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BRKL Brookline Bancorp

Participants
Marissa Martin Investor Relations
Paul Perrault President and Chief Executive Officer
Carl Carlson Chief Financial Officer
Robert Rose Chief Credit Officer
Mark Fitzgibbon Piper Sandler
Laurie Hunsicker Compass Point
William Wallace Raymond James
Call transcript
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Operator

Good day and welcome to the Brookline Bancorp Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Marissa Martin. Please go ahead.

Marissa Martin

Thank you, Tom 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, Brookline This Bancorp’s afternoon’s be call hosted executive Paul A. will team, by Perrault and M. Carl Carlson.

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

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

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

Paul Perrault

everyone. good Thanks, afternoon, Marissa and

activity. New the themselves infections in trends new seeing approached York hospitalization we we As holiday and and dampened and autumn recommendations as Rhode we season the positive reversed Island economic mandates Massachusetts, and winter in spike higher turned saw were

of is top to Providence. safety the stimulus promise vaccine the their and and families the employees at continues predominant of end home in priority. year. Work The about our of We the of be health are cities Boston our potential optimistic the and the of fiscal theme the very from provided the impact and

With the year challenging non-branch efforts to we reversed like many recognize I into in quality benefits past had a week also employees net earnings becomes of the reopening the infections, work once decline and million, infections We our paused and twice interest improved. their or respects, credit office see solid hard $X.XX and a as commitment. more This in vaccination share spike was quarter and would per evident. of come remained for widespread sustained our we a rate the $XX.X our and encouraging to stable or margin in employees of our of until

work to loan We may our of continue to relating the with deferrals the and to to additional still a small financial challenges customers payment get shutdowns segment other side. are who facing require

a new will now will approved million Carl? providing to turn which flexibility with in fourth paid $XX management presents to also when opportunity prudently the in Carl, XXXX. you stockholders, the results. stock February buyback of to dividend on stock approved balances $X.X year, As were short-term to had I last that to granted very the I only X,XXX we noted deferrals totaling report loan another credits pleased I billion. pleased also modifications. million am with of say there the $XX $X.XXX over be I the and quarter company’s loan XXX who of itself will program, the repurchase am Board as review quarter, end

Carl Carlson

were were from increased derivatives and interest higher comparative Slide lower Gains lower only by income income lower $XX.X Operating $X.X costs losses. provided behind QX, afternoon slightly non-interest and for we by year. due income X, improved and statements. compensation-related QX Thank pre-provision due million to It compared deposit ahead summary expenses, fee $X.X income slightly offset by $XX.X to from was of lower $X.X net have were and the you, million a credit driven principally provision $XX.X everyone. On Paul in costs. income, negative good in year. million, net Net QX. last $XXX,XXX million, Revenues million million was to fees, lower of income. interest Pre-tax income participation last

XX illustrated As prepayment were higher well net increased on PPP activity. as $X.X basis X, fee Page accelerated an on and funding declined loans, processing interest as cost million forgiven fees income as recognized on loan the basis The quarter yield X points of funding basis assets the cost in increase improved earning XX interest net the basis in a prior point points from on interest resulting margin. and declined

sheets. Allowance down If $XX $XXX billion $XXX balance losses In can year-over-year basis comparative million reflects QX. reference million to the you loan Slide of and points the Slide excluding XXX and the slightly our loan our me loans grew of represents you categories. $XXX had quarter million million. activity deposit quarter, Loans deposits composition significant for from PPP. X declined and and and linked X, fourth summary company $X.X follow to assets, in declined

the mentioned, forgiveness I loans. the quarter, portfolio by the loan million As PPP $XXX declined driven of in

the DDA, Excluding growth Market million, PPP and million. quarter $XX NOW core in declined loan driven Money loan payment deferment by activity. On Slide status products. $XXX our providing activity, we was the portfolio are of X, Deposit the the growth in

equipment predominantly total mentioned, have $XX Modifications the loan December Paul to loan of totaling million sector. outstanding. Slide signs there of Act, as under a representing X.X% CARES handful if the real continue XX, accruing balances and finance a downgrades information remain X, in are estate of deterioration. As with loan modification All is loans credits were of XXX by commercial provided On modification portfolios.

shutdowns industry exercise impact. the have meaningful monitor and limitations closely to as could a government continue We

quarter. points operating basis XX of exceeding regulatory $XX had as year, At our regulatory $XXX Slide the capitalized, internal capitalized earlier or continued we Slide program XX. February targets. own policies during per regulatory to on paid end X.X% common shareholders representing to approved be in company be increase $X.XXX XXXX. our out of which continues dividends Paul XXXX, share standards. XX requirements, a well $X.XX The of As paid of million and all will over dividend as regular stock capital shown a mentioned In X.X% the million quarterly the history the of well XX, capital. share, well total, over The of payout, buffer on XX per provides repurchase record on Board dividend February we this represents which

and currently a concludes X.X% approximates payout Our Paul. yield. comments, my formal This back turn to it I’ll

Paul Perrault

Carl. Thanks,

we question-and-answer Robert will session our us Joining is for open up Chief now for Officer. it Credit the And questions. Rose,

Operator

Our Instructions] comes with Piper first Mark Fitzgibbon question Please [Operator ahead. from go Sandler.

Mark Fitzgibbon

guys. afternoon. Hey, Good

Carl Carlson

Mark. Hi,

Paul Perrault

Mark. Hi,

Mark Fitzgibbon

come million you of help of also, maturity of of those the of think interest? schedule could us loans of paying off? of wondering And deferrals was are have about you the sort when that or modified, all $XX kind I those the and they most

Robert Rose

Virtually at are kinds been have all that these there are certain of largely to Mark. there, what’s windows granted paying a but soon. of rewrite, are and principal this payment interest XX-day deferments, where point, we at been deferred like offered have Hi, a those The deferrals returning which payments. more credits, our are time, different have we short-term

Mark Fitzgibbon

might And on But great. anticipate know that there of like? the core noise think you to help stuff some in the trend XXXX the us And expense forgiveness. margin core will I front? you also, the could I then you any Okay, is if look related what course wonder have margin, unusual about PPP the if Carl, items

Carl Carlson

Mark. Yes. Certainly,

standpoint, a – core core we still continue the basis re-pricing liabilities from the expect improve simply lower. to we On do on to margin margin because a have

first flat the this before quarter So, I of be quarter’s benefits margin to for probably do expect with margin PPP forgiveness. the core the

what expenses PPP expect So, I robust say pretty expense to we nothing in are as to in XXXX. to something – that strategies that’s take our we and as from. being expenses would major no very in do the is first are in quarters we careful on forgiveness that Outside particular continue side, far two invest to And there. is the away we there of and the of sense save programs go, in be

Paul Perrault

the what, to been. legacy Mark, beneficial in loan-to-deposit you and the the continues know purposes, with ago, helping lowest long and very a ever our lowest that has have ratio that’s that time, pattern improve for borrowings this Year are wholesale they been margin. have just by is that been been our You far memory us

of faced earlier all the of our are all at reasons, for to we that position we year out getting now wrong helpful was get prices beginning and this effort. the So, last rate reduction the fruit the over

Mark Fitzgibbon

network the am on of degree in physical the you banking. a And to as Paul locations? of people moving vein, pandemic in branch the I to guess, your that rethinking some wake your same to I curious Are greater and online thoughts

Paul Perrault

Not much do. I more than usually

locations good think me be branch to many to heard time, become time say have I pruned systems less that You from need good. times

per But want company in branch se. are be not a You to we places. different heavy

metro are of some of be lot there about in those Boston, that than density market, a of Boston branches opening closing in might more thinking between is changed. this We the branch and Providence metro But areas. inner the circle

it over XXX up moving up all they’re Chase almost like is branches. putting then that, on think And seems I fast P&C, the opening place.

digital dealing sure And electronic follower and ways fast with and commercial. so, we making other are are both we of in a us, that consumer

year. most very good of opening and pretty that, in good but we numbers those are use branches and all are we tools, that think of of at last a the had north accounts pointing I the also record

is I rocks to at up to lot to pandemic advantage throw something heard are cleaning say we using systems of wanted others, the saying if need everything taking of I that’s been So, branch people that a not think do I’ve and aggressively. electronic, going their

Mark Fitzgibbon

you. Thank

Operator

Christopher question Please next go Davidson. The with comes ahead. [indiscernible] from D.A.

Unidentified Analyst

you? How gentlemen. afternoon, are Good

Paul Perrault

Good, Christopher. Thanks.

Unidentified Analyst

of out particular coming days move there Act is something that? past period So is an plus I to end a or to and due, CARES XX the is factor in start with there deferrals that of in just a kind wanted transition driving the

Robert Rose

loans are process to to got No, with They organizing renewal ourselves. their with but are the the particular. in it’s taken than has little longer nothing collateral and of getting a CARES in there renewed just usual, and has just actually nothing three Act. do do being that is It

Unidentified Analyst

Okay.

all level completed? being from see those loans as we else decline equal, So presumably get that then would a renewals

Robert Rose

That some is category loan maturity and new that that. a officer down bounces that up case, delays bounce it. when in a past That the along, And has correct, sometimes the a comes that’s Chris. see and around some with you renewing unless usually loan runs is like bit, one

Unidentified Analyst

translate back get growth? to expect we when and and sense. kind we When just growth move at Thank I of kind you. standpoint. a look guess, to makes you like picture do That Okay. expect news loan stepping when back big into vaccines should pre-pandemic more to Then, that strong of from that it to you recently, had of the loan the do growth and levels stimulus

Paul Perrault

a immaterial even Christopher, is afraid hard PPP try for lots take a lot. of of lots to activity. not seen that going uneven a terrible. have Originations guess I’m to me on. that is seen one not to bit little stuff We’ve moves been prepayment that around but We’ve so us, too at.

good are has but got I pipelines, continue the it be the inning. But economic get to make I pretty positive this still first is we’ve that balance activity loans done. can Generally hard only curtailed. we on think sheet optimistic in year. things certainly some progress to

So, stuff best. more are okay, how don’t all are is, Things that but at know I the activity speculative is quickly okay. how things helpful into translates but

Unidentified Analyst

see curious it. just do it. And CD am run I Got down further the looking in deposit to then, got Okay, you the expect at book? composition,

Carl Carlson

to now, side, a are between basis to XXX in aren’t On XX offerings do money of points. even at in time. for about and their CD CDs $XXX mature decline. XX We’ve And CDs got million excited basis and right expect basis people points our about QX continue locking in specials out there really the too the I period points that

they are a the to something a but most Money move, to more part part, the for general choosing Market it’s liquid. either for most or statement, So, account

economy the the seemed we to and very to have substantial to might government it, the help to economy see more deposit federal CDs continue sticky, – expect do but – need decline, deposits or I decides that the and deposit growth. those growth continue out stimulate So,

Unidentified Analyst

questions. Got it. That’s my great. for Well, taking thanks

Paul Perrault

Christopher. Okay,

Operator

question next Laurie from Please go with ahead. Hunsicker The Point. Compass comes

Laurie Hunsicker

Yes, hi. Thanks. Good afternoon.

Paul Perrault

Laurie. Hi,

Carl Carlson

Laurie. Hi,

Laurie Hunsicker

quarter dollars [indiscernible] in and the income comments I margin, net Carl? interest could back and on this I this it, into and if was but if that to margin we your have missed you PPP rolled impact apologize those, do of go the income

Carl Carlson

Sure.

two So, certainly, pieces, quarter. big this

forgiveness. PPP A is that this So, quarter. fees deferred total in $X.X fees in was interest income $X.X net and this total in deferred of million were million

And total, $X.X deferred prior million were quarter. so, in from fees the up about

you that and all about of then And So the the impact almost it in in the prepayment on forgiveness QX. total than of more that, side, so, that piece. fees is prepayment were PPP was million just give sense $X.X of $XXX,XXX

meaningful those down. and So, had both deposit by this driven quarter and impact together of on margin really funding a then borrowings balance the coming the

Laurie Hunsicker

it. Got

And then you PPP Okay. number margin to a have the forgiveness? do happen calculated on

Carl Carlson

say, I That to basis want it was $X.X points. million. about was X

Laurie Hunsicker

That’s your of helpful. million so $XXX are what’s the PPP the loans Thanks. remaining, fees around And what – or of unamortized are Okay. that? that

Carl Carlson

last have I have think fingertips. the number. the still quarter my what, know And didn’t this and number You I asked don���t you me I at

Laurie Hunsicker

I’ll what, know You offline. you I’m sorry. follow-up with

Carl Carlson

Yes.

Laurie Hunsicker

been talked year Paul, lot then, the last There your has is M&A, about here? a for is a up. lot obviously Thanks. question, you, How think XX back in there to question months, stock you currency are here about you’ve Great. past mean, Okay. a in a obviously, bigger I happening your the thinking in about market. but And M&A

Paul Perrault

though the Well, stock would But be not term, our that’s to has same to back expectations. somewhat, we come strong about of But do of some a even We particularly the feel way. things as it’s ground. so eye these looking relative easy, open make I the keep to given something. back out

They think the environment would I higher. doable. a if just and are easier difficult deals price bit in little were this somewhat be stock it are more

changed my So, I I really think. don’t haven’t opinion.

Laurie Hunsicker

I’ll Thanks. it leave there. great. Okay,

Paul Perrault

Yes.

Operator

comes with Raymond Wallace from Please question William James. [Operator next ahead. Instructions] go Our

William Wallace

afternoon. Good Thanks.

Paul Perrault

Hi, Wally.

Carl Carlson

Hi, Wally.

William Wallace

and about – that what this if seeing you growth pipelines they so or it I hard conversation in about caught and that if building, have answer. pipeline I I question some apologize already, But building had my you back-in. I’m you can live answered have had been – Hi. said asked was if call talk in know was curious the this been how dropped, loan transcript dial to activity? I are to the

Paul Perrault

The rebuilding. pipelines been have slowly

the of exceptionally ready the means, year to also prepayments. But banking slow here by of that the pandemic, got down year, their down us early year, the You QX whole part all in early kind robust was are bankers has by the and lot picture about looked more point, at sort remember not doing the getting of most is any commercial which things the slowed that. I’m companies has at besides you been What themselves of getting and that clouded stuff. this PPP, okay production for particularly outlook. usually the were And last the in of busy taxes when gets a reorganized, middle part the feeling

called. in approximately at So, I the I for I’d say, already working it’s here least moment we it’s believe again, we’re on, X,XXX loans PPP go X, been heard

probably here, if So, I try Wally, it’s I along think growth year – somewhere could the you but dodge model I’m not with agree you, to – modest trying that. to

William Wallace

PPP new the Including Okay. loans?

Paul Perrault

when saying net sheet, because same am loans characteristics and differences if bucket my with different And might consistently year, sort the I okay those PPP out – the of they that. in they long will wrapped And, be used? out, net everything and prepay? of balance how might How to watching head How have show have I everything than everything likely are be they our I growth might you would around? when don’t be. X So, guess, through saw X. kind you I’m I might be be saying, you modest will characteristics those X around that have PPP Yes.

William Wallace

enough. Okay, alright. Fair

Paul Perrault

PPP it’s going X X to PPP The and X. replace

William Wallace

Yes. Yes.

X applications as on and of Part kind is X So Part far so those cadence might amount dollar the on the watched you up in, what of PPP? with end come might of applications you you the the what think

Paul Perrault

The the almost last did last in tell, at more moving is they more one. Wally, impossible people are part, paced than because – way a to

million. just was I think, $XXX I it’s about told,

Carl Carlson

We process now. have $XXX in million right

Paul Perrault

pipeline, kind more ran time, their and recognize scramble are from they and there’s time last whereas lot to know capacity because at plan more this and a taking the talking capacity that of bucket a was we dry. that in In but it about the got it they federal time before left do they customers time the level the capability

William Wallace

Yes.

the thanks as Okay. helping right Alright, great. tricky I clarify Well, same for it’s know pretty now.

So, we’ll Thank you. see how things out. play

Paul Perrault

We are precise, doing our best but to be it’s tough.

William Wallace

Understood.

Operator

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

Paul Perrault

Tom day. next all a again talking you, thank look Thank Okay. and Have for will and to you good us quarter. you joining with forward we

Operator

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

You disconnect. may now