Bogota Financial Corp

Previous wording

Management’s discussion and analysis of financial condition and results of operations at March 31, 2024 and December 31, 2023 and for thethree months ended March 31, 2024 and March 31, 2023 is intended to assist in understanding the financial condition and results of operations of Bogota Financial Corp. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Current wording

Management’s discussion and analysis of financial condition and results of operations at June 30, 2024 and December 31, 2023 and for thethree and six months ended June 30, 2024 and June 30, 2023 is intended to assist in understanding the financial condition and results of operations of Bogota Financial Corp. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

Our accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K at and for the year ended December 31, 2023. Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations.

Current wording

Our accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations.

Previous wording

***Total Assets.***Assets increased $21.5 million, or 2.3%, from $939.3 million at December 31, 2023 to $960.9 million at March 31, 2024 primarily due to a $33.1 million, or 48.1%, increase in securities available for sale and, a $3.8 million, or 5.2%, increase in securities held-to-maturity, offset by a $6.4 million, or 0.89%, decrease in loans and a $10.5 million, or 42.1%, decrease in cash and cash equivalents.

Current wording

***Total Assets.***Assets increased $35.4 million, or 3.8%, from $939.3 million at December 31, 2023 to $974.7 million at June 30, 2024 primarily due to a $38.0 million, or 55.1%, increase in securities available for sale and an $8.4 million, or 11.6%, increase in securities held-to-maturity, offset by a $7.1 million, or 1.0%, decrease in loans and a $7.3 million, or 29.4%, decrease in cash and cash equivalents.

Previous wording

***Cash and Cash Equivalents.***Cash and cash equivalents decreased $10.5 million, or 42.1%, to $14.4 million at March 31, 2024 from $24.9 million at December 31, 2023, as excess funds were used to purchase securities.

Current wording

***Cash and Cash Equivalents.***Cash and cash equivalents decreased $7.3 million, or 29.4%, to $17.6 million at June 30, 2024 from $24.9 million at December 31, 2023, as excess funds were used to purchase securities.

Previous wording

Securities Available for Sale. Securities available for sale increased $33.1 million, or 48.1%, to $102.0 million at March 31, 2024 from $68.9 million at December 31, 2023. The increase was primarily due to the purchase of mortgage-backed securities.

Current wording

Securities Available for Sale. Securities available for sale increased $38.0 million, or 55.1%, to $106.9 million at June 30, 2024 from $68.9 million at December 31, 2023. The increase was primarily due to the purchase of mortgage-backed securities that were purchased with excess funds.

Previous wording

Securities Held to Maturity. Securities held to maturity increased $3.8 million, or 5.2%, to $76.5 million at March 31, 2024 from $72.7 million at December 31, 2023, primarily due to the purchase of mortgage-backed securities.

Current wording

Securities Held to Maturity. Securities held to maturity increased $8.4 million, or 11.6%, to $81.1 million at June 30, 2024 from $72.7 million at December 31, 2023, primarily due to the purchase of mortgage-backed securities. At June 30, 2024, the Company's allowance for credit losses related to held-to-maturity securities totaled $108,000 or 0.13% of the total held-to-maturity securities portfolio.

Previous wording

***Net Loans.***Net loans decreased $6.4 million, or 0.89%, to $708.3 million at March 31, 2024 from $714.7 million at December 31, 2023. The decrease was due to a decrease of $4.2 million, or 0.86%, in one- to four-residential real estate loans to $481.9 million from $486.1 million at December 31, 2023 and a decrease of $8.1 million, or 16.5%, in construction loans to $41.2 million at March 31, 2024 from $49.3 million at December 31, 2023, offset by a $6.2 million, or 6.1%, increase in commercial real estate loans to $106.0 million at March 31, 2024 from $99.8 million at December 31, 2023. The decrease in one- to four-residential and construction loans reflect less opportunities and decreased demand due to the higher interest rate environment. As of March 31, 2024 and December 31, 2023, the Bank had no loans held for sale.

Current wording

***Net Loans.***Net loans decreased $7.1 million, or 1.0%, to $707.6 million at June 30, 2024 from $714.7 million at December 31, 2023. The decrease was due to a decrease of $10.4 million, or 2.1%, in one- to four-residential real estate loans to $475.7 million from $486.1 million at December 31, 2023 and a decrease of $10.8 million, or 21.9%, in construction loans to $38.5 million at June 30, 2024 from $49.3 million at December 31, 2023, offset by a $11.0 million, or 11.0%, increase in commercial real estate loans to $110.8 million at June 30, 2024 from $99.8 million at December 31, 2023. The decrease in one- to four-residential and construction loans reflect less opportunities and decreased demand due to the higher interest rate environment. As of June 30, 2024 and December 31, 2023, the Bank had no loans held for sale.

Previous wording

Delinquent loans increased $834,000 to $13.4 million, or 1.89% of total loans, at March 31, 2024. The increase was mostly due to one commercial real estate loan with a balance of $766,000 with a loan to value ratio of 60%. During the same timeframe, non-performing assets decreased to $12.4 million and were 1.29% of total assets at March 31, 2024. The Company’s allowance for credit losses was 0.40% of total loans and 22.69% of non-performing loans at March 31, 2024 compared to 0.39% of total loans and 21.81% of non-performing loans at December 31, 2023. The Bank does not have any exposure to commercial real estate loans secured by office space.

Current wording

Delinquent loans increased $888,000 to $13.5 million, or 1.90% of total loans, at June 30, 2024. The increase was mostly due to one commercial real estate loan with a balance of $761,000 with a loan to value ratio of 59%. During the same timeframe, non-performing assets increased from $12.8 million at December 31, 2023 to $13.0 million, which represented 1.33% of total assets at June 30, 2024. The Company’s allowance for credit losses was 0.39% of total loans and 21.20% of non-performing loans at June 30, 2024 compared to 0.39% of total loans and 21.81% of non-performing loans at December 31, 2023. The Bank does not have any exposure to commercial real estate loans secured by office space. The majority of the non-performing loans at June 30, 2024 was comprised of one construction loan with a balance of $10.9 million with a loan to value ratio of 45%. Based on the well-secured nature of the loan, there was no associated specific reserve at June 30, 2024. The Company has commenced legal action against the client.

Previous wording

Total Liabilities. Total liabilities increased $22.3 million, or 2.8%, to $824.4 million as of March 31, 2024 from $802.2 million as of December 31, 2023, mainly due to a $40.2 million increase in deposits, offset by a $18.4 million decrease in borrowings.

Current wording

Total Liabilities. Total liabilities increased $36.2 million, or 4.5%, to $838.4 million as of June 30, 2024 from $802.2 million as of December 31, 2023, primarily due to a $23.8 million increase in deposits and a $11.8 million increase in borrowings.

Previous wording

Deposits. Deposits increased $40.2 million, or 6.4%, to $665.5 million at March 31, 2024 from $625.3 million at December 31, 2023. The increase in deposits reflected an increase in interest-bearing deposits of $16.2 million, or 15.9%, to $117.7 million as of March 31, 2024 from $101.5 million at December 31, 2023 due to the $24.8 million, or 5.0%, increase in certificates of deposit and increases of $16.7 million, or 19.2%, in checking and savings, offset by a $506,000 decrease in money market accounts. Non-interest bearing deposits decreased $768,000, or 2.5%, to $29.8 million as of March 31, 2024 from $30.6 million as of December 31, 2023. The decreases reflected customers’ desire for higher-yielding accounts in the higher interest rate environment.

Current wording

***Deposits.***Deposits increased $23.8 million, or 3.8%, to $649.1 million at June 30, 2024 from $625.3 million at December 31, 2023. The increase in deposits reflected an increase in interest-bearing demand deposits of $1.7 million, or 1.6%, to $103.2 million as of June 30, 2024 from $101.5 million at December 31, 2023 due to the increases of $3.7 million, or 4.2%, in checking and savings accounts, offset by a $2.0 million, or 13.8%, decrease in money market accounts. Certificates of deposit increased $19.3 million, or 3.9% to $512.6 million at June 30, 2024 from $493.3 million at December 31, 2023. Non-interest bearing deposits increased $2.8 million, or 9.1%, to $33.3 million as of June 30, 2024 from $30.6 million as of December 31, 2023. The changes reflected customers’ desire for higher-yielding accounts in the higher interest rate environment.

Previous wording

At March 31, 2024, municipal deposits totaled $59.4 million, which represented 8.9% of total deposits, and brokered deposits totaled $90.3 million, which represented 13.6% of deposits. At December 31, 2023, municipal deposits totaled $48.0 million, which represented 7.7% of deposits, and brokered deposits totaled $53.5 million, which represented 8.5% of total deposits. At March 31, 2024, uninsured deposits totaled $67.4 million, comprised of 303 account holders, which represented 10.1% of total deposits.

Current wording

At June 30, 2024, municipal deposits totaled $35.4 million, which represented 5.5% of total deposits, and brokered deposits totaled $91.2 million, which represented 14.1% of deposits. At December 31, 2023, municipal deposits totaled $48.0 million, which represented 7.7% of deposits, and brokered deposits totaled $53.5 million, which represented 8.5% of total deposits. At June 30, 2024, uninsured deposits totaled $69.3 million, comprised of 326 account holders, which represented 10.7% of total deposits.

Previous wording

***Borrowings.***Federal Home Loan Bank of New York borrowings decreased $18.4 million, or 11.0%, to $149.3 million at March 31, 2024 from $167.7 million at December 31, 2023, specifically long-term advances decreased $9.4 million, while short-term advances decreased by $9.0 million. The weighted average rate of borrowings was 3.78% and 3.27% as of March 31, 2024 and December 31, 2023, respectively. Total borrowing capacity at the Federal Home Loan Bank was $316.5 million at March 31, 2024, of which $149.3 million was advanced.

Current wording

***Borrowings.***Federal Home Loan Bank of New York borrowings increased $11.7 million, or 7.0%, to $179.4 million at June 30, 2024 from $167.7 million at December 31, 2023, specifically short-term advances increased by $22.5 million while long-term advances decreased $10.7 million to better position the Company to take advantage of potential rate cuts. The weighted average rate of borrowings was 4.71% and 4.54% as of June 30, 2024 and December 31, 2023, respectively. Total borrowing capacity at the Federal Home Loan Bank was $304.2 million at June 30, 2024, of which $179.4 million was advanced.

Previous wording

***Total Equity.***Stockholders’ equity decreased $726,000 to $136.4 million, primarily due to a net loss of $441,000, the repurchase of 33,083 shares of stock during thethree months ended March 31, 2024 at a cost of $270,000, and a decrease in accumulated other comprehensive loss for securities available for sale of $300,000, partially offset by stock compensation of $234,000 for thethree months ended March 31, 2024. At March 31, 2024, the Company’s ratio of average stockholders’ equity-to-total assets was 14.24%, compared to 15.24% at December 31, 2023.

Current wording

***Total Equity.***Stockholders’ equity decreased $830,000 to $136.3 million, primarily due to a net loss of $873,000 and the repurchase of 140,406 shares of stock during thesix months ended June 30, 2024 at a cost of $1.0 million, offset by an decrease in accumulated other comprehensive loss for securities available for sale of $483,000 and stock compensation of $472,000 for thesix months ended June 30, 2024. At June 30, 2024, the Company’s ratio of average stockholders’ equity-to-total assets was 13.65%, compared to 15.24% at December 31, 2023.

Previous wording

(2) Cash flow hedges are used to manage interest rate risk. During the three months ended March 31, 2024, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $288,000 and $47,000 respectively.

Current wording

(2) Cash flow hedges are used to manage interest rate risk. During the six months ended June 30, 2024, the net effect on interest expense on the Federal Home Loan Bank advances and certificates of deposit was a reduced expense of $749,000 and $139,000 respectively.

Previous wording

General. Net income decreased by $1.4 million, or 144.4%, to a net loss of $441,000 for the three months ended March 31, 2024 from net income of $993,000 for the three months ended March 31, 2023. This decrease was primarily due to a decrease of $1.9 million in net interest income, partially offset by a decrease of $585,000 in income tax expense.

Current wording

General. Net income decreased by $1.3 million, or 150.5%, to a net loss of $432,000 for the three months ended June 30, 2024 from net income of $857,000 for the three months ended June 30, 2023. This decrease was primarily due to a decrease of $1.5 million in net interest income, partially offset by a decrease of $494,000 in income tax expense.

Previous wording

Interest Income. Interest income increased $1.0 million, or 11.6%, from $9.0 million for the three months ended March 31, 2023 to $10.1 million for the three months ended March 31, 2024 due to higher yields on interest-earning assets, offset by a decrease in the average balance of loans.

Current wording

Interest Income. Interest income increased $1.1 million, or 11.3%, from $9.4 million for the three months ended June 30, 2023 to $10.5 million for the three months ended June 30, 2024 due to higher yields on interest-earning assets and an increase in the average balance of securities, partially offset by a decrease in the average balance of loans and cash and cash equivalents.

Previous wording

Interest Expense. Interest expense increased $2.9 million, or 64.9%, from $4.5 million for the three months ended March 31, 2023 to $7.4 million for the three months ended March 31, 2024 due to higher costs and average balances on interest -bearing liabilities.

Current wording

Interest Expense. Interest expense increased $2.6 million, or 51.2%, from $5.1 million for the three months ended June 30, 2023 to $7.7 million for the three months ended June 30, 2024 due to higher costs and average balances on interest -bearing liabilities.

Previous wording

Interest expense on interest-bearing deposits increased $2.3 million, or 60.7%, to $6.0 million for the three months ended March 31, 2024 from $3.7 million for the three months ended March 31, 2023. The increase was due to a 157 basis point increase in the average cost of deposits to 3.82% for the three months ended March 31, 2024 from 2.25% for the three months ended March 31, 2023. The increase in the average cost of deposits was due to the higher interest rate environment and a change in the composition of the deposit portfolio to a greater concentration of higher-costing certificates of deposit. The average balances of certificates of deposit increased $13.1 million to $516.5 million for the three months ended March 31, 2024 from $503.4 million for the three months ended March 31, 2023 while average NOW and money market accounts and savings accounts decreased $43.3 million and $10.3 million for the three months ended March 31, 2024, respectively, compared to the three months ended March 31, 2023.

Current wording

Interest expense on interest-bearing deposits increased $2.0 million, or 48.5%, to $6.2 million for the three months ended June 30, 2024 from $4.2 million for the three months ended June 30, 2023. The increase was due to a 131 basis point increase in the average cost of deposits to 3.99% for the three months ended June 30, 2024 from 2.68% for the three months ended June 30, 2023. The increase in the average cost of deposits was due to the higher interest rate environment and a change in the composition of the deposit portfolio to a greater concentration of higher-costing certificates of deposit. The average balances of certificates of deposit increased $23.9 million to $517.9 million for the three months ended June 30, 2024 from $494.0 million for the three months ended June 30, 2023. The average balance of savings accounts decreased by $4.8 million during the quarter, while the average balance of NOW and money market accounts decreased $20.6 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

Interest expense on Federal Home Loan Bank borrowings increased $663,000, or 85.3%, from $777,000 for the three months ended March 31, 2023 to $1.4 million for the three months ended March 31, 2024. The increase was due to an increase in the average balance of borrowings of $56.7 million to $153.3 million for the three months ended March 31, 2024. The increase was also due to an increase in the average cost of borrowings of 51 basis points to 3.78% for the three months ended March 31, 2024 from 3.27% for the three months ended March 31, 2023 due to the new borrowings being at higher rates.

Current wording

Interest expense on Federal Home Loan Bank advances increased $573,000, or 63.6%, from $903,000 for the three months ended June 30, 2023 to $1.5 million for the three months ended June 30, 2024. The increase was due to an increase in the average balance of $49.8 million to $170.3 million for the three months ended June 30, 2024. The increase was also due to an increase in the average cost of borrowings of 48 basis points to 3.49% for the three months ended June 30, 2024 from 3.01% for the three months ended June 30, 2023 due to the new borrowings being at higher rates.

Previous wording

Net Interest Income. Net interest income decreased $1.9 million, or 41.4%, to $2.7 million for the three months ended March 31, 2024 from $4.5 million for the three months ended March 31, 2023. The decrease reflected a 100 basis point decrease in our net interest rate spread to 0.68% for the three months ended March 31, 2024 from 1.68% for the three months ended March 31, 2023. Our net interest margin decreased 87 basis points to 1.18% for the three months ended March 31, 2024 from 2.05% for the three months ended March 31, 2023.

Current wording

Net Interest Income. Net interest income decreased $1.6 million, or 36.1%, to $2.7 million for the three months ended June 30, 2024 from $4.3 million for the three months ended June 30, 2023. The decrease reflected an 85 basis point decrease in our net interest rate spread to 0.72% for the three months ended June 30, 2024 from 1.57% for the three months ended June 30, 2023. Our net interest margin decreased 75 basis points to 1.21% for the three months ended June 30, 2024 from 1.96% for the three months ended June 30, 2023.

Previous wording

Provision for Credit Losses. We recorded a $35,000 provision for credit losses for the three months ended March 31, 2024 compared to no provision for credit losses for the three-month period ended March 31, 2023. The provision in the first quarter of 2024 was due to an increase in corporate securities.

Current wording

Provision for Credit Losses. We recorded a $35,000 provision for credit losses for the three months ended June 30, 2024 compared to a $125,000 recovery for credit losses for the three-month period ended June 30, 2023. During the three months ended June 30, 2024 the Company recorded a $73,000 provision for the held-to-maturity securities portfolio, which was partially offset by a credit to the provision for loans of $38,000, which was related to the increase in corporate securities and a decrease in the loan portfolio.

Previous wording

Non-Interest Income. Non-interest income increased by $16,000, or 5.6%, to $299,000 for the three months ended March 31, 2024 from $283,000 for the three months ended March 31, 2023. Bank-owned life insurance income increased $26,000, or 14.0%, due to higher balances during 2024, which was partially offset by a lower gain on sale of loans.

Current wording

Non-Interest Income. Non-interest income increased by $20,000, or 7.0%, to $303,000 for the three months ended June 30, 2024 from $283,000 for the three months ended June 30, 2023. Bank-owned life insurance income increased $25,000, or 13.1%, due to higher balances during 2024, which was partially offset by no loan sales in 2024 compared to a $16,000 gain on sale of loans in 2023.

Previous wording

Non-Interest Expense. For the three months ended March 31, 2024, non-interest expense increased $126,000, or 3.6%, over the comparable 2023 period. Professional fees increased $48,000, or 31.8%, due to higher consulting expense related to strategic business planning and the increase in FDIC insurance premiums by $41,000, or 67.7%, due to a higher assessment rate in 2024. Data processing expense increased $27,000, or 9.6%, due to higher processing costs. The decrease in advertising expense of $37,000, or 25.3%, was due to reduced promotions for branch locations and less promotions on deposit and loan products. Other expense increased $67,000, or 37.6%, due to higher loan expense.

Current wording

Non-Interest Expense. For the three months ended June 30, 2024, non-interest expense increased $94,000, or 2.6%, over the comparable 2023 period. Professional fees increased $146,000, or 128.1% due to higher consulting expense related to strategic business planning. Data processing expense increased $83,000, or 35.5%, due to higher processing costs. Advertising expense also increased by $19,000, or 19.8%, which was related to promotions for our new branch location. This was offset by a $158,000, or 6.9% decrease in salaries and employee benefits cost, which decreased due to lower headcount and increased expenses in 2023 related to the retirement of the Company's previous Chief Executive Officer.

Previous wording

Income Tax Expense. Income tax expense decreased $585,000, or 196.2%, to a benefit of $287,000 for the three months ended March 31, 2024 from a $298,000 expense for the three months ended March 31, 2023. The decrease was due to $2.0 million of lower taxable income.

Current wording

Income Tax Expense. Income tax expense decreased $494,000, or 232.1%, to a benefit of $281,000 for the three months ended June 30, 2024 from a $213,000 expense for the three months ended June 30, 2023. The decrease was due to $1.8 million of lower taxable income.

Previous wording

We manage our interest rate risk to minimize the exposure of our earnings and capital to changes in market interest rates. We have implemented the following strategies to manage our interest rate risk: originating and purchasing loans with adjustable interest rates; promoting core deposit products; monitoring the length of our borrowings with the Federal Home Loan Bank and brokered deposits depending on the interest rate environment; maintaining a portion of our investments as available-for-sale; diversifying our loan portfolio; and strengthening our capital position. By following these strategies, we believe that we are better positioned to react to changes in market interest rates.

Current wording

We manage our interest rate risk to minimize the exposure of our earnings and capital to changes in market interest rates. We have implemented the following strategies to manage our interest rate risk: originating and purchasing loans with adjustable interest rates; promoting core deposit products; monitoring the length of our borrowings with the Federal Home Loan Bank and brokered deposits depending on the interest rate environment; maintaining a majority of our investments as available-for-sale; diversifying our loan portfolio; and strengthening our capital position. By following these strategies, we believe that we are better positioned to react to changes in market interest rates.

Previous wording

***Liquidity.***Liquidity describes our ability to meet financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from calls, maturities and sales of securities and sales of loans. We also borrow from the Federal Home Loan Bank of New York. At March 31, 2024, we had the ability to borrow up to $316.5 million, of which $149.3 million was outstanding and $1.5 million was utilized as collateral for letters of credit issued to secure municipal deposits. At March 31, 2024, we had $54.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.

Current wording

***Liquidity.***Liquidity describes our ability to meet financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from calls, maturities and sales of securities and sales of loans. We also borrow from the Federal Home Loan Bank of New York. At June 30, 2024, we had the ability to borrow up to $304.2 million, of which $179.4 million was outstanding and $1.4 million was utilized as collateral for letters of credit issued to secure municipal deposits. At June 30, 2024, we had $54.0 million in unsecured lines of credit with four correspondent banks with no outstanding balance.

Previous wording

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any period. At March 31, 2024, cash and cash equivalents totaled $14.4 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $102.0 million at March 31, 2024.

Current wording

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any period. At June 30, 2024, cash and cash equivalents totaled $17.6 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $106.9 million at June 30, 2024.

Previous wording

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate we will have sufficient funds to meet our current funding commitments. Certificates of deposit due within one year of March 31, 2024 totaled $439.9 million, or 66.1% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and Federal Home Loan Bank of New York advances. Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay. We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Current wording

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate we will have sufficient funds to meet our current funding commitments. Certificates of deposit due within one year of June 30, 2024 totaled $464.3 million, or 71.5% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and Federal Home Loan Bank of New York advances. Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay. We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Previous wording

Capital Resources. We are subject to various regulatory capital requirements administered by the New Jersey Department of Banking and Insurance and the Federal Deposit Insurance Corporation. At March 31, 2024, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines. As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, as modified in April 2020, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank's Tier 1 “equity capital to average total consolidated assets) for financial institutions with less than $10 billion. A “qualifying community bank” with capital exceeding 9% will be considered compliant with all applicable regulatory capital and leverage requirements, including the capital requirements to be considered "well capitalized” under Prompt Corrective Action statutes. As of March 31, 2024, the Bank is reporting as a qualifying community bank with a ratio of 13.23%.

Current wording

Capital Resources. We are subject to various regulatory capital requirements administered by the New Jersey Department of Banking and Insurance and the Federal Deposit Insurance Corporation. At June 30, 2024, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines. As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, as modified in April 2020, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank's Tier 1 “equity capital to average total consolidated assets) for financial institutions with less than $10 billion. A “qualifying community bank” with capital exceeding 9% will be considered compliant with all applicable regulatory capital and leverage requirements, including the capital requirements to be considered "well capitalized” under Prompt Corrective Action statutes. As of June 30, 2024, the Bank is reporting as a qualifying community bank with a ratio of 13.07%.

Previous wording

Substantially all of the Company's assets and liabilities relate to banking activities and are monetary. The consolidated financial statements and related financial data are presented following GAAP. GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, except for securities available for sale, impaired loans, and other real estate loans that are measured at fair value. Changes in the value of money due to rising inflation can cause purchasing power loss. Management's opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do affect each other but do not always move in correlation with each other. The Company's ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company's performance.

Current wording

Substantially all of the Company's assets and liabilities relate to banking activities and are monetary. The consolidated financial statements and related financial data are presented in accordance with GAAP. GAAP currently requires the Company to measure the financial position and results of operations in terms of historical dollars, except for securities available for sale, impaired loans, and other real estate loans that are measured at fair value. Changes in the value of money due to inflation can cause purchasing power loss. Management's opinion is that movements in interest rates affect the financial condition and results of operations to a greater degree than changes in the rate of inflation. It should be noted that interest rates and inflation do affect each other but do not always move in correlation with each other. The Company's ability to match the interest sensitivity of its financial assets to the interest sensitivity of its liabilities in its asset/liability management may tend to minimize the effect of changes in interest rates on the Company's performance.