Bogota Financial returns to profit after reshaping balance sheet; asset risks remain

Bogota Financial Corp. (NASDAQ: BSBK) - quick read on what's happening inside the company

Snapshot - balance sheet & capital
- Total assets: $921,834,660 (June 30, 2025)
- Total deposits: $628,229,786 (down $14.0M vs Dec 31, 2024)
- Net loans (net of ACL $2,590,950): $693,211,303
- Securities available-for-sale: $144,602,468 (unrealized losses $5,620,857)
- Cash & cash equivalents: $20,333,555 (was $52,232,208 at 12/31/24 - down $31.9M)
- Total liabilities: $783,394,959; Total stockholders' equity: $138,439,701
- Regulatory capital: "well capitalized"; qualifying community bank leverage ratio 15.40%

What moved this quarter - operations & funding
- Management repaid borrowings (FHLB advances down $36.2M) and reduced excess cash (used to repay debt).
- Borrowings: FHLB advances total $135,944,439 (short-term $40.0M; long-term $95.944M).
- Brokered deposits: $108.0M (17.2% of deposits). Uninsured deposits: $57.0M (9.1% of deposits).
- Management restructured securities (sold lower-yielding securities in Q4 2024 and reinvested into higher-yielding issues).

Key income statement highlights (Q2 / YTD)
- Q2 2025 net income: $224,395 (Q2 2024 loss $(432,479)) - basic EPS $0.02
- Six months 2025 net income: $955,342 vs loss $(873,459) in 6M 2024 - YTD EPS $0.08
- Net interest income Q2: $3,694,605 (up from $2,743,714) - NIM Q2: 1.74% (vs 1.21% prior year)
- Total interest income Q2: $10,505,164; total interest expense Q2: $6,810,559
- Non-interest income Q2: $331,710; Non-interest expense Q2: $3,854,502
- Provision for credit losses: $0 in Q2; YTD recovery $80,000

Positive aspects of the income statement
- Net interest income improved materially: +$951k Q2 YoY and +$1.9M YTD - margin expansion driven by higher yields on securities and loans.
- NII growth despite lower average balances (management tightened balance sheet and redeployed into higher-yield assets).
- Company returned to profitability both for the quarter and year-to-date; EPS positive (basic $0.02 Q2, $0.08 YTD).
- Non-interest income benefitted YTD from a one-time bank-owned life insurance death benefit (~$543k) and higher BOLI yields.

Negative aspects of the income statement / risks
- Non-interest expense increased (Q2 occupancy & equipment spiked $274k due to a sale-leaseback completed in Q4 2024; professional/legal fees rose), pressuring operating leverage.
- Securities portfolio carries significant unrealized losses ($5.62M); accumulated other comprehensive loss $(3,542,930).
- Credit pressure in specific loan pools: delinquent loans rose to $20.44M (2.9% of loans); non-performing loans $13,863,889 (includes a $10.89M construction loan).
- Allowance for credit losses is small: $2,590,950 (0.37% of total loans) - ACL covers ~18.69% of non-performing loans, which is thin if problems widen.
- Continued reliance on brokered deposits (17.2%) and material CDs due within one year ($429.4M) create refinancing/liquidity risk if rates or competition shift.

Other operational items to watch
- One large construction loan (catering hall, $10.9M) is non-performing; foreclosure proceedings are underway but no specific reserve was recorded based on collateral and progress (loan 99% complete, LTV ~45%).
- Cash fell sharply (from $52.2M to $20.3M) - management used cash to pay down borrowings; certificates of deposit and borrowings declined as part of balance sheet reshaping.
- Interest rate risk: management uses swaps (notional $125M in swaps noted) and hedging; NPV and income simulations are within board limits but portfolio is sensitive to rate shocks.
- Share count ~13.01M shares outstanding (Aug 12, 2025 disclosure).

Bottom line (straightforward)
Bogota Financial Corp. has tightened its balance sheet, pushed NII higher by reinvesting into higher-yielding securities and reduced borrowings - and that shows up as returned profitability this quarter and YTD. However, asset-quality concentration (notably one large construction loan), modest ACL coverage, unrealized losses in securities and dependence on brokered/term deposits are real risks. If interest rates or local real estate conditions deteriorate, those exposures could pressure earnings and capital. Management is active (deleveraging, hedging, legal action on problem collateral), but investors should monitor delinquent loan trends, ACL adequacy, deposit retention, and whether non-interest expenses normalize after one-time items.

Source: Bogota Financial Corp. Form 10‑Q for quarter ended June 30, 2025 (figures quoted as reported).