Press Release

Brookline Bancorp Announces Fourth Quarter Results

Company Release - 1/30/2019 4:45 PM ET

Net Income of $21.1 million, EPS of $0.26

Record 2018 Net Income of $83.1 million, EPS of $1.04

BOSTON, Jan. 30, 2019 (GLOBE NEWSWIRE) -- Brookline Bancorp, Inc. (NASDAQ: BRKL) (the “Company”) today announced net income of $21.1 million, or $0.26 per basic and diluted share, for the fourth quarter of 2018, compared to $22.5 million, or $0.28 per basic and diluted share, for the third quarter of 2018, and $6.8 million, or $0.09 per basic and diluted share, for the fourth quarter of 2017.

For the year ended December 31, 2018, the Company reported net income of $83.1 million, or $1.04 per basic and diluted share. This compared to $50.5 million, or $0.68 per basic and diluted share, for the year ended December 31, 2017.

Operating Earnings (Non-GAAP)

Operating earnings were $22.1 million, or $0.27 per diluted share, for the fourth quarter of 2018, compared to $15.9 million, or $0.21 per diluted share, for the fourth quarter of 2017. For the year ended December 31, 2018, operating earnings were $85.8 million or $1.07 per diluted share, compared to $52.4 million or $0.70 per diluted share in 2017.

Operating earnings exclude the impact of securities gains or losses, merger and acquisition related expenses and the 2017 impact of the Tax Reform Act. Details are provided in the Reconciliation Table - Non-GAAP Financial Information.

Paul Perrault, President and Chief Executive Officer of the Company, commented on the fourth quarter earnings, “2018 was a successful year for Brookline Bancorp. We completed the acquisition of First Commons Bank in March, and finished the year with record earnings, strong asset quality and capital, and good momentum going into the new year. I want to thank all our employees for their hard work and dedication in providing our customers with superior service throughout the year. With all our accomplishments in 2018, we are positioned to achieve continued success and growth in 2019."

On December 5, 2018, the Board of Directors (the “Board”) of the Company approved a stock repurchase program authorizing management to repurchase up to $10.0 million of the Company’s common stock. As of December 31, 2018, the Company had completed the program and repurchased 725,583 shares at a weighted average price of $13.78.

On January 30, 2019, the Board approved a stock repurchase program authorizing management to repurchase up to $10.0 million of the Company's common stock over a period of eleven months ending December 31, 2019.

Eastern Funding, LLC Acquisition

As of December 31, 2018, Brookline Bank, a wholly-owned subsidiary of the Company, held an 84.07 percent ownership interest in its subsidiary, Eastern Funding, LLC (“Eastern Funding”). As previously announced, on January 4, 2019, Brookline Bank completed the purchase of the remaining 15.93 percent interest in Eastern Funding for a total cash consideration of $35.9 million.

BALANCE SHEET

Total assets at December 31, 2018 increased $72.2 million to $7.39 billion from $7.32 billion at September 30, 2018, and increased $612.6 million from $6.78 billion at December 31, 2017. At December 31, 2018, total loans and leases were $6.30 billion, representing an increase of $75.8 million from September 30, 2018, and an increase of $572.8 million from December 31, 2017.

Investment securities at December 31, 2018 decreased $32.9 million to $621.8 million, comprising 8.41 percent of total assets, as compared to $654.6 million, or 8.94 percent of total assets, at September 30, 2018, and decreased $28.1 million from $649.9 million, or 9.58 percent of total assets, at December 31, 2017.

Total deposits at December 31, 2018 increased $220.4 million to $5.45 billion from $5.23 billion at September 30, 2018 and increased $582.7 million from $4.87 billion at December 31, 2017.

Total borrowed funds at December 31, 2018 decreased $162.3 million to $920.5 million from $1.08 billion at September 30, 2018 and decreased $100.3 million from $1.02 billion at December 31, 2017.

The ratio of stockholders’ equity to total assets was 12.18 percent at December 31, 2018, as compared to 12.16 percent at September 30, 2018, and 11.86 percent at December 31, 2017. The ratio of tangible stockholders’ equity to tangible assets was 10.15 percent at December 31, 2018, as compared to 10.11 percent at September 30, 2018, and 9.94 percent at December 31, 2017. Tangible book value per share increased $0.21 from $9.00 at September 30, 2018 to $9.21 at December 31, 2018, compared to $8.61 at December 31, 2017.

NET INTEREST INCOME

Net interest income increased $0.9 million to $63.2 million during the fourth quarter of 2018 from $62.3 million for the quarter ended September 30, 2018, driven by loan growth during the fourth quarter. The net interest margin increased 1 basis point to 3.58 percent for the three months ended December 31, 2018 from 3.57 percent for the three months ended September 30, 2018.

NON-INTEREST INCOME

Non-interest income for the quarter ended December 31, 2018 decreased $0.6 million to $6.5 million from $7.1 million for the quarter ended September 30, 2018. The decrease was primarily driven by quarter over quarter declines of $0.4 million in loan level derivative income, $0.2 million in revenue on sales of loans and leases, and an increase in the loss on investment securities of $0.4 million; partially offset by an increase of $0.4 million in other non-interest income.

PROVISION FOR CREDIT LOSSES

The Company recorded a provision for credit losses of $0.1 million for the quarter ended December 31, 2018, compared to $2.7 million for the quarter ended September 30, 2018. The decrease in the provision for the quarter was primarily driven by a reduction in loss factors and risk rating migration, as well as charge-offs on relationships with specific reserves.

At the end of the quarter, the carrying value of taxi medallion loans was $13.7 million with reserves of $2.5 million. For collateral valuation purposes, individual taxi medallions are currently estimated at $35,000 for Boston and $20,000 for Cambridge. The Company has no taxi medallion exposure outside Massachusetts.

Total net loan and lease charge-offs for the fourth quarter of 2018 were $1.3 million compared to $0.6 million in the third quarter of 2018. The ratio of net loan and lease charge-offs to average loans and leases on an annualized basis increased to 8 basis points for the fourth quarter of 2018 from 4 basis points for the third quarter of 2018. Net loan and lease charge-offs in the fourth quarter of 2018 consisted of $0.3 million of taxi medallion loans as compared to $0.1 million of taxi medallion loans in the third quarter of 2018. Net loan and lease charge-offs as a percent of average total loans was 8 basis points in 2018, as compared to 25 basis points in 2017.

The allowance for loan and lease losses represented 0.93 percent of total loans and leases at December 31, 2018, compared to 0.96 percent at September 30, 2018, and 1.02 percent at December 31, 2017. The allowance for loan and lease losses related to originated loans and leases represented 0.96 percent of originated loans and leases at December 31, 2018, compared to 1.00 percent at September 30, 2018, and 1.05 percent at December 31, 2017.

NON-INTEREST EXPENSE

Non-interest expense for the quarter ended December 31, 2018 increased $3.0 million to $40.3 million from $37.3 million for the quarter ended September 30, 2018. The increase was primarily driven by increases of $2.1 million in compensation and employee benefits, $0.5 million in merger and acquisition expense, and $1.4 million in other non-interest expense, partially offset by decreases of $0.7 million in occupancy expense and $0.3 million in advertising and marketing expense.

PROVISION FOR INCOME TAXES

The effective tax rate was 24.1 percent and 23.2 percent for the three and twelve months ended December 31, 2018, respectively.

RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

The annualized return on average assets decreased to 1.15 percent during the fourth quarter of 2018 compared to 1.23 percent for the third quarter of 2018; and was 1.15 percent for the year ended December 31, 2018, compared to 0.76 percent for the year ended December 31, 2017.

The annualized return on average tangible stockholders' equity decreased to 11.54 percent during the fourth quarter of 2018 compared to 12.44 percent for the third quarter of 2018; and was 11.70 percent for the year ended December 31, 2018 compared to 8.04 percent for the year ended December 31, 2017.

ASSET QUALITY

The ratio of total nonaccrual loans and leases to total loans and leases was 0.38 percent at December 31, 2018 as compared to 0.41 percent at September 30, 2018. Total nonaccrual loans and leases decreased $1.7 million to $24.1 million at December 31, 2018 from $25.8 million at September 30, 2018. The ratio of nonperforming assets to total assets was 0.38 percent at December 31, 2018 as compared to 0.41 percent at September 30, 2018. Nonperforming assets decreased $1.6 million to $28.1 million at December 31, 2018 from $29.7 million at September 30, 2018. The decrease was primarily driven by the pay offs of nonperforming loans and leases and the charge-offs of taxi medallion loans in the fourth quarter.

DIVIDEND DECLARED

The Company’s Board approved a dividend of $0.105 per share for the quarter ended December 31, 2018. The dividend will be paid on February 25, 2019 to stockholders of record on February 11, 2019.

CONFERENCE CALL

The Company will conduct a conference call/webcast at 1:30 PM Eastern Standard Time on Thursday, January 31, 2019 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 10127371. 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 $7.4 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 At and for the Twelve
Months Ended
 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017
  
 (Dollars In Thousands Except per Share Data)
Earnings Data:             
Net interest income$63,159  $62,332  $62,717  $59,491  $57,657  $247,699  $223,181 
Provision for credit losses 123   2,717   1,470   641   1,802   4,951   18,988 
Non-interest income 6,461   7,069   5,526   6,168   5,815   25,224   32,173 
Non-interest expense 40,282   37,310   37,702   39,938   35,152   155,232   139,111 
                            
Income before provision for income taxes 29,215   29,374   29,071   25,080   26,518   112,740   97,255 
Net income attributable to Brookline Bancorp, Inc. 21,138   22,460   20,831   18,633   6,827   83,062   50,518 
              
Performance Ratios:             
Net interest margin (1) 3.58%  3.57%  3.64%  3.66%  3.59%  3.61%  3.57%
Interest-rate spread (1) 3.25%  3.27%  3.36%  3.38%  3.42%  3.32%  3.38%
                            
Return on average assets (annualized) 1.15%  1.23%  1.15%  1.08%  0.41%  1.15%  0.76%
Return on average tangible assets (annualized) (non-GAAP) 1.17%  1.26%  1.17%  1.10%  0.41%  1.18%  0.78%
Return on average stockholders' equity (annualized) 9.40%  10.10%  9.53%  8.98%  3.37%  9.51%  6.53%
                            
Return on average tangible stockholders' equity (annualized) (non-GAAP) 11.54%  12.44%  11.80%  11.01%  4.09%  11.70%  8.04%
Efficiency ratio (2) 57.86%  53.76%  55.25%  60.83%  55.38%  56.88%  54.48%
              
Per Common Share Data:             
Net income — Basic$0.26  $0.28  $0.26  $0.24  $0.09  $1.04  $0.68 
Net income — Diluted 0.26   0.28   0.26   0.24   0.09   1.04   0.68 
Cash dividends declared 0.105   0.100   0.100   0.090   0.090   0.395   0.360 
                            
Book value per share (end of period) 11.30   11.08   10.94   10.80   10.49   11.30   10.49 
Tangible book value per share (end of period) (non-GAAP) 9.21   9.00   8.85   8.69   8.61   9.21   8.61 
Stock price (end of period) 13.82   16.70   18.60   16.20   15.70   13.82   15.70 
 
Balance Sheet:             
Total assets$7,392,805  $7,320,596  $7,285,710  $7,248,114  $6,780,249  $7,392,805  $6,780,249 
Total loans and leases 6,303,516   6,227,707   6,171,274   6,114,461   5,730,679   6,303,516   5,730,679 
Total deposits 5,454,044   5,233,611   5,198,280   5,191,520   4,871,343   5,454,044   4,871,343 
Brookline Bancorp, Inc. stockholders’ equity 900,140   890,368   877,283   865,777   803,830   900,140   803,830 
              
Asset Quality:             
Nonperforming assets$28,116  $29,718  $30,145  $30,242  $31,691  $28,116  $31,691 
Nonperforming assets as a percentage of total assets 0.38%  0.41%  0.41%  0.42%  0.47%  0.38%  0.47%
                            
Allowance for loan and lease losses$58,692  $59,997  $57,981  $58,714  $58,592  $58,692  $58,592 
                            
Allowance for loan and lease losses as a percentage of total loans and leases 0.93%  0.96%  0.94%  0.96%  1.02%  0.93%  1.02%
Net loan and lease charge-offs$1,252  $564  $2,330  $505  $8,507  $4,651  $13,858 
Net loan and lease charge-offs as a percentage of average loans and leases (annualized) 0.08%  0.04%  0.15%  0.03%  0.60%  0.08%  0.25%
              
Capital Ratios:             
Stockholders’ equity to total assets 12.18%  12.16%  12.04%  11.94%  11.86%  12.18%  11.86%
Tangible stockholders’ equity to tangible assets (non-GAAP) 10.15%  10.11%  9.97%  9.85%  9.94%  10.15%  9.94%
              
(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)
 December 31,
2018
 September 30,
2018
 June 30, 2018 March 31, 2018 December 31,
2017
  
  
ASSETS(In Thousands Except Share Data)
Cash and due from banks$47,542  $30,762  $32,724  $34,713  $25,622 
Short-term investments 42,042   23,114   22,754   49,743   35,383 
Total cash and cash equivalents 89,584   53,876   55,478   84,456   61,005 
Investment securities available-for-sale 502,793   534,788   558,602   558,357   540,124 
Investment securities held-to-maturity 114,776   115,684   116,670   117,352   109,730 
Investment securities trading 4,207   4,169          
Total investment securities 621,776   654,641   675,272   675,709   649,854 
Loans and leases held-for-sale 3,247   937   1,034   756   2,628 
Loans and leases:         
Commercial real estate loans:         
Commercial real estate mortgage 2,330,725   2,287,979   2,269,520   2,284,488   2,174,969 
Multi-family mortgage 847,711   828,849   816,311   793,006   760,670 
Construction 173,300   164,217   178,335   169,440   140,138 
Total commercial real estate loans 3,351,736   3,281,045   3,264,166   3,246,934   3,075,777 
Commercial loans and leases:         
Commercial 736,418   771,200   761,964   761,540   705,004 
Equipment financing 982,089   954,579   920,643   892,341   866,488 
Condominium association 50,451   52,205   53,537   52,739   52,619 
Total commercial loans and leases 1,768,958   1,777,984   1,736,144   1,706,620   1,624,111 
Consumer loans:         
Residential mortgage 782,968   759,167   754,818   766,687   660,065 
Home equity 376,484   380,303   382,597   364,928   355,954 
Other consumer 23,370   29,208   33,549   29,292   14,772 
Total consumer loans 1,182,822   1,168,678   1,170,964   1,160,907   1,030,791 
Total loans and leases 6,303,516   6,227,707   6,171,274   6,114,461   5,730,679 
Allowance for loan and lease losses (58,692)  (59,997)  (57,981)  (58,714)  (58,592)
Net loans and leases 6,244,824   6,167,710   6,113,293   6,055,747   5,672,087 
Restricted equity securities 61,751   63,963   68,343   66,164   59,369 
Premises and equipment, net of accumulated depreciation 76,382   77,886   79,194   80,268   80,283 
Deferred tax asset ("DTA") 21,495   22,249   20,826   19,198   15,061 
Goodwill 160,427   160,427   160,427   160,896   137,890 
Identified intangible assets, net of accumulated amortization 6,086   6,623   7,160   7,697   6,044 
Other real estate owned and repossessed assets 4,019   3,934   4,352   3,963   4,419 
Other assets 103,214   108,350   100,331   93,260   91,609 
Total assets$7,392,805  $7,320,596  $7,285,710  $7,248,114  $6,780,249 
LIABILITIES AND STOCKHOLDERS' EQUITY         
Deposits:         
Non-interest-bearing deposits:         
Demand checking accounts$1,033,551  $1,017,234  $1,002,954  $987,153  $942,583 
Interest-bearing deposits:         
NOW accounts 336,317   322,587   346,936   342,374   350,568 
Savings accounts 619,961   612,210   603,079   637,920   646,359 
Money market accounts 1,675,050   1,623,220   1,704,652   1,862,351   1,724,363 
Certificate of deposit accounts 1,789,165   1,658,360   1,540,659   1,361,722   1,207,470 
Total interest-bearing deposits 4,420,493   4,216,377   4,195,326   4,204,367   3,928,760 
Total deposits 5,454,044   5,233,611   5,198,280   5,191,520   4,871,343 
Borrowed funds:         
Advances from the FHLBB 784,375   959,446   991,091