EDGAR 10-K Filing

Company CIK: 1846017
Filing Year: 2022
Filename: 1846017_10-K_2022_0001628280-22-005995.json

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ITEM 1. BUSINESS
Item 1. Business

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
At December 31, 2021, the Company and the Bank conducted our business through 17 full-service branch offices located in northern New Jersey. We own six properties and lease 13 properties. A branch at one of the lease properties is expected to open in 2022. The aggregate net book value of premises and equipment was $28.1 million at December 31, 2021.
The Company’s principal executive office is located at 19 Park Avenue, Rutherford, New Jersey and the Company’s administrative offices are located at 7 Sylvan Way, Parsippany, New Jersey.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
Periodically, we are involved in claims and lawsuits, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real
property loans and other issues incident to our business. At December 31, 2021, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is listed on the Nasdaq Global Select Market under the trading symbol “BLFY.” Trading in the Company’s common stock commenced on July 16, 2021. As of January 31 2022, there were 28,522,500 shares of the Company’s common stock issued and outstanding, and approximately 1,375 stockholders of record. Certain shares of Blue Foundry Bancorp are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
The Company has not declared any dividends to holders of its common stock and we do not currently anticipate paying dividends on our common stock in the near future. Our board of directors has the authority to declare dividends on our shares of common stock, and may determine to pay dividends in the future, subject to financial condition, results of operations, tax considerations, industry standards, economic conditions, statutory and regulatory requirements that affect the payment of dividends by the Bank to the Company, and other relevant factors. No assurances can be given that any cash dividends will be paid or that, if paid, will not be reduced or eliminated in the future.
Issuer Purchases of Equity Securities
The Company did not purchase any shares of its common stock during the year ended December 31, 2021. Under current Federal Reserve Board regulations, the Company may not repurchase shares of its common stock during the first year following the Company’s initial public offering, except to fund shareholder-approved equity benefit plans or, with prior regulatory approval, when extraordinary circumstances exist.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. [RESERVED]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section is intended to assist in the understanding of the financial performance of the Company and its subsidiary through a discussion of our financial condition as of December 31, 2021, and our results of operations for the years ended December 31, 2021 and 2020. This section should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements that appear at the end of this report.
COVID Update
The COVID-19 pandemic related impacts on the Company’s business continue to lessen as the economy stabilizes, restrictions ease, and general market conditions improve. Additionally, the Federal Reserve’s policies are anticipated to address the recent inflation concerns and reduce the amount of broad-based financial support for asset pricing. This change in policy is indicative of a return to a more normal policy environment and the departure from pandemic-era policies which may be subject to future changes, such as changes that may result from any new COVID-19 variants.
Business Strategy
The Company’s goal is to position ourselves to prosper in an evolving financial services landscape and enhance our position as one of the leading community banking institutions in our market. We intend to continue to provide a broad array of banking and other financial services to retail, commercial and small business customers while growing our presence in our markets and expanding our franchise. In recent years, we have focused on, and invested heavily in, our technology and infrastructure to improve our delivery channels and create competitive products and services, a strong workforce and an enhanced awareness of our banking brand in our market area.
As a result, we believe we are well positioned to capitalize on the opportunities available in our market by focusing on the following core strategies.
Repositioning our Business Mix: Focus on building commercial and small-business relationships. We focus on understanding our customers’ and potential customers’ financial needs and providing a wide variety of high-quality products and solutions through a collaborative approach that intends to create long-term relationships. Our goal is to continue to evolve from a traditional savings bank focusing on residential lending to a full-service commercial bank with an emphasis on providing products and services to commercial and small businesses in our market area. We believe pursuing this strategy will allow us to both grow and diversify our business mix while providing us with the best opportunities to drive strong financial returns. We intend to pursue these commercial relationships through the lending personnel that we have recruited and continue to recruit, who have the experience and relationships necessary to build this business as well as through cultural changes that have been made across the organization that emphasize our goal of pursuing this strategy. Further, our investment in technology is intended to facilitate the delivery of consumer and business solutions without the need for traditional sales channels.
Recently, we were approved by the SBA to provide loans under the 7(a) Loan Program, the SBA’s most common loan program. We believe providing 7(a) loans as well as traditional commercial and industrial loans and lines of credit will allow us to provide needed funding to our business communities, which will increase deposits. Often, these borrowers also keep deposits at their loan providers.
Growing our Business: Developing new customer relationships and deepening existing relationships. We seek to expand our market share in existing and contiguous markets by leveraging our distinctive brand and delivering high-quality solutions through a collaborative, relationship-based approach. Our relationship-based approach has enabled us to achieve disciplined organic growth, and we expect this trend to continue. We believe our support of small business and non-profit customers in obtaining funding beginning in April 2020 under the PPP demonstrates both our commitment and capacity to meet our customers’ needs. Although many of our PPP borrowers were introduced to our bank through this program, we have been able to successfully establish and maintain a significant number of these new client relationships. Building our customer relationships around low and no cost products is part of our relationship expansion strategy. Our “Blue” products, including Blue Axis Checking,
Blue Axis Connect, Blue Axis Savings, and Blue Carbon Business Checking are designed to be low cost to the consumer or business, while providing us with lower interest rate deposits. Our consumer deposit products are designed to be easy to open in person or online. Our commercial deposit products include many features without fees that would customarily be included.
Leverage technology to enhance customer experience and drive operating efficiencies. We have made significant investments in our technology infrastructure to deliver high-quality, innovative products and services to our customers. For example, we continue to enhance our mobile banking platform for both consumer and commercial customers. In addition, we have invested in our new commercial lending origination system and platform, and we intend to continue to improve our consumer lending origination platform. We are committed to continue investing in technology and data analytics. We believe these investments will differentiate us with our target customers, which will generate significant operating leverage as we grow.
Continuing to invest and optimize our facilities and expand our branch network through selective de novo branching. Recently, we have been enhancing and optimizing both our facilities and branch network. We have optimized our branch footprint though the utilization of a new forward-thinking branch model and intend to continue our strategy to broaden our existing branch network by expanding into new markets and broadening our geographic footprint. In 2021, we opened new branches in Chatham, Ridgewood, and Jersey City, continuing our strategy of operating in high density areas with vibrant commercial corridors and main streets. Additionally, we renovated two existing locations, modernizing their appearance and upgrading their functionalities. We also plan to continue to open additional new branches in desirable locations in attractive growth markets. New branches will feature modern design elements focused on open and efficient use of space.
Branch efficiency has been built into our locations. All branches currently employ new multifunction automated teller machines that are designed to be compatible with new services as they become available. Further, all branches utilize teller cash recycling machines to further enhance efficiency.
Pursue opportunistic acquisitions and partnerships. We intend to prudently pursue opportunities to acquire banks in our existing and contiguous markets that create attractive financial returns. Our focus will primarily be on franchises that enhance our funding profile, product capabilities or geographic density, while maintaining an acceptable risk profile. We believe the vital need to make increasingly significant technological investments has greatly amplified the importance of scale in banking. In addition, we believe that the current economic climate will increase the rate of consolidation in the banking industry. We will evaluate potential partnerships with FinTech companies or other fee income generating businesses that we believe would be additive to our business strategy and consistent with our desire to stay ahead of technological developments that we believe will continue to cause the banking industry to evolve.
Critical Accounting Policies
Certain of our accounting policies are important to the presentation of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances that could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. The Company has identified the allowance for loan losses to be a critical accounting policy. This accounting policy and our significant accounting policies are discussed in detail in Note 1 to our Consolidated Financial Statements included in Part II, Item 8.
Executive Summary
Comparison of Operating Results for the Years Ended December 31, 2021 and 2020
General. Net loss increased $4.8 million, to a net loss of $36.3 million for the year ended December 31, 2021, compared to a net loss of $31.5 million for the year ended December 31, 2020. The increase was primarily a result of the establishment of a $16.7 million valuation allowance on the Company’s deferred tax assets, an $11.2 million loss related to the withdrawal from the multi-employer defined-benefit pension plan, and a $9.0 million contribution of cash and common stock of the Company to the Blue Foundry Charitable Foundation during the year ended December 31, 2021, partially offset by a $12.8 million valuation allowance as certain Bank property was reclassified to held for sale and subsequently written down to fair value and goodwill impairment of $15.5 million during the year ended December 31, 2020.
Interest Income. Interest income decreased $5.6 million, or 9.0%, to $56.1 million for the year ended December 31, 2021 from $61.6 million for the year ended December 31, 2020. The decrease was due to a decrease of $5.4 million in interest income from loans as the average balance of loans decreased $114.0 million to $1.27 billion and the average yield on loans decreased eight basis points to 3.82%. PPP fees recognized in interest income totaled $2.8 million and $605 thousand for the years ended December 31, 2021 and 2020, respectively.
Interest Expense. Interest expense decreased $9.5 million, or 41.9%, to $13.1 million for the year ended December 31, 2021 compared to $22.6 million for the year ended December 31, 2020. The decrease in interest expense was driven by a decrease of $8.0 million in interest expense on deposits, coupled with a decrease of $1.5 million in interest expense on borrowings. Average interest-bearing deposit balances rose to $1.29 billion at a weighted average interest rate of 0.61% for the year ended December 31, 2021, compared to $1.28 billion at a weighted average interest rate of 1.24% for the year ended December 31, 2020.
Net Interest Income and Margin. For the year ended December 31, 2021 net interest income was $42.9 million, an increase of $3.9 million compared to $39.1 million for same period in 2020.
Net interest margin for the year ended December 31, 2021 increased by 10 basis points to 2.20% from 2.10% for the year ended December 31, 2020. The yield on average interest earning assets decreased by 44 basis points, primarily due to higher average cash balances with minimal yield, for the year ended December 31, 2021. The yield on average loans decreased by eight basis points and the overall cost of average interest bearing liabilities decreased 55 basis points for the year ended December 31, 2021.
Provision for Loan Losses. Provisions for loan losses are charged to operations to establish an allowance for loan losses at a level necessary to absorb probable and incurred losses inherent in our loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. In evaluating the level of the allowance for loan losses, management analyzes several qualitative loan portfolio risk factors including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.
After an evaluation of these factors, the Company recorded a recovery of provision for loan losses of $2.5 million for the year ended December 31, 2021 compared to a provision of $2.5 million for the year ended December 31, 2020. The recovery for the year ended December 31, 2021 was driven by a change in balances in portfolio segments with respectively higher applied loss rates and declining non-performing assets.
As the pandemic emerged in March of 2020, the Company increased its allowance for loan losses by $1.5 million to $16.0 million as of March 31, 2020. As the economic effects of the pandemic continued to unfold, the Company increased its allowance by another $1.3 million as of June 30, 2020 to $17.3 million, where it remained through September 30, 2020 despite loan balances declining due to increased loan payoffs driven by record-low interest rates. Subsequently, credit quality continued to stabilize, and by December 31, 2020, the Company had
reduced its allowance slightly, to $17.0 million. 2021 saw continued strengthening of credit quality, as seen in the declining delinquency rates and balances of non-performing loans. Total non-performing loans decreased by $873 million to $12.0 million at December 31, 2021 compared to to $12.9 million at December 31, 2020.
Non-interest Income. Non-interest income of $2.5 million for the year ended December 31, 2021 represented an increase of $1.3 million from $1.2 million for the year ended December 31, 2020. The increase was driven by the the $1.4 million write down of real estate owned (“REO”) in 2020. All REO properties were sold during the fourth quarter of 2021.
Non-interest Expense. Non-interest expense decreased $2.5 million to $74.7 million for the year ended December 31, 2021 from $77.1 million for the year ended December 31, 2020. The decrease in non-interest expense for the year ended December 31, 2021 was driven by higher non-recurring expenses recognized in the prior period, related to a $12.8 million valuation allowance as certain Bank property was reclassified to held for sale and subsequently written down to fair value and a goodwill impairment of $15.5 million, partially offset by lower non-recurring expenses recognized in 2021 related to an $11.2 million loss related to the withdrawal from the multi-employer defined-benefit pension plan and a $9.0 million contribution of cash and common stock of the Company to the Blue Foundry Charitable Foundation. The increase of $3.1 million in data processing fees and the offsetting decrease of $4.0 million in professional fees for the year ended December 31, 2021 was driven by the transition from the use of consultants for information technology services during the 2020 period to managed services during 2021.
Income Tax Expense. For the year ended December 31, 2021, the Company recorded an income tax expense of $9.6 million compared to an income tax benefit of $7.9 million for the year ended December 31, 2020. The increase was primarily the result of the establishment of valuation allowances for the Company’s deferred tax assets. This resulted in an effective tax rate for the year ended December 31, 2021 and 2020 of 36.0% and (20.0)%, respectively.
Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends on the relative amounts of interest-earning assets and interest-bearing liabilities and the rates of interest earned on such assets and paid on such liabilities.
Average Balances and Yields. The following table presents 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. Non-accrual loans are included in average balances only. Loan fees are included in interest income on loans and are not material.
Year Ended December 31,
2021 2020
Average Balance Interest Average
Yield/Cost Average Balance Interest Average
Yield/Cost
(Dollar in thousands)
Assets:
Loans $ 1,274,885 $ 48,719 3.82 % $ 1,388,863 $ 54,125 3.90 %
Mortgage-backed securities 154,882 2,908 1.88 % 124,164 2,764 2.23 %
Other investment securities 147,853 3,237 2.19 % 125,794 3,127 2.49 %
FHLB stock 14,373 744 5.17 % 17,356 954 5.50 %
Cash and cash equivalents 356,458 445 0.12 % 200,068 655 0.33 %
Total interest earning assets 1,948,451 56,053 2.88 % 1,856,245 61,625 3.32 %
Non-interest earning assets 87,443 72,297
Total assets $ 2,035,894 $ 1,928,542
Liabilities and shareholders' equity:
NOW, savings, and money market deposits $ 676,697 1,091 0.16 % $ 511,927 1,372 0.27 %
Time deposits 610,092 6,793 1.11 % 767,931 14,509 1.89 %
Interest bearing deposits 1,286,789 7,884 0.61 % 1,279,858 15,881 1.24 %
FHLB advances 280,985 5,220 1.86 % 344,517 6,676 1.94 %
Total interest bearing liabilities 1,567,774 13,104 0.84 % 1,624,375 22,557 1.39 %
Non-interest bearing deposits 106,033 46,629
Non-interest bearing other 47,560 42,110
Total liabilities 1,721,367 1,713,114
Total shareholders' equity 314,527 215,428
Total liabilities and shareholders' equity $ 2,035,894 $ 1,928,542
Net interest income $ 42,949 $ 39,068
Net interest rate spread (1) 2.04 % 1.93 %
Net interest margin (2) 2.20 % 2.10 %
(1) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(2) Net interest margin represents net interest income divided by average interest-earning assets.
Rate/Volume Table
The following table sets forth the effects of changing rates and volumes on net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. Changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.
Years Ended December 31,
2021 vs. 2020
Increase (Decrease) Due to
Volume Rate Net
(In thousands)
Interest income:
Loans $ (4,442) $ (965) $ (5,407)
Mortgage-backed securities 684 (539) 145
Investment securities 548 (439) 109
FHLB stock (164) (46) (210)
Other interest-earning assets 512 (721) (209)
Total interest-earning assets $ (2,862) $ (2,710) $ (5,572)
Interest expense:
Deposits $ (2,539) $ (5,458) $ (7,997)
FHLB advances (1,231) (225) (1,456)
Total interest-bearing liabilities (3,770) (5,683) (9,453)
Net increase in net interest income $ 908 $ 2,973 $ 3,881
Comparison of Financial Condition at December 31, 2021 and December 31, 2020
Total Assets. Total assets decreased $28.3 million to $1.91 billion at December 31, 2021 from $1.94 billion at December 31, 2020. During 2021, the Company utilized its elevated cash position and liquidity raised in the public offering to continue optimizing its balance sheet through funding loans, investing in securities, offsetting maturing high cost time deposits, and prepaying borrowings from the FHLB.
Cash and cash equivalents. Cash and cash equivalents decreased $123.0 million to $193.4 million at December 31, 2021 from $316.4 million at December 31, 2020. The Company received $250.8 million in net proceeds from the stock offering during the quarter ended September 30, 2021. The increase in cash and cash equivalents from the stock offering was offset by security purchases, prepayment of FHLB borrowings and decreases in deposit balances.
Gross Loans. Gross loans held for investment increased $2.5 million, or 0.19%, to $1.281 billion at December 31, 2021 from $1.279 billion at December 31, 2020. The most significant drivers were net increases in multifamily and non-residential loans. These increases exceeded net payoffs and amortization in residential one-to-four family and construction loans as well as the ongoing forgiveness programs within the commercial & industrial portfolio attributable to loans made pursuant to the PPP. For the year ended December 31, 2021, there were $196.2 million in originations of multifamily loans partially offset by $108.4 million of payoffs and amortization, $32.2 million in originations of non-residential loans partially offset by $18.7 million of payoffs and amortization, and $44.2 million of originations in commercial & industrial (primarily PPP loans) more than offset by $76.7 million in payoffs/forgiveness and amortization. The decrease in one-to-four family loans was primarily driven by $166.1 million in payoffs and amortization, partially offset by $115.5 million of originations, including $89.5 million in whole loan purchases.
The following table presents loans at December 31, 2021 and December 31, 2020 allocated by loan category:
December 31, 2021 December 31, 2020
(In thousands)
Residential one-to-four family $ 560,976 $ 611,603
Multifamily 515,240 427,436
Non-residential 141,561 128,141
Construction and land 23,419 33,691
Junior liens 18,464 23,814
Commercial and industrial (including PPP) 21,563 54,053
Consumer and other 87 99
Total loans 1,281,310 1,278,837
Deferred fees, costs and premiums and discounts, net 6,299 5,236
Allowance for loan losses (14,425) (16,959)
(8,126) (11,723)
Loans receivable, net $ 1,273,184 $ 1,267,114
The table below presents the balance of non-performing assets on the dates indicated:
December 31, 2021 December 31, 2020
(In thousands)
Residential one-to-four family $ 10,805 $ 11,813
Multifamily 139 156
Non-residential 857 805
Construction and land - -
Junior liens 182 82
Commercial and industrial (including PPP) - (1) -
Total $ 11,983 $ 12,856
Other real estate owned - 624
Total non-performing assets $ 11,983 $ 13,480
(1) Excludes PPP loans 90 days past due and accruing totaling $116 thousand at December 31, 2021.
Securities Available-For-Sale. Securities available-for-sale increased $80.3 million, or 32.8%, to $324.9 million at December 31, 2021 from $244.6 million at December 31, 2020. During the year ended December 31, 2021, purchases of residential mortgage-backed securities, U.S. Treasury and Agency bonds, and corporate bonds were executed as interest rates rose. No securities were sold during the year ended December 31, 2021.
Assets Held-For-Sale, at Fair Value. We had no assets-held-for-sale at December 31, 2021 due to a decrease of $5.3 million from the sale during the fourth quarter of 2021 of the premises held for sale. The fourth quarter 2021 sale resulted in a net loss on sale of $83 thousand.
Securities Held-To-Maturity. Securities held-to-maturity increased $16.3 million to $23.3 million at December 31, 2021 from $7.0 million at December 31, 2020. The increase is due to an expansion of the portfolio during 2021.
Real Estate Owned, Net. Real estate owned, net decreased $624 thousand due to the sale during the fourth quarter of 2021 of the premises held for sale. The sale resulted in a net loss on sale of $6 thousand. The Company had no real estate owned at December 31, 2021.
Other Assets. Other assets decreased $4.6 million, or 35.0%, to $8.6 million at December 31, 2021 from $13.2 million at December 31, 2020. This decrease was primarily a result of the establishment of a $16.8 million valuation allowance on the Company’s full deferred tax assets. The establishment of the valuation allowance was driven by the Company’s three-year cumulative net loss.
Total Deposits. Total deposits decreased $109.1 million or 8.0% to $1.25 billion at December 31, 2021 compared to $1.36 billion at December 31, 2020 as the Company executed its strategy and allowed high cost time deposits to mature. Time deposits decreased $243.6 million, or 34.0%, to $473.8 million with a weighted average rate of 0.58% at December 31, 2021 from $717.4 million with a weighted average rate of 1.55% at December 31, 2020. The decrease in time deposits was partially offset by an increase in checking, savings, and money market accounts. These accounts increased $134.5 million, or 21.1%, to $773.2 million at December 31, 2021 from $638.8 million at December 31, 2020. This shift resulted in the ratio of time deposits to total deposits decreasing from 52.9% at December 31, 2020 to 38.0% at December 31, 2021, and a decline in the blended cost of deposits to 0.57% for the year ended December 31, 2021 from 1.20% for the year ended December 31, 2020.
The following table presents the totals of deposit accounts by account type, at the dates shown below:
December 31, 2021 December 31, 2020
(In thousands)
Non-interest bearing deposits $ 44,894 $ 44,195
NOW and demand accounts 363,419 317,974
Savings 364,932 276,584
Time deposits 473,795 717,431
Total Deposits $ 1,247,040 $ 1,356,184
Included within the NOW and demand account caption, as well as the Savings caption above are money market accounts with varying transactional limits.
Borrowings. The Company had $185.5 million of borrowings at December 31, 2021, compared to $329.4 million of borrowings at December 31, 2020. The Bank extinguished $111.4 million in borrowings from the FHLB during the year ended December 31, 2021, incurring a prepayment penalty of $2.2 million. Additionally, $32.5 million of borrowings matured during the year ended December 31, 2021.
Total Equity. Total shareholders’ equity increased by $223.9 million to $429.5 million at December 31, 2021 compared to $205.8 million at December 31, 2020 primarily due to the conversion and related stock offering on July 15, 2021.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of securities, borrowings from the FHLB and securities sold under agreements to repurchase. 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. Our primary use of funds is for the origination and purchase of loans and the purchase of securities.
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.
The Bank is subject to various regulatory capital requirements administered by the NJDOBI and the FDIC. At December 31, 2021, the Bank exceeded all applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines. See “Item 1. Business-Supervision and Regulation-Federal Banking Regulation-Capital Requirements” and Note 18 of the Notes to the Consolidated Financial Statements.
The Bank has entered into derivative financial instruments to reduce risk associated with interest rate volatility by matching asset maturities and liability maturities. These derivatives had an aggregate notional amount of $109.0 million as of December 31, 2021. See Note 12 of the Notes to the Consolidated Financial Statements.
At December 31, 2021, we had outstanding commitments to originate loans of $16.3 million and unused lines of credit of $52.8 million. We anticipate that we will have sufficient funds available to meet our current loan origination commitments. Certificates of deposit that are scheduled to mature in less than one year from December 31, 2021 totaled $304.7 million. Management expects, based on historical experience, that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. Available borrowing capacity at December 31, 2021 was $134.4 million with FHLB. We also had a $30.0 million available line of credit with a correspondent bank and a $2.5 million available line of credit with the Federal Reserve Bank of New York at December 31, 2021.
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 December 31, 2021 pursuant to off-balance-sheet arrangements and contractual obligations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. 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 financial condition 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 third-party modeling program, prepared 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; 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.
By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.
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.
In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. Certain tenors (e.g. overnight, 1 month, 3 month, etc.) of LIBOR are no longer supported as of December 31, 2021, and the FCA has announced that the remaining tenors will not be supported after June 2023. The Alternative Reference Rates Committee has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in financial contracts that are currently indexed to USD-LIBOR. The Company has approximately $38.0 million in loans, $34.5 million in investments and $109.0 million notional of derivatives which are indexed to USD-LIBOR for which it is monitoring the activity and assessing the related risks.
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. Historically, the model estimated 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 400 basis points in 100 basis point increments. However, given the current level of market interest rates, an NPV calculation for an interest rate decrease of greater than 100 basis points has not been prepared. 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 December 31, 2021, 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) Amount Change Percent
(Dollars in Thousands)
+400bp $ 50,932 4,837 10 %
+300bp 49,859 3,764 8
+200bp 48,604 2,509 5
+100bp 47,253 1,158 3
0 bp 46,095 - -
-100bp 44,939 (1,156) (3)
The following table sets forth, at December 31, 2021, 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%.
EVE
Change in Interest Rates (basis points) Estimated EVE Estimated Increase (Decrease) NPV as a Percent of Portfolio Value of Assets
Amount Percent NPV Ratio Change
(Dollars in thousands)
+400bp $ 300,008 $ (34,322) (10) % 16 % (2) %
+300bp 308,500 (25,830) (8) 16 (1)
+200bp 315,153 (19,177) (6) 16 (1)
+100bp 322,046 (12,284) (4) 17 (1)
0 bp 334,330 - - 17 -
-100bp 381,351 47,021 14 20 2
The table above indicates that at December 31, 2021, in the event of an instantaneous 100 basis point increase in interest rates, we would experience a 4% decrease in EVE. In the event of an instantaneous 100 basis point decrease in interest rates, we would experience a 14% increase in net portfolio value.
Certain shortcomings 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 table assumes 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, 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.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following are included in this item:
A. Report of Independent Registered Public Accounting Firm
B. Consolidated Financial Statements:
(1) Consolidated Statements of Financial Condition as of December 31, 2021 and 2020
(2) Consolidated Statements of Income for the years ended December 31, 2021 and 2020
(3) Consolidated Statements of Comprehensive Income for the years ended December 31, 2021 and 2020
(4) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020
(5) Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
(6) Notes to Consolidated Financial Statements
C. Blue Foundry Bancorp Condensed Financial Statements:
(1) Condensed Statement of Financial Condition as of December 31, 2021 and 2020
(2) Condensed Statement of Income for the years ended December 31, 2021 and 2020
(3) Condensed Statement of Cash Flows for the years ended December 31, 2021 and 2020
Report of Independent Registered Public Accounting Firm
Shareholders and the Board of Directors of Blue Foundry Bancorp
Rutherford, New Jersey
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Blue Foundry Bancorp (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholder’s equity, and cash flows for the years then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Crowe LLP
We have served as the Company's auditor since 2012.
New York, New York
March 14, 2022
BLUE FOUNDRY BANCORP
Consolidated Statements of Financial Condition
December 31, 2021 and December 31, 2020
(Dollars in thousands, except share data)
December 31, 2021 December 31, 2020
ASSETS
Cash and cash equivalents
$ 193,446 $ 316,445
Securities available for sale, at fair value 324,892 244,587
Assets held for sale - 5,295
Securities held to maturity (fair value of $22,849
at December 31, 2021 and $6,979 at December 31, 2020)
23,281 7,005
Restricted stock, at cost 10,182 16,860
Loans receivable, net of allowance of $14,425 at December 31, 2021 and $16,959 at December 31, 2020
1,273,184 1,267,114
Real estate owned, net - 624
Interest and dividends receivable 5,372 5,749
Premises and equipment, net 28,126 19,569
Right-of-use assets 25,457 24,878
Bank owned life insurance 21,662 21,186
Other assets 8,609 13,234
Total assets $ 1,914,211 $ 1,942,546
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits $ 1,247,040 $ 1,356,184
Advances from the Federal Home Loan Bank 185,500 329,400
Advances by borrowers for taxes and insurance 9,582 10,841
Lease liabilities 26,696 25,535
Other liabilities 15,922 14,986
Total liabilities 1,484,740 1,736,946
Shareholders’ equity
Common stock $0.01 par value; 70,000,000 shares
authorized; 28,522,500 shares issued and outstanding at December 31, 2021
285 10
Additional paid-in capital 282,006 822
Retained earnings 169,457 205,799
Unallocated common shares held by ESOP (2,190,528 shares)
(21,905) -
Accumulated other comprehensive loss (372) (1,031)
Total shareholders’ equity 429,471 205,600
Total liabilities and shareholders’ equity $ 1,914,211 $ 1,942,546
See accompanying notes to the consolidated financial statements.
BLUE FOUNDRY BANCORP AND SUBSIDIARY
Consolidated Statements of Operations
(Dollars in thousands, except share data)
For the year ended December 31,
2021 2020
Interest income:
Loans $ 48,719 $ 54,125
Taxable investment income 6,821 6,872
Non-taxable investment income 513 628
Total interest income 56,053 61,625
Interest expense:
Deposits 7,884 15,881
Borrowed funds 5,220 6,676
Total interest expense 13,104 22,557
Net interest income 42,949 39,068
(Recovery of) provision for loan losses (2,518) 2,518
Net interest income after (recovery of) provision for loan losses 45,467 36,550
Non-interest income:
Fees and service charges 1,975 1,739
(Loss) gain on sales and calls of securities available for sale (1) 69
Loss on premises and equipment (79) -
Net loss on real estate owned (6) (1,390)
Other 590 789
Total non-interest income 2,479 1,207
Non-interest expense:
Compensation and employee benefits 25,206 22,639
Loss on pension withdrawal 11,206 -
Occupancy and equipment 7,929 6,160
Loss on assets held for sale 104 12,775
Data processing 6,933 3,790
Prepayment fees 2,155 843
Advertising 2,390 2,636
Professional services 4,528 8,519
Directors fees 549 493
Provision for commitment and letters of credit 689 1,311
Federal deposit insurance 494 326
Goodwill impairment - 15,460
Contribution to Blue Foundry Charitable Foundation 9,000 -
Other 3,487 2,177
Total non-interest expense 74,670 77,129
Loss before income tax expense (benefit) (26,724) (39,372)
Income tax expense (benefit) 9,618 (7,866)
Net loss $ (36,342) $ (31,506)
Basic and diluted loss per share $ (2.99) n/a
Weighted average shares outstanding 12,171,050 n/a
See accompanying notes to the consolidated financial statements.
BLUE FOUNDRY BANCORP AND SUBSIDIARY
Consolidated Statements of Comprehensive Income (Loss)
(Dollars in thousands)
Year Ended December 31,
2021 2020
Net loss $ (36,342) $ (31,506)
Other comprehensive income (loss):
Unrealized (loss) gain on securities available for sale:
Unrealized holding (loss) gain arising during the period (4,626) 4,511
Reclassification adjustment for losses (gains) included in net income 1 (69)
(4,625) 4,442
Unrealized gain (loss) on cash flow hedge:
Reclassification adjustment for losses included in net income 1,427 752
Unrealized holding gain (loss) arising during the period 3,871 (5,795)
5,298 (5,043)
Defined benefit plans:
Net gain (loss) arising during the period 315 (439)
Reclassification adjustment for amortization of:
Net actuarial loss 210 189
525 (250)
Total tax effect (539) 337
Total other comprehensive income (loss) 659 (514)
Comprehensive loss $ (35,683) $ (32,020)
See accompanying notes to the consolidated financial statements.
BLUE FOUNDRY BANCORP AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders’ Equity
Year Ended December 31, 2021 and 2020
(Dollars in thousands, except share data)
Common
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Unallocated Common Stock Held by ESOP Total
Shareholders’
Equity
(In thousands)
Balance at January 1, 2020 $ 10 $ 822 $ 237,305 $ (517) $ - $ 237,620
Net loss - - (31,506) - - (31,506)
Other comprehensive loss - - - (514) - (514)
Balance at December 31, 2020
$ 10 $ 822 $ 205,799 $ (1,031) $ - $ 205,600
Balance at January 1, 2021 $ 10 $ 822 205,799 $ (1,031) $ - $ 205,600
Net loss - - (36,342) - - (36,342)
Proceeds of stock offering and issuance of common shares (net of issuance costs of $4.8 million)
268 273,330 - - - 273,598
Issuance of common shares donated to the Blue Foundry Charitable Foundation 7 7,493 - - - 7,500
Purchase of common shares by the ESOP (2,281,800 shares)
- - - (22,818) (22,818)
ESOP shares committed to be released (91,272 shares)
- 361 - - 913 1,274
Other comprehensive income - - - 659 - 659
Balance at December 31, 2021
$ 285 $ 282,006 $ 169,457 $ (372) $ (21,905) $ 429,471
See accompanying notes to the consolidated financial statements.
BLUE FOUNDRY BANCORP AND SUBSIDIARY
Consolidated Statements of Cash Flows
Year Ended December 31, 2021 and 2020
Year Ended December 31,
2021 2020
(In thousands)
Cash flows from operating activities
Net loss $ (36,342) $ (31,506)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment 2,347 1,925
Change in right-of-use asset 2,618 1,589
Amortization of:
Deferred loan fees, costs, and discounts, net
1,107 995
Premiums and discounts on securities, net 893 309
Goodwill impairment - 15,460
Deferred income tax expense (benefit) 8,733 (6,445)
Dividends on CRA fund - (15)
(Recovery) provision for loan losses (2,518) 2,518
Loss (gain) on sales and calls of securities 1 (69)
Loss on assets held for sale 104 12,775
Loss on premises and equipment 79 -
Net loss on Real Estate Owned 6 1,390
Increase in BOLI cash surrender value (476) (595)
Issuance of common shares donated to Blue Foundry Charitable Foundation 7,500 -
ESOP expense 1,274 -
Decrease (increase) in interest and dividends receivable 377 (355)
(Increase) decrease in other assets (2,134) 997
Increase in other liabilities 4,325 707
Change in lease liability (2,036) (932)
Net cash used by operating activities (14,142) (1,252)
Cash flows from investing activities
Net decrease in loans 86,975 139,148
Purchases of residential mortgage loans (91,635) -
Proceeds from sale of Real Estate Owned 618 -
Purchases of securities available for sale (164,958) (128,569)
Purchases of securities held to maturity (23,362) -
Sales of equity securities - 4,178
Proceeds from calls of securities held to maturity 7,000 2,500
Proceeds from sales and calls of securities available for sale 14,216 13,235
Principal payments and maturities on securities available for sale 65,002 79,363
Purchase of Federal Home Loan Bank stock - (4,028)
Redemption of Federal Home Loan Bank stock 6,678 2,579
Proceeds from Bank owned life insurance - 280
Proceeds from Assets held for sale 6,034 -
Purchases of premises and equipment (11,902) (7,293)
Net cash (used) provided by investing activities (105,334) 101,393
Cash flows from financing activities
Net (decrease) increase in deposits (109,144) 61,136
Proceeds of advances from Federal Home Loan Bank 583,600 621,000
Repayments of advances from Federal Home Loan Bank (727,500) (588,500)
Net decrease in advances by borrowers for taxes and insurance (1,259) (1,366)
Net proceeds from issuance of common shares 250,780 -
Net cash (used) provided by financing activities (3,523) 92,270
Net (decrease) increase in cash and cash equivalents (122,999) 192,411
Cash and cash equivalents at beginning of period 316,445 124,034
Cash and cash equivalents at end of period $ 193,446 $ 316,445
BLUE FOUNDRY BANCORP AND SUBSIDIARY
Consolidated Statements of Cash Flows
Year Ended December 31, 2021 and 2020
Year Ended December 31,
2021 2020
(In thousands)
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 12,836 $ 22,569
Income taxes 150 167
Supplemental noncash disclosures
Transfers of assets to held for sale $ 892 $ 5,695
Lease liabilities arising from obtaining right-of-use assets 3,197 26,467
Purchase of common shares by the ESOP (22,818) -
See accompanying notes to the consolidated financial statements.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
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, Blue Foundry Service Corp., Rutherford Center Development Corp., Blue Foundry Investment Company (collectively, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. Blue Foundry Bancorp owns 100% of the common stock of Blue Foundry Bank.
Business
The Company provides a wide range of banking services to individual and business customers through branch offices in New Jersey. The Company is subject to competition from other financial institutions and to the regulations of certain federal and state agencies, and undergoes periodic examinations by those regulatory authorities.
On July 15, 2021, the Company became the holding company for the Bank when Blue Foundry, MHC completed its conversion into the stock holding company form of organization. In connection with the conversion, the Company sold 27,772,500 shares of common stock at a price of $10 per share, for gross proceeds of $277.7 million. The Company contributed 750,000 shares of common stock and $1.5 million in cash to Blue Foundry Charitable Foundation, Inc. and established an Employee Stock Ownership Plan (“ESOP”) acquiring 2,281,800 shares of common stock. Shares of the Company’s common stock began trading on July 16, 2021 on the Nasdaq Global Select Market under the trading symbol “BLFY.”
Basis of Financial Statement Presentation
The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles. The audited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations 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 statement of financial condition and revenues and expenses for the period. Actual results could differ from those estimates. Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders’ equity. The results of operations and other data presented for the year ended December 31, 2021 are not necessarily indicative of the results of operations that may be expected for subsequent periods.
Cash and Cash Equivalents
Cash and cash equivalents include cash and deposits with other financial institutions with maturities fewer than 90 days.
Securities
Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Securities to be held for indefinite periods of time and not intended to be held to maturity are classified as available for sale and carried at fair value. Unrealized holding gains and losses on securities available for sale are excluded from earnings with unrealized holding gains and losses reported in other comprehensive income, net of tax adjusted for deferred tax valuation allowances, until realized. Securities available for sale are those which management intends to use as part of its asset/liability management strategy and which may be sold in response to changes in interest rates, resultant prepayment risk and other factors related to interest rate risk. Gains and losses on sales are recognized on a trade-date basis using the specific identification method.
Premiums on securities are amortized to income using a method that approximates the interest method over the remaining period to the earliest call date or contractual maturity, adjusted for anticipated prepayments. Discounts on securities are accreted to income over the remaining period to the contractual maturity, adjusted for anticipated prepayments. Interest income is recognized on an accrual basis.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
Management evaluates securities for other-than-temporary impairment (“OTTI”) on, at least, a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For debt securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.
Derivatives
At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For both types of hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income. As of December 31, 2021, and December 31, 2020 the Company’s derivatives are all cash flow hedges.
Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.
The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to a specific firm commitments or forecasted transactions.
When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.
The Company is exposed to losses if a counterparty fails to make its payments under a contract in which the Company is in the net receiving position. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements. All the contracts to which the Company is a party settle monthly or quarterly. In addition, the Company obtains collateral above certain thresholds of the fair value of its hedges for each counterparty based upon their credit standing and the Company has netting agreements with the dealers with which it does business.
Fair Value of Financial Instruments
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Restricted Stock
Restricted Stock consists primarily of membership and activity-based shares in the FHLB. Members are required to own a certain amount of stock based on the level of borrowings and other factors. FHLB stock is carried at cost, which approximates fair value, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Restricted stock also consists of shares in a cooperative that provides community banking core technology solutions, COCC.
Loans Receivable
Loans receivable are stated at unpaid principal balance, net of deferred fees, costs, and discounts, and the allowance for loan losses. Interest on loans is recognized based upon the principal amount outstanding. Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized in interest income using the level yield method over the contractual life of the individual loans, adjusted for actual prepayments.
For all loan classes, the accrual of income on loans, including impaired loans, is generally discontinued when a loan becomes 90 days delinquent or when certain factors indicate reasonable doubt as to the ability of the borrower to meet contractual principal and/or interest obligations. Loans on which the accrual of income has been discontinued are designated as nonaccrual loans. All previously accrued interest is reversed and income is recognized subsequently only in the period received, provided the remaining principal balance is deemed collectible. A nonaccrual loan is not returned to an accrual status until principal and interest payments are brought current and factors indicating doubtful collection no longer exist.
Principal and interest payments received on non-accrual loans for which the remaining principal balance is not deemed collectible are applied as a reduction to principal and interest income is not recognized. If the principal balance on the loan is later deemed collectible and the loan is returned to accrual status, any interest payments that were applied to principal while on non-accrual are recorded as an unearned discount on the loan, classified as deferred fees, costs and discounts, and are recognized into interest income using the level-yield method over the remaining contractual life the individual loan, adjusted for actual prepayments.
Allowance for Loan Losses
The allowance for loan losses is a valuation allowance for probable and reasonably estimable incurred credit losses in the loan portfolio as of the balance sheet date. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required for all portfolio segments using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.
The allowance consists of specific and general components. The specific component of the allowance relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.
Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance (generally $400,000 or less) homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment. Impaired loans also include all nonaccrual non-residential, multifamily and construction and land loans, and troubled debt restructurings.
Troubled debt restructured loans are those loans whose terms have been modified such that a concession has been granted because of deterioration in the financial condition of the borrower. Modifications could include extension of the terms of the loan, reduced interest rates, and forgiveness of accrued interest and/or principal. Once an obligation has been classified a troubled debt restructuring, it continues to be considered a troubled debt restructuring and is individually evaluated for impairment until paid in full. For a cash flow dependent loan, the Company records an impairment charge equal to the difference between the present value of the estimated future cash flows under the restructured terms discounted at the loans original effective interest rate, and the original loan’s carrying amount. For a collateral dependent loan, the Company records an impairment when the current estimated fair value, net of estimated costs to sell when necessary, of the property that collateralizes the impaired loan is less than the recorded investment in the loan.
The general component of the allowance covers non impaired loans and is based on historical loss experience adjusted for current qualitative factors. The historical loss experience is a quantitative factor determined by portfolio segment and is based on the actual loss history experienced by the Company. The qualitative factors include consideration of the following:
•Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses
•Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments
•Changes in the nature and volume of the portfolio and in the terms of loans
•Changes in the experience, ability, and depth of lending management and other relevant staff
•Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans.
•Changes in the quality of the institution's loan review system
•Changes in the value of underlying collateral for collateral-dependent loans
•The existence and effect of any concentrations of credit, and changes in the level of such concentrations
•The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution's existing portfolio
The loan portfolio is categorized according to collateral type, loan purpose, lien position, or borrower type (i.e., commercial, consumer). The categories used include residential one-to-four family, multifamily, non-residential, construction and land, junior liens, commercial and industrial (consisting primarily of Paycheck Protection Program, or “PPP”, loans), and consumer and other.
Real Estate Owned (REO)
REO consists of properties acquired in foreclosure actions or in settlement of loans and real estate held for investment purposes. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Real estate acquired in foreclosure, or in lieu thereof, is initially recorded at fair value, as generally determined by
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
independent appraisals, less estimated costs to sell. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.
When a property is acquired and there is a collateral deficiency, the excess of the loan balance over fair value is charged off through the allowance for loan losses. In instances where the fair value exceeds the loan balance, a recovery to the allowance for loan losses is recorded up to an amount equal to any previous charge-offs taken on the loan, with any excess remaining recorded as a gain on REO through the statement of operations. Subsequent costs directly related to the completion of construction or improvement of the real estate are capitalized to the extent realizable. Carrying costs, such as maintenance and taxes, are charged to operations as incurred. In addition, rental income collected on REO is recognized as income when received.
The Company evaluates its real estate held for investment based upon projected future cash flows of the underlying properties. Based upon the projected future cash flows, an impairment loss is recognized if the carrying amount of the real estate is not recoverable and exceeds fair value.
Premises and Equipment
Premises and equipment, including leasehold improvements, are generally stated at cost less accumulated depreciation, amortization and fair value adjustments. Depreciation and amortization is computed primarily using the straight-line method over the estimated useful lives of the assets or leases. Repair and maintenance items are expensed and improvements are capitalized. Construction in process represents costs incurred to develop properties for future use.
Leases and Lease Obligations
The Company enters into leases in the normal course of business primarily for financial centers, administrative and office operations locations, and information technology equipment. The Company’s leases have remaining terms ranging from less than one to 15 years, some of which include renewal or termination options to extend the lease for up to 10 years. The Company’s leases do not include residual value guarantees or covenants. The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option. In addition, the Company has elected to account for any non-lease components in its real estate leases as part of the associated lease component. The Company has also elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company’s balance sheet.
Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company’s incremental borrowing rate is based on the FHLB advance rate, adjusted for the lease term and other factors.
Bank Owned Life Insurance
The Company has purchased life insurance policies on certain key individuals. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.
Goodwill and Other Intangible Assets
Goodwill resulting from business combinations represents the excess of the purchase price over the fair value of the net assets of the businesses acquired. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but are tested for impairment at least annually or more frequently if events and circumstances exists that indicate that an impairment test should be performed. For the year ended December 31, 2020, goodwill of $15.5 million was impaired based on a multi-factor
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
quantitative assessment which resulted in the carrying amount of goodwill exceeding its fair value. After the 2020 impairment, there is no remaining goodwill. Intangible assets as of December 31, 2021 represent capitalized costs related to internal-use software. Eligible costs are capitalized according to ASC 350-40 and are amortized over the estimated useful life. Intangible assets are considered for potential impairment quarterly, or more frequently if a triggering event occurs under ASC 360-10-35.
Income Taxes
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The Company evaluates the realizability of deferred tax assets at least annually in accordance with ASC 740-10-30-5(e), and may determine that it is more-likely-than-not that a portion, or all, of the assets would require a valuation allowance. During the fourth quarter of 2021, the Company recorded a valuation allowance on all outstanding deferred tax assets in the amount of $16.8 million.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced by a valuation allowance for the amount of the deferred tax asset that is more likely than not to be realized.
A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
The Company recognizes interest and/or penalties related to income tax matters in other operating expenses.
Retirement Benefits
Effective January 1, 2020 the Defined Benefit Plan adopted by the Company was amended to freeze the plan, eliminating all future benefit accruals. In August, 2021, the Company announced its intent to withdraw from the DB Plan, effective September 30, 2021. The withdrawal was completed on December 1, 2021. The Company recorded a termination expense of $11.2 million.
The Company provides certain healthcare benefits, subject to certain limitations, to eligible retirees, based upon years of service and a retirement date prior to January 1, 2019. The Company also provides supplemental retirement benefits to certain directors. The Company measures the cost of these benefits based upon various estimates and assumptions. Costs are recognized as directors render service.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
Employee Stock Ownership Plan
The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of shareholders’ equity. Compensation expense is based on the market price of shares as they are committed to be released to participant accounts. Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce the ESOP’s debt and accrued interest.
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on both securities available for sale and derivatives, net of the related tax effect. Also included are changes in the unfunded status of the Company’s defined benefit plans, net of the related tax effect, which are recognized as separate components of shareholders’ equity.
Loss Contingencies
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the consolidated financial statements.
Earnings per share
Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. ESOP shares committed to be released are considered to be outstanding for purposes of the earnings per share computation. ESOP shares that have not been legally released, but that relate to employee services rendered during an accounting period (interim or annual) ending before the related debt service payment is made, are considered committed to be released. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options awards and are determined using the treasury stock method.
Segment Reporting
The Company operates as a single operating segment for financial reporting purposes.
Adoption of New Accounting Standards
No new accounting standards were adopted during the year ended December 31, 2021.
Accounting Standards Not Yet Adopted
As an “emerging growth company” as defined in Title 1 of the Jumpstart Our Business Startups (JOBS) Act prior to December 31, 2019, 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.
The FASB issued, but the Company has not yet adopted, ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” to replace the incurred loss model for loans and other financial assets with an expected loss models, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized costs, including loan receivables and held-to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases recognized by a lessor. In addition, the amendments in Topic 326 require credit losses on available-for-sale to be presented as a valuation allowance rather than a direct write-down on the basis of the securities. The Company is required to adopt this standard on January 1, 2023. At this time, the Company cannot reasonably estimate the impact that the adoption of CECL will have on the financial statements, but is in process of developing a methodology to implement the standard.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 2 - SECURITIES
Debt Securities
The amortized cost of securities available for sale and their estimated fair values at December 31, 2021 and 2020 are as follows:
Amortized
Cost Gross Unrealized Gains
Gross Unrealized Losses Estimated
Fair
Value
(In thousands)
December 31, 2021
Available for sale
U.S. Treasury Notes $ 36,933 $ 4 $ (105) $ 36,832
Corporate Bonds 86,118 1,791 (290) 87,619
U.S. Government agency obligations 23,462 46 (179) 23,329
Obligations issued by U.S. states and their political subdivisions
19,172 1,152 - 20,324
Mortgage-backed securities:
Residential one-to-four family
116,166 140 (1,905) 114,401
Multifamily
35,412 598 (94) 35,916
Asset-backed securities 6,538 3 (70) 6,471
Total available-for-sale $ 323,801 $ 3,734 $ (2,643) $ 324,892
December 31, 2020
Available for sale
U.S. Treasury Notes $ 9,989 $ 11 $ - $ 10,000
Corporate Bonds 57,478 1,863 - 59,341
U.S. Government agency obligations 19,787 89 (201) 19,675
Obligations issued by U.S. states and their political subdivisions
23,280 1,515 - 24,795
Mortgage-backed securities:
Residential one-to-four family
71,773 951 (8) 72,716
Multifamily
56,563 1,499 (2) 58,060
Total available-for-sale $ 238,870 $ 5,928 $ (211) $ 244,587
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The amortized cost of securities held-to-maturity and their estimated fair values at December 31, 2021 and 2020, are as follows:
Amortized Cost Gross Unrecognized Gains Gross Unrecognized Losses Estimated
Fair
Value
(In thousands)
December 31, 2021
Held-to-maturity
Asset-backed securities $ 15,281 $ - $ (373) $ 14,908
Corporate bonds 8,000 - (59) 7,941
Total held-to-maturity $ 23,281 $ - $ (432) $ 22,849
December 31, 2020
Held-to-maturity
Collateralized loan obligation $ 7,005 $ - $ (26) $ 6,979
Total Held-to-maturity $ 7,005 $ - $ (26) $ 6,979
During the year ended December 31, 2021, proceeds from calls of securities available for sale totaled $14.2 million, resulting in no gross realized gains and gross realized losses of $1 thousand. There were no securities sold during the year ended December 31, 2021. During the year ended December 31, 2020, proceeds from sales and calls of securities available for sale totaled $13.2 million, resulting in gross realized gains of $70 thousand and gross realized losses of $1 thousand.
There were no OTTI charges for the year ended December 31, 2021 and 2020.
The amortized cost and fair value of debt securities are shown below by contractual maturity. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. Securities not due at a single maturity are shown separately:
December 31, 2021
Amortized Cost Estimated Fair Value
(In thousands)
Available-for-sale
Due in one year or less $ 6,421 $ 6,479
Due from one year to five years 87,166 87,673
Due from five to ten years 55,412 56,684
Due after ten years 16,686 17,268
Mortgage-backed and asset-backed securities 158,116 156,788
Total $ 323,801 $ 324,892
Held-to-maturity
Due from one year to five years 6,071 5,947
Due from five to ten years 16,210 15,902
Due after ten years 1,000 1,000
Total $ 23,281 $ 22,849
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following tables summarize available-for-sale securities with unrealized losses at December 31, 2021 and 2020, aggregated by major security type and length of time in a continuous loss position.
Less than 12 Months 12 Months or More Total
Unrealized Losses Estimated
Fair Value Unrealized Losses Estimated
Fair Value Unrealized Losses Estimated
Fair Value
(In thousands)
December 31, 2021
Available for sale
U.S. Treasury Note $ (105) $ 16,814 $ - $ - $ (105) $ 16,814
Corporate Bonds (290) 17,183 - - (290) 17,183
U.S. Government
agency obligations (49) 9,951 (130) 7,980 (179) 17,931
Mortgage-backed
securities:
Residential one-to-four
family (1,761) 104,805 (144) 3,009 (1,905) 107,814
Multifamily - - (94) 910 (94) 910
Asset-backed securities (70) 4,458 - - (70) 4,458
Total available-for-sale $ (2,275) $ 153,211 $ (368) $ 11,899 $ (2,643) $ 165,110
December 31, 2020
Available for sale
U.S. Government
agency obligations $ (54) $ 3,559 $ (147) $ 10,014 $ (201) $ 13,573
Mortgage-backed
securities:
Residential one-to-four
family (7) 3,228 (1) 115 (8) 3,343
Multifamily (2) 738 - 313 (2) 1,051
Total available-for-sale $ (63) $ 7,525 $ (148) $ 10,442 $ (211) $ 17,967
At December 31, 2021, four U.S. Government agency obligations, two U.S Treasury note, and twenty-nine mortgage-backed securities held by the Company were in an unrealized loss position in the available-for-sale portfolio. These securities were all issued by U.S. Government-sponsored entities and agencies, which the government has affirmed its commitment to support. There were also seven investment grade corporate bonds and two asset-backed securities in an unrealized loss position. The Company does not consider these securities to be other-than-temporarily impaired due to the decline in fair value being 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 (maturity).
The Company did not have any held to maturity securities in an unrecognized loss position for more than twelve months at December 31, 2021 and 2020. At December 31, 2021, held to maturity securities in an aggregate unrecognized loss position for less than twelve months included two asset-backed securities with total fair value of $14.9 million in an aggregate unrecognized loss position of $373 thousand and two investment grade corporate bonds with total fair value of $6.9 million in an aggregate unrecognized loss position of $59 thousand. At December 31, 2020, held to maturity securities in an aggregate unrecognized loss position for less than twelve months included one collateralized loan obligation security with a fair value of $3.0 million, in an unrecognized loss position of $26 thousand.
Securities pledged at December 31, 2021 and December 31, 2020, had a carrying amount of $9.1 million and $12.7 million, respectively, and were pledged to secure public deposits, FHLB advances, and derivatives.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 3 - LOANS RECEIVABLE, NET
A summary of loans receivable, net is as follows:
December 31, 2021 December 31, 2020
(In thousands)
Residential one-to-four family $ 560,976 $ 611,603
Multifamily 515,240 427,436
Non-residential 141,561 128,141
Construction and land 23,419 33,691
Junior liens 18,464 23,814
Commercial and industrial (including PPP) 21,563 54,053
Consumer and other 87 99
Total loans 1,281,310 1,278,837
Deferred fees, costs and premiums and discounts, net 6,299 5,236
Allowance for loan losses (14,425) (16,959)
(8,126) (11,723)
Loans receivable, net $ 1,273,184 $ 1,267,114
The commercial and industrial portfolio is comprised of $16.8 million of PPP loans as well as $4.8 million of general commercial and industrial loans, including Small Business Administration (“SBA”), as of December 31, 2021. At December 31, 2020, the commercial and industrial portfolio was comprised of PPP loans totaling $53.9 million and $131 thousand of general commercial and industrial loans .
The portfolio classes in the above table have unique risk characteristics with respect to credit quality:
•Payment on multifamily and non-residential 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 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 and land loans often do not generate sufficient cash flows to service debt and thus repayment is subject to 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.
•Commercial and Industrial Loans consist of PPP loans, and other loans that are originated or purchased. This program originated from the Coronavirus Aid Relief and Economic Security (“CARES”) Act. The SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.
•The ability of borrowers to service debt in the residential one-to-four family, 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.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following tables present the activity in the Company’s allowance for loan losses by class of loans for the years ended December 31, 2021, and 2020:
Residential
One-To-Four
Family Multifamily Non-Residential Construction
and Land Junior Liens Commercial and Industrial (including PPP) Consumer
and Other Unallocated Total
(In thousands)
Year Ended December 31, 2021
Allowance for loan losses
Beginning balance $ 3,579 $ 5,460 $ 3,244 $ 3,655 $ 916 $ 2 $ 48 $ 55 $ 16,959
Charge-offs - - - - - - (16) - (16)
Recoveries - - - - - - - - -
(Recovery of) provision for loan losses (757) (197) (398) (977) (280) 49 6 36 (2,518)
Total ending allowance balance $ 2,822 $ 5,263 $ 2,846 $ 2,678 $ 636 $ 51 $ 38 $ 91 $ 14,425
Year Ended December 31, 2020
Allowance for loan losses
Beginning balance $ 3,446 $ 4,256 $ 2,548 $ 3,028 $ 1,002 $ - $ 56 $ 164 $ 14,500
Charge-offs (49) - - - - - (10) - (59)
Recoveries - - - - - - - - -
(Recovery of) provision for loan losses 182 1,204 696 627 (86) 2 2 (109) 2,518
Total ending allowance balance $ 3,579 $ 5,460 $ 3,244 $ 3,655 $ 916 $ 2 $ 48 $ 55 $ 16,959
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
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 December 31, 2021 and December 31, 2020:
Residential
One-To-Four
Family Multifamily Non-Residential Construction
and Land Junior Liens Commercial and Industrial (including PPP) Consumer
and Other Unallocated Total
(In thousands)
December 31, 2021
Allowance for loan losses:
Individually evaluated
for impairment $ 31 $ - $ - $ - $ - $ - $ 37 $ - $ 68
Collectively evaluated
for impairment 2,791 5,263 2,846 2,678 636 51 1 91 14,357
Total $ 2,822 $ 5,263 $ 2,846 $ 2,678 $ 636 $ 51 $ 38 $ 91 $ 14,425
Loans receivable:
Individually evaluated
for impairment $ 10,169 $ 684 $ 4,577 $ - $ 55 $ - $ 37 $ - $ 15,522
Collectively evaluated
for impairment 556,314 515,884 136,957 23,420 18,495 20,966 51 1,272,087
Total $ 566,483 $ 516,568 $ 141,534 $ 23,420 $ 18,550 $ 20,966 $ 88 $ - $ 1,287,609
December 31, 2020
Allowance for loan losses:
Individually evaluated
for impairment $ 49 $ 26 $ - $ - $ - $ - $ 46 $ - $ 121
Collectively evaluated
for impairment 3,530 5,434 3,244 3,655 916 2 2 55 16,838
Total $ 3,579 $ 5,460 $ 3,244 $ 3,655 $ 916 $ 2 $ 48 $ 55 $ 16,959
Loans receivable:
Individually evaluated
for impairment $ 11,829 $ 1,721 $ 5,084 $ - $ 58 $ - $ 46 $ - $ 18,738
Collectively evaluated
for impairment 604,419 427,374 123,133 33,630 23,860 52,867 52 - 1,265,335
Total $ 616,248 $ 429,095 $ 128,217 $ 33,630 $ 23,918 $ 52,867 $ 98 $ - $ 1,284,073
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following table presents information related to impaired loans by class of loans as of December 31, 2021 and December 31, 2020.
Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest
Income
Recognized Cash Basis Interest Recognized
(In thousands)
December 31, 2021
With no related allowance
recorded:
Residential one-to-four
family $ 8,744 $ 9,108 $ - $ 9,534 $ 75 $ 75
Multifamily 684 684 - 1,170 26 24
Non-residential 4,725 4,577 - 4,869 210 196
Construction and land - - - - - -
Junior liens 55 55 - 57 3 3
Commercial and
Industrial (including PPP) - - - - - -
14,208 14,424 - 15,630 314 298
With an allowance recorded:
Residential one-to-four
family 1,062 1,061 31 1,243 50 46
Multifamily - - - - - -
Non-residential - - - - - -
Construction and land - - - - - -
Commercial and
Industrial (including PPP) - - - - - -
Consumer and other 37 37 37 41 2 2
1,099 1,098 68 1,284 52 48
Total $ 15,307 $ 15,522 $ 68 $ 16,914 $ 366 $ 346
December 31, 2020
With no related allowance
recorded:
Residential one-to-four
family $ 6,399 $ 6,508 $ - $ 473 $ 97 $ 96
Multifamily 1,216 1,226 - 405 45 41
Non-residential 6,006 5,812 - 2,410 207 201
Construction and land - - - - - -
Junior liens 60 59 - 27 1 1
Commercial and
Industrial (including PPP) - - - - - -
13,681 13,605 - 3,315 350 339
With an allowance recorded:
Residential one-to-four
family 1,519 1,521 108 679 53 47
Multifamily 353 352 28 157 11 10
Non-residential - - - - - -
Construction and land - - - - - -
Commercial and
Industrial (including PPP) - - - - - -
Consumer and other 49 48 48 23 1 1
1,921 1,921 184 859 65 58
Total $ 15,602 $ 15,526 $ 184 $ 4,174 $ 415 $ 397
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The recorded investment in loans includes deferred fees, costs and discounts. For purposes of this disclosure, the unpaid principal balance is not reduced for partial charge-offs.
The total recorded investment of loans whose terms have been modified in troubled debt restructurings was $5.4 million and $6.3 million as of December 31, 2021 and December 31, 2020, respectively. The Company has allocated $68 thousand and $95 thousand, respectively, of specific reserves to troubled debt restructured loans as of December 31, 2021 and December 31, 2020. The modification of the terms of troubled debt restructured includes one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date. The Company is not committed to lend any additional amounts to customers with outstanding loans that are classified as troubled debt restructurings as of December 31, 2021.
A troubled debt restructuring (“TDR”) loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no troubled debt restructurings for which there was a payment default within twelve months following the modification during the periods ended December 31, 2021 and December 31, 2020.
The Company did not record any troubled debt restructurings during the years December 31, 2021 and 2020.
The following table presents the recorded investment in non-accrual loans and loans past due 90 days or more still on accrual as of December 31, 2021 and December 31, 2020:
Nonaccrual Loans Past Due
90 Days and Still Accruing
12/31/2021 12/31/2020 12/31/2021 12/31/2020
(In thousands)
Residential one-to-four family $ 10,805 $ 11,813 $ - $ -
Multifamily 139 156 - -
Non-residential 857 805 - -
Construction and land - - - -
Junior liens 182 82 - -
Commercial and industrial (including PPP) - - 116 (1)
-
Total $ 11,983 $ 12,856 $ 116 $ -
(1) PPP loans 90 days past due and accruing totaled $116 thousand. These PPP loans were not reported in non-performing loans as they carry the federal guarantee of the SBA.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following table presents the recorded investment in past due and current loans by loan portfolio class as of December 31, 2021 and December 31, 2020:
60-89
Days
Past Due 90 Days
and Greater
Past Due Total
Past Due Current Total
Loans
Receivable
(In thousands)
December 31, 2021
Residential one-to-four family $ 457 $ 8,936 $ 9,393 $ 557,090 $ 566,483
Multifamily - - - 516,568 516,568
Non-residential - 381 381 141,153 141,534
Construction and land - - - 23,420 23,420
Junior liens 53 182 235 18,315 18,550
Commercial and Industrial (including PPP) 57 116 173 20,793 20,966
Consumer and other - - - 88 88
Total $ 567 $ 9,615 $ 10,182 $ 1,277,427 $ 1,287,609
December 31, 2020
Residential one-to-four family $ 3,151 $ 10,075 $ 13,226 $ 603,022 $ 616,248
Multifamily - 156 156 428,939 429,095
Non-residential - 805 805 127,412 128,217
Construction and land 3,000 - 3,000 30,630 33,630
Junior liens - - - 23,918 23,918
Commercial and Industrial (including PPP) - - - 52,867 52,867
Consumer and other - - - 98 98
Total $ 6,151 $ 11,036 $ 17,187 $ 1,266,886 $ 1,284,073
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
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 as to credit risk. This analysis is performed whenever a 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 loans classified other than Pass:
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 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 this basically worthless asset even though partial recovery may be effected in the future.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following table presents the risk category of loans by class of loans based on the most recent analysis performed as of December 31, 2021 and December 31, 2020:
Pass Special
Mention Substandard Doubtful /
Loss Total
(In thousands)
December 31, 2021
Residential one-to-four family $ 555,184 $ - $ 11,299 $ - $ 566,483
Multifamily 510,815 5,069 684 - 516,568
Non-residential 140,377 144 1,013 - 141,534
Construction and land 23,420 - - - 23,420
Junior liens 18,368 - 182 - 18,550
Commercial and Industrial (including PPP) 20,966 - - 20,966
Consumer and other 88 - - - 88
Total $ 1,269,218 $ 5,213 $ 13,178 $ - $ 1,287,609
December 31, 2020
Residential one-to-four family $ 604,167 $ - $ 12,081 $ - $ 616,248
Multifamily 411,369 16,648 1,078 - 429,095
Non-residential 127,089 154 974 - 128,217
Construction and land 33,630 - - - 33,630
Junior liens 23,836 - 82 - 23,918
Commercial and Industrial (including PPP) 52,867 - - - 52,867
Consumer and other 98 - - - 98
Total $ 1,253,056 $ 16,802 $ 14,215 $ - $ 1,284,073
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 4 - REAL ESTATE OWNED (REO), NET
REO activity is as follows for the years ended December 31, 2021 and 2020:
2021 2020
Beginning balance $ 624 $ 2,014
Additions - -
Sales of REO (618) -
Write down of REO (6) (1,390)
Ending balance $ - $ 624
Income (loss) related to REO for the years ended December 31, 2021 and 2020, are as follows:
2021 2020
Net gain on sales $ - $ -
Write down of REO (6) (1,390)
Rental income, net of operating expenses 97 175
REO income (loss) $ 91 $ (1,215)
NOTE 5 - PREMISES AND EQUIPMENT
Premises and equipment, net, at December 31, 2021 and 2020, are summarized as follows:
2021 2020
Land $ 3,793 $ 4,320
Buildings and improvements 14,583 11,302
Leasehold improvements 10,174 3,204
Furnishings and equipment 9,325 8,640
Construction-in-Progress 1,618 5,103
39,493 32,569
Accumulated depreciation and amortization (11,367) (13,000)
$ 28,126 $ 19,569
Construction-in-progress consists of deposits made related to the construction of branch improvements and the purchase of furnishings and equipment.
Depreciation and amortization of premises and equipment was $2.3 million and $1.9 million for the years ended December 31, 2021 and 2020, respectively.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 6 - LEASES
The Company leases certain office space and equipment under operating leases. These leases have original terms ranging from one year to 40 years. Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.
As of December 31, 2021, the Company had the following related to operating leases:
As of
December 31, 2021
(In thousands)
Right-of-use assets $ 25,457
Lease liabilities 26,696
The following table is a summary of the Company’s components of net lease cost for the year ended December 31, 2021 and 2020:
Year Ended December 31,
2021 2020
(In thousands)
Operating lease cost $ 3,034 $ 1,486
Finance lease cost 19 15
Variable lease cost 219 79
Total lease cost $ 3,272 $ 1,580
As of December 31, 2021, the weighted average remaining lease term for operating leases was 12.2 years and the weighted average discount rate used in the measurement of lease liabilities was 1.97%. As of December 31, 2020, the weighted average remaining lease term for operating leases was 12.9 years and the weighted average discount rate used in the measurement of lease liabilities was 1.95%. Cash payments for lease liabilities totaled $2.72 million and $1.57 million for the years ended December 31, 2021 and 2020.
Future undiscounted lease payments for operating leases with initial terms of one year or more as of December 31, 2021 are as follows:
(In thousands)
2022 $ 2,995
2023 2,786
2024 2,699
2025 2,309
2026 2,300
Thereafter 17,265
Total undiscounted lease payments 30,354
Less: imputed interest (3,658)
Total $ 26,696
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 7 - DEPOSITS
Deposits at December 31, 2021 and December 31, 2020, are summarized as follows:
December 31, 2021 December 31, 2020
(In thousands)
Non -interest bearing deposits $ 44,894 $ 44,195
NOW and demand accounts 363,419 317,974
Savings 364,932 276,584
Time deposits 473,795 717,431
Total $ 1,247,040 $ 1,356,184
Included within the NOW and demand account caption, as well as the savings caption above are money market accounts with varying transactional limits.
Time deposits mature as follows for the year ending December 31:
(In thousands)
2022 $ 304,656
2023 121,643
2024 34,911
2025 6,499
2026 6,086
$ 473,795
Time deposits that meet or exceed the FDIC insurance limit of $250,000 at December 31,2021 and 2020, were $47.3 million and $96.1 million, respectively. As of December 31, 2021 and 2020, the Company had $2.4 million and $3.6 million respectively, in related party (principal officers, directors, and their affiliates) deposits.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 8 - ADVANCES FROM THE FEDERAL HOME LOAN BANK OF NEW YORK (FHLB)
Advances from the FHLB are fixed-rate, term borrowings and amounted to $185.5 million and $329.4 million at December 31, 2021 and 2020, respectively. Each advance is payable at its maturity date with a prepayment penalty if repayment is made prior to the maturity date. The Bank extinguished $111.4 million in FHLB borrowings during the year ended December 31, 2021, incurring a prepayment penalty of $2.2 million. During the year ended December 31, 2020, the Bank extinguished $14.0 million in FHLB borrowings incurring a prepayment penalty of $843 thousand. Advances are secured by investment securities and loans pledged at the FHLB totaling $319.9 million and $423.5 million as of December 31, 2021 and 2020, respectively.
Advances mature as follows for the year ended December 31, 2021.
Maturity Rate Range Weighted Average Rate Amount
2022 0.35% - 0.38% 0.36% $ 109,000
2023 0.70% - 1.94% 1.71% 18,000
2024 1.60% - 1.94% 1.80% 38,000
2025 1.50% - 1.60% 1.58% 20,500
0.92% $ 185,500
Advances from the FHLB amounted to $329.4 million at December 31, 2020, with a weighted average fixed rate of 1.49%.
See Note 12 for further disclosure around Derivatives activities related to FHLB advances.
NOTE 9 - RETIREMENT PLANS
The Company had been a participant in the Pentegra Defined Benefit Plan for Financial Institutions (the “Pentegra DB Plan”), a tax-qualified defined benefit pension plan. Effective January 1, 2020, this plan was frozen to all existing plan participants, eliminating all future benefit accruals. The Company elected to withdraw from the Pentegra DB Plan in August 2021, and recognized an $11.2 million expense associated with the exit from the plan. The withdrawal was completed on December 1, 2021.
The Company has a savings plan under Section 401(k) of the Internal Revenue Code, which covers substantially all employees upon employment who have attained the age of 18. Under the plan, employee contributions are partially matched by the Company at its sole discretion. Company contributions for the years ended December 31, 2021 and 2020 were $701 thousand and $670 thousand, respectively.
The Company provides certain health insurance benefits for retired employees and directors meeting plan eligibility requirements. Effective January 1, 2019 the employee postretirement health benefit plan was curtailed, leaving only 13 retired participants and beneficiaries remaining in the plan. Active participants who met certain requirements received payments in lieu of future benefits. The plans are unfunded as of December 31, 2021 and 2020, and the obligation is included in other liabilities as an accrued postretirement benefit cost.
The Company maintains an Executive Supplemental Income Retirement Plan (“SERP”) for certain employees and a Director Retirement Plan (“DRP”). As the SERP and DRP plans are unfunded, there are no plan assets associated with these plans.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following table sets forth the change in benefit obligation, change in plan assets and a reconciliation of the unfunded status and the assumptions used in determining the net periodic cost included in the accompanying consolidated financial statements for the Company’s post retirement plans. The measurement date for the post retirement plans were December 31 for each year presented.
SERP and DRP Post Retirement
2021 2020 2021 2020
(In thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year $ 4,102 $ 3,760 $ 1,881 $ 1,946
Service cost 201 146 1 1
Interest cost 79 98 38 54
Actuarial (gain) loss (100) 448 (215) (9)
Benefits paid (341) (350) (92) (111)
Projected benefit obligation at end of year 3,941 4,102 1,613 1,881
Reconciliation of plan assets:
Fair value of plan assets at beginning of year - - - -
Actual return on plan assets - - - -
Employer contributions 341 350 92 111
Benefits and Settlements paid (341) (350) (92) (111)
Fair value of plan assets at end of year - - - -
Unfunded status $ 3,941 $ 4,102 $ 1,613 $ 1,881
Amounts recognized in accumulated other comprehensive income at December 31, ignoring tax effects, consist of:
SERP and DRP Post Retirement
2021 2020 2021 2020
(In thousands)
Unrecognized net actuarial loss (gain) $ 1,073 $ 1,317 $ (189) $ 23
Unrecognized prior service cost 333 402 - -
Total accumulated other comprehensive loss (gain) $ 1,406 $ 1,719 $ (189) $ 23
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The weighted average assumptions used in the determination of benefit obligations as of December 31 were as follows:
SERP and DRP Post Retirement
2021 2020 2021 2020
Discount rate 2.31 % 1.85 % 2.53 % 2.10 %
Rate of compensation increase* 6.25 % 6.25 % N/A N/A
* Rate of compensation increase applicable to DRP only.
The weighted-average assumptions used in the determination of net periodic benefit cost were as follows:
SERP and DRP Post Retirement
2021 2020 2021 2020
Discount rate 1.82 % 2.21 % 2.18 % 2.53 %
Expected rate of return on plan assets N/A N/A N/A N/A
Rate of compensation increase* 6.25 % 6.25 % N/A N/A
* Rate of compensation increase applicable to DRP only.
The components of net periodic benefit cost and other amounts recognized in other comprehensive income were as follows for the years ended December 31, 2021 and 2020:
SERP and DRP Post Retirement
2021 2020 2021 2020
(In thousands)
Service cost $ 201 $ 146 $ 1 $ 1
Interest cost 79 98 38 54
Amortization:
Past service liability - - - -
Net loss (gain) 213 190 (3) (1)
Net periodic benefit cost $ 493 $ 434 $ 36 $ 54
The components of net periodic benefit cost other than the service cost component are included in “other non-interest expense” in the Statement of Operations. The estimated net loss and prior service cost for the post-retirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2022 are $124 thousand and $69 thousand, respectively.
The benefits expected to be paid in each of the next five years and the aggregate for the five years thereafter are as follows:
SERP and DRP Post- Retirement
(In thousands)
2022 $ 331 $ 98
2023 311 88
2024 286 89
2025 289 90
2026 268 90
Years 2027 - 2031 1,161 445
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains an ESOP, a tax-qualified plan for the benefit of all Company employees 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 in a suspense account for allocation among 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 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 shares at the end of employment. Dividends on allocated shares increase participants accounts.
At December 31, 2021, the remaining principal balance on the ESOP loan is $21.8 million. Contributions to the ESOP during the year ended December 31, 2021 totaled $981 thousand. ESOP compensation expense, representing the fair value of shares allocated during the year, was $1.3 million for the year ended December 31, 2021, and is recognized over the service period. There was no ESOP compensation expense for the year ended December 31, 2020.
Shares held by the ESOP were as follows:
December 31, 2021
(Dollars in thousands)
Shares allocated to participants 91,272
Unallocated shares 2,190,528
Total ESOP shares 2,281,800
Fair value of unallocated shares at December 31, 2021
$ 32,047
The fair value of the unallocated shares at December 31, 2021 was computed using the closing trading price of the Company’s common stock on December 31, 2021.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 11 - INCOME TAXES
Income tax expense (benefit) for the years ended December 31, 2021 and 2020, consists of the following:
Current Deferred Total
(In thousands)
December 31, 2021
Federal $ 140 $ 5,810 $ 5,950
State - 3,668 3,668
$ 140 $ 9,478 $ 9,618
December 31, 2020
Federal $ (1,582) $ (3,570) $ (5,152)
State 161 (2,875) (2,714)
$ (1,421) $ (6,445) $ (7,866)
A reconciliation between the actual income tax expense and the expected federal income tax expense (computed by multiplying income before income tax expense times the applicable statutory federal income tax rate) for the years ended December 31, 2021 and 2020, is as follows:
2021 2020
(In thousands)
Income (loss) before income tax (benefit) expense $ (26,724) $ (39,372)
Applicable statutory federal income tax rate 21.00 % 21.00 %
Computed “expected” federal income tax (benefit) expense $ (5,612) $ (8,268)
Increase (decrease) in federal income tax expense resulting from:
State income taxes, net of federal benefit (1,614) (2,143)
Valuation Allowance 16,719 -
Tax-exempt income (108) (132)
Impairment of Goodwill - 3,247
CARES Act - Carryback expense (benefit) 247 (568)
Other (14) (2)
Total $ 9,618 $ (7,866)
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020, are as follows:
2021 2020
Deferred tax assets: (In Thousands)
Allowance for loan losses and REO $ 4,617 $ 5,136
Allowance for losses premises and equipment - 3,915
Net unrealized losses on derivatives 69 1,559
Accrued postretirement benefits 1,217 1,077
Accrued interest receivable 179 108
Accrued bonus 506 112
Finance Lease Liability 7,504 7,178
Charitable contribution carryover 2,709 -
Funded status of benefit plans 342 490
Federal net operating loss carryforward 6,648 -
State net operating loss carryforward 2,392 553
Other 37 49
Total gross deferred tax assets 26,220 20,177
Valuation allowance (16,868) (72)
Gross deferred tax assets after valuation allowance 9,352 20,105
Deferred tax liabilities:
Net unrealized gains on securities available for sale 327 1,509
Deferred loan fees, net 1,198 1,472
Premises and equipment 489 -
Finance Lease ROU Asset 7,156 6,993
Other 182 114
Total gross deferred tax liabilities 9,352 10,088
Net deferred tax asset $ - $ 10,017
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2021. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
On the basis of this evaluation, for the year ended December 31, 2021, a valuation allowance of $16.8 million has been recorded. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. Net deferred tax assets are included in other assets.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
At December 31, 2021, the Company had federal net operating loss (“NOL”) carryforwards of $31.7 million with no expiration date. Under the provisions of the 2017 Tax Cuts and Jobs Act, use of our federal NOL carryforwards will be limited to 80% of taxable income in future periods. The Company also had New Jersey net operating loss carryforwards of $33.6 million, the majority of which expire in 20 years. We believe it is more likely than not the benefit from both the federal and state NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $9.0 million on the deferred tax assets related to the NOL carryforwards. The Company contributed $9.0 million to the Blue Foundry Charitable Foundation, and the deferred benefit has a 5 year carryforward limitation.
Retained earnings at December 31, 2021 and 2020, includes approximately $14.6 million, for which no provision for income tax has been made. This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include the failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to stockholders.
The Company and its subsidiary are subject to U.S. federal income tax as well as state income taxes, primarily New Jersey. The Company is no longer subject to examination by Federal taxing authorities for tax years before January 1, 2018, and State taxing authorities for tax years before January 1, 2017. Currently, the Company is not under examination by any taxing authority. The Company's New Jersey state tax returns for the tax years ended December 31, 2015 through 2018 were audited during 2021. The completion of this examination did not have a material impact on the Company's effective tax rates and financials.
NOTE 12 - DERIVATIVES
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.
Interest rate swaps with notional amounts totaling $109.0 million at December 31, 2021 and December 31, 2020, were designated as cash flow hedges of certain FHLB advances and were determined to be fully effective during all periods presented. The Company expects the hedges to remain fully effective during the remaining terms of the swaps. At December 31, 2021, the gross unrealized gain on interest-rate swaps included in other assets totaled $1.3 million and the gross unrealized loss on interest-rate swaps included in other liabilities totaled $1.5 million. At December 31, 2020, the gross unrealized gain on interest-rate swaps included in other assets totaled $79 thousand and the gross unrealized loss on interest-rate swaps included in other liabilities totaled $5.6 million.
Summary information about the interest-rate swaps designated as cash flow hedges as of period-end is as follows:
December 31, 2021 December 31, 2020
(Dollars in thousands)
Notional amounts $ 109,000 $ 109,000
Weighted average pay rates 1.46 % 1.46 %
Weighted average receive rates 0.17 % 0.23 %
Weighted average maturity (in years) 5.3 6.2
Unrealized losses $ (246) $ (5,545)
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
Interest expense recorded on swap transactions totaled $1.4 million and $752 thousand during the year ended December 31, 2021 and 2020, respectively, and is reported as a component of interest expense on FHLB advances. At December 31, 2021, the Company expected $1.1 million of the unrealized loss to be reclassified as an increase to interest expense during 2022.
Cash Flow Hedge
The effect of cash flow hedge accounting on accumulated other comprehensive income for the years ended December 31, 2021 and 2020 are as follows:
Amount of Gain (Loss) Recognized in OCI on Derivative (1)
Location of Gain (Loss) Reclassified from OCI into Income/(Expense)
Amount of Gain (Loss) Reclassified from OCI to
Income/(Expense)
(In thousands)
Year Ended December 31, 2021
Interest rate contracts $ (246) Interest Expense $ (1,427)
Year Ended December 31, 2020
Interest rate contracts $ (3,986) Interest Expense $ (752)
(1) Net of tax for the year ended December 31, 2020. For the year ended December 31, 2021, there is no tax effect due to the deferred taxes valuation allowance. See Note 11 for information related to the deferred taxes valuation allowance.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 13 - 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 benefit plans, as of the consolidated balance sheet dates, net of the related tax effect.
The following is a summary of the changes in accumulated other comprehensive income by component, net of tax adjusted for deferred tax valuation allowances, for the periods indicated:
Gains and
Losses on
Cash Flow
Hedges Unrealized Gains
and Losses on
Available-for-sale
Securities Defined
Benefit
Pension
Items Total
(In thousands)
Balance at December 31, 2020
$ (3,986) $ 4,208 $ (1,253) $ (1,031)
Other comprehensive income (loss) before reclassification 2,733 (3,118) (115) (500)
Amounts reclassified from accumulated other comprehensive income 1,007 1 151 1,159
Net current period other comprehensive (loss) gain 3,740 (3,117) 36 659
Balance at December 31, 2021
$ (246) $ 1,091 $ (1,217) $ (372)
Gains and
Losses on
Cash Flow
Hedges Unrealized Gains
and Losses on
Available-for-sale
Securities Defined
Benefit
Pension
Items Total
(In thousands)
Balance at December 31, 2019
$ (360) $ 916 $ (1,073) $ (517)
Other comprehensive income (loss) before reclassification (4,167) 3,343 (315) (1,139)
Amounts reclassified from accumulated other comprehensive income 541 (51) 135 625
Net current period other comprehensive (loss) gain (3,626) 3,292 (180) (514)
Balance at December 31, 2020
$ (3,986) $ 4,208 $ (1,253) $ (1,031)
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following is significant amounts reclassified out of each component of accumulated other comprehensive income (loss):
Details about Accumulated Other Comprehensive Income Components Year Ended December 31, Affected Line Item in the Statement Where Net Income is Presented
2021 2020
(In thousands)
Unrealized (loss) gain on securities available for sale: Realized (losses) gains on securities available for sale $ (1) $ 69 (Loss) gain on sales and calls of securities
Gains and (losses) on cash flow hedges:
Interest rate contracts (1,427) (752) Interest (expense) income
Amortization of benefit plan items:
Net actuarial loss (210) (189) Compensation and employee benefits
Total tax effect 479 247 Income tax expense
Total reclassification for the period, net of tax $ (1,159) $ (625)
NOTE 14 - 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 equity securities and 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
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
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 impaired loans with specific allocations of the allowance for loan losses 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.
Assets Held for Sale: Nonrecurring adjustments to certain non-residential properties classified as assets held for sale are measured at fair value, less costs to sell. Fair values are based on contracts / letters of intent.
REO: Nonrecurring adjustments to certain non-residential, construction and land, and residential one-to-four family real estate properties classified as real estate owned (“REO”) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use 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. Adjustments that are based on contracts / letters of intent result in a Level 2 classification.
The following table summarizes the fair value of assets and liabilities as of December 31, 2021:
Fair Value Measurements at December 31, 2021, Using
Quoted Prices
in Active
Markets for
Identical Assets Significant Other
Observable
Inputs Significant
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 $ 36,832 $ 36,832 $ - $ -
Domestic Corporate Bonds 87,619 - 87,619 -
U.S. Government agency obligations 23,329 17,617 5,712 -
Obligations issued by U.S. states and their political subdivisions 20,324 - 20,324 -
Mortgage-backed securities:
Residential one-to-four family 114,401 - 114,401 -
Multifamily 35,916 - 35,916 -
Asset-backed securities 6,471 - 6,471 -
$ 324,892 $ 54,449 $ 270,443 $ -
Financial Liabilities
Derivatives $ 246 $ - $ 246 $ -
There were no assets or liabilities measured at fair value on a non-recurring basis at December 31, 2021. The assets held for sale and REO were sold in December 2021, resulting in a net loss of $104 thousand and $6 thousand for assets held for sale and REO, respectively.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
The following table summarizes the fair value of assets and liabilities as of December 31, 2020:
Fair Value Measurements at December 31, 2020, Using
Quoted Prices
in Active
Markets for
Identical Assets Significant Other Observable Inputs Significant 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 $ 10,000 $ 10,000 $ - $ -
Domestic Corporate Bonds 59,341 - 59,341 -
U.S. Government agency obligations 19,675 12,417 7,258 -
Obligations issued by U.S. states and their political subdivisions 24,795 - 24,795 -
Mortgage-backed securities:
Residential one-to-four family 72,716 - 72,716 -
Multifamily 58,060 - 58,060 -
Total $ 244,587 $ 22,417 $ 222,170 $ -
Financial Liabilities
Derivatives $ 5,545 $ - $ 5,545 $ -
Measured on a nonrecurring basis:
Nonfinancial assets
Assets held for sale $ 5,295 $ - $ 5,295 $ -
Real estate owned 624 - 624 -
In March 2020, certain premises and REO were re-designated to held for sale, which resulted in a write-down from book value to fair value. The impairment recorded on the premises was $12.8 million which resulted in a remaining book value on those assets of $5.3 million that were reclassified from premises to assets held for sale. The impairment recorded on the REO was $1.4 million, which resulted in a remaining book value on those assets of $624 thousand. During the quarter ended December 31, 2021, all assets held for sale and held in REO were sold.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
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 balance sheet at December 31, 2021 and 2020. 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, restricted stock, 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 December 31, 2021 and December 31, 2020 are as follows:
Fair Value Measurements at
December 31, 2021, Using
Quoted Prices
in Active
Markets for
Identical Assets Significant
Other
Observable
Inputs Significant
Unobservable
Inputs
Book Value (Level 1) (Level 2) (Level 3)
(In thousands)
Financial assets
Securities held-to-maturity $ 23,281 $ - $ 22,849 $ -
Loans, net 1,273,184 - - 1,266,799
Financial liabilities
Time Deposits 473,795 - 470,732 -
Federal Home Loan advances 185,500 - 182,795 -
Fair Value Measurements at
December 31, 2020, Using
Quoted Prices
in Active
Markets for
Identical Assets Significant
Other
Observable
Inputs Significant
Unobservable
Inputs
Book Value (Level 1) (Level 2) (Level 3)
(In thousands)
Financial assets
Securities held-to-maturity $ 7,005 $ - $ 6,978 $ -
Loans, net 1,267,114 - - 1,290,740
Financial liabilities
Time Deposits 717,431 - 725,110 -
Federal Home Loan advances 329,400 - 336,377 -
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 15 - COMMITMENTS AND CONTINGENCIES
The Company, in the normal course of conducting its business, extends credit to meet the financing needs of its customers through commitments and lines of credit.
The following commitments exist at December 31, 2021 and 2020, which are not reflected in the accompanying consolidated financial statements:
As of December 31,
2021 2020
(Dollars in Thousands)
Origination of mortgage loans:
Fixed rate $ 1,847 $ 5,517
Variable rate 14,456 23,144
Undisbursed home equity credit lines 33,265 33,786
Undisbursed construction credit lines 17,700 16,264
Undisbursed commercial credit lines 1,792 1,594
Performance standby letters of credit 671 671
Overdraft protection credit lines 19,038 10,548
Commitments to purchase investments 1,000 -
These instruments involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated financial statements. The Company uses the same credit policies and collateral requirements in making commitments and conditional obligations as it does for on-balance-sheet loans. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company has no exposure to credit loss if the customer does not exercise its rights to borrow under the commitment. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower.
The Company issues financial standby letters of credit that are within the scope of ASC 460, Guarantees. These are irrevocable undertakings of the Company to guarantee payment of a specified financial obligation. Most of the Company’s standby letters of credit arise in connection with lending relationships and generally have terms of one year or less, or are issued in lieu of security deposits. The maximum potential future payments the Company could be required to make equals the contract amount of the standby letters of credit.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 16 - 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 Statement of Operations.
The following table presents the Company’s sources of revenue from contracts with customers for the year ended ended December 31, 2021 and 2020, respectively.
Year Ended December 31,
2021 2020
(In thousands)
Non-interest income
Service charges on deposits $ 954 $ 722
Interchange income 33 21
REO (loss) gain 6 -
Total Revenue from Contracts with Customers $ 993 $ 743
Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in the 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. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.
Interchange Income: The Company earns interchange fees from debit/credit cardholder transactions conducted through a payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.
Gain/loss on sale of Real Estate Owned (“REO”): The Company records a gain or loss from the sale of REO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of REO to the buyer, the Company assesses whether the buyer is committed to perform its obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the REO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company may adjust the transaction price and related gain (loss) on sale if a significant financing component is present.
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 17 - EARNINGS PER SHARE
Basic earning 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 stock options) 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.
There were no securities or other contracts that had a dilutive effect during the year ended December 31, 2021, and therefore the weighted-average common shares outstanding used to calculate both basic and diluted EPS are the same. Shares held by the ESOP not 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. Earnings per share for the year ended December 31, 2021 was calculated using 12,171,050 weighted average shares outstanding which represents zero shares outstanding prior to the conversion on July 15, 2021. Earnings per share data is not applicable for the year ended December 31, 2020 as the Company had no shares outstanding.
Twelve Months Ended December 31, 2021
(Income In thousands)
Net loss applicable to common shares $ (36,342)
Average number of common shares outstanding 13,206,308
Less: Average unallocated ESOP shares 1,035,258
Average number of common shares outstanding used to calculate basic earnings per common share 12,171,050
Common stock equivalents -
Net loss per share available to common shareholders-Basic and Diluted $ (2.99)
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 18 - REGULATORY CAPITAL REQUIREMENTS
Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines, and additionally for the Bank, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off balance sheet items calculated under regulatory accounting practices. Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the Company. The Bank has not paid dividends to the Company in the past. Capital amounts and classifications are also subject to qualitative judgements by regulators. Failure to meet capital requirements can initiate regulatory action. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. As of December 31, 2021, the Bank meets all capital adequacy requirements to which they are subject.
Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2021 and 2020, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.
The following table presents the regulatory capital, assets and risk based capital (common equity Tier 1, Tier 1 and Total capital) ratios for the Bank at December 31, 2021 and 2020 (in thousands, other than ratios):
Bank Actual Minimum Capital Adequacy Minimum Capital Adequacy With Capital Buffer For Classification as Well Capitalized
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
December 31, 2021
Common equity tier 1 $ 293,349 25.74 % $ 51,292 4.50 % $ 79,787 7.00 % $ 74,088 6.50 %
Tier 1 capital 293,349 25.74 % 68,389 6.00 % 96,885 8.50 % 91,186 8.00 %
Total capital 307,624 26.99 % 91,186 8.00 % 119,681 10.50 % 113,982 10.00 %
Tier 1 (leverage) capital 293,349 15.00 % 78,201 4.00 % N/A N/A 97,752 5.00 %
December 31, 2020
Common equity tier 1 $ 206,258 19.93 % $ 46,578 4.50 % $ 72,455 7.00 % $ 67,279 6.50 %
Tier 1 capital 206,258 19.93 % 62,104 6.00 % 87,981 8.50 % 82,806 8.00 %
Total capital 219,262 21.18 % 82,806 8.00 % 108,682 10.50 % 103,507 10.00 %
Tier 1 (leverage) capital 206,258 10.72 % 76,934 4.00 % N/A N/A 96,168 5.00 %
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
NOTE 19 - CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY
The condensed financial statements of Blue Foundry Bancorp (parent company only) are presented below:
Condensed Statements of Financial Condition
At December 31,
2021 2020
(In thousands)
Assets:
Cash and cash equivalents $ 114,331 $ 329
Investment in banking subsidiary 293,414 205,227
ESOP loan receivable 21,837 -
Other assets 245 164
Total Assets $ 429,827 $ 205,720
Liabilities and Stockholders’ Equity:
Total liabilities $ 356 $ 120
Total stockholders’ equity 429,471 205,600
Total Liabilities and Stockholders’ Equity $ 429,827 $ 205,720
Condensed Statements of Operations
Year Ended December 31,
2021 2020
(In thousands)
Income:
Interest on ESOP loan receivable $ 343 $ -
Other income 23 16
Total income 366 16
Expenses:
Contribution to Blue Foundry Charitable Foundation 9,000 -
Goodwill Impairment - 13,100
Other expenses 719 66
Total expenses 9,719 13,166
Loss before income tax (benefit) expense (9,353) (13,150)
Income tax (benefit) expense (59) 98
Loss before undistributed earnings of subsidiary (9,294) (13,248)
Equity in undistributed earnings of banking subsidiary (27,048) (18,258)
Net loss $ (36,342) $ (31,506)
BLUE FOUNDRY BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021 and 2020
Condensed Statements of Cash Flows
Twelve Months Ended December 31,
2021 2020
(In thousands)
Cash flows from operating activities:
Net loss $ (36,342) $ (31,506)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in undistributed earnings of subsidiary 27,048 18,258
Issuance of common shares donated to Blue Foundry Charitable Foundation 7,500 -
Goodwill impairment - 13,100
ESOP expense 361 -
Increase in other assets (82) (5)
Increase in other liabilities 237 55
Net cash used by operating activities (1,278) (98)
Cash flows from investing activities:
Capital contribution to banking subsidiary (136,481) -
Loan to ESOP (22,818) -
Repayment of ESOP loan 981 -
Net cash used in investing activities (158,318) -
Cash flows from financing activities:
Proceeds from issuance of common shares 273,598 -
Net cash provided by financing activities 273,598 -
Net increase (decrease) in cash and cash equivalents 114,002 (98)
Cash and cash equivalents at beginning of year 329 427
Cash and cash equivalents at end of year $ 114,331 $ 329
NOTE 20 - 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.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure 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.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management, including our Principal Executive Officer and Principal Financial Officer, concluded that our internal control over financial reporting was effective and met the criteria of the “Internal Control - Integrated Framework (2013)” as of December 31, 2021.
(c) Attestation Report of the Registered Public Accounting Firm
Not applicable because the Company is an emerging growth company.
(d) Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Board of Directors currently consists of eight (8) members and is divided into three classes, with one class of directors elected each year. The following table states our directors’ names, their ages as of December 31, 2021, the years when they began serving as directors of Blue Foundry Bank and the years when their current terms expire.
Name (1) Position(s) Held With
Blue Foundry Bancorp and Blue
Foundry Bank Age Director Since Current Term Expires
James D. Nesci President, Chief Executive Officer and Director 49 2019 2022
Patrick H. Kinzler Director 63 2012 2022
Mirella Lang Director 43 2020 2022
J. Christopher Ely Vice Chairman 65 1997 2023
Robert T. Goldstein Director 59 2015 2023
Kenneth Grimbilas Chairman of the Board 68 1997 2024
Jonathan M. Shaw Director 56 2010 2024
Margaret Letsche Director 69 2015 2024
(1) The mailing address for each person listed is 19 Park Avenue, Rutherford, New Jersey 07070.
Business Experience and Qualifications of Directors
The business experience for the past five years of each of our directors is set forth below. The biographies also contain information regarding the person’s experience, qualifications, attributes or skills that caused the board of directors to determine that the person should serve as a director. Each director is also a director of Blue Foundry Bank. Unless otherwise indicated, each individual has held his or her position for the past five years.
Terms that expire at the 2022 Annual Meeting of Shareholders
James D. Nesci serves as President and Chief Executive Officer of Blue Foundry Bank, a position he has held since 2018. In addition, he is a board member of the New Jersey Bankers Association. Mr. Nesci has been instrumental in developing the Blue Foundry Bank brand. Prior to his role at Blue Foundry Bank, he served as Head of National Sales for TD Bank’s $20 billion U.S. wealth management business. Before joining TD Bank, Mr. Nesci served as Executive Vice President and Chief Wealth Management Officer of Provident Bank and was President of Beacon Trust, a wholly owned subsidiary of Provident Bank. Prior to this, Mr. Nesci was Chief Operating Officer with Wilmington Trust Company, National Wealth Management. Mr. Nesci earned two separate MBAs from Columbia Business School and the London Business School, respectively, as well as a BBA in Finance from Hofstra University in New York. He also has received his NACD Fellowship certificate. Mr. Nesci’s positions as President and Chief Executive Officer foster clear accountability, effective decision-making, a clear and direct channel of communication from senior management to the full Board of Directors, and alignment on corporate strategy.
Patrick H. Kinzler is currently a Managing Principal at HLW International LLP and has previously held positions at PNC Bank, SmithKline Beecham, and KPMG Consulting. Mr. Kinzler received a Bachelor’s degree in Business Administration and Accounting from Shippensburg State University and an MBA in Finance from Temple University. Mr. Kinzler has significant banking and corporate treasury experience, which greatly assists the Board of Directors with its assessment of our risk management efforts and operational needs.
Mirella Lang is Managing Director of AQR’s Business Development team, collaborating with institutional investors throughout the United States. Prior to AQR, Ms. Lang was a Director in the Financial Institutions Group in the investment banking division at UBS, and earlier at Merrill Lynch & Co. She earned a Bachelor of Science in Accounting from Washington & Lee University and received an MBA from the University of California at
Berkeley’s Haas School of Business. Ms. Lang serves on the Board of ASSIST, a non-profit organization focused on high school exchange education for exceptionally gifted international students. Ms. Lang’s experience with investment management, investment banking and the financial institutions industry brings valuable skills to our board.
Terms that expire at the 2023 Annual Meeting of Shareholders
J. Christopher Ely has been a Director of Blue Foundry Bank since 1997. Mr. Ely is President of One Madison Management Corp., a real estate management and consulting firm that serves the needs of residential, commercial and industrial property owners in Northern New Jersey. He received a Bachelor of Science degree in Business Administration/ Accounting from Montclair State College, began his career with Price Waterhouse and Co. and earned a Certified Public Accounting Certification in 1981. He serves as an Assistant Treasurer for the Glen Ridge Congregational Church. Mr. Ely provides the Board of Directors with extensive knowledge of real estate and small business management experience.
Robert T. Goldstein is an Investment Advisory Representative at Astorino Financial Group, Inc. Previously, he was the President and Owner of R.J. Goldstein & Associates, Inc., an employee benefits consulting and brokerage firm, which he sold to World Insurance, LLC in 2018. Mr. Goldstein received his Bachelor of Science in Mathematics from Fairfield University. He also has received his NACD Fellowship certificate. He is a former Trustee and a Committee Member of the Glen Ridge Country Club and was previously a Board Member of Lacordaire Academy in Upper Montclair. Mr. Goldstein offers a valuable perspective and experience on employee benefits matters and with developing a successful business.
Terms that expire at the 2024 Annual Meeting of Shareholders
Kenneth Grimbilas is the current Chairman of Blue Foundry Bank Board of Directors and has served as a Director since 1997. Mr. Grimbilas is the Chief Executive Officer of Tornqvist, Inc., a boutique fabrication and machine shop that has served many clients in the pharmaceuticals, government, transportation, aerospace, entertainment, and consumer goods industries. In addition, Mr. Grimbilas has been a member of the board of the Chilton Memorial Hospital Foundation, now Chilton Medical Center, part of Atlantic Health. Mr. Grimbilas’ experience provides the Board of Directors with extensive knowledge of business and operational matters and the Northeastern New Jersey market area.
Margaret Letsche is retired. Prior to her retirement, Ms. Letsche was the Executive Director of 55 Kip Center, a non-profit community center for older adults. Ms. Letsche earned an Associate Degree in Business Management from Morris County Community College and a Bachelor’s degree in Psychology from Felician College. She holds professional certifications from Rutgers in Continued Education and Professional Development and is certified by the American Institute of Fitness Educators and the American Senior Fitness Association. She also has received her NACD Fellowship certificate. Ms. Letsche is a current Board Member on the Rutherford Community Blood Bank and has previously served on the Borough of Rutherford Zoning Board and the Municipal Alliance Committee. She was a founding member of the Lindsey Meyer Pumpkin Run which held an annual 5k event raising money and awareness for Cystic Fibrosis and supporting local scholarships. Ms. Letsche’s experience in our community provides valuable insight into the economic and business needs of our community, as well as insight into where we can best serve our community in other ways, including charitable donations.
Jonathan M. Shaw is President and Owner of Salon Development Corp, a regional chain of hair salons founded in 1964, and President and Owner of Lemon Tree Development, the national franchisor of Lemon Tree Hair Salons. Mr. Shaw received a Bachelor of Science from Syracuse University. He also has received his NACD Fellowship certificate. As a business owner and entrepreneur, Mr. Shaw offers a valuable perspective on developing a successful business as well as the challenges and risks an organization may face as it grows its product offerings and markets into new areas.
Executive Officers Who Are Not Directors
The following sets forth information regarding our executive officers who are not directors, including each executive officer’s business experience for the past five years. All executive officers have held their present positions for at least five years unless otherwise stated. Age information is as of December 31, 2021. The executive officers of Blue Foundry Bancorp and Blue Foundry Bank are elected annually.
Elizabeth Miller, age 62, has been our Executive Vice President and Chief Retail Officer since October 2018. Prior to joining Blue Foundry Bank, Ms. Miller held positions at Affinity Federal Credit Union, the largest Credit Union in New Jersey, where she was the Senior Vice President of Member Experience and Service from October 2014 to October 2018 and led the multi-state branch network, the wealth and business development teams, the central operations group and the 65 person call center. Prior to that, Ms. Miller worked at Peapack Gladstone Bank from August 2011 to October 2014, where she was the Vice President of Retail Branch Sales and Operations. Ms. Miller has a Bachelor’s degree in Business and Marketing from Montclair State University.
Brent Michael Ciurlino, age 63, has been our Executive Vice President and Chief Risk Officer since May 2020. Previously, Mr. Ciurlino held the positions of Senior Vice President-Risk & Operations at Newtek Business Services Corp. from September 2018 to May 2020 and Chief Operating & Risk Officer at Freedom Mortgage Corp. from November 2016 to September 2018. Prior to that, Mr. Ciurlino held senior positions at the U.S. Small Business Administration, the Federal Deposit Insurance Corp., Resolution Trust Company and RSM McGladrey International. Mr. Ciurlino received his Bachelor of Science from the University of Maine and a Master of Science from Washington State University.
Elyse D. Beidner, age 68, has been our Executive Vice President and Chief Legal Officer since 2004. Prior to joining Blue Foundry Bank, Ms. Beidner has gained more than 25 years of experience providing legal support for various financial institutions including JP Morgan Chase and Bank of America. She earned her Bachelor’s degree in French and Spanish from Goucher College, her Juris Doctor degree from Widener University School of Law, and her Masters in Corporate Law from New York University School of Law.
Jason Goldberg, age 47, has been our Executive Vice President and Chief Lending Officer since September 15, 2021. Prior to joining Blue Foundry Bank, Mr. Goldberg held a senior vice president position at Israel Discount Bank of New York where he worked from October 2015 to September 2021. Prior to that, Mr. Goldberg held a senior vice president position at Crestmark Bank where he worked from October 2010 to September 2015, and was vice president at Westgate Financial Corporation from 2001 to 2010.
Michele Dowling Johnson, age 55, has been our Executive Vice President and Chief Marketing Officer since May 2020. Prior to joining Blue Foundry Bank, Ms. Johnson held senior marketing leadership positions at bluemercury as Senior Vice President, Marketing & Digital from 2018 to 2020 and Dean & DeLuca as Senior Vice President, Sales & Marketing from 2016 to 2018. Prior to that, Ms. Johnson held executive positions at Geneva Watch Group, NY&Company, Balducci’s & Kings Food Markets, L’Oreal USA and Revlon Consumer Products Corporation. Ms. Johnson received a Bachelor of Science degree in Business Management from Cornell University and an MBA from Fordham University in Marketing and International Business.
Thomas Packwood, age 56, has been our Senior Vice President and Chief Audit Executive since 2011. Prior to joining Blue Foundry Bank, Mr. Packwood held senior positions at Deloitte, U.S.B. Holding Co., USA Bank, and RSM US LLP. Mr. Packwood received a Bachelor’s degree in Accounting from Villanova University and is a Certified Public Accountant. Additionally, he invented and implemented a patented quarterly Risk Assessment and Management System.
Acela Roselle, age 61, has been our Executive Vice President and Human Resources Director since 1999. Prior to joining Blue Foundry Bank, Ms. Roselle acted as the Employment Manager at Meadowlands Hospital Medical Center. Ms. Roselle attended The Wood Business School in New York and obtained a SHRM PHR Certification through Fairleigh Dickinson University in 2000.
Alex Agnoletto, age 29, has been our Vice President and Controller since March 2021 and was appointed as our Interim Chief Financial Officer on September 2, 2021. Prior to starting at Blue Foundry Bank, Mr. Agnoletto served as the Director of Accounting at Cenlar FSB from July 2020 to March 2021 and previously served as an Audit Manager at KPMG within the banking audit group from October 2014 to June 2020. Mr. Agnoletto received a Bachelor’s and Master’s degree in Accounting from Liberty University. He is a Certified Public Accountant in New Jersey.
Delinquent Section 16(a) Reports
Based solely on its review of copies of the reports the Company has received and written representations provided to it from the individuals required to file Section 16(a) reports, the Company believes that each individual who, at any time during the fiscal year ended December 31, 2021, served as an executive officer or director of the Company has complied with applicable reporting requirements for transactions in Company common stock during the fiscal year ended December 31, 2021, except for Mirella Lang and Jason Goldberg who due to administrative oversights failed to timely file a Form 4 and Form 3, respectively.
Code of Ethics
The Board has adopted a code of ethics for the principal executive officer, principal financial officer, principal accounting officer and all persons performing similar functions. The code of ethics is designed to deter wrongdoing and to promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations. The code of ethics is available on the Company’s website at www.bluefoundrybank.com, under Investors Relations-Governance.
Audit Committee
The Audit Committee consists of Directors Ely, who serves as Chair, Grimbilas, Kinzler and Lang. Each member of the Audit Committee is “independent” as defined in our Nominating/Corporate Governance Committee Charter. The Board of Directors has determined that Mr. Ely qualifies as an “audit committee financial expert” as that term is used in the rules and regulations of the Securities and Exchange Commission.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth, for the years ended December 31, 2021 and 2020, certain information as to the total compensation paid to James D. Nesci, who serves as our President and Chief Executive Officer, Elizabeth Miller, who serves as our Executive Vice President and Chief Retail Officer, Brent Michael Ciurlino, who serves as our Executive Vice President and Chief Risk Officer. Each of the individuals listed in the table below is referred to as a “Named Executive Officer.”
Summary Compensation Table
Salary Bonus Non-Equity Incentive Compensation All Other Compensation Total
Name and principal position Year ($) ($) ($) ($) (1)
($)
James D. Nesci 2021 700,000 - 425,250 153,277 1,278,527
President and Chief Executive 2020 697,308 - 52,500 102,497 852,305
Elizabeth Miller 2021 325,519 - 76,904 16,681 419,104
Executive Vice President and Chief Retail Officer 2020 324,462 - 18,281 16,397 359,140
Brent Michael Ciurlino
2021 310,519 - 66,840 16,562 393,921
Executive Vice President and Chief Risk Officer
(1) The compensation represented by the amounts for 2021 and 2020 set forth in the “All Other Compensation” column for the Named Executive Officers is detailed in the following table.
Other Compensation Table
401(k) Plan Matching Contributions Deferred Compensation Plan Contributions Automobile Usage Country Club Membership Life Insurance Premiums Total All Other Compensation
Name Year ($) ($) ($) ($) ($) ($)
James D. Nesci 2021 14,500 106,800 13,230 17,577 1,170 153,277
2020 14,250 55,800 12,600 18,712 1,135 102,497
Elizabeth Miller 2021 14,500 - - - 2,181 16,681
2020 14,250 - - - 2,147 16,397
Brent Michael Ciurlino 2021 14,500 - - - 2,062 16,562
Benefit Plans and Agreements
Employment Agreement. Blue Foundry Bank entered into an employment agreement with Mr. Nesci, effective January 1, 2021. The employment agreement has an initial term of three years, which extends automatically for one additional year on each anniversary of the effective date of the agreement, so that the remaining term is again three years, unless either Blue Foundry Bank or Mr. Nesci give notice to the other party of non-renewal. Notwithstanding the foregoing, in the event Blue Foundry Bancorp or Blue Foundry Bank enters into a transaction that would constitute a change in control, as defined under the employment agreement, the term of the agreement will automatically extend so that it would expire no less than three years following the effective date of the change in control.
The employment agreement specified Mr. Nesci’s initial base salary of $700,000. The Board of Directors or the Compensation Committee of Blue Foundry Bank will review Mr. Nesci’s salary no less than annually and may increase, but not decrease, Mr. Nesci’s base salary. In addition to the base salary, the agreement provides that Mr. Nesci will participate in an annual bonus plan with a target amount determined annually that is not less than 20% of his base salary. Mr. Nesci is also eligible to participate in any long-term incentive plan adopted by Blue Foundry. Mr. Nesci is also entitled to participate in all employee benefit plans arrangements and perquisites offered to employees and officers of Blue Foundry Bank and the reimbursement of reasonable business expenses incurred in the performance of his duties with Blue Foundry Bank. Blue Foundry Bank will also provide Mr. Nesci with an annual automobile allowance of $1,100 per month and an annual country club membership allowance of $22,050. Both the automobile and country club membership allowances will increase by 5% each year.
Blue Foundry Bank may terminate Mr. Nesci’s employment, or Mr. Nesci may resign from his employment, at any time with or without good reason. In the event Blue Foundry Bank terminates Mr. Nesci’s employment without cause or Mr. Nesci voluntary resigns for “good reason” (i.e., a “qualifying termination event”), Blue Foundry Bank will pay Mr. Nesci a severance payment equal to the greater of (i) the sum of one times Mr. Nesci’s base salary plus the target amount of the annual incentive bonus (as set by the Board of Directors or the Compensation Committee for the calendar year in which Mr. Nesci’s termination occurs) or (ii) the sum of Mr. Nesci’s base salary that would have been paid during the remaining term of the employment agreement, plus the target amount of the annual incentive bonus that would have been paid during the remaining term of the employment agreement. The severance payment will be paid as salary continuation in substantially equal installments over the twelve-month period following the date of Mr. Nesci’s termination of employment. In addition, if Mr. Nesci elects continued bank-provided group health plan coverage pursuant to the Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”), Blue Foundry Bank will reimburse him for the monthly COBRA premium less the active employee premium for the coverage. Mr. Nesci must sign a general release of claims to receive the severance payment. A “good reason” condition for purposes of the employment agreement includes a material reduction in base salary or target bonus opportunity, a material reduction in authority, duties or responsibilities associated with
the executive’s position with Blue Foundry Bank, a relocation of the executive’s principal place of employment resulting in the executive performing his services outside of certain counties listed in the employment agreement.
If a qualifying termination event occurs following a change in control of Blue Foundry Bancorp or Blue Foundry Bank, Mr. Nesci would be entitled to (in lieu of the payments and benefits described in the previous paragraph) a severance payment equal to three times the sum of (i) Mr. Nesci’s base salary, plus (ii) the greater of Mr. Nesci’s highest actual annual incentive bonus for the three calendar years immediately preceding his termination of employment or the target amount of the annual incentive bonus set by the Board of Directors or the Compensation Committee for the calendar year in which his termination occurs. If Mr. Nesci’s termination of employment occurs within two years after the change in control, the severance will be paid in one lump-sum payment on the next pay date that is at least seven days following his termination. In addition, if Mr. Nesci elects continued bank-provided group health plan coverage pursuant to COBRA, Blue Foundry Bank will reimburse him for the monthly COBRA premium less the active employee premium for the coverage. The conversion of Blue Foundry, MHC from the mutual to stock form and contemporaneous stock offering of Blue Foundry Bancorp are not considered a change in control for purposes of the employment agreement.
The employment agreement terminates upon Mr. Nesci’s death. Also, upon termination of employment (other than a termination in connection with a change in control), Mr. Nesci will be required to adhere to one-year non-competition and non-solicitation restrictions set forth in his employment agreement.
Change in Control Agreements. Blue Foundry Bank has entered into a Change in Control Agreement with Elizabeth Miller. The change in control agreement has a term of one year that extends each day by one day until either party gives the other notice of non-renewal. Notwithstanding the foregoing, in the event Blue Foundry Bancorp or Blue Foundry Bank enters into a transaction that would constitute a change in control, as defined under the change in control agreements, the term of the agreements will automatically extend so that they would expire no sooner than one year following the effective date of the change in control.
Upon termination of the executive’s employment by Blue Foundry Bank without “cause” or by the executive with “good reason” on or after the effective date of a change in control of Blue Foundry Bank or Blue Foundry Bancorp, the executive would be entitled to a severance payment equal to one time the sum of the executive’s: (i) base salary in effect as of the date of his termination or immediately prior to the change in control, whichever is higher; and (ii) the highest annual cash bonus earned for the three most recently completed performance periods prior to the change in control. The severance will be paid in a lump sum within 30 days following the executive’s date of termination. In addition, the executive would receive twelve consecutive monthly cash payments equal to the executive’s monthly COBRA premium.
A “good reason” condition for purposes of the change in control agreements includes a material reduction in base salary, a material reduction in authority, duties or responsibilities associated with the executive’s position with Blue Foundry Bank, a relocation of the executive’s principal place of employment resulting in an increase in the executive’s commute by 30 miles or more.
Annual Incentive Plan. Blue Foundry Bank has instituted an Annual Incentive Plan as a short-term incentive plan for our executive officers to incentivize personal performance in conjunction with Blue Foundry Bank’s overall performance. Payments under the Annual Incentive Plan are based on both Blue Foundry Bank’s overall performance and the executive’s personal performance. For 2020, the performance award opportunities ranged from 0% to 150% of target based on performance. The target goal for Mr. Nesci was 20% of base salary and the target goal for Ms. Miller was 15% of base salary. Performance measures included Return on Assets, Net Income, Efficiency and Total Deposit Growth, each weighted at 25%. Payments under the Annual Incentive Plan were 100% vested. For the year ended December 31, 2020, Mr. Nesci received an Annual Incentive Plan payment of $52,500 and Ms. Miller received an Annual Incentive Plan payment of $18,281, representing 7.5% and 5.6% of their 2020 base salaries, respectively.
Blue Foundry Bank adopted a new Annual Incentive Plan for 2021, which is also designed to reward employees for the achievement of corporate financial goals and demonstrated successful individual performance.
The Compensation Committee has set incentive opportunities for each of the Named Executive Officers based on a percentage of base salary. Threshold level performance will result in a payout of 50% of the targeted incentive opportunity and superior level performance will result in a payout of 150% of the targeted incentive opportunity. The actual amount of an award will be based on the level of business results (based on Net Loan Growth weighted at 30%, Targeted Deposit Growth weighted at 25% and Net Interest Margin weighted at 25%) and individual performance weighted at 20%. Under the 2021 Annual Incentive Plan, Mr. Nesci’s award opportunity is 90% of base salary and the award opportunities for Mr. Ciurlino and Ms. Miller are 35% of base salary. The higher targeted opportunities under the Annual Incentive Plan reflect the fact that Blue Foundry Bank has not previously made awards to the Named Executive Officers under a long-term incentive plan and has not adopted a long-term incentive plan for 2021. Blue Foundry Bank expects to implement a long-term incentive plan in the future and will consider the opportunities under that plan in setting future award opportunities under the Annual Incentive Plan. For the year ended December 31, 2021, Messrs. Nesci and Ciurlino received an Annual Incentive Plan payment of $425,250 and $66,840, respectively, and Ms. Miller received an Annual Incentive Plan payment of $76,904, representing 60.8%, 21.5% and 32.6% of their 2021 base salaries, respectively.
Deferred Compensation Plan. Blue Foundry Bank has entered into an Executive Deferred Compensation Agreement with Mr. Nesci (the “Deferred Compensation Agreement”). Under the Deferred Compensation Agreement, each year Blue Foundry Bank will credit a contribution of at least $50,000 to an account for the benefit of Mr. Nesci. The amounts credited to the account will earn an annual rate interest equal to the Prime Rate (as reported in the Wall Street Journal on the first business day of the year) plus two percent (2%), compounded monthly. The Board of Directors may, in its discretion, change the rate used to credit interest on the account from time to time. Mr. Nesci is always 100% vested in his account under the Deferred Compensation Agreement. Mr. Nesci generally will become entitled to a lump sum distribution of his account under the plan within 30 days following a separation from service. If Mr. Nesci dies prior to receiving a distribution from the plan, his beneficiary will be entitled to receive the account balance in a single lump sum payment. In certain situations that would constitute an unforeseeable emergency, Mr. Nesci may be entitled to receive an in-service distribution of a portion of his account under the Deferred Compensation Agreement.
401(k) Plan. Blue Foundry Bank maintains the Blue Foundry Bank 401(k) Plan, a tax-qualified defined contribution plan for eligible employees (the “401(k) Plan”). The named executive officers are eligible to participate in the 401(k) Plan on the same terms as other eligible employees of Blue Foundry Bank. Eligible employees who are at least 18 years of age will become participants for purposes of making elective deferrals and receiving safe-harbor matching contributions as of the first day of the first month following the date they begin employment with Blue Foundry Bank.
Under the 401(k) Plan, a participant may elect to defer, on a pre-tax basis, the maximum amount of compensation permitted by the Internal Revenue Code. For 2021, the salary deferral contribution limit was $19,500, provided, however, that a participant over age 50 may contribute an additional $6,500 to the 401(k) Plan for a total of $26,000. In addition to salary deferral contributions, Blue Foundry Bank makes safe harbor matching contributions equal to 100% of a participant’s salary deferrals, up to 4% of the participant’s compensation, and 50% of a participant’s salary deferrals that exceed 4% but do not exceed 6% of the participant’s compensation. A participant is always 100% vested in his or her salary deferral contributions and safe-harbor matching contributions.
Blue Foundry Bank may also make other discretionary matching contributions and other discretionary employer contributions to the 401(k) Plan, including profit sharing contributions, which vest based on a participant’s years of service at the rate of 0% through three years of service and 100% after completing three years of service. Eligible employees must be 18 years of age and complete 12 months of service (in which they complete at least 1,000 hours of service) to receive profit sharing contributions under the 401(k) Plan.
Generally, unless the participant elects otherwise, the participant’s account balance will be distributed as a result of the participant’s termination of employment. Blue Foundry Bank allowed participants in the 401(k) plan to use up to 50% of their account balances in the 401(k) Plan to subscribe for stock in the offering. Expense recognized in connection with the 401(k) Plan totaled approximately $514 thousand for the fiscal year ended December 31, 2021.
Defined Benefit Pension Plan. Blue Foundry Bank participates in a multiple employer defined benefit pension plan (the “Pension Plan”). Effective as of May 1, 2020, the plan was amended so that no new employees would become eligible to participate in the plan and the annual benefit provided to employees under the Pension Plan was frozen. Freezing the Pension Plan eliminated all future benefit accruals; however, the accrued benefits as of December 31, 2020, remain. The Company elected to withdraw from the Pentegra DB Plan in August 2021, and recognized an $11.2 million expense associated with the exit from the plan. The withdrawal was completed on December 1, 2021.
Employee Stock Ownership Plan. In connection with the conversion and related stock offering, Blue Foundry Bank adopted an ESOP for eligible employees. The named executive officers are eligible to participate in the ESOP on the same terms as other eligible employees. Eligible employees begin participation in the ESOP upon the first entry date commencing on or after the eligible employee’s completion of one year of service and attainment of age 18.
The ESOP trustee purchased, on behalf of the ESOP, 8.0% of the total number of shares of Blue Foundry Bancorp common stock issued in the conversion and related stock offering, or 2,281,800 shares. The ESOP funded its stock purchase with a loan from Blue Foundry Bancorp equal to the aggregate purchase price of the common stock. The trustee repays the loan principally through Blue Foundry Bank’s contributions to the ESOP and any dividends payable on common stock held by the ESOP over the anticipated 25-year term of the loan. The interest rate for the ESOP loan is a fixed rate of 3.25%, which was the prime rate, as published in The Wall Street Journal, on the closing date of the stock offering.
The trustee holds the shares purchased by the ESOP in an unallocated suspense account, and shares will be released from the suspense account on a pro-rata basis as the trustee repays the loan. The trustee allocates the shares released among participants’ accounts on the basis of each participant’s proportional share of compensation relative to all participants. Participants vest in his or her account balance based on his or her years of service with the bank, at the rate of 20% per year though the first five years of service, so that the participant will be 100% vested after completing five years of service. Participants who were employed by Blue Foundry Bank immediately prior to the closing of the stock offering received credit for vesting purposes for years of service prior to adoption of the ESOP. Participants also will automatically become fully vested upon attainment of their normal retirement age (age 65), death or disability, a change in control, or termination of the ESOP. Generally, participants will receive distributions from the ESOP upon terminating employment in accordance with the terms of the plan document. The ESOP reallocates any unvested shares forfeited upon a participant’s termination of employment among the remaining participants.
The ESOP permits participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The trustee votes unallocated shares and allocated shares for which participants do not timely provide instructions on any matter in the same ratio as those shares for which participants provide timely instructions, subject to fulfillment of the trustee’s fiduciary responsibilities.
Under applicable accounting requirements, Blue Foundry Bank records compensation expense for the ESOP at the fair market value of the shares as they are committed to be released from the unallocated suspense account, which may be more or less than the original issue price. The compensation expense resulting from the release of the common stock from the suspense account and allocation to the accounts of plan participants results in a corresponding reduction in the earnings of Blue Foundry Bancorp. Expense recognized in connection with the ESOP Plan totaled approximately $1.3 million for the fiscal year ended December 31, 2021.
Directors’ Compensation
The following table sets forth for the year ended December 31, 2021 certain information as to the total remuneration we paid to our directors other than James D. Nesci:
Directors Compensation Table for the Year Ended December 31, 2021
Fees Earned or Paid in Cash All Other Compensation Total
Name ($) ($) (1)
($)
J. Christopher Ely 81,000 - 81,000
Kenneth Grimbilas 98,500 1,055 99,555
Robert T. Goldstein 72,000 - 72,000
Patrick H. Kinzler 75,000 - 75,000
Mirella Lang 71,750 - 71,750
Margaret Letsche 75,000 - 75,000
Jonathan M. Shaw 75,500 - 75,500
(1)
Represents payments of medical premiums on behalf of Mr. Grimbilas.
Director Fees
Directors currently receive a base annual retainer of $51,000. In addition, the Chairman of the Board receives an additional annual retainer of $15,000. The Chairs of the Audit Committee, Nominating/Governance Committee, Compensation Committee, Risk Committee and Strategy Committee receive additional annual retainers of $20,000, $11,500, $12,000, $13,500 and $11,000, respectively. Members of the Audit Committee, Nominating/Governance Committee, Compensation Committee, Risk Committee and Strategy Committee receive additional annual retainers of $10,500, $6,000, $7,000, $6,000 and $3,000, respectively.
Each person who serves as a director of Blue Foundry Bancorp will also serve as a director of Blue Foundry Bank and earns a fee in their capacity as a board member of Blue Foundry Bank.
Director Emeritus Plan
Blue Foundry Bank maintains separate Restated Director Retirement Plans with Messrs. Ely and Grimbilas. Under the plans, if a director retires after having attained age 70 and completing ten years of continuous service, he will receive a monthly benefit equal to the monthly base board fee the director was receiving prior to terminating service with the board of directors. The benefit will be paid for the greater of the director’s life or five years, provided, however, that if the director dies within five years of terminating service with the board of directors, his beneficiary will continue to receive the monthly payments until the end of the five-year period. The director will be entitled to the same benefit if he terminates service on account of becoming disabled if he has completed ten years of continuous service.
Director Retirement Plan II
Blue Foundry Bank maintains the Boiling Springs Savings Bank Director Retirement Plan II for eligible directors (i.e., a “participant”) who are not grandfathered under the Director Emeritus Plan. Under the Director Retirement Plan, a participant who terminates service after completing ten years of continuous service on the Board of Directors (other than on account of disability, death or a change in control) will receive an annual benefit equal to $25,000 (paid in substantially monthly installments, for ten years). Blue Foundry Bank will begin making the payments to the participant on the first business day of the month following the later of (i) the day the participant attains age 70 or (ii) the day the participant terminates service. If the participant terminates service on account of disability prior to attaining age 70 but after having completed ten continuous years of service, he or she will receive the same benefit described above, except that the payments will start on the first business day of the month following the participant’s termination of service. If a participant experiences a termination of service within two years following a change in control, the participant will receive the present value of the benefit described above paid in a lump sum within thirty days following the participant’s termination of service. In addition, any participant (or beneficiary) who is in pay status at the time of a change in control will receive a lump sum payment of their remaining benefit within thirty days following the change in control. If a participant dies while in active service after
having completed ten years of service his or her beneficiary will receive the present value of the normal retirement benefit within thirty days of the participant’s death. If a participant has completed ten years of continuous service and dies after terminating service but prior to attaining age 70 (and before beginning to receive benefit payments), his or her beneficiary will receive the same death benefit described above for participants who die while in service after having completed ten years of service. If a participant dies while receiving benefits, his or her beneficiary will receive the present value of the remaining benefits in a lump sum within thirty days of the participant’s death. Currently, Messrs. Goldstein, Kinzler and Shaw and Ms. Letsche have been designated as eligible directors to participate in the Director Retirement Plan.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information, as March 7, 2022, regarding certain beneficial owners of shares of the Company’s common stock, including information regarding persons and entities known to the Company to be the beneficial owner of more than 5% of the Company’s issued and outstanding common stock and information regarding each director, named executive officer and all directors and executive officers of the Company as a group.
Name of Beneficial Owner Shares Beneficially Owned Percent of All Common Stock Outstanding
5% Owners (including address):
BlackRock, Inc. 1,936,720 (1) 6.80 %
55 East 52nd Street
New York, New York 10055
The Vanguard Group 1,494,082 (2) 5.24 %
100 Vanguard Blvd.
Malvern, PA 19355
Blue Foundry Bank Employee Stock Ownership Plan Trust 2,281,800 (3) 8.00 %
Trustee: Pentegra Trust Company
C/o Pentegra Services, Inc.
2 Enterprise Drive, Suite 408
Shelton, Connecticut 06484
T. Rowe Price Associates, Inc. 2,330,210 (4) 8.10 %
100 E. Pratt Street
Baltimore, MD 21202
(1) Based on information contained in a Schedule 13G filed with the SEC on February 4, 2022
(2) Based on information contained in a Schedule 13G filed with the SEC on February 9, 2022
(3) Based on information contained in a Schedule 13G filed with the SEC on February 11, 2022
(4) Based on information contained in a Schedule 13G filed with the SEC on February 14, 2022
Name of Beneficial Owner Shares Beneficially Owned Percent of All Common Stock Outstanding (1)
Directors:
James D. Nesci 41,582 (2) *
Patrick H. Kinzler 18,578 (3) *
Mirella Lang 5,765 *
J. Christopher Ely 25,366 (4) *
Robert T. Goldstein 27,887 (5) *
Kenneth Grimbilas 40,000 (6) *
Jonathan M. Shaw 23,454 (7) *
Margaret Letsche 19,894 *
Named Executive Officers:
Elizabeth Miller 23,151 (8) *
Brent Michael Ciurlino 11,000 (9) *
All directors and executive officers as a group (10 persons) 236,677 *
•Less than 1%
(1) Based on 28,522,500 shares outstanding as of March 7, 2022.
(2) Includes 8,500 shares held in our 401(k) Plan.
(3) Includes 7,202 shares held in individual retirement accounts.
(4) Includes 10,366 shares held in an individual retirement account.
(5) Includes 27,887 shares held in a 401(k) Plan.
(6) Includes 40,000 shares held in an individual retirement account.
(7) Includes 14,238 shares held in an individual retirement account, 9,100 shares held by his spouse’s individual retirement account and 116 shares held as custodian for his child.
(8) Includes 17,500 shares held in our 401(k) Plan.
(9) Includes 2,000 shares held in our 401(k) Plan.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Director Independence
The board of directors has determined that, except for Mr. Nesci, each member of the board of directors is an “independent director” as defined in the Nasdaq listing rules. Mr. Nesci is not considered independent because he is the President and Chief Executive Officer of the Company. In evaluating the independence of our independent directors, we found no transactions between us and our independent directors that are not required to be reported under “-Transactions with Certain Related Persons,” below, and that had an impact on our determination as to the independence of our directors.
Transactions with Certain Related Persons
All transactions between the Company and its executive officers, directors, holders of 10% or more of the shares of its common stock and affiliates thereof, are on terms no less favorable to the Company than could have been obtained by it in arms-length negotiations with unaffiliated persons. Such transactions must be approved by a majority of the independent directors of the Company not having any interest in the transaction. In the ordinary course of business, the Bank makes loans available to its directors, officers and employees. The aggregate amount of our outstanding loans to our officers and directors and their related entities was approximately $54 thousand at December 31, 2021. These loans are made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable loans with persons not related to
the Bank. These loans neither involve more than the normal risk of collectability nor present other unfavorable features.
Procedures Governing Related Persons Transactions
The Company maintains a Policy and Procedures Governing Related Person Transactions, which is a written set of procedures for the review and approval of transactions involving related persons. Under these procedures, related persons consist of directors, director nominees, executive officers, persons or entities known to us to be the beneficial owner of more than 5% of any outstanding class of the voting securities of the Company or immediate family members or certain affiliated entities of any of the foregoing persons.
Transactions covered by the procedures consist of any financial transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, in which:
•the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year;
•the Company is, will, or may be expected to be a participant; and
•any related person has or will have a direct or indirect material interest.
•The procedures exclude certain transactions, including:
•any compensation paid to an executive officer of the Company if the Compensation Committee of the Board approved (or recommended that the Board approve) such compensation;
•any compensation paid to a director of the Company if the Board or an authorized committee of the Board of Directors approved such compensation; and
•any transaction with a related person involving consumer and investor financial products and services proved in the ordinary course of the Company’s business and on substantially the same terms as those prevailing at the time for comparable services provided to persons unrelated to the Company, or to the Company’s employees on a broad basis (and, in the case of loans, in compliance with the Sarbanes-Oxley Act of 2002).
Related person transactions will be reviewed by the Audit Committee. In connection with its review, the Audit Committee will consider all relevant factors, including:
•whether the terms of the proposed transaction are at least as favorable to the Company as those that might be achieved with an unaffiliated third party;
•the size of the transaction and the amount of consideration payable to the related person;
•the nature of the interest of the related person;
•whether the transaction may involve a conflict of interest as defined in the Company’s Code of Ethics and Business Conduct; and
•whether the transaction involves the provision of goods and services to the Company that are available and from unaffiliated third parties.
For each periodic review of related persons transactions, the Audit Committee will determine if the transactions were fair, reasonable, and within Company policy and will recommend to the disinterested members of the Board of Directors that they should be ratified and approved or make such other recommendation to the Board of Directors as the Audit Committee deems appropriate. If any transaction recommended for ratification and approval by the Audit Committee is not ratified and approved by the Board of Directors, the Secretary of the Audit Committee will provide a report to the Audit Committee setting forth information about the Board’s actions.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm is Crowe LLP, New York, New York, Auditor Firm ID: 173.
Set forth below is certain information concerning aggregate fees for professional services rendered by Crowe LLP (“Crowe”) during fiscal years 2021 and 2020.
Audit Fees. The aggregate fees billed to the Company by Crowe for professional services rendered for the audit of the Company’s annual consolidated financial statements, review of the consolidated financial statements included in the Company’s annual report on Form 10-K and services that are normally provided by Crowe in
connection with statutory and regulatory filings and engagements were $682 thousand and $585 thousand during fiscal 2021 and 2020, respectively.
Audit Related Fees. There were no aggregate fees billed to the Company by Crowe for assurance and related services rendered that are reasonably related to the performance of the audit of and review of the consolidated financial statements during fiscal 2021 and 2020, respectively.
Tax Fees. The were no aggregate fees billed to the Company by Crowe for professional services rendered for tax compliance during fiscal 2021 and 2020, respectively.
Other Fees. The aggregate fees billed to the Company by Crowe for other professional services rendered during fiscal 2021 were $25 thousand. There were no aggregate fees billed to the Company by Crowe for other professional services rendered during fiscal 2020.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accountants
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accountants. These services may include audit services, audit-related services, tax services and other services. Pre-approval is provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. The Audit Committee has delegated pre-approval authority to its Chair when necessary, with subsequent reporting to the Audit Committee. The independent registered public accountants and management are required to report to the Audit Committee quarterly regarding the extent of services provided by the independent registered public accountants in accordance with this pre-approval policy, and the fees for the services performed to date.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following exhibits are either filed as part of this report or are incorporated herein by reference:
(a)(1) Financial Statements
The following financial statements are included under Part II, Item 8 of this report:
1. Report of Independent Registered Public Accounting Firm.
2. Consolidated Statements of Financial Condition as of December 31, 2021 and 2020.
3. Consolidated Statements of Operations for the Fiscal Years Ended December 31, 2021 and 2020.
4. Consolidated Statements of Comprehensive Income for the Fiscal Years ended December 31, 2021 and 2020.
5. Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended December 31, 2021 and 2020.
6. Consolidated Statements of Cash Flows for the Fiscal Years Ended December 31, 2021 and 2020.
7. Notes to Consolidated Financial Statements.
(a)(2) Financial Statement Schedules
No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.
(a)(3) Exhibits
3.1
Certificate of Incorporation of Blue Foundry Bancorp (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-254079)
3.2
Bylaws of Blue Foundry Bancorp (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-254079)
Form of Common Stock Certificate of Blue Foundry Bancorp (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-254079)
4.2
Description of Blue Foundry Bancorp’s Securities
Subsidiaries of Blue Foundry Bancorp (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-254079)
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 The following materials from the Company’s Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Financial Condition; (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)