Brookline Bancorp (BRKL) Q3 Earnings call transcript Oct 24, 2024

In the latest earnings call by Brookline Bancorp, the company reported a net income of $20.1 million and earnings per share of $0.23 for the third quarter of 2024. The call, hosted by Paul Perrault and Carl Carlson, provided valuable insights into the company's financial performance and future outlook.

Financial Highlights

The third quarter saw a modest growth in loans by $34 million and customer deposits by $103 million. The net interest margin increased by 7 basis points, suggesting a gradual return to normal market rates. The company's total assets grew by $42 million, driven mainly by loan growth in commercial and industrial (C&I) and consumer sectors. The equipment finance and commercial real estate (CRE) portfolios declined, indicating a strategic shift in lending focus.

Economic Outlook

The call highlighted the impact of the Federal Reserve's interest rate cuts on the company's performance. As rates normalize, Brookline Bancorp expects its net interest margin to continue improving, with a potential increase of 5 to 10 basis points in Q4 and beyond. The company anticipates a 4% to 5% growth in deposits and a stable cash and securities portfolio.

Credit and Risk Management

Nonperforming loans increased by $10.5 million, primarily due to one large loan to a grocery store chain. The company has set up a sizable specific reserve for this loan. The provision for credit losses decreased by $900,000, reflecting improved credit quality.

Regulatory and Compliance

The call addressed the ongoing impact of regulatory changes on the banking industry. Brookline Bancorp is working to maintain its quarterly dividend at $0.135 per share, signaling confidence in the company's financial health.

Investor Questions and Analyst Insights

During the Q&A session, analysts probed into the company's loan pipelines, credit reserves, and future growth strategies. Carl Carlson, the CFO, provided detailed insights into the loan portfolio, including the specialty vehicle runoff and the impact of rate changes on deposit funding. Mark Fitzgibbon of Piper Sandler questioned the timing and resolution of a large nonperforming loan, and Laura Havener Hunsicker of Seaport discussed the implications of credit reserves and office nonperformers.

Future Prospects

The call concluded with a forward-looking perspective, highlighting the company's strategic focus on selective lending and credit management. The management team expressed optimism about the improving economic environment and the potential for increased M&A activity.

Key Takeaways

Brookline Bancorp's Q3 2024 earnings call underscored the company's resilience in the face of economic uncertainties. The management team's confidence in the company's financial health and growth prospects is a positive sign for investors. The strategic focus on loan growth, credit management, and regulatory compliance positions Brookline Bancorp well for the future. As the company navigates the evolving regulatory landscape and interest rate environment, its ability to adapt and innovate will be key to maintaining its competitive edge.