Blue Foundry Bancorp (BLFY) Q3 2025 Earnings Call Transcript

Blue Foundry Bancorp (BLFY) reported a Q3 2025 net loss of $1.9 million, an improvement from the prior quarter, driven by a 6 basis point expansion in net interest margin to 2.34% and a $551,000 increase in net interest income. The company achieved deposit growth of $77.1 million and loan growth of $41.9 million, primarily in commercial real estate and consumer loans, while strategically de-emphasizing multifamily. Tangible book value per share increased to $15.14, and BLFY repurchased over 837,000 shares below tangible book value, leveraging its strong capital position despite an increase in non-performing loans to $11.4 million due to a single multifamily credit. Management anticipates a relatively flat NIM in Q4 but expects significant expansion in 2026 as lower-yielding multifamily loans reprice.

Analysis

Blue Foundry Bancorp (BLFY) reported a Q3 2025 net loss of $1.9 million, or $0.10 per diluted share, an improvement from the prior quarter's $2 million loss. This positive trend was supported by a 6 basis point expansion in net interest margin (NIM) to 2.34% and a $551,000 increase in net interest income to $12.2 million. The company advanced strategic objectives, including growing core deposits by over 10% year-to-date and diversifying its loan portfolio.

Balance sheet growth was evident with deposits increasing by $77.1 million and total loans by $41.9 million, driven by commercial real estate and consumer loans, while strategically reducing multifamily exposure. Capital remains robust, with tangible equity to tangible assets at 14.58% and tangible book value per share rising to $15.14. BLFY actively returned capital, repurchasing over 837,000 shares at a weighted average price of $9.09, significantly below tangible book value.

Credit quality saw an increase in non-performing loans (NPLs) to $11.4 million (0.66% of total loans) from $6.3 million, primarily due to a single $5.3 million multifamily loan, though no principal loss is currently anticipated. Management expects Q4 NIM to be relatively flat, but projects significant NIM expansion in 2026 as approximately $80 million in lower-yielding loans reprice. This outlook is supported by anticipated downward rate movements benefiting funding costs.

Key Decisions for Investors

• Monitor the net interest margin for anticipated 2026 expansion, driven by loan repricing and lower funding costs, following a projected flat Q4
• Evaluate the strategic shift in loan portfolio composition, particularly the de-emphasis on multifamily and growth in commercial and consumer loans, for its impact on future profitability and risk
• Assess the continued share repurchase program and strong capital ratios as supportive of shareholder value, while closely watching credit quality trends, especially the resolution of the recently elevated non-performing multifamily loan