- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to Blue Foundry Bancorp's Third Quarter 2022 Earnings Call. My name is Harry, and I will be your conference operator today. 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-GAAP measures, which exclude certain items from reported results. earnings reconciliations today's measures. these to refer release of for non-GAAP Please

a being is this As event recorded. reminder,

question-and-answer there line Your will be like remarks, call. Jim the and call be duration would over a to will to turn the of muted the the After session. now I CEO, President for Nesci. speakers’

James Nesci

will Financial net third and share recorded opening I'm joined call. revenue you, Good everyone, morning, earnings results. my of financial operator. company's $X.X third diluted net $X.X After and our the quarter or Officer, Chief Earlier Thank remarks, we share Pecoraro. $X.XX per pre-provision Kelly welcome income to our morning, million Kelly by million. a this of quarter

loans. Our performance driven in was largely by continued commercial growth

remarkable of had XXX originating team loans. lending million Our another quarter,

focused which During class asset times the production on is feel the a on quarter, uncertainty. we economic stable multifamily we of potential during segment,

beginning loan by to higher retail show deposit markets our our X%. net are expand costs, While helped to interest has growth income

of X% million quarter. growth more loan X%. from by loan billion, This consecutive represents XX, the of up XX portfolio loans As the we grow prior fourth than quarter our totaled quarter-over-quarter, X.XX September

remains deposit we million. We continue pipeline quarter XX consumer and growing supply loan strong our XX for segments. on by expect million by our current growing business our remains deposits Core environment, the certificates while given While reliance across the do at and decreased this healthy, core pace. to not growth record both of deposit

to in Business-related to an relationship full attracting businesses medium-sized led deposits XXX business the by increase on accounts focus small million. X%. banking increased X% Our to of

a we shares value. repurchase This in of added deposits. program. stock consumer company significant Beginning represents discount at in XX book repurchased August, average core of XX% approved tangible a $XX.XX, Additionally, the cost to million XXX,XXX weighted the

of us our These to Board align On like price their with officers Directors Not to company, and the call and to like Blue will they will retain for approval the to our ratably shareholders have would I next help further your officers the Kelly, interest Board our granted of be a the approved top seven stock our of last behalf only thank delighted shareholders. Additionally, turn years. of these options With support of will company. strike the and equity grants plan. XXXX talent, we'd the and questions. Foundry week, of I'd that, our for Kelly? Directors officers vest over to of option over incentive $XX.XX answer Bancorp grants of long-term

Kelly Pecoraro

everyone. you, Thank Jim, good and morning,

products. or point loan increase X income in This, in the Our net XX,XXX from offered basis prior X.X financial on point during income borrowings, drove a to [ph] net coupled rate XX funds increased related competitive pressure quarter. to increased and results This pre-provision the cost XXX,XXX driven have increase quarter. XXX,XXX. net XX were pricing, depository increased relatively a which Interest expanding an interest was Despite to X.XX%. million X% compared funding basis X.X points, of margin by short-term remained increased improvement balances. average select million largely linked million revenue, basis the interest compared in with income by to increase we rates with of Remaining net environment, flat, highlighted rising X

balance margin pressure our expect on to liability We sheet due sensitive. our being

by our change mix we released of to the of XXX,XXX for loan and in a During due XXX,XXX commitment losses our provision loan quarter, portfolio. of provision increased

Our asset quality remains strong.

decreased points. Nonperforming by well points This portfolio, mix XX our basis improvement metrics. as points. total our to to was partially basis XX the total driven allowance points as in decreased the loans of loans credit basis During to changing quarter, the XX basis X loans our to

Our quarter. allowance prior XXX% XXX% nonaccrual loans to increased from the to

under reminder, a to adopt on and model implementation loss CECL track we by are operating the date. incurred are currently As the required

In increase. is an combination equity and a investor sale. our increase to $XXX,XXX we in working This expenses, for of related and director terms the saw due expenses commitment, excluding of days activity potential nonrecurring branch from grants, provision

As in Jim approved grants month. his mentioned option were this stock remarks, for officers

quarterly these We expect XXX,XXX. add approximately grants to expense of

continue closely operating We our to expenses. will manage

driven the by primarily Moving the excluding PPP, XXX XX million, X.X% or grew Gross sheet. loans, on in originations multifamily balance to segment. by million of sequentially,

quarter, provide a Fannie XX also to market, of purchased of the which standards. in loans years, bank continues million maturities, the principal were downs. used to flow the X.X During in is of With attributed securities duration the to fund calls securities Mae residential that XX.X originated decline pay our million high was scheduled portfolio and our quality to being portfolio cash loans.

through our continue variety deposits of We core grow a to initiatives.

total During deposits. X% the core XX quarter, deposits million represent or of now and XX% increased

declined quarter, Tangible rates available sale to $XX.XX share, value the the portfolio. interest our during by that securities increased $X.XX primarily impact XX million. on negative borrowing book Additionally, driven for had per

on position, would if of we through equity more a were environment benefit little a than with rising in the Given the tax operating our have tax change equity current position. for has tax the most loss. rate unrealized with to our flows it more profound normalized fair Therefore, value impact

their we to to experienced quarter, securities these maturity, date. last unrealized contractual we currently allow the intend recoup mentioned through have to will hold which losses we us As

positive your repurchased tangible mentioned a shares to And Jim I a that, value. on had at book As discount, which we with take and earlier, happy Jim impact questions. are

Operator

day question first Hunsicker, now open. our Point. is line Laurie line And your comes from Instructions]. [Operator of Laurie, Compass the of the you. Thank

Laurie Hunsicker

Thanks. good and Great. Hi. Jim morning. Kelly,

start the could buyback. we actually hoping with Just

saying go the I I know or just XXX,XXX release, guess at that -- your you're Was was some in So for I'm plans -- XX.XX. ahead? that all of benefit

Kelly Pecoraro

so the morning. those of equity XXX,XXX Sorry, portion to grants. use we Laurie. Director's the Good did shares of Yes, fund

Laurie Hunsicker

Great. Perfect.

details growth loan little growth, your terms located? will that multifamily can thinking going you you million, that specifically growth, Any jump by look you're where a us, just then can think forward? us And loan just about on of give just LTVs that about then almost multifamily Thanks. XXX how that? Okay. how help in And is bit

Kelly Pecoraro

about had us in class growth We a good be this XX% asset the that, in at perspective, the to not for the around is LTV of which about majority strong -- And New point. LTV. York XX% XX% the segment Manhattan an think is multifamily Laurie. the New quarter, we space, Jersey space, in Sure, overall in this is are From XX% in the area.

Laurie Hunsicker

that when think forward, then going And looking how growth you about Okay. at are you book?

James Nesci

or book commercial estate overall? multifamily real just the At

Laurie Hunsicker

book annualized XX% of And quarter. multifamily on the At your because that's your exactly. book. was growth Yes, loan this top the

just about So how going forward? that thinking we should be

James Nesci

in market up to see down the we're is the to marketplace. multifamily. tightening It's continue as in seeing. I well. starting continue definitely to We'll But estate slow real think you'll from industrial the look growth at what

Laurie Hunsicker

with And that Okay. that purchased that? was multifamily, originated or team your

James Nesci

Directly originated.

Laurie Hunsicker

then think price about, on help thinking you about Okay, can pressure, bit your in pressure, talk terms just there what little great. us margin just comments the in of a Kelly, you're side, And small seeing of I And cleanup item, know then about a very just that forgiveness. amount your income, figure? kind PPP you a of very, that Do interest net there within little specifically, have probably was a bit? funding

Kelly Pecoraro

Yes, Laurie.

represented X this basis for quarter So about the PPP point.

approximately million XX,XXX in down in with loans, fee will that has said, the X.X come not only really be quarters. recent you left We income we PPP amortized, of be forward. meaningful, As to as which have about move

was point to the attributed quarter X basis NIM. this So

-- In terms of

Laurie Hunsicker

ahead. Go

Kelly Pecoraro

on. move to going was I No,

another you If I going had to question was pressure on to funding on move question. that, the

Laurie Hunsicker

Kelly. Thanks, please. Yes,

Kelly Pecoraro

of number institution. going a have initiatives at the we So on

I think funding we pressure unlike sources. experiencing not on others, are our

growth deposit continue to funding. are growth, shift see We pleased core deposits. has our outpaced pressure to on we our realize as with But our those

hopeful we're the sources be we're shifting of initiatives our margin. So in in the some looking But at that successful. will funding compression

Laurie Hunsicker

I what Okay. I -- guess

James Nesci

say was That's we're most I funds on new new really focused will customers be money. new to is Sorry, on the Laurie. focused customer introducing to bringing the so bank, focus. what to initiatives those bank, the of going

Laurie Hunsicker

Got it.

I obviously just margin fees, the you out your were X your headline stripping wider. fees, actually if PPP or basis out PPP headline Okay. and But so strip X Yes, margin basis points point. so contract the

together putting think terms in side? little help with guess more about what bit of margin everything us that you're contraction, the funding can you a I So on seeing

Kelly Pecoraro

had as last realized in we think some growth I in said we from deposit was quarter, that Yes, late QX. benefited fully QX

face So those the of more put have were we that But rate environment, and currently is assets overall again, number. putting realizing. current the in margin on on a we borrowings, did we're financial a core help from the look, to expand as pressure which took seeing the spreads you than do increased that little the we

Laurie Hunsicker

us Can is a saw say and would I that there much how income your XXX,XXX of charges. little non-interest then remind fees income? service in And Okay. nice jump you prepay

Kelly Pecoraro

to and prepay Yes, exit XXX income loan so is XXX fee the was during that realized quarter. approximately related

Laurie Hunsicker

it. Got

Okay. mentioned expenses mentioned number? I that quarter. in one-time this what's didn't just see tell in one-time comments your your charges press And much you What then how charges. in release, figure were us that you on to you the prepared was and the can

Kelly Pecoraro

primarily anticipate charges legal recognized we increase had an So selling include as branch was charges that had the expenses, that one-time as in we we've well really a some -- the there. there

be the of we nonrecurring. total, to expenses that XXX,XXX quarter in So the for believe

Laurie Hunsicker

together it incentive little Okay. quarter. maybe Obviously, expenses equity a your for you help put bit. part us plan And then only had of this on just

adds XXX,XXX plus, grant fully at call So phased, that really XXX,XXX. it Director’s another your

out and put year, and figure around in like? that on think Jim, Just -- if novos that? trying next netting that look will you're any about And thinking how even what as de of XXX, comment expenses, could about you expenses us just also, we refresh that maybe terms to So to together to help especially look

James Nesci

you. Kelly to for [indiscernible] numbers together Sorry, put chance a her

I in few continually that takes a make for marketplace far quite as to bank takes for would areas we months. XXXX, added branches de months With to a add branches novo look negotiation if sense novo. Lease the days. the said be these out Fit in that in takes two months. XXXX. de our surprised process branch As four not we to

forecasting while think first we’re in expense will it that we So be the guessing to don't most XXXX, QX that may XXXX. on most of is plan in put of or a I'm of quarter I in them or second incurred have QX. the

think be through novo for of So of there's a to de year. going next a pull expense lot I branching don't

Laurie Hunsicker

And great. just then Okay, --

James Nesci

to question. it your Kelly the turn of over second I'll part for

Kelly Pecoraro

annualized Great. on Thanks, granted annualized X.X those on expense basis. awards from an Jim. an Yes, million Laurie, X.X for basis around that date, front, on the we're have expense million, at looking to the been equity in

this and quarter you look of will grants partial quarter quarter, As equity mentioned, the next granted have partial I a equity we a the were Directors, at that had to for grants for management. as we the

we're So of in QX, looking those at rate a of expense run grants. XX.X terms about inclusive new for

Laurie Hunsicker

I then just costs. in new expense looking maybe And March -- you quarter, and branch $XXX,XXX, branches are could ahead the into the probably new guess comment $XXX,XXX Okay. mean your on I if

you think how that? Just about

Kelly Pecoraro

as really guidance, there's relative no initiatives operating think we environment of that don't I at grants our in embark expenses look we the of operating the the spend, we're currently, and Laurie, We're to will our later expense granted, Jim year. those had other mindful looking those the in. process upon through addressing guidance teams until an coming that anticipate mentioned, been to that based as expenses going And budget of the provided forward. in some now be

Laurie Hunsicker

AOCI just what was then one, AOCL? And in figure common was the The actual that just AOCI or -- equity housekeeping. Okay. last tangible

Kelly Pecoraro

Yes.

Laurie Hunsicker

loss actual the What’s there?

Kelly Pecoraro

swap we of at We the majority million. the position. positive a loss have The the unrealized loss are an that is in made cumulated securities is unrealized loss XX.X in up But impact on of XX mark the that million. the portfolio for portfolio. So in around The loss do is portfolio.

Laurie Hunsicker

Okay, got it. questions. Great. my taking Thank for you

James Nesci

engaged with Thanks Thank questions We really you, Laurie. us. every for being quarter. appreciate the

Operator

questions. have Thank further no you. we And

back to Jim for remarks. So hand closing it'll pleasure my any to Nesci be

James Nesci

day. today, interest to call speaking you in of you, thank look the you forward quarter. you to participated with have and our of all great company. Thanks fourth I Thank for who the all operator. again And in a And your on

Operator

Thank lines. us joined This you the to your call who may you disconnect today. concludes everyone now has and

Blue Foundry Bancorp (BLFY) 27 Oct 222022 Q3 Earnings call transcript