Blue Foundry Bancorp (BLFY)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 showed tangible operating progress despite a net loss: net interest margin expanded 27 bps to 2.16% on higher asset yields and lower deposit costs, net interest income rose 13% QoQ to $10.7M, and tangible book value per share increased to $14.81 .
• Deposits grew $43.9M to $1.39B and loans grew $42.2M to $1.63B, with mix shifting toward commercial real estate and purchased, credit-enhanced consumer loans to improve yields; uninsured deposits remained modest at ~11% .
• Management guided to further NIM expansion of about 5–10 bps in Q2 and maintained an operating expense run-rate in the high-$13M to low-$14M range; share repurchases continued (464k shares at $9.52) at a discount to TBV .
• Credit quality remained strong: ACL/loans 0.81%, NPLs 0.35% of loans, NPA 0.27% of assets; allowance covers NPLs ~230% .
• Wall Street consensus estimates via S&P Global were unavailable for Q1 2025, so no beat/miss analysis is provided; investor narrative centers on continued NIM improvement, deposit mix optimization, and capital returns [GetEstimates errors].

What Went Well and What Went Wrong

What Went Well

• Net interest margin expanded 27 bps QoQ to 2.16% as asset yields rose and deposit costs fell; net interest income increased by $1.27M QoQ to $10.74M .
• Balanced growth and funding: deposits +$43.9M to $1.387B funded loans +$42.2M to $1.626B, with targeted growth in commercial real estate and construction and purchased consumer loans to augment yield .
• Strong capital and liquidity: tangible equity/tangible assets 15.61%, TBV/share $14.81, liquidity coverage 3.9x uninsured deposits; “both the bank and holding company remain well-capitalized” .
• Quote: “We are pleased with the improvement experienced in yields on assets and cost of liabilities… net interest margin [up] 27 basis points… increasing tangible book value to $14.81 per share.” — CEO James D. Nesci .

What Went Wrong

• Continued net loss: Q1 2025 net loss of $2.692M and diluted EPS of $(0.13), flat vs Q4 2024 and Q1 2024; efficiency ratio remained elevated at 122.36% despite improvement .
• Noninterest expense increased $748k QoQ, primarily compensation and benefits due to merit increases and resetting variable compensation accruals to target; occupancy also up on snow removal .
• Slight deterioration in asset quality optics (still strong): NPLs rose to $5.7M (0.35% of loans) vs $5.1M (0.33%); ACL/NPL coverage declined to ~230% from ~254% .

Financial Results

Segment breakdown – Loans (Balances, $USD Thousands)

Deposit breakdown (Balances, $USD Thousands)

KPIs and capital

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategy: “Driving loan growth in higher-yielding asset classes, maintaining strong credit quality and continuing to grow and diversify low-cost funding sources… loan production totaled $90 million at ~7.1% yield.” — CEO James D. Nesci .
• Capital return: “We repurchased 464,000 shares at a weighted average price of $9.52, a significant discount to tangible book value… enhancing shareholder value.” — CEO .
• Margin outlook: “We expect some additional expansion as we head into the second quarter, probably about 5 to 10 basis points from where we were.” — CFO Kelly Pecoraro .
• Deposit plan: “We’ve strategically kept our CD short… ~$335 million maturing next quarter at 4.11% cost; shifting toward core… brokered ~3.75% with swaps, 2–3 years.” — CFO .
• Credit-enhanced consumer loans: “They come on with a 3% reserve level… good product to augment organic growth at ~7% yield.” — CFO .

Q&A Highlights

• Margin: Management targets additional NIM expansion of ~5–10 bps in Q2; spot margin not disclosed .
• Asset repricing: ~$220M of loans mature/reprice in 2025 at yields just shy of 7%; larger yield pickup expected in 2026–2027 as multifamily reprices from ~4% .
• Deposits: ~$335M CDs maturing next quarter (current cost ~4.11%); promo CDs at 3-month 4.20%, longer tenors sub-4%; brokered deposits at ~3.75% for 2–3 years .
• Consumer loan purchases: Unsecured, credit-enhanced consumer loans at ~7% yield with 3% reserve; incorporated into CECL, no additional allowance needed in Q1 .
• Buybacks: Expect to continue repurchases, subject to capital deployment opportunities and market conditions .

Estimates Context

• S&P Global consensus EPS and revenue estimates for Q1 2025 were unavailable at the time of retrieval; as a result, we cannot provide a beat/miss analysis relative to Street expectations [GetEstimates errors].
• Given the lack of published consensus, investor adjustments will likely center on internal margin trajectory and expense run-rate rather than revisions to modeled EPS or revenue.

Key Takeaways for Investors

• NIM inflection: Clear margin expansion (+27 bps QoQ) and guided +5–10 bps in Q2, driven by higher asset yields and deposit cost reductions; monitor deposit mix and CD repricing cadence for sustainability .
• Yield-focused portfolio rotation: Growth in CRE (owner-occupied), construction, and purchased credit-enhanced consumer loans (~7% yields, 3% reserve) supports topline; watch 2026–2027 multifamily repricing for further yield lift .
• Expense trajectory: Run-rate high-$13M to low-$14M with variable comp reset and targeted hiring; margin gains must outpace expense drift to reach breakeven/profitability .
• Capital returns: Buybacks at discounts to TBV accretive to per-share value; continuation provides downside support while earnings rebuild .
• Credit remains solid: NPLs/loans 0.35%, ACL/loans 0.81%, minimal net charge-offs; strong coverage and conservative CECL weighting reduce tail risk .
• Liquidity and deposit stability: Uninsured deposits at ~11% and robust borrowing capacity/liquidity (3.9x uninsured) mitigate funding stress risk .
• Near-term catalysts: Delivery of guided NIM expansion, execution on deposit repricing and pipeline conversion could re-rate shares; absence of Street estimates shifts focus to internal KPI trajectory and capital deployment .