Beacon Financial Corp Q1 FY2025 earnings call

• Operating net income $27.6 million, up 6% linked quarter and 32% year over year; EPS $0.60, flat linked quarter, up 22% year over year.
• Operating expenses $68 million, down 4% linked quarter and 6% year over year; operating leverage 5% linked quarter and 11% year over year.
• Asset quality strong: net charge-offs 15 basis points of loans, reserve to loans 1.24%, total loss reserves 500% of nonperforming loans; total delinquencies and nonperforming loans 42 basis points of loans, lowest in ~20 years.
• Liquidity solid: loan to deposit ratio 5%, down 1% linked quarter.
• Strategic initiatives: digital deposit initiative added $75 million deposits; sold remaining Upstart book; nonstrategic runoff portfolios down 76% year over year to $34 million.
• Merger with Brookline Bancorp: estimated 23% accretion to 2026 consensus; integration planning ongoing.

Operating net income was $27.6 million, up 6% linked quarter and 32% year over year. Net interest margin was 3.24%, up 10 basis points linked quarter, and net interest income was up $2.9 million or 3% linked quarter. Operating expenses were down $3.1 million or 4% linked quarter. Average loans were up $118 million or 1% linked quarter and up $348 million or 4% year over year. Net charge-offs were 15 basis points of loans, reserve to loans was 1.24%. Digital deposit initiative delivered approximately $75 million of new deposits. Sold remaining $7 million Upstart book; nonstrategic runoff portfolios down 76% year over year to $34 million.

• No line item income statement and balance sheet guidance for 2025 given pending merger.
• Encouraged by financial metrics momentum; confirm comfort with 2026 consensus accretion from merger.

• Economic environment volatility due to tariffs and policy initiatives; uncertainty impacts on loan demand and charge-offs.

Q: Update on loan demand and stand-alone growth?

A: Mixed client themes (inventory loading, wait and watch, expense rationalizing); pipeline slowed, expecting ~5% annualized loan growth range.

Q: Expense base growth?

A: Expect expense momentum to remain relatively stable.

Q: Normalized net charge-off range?

A: Expected to normalize around 20 basis points level.

Q: Employee retention ahead of MOE?

A: Identified key producers, discussed retention grants.

Q: Product offerings and deposit strategies ahead of legal close?

A: Digital deposit initiative added $75 million, ~1/5 new clients via digital; fine-tuning digital functionalities (e.g., direct deposit API).

Q: CRE concentration and TCE ratio near MOE?

A: CRE concentration below 300%, TCE expected stable.