Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to the Brookline Bancorp, Inc.'s Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Brookline Bancorp's Attorney, Laura Vaughn. Please go ahead.

Laura Vaughn

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

flip We this be will by and Perrault Carlson. Paul doing not a hosted quarter. afternoon's call be This will Carl slide

This of the Brookline condition, call statements of results to contain respect forward-looking Bancorp. operations may with financial and business

with our Page to actual forward-looking from of that presentation Securities filings statement our Also, to our factors X forward-looking refer these Commission, for Please results Exchange refer disclaimer. please other risk materially which the and earnings statements. to contain differ cause could

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

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

Chairman Paul introduce to CEO, Perrault. and pleased Brookline I'm Bancorp's

Paul Perrault

joining afternoon, Thank on you, good call. and this Laura, you everyone. us earnings today for Thank

Yesterday, or $X.XX we of $XX.X share. for million income reported per quarter the net

were $X earnings choices, about million with $X.XX. million non-GAAP in EPS operating merger operating Excluding of $XX.X

and billion As first quarter, $X.X in we call, on-balance cash to securities. form the the our during sheet over added discussed of we last liquidity and in quarter's

During the this second of quarter, we prudently position. reduced most

to relationships. Our attentive new customers, existing our opportunities in to markets. the bank very are strong be bankers we active remain prudent And while and to continue seeing we

annualized to assets. losses allowance off basis for Non-performing less low this the quarter remain million Net loan increased levels total $XX grew core total XXX quarter loans. for increased basis just grew X the X.X% $XXX portfolio points and historically of charge-offs than of points were assets Loan while deposits by in the quarter million. and

review second the will turn results. will Carl, it over quarter company's now who I to

Carl Carlson

Thank you, Paul.

total million than quarter, $XX.X $XXX billion, is lower finished which assets at This QX.

of be building securities liquidity on noted, Paul after caused in QX million quarter, several the failure to we bought balance million As $XXX by during disruption in banks. sheet reduced $XXX the market cash and by

growth As reduced million and these teams deposits The during loan we $XX of estate second with between loans. the equipment declines -- of borrowings finance million. $XXX between consumer by million combined banking evenly and in quarter, we $XXX split million commercial the also $XX began growth split brokered in and positions of $XX generated normalizing in C&I real million quarter, solid with our

$XXX portfolio on of the yield points. portfolio million In average points a at basis, the rose at XX. loan increased coupon On XXX on the X.X%. basis in a basis originated basis the XXX core points XX second to June coupon points the basis XX linked average quarter weighted quarter, weighted to during we loans loan The quarter

in and products. cost million the points side, growth deposits, higher was XX brokered million Money time of quarter and in grew funding net Market offset NOW $XX in XXX increased basis by the of deposits $XXX basis for in were points. partially deposits rate declines and DDA, deposits $XX to The reduced core growth On deposits total million. average The savings

$XXX resulting X.XX%, which million points basis of consistent $XX in quarter net interest-earning income declined margin average million, on the increased interest total XX linked with While net the to quarter. first assets interest basis, a was

when related on lower loan million as in to due sale the The decline gains in million lower for was QX. income quarter, swap is activity security excluding million the $X.X realized to $X.X participations. gain which as Non-interest down $X.X customer well is

in We in which QX, a other also on $X.X mark-to-market positive million income. reflected negative non-interest a risk recorded $XXX,XXX versus agreements mark is participation

for $XX.X in million $XX.X million quarter versus were Expenses the QX.

the and of down fees FDIC in of benefit higher charges $X.X and completed $X.X were This assessments. rate were full the million. the benefits conversions expenses as Excluding run costs. declined as Compensation first anticipated efficiencies a by quarter both partially in quarters, impact professional offset well merger million lower quarter systems PCSB after result the of as was

Provision net charge-offs, in loan $XXX.X allowance on for for versus was $X.X for the million $X.X representing increasing losses XXX quarter credit million, the loans. resulting total million basis in points losses to

a the an be record approximately on XX. yield approved our August annualized X.X%. maintaining payout Yesterday, at to basis, August on to $X.XXX share our Board of On stockholders quarterly per dividend as dividend paid XX approximates of

my concludes to formal back and comments, Paul. turn I'll This it

Paul Perrault

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

Operator

Instructions]. [Operator

Mark Our first today comes Fitzgibbon from Piper of Sandler. question for

Mark Fitzgibbon

past Paul, you, X across for have you or with come in months you've surprises in that little things any closing. sort I are that of maybe or PCSB positively that surprising negatively? question, First the a market we're noticed wondered if franchise

Paul Perrault

They X I the and this company, things mean, have terms surprises, of that. had of positive. sort big no thrilled technology are like of Mostly we they a but are balls them. being and there Mark, lot behind of been modern part new things in to brought

So, get they're the and yet new to and like benefit enjoying used see we I have think them we have and of things exposing that. them product start their that the playing their with that toys customers, lines to to all broader as they

bad not and that very operating and So, it in feeling but been is good nicely way, we're well. I've consolidated has pleasantly been surprised, very a

Mark Fitzgibbon

quarter. I net wonder Okay. the then margin if third the Carl, interest you secondly, could help us about in And think

if had control to the How of sort and XQ? about the You of it we're descent, margin. able are good you thinking control guys, obviously, you will, pretty for

Carl Carlson

Sure, Mark.

deposits, I now, of drivers. One, the it's in X to comes the that think the pricing. -- right? is first So So basically, and when right deposits, deposits, it margin

betas. higher choices. customers to funds I think largely and up the access have betas be But convenience caught move due we were more I on historical to So cycle slightly the greater anticipate to this

also to pricing dependent So and slower we more environment continue dramatically competition. the a on the see expect to but on bit pressure side, given

funding the is mix. Second

and and CDs. into stabilize. savings NOW of also of so But So a transfers expect or we've funds the next I over to lot diminish seen and accounts that of out DDA basically quarter

side. growth third is the And

hearing I'm how given from optimistic, I'm our what on and they're working everything very well bankers busy are. And so folks cash as management as our

So are really and about it's know very environment, feel headed. things a where very, good I competitive I but --

while of continue we'll largely to see So be going pressure funding assets. the think on it's repricing I by to the side, offset our

quarter, our points And down so being X our X reflect, much as basis being now, models next or or points to basis flat. right possibly as X margin

of this I where deposits. we the kind significant around highlight economic said, there But being to that outlook and particularly for that's want So the sources is right are competition uncertainty around and now. of

Mark Fitzgibbon

also sort Okay. then what you able without that commercial what the to -- LTVs could wonder you share on anything loan. loans Any Great. characteristics on on I CRE of $X.X $X.X million be went of look million And if those the specific kind any would or like? details share of that revealing the non-accrual relationship borrower, and drove and any the

Paul Perrault

Well, is technically bankruptcy. in loan the C&I

of have reserved going will. to start to joined reserves. see of And which well kinds the operating other units is we're And if different that it company, it's So some very an organizations. up with operating similar you think from specific the I with proceeds liquidation,

it will It's Central problems that loan The is under think and this year. up take is the a good real Boston I Business settled get one and the it's some owner. $X time. of its pace, in probably it had It's estate for million. So District, will balance over occupancy got

a any don't be bit see a think of I major auto business smallish but would patience, a we're exercising of I building all what sort look of child It's district going little crashes there. to like. foster

Operator

question comes from next Moss of Raymond Our Steve James.

Stephen Moss

that these rate days? following margin the on receiving Curious, Maybe originations new you're what's just up the here. on

Carl Carlson

that during we XXX were to things -- amount coupon on -- being getting some loans balance standpoint. said, a legacy on a quarter, north I now I weighted that. lot were of Like continue originated the increase. are to on had a But from originating points we And average basis about things lower that that that were right rates. of were draws expect

that. about good feel we So

Stephen Moss

any of post how And purchase in the you. merger, Got margin, PCSB terms around is accounting then the quantity Okay. much contributing to just curious there?

Carl Carlson

quarter $X.X accounting on And the was that the negative there on side. $XXX,XXX to deposits. about on side the $XXX,XXX with So there about in was loan purchase on side, think I million associated the

the income the So interest million in to contributing net net-net, about $X.X quarter.

Stephen Moss

Okay. close think, appreciate terms just that. in to what then to. I Great. guided I here, And of previously, guys you expenses

areas may any how forward expense maybe you all have? about here of and you're Just investment curious thinking the going

Carl Carlson

around we continue side we're So we've We We PCSB that have at of out business. in expected the We're added of of quarter. the a particularly gotten I in a had I'm opened still we just of to reflected more of branch the up all customer-facing But still invest activities office don't in the being this kind -- things. acquisition at the still is efficiencies Island. Rhode moment. aware see forward. lot back moving that open other Bank the

nothing continue to we'll drive So that's It's plans, build significant in our materially. out. to going it that

quarter. running to $X.X $X.X range think be million probably the do I rate. be at to in a next FDIC going run I expect million is to higher that

well and have be. higher going think little forward. going it the we should from When a than QX. little it moderate thought a to quarter was fees we to professional for I We as got of a bit bill legal this FDIC, true-up was And

a couple items of have We there. in

a So we keeping we're -- very close feel on expenses. eye

Operator

Instructions]. [Operator

O'Connell next from Our from comes question KBW. Chris

Christopher O'Connell

more the And just and the keep point? sheet hoping Is you that would securities balance to this look at start that quarter on or and term? the level with to balance longer was less finished of cash. off cash on this movements securities what's I sheet

Carl Carlson

Yes.

million liquidity -- comfortable So on it's a that's we'd securities let the environment. like, we I'm operating XX% books have the times, little And if certain out $XXX done. it's probably we market, more something range that's the that on by in just a hand should $XX I'd driven over say of normal are would there time. have But I'd very happens. we largely bit you case more million feel hey, the -- in environment. X% say to to in

It all of We make sleep a have amounts frankly. -- sheet, access I need it night, little tremendous happy, can happy. balance on sometimes of regulators things. liquidity, analyst at makes you But types makes those easier more quite bit to

happy range. XX% I XX% to X% point overall, right say think now. to we're but at So I'd close this in we're -- probably the

Christopher O'Connell

Okay. Great.

Carl Carlson

much, earning cash borrowings that over Fed, X% the is you're hand so bank around of on move around amount loan brokered paying or of spend deposits. and we're doesn't home -- the It because same

So that. around those are levers the

Christopher O'Connell

little a growth comments prepared product that mentioned the around Yes. line. there And I And there. had in Maybe a just out side, guys provide you yield the in savings good is the color savings you deposit really on higher that. think

Carl Carlson

Sure.

have very we there, to rates So out folks liquid something there that that. are like than would have but competitive CD more

was So current paid paying offer think Minimum a $XXX,XXX. that care really that created deposits high new we of is attract the on product. rate we're made to -- to as -- balance product. our well savings And moment as take I at base. customer is It

I we product when around that started originally think X%.

Christopher O'Connell

it. Got And still? is ongoing Got that it.

Carl Carlson

Absolutely.

Christopher O'Connell

this then be imply moves out and XQ next the Does late bit, yield the kind commentary, in here to Great. start rates that should bottom a minimal on of the And there based the curve? around of NIM some that it current like given XQ, in slowing deposit we down sounds compression impacts quarter. quarter

Carl Carlson

would current our QX caution that. QX on then we But slightly increasing also in of a be actually Yes. modeling, you, lot going possibly it and to I'll down assumptions suggests that in flat forward. Based in there's

Christopher O'Connell

the in you IRR in beta mentioned, Is cycle. expect this the higher deck. than I the beta, comments the to in believe, disclosures the Yes. think that that's XX% that And higher slide I be you

Carl Carlson

correct. correct. That's That's

there balance disclosures right sheet, over the we've that betas observed historical and our past flat cycles. So IRR a assumes assumption huge

also guidance what And so my away on. that's comments, that's a in I'm do that, And what reflects. lot models from my and the basing simulations we of

Christopher O'Connell

to of year? relative derivative be out last in a the Any I And and there'd pipelines where sense quite half can XQ bit this Great. you're less and given know dropped shake in a there you of year. fees types little and the the off fees participation second late on that in pipeline income. Obviously, those mentioned customer products the quarter Okay. quarter bit seeing, last demand

Carl Carlson

swap and lumpy. Yes, around side, it's and those be doing volumes provide on all what on the would very tough the how dependent I we're and guidance we're that. to say structuring that loan that's can transactions

or or we So we can can't may we not. them have

provide -- line to On don't could back I the we bounce that see sorry, in -- want a nice item.

side, on. the I'm On participation optimistic less

-- thing. participation market a the that's type think I

participate lot or a of able not things in participating things I to out. banks are think

I while. so that And a be think for going probably is line revenue to hamstringed

Christopher O'Connell

capital outlook it sounds you levels then now good the had pretty Okay. all capital X% above guys have Great. repurchases growth guys industry of up time? And a TC. relatively the on than But share at picked robust side, into this Are the around, half mean, you like of all any year. have at the a more I you lot on a back considering

Carl Carlson

No.

We to Right at any and now, dividend planning competitive not our paying growth. prioritize continue share a very we're this repurchase organic funding time.

Operator

closing conference to remarks. question-and-answer to turn This back for any session. I'd like the Perrault our concludes over Mr.

Paul Perrault

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

Operator

today's joining call. for you Thank

disconnect You your now may lines.

Brookline Bancorp (BRKL) 27 Jul 232023 Q2 Earnings call transcript