PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(unaudited)

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 

 

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

 

The Bank maintains two subsidiaries. Bogota Securities Corp. was formed to buy, sell and hold investment securities. Bogota Properties, LLC, formed to hold real estate owned by the Company, was inactive at September 30, 2025 and December 31, 2024.

 

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.

 

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 loss or stockholders' equity.

 

Earnings (Loss) per Share: Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. For purposes of calculating basic EPS, weighted average common shares outstanding excludes unallocated employee stock ownership plan shares that have not been committed for release and non-vested shares of restricted stock. Diluted EPS is computed using the same method as basic EPS, except it also reflects the potential dilution which could occur if non-vested restricted stock vested or stock options were exercised and converted into common stock. The potentially diluted shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. For the three and nine months ended September 30, 2025 and September 30, 2024, options to purchase 508,619 and 523,619 common shares, respectively, with an exercise price of $10.45 were outstanding but were not included in the computation of diluted earnings per common share because to do so would be anti-dilutive. Anti-dilutive options are those options with exercise prices in excess of the weighted average market value for the periods presented. For the three and nine months ended September 30, 2025, 12,242 and 1,532 shares of outstanding non-vested stock were added in the computation of diluted earnings per share. 

 

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2025 and 2024.

 

		For the three months ended September 30, 2025				For the three months ended September 30, 2024				For the nine months ended September 30, 2025				For the nine months ended September 30, 2024
Numerator
Net income (loss)		$	454,625			$	(366,960	)		$	1,409,967			$	(1,240,419	)
Denominator:
Weighted average shares outstanding - basic			12,637,950				12,702,683				12,641,128				12,702,683
Effect of unvested restricted stock			12,242				—				1,532				—
Weighted average shares outstanding - diluted			12,650,192				12,702,683				12,642,660				12,702,683
Earnings (loss) per common share:
Basic		$	0.04			$	(0.03	)		$	0.11			$	(0.10	)
Diluted			0.04				(0.03	)			0.11				(0.10	)

 

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

 

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in conformity with 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 the Company at and for the year ended December 31, 2024.

 

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Segment Reporting: The Company operates one reportable segment of business, “retail banking.” Through its retail banking segment, the Company provides a broad range of retail and commercial banking services. The accounting policies of the retail banking segment are the same as those described in the summary of significant accounting policies.

 

The Company's chief operating decision maker ("CODM") is the President and Chief Executive Officer, who decides how to allocate resources based on net income that also is reported on the statement of operations as consolidated net income.

 

The measure of segment assets is reported on the statement of financial condition as total consolidated assets.

 

NOTE 2 – SECURITIES AVAILABLE FOR SALE

 

The following table summarizes the amortized cost, fair value, and gross unrealized gains and losses of securities available for sale, by contractual maturity, none of which had an allowance for credit losses at September 30, 2025 and December 31, 2024:

 

						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
September 30, 2025
U.S. government and agency obligations
One through five years		$	3,000,000			$	—			$	(70,821	)		$	2,929,179
Corporate bonds due in:
One through five years			10,131,978				80,442				(210,021	)			10,002,399
Five through ten years			30,585,848				520,032				(852,504	)			30,253,376
Greater than ten years			5,849,234				225,891				—				6,075,125
Municipal obligations due in:
Five through ten years			505,933				—				(81,653	)			424,280
MBS – residential			99,876,238				1,066,110				(1,611,337	)			99,331,011
MBS – commercial			13,385,623				—				(1,653,754	)			11,731,869
Total		$	163,334,854			$	1,892,475			$	(4,480,090	)		$	160,747,239

 

						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
December 31, 2024
U.S. government and agency obligations
Less than one year		$	10,000,000			$	—			$	(55,870	)		$	9,944,130
One through five years			3,000,000				—				(151,590	)			2,848,410
Corporate bonds due in:
Less than one year			350,000				1,090				—				351,090
One through five years			9,112,269				83,414				(64,547	)			9,131,136
Five through ten years			25,410,219				202,205				(1,389,376	)			24,223,048
Greater than ten years			4,321,924				202,576				—				4,524,500
Municipal obligations due in:
Greater than ten years			506,706				—				(108,431	)			398,275
MBS – residential			76,661,752				53,730				(2,162,673	)			74,552,809
MBS – commercial			16,515,823				—				(2,181,774	)			14,334,049
Total		$	145,878,693			$	543,015			$	(6,114,261	)		$	140,307,447

 

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

 

There were no sales of securities during the three and nine months ended September 30, 2025 or September 30, 2024.

 

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NOTE 2 – SECURITIES AVAILABLE FOR SALE (Continued)

 

The age of unrealized losses and the fair value of related securities as of  September 30, 2025 and  December 31, 2024 were as follows:

 

		Less Than 12 Months								12 Months or More								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
September 30, 2025
U.S. government and agency obligations		$	—			$	—			$	2,929,179			$	(70,821	)		$	2,929,179			$	(70,821	)
Corporate bonds			3,433,035				(60,112	)			11,226,252				(1,002,413	)			14,659,287				(1,062,525	)
Municipal obligations			—				—				424,280				(81,653	)			424,280				(81,653	)
MBS – residential			708,318				(4,281	)			13,471,456				(1,607,056	)			14,179,774				(1,611,337	)
MBS – commercial			—				—				11,731,870				(1,653,754	)			11,731,870				(1,653,754	)
Total		$	4,141,353			$	(64,393	)		$	39,783,037			$	(4,415,697	)		$	43,924,390			$	(4,480,090	)

 

		Less Than 12 Months								12 Months or More								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
December 31, 2024
U.S. government and agency obligations		$	—			$	—			$	12,792,540			$	(207,460	)		$	12,792,540			$	(207,460	)
Corporate bonds			-				-				15,965,261				(1,453,923	)			15,965,261				(1,453,923	)
Municipal obligations			-				-				398,275				(108,431	)			398,275				(108,431	)
MBS – residential			43,739,606				(120,511	)			11,741,816				(2,042,162	)			55,481,422				(2,162,673	)
MBS – commercial			-				-				14,334,049				(2,181,774	)			14,334,049				(2,181,774	)
Total		$	43,739,606			$	(120,511	)		$	55,231,941			$	(5,993,750	)		$	98,971,547			$	(6,114,261	)

 

Unrealized losses on corporate bonds available for sale are not considered to be credit losses because the bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value was largely due to changes in interest rates and other market conditions. At September 30, 2025, 100% of the mortgage-backed securities were issued by U.S. government-sponsored entities and agencies, primarily FNMA and FHLMC, institutions which the government has affirmed its commitment to support. There were 35 securities in a loss position at September 30, 2025. Because the decline in fair value was attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Bank does not consider these losses to be credit-related at September 30, 2025. As of September 30, 2025, no allowance for credit losses ("ACL") was required on available for sale securities. At September 30, 2025 and December 31, 2024, securities available for sale with a carrying value of $5,427,755 and $5,741,240 were pledged to secure public deposits. Securities available for sale at September 30, 2025 and December 31, 2024, which were pledged to secure repurchase agreements at the Federal Home Loan Bank of New York, had a carrying value of $61,746 and $12,881,892, respectively.

 

 

 

At September 30, 2025 the Company held a $2.5 million investment in a limited partnership, which is part of a $10 million commitment.  The fund invests in sale leaseback transactions.  As of September 30, 2025, the Company had earned no income from this investment.

 

NOTE 4 – LOANS

 

Loans are summarized as follows at September 30, 2025 and December 31, 2024:

 

		September 30,				December 31,
		2025				2024
Real estate:		(unaudited)
Residential First Mortgage		$	449,596,294			$	472,747,542
Commercial Real Estate			122,811,801				118,008,866
Multi-Family Real Estate			70,364,169				74,152,418
Construction			25,231,859				43,183,657
Commercial and Industrial			3,703,476				6,163,747
Consumer			64,336				80,955
Total loans			671,771,935				714,337,185
Allowance for credit losses			(2,540,950	)			(2,620,949	)
Net loans		$	669,230,985			$	711,716,236

 

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NOTE 4 – LOANS (Continued)

 

The Bank has granted loans to officers and directors of the Bank. At September 30, 2025 and December 31, 2024, such loans totaled $2,024,521 and $2,256,911, respectively.

 

At September 30, 2025 and December 31, 2024, deferred loan fees were $2,348,676 and $2,496,364, respectively.

The following table presents the activity in the ACL by portfolio segment for the three and nine months ended September 30, 2025 and 2024:

 

		Residential First Mortgage				Commercial Real Estate				Multi-Family Real Estate				Construction				Commercial and Industrial				Consumer				Total
Three months ended September 30, 2025
Allowance for credit losses:
Beginning balance		$	1,660,885			$	533,874			$	278,916			$	92,712			$	24,340			$	223			$	2,590,950
Provision for (recovery) of credit losses			(41,284	)			22,684				9,125				(33,926	)			(6,563	)			(36	)			(50,000	)
Loans charged off			—				—				—				—				—				—				—
Recoveries			—				—				—				—				—				—				—
Total ending allowance balance		$	1,619,601			$	556,558			$	288,041			$	58,786			$	17,777			$	187			$	2,540,950

 

		Residential First Mortgage				Commercial Real Estate				Multi-Family Real Estate				Construction				Commercial and Industrial				Consumer				Total
Three Months Ended September 30, 2024
Allowance for credit losses:
Beginning balance		$	1,836,909			$	456,898			$	315,495			$	105,426			$	33,221			$	—			$	2,747,949
Provision for (recovery) of credit losses			(10,371	)			5,417				(2,274	)			6,692				536				—				—
Loans charged off			—				—				—				—				—				—				—
Recoveries			—				—				—				—				—				—				—
Total ending allowance balance		$	1,826,538			$	462,315			$	313,221			$	112,118			$	33,757			$	—			$	2,747,949

 

		Residential First Mortgage				Commercial Real Estate				Multi-Family Real Estate				Construction				Commercial and Industrial				Consumer				Total
Nine Months Ended September 30, 2025
Allowance for credit losses:
Beginning balance		$	1,680,949			$	508,000			$	289,000			$	123,000			$	20,000			$	—			$	2,620,949
Provision for (recovery) of credit losses			(61,348	)			48,558				(959	)			(64,214	)			(2,223	)			187				(79,999	)
Loans charged off			—				—				—				—				—				—				—
Recoveries			—				—				—				—				—				—				—
Total ending allowance balance		$	1,619,601			$	556,558			$	288,041			$	58,786			$	17,777			$	187			$	2,540,950

 

		Residential First Mortgage				Commercial Real Estate				Multi-Family Real Estate				Construction				Commercial and Industrial				Consumer				Total
Nine Months Ended September 30, 2024
Allowance for credit losses:
Beginning balance		$	1,851,969			$	437,180			$	317,300			$	157,500			$	22,000			$	—			$	2,785,949
Provision for (recovery) of credit losses			(25,431	)			25,135				(4,079	)			(45,382	)			11,757				—				(38,000	)
Loans charged off			—				—				—				—				—				—				—
Recoveries			—				—				—				—				—				—				—
Total ending allowance balance		$	1,826,538			$	462,315			$	313,221			$	112,118			$	33,757			$	—			$	2,747,949

 

For the three and nine months ended September 30, 2025, the provision for credit losses included a recovery of $50,000 and $130,000, respectively, due to a decrease in loan balances and off-balance sheet commitments.  Of the total recovery, zero and $50,000 was related to off-balance sheet commitments for the three and nine months ended September 30, 2025, respectively.

 

Since the Bank continues to have limited historical loss history, the majority of changes in the ACL noted in the above tables are driven by changes in the balances of the related loan segments and in the economic forecast.

 

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NOTE 4 – LOANS (Continued)

 

The following table presents the balance of non-performing loans by portfolio segments as of  September 30, 2025 and  December 31, 2024:

 

		Nonaccrual loans beginning of period				Nonaccrual loans end of period				Nonaccrual with no Allowance for Credit Loss				Loans Past Due 90 Days or More Still Accruing
September 30, 2025
Residential First Mortgage		$	1,863,957			$	2,502,938			$	2,502,938			$	—
Commercial Real Estate			1,205,025				7,060,968				7,060,968				—
Construction			10,893,713				10,893,713				10,893,713				—
Consumer			—				—				—				—
Total		$	13,962,695			$	20,457,619			$	20,457,619			$	—

 

		Nonaccrual loans beginning of period				Nonaccrual loans end of period				Nonaccrual with no Allowance for Credit Loss				Loans Past Due 90 Days or More Still Accruing
December 31, 2024
Residential First Mortgage		$	1,432,072			$	1,863,957			$	1,863,957			$	—
Commercial Real Estate			450,392				1,205,025				1,205,025			$	—
Construction			10,893,713				10,893,713				10,893,713				—
Consumer			—				—				—				—
Total		$	12,776,177			$	13,962,695			$	13,962,695			$	—

  

Collateral - dependent loans individually evaluated with the ACL by collateral type were as follows at September 30, 2025 and December 31, 2024:

 

September 30, 2025
Portfolio segment		Real estate				Other
Residential First Mortgage		$	2,502,938			$	—
Commercial Real Estate			7,060,968				—
Multi-Family Real Estate			—				—
Construction			10,893,713				—
Commercial and Industrial			—				—
Other Consumer			—				—
		$	20,457,619			$	—

 

December 31, 2024
Portfolio segment		Real estate				Other
Residential First Mortgage		$	1,863,957			$	—
Commercial Real Estate			1,205,025				—
Multi-Family Real Estate			—				—
Construction			10,893,713				—
Commercial and Industrial			—				—
Other Consumer			—				—
		$	13,962,695			$	—

 

Interest income recognized during impairment and cash-basis interest income for the three and nine months ended September 30, 2025 and 2024 was nominal.

 

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NOTE 4 – LOANS (Continued)

 

No nonaccrual loans had specific reserves as of September 30, 2025 as they were all well-secured and in the process of collection. The Bank had no other real estate owned at either September 30, 2025 or December 31, 2024.

 

The following table presents the aging of the recorded investment in past due loans as of September 30, 2025 and December 31, 2024, by class of loans:

 

										Greater than
		30-59 Days				60-89 Days				89 Days				Total				Loans Not
		Past Due				Past Due				Past Due				Past Due				Past Due				Total
September 30, 2025
Residential First Mortgage		$	69,992			$	88,237			$	1,801,822			$	1,960,051			$	447,636,243			$	449,596,294
Commercial Real Estate			—				1,859,931				7,060,968				8,920,899				113,890,902				122,811,801
Multi-Family Real Estate			—				—				—				—				70,364,169				70,364,169
Construction			—				—				10,893,713				10,893,713				14,338,146				25,231,859
Commercial and Industrial			19,340				—				—				19,340				3,684,136				3,703,476
Consumer			—				—				—				—				64,336				64,336
Total		$	89,332			$	1,948,168			$	19,756,503			$	21,794,003			$	649,977,932			$	671,771,935

 

										Greater than
		30-59 Days				60-89 Days				89 Days				Total				Loans Not
		Past Due				Past Due				Past Due				Past Due				Past Due				Total
December 31, 2024
Residential First Mortgage		$	119,309			$	1,607,835			$	513,297			$	2,240,441			$	470,507,101			$	472,747,542
Commercial Real Estate			—				—				1,205,025				1,205,025				116,803,841				118,008,866
Multi-Family Real Estate			—				—				—				—				74,152,418				74,152,418
Construction			—				—				10,893,713				10,893,713				32,289,944				43,183,657
Commercial and Industrial			—				—				—				—				6,163,747				6,163,747
Consumer			-				—				—				-				80,955				80,955
Total		$	119,309			$	1,607,835			$	12,612,035			$	14,339,179			$	699,998,006			$	714,337,185

 

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.

 

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NOTE 4 – LOANS (Continued)

 

The following table presents loans, by risk category, loan class and year of origination as of September 30, 2025 and  December 31, 2024:

 

		Term Loans by Origination Year
September 30, 2025		2025				2024				2023				2022				2021				Prior				Revolving Loans				Totals
Residential First Mortgage
Pass		$	6,522,488			$	26,799,710			$	19,609,339			$	99,318,676			$	29,797,378			$	127,658,092			$	138,007,695			$	447,713,378
Special Mention			—				—				—				—				—				808,122				596,186				1,404,308
Substandard			—				—				—				—				—				142,661				335,947				478,608
Doubtful			—				—				—				—				—				—				—				—
Total			6,522,488				26,799,710				19,609,339				99,318,676				29,797,378				128,608,875				138,939,828				449,596,294
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Commercial Real Estate
Pass			8,598,378				15,977,066				15,379,349				5,259,733				1,719,653				75,503,736				373,886				122,811,801
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Total			8,598,378				15,977,066				15,379,349				5,259,733				1,719,653				75,503,736				373,886				122,811,801
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Multi-Family Real Estate
Pass			1,735,716				—				—				5,085,066				—				5,890,652				57,652,735				70,364,169
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Total			1,735,716				—				—				5,085,066				—				5,890,652				57,652,735				70,364,169
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Construction
Pass			—				—				—				—				—				—				14,338,146				14,338,146
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				10,893,713				10,893,713
Doubtful			—				—				—				—				—				—				—				—
Total			—				—				—				—				—				—				25,231,859				25,231,859
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Commercial and Industrial
Pass			23,978				1,966,064				161,069				—				—				166,104				1,386,261				3,703,476
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Total			23,978				1,966,064				161,069				—				—				166,104				1,386,261				3,703,476
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Consumer
Pass			—				—				—				—				—				—				64,336				64,336
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Total			—				—				—				—				—				—				64,336				64,336
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Total loans		$	16,880,560			$	44,742,840			$	35,149,757			$	109,663,475			$	31,517,031			$	210,169,367			$	223,648,905			$	671,771,935

 

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NOTE 4 – LOANS (Continued)

 

		Term Loans by Origination Year
December 31, 2024		2024				2023				2022				2021				2020				Prior				Revolving Loans				Totals
Residential First Mortgage
Pass		$	26,742,846			$	20,620,971			$	102,163,479			$	31,658,834			$	25,961,474			$	118,351,367			$	145,384,614			$	470,883,585
Special Mention			—				—				—				—				186,177				593,420				598,461				1,378,058
Substandard			—				—				—				—				—				146,730				339,169				485,899
Doubtful			—				—				—				—				—				—				—				—
Total			26,742,846				20,620,971				102,163,479				31,658,834				26,147,651				119,091,517				146,322,244				472,747,542
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Commercial Real Estate
Pass			14,935,535				11,625,202				5,363,747				2,030,427				42,533,113				38,696,841				1,618,976				116,803,841
Special Mention			—				—				—				—				—				754,633				—				754,633
Substandard			—				—				—				—				—				450,392				—				450,392
Doubtful			—				—				—				—				—				—				—				—
Total			14,935,535				11,625,202				5,363,747				2,030,427				42,533,113				39,901,866				1,618,976				118,008,866
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Multi-Family Real Estate
Pass			—				—				2,262,457				—				—				1,909,140				69,980,821				74,152,418
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Total			—				—				2,262,457				—				—				1,909,140				69,980,821				74,152,418
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Construction
Pass			—				—				—				—				—				—				32,289,944				32,289,944
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				10,893,713				10,893,713
Doubtful			—				—				—				—				—				—				—				—
Total			—				—				—				—				—				—				43,183,657				43,183,657
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Commercial and Industrial
Pass			2,380,140				196,286				—				—				311,422				—				3,275,899				6,163,747
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Total			2,380,140				196,286				—				—				311,422				—				3,275,899				6,163,747
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Consumer
Pass			—				—				—				—				—				—				80,955				80,955
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Total			—				—				—				—				—				—				80,955				80,955
Gross charge-offs by vintage			—				—				—				—				—				—				—				—
Total loans		$	44,058,521			$	32,442,459			$	109,789,683			$	33,689,261			$	68,992,186			$	160,902,523			$	264,462,552			$	714,337,185

 

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NOTE 5 – DERIVATIVES AND HEDGING ACTIVITES

 

The Company uses derivative financial instruments as components of its market risk management, principally to manage interest rate risk. Certain derivatives may be entered into in connection with transactions with commercial customers. Derivatives are not used for speculative purposes. All derivatives are recognized as either assets or liabilities in the Consolidated Statements of Financial Condition, reported at fair value and presented on a gross basis. Until a derivative is settled, a favorable change in fair value results in an unrealized gain that is recognized as an asset, while an unfavorable change in fair value results in an unrealized loss that is recognized as a liability.

 

The Company generally applies hedge accounting to its derivatives used for market risk management purposes. Hedge accounting is permitted only if specific criteria are met, including a requirement that a highly effective relationship exists between the derivative instrument and the hedged item, both at inception of the hedge and on an ongoing basis. Changes in the fair value of effective fair value hedges are recognized in current earnings (with the change in fair value of the hedged asset or liability also recognized in earnings). Changes in the fair value of effective cash flow hedges are recognized in other comprehensive income (loss) until earnings are affected by the variability in cash flows of the designated hedged item. Ineffective portions of hedge results are recognized in current earnings. Changes in the fair value of derivatives for which hedge accounting is not applied are recognized in current earnings.

 

The Company formally documents at inception all relationships between the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transactions. This process includes linking all derivatives that are designated as hedges to specific assets and liabilities, or to specific firm commitments. The Company also formally assesses, both at inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair values or cash flows of the hedged items. If it is determined that a derivative is not highly effective or has ceased to be a highly effective hedge, the Company would discontinue hedge accounting prospectively. Gains or losses resulting from the termination of a derivative accounted for as a cash flow hedge remain in other comprehensive income (loss) and is (accreted) amortized to earnings over the remaining period of the former hedging relationship.

 

Certain derivative financial instruments are offered to certain commercial banking customers to manage their risk of exposure and risk management strategies. These derivative instruments consist primarily of currency forward contracts and interest rate swap contracts. The risk associated with these transactions is mitigated by simultaneously entering into similar transactions having essentially offsetting terms with a third party, i.e. back-to-back swaps. In addition, the Company executes interest rate swaps with third parties in order to hedge the interest rate risk of short-term FHLB advances.

 

Interest Rate Swaps. At September 30, 2025 and  December 31, 2024, the Company had six cash flow interest rate swaps with notional amounts of $85.0 million and five cash flow interest rate swaps with notional amounts of $65.0 million, respectively, which were used in hedging certain FHLB advances and brokered deposits. The Company also had two fair value interest rate swaps with notional amounts of $60.0 million hedging certain fixed-rate residential loans. These interest rate swaps meet the hedge accounting requirements. Changes in the fair value of cash flow hedges are recorded in comprehensive income. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount, which converts variable-rate liabilities to a fixed rate.  Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreement without the exchange of the underlying notional amount, which convert fixed-rate assets into a variable rate. The fair value hedges are recorded as components of other assets and other liabilities on the Company’s consolidated statement of financial condition. Changes in fair value of the fair value hedges are recorded against the basis of the asset or liability being hedged. The gain or loss on these derivatives, as well as the offsetting loss or gain on the hedged items attributable to the hedged risk, are recognized in interest income in the Company’s consolidated statements of operations. 

 

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the Consolidated Statements of Financial Condition at September 30, 2025:

 

						September 30,				December 31,
						2025				2024
		Hedge Type		Consolidated Statements of Financial Condition		Fair Value				Fair Value
Interest rate swaps		Cash Flow		Other (Liabilities) Assets		$	(187,703	)		$	651,340
Interest rate swaps		Fair Value		Other (Liabilities) Assets		$	(184,691	)		$	109,594
Interest rate swaps		Fair Value		Loans, net		$	236,297			$	(83,173	)
Total derivative instruments						$	(136,097	)		$	677,761

 

For the three and nine months ended September 30, 2025, unrealized gains of $121,000 and $603,000 were recorded for changes in fair value of interest rate swaps with third parties and at September 30, 2025, accrued interest was $98,000, after-tax. 

 

The Company has agreements with counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default of its derivative obligations. During the three months ended  September 30, 2025 and 2024, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $205,000 and $498,000, respectively. During the nine months ended  September 30, 2025 and 2024, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $568,000 and $1.2 million, respectively.

 

NOTE 6 – 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. The Bank’s derivatives are 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 derivatives consist of both cash flow and fair value hedges. The fair values of these hedges 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 derivatives.

 

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NOTE 6 – FAIR VALUE (Continued)

 

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

 

						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		Carrying				Assets				Inputs				Inputs
		Value				(Level 1)				(Level 2)				(Level 3)
As of September 30, 2025
Assets:
Securities available for sale:
U.S. government and agency obligations		$	2,929,179			$	—			$	2,929,179			$	—
Corporate bonds			46,330,900				—				46,330,900				—
Municipal obligations			424,280				—				424,280				—
MBS - residential			99,331,011				—				99,331,011				—
MBS - commercial			11,731,869				—				11,731,869				—
Fair value hedge			51,606				—				51,606				—
Liabilities:
Cash flow hedge			187,703				—				187,703				—
Fair value hedge			51,606				—				51,606				—
		$	160,559,536			$	—			$	160,559,536			$	—
As of December 31, 2024
Assets:
Securities available for sale:
U.S. government and agency obligations		$	12,792,540			$	—			$	12,792,540			$	—
Corporate bonds			38,229,775				—				38,229,775				—
Municipal obligations			398,275				—				398,275				—
MBS - residential			74,552,809				—				74,552,809				—
MBS - commercial			14,334,048				—				14,334,048				—
Cash flow hedge			651,340				—				651,340				—
Fair value hedge			109,594				—				109,594				—
		$	141,068,381			$	—			$	141,068,381			$	—

 

There were no transfers between level 1 and level 2 during the three or nine months ended September 30, 2025.

 

The carrying amounts and estimated fair values of financial instruments not measured at fair value, at September 30, 2025 and December 31, 2024, were as follows:

 

		Carrying				Fair				Fair Value Measurement Placement
		Amount				Value				(Level 1)				(Level 2)				(Level 3)
		(In thousands)
September 30, 2025
Financial instruments - assets
Loans		$	671,772			$	648,287			$	—			$	—			$	648,287
Financial instruments - liabilities
Certificates of deposit			502,537				503,120				—				503,120				—
Borrowings			119,413				120,045				—				120,045				—

 

		Carrying				Fair				Fair Value Measurement Placement
		Amount				Value				(Level 1)				(Level 2)				(Level 3)
		(In thousands)
December 31, 2024
Financial instruments - assets
Loans		$	714,337			$	686,977			$	—			$	—			$	686,977
Financial instruments - liabilities
Certificates of deposit			493,280				493,769				—				493,769				—
Borrowings			172,173				172,575				—				172,575				—

 

Carrying amount is the estimated fair value for cash and cash equivalents. Other balance sheet instruments such as cash and cash equivalents, accrued interest receivable, accrued interest payable and Bank owned life insurance holding costs approximate fair value. The fair value of off-balance sheet items is not considered material.

 

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NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE LOSS

 

The components of accumulated other comprehensive loss included in equity (net of tax) for the three and nine months ended September 30, 2025 and 2024 was as follows:

 

		Unrealized gain
		and losses on
		available for
		sale securities				Benefit plans				Derivatives				Total
Three months ended
September 30, 2025
Beginning balance		$	(3,598,212	)		$	69,388			$	(14,106	)		$	(3,542,930	)
Other comprehensive (loss) income before reclassification			1,737,976				—				(120,835	)			1,617,141
Amounts reclassified			—				—				—				—
Net period comprehensive (loss) income			1,737,976				—				(120,835	)			1,617,141
Ending balance		$	(1,860,236	)		$	69,388			$	(134,941	)		$	(1,925,789	)
September 30, 2024
Beginning balance		$	(6,676,939	)		$	5,654			$	689,446			$	(5,981,839	)
Other comprehensive income before reclassification			2,070,862				—				(936,818	)			1,134,044
Amounts reclassified			—				—				—				—
Net period comprehensive income			2,070,862				—				(936,818	)			1,134,044
Ending balance		$	(4,606,077	)		$	5,654			$	(247,372	)		$	(4,847,795	)

 

		Unrealized gain and losses on available for sale securities				Benefit plans				Derivatives				Total
Nine Months Ended September 30, 2025
Beginning balance		$	(4,005,169	)		$	(60,526	)		$	468,247			$	(3,597,448	)
Other comprehensive income (loss) before reclassification			2,144,933				—				(603,188	)			1,541,745
Amounts reclassified			—				129,914				—				129,914
Net period comprehensive income (loss)			2,144,933				129,914				(603,188	)			1,671,659
Ending balance		$	(1,860,236	)		$	69,388			$	(134,941	)		$	(1,925,789	)
Nine Months Ended September 30, 2024
Beginning balance		$	(6,639,506	)		$	2,549			$	172,183			$	(6,464,774	)
Other comprehensive (loss) income before reclassification			2,033,429				—				(419,555	)			1,613,874
Amounts reclassified			—				3,105				—				3,105
Net period comprehensive (loss) income			2,033,429				3,105				(419,555	)			1,616,979
Ending balance		$	(4,606,077	)		$	5,654			$	(247,372	)		$	(4,847,795	)

 

 

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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 September 30, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and September 30, 2024 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 may contain 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, financial condition and performance, 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, including potential recessionary conditions;

 

●

the imposition of tariffs or other domestic or international governmental policies and retaliatory responses;

 

●

the impact of the current federal government shutdown;

●

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

 

●

our ability to access cost-effective funding;

 

●

changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

 

●

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

 

●

demand for loans and deposits in our market area;

 

●

our ability to continue to implement our business strategies;

 

●

competition among depository and other financial institutions;

 

●

monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;

 

●

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;

 

●

changes in the securities markets;

 

●

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

 

●

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

 

●

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 investor sentiment and consumer spending, borrowing and saving habits;

 

 

●

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

 

●

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;

 

●

the failure to maintain current technologies;

 

●

the current or anticipated impact of military conflict, terrorism or other geopolitical events;

 

●

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.

 

Critical Accounting Policies

 

Our accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. 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.

 

Comparison of Financial Condition at September 30, 2025 and December 31, 2024

 

Total Assets. Assets decreased $45.7 million, or 4.7%, from $971.5 million at December 31, 2024 to $925.8 million at September 30, 2025, due largely to a $21.0 million, or 40.2%, decrease in cash and cash equivalents, and a $42.5 million, or 6.0%, decrease in loans, offset by a $20.4 million, or 14.6%, increase in securities available for sale.

 

Cash and Cash Equivalents. Cash and cash equivalents decreased $21.0 million, or 40.2%, to $31.2 million at September 30, 2025 from $52.2 million at December 31, 2024, as excess funds were used to repay borrowings and to purchase securities.

 

Net Equity Investments. Net equity investments were $2.5 million, at September 30, 2025 and were initially recorded during the quarter. This investment was part of a $10 million commitment to fund a limited partnership which invests in sale leaseback transactions.

 

Securities Available for Sale. Securities available for sale increased $20.4 million, or 14.6%, to $160.7 million at September 30, 2025 from $140.3 million at December 31, 2024, due to purchases of corporate bonds and mortgage-backed securities.

 

Net Loans.  Net loans decreased $42.5 million, or 6.0%, to $669.2 million at September 30, 2025 from $711.7 million at December 31, 2024. The decrease was due to a decrease of $23.2 million, or 4.9%, in one- to four-residential real estate loans to $449.6 million from $472.7 million at December 31, 2024, a decrease of $18.0 million, or 41.6%, in construction loans to $25.2 million at September 30, 2025 from $43.2 million at December 31, 2024, a decrease of $2.5 million, or 39.9%, in commercial and industrial loans to $3.7 million at September 30, 2025 from $6.2 million at December 31, 2024, and a decrease of $3.8 million, or 5.1%, in multi-family real estate loans to $70.4 million at September 30, 2025 from $74.2 million at December 31, 2024, offset by a $4.8 million, or 4.1%, increase in commercial real estate loans to $122.8 million at September 30, 2025 from $118.0 million at December 31, 2024. The decreases in one- to four-residential real estate loans and construction loans reflected a decrease in demand for such loans due to the interest rate environment. As of September 30, 2025 and December 31, 2024, the Bank had no loans held for sale. 

 

Asset Quality.  Delinquent loans increased $7.5 million to $21.8 million, or 3.2% of total loans, at September 30, 2025, compared to $14.3 million, or 2.0% of total loans, at December 31, 2024. The increase was primarily due to one commercial real estate loan with a balance of $7.1 million, which is considered well-secured and in the process of collection. The loan was on the watchlist and was placed on nonaccrual as it became greater than 90 days past due on September 30, 2025, the related credit quality indicator and risk rating were under review as of September 30, 2025. During the same timeframe, non-performing assets increased from $14.0 million at December 31, 2024 to $20.5 million, which represented 2.2% of total assets at September 30, 2025. The Company’s allowance for credit losses was 0.38% of total loans and 12.42% of non-performing loans at September 30, 2025 compared to 0.37% of total loans and 18.77% of non-performing loans at December 31, 2024.  The Bank has limited exposure to commercial real estate loans secured by office space. Non-performing loans at September 30, 2025 were primarily comprised of one construction loan for a catering hall that is 99% complete, with a balance of $10.9 million and a loan to value ratio of 45%. Based on the well-secured nature of the loan, there was no associated specific reserve at September 30, 2025. The Company has commenced legal action to foreclose on the property, which is ongoing. We did not record any specific reserves or charge-offs for our nonaccrual loans.  The Company did not record any charge-offs for the three and nine months ended September 30, 2025 or 2024.

 

Total Liabilities. Total liabilities decreased $49.1 million, or 5.9%, to $785.1 million as of September 30, 2025 from $834.2 million as of December 31, 2024, primarily due to a $52.8 million decrease in borrowings, offset by a $4.6 million increase in deposits.

 

 

Deposits. Deposits increased $4.6 million, or 0.7%, to $646.8 million at September 30, 2025 from $642.2 million at December 31, 2024. The increase in deposits was due to an increase in certificates of deposit of $9.2 million, or 1.9%, to $502.5 million as of September 30, 2025 from $493.3 million at December 31, 2024, and by an increase in savings accounts of $5.7 million, or 12.3%, to $52.6 million as of September 30, 2025 from $46.9 million at December 31, 2024, offset by a decrease in money market deposit accounts of $3.6 million, or 25.6%, to $10.4 million as of September 30, 2025 from $14.0 million at December 31, 2024, a $3.5 million, or 10.6%, a decrease in noninterest bearing accounts to $29.2 million as of September 30, 2025 from $32.7 million at December 31, 2024, and by a $3.4 million, or 6.1%, decrease in NOW accounts. The overall changes reflected the Company's efforts to retain certificates of deposit and savings accounts with customers moving funds into these higher-yielding investments.

 

At September 30, 2025, municipal deposits totaled $33.5 million, which represented 5.2% of total deposits, and brokered deposits totaled $112.9 million, which represented 17.5% of deposits. At December 31, 2024, municipal deposits totaled $30.7 million, which represented 4.8% of deposits, and brokered deposits totaled $101.6 million, which represented 15.8% of total deposits. At September 30, 2025, uninsured deposits totaled $59.7 million, comprised of 312 account holders, which represented 9.2% of total deposits.

 

Borrowings. Federal Home Loan Bank of New York borrowings decreased $52.8 million, or 30.6%, to $119.4 million at September 30, 2025 from $172.2 million at December 31, 2024.  Long-term advances decreased $58.3 million, while short-term advances increased by $5.5 million. The weighted average rate of borrowings was 4.42% and 4.49% as of September 30, 2025 and December 31, 2024, respectively. Total borrowing capacity at the Federal Home Loan Bank was $234.1 million at September 30, 2025, of which $119.4 million has been advanced.  The decrease in borrowings was largely attributable to the repayment of advances and borrowings that matured during the nine months ended September 30, 2025.

 

Total Equity. Stockholders’ equity increased $3.4 million to $140.7 million, primarily due to net income of $1.4 million and less unrealized losses related to available-for-sale securities of $1.7 million. At September 30, 2025, the Company’s ratio of average stockholders’ equity-to-average total assets was 15.02%, compared to 14.10% at December 31, 2024.

 

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 September 30,
		2025												2024
		Average Balance				Interest and Dividends				Yield/ Cost				Average Balance				Interest and Dividends				Yield/ Cost
		(Dollars in thousands)
Assets:		(unaudited)
Cash and cash equivalents		$	16,683			$	179				4.27	%		$	10,195			$	138				5.39	%
Loans			682,956				8,214				4.77	%			711,601				8,382				4.69	%
Securities			153,945				2,103				5.46	%			187,212				1,897				4.05	%
Other interest-earning assets			6,460				132				8.16	%			9,908				203				8.20	%
Total interest-earning assets			860,044				10,628				4.91	%			918,916				10,620				4.60	%
Non-interest-earning assets			64,826												56,061
Total assets		$	924,870											$	974,977
Liabilities and equity:
NOW and money market accounts		$	70,664			$	434				2.44	%		$	65,767			$	329				1.99	%
Savings accounts			50,442				269				2.11	%			44,029				205				1.85	%
Certificates of deposit (1)			502,657				4,922				3.89	%			497,251				5,626				4.50	%
Total interest-bearing deposits			623,763				5,625				3.58	%			607,047				6,160				4.04	%
Federal Home Loan Bank advances (1)			116,135				1,109				3.79	%			196,885				1,803				3.64	%
Total interest-bearing liabilities			739,898				6,734				3.61	%			803,932				7,963				3.94	%
Non-interest-bearing deposits			29,427												31,679
Other non-interest-bearing liabilities			16,114												2,724
Total liabilities			785,439												838,335
Total equity			139,431												136,642
Total liabilities and equity		$	924,870											$	974,977
Net interest income						$	3,894											$	2,657
Interest rate spread (2)											1.30	%											0.66	%
Net interest margin (3)											1.80	%											1.15	%
Average interest-earning assets to average interest-bearing liabilities			116.24	%											114.30	%

 

(1)         Cash flow and fair value hedges are used to manage interest rate risk. During the three months ended September 30, 2025 and 2024, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $205,000 and $498,000 respectively.

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

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

 

		Nine Months Ended September 30,
		2025												2024
		Average Balance				Interest and Dividends				Yield/ Cost				Average Balance				Interest and Dividends				Yield/ Cost
		(Dollars in thousands)
Assets:
Cash and cash equivalents		$	14,420			$	550				5.09	%		$	9,072			$	415				6.09	%
Loans			695,200				25,109				4.82	%			711,697				24,888				4.66	%
Securities			146,820				5,882				5.34	%			179,818				5,287				3.92	%
Other interest-earning assets			7,277				515				9.44	%			8,903				566				8.48	%
Total interest-earning assets			863,717				32,056				4.95	%			909,490				31,156				4.57	%
Non-interest-earning assets			58,963												58,221
Total assets		$	922,680											$	967,711
Liabilities and equity:
NOW and money market accounts		$	74,409			$	1,338				2.40	%		$	67,628			$	993				1.96	%
Savings accounts			48,358				743				2.06	%			43,824				608				1.85	%
Certificates of deposit (1)			489,876				14,830				4.05	%			510,494				16,784				4.39	%
Total interest-bearing deposits			612,643				16,911				3.69	%			621,946				18,385				3.95	%
Federal Home Loan Bank advances (1)			134,689				3,963				3.93	%			171,565				4,719				3.67	%
Total interest-bearing liabilities			747,332				20,874				3.73	%			793,511				23,104				3.89	%
Non-interest-bearing deposits			31,413												31,225
Other non-interest-bearing liabilities			5,367												6,154
Total liabilities			784,112												830,890
Total equity			138,568												136,821
Total liabilities and equity		$	922,680											$	967,711
Net interest income						$	11,182											$	8,052
Interest rate spread (2)											1.21	%											0.68	%
Net interest margin (3)											1.73	%											1.18	%
Average interest-earning assets to average interest-bearing liabilities			115.57	%											114.62	%

 

(1)         Cash flow hedges are used to manage interest rate risk. During the nine months ended September 30, 2025 and 2024, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $568,000 and  $1.2 million respectively.

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

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

 

 

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 September 30, 2025												Nine Months Ended September 30, 2025
		Compared to												Compared to
		Three Months Ended September 30, 2024												Nine Months Ended September 30, 2024
		Increase (Decrease) Due to												Increase (Decrease) Due to
		Volume				Rate				Net				Volume				Rate				Net
		(In thousands)
Interest income:		(unaudited)
Cash and cash equivalents		$	204			$	(163	)		$	41			$	248			$	(113	)		$	135
Loans receivable			(945	)			777				(168	)			(822	)			1,043				221
Securities			(1,714	)			1,920				206				(1,517	)			2,112				595
Other interest earning assets			(70	)			(1	)			(71	)			(137	)			86				(51	)
Total interest-earning assets			(2,525	)			2,533				8				(2,228	)			3,128				900
Interest expense:
NOW and money market accounts			26				79				105				106				239				345
Savings accounts			33				31				64				65				70				135
Certificates of deposit			398				(1,102	)			(704	)			(668	)			(1,286	)			(1,954	)
Federal Home Loan Bank advances			(1,167	)			473				(694	)			(1,234	)			478				(756	)
Total interest-bearing liabilities			(710	)			(519	)			(1,229	)			(1,731	)			(499	)			(2,230	)
Net (decrease) increase in net interest income		$	(1,815	)		$	3,052			$	1,237			$	(497	)		$	3,627			$	3,130

 

Comparison of Operating Results for the Three Months Ended September 30, 2025 and September 30, 2024

 

General. Net income increased $822,000 to $455,000 for the three months ended September 30, 2025 from a net loss of $367,000 for the three months ended September 30, 2024. The increase was primarily due to an increase of $1.2 million in net interest income, partially offset by a decrease of $326,000 in income tax benefit.

 

Interest Income. Interest income increased $8,000, or 0.1%, and was $10.6 million for the three months ended September 30, 2025  and  September 30, 2024.

 

Interest income on cash and cash equivalents increased $41,000, or 29.7%, to $179,000 for the three months ended September 30, 2025 from $138,000 for the three months ended September 30, 2024 due to a $6.5 million increase in the average balance to $16.7 million for the three months ended September 30, 2025 from $10.2 million for the three months ended September 30, 2024, reflecting proceeds from loan repayments, which were offset by funds used to repay borrowings. This was offset by a 112 basis point decrease in the average yield from 5.39% for the three months ended September 30, 2024 to 4.27% for the three months ended September 30, 2025, due to the lower interest rate environment.   

 

Interest income on loans decreased $168,000, or 2.0%, as a $28.6 million decrease in the average balance to $683.0 million for the three months ended September 30, 2025 from $711.6 million for the three months ended September 30, 2024 was offset by a eight basis point increase in the yield from 4.69% for the three months ended September 30, 2024 to 4.77% for the three months ended September 30, 2025.

 

Interest income on securities increased $206,000, or 10.9%, due to a 141 basis point increase in the average yield, from 4.05% for the three months ended September 30, 2024 to 5.46% for the three months ended September 30, 2025, which was offset by a $33.3 million decrease in the average balance to $153.9 million for the three months ended September 30, 2025 from $187.2 million for the three months ended September 30, 2024.  The changes in the yield and average balance reflect that, in the fourth quarter of 2024, the Company sold approximately $66.0 million in amortized cost ($57.1 million in market value) of securities with a weighted average yield of 1.89% and reinvested $32.7 million of these proceeds into securities with a weighted average yield of 5.60%.

 

Interest Expense. Interest expense decreased $1.2 million, or 15.4%, from $8.0 million for the three months ended September 30, 2024 to $6.7 million for the three months ended September 30, 2025 due to lower costs on certificates of deposit and lower balances on borrowings. 

 

Interest expense on interest-bearing deposits decreased $535,000, or 8.7%, to $5.6 million for the three months ended September 30, 2025 from $6.2 million for the three months ended September 30, 2024. The decrease was due to a 46 basis point decrease in the average cost of deposits to 3.58% for the three months ended September 30, 2025 from 4.04% for the three months ended September 30, 2024. The decrease in the average cost of deposits was due to the lower interest rate environment and a decrease in the rate paid on certificates of deposit offset by an increase in the rate paid on transactional accounts. Our rates on certificates of deposit decreased 61 basis points to 3.89% for the three months ended September 30, 2025 from 4.50% for the three months ended September 30, 2024, while the average balances of certificates of deposit increased $5.4 million to $502.7 million for the three months ended September 30, 2025 from $497.3 million for the three months ended September 30, 2024. The average balance of NOW/money market accounts and savings accounts increased $4.9 million and $6.4 million for the three months ended September 30, 2025, respectively, compared to the three months ended September 30, 2024.

 

Interest expense on Federal Home Loan Bank advances decreased $694,000, or 38.5%, from $1.8 million for the three months ended September 30, 2024 to $1.1 million for the three months ended September 30, 2025. The decrease was primarily due to a decrease in the average balance of $80.8 million to $116.1 million for the three months ended September 30, 2025, from $196.9 million for the three months ended September 30, 2024. The decrease was offset by an increase in the average cost of borrowings of 15 basis points to 3.79% for the three months ended September 30, 2025 from 3.64% for the three months ended September 30, 2024 due to the new borrowings being shorter durations at higher rates.

 

Net Interest Income. Net interest income increased $1.2 million, or 46.6%, to $3.9 million for the three months ended September 30, 2025 from $2.7 million for the three months ended September 30, 2024.  The increase reflected a 64 basis point increase in our net interest rate spread to 1.30% for the three months ended September 30, 2025 from 0.66% for the three months ended September 30, 2024. Our net interest margin increased 65 basis points to 1.80% for the three months ended September 30, 2025 from 1.15% for the three months ended September 30, 2024.

 

Provision for Credit Losses. We recorded a $50,000 recovery of credit losses for the three months ended September 30, 2025 compared to no provision for credit losses for the three months ended September 30, 2024 due to lower loan balances and commitments.

 

Non-Interest Income. Non-interest income decreased by $6,000, or 1.8%, to $321,000 for the three months ended September 30, 2025 from $327,000 for the three months ended September 30, 2024 due to the gain on the sale of loans of $12,000 for the three months ended September 30, 2024 compared to no such gain in 2025.

 

Non-Interest Expense. For the three months ended September 30, 2025, non-interest expense increased $133,000, or 3.7%, over the comparable 2024 period. Professional fees increased $113,000, or 45.6%, due to an increase in legal and consulting fees. Occupancy and equipment costs increased $259,000, or 68.0%, as a result of the lease-buyback transaction completed in the fourth quarter of 2024, which resulted in increased lease expense going forward. These increases were offset by a $79,000, or 3.8%, reduction in salaries and employee benefits, which decreased due to lower headcount, a $75,000, or 87.9%, decrease in advertising expenses and a $58,000, or 26.9%, decrease in other non-interest expense.

 

Income Tax Expense. Income tax expense increased $326,000 to an expense of $73,000 for the three months ended September 30, 2025 from a $253,000 benefit for the three months ended September 30, 2024. The increase was due to an increase of $1.1 million in pre-tax income. 

 

 

Comparison of Operating Results for the Nine Months Ended September 30, 2025 and September 30, 2024

 

General. Net income increased by $2.7 million to net income of $1.4 million for the nine months ended September 30, 2025 from a net loss of $1.2 million for the nine months ended September 30, 2024. This increase was primarily due to an increase of $3.1 million in net interest income and a $200,000 decrease in the provision for credit losses, partially offset by a $478,000 increase in non-interest expense and a decrease of $814,000 in income tax benefit. Income for the nine months ended September 30, 2025 included a one-time death benefit of approximately $543,000 from a bank-owned life insurance policy related to a former employee.

 

Interest Income. Interest income increased $900,000, or 2.9%, from $31.2 million for the nine months ended September 30, 2024 to $32.1 million for the nine months ended September 30, 2025 due to higher yields on interest-earning assets, offset by a decrease in the average balance of interest-earning assets.

 

Interest income on cash and cash equivalents increased $135,000, or 32.5%, to $550,000 for the nine months ended September 30, 2025 from $415,000 for the nine months ended September 30, 2024 due to a $5.3 million increase in the average balance to $14.4 million for the nine months ended September 30, 2025 from $9.1 million for the nine months ended September 30, 2024. This was partially offset by a 100 basis point decrease in the average yield from 6.09% for the nine months ended September 30, 2024 to 5.09% for the nine months ended September 30, 2025, due to the lower rate environment.

 

Interest income on loans increased $221,000, or 0.9%, to $25.1 million for the nine months ended September 30, 2025 compared to $24.9 million for the nine months ended September 30, 2024 due primarily to a 16 basis point increase in the average yield from 4.66% for the nine months ended September 30, 2024 to 4.82% for the nine months ended September 30, 2025, offset by a $16.5 million decrease in the average balance to $695.2 million for the nine months ended September 30, 2025 from $711.7 million for the nine months ended September 30, 2024.

 

Interest income on securities increased $595,000, or 11.3%, to $5.9 million for the nine months ended September 30, 2025 from $5.3 million for the nine months ended September 30, 2024 primarily due to a 142 basis point increase in the average yield from 3.92% for the nine months ended September 30, 2024 to 5.34% for the nine months ended September 30, 2025, which was offset by a $33.0 million decrease in the average balance to $146.8 million for the nine months ended September 30, 2025 from $179.8 million for the nine months ended September 30, 2024. The decrease in the average balance and the increase in the yield was as a result of the balance sheet restructuring undertaken in the fourth quarter of 2024, where certain lower-yielding securities were sold and a portion of the proceeds were reinvested into higher-yielding securities and all remaining held to maturity securities were reclassified as available for sale.

 

Interest Expense. Interest expense decreased $2.2 million, or 9.7%, from $23.1 million for the nine months ended September 30, 2024 to $20.9 million for the nine months ended September 30, 2025, primarily due to lower average balances on certificates of deposit and borrowings and a lower rate paid on certificates of deposit.

 

Interest expense on interest-bearing deposits decreased $1.5 million, or 8.0%, to $16.9 million for the nine months ended September 30, 2025 from $18.4 million for the nine months ended September 30, 2024. The decrease was due to a 26 basis point decrease in the average cost of deposits to 3.69% for the nine months ended September 30, 2025 from 3.95% for the nine months ended September 30, 2024.  The decrease in the average cost was driven by a 34 basis point decrease in the average cost of certificates of deposit to 4.05% for the nine months ended September 30, 2025 from 4.39% for the nine months ended September 30, 2024. The decrease in the average cost of deposits was due to the lower interest rate environment and a change in the composition of the deposit portfolio as the average balance of certificates of deposit declined while the average balance of transactional accounts increased. The average balances of certificates of deposit decreased $20.6 million to $489.9 million for the nine months ended September 30, 2025 from $510.5 million for the nine months ended September 30, 2024 while average NOW/money market accounts and savings accounts increased $6.8 million and $4.5 million for the nine months ended September 30, 2025, respectively, compared to the nine months ended September 30, 2024.

 

Interest expense on Federal Home Loan Bank advances decreased $756,000, or 16.0%. The decrease was primarily due to a decrease in the average balance of $36.9 million to $134.7 million for the nine months ended September 30, 2025 from $171.6 million for the nine months ended September 30, 2024. The decrease was offset by an increase in the average cost of borrowings of 26 basis points to 3.93% for the nine months ended September 30, 2025 from 3.67% for the nine months ended September 30, 2024 due to the new borrowings being for shorter durations at higher rates. 

 

Net Interest Income. Net interest income increased $3.1 million, or 38.9%, to $11.2 million for the nine months ended September 30, 2025 from $8.1 million for the nine months ended September 30, 2024.  The increase reflected a 53 basis point increase in our net interest rate spread to 1.21% for the nine months ended September 30, 2025 from 0.68% for the nine months ended September 30, 2024. Our net interest margin increased 55 basis points to 1.73% for the nine months ended September 30, 2025 from 1.18% for the nine months ended September 30, 2024

Provision for Credit Losses. We recorded an $130,000 recovery of credit losses for the nine months ended September 30, 2025 compared to a $70,000 provision for credit losses for the nine months ended September 30, 2024. The decrease in the allowance for credit losses was due to the decrease in loans, loan commitments and held-to-maturity securities and the absence of charge-offs.

 

Non-Interest Income. Non-interest income increased by $612,000, or 65.9%, to $1.5 million for the nine months ended September 30, 2025 from $930,000 for the nine months ended September 30, 2024.  Bank-owned life insurance income increased $564,000, or 87.1%, due to a death benefit receivable related to a former employee and higher balances during 2025. The gain on the sale of loans also increased by $26,000 compared to the nine months ended September 30, 2024.  

 

Non-Interest Expense. For the nine months ended September 30, 2025, non-interest expense increased $478,000, or 4.4%, over the comparable 2024 period. Professional fees increased $250,000, or 36.7%, due to higher legal and consulting expense. Occupancy and equipment costs increased $833,000, or 74.4%, as a result of the lease-buyback transaction completed in the fourth quarter of 2024, which resulted in increased lease expense. These were offset by a $241,000, or 3.8%, reduction in salaries and employee benefit, which decreased due to lower headcount, advertising expense, which decreased by $179,000, or 57.6%, and other non-interest expense, which decreased $183,000, or 24.4%. 

 

Income Tax Expense. Income tax benefit decreased $814,000, or 99.1%, to a benefit of $8,000 for the nine months ended September 30, 2025 from a $821,000 benefit for the nine months ended September 30, 2024. The decrease was due to an increase of $3.5 million in pre-tax income. Included in the net income for the nine months ended September 30, 2025 was a one-time death benefit of approximately $543,000 from a bank-owned life insurance policy, which was a non-taxable event and reduced the Company's effective tax rate for the period. 

 

 

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 and securities, have longer maturities than our liabilities, consisting primarily of deposits and borrowings. As a result, a principal part of our business strategy is to manage our exposure to changes in market interest rates. Accordingly, our board of directors has established an Asset/Liability Management Committee (the “ALCO”), which is comprised of three members of executive management and two independent directors, which oversees the asset/liability management processes and related procedures. The ALCO meets on at least a quarterly basis and reviews asset/liability strategies, liquidity, 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 all of our investments as available-for-sale; diversifying our loan portfolio; and strengthening our capital position. By following these strategies, we believe that we are better positioned to react to changes in market interest rates.

 

Net Portfolio Value Simulation. We analyze our sensitivity to changes in interest rates through a net portfolio value of equity (“NPV”) model. NPV represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities, adjusted for the value of off-balance sheet contracts. The NPV ratio represents the dollar amount of our NPV divided by the present value of our total assets for a given interest rate scenario. NPV attempts to quantify our economic value using a discounted cash flow methodology while the NPV ratio reflects that value as a form of capital ratio. We estimate what our NPV would be at a specific date. We then calculate what the NPV would be at the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. We currently calculate NPV under the assumptions that interest rates increase and decrease 100, 200, 300 and 400 basis points from current market rates.

 

The following table presents the estimated changes in our net portfolio value that would result from changes in market interest rates as of September 30, 2025. All estimated changes presented in the table are within the policy limits approved by the board of directors.

 

															NPV as Percent of Portfolio
			NPV												Value of Assets
			(Dollars in thousands)
Basis Point (“bp”) Change in			Dollar				Dollar				Percent
Interest Rates			Amount				Change				Change				NPV Ratio				Change
400 bp			$	85,472			$	(45,353	)			(34.67	)%			10.20	%			(29.29	)%
300 bp				97,152				(33,673	)			(25.74	)			11.36				(21.25	)
200 bp				107,892				(22,933	)			(17.53	)			12.37				(14.21	)
100 bp				119,114				(11,711	)			(8.95	)			13.40				(7.11	)
—				130,825				—				—				14.42				—
(100) bp				141,878				11,053				8.45				15.34				6.37
(200) bp				153,187				22,362				17.09				16.24				12.57
(300) bp				164,667				33,842				25.87				17.10				18.55
(400) bp				177,806				46,981				35.91				18.08				25.34

 

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The table above 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 in our balance sheet at a given point in time by showing the effect on net interest income over specified time frames and using different interest rate shocks and ramps. The assumptions include management’s best assessment of the effect of changing interest rates on the prepayment speeds of certain assets and liabilities, projections for account balances in each of the product lines offered and the historical behavior of deposit rates and balances in relation to changes in interest rates. These assumptions are subject to change, and as a result, the model is not expected to precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. Actual results will differ from the simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in the balance sheet composition and market conditions. Assumptions are supported with quarterly back testing of the model to actual market rate shifts.

 

 

As of September 30, 2025, net interest income simulation results indicated that its exposure over one year to changing interest rates was within our guidelines. The following table presents the estimated impact of interest rate changes on our estimated net interest income over one year:

 

Changes in Interest Rates			Change in Net Interest Income Year One
(basis points)(1)			(% change from year one base)
400				(15.44	)%
300				(11.40	)
200				(7.56	)
100				(3.79	)
—				—
(100)				3.37
(200)				7.00
(300)				10.17
(400)				11.62

 

(1)

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

 

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

 

Liquidity and Capital Resources

 

Liquidity. Liquidity describes our ability to meet financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from calls, maturities and sales of securities and sales of loans. We also borrow from the Federal Home Loan Bank of New York. At September 30, 2025, we had the ability to borrow up to $234.1 million, of which $119.4 million was outstanding and $7.2 million was utilized as collateral for letters of credit issued to secure municipal deposits. At September 30, 2025, we had $54.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.

 

The board of directors is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We believe that we had ample sources of liquidity to satisfy our short- and long-term liquidity needs as of September 30, 2025.

 

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, loan prepayments and loan and security sales 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 September 30, 2025, cash and cash equivalents totaled $31.2 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $160.7 million at September 30, 2025.

 

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 September 30, 2025 totaled $444.6 million, or 68.8% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and Federal Home Loan Bank of New York advances. Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay. We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

 

Capital Resources. We are subject to various regulatory capital requirements administered by the New Jersey Department of Banking and Insurance and the Federal Deposit Insurance Corporation. At September 30, 2025, 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 of September 30, 2025, the Bank reported as a qualifying community bank with a ratio of 15.42%.

 

Inflation

 

Substantially all of the Company's assets and liabilities relate to banking activities and are monetary. The consolidated financial statements and related financial data are presented in accordance with GAAP. GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, except for securities available for sale, impaired loans, and other real estate loans that are measured at fair value. Changes in the value of money due to inflation can cause purchasing power loss. Management's opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do affect each other but do not always move in correlation with each other. The Company's ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company's performance.

 

 

Item 3.         Quantitative and Qualitative Disclosures About Market Risk

 

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

 

Item 4.         Controls and Procedures

 

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and 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 Exchange Act of 1934, as amended) as of September 30, 2025.  Based on that evaluation, the Company's management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective.

 

During the three months ended September 30, 2025, 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.

 

PART II – OTHER INFORMATION

 

Item 1.         Legal Proceedings

 

At September 30, 2025, we were not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, the outcome of which would not be material to our financial condition or results of operations.

 

Item 1A.      Risk Factors

 

There have been no material changes in the 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, 2024.

 

Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchase of Equity Securities

 

On August 12, 2025, the Company announced it had received regulatory approval for the repurchase of up to 237,590 shares of its common stock, or approximately 5% of its then outstanding common stock (excluding shares held by Bogota Financial, MHC). The repurchase 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. As of September 30, 2025, 4,821 shares have been repurchased pursuant to the program at a cost of $42,000.

 

The following table provides information on repurchases by the Company of its common stock under the Company's Board approved program for the third quarter:

 

 

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
July 1 - 31, 2025		—		$ —		—		—
August 1 - 31, 2025		4,221		8.74		4,221		233,369
September 1 - 30, 2025		600		9.03		600		232,769
Total		4,821		$ 8.78		4,821		232,769

 

Item 3.         Defaults Upon Senior Securities

 

None.

 

Item 4.         Mine Safety Disclosures

 

Not applicable.

Item 5.         Other Information

 

During the three months ended September 30, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

 

 

Item 6.         Exhibits

 

Exhibit Number		Description
3.1		Articles of Incorporation of Bogota Financial Corp. (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-233680))
3.2		Amended and Restated Bylaws of Bogota Financial Corp. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 24, 2024 (Commission File No. 333-233680))
4.1		Form of Common Stock Certificate of Bogota Financial Corp. (incorporated by reference to Exhibit 4 of the Company’s Registration Statement on Form S-1, as amended (Commission File No. 333-233680))
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.0		The following materials for the periods ended September 30, 2025, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements*
104		Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

 

---

*         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: November 12, 2025	/s/ Kevin Pace
	Kevin Pace
	President and Chief Executive Officer
Date: November 12, 2025	/s/ Brian McCourt
	Brian McCourt
	Executive Vice President and Chief Financial Officer