Brookline Bancorp(US:BRKL)2023-07-27 20:58Financial Data and Key Metrics Changes - The company reported net income for the quarter of $21.9 million or $0.25 per share, with non-GAAP operating earnings of $23.2 million and operating EPS of $0.26 [4] - Total assets finished at $11.2 billion, which is $316 million lower than Q1, with cash and securities reduced by $419 million [57] - Net interest income was $86 million, consistent with the first quarter, while the net interest margin declined 10 basis points to 3.26% [73] Business Line Data and Key Metrics Changes - The loan portfolio grew by $94 million, with core deposits increasing by $110 million [21] - Non-interest income was $5.5 million for the quarter, down from $5.7 million when excluding security gains [6] - The provision for credit losses was $5.8 million, with the allowance for loan losses increasing to $125.8 million, representing 135 basis points on total loans [23][44] Market Data and Key Metrics Changes - Core deposits grew by $110 million, while brokered deposits were reduced by $49 million, resulting in net growth in deposits of $61 million [73] - The average cost of total deposits increased by 58 basis points to 204 basis points [73] - The weighted average coupon on the core loan portfolio rose by 20 basis points during the quarter to 568 basis points [45] Company Strategy and Development Direction - The company continues to prioritize paying a competitive dividend and funding organic growth, with no plans for share repurchase at this time [19] - There is optimism regarding loan growth, particularly in commercial real estate and equipment finance, despite declines in C&I and consumer loans [22][49] - The company is focused on maintaining a balance sheet liquidity of 8% to 12% in a normal operating environment [31][82] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued pressure on the funding side, but expects this to be offset by the repricing of assets [8] - There is significant uncertainty around the economic outlook and competition for deposits, which may affect net interest margin [8][26] - Management expressed confidence in the integration of the PCSB merger and the potential for future growth as new technologies are adopted [48][80] Other Important Information - Expenses for the quarter were $57.8 million, down from $64.8 million in Q1, with a notable decrease in compensation and benefits [58] - The company has seen a shift in deposit types, with transfers from DDA and NOW accounts into savings and CDs [39] Q&A Session Summary Question: What are the expectations for the net interest margin in the third quarter? - Management expects the margin to be down as much as 3 to 4 basis points or possibly flat, with significant uncertainty around the economic outlook and competition for deposits [8][26] Question: Can you provide details on the $9.3 million commercial relationship that went on non-accrual? - Management indicated that the loan is well reserved and is in the process of liquidation, with expectations for resolution over the balance of the year [76] Question: How is the company planning to manage expenses going forward? - Management noted that they are keeping a close eye on expenses, with expectations for moderation in legal and professional fees [12][64] Question: What is the outlook for participation income in the second half of the year? - Management expressed less optimism for participation income due to market conditions affecting banks' ability to participate [18][69]