NASDAQ:BRKL Brookline Bancorp Q1 2025 Earnings Report $10.68 +0.21 (+1.96%) As of 11:20 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast Brookline Bancorp EPS ResultsActual EPS$0.22Consensus EPS $0.23Beat/MissMissed by -$0.01One Year Ago EPSN/ABrookline Bancorp Revenue ResultsActual Revenue$91.49 millionExpected Revenue$91.38 millionBeat/MissBeat by +$114.00 thousandYoY Revenue GrowthN/ABrookline Bancorp Announcement DetailsQuarterQ1 2025Date4/23/2025TimeAfter Market ClosesConference Call DateThursday, April 24, 2025Conference Call Time1:30PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Brookline Bancorp Q1 2025 Earnings Call TranscriptProvided by QuartrApril 24, 2025 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good afternoon, and welcome to Brookline Bancorp, Inc. First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there'll be an opportunity to ask questions. Please note this event is being recorded. Operator00:00:15I'd now like to turn the conference over to Brookline Bancorp's attorney, Dario Hernandez. Please go ahead. Speaker 100:00:22Thank you, Lydia, and good afternoon, everybody. Yesterday, we issued our earnings release and presentation, which is available on the Investors Relations page on our website, brooklynbancorp.com, and has been filed with the SEC. This afternoon's call will be hosted by Paul A. Perl and Karl Carlson. This call may contain forward looking statements with respect to the financial condition, results of operations and business of Brookline Bancorp. Speaker 100:00:51Please refer to Page two of our earnings presentation for our forward looking statement disclaimer. Also, refer to our other filings with the Securities and Exchange Commission, which contain risk factors that could cause actual results to differ materially from these forward looking statements. Any references made during this presentation to non GAAP measures are only made to assist you in understanding Brookline Bancorp's results and performance trends and should not be relied on as financial measures of actual results or future predictions. For a comparison and reconciliation to GAAP earnings, please see our earnings release. I am pleased to introduce Brookline Bancorp's Chairman and CEO, Paul Perl. Speaker 200:01:31Thanks, Theriault, and good afternoon, everyone. Thank you for joining us for today's earnings call. We had solid core operating results for the first quarter with operating earnings of $20,000,000 or $0.22 per share. On a GAAP basis, which includes merger charges of $971,000 net income was $19,100,000 resulting in earnings per share of $0.21 The contraction in our loan portfolio of $136,600,000 is intentional as we reduce commercial real estate exposures while maintaining our focus on important customer relationships. We also experienced some planned runoff in our specialty vehicle portfolio following our exit from that business last year while we continue to increase our participation in the general C and I markets. Speaker 200:02:24Customer deposits increased $113,800,000 and our margin increased 10 basis points during the quarter. In January, we expected market rates to gradually return to normal. However, as you all know the opposite has occurred as uncertainty has become the theme of the day and markets have become even more volatile. Even with that, we expect to see our net interest margin continue to improve throughout 2025. In December, we announced the planned merger with Berkshire Hills Bancorp and I'm delighted to tell you it is moving along very nicely. Speaker 200:03:02I will now turn you over to Karl who will review the company's first quarter. Karl? Speaker 300:03:07Thank you, Paul. At the end of the quarter total assets stood at $11,500,000,000 reflecting a decrease of $385,500,000 from the end of the year. This reduction was due to a deliberate decrease in both cash equivalents and components of our loan portfolio. Specifically, loans declined by 136,600,000 with commercial real estate and equipment finance dropping by $135,000,000 and $32,000,000 respectively, while commercial loans saw growth. Owner occupied commercial real estate fell by $10,000,000 and the investment commercial real estate portfolio decreased by $125,000,000 bringing the percentage of investment commercial real estate to total risk based capital to 375% at year end at quarter end. Speaker 300:03:54The decline in equipment finance was primarily driven by the continued runoff of the specialty vehicle portfolio, which decreased by $29,000,000 during the quarter to $267,000,000 On the funding side, customer deposits increased by $113,000,000 while broker deposits and borrowings were reduced by $468,000,000 Stockholders' equity rose by $18,000,000 due to the retained earnings and lower mark to market on the available for sale portfolio, with tangible book value per share rising $0.22 to $11.3 from December 31. The net interest margin improved 10 basis points to 3.22 driven by lower funding costs. However, this was partially offset by a decline of $50,000,000 in average interest earning assets. Consequently, net interest income reached $85,800,000 an increase of $800,000 from the previous quarter. Lower derivative activity resulted in lower fee income for the quarter bringing total revenues for the quarter to $91,500,000 consistent with Q4. Speaker 300:05:02Provision for credit losses was $6,000,000.2000000 dollars higher than Q4. We had six point we had $7,600,000 in net charge offs, 5,200,000.0 were previously reserved for. The reserve coverage slightly increased to 129 basis points of total loans. The weightings of the Moody's economic scenarios remained at 40% baseline, 35% moderate recession and 25% stronger near term growth, which are consistent with the weightings at year end. We have evaluated the post quarter end increase in economic uncertainty and will continue to monitor how this uncertainty is captured by future scenarios and adjust as necessary. Speaker 300:05:45Non interest expense, excluding merger charges, was $59,000,000 for Q1, a decrease of $1,300,000 from Q4 due to lower compensation and marketing costs. Merger expenses for the quarter were $971,000 and are largely non tax deductible, contributing to a higher effective tax rate. Excluding merger charges, operating EPS was zero two two dollars per share. Yesterday, the Board approved maintaining our quarterly dividend at $0.01 $35 per share to be paid on May 23 to stockholders of record on May 9. Looking forward, the interest rate environment, the potential impact of tariffs and how our customers respond remains uncertain and the need to continually adapt is greater than ever. Speaker 300:06:33While modest improvements to net interest margin are increasingly uncertain, we are currently estimating an increase of four to eight basis points in Q2. This is dependent upon market conditions, deposit flows and the direction, timing and magnitude of future actions by the Federal Reserve. We continue to anticipate growth in the loan portfolio to be in the low single digits for the balance of 2025 as growth in commercial and consumer loans will be tempered by the runoff of specialty vehicle and lower commercial real estate activity. On the deposit side, we anticipate growth of 4% to 5% with growth generally favoring interest bearing accounts. Noninterest income is projected to be in the range of $5,500,000 to $6,500,000 per quarter, although components may vary significantly. Speaker 300:07:19We are managing expenses to $247,000,000 or less for the full year, excluding merger related costs. Our effective tax rate is expected to be in the range of 24.25%, excluding the impact of nondeductible merger charges. Regarding the merger of equals with Berkshire Hills Bancorp, we have added slide 11 into our earnings presentation providing an update. Regulatory applications have been filed and we will respond to comments or follow-up questions from the regulators On April 8, the S-four and proxy went effective with the SEC and mailing commenced to stockholders of both entities. Speaker 300:07:57The stockholder meetings for both Brookline and Berkshire are scheduled for May 21. We anticipate closing the transaction in the second half of twenty twenty five, which will include the merger of all four bank charters. While we are encouraged by the recent regulatory approval process experienced by other institutions, we will make no predictions or observations with respect to our own applications. At the time of the transaction announcement, we had not decided on a core banking platform. I'm pleased to say the diligence was completed and the core banking platform and related technologies have been determined with conversion planning well underway. Speaker 300:08:35System conversions are scheduled for February. As you can appreciate, we are unable to comment further on the transaction beyond what has been publicly disclosed. This concludes my formal comments. I will turn it back to Paul. Speaker 200:08:49Thanks, Karl. And Lydia, we will now open it up for questions. Operator00:08:54Thank Our first question today comes from Mark Fitzgibbon with Piper Sandler. Please go ahead. Your line is open. Speaker 400:09:17Hey guys, good afternoon. Speaker 200:09:18Hi Mark. Speaker 300:09:19Hi Mark. Speaker 400:09:21I was just curious and this may be a question for you Carl. Trying to get a sense for the impact of a 25 basis point Fed rate cut. What do you think that means for the margin on a standalone basis pre Berkshire Hills? Speaker 300:09:40Well, I think it all depends on what happens with the rest of the yield curve naturally. So if you get that slightly steepening of the yield curve, just cut at the short end, that would certainly be beneficial to us. But, again, it's it's highly dependable on what what what the market is is like and and what is going on with the market and why that cut is is happening. But generally, you know, just from a modeling perspective and and a cut in short term rates and longer term or mid term rates staying where they are that's beneficial. Speaker 400:10:14Okay. For your guidance though of 48 basis points up that doesn't assume any Fed rate cuts, correct? Speaker 300:10:21That does not reflect Fed rate cuts in the second quarter. Speaker 400:10:27Okay. Secondly, wondered if you could give us any color on that $7,100,000 commercial charge off you had. What was the story with that loan? Was that the transportation one that you've talked about in the past? Speaker 300:10:40No. That was a large C and I credit that we it was about $13,000,000 credit, dollars 13,000,000 and change that we had a specific reserve for that was around 5,000,000 already on on the books. So there was a little extra provisioning that requiring to cover that that full charge off. We actually it was a sale of a note. Speaker 400:11:03Okay. And then lastly, I just wondered maybe at a high level if you could share with us your thoughts on sort of the tariff implications on things like your equipment finance book and maybe your manufacturing loan book, which I think was around $250,000,000 Are you seeing any impact? Are you hearing from customers that it's become a significant problem, the tariffs or not so much? Speaker 200:11:28Credit administration is all over that like a wet blanket and they're hearing that people are not doing very much, but are very uneasy about it. And when we look at new credits that has become part of the underwriting process to see how that might have affected things. And so it is having a dampening effect on everything as we go forward, but there's nothing tangible yet. Okay. Thank you. Speaker 200:12:05Okay, Mark. Operator00:12:08Our next question comes from Steve Moss with Raymond James. Please go ahead. Speaker 500:12:14Good afternoon. Speaker 200:12:16Hi, Steve. Speaker 500:12:18Hey, Paul. Just maybe on loan pricing here, just kind of curious you know, what you guys are seeing for loan pricing that these these days and, you know, as you are also, you know, adding more C and I customers, what's what's the sentiment with, those borrowers and and your thoughts around pull through here? Speaker 200:12:40My thoughts around what? Speaker 500:12:44Pull through of new C and I loans. Speaker 300:12:48Pull through, I think. Speaker 600:12:50Is it do you think Speaker 500:12:51it's going extend out towards the latter part of the year? Or are you reasonably optimistic near term, me put it that way? Speaker 200:12:56I'm reasonably optimistic, but we're obviously going to be very careful like walking through glue or something. But the pipelines are okay and the quality of the stuff that's in the pipeline, I've been very impressed with. And the pricing has generally been pretty good. It feels like the dominant very large banks in our markets are pretty tepid about things right now. So we're not being pushed around too much. Speaker 200:13:27The smaller banks have tended to be a lot more aggressive, but our full service paying close attention nature, I think has made us attractive for companies that feel a little bit abused in this time. So we're going to go carefully, but I'm still optimistic with the numbers that Carl's told you about for the balance of the year. Speaker 300:13:49Just to give you a little bit more get a little bit more specific on pricing, I think it might be helpful. So we booked about $411,000,000 of originations in the quarter and the weighted average coupon on that book was seven eighteen basis points. And the weighted average coupon of our overall book is about five ninety one basis points. So it gives you a sense of how that's continuing. Every quarter that goes by, we're still getting a benefit on that. Speaker 300:14:18Unless the Fed cuts and then we think it's priced out, but that's what I Speaker 600:14:22had. Speaker 200:14:25Right. Speaker 500:14:26Okay. That's helpful there. Appreciate that color. And then just in terms of expenses here, down quarter over quarter compensation in particular, just kind of curious how are you thinking about expenses for the second quarter? I apologize if I missed that. Speaker 300:14:44No. I think they'll probably be fairly stable with whatever happened in the first quarter. I give guidance for the full year that we have an annual budget that we try to manage towards, and we're doing much better than that at this point. As as you probably understand, we've got the the merger of equals with Berkshire Hills. So we are being very careful about any hires and things of that nature or even replacing folks as as we know that the the opportunity to be able to fill those positions on a combined basis will will be enhanced when that happens. Speaker 300:15:19So that's and, you know, I took mentioned the marketing expenses are down, you know, quarter over quarter. I think we were just being thoughtful about where we're where we're spending our money, marketing dollars and keeping some powder dry for for for the, the merger. Speaker 500:15:37Okay. Great. Those were my primary two questions. I I really appreciate the color here. I'll step back in the queue. Speaker 200:15:42Okay, Steve. See you. Operator00:15:47Our next question comes from Laurie Hunsicker with Seaport Research Partners. Please go ahead. Speaker 700:15:54Yes. Hi, Paul and Karl. Good afternoon. Speaker 200:15:57Hi. Hello, Laurie. Speaker 700:15:59Just circling back to credit here. So the the 7,600,000.0 in C and I charge off, 7,100,000.0 was one loan. Was that a I guess, what type of loan was that? Was that an equipment finance loan? Was that a grocery store? Speaker 700:16:18Was what was that? Speaker 200:16:21It's in the food manufacturing business, if you will. And it was not entirely the $7.06, but it was primarily so that that loan. It had been a family business that was subject to a leverage buyout by private equity firms and things haven't gone according to oil. Speaker 700:16:43Okay. Okay. And then your your specialty vehicle booked down to 267,000,000. That's great. How much were charge offs there in the quarter? Speaker 300:16:54Not not much at all. It was de minimis. Speaker 700:16:57Okay. Okay. Okay. Okay. Alright. Speaker 700:17:02And then just wonder, can you can you give us an update? The the office, the 11,000,000 office loan that I think is supposed to I think it's supposed to close in 2Q. Is that still the case? Speaker 200:17:19Is it Speaker 700:17:20well observed? How you think about that? Yes. Speaker 200:17:22It's under PNS and it's imminent to close sometime soon. Don't know exactly the timing, but it's fully expected to close. Speaker 300:17:31Yes. We were and we're not anticipating any additional loss associated with that. Speaker 700:17:36Okay. Perfect. That was my question. Okay. Great. Speaker 700:17:40And then, I see here I love that you give this update. You're 95% pass rated on that which is maturing. What where does your whole book stand in terms of pass rated? I think I last had that at around 90%. I don't know if you have that number refreshed or if that's still approximately the number. Speaker 200:17:59It's approximately 95%. Speaker 700:18:04Oh, for the whole book. Okay. Speaker 200:18:06Yep. Speaker 700:18:07Okay. Great. And then let me just go up here. Do you have do you have a a spot margin for March? Speaker 300:18:19'3 '20 '3. Speaker 700:18:22Thank you. Okay. And then, I guess, just sort of fast forwarding, and I appreciate that you don't wanna comment any further on the timing, but just fast forwarding the the Brookline Berkshire Hills merger is closed. Can you just talk a little bit about sort of two things on a go forward basis? So number one, obviously, there was that nonbinding letter of intent in company a to potentially acquire you 50% higher. Speaker 700:18:52So I guess, how do you think about you know, what directionally are you gonna do as a combined company to get that value from where we are here to sort of 50% higher? That's my first question. And then my second question is, previously you were pretty active in buybacks. You're obviously very well capitalized. Credit looks good. Speaker 700:19:13Obviously, many, many uncertainties at the moment, but we are seeing companies amp up the buyback just taking advantage of stock price. Can you tell us a little bit about how you would think about share buybacks once this is closed? Sure. Speaker 300:19:30So again, we can't talk too much about adding any additional information. But I would certainly refer you back to the when we announced the transaction and the benefits associated with that transaction, particularly the opportune operational efficiencies, the results, performance of the organization, excluding purchase accounting. Because purchase accounting, as we all know, is is moving in in many different ways every day. But the benefits of getting the purchase accounting done as well will add significantly to to the the performance. As you know, a lot of lot of banks in particular have done restructuring of their investment portfolios to enhance the yields going forward and their margins going forward. Speaker 300:20:21And and here you're taking, basically one organization. So $11,000,000,000 of the balance sheet and and and purchase doing the purchase accounting on that and getting the benefits of that going forward. So I think you can refer to that to see, hey. What what is the returns on this this going forward? And, of course, you know, we're in the process of doing the the conversion and the cost savings, and we we feel really, really good about the process so far. Speaker 300:20:50Regarding stock buybacks, I'd say it's just too early to talk about that at this point, and we'll we'll see what what the capital ratios and how that will you know, how how the balance sheet is restructured as we come together. And and and the the board will review what the capital opportunities are there and and optimize the capital structure. And if if buybacks are appropriate, that'll that'll get discussed. Speaker 700:21:17Okay. Thanks. And one more one more question with respect to capital management. Is it still the intent to take the Berkshire Hills, pro form a combined company dividend up to a rate that's on par with where Brookline is currently? Is that still the plan? Speaker 200:21:32That's correct. Speaker 700:21:35Okay, great. Thanks. I'll leave it there. Speaker 200:21:38Okay, Laurie. Operator00:21:41Thank you. And our next question comes from Chris O'Connell with KBW. Your line is open. Speaker 600:21:49Hey, Paul. Hey, Karl. Just wanted to start off on the CRE runoff, which I know you guys was planned. Wondering how much more is kind of earmarked to be runoff over the next few quarters and if that will continue after the merger close? Speaker 300:22:15Excellent question. So we did plan for the iCree runoff. We identified certain areas that we we would not try to pursue certain customers or certain transactions. I wouldn't wanna call them customers, certain transactions. It it was accelerated a bit in the first quarter, a little bit more than we had originally planned. Speaker 300:22:38So outside of that, I I don't see a lot of reduction in that space to the magnitude going forward, But that's that's was a planned planned approach to to 02/2025. On a go forward, it it will will will after after the the combination of the two companies, we'll be looking at that and where where we stand and what we wanna be focused on. I I would I would say we're we're not focused on participating commercial real estate transactions into the bank. We we we'd like to do the lead. Occasionally, we'll do that with friends and family, but that's not something that we would wanna be doing on a go forward basis. Speaker 300:23:23And we'd be looking at the combined portfolio and looking at those types of transactions and not really pursuing those going forward. So the timing around that and seeing that, we'd rather preserve our capital or funding for taking care of our customers in our footprint. Speaker 600:23:43Understood. Thank you. And appreciate the standalone expense guide in the comments for flattish into Q2. Just rough calculations, you know, you guys are did a really good job, you know, here in the first quarter, you know, of keeping expenses low. You know, if it's relatively flat into q two, you know, that leaves about, you know, 11,000,000 of growth in the back half of the year to kind of get towards that guidance number. Speaker 600:24:17Is there any particular dynamics, I guess, that are driving up the costs that much in the back half of the year? Speaker 300:24:26No, not at all. It just was our original budget. Speaker 200:24:29It was the budget. Speaker 300:24:30We're just doing much better. Both companies are doing much better on the expense side as we're very careful on how we're spending money as we're going into this. Speaker 600:24:44Okay. Great. And then with the conversion now booked for February 2026, Is that consistent with the original timing? I know it was a little bit up in the air at the time of the announcement. And does it change any of the cost save timings or shift them out a little further? Speaker 200:25:07Only a little bit. It's a little bit later than we had hoped it would be and this has a lot to do with scheduling with providers and synchronizing all of the stuff that has to happen. And so some of the cost savings are going to be slightly delayed, but to the extent that both companies are managing their costs very well in the meantime, I'm not viewing it as having any material effect at that point, even though technically some of the expenses are going to be longer than in the original plan, but at a lower level. Speaker 300:25:41It's going be harder to cut expenses that you're not even incurring. Paul is saying, the timing we're kind of front loading some of those savings. And so economically, at the end of the day, I would imagine we're probably going to be better off. Speaker 600:26:02And then, you know, on the you know, I appreciate the kind of overall office commentary. You know, I was hoping to get, you know, if you had your exposures to, you know, the Cambridge market and your overall lab exposure And just any color around kind of what you guys are seeing or what you guys are hearing in terms of any market developments in those areas? Speaker 200:26:29It's a pretty small share of our book. We haven't done very much in the Cambridge area that I can recall. Carl, do you have any sense of the numbers? Speaker 300:26:45It's $50,000,000 in lab. Speaker 200:26:50All in Cambridge? No. No, all over. So it's $50,000,000 overall in lab space. It's pretty small exposure. Speaker 200:26:58We just haven't been exposed to that sort of stuff. We tend to bank real estate professionals who really haven't played all that much in the lab space. Speaker 600:27:11Okay, great. That's all I had. Thank you. Speaker 200:27:15Okay. Thanks, Chris. That is it. Operator00:27:18This concludes our question and answer session. So I'd like to turn the conference back over to Mr. Farrell for any closing remarks. Speaker 200:27:26Thank you, Lydia. And thank you all for joining us this afternoon and we will look forward to talking with you again next quarter. Good day. Operator00:27:36This concludes today's call. Thank you very much for joining. You may now disconnect your line.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBrookline Bancorp Q1 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Brookline Bancorp Earnings HeadlinesBrookline Bancorp: Dividends Are Interesting, But The Share Price Has Stagnated For DecadesMay 1 at 11:54 PM | seekingalpha.comBrookline Bancorp, Inc. (NASDAQ:BRKL) Q1 2025 Earnings Call TranscriptApril 26, 2025 | insidermonkey.comThe next market Nvidia is positioned to dominate …Robots — built by Nvidia. Forbes says this could be " a $24 trillion opportunity for investors." 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Email Address About Brookline BancorpBrookline Bancorp (NASDAQ:BRKL) operates as a bank holding company for the Brookline Bank that provide commercial, business, and retail banking services to corporate, municipal, and retail customers in the United States. Its deposit products include demand checking, NOW, money market, and savings accounts. The company's loan portfolio primarily comprises first mortgage loans secured by commercial, multi-family, and residential real estate properties; loans to business entities comprising commercial lines of credit; loans to condominium associations; loans and leases used to finance equipment for small businesses; financing for construction and development projects; and home equity and other consumer loans. It provides credit, term loans, letters of credit, foreign exchange, cash management, consumer and residential loans, wealth and investment advisory, and online and mobile banking services, as well as invests in debt and equity securities. The company was founded in 1871 and is headquartered in Boston, Massachusetts.View Brookline Bancorp ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of EarningsAmazon's Earnings Will Make or Break the Stock's Comeback Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 8 speakers on the call. Operator00:00:00Good afternoon, and welcome to Brookline Bancorp, Inc. First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there'll be an opportunity to ask questions. Please note this event is being recorded. Operator00:00:15I'd now like to turn the conference over to Brookline Bancorp's attorney, Dario Hernandez. Please go ahead. Speaker 100:00:22Thank you, Lydia, and good afternoon, everybody. Yesterday, we issued our earnings release and presentation, which is available on the Investors Relations page on our website, brooklynbancorp.com, and has been filed with the SEC. This afternoon's call will be hosted by Paul A. Perl and Karl Carlson. This call may contain forward looking statements with respect to the financial condition, results of operations and business of Brookline Bancorp. Speaker 100:00:51Please refer to Page two of our earnings presentation for our forward looking statement disclaimer. Also, refer to our other filings with the Securities and Exchange Commission, which contain risk factors that could cause actual results to differ materially from these forward looking statements. Any references made during this presentation to non GAAP measures are only made to assist you in understanding Brookline Bancorp's results and performance trends and should not be relied on as financial measures of actual results or future predictions. For a comparison and reconciliation to GAAP earnings, please see our earnings release. I am pleased to introduce Brookline Bancorp's Chairman and CEO, Paul Perl. Speaker 200:01:31Thanks, Theriault, and good afternoon, everyone. Thank you for joining us for today's earnings call. We had solid core operating results for the first quarter with operating earnings of $20,000,000 or $0.22 per share. On a GAAP basis, which includes merger charges of $971,000 net income was $19,100,000 resulting in earnings per share of $0.21 The contraction in our loan portfolio of $136,600,000 is intentional as we reduce commercial real estate exposures while maintaining our focus on important customer relationships. We also experienced some planned runoff in our specialty vehicle portfolio following our exit from that business last year while we continue to increase our participation in the general C and I markets. Speaker 200:02:24Customer deposits increased $113,800,000 and our margin increased 10 basis points during the quarter. In January, we expected market rates to gradually return to normal. However, as you all know the opposite has occurred as uncertainty has become the theme of the day and markets have become even more volatile. Even with that, we expect to see our net interest margin continue to improve throughout 2025. In December, we announced the planned merger with Berkshire Hills Bancorp and I'm delighted to tell you it is moving along very nicely. Speaker 200:03:02I will now turn you over to Karl who will review the company's first quarter. Karl? Speaker 300:03:07Thank you, Paul. At the end of the quarter total assets stood at $11,500,000,000 reflecting a decrease of $385,500,000 from the end of the year. This reduction was due to a deliberate decrease in both cash equivalents and components of our loan portfolio. Specifically, loans declined by 136,600,000 with commercial real estate and equipment finance dropping by $135,000,000 and $32,000,000 respectively, while commercial loans saw growth. Owner occupied commercial real estate fell by $10,000,000 and the investment commercial real estate portfolio decreased by $125,000,000 bringing the percentage of investment commercial real estate to total risk based capital to 375% at year end at quarter end. Speaker 300:03:54The decline in equipment finance was primarily driven by the continued runoff of the specialty vehicle portfolio, which decreased by $29,000,000 during the quarter to $267,000,000 On the funding side, customer deposits increased by $113,000,000 while broker deposits and borrowings were reduced by $468,000,000 Stockholders' equity rose by $18,000,000 due to the retained earnings and lower mark to market on the available for sale portfolio, with tangible book value per share rising $0.22 to $11.3 from December 31. The net interest margin improved 10 basis points to 3.22 driven by lower funding costs. However, this was partially offset by a decline of $50,000,000 in average interest earning assets. Consequently, net interest income reached $85,800,000 an increase of $800,000 from the previous quarter. Lower derivative activity resulted in lower fee income for the quarter bringing total revenues for the quarter to $91,500,000 consistent with Q4. Speaker 300:05:02Provision for credit losses was $6,000,000.2000000 dollars higher than Q4. We had six point we had $7,600,000 in net charge offs, 5,200,000.0 were previously reserved for. The reserve coverage slightly increased to 129 basis points of total loans. The weightings of the Moody's economic scenarios remained at 40% baseline, 35% moderate recession and 25% stronger near term growth, which are consistent with the weightings at year end. We have evaluated the post quarter end increase in economic uncertainty and will continue to monitor how this uncertainty is captured by future scenarios and adjust as necessary. Speaker 300:05:45Non interest expense, excluding merger charges, was $59,000,000 for Q1, a decrease of $1,300,000 from Q4 due to lower compensation and marketing costs. Merger expenses for the quarter were $971,000 and are largely non tax deductible, contributing to a higher effective tax rate. Excluding merger charges, operating EPS was zero two two dollars per share. Yesterday, the Board approved maintaining our quarterly dividend at $0.01 $35 per share to be paid on May 23 to stockholders of record on May 9. Looking forward, the interest rate environment, the potential impact of tariffs and how our customers respond remains uncertain and the need to continually adapt is greater than ever. Speaker 300:06:33While modest improvements to net interest margin are increasingly uncertain, we are currently estimating an increase of four to eight basis points in Q2. This is dependent upon market conditions, deposit flows and the direction, timing and magnitude of future actions by the Federal Reserve. We continue to anticipate growth in the loan portfolio to be in the low single digits for the balance of 2025 as growth in commercial and consumer loans will be tempered by the runoff of specialty vehicle and lower commercial real estate activity. On the deposit side, we anticipate growth of 4% to 5% with growth generally favoring interest bearing accounts. Noninterest income is projected to be in the range of $5,500,000 to $6,500,000 per quarter, although components may vary significantly. Speaker 300:07:19We are managing expenses to $247,000,000 or less for the full year, excluding merger related costs. Our effective tax rate is expected to be in the range of 24.25%, excluding the impact of nondeductible merger charges. Regarding the merger of equals with Berkshire Hills Bancorp, we have added slide 11 into our earnings presentation providing an update. Regulatory applications have been filed and we will respond to comments or follow-up questions from the regulators On April 8, the S-four and proxy went effective with the SEC and mailing commenced to stockholders of both entities. Speaker 300:07:57The stockholder meetings for both Brookline and Berkshire are scheduled for May 21. We anticipate closing the transaction in the second half of twenty twenty five, which will include the merger of all four bank charters. While we are encouraged by the recent regulatory approval process experienced by other institutions, we will make no predictions or observations with respect to our own applications. At the time of the transaction announcement, we had not decided on a core banking platform. I'm pleased to say the diligence was completed and the core banking platform and related technologies have been determined with conversion planning well underway. Speaker 300:08:35System conversions are scheduled for February. As you can appreciate, we are unable to comment further on the transaction beyond what has been publicly disclosed. This concludes my formal comments. I will turn it back to Paul. Speaker 200:08:49Thanks, Karl. And Lydia, we will now open it up for questions. Operator00:08:54Thank Our first question today comes from Mark Fitzgibbon with Piper Sandler. Please go ahead. Your line is open. Speaker 400:09:17Hey guys, good afternoon. Speaker 200:09:18Hi Mark. Speaker 300:09:19Hi Mark. Speaker 400:09:21I was just curious and this may be a question for you Carl. Trying to get a sense for the impact of a 25 basis point Fed rate cut. What do you think that means for the margin on a standalone basis pre Berkshire Hills? Speaker 300:09:40Well, I think it all depends on what happens with the rest of the yield curve naturally. So if you get that slightly steepening of the yield curve, just cut at the short end, that would certainly be beneficial to us. But, again, it's it's highly dependable on what what what the market is is like and and what is going on with the market and why that cut is is happening. But generally, you know, just from a modeling perspective and and a cut in short term rates and longer term or mid term rates staying where they are that's beneficial. Speaker 400:10:14Okay. For your guidance though of 48 basis points up that doesn't assume any Fed rate cuts, correct? Speaker 300:10:21That does not reflect Fed rate cuts in the second quarter. Speaker 400:10:27Okay. Secondly, wondered if you could give us any color on that $7,100,000 commercial charge off you had. What was the story with that loan? Was that the transportation one that you've talked about in the past? Speaker 300:10:40No. That was a large C and I credit that we it was about $13,000,000 credit, dollars 13,000,000 and change that we had a specific reserve for that was around 5,000,000 already on on the books. So there was a little extra provisioning that requiring to cover that that full charge off. We actually it was a sale of a note. Speaker 400:11:03Okay. And then lastly, I just wondered maybe at a high level if you could share with us your thoughts on sort of the tariff implications on things like your equipment finance book and maybe your manufacturing loan book, which I think was around $250,000,000 Are you seeing any impact? Are you hearing from customers that it's become a significant problem, the tariffs or not so much? Speaker 200:11:28Credit administration is all over that like a wet blanket and they're hearing that people are not doing very much, but are very uneasy about it. And when we look at new credits that has become part of the underwriting process to see how that might have affected things. And so it is having a dampening effect on everything as we go forward, but there's nothing tangible yet. Okay. Thank you. Speaker 200:12:05Okay, Mark. Operator00:12:08Our next question comes from Steve Moss with Raymond James. Please go ahead. Speaker 500:12:14Good afternoon. Speaker 200:12:16Hi, Steve. Speaker 500:12:18Hey, Paul. Just maybe on loan pricing here, just kind of curious you know, what you guys are seeing for loan pricing that these these days and, you know, as you are also, you know, adding more C and I customers, what's what's the sentiment with, those borrowers and and your thoughts around pull through here? Speaker 200:12:40My thoughts around what? Speaker 500:12:44Pull through of new C and I loans. Speaker 300:12:48Pull through, I think. Speaker 600:12:50Is it do you think Speaker 500:12:51it's going extend out towards the latter part of the year? Or are you reasonably optimistic near term, me put it that way? Speaker 200:12:56I'm reasonably optimistic, but we're obviously going to be very careful like walking through glue or something. But the pipelines are okay and the quality of the stuff that's in the pipeline, I've been very impressed with. And the pricing has generally been pretty good. It feels like the dominant very large banks in our markets are pretty tepid about things right now. So we're not being pushed around too much. Speaker 200:13:27The smaller banks have tended to be a lot more aggressive, but our full service paying close attention nature, I think has made us attractive for companies that feel a little bit abused in this time. So we're going to go carefully, but I'm still optimistic with the numbers that Carl's told you about for the balance of the year. Speaker 300:13:49Just to give you a little bit more get a little bit more specific on pricing, I think it might be helpful. So we booked about $411,000,000 of originations in the quarter and the weighted average coupon on that book was seven eighteen basis points. And the weighted average coupon of our overall book is about five ninety one basis points. So it gives you a sense of how that's continuing. Every quarter that goes by, we're still getting a benefit on that. Speaker 300:14:18Unless the Fed cuts and then we think it's priced out, but that's what I Speaker 600:14:22had. Speaker 200:14:25Right. Speaker 500:14:26Okay. That's helpful there. Appreciate that color. And then just in terms of expenses here, down quarter over quarter compensation in particular, just kind of curious how are you thinking about expenses for the second quarter? I apologize if I missed that. Speaker 300:14:44No. I think they'll probably be fairly stable with whatever happened in the first quarter. I give guidance for the full year that we have an annual budget that we try to manage towards, and we're doing much better than that at this point. As as you probably understand, we've got the the merger of equals with Berkshire Hills. So we are being very careful about any hires and things of that nature or even replacing folks as as we know that the the opportunity to be able to fill those positions on a combined basis will will be enhanced when that happens. Speaker 300:15:19So that's and, you know, I took mentioned the marketing expenses are down, you know, quarter over quarter. I think we were just being thoughtful about where we're where we're spending our money, marketing dollars and keeping some powder dry for for for the, the merger. Speaker 500:15:37Okay. Great. Those were my primary two questions. I I really appreciate the color here. I'll step back in the queue. Speaker 200:15:42Okay, Steve. See you. Operator00:15:47Our next question comes from Laurie Hunsicker with Seaport Research Partners. Please go ahead. Speaker 700:15:54Yes. Hi, Paul and Karl. Good afternoon. Speaker 200:15:57Hi. Hello, Laurie. Speaker 700:15:59Just circling back to credit here. So the the 7,600,000.0 in C and I charge off, 7,100,000.0 was one loan. Was that a I guess, what type of loan was that? Was that an equipment finance loan? Was that a grocery store? Speaker 700:16:18Was what was that? Speaker 200:16:21It's in the food manufacturing business, if you will. And it was not entirely the $7.06, but it was primarily so that that loan. It had been a family business that was subject to a leverage buyout by private equity firms and things haven't gone according to oil. Speaker 700:16:43Okay. Okay. And then your your specialty vehicle booked down to 267,000,000. That's great. How much were charge offs there in the quarter? Speaker 300:16:54Not not much at all. It was de minimis. Speaker 700:16:57Okay. Okay. Okay. Okay. Alright. Speaker 700:17:02And then just wonder, can you can you give us an update? The the office, the 11,000,000 office loan that I think is supposed to I think it's supposed to close in 2Q. Is that still the case? Speaker 200:17:19Is it Speaker 700:17:20well observed? How you think about that? Yes. Speaker 200:17:22It's under PNS and it's imminent to close sometime soon. Don't know exactly the timing, but it's fully expected to close. Speaker 300:17:31Yes. We were and we're not anticipating any additional loss associated with that. Speaker 700:17:36Okay. Perfect. That was my question. Okay. Great. Speaker 700:17:40And then, I see here I love that you give this update. You're 95% pass rated on that which is maturing. What where does your whole book stand in terms of pass rated? I think I last had that at around 90%. I don't know if you have that number refreshed or if that's still approximately the number. Speaker 200:17:59It's approximately 95%. Speaker 700:18:04Oh, for the whole book. Okay. Speaker 200:18:06Yep. Speaker 700:18:07Okay. Great. And then let me just go up here. Do you have do you have a a spot margin for March? Speaker 300:18:19'3 '20 '3. Speaker 700:18:22Thank you. Okay. And then, I guess, just sort of fast forwarding, and I appreciate that you don't wanna comment any further on the timing, but just fast forwarding the the Brookline Berkshire Hills merger is closed. Can you just talk a little bit about sort of two things on a go forward basis? So number one, obviously, there was that nonbinding letter of intent in company a to potentially acquire you 50% higher. Speaker 700:18:52So I guess, how do you think about you know, what directionally are you gonna do as a combined company to get that value from where we are here to sort of 50% higher? That's my first question. And then my second question is, previously you were pretty active in buybacks. You're obviously very well capitalized. Credit looks good. Speaker 700:19:13Obviously, many, many uncertainties at the moment, but we are seeing companies amp up the buyback just taking advantage of stock price. Can you tell us a little bit about how you would think about share buybacks once this is closed? Sure. Speaker 300:19:30So again, we can't talk too much about adding any additional information. But I would certainly refer you back to the when we announced the transaction and the benefits associated with that transaction, particularly the opportune operational efficiencies, the results, performance of the organization, excluding purchase accounting. Because purchase accounting, as we all know, is is moving in in many different ways every day. But the benefits of getting the purchase accounting done as well will add significantly to to the the performance. As you know, a lot of lot of banks in particular have done restructuring of their investment portfolios to enhance the yields going forward and their margins going forward. Speaker 300:20:21And and here you're taking, basically one organization. So $11,000,000,000 of the balance sheet and and and purchase doing the purchase accounting on that and getting the benefits of that going forward. So I think you can refer to that to see, hey. What what is the returns on this this going forward? And, of course, you know, we're in the process of doing the the conversion and the cost savings, and we we feel really, really good about the process so far. Speaker 300:20:50Regarding stock buybacks, I'd say it's just too early to talk about that at this point, and we'll we'll see what what the capital ratios and how that will you know, how how the balance sheet is restructured as we come together. And and and the the board will review what the capital opportunities are there and and optimize the capital structure. And if if buybacks are appropriate, that'll that'll get discussed. Speaker 700:21:17Okay. Thanks. And one more one more question with respect to capital management. Is it still the intent to take the Berkshire Hills, pro form a combined company dividend up to a rate that's on par with where Brookline is currently? Is that still the plan? Speaker 200:21:32That's correct. Speaker 700:21:35Okay, great. Thanks. I'll leave it there. Speaker 200:21:38Okay, Laurie. Operator00:21:41Thank you. And our next question comes from Chris O'Connell with KBW. Your line is open. Speaker 600:21:49Hey, Paul. Hey, Karl. Just wanted to start off on the CRE runoff, which I know you guys was planned. Wondering how much more is kind of earmarked to be runoff over the next few quarters and if that will continue after the merger close? Speaker 300:22:15Excellent question. So we did plan for the iCree runoff. We identified certain areas that we we would not try to pursue certain customers or certain transactions. I wouldn't wanna call them customers, certain transactions. It it was accelerated a bit in the first quarter, a little bit more than we had originally planned. Speaker 300:22:38So outside of that, I I don't see a lot of reduction in that space to the magnitude going forward, But that's that's was a planned planned approach to to 02/2025. On a go forward, it it will will will after after the the combination of the two companies, we'll be looking at that and where where we stand and what we wanna be focused on. I I would I would say we're we're not focused on participating commercial real estate transactions into the bank. We we we'd like to do the lead. Occasionally, we'll do that with friends and family, but that's not something that we would wanna be doing on a go forward basis. Speaker 300:23:23And we'd be looking at the combined portfolio and looking at those types of transactions and not really pursuing those going forward. So the timing around that and seeing that, we'd rather preserve our capital or funding for taking care of our customers in our footprint. Speaker 600:23:43Understood. Thank you. And appreciate the standalone expense guide in the comments for flattish into Q2. Just rough calculations, you know, you guys are did a really good job, you know, here in the first quarter, you know, of keeping expenses low. You know, if it's relatively flat into q two, you know, that leaves about, you know, 11,000,000 of growth in the back half of the year to kind of get towards that guidance number. Speaker 600:24:17Is there any particular dynamics, I guess, that are driving up the costs that much in the back half of the year? Speaker 300:24:26No, not at all. It just was our original budget. Speaker 200:24:29It was the budget. Speaker 300:24:30We're just doing much better. Both companies are doing much better on the expense side as we're very careful on how we're spending money as we're going into this. Speaker 600:24:44Okay. Great. And then with the conversion now booked for February 2026, Is that consistent with the original timing? I know it was a little bit up in the air at the time of the announcement. And does it change any of the cost save timings or shift them out a little further? Speaker 200:25:07Only a little bit. It's a little bit later than we had hoped it would be and this has a lot to do with scheduling with providers and synchronizing all of the stuff that has to happen. And so some of the cost savings are going to be slightly delayed, but to the extent that both companies are managing their costs very well in the meantime, I'm not viewing it as having any material effect at that point, even though technically some of the expenses are going to be longer than in the original plan, but at a lower level. Speaker 300:25:41It's going be harder to cut expenses that you're not even incurring. Paul is saying, the timing we're kind of front loading some of those savings. And so economically, at the end of the day, I would imagine we're probably going to be better off. Speaker 600:26:02And then, you know, on the you know, I appreciate the kind of overall office commentary. You know, I was hoping to get, you know, if you had your exposures to, you know, the Cambridge market and your overall lab exposure And just any color around kind of what you guys are seeing or what you guys are hearing in terms of any market developments in those areas? Speaker 200:26:29It's a pretty small share of our book. We haven't done very much in the Cambridge area that I can recall. Carl, do you have any sense of the numbers? Speaker 300:26:45It's $50,000,000 in lab. Speaker 200:26:50All in Cambridge? No. No, all over. So it's $50,000,000 overall in lab space. It's pretty small exposure. Speaker 200:26:58We just haven't been exposed to that sort of stuff. We tend to bank real estate professionals who really haven't played all that much in the lab space. Speaker 600:27:11Okay, great. That's all I had. Thank you. Speaker 200:27:15Okay. Thanks, Chris. That is it. Operator00:27:18This concludes our question and answer session. So I'd like to turn the conference back over to Mr. Farrell for any closing remarks. Speaker 200:27:26Thank you, Lydia. And thank you all for joining us this afternoon and we will look forward to talking with you again next quarter. Good day. Operator00:27:36This concludes today's call. Thank you very much for joining. You may now disconnect your line.Read morePowered by