Bogota Financial Corp. (the “Company”) (NASDAQ: BSBK), the
holding company for Bogota Savings Bank (the “Bank”), reported net
income for the three months ended June 30, 2021 and 2020 of $1.4
million. The Company reported net income for the six months ended
June 30, 2021 of $4.4 million compared to net income of $65,000 for
the comparable prior year period. The Company recorded a bargain
purchase gain of $1.9 million associated with the acquisition of
Gibraltar Bank in February 2021. Also, during the six months ended
June 30, 2021, the Company had merger-related expenses of $392,000.
The Company contributed cash and stock with a value of $2.9 million
($2.1 million after-tax) to the Bogota Charitable Foundation during
the six months ended June 30, 2020. Excluding the bargain purchase
gain and the merger-related expenses in 2021 and the contribution
to the charitable foundation in 2020, net income for the six months
ended June 30, 2021 and 2020 would have been $2.9 million and
$65,000, respectively1.
On January 15, 2020, the Company became the holding company for
the Bank when it completed the reorganization of the Bank into a
two-tier mutual holding company form of organization. In connection
with the reorganization, the Company sold 5,657,735 shares of
common stock at a price of $10 per share, for gross proceeds of
$56.6 million. The Company also issued 263,150 shares of common
stock and $250,000 in cash to Bogota Savings Bank Charitable
Foundation, Inc., and issued 7,236,640 shares of common stock to
Bogota Financial, MHC, its New Jersey-chartered mutual holding
company. Shares of the Company’s common stock began trading on
January 16, 2020 on the Nasdaq Capital Market under the trading
symbol “BSBK.”
On February 28, 2021, the Company completed its acquisition of
Gibraltar Bank and as part of the transaction, the Company acquired
$106.0 million in assets including $77.0 million in loans, assumed
$81.4 million in deposits and issued 1,267,916 shares of its common
stock to Bogota Financial, MHC. The conversion and consolidation of
data processing platforms, systems and customer files is expected
to occur in August 2021. The merger added three branches to the
Bank’s network and on June 29th the Bank opened a new branch in
Hasbrouck Heights, New Jersey, which provides additional offices
for staff.
Other Financial Highlights:
- Total assets increased $77.9 million, or 10.5%, to $818.9
million at June 30, 2021 from $740.9 million at December 31, 2020,
primarily due to acquiring $106.0 million in assets from the
Gibraltar Bank acquisition.
- Net loans increased $26.1 million, or 4.7%, to $584.6 million
at June 30, 2021 from $557.7 million at December 31, 2020.
- Total deposits were $569.2 million, increasing $67.2 million,
or 13.4%, during the six months ended June 30, 2021 compared to
$502.0 million at December 31, 2020.
- Return on average assets was 1.12% for the six-month period
ended June 30, 2021 compared to 0.04% for the corresponding period
of 2020. Without the bargain purchase gain and merger-related
expenses in 2021 and the charitable foundation contribution in
2020, the return on average assets would have been 0.38% and 0.22%
for the six-month periods ended June 30, 2021 and 2020,
respectively2.
- Return on average equity was 6.46% for the six-month period
ended June 30, 2021 compared to 0.29% for the corresponding period
of 2020. Without the bargain purchase gain and merger-related
expenses in 2021 and the charitable foundation contribution in
2020, the return on average equity would have been 2.20% and 2.33%
for the six-month periods ended June 30, 2021 and 2020,
respectively2.
Joseph Coccaro, President and Chief Executive Officer, said,
“During the second quarter, we have worked on the integration of
Gibraltar Bank while working toward the system conversion to take
place during August. Also in the second quarter, we have opened our
Hasbrouck Heights branch which is our sixth branch location and
also contains additional office space for the Bank. The Bank will
have the grand opening of the new branch on August 4th."
“We are pleased with our continued strategy to expand our loan
portfolio and the positive overall impacts of doing so on assets
and income. We continue our efforts to expand our market presence,
improve and expand our technology platform and offerings and manage
our interest rate risk.”
Mr. Coccaro further stated, “We are pleased with our first half
results and we continue to enjoy strong credit quality as
non-performing loans and criticized assets remain very low. We are
off to a very strong start for 2021 with our net interest margin
rising 61 basis points on a year over year comparison. We have
finished a second round of SBA PPP loans and look forward to
continuing to serve our communities going forward. The economic
impact of the COVID-19 pandemic on the Company’s operations was not
material during 2021. Our loan deferrals are down to five loans as
of June 30, 2021.”
Paycheck Protection Program
As a qualified Small Business Administration lender, the Company
was automatically authorized to originate loans under the Paycheck
Protection Program (“PPP”). During 2020, the Company received and
processed 113 PPP applications totaling $10.5 million. The Company
completed the second round of PPP loans and during the first six
months of 2021 the Company received and processed 54 PPP
applications totaling $6.9 million.
COVID
The Company is also providing assistance to individuals and
small business clients directly impacted by the COVID-19 pandemic
by allowing borrowers to modify their loans to defer principal
and/or interest payments. Through December 31, 2020, the Company
granted 172 loan modifications totaling $67.9 million, of which 137
loans remained in the portfolio at June 30, 2021, totaling $55.8
million, which represented 9.6% of the total loan portfolio. As of
June 30, 2021, five loans, all of which are within the one-to-four
family residential real estate portfolio, are still requesting
deferral, which represents $884,000 or 0.2% of net loans.
Income Statement Analysis
Net interest income increased by $1.5 million, or 45.3%, to $4.8
million for the three months ended June 30, 2021 as compared to the
second quarter of 2020. During the same period, the Company’s net
interest margin increased from 1.88% to 2.44%, while the ratio of
average interest-earning assets to average interest-bearing
liabilities increased 0.12% to 122.55%. The increase in net
interest margin during the three months ended June 30, 2021 was
mostly due to a lower cost of funds.
The Company reported a credit to the provision for loan losses
of $54,000 for the three-month period ended June 30, 2021 compared
to a $225,000 provision for loan losses during the same period last
year. The repayments of residential loans during the first quarter
of 2021 and the improved economic outlook related to the COVID-19
pandemic were the main reasons for the decrease in the allowance
for loan losses.
Non-interest income was $533,000 for the three months June 30,
2021, a decrease of $234,000, or 30.5%, compared to $768,000 in the
prior year period. The decrease was due to $604,000 lower income on
bank owned life insurance. Last year the Bank collected $648,000 in
death proceeds. This was offset by a $284,000 gain on the sale of
$9.4 million of residential loans during the three months ended
June 30, 2021.
Non-interest expenses increased $1.4 million to $3.6 million for
the three months ended June 30, 2021 from $2.2 million in the
comparable 2020 period. Expenses for the three months ended June
30, 2021 included an entire quarter of operating expenses for
Gibraltar Bank. Merger expenses decreased $318,000 associated with
the Gibraltar Bank acquisition. Salaries and employee benefits
increased $833,000, or 69.3%, which was attributable to adding the
new Gibraltar Bank employees. Data processing expense increased
$147,000, or 89.2%, due to higher data processing costs associated
with running two core systems. The increase of other general
operating expenses was mainly due to operating a larger
organization resulting from the acquisition and establishing the
new branch location in Hasbrouck Heights.
Net interest income increased by $2.9 million, or 46.8%, to $9.4
million for the six months ended June 30, 2021 as compared to the
first six months ended June 30, 2020. During the same period, the
Company’s net interest margin increased from 1.85% to 2.46%, while
the ratio of average interest-earning assets to average
interest-bearing liabilities increased 0.4% to 122.40%. The
increase in net interest margin during the six months ended June
30, 2021 was mostly due to a lower cost of funds.
The Company reported a credit to the provision to the allowance
for loan losses of $113,000 for the six-month period ended June 30,
2021 compared to a $250,000 provision for loan losses during the
same period last year. The repayments of residential loans during
the first quarter of 2021 and the improved economic outlook related
to the COVID-19 pandemic were the main reasons for the decrease in
the allowance for loan losses.
Non-interest income was $2.9 million for the six months ended
June 30, 2021, an increase of $2.0 million, or 220.8%, compared to
$889,000 in the prior year period. The increase was due to the $1.9
million bargain purchase gain on the Gibraltar Bank merger and a
$520,000 gain on the sale of $15.7 million of residential loans.
This was offset by $614,000 lower income on bank owned life
insurance. Last year the Bank collected $648,000 in death proceeds
during the six months ended June 30, 2021.
Non-interest expense decreased $223,000 from $7.2 million for
the six months ended June 30, 2020 to $7.0 million for the 2021 six
month period. Salaries and employee benefits increased $1.1
million, or 45.3%, which was attributable to adding the new
Gibraltar Bank employees. Data processing costs increased $210,000,
or 67.3%, due to higher costs associated with running two core
systems. Expenses for the six months ended June 30, 2020 included a
$2.9 million contribution to the Bogota Charitable Foundation that
was formed during the reorganization of the Bank into a two-tier
mutual holding company form of organization. The increase of other
general operating expenses was mainly due to increases in
professional fees associated with the expense of becoming a public
company. Without the contribution to the charitable foundation in
2020 and the core conversion expense in 2021, non-interest expense
would have increased $2.3 million to $6.7 million compared to the
same period last year.
Balance Sheet Analysis
Total assets were $818.9 million at June 30, 2021, representing
an increase of $77.9 million, or 10.5%, from December 31, 2020.
Cash and cash equivalents increased $20.3 million during the period
primarily due to $19.3 million in cash from the Gibraltar Bank
acquisition. Net loans increased $26.1 million or 4.7%, due to new
production of $36.2 million, consisting of a relatively equal mix
of residential real estate loans and commercial real estate loans
and $77.0 million of loans acquired from Gibraltar Bank, which was
offset by $15.7 million of loans sold and $70.3 million in
repayments. Securities held to maturity increased $20.2 million due
to the purchase of corporate bonds and mortgage-backed securities
with excess cash and $7.0 million of securities acquired from
Gibraltar Bank.
Delinquent loans increased $852,000, or 96.0%, during the
six-month period ended June 30, 2021, finishing at $1.7 million or
0.30% of total loans. During the same timeframe, non-performing
assets decreased $8,000 or 1.2%, to $685,000 and were 0.08% of
total assets at June 30, 2021. The Company’s allowance for loan
losses was 0.36% of total loans and 310.90% of non-performing loans
at June 30, 2021.
Total liabilities increased $61.8 million, or 10.1%, to $674.2
million mainly due to deposits and borrowings acquired from
Gibraltar Bank. Deposits increased $67.2 million, or 13.4%, which
included $81.4 million of deposits acquired from Gibraltar Bank
offset by a $14.2 million run-off of deposits reducing excess
liquidity. Federal Home Loan Bank advances decreased $7.3 million,
or 7.0%, as the $10.0 million of borrowings acquired from Gibraltar
Bank were offset by $17.3 million of borrowings that matured.
Stockholders’ equity increased $16.2 million to $144.6 million,
as a result of $11.5 million of capital acquired from Gibraltar
Bank and net income of $4.4 million for the six months ended June
30, 2021. At June 30, 2021, the Company’s ratio of average
stockholders’ equity-to-total assets was 17.43%, compared to 17.25%
at June 30, 2020.
EXPLANATORY NOTE
The Company was formed to serve as the mid-tier stock holding
company for the Bank in connection with the reorganization of the
Bank and its mutual holding company, Bogota Financial, MHC, into
the two-tier mutual holding company structure.
About Bogota Financial Corp.
Bogota Financial Corp. is a Maryland corporation organized as
the mid-tier holding company of Bogota Savings Bank and is the
majority-owned subsidiary of Bogota Financial, MHC. Bogota Savings
Bank is a New Jersey chartered stock savings bank that has served
the banking needs of its customers in northern and central New
Jersey since 1893. It operates from six offices located in Bogota,
Hasbrouck Heights, Newark, Oak Ridge, Parsippany and Teaneck, New
Jersey.
Forward-Looking Statements
This press release contains certain forward-looking statements
about the Company and the Bank. Forward-looking statements include
statements regarding anticipated future events and can be
identified by the fact that they do not relate strictly to
historical or current facts. They often include words such as
“believe,” “expect,” “anticipate,” “estimate,” and “intend” or
future or conditional verbs such as “will,” “would,” “should,”
“could,” or “may.” Forward-looking statements, by their nature, are
subject to risks and uncertainties. Certain factors that could
cause actual results to differ materially from expected results
include increased competitive pressures, changes in the interest
rate environment, general economic conditions or conditions within
the securities markets, and legislative, accounting, tax and
regulatory changes that could adversely affect the business in
which the Company and the Bank are engaged.
Further, given its ongoing and dynamic nature, it is difficult
to predict the full impact of the COVID-19 pandemic on the
Company’s business. The extent of such impact will depend on future
developments, which are highly uncertain, including if the
coronavirus can continue to be controlled and abated and if and how
the economy may remain open. As the result of the COVID-19 pandemic
and the related adverse local and national economic consequences,
the Company could be subject to any of the following risks, any of
which could have a material, adverse effect on the Company’s
business, financial condition, liquidity, and results of
operations: demand for the Company’s products and services may
decline, making it difficult to grow assets and income; if the
economy is unable to substantially remain open, and higher levels
of unemployment continue for an extended period of time, loan
delinquencies, problem assets, and foreclosures may increase,
resulting in increased charges and reduced income; collateral for
loans, especially real estate, may decline in value, which could
cause loan losses to increase; the Company’s allowance for loan
losses may increase if borrowers experience financial difficulties,
which will adversely affect the Company’s net income; the net worth
and liquidity of loan guarantors may decline, impairing their
ability to honor commitments to us; the Company’s cyber security
risks are increased as the result of an increase in the number of
employees working remotely; and FDIC premiums may increase if the
agency experience additional resolution costs.
The Company undertakes no obligation to revise these
forward-looking statements or to reflect events or circumstances
after the date of this press release.
_______________________ 1 This number represents a non-GAAP
Financial Measure. Please see “Reconciliation of GAAP to Non-GAAP”
contained at the end of this release. 2 This number represents a
non-GAAP Financial Measure. Please see “Reconciliation of GAAP
to Non-GAAP” contained at the end of this release
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF
FINANCIAL CONDITION
As of
As of
June 30, 2021
December 31, 2020
Assets
(unaudited)
Cash and due from banks
$
6,153,193
$
5,957,564
Interest-bearing deposits in other
banks
94,517,618
74,428,175
Cash and cash equivalents
100,670,811
80,385,739
Securities available for sale
11,223,212
11,870,508
Securities held to maturity (fair value of
$78,486,099 and $58,872,451, respectively)
77,656,637
57,504,443
Loan held for sale
893,600
—
Loans, net of allowance of $2,128,174 and
$2,241,174, respectively
583,751,887
557,690,853
Premises and equipment, net
7,896,029
5,671,097
Federal Home Loan Bank (FHLB) stock and
other restricted securities
5,457,100
5,928,100
Accrued interest receivable
2,690,816
2,855,425
Core deposit intangibles
380,331
—
Bank-owned life insurance
25,150,470
16,915,637
Other assets
3,081,402
2,083,076
Total Assets
$
818,852,295
$
740,904,878
Liabilities and Equity
Non-interest bearing deposits
$
31,771,385
$
27,061,629
Interest bearing deposits
537,419,334
474,911,402
Total Deposits
569,190,719
501,973,031
FHLB advances
96,996,554
104,290,920
Advance payments by borrowers for taxes
and insurance
3,566,955
2,560,089
Other liabilities
4,475,965
3,612,762
Total liabilities
674,230,193
612,436,802
Commitments and Contingencies
—
—
Stockholders’ Equity
Preferred stock $0.01 par value 1,000,000
shares authorized, none issued and outstanding at June 30, 2021 and
December 31, 2020.
—
—
Common stock $0.01 par value, 30,000,000
shares authorized, 14,425,441 issued and outstanding at June 30,
2021 and 13,157,525 at December 31, 2020
144,254
131,575
Additional Paid-In capital
68,437,376
56,975,187
Retained earnings
81,804,768
77,359,737
Unearned ESOP shares (476,721 at June 30,
2021 and 489,983 shares at December 31, 2020)
(5,574,808
)
(5,725,410
)
Accumulated other comprehensive loss
(189,488
)
(273,013
)
Total stockholders’ equity
144,622,102
128,468,076
Total liabilities and stockholders’
equity
$
818,852,295
$
740,904,878
BOGOTA FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF
INCOME
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
(unaudited)
Interest income
Loans
$
5,684,881
$
5,245,931
$
11,149,842
$
10,343,182
Securities
Taxable
388,604
405,146
1,062,151
836,199
Tax-exempt
12,798
13,220
25,383
24,881
Other interest-earning assets
115,256
151,913
238,260
529,276
Total interest income
6,201,539
5,816,210
12,475,636
11,733,538
Interest expense
Deposits
1,050,546
2,041,512
2,314,228
4,357,833
FHLB advances
376,508
488,854
807,633
1,005,926
Total interest expense
1,427,054
2,530,366
3,121,861
5,363,759
Net interest income
4,774,485
3,285,844
9,353,775
6,369,779
(Credit) Provision for loan losses
(54,000
)
225,000
(113,000
)
250,000
Net interest income after (credit)
provision for loan losses
4,828,485
3,060,844
9,466,775
6,119,779
Non-interest income
Fees and service charges
68,576
12,327
121,103
32,045
Gain on sale of loans
284,065
—
520,102
—
Bargain purchase gain
—
—
1,933,397
—
Bank-owned life insurance
145,167
749,091
234,833
848,802
Other
35,480
6,228
42,459
8,182
Total non-interest income
533,288
767,646
2,851,894
889,029
Non-interest expense
Salaries and employee benefits
2,035,467
1,202,387
3,574,387
2,459,986
Occupancy and equipment
294,694
159,376
561,173
328,916
FDIC insurance assessment
69,300
26,000
114,300
71,000
Data processing
312,527
165,211
520,836
311,237
Advertising
60,000
42,180
120,000
101,814
Director fees
216,880
178,894
415,119
365,176
Professional fees
208,849
192,572
467,766
324,906
Merger fees
73,932
—
392,197
—
Core conversion costs
—
—
360,000
—
Contribution to charitable foundation
—
—
—
2,881,500
Other
305,484
193,070
483,801
387,771
Total non-interest expense
3,577,133
2,159,690
7,009,579
7,232,306
Income (loss) before income taxes
1,784,640
1,668,800
5,309,090
(223,498
)
Income tax (benefit) expense
345,916
265,727
864,059
(288,988
)
Net income
$
1,438,724
$
1,403,073
$
4,445,031
$
65,490
Earnings per Share (basic and diluted)
$
0.10
$
0.11
$
0.33
$
0.01
Weighted average shares outstanding
13,945,423
12,650,748
13,528,822
11,675,010
BOGOTA FINANCIAL CORP.
SELECTED RATIOS
(unaudited)
At or For the Three Months
Ended June 30,
At or For the Six Months
Ended June 30,
2021
2020
2021
2020
Performance Ratios (1):
Return on average assets (2)
0.70
%
0.77
%
1.12
%
0.04
%
Return on average equity (3)
4.00
%
4.46
%
6.46
%
0.22
%
Interest rate spread (4)
2.28
%
1.55
%
2.27
%
1.50
%
Net interest margin (5)
2.44
%
1.88
%
2.46
%
1.85
%
Efficiency ratio (6)
67.39
%
53.28
%
57.43
%
99.64
%
Average interest-earning assets to average
interest- bearing liabilities
122.55
%
122.67
%
122.40
%
121.99
%
Net loans to deposits
102.56
%
119.35
%
102.56
%
119.35
%
Equity to assets (7)
17.43
%
17.25
%
17.43
%
17.25
%
Capital Ratios:
Tier 1 capital to average assets
17.67
%
17.59
%
Asset Quality Ratios:
Allowance for loan losses as a percent of
total loans
0.36
%
0.38
%
Allowance for loan losses as a percent of
non- performing loans
310.90
%
335.87
%
Net recoveries to average outstanding
loans during the period
0.00
%
0.00
%
Non-performing loans as a percent of total
loans
0.12
%
0.11
%
Non-performing assets as a percent of
total assets
0.08
%
0.09
%
(1)
Performance ratios are annualized.
(2)
Represents net income divided by average total assets.
(3)
Represents net income divided by average stockholders'
equity.
(4)
Represents the difference between the weighted average yield
on average interest-earning assets and the weighted average cost of
average interest-bearing liabilities. Tax exempt income is reported
on a tax equivalent basis using a combined federal and state
marginal tax rate of 30%.
(5)
Represents net interest income as a percent of average
interest-earning assets. Tax exempt income is reported on a tax
equivalent basis using a combined federal and state marginal tax
rate of 30% for 2021 and 2020.
(6)
Represents non-interest expenses divided by the sum of net
interest income and non-interest income.
(7)
Represents average equity divided by average total assets.
BOGOTA FINANCIAL CORP. RECONCILIATION
OF GAAP TO NON-GAAP (unaudited)
The Company’s management believes that the presentation of net
income on a non-GAAP basis, excluding nonrecurring items, provides
useful information for evaluating the Company’s operating results
and any related trends that may be affecting the Company’s
business. These disclosures should not be viewed as a substitute
for operating results determined in accordance with GAAP.
Three months ended June 30,
2021
Income Before Income Taxes
Provision for Income Taxes
Net Income
GAAP basis
$
1,784,640
$
345,916
$
1,438,724
Add: merger-related expenses
73,932
—
73,932
Non-GAAP basis
$
1,858,572
$
345,916
$
1,512,656
Three months ended June 30,
2020
Income Before Income Taxes
Provision for Income Taxes
Net Income
GAAP basis
$
1,668,800
$
265,727
$
1,403,073
Add: merger-related expenses
$
-
$
-
$
-
Non-GAAP basis
$
1,668,800
$
265,727
$
1,403,073
Six months ended June 30,
2021
Income Before Income Taxes
Provision for Income Taxes
Net Income
GAAP basis
$
5,309,090
$
864,059
$
4,445,031
Add: merger and acquisition related
expenses
392,197
—
392,197
ADD: Charitable Foundation
Contribution
—
—
—
Less: Bargain purchase gain
(1,933,397
)
—
(1,933,397
)
Non-GAAP basis
$
3,767,890
$
864,059
$
2,903,831
Six months ended June 30,
2020
Income Before Income Taxes
Provision for Income Taxes
Net Income
GAAP basis
$
(223,498
)
$
(288,988
)
$
65,490
Add: merger and acquisition related
expenses
—
—
—
Add: Charitable Foundation
Contribution
2,881,500
809,990
2,071,510
Less: Bargain purchase gain
—
—
—
Non-GAAP basis
$
(223,498
)
$
(288,988
)
$
65,490
Six months ended June
30,
Return on average assets (annualized):
2021
2020
GAAP
1.12
%
0.04
%
Non-GAAP
0.38
%
0.22
%
Return on average equity (annualized):
GAAP
6.46
%
0.29
%
Non-GAAP
2.20
%
2.33
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803006144/en/
Joseph Coccaro – President & CEO, 201-862-0660 ext. 1110
Bogota Financial (NASDAQ:BSBK)
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