Bogota Financial (BSBK) - 2025 Q2 - Quarterly Results

Executive Summary & Company Overview Overall Financial Performance Bogota Financial Corp. reported a significant turnaround from a net loss in the prior year to net income for both the three and six months ended June 30, 2025, driven by increased net interest income and a one-time death benefit for the six-month period | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :----------------------------- | :----------------------------- | :----------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Net Income (Loss) | $224,000 | $(432,000) | +$656,000 | $955,000 | $(873,000) | +$1,828,000 | | EPS (Basic & Diluted) | $0.02 | $(0.03) | +$0.05 | $0.08 | $(0.07) | +$0.15 | - Income for the six months ended June 30, 2025, included a one-time death benefit from a bank-owned life insurance policy of approximately $543,000[2] CEO Commentary & Strategic Initiatives CEO Kevin Pace noted that the first half of 2025 met projections, with steady loan demand expected to increase later in the year, focusing on commercial portfolio growth, risk limitation, and reducing the cost of funds through deposit growth, while enhancing shareholder value via stock buybacks - Management expects an uptick in loan demand later in 2025 and into early 2026[4] - Key initiatives include continued growth in the commercial portfolio, limiting risk to certain markets and property types, and increasing consumer and commercial deposits to reduce the cost of funds[4] | Metric | Since IPO (Cumulative) | | :----------------------------------- | :--------------------- | | Shares Reduced | 1,653,571 | | Tangible Book Value per Minority Share | From $22.04 to $29.10 | Company Profile Bogota Financial Corp. is the mid-tier holding company for Bogota Savings Bank, a New Jersey chartered stock savings bank established in 1893, operating seven offices and a loan production office across northern and central New Jersey - Bogota Financial Corp. is the mid-tier holding company for Bogota Savings Bank, a New Jersey chartered stock savings bank[37] - The Bank operates from seven offices in New Jersey and a loan production office in Spring Lake, New Jersey[37] Forward-Looking Statements The report includes forward-looking statements subject to various risks and uncertainties, such as competitive pressures, interest rate changes, inflation, economic conditions, real estate market values, liquidity, and regulatory changes, which the Company does not undertake to revise - Forward-looking statements are subject to risks including competitive pressures, interest rate environment changes, inflation, general economic conditions, real estate market values, liquidity, and regulatory changes[38] - The Company does not commit to revising these forward-looking statements after the press release date[39] Financial Highlights (Balance Sheet & Key Metrics) Balance Sheet Summary As of June 30, 2025, total assets decreased primarily due to reductions in cash and loans, while securities saw a slight increase, with total liabilities also decreasing due to lower deposits and FHLB advances, and stockholders' equity increasing from net income | Balance Sheet Item | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change (Millions) | % Change | | :---------------------- | :----------------------- | :---------------------- | :---------------- | :------- | | Total Assets | $921.8 | $971.5 | $(49.7) | -5.1% | | Cash & Cash Equivalents | $20.3 | $52.2 | $(31.9) | -61.1% | | Securities | $144.6 | $140.3 | $4.3 | +3.1% | | Net Loans | $693.2 | $711.7 | $(18.5) | -2.6% | | Total Deposits | $628.2 | $642.2 | $(14.0) | -2.2% | | FHLB Advances | $135.9 | $172.2 | $(36.2) | -21.0% | | Total Liabilities | $783.4 | $834.2 | $(50.8) | -6.1% | | Total Stockholders' Equity | $138.4 | $137.3 | $1.2 | +0.9% | - The decrease in cash and cash equivalents was largely due to using excess funds to pay down borrowings[5] - Net loans decreased primarily due to decreases in residential mortgages and construction loans, reflecting lower demand in these segments[5][33] - The average rate on deposits decreased by 16 basis points to 3.75% for the first half of 2025, driven by lower interest rates and a reduced proportion of higher-costing certificates of deposit[5] Key Financial Ratios Bogota Financial Corp. demonstrated improved performance and capital ratios for the periods ended June 30, 2025, compared to the prior year, with a significantly improved efficiency ratio and mixed asset quality trends showing increased non-performing loans but decreased non-performing assets | Ratio | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Return (loss) on average assets | 0.02% | (0.18)% | 0.10% | (0.18)% | | Return (loss) on average equity | 0.16% | (1.32)% | 0.10% | (1.32)% | | Interest rate spread | 1.20% | 0.72% | 1.15% | 0.68% | | Net interest margin | 1.74% | 1.21% | 1.70% | 1.20% | | Efficiency ratio | 95.73% | 122.28% | 90.66% | 122.87% | | Average equity to average assets | 15.02% | 13.48% | 14.88% | 14.71% | | Tier 1 capital to average assets | N/A | N/A | 15.32% | 13.52% | | Allowance for credit losses as % of total loans | N/A | N/A | 0.37% | 0.39% | | Non-performing loans as % of total loans | N/A | N/A | 2.00% | 1.82% | | Non-performing assets as % of total assets | N/A | N/A | 1.50% | 1.33% | - The efficiency ratio significantly improved, indicating better cost management relative to income generation[46] - Delinquent loans increased to $20.4 million (2.94% of total loans) at June 30, 2025, primarily due to one well-secured commercial real estate loan of $7.1 million[34] - Non-performing assets slightly decreased to $13.9 million (1.50% of total assets) at June 30, 2025[34] Income Statement Analysis Three Months Ended June 30, 2025 vs. 2024 For the three months ended June 30, 2025, Bogota Financial Corp. reported a net income of $224,000, a substantial increase from a net loss of $432,000 in the prior year, primarily driven by a significant increase in net interest income, partially offset by a decrease in income tax benefit | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :----------------- | :--------------------------- | :--------------------------- | :----------- | | Net Income (Loss) | $224,000 | $(432,000) | +$656,000 | | Net Interest Income | $3.7 million | $2.7 million | +$951,000 | | Income Tax Benefit | $(53,000) | $(281,000) | +$228,000 | - Net interest income increased by 34.7% due to a 48 basis point increase in net interest rate spread (to 1.20%) and a 53 basis point increase in net interest margin (to 1.74%)[14] Interest Income (3 Months) Total interest income remained relatively stable, with a slight increase of $31,000, resulting from mixed performance across asset categories: a decrease in interest income from cash and loans, largely offset by an increase from securities due to a balance sheet restructuring in Q4 2024 | Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :---------------------- | :--------------------------- | :--------------------------- | :----------- | | Total Interest Income | $10.5 million | $10.5 million | +$31,000 | | Cash & Cash Equivalents | $106,000 | $127,000 | $(21,000) | | Loans | $8.292 million | $8.299 million | $(7,000) | | Securities | $1.946 million | $1.860 million | +$86,000 | - Interest income on securities increased due to a 151 basis point increase in average yield, despite a $44.4 million decrease in average balance, reflecting the Q4 2024 sale of lower-yielding securities and reinvestment into higher-yielding ones[10] Interest Expense (3 Months) Total interest expense decreased by $920,000, primarily due to lower average balances and costs on deposits, as well as reduced balances on borrowings, with hedges also contributing to a reduction in interest expense on FHLB advances and brokered deposits | Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :---------------------- | :--------------------------- | :--------------------------- | :----------- | | Total Interest Expense | $6.8 million | $7.7 million | $(920,000) | | Interest-Bearing Deposits | $5.5 million | $6.3 million | $(730,000) | | FHLB Advances | $1.3 million | $1.5 million | $(190,000) | - Interest expense on deposits decreased due to a 32 basis point reduction in the average cost of deposits (to 3.67%) and a shift in deposit composition away from certificates of deposit[12] - Hedges reduced interest expense on FHLB advances and brokered deposits by $186,000 during the quarter[11] Provision for Credit Losses (3 Months) No provision for credit losses was recorded for the three months ended June 30, 2025, compared to a $35,000 provision in the prior year period | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Provision for Credit Losses | $0 | $35,000 | Non-Interest Income (3 Months) Non-interest income increased by $29,000, or 9.4%, driven by higher bank-owned life insurance (BOLI) income, increased gain on sale of loans, and higher fee and service charge income | Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :---------------------- | :--------------------------- | :--------------------------- | :----------- | | Total Non-Interest Income | $332,000 | $303,000 | +$29,000 | | Bank-Owned Life Insurance | +$13,000 | N/A | +6.0% | | Gain on Sale of Loans | +$9,000 | N/A | N/A | | Fee & Service Charge Income | +$11,000 | N/A | N/A | Non-Interest Expense (3 Months) Non-interest expense increased by $129,000, or 3.5%, primarily due to higher professional fees and occupancy and equipment costs related to a lease-buyback transaction, partially offset by reductions in salaries and employee benefits, advertising, and other non-interest expenses | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :------------------------ | :--------------------------- | :--------------------------- | :----------- | | Total Non-Interest Expense | N/A | N/A | +$129,000 | | Professional Fees | N/A | N/A | +$112,000 | | Occupancy & Equipment | N/A | N/A | +$274,000 | | Salaries & Employee Benefits | N/A | N/A | $(83,000) | | Advertising | N/A | N/A | $(99,000) | | Other Non-Interest Expense | N/A | N/A | $(78,000) | - Occupancy and equipment costs increased significantly (74.6%) due to increased lease expense from a Q4 2024 lease-buyback transaction[17] - Salaries and employee benefits decreased due to lower headcount[17] Income Tax Expense (3 Months) Income tax expense increased by $229,000, resulting in a smaller benefit of $53,000 for the three months ended June 30, 2025, compared to a $281,000 benefit in the prior year, primarily due to the increase in net income | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :----------------- | :--------------------------- | :--------------------------- | :----------- | | Income Tax Benefit | $(53,000) | $(281,000) | +$228,000 | Six Months Ended June 30, 2025 vs. 2024 For the six months ended June 30, 2025, Bogota Financial Corp. reported a net income of $955,000, a significant improvement from a net loss of $873,000 in the prior year, primarily driven by a substantial rise in net interest income and a one-time death benefit, partially offset by an increase in income tax expense | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :----------------- | :--------------------------- | :--------------------------- | :----------- | | Net Income (Loss) | $955,000 | $(873,000) | +$1.8 million | | Net Interest Income | $7.3 million | $5.4 million | +$1.9 million | | Income Tax Benefit | $(81,000) | $(568,000) | +$487,000 | - Income for the six months included a one-time death benefit of approximately $543,000 from a bank-owned life insurance policy[19] - Net interest income increased by 35.1% due to a 47 basis point increase in net interest rate spread (to 1.15%) and a 50 basis point increase in net interest margin (to 1.70%)[27] Interest Income (6 Months) Total interest income increased by $893,000, or 4.4%, for the six months ended June 30, 2025, primarily due to higher yields on interest-earning assets, despite a decrease in their average balance, with significant contributions from cash, loans, and securities | Source | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :---------------------- | :--------------------------- | :--------------------------- | :----------- | | Total Interest Income | $21.4 million | $20.5 million | +$893,000 | | Cash & Cash Equivalents | $371,000 | $276,000 | +$95,000 | | Loans | $16.9 million | $16.5 million | +$387,000 | | Securities | $3.8 million | $3.4 million | +$390,000 | - Interest income on securities increased due to a 143 basis point increase in average yield (to 5.28%), offset by a $32.9 million decrease in average balance, a result of the Q4 2024 balance sheet restructuring[23] Interest Expense (6 Months) Total interest expense decreased by $1.0 million, or 6.6%, for the six months ended June 30, 2025, mainly due to lower average balances and rates on certificates of deposit and reduced borrowings, with hedges also playing a role in mitigating interest expense | Source | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :---------------------- | :--------------------------- | :--------------------------- | :----------- | | Total Interest Expense | $14.1 million | $15.1 million | $(1.0) million | | Interest-Bearing Deposits | $11.3 million | $12.2 million | $(938,000) | | FHLB Advances | $2.85 million | $2.92 million | $(62,000) | - Interest expense on deposits decreased due to a 16 basis point reduction in the average cost of deposits (to 3.75%) and a change in deposit composition[25] - Hedges reduced interest expense on FHLB advances and brokered deposits by $363,000 during the six months[24] Recovery/Provision for Credit Losses (6 Months) The company recorded an $80,000 recovery of credit losses for the six months ended June 30, 2025, a positive shift from a $70,000 provision in the comparable prior year period, attributed to a decrease in loans and held-to-maturity securities | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | (Recovery) Provision for Credit Losses | $(80,000) | $70,000 | Non-Interest Income (6 Months) Non-interest income significantly increased by $619,000, or 102.7%, primarily driven by a death benefit related to a former employee and higher bank-owned life insurance (BOLI) balances, along with increased gains on sale of loans | Source | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :---------------------- | :--------------------------- | :--------------------------- | :----------- | | Total Non-Interest Income | $1.2 million | $602,000 | +$619,000 | | Bank-Owned Life Insurance | N/A | N/A | +$564,000 | | Gain on Sale of Loans | N/A | N/A | +$38,000 | - Bank-owned life insurance income increased by 132.0% due to a death benefit related to a former employee and higher balances[30] Non-Interest Expense (6 Months) Non-interest expense increased by $345,000, or 4.7%, mainly due to higher professional fees and a significant rise in occupancy and equipment costs from the Q4 2024 lease-buyback transaction, partially offset by reductions in salaries and employee benefits, advertising, and other non-interest expenses | Expense Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :------------------------ | :--------------------------- | :--------------------------- | :----------- | | Total Non-Interest Expense | N/A | N/A | +$345,000 | | Professional Fees | N/A | N/A | +$114,000 | | Occupancy & Equipment | N/A | N/A | +$574,000 | | Salaries & Employee Benefits | N/A | N/A | $(162,000) | | Advertising | N/A | N/A | $(104,000) | | Other Non-Interest Expense | N/A | N/A | $(102,000) | - Occupancy and equipment costs increased by 77.8% due to increased lease expense from the Q4 2024 lease-buyback transaction[31] - Salaries and employee benefits decreased due to lower headcount[31] Income Tax Expense (6 Months) Income tax expense increased by $488,000, resulting in a smaller benefit of $81,000 for the six months ended June 30, 2025, compared to a $568,000 benefit in the prior year, primarily due to the increase in income | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :----------------- | :--------------------------- | :--------------------------- | :----------- | | Income Tax Benefit | $(81,000) | $(568,000) | +$487,000 | Balance Sheet Analysis Assets Total assets decreased by $49.7 million, or 5.1%, to $921.8 million at June 30, 2025, primarily due to significant decreases in cash and cash equivalents and net loans, while securities available for sale saw an increase | Asset Category | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change (Millions) | % Change | | :---------------------- | :----------------------- | :---------------------- | :---------------- | :------- | | Total Assets | $921.8 | $971.5 | $(49.7) | -5.1% | | Cash & Cash Equivalents | $20.3 | $52.2 | $(31.9) | -61.1% | | Net Loans | $693.2 | $711.7 | $(18.5) | -2.6% | | Securities AFS | $144.6 | $140.3 | $4.3 | +3.1% | - Net loans decreased due to $32.0 million in repayments, partially offset by $15.5 million in new production. Residential and construction loans decreased, while commercial real estate and multi-family loans increased[33] - Demand for residential and construction loans decreased due to the interest rate environment[33] Liabilities Total liabilities decreased by $50.8 million, or 6.1%, to $783.4 million, mainly driven by decreases in total deposits and Federal Home Loan Bank (FHLB) advances, with long-term borrowings decreasing while short-term borrowings increased | Liability Category | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change (Millions) | % Change | | :---------------------- | :----------------------- | :---------------------- | :---------------- | :------- | | Total Liabilities | $783.4 | $834.2 | $(50.8) | -6.1% | | Total Deposits | $628.2 | $642.2 | $(14.0) | -2.2% | | FHLB Advances | $135.9 | $172.2 | $(36.2) | -21.0% | | Short-Term Borrowings | $40.0 | $29.5 | +$10.5 | +35.6% | | Long-Term Borrowings | $95.9 | $142.7 | $(46.7) | -32.8% | - The decrease in deposits was primarily due to reductions in certificates of deposit, NOW accounts, money market accounts, and noninterest-bearing checking accounts, partially offset by an increase in savings accounts[5] - At June 30, 2025, brokered deposits were $108.0 million (17.2% of deposits) and uninsured deposits represented 9.1% of total deposits[35] - Total borrowing capacity at the Federal Home Loan Bank is $241.3 million, with $139.0 million advanced[35] Stockholders' Equity Total stockholders' equity increased by $1.2 million to $138.4 million, primarily driven by net income, with the ratio of average stockholders' equity-to-total assets improving to 14.96% from 13.99% at December 31, 2024 | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change (Millions) | | :----------------------------------- | :----------------------- | :---------------------- | :---------------- | | Total Stockholders' Equity | $138.4 | $137.3 | +$1.2 | | Average Stockholders' Equity-to-Total Assets Ratio | 14.96% | 13.99% | +0.97% | Loan and Deposit Composition The loan portfolio saw shifts with decreases in residential first mortgages and construction loans, while commercial real estate and multi-family real estate loans increased, and certificates of deposit continued to be the largest component of deposits, though their share slightly decreased Loans Summary: | Loan Type | June 30, 2025 | Dec 31, 2024 | | :------------------------ | :------------ | :----------- | | Residential First Mortgage | $458,212,962 | $472,747,542 | | Commercial Real Estate | $125,349,129 | $118,008,866 | | Multi-Family Real Estate | $82,118,178 | $74,152,418 | | Construction | $25,766,387 | $43,183,657 | | Commercial and Industrial | $4,282,269 | $6,163,747 | | Consumer | $73,328 | $80,955 | | Total Loans | $695,802,253 | $714,337,185 | Deposit Distribution: | Account Type | June 30, 2025 Amount | June 30, 2025 Percent | Dec 31, 2024 Amount | Dec 31, 2024 Percent | | :------------------------ | :------------------- | :-------------------- | :------------------ | :------------------- | | Noninterest bearing demand | $30,696,810 | 4.89% | $32,681,963 | 5.09% | | NOW accounts | $52,611,377 | 8.37% | $55,378,051 | 8.62% | | Money market accounts | $11,677,716 | 1.86% | $13,996,460 | 2.18% | | Savings accounts | $51,419,664 | 8.18% | $46,851,793 | 7.30% | | Certificates of deposit | $481,824,219 | 76.70% | $493,279,775 | 76.81% | | Total | $628,229,786 | 100.00% | $642,188,042 | 100.00% | Asset Quality Asset quality metrics showed an increase in delinquent loans, primarily due to one commercial real estate loan, while non-performing assets slightly decreased, with the allowance for credit losses remaining stable relative to total loans and no charge-offs recorded | Metric | June 30, 2025 | Dec 31, 2024 | | :------------------------------------------- | :------------ | :----------- | | Delinquent Loans | $20.4 million | $14.3 million | | Delinquent Loans as % of Total Loans | 2.94% | N/A | | Non-Performing Assets | $13.9 million | $14.0 million | | Non-Performing Assets as % of Total Assets | 1.50% | N/A | | Allowance for Credit Losses as % of Total Loans | 0.37% | 0.37% | | Allowance for Credit Losses as % of Non-Performing Loans | 18.69% | 18.77% | - The increase in delinquent loans was primarily due to one commercial real estate loan of $7.1 million, which is considered well-secured and in the process of collection[34] - No loans were charged-off during the three or six months ended June 30, 2025 or 2024[34] - The Bank has no exposure to commercial real estate loans secured by office space[34] Consolidated Financial Statements Consolidated Statements of Financial Condition The consolidated statement of financial condition shows a decrease in total assets and liabilities from December 31, 2024, to June 30, 2025, primarily driven by reductions in cash, loans, deposits, and FHLB advances, with stockholders' equity seeing a modest increase | | As of June 30, 2025 | As of December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------------ | :---------------------- | | Assets | | | | Cash and cash equivalents | $20,333,555 | $52,232,208 | | Securities available for sale, at fair value | $144,602,468 | $140,307,447 | | Loans, net of allowance for credit losses | $693,211,303 | $711,716,236 | | Total Assets | $921,834,660 | $971,489,884 | | Liabilities | | | | Total deposits | $628,229,786 | $642,188,042 | | FHLB advances-short term | $40,000,000 | $29,500,000 | | FHLB advances-long term | $95,944,439 | $142,673,182 | | Total liabilities | $783,394,959 | $834,200,724 | | Stockholders' Equity | | | | Total stockholders' equity | $138,439,701 | $137,289,160 | | Total liabilities and stockholders' equity | $921,834,660 | $971,489,884 | Consolidated Statements of Operations The consolidated statements of operations show a significant improvement in net income for both the three and six months ended June 30, 2025, compared to net losses in the prior year periods, driven by increased net interest income and, for the six-month period, a substantial increase in non-interest income | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Total interest income | $10,505,164 | $10,474,209 | $21,428,753 | $20,535,396 | | Total interest expense | $6,810,559 | $7,730,495 | $14,140,910 | $15,140,445 | | Net interest income | $3,694,605 | $2,743,714 | $7,287,843 | $5,394,951 | | (Recovery) provision for credit losses | — | $35,000 | $(80,000) | $70,000 | | Total non-interest income | $331,710 | $303,204 | $1,221,082 | $602,282 | | Total non-interest expense | $3,854,502 | $3,725,783 | $7,714,172 | $7,368,874 | | Income (loss) before income taxes | $171,813 | $(713,865) | $874,753 | $(1,441,641) | | Income tax benefit | $(52,582) | $(281,386) | $(80,589) | $(568,182) | | Net income (loss) | $224,395 | $(432,479) | $955,342 | $(873,459) | | Earnings (loss) per Share - basic | $0.02 | $(0.03) | $0.08 | $(0.07) | Average Balance Sheets and Rate/Volume Analysis Average Balance Sheets, Yields and Rates (Three Months) For the three months ended June 30, 2025, average interest-earning assets decreased, but the overall yield improved, while average interest-bearing liabilities also decreased with a notable reduction in the cost of deposits, leading to an improved net interest margin and spread | | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Average Interest-Earning Assets (thousands) | $855,994 | $912,888 | | Yield on Interest-Earning Assets (%) | 4.92% | 4.61% | | Average Interest-Bearing Liabilities (thousands) | $734,805 | $799,957 | | Cost of Interest-Bearing Liabilities (%) | 3.72% | 3.89% | | Net Interest Income (thousands) | $3,695 | $2,744 | | Interest Rate Spread (%) | 1.20% | 0.72% | | Net Interest Margin (%) | 1.74% | 1.21% | | Average Interest-Earning Assets to Average Interest-Bearing Liabilities (%) | 116.49% | 114.12% | - The average cost of certificates of deposit decreased from 4.44% to 4.01% year-over-year[52] Average Balance Sheets, Yields and Rates (Six Months) For the six months ended June 30, 2025, average interest-earning assets decreased, but the yield improved, while average interest-bearing liabilities also decreased with a lower cost of deposits, contributing to a stronger net interest margin and spread | | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Average Interest-Earning Assets (thousands) | $865,584 | $904,725 | | Yield on Interest-Earning Assets (%) | 4.95% | 4.54% | | Average Interest-Bearing Liabilities (thousands) | $751,112 | $789,760 | | Cost of Interest-Bearing Liabilities (%) | 3.80% | 3.86% | | Net Interest Income (thousands) | $7,288 | $5,395 | | Interest Rate Spread (%) | 1.15% | 0.68% | | Net Interest Margin (%) | 1.70% | 1.20% | | Average Interest-Earning Assets to Average Interest-Bearing Liabilities (%) | 115.24% | 114.56% | - The average cost of certificates of deposit decreased from 4.34% to 4.13% year-over-year[54] Rate/Volume Analysis The rate/volume analysis indicates that the increase in net interest income for both the three and six months ended June 30, 2025, was primarily driven by favorable changes in interest rates, which more than offset the negative impact of changes in volume Three Months Ended June 30, 2025 vs. 2024: | | Increase (Decrease) Due to Volume (In thousands) | Increase (Decrease) Due to Rate (In thousands) | Net (In thousands) | | :-------------------------- | :----------------------------------- | :----------------------------- | :----------------- | | Total Interest Income | $(2,662) | $2,693 | $31 | | Total Interest Expense | $(1,454) | $534 | $(920) | | Net Interest Income | $(1,208) | $2,159 | $951 | Six Months Ended June 30, 2025 vs. 2024: | | Increase (Decrease) Due to Volume (In thousands) | Increase (Decrease) Due to Rate (In thousands) | Net (In thousands) | | :-------------------------- | :----------------------------------- | :----------------------------- | :----------------- | | Total Interest Income | $(2,017) | $2,910 | $893 | | Total Interest Expense | $(1,197) | $197 | $(1,000) | | Net Interest Income | $(820) | $2,713 | $1,893 | - For both periods, the positive impact of rate changes on interest income and the negative impact of rate changes on interest expense (due to lower deposit costs) significantly contributed to the increase in net interest income[57]