BLFY

• Advanced core objectives of growing core deposits, diversifying loan portfolio, and expanding net interest margin.
• Deposits increased by $77.1 million, loans by $41.9 million, net interest margin expanded by 6 basis points.
• Loan growth driven by commercial real estate and consumer loan portfolios; commercial portfolio grew by $7.2 million, consumer loan portfolio by $38 million.
• Loan pipeline healthy with over $41 million in executed letters of intent, primarily in commercial lending.
• Tangible book value per share increased to $15.14 per share; repurchased over 837,000 shares during the quarter.
• Capital and liquidity strong, with $423 million in borrowing capacity and $178 million in unencumbered securities.

• Expect downward rate movements to benefit funding costs and loan portfolio repricing, positively impacting net interest margin over time.
• Fourth quarter expected to be relatively flat; repricing activity to pick up in first half of 2026 with ~$45 million in sub-4% repricing and ~$35-40 million in sub-3.75% repricing in latter half.
• Anticipate net interest margin pickup in 2026 from repricing and new production.

During the third quarter, deposits increased by $77.1 million. Loans grew by $41.9 million. The net interest margin expanded by 6 basis points to 2.34%. Net interest income was $12.2 million, up $551,000 from the prior quarter. The commercial portfolio grew by $7.2 million, with origination activity of $81.3 million including ~$40 million in owner-occupied CRE and C&I offset by payoffs. The consumer loan portfolio increased by $38 million. Core deposits grew by over 10% year-to-date, commercial deposits by over 17%.

• A $5.3 million multifamily loan was added to nonperforming loans, but no immediate risk of loss of principles associated with this credit.
• Credit quality remains sound overall but monitored with discipline.

Q: Wanted to start off on the margin here, talking about deposit response to rate cuts, multifamily repricing, commercial loan growth, and expenses.

A: Kelly Pecoraro discussed leveraging broker deposits, deemphasizing CDs, expected margin pickup in 2026 from repricing, commercial loan focus on relationship-driven C&I, and fourth quarter expenses expected in high 13% low 14% range.

Q: On loan growth outlook, structured consumer loan book, and capital/buybacks.

A: Kelly Pecoraro stated structured consumer loan portfolio still in 7%-8% range, and there was another 730,000 shares under current repurchase plan at quarter end