10-Q: Bogota Financial Corp. Q1 2026 Earnings Decline Slightly

Bogota Financial Corp. reported a slight decrease in net income for the first quarter of 2026, driven by lower non-interest income and increased taxes, despite a rise in net interest income.

Summary

• Bogota Financial Corp. reported net income of $705,946 for the three months ended March 31, 2026, a decrease from $730,947 in the same period of 2025.
• Total assets decreased by 3.1% to $877.2 million as of March 31, 2026, from $904.9 million at December 31, 2025.
• Net loans decreased by 1.3% to $639.4 million.
• Deposits saw a significant decrease of 7.9% to $600.9 million, while borrowings increased by 24.2% to $115.9 million.
• The company maintained strong capital ratios, exceeding all applicable regulatory capital requirements.
• Delinquent loans increased slightly to 4.4% of total loans, and non-performing assets remained stable at 1.5% of total assets.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral to slightly negative sentiment, with a slight decrease in net income and a significant drop in non-interest income overshadowing the positive increase in net interest income and strong capital ratios.

Positives

• Net interest income increased by 23.2% to $4.4 million, driven by an improved net interest rate spread and net interest margin.
• The company exceeded all applicable regulatory capital requirements, maintaining a strong capital position.
• Securities available for sale saw an increase in average yield, contributing to higher interest income from securities.
• The company has ample sources of liquidity to meet its short- and long-term needs.
• The allowance for credit losses as a percentage of total loans slightly increased, indicating a prudent approach to risk management.

Negatives

• Net income for the quarter decreased by $25,000 compared to the prior year.
• Non-interest income decreased significantly by 63.9% to $321,000, largely due to a one-time death benefit received in the prior year.
• Total deposits decreased by 7.9% to $600.9 million, primarily due to a decline in certificates of deposit.
• Interest income on loans decreased by 7.1% due to a lower average balance.
• Interest income on cash and cash equivalents decreased significantly due to lower average balances and yields.

Risks

• General economic conditions, nationally or in the market area, that are worse than expected, including potential recessionary conditions.
• Changes in the amount and trend of loan delinquencies, charge-offs and non-performing and classified loans.
• Our ability to access cost-effective funding.
• Changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits.
• Fluctuations in real estate values and both residential and commercial real estate market conditions.
• Competition among depository and other financial institutions.
• Monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System.
• Inflation and changes in market interest rates that reduce our margins and yields, reduce the fair value of financial instruments or reduce our volume of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary market.
• Changes in the securities markets.
• Changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements.
• Our ability to manage market risk, credit risk and operational risk.
• Risks as it relates to cyber attacks against our information technology and those of our third-party providers and vendors.
• The failure to maintain current technologies.

Future Outlook

The company anticipates having sufficient funds to meet current funding commitments. However, if certificates of deposit do not remain with the company, it may need to seek other sources of funds, potentially at higher rates. The company believes it can attract and retain deposits by adjusting interest rates offered.

Management Comments

• Management believes that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation.
• Management believes that by following strategies such as originating and purchasing loans with adjustable interest rates, promoting core deposit products, and monitoring borrowings, the company is better positioned to react to changes in market interest rates.
• Management believes that it had ample sources of liquidity to satisfy its short- and long-term liquidity needs as of March 31, 2026.
• Management believes that a significant portion of maturing certificates of deposit will remain with the company based on past experience.

Industry Context

StockSavvy.ai notes that Bogota Financial Corp.'s performance in Q1 2026 reflects broader trends in the banking sector, including a challenging interest rate environment impacting loan origination and deposit strategies. The slight decrease in net income, despite an increase in net interest income, highlights the pressure on non-interest income sources and the impact of regulatory compliance costs.

Comparison to Industry Standards

• The company's Community Bank Leverage Ratio of 16.39% as of March 31, 2026, significantly exceeds the 9% threshold for qualifying community banks to be considered well-capitalized.
• The allowance for credit losses as a percentage of total loans (0.40%) is within typical ranges for community banks, though specific comparisons depend on the bank's loan portfolio composition and risk appetite.
• The net interest margin of 2.20% for Q1 2026 shows an improvement from the previous year (1.66%), indicating effective management of interest rate differentials, a key performance indicator for banks.
• The decrease in total deposits (7.9%) is a common challenge for banks in the current environment, as customers seek higher yields elsewhere, requiring banks to adjust their funding strategies.

Legal Proceedings

• The company is pursuing legal action to foreclose on a construction loan property that is 99% complete.

Related Party Transactions

• The Bank has granted loans to officers and directors of the Bank, totaling $1,961,468 at March 31, 2026.

Stakeholder Impact

• Shareholders: A slight decrease in net income may impact investor sentiment, though strong capital ratios provide a buffer.
• Depositors: A decrease in deposit balances was observed, with a shift from certificates of deposit to core deposit accounts.
• Creditors: The company's strong capital position and liquidity suggest continued ability to meet obligations.
• Employees: Stock-based compensation continues to be recognized, and a retirement and consulting agreement with Robert Walsh is noted.

Next Steps

• Continue to monitor and manage interest rate risk through various strategies.
• Manage liquidity to meet financial obligations and customer needs.
• Continue to manage the loan portfolio, including addressing delinquent commercial real estate loans.
• The company has commenced legal action to foreclose on a specific construction loan property.

Key Dates

Recommendation

The company demonstrates stable financial health with strong capital ratios and improved net interest income. However, the decline in net income, driven by a significant drop in non-interest income and a slight increase in delinquencies, warrants a cautious 'hold' recommendation pending further improvement in profitability and a clearer outlook on deposit stability.

Keywords

Bogota Financial Corp, 10-Q, Quarterly Report, Financial Statements, Net Income, Net Interest Income, Deposits, Loans, Securities, Interest Rate Risk, Capital Ratios, BSBK