Press Release

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

Company Release - 7/25/2018 4:05 PM ET

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