8-K: Bogota Financial Corp. Swings to Profit in Q3 2025

Bogota Financial Corp. reported a significant turnaround, posting net income for the three and nine months ended September 30, 2025, driven by increased net interest income and a one-time death benefit.

Summary

• Net income for the three months ended September 30, 2025, was $455,000, or $0.04 per basic and diluted share, compared to a net loss of $367,000, or $0.03 per share, for the comparable prior year period.
• Net income for the nine months ended September 30, 2025, was $1.4 million, or $0.11 per basic and diluted share, compared to a net loss of $1.2 million, or $0.10 per share, for the comparable prior year period.
• Income for the nine months ended September 30, 2025, included a one-time death benefit of approximately $543,000 from a bank-owned life insurance policy related to a former employee.
• Total assets decreased $45.7 million, or 4.7%, to $925.8 million at September 30, 2025, from $971.5 million at December 31, 2024.
• Cash and cash equivalents decreased $21.0 million, or 40.2%, to $31.2 million at September 30, 2025, from $52.2 million at December 31, 2024.
• Net loans decreased $42.5 million, or 6.0%, to $669.2 million at September 30, 2025, from $711.7 million at December 31, 2024, primarily due to decreases in residential mortgages and construction loans.
• Total deposits increased $4.6 million, or 0.7%, to $646.8 million at September 30, 2025, compared to $642.2 million at December 31, 2024.
• Federal Home Loan Bank advances decreased $52.8 million, or 30.6%, to $119.4 million at September 30, 2025, from $172.2 million at December 31, 2024.
• Net interest income increased $1.2 million, or 46.6%, to $3.9 million for the three months ended September 30, 2025, and $3.1 million, or 38.9%, to $11.2 million for the nine months ended September 30, 2025.
• Net interest margin increased 65 basis points to 1.80% for Q3 2025 and 55 basis points to 1.73% for 9M 2025.
• A $50,000 recovery of credit losses was recorded for Q3 2025, and a $130,000 recovery for 9M 2025.
• Delinquent loans increased $7.5 million to $21.8 million, or 3.24% of total loans, at September 30, 2025, compared to $14.3 million at December 31, 2024.
• Non-performing assets increased from $14.0 million at December 31, 2024, to $20.5 million, representing 2.21% of total assets at September 30, 2025.
• Regulatory approval was received on August 12, 2025, for the repurchase of up to 237,590 shares of common stock (approximately 5% of outstanding shares), with 4,821 shares repurchased for $42,000 as of September 30, 2025.

Sentiment

Score: 7

Explanation: The company successfully returned to profitability and significantly improved key interest income metrics despite a challenging environment. The share repurchase program is also a positive signal. However, the notable increase in delinquent loans and non-performing assets, coupled with declining loan balances, presents a significant concern regarding asset quality. The nine-month net income was also boosted by a one-time death benefit, suggesting that underlying core profitability might be slightly less robust.

Positives

• Returned to net income for both the three months ($455,000) and nine months ($1.4 million) ended September 30, 2025, reversing net losses from the prior year periods.
• Net interest income significantly increased by $1.2 million (46.6%) for Q3 2025 and $3.1 million (38.9%) for 9M 2025.
• Net interest margin improved by 65 basis points to 1.80% for Q3 2025 and 55 basis points to 1.73% for 9M 2025.
• Interest expense decreased due to lower costs on deposits and reduced Federal Home Loan Bank advances.
• Recorded a recovery of credit losses ($50,000 for Q3, $130,000 for 9M) compared to a provision in the prior year.
• Total deposits increased by $4.6 million, driven by increases in certificates of deposit and savings accounts.
• Successfully reduced Federal Home Loan Bank advances by $52.8 million (30.6%).
• Received regulatory approval for a new share repurchase program of up to 237,590 shares, demonstrating a commitment to shareholder value.
• Strong capital position with Tier 1 capital to average assets at 15.46% at September 30, 2025.
• Effective use of hedges reduced interest expense on Federal Home Loan Bank advances and brokered deposits by $205,000 in Q3 2025 and $568,000 in 9M 2025.

Negatives

• Total assets decreased by $45.7 million, or 4.7%, from December 31, 2024.
• Cash and cash equivalents decreased significantly by $21.0 million, or 40.2%.
• Net loans decreased by $42.5 million, or 6.0%, primarily due to reduced demand for residential mortgages and construction loans.
• Delinquent loans increased by $7.5 million to $21.8 million, representing 3.24% of total loans, at September 30, 2025.
• Non-performing assets increased from $14.0 million at December 31, 2024, to $20.5 million, representing 2.21% of total assets at September 30, 2025.
• Allowance for credit losses as a percent of non-performing loans decreased to 12.42% at September 30, 2025, from 18.77% at December 31, 2024, indicating reduced coverage for increased non-performing loans.
• Professional fees increased by $113,000 (45.6%) for Q3 and $250,000 (36.7%) for 9M 2025.
• Occupancy and equipment costs increased significantly due to a lease-buyback transaction in Q4 2024.
• Average yield on cash and cash equivalents decreased by 112 basis points for Q3 and 100 basis points for 9M 2025.

Risks

• Increased competitive pressures in the banking industry.
• Changes in the interest rate environment, which can impact profitability.
• Inflation and its effects on operating costs and consumer spending.
• General economic conditions or conditions within the securities markets.
• The imposition of tariffs or other domestic or international governmental policies and retaliatory responses.
• The impact of the current federal government shutdown (mentioned as a general risk).
• Fluctuations in real estate market values in the Bank's lending area.
• Changes in liquidity, including the size and composition of the deposit portfolio and the percentage of uninsured deposits.
• The availability of low-cost funding sources.
• Continued reliance on brokered and municipal deposits.
• Demand for loans in the market area.
• Changes in the quality of loan and security portfolios, including increases in non-performing and classified loans.
• Economic assumptions or changes in methodology impacting the allowance for credit losses calculation.
• Monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System.
• A failure in or breach of the Company's operational or security systems or infrastructure, including cyberattacks.
• The failure to maintain current technologies.
• Failure to retain or attract employees.
• Legislative, accounting, and regulatory changes that could adversely affect the business.

Future Outlook

Management remains focused on sustainable growth, operational efficiency, and delivering long-term value for customers and shareholders. The company continues to prioritize growth in its commercial portfolio and maintaining high-quality credit, while also emphasizing improved core deposit relationships and exceptional customer service, despite a challenging interest rate environment.

Management Comments

• "Our third quarter results reflect our continued resilience despite a challenging interest rate environment."
• "We continue to focus on growth in our commercial portfolio and maintaining high quality credit."
• "Improved core deposit relationships and maintaining exceptional customer service remain a focal point."
• "As we move into the final quarter of 2025, we remain focused on sustainable growth, operational efficiency and delivering long-term value for our customers and shareholders."

Industry Context

The banking sector continues to navigate a challenging interest rate environment, which has impacted loan demand, particularly for residential and construction loans. Bogota Financial Corp.'s strategic focus on commercial portfolio growth, core deposit relationships, and balance sheet restructuring (including reinvesting in higher-yielding securities and using hedges) reflects common industry responses to these conditions. The increase in non-performing assets and delinquent loans could be indicative of broader asset quality pressures within the industry, especially if economic conditions remain uncertain or deteriorate.

Stakeholder Impact

• Shareholders: Positive impact due to the return to profitability, increased earnings per share, and the initiation of a share repurchase program, which can enhance shareholder value.
• Customers: The company's focus on improved core deposit relationships and maintaining exceptional customer service suggests a positive impact for customers.
• Employees: A reduction in salaries and employee benefits due to lower headcount indicates a potential negative impact for some employees, though specific layoffs are not detailed.
• Creditors: Reduced borrowings (Federal Home Loan Bank advances) and improved net interest income could be viewed positively by creditors, indicating better financial health and repayment capacity.

Next Steps

• Continue to focus on growth in the commercial portfolio.
• Maintain high quality credit standards.
• Improve core deposit relationships.
• Maintain exceptional customer service.
• Focus on sustainable growth, operational efficiency, and delivering long-term value for customers and shareholders in the final quarter of 2025.
• Continue share repurchases under the approved program.

Key Dates

Recommendation

While the return to profitability and improved net interest margin are positive developments, the significant increase in delinquent loans and non-performing assets, coupled with declining loan balances, introduces a notable risk to the company's asset quality. The one-time death benefit also inflates the nine-month net income, suggesting that underlying core profitability might be less robust than headline figures imply. The share buyback is a positive signal for shareholder returns. A 'hold' recommendation is appropriate to allow investors to monitor the trend in asset quality and loan growth in future periods before making a more definitive investment decision.

Keywords

Bogota Financial Corp, BSBK, financial results, Q3 2025, net income, banking, community bank, net interest income, deposits, loans, share repurchase, non-performing assets, interest rates, New Jersey