BRKL - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the Brookline Bancorp's Fourth Quarter 2018 Earnings Conference Call. All participations will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Marissa Frerk. ahead. go Please

Marissa Frerk

Relations Good afternoon's fourth Sean. Carlson. Perrault issued and to Brookline with team, the welcome earnings and executive website, Thank been Bancorp's will has XXXX afternoon Carl be earnings and Bancorp's filed Investor on available quarter which SEC. we A. of conference Brookline M. our release, brooklinebancorp.com This you, the is everyone page call call. Paul our by Yesterday, hosted

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

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

Paul Perrault

XXXX, you my Yesterday, per in of of million record or Carl for Financial year $XX.X by today financial we reported of million accompanied the results Carlson, earnings per resulting $X.XX following I'm Chief comments. all. afternoon good $X.XX quarterly and or for who quarter walk share. will our Marissa fourth the Officer, earnings share $XX.X through Thanks our

by grew higher million, loan deposits XXXX XX%. grew than by and $XXX year, balances million $XXX the XX% or For

saw of XXXX interest customer well volatile time yield preferences a year XXXX deposits, demand saw rates to million deposits we almost $XX a shift XX%. also in rising as also While or of as strong growth curve. was

strived We a bank possible to year-over-year basis in in point interest as we changes to as position and be neutral have rates always four margin X.XX%. interest our the to experienced increase to net

by Excluding almost year-over-year increased XX%. of gains, revenues $XX.X the or impact securities million

positive our exceptional Excluding the merger impact expenses pleased leading operating quarter. the of or increased one making of and our I review to by I X.X%. to the Carl, team over million in will company's Bancorp to customers Brookline of enterprises. X.X%, who region's our Carl? $XX.X will of work charges, year-over-year fourth be continue resulting leverage communities turn serve commercial the now banking you

Carl Carlson

the on during on categories. Deposits loan for all XX up assets basis XXX the growth earning points driving XX $XX basis portfolio points. increased quarter, The $XXX.X yield yield from in quarter overall million. quarter the of third the average with an million Loan in drawdowns originations grew strong higher loan Loans slightly million, Paul. or basis, than was quarter estate at participations by commercial real X.X% annual in and the and $XX.X $XXX were again which on third you, Thank driven quarter fourth sales grew the basis the coming million with and quarter out consumer. weighted of points once the

cost increased liabilities and of basis XX all During points. our of XX increased points the the interest-bearing deposits quarter, cost interest-bearing basis

and Combined, quarter. $XXX,XXX was the fourth of were incremental prepayments loss $XXX,XXX quarter, interest $X.X and accounting third one our fees. third million the down margin XXX $X.X to $XXX,XXX the million, Non-interest down on is fourth net basis prepayment linked-quarter income in offset quarter, during in and Included during change Our in Purchase interest quarter-over-quarter points purchase basis from and quarter lower increased the quarter derivative driven income basis. from was on impact increased from investment margin quarter. and income a point net accounting had on fees the impact the activity $XXX,XXX income securities. in no changes The was up decrease by the the $XXX,XXX the QX. the

$XX.X Our resulted provision went XX specific credit million, through for $XXX,XXX, points in on loans. basis the losses as quarter losses allowance and for and charge-offs credit for largely workouts trends the reserves established was favorable loan quarter within of representing

declined on or million million million net to basis. $XX.X and of charge-offs basis XX loans the During were loans annualized quarter, points an non-accrual eight total $X.X $X.X or basis points

Excluding $X.XXX the per expense XXth With impact it to share, February higher remarks. from on on non-interest of OREO was and the back compensation expense $XX.X million. million the incentive concluding was an expenses. of be higher by $X.X common by increase will for I'll and increased operating quarterly over was expense yield write-downs merger The costs. operating quarter company's X.X%. a and acquisition driven and and Other driven expense, severance, other to approximately turn workout which of of by Compensation new Board Yesterday, that, record February dividend the XXth hires. costs, third paid Paul represents approved stockholders annualized to driven

Paul Perrault

Thank you, Carl.

we year expect another happy to the record solid company have a XXXX. very are and We for reported

questions. for open up We it will now

Operator

first will comes [Operator Instructions] the Mark Please question question-and-answer ahead. Sandler now Our We session. Fitzgibbon O'Neill. begin go from with

Mark Fitzgibbon

guys, good afternoon. Hey

Paul Perrault

Mark. Hi

Mark Fitzgibbon

with the commercial could what of pipeline you and that I now wonder the looks if maybe size rate your on like? blended us share

Paul Perrault

done can it has been. of know from might it average and my in the tell you when recall, dollars And of robust hundreds Mark, to don't a something because I quantify of millions as all not as As pipeline, probably deal. it -- that those is be, is But like I don't is exactly. things what rate weighted that you perspective, I it's when the

improvement impression intermediate rates a the over that rate. generally not that from anymore. market have I rising But rates steady level, holding of yield the negotiated as -- approved customer in back are past may have and there's improved curve is at We not flattened, year it, went or think fall, the the down haven't accepted generally holding sort they I we been it, hasn't think up has after in it's my may come pricing, last pretty

Mark Fitzgibbon

And then Okay. secondly--

Paul Perrault

And see-- Carl, do you want add to from what anything you

Carl Carlson

like the loans, quarter, coupon. Yes, on I million add weighted the I a little might not this and a going first would guess and quarter the what in what have average But that we to to sense only thing just we're fourth give you so look just of you point. happened project $XXX -- at the originated of

So, and just those loans drawdown doesn't XX those have FAS X.X%. adjustments. any and so the this But on all the X.XX, is coupon

Mark Fitzgibbon

outlook your in, quarter Can margin the Great, it for okay. bit the even? let's again? hold here or And little first a what's say, improve maybe Carl, even

Carl Carlson

in it seeing the a kind think; we've a more big it's stabilization good but Competition a bit. was is categories. we're leaning some preference There in deposits, we're of of catch-up at amount Well, in normalize big certainly -- way, I'll but I still seen there. time all -- QX, point. factor seeing is this towards put margin growth There that now this deposit funding growth out a

quarter we two stable of a generally be might the one of account, best you're bit very where the to trying the the basis day margin for expect that overall, pinpoint be if number projections we better them. so that do. QX, margin plus can first the or up ended for points, probably flat. relatively things little to just do nature And because I or So, just minus But

Mark Fitzgibbon

your desire XX previously? Okay. remaining And percentage Funding drove then didn't that to what you buy curious, in secondly, Eastern just just the own

Paul Perrault

the part actually ultimately the was this of would deal It that original be outcome.

Mark Fitzgibbon

Okay.

the would at? do date you that and predetermined, price it was it So,

Paul Perrault

date, date, price. No, the ultimately the not that date would XXX%. part at buy was in it of on a elective their action it been but balance market upon, the somewhat we price terms particular and the and the But wasn't pricing's agreed the just

Mark Fitzgibbon

little there? Carl, kind anything that Or was line, higher the income drove than what And like usual. of it other in it looked there Okay. in unusual then Was a increase? bit

Carl Carlson

$XXX,XXX. had a that a sale just that went of line under of We building in

Mark Fitzgibbon

Okay. A branch?

Carl Carlson

A branch.

Paul Perrault

old fancy. Island, been sold That had Nothing relocated we the and in Rhode one.

Mark Fitzgibbon

lastly. then And

were would way if think to any in sort you unusual items other X% expenses that be increase, really XXXX, this other? is or As a of we X% kind out anticipate of number you to model we one year for the that there about ballpark? Or pushing the

Carl Carlson

No, my that think be I guidance. would

Mark Fitzgibbon

Thank Great. you.

Paul Perrault

Thank Mark. you,

Operator

Compass Please Point. from next ahead. go question Our Hunsicker Laurie with comes

Laurie Hunsicker

afternoon. thanks. Good Yes,

Paul Perrault

Laurie. Hi

Laurie Hunsicker

staying with in $X.X anything That million are items that? income there was elevated. Just here, there -- bit one-time other any Was that expense? a statement line

Carl Carlson

some have recovery that, call very Well, We characterize -- because I write-down -- us one-timers, higher OREO them as large -- of for what expenses. level hate would which to would and off-trend. and workout did things call I just a is unusual I in time

over those fact, things in So, were combined $XXX,XXX.

I the So, driving that big number. think that's thing

Laurie Hunsicker

Okay. those And related merger charges Choice? or to $XXX,XXX, the were those related to Eastern were of First

Carl Carlson

getting Approximately at were the related Commons. a was And to balance First related over -- Eastern. Commons, of First just little out a $XXX,XXX to just facility

Laurie Hunsicker

First Commons, sorry, not First Choice.

Carl Carlson

First Commons.

Laurie Hunsicker

closed do Xst go a see zero when because ago? that year we to March merger So, charges

Carl Carlson

think that forward. -- is going I zero be Yes, zero a should it

Laurie Hunsicker

then how what -- forward? And about going thinking terms be charges Okay. merger in Eastern we of should

Paul Perrault

Zero.

Carl Carlson

done. all It's

Paul Perrault

It's done. all

Laurie Hunsicker

Okay.

I Okay. just sure-- And make then want to

Carl Carlson

those expenses. had on January closed I accrued mean it we Xth, all but

Laurie Hunsicker

thinking I about And the great. just Okay, to this right I'm way. make sure then want

So, through fourth dropping the bottom-line. in to terms Eastern is completely your quarter, that now million of running $X.XXX

Carl Carlson

[Indiscernible]. was subtracted, be not going consolidated-- fully to Yes, a It's it because

Laurie Hunsicker

right. subtracted, not It's

Okay.

Carl Carlson

subtracted just going It's not be anymore. to

Laurie Hunsicker

am that math number, round share, is It's Okay. equating a doing to $X.XX right? I about a that

Carl Carlson

that ours. not part Well, we're really because also not, income of is

an their income on the haven't individuals taxes that to been they either, pushed on and paying were taxes it LLC, paying out it's gets that. because own We

our have the So, will statutory rate. income to pay at tax we

be to that than slightly going it's So, number. less

Laurie Hunsicker

X.X%.

helpful. you then year? got help can Okay, next that think just us it. tax That's about on rate, for And

Carl Carlson

be right in say -- Yes, I'd it's now, between XX%, I that and going and think range. XX.X% to

Laurie Hunsicker

Great. Thanks. I'll it leave there.

Operator

Please comes Our Matthew Breese question ahead. Piper with next Jaffray. from go

Matthew Breese

afternoon. Good

Paul Perrault

Matt. Hey

Carl Carlson

Matt. Hey

Matthew Breese

continue the FHLB we channel? I question FHLB more as versus brokered saw guess think saw this to XXXX, wanted advantageous to came the just my talk increase. sheet about is fund CDs funding CDs And I the trends advances we or We down. it through quarter. about balance CDs to

Paul Perrault

Probably.

Carl Carlson

the channels? think well, Between we a funding I those of variety -- sheet. ways of balance have

Federal Bank certain in Home very brokered CDs and as well Loan but days. favorable. advances -- as market points these favorable are certain the are tenors So,

year ago, give CD. couldn't I away or So, a years a two

the a bit in quite markets of there's that particularly Now, serve. we appetite,

variety So, funding. a we're seeing of availability of

want at try to to the price. right do Just it

Matthew Breese

Maybe way. this try it understood. Okay,

XX%. to that think borrowings to usual Your ratio around asset end year downward? continues came XX% from trend at you Do down a to

Paul Perrault

our It be effort. certainly would

DDA improvement core in relationships, sell deposits, cash we more as the and treasury see management, more You and build more services.

trying to But actually a been we've success these long of what are amount do and over directionally time. we've that's So, had fair arcs--

Carl Carlson

quarter-to-quarter-- a not It's

Paul Perrault

Yes, sure you we kind bit how $XXX good little sign. of do by so. that I'm for can about about, million it is right? I our quarter at And it down will given the read much brick-by-brick, a way, spoke borrowings to the included that's, year, any That's very are But you in is stat predict. hard But think a old-fashioned Matt. guess, the directionally that's I continue.

Matthew Breese

Exactly. kind That my trending lower. of a -- little We've point. it's been bit was

lower. it the was push to wanted sense strategy that And to more to just so for continue quarter, -- get This significant. a as

I at. think head's I know where your

million. about to $X was off-trend. quarter? line to of that said returns the that in it Just million going Is first other OREO level at the $X.X comes the item expense, Usually, to back in you expectation

Carl Carlson

it's Yes, lower. not

Matthew Breese

just then the Funding. And Okay. Eastern on

understand, How treat interest? that? we should P&L I how treat should minority that it's perspective, from yours, so now Just we entirely that

Carl Carlson

reduction to That's members was what net number the the minority happens income our when at statement is looking coming minority show the see the income to consolidated to that's already. a fully income you'll of in reduction at perspective, income interest, the shareholders? the bottom an out it Brookline net statement, non-controlling statement those of from LLC. income What that -- or So, very the you're is statement, income the -- for

zero roughly goes fraction a a after be transaction, that going the Xth -- quarter forward could turn it's then that since it will That and first that. away. in there a So be to January will for number of

Matthew Breese

Understood.

at levels, And the interested other the in? at on that re-up then you're is the Okay. levels, these buyback, saw authorization the something -- these I

Carl Carlson

-- it the did going not levels. what the what you probably approve I'm a and these pine-on we it faster going just I'm pine-on saw was a -- did. did did to done lot million market program ever to we on expected Board than because $XX

execution in favorable those that. to forward. the And do market a got going if, types of it was And on we fact, feel the we very so opportunities provides $XX felt prudent another Board million

Matthew Breese

I you. right. That's had. All all Okay. Thank

Paul Perrault

bet. You

Operator

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

Collyn Gilbert

Good Thanks. afternoon guys.

Paul Perrault

Collyn. Hey

Carl Carlson

Hey Collyn.

Collyn Gilbert

have I questions answered. OREO question asked last clarify and Most to expense. of the on my been just wanted Matt's

a I'm little Sorry, confused.

So, the that at fourth said expenses -- you quarter, that $X.X million, had for right, there the in expense workout other Carl? elevated line was other

Carl Carlson

Yes.

Collyn Gilbert

Okay. And to million. the -- said, run but say million $X.X then just normalized then that, Matt $X And is generally that yes? did rate you

Carl Carlson

no. No, no,

So just a -- clear. let -- little me be bit

We our quarter. will $XXX,XXX the OREO over write-down in

of We had expenses around lines. also elevated in workout $XXX,XXX various

OREO the sure of some moving OREO any don't the time will end how last We of typical. properties see that so write-down first And write-down quickly. quarter. be write-down out. will -- hopefully had not done are that not those fairly those be expected and the even that we'll usually is so pans I'm the have to by we And our I And OREO. we

back $XXX,XXX rate think he the I that a I So, was trend that's workout, foreclosure what in and was to responding things repo, being to. expenses, getting and run of like

Collyn Gilbert

Got it.

Okay.

that's Okay, helpful.

to it answer seeing? appetite environment lot the asked I to M&A? change it, Paul, -- but gets M&A, your I ask every is? Okay. but you're any Thoughts What -- I'm know any the A relates -- there? And time, in it of capital. as What think going

Paul Perrault

the are views XXXX markets I there's opportunities activity I really changed Well, I fewer observer of anything around haven't -- I think the that say would in it don't at here. but relevant an all. guess, -- new. because in That's Carl? my on don't there much

Carl Carlson

to I that. anything add wouldn't

Collyn Gilbert

Okay.

So, buybacks. the the capital question answered levels, I mean, you on

level? that do that the you You've where got I guess, Carl? managing capital on see your dividend. What are thoughts And trending,

Carl Carlson

the to -- we'll faster had law, Well, than continues change we we be be performance I are deploying quite of capital those that good. we company tax the projected accumulating fit. see we'll think, and the with in just the originally as And capital manage

We bit nice within had We've to fourth just now, a hires opportunities see organically. continue market. the quite Right opportunity of in the quarter. some

deployments see to expect athletes great are -- efforts. themselves continue continue and We into to long-term of but develops those present what there, to find capital we'll those

Collyn Gilbert

see more put growth the far mean, kind term, do think growth, just that XXXX? In building thus the in relative to that Okay. in accelerate of been you loan I you momentum that could immediate you've you up loan XXXX what

Paul Perrault

see Yes, I gains better could think it's XXXX. XXXX possible in than we

all You year. other then well, the loans slow. were pay very pay being right. of and a ledger, markets might XXXX down actually through had the lot in our recall, of the started out side pretty sold doing way balance And on left the we off, picked or are companies But of up properties momentum we the

a think, given XXXX. footrace. it can decent So, I of bit gains. a We But have, was sheet outdo possible we some we that momentum it got balance that is the

Carl Carlson

were we the side a participation to out. add is, lot Yes. to that And doing on just more

$XX million, folks the just have quite that we experiencing. a just and have only for C&I as brought and there. balance them out in our our bit on given expectation so much have less growth, not We -- then we a you sheet. the And expectations participation the quite on quarter, our had as so on been greater throughout that saw side do is maintaining little originations So, strong to year, been this

Collyn Gilbert

All Okay. you. helpful. right. Thank That's very

Operator

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

Paul Perrault

to And for we all you joining look you quarter. thank next forward talking Good with and will again John us. day. Thanks

Operator

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

Brookline Bancorp (BRKL) 31 Jan 192018 Q4 Earnings call transcript