BRKL - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the Brookline Bancorp Second Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Lindsey Kitchens of Brookline Bancorp. Please go ahead, ma'am.

Lindsey Kitchens

Thank you, Rocco. welcome Bancorp's and Earnings Quarter everyone, Call. Conference afternoon, to Second Brookline XXXX Good our which and earnings the issued we Yesterday, release, page with SEC. our filed Investor is of website, been brooklinebancorp.com, has the Relations on available

by This Bancorp's Paul M. executive Carl Brookline afternoon's and be Perrault team, will Carlson. call hosted A.

these disclaims please business this to from call annual begin, condition, results earnings intent any publicly statements, statements. our press of financial may the XX-K, against Bancorp. forward-looking otherwise. to of contain results forward-looking we most whether our our Bancorp forward-looking to new in Brookline may results Before or and that XX-Q and may cautions events you note and that operations Brookline Actual any those report information, respect cause statements differ any on to release. Factors with upon identified differ future unduly actual update in include recently Form relying response filed statements forward-looking

references performance future Any in results actual financial or presentation Bancorp's of are measures not Brookline understanding assist non-GAAP and made measures to to and relied only on you should results be as during predictions. trends made this

earnings, please a comparison and our reconciliation to earnings release. For see GAAP

pleased And Perrault. President introduce to now, and I'm Bancorp's Brookline CEO, Paul

Paul Perrault

accompanied Lindsey. quarterly financial our through by you, my Carl all. our will I'm Good you walk Carlson, today results Thank afternoon, Chief who Financial Officer, comments. following

quarter, had solid we report driven organic pleased I'm that a loan by to growth.

$XXX million. For million our $X loan by the and quarter, balances deposits grew increased

of $X.XX will our of had second first income. of dividend record quarter. on a share, another X. $X.XX slightly stockholders declined August And be interest which and margin We $XX.X we share per income per or fee the approved from XX common net quarter our Board to on million our for While August reported the yesterday, earnings quarter, quarterly paid solid improved, of

serve. organically that Market very be plans, rate the strong, to competition are interest in and our we to continuing execute challenging. on the markets growing We continues remains environment

Bancorp commercial continue the who to over I employees company's leading to of one will make region's the Our review companies. quarter. dedicated second will Brookline now turn Carl, you banking

Carl Carlson

Paul, you, afternoon. and Thank good

million, the mentioned, quarter. Paul earnings were for from $XX.X first quarter $X the million down As

million While $XXX,XXX, expenses total basis. loan revenues quarter improved strong for growth million. QX, of the an increased on provision the or $XXX.X We in increased $X $X.X million from loan and loss X.X% had second annualized

grew real estate million or $XX.X commercial C&I $X.X and annualized. million. X.X% Our portfolio million $XX.X loans declined grew consumer

X.XX%. and weighted million, in with basis was X were originations increase the yield X.XX%. quarter an quarter for overall average rose the $XXX on the coupon as drawdowns earning average first Loan on assets an yield points basis to loan from X.XX%, the X quarter of The points the of weighted portfolio

$X.X Total with million million of deposits quarter, demand deposits during the and $XX.X strong in grew growth in $XX.X million CDs.

our net change liabilities offset points this quarter to the was funding in basis cost of by basis interest NOW The declines X X.XX%. increased margin repricing X points. However, caused from cost our and market deposit in balances. mix money interest-bearing to savings and Higher decline by first

net quarter our earning income linked by continued our a improved growth driven on However, basis, assets. interest in $XXX,XXX

$XXX,XXX and mark-to-market was equity in loan a on negative basis from the quarter. in point mark fees $XXX,XXX, versus income on the quarter. fees. portfolio is $XXX,XXX $XXX,XXX net $XXX,XXX participation impact prepayment driven strong quarter, were a of and QX. margin first X million Included was from accounting the second accounting quarter. first a the up the quarter-over-quarter the in in $X.X the interest activity the impact income positive second of changes was increase from prepayment during negative Noninterest down quarter, the The $XXX,XXX purchase the by first and $XXX,XXX Purchase had quarter, Combined, of down

from quarter cost noninterest was and to repossessed and $XXX,XXX higher and the recruiting company's first expense million. salaries marketing expense to benefits, charges $XX.X and increased The by related premiums, The increase assets. OREO FDIC primarily driven

for Our of provision from growth loans. charge-offs increase million $XX.X quarter XX for was The The basis losses of for by million credit reserves. points on in strong $X.X in specific losses provision QX. the was driven $X.X of an million, increase loan the allowance and excess represents loan established

annualized statements. $X.X estate declined of an the That concludes loans, or million During million repossessed formal basis during basis million XX Other our points $X or declined and XX total to $XX.X and charge-offs real owned $X.X million quarter, loans points also the basis. net on nonaccrual were assets quarter.

open now will questions. it up We for

Operator

Instructions] [Operator

comes Today's go first Fitzgibbon of Please Mark O'Neill Sandler + from question ahead. Partners.

MarkFitzgibbon

to going Hey, balances important afternoon. how you curious guarantee outgrew I you guys guys. fund. that I that Massachusetts deposit have to on impact Good it forward? any insurance noticed guess I'm deposit your customers. do the And expect is

PaulPerrault

Well, we're be it sure doesn't. to it's pretty stable really but far, much common, early to too certainly hard It's a environment. working so make certain,

MarkFitzgibbon

then, curious for for half the cuts. net assumptions your the back your Carl, to I'm margin of And rate as year and are interest Okay. the thoughts what on

CarlCarlson

not to of this to will to or at I they're with points, including in we but margin end agree XX that Whether cut rate. a compress run cut think, that X going month. story, we from rates. likely right that Fed rates likely now, points is And basis believe think different cut do the right we X expect, the basis anywhere the now, we

MarkFitzgibbon

X there's the quarter? September, in in have So fourth do if compression think we additional a of you basis points an cut

CarlCarlson

to there just don't yet. want I go

MarkFitzgibbon

that a was the in on looks what quarter. you it caused like was large give there then -- -- What was it? net Can And little charge-off color that? of credit one bit Okay. us

PaulPerrault

for that. sort was I to against give of color. us, like so, which but which one a they I or us unusual results was sort fraud, a credit charge-offs way who mean, run collateralized. was of hit one, of potholes, much like so committed the Yes, is larger can the we couple of from you some million lot a have $X why we company are by are are, a not the guy a them, of which But

We've just going to stuff the our trying it's very get and not well. been judge from bankruptcy

we And thought part credit. be aspect with the was sure balance we'll the a of And of get valor we on make so the but not better realize to thing we should to done collateral, sheet us. take when really that sure behind that hit strong this we're

a The the Cambridge medallions in Boston It a beginning it's like few looking bad major has New other had left. we market. so And literally that quite was little one in York as very worse. and this does, sizable was hit and think, This this been this a towel, was multiple holder on Cambridge medallion think, that is $X as put was to I the Cambridge. us. guy. Cambridge guy. In behind medallions, have the that in we And is throw -- a business last And for the guy in took under taxi I that million,

then, had And variety stuff. your you garden

Operator

Piper from Matthew today next Jaffray. of question our comes Breese And

MatthewBreese

or is out just more. loan the much discussion LIBOR tied prime? your How to index I like bit ferret wanted to a book little short-duration a margin of

CarlCarlson

billion. $X.X about It's

MatthewBreese

Okay.

tied move the in decline, of to How this in that quarter, was count? of a apart day so to much was And teasing the LIBOR? how much margin change the that tied

CarlCarlson

at that have my don't I fingertips. detail

impact So has moved the we as tied some loan X-month on had the have X-month the to negative while loans LIBOR, some to lot more a you LIBOR, X-month than tied X-month for know, quarter. but yields the a X-month,

in you as always numbers see QX. you'll has the included the Q forward, count we Day a have impact for margin already type impact move -- that of on same big and in our and

MatthewBreese

of side, able gathering on some environment, then deposit talk competitive could And you've how just is take the not and potential the opportunities there? to been whether you Okay. it or about advantage

PaulPerrault

that on but wild some there. think not margin. so can't first was going was level you say with second and of on of particularly how little of CDs, that impact it very guy and the in sheet on, stuff I see out would a accounting in I Well, market, others. around I quarter, our a balance you in tell can I'm And running much, had a lots aspect competitive as the there sort that, the

as things much have July, to gotten and organized more calmer lot going a seems been have And favorable through gathering and we the us. deposit

is I get they a rates than think everybody future have when bit little through I past. spring So to we that fall/winter timeframe, better on recent late the were the sank, think and around into before jumping

MatthewBreese

the deposit of basis for same decline understand outlook, margin the is given for you? to X cut; of going would this outlook Okay. kind X Fed And cut next all the Fed per if into points quarter you expect the tying the to improve environment I

CarlCarlson

be in That would probably that range.

Operator

today question KBW. from comes Please Gilbert go next Collyn ahead. of our And

CollynGilbert

Thanks. Good afternoon, guys.

component you seeing of in that that going kind market. bit about some did may this again, little what to see of of that those is quarter Just then, you dynamics the more. And given here segments? growth you're some forward, and just the see deposit outlook competitiveness drill deposit a be caused some Can and in just with the growth happen into flat to the outflows your what for rates talk

CarlCarlson

been customers -- a we're or want we've it's of these seasonality, to seen nature. lot don't between It's And of say movement of like banks. money it's I just deposits, Sure. but that anything losing not

some So the municipalities, out in the on move company of balances over quarter. seen we've large municipalities and

quarter, do thing, strong paying had of season the down quarter. DDA, gone in in particular, during tax then to came taxes, had with that it back taxes, and very type all late and maybe the

XXXX just accounts, so for as from side, some where to money the the space. and seen saving it's it into and that considerably a market in rate savings quarter it's market see we put are in first to the or going that environment competitive account be volume dynamic. are as And best -- looking we just Those on product. of continue CDs, money the we down our people balances much have whether hadn't On very

we market pricing the in quite side, pricing we the bit. off -- On back are a seen have

PaulPerrault

Very recent.

CarlCarlson

recent. very Yes,

CollynGilbert

if Okay. just back moving the that, that, own continue can? half terms book to will And your of into of of of customers structures, year? maybe the in movement how that manage you Or higher sort the you control you do within do think into

CarlCarlson

I fair We're a our manage that providing and we with try way. great fair rates to out or control in bank place that very there to wouldn't with rates. say customers, for any

the I of think as would on we're mean, to much going where aggressive side can. be pricing as we I that's kind I go.

PaulPerrault

Collyn. through going continue to were jumping been out. the When were I up, it's all winter likely And would was had a considerably. get gotten up bidding were few there we and they the go going to so a calmer. rates our an CDs like people feels It that New like expectation ago, into to in had that get comments those into tried spring, intermediate-term people market, England up lot

So hence, our moving. money of cost was

-- down rush the that be to Now saw come rates have we to move CDs market down and have there to rates that doesn't seem come before. money considerably, intermediate there's from

I deposits. can those of So the carefully where think quantity manage we period cost going into we're a and the

CollynGilbert

Okay.

we Okay. good of continue And Or I few rates loan deposit sort X? that between that tying will loan guys really about growth. just the the should had to growth the ratio? and the over quarters then rates loan-to-deposit That's you relationship Do growth how mean, elevating you think the next to that the overall helpful. think then exceed outlook.

PaulPerrault

I of we little up time. have jump In any the and an efforts, been ratio, But we all to loan within growth, for lower like a it of given a deposit the we're keeping in bit. period have tend extended be narrow see us pretty quarter, might success so our that I even ratio a up. would bit range quite of to down despite originations think, just strong loan-to-deposit loan-to-deposit but in our though

don't it would think So maybe X is know in something that if I exactly we'll it's it's I but range, were that that. X.XX, I be like not, X.XX I between what -- I'm of expect which a modeler, today, X.XX.

CollynGilbert

Okay.

structure And into securities you on were Or guys finally next securities impacted about helpful. book? of as your we That's thinking in Are the securities Carl, Okay. quarters? the then how the you securities any about think differently this just go quarter kind managing that book. by this couple we book. obviously, prepays book should of that -- accelerated of

CarlCarlson

somewhat, imagine maintained is perhaps to letting at for The that securities environment. as come book asset in continue happen would well we've I pace. of this liability would liquidity, that a purposes basically And been interest a portfolio slower rate down and bit

Operator

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

LaurieHunsicker

provision just with Carl, provision? million. afternoon. The me taxi? thanks. if of wonder How related Yes, that hi, loan-loss $X.X Good the much to share you was I could of

PaulPerrault

provision. The

CarlCarlson

You mean the charge-offs?

LaurieHunsicker

and Well, yes. so for No, both the X I'm the provision things. looking --

-- taxi do Is specific a where stand charges-offs? everything there piece in that then, Is Presumably, now? non-performers? were I off maybe So have we what's CRE $X if was was charge-offs. the you there? what your relationship. balance What are $X with $X the the reserve? still piece provision? taxi other in was And of sure guess loan-loss charged way. What the million should what were wasn't it million You million, your starting, it started maybe charge-offs? -- but actual I I mentioned If

just you If yes. -- could share those

CarlCarlson

Sure. Sure.

charge-offs. the with start let's So

the of specific of $X million associated specific of with million Of charge-offs charged reserves, the $X.X off only net that. We taxis got had the reserves quarter. had in quarter. against $XXX,XXX about we that was $X So in million

reserves go the So medallions. down associated much the taxi specific with didn't

We in taxi of did charge-off have medallions a the $XXX,XXX in quarter.

already so set that's we So at. and -- had reserve the had about been $XXX,XXX charge-offs above over of additional what specific basically,

LaurieHunsicker

it. Got

Okay. And then -

CarlCarlson

around we As in that, It's to more -- Q, probably around would that added probably we've all $XXX,XXX, I the We'll specific reserves, $XXX,XXX. guessing gotten I'm than other, far have small. as less and so probably maybe say likely. something add that's

we value it medallions $XX,XXX. did -- $XX,XXX, the things $XX,XXX. to down we previously, the at take of One brought was had Cambridge the down so we collateral set We

specific existing Cambridge around the on increases reserves medallions. some had we So

that's basically we So on are that. where

LaurieHunsicker

the And as what actual is XQ? taxi of balance

CarlCarlson

that taxi. loan don't one have we consider we So really a

about of I there, figure that books. $X.X this medallions, collateral. talked lot has are of he out $X really a of think about that taxi a of what someone also exposure is like at C&I. I before. or lot got a of million give to on of sense then loans It's There we million more but outside a And kind XX%, to we've relationship, medallions the Reserve's other just is. taxi

LaurieHunsicker

reserve. XX%

of high any have different running assuming loan sort guess don't provision I about your mid loan-loss way, sort your growth single And asked charge-off of we're digits, is Okay. a we thinking if and to outsized million a it? about saw, just be provision fair quarter? a between we way and Is it to to loan-loss like that events is about somewhere probably assume that is running your $X.X good million thinking $X

CarlCarlson

quarter, the this loan required growth for of loan just $X.X for just million Well, growth. we provision,

PaulPerrault

it So a isn't bulk

CarlCarlson

up -- filling of over that's more general anything Anything and that's charge-offs, reserve you're bucket the kind -- that's putting you're then [Indiscernible] --

LaurieHunsicker

Great. That's perfect.

should Okay. Tax thinking rate, be about that? how we

CarlCarlson

XX%.

LaurieHunsicker

$XX update then, Okay. on M&A over you around marketplace. recently us of you'd about Great. And you in going year-to-date just where are, billion. question. like Paul, you seen New to M&A a where England Just lot We've just us thoughts again? Can how the and maybe refresh your be last think

PaulPerrault

under $XX $XX billion. Well, if we're not. second or indifferent I or over don't billion billion think for $XX about a I'm going over

to get a franchise doesn't very is desire important core paper. The continue to truly that on to have the us. very, So

transactions so have up us, really the that potential in the in and it non-core tended hasn't reasonably pay core of been as for. just we that kind view done could area want thing. the have been have And by valuable, to our been the we stuff, don't Hence, to might

so be to the us have are growth to able successful, eager sufficiently order Our shown franchise. in we rates to be to dilute and grow not

But the our we have we conversations. to keep ground, ear

has things us. We by have trust but the play, okay way out are me, that in been the come

LaurieHunsicker

Okay.

And question. last just Okay.

terms if thinking found Boston you west you of -- or Just something us outside far how venture can on just you would your interesting? in of update remind us

PaulPerrault

about maybe being currently Middle Atlantic. feel I potential, we as We Northeast like would and the into look a the Oh, think to even that operate. and go places place the

Operator

And follow-up our Gilbert go a next ahead. from KBW. is Please question with Collyn

CollynGilbert

Thanks.

check and Just wanted expenses. to sort fees for outlook on of back in the

of I like job maybe to in there. said wondering that's and pretty you your see, check a rate doing ballpark? Carl, past, was X% 'XX, the been have think, also a the guys in still outlook in And for if OpEx then growth the had X% You fee component, good what increasing just to

CarlCarlson

So sure.

derivative pipelines of activity. On that is late, to and one income be very ebb the been of the grow with It's fee continue side, very consistent bigger probably can the things and strong.

And on so we're that'll -- very optimistic we're is, be going where that fairly consistent that forward.

The also how activity that on on other depending going -- thing basically sales quarter, into the participations do, that we and pretty is also on goes there much QX. loan looks solid that can

fee that confident be the pretty I'm income. here guidance consistent would fairly So

like as that, equity out things throw the of far gains calculation. I'd and As that

expense a that kind items few expense, special balance OREO this that have we and down. brought out side, we got of did I the we properties of The On consider some quarter.

I we those other going of -- things types expenses the expect said, quarter. So have that things nature recruiting going see don't couple And through higher that of cost to we of and some in had might QX. a

So from guide I would be fairly QX. think I flat to to expenses QX

CollynGilbert

Okay.

of some listen, the be EPS we're the down kind it's of at the Or thinking some helpful. how just obviously, want curious, to That's How mid-single-digit just next for But and XXXX of just be growth a you the rate financial more going find interest of to then, pressure saying, guys yourselves offsets going this growth EPS nature And committed you tie do think all that do try about together, if you numbers margin environment? environment year to year. of Will some in -- you're a where of to broadly, Okay. put you're broadly targets? on there targets. you kind is we way hold to to it's about and range? to look just -- would are compression this or into -- generating you that performance driving going

PaulPerrault

It's future. difficult to predict the

work So we our day to I be reasonably continue funding loan make improve to we continue that think to base, progress. have if strong and can should continue able we expect I to growth every then to

a obviously said high plan we such the environment Now interest because how to EPS the moves improve that, game that to us, we're charge-offs the has creep big ratio, rate back originations, to I but that loan-to-deposit not to up kinds have the would And could it a the used of which to having get expect that, of work have on the continue is and least continue minimal effect to. ladder. we

of Q&A End

Operator

like our conference over to concludes This question-and-answer any the session. I'd final remarks. the turn to team back management for

Paul Perrault

you, day. Rocco, Good with all Thank thank again for you and look talking us. you joining forward We quarter. next to

Operator

Thank concluded, thank attending has Today's and you. all we presentation. for conference now you today's

disconnect a wonderful may your You and lines, have now day.

Lindsey Kitchens	Senior Law Clerk
Paul Perrault	President and Chief Executive Officer
Carl Carlson	Chief Financial Officer
Mark Fitzgibbon	Sandler O'Neill
Matthew Breese	Piper Jaffray
Collyn Gilbert	KBW
Laurie Hunsicker	Compass Point

Brookline Bancorp (BRKL) 28 Jul 192019 Q2 Earnings call transcript