Blue Foundry Bancorp (BLFY) 11-KAnnual report of employee stock purchases

Blue Foundry Bank ("the Bank") adopted the Blue Foundry Bank 401(k) Plan ("the Plan") effective as of May 1, 1994. The Plan was part of the Pentegra Defined Contribution Plan for Financial Institutions, a multiple employer plan. In connection with the Blue Foundry, MHC, the mutual holding company of the Bank, mutual to stock conversion and related stock offering of the newly formed holding company ("Blue Foundry Bancorp"), the Plan was amended and restated to a single employer plan effective April 1, 2021 to allow active participants in the Plan to make an election to purchase participation interests in shares of Blue Foundry Bancorp common stock through the Plan. Active participants in the Plan could direct the trustee of the Plan to invest up to 50% of their Plan account in Blue Foundry Bancorp common stock at the time of the stock offering. The mutual to stock conversion and related stock offering was completed on July 15, 2021.

The Trustee of the Plan purchased 241,512 shares of Blue Foundry Bancorp common stock based on designated percentages provided by employees. The purchased shares of Blue Foundry Bancorp common stock are reflected in the Blue Foundry Bancorp Stock Fund, with each share initially valued at $10.00. At December 31, 2022, the Blue Foundry Bancorp Stock Fund held 221,667 shares of Blue Foundry Bancorp common stock valued at a quoted market price of $2,848,544 ($12.85 per share). At December 31, 2021, the Blue Foundry Bancorp Stock Fund held 232,373 shares of Blue Foundry Bancorp common stock valued at a quoted market price of $3,399,642 ($14.63 per share).

The Plan is a voluntary, participant-directed defined-contribution 401(k) plan as defined under the Internal Revenue Code (“IRC”) sponsored by the Bank. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The following description of the Plan provides only general information. Eligible employees who participate in the Plan should refer to the Plan Document for a more complete description of the Plan’s provisions.

Pentegra Trust Company (the "Trustee") is the Plan's trustee. The Plan offers participants choices between a diverse group of investment funds. Reliance Trust Company is custodian for all investment funds under the Plan and Pentegra Services, Inc. is the administrator and recordkeeper of the Plan.

Generally, an employee of the Bank is eligible to participate on the first of the month following the date eligibility requirements are satisfied. All employees who have attained the age of 18, except employees classified as "Flex Staff Employees", are eligible to participate in the Plan. Employees of the Bank may be eligible to receive a discretionary profit sharing contribution after one year of service, as defined, providing they worked at least 1,000 hours during such plan year and attained age 18. Participants who do not have at least 1,000 hours of service during such plan year or are not employed on the last working day of a plan year are generally not eligible for a profit sharing contribution for such year. The "Plan Year" is January 1 to December 31.

Participants are entitled to contribute to the Plan between 0% to 100%, subject to certain IRC limitations, of their eligible compensation, as defined in the Plan. Contributions can be made on a pre-tax basis or after-tax (Roth) basis. The limit on employee elective deferrals for 2022 is $20,500. Upon meeting the eligibility requirements, participants are automatically enrolled in the Plan at a pre-tax deferral rate of 3% of eligible compensation, as defined, with annual increases of 1% up to a maximum rate of 6% of their eligible compensation, unless the participant elects otherwise. A participant may make “catch-up” contributions, up to the maximum amount allowed by the IRC, if the maximum annual amount of regular contributions is made and the participant is age 50 or older. The maximum allowable catch-up contribution for 2022 was $6,500. Employee contributions are funded through biweekly payroll deductions.

Contributions are invested based on participant direction. If the participant has not provided investment directions, contributions will be invested in accordance with the default investment alternatives established under the Plan. Participants may elect to divide their contributions or initiate a transfer among the investment options offered by the Plan, subject to certain restrictions. An eligible participant may elect to suspend or resume his or her contributions, subject to the Plan's notice requirements. Changes requested by participants are implemented as soon as administratively practicable, in accordance with the Plan Document.

The Bank contributes safe harbor matching contributions to the Plan equal to 100% of a participant's deferrals that do not exceed 4% of their eligible compensation and 50% of their deferrals that exceed 4% but not 6% of their eligible compensation, for a maximum Bank match of 5.0%. The Bank may make discretionary profit sharing contributions under the Plan. For the Plan year ended December 31, 2022, there was no profit sharing contribution made to the Plan. Bank matching contributions are determined and funded biweekly. The Bank's matching contribution totaled $790,684 for 2022.

Individual accounts are established for each participant. Each participant's account is credited with the participant's contributions, and allocations of (a) the Bank's contributions and (b) Plan earnings (losses) thereon. Allocations are based on participant earnings, account balances, or specific participant transactions, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participants' vested account. The participant's account is reduced by withdrawals, losses on investments and any administrative expenses.

The Plan permits participants to have their interests in other qualified plans rolled over to the Plan or to make rollover contributions into the Plan from a conduit individual retirement account, which holds amounts attributable solely to a rollover from another qualified plan. In addition, the Plan permits for direct transfer of participant accounts for employees in businesses that were acquired by the Bank. Such transfers or rollovers to the Plan may only be made with the approval of the Plan administrator and do not affect any other contributions made by or on behalf of a participant. Rollovers into the Plan amounted to $277,567 for 2022.

Participants are 100% vested immediately in their contributions, Bank safe harbor contributions and the earnings or losses thereon. Bank matching contributions made prior to April 1, 2021 and earnings or losses thereon vest 25% after one year of service, 50% after two years of service, and 100% after three years of service. Bank discretionary profit sharing contributions and earnings or losses thereon vest 100% after three years of service.

Participants shall become 100% vested if he or she terminates employment on or after he or she attains normal retirement age, as defined as age 65, or as a result of his or her death or disability. In addition, in the event of Plan termination or partial termination as defined under ERISA, as well as a rollover into a new Plan, participants shall become 100% vested.

Upon application by a participant, the Plan administrator may direct that a loan be made from the participant’s account. Participants can borrow from their account a minimum amount of $1,000 up to the lesser of fifty percent (50%) of the value of the participant’s vested account or $50,000 reduced by the largest outstanding loan balance during the past 12 months. Loans are secured by the balance in the participant’s account. General purpose loans must be repaid within five years and loans for the purchase of a principal residence may be longer. Upon termination from service, a participant has the option to continue to make loan payments directly to the Trustee. If the participant does not continue to make payments on the loan, the loan will default per the Internal Revenue Service (the "IRS") regulations and will become a deemed distribution.

Loans are fixed rate and bear interest at prime rate plus 1%. At December 31, 2022, the interest rates on outstanding participant loans ranged from 4.25% to 8.00%, with maturities through 2032.

Principal and interest are paid ratably through biweekly payroll deductions.

Upon termination of employment including termination of service due to death, disability or retirement, participants may elect to receive distribution of their vested account balances, as a single lump sum distribution, installment payments over a period of not more than their assumed life expectancy or partial withdrawals, except to the extent their vested account balance, including “rollover” contributions, as of the date of termination is less than $5,000; in which case their vested interest in the Plan is distributed in a lump sum. A participant is able to leave their account with the Plan and defer commencement of receipt of their vested balance until April 1 of the calendar year following the calendar year in which they attain age 72, except to the extent that their vested account balance, including “rollover” contributions, as of the date of termination is in excess of $5,000; otherwise, their vested interest in the Plan is distributed in a lump sum.

Participants who terminate employment prior to becoming 100% vested forfeit any non-vested Bank contributions. Forfeitures are retained in the Plan and may be used to pay Plan expenses, reduce Bank contributions payable under the Plan or be reallocated to participants as though they are additional Bank contributions. At December 31, 2022, there was no balance of forfeited non-vested accounts and at December 31, 2021, forfeited non-vested accounts totaled $1,114. For the year ended December 31, 2022, forfeitures totaling $25,966 were used to reduce Bank contributions.

The accompanying financial statements of the Plan have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), using the accrual method of accounting.

The preparation of financial statements in conformity with GAAP requires the Plan management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Accordingly, actual results may differ from those estimates.

Participants may direct their contributions in any of the investment options offered by the Plan. The Plan may invest in various types of investment securities that are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the financial statements.

Investment funds are stated at fair value. Purchases and sales of investments are recorded on a trade date basis, and interest income is recorded when earned on the accrual basis. Dividend income is recorded on the ex-dividend date. Net appreciation/(depreciation) in fair value of investments includes the Plan's gains and losses on investments bought and sold as well as held during the year.

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. If a loan is not repaid, it will be reclassified as a distribution based upon the terms of the Plan Document. Therefore, no allowance for credit losses was recorded as of December 31, 2022 and 2021.

Benefits are recorded upon distribution.

(4) Plan Expenses

(6) Federal Income Taxes