Q1 2025 Blue Foundry Bancorp Earnings Call
Operator: Good morning and welcome to the Blue Foundry Bancorp's first quarter 2025 earnings call. Comments made today 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. Blue Foundry 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.
Good morning, and welcome to the Blue Foundry Bancorp's first quarter 25 earnings Coke.
That's made today.
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.
Foundry 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 Blue Foundry Bank Adult club.
Operator: 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. As a reminder, this event is being recorded. Your line will be muted for the duration of the call.
During the call management will refer to non G. A a P measures, which exclude certain items from reported results. Please.
You refer to today's earnings release for reconciliations of these non G. A a P measures.
A reminder, this event is being recorded your line will be muted for the duration of a cool.
Operator: After the speaker's remarks, there will be a question and answer session.
After the Speakers' remarks, there will be a question and answer session.
James Nesci: I will now turn the call over to President and CEO, Jim Nesci, to begin. Please go ahead, Jim. Thank you, operator. And good morning, everyone. We appreciate you joining us for our first quarter earnings call.
Speaker Change: I will now turn the call over to President and CEO, Jim messy to begin.
Please go ahead Jim.
Jim Messy: Thank you operator, and good morning, everyone. We appreciate you joining us for our first quarter earnings call.
James Nesci: As always, I'm joined by our Chief Financial Officer, Kelly Pecoraro, who will review our financial performance in detail following my remarks. Our strategic priorities for 2025 remain focused on driving loan growth in higher yielding asset classes, maintaining strong credit quality, and continuing to grow and diversify low-cost funding. I am pleased to report that our first quarter results reflect solid progress on all fronts. We achieved 3% loan growth during the quarter, while improving the yield on our loan portfolio by 15 basis points. This was supported by $44 million in deposit growth, accompanied by a 14 basis point reduction in our cost of deposit.
Jim Messy: I'm joined by our Chief Financial Officer, Alex <unk>, who will review our financial performance in detail following my remarks.
Jim Messy: Our strategic priority for 2025, we remain focused on driving loan growth and higher yielding asset classes, maintaining strong credit quality and continuing to grow and diversify low cost funding sources.
Jim Messy: I am pleased to report that our first quarter results reflect solid progress on all fronts.
Jim Messy: We achieved 3% loan growth during the quarter, while improving the yield on our loan portfolio by 15 basis points.
Jim Messy: This was supported by $44 million deposit growth accompanied by 14 basis point reduction in our cost of deposits.
James Nesci: Together, these results contributed to a 27-basis point expansion in our net interest market, an important milestone in our efforts to enhance earnings. While we reported a net loss for the quarter, we successfully increased tangible book value per share, supported by share repurchases and prudent capital management. Our capital and credit quality remain strong, and we are encouraged by the momentum in both our lending and deposit gathering activities. Low production totaled $90 million during the quarter at a weighted average yield of approximately 7.1%. This included $33 million in commercial real estate loans, primarily collateralized by owner-occupied property, along with production of $9 million in residential mortgages and $7 million in construction loans.
Jim Messy: Together. These results contributed to a 27 basis point expansion, sorry, net interest margin and important milestone in our efforts to enhance earnings.
Jim Messy: While we reported a net loss for the quarter, we successfully increased tangible book value per share.
Jim Messy: Courted by share repurchases and prudent capital management.
Jim Messy: Capital and credit quality remained strong and we are encouraged by the momentum in both our lending and deposit gathering activities.
Jim Messy: Production totaled $90 million during the quarter at a weighted average yield of approximately seven 1%.
Jim Messy: This included $33 million in commercial real estate loans, primarily collateralized by owner occupied property, along with production of $9 million.
Jim Messy: Potential mortgages at $7 million and construction loans.
James Nesci: We also purchased $35 million in credit-enhanced consumer loans at attractive yields. As we continue to execute our strategy of portfolio diversification, we are deliberately emphasizing asset classes that deliver higher yields and better risk-adjusted returns. The growth in commercial real estate, particularly owner-occupied properties, and construction lending reflects our ability to support local businesses while managing credit exposure. Additionally, our investment in credit-enhanced consumer loans enables us to capture attractive returns while maintaining a strong risk management framework. These shifts in portfolio composition support our broader objective of enhancing earnings and bringing long-term franchise value. Our loan pipeline remains healthy, with executed letters of intent totaling more than $40 million, primarily in commercial lending with anticipated yields above 7%.
Jim Messy: We also purchased $35 million and credit enhanced consumer loans at attractive yields.
Jim Messy: As we continue to execute our strategy of portfolio diversification, we are deliberately emphasizing asset classes that deliver higher yields and better risk adjusted returns.
Jim Messy: The growth in commercial real estate, particularly owner occupied property and construction lending reflects our ability to support local businesses, while managing credit exposure.
Jim Messy: Additionally, our investment in credit enhanced consumer loans.
Jim Messy: April's us to capture attractive returns, while maintaining a strong risk management framework.
Jim Messy: Shifts in portfolio composition.
Jim Messy: Our broader objective of enhancing earnings and bringing long term franchise value.
Jim Messy: Our loan pipeline remains healthy with executed letters of intent totaling more than $40 million, primarily in commercial lending with anticipated yields above 7%.
James Nesci: tangible book value per share increased to $14.81, up $0.07 from the prior quarter. During the quarter, we repurchased 464,000 shares at a weighted average price of $9.52, a significant discount to tangible book value and adjusted tangible book value. These repurchases continue to enhance shareholder value. Both the bank and holding company remain well capitalized with tangible equity to tangible common assets at 15.6 percent, among the highest in the industry. Liquidity remains robust, with $413 million in untapped borrowing capacity and an additional $208 million in liquidity from unencumbered available for sale securities and unrestricted cash. Importantly, this liquidity position is 3.9 times greater than our uninsured and uncollateralized deposits, which represent just 11% of our total deposits.
Jim Messy: Tangible book value per share increased to $14 81 up seven from the prior quarter.
Jim Messy: During the quarter, we repurchased 464000 shares at a weighted average price of $9 52 sets.
Jim Messy: A significant discount to tangible book value and adjusted tangible book value.
Jim Messy: These repurchases continue to enhance shareholder value.
Jim Messy: Both the bank and holding company remained well capitalized with tangible equity to tangible common assets at 15, 6% among the highest in the industry.
Jim Messy: Liquidity remains robust with $413 million.
Jim Messy: Untapped borrowing capacity and then the additional $208 million in liquidity unencumbered available for sale securities and unrestricted cash.
Jim Messy: Importantly, this liquidity position is three nine times greater than our uninsured and uncollateralized deposits, which represents just 11% of our total deposits demonstrating our strong liquidity coverage of low concentration risk.
James Nesci: demonstrating our strong liquidity coverage and low concentration.
Kelly Pecoraro: With that, I'll turn the call over to Kelly for a deeper look at our financials. After her remarks, we'll be happy to take your questions.
Jim Messy: With that I'll turn the call over to Kelly for a deeper look at our financials. After her remarks, we'll be happy to take your question Kelly.
Kelly Pecoraro: Kelly? Thank you, Jen, and good morning, everyone. For the first quarter, we reported a net loss of $2.7 million, or $0.13 per diluted share. While the bottom line result was similar to the prior quarter, we were encouraged by meaningful improvement in net interest income. This top-line trend was offset by the increase in non-interest expense that we guided to last quarter, as well as a provision bill related to loan growth. Net interest income increased by $1.3 million, or 13.4%, driven by a 27 basis point expansion in our net interest margin. interest income rose $928,000, primarily due to loan growth, while interest expense declined by $343,000, reflecting lower deposit costs that more than offset the impact of 3% deposit growth.
Kelly: Thank you Ken and good morning, everyone.
Kelly: For the first quarter, we recorded a backlog of $2 $7 million or 13.
Kelly: Our diluted share.
Kelly: While the bottom line result was similar to the prior quarter. We were encouraged by looking for improvement in net interest income.
Kelly: Top line strength.
Kelly: Offset by the increased non interest expense that we guided to last quarter as well as a provision build related to loan growth.
Kelly: Net interest income increased by one $3 million or <unk>.
Kelly: 4%.
Kelly: Driven by a 27 basis point expansion in our.
Kelly: Net interest margin.
Kelly: Interest income rose $928000, primarily due to loan growth.
Kelly: Interest expense declined by $343000.
Kelly: Lower deposit costs.
Kelly: More than offset the impact of 3% deposit growth.
Kelly Pecoraro: The yield on loans increased by 15 basis points to 4.72%. and the yield on total interest earning assets improved by 14 basis points to 4.51%. are cost-to-funds declined by 8 basis points to 2.85%. The cost of interest bearing deposits decreased 15 basis points to 2.75%, while the cost of borrowings rose 13 basis points to 3.39%. Non-interest expense increased by $748,000, driven by higher compensation and benefits. As discussed on our last call, this increase was expected and primarily reflects two factors. First, Merit-Based Salary Adjustment. which had less inflation in prior periods. and second, the recess of our variable compensation accruals.
Kelly: The yield on loans increased by 15 basis points.
Kelly: At 17%.
Kelly: And the yield on total interest earning assets.
Kelly: <unk> by 14 basis points.
Kelly: Five 1%.
Kelly: Our cost of funds declined by eight basis points to eight 5%.
Kelly: The cost of interest bearing deposits decreased 15 basis points to 275%, while the cost of borrowings rose 13 basis points to 339%.
Kelly: Non interest expense increased by $748000.
Kelly: Driven by higher compensation and benefits.
Kelly: As discussed on our last call.
Kelly: The increase was expected and primarily reflects two factors.
Kelly: <unk>.
Kelly: Merit based salary adjustments.
Kelly: Each had less inflation from prior period.
Kelly: And second the reset of our variable compensation accrual.
Kelly Pecoraro: last year's annual incentive compensation did not pay out a target as the company did not fully meet its performance target. For the first quarter, we accrued variable incentive compensation, assuming target performance. in line with our expectations to meet those goals this year.
Kelly: Last years annual incentive compensation did not payout target as the company did not fully meet.
Kelly: Performance target.
Kelly: For the first quarter, we accrued variable incentive compensation assuming target performance.
Kelly: In line with our expectations.
Kelly: Those go this year.
Kelly Pecoraro: While we remain committed to expense discipline, we expect operating expenses to stay in the high $13 million to low $14 million range. We recorded a provision for credit losses of $201,000 for the quarter, attributable to loan growth and shift in loan category. The Allowance for Credit Losses on Off-Balance Sheet Commitments and Health Maturity Securities declines slightly. As a reminder, the majority of our allowance is derived from quantitative models, and our methodology continues to assign greater weight to the baseline and adverse economic scenarios.
Kelly: While we remain committed to expense discipline, we expect operating expenses to stay.
Kelly: In the high $13 million to low $14 million range.
Kelly: We recorded a provision for credit losses of $201000 for the quarter.
Kelly: Attributable to loan growth and shifts in loan category.
Kelly: The allowance for credit losses on off balance sheet commitment.
Kelly: Held to maturity securities declined slightly.
Kelly: As a reminder.
Kelly: Alrighty of our allowance is derived from quantitative model.
Kelly: Our methodology continues to assign greater weight.
Kelly: Baseline adverse economic scenarios.
Kelly Pecoraro: Turning to the bounce. growth loans increased $42.2 million during the quarter. primarily in owner-occupied and non-owner-occupied commercial real estate, as well as construction loans. As Jim mentioned, we also purchased $35 million in credit-enhanced consumer loans and supplemented our residential production with $6.6 million in residential loan purchases. are exposure to office spaces limited. That's 2% of the loan portfolio, and none of it is located in New York City. Our available-for-sale securities portfolio, which has a duration of 4.3 years, declined by $10.4 million due to maturities, calls, and paydowns. This was partially offset by a $4.1 million improvement in unrealized losses.
Kelly: Turning to the balance sheet gross loans increased $42 $2 million during the quarter.
Kelly: Primarily owner occupied and non owner occupied commercial real estate as well as construction months.
Kelly: As Jim mentioned, we also purchased $35 million credit enhance consumer loans and supplemented our residential production with $6 $6 million.
Kelly: Prudential loan purchases.
Kelly: Our exposure to office space is limited.
Kelly: 2% of the loan portfolio and none of it is located in New York City.
Kelly: Our available for sale Securities portfolio, which has a duration of four three years declined by $10 $4 million due to maturities.
Kelly: And pay downs.
Kelly: This was partially offset by $1 $1 million coupon and unrealized losses.
Kelly Pecoraro: Deposits increased by $43.9 million, or 3.2%. We experienced $24.4 million, or 3.8% of growth in core deposit counts. Importantly, growth in core deposits was fueled by full banking relations. with commercial cut. validating our strategic focus on deepening client engagement in a competitive market. Time deposits increased $19.6 million as we strategically repriced promotional C&Ds and backfilled runoff with $50 million in broker deposits at lower rates. Borrowings decreased slightly as loan growth was primarily funded through deposits.
Kelly: Deposits increased by $43 $9 million.
Kelly: Or three 2%.
Kelly: We experienced $24 $4 million or three 8% growth in core deposit accounts.
Kelly: Importantly growth in core deposits was fueled by full banking relationships with commercial customers.
Kelly: Our strategic focus on deepening client engagement and a competitive market.
Kelly: Time deposits increased $19 $6 million as we strategically repriced promotional CMT and.
Kelly: Bank sales run off with $50 million of broker deposits.
Speaker Change: Sure Rick.
Kelly: Borrowings decreased slightly as loan growth was primarily funded through the patent cliff.
Kelly Pecoraro: Lastly, asset quality remains strong. non-performing assets increased by $619,000 due to a slight rise in non-accrual loans. non-performing assets to total assets, and non-performing loans to total loans, each increased by two basis points. but remain low at 27 basis points and 35 basis points respectively. Allowance coverage decreased slightly, with the allowance for credit losses to total loans declining by 2 basis points to 81 basis points. and the ratio of allowance for credit losses to non-performing loans decreased from 254% to 230%.
Kelly: Lastly, asset quality remained strong.
Kelly: Performing assets increased by $619000 due to a slight rise in non accrual loans.
Kelly: Nonperforming assets to total assets and nonperforming loans to total loans increased by two basis points.
Kelly: We may love at 27 basis points, and 35 basis points respectively.
Kelly: Allowance coverage decreased slightly.
Kelly: Allowance for credit losses to total loans declining by two basis points.
Kelly: 81 basis points.
Kelly: And the ratio of allowance for credit losses to nonperforming loans.
Kelly: Creased for 254% to.
Kelly: 230%.
James Nesci: With that, Jim and I are happy to take your questions. Thank you, Kelly.
Kelly: With that Jim and I are happy to take your questions.
Kenny: Thank you Kenny.
Operator: To ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by 2. and to ask your question please ensure your device is unmuted locally.
Speaker Change: So I'll ask a question. Please press star followed by one on your kind of thing keep at that.
Kenny: If you change your mind, Please press star followed by two.
Speaker Change: I'm preparing to ask your question. Please ensure devices on mute locally.
Justin Crowley: Our first question comes from Justin Crowley from Piper Sadler. Your line is open, please go ahead. Hey, good morning.
Justin: Our first question comes from Justin poorly.
Speaker Change: Piper Sandler.
Speaker Change: Your line is open. Please go ahead.
Speaker Change: Hey, good morning.
Kelly Pecoraro: Just wanted to start off on the margin for the quarter. Kelly, do you have where that ended the period on a spot basis or perhaps for the month of March? Good morning, Justin. How are you doing? I don't have the spot in front of me right now, but, you know, as we talk about where we think our margin is going, you know, we were very pleased with the expansion we saw this quarter. We expect some additional expansion as we head into the second quarter, probably about five to ten basis points. on From Where We Work.
Speaker Change: Just wanted to start off on the margin for the quarter.
Speaker Change: Kelly do you have where that ended the period on a spot basis or perhaps for the month of March.
Speaker Change: Oh, good morning, Justin How're you doing.
Speaker Change: I don't have the spot and frankly right now, but you know as we talk about where we think our margin is going.
Speaker Change: We were very pleased with the expansion we saw this quarter.
Speaker Change: We expect some additional expansion.
Speaker Change: Into the second quarter, probably about five to 10 basis points.
From where we were.
Kelly Pecoraro: Okay, and then can you just think in, you know, unpacking the drivers there a little, can you remind us how much in loan maturities and resets through the end of the year you've got and just what the yield pickup is of those loans requests? Yeah, so you know, just as we look at our loan portfolio, we have about 220 million that's going to be either maturing or repricing within 2025. A lot of that product though happens to be in construction or a lot of set to current indices. So that yields on that maturity and repricing sits just shy 7%.
Speaker Change: Okay, and then can you just thinking unpacking the drivers there a little can you remind us how much in bond maturities and reset.
Speaker Change: Reset through the end of the year.
Speaker Change: <unk> got just what the yield pick up is as those loans reprice.
Speaker Change: Yeah. So just as we look at our loan portfolio. We have about 220 million that's going to be the maturing of repricing within 2025, a lot of that product still happens to be in construction or a lot of that to correct. This theme so that yield on that maturity.
Speaker Change: Like pricing, it's just shy of 7%. So we're not expecting a tremendous amount of pick up on that repricing.
Kelly Pecoraro: So we're not expecting a tremendous amount of pickup on that repricing. However, what we are seeing is in the latter years, the 26-27, that's really where you're seeing a lot of that multifamily book repricing that's sitting at those lower yields, the 4% where we'll see some of the pickup there. Okay.
Speaker Change: However, what we are seeing is in the latter years with 26, 27, and that's really where you're seeing a lot of that multifamily book repricing, that's sitting at those lower deal.
Speaker Change: 4%, where we'll see some pick up there.
Speaker Change: Okay.
Speaker Change: Okay.
Kelly Pecoraro: And then, you know, I guess I'll ask a similar question just on the deposit side, specifically on the CD book. And maybe just for a second, putting potential rate cuts to the side, you know, is there much room left there to lower rates? Are you largely through pricing at this point?
Speaker Change: And then I guess I'll ask a similar question just on the deposit side, specifically on the CD book.
Speaker Change: And maybe just for a second put in potential rate cuts to the side.
Speaker Change: Is there much room left there to lower rates or are you largely through pricing at this point, what kind of gets you to the margin expansion through the balance of 2025.
Kelly Pecoraro: You know, what kind of gets you to the margin expansion to the balance of 2025? And so I think, you know, we are looking at these, sorry, we strategically kept our CV short. So we have about $335 million maturing in the next quarter, you know, that's sitting at a yield or cost of $411 right now. And as we look to transition, really the core deposits, customer relationships, which has really been the focus of our customer deposits, we see some room there to pull those rates down as they shift into core. We've also taken advantage of going into the brokered market.
Speaker Change: Yes, I think.
Speaker Change: Alright looking at me like.
Speaker Change: Strategically kept our CV short so we have about 335 million maturing in the next quarter.
Speaker Change: Sitting at a yield or a cost of 411, right now and as we look to transition really support deposit customer relationships, which has really been the focus.
That's our customer deposit we see some room there to pull those rates down as they shift into core.
Speaker Change: We've also taken advantage of going into the brokerage market. As you saw we did have an increase in brokered deposits.
Kelly Pecoraro: As you saw, we did have an increase in brokered deposits. And on that, we're able to extend some of our duration and lower some of the rates. Okay, I got it.
Speaker Change: Now that we're able to extend some of our duration and lower some.
Speaker Change: Some of the rate there.
Speaker Change: Okay.
Speaker Change: Okay got it.
Kelly Pecoraro: And then just as far as the loan growth in the quarter specifically, on the purchase of unsecured consumer, can you talk through a little what kind of loan product that is, you know, whether it's debt consolidation, payday loans, student debt, or something along those lines? Just give us a flavor of that. And then just any detail or on the yield you're getting on those assets, along with how those credit enhancements are structured. Yeah, so those are those loans are really professional. The yield on that is around 7% that we're getting. And it does come with credit reserve.
Speaker Change: And then just as far as the loan growth in the quarter specifically.
Speaker Change: On the purchase of unsecured consumer can you talk through a little what kind of loan product that is whether it's debt consolidation payday loans student debt or something along those lines.
Speaker Change: Just give us a flavor of that and then just any detail or on the yield you're getting on those assets along with how those credit enhancements are structured.
Speaker Change: Yeah. So those are those loans are really good professional.
Speaker Change: The yield on that is around 7% that we're getting and it does come with credit reserves. So you know as we look to transition our balance sheet looking for better risk. Adjusted returns. This was a good product for us to augment our organic growth.
Kelly Pecoraro: So, you know, as we look to transition our balance sheet, you know, looking for a better risk adjusted return. This was a good product for us to augment our organic. Okay, and how should we think about further loan purchases there? Do you expect to continue to grow this book to augment growth? Or do you cap it as a certain percentage of the total portfolio? What's the thinking there? You know, I don't think we've we've come up with where cap is, you know, as we're looking at our organic growth, that is, of course, first and foremost, as we continue to grow that commercial.
Speaker Change: Okay, and how should we think about further loan purchases there and do you expect to continue to grow this book to augment growth.
Speaker Change: Or do you cap it has a certain percentage of the total portfolio whats the thinking there.
Speaker Change: Yeah, I don't think we can come up with where its happened you know as we're looking at organic growth that is of course first and foremost as we continue to grow that commercial side, but we will look to purchase additional to augment that.
James Nesci: But we will look to purchase additional to augment that in the coming quarters, if necessary, but that is not a long term strategy of continuing being in that book to a large degree. I mean, we'll have a nice sized portfolio potentially, but again, these are consumer loans at a higher yield with some credit reserve.
In the coming quarters, if necessary, but that is not a long term strategy of continuing being in that book to a large degree and we will have a nice sized portfolio potentially but again. These are consumer loans at a higher deals with some credit reserve.
James Nesci: Justin, this is Jim Devoy. I think Kelly described it really well when she said it's an augmentation. It does help on the yield, the credit enhancement obviously helps. And it helps us to transition into that higher yielding, you know, on a risk adjusted basis, we think it makes a lot of sense to sort of push on getting better yields to get the NIMP to expand as we make the transition. But it's not it's not going to continue forever. We're trying to right size it to our balance. Okay, great. Well, I appreciate it. I'll leave it there.
Speaker Change: Justin This is Joe good morning.
Speaker Change: I can tell you described it.
Speaker Change: Really well when she said its an augmentation it does help while the yield that credit enhancement obviously helps.
Speaker Change: And it helps us to transition into that higher yielding on a risk adjusted basis, we think it makes a lot of sense.
Speaker Change: Sort of push on getting better yields to get the NIM to expand as we make the transition.
Speaker Change: But it's not it's not going to continue forever, we're trying to right size our balance sheet.
Speaker Change: Okay, great well I appreciate it I'll leave it there thanks so much.
James Nesci: Thanks so much. Great. Thanks, Jeff.
Speaker Change: Thanks Frank.
Speaker Change: Yeah.
Chris O'connell: Our next question comes from Chris O'Connell from KBW. Your line is open, please go ahead. Hey, good morning. Just following up on the On the consumer loan purchases, when you say, you know, it's coming along with either, you know, credit enhancements or reserves, is that showing up in your allowance? Or is it like effectively coming on, I guess, as marked? And then, you know, what is the level of reserves that they're coming? So we do, those loans are incorporated into our FECAL calculations, we look at what the loss rate is on a similar product, and if the credit reserves aren't sufficient to cover what a loss rate would be, we would apply an additional allowance on those credits.
Speaker Change: Our next question comes from Chris O'connell K B W.
Speaker Change: Your line is open. Please go ahead.
Chris O'connell: Hey, good morning.
Speaker Change: Just following up on the.
Speaker Change: Hi.
Speaker Change: Consumer loan purchases.
Speaker Change: When you say, it's coming along with either credit enhancements of reserves is that showing up in your allowance or is it like effectively coming on I guess as March and then.
Speaker Change: What is the level of reserves that they are coming on that.
Speaker Change: So we do those loans are incorporated into our DSO calculation, we looked at what the loss rate is on a similar product and if the credit reserves are sufficient to cover what our loss rate would be we would apply an additional allowance on those credits.
Kelly Pecoraro: At the current quarter, there isn't an additional necessary, but again, that changes quarterly as we do our analysis. Okay. In what in what are the reserve levels that they come on with? So they come out with a 3% reserve level.
Speaker Change: Current quarter, there isn't an additional necessary, but again that changes quarterly as we do our analysis.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change:
Speaker Change: And what and what are the reserve levels that they come on with.
Speaker Change: So they come out with a 3% reserve level.
Kelly Pecoraro: Okay, great.
Speaker Change: Okay great.
Kelly Pecoraro: and then You know, on the CDs, so they're coming off at, you know, 411 in 2Q, if, you know, obviously, if they move, you know, more into the core bucket, that shifts lower if they kind of stick around the CDs, I guess, just what is the current offering rates at? Yeah, our current rate and again, we're keeping short giving us the opportunity to reprice quicker. So our current rate is a three month at $4.20. That is our promotional rate that's out there. It's going longer. It's on step four.
Speaker Change: And then.
Speaker Change: On the Cds, So theyre coming off at 411 two two.
Speaker Change: Obviously, if they move more into the core bucket that ships lower if the kind of stick around to Cds I guess, just what is the current offering rate yet.
Speaker Change: Yeah, our current rate and again, where we're keeping short.
Speaker Change: Giving us the opportunity to reprice quicker so our current ratings at the three months at 427 is our promotional rate that's out there.
Speaker Change: Going longer it's a sub four.
Kelly Pecoraro: Okay, great. And what are you guys able to get on, you know, the brokered that you brought on? So if we look at brokered, if we have an opportunity to place that out for a longer duration, we're coming in around 375. falling with a swap. and what's the duration that you're getting? We're here. between two and three years, is what we will look at.
Speaker Change: Okay great.
Speaker Change: What are you guys able to get.
Speaker Change: Brokered debt.
Speaker Change: You brought on.
Speaker Change: So as we look at brokered if you have an opportunity to play that out for a longer duration.
Speaker Change: Around 375.
Speaker Change: I'll end with a swap.
Speaker Change: Yeah.
Speaker Change: And what's the duration that you're getting.
Speaker Change: Our three year.
Speaker Change: Between two and three years.
Kelly Pecoraro: Okay, great.
Speaker Change: Okay great.
Kelly Pecoraro: and um So for the expense outlook from here, it sounds like, you know, a little bit of, you know, move up over the course of the year. It just, you know, any color around, you know, where that's coming from, is that, you know, hiring? If so, you know, what areas are you guys looking to add?
Speaker Change: And.
Speaker Change: So for the expense outlook.
Speaker Change: From here.
Speaker Change: It sounds like a little bit of a move up over the course of the year.
Speaker Change: Just.
Speaker Change: Any color on where that's coming from is that hiring if so what areas are you guys looking to add.
James Nesci: And I guess, you know, start In terms of the expenses, you know, as we look to the quarter we will have additional bankers potentially coming on to help with that organic loan growth and also making sure that we have the appropriate staffing within our branches and our network. If you look at it, Chris, it's the variable comp. We're constantly adjusting where we think we're going to be for the full year. And that's not true of what we go through. So if it looks like we're on track, we keep moving that number higher. Obviously, we want to pay sales conditions, variable compensation for new customers, for new loans, for new deposits.
Speaker Change: And I guess start there.
Speaker Change:
Speaker Change: In terms of the expenses you know as we look to the quarter, we will have additional bankers potentially coming on to help with that organic loan growth.
Speaker Change: And also making sure that we have the appropriate staffing within our branches and our network.
If you look at it Chris the variable comp we're constantly adjusting where we think we're going to be for the full year and that's been.
True ups that we go through here so.
Speaker Change: If it looks like we're on track, we keep moving that number higher obviously, we want to pay.
Speaker Change: Sales conditions variable compensation for new customers as well as for new deposits. So that's the goal and we're trying to drive.
Kelly Pecoraro: So that's the goal, right? We're trying to drive the top line growth and the expense comes out through variable compensation. Okay.
Speaker Change: The topline growth.
Speaker Change: Expense cuts out through variable compensation.
Speaker Change: Okay. Thanks, Jim.
Kelly Pecoraro: Thanks, Jim. And I, you know, as like assuming, you know, I guess you hit than, you know, your variable comp numbers. How should we think about... the, you know, longer term expense. I think a lot of it, you know, you're going to see the real estate numbers move up like with inflation, that's not going to be a lot of movement. The technology, we're, we're trying really hard to hold that as low as we can, keeping it as flat as we can, it probably again moves up with inflation, the compensation number moves higher over time, because you have inflation, and then you have hopefully additional people joining the team, and pushing on the top line revenue growth.
Speaker Change: And then.
Speaker Change: Assuming I guess you hit.
Speaker Change: Then your variable comp numbers.
Speaker Change: How should we think about.
Speaker Change: The longer term expense growth rate.
Speaker Change: I think a lot of it you know you're going to see.
Speaker Change: The real estate numbers move up but like with the twice it that's not going to be a lot of.
Speaker Change: The technology, we're trying really hard to hold that as low as we can keeping it flat as we can probably again moves up with inflation the compensation member moves higher over time, because you have inflation and then you have hopefully additional people joining the team and pushing on the top line revenue growth so that is.
Kelly Pecoraro: So that's the number that that's the more volatile numbers, that top number, but the other two big factors, technology and real estate, I see them moving along with inflation. and the Variable Cost, as Jim said, it's dependent upon hitting our performance metrics. And if we're exceeding those, you will see that cost go higher. But again, that would be a benefit to the cost. Okay, got it.
Speaker Change: The number that's the more volatile numbers backstop number, but the other two big factors technology and real estate.
Speaker Change: You see that moving along with in place.
And the variable comp as Jim said, it's dependent upon hitting our performance metrics.
Speaker Change: Exceeding though you will see that cost go higher but again that would be a benefit to the top line.
Speaker Change: Okay got it.
Kelly Pecoraro: in thinking, you know, just a little bit, you know, longer term or more aspirational. I mean, you know, absent said further fed cuts. Where do you think the margin can get to, you know, as we move towards, you know, the back end of the year or kind of into, you know, early 26, you know, just, you know, on a little bit on the, you know, deposit side, and then, you know, with with the level of loan growth that you're looking at? Yeah, so I think, Chris, as I had said, you know, we don't have a tremendous amount of repricing of the lower yielding assets this year, right?
Speaker Change: Thinking just a little bit longer term or more aspirational.
Speaker Change: No.
Speaker Change: Absent fed.
Speaker Change: They're fed cuts.
Speaker Change: Yes.
Speaker Change: I mean, yeah.
Speaker Change: Where do you think the margin can get to as we move towards the back end of the year or kind of into.
Speaker Change: Early 'twenty six.
Speaker Change: I'm.
Speaker Change: Just.
Speaker Change: On a little bit on the.
Speaker Change: Deposit side and then.
Speaker Change: With the level of loan growth that you're looking at.
Chris O'connell: Yeah. So I think Chris I thought you had said you know.
Chris O'connell: We don't have a tremendous amount of re pricing at the lower yielding assets. This year right. So I think we will see some expansion probably the majority coming in the second quarter, and then tapering a little bit as we normalize.
Kelly Pecoraro: So I think we will see some expansion, probably the majority coming in the second quarter and then tapering a little bit as we normalize. But adding additional growth could potentially have an additional expansion. But really, when we get to the first half of twenty-fifth, we're seeing that multi-family book reprice that's sitting at four percent. So we really are looking for some expansion there as we're repricing those assets.
Chris O'connell: But adding additional growth could potentially have additional expansion, but really when we get to the first half of 'twenty six.
Chris O'connell: We're seeing that multifamily book repriced, that's sitting at 4%. So we really go looking for some expansion there as we're repricing those assets.
Kelly Pecoraro: Okay. I think you hit it on the head, though, when you talk about what is the Fed going to do. Right? So that cuts both ways. We have variable price loans on the construction side, if they cut those yields come down. But then we get to reprice our liabilities, obviously, the CD rates should come down as well. So, you know, that's what we're trying to balance on our projections. But as Kelly stated, you know, the vintage that seems really interesting to us is probably Q1, Q2 of next year. We should have favorable repricing, if we stay relatively stable on interest rates.
Chris O'connell: Okay.
Chris O'connell: Understood.
He has hit it had though when you talk about what is the fed going to do right. So that cuts both ways, we have variable price loans on the construction side.
Speaker Change: They cut those yields come down, but then we get to reprice, our liabilities, obviously, the CD rates should come down as well. So that's what we're trying to balance on our projections, but as Kelly stated the visits that seems really interesting to US is probably Q1 Q2 of next year, we should have.
Chris O'connell: Favorable repricing.
Speaker Change: We say relatively stable interest rates.
Kelly Pecoraro: Okay, great.
Okay, Great that's helpful.
James Nesci: um And on the, you know, buyback is the baseline assumption, you know, that continuing to, you know, kind of, you know, continue at the same pace as the past, you know, two or three quarters. Yeah, I think we definitely can expect to continue to execute on the shared buyback program, being mindful of deploying capital, but we will support the thought.
Speaker Change:
Speaker Change: And on the.
Speaker Change: Buyback.
Speaker Change: As the baseline assumption.
Continuing to kind of.
Speaker Change: Yeah.
Speaker Change: At the same pieces, the past two or three quarters.
Speaker Change: Yeah, I think we definitely expect to continue to execute on the share buyback program in mindful of deploying capital.
We will support the stock.
James Nesci: And is there. They're a... Is there a timeline or, you know, a point in time down the line, you know, you know, what that would trigger a change in that, whether that be, you know, loan growth ramps up, you know, if you guys start growing at, you know, 12 plus percent instead of, you know, 8 to 10 percent or, you know. and any any change, you know, that would occur, I guess, in the pace of buybacks going forward. I think there are scenarios that could change the pace of the buyback, you know, if there was extreme volatility, that the board wanted to make sure we had ample cash on hand.
Speaker Change: And is there.
Speaker Change: Is there a.
Speaker Change: Is there a timeline.
Speaker Change: Or a point in time down the line.
Speaker Change: What that would trigger a change in that.
Speaker Change: That would be no loan growth ramps up.
Speaker Change: If you guys start growing.
Speaker Change: <unk> 12, plus percent instead of 8% to 10% or.
Speaker Change:
Speaker Change: Yeah.
Speaker Change: And any any change that would occur I guess, the pace of buybacks going forward.
Speaker Change: I think there are scenarios that could change the pace of the buyback you know if there was extreme volatility.
Speaker Change: The board wanted to make sure we have ample cash on hand.
James Nesci: If you saw really good opportunities on the loan side, where we could get a really high return on equity. I think there are scenarios. I wouldn't say it's a never, but right now, we believe the buyback is working, it's helping to increase our tangible book value per share. The board and I discuss it with Kelly very frequently, and at the moment, we continue with the buyback. working quite well. Okay, got it.
Speaker Change: If you saw really good opportunities on the loan side, where we could get a really high.
Speaker Change: Third on equity I think there are scenarios, so I wouldn't say never but right now we believe the buyback is working it is helping to increase our tangible book value per share.
Speaker Change: And I discuss it with Kelly very frequently and at the moment, we continue with the buyback it seems to be working quite well.
Speaker Change: Okay got it.
James Nesci: All right. Thanks, Jim. Thanks, Kelly.
Speaker Change: Alright, thanks, Jim Thanks going to science.
James Nesci: That's all I have. Thank you.
Speaker Change: Thank you.
James Nesci: We currently have no further questions, so I'd like to hand back to Jim Nesci for any closing remarks. Thank you, operator. We remain confident in our strategy and the opportunities ahead for Blue Foundry.
Speaker Change: We currently have no further questions. So I'm not talking about the gym messy.
Speaker Change: Amongst.
Speaker Change: Thank you operator, we remain confident in our strategy and the opportunities ahead for Blue battery, we want to thank our shareholders our customers and employees for their continued support as we build on this positive momentum throughout the year.
James Nesci: We want to thank our shareholders, our customers and employees for their continued support as we build on this positive momentum throughout the year. Thanks so much and we'll see you next quarter.
Speaker Change: So much and we'll see you next quarter.
Speaker Change: This concludes today's call. Thank you very much for joining you may now disconnect your lines.
Operator: This has concluded today's call. Thank you very much for joining. You may now disconnect your line.
Speaker Change: [music].