BRKL - Earnings call transcript Q2 2022

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Operator

Good afternoon, and thank you for attending today's Brookline Bancorp Second Quarter 2022 Earnings Call. My name is Daniel, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Laura Vaugh [ph] with Brookline Bancorp as the Attorney. Laura please proceed.

Unidentified Company Representative

good and Daniel you afternoon everyone. Thank issued available on we brooklinebancorp.com has the our of earnings is which and SEC. with filed presentation, and been the website, release our Yesterday, Investor page Relations hosted be will call afternoon's by A. Paul This Perrault and Carl M. Carlson. statements may Brookline the of financial respect call of This with and results operations to forward-looking contain business Bancorp. conditions, our disclaimer. refer page of X statement to our forward-looking Please earnings presentation for actual and results to our differ that other Exchange Securities Commission, refer the factors which please these Also, could from with cause to materially forward-looking risk contain filings statements. predictions. made to should Any Bancorp's in assist during results on results this references measures future Brookline be not made non-GAAP presentation measures understanding financial and are only actual as to and relied trends performance of you or

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

Paul Perrault

and welcome earnings quarterly per to joining the call. a on and today's to Laura, Board share another Thanks of afternoon had you, for you or approved everyone. $X.XX us $XX.X million we quarter pleased Thank I'm and good report, of solid of $XX payment annualized from or per dividend was quarter our basis, an increase the first seven X.XX%, the and for interest second million net margin X.X% quarter. portfolio loan an share. our core points annualized of $X.XX grew On basis

will with review our second you to to see transaction We pleased and year. fourth expect the of to the turn the close have of over I despite markets in and the Brookline quarter will quarter. rise making the commercial significant the and in this Carl PCSB continue short-term who teams company's activity continue Bank solid been now I'm all to deposit at progress in rates. loan both

Carl Carlson

Paul. you Thank

split from at acquisition has Laura filed $XXX,XXX slide which the costs. mentioned, $XX.X $X.X be million also income included was with I been merger and on of an website QX the doing we will a and this this presentation quarter for quarter. up impact not As SEC. earnings our Net provided have million, in

June margin. income points in down XX. quarter, $XXX to XXX or PPP continue were a basis were portfolio accruals coupon growth decline the XX average million quarter. a increased loans quarter. The assets, declined driven up in by weighted with of were quarter. million be in net basis combined net X% to growth deferred Prepayment revenues coupon points. loans market loan in three we to associated the originated Credit have in million quarter expenses basis loans coverage and impact up X%. Total QX. favorable investment on was And in reserve Revenue loan and growth a incentive by in over $XX derivatives million merger approximately $XXX,XXX less increases, trends than The $XXX,XXX $XX points less or of negative excluding weighted QX. than to resulting rose quality quarter XXX fees PPP adjustments. and interest-earning second core were of million from basis PPP impact to In $XX,XXX the driven growth $X.X today, $X basis solid the in XX was and prior XX were XXX of margin first due as core points points charges interest the our balance basis as the end at Our was And million of at the during from the remaining million a XX or million an at to volumes. we interest average the annual on loans QX, just $X.X excluding million. $XX primarily Expense merit $X fees $X increase points, up with PPP slight loans compared only compensation

large and Tax quarter, million. second real estate $XXX decline purchases in deposits. declined transfers the accounts to deposits During payments, drove personal the investment

in increased basis significant points as the to in see the asset-sensitive the interest to rate short-term us basis and benefit XX Reserve June. in funds Federal short-term increases Fed rates in XX moderately to another position. Increases potential our rates continue have We points May due

next a as curve increase the simulations Assuming net income X.X% XX, over forward flat a and reflect our balance the of June XX interest sheet in months.

shares we a company pause well before program. of beta XX% product we to deposits. little our total capitalized weighted remains during XXX,XXX on reflect simulations were The quarter required Our the a over and repurchased

dividend mentioned, for of XX dividend and As XX. on August representing and per X.X% share, XX% quarterly concludes Paul will the to The a be up questions. our yield. record on of August comments, Board $X.XX open stockholders we'll approved paid This a formal now payout a

Operator

[Operator Instructions] Piper The first question proceed. comes Fitzgibbon from Sandler. Mark from Please

Mark Fitzgibbon

Thank you afternoon. good and

Carl Carlson

Mark. Hi

Paul Perrault

Mark. Hi

Mark Fitzgibbon

a us from market pricing and of the seeing you you're for with of half about kind betas I year? in wonder, the share how if what you deposit deposit think second standpoint could the

Carl Carlson

a activity. seeing We're Sure. lot not of

there's of pocket people rates a people use. that a that lot of can think specials lot I There's are offering.

I think folks there parties banks the there Internet those with higher some that out to rates and are out are other attracting opportunities.

think and front. treasuries less we're so nature, towards things market more of funds the accounts people and that short-term the seeing that of move money I it's I on think treasury money deposit

XXX could rate We're we're said, now. Now, than the increase in higher of cost right now, think and second the change went significantly basis first any modeling four we Like basis I actually points. funds our or But point that funds Fed point. what I saw quarter up at right are quarter. betas seeing in dramatically in

quarter. I expect low do beta accelerate to the first very QX. in So, in that

Mark Fitzgibbon

that you Carl, to fair? will But Okay. Is margin think that continue slowly rise. the

Carl Carlson

I on XX increase -- or my will be QX. would points guidance in better basis margin

Mark Fitzgibbon

expense thoughts as Any in then, would great. your wondered, XX I guidance points Great. well. with on basis growth Okay. share could there you us QX? And if be

Carl Carlson

is talent there quite than for rates frankly. more probably on days these there's deposit think I competition

Paul Perrault

accelerated. probably It's

Carl Carlson

So, we certainly. it retention some and strong for demand costs talent talent have attraction seen some and more of

we We -- the that. an early other minimum raised we our this for are wage year, I largely pay a market hour raised $XX adjustments. to minimum think which seen folks minimum that with our of lot we've

that seeing So roll QX, well as March. lot a we typical happened started early of in in which as increases our merit

we benefit we maintain talent So, impact full that attract QX. of that see talent. saw to things we continue the and to full to do -- And have in

perhaps next quarter expect the do I expenses to $XXX,XXX So, about rise or take. in give

Paul Perrault

basically do. And I and banking think One that commercial of say the that that everything Mark, we that's big I in is the macro drivers sense.

lot lot other and a than deeper a places. we're broader So, of

we'll And them. so who in to try are juicy to pretty probably we're looking more banking. people But participate commercial for keep planning

Mark Fitzgibbon

costs I spending Are $XX kind then through the also is most could walk of crossing for this billion wondered need of meeting in to And or for regulatory us you what you prepare that? burden threshold? maybe there built do much that if incremental to still to point at

Carl Carlson

They're things, that material. always need little but see mostly of course They'll certain resources in. built not a we're address to bit to going more

Mark Fitzgibbon

if Okay. any then finally, update... And

Paul Perrault

little to bit. different It's testing currently I fill little do it a on a there's Mark like than stress stuff probably was exhaustive little in and we more probably... approach going and a just

Carl Carlson

It a regulatory the was being on a little top side... bit audit of more bit was little It more the side. on

Paul Perrault

Yes it's pretty incremental.

Carl Carlson

here significant. but and little a there, it's So not bit

Mark Fitzgibbon

Okay. private, to or Great. are any are assets And what up we updates close lastly then on Clarendon getting to breakeven?

Carl Carlson

where It's breakeven with They're expected. we do in would right years. on be track funny. expect X.X this We to that three years

and Of course, I are track always excellent. on wish more track they than on that doing right they're but

I well think that we're with bringing what the banks. it's the exactly and of is we're extremely in and assets that the attracting And working clientele wanted. we clients types

branch really been embraced great teams the managers job our lenders together. have Our and them a doing have

of So honestly, extremely pretty things time gates it how quite take that. with does out to out started build the because quickly have pleased right

with clients on. really of doesn't meet overnight, it's a lot great seeing that You happen traction something we're right? So, it

Mark Fitzgibbon

this you give be point? a under would us how management group the at has to in number able or assets of But advisory much

Carl Carlson

We not it's I public going but reports file I could think don't do that I'm meaningful. to. it's really -- but

Mark Fitzgibbon

you. Thank Okay.

Operator

O'Connell Please comes question from proceed. next The Chris with KBW.

Chris O'Connell

afternoon. good Hey

Paul Perrault

Chris. Hi

Chris O'Connell

activity quarter -- of an last I this back and activity is mean of this there outlook that loan Was as quarter quarter it that kind to well the here. that last growth balancing originations year quarter payoff were sounds like pipeline of below versus going and the a was get I the half kind get to strong. do little hoping see like on hoping you more the strong growth update into and how just out? kept originations bit

Paul Perrault

these people the for better like And about capability, customers. strong maybe if a can be future. our families. All something say generally private over will to to been originations picture higher Chris are I going that little we'll we be the on I But people years down way be at least we have and buying rates can bit that able It for continue nonetheless. calm can't expect, now. talk the traction. It's feels and a just into some down the making bright I selling wait get This gain to with comp has we it'll have two to strong people were is, now banking stop

Chris O'Connell

you. Got

forward? somewhere I the in first the So outlook range given quarter to pipeline going is and expected the be second is growth the guess same

Carl Carlson

Yes. Exactly.

we're our stronger businesses. just it been great we their think this expect said, than loan But quarter of lower lot the we've did at selling great be and a customers anticipated a we than to of that. little that great million have I families Paul as would businesses a core have seen $XX little

And so that's...

Paul Perrault

up have probably we a sale slightly fit it's gain there. at least million just came of and in this like to quarter quarter company short, $XXX one We

Chris O'Connell

then growth. it. of side, you on kind deposit flows mean, seeing are Makes and sense. guys Got And how I the

well going I deck deposit $XXX half mean out sheet related have How think thinking and to into as market funds million of about you into like somewhere called growth this of and in payments as there money tax you -- year? as a of I or... number seen off-balance the is lot that are you guys there here. a purchases get transfers back is continue kind the movement towards

Paul Perrault

interest the year think, had would really data, rising lumpy rates. if far really so pretty particularly this with that raw I you it's you Well, find

we But bit. how pipeline are -- see that have the manage us I robust having at of treasury major little of significant When which for up part. examples and significant is does those which so with some us, that very, through is not ended of other more alluding the environment organizations, low rather been the Carl most new that gone rates management some some strong. signing through the is was as kinds rate far open, we're and moved doing have accounts treasuries products. to deposits activities importantly to look but this the retail deposit cash up up still has for very And I can We year the traction their gain a growth, treasury business a that that

reduction of the described. So I was strong. think to the continues activity, think, be is It what underlying I because But I seasonal. exaggerated

progress. And it that us I has some to that It's continued it has make we're not Already to-date halfway magnitude. so with or reduction not behind -- back abated. think we'll

it put me Let that way.

Carl Carlson

of little it's commercial key. with any thoughtful accounts. saying, -- We we which a their and people And DDA a managing presidents base closely. bank funds nature customers is bit basically funds talk and to grow little the they on continue just customer being losing their are but things some side not the more to we're Particularly the that

Chris O'Connell

maybe seen know but on level far year? loan into the the whether as utilization any it increase forward. that demand the know And for going -- half going back kind outlook Great. of I derivative you've opportunity not it's item, just but or based a it's use volatile line I of income in customers' very if

Carl Carlson

and and how difficult have on to you customers' all very That's structure estimate. the handle good depends to try very a they it's loans. project want appetite I line the to think what It -- a is on that.

provide And guidance that. really really on don't I so

can activity average over is over time time. you see degree. that a think what I loan the and large kind But trends it of kind to the follows of

Paul Perrault

to you're are In you they is I to environment going Chris an and a think my want vice customer deal do that funny. experience derivative the sure decides a customers when warrant of in just particular that mean that don't pretty kind versa.

predict impossible is it to behavior. their So

Chris O'Connell

the Got it. Understood. lastly, any good. PCSB as Very merger the And update timing to close? of

Carl Carlson

as exactly Everything is Nothing everything target planned. We're QX. proceeding on has we for had changed.

front. nothing So on new really that

Chris O'Connell

questions. my taking for Thanks Great. Okay.

Carl Carlson

a Thanks lot.

Operator

you. Thank

question comes Point. Laurie Next from Hunsicker from Compass

Laurie Hunsicker

Yes.

Carl Carlson

Laurie. Hi,

Laurie Hunsicker

interest with Yes. on and just ages had just I Paul us where Hi. maybe you a afternoon. at mark like on on $XX have loans, now million -- on give which which had I it May merged. you million rates? as rate you securities Carl, the the through we markup $XX think deposits can was of and a are Good late and announcement refresh as then on interest XX the of acquisition seems and March mark was Yes you staying rate current PCSB know also interest ago, then was

So at don't us in about thinking a number you're or refreshed even a maybe can if with know how I refreshed you've got just terms it number share you closing? of

Carl Carlson

an what as that to impact. of have I potentially a going no. with sense as and the have on eye Actually it far market might keep what's on an just

imagine, moved two years out announced. when three from we that As when the hasn't all you start curve to going much can you yield past

right with rates to far so, on long we're I out we points an -- very If the last we or anything backed off recession wouldn't a Everybody like have XX be. rate provided first I or what estimate. is expecting marks tomorrow XX when what this. as And from announced yesterday basis quarter. say have to as now, is no maybe going comfortable idea as end

volatility we're rate as the of a is concerned. So, seeing far lot as in market

big really how point. are those So, this priced not change in a things, at

my I is purchase far models wouldn't no as accounting So, real changing concerned. -- be as

Laurie Hunsicker

Okay.

to just question going for to lining close general quarter right a a up on with maybe expectations, a more your your little bit time you Okay. appetite fourth Paul, us with do seen now talk And more PCSB then, you be can marks, about M&A? thinking many rate We in with be but banks you're how obviously, step your you because share just can very thoughts of billion. haven't across to you're just pain interest of certainly $XX the

them? is your where appetite Just with

Paul Perrault

hasn't through We some really this. to continue appetite talk with My changed still at people. all

look fundamentally So, effect nor opinion. we But increased. would I interest beyond in my rate appetite to not pretty is Carl what on be. do if heavily had my haven't the I something of But environment diminished, course, this weigh of Putnam, changed

Laurie Hunsicker

Okay.

Okay. office And lending? refresh just few are helpful. can and also the looking a with leverage where then, I'm you would for. guys give Anything Carl, with on be Thanks. numbers us you

Carl Carlson

take will care Paul so Well, of that.

Paul Perrault

stuff. do I'll kind the the take to simple, on estate billion, eye Yes, It's very very little if of high very in we're coverage, -- it's that bit for Loop, XXX weather And zero. it Never over was it is the because and big is a area, the buildings it. active. very diverse. of tend portfolio leverage but billion, within you don't strong, have. which desirable is it And the still $X.X be sort to doesn't over tends It Real lending, material. know financial is is Boston. district be of that's that the We And first, it's office very keeping office. $X.X one us segment

We office have west area, Hill, in particularly metro in don't that Beacon West and of in of Boston. the and north lot actually the very have Island. and But markets, from a strong we a in other presence and little End Rhode the is downtown the south very, big stuff

loan-to-value but it, the statistics close are keeping terms on we coverage very eye very So, in are it comforting in a of ratios. on

Laurie Hunsicker

Got it.

do loan you your that value? your you -- coverage What and ratio? Okay. to share Will have

Paul Perrault

would comforted of they're much or tell is Well, the I hear to be over less. you, I can very XX% it But also mean, you all lot. that

Laurie Hunsicker

kind just maybe that or approximately or bucket healthcare of risk how medical school? in medical million, -- know the then, of you do And lower $XXX Okay. is school much of

Paul Perrault

any That I don't have clarity on.

Laurie Hunsicker

Okay. Great.

Okay. you it taking That’s for from question. me. my Thank

Paul Perrault

don't there to -- is content really that. diverse. not some Yes, of I quite but medical, over-weighted it's It's

Laurie Hunsicker

you Okay, very great. Thank much.

Paul Perrault

Thank you, Laurie.

Operator

over the closing to There I'll questions conference additional pass for remarks. waiting back you. Thank are at so this time, Paul Perrault no

Paul Perrault

all look we forward talking this Daniel, next Thank joining you, with for quarter. afternoon, thank and you us you will and again to

Operator

your participation. Thank concludes conference for call. That the you

your now lines. You disconnect may

Brookline Bancorp (BRKL) 30 Jul 222022 Q2 Earnings call transcript