The details of the loan portfolio are below:

Retail Banking Franchise

As of March 31, 2024, deposits totaled $1.29 billion, an increase of $46.3 million, or 3.72%, from December 31, 2023, mostly due to the increase of $45.7 million in time deposits. The Company’s strategy is to focus on attracting the full banking relationship of small- to medium-sized businesses through an extensive suite of deposit products. While there is strong competition for deposits in the northern New Jersey market, we were able to increase retail deposits during the quarter. Brokered deposits were flat for the quarter.

The details of deposits are below:

Financial Performance Overview:

First quarter of 2024 compared to the fourth quarter of 2023

Net interest income compared to the fourth quarter of 2023:

• Net interest income was $9.4 million in the three months ended March 31, 2024 compared to $9.2 million in the fourth quarter of 2023 as an increase in interest received on interest-earning assets outpaced the increase in interest paid on interest-bearing liabilities.

• Net interest margin increased by 8 basis points to 1.92%.

• Yield on average interest-earning assets increased 19 basis points to 4.25%, while the cost of average interest-bearing liabilities increased 13 basis points to 2.86%.

• Average loans decreased by $9.3 million and average interest-bearing liabilities decreased by $7.6 million.

Non-interest expense compared to the fourth quarter of 2023:

• Non-interest expense increased $699 thousand primarily driven by an increase of $662 thousand in compensation and benefits expenses due to merit increases, as well as variable compensation plans being reset, and an increase in professional fees of $99 thousand, partially offset by a decrease in data processing expense of $123 thousand.
  

Income tax expense compared to the fourth quarter of 2023:

• The Company did not record a tax benefit for the loss incurred during the first quarter of 2024 and the fourth quarter of 2023 due to the full valuation allowance required on its deferred tax assets.

• The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At March 31, 2024, the valuation allowance on deferred tax assets was $23.5 million.

First quarter of 2024 compared to the first quarter of 2023

Net interest income compared to the first quarter of 2023:

• Net interest income was $9.4 million for the three months ended March 31, 2024 compared to $11.9 million for the same period in 2023. The decrease is largely due to increases in rates paid on interest-bearing liabilities.

• Net interest margin decreased by 50 basis points to 1.92%.

• Yield on average interest-earning assets increased 43 basis points to 4.25%, while the cost of average interest-bearing liabilities increased 109 basis points to 2.86%.

• Average loans increased by $2.4 million and average interest-bearing liabilities increased by $28.1 million.

Non-interest expense compared to the first quarter of 2023:

• Non-interest expense was $13.2 million, a decrease of $415 thousand driven by a decrease of $298 thousand in compensation and benefits expenses, a decrease of $250 thousand in professional services and a decrease of $214 thousand in data processing partially offset by an increase of $210 thousand and $94 thousand in occupancy and equipment and FDIC premiums, respectively.
  

Income tax expense compared to the first quarter of 2023:

• The Company did not record a tax benefit for the loss incurred during the first quarters of 2024 and 2023 due to the full valuation allowance required on its deferred tax assets.

• The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At March 31, 2024, the valuation allowance on deferred tax assets was $23.5 million.

Balance Sheet Summary:

March 31, 2024 compared to December 31, 2023

Cash and cash equivalents:

• Cash and cash equivalents increased $7.7 million to $53.8 million.
  

Securities available-for-sale:

• Securities available-for-sale decreased $18.6 million to $265.2 million due to maturities and paydowns.

• Unrealized losses increased $1.1 million to $31.8 million.

Other investments:

• Other investments decreased $2.4 million due to a decrease in FHLB stock as a result of a reduction in FHLB borrowings.
  

Total loans:

• Total loans held for investment decreased $6.6 million to $1.55 billion.

• Commercial real estate loans increased $11.7 million, construction loans increased $2.6 million and commercial and industrial loans increased $1.6 million offset by a reduction of $11.6 million in multifamily loans and $10.5 million in residential loans in line with our strategy to further diversify our loan portfolio.

Deposits:

• Deposits totaled $1.29 billion, an increase of $46.3 million from December 31, 2023. This was largely the result of a $45.7 million increase in certificate of deposits.

• Core deposits (defined as non-interest bearing checking, NOW and demand accounts and savings accounts) represented 50.3% of total deposits, compared to 52.1% at December 31, 2023 and 66.0% at March 31, 2023.

• Brokered deposits totaled $125.0 million at March 31, 2024 and December 31, 2023.

• Uninsured and uncollateralized deposits to third party customers were $133.4 million, or 10% of total deposits, at the end of the first quarter.

Borrowings:

• FHLB borrowings decreased $55.0 million to $342.5 million as deposit growth outpaced asset growth.

• As of March 31, 2024, the Company had $379.7 million of additional borrowing capacity at the FHLB and $33.2 million of other unsecured lines of credit.

Capital:

• Shareholders’ equity decreased by $5.5 million to $350.2 million. The decrease was primarily driven by the repurchase of shares, including net shares, at a cost of $5.3 million.

• Tangible equity to tangible assets was 17.25% and tangible common equity per share outstanding was $14.60. See the “Supplemental Information - Non-GAAP Financial Measures” tables below for additional information regarding our non-GAAP measures.

• The Bank’s capital ratios remain above the FDIC’s “well capitalized” standards.
  

Asset quality:

• As of March 31, 2024, the allowance for credit losses (“ACL”) on loans as a percentage of gross loans was 0.88%.

• The Company recorded a net release of provision for credit losses of $535 thousand for the quarter ended March 31, 2024, driven by decreases in all categories. There was a release of $396 thousand in the ACL for loans, $121 thousand in the ACL for off-balance-sheet commitments and $18 thousand in the ACL for held-to-maturity securities. The release was driven by improvements in the economic forecast for the key drivers of our model.

• Non-performing loans totaled $6.7 million, or 0.43% of total loans compared to $5.9 million, or 0.38% of total loans at December 31, 2023, and $7.5 million, or 0.47% of total loans at March 31, 2023.

• Net charge-offs were $9 thousand for the quarter ended March 31, 2024.

• Ratio of non-performing loans to allowance for credit losses on loans was 205.48% at March 31, 2024 compared to 239.98% at December 31, 2023 and 189.18% at March 31, 2023.
  

About Blue Foundry

Blue Foundry Bancorp is the holding company for Blue Foundry Bank, a place where things are made, purpose is formed, and ideas are crafted. Headquartered in Rutherford NJ, with a presence in Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Somerset and Union counties, Blue Foundry Bank is a full-service, innovative bank serving the doers, movers, and shakers in our communities. We offer individuals and businesses alike the tailored products and services they need to build their futures. With a rich history dating back more than 145 years, Blue Foundry Bank has a longstanding commitment to its customers and communities. To learn more about Blue Foundry Bank visit BlueFoundryBank.com or call (888) 931-BLUE. Member FDIC.

Conference Call Information

A conference call covering Blue Foundry’s first quarter 2024 earnings announcement will be held today, Wednesday, April 24, 2024 at 11:00 a.m. (EDT). To listen to the live call, please dial 1-833-470-1428 (toll free) or +1-404-975-4839 (international) and use access code 580671. The webcast (audio only) will be available on ir.bluefoundrybank.com. The conference call will be recorded and will be available on the Company’s website for one month.

Contact:
James D. Nesci
President and Chief Executive Officer
BlueFoundryBank.com
[email protected]
201-972-8900

Forward Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.

Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase in the level of defaults, losses and prepayments on loans we have made and make; general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; the effects of the recent turmoil in the banking industry; adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums; changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; a failure or breach of our operational or security systems or infrastructure, including cyber-attacks; the inability of third party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related there to; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; the current or anticipated impact of military conflict, terrorism or other geopolitical events; the ability of the U.S. Government to manage federal debt limits; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

(1) The assumed vesting of outstanding restricted stock units had an antidilutive effect on diluted earnings per share due to the Company’s net loss for the 2024 and 2023 periods.

(1) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income divided by average interest-earning assets.
(3) Efficiency ratio represents adjusted non-interest expense divided by the sum of net interest income plus non-interest income.
(4) See the “Supplemental Information - Non-GAAP Financial Measures” tables below for additional information regarding our non-GAAP measures.
(5) March 31, 2024 per share metrics computed using 23,958,888 total shares outstanding.

(1) Average loan balances are net of deferred loan fees and costs, and premiums and discounts, and include non-accrual loans.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.

This press release contains certain supplemental financial information, described in the table below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Blue Foundry's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Blue Foundry's financial results. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Blue Foundry strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Net income, as presented in the Consolidated Statements of Operations, includes the provision for credit losses and income tax expense, while pre-provision net revenue does not.