Blue Foundry Bancorp

Good morning. My name is Simona and I'll be your conference operator today. I would like to welcome everyone to the Blue Foundry Bancorp Q1 2022 earnings call. Today's call will include forward-looking statements, including statements about Blue Foundry's future financial and operating results, outlook, business strategies and plans, as well as other opportunities and potential risks that management foresees. Such forward-looking statements reflect management's current estimates or beliefs and are subject to known and unknown risks and uncertainties that may cause actual results or the timing of events to differ materially from those expressed or implied in such forward-looking statements. Listeners are referred to the disclosures set forth under the caption forward-looking statements in the earnings press release, as well as the risk factors and other disclosures contained in the company's recent filings with the Securities and Exchange Commission. For more information about such risks and uncertainties, Any forward-looking statements made during this call represent management views and estimates only as of today. While the company may elect to update forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so, even if management views or estimates change. And you should not rely on such statements as representing management views as of any date subsequent to today. During the call, the company will refer to non-GAAP measures, which exclude certain items from reported results. Please refer to today's earnings release for reconciliations of these non-GAAP measures. Please note this event is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Thank you. I'll now turn the call over to Jim Nessie, President and CEO.

Great. Thanks, Operator, and good morning to everyone. Thank you for joining us for Blue Foundry's first quarter earnings call. I am joined today by our controller and interim chief financial officer, Alex Agnoletto. He will share the company's financial results and participate in the Q&A segment of the call. In the first quarter of 2022, we made great progress towards our goals of growing core deposits and growing higher interest earning assets. Our core deposits increased by $64.8 million in the quarter, gross loans increased by $55 million, and our investment book grew by $57.3 million. We also worked diligently to reduce our core operating expenses which decreased by over $1 million in the quarter. This will position us well for Q2 when our asset growth produces a full quarter of interest income. On the retail front, we continue to grow our deposit franchise, specifically within our business customers. In the quarter, our team grew core business deposits by over $40 million. New branches opened within the last year have seen strong growth and new customer acquisition success as our refreshed brick-and-mortar locations provide an inviting and exciting customer experience. Moving to our lending efforts, our team onboarded over $147 million of new loans in the first quarter. Excluding PPP, quarterly gross loan growth came in at a net of $64.1 million, with strong performance within our commercial lending team. We are and we will continue to benefit from the rising rate environment as we put excess liquidity to work and as we fund new loan growth with low-cost core deposits. Total cash was $101.6 million at the end of the first quarter, which represents our management team putting over $90 million to work during the quarter. The first quarter shows evidence of our core strategy and capability beginning to come to fruition. with our migration to becoming a larger, more commercial bank funded by Core Deposits. I'm also pleased to announce the appointment of our new Chief Financial Officer, Kelly Pecoraro. Kelly joined Blue Foundry Bank from Investors Bank, where she most recently served as the Chief Accounting Officer. She began her career in KPMG's audit practice and brings a wealth of accounting, finance, and regulatory knowledge from her 30-plus year career that will support our growth objectives. Kelly will be formally appointed in mid-May and will work to transition responsibilities with our interim CFO, Alex. Alex will return to serving as our controller following Kelly's deployment. I'd like to turn the call over to Alex Agnoletto to discuss the company's financial results.

Thank you, Jim, and good morning, everyone. Our gap net income for the quarter was $553,000, or two cents per share. Core operating expenses decreased $1.04 million, or 7% quarter over quarter, to $13.4 million. This decrease was driven by a $418,000 reduction in professional fees, combined with a reduction in advertising expense of $276,000 and a reduction in occupancy expense of $199,000. This marks a significant reduction in our operating costs and will enable us to return to profitability in the coming months, as we previously announced. Quarter over quarter, net interest income decreased 397,000, or 3%, to $11.9 million. This decrease was driven primarily by a reduction in PPP fees realized, which was offset by loan and investment growth, and a continued reduction in our cost of funds. our net interest margin decreased by one basis point to 2.62% for the three months ended March 31st, 2022, as compared to the prior quarter. Net interest margin increased by 54 basis points year over year, from 2.08% to 2.62%, representing a 26% increase. Our adjusted PPNR was a loss of $520,000 to the quarter, compared to a loss of $1.4 million in the prior quarter These results represent progress of nearly 900,000 toward our break-even point, which we expect will come in the next few months. Interest income decreased by 641,000, or 5% during the quarter, which was driven primarily by 600,000 lower realization of PPPB income in the quarter, coupled with the timing of loan and investment portfolio growth being later in the quarter. Interest expense continued to decrease from last quarter, 4,000 to 1.7 million. This decrease was driven primarily by continued maturities of time deposits as well as slightly reduced average FHLV volume. The fourth quarter contained a partial month of higher balances prior to the October FHLV pay down. Quarter over quarter, gross loans excluding PPP increased by 64.1 million or 5%. primarily due to strong origination performance across our CRE portfolios, coupled with the continuation of the residential loan purchase program. Gross loans, including PPP, increased by $55 million, or 4.3%. Currently, we have $8.1 million of PPP loans remaining on our books and $251,000 of fees left to be realized. Our total pipeline was over $130 million as of March 31st, with an average expected yield of 3.9%. Our real estate portfolios experienced strong growth in the quarter, driven by originations of over $147 million. Our residential portfolio grew through a mixture of organic originations and the continuation of the loan purchase program that was enacted last year. During the quarter, the bank purchased approximately $45 million of high-quality residential loans originated to Fannie Mae standards and to borrowers in our principal market. This purchase program is expected to continue through the next two quarters to offset higher-than-average prepayment levels. Our securities portfolio grew by $57.3 million during the quarter, which was the result of utilizing excess liquidity to capture incremental yield as rates rose. we plan to continue to reinvest excess liquidity into a mixture of loans and shorter-duration securities over the coming quarters. We have been reinvesting in securities that yielded roughly 2.65% over the past quarter, and as rates rise, we plan to put more excess liquidity to work. Our current portfolio has a weighted average life of 4.7 years. We view our asset quality as stable and improved. Our non-performing loans to total loans decreased 16 basis points from 0.94% to 0.78%. Loans 90 days or more past due decreased by 2 million or over 20% from 9.6 million at year end to 7.6 million as of the current quarter. During the quarter, our allowance to total loans decreased 13 basis points from 1.13% to 1% as the economy continues to stabilize and improve. As a reminder, We expect to adopt CECL as of January 1st, 2023, and are currently operating under the incurred loss model. Now I would like to turn it back to Jim for concluding remarks.