Earnings call transcript Q4 2022

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Operator

Good afternoon. And welcome to Brookline Bancorp, Inc.’s Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

to Vaugh conference [ph]. like Bancorp’s to now Laura attorney, would turn over the Brookline I Please ahead. go

Unidentified Company Representative

Thank you, available Alexis, and issued Relations our and of has good afternoon, release page the presentation, everyone. been and filed which SEC. website, is our on with Investor earnings the brooklinebancorp.com Yesterday, we

Bancorp. financial by business This may with statements contain hosted Perrault; refer condition, of Carl and Paul Please the operations results afternoon’s Brookline two forward-looking call earnings will M. page and of forward-looking for respect A. presentation be statement of Carlson. call to to This disclaimer. our our

Also, risk with the factors please these to Securities contain cause other could from which results actual Commission, refer to that differ our and statements. filings materially Exchange forward-looking

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

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

I introduce Brookline and Chairman am pleased Perrault. to CEO, Paul Bancorp’s

Paul Perrault

thank everyone, off report to today’s on I call. very afternoon, joining of us you pleased Good had year performance. solid quarter, which am a a productive capped we for and

million, regulatory per PCSB share received on as our able $X.XX we also December announced, million. portfolio acquisition Earnings loan in while for $XXX of recognizing of Xst. January $X.X previously As close on the $XX.X were Financial or million on were we participation deal and approval to that the income grew quarter loan

PCSB I company’s about make review few financials, acquisition. the it I Carl the to to a to Before want comments turn over Financial

Bancorp Board he of Hill yesterday agreed Boston. meeting actually Directors that had pleased of join to very first Willard our are in here his Board and Brookline We

recognize by keeping which my this conversion to on first with us chaired I tremendous track PCSB for teams at and I and mid-February. morning, had systems Brookline, effort are the Bank PCSB new both also the President CEO, Board want Goldrick. the core of now Board the Michael the And meeting right in

it over turn I to will Carl. now

Carl Carlson

Paul. you, Thank

Paul asset estate the finance $XXX million, $XXX portfolio and with As Commercial real $XX million, in equipment commercial million million. $X all consumer loan grew advanced $XX mentioned, growth million classes.

million weighted of at fourth quarter points. basis a loan quarter, points coupon $XXX average is originated December the This weighted XXX at XX coupon up during the This on XXst. the XXX increased total we average in loans points basis basis from the basis prior quarter. points portfolio of the In to XX

The of $X prior on Prepayment benefit fees quarter. interest impact QX. increased million. amortization X a $XXX,XXX $X.X margin from was net million, the deferred which had fees less $XXX,XXX than of point was in basis to QX combined $XXX,XXX roughly the The

of quarter. provision and from impact was loans growth the million, outstanding, in of as credit increase The $X.X million an an per for in due as QX primarily in The unfunded share continued was growth increase commitments. losses $X.X $X.XX strong well to

unfunded or credits points $X loan for from X on an for basis. The on were while allowance annualized loans million, also approximately $XXX,XXX QX. charge-offs losses The $X basis reserve net increased increased million

as to XX basis total continue non-performing favorable of trends quality Credit points be loans loans. declined

increased a forecasts, coverage economic reserve due X.XX%. in slightly However, to deterioration to the slight

basis investment-oriented fourth point XXX total as balances higher Deposit declined the of funding basis or QX During million the deposit in rate. Fed funds quarter, $XXX the opportunities. points betas in with increase deposits XX accelerated flowing yielding XX% to increased

Fed increase XX in points the Our the funds XX% total in or funding of cost increased the basis rate. quarter

QX margin X.X%. remaining consistent payment at resulting migrated and net to deposits As with higher asset growth in a was funding, products funded wholesale with interest

participation non-interest a security net increase interest income, strong $X.X the income reflected and million which excluding million, increased in loan is Revenues gain driven of on million sale loans. an of due in $X.X $X by gains, increase in to income

related due and QX. Operating and were million up for largely as $XXX,XXX QX. decline incentive million, costs $XXX,XXX non-capitalized quarter, some were was accruals pre-provision Merger FDIC a of $X.X was in systems true-ups software $X the Pretax increases net enhancements, million increase from expenses a in to revenue to assessments. which expenses as well $XX.X over

record As paid Paul X% XXth. on will on share, approved of on a stockholders $X.XXX represents Board February dividend mentioned, closing per the XXth a The be which yesterday’s based dividend price. to quarterly yield of February

formal concludes our comments. This

will up for open now questions. We

Operator

Absolutely. line question [Operator Mark Piper Instructions] from comes the first Sandler. The of Fitzgibbon with

may You proceed.

Mark Fitzgibbon

Thursday. Happy guys. Hey,

Paul Perrault

Mark. Thanks,

Carl Carlson

morning. Good

Mark Fitzgibbon

good I some I balance am quick guess there, on and some of doing sheet couple restructuring questions post are at all closing doing surprises curious bad restructuring? about any A or PCSB first PCSB. the thinking you

Paul Perrault

with Let Carl me and surprises. then enthusiastic seen to qualitative am no will I give such the quantitative. the I acquired people. seeing start I of never an for it negative have group certainly

very well. So things at going pace are and are proceeding things

Carl Carlson

Bank -- benefits the liquidity the PCSB the on in. of is it’s the great one of Certainly, markets in

it’s right off back. So the

portfolio, actually We pay actually will be the investment the on investments having down better overall to balance the be than restructuring and borrowings, company sheet. will some the for liquidity provide additional able which which is

portfolio. unit. in It restructuring funding our provides as higher such near-term yielding finance the equipment some So be on will -- also particularly assets happening the around for investment

Mark Fitzgibbon

sheet, equity you And restricted the of balance noticed exactly $XX.X what have Great. securities, million like then, Okay. on are Carl, I those?

Carl Carlson

Home investments there’s to Fed also we -- that members, say. Bank hold in so Fed are Federal the membership… at the a of -- Bank you then Fed, should That’s a Reserve the have stock Federal -- Loan the I with And primarily

Mark Fitzgibbon

Okay.

Carl Carlson

… Boston, but the that York. we will Bank, New New the number then and so also Federal in represents England have York New with both

Mark Fitzgibbon

with us you Carl, expenses quarter us how and help could triangulate about thinking the maybe PCSB, share And margin with you combined Okay. the are first in that?

Carl Carlson

things that. lag priced, believe we see pace, of continue how get Fed I will betas because deposit an and accelerated see the particularly Directionally, to just at Sure. will as you slows, the

I I don’t think will to accelerate deposit the they going are here. system from flows think out slow. of

they slow think here. will I from

additional it still and growth, growth of near-term. puts the least on things to funding we a to at the in But continue rely good funding so side on pressure we pretty fund on as pipeline the see wholesale

what progresses. as see time will We happens

directionally coming I rather on back towards challenges So challenges, here. the not but up down see margin from than --

PCSB too will be very to helpful the on side. early much comment me how But for might margin on be. it’s really that

of accounting We still doing on a adjustments purchase are lot this. the

really I to you I can’t good a that. answer really don’t So give on want --

Mark Fitzgibbon

then And $XX-ish maybe enough. million… combined the on Fair side, expense

Carl Carlson

am Oh! So on the sorry. side. ahead, I Go expense

Mark Fitzgibbon

estimate the synergies say $XX all are of going to sort rough million extracted? I was No. is ballpark a good before

Carl Carlson

accelerate going some million. $XX a say call true-ups would to quarter, or -- at non-recurring am expect don’t not like to items, due comment the to FDIC I items insurance but I we incentives Yeah. base. and little do would that’s in expense rate industry-wide. more this -- in type say in the on quarter them some the our one-time items I FDIC to other next so I and even bit non-run had rates I were increases we to

do first But are we we mid-February. through conversion in expect the track get for we as as once on far -- cost right quarter,

so and I we think that weekend that time February XXth, period. folks will it’s through have

-- have quarter. the we an are the had after we savings projected. impact right that will that, for first cost But on now, on they our So track

have costs those of lot already come a out. And

organization. the we that SERP know, were some of ESOP that, this. were were leaving of, expenses, executives So like a -- lot There a you really lot when things there as that announced the transaction, driving isn’t and expenses,

lot of a staff There weren’t were folks impacted. getting that

retention have go So savings we not that and through associated as of a of lot that, do nature bonuses cost but things this. with we

So what for expect what once savings be around initially that. projected will we we get on quarter, track we first through of -- the we back

Mark Fitzgibbon

I your a I Okay. all guys office underwriters. And seeing are But is, signs distress you really question, little know $XXX conservative any book, which at of then are over last you million? think, in

Paul Perrault

We much bigger, district, are don’t older have weakness are we in be all mean Metro but any in Boston financial book don’t the area, good. the stable. which seeing stuff relatively I things that on cocky, is is in and going quite seaport it part is of like old the Boston no, appears is involvement which stress Back to Bay, tends the there buildings, here newer in the occupancy to But be But not in. still our area, and robust,

Mark Fitzgibbon

Okay. you. Thank

Paul Perrault

you, Thank Mark.

Operator

Thank James. you, the The next Fitzgibbon. line Raymond from comes Moss question of with Steve

proceed. may You

Steve Moss

Maybe just up afternoon. Good following on…

Paul Perrault

Good afternoon, Steve.

Steve Moss

Hi, on just Paul following margin Carl. here. and up the Maybe

are pricing, kind Year? just little curious, you we what as in of the maybe New headed Just your seeing into markets around color loan a

Carl Carlson

have nicely. So -- spreads quite still there really hanging in are not

that short little area. end the curve continuing So, move yield nice in yields seeing in of are with bit, we still the particularly up course, a to

I is inversion think the the challenge of the curve.

that the We come down to in end. continue have seen longer

spreads -- so see are -- our when but in bit the little you more challenged, get of a particularly kind funding bit there, coupon to are you comparing side. that a So little

those loans, adding what So margin you new at net the at a general. moment in to is our reduced are interest spread

so So of in a fourth kind that’s something we and in that color. lags provided the what booked I that quarter, bit coupons comments. were, you gives the spreads little the of my the

Steve Moss

have just an side in your Okay. for on Got about house, so cost average your of of, of on And quarter, Brookline CDs it. with or in million That’s the just maybe terms you the bucket, then helpful. curious the -- just $XXX XXX. CD

remaining re-pricing Just think kind just the the what’s curious average how life dynamic of kind there? about we of there

Carl Carlson

or a a see on we if CDs it’s at re-pricing $XX for about in So basis that month don’t that stuff that’s of helpful about re-price. -- that kind roll you. constant I million know rolling

Steve Moss

just kind your where rates And rack these of are Okay. curious days? maybe

Carl Carlson

production booking we What at? are new

Steve Moss

Yeah.

Carl Carlson

at It’s this point. in the Xs

Steve Moss

how just are then thinking opportunities, here loan here? of kind thinking upbeat helpful. of in like it growth the That’s still going loan of growth are kind of sounds you you Okay. terms curious pace forward just about about And about business

Paul Perrault

strong. Well, pipelines Steve, the today, as are very still of

we saw a fourth big had You quarter. really

We good are so very already far. production seeing

the maybe that little it we at So had, maybe seeing kind have we not we better, and a growth three see am optimistic I are historic that banks. of all will bit

Steve Moss

Thank you that. Appreciate very Great. much. Okay.

Paul Perrault

Okay. Yeah.

Operator

you, line Thank The Laurie Hunsicker of Moss. the Point. comes Mr. from question Compass next with

You may proceed.

Laurie Hunsicker

Hey. Carl. Hi, Paul. Hi,

Paul Perrault

Hi, Laurie.

Laurie Hunsicker

want I this have million running, a right. to Just sure just $X and that about quarter. make everything has PCSB I pretty I guess, going to expenses been back

million you low assuming quarter, $X.X it, call guys in, XX% about still or phased gel fully with $X are? it’s is does that that a million cost right, once saves So where

Carl Carlson

just Yeah. With FDIC because of natural… of a and increase bit insurance little

Paul Perrault

Inflation…

Carl Carlson

$X … things using -- inflation increases nature. cost $X out as the far the of that yes. million and down to merit what -- nothing the savings, and million, as framed you But

Laurie Hunsicker

Okay.

job the even But further think otherwise into think would us than nice else put And probably your little line can industry lighter help like? was out, quarter, and about drag accretion be and just of going obviously did was, we looking I and look we about if the that we what Okay. guys us the down. mean, I a restructure. watching there’s bit a hey, very think, holding substantially PCSB yours look were obviously, that funding as far. you going are Great. you mean, across that you directionally, to I just then help to more, their we you Can pressure everything two at out are income, banks might to together, margin June PCSB, said, it you we cognizant look

Carl Carlson

Sure.

gets the we the buy as asked, anything own portfolio and mark-to-market investment market doing So on investment planning yields. at Mark when we on So company portfolio? so are you it the

cost for So pay as particularly in down yield securities when borrowing, securities even it’s of inversion us the and curve. the high on of -- to sell yields isn’t the borrowings, isn’t market better you the those the look because at as actually the

longer can pay securities yields, money costs these down than more borrowings So and have what term duration. it we us holding higher shorter that

I think of that it. following are part you So

So of down the us day, the of pay at makes end those. to sense for some it

then throughout Now we liquidate we we portfolio, the paying reducing purpose, and down the for that be don’t not but certainly need securities are entire -- so borrowings you liquidity will and purposes for collateral organization. portfolio

how that So we a will structuring be sense you of gives that.

As purchase the loans, around far are still working on. that as accounting we

that what something So I But that to will will that give be really you in. good yields. and can’t a insight on we factor means

that X-K, you early so that hopefully information of an will that’s We in will what get and helpful. probably sense provide March, a looks like in

originally job job Their a projected better margin first actually actually fantastic doing had May. was back doing analysis we did were in what Deposits, on deposits. than They of a loans. they did we really when growing done have the nice

just that it us market Valley -- to interim, for Lower to the loans in yet think, I the able and be the In excellent grow this shows another strength the attract deposits of Hudson having market. in

a something XX perspective for that’s long-term -- think I but doesn’t in happen definitely that days, wonderful it’s it this.

bring foreign And benefits services, it’s But but a on particularly the on cash commercial additional side commercial consumer as we the enhancements, on side. the have management lot we well, whether side, can we the have particularly as swap side. of bring own and exchange, very can here that steps loan to we we our lot help a on out the excited about this. that There’s we are table

Paul Perrault

are, Yeah. too. And they

Laurie Hunsicker

Good. Good.

And this closing the Durbin, beginning the year, you year. at Okay. that Carl, cross of pushes since just obviously, off closed the were at end one, you initially, the happened right, since the

sure making right? put So I of July us instead that got just XXXX, does then in that XXXX July

Carl Carlson

the one benefits. are of right. You That absolutely was

Paul Perrault

fancy of One moves. Carl’s

Carl Carlson

intended a wasn’t nicely. worked it way, out move. that not It but was It fancy

Laurie Hunsicker

Okay.

Carl Carlson

You are absolutely right.

Laurie Hunsicker

the that. save does is million, $X It

Carl Carlson

us of bit a than the bonuses things million $X months it folks closing pay little we for that, have like revenue. bit little less. XX save that going retention in and does to to later, a a And less over It little are

was were contract line some a because charges, but multiple in thing. more, so there’s expected. what But, type the payouts of we in largely of year-end movement bit on merger a Some directions little the with of it

Laurie Hunsicker

it. Got it. Got

Okay. of to And still sounds forma with pro and then marking like going you look maybe just rough respect a you everything. can estimation us like? to that’s I But intangibles, it give what guess, just are

Carl Carlson

Yeah.

loan doing yield stay that. than marks at will I end was the the the where of interest the marks It in The they in year, from curve just is, are the process of interesting that. what’s was the with marks particular, folks and rate So that well worse I -- originally being still by were worse rate still the on that’s but being worked we CECL on. on marks don’t portfolio and have than yet, interest the expected. is the as loan the worked securities adjustment as portfolio

the transaction came something remember, $XX estimated in million we back -- portfolio, end at I think to you when it be or like the announced if -- But securities $XX in. of I it year. the the million underwater around that we was And

is So it was materially factor. that different and so a

it XX/XX. you mark So as of

has So moment. we securities inverted see don’t at gains as and this security so these in the be further slight surprised to are liquidate QX actually gains this because curve

have in funny on of one it’s little the to accounting, through So those a things you that. work that

on bit I we a But transaction. loan the first it be the worse, expect expect we we announced than to much would originally how portfolio, or don’t be to little worse than what estimated know what when I

actually may higher. be CDI

CDI points rates naturally than this moved we as So deposits year. ever X% basis have estimate around more worth up XXX and

expense that those not deposits amortize So more, worth it’s actually become because to -- helpful, as necessarily you that an which forward. have going

But it is non-cash expense. a

as up value that book amortizes goes tangible Your down.

being little early worked So that. That’s still that’s thing those have I It’s But on. after your yet. another numbers models. just don’t for a

Laurie Hunsicker

should be going about then thinking tax forward? Great. how that And Okay. rate, we just

Carl Carlson

Yeah.

not that had expect in pipeline was I up some a XXXX us XXXX I knew It -- associated on an event. going credit ended event. be being energy the things we had did thought to to it. tax I with well, So leases that December close that

pipeline the know now that recognize don’t So QX. in we in along anything right of lines. I did benefit those

-- So in my least the my previous now range estimates on taxes. I -- estimate XX% is at that will right taxes on

PCSB, More that, in will of come New York. it’s out because

positive on is New an think it I will York. on lot not we securities impact impact municipal have rate. tax that But a estimate. a have and planning bit being current also are But of our so the does my So that selling XX% a they in of have

better a have will come We number QX. to end of

Laurie Hunsicker

you And question, just for Okay. Do back last December? just Great. a margin going one margin. to spot have

Paul Perrault

Of what?

Carl Carlson

our margin December? was for What

Laurie Hunsicker

Yeah.

Carl Carlson

I I am but like... am sure, don’t, I

Laurie Hunsicker

Carl. Okay. appreciate Thanks No. it for Thanks. That’s all the I color. okay.

Carl Carlson

Yeah.

Laurie Hunsicker

all the for Thanks color.

Carl Carlson

Laurie. you, Thank

Paul Perrault

Okay.

Operator

question O'Connell next The KBW. Hunsicker. of from Ms. line the you, Thank comes with Chris

proceed. may You

Chris O'Connell

Good morning. Hey.

Paul Perrault

Chris. morning, Good

Chris O'Connell

a coming? core your of forward that with sheet to like up risk for rate bit it I trying like rates slide looks reconcile balance interest compression off So that, implied margin going NII the there’s wanted earlier to ex-PCSB, and the still start a there it sounds just the slide. on And flat commentary, and in

connect you or comment So of to? could maybe if just kind it that on

Carl Carlson

Sure.

to Just little give you of on a background bit this.

at governance So we and when we looking and standpoint start and asset liability of the from a an standpoint, position running ongoing more basis. of sensitivity management are a our from our organization on is this models risk

do change forward our it to things the And if balance doesn’t we what going what’s is are all, flat the one balance suggesting and of keeping rates sheet. curve say at sheet

And gives starting us a point. so that

it’s run positioning different And are to continue look scenarios are Then that. we of in sensitive? or through around something a can we that sensitive How balance getting sheet the less time, we this? more can lot we

off million? And that What grow can of impact What if lot base loans deposits What may scenarios case. we $XXX How million? on our that that? funded? the so run being if is become different run a $XXX is

I going is be. And we talk going is what what margin our to guys be the and our projection is base to and case for you what think and tell sometimes you our to think margin we

with of where that. to and curve projections forward it’s the we That’s I you try and parts and Naturally, with some slide guidance things you want provide lot it never the are the our as December to and least I say XXst. that a of expect And that say, use. kind of we happen. moving when at this But today way current there’s change, curve, it happens is to forward

include And it all rates. does of our

to What’s models the loan are in that Things are it at? do our portfolio? CDs we going loan nature. our But at from new loan the of portfolio? What rollover includes book away can that. we at? what CDs then originations terms booking in expecting So we What’s

because have know helpful understand provide guys you to and for not your that own guys models and I or know we don’t you you gives But but do that it’s you if that, our I baseline how information.

re-prices And what what’s say, rate we the good are months, three in of re-priced of quarter hey, that on them immediately I were is sense this think slide, the originations portfolio maybe floating so that duration fixed course, five percentage be. you the a loan and within what’s portfolio of have that the of then, like and and looks what’s our more the whole of or years that might or of more a a give in risks three years, what of sense rate a you and just where

Chris O'Connell

it. Got

the going and So of sounds forward, mix side little on potential like. growth just a the for result the funding of a a bit shift it

rough And Great. estimate things off? of do portfolio you are about that have have like thinking the potential I numbers, being securities dollar their of Okay. level considered for know you and a still a that restructuring, but don’t exact selling you

Carl Carlson

total in securities we amount that off The would… I sell portfolio? are to that going

Chris O'Connell

Yeah. Yeah.

Carl Carlson

I day management the XX% the from the at the a would million PCSB at in end of million kind keep liquidity standpoint. X% of the $XXX like to portfolio range of the $XXX assets in total securities expect portfolio securities to bank. to We

balance liquidity. any -- And that so becomes then and additional of

a a low I Northeast relatively relatively they look to So and Bank, X% say is ratio number. X% relative, loan-to-deposit had low when for

because finance equipment than significantly that is we that Funding when Eastern the business higher the of ours have. we have, course, -- of And business

end day. So for at bit on the borrowings little relying beneficial is to of less us ability that wholesale fund instead the of the a

Chris O'Connell

market that, are here. seeing that a do to think you pace the the for you compared solid fee still pretty on Do to some a have of sounds half of on past still yeah, that quarters, remains Yeah. couple Got And kind from you you think it. participations. side, relatively at solid the overall growth had first XXXX? that’s loan It outlook the going -- like guys levels of nice continue the

Paul Perrault

it XXXX. look Well, like might yeah, the half first more of

some rolled the now pointed toward year-end, pipelines and over bit had amount activity transactions went and have I a of even we there to bit though in we strong. were a there, relatively out have accelerated large the little which seemed earlier, that are As still

pace we that. But into X% try normal into not would me of we a by the where to us roll be end surprise back X%, will, as the pace, will year, normal for of sort the year. get or growth beat if we more It might you

Chris O'Connell

Yeah.

I And to Okay. then the this portfolio, in general seeing I But migrate other front there their that office continue you know is and you or you PCSB as the out on seeing board through the positively things pockets you areas quarter. of -- any on that is touched mean, of I the of know Anything credit guys are concern? in look meetings. concern just are they came portfolio of markets kind

Paul Perrault

well the legacy All sectors or bunch stuff million stuff portfolio, the pretty in financial not $XXX lot is not A Boston. within that of Boston spread would so office very across out big, in performing the Rhode Bancorp that, Brookline like in and point the of enormous. and It’s leafy I of No. the suburbs It’s it’s portfolio it’s and is it’s are Metro well Island. district but at it’s not big, out. that a

well. very, very diversified performed has and exceptionally So well it is

Chris O'Connell

taking Got Thanks for All time. questions. I right. appreciate the my it.

Paul Perrault

Thanks, Chris.

Operator

Thank will Perrault to for any line you, pass additional I session. now question-and-answer concludes Mr. O'Connell. back the That Paul remarks. the

Paul Perrault

Good Thank us day. we all joining you, And you and with Alexis, to today. quarter. again for thank you look next talking forward

Operator

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

disconnect You may your now lines.

Brookline Bancorp (BRKL) 26 Jan 232022 Q4 Earnings call transcript