BRKL - Earnings call transcript Q2 2018

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Operator

Good afternoon, and welcome to the Brookline Bancorp, Incorporated Quarter 2, 2018 Earnings Release Conference Call and Webcast. All participations will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Marissa Frerk, Associate of General Counsel. Please go ahead.

Marissa Frerk

Michelle. you, Thank and XXXX everyone, Brookline Inc.'s Bancorp, Good conference welcome call. quarter earnings second afternoon, to Yesterday, our 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 condition, 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 statements XX-K, Form trends, filed presentation XX-Q the relied whether to update performance this forward-looking on earnings

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

Paul Perrault

First offices Bank the our and company bank financial Xst, by into in following again systems existing I'm the and all. June we you experienced today conversion afternoon, our record earnings. Financial the quarterly On good accompanied their experienced will And In second my Carlson, results team Marissa. walk quarterly Officer, successfully Chief branches. Thanks, Brookline Wellesley through our Newton consolidated comments. executed quarter, Commons Carl of who the

of We Wakefield of north reported commercial south markets Massachusetts our banking and Boston. also offices to share of and million $X.XX for $XX.X We Braintree, or extend these second to banking per in XXXX. quarter earnings opened of boutique style the

balances grew $X million. million grew the Our quarter, by in loan $XX while deposits

Our customers and Brookline you more communities commercial will the Carl, in of now who [colleagues] serve one the Bank continued work companies. to banking making company's leading will over second region's do turn hard to our I detail. the our to Corp. review quarter

Carl Carlson

Thank you, Paul.

grew As to million loans $XXX during quarter. second in first quarter organically the Paul compared mentioned, the million $XX

net than in this Our loan second quarter. originations quarter, resulted remain which In of $XX million were draws greater growth and million, quarter. higher strong, lower loan we the reductions principal $XXX originations loan net first had the

However, well principal higher average the during see XX-XX reallocating as market sales, yield participations portfolio by increased to growth as started continue yield reductions the market as loan in basis up earning CD’s Deposits million. million assets $X during sensitive rate points prepayments. this declined on points XX balances by to driven significant DDA, in were accounts offset outflows and quarter. the time as on quarter, solid customers Money overall $XXX from money program loan more as loan greater increased XX balances. we basis The weighted grew deposits, and $XXX driving shifts also net our million

This time basis deposits costs XX increase funding basis bearing During basis deposits by of deposits points. cost market on quarter, increases XX driven from drove the the money basis interest first up overall XX our the of increased XX and quarter. points points points to

earning linked higher QX. these This items second our to credit points increased were margin X in level XXX,XXX, $X.X of sales net compressed increase quarter quarter, in first growth of higher sequentially is the due positively of quarter excluding million in was the XXX quarter, points, gains increase was [indiscernible] up the up is loan basis quarter-over-quarter driven quarter million, our XXX,XXX participations impacted during XXX,XXX fees from loss funding the was for first basis XXX,XXX XXX,XXX average primarily to quarter. the $X.X by which the an of income the loan in Non-interest increase by the and a Combined of our the Included up quarter. the impact net interest margin the and XXX,XXX in which impact quarter points. driven in $X.X While accounting X the cost charge-offs. from interest security million assets. basis net XXX,XXX, second income on income and purchase prepayment basis

QX. points non-accrual points quarter million basis on the allowance million XXX,XXX $XX.X net loans end The and loans to basis. the of loans of the of basis charge-offs end quarter, During was annualized down a an or percentage on once XX loans XX basis at declined total $X.X or points XX at of XX basis as the were from

expense for basis impact which to the quarter dividend closing or price stockholders remarks. With quarterly per share XXXX. points XXX,XXX that, from first non-interest based per of it million. approved back and the million the $XX.X for August record The of share and XXth turn on board on increased the quarterly $X.XX to Paul income the acquisition XX. $X.XX to expenses, $XX.X represents an of paid Net yield concluding of of on merger company's over annualized we Excluding quarter August $X.XX I'll XXX was the dividend yesterday's

Paul Perrault

and a even nice feel Thanks, for Carl. year. had rest things expect we very greater I XXXX of first the the half of we've

We will now open it up questions.

Operator

Sandler from comes The Mark Instructions] from [Operator first Fitzgibbon O'Neill. question

Mark Fitzgibbon

Afternoon.

Operator

Go ahead.

Paul Perrault

Mark. Hi,

Carl Carlson

Hey, Mark.

Mark Fitzgibbon

guys. Hey,

quick of couple a questions. Just

First special into at of XX flows CD Is that month guys the at month XXX. an those are I where XX you CD buckets? coming an most have X.X% two saw that

Carl Carlson

Yes.

Mark Fitzgibbon

outlook becoming the deposit Okay. And everybody for there? out your pricing little seeing Carl, then is cautious more given pressures a margin that the

Carl Carlson

say the cautious, if margin we see is going other I say - the in its direction. wouldn’t moving I'd down,

catch-up of right little happening now. that's a there's bit think I

seeing But - it it. probably on I bank so side if is we're see would seeing to exert I continue because funding pressures think every experiencing the everybody deposit themselves. the

Mark Fitzgibbon

foreseeable So you basis a is margin for reasonable of think? quarter future that the a down do sort few points

Carl Carlson

I'm if future, I rates, to go large been far, catch-up a how basis, not a am it's not there's foreseeable be sure now I on I much so going forward think say would more in the sure. there's

beta So XX% lot when XXs, probably to been time, we projecting XX% a we’ll think folks deposit in percent betas, I over where have think about normalize the out deposit area. to of

we're this still catch-up. think even that a behind quarter's I little with

probably So we'll continue I to those think types of pressures. see

to it's more see much to somewhat. we’re So the it's probably next moderate going going - in quarter, how probably are -

Paul Perrault

I'd X pretty we Together, is just does forecast of big of another that is is sort in that, then with this for to and and LIBOR. not at probably whatever our a big, we're portfolio floats And be of portfolio but part other which throw have year have originating factor that it our your prime tightly five going amount priced the is we fair the year, as off impact it rate.

that'll revenue impact the So have an as well side. on

taking just calling For the don't better or curve. not for at yield line, worse, yield know. the Carl is the I been

So I know… don't

Mark Fitzgibbon

Okay…

Carl Carlson

points, expect at margin this And too X guidance give the the to or So into much I decline would I quarter. mean, point. basis third in least wouldn't the fourth I - probably X at

Mark Fitzgibbon

that number because loan your last half lending tougher. in of loan slowed changing? design was that like environment markets out you looks it was then, in And the deposit flows there Or about guys projected side, quarter, growth the were you is the by the Okay. growth the competitive

Paul Perrault

active prepayments down. participations spread. the as some of it And is some loans slow where had selling exceptional of I pick And up But didn't remarks, buildings we else. management No, much his sale it. pointed that's as are in Carl also we think been prices at Metro things, staggering on guys we have a risk for in that in anything in we as out our pretty Boston

new, just little nothing prepayment previously. So more activity than a

Carl Carlson

quarter. our still. I Our would was in this is origination were than pipeline quarter actually first And the say stronger stronger they

things… of a So it's of a mix mix - it's

Paul Perrault

It's lumpy, think. as we

Mark Fitzgibbon

that of assume cost then in Okay. should deal quarter? out saves the come And in most will the third First the expenses, on Commons we

Paul Perrault

saves have of done. cost Most the

Mark Fitzgibbon

June, conversion coming in of that you some cost out done, the be They are assume incremental think there okay. would - distance didn't I XQ? know I so I

Paul Perrault

There I will we're flat. probably expenses be to very - for that would now And say little. relatively right be projecting we're projecting

Mark Fitzgibbon

do Okay. And sort it that then tax rate, the you the XX% year? of have down on been the lastly guys higher touch it on in back of the think back was come than you giving. Will guidance half a

Carl Carlson

down I half back expect the it in come year. would back will

Mark Fitzgibbon

Thank you.

Paul Perrault

Mark. Hey,

Operator

go The comes of ahead. from Point. Hunsicker Compass next Please Laurie question

Laurie Hunsicker

Yes. afternoon. Hi, good

Paul Perrault

Hi, Laurie.

Carl Carlson

Hi, Laurie.

Laurie Hunsicker

then And loan loss with charge-off was take how wonder us thinking Just that be line, the how should to if provision and loss through loan going much taxi? Carl can the we forward? provisioning respect you about within

Carl Carlson

Okay.

today the against taxi a million So is portfolio that reserves $XX.X The about $XXX. million.

kind today. So that's where of we stand

During million we quarter $X like over line. dollars. we net know in - the the had that taxi actually have something charge-offs we report in charge-offs million And is $X the

did So a some of on things as we we And brought did also quarter $XX,XXX. the quarter well. medallion $X in in value one loans line. down we million taxi during of But some the on the recoveries commercial had we to was Cambridge the charge-offs the

Laurie Hunsicker

then that just XX.X net balance X.XXX that And reserve? is Okay. of

Carl Carlson

the on what That’s No. books and…

Laurie Hunsicker

medallions of estate are have that Okay. by? commercial of And the do secured million still some those $X you real

Carl Carlson

have collateral can credit well manage with there treat and medallions as there’s the one a very associated a quite what it well. We know they that very estate few that more C&I of loan own -- we it they're relationship, real because doing they and

Paul Perrault

own of And a they lot others…

Carl Carlson

a right. lot other of own things, They

part loan? of $X.X of a more to as and million - treat a that also that's C&I So [$XX.X] we that

Laurie Hunsicker

Okay.

So down basically, taxi to - CRE, a X.X net you're of reserve, if $X.X the net X.X the net book million? for the

Carl Carlson

it you If net up… all

Paul Perrault

in… Just

Laurie Hunsicker

Okay.

portfolio. I we did the a be or credit mean, think any given mark about deterioration, that? of on basically thinking so you about thinking I And more this quarter, provisioning loss loan other how that quarter, as Cambridge we just we growth should can that September - about your XXX,XXX did it guess, run I be mean, the absent rate in X, matching into

Paul Perrault

I think about whatever way charge-offs on The is, X% loan plus about be. growth whatever net might the it is incremental

of things, charge-off have in on if the that be all you charge-off in economy. it as impacts whatever - those well in recoveries, higher types if So going to is terms additive that that, economy may the as there's and that

Laurie Hunsicker

talk And markets, that quick you Carl specific we XX great. on big really line should Okay, money jump about to points about points. deposits. then question quarter from the linked we Okay, one item you went can basis going How a little basis in bit XX thinking just a be saw forward?

Carl Carlson

I would rate certainly sensitive that become has interest rates. that to say

but up, of now, to they've really woken money I and focused laddering are they've other at where said there been think They're customers place looking that to want money. to some CDs. their out money on their - say they CDs opportunities place

see to starting we're the pressure so sides on And there. all

So historical I been. more to probably in would that moving be up, betas line had with what expect

So in change on But some we've interest now seeing lower of XX% for it types move the much products. to normalized had rates XX% you're quite in time, betas. those more

Laurie Hunsicker

Okay.

obviously for about and And respect sitting you're Can saw about stock a times about We to your thinking Okay. you. are how bit with us out here Thanks. it, generally then up little at back? yesterday. taken bank talk M&A X.X question Boston you currency out Paul, you just to last how thinking just

Paul Perrault

We of to keep look something financially, think do. we're around it we'll do obviously. usually doing look sense generally But makes we'll strategically fine it. M&A as without I and looking us I for if

nothing urgent, keep ground, so we anything do And the but our new. ear don't feel we to

Laurie Hunsicker

one question. planned I'm just And Are novos coming the last other Okay. in sorry de quarters? there

Paul Perrault

these offices? banking In

Laurie Hunsicker

Yes.

Paul Perrault

very, these No. but And difficult it's Braintree on, shaping market, particularly got already in happy in been about going up are staff are with a XX% what's is well. and very - we've very obviously nicely Wakefield tight that's these we as

have you've us here offices already very - and traffic given around noticed as handy these probably So, for become institutionally. the

Laurie Hunsicker

much. Thank so you Great.

Paul Perrault

Thank you, Laurie.

Operator

Breese go Matthew ahead. from Instructions] Jaffray. Piper next The [Operator comes Please with question

Matthew Breese

afternoon, Good guys.

Paul Perrault

Hi, Matt.

Matthew Breese

of Just from the quick others been have me. one Most one answered.

they’re Just eating across a your us get is idea competitive, the for wanted classes? most compression give yields spreads spread the maybe where seeing across of the you're book, is the competition, some where incremental asset some -- they to just sense away loan where where least

Paul Perrault

as that, the fed but from on little compression say mostly they've with deposit to able it's explain benefit some like okay. is cycles, anything spread steady coming tier loan than they see we have have funding goes I’d to finance from been how the not equipment floating. from that? as bit see better par much have liked. able more to pricing. I’d might funds or where she and rising The been you probably That's it's world to would C&I rather rates to in a not I'd pricing. gain as been is is top it. a estate add Carl, where real these That's we costs anything the rate rate because able

Carl Carlson

I'm XXX, and for that. and finance is mean. the that you X.XX$, is financing driven you're of we on is much detail booked, I bit financing a that coupon units, the driven units so The that was million that equipment equipment dollars everything XXX finance - by looking be booked, not our how equipment almost was average [indiscernible] average equipment now the $XXX on sure average a exactly quite coupon, was coupon in XXX, that out get the to weighted second quarter helpful, really from

Matthew Breese

of average Right. Right. yield of And that compares the XXX.

quite - roll So a nice of bit positive on it's it's roll a off… versus

Carl Carlson

That's correct.

and not right the So I'm WAC and all that and on at average XXX in at XXX. talking effective accounting up so the looking last that. about- the fees portfolio of of end end at we end the - But that’s at when I'm coupon the entire the at the quarter, way at -- weighted finished quarter of was looking the deferred quarter the the when look I'm purchase coupon of

Matthew Breese

Right. Understood.

you. That's all Thank had. great. they Okay,

Operator

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

Paul Perrault

all look forward again for you you, us Michele. you talking to quarter. And afternoon. joining thank Thank this We'll to next

Operator

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

disconnect. may You now

Brookline Bancorp (BRKL) 26 Jul 182018 Q2 Earnings call transcript