Bogota Financial (BSBK) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Unaudited consolidated financial statements are presented, reflecting the company's reorganization, stock offering, and a net loss due to a significant charitable contribution Consolidated Statements of Financial Condition Consolidated Balance Sheet Highlights (unaudited) | Account | March 31, 2020 ($ Millions) | December 31, 2019 ($ Millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | $708.7 | $766.6 | -7.6 | | Cash and cash equivalents | $65.7 | $127.9 | -48.6 | | Loans, net | $546.7 | $537.2 | +1.8 | | Total Liabilities | $584.1 | $691.6 | -15.6 | | Total Deposits | $477.6 | $497.7 | -4.1 | | Total Stockholders' Equity | $124.7 | $75.0 | +66.3 | - The significant increase in stockholders' equity resulted from the common stock issuance following the company's reorganization and public offering in January 2020, while the decrease in total assets and liabilities was largely due to the return of $41.5 million in unfilled stock offering subscriptions and a decrease in deposits[17][140][141] Consolidated Statements of Income Consolidated Income Statement (unaudited) | Metric | Three Months Ended Mar 31, 2020 ($) | Three Months Ended Mar 31, 2019 ($) | | :--- | :--- | :--- | | Net Interest Income | $3,083,935 | $2,815,040 | | Provision for loan losses | $25,000 | $0 | | Total Non-interest Expense | $5,072,614 | $2,506,137 | | Net (Loss) Income | ($1,337,583) | $361,818 | | Earnings (Loss) Per Share | ($0.13) | N/A | - The company reported a net loss of $1.3 million for Q1 2020, compared to a net income of $362,000 in Q1 2019, primarily driven by a $2.9 million contribution to the Bogota Charitable Foundation formed during the reorganization[21][167] Consolidated Statements of Cash Flows Consolidated Cash Flows Summary (unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2020 ($) | | :--- | :--- | | Net cash provided by operating activities | $2,358,184 | | Net cash used in investing activities | ($4,831,251) | | Net cash used in financing activities | ($59,678,543) | | Net decrease in cash and cash equivalents | ($62,151,610) | - The significant use of cash in financing activities was mainly due to a $41.5 million return of unfilled stock offering subscriptions and a $20.1 million net decrease in deposits[31][141] Notes to Consolidated Financial Statements - On January 15, 2020, the company completed its reorganization and stock offering, selling 5,657,735 shares at $10.00 per share for net proceeds of $54.6 million[36] - The COVID-19 pandemic is identified as a significant risk and uncertainty, with potential adverse effects on the company's financial condition and results of operations, including estimates for expected credit losses[43] - The loan portfolio grew to $548.7 million, with residential real estate comprising the largest segment at $386.5 million, and the allowance for loan losses was $2.04 million, or 0.37% of total loans[64][165] - The Bank was categorized as "well capitalized" under regulatory framework as of March 31, 2020, exceeding all minimum capital requirements[89][92] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting the impact of reorganization and COVID-19, noting a net loss from a charitable contribution, and detailing pandemic responses and financial stability - The company's critical accounting policy is the Allowance for Loan Losses, which requires significant management judgment and is susceptible to changes in the economic environment[123] - In response to COVID-19, as of May 13, 2020, the company approved loan modifications for 158 loans totaling $87.2 million, representing 16.0% of the total loan portfolio, and processed 73 PPP loan applications totaling approximately $7.5 million as of May 3, 2020[135][137][139] Comparison of Operating Results (Q1 2020 vs Q1 2019) | Metric | Q1 2020 ($ Millions) | Q1 2019 ($ Millions) | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $3.1 | $2.8 | +9.6 | | Net Interest Margin | 1.79% | 1.77% | +2 bps | | Non-Interest Expense | $5.1 | $2.5 | +104 | | Net (Loss) Income | ($1.3) | $0.36 | -469.7 | - The increase in non-interest expense and resulting net loss in Q1 2020 was primarily due to a $2.9 million contribution to the Bogota Charitable Foundation following the reorganization[167] Quantitative and Qualitative Disclosures About Market Risk This section details the company's management of interest rate risk, its most significant market risk, using NPV and NII simulation models to analyze sensitivity to interest rate changes, confirming exposure was within policy limits Net Portfolio Value (NPV) Sensitivity Analysis | Basis Point Change | NPV Percent Change | | :--- | :--- | | +400 bp | (22.74)% | | +200 bp | (6.46)% | | -100 bp | 10.38% | | -200 bp | 26.14% | Net Interest Income (NII) Sensitivity Analysis (Year One) | Basis Point Change | NII Percent Change | | :--- | :--- | | +200 bp | (0.12)% | | +100 bp | (0.43)% | | -100 bp | (0.06)% | | -200 bp | 1.50% | Controls and Procedures Management evaluated the company's disclosure controls and procedures, concluding they were effective as of March 31, 2020, with no material changes in internal controls over financial reporting identified - Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2020[185] - There were no changes in the Company's internal controls over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the controls[186] PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not involved in any pending legal proceedings, other than routine matters, that would materially impact its financial condition or results of operations as of March 31, 2020 - The company is not involved in any material legal proceedings outside of the ordinary course of business[187] Risk Factors This section provides a material update to the company's risk factors, focusing entirely on the significant economic impact and business risks associated with the COVID-19 pandemic, outlining potential adverse effects on operations, financial condition, and liquidity - The primary updated risk factor is the economic impact of the COVID-19 outbreak, which has caused significant economic dislocation and an unprecedented slowdown in activity[189] - Potential adverse effects from the pandemic include: declining demand for products, increased loan delinquencies and foreclosures, declining collateral values, a need for higher loan loss allowances, reduced net interest margin, and increased cybersecurity risks from remote work[190][191] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[194] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[195] Mine Safety Disclosures This item is not applicable to the company - Not applicable[196] Other Information The company reported no other information for the period - None[197] Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, stock certificates, employment agreements, and CEO/CFO certifications - A list of exhibits is provided, including Articles of Incorporation, Bylaws, Employment Agreements, and CEO/CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[199]