NASDAQ:BLFY Blue Foundry Bancorp Q4 2024 Earnings Report $9.25 -0.03 (-0.32%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$9.24 -0.02 (-0.16%) As of 04/25/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Blue Foundry Bancorp EPS ResultsActual EPS-$0.13Consensus EPS -$0.17Beat/MissBeat by +$0.04One Year Ago EPSN/ABlue Foundry Bancorp Revenue ResultsActual RevenueN/AExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ABlue Foundry Bancorp Announcement DetailsQuarterQ4 2024Date1/29/2025TimeBefore Market OpensConference Call DateWednesday, January 29, 2025Conference Call Time11:00AM ETUpcoming EarningsBlue Foundry Bancorp's Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled at 11:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfilePowered by Blue Foundry Bancorp Q4 2024 Earnings Call TranscriptProvided by QuartrJanuary 29, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Good morning, and welcome to Blue Foundry Bancorp's 4th Quarter 2024 Earnings Call. Comments made during today's call may include forward looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. BlueFoundry encourages all participants to refer to the full disclaimer contained in this morning's earnings release, which has been posted to the Investor Relations page on bluefoundrybank.com. During the call, management will refer to non GAAP measures, which exclude certain items from reported results. Please refer to today's earnings release for reconciliations of these non GAAP measures. Operator00:00:40As a reminder, this event is being recorded. Your line will be muted for the duration of the call. After the speakers' remarks, there will be a question and answer session. I will now turn the call over to President and CEO, Jim Nesi. James NesciCEO & President at Blue Foundry Bancorp00:00:56Thank you, operator, and good morning, everyone. Thank you for joining us for our Q4 earnings call. I am joined by our Chief Financial Officer, Kelly Piperaro, who will discuss the company's 4th quarter financial results in detail after I provide an update on our operations. Earlier this morning, we reported a quarterly net loss of $2,700,000 and a quarterly pre provision net loss of $3,000,000 Levels increased by $32,000,000 predominantly in our commercial portfolios. Deposits grew $25,000,000 the majority of which came in core growth, including a 17% increase in non interest bearing accounts. James NesciCEO & President at Blue Foundry Bancorp00:01:41Despite the net loss, we were able to maintain tangible book value and both capital and credit quality remains strong. Additionally, our balance sheet remains well positioned for the current environment. We are encouraged by the improvement in our yield on interest earning assets as well as our cost of interest bearing liabilities, as this may indicate an inflection point in our net interest margin going forward. Continuing our transformation into becoming a more commercially oriented institution, my management team and I have set forth the strategic plan intent on attracting the full banking relationship of small to medium sized businesses in our marketplace. Our bank has industry leading frictionless products and we are focused on developing new relationships and deepening our current relationships within the communities we serve. James NesciCEO & President at Blue Foundry Bancorp00:02:36All employees have a portion of their compensation aligned with achieving our strategic objectives. We funded $59,000,000 of loans during the quarter, yielding approximately 7.5%. We have executed letters of intent totaling over $60,000,000 for predominantly commercial credits at yields of approximately 7.7%. Given our demonstrated high pull through rate, we expect to deliver continued balance sheet and interest income growth over the coming quarters, all while remaining disciplined in our underwriting standards. During the quarter, we repurchased 481,000 shares at a weighted average share price of $10.49 Repurchasing shares at this price continues to improve shareholder value. James NesciCEO & President at Blue Foundry Bancorp00:03:30To date, we have repurchased 6,900,000 shares at a weighted average cost of $10.16 Tangible book value per share remained flat at $14.74 this quarter. Our bank and holding company remained well capitalized with capital levels that are among the strongest in the banking industry. Tangible equity to tangible common assets is 16.1%. Blue Foundry continues to operate with robust liquidity and a low concentration risk to any single depositor. At the end of the 4th quarter, we had $408,000,000 in untapped borrowing capacity and our unencumbered available for sale securities and unrestricted cash provided another $211,000,000 of liquidity. James NesciCEO & President at Blue Foundry Bancorp00:04:23This liquidity is 4.2 times larger than our uninsured and uncollateralized deposits to customers, which represent only 11% of our deposit balances. With that, I'd like to turn the call over to Kelly and then we will be delighted to answer your questions. Kelly? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:04:41Thank you, Jim, and good morning, everyone. The net loss for the Q4 was $2,700,000 compared to a net loss of $4,000,000 during the prior quarter. This improvement was driven by an increase in net interest income, a decrease in expenses and a release of provision for credit losses compared to a build in the prior quarter. Net interest income increased by $386,000 leading to a 7 basis point improvement in net interest margin. Interest income expanded $253,000 while interest expense declined $133,000 We expect our net interest margin to improve as we close loans at current rates and reprice deposits lower. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:05:39Yield on loans improved by 4 basis points to 4.57% as the improvement from originations was partially offset by the reduction in yields on construction loans due to the decrease in the prime rate. The yield on all interest earning assets improved by 5 basis points to 4.37%. Cost of funds decreased 6 basis points to 2.93%. The cost of interest bearing deposits decreased 10 basis points to 2.90 percent, while borrowing costs increased 13 basis points to 3.26%. Expenses improved by $386,000 Compensation expense was lower this quarter, driven by the lower than projected variable compensation expenses. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:06:42As you will remember, we began releasing variable compensation accruals earlier this year when the achievement of some goals became less probable. Our annual cash incentive plan has a potential payout of up to 150%. The planned payout is approximately 60% to 70% of target as the company did not achieve all corporate goals this year. While we continue to promote expense discipline, we expect operating expenses to return to the mid to high $13,000,000 range as bonus accruals reset to 100% achievement, merit raises are realized and normal inflationary consideration impact other contracts. For the Q4, we had a $301,000 release in the provision for credit losses. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:07:39The majority of this release was in the allowance for commitments and unused lines as much of our loan growth this quarter came from loans that were commitments at the end of last quarter. The economic forecast scenarios as well as the duration of our construction portfolio contributed to a slight relief in the allowance for credit losses on loans. We also had a small release in the allowance for credit losses on held to maturity securities. As a reminder, the majority of our allowance for credit loss is derived from quantitative measures and our allowance methodology still places greater weighting on the baseline and adverse forecast. Moving on to the balance sheet, gross loans increased by $32,500,000 during the quarter, predominantly in owner occupied commercial real estate and to a lesser extent commercial industrial and multifamily loans. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:08:44Only approximately 2% of our loan portfolio is in office space and none is in New York City. Our available for scale security portfolio with a duration of 4.2 years increased $6,200,000 This increase was driven by the purchase of $44,500,000 of securities at current yields, partially offset by $20,000,000 of maturing lower yielding treasuries, dollars 13,800,000 of amortization and a $4,500,000 deterioration in the unrealized loss position. Deposits grew by $24,700,000 We saw growth of $18,600,000 in core accounts across all categories. Non interest bearing deposits grew $3,700,000 checking accounts grew $12,100,000 and savings accounts grew $2,800,000 Time deposits grew $6,100,000 as we replaced promotional customer time deposits with $30,000,000 of broker deposits. Borrowing decreased by $9,000,000 as the company funded loan growth with deposit growth and cash on hand. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:10:20Finally, asset quality remains strong in the current environment. Non performing assets declined modestly due to a slight improvement in non accrual loans. Both non performing assets to assets and non performing loans to loans remains relatively flat at 25 basis points and 33 basis points respectively. Our allowance coverage ratios remained relatively flat as well at 83 basis points to total loans and 2 54% of non performing loans. And with that, Jim and I are happy to take your questions. Operator00:11:04Thank you. Our first question comes from the line of Justin Crowley with Piper Sandler. Please go ahead. Justin CrowleyResearch Analyst at Piper Sandler Companies00:11:30Hey, good Justin CrowleyResearch Analyst at Piper Sandler Companies00:11:31morning. Just want to start off on your commentary on loan growth. That 1% to 4% and then multifamily bucket have been kind of the 2 areas that have been a drag on net growth for the past couple of years now. Is the expectation that that will continue to be the case looking forward? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:11:50Yes. I think from a strategic perspective, Justin, we're really looking at growing the commercial book, both in C and I, as well as owner occupied space. The decline in our residential book has been somewhat intentional, although quicker than we had envisioned. In multifamily, we believe we have a large concentration there. So we're watching our concentration limits on the multifamily space. Justin CrowleyResearch Analyst at Piper Sandler Companies00:12:20Okay, got it. And then you mentioned the $60,000,000 pipeline. I can't remember where maybe that stood last quarter. I'm not sure if you shared that. But just curious your just broader thoughts on just where activity stands and you see things starting to pick up as we head through the New Year and perhaps maybe more certainty following the election? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:12:42Yes. I definitely think the pipeline has improved from where we were last quarter. And as we mentioned, we did see some pull through of those that we had commitments on at the end of Q3. As Jim mentioned in his remarks, we have about $60,000,000 of commercial loans that we had letters of intent out at a rate of around $750,000,000 So we are seeing some improvement in the pipeline and look for that to continue. Justin CrowleyResearch Analyst at Piper Sandler Companies00:13:13Okay, got it. And then on the margin, I'm just looking to get a sense for how you're thinking about deposit cost progression over the course of the year. How much have you been able to move rates lower so far, following 100 basis points and cuts out of the Fed? And to what extent is that reflected in the 4Q margin? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:13:34So I think we did see improvement in deposit costs as we mentioned to 2.9% yield on that book. There's been pressures, Justin, on repricing. We have been able to bring prices down or costs down somewhat on that book. We do have probably $500,000,000 $500,000,000 coming into the first half. We've intentionally kept our CV short. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:14:02So we look for that with pricing and hope that we can get benefits as rates trend lower. Justin CrowleyResearch Analyst at Piper Sandler Companies00:14:10Okay. And on that $500,000,000 do you have the rate that that's coming off of and where that will reset at? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:14:19Yes. So the rate currently on the Q1 is probably around 4.75%. So we're looking our promotional rate that we have out there right now is a 4% yielding CD. So we're hoping to realize some improvement as those reprice. And then in the second half or the second quarter, we're seeing a little bit lower of a yield on that, both probably around the $450,000,000 and hope that that can reprice as well. Justin CrowleyResearch Analyst at Piper Sandler Companies00:14:50All right. That's helpful. And then just another input as far as the margin on the asset side. With average loan yields around that mid-four level, is the expectation that that continues to move higher regardless of whether we get another cut or 2, just given where new production is coming on at combined with back book repricing? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:15:11Yes. I think we do anticipate that to trend higher as things are coming on at market rates, and we have the amortization of our book at the lower rates. There are some challenges as well though on the construction book. So I think it's fair to say while construction will reprice lower if prime rate goes down, we will see improvement as those other asset classes are being put on the books. Justin CrowleyResearch Analyst at Piper Sandler Companies00:15:38Okay, great. I'll leave it there. Thanks so much for taking the questions. James NesciCEO & President at Blue Foundry Bancorp00:15:44Thank you. Operator00:15:48The next question comes from Chris O'Connell with KBW. Please go ahead, Chris. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:15:55Hey, yes. Good morning. Just wanted to follow-up on the margin discussion. I was wondering if you guys had the spot margin handy for December at the end of the quarter? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:16:14I think we were around 190 from a margin perspective at the end of the quarter, a little bit higher, like 190,192. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:16:28Okay, great. And just given the dynamics here on the balance sheet, I mean, it seems like things are now moving in the right direction on the margin. And I'm sure a lot of it depends on how much growth on the loan portfolio side that you guys are able to put on over the course of the year. But any sense of the magnitude of expansion that you could see over the course of 2025? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:17:01I think as we look at 2025, of course, we're looking to grow. We're looking at probably high single digit loan growth at this point, given where we have some maturities coming in as well as the pipeline, so factoring that in. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:17:22Okay. And do you think like the margin do you expect it can kind of pace over the course of the year at a similar expansion rate that you saw in the Q4? Or is that a little bit higher or lower than what you think you're going to achieve going forward? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:17:40I think at this point, we're anticipating a similar pace. Again, it's all dependent upon the timing of putting those credit signs and also the ability to reprice deposits Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:17:54lower. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:17:56Okay. Thanks. And then for the expense guide back to the mid to high $13,000,000 range, Is the expectation that that holds as a pretty good level for the remainder of 2025 after Q1? Or do you expect to see growth thereafter? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:18:22Yes. I think we're looking at that mid to high $13,000,000 range across the quarters. Again, as we look at our achievement in variable compensation and how we're attaining throughout the year, but that's where we're seeing things pull out for 2025. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:18:42Okay. And then I guess on as far as like the variable compensation goes, is there like what are the specific metrics for 2025 to hit that 100%? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:19:02So the goals that the our compensation committee and Board have agreed to really align to our growth and it ties to loan growth, also deposit growth, loan cost deposit growth and our net interest margin really growing the balance sheet in a mindful way. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:19:24Okay. Thanks. And then you mentioned the construction portfolio being potentially really the only headwind here on the loan yields. Like what are the yields coming off on that portfolio? And what are the new origination yields there? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:19:49So the yields on the portfolio are Climb plus is either 50 basis points to 100 basis points within that range. So it's dependent upon where Climb rate is. The construction book is right around $85,000,000 right now, and we see some of the pipeline as those are maturing, coming on. So, we have some of the construction in the pipeline. James NesciCEO & President at Blue Foundry Bancorp00:20:12Yes, I think that book is constantly recycled is the way to look at it. If construction project gets finished up, that loan pays off, a new one comes on board. We've got a good pipeline of construction loans. Got it. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:20:33And then on the share repurchases, is it fair to assume that that can progress at a kind of similar pace over the course of 2025 from here? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:20:48Yes. I think as we look at share repurchases, we think it's a good use of capital at these levels. So we'll continue to be active in the market, again, always looking at the best use of capital as we move forward. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:21:07Great. Thanks, Jim. Thanks, Kelly. Appreciate the time. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:21:12Great. James NesciCEO & President at Blue Foundry Bancorp00:21:12Thank you. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:21:12Thanks, Chris. Operator00:21:17Thank you for your questions. I will now turn the call back over to Jim Nesi for closing comments. James NesciCEO & President at Blue Foundry Bancorp00:21:24Thank you, operator. We'd like to thank everybody for participating today, and we look forward to updating you next quarter. Thanks so much. Operator00:21:34Thank you, everyone, for joining us today. This concludes your call and you may now disconnect your lines.Read moreParticipantsExecutivesJames NesciCEO & PresidentKelly PecoraroExecutive VP & CFOAnalystsJustin CrowleyResearch Analyst at Piper Sandler CompaniesChristopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)Powered by Conference Call Audio Live Call not available Earnings Conference CallBlue Foundry Bancorp Q4 202400:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsPress Release(8-K)Annual report(10-K) Blue Foundry Bancorp Earnings HeadlinesBlue Foundry Bancorp (BLFY) Projected to Post Quarterly Earnings on WednesdayApril 28 at 1:21 AM | americanbankingnews.comBlue Foundry Bancorp Schedules First Quarter 2025 Earnings Conference Call | BLFY Stock NewsApril 16, 2025 | gurufocus.comHere’s How to Claim Your Stake in Elon’s Private Company, xAII predict this single breakthrough could make Elon the world’s first trillionaire — and mint more new millionaires than any tech advance in history. And for a limited time, you have the chance to claim a stake in this project, even though it’s housed inside Elon’s private company, xAI.April 28, 2025 | Brownstone Research (Ad)Blue Foundry Bancorp Schedules First Quarter 2025 Earnings Conference CallApril 16, 2025 | gurufocus.comBlue Foundry Bancorp Schedules First Quarter 2025 Earnings Conference CallApril 16, 2025 | globenewswire.comBlue Foundry Bancorp Full Year 2024 Earnings: EPS Beats ExpectationsMarch 29, 2025 | finance.yahoo.comSee More Blue Foundry Bancorp Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Blue Foundry Bancorp? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Blue Foundry Bancorp and other key companies, straight to your email. Email Address About Blue Foundry BancorpBlue Foundry Bancorp (NASDAQ:BLFY) operates as a bank holding company for Blue Foundry Bank, a savings bank that offers various banking products and services for individuals and businesses in the United States. The company offers saving, time, and non-interest bearing deposits; demand accounts; and loans, such as one-to-four family residential property, multi-family, residential real estate, non-residential real estate, consumer, construction, and commercial and industrial loans, as well as junior liens and home equity lines of credit. The company was formerly known as Boiling Springs Bancorp and changed its name to Blue Foundry Bancorp in July 2019. 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PresentationSkip to Participants Operator00:00:00Good morning, and welcome to Blue Foundry Bancorp's 4th Quarter 2024 Earnings Call. Comments made during today's call may include forward looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. BlueFoundry encourages all participants to refer to the full disclaimer contained in this morning's earnings release, which has been posted to the Investor Relations page on bluefoundrybank.com. During the call, management will refer to non GAAP measures, which exclude certain items from reported results. Please refer to today's earnings release for reconciliations of these non GAAP measures. Operator00:00:40As a reminder, this event is being recorded. Your line will be muted for the duration of the call. After the speakers' remarks, there will be a question and answer session. I will now turn the call over to President and CEO, Jim Nesi. James NesciCEO & President at Blue Foundry Bancorp00:00:56Thank you, operator, and good morning, everyone. Thank you for joining us for our Q4 earnings call. I am joined by our Chief Financial Officer, Kelly Piperaro, who will discuss the company's 4th quarter financial results in detail after I provide an update on our operations. Earlier this morning, we reported a quarterly net loss of $2,700,000 and a quarterly pre provision net loss of $3,000,000 Levels increased by $32,000,000 predominantly in our commercial portfolios. Deposits grew $25,000,000 the majority of which came in core growth, including a 17% increase in non interest bearing accounts. James NesciCEO & President at Blue Foundry Bancorp00:01:41Despite the net loss, we were able to maintain tangible book value and both capital and credit quality remains strong. Additionally, our balance sheet remains well positioned for the current environment. We are encouraged by the improvement in our yield on interest earning assets as well as our cost of interest bearing liabilities, as this may indicate an inflection point in our net interest margin going forward. Continuing our transformation into becoming a more commercially oriented institution, my management team and I have set forth the strategic plan intent on attracting the full banking relationship of small to medium sized businesses in our marketplace. Our bank has industry leading frictionless products and we are focused on developing new relationships and deepening our current relationships within the communities we serve. James NesciCEO & President at Blue Foundry Bancorp00:02:36All employees have a portion of their compensation aligned with achieving our strategic objectives. We funded $59,000,000 of loans during the quarter, yielding approximately 7.5%. We have executed letters of intent totaling over $60,000,000 for predominantly commercial credits at yields of approximately 7.7%. Given our demonstrated high pull through rate, we expect to deliver continued balance sheet and interest income growth over the coming quarters, all while remaining disciplined in our underwriting standards. During the quarter, we repurchased 481,000 shares at a weighted average share price of $10.49 Repurchasing shares at this price continues to improve shareholder value. James NesciCEO & President at Blue Foundry Bancorp00:03:30To date, we have repurchased 6,900,000 shares at a weighted average cost of $10.16 Tangible book value per share remained flat at $14.74 this quarter. Our bank and holding company remained well capitalized with capital levels that are among the strongest in the banking industry. Tangible equity to tangible common assets is 16.1%. Blue Foundry continues to operate with robust liquidity and a low concentration risk to any single depositor. At the end of the 4th quarter, we had $408,000,000 in untapped borrowing capacity and our unencumbered available for sale securities and unrestricted cash provided another $211,000,000 of liquidity. James NesciCEO & President at Blue Foundry Bancorp00:04:23This liquidity is 4.2 times larger than our uninsured and uncollateralized deposits to customers, which represent only 11% of our deposit balances. With that, I'd like to turn the call over to Kelly and then we will be delighted to answer your questions. Kelly? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:04:41Thank you, Jim, and good morning, everyone. The net loss for the Q4 was $2,700,000 compared to a net loss of $4,000,000 during the prior quarter. This improvement was driven by an increase in net interest income, a decrease in expenses and a release of provision for credit losses compared to a build in the prior quarter. Net interest income increased by $386,000 leading to a 7 basis point improvement in net interest margin. Interest income expanded $253,000 while interest expense declined $133,000 We expect our net interest margin to improve as we close loans at current rates and reprice deposits lower. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:05:39Yield on loans improved by 4 basis points to 4.57% as the improvement from originations was partially offset by the reduction in yields on construction loans due to the decrease in the prime rate. The yield on all interest earning assets improved by 5 basis points to 4.37%. Cost of funds decreased 6 basis points to 2.93%. The cost of interest bearing deposits decreased 10 basis points to 2.90 percent, while borrowing costs increased 13 basis points to 3.26%. Expenses improved by $386,000 Compensation expense was lower this quarter, driven by the lower than projected variable compensation expenses. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:06:42As you will remember, we began releasing variable compensation accruals earlier this year when the achievement of some goals became less probable. Our annual cash incentive plan has a potential payout of up to 150%. The planned payout is approximately 60% to 70% of target as the company did not achieve all corporate goals this year. While we continue to promote expense discipline, we expect operating expenses to return to the mid to high $13,000,000 range as bonus accruals reset to 100% achievement, merit raises are realized and normal inflationary consideration impact other contracts. For the Q4, we had a $301,000 release in the provision for credit losses. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:07:39The majority of this release was in the allowance for commitments and unused lines as much of our loan growth this quarter came from loans that were commitments at the end of last quarter. The economic forecast scenarios as well as the duration of our construction portfolio contributed to a slight relief in the allowance for credit losses on loans. We also had a small release in the allowance for credit losses on held to maturity securities. As a reminder, the majority of our allowance for credit loss is derived from quantitative measures and our allowance methodology still places greater weighting on the baseline and adverse forecast. Moving on to the balance sheet, gross loans increased by $32,500,000 during the quarter, predominantly in owner occupied commercial real estate and to a lesser extent commercial industrial and multifamily loans. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:08:44Only approximately 2% of our loan portfolio is in office space and none is in New York City. Our available for scale security portfolio with a duration of 4.2 years increased $6,200,000 This increase was driven by the purchase of $44,500,000 of securities at current yields, partially offset by $20,000,000 of maturing lower yielding treasuries, dollars 13,800,000 of amortization and a $4,500,000 deterioration in the unrealized loss position. Deposits grew by $24,700,000 We saw growth of $18,600,000 in core accounts across all categories. Non interest bearing deposits grew $3,700,000 checking accounts grew $12,100,000 and savings accounts grew $2,800,000 Time deposits grew $6,100,000 as we replaced promotional customer time deposits with $30,000,000 of broker deposits. Borrowing decreased by $9,000,000 as the company funded loan growth with deposit growth and cash on hand. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:10:20Finally, asset quality remains strong in the current environment. Non performing assets declined modestly due to a slight improvement in non accrual loans. Both non performing assets to assets and non performing loans to loans remains relatively flat at 25 basis points and 33 basis points respectively. Our allowance coverage ratios remained relatively flat as well at 83 basis points to total loans and 2 54% of non performing loans. And with that, Jim and I are happy to take your questions. Operator00:11:04Thank you. Our first question comes from the line of Justin Crowley with Piper Sandler. Please go ahead. Justin CrowleyResearch Analyst at Piper Sandler Companies00:11:30Hey, good Justin CrowleyResearch Analyst at Piper Sandler Companies00:11:31morning. Just want to start off on your commentary on loan growth. That 1% to 4% and then multifamily bucket have been kind of the 2 areas that have been a drag on net growth for the past couple of years now. Is the expectation that that will continue to be the case looking forward? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:11:50Yes. I think from a strategic perspective, Justin, we're really looking at growing the commercial book, both in C and I, as well as owner occupied space. The decline in our residential book has been somewhat intentional, although quicker than we had envisioned. In multifamily, we believe we have a large concentration there. So we're watching our concentration limits on the multifamily space. Justin CrowleyResearch Analyst at Piper Sandler Companies00:12:20Okay, got it. And then you mentioned the $60,000,000 pipeline. I can't remember where maybe that stood last quarter. I'm not sure if you shared that. But just curious your just broader thoughts on just where activity stands and you see things starting to pick up as we head through the New Year and perhaps maybe more certainty following the election? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:12:42Yes. I definitely think the pipeline has improved from where we were last quarter. And as we mentioned, we did see some pull through of those that we had commitments on at the end of Q3. As Jim mentioned in his remarks, we have about $60,000,000 of commercial loans that we had letters of intent out at a rate of around $750,000,000 So we are seeing some improvement in the pipeline and look for that to continue. Justin CrowleyResearch Analyst at Piper Sandler Companies00:13:13Okay, got it. And then on the margin, I'm just looking to get a sense for how you're thinking about deposit cost progression over the course of the year. How much have you been able to move rates lower so far, following 100 basis points and cuts out of the Fed? And to what extent is that reflected in the 4Q margin? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:13:34So I think we did see improvement in deposit costs as we mentioned to 2.9% yield on that book. There's been pressures, Justin, on repricing. We have been able to bring prices down or costs down somewhat on that book. We do have probably $500,000,000 $500,000,000 coming into the first half. We've intentionally kept our CV short. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:14:02So we look for that with pricing and hope that we can get benefits as rates trend lower. Justin CrowleyResearch Analyst at Piper Sandler Companies00:14:10Okay. And on that $500,000,000 do you have the rate that that's coming off of and where that will reset at? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:14:19Yes. So the rate currently on the Q1 is probably around 4.75%. So we're looking our promotional rate that we have out there right now is a 4% yielding CD. So we're hoping to realize some improvement as those reprice. And then in the second half or the second quarter, we're seeing a little bit lower of a yield on that, both probably around the $450,000,000 and hope that that can reprice as well. Justin CrowleyResearch Analyst at Piper Sandler Companies00:14:50All right. That's helpful. And then just another input as far as the margin on the asset side. With average loan yields around that mid-four level, is the expectation that that continues to move higher regardless of whether we get another cut or 2, just given where new production is coming on at combined with back book repricing? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:15:11Yes. I think we do anticipate that to trend higher as things are coming on at market rates, and we have the amortization of our book at the lower rates. There are some challenges as well though on the construction book. So I think it's fair to say while construction will reprice lower if prime rate goes down, we will see improvement as those other asset classes are being put on the books. Justin CrowleyResearch Analyst at Piper Sandler Companies00:15:38Okay, great. I'll leave it there. Thanks so much for taking the questions. James NesciCEO & President at Blue Foundry Bancorp00:15:44Thank you. Operator00:15:48The next question comes from Chris O'Connell with KBW. Please go ahead, Chris. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:15:55Hey, yes. Good morning. Just wanted to follow-up on the margin discussion. I was wondering if you guys had the spot margin handy for December at the end of the quarter? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:16:14I think we were around 190 from a margin perspective at the end of the quarter, a little bit higher, like 190,192. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:16:28Okay, great. And just given the dynamics here on the balance sheet, I mean, it seems like things are now moving in the right direction on the margin. And I'm sure a lot of it depends on how much growth on the loan portfolio side that you guys are able to put on over the course of the year. But any sense of the magnitude of expansion that you could see over the course of 2025? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:17:01I think as we look at 2025, of course, we're looking to grow. We're looking at probably high single digit loan growth at this point, given where we have some maturities coming in as well as the pipeline, so factoring that in. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:17:22Okay. And do you think like the margin do you expect it can kind of pace over the course of the year at a similar expansion rate that you saw in the Q4? Or is that a little bit higher or lower than what you think you're going to achieve going forward? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:17:40I think at this point, we're anticipating a similar pace. Again, it's all dependent upon the timing of putting those credit signs and also the ability to reprice deposits Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:17:54lower. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:17:56Okay. Thanks. And then for the expense guide back to the mid to high $13,000,000 range, Is the expectation that that holds as a pretty good level for the remainder of 2025 after Q1? Or do you expect to see growth thereafter? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:18:22Yes. I think we're looking at that mid to high $13,000,000 range across the quarters. Again, as we look at our achievement in variable compensation and how we're attaining throughout the year, but that's where we're seeing things pull out for 2025. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:18:42Okay. And then I guess on as far as like the variable compensation goes, is there like what are the specific metrics for 2025 to hit that 100%? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:19:02So the goals that the our compensation committee and Board have agreed to really align to our growth and it ties to loan growth, also deposit growth, loan cost deposit growth and our net interest margin really growing the balance sheet in a mindful way. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:19:24Okay. Thanks. And then you mentioned the construction portfolio being potentially really the only headwind here on the loan yields. Like what are the yields coming off on that portfolio? And what are the new origination yields there? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:19:49So the yields on the portfolio are Climb plus is either 50 basis points to 100 basis points within that range. So it's dependent upon where Climb rate is. The construction book is right around $85,000,000 right now, and we see some of the pipeline as those are maturing, coming on. So, we have some of the construction in the pipeline. James NesciCEO & President at Blue Foundry Bancorp00:20:12Yes, I think that book is constantly recycled is the way to look at it. If construction project gets finished up, that loan pays off, a new one comes on board. We've got a good pipeline of construction loans. Got it. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:20:33And then on the share repurchases, is it fair to assume that that can progress at a kind of similar pace over the course of 2025 from here? Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:20:48Yes. I think as we look at share repurchases, we think it's a good use of capital at these levels. So we'll continue to be active in the market, again, always looking at the best use of capital as we move forward. Christopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)00:21:07Great. Thanks, Jim. Thanks, Kelly. Appreciate the time. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:21:12Great. James NesciCEO & President at Blue Foundry Bancorp00:21:12Thank you. Kelly PecoraroExecutive VP & CFO at Blue Foundry Bancorp00:21:12Thanks, Chris. Operator00:21:17Thank you for your questions. I will now turn the call back over to Jim Nesi for closing comments. James NesciCEO & President at Blue Foundry Bancorp00:21:24Thank you, operator. We'd like to thank everybody for participating today, and we look forward to updating you next quarter. Thanks so much. Operator00:21:34Thank you, everyone, for joining us today. This concludes your call and you may now disconnect your lines.Read moreParticipantsExecutivesJames NesciCEO & PresidentKelly PecoraroExecutive VP & CFOAnalystsJustin CrowleyResearch Analyst at Piper Sandler CompaniesChristopher O'ConnellDirector - Equity Research at Keefe, Bruyette & Woods (KBW)Powered by