Q4 2023 Blue Foundry Bancorp Earnings Call
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Hello everyone and welcome. My name is Drew and I'll be your conference operator today. At this time, I would like to welcome everyone to the Blue Foundry Bancorp fourth quarter and year-end 2023 earnings call. 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. To ask a question, please press start followed by one on your telephone keypad. To withdraw your question, please press start followed by two. I will now turn the call over to your host, Jim Nuffie. Please go ahead.
Hello, everyone and welcome my name is Jay and I'll be your conference operator today at this time I would like to welcome everyone that steep leave foundry Bancorp fourth quarter and year end 2023, adding is cool all lines have been placed on mute to prevent any background noise.
Jay: The speaker's remarks, there will be a question and answer session to ask a question. Please press star followed by one on your telephone keypad withdraw. Your question. Please press star followed by two I will now turn the call over to your host Jim Nafie. Please go ahead.
Jim Nuffie: Thank you, Operator. Good morning and Happy New Year to everyone. Welcome to our fourth quarter earnings call.
Jim Nafie: Thank you operator.
Jay: Morning.
Jim Nafie: Everyone welcome to our fourth quarter earnings call.
Jim Nuffie: I'm joined by our Chief Financial Officer, Kelly Pecoraro, who will share the company's financial results in greater detail after my opening remarks.
Jim Nafie: I'm joined by our Chief Financial Officer.
Jim Nafie: So we'll share on the company's financial results in greater detail after my opening remarks.
Kelly Pecoraro: 2023 was a challenging year, especially for financial institutions.
Jim Nafie: 23 was a challenging year.
Jim Nafie: Actually for financial institutions.
Jim Nafie: We navigated thanks failures a slowing economy.
Kelly Pecoraro: We navigated bank failures, a slowing economy, and the impact of rate hikes at historic speed.
Impact of rate hikes that historic speed.
Kelly Pecoraro: When we entered the year, economists predicted a mild recession.
Jim Nafie: We entered the year economists predicted a mild recession.
Kelly Pecoraro: But 2023 showcased economic resilience despite higher interest rates.
Jim Nafie: But 2023 showcased economic resilience, despite higher interest rates higher.
Kelly Pecoraro: higher rates caused a flight of deposits out of depository institutions across the United
Jim Nafie: Higher rates caused a flight of deposits out of depository institutions across the United States.
Kelly Pecoraro: Our markets were not excluded from this trend.
Jim Nafie: Our markets were not excluded from this strength.
Kelly Pecoraro: While this was tough to circumvent throughout the year, our fourth quarter proved to be a promising step in the right direction. Deposits did decline $8 million during the quarter, but this was largely driven by a $7 million reduction in cash collateral tied to our SWOT program and a $5 million reduction in wholesale deposits.
Jim Nafie: Well this was tough to circumvent throughout the year, our fourth quarter proved to be a promising step in the right direction deposits declined $8 million during the quarter, but this was largely driven by a $7 million reduction in cash collateral types, where our swaps program and a $5 million reduction in whole.
Sale deposits.
Kelly Pecoraro: Deposits within our resale network increased modestly, 1.3%, on an annualized basis during the quarter.
Operator: Thank you. We'll be right back.
Deposits within our retail network increased modestly one 3% on an annualized basis during the quarter.
Kelly Pecoraro: In 2024, we are focused on leveraging our capital to grow our balance sheet and funding it through organic deposit acquisition.
Jim Nafie: In 2024, we are focused on leveraging our capital to grow our balance sheet and funding it through organic deposit acquisition.
Kelly Pecoraro: We continue to be disciplined in our underwriting strong credits and bringing efficiency to the.
Operator: Hello everyone, and welcome. My name is Drew, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Blue Foundry Bancorp fourth quarter and year-end 2023 earnings call. All lines have been placed on mute to prevent any background noise.
Jim Nafie: Continue to be disciplined in our underwriting strong credits and bringing efficiency to the institution.
Kelly Pecoraro: Given the liability-sensitive nature of our balance sheet, we are encouraged by the potential improvements in short-term rates.
Jim Nafie: Given the liability sensitive nature of our balance sheet. We are encouraged by the potential improvements in short term rates.
Kelly Pecoraro: to us.
Jim Nafie: To us our capital is king.
Kelly Pecoraro: Our capital is King.
Kelly Pecoraro: Both our bank and holding companies have capital levels that are among the highest in the banking industry. All of our capital ratios are more than two times higher than the regulatorily defined well-capitalized levels.
Jim Nafie: Both our bank and holding company have capital levels that are among the highest in the banking industry. All of our capital ratios are more than two times higher than the regulatory early defined well capitalized levels.
Kelly Pecoraro: Tangible equity to tangible common assets was 17.4% at December 31st.
Jim Nafie: Digital equity tangible common assets was 17, 4% at December 31.
Jim Nafie: We continue to execute on our share repurchase program during the quarter, we repurchased 657000 shares at a weighted average cost of $8 70 to a discount to tangible book value.
Kelly Pecoraro: We continue to execute on our share repurchase program. During the quarter, we repurchased 657,000 shares at a weighted average cost of $8.72, a discount to tangible book value.
Operator: After the speaker's remarks, there will be a question and answer session. To ask a question, please press start followed by one on your telephone keypad. To withdraw your question, please press start followed by two. I will now turn the call over to your host, Jim Nuffie. Please go ahead.
Kelly Pecoraro: These repurchases, coupled with the improvement in our AOCI, helped increase tangible book value per share by $0.25 to $14.49 at December 31.
Jim Nafie: These repurchases coupled with the improvement in our OCI health increased tangible book value per share by <unk> 25 to $14 49 at December 31.
Kelly Pecoraro: To date, we have repurchased over 5 million shares, which represents nearly 18% of the shares issued during our conversion.
Jim Nafie: We have repurchased over 5 million shares which represents nearly 18% of the shares issued during our conversion.
Thank you, Operator. Good morning and Happy New Year to everyone. Welcome to our fourth quarter earnings call. I'm joined by our Chief Financial Officer, Kelly Pecoraro, who will share the company's financial results in greater detail after my opening remarks. 2023 was a challenging year, especially for financial institutions. We navigated bank failures, a slowing economy, and the impact of rate hikes at historic speed. When we entered the year, economists predicted a mild recession.
Jim Nafie: Over the course of 2023, our capital was adversely impacted by the unprecedented speed and F OFC rate hikes.
Kelly Pecoraro: Over the course of 2023, our capital was adversely impacted by the unprecedented speed in FOMC rate hike.
Kelly Pecoraro: or accumulated other comprehensive loss position currently accounts for approximately 93 cents per share.
Jim Nafie: Accumulated other comprehensive loss position currently accounts for approximately 93 per share.
Kelly Pecoraro: To reiterate, while the securities in an unrealized loss position are held as available for sale, we currently intend to hold them until their contractual maturity and realize the reversal of the unrealized loss as the securities get closer to maturity.
Jim Nafie: To reiterate while the securities in an unrealized loss position are held as available for sale.
But 2023 showcased economic resilience despite higher interest rates; higher rates caused a flight of deposits out of depository institutions across the United States. Our markets were not excluded from this trend. While this was tough to circumvent throughout the year, our fourth quarter proved to be a promising step in the right direction. Deposits did decline $8 million during the quarter, but this was largely driven by a $7 million reduction in cash collateral tied to our SWOT program and a $5 million reduction in wholesale deposits. Deposits within our resale network increased modestly, 1.3%, on an annualized basis during the quarter. In 2024, we are focused on leveraging our capital to grow our balance sheet and funding it through organic deposit acquisition. We continue to be disciplined in our underwriting strong loans and bringing efficiency to the. Given the liability-sensitive nature of our balance sheet, we are encouraged by the potential improvements in short-term rates. To us, our capital is King.
Jim Nafie: We currently intend to hold them until their contractual maturity and realize the reversal of the unrealized loss at the securities get closer to maturity.
Kelly Pecoraro: We have maintained significant liquidity throughout the year. At the end of the fourth quarter, we had over $354 million in untapped borrowing capacity, and our unencumbered available-for-sale securities provided another $278 million of liquidity.
Jim Nafie: We have maintained significant liquidity throughout the year at the end of the fourth quarter, we had over $354 million and untapped borrowing capacity.
Our unencumbered available for sale securities provided another $278 million of liquidity.
Kelly Pecoraro: Additionally, we had $46 million of cash on the balance sheet, of which $36 million was unrestricted.
Additionally, we had $46 million of cash on the balance sheet of which $36 million was unrestricted.
Jim Nafie: <unk> continues to operate with a low percentage of uninsured deposits and a low concentration risk to any single depositor.
Kelly Pecoraro: Blue Foundry continues to operate with a low percentage of uninsured deposits and a low concentration risk to any single deposit.
Kelly Pecoraro: Uninsured and uncollateralized deposits from customer accounts were $131 million at December 31st.
Jim Nafie: Sure and uncollateralized deposits from customer accounts were $131 billion at December 31.
Kelly Pecoraro: This is approximately 10% of the company's total deposit.
Jim Nafie: This is approximately 10% of the company's total deposits.
Jim Nafie: Additionally, our available liquidity covers five one times, our uninsured uncollateralized deposits to customers.
Kelly Pecoraro: Additionally, our available liquidity covers 5.1 times our uninsured, uncollateralized deposits to customers.
Kelly Pecoraro: And with that, I'd like to turn the call over to Kelly, and then we'd be delighted to answer your questions. Kelly?
Speaker Change: And with that I'd like to turn the call over to Kelly and then we'd be delighted to answer your question Kelly.
Both our bank and holding companies have capital levels that are among the highest in the banking industry. All of our capital ratios are more than two times higher than the regulatory defined well-capitalized levels. Tangible equity to tangible common assets was 17.4% at December 31st. We continue to execute on our share repurchase program. During the quarter, we repurchased 657,000 shares at a weighted average cost of $8.72, a discount to tangible book value. These repurchases, coupled with the improvement in our AOCI, helped increase tangible book value per share by $0.25 to $14.49 on December 31. To date, we have repurchased over 5 million shares, which represents nearly 18% of the shares issued during our conversion. Over the course of 2023, our capital will be adversely impacted by the unprecedented speed of the FOMC rate hike, or accumulated other comprehensive loss position currently accounts for approximately 93 cents per share. To reiterate, while the securities in an unrealized loss position are held as available for sale, we currently intend to hold them until their contractual maturity and realize the reversal of the unrealized loss as the securities get closer to maturity.
Kelly: Thank you Jim and good morning, everyone.
Kelly Pecoraro: Thank you, Jim, and good morning, everyone.
Kelly: The net loss for the fourth quarter was $2 $9 million compared to a net loss of $1 $4 million during the prior quarter.
Kelly Pecoraro: The net loss for the fourth quarter was $2.9 million, compared to net loss of $1.4 million during the prior quarter.
Kelly Pecoraro: This deterioration was largely driven by NIM contraction and an increase in the provision for credit loss.
Kelly: Deterioration was largely driven by NIM contraction and an increase in the provision for credit losses.
Kelly: Our asset quality continues to remain strong in the current environment.
Kelly Pecoraro: Our asset quality continues to remain strong in the current environment.
Kelly Pecoraro: During the quarter, we had a provision for credit loss of $156,000.
Kelly: During the quarter, we had a provision for credit loss of $156000.
Kelly Pecoraro: Although our loan portfolio declined slightly during the quarter, the impact of prepayments flowing, partially offset by improvements in our forecast,
Kelly: Although our loan portfolio declined slightly during the quarter the impact of prepaying slowly partially offset by improvements in our forecast.
Kelly Pecoraro: Result is an allowance for credit losses on loans of $298,000.
Kelly: He started in the allowance for credit losses on loans of $298000.
Kelly Pecoraro: partially offsetting the increase in the provision for credit losses on loan.
Kelly: Partially offsetting the increase in the provision for credit losses on loans was the reduction in the provision for credit losses on off balance sheet commitments and held to maturity securities of $132000 and $10000 respectively.
Kelly Pecoraro: was a reduction in the provision for credit losses on off-balance sheet commitments and held to maturity security.
Kelly Pecoraro: of $132,000 and $10,000 per step.
Kelly Pecoraro: As a reminder, the majority of our allowance for credit loss is derived from quantitative
Kelly: As a reminder, the majority of our allowance for credit loss is derived from quantitative measures.
Kelly Pecoraro: and their allowance methodology places greater weighting on the baseline and adverse forecast.
Kelly: Our allowance methodology Christmas greater weighting on the baseline.
Kelly: Adverse forecast.
Kelly Pecoraro: Non-performing assets to total assets decreased one basis point to 32 basis points, primarily driven by a decline in non-accrual loans.
Kelly: Nonperforming assets to total assets decreased one basis point to 32 basis points, primarily driven by a decline in non accrual loans.
We have maintained significant liquidity throughout the year. At the end of the fourth quarter, we had over $354 million in untapped borrowing capacity, and our unencumbered available-for-sale securities provided another $278 million of liquidity. Additionally, we had $46 million of cash on the balance sheet, of which $36 million was unrestricted. Blue Foundry continues to operate with a low percentage of uninsured deposits and a low concentration risk to any single deposit. Uninsured and uncollateralized deposits from customer accounts were $131 million on December 31st.
Kelly Pecoraro: our allowance to total loans increased
Kelly: Our allowance to total loans increased three basis points to 91 basis points.
Kelly Pecoraro: three basis points to 91 basis points.
Kelly Pecoraro: due to the increase in the allowance for credit losses on loan.
Kelly: Due to the increase in the allowance for credit losses on loans.
Kelly Pecoraro: And our allowance to non-accrual loans increased to 240 percent from 226 percent the prior quarter due to the decline in non-accrual loans and the increase in allowance for credit losses on loans.
Kelly: And our allowance to non accrual loans increased to 240% from 226% the prior quarter due to the decline in non accrual loans and the increase in <unk>.
Jim: Deposits within our retail network increased modestly 1.3% on an annualized basis during the quarter. In 2024, we are focused on leveraging our capital to grow our balance sheet and funding it through organic deposit acquisition. We continue to be disciplined in our underwriting strong credits and bringing efficiency to the. Given the liability-sensitive nature of our balance sheet, we are encouraged by the potential improvements in short-term rates.
Kelly: Allowance for credit losses on loans.
Kelly: While we realized a 162000 dollar expansion and interest income or interest expense increased $842000, resulting in a reduction of $680000 in net interest income.
Kelly Pecoraro: While we realized a $162,000 expansion in interest income, our interest expense increased $842,000 resulting in a reduction of $680,000 in net interest income.
This is approximately 10% of the company's total deposit. Additionally, our available liquidity covers 5.1 times our uninsured, uncollateralized deposits to customers. And with that, I'd like to turn the call over to Kelly, and then we'd be delighted to answer your questions.
Kelly: Well still unfavorable we are pleased to see the quarter over quarter contraction slow.
Kelly Pecoraro: While still unfavorable, we are pleased to see the quarter over quarter contraction slow.
Kelly: Yield on loans increased by eight basis points to 429%.
Kelly Pecoraro: Yield on loans increased by 8 basis points to 4.29%. And yield on all interest-bearing assets increased by 9 basis points to 4.06%.
Jim: Our capital is King. Both our bank and holding companies have capital levels that are among the highest in the banking industry. All of our capital ratios are more than two times higher than the regulatory defined well-capitalized level. Tangible equity to tangible common assets was 17.4% at December 31st. We continue to execute on our share repurchase program. During the quarter, we repurchased 657,000 shares at a weighted average cost of $8.72, a discount to tangible book value. These repurchases, coupled with the improvement in our AOCI, helped increase tangible book value per share by $0.25 to $14.49 on December 31st. Today, we have repurchased over 5 million shares, which represents nearly 18% of the shares issued during our conversion. Over the course of 2023, our capital was adversely impacted by the unprecedented speed of FOMC rate hikes, and our accumulated other comprehensive loss position currently accounts for approximately $0.93 per share.
Kelly: And yields on all interest bearing assets increased by nine basis points to.
Thank you, Jim, and good morning, everyone. The net loss for the fourth quarter was $2.9 million, compared to a net loss of $1.4 million during the prior quarter. This deterioration was largely driven by NIM contraction and an increase in the provision for credit losses. However, our asset quality continues to remain strong in the current environment. During the quarter, we had a provision for credit losses of $156,000. Although our loan portfolio declined slightly during the quarter, the impact of prepayments flowing, partially offset by improvements in our forecast, resulting in an allowance for credit losses on loans of $298,000. Partially offsetting the increase in the provision for credit losses on loans was a reduction in the provision for credit losses on off-balance sheet commitments and held to maturity security of $132,000 As a reminder, the majority of our allowance for credit loss is derived from quantitative, and their allowance methodology places greater weighting on the baseline and adverse forecast.
Kelly: <unk>, 4.06%.
Kelly Pecoraro: cost of funds increased 23 basis points,
Kelly: Cost of funds increased 23 basis points to 269%.
Kelly Pecoraro: two point six nine percent
Kelly Pecoraro: Remaining competitive in deposit pricing, the cost of interest-bearing deposits increased 27 basis points to 2.52%.
Remaining competitive and deposit pricing the cost of interest bearing deposits increased 27 basis points to 252%.
Kelly Pecoraro: and borrowing costs increased 11 basis points to 3.38%.
Kelly: And borrowing costs increased 11 basis points to 338%.
Kelly Pecoraro: We still expect pressure on our margin to continue due to competition for deposits and
Kelly: We still expect pressure on our margins to continue due to competition for deposits in the current rate environment.
Kelly: Expenses increased modestly by $149000 driven by compensation and benefits expense.
Kelly Pecoraro: Expenses increased modestly by $149,000, driven by compensation and benefit expense.
Kelly Pecoraro: partially offset by a reduction to other expenses.
Kelly: Actually offset by a reduction to other expenses.
Kelly: The increased compensation and benefits expense was driven by the absence of adjustments to variable compensation that we recorded in the third quarter.
Kelly Pecoraro: The increase to compensation and benefits expense was driven by the absence of adjustments to variable compensation that we recorded in the third quarter.
Kelly Pecoraro: We continue to explore opportunities to optimize our expenses.
Kelly: We continue to explore opportunities to optimize our expense base.
Jim: To reiterate, while the securities in an unrealized loss position are held as available for sale, we currently intend to hold them until their contractual maturity and realize the reversal of the unrealized loss as the securities get closer to maturity. We have maintained significant liquidity throughout the year. At the end of the fourth quarter, we had over $354 million in untapped borrowing capacity, and our unencumbered available for sale securities provided another $278 million of liquidity. Additionally, we had $46 million of cash on the balance sheet, of which $36 million was unrestricted. Blue County continues to operate with a low percentage of uninsured deposits and a low concentration risk to any single deposit. Uninsured and uncollateralized deposits from customer accounts were $131 million at December 31st.
Kelly: We expect operating expenses for the first quarter 2024 to be below $14 million.
Kelly Pecoraro: We expect operating expenses for the first quarter 2024 to be below $14 million.
Kelly: Moving on to the balance sheet.
Kelly Pecoraro: Moving on to the balance sheet, gross loans declined by $10.3 million during the quarter as amortizations and payoffs outpaced new loan funding.
Non-performing assets to total assets decreased one basis point to 32 basis points, primarily driven by a decline in non-accrual loans. However, our allowance to total loans increased three basis points to 91 basis points due to an increase in the allowance for credit losses on loans. And our allowance for non-accrual loans increased to 240 percent from 226 percent the prior quarter due to the decline in non-accrual loans and the increase in allowance for credit losses on loans. While we realized a $162,000 expansion in interest income, our interest expense increased $842,000, resulting in a reduction of $680,000 in net interest income. While still unfavorable, we are pleased to see the quarter over quarter contraction slow. Yield on loans increased by 8 basis points to 4.29%.
Kelly: Gross margin declined by $10 $3 million during the quarter and amortization and payoffs outpaced new loan funding.
Kelly Pecoraro: As a reminder, less than 2% or $22 million of our loan portfolio is in office space and none is in New York City.
Kelly: As a reminder, less than 2% or $22 million of our loan portfolio is in office space and none is New York City.
Kelly Pecoraro: Our guest securities portfolio increased slightly.
Kelly: Our debt securities portfolio increased slightly.
Kelly Pecoraro: given the limited benefit considering the company's current tax position,
Kelly: Given the limited benefit considering the Companys current tax position, we sold the majority of our obligations issued by U S state and their political subdivisions.
Kelly Pecoraro: We sold the majority of our obligations issued by US states and their political subdivisions at a slight gain.
Kelly: King.
Kelly: We use these proceeds and excess cash to purchase $15 $5 million of higher yielding securities.
Kelly Pecoraro: We use these proceeds and excess cash to purchase $15.5 million of higher yielding securities.
Kelly Pecoraro: Picking up approximately 5% in meals.
Kelly: Picking up approximately 5%.
Jim: This is approximately 10% of the company's total deposit. Additionally, our available liquidity covers 5.1 times our uninsured, uncollateralized deposits to customers. And with that, I'd like to turn the call over to Kelly, and then we'd be delighted to answer your questions.
Kelly: Additionally, during the quarter, our unrealized loss position improved by $11 $2 million or 27%.
Kelly Pecoraro: Additionally, during the quarter, our unrealized loss position improved by $11.2 million for 27%.
Kelly Pecoraro: and with a duration of 4.5 years, our debt securities portfolio continues to provide cash flow that is used to invest in higher yielding assets.
Kelly: And with a duration of four five years, our debt securities portfolio continues to provide cash flow that is used to invest in higher yielding assets.
And yield on all interest-bearing assets increased by 9 basis points to 4.06%, cost of funds increased 23 basis points, to 2.069%. To remain competitive in deposit pricing, the cost of interest-bearing deposits increased 27 basis points to 2.52%, and borrowing costs increased 11 basis points to 3.38%. We still expect pressure on our margin to continue due to competition for deposits and, Expenses increased modestly by $149,000, driven by compensation and benefit expense, partially offset by a reduction in other expenses. The increase in compensation and benefits expense was driven by the absence of adjustments to variable compensation that we recorded in the third quarter.
Kelly: Thank you, Jim, and good morning, everyone. The net loss for the fourth quarter was $2.9 million, compared to a net loss of $1.4 million during the prior quarter. This deterioration was largely driven by NIM contraction and an increase in the provision for credit loss; however, our asset quality continues to remain strong in the current environment. During the quarter, we had a provision for credit loss of $156,000. Although our loan portfolio declined slightly during the quarter, the impact of prepayment slowing, partially offset by improvements in our forecast, resulted in an allowance for credit losses on loans of $298,000. Partially offsetting the increase in the provision for credit losses on loans was a reduction in the provision for credit losses on off-balance sheet commitments and held to maturity security of $132,000 and $10,000 per step. As a reminder, the majority of our allowance for And our allowance methodology places greater weight on the baseline and adverse forecast.
Kelly: Deposits decreased by $8 $2 million or 7% during the quarter.
Kelly Pecoraro: Deposits decreased by $8.2 million, or 0.7% during the quarter.
Kelly Pecoraro: As Jim mentioned earlier, we were able to modestly increase our retail deposits by approximately $4 million.
Kelly: As Jim mentioned earlier, we were able to modestly increase our retail deposits by approximately $4 million, which allowed us to slightly reduce our reliance on wholesale funding.
Kelly Pecoraro: which allowed us to slightly reduce our reliance on wholesale funding.
Kelly Pecoraro: Additionally, cash held as collateral tied to our spouse program declined $7 million.
Kelly: Additionally, cash held as collateral tied to our <unk> program.
Kelly: Declined $7 million.
Kelly: Our focus remains on attracting the full banking relationship of small to medium sized businesses.
Kelly Pecoraro: Our focus remains on attracting the full banking relationship of small to medium sized
Kelly Pecoraro: We offer an extensive suite of low-cost deposit products to our business customers.
Kelly: We offer an extensive suite of low cost deposit products to our business customers.
Kelly: Despite the competition for deposits, we were able to grow the number of business account by 1% during the fourth quarter.
Kelly Pecoraro: Despite the competition for deposits, we were able to grow the number of business accounts by 1% during the fourth quarter.
Kelly Pecoraro: the number of business accounts is up 8% for the full year.
Kelly: The number of business accounts is up 8% for the full year.
Kelly: During the quarter borrowings decreased by $5 million.
Kelly Pecoraro: during the quarter, borrowing decreased by $5 million.
We continue to explore opportunities to optimize our expenses. We expect operating expenses for the first quarter of 2024 to be below $14 million. Moving on to the balance sheet, gross loans declined by $10.3 million during the quarter as amortizations and payoffs outpaced new loan funding.
Speaker Change: And with that, Jim and I are happy to take your questions.
Speaker Change: And with that Jim and I are happy to take your questions.
Speaker Change: Thank you we will now start today's Q&A session, if you'd like to ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed by T.
Speaker Change: thank you we will now start today's q a session if you would like to ask a question please press start followed by one on your telephone keypad now if you change your mind please press start followed by
Kelly: Non-performing assets to total assets decreased one basis point to 32 basis points, primarily driven by a decline in non-accrual loans. Our allowance to total loans increased three basis points to 91 basis points due to an increase in the allowance for credit losses on loans, and our allowance to non-accrual loans increased to 240% from 226% the prior quarter due to the decline in non-accrual loans and the increase in the allowance for credit losses on loans While we realized a $162,000 expansion in interest income, our interest expense increased $842,000, resulting in a reduction of $680,000 in net interest income. While still unfavorable, we are pleased to see the quarter-over-quarter contraction slow. Yield on loans increased by 8 basis points to 4.29%, and yield on all interest-bearing assets increased by 9 basis points to 4.06%. Positive funds increased 23 basis points. 2.69%
Speaker Change: Our first question today comes from Justin Crowley from Piper Sandler. Your line is now open. Please go ahead.
Speaker Change: Our first question today comes from Justin Crowley from Piper Sandler. Your line is now <unk>. Please go ahead.
As a reminder, less than 2%, or $22 million, of our loan portfolio is in office space, and none is in New York City. Our guest securities portfolio increased slightly, given the limited benefit considering the company's current tax position. We sold the majority of our obligations issued by US states and their political subdivisions at a slight gain. We use these proceeds and excess cash to purchase $15.5 million of higher yielding securities, picking up approximately 5% in meals. Additionally, during the quarter, our unrealized loss position improved by $11.2 million, or 27%, and with a duration of 4.5 years, our debt securities portfolio continues to provide cash flow that is used to invest in higher yielding assets. Deposits decreased by $8.2 million, or 0.7%, during the quarter.
Speaker Change: Okay.
Justin Crowley: Hey, good morning.
Justin Crowley: Hey, good morning.
Justin Crowley: Wanted to start off on the net interest margin. It seems like things are leveling off to a degree on the funding side.
Justin Crowley: Wanted to start off on the net interest margin. Seems like things are leveling off to a degree on the funding side. Curious if you could speak to that side of things and how we should be thinking about the NIM trajectory through at least the first half of the year. And then maybe just a little detail on how if and when we get rate cuts, how that plays into the margin, you know, as we head into the back half of 2024.
Justin Crowley: Curious if you can speak to that side of things and how we should be thinking about the NIM trajectory through or at least the first half of the year.
Justin Crowley: Then maybe just a little detail on how if and when we get rate cuts how that plays into the margin.
Justin Crowley: As we head into the back half of 2024.
Speaker Change: Yeah, great. Thanks, Justin.
Speaker Change: Yeah, great. Thanks, Justin. Um, you know, we work these this quarter, as I said, with the, the slowdown, the contraction, um, on the men, we do look for that trend to continue as we head into the 1st, half of the year. We are mindful though, that we do have a book of CDs that have some repricing that will come in.
Speaker Change: We work this quarter as I said with the slowdown in the contraction.
And then we do look for that trend to continue as we head into the first half of the year.
Speaker Change: We are mindful, though that we do have a book of Cds that have some repricing that will come in.
Speaker Change: in the quarter so absent some cuts we might see a slight uptick in the cost of
Speaker Change: In the quarter, so absent some cuts we might see a slight uptick in the cost of C. D. But again those are short maturity about five months maturity. So we look with rate cuts, we look to benefit from that if we're able to reset those lower.
Speaker Change: but again those are short maturity about five months maturity so we look with rate cuts we look to benefit from that if we're able to reset those lower
Speaker Change: Okay, and you're able to quantify just how much of the Cvs are coming down.
Speaker Change: Okay, and you're able to quantify just how much of those CDs are coming to?
As Jim mentioned earlier, we were able to modestly increase our retail deposits by approximately $4 million, which allowed us to slightly reduce our reliance on wholesale funding. Additionally, cash held as collateral tied to our spouse program declined $7 million. 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 the number of business accounts by 1% during the fourth quarter. The number of business accounts is up 8% for the full year. During the quarter, borrowing decreased by $5 million. And with that, Jim and I are happy to take your questions. Thank you. We will now start today's Q&A session. If you would like to ask a question, please press start followed by one on your telephone keypad. Now, if you change your mind, please press start followed by one. Our first question today comes from Justin Crowley from Piper Sandler. Your line is now open. Please go ahead. Hey, good morning.
Kelly: To remain competitive in deposit prices, the cost of interest-bearing deposits increased 27 basis points to 2.52 percent, and borrowing costs increased 11 basis points to 3.38 percent. We still expect pressure on our margin to continue due to competition for deposits and the current rate environment. Expenses increased modestly by $149,000, driven by compensation and benefit expenses, partially offset by a reduction in other expenses. The increase in compensation and benefits expense was driven by the absence of adjustments to variable compensation that we recorded in the third quarter.
Speaker Change: Um, so there's, there's a weighted average maturity of 5 months and it's about 460Million of retail.
Speaker Change: So there is there is a weighted average maturity of five months and it's about $460 million of retail Cds, that's excluding brokerage.
Speaker Change: including brokers.
Speaker Change: Okay, got it. And then just maybe more thematically, when we do get rate cuts, how quickly do you think you'll be able to move rates lower? Not sure if you have any embedded beta assumptions on the way down.
Speaker Change: Okay got it.
Speaker Change: And then just maybe more thematic Lee.
Speaker Change: When we do get rate cuts.
Speaker Change: How quickly do you think you'll be able to move rates lower and not sure. If you have any embedded beta assumptions on the way down.
Speaker Change: Now, I think, Justin, it's going to be an interesting market. You know, we will look to reduce those rates, of course, but we're mindful of the competition within our market and also the pressures from the national and regional players.
Speaker Change: No I think Justin it's going to be an interesting market. We will look to reduce those rates of course, but we're mindful of the competition within our market and also the pressures from the national and regional players.
Speaker Change: for that funding.
Speaker Change: So that funding.
Okay got it I appreciate that.
Justin Crowley: okay got it appreciate that um and then just wondering if you could detail expense expectations a little further um in that sub 14 million dollar you alluded to for the first quarter um you know what drives the pickup there and what's the right way to think about growth through the duration of the year
Kelly: We continue to explore opportunities to optimize our expenses. We expect operating expenses for the 1st quarter of 2024 to be below 14 million dollars. Moving on to the balance sheet, gross loans declined by $10.3 million during the quarter, and amortizations and payoffs outpaced new loan funding.
Justin Crowley: And then just wondering if you could detail expense expectations, a little further in that sub 14 million dollar you alluded to for the first quarter.
Trying to pick up there and what's the right way to think about growth through the duration of the year.
Speaker Change: yeah i think the the primary driver for that pickup is in our compensation line item you know as we talked about during this year we had eliminated our variable compensation expense due to the current environment and where we were in aligning to our targets so that came in at a zero for 2023 as we head into 2024 we reset those variable comp plans so that increase you know a million right around a million of that is driven by the reset of those plans again we reevaluate that on a quarterly basis so we're baking in a full 100 achievement but that gets adjusted as we go through the year and where we are in our target
Speaker Change: Yeah, I think the primary driver for that pickup is in our compensation line item as we talked about during this year, we had eliminated our variable compensation expense.
Kelly: As a reminder, less than 2% or $22 million of our loan portfolio is in office space, and none is in New York City; our guest securities portfolio increased like, given the limited benefit considering the company's current tax position. We saw the majority of our obligations issued by U.S. states and their political subdivisions at a slight gain. We used these proceeds and excess cash to purchase $15.5 million of higher yielding security, picking up approximately 5% in yield. Additionally, during the quarter, our unrealized loss position improved by $11.2 million, or 27%. And with a duration of 4.5 years, our debt securities portfolio continues to provide cash flow that is used to invest in higher yielding assets. Deposits decreased by $8.2 million or 0.7% during the quarter.
Speaker Change: The current environment, and where we were and aligning to our targets. So that came in at a zero for 2023 as we head into 2024, we reset those variable comp plans so that increase.
I wanted to start off on the net interest margin. Seems like things are leveling off to a degree on the funding side. Curious if you could speak to that side of things and how we should be thinking about the NIM trajectory through at least the first half of the year. And then maybe just a little detail on how if and when we get rate cuts, how that plays into the margin, you know, as we head into the back half of 2024. Yeah, great. Thanks, Justin.
Speaker Change: Right around $1 million of that is driven by the reset of those plans again, we reevaluate that on a quarterly basis. So we're baking in a full 100% achievement, but that gets adjusted as we go through the year and where we are in our target.
Um, you know, we work these this quarter, as I said, with the slowdown, the contraction, um, on the men, we do look for that trend to continue as we head into the 1st half of the year. We are mindful though that we do have a book of CDs that have some repricing that will come in during the quarter, so absent some cuts, we might see a slight uptick in the cost of those, but again, those are short maturity, about five months, so we look with rate cuts we look to benefit from that if we're able to reset those lower. Okay, and you're able to quantify just how much of those CD Um, so there's a weighted average maturity of 5 months, and it's about 460 million retail, including brokers. Okay, I got it.
Speaker Change: Okay I appreciate that.
Speaker Change: okay i appreciate it um and then lastly for me on buybacks um you know saw a nice pickup of an activity in the quarter you know how would you describe the appetite here uh you know shares back around that ten dollar level uh with what's left on the existing authorization um and then also just jim alluding to your comments um at the top just leveraging capital through growing the balance sheet how do you weigh those two against each other
Speaker Change: And then lastly from me on buybacks.
Speaker Change: Pick up in activity in the quarter, how would you describe your appetite here.
Speaker Change: <unk> background that $10 level with what's left on the existing authorization and then also just Jim alluding to your comments at the top just leveraging capital through growing the balance sheet, how do you weigh those two against each other.
Speaker Change: Right.
Speaker Change: Right.
Speaker Change: Good morning.
Speaker Change: Good morning. What I think about is what's the best opportunity for the bank and its capital. We're trading below tangible book value. We continue to believe in the buyback and we'll continue to execute against the buyback. With that said, I think there's opportunity to make loans. We're looking to shift more into CNI, for instance, and we believe we can get good return on our capital there as well. Kelly, I don't know if you want to add anything. Yeah, no, I think we are a firm believer in buybacks and continue to buy back what we can in the market.
Speaker Change: About is what's the best opportunity for the bank and its capital we're trading below tangible book value. We continue to believe in the buyback and we'll continue to execute against the buyback.
Speaker Change: With that said I think there is opportunity to make loans.
Jim: As Jim mentioned earlier, we were able to modestly increase our retail deposits by approximately $4 million. Thank you for watching, which allowed us to slightly reduce our reliance on wholesale funding. Additionally, cash held as collateral tied to our spouse program declined $7 million.
Speaker Change: We're looking to shift more into the C&I for instance, and we believe we can get good return on our capital there as well tell me Arnaud if you want to add anything yeah. No. I think we are a firm believer in buybacks and continue the buyback what we can in the market.
And then just maybe more thematically, when we do get rate cuts, how quickly do you think you'll be able to move rates lower? Not sure if you have any embedded beta assumptions on the way down. Now, I think, Justin, it's going to be an interesting market. You know, we will look to reduce those rates, of course, but we're mindful of the competition within our market and also the pressures from the national and regional players, for that funding, okay got it appreciate that um and then just wondering if you could detail expense expectations a little further um in that sub 14 million dollar you alluded to for the first quarter um you know what drives the pickup there and what's the right way to think about growth through the duration of the year yeah i think the the primary driver for that pickup is in our compensation line item you know as we talked about during this year we had eliminated our variable compensation expense due to the current environment and where we were in aligning to our targets so that came in at a zero for 2023 as we head into 2024 we reset those variable comp plans so that increase you know a million right around a million of that is driven by the reset of those plans again we reevaluate that on a quarterly basis so we're baking in a full 100 achievement but that gets adjusted as we go through the year and where we are in our target okay i appreciate it um and then lastly for me on buybacks um you know saw a nice pickup of an activity in the quarter you know how would you describe the appetite here uh you know shares back around that ten dollar level uh with what's left on the existing authorization um and then also just jim alluding to your comments um at the top just leveraging capital through growing the balance sheet how do you weigh those two against each other, Right. Good morning.
Arnaud: Okay, and then just as far as the balance sheet.
Speaker Change: Okay, and then just as far as the balance sheet, so, you know, is net growth a decent expectation, maybe beyond sort of what you saw this year, some of the net shift within the loan portfolio?
Jim: 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 the number of business accounts by 1% during the fourth quarter. The number of business accounts is up 8% for the full year. During the quarter, borrowing decreased by $5 million.
Arnaud: So.
Is that growth with a decent expectation maybe beyond sort of what you saw this year some of the mix shift within the loan portfolio.
Speaker Change: Yeah, I think on both fronts, we will look to continue to shift as Jim mentioned into C&I, some higher yielding assets.
Speaker Change: Yeah, I think on both fronts, we will look to continue to shift, you know, as Jim mentioned, into CNI, some higher yielding assets. We are looking for growth probably in the mid-single digit at this point, but again, we will respond to the market and the availability to continue on our strategy.
Speaker Change: We are looking for growth probably in the.
Speaker Change: Mid single digit at this point, but again, we will respond to the market and the availability to continue on our strategy.
Speaker Change: Okay, perfect I will leave it there. Thanks, so much for taking my question.
Speaker Change: Okay, perfect. I will leave it there. Thanks so much for taking my question.
Operator: And with that, Jim and I are happy to take your questions. Thank you. We will now start today's Q&A session. If you would like to ask a question, please press start followed by one on your telephone keypad now. If you change your mind, please press start followed by one. Our first question today comes from Justin Crowley from Piper Sandler. Your line is now open, please go ahead. Hey, good morning.
Speaker Change: Thank you.
Okay.
Speaker Change: Our next question today comes from Chris O'connell. Your line is now open. Please go ahead.
Speaker Change: Our next question today comes from Chris O'Connell. Your line is now open. Please go ahead.
Chris O'connell: Hey, good morning.
Chris O'connell: Hey, good morning.
Chris O'connell: um maybe just following up on uh
Chris O'connell: Maybe just following on.
Chris O'connell: On the loan growth.
Chris O'connell: on the loan growth, how are the pipelines compared quarter over quarter? And what is the blended origination yield that you guys are putting on?
Chris O'connell: How are the pipelines.
Chris O'connell: Compared quarter over quarter.
Chris O'connell: And what is.
Jim: I wanted to start off on the net interest margin. Seems like things are leveling off to a degree on the funding side. Curious if we can speak to that side of things and how we should be thinking about the NIM trajectory through at least the first half of the year. And then maybe just a little detail on how if and when we get rate cuts, how that plays into the margin, you know, as we head into the back half of 2024. Yeah, great. Thanks, Justin.
Chris O'connell: The blended origination yield that you guys are putting on.
Chris O'connell: So I think you know at 12 31, or our pipeline was strong you had about $25 million.
Speaker Change: So I think at 1231, our pipeline was strong. We had about 25 million in our pipeline, 20 of that in the CNI space, which we were pleased with. The yield on that is just around 8%, 8.2%.
Chris O'connell: In our pipeline 20 of that in the C&I space, which we are pleased with.
Chris O'connell: The yield on that is just around 882%.
Speaker Change: on that pipeline.
Chris O'connell: That pipeline.
Speaker Change: Great.
Chris O'connell: Great.
Jim: You know, we worked this quarter, as I said, with the slowdown and the contraction on the men, we do look for that trend to continue as we head into the 1st half of the year. We are mindful, though, that we do have a book of CDs that have some repricing that will come in. In the quarter, so absent some cuts, we might see a slight uptick in the cost of those bonds. But again, those are short maturity, about five months maturity.
Chris O'connell: And so for the mid single digit loan growth are you expecting.
Speaker Change: And so for the mid-single-digit loan growth, are you –
Speaker Change: expecting that to be, you know, more back-weighted and for, you know, the pipeline to pick up over the course of the year?
Chris O'connell: To be more back weighted and improve the pipeline to pick up over the course of the year.
Speaker Change: I think as we look at it, having $25 million in our pipeline right now, we continue to respond to the market and what's available to meet the strategy of shifting to C&I. So, as deals become available or actively looking at that, we
Chris O'connell: I think as we look out its having 25 million are in our pipeline right now we continue to respond to the market and what's available to meet the strategy of shifting to C&I. So its deals become available.
Chris O'connell: We're actively looking at that.
What I think about is what's the best opportunity for the bank and its capital. We're trading below tangible book value. We continue to believe in the buyback, and we'll continue to execute on the buyback. With that said, I think there's opportunity to make loans. We're looking to shift more into CNI, for instance, and we believe we can get a good return on our capital there as well. Kelly, I don't know if you want to add anything.
Jim: So we look at rate cuts. We look to benefit from that if we're able to reset those lower. Okay, and you're able to quantify just how much of those CDs are coming down? So, there's a weighted average maturity of five months, and it's about four hundred and sixty million retail, excluding brokers. Okay, got it.
Chris O'connell: We.
Speaker Change: are hoping to have the growth come in sooner as we benefit from that throughout the year, but we will be cautious in terms of extending our crisis.
Chris O'connell: We're hoping to have the growth come in sooner as we benefit from that throughout the year, but we will be cautious in terms of extending our credit.
Speaker Change: Got it.
Speaker Change: Got it.
Speaker Change: And for the Securities portfolio.
Speaker Change: And for the securities portfolio, I appreciate the color and the duration.
Speaker Change: Appreciate.
Speaker Change: The color on the duration.
Speaker Change: <unk>.
Speaker Change: For the next few quarters, do you think that you'll let that run off to the extent that you have stuff maturing, or do you expect to keep it fairly stable from here?
Speaker Change: For the next few quarters do you think that Youll, let that run off.
Speaker Change: To the extent that stuff.
Jim: And then maybe more thematically, you know, when we do get rate cuts, you know, how quickly do you think you'll be able to move rates lower? Not sure if you have any embedded beta assumptions on the way down. Now, I think, Justin, it's going to be an interesting market. We will look to reduce those rates, of course, but we're mindful of the competition within our market and also the pressures from national and regional players for that funding. Okay.
Yeah, no, I think we are a firm believer in buybacks and will continue to buy back what we can in the market. Okay, and then just as far as the balance sheet, so, you know, is net growth a decent expectation, maybe beyond sort of what you saw this year, some of the net shift within the loan portfolio? Yeah, I think on both fronts, we will look to continue to shift, you know, as Jim mentioned, into CNI, some higher yielding assets. We are looking for growth probably in the mid-single digits at this point, but again, we will respond to the market and the availability to continue on our strategy. Okay, perfect. I will leave it there. Thanks so much for taking my question.
Speaker Change: Maturing or do.
Speaker Change: Do you expect to keep it fairly stable from here.
Speaker Change: I think there's a couple of opportunities in the marketplace with some higher yielding securities some of our securities roll off due to maturities, we arent seeing some opportunities to reinvest at higher rates sort of letting the natural maturity take place and then reinvesting as I said at a higher interest rate.
Speaker Change: I think there's a couple of opportunities in the marketplace with some higher yielding securities as some of our securities roll off due to maturities. We are seeing some opportunities to reinvest at higher rates, sort of letting the natural maturity take place and then reinvesting, as I said, at a higher interest rate.
Speaker Change: Okay, great right. So, um, for what.
Speaker Change: Okay, great right. So.
Kelly: Appreciate that. And then just wondering if you could detail expense expectations a little further in that sub-14 million you alluded to for the first quarter, you know, what drives the pickup there, and what's the right way to think about growth through the duration of the year. Yeah, I think the primary driver for that pickup is in our compensation line item. You know, as we talked about during this year, we had eliminated our variable compensation expense due to the current environment and where we were aligning to our targets.
For what.
Speaker Change: Sorry go ahead, I'm sorry, Chris.
Speaker Change: Sorry go ahead. Sorry, Chris. We look for opportunities and look for the highest and best use of the proceeds as they mature, where we can put them into higher yielding. Is it going to be securities or is it going to be loans?
Chris O'connell: Opportunities and look for the highest and best use of the proceeds as they mature where we can put them into higher yielding is it going to be securities or is it going to be months.
Speaker Change: Got it.
Speaker Change: Got it.
Speaker Change: Yeah.
Speaker Change: And as far as, you know, gain on sale going forward,
Speaker Change: And.
Speaker Change: As far as.
Speaker Change: Gain on sale going forward.
Kelly: So, that came in at zero for 2023. As we head into 2024, we reset those variable comp plans. So, that increase, you know, a million, right around a million of that is driven by the reset of those plans. Again, we reevaluate that on a quarterly basis. So, we're baking in a full 100% achievement, but that gets adjusted as we go through the year and where we are in our targets.
Thank you. Our next question today comes from Chris O'Connell. Your line is now open. Please go ahead.
Speaker Change: Given the level of <unk> that you guys have been.
Speaker Change: Given, you know, the level of, you know, resi that you guys have been, you know, producing, I mean, do you expect that to tick down a little bit year near term? Or do you think it can stay in a relatively similar range?
Speaker Change: Producing I mean do you expect that.
Hey, good morning; maybe just following up on uh, loan growth; how are the pipelines compared quarter over quarter? And what is the blended origination yield that you guys are putting on? So I think at 1231, our pipeline was strong. We had about 25 million in our pipeline, 20 of that in the CNI space, which we were pleased with. The yield on that is just around 8%, 8.2%, on that pipeline.
Speaker Change: It ticked down a little bit your near term or do you think it can stay in a relatively similar range.
Well I think we'll be in a similar range. The majority of that gain on sale was in the SBA product not the resi product.
Speaker Change: Well, I think we'll be in a similar range. The majority of that gain on sale was in the SBA product, not in the REGI product. And as we look to the future, depending on what the markets do, we will look to be an active participant when the opportunity is present.
Speaker Change: As we look to the future depending on what the markets do we will look to be an active participant when the opportunity.
Speaker Change: Got it.
Speaker Change: Great.
Speaker Change: Great.
Speaker Change: And on the expenses for, you know, the sub-$14 million just to start off the first quarter,
Speaker Change: And on the expenses for this sub 14 million just to start off the first quarter.
Jim: Okay, I appreciate it. And then lastly, for me on buybacks, you know, I saw a nice pickup of activity in the quarter. You know, how would you describe the appetite here, you know, shares back around that $10 level with what's left on the existing authorization? And then also, Jim, alluding to your comments at the top, just leveraging capital through growing the balance sheet. How do you weigh those two against each other?
Speaker Change:
Speaker Change: You know, I know you guys have been kind of, you know, looking for efficiencies and, you know, ways to help keep that relatively contained. How do you think, you know, overall expenses will play out over the course of the year? Do you think it'll be, you know, fairly flattish from that, you know, sub-14 after the first quarter?
Speaker Change: I know you guys have been kind of looking for.
Great. And so for the mid-single-digit loan growth, are you expecting that to be, you know, more back-weighted and for, you know, the pipeline to pick up over the course of the year? I think as we look at it, having $25 million in our pipeline right now, we continue to respond to the market and what's available to meet the strategy of shifting to C&I. So, as deals become available or actively looking at that, we are hoping to have the growth come in sooner as we benefit from that throughout the year, but we will be cautious in terms of extending our crisis. I got it.
Speaker Change: <unk>.
Speaker Change: Ways to help keep that relatively contained.
How do you think.
Speaker Change: Overall expenses will play out over the course of the year do you think it'll be fairly flattish from the sub 2014.
Speaker Change: After the first quarter.
Speaker Change: Yeah, Chris we think that 14 is probably or just below 14 is a good run rate number from a fully baked and we continue to look at our contracts professional fees, where we're spending.
Speaker Change: Yeah, Chris, we think that 14 is probably or just below 14 is a good run rate number from a fully based in. We continue to look at our contracts, professional fees, where we're spending money and driving.
Jim: So, good morning. What I think about is what's the best opportunity for the bank and its capital? We're trading below tangible book value. We continue to believe in the buyback, and we'll continue to execute on the buybacks. With that said, I think there's an opportunity to make loans. We're looking to ship more into CNI, for instance, and we believe we can get a good return on our capital there as well. Kelly, I don't know if you want to add anything.
Speaker Change: Money and driving institutions being efficient.
Speaker Change: EFFICIENT.
Speaker Change: Um, okay.
Speaker Change: Okay.
Speaker Change: And then...
Speaker Change: And then.
Speaker Change: Um.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Asset quality seems, you know, pretty stable, quiet this quarter. Anything that you guys are seeing within your portfolio that, you know, gives you any concerns?
Speaker Change: Asset quality seems pretty.
And for the securities portfolio, I appreciate the color and the duration. For the next few quarters, do you think that you'll let that run off to the extent that you have stuff maturing, or do you expect to keep it fairly stable from here? I think there are a couple of opportunities in the marketplace for higher-yielding securities as some of our securities roll off due to maturities. We are seeing some opportunities to reinvest at higher rates, sort of letting the natural maturity take place and then reinvesting, as I said, at a higher interest rate. Okay, great, right? So, um, for what? Sorry, go ahead. Sorry, Chris.
Speaker Change: Stable quiet this quarter anything that you guys are seeing within your portfolio that gives you any concern.
Kelly: Yeah, no, I think we are a firm believer in buybacks and will continue to buy back what we can in the market. Okay, and then just as far as the balance sheet, so, you know, is net growth a decent expectation maybe beyond sort of what you saw this year, some of the next shift within the loan portfolio? Yeah, I think on both fronts, we will look to continue to shift, you know, as Jim mentioned, into C&I, some higher yielding assets. We are looking for growth probably in the mid-single digits at this point, but again, we will respond to the market and the availability to continue on our strategy. Okay, perfect. I will leave it there. Thanks so much for taking my question.
Speaker Change: Not at this juncture. We keep combing through it and so far.
Speaker Change: Not at this juncture.
Speaker Change: Keep combing through it so far.
Speaker Change: It's been very good.
Speaker Change: been very good. Nothing's popped up as of today. Everything
Speaker Change: Nothing has popped up as of today everything looks good.
Speaker Change: Great. That's all I had. Thanks for taking my question.
Speaker Change: Great.
Speaker Change: That's all I had thanks for taking my questions.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: That concludes the Q&A portion of today's call I'd now like to turn the session back over to Jim Murphy for any closing remarks.
Speaker Change: That concludes the Q&A portion of today's call. I'd now like to turn the session back over to Jim Naffey for any closing remarks.
Jim Naffey: thank you, operator, and I'd like to thank all of our shareholders and customers who have joined us today. I look forward to speaking with you again next quarter. Thanks, and have a great day.
Jim Murphy: Thank you operator, and I'd like to thank all of our shareholders and customers, who joined US today and look forward to speaking with you again next quarter, Thanks and have a great day.
We look for opportunities and look for the highest and best use of the proceeds as they mature, where we can put them into higher yielding assets. Is it going to be securities, or is it going to be loans? Got it. And as far as, you know, gain on sale going forward, given the level of, you know, resi that you guys have been, you know, producing, do you expect that to tick down a little bit in the near term? Or do you think we can stay in a relatively similar range? Well, I think we'll be in a similar range. The majority of that gain on sale was in the SBA product, not in the REGI product.
Jim Murphy: That concludes today's please foundry bancorp's fourth quarter and year end 2023 earnings call. You may now disconnect your lines.
Speaker Change: That concludes today's Blue Foundry Bank Corp fourth quarter and year-end 2023 earnings call. You may now disconnect your line.
Jim Murphy: [music].
Speaker Change: Thank you.
Operator: Okay. Our next question today comes from Chris O'Connell. Your line is now open, please go ahead. Hey, good morning.
Kelly: Uh, maybe just following up on, uh..., on the loan growth. How are the pipelines compared, you know, quarter over quarter, and what is the blended origination yield that you guys are putting on? So, I think, you know, at 1231, our pipeline was strong. We had about $25 million.
And as we look to the future, depending on what the markets do, we will look to be an active participant when the opportunity is present. And on the expenses for, you know, the sub-$14 million just to start off the first quarter. You know, I know you guys have been kind of looking for efficiencies and, you know, ways to help keep that relatively contained. How do you think overall expenses will play out over the course of the year? Do you think it'll be, you know, fairly flattish from that, you know, sub-14 after the first quarter? Yeah, Chris. We think that 14 is probably or just below 14 is a good run rate number from a fully based in. We continue to look at our contracts, professional fees, where we're spending money and driving. EFFICIENT. Um, okay. And then... Um.
Kelly: In our pipeline, 20 of those are in the CNI space, which we were pleased with. The yield on that is just around 8.2% on that pipeline. Great, um. And so for the mid-single-digit loan growth, are you expecting that to be more back-weighted and for the pipeline to pick up over the course of the year? I think as we look at it, having 25 million in our pipeline right now, we continue to respond to the market and what's available to meet the strategy of shifting to C&I. So as deals become available or actively looking at that, we are hoping to have the growth come in sooner as we benefit from that throughout the year, but we will be cautious in terms of extending our crite. Got it. In further securities portfolios, appreciate the color and the duration.
Kelly: For the next few quarters, do you think that you'll let that run off to the extent that, you know, you have stuff maturing, or do you expect to keep it, you know, fairly stable from here? I think there are a couple of opportunities in the marketplace with some higher yielding securities as some of our securities roll off due to maturities. We are seeing some opportunities to reinvest in higher rates, sort of letting the natural maturity take place and then reinvesting, as I said, at a higher interest rate.
Asset quality seems, you know, pretty stable and quiet this quarter. Anything that you guys are seeing within your portfolio that, you know, gives you any concerns? Not at this juncture. We keep combing through it, and so far, it's been very good. Nothing's popped up as of today.
Everything, Great. That's all I had. Thanks for taking my question. Thank you. That concludes the Q&A portion of today's call. I'd now like to turn the session back over to Jim Naffey for any closing remarks. Thank you, operator, and I'd like to thank all of our shareholders and customers who have joined us today. I look forward to speaking with you again next quarter. Thanks, and have a great day. That concludes today's Blue Foundry Bank Corp fourth quarter and year-end 2023 earnings call. You may now disconnect your line. Thank you.
Kelly: Okay. Great. Right. So, for what? Sorry, go ahead. Sorry, Chris.
Kelly: We look for opportunities and look for the highest and best use of the proceeds as they mature, where we can put them into higher yielding assets. Is it going to be securities, or is it going to be loans? Got it.
Kelly: And as far as, you know, gain on sale going forward, given the level of resale that you guys have been producing, do you expect that to tick down a little bit year-on-year term, or do you think it can stay in a relatively similar range? Well, I think we'll be in a similar range. The majority of that game on sale was in the SBA product, not in the regular product.
Kelly: And as we look to the future, depending on what the markets do, we will look to be an active participant when the opportunity is present. And on the expenses for, you know, the sub-14 million just to start off the first quarter. I know you guys have been kind of looking for efficiencies and ways to help keep that relatively contained. How do you think overall expenses will play out over the course of the year? Do you think it'll be fairly flattish from that sub-14 after the first quarter? Yeah, Chris, we think that 14 is probably or just below 14 is a good run rate number from a fully based in.
Kelly: We continue to look at our contracts and professional fees where we're spending money and driving fish. Okay. And then. Um, asset quality seemed, you know, pretty stable and quiet this quarter. Anything that you guys are seeing within your portfolio that, you know, gives you any concern? Not at this juncture. We keep coming through it, and so far, it's been very stable. I don't think it's popped up as of today.
Kelly: Great, that's all I had. Thanks for taking my question. Thank you. That concludes the Q&A portion of today's call. I'd now like to turn the session back over to Jim Nuffie for any closing remarks. But thank you, operator, and I'd like to thank all of our shareholders and customers who have joined us today. I look forward to speaking with you again next quarter. Thanks, and have a great day! That concludes today's Blue Foundry Bancorp fourth quarter and year-end 2023 earnings call. You may now disconnect your line.