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BRKL Brookline Bancorp

Participants
Marissa Martin Associate General Counsel
Paul Perrault President & Chief Executive Officer
Carl Carlson Chief Financial Officer
Laurie Hunsicker Compass Point
Collyn Gilbert KBW
Mark Fitzgibbon Piper Sandler
William Wallace Raymond James
Call transcript
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Operator

Good day, and welcome to the Brookline Bancorp Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Marissa Martin, Associate General Counsel. ahead. go Please

Marissa Martin

Relations Good afternoon’s fourth Andrew. Carlson. Perrault issued and to Brookline with team, the welcome earnings and executive website, Thank been Bancorp’s will has XXXX afternoon, Carl be earnings and Bancorp’s filed Investor on available quarter which SEC. we A. of conference Brookline M. our release, brooklinebancorp.com, This you, the is everyone, page call call. Paul our by Yesterday, hosted

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

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

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

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

Paul Perrault

you Officer, following our good results Carlson, and quarterly I’m Thanks, Marissa walk comments. Chief today afternoon, all. through my Carl our accompanied who will by Financial financial

record million $X.XX quarter the $X.XX or year per share. of of of $XX.X We per or $XX.X million the reported XXXX, in resulting for in fourth earnings share earnings

about of loan or $XXX For X% deposits balances almost $XXX grew also grew increase by the from million. XXXX year and X% an million, our

banks a point. a to of yield try to and actually with relatively one the at XXXX position in then We neutral interest to as falling rates possible was also inverted rising flat changes be which as interest year curve, rates.

point basis preferences year-over-year flat to certificates yield due However, X.XX%, we and year. customer of to deposit our the margin decrease in for XX experience did that later in a curve

Excluding the First Also year-over-year resulted related or leverage. Brookline Bank $XXX,XXX impact in merger year-over-year the which $X.X X.X%. charges excluding increased merger Bank, gains, to expenses million operating impact of X.X%, securities Ipswich or of revenues the positive into negative decreased

the by helps The work serving we customers place. exceptional the of make not which and do that have commercial I people their Bancorp, communities without dedication, be Brookline one leading pleased our be to our companies. would in of we possible team continue banking region's

the I to Carl, quarter will will review now you over fourth who turn results.

Carl Carlson

points. in fourth had an the basis. Thank with points. yield loan earning quarter portfolio basis drawdowns basis quarter average of The as you, an yield basis, basis the points nine weighted a growth average Paul. loan the basis quarter overall assets the originations $XX We million linked-quarter and on in points, or was to X.X% annualized points a weighted of XXX Loan of on $XXX was XX decrease declined on coupon on for million XXX basis the XXX

$XX grew of demand in accounts. growth savings, with in deposits, deposits time during million Total and $XX accounts million the market million $XX NOW $XXX million money and quarter in

X.XX%, to by basis in earning $XXX,XXX income declined margin two growth interest points the improved while interest our net driven net from Our prior quarter assets.

quarter in of loan loss million due $XXX,XXX loans third non-interest $X.X quarter. gain from $X.X $XXX,XXX quarter, declined versus on of in was slightly on decrease $XXX,XXX the $XX.X operating our offset by expense from sales The The investment million. gain the lower income fees, to income QX. the million a the Non-interest prior company's and down was securities to

in on charge to compensation basis restructuring a and lower million related The linked advertising. due quarter declined to expenses $XXX,XXX. equipment decline costs Including quarter the was linked QX, $X.X

losses million an basis or basis was Net basis an quarter QX. credit points XX points for million $X.X provision two for annualized $X.X Our the in versus million, increase on were $X.X QX. charge-offs of from

for allowance to loan on XX end increased represents The points versus basis million $XX.X $X.X and the losses of points September. in million basis the loans XX quarter at

million. closing $XX.X declined $X.X loans increased quarter, price. repossessed the During approximates quarter assets and which points to representing approved XX during non-accrual quarterly per of share, a dividend loans X% based of on million $X.X million total yesterday's the The to Board $XXX,XXX $X.XXX basis yield

statements. This our concludes formal

it open up now will questions. for We

Operator

comes [Operator first Compass ahead. Hunsicker Point. of Laurie from question The Instructions] Please go

Laurie Hunsicker

afternoon. Good thanks. Hi,

was Carl quarter? accretion us could the income were you prepay that give for and what Just hoping fees

Carl Carlson

Sure.

Laurie Hunsicker

just also, then range loss about little be day provision bit there's given loan wider should wondered CECL under two thinking a how here consensus. And that a we with of

help you us could about that think hoping Just taking down? that and Thanks.

Carl Carlson

the accounting fees were quarter. Purchase $XXX,XXX prepayment in Sure. was $X.X million and

Laurie Hunsicker

great. Okay,

Carl Carlson

sort We're Part all the of quarters On will documentation won't heavier parallel We're the in model be the in going it validation the allowance. what impact that's of thing. unfunded reserve several large are up of XX%. see been to numbers or be commitments, but will weighted of so running and an shaping that to to now. the and final the heavier for see we've commitments, -- side, for it that plus A in CECL minus to unfunded -- be. stages you

Laurie Hunsicker

And then that you're going for think loan help XXXX? you forward? looking growth Okay. can at about How year full us

Carl Carlson

going we're or so $XXX that. to be million at a steady plus be think I We'll quarter. minus still or

Laurie Hunsicker

about buyback? should how we Okay. And thinking then be

Carl Carlson

Very opportunistically.

Laurie Hunsicker

Okay.

last question And just be Okay. we that? on thinking should about How rate. your tax then

Carl Carlson

a with that still lower in but little bit so the that, budgeting probably estimating we're than it's to -- been XX%, XX%. We're XX.X% trending

Laurie Hunsicker

Okay, great. Thanks.

Operator

comes KBW. go from The next question Collyn of Please ahead. Gilbert

Collyn Gilbert

Thanks. Good guys. afternoon

Carl Carlson

Hi, Collyn.

Collyn Gilbert

then as and also the evolve bit that part the two which just on it. that after about of seeing growth the that. to goes about a sort NIM, Carl this talk million seeing the ask other loan you on $XXX yields just then you're question -- I'll how you quarter year? then loan And seeing you're one Can just trending a you're mix little how part

Carl Carlson

going it's to as say do a grows, then the up we're tick of doing. the consistent very same. It's bit to that with what amounts part as expect mix. may also would more grow. But C&I we I that loan I of be total see

of don't a the big see I So change forward mix going in now. we are where

lower what going Right now portfolio yields originations new are. are slightly than on our

lot is of we'll So of so see And duration, as a the that production shorter in you'll our well. impact see.

Collyn Gilbert

Okay.

segments? seeing better the pricing Just best some the on spreads where that are or of you your point, business within

Paul Perrault

say the that's units finance the get not it's equipment new uncommon. and Well biggest but that yields, I'd would call it, nothing I

Collyn Gilbert

Yes. part dynamics the dynamic I business. it -- that guess mean that's the you're competitive I too. of within not seeing change

Just are to compress pricing start or because start to more kind of seeing dynamics. banks compress loan be of as that a focus, to in having you're many if I spreads know categories the shifting any competitive didn't of

Paul Perrault

Well yes.

recent that that but it's of provides years, finance describing. I equipment it what little quality at than a level in we due the you're been than banking to think opportunities stuff compression still bit the yield core It's in higher past, probably been it competitive in like. the has more

Collyn Gilbert

Okay.

from look building the building -- you're their kind as Okay. new is much versus to businesses you or this mines? their And growth of are customers then able customers at own you is how of -- own finding current coming this

Paul Perrault

a unscientific and mean would I that totally answer half half. be to

Collyn Gilbert

Good answer. Good answer.

maybe of pricing And just some trending sort seeing for Okay. of to NIM right. offering just are NIM deposit of you outlook the then All the about the could sort new for in rates talk where year? and Carl shifting this maybe how deposits you're your

Carl Carlson

I side. our efforts competitive, we are would the deposit continue be to Sure. but deposits say benefits on seeing on pricing very

little the for we're that is full year. bit gave QX. X.XX% or so or projecting around as Last NIM so quarter far concerned, higher than X.XX As X.XX% guidance range the for we about in a

We're curve -- we've know seeing yield to flat that but then -- visibility we have present. some our and we down continue pricing, very to we revisit a still the LIBOR that seen seeing at also to continue we're that as come still

see a there'll side. the lasts see we how to if there. on that yields -- our additional and relief loan and pricing we'll be so in QX So deposit some continues and pressure on adjust QX long There'll lot that put we'll

Collyn Gilbert

Okay. including any NIM that year -- guide of X.XX% kind the the for And that cut the is your full you year? throughout had rate given

Carl Carlson

No, no. That's a flat environment safe environment.

Collyn Gilbert

And it the and part Okay. -- I apologize beginning. know you in on may I a touched and missed have I of

how see know you activity your it efforts of terms or of where swap the any swap relates saw, going predict, of the internal the just trend? thoughts I demand that XXXX you that's as hard income line can in for development you business but kind I think customer to think that own that to in some

Carl Carlson

always is. me and going close lending been as and appetite not been be surprise continues very I've as on on pipelines good. and guess But to teams has to quarter and I'm to Every try particular look what's what this cautious very customer to pleasantly quarter continue going solid. to our robust it

long appetite that pretty that's flat yield funding we'll see. with treasury With and -- accommodate so for curve through is yield a such long-term and say where a how -- would away not is going customer is I swaps today, is the XX-year we

Collyn Gilbert

business broadly sort against or where little terms -- where be of Okay. that how there's obviously What and point year be terms just of if my yourselves more something financial that of would markets metric, so maybe volatility in then the you successful a -- I would should the on guess but your that metric for specific in you as much And would a measuring metric last in we monitor so, you're kind to you're measure last not. manage you being the of you question success? -- financial over just the there's you Paul -- bit or

Paul Perrault

EPS.

EPS mean, Our basic has I stuff. it's pretty grown.

Collyn Gilbert

you I to... on Like on an growing trying year-over-year -- isolation? fact -- relative manage EPS the to mean basis, absolute and year? growth Just more to I or guess do that basis a than prior points that -- to did the try it In

Paul Perrault

are that of We'll probably I'll in after produce company a answer north. indicators Maybe, operating differently. around I'd going leverage consistently all the the keep can about direction. quarter say little Carl other leverage to bit great right we if try then a preacher it I the quarter, and is guess, operating going

Collyn Gilbert

Okay.

Paul Perrault

So, there of in know of you when a keep them -- bunch a EPS, stead. and I'm job things our of eye any all them act half is isn't keep all I but I an this say and balancing is on good whole singular joking as mean to

Collyn Gilbert

is Thank I Okay. you. That all had.

Paul Perrault

Collyn. you, Thank Okay.

Operator

comes Mark [Operator from ahead. Instructions] go Sandler. Fitzgibbon Please The question next of Piper

Mark Fitzgibbon

afternoon. good guys, Hey

Paul Perrault

Hi Mark.

Carl Carlson

Mark. Hi

Mark Fitzgibbon

strong really that first this have anticipated loan relatively a provision was and credit curious quarter a would've and I would quite had was quality especially charge-offs I than been number. I growth. the thought you lower given modest it higher have bit guys

there was And so, I'm was? else that as of sort just the provision -- you there curious it to unique caused level that was bump the to up something

Carl Carlson

charge-offs on at that's $X.X think I higher Yet, more go would reserve right charge-offs all a with a risk million. versus See, the we risk into loss of say, few $XX had go And growth We I first you your -- with that truing up. then down nature bit that activities and of of we factors well. since were million. get And start as whatever have coverage ratings going course, it. up the loan little things for then, there's that the probably credits have you migration. had

the So, you throughout that the quarter, process throughout this give. year through loans go

Paul Perrault

That's noise quarter, in bit anything fourth more don't than a a us, I have. probably normal see there the as more Mark. it But than trending. mean, yes for was observation, a we will typically great little little it in we

Mark Fitzgibbon

Okay.

Carl Carlson

comps our basis points, saw yes. up go You two by

Mark Fitzgibbon

for some variety looked -- made to quarter then or curious XXXX? on Is progress this of thoughts there cost expense uptick quarter. on on good as items you you of normal that related expense sustainable guys the to small the And front, your growth sort like a first just absent have you

Carl Carlson

-- mind. so things a Yes. I would I couple thought in to keep say of

you few -- mind in in that a fourth insurance to things saw are some and way. really on The FDIC, quarters. We we third let's put it keep the had that relief FDIC

with things have on that and that said the quarter. those the be get a you'll in employee first associated Like and expense are probably usually would big the coming driving you taxes quarter. nature So, back first think things that. benefits I -- that you the already -- And like that in pop

benefit February consolidation will QX. that the -- really into the start happen know we're that we'll so Ipswich into First in working Brookline really But As you of seeing Bank. that. also see That benefit of on you won't some

but of most in some QX, that in it QX. see You'll of

as And have are growing to we want the we're expenses. revenue investing. on -- just come open well long as but no a so as keep than as revenues very costs -- to Where problem join if mentioned team athlete very across to Paul opportunities focused stop -- those we we we growing great we're faster

Mark Fitzgibbon

then think on to know come that lastly, off been and back Cambridge the talk market. of how And rent just curious I control Boston, to you likely there's some to is I'm to Okay. pass? as bringing

Paul Perrault

level don't it it, odds pushing noise at the low-level against say a I'd serious see but I about point. are at it. this There's really anybody

Mark Fitzgibbon

you. Thank

Paul Perrault

Okay.

Operator

Please go The William next question comes James. of Raymond ahead. from Wallace

William Wallace

guys. afternoon, Good Thanks.

Carl Carlson

Hi, William

William Wallace

Once conversion a or what's of follow-up annual Just a you line benefit questioning. the expense anticipate that Ipswich the on done basis? on quick is the quarterly

Carl Carlson

an on annual was about estimating benefit basis. an basis, of on $X think annualized I million I

William Wallace

said question sold to sense? And as you market makes January curious you it stocks if be early then the be willing Or to Great. buyback. last a off. general a it if you'd like you give range earlier that response you an opportunistically more in price in I'm opportunistic feel the where to question in had us were when relates will

Carl Carlson

I'm not you range. willing to that price give

William Wallace

enough. Fair

Carl Carlson

comment We'll fourth the on quarter.

William Wallace

Yeah. it. Appreciate That’s all had. Thanks. I

Carl Carlson

You bet.

Operator

any question-and-answer This over remarks. to Perrault, the like session. Chief Officer conference Executive concludes would for our Paul back turn to I closing

Paul Perrault

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

Operator

attending The conference for you has concluded. now presentation. today's Thank

may You now disconnect.