BSBK 10-Q Quarter ended Sept. 30, 2019

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 333-233680

Bogota Financial Corp.

(Exact Name of Registrant as Specified in Its Charter)

Maryland		84-3501231
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
819 Teaneck Road Teaneck, New Jersey		07666
(Address of Principal Executive Offices)		(Zip Code)

(201) 862-0660

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.    YES  ☐    NO   ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES  ☒    NO  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
				Emerging growth company		☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ☐    NO  ☒

As of December 20, 2019, there were no shares issued and outstanding of the registrant’s common stock.

Bogota Financial Corp.

Form 10-Q

Table of Contents

				Page
PART I. FINANCIAL INFORMATION
Item 1.		Financial Statements			1
		Consolidated Statements of Financial Condition at September 30, 2019 (unaudited) and December 31, 2018			1
		Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)			2
		Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)			3
		Consolidated Statements of Equity for the Nine Months Ended September 30, 2019 and 2018			4
		Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)			5
		Notes to Consolidated Financial Statements (unaudited)			6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			36
Item 4.		Controls and Procedures			36
PART II. OTHER INFORMATION
Item 1.		Legal Proceedings			37
Item 1A.		Risk Factors			37
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 3.		Defaults Upon Senior Securities			37
Item 4.		Mine Safety Disclosures			37
Item 5.		Other Information			37
Item 6.		Exhibits			38
		SIGNATURES			39

i

EXPLANATORY NOTE

Bogota Financial Corp. (the “Company,” “we” or “our”) was formed to serve as the mid-tier stock holding company for Bogota Savings Bank in connection with the reorganization of Bogota Savings Bank and its mutual holding company, Bogota Financial, MHC, into the two-tier mutual holding company structure. As of September 30, 2019, the reorganization had not been completed and the Company had no assets or liabilities and had not conducted any business activities other than organizational activities. Accordingly, the unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q relate solely to the consolidated financial results of Bogota Savings Bank.

The unaudited financial statements and other financial information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements, and related notes, of Bogota Savings Bank at and for the year ended December 31, 2018 contained in the Company’s definitive prospectus dated November 12, 2019 (the “Prospectus”), as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on November 18, 2019.

ii

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

BOGOTA SAVINGS BANK

CONSOLDIATED STATEMENTS OF FINANCIAL CONDITION

		September 30, 2019				December 31, 2018
		(unaudited)
Assets
Cash and due from banks		$	7,045,570			$	5,744,106
Interest-bearing deposits in other banks			25,721,781				18,773,496
Cash and cash equivalents			32,767,351				24,517,602
Securities available for sale			11,946,633				13,599,806
Securities held to maturity (fair value of $52,979,846 and $68,802,922, respectively)			52,479,688				70,048,579
Loans, net of allowance of $2,016,175 and $1,976,175, respectively			536,543,577				526,669,660
Premises and equipment, net			4,155,682				4,656,903
Federal Home Loan Bank (FHLB) stock			6,208,500				4,684,300
Accrued interest receivable			1,972,360				1,946,768
Bank owned life insurance			17,309,247				17,004,105
Other assets			2,249,153				1,880,815
Total Assets		$	665,632,191			$	665,008,538
Liabilities and Equity
Liabilities
Non-interest bearing		$	13,002,497			$	12,500,091
Interest bearing			461,352,333				497,793,237
Total Deposits			474,354,830				510,293,328
FHLB advances			108,898,206				74,638,690
Advance payments by borrowers for taxes and insurance			4,556,900				4,332,611
Other liabilities			3,688,188				3,266,141
Total liabilities			591,498,124				592,530,770
Equity
Retained earnings			74,504,703				72,794,887
Accumulated other comprehensive loss			(370,636	)			(317,119	)
Total equity			74,134,067				72,477,768
Total liabilities and equity		$	665,632,191			$	665,008,538

See accompanying notes to unaudited consolidated financial statements.

1

BOGOTA SAVINGS BANK

CONSOLIDATED STATEMENTS OF INCOME

		Three months ended September 30,								Nine Months ended September 30,
		2019				2018				2019				2018
		(unaudited)
Interest income
Loans		$	5,136,299			$	4,763,057			$	15,147,160			$	14,363,997
Securities
Taxable			441,557				489,299				1,383,258				1,378,028
Tax-exempt			11,836				39,267				77,787				79,186
Other interest-earning assets			215,048				222,543				659,842				615,234
Total interest income			5,804,740				5,514,166				17,268,047				16,436,445
Interest expense
Deposits			2,485,223				1,969,616				7,433,088				5,352,228
FHLB advances			568,740				288,262				1,487,479				884,325
Total interest expense			3,053,963				2,257,878				8,920,567				6,236,553
Net interest income			2,750,777				3,256,288				8,347,480				10,199,892
Provision for loan losses			—				—				—				—
Net interest income after provision for loan losses			2,750,777				3,256,288				8,347,480				10,199,892
Non-interest income
Fees and service charges			25,447				19,970				85,887				97,723
Bank owned life insurance			102,880				114,386				305,142				344,440
Other			3,885				7,435				20,860				30,008
Total non-interest income			132,212				141,791				411,889				472,171
Non-interest expense
Salaries and employee benefits			1,229,834				1,148,288				3,704,454				3,407,577
Occupancy and equipment			162,945				168,272				513,517				526,071
FDIC insurance assessment			14,161				52,682				75,296				146,574
Data processing			83,915				218,637				820,958				658,044
Advertising			65,000				60,000				185,000				180,000
Director fees			160,651				165,557				498,596				506,442
Professional fees			85,500				53,000				208,000				176,000
Other			136,762				218,125				554,078				608,348
Total non-interest expense			1,938,768				2,084,561				6,559,899				6,209,056
Income before income taxes			944,221				1,313,518				2,199,470				4,463,007
Income tax expense			273,207				374,596				558,367				1,175,006
Net income		$	671,014			$	938,922			$	1,641,103			$	3,288,001

See accompanying notes to unaudited consolidated financial statements.

2

BOGOTA SAVINGS BANK

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

		Three months ended September 30,								Nine Months ended September 30,
		2019				2018				2019				2018
		(unaudited)
Net income		$	671,014			$	938,922			$	1,641,103			$	3,288,001
Other comprehensive income (loss):
Unrealized gains/losses on securities available for sale:
Unrealized holding (loss) gain arising during the period			(16,035	)			(6,864	)			41,227				(73,538	)
Tax effect, income (benefit) tax expense			4,508				1,930				(11,589	)			20,672
Net of tax			(11,527	)			(4,934	)			29,638				(52,866	)
Defined benefit retirement plans:
Net gain arising during the period including changes in assumptions			—				—				—				—
Reclassification adjustment for amortization of prior service cost and net gain/loss included in salaries and employee benefits			(20,058	)			—				(20,058	)			—
Tax effect, income tax benefit			5,616				—				5,616				—
Net of tax			(14,442	)			—				(14,442	)			—
Total other comprehensive income (loss)			(25,969	)			(4,934	)			15,196				(52,866	)
Comprehensive income		$	645,046			$	933,988			$	1,656,299			$	3,235,135

See accompanying notes to unaudited consolidated financial statements.

3

BOGOTA SAVINGS BANK

CONSOLIDATED STATEMENTS OF EQUITY

		Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total Equity
Balance January 1, 2019		$	72,794,887			$	(317,119	)		$	72,477,768
Net Income			361,818				—				361,818
Other comprehensive income			—				13,201				13,201
Reclassification of the stranded tax effects from the enactment of the Tax Cuts and Jobs Act			68,713				(68,713	)			—
Balance March 31, 2019 (unaudited)		$	73,225,418			$	(372,631	)		$	72,852,787
Balance April 1, 2019			73,225,418				(372,631	)			72,852,787
Net Income			608,271				—				608,271
Other comprehensive income			—				27,965				27,965
Balance June 30, 2019 (unaudited)		$	73,833,689			$	(344,666	)		$	73,489,023
Balance July 1, 2019			73,833,689				(344,666	)			73,489,023
Net Income			671,014				—				671,014
Other comprehensive income			—				(25,970	)			(25,970	)
Balance September 30, 2019 (unaudited)		$	74,504,703			$	(370,636	)		$	74,134,067
		Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total Equity
Balance January 1, 2018		$	68,658,210			$	(349,721	)		$	68,308,489
Net Income			1,244,876				—				1,244,876
Other comprehensive income			—				(37,137	)			(37,137	)
Balance March 31, 2018 (unaudited)		$	69,903,086			$	(386,858	)		$	69,516,228
Balance April 1, 2018			69,903,086				(386,858	)			69,516,228
Net Income			1,104,203				—				1,104,203
Other comprehensive income			—				(10,765	)			(10,765	)
Balance June 30, 2018 (unaudited)		$	71,007,289			$	(397,653	)		$	70,609,636
Balance July 1, 2018			71,007,289				(397,653	)			70,609,636
Net Income			938,922				—				938,922
Other comprehensive income			—				(4,935	)			(4,935	)
Balance September 30, 2018 (unaudited)		$	71,946,211			$	(402,588	)		$	71,543,623

See accompanying notes to unaudited consolidated financial statements.

4

BOGOTA SAVINGS BANK

CONSOLIDATED STATEMENTS OF CASH FLOWS

		For the nine months ended September 30,
		2019				2018
		(unaudited)
Cash flows from operating activities
Net income		$	1,641,103			$	3,288,001
Adjustments to reconcile net income to net cash from operating activities:
Depreciation of premises and equipment			227,638				234,451
Amortization of deferred loan fees			306,297				367,973
Amortization of premiums and accretion of discounts on securities, net			105,269				159,510
Deferred income tax benefit			4,255				20,812
Increase in cash surrender value of bank owned life insurance			(305,142	)			(344,440	)
Changes in:
Accrued interest receivable			(25,592	)			(159,144	)
Net changes in other assets			(77,280	)			(794,983	)
Net changes in other liabilities			424,281				567,140
Net cash provided by operating activities			2,300,829				3,339,320
Cash flows from investing activities
Purchases of securities available for sale			(497,500	)			(4,030,000	)
Purchases of securities held to maturity			(2,051,895	)			(16,185,517	)
Maturities, calls, and repayments of securities available for sale			2,179,766				1,760,280
Maturities, calls, and repayments of securities held to maturity			19,527,652				6,526,169
Net (increase) decrease in loans			(10,180,214	)			12,905,793
Purchases of premises and equipment			(49,996	)			(576,047	)
Purchase of FHLB Stock			(4,195,300	)			(1,012,903	)
Redemption of FHLB stock			2,671,100				2,258,903
Net cash provided by investing activities			7,403,613				1,646,678
Cash flows from financing activities
Net (decrease) increase in deposits			(35,938,498	)			25,140,183
Net (decrease) increase in short-term FHLB advances			(40,000,000	)			3,500,000
Proceeds from long-term FHLB non-repo advances			77,000,000				—
Repayments of long-term FHLB non-repo advances			(2,740,484	)			(23,875,086	)
Repayments of long-term FHLB repo advances			—				(7,000,000	)
Net increase in advance payments from borrowers for taxes and insurance			224,289				1,170,582
Net cash used in financing activities			(1,454,693	)			(1,064,321	)
Net increase in cash and cash equivalents			8,249,749				3,921,677
Cash and cash equivalents at beginning of year.			24,517,602				22,558,312
Cash and cash equivalents at September 30.		$	32,767,351			$	26,479,989
Supplemental cash flow information
Income taxes paid		$	603,000			$	2,130,000
Interest paid		$	8,920,567			$	6,236,553

See accompanying notes to unaudited consolidated financial statements.

5

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation : The consolidated financial statements include the accounts of Bogota Savings Bank (the “Bank”) and its wholly-owned subsidiaries, Bogota Securities Corp. and Bogota Properties, LLC. All significant intercompany balances and transactions have been eliminated in consolidation.

Bogota Securities Corp. was formed on August 14, 2014 for the purpose of buying, selling and holding investment securities. Bogota Properties, LLC was inactive at September 30, 2019 and December 31, 2018.

The Bank generally grants residential, commercial and consumer loans to, and accepts deposits from, customers in New Jersey. The debtors’ ability to repay the loans is dependent upon the region’s economy and the borrowers’ circumstances. The Bank is also subject to the regulations of certain federal and state agencies and undergoes periodic examination by those regulatory authorities.

Use of Estimates : To prepare financial statements in conformity with accounting principles generally accepted in the United States of America management makes estimates and assumptions based on available information. These estimates and assumptions effect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Basis of Presentation : The accompanying unaudited consolidated financial statements have been prepared in conformity with GAAP for interim financial information and pursuant to the requirements for reporting on Article 10 of Regulation S-X of the Exchange Act. These financial statements include the accounts of the Bank and its subsidiaries, and all significant intercompany balances and transactions are eliminated in consolidation. Amounts in the prior periods’ consolidated financial statements are reclassified whenever necessary to conform to the current period’s presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ. In the opinion of management, all adjustments (consisting of normal recurring adjustments) and disclosures necessary for the fair presentation of the accompanying consolidated financial statements have been included.. The results of operations for any interim periods are not necessarily indicative of the results which may be expected for the entire year or any other period.

Newly Issued, Not Yet Effective Accounting Pronouncements: In January 2016, FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale. In addition, the amendments in this ASU require an entity to disclose the fair value of its financial instruments using the exit price notion. Exit price is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance is effective for annual periods beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019.

6

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which will supersede the current lease requirements in Topic 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of income. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new guidance will be effective for the bank for years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Once effective, the standard will be applied using a modified retrospective transition method. The Bank is currently assessing the impact this new standard will have on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses . ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. The amendments are effective for the bank for fiscal years beginning after December 15, 2022 and interim periods within fiscal years beginning after December 15, 2022. The Bank is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

Adopted effective Accounting Pronouncements: In February 2018, the FASB issued ASU 2018-02, Income Statement- Reporting Comprehensive Income (Topic 220) – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update affect any entity that is required to apply the provisions of Topic 220, Income Statement- Reporting Comprehensive Income. Deferred tax assets (“DTAs”) related to defined pension benefit plans and securities available for sale that were revalued as of December 31, 2017 created “stranded tax effects” in Accumulated Other Comprehensive Income (“AOCI”) due to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”).

Existing GAAP required recognition of the tax rate change effects on the DTA revaluation as an adjustment to income tax expense. As a result the AOCI contained the stranded amounts from prior periods at the previous tax rate. ASU 2018-12 permits the reclassification of the stranded amounts from AOCI to retained earnings resulting from the Tax Act. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Act, the underlying GAAP guidance that requires the effect of a change in tax laws or rates to be included in income from continuing operations is not affected. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments is permitted, including adoption in any interim period. The Bank adopted this standard as of January 1, 2019, which resulted in a reclassification of $68,713 between retained earnings and accumulated other comprehensive loss.

On January 1, 2019, the Bank adopted ASU 2014-09 Revenue from Contracts with Customers (Topic 606) and all subsequent amendments to the ASU (collectively, “ASU 606”), which creates a single framework for recognizing revenue from contracts with customers that fall within its scope and revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets. The majority of the Bank’s revenues come from interest income and other sources, including loans and securities, that are outside the scope of ASC 606. The Bank’s services that fall within the scope of ASC 606 are presented within non-interest income and are recognized as revenue as the Bank satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on

7

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

deposits. The amendments allow for one of two transition methods: full retrospective or modified retrospective. The full retrospective approach requires application to all periods presented. The modified retrospective transition requires application to uncompleted contracts at the date of adoption. Periods prior to the date of adoption are not retrospectively revised, but a cumulative effect is recognized at the date of initial application on uncompleted contracts. The Bank adopted the new revenue guidance using the modified retrospective approach. There was no significant change upon adoption of the standard, as the new standard did not materially change the way the Bank currently records revenue and as such, no cumulative effect adjustment was recorded.

NOTE 2 – SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost, fair value, and gross unrealized gains and losses of securities available for sale at September 30, 2019 and December 31, 2018:

		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
September 30, 2019 (unaudited)
Corporate bonds due in:
One through five years		$	5,526,043			$	28,396			$	(6,244	)		$	5,548,195
Five through ten years			350,000				—				(1,300	)			348,700
MBSs – residential			5,919,166				130,572				—				6,049,738
Total		$	11,795,209			$	158,968			$	(7,544	)		$	11,946,633
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
December 31, 2018
Corporate bonds due in:
One through five years		$	5,311,813			$	15,700			$	(34,519	)		$	5,292,994
Five through ten years			1,345,749				6,865				(22,290	)			1,330,324
MBSs – residential			6,832,048				160,222				(15,782	)			6,976,488
Total		$	13,489,610			$	182,787			$	(72,591	)		$	13,599,806

MBSs include Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Government National Mortgage Association (“GNMA”) securities, all of which are U.S. government sponsored agencies.

There were no sales of securities during the three months and nine months ended September 30, 2019 and September 30, 2018.

8

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 2 – SECURITIES AVAILABLE FOR SALE (Continued)

The age of unrealized losses and the fair value of related securities as of September 30, 2019 and December 31, 2018 were as follows:

		Less Than 12 Months								12 Months or More								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
September 30, 2019 (unaudited)
Corporate bonds		$	348,700			$	(1,300	)		$	1,003,417			$	(6,244	)		$	1,352,117			$	(7,544	)
MBSs – residential			—				—				—				—				—				—
Total		$	348,700			$	(1,300	)		$	1,003,417			$	(6,244	)		$	1,352,117			$	(7,544	)
		Less Than 12 Months								12 Months or More								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
December 31, 2018
Corporate bonds		$	3,968,269			$	(56,809	)		$	—			$	—			$	3,968,269			$	(56,809	)
MBSs – residential			875,258				(15,782	)			—				—				875,258				(15,782	)
Total		$	4,843,527			$	(72,591	)		$	—			$	—			$	4,843,527			$	(72,591	)

Unrealized losses on corporate bonds available for sale have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. At September 30, 2019 and December 31, 2018, 100% of the MBSs were issued by U.S. government-sponsored entities and agencies, primarily FNMA and FHLMC, institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these MBSs and it is likely that it will not be required to sell the securities before their anticipated recovery, the Bank does not consider these securities to be other-than-temporary impaired at September 30, 2019 and December 31, 2018. At September 30, 2019 and December 31, 2018, securities available for sale with a carrying amount of $0 and $1,208,934, respectively, were pledged to secure repurchase agreements at the FHLB (see Note 7). At September 30, 2019 and December 31, 2018, securities available for sale with a carrying value of $278,281 and $331,270, respectively, were pledged to secure public deposits.

9

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 3 – SECURITIES HELD TO MATURITY

The following table summarizes the amortized cost, fair value, and gross unrecognized gains and losses of securities held to maturity at September 30, 2019 and December 31, 2018:

		Amortized Cost				Gross Unrecognized Gains				Gross Unrecognized Losses				Fair Value
September 30, 2019 (unaudited)
U.S. Government-sponsored agencies due in:
One through five years		$	7,449,513			$	—			$	(28,413	)		$	7,421,100
Corporate bonds due in:
Five through ten years			5,436,849				159,730				—				5,596,579
Municipal obligations due in:
One through five years			2,290,855				18,665				—				2,309,520
MBSs:
Residential			12,381,566				121,268				(39,793	)			12,463,041
Commercial			24,920,905				288,567				(19,866	)			25,189,606
Total		$	52,479,688			$	588,230			$	(88,072	)		$	52,979,846
		Amortized Cost				Gross Unrecognized Gains				Gross Unrecognized Losses				Fair Value
December 31, 2018
U.S. Government-sponsored agencies due in:
One through five years		$	17,673,603			$	—			$	(191,118	)		$	17,482,485
Corporate bonds due in:
Five through ten years			4,004,426				18,319				(61,593	)			3,961,152
Municipal obligations due in:
One through five years			8,135,032				—				(32,581	)			8,102,451
MBSs:
Residential			14,804,434				57,105				(301,650	)			14,559,889
Commercial			25,431,084				6,649				(740,788	)			24,696,945
Total		$	70,048,579			$	82,073			$	(1,327,730	)		$	68,802,922

10

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 3 – SECURITIES HELD TO MATURITY (Continued)

MBSs include FHLMC, FNMA and GNMA securities, all of which are U.S. government sponsored agencies.

The age of unrecognized losses and the fair value of related securities were as follows:

		Less Than 12 Months								12 Months or More								Total
		Fair Value				Unrecognized Losses				Fair Value				Unrecognized Losses				Fair Value				Unrecognized Losses
September 30, 2019 (unaudited)
U.S. Government-sponsored agencies		$	—			$	—			$	7,421,100			$	(28,413	)		$	7,421,100			$	(28,413	)
MBSs – residential			2,682,615				(8,508	)			1,622,831				(31,285	)			4,305,446				(39,793	)
MBSs – commercial			4,022,507				(19,866	)			—				—				4,022,507				(19,866	)
Total		$	6,705,122			$	(28,374	)		$	9,043,931			$	(59,698	)		$	15,749,053			$	(88,072	)
		Less Than 12 Months								12 Months or More								Total
		Fair Value				Unrecognized Losses				Fair Value				Unrecognized Losses				Fair Value				Unrecognized Losses
December 31, 2018
U.S. Government-sponsored agencies		$	7,218,382			$	(5,891	)		$	10,264,103			$	(185,227	)		$	17,482,485			$	(191,118	)
Corporate bonds			—				—				1,438,407				(61,593	)			1,438,407				(61,593	)
Municipal obligations			6,686,311				(10,842	)			1,416,140				(21,739	)			8,102,451				(32,581	)
MBSs – residential			1,289,961				(8,679	)			10,429,486				(292,971	)			11,719,447				(301,650	)
MBSs – commercial			1,826,592				(12,427	)			21,257,626				(728,361	)			23,084,218				(740,788	)
Total		$	17,021,246			$	(37,839	)		$	44,805,762			$	(1,289,891	)		$	61,827,008			$	(1,327,730	)

Unrecognized losses have not been recognized into income because the issuers of the securities are of high credit quality, management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The fair value is expected to recover as the securities approach maturity.

At September 30, 2019 and December 31, 2018, securities held to maturity with a carrying amount of $14,596,888 and $23,058,995, respectively, were pledged to secure repurchase agreements at the FHLBNY (see Note 7).

At September 30, 2019 and December 31, 2018, securities held to maturity with a carrying value of $4,098,846 and $23,789,123, respectively were pledged to secure public deposits.

11

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 4 – LOANS

Loans are summarized as follows at September 30, 2019 and December 31, 2018:

		September 30, 2019				December 31, 2018
		(unaudited)
Real estate:
Residential		$	384,759,708			$	376,304,160
Commercial and multi-family real estate			123,121,421				123,220,556
Construction			1,110,157				2,338,647
Commercial and industrial			2,379,584				1,267,313
Consumer:
Home equity and other			27,188,882				25,515,159
Total loans			538,559,752				528,645,835
Allowance for loan losses			(2,016,175	)			(1,976,175	)
Net loans		$	536,543,577			$	526,669,660

The Bank has granted loans to officers and directors of the Bank. At September 30, 2019 and December 31, 2018, such loans totaled approximately $787,420 and $809,956, respectively.

12

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 4 – LOANS (Continued)

The following table presents the activity in the allowance for loan losses by portfolio segments for the three and nine months ended September 30, 2019 and 2018.

		Residential First Mortgage				Commercial and Multi- Family Real Estate				Construction				Consumer				Commercial and Industrial				Total
Three months
September 30, 2019 (unaudited)
Allowance for loan losses:
Beginning balance		$	1,300,675			$	600,000			$	12,500			$	94,000			$	9,000			$	2,016,175
Provision for loan losses (credit)			37,400				(38,000	)			500				100				—				—
Recoveries			—				—				—				—				—				—
Total ending allowance balance		$	1,338,075			$	562,000			$	13,000			$	94,100			$	9,000			$	2,016,175
September 30, 2018 (unaudited)
Allowance for loan losses:
Beginning balance		$	1,322,175			$	551,000			$	12,000			$	91,000			$	—			$	1,976,175
Provision for loan losses (credit)			17,400				(23,900	)			1,600				(100	)			5,000				—
Loans charged off			—				—				—				—				—				—
Recoveries			—				—				—				—				—				—
Total ending allowance balance		$	1,339,575			$	527,100			$	13,600			$	90,900			$	5,000			$	1,976,175
		Residential First Mortgage				Commercial and Multi- Family Real Estate				Construction				Consumer				Commercial and Industrial				Total
Nine months
September 30, 2019 (unaudited)
Allowance for loan losses:
Beginning balance		$	1,266,175			$	607,000			$	9,000			$	89,000			$	5,000			$	1,976,175
Provision for loan losses (credit)			31,900				(45,000	)			4,000				5,100				4,000				—
Loans charged off			—				—				—				—				—				—
Recoveries			40,000				—				—				—				—				40,000
Total ending allowance balance		$	1,338,075			$	562,000			$	13,000			$	94,100			$	9,000			$	2,016,175
September 30, 2018 (unaudited)
Allowance for loan losses:
Beginning balance		$	1,248,400			$	620,775			$	12,000			$	95,000			$	—			$	1,976,175
Provision for loan losses (credit)			91,175				(93,675	)			1,600				(4,100	)			5,000				—
Loans charged off			—				—				—				—				—				—
Recoveries			—				—				—				—				—				—
Total ending allowance balance		$	1,339,575			$	527,100			$	13,600			$	90,900			$	5,000			$	1,976,175

13

BOGOTA SAVINGS BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 4 – LOANS (Continued)

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segments and based on impairment method as of September 30, 2019 and December 31, 2018:

		Residential First Mortgage				Commercial and Multi- Family Real Estate				Construction				Consumer				Commercial and Industrial				Total
September 30, 2019 (unaudited)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	—			$	—			$	—			$	—			$	—			$	—
Collectively evaluated for impairment			1,338,075				562,000				13,000				94,100				9,000				2,016,175
Total ending allowance balance		$	1,338,075			$	562,000			$	13,000			$	94,100			$	9,000			$	2,016,175
Loans:
Loans individually evaluated for impairment		$	1,196,462			$	—			$	—			$	41,883			$	—			$	1,238,345
Loans collectively evaluated for impairment			383,563,246				123,121,421				1,110,157				27,146,999				2,379,584				537,321,407
Total ending loan balance		$	384,759,708			$	123,121,421			$	1,110,157			$	27,188,882			$	2,379,584			$	538,559,752
December 31, 2018
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	—			$	—			$	—			$	—			$	—			$	—
Collectively evaluated for impairment			1,266,175				607,000				9,000				89,000				5,000				1,976,175
Total ending allowance balance		$	1,266,175			$	607,000			$	9,000			$	89,000			$	5,000			$	1,976,175
Loans:
Loans individually evaluated for impairment		$	1,186,317			$	—			$	—			$	22,152			$	—			$	1,208,469
Loans collectively evaluated for impairment			375,117,843				123,220,556				2,338,647				25,493,007				1,267,313				527,437,366
Total ending loan balance		$	376,304,160			$	123,220,556			$	2,338,647			$	25,515,159			$	1,267,313			$	528,645,835

14