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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
Or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-40619
BLUE FOUNDRY BANCORP
(Exact name of the registrant as specified in its charter)
Delaware
86-2831373
           (State or Other Jurisdiction of Incorporation or Organization)
                                   (I.R.S. Employer Identification Number)
19 Park Avenue,
Rutherford,New Jersey
07070
(Address of principal executive offices)
(Zip Code)
(201) 939-5000
(Registrant’s telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par valueBLFYThe NASDAQ Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
 
Large accelerated filer
 ☐ 
Accelerated filer
 
☐
Non-accelerated filer
 ☒
Smaller reporting company
 
☒
Emerging Growth Company
 
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ☐  Yes    ☒  No

As of August 6, 2024 there were 28,522,500 shares issued and 23,213,599 shares outstanding of the Registrant’s Common Stock, par value $0.01 per share.



BLUE FOUNDRY BANCORP
FORM 10-Q
Index



PAGE
UNREGISTERED SALES OF EQUITY SECURITIES. USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES



Part I Financial Information
ITEM 1. FINANCIAL STATEMENTS
BLUE FOUNDRY BANCORP
Consolidated Balance Sheets

June 30, 2024December 31, 2023
(Unaudited)(Audited)
(In thousands)
ASSETS
Cash and cash equivalents
$60,262 $46,025 
Securities available-for-sale, at fair value297,790 283,766 
Securities held-to-maturity, net (fair value of $28,348 at June 30, 2024 and $28,323 at December 31, 2023, and allowance for credit losses of $133 at June 30, 2024 and $158 at December 31, 2023)
33,169 33,254 
FHLB stock and other investments17,942 20,346 
Loans receivable, net of allowance for credit losses of $13,027 at June 30, 2024 and $14,154 at December 31, 2023
1,534,357 1,546,576 
Real estate owned, net— 593 
Interest and dividends receivable7,882 7,595 
Premises and equipment, net30,858 32,475 
Right-of-use assets24,596 25,172 
Bank owned life insurance22,274 22,034 
Other assets16,322 27,127 
Total assets$2,045,452 $2,044,963 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits$1,311,156 $1,244,904 
Advances from the Federal Home Loan Bank342,500 397,500 
Advances by borrowers for taxes and insurance9,875 8,929 
Lease liabilities26,243 26,777 
Other liabilities10,081 11,213 
Total liabilities1,699,855 1,689,323 
Shareholders’ equity
Preferred stock, $0.01 par value, 10,000,000 authorized: none issued
— — 
Common stock $0.01 par value; 70,000,000 shares authorized; 28,522,500 shares issued at June 30, 2024 and December 31, 2023; 23,505,357 and 24,509,950 shares outstanding at June 30, 2024 and December 31, 2023, respectively
285 285 
Additional paid-in capital275,890 273,991 
Retained earnings159,157 164,340 
Treasury stock, at cost: 5,017,143 and 4,012,550 shares at June 30, 2024 and December 31, 2023, respectively
(49,229)(40,016)
Unallocated common shares held by Employee Stock Ownership Plan(19,623)(20,080)
Accumulated other comprehensive loss(20,883)(22,880)
Total shareholders’ equity 345,597 355,640 
Total liabilities and shareholders’ equity$2,045,452 $2,044,963 
See accompanying notes to the consolidated financial statements.
3


BLUE FOUNDRY BANCORP
Consolidated Statements of Operations
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(Dollars in thousands)
Interest and dividend income:
Loans$17,570 $16,481 $34,762 $32,050 
Taxable investment income3,686 3,172 7,300 6,324 
Non-taxable investment income36 112 72 223 
Total interest income21,292 19,765 42,134 38,597 
Interest expense:
Deposits9,132 5,173 17,545 9,327 
Borrowed funds2,587 3,686 5,599 6,423 
Total interest expense11,719 8,859 23,144 15,750 
Net interest income9,573 10,906 18,990 22,847 
(Release of) provision for credit losses(762)143 (1,297)120 
Net interest income after (release of) provision for credit losses10,335 10,763 20,287 22,727 
Non-interest income:
Fees and service charges296 280 625 542 
Gain on sale of loans— 24 36 159 
Other income240 76 326 163 
Total non-interest income536 380 987 864 
Non-interest expense:
Compensation and benefits7,635 7,065 15,184 14,912 
Occupancy and equipment2,262 2,124 4,454 4,106 
Data processing1,335 1,535 2,722 3,136 
Advertising52 77 124 149 
Professional services623 764 1,353 1,744 
Federal deposit insurance premiums194 231 393 336 
Other expense1,114 1,172 2,227 2,242 
Total non-interest expenses13,215 12,968 26,457 26,625 
Loss before income tax expense(2,344)(1,825)(5,183)(3,034)
Income tax expense— — — — 
Net loss$(2,344)$(1,825)$(5,183)$(3,034)
Basic loss per share$(0.11)$(0.08)$(0.24)$(0.13)
Diluted loss per share$(0.11)$(0.08)$(0.24)$(0.13)
Weighted average shares outstanding - basic21,735,002 24,249,71421,914,811 24,131,017
Weighted average shares outstanding - diluted (1)
21,735,002 24,249,714 21,914,811 24,131,017
(1) The assumed vesting of outstanding restricted stock units had an antidilutive effect on diluted earnings per share due to the Company’s net loss for the 2024 and 2023 periods.

See accompanying notes to the consolidated financial statements.
4


BLUE FOUNDRY BANCORP
Consolidated Statements of Comprehensive Loss
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In thousands)
Net loss$(2,344)$(1,825)$(5,183)$(3,034)
Other comprehensive income (loss), net of tax (1):
Unrealized gain (loss) on securities available-for-sale:
Unrealized gain (loss) arising during the period361 (3,800)(748)239 
361 (3,800)(748)239 
Unrealized gain (loss) on cash flow hedge:
Unrealized gain arising during the period(1,685)5,149 (521)3,709 
Reclassification adjustment for loss (gain) included in net loss1,613 (1,346)3,262 (2,350)
(72)3,803 2,741 1,359 
Post-retirement plans:
Reclassification adjustment for amortization of:
Net actuarial gain (loss)3 (2)4 (4)
3 (2)4 (4)
Total other comprehensive income, net of tax (1)292 1 1,997 1,594 
Comprehensive loss$(2,052)$(1,824)$(3,186)$(1,440)
(1) Reflects deferred tax valuation allowance.



See accompanying notes to the consolidated financial statements.
5


BLUE FOUNDRY BANCORP
Consolidated Statements of Changes in Shareholders’ Equity
Three Months Ended June 30, 2023 and 2024
(Unaudited)
Common StockAdditional
Paid-In
Capital		Retained
Earnings		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Unallocated Common Stock Held by ESOPTotal
Shareholders’
Equity
SharesPar Value
(In thousands, except share data)
Balance at March 31, 202327,385,482$285 $271,507 $170,528 $(12,737)$(23,126)$(20,764)$385,693 
Net income—— — (1,825)— — — (1,825)
Other comprehensive loss—— — — — 1 — 1 
Purchase of Treasury stock(1,892,060)— — — (18,323)— — (18,323)
Compensation cost for stock options and restricted stock—— 768 — — — — 768 
ESOP shares committed to be released (22,818 shares)
—— (8)— — — 228 220 
Balance at June 30, 2023
25,493,422$285 $272,267 $168,703 $(31,060)$(23,125)$(20,536)$366,534 
Balance at March 31, 202423,958,888285 $274,327 $161,501 $(44,930)$(21,175)$(19,852)$350,156 
Net loss—— — (2,344)— — — (2,344)
Other comprehensive loss—— — — — 292 — 292 
Purchase of Treasury stock(386,352)— — — (3,460)— — (3,460)
Treasury stock allocated to restricted stock plan, net of forfeitures(67,179)— 833 — (839)— — (6)
Compensation cost for stock options and restricted stock—— 756 — — — — 756 
ESOP shares committed to be released (22,818 shares)
—— (26)— — — 229 203 
Balance at June 30, 2024
23,505,357$285 $275,890 $159,157 $(49,229)$(20,883)$(19,623)$345,597 

See accompanying notes to the consolidated financial statements.
6


BLUE FOUNDRY BANCORP
Consolidated Statements of Changes in Shareholders’ Equity
Six Months Ended June 30, 2023 and 2024
(Unaudited)
Common StockAdditional
Paid-In
Capital		Retained
Earnings		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Unallocated Common Stock Held by ESOPTotal
Shareholders’
Equity
SharesPar Value
(In thousands, except share data)
Balance at December 31, 2022
27,523,219$285 $279,454 $171,763 $(12,072)$(24,719)$(20,993)$393,718 
Cumulative effect of adopting ASU No. 2016-13—— — (18)— — — (18)
Cumulative effect of adopting ASU No. 2022-02—— — (8)— — — (8)
Net loss—— — (3,034)— — — (3,034)
Other comprehensive income—— — — — 1,594 — 1,594 
Purchase of Treasury stock(2,762,577)— — — (27,645)— — (27,645)
Treasury stock allocated to restricted stock plan732,780— (8,657)— 8,657 — — — 
Compensation cost for stock options and restricted stock—— 1,444 — — — — 1,444 
ESOP shares committed to be released (45,636 shares)
—— 26 — — — 457 483 
Balance at June 30, 2023
25,493,422$285 $272,267 $168,703 $(31,060)$(23,125)$(20,536)$366,534 
Balance at December 31, 202324,509,950$285 $273,991 $164,340 $(40,016)$(22,880)$(20,080)$355,640 
Net loss—— — (5,183)— — — (5,183)
Other comprehensive income—— — — — 1,997 — 1,997 
Purchase of Treasury stock(942,705)— — — (8,792)— — (8,792)
Treasury stock allocated to restricted stock plan, net of forfeitures(61,888)— 402 — (421)— — (19)
Compensation cost for stock options and restricted stock—— 1,537 — — — 1,537 
ESOP shares committed to be released (45,636 shares)
—— (40)— — — 457 417 
Balance at June 30, 2024
23,505,357$285 $275,890 $159,157 $(49,229)$(20,883)$(19,623)$345,597 



See accompanying notes to the consolidated financial statements.
7
BLUE FOUNDRY BANCORP
Consolidated Statements of Cash Flows
(Unaudited)



Six Months Ended June 30,
20242023
(In thousands)
Cash flows from operating activities
Net loss$(5,183)$(3,034)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of premises and equipment1,570 1,354 
Amortization (accretion) of:
Right-of-use asset1,438 1,400 
Deferred loan fees, costs, and discounts, net(14)(312)
Premiums and discounts on securities326 484 
(Release of) provision for credit losses(1,297)120 
Proceeds from sales of loans held for sale486 2,346 
Gains on sale of loans, net(36)(159)
Origination of loans held for sale(450)(4,684)
Loss on disposal of premises and equipment— 13 
Gain on sale of real estate owned(123)— 
Increase in bank owned life insurance cash surrender value(240)(226)
ESOP and stock-based compensation expense 1,954 1,927 
Increase in interest and dividends receivable(287)(392)
Decrease in other assets12,020 186 
Decrease (increase) in other liabilities502 (3,430)
Change in lease liability(1,396)(1,282)
Net cash provided by (used in) operating activities9,270 (5,689)
Cash flows from investing activities
Net change in loans receivable13,335 (29,519)
Purchases of residential mortgage loans— (6,804)
Proceeds from sale of real estate owned716 — 
Purchases of securities available-for-sale(44,303)— 
Principal payments and maturities on securities available-for-sale29,315 13,169 
Purchase of Federal Home Loan Bank stock(19,805)(42,035)
Redemption of Federal Home Loan Bank stock22,343 37,620 
Proceeds from bank owned life insurance— 582 
Proceeds from disposal of fixed assets— 16 
Purchases of premises and equipment47 (3,077)
Net cash provided by (used in) investing activities1,648 (30,048)
Cash flows from financing activities
Net increase (decrease) in deposits66,252 (21,601)
Proceeds from advances from Federal Home Loan Bank558,000 1,497,000 
Repayments of advances from Federal Home Loan Bank(613,000)(1,408,000)
Net increase in advances by borrowers for taxes and insurance946 560 
Purchase of treasury stock(8,879)(27,645)
Net cash provided by financing activities3,319 40,314 
Net increase in cash and cash equivalents14,237 4,577 
Cash and cash equivalents at beginning of period46,025 41,182 
Cash and cash equivalents at end of period$60,262 $45,759 

See accompanying notes to the consolidated financial statements.
8
BLUE FOUNDRY BANCORP
Consolidated Statements of Cash Flows
(Unaudited)




Six Months Ended June 30,
20242023
(In thousands)
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest$23,512 $15,302 
Taxes21 13 
Supplemental noncash disclosures
Lease liabilities arising from obtaining right-of-use assets862 2,088 
See accompanying notes to the consolidated financial statements.
9
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The accompanying consolidated financial statements include the accounts of Blue Foundry Bancorp (the “Company”), and its wholly owned subsidiary, Blue Foundry Bank (the “Bank”), and the Bank’s wholly owned subsidiaries, TrackView LLC and Blue Foundry Investment Company (collectively, the “Company”). All intercompany accounts and transactions have been eliminated in consolidation. Blue Foundry Bancorp owns 100% of the common stock of Blue Foundry Bank.
Segment Reporting: The Company operates as a single operating segment for financial reporting purposes.
Basis of Financial Statement Presentation: The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles. Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for the preparation of the Quarterly Reports on Form 10-Q and with Regulation S-X. The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the consolidated balance sheets and the consolidated statements of income for the periods presented. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and revenues and expenses for the period. Actual results could differ from those estimates. Some items in the prior year financial statements may be reclassified to conform to the current presentation. The results of operations and other data presented for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that may be expected for subsequent periods or the full year results. These financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on March 27, 2024.
The accounting policies of the Company conform to U.S. GAAP and to general practice within the financial services industry. A discussion of these policies can be found in Note 1, Summary of Significant Accounting Policies, included in the Company’s 2023 Annual Report on Form 10-K. Except for the below, there have been no changes to the Company’s significant accounting policies since December 31, 2023.
Accounting Standards Not Yet Adopted: As an “emerging growth company” as defined in Title 1 of the Jumpstart Our Business Startups (“JOBS”) Act, the Company elected to use the extended transition period to delay the adoption of new or reissued accounting pronouncements applicable to public companies until such pronouncements were made applicable to private companies.



10
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2 – SECURITIES
The amortized cost of securities available-for-sale and their estimated fair values at June 30, 2024 and December 31, 2023 are as follows:
Amortized
Cost		Gross Unrealized GainsGross Unrealized LossesEstimated
Fair
Value
(In thousands)
June 30, 2024
U.S. Treasury notes$36,499 $3 $(1,588)$34,914 
Corporate bonds77,181 134 (4,867)72,448 
U.S. Government agency obligations11,291 — (154)11,137 
Obligations issued by U.S. states and their political subdivisions
6,390 — (402)5,988 
Mortgage-backed securities:
Residential
172,130 10 (23,432)148,708 
Multifamily
11,004 — (888)10,116 
Asset-backed securities14,742 — (263)14,479 
Total$329,237 $147 $(31,594)$297,790 
December 31, 2023
U.S. Treasury notes$36,935 $— $(1,875)$35,060 
Corporate bonds82,248 56 (5,681)76,623 
U.S. Government agency obligations11,519 — (379)11,140 
Obligations issued by U.S. states and their political subdivisions
6,423 — (228)6,195 
Mortgage-backed securities:
Residential
149,808 — (21,266)128,542 
Multifamily12,522 — (999)11,523 
Asset-backed securities15,010 — (327)14,683 
Total$314,465 $56 $(30,755)$283,766 



11
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The amortized cost of securities held-to-maturity, allowance for credit losses and their estimated fair values at June 30, 2024 and December 31, 2023, are as follows:
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated
Fair
Value
(In thousands)
June 30, 2024
Corporate bonds$18,600 $— $(3,568)$15,032 
Asset-backed securities14,702 — (1,386)13,316 
Total$33,302 $— $(4,954)$28,348 
Allowance for credit loss(133)
$33,169 
December 31, 2023
Corporate bonds$18,600 $— $(3,593)$15,007 
Asset-backed securities14,812 — (1,496)13,316 
Total$33,412 $— $(5,089)$28,323 
Allowance for credit loss(158)
$33,254 
At June 30, 2024 and December 31, 2023, the allowance for credit losses on securities held-to-maturity totaled $133 thousand and $158 thousand respectively, and related to the corporate bonds. The asset-backed securities are in a AAA tranche determined by a third party. No loss is expected on these securities.
Securities pledged at June 30, 2024 and December 31, 2023 had a carrying amount of $12.8 million and $11.7 million, respectively, and were pledged to secure public deposits and our credit line with the Federal Reserve Bank.
The amortized cost and fair value of debt securities are shown below by contractual maturity as of June 30, 2024. Expected maturities on mortgage and asset-backed securities generally exceed 20 years; however, they may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.
Amortized Cost (1)
Estimated Fair Value
(In thousands)
Available-for-sale
Due in one year or less$44,618 $44,045 
Due from one year to five years31,648 30,953 
Due from five to ten years48,106 44,390 
Due after ten years6,989 5,099 
Mortgage-backed and asset-backed securities197,876 173,303 
Total$329,237 $297,790 
Held-to-maturity
Due from five to ten years 18,600 15,032 
Mortgage-backed and asset-backed securities14,702 13,316 
Total$33,302 $28,348 
(1) Excludes the allowance for credit losses on held-to-maturity securities at June 30, 2024.



12
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Credit Quality Indicators
Credit ratings are a key measure for estimating the probability of a bond’s default and for monitoring credit quality on an on-going basis. For bonds other than U.S. Treasuries and bonds issued or guaranteed by U.S. government agencies, credit ratings issued by one or more nationally recognized statistical rating organization are considered in conjunction with an assessment by the Company’s management. Investment grade reflects a credit quality of BBB- or above. None of the Company’s securities are on non-accrual status, nor are any past due.
The table below indicates the credit profile of the Company’s debt securities held-to-maturity at amortized cost for the periods shown.
June 30, 2024AAAA1BBB+BBBBBB-Total
(In thousands)
Corporate bonds$— $— $1,600 $16,000 $1,000 $18,600 
Asset-backed securities8,761 5,941 — — — 14,702 
Total held-to-maturity$8,761 $5,941 $1,600 $16,000 $1,000 $33,302 
December 31, 2023AAAA1BBB+BBBBBB-Total
(In thousands)
Corporate bonds$— $— $1,600 $11,000 $6,000 $18,600 
Asset-backed securities8,844 5,968 — — — 14,812 
Total held-to-maturity$8,844 $5,968 $1,600 $11,000 $6,000 $33,412 
At June 30, 2024 and December 31, 2023, there was one security with a value of $2.0 million included in the BBB rating that had a split rating.




13
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following tables summarize available-for-sale securities with unrealized losses at June 30, 2024 and December 31, 2023, aggregated by major security type and length of time in a continuous loss position.
Less than 12 Months12 Months or MoreTotal
Unrealized LossesEstimated
Fair Value		Unrealized LossesEstimated
Fair Value		Number of SecuritiesUnrealized LossesEstimated
Fair Value
(Dollars in thousands)
June 30, 2024
U.S. Treasury notes$— $— $(1,588)$25,346 3$(1,588)$25,346 
Corporate bonds(72)9,660 (4,795)46,939 24(4,867)56,599 
U.S. Government agency obligations— — (154)11,137 3(154)11,137 
Obligations issued by U.S. states and their political subdivisions— — (402)5,988 5(402)5,988 
Mortgage-backed securities:
Residential(24)19,593 (23,408)119,359 48(23,432)138,952 
Multifamily— — (888)10,115 5(888)10,115 
Asset-backed securities(11)5,002 (252)4,465 3(263)9,467 
Total$(107)$34,255 $(31,487)$223,349 91$(31,594)$257,604 
December 31, 2023
U.S. Treasury notes$— $— $(1,875)$35,060 4$(1,875)$35,060 
Corporate bonds(7)8,260 (5,674)61,156 30(5,681)69,416 
U.S. Government agency obligations— — (380)11,140 3(380)11,140 
Obligations issued by U.S. states and their political subdivisions— — (228)6,195 5(228)6,195 
Mortgage-backed securities:
Residential— 2 (21,266)128,535 48(21,266)128,537 
Multifamily— — (999)11,524 6(999)11,524 
Asset-backed securities(21)4,991 (305)4,680 3(326)9,671 
Total$(28)$13,253 $(30,727)$258,290 99$(30,755)$271,543 
Of the available-for-sale securities in an unrealized loss position at June 30, 2024, 59 are comprised of U.S. Government agency obligations, Treasury notes, and mortgage-backed securities. These securities were all issued by U.S. Government-sponsored entities and agencies, which the government has affirmed its commitment to support. Corporate bonds, obligations issued by U.S. states and their political subdivisions and asset-backed securities in an unrealized loss position all experienced a decline in fair value, which is attributable to changes in interest rates and liquidity, not credit quality. The Company also does not intend to sell these securities, nor does it foresee being required to sell them before the anticipated recovery or maturity.
The following tables summarizes held-to-maturity securities with unrealized losses at June 30, 2024 and December 31, 2023, aggregated by major security type and length of time in a continuous loss position.
Less than 12 Months12 Months or MoreTotal
Unrealized LossesEstimated
Fair Value		Unrealized LossesEstimated
Fair Value		Number of SecuritiesUnrealized LossesEstimated
Fair Value
(Dollars in thousands)
June 30, 2024
Corporate Bonds— — (3,568)15,032 9(3,568)15,032 
Asset-backed securities— — (1,386)13,316 2(1,386)13,316 
Total$— $— $(4,954)$28,348 11$(4,954)$28,348 



14
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Less than 12 Months12 Months or MoreTotal
Unrealized LossesEstimated
Fair Value		Unrealized LossesEstimated
Fair Value		Number of SecuritiesUnrealized LossesEstimated
Fair Value
(Dollars in thousands)
December 31, 2023
Corporate Bonds— — (3,593)15,007 9(3,593)15,007 
Asset-backed securities— — (1,496)13,316 2(1,496)13,316 
Total$— $— $(5,089)$28,323 11$(5,089)$28,323 
The held-to-maturity securities in an unrealized loss position at June 30, 2024, are corporate bonds and asset-backed securities. Unrealized losses are attributable to changes in interest rates and liquidity, not credit quality. The Company also does not intend to sell these securities, nor does it foresee being required to sell them before the anticipated recovery or maturity.
NOTE 3 – LOANS RECEIVABLE
A summary of loans receivable, net at June 30, 2024 and December 31, 2023, follows:
June 30, 2024December 31, 2023
(In thousands)
Residential$526,453 $550,929 
Multifamily671,185 682,564 
Commercial real estate241,867 232,505 
Construction71,882 60,414 
Junior liens23,653 22,503 
Commercial and industrial12,261 11,768 
Consumer and other83 47 
Total loans1,547,384 1,560,730 
Less: Allowance for credit losses (1)13,027 14,154 
Loans receivable, net$1,534,357 $1,546,576 
(1) For more information, see Note 4 - Allowance for Credit Losses.
Loans are recorded at amortized cost, which includes principal balance, net deferred fees or costs, premiums and discounts. The Company elected to exclude accrued interest receivable from amortized cost. Accrued interest receivable is reported separately in the consolidated balance sheets and totaled $6.4 million and $6.1 million at June 30, 2024 and December 31, 2023, respectively. Loan origination fees and certain direct loan origination costs are deferred and the net fee or cost is recognized in interest income as an adjustment of yield. At June 30, 2024 and December 31, 2023, net deferred loan fees totaled $2.5 million and $2.0 million, respectively.
The portfolio classes in the above table have unique risk characteristics with respect to credit quality:
•Payment on multifamily and commercial real estate mortgages is driven principally by operating results of the managed properties or underlying business and secondarily by the sale or refinance of such properties. Both primary and secondary sources of repayment and the value of the properties in liquidation, may be affected to a greater extent by adverse conditions in the real estate market or the economy in general.
•Properties underlying construction loans often do not generate sufficient cash flows to service debt and thus repayment is subject to the ability of the borrower and, if applicable, guarantors, to complete development or construction of the property and carry the project, often for extended periods of time. As a result, the performance of these loans is contingent upon future events whose probability at the time of origination is uncertain.



15
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



•Commercial and industrial (“C&I”) loans include C&I revolving lines of credit, term loans, SBA 7a loans and to a lesser extent, Paycheck Protection Program (“PPP”) loans. Payments on C&I loans are driven principally by the cash flows of the businesses and secondarily by the sale or refinance of any collateral securing the loans. Both the cash flow and value of the collateral in liquidation may be affected by adverse general economic conditions.
•The ability of borrowers to service debt in the residential, junior liens and consumer loan portfolios is generally subject to personal income which may be impacted by general economic conditions, such as increased unemployment levels. These loans are predominately collateralized by first and second liens on single family properties. If a borrower cannot maintain the loan, the Company’s ability to recover against the collateral in sufficient amount and in a timely manner may be significantly influenced by market, legal and regulatory conditions.
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the quality and realizable value of collateral, if any, and the ability of borrowers to service their debts such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk. This analysis is performed whenever credit is extended, renewed, or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans. The Company used the following definitions for risk ratings for loan classification:
Pass – Loans classified as pass are loans performing under the original contractual terms, do not currently pose any identified risk and can range from the highest to pass/watch quality, depending on the degree of potential risk.
Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the Company’s credit position at some future date.
Substandard – Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor, or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the repayment and liquidation of the debt. They are characterized by a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.
Loss – Assets classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset even though partial recovery may be effected in the future.



16
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following table presents the risk category of loans by class of loan and vintage as of June 30, 2024:
Term Loans by Origination Year
20242023202220212020Pre-2020Revolving LoansTotal
(in thousands)
Residential
Pass$2,034 $13,149 $95,083 $105,468 $14,079 $290,729 $— $520,542 
Special mention— — — — — 653 — 653 
Substandard— — — — — 5,258 — 5,258 
Total2,034 13,149 95,083 105,468 14,079 296,640 — 526,453 
Multifamily
Pass4,320 17,041 280,383 151,617 35,022 182,670 — 671,053 
Substandard— — — — — 132 — 132 
Total4,320 17,041 280,383 151,617 35,022 182,802 — 671,185 
Commercial real estate
Pass13,744 26,624 117,088 14,638 14,859 54,048 — 241,001 
Special mention— — — — — 866 — 866 
Total13,744 26,624 117,088 14,638 14,859 54,914 — 241,867 
Construction
Pass— 26,025 28,373 17,484 — — — 71,882 
Total— 26,025 28,373 17,484 — — — 71,882 
Junior liens
Pass2,235 5,734 5,125 1,243 242 9,027 — 23,606 
Substandard— — — — — 47 — 47 
Total2,235 5,734 5,125 1,243 242 9,074 — 23,653 
Commercial and industrial
Pass3,621 6,212 100 1,557 — — — 11,490 
Substandard— 756 — 15 — — — 771 
Total3,621 6,968 100 1,572 — — — 12,261 
Consumer and other
Pass55 — — — — — 28 83 
Total55 — — — — — 28 83 
Total gross loans$26,009 $95,541 $526,152 $292,022 $64,202 $543,430 $28 $1,547,384 



17
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following table presents the risk category of loans by class of loan and vintage as of December 31, 2023:
Term Loans by Origination Year
20232022202120202019Pre-2019Revolving LoansTotal
(in thousands)
Residential
Pass$13,338 $98,007 $109,193 $14,315 $18,460 $291,069 $— $544,382 
Special mention— — — — — 663 — 663 
Substandard— — — — — 5,884 — 5,884 
Total13,338 98,007 109,193 14,315 18,460 297,616 — 550,929 
Multifamily
Pass17,144 281,906 158,705 35,407 56,739 132,517 — 682,418 
Substandard— — — — — 146 — 146 
Total17,144 281,906 158,705 35,407 56,739 132,663 — 682,564 
Commercial real estate
Pass26,610 118,247 14,785 15,080 5,386 51,493 — 231,601 
Special mention— — — — — 904 — 904 
Total26,610 118,247 14,785 15,080 5,386 52,397 — 232,505 
Construction
Pass22,798 21,067 16,549 — — — — 60,414 
Total22,798 21,067 16,549 — — — — 60,414 
Junior liens
Pass5,359 5,234 1,232 296 1,773 8,560 — 22,454 
Substandard— — — — — 49 — 49 
Total5,359 5,234 1,232 296 1,773 8,609 — 22,503 
Commercial and industrial
Pass7,055 105 4,492 77 — — — 11,729 
Substandard— — 39 — — — — 39 
Total7,055 105 4,531 77 — — — 11,768 
Consumer and other
Pass25 — — — — — 22 47 
Total25 — — — — — 22 47 
Total gross loans$92,329 $524,566 $304,995 $65,175 $82,358 $491,285 $22 $1,560,730 



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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Past Due and Non-accrual Loans
The following table presents the recorded investment in past due and current loans by loan portfolio class as of June 30, 2024 and December 31, 2023:
30-59
Days
Past Due		60-89
Days
Past Due		90 Days
and Greater
Past Due		Total
Past Due		CurrentTotal
Loans
Receivable
(In thousands)
June 30, 2024
Residential$1,139 $— $4,595 $5,734 $520,719 $526,453 
Multifamily— — — — 671,185 671,185 
Commercial real estate398 — — 398 241,469 241,867 
Construction— — — — 71,882 71,882 
Junior liens150 — 47 197 23,456 23,653 
Commercial and industrial 1 — 14 15 12,246 12,261 
Consumer and other— — — — 83 83 
Total$1,688 $— $4,656 $6,344 $1,541,040 $1,547,384 
December 31, 2023
Residential$887 $752 $3,926 $5,565 $545,364 $550,929 
Multifamily— — — — 682,564 682,564 
Commercial real estate— — — — 232,505 232,505 
Construction— — — — 60,414 60,414 
Junior liens— — 49 49 22,454 22,503 
Commercial and industrial — — 39 39 11,729 11,768 
Consumer and other— — — — 47 47 
Total$887 $752 $4,014 $5,653 $1,555,077 $1,560,730 
The following tables presents information on non-accrual loans at June 30, 2024 and December 31, 2023:
Non-accrualInterest Income Recognized on Non-accrual LoansAmortized Cost Basis of Loans >= 90 Day Past Due and Still AccruingAmortized Cost Basis of Non-accrual Loans Without Related Allowance
June 30, 2024(In thousands)
Residential$5,258 $11 $— $5,258 
Multifamily132 4 — 132 
Junior liens47 2 — 47 
Commercial and industrial771 — — 771 
Total$6,208 $17 $— $6,208 
December 31, 2023
Residential$5,884 $— $— $5,884 
Multifamily146 — — 146 
Junior liens49 — — 49 
Commercial and industrial39 — — 39 
Total$6,118 $— $— $6,118 



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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The Company had no loans held-for-sale at June 30, 2024 and December 31, 2023. Gains and losses on sales of loans are specifically identified and accounted for in accordance with U.S. GAAP.
Modifications made to borrowers experiencing financial difficulty may include principal forgiveness, interest rate reductions, other than insignificant payment delays, terms extensions or a combination thereof intended to minimize economic loss and to avoid foreclosure or repossession of collateral. If the borrower has demonstrated performance under the previous terms and our underwriting process show the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest.
In the second quarter of 2024, there were no modifications to borrowers experiencing financial difficulty. The following table presents the amortized cost basis at June 30, 2024, of loan modifications to borrowers experiencing financial difficulty during the six months ended June 30, 2024, disaggregated by type of modification.
Payment DelaysTerm ExtensionsTotal Principal% of Total Class of Loans
(Dollars in thousands)
Residential$— $113 $113 0.02 %
Commercial and industrial756 — 756 6.17 
Total$756 $113 $869 0.06 %
Types of Modifications
Residential
Term extensions of 3 to 12 months
Commercial and industrial
Deferral of three payments
In the first quarter of 2023, there were no modifications to borrowers experiencing financial difficulty. The following table presents the amortized cost basis at June 30, 2023, of loan modifications to borrowers experiencing financial difficulty during the three and six months ended June 30, 2023, disaggregated by type of modification.
Payment DelaysTerm ExtensionsTotal Principal% of Total Class of Loans
(Dollars in thousands)
Residential$752 $374 $1,126 0.19 %
Total$752 $374 $1,126 0.07 %
Types of Modifications
Residential
Term extensions of 3 to 12 months
Amortize past due balances over the remaining life of the loans



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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The Company closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the payment status and amortized cost basis at June 30, 2024, of loans that were modified during the twelve-month period ended June 30, 2024.
Current30-59 Days Past Due60-89 Days Past Due90 Days or More Past DueNon-AccrualTotal
(In thousands)
Residential$1,860 $— $— $— $185 $2,045 
Commercial and industrial— — — — 756 756 
Total$1,860 $— $— $— $941 $2,801 
The following table presents the payment status and amortized cost basis at June 30, 2023, of loans that were modified during the six-month period ended June 30, 2023.
Current30-59 Days Past Due60-89 Days Past Due90 Days or More Past DueNon-AccrualTotal
(In thousands)
Residential$374 $— $— $— $752 $1,126 
Total$374 $— $— $— $752 $1,126 
The Company had $4.1 million and $4.0 million in consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process at June 30, 2024, and December 31, 2023, respectively. At June 30, 2024, the Company had no other real estate owned and reported one property totaling $593 thousand at December 31, 2023.
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES
Allowance for Credit Losses - Loans
The allowance for credit losses on loans is summarized in the following table:
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2024202320242023
(In thousands)
Balance at beginning of period$13,749 $14,153 $14,154 $13,400 
Impact of adopting ASU 2016-13 and ASU 2022-02— — — 668 
Charge-offs(20)(13)(33)(18)
Recoveries4 — 8 1 
Net charge-offs(16)(13)(25)(17)
(Recovery of) provision for credit loss on loans(706)273 (1,102)362 
Balance at end of period$13,027 $14,413 $13,027 $14,413 


21
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following tables present the activity in the Company’s allowance for credit losses by class of loans based on the analysis performed for the three months ended June 30, 2024 and 2023:
Balance at March 31, 2024
Charge-offsRecoveries(Recovery of) Provision for Credit Loss - Loans
Balance at June 30, 2024
(In thousands)
Residential$1,919 $— $— $(94)$1,825 
Multifamily7,003 — — (326)6,677 
Commercial real estate3,231 — — 465 3,696 
Construction884 — — (248)636 
Junior liens77 — — 7 84 
Commercial and industrial635 — — (527)108 
Consumer and other— (20)4 17 1 
Total$13,749 $(20)$4 $(706)$13,027 
Consumer and other charge-offs relate to overdrafts in the three months ended June 30, 2024, which originated in the first or second quarter of 2024, as it is our policy to charge these off within 60 days of occurrence.
Balance at March 31, 2023
Charge-offsRecoveries(Recovery of) Provision for Loan Loss
Balance at June 30, 2023
(In thousands)
Residential$2,056 $— $— $(62)$1,994 
Multifamily7,191 — — (174)7,017 
Commercial real estate3,570 — — 243 3,813 
Construction1,190 — — 238 1,428 
Junior liens46 — — 4 50 
Commercial and industrial100 — — 11 111 
Consumer and other— (13)— 13 — 
Unallocated— — — — — 
Total$14,153 $(13)$— $273 $14,413 
Consumer and other charge-offs relate to overdrafts in the three months ended June 30, 2023, which originated in the first or second quarter of 2023, as it is our policy to charge these off within 60 days of occurrence.



22
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following tables present the activity in the Company’s allowance for credit losses by class of loans based on the analysis performed for the six months ended June 30, 2024 and 2023:
Balance at December 31, 2023
Charge-offsRecoveries(Recovery of) Provision for Credit Loss - Loans
Balance at June 30, 2024
(In thousands)
Residential$1,968 $— $— $(143)$1,825 
Multifamily7,046 — — (369)6,677 
Commercial real estate3,748 — — (52)3,696 
Construction1,222 — — (586)636 
Junior liens76 — — 8 84 
Commercial and industrial94 — — 14 108 
Consumer and other— (33)8 26 1 
Total$14,154 $(33)$8 $(1,102)$13,027 
Consumer and other charge-offs relate to overdrafts in the six months ended June 30, 2024, which originated in the last quarter of 2023 or the first or second quarter of 2024, as it is our policy to charge these off within 60 days of occurrence.
Balance at December 31, 2022
Impact of adopting ASU 2016-13Charge-offsRecoveries(Recovery of) Provision for Loan Loss
Balance at June 30, 2023
(In thousands)
Residential$2,264 $(183)$— $— $(87)$1,994 
Multifamily5,491 2,057 — — (531)7,017 
Commercial real estate3,357 146 — — 310 3,813 
Construction1,697 (832)— — 563 1,428 
Junior liens451 (405)— — 4 50 
Commercial and industrial47 (23)— — 87 111 
Consumer and other— 1 (18)1 16 — 
Unallocated93 (93)— — — — 
Total$13,400 $668 $(18)$1 $362 $14,413 
Consumer and other charge-offs relate to overdrafts in the six months ended June 30, 2023, which originated in the last quarter of 2022 or the first or second quarter of 2023, as it is our policy to charge these off within 60 days of occurrence.



23
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following table represents the allocation of allowance for loan losses and the related recorded investment, including deferred fees and costs, in loans by loan portfolio segment, disaggregated based on the impairment methodology at June 30, 2024 and December 31, 2023:
LoansAllowance for Credit Losses on Loans
June 30, 2024Individually EvaluatedCollectively EvaluatedTotalIndividually EvaluatedCollectively EvaluatedTotal
(In thousands)
Residential$5,258 $521,195 $526,453 $— $1,825 $1,825 
Multifamily132 671,053 671,185 — 6,677 6,677 
Commercial real estate— 241,867 241,867 — 3,696 3,696 
Construction— 71,882 71,882 — 636 636 
Junior liens47 23,606 23,653 — 84 84 
Commercial and industrial (1)756 11,505 12,261 — 108 108 
Consumer and other— 83 83 — 1 1 
Total$6,193 $1,541,191 $1,547,384 $— $13,027 $13,027 
(1) Includes PPP loans which carry the federal guarantee of the SBA and do not have an allowance for credit losses.
LoansAllowance for Credit Losses on Loans
December 31, 2023Individually EvaluatedCollectively EvaluatedTotalIndividually EvaluatedCollectively EvaluatedTotal
(In thousands)
Residential$5,721 $545,208 $550,929 $— $1,968 $1,968 
Multifamily146 682,418 682,564 — 7,046 7,046 
Commercial real estate— 232,505 232,505 — 3,748 3,748 
Construction— 60,414 60,414 — 1,222 1,222 
Junior liens49 22,454 22,503 — 76 76 
Commercial and industrial (1)— 11,768 11,768 — 94 94 
Consumer and other— 47 47 — — — 
Unallocated— — — — — — 
Total$5,916 $1,554,814 $1,560,730 $— $14,154 $14,154 
(1) Includes PPP loans which carry the federal guarantee of the SBA and do not have an allowance for credit losses.
Allowance for Credit Losses - Securities
At June 30, 2024 and December 31, 2023, the balance of the allowance of credit losses on securities was $133 thousand and $158 thousand, respectively. The Company recorded a decrease in provision for credit losses on held-to-maturity securities of $7 thousand and $25 thousand for the three and six months ended June 30, 2024, respectively and a provision for credit losses on held-to-maturity securities of $17 thousand and none for the three and six months ended June 30, 2023, respectively. In addition, the Company recorded an allowance of credit losses on securities of $170 thousand upon adoption of ASU 2016-13 on January 1, 2023. Accrued interest receivable on securities is reported as a component of accrued interest receivable on the consolidated balance sheets and totaled $1.5 million and $1.5 million at June 30, 2024 and December 31, 2023, respectively. The Company made the election to exclude accrued interest receivable from the estimate of credit losses on securities.



24
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Allowance for Credit Losses - Off-Balance-Sheet Exposures
The allowance for credit losses on off-balance-sheet exposures is reported in other liabilities in the consolidated balance sheets. The liability represents an estimate of expected credit losses arising from off-balance-sheet exposures such as letters of credit, guarantees and unfunded loan commitments. The process for measuring lifetime expected credit losses on these exposures is consistent with that for loans as discussed above, but is subject to an additional estimate reflecting the likelihood that funding will occur. No liability is recognized for off-balance-sheet credit exposures that are unconditionally cancellable by the Company. Adjustments to the liability are reported as a component of provision for credit losses.
At June 30, 2024 and December 31, 2023, the balance of the allowance for credit losses for off-balance-sheet exposures was $133 thousand and $303 thousand, respectively. The Company recorded a recovery of provision for credit loss on off-balance-sheet exposures of $49 thousand and $170 thousand for the three and six months ended June 30, 2024, respectively. For the three and six months ended June 30, 2023, the Company recorded a recovery of provision for credit loss on off-balance-sheet exposures of $113 thousand and $242 thousand, respectively. The Company also recorded a decrease in the allowance for credit losses for off-balance-sheet exposures of $811 thousand upon adoption of ASU 2016-13 on January 1, 2023.
NOTE 5 – LEASES
The Company leases certain office space, land and equipment under operating leases. These leases have original terms ranging from one year to 40 years. Operating lease liabilities and right-of-use assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.
The Company had the following related to operating leases:
June 30, 2024December 31, 2023
(Dollars in thousands)
Right-of-use assets$24,596 $25,172 
Lease liabilities26,243 26,777 
Weighted average remaining lease term for operating leases9.8 years10.3 years
Weighted average discount rate used in the measurement of lease liabilities2.51 %2.40 %
The following table is a summary of the Company’s components of net lease cost for the three and six months ended June 30, 2024 and 2023. The variable lease cost primarily represents variable payments such as common area maintenance and utilities.
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In thousands)
Operating lease cost$879 $875 $1,753 $1,715 
Finance lease cost— — — 4 
Variable lease cost91 70 158 127 
Total lease cost included as a component of occupancy and equipment$970 $945 $1,911 $1,846 



25
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following table presents supplemental cash flow information related to operating leases:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases$951 $813 $1,869 $1,702 
Operating lease liabilities arising from obtaining right-of-use assets (non-cash):
Operating leases$862 $982 $862 $2,088 
Future undiscounted lease payments for operating leases with initial terms of one year or more as of June 30, 2024 are as follows:
Through June 30,
(In thousands)
2024$3,308 
20253,232 
20263,159 
20273,005 
20282,705 
Thereafter14,182 
Total undiscounted lease payments29,591
Less: imputed interest3,348 
Total$26,243 
NOTE 6 – DEPOSITS
Deposits at June 30, 2024 and December 31, 2023 are summarized as follows:
June 30, 2024December 31, 2023
(In thousands)
Non-interest bearing deposits$24,733 $27,739 
NOW and demand accounts368,386 361,139 
Savings246,559 259,402 
Time deposits671,478 596,624 
Total$1,311,156 $1,244,904 
Money market accounts are included within the NOW and demand accounts and savings captions. Included in time deposits are brokered deposits totaling $125.0 million at both June 30, 2024 and December 31, 2023.
Time deposits mature as follows for the years ending December 31:
(In thousands)
Remainder of 2024$437,929 
2025224,441 
20264,223 
20272,432 
20281,847 
2029606 
$671,478 

26
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 7 - STOCK-BASED COMPENSATION
Employee Stock Ownership Plan
The Company maintains an ESOP, a tax-qualified plan designed to invest primarily in the Company’s common stock. The ESOP provides employees with the opportunity to receive a funded retirement benefit from the Bank, based primarily on the value of the Company’s common stock.
The ESOP borrowed funds from the Company to purchase 2,281,800 shares of stock at $10 per share. The loan is secured by the shares purchased, which are held until allocated to participants. Shares are released for allocation to participants as loan payments are made. Loan payments are principally funded by discretionary cash contributions by the Bank, as well as dividends, if any, paid to the ESOP on unallocated shares. When loan payments are made, ESOP shares are allocated to participants at the end of the plan year (December 31) based on relative compensation, subject to federal tax law limits. Participants receive the allocated vested shares at the end of employment. Dividends on allocated shares, if any, increase participants accounts.
At June 30, 2024, the principal balance on the ESOP loan was $20.6 million. There were no contributions to the ESOP during the three and six months ended June 30, 2024, as loan payments are made annually during the fourth quarter of each year. ESOP shares are committed to be released from unallocated and compensation expense is recognized over the service period. At June 30, 2024 and December 31, 2023, there were 2,007,984 unallocated shares and 273,816 shares allocated to participants. The fair value of unallocated shares at June 30, 2024 and December 31, 2023 was $18.2 million and $19.4 million, respectively, computed using the closing trading price of the Company’s common stock on each date.
For the three and six months ended June 30, 2024, ESOP compensation expense for the shares committed to be released from unallocated was $203 thousand and $417 thousand, respectively. Shares committed to be released from unallocated was 22,818 and 45,636 for the three and six months ended June 30, 2024. For the three and six months ended June 30, 2023, ESOP compensation expense for the shares committed to be released from unallocated was $220 thousand and $483 thousand, respectively. Shares committed to be released from unallocated total 22,818 and 45,636 for three and six months ended June 30, 2023.
Equity Incentive Plan
At the annual meeting held on August 25, 2022, shareholders of the Company approved the Blue Foundry Bancorp 2022 Equity Incentive Plan (“Equity Plan”) which provides for the granting of up to 3,993,150 shares (1,140,900 restricted stock awards and 2,852,250 stock options) of the Company’s common stock.
Restricted shares granted under the Equity Plan generally vest in equal installments, over a service period between five and seven years beginning one year from the date of grant. Additionally, certain restricted shares awarded can be performance vesting awards, which may or may not vest depending upon the attainment of certain corporate financial targets. The vesting of the awards accelerate upon death, disability or an involuntary termination at or following a change in control. The product of the number of shares granted and the grant date closing market price of the Company’s common stock determine the fair value of restricted shares under the Equity Plan. Management recognizes compensation expense for the fair value of time-based restricted shares on a straight-line basis over the requisite service period. Performance based awards are expensed based on the fair value of the shares and the probability of achieving the performance goals.
Stock options granted under the Equity Plan generally vest in equal installments, over a service period between five and seven years beginning one year from the date of grant. The vesting of the options accelerate upon death, disability or an involuntary termination at or following a change in control. Stock options were granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on the closing market price and have an expiration period of ten years.
There were 48,133 stock options granted during the first quarter of 2024. The fair value of stock options granted during the first quarter of 2024 were estimated utilizing the Black-Scholes option pricing model: an expected life of 6.50 years, risk-free rate of 3.94%, volatility of 32.26% and a dividend yield of 0.84%. There were no stock options granted during the three and six months ended June 30, 2023. Due to the limited historical information of the Company’s stock, management considered the weighted historical volatility of the Company and similar entities for an appropriate period in determining the volatility rate used in the estimation of fair value. The expected life of the

27
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



stock option was estimated using the simplified method. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company recognizes compensation expense for the fair values of these awards, which have straight-line vesting, on a straight-line basis over the requisite service period of the awards. Upon exercise of vested options, management expects to draw on treasury stock as the source for shares.
The following table presents the share-based compensation expense for the three and six months ended June 30, 2024 and 2023.
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In thousands)
Stock option expense$335 $397 $714 $796 
Restricted stock expense421 371 823 648 
Total share-based compensation expense$756 $768 $1,537 $1,444 
The following is a summary of the Company’s stock option activity and related information for the six months ended June 30, 2024:
Number of Stock OptionsWeighted Average Grant Date Fair ValueWeighted Average Exercise PriceWeighted Average Remaining Contractual Life (years)
Outstanding - December 31, 2023
2,475,363$4.12 $11.65 8.8
Granted48,1333.67 9.95 6.5
Exercised—— — — 
Forfeited(222,255)4.23 11.74 — 
Expired(17,287)4.02 11.69 
Outstanding - June 30, 2024
2,283,954$4.10 $11.60 8.2
Exercisable - June 30, 2024
396,419
Expected future expense relating to the non-vested options outstanding as of June 30, 2024 is $6.7 million over a weighted average period of 4.7 years.
During the first quarter of 2024, the Company granted to directors and employees, under the 2022 Equity Incentive Plan, 184,625 restricted stock awards with a total grant-date fair value of $1.8 million. Of these grants, 2,900 vest one year from the date of grant, 19,255 and 162,470 vest in equal installments over five and six years, respectively, beginning one year from the date of grant. The Company also issued 193,070 performance-based restricted stock awards to its officers with a total grant date fair value of $1.8 million. Vesting of the performance-based restricted stock units will be based on achievement of certain levels of loan growth, deposit growth and net interest margin and will convert to a four-year time vest after the three-year measurement period ending December 31, 2026. At the end of the performance period, the number of actual shares to be awarded may vary between 0% and 100% of target amounts.
During the first quarter of 2024, 347,640 of performance-based restricted stock awards were forfeited when none of the performance target metrics were met. This forfeiture amount of performance shares is included in the total forfeited restricted shares for the six months ended June 30, 2024, as shown in the table below.

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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following is a summary of the status of the Company’s restricted shares as of June 30, 2024 and changes therein during the six months ended:
Number of Shares AwardedWeighted Average Grant Date Fair Value
Outstanding - December 31, 2023
944,262$11.88 
Granted377,6959.51 
Forfeited(439,583)11.77
Vested(55,523)12.00 
Outstanding - June 30, 2024
826,851$10.85 
Expected future expense relating to the non-vested restricted shares outstanding as of June 30, 2024 is $8.0 million over a weighted average period of 4.9 years.
NOTE 8 – DERIVATIVES AND HEDGING ACTIVITIES
The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.
The Company had interest rate swaps with notional amounts totaling $254.0 million and $259.0 million at June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, they were designated as cash flow hedges of certain Federal Home Loan Bank (“FHLB”) advances and brokered deposits. They were determined to be highly effective during all periods presented. The Company expects the hedges to remain highly effective during the remaining terms of the swaps.
Summary information about the interest rate swaps designated as cash flow hedges as of period-end is as follows:
June 30, 2024December 31, 2023
(Dollars in thousands)
Notional amounts$254,000 $259,000 
Weighted average pay rates2.95 %2.91 %
Weighted average receive rates5.46 %5.49 %
Weighted average maturity2.7 years3.2 years
Gross unrealized gain included in other assets$10,397 $9,047 
Gross unrealized loss included in other liabilities73 1,465 
Unrealized gains, net$10,324 $7,582 
At June 30, 2024, the Company held $11.0 million as cash collateral pledged from the counterparty for these interest-rate swaps and had no securities pledged to the counterparty. At December 31, 2023, the Company held $8.1 million as cash collateral pledged from the counterparty and had no securities pledged to the counterparty.
Interest income or expense recorded on these swap transactions is reported as a component of interest expense on FHLB advances or brokered deposits. Interest income during the three months ended June 30, 2024 and 2023 totaled $1.6 million and $1.3 million, respectively. Interest income during the six months ended June 30, 2024 and 2023 totaled $3.3 million and $2.4 million, respectively. At June 30, 2024, the Company expected $3.2 million of the unrealized gain to be reclassified as a reduction to interest expense during the remainder of 2024.

29
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Cash Flow Hedge
The effect of cash flow hedge accounting on accumulated other comprehensive income for the three and six months ended June 30, 2024 and 2023 is as follows:
Amount of (Loss) Gain Recognized in OCI (Net of Tax) on Derivative (1)
Location of Gain (Loss) Reclassified from OCI into Income/(Expense)
Amount of Gain Reclassified from OCI to
Expense
(In thousands)
Three months ended June 30, 2024
Interest rate contracts$(72) Interest Expense $1,613 
Three months ended June 30, 2023
Interest rate contracts$3,803  Interest Expense $1,346 
Six Months Ended June 30, 2024
Interest rate contracts$2,741 Interest Expense$3,262 
Six Months Ended June 30, 2023
Interest rate contracts$1,359 Interest Expense$2,350 
(1) Net of tax, adjusted for deferred tax valuation allowance.
NOTE 9 – ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents the net unrealized holding gains on securities available-for-sale, derivatives and the funded status of the Company’s post-retirement plans, as of the balance sheet dates, net of the related tax effect. The tax effect in accumulated other comprehensive income is adjusted to reflect the Company’s valuation allowance on deferred tax assets.
The following table presents the components of other comprehensive income (loss) both gross and net of tax, inclusive of a deferred tax valuation allowance, for the periods indicated:
Three Months Ended June 30,
20242023
Before TaxTax
Effect		After
Tax		Before TaxTax
Effect		After
Tax
(In thousands)
Unrealized gain (loss) on securities available-for-sale:
Unrealized gain (loss) arising during the period$361 $— $361 $(3,800)$— $(3,800)
Unrealized (loss) gain on cash flow hedge:
Unrealized (loss) gain arising during the period(1,685)— (1,685)5,149 — 5,149 
Reclassification adjustment for gain (loss) included in net loss1,613 — 1,613 (1,346)— (1,346)
Total (loss) gain(72)— (72)3,803 — 3,803 
Post-retirement plans:
Reclassification adjustment for amortization of:
Net actuarial gain (loss)3 — 3 (2)— (2)
Total other comprehensive income$292 $— $292 $1 $— $1 

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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Six Months Ended June 30,
20242023
Before TaxTax
Effect		After
Tax		Before TaxTax
Effect		After
Tax
(In thousands)
Unrealized (loss) gain on securities available-for-sale:
Unrealized (loss) gain arising during the period$(748)$— $(748)$239 $— $239 
Unrealized (loss) gain on cash flow hedge:
Unrealized (loss) gain arising during the period(521)— (521)3,709 — 3,709 
Reclassification adjustment for gain (loss) included in net loss3,262 — 3,262 (2,350)— (2,350)
Total gain2,741 — 2,741 1,359 — 1,359 
Post-retirement plans:
Reclassification adjustment for amortization of:
Net actuarial gain (loss) 4 — 4 (4)— (4)
Total4 — 4 (4)— (4)
Total other comprehensive income $1,997 $— $1,997 $1,594 $— $1,594 
The following is a summary of the changes in accumulated other comprehensive income by component, net of tax, inclusive of a deferred tax valuation allowance, for the periods indicated:
 Unrealized Gains on Cash Flow
Hedges		Unrealized Losses on Available-for-Sale
Securities		Post-Retirement
Plans		Total
(In thousands)
Balance at March 31, 2024$10,395 $(31,808)$238 $(21,175)
Other comprehensive (loss) income before reclassification(1,685)361 — (1,324)
Amounts reclassified from accumulated other comprehensive income1,613 — 3 1,616 
Net current period other comprehensive (loss) gain(72)361 3 292 
Balance at June 30, 2024
$10,323 $(31,447)$241 $(20,883)
Unrealized Gains on Cash Flow
Hedges		Unrealized Losses on Available-for-Sale
Securities		Post-Retirement
Plans		Total
(In thousands)
Balance at March 31, 2023$8,647 $(32,144)$371 $(23,126)
Other comprehensive income (loss) before reclassification5,149 (3,800)— 1,349 
Amounts reclassified from accumulated other comprehensive income(1,346)— (2)(1,348)
Net current period other comprehensive gain (loss)3,803 (3,800)(2)1 
Balance at June 30, 2023
$12,450 $(35,944)$369 $(23,125)

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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Unrealized Gains and (Losses) on Cash Flow
Hedges		Unrealized Gains and (Losses) on Available-for-Sale
Securities		Post-Retirement
Plans		Total
(In thousands)
Balance at December 31, 2023
$7,582 $(30,699)$237 $(22,880)
Other comprehensive loss before reclassification(521)(748)— (1,269)
Amounts reclassified from accumulated other comprehensive income3,262 — 4 3,266 
Net current period other comprehensive gain (loss)2,741 (748)4 1,997 
Balance at June 30, 2024
$10,323 $(31,447)$241 $(20,883)
 Unrealized Gains and (Losses) on Cash Flow
Hedges		Unrealized Gains and (Losses) on Available-for-Sale
Securities		Post-Retirement
Plans		Total
(In thousands)
Balance at December 31, 2022
$11,091 $(36,183)$373 $(24,719)
Other comprehensive income before reclassification3,709 239 — 3,948 
Amounts reclassified from accumulated other comprehensive income(2,350)— (4)(2,354)
Net current period other comprehensive gain (loss)1,359 239 (4)1,594 
Balance at June 30, 2023
$12,450 $(35,944)$369 $(23,125)
The following table presents information about amounts reclassified from accumulated other comprehensive income (loss) to the consolidated statements of income for the periods indicated:
Details about Accumulated Other Comprehensive Income ComponentsThree Months Ended June 30,Six Months Ended June 30,Affected Line Item in the Statement Where Net Income is Presented
2024202320242023
(In thousands)
Unrealized gains on securities available for sale:
Losses on cash flow hedges:
Interest rate contracts(1,613)1,346 (3,262)2,350 Interest expense
Amortization of post-retirement plan items:
Net actuarial loss(3)2 (4)4 Compensation and employee benefits
Total tax effect (1)
— — — — Income tax expense
Total reclassification for the period, net of tax$(1,616)$1,348 $(3,266)$2,354 
(1) Reflects deferred tax valuation allowance.

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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 10 – FAIR VALUE OF ASSETS AND LIABILITIES
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The Company used the following methods and significant assumptions to estimate fair value:
Securities: For securities available-for-sale and equity securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input as defined by ASC 820, is a mathematical technique used principally to value certain securities to benchmark or comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. The Company also holds debt instruments issued by the U.S. government and U.S. government sponsored agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.
Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). The Company’s derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.
Impaired loans: The fair value of collateral dependent impaired loans is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
Other real estate owned (OREO): Property acquired through foreclosure or deed in lieu of foreclosure is carried at fair value less estimated disposal costs of the acquired property. Fair value of OREO is based on the appraised value of the collateral using discount rates similar to those used in impaired loan valuation.

33
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following table summarizes the fair value of assets and liabilities as of June 30, 2024:
Fair Value Measurements at June 30, 2024, Using
Quoted Prices
in Active
Markets for
Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Total(Level 1)(Level 2)(Level 3)
(In thousands)
Measured on a recurring basis:
Financial assets
Securities available-for-sale:
U.S. Treasury notes$34,914 $34,914 $— $— 
Corporate bonds72,448 — 72,448 — 
U.S. Government agency obligations11,137 11,137 — — 
Obligations issued by U.S. states and their political subdivisions5,988 — 5,988 — 
Mortgage-backed securities:
Residential148,708 — 148,708 — 
Multifamily10,116 — 10,116 — 
Asset-backed securities14,479 — 14,479 — 
Total securities available-for-sale297,790 46,051 251,739 — 
Derivatives10,397 — 10,397 — 
Total financial assets measured on a recurring basis$308,187 $46,051 $262,136 $— 
Financial liabilities
Derivatives$73 $— $73 $— 
Measured on a nonrecurring basis:
Nonfinancial assets
Real estate owned$— $— $— $— 

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BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following table summarizes the fair value of assets and liabilities as of December 31, 2023:
Fair Value Measurements at
 December 31, 2023, Using
Quoted Prices
in Active
Markets for
Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Total(Level 1)(Level 2)(Level 3)
(In thousands)
Measured on a recurring basis:
Financial assets
Securities available-for-sale:
U.S. Treasury notes$35,060 $35,060 $— $— 
Corporate bonds76,623 — 76,623 — 
U.S. Government agency obligations11,140 11,140 — — 
Obligations issued by U.S. states and their political subdivisions6,195 — 6,195 — 
Mortgage-backed securities:
Residential128,542 — 128,542 — 
Multifamily11,523 — 11,523 — 
Asset-backed securities14,683 — 14,683 — 
Total securities available-for-sale283,766 46,200 237,566 — 
Derivatives9,047 — 9,047 — 
Total financial assets measured on a recurring basis$292,813 $46,200 $246,613 $— 
Financial liabilities
Derivatives$1,465 $— $1,465 $— 
Measured on a nonrecurring basis:
Nonfinancial assets
Real estate owned593 — — 593 
Other Fair Value Disclosures
Fair value estimates, methods and assumptions for the Company’s financial instruments that are not recorded at fair value on a recurring or non-recurring basis are set forth below.
Securities held-to-maturity: The Company’s securities held-to-maturity portfolio is carried at amortized cost less allowance for credit losses. The fair values of debt securities held-to-maturity are provided by a third-party pricing service. The pricing service may use quoted market prices of comparable instruments or a variety of other forms of analysis, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads, default rates, prepayment speeds and non-binding broker quotes.
Loans, net: Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, such as residential mortgage and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories. Estimated fair value of loans is determined using a discounted cash flow model that employs an exit discount rate that reflects the current market pricing for loans with similar characteristics and remaining maturity, adjusted for estimated credit losses inherent in the portfolio at the balance sheet date.
Time deposits: The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using rates for currently offered deposits of similar remaining maturities.

35
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Federal Home Loan Bank advances: The fair value of borrowings is based on securities dealers’ estimated fair values, when available, or estimated using discounted cash flow analysis. The discount rates used approximate the rates offered for similar borrowings of similar remaining terms.
The following tables present the book value, fair value, and placement in the fair value hierarchy of financial instruments not recorded at fair values in their entirety on a recurring basis on the Company’s consolidated balance sheets at June 30, 2024 and December 31, 2023. The fair value measurements presented are consistent with Topic 820, Fair Value Measurement, in which fair value represents exit price.
These tables exclude financial instruments for which the carrying amount approximates fair value. Financial instruments for which the carrying amount approximates fair value include cash and cash equivalents, other investments, non-maturity deposits, overnight borrowings and accrued interest, which are excluded from the table below.
The carrying amounts and fair value of financial instruments not carried at fair value, at June 30, 2024 and December 31, 2023, are as follows:
Fair Value Measurements at June 30, 2024, Using
Quoted Prices in
Active Markets
for Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Book Value(Level 1)(Level 2)(Level 3)
(In thousands)
Financial assets
Securities held-to-maturity:
Corporate bonds$18,600 $— $15,032 $— 
Asset-backed securities14,702 — 13,316 — 
Securities held-to-maturity33,302 — 28,348 — 
Loans, net1,534,357 — — 1,404,667 
Financial liabilities
Time deposits671,478 — 668,527 — 
FHLB advances342,500 — 346,892 — 
Fair Value Measurements at December 31, 2023, Using
Quoted Prices in
Active Markets
for Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
Book Value(Level 1)(Level 2)(Level 3)
(In thousands)
Measured on a recurring basis:
Financial assets
Securities held-to-maturity:
Corporate bonds$18,600 $— $15,007 $— 
Asset-backed securities14,812 — 13,316 — 
Securities held-to-maturity33,412 — 28,323 — 
Loans, net1,546,576 — — 1,332,138 
Financial liabilities
Time deposits596,624 — 592,676 — 
FHLB advances397,500 — 405,015 — 


36
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 11 – REVENUE FROM CONTRACTS WITH CUSTOMERS AND OTHER INCOME
All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income in the statements of income.
The following table presents the Company’s sources of revenue from contracts with customers for the three and six months ended June 30, 2024 and 2023, respectively:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In thousands)
Service charges on deposits$241 $225 $443 $431 
Interchange income15 13 29 24 
Total revenue from contracts with customers$256 $238 $472 $455 
Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance. Transaction based fees, which include services such as ATM use fees, stop payment charges, statement rendering and wire transfer fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation.
Interchange Income: The Company earns interchange fees from debit cardholder transactions conducted through a payment network. Interchange fees from debit cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. In addition, the Company earns interchange fees from credit cardholder transactions through its partnership with a third party.

37
BLUE FOUNDRY BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 12 - EARNINGS PER SHARE
Basic earnings per share (“EPS”) represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares (such as unexercised stock options and unvested restricted stock) were exercised or converted into additional common shares that would then share in the earnings of the entity. Diluted EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the period, plus the effect of potential dilutive common share equivalents.
Shares held by the Employee Stock Ownership Plan (“ESOP”) that have not been allocated to employees in accordance with the terms of the ESOP, referred to as “unallocated ESOP shares,” are not deemed outstanding for earnings per share calculations.
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(Income in thousands)
Net loss applicable to common shares$(2,344)$(1,825)$(5,183)$(3,034)
Shares
Average number of common shares outstanding23,708,759 26,314,743 23,899,977 26,184,419 
Less: Average unallocated ESOP shares1,973,757 2,065,029 1,985,166 2,053,402 
Average number of common shares outstanding used to calculate basic earnings per common share21,735,002 24,249,714 21,914,811 24,131,017 
Common stock equivalents— — — — 
Average number of common shares outstanding used to calculate diluted earnings per common share21,735,002 24,249,714 21,914,811 24,131,017 
Loss per common share
Basic$(0.11)$(0.08)$(0.24)$(0.13)
Diluted$(0.11)$(0.08)$(0.24)$(0.13)
Excluded from the earnings per share calculation are anti-dilutive equity awards for the three and six months ended June 30, 2024, totaling 1,503,057 and 1,462,628, respectively. For the three and six months ended June 30, 2023, anti-dilutive equity awards totaling 1,490,010 and 1,177,136, respectively, were excluded from the earnings per share calculation. Due to the Company’s net loss for the three and six months ended June 30, 2024 and 2023, the assumed vesting of outstanding restricted stock units had an antidilutive effect on diluted earnings per share.
NOTE 13 - SUBSEQUENT EVENTS
As defined in FASB ASC 855, “Subsequent Events,” subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued. Financial statements are considered issued when they are widely distributed to stockholders and other financial statement users for general use and reliance in a form and format that complies with U.S. GAAP. The Company performed an evaluation and determined that there are no subsequent events to report.

38


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section is intended to assist in the understanding of the financial performance of the Company and its subsidiary through a discussion of our financial condition as of June 30, 2024, and our results of operations for the three and six month periods ended June 30, 2024 and 2023. This section should be read in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto of the Company appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.
Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make; adverse changes in the securities or secondary mortgage markets; changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; a failure or breach of our operational or security systems or infrastructure, including cyber-attacks; the inability of third party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related there to; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; the current or anticipated impact of military conflict, terrorism or other geopolitical events; the ability of the U.S. Government to manage federal debt limits; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

39


Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results could differ from these estimates.
Comparison of Operating Results for the Three Months Ended June 30, 2024 and 2023
General. The Company recorded a net loss of $2.3 million for the three months ended June 30, 2024, compared to a net loss of $1.8 million for the three months ended June 30, 2023.
Interest Income. Interest income for the three months ended June 30, 2024 was $21.3 million an increase of $1.5 million, or 7.7%, from $19.8 million for the three months ended June 30, 2023, driven by increases in the rates earned on all categories of interest-earning assets and an increase in the average balances of cash and cash equivalents, partially offset by a decrease in the average balances of all other categories of interest-earning assets. The yield on average interest-earning assets increased 44 basis points to 4.37% for the three months ended June 30, 2024 from 3.93% for the three months ended June 30, 2023.
Interest Expense. Interest expense was $11.7 million for the three months ended June 30, 2024 compared to $8.9 million for the three months ended June 30, 2023, an increase of $2.9 million primarily driven by increases in rates paid on interest-bearing liabilities. Average balances of time deposits increased $213.2 million, while the average balances of interest-bearing core deposits and FHLB advances decreased $142.1 million and $95.4 million, respectively, when compared to the second quarter of 2023. The cost of average interest-bearing liabilities increased 76 basis points to 2.94% for the three months ended June 30, 2024 from 2.18% for the three months ended June 30, 2023.
Net Interest Income. Net interest income was $9.6 million and $10.9 million for the three months ended June 30, 2024 and 2023, respectively. Net interest rate spread decreased 32 basis points to 1.43% and net interest margin decreased 21 basis points to 1.96%.
Provision for Credit Losses. The Company recorded a $762 thousand release of provision for credit losses for the three months ended June 30, 2024, compared to a $143 thousand provision for credit losses for the same period of 2023. For June 30, 2024, the release of provision on loans of $706 thousand and the release of provision on commitments and letters of credit of $49 thousand was driven by forecasted improvements to economic drivers utilized to model credit losses, coupled with a decline in loan balances and unused lines. In addition, the release of provision included a $7 thousand release on securities. As of June 30, 2024, the Allowance for Credit Losses (“ACL”) on loans as a percentage of total loans was 0.84%.
Non-interest Income. Non-interest income increased $156 thousand, or 41.1%, to $536 thousand for the second quarter of 2024 from $380 thousand for the second quarter of 2023. The increase in non-interest income from the prior year period was primarily related to a gain on sale of other real estate owned of $123 thousand.
Non-interest Expense. Non-interest expense increased $247 thousand to $13.2 million for the second quarter of 2024 when compared to the same period in 2023. The increase was primarily driven by increases of $570 thousand in compensation and benefits expenses and $138 thousand in occupancy and equipment expense offset by decreases of $200 thousand in data processing expense and $141 thousand in professional fees.
Income Tax Expense. The Company did not record a tax benefit for the loss incurred during the current or previous year quarter due to the full valuation allowance required on its deferred tax assets. The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At June 30, 2024, the valuation allowance on deferred tax assets was $23.5 million.

40


Average Balances and Yields
The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using daily balances. The amortization and accretion of deferred fees and costs are included in interest income on loans and are not material.
Three Months Ended June 30,
20242023
 Average Balance  Interest  Average
Yield/Cost 		 Average Balance  Interest  Average
Yield/Cost
(Dollars in thousands)
Assets:
Loans (1)$1,550,736 $17,570 4.56 %$1,583,057 $16,481 4.18 %
Mortgage-backed securities167,219 960 2.31 %174,398 967 2.22 %
Other investment securities175,394 1,688 3.87 %198,588 1,505 3.04 %
FHLB stock17,223 447 10.44 %22,832 342 6.00 %
Cash and cash equivalents51,290 627 4.92 %40,614 470 4.64 %
   Total interest-earning assets1,961,862 21,292 4.37 %2,019,489 19,765 3.93 %
   Non-interest earning assets56,826 56,280 
       Total assets$2,018,688 $2,075,769 
Liabilities and shareholders' equity:
NOW, savings, and money market deposits$611,931 $1,955 1.28 %$754,048 $2,217 1.18 %
Time deposits655,755 7,177 4.40 %442,547 2,956 2.68 %
    Interest-bearing deposits1,267,686 9,132 2.90 %1,196,595 5,173 1.73 %
FHLB advances336,742 2,587 3.09 %432,137 3,686 3.42 %
   Total interest-bearing liabilities1,604,428 11,719 2.94 %1,628,732 8,859 2.18 %
Non-interest bearing deposits25,076 26,914 
Non-interest bearing other41,061 44,240 
   Total liabilities1,670,565 1,699,886 
Total shareholders' equity348,123 375,883 
Total liabilities and shareholders' equity$2,018,688 $2,075,769 
Net interest income$9,573 $10,906 
Net interest rate spread (2)1.43 %1.75 %
Net interest margin (3)1.96 %2.17 %
(1) Average loan balances are net of deferred loan fees and costs, premiums and discounts and include non-accrual loans.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.

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Comparison of Operating Results for the Six Months Ended June 30, 2024 and 2023
General. The Company recorded a net loss of $5.2 million and $3.0 million for the six months ended June 30, 2024 and 2023, respectively.
Interest Income. For the six months ended June 30, 2024 and 2023, interest income totaled $42.1 million and $38.6 million, respectively. This represents an increase of $3.5 million, or 9.2%, driven primarily by increases in rates earned on interest-earning assets. The yield on average interest-earning assets was 4.30% and 3.87% for the six months ended June 30, 2024 and 2023, respectively, an increase of 43 basis points.
Interest Expense. For the six months ended June 30, 2024, interest expense increased $7.4 million to $23.1 million when compared to the 2023 period due primarily to increases in the rates paid on interest-bearing liabilities. Average interest-bearing deposit balances increased $41.7 million when compared to the 2023 period, while average borrowings decreased $40.7 million. The cost of average interest-bearing liabilities increased 91 basis points to 2.89% for the six months ended June 30, 2024 from 1.98% for the same period in 2023.
Net Interest Income. Net interest income was $19.0 million for the six months ended June 30, 2024 compared to $22.8 million for the six months ended June 30, 2023, a $3.9 million decrease. Net interest rate spread was 1.41% for the six months ended June 30, 2024 compared to 1.89%, a decrease of 48 basis points. For the six months ended June 30, 2024 and 2023, the net interest margin was 1.94% and 2.29%, respectively, a decrease of 35 basis points.
Provision for Credit Losses. The Company recorded a release of provision for credit losses totaling $1.3 million for the six months ended June 30, 2024 and a provision for credit losses of $120 thousand for the same period in 2023. The release of provision on loans, commitments and letters of credit and securities totaled $1.1 million, $170 thousand and $25 thousand, respectively, for the six months ended June 30, 2024. The decrease in the provision for credit losses was primarily driven by forecasted improvements to economic drivers utilized to model credit losses, coupled with a decline in loan balances and unused lines.
Non-interest Income. For the six months ended June 30, 2024 and 2023, non-interest income was $987 thousand and $864 thousand, respectively. The increase of $123 thousand, or 14.2%, was due to the gain on sale of REO property of $123 thousand.
Non-interest Expense. Non-interest expense totaled $26.5 million for the six months ended June 30, 2024, a decrease of $168 thousand from the same period in 2023. The decrease was primarily driven by decreases in data processing of $414 thousand and professional fees of $391 thousand, partially offset by increases of $348 thousand in occupancy and equipment expense and $272 thousand in compensation and benefits expense. The Company added a branch to its network in the fourth quarter of 2023.
Income Tax Expense. The Company did not record a tax benefit for the loss incurred during the first six months of the current or previous year due to the full valuation allowance required on its deferred tax assets. The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At June 30, 2024, the valuation allowance on deferred tax assets was $23.5 million.


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Average Balances and Yields
The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using daily balances. The amortization and accretion of deferred fees and costs are included in interest income on loans and are not material.
Six Months Ended June 30,
20242023
 Average Balance  Interest  Average
Yield/Cost 		 Average Balance  Interest  Average
Yield/Cost
(Dollars in thousands)
Assets:
Loans (1)$1,553,135 $34,762 4.49 %$1,568,170 $32,050 4.12 %
Mortgage-backed securities163,784 1,836 2.25 %176,987 1,949 2.22 %
Other investment securities179,555 3,340 3.73 %198,827 3,017 3.06 %
FHLB stock18,673 939 10.08 %21,494 649 6.09 %
Cash and cash equivalents51,426 1,257 4.90 %43,556 932 4.31 %
   Total interest-earning assets1,966,573 42,134 4.30 %2,009,034 38,597 3.87 %
   Non-interest earning assets58,108 56,112 
       Total assets$2,024,681 $2,065,146 
Liabilities and shareholders' equity:
NOW, savings, and money market deposits$614,049 $3,891 1.27 %$780,362 $4,227 1.09 %
Time deposits637,488 13,654 4.30 %429,465 5,100 2.39 %
    Interest-bearing deposits1,251,537 17,545 2.81 %1,209,827 9,327 1.55 %
FHLB advances355,308 5,599 3.16 %396,025 6,423 3.27 %
   Total interest-bearing liabilities1,606,845 23,144 2.89 %1,605,852 15,750 1.98 %
Non-interest bearing deposits25,786 30,091 
Non-interest bearing other41,314 44,543 
   Total liabilities1,673,945 1,680,486 
Total shareholders' equity350,736 384,660 
Total liabilities and shareholders' equity$2,024,681 $2,065,146 
Net interest income$18,990 $22,847 
Net interest rate spread (2)1.41 %1.89 %
Net interest margin (3)1.94 %2.29 %
(1) Average loan balances are net of deferred loan fees and costs, premiums and discounts and include non-accrual loans.
(2) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.

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Comparison of Financial Condition at June 30, 2024 and December 31, 2023
Total Assets. Total assets were $2.05 billion and $2.04 billion at June 30, 2024 and December 31, 2023, respectively.
Cash and cash equivalents. Cash and cash equivalents increased $14.2 million, or 31%, to $60.3 million at June 30, 2024 from $46.0 million at December 31, 2023.
Securities available-for-sale. Securities available-for-sale increased $14.0 million, or 4.9%, to $297.8 million at June 30, 2024 from $283.8 million at December 31, 2023, driven by $44.3 million of purchases partially offset by maturities and paydowns. In addition, the unrealized loss on available-for-sale securities increased by $748 thousand.
Securities held-to-maturity. Held-to-maturity securities totaled $33.2 million and $33.3 million at June 30, 2024 and December 31, 2023, respectively.
FHLB stock and other investments. Other investments decreased $2.4 million to $17.9 million at June 30, 2024 due to a decrease in the amount of Federal Home Loan Bank stock held by the Company as a result of a reduction of borrowings from FHLB.
Gross Loans. Gross loans held for investment decreased $13.3 million to $1.55 billion at June 30, 2024, from $1.56 billion at December 31, 2023. Residential loans and multifamily loans decreased $24.5 million and $11.4 million, respectively, partially offset by increases in construction loans of $11.5 million and commercial real estate loans of $9.4 million. Year-to-date, 2024 loan fundings totaled $19.5 million, including fundings of $12.4 million in construction loans, $3.4 million in junior liens and $1.7 million in commercial and industrial loans.
The following table presents loans at June 30, 2024 and December 31, 2023 allocated by loan category:
June 30, 2024December 31, 2023
(In thousands)
Residential$526,453 $550,929 
Multifamily671,185 682,564 
Commercial real estate241,867 232,505 
Construction71,882 60,414 
Junior liens23,653 22,503 
Commercial and industrial12,261 11,768 
Consumer and other83 47 
Total loans1,547,384 1,560,730 
Less: Allowance for credit losses13,027 14,154 
Loans receivable, net$1,534,357 $1,546,576 
The table below presents the balance of non-performing loans on the dates indicated:
June 30, 2024December 31, 2023
(In thousands)
Residential$5,258 $5,884 
Multifamily132 146 
Junior liens47 49 
Commercial and industrial771 39 
Total non-performing loans6,208 6,118 
Other real estate owned— 593 
Total non-performing assets$6,208 $6,711 

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Total Deposits. Total deposits were $1.31 billion at June 30, 2024, an increase of $66.3 million, or 5.3%, from December 31, 2023. Time deposits increased $74.9 million, or 12.6%, to $671.5 million at June 30, 2024 from $596.6 million at December 31, 2023. Checking and savings accounts decreased $8.6 million, or 1.3%, to $639.7 million at June 30, 2024 from $648.3 million at December 31, 2023. Uninsured and uncollateralized deposits to third party customers were $150.9 million, or 12% of total deposits, at the end of the quarter.
The following table presents the totals of deposit accounts by account type, at the dates shown below:
June 30, 2024December 31, 2023
(In thousands)
Non-interest bearing deposits$24,733 $27,739 
NOW and demand accounts (1)368,386 361,139 
Savings (1)246,559 259,402 
Core deposits639,678 648,280 
Time deposits671,478 596,624 
Total deposits$1,311,156 $1,244,904 
(1) Money market accounts are included within the NOW and demand accounts and Savings captions.
Borrowings. The Company had $342.5 million of borrowings at June 30, 2024, a decrease of $55.0 million, or 13.8% from $397.5 million at December 31, 2023 as the increase in deposits were partially used to pay down borrowings. Borrowings consist solely of Federal Home Loan Bank of New York advances.
Total Shareholders’ Equity. Total shareholders’ equity decreased by $10.0 million, or 2.8%, to $345.6 million at June 30, 2024 compared to $355.6 million at December 31, 2023. The decrease was primarily driven by the repurchase of treasury shares and the year-to-date loss. In 2024, the Company repurchased 942,705 shares at a cost of $8.8 million or $9.33 per share.
Off-Balance Sheet. To help manage our interest rate position, the Company had $254.0 million in interest rate hedges at June 30, 2024, with a weighted average duration of 2.7 years and a weighted average rate of 2.51%. This represents a decrease of $5.0 million from December 31, 2023, when we had $259.0 million in interest rate hedges with a weighted average duration of 3.2 years and a weighted average rate of 2.58%. See Note 8, Derivatives and Hedging Activities, of Notes to Consolidated Financial Statements in “Item 1- Financial Statements.”
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Qualitative Analysis. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our balance sheet and results of operations to changes in market interest rates. Our ALCO/Investment Committee, which consists of members of management, is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. We currently utilize a modeling program, on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.
We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk: growing target deposit accounts, such as small business accounts; utilizing our investment securities portfolio and interest rate swaps as part of our balance sheet asset and liability and interest rate risk management strategy to reduce the impact of movements in interest rates on net interest income and economic value of equity, which can create temporary valuation adjustments to equity in Accumulated Other Comprehensive Income; continuing the diversification of our loan portfolio by adding more commercial loans, which typically have shorter maturities and/or balloon payments.

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By following these strategies, we believe that we are positioned to react to increases and decreases in market interest rates.
Other than cash flow hedging on interest expense, we generally do not engage in hedging activities such as engaging in futures or options, or investing in high-risk mortgage derivatives such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.
The Company has entered into derivative financial instruments to reduce risk associated with interest rate volatility by matching asset maturities and liability maturities. These derivatives had an aggregate notional amount of $254.0 million as of June 30, 2024.
Quantitative Analysis. We compute amounts by which the net present value of our cash flow from assets, liabilities and off-balance-sheet items would change in the event of a range of assumed changes in market interest rates. The economic value of equity (“EVE”) analysis estimates the change in the net present value (“NPV”) of assets and liabilities and off-balance-sheet contracts over a range of immediate rate shock interest rate scenarios. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance-sheet contract under the assumption that the United States Treasury yield curve increases or decreases instantaneously by 100 to 200 basis points in 100 basis point increments. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100-basis point increase in the “Basis Point Change in Interest Rates” column below.
The following table sets forth, at June 30, 2024, the calculation of the estimated changes to the Bank’s net interest income, at the Bank level, that would result from the specified immediate changes in the United States Treasury yield curve. For purposes of this table, 100 basis points equals 1%.
Net Interest Income
Change in Interest Rates (basis points)AmountChangePercent
(Dollars in thousands)
+200$43,400 $(1,017)(2.3)%
+10043,792 (625)(1.4)
044,417 — — 
-10046,256 1,839 4.1 
-20047,763 3,346 7.5 
The following table sets forth, at June 30, 2024, the calculation of the estimated changes in our net portfolio value, at the Bank level, that would result from the specified immediate changes in the United States Treasury yield curve. For purposes of this table, 100 basis points equals 1%.
EVENPV as a Percent of Portfolio Value of Assets
Change in Interest Rates (basis points)Estimated EVEEstimated Increase (Decrease)
AmountPercentNPV RatioChange
(Dollars in thousands)
+200$93,473 $(81,627)(46.6)%4.6 %(4.0)
+100133,851 (41,249)(23.6)6.5 (2.0)
0175,100 — — 8.6 — 
-100216,431 41,331 23.6 10.6 2.0 
-200256,905 81,806 46.7 12.6 4.0 
The tables above indicates that at June 30, 2024, in the event of an instantaneous 100 basis point increase in interest rates, we would experience a 24% decrease in EVE. In the event of an instantaneous 100 basis point decrease in interest rates, we would experience a 24% increase in EVE.

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Certain short comings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The above tables assume that the composition of our interest sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an indication of our interest rate risk exposure at a particular point in time, the data does not reflect any actions we may take in response to changes in interest rates. In addition, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature. Our primary sources of funds consist of deposit inflows, principal and interest payments on loans and securities, maturity of securities, borrowings from the Federal Home Loan Bank of New York and, to a lesser extent, proceeds from the sale of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, calls of investment securities and borrowed funds and prepayments on loans are greatly influenced by general interest rates, economic conditions and competition.
Management regularly adjusts our investments in liquid assets based upon an assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of our interest-rate risk and investment policies.
At June 30, 2024, we had $19.5 million in commitments to originate loans and unused lines of credit totaled $71.7 million. We anticipate that we will have sufficient funds available to meet our current loan origination and lines of credit commitments. Certificates of deposit that are scheduled to mature in less than one year from June 30, 2024 totaled $655.1 million. Management expects, based on historical experience, that a deposit relationship will be retained with a substantial portion of certificate holders. However, if a substantial portion of these deposits is not retained, we may borrow against our available borrowing capacity or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. Available borrowing capacity at June 30, 2024 was $360.5 million with Federal Home Loan Bank of New York, a $30.0 million line of credit with a correspondent bank and a $3.1 million line of credit with the Federal Reserve Bank of New York. Total available borrowing capacity is 2.6 times total uninsured and uncollateralized deposits to third-party customers. The estimated fair market value of unencumbered securities totaled $313.3 million or 96.1% of the portfolio at June 30, 2024.
We are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to originate loans, unused lines of credit and standby letters of credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Our exposure to credit loss is represented by the contractual amount of the instruments. We use the same credit policies in making commitments that we do for on-balance sheet instruments. Management believes that our current sources of liquidity are more than sufficient to fulfill our obligations as of June 30, 2024 pursuant to off-balance-sheet arrangements and contractual obligations.

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The Bank is subject to various regulatory capital requirements administered by the New Jersey Department of Banking and Insurance (“NJDOBI”) and the Federal Deposit Insurance Corporation (“FDIC”). At June 30, 2024, the Bank exceeded all applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines.
 ActualMinimum Capital AdequacyFor Classification With Capital BufferFor Classification as Well Capitalized
AmountRatioAmountRatioAmountRatioAmountRatio
(Dollars in thousands)
June 30, 2024
Common equity tier 1$293,395 20.24 %$65,231 4.50 %$101,470 7.00 %$94,222 6.50 %
Tier 1 capital293,395 20.24 %86,974 6.00 %123,213 8.50 %115,966 8.00 %
Total capital306,688 21.16 %115,966 8.00 %152,205 10.50 %144,957 10.00 %
Tier 1 (leverage) capital293,395 14.51 %80,883 4.00 % N/A N/A101,104 5.00 %
December 31, 2023
Common equity tier 1$296,238 20.13 %$66,219 4.50 %$103,008 7.00 %$95,650 6.50 %
Tier 1 capital296,238 20.13 %88,292 6.00 %125,081 8.50 %117,723 8.00 %
Total capital310,853 21.12 %117,723 8.00 %154,512 10.50 %147,154 10.00 %
Tier 1 (leverage) capital296,238 14.31 %82,798 4.00 % N/A N/A103,497 5.00 %
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective. There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not engaged in any legal proceedings of a material nature at the present time. The Company is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.
ITEM 1.A. RISK FACTORS
There have been no material changes in risk factors from those identified in the Annual Report on Form 10-K for the year ended December 31, 2023.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES. USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
The following table reports information regarding repurchases of our common stock during the quarter ended June 30, 2024, and the stock repurchase plans approved by our board of directors.
PeriodTotal Number of Shares Purchased 
(1)		Average Price paid Per ShareAs part of Publicly Announced Plans or ProgramsYet to be Purchased Under the Plans or Programs 
(2)
April161,962 8.60161,962 1,233,719 
May123,800 9.24123,800 1,109,919 
June100,590 8.83100,590 1,009,329 
Total386,352 $8.87386,352 
(1)    On February 21, 2024, the Company adopted its fourth repurchase program to repurchase up to 1,203,545 shares, or 5%, of its outstanding common stock. The fourth repurchase program has no expiration date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
During the second quarter of 2024, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

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ITEM 6. EXHIBITS
The following exhibits are either filed as part of this report or are incorporated herein by reference:
101
The following materials from the Company’s Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets; (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

50


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BLUE FOUNDRY BANCORP


Dated:August 9, 2024By:/s/ James D. Nesci
James D. Nesci
Chief Executive Officer
(Principal Executive Officer)
Dated:August 9, 2024By:/s/ Kelly Pecoraro
Kelly Pecoraro
Chief Financial Officer
(Principal Financial Officer)
         




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