[Management View]
Blue Foundry Bancorp (BLFY) reported a sequentially reduced net loss for Q3 2025, supported by net interest margin improvement and higher net interest income versus the prior quarter. The company emphasized ongoing share repurchases below tangible book value, with tangible book value per share increasing to $15.14. Management highlighted a strategic pivot toward commercial assets and business banking, continued reduction in CD reliance, and sees margin tailwinds from expected loan repricing and lower funding costs in 2026.

[Outlook]
Management expects downward rate movements to benefit funding costs and anticipates repricing in the loan portfolio to have a favorable impact on net interest margin over time. Noninterest expenses for Q4 2025 are guided to be in the high-$13 million to low-$14 million range, with no 2026 guidance due to ongoing strategic planning.

[Financial Performance]
- Net loss: $1,900,000, or 10¢ per diluted share, improved from the prior quarter.
- Net interest income: Increased by $551,000 to $12,200,000.
- Net interest margin: Rose six basis points to 2.34%.
- Deposits: Increased by $77,100,000.
- Loans: Grew by $41,900,000.
- Allowance for credit losses: 0.81% of gross loans, up one basis point.
- Tangible book value per share: Increased to $15.14.
- Noninterest expense: Grew by $347,000.

[Q&A Highlights]
Question 1: Can you talk about how you've responded on the deposit side and your expectations as rates continue to come down?
Answer: We took advantage of putting on another broker deposit at a lower rate. We are managing funding costs and working with customers on core deposit growth, deemphasizing CDs. We expect a shift from CDs to money market products.

Question 2: What benefit could you get as CDs come up for repricing?
Answer: We have durations of five months for CDs, so we don't anticipate a significant pickup in Q4. We expect benefits in 2026 as CDs roll off in January and February.

Question 3: What are your near or medium-term expectations for the margin?
Answer: We anticipate the fourth quarter to be relatively flat, with repricing activity picking up in 2026. We expect around $45,000,000 in sub-4% repricing and another $35,000,000 to $40,000,000 in sub-3.75% repricing.

Question 4: Can you discuss opportunities in commercial loan growth and the pipeline?
Answer: We are deemphasizing multifamily loans unless strategic. The focus is on commercial and industrial loans, pulling in full relationships. The pipeline includes over $41,000,000 in letters of intent with rates above 7%.

Question 5: What is a reasonable level of expense growth to expect for the company?
Answer: For Q4, expenses are expected to be in the high-$13 million to low-$14 million range. We are not prepared to give 2026 guidance as we are working through our strategic planning process.

Question 6: Is 7%-8% still the range for the structured consumer loan book?
Answer: Yes, 7%-8% is still the range.

Question 7: How do you think about the buyback activity going forward?
Answer: We had a specific transaction this quarter, so it's not a usable run rate. We believe the buyback is a good use of capital, with 730,000 shares remaining under the current plan.

[Sentiment Analysis]
Analysts were focused on understanding the impact of rate cuts on margins and deposit costs, as well as the strategic shift towards commercial loans. Management maintained a cautious but optimistic tone, emphasizing strategic initiatives and disciplined capital management.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 |
|-------------------------------|------------------|------------------|
| Net Loss | $1,900,000 | $2,000,000 |
| Net Interest Income | $12,200,000 | $11,649,000 |
| Net Interest Margin | 2.34% | 2.28% |
| Deposits | $77,100,000 | $- |
| Loans | $41,900,000 | $- |
| Allowance for Credit Losses | 0.81% | 0.80% |
| Tangible Book Value per Share | $15.14 | $- |
| Noninterest Expense | $- | $- |

[Risks and Concerns]
- Nonperforming loans increased to $11,400,000, driven by a $5,300,000 multifamily credit.
- Provision for credit losses increased to $589,000 due to deteriorating economic forecasts.
- Higher noninterest expense due to increased compensation and professional services expenses.

[Final Takeaway]
Blue Foundry Bancorp showed improvement in net interest income and margin, despite a net loss for Q3 2025. The company is strategically shifting towards commercial assets and reducing reliance on CDs, with expectations of margin benefits from loan repricing and lower funding costs in 2026. While nonperforming loans and credit loss provisions have increased, management remains focused on disciplined capital management and enhancing shareholder value.