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BRKL Brookline Bancorp

Participants
Marissa Martin Associate General Counsel
Paul Perrault President & CEO
Carl Carlson CFO
Robert Rose CCO
Mark Fitzgibbon Piper Sandler
Christopher Keith D.A. Davidson
Laurie Hunsicker Compass Point
Collyn Gilbert KBW
Call transcript
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Operator

Hello and welcome to the Brookline Bancorp, Inc.

Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event this being is note recorded. Please now Marissa Martin, would like to to over conference the Associate turn I General Counsel. Please go ahead.

Marissa Martin

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

this presentation locations. note being done Before different please we is from several begin,

could two This other materially So condition, Bancorp's problem, our references for if with be filings there's we actual and refer our appreciate a disclaimer. of Securities statement financial refer may future forward-looking Factors made Page as to Risk performance and Brookline delay predictions. of results or results on that are Brookline measures you this statements. to and should with Any your our trends please of technical patience also actual and of relied earnings Commission, financial and forward-looking only call the assist Please business statements differ results in which Exchange made measures presentation forward-looking to non-GAAP contain the Also, these understanding cause results or operations to respect to Bancorp. understanding. presentation during to not contain from

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

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

Paul Perrault

schools work-from-home Providence of busy. open, Activity within quite as positive Island are theme, see remain activity and continues and some as sidewalk good recovering. continue optimistic while and mixed the trends to as everyday process Massachusetts, slowly cities Boston and cafes are Marissa, be to all. the economic predominant restaurants to in be I Rhode seems reopening cautiously and the Thanks, afternoon New York we remain

infection and continues and of possibly increasing. priority. as safety their rates The weather cautious of our the employees are We our cools families be and health to

employees one are into safety we social times mandatory, of office distancing come to a encouraging the all not in two locations. While our guidelines non-branch week, while and maintaining or

the will will continue quarter I'm will of as of credits turn report and which Carl? customers billion. are or the of maintained Since require financial of of we buyback say $X.X normal paid been returned March per Carl, additional challenges who of third to the and had who facing be over now still small a the will to to at you net these company's November, position. our of interest share have modifications. suspended our stock I'm with segment loan related our program, another to Board on may stabilized $X.XXX X,XXX $XXX dividend March. in deferrals granted status, XXX reserve also I earnings also approved in had X, We balances loan with work $X.XX review there shutdowns repayment deferrals. results. to that resumption short-term quarter million to quarter, a third stockholders, million approved the customers pleased the end margin were substantial $XX.X We and loss our loan as solid and which pleased most to we totaling

Carl Carlson

million Revenues comparative credit relatively summary expenses Paul. lower and losses. $XX.X we revenues, was interest assessments. estate On Net for to lower swaps to and costs were rate as FDIC Operating higher as the by increased stable X, to million for lower. income related in customer you, real income are Thank a compared significantly provision were due net QX $XX.X flat commercial statements. Fees higher Slide income and higher slightly quarter driven interest have costs declined. compensation income originations provided back-to-back are fee

While volatility remains $X.X COVID-XX and provision significant to losses have credit pandemic. for uncertainty the for of improved, there the with loan modeling credit million. economic reserve related coverage losses marginally we a for We losses forecasts used maintained our

income Page basis on growth million earning XXX XX $X.X million margin basis interest illustrated our asset X, funding the increased loan As net driven average as cost portfolio our stabilized yield points. declined interest The as $XXX declined by at points. basis of net of XX on points

as deposits comparative In for loans. rates across and and was Bank of $X the we The stable loan assets, flat our declined deposits for slight you in was the to to Loans brokered million the points largely $XXX and of deposit growth million. excluding significant X, loan quarter, The $XXX allowance If from Federal X replace deposits driven reflects portfolio. growth favorable million, of Home evenly can distributed loan advantage the loans, me non-maturity XXX PPP could sheets. billion categories. third relatively you company composition our quarter basis and QX. $XX follow Slide down the took summary Loan remained at had grew by advances. Slide reference balance declines million represents for brokered $XX losses Deposit portfolio with

offset loan the demand X, we status activity. increases the payment money providing CDs and our deferment this of in deposits in decline. On NOW While savings are declined quarter, markets and Slide

loan XXX X.X% loan by X, quarter-end, provided $XXX continued handful there deterioration. signs loans credits information modification under of modifications loans a mentioned, downgrades remain of On Act, total million As of have Slide sector. All to of is CARES with as if the accruing outstanding. Paul representing were totaling

go could retail fall meaningful limitations and monitor exercise, impact or we closely sectors into months. as We winter continue as a the have government shutdowns and laundry to

capitalized, we Directors million buyback program of standards. in resuming all on the The continues be Board of requirements. September exceeding $XXX company well-capitalized buffer approved Slide XX, of shown to well paused regulatory As capital XX, the X.X% or yesterday regulatory At we had March. stock

stockholders history which common to will regular of which a used November per yield. X.X% be paid approved a dividend to of $X.XXX funding, Board back be XX approximates a year-end. will $X.XX million XX. to of representing we in opportunistically in provides our comments, are In XX increase before shares XXXX, our paying total, payout, quarter. $X.X remaining turn on XXXX, The share continued per which over out a concludes have dividend share, payout repurchase my November it currently during This We this quarterly dividends a X.X% I'll on and record and formal Paul. Slide

Paul Perrault

Carl. Thanks,

session now our Credit Joining the us for Robert Chief is Officer. Rose, question-and-answer

now We up it open will questions. for Brandon?

Operator

you. Thank

session. [Operator We will the now Instructions]. question-and-answer begin

comes Mark Sandler. question Piper first with from Fitzgibbon Our

Mark Fitzgibbon

breakdown CD quarters, the the rates over wondered next look at. maturities Carl, what I of for kind couple if you like sort of of what us are could those

Carl Carlson

Sure.

CDs. $XXX next So Exactly got and we've about X%, than what quarter, in rate around little this is is X%. We'll X.X%. higher excludes CDs brokered a maturing, say million about

Paul Perrault

That'll be quite helpful.

Mark Fitzgibbon

quarter, due Carl? in fourth becomes the That

Carl Carlson

quarter. That's in the just fourth

Mark Fitzgibbon

that then you have XQ, And about Okay. how handy?

Carl Carlson

Because my in this up to million and I $XXX in Okay. March, million and can't $XXX $XXX around head, add January, all you $XXX that's give I'll million in $XXX a February, in rundown. million. million

Mark Fitzgibbon

rates about think at? just then deposits guess quarter. I brokered Okay. I mentioned was curious, you Great. those brokered kind deposits. million this and $XXX of of booked What the you I are terms And

Carl Carlson

Ameribor basically these of DDA not plus are and accounts brokered an average NOW brokered brokered XX. with are CDs, So, these around yes, cost

on right points XX average. around So basis

Mark Fitzgibbon

general, little see more quarters downward in some assume Okay. Great. margin in in probably degradation Is bit of liability I despite fair? the then that the repricing. a And coming we'd that

Carl Carlson

see going little of that Actually, to that thought had interest liquidity we I increase know on were a going pressure this little higher that. just more margin a level margin income net bit still guided we we expect we hand we quarter. to anticipating. put forward. same on the were that of I bit And But had We

a basis increase Just five showed smaller But the we the do margin margin points expect XX next about to number. to quarter.

Mark Fitzgibbon

comment now competitor side lastly, wondering, was I was capital all. There of is you curious yours. that a market with your if of affecting the company then in I'm Okay. just -- a they pricing or could in pile on loan demutualization the are large recently, market a a And just at

Carl Carlson

Really? In our market, Mark?

Paul Perrault

keeping business. think care so. don't that's been sort certainly There's taking evident their and of going of to Everybody's I on. nothing knitting

Operator

from Keith Our next Christopher question with Davidson. D.A. comes

Christopher Keith

get like if detail more estate what's Could pricing maybe are coming loans us So and give repricing that's and a just of you to a quarters? little side all sense on on commercial next -- over few real the asset then right. just I'd where sense the a for

Carl Carlson

Yes.

the So entire book third quarter. sense of loan in you I'll give a the

just average, breakdown basis now points; New XXX; XXX around were of themselves at and loans, you consumer real weighted to XXX the XXX originations loans give basis estate commercial were C&I, a those. XXX, points;

we of repricing, as our book commercial is lot -- As a far repricing. felt

has all. billion lot that those three that $X.X $X.X be don't happened rate. to that I But about since a the or months lot of think of down coming got So the definition we in that that billion. in of floating we earlier are already but Floating at is reprice, is repricing a expect loans year of

Christopher Keith

far estate, looking very disclose, for are do be That's loan have commercial going that out then me seeing that And loan could direction the it. and and strength general sense you overall I then of in Got where growth, you in helpful. pipeline? bucket real consumer a And at commercial you give just a the the guess loans, we're for for the leases you to loans growth? as as if sense XXXX

Paul Perrault

going seeing Well, it'll because which first the will C&I modest forgiveness what through for it know and been just historically. in us, is some is it's out. thing murky put makes We more but activity you than in we continue activity next be when stronger But and to that year. time I if in a first, that expect it the expect table not that, let's next presumably. take happen, but real don't we're aside, year, residential, Christopher, that figure half, say off PPP has the to business estate is huge I'd

high-single-digit be clouded seen that that all in the I that situation looking I X%. don't I do we're things think continue growth we assuming we I'm right now, we've so half that. of may could of well. suspect environment, recent a sort years. So operate But In have overall think X%, of reasonably rather at will pattern to it

Christopher Keith

if fair. Okay. And just I more, That's That's can. one great. then

I your you given is curious at see intent liquidity. comments attractive, especially looking work to put the the end -- but strategy? on mentioned to work. You less of I'm your within little a how excess market? curve. liquidity to excess that rates growth, -- are that fits seeing loan in you or what Are anything less long securities the your Do know we're

there great. any just would So color your be on thoughts

Carl Carlson

No.

up first liquidity this built that have on some still have we when balance basically think our crisis I and started liquidity sheet.

before rates from going do not basically on portfolio here. to anything, securities securities If the came down to put grow continue dramatically. shrink. also We We expect it's to

And getting the balance side. we're sure if so weren't to the funds from the cash sheet, balances the back have really, SBA forgiveness we that on going we start on

we'll Bank to grow be off Home added Federal that. throughout this. So that as very, well -- as around and that basically monitoring with off holding very liquidity liquidity brokered solid any and paying in Deposits paying liquidity continue deposits are Loan advances and

that's -- in I where deposits. that have by us and think may level some growth been of So of surprised

Christopher Keith

see going And you -- Or, deposits, few to waning I that up we last level you I to brought but mean, are mean, know I Great. next I you do continue quarters? I'm one, of the growth? sorry, in see this said when

Paul Perrault

of PPP think growth. bit. the kind I some of were it's will thing. have for attracting came money who don't if who see center I we not Again, know aside put -- is speculate half, bank don't treated out another the that that but level good X.X this was that Well, cash of customers magnitude a unless by a order have lot well. there their something I pretty The of you'll being I deposit very little rest of balances PPP program -- to

portion solid regular some is So it growth. of

one another continue is to inflation. And upward described have Otherwise, gathering. is we'll trend The just see I might other those, growth. if the we of an same in deposit deposit the PPP there

Operator

Our question comes from Hunsicker next with Point. Laurie Compass

Laurie Hunsicker

maybe, and Love a the question for -- you. this detail wondered is on the deck. I Bob,

laundry. help now -- could your of are you one-third think If deferrals us looks like about

on If comments you've that how to around And million. payments added That's also, of much got color Just one. first planned coming resume is laundry. maybe in additional weeks? $XX any any that the

Robert Rose

Yes, Hi, Sure. Laurie. sure.

next We come over majority that expect months. the of three to back one the to

But we're in they and about caution I They the don't in at talk a unique that -- that moment when erred their acquiring people think about customers, area. were in here, we our other people on laundromats time. generous with all. side COVID talk we with of talk

do the laundromats. of and restrictions number the chosen an future, expect through affect it's the sites those into put affect So But i.e., quite are well, moderate they that them. to people They can we a essential business, resume payment. bit

Laurie Hunsicker

you New you're that. sort a of geographic if in York can Or us just just Or market? other in how And have York do deferrals remind any color maybe, much New sitting seeing the that of is and you outsized City around breakdown? any

Robert Rose

have It see Well, the when country. the has the are five out and New deferrals. concentrated from then difficult because is large portfolio they been about. where New not in fires all cities it's states. and not to in business boroughs They're throughout York the York. They're go all California the is boroughs. and they do a in all forest more closure, XX surprising people you And just of in place not in

So Laurie. spread well they're pretty around,

Laurie Hunsicker

Okay.

then here And just Okay. one more on deferrals. question

the September looks XX, as refreshed like million or currently, that beginning number an you So as maybe number what what is of that have of even do to November? $XXX that had you October a

Robert Rose

few I here news deferrals as that of which takes not $XX $XX other days tell can XXth of day. the the the good fallen do that of shown has Macrolease, this. a million million September because I has presently, ends a of you month to bit to on recalculate it after

Laurie Hunsicker

Okay.

Robert Rose

-- So

Laurie Hunsicker

great. That's

Robert Rose

Yes.

Paul Perrault

that when we Q for the refresh the file All will right, Q. we

Laurie Hunsicker

Okay. Great. slide. a is fabulous This

million, on Great. you Carl, where PPP million. us fees. $XX the Okay. $XX of just update are as quick question Can XX? September for a thinking you those I'm of

if more exact had number. know didn't you Just a

Carl Carlson

I exact don't at have fingertips. an number my

Laurie Hunsicker

Okay.

-- Okay. then, And Paul

Paul Perrault

notes? amount The of

Carl Carlson

-- that it's number Paul, whatever -- It's

Paul Perrault

$XXX million. about It's

Carl Carlson

balance we right well, in at did I now and sheet million. it's -- loans, the it's million, $XXX So believe, $XXX on

XX and So between is the the deferred numbers those net difference two fees of as September costs.

Laurie Hunsicker

helpful. Got perfect. That's it. That's

a Okay. for Mark's Thanks. acquisitive. last mentioned, Certainly, question see talk for you, with the bit Mark maybe M&A question. just the Boston they're about little the then, going they've in you've very of marketplace? And That's banks Paul, taken. dovetailing that you to you said kind path how that potential Can be

pressure rethink sitting on would here? comments right Or a just you bit you're you, especially how this M&A about any Just thinking helpful, just Does sort of here put or give be little a difference. you're mound on things? more color as could of

Paul Perrault

I'm public war Well, much. went I'd bothered say not I Eastern it. mean I that do or has a chest can -- not with and don't and worried something

We now. it I We're continue play prices the fine. There like go in well environment given the the M&A just But We're to history Eastern after. own as to difficult have could plan our a pandemic and candidates right getting which region some doing to done. stock think very off as game. it's pull a somebody are

unusual an have going a for to while. normal M&A I there's don't unless -- I circumstance, you're So think

Operator

[Operator Instructions].

from KBW. Gilbert with comes question Collyn next Our

Collyn Gilbert

just NIM. with Carl, start to Maybe, the

NIM color broadly I expansion the but this of PPP mentioned mean just just the get for that like for the fourth XXXX. going robust. as, thinking we you're mess -- I through whatever, you get kind -- -- -- But as appreciate like or setup you pretty the you through I Paul, into So more the seemed gave quarter. is

seems floor. As you to had loan a have right, the book mentioned, repriced to

traditional the funding side, have might still case high on whatever You brokered the meaningfully costs be. side, CD

look NIM just settle out or maybe normalized of think trajectory you out kind to and to. XXXX funding -- seeing as and a that costs curious So could where you're XXXX we where how

Carl Carlson

answer soon not But, just try so them. basically, so yes, to I'll things of any you get and there, as you give questions guidance, and always as you well, excellent get -- at curveballs. Well, thrown

modest those But off. always come Loan very that -- on see is into funding we some continue CDs with forward side everything modest So pay being reprice Home to we things XXXX. those Bank do and continue going -- of that basically down and and But advances benefits Federal dynamic. as the to reductions said,

you we excluding that go basis the after go NIM that, to impact give to we five up points a guidance quarter actual alone. So little expect the do modestly PPP. XX I'd any that expect to And from to into NIM NIM given an next on higher XXXX,

So -- a have any I just -- I'm number that that that any acceleration will of revenue basically line cost sooner funding forgiveness that later. That's be or hitting recognizing additional than -- willing rather to provide. don't rather

Collyn Gilbert

Okay.

there Okay. I'll -- no, right. okay. All then. right. All it I leave just

Carl Carlson

it's very, Well, very just dynamic.

Collyn Gilbert

understand. No. I

Carl Carlson

It's very --

Collyn Gilbert

anything you. guess -- -- go But as And thinking, we I the there just that in going from out. would is basis I you guess right, look as of guys to No, that wouldn't -- maybe no, are through just like higher would I -- XX -- would of in I market well, a to into I'm or there cycle, your be missing strategic missing totally. get anything like -- costs there you, peers? no, you I sustain you cost structurally a to I for no, longer-duration mean you to, cause kind think play? say, that's anything funding there? getting impede that we're as point need come keep structures there that asking, initiatives than like to guess going I asking you're position the competitive think perhaps Is I'm And funds

Carl Carlson

on there. you're think right I

in of basis money CDs roll quarter. the coming other did last CDs going that do is into actually think are XX a points the that roll, that lot around I at But products.

reasonable the if very very, at number -- basis number -- in I don't not a point So future, so XX that point is some

Collyn Gilbert

okay. Yes,

Okay.

Carl Carlson

we not long don't structures, we any our in -- have do book. have -- quite any unusually If no will frankly, and have that we --

lot we the gotten that think probably in I time. Qs. provide It's at short actually this a detail quite of

Collyn Gilbert

Okay.

utilized Okay. the sort funding of know equipment fund Because the to finance have structure guys I historically, wholesale you book.

Paul Perrault

That's right. that that. that out ladder over several that really We that use been bringing quarters, down the last closely we duration. match But would and so would we've

Collyn Gilbert

Yes. Yes. Makes sense.

All right. Okay.

we Okay. you of trajectory, thinking additional us fourth the bit any qualitative you're And about or foreseeing maybe looks inputs my as for you're that more how buckets. slide, then and those that insight to And then give what as would collateral you're a quarter, deferral about risk? Could how the shifting guess just loss of too, at like into to the on some I question Bob, that if coming thinking reserves. be little look

a question that's trajectory. centering it's So reserve around multipart

Robert Rose

Well, we to the to the And we hate happy moment, And reserve in few we're with quickly, things trajectory, today. change, at the short-term facts for to is very we just Collyn, say reserve the opportunity evaluate shift had look given have a they -- time. of it that. level change But have I around way. it. rather at within way dollars we've the the a the very the and

the No, closed ordered business the increased have but can't portfolio. on that exercise not could levels the gets big reserve a we've by you it's same the city, payments make you a before. example, your portfolio, you when or way For the state

going a making are things quarter us going it's embedded to go not losses way each all areas the So to out the limb it that going at down. and The I'm change. and to that loss examined keep modifications out appropriate say screaming time in in say looking just we these by are up we're not the go of seeing area. that to go to are going it because or are going on I'm it's and

in Donuts; has had appropriately, exercise range By said; than high out we Macrolease one loss the one, food loan-to-values would it's us million, most the portfolio we family guarantees handful are equipment and example, those range is mean we we of not stated lodging. of a we But another so each couple I $XX -- fact the liquidate if the personal that of earlier, to. restaurants. that XX% the XX%, a that have at could rather other cross I have the out looked fitness are you Dunkin' it's that it's moment one bother for equipment the the would because really and now them have at could of that, that particular have and And XX% them rates. If in out of some where first guarantees, nothing at losses, what liquidating reserved portfolio. as me we used it this Despite screaming and produce

Paul Perrault

Can Collyn? on hit that, I

Collyn Gilbert

Yes. Go ahead, Paul.

Paul Perrault

our showed though modeling that, We we very of part with We better level stay modeling, I it's the the course. quarter for the was think comfortable to appropriate. thought that add characteristics even reserves. murky. are third to think would to future CECL the just is of that valor And the the previous we favorable

Collyn Gilbert

Okay.

some That's how buyback? lastly criteria buyback. And on to not attention the then that the you're of or helpful. the just would aggressive would you be -- What Okay. that would on paying are closely what determine most would

Carl Carlson

fire. The it. Sure about price. That's

We it. about this where would that's So -- want

Collyn Gilbert

would mean you I it's back right then buying would be I mad like assume, then, share driven? it would which price now if indicate

Carl Carlson

correct. That's

Collyn Gilbert

Okay.

your could back you would know guess, aggressive appetite, share you mean I of foresee sorry, trigger, -- to is and programs you capital. want Okay. And take your doing the -- just aggressive price be takes to I'd mean, obviously, where as go -- X% I If the I -- be, to to of should plenty which, your multiple I appetite I Or curious like have back? how repurchase do what But again, in capital. you've I should just you question this. don't as look. to have then it just got, back

Carl Carlson

or likely that in revisit would January. We December

Collyn Gilbert

finish current you authorization? this After

Carl Carlson

Correct.

Operator

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

Paul Perrault

to we and thank forward us to this Bye for you next again joining now. and look talking Brandon, Thanks, afternoon, all will you quarter.

Operator

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

may now disconnect. You