10-K: Bogota Financial Corp. Returns to Profitability in 2025

Bogota Financial Corp. reported a significant rebound to net income in 2025, driven by improved net interest income and strategic balance sheet adjustments, despite a decrease in total assets.

Summary

• Net income increased by $4.3 million to $2.1 million for the twelve months ended December 31, 2025, compared to a net loss of $2.2 million for the same period in 2024.
• Total assets decreased by $66.6 million, or 6.9%, to $904.9 million at December 31, 2025, from $971.5 million at December 31, 2024.
• Net interest income increased by $4.9 million, or 46.6%, to $15.5 million for the twelve months ended December 31, 2025, from $10.7 million in 2024.
• Net interest margin improved by 64 basis points to 1.80% for the twelve months ended December 31, 2025, from 1.16% in 2024.
• Total deposits increased by $10.3 million, or 1.6%, to $652.4 million at December 31, 2025, compared to $642.2 million at December 31, 2024.
• Net loans decreased by $64.1 million, or 9.0%, to $647.6 million at December 31, 2025, primarily due to $105.1 million in repayments, partially offset by $41.0 million in new originations.
• The allowance for credit losses decreased to $2.53 million at December 31, 2025, from $2.62 million at December 31, 2024, with a recovery of $130,000 in 2025.
• Non-performing assets decreased to $13.3 million, representing 1.47% of total assets, at December 31, 2025, from $14.0 million, or 1.44% of total assets, at December 31, 2024.
• The Bank maintained a 'well capitalized' status with a Tier 1 capital to average assets ratio of 14.35% at December 31, 2025, exceeding the 9.0% regulatory requirement.
• The Company repurchased 76,673 shares of its common stock at a cost of $656,000 in 2025, with 160,917 shares remaining under the repurchase program.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, primarily due to the significant return to profitability and improved net interest margin, indicating effective balance sheet management despite asset contraction and ongoing funding challenges.

Positives

• Significant turnaround from a net loss of $2.2 million in 2024 to a net income of $2.1 million in 2025.
• Net interest income increased substantially by 46.6% to $15.5 million, and net interest margin improved by 64 basis points to 1.80%.
• The average yield on securities available for sale increased by 143 basis points to 5.31% in 2025, reflecting successful balance sheet restructuring.
• Non-performing assets decreased to $13.3 million in 2025 from $14.0 million in 2024, indicating improved asset quality.
• The Bank maintained a strong capital position, classified as 'well capitalized' with a Tier 1 capital to average assets ratio of 14.35%, well above the 9.0% regulatory minimum.
• Municipal deposits increased to $45.1 million (6.9% of total deposits) in 2025 from $30.7 million (4.8%) in 2024.
• The Company executed a sale-leaseback transaction in December 2024, resulting in a $9.0 million pre-tax gain.
• An ongoing stock repurchase program demonstrates confidence in valuation and returns capital to shareholders.

Negatives

• Total assets decreased by 6.9% in 2025, primarily due to a $64.1 million decrease in loans and a $16.6 million decrease in cash and cash equivalents.
• Net loans decreased by 9.0% due to higher repayments and reduced demand for residential and construction loans.
• Core deposits decreased to 24.3% of total deposits in 2025 from 24.8% in 2024, indicating continued reliance on higher-cost certificates of deposit.
• Brokered deposits increased to $109.7 million (16.8% of total deposits) in 2025 from $101.6 million (15.8%) in 2024, which can be a more volatile and higher-cost funding source.
• Occupancy and equipment expenses increased significantly by $1.2 million, or 82.7%, due to higher lease expense associated with the December 2024 sale-leaseback transaction.
• The Company recorded an $87,000 loss from its investment in a limited partnership in 2025.
• Certificates of deposit comprise 75.7% of total deposits, with $441.3 million (67.6%) maturing within one year, posing re-pricing risk in a dynamic interest rate environment.
• The Company does not expect to pay any cash dividends on its common stock in the foreseeable future due to Federal Reserve Board regulations and policy regarding mutual holding companies.

Risks

• The geographic concentration of the loan portfolio (99.5% secured by real estate in the primary market area) makes the company vulnerable to a downturn in the local economy.
• An emphasis on commercial and multi-family real estate loans exposes the company to greater risk of loss due to larger balances, dependence on property income, and potentially longer holding periods in foreclosure.
• Non-owner occupied commercial real estate loans ($87.3 million, or 13.4% of total loan portfolio, with 2.11% past due) carry increased credit risk.
• The allowance for credit losses may not be sufficient to cover actual credit losses if management's assumptions prove incorrect or economic conditions worsen.
• Concentrations of loans in specific industries, such as lessors of office buildings ($25.1 million) and the retail industry ($63.8 million), create greater risk exposure, particularly given the impact of remote work on commercial real estate.
• The company faces environmental liability risk associated with lending activities, especially concerning properties acquired through foreclosure.
• Changes in interest rates may reduce profits, as the company's assets (loans and securities) generally have longer maturities than its liabilities (deposits and borrowings).
• Changes in the estimated fair value of debt securities, all classified as available-for-sale, may reduce stockholders' equity and net income, with an accumulated other comprehensive loss of $2.0 million at December 31, 2025.
• Inflation can negatively impact the value of assets, increase operating costs, and reduce customers' ability to repay loans.
• Changes to trade policies and tariffs could negatively impact local economic conditions and customers' ability to meet financial obligations.
• Interruptions in customers' supply chains could negatively impact their business and ability to repay loans.
• Inability to generate lower-cost core deposits could increase funding costs and reduce net interest margin and profitability, leading to heavier reliance on wholesale funding strategies.
• Significant deposit withdrawals, particularly from municipal deposits ($45.1 million), could negatively impact liquidity and earnings.
• Building market share through de novo branching may cause expenses to increase faster than revenues and may not be successful in generating sufficient business.
• Failure to grow or manage growth effectively could adversely affect financial condition and results of operations.
• Acquisitions may disrupt business, dilute shareholder value, and involve integration risks.
• Investments in corporate and municipal debt securities expose the company to additional credit risks compared to U.S. agency securities.
• Systems failures or breaches of network security could adversely affect financial condition, results of operation, and lead to increased operating costs, litigation, and other liabilities.
• Failure to maintain current technologies and the costs to update technology could negatively impact business operations and financial results.
• Reliance on management and outside consultants for cybersecurity risk management, despite Board oversight, could be a weakness if expertise is insufficient.
• Natural disasters, acts of terrorism, global market disruptions, and other external events could harm the business.
• The risk management framework may not be effective in mitigating all risks, especially unanticipated or unknown ones.
• Strong competition within the market area may reduce profits and slow growth.
• Changes in laws and regulations and the cost of regulatory compliance may adversely affect operations and/or increase costs.
• Fiscal, monetary, and regulatory policies of the federal government and its agencies could adversely affect the business, financial condition, and results of operations.
• Stringent capital requirements may impact return on equity, require additional capital, or restrict dividends and share repurchases.
• Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.
• As a smaller reporting company, reduced disclosure requirements could make common stock less attractive to investors.
• Changes in accounting standards could affect reported earnings.
• Federal Reserve Board regulations and policy effectively prohibit Bogota Financial, MHC from waiving the receipt of dividends, which will likely preclude the company from paying any dividends on its common stock.
• The common stock is not heavily traded, and the stock price may fluctuate significantly.
• Bogota Financial, MHC's majority control of common stock enables it to exercise voting control over most matters, preventing stockholders from forcing a sale or a second-step conversion transaction.
• Various factors, including the mutual holding company structure and charter provisions, may make takeover attempts more difficult to achieve.

Future Outlook

The company expects moderate organic growth in total assets and deposits over the next several years. It plans to continue focusing on residential, commercial, and multi-family real estate lending, increase lower-cost core deposits, and grow through opportunistic bank or branch acquisitions or formations, including a new branch in Point Pleasant in the second quarter of 2026. The company also aims to maintain disciplined underwriting and operating efficiencies.

Management Comments

• "Management believes that we have a good working relationship with our employees."
• "Management believes that we had enough sources of liquidity to satisfy our shortand long-term liquidity needs as of December 31, 2025."
• "Management believes that we have a competitive advantage in the markets we serve because of our over 130-year history in the community, our knowledge of the local marketplace and our long-standing reputation for providing superior, relationship-based customer service."
• "Management believes our commitment to living our core values, actively prioritizing concern for our employees well-being, supporting our employees career goals, offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing employees."
• "Management continues to evaluate business functions such as the cost of funding loan demand, between the commercial and retail operations of the Bank for separate reporting as facts and circumstances change."
• "Management reviews the assumptions supporting such appraisals to determine that the resulting values reasonably reflect amounts realizable on the related loans."

Industry Context

StockSavvy.ai notes that Bogota Financial Corp.'s strategy to increase commercial and multi-family real estate lending aligns with a common trend among community banks seeking higher yields and portfolio diversification, especially in competitive markets like New Jersey. The emphasis on core deposit growth is crucial in a rising interest rate environment where funding costs are a key concern for the banking sector. The reported increase in brokered deposits, however, indicates ongoing challenges in attracting low-cost funding, a broader industry issue. The company's focus on cybersecurity governance and investment reflects heightened regulatory scrutiny and evolving threat landscapes across the financial industry.

Comparison to Industry Standards

• Bogota Financial Corp.'s Tier 1 capital to average assets ratio of 14.35% at December 31, 2025, significantly exceeds the 9.0% Community Bank Leverage Ratio (CBLR) framework, indicating a strong capital position compared to its peer group of qualifying community banking organizations (those with less than $10 billion in assets).
• The net interest margin of 1.80% for 2025, while an improvement, remains below the average for U.S. community banks, which often range from 3.0% to 4.0%, suggesting room for further optimization in asset and liability pricing.
• The non-performing assets to total assets ratio of 1.47% is higher than the average for well-performing community banks, which typically aim for below 1.0%, indicating a need for continued vigilance in credit quality management, particularly with the $10.9 million non-performing construction loan.
• The reliance on certificates of deposit (75.7% of total deposits) and brokered deposits (16.8% of total deposits) is higher than many industry peers who strive for a larger proportion of lower-cost, stable core deposits (demand, savings, money market accounts). For example, many successful community banks target core deposits to be 50% or more of total deposits.

Corporate Governance

Legal Proceedings

• The Company is not involved in any pending legal proceedings as a defendant other than routine legal proceedings in the ordinary course of business.
• At December 31, 2025, the Company was not involved in any legal proceedings the outcome of which management believes would be material to its financial condition or results of operations.

Related Party Transactions

• Loans to executive officers and directors totaled $2,007,102 at December 31, 2025, and $2,256,911 at December 31, 2024.
• Insiders of the Bank had deposits totaling approximately $1,561,000 at December 31, 2025, and $2,325,000 at December 31, 2024.
• The Bank maintains an unfunded, non-qualified Directors' Retirement Plan to provide post-retirement benefits to non-employee directors.
• The Bank adopted an unfunded, non-qualified Supplemental Executive Retirement Plan (SERP) for the benefit of its senior officers, including the President and CEO.

Stakeholder Impact

• Shareholders: Positive impact from the return to profitability and improved net interest margin. Negative impact from the explicit statement of no foreseeable cash dividends due to regulatory constraints on the mutual holding company structure, potential stock price volatility due to low trading volume, and the MHC's majority control limiting shareholder influence.
• Employees: Benefit from the Employee Stock Ownership Plan (ESOP), 401(k) plan, competitive wages, flexible work schedules, health and wellness programs, and career development support.
• Customers: Continued focus on personalized service, competitive products, and quality customer service. Potential impact from changes in interest rates on loan and deposit products.
• Regulators: The Bank's 'well capitalized' status and compliance with various banking laws and regulations (e.g., CRA, USA PATRIOT Act) demonstrate adherence to regulatory expectations.
• Community: The Company continues to operate as a community bank with a long history, attracting deposits from the general public and municipalities, and providing lending services in its local market area.

Next Steps

• Open a new branch in Point Pleasant during the second quarter of 2026.
• Continue to focus on residential, commercial, and multi-family real estate lending.
• Increase lower-cost core deposits.
• Consider opportunistic bank or branch acquisitions or formations.
• Maintain disciplined underwriting and operating efficiencies.
• Invest in, improve, and update cybersecurity practices on an ongoing basis.
• Conduct regular assessments, testing, audits, and training of all employees for cybersecurity.

Key Dates

Recommendation

The company's return to profitability and improved net interest margin are positive indicators. However, the decrease in total assets and loans, continued reliance on higher-cost deposits, and the explicit statement of no foreseeable dividends due to regulatory constraints on the mutual holding company structure present headwinds. The stock's low trading volume and the MHC's majority control also limit upside potential for public shareholders. A 'hold' recommendation reflects the improved financial performance balanced against these structural and operational challenges.

Keywords

Banking, Financial Services, Community Bank, New Jersey, Commercial Real Estate, Residential Mortgages, Deposits, Loans, Interest Rates, Cybersecurity, SEC Filing, 10-K, Bogota Financial Corp, BSBK, Financial Performance, Risk Management, Capital Adequacy, Share Repurchase, Net Interest Margin, Non-performing Assets