 

 

(1,892,115

)

ESOP shares released (25,789 shares)

 

 

 

 

 

 

 

 

(9,156

)

 

 

 

 

 

 

75,301

 

 

 

 

 

 

66,145

 

Balance March 31, 2022

 

 

14,425,308

 

 

$

144,252

 

 

$

66,580,931

 

 

 

$

86,280,709

 

 

$

(5,348,905

)

 

$

(2,631,055

)

 

$

145,025,932

 

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

 

 

 

Common

Stock Shares

 

 

Common

Stock

 

 

Paid-in

Capital

 

 

Retained

Earnings

 

 

Unearned

ESOP shares

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

 

Total stockholders'

Equity

 

Balance January 1, 2020

 

 

 

 

$

 

 

$

 

 

$

75,291,512

 

 

$

 

 

$

(313,665

)

 

 

$

74,977,847

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,337,583

)

 

 

 

 

 

 

 

 

 

(1,337,583

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(113,532

)

 

 

 

(113,532

)

Issuance of common stock for initial public offering,

   net of expenses

 

 

12,894,375

 

 

 

128,943

 

 

 

54,425,094

 

 

 

 

 

 

 

 

 

 

 

 

 

54,554,037

 

Issuance of common stock to the Charitable Foundation

 

 

263,150

 

 

 

2,632

 

 

 

2,628,868

 

 

 

 

 

 

 

 

 

 

 

 

 

2,631,500

 

Stock purchase by the ESOP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,022,899

)

 

 

 

 

 

 

(6,022,899

)

Balance March 31, 2020

 

 

13,157,525

 

 

$

131,575

 

 

$

57,053,962

 

 

$

73,953,929

 

 

$

(6,022,899

)

 

$

(427,197

)

 

 

$

124,689,370

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,403,073

 

 

 

 

 

 

 

 

 

 

1,403,073

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

127,785

 

 

 

 

127,785

 

ESOP shares released

 

 

 

 

 

 

 

 

 

 

(31,730

)

 

 

 

 

 

143,453

 

 

 

 

 

 

 

 

111,723

 

Balance June 30, 2020

 

 

13,157,525

 

 

$

131,575

 

 

$

57,022,232

 

 

$

75,357,002

 

 

$

(5,879,446

)

 

$

(299,412

)

 

 

$

126,331,951

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

(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

 

See accompanying notes to unaudited consolidated financial statements.

4



 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

For the six months ended

June 30,

 

 

For the six months ended
June 30,

 

 

2021

 

 

2020

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

4,445,031

 

 

$

65,490

 

 

$

3,042,904

 

 

$

4,445,031

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bargain purchase gain

 

 

(1,933,397

)

 

 

 

 

 

 

 

 

(1,933,397

)

Amortization of intangible asset, credit marks

 

 

(275,595

)

 

 

 

 

(Credit) provision for loan losses

 

 

(113,000

)

 

 

250,000

 

Amortization of intangible assets

 

 

(119,059

)

 

 

(275,595

)

Provision (credit) for loan losses

 

 

100,000

 

 

 

(113,000

)

Depreciation of premises and equipment

 

 

149,401

 

 

 

139,337

 

 

 

234,798

 

 

 

149,401

 

Amortization of deferred loan fees

 

 

331,462

 

 

 

309,726

 

Amortization of deferred loan(fees) costs, net

 

 

(41,279

)

 

 

331,462

 

Amortization of premiums and accretion of discounts on securities, net

 

 

103,369

 

 

 

68,148

 

 

 

38,625

 

 

 

103,369

 

Deferred income tax expense (benefit)

 

 

350,680

 

 

 

(829,801

)

Contribution to charitable foundation

 

 

 

 

 

2,631,500

 

Deferred income tax expense

 

 

76,209

 

 

 

350,680

 

Gain on sale of loans

 

 

(520,102

)

 

 

 

 

 

(86,913

)

 

 

(520,102

)

Proceeds from sale of loans

 

 

4,640,081

 

 

 

15,659,195

 

Origination of loans held for sale

 

 

(3,760,668

)

 

 

 

Increase in cash surrender value of bank owned life insurance

 

 

(234,833

)

 

 

(190,911

)

 

 

(312,745

)

 

 

(234,833

)

Employee stock ownership plan expense

 

 

125,471

 

 

 

111,723

 

 

 

136,615

 

 

 

125,471

 

Stock based compensation

 

 

466,386

 

 

 

 

Changes in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued interest receivable

 

 

467,536

 

 

 

(649,865

)

 

 

(294,802

)

 

 

467,536

 

Net changes in other assets

 

 

(519,057

)

 

 

1,199,748

 

 

 

1,933,798

 

 

 

(519,057

)

Net changes in other liabilities

 

 

503,921

 

 

 

855,799

 

 

 

202,678

 

 

 

503,921

 

Net cash provided by operating activities

 

 

2,880,887

 

 

 

3,960,894

 

 

 

6,256,628

 

 

 

18,540,082

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of securities held to maturity

 

 

(27,261,578

)

 

 

(11,664,965

)

 

 

(23,120,238

)

 

 

(27,261,578

)

Purchases of securities available for sale

 

 

(2,021,000

)

 

 

 

 

 

 

(67,461,181

)

 

 

(2,021,000

)

Maturities, calls, and repayments of securities available for sale

 

 

2,593,807

 

 

 

1,058,806

 

 

 

2,653,200

 

 

 

2,593,807

 

Maturities, calls, and repayments of securities held to maturity

 

 

14,151,334

 

 

 

13,147,253

 

 

 

10,740,997

 

 

 

14,151,334

 

Proceeds from sale of loans

 

 

15,659,195

 

 

 

 

Net decrease (increase) in loans

 

 

34,542,074

 

 

 

(49,213,588

)

Loans purchased

 

 

 

 

 

(1,869,667

)

Net (increase) decrease in loans

 

 

(60,612,691

)

 

 

34,542,074

 

Purchase of Bank Owned Life Insurance

 

 

(8,000,000

)

 

 

 

 

 

 

(5,000,000

)

 

 

(8,000,000

)

Net cash acquired in merger

 

 

19,393,090

 

 

 

 

 

 

 

 

 

19,393,090

 

Death benefit proceeds from bank owned life insurance

 

 

 

 

 

863,921

 

Purchases of premises and equipment

 

 

(945,972

)

 

 

(45,087

)

 

 

(113,536

)

 

 

(945,972

)

Purchase of FHLB Stock

 

 

(169,700

)

 

 

(789,100

)

Purchase of FHLB stock

 

 

(2,204,600

)

 

 

(169,700

)

Redemption of FHLB stock

 

 

1,194,200

 

 

 

137,700

 

 

 

979,200

 

 

 

1,194,200

 

Net cash provided by (used in) investing activities

 

 

49,135,450

 

 

 

(48,374,727

)

Net cash (used in) provided by investing activities

 

 

(144,138,849

)

 

 

33,476,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.


5


BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) continued

 

 

 

For the six months ended

June 30,

 

 

 

2021

 

 

2020

 

Cash flows from financing activities net of effects of business combinations

 

 

 

 

 

 

 

 

Net decrease in deposits

 

 

(14,593,415

)

 

 

(5,334,232

)

Net decrease in short-term FHLB advances

 

 

(12,000,000

)

 

 

7,000,000

 

Proceeds from long-term FHLB non-repo advances

 

 

3,000,000

 

 

 

16,500,000

 

Repayments of long-term FHLB non-repo advances

 

 

(8,498,055

)

 

 

(7,486,878

)

Loan to ESOP

 

 

 

 

 

(6,022,899

)

Stock offering expenses

 

 

 

 

 

(1,973,312

)

Return of unfilled stock offering subscriptions

 

 

 

 

 

(41,505,998

)

Common stock issuance

 

 

 

 

 

7,683,507

 

Net increase (decrease) in advance payments from borrowers for taxes

   and insurance

 

 

360,205

 

 

 

(499,444

)

Net cash used in financing activities

 

 

(31,731,265

)

 

 

(31,639,256

)

Net increase (decrease) in cash and cash equivalents

 

 

20,285,072

 

 

 

(76,053,089

)

Cash and cash equivalents at beginning of year

 

 

80,385,739

 

 

 

127,862,559

 

Cash and cash equivalents at June 30

 

$

100,670,811

 

 

$

51,809,470

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Subscription offering proceeds used to purchase common stock

 

$

 

 

$

48,843,842

 

Income taxes paid

 

$

1,355,000

 

 

$

100,000

 

Interest paid

 

$

3,157,098

 

 

$

5,449,347

 

 

 

 

 

 

 

 

 

 

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

 

 

$

 

 

 

For the six months ended
June 30,

 

 

 

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
   and insurance

 

 

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 2 subsidiaries. Bogota Securities Corp. was formed for the purpose of buying, selling and holding investment securities. Bogota Properties, LLC was inactive at June 30, 20212022 and December 31, 2020.2021.

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

Bogota Financial Corp.The Company completed its stock offering in connection with the mutual holding company reorganization of Bogota Savingsthe Bank on January 15, 2020. The Company sold 5,657,735 shares of common stock at $10.00 per share resulting in net proceeds of $54.6 million after $2.0 million of expenses.  In connection with the reorganization, the Company also issued 263,150 shares of common stock and contributed $250,000 in cash to Bogota Savings Bank Charitable Foundation, Inc., and issued 7,236,640 shares of common stock to Bogota Financial, MHC, its New Jersey-chartered mutual holding company. 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 stockholdersstockholders' 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.release and non-vested 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-six month periods ended June 30, 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 does not currentlydid 0t have any outstanding stock options or shares of restricted stock.stock for the three and six-month periods ended June 30, 2021.

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, 20212022 and 2020.2021.

 

 

For the three months ended June 30, 2021

 

 

For the three months ended June 30, 2020

 

 

For the six months ended June 30, 2021

 

 

For the six months ended June 30, 2020

 

 

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

 

Numerator

 

 

 

 

 

 

 

 

 

Net income

 

$

1,438,724

 

 

$

1,403,073

 

 

$

4,445,031

 

 

$

65,490

 

 

$

1,642,007

 

 

$

1,438,724

 

 

$

3,042,904

 

 

$

4,445,031

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

13,945,423

 

 

 

12,650,748

 

 

 

13,528,822

 

 

 

11,675,010

 

 

 

13,662,222

 

 

 

13,945,423

 

 

 

13,760,002

 

 

 

13,528,822

 

Basic earnings per share

 

$

0.10

 

 

$

0.11

 

 

$

0.33

 

 

$

0.01

 

Effect of stock options

 

 

39,452

 

 

 

 

 

 

40,166

 

 

 

 

Weighted average shares outstanding - diluted

 

 

13,701,674

 

 

 

13,945,423

 

 

 

13,800,168

 

 

 

13,528,822

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

 

$

0.10

 

 

$

0.22

 

 

$

0.33

 

Diluted

 

 

0.12

 

 

 

0.10

 

 

 

0.22

 

 

 

0.33

 

 

7


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

7


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES differ under different conditions than those assumed. (continued)

Risks and Uncertainties: On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The COVID-19 pandemic has adversely affected, and will continue to adversely affect, local, national and global economic activity. On March 3, 2020, the Federal Open Market Committee reduced the targeted federal funds interest rate range by 50 basis points to 1.00 to 1.25 percent. This range was further reduced to 0 percent to 0.25 percent on March 16, 2020. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted to, among other provisions, provide emergency assistance for individuals, families and businesses affected by the COVID-19 pandemic. These reductions in interest rates and other effects of the COVID-19 pandemic may materially and adversely affect the Company’s financial condition and results of operations in future periods. It is unknown how long the adverse conditions associated with the COVID-19 pandemic will last and what the complete financial effect will be to the Company. It is possible that estimates made in the financial statements could be materially and adversely impacted as a result of these COVID-19-related conditions, including estimates regarding expected credit losses on loans receivable and other-than-temporary impairment of investment securities.

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

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

The unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements, and related notes, of Bogota Savings BankFinancial Corp. at and for the year ended December 31, 2020.2021.

 

Acquired Loans

Loans acquired including loans that have evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments receivable, are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance. Loans are evaluated individually to determine if there is evidence of deterioration of credit quality since origination. The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield adjustment or as a loss accrual or a valuation allowance. Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining estimated life. Decreases in expected cash flows are recognized immediately as impairment. Any valuation allowances on these impaired loans reflect only losses incurred after the acquisition.

8


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

For purchased loans acquired that are not deemed impaired at acquisition, credit discounts representing the principal losses expected over the life of the loan are a component of the initial fair value. Loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. Subsequent to the purchase date, the methods utilized to estimate the required allowance for credit losses for these loans is similar to originated loans; however, the Company records a provision for loan losses only when the required allowance exceeds any remaining credit discounts. The remaining differences between the purchase price and the unpaid principal balance at the date of acquisition are recorded in interest income over the life of the loans.

Not Yet Effective Accounting Pronouncements:Pronouncements: In February 2016,January 2020, the FASB issued ASU No. 2016-02, Leases2020-04, Reference Rate Reform (Topic 842), which will supersede the current lease requirements in Topic 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of income. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. In May 2020, FASB amended the effective date848): Facilitation of the newEffects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on Leases.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 amendment and related new guidance on Leasesamendments in this ASU are effective for the Company for the fiscal years beginning afterall entities upon issuance through December 15, 2021 and interim periods within fiscal years beginning after December 15,31, 2022. The Company is currently evaluating the effectimpact the adoption of the standard will have on the Company’s financial statements when adopted.position and results of operations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entitiesLosses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to report “expected”improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other commitmentsorganizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to extendbe collected, through an allowance for credit rather thanlosses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current “incurred loss” model. Theseestimate 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, held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the expected increases or decreases of expected credit qualitylosses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative-effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This Update is effective for SEC filers that qualify as smaller reporting companies, non-SEC filers, and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

The effective date of ASU 2016-13 for the Company is theall other companies, to fiscal yearyears beginning on January 1, 2023 andafter December 15, 2022, including interim periods within those fiscal years. The Company does not planexpects to early adopt, but will continue to review factors that might indicate that the full deferral time period should not be used. The Company continues to evaluate the impact the new standard will have on the accounting for credit losses, but the Company may recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, consistent with regulatory expectations set forth in interagency guidance issued at the end of 2016.January 1, 2023. The Company cannot yet determine the magnitude of any such one-time cumulative adjustment or of the overall impact of the new standardguidance on itsthe consolidated financial condition or results of operations.statements.

NOTE 2-2 – ACQUISITION OF GIBRALTAR BANK

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

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

9


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 2-2 – ACQUISITION OF GIBRALTAR BANK (continued)(Continued)

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

 

 

 As recorded by
Gibraltar Bank

 

 

 Fair value
adjustments

 

 

 As recorded
at acquisition

 

Fair value of Equity acquired

 

 

 

 

 

 

 

$

11,500,000

 

Assets Acquired

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

19,393,090

 

 

$

 

 

$

19,393,090

 

Securities held to maturity

 

 

7,250,000

 

 

 

(208,051

)

(a)

 

7,041,949

 

Federal Home Loan Bank stock and other
   restricted stock

 

 

603,500

 

 

 

 

 

 

603,500

 

Loans receivable

 

 

77,683,903

 

 

 

(920,497

)

(b)

 

76,763,406

 

Allowance for loan loss

 

 

(640,232

)

 

 

640,232

 

(c)

 

 

Accrued interest receivable

 

 

302,927

 

 

 

 

 

 

302,927

 

Premises and equipment, net

 

 

348,714

 

 

 

1,079,647

 

(d)

 

1,428,361

 

Core deposit intangible

 

 

 

 

 

400,000

 

(e)

 

400,000

 

Deferred taxes

 

 

913,303

 

 

 

(184,973

)

(f)

 

728,330

 

Other assets

 

 

362,636

 

 

 

(278,355

)

(g)

 

84,281

 

Total assets acquired

 

$

106,217,841

 

 

$

528,003

 

 

$

106,745,844

 

Liabilities assumed

 

 

 

 

 

 

 

 

 

Deposits

 

$

81,558,612

 

 

$

386,865

 

(h)

$

81,945,477

 

Borrowings

 

 

10,000,000

 

 

 

273,721

 

(i)

 

10,273,721

 

Advance payments by borrowers for taxes and
   insurance

 

 

646,661

 

 

 

 

 

 

646,661

 

Accrued expenses and other liabilities

 

 

446,588

 

 

 

 

 

 

446,588

 

Total liabilities assumed

 

$

92,651,861

 

 

$

660,586

 

 

$

93,312,447

 

Net assets acquired

 

 

 

 

 

 

 

$

13,433,397

 

Bargain purchase gain recorded at merger

 

 

 

 

 

 

 

 

1,933,397

 

 

 

As recorded by Gibraltar Bank

 

 

Fair value adjustments

 

 

As recorded at acquisition

 

Fair value of Equity acquired

 

 

 

 

 

 

$

11,500,000

 

Assets Acquired

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

19,393,090

 

 

$

 

 

$

19,393,090

 

Securities held to maturity

 

 

7,250,000

 

 

 

(208,051

)

(a)

 

7,041,949

 

Federal Home Loan Bank stock and other restricted stock

 

 

603,500

 

 

 

 

 

 

603,500

 

Loans receivable

 

 

77,683,903

 

 

 

(920,497

)

(b)

 

76,763,406

 

Allowance for loan loss

 

 

(640,232

)

 

 

640,232

 

(c )

 

 

Accrued interest receivable

 

 

302,927

 

 

 

 

 

 

302,927

 

Premises and equipment, net

 

 

348,714

 

 

 

1,079,647

 

(d)

 

1,428,361

 

Core deposit intangible

 

 

 

 

 

400,000

 

(e )

 

400,000

 

Deferred taxes

 

 

913,303

 

 

 

(184,973

)

(f)

 

728,330

 

Other assets

 

 

362,636

 

 

 

(278,355

)

(g)

 

84,281

 

Total assets acquired

 

$

106,217,841

 

 

$

528,003

 

 

$

106,745,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities assumed

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

81,558,612

 

 

$

386,865

 

(h)

$

81,945,477

 

Borrowings

 

 

10,000,000

 

 

 

273,721

 

(i)

 

10,273,721

 

Advance payments by borrowers for taxes and insurance

 

 

646,661

 

 

 

 

 

 

646,661

 

Accrued expenses and other liabilities

 

 

446,588

 

 

 

 

 

 

446,588

 

Total liabilities assumed

 

$

92,651,861

 

 

$

660,586

 

 

$

93,312,447

 

Net assets acquired

 

 

 

 

 

 

 

 

 

$

13,433,397

 

Bargain purchase gain recorded at merger

 

 

 

 

 

 

 

 

 

 

1,933,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Explanation of certain fair value related adjustments:

(a)

Represents the fair value adjustments on investment securities over estimated useful life.at the acquisition date.

(b)

Represents the fair value adjustments on the net book value of loans, which includes an interest rate mark and

credit mark adjustment and the reversal of deferred fees/costs and premiums over estimated useful life.

 

(c)

Represents the elimination of Gibraltar Bank allowance for loan losses.

(d)

Represents the fair value adjustments to reflect the fair value of land and buildings and premises and equipment,

which will be amortized on a straight-line basis over the estimated useful lives of the individual assets.

 

(e)

Represents the intangible assets recorded to reflect the fair value of core deposits. The core deposit asset was recorded as an

identifiable intangible asset and will be amortized on an accelerated basis over the estimated average life of the deposit base.

(f)

Represents an adjustment to net deferred tax assets resulting from the fair value adjustments related to the acquired assets,

liabilities assumed and identifiable intangible assets recorded.

 

(g)

Represents an adjustment to other assets acquired.

(h)

Represents fair value adjustments on time deposits, which will be treated as a reduction of interest expense

over the remaining term of the time deposits.

 

(i)

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

 

10


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 2- ACQUISITION OF GIBRALTAR BANK(continued)

The fair value of loans acquired from Gibraltar Bank was estimated using cash flow projections based on the remaining maturity and repricing terms. Cash flows were adjusted by estimating future credit losses and the rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. There was no carryover of Gibraltar’s Bank allowance for loan losses associated with the loans that were acquired.  The core deposit intangible asset recognized is being amortized over its estimated useful life of approximately 10 years utilizing the sum-of-the-years digits method.  The acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Accordingly, the Company recognizes amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair value. Due to the complexity in valuing the assets acquired and liabilities assumed, and the significant amount of data inputs required, the valuation of the assets and liabilities acquired is not yet final. Fair value estimates are based on the information available and are subject to change for up to one year after the closing date of the acquisition as additional information relative to the closing date fair values becomes available.  

The fair value of purchased financial assets with credit impairment was $6.1 million on the date of acquisition.  The gross contractual amounts receivable relating to the purchased financial assets with the credit impairment was $6.7 million.     

Certain loans, for which specific credit-related deterioration was identified, are recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition on these loans is based on a reasonable expectation of the timing and amount of cash flows to be collected. The timing of the sale of loan collateral was estimated for acquired loans deemed impaired and considered collateral dependent. For these collateral dependent impaired loans, the excess of the future expected cash flow over the present value of the future expected cash flow represents the accretable yield, which will be accreted into interest income over the estimated liquidation period using the effective interest method.

The following table details the loans that are accounted for in accordance with FASB ASC 310-30 as of March 1, 2021:

(Dollars in thousands)

Contractually required principal and interest at acquisition

 

 

 

 

 

$

8,346

 

Contractual cash flows not expected to be collected (nonaccretable difference)

 

 

1,412

 

Expected cash flows at acquisition

 

 

 

 

 

 

6,934

 

Interest component of expected cash flows (accretable discount)

 

 

 

 

 

 

846

 

Fair value of acquired loans accounted for under FASB ASC 310-30

 

 

 

 

 

$

6,088

 

Acquired loans not subject to the requirements of FASB ASC 310-30 are recorded at fair value. The fair value mark on each of these loans will be accreted into interest income over the remaining life of the loan. The following table details loans that are not accounted for in accordance with FASB ASC 310-30 as of March 1, 2021:

(Dollars in thousands)

Contractually required principal at acquisition

 

 

 

 

 

$

91,906

 

Contractual cash flows not expected to be collected (credit mark)

 

 

9,978

 

Expected cash flows at acquisition

 

 

 

 

 

 

81,928

 

Interest component of expected cash flows (accretable discount)

 

 

 

 

143

 

Fair value of acquired loans accounted for under FASB ASC 310-30

 

 

 

$

82,071

 

11


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 2- ACQUISITION OF GIBRALTAR BANK(continued)

The following table presents actual operating results attributable to Gibraltar Bank since the March 1, 2021 acquisition date through June 30, 20201. This information does not include purchase accounting adjustments or acquisition integration costs.

(Dollars in thousands)

 

 

 

 

 

 

Gibraltar March 1, 2021 to June 30, 2021

 

Net interest income

 

 

 

 

 

$

845

 

Non-interest income

 

 

600

 

Non-interest expense

 

 

204

 

Pre-tax income

 

 

1,241

 

Income tax expense

 

 

 

Net Income

 

$

1,241

 

The fair value of retail demand and interest bearing deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair value of time deposits was estimated by discounting the contractual future cash flows using market rates offered for time deposits of similar remaining maturities.  The fair value of borrowings was based on the FHLB calculation to prepay borrowings with associated penalties.

NOTE 3 – SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost, fair value, and gross unrealized gains and losses of securities available for sale, by contractual maturity, at June 30, 20212022 and December 31, 2020:2021:

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair

Value

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

U.S treasury bills less than one year

 

$

9,910,459

 

 

$

 

 

$

(40,027

)

 

 

9,870,432

 

U.S. government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

 

6,000,000

 

 

 

 

 

 

(432,891

)

 

 

5,567,109

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

$

5,380,365

 

 

$

44,969

 

 

$

 

 

$

5,425,334

 

 

 

15,252,017

 

 

 

503

 

 

 

(358,051

)

 

 

14,894,469

 

Five through ten years

 

 

1,002,862

 

 

 

5,008

 

 

 

 

 

 

1,007,870

 

 

 

2,949,325

 

 

 

 

 

 

(234,025

)

 

 

2,715,300

 

MBSs – residential

 

 

4,671,210

 

 

 

120,375

 

 

 

(1,577

)

 

 

4,790,008

 

 

 

46,918,907

 

 

 

11,912

 

 

 

(5,546,864

)

 

 

41,383,955

 

MBSs – commercial

 

 

25,553,578

 

 

 

 

 

 

(2,477,150

)

 

 

23,076,428

 

Total

 

$

11,054,437

 

 

$

170,352

 

 

$

(1,577

)

 

$

11,223,212

 

 

$

106,584,286

 

 

$

12,415

 

 

$

(9,089,008

)

 

$

97,507,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair

Value

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

$

3,000,000

 

 

$

 

 

$

(18,270

)

 

$

2,981,730

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than one year

 

$

1,001,354

 

 

$

954

 

 

$

 

 

$

1,002,308

 

One through five years

 

 

5,369,527

 

 

 

31,407

 

 

 

(4,186

)

 

 

5,396,748

 

 

 

6,375,068

 

 

 

17,594

 

 

 

(636

)

 

 

6,392,026

 

Five through ten years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,002,542

 

 

 

3,050

 

 

 

 

 

 

1,005,592

 

MBSs – residential

 

 

5,359,734

 

 

 

114,426

 

 

 

(2,708

)

 

 

5,471,452

 

 

 

21,695,539

 

 

 

89,297

 

 

 

(24,591

)

 

 

21,760,245

 

MBSs – commercial

 

 

9,741,782

 

 

 

 

 

 

(42,577

)

 

 

9,699,205

 

Total

 

$

11,730,615

 

 

$

146,787

 

 

$

(6,894

)

 

$

11,870,508

 

 

$

41,814,931

 

 

$

109,941

 

 

$

(86,074

)

 

$

41,838,798

 

 

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

1211


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 3 – SECURITIES AVAILABLE FOR SALE (Continued)

There were 0 sales of securities during the three and six months ended June 30, 20212022 or June 30, 2020.2021.

The age of unrealized losses and the fair value of related securities as of June 30, 20212022 and December 31, 20202021 were as follows:

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S treasury bills

 

$

9,870,432

 

 

$

(40,027

)

 

$

 

 

$

 

 

$

9,870,432

 

 

$

(40,027

)

U.S. government and agency obligations

 

 

5,567,109

 

 

 

(432,891

)

 

 

 

 

 

 

 

 

5,567,109

 

 

 

(432,891

)

Corporate bonds

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

16,608,727

 

 

 

(592,076

)

 

 

 

 

 

 

 

 

16,608,727

 

 

 

(592,076

)

MBSs – residential

 

 

-

 

 

 

-

 

 

 

262,826

 

 

 

(1,577

)

 

 

262,826

 

 

 

(1,577

)

 

 

40,333,985

 

 

 

(5,541,734

)

 

 

239,326

 

 

 

(5,130

)

 

 

40,573,311

 

 

 

(5,546,864

)

MBSs – commercial

 

 

23,076,428

 

 

 

(2,477,150

)

 

 

 

 

 

 

 

 

23,076,428

 

 

 

(2,477,150

)

Total

 

$

 

 

$

 

 

$

262,826

 

 

$

(1,577

)

 

$

262,826

 

 

$

(1,577

)

 

$

95,456,681

 

 

$

(9,083,878

)

 

$

239,326

 

 

$

(5,130

)

 

$

95,696,007

 

 

$

(9,089,008

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

2,981,730

 

 

$

(18,270

)

 

$

 

 

$

 

 

$

2,981,730

 

 

$

(18,270

)

Corporate bonds

 

$

 

 

$

 

 

$

2,005,441

 

 

$

(4,186

)

 

$

2,005,441

 

 

$

(4,186

)

 

 

1,006,523

 

 

 

(636

)

 

 

 

 

 

 

 

 

1,006,523

 

 

 

(636

)

MBSs – residential

 

 

271,340

 

 

 

(2,708

)

 

 

-

 

 

 

-

 

 

 

271,340

 

 

 

(2,708

)

 

 

10,000,558

 

 

 

(22,652

)

 

 

250,581

 

 

 

(1,939

)

 

 

10,251,139

 

 

 

(24,591

)

MBSs – commercial

 

 

9,699,205

 

 

 

(42,577

)

 

 

 

 

 

 

 

 

9,699,205

 

 

 

(42,577

)

Total

 

$

271,340

 

 

$

(2,708

)

 

$

2,005,441

 

 

$

(4,186

)

 

$

2,276,781

 

 

$

(6,894

)

 

$

23,688,016

 

 

$

(84,135

)

 

$

250,581

 

 

$

(1,939

)

 

$

23,938,597

 

 

$

(86,074

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on corporate bonds available for sale have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value iswas largely due to changes in interest rates and other market conditions. At June 30, 2021, 100%2022, 100% of the mortgage-backed securities were issued by U.S. government-sponsored entities and agencies, primarily Fannie MaeFNMA and Freddie Mac,FHLMC, institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Bank does not consider these securities to be other-than-temporary impaired at June 30, 2021.2022. At June 30, 2021 and December 31, 2020,2022, securities available for sale with a carrying value of $178,525 and $214,229, respectively,$144,705 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 53 securities in a loss position at June 30, 2022, none of which were considered to be other-than-temporally impaired.

1312


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 4 – SECURITIES HELD TO MATURITY

The following table summarizes the amortized cost, fair value, and gross unrecognized gains and losses of securities held to maturity by contractual maturity at June 30, 20212022 and December 31, 2020:2021:

 

 

Amortized

Cost

 

 

Gross

Unrecognized

Gains

 

 

Gross

Unrecognized

Losses

 

 

Fair

Value

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agencies due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

More than ten years

 

$

4,503,581

 

 

$

696

 

 

$

(2,146

)

 

$

4,502,131

 

 

Amortized
Cost

 

 

Gross
Unrecognized
Gains

 

 

Gross
Unrecognized
Losses

 

 

Fair
Value

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

$

10,000,000

 

 

$

 

 

$

(288,760

)

 

$

9,711,240

 

Five through ten years

 

 

3,000,000

 

 

 

 

 

 

(340,374

)

 

 

2,659,626

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

One through five years

 

 

938,800

 

 

 

 

 

 

(40,579

)

 

 

898,221

 

Five through ten years

 

 

15,317,671

 

 

 

14,613

 

 

 

(416,722

)

 

 

14,915,562

 

Municipal obligations due in:

 

 

 

 

 

 

 

 

 

 

 

 

Less than one year

 

 

8,453,894

 

 

 

595

 

 

 

(40,660

)

 

 

8,413,829

 

One through five years

 

 

1,223,015

 

 

 

499

 

 

 

(71,658

)

 

 

1,151,856

 

Five through ten years

 

 

375,000

 

 

 

128

 

 

 

 

 

 

375,128

 

Greater than ten years

 

 

1,730,290

 

 

 

 

 

 

(372,950

)

 

 

1,357,340

 

MBSs:

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

15,543,065

 

 

 

1,545

 

 

 

(1,670,272

)

 

 

13,874,338

 

Commercial

 

 

29,850,605

 

 

 

 

 

 

(3,349,349

)

 

 

26,501,256

 

Total

 

$

86,432,340

 

 

$

17,380

 

 

$

(6,591,324

)

 

$

79,858,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized
Cost

 

 

Gross
Unrecognized
Gains

 

 

Gross
Unrecognized
Losses

 

 

Fair
Value

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency obligations

 

 

 

 

 

 

 

 

 

 

 

 

Five through ten years

 

$

3,000,000

 

 

$

 

 

$

 

 

$

3,000,000

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Five through ten years

 

 

13,167,446

 

 

 

458,741

 

 

 

(39,038

)

 

 

13,587,149

 

 

 

13,681,053

 

 

 

410,726

 

 

 

(39,870

)

 

 

14,051,909

 

Municipal obligations due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than one year

 

 

1,322,439

 

 

 

2,542

 

 

 

 

 

 

1,324,981

 

 

 

4,006,006

 

 

 

12,668

 

 

 

(2,776

)

 

 

4,015,898

 

One through five years

 

 

4,006,811

 

 

 

21,969

 

 

 

(3,100

)

 

 

4,025,680

 

 

 

903,483

 

 

 

 

 

 

(15,399

)

 

 

888,084

 

Five through ten years

 

 

375,000

 

 

 

31,729

 

 

 

 

 

 

406,729

 

 

 

375,000

 

 

 

27,353

 

 

 

 

 

 

402,353

 

Greater than ten years

 

 

1,732,386

 

 

 

9,527

 

 

 

 

 

 

1,741,913

 

MBSs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

19,087,067

 

 

 

136,647

 

 

 

(190,397

)

 

 

19,033,317

 

 

 

16,913,787

 

 

 

75,094

 

 

 

(240,797

)

 

 

16,748,084

 

Commercial

 

 

35,194,293

 

 

 

655,616

 

 

 

(243,797

)

 

 

35,606,112

 

 

 

33,441,384

 

 

 

287,278

 

 

 

(495,844

)

 

 

33,232,818

 

Total

 

$

77,656,637

 

 

$

1,307,940

 

 

$

(478,478

)

 

$

78,486,099

 

 

$

74,053,099

 

 

$

822,646

 

 

$

(794,686

)

 

$

74,081,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized

Cost

 

 

Gross

Unrecognized

Gains

 

 

Gross

Unrecognized

Losses

 

 

Fair

Value

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than one year

 

$

1,501,179

 

 

$

13,616

 

 

$

 

 

$

1,514,795

 

One through five years

 

 

8,635,831

 

 

 

221,716

 

 

 

(2,520

)

 

 

8,855,027

 

Municipal obligations due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than one year

 

 

2,764,079

 

 

 

4,944

 

 

 

(141

)

 

 

2,768,882

 

One through five years

 

 

1,057,609

 

 

 

30,492

 

 

 

 

 

 

1,088,101

 

Five through ten years

 

 

375,000

 

 

 

32,201

 

 

 

 

 

 

407,201

 

MBSs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

11,906,884

 

 

 

144,863

 

 

 

(15,440

)

 

 

12,036,307

 

Commercial

 

 

31,263,861

 

 

 

997,319

 

 

 

(59,042

)

 

 

32,202,138

 

Total

 

$

57,504,443

 

 

$

1,445,151

 

 

$

(77,143

)

 

$

58,872,451

 

 

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

 

1413


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 4 – SECURITIES HELD TO MATURITY (Continued)

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

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

Fair

Value

 

 

Unrecognized

Losses

 

 

Fair

Value

 

 

Unrecognized

Losses

 

 

Fair

Value

 

 

Unrecognized

Losses

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agencies

 

$

1,997,854

 

 

$

(2,146

)

 

$

 

 

$

 

 

$

1,997,854

 

 

$

(2,146

)

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency obligations

 

$

12,370,866

 

 

$

(629,134

)

 

$

 

 

$

 

 

$

12,370,866

 

 

$

(629,134

)

Corporate bonds

 

 

3,147,743

 

 

 

(39,038

)

 

 

 

 

 

 

 

 

3,147,743

 

 

 

(39,038

)

 

 

11,431,670

 

 

 

(374,801

)

 

 

667,500

 

 

 

(82,500

)

 

 

12,099,170

 

 

 

(457,301

)

Municipal bonds

 

 

2,946,900

 

 

 

(3,100

)

 

 

 

 

 

 

 

 

2,946,900

 

 

 

(3,100

)

 

 

9,866,743

 

 

 

(485,268

)

 

 

 

 

 

 

 

 

9,866,743

 

 

 

(485,268

)

MBSs – residential

 

 

7,612,394

 

 

 

(189,371

)

 

 

83,577

 

 

 

(1,026

)

 

 

7,695,971

 

 

 

(190,397

)

 

 

8,703,765

 

 

 

(1,106,726

)

 

 

4,934,374

 

 

 

(563,546

)

 

 

13,638,139

 

 

 

(1,670,272

)

MBSs – commercial

 

 

10,840,332

 

 

 

(243,797

)

 

 

 

 

 

 

 

 

10,840,332

 

 

 

(243,797

)

 

 

20,130,247

 

 

 

(1,744,641

)

 

 

6,371,009

 

 

 

(1,604,708

)

 

 

26,501,256

 

 

 

(3,349,349

)

Total

 

$

26,545,223

 

 

$

(477,452

)

 

$

83,577

 

 

$

(1,026

)

 

$

26,628,800

 

 

$

(478,478

)

 

$

62,503,291

 

 

$

(4,340,570

)

 

$

11,972,883

 

 

$

(2,250,754

)

 

$

74,476,174

 

 

$

(6,591,324

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

Fair

Value

 

 

Unrecognized

Losses

 

 

Fair

Value

 

 

Unrecognized

Losses

 

 

Fair

Value

 

 

Unrecognized

Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

 

Fair
Value

 

 

Unrecognized
Losses

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

747,480

 

 

$

(2,520

)

 

$

 

 

$

 

 

$

747,480

 

 

$

(2,520

)

 

$

3,710,120

 

 

$

(39,870

)

 

$

 

 

$

 

 

$

3,710,120

 

 

$

(39,870

)

Municipal bonds

 

 

1,436,454

 

 

 

(141

)

 

 

 

 

 

 

 

 

1,436,454

 

 

 

(141

)

 

 

3,835,309

 

 

 

(18,175

)

 

 

 

 

 

 

 

 

3,835,309

 

 

 

(18,175

)

MBSs – residential

 

 

2,403,485

 

 

 

(15,440

)

 

 

 

 

 

 

 

 

2,403,485

 

 

 

(15,440

)

 

 

10,720,544

 

 

 

(141,726

)

 

 

2,701,345

 

 

 

(99,071

)

 

 

13,421,889

 

 

 

(240,797

)

MBSs – commercial

 

 

2,652,666

 

 

 

(59,042

)

 

 

 

 

 

 

 

 

2,652,666

 

 

 

(59,042

)

 

 

7,898,509

 

 

 

(197,720

)

 

 

4,653,364

 

 

 

(298,124

)

 

 

12,551,873

 

 

 

(495,844

)

Total

 

$

7,240,085

 

 

$

(77,143

)

 

$

 

 

$

 

 

$

7,240,085

 

 

$

(77,143

)

 

$

26,164,482

 

 

$

(397,491

)

 

$

7,354,709

 

 

$

(397,195

)

 

$

33,519,191

 

 

$

(794,686

)

Unrecognized losses have not been recognized into income because the issuers of the securities are of high credit quality, management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value iswas 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, 20212022 and December 31, 2020,2021, securities held to maturity with a carrying amount of $8,763,014$6,643,645 and $11,057,973,$8,363,997, respectively, were pledged to secure repurchase agreements at the Federal Home Loan Bank of New York.

There were 57 securities in a loss position at June 30, 2022, none of which were considered to be other-than-temporally impaired. At June 30, 20212022 and December 31, 2020,2021, securities held to maturity with a carrying value of $2,704,730$4,792,454 and $4,327,429,$3,976,629, respectively, were pledged to secure public deposits.

1514


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS

Loans are summarized as follows at June 30, 20212022 and December 31, 2020:2021:

 

 

June 30,

2021

 

 

December 31,

2020

 

Real estate:

 

 

 

 

 

 

 

 

Residential

 

$

343,180,278

 

 

$

340,000,989

 

Commercial and multi-family real estate

 

 

189,787,127

 

 

 

171,634,451

 

Construction

 

 

13,776,910

 

 

 

9,930,959

 

Commercial and industrial

 

 

10,624,189

 

 

 

13,652,248

 

Consumer:

 

 

 

 

 

 

 

 

Home equity and other

 

 

28,511,557

 

 

 

24,713,380

 

Total loans

 

 

585,880,061

 

 

 

559,932,027

 

Allowance for loan losses

 

 

(2,128,174

)

 

 

(2,241,174

)

Net loans

 

$

583,751,887

 

 

$

557,690,853

 

The Bank has granted loans to officers and directors of the Bank.  At June 30, 2021 and December 31, 2020, such loans totaled approximately $728,715 and $748,662, respectively.  At June 30, 2021 and December 31, 2020 deferred loan fees were $$1,548,099 and $1,844,233 respectively

 

 

 

June 30,
2022

 

 

December 31,
2021

 

Real estate:

 

(unaudited)

 

Residential

 

$

379,776,653

 

 

$

319,968,234

 

Commercial and multi-family real estate

 

 

173,619,693

 

 

 

175,375,419

 

Construction

 

 

51,799,501

 

 

 

41,384,687

 

Commercial and industrial

 

 

2,068,871

 

 

 

7,905,524

 

Consumer:

 

 

 

 

 

 

Home equity and other

 

 

25,798,836

 

 

 

27,728,979

 

Total loans

 

 

633,063,554

 

 

 

572,362,843

 

Allowance for loan losses

 

 

(2,253,174

)

 

 

(2,153,174

)

Net loans

 

$

630,810,380

 

 

$

570,209,669

 

As a qualified Small Business Administration lender, the Bank was automatically authorized to originate loans under the Paycheck Protection Program (“PPP”). During 2020, the Bank received and processed 113 PPP applications totaling approximately $10.5$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$6.9 million. All outstanding PPP loans are included in the table above under commercial and industrial loans.loans. Since origination, the Bank has processed forgiveness applications for $9.0$13.4 million and the current outstanding balance of PPP loans at June 30, 2022 and December 31, 2021 is $8.2was $1.4 million and $5.8 million, respectively.

The Bank has granted loans to officers and directors of the Bank. At June 30, 2022 and December 31, 2021, such loans totaled $1,754,815 and $577,143, respectively. At June 30, 2022 and December 31, 2021 deferred loan fees were $2,127,170 and $1,249,233, respectively.

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
June 30, 2022

 

 

Six months ended
June 30, 2022

 

 

Three Months Ended
June 30, 2021

 

 

Six Months Ended
June 30, 2021

 

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, 20212022 and 2020.2021.

 

 

Residential

First

Mortgage

 

 

Commercial

and Multi-

Family Real

Estate

 

 

Construction

 

 

Commercial

and

Industrial

 

 

Consumer

 

 

Total

 

Three months

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential
First
Mortgage

 

 

Commercial
and Multi-
Family Real
Estate

 

 

Construction

 

 

Commercial
and
Industrial

 

 

Home equity & other

 

 

Total

 

Three months
June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,185,674

 

 

$

849,000

 

 

$

48,000

 

 

$

13,500

 

 

$

86,000

 

 

$

2,182,174

 

 

$

1,092,474

 

 

$

768,600

 

 

$

195,000

 

 

$

9,400

 

 

$

87,700

 

 

$

2,153,174

 

(Credit) provision for loan losses

 

 

(58,980

)

 

 

4,000

 

 

 

6,000

 

 

 

(5,020

)

 

 

 

 

 

(54,000

)

 

 

159,450

 

 

 

(88,600

)

 

 

37,000

 

 

 

(2,400

)

 

 

(5,450

)

 

 

100,000

 

Loans charged off

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

$

1,126,694

 

 

$

853,000

 

 

$

54,000

 

 

$

8,480

 

 

$

86,000

 

 

$

2,128,174

 

 

$

1,251,924

 

 

$

680,000

 

 

$

232,000

 

 

$

7,000

 

 

$

82,250

 

 

$

2,253,174

 

June 30,2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,311,174

 

 

$

589,000

 

 

$

31,000

 

 

$

18,000

 

 

$

92,000

 

 

$

2,041,174

 

 

$

1,185,674

 

 

$

849,000

 

 

$

48,000

 

 

$

13,500

 

 

$

86,000

 

 

$

2,182,174

 

(Credit) provision for loan losses

 

 

46,500

 

 

 

181,000

 

 

 

3,500

 

 

 

(2,000

)

 

 

(4,000

)

 

 

225,000

 

 

 

(58,980

)

 

 

4,000

 

 

 

6,000

 

 

 

(5,020

)

 

 

 

 

 

(54,000

)

Loans charged off

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

$

1,357,674

 

 

$

770,000

 

 

$

34,500

 

 

$

16,000

 

 

$

88,000

 

 

$

2,266,174

 

 

$

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
First
Mortgage

 

 

Commercial
and Multi-
Family Real
Estate

 

 

Construction

 

 

Commercial
and
Industrial

 

 

Home equity & other

 

 

Total

 

Six months
June 30, 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)

 

 

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 5 – LOANS (Continued)

 

 

Residential

First

Mortgage

 

 

Commercial

and Multi-

Family Real

Estate

 

 

Construction

 

 

Commercial

and

Industrial

 

 

Consumer

 

 

Total

 

Six months

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

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,383,174

 

 

$

512,000

 

 

$

26,000

 

 

$

9,000

 

 

$

86,000

 

 

$

2,016,174

 

Provision for loan losses (credit)

 

 

(25,500

)

 

 

258,000

 

 

 

8,500

 

 

 

7,000

 

 

 

2,000

 

 

 

250,000

 

Loans charged off

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

$

1,357,674

 

 

$

770,000

 

 

$

34,500

 

 

$

16,000

 

 

$

88,000

 

 

$

2,266,174

 

17


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 5 – LOANS (Continued)

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segments and based on impairment method as of June 30, 20212022 and December 31, 2020:2021:

 

 

Residential

First

Mortgage

 

 

Commercial

and Multi-

Family Real

Estate

 

 

Construction

 

 

Commercial

and

Industrial

 

 

Consumer

 

 

Total

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential
First
Mortgage

 

 

Commercial
and Multi-
Family Real
Estate

 

 

Construction

 

 

Commercial
and
Industrial

 

 

Home equity & other consumer

 

 

Total

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance

attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for

impairment

 

$

35,859

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

35,859

 

 

$

35,859

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

35,859

 

Collectively evaluated for

impairment

 

 

1,090,835

 

 

 

853,000

 

 

 

54,000

 

 

 

8,480

 

 

 

86,000

 

 

 

2,092,315

 

 

 

1,216,065

 

 

 

680,000

 

 

 

232,000

 

 

 

7,000

 

 

 

82,250

 

 

 

2,217,315

 

Acquired with deteriorated credit quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total ending allowance balance

 

$

1,126,694

 

 

$

853,000

 

 

$

54,000

 

 

$

8,480

 

 

$

86,000

 

 

$

2,128,174

 

 

$

1,251,924

 

 

$

680,000

 

 

$

232,000

 

 

$

7,000

 

 

$

82,250

 

 

$

2,253,174

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

for impairment

 

$

1,066,857

 

 

$

 

 

$

 

 

$

 

 

$

18,791

 

 

$

1,085,648

 

 

$

832,754

 

 

$

 

 

$

 

 

$

 

 

$

18,239

 

 

$

850,993

 

Loans collectively evaluated

for impairment

 

 

337,723,730

 

 

 

188,337,396

 

 

 

13,776,910

 

 

 

10,624,189

 

 

 

28,448,911

 

 

 

578,911,136

 

 

 

375,642,159

 

 

 

172,240,349

 

 

 

51,799,501

 

 

 

2,068,871

 

 

 

25,745,345

 

 

 

627,496,225

 

Loans acquired with deteriorated credit quality

 

 

4,389,691

 

 

 

1,449,731

 

 

 

 

 

 

 

 

 

43,855

 

 

 

5,883,277

 

 

 

3,301,740

 

 

 

1,379,344

 

 

 

 

 

 

 

 

 

35,252

 

 

 

4,716,336

 

Total ending loan balance

 

$

343,180,278

 

 

$

189,787,127

 

 

$

13,776,910

 

 

$

10,624,189

 

 

$

28,511,557

 

 

$

585,880,061

 

 

$

379,776,653

 

 

$

173,619,693

 

 

$

51,799,501

 

 

$

2,068,871

 

 

$

25,798,836

 

 

$

633,063,554

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance

attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for

impairment

 

$

35,859

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

35,859

 

 

$

35,859

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

35,859

 

Collectively evaluated for

impairment

 

 

1,218,315

 

 

 

841,000

 

 

 

45,000

 

 

 

14,000

 

 

 

87,000

 

 

 

2,205,315

 

 

 

1,056,615

 

 

 

768,600

 

 

 

195,000

 

 

 

9,400

 

 

 

87,700

 

 

 

2,117,315

 

Total ending allowance balance

 

$

1,254,174

 

 

$

841,000

 

 

$

45,000

 

 

$

14,000

 

 

$

87,000

 

 

$

2,241,174

 

 

$

1,092,474

 

 

$

768,600

 

 

$

195,000

 

 

$

9,400

 

 

$

87,700

 

 

$

2,153,174

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

for impairment

 

$

1,082,371

 

 

$

223,352

 

 

$

 

 

$

 

 

$

19,044

 

 

$

1,324,767

 

 

$

1,099,793

 

 

$

 

 

$

 

 

$

 

 

$

18,507

 

 

$

1,118,300

 

Loans collectively evaluated

for impairment

 

 

338,918,618

 

 

 

171,411,099

 

 

 

9,930,959

 

 

 

13,652,248

 

 

 

24,694,336

 

 

 

558,607,260

 

 

 

314,754,870

 

 

 

173,962,424

 

 

 

41,384,687

 

 

 

7,866,263

 

 

 

27,710,472

 

 

 

565,678,716

 

Loans acquired with deteriorated
credit quality

 

 

4,113,571

 

 

 

1,412,995

 

 

 

 

 

 

39,261

 

 

 

 

 

 

5,565,827

 

Total ending loan balance

 

$

340,000,989

 

 

$

171,634,451

 

 

$

9,930,959

 

 

$

13,652,248

 

 

$

24,713,380

 

 

$

559,932,027

 

 

$

319,968,234

 

 

$

175,375,419

 

 

$

41,384,687

 

 

$

7,905,524

 

 

$

27,728,979

 

 

$

572,362,843

 

 

18

17


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

 

Impaired loans as of and for the three and six months ended June 30, 20212022 were as follows:

 

 

Loans

With no related

allowance recorded

 

 

Loans

with an

allowance recorded

 

 

Amount of

allowance for

loan losses allocated

 

 

Loans
With no related
allowance
recorded

 

 

Loans
with an
allowance
recorded

 

 

Amount of
allowance for
loan
losses allocated

 

Residential first mortgages

 

$

890,402

 

 

$

176,455

 

 

$

35,859

 

 

$

1,215,530

 

 

$

173,353

 

 

$

35,859

 

Commercial and Multi-Family

 

 

 

 

 

 

 

 

 

 

 

488,849

 

 

 

 

 

 

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity & other consumer

 

 

18,791

 

 

 

 

 

 

 

 

 

18,239

 

 

 

 

 

 

 

 

$

909,193

 

 

$

176,455

 

 

$

35,859

 

 

$

1,722,618

 

 

$

173,353

 

 

$

35,859

 

 

 

Average

Of individually

Impaired loans for the

 

 

Average
Of individually
Impaired
loans for the

 

 

Three months ended       June 30, 2021

 

 

Six months ended            June 30, 2021

 

 

Three months ended
June 30, 2022

 

 

Six months ended
June 30, 2022

 

Residential first mortgages

 

$

1,217,094

 

 

$

1,231,099

 

 

$

1,393,122

 

 

$

1,482,496

 

Commercial and Multi-Family

 

 

222,534

 

 

 

227,226

 

 

 

488,752

 

 

 

488,504

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

 

 

 

Home equity & other consumer

 

 

18,980

 

 

 

19,353

 

 

 

28,907

 

 

 

25,440

 

 

$

1,458,608

 

 

$

1,477,678

 

 

$

1,910,781

 

 

$

1,996,440

 

 

Impaired loans as of December 31, 20202021 and for the three and six months ended June 30, 2021 were as follows:

 

 

Loans

With no related

allowance recorded

 

 

Loans

with an

allowance recorded

 

 

Amount of

allowance for

loan losses allocated

 

 

Loans
With no related
allowance
recorded

 

 

Loans
with an
allowance
recorded

 

 

Amount of
allowance for
loan
losses allocated

 

Residential first mortgages

 

$

904,730

 

 

$

177,641

 

 

$

35,859

 

 

$

1,486,469

 

 

$

174,776

 

 

$

35,859

 

Commercial and Multi-Family

 

 

223,352

 

 

 

 

 

 

 

 

 

488,003

 

 

 

 

 

 

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity & other consumer

 

 

19,044

 

 

 

 

 

 

 

 

 

18,507

 

 

 

 

 

 

 

 

$

1,147,126

 

 

$

177,641

 

 

$

35,859

 

 

$

1,992,979

 

 

$

174,776

 

 

$

35,859

 

 

 

Average
Of individually
Impaired
loans for the

 

 

 

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

 

 

 

 

Average

Of individually

Impaired loans for the

 

 

 

Three months ended       June 30, 2020

 

 

Six months ended            June 30, 2020

 

Residential first mortgages

 

$

1,231,715

 

 

$

1,234,948

 

Commercial and Multi-Family

 

 

 

 

 

 

Construction

 

 

 

 

 

 

Commercial & Industrial

 

 

 

 

 

 

Home equity & other consumer

 

 

9,866

 

 

 

6,577

 

 

 

$

1,241,581

 

 

$

1,241,525

 

1918


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

 

The Bank has 43 residential loans totaling $738,717$469,102 that were troubled debt restructurings (“TDRs”) as of June 30, 2021,2022, with one loan totaling $176,455$173,353 with a specific reserve of $35,859.$35,859. At December 31, 2020,2021, the Bank had 4 residential loans totaling $750,035 and 1 commercial loan totaling $223,352$728,288 that were TDRs and one1 loan totaling $174,776 with a specific reserve of $35,859.$35,859. The Bank has not committed to lend additional amounts as of June 30, 2021 and2022 or December 31, 20202021 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, 20212022 or 2020.2021. There were 0 TDRs in payment default within twelve months following the modification during the three and six months ended June 30, 2021 and 2020.2022 or 2021.

Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

Interest income recognized on impaired loans for the three and six months ended June 30, 20212022 and March 31, 2020June 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, 20212022 and December 31, 2020:2021:

 

 

 

Nonaccrual

 

 

Loans Past

Due 90 Days

or More Still

Accruing

 

June 30, 2021

 

 

 

 

 

 

 

 

Residential

 

$

665,732

 

 

$

 

Commercial and multi-family

 

 

 

 

 

 

Consumer

 

 

18,791

 

 

 

 

Total

 

$

684,523

 

 

$

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

Residential

 

$

673,539

 

 

$

 

Commercial and multi-family

 

 

 

 

 

 

Consumer

 

 

19,044

 

 

 

 

Total

 

$

692,583

 

 

$

 

 

 

Nonaccrual

 

 

Loans Past
Due 90 Days
or More Still
Accruing

 

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

 

 

$

 

 

The Bank had 0 other real estate owned at either June 30, 20212022 or December 31, 2020.2021.

2019


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

 

The following table presents the aging of the recorded investment in past due loans as of June 30, 20212022 and December 31, 2020,2021, by class of loans:

 

 

30-59 Days

Past Due

 

 

60-89 Days

Past Due

 

 

Greater than

89 Days

Past Due

 

 

Total

Past Due

 

 

Loans Not

Past Due

 

 

Loans acquired with deteriorated credit quality

 

 

Total

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

Greater than
89 Days
Past Due

 

 

Total
Past
Due

 

 

Loans Not
Past Due

 

 

PCI loans

 

 

Total

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

331,535

 

 

$

1,073,062

 

 

$

113,370

 

 

$

1,517,967

 

 

$

337,272,620

 

 

$

4,389,691

 

 

$

343,180,278

 

 

$

 

 

$

559,838

 

 

$

286,744

 

 

$

846,582

 

 

$

375,628,331

 

 

$

3,301,740

 

 

$

379,776,653

 

Commercial and multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

188,337,396

 

 

 

1,449,731

 

 

 

189,787,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

172,240,349

 

 

 

1,379,344

 

 

 

173,619,693

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,776,910

 

 

 

 

 

 

13,776,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51,799,501

 

 

 

 

 

 

51,799,501

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,580,334

 

 

 

43,855

 

 

 

10,624,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,068,871

 

 

 

 

 

 

2,068,871

 

Consumer

 

 

199,758

 

 

 

21,928

 

 

 

 

 

 

221,686

 

 

 

28,289,871

 

 

 

 

 

 

28,511,557

 

Home equity and other consumer

 

 

137,112

 

 

 

 

 

 

 

 

 

137,112

 

 

 

25,626,472

 

 

 

35,252

 

 

 

25,798,836

 

Total

 

$

531,293

 

 

$

1,094,990

 

 

$

113,370

 

 

$

1,739,653

 

 

$

578,257,131

 

 

$

5,883,277

 

 

$

585,880,061

 

 

$

137,112

 

 

$

559,838

 

 

$

286,744

 

 

$

983,694

 

 

$

627,363,524

 

 

$

4,716,336

 

 

$

633,063,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

 

 

$

702,497

 

 

$

24,628

 

 

$

727,125

 

 

$

339,273,864

 

 

$

 

 

$

340,000,989

 

 

$

 

 

$

312,616

 

 

$

857,676

 

 

$

1,170,292

 

 

$

314,684,371

 

 

$

4,113,571

 

 

$

319,968,234

 

Commercial and multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

171,634,451

 

 

 

 

 

 

171,634,451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

173,962,424

 

 

 

1,412,995

 

 

 

175,375,419

 

Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,930,959

 

 

 

 

 

 

9,930,959

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41,384,687

 

 

 

 

 

 

41,384,687

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,652,248

 

 

 

 

 

 

13,652,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,905,524

 

 

 

 

 

 

7,905,524

 

Home Equity & Consumer

 

 

160,382

 

 

 

 

 

 

 

 

 

160,382

 

 

 

24,552,998

 

 

 

 

 

 

24,713,380

 

 

 

27,529

 

 

 

 

 

 

 

 

 

27,529

 

 

 

27,662,189

 

 

 

39,261

 

 

 

27,728,979

 

Total

 

$

160,382

 

 

$

702,497

 

 

$

24,628

 

 

$

887,507

 

 

$

559,044,520

 

 

$

 

 

$

559,932,027

 

 

$

27,529

 

 

$

312,616

 

 

$

857,676

 

 

$

1,197,821

 

 

$

565,599,195

 

 

$

5,565,827

 

 

$

572,362,843

 

 

Loans greater than 89 days past due 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.

2120


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 5 – LOANS (Continued)

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

 

 

Pass

 

 

Special

Mention

 

 

Substandard

 

 

Doubtful

 

 

Totals

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

Special
Mention

 

 

Substandard

 

 

Doubtful

 

 

Totals

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

342,100,977

 

 

$

444,075

 

 

$

635,226

 

 

$

 

 

$

343,180,278

 

 

$

378,943,899

 

 

$

372,332

 

 

$

460,422

 

 

$

 

 

$

379,776,653

 

Commercial and multi-family

 

 

188,570,416

 

 

 

 

 

 

1,216,711

 

 

 

 

 

 

189,787,127

 

 

 

173,619,693

 

 

 

 

 

 

 

 

 

 

 

 

173,619,693

 

Construction

 

 

13,776,910

 

 

 

 

 

 

 

 

 

 

 

 

13,776,910

 

 

 

51,799,501

 

 

 

 

 

 

 

 

 

 

 

 

51,799,501

 

Commercial and industrial

 

 

10,624,189

 

 

 

 

 

 

 

 

 

 

 

 

10,624,189

 

 

 

2,068,871

 

 

 

 

 

 

 

 

 

 

 

 

2,068,871

 

Consumer

 

 

28,492,766

 

 

 

 

 

 

18,791

 

 

 

 

 

 

28,511,557

 

Home equity and other consumer

 

 

25,780,597

 

 

 

 

 

 

18,239

 

 

 

 

 

 

25,798,836

 

Total

 

$

583,565,258

 

 

$

444,075

 

 

$

1,870,728

 

 

$

 

 

$

585,880,061

 

 

$

632,212,561

 

 

$

372,332

 

 

$

478,661

 

 

$

 

 

$

633,063,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

338,786,939

 

 

$

567,766

 

 

$

646,284

 

 

$

 

 

$

340,000,989

 

 

$

318,868,440

 

 

$

383,034

 

 

$

716,760

 

 

$

 

 

$

319,968,234

 

Commercial and multi-family

 

 

170,181,704

 

 

 

 

 

 

1,452,747

 

 

 

 

 

 

171,634,451

 

 

 

174,173,925

 

 

 

 

 

 

1,201,494

 

 

 

 

 

 

175,375,419

 

Construction

 

 

9,930,959

 

 

 

 

 

 

 

 

 

 

 

 

9,930,959

 

 

 

41,384,687

 

 

 

 

 

 

 

 

 

 

 

 

41,384,687

 

Commercial and industrial

 

 

13,652,248

 

 

 

 

 

 

 

 

 

 

 

 

13,652,248

 

 

 

7,905,524

 

 

 

 

 

 

 

 

 

 

 

 

7,905,524

 

Consumer

 

 

24,694,336

 

 

 

 

 

 

19,044

 

 

 

 

 

 

24,713,380

 

Home equity and other consumer

 

 

27,710,472

 

 

 

 

 

 

18,507

 

 

 

 

 

 

27,728,979

 

Total

 

$

557,246,186

 

 

$

567,766

 

 

$

2,118,075

 

 

$

 

 

$

559,932,027

 

 

$

570,043,048

 

 

$

383,034

 

 

$

1,936,761

 

 

$

 

 

$

572,362,843

 

 

NoteNOTE 6Commitments 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 Contingencies644,718 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, 2022, approximately $118,000 and $236,000 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. The Bankexpected future compensation expense related to the 226,519 non-vested restricted shares outstanding at June 30, 2022 was approximately $2.0 million over a weighted average period of four years.

The following is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates.  These financial instruments primarily include commitments to extend credit.  Such instruments involve, to varying degrees, elements of credit and interest rate risk in excesssummary of the amount recognized inCompany's restricted stock activity during the consolidated statements of financial condition.  The contractual amounts of these instruments reflect the extent of involvement the Bank has in those particular classes of financial instruments.six months ended June 30, 2022:

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

 

 

Number of non-vested Restricted Shares

 

 

Weighted Average Grant Date Fair Value

 

Outstanding, January 1, 2022

 

 

226,519

 

 

$

10.45

 

Granted

 

 

0

 

 

 

0

 

Vested

 

 

0

 

 

 

0

 

Forfeited

 

 

0

 

 

 

0

 

Outstanding, June 30, 2022

 

 

226,519

 

 

$

10.45

 

2221


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note(unaudited)

NOTE 6Commitments and Contingencies 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 Bank hadfair 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 firm commitments,and is estimated using the simplified approach, which assumes that all outstanding options will be exercised at the midpoint of which expire within twothe 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, 2022, approximately $115,000 and $230,000 in expense was recognized in regard to originate, loansthese 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 526,119 non-vested options outstanding at June 30, 2021 and December 31, 2020 as follows:

2022 was $1.9 million over the vesting period of four years.

 

 

June 30,

2021

 

 

December 31,

2020

 

Fixed Rate

 

 

 

 

 

 

 

 

Residential mortgage loans

 

$

11,832,150

 

 

$

8,524,000

 

Commercial real estate

 

 

10,977,500

 

 

 

1,830,000

 

Commercial and industrial

 

 

 

 

 

 

Construction

 

 

23,000,000

 

 

 

 

Home equity

 

 

707,000

 

 

 

2,135,000

 

Total

 

$

46,516,650

 

 

$

12,489,000

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Variable Rate

 

 

 

 

 

 

 

 

Residential mortgage loans

 

$

 

 

$

1,500,000

 

Commercial real estate

 

 

 

 

 

4,675,000

 

Construction

 

 

 

 

 

 

Home equity

 

 

159,900

 

 

 

 

Total

 

$

159,900

 

 

$

6,175,000

 

Commitments to make loans are generally made for periodsThe following is a summary of 90 days or less.  The fixed rate loan commitments have interest rates ranging from 2.625% to 4.375%and maturities ranging from 10 years to 30 years.

Atthe Company's option activity during the six months ended June 30, 20212022:

 

 

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

 

Granted

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, June 30, 2022

 

 

523,619

 

 

$

10.45

 

 

 

5.9

 

 

$

397,591

 

Options exercisable at June 30, 2022

 

$

 

 

 

 

 

 

 

 

$

 

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, the difference between the Company's closing stock price on the last trading day of the period and December 31, 2020, undisbursed funds from approved linesthe exercise price, multiplied by the number of credit under a homeowners’ equity lending program amounted to $45,889,699in-the-money options.

NOTE 7 – EMPLOYEE STOCK OWNERSHIP PLAN

In connection with our mutual-to-stock reorganization and $41,774,944, respectively.  At June 30, 2021 and December 31, 2020, undisbursed funds from approved lines of credit under a business line of credit program amounted to $413,307 and $427,827, respectively.  Unless they are specifically cancelled by notice fromstock offering, the Bank these funds represent firm commitments availableestablished 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 respective borrowersESOP are allocated to eligible participants on demand.

Commitmentsthe basis of compensation, subject to extend credit are agreementsfederal tax limits. The number of shares to lend to a customer as long as therebe allocated annually 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 $73,763 and $19,258 for25,789 through 2039. During the three months ended June 30, 2022 and 2021, $70,000and 2020,$65,000 was incurred as expense for the plan, respectively. During the six months ended June 30, 2022 and 2021, $137,000 and $125,000 was incurred as expense for the plan, respectively. As of June 30, 2022, 65,789 shares have been allocated and 449,977 shares are unallocated with a fair value of $5.1 million.


2322


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 7 – 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.(unaudited)

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

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

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

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

 

 

 

Carrying

Value

 

 

Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

As of June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

6,433,204

 

 

$

 

 

$

6,433,204

 

 

$

 

MBSs - residential

 

 

4,790,008

 

 

 

 

 

$

4,790,008

 

 

 

 

 

 

$

11,223,212

 

 

$

 

 

$

11,223,212

 

 

$

 

As of December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

6,399,056

 

 

$

 

 

$

6,399,056

 

 

$

 

MBSs - residential

 

 

5,471,452

 

 

 

 

 

 

5,471,452

 

 

 

 

 

 

$

11,870,508

 

 

$

 

 

$

11,870,508

 

 

$

 

There were 0 transfers between level 1 and level 2 during the nine months ended June 30, 2021 and December 31, 2020.

24


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 7 – FAIR VALUE (Continued)

The carrying amounts and estimated fair values of financial instruments, at June 30, 2021 and December 31, 2020, are as follows:

 

 

Carrying

 

 

Fair

 

 

Fair Value Measurement Placement

 

 

 

Amount

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

100,671

 

 

$

100,671

 

 

$

100,671

 

 

$

 

 

$

 

Investment securities held-to-maturity

 

 

77,657

 

 

 

78,486

 

 

 

 

 

 

78,486

 

 

 

 

Loans

 

 

583,752

 

 

 

582,818

 

 

 

 

 

 

 

 

 

582,818

 

Financial instruments - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

374,134

 

 

 

374,864

 

 

 

 

 

 

374,864

 

 

 

 

Borrowings

 

 

96,997

 

 

 

98,556

 

 

 

 

 

 

98,556

 

 

 

 

 

 

Carrying

 

 

Fair

 

 

Fair Value Measurement Placement

 

 

 

Amount

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

80,386

 

 

$

80,386

 

 

$

80,386

 

 

$

 

 

$

 

Investment securities held-to-maturity

 

 

57,504

 

 

 

58,872

 

 

 

 

 

 

58,872

 

 

 

 

Loans

 

 

557,691

 

 

 

544,392

 

 

 

 

 

 

 

 

 

544,392

 

Financial instruments - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

356,364

 

 

 

359,465

 

 

 

 

 

 

359,465

 

 

 

 

Borrowings

 

 

104,291

 

 

 

106,159

 

 

 

 

 

 

106,159

 

 

 

 

Carrying amount is the estimated fair value for cash and cash equivalents.  The fair value of loans is determined using an exit price methodology. Certificates of deposits fair value is estimated by using a discounted cash flow approach. Fair value of FHLB advances is based on current rates for similar financing.  The fair value of off-balance sheet items is not considered material.

25


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 8 Commitments and Contingencies

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

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

23


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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,
2022

 

 

December 31,
2021

 

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,
2022

 

 

December 31,
2021

 

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. 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 89 – 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:

 

 

Carrying
Value

 

 

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

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

As of 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

 

 

$

 

There were 0 transfers between level 1 and level 2 during the six months ended June 30, 2022.

25


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 9 – FAIR VALUE (Continued)

The carrying amounts and estimated fair values of financial instruments not measured at fair value, at June 30, 2022 and December 31, 2021, were as follows:

 

 

Carrying

 

 

Fair

 

 

Fair Value Measurement Placement

 

 

 

Amount

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Loans and loans held for sale

 

 

631,170

 

 

 

595,775

 

 

 

 

 

 

 

 

 

595,775

 

Financial instruments - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

367,866

 

 

 

369,394

 

 

 

 

 

 

369,394

 

 

 

 

Borrowings

 

 

115,279

 

 

 

114,670

 

 

 

 

 

 

114,670

 

 

 

 

 

 

Carrying

 

 

Fair

 

 

Fair Value Measurement Placement

 

 

 

Amount

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial instruments - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

105,069

 

 

$

105,069

 

 

$

105,069

 

 

$

 

 

$

 

Investment securities held-to-maturity

 

 

74,053

 

 

 

74,081

 

 

 

 

 

 

74,081

 

 

 

 

Loans and loans held for sale

 

 

571,363

 

 

 

569,845

 

 

 

 

 

 

 

 

 

569,845

 

Financial instruments - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

366,396

 

 

 

365,452

 

 

 

 

 

 

365,452

 

 

 

 

Borrowings

 

 

85,052

 

 

 

86,657

 

 

 

 

 

 

86,657

 

 

 

 

Carrying amount is the estimated fair value for cash and cash equivalents. The fair value of loans is determined using an exit price methodology. Certificates of deposits fair value is estimated by using a discounted cash flow approach. Fair value of FHLB advances is based on current rates for similar financing. The fair value of off-balance sheet items is not considered material.

NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss included in equity (net of tax) for the three and six months ended June 30, 20212022 and 2020 is2021 was as follows:

 

 

 

Unrealized gain

and losses on

available for

sale securities

 

 

Benefit plans

 

 

Total

 

Three months

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance at April 1, 2021

 

$

112,120

 

 

$

(342,201

)

 

$

(230,081

)

Other comprehensive gain

 

 

9,212

 

 

 

 

 

 

9,212

 

Amounts reclassified

 

 

 

 

 

31,381

 

 

 

31,381

 

Net period comprehensive income

 

 

9,212

 

 

 

31,381

 

 

 

40,593

 

Ending balance

 

$

121,332

 

 

$

(310,820

)

 

$

(189,488

)

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance at January 1, 2020

 

$

(29,538

)

 

$

(397,659

)

 

$

(427,197

)

Other comprehensive loss before reclassification

 

 

99,890

 

 

 

 

 

 

99,890

 

Amounts reclassified

 

 

 

 

 

27,895

 

 

 

27,895

 

Net period comprehensive loss

 

 

99,890

 

 

 

27,895

 

 

 

127,785

 

Ending balance

 

$

70,352

 

 

$

(369,764

)

 

$

(299,412

)

 

 

Unrealized gain
and losses on
available for
sale
securities

 

 

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

)

26


BOGOTA FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

Unrealized gain
and losses on
available for
sale
securities

 

 

Benefit plans

 

 

Total

 

Six months ended
June 30, 2022

 

 

 

 

 

 

 

 

 

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

)

 

 

 

 

Unrealized gain

and losses on

available for

sale securities

 

 

Benefit plans

 

 

Total

 

Six months

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance at January 1, 2021

 

$

100,569

 

 

$

(373,582

)

 

$

(273,013

)

Other comprehensive  (loss) gain

 

 

20,763

 

 

 

 

 

 

20,763

 

Amounts reclassified

 

 

 

 

 

62,762

 

 

 

62,762

 

Net period comprehensive income

 

 

20,763

 

 

 

62,762

 

 

 

83,525

 

Ending balance

 

$

121,332

 

 

$

(310,820

)

 

$

(189,488

)

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance at January 1, 2020

 

$

111,892

 

 

$

(425,557

)

 

$

(313,665

)

Other comprehensive gain (loss)

 

 

(41,540

)

 

 

 

 

 

(41,540

)

Amounts reclassified

 

 

 

 

 

55,793

 

 

 

55,793

 

Net period comprehensive income

 

 

(41,540

)

 

 

55,793

 

 

 

14,253

 

Ending balance

 

$

70,352

 

 

$

(369,764

)

 

$

(299,412

)

27

NOTE 9 – 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 4% of the shares issued, including shares issued to the Bogota Savings Bank Charitable Foundation. 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.



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

General

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, 2021 as compared to2022 and December 31, 20202021 and for the three and six months ended June 30, 20212022 and June 30, 20202021 is intended to assist in understanding the financial condition and results of operations of Bogota Financial Corp. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

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

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

statements of our goals, intentions and expectations;

statements regarding our business plans, prospects, growth and operating strategies;

statements regarding the quality of our loan and investment portfolios; and

estimates of our risks and future costs and benefits.

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

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

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

changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for loan losses;

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

our ability to access cost-effective funding;

our ability to access cost-effective funding;

fluctuations in real estate values and both residential and commercial real estate market conditions;

fluctuations in real estate values and both residential and commercial real estate market conditions;

demand for loans and deposits in our market area;

demand for loans and deposits in our market area;

our ability to continue to implement our business strategies;

our ability to continue to implement our business strategies;

competition among depository and other financial institutions;

competition among depository and other financial institutions;

inflation and changes in market interest rates that reduce our margins and yields, reduce the fair value of financial instruments or reduce our volume of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary market;

inflation and changes in market interest rates that reduce our margins and yields, reduce the fair value of financial instruments or reduce our volume of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary market;

adverse changes in the securities markets;

adverse changes in the securities markets;

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

our ability to manage market risk, credit risk and operational risk;

our ability to manage market risk, credit risk and operational risk;

28


our ability to enter new markets successfully and capitalize on growth opportunities;

our ability to successfully integrate into our operations any assets, liabilities or systems we may acquire, as well as new management personnel or customers, and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;
changes in consumer spending, borrowing and savings habits;
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
our ability to retain key employees;
risks as it relates to cyber security against our information technology and those of our third-party providers and vendors.
our compensation expense associated with equity allocated or awarded to our employees; and
changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

 

our ability to enter new markets successfully and capitalize on growth opportunities;

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

changes in consumer spending, borrowing and savings habits;

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

our ability to retain key employees;

our compensation expense associated with equity allocated or awarded to our employees; and

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

The COVID-19 pandemic has adversely impacted the global and nation economy and certain industries and geographies in which our clients operate. Given theits ongoing and dynamic nature, of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business.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, including ifuncertain. Additionally, the coronavirus can continueresponses of various governmental and nongovernmental authorities and consumers to be controlledthe pandemic may have material long-term effects on the Company and abated and whether the reopening of businesses will result in a meaningful increase in economic activity.  As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any ofits clients which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: demand for our products and services may decline, making itare difficult to grow assets and income;quantify in the near-term or long-term.

if the economy is unable to substantially remain open, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

our allowance for loan losses may be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

our cyber security risks are increased as the result of an increase in the number of employees working remotely;

we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and

Federal Deposit Insurance Corporation premiums may increase if the agency experience additional resolution costs.

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


Any one or a combination of the factors identified above could negatively impact our business, financial condition and results of operations and prospects.

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 is expected to occuroccurred on or about August 16, 2021.

As of February 28, 2021, Gibraltar had assets of $106.2 million, of assets, gross 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 unaudited consolidated financial statements included with our Annual Report on Form 10-K at and for the year ended December 31, 2020.2021. Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations. Management believes that the most critical accounting policy, which involves the most complex or subjective decisions or assessments, is as follows:

Allowance for Loan Losses.  The allowance for loan losses is the amount estimated by management as necessary to absorb credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the relevant balance sheet date. The amount of the allowance is based onThere have been no significant estimates, and the ultimate losses may vary from such estimates as more information becomes available or conditions change. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions used and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.Company's critical accounting policies since December 31, 2021.

As a substantial percentage of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans are critical in determining the amount of the allowance required for specific loans. Assumptions are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property securing a loan and the related allowance. Management reviews the assumptions supporting such appraisals to determine that the resulting values reasonably reflect amounts realizable on the related loans.29


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

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

Actual loan losses may be significantly more than the allowance we have established, which could have a material negative effect on our financial results.  See Note 1 to the Notes to the consolidated financial statements for a complete discussion of the allowance for loan losses.  


COVID-19

COVID-19 has adversely impacted a broad range of industries in which the Company’s customers operate and could impair their ability to fulfill their financial obligations. The pandemic has caused significant disruption in the U.S. economy and disrupted banking and other financial activity in the areas in which the Company operates.

Congress, the President and the banking regulators have taken several actions designed to cushion the economic fallout, including enactment of the Coronavirus Aid Relief and Economic Security (“CARES”) Act at the end of March 2020. The goal of the CARES Act is to prevent severe economic downturn through various measures, including direct financial aid to American families and economic stimulus to significantly impacted industry sectors. On December 27, 2020, the 2021 Consolidated Appropriations Act, which was enacted as part of an omnibus spending bill for the 2021 federal fiscal year, included provisions intended to provide additional aid to those impacted by the pandemic. In addition to the general impact of COVID-19, certain provisions of the CARES Act, the 2021 Consolidated Appropriations Act as well as other legislative and regulatory relief efforts may have a material impact on the Company’s operations.

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

As of June 30, 2021,2022, 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 CARESCoronavirus Aid Relief and Economic Security (“CARES”) Act and, willas such, were not be treated as troubled debt restructurings during the short-term modification period if the loan was not in arrears at December 31, 2019. Furthermore, these loans will continuecontinued to accrue interest. Of the 172 loans to which loan modifications were granted only five loans have requested additional deferrals as of June 30, 2021.  The five loans still on deferral represents $884,000or 0.2% of net loans, and all are within the one-to-four family residential real estate portfolio.

Financial position and results of operations

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

The Company’s interest income could be reduced due to COVID-19. In keeping with the guidance from the regulators, the Company is actively working with COVID-19 affected borrowers to defer payments, interest and fees. While interest and fees will accrue to income through normal GAAP accounting, should eventual credit losses on these deferred payments emerge, interest income and fees accrued would need to be reversed. As a result, interest income in future periods could be negatively impacted.

Credit and asset quality

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

The Company is also providing assistance to individuals and small business clients directly impacted by the COVID-19 pandemic by allowing borrowers to modify their loans. Under the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current for the COVID-19 modifications. Loans that were modified due to COVID-19 will not be classified as a troubled debt restructurings (“TDR”).


The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) program called the Paycheck Protection Program (“PPP”). PPP loans have: (a) an interest rate of 1.0%, (b) a five-year loan term to maturity for loans made on or after June 5, 2020 (loans made prior to June 5, 2020 have a two-year term, however borrowers and lenders may mutually agree to extend the maturity for such loans to five years); and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be forgiven under the PPP if employee and compensation levels of the business are maintained and 60% of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses. The 2021 Consolidated Appropriations Act signed into law on December 27, 2020 approved an additional $286,000,000 for PPP loans.

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, 20212022 and December 31, 20202021

Total Assets. Total assets increased $77.9$37.6 million, or 10.5%4.5%, from December 31, 2021 to $818.9$874.9 million at June 30, 2021 from December 31, 20202022 primarily due to acquiring $106.0 million in assets from the Gibraltar Bank acquisition.loan originations and purchase of investment securities with excess liquidity. The increase in assets reflected a $20.3$60.6 million, or 25.2%10.6%, increase in loans, a $55.7 million, or 133.1%, increase in securities available for sale and a $12.4 million or 16.7%, increase in securities held to maturity, offset by a $97.5 million, or 92.8%, decrease in cash and cash equivalents to $100.7 million, a $20.2 million, or 35.0%, increase in securities held-to-maturity, a $27.0 million, or 10.5%, increase in loans and a $8.2 million, or 48.7% increase in bank owned life insurance.equivalents.

Cash and Cash Equivalents. Total cash and cash equivalents increased $20.3decreased $97.5 million, or 25.2%92.8%, to $100.7$7.6 million at June 30, 20212022 from $80.4$105.1 million at December 31, 2020.2021. The increasedecrease was primarily due to $19.3 million in cash fromfunding of loan originations and investment security purchases during the Gibraltar Bank acquisition.six months ended June 30, 2022.

Securities Available for Sale. Total securities available for sale decreased $647,000,increased $55.7 million, or 5.5%133.1%, to $11.2$97.5 million at June 30, 20212022 from $11.9$41.8 million at December 31, 2020.2021. The decreaseincrease was due to maturities$67.5 million of purchases of mortgage-backed securities, corporate bonds, U.S. treasury bills and government agency obligations, with excess cash. The increase in securities available for sale reflected a $10.2 million increase 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 million increase in mortgage-backed securities.

Securities Held to Maturity. Total securities held to maturity increased $20.2$12.4 million, or 35.0%16.7%, to $77.7$86.4 million at June 30, 20212022 from $57.5$74.1 million at December 31, 2020,2021, primarily due to $27.3$23.1 million in purchases of securities and $7.0 million of securities acquired from Gibraltar Bank, which was offset by repayments inof mortgage-backed securities. The increase in securities held to maturity reflected a $2.5 million increase in corporate bonds, a $4.5$10.0 million increase in U.S. government agency obligations, a $1.4$4.8 million increase in municipal bonds and a $10.4$5.0 million increasedecrease in mortgage-backed securities.

Net Loans. Net loans increased $26.1$60.6 million, or 4.7%10.6%, to $583.8$630.8 million at June 30, 20212022 from $557.7$570.2 million at December 31, 2020.2021. The increase was due to a $18.2an increase of $59.8 million, or 10.6%18.7%, in one-to four-residential real estate loans to $379.8 million from $320.0 million at December 31, 2021, and an increase of $10.4 million, or 25.2%, in construction loans to $51.8 million at June 30, 2022 from $41.4 million at December 31, 2021 offset by a $5.8 million, or 73.8%, decrease in commercial and industrial loans to $2.1 million at June 30, 2022 from $7.9 million as of December 31, 2021, a decrease of $1.9 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%, in commercial and multi-family real estate loans to $189.8$173.6 million at June 30, 20212022 from $171.6$175.4 million at December 31, 2020, an increase of $4.1 million, or 1.2% in one- to-four residential real estate loans to $344.1 million at June 30, 2021 from $340.0 million  at December 31, 2020, an increase of $3.8 million, or 38.7%, in construction real estate loans to $13.8 million at June 30, 2021 from $9.9 million at December 31, 2020, an increase of $3.8 million or 15.4% in consumer loans to $28.5 million at June 30, 2021 from $24.7 million at December 31, 2020, partially offset by a decrease of $3.0 million, or 22.2%, in commercial and industrial loans to $10.6 million at June 30, 2021 from $13.7 million as of December 31, 2020. The increase in loans was primarily due to the $76.8 million of loans acquired from Gibraltar Bank, which was offset by residential loan pay downs and the sale of $15.7 million of residential loans.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. As of June 30, 20212022, the Bank had $894,000$360,000 in loans held for sale compare the nocompared $1.2 million loans held for sale as of December 31, 2021.


Bank-Owned Life Insurance. Bank-owned life insurance increased $5.3 million or 21.7% due to a $5.0 million purchase of bank-owned life insurance during the six months ended June 30, 2022.

30


Deposits. Total deposits increased $67.2$13.8 million, or 13.4%2.3%, to $569.2$611.3 million at June 30, 20212022 from $502.0$597.5 million at December 31, 20202021 reflecting a new $11.0 million interest-bearing checking municipal relationship. The increase in deposits reflected an increase in interest bearinginterest-bearing deposits of $62.5$13.7 million, or 13.2%2.5%, to $537.4$571.8 million as of June 30, 20212022 from $474.9$558.2 million at December 31, 20202021 and an increase in non-interest bearing deposits of $4.7 million,$124,000, or 17.4%0.3%, to $31.8$39.4 million as of June 30, 20212022 from $27.1$39.3 million as of December 31, 2020. The increases are primarily due to the $81.4 million of deposits acquired from Gibraltar Bank.2021.

At June 30, 2021,2022, municipal deposits totaled $22.8$38.9 million, which represented 4.0%6.4% of total deposits, and brokered deposits totaled $54.2$48.7 million, which represented 9.5%8.0% of total deposits. At December 31, 2020,2021, municipal deposits totaled $37.6$31.5 million, which represented 7.5%5.3% of total deposits, and brokered deposits totaled $54.2$52.9 million, which represented 10.8%8.9% of total deposits.

Borrowings. Federal Home Loan Bank of New York borrowings decreased $7.3increased $30.2 million, or 7.0%35.5%, to $97.0$115.3 million at June 30, 20212022 from $104.3$85.1 million at December 31, 2020,2021, as maturitiesshort-term advances increased $43.2 million and repayments of $17.3 million of FHLBlong-term advances were offset by $10.3 million of borrowings that were assumed from Gibraltar Bank.$13.0 million. The weighted average rate of borrowings was 1.74%1.72% and 1.64%1.69% as of June 30, 20212022 and December 31, 2020,2021, respectively.

Total Equity. Stockholders’ equity increased $16.2decreased $7.1 million to $144.6$140.5 million, primarily due toincreased accumulated other comprehensive loss for securities available for sale of $6.5 million and the $11.5 millionrepurchase of 379,949 shares of stock issued in connection withduring the acquisitionsix months at a cost of Gibraltar Bank and the $4.4$4.3 million, offset by $3.0 million of net income for the six months ended June 30, 2021.2022. At June 30, 2021,2022, the Company’s ratio of average stockholders’ equity-to-total assets was 17.43%17.08%, compared to 16.97%17.67% at December 31, 2020.2021.


31


Average Balance Sheets and Related Yields and Rates

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

 

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

 

Average
Balance

 

 

Interest and
Dividends

 

 

Yield/
Cost
(3)

 

 

Average
Balance

 

 

Interest and
Dividends

 

 

Yield/
Cost
(3)

 

 

 

(Dollars in thousands)

 

Assets:

 

(unaudited)

 

Cash and cash equivalents

 

$

20,723

 

 

$

28

 

 

 

0.55

%

 

$

99,956

 

 

$

41

 

 

 

0.16

%

Loans

 

 

593,705

 

 

 

5,849

 

 

 

3.95

%

 

 

591,134

 

 

 

5,685

 

 

 

3.86

%

Securities

 

 

182,338

 

 

 

979

 

 

 

2.15

%

 

 

86,594

 

 

 

402

 

 

 

1.86

%

Other interest-earning assets

 

 

4,891

 

 

 

55

 

 

 

4.53

%

 

 

5,740

 

 

 

74

 

 

 

5.16

%

Total interest-earning assets

 

 

801,657

 

 

 

6,911

 

 

 

3.46

%

 

 

783,424

 

 

 

6,202

 

 

 

3.17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-earning assets

 

 

54,038

 

 

 

 

 

 

 

 

 

41,827

 

 

 

 

 

 

 

Total assets

 

$

855,695

 

 

 

 

 

 

 

 

$

825,251

 

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

158,552

 

 

$

217

 

 

 

0.55

%

 

$

99,267

 

 

$

142

 

 

 

0.59

%

Savings accounts

 

 

66,095

 

 

 

43

 

 

 

0.26

%

 

 

64,341

 

 

 

26

 

 

 

0.16

%

Certificates of deposit

 

 

354,600

 

 

 

590

 

 

 

0.67

%

 

 

375,373

 

 

 

883

 

 

 

0.94

%

Total interest-bearing deposits

 

 

579,247

 

 

 

850

 

 

 

0.59

%

 

 

538,981

 

 

 

1,051

 

 

 

0.78

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank
   advances

 

 

86,445

 

 

 

356

 

 

 

1.59

%

 

 

100,289

 

 

 

376

 

 

 

1.50

%

Total interest-bearing liabilities

 

 

665,692

 

 

 

1,206

 

 

 

0.73

%

 

 

639,270

 

 

 

1,427

 

 

 

0.90

%

Non-interest-bearing deposits

 

 

38,132

 

 

 

 

 

 

 

 

 

26,736

 

 

 

 

 

 

 

Other non-interest-bearing
   liabilities

 

 

5,556

 

 

 

 

 

 

 

 

 

15,421

 

 

 

 

 

 

 

Total liabilities

 

 

709,380

 

 

 

 

 

 

 

 

 

681,427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

146,315

 

 

 

 

 

 

 

 

 

143,824

 

 

 

 

 

 

 

Total liabilities and equity

 

$

855,695

 

 

 

 

 

 

 

 

$

825,251

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

5,705

 

 

 

 

 

 

 

 

$

4,775

 

 

 

 

Interest rate spread (1)

 

 

 

 

 

 

 

 

2.73

%

 

 

 

 

 

 

 

 

2.28

%

Net interest margin (2)

 

 

 

 

 

 

 

 

2.85

%

 

 

 

 

 

 

 

 

2.44

%

Average interest-earning assets
   to average interest-bearing
   liabilities

 

 

120.42

%

 

 

 

 

 

 

 

 

122.55

%

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

 

Average

Balance

 

 

Interest and

Dividends

 

 

Yield/

Cost (3)

 

 

Average

Balance

 

 

Interest and

Dividends

 

 

Yield/

Cost (3)

 

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

99,956

 

 

$

41

 

 

 

0.16

%

 

$

48,248

 

 

$

69

 

 

 

0.57

%

Loans

 

 

591,134

 

 

 

5,685

 

 

 

3.86

%

 

 

578,212

 

 

 

5,246

 

 

 

3.63

%

Securities

 

 

86,594

 

 

 

402

 

 

 

1.86

%

 

 

68,267

 

 

 

418

 

 

 

2.45

%

Other interest-earning assets

 

 

5,740

 

 

 

74

 

 

 

5.16

%

 

 

6,236

 

 

 

83

 

 

 

5.32

%

Total interest-earning assets

 

 

783,424

 

 

 

6,202

 

 

 

3.17

%

 

 

700,963

 

 

 

5,816

 

 

 

3.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-earning assets

 

 

41,827

 

 

 

 

 

 

 

 

 

 

 

28,109

 

 

 

 

 

 

 

 

 

Total assets

 

$

825,251

 

 

 

 

 

 

 

 

 

 

$

729,072

 

 

 

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

99,267

 

 

$

142

 

 

 

0.57

%

 

$

52,699

 

 

$

125

 

 

 

0.95

%

Savings accounts

 

 

64,341

 

 

 

26

 

 

 

0.16

%

 

 

29,764

 

 

 

18

 

 

 

0.25

%

Certificates of deposit

 

 

375,373

 

 

 

883

 

 

 

0.94

%

 

 

379,210

 

 

 

1,898

 

 

 

2.00

%

Total interest-bearing deposits

 

 

538,981

 

 

 

1,051

 

 

 

0.78

%

 

 

461,673

 

 

 

2,041

 

 

 

1.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

 

100,289

 

 

 

376

 

 

 

1.50

%

 

 

109,758

 

 

 

489

 

 

 

1.78

%

Total interest-bearing liabilities

 

 

639,270

 

 

 

1,427

 

 

 

0.90

%

 

 

571,431

 

 

 

2,530

 

 

 

1.78

%

Non-interest-bearing deposits

 

 

26,736

 

 

 

 

 

 

 

 

 

 

 

24,471

 

 

 

 

 

 

 

 

 

Other non-interest-bearing liabilities

 

 

15,421

 

 

 

 

 

 

 

 

 

 

 

7,378

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

681,427

 

 

 

 

 

 

 

 

 

 

 

603,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

143,824

 

 

 

 

 

 

 

 

 

 

 

125,792

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

825,251

 

 

 

 

 

 

 

 

 

 

$

729,072

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

$

4,775

 

 

 

 

 

 

 

 

 

 

$

3,286

 

 

 

 

 

Interest rate spread (1)

 

 

 

 

 

 

 

 

 

 

2.28

%

 

 

 

 

 

 

 

 

 

 

1.55

%

Net interest margin (2)

 

 

 

 

 

 

 

 

 

 

2.44

%

 

 

 

 

 

 

 

 

 

 

1.88

%

Average interest-earning assets to

   average interest-bearing liabilities

 

 

122.55

%

 

 

 

 

 

 

 

 

 

 

122.67

%

 

 

 

 

 

 

 

 

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

 

32


 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

 

Average
Balance

 

 

Interest and
Dividends

 

 

Yield/
Cost
 (3)

 

 

Average
Balance

 

 

Interest and
Dividends

 

 

Yield/
Cost
(3)

 

 

 

(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
   advances

 

 

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
   liabilities

 

 

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
   to average interest-bearing
   liabilities

 

 

121.36

%

 

 

 

 

 

 

 

 

122.40

%

 

 

 

 

 

 

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

33


(1)

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

(2)

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

(3)

Annualized.


 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

 

Average

Balance

 

 

Interest and

Dividends

 

 

Yield/

Cost (3)

 

 

Average

Balance

 

 

Interest and

Dividends

 

 

Yield/

Cost (3)

 

 

 

(Dollars in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,564

 

 

$

91

 

 

 

0.19

%

 

$

69,337

 

 

$

351

 

 

 

1.01

%

Loans

 

 

585,279

 

 

 

11,150

 

 

 

3.83

%

 

 

550,246

 

 

 

10,343

 

 

 

3.76

%

Securities

 

 

78,485

 

 

 

1,088

 

 

 

2.77

%

 

 

66,083

 

 

 

861

 

 

 

2.61

%

Other interest-earning assets

 

 

5,919

 

 

 

147

 

 

 

4.98

%

 

 

5,888

 

 

 

179

 

 

 

6.08

%

Total interest-earning assets

 

 

765,247

 

 

 

12,476

 

 

 

3.27

%

 

 

691,554

 

 

 

11,734

 

 

 

3.39

%

Non-interest-earning assets

 

 

35,878

 

 

 

 

 

 

 

 

 

 

 

28,240

 

 

 

 

 

 

 

 

 

Total assets

 

$

801,125

 

 

 

 

 

 

 

 

 

 

$

719,794

 

 

 

 

 

 

 

 

 

Liabilities and equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

$

94,606

 

 

$

251

 

 

 

0.54

%

 

$

50,263

 

 

$

257

 

 

 

1.03

%

Savings accounts

 

 

53,344

 

 

 

48

 

 

 

0.18

%

 

 

29,208

 

 

 

37

 

 

 

0.25

%

Certificates of deposit

 

 

373,355

 

 

 

2,015

 

 

 

1.09

%

 

 

386,437

 

 

 

4,064

 

 

 

2.11

%

Total interest-bearing deposits

 

 

521,305

 

 

 

2,314

 

 

 

0.90

%

 

 

465,908

 

 

 

4,358

 

 

 

1.88

%

Federal Home Loan Bank advances

 

 

103,897

 

 

 

808

 

 

 

1.57

%

 

 

100,997

 

 

 

1,006

 

 

 

2.00

%

Total interest-bearing liabilities

 

 

625,202

 

 

 

3,122

 

 

 

1.01

%

 

 

566,905

 

 

 

5,364

 

 

 

1.90

%

Non-interest-bearing deposits

 

 

27,820

 

 

 

 

 

 

 

 

 

 

 

17,056

 

 

 

 

 

 

 

 

 

Other non-interest-bearing liabilities

 

 

9,268

 

 

 

 

 

 

 

 

 

 

 

14,552

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

662,290

 

 

 

 

 

 

 

 

 

 

 

598,513

 

 

 

 

 

 

 

 

 

Total equity

 

 

138,835

 

 

 

 

 

 

 

 

 

 

 

121,281

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

801,125

 

 

 

 

 

 

 

 

 

 

$

719,794

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

$

9,354

 

 

 

 

 

 

 

 

 

 

$

6,370

 

 

 

 

 

Interest rate spread (1)

 

 

 

 

 

 

 

 

 

 

2.27

%

 

 

 

 

 

 

 

 

 

 

1.50

%

Net interest margin (2)

 

 

 

 

 

 

 

 

 

 

2.46

%

 

 

 

 

 

 

 

 

 

 

1.85

%

Average interest-earning assets to

   average interest-bearing liabilities

 

 

122.40

%

 

 

 

 

 

 

 

 

 

 

121.99

%

 

 

 

 

 

 

 

 

(1)

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

(2)

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

(3)

Annualized.


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,

2021 Compared to Three

Months Ended June 30, 2020

 

 

Six Months Ended June 30,

2020 Compared to Six Months

Ended June 30, 2020

 

 

Three Months Ended June 30,
2022 Compared to Three
Months Ended June 30, 2021

 

 

Six Months Ended June 30,
2022 Compared to Six Months
Ended June 30, 2021

 

 

Increase (Decrease) Due to

 

 

Increase (Decrease) Due to

 

 

Increase (Decrease) Due to

 

 

Increase (Decrease) Due to

 

 

Volume

 

 

Rate

 

 

Net

 

 

Volume

 

 

Rate

 

 

Net

 

 

Volume

 

 

Rate

 

 

Net

 

 

Volume

 

 

Rate

 

 

Net

 

 

(In thousands)

 

 

(In thousands)

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

83

 

 

$

(111

)

 

$

(28

)

 

$

50

 

 

$

(310

)

 

$

(260

)

 

$

(195

)

 

$

182

 

 

$

(13

)

 

$

(92

)

 

$

58

 

 

$

(34

)

Loans receivable

 

 

499

 

 

 

(60

)

 

 

439

 

 

 

1,342

 

 

 

(535

)

 

 

807

 

 

 

26

 

 

 

138

 

 

 

164

 

 

 

(124

)

 

 

360

 

 

 

236

 

Securities

 

 

341

 

 

 

(357

)

 

 

(16

)

 

 

344

 

 

 

(117

)

 

 

227

 

 

 

506

 

 

 

71

 

 

 

577

 

 

 

1,354

 

 

 

(805

)

 

 

549

 

Other interest earning assets

 

 

(26

)

 

 

17

 

 

 

(9

)

 

 

2

 

 

 

(34

)

 

 

(32

)

 

 

(10

)

 

 

(9

)

 

 

(19

)

 

 

(25

)

 

 

(12

)

 

 

(37

)

Total interest-earning assets

 

 

897

 

 

 

(511

)

 

 

386

 

 

 

1,738

 

 

 

(996

)

 

 

742

 

 

 

327

 

 

 

382

 

 

 

709

 

 

 

1,113

 

 

 

(399

)

 

 

714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and money market accounts

 

 

265

 

 

 

(248

)

 

 

17

 

 

 

239

 

 

 

(245

)

 

 

(6

)

 

 

139

 

 

 

(64

)

 

 

75

 

 

 

165

 

 

 

21

 

 

 

186

 

Savings accounts

 

 

55

 

 

 

(47

)

 

 

8

 

 

 

43

 

 

 

(32

)

 

 

11

 

 

 

1

 

 

 

16

 

 

 

17

 

 

 

13

 

 

 

25

 

 

 

38

 

Certificates of deposit

 

 

(36

)

 

 

(979

)

 

 

(1,015

)

 

 

(143

)

 

 

(1,906

)

 

 

(2,049

)

 

 

(47

)

 

 

(246

)

 

 

(293

)

 

 

(105

)

 

 

(757

)

 

 

(862

)

Federal Home Loan Bank advances

 

 

(142

)

 

 

29

 

 

 

(113

)

 

 

46

 

 

 

(244

)

 

 

(198

)

 

 

(140

)

 

 

120

 

 

 

(20

)

 

 

(216

)

 

 

94

 

 

 

(122

)

Total interest-bearing liabilities

 

 

142

 

 

 

(1,245

)

 

 

(1,103

)

 

 

185

 

 

 

(2,427

)

 

 

(2,242

)

 

 

(47

)

 

 

(174

)

 

 

(221

)

 

 

(143

)

 

 

(617

)

 

 

(760

)

Net increase (decrease) in net interest

income

 

$

755

 

 

$

734

 

 

$

1,489

 

 

$

1,553

 

 

$

1,431

 

 

$

2,984

 

 

$

374

 

 

$

556

 

 

$

930

 

 

$

1,256

 

 

$

218

 

 

$

1,474

 

 

Comparison of Operating Results for the Three Months Ended June 30, 20212022 and June 30, 20202021

General. Net income increased by $36,000,$203,000, or 2.5%14.1%, to $1.6 million for the three months ended June 30, 2022 from $1.4 million for the three months ended June 30, 2021 from2021. The increase was due to an increase in net interest income of $930,000, offset by a decrease in non-interest income of $280,000 and an increase of $154,000 in the provision for loan losses.

Interest Income. Interest income increased $709,000, or 11.4%, to $6.9 million for the three months ended June 30, 2022. The increase reflected an $18.2 million increase in the average balance of interest-earnings assets, and a 29 basis points increase in the average yield on interest-earning assets to 3.46% for the three months ended June 30, 2022 from 3.17% for the three months ended June 30, 2021.

Interest income on cash and cash equivalents decreased $13,000, or 31.7%, to $28,000 for the three months ended June 30, 2022 from $41,000 for the three months ended June 30, 2021 due to a $79.2 million decrease in the average balance of cash and cash equivalents to $20.7 million for the three months ended June 30, 2022 from $100.0 million for the three months ended June 30, 2021, 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, or 2.9%, to $5.8 million for the three months ended June 30, 2022 compared to $5.7 million for the three months ended June 30, 2021 due to a nine basis point increase in the average yield on loans from 3.86% for the three months ended June 30, 2021 to 3.95% for the three months ended June 30, 2022 and by a $2.6 million increase in the average balance of loans to $593.7 million for the three months ended June 30, 2022 from $591.1 million for the three months ended June 30,

34


2021.



Interest income on securities increased $578,000, or 143.9%, to $979,000 for the three months ended June 30, 2022 from $401,000 for the three months ended June 30, 2021 due 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 million increase in the average balance of securities to $182.3 million for the three months ended June 30, 2022 from $86.6 million for the three months ended June 30, 2021, reflecting the purchase of investments with excess liquidity.

Interest Expense. Interest expense decreased $221,000, or 15.5%, to $1.2 million for the three months ended June 30, 2022 from $1.4 million for the three months ended June 30, 2020.2021. The increasedecrease primarily reflected a 17 basis point decrease in the average cost of interest-bearing liabilities to 0.73% for the three months ended June 30, 2022 from 0.90% for the three months ended June 30, 2021.

Interest expense on interest-bearing deposits decreased $201,000, or 19.1%, to $850,000 for the three months ended June 30, 2022 from $1.1 million for the three months ended June 30, 2021. The decrease was due primarily to a 19 basis point decrease in the average cost of interest-bearing deposits to 0.59% for the three months ended June 30, 2022 from 0.78% for the three months ended June 30, 2021. The decrease in the average cost of deposits was due to increaseslower average balances and lower average costs of certificates of deposit. This decrease was offset by a $40.3 million increase in net interest incomethe average balance of $1.5total deposits to $579.2 million andfor the three months ended June 30, 2022 from $539.0 million for the three months ended June 30, 2021.

Interest expense on Federal Home Loan Bank borrowings decreased $20,000, or 5.4%, from $376,000 for the three months ended June 30, 2021 to $356,000 for the three months ended June 30, 2022. The decrease was due to a decrease in the provisionaverage balance of borrowings of $13.8 million to $86.4 million for loan losses of $279,000the three months ended June 30, 2022 from $100.3 million for the three months ended June 30, 2021. The decrease was offset by decreasesan increase in non-interest incomethe average cost of $235,000, and increases in non-interest expenseborrowings of $1.4 million and income tax expense of $80,000.  nine basis points to 1.59% for the three months ended June 30, 2022 from 1.50% for the three months ended June 30, 2021 due to the higher borrowing rates.

Net Interest Income. InterestNet interest income increased $386,000,$930,000, or 6.6%19.5%, to $6.2$5.7 million for the three months ended June 30, 2022 from $4.8 million for the three months ended June 30, 2021. The increase reflected an $82.5 million increase in the average balance of interest-earnings assets, offset by a 15 basis points decrease in the average yield on interest-earning assets to 3.17% for the three months ended June 30, 2021 from 3.32% for the three months ended June 30, 2020.

Interest income on cash and cash equivalents decreased $28,000, or 40.6%, to $41,000 for the three months ended June 30, 2021 from $69,000 for the three months ended June 30, 2020 due to a 41 basis point decrease in the average yield on cash and cash equivalents from 0.57% for the three months ended June 30, 2020 to 0.16% for the three months ended June 30, 2021 due to the lower interest rate environment.   The decrease was offset by a $51.7 million increase in the average balance of cash and cash equivalents to $100.0 million for the three months ended June 30, 2021 from $48.2 million for the three months ended June 30, 2020.

Interest income on loans increased $439,000, or 8.4%, to $5.7 million for the three months ended June 30, 2021 from $5.2 million for the three months ended June 30, 2020 due to a $12.9 million increase in the average balance of loans to $591.1 million for the three months ended June 30, 2021 from $578.2 million for the three months ended June 30, 2020.  The increase in the average balance of loans reflected our continued efforts to increase our loan originations and the loans acquired from Gibraltar Bank.  The increase was supplemented by a 23 basis


point increase in the average yield on loans from 3.63% for the three months ended June 30, 2020 to 3.86% for the three months ended June 30, 2021 due to a higher rate environment when comparing the two periods.  

Interest income on securities decreased $16,000, or 3.8%, to $402,000 for the three months ended June 30, 2021 from $418,000 for the three months ended June 30, 2020 due to a $18.3 million increase in the average balance of securities to $86.6 million for the three months ended June 30, 2021 from $68.3 million for the three months ended June 30, 2020 offset by a 59 basis point decrease in the average yield from 2.45% for the three months ended June 30, 2020 to 1.86% for the three months ended June 30, 2021.

Interest Expense.  Interest expense decreased $1.1 million, or 43.6%, to $1.4 million for the three months ended June 30, 2021 from $2.5 million for the three months ended June 30, 2020.  The decrease primarily reflected a 88 basis point decrease in the average cost of interest-bearing liabilities to 0.90% for the three months ended June 30, 2021 from 1.78% for the three months ended June 30, 2020.

Interest expense on interest-bearing deposits decreased $990,000, or 48.5%, to $1.1 million for the three months ended June 30, 2021 from $2.0 million for the three months ended June 30, 2020.  The decrease was due primarily to a 99 basis point decrease in the average cost of interest-bearing deposits to 0.78% for the three months ended June 30, 2021 from 1.77% for the three months ended June 30, 2020. The decrease in the average cost of deposits was due to the lower interest rate environment and an increase in the average balance of lower-cost transaction accounts and a decrease in the average balance of higher cost certificates of deposit. This decrease was offset by a $77.3 million increase in the average balance of deposits to $539.0 million for the three months ended June 30, 2021 from $461.7 million for the three months ended June 30, 2020.  

Interest expense on Federal Home Loan Bank borrowings decreased $112,000, or 23.0%, from $489,000 for the three months ended June 30, 2020 to $376,000 for the three months ended June 30, 2021.  The decrease was primarily due to the lower interest rate environment, as the average cost of borrowings decreased 28 basis point to 1.50% for the three months ended June 30, 2021 from 1.78% for the three months ended June 30, 2020 and the average balance of borrowings decreased $9.5 million to $100.3 million for the 3 months ended June 30, 2021 from $109.8 million for the three months ended June 30, 2020.

Net Interest Income.  Net interest income increased $1.5 million, or 45.3%, to $4.8 million for the three months ended June 30, 2021 from $3.3 million for the three months ended June 30, 2020.  The increase reflected a 7345 basis point increase in our net interest rate spread to 2.73% for the three months ended June 30, 2022 from 2.28% for the three months ended June 30, 2021 from 1.55%2021. Our net interest margin increased 41 basis points to 2.85% for the three months ended June 30, 2020. Our net interest margin increased 56 basis points to2022 from 2.44% for the three months ended June 30, 2021 from 1.88%2021.

Provision for Loan Losses. We recorded a $100,000 provision for loan 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, 2020.

Provision for Loan Losses.  We recorded a credit for loan losses of $54,000 for the three months ended June 30, 2021 compared to a $225,000 provision for loan losses for the three-month period ended June 30, 2020. Lower balances in residential loans, a more positive economic environment and continued strong asset quality metrics were the reasons for the credit during the three months ended June 30, 2021.2022. The Bank continues to have a low level of delinquent and non-accrual loans in the portfolio, as well as no charge-offs. Non-performing assets were $685,000,$1.9 million, or 0.08%0.21% of total assets, at June 30, 2021.2022. The allowance for loan losses was $2.1$2.3 million, or 0.36% of loans outstanding and 310.9%120.8% of nonperforming loans, at June 30, 2021.2022.

Non-Interest Income. Non-interest income decreased by $234,000$280,000, or 30.53%52.4%, to $254,000 for the three months ended June 30, 2022 from $533,000 for the three months ended June 30, 2021 from $768,0002021. Gain on sale of loans decreased $284,000 as the Bank decided to portfolio loans rather than sell loans. This decrease was offset by a $24,000, or 16.7%, increase in bank-owned life insurance to $169,000 for the three months ended June 30, 2020. The decrease was due to $604,000 lower income on bank owned life insurance. Last year the Bank collected $648,000 in death proceeds. This was offset by a $284,000 gain on sale of $9.4 million residential loans during2022 from $145,000 for the three months ended June 30, 2021.2022.

Non-Interest Expense. For the three months ended June 30, 2021,2022, non-interest expense increased $1.4 million to $3.6 million,$17,000, or 0.5%, over the comparable 20202021 period. Salaries and employee benefits increased $833,000,$63,000, or 69.3%3.1%, attributabledue to adding the new Gibraltar employees.stock compensation plan established in September 2021. Data processing expense increased $147,000,$18,000, or 89.2%5.9%, due to higher data processing expense from maintaining two core systems.associated with being a larger organization. Professional fees increased $90,000,decreased $57,000, or 46.8%27.5%, due in part to mergerlower legal expense in 2022. Merger fees expenses were $74,000 in 2021. The increase in occupancy and equipment expenses of $74,000 associated with the Gibraltar Bank acquisition. The increase of other general operating expenses$48,000, or 16.2%, was mainly due to increase occupancyincreased costs for the acquired Gibraltar Bank branches and the branch location innew Hasbrouck Heights expected to be opened in June.branch office.


35


Income Tax Expense. Income tax expense increased $80,000,$277,000, or 30.2%80.1%, to $623,000 for the three months ended June 30, 2022 from $346,000 for the three months ended June 30, 2021 from $266,0002021. The increase was due to $422,000 of higher taxable income. The effective tax rate for the three months ended June 30, 2020.  The increase was due to $116,000 of higher taxable income.2022 and 2021 were 27.51% and 19.38%, respectively.

 

Comparison of Operating Results for the Six Months Ended June 30, 20212022 and June 30, 20202021

General. Net income increaseddecreased by $4.4$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 from net2021. The decrease was due to a decrease in non-interest income of $65,000$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, 2020.   The increase was due to increases in net interest income of $3.0 million, a decrease in the provision for loan losses of $363,000, an increases in non-interest income of $2.0 million, decreases in non-interest expense of $223,000 offset by an increase in income tax expense of $1.2 million.  

Interest Income.  Interest income increased $742,000, or 6.3%, to2022 from $12.5 million for the six months ended June 30, 2021. The increase reflected a $73.7$29.1 million increase in the average balance of interest-earnings assets, offset byand a 12six basis points decreasepoint 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 from 3.39% for the six months ended June 30, 2020.2021.

Interest income on cash and cash equivalents decreased $260,000,$34,000, or 74.1%37.4%, to $57,000 for the six months ended June 30, 2022 from $91,000 for the six months ended June 30, 2021 from $351,000due 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, 2020 due2022 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 82six basis point decreaseincrease 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, 20202021, 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 0.19%$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 lowerhigher borrowing rates.

Net Interest Income. Net interest rate environment.   The decrease was offset by a $26.2income increased $1.5 million, increase in the average balance of cash and cash equivalentsor 15.8%, to $95.6$10.8 million for the six months ended June 30, 20212022 from $69.3$9.4 million for the six months ended June 30, 2020.

Interest income on loans increased $807,000, or 7.8%, to $11.2 million for the six months ended June 30, 2021 from $10.3 million for the six months ended June 30, 2020 due to a $35.0 million increase in the average balance of loans to $585.3 million for the six months ended June 30, 2021 from $550.2 million for the six months ended June 30, 2020.  The increase in the average balance of loans reflected our continued efforts to increase our loan originations and the loans acquired from Gibraltar Bank.  The increase was supplemented by a 7 basis point increase in the average yield on loans from 3.76% for the six months ended June 30, 2020 to 3.83% for the six months ended June 30, 2021 due to a higher rate environment when comparing the two periods.  

Interest income on securities increased $226,000, or 26.3%, to $1.1 million for the six months ended June 30, 2021 from $861,000 for the six months ended June 30, 2020 due to a $12.4 million increase in the average balance of securities to $78.5 million for the six months ended June 30, 2021 from $66.1 million for the six months ended June 30, 2020 offset by a 16 basis point decrease in the average yield from 2.61% for the six months ended June 30, 2020 to 2.77% for the six months ended June 30, 2021.

Interest Expense.  Interest expense decreased $2.2 million, or 41.8%, to $3.1 million for the six months ended June 30, 2021 from $5.4 million for the six months ended June 30, 2020.  The decrease primarily reflected a 89 basis point decrease in the average cost of interest-bearing liabilities to 1.01% for the six months ended June 30, 2021 from 1.90% for the six months ended June 30, 2020.

Interest expense on interest-bearing deposits decreased $2.1 million, or 46.9%, to $2.3 million for the six months ended June 30, 2021 from $4.4 million for the six months ended June 30, 2020.  The decrease was due primarily to 98 basis point decrease in the average cost of interest-bearing deposits to 0.90% for the six months ended June 30, 2021 from 1.88% for the six months ended June 30, 2020. The decrease in the average cost of deposits was due to the lower interest rate environment and an increase in the average balance of lower-cost transaction accounts and a decrease in the average balance of higher cost certificates of deposit. This decrease was offset by a $55.4 million increase in the average balance of deposits to $521.3 million for the six months ended June 30, 2021 from $465.9 million for the six months ended June 30, 2020.  

Interest expense on Federal Home Loan Bank borrowings decreased $198,000, or 19.7%, from $1.0 million for the six months ended June 30, 2020 to $808,000 for the six months ended June 30, 2021. The decrease was primarily due to the lower interest rate environment, as the average cost of borrowings decreased 43 basis point to 1.57% for the six months ended June 30, 2021 from 2.00% for the six months ended June 30, 2020.


Net Interest Income.  Net interest income increased $3.0 million, or 46.8%, to $9.4 million for the six months ended June 30, 2021 from $6.4 million for the six months ended June 30, 2020.  The increase reflected a 7734 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 from 1.50%2021. Our net interest margin increased 29 basis points to 2.75% for the six months ended June 30, 2020. Our net interest margin increased 61 basis points to2022 from 2.46% for the six months ended June 30, 2021 from 1.85%2021.

Provision for Loan Losses. We recorded a $100,000 provision for loan losses for the six months ended June 30, 2020.

Provision for Loan Losses.  We recorded2022 compared to a $113,000 credit for loan losses of $113,000the 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, 2021 compared to a $250,000 provision for loan losses for the six-month period ended June 30, 2020. Lower balances in residential loans, a more positive economic environment and continued strong asset quality metrics were the reasons for the credit during the six months ended June 30, 2021.2022. The Bank continues to have a low level of delinquent and non-accrual loans in the portfolio, as well as no charge-offs.  Non-performing assets were $685,000, or 0.08% of total assets, at June 30, 2021.  The allowance for loan losses was $2.1 million, or 0.36% of loans outstanding and 310.9% of nonperforming loans, at June 30, 2021.

Non-Interest Income. Non-interest income increaseddecreased by $2.0$2.3 million, or 220.8%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, from $889,000there 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, 2020. The increase was due to $1.9 million bargain purchase gain2022 from $520,000 for the Gibraltar merger, a $520,000 gain on sale of $15.7 million residential loans sold during the six months ended June 30, 2021, offset by $614,000 lower2021. Bank-owned life insurance income on bank owned life insurance.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, 2021,2022, non-interest expense decreased $223,000increased $126,000, or 1.8%, to $7.0$7.1 million, over the comparable 20202021 period. Salaries and employee benefits increased $1.1 million,$588,000, or 45.3%16.4%, attributabledue to adding the new Gibraltar employees and normal merit increases.stock compensation plan started in September 2021. Data processing expense increased $570,000,$88,000, or 183.0%17.0%, due to higher data processing expense from maintaining two core systems and expense associated with the upcoming core conversion.a larger company. Advertising expense increased $92,000 due to additional promotions for branch locations and new promotions. Professional fees increased $143,000,decreased $172,000, or 44.0%36.8%, due to higher legallower consulting expense. Merger fees and consulting fees.  Merger expenses increased $392,000 associated with the Gibraltar Bank acquisition.core conversion costs were $752,000 in 2021. The increase in equipment and occupancy expenses of other general operating expenses$126,000, or 22.4%, was mainly due to increase occupancy costs for the acquired Gibraltar Bank branches and theadditional branch location in Hasbrouck Heights expectedlocations.

Income Tax Expense. Income tax expense increased $284,000, to be opened in June. During the six months ended June 30, 2020 the Bank made a $2.9$1.1 million contribution to the Bogota Charitable Foundation and there was no contribution for the six months ended June 30, 2021

Income Tax Expense.  Income tax expense increased $1.2 million, to2022 from $864,000 for the six months ended June 30, 2021 from a benefit2021. The increase was due to $683,000 of $289,000higher taxable income. The effective tax rate for the six months ended June 30, 2020.  The increase was due to $5.5 million of higher taxable income.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. 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-


balanceoff-balance sheet contracts. The NPV ratio represents the dollar amount of our NPV divided by the present value of our total assets for a given interest rate scenario. NPV attempts to quantify our economic value using a discounted cash flow methodology while the NPV ratio reflects that value as a form of capital ratio. We estimate what our NPV would be at a specific date. We then calculate what the NPV would be at the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. We currently calculate NPV under the assumptions that interest rates increase 100, 200, 300 and 400 basis points from current market rates and that interest rates decrease 100 points from current market rates.

The following table presents the estimated changes in our net portfolio value that would result from changes in market interest rates as June 30, 2021.2022. All estimated changes presented in the table are within the policy limits approved by the board of directors.

 

 

NPV

 

 

NPV as Percent of Portfolio

Value of Assets

 

 

NPV

 

 

NPV as Percent of Portfolio
Value of Assets

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

Basis Point (“bp”) Change in

Interest Rates

 

Dollar

Amount

 

 

Dollar

Change

 

 

Percent

Change

 

 

NPV Ratio

 

 

Change

 

 

Dollar
Amount

 

 

Dollar
Change

 

 

Percent
Change

 

 

NPV Ratio

 

 

Change

 

400 bp

 

$

116,931

 

 

$

(15,463

)

 

 

(11.68

)%

 

 

15.97

%

 

 

(26.21

)%

 

$

95,325

 

 

$

(24,326

)

 

 

(20.33

)%

 

 

12.66

%

 

 

(9.64

)%

300 bp

 

 

124,778

 

 

 

(7,616

)

 

 

(5.75

)

 

 

16.59

 

 

 

3.04

 

 

 

105,258

 

 

 

(14,393

)

 

 

(12.03

)

 

 

13.56

 

 

 

(3.21

)

200 bp

 

 

131,558

 

 

 

(836

)

 

 

(0.63

)

 

 

16.99

 

 

 

5.53

 

 

 

113,983

 

 

 

(5,668

)

 

 

(4.74

)

 

 

14.22

 

 

 

1.50

 

100 bp

 

 

134,669

 

 

 

2,275

 

 

 

1.72

 

 

 

16.88

 

 

 

4.84

 

 

 

119,476

 

 

 

(175

)

 

 

(0.15

)

 

 

14.43

 

 

 

3.00

 

 

 

132,394

 

 

 

 

 

 

 

 

 

16.10

 

 

 

 

 

 

 

119,651

 

 

 

 

 

 

 

 

 

14.01

 

 

 

 

(100) bp

 

 

137,793

 

 

 

5,399

 

 

 

9.78

 

 

 

16.30

 

 

 

1.25

 

 

 

119,403

 

 

 

(248

)

 

 

(1.16

)

 

 

14.68

 

 

 

4.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(200) bp

 

 

119,001

 

 

 

(650

)

 

 

(3.16

)

 

 

14.71

 

 

 

6.78

 

 

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, 2021,2022, net interest income simulation results indicated that its exposure over one year to changing interest rates was within our guidelines. The following table presents the estimated impact of interest rate changes on our estimated net interest income over one year:

 

Changes in Interest Rates
(basis points)
(1)

 

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

 

400

 

(15.09)%

 

300

 

 

(10.97

)

200

 

 

(6.80

)

100

 

 

(2.67

)

 

 

(100)

 

 

(0.86

)

(200)

 

 

2.86

 

Changes in Interest Rates

(basis points)(1)

 

Change in Net Interest Income Year One

(% change from year one base)

 

400

 

(6.63)%

 

300

 

-4.75

 

200

 

-2.65

 

100

 

-1.17

 

 

 

(100)

 

1.49

 

 

 

 

 

 

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

(1)

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

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

Liquidity and Capital Resources

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from calls, maturities and sales of securities and sales of loans. We also have the ability to borrow from the Federal Home Loan Bank of New York. At June 30, 2021,2022, we had the ability to borrow up to $257.5$260.0 million, of which $97.0$115.0 million was outstanding and $1.5 million was utilized as collateral for letters of credit issued to secure municipal deposits. At June 30, 2021,2022, we had $51.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.

The board of directors is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We believe that we had enough sources of liquidity to satisfy our short- and long-term liquidity needs as of June 30, 2021.2022.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any period. At June 30, 2021,2022, cash and cash equivalents totaled $100.7$7.6 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $11.2$97.5 million at June 30, 2021.  2022.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate we will have sufficient funds to meet our current funding commitments. Certificates of deposit due within one year of June 30, 20212022 totaled $277.6$206.1 million, or 48.8%33.7% 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.


39


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, 2021,2022, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines. As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, as modified in April 2020, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank's Tier 1 “equity capital to average total consolidated assets) for financial institutions with less than $10 billion. A “qualifying community bank” with capital exceeding 9% will be considered compliant with all applicable regulatory capital and leverage requirements, including the capital requirements to be considered "well capitalized” under Prompt Corrective Action statutes. As a result of the CARES Act, the ratio was temporarily reduced to 8% for calendar year 2020 and 8.5% for calendar year 2021 in response to COVID-19. As of June 30, 2021,2022, the Bank is reporting as a qualifying community bank with a ratio of 17.67%17.50%.

Item 3.Quantitative and QualitativeQualitative 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, 2021.2022. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the threesix months ended June 30, 2021,2022, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


40


PART II – OTHER INFORMATION

Item 1.

At June 30, 20212022 we arewere 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

Item 1A.

Risk Factors

There have been no material changes in risk factors applicable to the Company from those disclosed in “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

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

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, 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 approved the repurchase of 292,568 shares of its common stock, which is approximately 5% of its then outstanding common stock (excluding shares held by Bogota Financial, MHC). The program does not have a scheduled expiration date and the Board of Directors has the right to suspend or discontinue the program at any time.

The following table provides information on repurchases by the Company did not repurchase any sharesof its common stock under the repurchase program duringCompany's Board approved programs for the three months ended June 20, 2021.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

 

 

 

 

Item 3. Defaults Upon Senior Securities

None.

Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

Item 5. Other Information

None.


41


Item 6. Exhibits

Exhibit

Number

Exhibits

Exhibit

Number

Description

 

 

 

  3.1

 

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

 

 

 

  3.2

 

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

 

 

 

  4.1

 

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

 

 

 

10.131.1

Bogota Financial Corp. 2021 Equity Incentive Plan (incorporated by reference to Appendix A to the proxy statement for the 2021 Annual Meeting of Stockholders (File No. 001-39180).

31.1

 

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

 

 

 

31.2

 

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

 

 

 

32.1

 

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

 

 

 

101.0

 

The following materials for the quarter ended June 30, 2021,2022, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements*

104

 

104

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

 

* Furnished, not filed.

42


SIGNATURES

*

Furnished, not filed.



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: August 11, 20212022

 

/s/ Joseph Coccaro

 

 

Joseph Coccaro

 

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

Date: August 11, 20212022

 

/s/ Brian McCourt

 

 

Brian McCourt

 

 

Executive Vice President and Chief Financial Officer

 

 

43

44