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What changed in Blue Foundry Bancorp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Blue Foundry Bancorp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+271 added−476 removedSource: 10-K (2024-03-27) vs 10-K (2023-03-30)

Top changes in Blue Foundry Bancorp's 2023 10-K

271 paragraphs added · 476 removed · 216 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

163 edited+25 added−212 removed120 unchanged
Biggest changeAt December 31, 2022 2021 (Dollars in thousands) Non-Performing Assets: Non-accrual loans: Residential one-to-four family $ 7,498 $ 10,805 Multifamily 182 139 Non-residential — 857 Construction and land — — Junior liens 52 182 Commercial and Industrial 35 — Consumer and other — — Total 7,767 11,983 Accruing loans past due 90 days or more: Residential one-to-four family — — Multifamily — — Non-residential — — Construction and land — — Junior liens — — Commercial and Industrial (1) — — Consumer and other — — Total — — Total non-performing loans 7,767 11,983 Real estate owned — — Other non-performing assets — — Total non-performing assets $ 7,767 $ 11,983 Troubled debt restructurings (accruing): Residential one-to-four family $ 1,750 $ 1,346 Multifamily — — Non-residential 2,567 3,564 Construction and land — — Junior liens — — Commercial and Industrial — — Consumer and other — 37 Total troubled debt restructurings (accruing) $ 4,317 $ 4,947 Total troubled debt restructurings (accruing) and total non-performing assets $ 12,084 $ 16,930 Total non-performing loans to total loans 0.50 % 0.94 % Total non-performing loans to total assets 0.38 % 0.63 % Total non-performing assets to total assets 0.38 % 0.63 % Total non-performing assets and troubled debt restructurings (accruing) to total assets 0.59 % 0.88 % (1) PPP loans 90 days past due and accruing totaled $61 thousand and $116 thousand at December 31, 2022 and 2021, respectively.
Biggest changeDecember 31, 2023 December 31, 2022 (Dollars in thousands) Non-Performing Assets: Non-accrual loans: Residential one-to-four family $ 5,884 $ 7,498 Multifamily 146 182 Junior liens 49 52 Commercial and Industrial 39 35 Total 6,118 7,767 Accruing loans past due 90 days or more: Commercial and Industrial (1) — 61 Total — 61 Total non-performing loans 6,118 7,828 Real estate owned 593 — Total non-performing assets $ 6,711 $ 7,828 Total non-performing loans to total loans 0.39 % 0.50 % Total non-performing loans to total assets 0.30 % 0.38 % Total non-performing assets to total assets 0.33 % 0.38 % (1) PPP loans 90 days past due and accruing totaled $61 thousand at December 31, 2022.
Our primary sources of funds are deposits, principal and interest payments on loans, securities, and borrowings from the Federal Home Loan Bank of New York (“FHLB”). Blue Foundry Bank is subject to comprehensive regulation and examination by the New Jersey Department of Banking and Insurance (“NJDOBI”) and the Federal Deposit Insurance Corporation (“FDIC”). Our website address is www.bluefoundrybank.com .
Our primary sources of funds are deposits, principal and interest payments on loans and securities, and borrowings from the Federal Home Loan Bank of New York (“FHLB”). Blue Foundry Bank is subject to comprehensive regulation and examination by the New Jersey Department of Banking and Insurance (“NJDOBI”) and the Federal Deposit Insurance Corporation (“FDIC”). Our website address is www.bluefoundrybank.com .
We expect competition to remain intense in the future as a result of legislative, regulatory and technological changes and the continuing trend toward consolidation of the financial services industry.
We expect competition to remain intense in the future as a result of legislative, regulatory and technological changes and the continuing trend toward consolidation in the financial services industry.
Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (1) making or servicing loans; (2) performing certain data processing services; (3) providing discount brokerage services; (4) acting as fiduciary, investment or financial advisor; (5) leasing personal or real property; (6) making investments in corporations or projects designed primarily to promote community welfare; and (7) acquiring a 28 savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.
Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (1) making or servicing loans; (2) performing certain data processing services; (3) providing discount brokerage services; (4) acting as fiduciary, investment or financial advisor; (5) leasing personal or real property; (6) making investments in corporations or projects designed primarily to promote community welfare; and (7) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.
If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of possible additional restrictions, including an order by the FDIC to sell sufficient voting stock to become adequately capitalized, reduce total assets, cease receipt of deposits from correspondent banks, dismiss directors or officers, or limit interest rates paid on deposits, compensation of executive officers or capital distributions by the parent holding company.
If an “undercapitalized” bank fails to submit an acceptable capital restoration plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of possible additional restrictions, including an order by the FDIC to sell sufficient voting stock to become adequately capitalized, reduce total assets, cease receipt of deposits from correspondent banks, dismiss directors or officers, or to limit interest rates paid on deposits, compensation of executive officers or capital distributions by the parent holding company.
The FDIC may also appoint itself as conservator or receiver for an insured bank under specified circumstances, including: (1) insolvency; (2) substantial dissipation of assets or earnings 23 through violations of law or unsafe or unsound practices; (3) the existence of an unsafe or unsound condition to transact business; (4) insufficient capital; or (5) the incurrence of losses that will deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance.
The FDIC may also appoint itself as conservator or receiver for an insured bank under specified circumstances, including: (1) insolvency; (2) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (3) the existence of an unsafe or unsound condition to transact business; (4) insufficient capital; or (5) the incurrence of losses that will deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance.
Technological advances, for example, have lowered barriers to entry, allowed banks to expand their geographic reach by providing services over the internet and made it possible for non-depository institutions, including financial technology companies, to offer products and services that traditionally have been provided by banks. During 2022, the Federal Reserve took unprecedented action to contain inflation.
Technological advances, for example, have lowered barriers to entry, allowed banks to expand their geographic reach by providing services over the internet and made it possible for non-depository institutions, including financial technology companies, to offer products and services that traditionally have been provided by banks. During 2022 and 2023, the Federal Reserve took unprecedented action to contain inflation.
Home equity lines of credit are secured by residential real estate in a first or second lien position. 10 The procedures for underwriting consumer loans include assessing the applicant’s payment history on other indebtedness, the applicant’s ability to meet existing obligations and payments on the proposed loan, and the loan-to-value ratio of the collateral property.
Home equity lines of credit are secured by residential real estate in a first or second lien position. The procedures for underwriting consumer loans include assessing the applicant’s payment history on other indebtedness, the applicant’s ability to meet existing obligations and payments on the proposed loan, and the loan-to-value ratio of the collateral property.
In April 2021, legislation increased the corporate franchise tax rate to 7.25% for tax years beginning on or after January 31 1, 2021 and before January 1, 2024 for taxpayers with a business income base greater than $5 million. In addition, the scheduled phase-out of the capital base tax was delayed.
In April 2021, legislation increased the corporate franchise tax rate to 7.25% for tax years beginning on or after January 1, 2021 and before January 1, 2024 for taxpayers with a business income base greater than $5 million. In addition, the scheduled phase-out of the capital base tax was delayed.
The administrative offices of the Company and Bank are located at 7 Sylvan Way, Suite 200, Parsippany, New Jersey 07054. Our telephone number is (201) 939-5000. The economy in our primary market area benefits from being varied and diverse, with a broad economic base.
The administrative offices of the Company and Bank are located at 7 Sylvan Way, Suite 200, Parsippany, New Jersey 07054. Our telephone number is (201) 939-5000. 5 The economy in our primary market area benefits from being varied and diverse, with a broad economic base.
To encourage retirement savings, the Bank provides a 401(k) match of up to 6% of an employee’s salary. Eligible employees are automatically enrolled in the plan and 3% of the employee’s total taxable compensation is withheld with annual 1% escalations up to 6%. Employees may opt out at any time.
To encourage retirement savings, the Bank provides a 401(k) match on up to 6% of an employee’s salary. Eligible employees are automatically enrolled in the plan and 3% of the employee’s total taxable compensation is withheld with annual 1% escalations up to 6%. Employees may opt out at any time.
We believe that we have developed products and services that meet the financial needs of our current and future customer base; however, we plan, and believe it is necessary to continuously evaluate our products and 6 service offerings in light of evolving expectations and make the appropriate enhancements to ensure we remain competitive in our market area.
We believe that we have developed products and services that meet the financial needs of our current and future customer base; however, we plan, and believe it is necessary, to continuously evaluate our products and service offerings in light of evolving expectations and make the appropriate enhancements to ensure we remain competitive in our market area.
Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is guaranteed or well secured and in the process of collection.
Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and in the process of collection.
Federal laws also prohibit unfair, deceptive or abusive acts or practices against consumers, which can be enforced by the Consumer Financial Protection Bureau, the FDIC and state attorneys general. Federal Home Loan Bank System The Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
Federal laws also prohibit unfair, deceptive or abusive acts or practices against consumers, which can be enforced by the Consumer Financial Protection Bureau, the FDIC and state attorneys general. 25 Federal Home Loan Bank System The Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
In general, the Federal Reserve Board’s policy is that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition.
In general, the Federal Reserve Board’s policy is that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition.
We may generally exclude from our income 100% of dividends received from the Bank as a member of the same affiliated group of corporations. Audit of Tax Returns. The Company’s federal income tax returns have not been audited in the last three years. State Taxation New Jersey State Taxation.
We may generally exclude from our income 100% of dividends received from the Bank as a member of the same affiliated group of corporations. Audit of Tax Returns. The Company’s federal income tax returns have not been audited in the last three years. 28 State Taxation New Jersey State Taxation.
When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral less selling costs.
When a loan is determined to be impaired, the measurement of the loan in the allowance for credit losses on loans is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral less selling costs.
Our adjustable-rate residential real estate loans have initial and periodic caps of up to 2.0% on interest rate changes, with a current cap on total increases of 6.0% over the life of the loan.
Our adjustable-rate residential real estate loans can have initial and periodic caps of up to 2.0% on interest rate changes, with a current cap on total increases of 6.0% over the life of the loan.
Therefore, commercial and industrial loans that we originate have greater credit risk than one-to-four family residential real estate loans or, generally, consumer loans. In addition, commercial and industrial loans generally require substantially greater evaluation and oversight efforts.
Therefore, commercial and industrial loans that we originate may have greater credit risk than one-to-four family residential real estate loans or, generally, consumer loans. In addition, commercial and industrial loans generally require substantially greater evaluation and oversight efforts.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater.
An institution is considered “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater.
An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
An institution is considered “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, to the proposed loan amount. Commercial and Industrial Loans.
Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, to the proposed loan amount. 9 Commercial and Industrial Loans.
The supervisory bulletin also indicates that a holding company should notify the Federal Reserve Board, under certain circumstances, prior to redeeming or repurchasing common stock or perpetual preferred stock.
The supervisory bulletin also indicates that a bank holding company should notify the Federal Reserve Board, under certain circumstances, prior to redeeming or repurchasing common stock or perpetual preferred stock.
Capital Requirements. Under FDIC regulations, the Bank must meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets, and a Tier 1 capital to average total assets leverage ratio.
Capital Requirements. Under FDIC regulations, the Bank must meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital risk-based assets ratio, and a Tier 1 capital to total assets leverage ratio.
Control, 29 as defined under the Change in Bank Control Act, means ownership, control of or the power, to vote 25% or more of any class of voting securities of the company.
Control, as defined under the Change in Bank Control Act, means ownership, control of or the power, to vote 25% or more of any class of voting securities of the company.
Privacy Regulations. Federal law generally requires that the Bank disclose its privacy policy, including identifying with whom it shares a customer’s “non-public personal information,” to customers at the time of establishing the customer relationship. In addition, financial institutions are generally required to furnish their 27 customers a privacy notice annually.
Privacy Regulations. Federal law and regulations generally requires that the Bank disclose its privacy policy, including identifying with whom it shares a customer’s “non-public personal information,” to customers at the time of establishing the customer relationship. In addition, financial institutions are generally required to furnish their customers a privacy notice annually.
Adjustable Rate Loans. The following table sets forth the dollar amount of all loans at December 31, 2022 that are due after December 31, 2023 and have either fixed interest rates or floating or adjustable interest rates. The amounts shown below include unearned loan origination fees and costs, and unamortized premium and discounts, net.
Adjustable Rate Loans. The following table sets forth the dollar amount of all loans at December 31, 2023 that are due after December 31, 2024 and have either fixed interest rates or floating or adjustable interest rates. The amounts shown below include unearned loan origination fees and costs and unamortized premium and discounts, net.
New Jersey savings banks also may exercise those powers, rights, benefits or privileges authorized for national banks or out-of-state banks or for federal or out-of-state savings banks or savings associations, provided that before exercising any such power, right, benefit or privilege, prior approval by the NJDOBI by regulation or by specific authorization is required.
Savings banks also may exercise those powers, rights, benefits or privileges authorized for national banks or out-of-state banks or for federal or out-of-state savings banks or savings associations, provided that before exercising any such power, right, benefit or privilege, prior approval by the NJDOBI by regulation or by specific authorization is required.
The Federal Home Loan Banks provide a central credit facility primarily for member institutions. The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. The Bank was in compliance with this requirement at December 31, 2022. Holding Company Regulation Federal Holding Company Regulation .
The Federal Home Loan Banks provide a central credit facility primarily for member institutions. The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. The Bank was in compliance with this requirement at December 31, 2023. Holding Company Regulation Federal Holding Company Regulation .
In addition to the investment in employee professional development, the Bank’s benefit and compensation programs are designed to ensure we recruit and retain top talent. 21 The Bank offers employees a comprehensive health benefits package and structures its bonus program to create meaningful performance-based incentives.
In addition to the investment in employee professional development, the Bank’s benefit and compensation programs are designed to ensure we recruit and retain top talent. 19 The Bank offers employees a comprehensive health benefits package and structures its bonus program to create meaningful performance-based incentives.
We access deposit customers by offering a broad selection of deposit instruments for individuals and businesses. Deposit account terms vary according to the minimum balance required, the time period that funds must remain on deposit, and the interest rate, among other factors.
We attract deposit customers by offering a broad selection of deposit instruments for individuals and businesses. Deposit account terms vary according to the minimum balance required, the time period that funds must remain on deposit, and the interest rate, among other factors.
A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2022. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2023. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
We compete for loans by offering high quality personalized service, providing convenience and flexibility, timely responses on loan applications, and by offering competitive pricing. 7 Loan Portfolio Composition. The following table sets forth the composition of the loan portfolio at the dates indicated.
We compete for loans by offering high quality personalized service, providing convenience and flexibility, timely responses on loan applications, and by offering competitive pricing. 6 Loan Portfolio Composition. The following table sets forth the composition of the loan portfolio at the dates indicated.
A savings bank may lend an additional 10% of the bank’s capital funds if secured by collateral meeting the requirements of the New Jersey Banking Act. The Bank currently complies with applicable loan-to-one-borrower limitations. Dividends.
A savings bank may lend an additional 10% of the bank’s capital funds if secured by collateral meeting the requirements of the New Jersey Banking Act. The Bank currently complies with applicable loans-to-one-borrower limitations. Dividends.
These regulatory policies could affect the ability of Blue Foundry Bancorp to pay dividends, engage in stock repurchases or otherwise engage in capital distributions. Acquisition. The Change in Bank Control Act provides that no person may acquire control of a bank holding company, such as the Company, without the prior non-objection or approval of the Federal Reserve Board.
These regulatory policies could affect the ability of the Company to pay dividends, engage in stock repurchases or otherwise engage in capital distributions. Acquisition. The Change in Bank Control Act provides that no person may acquire control of a bank holding company, such as the Company, without the prior non-objection or approval of the Federal Reserve Board.
An institution is “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a 25 Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%.
An institution is considered “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%.
Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Also included in Tier 2 capital is the allowance for credit losses on loans limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Even outside of these circumstances, the Federal Reserve Board expects as a matter of practice to have notice and opportunity for non-objection before such an action is taken. The supervisory bulletin indicates that such notification is for purposes of allowing Federal Reserve Board supervisory review of, and possible objection to, the proposed repurchases or redemption.
Even outside of these circumstances, the Federal Reserve Board expects as a matter of practice to have notice and opportunity for non-objection before such an action is taken. The supervisory bulletin indicates that such notification is to allow Federal Reserve Board supervisory review of, and possible objection to, the proposed repurchases or redemption.
If payment is made and the loan is brought current, foreclosure proceedings are discontinued, and the borrower is permitted to continue to make payments. If the borrower does not respond, we will initiate foreclosure proceedings. Loans Past Due and Non-Performing Assets. Loans are reviewed on a regular basis.
If payment is made and the loan is brought current, foreclosure proceedings are discontinued, and the borrower is permitted to continue to make payments. If the borrower does not cure the default, we will initiate foreclosure proceedings. Loans Past Due and Non-Performing Assets. Loans are reviewed on a regular basis.
New Jersey, counted among the wealthiest states in the nation with an estimated population of 9.26 million, is considered one of the most attractive banking markets in the United States. Within our primary market areas, the Bank had less than 1% of bank deposit market share as of June 30, 2022, the latest date for which statistics are available.
New Jersey, counted among the wealthiest states in the nation with an estimated population of 9.29 million, is considered one of the most attractive banking markets in the United States. Within our primary market areas, the Bank had less than 1% of bank deposit market share as of June 30, 2023, the latest date for which statistics are available.
Subject to market conditions and our asset-liability analysis, we expect to continue to focus on commercial real estate, multi-family and traditional C&I lending as part of our effort to diversify the loan portfolio and increase the overall yield earned on our loans.
Subject to market conditions and our asset-liability analysis, we expect to continue to focus on commercial real estate, multifamily and traditional C&I lending as part of our effort to diversify the loan portfolio and increase the overall yield earned on our loans.
Blue Foundry Bank’s principal business consists of originating one-to-four family residential, multi-family, and non-residential real estate mortgages, home equity loans and lines of credit, construction, and commercial and industrial loans in our principal market and surrounding areas. In addition, we often lend outside of our branch network in more densely populated and metropolitan areas, adding diversification to our loan portfolio.
Blue Foundry Bank’s principal business consists of originating one-to-four family residential, multifamily, and non-residential real estate mortgages, home equity loans and lines of credit, construction and commercial and industrial loans in our principal market and surrounding areas. In addition, we occasionally lend outside of our branch network in more densely populated and metropolitan areas, adding diversification to our loan portfolio.
Non-residential real estate loans are underwritten to asset specific guidelines in accordance to policy with the loan-to-value ratio limit generally being 75% of the appraised value of the property. At December 31, 2022, our largest non-residential real estate loan totaled $24.7 million and was secured by a grocery-anchored shopping center.
Non-residential real estate loans are underwritten to asset specific guidelines in accordance to policy with the loan-to-value ratio limit generally being 75% of the appraised value of the property. At December 31, 2023, our largest non-residential real estate loan totaled $24.3 million and was secured by a grocery-anchored shopping center.
Federal Securities Laws The Company’s common stock is registered with the Securities and Exchange Commission. Blue Foundry Bancorp is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Exchange Act. Emerging Growth Company Status. We are an emerging growth company.
Federal Securities Laws The Company’s common stock is registered with the Securities and Exchange Commission. The Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Exchange Act. Emerging Growth Company Status. We are an emerging growth company.
At December 31, 2022, our securities portfolio consisted of approximately 60% high-quality liquid assets, with the remaining 40% consisting of corporate bonds, municipal bonds, privately issued asset-backed securities and other investment securities. Approximately 90% of our securities portfolio was classified as available for sale, with the remaining 10% classified as held to maturity. 18 Portfolio Maturities and Yields.
At December 31, 2023, our securities portfolio consisted of approximately 60% high-quality liquid assets, with the remaining 40% consisting of corporate bonds, municipal bonds, privately issued asset-backed securities and other investment securities. Approximately 90% of our securities portfolio was classified as available-for-sale, with the remaining 10% classified as held-to-maturity. 16 Portfolio Maturities and Yields.
The Company is a bank holding company registered with the Federal Reserve Board and is subject to regulations, examination, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board will have enforcement authority over the Company and its non-savings bank subsidiaries.
The Company is a bank holding company registered with the Federal Reserve Board and is subject to regulations, examination, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board has enforcement authority over the Company and its non-savings bank subsidiaries.
The regulatory structure gives the FDIC extensive discretion in connection with its supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for loan losses for regulatory purposes. The Bank must file reports with the FDIC concerning its activities and financial condition.
The regulatory structure gives the FDIC extensive discretion in connection with its supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for credit losses on loans for regulatory purposes. The Bank must file reports with the FDIC concerning its activities and financial condition.
Credit Policy and Procedures Loan Approval Procedures and Authority . Our lending activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by management and approved by our Board of Directors. The Board of Directors has granted loan approval authority to certain officers up to prescribed limits, depending on the officer’s title, experience, and the type of loan.
Our lending activities follow written, non-discriminatory, underwriting standards and loan origination policies established by management and approved by our Board of Directors. The Board of Directors has granted loan approval authority to certain officers up to prescribed limits, depending on the officer’s title, experience, and the type of loan.
In addition, the NJDOBI and the FDIC periodically review our allowance for loan losses and as a result of such reviews, they may require us to adjust our allowance for loan losses or recognize loan charge-offs. The following table sets forth activity in our allowance for loan losses for the periods indicated.
In addition, the NJDOBI and the FDIC periodically review our allowance for credit losses on loans and as a result of such reviews, they may require us to adjust our allowance for credit losses on loans or recognize loan charge-offs. 14 The following table sets forth activity in our allowance for credit losses on loans for the periods indicated.
The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies regarding classifying assets and establishing an adequate allowance for loan losses for regulatory purposes. New Jersey Banking Laws and Supervision Activity Powers.
The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies regarding classifying assets and establishing an adequate allowance for credit losses on loans for regulatory purposes. New Jersey Banking Laws and Supervision Activity Powers.
Under the Community Reinvestment Act, or “CRA,” as implemented by the FDIC, a state nonmember bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods.
Under the Community Reinvestment Act (“CRA”), as implemented by the FDIC, a state nonmember bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods.
The following table sets forth our amounts of special mention and classified loans as of December 31, 2022 and 2021.
The following table sets forth our amounts of special mention and classified loans as of December 31, 2023 and 2022.
The exercise of these lending, investment and activity powers is limited by federal law and regulations. See “—Federal Bank Regulation—Activities and Investments” below. Certain corporate transactions by a savings bank, such as establishing branches and acquiring other banks, require the prior approval of the NJDOBI. Loan-to-One-Borrower Limitations.
The exercise of these lending, investment and activity powers is limited by federal law and regulations. See “Federal Bank Regulation Activities and Investments” below. Certain corporate transactions by a savings bank, such as establishing branches and acquiring other banks, require the prior approval of the NJDOBI. 20 Loans-to-One-Borrower Limitations.
The Company had New Jersey net operating loss carryforwards totaling $26.4 million, the majority of which will expire in 19.0 years years. The Company’s New Jersey State income tax returns were subject to an audit for the years 2015 through 2018, which concluded in January 2022 without findings. New York State Taxation .
The Company had New Jersey net operating loss carryforwards totaling $33.0 million, the majority of which will expire in 18 years. The Company’s New Jersey State income tax returns were subject to an audit for the years 2015 through 2018, which concluded in January 2022 without findings. New York State Taxation .
Such activities may include insurance underwriting and investment banking. Blue Foundry Bancorp has no plans to elect “financial holding company” status at this time. Capital. Federal legislation required the Federal Reserve Board to establish minimum consolidated capital requirements for bank and savings and loan holding companies that are as stringent as those applicable to their insured depository subsidiaries.
Such activities may include insurance underwriting and investment banking. The Company has no plans to elect “financial holding company” status at this time. Capital. Federal legislation required the Federal Reserve Board to establish minimum consolidated capital requirements for bank holding companies that are as stringent as those applicable to their insured depository subsidiaries.
We generally originate multi-family real estate loans with maximum terms of 10 years based on amortization periods between 25 and 30 years. We generally limit loan-to-value ratios to less than 80% of the appraised value of the property for multi-family real estate loans. Our multi-family real estate loans are offered with fixed and adjustable rate interest terms.
We generally originate multifamily loans with maximum terms of 10 years based on amortization periods between 25 and 30 years. We generally limit loan-to-value ratios to less than 80% of the appraised value of the property for multifamily loans. Our multifamily loans are offered with fixed and adjustable rate interest terms.
The Bank also has five inactive subsidiaries formed to hold certain real estate owned, of which two are New Jersey corporations: Rutherford Center Development Corp. and Blue Foundry Service Corporation and three are New Jersey limited liability companies: Blue Foundry, LLC, 116-120 Route 23 North, LLC, and TrackView LLC.
The Bank also has four subsidiaries formed to hold certain real estate owned, of which two are New Jersey corporations, Rutherford Center Development Corp. and Blue Foundry Service Corporation, and two are New Jersey limited liability companies, Blue Foundry, LLC and 116-120 Route 23 North, LLC.
The following tables set forth the allowance for loan losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated.
The following tables set forth the allowance for credit losses on loans allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated.
Additionally, we do not offer “subprime loans” (loans that are made with low down-payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than full documentation). 9 Multi-Family Real Estate Loans .
Additionally, we do not offer “subprime loans” (loans that are made with low down-payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than full documentation). 8 Multifamily Loans .
In 1992, Boiling Springs Savings & Loan Association converted to a New Jersey-chartered mutual savings bank and became known as Boiling Springs Savings Bank. Boiling Springs Savings Bank’s name was changed to Blue Foundry Bank in 2019. At December 31, 2022, the Bank had assets of $2.04 billion, net loans of $1.53 billion and deposits of $1.39 billion.
In 1992, Boiling Springs Savings & Loan Association converted to a New Jersey-chartered mutual savings bank and became known as Boiling Springs Savings Bank. Boiling Springs Savings Bank’s name was changed to Blue Foundry Bank in 2019. At December 31, 2023, the Bank had assets of $2.04 billion, net loans of $1.55 billion and deposits of $1.24 billion.
At December 31, 2022 One Year or Less More than One Year to Five Years More than Five Years to Ten Years More than Ten Years Total Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield (Dollars in thousands) Available for sale: U.S.
One Year or Less More than One Year to Five Years More than Five Years to Ten Years More than Ten Years Total Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield (Dollars in thousands) Available-for-sale: U.S.
A bank’s loans to its executive officers, directors, any owner of 10% or more of its stock (each, an insider) and any of certain entities affiliated with any such person (an insider’s related interest) as well as loans to insiders of affiliates and such insiders’ related interests are subject to the conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and its implementing regulations.
A bank’s loans to its executive officers, directors, any owner of 10% or more of its stock (each, an insider) and any of certain entities controlled by any such person (an insider’s related interests), as well as loans to insiders of affiliates and such insiders’ related interests, are subject to the conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and its implementing regulation, Regulation O.
Loans to an executive officer, other than loans for the education of the officer’s children and certain loans secured by the officer’s residence, may not exceed the lesser of (1) $100,000 or (2) the greater of $25,000 or 2.5% of the bank’s unimpaired capital and surplus.
Loans to an executive officer, other than loans for the education of the officer’s children and certain loans secured by the officer’s residence, may not exceed the greater of $25,000 or 2.5% of the bank’s unimpaired capital and surplus, and in no event may exceed $100,000.
At December 31, 2022 based on the 15% limitation, the Bank’s loans-to-one-borrower limit was approximately $47.0 million, our internal policy limit was $42.3 million, representing 90% of the 15% limit. On the same date, the Bank had no borrowers with outstanding balances in excess of this amount.
At December 31, 2023, based on the 15% limitation, the Bank’s loans-to-one-borrower limit was approximately $46.6 million, our internal policy limit was $42.0 million, representing 90% of the 15% limit. On the same date, the Bank had no borrowers with outstanding balances in excess of this amount.
The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
The allowance for credit losses on loans allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
An institution is “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets equal to or less than 2.0%. At December 31, 2022, the Bank was classified as a “well capitalized” institution.
An institution is considered “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets equal to or less than 2.0%. At December 31, 2023, the Bank was classified as a “well capitalized” institution under these definitions.
Blue Foundry Bank The Bank is a New Jersey-chartered stock savings bank that was organized in 1939 as Boiling Springs Savings & Loan Association by the combination of the Rutherford Mutual Loan and Building Association and the East Rutherford Savings, Loan and Building Association.
Blue Foundry Bank The Bank is a New Jersey-chartered stock savings bank that was organized in 1939 as Boiling Springs Savings & Loan Association by the combination of the Rutherford Mutual Loan and Building Association, which had been founded in 1876, and the East Rutherford Savings, Loan and Building Association.
The regulations require that any proposed loan to an insider, or a related interest of that insider, be approved in advance by a majority of the Board of Directors of the bank, with any interested directors not participating in the voting, if that loan, combined with previous loans by the bank to the insider and his or her related interests, exceeds specified amounts.
Regulation O requires that any proposed loan to an insider, or a related interest of that insider, be approved in advance by a majority of the Board of Directors of the bank, with any interested directors not participating directly or indirectly in the voting, if that loan, combined with previous loans by the bank to the insider and his or her related interests, exceeds specified amounts.
Our deposit pricing strategy has been to offer competitive rates, but generally not the highest rates offered in the market, and to periodically offer special rates to attract deposits of a specific type or with a specific term. Deposit pricing is reviewed regularly as warranted by market conditions. We may supplement customer deposits with listed and brokered deposits.
Our deposit pricing strategy has been to offer competitive rates, but generally not the highest rates offered in the market, and to periodically offer special rates to attract deposits of a specific type or with a specific term. We may supplement customer deposits with listed and brokered deposits.
The Company has policies, procedures and systems designed to comply with these regulations. 30 TAXATION Federal Taxation General. The Company and the Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below.
The Company has policies, procedures and systems designed to comply with this Act and its implementing regulations. TAXATION Federal Taxation General. The Company and the Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below.
Further expected interest rate increases, persistently high inflation and geopolitical tensions have increased uncertainty and elevated the risk of recession in the US economy. Historically, our lending activities have emphasized one-to-four family residential real estate loans and multifamily housing loans, and such loans continue to comprise the largest portion of our loan portfolio.
Persistently high inflation and geopolitical tensions have continued to increase uncertainty and elevated the risk of recession in the US economy. Historically, our lending activities have emphasized one-to-four family residential real estate loans and multifamily housing loans, and such loans continue to comprise the largest portion of our loan portfolio.
These repricing schedules are not reflected in the table below. Weighted average yield calculations on investment securities available for sale do not give effect to changes in fair value that are reflected as a component of equity.
Weighted average yield calculations on investment securities available-for-sale do not give effect to changes in fair value that are reflected as a component of equity.
A company loses emerging growth company status on the earlier of: (1) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07 billion or more; (2) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act; (3) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (4) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, a “large accelerated filer” is defined as a corporation with at least $700 million of voting and non-voting equity held by non-affiliates).
Due to our use of the extended transition period, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. 27 A company loses emerging growth company status on the earlier of: (1) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07 billion or more; (2) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act; (3) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (4) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, a “large accelerated filer” is defined as a corporation with at least $700 million of voting and non-voting equity held by non-affiliates).
Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.
Classified Assets . Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered to be of lesser quality, as substandard, doubtful or loss. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.
Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and Tier 2 capital.
Common equity Tier 1 capital is generally defined as common shareholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries.
Generally, Section 23A of the Federal Reserve Act and the Federal Reserve Board’s Regulation W prohibit a bank and its subsidiaries from engaging in a “covered transaction” with an affiliate if the aggregate amount of covered transactions outstanding with that affiliate, including the proposed transaction, would exceed an amount equal to 10.0% of the bank’s capital stock and surplus.
Generally, Section 23A of the Federal Reserve Act, applicable to FDIC-insured state nonmember banks by Section 18(j) of the Federal Deposit Insurance Act, and the Federal Reserve Board’s Regulation W prohibit a bank and its subsidiaries from engaging in a “covered transaction” with an affiliate if the aggregate amount of covered transactions outstanding with that affiliate, including the proposed transaction, would exceed an amount equal to 10.0% of the bank’s capital stock and surplus.
Section 23B applies to “covered transactions,” as well as to certain other transactions, and requires that all such transactions be on terms substantially the same, or at least as favorable, to the institution or subsidiary as prevailing market terms for transactions with or involving a non-affiliate.
Section 23B of the Federal Reserve Act applies to “covered transactions,” as well as to certain other transactions, and requires that all such transactions be on terms and under circumstances that are substantially the same as, or at least as favorable to, the institution as prevailing market terms for comparable transactions with or involving a non-affiliate.
Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
Listed deposits totaled $40.4 million and $65.3 million at December 31, 2022 and 2021, respectively. At December 31, 2022, brokered deposits totaled $75.0 million. There were no brokered deposits at December 31, 2021. The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition.
Listed deposits totaled $11.4 million and $40.4 million at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, brokered deposits totaled $125.0 million and $75.0 million, respectively. The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition.
Transaction with Affiliates and Regulation W of the Federal Reserve Regulations/Loans to Insiders. Transactions between banks and their affiliates are governed by federal law.
Transaction with Affiliates and Regulation W / Loans to Insiders and Regulation O . Transactions between banks and their affiliates are governed by federal law.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOne owned branch office is expected to cease operations and the building sold during the second quarter of 2023, decreasing the properties owned to five. The aggregate net book value of premises and equipment was $29.8 million at December 31, 2022.
Biggest changeWe own five properties and lease 16 properties at December 31, 2023. The aggregate net book value of premises and equipment was $32.5 million at December 31, 2023.
ITEM 2. PROPERTIES At December 31, 2022, the Company and the Bank conducted business through 18 full-service branch offices, located in northern New Jersey, and the Company’s administrative offices located at 7 Sylvan Way, Parsippany, New Jersey.
ITEM 2. PROPERTIES At December 31, 2023, the Company and the Bank conducted business through 20 full-service branch offices, located in northern New Jersey and the Company’s administrative offices located at 7 Sylvan Way, Parsippany, New Jersey. The Company’s principal executive office is located at 19 Park Avenue, Rutherford, New Jersey.
Removed
The Company’s principal executive office is located at 19 Park Avenue, Rutherford, New Jersey. 45 We own six properties and lease 12 properties at December 31, 2022. Three branches are expected to open in 2023, increasing the number of leased properties to 15.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt December 31, 2022, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. PART II
Biggest changeAt December 31, 2023, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 43 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased (1) Average Price paid Per Share As part of Publicly Announced Plans or Programs Yet to be Purchased Under the Plans or Programs (1) October 223,436 $11.79 223,436 1,962,125 November 228,515 12.70 228,515 1,733,610 December 180,122 12.78 180,122 1,553,488 Total 632,073 12.40 632,073 (1) On July 20, 2022, the Company adopted a program to repurchase up to 2,852,250 shares, or 10%, of its outstanding common stock.
Biggest changePeriod Total Number of Shares Purchased (1) Average Price paid Per Share As part of Publicly Announced Plans or Programs Yet to be Purchased Under the Plans or Programs (1) October 148,810 $7.87 148,810 947,399 November 283,300 8.37 283,300 664,099 December 225,052 9.71 225,052 439,047 Total 657,162 $8.72 657,162 (1) On April 19, 2023, the Company adopted its second program to repurchase up to 1,335,126 shares, or 5%, of its outstanding common stock.
No assurances can be given that any cash dividends will be paid or that, if paid, will not be reduced or eliminated in the future. Issuer Purchases of Equity Securities The following table reports information regarding repurchases of our common stock during the quarter ended December 31, 2022 and the stock repurchase plans approved by our Board of Directors.
No assurances can be given that any cash dividends will be paid or that, if paid, will not be reduced or eliminated in the future. Issuer Purchases of Equity Securities The following table reports information regarding repurchases of our common stock during the quarter ended December 31, 2023 and the stock repurchase plans approved by our Board of Directors.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is listed on the Nasdaq Global Select Market under the trading symbol “BLFY.” Trading in the Company’s common stock commenced on July 16, 2021. As of December 31, 2022, there were 1,254 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is listed on the Nasdaq Global Select Market under the trading symbol “BLFY.” Trading in the Company’s common stock commenced on July 16, 2021. As of December 31, 2023, there were 1,308 stockholders of record.
Removed
This program has no expiration date and has 1,553,488 shares yet to be repurchased as of December 31, 2022. 46
Added
On August 16, 2023, the Company adopted its third repurchase program, which authorized the purchase of 5%, or 1,268,382 shares, of its outstanding common stock commencing upon the completion of the Company’s second stock repurchase program on August 17, 2023. The third repurchase program has no expiration date. ITEM 6. [RESERVED] 44

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, 2022 2021 Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost (Dollar in thousands) Assets: Loans (1) $ 1,407,502 $ 52,279 3.71 % $ 1,274,885 $ 48,719 3.82 % Mortgage-backed securities 190,540 3,934 2.06 % 154,882 2,908 1.88 % Other investment securities 203,002 4,820 2.37 % 147,853 3,237 2.19 % FHLB stock 12,629 587 4.65 % 14,373 744 5.17 % Cash and cash equivalents 88,703 793 0.89 % 356,458 445 0.12 % Total interest earning assets 1,902,376 62,413 3.28 % 1,948,451 56,053 2.88 % Non-interest earning assets 64,786 87,443 Total assets $ 1,967,162 $ 2,035,894 Liabilities and shareholders' equity: NOW, savings, and money market deposits $ 812,473 2,959 0.36 % $ 676,697 1,091 0.16 % Time deposits 412,734 2,779 0.67 % 610,092 6,793 1.11 % Interest bearing deposits 1,225,207 5,738 0.47 % 1,286,789 7,884 0.61 % FHLB advances 235,589 4,832 2.05 % 280,985 5,220 1.86 % Total interest bearing liabilities 1,460,796 10,570 0.72 % 1,567,774 13,104 0.84 % Non-interest bearing deposits 44,029 106,033 Non-interest bearing other 47,707 47,560 Total liabilities 1,552,532 1,721,367 Total shareholders' equity 414,630 314,527 Total liabilities and shareholders' equity $ 1,967,162 $ 2,035,894 Net interest income $ 51,843 $ 42,949 Net interest rate spread (2) 2.56 % 2.04 % Net interest margin (3) 2.73 % 2.20 % (1) Average loan balances are net of deferred loan fees and costs, premiums and discounts, and includes non-accrual loans.
Biggest changeYear Ended December 31, 2023 2022 Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost (Dollars in thousands) Assets: Loans (1) $ 1,569,590 $ 65,685 4.18 % $ 1,407,502 $ 52,279 3.71 % Mortgage-backed securities 172,405 3,693 2.14 % 190,540 3,934 2.06 % Other investment securities 195,754 6,010 3.07 % 203,002 4,820 2.37 % FHLB stock 21,249 1,582 7.45 % 12,629 587 4.65 % Cash and cash equivalents 46,245 2,135 4.62 % 88,703 793 0.89 % Total interest earning assets 2,005,243 79,105 3.94 % 1,902,376 62,413 3.28 % Non-interest earning assets 56,297 64,786 Total assets $ 2,061,540 $ 1,967,162 Liabilities and shareholders' equity: NOW, savings, and money market deposits $ 722,149 8,339 1.15 % $ 812,473 2,959 0.36 % Time deposits 501,124 15,777 3.15 % 412,734 2,779 0.67 % Interest bearing deposits 1,223,273 24,116 1.97 % 1,225,207 5,738 0.47 % FHLB advances 396,265 13,070 3.30 % 235,589 4,832 2.05 % Total interest bearing liabilities 1,619,538 37,186 2.30 % 1,460,796 10,570 0.72 % Non-interest bearing deposits 25,227 44,029 Non-interest bearing other 43,868 47,707 Total liabilities 1,688,633 1,552,532 Total shareholders' equity 372,907 414,630 Total liabilities and shareholders' equity $ 2,061,540 $ 1,967,162 Net interest income $ 41,919 $ 51,843 Net interest rate spread (2) 1.64 % 2.56 % Net interest margin (3) 2.09 % 2.73 % (1) Average loan balances are net of deferred loan fees and costs, premiums and discounts and includes non-accrual loans.
We use the same credit policies in making commitments that we do for on-balance sheet instruments. Management believes that our current sources of liquidity are more than sufficient to fulfill our obligations as of December 31, 2022 pursuant to off-balance-sheet arrangements and contractual obligations.
We use the same credit policies in making commitments that we do for on-balance sheet instruments. Management believes that our current sources of liquidity are more than sufficient to fulfill our obligations as of December 31, 2023 pursuant to off-balance-sheet arrangements and contractual obligations.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section is intended to assist in the understanding of the financial performance of the Company and its subsidiary through a discussion of our financial condition as of December 31, 2022, and our results of operations for the years ended December 31, 2022 and 2021.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section is intended to assist in the understanding of the financial performance of the Company and its subsidiary through a discussion of our financial condition as of December 31, 2023, and our results of operations for the years ended December 31, 2023 and 2022.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average interest-earning assets. 52 Rate/Volume Table The following table sets forth the effects of changing rates and volumes on net interest income.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average interest-earning assets. 48 Rate/Volume Table The following table sets forth the effects of changing rates and volumes on net interest income.
These accounting policies and our significant accounting policies are discussed in detail in Note 1 to our Consolidated Financial Statements included in Part II, Item 8. 49 Comparison of Operating Results for the Years Ended December 31, 2022 and 2021 General .
These accounting policies and our significant accounting policies are discussed in detail in Note 1 to our Consolidated Financial Statements included in Part II, Item 8. Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 General .
Our borrowings consisted solely of Federal Home Loan Bank of New York advances. $109.0 million of which are associated with longer-dated swap agreements. See Note 10, Derivatives, of Notes to Consolidated Financial Statements in “Part II, Item 8- Financial Statements.” Total Shareholders’ Equity.
Our borrowings consisted solely of Federal Home Loan Bank of New York advances, $209.0 million of which are associated with longer-dated swap agreements. See Note 12, Derivatives, of Notes to Consolidated Financial Statements in “Part II, Item 8- Financial Statements.” Total Shareholders’ Equity.
Facts and circumstances that could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. The Company has identified the allowance for loan losses and income taxes to be a critical accounting policy.
Facts and circumstances that could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. The Company has identified the allowance for credit losses on loans and income taxes to be a critical accounting policy.
The Bank has entered into derivative financial instruments to reduce risk associated with interest rate volatility by matching repricing terms of assets and liabilities. These derivatives had an aggregate notional amount of $109.0 million as of December 31, 2022. See Note 10 of the Notes to the Consolidated Financial Statements.
The Bank has entered into derivative financial instruments to reduce risk associated with interest rate volatility by matching repricing terms of assets and liabilities. These derivatives had an aggregate notional amount of $259.0 million and $109.0 million at of December 31, 2023 and 2022, respectively.
We believe pursuing this strategy will allow us to both grow and diversify our business mix while providing us with the best opportunities to drive strong financial returns.
We look to partner with our customers in their journey to build their businesses. We believe pursuing this strategy will allow us to both grow and diversify our business mix while providing us with the best opportunities to drive strong financial returns.
Borrowings. The Company had $310.5 million of borrowings at December 31, 2022, an increase of $125.0 million, or 67.4%, from $185.5 million at December 31, 2021. The increase is related to the execution of short-term borrowings during the second half of 2022 to support loan growth.
Borrowings. The Company had $397.5 million of borrowings at December 31, 2023, an increase of $87.0 million, or 28.0%, from $310.5 million at December 31, 2022. The increase is related to the execution of short-term borrowings during the 2023 to support loan growth.
The average balance of securities and loans increased $89.1 million and $132.6 million, respectively, while the average balance of cash decreased $267.8 million. Interest income and average balances of loans for the year ended December 31, 2022 as compared to the 2021 period increased due to growth in the multifamily and non-residential mortgage portfolios.
The average balance of loans increased $162.1 million, while the average balances of cash and securities decreased $42.5 million and $25.4 million, respectively. Average balances of loans for the year ended December 31, 2023 as compared to the 2022 period increased due to growth in the multifamily and non-residential mortgage portfolios. Interest Expense.
The increase is related to the purchases of Federal Home Loan Bank of New York stock made in conjunction with borrowings in the second half of 2022. Gross Loans . Gross loans held for investment increased $261.1 million, or 20.37%, to $1.542 billion at December 31, 2022 from $1.281 billion at December 31, 2021.
The increase was related to the purchases of Federal Home Loan Bank of New York stock made in conjunction with borrowings in 2023. Gross Loans . Gross loans held for investment increased $15.6 million, or 1.01%, to $1.56 billion at December 31, 2023 from $1.55 billion at December 31, 2022.
For the year ended December 31, 2022 net interest income was $51.8 million, an increase of $8.9 million or 20.7%, compared to $42.9 million for same period in 2021. Net interest margin for the year ended December 31, 2022 increased by 53 basis points to 2.73% from 2.20% for the year ended December 31, 2021.
Net Interest Income and Margin. For the year ended December 31, 2023 net interest income was $41.9 million, a decrease of $9.9 million or 19.1%, compared to $51.8 million for same period in 2022. Net interest margin for the year ended December 31, 2023 decreased by 64 basis points to 2.09% from 2.73% for the year ended December 31, 2022.
The following table presents the totals of deposit accounts by account type, at the dates shown below: December 31, 2022 December 31, 2021 (In thousands) Non-interest bearing deposits $ 37,907 $ 44,894 NOW and demand accounts (1) 410,937 363,419 Savings (1) 423,758 364,932 Time deposits 416,260 473,795 Total Deposits $ 1,288,862 $ 1,247,040 (1) Money market accounts are included within the NOW and demand accounts and Savings captions.
This shift resulted in the ratio of core deposits to total deposits decreasing from 67.7% at December 31, 2022 to 52.1% at December 31, 2023. 50 The following table presents the totals of deposit accounts by account type, at the dates shown below: December 31, 2023 December 31, 2022 (In thousands) Non-interest bearing deposits $ 27,739 $ 37,907 NOW and demand accounts (1) 361,139 410,937 Savings (1) 259,402 423,758 Time deposits 596,624 416,260 Total deposits $ 1,244,904 $ 1,288,862 (1) Money market accounts are included within the NOW and demand accounts and savings captions.
Interest Income. Interest income increased $6.4 million, or 11.3%, to $62.4 million for the year ended December 31, 2022 from $56.1 million for the year ended December 31, 2021. The increase was due to an increase of $3.6 million in interest income from loans and an increase of $2.9 million in interest income from cash and securities.
Interest income increased $16.7 million, or 26.7%, to $79.1 million for the year ended December 31, 2023 from $62.4 million for the year ended December 31, 2022. The increase was due to an increase in market rates with interest income from loans and securities increasing $13.4 million and $3.3 million, respectively.
Net income was $2.4 million for the year ended December 31, 2022, compared to a net loss of $36.3 million for the year ended December 31, 2021.
The Company recorded a net loss for the year ended December 31, 2023 of $7.4 million compared to net income of $2.4 million for the year ended December 31, 2022. The decrease was largely driven by a decrease of $9.9 million in net interest income. Interest Income.
As a result, we believe we are well positioned to capitalize on the opportunities available in our market by focusing on the following core strategies. Repositioning our Business Mix: Focus on building commercial and small-business relationships.
As a result, we believe we are well positioned to capitalize on the opportunities available in our market by focusing on the following core strategies. Grow funding sources with an emphasis on core deposits to improve cost and mix and improve our Loan/Deposit ratio.
The Bank is subject to various regulatory capital requirements administered by the NJDOBI and the FDIC. At December 31, 2022, the Bank exceeded all applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines. See “Item 1. Business—Supervision and Regulation—Federal Banking Regulation—Capital Requirements” and Note 17 of the Notes to the Consolidated Financial Statements.
At December 31, 2023, Blue Foundry Bancorp (unconsolidated) had liquid assets of $61.4 million. The Bank is subject to various regulatory capital requirements administered by the NJDOBI and the FDIC. At December 31, 2023, the Bank exceeded all applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines. See “Item 1.
Management expects, based on historical experience, that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. Available borrowing capacity at December 31, 2023 was $320.0 million with FHLB.
The table below presents the balance of non-performing assets on the dates indicated: December 31, 2022 December 31, 2021 (In thousands) Residential one-to-four family $ 7,498 $ 10,805 Multifamily 182 139 Non-residential — 857 Construction and land — — Junior liens 52 182 Commercial and industrial (1) 35 — Total $ 7,767 $ 11,983 Other real estate owned — — Total non-performing assets $ 7,767 $ 11,983 (1) PPP loans 90 days past due and accruing totaled $61 thousand and $116 thousand at December 31, 2022 and 2021, respectively.
The table below presents the balance of non-performing assets on the dates indicated: December 31, 2023 December 31, 2022 (In thousands) Residential one-to-four family $ 5,884 $ 7,498 Multifamily 146 182 Non-residential — — Construction — — Junior liens 49 52 Commercial and industrial 39 35 Consumer and other — — Total $ 6,118 $ 7,767 Other real estate owned 593 — Total non-performing assets $ 6,711 $ 7,767 Other Assets.
After an evaluation of these factors, the Company recorded a release of provision for loan losses of $1.0 million for the year ended December 31, 2022 compared to a release of $2.5 million for the year ended December 31, 2021.
Prior year disclosures have not been restated. The Company recorded a net release of provision for credit losses of $441 thousand for the year ended December 31, 2023 compared to a release of provision for loan losses of $1.0 million for the year ended December 31, 2022.
The following table presents loans allocated by loan category: December 31, 2022 December 31, 2021 (In thousands) Residential one-to-four family $ 594,521 $ 560,976 Multifamily 690,278 515,240 Non-residential 216,394 141,561 Construction and land 17,990 23,419 Junior liens 18,477 18,464 Commercial and industrial (1) 4,682 21,563 Consumer and other 38 87 Total gross loans 1,542,380 1,281,310 Deferred fees, costs and premiums and discounts, net 2,747 6,299 Total loans 1,545,127 1,287,609 Allowance for loan losses (13,400) (14,425) Loans receivable, net $ 1,531,727 $ 1,273,184 (1) At December 31, 2022 and 2021, PPP loans totaled $477 thousand and $16.8 million, respectively, net of unearned deferred fees.
Originations totaled $119.6 million during 2023, including originations of $35.6 million in construction loans, $27.4 million in non-residential real estate loans, and $17.3 million in multifamily loans. 49 The following table presents loans allocated by loan category: December 31, 2023 December 31, 2022 (In thousands) Residential one-to-four family $ 550,929 $ 594,521 Multifamily 682,564 690,278 Non-residential 232,505 216,394 Construction 60,414 17,990 Junior liens 22,503 18,477 Commercial and industrial 11,768 4,682 Consumer and other 47 38 Total gross loans 1,560,730 1,542,380 Deferred fees, costs and premiums and discounts, net (1) — 2,747 Total loans $ 1,560,730 $ 1,545,127 (1) With the adoption of ASU No. 2016-13, net deferred fees and costs are allocated to the loan segments.
Given its dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business. Business Strategy The Company’s goal is to position ourselves to prosper in an evolving financial services landscape and enhance our position as one of the leading community banking institutions in our market.
This section should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements that appear at the end of this report. Business Strategy The Company’s goal is to position ourselves to prosper in an evolving financial services landscape and enhance our position as one of the leading community banking institutions in our market.
At December 31, 2022, we had outstanding commitments to originate loans of $8.0 million and unused lines of credit of $80.0 million. We anticipate that we will have sufficient funds available to meet our current loan origination commitments. Certificates of deposit that are scheduled to mature in less than one year from December 31, 2022 totaled $294.9 million.
See Note 12 of the Notes to the Consolidated Financial Statements. 51 At December 31, 2023, we had outstanding commitments to originate loans of $18.1 million and unused lines of credit of $92.7 million. We anticipate that we will have sufficient funds available to meet our current loan origination commitments.
The cost of average interest-bearing liabilities decreased 12 basis points to 0.72% for the year ended December 31, 2022 from 0.84% for the year ended December 31, 2021. Net Interest Income and Margin.
The yield on average interest-earning assets increased 66 basis points to 3.94% for the year ended December 31, 2023 from 3.28% for the year ended December 31, 2022, while the cost of average interest-bearing liabilities increased 158 basis points to 2.30% for the year ended December 31, 2023 from 0.72% for the year ended December 31, 2022.
These decreases were partially offset by net income of $2.4 million. 55 Liquidity and Capital Resources Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of securities, borrowings from the FHLB and securities sold under agreements to repurchase.
Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of securities, borrowings from the FHLB and securities sold under agreements to repurchase.
Interest expense decreased $2.5 million, or 19.3%, to $10.6 million for the year ended December 31, 2022 compared to $13.1 million for the year ended December 31, 2021. The decrease in interest expense was driven by a decrease of $2.1 million in interest expense on deposits, coupled with a decrease of $388 thousand in interest expense on borrowings.
Interest expense increased $26.6 million, or 251.8%, to $37.2 million for the year ended December 31, 2023 compared to $10.6 million for the year ended December 31, 2022. The increase in interest expense was driven by increases of $18.4 million and $8.2 million in interest expense on deposits and borrowings, respectively due to an increase in rates paid.
We intend to pursue these commercial relationships through the lending, retail branch, and the retail business development personnel that we have recruited and continue to recruit, who have the experience and relationships necessary to build this business as well as through cultural changes that have been made across the organization that emphasize our goal of pursuing this strategy.
We intend to pursue these commercial relationships through the lending, retail branch and the retail business development personnel that we have recruited and continue to recruit, who have the experience and relationships necessary to build relationships with the privately-owned businesses managed and/or operating within the market and those located in areas targeted for expansion.
A decrease of $197.4 million in the average balance of higher cost time deposits partially offset by an increase of $135.8 million in the average balance of interest-bearing core deposits (checking, savings and money market accounts) drove a 12 basis point decrease in the cost of total deposits and a 8 basis point decrease in the cost of funds.
The average balance of FHLB advances increased $160.7 million offset by a small decrease in the average balance of interest bearing deposits of $1.9 million. Balances shifted from interest-bearing core deposits (checking, savings and money market accounts) to higher-cost time deposits with average interest-bearing core deposits declining by $90.3 million and average time deposits increasing $88.4 million.
Securities available-for-sale decreased $10.6 million, or 3.3%, to $314.2 million at December 31, 2022 from $324.9 million at December 31, 2021. During the year ended December 31, 2022, purchases of securities were more than offset by the fair value decline in the portfolio, as well as amortization and calls.
Securities available-for-sale decreased $30.5 million, or 9.7%, to $283.8 million at December 31, 2023 from $314.2 million at December 31, 2022 due to amortization, maturities, calls and sales during the year. In addition, the unrealized loss on available-for-sale securities increased by $5.5 million. During the year ended December 31, 2023, the Company sold $9.1 million of available-for-sale securities.
These PPP loans were not reported in non-performing loans as they carry the federal guarantee of the SBA. 54 Other Assets. Other assets increased $13.6 million, or 158.0%, to $22.2 million at December 31, 2022 from $8.6 million at December 31, 2021. This increase was primarily driven by the increase in fair value of the Company’s interest rate swap agreements.
Other assets increased $4.9 million, or 22.2%, to $27.1 million at December 31, 2023 from $22.2 million at December 31, 2022. This increase was primarily driven by the increase in fair value of the Company’s interest rate swap agreements. See Note 12, Derivatives, of Notes to Consolidated Financial Statements in “Part II, Item 8- Financial Statements.” Total Deposits.
Time deposits decreased $57.5 million, or 12.1%, to $416.3 million with a weighted average rate of 1.79% at December 31, 2022 from $473.8 million with a weighted average rate of 0.58% at December 31, 2021. The decrease in time deposits was partially offset by an increase in checking, savings, and money market accounts.
Time deposits increased $180.4 million, or 43.3%, to $596.6 million with a weighted average rate of 4.1% at December 31, 2023 from $416.3 million with a weighted average rate of 1.8% at December 31, 2022. The increase in time deposits was due to an increase in rates paid on these non-core deposits.
Available borrowing capacity at December 31, 2022 was $328.1 million with FHLB. We also had a $30.0 million available line of credit with a correspondent bank and a $2.5 million available line of credit with the Federal Reserve Bank of New York at December 31, 2022.
We also had a $30.0 million available line of credit with a correspondent bank and the ability to borrow up to $2.3 million at the FRB’s Discount Window at December 31, 2023. The Company also had the ability to participate in the FRB’s Bank Term Funding Program.
Further, our investment in technology is intended to facilitate the delivery of consumer and business solutions without the need for traditional sales channels. We are approved by the SBA to provide loans under the 7(a) Loan Program, the SBA’s most common loan program.
Further, our investment in technology is intended to facilitate the delivery of consumer and business solutions without the need for traditional sales channels. Improve operating leverage and efficiency. The Company seeks to achieve meaningful balance sheet growth to absorb narrowing margins and operating costs.
The Company also repurchased 1,298,762 of its shares at a cost of $15.6 million. 299,481 of the shares repurchased were used to fund the shareholder-approved restricted stock grants.
Total shareholders’ equity decreased by $38.1 million, or 9.7%, to $355.6 million at December 31, 2023 compared to $393.7 million at December 31, 2022. The Company also repurchased 3,717,949 of its shares at a cost of $36.3 million. Treasury shares totaling 732,780 were used to fund the shareholder-approved restricted stock grants. Off-Balance Sheet.
Years Ended December 31, 2022 vs. 2021 Increase (Decrease) Due to Volume Rate Net (In thousands) Interest income: Loans $ 5,068 $ (1,508) $ 3,560 Mortgage-backed securities 669 357 1,026 Other investment securities 1,207 376 1,583 FHLB stock (91) (66) (157) Cash and cash equivalents (334) 682 348 Total interest-earning assets $ 6,519 $ (159) $ 6,360 Interest expense: Deposits $ (1,977) $ (169) $ (2,146) FHLB advances (843) 455 (388) Total interest-bearing liabilities (2,820) 286 (2,534) Net increase in net interest income $ 9,339 $ (445) $ 8,894 Comparison of Financial Condition at December 31, 2022 and December 31, 2021 Total Assets.
Year Ended December 31, 2023 vs. 2022 Increase (Decrease) Due to Volume Rate Net (In thousands) Interest income: Loans $ 6,029 $ 7,377 $ 13,406 Mortgage-backed securities (379) 138 (241) Other investment securities (180) 1,370 1,190 FHLB stock 400 595 995 Cash and cash equivalents (383) 1,725 1,342 Total interest-earning assets $ 5,487 $ 11,205 $ 16,692 Interest expense: Interest-bearing deposits $ 245 $ 18,133 $ 18,378 FHLB advances 3,285 4,953 8,238 Total interest-bearing liabilities 3,530 23,086 26,616 Net increase in net interest income $ 1,957 $ (11,881) $ (9,924) Comparison of Financial Condition at December 31, 2023 and December 31, 2022 Total Assets.
Total non-performing loans decreased by $4.2 million to $7.8 million at December 31, 2022 compared to $12.0 million at December 31, 2021. Non-interest Income . Non-interest income of $2.7 million for the year ended December 31, 2022 represented an increase of $184 thousand, or 7.4%, from $2.5 million for the year ended December 31, 2021.
The Company recorded non-interest income of $1.8 million for the year ended December 31, 2023, a decrease of $859 thousand, or 32.2%, from $2.7 million recorded for the year ended December 31, 2022. The reduction was primarily due to a decrease in prepayment fees of $748 thousand as the increase in market rates slowed prepayments on loans.
Cash and cash equivalents decreased $152.3 million, or 78.7%, to $41.2 million at December 31, 2022 from $193.4 million at December 31, 2021. The decrease in cash and cash equivalents was due to the deployment of cash primarily into higher yielding loans and securities. Securities Available-For-Sale .
Total assets increased $1.6 million to $2.04 billion at December 31, 2023. Cash and cash equivalents . Cash and cash equivalents increased $4.8 million, or 11.8%, to $46.0 million at December 31, 2023 from $41.2 million at December 31, 2022. Securities Available-For-Sale .
Excluding these non-recurring items, non-interest expense increased $464 thousand. An increase of $3.5 million in compensation and benefits costs was driven by salary increases, hiring of additional staff, an increase in cash incentive compensation expense, and costs associated with equity grants made under the shareholder-approved equity incentive plan.
In addition, compensation and benefits costs declined by $808 thousand to $28.4 million for the year ended December 31, 2023, due to lower cash incentive expense offset in part by costs associated with equity grants made under the shareholder-approved equity incentive plan. Income Tax Expense .
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This section should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements that appear at the end of this report. COVID Update The COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves.
Added
The Company’s core banking strategy is to target small and medium-sized businesses and to continue the transition to relationship driven business and retail customers to grow the deposit base. The focus on small and medium-sized businesses will seek to attract and develop customers whose businesses are growing.
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We focus on understanding our customers’ and potential customers’ financial needs and providing a wide variety of high-quality products and solutions through a collaborative approach that intends to create long-term relationships.
Added
As these customers grow, they can become full-service relationships that provide both lower-cost core deposits and lending opportunities. Blue Foundry’s market area has many small and medium-sized business opportunities to attract, onboard and leverage. Opportunities also exist to gain the banking relationships of business owners, as well as their employees.
Removed
Our goal is to continue to evolve from a traditional savings bank focusing on residential lending to a full-service commercial bank with an emphasis on providing products and services to commercial and small businesses in our market area.
Added
While we have continued to maintain and deepen relationships with many of the commercial customers onboarded during PPP, we have also broadened the business customer offerings and have a full suite of cash management products for businesses. We anticipate steadily increasing deposit accounts each year.
Removed
We believe providing 7(a) loans as well as traditional commercial and industrial loans and lines of credit will allow us to provide needed funding to our business communities, which will increase deposits. These borrowers often also keep deposits at their loan providers. Growing our Business: Developing new customer relationships and deepening existing relationships.
Added
Critical to succeeding will be the ability to leverage technology, utilize management information, assign responsibility and accountability and develop a steady stream of referral opportunities to build quality relationships. Grow and further diversify the loan portfolio.
Removed
We seek to expand our market share in existing and contiguous markets by leveraging our distinctive brand and delivering high-quality solutions through a collaborative, relationship-based approach. Our relationship-based approach has enabled us to achieve disciplined organic growth, and we expect this trend to continue.
Added
The Company’s overall strategy for loan growth and revenue generation will primarily be driven by further diversification into commercial lending, particularly CRE and C&I lending. Our market area includes a sizable number of small to medium-sized businesses, which are potentially full-service relationships that can provide both core deposits and lending opportunities.
Removed
Building our customer relationships around low and no cost products is part of our relationship expansion strategy. Our “Blue” products, including Blue Axis® Checking, Blue Axis Connect®, Blue Axis® Savings, Blue Axis Edge™ Savings, Blue Axis® Club Savings, Blue Carbon® Business Checking.
Added
Improving operating leverage and efficiency will assist in increasing revenue and managing operating expenses to reach necessary and expected performance targets. We will continue to reduce redundant tasks and streamline workflows to provide a consistently better customer experience.
Removed
Blue Carbon Edge™ Business Checking, Blue Carbon® Business Money Market, and Blue Carbon® Business Savings, are designed to be low cost to the consumer or business, while providing us with lower interest rate deposits. Our consumer deposit products are designed to be easy to open in person or online.
Added
Management will continue to foster a culture of continuous improvement where each employee is empowered to find ways to make every process more efficient and effective in their daily routines. Benefits include increased employee engagement, customer satisfaction and loyalty and greater efficiency and productivity.
Removed
Our commercial deposit products include many features without fees that would customarily be charged. 48 Leverage technology to enhance customer experience and drive operating efficiencies. We have made significant investments in our technology infrastructure to deliver high-quality, innovative products and services to our customers. For example, we continue to enhance our mobile banking platform for both consumer and commercial customers.
Added
As the Bank grows, processes must continue to be scaled, allowing for growth, as well as addition of incremental capabilities without requiring similar growth in infrastructure or staffing. 45 Leveraging technology to enable revenue growth will continue to be a strategic focus.
Removed
New services, such as Early Pay, same day ACH, and “sweep” functionality, continue to be introduced to increase convenience and meet evolving customer financial needs. In addition, we have invested in our new commercial lending origination system and platform, and we intend to continue to improve our consumer lending origination platform.
Added
The Bank will continue to explore and evaluate technology offerings from FinTechs to identify partnering opportunities to enhance systems, infrastructure, processes, and/or organizational structure to improve delivery channels or ensure regulatory compliance. The Company recognizes that technology must be nimble and quick, and touch-points must be customer friendly.
Removed
We are committed to continue investing in technology and data analytics. We believe these investments will differentiate us with our target customers, which will generate significant operating leverage as we grow. Continuing to invest and optimize our facilities and expand our branch network through selective de novo branching. We have been enhancing and optimizing both our facilities and branch network.
Added
The Bank also wants to ensure that all system options and capabilities are utilized to more efficiently and effectively make better use of all resources.
Removed
We have optimized our branch footprint though the utilization of a new forward-thinking branch model and intend to continue this strategy in 2023 to broaden our existing branch network by expanding into new markets and extending our geographic footprint.
Added
The total cost of deposits increased 148 basis points and the total cost of funds increased 156 basis points. 46 Provision for Credit Losses . Provisions for credit losses are charged to operations to establish an allowance for credit losses.
Removed
In 2022, we opened a new branch in Hoboken, continuing our strategy of operating in high density areas with vibrant commercial corridors and main streets. Additionally, we renovated three existing locations, modernizing their appearance and upgrading their functionalities. New branches feature modern design elements focused on open and efficient use of space. Branch efficiency has been built into our locations.
Added
The Company adopted ASU No. 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss model for loans and other financial assets with an expected loss model and is referred to as the current expected credit loss (“CECL”) model.
Removed
All branches currently employ new multifunction automated teller machines that are designed to be compatible with new services as they become available. Further, all branches utilize teller cash recycling machines to further enhance efficiency. Pursue opportunistic acquisitions and partnerships. We intend to prudently pursue opportunities to acquire banks in our existing and contiguous markets that create attractive financial returns.
Added
The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loans receivable and held-to maturity debt securities. It also applies to off-balance-sheet credit exposures (loan commitments, standby letters of credit, financial guarantees and other similar instruments) and net investments in certain leases recognized by a lessor.
Removed
Our focus will primarily be on franchises that enhance our funding profile, product capabilities or geographic density, while maintaining an acceptable risk profile. We believe the vital need to make increasingly significant technological investments has greatly amplified the importance of scale in banking.
Added
The net release of provision in 2023 consisted of a $146 thousand provision on loans, a release of provision of $575 thousand for commitments and letters of credit and a release of $12 thousand on held-to-maturity securities.
Removed
In addition, we believe that the current economic climate will increase the rate of consolidation in the banking industry.
Added
During 2023, credit quality improved with reductions in delinquent and non-performing loan balances of $2.3 million and $1.6 million, respectively, coupled with limited growth in the loan portfolio. Non-interest Income .
Removed
We will evaluate potential partnerships with FinTech companies or other fee income generating businesses that align with our business strategy and are consistent with our desire to stay ahead of technological developments that we believe will continue to cause the banking industry to evolve.
Added
In addition, the Company discontinued charging overdraft fees in the fourth quarter of 2022 resulting in no overdraft fees for the year ended December 31, 2023 compared to overdraft fees totaling $242 thousand for the same period in 2022. The Company began selling SBA loans during 2023, resulting in gains on sales of loans totaling $231 thousand. Non-interest Expense .
Removed
The increase was driven by an increase of $8.9 million in net interest income and by the absence in the 2022 period of non-recurring expenses incurred in 2021 consisting of the establishment of a $16.7 million valuation allowance on the Company’s deferred tax assets, an $11.2 million loss related to the withdrawal from the multi-employer defined-benefit pension plan, a $9.0 million contribution of cash and common stock of the Company to the Blue Foundry Charitable Foundation, and $2.2 million in debt extinguishment costs.
Added
Non-interest expense totaled $51.6 million and $52.8 million for the year ended December 31, 2023 and 2022, respectively, a decrease of $1.2 million or 2.3%. Excluding the provision for commitments and letters of credit, which prior to January 1, 2023 was recorded in non-interest expense, non-interest expense decreased $1.5 million.
Removed
The yield on average interest-earning assets increased 40 basis points to 3.28% for the year ended December 31, 2022 from 2.88% for the year ended December 31, 2021. PPP fees recognized in interest income totaled $568 thousand and $2.8 million for the years ended December 31, 2022 and 2021, respectively. Interest Expense .
Added
The decrease was primarily driven by decreases in professional fees and advertising expenses of $1.1 million and $707 thousand, respectively, partially offset by increases of $725 thousand in occupancy and equipment expense, $365 thousand in data processing and $418 thousand in FDIC assessment. Occupancy and equipment expense increased as a result of additional branches and branch renovations.
Removed
The average balance of interest-bearing deposits and FHLB advances decreased $61.6 million and $45.4 million, respectively.
Added
The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At December 31, 2023, the valuation allowance on deferred tax assets was $24.1 million. The Company did not record a tax benefit for the loss incurred during 2023 because a full valuation allowance was required on its deferred tax assets.
Removed
The yield on average interest earning assets increased by 40 basis points as cash was invested into higher yielding loans and securities during the year ended December 31, 2022 while the overall cost of average interest bearing liabilities decreased 12 basis points for the year ended December 31, 2022. Provision for Loan Losses .
Added
The effective tax rate for the year ended December 31, 2022 was 12.4% and was the result of the taxable income produced during the year ended December 31, 2022, partially offset by the ability to utilize a portion of the net operating losses that were fully reserved. 47 Analysis of Net Interest Income Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities.
Removed
Provisions for loan losses are charged to operations to establish an allowance for loan losses at a level necessary to absorb potential losses inherent in our loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−6 removed13 unchanged
Biggest changeOther than cash flow hedging on interest expense, we generally do not engage in hedging activities such as engaging in futures or options, or investing in high-risk mortgage derivatives such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.
Biggest changeOther than cash flow hedging on interest expense, we generally do not engage in hedging activities such as engaging in futures or options, or investing in high-risk mortgage derivatives such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities. 52 The Bank has entered into derivative financial instruments to reduce risk associated with interest rate volatility by matching repricing terms of assets and and liabilities.
The net present value (“NPV”) analysis estimates the change in the NPV of assets and liabilities and off- 57 balance sheet contracts over a range of immediate rate shock interest rate scenarios. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value.
The net present value (“NPV”) analysis estimates the change in the NPV of assets and liabilities and off-balance sheet contracts over a range of immediate rate shock interest rate scenarios. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value.
The following table sets forth, at December 31, 2022, the calculation of the estimated changes to the Bank’s net interest income, at the Bank level, that would result from the specified immediate changes in the United States Treasury yield curve. For purposes of this table, 100 basis points equals 1%.
The following table sets forth, at December 31, 2023, the calculation of the estimated changes to the Bank’s net interest income, at the Bank level, that would result from the specified immediate changes in the United States Treasury yield curve. For purposes of this table, 100 basis points equals 1%.
In addition, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results. 58
In addition, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results. 54
In the event of an instantaneous 100 basis point decrease in interest rates, we would experience a 30% increase in NPV. Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements.
In the event of an instantaneous 100 basis point decrease in interest rates, the Bank would experience a 42% increase in NPV. 53 Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements.
Quantitative Analysis. We compute amounts by which the net present value of our cash flow from assets, liabilities and off-balance sheet items would change in the event of a range of assumed changes in market interest rates.
These derivatives had an aggregate notional amount of $259.0 million as of December 31, 2023. Quantitative Analysis. We compute amounts by which the net present value of our cash flow from assets, liabilities and off-balance sheet items would change in the event of a range of assumed changes in market interest rates.
Net Interest Income Change in Interest Rates (basis points) Amount Change Percent (Dollars in Thousands) +200 $ 55,277 (3,499) (6.0) % +100 57,113 (1,663) (2.8) 0 58,776 — — -100 59,223 447 0.8 -200 58,605 (171) (0.3) The following table sets forth, at December 31, 2022, the calculation of the estimated changes in our NPV, at the Bank level, that would result from the specified immediate changes in the United States Treasury yield curve.
Net Interest Income Change in Interest Rates (basis points) Amount Change Percent (Dollars in thousands) +200 $ 45,392 (1,012) (2.2) % +100 45,929 (475) (1.0) 0 46,404 — — -100 48,977 2,573 5.5 -200 51,187 4,783 10.3 The following table sets forth, at December 31, 2023, the calculation of the estimated changes in our NPV, at the Bank level, that would result from the specified immediate changes in the United States Treasury yield curve.
NPV Change in Interest Rates (basis points) Estimated NPV Estimated Increase (Decrease) NPV as a Percent of Portfolio Value of Assets Amount Percent NPV Ratio Change (Dollars in thousands) +200 $ 45,317 $ (84,778) (65.2) % 2.2 % (4.1) +100 87,038 (43,057) (33.1) 4.3 (2.1) 0 130,095 — — 6.4 — -100 169,745 39,650 30.5 8.3 1.9 -200 206,652 76,557 58.8 10.1 3.7 The table above indicates that at December 31, 2022, in the event of an instantaneous 100 basis point increase in interest rates, we would experience a 33% decrease in NPV.
NPV Change in Interest Rates (basis points) Estimated NPV Estimated Increase (Decrease) NPV as a Percent of Portfolio Value of Assets Amount Percent NPV Ratio Change (Dollars in thousands) +200 $ 15,293 $ (73,921) (82.9) % 0.8 % (3.6) +100 51,896 (37,318) (41.8) 2.5 (1.8) 0 89,214 — — 4.4 — -100 126,976 37,763 42.3 6.2 1.9 -200 165,462 76,248 85.5 8.1 3.7 The table above indicates that at December 31, 2023, in the event of an instantaneous 100 basis point increase in interest rates, the Bank would experience a 42% decrease in NPV.
Removed
The Bank has entered into derivative financial instruments to reduce risk associated with interest rate volatility by matching repricing terms of assets and and liabilities. These derivatives had an aggregate notional amount of $109.0 million as of December 31, 2022.
Removed
In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. Most tenors of LIBOR will cease being published on June 30, 2023, although some tenors ceased at the end of 2021.
Removed
The Bank has not been materially impacted by the partial LIBOR cessations on December 31, 2021. The Alternative Reference Rates Committee has proposed that the Secured Overnight Financing Rate is the rate that represents best practice as the alternative to USD-LIBOR for use in financial contracts that are currently indexed to USD-LIBOR.
Removed
The Company has approximately $11.1 million in loans, $24.6 million in investments and $109.0 million notional of derivatives which are indexed to USD-LIBOR for which it is monitoring the activity and assessing the related risks.
Removed
The Company is monitoring and developing transition plans to address potential revisions to documentation, as well as customer management and communication, internal training, financial, operational and risk management implications, and legal and contract management.
Removed
When LIBOR rates are no longer available and we are required to implement substitute indices for the calculation of interest rates, we may incur expenses in effecting the transition, we may suffer a loss in the conversion to a new rate because the new rate may not be equal to what we were being paid on the LIBOR rate, and may be subject to disputes or litigation with customers and security holders over the appropriateness or comparability to LIBOR of the substitute indices, which could have an adverse effect on our results of operations.

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