Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deposit growth continued in the second quarter, with a 9% increase in commercial deposits and a 6% increase in consumer deposits.
- Net interest margin expanded for the second consecutive quarter, contributing to an improvement in pre-provision net revenue (PPNR) by $268,000.
- The company repurchased 386,000 shares at a weighted average share price of $8.84, improving shareholder value.
- Tangible book value per share increased by $0.09 to $14.69, and the company remains well-capitalized with a tangible equity to tangible common assets ratio of 16.9%.
- Non-performing assets declined by $1.1 million, and non-accrual loans improved by $483,000, indicating strong asset quality.
Negative Points
- The company reported a net loss of $2.3 million for the second quarter, although this was an improvement from the prior quarter's net loss of $2.8 million.
- Gross loans declined by $6.8 million during the quarter, as amortization and payoffs outpaced new loan funding.
- The cost of interest-bearing deposits increased by 16 basis points to 2.90%, reflecting ongoing funding pressures.
- Expenses are expected to increase in the third quarter to the mid to high $13 million range, driven by potential increases in compensation and hiring.
- The pace of share repurchases has slowed due to volume-based limitations, although the company remains committed to buybacks.
Q & A Highlights
Blue Foundry Bancorp (BLFY, Financial) Q2 2024 Earnings Call Highlights
Q: How do you expect the net interest margin (NIM) to trend moving forward given the current funding pressures?
A: We believe the margin will remain stable for the rest of the year, though it could be moderately impacted by the interest rate environment and asset classes added to the balance sheet. (Kelly Pecoraro, CFO)
Q: What assumptions are embedded in your guidance for a stable margin, particularly regarding Fed rate cuts?
A: We are not factoring in any Fed rate cuts until later in the fourth quarter. (Kelly Pecoraro, CFO)
Q: How soon after a Fed rate cut do you envision being able to lower deposit rates?
A: The ability to lower deposit costs will depend on market activity and competition. We will monitor this closely. (Kelly Pecoraro, CFO)
Q: What would need to change for you to start thinking about loan growth again?
A: We are being selective with loan originations but expect our pipeline to pick up in the latter half of the year. Our current commercial pipeline is about $32 million. (Kelly Pecoraro, CFO)
Q: Can you provide more details on the reserve release and underlying credit trends?
A: We have about $30 million in repricing through the end of 2024. Our allowance methodology is primarily quantitative and has benefited from favorable economic forecasts. (Kelly Pecoraro, CFO)
Q: What are your current CD offering rates and how much of your book has already repriced?
A: Our current offering rate is about 5.25% for seven-month maturities. A significant portion of our book has already repriced to higher rates. (Kelly Pecoraro, CFO)
Q: How much of your FHLB advances are overnight, and what is the maturity schedule?
A: We currently have no overnight advances. We have about $30 million in shorter durations within one to three months, and some longer-dated advances. (Kelly Pecoraro, CFO)
Q: How do you manage the impact of hedging on FHLB advances?
A: We have $204 million of borrowings hedged, with a three-year maturity on our swap book. This helps manage the cost of longer-dated borrowings. (Kelly Pecoraro, CFO)
Q: Will you consider more securities purchases if loan growth is slow?
A: We will be strategic in growing the balance sheet. If loan opportunities are not there, we will consider securities that make sense for the balance sheet. (James Nesci, CEO)
Q: What areas are you looking to make hires in the back half of the year?
A: We are focusing on deposit gathering, C&I producers, and regulatory compliance staff to support balance sheet growth and regulatory requirements. (James Nesci, CEO)
Q: How do you feel about the level of share repurchases going forward?
A: We strongly believe in buybacks and are in the market every day, but are limited by rules based on prior month average daily trading volume and SEC regulations. (Kelly Pecoraro, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
