Q2 2024 Brookline Bancorp Inc Earnings Call
Good afternoon and welcome to Brookline Bancorp Inc's second quarter 2024 earnings conference call.
Operator: 24 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.
Operator: for the Earnings Conference Call. All participants will be in a listen-only mode.
Operator: After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Brookline Bancorp's attorney, Laura Vaughn. Please go ahead. Thank you, Alitza, and good afternoon.
Speaker Change: All participants will be in a listen-only mode.
Laura Vaughn: After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Brookline Bancorp's attorney, Laura Vaughn. Please go ahead.
Laura Vaughn: I would now like to turn the conference over to Brookline Bancorp's attorney Laura Vaughn. Please go ahead.
Laura Vaughn: Thank you, Alyssa, and good afternoon, everyone. Yesterday, we issued our earnings release and presentation. It is available on the investor-relations stage of our website, BrooklineBancorp.com, and has been filed with the SEC. We are all making gains more with the statement, with respect to the financial condition of both the operation and business of Brookline Bancorp. Please refer to page two of our earnings presentation for Brookline Bancorp's statement. Also, please refer to our other files with a security-based exchange permission, which contains 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 to ensure the results of the needs and completions.
Laura Vaughn: Thank you, Alyssa, 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 has been filed with the SEC, as well as the business of Brookline Bancorp. Please refer to page two of our earnings presentation for our forward booking statement disclaimer. Also, please refer to our other files with the Securities and Exchange Commission, which contain risk factors that could cause actual results to differ materially from these forward-looking statements.
Speaker Change: Thank you, Alyssa, and good afternoon, everyone. Yesterday, we issued our earnings release and presentation. It is available on the Investor Relations page of our website, brooklinebancorp.com, and has been filed with the SEC.
Speaker Change: This call may contain forward-looking statements with respect to the following.
Speaker Change: Please refer to page 2 of our earnings presentation for our forward-looking statement disclaimer.
Speaker Change: Also, please refer to our other files with the Securities and Exchange Permission, which contain risk factors that could cause actual results to differ materially from these forward looking statements.
Laura Vaughn: 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 for the actual results of any of the measures. For a comparison and reconciliation to GAAP earnings, please see our earnings bulletin. I'm pleased to introduce Brookline Bancorp Chairman and CEO, Paul Carlson.
Speaker Change: 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 that are too expensive to use in relations.
Laura Vaughn: For comparison and reconciliation to GAP earnings, please see our earnings results, and please introduce for Brookline Bancorp's Chairman and CEO of Brookline Bancorp.
Speaker Change: For a comparison and reconciliation of GAAP earnings, please see our earnings notes.
Paul Carlson: Thanks, Laura, and good afternoon, everyone. Thank you for joining us on today's earnings call. We had a solid quarter of loan and deposit growth across all three of our banks. While our net interest margin declined slightly, it appears to be hitting the bottom, as the month of June was higher than May. This quarter, we decided to exit our specialty vehicle finance business, which is primarily a tilt truck business. The spreads for this business line have been coming under pressure for some time now as more competition has entered the market.
Speaker Change: I'm pleased to introduce Brookline Bancorp's Chairman and CEO , Paul Carlson.
Paul Perrault: Thanks, Laura, and good afternoon, everyone. Thank you for joining us for today's journey through all of us. We have a solid floor of loan and deposit bill for across all three of our banks. While our net interest margin declined slightly, it appears to be hitting the bottom as the month of June was higher than May.
Paul Carlson: Thanks, Laura, and good afternoon, everyone. Thank you for joining us for today's earnings call.
Paul Carlson: We have a solid quarter of loan and deposit growth across all three of our banks.
Speaker Change: While our net interest margin declined slightly, it appears to be hitting the bottom as the month of June was higher than May.
Paul Perrault: This quarter, we decided to exit our specialty vehicle finance business, which is primarily tilt crunch. The spreads for this business line have been coming under pressure for some time now, as more competition has entered the market. Unfortunately, cost also continued to rise, particularly collection costs, which drove this decision.
Speaker Change: This quarter, we decided to exit our specialty vehicle finance business, which is primarily tow trucks.
Speaker Change: The spreads for this business line have been coming under pressure for some time now as more competition has entered the market. Unfortunately, costs also continue to rise, particularly collection costs, which drove this decision.
Paul Carlson: Unfortunately, costs also continue to rise, particularly collection costs, which drove this decision. We closed our office in Melville, Ohio, and had a reduction of staff of 21, the portfolio of $350 million in specialty vehicle loans will run off over time and will be a slight headwind to the overall growth in the equipment finance portfolio. We estimate runoff over the next 12 months to be $115 million.
Paul Perrault: We closed our office in Melville, or Ireland, and had a reduction of staff of 21. The portfolio of $250 million in specialty vehicle loans will run off over time, and will be a slight headwind to the overall growth in the equipment finance portfolio. We estimate runoff over the next 12 months to be $150 million.
Speaker Change: We closed our office in Melville, Ohio and had a reduction of staff of 21.
Speaker Change: The portfolio of $350 million in specialty vehicle loans.
Speaker Change: will run off over time and will be a slight headwind to the overall growth in the equipment finance portfolio.
Speaker Change: We estimate runoff over the next 12 months to be $115 million.
Carl Carlson: I will not turn you over to Carl, who will review the company's second quarter results in detail. Carl, thank you both.
Carl: I will now turn you over to Carl, who will review the company's second quarter results in detail. Carl. Thank you, Paul.
Speaker Change: I will now turn you over to Carl, who will review the company's second quarter results in detail. Carl? Thank you, Paul.
Carl Carlson: Yesterday, we recorded net income for the quarter of $16.4 million, where 18 cents per share.
Carl: Yesterday we reported net income for the quarter of $16.4 million, or $0.18 per share. As Paul just mentioned, we are a specialty vehicle finance business and recognize a destruction charge of $823,000, which includes severance and other costs, excluding the structuring charge, operating monies for $17 million, and operating expenses for $.S. It was the 19th century.
Carl: Yesterday we reported net income for the quarter of $16.4 million, or $0.18 per share.
Carl Carlson: As well as just mentioned, we edited specialty vehicle finance business and recognized on its construction charge of 823,000, which includes severance, economics, and growth. Excluding the construction charge, we operated money for $17,000, operating the DSC, which is 18 cents per share. During the quarter, total assets for 92 million doing buying, long growth for 66 million is very close to all loan capital. In the second quarter, we are reaching $491 million in loans. Our weighted average group bond from $182 million to $820 million. We have a strip on the four moon portfolio rows, nine basis, lunchtime, quarter to six hundred five basis, three at June 30th.
Carl: As Paul just mentioned, we are a specialty vehicle finance business and recognize a restructuring charge of $823,000, which includes severance and other fixed costs.
Speaker Change: excluding the restructuring charge in operating monies for $17 million operating DPS was $0.19 per share.
Carl: Carrying a quarter total assets of $92 million, joined by loan growth of $66 million spread across all loans, in the second quarter, we originated $491 million in loans at a weighted average coupon of $108.02 basis. The Lead Average Coupon for Loan Portfolio Rows 9 Basis Points String Ordered to 605 Basis Points Achieved. On a linked quarter basis, the yield on the loan portfolio declined one basis point to 602 basis points due to the reversal of the interest they come due on two large commercial loans going non-accrual to the board.
Speaker Change: Carried a quarter total assets through $92 million due in buying, loan growth of $66 million spread across all loan categories.
Speaker Change: In the second quarter, we originated $491 million in loans and a weighted average coupon of 802 basis points.
Speaker Change: The Weight Average Coupon for Home Portfolio Rows, 9 Basis Points String Quarters to 605 Basis Points at G30.
Carl Carlson: On the length quarter basis, the yield on the moon portfolio to climb one basis point to six hundred two basis points, doing by the reversal of interest income due on two large commercial loans, only not for the fourth quarter. The reversal of crude interest and borrowing interest for down on those loans equal five basis points, and in that it's larger for two to two. On the top of the side, plus or the top of the two of sixty six million, a burger to toss its increase in volume. The positive growth continues to be focused entirely stated time deposits.
Speaker Change: On a length quarter basis, the yield on the loan portfolio declined one basis point to 602 basis points, driven by the reversal.
Speaker Change: of interest income due on two large commercial loans going on a community board.
Carl: The reversal of accrued interest in the early interest foregone on those loans equals five basis points in the net interest margin for Q2. On the deposit side, customer deposits grew $66 million, while broker deposits increased to $48 million. The positive growth continues to be focused on moderate savings.
Speaker Change: The reversal of accrued interest in the quarterly interest foregone on those loans equals five basis payments and in that interest margin for Q2.
Speaker Change: On the deposit side, customer deposits grew $66 million, while broker deposits decreased to $48 million.
Speaker Change: The positive growth continues to be focused on higher-rate savings and time deposits.
Carl Carlson: Total funding costs increase at a basis once in order to three hundred sixty-five basis points. Overall, the margin declined six basis points; the three other basis points stated. Total average interest future starting assets will basically flat the 10.7 billion dollars on the quarter basis, resulting in that interest income of the maybe a billion dollars in a decline of more quite a size in the yielding. Connotes can go to six point, thirdly to basically flat by a quarter. With royal fees under the income, we'll also by honor the dissolution of these and other non-interested. Operating expenses were $50.4 million for the quarter.
Carl: Total funding costs increased seven basis points and afforded $365,000. Overall, the margin declined 6 basis points to 300 basis points. Total average interest earning assets grew basically flat to $10.7 billion on a reported basis, resulting in a net interest income of $80 billion, a decline of $1.6 million in QE. Honours just got filled with $6.4 million, which is basically flat, but it's by a quarter. A fluorocane of derivative income will be offset by honor participation fees of $100 million. Operating expenses were $58.4 million, to exclude the restructuring charge.
Speaker Change: Total funding costs increased seven basis points and reported 365 basis points.
Speaker Change: Overall, the margin declined 6 basis points to 300 basis points in October .
Speaker Change: Total average interest rate for future starting assets will basically be flat at 10.7 billion dollars on a reported basis, resulting in a net interest income of 80 billion dollars, a decline of 1.6 million in 2 years.
Speaker Change: Non-interest income is 6.4 million, which is basically flat in the prior quarter. The floor of the conservative income will offset by unpaid participation fees under non-interest income.
Carl Carlson: It's slew the restructuring charge. This is down 2.6 million from Q1, driven by lower compensation benefits and whether we're really talking about this. The reversal of credit losses is $5.6 million for the quarter, a decrease of $1.28 million from first quarter.
Speaker Change: Operating expenses were $58.4 million for the quarter.
Carl: This is down $2.6 million from Q1, primarily driven by lower compensation benefits and weather-related taxes. The vision of the credit losses was $5.6 million for the quarter, a decrease of $1.8 million from the first quarter. That charge-offs were $8.4 million, given by a $3.8 million charge-off of an office building and $4.6 million in C&I charge-offs, nearly all of which were related to equipment finding. Charges were largely, largely previously reserved.
Speaker Change: excluding the restructuring charge
Speaker Change: This is down $2.6 million from Q1, primarily driven by lower compensation benefits and weather-related targets.
Speaker Change: The provision of credit losses is $5.6 million for the quarter, a decrease of $1.8 million from the first quarter.
Carl Carlson: That charge was $8.4 million, given by a $3.8 million charge of an office building, and $4.6 million in CNI charge also, nearly all of which are related to what the finance is. The charge also were largely previously reserved for. Outform loans increase $4.9 million for the increase of $27 billion in CNI for a bunch of large credits. The increase was also at $5.6 million, $7.7 million, and not the funding promotion was a little safer. It pays the total assets increased to $54.5 million. Resurrect coverage ratio increased slightly to $1.25 million. As I mentioned last quarter, $5.8 million in industry response is continued to adapt to a fairly volatile environment.
Speaker Change: That charge-off was $8.4 million, driven by a $3.8 million charge-off of an office building and $4.6 million in C&I charge-offs, nearly all of which were related to equipment financing.
Speaker Change: The charge-offs were largely previously reserved for them.
Carl: I'll form Lowe's to increase $20 million in the board to decrease the $27 billion in C&I, given my two large creditors. The increase was offset by a defined $6.7 billion in non-performing commercial real estate to pay for total assets increased to $74 billion. The reserve coverage ratio increased slightly to 125. As I mentioned last quarter, client behavior and industry response have continued to adapt to a fairly volatile environment.
Speaker Change: Our foreign loans increased $40 million a year, a decrease of $27 billion in C&I given by two large credits.
Speaker Change: The increase was offset by a defined $6.7 billion in non-performing commercial use savings.
Speaker Change: to pay for total assets increased to $54,000.
Speaker Change: Reserve coverage ratio increased slightly to 125 basis points.
Speaker Change: As I mentioned last quarter, client behavior and industry responses continue to adapt to a fairly volatile environment. Recently, we've seen greater market expectation of Federal Reserve with up rates and longer term rates have declined significantly since the end of the quarter, approaching marsh levels.
Carl: Recently, we've seen greater market expectation for the reserve with upgrades, and longer-term rates have declined significantly since the end of the quarter, approaching zero. While loan demand is not robust, it is a bit better than we previously anticipated. We expect loan growth of 2-5% across all sectors. Our cash and securities portfolio remains stable, representing 9-12% of total assets. On the positive side, we anticipate growth of four or five machines. Given the prevailing interest rates, migration of demand deposit accounts and low-cost deposits may persist but at a significantly slower pace.
Carl Carlson: Recently we were seeing three or more to expectation that those are of the cup rates and longer term rates of the client's income rate since the end of the quarter.
Carl Carlson: I'll tell you more; she loves us. While a long demand is not robust, it is a bit better than we previously anticipated. It's that long growth of 2 to 5 percent across all savings. Our charge insurance portfolio would remain stable, representing 9 to 12 percent of total assets. On its part and side, we anticipate growth of 4 to 5 percent. It could prevail in interest rates. The migration of demand at the bottom of the significant, significantly slower case. Why two free mortgages is projected to fall with an average of 300 to 300 to 10-based and continue to improve.
Speaker Change: While loan demand is not robust, it is a bit better than we previously anticipated. We expect loan growth of 2-5% across all states.
Speaker Change: Our cash and securities portfolio remains stable, representing 9-12% of total assets.
Speaker Change: On the positive side, we anticipate growth of four to five percent.
Speaker Change: To prevail in interest rates, migration of demand deposit accounts and low-cost deposits may persist, but at a significantly slower pace.
Carl: Our Q3 margin is projected to fall within the range of 300 to 310 basis points and to continue to improve. However, this is imperative for depositors and the family of actions by the family. Knowledge standard is projected to be in the range of 6 to 7 million per quarter, although components may vary significantly, continuing to manage operations at $240 million or less for the full year. Exiting the specialty vehicle business will reduce operating expenses to approximately $800,000 per floor.
Speaker Change: Our Q3 margin is projected to fall in the range of 300 to 310 basis points.
Carl Carlson: However, this is a bit better along with the positives and some of the Richard, the non-explanter of his projective in the range of six and seven million per court, have both continuously very significant. The continued managed operate expenses at $240 million or less in the full year, including the specialty vehicle business when we do operate expenses at approximately 800,000 per point. Currently, we'll expect the tax rate to be expected to be in the range of 23.5% of the cost of the year.
Speaker Change: and continue to improve. However, this is a paradigm of the positive growth and positive actions by the federal reserve.
Speaker Change: Knowledge standard is projected to be in the range of $6-$7 million per quarter, although components may vary significantly.
Speaker Change: to continue to manage operations at $240 million or less for the full year.
Speaker Change: Exiting the specialty vehicle business will reduce operating expenses to approximately $800,000 per floor.
Carl: Currently, our expected tax rate is expected to be in the range of 24.5% or down. Yesterday, the board approved maintaining our quarterly dividend at 13.5 cents per share to be paid on August 30th to stockholders of record from August 6th. On an annualized basis, I'm given a period of approximately a year over 5.1 years. This concludes my formal comments.
Speaker Change: Currently our expected tax rate is expected to be in the range of 24.5% of downs in the year.
Carl Carlson: Yes, please. We'd love to maintain your approval within a 13-and-a-half chance for sharing to be paid on August 30th in the stockles of revenue in August 16th. On an annualized basis, I'm doing a pair of approximate per year of $5.1 per share.
Speaker Change: Yesterday, the board approved maintaining our quarterly dividend at 13.5 cents per share to be paid on August 30th in stockholds of record from August 16th.
Speaker Change: On an annualized basis, under the NEPERA approximates a yield of 5.1%.
Operator: This concludes my follow-up comments from the Championship. Thanks, Carl. And we will now hold it up for questions. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If, for any reason, you would like to remove your question from the queue, you may press star two. If you are using a speaker phone, please remember to pick up your handset before asking your question. Once again, please press star one to queue for questions.
Paul Carlson: Thanks Carl, and we will now open it up for questions.
Speaker Change: This concludes my follow-up comments. Thank you.
Speaker Change: Thanks Carl, and we will now open it up for questions.
Operator: We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove your question from the queue, you may press star two. If you are using a speakerphone, please remember to pick up your handset before asking your question. Once again, please press star 1 to queue for questions. Our first question is from the line of Mark Fitzgibbon with Piper Sandler.
Speaker Change: We will now begin the question and answer session.
Speaker Change: If you would like to ask a question, please press star followed by one on your telephone keypad.
Speaker Change: If for any reason you would like to remove your question from the queue, you may press star 2.
Speaker Change: If you are using a speakerphone, please remember to pick up your handset before asking your question.
Speaker Change: Once again, please press star 1 to queue for questions.
Mark Fitzgibbon: Our question is from the line of Mark Fitzgibbon with Piper Sandler. Your line is now open.
Speaker Change: First question is from the line of Mark Fitzgibbon with Piper Sandler. Your line is now open.
Mark Fitzgibbon: Hey, guys. Good afternoon.
Mark Thomas Fitzgibbon: Hey guys, good afternoon. Are you working? Carl, could you just repeat your guidance on expenses? I missed that, I apologize.
Carl Carlson: Thank you.
Mark Thomas Fitzgibbon: Hey guys, good afternoon.
Mark Fitzgibbon: Carl, could you just repeat your guidance on expenses? I missed that, and I apologize.
Speaker Change: that are working.
Mark Thomas Fitzgibbon: Carl, could you just repeat your guidance on expenses? I missed that, I apologize.
Carl Carlson: Sure.
Carl: So we still expect to be in the $240 million or less for the full year.
Carl Carlson: We still start to be in the $2.3 million or less than a phone debt.
Carl: So we still expect to be in the $240 million or less for the full year.
Mark Fitzgibbon: And you said the benefit from an expense standpoint of getting out of the specialty finance business was how much? $800,000. $800,000 a quarter.
Mark Thomas Fitzgibbon: And you said the benefit from an expense standpoint of getting out of the specialty finance business was how much? About 800,000 workforces. Okay, great. And then secondly, I know it's been challenging recently from a credit perspective on this, the specialty, you know, vehicle business, but I, I guess I'm curious, you know, longer term, what were some of the other major dynamics of why your
Speaker Change: And you said the benefit from an expense standpoint of this getting out of the specialty finance business was how much?
Speaker Change: About 800,000 reported.
Mark Fitzgibbon: Okay, great. And then secondly, I know it's been challenging recently from a credit perspective on the specialty vehicle business.
Speaker Change: $800,000 a quarter.
Speaker Change: Okay, great. And then secondly, I know, you know, it's been challenging recently from a credit perspective on the, the specialty, you know, vehicle business, but I, I guess I'm curious, you know, longer term, what were some of the other major dynamics of why you're exiting this business?
Paul Perrault: But I guess I'm curious, you know, longer term, what were some of the other major dynamics of why you're exiting this business? Expected origination costs, small ticket relative to other kinds of loans that we can do. The collection effort is very big and difficult. And you're just dealing with a lot of little pieces that make it unprofitable. And you can't get rich in that gig anymore. You know, it was great. It was good while it lasted. It's something we had been doing about 10 years ago. And we were sticking with mostly larger operators for a while.
Carl: Expensive origination costs, a small ticket relative to other kinds of loans that we can do. The collection effort is very big and difficult, and you're just dealing with a lot of little pieces that make it unprofitable.
Speaker Change: Expensive origination costs, small ticket relative to other kinds of loans that we can do. The collection effort is very big and difficult.
Speaker Change: and you're just dealing with a lot of little pieces.
Carl: And you can't get a rate on that gig anymore. You know, it was good while it lasted. It's something we got into about 10 years ago, and we were sticking with mostly larger operators for a while. But as time went on, we seem to have ended up with more one or two truck kind of people, and it's just very hard to make money at that. The other piece, it's mostly products, but the other piece that was affected too is somewhere along the line, they get into delivery vehicles, mostly for contractors with UPS or FedEx.
Speaker Change: make it unprofitable, and you can't get a rate in that gig anymore. You know, it was great. It was good while it lasted. It's something we got into about ten years ago, and we were sticking with mostly larger operators for a while.
Paul Perrault: But as time went on, we seem to have ended up with more than one or two kind of people. And it's just very hard to make money at that.
Speaker Change: But as time went on, we seem to have ended up with more Q1 or Q4 kind of people. And it's just very hard to make money at that.
Paul Perrault: The other piece, it's both the other piece that was affected, too, is somewhere along the line of aid. They get into delivery vehicles, mostly for contractors with UPS or FedEx. And when the Amazon decided to have its own delivery business, a lot of those guys kind of lost that business and was kind of stuck without anything. So it's just...
Speaker Change: The other piece, it's mostly both of us, but the other piece that was affected too is somewhere along the line they they got into delivery.
Speaker Change: vehicles, mostly for contractors with UPS or FedEx.
Carl: And when Amazon decided to have its own delivery business, a lot of those guys kind of lost that business and were kind of stuck without anything. So it's just. Not knowing where else to start, just stop.
Speaker Change: and when Amazon decided to have its own delivery business a lot of those guys kind of lost that business and it was kind of stuck without anything so it's just
Paul Perrault: Not knowing where else was better to stop.
Carl: Okay, great, and then I wonder if you could provide any color on those two large loans that caused the uptick in non-performers this quarter.
Mark Fitzgibbon: Okay, great. And then I wonder if he could provide any color on those two large loans that caused the uptake in non-performers this quarter? Sure, it was a better island flight. The long-term flight that just was really structured and so it was a deferred cane that served two quarters. So we just ordered that and put that on not a cool and that'll do that on a full stack after they gave the two quarters of the world. So we do expect that to happen by the end of the year, early next year.
Speaker Change: Not in the only world, so let's try to just stop.
Speaker Change: Okay, great. And then I wondered if you could provide any color on those two large loans that caused the uptick in non performers this quarter.
Carl: Sure. One is a Bank of Rhode Island client, a long-term client that just was restructured. And so there was a deferred payment for two quarters. So we just automated them, put that on non-accrual, and that'll go back on accrual stacks after they pay for two quarters in a row. So we do expect that to happen by the end of this year or early next year.
Speaker Change: Sure, one's a Bank of Rhode Island client, a long-term client that just was restructured and so there's a deferred payments for two quarters.
Carl: So we just automatically put that on non-accrual, and that will go back on accrual stacks after they pay for two-quarters of the row. So we do expect that to happen by the end of this year or early next year. And that's a C&I credit, Carl?
Carl: And that's a C&I credit, Carl?
Mark Fitzgibbon: And that's a C&I credit call? That's a C&I credit. Respectively food company. And the other is a large industrial laundry, basically two barnerns, the laundry companies. Industrial laundry, that's staying in the process.
Carl: That's a C&I printer for a specialty food company, and the other is a large industrial laundry, basically two laundromats, or laundry companies. Industrial Laundry, that's in the process of being worked out.
Speaker Change: That's a C&I printer. For specialty food companies. Exactly. And the other is a large industrial laundry, basically two laundromats for laundry companies.
Mark Fitzgibbon: Okay, great. And then lastly, and I know the size of the portfolios is different, but how would you say asset quality in general is stacking up amongst your three different banks?
Speaker Change: Industrial Laundry. Industrial Laundry, that's in the process of being worked out as well.
Mark Thomas Fitzgibbon: Okay, great. And then lastly, and I know the size of the portfolios is different, but how would you say asset quality in general is stacking up amongst your three different bands?
Speaker Change: Okay, great. And then lastly, and I know the size of the portfolios are different, but how is, how would you say asset quality in general is stacking up amongst your three different banks?
Paul Perrault: I would probably say that platinum is the cleanest at this point. And, but I want them Boston are probably neck and neck.
Carl: I would probably say that Putnam... [inaudible] at this point in Rhode Island and Boston are probably neck and neck. We've had a few quarters of being a little bit bumpy for us in the asset quality area, but I'm optimistic that we've kind of gotten through the worst of it, and we've dealt with it, and I'm very hopeful that we'll go back to our normal numbers.
Speaker Change: I would probably say that Putnam...
Speaker Change: is the trineist.
Speaker Change: at this point in Rhode Island and Boston are probably neck and neck.
Mark Fitzgibbon: Great, thank you. We have a few quarters of a little bit bumpy for us in the asset quality area.
Speaker Change: We've had a few quarters that were a little bit bumpy for us in the asset quality area. I'm optimistic that we've kind of gotten through the worst of it and we've dealt with it. And I'm very hopeful that we'll go back to our normal kind of numbers.
Paul Perrault: I'm optimistic that we've kind of gotten through the worst of it. And we've dealt with it. And I'm very hopeful that we'll go back to our normal kind of numbers.
Mark Fitzgibbon: Paul, just having been through the cycles, and we both have over a long time, I've talked to probably six other banks today that all seem to have one-off isolated credit instances.
Paul Carlson: Paul, just having been through the cycles, as we both have for a long time, I've talked to probably six other banks today that all seem to have one-off isolated credit. I guess I'm wondering, can there be that many one-off isolated credit situations, or are we seeing a trend here? And just curious as to your thoughts from the big picture, not specific to Brookline.
Speaker Change: Paul, just having been through the cycles, as we both have over a long time, I've talked to probably six other banks today that all seem to have one-off, isolated credit instances.
Paul Perrault: I guess I'm wondering, can there be that many one-off isolated credit situations, or are we seeing a trend here? And you know, just curious as to your thoughts from a big picture, not specific to Proclaim. I think that there's a lot of stuff that was tried post-pandemic, and some of it didn't work. Company struggle through didn't didn't make ends meet and things are not as solid as they were before, but I don't see any big. We're writing trends that show like all the industry being in trouble with something unless I guess you don't make a record card.
Paul Carlson: I guess I'm wondering can there be that many one-off isolated credit situations or are we seeing a trend here and and you know just curious as to your thoughts from a big picture not specific to Brookline.
Paul Carlson: I think that there's a lot of stuff that was tried post-pandemic, and some of it didn't work, companies struggled through, didn't make ends meet, and things are not as solid as they were before, but I don't see any big, overriding trends that show like a whole industry being in trouble with something, unless, I guess, you have an electric car that's been invented. We don't see inventory problems; we don't see collection problems.
Paul Carlson: I think that there's a lot of stuff that was tried post-pandemic, and some of it didn't work. Companies struggled through, didn't make ends meet, and things are not.
Paul Carlson: as solid as they were before, but I don't see any ache.
Speaker Change: Overriding trends that show a whole industry being in trouble with something, unless, I guess, you have an electric car that's been invented. We don't see inventory problems. We don't see collection problems.
Paul Perrault: We don't see; we don't see inventory problem. We don't see election problems. We were saying knock on one here at least in the Metro Boston and certainly where I on the Westchester continues to hold up pretty well. And we've only have two downtown properties that were an issue, and those were relatively unique. They both have the same background in the sense that they were see properties that were acquired by very capable the owners who intended to operate them to almost a level of at least a month, and they got caught in the middle with the pandemic.
Paul Carlson: Real estate, knock on wood here, at least in the metro Boston area and certainly where I live in Westchester, continues to hold up pretty well. And we've only had to go to the downtown areas, properties that were an issue. And those were relatively unique. They both have the same background in the sense that they were C properties that were acquired by very capable owners who intended to upgrade them to almost a certain level and then lease them out.
Speaker Change: Real estate, knock on wood here, at least in the metro of Boston, and certainly where I live in Westchester, continues to hold up pretty well. And we've only had, though, two downtown...
Speaker Change: properties that were an issue and those were relatively unique. They both have the same background in the sense that they were seed properties that were acquired by very capable owners.
Speaker Change: who intended to upgrade them to almost a level of at least a month.
Paul Carlson: And they got caught in the middle of the pandemic. And so the buildings got fixed, but not leased entirely. And so, in both cases, they're looking to hold onto them, put in more money, and kind of wait it out. So... I think real estate is okay in the C&I business. It's a little bit trickier to be successful than it might have been five years ago.
Paul Perrault: And so at least that fixed, but not least entirely. And so they, in both cases, they're looking to hold on and put in nobody and kind of way it up.
Speaker Change: And they got caught in the middle with the pandemic, and so the buildings got fixed, but not leased.
Tyra: and Tyra.
Speaker Change: And so they, in both cases, they're looking to hold onto them, put in more money, and kind of weigh it up.
Paul Perrault: So I think wheel of state is okay in the CNI business. It's a little bit trickier to be successful, but it might have been five years ago or something.
Speaker Change: So...
Speaker Change: I think real estate is okay in the C&I business.
Speaker Change: It's a little bit trickier to be successful, but it might have been five years ago.
Speaker Change: Thank you.
Laura Hunsicker: The next question is from the line of Lori Hunsicker with Seaport Research. Your line is now open.
Laura Katherine Havener Hunsicker: The next question is from the line of Lori Hunsicker with Seaport Research. Your line is now open. Good.
Speaker Change: Thank you.
Speaker Change: The next question is from the line of Lori Hunsicker with Seaport Research. Your line is now open.
Laura Hunsicker: Great. Hi, thanks.
Laura Katherine Havener Hunsicker: Great. Hi, thanks. Good afternoon, Paul and Carl. Going back to your specialty vehicle portfolio of $352 million, can you share with us what the coupon is on that and then what the non-performers are on that?
Laura Hunsicker: Good afternoon, Paul and Carl.
Laura Hunsicker: Just going back to your specialty vehicle portfolio of $352 million.
Laura Katherine Havener Hunsicker: Great. Hi, thanks. Good afternoon, Paul and Carl. Just going back to your specialty vehicle portfolio of $352 million, can you share with us what the coupon is on that and then what the non-performers are on that?
Carl Carlson: Can you share with us what the coupon is on that and then what the non-performers are on that? Sure. The coupon on the specialty vehicle portfolio, although there are the yields around $75,000 on the entire.
Carl: Sure, the coupon on the specialty vehicles, I'll go to the yield. The yield's around $7,000 on that book, on the whole. Perfect.
Speaker Change: Sure. The coupon on the specialty vehicle is $1. I'll go to the yield. The yield is around $7.50.
Carl Carlson: Perfect. And then the non-performers, I mean I guess your equipment, finance, non-performers for $27 million. I mean, how much of that is related to this book? I'll give that to you.
Speaker Change: on that book. I'm going to be tired.
Speaker Change: Perfect.
Carl: Yeah, and then the non-performers, I mean, I guess your equipment finance non-performers are $27 million. How much of that is related to this book?
Speaker Change: Thank you.
Speaker Change: Yeah and then the non-performers, I mean I guess your equipment, finance, non-performers are $27 million. How much of that is related to this book?
Laura Katherine Havener Hunsicker: I'll get back to you. I don't have that for you yet. Okay.
Carl Carlson: I don't have that one. Okay.
Laura Katherine Havener Hunsicker: Okay, okay. And then also the charge-offs for this quarter, the $4.3 million equipment financing charge-offs, the C&I equipment financing charge-offs, was that a specialty vehicle, or was that something separate?
Speaker Change: I'll get back to you. I don't have that formula. That's fine. Okay. Okay. Okay. And then also the charge-offs for this quarter, the $4.3 million equipment financing charge-offs, C&I equipment financing charge-offs, was that a specialty vehicle or was that something separate?
Carl Carlson: And then also the charge-offs for this quarter, the $4.3 million equipment financing charge-off, CNI equipment financing charge-off.
Carl Carlson: Was that a specialty vehicle, or was that something separate? Mostly. Most of it's more like a specialty vehicle. We had some car washers that come out of the car. But the line here was at four lines. Got it. I missed it.
Speaker Change: Mostly, mostly special people. We had some car washers in there that come out of the car.
Carl: [inaudible] Carl Washington that comes out of the closet; that's the lion's share of us.
Laura Katherine Havener Hunsicker: Got it. I missed it. You said you said how many people were terminated on the specialty vehicle side? 21.
Speaker Change: But the lion's share of us have four lion's shares.
Laura Hunsicker: You said how many people were terminated on the specialty vehicle side? 21. Okay.
Speaker Change: Got it. I missed it. You said how many people were terminated on the specialty vehicle side?
Laura Katherine Havener Hunsicker: And did that happen late in the quarter, the middle of the quarter, or the beginning of the quarter? How should we think about that? It's happening right now. Okay, so it's..., and then. We're also going to see the Durban impact through in September. And I had in my notes that roughly, at least on the expense side, so obviously we know the non-interest income, that deducts round numbers like a million or something annually. But on the expense side, I had that impact running about $400,000 annually next quarter. Am I thinking about that right, or has that already been reflected? How should we think about that?
Laura Hunsicker: And did that happen? Did that happen late in the quarter, middle of the quarter, beginning of the quarter? How should we think about that? Happening right now. Okay, so it's okay.
Speaker Change: 21. And did that happen did that happen late in the quarter, middle of the quarter, beginning of the quarter? How should we think about that? It's happening right now.
Laura Hunsicker: And then we're also going to see the urban impact coming through in September. And I had in my notes that roughly, at least on the expense side, so obviously we know the non-interest income that deducts round numbers, the million or something annually. But on the expense side, I had that impact running about $1.6 million annually to $400,000 next quarter. Am I thinking about that right, or has that already been reflected? How should we think about that?
Speaker Change: Okay, so it's okay. And then we're also gonna see the Durban impact coming through in September . And I had in my notes that roughly, at least on the expense side, so obviously we know the non-interest income.
Speaker Change: that deducts round numbers a million or something annually but on the expense side I had that impact running about 1.6 million annually to 400,000 next quarter. Am I thinking about that right or has that already been reflected? How should we think about that?
Laura Katherine Havener Hunsicker: I'm not sure what you're referring to when you talk about the derp. It might be a misunderstanding.
Laura Hunsicker: I'm not sure what in the front, too, we can talk about the government. In this understanding, the government's really just the amount of income that we have in court. Right. That's right. It's just a side.
Speaker Change: I'm not sure what you're referring to when you talk about the Durbin. You might be misunderstanding. Durbin's really just the amount of feedback you get on the debit card side.
Laura Katherine Havener Hunsicker: Right, right. It's just one side, but I thought for some reason that you guys were doing something on the expense side around... Client spilled, or maybe I got that wrong.
Laura Hunsicker: But I saw, for some reason, that you guys were doing something on the expense side around a compliance bill, or maybe I got that wrong. Well, I think when we first were estimated, the lower first estimate, what the impact would be about going over $10 billion. I think we estimated some higher expenses associated with; you'll build up that, adding a few people to that. But that had nothing to do with urban; that just had to do with a lot of compliance. It makes some people incredible. That's largely done. That's already done. Okay. That's great. And then, okay.
Speaker Change: Right, right. It's just one side, but I thought for some reason that you guys were doing something on the expense side around...
Speaker Change: a compliance bill, or maybe I got that wrong.
Carl: No, I think when we first were asked to... When we were first estimating what the impact would be of going over $10 billion, I think we estimated some higher expenses associated with adding a few people on staff. But that had nothing to do with Thurman, that just had to do with going over to compliance, adding some people on credit, things of that nature.
Speaker Change: No, I think when we first were asked to...
Speaker Change: We were first estimating what the impact would be about going over $10 billion.
Speaker Change: I think we estimated some higher expenses associated with, you know, adding a few people on staff. But that had nothing to do with Durbin, that just had to do with building up to a lot of compliance. Adding some people on credit, things of that nature, compliance.
Laura Katherine Havener Hunsicker: That's already done, okay, okay, that's great. And then. Okay, perfect. Perfect. Okay. And then... On office, the $3.8 million that you had that were net charge-offs, how big was that office? credit that you took the charge off?
Speaker Change: That's largely done.
Speaker Change: That's already done. Okay. Okay. That's great.
Laura Hunsicker: Perfect. Okay.
Carl Carlson: And then on office, the 3.8 million that you had that were net charge-offs, how big was that office credit that you took the charge-off on? Just trying to think about what the right was. It was around 14 million. 14 million. 14 million originally. Okay. And that's correct.
Speaker Change: Okay perfect perfect okay and then on office the the 3.8 million that you had that were net charge off how big was that office?
Carl: I'm just trying to think about what the rights are. This is around $14 million. $14 million originally. OK. And that's it.
Speaker Change: credit that you took the charge up on.
Speaker Change: Just trying to think about what the rights are. It was around $14 million.
Carl: That's correct. Let me go into a little bit more detail on that. We currently are counting out at 10.8 million. So we're still working through this, and we do have a specific reserve.
Speaker Change: $14 million originally, okay.
Carl Carlson: And I want to give a little bit more detail on that. We currently are carrying out a 10.8 million. So we're still working to do this. And we do have a specific reserve, 2.5 million. Okay. And then, where is that located? Is that a downtown property? Got down walls. Okay. And that's Class A, Class B. That's B. Okay.
Speaker Change: That's correct. Let me go into a little bit more detail on that. We currently are counting out of 10.8 million.
Speaker Change: So we're still working through this one.
Carl: $2.5 million. Thanks a lot.
Speaker Change: and we do have a specific reserve.
Speaker Change: 2.5 million
Laura Katherine Havener Hunsicker: Okay, and then where is that located? Is that a downtown property? [inaudible] And that's class A, class B. That's the... Okay, and then just last question on that one: is that or what is the vacancy, if you have it on that one?
Speaker Change: Thanks a lot.
Speaker Change: Okay, and then where is that located? Is that a downtown property?
Speaker Change: hope to have lost
Speaker Change: Okay.
Speaker Change: And that's class A, class B.
Laura Hunsicker: And then just last question on that one. Is that, or what, what is the vacancy if you have it on that one? It could be that.
Speaker Change: That's it.
Speaker Change: Okay and then just last question on that one is that or what what is the vacancy if you have it on that one?
Carl: It could be that, it could be him, it could be that him.
Speaker Change: I don't think so.
Speaker Change: It could be that. It could be that.
Laura Katherine Havener Hunsicker: between the third and the fourth floor. First floor, second floor.
Speaker Change: No, it's been over a long time.
Carl: Gotcha. Okay. Yep.
Speaker Change: between the third and the fifth.
Speaker Change: First of all, it's important. Gotcha, okay.
Laura Katherine Havener Hunsicker: Gotcha. Okay, good, good. Okay. And then, Office Nanacruz. I appreciate all the detail you've got in your deck here, but it looks like these are just the ones that are maturing. Do you have what's your overall office number?
Speaker Change: Gotcha. Okay, good, good. Okay, and then Office Nanacruz, I appreciate all the detail you've got in your deck here, but
Carl Carlson: I appreciate all the detail you've got in your deck here, but it looks like these are just the ones that are maturing. Do you have what your overall office non-performers are? We just have the one. We really have the one. It's just that one. Just the one that's coming in. Okay. That's correct. Got it. Okay.
Speaker Change: It looks like these are just the ones that are maturing. Do you have, what's your overall office?
Speaker Change: non-performers are.
Carl: We just have to watch. We only have the one that's black on it. It's just that.
Office Nanacruz: But we just have the one. We only have the one, the one that's black one. It's just that one, the 10.8.
Laura Katherine Havener Hunsicker: Just the one that's coming due, okay? That's correct.
Office Nanacruz: Just the one that's that's coming due. Okay.
Laura Katherine Havener Hunsicker: Got it. Okay. Okay, very helpful. Okay, and then I guess, Paul, just one last question. There seems to be a little bit more M&A chatter going on. Obviously, you're one of the few banks that did an acquisition as rates started to go up. Can you just share with us your take on how you are thinking about M&A, how you see the sort of pulse on M&A, any chatter, any directional thoughts? That'd be really helpful. Well, I think...
Laura Hunsicker: Very helpful. Okay.
Laura Hunsicker: And then, I guess I'll just last question.
Speaker Change: That's correct. Got it. Okay.
Speaker Change: Okay, very helpful. Okay, and then I guess, Paul, just last question. There seems to be a little bit more M&A chatter going on. Obviously, you're one of the few banks who did an acquisition as rates started to go up. Can you just share with us your...
Paul Perrault: There seems to be a little bit more M&A chatter going on. Obviously, you're one of the few banks. You did an acquisition. As Ray started to go up, can you just share with us your take on how you are thinking about M&A? How do you see sort of the pulse on M&A? Any chatter? Any directional thoughts? That'd be really helpful. Thanks. Well, I think you said right. I mean, a little bit more part of the very little. So, it's still a very difficult environment with the marks underneath it. But the facilities surprise the capital and having it all work.
Paul: your take on how you are thinking about M&A, how you see sort of the pulse on M&A, any chatter, any directional thoughts, that'd be really helpful. Thanks.
Paul Carlson: Well, I think, you said it right. I mean, a little bit more talk, but very little. It's still, it's still a very difficult environment, with the marks on everything. I think we're closer to getting to more normal M&A activity, but we're not quite there yet. And I'm not aware that there's all that much around us anyway.
Paul: Well, I think, you know, you said it right, I mean, a little bit more talk, but very little. It's still, it's still a very, uh...
Paul: difficult environment with the marks underneath it.
Laura Hunsicker: But you know, I think I think we're closer to getting to more normal M&A activity, but we're not quite there yet. And I'm not aware that there's a lot much around us anyway. Okay. Great. Thank you so much for taking my question. Okay. Thank you.
Speaker Change: I think we're closer to getting to more normal M&A activity, but we're not quite there yet.
Speaker Change: And I'm not aware that there's all that much around us anyway.
Laura Katherine Havener Hunsicker: Okay, great. Thank you so much for taking my question. Thank you. Okay.
Speaker Change: Okay, great. Thank you so much for taking my questions.
Laurie: Okay, Laurie.
Chris O'connell: The next question is from the line of Chris O'Connell with KBW.
Chris O'connell: The next question is from the line of Chris O'Connell with KBW. Your line is now open.
Speaker Change: Thank you.
Chris O'connell: The line is out. Hey, good afternoon, Paul. I call you back.
Speaker Change: The next question is from the line of Chris O'Connell with KBW. Your line is now open.
Chris O'connell: And a good afternoon, Paul and Carl. Hoping to start off on some of the margin dynamics going forward. You know, it seems like the, you know, deposit mix shifts, you know, turned around and slowed this quarter. Are you guys still seeing pressure there at all? Do you expect, you know, a little bit of a slower pace in the back half of the year? I guess, yeah, start out there.
Chris O'connell: Hey, good afternoon, Paul and Carl.
Chris O'connell: I'm hoping to start off on some of the margin dynamics going forward. You know, it seems like the, you know, deposit, mixed shifts, you know, turned around and slowed this quarter. Are you guys still seeing pressure there at all? And do you expect, you know, a little bit, you know, slower pace in the back half of the year? I guess, yes, start out there. Yeah, so we're not seeing the movement between floods that we've seen in the past. The people moving a lot, money out of one clock or a lower interest rate, tied into a higher interest rate.
Chris O'connell: I'm hoping to start off on some of the margin dynamics going forward.
Chris O'connell: You know, it seems like the, you know, deposit mix shifts, you know, turned around and slowed this quarter. Are you guys still seeing pressure there at all? Do you expect, you know, a little bit, you know, slower pace in the back half of the year?
Carl: Yeah, so, uh... We're not seeing the movement between products that we've seen in the past, with people moving a lot of money out of one product or a lower-interest bearing product into a higher-interest bearing product.
Speaker Change: I guess he has to start out there.
Speaker Change: Yeah, so...
Speaker Change: We're not seeing the movement between products that we've seen in the past. People moving a lot of money out of one product or a lower interest rate product into a higher interest rate product.
Carl: Any growth in deposits is basically coming behind yourself, you know, as you attract new customers. We are starting to see more activity on the DDA side, particularly on the commercial side and the cash management side. Good to see, and you don't have the outflows that you were seeing earlier; you're seeing some growth there. But I'd say, on the CD side, you know, we're basically, you know, high spread, the market is, right, so the book is maturing.
Paul Perrault: Any growth in the past is basically coming higher interest rate, you know, as you're trying to be in custody. You know, we are starting to see more active in the ADA side, particularly the commercial side and the cash management side. She's in the, good to see. And you don't have the outflows that you see growing. She starts to see some growth there. So let's say on the city side, you know, we're basically, you know, highest where the market is right. So the book is mature. So we have about 330 million dollars CD. So I'm going to go off to three.
Speaker Change: Bye.
Speaker Change: Any growth in deposits is basically coming behind yourself, you know, as you're trying to do customers.
Speaker Change: We are starting to see more activity on the DDA side, particularly on the commercial side, and the cash management side.
Speaker Change: It's good to see that you don't have the outflows that you were seeing earlier. On the CD side, you know, we're basically, you know,
Carl: So we've got about $330 million in CDs that will go off in Q3, and it's basically going on at similar rates. Wherever possible, we're trying to shorten those durations of the bank loan. We're actually offering a little bit of a higher rate for lower, we're limiting the curve out there so that people are trying to fit the ball in lower terms. There are eight of us.
Speaker Change: The book is maturing, so we've got about $330 million in CDs that will go off in Q3, and it's basically going on at similar rates.
Paul Perrault: And it's basically going on at similar rates. And maybe, where possible, we're trying to shorten those durations. We're actually offering a little bit of a higher rate for lower. But we're meaning that the curve out there, so that people are trying to find lower terms. So not finding any of those. So there's stayed on the dance side. And if you guys can able to test the waters at all. You know, with any reductions in any of the products on the deposit side at all year to date. Yes. You actually have. So we have, we have moved a race on the top tier.
Speaker Change: Thank you very much.
Speaker Change: wherever possible we're trying to shorten those durations of the Bancorp
Speaker Change: We're actually offering a little bit of a higher rate
Speaker Change: for lower, we're limiting the curve out there so that people are trying to take lower terms.
Speaker Change: So now finally, we'll see you again soon. Let's stay on the dance side.
Chris O'connell: And have you guys been able to test the waters at all? on the deposit side all year to date? Yes, yes we have. So we have moved rates on the top tier offerings that we might have in money markets and savings, financial savings. A number of quarters, some were 10 basis points.
Speaker Change: And have you guys been able to test the waters at all with any reductions in any of the products on the deposit side at all year to date?
Speaker Change: Yes, we have. So we have moved rates on the top tier offerings that we might have in money markets and savings accounts.
Chris O'connell: Offerings that we might have in money markets instead of savings, legal savings accounts. No, we're going to see. The number of quarters, somewhere 10 basis points. Yeah. That's a fairly reasonable. Got it.
Carl: Some more quarter, some more 10 basis points. Yeah.
Speaker Change: [inaudible]
Speaker Change: That's a fairly recent development, yes.
Chris O'connell: And just, you know, with the outlook for the rate environment now shifting a bit to, you know, hopefully be a little bit more favorable, you know, as you get further along to 24 to 25, maybe just talk about your, you know, strategic priorities in terms of whether that makes you a little bit more optimistic on loan growth into next year? Or, you know, there's still a good amount of broker deposits that, you know, at a fairly high cost right now that could make shift or come off the balance sheet.
Chris O'connell: And just, you know, with the outlook for the rate environment, you know, now shifting a bit to, you know, hopefully be a little bit more favorable, you know, as you get further along to 24 to 25. You know, maybe just talk about your, you know, strategic priorities in terms of, does that, you know, make you a little bit more optimistic on loan growth into next year. Or, you know, there's still a good amount of broker deposit that, you know, are fairly, you know, high cost right now that could make shift or come off the balance sheet.
Speaker Change: Got it.
Speaker Change: And just, you know, with the outlook for the rate environment, you know, now shifting a bit to, you know, hopefully be a little bit more favorable, you know, as you get further along to 24 to 25.
Speaker Change: you know, maybe just talk about your, you know, strategic priorities in terms of, does that
Speaker Change: you know, make you a little bit...
Speaker Change: more optimistic on loan growth into next year.
Speaker Change: Or, you know, there's still a good amount of broker deposits that, you know, at a fairly, you know, high cost right now that could make shift or come off the balance sheet.
Chris O'connell: You know, is there any kind of strategic priority in terms of, you know, growing the asset side of the balance sheet or maybe taking it, you know, a little bit slower into next year and reducing some of those high-cost broker deposits or even, you know, some of the highest-cost borrowing? But we're
Paul Perrault: Does, you know, is there any kind of strategic priority in terms of, you know, growing the assets out of the balance sheet or maybe taking it, you know, a little bit slower into next year and reducing some of, you know, those high cost, you know, broker deposits or even, you know, some of that, you know, highest cost bar. But we're always looking to try to reduce those wholesale funny side things, and I think when we're starting to reverse the portion, we'll see more at the end of the week side. Some people should even sign like that; they don't have to borrow the big way to erase stuff out of the way.
Speaker Change: Is there any kind of strategic priority in terms of growing the assets out of the balance sheet or maybe taking it a little bit slower into next year and reducing some of those high-cost broker deposits or even some of the highest-cost borrowings?
Speaker Change: but we're always looking to try to reduce those those wholesale on the wholesale funding side of things.
Carl: Well, we're always looking to try to reduce the wholesale funding side of things. And I think, you know, when rates do start to reverse course, you will see more activity on the opening side. I think some people are sitting on the sidelines, thinking they don't have tomorrow.
Speaker Change: And I think when rates do start to reverse course, you will see more activity on the community side. I think some people should be on the sidelines if they don't have to borrow, but the interest rates have gone down a little bit. So all of those things are true.
Chris O'connell: They're going to trace that down a little bit. So all of those things are true. Yeah.
Paul Perrault: So all of those things are true, so we'll be out there.
Speaker Change: Yeah, thank you.
Chris O'connell: Got it, and just thinking about the margin as we get past the next quarter or so, how much do you think the dynamic changes depending on the pace of debts on cuts, whether they're coming in kind of quickly as we enter, you know, 2025, or, you know, a little bit, you know, more measured than what's been priced in recently? Well, as I said, come down. We're a lot earlier, so that's pretty responding to that. I expect that to be fairly responsive, as it goes down, that data would be as it tends to be as immediate as the time rate goes down. So far, we're going down; probably not, there'll probably be a little bit of a back there.
Chris O'connell: I got it. And just, you know, thinking about the margin, you know, as we get past, you know, the next quarter or so, I mean, how much do you think the dynamic changes depending on, you know, the pace of Fed Fund cuts, you know, whether they're coming in kind of quickly as we enter, you know, 2025, or, you know, a little bit, you know, more measured than what's been priced in recently?
Speaker Change: Got it.
Speaker Change: and just, you know, thinking about the margin, you know, as we get, you know, past
Speaker Change: you know the next quarter or so.
Speaker Change: I mean, how much do you think the dynamic changes depending on, you know, the pace of debt fund cuts?
Carl: Well, as rates come down, our library is pretty responsive to that. I expect that to be fairly responsive as it goes down. That would be an immediate event. I don't see the crime rate going down, the SOFR rate going down, probably not, but there will probably be a little bit of an impact there.
Speaker Change: Well, as Rick's coming out, our library is pretty responsive to that. I expect that to be fairly responsive as it goes down. That data could be as immediate as...
Speaker Change #100: What's the crime rate going down? The SOFR rate going down? Oh, probably not. There'll probably be a little bit of a back there. But we have quite a bit, like I said, of broker CDs and some of them are bank-based, that we refresh fairly quickly. And, uh...
Paul Perrault: We have to be quite a bit, like you said, in both the cities, in the lower bank of the base. You have to re-price fairly before you go home, and, you know, so we're not really aware of that very closely, of course, and try to match that up with our new book. So, we do also adjust the weight, floating rate, on our blocks that would re-price down as well. Well, I think it's going to be a benefit to me, sir. Understood.
Carl: But we have quite a bit, like I said, of broker CBEs at all of our bank events that we refresh fairly quickly. Yes, we monitor that very closely, of course, and try to match that up with what we can book. So we do also have a lot of adjustable rate and floating rate mortgages. Lots. That would be twice down the street. All in all, I think it's going to be a benefit to us all.
Speaker Change #100: So we monitor that very closely, of course, and try to match that up with what we can book. So we do also have a lot of adjustable weight, floating weight lumps that would be traced down as well.
Speaker Change #100: Overall, I think it's going to be a beneficial system.
Chris O'connell: understood, and you know, if the pace of growth, you know, does kind of continue to be, you know, relatively tepid, is there, you know, a point where, you know, capital ratios get, you know, high enough where you'd be interested in, you know, buying back shares?
Speaker Change #100: Thank you. Bye-bye.
Chris O'connell: And, you know, if the pace of growth, you know, does, you know, kind of continue to be, you know, relatively competitive, is there, you know, a point where, you know, capital ratios get, you know, high enough where you'd be interested in buying back shares? So, we continue to look at. So, we are the Bill with capital. I think that's what we're talking about. Got it. All right.
Speaker Change #100: Understood.
Speaker Change #100: you know if the pace of growth you know does
Speaker Change #101: you know, kind of continue to be, you know, relatively tepid, is there, you know, a point where, you know, capital ratios get, you know, high enough where you'd be interested in, you know, buying back shares?
Carl: So we continually look at it. So we have a bill with capital. I think that's something that's on.
Speaker Change #101: So we continually look at.
Speaker Change #102: So we have a bill with capital. I think that's something that's important to talk about.
Chris O'connell: All right, that's all I had. Thanks for taking my questions.
Operator: That's all I have. Extreme questions. Next question. Thank you.
Speaker Change #103: Got it.
Speaker Change #104: All right, that's all I have. Thanks for taking my questions.
Chris: Thanks, Chris.
Operator: This concludes our question and answer session.
Operator: This concludes our question and answer session. I'd like to turn the conference back over to Mr. Perrault for any closing remarks. Thanks a lot, and thank you.
Paul Perrault: I'd like to turn the conference back over to Mr. Pearl for any closing remarks.
Speaker Change #106: Thank you.
Speaker Change #107: This concludes our question and answer session. I'd like to turn the conference back over to Mr. Perrault for any closing remarks.
Paul Perrault: Thanks a lot.
Paul Carlson: Thanks, Eliza, and thank you all for joining us here this afternoon. We look forward to talking with you again next quarter. Have a good day.
Paul Perrault: And thank you all for joining us this afternoon. We look forward to talking with you again next quarter.
Paul A. Perrault: Thanks, Elizabeth, and thank you all for joining us this afternoon. We look forward to talking with you again next quarter. Have a good day.
Operator: Have a good day.
Operator: The conference has concluded. Thank you for attending today's presentation.
Operator: The conference has concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: You may now disconnect.
Speaker Change #109: The conference has concluded. Thank you for attending today's presentation. You may now disconnect.