Brookline Bancorp Management Discusses Q3 2013 Results - Earnings Call Transcript

| About: Brookline Bancorp, (BRKL)

Brookline Bancorp (NASDAQ:BRKL)

Q3 2013 Earnings Call

October 24, 2013 1:30 pm ET

Executives

Paul A. Perrault - Chief Executive Officer, President, Director, Member of Credit Committee, Chairman of Brookline Bank and Chief Executive Officer of Brookline Bank

Julie A. Gerschick - Chief Financial Officer, Principal Accounting Officer and Treasurer

Analysts

Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division

Operator

Good afternoon. My name is Amy, and I will be your conference call coordinator today. It is my pleasure to welcome you to the Brookline Bancorp, Inc. Third Quarter 2013 Earnings Call. This conference call is being recorded and simultaneously webcast on the Brookline Bancorp website, where it will be archived after the call. [Operator Instructions]

I would now like to remind you that this call may contain forward-looking statements with respect to the financial condition, results of operations and business of Brookline Bancorp, Inc. Actual results may differ materially from those forward-looking statements. Accordingly, Brookline Bancorp cautions you against any undue reliance upon forward-looking statements and disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise.

I would now like to turn the conference call over to Mr. Paul Perrault, CEO and President; and Ms. Julie Gerschick, CFO and Treasurer of Brookline Bancorp. Please go ahead, Mr. Perrault.

Paul A. Perrault

Thank you, Amy, and good afternoon, all of you. Thank you for joining us today. Brookline Bancorp delivered another quarter of inline results in what remains a highly competitive marketplace. Despite headwinds, Brookline's business fundamentals remained strong, and I am particularly proud of the results our dedicated bankers have delivered again this quarter.

Loan growth continues to gain traction. Third quarter growth in our commercial banking portfolios increased by 4% in the quarter, and 10% on a year-to-year basis. More specifically, C&I lending increased 9% during this quarter; equipment finance increased 8%; and Commercial Real Estate increased 4% during the quarter.

Asset quality continues to reach new heights, with nonperforming loans and nonperforming asset levels being at the lowest levels as compared to our peers. Our continued efforts to restructure our deposit base continues to pay off for the company as well. Core deposits rose 4% during the quarter and 10% year-over-year. As a result, core deposits now represent 75% of total deposits, up from 71% on September 30th of last year, an improvement that has resulted in a cost of funds reduction of 3 basis points for the quarter and 17 basis points year-over-year.

The company remains well-capitalized by every measure. Tangible capital continues to grow, with tangible book value per share increasing $0.06 during the quarter to $6.57. This capital strength, coupled with the strengthening of our internal infrastructure, which we have discussed before, provides us with the strong base we need to support our growth. On an overall basis, these gains reflect the strength of our business strategy, the strength of our bankers and the strength of our franchise.

I mentioned a few minutes ago that we continue to face strong headwinds. Interest rates remain low. Competition remains keen. And ongoing regulatory changes continue to demand greater and greater resources. This is reflected in our net interest rate margin, which, like the majority of our peers, remains under pressure. Our loan composition is such that we remain poised to quickly benefit from rising interest rates, but until then, we will continue to focus on 3 important goals: expanding our commercial banking and deposit bases, relationship by relationship; maintaining our stellar asset quality; and continuing to improve our efficiency ratio. It is this overall strategy that has allowed the company to report third quarter earnings of $9.4 million, or $0.14 per basic share, and will allow the company to thrive in the long run.

With that, let me turn it over to Julie to provide you with greater details on that third quarter performance. Julie?

Julie A. Gerschick

Thank you, Paul. As reported in yesterday's press release, the company earned $9.4 million, $0.14 on a per basic share basis and $0.13 per share on a fully diluted basis. These results were in line with the net income of $9.5 million or $0.14 per basic and diluted shares that we reported in the second quarter of 2013.

Total assets were 2% sequentially, to $5.3 billion at September 30, up $175 million or 4% from September 30, 2012. The return on average assets remained strong at 73 basis points, as did the return on tangible stockholder's equity of 8.27%.

In addition, our tangible capital ratio of 9.03% remains well above our peer group median.

I'd like now to address some of the key financial highlights for the quarter. As anticipated, our commercial loan portfolio continued to grow, increasing $133 million during the quarter, and as Paul indicated, growing at a quarterly rate at 4%, in an annualized rate of 80%.

Growth in our C&I portfolio led the increase, growing at a quarterly rate of 9% during the quarter, followed closely behind by growth in the equipment financing portfolios. Commercial Real Estate also continued to grow. Together, this growth more than offset the $39 million decline in our indirect auto portfolio during the quarter.

Our consumer loan portfolios of $774 million remained relatively flat for the quarter, up $673,000 during the quarter and down $698,000 year-to-date.

Asset quality remains strong. The third quarter saw the continued resolution of our already-low levels of problem assets, including the resolution of a $1.4 million problem loan. As a result, nonperforming loans declined 6 basis points, and nonperforming assets declined 5 basis points, to end the quarter at 36 and 32 basis points, respectively.

Net loan charge-offs remained stable at 6 basis points of average total loans and leases in the third quarter. And consistent with prior quarters, our provision continues to exceed net charge-offs, as we rebuild Bank Rhode Island and First Ipswich's allowances for loan and lease losses and add for loan growth at Brookline Bank.

Given the continued improvements in the economy, the ongoing improvement in already-strong asset quality metrics and our increasing comfort with our acquired loan portfolios, the company released $543,000 of allowance for loans and lease losses during the third quarter, a net change that included a $1.2 million allowance reduction for the improving quality of our loan portfolios, offset by a $657,000 increase in the portfolios for a deterioration in certain acquired loans, as required by generally accepted accounting principles. As a result, the allowance for loans and lease process represents 1.08% of total loans and leases and 1.31% of originated loans and leases at September 30, 2013.

Shifting to the liability side of our balance sheet. Deposits grew $81 million during the quarter, or 9% on an annualized basis. Strategically, management continues to focus on growing core deposits and, in particular, commercial deposits as a percentage of total deposits. To that end, certificates of deposits declined $22 million during the quarter, offset by a $103 million increase in our core deposits. As a result, core deposits now represent 75% of total deposits, up 6% from the prior quarter on an annualized basis, and up 5% from September 30, 2012.

While Federal Home Loan Bank advances remained relatively steady quarter-to-quarter at approximately $785 million, they continued to decline as a percentage of the company's total funding base, decreasing 1% from June 30, 2013, and 2% for September 30, 2012.

Turning to the income statement, the company reported net interest income of $43.4 million for the quarter and $132 million for year-to-date. Net interest margin for the quarter was 3.56%, down from 3.78% for the second quarter of 2013. Several factors contributed to this 22-basis-point reduction, including an 8-basis-point reduction quarter-to-quarter in prepayment penalties, a 5-basis-point reduction in purchase accounting accretion, an 8-basis-point reduction in weighted average coupon rates, and a 1 basis reduction in late charges; reductions that were offset in total by a 3-basis-point improvement in the total cost of funds.

Non-interest income grew to $3.5 million in the third quarter 2013 from $3.1 million in the second quarter. This growth included $508,000 in retail-related fees and $200,000 in a recovery of an investment previously written off other-than-temporary impairment purposes, income levels that we believe compare favorably on a sequential quarter basis.

Losses from investments in affordable housing project were $558,000 in the quarter, up from the $400,000 run rate previously discussed, in part as a result of 1 project, which, because of slower than anticipated rental periods, has incurred higher marketing costs and lower rent income than initially projected. Regardless of the impact of their income, these investments continue to provide the company with very important tax benefits.

Non-interest expense of $29.6 million in the third quarter of 2013 decreased $1.3 million from $30.8 million in the second quarter, resulting in a decrease in the efficiency ratio from 63.5% to 63.1% quarter-to-quarter.

Compensation declined $1.1 million quarter-to-quarter, in part due to a $602,000 reduction in retirement plan expense and a reduction of $636,000 in bonus accruals. Increases in occupancy expense included an additional $120,000 of increased real estate taxes on our new corporate headquarters. Two new branches added over the last 3 quarters resulted in $81,000 of additional depreciation on a sequential quarter basis, while the retirement of certain fixed assets added an additional $103,000 to occupancy expense in the quarter.

These increases were offset by decreases in equipment and data processing of $201,000, which reflect reductions in costs stemming from our successful systems conversion and the release of associated temporary personnel.

Finally, let me touch upon the change in tax provision, which decreased $700,000 quarter-to-quarter. Although the quarterly effective tax rate was 31.9%, you will note that the year-to-date effective tax rate was 34.3%, a rate that we consider in line with earlier quarters and more indicative of our anticipated 2013 effective tax rates. The quarterly reduction of $700,000 in tax provision included $300,000 in adjustments for tax returns filed and $400,000 in provision reductions for changes in estimated 2013 pretax income and associated tax rates.

Amy, this concludes my formal remarks. We can now open the call up to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Mark Fitzgibbon at Sandler O'Neill.

Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division

I was wondering, should we expect expenses to decline again in coming quarters? I know you had talked about sort of building out the expense base. But -- or should we sort of expect the expenses to hold steady in revenues to kind of grow up around them?

Paul A. Perrault

I hope that's not meant to be a trick question, Mark.

Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division

It's not.

Paul A. Perrault

Okay. We have reported that we've been carrying a lot of expenses because we've been doing a lot of things. We have gotten most of the way there, almost all the way there, beginning to see the fruits of some of that on many fronts, including the expense front. On the other hand, we're seeing rather robust growth in areas that you need to pay close attention to all the various pieces of commercial banking. So -- I mean, it's a bit of a back-and-forth. But directionally, if I could answer it, perhaps a little bit via the efficiency ratio, I'm still optimistic that we could show improvement there.

Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division

Okay. Second question relates to -- I'm curious how the balance sheet position today from a rate-sensitivity standpoint, and also, if you could share with us directionally where you think the margin's headed.

Julie A. Gerschick

Well, let me talk a little bit about the changes in the margin from quarter-to-quarter so that we can take it piece by piece. The margin includes an 8-basis-point reduction in the weighted average coupon rate, and that 8-basis-point reduction has remained relatively steady quarter-to-quarter. And so for the continuing timeframe, at least given this interest rate environment, we would expect that reduction to continue going forward. Prepayment penalties vary significantly quarter-to-quarter, as we discussed last quarter in particular. They were represented approximately $700,000 to $800,000 in the first quarter; they were about $1.4 million to $1.5 million in the second quarter; and in this third quarter, they were $600,000. So from second quarter to third quarter, we experienced an 8% reduction in those prepayment penalties -- excuse me, 8 basis points. However, that can go up and down, depending upon the quarter, depending upon the interest rates, and it's really very hard to predict. So that's probably one of the tougher pieces of this puzzle, Mark.

Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division

So you are suggesting, Julie, that the NIM will be down something in the neighborhood of 14 basis points next quarter?

Julie A. Gerschick

No. The 8-basis-point -- very good question. The 8-basis-point reduction, Mark, for this quarter represented largely -- it reflects largely the reduction of the fees associated with that $1.0 million -- $1 million penalty, prepayment penalty, on a $15 million loan that paid off in the second quarter. So the majority of the 8-basis-point deduction in the NIM related to prepayment penalties is resulting from that one loan, which was out of character for prepayment penalties in any realm. So we don't think we'll be seeing an 8-basis-point decline in the next quarter for prepayment penalties, because, as I mentioned earlier, they are at....

Paul A. Perrault

$600,000.

Julie A. Gerschick

They are at $600,000, 5 basis points. Could they go up to $700,000? Yes. Could they go down $400,000? Yes. But it won't be the 8-basis-point reduction that you saw in this last quarter.

Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division

Okay. So excluding prepayment penalties, the core margin is sort of stabilizing?

Julie A. Gerschick

I would say, I mean like...

Paul A. Perrault

Probably not quite.

Julie A. Gerschick

Yes. The other piece of it, Mark, that -- always the wildcard is the purchase accounting accretion, because that moves up and down depending upon prepayments, which move up and down depending upon interest rates. So that contributed 5 basis points to the quarter's reduction in the net interest margin. How much that contributes next quarter, whether it's 3 basis points or 6 basis points, it's not quite clear; but it will probably contribute a little bit as well.

Paul A. Perrault

I think the takeaway, Mark, is that the decline in Q3 from Q2 is dramatically exaggerated by the prepayment explanation that Julie just gave you. So if you sort of put that aside for a second, there is no doubt continued downward pressure on the margin. But it is not catastrophic or excessively painful. The way that I explain it to the guys is, one of those things we can problem make up with margin.

Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division

Well, that's my next question. What does the pipeline look like today?

Paul A. Perrault

Other than indirect auto and residential lending, I'd call our pipelines rather robust, which would include home equity, the 3 equipment finance arms, C&I and CRE.

Operator

Our next question comes from Matthew Kelley at Sterne Agee.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

First, just wondering if you could talk about what you're seeing in yield and spread trends on commercial loans, particularly Commercial Real Estate, multifamily? How that changed during 3Q compared to the first half of the year?

Paul A. Perrault

Compared to the first half of the year, there's more business around. That's one difference. And there is some level of crazier pricing, though it is not rampart, I'd say. So you pick your spots or you move away from those deals, which tends to be our likely direction, as we tend to just pass on them if they're really low. And there are probably -- we used to call the economy getting better, you'd see some green shoots. I probably have seen some green shoots that suggest that the general level of pricing, which got pretty bad during Q2, is at least stabilizing, generally now. There are plenty of one-offs as I first described, but in the bigger markets, it's probably stabilizing and once in a while we could see a little bit better pricing. You have to remember, a lot of these things sort of track directly or in arrears against things like Federal Home Loan Bank borrowing cost at 5 years to be the most common example. That was very, very low, went way up in the early -- late spring, early summer, came back down, but not down as low as it was before. It depends where you are comparing. So things are coming on the books at a price that's not as good as it was midyear when there was less volume, as you know from our results, but quite a bit better than it was a year ago when we had bigger volume. So...

Julie A. Gerschick

And terms seem to be stabilizing a little bit from the earlier part of that -- yes, well, the length of the time, the maturity of the property...

Paul A. Perrault

Probably, yes.

Julie A. Gerschick

And that's a little bit better than it was at the beginning of the year when competition was so keen after that push in fourth quarter. So it's still not -- it's still -- you still have false points on the rates, see some unusual one-offs, but on an overall basis, that seems to be stabilizing to a degree.

Paul A. Perrault

The other impacts, Matt, that are important, I think, here is that everybody is back, which has not been the case in years. And by everybody is back, I mean all the players in the market are back looking for business, and even their cousins and aunts and uncles. So everywhere you can -- just trying to be a player in commercial real estate, particularly. And so very recently, the guys do report that they're seeing important deterioration in standards mostly related to loan-to-values, and the ones that worried them the most, because they are the practitioners, is what's going on in construction lending, which is -- we are in it, obviously, but it's not a huge business for us. But it's just an interesting thing to note that that's where the credit standards are exhibiting themselves as being not quite what they were. And our Chief Credit Officer, who calls these the "Eisenhower years" in commercial real estate in new England at least, keeps pointing out that in the multifamily, I believe you asked specifically about, rates have never been lower -- cap rates have never been lower, occupancy rates have never been higher, and rents have never been higher; and in Metro Boston, at least, we have never seen so many apartment units under construction or planned. That's a formula that we pay very, very close attention to.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Right. And just along those lines, how big of a role do the agency, securitized dust lenders, so Fannie-Freddie provide in the multifamily space as competition? I know there is a mandate for them to reduce their role nationally, 10% this year. Do you think that there is an opportunity for the banks like Brookline to take advantage of that? Or maybe just comment on first their role in the multifamily markets that you compete in, in Metro Boston.

Paul A. Perrault

Yes, they are reducing their involvement in the sector. They are concentrating it in Boston. Because we only see more and more competitive situations where we lose to them and HUD, there is another one that the guys talk about, where they have silly longs, silly low rate, silly loan-to-value programs that take a lot of business. And then we have these big, old relationships with real estate families that do this for a living, and in a lot of cases, we have a proposal, the government has a proposal, and we recommend they take the government proposal. It makes them a better borrower. So I don't see any diminution at all.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Last question, just on the tax rate. So a little bit of a change in -- using the 34% going forward. But as we look out into '14 and beyond, are you still working for ways to reduce that further with tax credits and maybe municipals, or what else is going on there?

Julie A. Gerschick

Our intent for 2014 is -- it's got several prongs to it. The largest prong would continue to be the use of tax credit, the use of the affordable housing tax credits as well, and then stronger use of our tax-benefited investment subsidiaries.

Paul A. Perrault

A little tough for us to look at municipal, I think, Matt. Because when a guy get a 115% loan-to-deposit ratio, the investment portfolio is a liquidity and collateral play, and so I would have to be leveraging, I think, in order to get there. That's not worth that. I mean, I like lower tax rates, but not at that cost.

Operator

[Operator Instructions] And our next question comes from Collyn Gilbert from KBW.

Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division

Paul, you sort of touched on this, but I just want to just make sure that I'm hearing you correctly. So with the growth -- the loan growth that you saw this quarter and kind of your thoughts on going into the fourth quarter, do you -- so this is real economic growth or market share growth that you're seeing versus any potential maybe just pull-through, given the volatility in rates and the uncertainty in the economy and that type of thing? I mean, do you feel like there is real definitive sustainability here in the loan growth trajectory for you guys?

Paul A. Perrault

Well, let me start with the last part of the question, which is, I think we have shown, particularly since we have owned Bank Rhode Island and before, that we are very capable at growing commercial loan portfolios. I think we got a good track record that'll stand, I think, on its own. The question of whether we are taking market share or not is a much tougher one. Commercial Real Estate is one that I don't think really has but theoretical market share. Boston is hot as a pistol, generally. There are plenty of properties that are being taken advantage of and upgraded by investors, as people move stuff around. So there is a tremendous amount of action. And without trying to hit the ball back over there to you, I think you guys are in a better position to gauge, because you look at all the banks in the market to see whether our market share appears to be improving or not. In theory, I'll take a guess. Yes, I think we probably are a little bit, but I can't really be sure of that, because there are so many players. Stuff's going to insurance companies. We talked with Matt about the government programs. And product ends up all over the place. There are private equity players doing deals, so I can't really tell. I'm satisfied with what we're doing and how we're doing it. Frankly, whether we're gaining share or not, we're going fast enough.

Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division

Okay. Okay, that's helpful. And then just, Julie, on the commentary surrounding the NIM, and more specifically, the loan yield. So were you saying that it's like an 8-basis-point reduction due to coupon rates? Does that mean we assume that what's rolling -- or what's coming on is 8 basis points lower than the portfolio yields? If the portfolio yields at 4.54%, that means you're still originating in the high 4.4s? Or do I have that wrong?

Julie A. Gerschick

Well, I think it's hard, Collyn, to give a straight -- a simple answer to that, because there are so many variables, including mix. It's mix, depending on the portfolio, equipment financing or commercial or residential, they're not all changing at the same rates. So I don't think -- I mean, we look at it on a macro-level basis, and that's where the 8 basis points per quarter decline is derived. Clearly, because the majority of the portfolios are in commercial loans, that's going to be largest driver of it. But it is really a mix-driven component. It's -- there is purchase accounting in there that's affecting, well it doesn't affect the weighted average coupon, but that affects the overall yield on the interest-bearing gift loans. So it's -- a lot of complexity to it.

Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, okay. Okay, that's helpful. And then just on the expense commentary, Paul, you had indicated that you are going to sort of be reinvesting in the business. I mean, as we look at that, and looking at sort of the infrastructure investment maybe slowly coming to an end, do you mean that -- should we think of that the expenses maybe could bottom somewhere in the fourth quarter and then -- but then migrate higher as you just continue to grow the business, and as you said, grow out the commercial parts of the business?

Paul A. Perrault

That's a logical, conceptual way to look at it. Whether it happens exactly like that and the timing is a little bit hard to tell, we're all doing a lot of stuff on the regulatory front that has some impact on this. But it is a good way to think about it. That's why I dodged Mark a little bit when I said we're bringing down the efficiency ratio in a way that I think is important and material, but on an absolute basis, we're not -- we are apparently not doing quite as well in the absolute costs, because there is a lot of moving pieces in there. But I think you're right. If we did not see good growth, then I would expect us to be able to gain on the absolute dollar cost of our expenses.

Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, okay. And then just one final question. You guys have done a great job of transforming this from sleepy thrift to commercial bank. And how do you think about sort of the ROA and ROE targets or trajectory that you're creating today, kind of longer term, having changed so much of the business to be much more commercial-oriented? I mean, are you looking at that, the ROA and ROEs, in just near-terms goals or longer-term goals for where you want to get each of those metrics?

Paul A. Perrault

Yes, better in both. I've been pretty public about -- a couple of years ago, I had said that our target was 1% on ROA. I think we touched it a couple of times. I am -- frankly, I'm not so sure if that's an appropriate target for a safely run, consistently earning company. I'm not clear on what it ought to be. But one, particularly for a pretty vanilla ice cream company that doesn't have a lot of the side businesses, 1% seems like it could be difficult to get unless rates change and I see a different landscape as to how I might get there. Now, we are at 0.73% or 0.75%...

Julie A. Gerschick

0.73%.

Paul A. Perrault

0.73% now. Should we be better than that? Yes, we should be. So it's somewhere between that and 1%. 1% is probably difficult to see. On the ROE side, it's a very good question. We are 70% commercial outstandings in the loan portfolio, and I mentioned a moment ago, 115% loan-to-deposit ratio. That gives us -- look at my capital ratios. That gives us a 9% leverage ratio of capital, higher than everybody. Some of you asked me about buyback sometimes. And then you look at our total risk-based capital, 12-and-change, plenty by any measure, particularly with our reserves and our asset quality. But some of you might tell me it's below peer. So there is this dichotomy about capital. But I am getting to the answer of your question. So what's the right return? I think, in the relatively near future in this environment, 10% on tangibles, probably the right kind of target for now.

Operator

Our next question comes from Matthew Kelley of Sterne Agee.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Just a quick one to follow-up on the items kind of reconciling to the margin. I believe, in the second quarter, the purchase accounting accretion benefit was 20 basis points, or $2.4 million. So I just want to be clear, that was a 15-basis-point benefit in the third quarter, is that accurate?

Julie A. Gerschick

No -- yes, we had 15 basis points of accretion benefit. You're 100% right, 5 basis points down from the second quarter of 20 basis points, spot on.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Yes, okay. And then on the indirect auto business, the pace of decline there accelerated once again. How -- what would have to change in that business to see that start to moderate? Or will that continue?

Julie A. Gerschick

In the traditional business that we have always done, given the competition in the marketplace, especially with the new, larger institutions coming into our market space, that portfolio is going to continue to be under pressure, because the larger institutions are taking the crème de la crème of the credits and we refused to take larger portions of the subprime portfolios. So for us, to reverse this, I think the answer really lies in pursuing different business lines, different divisions or different strands of the industry, of which there are several. And so we are actively looking at that as we speak to determine whether or not we want to move forward in rolling out a different division or a different line of lending, still indirect auto, but a different components that we have not participated in in the past.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

That'd be like floor plan or something like that or...?

Julie A. Gerschick

No, there is different sectors. There is medium truck. There is antique cars or specialty cars. And there are several different components to the marketplace that we haven't played in that have better yields, better returns to investors, have a little bit of a higher touch associated with them, pay -- kind of go as bread and butter to the types of dealers that we have, and so may very well represent for us good new line to counter the continued decline in traditional auto lending.

Paul A. Perrault

But even if we went down that route, Matt, it's the -- the volumes will not be representative of what the Brookline indirect had been historically.

Operator

At this time, we show no further questions, and I would like to turn the conference back over to management for any closing remarks.

Paul A. Perrault

Thank you, Amy. I'd like to extend my thanks to our listeners today and in the questions, and look forward to reporting on our year-end results in January. In the meantime, we hope you enjoy the rest of the year, and particularly, watching Boston in the World Series.

Julie A. Gerschick

Go Sox.

Paul A. Perrault

Thank you.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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