NASDAQ:BLFY Blue Foundry Bancorp Q3 2023 Earnings Report $9.84 +0.25 (+2.61%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$9.84 0.00 (0.00%) As of 04:17 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Blue Foundry Bancorp EPS ResultsActual EPS-$0.06Consensus EPS -$0.12Beat/MissBeat by +$0.06One Year Ago EPSN/ABlue Foundry Bancorp Revenue ResultsActual Revenue$10.25 millionExpected Revenue$10.76 millionBeat/MissMissed by -$510.00 thousandYoY Revenue GrowthN/ABlue Foundry Bancorp Announcement DetailsQuarterQ3 2023Date10/25/2023TimeN/AConference Call DateWednesday, October 25, 2023Conference Call Time11:00AM ETUpcoming EarningsBlue Foundry Bancorp's Q2 2025 earnings is scheduled for Wednesday, July 23, 2025, with a conference call scheduled at 11:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Blue Foundry Bancorp Q3 2023 Earnings Call TranscriptProvided by QuartrOctober 25, 2023 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Good morning, and welcome to Blue Foundry Bancorp's Third Quarter 2023 Earnings Call. My name is Jordan, and I'll 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. Operator00:00:44Please 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 speakers' remarks, there will be a question and answer session. I'm now going to turn the call over to President and CEO, Jim Nesi. Speaker 100:01:06Thank you, operator. Good morning, and welcome to Blue Foundry Bancorp's 3rd quarter earnings call. I'm joined by our Chief Financial Officer, Kelly Pecoraro, We will share the company's financial results in greater detail after my opening remarks. The results we announced earlier today Illustrate the impact that the higher for longer rate environment continues to have on our revenue. The highly competitive Northern New Jersey market, Coupled with sustained higher short term interest rates, has had an adverse impact on our margin and cost of funds. Speaker 100:01:41Despite this pressure on revenue, we remain focused on expense management and maintaining our robust capital base, Strong liquidity and stable asset quality. My management team and I have been diligent in exploring opportunities to reduce our expense base To offset some of the top line pressure, we have reduced staff by 10% this year, and our investment in technology has allowed our employees Earlier this year, we challenged our employees to further optimize our operations, And we are appreciative of their contributions. Their efforts resulted in increased productivity through a reduction in redundant tasks and cost saves. And most importantly, we continue to streamline delivery of customer services to provide a consistently better customer experience. Our expenses have steadily declined during the course of the year. Speaker 100:02:38Expenses were $13,700,000 in the 1st quarter, $13,000,000 in the 2nd quarter $12,400,000 this quarter. Quarter over quarter, Our operating expenses declined $574,000 or 4.2%. Both our bank And holding company have capital levels that are among the highest in the banking industry. All of our capital ratios Are more than 2 times higher than the regulatorily defined well capitalized levels. Additionally, Tangible equity to tangible common assets was 17.1% at September 30. Speaker 100:03:19Maintaining significant liquidity and reducing liquidity risk remain paramount when operating in the current environment. At the end of the Q3, we had over $369,000,000 in untapped borrowing capacity And our unencumbered available for sale securities provided another $278,000,000 of liquidity. Excluding Heller Cash and counterparty cash collateral received from our swaps program, We had $33,000,000 of cash on hand at quarter end. Additionally, Blue Foundry continues to operate With a low percentage of uninsured deposits and low concentration risk to any single depositor. For customers who require FDIC coverage beyond the traditional $250,000 we're able to provide them With an additional coverage through our ICS and Cedar Sweep account programs. Speaker 100:04:20Uninsured deposits from customer accounts For $127,000,000 at September 30. This represents approximately 10% of the bank's total deposits. Additionally, our available liquidity covers 5.4 times our uninsured and uncollateralized deposits to customers. While the prospective credit environment remains uncertain, we continue to be pleased with the resilience of our existing lending portfolio. Our credit quality remains strong. Speaker 100:04:53Our non performing loans remain at historically favorable levels, and our underwriting standards on new production remain conservative. Lastly, in July, we completed our 2nd stock repurchase program and announced that our Board of Directors We approved a 3rd program authorizing the repurchase of an additional 5% of outstanding shares. During the quarter, We repurchased 298,000 shares at a weighted average cost of $9.51 a discount to tangible book value. Tangible book value per share was $14.24 at September 30, and we continue to believe that share repurchase programs representing prudent use of capital. With that, I'd like to turn the call over to Kelly, and then we would be delighted to answer your questions. Speaker 100:05:43Kelly? Speaker 200:05:45Thank you, Jim, and good morning, everyone. The net loss for the Q3 was $1,400,000 compared to net loss of $1,800,000 during the prior quarter. This improvement Was largely driven by lower operating expenses and the release of the provision for credit losses, partially offset During the quarter, we had a provision for credit loss release of $717,000 The majority of our allowance for credit loss is derived from quantitative measures. And although our allowance methodology placed greater weighting On the baseline and adverse forecast, our favorable credit metrics and the composition of our loan portfolio, Coupled with a slight decline in our loan portfolio and a decline in our unused credit lines led to a reduction of our current expected credit loss reserves. Nonperforming assets to total assets Decreased 4 basis points to 33 basis points, primarily driven by a decline in nonaccrual loans. Speaker 200:07:09Our allowance to total loans decreased 3 basis points to 88 basis points. However, our allowance to non accrual loans increased to 226% From 186 percent the prior quarter, also due to the decline in non accrual loans. While we realized a $408,000 expansion in interest income, our interest expense increased $1,400,000 resulting in a reduction of $1,000,000 in net interest income. Yields on loans increased by 3 basis points to 4.21 percent And Neil on all interest bearing assets increased by 4 basis points to 3.97%. Cost of funds increased 31 basis points to 2.46%. Speaker 200:08:11Remaining competitive deposit pricing, The cost of interest bearing deposits increased 52 basis points to 2.25%. This was partially offset by 15 basis point reduction in borrowing costs. We still expect pressure on our margin to continue due to the competition for deposits, the current rate environment And the liability sensitive nature of our balance sheet. During the quarter, we executed $50,000,000 in interest rate hedges to manage our interest rate position. This brings us to a total of $259,000,000 of hedges Against interest rate volatility, the weighted average duration of these hedges is 3.4 years. Speaker 200:09:03Expenses declined $574,000 driven by a reduction in compensation and benefits expense And to a lesser extent, a reduction in occupancy and equipment, data processing and professional services. The reduction to compensation and benefits expense was driven by sustained lower headcount and a reduction in variable compensation. We continue to explore opportunities to optimize our expense base. We expect operating expenses for the 4th quarter To be below $13,000,000 Moving on to the balance sheet. Gross loans declined By $10,800,000 as amortizations and payoffs outpaced new loan funding. Speaker 200:09:58As a reminder, Less than 2% or $23,000,000 of our loan portfolio is in office space And none is in New York City. With a duration of 4.5 years, Our debt securities portfolio continues to provide cash flow that is being used to fund loans. These securities declined $11,500,000 due to maturities, calls And schedule paid down as well as an additional $5,900,000 increase in unrealized losses. Deposits decreased by $14,000,000 or 1.1% during the quarter. We were able to increase retail time deposits by $51,000,000 This growth in time deposits Was more than offset by an outflow of $65,000,000 from non maturity accounts. Speaker 200:11:02Our focus remains on attracting the full banking relationship of small to medium sized businesses. We offer an extensive suite of low cost Deposit products to our business customers. Despite the competition for deposits, we were able to grow the number of business accounts By 2% during the Q3. The number of business accounts are up 7% this year. During the quarter, borrowings increased marginally. Speaker 200:11:33And with that, Jim and I are happy to take your questions. Operator00:11:54Our first question comes from Justin Crowley of Piper Sandler. Justin, the line is yours. Speaker 300:12:02Hey, good morning, guys. Good morning, Mike. I wanted to start on operating expenses. It's nice to see this continue to come down in the quarter. As I think the last update, at least this time last quarter, was to perhaps About cost holding steady through the back half of the year. Speaker 300:12:21And I was wondering if you could expand a little on exploring opportunities. I think across the industry you've seen a lot of banks formally come out with broader initiatives, some of which you've already done. It seems like you guys have also been able to do a decent job just Trimming costs around the margin, but just curious if there could be even more to be done here. And then I guess sort of a loaded question, But Kelly, if I heard you right, I think you mentioned below $13,000,000 for the Q4. I'm not sure if you're able to get a little more specific But does that sort of imply that the base could see a little bit of a tick up into the end of the year? Speaker 200:13:00Yes, Dustin. So 13, we're guiding to just below $13,000,000 We do have a little bit of additional expense. We do have one new branch coming on In the Q4, which will have additional expense, but we continue to look at opportunities to reduce our expense base. So you asked, are we do we have specific initiatives? I think the initiative and the mantra around here is to look at every contract, look at every Expense line item, especially as we go into our strategic planning season and as renewals come up and see what we can do to lower that expense, Eliminate redundancies and tasks that vendors may be performing for us, so it's been paramount in our operating model. Speaker 300:13:48Okay. I appreciate that. And then sort of shifting gears, turning to loan growth. So our balance has declined again. Can you just talk a little bit about net growth expectations going forward? Speaker 300:14:01I'm not sure if there's any change in the thinking in terms of the size of the balance sheet looking ahead. Just curious your thoughts there. Speaker 200:14:11So Justin, I think, yes, we did see a reduction in our loan balances. We are very mindful in putting on high quality, high yielding loans using both our Using both our amortization from our loan book to redeploy that into higher yielding assets as well as our Pay downs and amortization of our securities book, some of the constraints on the deposit outflow has tampered that a little bit, but we're in the market looking to lend and looking for the appropriate asset class to put on our balance sheet. Speaker 300:14:45Okay. So when I think about like the loan pipeline, how is that trended maybe as of now compared to this time last quarter? Speaker 200:14:55I think right now, we're probably a little bit below where we were from an overall pipeline perspective, but the rates are higher. So as we look at that, as we said, putting on those higher yielding assets and being mindful of our composition. Speaker 300:15:14Okay. And do you feel comfortable just sharing any sort of loan growth target just over the next Perhaps a year or so? I'm not sure if you're in a position to be able to do that. Speaker 200:15:27No. We're not in a position right now, Justin, to do that. Speaker 300:15:31Okay. Got it. And then just lastly, I wanted to touch on share repurchases. Obviously, capital levels are pretty healthy. Just curious if there's appetite to get quite a bit more active here possibly. Speaker 300:15:43We've seen that the math has gotten even more attractive when I think about where activity Speaker 200:15:51Yes. I think we are very we support buybacks. The Board and management believe that the purchase of our shares is a good investment. We were If you think about where we were in the Q2 and the volume within the market, we were able to take advantage of that, the volume At that point, as we headed into Q3, we saw volumes kind of trend downward. Also the timing of Transition from our first stock our second stock repurchase plan to the 3rd plan had some impact on our purchases this quarter. Speaker 100:16:26Justin, this is Jim. Good morning again. To reiterate what Kelly is saying, we are still a firm believer And share buybacks and expect to be back in the marketplace in Q4 as we go in. So again, no news. Speaker 300:16:43Okay, understood. Great. I appreciate it. I'll leave it there. Speaker 100:16:50Thanks, Justin. Speaker 200:16:50Thank you, Justin. Operator00:16:52Our next question comes from Chris O'Connell of KBW. Chris, please go ahead. Speaker 400:17:00Hi, morning. Just circling back on the loan growth discussion. So I mean given where the pipelines are a bit lower than last quarter, I mean is it does that imply that Maybe for the next couple of quarters, net loan growth is kind of more of a flat line situation? Speaker 200:17:24I think it's hard to tell, Chris, as we look at the market, the volume in the market, what we're looking to put on the balance sheet, Again, looking for those high quality, higher yielding assets. So if it's available and we have the funding as well, we are definitely looking to put Loans on our balance sheet. Speaker 100:17:45Yes. I think just to again reiterate, it depends on the asset class, it depends on the price. So those 2 go hand in glove in my opinion. We're looking, we're actively looking and we are building the pipeline. So it's hard to give you a specific number Where we projected to be, we're looking in the marketplace and we do think there'll be activity in the coming quarters. Speaker 400:18:10Okay. And what is are the origination yields on the loan pipeline? Speaker 200:18:18The pipeline right now, we have just under 8.5 from a weighted average rate. Speaker 400:18:30Okay. And as far as the next 12 months, how much In the dollar amount, are the loans set to mature? Speaker 200:18:51$25,000,000 are set to mature, but we do have amortization of the portfolio. Each month is about $5,000,000 to $7,000,000 that's coming in from an amortization perspective as well as the securities portfolio that's amortizing down And we have some payoffs coming or maturities due in that book, probably about $12,000,000 in the next quarter. Speaker 400:19:16Okay, great. And as far as all the hedges that you guys have on the 259,000,000 Can you remind us as to where each of those rates are locked in at? Speaker 200:19:35I think it's a nice blend, Chris, as we put them on right now. We have our The weighted average maturity is 3.4 years and the weighted average rate of those hedges are at Okay. Speaker 400:19:59And that's being kind of applied against the FHLB advances in terms of like the yield table? Speaker 200:20:09Right. So if you take a look at that, it does impact our interest expense. So it's offsetting interest expense on our financial Speaker 400:20:20Okay, great. And kind of putting it all together here, I mean, do you guys have the September spot NIM or any color as to how much NIM pressure you might see into the Q4? Speaker 200:20:39So we don't normally share our Spot NIM where we're at, but we do see some additional compression, but not at the pace we saw in the 3rd quarter As the significant amount of our CDs have matured and went into those buckets, so we don't see that volume of activity in some of our maturing deposits. Speaker 400:21:05Okay. Got it. And just taking a step back, I mean, in order do you have any idea of In the current rate environment and if that kind of persists as it is right now with the inverted yield curve, Which I know makes things difficult. Where the NIM could bottom and start to move back up in terms of timing And just what levers can be pulled to kind of get to a path to profitability from here? Speaker 100:21:46So I don't know that it's a specific lever. What we continue to focus on is our core business strategy of banking small and medium sized businesses. We continue to look for the lower cost deposits, obviously, that those businesses provide to banks like ours. But that's where we're going to stay on the strategy. We continue to increase the deposit base. Speaker 100:22:06The products are working well. Obviously, we want to see them scale up faster, but that's We're going to keep pushing our manpower into. Speaker 400:22:19Okay. And any sense is the timing as to where we could get to an inflection point in the margin? Speaker 100:22:29It's too hard to say at this juncture. I don't have any guidance on that point at this time. Speaker 400:22:39Okay. That's all I had. Thank you for taking my questions. Speaker 200:22:46Of course. Thanks. Thank you, Chris. Operator00:22:49With that, I'll hand back to the team for any closing remarks. Speaker 100:22:55Thank you, operator. Thank you again for joining us on our Q3 call our earnings call. We look forward to speaking with you again next quarter. Thanks, and have a great day. Operator00:23:08Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your line.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBlue Foundry Bancorp Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Blue Foundry Bancorp Earnings HeadlinesEarnings call transcript: Blue Foundry Bancorp beats Q1 2025 EPS forecastMay 2 at 8:51 AM | uk.investing.comBlue Foundry Bancorp highlights Q1 2025 loan growth and net interest margin expansionMay 1, 2025 | msn.comHere’s How to Claim Your Stake in Elon’s Private Company, xAII predict this single breakthrough could make Elon the world’s first trillionaire — and mint more new millionaires than any tech advance in history. And for a limited time, you have the chance to claim a stake in this project, even though it’s housed inside Elon’s private company, xAI.May 5, 2025 | Brownstone Research (Ad)Blue Foundry Bancorp (BLFY) Q1 2025 Earnings Call Highlights: Navigating Growth Amidst ChallengesMay 1, 2025 | finance.yahoo.comBlue Foundry Bancorp reports narrower Q1 loss, stock fallsApril 30, 2025 | za.investing.comBlue Foundry Bancorp (BLFY) Q1 2025 Earnings Call TranscriptApril 30, 2025 | seekingalpha.comSee More Blue Foundry Bancorp Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Blue Foundry Bancorp? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Blue Foundry Bancorp and other key companies, straight to your email. Email Address About Blue Foundry BancorpBlue Foundry Bancorp (NASDAQ:BLFY) operates as a bank holding company for Blue Foundry Bank, a savings bank that offers various banking products and services for individuals and businesses in the United States. The company offers saving, time, and non-interest bearing deposits; demand accounts; and loans, such as one-to-four family residential property, multi-family, residential real estate, non-residential real estate, consumer, construction, and commercial and industrial loans, as well as junior liens and home equity lines of credit. The company was formerly known as Boiling Springs Bancorp and changed its name to Blue Foundry Bancorp in July 2019. 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There are 5 speakers on the call. Operator00:00:00Good morning, and welcome to Blue Foundry Bancorp's Third Quarter 2023 Earnings Call. My name is Jordan, and I'll 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. Operator00:00:44Please 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 speakers' remarks, there will be a question and answer session. I'm now going to turn the call over to President and CEO, Jim Nesi. Speaker 100:01:06Thank you, operator. Good morning, and welcome to Blue Foundry Bancorp's 3rd quarter earnings call. I'm joined by our Chief Financial Officer, Kelly Pecoraro, We will share the company's financial results in greater detail after my opening remarks. The results we announced earlier today Illustrate the impact that the higher for longer rate environment continues to have on our revenue. The highly competitive Northern New Jersey market, Coupled with sustained higher short term interest rates, has had an adverse impact on our margin and cost of funds. Speaker 100:01:41Despite this pressure on revenue, we remain focused on expense management and maintaining our robust capital base, Strong liquidity and stable asset quality. My management team and I have been diligent in exploring opportunities to reduce our expense base To offset some of the top line pressure, we have reduced staff by 10% this year, and our investment in technology has allowed our employees Earlier this year, we challenged our employees to further optimize our operations, And we are appreciative of their contributions. Their efforts resulted in increased productivity through a reduction in redundant tasks and cost saves. And most importantly, we continue to streamline delivery of customer services to provide a consistently better customer experience. Our expenses have steadily declined during the course of the year. Speaker 100:02:38Expenses were $13,700,000 in the 1st quarter, $13,000,000 in the 2nd quarter $12,400,000 this quarter. Quarter over quarter, Our operating expenses declined $574,000 or 4.2%. Both our bank And holding company have capital levels that are among the highest in the banking industry. All of our capital ratios Are more than 2 times higher than the regulatorily defined well capitalized levels. Additionally, Tangible equity to tangible common assets was 17.1% at September 30. Speaker 100:03:19Maintaining significant liquidity and reducing liquidity risk remain paramount when operating in the current environment. At the end of the Q3, we had over $369,000,000 in untapped borrowing capacity And our unencumbered available for sale securities provided another $278,000,000 of liquidity. Excluding Heller Cash and counterparty cash collateral received from our swaps program, We had $33,000,000 of cash on hand at quarter end. Additionally, Blue Foundry continues to operate With a low percentage of uninsured deposits and low concentration risk to any single depositor. For customers who require FDIC coverage beyond the traditional $250,000 we're able to provide them With an additional coverage through our ICS and Cedar Sweep account programs. Speaker 100:04:20Uninsured deposits from customer accounts For $127,000,000 at September 30. This represents approximately 10% of the bank's total deposits. Additionally, our available liquidity covers 5.4 times our uninsured and uncollateralized deposits to customers. While the prospective credit environment remains uncertain, we continue to be pleased with the resilience of our existing lending portfolio. Our credit quality remains strong. Speaker 100:04:53Our non performing loans remain at historically favorable levels, and our underwriting standards on new production remain conservative. Lastly, in July, we completed our 2nd stock repurchase program and announced that our Board of Directors We approved a 3rd program authorizing the repurchase of an additional 5% of outstanding shares. During the quarter, We repurchased 298,000 shares at a weighted average cost of $9.51 a discount to tangible book value. Tangible book value per share was $14.24 at September 30, and we continue to believe that share repurchase programs representing prudent use of capital. With that, I'd like to turn the call over to Kelly, and then we would be delighted to answer your questions. Speaker 100:05:43Kelly? Speaker 200:05:45Thank you, Jim, and good morning, everyone. The net loss for the Q3 was $1,400,000 compared to net loss of $1,800,000 during the prior quarter. This improvement Was largely driven by lower operating expenses and the release of the provision for credit losses, partially offset During the quarter, we had a provision for credit loss release of $717,000 The majority of our allowance for credit loss is derived from quantitative measures. And although our allowance methodology placed greater weighting On the baseline and adverse forecast, our favorable credit metrics and the composition of our loan portfolio, Coupled with a slight decline in our loan portfolio and a decline in our unused credit lines led to a reduction of our current expected credit loss reserves. Nonperforming assets to total assets Decreased 4 basis points to 33 basis points, primarily driven by a decline in nonaccrual loans. Speaker 200:07:09Our allowance to total loans decreased 3 basis points to 88 basis points. However, our allowance to non accrual loans increased to 226% From 186 percent the prior quarter, also due to the decline in non accrual loans. While we realized a $408,000 expansion in interest income, our interest expense increased $1,400,000 resulting in a reduction of $1,000,000 in net interest income. Yields on loans increased by 3 basis points to 4.21 percent And Neil on all interest bearing assets increased by 4 basis points to 3.97%. Cost of funds increased 31 basis points to 2.46%. Speaker 200:08:11Remaining competitive deposit pricing, The cost of interest bearing deposits increased 52 basis points to 2.25%. This was partially offset by 15 basis point reduction in borrowing costs. We still expect pressure on our margin to continue due to the competition for deposits, the current rate environment And the liability sensitive nature of our balance sheet. During the quarter, we executed $50,000,000 in interest rate hedges to manage our interest rate position. This brings us to a total of $259,000,000 of hedges Against interest rate volatility, the weighted average duration of these hedges is 3.4 years. Speaker 200:09:03Expenses declined $574,000 driven by a reduction in compensation and benefits expense And to a lesser extent, a reduction in occupancy and equipment, data processing and professional services. The reduction to compensation and benefits expense was driven by sustained lower headcount and a reduction in variable compensation. We continue to explore opportunities to optimize our expense base. We expect operating expenses for the 4th quarter To be below $13,000,000 Moving on to the balance sheet. Gross loans declined By $10,800,000 as amortizations and payoffs outpaced new loan funding. Speaker 200:09:58As a reminder, Less than 2% or $23,000,000 of our loan portfolio is in office space And none is in New York City. With a duration of 4.5 years, Our debt securities portfolio continues to provide cash flow that is being used to fund loans. These securities declined $11,500,000 due to maturities, calls And schedule paid down as well as an additional $5,900,000 increase in unrealized losses. Deposits decreased by $14,000,000 or 1.1% during the quarter. We were able to increase retail time deposits by $51,000,000 This growth in time deposits Was more than offset by an outflow of $65,000,000 from non maturity accounts. Speaker 200:11:02Our focus remains on attracting the full banking relationship of small to medium sized businesses. We offer an extensive suite of low cost Deposit products to our business customers. Despite the competition for deposits, we were able to grow the number of business accounts By 2% during the Q3. The number of business accounts are up 7% this year. During the quarter, borrowings increased marginally. Speaker 200:11:33And with that, Jim and I are happy to take your questions. Operator00:11:54Our first question comes from Justin Crowley of Piper Sandler. Justin, the line is yours. Speaker 300:12:02Hey, good morning, guys. Good morning, Mike. I wanted to start on operating expenses. It's nice to see this continue to come down in the quarter. As I think the last update, at least this time last quarter, was to perhaps About cost holding steady through the back half of the year. Speaker 300:12:21And I was wondering if you could expand a little on exploring opportunities. I think across the industry you've seen a lot of banks formally come out with broader initiatives, some of which you've already done. It seems like you guys have also been able to do a decent job just Trimming costs around the margin, but just curious if there could be even more to be done here. And then I guess sort of a loaded question, But Kelly, if I heard you right, I think you mentioned below $13,000,000 for the Q4. I'm not sure if you're able to get a little more specific But does that sort of imply that the base could see a little bit of a tick up into the end of the year? Speaker 200:13:00Yes, Dustin. So 13, we're guiding to just below $13,000,000 We do have a little bit of additional expense. We do have one new branch coming on In the Q4, which will have additional expense, but we continue to look at opportunities to reduce our expense base. So you asked, are we do we have specific initiatives? I think the initiative and the mantra around here is to look at every contract, look at every Expense line item, especially as we go into our strategic planning season and as renewals come up and see what we can do to lower that expense, Eliminate redundancies and tasks that vendors may be performing for us, so it's been paramount in our operating model. Speaker 300:13:48Okay. I appreciate that. And then sort of shifting gears, turning to loan growth. So our balance has declined again. Can you just talk a little bit about net growth expectations going forward? Speaker 300:14:01I'm not sure if there's any change in the thinking in terms of the size of the balance sheet looking ahead. Just curious your thoughts there. Speaker 200:14:11So Justin, I think, yes, we did see a reduction in our loan balances. We are very mindful in putting on high quality, high yielding loans using both our Using both our amortization from our loan book to redeploy that into higher yielding assets as well as our Pay downs and amortization of our securities book, some of the constraints on the deposit outflow has tampered that a little bit, but we're in the market looking to lend and looking for the appropriate asset class to put on our balance sheet. Speaker 300:14:45Okay. So when I think about like the loan pipeline, how is that trended maybe as of now compared to this time last quarter? Speaker 200:14:55I think right now, we're probably a little bit below where we were from an overall pipeline perspective, but the rates are higher. So as we look at that, as we said, putting on those higher yielding assets and being mindful of our composition. Speaker 300:15:14Okay. And do you feel comfortable just sharing any sort of loan growth target just over the next Perhaps a year or so? I'm not sure if you're in a position to be able to do that. Speaker 200:15:27No. We're not in a position right now, Justin, to do that. Speaker 300:15:31Okay. Got it. And then just lastly, I wanted to touch on share repurchases. Obviously, capital levels are pretty healthy. Just curious if there's appetite to get quite a bit more active here possibly. Speaker 300:15:43We've seen that the math has gotten even more attractive when I think about where activity Speaker 200:15:51Yes. I think we are very we support buybacks. The Board and management believe that the purchase of our shares is a good investment. We were If you think about where we were in the Q2 and the volume within the market, we were able to take advantage of that, the volume At that point, as we headed into Q3, we saw volumes kind of trend downward. Also the timing of Transition from our first stock our second stock repurchase plan to the 3rd plan had some impact on our purchases this quarter. Speaker 100:16:26Justin, this is Jim. Good morning again. To reiterate what Kelly is saying, we are still a firm believer And share buybacks and expect to be back in the marketplace in Q4 as we go in. So again, no news. Speaker 300:16:43Okay, understood. Great. I appreciate it. I'll leave it there. Speaker 100:16:50Thanks, Justin. Speaker 200:16:50Thank you, Justin. Operator00:16:52Our next question comes from Chris O'Connell of KBW. Chris, please go ahead. Speaker 400:17:00Hi, morning. Just circling back on the loan growth discussion. So I mean given where the pipelines are a bit lower than last quarter, I mean is it does that imply that Maybe for the next couple of quarters, net loan growth is kind of more of a flat line situation? Speaker 200:17:24I think it's hard to tell, Chris, as we look at the market, the volume in the market, what we're looking to put on the balance sheet, Again, looking for those high quality, higher yielding assets. So if it's available and we have the funding as well, we are definitely looking to put Loans on our balance sheet. Speaker 100:17:45Yes. I think just to again reiterate, it depends on the asset class, it depends on the price. So those 2 go hand in glove in my opinion. We're looking, we're actively looking and we are building the pipeline. So it's hard to give you a specific number Where we projected to be, we're looking in the marketplace and we do think there'll be activity in the coming quarters. Speaker 400:18:10Okay. And what is are the origination yields on the loan pipeline? Speaker 200:18:18The pipeline right now, we have just under 8.5 from a weighted average rate. Speaker 400:18:30Okay. And as far as the next 12 months, how much In the dollar amount, are the loans set to mature? Speaker 200:18:51$25,000,000 are set to mature, but we do have amortization of the portfolio. Each month is about $5,000,000 to $7,000,000 that's coming in from an amortization perspective as well as the securities portfolio that's amortizing down And we have some payoffs coming or maturities due in that book, probably about $12,000,000 in the next quarter. Speaker 400:19:16Okay, great. And as far as all the hedges that you guys have on the 259,000,000 Can you remind us as to where each of those rates are locked in at? Speaker 200:19:35I think it's a nice blend, Chris, as we put them on right now. We have our The weighted average maturity is 3.4 years and the weighted average rate of those hedges are at Okay. Speaker 400:19:59And that's being kind of applied against the FHLB advances in terms of like the yield table? Speaker 200:20:09Right. So if you take a look at that, it does impact our interest expense. So it's offsetting interest expense on our financial Speaker 400:20:20Okay, great. And kind of putting it all together here, I mean, do you guys have the September spot NIM or any color as to how much NIM pressure you might see into the Q4? Speaker 200:20:39So we don't normally share our Spot NIM where we're at, but we do see some additional compression, but not at the pace we saw in the 3rd quarter As the significant amount of our CDs have matured and went into those buckets, so we don't see that volume of activity in some of our maturing deposits. Speaker 400:21:05Okay. Got it. And just taking a step back, I mean, in order do you have any idea of In the current rate environment and if that kind of persists as it is right now with the inverted yield curve, Which I know makes things difficult. Where the NIM could bottom and start to move back up in terms of timing And just what levers can be pulled to kind of get to a path to profitability from here? Speaker 100:21:46So I don't know that it's a specific lever. What we continue to focus on is our core business strategy of banking small and medium sized businesses. We continue to look for the lower cost deposits, obviously, that those businesses provide to banks like ours. But that's where we're going to stay on the strategy. We continue to increase the deposit base. Speaker 100:22:06The products are working well. Obviously, we want to see them scale up faster, but that's We're going to keep pushing our manpower into. Speaker 400:22:19Okay. And any sense is the timing as to where we could get to an inflection point in the margin? Speaker 100:22:29It's too hard to say at this juncture. I don't have any guidance on that point at this time. Speaker 400:22:39Okay. That's all I had. Thank you for taking my questions. Speaker 200:22:46Of course. Thanks. Thank you, Chris. Operator00:22:49With that, I'll hand back to the team for any closing remarks. Speaker 100:22:55Thank you, operator. Thank you again for joining us on our Q3 call our earnings call. We look forward to speaking with you again next quarter. Thanks, and have a great day. Operator00:23:08Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your line.Read morePowered by