Bogota Financial Corp.

Bogota Financial Corp. operates as a Maryland corporation formed in September 2019, serving as the bank holding company for Bogota Savings Bank. Its primary business activity is holding the common stock of Bogota Savings Bank and making a loan to the employee stock ownership plan of Bogota Savings Bank. Bogota Savings Bank, founded in 1893, is a New Jersey-chartered savings bank with seven offices in New Jersey and a loan production office in Spring Lake, New Jersey. The bank attracts deposits from the general public and municipalities, using these funds, along with Federal Home Loan Bank of New York advances and operational funds, to originate one- to four-family residential real estate loans, commercial real estate and multi-family loans, and to a lesser extent, consumer loans, commercial and industrial loans, and construction loans. The bank also invests in securities, primarily U.S. Government and agency obligations, municipal obligations, corporate bonds, and mortgage-backed securities. The company faces significant competition for deposits and loans from numerous financial institutions, including larger community banks, credit unions, money center banks such as Bank of America, JP Morgan Chase, Wells Fargo, and Citi, and large regional banks like TD Bank, M&T Bank, and PNC Bank, as well as non-depository financial service companies. As of June 30, 2025, Bogota Savings Bank held 0.82% of the FDIC-insured deposit market share in Bergen County, ranking 21st among 43 institutions, 0.05% in Essex County, ranking 30th among 30 institutions, and 0.05% in Morris County, ranking 29th among 29 institutions.

The core business model revolves around traditional banking services, primarily generating revenue through net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and borrowings. The company also generates non-interest income from banking fees, service charges, net gains in cash surrender value of bank-owned life insurance, and miscellaneous income. Its primary customer segments are individuals, businesses, and municipalities within its market area, which includes Bergen, Morris, Essex, Monmouth, and Ocean Counties in New Jersey.

Historically, the company's lending activities have emphasized one- to four-family residential real estate loans, which comprised $443.9 million ¹ or 68.3% ² of the total loan portfolio at December 31, 2025. These loans include mortgage loans for purchase or refinancing, home equity loans, and lines of credit, with maturities up to 30 years. Commercial and multi-family real estate loans totaled $180.9 million ³ or 27.8% ⁴ of the loan portfolio at December 31, 2025, secured by office buildings, industrial facilities, retail facilities, and multi-family properties. Commercial real estate loans amounted to $122.0 million ⁵, with $30.0 million ⁶ owner-occupied and $92.0 million ⁷ non-owner-occupied. Multi-family real estate loans were $58.9 million ⁸. Construction loans, including residential and commercial, totaled $22.0 million ⁹ or 3.39% ¹⁰ of the loan portfolio, with commercial construction loans at $20.4 million ¹¹ or 3.14% ¹². Commercial and industrial loans were $3.2 million ¹³ or 0.5% ¹⁴ of total loans, and consumer loans were $118,000 ¹⁵, representing less than 1.0% ¹⁶ of the total loan portfolio. The investment securities portfolio, entirely classified as available-for-sale, was $158.1 million ¹⁷ at December 31, 2025, with a weighted average yield of 4.65% ¹⁸.

For the fiscal year ended December 31, 2025, total assets decreased by $66.6 million ¹⁹, or 6.9% ²⁰, to $904.9 million ²¹ from $971.5 million ²² at December 31, 2024. Net loans decreased by $64.1 million ²³, or 9.0% ²⁴, to $647.6 million ²⁵ from $711.7 million ²⁶. Total deposits increased by $10.3 million ²⁷, or 1.6% ²⁸, to $652.4 million ²⁹ from $642.2 million ³⁰. Federal Home Loan Bank of New York borrowings decreased by $78.9 million ³¹, or 45.8% ³², to $93.3 million ³³ from $172.2 million ³⁴. Total stockholders' equity increased by $3.6 million ³⁵ to $140.9 million ³⁶ from $137.3 million ³⁷. Net income increased by $4.3 million ³⁸, or 196.3% ³⁹, to $2.1 million ⁴⁰ for the twelve months ended December 31, 2025, compared to a net loss of $2.2 million ⁴¹ for the same period in 2024. Net interest income increased by $4.9 million ⁴², or 46.6% ⁴³, to $15.5 million ⁴⁴ from $10.7 million ⁴⁵. The net interest rate spread increased by 63 basis points to 1.29% ⁴⁶ from 0.66% ⁴⁷, and the net interest margin increased by 64 basis points to 1.80% ⁴⁸ from 1.16% ⁴⁹. Non-interest income increased by $420,000 ⁵⁰, or 31.1% ⁵¹, primarily due to a $564,000 ⁵² increase in bank-owned life insurance. Non-interest expenses increased by $707,000 ⁵³, or 4.8% ⁵⁴.

During the period, the company recorded a $130,000 ⁵⁵ recovery of credit losses for the twelve months ended December 31, 2025, compared to a $148,000 ⁵⁶ recovery for the same period in 2024. Occupancy and equipment expenses increased by $1.2 million ⁵⁷, or 82.7% ⁵⁸, due to higher lease expense from a sale-leaseback transaction in December 2024. Salaries and employee benefits decreased by $251,000 ⁵⁹, or 2.9% ⁶⁰, due to a lower employee count. Advertising decreased by $199,000 ⁶¹, or 53.5% ⁶², and professional fees increased by $265,000 ⁶³, or 33.5% ⁶⁴. The company made a $2.5 million ⁶⁵ equity investment as part of a $10 million ⁶⁶ commitment to a limited partnership that invests in sale-leaseback transactions.

The company's business strategy is to operate as a well-capitalized and profitable community bank, emphasizing personalized service. A key element of this strategy is to continue focusing on residential real estate lending, which constituted 68.3% ² of the total loan portfolio at December 31, 2025. The company also plans to continue emphasizing commercial and multi-family real estate lending as a means to increase interest income and loan portfolio yield, and to reduce the average terms of its loans. Management believes that local banking consolidation presents opportunities to attract talent experienced in originating commercial real estate loans within its market area.

Another strategic priority is to increase lower-cost core deposits, including demand deposit accounts, savings accounts, and money market accounts, from individuals, businesses, and municipalities. The company aims to attract and retain these accounts by offering competitive products and rates and providing quality customer service, recognizing that core deposits are its least costly source of funds, which improves interest rate spread and contributes non-interest income.

The company intends to grow through opportunistic bank or branch acquisitions or formations. Specifically, it is opening a new branch in Point Pleasant during the second quarter of 2026, which is expected to be an additional source for deposit growth. The company's capital position is seen as an opportunity to acquire smaller institutions or fee-based businesses within or contiguous to its market area.

In terms of operational outlook, the company is focused on controlling expenses and increasing net income. It is disciplined in managing non-interest expenses by identifying cost-saving opportunities, such as the sale/leaseback transaction executed in December 2024, renegotiating key third-party contracts, and reducing other operating expenses. The overhead ratio, defined as non-interest expense to average total assets, was 1.66% ⁶⁷ for the year ended December 31, 2025, consistent with the 1.66% ⁶⁸ for the year ended December 31, 2024. To support cost-effective growth, the company plans to continue prudent investments in technology to improve its operational infrastructure.

The company is committed to maintaining disciplined underwriting practices, based on market knowledge, customer relationships, sound underwriting standards, and experienced loan officers. It plans to actively monitor and manage its loan portfolio to proactively identify and mitigate credit risks. At December 31, 2025, non-performing assets totaled $13.3 million ⁶⁹, representing 1.47% ⁷⁰ of total assets, including a $10.9 million ⁷¹ construction loan considered well-secured with a loan-to-value of 41% ⁷² based on a March 2025 appraisal, for which no specific reserve or charge-offs were recorded.

The company's capital management policy is designed to build and maintain capital levels that exceed regulatory standards and appropriately provide for growth. The leverage ratio of Bogota Savings Bank at December 31, 2025, was 15.80% ⁷³, exceeding the 9.0% ⁷⁴ required for "well capitalized" status under the Community Bank Leverage Ratio (CBLR) framework. The company had available liquidity of $136.6 million ⁷⁵ from the FHLB and $54.0 million ⁷⁶ in unsecured lines of credit with four correspondent banks at December 31, 2025.

The company faces several material risks, including significant competition for deposits and loans from larger financial institutions and non-depository financial service companies, which could reduce profits and slow growth. The geographic concentration of its loan portfolio, with approximately $646.8 million ⁷⁷ or 99.5% ⁷⁸ secured by real estate in its primary market area, makes it vulnerable to local economic downturns, potentially impairing collateral values and requiring increased allowance for credit losses. The emphasis on commercial and multi-family real estate loans, totaling $180.9 million ³ or 27.8% ⁴ of the loan portfolio, exposes the company to greater risk of loss due to larger balances and dependence on property income or business operations. Non-owner occupied commercial real estate loans, at $87.3 million ⁷⁹ or 13.4% ⁸⁰ of the total loan portfolio, present increased credit risk, with $13.7 million ⁸¹ or 2.11% ⁸² of these loans past due at December 31, 2025. The allowance for credit losses may not be sufficient to cover actual losses, and the CECL model requires significant judgment, with the company having minimal historical credit losses and relying on qualitative factors. Concentrations in specific industries, such as lessors of office buildings ($25.1 million ⁸³ or 3.5% ⁸⁴ of total loans) and the retail industry ($63.8 million ⁸⁵ or 9.8% ⁸⁶ of total loans), create greater risk exposure to commercial real estate if these industries deteriorate. Changes in interest rates pose a significant market risk, as the majority of loans have fixed interest rates, and the company's interest-bearing liabilities generally have shorter contractual maturities than its interest-earning assets, potentially creating earnings volatility. The estimated net portfolio value (NPV) could decrease by $49.387 million ⁸⁷, or 39.09% ⁸⁸, in a 400 basis point increase in interest rates. Changes in the estimated fair value of the $158.1 million ¹⁷ available-for-sale debt securities portfolio, which had an unrealized loss of $2.7 million ⁸⁹ at December 31, 2025, could reduce stockholders' equity and net income. Inflation can negatively impact asset values, increase operating costs, and affect customers' ability to repay loans. Changes in trade policies and tariffs could negatively impact economic conditions and customer repayment abilities. Interruptions in customers' supply chains could affect their businesses and loan repayment capacity. A deterioration in economic conditions could reduce demand for products and services and decrease asset quality. The reliance on certificates of deposit, which comprised $493.9 million ⁹⁰ or 75.7% ⁹¹ of total deposits at December 31, 2025, with $441.3 million ⁹² or 67.6% ⁹³ due within one year, including $109.7 million ⁹⁴ of brokered deposits, could lead to higher funding costs if core deposits are not generated. The inability to generate core deposits or a significant withdrawal of municipal deposits ($45.1 million ⁹⁵ or 6.9% ⁹⁶ of total deposits at December 31, 2025) could negatively impact liquidity and earnings. De novo branching may increase expenses faster than revenues. Acquisitions may disrupt business and dilute shareholder value. Systems failures or cyberattacks could adversely affect financial condition, results of operations, and lead to increased operating costs, litigation, and other liabilities. The company's risk management framework may not be effective in mitigating all risks. Changes in laws and regulations, including stringent capital requirements (e.g., CBLR of 9% ⁷⁴), could adversely affect operations, increase costs, or restrict dividends and share repurchases. Federal Reserve Board regulations effectively prohibit Bogota Financial, MHC from waiving dividends, making it unlikely that Bogota Financial Corp. will pay any dividends. Bogota Financial, MHC's majority control of common stock (8,504,556 shares ⁹⁷ out of 12,919,366 outstanding shares ⁹⁸ as of March 20, 2026) prevents stockholders from forcing a sale or second-step conversion.

Management's message to shareholders emphasizes a commitment to operating as a well-capitalized and profitable community bank, prioritizing personalized service to individuals and businesses. They highlight the competitive advantage derived from the bank's over 130-year history, local market knowledge, and reputation for superior, relationship-based customer service. Strategic priorities for the period ahead include continuing to focus on residential real estate lending, which remains the primary lending activity, and increasing emphasis on commercial and multi-family real estate lending to boost interest income and loan portfolio yield. Management also aims to increase lower-cost core deposits by offering competitive products and quality customer service. Growth is planned through opportunistic bank or branch acquisitions or formations, with a new branch in Point Pleasant scheduled to open in the second quarter of 2026 to drive deposit growth. Furthermore, management is focused on maintaining operating efficiencies and cost controls, as evidenced by the stable overhead ratio of 1.66% ⁶⁷ for the year ended December 31, 2025, and plans to prudently invest in technology. A disciplined credit culture with sound underwriting standards and active loan portfolio monitoring is a key priority to mitigate credit risks, noting that non-performing assets totaled $13.3 million ⁶⁹ at December 31, 2025.