Blue Foundry Bancorp(BLFY) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents Blue Foundry Bancorp's unaudited consolidated financial statements for Q2 and H1 2025, detailing financial position and performance with accompanying notes Consolidated Balance Sheets Total assets increased to $2.13 billion by June 30, 2025, driven by loan growth, while liabilities rose to $1.81 billion and equity decreased to $321.3 million Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Total Assets | $2,127,504 | $2,060,683 | | Cash and cash equivalents | $41,877 | $42,502 | | Securities (AFS & HTM) | $313,301 | $330,104 | | Loans receivable, net | $1,659,732 | $1,570,517 | | Total Liabilities | $1,806,204 | $1,728,485 | | Deposits | $1,416,321 | $1,343,320 | | Advances from FHLB | $343,000 | $339,500 | | Total Shareholders' Equity | $321,300 | $332,198 | Consolidated Statements of Operations For Q2 2025, net loss improved to $2.0 million from $2.3 million year-over-year, driven by a $2.1 million increase in net interest income, with the six-month net loss narrowing to $4.6 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $23,438 | $21,292 | $46,151 | $42,134 | | Total Interest Expense | $11,798 | $11,719 | $23,767 | $23,144 | | Net Interest Income | $11,640 | $9,573 | $22,384 | $18,990 | | Provision for (release of) credit losses | $463 | $(762) | $664 | $(1,297) | | Total Non-interest Income | $405 | $536 | $799 | $987 | | Total Non-interest Expenses | $13,539 | $13,215 | $27,168 | $26,457 | | Net Loss | $(1,957) | $(2,344) | $(4,649) | $(5,183) | | Diluted Loss Per Share | $(0.10) | $(0.11) | $(0.23) | $(0.24) | Consolidated Statements of Comprehensive Loss Comprehensive loss for Q2 2025 was $2.4 million, including a $2.0 million net loss and $0.5 million other comprehensive loss, resulting in a six-month comprehensive loss of $4.2 million Comprehensive Loss Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(1,957) | $(2,344) | $(4,649) | $(5,183) | | Total Other Comprehensive (Loss) Income | $(473) | $292 | $409 | $1,997 | | Comprehensive Loss | $(2,430) | $(2,052) | $(4,240) | $(3,186) | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity decreased from $332.2 million at year-end 2024 to $321.3 million at June 30, 2025, primarily due to a $4.6 million net loss and $8.6 million in treasury stock purchases - For the six months ended June 30, 2025, total shareholders' equity decreased by $10.9 million[19] - Key drivers of the decrease in equity were the net loss of $4.6 million and the repurchase of treasury stock totaling $8.6 million[19] Consolidated Statements of Cash Flows For the six months ended June 30, 2025, cash and cash equivalents decreased by $0.6 million, with net cash used in operating and investing activities largely offset by financing activities driven by increased deposits Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,785) | $9,270 | | Net cash (used in) provided by investing activities | $(67,427) | $1,648 | | Net cash provided by financing activities | $68,587 | $3,319 | | Net (decrease) increase in cash and cash equivalents | $(625) | $14,237 | Notes to the Consolidated Financial Statements The notes detail financial accounts and policies, including securities portfolio unrealized losses, loan portfolio growth to $1.67 billion, a $13.3 million allowance for credit losses, and $426.0 million in interest rate swaps - The securities portfolio includes available-for-sale securities with a fair value of $284.2 million and held-to-maturity securities with an amortized cost of $29.1 million, with unrealized losses primarily due to interest rate changes, not credit quality[33][35][46] Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Residential | $519,370 | $518,243 | | Multifamily | $633,849 | $671,116 | | Commercial real estate | $293,179 | $259,633 | | Construction | $97,207 | $85,546 | | Consumer and other | $83,706 | $7,211 | | Total Loans | $1,673,036 | $1,583,482 | - The allowance for credit losses on loans was $13.3 million at June 30, 2025, up from $13.0 million at year-end 2024, with a provision of $350 thousand recorded for the first six months of 2025[76][82] - The company uses interest rate swaps with a total notional amount of $426.0 million as of June 30, 2025, designated as cash flow hedges against FHLB advances and brokered deposits[118] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting reduced net losses for Q2 and H1 2025 due to improved net interest income, alongside loan portfolio growth, deposit increases, and capital adequacy Comparison of Operating Results Q2 2025 net loss improved to $2.0 million from $2.3 million year-over-year, driven by a $2.1 million increase in net interest income, despite higher credit loss provisions and non-interest expenses - Net interest income for Q2 2025 increased by $2.1 million year-over-year, with the net interest margin expanding by 32 basis points to 2.28%[166] - A provision for credit losses of $463 thousand was recorded in Q2 2025, compared to a $762 thousand release in Q2 2024, primarily due to growth in unfunded loan commitments and shifts in the loan portfolio composition[167] - Non-interest expense for Q2 2025 rose by $324 thousand year-over-year, driven by higher compensation, benefits, and data processing costs[169] Comparison of Financial Condition Total assets grew by $66.8 million to $2.13 billion by June 30, 2025, driven by $89.6 million loan growth and $73.0 million deposit increase, while equity decreased by $10.9 million - Gross loans increased by $89.6 million since year-end 2024, with significant growth in consumer loans (+$76.5 million) and commercial real estate loans (+$33.5 million)[188] - Total deposits grew by $73.0 million, or 5.4%, since year-end 2024, supported by an increase in brokered deposits to $225.0 million[189] - Total shareholders' equity declined by $10.9 million, primarily due to the repurchase of shares at a cost of $8.5 million and the net loss for the period[192] Liquidity and Capital Resources The company maintains strong liquidity with $256.1 million in FHLB borrowing capacity, exceeding all regulatory capital requirements and remaining 'well capitalized' with a 13.51% Tier 1 leverage ratio - Available borrowing capacity at June 30, 2025, included $256.1 million from the FHLB of New York, a $110.3 million line with the Federal Reserve, and a $30.0 million unsecured line with a correspondent bank[205] Bank Regulatory Capital Ratios as of June 30, 2025 | Ratio | Actual | Minimum for Well Capitalized | | :--- | :--- | :--- | | Common equity tier 1 | 18.11% | 6.50% | | Tier 1 capital | 18.11% | 8.00% | | Total capital | 18.98% | 10.00% | | Tier 1 (leverage) capital | 13.51% | 5.00% | Quantitative and Qualitative Disclosure About Market Risk The company's primary market risk is interest rate risk, managed with $426.0 million in interest rate swaps, where a 100 basis point rate increase would decrease Economic Value of Equity by 15.4% - The company utilizes interest rate swaps to manage risk, with an aggregate notional amount of $426 million as of June 30, 2025[197] Net Interest Income Sensitivity Analysis (at June 30, 2025) | Change in Interest Rates (bps) | Change in NII (in thousands) | Percent Change | | :--- | :--- | :--- | | +200 | $1,309 | 2.5% | | +100 | $709 | 1.4% | | -100 | $907 | 1.7% | | -200 | $1,824 | 3.5% | Economic Value of Equity (EVE) Sensitivity Analysis (at June 30, 2025) | Change in Interest Rates (bps) | Change in EVE (in thousands) | Percent Change | | :--- | :--- | :--- | | +200 | $(68,059) | (30.9)% | | +100 | $(33,957) | (15.4)% | | -100 | $32,592 | 14.8% | | -200 | $66,292 | 30.1% | Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[209] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings, and any normal course actions are not expected to materially affect its financial condition or operations - The Company is not engaged in any material legal proceedings at the present time[211] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors have occurred since the last Annual Report on Form 10-K[212] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities During Q2 2025, the company repurchased 406,391 shares at an average price of $9.45 per share and authorized a new program to repurchase up to 1,082,533 additional shares Share Repurchases for Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April | 231,145 | $9.04 | | May | 165,842 | $10.04 | | June | 9,404 | $8.98 | | Total | 406,391 | $9.45 | - On June 18, 2025, the Company adopted its sixth repurchase program to repurchase up to 1,082,533 shares, or 5% of its outstanding common stock[214] Defaults Upon Senior Securities Not applicable Mine Safety Disclosures Not applicable Other Information During Q2 2025, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities under Rule 10b5-1(c) during Q2 2025[217] Exhibits This section lists the exhibits filed with or incorporated by reference into the Form 10-Q, including the company's certificate of incorporation, bylaws, and required certifications