BRKL - Earnings call transcript Q4 2017

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Operator

Good day, and welcome to the Brookline Bancorp Fourth Quarter 2017 Earnings Release Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Marissa Frerk, Associate General Counsel. Please go ahead.

Marissa Frerk

Phil. you, Thank and XXXX everyone, Brookline Inc.'s Bancorp, Good Conference welcome Call. Quarter Earnings Fourth afternoon, to Yesterday, our www.brooklinebancorp.com, Investor Relations filed we on the page available issued with of earnings release our website, SEC. and been is has which the Brookline will and Paul by Carlson. executive team, This afternoon's hosted Bancorp's call be Perrault Carl

Bancorp. differ call and to report disclaims forward-looking these assist Bancorp results future publicly unduly begin, and intent conditions, and those as should operations any understanding results press references only this are relying forward-looking Actual otherwise. in Brookline you upon actual may with identified measures statement of from to our annual in cause measures may financial Brookline may against be results information, Bancorp's future new that differ Brookline not results results our include actual on we to statements. most in during any any made Before events note, respect statements Factors forward-looking to or predictions. release. of made non-GAAP business contain you cautions please to financial response Any of or and and recently our statement XX-K, Form trends filed presentation XX-Q the relied whether to update performance this forward-looking on earnings

to reconciliation GAAP pleased President and Brookline introduce earnings Perrault. I'm earnings, to now Bancorp's comparison CEO, release. For please see And our and Paul

Paul Perrault

or of following fourth share Carlson, Bancorp's will my results and a reported Brookline our I'm welcome the fourth afternoon, our Financial today Thanks, XXXX. for $X.X quarter earnings to through of we Yesterday, quarterly walk Chief who earnings Good Carl million quarterly quarter by $X.XX Marissa. comments. accompanied you Officer, financial call.

share $X.XX Jobs share a of impact Cuts million Tax the or XXXX. this have would the fourth Excluding been or of and compares $XX.X $X.XX million in $XX.X quarter Act, net to per and income the

million. by million balances the and grew loan deposits $XX quarter, $XX grew During

grew quarter, to by revenues efficiency $XXX,XXX the declined quarter. third XX.X% total compared in $XXX,XXX, XX.X% from third an in of Our resulting the expenses while ratio

we recall You transaction have might acquisition announced XX. now Commons Bank, the their on September of shareholders approved that XX, on and January First

quarter. We expect close transaction the this to

our approximately in Commons $XXX and will Brookline in $XXX Bank million into deposits. loans million add merged be and First

We the the are to family. all looking welcoming of customers Commons forward First to Brookline

our you We to have turn our communities, quarter. serving a fourth Carl, of Brookline now our will employees region's team Bancorp And making customers great leading over commercial review who dedicated of the banks. one and I will

Carl Carlson

solid earnings Paul. you, which quarter very pretax had very million, with of a We reflected a year. Thank $XX.X off capped solid

December we the our tax on million, for mentioned, asset which value is to Right provision light enacted Paul in Jobs of of Taxes low the Act, section accounting asset housing in approximately and net which deferred remeasure Income reflected our is As of deferred tax income the in Cuts statement. investments and the required Tax now, income was were XX. $X

from the While X estimate XXXX through XX.X%, be tax of XXXX. charge approximately XX will taxes and quarter, effective is preliminary was to charge down months the expect first for significant the million rate in XX%, federal a this in $X we the fourth lower our recaptured

loans. Turning to

to by driven During our average with the $XX.X annualized activity X.X% earning the of quarterly originations. consistent million the by our portfolio guidance loan quarter, grew XXX $XXX basis. weighted prior end an is quarter, fourth of million was This quarter, and seven-point million on of or a At the the coupon growth. increase the repricing portfolio points, asset basis from on $XX

basis. X.X% an grew annualized deposits quarter, $XX.X During or by on the million fourth

cost increased basis the period, five interest-bearing deposits this During of points.

million, the million increased prepayment increase assets annualized and fees increased increase income average $X.X Combined, earning to the up third third quarter. deposits basis lower basis. of X.X% the three revenues points. third or an quarter, was in increased four cost yield quarter The represents quarter points. on $XXX,XXX half liabilities the derivative from quarter-over-quarter $XXX,XXX QX. slight the We points fourth the compared accounting fourth or Loan quarter, while on the purchase in $XX.X $XXX,XXX $X,XXX basis customer million saw and quarter from for due was million were loan two sales. demand assets to The from for basis quarterly $X.X interest-bearing of the was decline on Noninterest of earning $X the in also the yield up

credit $X.X quarter for less was a decrease provision simply The favorable was than charge-off we the a million, the $X.X specific third established in the workout. quarter, driven by losses Our reserve previously established of QX. have for from million loan

the loans XXX During from of the end a net quarter, $X.X Nonaccrual was points, $XX.X basis the quarter, basis third medallions. loans million, points under $X.X taxi million total were At Of million or the the related basis million allowance loans. just $XX.X were to the of nonaccrual medallion $XX.X charge-offs taxi are points of to million at declined $X.X for of quarter. down loan end XXX XX as loans. of losses million percentage the loans,

million, annualized the X.XX% from merger Paul paid for $XX. represents of $X.X closing decreased remarks. concluding that, million general and closing, price $XX.X third back declined company's The the shareholders $XXX,XXX common be quarter Our turn In I'll yesterday's yield dividend and $XXX,XXX of acquisition total the the of share on which to board over quarterly February taxi and million. on specific approved to to quarter will during reserves record per With March X $XX.X of it quarterly on $X.XX costs. medallion based with million dividend The $X.X included expense noninterest XX. of portfolio per share, an $X.XX to in

Paul Perrault

Thank you, Carl.

the as our deliver customers place, exceptional to As look our forward consistently to of potential have service we to our resources With first that through we growth this the deserve. quarter our we the presented move XXXX, opportunities continue organization. in we

up open now will We questions. it for

Operator

[Operator Instructions].

first question O'Neill. comes Mark with The Sandler from Fitzgibbon

Mark Fitzgibbon

and you're what carrying taxi if what those on First, of loans update you at. could remains us medallion the

Carl Carlson

Yes.

on have, medallion taxi we the now, right $XX.X million books, in loans. So

And intents million, that loan of And behind there's $XX.X so that really is $X.X medallions about that a million not C&I taxi that. and substantial credit piece all is and we based for got of reserve purposes because one particular $X.X the million. we've as repayment that's really on of against the There individual, themselves. treat loan the assets the of

how basically that's look we So it. at

we look about the think $XX more of in itself, kind it we when at So million the medallion taxi as you... exposure range

Paul Perrault

against. million $X.X

Carl Carlson

against million $X.X that.

Paul Perrault

so what of lot but The somebody XXX%, think in marketplace much we But in marketplace, the be of very, a really the is we times still all missing might values I really exposure. balances financing and real still changed these other quarters. very upon clarity amount, of some the charging in Virtually, fortunate payments to off that's think be that as to advantage are the reduce coming. for big one. hell, it's it And market and it's there's their hasn't I acquiring be. thing indicate level, murky take no have But it's coming, been agreed at some making in some aggressive able at recent Mark, them to

Mark Fitzgibbon

the I right? quarter, in is Okay. heard think, acquisition the late I that said to correctly, And then close if first going you you're

Paul Perrault

Yes.

Mark Fitzgibbon

help us acquisition growth there you think we with of year? an also and in kind this the expenses Could operating look as ahead organic about

Carl Carlson

Yes.

second in I the quarter. think the that systems we of expect in of close the conversion and later quarter transaction, to first we'll do

cost the seeing start seeing of savings in we'll So savings those XXX% really cost QX. start

the in in second so So the far savings rates. as quarter you'll see run and quarter certainly as third cost more

I be to similar year grow expense think the company. we continue just as growth think this year, it looking at will next our very I

on sticking So growth costs. that's am the forward. And growth million that on the of with growth to nature, million $XXX and things the loan basically $XX operating where quarterly I'm I going and of the expense

Mark Fitzgibbon

$XX $XXX of quarterly million growth, you loan to said? million

Carl Carlson

Yes.

Paul Perrault

Yes.

Mark Fitzgibbon

up Okay. margins remix. moved to lastly, continue as And you nicely then your

How done the same? have the more funding controlling good margin a year, of guys you thinking You job this about cost. are

Carl Carlson

same. of More the

course, and parts lot all this, you expecting, of in a I'm So know. there's of moving as

year, We about expect X.XX% around, margin. for the full probably

Mark Fitzgibbon

hikes And rate there? that is rebate some a couple in of

Carl Carlson

help The correct. doesn't rate hike Correct, fourth much.

Operator

next comes Point. Compass Hunsicker from with Laurie The question

Laurie Hunsicker

wanted margins. just go to back I to

you prepay fees, the assuming if because just delta, So the off the at I'm are quarter, us off, gave prepay take you that just stripping linked flat I'm I X.XX%. just If to fees. X.XX%

in And to deal? jumps X.XX%, so from as that Is income accretion right? that that the the is

Carl Carlson

No, no, no.

forecast factored purchase any you into our far. have accounting So know, so not just we

Laurie Hunsicker

So right? that's just

Carl Carlson

actually the Right. We deal. close

deal is all. that at included not in So the

Now...

Laurie Hunsicker

an have ahead. you sorry, go I'm -- Do accretion

Carl Carlson

expect to little. be We very that

Laurie Hunsicker

we can win should you back of the on question And just expenses. reinvestment bit about about little dollars? Great. how us just in The following that to a raw talk expense, terms Okay. then think tax of

Carl Carlson

a you amount dollar now. I right give couldn't

Laurie Hunsicker

any Okay. novo What plans de about for in branching XXXX?

Paul Perrault

anymore ideas, wouldn't a an We're the in relocation we're what certainly branch which The be place expansions but would major. rebuild is from but banks process it involved. the some doing. a and be successful wrapping Rhode pruning Island, a major not of probably one old some in right no relocations, in up and have of It branch within that's

so do major no of there's we that, but And plans. lot a like stuff

think XXXX. consideration this I we for couple under a have for

Laurie Hunsicker

Okay.

about you perching -- Okay, you're one now Obviously, your to you're how last great. Commons, question. you're it First thinking the just then, share that of M&A half now? for us back maybe XXXX can just how Paul, with close And really closing to or

Paul Perrault

them. change to that if back they pursue we at look we my If thinking. what make we And along. We sense, don't, were they No doing. come go in doing opportunities appropriate

Operator

Breese comes question next The Piper with from Matthew Jaffray.

Matthew Breese

on the right? that was margin, margin. X.XX% The on total guidance, Just the

Carl Carlson

that's That's for full the year, correct.

Matthew Breese

year. Full

expectations Okay. within what penalty And help me prepayment are that, you for understand, just your income? could then

Carl Carlson

I'd we've our actually. income always group doing. consistent that what with of fairly A equipment lot been comes prepayment say finance it's to

it's think fairly I consistent. So

Paul Perrault

what it in is Activity once was.

Matthew Breese

as then just it some place year. the over and by would imagine And average it, the think about far of we're to X.XX% that end That's right, way trajectory, that out? I the Right. as

Carl Carlson

Yes.

at quarterly at actual robust. you pretty way do like the not sure basis. the margin, the more [indiscernible]. how an margin year basis. I'm do a We you we out have we of think probably look focused guys on we'll the I on, start look But on a

quarter. a jump because You'll of number first big see days of just in the the

deposit financing the on going market. deposit forward. what the points very move increasing. we in basis, quarter is So we in But X, And X keep that can a as the our really of -- on that's pretty timing volumes mind pricing. and one what's lot that, is in that, just think the that year full the to general, but on a well also X around of will lathering that, based We side happens dependent thing every be, with the manage to basis on

Matthew Breese

could what you And talk incremental more has cost really Great. deposit been get the funds, of out there do deposit beta been is think? How recently that? -- in you to if about and and you has had deposits, drive

Paul Perrault

Well, deposits. area do in advertised it depends what kind the the of I specials, market see plenty particularly banks we of and in money area. some the nonbranch-based CD of mean,

in they're of able knock on there and seen not little So not less nonretail qualitative continue either. slightly mostly relationships way, quantitative a yet. and are a but sensitive, we've wood. way, pressure who but We're is progress building kind excessively in to so to a stupid build with bit We

need that we we cost to. go And that if then do hikes and will manage expect our we'll deposit up, these up see as rate come so

Matthew Breese

have interest money Do rate that small you haven't think getting the point the you some -- rates to market incremental of point do extent Where group, tripping we core the to a marks that increase You're think happens? increases seen maybe special. depositors, at the deposits? for

Paul Perrault

be you a do of bucket. in what I point which to the think is account. And entity at who single may lot is with whether sponsoring serious has the our and with answer entity be what And that to accommodating a it other money it we you'll the is market largest is away kind have and business as someone again, a two from yes. relook or accounts,

into goes lot it. a So

Carl Carlson

we've that been payer a for products, all have we And and say lot of that, I little so... in deposit would markets a our in the historically, higher branches

Paul Perrault

large The banks.

Carl Carlson

a retail on in close a little front. the And and There Within biggest up I much other the to large player may keep the eye against banks be encourage are, biggest past the they be higher. banks, threat be in some eventually, on typically because we continue and think wars to question not there big like a the bit we is been of that proactive more the the very different but regulatory and LCR compete here. them things, all rate things, we catching and to these we

We haven't possible. mean it's it that doesn't yet, seen but

those things. customers, and constantly also we're care as taking well. looking we're that's So our at of But key

Matthew Breese

it. Got

growth that robust incremental and Okay. And the but get wanted last growth know unchanged, one, a XXXX. I your and breakdown my to the just you might I see out for outlook that XXXX sense just and dollar more the within portfolio loan in segments see coming from of where we is

Paul Perrault

I'm developing C&I. our the talk estate And and you XX-XX, though guys if and representative last our the markets be I've think to with real in the at is But reputation the of that think me C&I. three curve successful and equipment giving is about some in even at context, and is history Half belie have C&I more calls, years. not that of in directionally bias I I'm trying up. plans business, look And been it estate I and would as couple and XXXX commercial. on half and fact our be, our a that the more think stronger like is I commercial XXXX, bend consistent to what XX-plus gain, real previous going heard and percent which you other

Operator

[Operator question Instructions]. Gilbert from with KBW. comes The Collyn next

Collyn Gilbert

those offer and of that well? in Just appetite the tax color as the is as million bit your we on that targeted seen of loan sort paydowns on can tying $XXX $XX your growth given and follow-up where are the what now, of given Paul, the you've paydowns to market, like a that, way of for portfolio around in just million color 'XX, sort right portfolios of you in some maybe into bill assuming of the to then what as you're just borrowers' little

Paul Perrault

kind much not equipment, what the that I will tax might that It's things ones, continue. It's or not out of a business been success or bill. may really a expansion have We don't has very the who it of lot stuff kinds bill, heard accelerating almost they about and of honestly on. inventory as company marketplace really have the time such of money of, the do accelerates vast early may tax of more right? spending not, have hard result C&I of be be. the larger on very of And impact prior will might a been or seem might the we tend representative our I'm envision enjoying customers me all be be business would to that which market that macroeconomic to me and the tell, it to would at would that not it does most what normal plant to But for like growth, whether needle. truly be it our level. move large feels That aware

Collyn Gilbert

Okay.

seeing the to rate that color guys the still was trends just Okay, plan growth? And at of a and you're grow some about overall on or the deposit loans? that Is that's to side intention pricing but there, try the deposits good as similar deposit helpful. you offered what

Paul Perrault

have growth in Well, even our I'd But be years, the continuing like growth get we ideally that. struggled keep recent we better to the going even that. to to near and given than develop strategies in to new and than improved better deposit even past. But we've up loan are

Collyn Gilbert

Okay, then just that's And I lastly... helpful. guess,

Paul Perrault

change it let add been strong brick and and brick and me just having We've ratio improved we have the Keep buying purposely proud is our is, develop lines, patience in can which deposits. we're so We're mind, patient, and by we there, by that. loan-to-deposit Collyn, our along we are going why stripes and but our in not that ideas. those not it more hang building of more margin what is efforts to to

Collyn Gilbert

Okay.

any where I the think then I Okay, book. just And there of talked that's Or the are the helpful. you're lastly credit. about we forward? areas taxi about mean, going provisioning taxi, seeing just stress? reserving how on that But should guess of outside and kind you

Paul Perrault

wood, credit. to Knock very, continued enjoy I we've good very mean

to recent medical-related few hasn't because years. how in little caused heartburn. huge resulted it pay. more bit We are government doesn't enterprises a changes seen us pay has but That We've of disasters, rulebook the government paying a or and in the attention a hiccups

occupancies paying other test, value to serious stress and that loan diversified that. -- we're mattress therefore is So in will, Sleepy's any properties. owns the there sort occupancy to Carl, to mean, markets. all our could example, -- the closer South focused we attention Steinhoff close value, general if problems, -- and loan attention company, our show company I you that But African of that to paying and so commercial of very retail that low we're absorb in

Sleepy's. We have of we a properties have material a commercial finance that number

So is, we've over case, And going And one-to-one every company the but answer don't the tested coverage that. things that's all they're the like that good that whoever stuff. I in a traditional here without in think big anywhere, We so we we're Sleepy's. see finance are these holds, and it's is malls, don't the else really the hurt, watch big world seeing there. out Kmart, which well

than have don't point we rises risk, out? you the areas And would localized that more can a it risk. think other So guys that, other any of Carl, of that

Carl Carlson

any, talked particularly We've -- weak. about not that any heard around noise

Collyn Gilbert

back Okay. million $X I behind taxi elevated the start normalize should beyond million to even the hopefully million stay or that? we $X range? provision And are then if assume guess losses $XX to then that does you, range of it that Or bulk to

Carl Carlson

the whatever growth I look we high is to this we a in level, when I at very on cover portfolio. the Well, have say think basically

X% those more mix quarter, on a if $XX growing $XXX the of to is covering little charge-offs. And then loans. not million depending portfolio on you're that, the about you're a million your expecting So bit

whatever quarterly are So there. charge-offs because on natural taxi net basis we're then well really the basically are, specific excluding a reserved those and reserves is

I at that's might be on be the side. low looking $X would how million So it. Obviously,

little I will think be it that. than bit better a

Operator

like question-and-answer This concludes over closing Mr. conference to Paul I to back session. our for turn would any Perrault the remarks.

Paul Perrault

And you, to will we joining you next thank forward Bye talking quarter. and you all Thank for with now. look us, Phil.

Operator

now you today's has conference presentation. concluded. The for attending Thank

now disconnect. may You

Brookline Bancorp (BRKL) 1 Feb 182017 Q4 Earnings call transcript