Bogota Financial Corp.

11/14/2024 | Press release | Distributed by Public on 11/14/2024 10:16

Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

bsbk20240831_10q.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2024

OR

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

For the transition period from _______________ to _______________

Commission File No. 001-39180

Bogota Financial Corp.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

84-3501231

(State or Other Jurisdiction of
Incorporation or Organization)

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

819 Teaneck Road

Teaneck, New Jersey

07666

(Address of Principal Executive Offices)

(Zip Code)

(201) 862-0660

(Registrant's Telephone Number, Including Area Code)

N/A

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

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

Title of each class

Trading Symbol(s)

Name of each exchange
on which registered

Common Stock, $0.01 par value per share

BSBK

The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

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

As of November 12, 2024, there were 13,074,928 shares issued and outstanding of the registrant's common stock, par value $0.01 per share.

Table of Contents

Bogota Financial Corp.

Form 10-Q

Table of Contents

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

1

Consolidated Statements of Financial Condition at September 30, 2024 and December 31, 2023 (unaudited)

1

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

2

Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

3

Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

4

Consolidated Statements of Cash Flows for the Nine Months Ended September30, 2024 and 2023 (unaudited)

5

Notes to Consolidated Financial Statements (unaudited)

6

Item 2.

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

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

SIGNATURES

32

i
Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(unaudited)

As of

As of

September 30, 2024

December 31, 2023

Assets

Cash and due from banks

$ 10,630,086 $ 13,567,115

Interest-bearing deposits in other banks

10,372,434 11,362,356

Cash and cash equivalents

21,002,520 24,929,471

Securities available for sale, at fair value

108,560,811 68,888,179

Securities held to maturity, net of allowance for securities credit losses of $108,000and zero, respectively (fair value - $74,603,097and $65,374,753, respectively)

80,103,753 72,656,179

Loans, net of allowance for credit losses of $2,747,949and $2,785,949, respectively

708,896,566 714,688,635

Premises and equipment, net

7,853,076 7,687,387

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

10,180,100 8,616,100

Accrued interest receivable

4,352,967 3,932,785

Core deposit intangibles

165,454 206,116

Bank-owned life insurance

31,635,988 30,987,851

Other assets

6,138,029 6,731,500

Total Assets

$ 978,889,264 $ 939,324,203

Liabilities and Equity

Non-interest bearing deposits

$ 32,125,742 $ 30,554,842

Interest bearing deposits

597,141,995 594,792,300

Total deposits

629,267,737 625,347,142

FHLB advances-short term

53,500,000 37,500,000

FHLB advances-long term

149,065,610 130,189,663

Advance payments by borrowers for taxes and insurance

3,265,262 2,733,709

Other liabilities

6,850,898 6,380,486

Total liabilities

841,949,507 802,151,000

Stockholders' Equity

Preferred stock $0.01par value 1,000,000shares authorized, noneissued and outstanding at September 30, 2024 and December 31, 2023

- -

Common stock $0.01par value, 30,000,000shares authorized, 13,092,357issued and outstanding at September 30, 2024 and 13,279,230at December 31, 2023

130,923 132,792

Additional paid-in capital

55,315,875 56,149,915

Retained earnings

90,936,649 92,177,068

Unearned ESOP shares (389,674shares at September 30, 2024 and 409,750shares at December 31, 2023)

(4,595,895 ) (4,821,798 )

Accumulated other comprehensive loss

(4,847,795 ) (6,464,774 )

Total stockholders' equity

136,939,757 137,173,203

Total liabilities and stockholders' equity

$ 978,889,264 $ 939,324,203

See accompanying notes to unaudited consolidated financial statements.

1
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BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2024

2023

2024

2023

Interest income

Loans, including fees

$ 8,381,581 $ 7,980,388 $ 24,888,377 $ 23,821,545

Securities

Taxable

1,884,276 994,791 5,247,336 3,042,389

Tax-exempt

13,137 13,159 39,409 78,293

Other interest-earning assets

341,268 301,081 980,536 771,584

Total interest income

10,620,262 9,289,419 31,155,658 27,713,811

Interest expense

Deposits

6,160,547 4,851,926 18,384,323 12,777,907

FHLB advances

1,802,387 1,220,166 4,719,056 2,900,359

Total interest expense

7,962,934 6,072,092 23,103,379 15,678,266

Net interest income

2,657,328 3,217,327 8,052,279 12,035,545

Provision (recovery) for credit losses

- - 70,000 (125,000 )

Net interest income after provision (recovery) for credit losses

2,657,328 3,217,327 7,982,279 12,160,545

Non-interest income

Fees and service charges

56,610 61,529 164,400 159,381

Gain on sale of loans

11,710 - 11,710 29,375

Bank-owned life insurance

221,122 197,873 648,137 574,073

Other

37,943 30,332 105,420 93,660

Total non-interest income

327,385 289,734 929,667 856,489

Non-interest expense

Salaries and employee benefits

2,102,993 2,274,347 6,404,946 6,737,952

Occupancy and equipment

380,714 372,626 1,118,739 1,114,170

FDIC insurance assessment

106,313 132,571 313,626 319,690

Data processing

306,167 205,721 928,292 717,913

Advertising

85,750 126,000 310,950 369,383

Director fees

159,851 159,336 467,100 478,011

Professional fees

248,420 149,251 682,517 412,519

Other

214,686 241,530 747,598 661,300

Total non-interest expense

3,604,894 3,661,382 10,973,768 10,810,938

(Loss) income before income taxes

(620,181 ) (154,321 ) (2,061,822 ) 2,206,096

Income tax (benefit) expense

(253,221 ) (125,268 ) (821,403 ) 385,801

Net (loss) income

$ (366,960 ) $ (29,053 ) $ (1,240,419 ) $ 1,820,295

(Loss) earnings per Share - basic

$ (0.03 ) $ (0.00 ) $ (0.10 ) $ 0.14

(Loss) earnings per Share - diluted

$ (0.03 ) $ (0.00 ) $ (0.10 ) $ 0.14

Weighted average shares outstanding - basic

12,702,683 13,037,903 12,702,683 13,103,951

Weighted average shares outstanding - diluted

12,702,683 13,037,903 12,702,683 13,103,951

See accompanying notes to unaudited consolidated financial statements.

2
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BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2024

2023

2024

2023

Net (loss) income

$ (366,960 ) $ (29,053 ) $ (1,240,419 ) $ 1,820,295

Other comprehensive (loss) income:

Net unrealized gain (loss) on securities available for sale:

2,880,599 (1,594,912 ) 2,828,529 (2,456,233 )

Tax effect

(809,737 ) 448,330 (795,100 ) 690,448

Net of tax

2,070,862 (1,146,582 ) 2,033,429 (1,765,785 )

Defined benefit retirement plans:

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

- (23,016 ) 6,414 (69,048 )

Tax effect

- 6,470 (3,309 ) 19,410

Net of tax

- (16,546 ) 3,105 (49,638 )

Derivatives:

Unrealized (loss) gain on swap contracts accounted for as cash flow hedges

(1,303,127 ) 257,333 (583,606 ) 555,677

Tax effect

366,309 (72,336 ) 164,051 (156,201 )

Net of tax

(936,818 ) 184,997 (419,555 ) 399,476

Total other comprehensive income (loss)

1,134,044 (978,131 ) 1,616,979 (1,415,947 )

Comprehensive income (loss)

$ 767,084 $ (1,007,184 ) $ 376,560 $ 404,348

See accompanying notes to unaudited consolidated financial statements.

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BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

Accumulated

Additional

Other

Total

Common

Common

Paid-in

Retained

Unearned

Comprehensive

Stockholders

Stock Shares

Stock

Capital

Earnings

ESOP shares

(Loss) Income

Equity

Balance January 1, 2023

13,699,016 $ 136,989 $ 59,099,476 $ 91,756,673 $ (5,123,002 ) $ (6,211,013 ) $ 139,659,123

Adoption of ASU 326 credit losses

- - - (222,140 ) - - (222,140 )

Net income

- - - 992,707 - - 992,707

Other comprehensive loss

- - - - - (246,175 ) (246,175 )

Stock based compensation

- - 233,193 - - - 233,193

Stock purchased and retired

(126,660 ) (1,266 ) (1,401,568 ) - - - (1,402,834 )

ESOP Shares released (25,789shares)

- - (2,916 ) - 75,301 - 72,385

Balance March 31, 2023

13,572,356 $ 135,723 $ 57,928,185 $ 92,527,240 $ (5,047,701 ) $ (6,457,188 ) $ 139,086,259

Net income

- - - 856,641 - - 856,641

Other comprehensive loss

- - - - - (191,641 ) (191,641 )

Stock based compensation

- - 233,193 - - - 233,193

Stock purchased and retired

(89,899 ) (899 ) (839,563 ) - - - (840,462 )

ESOP Shares released (25,789shares)

- - (20,813 ) - 75,301 - 54,488

Balance June 30, 2023

13,482,457 $ 134,824 $ 57,301,002 $ 93,383,881 $ (4,972,400 ) $ (6,648,829 ) $ 139,198,478

Net loss

- - - (29,053 ) - - (29,053 )

Other comprehensive income

- - - - - (978,131 ) (978,131 )

Stock based compensation

- - 233,193 - - - 233,193

Stock purchased and retired

(108,691 ) (1,087 ) (821,172 ) - - - (822,259 )

ESOP Shares released (25,789shares)

- - (24,274 ) - 75,301 - 51,027

Balance September 30, 2023

13,373,766 $ 133,737 $ 56,688,749 $ 93,354,828 $ (4,897,099 ) $ (7,626,960 ) $ 137,653,255

Balance January 1, 2024

13,279,230 $ 132,792 $ 56,149,915 $ 92,177,068 $ (4,821,798 ) $ (6,464,774 ) $ 137,173,203

Net loss

- - - (440,980 ) - - (440,980 )

Other comprehensive loss

- - - - - (300,572 ) (300,572 )

Restricted Stock Issuance

10,000 - - - - - -

Stock based compensation

- - 234,493 - - - 234,493

Stock purchased and retired

(33,083 ) (331 ) (269,364 ) - - - (269,695 )

ESOP shares released (6,447shares)

- - (25,025 ) - 75,301 - 50,276

Balance March 31, 2024

13,256,147 $ 132,461 $ 56,090,019 $ 91,736,088 $ (4,746,497 ) $ (6,765,346 ) $ 136,446,725

Net loss

- - - (432,479 ) - - (432,479 )

Other comprehensive income

- - - - - 783,507 783,507

Stock based compensation

- - 237,093 - - - 237,093

Stock purchased and retired

(107,323 ) (1,073 ) (733,660 ) - - - (734,733 )

ESOP shares released (6,447shares)

- - (31,768 ) - 75,301 - 43,533

Balance June 30, 2024

13,148,824 $ 131,388 $ 55,561,684 $ 91,303,609 $ (4,671,196 ) $ (5,981,839 ) $ 136,343,646

Net loss

- - - (366,960 ) - - (366,960 )

Other comprehensive income

- - - - - 1,134,044 1,134,044

Stock based compensation

- - 196,498 - - - 196,498

Stock purchased and retired

(56,467 ) (465 ) (414,511 ) - - - (414,976 )

ESOP shares released (6,447shares)

- - (27,796 ) - 75,301 - 47,505

Balance September 30, 2024

13,092,357 $ 130,923 $ 55,315,875 $ 90,936,649 $ (4,595,895 ) $ (4,847,795 ) $ 136,939,757

See accompanying notes to unaudited consolidated financial statements.

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BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

For the nine months ended

September 30,

2024

2023

Cash flows from operating activities

Net (loss) income

$ (1,240,419 ) $ 1,820,295

Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:

Amortization of intangible assets

44,375 (53,081 )

Provision (recovery) for credit losses

70,000 (125,000 )

Depreciation of premises and equipment

377,301 383,136

Amortization of deferred loan costs, net

183,775 97,891

Amortization of premiums and accretion of discounts on securities, net

17,337 4,541

Deferred tax benefit

(1,171,476 ) (111,594 )

Gain on sale of loans

(11,710 ) (29,375 )

Proceeds from sale of loans

445,393 1,875,125

Origination of loans held for sale

(433,683 ) (1,845,750 )

Increase in cash surrender value of bank owned life insurance

(648,137 ) (574,073 )

Employee stock ownership plan expense

141,314 177,900

Stock based compensation

668,084 699,579

Changes in:

Accrued interest receivable

(420,182 ) 293,769

Net changes in other assets

65,402 (1,518,086 )

Net changes in other liabilities

394,731 566,354

Net cash (used for) provided by operating activities

(1,517,895 ) 1,661,631

Cash flows from investing activities

Purchases of securities held to maturity

(10,645,873 ) (1,000,000 )

Purchases of securities available for sale

(44,228,923 ) -

Maturities, calls, and repayments of securities available for sale

7,367,482 14,121,182

Maturities, calls, and repayments of securities held to maturity

3,090,299 12,500,153

Purchase of loan pool

(10,391,872 ) -

Net decrease in loans

16,621,983 8,637,206

Purchases of premises and equipment

(542,991 ) (264,605 )

Purchase of FHLB stock

(7,450,900 ) (6,919,000 )

Redemption of FHLB stock

5,886,900 5,251,500

Net cash (used in) provided by investing activities

(40,293,895 ) 32,326,436

Cash flows from financing activities

Net increase (decrease) in deposits

3,920,595 (56,099,671 )

Net increase (decrease) in short-term FHLB advances

16,000,000 (20,000,000 )

Proceeds from long-term FHLB non-repo advances

- 75,500,000

Repayments of long-term FHLB non-repo advances

18,875,947 (22,472,502 )

Repurchase of common stock

(1,419,403 ) (3,065,555 )

Issuance of common stock

100 -

Net increase in advance payments from borrowers for taxes and insurance

507,600 286,065

Net cash provided by (used in) financing activities

37,884,839 (25,851,663 )

Net (decrease) increase in cash and cash equivalents

(3,926,951 ) 8,136,404

Cash and cash equivalents at beginning of year

24,929,471 16,840,917

Cash and cash equivalents at September 30,

$ 21,002,520 $ 24,977,321

Supplemental cash flow information

Income taxes paid

$ 40,000 $ 1,375,000

Interest paid

23,103,379 15,261,645

Fair value change in cash flow hedges

$ (583,606 ) $ 239,510

Fair value change in fair value hedges

(544,702 ) -

See accompanying notes to unaudited consolidated financial statements.

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Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation: On January 15, 2020, Bogota Financial Corp. (the "Company," "we" or "our") became the mid-tier stock holding company for Bogota Savings Bank (the "Bank") in connection with the reorganization of Bogota Savings Bank into the two-tier mutual holding company structure. The 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 twosubsidiaries. Bogota Securities Corp. was formed to buy, sell and hold investment securities. Bogota Properties, LLC was inactive at September 30, 2024and December 31, 2023.

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 income or stockholders' equity.

(Loss) Earnings per Share:Basic (loss) earnings 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, 2024and September 30, 2023, options to purchase 511,119 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, 2024 and for the three and nine months ended September 30, 2023, all grants of non-vested restricted stock were excluded from the computation of diluted earnings per share, because to include such shares would have been anti-dilutive.

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, 2024 and 2023.

For the three months ended September 30, 2024

For the three months ended September 30, 2023

For the nine months ended September 30, 2024

For the nine months ended September 30, 2023

Numerator

Net (loss) income

$ (366,960 ) $ (29,053 ) $ (1,240,419 ) $ 1,820,295

Denominator:

Weighted average shares outstanding - basic

12,702,683 13,037,903 12,702,683 13,103,951

Effect of unvested restricted stock

- - - -

Weighted average shares outstanding - diluted

12,702,683 13,037,903 12,702,683 13,103,951

(Loss) earnings per common share:

Basic

$ (0.03 ) $ (0.00 ) $ (0.10 ) $ 0.14

Diluted

(0.03 ) (0.00 ) (0.10 ) 0.14

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.

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BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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, 2023.

Not yet effective Accounting Pronouncements:

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (TOPIC 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments' significant expenses on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Public entities are required to adopt the changes retrospectively, recasting each prior period disclosure for which a comparative income statement is presented in the period of adoption. This update is not expected to have a material impact on the Company's financial statements.

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance is effective for public business entities for annual periods beginning after December 15, 2024. This update is not expected to have a material impact on the Company's financial statements.

In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), which amended the guidance in ASC 718 to add an example showing how to apply the scope guidance to determine whether profits interest and similar awards should be accounted for as share-based payment arrangements. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. This update is not expected to have a significant impact on the Company's financial statements.

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BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

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, noneof which had an allowance for credit losses at September 30, 2024and December 31, 2023:

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

September 30, 2024

U.S. government and agency obligations

One through five years

$ 6,000,000 $ - $ (263,082 ) $ 5,736,918

Corporate bonds due in:

Less than one year

5,325,846 - (37,411 ) 5,288,435

One through five years

3,974,138 6,988 (76,147 ) 3,904,979

Five through ten years

5,000,000 24,560 (91,910 ) 4,932,650

MBS - residential

76,182,161 270,055 (4,357,505 ) 72,094,711

MBS - commercial

18,485,785 - (1,882,667 ) 16,603,118

Total

$ 114,967,930 $ 301,603 $ (6,708,722 ) $ 108,560,811

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

December 31, 2023

U.S. government and agency obligations

One through five years

6,000,000 - (454,599 ) 5,545,401

Corporate bonds due in:

Less than one year

3,000,000 - (44,230 ) 2,955,770

One through five years

8,264,973 - (247,937 ) 8,017,036

Five through ten years

1,000,000 - (154,050 ) 845,950

MBS - residential

41,105,143 5,182 (5,703,143 ) 35,407,182

MBS - commercial

18,753,711 - (2,636,871 ) 16,116,840

Total

$ 78,123,827 $ 5,182 $ (9,240,830 ) $ 68,888,179

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

There were no salesof securities during the three and nine months ended September 30, 2024 or September 30, 2023.

The age of unrealized losses and the fair value of related securities as of September 30, 2024and December 31, 2023were 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, 2024

U.S. government and agency obligations

$ - $ - $ 5,736,918 $ (263,082 ) $ 5,736,918 $ (263,082 )

Corporate bonds

1,998,738 (1,262 ) 8,092,155 (204,206 ) 10,090,893 (205,468 )

MBS - residential

- - 32,966,892 (4,357,505 ) 32,966,892 (4,357,505 )

MBS - commercial

- - 16,603,118 (1,882,667 ) 16,603,118 (1,882,667 )

Total

$ 1,998,738 $ (1,262 ) $ 63,399,083 $ (6,707,460 ) $ 65,397,821 $ (6,708,722 )

Less Than 12 Months

12 Months or More

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Losses

Value

Losses

Value

Losses

December 31, 2023

U.S. government and agency obligations

$ - $ - $ 5,545,401 $ (454,599 ) $ 5,545,401 $ (454,599 )

Corporate bonds

1,999,940 (60 ) 9,818,816 (446,157 ) 11,818,756 (446,217 )

MBS - residential

- - 34,829,468 (5,703,143 ) 34,829,468 (5,703,143 )

MBS - commercial

- - 16,116,840 (2,636,871 ) 16,116,840 (2,636,871 )

Total

$ 1,999,940 $ (60 ) $ 66,310,525 $ (9,240,770 ) $ 68,310,465 $ (9,240,830 )
8
Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 2 - SECURITIES AVAILABLE FOR SALE (Continued)

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, 2024, 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 34 securities in a loss position at September 30, 2024. 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, 2024. As of September 30, 2024, no allowance for credit loss ("ACL") was required on available for sale securities. At September 30, 2024and December 31, 2023, securities available for sale with a carrying value of $98,231 and $113,415 were pledged to secure public deposits.

NOTE 3 - SECURITIES HELD TO MATURITY

The following table summarizes the amortized cost, fair value, and gross unrecognized gains and losses of securities held to maturity by contractual maturity at September 30, 2024and December 31, 2023:

Gross

Gross

Amortized

Unrecognized

Unrecognized

Fair

Cost

Gains

Losses

Value

September 30, 2024

U.S. Government and agency obligations due in:

Less than one year

$ 10,000,000 $ - $ (116,890 ) $ 9,883,110

Five through ten years

3,000,000 - (250,632 ) 2,749,368

Corporate bonds due in:

One through five years

8,099,945 59,158 (84,703 ) 8,074,400

Five through ten years

20,408,373 56,747 (1,816,554 ) 18,648,566

Greater than ten years

4,313,175 - (6,025 ) 4,307,150

Municipal obligations due in:

One through five years

900,882 - (25,695 ) 875,187

Five through ten years

1,588,709 158 (184,589 ) 1,404,278

Greater than ten years

506,960 - (83,495 ) 423,465

MBS:

Residential

14,676,749 26,926 (1,108,642 ) 13,595,033

Commercial

16,716,960 - (2,074,420 ) 14,642,540

Allowance for credit losses

(108,000 ) - - (108,000 )

Total

$ 80,103,753 $ 142,989 $ (5,751,645 ) $ 74,495,097

Gross

Gross

Amortized

Unrecognized

Unrecognized

Fair

Cost

Gains

Losses

Value

December 31, 2023

U.S. Government and agency obligations

One through five years

$ 10,000,000 $ - $ (314,240 ) $ 9,685,760

Five through ten years

3,000,000 - (372,885 ) 2,627,115

Corporate bonds due in:

One through five years

6,431,007 - (52,685 ) 6,378,322

Five through ten years

16,294,604 38,684 (2,074,007 ) 14,259,281

Greater than ten years

4,287,941 - (441 ) 4,287,500

Municipal obligations due in:

One through five years

901,597 - (55,102 ) 846,495

Five through ten years

1,591,199 784 (160,655 ) 1,431,328

Greater than ten years

507,716 - (103,356 ) 404,360

MBS:

Residential

12,484,366 7,223 (1,457,104 ) 11,034,485

Commercial

17,157,749 - (2,737,642 ) 14,420,107

Total

$ 72,656,179 $ 46,691 $ (7,328,117 ) $ 65,374,753

Management completed an evaluation of the held to maturity securities portfolio to identify whether any ACL is required for the three and nine months ended September 30, 2024 and 2023, the results of which are presented in the below table, which summarizes the allowance and provision for credit losses related to the Company's held-to-maturity securities portfolio by type:

U.S. government and agency obligations

Corporate bonds

Municipal obligations

MBS - residential

MBS - commercial

Total

For the three months ended

September 30, 2024

Allowance for credit losses:

Beginning balance

$ - $ 108,000 $ - $ - $ - $ 108,000

Provision for credit losses

- - - - - -

Securities losses

- - - - - -

Recoveries

- - - - - -

Total ending allowance balance

$ - $ 108,000 $ - $ - $ - $ 108,000

U.S. government and agency obligations

Corporate bonds

Municipal obligations

MBS - residential

MBS - commercial

Total

September 30, 2023

Allowance for credit losses:

Beginning balance

$ - $ - $ - $ - $ - $ -

Impact of ASC 326 adoption

- - - - - -

Provision for credit losses

- - - - - -

Securities losses

- - - - - -

Recoveries

- - - - - -

Total ending allowance balance

$ - $ - $ - $ - $ - $ -

U.S. government and agency obligations

Corporate bonds

Municipal obligations

MBS - residential

MBS - commercial

Total

For the nine months ended

September 30, 2024

Allowance for credit losses:

Beginning balance

$ - $ - $ - $ - $ - $ -

Provision for credit losses

- 108,000 - - - 108,000

Securities losses

- - - - - -

Recoveries

- - - - - -

Total ending allowance balance

$ - $ 108,000 $ - $ - $ - $ 108,000

U.S. government and agency obligations

Corporate bonds

Municipal obligations

MBS - residential

MBS - commercial

Total

September 30, 2023

Allowance for credit losses:

Beginning balance

$ - $ - $ - $ - $ - $ -

Impact of ASC 326 adoption

- - - - - -

Provision for credit losses

- - - - - -

Securities losses

- - - - - -

Recoveries

- - - - - -

Total ending allowance balance

$ - $ - $ - $ - $ - $ -

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

9
Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 3 - SECURITIES HELD TO MATURITY (Continued)

The credit rating and the amortized cost of related securities were as follows:

U.S. government and agency obligations

Corporate bonds

Municipal obligations

MBS - residential

MBS - commercial

Total

September 30, 2024

Credit Rating

AAA/AA/A

$ 13,000,000 $ 3,729,721 $ 2,621,551 $ 14,676,749 $ 16,716,960 $ 50,744,981

BBB/BB/B

- 6,729,237 - - - 6,729,237

Lower than B

- - - - - -

Not Rated

- 22,362,536 375,000 - - 22,737,536

Total

$ 13,000,000 $ 32,821,494 $ 2,996,551 $ 14,676,749 $ 16,716,960 $ 80,211,754

U.S. government and agency obligations

Corporate bonds

Municipal obligations

MBS - residential

MBS - commercial

Total

December 31, 2023

Credit Rating

AAA/AA/A

$ 13,000,000 $ 11,860,264 $ 3,000,512 $ 12,484,366 $ 17,157,749 $ 57,502,891

BBB/BB/B

- 5,403,288 - - - $ 5,403,288

Lower than B

- - - - - $ -

Not Rated

- 9,750,000 - - - $ 9,750,000

Total

$ 13,000,000 $ 27,013,552 $ 3,000,512 $ 12,484,366 $ 17,157,749 $ 72,656,179

There were 54 securities in a loss position at September 30, 2024. The fair value of the securities held to maturity is expected to recover as the securities approach maturity. At September 30, 2024and December 31, 2023, securities held to maturity with a carrying amount of $1,231,090 and $1,589,747, respectively, were pledged to secure repurchase agreements at the Federal Home Loan Bank of New York. At September 30, 2024and December 31, 2023, securities held to maturity with a carrying value of $4,621,590 and $4,976,927, respectively, were pledged to secure public deposits.

NOTE 4 - LOANS

Loans are summarized as follows at September 30, 2024and December 31, 2023:

September 30,

December 31,

2024

2023

Real estate:

(unaudited)

Residential First Mortgage

$ 473,492,871 $ 486,052,422

Commercial Real Estate

112,899,496 99,830,514

Multi-Family Real Estate

74,697,352 75,612,566

Construction

40,243,916 49,302,040

Commercial and Industrial

10,229,503 6,658,370

Consumer

81,377 18,672

Total loans

711,644,515 717,474,584

Allowance for credit losses

(2,747,949 ) (2,785,949 )

Net loans

$ 708,896,566 $ 714,688,635
10
Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 4 - LOANS (Continued)

The Bank has granted loans to officers and directors of the Bank. At September 30, 2024and December 31, 2023, such loans totaled $2,291,851 and $1,610,688, respectively.

At September 30, 2024and December 31, 2023, deferred loan fees were $2,633,263 and $2,873,724, respectively.


The following table presents the activity in the ACL by portfolio segment for the three and nine months ended September 30, 2024 and 2023:

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

Three Months Ended September 30, 2023

Allowance for credit losses:

Beginning balance

$ 1,811,547 $ 539,002 $ 265,000 $ 159,000 $ 11,400 $ - $ 2,785,949

Provision for (recovery) of credit losses

(17,720 ) (5,505 ) 4,925 11,700 6,600 - -

Loans charged off

- - - - - - -

Recoveries

- - - - - - -

Total ending allowance balance

$ 1,793,827 $ 533,497 $ 269,925 $ 170,700 $ 18,000 $ - $ 2,785,949

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

Residential First Mortgage

Commercial Real Estate

Multi-Family Real Estate

Construction

Commercial and Industrial

Consumer

Total

Nine Months Ended September 30, 2023

Allowance for credit losses:

Beginning balance

$ 1,602,534 $ 381,180 $ 234,300 $ 258,500 $ 3,960 $ 97,700 $ 2,578,174

Impact of ASC 326 adoption

113,969 141,797 25,469 1,500 40 - 282,775

Provision for (recovery) of credit losses

77,324 10,520 10,156 (89,300 ) 14,000 (97,700 ) (75,000 )

Loans charged off

- - - - - - -

Recoveries

- - - - - - -

Total ending allowance balance

$ 1,793,827 $ 533,497 $ 269,925 $ 170,700 $ 18,000 $ - $ 2,785,949

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

11
Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 4 - LOANS (Continued)

The following table presents the balance in the ACL and the recorded investment in loans by portfolio segments and based on impairment method as of September 30, 2024and December 31, 2023:

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

Interest recognized on nonaccrual loans

September 30, 2024

Residential First Mortgage

$ 1,432,072 $ 1,678,469 $ 1,678,469 $ - $ -

Commercial Real Estate

450,392 1,208,325 1,208,325 - -

Construction

10,893,713 10,893,713 10,893,713 - -

Consumer

- - - - -

Total

$ 12,776,177 $ 13,780,507 $ 13,780,507 $ - $ -

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

Interest recognized on nonaccrual loans

December 31, 2023

Residential First Mortgage

$ 819,590 $ 1,432,072 $ 1,432,072 $ - $ -

Commercial Real Estate

- 450,392 450,392 $ - $ -

Construction

- 10,893,713 10,893,713 - -

Consumer

37,069 - - - -

Total

$ 856,659 $ 12,776,177 $ 12,776,177 $ - $ -

Collateral - dependent loans individually evaluated with the ACL by collateral type were as follows at September 30, 2024and December 31, 2023:

September 30, 2024

Portfolio segment

Real estate

Other

Residential First Mortgage

$ 1,678,469 $ -

Commercial Real Estate

1,208,325 -

Multi-Family Real Estate

- -

Construction

10,893,713 -

Commercial and Industrial

- -

Other Consumer

- -
$ 13,780,507 $ -

December 31, 2023

Portfolio segment

Real estate Other

Residential First Mortgage

$ 1,432,072 $ -

Commercial Real Estate

450,392 -

Multi-Family Real Estate

- -

Construction

10,893,713 -

Commercial and Industrial

- -

Other Consumer

- -
$ 12,776,177 $ -

Interest income recognized during impairment and cash-basis interest income for the three and nine months ended September 30, 2024 and 2023 was nominal.

12
Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 4 - LOANS (Continued)

No nonaccrual loans had specific reserves as of September 30, 2024, as they were all well-secured and in the process of collection. The Bank had no other real estate owned at either September 30, 2024or December 31, 2023.

The following table presents the aging of the recorded investment in past due loans as of September 30, 2024and December 31, 2023, 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, 2024

Residential First Mortgage

$ 122,024 $ 1,151,890 $ 805,020 $ 2,078,934 $ 471,413,937 $ 473,492,871

Commercial Real Estate

- 7,351,070 1,208,325 8,559,395 104,340,101 112,899,496

Multi-Family Real Estate

- - - - 74,697,352 74,697,352

Construction

- - 10,893,713 10,893,713 29,350,203 40,243,916

Commercial and Industrial

- - - - 10,229,503 10,229,503

Consumer

- - - - 81,377 81,377

Total

$ 122,024 $ 8,502,960 $ 12,907,058 $ 21,532,042 $ 690,112,473 $ 711,644,515

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, 2023

Residential First Mortgage

$ - $ 297,118 $ 964,806 $ 1,261,924 $ 484,790,498 $ 486,052,422

Commercial Real Estate

- - 450,392 450,392 99,380,122 99,830,514

Multi-Family Real Estate

- - - - 75,612,566 75,612,566

Construction

- - 10,893,713 10,893,713 38,408,327 49,302,040

Commercial and Industrial

- - - - 6,658,370 6,658,370

Consumer

- - - - 18,672 18,672

Total

$ - $ 297,118 $ 12,308,911 $ 12,606,029 $ 704,868,555 $ 717,474,584

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.

13
Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 4 - LOANS (Continued)

The following table presents loans, by risk category, loan class and year of origination as of September 30, 2024and December 31, 2023:

Term Loans by Origination Year

September 30, 2024

2024

2023

2022

2021

2020

Prior

Revolving Loans

Totals

Residential First Mortgage

Pass

$ 17,142,403 $ 22,274,590 $ 112,519,678 $ 33,636,953 $ 27,355,815 $ 132,783,333 $ 126,141,073 $ 471,853,845

Special Mention

- - - - 188,094 616,824 345,760 1,150,678

Substandard

- - - - - 147,528 340,820 488,348

Doubtful

- - - - - - - -

Total

17,142,403 22,274,590 112,519,678 33,636,953 27,543,909 133,547,685 126,827,653 473,492,871

Gross charge-offs by vintage

- - - - - - - -

Commercial Real Estate

Pass

9,944,908 11,699,559 5,397,799 2,047,869 42,826,155 40,084,642 448,172 112,449,104

Special Mention

- - - - - - - -

Substandard

- - - - - 450,392 - 450,392

Doubtful

- - - - - - - -

Total

9,944,908 11,699,559 5,397,799 2,047,869 42,826,155 40,535,034 448,172 112,899,496

Gross charge-offs by vintage

- - - - - - - -

Multi-Family Real Estate

Pass

672,900 12,571,571 6,636,348 11,717,025 12,810,530 26,278,704 4,010,274 74,697,352

Special Mention

- - - - - - - -

Substandard

- - - - - - - -

Doubtful

- - - - - - - -

Total

672,900 12,571,571 6,636,348 11,717,025 12,810,530 26,278,704 4,010,274 74,697,352

Gross charge-offs by vintage

- - - - - - - -

Construction

Pass

- - - - - - 29,350,203 29,350,203

Special Mention

- - - - - - - -

Substandard

- - - - - - 10,893,713 10,893,713

Doubtful

- - - - - - - -

Total

- - - - - - 40,243,916 40,243,916

Gross charge-offs by vintage

- - - - - - - -

Commercial and Industrial

Pass

2,511,643 211,275 - - 366,691 - 7,139,894 10,229,503

Special Mention

- - - - - - - -

Substandard

- - - - - - - -

Doubtful

- - - - - - - -

Total

2,511,643 211,275 - - 366,691 - 7,139,894 10,229,503

Gross charge-offs by vintage

- - - - - - - -

Consumer

Pass

- - - - - - 81,377 81,377

Special Mention

- - - - - - - -

Substandard

- - - - - - - -

Doubtful

- - - - - - - -

Total

- - - - - - 81,377 81,377

Gross charge-offs by vintage

- - - - - - - -

Total loans

$ 30,271,854 $ 46,756,995 $ 124,553,825 $ 47,401,847 $ 83,547,285 $ 200,361,423 $ 178,751,286 $ 711,644,515
14
Table of Contents
BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Term Loans by Origination Year

December 31, 2023

2023

2022

2021

2020

2019

Prior

Revolving Loans

Totals

Residential First Mortgage

Pass

$ 5,174,879 $ 111,903,094 $ 37,747,971 $ 28,952,299 $ 26,155,892 $ 114,830,194 $ 159,976,218 $ 484,740,547

Special Mention

- - - 191,276 169,343 389,565 107,538 857,722

Substandard

- - - - - 169,131 285,022 454,153

Doubtful

- - - - - - - -

Total

5,174,879 111,903,094 37,747,971 29,143,575 26,325,235 115,388,890 160,368,778 486,052,422

Gross charge-offs by vintage

- - - - - - - -

Commercial Real Estate

Pass

- 3,065,843 - 6,893,352 5,501,995 11,722,774 72,196,158 99,380,122

Special Mention

- - - - - - - -

Substandard

- - - - - - 450,392 450,392

Doubtful

- - - - - - - -

Total

- 3,065,843 - 6,893,352 5,501,995 11,722,774 72,646,550 99,830,514

Gross charge-offs by vintage

- - - - - - - -

Multi-Family Real Estate

Pass

- 2,362,920 - 1,162,353 - 2,117,462 69,969,831 75,612,566

Special Mention

- - - - - - - -

Substandard

- - - - - - - -

Doubtful

- - - - - - - -

Total

- 2,362,920 - 1,162,353 - 2,117,462 69,969,831 75,612,566

Gross charge-offs by vintage

- - - - - - - -

Construction

Pass

- - - - - - 38,459,962 38,459,962

Special Mention

- - - - - - - -

Substandard

- - - - - - 10,842,078 10,842,078

Doubtful

- - - - - - - -

Total

- - - - - - 49,302,040 49,302,040

Gross charge-offs by vintage

- - - - - - - -

Commercial and Industrial

Pass

241,109 - - 576,164 94,204 - 5,746,893 6,658,370

Special Mention

- - - - - - - -

Substandard

- - - - - - - -

Doubtful

- - - - - - - -

Total

241,109 - - 576,164 94,204 - 5,746,893 6,658,370

Gross charge-offs by vintage

- - - - - - - -

Consumer

Pass

- - - - - - 18,672 18,672

Special Mention

- - - - - - - -

Substandard

- - - - - - - -

Doubtful

- - - - - - - -

Total

- - - - - - 18,672 18,672

Gross charge-offs by vintage

- - - - - - - -

Total loans

$ 5,415,988 $ 117,331,857 $ 37,747,971 $ 37,775,444 $ 31,921,434 $ 129,229,126 $ 358,052,764 $ 717,474,584
There were no loan modifications during the three-month period ended September 30, 2024 .
15
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BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 5 - STOCK BASED COMPENSATION

The Company maintains the Bogota Financial Corp. 2021 Equity Incentive Plan (the "2021 Plan"), which provides for the issuance of up to 902,602 shares (257,887 restricted stock awards and 644,718 stock options) of Bogota Financial Corp. common stock.

On September 2, 2021, 226,519 shares of restricted stock were awarded, with a grant date fair value of $10.45 per share. On February 28, 2024, 10,000 shares of restricted stock were awarded, with a grant date fair value of $7.80 per share. To fund the grant of restricted common stock, the Company issued shares from authorized but unissued shares. Restricted shares granted under the 2021 Plan vest in equal installments, over a service period of fiveyears, beginning one year from the date of grant. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period. During the three and nine months ended September 30, 2024, approximately $121,000 and $363,000 in expense was recognized in regard to these awards, respectively, compared to expense during the same periods ended September 30, 2023, of approximately $118,000 and $354,000, respectively. The expected future compensation expense related to the 97,607 non-vested restricted shares outstanding at September 30, 2024was approximately $946,000, which is expected to be recognized over a weighted-average period of 2.10 years.

The following is a summary of the Company's restricted stock activity during the nine months ended September 30, 2024:

Number of Non-vested Restricted Shares

Weighted Average Grant Date Fair Value

Outstanding, January 1, 2024

135,911 $ 10.45

Granted

10,000 7.80

Vested

$ (45,304 ) 10.45

Forfeited

$ (3,000 ) 10.45

Outstanding, September 30, 2024

97,607 $ 10.18

On September 2, 2021, options to purchase 526,119 shares of Company common stock were awarded, with a grant date fair value of $4.37 per option. Stock options granted under the 2021 Plan vest in equal installments over a service period of fiveyears beginning one year from the date of grant. Stock options were granted at an exercise price of $10.45, which was the Company's common stock price on the grant date and had an expiration period of 10 years.

Management recognizes expense for the fair value of these awards on a straight-line basis over the requisite service period. During the three and nine months ended September 30, 2024, approximately $76,000 and $305,000 in expense was recognized in regard to these awards, respectively compared to expense of approximately $112,000 and $335,000 for the three and nine months ended September 30, 2023, respectively. The expected future compensation expense related to the 204,447 non-vested options outstanding at September 30, 2024was $892,000, which is expected to be recognized over a weighted-average period of 2.00 years. Forfeitures are accounted for as they occur through reversal of the expense on non-vested shares in the period of forfeiture.

The following is a summary of the Company's option activity during the nine months ended September 30, 2024:

Number of Stock Options

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (in years)

Aggregate Intrinsic Value

Outstanding, January 1, 2024

523,619 $ 10.45 5.5 $ -

Granted

-

Exercised

-

Forfeited

(12,500 ) 10.45 -

Outstanding, September 30, 2024

511,119 $ 10.45 4.9 $ -

Options exercisable at September 30, 2024

332,227 $ -

The aggregate intrinsic value in the table above represents the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options. As of September 30, 2024, there were no in-the-money options.

NOTE 6 - EMPLOYEE STOCK OWNERSHIP PLAN

In connection with our mutual-to-stock reorganization and stock offering, the Bank established an employee stock ownership plan ("ESOP"), which acquired 515,775 shares of the Company's common stock equaling 3.92% of the Company's outstanding shares. The ESOP is a tax-qualified retirement plan providing employees the opportunity to own Company stock. Bank contributions to the ESOP are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The number of shares to be allocated annually is 25,789 through 2039. During the three and nine months ended September 30, 2024, $48,000 and $141,314 was incurred as expense for the plan, respectively, compared to expense during the same periods ended September 30, 2023 of approximately $51,000 and $177,900, respectively. As of September 30, 2024, 126,101 shares have been allocated and 389,674 shares are unallocated with a fair value of $3.2 million.

NOTE 7 - DERIVATIVES AND HEDGING ACTIVITES

The Company uses derivative financial instruments as components of its market risk management, principally to manage interest rate risk. Certain derivatives 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.

16
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BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 7 - DERIVATIVES AND HEDGING ACTIVITES (continued)

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, 2024, the Company had five cash flow interest rate swaps with notional amounts of $65.0 million 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. 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 notionalamount. 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.

At December 31, 2023, the Company had twointerest rate swaps with a notional amount of $20.0 million to hedge certain FHLB advances and brokered deposits. At both September 30, 2024and December 31, 2023, the Company had no back-to-back interest rate swaps in place with commercial banking customers. During the three and nine months ended September 30, 2024, the net effect on interest expense related to cash flow hedges was a reduced expense of $258,000 and $679,000, respectively, while the net effect on interest expense related to fair value hedge during the three and nine months ended September 30, 2024, was a reduced expense of $240,000 and $567,000, respectively.

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, 2024:

September 30,

December 31,

2024

2023

Asset Derivative

Asset Derivative

Hedge Type

Consolidated Statements of Financial Condition

Fair Value

Fair Value

Interest rate swaps

Cash Flow

Other (Liabilities) Assets

$ (344,096 ) $ 239,510

Interest rate swaps

Fair Value

Other (Liabilities) Assets

$ (544,702 ) $ -

Interest rate swaps

Fair Value

Loans, net

$ 563,678 $ -

Total derivative instruments

$ (325,120 ) $ 239,510

For the nine months ended September 30, 2024, unrealized losses of $420,000 were recorded for changes in fair value of interest rate swaps with third parties and at September 30, 2024, accrued interest was $233,000.

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.

NOTE 8 - 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.

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BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 8 - 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, 2024

Assets:

Securities available for sale:

U.S. government and agency obligations

$ 5,736,918 $ - $ 5,736,918 $ -

Corporate bonds

14,126,064 - 14,126,064 -

MBS - residential

72,094,711 - 72,094,711 -

MBS - commercial

16,603,118 - 16,603,118 -

Liabilities:

Cash flow and fair value hedges

888,798 - 888,798 -
$ 107,672,013 $ - $ 107,672,013 $ -

As of December 31, 2023

Assets:

Securities available for sale:

U.S. government and agency obligations

$ 5,545,401 $ - $ 5,545,401 $ -

Corporate bonds

11,818,756 - 11,818,756 -

MBS - residential

35,407,182 - 35,407,182 -

MBS - commercial

16,116,840 - 16,116,840 -

Liabilities:

Cash flow hedge

(239,510 ) - (239,510 ) -
$ 69,127,689 $ - $ 69,127,689 $ -

There were no transfers between level 1 and level 2 during the nine months ended September 30, 2024.

The carrying amounts and estimated fair values of financial instruments not measured at fair value, at September 30, 2024and December 31, 2023, were as follows:

Carrying

Fair

Fair Value Measurement Placement

Amount

Value

(Level 1)

(Level 2)

(Level 3)

(In thousands)

September 30, 2024

Financial instruments - assets

Investment securities held-to-maturity

$ 80,104 $ 74,495 $ - $ 74,495 $ -

Loans

708,897 680,139 - - 680,139

Financial instruments - liabilities

Certificates of deposit

493,780 496,477 - 496,477 -

Borrowings

202,566 203,894 - 203,894 -

Carrying

Fair

Fair Value Measurement Placement

Amount

Value

(Level 1)

(Level 2)

(Level 3)

(In thousands)

December 31, 2023

Financial instruments - assets

Investment securities held-to-maturity

$ 72,656 $ 65,375 $ - $ 65,375 $ -

Loans

714,687 672,347 - - 672,347

Financial instruments - liabilities

Certificates of deposit

493,275 491,944 - 491,944 -

Borrowings

167,690 167,891 - 167,891 -

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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BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 9 - 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, 2024 and 2023was as follows:

Unrealized gain

and losses on

available for

sale securities

Benefit plans

Derivatives

Total

Three months ended

September 30, 2024

Beginning balance

$ (6,676,939 ) $ 5,654 $ 689,446 $ (5,981,839 )

Other comprehensive (loss) income before reclassification

2,070,862 - (936,818 ) 1,134,044

Amounts reclassified

- - - -

Net period comprehensive (loss) income

2,070,862 - (936,818 ) 1,134,044

Ending balance

$ (4,606,077 ) $ 5,654 $ (247,372 ) $ (4,847,795 )

September 30, 2023

Beginning balance

$ (7,118,869 ) $ 22,592 $ 447,448 $ (6,648,829 )

Other comprehensive (loss) income before reclassification

(1,146,582 ) - 184,997 (961,585 )

Amounts reclassified

- (16,546 ) - (16,546 )

Net period comprehensive (loss) income

(1,146,582 ) (16,546 ) 184,997 (978,131 )

Ending balance

$ (8,265,451 ) $ 6,046 $ 632,445 $ (7,626,960 )

Unrealized gain and losses on available for sale securities

Benefit plans

Derivatives

Total

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 )

Nine Months Ended September 30, 2023

Beginning balance

$ (6,499,666 ) $ 55,684 $ 232,969 $ (6,211,013 )

Other comprehensive (loss) income before reclassification

(1,765,785 ) - 399,476 (1,366,309 )

Amounts reclassified

- (49,638 ) - (49,638 )

Net period comprehensive (loss) income

(1,765,785 ) (49,638 ) 399,476 (1,415,947 )

Ending balance

$ (8,265,451 ) $ 6,046 $ 632,445 $ (7,626,960 )
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BOGOTA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

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, 2024and December 31, 2023and for the three and nine months ended September 30, 2024and September 30, 2023is intended to assist in understanding the financial condition and results of operations of Bogota Financial Corp. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

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

statements of our goals, intentions and expectations;

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

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

estimates of our risks and future costs and benefits.

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

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

changes in the amount and trend of loan delinquencies, charge-offs and non-performing and classified loans and changes in estimates of the adequacy of 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 consumer spending, borrowing and saving habits;

20
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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 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, 2023. 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, 2024and December 31, 2023

Total Assets. Assets increased $39.6 million, or 4.2%, from $939.3 million at December 31, 2023to $978.9 million at September 30, 2024primarily due to a $39.7 million, or 57.6%, increase in securities available for sale and an $7.4 million, or 10.3%, increase in securities held-to-maturity, offset by a $5.8 million, or 0.8%, decrease in loans and a $3.9 million, or 15.8%, decrease in cash and cash equivalents.

Cash and Cash Equivalents. Cash and cash equivalents decreased $3.9 million, or 15.8%, to $21.0 million at September 30, 2024from $24.9 million at December 31, 2023, as excess funds from increases in borrowings and deposits were used to purchase securities.

Securities Available for Sale.Securities available for sale increased $39.7 million, or 57.6%, to $108.6 million at September 30, 2024from $68.9 million at December 31, 2023. The increase was primarily due to the purchase of mortgage-backed securities that were purchased with excess funds as part of our leveraging strategy.

Securities Held to Maturity.Securities held to maturity increased $7.4 million, or 10.3%, to $80.1 million at September 30, 2024from $72.7 million at December 31, 2023, primarily due to the purchase of mortgage-backed securities with excess funds. At September 30, 2024, the Company's allowance for credit losses related to held-to-maturity securities totaled $108,000 or 0.13% of the total held-to-maturity securities portfolio.

Net Loans. Net loans decreased $5.8 million, or 0.8%, to $708.9 million at September 30, 2024from $714.7 million at December 31, 2023. The decrease was due to a decrease of $12.6 million, or 2.6%, in one- to four-residential real estate loans to $473.5 million from $486.1 million at December 31, 2023and a decrease of $9.1 million, or 18.4%, in construction loans to $40.2 million at September 30, 2024from $49.3 million at December 31, 2023, offset by a $13.1 million, or 13.1%, increase in commercial real estate loans to $112.9 million at September 30, 2024from $99.8 million at December 31, 2023, and by a $3.6 million, or 53.6%, increase in commercial and industrial loans to $10.2 million at September 30, 2024 from $6.7 million at December 31, 2023. The decreases in one- to four-residential and construction loans reflect less opportunities and decreased demand due to the higher interest rate environment. As of September 30, 2024and December 31, 2023, the Bank had no loans held for sale.

Delinquent loans increased $8.9 million to $21.5 million, or 3.0% of total loans, at September 30, 2024. The increase was mostly due to four commercial real estate loans to three customers with a balance of $8.1 million. Three of the past due commercial real estate loans are being actively managed with the customers and are expected to be brought current, while one totaling $758,000 has been placed on nonaccrual status, but is considered well-secured with a loan-to-value of 59%. We did not record any specific reserves, or charge-offs for these loans. During the same timeframe, non-performing assets increased from $12.8 million at December 31, 2023 to $13.8 million, which represented 1.41% of total assets at September 30, 2024. The Company's allowance for credit losses was 0.39% of total loans and 19.94% of non-performing loans at September 30, 2024compared to 0.39% of total loans and 21.81% of non-performing loans at December 31, 2023. The Bank does not have any exposure to commercial real estate loans secured by office space. The majority of the non-performing loans at September 30, 2024 was comprised of one construction loan for construction of 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, 2024. The Company has commenced legal action against the client.

Total Liabilities.Total liabilities increased $39.7 million, or 5.0%, to $841.9 million as of September 30, 2024from $802.2 million as of December 31, 2023, primarily due to a $3.9 million increase in deposits and a $34.9 million increase in borrowings.

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Table of Contents

Deposits.Deposits increased $3.9 million, or 0.6%, to $629.2 million at September 30, 2024from $625.3 million at December 31, 2023. The increase in deposits reflected an increase in interest-bearing demand deposits of $1.8 million, or 1.8%, to $103.3 million as of September 30, 2024from $101.5 million at December 31, 2023 due to the increases of $4.5 million, or 5.2%, in checking and savings accounts, offset by a $2.6 million, or 18.1%, decrease in money market accounts. Certificates of deposit increased $505,000, or 0.1%, to $493.8 million at September 30, 2024from $493.3 million at December 31, 2023. Non-interest bearing deposits increased $1.5 million, or 5.2%, to $32.1 million as of September 30, 2024from $30.6 million as of December 31, 2023. The changes reflected customers' desire for higher-yielding accounts in the higher interest rate environment.

At September 30, 2024, municipal deposits totaled $36.0 million, which represented 5.7% of total deposits, and brokered deposits totaled $101.1 million, which represented 16.1% of deposits. At December 31, 2023, municipal deposits totaled $57.5 million, which represented 9.2% of deposits, and brokered deposits totaled $53.3 million, which represented 8.5% of total deposits. At September 30, 2024, uninsured deposits totaled $64.1 million, comprised of 296 account holders, which represented 10.2% of total deposits.

Borrowings. Federal Home Loan Bank of New York borrowings increased $34.9 million, or 20.8%, to $202.6 million at September 30, 2024from $167.7 million at December 31, 2023. Specifically short-term advances increased by $16.0 million while long-term advances increased $18.9 million which is part of our leveraging strategy that will allow the Company to better position itself to take advantage of potential rate cuts. The weighted average rate of borrowings was 4.62% and 4.54% as of September 30, 2024and December 31, 2023, respectively. Total borrowing capacity at the Federal Home Loan Bank was $297.9 million at September 30, 2024, of which $202.6 million was advanced.

Total Equity. Stockholders' equity decreased $233,000 to $136.9 million, primarily due to a net loss of $1.2 million and the repurchase of 196,873 shares of stock during the nine months ended September 30, 2024at a cost of $1.4 million, offset by a decrease in accumulated other comprehensive loss for securities available for sale of $1.6 million and stock compensation of $668,000 for the nine months ended September 30, 2024. At September 30, 2024, the Company's ratio of average stockholders' equity-to-average total assets was 14.01%, compared to 15.24% at December 31, 2023.

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,

2024

2023

Average Balance

Interest and Dividends

Yield/ Cost (1)

Average Balance

Interest and Dividends

Yield/ Cost (1)

(Dollars in thousands)

Assets:

(unaudited)

Cash and cash equivalents

$ 10,195 $ 138 5.39 % $ 12,764 $ 168 5.21 %

Loans

711,601 8,382 4.69 % 710,725 7,981 4.45 %

Securities

187,212 1,897 4.05 % 138,479 1,008 2.91 %

Other interest-earning assets

9,908 203 8.20 % 6,620 132 8.04 %

Total interest-earning assets

918,916 10,620 4.60 % 868,588 9,289 4.25 %

Non-interest-earning assets

56,061 54,179

Total assets

$ 974,977 $ 922,767

Liabilities and equity:

NOW and money market accounts

$ 65,767 $ 329 1.99 % $ 74,785 $ 354 1.88 %

Savings accounts

44,029 205 1.85 % 46,177 214 1.83 %

Certificates of deposit (1)

497,251 5,626 4.50 % 498,082 4,284 3.41 %

Total interest-bearing deposits

607,047 6,160 4.04 % 619,044 4,852 3.11 %

Federal Home Loan Bank advances (1)

196,885 1,803 3.64 % 125,344 1,220 3.86 %

Total interest-bearing liabilities

803,932 7,963 3.94 % 744,388 6,072 3.24 %

Non-interest-bearing deposits

31,679 38,257

Other non-interest-bearing liabilities

2,724 1,727

Total liabilities

838,335 784,372

Total equity

136,642 138,395

Total liabilities and equity

$ 974,977 $ 922,767

Net interest income

$ 2,657 $ 3,217

Interest rate spread (2)

0.66 % 1.01 %

Net interest margin (3)

1.15 % 1.47 %

Average interest-earning assets to average interest-bearing liabilities

114.30 % 116.68 %

(1) Cash flow and fair value hedges are used to manage interest rate risk. During the three months ended September 30, 2024 and 2023, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $498,000 and $115,000 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.

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Nine Months Ended September 30,

2024

2023

Average Balance

Interest and Dividends

Yield/ Cost (1)

Average Balance

Interest and Dividends

Yield/ Cost (1)

(Dollars in thousands)

Assets:

Cash and cash equivalents

$ 9,072 $ 415 6.09 % $ 11,352 $ 423 4.98 %

Loans

711,697 24,888 4.66 % 713,603 23,822 4.46 %

Securities

179,818 5,287 3.92 % 148,802 3,121 2.80 %

Other interest-earning assets

8,903 566 8.48 % 6,110 348 7.62 %

Total interest-earning assets

909,490 31,156 4.57 % 879,867 27,714 4.20 %

Non-interest-earning assets

58,221 54,380

Total assets

$ 967,711 $ 934,247

Liabilities and equity:

NOW and money market accounts

$ 67,628 $ 993 1.96 % $ 91,781 $ 1,089 1.59 %

Savings accounts

43,824 608 1.85 % 49,529 375 1.01 %

Certificates of deposit (1)

510,494 16,784 4.39 % 498,460 11,314 3.03 %

Total interest-bearing deposits

621,946 18,385 3.95 % 639,770 12,778 2.67 %

Federal Home Loan Bank advances (1)

171,565 4,719 3.67 % 110,875 2,900 3.50 %

Total interest-bearing liabilities

793,511 23,104 3.89 % 750,645 15,678 2.79 %

Non-interest-bearing deposits

31,225 38,253

Other non-interest-bearing liabilities

6,154 6,351

Total liabilities

830,890 795,249

Total equity

136,821 138,998

Total liabilities and equity

$ 967,711 $ 934,247

Net interest income

$ 8,052 $ 12,036

Interest rate spread (2)

0.68 % 1.41 %

Net interest margin (3)

1.18 % 1.82 %

Average interest-earning assets to average interest-bearing liabilities

114.62 % 117.21 %

(1) Cash flow and fair value hedges are used to manage interest rate risk. During the ninemonths ended September 30, 2024 and 2023, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $1.2 million and $254,000 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.

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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, 2024

Nine Months Ended September 30, 2024

Compared to

Compared to

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Increase (Decrease) Due to

Increase (Decrease) Due to

Volume

Rate

Net

Volume

Rate

Net

(In thousands)

Interest income:

(unaudited)

Cash and cash equivalents

$ (66 ) $ 36 $ (30 ) $ (123 ) $ 115 $ (8 )

Loans receivable

9 392 401 (101 ) 1,167 1,066

Securities

420 469 889 742 1,424 2,166

Other interest earning assets

68 3 71 175 43 218

Total interest-earning assets

432 899 1,331 692 2,750 3,442

Interest expense:

NOW and money market accounts

(128 ) 103 (25 ) (413 ) 317 (96 )

Savings accounts

(24 ) 15 (9 ) (73 ) 306 233

Certificates of deposit

(49 ) 1,391 1,342 279 5,191 5,470

Federal Home Loan Bank advances

1,032 (449 ) 583 1,667 152 1,819

Total interest-bearing liabilities

830 1,061 1,891 1,461 5,965 7,426

Net decrease in net interest income

$ (399 ) $ (161 ) $ (560 ) $ (768 ) $ (3,216 ) $ (3,984 )
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Comparison of Operating Results for the Three Months Ended September 30, 2024and September 30, 2023

General.Net income decreased by $338,000 to a net loss of $367,000 for the three months ended September 30, 2024from a net loss of $29,000 for the three months ended September 30, 2023. This decrease was primarily due to a decrease of $560,000 in net interest income, partially offset by a decrease of $56,000 in non-interest expense, an increase of $128,000 in income tax benefit and a $38,000 increase in non-interest income.

Interest Income.Interest income increased $1.3 million, or 14.3%, from $9.3 million for the three months ended September 30, 2023to $10.6 million for the three months ended September 30, 2024 primarily due to higher yields on interest-earning assets and an increase in the average balance of securities.

Interest income on cash and cash equivalents decreased $30,000, or 17.9%, to $138,000 for the three months ended September 30, 2024from $168,000 for the three months ended September 30, 2023due to a $2.6 million decrease in the average balance to $10.2 million for the three months ended September 30, 2024from $12.8 million for the three months ended September 30, 2023, reflecting the use of excess cash to purchase securities. The decrease was offset by an 18 basis point increase in the average yield from 5.21% for the three months ended September 30, 2023to 5.39% for the three months ended September 30, 2024, due to the higher interest rate environment.

Interest income on loans increased $400,000, or 5.0%, to $8.4 million for the three months ended September 30, 2024compared to $8.0 million for the three months ended September 30, 2023due primarily to a 24 basis point increase in the average yield from 4.45% for the three months ended September 30, 2023to 4.69% for the three months ended September 30, 2024, and to a lesser extent, a $876,000 increase in the average balance to $711.6 million for the three months ended September 30, 2024from $710.7 million for the three months ended September 30, 2023.

Interest income on securities increased $889,000, or 88.2%, to $1.9 million for the three months ended September 30, 2024from $1.0 million for the three months ended September 30, 2023 primarily due to a $48.7 million increase in the average balance to $187.2 million for the three months ended September 30, 2024from $138.5 million for the three months ended September 30, 2023, and a 114 basis point increase in the average yield from 2.91% for the three months ended September 30, 2023to 4.05% for the three months ended September 30, 2024 due to the higher interest rate environment.

Interest Expense.Interest expense increased $1.9 million, or 31.1%, from $6.1 million for the three months ended September 30, 2023to $8.0 million for the three months ended September 30, 2024due to higher costs and average balances on interest-bearing liabilities.

Interest expense on interest-bearing deposits increased $1.3 million, or 27.0%, to $6.2 million for the three months ended September 30, 2024from $4.9 million for the three months ended September 30, 2023. The increase was due to a 93 basis point increase in the average cost of deposits to 4.04% for the three months ended September 30, 2024from 3.11% for the three months ended September 30, 2023. The increase in the average cost of deposits was due to the higher interest rate environment and a change in the composition of the deposit portfolio to a greater concentration of higher-costing certificates of deposit. The average balances of certificates of deposit decreased $831,000 to $497.3 million for the three months ended September 30, 2024from $498.1 million for the three months ended September 30, 2023. The average balance of savings accounts decreased by $2.1 million during the quarter, while the average balance of NOW and money market accounts decreased $9.0 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Interest expense on Federal Home Loan Bank advances increased $582,000, or 47.7%, from $1.2 million for the three months ended September 30, 2023 to $1.8 million for the three months ended September 30, 2024. The increase was due to an increase in the average balance of $71.6 million to $196.9 million for the three months ended September 30, 2024. The increase was offset by a 22 basis point decrease in the average cost of borrowings to 3.64% for the three months ended September 30, 2024from 3.86% for the three months ended September 30, 2023 due to the new borrowings being at lower rates.

Net Interest Income.Net interest income decreased $560,000, or 17.4%, to $2.7 million for the three months ended September 30, 2024from $3.2 million for the three months ended September 30, 2023. The decrease reflected a 35 basis point decrease in our net interest rate spread to 0.66% for the three months ended September 30, 2024from 1.01% for the three months ended September 30, 2023. Our net interest margin decreased 32 basis points to 1.15% for the three months ended September 30, 2024from 1.47% for the three months ended September 30, 2023.

Provision for Credit Losses.We did not record a provision for credit losses for the three months ended September 30, 2024 or September 30, 2023 due to the decrease in loans.

Non-Interest Income.Non-interest income increased by $37,000, or 13.0%, to $327,000 for the three months ended September 30, 2024from $290,000 for the three months ended September 30, 2023. Bank-owned life insurance income increased $23,000, or 11.7%, due to higher balances during 2024, and gain on sale of loans increased $12,000 compared to no gain on sale of loans for the three months ended September 30, 2023.

Non-Interest Expense.For the three months ended September 30, 2024, non-interest expense decreased $56,000, or 1.5%, over the comparable 2023period. This was due to a $171,000, or 7.5% reduction in salaries and employee benefits, which decreased due to lower headcount, and a $40,000, or 31.9%, decrease in advertising expenses. Our FDIC insurance assessment also decreased by $26,000, or 19.8%. These decreases were offset by an increase in professional fees of $99,000, or 70.6%, due to higher consulting expense related to strategic business planning. Data processing expense also increased $100,000, or 48.8%, due to higher processing costs.

Income Tax Expense.Income tax benefit increased $128,000, or 102.1%, to a benefit of $253,000 for the three months ended September 30, 2024from a $125,000 benefit for the three months ended September 30, 2023. The decrease was due to $466,000 of lower taxable income.

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Comparison of Operating Results for the Nine Months Ended September 30, 2024and September 30, 2023

General.Net income decreased by $3.1 million, or 168.1%, to a net loss of $1.2 million for the ninemonths ended September 30, 2024from net income of $1.8 million for the ninemonths ended September 30, 2023. This decrease was primarily due to a decrease of $4.0million in net interest income, partially offset by a decrease of $1.2 million in income tax expense.

Interest Income.Interest income increased $3.4 million, or 12.4%, from $27.7 million for the ninemonths ended September 30, 2023to $31.1 million for the ninemonths ended September 30, 2024due to higher yields on interest-earning assets and an increase in the average balance of securities, partially offset by a decrease in the average balance of loans and cash and cash equivalents.

Interest income on cash and cash equivalents decreased $8,000, or 1.9%, to $415,000 for the ninemonths ended September 30, 2024from $423,000 for the ninemonths ended September 30, 2023due to a $2.3 million decrease in the average balance to $9.1 million for the ninemonths ended September 30, 2024from $11.4 million for the ninemonths ended September 30, 2023, reflecting the decrease of liquidity due to increased securities purchases. This decrease was offset by a 111 basis point increase in the average yield from 4.98% for the ninemonths ended September 30, 2023to 6.09% for the ninemonths ended September 30, 2024due to the higher interest rate environment.

Interest income on loans increased $1.1 million, or 4.5%, to $24.9 million for the ninemonths ended September 30, 2024compared to $23.8 million for the ninemonths ended September 30, 2023due primarily to a 20 basis point increase in the average yield from 4.46% for the ninemonths ended September 30, 2023to 4.66% for the ninemonths ended September 30, 2024, offset by a $1.9 million decrease in the average balance to $711.7 million for the ninemonths ended September 30, 2024from $713.6 million for the ninemonths ended September 30, 2023.

Interest income on securities increased $2.2 million, or 69.4%, to $5.3 million for the ninemonths ended September 30, 2024from $3.1 million for the ninemonths ended September 30, 2023 primarily due to a 112 basis point increase in the average yield from 2.80% for the ninemonths ended September 30, 2023to 3.92% for the ninemonths ended September 30, 2024, and a $31.0 million increase in the average balance to $179.8 million for the ninemonths ended September 30, 2024from $148.8 million for the ninemonths ended September 30, 2023.

Interest Expense.Interest expense increased $7.4 million, or 47.4%, from $15.7 million for the ninemonths ended September 30, 2023to $23.1 million for the ninemonths ended September 30, 2024, primarily due to higher costs and higher average balances on certificates of deposit and borrowings.

Interest expense on interest-bearing deposits increased $5.6 million, or 43.9%, to $18.4 million for the ninemonths ended September 30, 2024from $12.8 million for the ninemonths ended September 30, 2023. The increase was due to a 128 basis point increase in the average cost of deposits to 3.95% for the ninemonths ended September 30, 2024from 2.67% for the ninemonths ended September 30, 2023. The increase in the average cost of deposits was due to the higher interest rate environment and a change in the composition of the deposit portfolio to a greater concentration of higher-costing certificates of deposit. The average balances of certificates of deposit increased $12.0 million to $510.5 million for the ninemonths ended September 30, 2024from $498.5 million for the ninemonths ended September 30, 2023while average NOW and money market accounts and savings accounts decreased $24.2 million and $5.7 million for the ninemonths ended September 30, 2024, respectively, compared to the ninemonths ended September 30, 2023.

Interest expense on Federal Home Loan Bank advances increased $1.8 million, or 62.7%, from $2.9 million for the ninemonths ended September 30, 2023 to $4.7 million for the ninemonths ended September 30, 2024. The increase was due to an increase in the average balance of $60.7 million to $171.6 million for the ninemonths ended September 30, 2024. The increase was also due to an increase in the average cost of borrowings of 17 basis points to 3.67% for the ninemonths ended September 30, 2024from 3.50% for the ninemonths ended September 30, 2023 due to the new borrowings being at higher rates.

Net Interest Income.Net interest income decreased $3.9 million, or 33.1%, to $8.1 million for the ninemonths ended September 30, 2024from $12.0 million for the ninemonths ended September 30, 2023. The decrease reflected a 73 basis point decrease in our net interest rate spread to 0.68% for the ninemonths ended September 30, 2024from 1.41% for the ninemonths ended September 30, 2023. Our net interest margin decreased 64 basis points to 1.18% for the ninemonths ended September 30, 2024from 1.82% for the ninemonths ended September 30, 2023.

Provision for Credit Losses.We recorded a $70,000 provision for credit losses for the ninemonths ended September 30, 2024compared to a $125,000 recovery for credit losses for the nine-month period ended September 30, 2023. The entire provision during the period was due to a $108,000 provision for held-to-maturity securities due to an increase in corporate securities, which was offset by a $38,000 credit to the provision for loans due to a decrease in the loan portfolio.

Non-Interest Income.Non-interest income increased by $73,000, or 8.5%, to $929,000 for the ninemonths ended September 30, 2024from $856,000 for the ninemonths ended September 30, 2023. Bank-owned life insurance income increased $74,000, or 12.9%, due to higher balances during 2024.

Non-Interest Expense.For the ninemonths ended September 30, 2024, non-interest expense increased $163,000, or 1.5%, over the comparable 2023period. Professional fees increased $270,000, or 65.5% due to higher consulting expense related to strategic business planning. Data processing expense increased $210,000, or 29.3%, due to higher processing costs. These were offset by a $333,000, or 4.9%, reduction in salaries and employee benefit costs, which decreased due to lower headcount.

Income Tax Expense.Income tax expense decreased $1.2 million, or 312.9%, to a benefit of $821,000 for the ninemonths ended September 30, 2024from a $386,000 expense for the ninemonths ended September 30, 2023. The decrease was due to $4.3 million of lower taxable income.

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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 positions, alternative funding sources, interest rate risk measurement reports, capital levels and economic trends at both national and local levels. Our interest rate risk position is also monitored quarterly by the board of directors.

We manage our interest rate risk to minimize the exposure of our earnings and capital to changes in market interest rates. We have implemented the following strategies to manage our interest rate risk: originating and purchasing loans with adjustable interest rates; promoting core deposit products; monitoring the length of our borrowings with the Federal Home Loan Bank and brokered deposits depending on the interest rate environment; maintaining a majority of our investments as available-for-sale; diversifying our loan portfolio; and strengthening our capital position. By following these strategies, we believe that we are better positioned to react to changes in market interest rates.

Net Portfolio Value Simulation. We analyze our sensitivity to changes in interest rates through a net portfolio value of equity ("NPV") model. NPV represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities, adjusted for the value of off-balance sheet contracts. The NPV ratio represents the dollar amount of our NPV divided by the present value of our total assets for a given interest rate scenario. NPV attempts to quantify our economic value using a discounted cash flow methodology while the NPV ratio reflects that value as a form of capital ratio. We estimate what our NPV would be at a specific date. We then calculate what the NPV would be at the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. We currently calculate NPV under the assumptions that interest rates increase 100, 200, 300 and 400 basis points from current market rates and that interest rates decrease 100, 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, 2024. 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

$ 68,323 $ (46,293 ) (40.39 )% 7.81 % (35.35 )%

300 bp

80,478 (34,138 ) (29.78 ) 9.01 (25.41 )

200 bp

91,085 (23,531 ) (20.53 ) 10.00 (17.22 )

100 bp

102,606 (12,010 ) (10.48 ) 11.04 (8.61 )
- 114,616 - - 12.08 -

(100) bp

126,246 11,630 10.15 13.04 7.95

(200) bp

137,156 22,540 19.67 13.89 14.98

(300) bp

147,064 32,448 28.31 14.63 21.11

(400) bp

157,813 43,197 37.69 15.40 27.48

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

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As of September 30, 2024, 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 (9.27 )%
300 (7.06 )
200 (4.52 )
100 (2.05 )
- -

(100)

(0.78 )

(200)

(3.46 )

(300)

(7.94 )

(400)

(13.32 )

(1)

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

The preceding simulation analyses do 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, 2024, we had the ability to borrow up to $297.9 million, of which $202.7 million was outstanding and $1.2 million was utilized as collateral for letters of credit issued to secure municipal deposits. At September 30, 2024, 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, 2024.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any period. At September 30, 2024, cash and cash equivalents totaled $21.0 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $108.6 million at September 30, 2024.

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, 2024totaled $439.7 million, or 69.9% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and Federal Home Loan Bank of New York advances. Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay. We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Capital Resources. We are subject to various regulatory capital requirements administered by the New Jersey Department of Banking and Insurance and the Federal Deposit Insurance Corporation. At September 30, 2024, 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, 2024, the Bank is reporting as a qualifying community bank with a ratio of 13.12%.

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.

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Table of Contents

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

As required by Rule 13a-15(b) of the Exchange Act, an evaluation as of September 30, 2024 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of September 30, 2024 were not effective due to the previously reported material weakness described below.

Management's Report on Internal Control Over Financial Reporting

During May 2024, while finalizing the unaudited interim financial statements, it was discovered that the accounting for fair value hedges was completed incorrectly in that instead of adjusting the fair value of loans the accumulated other comprehensive loss was adjusted. As such, the Company concluded that a material weakness existed in its internal controls over financial reporting. The fair value hedges were purchased in February 2024 and the error was discovered before any financial statements were issued. Corrections were made to properly reflect the correct accounting treatments of fair value hedges. Consequently, the material weakness did not result in any identified misstatement, and there were no changes to previously issued financial statements.

Remediation Plan for the Material Weakness

In the first quarter of 2024, corrections were made by management to properly account for the fair value hedges, which completely remedied the material weakness. Management will continue to account for the fair value hedges in accordance with generally accepted accounting principles going forward.

During the three months ended September 30, 2024, 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. We believe the actions described above were sufficient to remediate the identified material weakness.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

At September 30, 2024we 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 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, 2023.

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

On April 24, 2024, the Company announced it had received regulatory approval for the repurchase of up to 237,090 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, 2024, 163,790 shares have been repurchased pursuant to the program at a cost of $1.2 million.

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

ISSUER PURCHASES OF EQUITY SECURITIES

Period

Total Number of Shares Purchased

Average Price Paid per Share

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

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

July 1 - 31, 2024

17,469 $ 7.21 17,469 112,298

August 1 - 31, 2024

21,604 7.31 21,604 90,694

September 1 - 30, 2024

17,394 7.54 17,394 73,300

Total

56,467 $ 7.35 56,467

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, 2024, noneof 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.

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Item 6. Exhibits

Exhibit

Number

Description

3.1

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

3.2

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 February 23, 2023 (Commission File No. 333-233680))

4.1

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

31.1

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

31.2

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

32.1

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

101.0

The following materials for the quarter ended September 30, 2024, 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 (Loss), (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements*

104

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

* Furnished, not filed.

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SIGNATURES

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

BOGOTA FINANCIAL CORP.

Date: November 13, 2024

/s/ Kevin Pace

Kevin Pace

President, Chief Executive Officer and Director

Date: November 13, 2024

/s/ Brian McCourt

Brian McCourt

Executive Vice President and Chief Financial Officer

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