Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to Blue Foundry Bancorp's Fourth Quarter 2022 Earnings Call. My name is Graham, and I will be your conference operator today.

Comments made during today's call may include forward-looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Blue Foundry encourage all participant to refer to the full disclaimer contained in this morning's earnings release, which has been posted to the Investor Relations page on bluefoundrybank.com.

During the call, management will refer to non-GAAP measure, which exclude certain items from reported results. earnings reconciliations today's measures. these to refer release of for non-GAAP Please

a being is this As event recorded. reminder,

question-and-answer there line Your will be remarks, call. be duration a will the of muted the the After session. for speakers'

I will to CEO, Nesci. Jim call President and turn now the over

Jim Nesci

Good and Kelly Pecoraro. Kelly Thank financial call. opening our remarks, earnings share welcome After fourth the results. Officer, you, operator. once Chief again, Financial to quarter will company's And joined morning, everyone, by our my

fourth reported per we morning, net a income net $X.XX this Earlier $XXX,XXX. or $XXX,XXX quarter diluted pre-provision of and share revenue of

Our growth performance driven was largely by in commercial continued loans.

originated team lending and multifamily. loans, $XX Our primarily in non-residential million of

While net this in not remained as offs robust previous loan slowed. origination quarters, activity strong was as growth as pay

generated $X.XX reflect results priorities. net million net $X.X pre-provision and we strategic per share execution of of $X.X These or revenue of our income XXXX, million. diluted the financial In

loans, $XXX Our net year. of lending loan produced the which team drove during XX% million growth

strong deposits growth deposit XX%. grew XXXX. or million remained Core $XX by in Core

retaining attracting by an small- to of medium-sized Our business to focus relationship banking led the in Business full balances businesses XX%. core deposits. increased increase on and

$XX As totaled $XX represents totaled loans December billion, from quarter-over-quarter. $X.XX sequentially. This million of prior the $X.XX quarter. loan up X% XX, of increasing growth million Deposits billion,

within retain rate suite the customer-friendly to committed pressure we deposits, put business core our ability competitive and environment our are deposits While attracting in our has primary of on market products. to consumer low-cost

value. stock to repurchase book continue at a tangible discount We

XXX,XXX cost quarter, weighted $XX.XX. During average repurchased we a at fourth the shares of

stock approximately which XX% total a repurchased repurchase of have We shares, X,XXX,XXX is of approved program. the now

the at This at share per book. quarter during $XX.XX in tangible were a executed Tangible repurchases the share book year-end. increased aforementioned $X.XX discount value was as

the your to turn will delighted we be Kelly? over and that, questions. to call to answer Kelly, then like I'd With

Kelly Pecoraro

Thank you, morning, good and Jim, everyone.

quarter. the This $X.X to related reduction compared competitive by funding income Our of the was pressures linked highlighted during financial results million $XXX,XXX from largely to net were environment. rate

income, increased in expansion income. million in While we also net interest a million, $X.X resulting in interest our expense realized an $XXX,XXX interest reduction $X.X

Yield points assets to on basis basis by interest-bearing points yields all increased by X.XX%. XX on loans X.XX%, to increased X and

deposit prior of XX points of cost to to cost interest-bearing coupled in a short-term increase the pricing, This competitive drove quarter. basis X.XX%, an Remaining points. the increased increase point with basis XX deposits the XX with compared basis borrowings in funds

We nature continue margin liability on expect sheet. the to to due our pressure our balance sensitive of

loan we of the mix and portfolio. positive quarter, $XXX,XXX for released change continued allowance commitments loan for our from from and $XXX,XXX losses allowance credit the the During in to the metrics the due

current asset the continues to Our remain quality environment. in strong

by the points, XX driven loans. loans basis non-performing During points to primarily decreased reduction quarter, non-performing basis in to X loans total a

total to reduction basis increased allowance XXX% XX to X from a allowance non-accrual our loans to decreased the non-accrual loans points to quarter due While to prior our basis loans. in points, XXX%

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

declined commitments, for be Management management. continues provision our $XXX,XXX. excluding to on Expenses, expense focused

temporary technology for our a negotiated services. successfully continued to our reduced personnel spend on and on we quarter, This focus reliance credit and advertising consultants,

to save we the expect move explore we As continue into will to from we XXXX, opportunities inflation. pressure to offset

X.X% or in segments. Gross non-residential and million, of balance sheet. to the on loans by $XX sequentially, originations driven the primarily by grew Moving $XX million multifamily

were our standards. also the of Fannie quarter, the market, loans residential Mae which to bank originated principal During high-quality $XX million purchased in

decline fund the in of calls to X.X being was With maturities, and securities the continues portfolio is portfolio our flow securities to paydowns. million scheduled loans. quarterly of to the years, attributed duration cash that provide $X.X used

rates as balance our has been challenging Funding sheet to continue rise.

from million wholesale accounts, increase $XX with While non-maturity This total through channels. we retail million deposits in more drove growth outflow than of quarter. we both time $XX deposits and in this offset million the an during an of of experienced $XX

million help loan increased to growth. fund Additionally, during the borrowings quarter, $XX

I happy And that, and your to take Jim questions. are with

Operator

[Operator First question from Instructions] KBW. your from now O'Connell Christopher, open. is you. Thank comes Christopher line

Christopher O'Connell

Good Hi. morning.

Jim Nesci

morning. Good

Christopher O'Connell

recent margin So, just on periods? originating some of off yields start wanted to where at I guys loan are the guess first, components. you or in weeks

Kelly Pecoraro

in recent our high the pipeline, have X. X, So, originations periods, to our been in in high mid loan

Christopher O'Connell

I pace I -- yields reason just for XX really, it past of or three that's on lower anything you moved given have you It period. bit that? to pools particular surprised and a up some have coming the over -- points originating guys up like would the there quarters, I basis was on point loan past chunkier seems like Okay. seems Or gone rates of growth loan stuff guess, the have guys couple quarters? quite two put mean, just more that than growth. mean, the of I'm -- the in at some less of it in Any time

Kelly Pecoraro

we lower the look beginning the quarter, of put and Also, the third our originations rates. of the pricing. if second bit on quarter, a terms in at what in think in lag I you little they were

Christopher O'Connell

the reliance how are business, kind quarters? the next versus how as the of wholesale over channels? far then, deposits of side overall by Okay. as be on much generated deposit I more growth guys that deposit funding core you And couple about mean, And of thinking of can

Kelly Pecoraro

pressure in retaining seeing Chris, on are balance and definitely on market, attracting deposits those our this sheet. we

successful that bank and We are that, into will driving focused on very relationship move the business be forward. as we the hope

the sources knowing also pressure we the quarter, funding there's the on into looking deposit front. alternative at move that as We are

Christopher O'Connell

guys course Okay, got cycle? targeting are for over what you deposit beta And it. the this your for of

Kelly Pecoraro

reactive forward. to that they industry based course look be the need manage pressures market our to seeing we responsive Are to be. around where and Over where to be the fluid and say They are be XX% at be we're the are to as difficult difficult perspective, that. this in going responsive. But see market. on to of to it's land more and that we're going upon cycle, we're going to We could From level? able betas we

Christopher O'Connell

Okay, mean, on or of the of the will overall 'XX? think inflow on on move increasingly change success your as efforts, it kind level And through side that are growth would guys at funding targeting got if the of generally pace the you double I difficult deposit I funding change digit all digit side? -- it. loan mean, becomes Does I low that you double loans. kind outlook

Kelly Pecoraro

fund for those core of sheet, does to looking right, think our balance Chris, help you're outlook. Yes, I we that Cognizant deposits change fund. our how

rate. As be we at as it as forward, was don't growth, we look loan year, XX% envision growth this the to robust

-- We deposit are double digit knowing to high loan other for tagging low XXXX, side. growth that there low single on the pressures are

Christopher O'Connell

margin the guess kind of you some how on all that it of given way this or two, quarter? to any I expected. the outlook, I just big was over jump in And putting mentioned just characterize range the that commentary in or quarter kind term, the frame together next near type of it. Got think continued compression Any the even

Kelly Pecoraro

Yes.

range for to we closely try I low Definitely we that -- We perspective. to the than out have in and continue that, challenges. from any to any guidance further think but QX, a be looking as monitor X.XX% don't range we're NIM look manage for manage out the to NIM.

Christopher O'Connell

I'll Okay. now. Thank for you. step Great. out

Kelly Pecoraro

Thank you, Chris.

Jim Nesci

Thanks, Chris.

Operator

Thank Chris. you,

our Hunsicker open. next that Laurie Laurie, have Point. question from line We comes your Compass from is now

Laurie Hunsicker

Jim Good morning. thanks, and Kelly. Hi, Yes.

shifting out, and a challenge the standpoint your the bit as but on But little all federal trying here, about that together. thinking you're to through those stay little thinking about across category? little through And little first weigh you're talking for funding Chris seeing margin the board, alternative, I us there. Can And deposits, continue about you just help appreciate where guide maybe wanted increase margin. of you mix also put about how that mean, Can was Just to side, certainly, a an take think gave bit that. saw quarter funding loan a of the adding obviously, home in this bank. thinking -- headwinds bit mentioned just thinking to take bit just I you assume us further the from you us on we're is a pieces we that

Jim Nesci

than Sure, try in I'll Laurie. FHLB straight swaps. has We're other for a now. a looking mid-X%-s the just best are borrowings Right We've coming my looked at things positive to at borrowing. instance. straight to swap Those answer that. market up FHLB spread the now,

of focused We will and look wholesale trying different we're corporate get But exploring can we cost. of lower time are for buy, There's at funding the agencies of lot on what wholesale best listing avenues some that to a that through of then, a funding some find to deposits source mix to we And always call, where options from digital what's opportunities I'll sources. CDs. working time, and funding we able be obviously. our correct may there's multitude the we're at

Laurie Hunsicker

it. Got

on last And Okay. million you your current $X.X I have had quarter. that Do CDs, at that? a then, brokered number

Kelly Pecoraro

million. this That up is quarter to $XX

Laurie Hunsicker

the And where December? $XX okay. is you month Great. million, then, us of your can spot margin with for share

Kelly Pecoraro

share monthly guidance. Laurie, normally don't we

be However, we is provided the what for think QX. going to we outlook

Laurie Hunsicker

CECL, Okay. with then, for up. that letters obviously, moves And credit on provision of expenses,

to then, about noninterest million in there? you going that that's how quarter? expenses. that's there back, terms over going to rate for baked thinking specifically, us plan And adding the on think can $XX obviously, that, the come anything for expense, run about XXXX? expenses that So, benefit all is Or you we're online is us already for fully quarterly Can look help a in of this still remind

Kelly Pecoraro

in QX right the So, looking went management to was $XXX,XXX date. expense that from the in been October. around equity equity we're awards knowing about A perspective, at plan by full for out shy $XX,XXX, what's late issued plan quarter,

high what at model those operating we're on to the the at expenses. -- $XX for continue we're to of overall business at managing to range from we expense, to expense being and range, optimize an an look our mid looking as laser-focused operating Relative avenues million looking on

Laurie Hunsicker

and there non-recurring credit? out other million there, you is outside that fee expense? professional know, is noninterest in anything the of there potentially did reported on $XX.X that Okay. outside CECL coming In recovery of don't anything help? of have number And provision embedded I letters words, was Or

Kelly Pecoraro

that always fees are professional are reduced initiatives. next there some quarter, additional be will there While

So, those our outs the includes and provided ins relative professional to guidance that we fee.

Laurie Hunsicker

it. Got

on little sitting generally, you about Obviously, bit more you'll help at XX a just could us be points. then, CECL. that, loans And think maybe basis your to at reserves Okay. provision, here

any you color helpful. would be super Just there give can us

Kelly Pecoraro

Laurie, in we adapt increase as it, adjustment, XX an there came that it's the coverage, methodology, the Yes, points be We're again, not basis material. material I we ratio. basis looking looking, a CECL, a reserve looking equity. think, in at Difficulty] We're an [Technical CECL coverage through at under come for at incurred not forward points looking couple of at change will to

Laurie Hunsicker

maybe, Kelly, Okay. loan can we saw And growth XX%. like you little comment estate? then, outsized bit a It looks that in commercial real the

a on help to, in you've number. big know be would This some Can the have exposure give in great. then, any got or if be could you've detail is would you And those, quarter, could had And really XX% hotel, super button Thanks. restaurants, in office, refresh a you you I you categories and about us that? loan think minimis got color what's but hot what if around provide whatever that LTVs annualized us really you de in helpful. of

Kelly Pecoraro

Sure, Laurie.

this large had there that investment-grade which was was comfortable we are Again, originations the credits million exposure. so yes, in of multifamily were by strong. CRE million $XX that that in anchored two of in feel retail, space. million $XX quarter, space. in there were relative $XX to So, loan tenant, the

of X% None around portfolio office, York on the In commercial around regards are New in portfolio LTVs portfolio, our to that office contains on the that XX%, loan City. is And our of office. LTV.

exposure no We restaurants. have portfolio our no in and direct to we have hotels

Laurie Hunsicker

Great.

all loans… clarify, real that's X%, office the or X% the X% just And to of in commercial of it's Okay. estate

Kelly Pecoraro

of Yes, total our commercial less portfolio, the portfolio. of than

So, portfolio. it's the X% of commercial

Laurie Hunsicker

commercial multifamily adding together? you only, X% Okay. are the just the CRE portfolio, CRE the Or $XXX straight of then, the And and million?

Kelly Pecoraro

No, the combination. it's

Laurie Hunsicker

combination. The

Okay. Great.

the with the assume still I forward on about that? thinking any way, comments or Jim, it buybacks. the seeing you're Love here, stock same Okay.

Jim Nesci

provide. as I mean, today, it all But is same way. think around can about guidance in table about thinking we're we the Sure. believe the so, That's buybacks, stock exactly the I yes. everyone I yes, trading

Laurie Hunsicker

And last great. just Okay, then, one question.

may that through profitable profitable, take profitable, us should you're year, we if Assuming like? tax what And then, about rate? minimally even be next look how not you're thinking the

Kelly Pecoraro

All right.

So, a for utilize we minimal tax in are there valuation to allowance pegging are we to have earnings. or loss recorded recorded. a profitability, position, expense we XX% our the tax tax at the If as XX% rate no able we're benefit is as

Laurie Hunsicker

for Great. Tim questions. and Kelly, taking thanks my

Kelly Pecoraro

Thank Laurie. you,

Jim Nesci

Thank you. day. a great Have

Operator

Laurie. you, Thank

We on questions will have to no back I remarks. hand for closing the for Jim -- now further line. Jim

Jim Nesci

Thank Thanks, you on who day. very and everybody joined much, great operator. quarter. thank us I'd speaking Look our forward to like next call. to a everybody to have today

Operator

Ladies Thank for joining. gentlemen, concludes call. this and today's Thank you you.

You may lines. now disconnect your

Blue Foundry Bancorp (BLFY) 25 Jan 232022 Q4 Earnings call transcript