RUTHERFORD, NJ, July 26, 2023 — Blue Foundry Bancorp (NASDAQ:BLFY) (the “Company”), the holding company for Blue Foundry Bank (the “Bank”), today reported a net loss of $1.8 million, or $0.08 per diluted common share, for the three months ended June 30, 2023, compared to net loss of $1.2 million, or $0.05 per diluted common share, for the three months ended March 31, 2023, and net income of $40 thousand for the three months ended June 30, 2022.

“Blue Foundry continues to maintain its strong capital position and access to liquidity, as well as a diversified deposit base and a low percentage of uninsured deposits to customers,” said James D. Nesci, President and Chief Executive Officer.

He continued, “Our second quarter performance largely reflects the impact that the inverted yield curve and the highly competitive rate environment in northern New Jersey has had on our funding base. Despite this, we are seeing our investments in technology lead to productivity saves through lower operating expenses. We also remain active in lending markets, focusing on the organic origination of commercial loans with strong credit metrics.”

•Deposits increased $22.7 million, or 1.8%, compared to the prior quarter.

•Non-interest expense decreased $689 thousand or 5.1% sequentially, primarily driven by lower compensation and benefits expenses.

•Uninsured deposits to third-party customers totaled approximately 14% of total deposits as of June 30, 2023.

•Interest income for the quarter was $19.8 million, an increase of $933 thousand, or 5.0%, compared to the prior quarter.

•Interest expense for the quarter was $8.9 million, an increase of $2.0 million, or 28.6%, compared to the prior quarter.

•Net interest margin decreased 25 basis points from the prior quarter to 2.17%.

•Tangible book value per share was $14.35.

•1,892,060 shares were repurchased at a weighted average cost of $9.68.

The Company continues to diversify its lending franchise by focusing on growing the commercial portfolio. During the first half of 2023, total loans increased by $36.6 million primarily due to growth within the Company’s non-residential real estate, construction, multifamily and commercial and industrial portfolios.

The details of the loan portfolio are below:

			June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022						June 30, 2022
			(In thousands)
Residential one-to-four family			$	580,396					$	592,809					$	597,254					$	594,795					$	593,563
Multifamily			696,956						695,207						690,690						680,181						580,060
Non-residential real estate			237,247						239,844						216,061						185,147						211,429
Construction and land			36,032						28,141						17,799						12,792						20,762
Junior liens			21,338						19,644						18,631						16,778						16,537
Commercial and industrial			9,743						10,357						4,653						4,705						5,875
Consumer and other			33						58						39						39						47
Total loans			1,581,745						1,586,060						1,545,127						1,494,437						1,428,273
Less: Allowance for credit losses			14,413						14,153						13,400						13,600						14,050
Loans receivable, net			$	1,567,332					$	1,571,907					$	1,531,727					$	1,480,837					$	1,414,223

.

As of June 30, 2023, deposits totaled $1.27 billion, an increase of $22.7 million, or 1.8%, from March 31, 2023. While the Company continues to focus on attracting the full banking relationship of small- to medium-sized businesses through an extensive suite of deposit products, the rate environment in the northern New Jersey market has intensified competition for deposits. The reduction of $75.5 million in core deposits was more than offset by an increase of $98.2 million in time deposits, including $50.0 million of brokered deposits.

The details of deposits are below:

•Net interest income was $10.9 million in the three months ended June 30, 2023 compared to $13.2 million in same period in 2022 due to increases in rates paid on interest-bearing liabilities.

•Net interest margin decreased by 66 basis points to 2.17%.

•Yield on average interest-earning assets increased 74 basis points to 3.93%, while the cost of average interest-bearing liabilities increased 170 basis points to 2.18%.

•Average loans increased by $213.7 million and average interest-bearing liabilities increased by $208.3 million.

•Non-interest expense was $13.0 million, a decrease of $159 thousand excluding the provision for commitments and letters of credit, driven by a decrease of $272 thousand in advertising, a decrease of $212 thousand in professional services and a decrease of $69 thousand in compensation and benefits expenses, partially offset by an increase of $210 thousand in occupancy and equipment, an increase of $142 thousand in data processing and an increase of $132 thousand in FDIC assessment.

•Since the adoption of the current expected credit loss (CECL) methodology on January 1, 2023, the provision for commitments and letters of credit is recorded in the provision for credit losses. This expense was previously recorded in non-interest expense. During the second quarter of 2022, the Company recorded a $108 thousand release of its provision for commitments and letters of credit.

•The Company did not record a tax benefit for the loss incurred during the current quarter due to the full valuation allowance required on its deferred tax assets. The prior year quarter effective tax rate of 7.0% was a result of the taxable income produced during the prior year quarter, partially offset by the ability to utilize a portion of the net operating losses that were fully reserved.

•The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At June 30, 2023, the valuation allowance on deferred tax assets was $22.1 million.

•Net interest income was $22.8 million, a decrease of $2.3 million.

•Net interest margin decreased by 43 basis points to 2.29%.

•Yield on average interest-earning assets increased 78 basis points to 3.87% while the cost of average interest-bearing deposits increased 125 basis points to 1.55%.

•Average loans increased by $243.0 million and average interest-bearing deposits decreased by $15.7 million.

•Non-interest expense was $26.6 million, an increase of $112 thousand excluding the provision of commitments and letters of credit, driven by an increase of $718 thousand in compensation and benefits costs, $311 thousand in occupancy and equipment costs and $265 thousand in data processing expense, partially offset by decreases of $719 thousand in advertising and $523 thousand in fees for professional services.

•The Company recorded a $278 thousand release of its provision for commitments and letters of credit in the first half of 2022.

•The Company did not record a tax benefit for the loss incurred during the six months ended June 30, 2023 due to the full valuation allowance required on its deferred tax assets. The six months ended June 30, 2022 effective tax rate of 8.1% was a result of the taxable income produced during the prior year period, partially offset by the ability to utilize a portion of the net operating losses that were fully reserved.

•The Company’s current tax position reflects the previously established full valuation allowance on its deferred tax assets. At June 30, 2023, the valuation allowance on deferred tax assets was $22.1 million.

•Cash and cash equivalents increased $4.6 million compared to December 31, 2022.

•Securities available-for-sale decreased $13.3 million to $300.9 million due to amortization and payoffs.

•Unrealized losses improved slightly to a net loss of $35.9 million.

•Total loans held for investment increased $36.6 million to $1.58 billion.

•Non-residential real estate loans increased $21.2 million, construction and land loans increased $18.2 million, commercial and industrial increased $5.1 million and multifamily loans increased $6.3 million.

•Deposits totaled $1.27 billion, a decrease of $21.6 million from December 31, 2022, largely the result of the competitive rate environment.

•Core deposits represented 58.9% of total deposits, compared to 67.7% at December 31, 2022 and 66.8% at June 30, 2022.

•Uninsured and uncollateralized deposits to third party customers were $172.5 million, or 14% of total deposits, at the end of the second quarter.

•FHLB borrowings increased by $89.0 million to $399.5 million to support loan growth and replace deposit attrition.

•During the first quarter of 2023, the Company executed $100 million of hedges on interest rates with maturities ranging from three to five years. The Company’s hedging program aims to reduce the Company’s sensitivity to interest rate by locking in spread.

•As of June 30, 2023, the Company had $363.0 million of additional borrowing capacity at FHLB and $32.5 million of other unsecured lines of credit.

•Shareholders’ equity decreased by $27.2 million to $366.5 million. The decrease was primarily driven by the $27.4 million cost of shares repurchased and a $3.1 million reduction in retained earnings, partially offset by stock-based compensation activity.

•Tangible equity to tangible assets was 17.59% and tangible common equity per share outstanding was $14.35.

•The Bank’s capital ratios remain above the FDIC’s “well capitalized” standards.

•As of June 30, 2023, the Allowance for Credit Losses as a percentage of gross loans was 0.91%.

•The Company recorded a net provision for credit losses of $143 thousand for the quarter ended June 30, 2023, driven by an increase in the allowance for loans, partially offset by a decrease in the allowance for commitments.

•Non-performing loans totaled $7.7 million, or 0.49% of total loans compared to $7.8 million, or 0.50% of total loans at December 31, 2022, and $10.0 million, or 0.70% of total loans at June 30, 2022.

•Net charge-offs were $13 thousand for the quarter ended June 30, 2023 and $17 thousand for the six months ended June 30, 2023.

Blue Foundry Bancorp is the holding company for Blue Foundry Bank, a place where things are made, purpose is formed, and ideas are crafted. Headquartered in Rutherford NJ, with a presence in Bergen, Essex, Hudson, Morris, Passaic, Somerset and Union counties, Blue Foundry Bank is a full-service, innovative bank serving the doers, movers, and shakers in our communities. We offer individuals and businesses alike the tailored products and services they need to build their futures. With a rich history dating back more than 145 years, Blue Foundry Bank has a longstanding commitment to its customers and communities. To learn more about Blue Foundry Bank visit BlueFoundryBank.com or call (888) 931-BLUE. Member FDIC.

A conference call covering Blue Foundry’s second quarter 2023 earnings announcement will be held today, Wednesday, July 26, 2023 at 11:00 a.m. (EDT). To listen to the live call, please dial 1-833-470-1428 (toll free) or +1-404-975-4839 (international) and use access code 445457. The webcast (audio only) will be available on ir.bluefoundrybank.com. The conference call will be recorded and will be available on the Company’s website for one month.

BlueFoundryBank.com

jnesci@bluefoundrybank.com

201-972-8900

President and Chief Executive Officer Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.

Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make; general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; the effects of the recent turmoil in the banking industry (including the failures of two financial institutions); adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums; changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; a failure or breach of our operational or security systems or infrastructure, including cyber-attacks; the inability of third party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related there to; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; the ability of the U.S. Government to manage federal debt limits; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Consolidated Statements of Financial Condition

Consolidated Statements of Operations

(Dollars in Thousands Except Per Share Data) (Unaudited)

						Three months ended																		Six months ended
						June 30, 2023						March 31, 2023						June 30, 2022						June 30, 2023						June 30, 2022
						(Dollars in thousands)
Interest income:
Loans						$	16,481					$	15,569					$	12,444					$	32,050					$	24,100
Taxable investment income						3,172						3,152						2,320						6,324						4,137
Non-taxable investment income						112						111						114						223						235
Total interest income						19,765						18,832						14,878						38,597						28,472
Interest expense:
Deposits						5,173						4,154						950						9,327						1,832
Borrowed funds						3,686						2,737						766						6,423						1,539
Total interest expense						8,859						6,891						1,716						15,750						3,371
Net interest income						10,906						11,941						13,162						22,847						25,101
Provision for (release of) credit losses						143						(23)						594						120						(358)
Net interest income after provision for (release of) credit losses						10,763						11,964						12,568						22,727						25,459
Non-interest income:
Fees and service charges						280						262						365						542						1,165
Gain on securities, net						—						—						14						—						14
Gain on sale of loans						24						135						—						159						—
Other income						76						87						115						163						242
Total non-interest income						380						484						494						864						1,421
Non-interest expense:
Compensation and employee benefits						7,065						7,847						7,134						14,912						14,194
Occupancy and equipment						2,124						1,982						1,914						4,106						3,795
Data processing						1,535						1,601						1,393						3,136						2,871
Advertising						77						72						349						149						868
Professional services						764						980						976						1,744						2,267
Release of provision for commitments and letters of credit						—						—						(108)						—						(278)
Federal deposit insurance						231						105						99						336						177
Other						1,172						1,070						1,262						2,242						2,341
Total non-interest expense						12,968						13,657						13,019						26,625						26,235
(Loss) income before income tax expense						(1,825)						(1,209)						43						(3,034)						645
Income tax expense						—						—						3						—						52
Net (loss) income						$	(1,825)					$	(1,209)					$	40					$	(3,034)					$	593
Basic (loss) earnings per share						$	(0.08)					$	(0.05)					$	—					$	(0.13)					$	0.02
Diluted (loss) earnings per share						$	(0.08)					$	(0.05)					$	—					$	(0.13)					$	0.02
Weighted average shares outstanding-basic and diluted (1)						24,249,714						25,374,653						26,366,324						24,131,017						26,354,979

(1) The assumed vesting of outstanding restricted stock units had an antidilutive effect on diluted earnings per share due to the Company’s net loss for the 2023 periods. There were no equity awards to cause dilution in the 2022 periods.

Consolidated Financial Highlights

(Dollars in Thousands Except Per Share Data) (Unaudited)

(1) 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.

(3) Efficiency ratio represents adjusted non-interest expense divided by the sum of net interest income plus non-interest income.

(4) Tangible equity equals $365.8 million, which exclude intangible assets ($730 thousand of capitalized software). Tangible assets equal $2.08 billion and exclude intangible assets.

(5) June 30, 2023 per share metrics computed using 25,493,422 total shares outstanding.

Adjusted Pre-Provision Net Revenue (Non-GAAP)

(Unaudited)

This press release contains certain supplemental financial information, described in the table below, which has been determined by methods other than U.S. Generally Accepted Accounting Principles ("GAAP") that management uses in its analysis of Blue Foundry's performance. Management believes these non-GAAP financial measures provide information useful to investors in understanding Blue Foundry's financial results. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Blue Foundry strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Net income, as presented in the Consolidated Statements of Operations, includes the provision for loan losses, provision for commitments and letters of credit, and income tax expense, while pre-provision net revenue does not.