Earnings call transcript Q2 2023

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Operator

Good morning and welcome to the Blue Foundry Bancorp’s Second Quarter 2023 Earnings Call. My name is Carla 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 encourages all participants 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 measures, 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 [Operator As event recorded. reminder, Instructions]

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

Jim Nesci

second morning, our opening by Financial remarks. after financial Officer, will welcome operator. results am who Chief everyone Pecoraro, the you, call. I Good to Thank my our share quarter Kelly in earnings joined detail and company’s greater

and an non-depository curve, competition impact institutions, to with have technology The both productivity in for and yield have from been results investments the Despite line saves. margin continues our depository to funds. this adverse deposits on inverted pleased of pressure, our and along cost see top we

benefits expense. is than operating more the of use was impactful projects. redundant lower expenses end to Headcount at $XXX,XXX, allowing it the through on our optimizing and of productivity driven by declined technology, increased and them employees primarily tasks have XXXX, X.X%, X% Quarter-over-quarter, compensation or by lower focus

Additionally, focused we on variable expenses. have managing down been keenly

reduced have XX% and our average. on our consultants, were quarterly XXXX’s below advertising costs reliance We

quarter, increased second at XX. average This discount tangible at value. a per tangible the of $XX.XX $X.XX, During repurchased a X,XXX,XXX cost to value book help $X.XX book we to share shares, weighted June

programs to capital. repurchase continue We believe use that represent of accretive the share

We are still active in the lending markets.

our During the second portfolios. commercial in in originated $XX primarily quarter, we loans, million

standards underwriting and quality remains conservative remain Our our strong. credit

second untapped company million had strong capacity. environment and remain the holding we capitalized. liquidity We throughout monitor $XXX Our being our macroeconomic steadfast banking borrowing and over in of the remain end well Both than bank liquidity management capital to continues the At maintaining team industry. quarter, the more challenges positions. and in experienced

represents $XXX of Additionally, securities hold, an portfolio, provided securities which additional we liquidity. million XX% of our debt the available-for-sale

$XX at are risk the million Factory and Jersey’s insured totaling low approximately bank deposits includes Foundry continues which million million Act. from deposits of second Blue of $XX Protection $XX the deposits quarter. Company, approximately uninsured municipal subsidiary end of Blue Foundry and Deposit deposits, with single million concentration to deposits, of a operate under New our its Bancorp, percentage any $XXX This Unit to Governmental total and subsidiary, from low the uninsured Blue of depositor, Investment

items, only sweep Excluding improved these from This bank’s that of our from deposits. as the three coverage FDIC accounts through the some of quarter account prior deposits larger products. uninsured our customer represented we total of took provide CDARS and XX.X% advantage increased ICS relationships the

covers uncollateralized our liquidity our to and available uninsured deposits customers. X.Xx Additionally,

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

Kelly Pecoraro

This and for compared Thank million, everyone. pressures was quarter. to the million to The funding quarter during was change $X.X the good morning, you, prior net rate related second largely $X.X the from net competitive of loss Jim, loss environment.

compared the in increase in funds with assets coupled the While in X.XX%, points cost $XXX,XXX average we our on to short-term increase basis points X.XX%. a drove increased to cost the deposit of X.XX%. and XX with by Remaining interest on points prior deposits yield This, expense reduction pricing, a competitive basis interest XX an point interest-bearing expansion basis $X net increased interest-bearing interest basis borrowings, increased loans by of to quarter. in in XX X.XX% income. also Yields million, $X million to of realized all resulting income, a increased XX

liability-sensitive environment quarter, has on balance margin in of While and expect current the and nature to we the since for deposits, our due of our pressure the still cost last liabilities sheet. continue slowed interest-bearing increase to of rate cost the funds competition

partially an increase offset a for by quarter XXXX, for loans, the $XXX,XXX for ended in for driven of the recorded June we XX, decrease provision commitments. quarter, a loss the by allowance the allowance During credit in

Our environment. the asset current quality strong remains in

points, XX nonperforming to loans by total basis primarily X increase loans. quarter, the increased points loans to During a driven non-accrual slight basis in

Our points, our XXX% loans XXX% also non-accrual slight to to to basis allowance the prior and loans X decreased increase non-accrual to increased loans. XX allowance to basis to points quarter, in due the from total

Expenses headcount a declined compensation. a $XXX,XXX, by a expense. This benefit and in variable largely sustained of driven driven compensation was in full reduction by and reduction quarter reduction lower

opportunities We our reduce to explore continue base. to expense

each line this quarter, of there with remainder while Therefore, for in items remain operating relatively one-time year quarter. second Additionally, offset in the other. expect we they were expenses the the operating largely expenses to

on Gross funding. loan by as amortization loans the and Moving declined balance outpaced million, $X.X to sheet. payoffs

As in the less space is of market. X% none our than a portfolio New office loan and in reminder, City York is

duration debt to years, of These continues maturities million cash that and provide fund is our due flow used the securities With being securities $X.X to scheduled pay-downs. X.X portfolio loans. declined to halt

were increased We brokered Funding quarter. to outflow retail million $XX in we challenging or an deposits time during This $XX $XX our from the new million balance million in X.X% growth of was of time by deposits by has million $XX Deposits offset CDs. sheet this increase non-maturity able environment. accounts. and been executed partially

an to competition on suite deposit able products balances customers. we and Our second business business for focus the both quarter. our the number banking X% during business remains grow the deposits, to Despite were small- relationship medium-sized full of accounts the by businesses. offer to of of extensive attracting We low-cost

up balances up were For XX, the June accounts ended months were and XXXX, X% X%. X

During decreased the $XX short-term as we quarter, borrowings deposits. time million borrowings with replaced

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

Operator

Crowley question is first from Piper [Operator Instructions] Sandler. Justin from Our

now Your line is open.

Justin Crowley

reduction entail? It’s a quarter, of like guys. to end that through of beyond it go nice the look which simply of you’re this forward. some you Curious looking strategies certainly does of spoke some bit year. on? sort a for the It’s maybe expense a little to more – this holding was the further see at, rate Does job the of of and strong some on a you’ve pull the of it reductions that morning, taking good sounds Hi, the headcount, these more of what But half towards done back sort that year. of

Kelly Pecoraro

I So we’re point, quarter, compensation. in fourth at guiding, primarily variable the low-XX quarter the third headcount Justin, driven into and and this reduction the think by to for yes,

looking We’re reducing ways at advertising have place to it’s the bank, also costs, things opposed being leverage new technology to as whether initiatives continually on. the putting of other in throughout through or we already our able initiatives

to of save forward. continue all for as we we those initiatives So cost move look

Jim Nesci

vendors contract a something pricing, on where number basis. basis, do that a on on but extract Justin, add to just a vendor that we little or we to better analysis that’s bit. consolidate quarterly a through of We go a regular can

focus management definitely expense So a is the management team. of

Justin Crowley

to I growth. appreciate then that. over Okay. And switching

guys sort what of expectations quarter, previously saw deposit look bit the that of perhaps a I loan to how have see loan-to-deposit the little that think on through the judicious managing talked being of is compares on this more growth. that you How Curious about as you that predicated and we slowdown on ratio? balance generation how you much year? the side,

Jim Nesci

spot hit So I think on. it you

funding on or whether our wholesale at looking it’s generation constantly deposit funding. organic We’re sources, through

opportunistic match funding. definitely on are We

we where We to excess us, a have lines still decent can accessible – make spread.

the we it opportunity will still look definitely at add But market, credit still funding may the the are market is again, Kelly But I look give in what we – to lending. we quality at and the think at want then first, that? look So to and us. we and

Kelly Pecoraro

our Jim on in think we standards credit I the disciplines are into of look No, we terms Also what’s Yes. in market, is this walking remaining available correct how at market. it. as

We it. do we So envision at that’s growth. how look

We are originate in this able opportunistic market and growth. look to for

Justin Crowley

And estate, the just here? side, you going to as it so real seeing Okay. Is where opportunities? you the look are more less be like C&I most out

Kelly Pecoraro

think tick you see I of – a in So couple different seeing up. construction we’re our did segments,

the loans have we move the to We C&I product. Also, sponsors well-seasoned additional some multifamily on increases half are second – the and as year. of in building construction seeing we are originated into some

Justin Crowley

to helpful. money can versus little unpack I just things. drives on guess, just just And just quickly, back borrowings, looking Weighing where with, between going And economics of versus those putting balance of pure you the brokered bit you again, Okay. the funding it then, Is fleshes decision? two side that That’s of of again, just that cost back ratio, the what the it? out, how loan-to-deposit a at that to do funding sort channels?

Jim Nesci

on funding to the funding, look curve we our wholesale out us So at, are say, curve. go first, We through at for then look laid all and consider. they funding we retail

we But between far Sometimes but from be and type picking and relationship of looking possibly fuller we the look on on can to we want up us markets value, are our as general, take in provide curve diligent pay balance the want that funding a and for a then duration, wholesale where to in where sheet, does as we the swap customer the at rate. incentivize funding sources to get we retail. a better

Kelly Pecoraro

then... And

Justin Crowley

it. Got Okay.

go Sorry, ahead.

Kelly Pecoraro

between I brokered just from looking the into we into of we’re going No. market, difference or our saying, whether Bank was metrics the Home wholesale take in at borrowing funding, Federal terms consideration. Loan the the

in funding terms wholesale funding. a to place under that so we be We year opportunistic as of are XX% of is book duration, sure our the looking

Justin Crowley

market? there into mean on then limit And lean how can – I much Okay. you at a is you XX%, brokered do further the

Kelly Pecoraro

but we of what has still limits spot. some the room our So point, it’s brokered a terms have combination this policy at in in

Justin Crowley

for Okay, questions. got there. guys. I you my will it. it. leave Alright, it Thank taking I appreciate

Kelly Pecoraro

Justin. you, Thank

Jim Nesci

Thank you, Justin.

Operator

Thank you, Justin.

further We questions time. this have at no

now final Nesci will hand I back any for Jim So to remarks.

Jim Nesci

in like and you Foundry I’d you. dialed forward your today. interest we look the participants next appreciate with Blue speaking to quarter. Thank thank who I again to all in Bank,

Operator

This concludes for joining. Thank you call. today’s

disconnect now You your may lines.

Blue Foundry Bancorp (BLFY) 26 Jul 232023 Q2 Earnings call transcript