Brookline Bancorp, Inc. (BRKL) Q2 2024 Earnings Call Transcript

In the latest earnings call, Brookline Bancorp Inc. reported a solid second quarter with a focus on strategic initiatives aimed at enhancing their financial performance. Here are the key takeaways from the call.

Financial Performance

Brookline Bancorp reported a net income of $16.4 million for the quarter, with a net interest margin that appears to be stabilizing after a slight decline in the previous quarter. The company also made the decision to exit its specialty vehicle finance business, which primarily dealt with tow trucks, due to increasing competition and rising costs, particularly collection costs. This move is expected to result in a reduction of operating expenses and a slight headwind to the overall growth in the equipment finance portfolio.

Strategic Initiatives

Paul Perrault, CEO of Brookline Bancorp, highlighted the company's loan and deposit growth across all three banks, despite a slight decline in net interest margin. He also announced the closure of an office in Melville, Long Island, and a reduction of staff of 21, indicating a strategic move to streamline operations and focus on more profitable areas. The company is also focusing on growing its loan portfolio, particularly in the C&I sector, and anticipates loan growth of 2% to 5% across all segments.

Credit Quality

During the call, Carl Carlson, CFO of Brookline Bancorp, provided insights into the company's credit quality, which has been impacted by a few large loan restructurings and charge-offs, particularly in the C&I sector. However, Perrault remains optimistic about the company's ability to navigate these challenges and return to normal levels of asset quality.

Outlook

Looking ahead, Brookline Bancorp expects to maintain its quarterly dividend at $0.135 per share and continues to manage operating expenses below $240 million for the full year. The company is also projecting a slight decline in margins in Q3, but expects them to improve in the future, despite the challenges posed by the current economic environment and the impact of the Fed's rate decisions.

Investor Questions

During the Q&A session, investors raised questions about the company's strategic priorities, including its approach to M&A and the impact of the Durban acquisition. Perrault expressed optimism about the potential for M&A activity in the future, but acknowledged the challenges in the current environment. He also addressed concerns about the company's high-cost broker deposits and the potential for reducing these liabilities in the future.

Conclusion

Overall, Brookline Bancorp's Q2 earnings call highlighted the company's resilience in the face of challenges, particularly in the credit area. The strategic initiatives outlined by the company, including the exit from the specialty vehicle finance business and the focus on growing the loan portfolio, suggest a proactive approach to managing the company's financial performance. However, the impact of the current economic environment and the Fed's rate decisions will continue to shape the company's outlook moving forward.