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Blue Foundry Bancorp (BLFY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 loss narrowed sequentially as net interest income rose, NIM expanded 7 bps to 1.89%, and operating expenses fell; credit quality remained strong with NPLs at 0.33% and ACL coverage at 254% .
  • Management signaled continued NIM improvement into 2025 as higher-yield originations flow through and CDs reprice lower; ~$500M of CDs roll in 1H with a promotional 4% offering, supporting deposit cost relief .
  • Balance sheet momentum: loans +$32.5M QoQ (to $1.58B) led by commercial, and deposits +$24.7M QoQ (to $1.34B); uninsured/unsecured deposits ~11% and substantial liquidity headroom remain .
  • Capital return continues: 480,851 shares repurchased at $10.49 avg; TBV per share held at $14.74; capital ratios well above “well-capitalized” .
  • Potential 2025 catalysts: sustained NIM expansion at a similar quarterly pace, high single-digit loan growth, expense normalization, and ongoing buybacks; estimate comparisons were unavailable via S&P Global this quarter (see Estimates Context) .

What Went Well and What Went Wrong

What Went Well

  • Sequential NIM and earnings trajectory improved: NIM +7 bps QoQ to 1.89% on higher asset yields and lower deposit costs; net loss improved to $(2.7)M from $(4.0)M in Q3 .
  • Commercial pivot gaining traction: loans +$32.5M QoQ; new production funded at ~7.5% in the quarter; LOIs of >$60M at ~7.7% yield support forward interest income growth .
  • Liquidity, credit, and capital remained strong: NPLs 0.33%, ACL coverage 254%, uninsured deposits ~11%, with ~$408M untapped borrowing capacity plus ~$211M of unencumbered AFS/cash liquidity; TBV/share steady at $14.74 .

What Went Wrong

  • Still loss-making and efficiency remains elevated: Q4 net loss $(2.7)M; non-interest expense $12.9M; efficiency ratio 130%+ underscores operating leverage work ahead .
  • Non-interest income softness YoY: down 27% vs Q4’23 on absence of gains and lower fees/service charges .
  • Mix shift pressure to time deposits: core deposits 47.3% (down from 48.8% YoY) as time deposits rose; although cost relief is expected, deposit mix remains a margin headwind until repricing flows through .

Financial Results

Quarterly trends (QoQ)

MetricQ2 2024Q3 2024Q4 2024
Total Interest Income ($M)21.292 21.532 21.785
Total Interest Expense ($M)11.719 12.445 12.312
Net Interest Income ($M)9.573 9.087 9.473
Non-Interest Income ($M)0.536 0.387 0.420
Total Non-Interest Expense ($M)13.215 13.267 12.881
Net Loss ($M)(2.344) (4.041) (2.687)
Diluted EPS ($)(0.11) (0.19) (0.13)
Net Interest Margin (%)1.96 1.82 1.89
Efficiency Ratio (%)130.73 140.04 130.20

Year-over-year comparison (YoY)

MetricQ4 2023Q4 2024
Total Interest Income ($M)20.335 21.785
Total Interest Expense ($M)11.139 12.312
Net Interest Income ($M)9.196 9.473
Non-Interest Income ($M)0.572 0.420
Total Non-Interest Expense ($M)12.543 12.881
Net Loss ($M)(2.931) (2.687)
Diluted EPS ($)(0.13) (0.13)
Net Interest Margin (%)1.84 1.89
Efficiency Ratio (%)128.41 130.20

Loan portfolio breakdown ($000s)

CategoryDec 31, 2023Sep 30, 2024Dec 31, 2024
Residential550,929 516,754 518,243
Multifamily682,564 666,304 671,116
Commercial Real Estate232,505 241,711 259,633
Construction & Land60,414 80,081 85,546
Junior Liens22,503 24,174 25,422
Commercial & Industrial11,768 14,228 16,311
Consumer & Other47 7,731 7,211
Total Loans1,560,730 1,550,983 1,583,482
ACL on Loans14,154 13,012 12,965
Loans, net1,546,576 1,537,971 1,570,517

Deposits breakdown ($000s)

CategoryDec 31, 2023Sep 30, 2024Dec 31, 2024
Non-interest Bearing27,739 22,254 26,001
NOW & Demand361,139 357,503 369,554
Savings259,402 237,651 240,426
Core Deposits648,280 617,408 635,981
Time Deposits596,624 701,262 707,339
Total Deposits1,244,904 1,318,670 1,343,320

KPIs and balance sheet ratios

KPIQ2 2024Q3 2024Q4 2024
Net Interest Margin (%)1.96 1.82 1.89
Interest Rate Spread (%)1.43 1.29 1.40
Efficiency Ratio (%)130.73 140.04 130.20
NPLs / Total Loans (%)0.40 0.33 0.33
ACL / Total Loans (%)0.84 0.84 0.83
ACL / NPLs (%)209.84 252.86 254.02
NPAs / Total Assets (%)0.30 0.25 0.25
Tangible BV/Share ($)14.69 14.74 14.74
Uninsured & Uncollateralized Deposits (% of total)~12% ~12% ~11%
FHLB Advances ($M, period-end)342.5 348.5 339.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin trajectoryFY 2025Not providedExpect continued improvement at a similar pace to Q4 as loans reprice up and deposits reprice down New
Loan growthFY 2025Not providedTarget high single-digit loan growth given maturities and pipeline New
Operating expenses (quarterly)2025 run-rateNot providedMid- to high-$13M per quarter as bonus accruals reset, merit increases, inflation New
CD repricing and deposit costs1H 2025Not provided~$500M CDs rolling in 1H; promo 4% CD; expect deposit cost relief as rates trend lower New
Share repurchasesOngoingNot providedContinue to be active at current levels as a prudent use of capital Maintained/affirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4 2024)Trend
Margin/NIMQ2: NIM +4 bps QoQ to 1.96% on asset yields; Q3: NIM down to 1.82% on higher funding costs NIM 1.89% (+7 bps QoQ); expect similar quarterly expansion into 2025 Improving
Deposit strategy/mixQ2/Q3: deposit growth; time deposits rose; core mix fell; uninsured ~12% Deposits +$24.7M QoQ; uninsured ~11%; ~$500M CDs rolling with 4% promo aiding cost Cost tailwind emerging
Commercial lending pivotQ2/Q3: growth in construction/CRE; consumer participation Loans +$32.5M QoQ; funded ~$59M in Q4 at ~7.5%; >$60M LOIs at ~7.7% Building
Credit qualityQ2/Q3: NPLs stable/declining; ACL ~0.84% NPLs 0.33%; ACL/NPL 254%; net charge-offs de minimis Stable/strong
Capital & buybacksQ2/Q3: TBVPS ~$14.7; active repurchases TBVPS $14.74; 480,851 shares repurchased at $10.49 avg; well-capitalized Ongoing
LiquidityQ3: FHLB capacity noted $408M untapped capacity; +$211M unencumbered AFS/cash; 4.2x uninsured deposits Robust

Management Commentary

  • “We funded $59 million of loans during the quarter, yielding approximately 7.5%... letters of intent totaling over $60 million... at approximately 7.7%.” – CEO James Nesci .
  • “We expect our net interest margin to improve as we close loans at current rates and reprice deposits lower.” – CFO Kelly Pecoraro .
  • “Deposits grew $25 million, the majority of which came in core growth including a 17% increase in noninterest-bearing accounts.” – CEO James Nesci .
  • “Uninsured and uncollateralized deposits... represent only 11%... our liquidity is 4.2x larger than our uninsured and uncollateralized deposits.” – CEO James Nesci .

Q&A Highlights

  • Pipeline and production: LOIs >$60M at ~7.7% following $59M funded in Q4 at ~7.5%, supporting forward NII/NIM expansion .
  • Deposit repricing cadence: ~$500M CDs mature in 1H; current Q1 cohort ~4.75% resetting to ~4% promo; further relief in Q2 cohort ~4.50% expected if rates trend lower .
  • NIM outlook: Management anticipates quarterly NIM expansion at a “similar pace” to Q4 (i.e., modest bps per quarter), contingent on loan fundings and deposit repricing timing .
  • Expense outlook: Operating expenses guided to mid- to high-$13M per quarter in 2025 as incentive accruals reset, wages/merit and inflation normalize .
  • Share repurchases: Company expects to continue repurchases as a good use of capital at current levels .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to data access limits at the time of this analysis; therefore, we cannot provide beat/miss vs Street for this quarter [GetEstimates error].

Key Takeaways for Investors

  • Early signs of a positive earnings inflection: sequential NIM expansion, lower funding costs, and commercial loan growth at attractive yields should support margin and NII into 2025 .
  • Funding tailwind is visible: ~$500M of near-term CD maturities repricing lower (to ~4% promo) should reduce deposit costs assuming a benign rate path .
  • Asset quality remains a differentiator: low NPLs (0.33%) and strong ACL coverage (254%) limit credit drag risk in the near term .
  • Expense normalization is a watch item: OpEx expected mid- to high-$13M per quarter in 2025; revenue growth and NIM expansion need to outpace expense resets to drive operating leverage .
  • Capital strength and TBV stability provide downside support; continued buybacks at a discount to TBV are accretive .
  • Liquidity robust and diversified, with capacity far exceeding uninsured deposits, reducing funding and confidence risk .
  • Medium-term thesis: if the bank executes on high single-digit loan growth and maintains NIM expansion while managing deposit mix back toward core, losses should narrow with a path toward breakeven/profitability as the rate environment eases .