BLFY - Earnings call 4 2021 | Blue Foundry Bancorp

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Operator

Good morning. My name is Daisy, and I'll be your conference operator today. I would like to welcome everyone to the Blue Foundry Bancorp Q4 2021 earnings call. Today's call will include forward-looking statements, including statements about Blue Foundry's future financial and operating results, outlook, business strategies, and plans, as well as other opportunities and potential risks that management foresees. Such forward-looking statements reflect management's current estimates or beliefs and are subject to known and unknown risks and uncertainties that may cause actual results or the timing of events to differ materially from those expressed or implied in such forward-looking statements. Listeners are referred to the disclosures set forth under the caption Forward-looking Statements in the earnings press release, as well as the risk factors and other disclosures contained in the company's recent filings with the Securities and Exchange Commission for more information about such risks and uncertainties. Any forward-looking statements made during this call represent management views and estimates only as of today.

management's elect future, forward-looking any rely the do today. even may point at obligation on company change, any so, the estimates date representing in company if as such the statements to you management statements update some to and as While should or views not of views specifically to disclaims subsequent

earnings exclude release will recorded. certain the now reconciliations event the company refer refer and to to over to measures, this Please call, Nesci, the turn non-GAAP today's from items [Operator these CEO. the which for reported of ahead. you. I'll note, measures. president results. During please non-GAAP Jim, call Jim Instructions] Please Thank being is go

James Nesci

everyone. Parsippany released in $XXX PPP, conversion technology. initial million. and we space over state-of-the-art July, participate of the and we nearly third call. results we new to Thank welcomed quarter provided May, share In and April, announced financial our employees XXXX, Agnoletto. He March, million morning a in office good of to the by you Foundry's of joining a feet our And January June, year which proceeds interim Alex public loans. for headquarters by first and round mutual participated the and our originating operator, to XX,XXX call. in was chief Thanks, intention XXXX released square earnings In our we And the prospectus. In completed us fourth convert in and our offering, of will our company's In joined Blue I'm XX-Q. we of new in company. $XX today marked controller officer, our for from utilize financial and change over we administrative progress. back Great. holding Q&A segment opened

was to of borrowings. as The borrowings. exited, sale $X.X XXXX. $XX.X we in QX, our was and million we debt withdraw pension base In QX, debt building our pension the And total, $XX.X million of additional prepaid. exit, In over from million plan FHLB annual of pension announced FHLB million intention worth and from expense we the head an the into extinguishment paydown, of and extinguished $XXX.X removed

retail are branches On changing front, Chatham, opened and branches Ridgewood we and been retail and the enhance of refreshed branches to meet brand closed new lower secure at and franchise Glen with Ridgewood have our our interactive X to a interaction Rock. XX% can branches than to in in a Half Jersey needs. in hours position us banker provide our now exposure. for More as new We our teller are more customers live our Lynhurst a from These allows redesigned centralized visual City, location. customers of customers' or new win ATMs to have and changes now cost. machines. This our operational us

marketing Our far seen generated average XX and times click-through million digital were rates. over campaigns above

is paired new We $XX advertising openings. new deposit at cost with through a advertising able to of account roughly acquire have been branch per customers when digital

Moving to lending efforts.

in of onboarded team XXXX. new over $XXX.X loans million Our

year. Looking Unfortunately, loan of prepayments back I believe over the this million continue record to throughout represents weigh last for the $XXX.X growth a decade, the bank. on

Excluding PPP, loan growth net came million. in at of $XX a

residential, net Our assets the commercial, loan and growth and produce focus remains areas. originate to in SBA for C&I, high-quality bank

over deposits year, income changes increased year experienced team we've and grew net $XXX million year this core over management by $X.X the our million. or X.X% over all by Despite interest

over now Bank, for net to like interest Blue into a Alex? margin. XXXX. call the see contribute year Agnoletto carry eager results. to We meaningful expansion to also continue financial costs, we to momentum was discuss landmark the the are reduction in company's Alex to and our Foundry I'd total will a funding which to XXXX turn of

Alex Agnoletto

be good provide earnings that disclosures, information and We've Jim, will and including the we of think tables assess to morning, read everyone you, at back the our tried to we non-GAAP release. earnings the useful our encourage Thank to everyone. going forward,

income over as Quarter was which XX $XX.X year reduction $X.X year. increased million This primarily or XX-basis-point a cost increase quarter, XX. the of or basis December net reduction driven interest in our This million. to XX% by XX% continued represents was points over funds, of

points XX three prior basis basis XX, the the months net December margin X.X% margin to year increased Net year over to X.XX% ended by points compared to X.X%. from increased interest Our by XXXX, XX as quarter. for interest

in The was of addition $XXX,XXX $X $XX quarter. the of noted in which a estimated low million for loss, $XX.X the to the a modest lower $XX,XXX million. cost incurred side which quarter, was is incurred prior approved bank the to The driven pension amount exit in closing headquarters our fourth exit former completed This by our the range the which million the completed settlement total The S-X, sale in quarter, of in than was expense, also million. costs. a of $XX

As we an $XXX,XXX disclosed of penalty. incurred roughly in million bank announced FHLB borrowings. our paydown X-K prepayment of $XX.X a issued on additional The October XX,

million million the one-time company's per $XX.X earnings combination tax by compared net of reported tax evaluate deferred valuation also $X.X our our to or The allowance adjusted our the removal. any this of better loss, The PPNR, a to company the to that or we'll the as pre-provision the its benefits reporting sustainable results. timing items core quarter. net expenses these of in cumulative of valuation net to believe that GAAP of items continue removal profitability, created and and revenue, associated the with These driven demonstrates contributed allowance share. We on quarter GAAP returns our $X.XX for the three-year assets, million $XX.X company loss

were impacted a personnel, costly which utilizing as a as by results and million These which the loss investments the for market, in scale. prove $X.X will in PPNR temporary the of compared accretive as challenged prior adjusted was well the labor Our in more loss quarter. continued quarter, we technology $XXX,XXX of resulted to

the $XXX,XXX XXXX. timing to IPO, forward in quarter not the the expense of to the of Additionally, due which reflected to the ESOP, look first half will We roughly of returning reflected periods. be additional profitability related future in to

XX% Interest income programs. offset excluding Interest interest and by X.X%, time origination loans, due increased during portfolios, the securities which increased decrease by or CRE by loans, over deposits, million from residential to borrowing $XXX,XXX $XX or in coupled the with PPP, X.X% by million. strong FHLB PPP, loan in our by purchase or decrease primarily quarter, This performance of by including as Total maturities well continuation across increased and X.X%, total a primarily was remaining $XX.X last the balances. Quarter of primarily from expense anticipated of was reduced books on million decreased increase $X.X our driven significantly quarter, quarter down as partially left PPP realized. $XX.X $XXX,XXX of $XXX,XXX from or a cash. million driven loans, to was interest by weighed continued which have be loans loan fees we PPP Currently, $XXX,XXX forgiveness. by

the on loans forbearance December XX, pandemic. to no As remain due of

$XXX total an million yield of X.X%. average was Our with over pipeline December XX as of

purchase that mixture a loan of portfolio grew in July. the enacted residential was continuation through organic and program Our of the originations

The of that interest-earning half of assist expected to in mortgage-backed to levels are Mae from allows obtain XXXX into to Fannie allows year in through have comparable principal prepayment to quarter, XX. of Mae a Fannie loans. Currently, loans continue already last end as XX market. borrowers the than bank individual select first $XX.X offset to million the cash, basis program the our million deployment is purchase reduced XX% bank to standards During points with standards. and loan us of purchase December in and This program underwritten to $XXX.X purchased the approximately high-quality in originated higher the excess of at investments, and yields securities. we to also note pool program higher-than-average XX% the liquidity its to to $XXX.X cash million assets. The has us We assets of residential loans XX%

We during mixture and fourth which some over our coming securities million excess the quarters. liquidity of the result loans $X.X reinvest yield. into by quarter, shorter-duration liquidity to to grew excess portfolio incremental the plan was a securities of capture of to Our utilizing continue

roughly put more to reinvesting been our a the securities have in plan rates view asset stable. liquidity work. We at of over past X.X% to quarter. yield We excess we And rise, as quality as

our and improve. from allowance to continues to nonperforming X% loans quarter, loans our the X loans from to And During to points decreased X.XX% stabilize points total X.XX%. X the basis as X.XX% basis to total economy decreased

X, As we the CECL XXXX, under expect of currently operating adopt incurred as and a January model. to reminder, loss are

for it turn to remarks. like I'd back Jim concluding to Now

James Nesci

also and XXXX. their the as of progress Thank everyone for Thanks, been how now. operator to Q&A like operating XXXX, Alex. we in look made progress our begin can proud sharing for session in would well-positioned we the growth We are I've their for into immensely results Throughout time Foundry. forward today to we've Blue and XXXX. The thank interest We you.

Operator

We much, first our from Laurie take you very Thank Instructions] Jim. will Hunsicker from Compass [Operator question Point.

Laurie Hunsicker

ones, know the pension more XXXX. on Hoping that fees two correct? clarify, advances and the withdrawal. no the residual in I that Obviously, There start prepaid that you pension on completed. could just we the big highlighted And expenses. to are Is was

Alex Agnoletto

correct. That's

Laurie Hunsicker

look forward? does was then And be in what -- Or better that is maybe completed, Okay. much that the running? question the headquarters what save we how the as occupancy expense occupancy should sale

Alex Agnoletto

question, good Thank you. a That's Laurie.

it mixture repairs, $XXX,XXX taxes, per around it's think I quarter estate a real in of general stay maintenance and upkeep. other should that

Laurie Hunsicker

refreshed other Were think else can it come then in how said, in that that's work, from standpoint, -- your number you then us a And growth any expense at just expense core what that XXXX items one-time been as going great. help XXXX? little your looks Okay, $X.X lower. running into the line with you about a And elevated lower? like or about maybe million we new should should XX% and was branch of forward and there sort bit think higher-level is of is

Alex Agnoletto

Sure.

some that Delaware, the related base as that a expenses do QX expenses. were investor been So other result expenses be related think QX have the $XX.X to will expense state relations newer IPO I to in we to elevated taxes, some around in closer incurring well as million. new of as

QX, from what come from going which bit expect the majority a was think I to elevated for XXXX. we it's bit to of a see down

be best to As to Jim branch expansions, far think as the that. I would speak

James Nesci

again, morning Good Laurie.

yes, XX% the front, on recently expansion renovated. So have branch been

branches. couple We to like of as Blue look feel right The of the a and have branches get Foundry goal to many now. is obviously renovated existing being branches

branch we doing own delays on affecting investors. branches a going you we'll more cost We've We're and give are to transitions and impact number with difficult looking then on us. on number bit a lease, more first you and sharing is on everybody, solid little that other at been construction Obviously, -- so it's look how another what forward, as factor expense we going the will that's clarity, branches we like. get be to

Laurie Hunsicker

you guidance Can the from about And growth for great. 'XX full help $XX.X and expenses Okay, level into helpful. like us is what XXXX year think XQ for and will million core that even look XXXX? maybe

Alex Agnoletto

XXXX, we're quarter I around in QX, think XX.X%. projecting each

will -- QX we're would with may the be it too shouldn't some how QX, drastically into that million too be for level the the half. quickly but less not programs, ways, than pretty grow to book around to paying think various second able I with And that that depend then slightly growth from -- off. deviate QX far confident I -- compensation and but less in level. loan on $XX

Laurie Hunsicker

should tax thinking And helpful. be about how we XXXX? rate for That's year Okay. full then

Alex Agnoletto

around in or that future this the the the remains that rate will Obviously, what been right assets be XX%, than valuation tax XX%. expense bit was recorded period tax more in has effective recently makes past. Our a that on allowance deferred lumpy the

perspective. to the to As we will something around from to we toward be profitability, land seems assess. where answer that's your I we move to XX% that the XX% to question, right will But I continue think AETR's continue think

Laurie Hunsicker

those, just number? exact then a Or what, have intangibles, And quickly, great. better you do total Okay, $XXX,XXX, are $XXX,XXX?

Alex Agnoletto

Sure.

the So it at our a in initiatives software footnote of the related right of It's exact bottom the area. for to in number lending $XXX,XXX. We mostly on new to is Page the try some X put the chart. at capitalized

Laurie Hunsicker

Perfect.

of things think Okay. about net Obviously, got just quarter us help forward prepay, for when interest And a you if you've little did in then lot Maybe the could that FHLB the income. occur? bit a just going. starters,

Alex Agnoletto

That was XX. on October

Laurie Hunsicker

Okay.

that's So -- Okay.

still little we there. So a have bit

last quarter, looks got forgiveness, on I that. was probably higher Okay. know PPP $X million. of guess, you've better the don't maybe standpoint And if like then from than it number a I

Alex Agnoletto

about was expecting QX. deferred realized unforgiven the that bit we fees form Right of some $X million. of repaid substantially fees remaining but virtually end the little or PPP in loans through a in all be could now, QX. realized majority to be $XXX,XXX into PPP to QX, QX either in drag expect we're right of It remaining the of Correct.

Laurie Hunsicker

Okay.

core So about you point. XXXX? or thinking about maybe of mentioned Can by a terms that purchase in margin my us that, to margin so pieces other of the should calculation, maybe net taking that's starting some we think loan our of you other for you're taking? be Obviously, that had $XXX,XXX help program, interest but initiatives sort

James Nesci

Yes.

I and you're SBA. the C&I bit that should looking perspective, our hopeful spreads business it and C&I, success. some increase higher, NIMs. had we're We've are through a we're the little the increase And expansion utilization from excited of also again, which So help give in the for. looking the And we're should expand to us and to rates think us

Laurie Hunsicker

do one that Okay. XXX up rates basis refreshed asset points, got I is have looking the In terms And that of would we've you liability-sensitive be? pre-conversion. at mean, a stock? what then

that If you've on would helpful. got that, a refresh be

Alex Agnoletto

Yes.

So income. interest a we're looking net increase X.X% up XXX, in at

Laurie Hunsicker

Perfect.

Thanks. Okay. leave it I'll there.

Operator

much, very Laurie. you Thank

from comes next Julienne Analytics. Sycamore Our question from Cassarino

Unknown Analyst

me, good. You right? hear can Okay,

hear $XX.X valuation total valuation Or Just want me. that million, was anything there The sure to previous? is you allowance? make DTA the can allowance,

Alex Agnoletto

something to years valuation was DTA several the on. and the ago was is allowance no virtually was relevant of the not very related anymore. There valuation But recorded. immaterial from allowance It Correct. entirety what previous reported

Unknown Analyst

auditors, curiosity, of do they instead this that to right you threshold on I find previously? you're now you would OK. is when of now why the record out it interesting whomever, profitability. regulators, Maybe whomever, of making this want just

Alex Agnoletto

and something allowance is we for potential more looking the historical did with the about in And to the So the to opportunities losses led it that's historical weight bank's data the us us accounting the remain ultimately to the recording in guidance future. at fourth income, than while forecast points to it probably the that weight valuation our and And future when quarter. in hard growth what we of overcome. optimistic

as and I the auditors our ultimately greater tax the to pension fourth us allowed think conclusion the the see to. became fully with settled, we, and, quarter came full year that's clarity that counsel,

James Nesci

the it's piece other it don't three-year of a lose I sight Julienne, number. just That's to that cumulative want of that.

XXXX. So it goes back from

Unknown Analyst

about about people to allowance It's are thinking And to valuation I been a while auditors are is point, cumulative forward, do regulators going have so, is three is going years? for it I'm Right. -- now? or then just two what -- since -- reversals now. at DTA want to down profits Or just profits you we've this curious so it that know show how years -- seen how it or thinking the forward? the it

James Nesci

can it's walk one and auditors, more to through not regulators, Alex you be clear. But just time. definitely enough, Fair

Alex Agnoletto

Sure.

toward so of the grow today, will to But to from allowance doesn't point, the a the is profitability future not stands is recognized, that remain fall speak, placed as to tax profits come. and there away. begin DTA portions the to for value those we the it go necessarily and That benefit begin reversal the as a profitability So basis. valuation GAAP on off, company. as your To was side, when incremental

Unknown Analyst

Okay.

one-time one-time you reversal write-up. let in as to a waiting opposed they'll it piecemeal for So bring or

earliest when that, could start? the -- that So what's

Alex Agnoletto

but portions rules that you're of a allowed expense. the lot back of DTA, that first tax We're around against current of recognize this hopeful are in half to bringing there when year, for profitability

be to when. say we three see it's But offset picture, So to a bigger the hard I exactly does to when benefit expense will tax think over that to years, one come. next this

Unknown Analyst

Okay.

whole years, is thing, could within year, accurate, possibly, a X -- that start the right? correct? it So happen X, then anyway, and That's unless I within

James Nesci

profitability. happens with It

can't to but we you, it's you hard. bit tell the to offset thing But burden. little available timing, So it's that give can tax up, how I a whole to a us eat soon

Unknown Analyst

I right? from regulatory meaningful impact up on OK. completely that allowance put Right, guess, on the valuation had a any this any -- The buyback right. to then separate won't side, buybacks, that fact on DTA is And you approval program. have

James Nesci

it's us you you tell make Well, I'll anyway, you remind correct. day believe I in from but that ask. the year, before but going has I work that would you it public, to have do impact wait suspect year to to doesn't. on we I we a an can't definitively, are have sure some could don't it a

Alex Agnoletto

remain well-capitalized the limits. ratios above capital well Our

So...

Unknown Analyst

Right. Definitely.

since Just -- you seen a Appreciate lot again, so great. Thank we've been much. it's one. it. OK,

Operator

closing Instructions] [Operator no I We so for further any questions, hand back have remarks.

James Nesci

it. day. you into call you, today, you forward we and And dialed thank operator, to quarter. Well, great a look to thank I next again joining Have of all speaking to appreciate who have you the us, for earnings

Operator

you, call. everyone, today's for Thank joining

have lovely You may lines, now disconnect a your and day.

Blue Foundry Bancorp (BLFY) 26 Jan 222021 Q4 Earnings call transcript