Blue Foundry Bancorp(BLFY) - 2024 Q1 - Quarterly Report

Part I Financial Statements Blue Foundry Bancorp reported a net loss of $2.8 million in Q1 2024, with total assets at $2.03 billion, reflecting declining net interest income due to rising interest expenses Consolidated Balance Sheets Total assets slightly decreased to $2.03 billion as of March 31, 2024, with shareholders' equity declining to $350.2 million due to treasury stock repurchases Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $2,027,787 | $2,044,963 | | Loans receivable, net | $1,540,428 | $1,546,576 | | Securities available-for-sale | $265,191 | $283,766 | | Total Liabilities | $1,677,631 | $1,689,323 | | Deposits | $1,291,184 | $1,244,904 | | Advances from FHLB | $342,500 | $397,500 | | Total Shareholders' Equity | $350,156 | $355,640 | Consolidated Statements of Operations The company reported a net loss of $2.8 million for Q1 2024, driven by a decrease in net interest income due to significantly higher interest expenses Q1 Statement of Operations (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Interest Income | $20,842 | $18,832 | | Total Interest Expense | $11,425 | $6,891 | | Net Interest Income | $9,417 | $11,941 | | Release of provision for credit losses | $(535) | $(23) | | Total Non-interest Expense | $13,242 | $13,657 | | Net Loss | $(2,839) | $(1,209) | | Diluted Loss Per Share | $(0.13) | $(0.05) | Consolidated Statements of Comprehensive Income (Loss) The company recorded a comprehensive loss of $1.1 million for Q1 2024, partially offset by $1.7 million in other comprehensive income from unrealized gains Q1 Comprehensive Income (Loss) (in thousands) | Component | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Loss | $(2,839) | $(1,209) | | Total Other Comprehensive Income | $1,705 | $1,593 | | Comprehensive (Loss) Income | $(1,134) | $384 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity decreased to $350.2 million by March 31, 2024, primarily due to a net loss and treasury stock repurchases - Total shareholders' equity decreased by $5.5 million during Q1 2024, ending at $350.2 million[15] - Key drivers for the decrease in equity were the net loss of $2.8 million and treasury stock purchases of $5.3 million[15] Consolidated Statements of Cash Flows Net cash increased by $7.7 million in Q1 2024, driven by investing activities despite cash used in operations and financing Q1 Cash Flow Summary (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,855) | $(4,422) | | Net cash provided by (used in) investing activities | $26,295 | $(37,929) | | Net cash (used in) provided by financing activities | $(13,712) | $58,790 | | Net increase in cash and cash equivalents | $7,728 | $16,439 | Notes to Unaudited Consolidated Financial Statements Notes detail the securities portfolio's unrealized losses, the loan portfolio's composition, a decreased allowance for credit losses, and the use of interest rate swaps for hedging - The company's securities portfolio, valued at fair value of $265.2 million for AFS and an estimated fair value of $28.6 million for HTM, has significant unrealized losses primarily attributed to changes in interest rates, not credit quality[28][57][48] - The loan portfolio, totaling $1.55 billion, is primarily composed of multifamily ($671.0 million) and residential ($540.4 million) loans, with non-accrual loans increasing to $6.7 million[58][90] - The Allowance for Credit Losses on loans decreased to $13.7 million from $14.2 million, driven by a release of provision of $396 thousand[94] - The company utilizes interest rate swaps with a total notional amount of $254.0 million as of March 31, 2024, to hedge interest rate risk on FHLB advances and brokered deposits[111] Management's Discussion and Analysis (MD&A) Management attributes the increased net loss of $2.8 million in Q1 2024 to significant net interest margin compression, despite deposit growth and strong capitalization - Net loss increased to $2.8 million in Q1 2024 from $1.2 million in Q1 2023[156] - Net interest margin decreased by 50 basis points to 1.92% YoY, and net interest spread decreased by 66 basis points to 1.39%, reflecting significant margin compression[156] - Total deposits increased by $46.3 million (3.7%) during the quarter, primarily driven by a $45.7 million increase in time deposits[160] - The company repurchased 556,353 shares at a weighted average cost of $9.49 per share during the quarter[190] Quantitative and Qualitative Disclosure About Market Risk The company's primary market risk is interest rate risk, with EVE sensitivity showing a 24.3% decrease for a 100 basis point rate increase, managed through various strategies including swaps Economic Value of Equity (EVE) Sensitivity Analysis (as of March 31, 2024) | Change in Interest Rates (bps) | Estimated EVE (in thousands) | Change from Base (%) | | :--- | :--- | :--- | | +200 | $86,379 | (48.4)% | | +100 | $126,650 | (24.3)% | | 0 | $167,400 | 0.0% | | -100 | $208,705 | 24.7% | | -200 | $249,172 | 48.9% | - The company uses derivative financial instruments (interest rate swaps) with an aggregate notional amount of $254.0 million as of March 31, 2024, to reduce risk associated with interest rate volatility[164] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective[196] Part II Legal Proceedings The company is not currently engaged in any material legal proceedings, with ongoing actions not expected to have a material adverse effect - The Company is not engaged in any legal proceedings of a material nature at the present time[197] Risk Factors There have been no material changes in risk factors from those identified in the Annual Report on Form 10-K - There have been no material changes in risk factors from those identified in the Annual Report on Form 10-K[209] Issuer Purchases of Equity Securities The company repurchased 556,353 shares at an average price of $9.49 per share in Q1 2024, and adopted a new repurchase program for up to 1,203,545 shares Q1 2024 Share Repurchases | Period | Total Shares Purchased | Average Price Paid | Shares Purchased Under Program | | :--- | :--- | :--- | :--- | | January | 225,600 | $9.96 | 225,600 | | February | 186,111 | $9.26 | 186,111 | | March | 144,642 | $9.07 | 120,341 | | Total | 556,353 | $9.49 | 532,052 | - On February 21, 2024, the Company adopted its fourth repurchase program to repurchase up to 1,203,545 shares, or 5% of its outstanding common stock[172] Exhibits This section lists exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, and required certifications from executive officers - Key exhibits filed include Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[213]