Brookline Bancorp, Inc. (NASDAQ:BRKL) Q2 2020 Earnings Conference Call - Final Transcript

Jul 23, 2020 • 01:30 pm ET

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Brookline Bancorp, Inc. (NASDAQ:BRKL) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Paul A. Perrault

may require additional loan payment deferrals, which we refer to as phase 2. By the way, I want to publicly recognize our amazing employees who have been incredible supporting our customers as well as each other.

We had a solid quarter of earnings of $19.6 million or $0.25 per share, driven by a lower provision for loan loss as we continue to build on the substantial reserve position, we had established in the first quarter. I'm also pleased to report, the Board approved another $0.115 dividend to stockholders and that will be paid in August.

I will now turn you over to Carl, who will review the Company's second quarter results.

Executive
Carl M. Carlson

Thank you, Paul. On slide 4, we've provided summary income statements for the quarter, prior quarter and prior year. We recognized net income of $19.6 million compared to a loss of $17.3 million in Q1, driven by stable revenues, lower expenses and a lower provision for credit losses. Revenues were relatively flat for the quarter as net interest income increased and fee income declined. We track debit card usage and interchange income on a weekly basis as compared with the same period in the prior year. Initially, we saw a very sharp drop off of over 40% as a pandemic hit and businesses shut down.

Weekly activity has steadily improved and is now nearly flat with last year. Fees related to customer back to back interest rate swaps were also significantly lower as commercial real estate originations declined sharply. Operating costs were lower due to seasonality. The First Ipswich Bank consolidation and deferred costs associated with PPP loan originations. This was offset by higher FDIC insurance expense as credits were exhausted during Q1. Our pre-tax pre-provision net revenue improved $1.1 million from Q1 and $400,000 from last year. We continue to build our reserve for loan losses with provision for credit losses of $5.3 million. After taxes, we earned $19.6 million or $0.25 per share.

As illustrated on page 5, net interest income increased $2.6 million driven by average earning asset growth of $870 million as our net interest margin compressed 22 basis points. The yield on the loan portfolio declined 46 basis points as the full impact of the decline in market rates in Q1 was realized as well as the continued decline in LIBOR rates during Q2. Overall, our cost of interest bearing liabilities declined 38 basis points, which consisted of 33 basis point decline in the cost of interest bearing deposits and a 74 basis points decline in the cost of borrowings.

If you could follow me to slide 6, you can reference our comparative summary balance sheet. In the second quarter, the Company grew -- grew to $9.1 billion in assets. We had loan growth of $585 million, and deposits grew $550 million. The allowance for loan losses also grew $7 million, and represents 175 basis points of loans excluding PPP loans. We also shifted some of our on-balance sheet liquidity from cash to securities