Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deposits increased by $7.5 million and loans grew by $3.6 million, indicating growth in core banking activities.
- Tangible book value per share increased by $0.05 to $14.74, reflecting improved shareholder value.
- The company has a healthy commercial loan pipeline, which is expected to drive sustained loan growth in future quarters.
- Blue Foundry Bancorp (BLFY, Financial) remains well-capitalized with a tangible equity to tangible common assets ratio of 16.5%, one of the strongest in the banking industry.
- The bank operates with robust liquidity, having $334 million in untapped borrowing capacity and additional liquidity from unencumbered securities and cash.
Negative Points
- The company reported a net loss of $4 million for the third quarter, compared to a net loss of $2.3 million in the previous quarter.
- Net interest income decreased by $486,000, leading to a 14 basis point reduction in net interest margin.
- Interest expense increased by $726,000, outpacing the increase in interest income.
- The cost of funds increased by 10 basis points to 2.99%, indicating rising funding costs.
- The yield on loans contracted by 3 basis points to 4.53%, reflecting pressure on loan profitability.
Q & A Highlights
Q: What drove the decrease in net interest margin (NIM) for the quarter, particularly regarding loan yields?
A: Kelly Pecoraro, CFO, explained that the decrease in NIM was due to the timing of funding on some loan products as the bank transitions to a more commercial focus. Additionally, there was repricing of deposits to higher levels earlier in the quarter, with some CDs locked in at higher rates, impacting the NIM.
Q: How does Blue Foundry plan to manage deposit rates, especially promotional CD rates, in light of potential further rate decreases?
A: Kelly Pecoraro stated that the bank is monitoring the competitive rate environment and has recently lowered its CD offering rate. The bank aims to shift customers back into core products, allowing for more flexibility in adjusting rates.
Q: Can you provide details on the consumer loan participation during the quarter and its potential as a growth tool?
A: Kelly Pecoraro noted that the bank participated in a consumer loan pool with strong credit enhancements. While specific FICO scores weren't provided, the credits were well-underwritten. The bank will continue to evaluate such opportunities based on credit quality and rates.
Q: What is the outlook for loan pipelines and origination yields?
A: Kelly Pecoraro mentioned that the loan pipeline is stronger than the previous quarter, standing at over $60 million with origination yields around 8.7%. The timing of fundings will depend on borrower needs.
Q: How does Blue Foundry view its CD portfolio in terms of maturity and turnover in the coming quarters?
A: Kelly Pecoraro indicated that the CD portfolio is kept short, with about $300 million set to reprice in the fourth quarter. The bank's strategy includes maintaining a seven-month special CD, which allows for quick turnover.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
