Blue Foundry Bancorp

Good morning and welcome to the Blue Foundry Bancorp's third quarter 2025 earnings call. Comments made 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. During the call, management will refer to non-gap 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. After the speaker's remarks, there will be a question and answer session. I will now hand over to President and CEO Jim Nessie to begin.

Thank you, Operator. Good morning, and welcome to our third quarter earnings call. I'm joined today by our Chief Financial Officer, Kelly Pecoraro. She will provide a detailed financial review after I share updates on our strategy and recent progress. Earlier this morning, we reported a quarterly net loss of $1.9 million and a quarterly pre-provision net loss of $1.3 million. Both metrics have improved compared to the prior quarter. During the third quarter, we advanced our core objectives of growing core deposits, diversifying our loan portfolio to enhance risk-adjusted returns, and expanding our net interest margin. The progress against these strategic initiatives better positions us for continued growth and long-term value creation. Deposits increased by $77.1 million, loans grew by $41.9 million, and net interest margin expanded by six basis points. Capital remained strong, and we were able to increase tangible low value per share. Our loan growth was driven by continued expansion in our commercial real estate and consumer loan portfolios. Our commercial portfolio grew by $7.2 million, reflecting strong origination activity of $81.3 million, including approximately $40 million in owner-occupied CRE and CMS, offset by $66.8 billion in payoffs. Our consumer loan portfolio increased by $38 million in the third quarter, supported by purchases of unsecured consumer loans with credit reserves. This growth allows us to improve yields while maintaining crude credit risk. Our loan pipeline remains healthy with over $41 million in executed letters of intent, primarily in commercial lending, with anticipated weighted average rates above 7%. Year-to-date, our relationship-driven approach has enabled us to grow core deposits by over 10% and commercial deposits by over 17%. Our net interest margin expanded by six basis points to 2.34%, supported by a nine basis point increase in asset yields and a four basis point reduction in the cost of liability. Net interest income was $12.2 million, up $551,000 from the prior quarter. We remain focused on disciplined capital management and enhancing shareholder value. Tangible book value per share increased to $15.14 per share. During the quarter, we repurchased over 837,000 shares at a weighted average price of $9.09 per share, well below our tangible book value. Since instituting share repurchases, we have repurchased 8.65 million shares. Liquidity and capital remain strong. At the end of the third quarter, we had $423 million in borrowing capacity and an additional $178 million in unencumbered securities. Tangible equity to tangible assets stood at 14.58%, and we remained well capitalized with capital ratios among the highest in the industry. With robust capital, ample liquidity, and a focus on deepening commercial relationships, We believe Blue Foundry is positioned for continued growth. We expect downward rate movements, which will benefit our funding costs, and anticipated repricing in our loan portfolio to have a favorable impact on our net interest margin over time. With that, I'll turn the call over to Kelly for a deeper look at our financials. Kelly?

Thank you, Jim, and good morning, everyone. As Jim mentioned, we reported a net loss of $1.9 million for the third quarter, or 10 cents per diluted share. This compares favorably to the $2 million loss in the prior quarter. This improvement was driven by an increase in net interest income, partially offset by an increase in provision for credit losses and an increase in operating expenses. Net interest income increased by $551,000 first prior quarter to $12.2 million, driven by $693,000 of additional interest income, representing an 11.8% annualized increase. The yield on average interest earning assets rose to 4.67% while the cost of average interest-bearing liabilities declined to 2.72%. These improvements contributed to a six basis point expansion in our net interest margin. Non-interest expense increased by $347,000, primarily due to higher compensation and benefit expense and higher professional services expenses. The increase in compensation and benefits is due to day counts and the prior quarter having higher forfeitures of equity grants. We recorded a provision for credit loss of $589,000, primarily driven by deterioration in economic forecasts. Our allowance methodology continues to place greater weight on baseline and adverse economic scenarios. The allowance for credit loss was 0.81% of gross loans, up one basis point from the prior quarter, primarily reflecting changes in economic forecasts, while charge-offs remained minimal at $25,000. Credit quality remained sound overall, and we continued to manage risk with discipline. During the quarter, a $5.3 million multifamily loan was added to non-performing loans. Currently, we do not believe that there is a risk of loss of principles associated with this credit. Total non-performing loans was $11.4 million, or 66 basis points of total loans on September 30th, up from $6.3 million, or 38 basis points, at the prior quarter end, reflecting the increase in nonperforming loans. Moving on to the balance sheet, we saw total loan growth of $41.9 million for the quarter. We continue to focus on optimizing our portfolio composition, and we are encouraged by the growth in owner-occupied commercial real estate and commercial and industrial loans this quarter. are available for sale securities portfolio with a modified duration of approximately 3.9 years decreased by $10.3 million, primarily due to calls and maturity partially offset by an improvement in the unrealized loss position. Deposits grew by $77.1 million with core deposits increasing by $18.6 million. Brokered deposits increased $50 million, helping us manage funding costs and support loan growth. Borrowings decreased by $42 million as we allowed them to roll off and replace them with brokered deposits. With that, Jim and I are happy to take your questions.