8-K: Blue Foundry Bancorp Reports Q2 2024 Results and Appoints New Director

Blue Foundry Bancorp reported a net loss for the second quarter of 2024, while also announcing the appointment of John F. Kuntz to its Board of Directors.

Summary

• Blue Foundry Bancorp reported a net loss of $2.3 million, or $0.11 per diluted share, for the second quarter of 2024, which is an improvement compared to the previous quarter's loss of $2.8 million.
• The company saw a $20 million increase in deposits, representing a 1.55% growth from the prior quarter.
• Interest income increased to $21.3 million, a 2.2% rise from the previous quarter, while interest expense also increased by 2.6% to $11.7 million.
• The net interest margin increased slightly by four basis points to 1.96%.
• A release of $762 thousand in provision for credit losses was recorded due to changes in the loan portfolio forecast.
• The company repurchased 386,352 shares at an average price of $8.84 per share.
• Total loans decreased by $13.3 million in the first half of 2024, but commercial real estate and construction loans increased by $9.4 million and $11.5 million, respectively.
• Deposits increased by $66.3 million since the end of 2023, primarily due to a $74.9 million increase in time deposits.
• The company's tangible book value per share increased to $14.69.
• John F. Kuntz was appointed to the Board of Directors of both Blue Foundry Bancorp and Blue Foundry Bank.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the reported net loss and decrease in net interest income, although there are some positive aspects such as deposit growth and the appointment of a new director. The company is facing challenges in profitability and efficiency.

Positives

• The net loss decreased compared to the previous quarter, indicating a potential improvement in financial performance.
• Deposit growth continued, increasing by $20 million in the second quarter.
• Interest income increased by 2.2% compared to the previous quarter.
• The net interest margin saw a slight increase of four basis points.
• The company released $762 thousand in provision for credit losses.
• The company increased its tangible book value per share to $14.69.
• The company is diversifying its loan portfolio by increasing commercial real estate and construction lending.
• The appointment of John F. Kuntz to the Board of Directors brings valuable experience and expertise.

Negatives

• The company reported a net loss of $2.3 million for the second quarter of 2024.
• Net interest income decreased to $9.6 million for the three months ended June 30, 2024, compared to $10.9 million for the same period in 2023.
• The net interest margin decreased by 21 basis points compared to the same period in 2023.
• Total loans decreased by $13.3 million in the first half of 2024.
• Shareholders equity decreased by $10 million.
• Non-performing loans increased to $6.2 million, or 0.40% of total loans.

Risks

• The company is operating in a highly competitive market for deposits.
• The company is experiencing a decrease in net interest income compared to the previous year.
• The company's loan portfolio is experiencing a decrease in total loans.
• The company is facing increased interest expenses.
• The company is experiencing a decrease in shareholders equity.
• The company is facing a full valuation allowance on its deferred tax assets.

Future Outlook

The company remains focused on growing the commercial loan portfolios and attracting the full banking relationship of smallto medium-sized businesses.

Management Comments

• James D. Nesci, President and Chief Executive Officer, commented, 'Deposit growth continued in the second quarter despite the highly competitive environment in our market area.'
• Mr. Nesci stated, 'We remain focused on growing the commercial loan portfolios and saw increases in commercial real estate and construction lending.'
• Mr. Nesci also noted, 'The Company continues to maintain its strong capital position and access to liquidity.'
• Mr. Nesci remarked, 'We are delighted to welcome Mr. Kuntz to Blue Foundrys Board of Directors. His years of combined legal and operational expertise leading financial institutions will be invaluable to the Company.'
• Kenneth Grimbilas, Chairman, stated, 'We are very pleased to have Mr. Kuntz join Blue Foundrys Board of Directors. His extensive knowledge and experience in financial, legal and operational matters will provide additional perspective and depth to the organization.'

Industry Context

The results reflect the challenges of a competitive banking environment, particularly in the northern New Jersey market, where deposit growth is a key focus. The company's strategy to diversify its loan portfolio by increasing commercial lending aligns with industry trends of banks seeking higher-yielding assets.

Comparison to Industry Standards

• Blue Foundry's net interest margin of 1.96% is below the average for US banks, which is closer to 3%.
• The company's efficiency ratio of 130.73% is high compared to the industry average, indicating higher operating costs relative to revenue.
• The company's return on average assets of -0.47% is below the industry average, indicating lower profitability.
• The company's tangible equity to tangible assets ratio of 16.88% is above the regulatory minimums, indicating a strong capital position.
• The company's non-performing loans to total loans ratio of 0.40% is within the industry average, indicating a moderate level of credit risk.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders may be concerned about the reported net loss and the decrease in net interest income.
• Employees may be impacted by the company's efforts to manage costs and improve efficiency.
• Customers may benefit from the company's focus on growing its commercial loan portfolios and attracting smallto medium-sized businesses.
• Creditors may be concerned about the company's profitability and financial performance.

Next Steps

• The company will continue to focus on growing its commercial loan portfolios.
• The company will continue to focus on attracting the full banking relationship of smallto medium-sized businesses.
• The company will hold a conference call to discuss the second quarter 2024 earnings.

Key Dates

Keywords

Blue Foundry Bancorp, Financial Results, Net Loss, Deposits, Interest Income, Net Interest Margin, Loan Portfolio, Board of Directors, John F. Kuntz, Share Repurchase, Tangible Book Value