Brookline Bancorp , Inc. (NASDAQ:BRKL) reported a net income of $22.7 million, or $0.26 per share, for the third quarter of 2023. The bank saw an increase in its loan portfolio and customer deposits, while nonperforming assets remained relatively stable. The company's Equipment Finance division continues to grow, and the bank is monitoring its exposure to the office sector. The bank's executives expressed confidence about the end of the year and the potential for increased net interest margin in the next quarter.
Key takeaways from Brookline Bancorp's Q3 2023 earnings call:
- The bank reported a net income of $22.7 million, or $0.26 per share.
- The loan portfolio grew by $40 million, and customer deposits increased by $88 million.
- Nonperforming assets increased slightly but remain less than half of 1% of total assets.
- The bank's dividend payout remains at $0.135 per share.
- The Equipment Finance division continues to show strong growth, with the bank comfortable having up to 20% of its loan book in this area.
- The bank is closely monitoring the office sector, which represents about 8% of its loans.
- Loan pricing has improved, while deposit rates have remained stable.
- Expenses are expected to remain around $57 million for the fourth quarter and into next year.
- Commercial real estate (CRE) maturities in the next 24 months are expected to be similar to the overall portfolio.
During the earnings call, the company's executives noted positive loan pricing and growth in customer deposits. They also mentioned a lack of movement in deposit rates despite changes in the interest rate curve. The bank expects slight growth in expenses going into the next year. The executives expressed confidence in the renewal process for CRE loans, stating that the loans were well underwritten and have performed well. They also discussed two commercial charge-offs, which were attributed to mismanagement rather than market-driven issues.
The executives stated that the bank is preserving capital but also considering stock buybacks. They expressed optimism about the end of the year and noted that the bank's modeling suggests a potential increase in net interest margin in the next quarter.
In response to a question from KBW analyst Chris O'Connell, the company did not provide specific numbers for the loan pipeline at the end of the quarter. However, they stated that pipelines are down but they remain active in the commercial and industrial (C&I) space and equipment finance. The bank targets $80 million to $100 million per quarter in loan growth, depending on deposit growth. The most attractive sectors for growth are equipment and C&I, with some opportunities arising from companies switching banks. The bank expects a potential improvement in net interest margin (NIM) in the next quarter.
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