Earnings call transcript Q1 2023

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Operator

Good afternoon and welcome to Brookline Bancorp, Inc.’s First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Brookline Bancorp’s Attorney, Laura Vaughn. ahead. go Please

Laura Vaughn

been and Perrault earnings Forum the everyone. we hosted and Yesterday Relations afternoon’s SEC. Thank will Carl call and good M. presentation, our be has brooklinebancorp.com website, release of Paul on with which issued the page This A. you, by our afternoon filed and is Investor available Carlson.

presentation of statements business our contain financial differ from trends only condition, results future to could are on operations and of This predictions. forward-looking Bancorp. Also, statements. the in Page presentation to made statement call actual with actual Commission, to results that please our measures earnings to assist this Securities not or X Brookline may should for our these refer which with as performance respect and non-GAAP Exchange materially factors contain and other cause financial refer Bancorp’s results Brookline of forward-looking you measures the Any to relied Please forward-looking disclaimer. risk of be understanding and during references filings made results to

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

Bancorp’s can Perrault. pleased X presentation, Page If to us CEO, and of earnings introduce the join you on Brookline Chairman Paul I’m

Paul Perrault

you, earnings joining afternoon call. Thank Laura everyone, today’s good for us for and Thank you

conversion happen. Henry, who PCSB smoothly technology Jack our system closed folks as make Financial the Our X first core in quarter work results completed and to it include well at with the on January which report and hard of am both mid-February. transaction thanks teams of PCSB very associated acquisition costs Brookline I and commitment Special pleased for the was provider, helped as

we items, of for $X.XX earnings operating of share reported operating per had we million items, earnings $X.XX. we If the Including or quarter exclude $XX.X of and income those acquisition-related million one-time per share. $X.X net

grew and one was to and to grew Loans $X.X we During quarter our as billion to billion. by disruption, $XX.X here particularly – billion, $X.X quarter, know, $X.X also equity the grew of by deposits grew to $X.X The all Boston. in assets grew billion. billion

excellent was address concerns, solutions well clients. questions, start, as and ready staff to potential the as existing From our to offer answer

also our and cash sheet securities to We multiple by the affirming arise. to adding million liquidity, of while access on-balance increased liquidity our our need $XXX position sources should if

basis loans to continue Our at the net lows, in with $XXX,XXX nonperforming X charge-offs historic points be quarter or of annualized. just

capitalized. Our solid and basis losses reserve continue is XXX at points, very be we loan well for to

turn first will will review Carl you company’s over who quarter. I now the to

Carl Carlson

Thank you, Paul.

had quite This quarter, we a parts. few moving

unique to are of much end of Brookline, some well as impact as of Some Bank failure SVB the unpack continuation a Signature the these are here and at and some the possible on related as I’ll to Brookline. as the trends, quarter. are

next on Slide on X, margin interest largely acquisition lower lower Brookline, $X.X have was summary million income decline million I higher basis, $XX.X a was which about by had will for to and we This million totaling on income of comparative quarter $XX.X which January particularly X, Financial pretax last On credit provision quarter. talk provided to net slide. this unique than income PCSB items the net more the due statements. was also onetime losses. which is in The factors driven Net

by included $XX.X margin. sheet of of net the well which Expenses net in losses compressing provisions $XXX,XXX the reduced the the X higher The in cost charge. cover to growth well $X.X driven included million, of loans as a quarter. margin, million which the for amortization, as due $XX.X $XX.X addition core also While net as is had non-cash intangible liquidity the effect our credit acquired million of provision a contribution CECL CECL of PCSB to levels interest Day overall on-balance funding X assets. targeted revenues Day just growth for the million maintained, were in from increased organic million of QX, – $X deposit as Also, limiting charge-offs interest increased cover the of provision and

$XX.X X, Day As XX% excluded in normalized gains, loans. illustrated Upon income available CECL on approximately are The acquisition, effective sale, the associated in provision X classified earnings. security impact $X.X charges, estimating for with items for for $X.X as $XX.X XX.X%, realized of Page tax currently resulting is items acquisition, entire but $X.X book of excluding in of the merger PCSB the PCSB being and million. was million operating portfolio, Brookline million onetime and a million in acquired Brookline losses the million of on for portfolio rate used operating tax sale a which held sold estimates the purposes. non-core maturity to gain

or per year. $XX.X per $X.XX compares $X.XX or Our to in revenue operating million $XX.X the share net share million pre-provision pretax prior of

Please slide. follow me and our Slide net to margin interest X

points. While more cost net X.XX%. in basis funds million, $X increased net $X Interest-earning interest than to declined interest XX margin billion a little of less assets than quarter billion as Interest-bearing and the $X XX grew basis margin improved income grew our XX liabilities yields basis points increased the points. a little

points has slow increased the declined, on as the compared is change Through longer interest-bearing data. the trend in continuation XX-basis funding of XX XX% the to deposits significantly and XX we anticipate basis increased point points resulting cost X it of beta interest-bearing Federal In steeper Rate, the experiencing, cost we of increase but a curve. have been Funds in rates our During yield will approach quarter, a we a the beta The causing the quarterly the the years deposits inversion been on Federal in quarter, basis XX%. as XXX%. another through-the-cycle Funds cycle Rate of

highlighted the by Bank, of growth Paul reflects driven X year-over-year balance PCSB quarter Slide acquisition primarily which the and linked reflecting sheet, earlier.

assumed the recent significant Day and press bank and the assets at investments price highlight increased We liquidity, presentation. and the our release sheet failures to the due short-term in I to X quarter. liabilities the of borrowings want acquired we allocation on which March, added in just that appendix in this of end also balance provided of purchase

Slide strong activity follow prior $X.X X me PCSB we increased loans XX of overall of the basis loan and at the quarter on to loan Day to provided. portfolio coupon you X, during our organic The In billion portfolio by composition in categories the million. from If from growth $XXX the of weighted basis core XX. loan growth deposit and basis first points XXX and at rose net billion March The is quarter, XXX driven average $XXX of points. originated quarter, coupon weighted average points million a the $X.X

grew deposits $X.X Total billion.

deposits, $X.X increased broker Excluding billion. deposits

Excluding also deposits to X of move a frequently experiencing been deposits $XXX fixed our the Day money of assistance funds money impact of opportunities, is trends have we as investment The professionals. decline market PCSB, with declined the continue in million. depositors income and

on the around has Signature there from of and not impact perspective. This a failure SVB balance meaningful awareness With net Banks, a was banks FDIC had our heightened insurance.

deposits. are and We new ensure very comfortable their services and providing coverage with have of active to with customers been the insurance communicating current

regulatory end $XXX million own And capitalized, company well-capitalized the had capital securities as continues mark-to-market buffer investment targets. The requirements million. company available X, of of $XX.X as XX, standards. internal At on for shown and the March, regulatory on a all all of operating well to as Slide the policies was of as designates be March As sale. we the our negative exceeding portfolio well

does not have in If While basis calculations. capital this mark it excess it $XXX million regulatory impact equity, and is still regulatory above would reported capital, company represent it well-capitalized points the nearly requirements. would included was, in in capital XX

it a maintaining a and $X.XXX dividend. Paul. the will the regular payout to history on growth turn an my back our in provides share per yield. comments XX on annualized I estimates of paid XX. be common X.X% at our May formal record This our XX Slide to dividend shareholders approved quarterly On basis, of Board to Yesterday, May concludes stock dividend

Paul Perrault

now, And will we open questions. it for Carl. Thanks, up

Operator

Our open. Sandler. is with come Instructions] [Operator Fitzgibbon of line Piper Mark your now line question will from first the Mark,

Paul Perrault

Mark?

Mark Fitzgibbon

I muted I’m sorry was about accidentally. apologize. I that.

Paul Perrault

We understand.

Mark Fitzgibbon

remind you the of us sort if impact the timing could of from of Durbin and that? Wondered Okay.

Carl Carlson

acquisition on year, next January of the X, X XXXX. impact July July, Since next the Sure. happened until Durbin won’t happen

Paul Perrault

how much? And

Carl Carlson

How much? at say year That’s – I’d about point. this good question. a million $X It’s it’s a about

Mark Fitzgibbon

like? tax going Okay. for Great. what And look to is the then combined secondly, the effective rate company

Carl Carlson

estimated it’s XX.X%. at now, Right

Mark Fitzgibbon

us Okay. – margin. can comments help you And the I on your Carl, heard

that forward bottom happens? of sense of give think be to and sort can where roughly margin might the the curve, falls us when the you a Assuming of you Fed

Carl Carlson

not that rabbit I’m to down hole. go going

as do. runoff now, you tell how the scenarios, We models. have as well basis. lot have this, deposit be models go-forward can’t a Right pressure repricing doing whether to different of is Fed I a going going negative to on many is we whatever the and

it’s I – I QX some going break going not in into see to cycle mean We what good guess the expect don’t seeing that’s are through see on for side, see we’re repricing as as loan far But to benefit. I’d now, some betas I going for be, side sure. XX% or but asset see a quarter try three, around quarter I’m be etcetera. accelerated concerned. will betas still it’s also right a pressure to the the so. I on though.

Paul Perrault

There know And going a at it that, how is beneficial. conditions the a sheet we lot on got very rid where liquidity can excess on some if that’s of holding we’re we is. point, don’t on that’s of affect to that going of which stuff get are. to We’ve just that, see lot balance

we we also, the that priced loan cash big in myself that flow finance nature hard I’m and at not little relent CFO, on we’ve to comes floating have but derivatives rates. book for by through where we then here better got heavy that’s get two our a gets is muddle little margin-wise. very the book, horizon while, in of think which but and the a and I assets of here We well, rate the the trouble big I with units obviously, my equipment that sunshine a will see trying

Mark Fitzgibbon

book as Okay. X gave expect – is slides detail of is roll, you office your on some and you we decent helpful in on chunk XX% XX And almost a office then like Paul? the in maturities XX book. issues years, looks that maturing should loans Boston. It where some of next really these and in your Slide Are the were

Paul Perrault

evidence that the behave pretty have Mark, been trades the a you a the When buildings much be real not there how we very pops we two, be We if in business so do But if And valuation in those lot central know stress But and the a there surprised to lists would the broad-based going it’s virtually of or much things market. really we inner it say our of up isn’t because that’s really well. and district. updating is has to testing. of very get. tenant we be lot lot in was are – much in to shocked been if sublet tended of in but don’t stuff But to that. do XXX Boston, of and suburbs suffering have estate really affected. and problem tough don’t geography, I have Metro have markets would no I like out is there big Boston a

We’re that legwork understand. make doing the to sure we

things pretty feeling it’s road when. there me how feeling, bump and not the if I there. far, would how it here But is so sponsors But good. in surprise don’t depending on know are a And go or

Mark Fitzgibbon

us us or then and was an my that’s how give Private, curious Clarendon data guess you. there? last that Thank points wondered a share if could so, update I question, I it’s Okay. X.X you years been with going. you And I any year, on could

Paul Perrault

capabilities, say I’d of you it off lot busy. The revenue lot they been a you Sure. know, a now very don’t here is as have is very, getting fixed going are make I income. of probably word activities about right the fixed our and is challenge relationships and And income. with and the pleased out the think so building there. we’re very customers with But on the that’s

management under I and think it’s… assets this we’re in time, slightly over $XXX million at

Carl Carlson

in is way lot a the There coming on too. in that’s

Paul Perrault

business. the because were was and Mark, with us, the very to For traditional that and very, thrilled well it staying so around year, the first have bankers customers love that pretty went

large they Carl the deposits Now helping And uninsured very very have been handle useful depositors. that pointed our busy has been out. as of

Carl Carlson

As well as customers. new

Paul Perrault

stay who from People across they were. town want didn’t to where

Mark Fitzgibbon

you. Thank

Paul Perrault

Okay. Mark.

Operator

your Steve, the is line of from Raymond with comes Moss question next Our Steve line now James. open.

Steve Moss

Hi, good afternoon, guys.

Paul Perrault

Hi, Steve.

Steve Moss

the the starting with going here, appreciate just margin back Maybe to I color.

broker go And quickly kind of with could this maybe those what the term advances that deposits? added Federal curious, quarter, the away? deposits starting in was of Home you Just the how Loan

Carl Carlson

usually To fund we finance step our back, to use these equipment avenues units.

years comfortable side the we’re over out very well as equipment both fund side to on the and going So ladder out, Bank as X.X Federal broker book. organization Loan the them finance really deposit Home the

a came getting but certainly book. back the that more short-term in, managing great we relatively borrowings some did a as is make lot deal to on to be basis out, not are just can kind sheet benefit PPP are get turning as and still we balance so when on. of monthly a money so additional would to But And add a that expect we’re off there liquidity. where be used far We did of move But they decisions and cash we laddered of we on for flow on it’s that something switch. just

Steve Moss

just maybe where margin get to happen kind have here, way for out? do a the a lot of shook of of quarter, end or things EOP the to the Definitely at about here. moves March thinking And of feel month numbers Carl, another it spot of for Okay. just in the you a margin

Carl Carlson

For my at I of fingertips. the have March, that month don’t

Steve Moss

Yes.

mean terms that deposits beta, deposit on that, of kind of beta. for I or I about you total deposit Okay. I interest-bearing do are hear as think guess just the in just And deposits? you you just on of your I implying guess kind – then – expectation

Carl Carlson

Interest – deposits. total interest-bearing the

Steve Moss

Okay.

where it as deposits, Just of of Funds is. cost implies to kind the Fed still XXX-ish type which is about I like pretty a interest-bearing think gap a funds big relative

under like about X%, think for the at if X% like the scenario of the curious that you Just break could Fed type the potential that next, for margin? you holds

Carl Carlson

to March. I was nothing had you saw a to going model expect. we any basis can that But manage one can. continue that day-to-day not to we No expected X%. expected expect with volatile, anything hard because our that hold I’m I conviction. book. do on something March. on things the you see happened it’s can’t want of Nobody we I it to don’t yet know you are say we loan repricing and happen. happen breaking That mean doesn’t think I don’t say And this to don’t this modeling to. what us going guys a in what in When

And so…

Paul Perrault

good And this dynamic, Steve, we’re still signing up customers at a clip. pretty

can management, cash busy treasury be. as Our they areas are as

And of so is hard for lower. be But it’s margin that needle move that the by stuff $X we deposits. the because insist expenses operating almost billion to favorable all the

Carl Carlson

because a well. hear in with to this highlight and think Quite have as quite our are impact ago don’t do But well. we the I couple and it’s analysts that all to with are million to of speed the the been And this we what game a do know you can job regional and in on up over I staff around don’t very $XX – community some been we helping And this think right up ahead frankly. folks another claiming providing folks something we the is we able for of maybe set – about very, ridiculous, death hear fantastic to is able it’s of have time and to ICS. many quite to I banks up you everybody It’s that’s be much at the and thing to the of media. deposits and bank now. they up IntraFi do it. And how on customers our service bank, And from don’t $XXX,XXX decades are just the frankly, had it is. bit-speed insurance. people now,

that of think will in platform. $XXX banks this we a rest I part XX% of network of to of if up couple there. the go quarters, country using by frankly, the be of banks we to million the this to XX% insured probably And quite be in the are could And platform. deposits wanted in

little So, I think something start a to attention of paying bit people have to. it’s

Steve Moss

helpful. your here, And kind for side as good the are originations on numbers growth? maybe on the by loan curious new pricing That’s where Okay. to of thoughts these is of pretty loan terms this days and just of have quarter. loan in what organic growth here pace You my

Carl Carlson

you running fingers me want other getting – have I I have I the do didn’t questions right else’s somebody some because of it but numbers. now around to my want cover at some fingertips, here had I to

give will sheet right being end balance as a the number in I that driven in don’t the you so quarterly lot much the was in particular. the added of it you know, the the that’s margin impact – that on we as interest end And you liquidity numbers, So, net of, see but at quarter, X.XX. March you of at see of

give you days, Bank the number the the was, us million on gives side, sense. the wanted Loan asset over of other we That it’s The matures course deposits next flexibility flexibility so Federal liability to of have $XXX just side. between brokered Home I and a about lot have XX on you and advances, a

I million it was on in of originations Of rates of just $XXX Eastern origination coupon of of guys, we points. size question originations love because average book. the the coupon to $XXX highlight been at was points I And the had booked. sense a the million your have XXX the would quarter, to Funding in Now, we think basis a basis love the give that, for those you what I already of putting were – that XXX we we on, them loans mentioned I quarter,

Steve Moss

terms your forward, of just growth helpful. in and forward? process of curious dislocation kind the thought kind with pipeline on saw, Okay. And your then here loan kind Great. what’s That’s we rates of higher loan going of going here and

Paul Perrault

quarters, pointed originations down. displacement Last And and we been alternative, customers. troubles we some some an big have two and big, out. we has QX. up customers. the The signing their former of we were markedly as QX us. in we Carl seeing running from in in very were in And been sharing are But cases are certainly around industry, slowed have so for hard town they the the were attractive It

over down. And it’s are We entire not obviously But estate, we seeing definitely the real careful, terrible. much are very in and are relationships. that so slowed have C&I not all investors is business. But hesitant taken you and

Steve Moss

you Appreciate much. Great. color. very all Thank the

Operator

Thank question. for you your

Our is comes KBW. open. line O’Connell line of the next from with now question Chris your Chris,

Chris O’Connell

afternoon. Good Hey.

Paul Perrault

Chris. Hi

Chris O’Connell

hoping off accretion with was then and I an to quarter for just was income forward much that? in the how outlook maybe start going

Carl Carlson

any There income. negated So, when in wash. income a reason approximately the very at the on the will we side, it’s that on The you were it at loans into go-forward rate purchase $X accretion On that loan loan the premium. when be recognized. floating were a accreting income on mark that the basically million it first that comes you were of actually to quarter, that loans, discount a so – was so some side the during behind all – basis, accretion little the on priced was had accounting

Paul Perrault

For that period?

Carl Carlson

quarter. Per

at they portfolio, not were securities just and deposits yields the On sold meaningful. part. book for we it’s of the most the borrowings, most the since securities, In

Chris O’Connell

an the And to just Great. and as maybe from then hoping beyond And into the saves quarter what second have – expenses the might achieved all the if cost trend that? deal? update to been how get

Paul Perrault

exactly We cost of Most left acquisition it’s where went the would We are March. people in retained the of process very early the we did I extremely too the savings. Xst. did smooth on which January say conversion, we middle say to the through that early February.

say in the headcount. started March. cost have cost on of savings, the But some nailed got it I So, we would we the the we savings headcount, seeing

we things We looking some little think come salaries of in originally are anticipated. a have and still because had that of the things those at nature than higher I

was think $X.X But towards. projected, that And of that’s to of because I I and we which inflation think nature. think not working are going we I goal that more estimating yet… am what those to that million cost about number. things we savings and is a are we close claiming be quarter that’s the victory are I the very

Chris O’Connell

Yes.

am if shy So, I imply of maybe X.X or quarterly of out that bit it understanding run still number that maybe the rate that does forward? little going comes right, a

Paul Perrault

particularly outsized a to FDIC of I the continue say insurance and bank have growth little yes, we would see some also but we expenses. around other will headwinds, in bit areas love to that

the that to it’s I relate don’t the bank in are cost pressures. seeing want PCSB areas but So, it some to we acquisition, other of

Chris O’Connell

and you the could on around details on NPL And maybe hoping the C&I any came quarter, that Okay. in just size touch the it?

Paul Perrault

very from that could this Well, It’s reserves or perfect I and can would those have not we either us set one because can can specific you time-to-time The you whole go fail. medium-sized thing it’s some issues, be which they issues. be It fix up it just things their way. serious see thing where say estate. real operating it’s facing loan, of happens a if And will. is for to enterprise an

we reserved pretty well ready for now. So, but are it it’s way, either

Chris O’Connell

have of And it. Got size you the do it?

Paul Perrault

have it don’t you I I in guess magnitude. the front will give of I me.

I $X think million might it magnitude. be of something that or

Chris O’Connell

reserve do it. held Got you against it what’s the guys have And is?

Paul Perrault

a know not I our get by reserved for am outcome, into that credit we of are hopeful will don’t detail, which but to guys are it’s bad I we if useful level happen. that still told comfortably

Chris O’Connell

where just I of updates know activity. business line bit outlook you kind forward? But a kind fluctuate quite on color have quarter, number then that fees really on going And that items any or out the of it. a side, Got of on the guys strong could things with shake

Carl Carlson

in a don’t the think I And is now, number the have I right lot pipeline. best volatile we a say. It’s can

Paul Perrault

income that from loan swaps the being the from it’s down a Yes. origination quarters. or of as either down be as way to it in A is, friends with comes fee an And the neighborhood. lead lot few that sold family the on likely past book been to not and it’s our impressive the gets activity of

Chris O’Connell

thinking And lastly target Okay. then forward? I going how any to there Got capital buyback for about guys is any And mean you levels me, it. do are point? a consideration at

Carl Carlson

– Well, are. our are about operating lay targets We our targets the a as buybacks have would there even volatility comfortable as out be operating XX.X%. is you they whenever to lot of deck. thoughtful be we Naturally, very attractive in in the market, very

So, with the and or will… – we this we subject, Board will talk talk we dividends whether frequently about it’s buybacks,

Paul Perrault

keep doing that. We will

Carl Carlson

We will it. doing keep

Paul Perrault

we time think And when we will act is appropriate. the

Chris O’Connell

Okay. all have. taking I questions. Great. for Thanks my That’s

Paul Perrault

Chris. Thanks

Okay.

Operator

This pass concludes I Thank you. any back call. now for final will our today’s session Q&A for remarks.

Paul Perrault

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

Operator

participation. you concludes Thank call. your for This today’s

now may disconnect lines. your You

Brookline Bancorp (BRKL) 27 Apr 232023 Q1 Earnings call transcript