BSBK — Q2 2026 Financial Report Analysis

Bogota Financial Corp., the holding company for Bogota Savings Bank (eight branches in northern and central New Jersey), more than tripled its second-quarter profit to $748,000, or $0.06 a share, from $224,000 ($0.02) a year earlier. The improvement came from cheaper deposits, lower expenses and a one-time $300,000 insurance recovery. It did not come from a healthier balance sheet. Over the same six months, loans the bank has stopped booking interest on doubled, deposits fell 12% and were replaced with short-term borrowings, and net interest income fell 13% from the first quarter. The bank also agreed to absorb GSL Savings Bank, a two-branch New Jersey mutual, in a deal expected to close in the second half of 2026.

At a glance

• Net income $0.75 million, up 233% year over year. The base was tiny ($0.22 million a year ago). About $300,000 of this quarter's pre-tax income was a one-time insurance payment for an old fraud loss.
• Net interest margin 1.94%, up from 1.74% a year ago but down from about 2.2% in Q1. Net interest margin is what the bank earns on its loans and securities minus what it pays for deposits and borrowings, as a share of its interest-earning assets. Below 2% is thin for a bank.
• Non-performing loans $27.8 million, 4.3% of loans, versus $13.3 million at year-end. The bank's loss reserve covers only 9.3% of those loans. Management says they are well secured by real estate.

The quarter in numbers

The efficiency ratio is non-interest expense divided by revenue: the share of each revenue dollar spent on running the bank. Lower is better. The efficiency ratio, return on equity and the year-ago non-performing ratio are the company's own figures from its July 30 earnings release. The non-performing loan total and ratio for June 30, 2026 come from the 10-Q (see the quality check below). Bogota does not report a CET1 ratio or return on tangible equity. It uses the simpler community bank leverage ratio instead (below).

Where the profit came from

Cheaper deposits did most of the work. Interest income fell $916,000 (8.7%) to $9.6 million because the loan book is shrinking. Average loans were $640.3 million, down $57.5 million from a year earlier. Interest expense fell faster, by $1.1 million (15.6%) to $5.7 million. The average rate paid on certificates of deposit (CDs, fixed-term savings deposits that make up 70% of this bank's deposits) dropped from 4.01% to 3.57%, and the average CD balance fell $59.8 million. The net effect was $145,000 more net interest income than a year ago.

Expenses fell $200,000 (5.2%). Professional fees were down $125,000 on lower legal costs. Director fees fell $44,000 because the board is smaller, and salaries fell $75,000 on lower headcount.

A one-time item doubled non-interest income. Non-interest income was $661,000 against $332,000. The company says the increase was "due to a $300,000 collection on an insurance claim from a previous year fraud loss." Without it, pre-tax income would have been roughly $546,000, not $846,000. That is still well above last year's $172,000, but the reported 233% jump overstates the underlying change.

Taxes worked against the year-over-year comparison. Q2 2025 had a $53,000 tax benefit. Q2 2026 had a $99,000 tax expense. Tax was not a source of the earnings gain.

For the first half, net income was $1.45 million ($0.12 a share) versus $0.96 million ($0.08). Net interest income rose 13.4% and the six-month margin was 2.06% versus 1.70%. The first half of 2025 included a $564,000 life-insurance death benefit, which flatters the comparison in the other direction.

What the headline numbers hide

The margin peaked in Q1 and fell back in Q2. Subtracting Q2 from the six-month totals gives Q1 2026 net interest income of about $4.43 million. Q2's $3.84 million is about 13% lower. The implied Q1 margin was about 2.2%, against 1.94% in Q2. Interest on loans fell from about $7.99 million in Q1 to $7.52 million in Q2, a 5.8% drop, while average loans fell only about 1%. Securities interest fell from about $2.26 million to $1.86 million. The filing gives no reason for the drop between quarters. Two facts in it are consistent with one. First, $14.4 million of commercial real estate loans moved to nonaccrual status this half, and interest on nonaccrual loans is not booked as income. Second, amortization of deferred loan costs and securities premiums, which reduce reported yields, rose to $174,000 and $279,000 for the half from $17,000 and $43,000. The year-over-year margin gain is real, but Q2 alone is the weaker run-rate.

Problem loans doubled, and the reserve is small. According to the 10-Q, nonaccrual loans were $27.8 million at June 30, up from $13.3 million at December 31. These are loans where the bank has stopped counting interest as earned because it doubts it will be paid on time. The total includes:

• a $10.9 million construction loan for a catering hall that is 99% complete, with a 45% loan-to-value ratio, which the bank is foreclosing on;
• two commercial real estate loans totaling $12.5 million that had been 60 days delinquent;
• $2.5 million of residential mortgages.

The allowance for credit losses is $2.58 million, or 0.40% of loans and only 9.3% of non-performing loans. The bank says no specific reserves were needed because the loans are well secured. It recorded no provision for the quarter and no charge-offs (loans written off as lost) in the first half of either year. If the collateral values hold, that is reasonable. If they don't, the cushion is thin: a loss equal to 4% of the nonaccrual book would wipe out a full quarter's pre-tax profit.

The earnings release understated the problem loans. The July 30 release put non-performing assets at $25.9 million (2.96% of assets) and reserve coverage at 9.95%. The 10-Q, filed two weeks later, reports $27.8 million (3.2% of assets) and 9.29%. The release also gave delinquent loans as $27.7 million, while the 10-Q says $27.9 million, or 4.4% of loans. This analysis uses the 10-Q figures.

Deposits are leaving and borrowed money is replacing them. Deposits fell $78.2 million (12.0%) in six months, driven by a $91.4 million drop in CDs. Of that drop, $10.8 million was brokered deposits (deposits bought through brokers rather than gathered from local customers). Savings accounts grew $10.9 million. To fill the gap, Federal Home Loan Bank advances (secured wholesale borrowings) rose $47.7 million to $141.0 million. Short-term advances jumped from $20.0 million to $101.0 million while long-term advances fell. The loans-to-deposits ratio is 111%, so the bank lends out more than it holds in deposits. The FHLB advances cost 4.14% in Q2, more than the 3.28% average deposit cost, and short-term funding has to be refinanced soon. Brokered deposits are still 17.2% of the total. The bank has $90.2 million of unused FHLB capacity, so liquidity is not tight. Uninsured deposits are 10.4%.

Cash conversion is fine. Operating cash flow was $3.06 million for the half against $1.45 million of net income. The gap is mostly non-cash charges such as amortization and stock compensation, and it does not suggest profit that never arrives as cash.

Buybacks played only a small part in EPS. The company spent $1.34 million on repurchases in the first half and has bought 230,544 of the 237,590 shares authorized. Diluted share count was about 1% lower than a year ago, so almost all of the EPS gain came from higher net income.

Capital: plenty, but earning very little

Stockholders' equity is $142.0 million against $875.0 million of assets. The bank's community bank leverage ratio (Tier 1 capital to average assets, a simplified capital test for banks under $10 billion) is 16.39%, against a 9% requirement to be treated as well capitalized. Losses are not the issue for this bank's capital. Returns are. Annualized return on equity was 0.53% in Q2, meaning the bank earned about half a cent a year for each dollar of shareholder capital. Return on assets was 0.09%. Book value is about $11.12 per outstanding share (our arithmetic: equity divided by 12.77 million shares).

The GSL Savings Bank merger

On May 31 Bogota agreed to merge GSL Savings Bank into Bogota Savings Bank. At June 30, GSL had $151.2 million of assets, $119.7 million of gross loans, $120.4 million of deposits and two branches, in Guttenberg and Fairview, New Jersey. GSL is a mutual bank, owned by its depositors, so there are no shareholders to pay. Instead, Bogota will issue new shares to its majority owner, Bogota Financial, MHC, equal to GSL's appraised fair value. GSL's depositors get the same rights in the MHC as Bogota's own depositors. GSL pays a $750,000 termination fee if the deal fails for certain reasons. Closing is expected in the second half of 2026, subject to regulatory approval.

The deal would add about 17% to Bogota's assets. GSL's loans and deposits are almost equal in size, so it does not fix Bogota's funding gap on its own. Bogota will still be relying on about $141 million of FHLB advances unless the combined bank grows deposits.

Takeaway: The profit gain is mostly cheaper CD funding plus a one-time $300,000 insurance recovery. Meanwhile the margin fell back below 2% in Q2, problem loans doubled to 4.3% of the book with a reserve covering under a tenth of them, and the bank is replacing departing deposits with short-term borrowings. Capital is strong enough to absorb trouble. The question is whether those real-estate-backed nonaccrual loans resolve without losses.

What to watch next

Management gave no numeric guidance. CEO Kevin Pace pointed to the GSL deal, planned technology upgrades, "prudent lending that diversifies our portfolio," and continued buybacks. Our view:

• Margin direction. Q2's 1.94% is the run-rate to beat. Cheaper CDs still help as they reprice. Working against that are the switch to short-term FHLB money at about 4.1% and the loss of interest on nonaccrual loans. A Q3 margin below Q2's would suggest the year-over-year improvement has run its course.
• The $10.9 million foreclosure and the two CRE loans. Watch whether these resolve at or near book value, which management expects, or lead to charge-offs and a higher provision. With $2.58 million in reserves and roughly $0.8 million of quarterly pre-tax profit, any meaningful loss would show up directly in earnings.
• Deposit trend and the GSL close. Look at whether CD outflows slow, whether short-term borrowings come down, and whether the merger closes on schedule in the second half.

The next report is the Q3 2026 results. Last year's Q3 earnings release came out on November 3, and the 10-Q followed on November 12.

Source: Bogota Financial Corp. Form 10-Q for the quarter ended June 30, 2026 (filed August 13, 2026), with selected ratios from the company's Q2 2026 earnings release (Form 8-K Exhibit 99.1, July 30, 2026) and merger terms from its Form 8-K dated May 31, 2026.