Blue Foundry Bancorp (BLFY)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 showed continued sequential improvement: net loss narrowed to $2.0M ($0.10) from $2.7M ($0.13) in Q1, driven by 12 bps NIM expansion to 2.28% and stable expenses; credit quality remained strong with NPLs at 0.38% of loans .
• Against S&P Global consensus, BLFY beat EPS by $0.02 (actual -$0.10 vs -$0.12*) but modestly missed “Revenue” (SPGI revenue proxy) by ~$0.22M (actual $11.58M* vs $11.80M*), reflecting timing of funding costs and asset yield progression (company-reported NII was $11.64M) .
• Balance sheet mix shifted as planned: loans +$47.4M QoQ to $1.67B with growth in owner-occupied CRE and construction, and purchases of credit-enhanced consumer loans; deposits +$29.1M QoQ with core deposits +$25.2M, while brokered deposits funded part of growth .
• Management expects only “a couple of bps” of NIM expansion in Q3 with more meaningful margin improvement in 2026 as ~$75M of loans at ~3.75% reprice; OpEx is guided to remain in the mid-to-high $13M range per quarter near-term .
• Capital return: 406K shares repurchased at $9.42; a new 5% program (up to 1.08M shares) commenced June 20; tangible equity/TA remains robust at 15.10% .

What Went Well and What Went Wrong

• What Went Well

  • Net interest margin expanded 12 bps QoQ to 2.28% (third consecutive quarter of expansion), lifting NII by $0.9M QoQ to $11.64M .
  • Core deposit growth (+$25.2M QoQ; +$49.6M YTD) and lower deposit costs (-13 bps QoQ to 2.62%) supported spread improvement despite competitive markets .
  • Credit quality remained solid: NPLs at 0.38% of loans; ACL/NPL coverage >200%; net recoveries in Q2 were de minimis .
  • Management quote: “We are encouraged by the continued improvement this quarter, highlighted by net interest margin expansion, stable expenses, and continued strong credit metrics.” — CEO James Nesci .

• What Went Wrong

  • Still loss-making: Q2 net loss of $2.0M due in part to provision on off-balance-sheet commitments and lack of tax benefit given the DTA valuation allowance .
  • Efficiency ratio, while improving, remains elevated at 112.4% (down from 122.4% in Q1), highlighting the need for further operating leverage .
  • Mix headwinds and timing: brokered deposits increased YTD to $225M to fund loan growth; NIM expansion in 2H25 expected to be limited before larger 2026 repricing wave .

Financial Results

Results vs prior periods and S&P Global consensus (company “Revenue proxy” shown as Net Interest Income; SPGI “Revenue” used for estimate comparison)

Loan portfolio composition (period-end, $USD thousands)

Deposit composition (period-end, $USD thousands)

Key Performance Indicators (quarterly)

Note: Asterisked estimates are from S&P Global; see Estimates Context section for disclaimer.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are encouraged by the continued improvement experienced this quarter, highlighted by net interest margin expansion, stable expenses, and continued strong credit metrics.” — James D. Nesci, CEO .
• “The net interest margin expanded due to improvements in both asset yields and the cost of liabilities… our focus on attracting the full banking relationship has contributed to core deposit growth.” — James D. Nesci .
• “Net interest income increased by $896,000 or 8.3%, driven by a 12 basis point expansion in our net interest margin… The yield on loans increased by 8 basis points to 4.80%… the cost of interest bearing deposits decreased 13 basis points to 2.62%.” — Kelly Pecoraro, CFO .

Q&A Highlights

• Margin outlook and repricing: Only a “couple of bps” of NIM expansion likely in Q3; ~$23M at ~4.75% reprices in 2H25; ~$75M at ~3.75% reprices over 2026, pointing to more material 2026 tailwind .
• Deposit costs/CDs: Book kept relatively short; added an 8‑month CD which shifts repricing into Jan/Feb 2026; competitive market dynamics will influence pricing .
• Consumer loan strategy: Consumer purchases stand at ~5% of loans; management is comfortable increasing to 7–8% near-term; these carry a 3% reserve and run through the normal allowance methodology .
• Expense discipline and AI: Management continues to scrutinize expenses and explore AI to drive efficiencies; modest 2H variable comp uptick expected .
• Core deposit growth strategy: Emphasis on full relationships across CRE/C&I and other borrowers to lift non-interest-bearing and core funding .

Estimates Context

• Q2 2025 EPS: Actual -$0.10 vs S&P Global consensus -$0.12* → Beat by $0.02*. Q2 2025 “Revenue” (SPGI proxy): Actual $11.58M* vs $11.80M* → Miss by ~$0.22M*. Coverage was limited (2 estimates*).
• Q1 2025 EPS: Actual -$0.13 vs -$0.17* → Beat by $0.04*. “Revenue”: $10.94M* vs $10.29M* → Beat by ~$0.65M*.
• Implications: With management signaling limited NIM expansion in 2H25 and more substantial repricing benefits in 2026, near-term revenue/NII estimates may need modest fine‑tuning, while outer‑year margin assumptions could drift higher if execution/pipeline holds .

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

• Sequential progress continues: NIM expansion, stable OpEx, and solid credit metrics narrowed losses; PPNR improved by ~$1.0M QoQ to a loss of $1.49M .
• Near-term outlook: Expect only modest NIM gains through Q3/Q4; larger repricing-driven improvement likely in 2026, when ~$75M of loans reprice from ~3.75% .
• Funding mix: Core deposits are rising, but brokered deposits remain a meaningful funding source; watch competitive pressures on deposit costs and the pace of core growth .
• Balance sheet strategy: Continued rotation toward owner-occupied CRE, construction, and credit-enhanced consumer loans (targeting 7–8% of loans) should support yields while managing risk .
• Expense trajectory: Efficiency ratio is improving but still elevated; OpEx expected in mid-to-high $13M per quarter with potential AI-driven efficiency gains longer term .
• Capital and valuation: Robust TCE/TA (15.10%) and ongoing buybacks (new 5% program) underpin TBV accretion; repurchases at discounts to TBV/ATBV add support .
• Trading setup: Modest near-term catalysts (incremental NIM) vs medium-term repricing tailwind; delivery on core deposit growth and expense discipline are likely stock drivers into 2026 .

Additional detail from primary sources:

• Q2 results 8‑K (full financials and KPIs) .
• Earnings call (prepared remarks and Q&A) .
• Press release (duplicative of EX‑99.1 highlights) .
• Prior quarters for trend: Q1’25 8‑K ; Q4’24 8‑K .