Bogota Financial Corp. (NASDAQ: BSBK) (the “Company”), the
holding company for Bogota Savings Bank (the “Bank”), reported net
income for the three months ended March 31, 2023 of $993,000 or
$0.08 per basic and diluted shares, compared to net income of $1.4
million, or $0.10 per basic and diluted shares for the three months
ended March 31, 2022.
On October 3, 2022, the Company announced it had received
regulatory approval for the repurchase of up to 556,631 shares of
its common stock, which was approximately 10% of its then
outstanding common stock (excluding shares held by Bogota
Financial, MHC). As of March 31, 2023, 487,032 shares have been
repurchased, including the repurchase of 126,660 shares of stock
during the quarter at a cost of $1.4 million.
Other Financial Highlights:
- Total assets decreased $808,000, or 0.1%, to $950.3 million at
March 31, 2023 from $951.1 million at December 31, 2022, due to a
decrease in loans and securities, offset by an increase in cash and
cash equivalents.
- Cash and cash equivalents increased $7.7 million, or 45.5% to
$24.5 million at March 31, 2023 from $16.8 million at December 31,
2022.
- Net loans decreased $7.1 million, or 1.0%, to $711.9 million at
March 31, 2023 from $719.0 million at December 31, 2022.
- Total deposits were $690.7 million, decreasing $10.7 million,
or 1.5%, as compared to $701.4 million at December 31, 2022,
primarily due to a decrease of $15.8 million in checking, savings
and money market accounts offset by a $5.6 million increase in
certificates of deposit. The average rate paid on deposits at March
31, 2023 increased 59 basis points to 2.41% at March 31, 2023 from
1.82% at December 31, 2022 due to higher interest rates and a
larger percentage of deposits consisting of higher-costing
certificates of deposit.
- Federal Home Loan Bank advances increased $9.7 million, or 9.5%
to $112.0 million at March 31, 2023 from $102.3 million as of
December 31, 2022.
- Annualized return on average assets was 0.39% for the
three-month period ended March 31, 2023 compared to 0.68% for
three-month period ended March 31, 2022.
- Annualized return on average equity was 2.68% for the
three-month period ended March 31, 2023 compared to 3.88% for the
three-month period ended March 31, 2022.
- Upon adoption of the CECL method of calculating the allowance
for credit losses on January 1, 2023, the Bank recorded a one-time
decrease, net of tax, in retained earnings of $220,000, an increase
to the allowance for credit losses of $157,000 and an increase in
the reserve for unfunded liabilities of $152,000.
Joseph Coccaro, President and Chief Executive Officer, said, “As
expected, the interest rate hikes impacted our net interest margin
but we continue to record positive earnings. In light of the recent
bank failures, the Bank continues to be prudent in its lending and
interest rate risk management. Asset quality remains strong and the
Hasbrouck Heights branch is approaching $100 million in deposits in
under two years. Regulatory authorities recently approved a new
branch in Upper Saddle River, NJ, which will be the Bank’s seventh
stand-alone branch. The Bank anticipates this new office will open
in the second half of this year.”
Mr. Coccaro further stated, "We expect loan growth to remain
slow through the first half of the year as interest rates and
inflation are expected to remain elevated and the housing
inventories continue to be low. Increased interest rate liability
costs may impact future earnings. “
Income Statement Analysis
Comparison of Operating Results for the Three Months Ended
March 31, 2023 and March 31, 2022
Net income decreased by $408,000, or 29.1%, to $993,000 for the
three months ended March 31, 2023 from $1.4 million for the three
months ended March 31, 2022. This decrease was due to an decrease
of $598,000 in net interest income and a decrease of $61,000 in
non-interest income offset by a decrease of $24,000 in non-interest
expense and a decrease of $227,000 in income tax expense.
Interest income increased $2.7 million, or 43.6%, from $6.3
million for the three months ended March 31, 2022 to $9.0 million
for the three months ended March 31, 2023 due to increases in the
average balance of and higher yields on interest earning
assets.
Interest income on cash and cash equivalents increased $76,000,
or 262.1%, to $105,000 for the three months ended March 31, 2023
from $29,000 for the three months ended March 31, 2022 due a 467
basis point increase in the average yield on cash and cash
equivalents from 0.17% for the three months ended March 31, 2022 to
4.84% for the three months ended March 31, 2023 due to the higher
interest rate environment. This was offset by a $62.7 million
decrease in the average balance of cash and cash equivalents to
$8.8 million for the three months ended March 31, 2023 from $71.5
million for the three months ended March 31, 2022, reflecting the
use of excess liquidity to fund loan originations and purchase
investment securities.
Interest income on loans increased $2.2 million, or 39.0%, to
$7.7 million for the three months ended March 31, 2023 compared to
$5.5 million for the three months ended March 31, 2022 due
primarily to $146.1 million increase in the average balance of
loans to $718.0 million for the three months ended March 31, 2023
from $571.8 million for the three months ended March 31, 2022 and a
42 basis point increase in the average yield on loans from 3.90%
for the three months ended March 31, 2022 to 4.32% for the three
months ended March 31, 2023. The increase was offset by a $347,000
reserve for nonaccrual interest on a delinquent construction
loan.
Interest income on securities increased $438,000, or 66.6%, to
$1.1 million for the three months ended March 31, 2023 from
$658,000 for the three months ended March 31, 2022 due primarily to
a $23.2 million increase in the average balance of securities to
$162.0 million for the three months ended March 31, 2023 from
$138.8 million for the three months ended March 31, 2022,
reflecting the purchase of investments with excess liquidity, and a
81 basis point increase in the average yield from 1.90% for the
three months ended March 31, 2022 to 2.71% for the three months
ended March 31, 2023.
Interest expense increased $3.3 million, or 288.6%, from $1.2
million for the three months ended March 31, 2022 to $4.5 million
for the three months ended March 31, 2023 due to increases in the
average balance of and higher costs on interest bearing
liabilities.
Interest expense on interest-bearing deposits increased $2.9
million, or 349.8%, to $3.7 million for the three months ended
March 31, 2023 from $826,000 for the three months ended March 31,
2022. The increase was due to a 165 basis point increase in the
average cost of interest-bearing deposits to 2.25% for the three
months ended March 31, 2023 from 0.60% for the three months ended
March 31, 2022. The increase in the average cost of deposits was
due to the higher interest rate environment and an increase in the
average balances of certificates of deposit of $152.3 million to
$503.4 million for the three months ended March 31, 2023 from
$351.0 million for the three months ended March 31, 2022.
Interest expense on Federal Home Loan Bank borrowings increased
$447,000, or 135.5%, from $330,000 for the three months ended March
31, 2022 to $777,000 for the three months ended March 31, 2023. The
increase was due to an increase in the average cost of borrowings
of 164 basis points to 3.27% for the three months ended March 31,
2023 from 1.63% for the three months ended March 31, 2022 due to
the new borrowings at higher rates. The increase was also due to an
increase in the average balance of borrowings of $14.3 million to
$96.5 million for the three months ended March 31, 2023 from $82.3
million for the three months ended March 31, 2022.
Net interest income decreased $598,000, or 11.7%, to $4.5
million for the three months ended March 31, 2023 from $5.1 million
for the three months ended March 31, 2022. The increase reflected a
80 basis point decrease in our net interest rate spread to 1.68%
for the three months ended March 31, 2023 from 2.48% for the three
months ended March 31, 2022. Our net interest margin decreased 59
basis points to 2.05% for the three months ended March 31, 2023
from 2.64% for the three months ended March 31, 2022.
We recorded no provision for credit losses for the three months
ended March 31, 2023 or the three-month period ended March 31,
2022. As of January 1, 2023 the Bank adopted CECL and recorded a
one-time adjustment of $157,000 to the allowance for credit losses.
The Bank had a decrease in the loan portfolio and continues to have
a low level of delinquent and non-accrual loans in the portfolio,
as well as no charge-offs.
Non-interest income decreased by $61,000, or 17.8%, to $283,000
for the three months ended March 31, 2023 from $344,000 for the
three months ended March 31, 2022. Gain on sale of loans decreased
$74,000 as loan originations were lower in 2023 and fees and other
income decreased $30,000. These decreases were partially offset by
an increase in income from bank-owned life insurance of $30,000, or
19.2%, due higher balances during 2023, and an increase in fee and
service charges of $13,000.
For the three months ended March 31, 2023, non-interest expense
decreased $24,000, or 0.7%, over the comparable 2022 period.
Salaries and employee benefits increased $99,000, or 4.8%, due to a
higher employee count. Director fees decreased $55,000, or 25.8%,
due to lower pension expense. The increase in advertising expense
of $26,000, or 21.6%, was due to additional promotions for branch
locations and new promotions on deposit and loan products. Other
expense decreased $142,000, or 44.2% due to lower deferred
compensation expense and other various expenses.
Income tax expense decreased $227,000, or 43.3%, to $298,000 for
the three months ended March 31, 2023 from $525,000 for the three
months ended March 31, 2022. The increase was due to $689,000 of
lower taxable income. The effective tax rate for the three months
ended March 31, 2023 and 2022 were 23.09% and 27.27%,
respectively.
Balance Sheet Analysis
Total assets were $950.3 million at March 31, 2023, representing
an decrease of $809,000, or 0.1%, from December 31, 2022. Cash and
cash equivalents increased $7.7 million during the period primarily
due to loan payments received. Net loans decreased $7.1 million, or
1.0%, due to $11.7 million in repayments, partially offset by new
production of $4.6 million, consisting of a mainly residential real
estate loans and home equity loans. Securities held to maturity
increased $780,000 due to the purchase of corporate bond with
excess cash. Securities available for sale decreased $3.0 million
or 3.6% due to the repayments of mortgage-backed securities and
corporate bonds.
Delinquent loans increased $11.7 million during the three-month
period ended March 31, 2023, finishing at $13.5 million or 1.86% of
total loans. The increase was due to one commercial construction
loan located in Totowa New Jersey with a balance of $10.9 million
with a loan to value ratio of 46%. During the same timeframe,
non-performing assets increased to $12.9 million and were 1.35% of
total assets at March 31, 2023. The Company’s allowance for loan
losses was 0.38% of total loans and 21.35% of non-performing loans
at March 31, 2023 compared to 0.36% of total loans and 136.3% of
non-performing loans at December 31, 2022.
Total liabilities decreased $236,000, or 0.0%, to $811.2 million
mainly due to an $10.7 million decrease in deposits, offset by a
$9.7 million increase in borrowings. Total deposits decreased $10.7
million, or 1.5%, to $690.7 million at March 31, 2023 from $701.4
million at December 31, 2022. The decrease in deposits reflected
decreases in NOW, money market and savings accounts, which
decreased by $15.8 million from $170.2 million at December 31, 2022
to $154.3 million at March 31, 2023, offset by an increase in
certificate of deposit accounts, which increased by $5.6 million to
$498.2 million from $492.6 million at December 31, 2022. At March
31, 2023, uninsured deposits represented 8.4% of the Bank’s total
deposits. Federal Home Loan Bank advances increased $9.7 million,
or 9.5%, due to new advances for loan funding. Total borrowing
capacity at the Federal Home Loan Bank is $336.8 million of which
$112.0 million is advanced.
Stockholders’ equity decreased $573,000 to $139.1 million, due
to increased accumulated other comprehensive loss for securities
available for sale of $246,000 and the repurchase of 126,660 shares
of stock during the quarter at a cost of $1.4 million, offset by
net income of $993,000 for the three months ended March 31, 2023.
At March 31, 2023, the Company’s ratio of average stockholders’
equity-to-total assets was 14.69%, compared to 17.05% at March 31,
2022.
About Bogota Financial Corp.
Bogota Financial Corp. is a Maryland corporation organized as
the mid-tier holding company of Bogota Savings Bank and is the
majority-owned subsidiary of Bogota Financial, MHC. Bogota Savings
Bank is a New Jersey chartered stock savings bank that has served
the banking needs of its customers in northern and central New
Jersey since 1893. It operates from six offices located in Bogota,
Hasbrouck Heights, Newark, Oak Ridge, Parsippany and Teaneck, New
Jersey and operates a loan production office in Spring Lake, New
Jersey.
Forward-Looking Statements
This press release contains certain forward-looking statements
about the Company and the Bank. Forward-looking statements include
statements regarding anticipated future events and can be
identified by the fact that they do not relate strictly to
historical or current facts. They often include words such as
“believe,” “expect,” “anticipate,” “estimate,” and “intend” or
future or conditional verbs such as “will,” “would,” “should,”
“could,” or “may.” Forward-looking statements, by their nature, are
subject to risks and uncertainties. Certain factors that could
cause actual results to differ materially from expected results
include increased competitive pressures, changes in the interest
rate environment, inflation, general economic conditions or
conditions within the securities markets, potential recessionary
conditions, real estate market values in the Bank’s lending area
changes in the quality of our loan and security portfolios,
increases in non-performing and classified loans, changes in
liquidity, including the size and composition of our deposit
portfolio, including the percentage of uninsured deposits in the
portfolio, 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, a failure in or breach of the
Company’s operational or security systems or infrastructure,
including cyberattacks, the failure to maintain current
technologies, failure to retain or attract employees and
legislative, accounting and regulatory changes that could adversely
affect the business in which the Company and the Bank are
engaged.
The Company undertakes no obligation to revise these
forward-looking statements or to reflect events or circumstances
after the date of this press release.
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF
FINANCIAL CONDITION
(unaudited)
As of
As of
March 31, 2023
December 31, 2022
Assets
Cash and due from banks
$
11,423,093
$
8,160,028
Interest-bearing deposits in other
banks
13,079,185
8,680,889
Cash and cash equivalents
24,502,278
16,840,917
Securities available for sale
82,051,189
85,100,578
Securities held to maturity (fair value of
$71,201,953 and $70,699,651, respectively)
78,207,206
77,427,309
Loans, net of allowance of $2,735,174 and
$2,578,174, respectively
711,890,347
719,025,762
Premises and equipment, net
7,852,299
7,884,335
Federal Home Loan Bank (FHLB) stock and
other restricted securities
5,918,600
5,490,900
Accrued interest receivable
3,777,228
3,966,651
Core deposit intangibles
251,240
267,272
Bank-owned life insurance
30,392,377
30,206,325
Other assets
5,447,449
4,888,954
Total Assets
$
950,290,213
$
951,099,003
Liabilities and Equity
Non-interest bearing deposits
$
38,107,101
$
38,653,349
Interest bearing deposits
652,604,123
662,758,100
Total deposits
690,711,224
701,411,449
FHLB advances-short term
36,500,000
59,000,000
FHLB advances-long term
75,531,931
43,319,254
Advance payments by borrowers for taxes
and insurance
3,499,731
3,174,661
Other liabilities
4,961,068
4,534,516
Total liabilities
811,203,954
811,439,880
Stockholders’ Equity
Preferred stock $0.01 par value 1,000,000
shares authorized, none issued and outstanding at March 31, 2023
and December 31, 2022
—
—
Common stock $0.01 par value, 30,000,000
shares authorized, 13,572,356 issued and outstanding at March 31,
2023 and 13,699,016 at December 31, 2022
135,723
136,989
Additional paid-in capital
57,928,185
59,099,476
Retained earnings
92,527,240
91,756,673
Unearned ESOP shares (429,900 shares at
March 31, 2023 and 436,495 shares at December 31, 2022)
(5,047,701
)
(5,123,002
)
Accumulated other comprehensive loss
(6,457,188
)
(6,211,013
)
Total stockholders’ equity
139,086,259
139,659,123
Total liabilities and stockholders’
equity
$
950,290,213
$
951,099,003
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF
INCOME
(unaudited)
Three Months Ended March
31,
2023
2022
Interest income
Loans
$
7,699,438
$
5,537,080
Securities
Taxable
1,051,260
637,121
Tax-exempt
44,902
20,996
Other interest-earning assets
221,589
83,813
Total interest income
9,017,189
6,279,010
Interest expense
Deposits
3,714,997
826,184
FHLB advances
777,354
329,833
Total interest expense
4,492,351
1,156,017
Net interest income
4,524,838
5,122,993
Provision for loan losses
—
—
Net interest income after provision for
loan losses
4,524,838
5,122,993
Non-interest income
Fees and service charges
52,152
39,318
Gain on sale of loans
13,225
87,130
Bank-owned life insurance
186,053
155,993
Other
31,849
61,982
Total non-interest income
283,279
344,423
Non-interest expense
Salaries and employee benefits
2,162,369
2,063,347
Occupancy and equipment
382,787
344,429
FDIC insurance assessment
60,000
54,000
Data processing
277,097
278,347
Advertising
147,300
121,145
Director fees
159,337
214,791
Professional fees
149,250
144,263
Other
179,208
320,953
Total non-interest expense
3,517,348
3,541,275
Income before income taxes
1,290,769
1,926,141
Income tax expense
298,062
525,244
Net income
$
992,707
$
1,400,897
Earnings per Share - basic
$
0.08
$
0.10
Earnings per Share - diluted
$
0.08
$
0.10
Weighted average shares outstanding -
basic
13,013,492
13,858,884
Weighted average shares outstanding -
diluted
13,055,533
13,878,304
BOGOTA FINANCIAL CORP.
SELECTED RATIOS
(unaudited)
At or For the Three Months
Ended March 31,
2023
2022
Performance Ratios (1):
Return on average assets (2)
0.39
%
0.68
%
Return on average equity (3)
2.68
%
3.88
%
Interest rate spread (4)
1.68
%
2.48
%
Net interest margin (5)
2.05
%
2.64
%
Efficiency ratio (6)
73.15
%
64.77
%
Average interest-earning assets to average
interest-bearing liabilities
116.68
%
122.33
%
Net loans to deposits
103.07
%
91.05
%
Equity to assets (7)
14.69
%
17.05
%
Capital Ratios:
Tier 1 capital to average assets
15.60
%
17.35
%
Asset Quality Ratios:
Allowance for loan losses as a percent of
total loans
0.38
%
0.38
%
Allowance for loan losses as a percent of
non-performing loans
21.35
%
111.82
%
Net recoveries to average outstanding
loans during the period
0.00
%
0.00
%
Non-performing loans as a percent of total
loans
1.79
%
0.34
%
Non-performing assets as a percent of
total assets
1.35
%
0.23
%
(1)
Performance ratios are
annualized.
(2)
Represents net income divided by
average total assets.
(3)
Represents net income divided by
average stockholders' equity.
(4
Represents the difference between
the weighted average yield on average interest-earning assets and
the weighted average cost of average interest-bearing liabilities.
Tax exempt income is reported on a tax equivalent basis using a
combined federal and state marginal tax rate of 27.5%.
(5)
Represents net interest income as
a percent of average interest-earning assets. Tax exempt income is
reported on a tax equivalent basis using a combined federal and
state marginal tax rate of 27.5%.
(6)
Represents non-interest expenses
divided by the sum of net interest income and non-interest
income.
(7)
Represents average stockholders'
equity divided by average total assets.
LOANS
Loans are summarized as follows at March 31, 2023 and December
31, 2022:
March 31, 2023
December 31, 2022
Real estate:
(unaudited)
Residential First Mortgage
$
462,407,846
$
466,100,627
Commercial and Multi-Family Real
Estate
166,664,915
162,338,669
Construction
57,379,095
61,825,478
Commercial and Industrial
1,523,380
1,684,189
Consumer:
Home Equity and Other Consumer
26,650,285
29,654,973
Total loans
714,625,521
721,603,936
Allowance for loan losses
(2,735,174
)
(2,578,174
)
Net loans
$
711,890,347
$
719,025,762
The following tables set forth the distribution of total deposit
accounts, by account type, at the dates indicated.
At March 31,
At December 31,
2023
2022
Amount
Percent
Average Rate
Amount
Percent
Average Rate
(Dollars in thousands)
(unaudited)
Noninterest bearing demand accounts
$
38,221,561
6.93
%
—
%
$
38,653,472
5.52
%
—
%
NOW accounts
78,112,797
11.31
1.83
82,720,214
11.79
0.88
Money market accounts
23,067,201
3.34
0.31
30,037,106
4.28
0.32
Savings accounts
53,144,417
7.69
0.53
57,407,955
8.18
0.49
Certificates of deposit
498,165,248
72.12
2.99
492,592,702
70.23
2.37
Total
$
690,711,224
100.00
%
2.41
%
$
701,411,449
100.00
%
1.82
%
Average Balance Sheets and Related Yields and Rates
The following tables present information regarding average
balances of assets and liabilities, the total dollar amounts of
interest income and dividends from average interest-earning assets,
the total dollar amounts of interest expense on average
interest-bearing liabilities, and the resulting annualized average
yields and costs. The yields and costs for the periods indicated
are derived by dividing income or expense by the average balances
of assets or liabilities, respectively, for the periods presented.
Average balances have been calculated using daily balances.
Nonaccrual loans are included in average balances only. Loan fees
are included in interest income on loans and are not material.
Three Months Ended March
31,
2023
2022
Average Balance
Interest and Dividends
Yield/ Cost (3)
Average Balance
Interest and Dividends
Yield/ Cost (3)
(Dollars in thousands)
Assets:
(unaudited)
Cash and cash equivalents
$
8,799
$
105
4.84
%
$
71,541
$
29
0.17
%
Loans
717,964
7,699
4.32
%
571,827
5,537
3.90
%
Securities
161,960
1,096
2.71
%
138,798
658
1.90
%
Other interest-earning assets
5,338
117
8.74
%
4,834
55
4.50
%
Total interest-earning assets
894,061
9,017
4.06
%
787,000
6,279
3.21
%
Non-interest-earning assets
54,810
50,802
Total assets
$
948,871
$
837,802
Liabilities and equity:
NOW and money market accounts
$
112,717
$
380
1.37
%
$
143,453
$
220
0.62
%
Savings accounts
53,618
70
0.53
%
66,583
43
0.26
%
Certificates of deposit
503,369
3,265
2.63
%
351,027
563
0.65
%
Total interest-bearing deposits
669,704
3,715
2.25
%
561,063
826
0.60
%
Federal Home Loan Bank advances (1)
96,532
777
3.27
%
82,280
330
1.63
%
Total interest-bearing liabilities
766,236
4,492
2.38
%
643,343
1,156
0.73
%
Non-interest-bearing deposits
37,224
42,936
Other non-interest-bearing liabilities
5,977
5,265
Total liabilities
809,437
691,544
Total equity
139,434
146,258
Total liabilities and equity
$
948,871
$
837,802
Net interest income
$
4,525
$
5,123
Interest rate spread (2)
1.68
%
2.48
%
Net interest margin (3)
2.05
%
2.64
%
Average interest-earning assets to average
interest-bearing liabilities
116.68
%
122.33
%
(1)
Cash flow hedges are used to
manage interest rate risk. During the three months ended March 31,
2023, the net effect on interest expense on the Federal Home Loan
Bank advances was a reduced expense of $47,000.
(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 March 31,
2023 Compared to Three Months Ended March 31, 2022
Increase (Decrease) Due
to
Volume
Rate
Net
(In thousands)
Interest income:
(unaudited)
Cash and cash equivalents
$
(204
)
$
280
$
76
Loans receivable
1,521
641
2,162
Securities
123
315
438
Other interest earning assets
6
56
62
Total interest-earning assets
1,446
1,292
2,738
Interest expense:
NOW and money market accounts
(300
)
460
160
Savings accounts
(53
)
80
27
Certificates of deposit
337
2,365
2,702
Federal Home Loan Bank advances
66
381
447
Total interest-bearing liabilities
50
3,286
3,336
Net increase (decrease) in net interest
income
$
1,396
$
(1,994
)
$
(598
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230428005489/en/
Joseph Coccaro – President & CEO, 201-862-0660 ext. 1110
Bogota Financial (NASDAQ:BSBK)
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