Brookline Bancorp(US:BRKL)2022-07-30 12:19Financial Data and Key Metrics Changes - The company reported net income of $25.2 million or $0.33 per share for Q2 2022, an increase of $0.5 million from Q1 [5][8] - Revenues increased by $3.5 million or 5% compared to the previous quarter, driven by growth in interest-earning assets and an increase in the core margin [8][9] - The net interest margin for Q2 was 3.56%, up seven basis points from Q1 [6] Business Line Data and Key Metrics Changes - Total loans increased by $69 million, with core loan growth of $82 million, while PPP loans declined by $13 million [10] - The company originated $527 million in loans at a weighted average coupon of 498 basis points, up 99 basis points from the prior quarter [11] - Prepayment fees decreased to $1 million in Q2, down $490,000 from Q1 [11] Market Data and Key Metrics Changes - Deposits declined by $200 million due to tax payments, large real estate purchases, and transfers to personal investment accounts [12] - The company noted significant increases in short-term interest rates, with the Federal Reserve raising the Fed funds rate by 125 basis points in May and June [12][13] - The company expects a 3.1% increase in net interest income over the next 12 months, assuming a flat balance sheet [13] Company Strategy and Development Direction - The company is focused on closing the transaction with PCSB Bank in Q4 2022, which is expected to enhance its market position [6][14] - Management emphasized the importance of commercial banking and the need to attract and retain talent in a competitive environment [20][21] - The company is monitoring its office portfolio closely, which is over $0.5 billion, but remains confident in its diversity and coverage ratios [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan originations continuing to be strong, despite challenges from competitors acquiring their customers [27][28] - The company is experiencing a seasonal reduction in deposits but expects underlying activity to remain strong [33] - Management indicated that they are on track for the PCSB merger and are comfortable with the current interest rate marks [40][41] Other Important Information - The company repurchased over 956,000 shares during the quarter before pausing the program [14] - A quarterly dividend of $0.13 per share was approved, representing a 40% payout and a 3.7% yield [14] Q&A Session Summary Question: What are the deposit pricing trends and expectations for the second half of the year? - Management noted limited activity in deposit pricing, with expectations for betas to accelerate in Q3 [16][17] Question: What is the outlook for expense growth? - Management anticipates expenses to rise by approximately $500,000 in the next quarter due to competition for talent and merit increases [20] Question: What is the status of the PCSB merger? - Management confirmed that everything is on target for a Q4 close, with no changes to the timeline [37][40] Question: How is the company managing its office portfolio? - Management stated that the office portfolio is diverse and strong, with loan-to-value ratios generally at 50% or less [46][48]