Blue Foundry Bancorp (BLFY) 2023 Q2 法說會逐字稿

Good morning, and welcome to the Blue Foundry Bancorp's Second-Quarter 2023 earnings call. My name is Carla and I will be your conference operator today. Comments made during today's call may include forward-looking statements which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Blue Foundry encourages all participants to refer to the full disclaimer contained in this morning's earnings release, which has been posted to the Investor Relations page on bluefoundrybank.com.

早安，歡迎參加 Blue Foundry Bancorp 的 2023 年第二季財報電話會議。我叫卡拉，今天我將擔任你們的會議操作員。在今天的電話會議中發表的評論可能包括基於管理層當前預期的前瞻性陳述，並可能受到不確定性和情況變化的影響。 Blue Foundry 鼓勵所有參與者參考今天早上財報中包含的完整免責聲明，該聲明已發佈在 bluefoundrybank.com 的投資者關係頁面上。

During the call, management 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.

在電話會議期間，管理階層將參考非公認會計準則衡量標準，這些衡量標準將某些項目排除在報告結果之外。請參閱今天的收益報告，以了解這些非公認會計準則指標的調節表。

As a reminder, this event is being recorded. Your line will be muted for the duration of the call. After the speakers' remarks, there will be a question-and-answer session.

提醒一下，此事件正在被記錄。在通話期間您的線路將被靜音。演講者發言後，將進行問答環節。

I will now turn the call over to President and CEO, Jim Nesci.

我現在將把電話轉給總裁兼執行長吉姆·內西 (Jim Nesci)。

Thank you, operator. Good morning, everyone, and welcome to our second-quarter earnings call. I am joined by our Chief Financial Officer, Kelly Pecoraro, who will share the company's financial results in greater detail after my opening remarks.

謝謝你，接線生。大家早安，歡迎參加我們的第二季財報電話會議。我們的財務長 Kelly Pecoraro 將在我的開場白後更詳細地分享公司的財務表現。

The competition for deposits from both depository and non-depository institutions, along with the inverted yield curve continues to have an adverse impact on our margin and cost of funds. Despite this topline pressure, we have been pleased to see our investments in technology result in productivity saves.

存款機構和非存款機構對存款的競爭以及殖利率曲線倒掛繼續對我們的利潤率和資金成本產生不利影響。儘管有這樣的收入壓力，我們很高興看到我們對科技的投資帶來了生產力的節省。

Quarter-over-quarter, our operating expenses declined 689,000 or 5.1%, driven primarily by lower compensation and benefits expense. Headcount is 9% lower than it was at the end of 2022, and employees have increased productivity by optimizing redundant tasks through the use of technology, allowing them to focus on more impactful projects. Additionally, we have been keenly focused on managing down variable expenses. We have reduced our reliance on consultants, and our advertising costs were 71% below 2022's quarterly average.

與上一季相比，我們的營運費用下降了 689,000 美元，即 5.1%，這主要是由於薪資和福利費用下降。員工人數比 2022 年底減少了 9%，員工透過使用技術優化冗餘任務提高了生產力，使他們能夠專注於更有影響力的專案。此外，我們一直專注於管理可變費用。我們減少了對顧問的依賴，我們的廣告成本比 2022 年季度平均值低 71%。

During the second quarter, we repurchased 1,892,000 shares at a weighted average cost of $9.68, a discount to tangible book value. This helped tangible book value per share increased $0.29 to $14.35 at June 30. We continue to believe that share repurchase programs represent the accretive use of capital.

第二季度，我們以 9.68 美元的加權平均成本回購了 1,892,000 股股票，較有形帳面價值有折扣。這使得截至 6 月 30 日的每股有形帳面價值增加了 0.29 美元，達到 14.35 美元。我們仍然認為，股票回購計畫代表了資本的增值使用。

We are still active in the lending markets. During the second quarter, we originated $41 million in loans, primarily in our commercial portfolios. Our underwriting standards remain conservative and our credit quality remains strong. Our management team continues to monitor the macroeconomic environment and liquidity challenges being experienced throughout the banking industry.

我們仍然活躍在貸款市場。第二季度，我們發放了 4,100 萬美元的貸款，主要來自我們的商業投資組合。我們的核保標準仍然保守，信用品質依然強勁。我們的管理團隊持續監控宏觀經濟環境和整個銀行業面臨的流動性挑戰。

We remain steadfast in maintaining strong capital and liquidity positions. Both our bank and holding company remain more than well capitalized. At the end of the second quarter, we had over $395 million in untapped borrowing capacity. Additionally, our available-for-sale securities portfolio which represents 90% of the debt securities we hold, provided an additional $301 million of liquidity.

我們仍然堅定地維持強勁的資本和流動性狀況。我們的銀行和控股公司的資本仍然充足。截至第二季末，我們還有超過 3.95 億美元的未利用借款能力。此外，我們的可供出售證券投資組合占我們持有的債務證券的 90%，額外提供了 3.01 億美元的流動性。

Blue Foundry continues to operate with a low percentage of uninsured deposits and low concentration risk to any single depositor. Our bank subsidiary and uninsured deposits totaling approximately $293 million at the end of the second quarter, this total includes approximately $69 million of deposits from the Blue Foundry Bancorp. 20 million of deposits from its subsidiary, Blue Foundry Investment Company, and 32 million from municipal deposits which are insured under New Jersey's Governmental Unit Deposit Protection Act.

Blue Foundry 繼續經營，未投保存款比例較低，單一存款人的集中風險也較低。截至第二季末，我們的銀行子公司和未保險存款總計約2.93 億美元，其中包括Blue Foundry Bancorp 的存款約6,900 萬美元。其子公司Blue Foundry Investment Company 的存款為2,000 萬美元，市政銀行的存款為3,200 萬美元。根據新澤西州政府單位存款保護法受保險的存款。

Excluding these three items, uninsured deposits from customer accounts represented only 13.6% of the bank's total deposits. This improved from the prior quarter as some of our larger relationships took advantage of the increased FDIC coverage that we provide through our ICS and CDARS sweep account products. Additionally, our available liquidity covers 4.4 times our uninsured and uncollateralized deposits to customers.

除去這三項，來自客戶帳戶的未保險存款僅佔銀行存款總額的13.6%。這比上一季有所改善，因為我們的一些較大的關係利用了我們透過 ICS 和 CDARS 掃描帳戶產品提供的 FDIC 覆蓋範圍的擴大。此外，我們的可用流動性是我們向客戶提供的無保險和無抵押存款的 4.4 倍。

With that, I'd like to turn the call over to Kelly, and then, we'd be delighted to answer your questions.

我想將電話轉給凱利，然後我們很樂意回答您的問題。

Thank you, Jim, and good morning, everyone. The net loss for the second quarter was $1.8 million, compared to net loss of $1.2 million during the prior quarter. This change was largely related to funding pressures from the competitive rate environment.

謝謝吉姆，大家早安。第二季淨虧損為 180 萬美元，而上一季淨虧損為 120 萬美元。這項變化很大程度上與競爭性利率環境帶來的資金壓力有關。

While we realized a $933,000 expansion in interest income, our interest expense increased $2 million, resulting in a reduction of $1 million in net interest income. Yields on loans increased by 11 basis points to 4.18% and yield on all interest-bearing assets also increased by 11 basis points to 3.93%. Remaining competitive in deposit pricing, the cost of interest-bearing deposits increased 35 basis points to 1.73%. This, coupled with an increase in average short-term borrowings drove the cost of funds to 2.15%, a 42-basis-point increase compared with the prior quarter.

雖然我們的利息收入增加了 933,000 美元，但利息支出增加了 200 萬美元，導致淨利息收入減少了 100 萬美元。貸款收益率上升11個基點至4.18%，所有生息資產收益率也上升11個基點至3.93%。存款定價仍維持競爭力，計息存款成本上升35個基點至1.73%。再加上平均短期借款的增加，資金成本升至 2.15%，較上一季上升 42 個基點。

While the increase in the cost of interest-bearing liabilities and cost of funds has slowed since last quarter, we still expect pressure on our margin to continue due to competition for deposits, the current rate environment, and the liability-sensitive nature of our balance sheet. During the quarter, we recorded a provision for credit loss of $143,000 for the quarter ended June 30, 2023, driven by an increase in the allowance for loans, partially offset by a decrease in the allowance for commitments. Our asset quality remains strong in the current environment.

儘管自上季以來計息負債成本和資金成本的成長有所放緩，但由於存款競爭、當前利率環境以及餘額的負債敏感性，我們仍預期利潤率將繼續面臨壓力床單。在本季度，我們在截至 2023 年 6 月 30 日的季度記錄了 143,000 美元的信貸損失撥備，這是由於貸款準備金增加所致，部分被承諾準備金減少所抵消。在當前環境下，我們的資產品質仍然強勁。

During the quarter, non-performing loans to total loans increased 2 basis points to 49 basis points, primarily driven by a slight increase in non-accrual loans. Our allowance to total loans increased 2 basis points to 91 basis points, and our allowance to non-accrual loans decreased to 186% from 189% the prior quarter, also due to the slight increase in non-accrual loans. Expenses declined $689,000, largely driven by a reduction in compensation and benefit expense. This reduction was driven by a full quarter of sustained lower headcount and a reduction in variable compensation.

本季不良貸款佔貸款總額的比例增加了 2 個基點，達到 49 個基點，主要是由於非應計貸款略有增加。我們的貸款總額準備金增加了 2 個基點，達到 91 個基點，非應計貸款準備金從上一季的 189% 降至 186%，這也是由於非應計貸款略有增加。費用下降了 689,000 美元，主要是由於薪資和福利費用的減少。這一減少是由於整整一個季​​度的員工人數持續減少和可變薪酬的減少所致。

We continue to explore opportunities to reduce our expense base. Additionally, while there were one-time items in operating expenses this quarter, they largely offset each other. Therefore, we expect operating expenses for the remainder of the year to remain relatively in line with the second quarter.

我們繼續探索減少開支的機會。此外，雖然本季營運費用中有一次性項目，但它們在很大程度上相互抵消。因此，我們預計今年剩餘時間的營運支出將與第二季保持相對一致。

Moving on to the balance sheet. Gross loans declined by $4.6 million, as amortization and payoffs outpaced loan funding. As a reminder, less than 2% of our loan portfolio is in office space and none is in the New York City market. With the duration of 4.8 years, our debt securities portfolio continues to provide cash flow that is being used to fund loans, these securities declined 8.2 million due to maturities halt and scheduled takedowns.

繼續看資產負債表。由於攤銷和還款超過了貸款融資，貸款總額下降了 460 萬美元。提醒一下，我們的貸款組合中只有不到 2% 位於辦公空間，而且沒有位於紐約市市場。在 4.8 年的期限內，我們的債務證券投資組合繼續提供用於為貸款提供資金的現金流，這些證券由於到期暫停和計劃刪除而減少了 820 萬份。

Funding our balance sheet has been challenging in this environment. Deposits increased $23 million or 1.8% during the quarter. We were able to increase retail time deposits by $48 million and we executed $50 million of new brokered CDs. This growth in time deposits was partially offset by an outflow of $75 million from non-maturity accounts.

在這種環境下，為我們的資產負債表提供資金一直充滿挑戰。本季存款增加 2,300 萬美元，成長 1.8%。我們將零售定期存款增加了 4,800 萬美元，並執行了 5,000 萬美元的新經紀 CD。定期存款的成長被非到期帳戶流出 7,500 萬美元部分抵銷。

Our focus remains on attracting the full banking relationship of small- to medium-sized businesses, we offer an extensive suite of low-cost deposit products to our business customers. Despite the competition for deposits, we were able to grow both business balances and the number of business accounts by 2% during the second quarter. For the 6 months ended June 30, 2023, balances were up 8% and accounts were up 5%. During the quarter, borrowings decreased $23 million as we replaced short-term borrowings with time deposits.

我們的重點仍然是吸引中小型企業的全面銀行關係，我們為企業客戶提供廣泛的低成本存款產品。儘管存在存款競爭，第二季度我們的業務餘額和業務帳戶數量仍實現了 2% 的成長。截至 2023 年 6 月 30 日的 6 個月，餘額增加了 8%，帳戶增加了 5%。本季度，由於我們用定期存款取代短期借款，借款減少了 2,300 萬美元。

And with that, Jim and I are happy to take your questions.

吉姆和我很樂意回答你們的問題。

(Operator Instructions) Justin Crowley, Piper Sandler.

（操作說明）Justin Crowley、Piper Sandler。

Hey, good morning, guys. So it's certainly nice to see some of the expense reduction this quarter, and you spoke to holding this rate through the end of the year. Curious, it sounds like maybe that was a little bit more of a pull forward, I was looking for more of some of these reductions towards the back half of the year.

嘿，早上好，夥計們。因此，很高興看到本季度費用有所減少，而且您談到要在年底前保持這一水平。奇怪的是，聽起來這可能是一個更大的推動力，我一直在尋找今年下半年更多的一些削減。

But on some of the further strategies that you're taking a look at, what does that entail? Does it go beyond simply headcount which you've done a strong job on?

但就您正在考慮的一些進一步策略而言，這意味著什麼？它是否超出了您所做的出色工作的簡單人數？

So Justin, yeah, I think we're guiding, at this point, to low 13s for the third quarter and into the fourth quarter, driven primarily by the reduction in headcount and variable compensation. We're also continually looking at ways of reducing costs, whether it's through our advertising initiatives or other initiatives throughout the bank. Being able to leverage the technology we already have in place as opposed to putting new things on. So we continue to look for all of those costs save initiatives as we move forward.

所以賈斯汀，是的，我認為目前我們的目標是第三季和第四季的 13 %，這主要是由於員工人數和可變薪酬的減少。我們也不斷尋找降低成本的方法，無論是透過我們的廣告計劃還是整個銀行的其他計劃。能夠利用我們已有的技術，而不是增加新的東西。因此，在前進的過程中，我們將繼續尋求所有這些成本節約措施。

Justin, just to add on to that a little bit. We go through a vendor analysis on a quarterly basis, where we can consolidate a number of vendors or extract better contract pricing, but that's something that we do on a regular basis. So expense management is definitely a focus of the management team.

賈斯汀，只是補充一點。我們每季進行一次供應商分析，我們可以整合許多供應商或提取更好的合約定價，但這是我們定期做的事情。所以費用管理絕對是管理團隊關注的重點。

Okay, I appreciate that. And then, switching over to growth. I think you guys have previously talked about being a little bit more judicious on loan growth.

好的，我很欣賞。然後，轉向增長。我想你們之前已經討論過要對貸款成長更加明智。

Curious how the slowdown that we saw this quarter, how that compares to expectations as you look through the balance of the year? How much of that is predicated on what you see on the deposit generation side? And perhaps, managing that loan-to-deposit ratio?

想知道本季我們看到的經濟放緩情況如何，與您回顧今年剩餘時間的預期相比如何？其中有多少是基於您在存款產生方面看到的情況？也許，管理貸存比？

So I think you hit it spot on. We're constantly looking at our funding sources, whether it's on organic deposit generation or through wholesale funding. We are definitely opportunistic on match funding, we have excess lines accessible to us where we can still make a decent spread, so we are still in the market, still lending. But again, it is definitely, we look at funding first, and then, we look at the opportunity, and we look at the credit quality and what the market will give us. But I think Kelly may want to add to that?

所以我認為你說得對。我們不斷關注我們的資金來源，無論是有機存款產生還是批發資金。我們在匹配資金方面絕對是機會主義的，我們有多餘的額度，我們仍然可以賺取可觀的利差，所以我們仍然在市場上，仍然放貸。但同樣，我們首先關注資金，然後專注於機會，關注信貸品質以及市場將給我們什麼。但我認為凱利可能想補充一點？

Yeah, I know. I think Jim is correct in terms of how we look at it. Also, what's available in the market, remaining disciplined on our credit standards as we are walking into this market, so that's how we look at it. We do envision growth, we are able to originate in this market and look for opportunistic growth.

是的，我知道。我認為吉姆就我們的看法而言是正確的。此外，市場上有什麼，當我們進入這個市場時，我們仍然遵守我們的信用標準，所以這就是我們的看法。我們確實設想了成長，我們能夠起源於這個市場並尋找機會性成長。

Okay. And where are you seeing the most opportunities? Is it going to be more on the C&I side, less so real estate, just as you look out here?

好的。您在哪裡看到最多的機會？就像你在這裡看到的那樣，它會更多地集中在工商業方面，而不是房地產方面嗎？

So I think we're seeing in a couple of different segments, you did see our construction tick up. We are -- have originated some construction loans to well-seasoned sponsors and building on the multifamily product. Also, we are seeing some additional increases in C&I as we move into the second half of the year.

所以我認為我們在幾個不同的領域看到，你確實看到我們的建設在進步。我們已經向經驗豐富的贊助商發放了一些建設貸款，並以多戶型產品為基礎。此外，隨著進入今年下半年，我們還看到商業和工業的一些額外增長。

Okay, that's helpful. And then, I guess, just quickly, just back to the funding side of things.

好的，這很有幫助。然後，我想，很快，就回到資金方面。

Weighing of putting on brokered money versus borrowings, can you just unpack a little bit what drives that decision? Is it the pure economics of it? And how do you balance that with, again, just going back to the loan-to-deposit ratio, where that flushes out, again, just versus looking at the cost between those two funding channels?

在權衡投入經紀資金與借款之間，您能稍微解釋一下推動這項決定的原因嗎？這是純粹的經濟學嗎？你如何平衡這一點，再次回到貸存比，再次沖刷，只是看看這兩個融資管道之間的成本？

So we look at a funding curve, we go through wholesale funding first, then, we look at our retail funding, and they are all laid out on the curve for us to consider. Sometimes the swap markets provide better value, but we are diligent in looking and picking where on the curve we want to be as far as duration, and then, the type of funding we want to take on our balance sheet. Where we can get a fuller relationship from our customer that does incentivize us to possibly pay up for a rate. But in general, we look at the funding sources between wholesale and retail.

所以我們來看一條融資曲線，我們先查看批發融資，然後，我們查看零售融資，它們都排列在曲線上供我們考慮。有時掉期市場提供更好的價值，但我們會努力尋找並選擇曲線上我們想要的久期，然後是我們想要在資產負債表上採用的融資類型。我們可以從客戶那裡獲得更全面的關係，這確實會激勵我們支付費用。但總的來說，我們會關注批發和零售之間的資金來源。

And then --

進而 -

Okay. Got it. Sorry, go ahead.

好的。知道了。抱歉，請繼續。

No. Just, I was just saying, in terms of our wholesale funding, looking at the difference between whether we're borrowing from the Federal Home Loan Bank or going into the brokered market, we take the metrics into consideration. We are short about 40% of our wholesale funding book is under a year in terms of duration, so looking to be opportunistic as we place the funding.

不，我只是說，就我們的批發融資而言，看看我們是從聯邦住房貸款銀行借款還是進入經紀市場之間的差異，我們會考慮這些指標。我們的批發資金帳目中大約有 40% 的資金期限不足一年，因此我們在提供資金時希望抓住機會。

Okay. And then, do you -- I mean at 10%, is there a limit on how much further you can lean into the brokered market?

好的。然後，我的意思是，在 10% 的情況下，您可以進一步向經紀市場傾斜的程度是否有限制？

So it's a combination in terms of what our policy limits has at this point, but we still have some room in the brokered spot.

因此，這是我們目前政策限制的結合，但我們在經紀方面仍然有一些空間。

Okay, got it. Alright guys, I appreciate it. I will leave it there. Thank you for taking my questions.

好，知道了。好吧，夥計們，我很感激。我會把它留在那裡。感謝您回答我的問題。

Thank you, Justin.

謝謝你，賈斯汀。

Thanks, Justin.

謝謝，賈斯汀。

Thank you, Justin. We have no further questions at this time. So I will now hand back to Jim Nesci for any final remarks.

謝謝你，賈斯汀。目前我們沒有進一步的問題。因此，我現在將把最後的發言交還給吉姆·內西 (Jim Nesci)。

I'd like to thank all the participants who dialed in today. I appreciate your interest in Blue Foundry Bank, and we look forward to speaking with you again next quarter. Thank you.

我要感謝今天撥通電話的所有參與者。感謝您對 Blue Foundry Bank 的興趣，我們期待下季再次與您交談。謝謝。

This concludes today's call. Thank you for joining. You may now disconnect your lines.

今天的電話會議到此結束。感謝您的加入。現在您可以斷開線路。