Blue Foundry Bancorp (BLFY) Q3 Earnings call transcript Oct 23, 2024

In Blue Foundry Bancorp's third quarter 2024 earnings call, management provided a comprehensive update on the company's performance and future outlook, highlighting key themes and trends that underscore the bank's financial health and strategic direction. The call, led by President and CEO, Jim Nesci, and CFO, Kelly Pecoraro, covered a range of topics, from financial results and loan pipeline to capital levels and liquidity.

Financial Results and Loan Pipeline

Blue Foundry reported a quarterly net loss of $4 million, with a pre-provision net loss of $3.8 million. Despite this loss, the company noted a healthy commercial loan pipeline and strong capital and credit quality. The quarter saw an increase in deposits by $7.5 million and loans by $3.6 million, with a focus on attracting the full banking relationship of small- to medium-sized businesses. This strategy has resulted in an 11% increase in commercial deposits and a 7% increase in consumer deposits, reducing the reliance on wholesale deposits by 4%.

Capital and Liquidity

With a tangible equity to tangible common assets ratio of 16.5%, Blue Foundry continues to maintain strong capital levels. The bank operates with robust liquidity and a low concentration risk to any single depositor, ensuring financial stability. The bank's liquidity stands at 4x larger than uninsured and uncollateralized deposits to customers, providing a significant buffer against market fluctuations.

Outlook and Strategic Initiatives

Management expressed optimism for both the fourth quarter and the next year, citing a positive outlook for sustained loan growth and a favorable impact from the Federal Reserve's recent rate cut. Blue Foundry's focus on becoming a more commercially oriented institution is evidenced by its selective origination of real estate loans and the expansion of its commercial pipeline. The bank's strategy to attract and retain small- to medium-sized businesses is expected to drive growth in the coming quarters.

Question-and-Answer Session

During the question-and-answer session, analysts probed into topics such as net interest margin, loan purchases, and the bank's buyback program. Management provided insight into the factors affecting net interest margin, including the timing of loan fundings and repricing of deposits. They also discussed the potential for further deposit rate reductions and the role of consumer participation loans in supplementing growth.

Conclusion

Blue Foundry Bancorp's third quarter earnings call painted a picture of a financially stable and strategically positioned bank, with a focus on attracting and retaining small- to medium-sized businesses and navigating the evolving interest rate environment. The company's strong capital and liquidity position, coupled with its disciplined approach to underwriting and loan origination, positions it well for future growth opportunities. The management's confidence in the company's strategic initiatives and financial outlook bodes well for shareholders and investors.