Blue Foundry Bancorp(US:BLFY)2023-01-25 17:53Financial Data and Key Metrics Changes - In 2022, the company generated net income of $2.4 million or $0.09 per diluted share and pre-provision net revenue of $1.4 million, reflecting the execution of strategic priorities [4] - For the fourth quarter, net income was $562,000 or $0.02 per diluted share, down from $1.2 million in the linked quarter, primarily due to funding pressures from a competitive rate environment [41][68] - The yield on loans increased by 9 basis points to 3.80%, while yields on all interest-bearing assets increased by 18 basis points to 3.55% [6] - The cost of interest-bearing deposits increased by 36 basis points to 82 basis points, leading to a total cost of funds of 1.17%, a 51 basis point increase compared to the prior quarter [72] Business Line Data and Key Metrics Changes - Gross loans grew by $51 million or 3.4% sequentially, driven by originations of $68 million, primarily in non-residential and multifamily segments [40] - Core deposits grew by $99 million or 13% in 2022, with business balances increasing by 56% [69] - The bank purchased $18 million of high-quality residential loans during the quarter, which were originated to Fannie Mae standards [40] Market Data and Key Metrics Changes - The company experienced an outflow of $28 million from non-maturity accounts but offset this with $51 million growth in time deposits, resulting in a total deposit increase of $22 million during the quarter [8] - The competitive rate environment has put pressure on the ability to retain deposits, with management focused on attracting low-cost core deposits [55][48] Company Strategy and Development Direction - The company continues to repurchase stock at a discount to tangible book value, having repurchased a total of 1,299,000 shares, approximately 46% of the approved stock repurchase program [5] - Management is focused on optimizing the business model and managing operating expenses, targeting mid to high $13 million range for operating expenses [18][73] Management's Comments on Operating Environment and Future Outlook - Management anticipates loan growth in 2023 to be in the high single to low double digits, acknowledging pressures on the deposit side [43] - The company expects continued pressure on net interest margin due to the liability-sensitive nature of its balance sheet [57] - Management is exploring various funding sources, including swaps and digital avenues, to mitigate funding challenges [31] Other Important Information - The allowance for loan losses decreased to 87 basis points, with an increase in the allowance to non-accrual loans to 173% from 162% in the prior quarter [7] - The securities portfolio has a duration of 4.3 years, providing cash flow to fund loans, with a decline attributed to maturities and scheduled paydowns [58] Q&A Session Summary Question: What is the outlook for loan growth and deposit inflows? - Management indicated that loan growth is expected to be lower than the previous year, with a focus on attracting core deposits while managing funding pressures [43][88] Question: Can you provide details on the commercial real estate portfolio? - The commercial loan portfolio contains around 3% of office loans, with no exposure to hotels or restaurants, and LTVs on that portfolio are around 50% [96] Question: What is the expected tax rate for minimal profitability? - The tax rate is pegged at 10% to 12% if the company is minimally profitable, with no tax benefit recorded in a loss position [38]