Brookline Bancorp, Inc. (NASDAQ:BRKL) Third Quarter 2024 Results

Brookline Bancorp, Inc. (NASDAQ:BRKL) announced its financial results for the third quarter of 2024, revealing a net income of $20.1 million and earnings per share of $0.23. The bank experienced modest loan growth and a significant increase in customer deposits. Net interest margin improved, and total assets grew modestly. The company expects continued margin improvement and measured loan portfolio growth in the future.

Key Takeaways

• Brookline Bancorp reported a net income of $20.1 million with earnings per share of $0.23.
• Loan growth was modest at $34 million, while customer deposits increased by $103 million.
• Net interest margin improved by 7 basis points to 307 basis points.
• Operating expenses decreased, with anticipated savings from a recent reduction in force.
• The company approved a quarterly dividend of $0.135 per share.
• Discussions on potential stock buybacks are ongoing, and merger and acquisition activity is expected to pick up as market conditions stabilize.

Company Outlook

• Brookline Bancorp anticipates continued improvement in net interest margin.
• Loan portfolio growth is expected to be measured, with a Q4 margin projected between 312 to 320 basis points.
• Noninterest income is expected to range from $6 million to $7 million per quarter.
• Operating costs are projected to grow by 3% to 3.5% in 2025.

Bearish Highlights

• Nonperforming loans increased by $10.5 million, largely due to a significant relationship financing grocery stores.
• The company has $4.6 million in nonperforming loans related to specialty vehicles.

Bullish Highlights

• Total assets increased by $42 million.
• The company originated $459 million in loans with favorable coupon rates.
• Noninterest income remained stable, and operating expenses decreased.

Misses

• Total funding costs rose to 367 basis points.
• The provision for credit losses was reported at $4.7 million with net charge-offs of $3.8 million.

Q&A Highlights

• The company discussed future charge-offs related to specialty vehicles, with trends suggesting potential improvements.
• Reserve ratios may decline as the market improves, with the credit provision for unfunded commitments decreasing.
• Management is actively managing deposit rates to optimize net interest income in response to changing economic conditions.

Brookline Bancorp's third quarter results show stable financial performance with a focus on measured growth strategy. The company's proactive management of deposit rates and costs, combined with caution towards loan growth and asset quality, positions it to navigate the current economic landscape effectively. Investors and stakeholders can anticipate continued efforts to optimize financial performance in the upcoming quarters.

InvestingPro Insights

Brookline Bancorp's (BRKL) financial results can be contextualized further using insights from InvestingPro. The company's market capitalization is approximately $967.36 million, reflecting its position in the regional banking sector.

• Brookline Bancorp has maintained dividend payments for 27 consecutive years, demonstrating a strong commitment to shareholder returns. The current dividend yield is 5.12%, which may appeal to income-focused investors.
• BRKL has experienced a 28.91% price total return over the last six months, indicating positive momentum due to the bank's stable financial performance and improving net interest margin.
• The company's P/E ratio of 12.99 suggests reasonable valuation compared to earnings. The Price to Book ratio of 0.78 indicates the stock is trading below its book value, offering potential safety margins.

For further analysis, InvestingPro has additional insights available for Brookline Bancorp.

Full Transcript – Brookline Bancorp Inc (BRKL) Q3 2024

Operator

Good afternoon, and welcome to Brookline Bancorp, Inc's. Third Quarter 2024 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Brookline Bancorp's Attorney, Laura Vaughn. Please proceed.

Laura Vaughn

Thank you, Sara, and good afternoon, everyone. Yesterday, we issued our earnings release and presentation, which is available on the Investor Relations page of our website, brooklinebancorp.com, and have been filed with the SEC. This afternoon's call will be hosted by Paul A. Perrault and Carl M. Carlson. This call may contain forward-looking statements regarding Brookline Bancorp’s financial condition, operational results, and business. Please refer to the earnings presentation for our forward-looking statement disclaimer and our filings with the SEC containing risk factors.

I'm pleased to introduce Brookline Bancorp's Chairman and CEO, Paul Perrault.

Paul Perrault

Thank you, Laura, and good afternoon, everyone. Thank you for joining us for today's earnings call. Performance improved in the quarter with net income of $20.1 million and earnings per share of $0.23. Loans grew by a modest $34 million. Customer deposits increased $103 million. And our margin increased by 7 basis points. As market rates gradually return to normal, we expect to see our net interest margin continue to improve right through 2025. I will now turn you over to Carl, who will review the company's third-quarter results.

Carl Carlson

Thank you, Paul. During the quarter, total assets grew $42 million, driven by loan growth of $34 million in C&I and consumer, while the equipment finance and commercial real estate portfolios declined. In the third quarter, we originated $459 million in loans at a weighted average coupon of 735 basis points. The yield on the loan portfolio increased by 15 basis points to 617 basis points. On the deposit side, customer deposits grew $103 million, while brokered deposits declined by $107 million. Total funding costs were 367 basis points, and the net interest margin improved 7 basis points to 307 basis points.

Noninterest income remained flat at $6.3 million compared to the prior quarter. Operating expenses decreased to $57.9 million, primarily due to a reduction in force. The provision for credit losses was reported at $4.7 million with net charge-offs of $3.8 million. Nonperforming loans increased $10.5 million due to one significant relationship financing grocery stores.

Looking forward, we expect continued improvement in the net interest margin and measured loan portfolio growth into 2025.

Operator

Thank you all for your questions. This concludes our Q&A session. I would like to turn the conference back over to Mr. Perrault for any closing remarks.

Paul Perrault

Thank you all for joining us today, and we look forward to speaking with you again next quarter.

Operator

The conference has concluded. You may now disconnect.