Blue Foundry Bancorp(US:BLFY)2024-01-24 18:58Financial Data and Key Metrics Changes - The net loss for the fourth quarter was $2.9 million, compared to a net loss of $1.4 million in the prior quarter, primarily due to NIM contraction and an increase in the provision for credit losses [16] - Cost of funds increased by 23 basis points to 2.69%, with interest-bearing deposits rising by 27 basis points to 2.52% and borrowing costs increasing by 11 basis points to 3.38% [32] - The allowance for credit losses on loans increased to 91 basis points, while the allowance to nonaccrual loans rose to 240% from 226% in the prior quarter [31] Business Line Data and Key Metrics Changes - Gross loans declined by $10.3 million during the quarter, with amortization and payoffs outpacing new loan funding [23] - The yield on loans increased by 8 basis points to 4.29%, while yields on all interest-bearing assets rose by 9 basis points to 4.06% [47] - The company is shifting focus towards C&I (Commercial and Industrial) loans, with a pipeline of $25 million, of which $20 million is in the C&I space, yielding around 8% [59] Market Data and Key Metrics Changes - Deposits decreased by $8 million during the quarter, largely due to a $7 million reduction in cash collateral tied to the swap program and a $5 million reduction in wholesale deposits [42] - Uninsured and uncollateralized deposits from customer accounts were $131 million, approximately 10% of total deposits, with available liquidity covering 5.1 times these deposits [45] Company Strategy and Development Direction - The company aims to leverage its capital to grow its balance sheet through organic deposit acquisition while maintaining discipline in underwriting [29] - The share repurchase program continues, with 657,000 shares repurchased at a weighted average cost of $8.72, increasing tangible book value per share by $0.25 to $14.49 [44] - The company is focused on attracting full banking relationships with small to medium-sized businesses, offering low-cost deposit products [50] Management's Comments on Operating Environment and Future Outlook - Management noted that 2023 was challenging due to bank failures, a slowing economy, and rapid rate hikes, but expressed optimism about the fourth quarter as a step in the right direction [42] - The company expects pressure on margins to continue due to competition for deposits and the current rate environment [32] - Management anticipates mid-single-digit loan growth, with a cautious approach to extending pricing [4][7] Other Important Information - The unrealized loss position improved by $11.2 million or 27%, with the debt securities portfolio providing cash flow for reinvestment in higher-yielding assets [49] - The company continues to explore opportunities to optimize its expense base, expecting operating expenses for the first quarter of 2024 to be below $14 million [48] Q&A Session Summary Question: What is the outlook for net interest margin (NIM)? - Management indicated that the contraction in NIM is slowing and expects this trend to continue into the first half of the year, with potential benefits from rate cuts [52][67] Question: How does the company plan to manage expenses? - Management expects operating expenses to remain contained, with a target of below $14 million for the first quarter [68] Question: What is the appetite for share buybacks? - Management expressed a strong belief in buybacks and plans to continue repurchasing shares as opportunities arise [69]