Market Overview

Brookline Bancorp Announces Second Quarter Results; Record Net Income of $20.8 million, EPS of $0.26

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BOSTON, July 25, 2018 (GLOBE NEWSWIRE) -- Brookline Bancorp, Inc. (NASDAQ:BRKL) (the "Company") today announced net income of $20.8 million, or $0.26 per basic and diluted share, for the second quarter of 2018, compared to $18.6 million, or $0.24 per basic and diluted share, for the first quarter of 2018, and $14.9 million, or $0.20 per basic and diluted share, for the second quarter of 2017.

"Brookline Bancorp continued to generate record earnings in the quarter while maintaining our commitment to reinvest in the franchise," said Paul Perrault, President and Chief Executive Officer of the Company. "We successfully completed the branch consolidation, conversion and system integration of First Commons Bank on June 1st thanks to the hard work of our experienced team. During the quarter we opened banking offices in Wakefield and Braintree, Massachusetts, expanding our boutique style of commercial banking to these markets."

BALANCE SHEET

Total assets at June 30, 2018 increased $37.6 million to $7.29 billion from $7.25 billion at March 31, 2018, and increased $627.6 million from $6.66 billion at June 30, 2017. At June 30, 2018, total loans and leases were $6.17 billion, representing an increase of $56.8 million from March 31, 2018, and an increase of $633.9 million from June 30, 2017.

Investment securities at June 30, 2018 decreased $0.4 million to $675.3 million, comprising 9.27 percent of total assets, as compared to $675.7 million, or 9.32 percent of total assets, at March 31, 2018, and increased approximately $25.3 million from $649.9 million, or 9.76 percent of total assets, at June 30, 2017.

Total deposits at June 30, 2018 increased $6.8 million to $5.20 billion from $5.19 billion at March 31, 2018 and increased $488.9 million from $4.71 billion at June 30, 2017.

Total borrowings at June 30, 2018 increased $11.5 million to $1.11 billion from $1.10 billion at March 31, 2018 and increased $44.3 million from $1.07 billion at June 30, 2017.

The ratio of stockholders' equity to total assets was 12.04 percent at June 30, 2018, as compared to 11.94 percent at March 31, 2018, and 11.95 percent at June 30, 2017. The ratio of tangible stockholders' equity to tangible assets was 9.97 percent at June 30, 2018, as compared to 9.85 percent at March 31, 2018, and 9.99 percent at June 30, 2017. Tangible book value per share increased $0.16 from $8.69 at March 31, 2018 to $8.85 at June 30, 2018, compared to $8.52 at June 30, 2017.

NET INTEREST INCOME

Net interest income increased $3.2 million to $62.7 million during the second quarter of 2018 from the quarter ended March 31, 2018. The net interest margin decreased 2 basis points to 3.64 percent for the three months ended June 30, 2018.

NON-INTEREST INCOME

Non-interest income for the quarter ended June 30, 2018 decreased $0.7 million to $5.5 million from $6.2 million for the quarter ended March 31, 2018. The decrease was primarily driven by $1.2 million in gain on sales of securities in the prior quarter, a decrease of $0.3 million in loan level derivative income, offset by an increase of $0.4 million in gain on sales of loans and leases, an increase of $0.2 million in deposit fees and an increase of $0.2 million in other non-interest income.

PROVISION FOR CREDIT LOSSES

The Company recorded a provision for credit losses of $1.5 million for the quarter ended June 30, 2018, compared to $0.6 million for the quarter ended March 31, 2018. The increase in the provision for the quarter was driven by specific reserves and charge-offs on commercial relationships, primarily taxi medallion loans, in the quarter.

Net charge-offs for the second quarter of 2018 were $2.3 million compared to $0.5 million in the first quarter of 2018. The ratio of net charge-offs to average loans and leases on an annualized basis increased to 15 basis points for the second quarter of 2018 from 3 basis points for the first quarter of 2018.

The allowance for loan and lease losses represented 0.94 percent of total loans and leases at June 30, 2018, compared to 0.96 percent at March 31, 2018, and 1.17 percent at June 30, 2017. The allowance for loan and lease losses related to originated loans and leases represented 0.98 percent of originated loans and leases at June 30, 2018, compared to 1.03 percent at March 31, 2018, and 1.20 percent at June 30, 2017.  Favorable economic trends are reflected in the methodology loss factors, which were a driver of the modest reduction in the allowance for loan and lease losses.

NON-INTEREST EXPENSE

Non-interest expense for the quarter ended June 30, 2018 decreased $2.2 million to $37.7 million from $39.9 million for the quarter ended March 31, 2018. The decrease was primarily driven by a decrease of $2.6 million in merger and acquisition expense, a decrease of $0.3 million in equipment and data processing, and a decrease of $0.1 million in FDIC insurance, partially offset by an increase of $0.3 million in compensation and employee benefits and an increase of $0.5 million in other non-interest expense.

PROVISION FOR INCOME TAXES

The effective tax rate was 25.3 percent and 24.0 percent for the three and six months ended June 30, 2018.

RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

The annualized return on average assets increased to 1.15 percent during the second quarter of 2018 from 1.08 percent for the first quarter of 2018. The annualized return on average tangible assets increased to 1.17 percent for the second quarter of 2018 from 1.10 percent for the first quarter of 2018.

The annualized return on average stockholders' equity increased to 9.53 percent during the second quarter of 2018 from 8.98 percent for the first quarter of 2018. The annualized return on average tangible stockholders' equity increased to 11.80 percent for the second quarter of 2018 from 11.01 percent for the first quarter of 2018.

ASSET QUALITY

The ratio of nonperforming loans and leases to total loans and leases was 0.42 percent at June 30, 2018 as compared to 0.43 percent at March 31, 2018. Nonperforming loans and leases decreased $0.5 million to $25.8 million at June 30, 2018 from $26.3 million at March 31, 2018. The ratio of nonperforming assets to total assets was 0.41 percent at June 30, 2018 as compared to 0.42 percent at March 31, 2018. Nonperforming assets decreased $0.1 million to $30.1 million at June 30, 2018 from $30.2 million at March 31, 2018.

DIVIDEND DECLARED

The Company's Board of Directors approved a dividend of $0.10 per share for the quarter ended June 30, 2018. The dividend will be paid on August 24, 2018 to stockholders of record on August 10, 2018.

CONFERENCE CALL

The Company will conduct a conference call/webcast at 1:30 PM Eastern Daylight Time on Thursday, July 26, 2018 to discuss the results for the quarter, business highlights and outlook. The call can be accessed by dialing 877-504-4120 (United States) or 412-902-6650 (internationally).  A recorded playback of the call will be available for one week following the call at 877-344-7529 (United States) or 412-317-0088 (internationally). The passcode for the playback is 10121487. The call will be available live and in a recorded version on the Company's website under "Investor Relations" at www.brooklinebancorp.com.

ABOUT BROOKLINE BANCORP, INC.

Brookline Bancorp, Inc., a bank holding company with $7.3 billion in assets and branch locations in Massachusetts and Rhode Island, is headquartered in Boston, Massachusetts and operates as the holding company for Brookline Bank, Bank Rhode Island, and First Ipswich Bank (the "banks"). The Company provides commercial and retail banking services, cash management and investment services to customers throughout Central New England. More information about Brookline Bancorp, Inc. and its banks can be found at the following websites: www.brooklinebank.com, www.bankri.com, and www.firstipswich.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the risks outlined in the Company's Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission ("SEC"). The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

BASIS OF PRESENTATION

The Company's consolidated financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") as set forth by the Financial Accounting Standards Board in its Accounting Standards Codification and through the rules and interpretive releases of the SEC under the authority of federal securities laws. Certain amounts previously reported have been reclassified to conform to the current period's presentation.

NON-GAAP FINANCIAL MEASURES

The Company uses certain non-GAAP financial measures, such as operating earnings, operating return on average assets, operating return on average tangible assets, operating return on average stockholders' equity, operating return on average tangible stockholders' equity, the allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases, tangible book value per common share, tangible stockholders' equity to tangible assets, return on average tangible assets and return on average tangible stockholders' equity. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial services sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.

Contact:
Carl M. Carlson
Brookline Bancorp, Inc.
Chief Financial Officer
(617) 425-5331
ccarlson@brkl.com

 
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
 
Selected Financial Highlights (Unaudited)
 
  At and for the Three Months Ended
  June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
                                       
  (Dollars In Thousands Except per Share Data)
Earnings Data:                  
Net interest income $ 62,717     $ 59,491     $ 57,657     $ 56,843     $ 55,583  
Provision for credit losses   1,470       641       1,802       2,911       873  
Non-interest income   5,526       6,168       5,815       5,973       4,477  
Non-interest expense   37,702       39,938       35,152       35,408       34,795  
Income before provision for income taxes   29,071       25,080       26,518       24,497       24,392  
Net income attributable to Brookline Bancorp, Inc.   20,831       18,633       6,827       15,366       14,880  
                   
Performance Ratios:                  
Net interest margin (1)   3.64 %     3.66 %     3.59 %     3.57 %     3.59 %
Interest-rate spread (1)   3.36 %     3.38 %     3.42 %     3.41 %     3.39 %
Return on average assets (annualized)   1.15 %     1.08 %     0.41 %     0.92 %     0.91 %
Return on average tangible assets (annualized) (non-GAAP)   1.17 %     1.10 %     0.41 %     0.94 %     0.93 %
Return on average stockholders' equity (annualized)   9.53 %     8.98 %     3.37 %     7.64 %     7.76 %
Return on average tangible stockholders' equity (annualized) (non-GAAP)   11.80 %     11.01 %     4.09 %     9.31 %     9.58 %
Efficiency ratio (2)   55.25 %     60.83 %     55.38 %     56.37 %     57.93 %
                   
Per Common Share Data:                  
Net income — Basic $ 0.26     $ 0.24     $ 0.09     $ 0.20     $ 0.20  
Net income — Diluted   0.26       0.24       0.09       0.20       0.20  
Cash dividends declared   0.10       0.09       0.09       0.09       0.09  
Book value per share (end of period)   10.94       10.80       10.49       10.52       10.42  
Tangible book value per share (end of period) (non-GAAP)   8.85       8.69       8.61       8.63       8.52  
Stock price (end of period)   18.60       16.20       15.70       15.50       14.60  
 
Balance Sheet:                  
Total assets $ 7,285,710     $ 7,248,114     $ 6,780,249     $ 6,686,284     $ 6,658,067  
Total loans and leases   6,171,274       6,114,461       5,730,679       5,639,440       5,537,406  
Total deposits   5,198,280       5,191,520       4,871,343       4,805,683       4,709,419  
Brookline Bancorp, Inc. stockholders' equity   877,283       865,777       803,830       804,762       795,618  
                   
Asset Quality:                  
Nonperforming assets $ 30,145     $ 30,242     $ 31,691     $ 44,371     $ 47,140  
Nonperforming assets as a percentage of total assets   0.41 %     0.42 %     0.47 %     0.66 %     0.71 %
Allowance for loan and lease losses $ 57,981     $ 58,714     $ 58,592     $ 65,413     $ 64,521  
Allowance for loan and lease losses as a percentage of total loans and leases   0.94 %     0.96 %     1.02 %     1.16 %     1.17 %
Net loan and lease charge-offs $ 2,330     $ 505     $ 8,507     $ 1,954     $ 2,402  
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)   0.15 %     0.03 %     0.60 %     0.14 %     0.17 %
                   
Capital Ratios:                  
Stockholders' equity to total assets   12.04 %     11.94 %     11.86 %     12.04 %     11.95 %
Tangible stockholders' equity to tangible assets (non-GAAP)   9.97 %     9.85 %     9.94 %     10.09 %     9.99 %
                   
(1) Calculated on a fully tax-equivalent basis.                  
(2) Calculated as non-interest expense as a percentage of net interest income plus non-interest income.                  
 

 

 
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
 
Consolidated Balance Sheets (Unaudited)
  June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
                                       
ASSETS (In Thousands Except Share Data)
   
Cash and due from banks $ 32,724     $ 34,713     $ 25,622     $ 35,392     $ 40,599  
Short-term investments   22,754       49,743       35,383       27,971       72,996  
Total cash and cash equivalents   55,478       84,456       61,005       63,363       113,595  
Investment securities available-for-sale   558,602       558,357       540,124       522,910       540,976  
Investment securities held-to-maturity   116,670       117,352       109,730       107,738       108,963  
Total investment securities   675,272       675,709       649,854       630,648       649,939  
Loans and leases held-for-sale   1,034       756       2,628       2,973       593  
Loans and leases:                  
Commercial real estate loans:                  
Commercial real estate mortgage   2,269,520       2,284,488       2,174,969       2,119,440       2,062,646  
Multi-family mortgage   816,311       793,006       760,670       743,912       720,484  
Construction   178,335       169,440       140,138       165,657       153,057  
Total commercial real estate loans   3,264,166       3,246,934       3,075,777       3,029,009       2,936,187  
Commercial loans and leases:                  
Commercial   761,964       761,540       705,004       689,010       691,070  
Equipment financing   920,643       892,341       866,488       842,516       839,932  
Condominium association   53,537       52,739       52,619       53,770       58,130  
Total commercial loans and leases   1,736,144       1,706,620       1,624,111       1,585,296       1,589,132  
Consumer loans:                  
Residential mortgage   754,818       766,687       660,065       652,415       646,679  
Home equity   382,597       364,928       355,954       356,982       351,124  
Other consumer   33,549       29,292       14,772       15,738       14,284  
Total consumer loans   1,170,964       1,160,907       1,030,791       1,025,135       1,012,087  
Total loans and leases   6,171,274       6,114,461       5,730,679       5,639,440       5,537,406  
Allowance for loan and lease losses   (57,981 )     (58,714 )     (58,592 )     (65,413 )     (64,521 )
Net loans and leases   6,113,293       6,055,747       5,672,087       5,574,027       5,472,885  
Restricted equity securities   68,343       66,164       59,369       62,135       66,988  
Premises and equipment, net of accumulated depreciation   79,194       80,268       80,283       81,159       81,052  
Deferred tax asset   20,826       19,198       15,061       28,093       26,982  
Goodwill   160,427       160,896       137,890       137,890       137,890  
Identified intangible assets, net of accumulated amortization   7,160       7,697       6,044       6,563       7,082  
Other real estate owned and repossessed assets   4,352       3,963       4,419       4,398       4,873  
Other assets   100,331       93,260       91,609       95,035       96,188  
Total assets $ 7,285,710     $ 7,248,114     $ 6,780,249     $ 6,686,284     $ 6,658,067  
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Deposits:                  
Non-interest-bearing deposits:                  
Demand checking accounts $ 1,002,954     $ 987,153     $ 942,583     $ 905,472     $ 920,035  
Interest-bearing deposits:                  
NOW accounts   346,936       342,374       350,568       318,284       321,982  
Savings accounts   603,079       637,920       646,359       665,558       584,408  
Money market accounts   1,704,652       1,862,351       1,724,363       1,749,040       1,763,443  
Certificate of deposit accounts   1,540,659       1,361,722       1,207,470       1,167,329       1,119,551  
Total interest-bearing deposits   4,195,326       4,204,367       3,928,760       3,900,211       3,789,384  
Total deposits   5,198,280       5,191,520       4,871,343       4,805,683       4,709,419  
Borrowed funds:                  
Advances from the FHLBB   991,091       982,533       889,909       872,579       930,028  
Subordinated debentures and notes   83,352       83,311       83,271       83,229       83,188  
Other borrowed funds   36,480       33,585       47,639       30,087       53,427  
Total borrowed funds   1,110,923       1,099,429       1,020,819       985,895       1,066,643  
Mortgagors' escrow accounts   8,122       8,395       7,686       8,151       7,714  
Accrued expenses and other liabilities   82,017       74,024       67,818       74,019       71,232  
Total liabilities   6,399,342       6,373,368       5,967,666       5,873,748       5,855,008  
Stockholders' equity:                  
Brookline Bancorp, Inc. stockholders' equity:                  
Common stock, $0.01 par value; 200,000,000 shares authorized; 85,177,172 shares issued, 85,177,172 shares issued, 81,695,695 shares issued, 81,695,695 shares issued, and 81,695,695 shares issued, respectively   852       852       817       817       817  
Additional paid-in capital   756,254       755,843       699,976       700,624       699,923  
Retained earnings, partially restricted   185,734       172,934       161,217       160,225       151,759  
Accumulated other comprehensive (loss) income   (13,415 )     (11,666 )     (5,950 )     (1,893 )     (2,175 )
Treasury stock, at cost;                  
4,409,501 shares, 4,401,333 shares, 4,440,665 shares, 4,572,954 shares, and 4,717,775 shares, respectively   (51,454 )     (51,454 )     (51,454 )     (54,188 )     (53,837 )
Unallocated common stock held by the Employee Stock Ownership Plan;                  
126,144 shares, 134,238 shares, 142,332 shares, 150,921 shares, and 159,510 shares, respectively   (688 )     (732 )     (776 )     (823 )     (869 )
Total Brookline Bancorp, Inc. stockholders' equity   877,283       865,777       803,830       804,762       795,618  
Noncontrolling interest in subsidiary   9,085       8,969       8,753       7,774       7,441  
Total stockholders' equity   886,368       874,746       812,583       812,536       803,059  
Total liabilities and stockholders' equity $ 7,285,710     $ 7,248,114     $ 6,780,249     $ 6,686,284     $ 6,658,067  
                   

 

 
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
 
Consolidated Statements of Income (Unaudited)
  Three Months Ended
  June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017
                             
  (In Thousands Except Share Data)
Interest and dividend income:                  
Loans and leases $ 73,329   $ 67,272   $ 64,272   $ 63,054   $ 61,138
Debt securities   3,563     3,323     3,214     3,154     3,156
Marketable and restricted equity securities   1,003     924     751     788     797
Short-term investments   179     120     100     180     95
Total interest and dividend income   78,074     71,639     68,337     67,176     65,186
Interest expense:                  
Deposits   9,219     7,099     6,681     5,984     5,543
Borrowed funds   6,138     5,049     3,999     4,349     4,060
Total interest expense   15,357     12,148     10,680     10,333     9,603
Net interest income   62,717     59,491     57,657     56,843     55,583
Provision for credit losses   1,470     641     1,802     2,911     873
Net interest income after provision for credit losses   61,247     58,850     55,855     53,932     54,710
                   
Non-interest income:                  
Deposit fees   2,620     2,463     2,542     2,547     2,552
Loan fees   330     290     338     282     229
Loan level derivative income, net   571     866     755     844     186
Gain on sales of investment securities, net       1,162            
Gain on sales of loans and leases held-for-sale   722     299     935     1,049     307
Other   1,283     1,088     1,245     1,251     1,203
Total non-interest income   5,526     6,168     5,815     5,973     4,477
Non-interest expense:                  
Compensation and employee benefits   22,565     22,314     20,652     21,067     20,910
Occupancy   3,879     3,959     3,594     3,650     3,657
Equipment and data processing   4,368     4,618     4,417     4,210     4,164
Professional services   1,055     1,144     1,200     973     1,036
FDIC insurance   514     635     678     842     951
Advertising and marketing   1,118     1,057     856     839     857
Amortization of identified intangible assets   539     467     519     519     519
Merger and acquisition expense   334     2,905     206     205    
Other   3,330     2,839     3,030     3,103     2,701
Total non-interest expense   37,702     39,938     35,152     35,408     34,795
Income before provision for income taxes   29,071     25,080     26,518     24,497     24,392
Provision for income taxes - operating   7,342     5,652     9,747     8,330     8,759
Impact of revaluation of DTA           8,965        
Total provision for income taxes   7,342     5,652     18,712     8,330     8,759
Net income before noncontrolling interest in subsidiary   21,729     19,428     7,806     16,167     15,633
                             
Less net income attributable to noncontrolling interest in subsidiary   898     795     979     801     753
Net income attributable to Brookline Bancorp, Inc. $ 20,831   $ 18,633   $ 6,827   $ 15,366   $ 14,880
                   
Earnings per common share:                  
Basic $ 0.26   $ 0.24   $ 0.09   $ 0.20   $ 0.20
Diluted $ 0.26   $ 0.24   $ 0.09   $ 0.20   $ 0.20
Weighted average common shares outstanding during the period:                
Basic   80,184,977     77,879,593     76,583,712     76,452,539     74,325,013
Diluted   80,505,614     78,167,800     76,868,307     76,961,948     74,810,088
Dividends declared per common share $ 0.10   $ 0.09   $ 0.09   $ 0.09   $ 0.09
                   
 

 

 
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
 
Consolidated Statements of Income (Unaudited)
   
  Six Months Ended June 30,
    2018     2017  
             
  (In Thousands Except Share Data)
Interest and dividend income:      
Loans and leases $   140,601    $   119,696   
Debt securities    6,886       6,156   
Marketable and restricted equity securities    1,927       1,523   
Short-term investments    299       162   
Total interest and dividend income    149,713       127,537   
Interest expense:      
Deposits    16,318       10,623   
Borrowed funds    11,187       8,233   
Total interest expense    27,505       18,856   
Net interest income    122,208      108,681  
Provision for credit losses    2,111      14,275  
Net interest income after provision for credit losses    120,097      94,406  
Non-interest income:      
Deposit Fees    5,083       4,961   
Loan Fees    620       490   
Loan level derivative income, net    1,437       588   
Gain on sales of investment securities, net    1,162       11,393   
Gain on sales of loans and leases held-for-sale    1,021       660   
Loss on sale/disposals of premises and equipment, net    —      (44 )
Other    2,371       2,337   
Total non-interest income    11,694       20,385   
Non-interest expense:      
Compensation and employee benefits    44,879       40,694   
Occupancy    7,838       7,302   
Equipment and data processing    8,986       8,227   
Professional services    2,199       2,142   
FDIC insurance    1,149       1,806   
Advertising and marketing    2,175       1,674   
Amortization of identified intangible assets    1,006       1,051   
Merger and acquisition expense    3,239       —  
Other    6,169       5,655   
Total non-interest expense    77,640       68,551   
Income before provision for income taxes    54,151       46,240   
Provision for income taxes    12,994       16,594   
Net income before noncontrolling interest in subsidiary    41,157       29,646   
Less net income attributable to noncontrolling interest in subsidiary    1,693       1,321   
Net income attributable to Brookline Bancorp, Inc. $   39,464    $   28,325   
Earnings per common share:      
Basic $   0.50    $   0.39   
Diluted $   0.50    $   0.39   
Weighted average common shares outstanding during the period:    
Basic    79,038,041       72,366,769   
Diluted    79,342,463       72,837,971   
Dividends declared per common share $   0.19    $   0.18   
 

 

 
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
 
Asset Quality Analysis (Unaudited)
  At and for the Three Months Ended
  June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017
   
  (Dollars in Thousands)
NONPERFORMING ASSETS:                  
Loans and leases accounted for on a nonaccrual basis:                  
Commercial real estate mortgage $ 3,774     $ 4,080     $ 3,313     $ 3,051     $ 2,766  
Multi-family mortgage   568       588       608       792       1,075  
Construction   640       860       860       860        
Total commercial real estate loans   4,982       5,528       4,781       4,703       3,841  
                   
Commercial   9,487       11,150       11,619       22,367       23,886  
Equipment financing   8,825       6,661       8,106       9,858       9,702  
Total commercial loans and leases   18,312       17,811       19,725       32,225       33,588  
                   
Residential mortgage   1,571       1,962       1,979       1,969       3,429  
Home equity   923       925       744       1,047       1,366  
Other consumer   5       53       43       29       43  
Total consumer loans   2,499       2,940       2,766       3,045       4,838  
                   
Total nonaccrual loans and leases   25,793       26,279       27,272       39,973       42,267  
                   
Other real estate owned   3,436       3,235       3,235       3,235       3,384  
Other repossessed assets   916       728       1,184       1,163       1,489  
Total nonperforming assets $ 30,145     $ 30,242     $ 31,691     $ 44,371     $ 47,140  
                   
Loans and leases past due greater than 90 days and still accruing (1) $ 12,340     $ 5,240     $ 3,020     $ 2,523     $ 2,706  
                   
Troubled debt restructurings on accrual   12,911       14,294       16,241       14,024       14,732  
Troubled debt restructurings on nonaccrual   9,391       8,610       9,770       15,290       16,146  
Total troubled debt restructurings $ 22,302     $ 22,904     $ 26,011     $ 29,314     $ 30,878  
                   
Nonperforming loans and leases as a percentage of total loans and leases   0.42 %     0.43 %     0.48 %     0.71 %     0.76 %
Nonperforming assets as a percentage of total assets   0.41 %     0.42 %     0.47 %     0.66 %     0.71 %
                   
PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES:            
Allowance for loan and lease losses at beginning of period $ 58,714     $ 58,592     $ 65,413     $ 64,521     $ 66,133  
Charge-offs   (3,605 )     (792 )     (8,921 )     (2,143 )     (3,365 )
Recoveries   1,275       287       414       189       963  
Net charge-offs   (2,330 )     (505 )     (8,507 )     (1,954 )     (2,402 )
Provision for loan and lease losses   1,597       627       1,686       2,846       790  
Allowance for loan and lease losses at end of period $ 57,981     $ 58,714     $ 58,592     $ 65,413     $ 64,521  
                   
Allowance for loan and lease losses as a percentage of total loans and leases   0.94 %     0.96 %     1.02 %     1.16 %     1.17 %
Allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases (non-GAAP)   0.98 %     1.03 %     1.05 %     1.20 %     1.20 %
                   
NET CHARGE-OFFS:                  
Commercial real estate loans $ 100     $ 3     $ 200     $ 65     $ (131 )
Commercial loans and leases   2,304       532       8,290       1,856       2,546  
Consumer loans   (74 )     (30 )     17       33       (13 )
Total net charge-offs $ 2,330     $ 505     $ 8,507     $ 1,954     $ 2,402  
                   
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)   0.15 %     0.03 %     0.60 %     0.14 %     0.17 %
                   
(1) The significant quarter over quarter increase in the loans and leases past due greater than 90 days and still accruing is due to one Commercial Real Estate loan which is part of the SOP03-3 acquired population for approximately $8.6 million becoming greater than 90 days past due during the second quarter of 2018.
 

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs (Unaudited)
  Three Months Ended
  June 30, 2018   March 31, 2018   June 30, 2017
  Average Balance   Interest (1)   Average
Yield/
Cost
  Average Balance   Interest (1)   Average
Yield/
Cost
  Average Balance   Interest (1)   Average
Yield/
Cost
                                                           
  (Dollars in Thousands)
Assets:                                  
Interest-earning assets:                                  
Investments:                                  
Debt securities (2) $ 666,182     $ 3,617   2.17 %   $ 647,501     $ 3,377   2.09 %   $ 638,798     $ 3,267   2.05 %
Marketable and restricted equity securities (2)   69,395       1,004   5.78 %     64,127       923   5.76 %     68,629       799   4.66 %
Short-term investments   41,155       179   1.74 %     30,664       120   1.57 %     43,739       95   0.87 %
Total investments   776,732       4,800   2.47 %     742,292       4,420   2.38 %     751,166       4,161   2.22 %
Loans and Leases:                                  
Commercial real estate loans (3)   3,250,488       36,372   4.43 %     3,116,690       33,429   4.29 %     2,942,927       30,368   4.08 %
Commercial loans (3)   823,860       9,323   4.48 %     785,936       8,424   4.29 %     728,014       7,665   4.17 %
Equipment financing (3)   907,089       15,739   6.94 %     875,304       14,864   6.79 %     826,877       13,810   6.68 %
Residential mortgage loans (3)   759,866       7,552   3.98 %     704,666       6,733   3.82 %     639,449       5,859   3.67 %
Other consumer loans (3)   406,144       4,464   4.40 %     382,194       3,941   4.18 %     362,404       3,677   4.07 %
Total loans and leases   6,147,447       73,450   4.78 %     5,864,790       67,391   4.60 %     5,499,671       61,379   4.46 %
Total interest-earning assets   6,924,179       78,250   4.52 %     6,607,082       71,811   4.35 %     6,250,837       65,540   4.19 %
Allowance for loan and lease losses   (59,247 )             (58,986 )             (66,853 )        
Non-interest-earning assets   408,861               379,213               372,681          
Total assets $ 7,273,793             $ 6,927,309             $ 6,556,665          
                                   
Liabilities and Stockholders' Equity:                                  
Interest-bearing liabilities:                                  
Deposits:                                  
NOW accounts $ 346,410       65   0.07 %   $ 335,990       58   0.07 %   $ 316,486       54   0.07 %
Savings accounts   609,758       405   0.27 %     649,224       401   0.25 %     592,150       300   0.20 %
Money market accounts   1,767,509       3,530   0.80 %     1,772,362       2,558   0.59 %     1,767,973       2,131   0.48 %
Certificates of deposit   1,422,782       5,219   1.47 %     1,247,049       4,082   1.33 %     1,101,094       3,058   1.11 %
Total interest-bearing deposits   4,146,459       9,219   0.89 %     4,004,625       7,099   0.72 %     3,777,703       5,543   0.59 %
Borrowings                                  
Advances from the FHLBB   1,018,130       4,696   1.82 %     956,298       3,748   1.57 %     896,565       2,755   1.22 %
Subordinated debentures and notes   83,330       1,296   6.22 %     83,289       1,282   6.16 %     83,165       1,271   6.11 %
Other borrowed funds   46,635       146   1.26 %     36,147       19   0.21 %     47,466       34   0.29 %
Total borrowings   1,148,095       6,138   2.11 %     1,075,734       5,049   1.88 %     1,027,196       4,060   1.56 %
Total interest-bearing liabilities   5,294,554       15,357   1.16 %     5,080,359       12,148   0.97 %     4,804,899       9,603   0.80 %
Non-interest-bearing liabilities:                                  
Demand checking accounts   1,003,985               931,685               900,302          
Other non-interest-bearing liabilities   91,889               77,169               77,682          
Total liabilities   6,390,428               6,089,213               5,782,883          
Brookline Bancorp, Inc. stockholders' equity   874,513               829,598               766,529          
Noncontrolling interest in subsidiary   8,852               8,498               7,253          
Total liabilities and equity $ 7,273,793             $ 6,927,309             $ 6,556,665          
Net interest income (tax-equivalent basis) /Interest-rate spread (4)       62,893   3.36 %         59,663   3.38 %         55,937   3.39 %
Less adjustment of tax-exempt income       176             172             354    
Net interest income     $ 62,717           $ 59,491           $ 55,583    
Net interest margin (5)         3.64 %           3.66 %           3.59 %
                                   
(1) Tax-exempt income on debt securities, equity securities and revenue bonds included in commercial real estate loans is included on a tax-equivalent basis.
(2) Average balances include unrealized gains (losses) on investment securities. Dividend payments may not be consistent and average yield on equity securities may vary from month to month.
(3) Loans on nonaccrual status are included in the average balances.
(4) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets on an actual/actual basis.
 

 

 
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
 
Average Yields / Costs (Unaudited)
  Six Months Ended
  June 30, 2018   June 30, 2017
  Average Balance   Interest (1)   Average
Yield/
Cost
  Average Balance   Interest (1)   Average
Yield/
Cost
                                       
  (Dollars in Thousands)
Assets:                      
Interest-earning assets:                      
Investments:                      
Debt securities (2) $ 656,893     $ 6,994   2.13 %   $ 626,229     $ 6,377   2.04 %
Marketable and restricted equity securities (2)   66,774       1,927   5.77 %     69,066       1,517   4.39 %
Short-term investments   35,938       299   1.67 %     37,965       162   0.86 %
Total investments   759,605       9,220   2.43 %     733,260       8,056   2.20 %
Loans and Leases:                      
Commercial real estate loans (3)   3,183,959       69,801   4.36 %     2,936,671       59,835   4.05 %
Commercial loans (3)   805,002       17,747   4.39 %     715,377       14,778   4.11 %
Equipment financing (3)   891,284       30,603   6.87 %     816,565       26,924   6.59 %
Residential mortgage loans (3)   732,418       14,285   3.90 %     637,179       11,468   3.60 %
Other consumer loans (3)   394,235       8,405   4.29 %     361,602       7,172   4.00 %
Total loans and leases   6,006,898       140,841   4.69 %     5,467,394       120,177   4.40 %
Total interest-earning assets   6,766,503       150,061   4.44 %     6,200,654       128,233   4.14 %
Allowance for loan and lease losses   (59,117 )             (60,618 )        
Non-interest-earning assets   394,124               369,152          
Total assets $ 7,101,510             $ 6,509,188          
                       
Liabilities and Stockholders' Equity:                      
Interest-bearing liabilities:                      
Deposits:                      
NOW accounts $ 341,228       123   0.07 %   $ 318,567       109   0.07 %
Savings accounts   629,382       806   0.26 %     603,057       610   0.20 %
Money market accounts   1,769,923       6,088   0.69 %     1,756,318       4,140   0.48 %
Certificates of deposit   1,335,401       9,301   1.40 %     1,061,740       5,764   1.09 %
Total interest-bearing deposits   4,075,934       16,318   0.81 %     3,739,682       10,623   0.57 %
Borrowings                      
Advances from the FHLBB   987,385       8,444   1.70 %     913,102       5,612   1.22 %
Subordinated debentures and notes   83,310       2,578   6.19 %     83,145       2,531   6.09 %
Other borrowed funds   41,420       165   0.80 %     54,014       90   0.34 %
Total borrowings   1,112,115       11,187   2.00 %     1,050,261       8,233   1.56 %
Total interest-bearing liabilities   5,188,049       27,505   1.07 %     4,789,943       18,856   0.79 %
Non-interest-bearing liabilities:                      
Demand checking accounts   968,035               899,396          
Other non-interest-bearing liabilities   84,570               74,763          
Total liabilities   6,240,654               5,764,102          
Brookline Bancorp, Inc. stockholders' equity   852,180               737,971          
Noncontrolling interest in subsidiary   8,676               7,115          
Total liabilities and equity $ 7,101,510             $ 6,509,188          
Net interest income (tax-equivalent basis) /Interest-rate spread (4)       122,556   3.37 %         109,377   3.35 %
Less adjustment of tax-exempt income       348             696    
Net interest income     $ 122,208           $ 108,681    
Net interest margin (5)         3.65 %           3.56 %
                       
(1) Tax-exempt income on debt securities, equity securities and revenue bonds included in commercial real estate loans is included on a tax-equivalent basis.
(2) Average balances include unrealized gains (losses) on investment securities. Dividend payments may not be consistent and average yield on equity securities may vary from month to month.
(3) Loans on nonaccrual status are included in the average balances.
(4) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets on an actual/actual basis.
 

 

 
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
 
Non-GAAP Financial Information (Unaudited)
      At and for the Three Months Ended
June 30,
  At and for the Six Months Ended 
June 30,
        2018       2017       2018       2017  
                                 
Reconciliation Table - Non-GAAP Financial Information   (Dollars in Thousands Except Share Data)
             
Net income attributable to Brookline Bancorp, Inc.   $ 20,831     $ 14,880     $ 39,464     $ 28,325  
Less:                  
Security gains (after-tax of 24.0% for 2018 and 35.9% for 2017) **                 883       7,303  
Add:                  
Merger and acquisition-related expenses (after-tax of 24.0% for 2018 and 35.9% for 2017) **     254             2,462        
Operating earnings   $ 21,085     $ 14,880     $ 41,043     $ 21,022  
               
Operating earnings per common share:              
Basic     $ 0.26     $ 0.20     $ 0.52     $ 0.29  
Diluted       0.26       0.20       0.52       0.29  
               
Weighted average common shares outstanding during the period:            
Basic       80,184,977       74,325,013       79,038,041       72,366,769  
Diluted       80,505,614       74,810,088       79,342,463       72,837,971  
                   
                   
Return on average assets *     1.15 %     0.91 %     1.11 %     0.87 %
Less:                  
Security gains (after-tax) *     %     %     0.02 %     0.22 %
Add:                  
Merger and acquisition-related expenses (after-tax) *     0.01 %     %     0.07 %     %
Operating return on average assets *     1.16 %     0.91 %     1.16 %     0.65 %
                   
                   
Return on average tangible assets *     1.17 %     0.93 %     1.14 %     0.89 %
Less:                  
Security gains (after-tax) *     %     %     0.03 %     0.23 %
Add:                  
Merger and acquisition-related expenses (after-tax) *     0.02 %     %     0.07 %     %
Operating return on average tangible assets *     1.19 %     0.93 %     1.18 %     0.66 %
                   
                   
Return on average stockholders' equity *     9.53 %     7.76 %     9.26 %     7.68 %
Less:                  
Security gains (after-tax) *     %     %     0.21 %     1.98 %
Add:                  
Merger and acquisition-related expenses (after-tax) *     0.11 %     %     0.58 %     %
Operating return on average stockholders' equity *     9.64 %     7.76 %     9.63 %     5.70 %
                   
                   
Return on average tangible stockholders' equity *     11.80 %     9.58 %     11.41 %     9.56 %
Less:                  
Security gains (after-tax) *     %     %     0.26 %     2.46 %
Add:                  
Merger and acquisition-related expenses (after-tax) *     0.14 %     %     0.71 %     %
Operating return on average tangible stockholders' equity *     11.94 %     9.58 %     11.86 %     7.10 %
                 
* Ratios at and for the three months ended are annualized.              
** Based on current expected effective tax rate of 24% for the remainder of 2018.                
                   
                   
  At and for the Three Months Ended
  June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
                                       
  (Dollars in Thousands)
                   
Net income, as reported $ 20,831     $ 18,633     $ 6,827     $ 15,366     $ 14,880  
                   
Average total assets $ 7,273,793     $ 6,927,309     $ 6,725,730     $ 6,681,042     $ 6,556,665  
Less: Average goodwill and average identified intangible assets, net   168,185       152,377       144,226       144,747       145,269  
Average tangible assets $ 7,105,608     $ 6,774,932     $ 6,581,504     $ 6,536,295     $ 6,411,396  
                   
Return on average tangible assets (annualized)   1.17 %     1.10 %     0.41 %     0.94 %     0.93 %
                   
Average total stockholders' equity $ 874,513     $ 829,598     $ 811,219     $ 804,666     $ 766,529  
Less: Average goodwill and average identified intangible assets, net   168,185       152,377       144,226       144,747       145,269  
Average tangible stockholders' equity $ 706,328     $ 677,221     $ 666,993     $ 659,919     $ 621,260  
                   
Return on average tangible stockholders' equity (annualized)   11.80 %     11.01 %     4.09 %     9.31 %     9.58 %
                   
Brookline Bancorp, Inc. stockholders' equity $ 877,283     $ 865,777     $ 803,830     $ 804,762     $ 795,618  
Less:                  
Goodwill   160,427       160,896       137,890       137,890       137,890  
Identified intangible assets, net   7,160       7,697       6,044       6,563       7,082  
Tangible stockholders' equity $ 709,696     $ 697,184     $ 659,896     $ 660,309     $ 650,646  
                   
Total assets $ 7,285,710     $ 7,248,114     $ 6,780,249     $ 6,686,284     $ 6,658,067  
Less:                  
Goodwill   160,427       160,896       137,890       137,890       137,890  
Identified intangible assets, net   7,160       7,697       6,044       6,563       7,082  
Tangible assets $ 7,118,123     $ 7,079,521     $ 6,636,315     $ 6,541,831     $ 6,513,095  
                   
Tangible stockholders' equity to tangible assets   9.97 %     9.85 %     9.94 %     10.09 %     9.99 %
                   
Tangible stockholders' equity $ 709,696     $ 697,184     $ 659,896     $ 660,309     $ 650,646  
                   
Number of common shares issued   85,177,172       85,177,172       81,695,695       81,695,695       81,695,695  
Less:                  
Treasury shares   4,409,501       4,401,333       4,440,665       4,572,954       4,717,775  
Unallocated ESOP shares   126,144       134,238       142,332       150,921       159,510  
Unvested restricted shares   455,283       455,283       455,283       471,702       457,966  
Number of common shares outstanding   80,186,244       80,186,318       76,657,415       76,500,118       76,360,444  
                   
Tangible book value per common share $    8.85      $    8.69      $    8.61      $    8.63      $    8.52   
                   
Allowance for loan and lease losses $ 57,981     $ 58,714     $ 58,592     $ 65,413     $ 64,521  
Less:                  
Allowance for acquired loans and leases losses   1,961       910       1,040       1,003       1,188  
Allowance for originated loan and lease losses $ 56,020     $ 57,804     $ 57,552     $ 64,410     $ 63,333  
                   
Total loans and leases $ 6,171,274     $ 6,114,461     $ 5,730,679     $ 5,639,440     $ 5,537,406  
Less:                  
Total acquired loans and leases   460,142       482,237       240,057       260,196       271,157  
Total originated loans and leases $ 5,711,132     $ 5,632,224     $ 5,490,622     $ 5,379,244     $ 5,266,249  
                   
Allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases   0.98 %     1.03 %     1.05 %     1.20 %     1.20 %

 

 

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