Brookline Bancorp(US:BRKL)2020-07-23 21:07Financial Data and Key Metrics Changes - The company reported earnings of $19.6 million or $0.25 per share, a significant recovery from a loss of $17.3 million in Q1 2020, driven by stable revenues and lower expenses [11][12] - Revenues were relatively flat, with net interest income increasing by $2.6 million, while fee income declined [12][15] - The provision for credit losses was $5.3 million, contributing to the solid earnings performance [14] Business Line Data and Key Metrics Changes - Loan growth was $585 million, primarily driven by the Paycheck Protection Program (PPP), with $566 million attributed to PPP loans [17][18] - Deposit growth was $550 million, largely due to the funding of PPP loans into customer accounts [19] - The company shifted liquidity from cash to securities to maintain a prudent position [17] Market Data and Key Metrics Changes - Debit card usage and interchange income initially dropped over 40% due to the pandemic but have since improved to nearly flat compared to the previous year [13] - The company provided 90-day loan payment relief on $1.2 billion, or 16% of total loans, with expectations that 70% will return to payment status [21] Company Strategy and Development Direction - The company is focused on assisting customers through the SBA loan forgiveness process and managing ongoing financial challenges for a small segment of clients [9][10] - Management emphasized the importance of maintaining a strong capital position, exceeding regulatory requirements with a capital buffer of 2.6% [27] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the recovery trends in Massachusetts, Rhode Island, and New York as they move into Phase 3 of reopening [7] - The company expects to see some pressure on margins due to continued re-pricing of assets, but liability side re-pricing may lead to slight margin improvement [35] Other Important Information - The board approved a quarterly dividend of $0.115 per share, reflecting a 4.5% increase over 2019 [28] - The company continues to build reserves for loan losses, with the allowance for loan losses growing to 175 basis points of loans, excluding PPP loans [17][55] Q&A Session Summary Question: Details on fitness credits in the macro lease portfolio - The fitness-related portion of the macro lease portfolio is approximately $160 million, primarily from Planet Fitness franchises and YMCAs [31] Question: Ability of deferral loans to return to full payments - Management expects the majority of deferral loans to return to full payments, although some sectors may face challenges [32][33] Question: Differences in business conditions between Rhode Island and Massachusetts - Both states are experiencing similar recovery trends with low infection rates [34] Question: Outlook on operating expenses and PPP fees - Operating expenses are expected to remain flat, with PPP fees recognized monthly as income [38][39] Question: Impact of PPP loans on deposit balances - There is a mix of customers using PPP funds for operations and those maintaining liquidity, making it difficult to predict overall trends [49][51] Question: Average yield on PPP loans - The average yield on the PPP loan book is around 2.35% to 2.40%, including amortization costs [71]