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Brookline Bancorp Announces Second Quarter Results
Source: Nasdaq GlobeNewswire / 26 Jul 2023 16:05:39 America/New_York
Net Income of $21.9 million, EPS of $0.25
Operating Earnings of $23.2 million, Operating EPS of $0.26
BOSTON, July 26, 2023 (GLOBE NEWSWIRE) -- Brookline Bancorp, Inc. (NASDAQ: BRKL) (the “Company”) today announced net income of $21.9 million, or $0.25 per basic and diluted share, for the second quarter of 2023, compared to net income of $7.6 million, or $0.09 per basic and diluted share, for the first quarter of 2023, and net income of $25.2 million, or $0.33 per basic and diluted share, for the second quarter of 2022.
“I am pleased to report on our consistent performance in the second quarter,” Chairman and CEO Paul Perrault commented on the Company’s earnings. “Core deposits increased from the prior quarter and our bankers continue to demonstrate our culture by providing excellent customer service to our clients, which contributes to the continued growth of our Company.”
BALANCE SHEET
Total assets at June 30, 2023 decreased $0.3 billion to $11.2 billion from $11.5 billion at March 31, 2023, and increased $2.7 billion from $8.5 billion at June 30, 2022. At June 30, 2023, total loans and leases were $9.3 billion, representing an increase of $0.1 billion from March 31, 2023, and an increase of $2.0 billion from June 30, 2022. The loan portfolio grew $0.1 billion in the second quarter compared to growth of $1.6 billion in the first quarter, primarily driven by the completion of the acquisition of PCSB Financial Corporation ("PCSB").
Total investment securities at June 30, 2023 decreased $156.8 million to $910.2 million from $1.1 billion at March 31, 2023, and increased $192.4 million from $717.8 million at June 30, 2022. Total cash and cash equivalents at June 30, 2023 decreased $261.9 million to $224.4 million from $486.3 million at March 31, 2023, and increased $134.1 million from $90.3 million at June 30, 2022. As of June 30, 2023, total investment securities and total cash and cash equivalents represented 10.1 percent of total assets compared to 13.5 percent and 9.5 percent as of March 31, 2023 and June 30, 2022, respectively.
Total deposits at June 30, 2023 increased $60.6 million to $8.52 billion from $8.46 billion at March 31, 2023, consisting of a $110.1 million increase in core deposits (which include demand checking, NOW, money market and savings accounts) and certificate of deposit accounts, partially offset by a $49.5 million decrease in brokered deposits, and increased $1.6 billion from $6.9 billion at June 30, 2022, primarily driven by the completion of the PCSB acquisition.
Total borrowed funds at June 30, 2023 decreased $403.8 million to $1.2 billion from $1.6 billion at March 31, 2023, and increased $748.1 million from $478.2 million at June 30, 2022.
The ratio of stockholders’ equity to total assets was 10.37 percent at June 30, 2023, compared to 10.11 percent at March 31, 2023, and 11.38 percent at June 30, 2022. The ratio of tangible stockholders’ equity to tangible assets (non-GAAP) was 8.16 percent at June 30, 2023, compared to 7.94 percent at March 31, 2023, and 9.65 percent at June 30, 2022. Tangible book value per share (non-GAAP) decreased $0.01 from $10.08 at March 31, 2023 to $10.07 at June 30, 2023, compared to $10.51 at June 30, 2022.
NET INTEREST INCOME
Net interest income remained consistent quarter over quarter at $86.0 million. The net interest margin decreased 10 basis points to 3.26 percent for the three months ended June 30, 2023 from 3.36 percent for the three months ended March 31, 2023, primarily driven by higher funding costs.
NON-INTEREST INCOME
Total non-interest income for the quarter ended June 30, 2023 decreased $7.5 million to $5.5 million from $12.9 million for the quarter ended March 31, 2023. The decrease was primarily driven by a combined $3.0 million decline in gain on sales of loans and investment, $2.0 million decline in derivative income, and $2.0 million impact from the mark to market on interest rate swaps.
PROVISION FOR CREDIT LOSSES
The Company recorded a provision for credit losses of $5.7 million for the quarter ended June 30, 2023, compared to $25.3 million for the quarter ended March 31, 2023. The higher provision for credit losses in the first quarter of 2023 was primarily driven by the acquisition of PCSB as well as loan growth.
Total net charge-offs for the second quarter of 2023 were $1.1 million compared to $0.5 million in the first quarter of 2023. The increase was primarily driven by an increase in net charge-offs on equipment financing loans of $0.6 million. The ratio of net loan and lease charge-offs to average loans and leases on an annualized basis increased to 5 basis points for the second quarter of 2023 from 2 basis points for the first quarter of 2023.
The allowance for loan and lease losses represented 1.35 percent of total loans and leases at June 30, 2023, compared to 1.31 percent at March 31, 2023, and 1.28 percent at June 30, 2022.
ASSET QUALITY
The ratio of nonperforming loans and leases to total loans and leases was 0.50 percent at June 30, 2023, an increase from 0.31 percent at March 31, 2023. Total nonaccrual loans and leases increased $17.9 million to $46.3 million at June 30, 2023 from $28.5 million at March 31, 2023. The ratio of nonperforming assets to total assets was 0.42 percent at June 30, 2023, an increase from 0.25 percent at March 31, 2023. Total nonperforming assets increased $18.0 million to $46.9 million at June 30, 2023 from $29.0 million at March 31, 2023. The increase in nonperforming assets was primarily driven by a $9.3 million commercial relationship and a $2.8 million commercial real estate relationship.
NON-INTEREST EXPENSE
Non-interest expense for the quarter ended June 30, 2023 decreased $7.0 million to $57.8 million from $64.8 million for the quarter ended March 31, 2023. The decrease was primarily driven by decreases of $5.4 million in merger and acquisition expense, $3.1 million in compensation and employee benefits expense, and $0.4 million in occupancy expense, partially offset by an increase of $1.4 million in FDIC insurance expense and an increase of $0.6 million in professional services expense.
PROVISION FOR INCOME TAXES
The effective tax rate was 21.4 percent and 19.4 percent for the three and six months ended June 30, 2023 compared to 12.8 percent for the three months ended March 31, 2023 and 25.2 percent for both the three and six months ended June 30, 2022.
RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY
The annualized return on average assets increased to 0.78 percent during the second quarter 2023 from 0.27 percent for the first quarter of 2023.
The annualized return on average stockholders' equity increased to 7.44 percent during the second quarter of 2023 from 2.61 percent for the first quarter of 2023. The annualized return on average tangible stockholders’ equity increased to 9.67 percent for the second quarter of 2023 from 3.43 percent for the first quarter of 2023.
DIVIDEND DECLARED
The Company’s Board of Directors approved a dividend of $0.135 per share for the quarter ended June 30, 2023. The dividend will be paid on August 25, 2023 to stockholders of record on August 11, 2023.
CONFERENCE CALL
The Company will conduct a conference call/webcast at 1:30 PM Eastern Time on Thursday, July 27, 2023 to discuss the results for the quarter, business highlights and outlook. A copy of the Earnings Presentation is available on the Company’s website, www.brooklinebancorp.com. To listen to the call and view the Company’s Earnings Presentation, please join the call via https://events.q4inc.com/attendee/769450735. To listen to the call without access to the slides, interested parties may dial 833-470-1428 (United States) or 404-975-4839 (internationally) and ask for the Brookline Bancorp, Inc. conference call (Access Code 281178). A recorded playback of the call will be available for one week following the call on the Company’s website under “Investor Relations” or by dialing 866-813-9403 (United States) or 204-525-0658 (internationally) and entering the passcode: 932919.
ABOUT BROOKLINE BANCORP, INC.
Brookline Bancorp, Inc., a bank holding company with $11.2 billion in assets and branch locations in Massachusetts, Rhode Island, and the Lower Hudson Valley of New York State, is headquartered in Boston, Massachusetts and operates as the holding company for Brookline Bank, Bank Rhode Island, and PCSB Bank (the "banks"). The Company provides commercial and retail banking services, cash management and investment services to customers throughout Central New England and the Lower Hudson Valley of New York State. More information about Brookline Bancorp, Inc. and its banks can be found at the following websites: www.brooklinebank.com, www.bankri.com and www.pcsb.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. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission ("SEC"), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters, including statements regarding the Company’s business, credit quality, financial condition, liquidity and results of operations. Forward-looking statements may differ, possibly materially, from what is included in this press release due to factors and future developments that are uncertain and beyond the scope of the Company’s control. These include, but are not limited to, the Company’s ability to achieve the synergies and value creation contemplated by the acquisition of PCSB; turbulence in the capital and debt markets; changes in interest rates; competitive pressures from other financial institutions; general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, and future pandemics; changes in regulation; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions and adverse economic developments; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; and changes in assumptions used in making such forward-looking statements. Forward-looking statements involve risks and uncertainties which are difficult to predict. 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 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 earnings per common share, operating return on average assets, operating return on average tangible assets, operating return on average stockholders' equity, operating return on average tangible stockholders' equity, tangible book value per common share, tangible stockholders’ equity to tangible assets, return on average tangible assets (annualized) and return on average tangible stockholders' equity (annualized). 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.
INVESTOR RELATIONS:
Contact: Carl M. Carlson Brookline Bancorp, Inc. Co-President and 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,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022(Dollars In Thousands Except per Share Data) Earnings Data: Net interest income $ 86,037 $ 86,049 $ 80,030 $ 78,026 $ 71,867 Provision (credit) for credit losses 5,726 25,344 5,671 2,845 173 Provision (credit) for investment losses 133 198 54 (10) 54 Non-interest income 5,462 12,937 9,056 6,834 6,928 Non-interest expense 57,825 64,776 47,225 44,959 44,871 Income before provision for income taxes 27,815 8,668 36,136 37,066 33,697 Net income 21,850 7,560 29,695 30,149 25,195 Performance Ratios: Net interest margin (1) 3.26 % 3.36 % 3.81 % 3.80 % 3.56 % Interest-rate spread (1) 2.51 % 2.66 % 3.35 % 3.58 % 3.41 % Return on average assets (annualized) 0.78 % 0.27 % 1.34 % 1.40 % 1.18 % Return on average tangible assets (annualized) (non-GAAP) 0.79 % 0.28 % 1.37 % 1.43 % 1.21 % Return on average stockholders' equity (annualized) 7.44 % 2.61 % 12.09 % 12.29 % 10.32 % Return on average tangible stockholders' equity (annualized) (non-GAAP) 9.67 % 3.43 % 14.48 % 14.72 % 12.39 % Efficiency ratio (2) 63.20 % 65.44 % 53.01 % 52.98 % 56.95 % Per Common Share Data: Net income — Basic $ 0.25 $ 0.09 $ 0.39 $ 0.39 $ 0.33 Net income — Diluted 0.25 0.09 0.39 0.39 0.33 Cash dividends declared 0.135 0.135 0.135 0.135 0.130 Book value per share (end of period) 13.11 13.14 12.91 12.54 12.63 Tangible book value per share (end of period) (non-GAAP) 10.07 10.08 10.80 10.43 10.51 Stock price (end of period) 8.74 10.50 14.15 11.65 13.31 Balance Sheet: Total assets $ 11,206,078 $ 11,522,485 $ 9,185,836 $ 8,695,708 $ 8,514,230 Total loans and leases 9,340,799 9,246,965 7,644,388 7,421,304 7,291,912 Total deposits 8,517,013 8,456,462 6,522,146 6,735,605 6,894,457 Total stockholders’ equity 1,162,308 1,165,066 992,125 963,618 968,496 Asset Quality: Nonperforming assets $ 46,925 $ 28,962 $ 15,302 $ 18,312 $ 21,259 Nonperforming assets as a percentage of total assets 0.42 % 0.25 % 0.17 % 0.21 % 0.25 % Allowance for loan and lease losses $ 125,817 $ 120,865 $ 98,482 $ 94,169 $ 93,188 Allowance for loan and lease losses as a percentage of total loans and leases 1.35 % 1.31 % 1.29 % 1.27 % 1.28 % Net loan and lease charge-offs (recoveries) $ 1,097 $ 451 $ 310 $ (179) $ 1,242 Net loan and lease charge-offs as a percentage of average loans and leases (annualized) 0.05 % 0.02 % 0.02 % (0.01)% 0.07 % Capital Ratios: Stockholders’ equity to total assets 10.37 % 10.11 % 10.80 % 11.08 % 11.38 % Tangible stockholders’ equity to tangible assets (non-GAAP) 8.16 % 7.94 % 9.20 % 9.39 % 9.65 % (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,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022ASSETS (In Thousands Except Share Data) Cash and due from banks $ 44,323 $ 30,782 $ 191,767 $ 65,638 $ 50,429 Short-term investments 180,109 455,538 191,192 46,873 39,900 Total cash and cash equivalents 224,432 486,320 382,959 112,511 90,329 Investment securities available-for-sale 910,210 1,067,032 656,766 675,692 717,818 Total investment securities 910,210 1,067,032 656,766 675,692 717,818 Loans and leases: Commercial real estate loans 5,670,771 5,610,414 4,404,148 4,269,512 4,225,754 Commercial loans and leases 2,193,027 2,147,149 2,016,499 1,933,645 1,860,182 Consumer loans 1,477,001 1,489,402 1,223,741 1,218,147 1,205,976 Total loans and leases 9,340,799 9,246,965 7,644,388 7,421,304 7,291,912 Allowance for loan and lease losses (125,817) (120,865) (98,482) (94,169) (93,188) Net loans and leases 9,214,982 9,126,100 7,545,906 7,327,135 7,198,724 Restricted equity securities 71,421 86,230 71,307 44,760 35,406 Premises and equipment, net of accumulated depreciation 90,685 87,799 71,391 69,912 69,557 Right-of-use asset operating leases 31,774 30,067 19,484 18,614 18,226 Deferred tax asset 77,704 75,028 52,237 56,894 50,736 Goodwill 241,222 241,222 160,427 160,427 160,427 Identified intangible assets, net of accumulated amortization 28,126 30,080 1,781 1,902 2,022 Other real estate owned and repossessed assets 602 508 408 591 507 Other assets 314,920 292,099 223,170 227,270 170,478 Total assets $ 11,206,078 $ 11,522,485 $ 9,185,836 $ 8,695,708 $ 8,514,230 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Demand checking accounts $ 1,843,516 $ 1,899,370 $ 1,802,518 $ 1,848,562 $ 1,845,365 NOW accounts 699,119 757,411 544,118 597,870 628,791 Savings accounts 1,464,054 1,268,375 762,271 824,789 894,926 Money market accounts 2,166,570 2,185,971 2,174,952 2,405,680 2,402,992 Certificate of deposit accounts 1,410,905 1,362,970 928,143 924,771 1,006,786 Brokered deposit accounts 932,849 982,365 310,144 133,933 115,597 Total deposits 8,517,013 8,456,462 6,522,146 6,735,605 6,894,457 Borrowed funds: Advances from the FHLBB 1,043,381 1,458,457 1,237,823 557,895 307,967 Subordinated debentures and notes 84,116 84,080 84,044 84,008 83,970 Other borrowed funds 98,773 87,565 110,785 116,865 86,263 Total borrowed funds 1,226,270 1,630,102 1,432,652 758,768 478,200 Operating lease liabilities 33,021 31,373 19,484 18,614 18,226 Mortgagors’ escrow accounts 17,207 17,080 5,607 5,785 5,771 Reserve for unfunded credits 22,789 23,112 20,602 19,555 17,511 Accrued expenses and other liabilities 227,470 199,290 193,220 193,763 131,569 Total liabilities 10,043,770 10,357,419 8,193,711 7,732,090 7,545,734 Stockholders' equity: Common stock, $0.01 par value; 200,000,000 shares authorized; 96,998,075 shares issued, 96,998,075 shares issued, 85,177,172 shares issued, 85,177,172 shares issued, and 85,177,172 shares issued, respectively 970 970 852 852 852 Additional paid-in capital 905,084 904,174 736,074 735,119 738,544 Retained earnings, partially restricted 417,328 407,528 412,019 392,779 372,677 Accumulated other comprehensive income (66,156) (52,688) (61,947) (70,227) (44,977) Treasury stock, at cost; 7,734,891, 7,734,891, 7,731,445, 7,730,945, and 7,995,888 shares, respectively (94,918) (94,918) (94,873) (94,866) (98,525) Unallocated common stock held by the Employee Stock Ownership Plan; 0, 0, 0, 4,833, and 11,442 shares, respectively — — — (39) (75) Total stockholders' equity 1,162,308 1,165,066 992,125 963,618 968,496 Total liabilities and stockholders' equity $ 11,206,078 $ 11,522,485 $ 9,185,836 $ 8,695,708 $ 8,514,230 BROOKLINE BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) Three Months Ended June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022(In Thousands Except Share Data) Interest and dividend income: Loans and leases $ 132,299 $ 121,931 $ 98,386 $ 84,375 $ 74,287 Debt securities 8,034 7,870 3,497 3,337 3,249 Restricted equity securities 1,673 1,255 766 467 337 Short-term investments 3,351 1,495 754 464 156 Total interest and dividend income 145,357 132,551 103,403 88,643 78,029 Interest expense: Deposits 43,147 29,368 14,185 7,354 4,282 Borrowed funds 16,173 17,134 9,188 3,263 1,880 Total interest expense 59,320 46,502 23,373 10,617 6,162 Net interest income 86,037 86,049 80,030 78,026 71,867 Provision for credit losses 5,726 25,344 5,671 2,845 173 Provision (credit) for investment losses 133 198 54 (10) 54 Net interest income after provision for credit losses 80,178 60,507 74,305 75,191 71,640 Non-interest income: Deposit fees 2,866 2,657 2,916 2,759 2,744 Loan fees 491 391 446 349 666 Loan level derivative income, net 363 2,373 670 1,275 1,615 Gain on investment securities, net 3 1,701 321 — — Gain on sales of loans and leases held-for-sale 308 1,638 2,612 889 291 Other 1,431 4,177 2,091 1,562 1,612 Total non-interest income 5,462 12,937 9,056 6,834 6,928 Non-interest expense: Compensation and employee benefits 33,438 36,565 29,525 28,306 28,772 Occupancy 4,870 5,223 4,005 3,906 3,807 Equipment and data processing 6,531 6,462 5,758 5,066 4,931 Professional services 1,986 1,430 1,546 1,069 1,219 FDIC insurance 2,609 1,244 1,001 709 739 Advertising and marketing 1,382 1,410 1,052 1,337 1,319 Amortization of identified intangible assets 1,954 1,966 120 120 120 Merger and acquisition expense 1,002 6,409 641 1,073 535 Other 4,053 4,067 3,577 3,373 3,429 Total non-interest expense 57,825 64,776 47,225 44,959 44,871 Income before provision for income taxes 27,815 8,668 36,136 37,066 33,697 Provision for income taxes 5,965 1,108 6,441 6,917 8,502 Net income $ 21,850 $ 7,560 $ 29,695 $ 30,149 $ 25,195 Earnings per common share: Basic $ 0.25 $ 0.09 $ 0.39 $ 0.39 $ 0.33 Diluted $ 0.25 $ 0.09 $ 0.39 $ 0.39 $ 0.33 Weighted average common shares outstanding during the period: Basic 88,665,135 86,563,641 76,841,655 76,779,038 77,091,013 Diluted 88,926,543 86,837,806 77,065,076 77,007,971 77,419,288 Dividends paid per common share $ 0.135 $ 0.135 $ 0.135 $ 0.130 $ 0.130 BROOKLINE BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) Six Months Ended June 30, 2023 2022 (In Thousands Except Share Data) Interest and dividend income: Loans and leases $ 254,230 $ 146,008 Debt securities 15,904 6,245 Marketable and restricted equity securities 2,928 665 Short-term investments 4,846 222 Total interest and dividend income 277,908 153,140 Interest expense: Deposits 72,515 8,053 Borrowed funds 33,307 3,372 Total interest expense 105,822 11,425 Net interest income 172,086 141,715 Provision for credit losses 31,070 9 Provision for investment losses 331 58 Net interest income after provision for credit losses 140,685 141,648 Non-interest income: Deposit Fees 5,523 5,244 Loan Fees 882 1,413 Loan level derivative income, net 2,736 2,301 Gain on investment securities, net 1,704 — Gain on sales of loans and leases held-for-sale 1,946 635 Other 5,608 2,864 Total non-interest income 18,399 12,457 Non-interest expense: Compensation and employee benefits 70,003 55,656 Occupancy 10,093 8,091 Equipment and data processing 12,993 10,009 Professional services 3,416 2,445 FDIC insurance 3,853 1,467 Advertising and marketing 2,792 2,591 Amortization of identified intangible assets 3,920 254 Merger and acquisition expense 7,411 535 Other 8,120 6,310 Total non-interest expense 122,601 87,358 Income before provision for income taxes 36,483 66,747 Provision for income taxes 7,073 16,847 Net income $ 29,410 $ 49,900 Earnings per common share: Basic $ 0.34 $ 0.65 Diluted $ 0.34 $ 0.65 Weighted average common shares outstanding during the period: Basic 87,620,194 77,352,666 Diluted 87,887,980 77,671,601 Dividends paid per common share $ 0.270 $ 0.255 BROOKLINE BANCORP, INC. AND SUBSIDIARIES Asset Quality Analysis (Unaudited) At and for the Three Months Ended June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022(Dollars in Thousands) NONPERFORMING ASSETS: Loans and leases accounted for on a nonaccrual basis: Commercial real estate mortgage $ 8,737 $ 4,589 $ 607 $ 3,136 $ 6,470 Construction 3,828 3,883 707 — — Total commercial real estate loans 12,565 8,472 1,314 3,136 6,470 Commercial 16,023 5,495 464 618 892 Equipment financing 12,809 9,908 9,653 10,544 10,183 Condominium association — 51 58 64 71 Total commercial loans and leases 28,832 15,454 10,175 11,226 11,146 Residential mortgage 4,343 3,449 2,680 2,741 2,412 Home equity 583 1,079 723 616 721 Other consumer — — 2 2 3 Total consumer loans 4,926 4,528 3,405 3,359 3,136 Total nonaccrual loans and leases 46,323 28,454 14,894 17,721 20,752 Other repossessed assets 602 508 408 591 507 Total nonperforming assets $ 46,925 $ 28,962 $ 15,302 $ 18,312 $ 21,259 Loans and leases past due greater than 90 days and still accruing $ 490 $ 726 $ 33 $ 9,583 $ 266 Nonperforming loans and leases as a percentage of total loans and leases 0.50 % 0.31 % 0.19 % 0.24 % 0.28 % Nonperforming assets as a percentage of total assets 0.42 % 0.25 % 0.17 % 0.21 % 0.25 % PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES: Allowance for loan and lease losses at beginning of period $ 120,865 $ 98,482 $ 94,169 $ 93,188 $ 95,463 Charge-offs (1,690 ) (845 ) (658 ) (598 ) (1,533 ) Recoveries 593 394 348 777 291 Net (charge-offs) recoveries (1,097 ) (451 ) (310 ) 179 (1,242 ) Provision (credit) for loan and lease losses excluding unfunded commitments * 6,049 22,834 4,623 802 (1,033 ) Allowance for loan and lease losses at end of period $ 125,817 $ 120,865 $ 98,482 $ 94,169 $ 93,188 Allowance for loan and lease losses as a percentage of total loans and leases 1.35 % 1.31 % 1.29 % 1.27 % 1.28 % NET CHARGE-OFFS (RECOVERIES): Commercial real estate loans $ (6 ) $ (6 ) $ (6 ) $ (6 ) $ (6 ) Commercial loans and leases 1,108 457 320 (179 ) 1,254 Consumer loans (5 ) — (4 ) 6 (6 ) Total net charge-offs (recoveries) $ 1,097 $ 451 $ 310 $ (179 ) $ 1,242 Net loan and lease charge-offs as a percentage of average loans and leases (annualized) 0.05 % 0.02 % 0.02 % (0.01 )% 0.07 % *Provision for loan and lease losses does not include (credit) provision of $(0.3) million, $2.5 million, $1.0 million, $2.0 million, and $1.2 million for credit losses on unfunded commitments during the three months ended June 20, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively. BROOKLINE BANCORP, INC. AND SUBSIDIARIES Average Yields / Costs (Unaudited) Three Months Ended June 30, 2023 March 31, 2023 June 30, 2022 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) $ 1,000,440 $ 8,091 3.23 % $ 1,029,068 $ 7,974 3.10 % $ 726,374 $ 3,249 1.79 % Marketable and restricted equity securities (2) 77,364 1,673 8.65 % 76,911 1,255 6.53 % 30,461 337 4.42 % Short-term investments 229,474 3,351 5.84 % 147,654 1,495 4.05 % 99,905 156 0.62 % Total investments 1,307,278 13,115 4.01 % 1,253,633 10,724 3.42 % 856,740 3,742 1.75 % Loans and Leases: Commercial real estate loans (3) 5,640,491 79,582 5.58 % 5,579,977 67,667 4.85 % 4,220,257 38,967 3.65 % Commercial loans (3) 913,732 13,502 5.85 % 892,522 14,017 6.28 % 695,365 7,074 4.03 % Equipment financing (3) 1,253,199 22,357 7.14 % 1,226,717 21,213 6.92 % 1,129,606 17,897 6.34 % Consumer loans (3) 1,482,799 16,903 4.56 % 1,452,072 19,070 5.28 % 1,195,051 10,397 3.48 % Total loans and leases 9,290,221 132,344 5.70 % 9,151,288 121,967 5.33 % 7,240,279 74,335 4.11 % Total interest-earning assets 10,597,499 145,459 5.49 % 10,404,921 132,691 5.10 % 8,097,019 78,077 3.86 % Non-interest-earning assets 675,173 726,166 418,311 Total assets $ 11,272,672 $ 11,131,087 $ 8,515,330 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Deposits: NOW accounts $ 735,001 1,069 0.58 % $ 810,333 901 0.45 % $ 612,439 216 0.14 % Savings accounts 1,374,337 5,917 1.73 % 1,160,003 2,514 0.88 % 930,957 211 0.09 % Money market accounts 2,140,522 13,989 2.62 % 2,366,235 12,140 2.08 % 2,429,043 2,073 0.34 % Certificates of deposit 1,390,913 10,021 2.89 % 1,346,761 7,456 2.25 % 1,018,471 1,694 0.67 % Brokered deposit accounts 975,700 12,151 5.00 % 534,527 6,357 4.82 % 115,535 88 0.30 % Total interest-bearing deposits 6,616,473 43,147 2.62 % 6,217,859 29,368 1.92 % 5,106,445 4,282 0.34 % Borrowings Advances from the FHLBB 1,191,424 14,287 4.74 % 1,264,523 14,531 4.60 % 183,047 489 1.06 % Subordinated debentures and notes 84,098 1,363 6.49 % 84,062 1,354 6.44 % 83,952 1,262 6.02 % Other borrowed funds 86,896 523 2.41 % 158,499 1,249 3.20 % 106,363 129 0.48 % Total borrowings 1,362,418 16,173 4.70 % 1,507,084 17,134 4.55 % 373,362 1,880 1.99 % Total interest-bearing liabilities 7,978,891 59,320 2.98 % 7,724,943 46,502 2.44 % 5,479,807 6,162 0.45 % Non-interest-bearing liabilities: Demand checking accounts 1,849,393 1,930,162 1,886,284 Other non-interest-bearing liabilities 270,221 316,347 173,072 Total liabilities 10,098,505 9,971,452 7,539,163 Stockholders’ equity 1,174,167 1,159,635 976,167 Total liabilities and equity $ 11,272,672 $ 11,131,087 $ 8,515,330 Net interest income (tax-equivalent basis) /Interest-rate spread (4) 86,139 2.51 % 86,189 2.66 % 71,915 3.41 % Less adjustment of tax-exempt income 102 140 48 Net interest income $ 86,037 $ 86,049 $ 71,867 Net interest margin (5) 3.26 % 3.36 % 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 Average Yields / Costs (Unaudited) Six Months Ended June 30, 2023 June 30, 2022 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) $ 1,014,675 $ 16,065 3.17 % $ 723,336 $ 6,245 1.73 % Marketable and restricted equity securities (2) 77,139 2,928 7.59 % 29,192 665 4.55 % Short-term investments 188,790 4,846 5.13 % 145,934 222 0.30 % Total investments 1,280,604 23,839 3.72 % 898,462 7,132 1.59 % Loans and Leases: Commercial real estate loans (3) 5,610,401 147,249 5.22 % 4,186,523 74,994 3.56 % Commercial loans (3) 903,185 27,519 6.06 % 725,422 15,072 4.13 % Equipment financing (3) 1,240,031 43,570 7.03 % 1,117,467 35,909 6.43 % Consumer loans (3) 1,467,521 35,973 4.91 % 1,183,328 20,139 3.41 % Total loans and leases 9,221,138 254,311 5.52 % 7,212,740 146,114 4.05 % Total interest-earning assets 10,501,742 278,150 5.30 % 8,111,202 153,246 3.78 % Non-interest-earning assets 700,529 411,944 Total assets $ 11,202,271 $ 8,523,146 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Deposits: NOW accounts $ 772,459 1,970 0.51 % $ 601,227 319 0.11 % Savings accounts 1,267,762 8,431 1.34 % 932,059 409 0.09 % Money market accounts 2,252,755 26,129 2.34 % 2,422,845 3,643 0.30 % Certificates of deposit 1,368,959 17,477 2.57 % 1,054,897 3,542 0.68 % Brokered deposit accounts 756,332 18,508 4.93 % 124,096 140 0.23 % Total interest-bearing deposits 6,418,267 72,515 2.28 % 5,135,124 8,053 0.32 % Borrowings Advances from the FHLBB 1,227,772 28,818 4.67 % 143,681 676 0.94 % Subordinated debentures and notes 84,080 2,717 6.46 % 83,934 2,506 5.97 % Other borrowed funds 122,500 1,772 2.92 % 118,156 190 0.32 % Total borrowings 1,434,352 33,307 4.62 % 345,771 3,372 1.94 % Total interest-bearing liabilities 7,852,619 105,822 2.72 % 5,480,895 11,425 0.42 % Non-interest-bearing liabilities: Demand checking accounts 1,889,554 1,883,179 Other non-interest-bearing liabilities 293,157 172,400 Total liabilities 10,035,330 7,536,474 Stockholders’ equity 1,166,941 986,672 Total liabilities and equity $ 11,202,271 $ 8,523,146 Net interest income (tax-equivalent basis) /Interest-rate spread (4) 172,328 2.58 % 141,821 3.36 % Less adjustment of tax-exempt income 242 106 Net interest income $ 172,086 $ 141,715 Net interest margin (5) 3.31 % 3.53 % (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 30,2023 2022 2023 2022 Reconciliation Table - Non-GAAP Financial Information (Dollars in Thousands Except Share Data) (Dollars in Thousands Except Share Data) Reported Pretax Income $ 27,815 $ 33,697 $ 36,483 $ 66,747 Less: Security gains 3 — 1,704 — Add: Day 1 PCSB CECL provision — — 16,744 — Merger and acquisition expense 1,002 535 7,411 535 Operating Pretax Income $ 28,814 $ 34,232 $ 58,934 $ 67,282 Estimated effective tax rate 19.4 % 25.2 % 19.4 % 25.2 % Estimated taxes 5,587 8,637 11,427 16,982 Operating earnings after tax $ 23,227 $ 25,595 $ 47,507 $ 50,300 Operating earnings per common share: Basic $ 0.26 $ 0.33 $ 0.54 $ 0.65 Diluted $ 0.26 $ 0.33 $ 0.54 $ 0.65 Weighted average common shares outstanding during the period: Basic 88,665,135 77,091,013 87,620,194 77,352,666 Diluted 88,926,543 77,419,288 87,887,980 77,671,601 Return on average assets * 0.78 % 1.18 % 0.53 % 1.17 % Less: Security gains (after-tax) * — % — % 0.02 % — % Add: Day 1 PCSB CECL provision * — % — % 0.24 % — % Merger and acquisition expense (after-tax) * 0.03 % 0.02 % 0.11 % 0.01 % Operating return on average assets * 0.81 % 1.20 % 0.86 % 1.18 % Return on average tangible assets * 0.79 % 1.21 % 0.54 % 1.19 % Less: Security gains (after-tax) * — % — % 0.03 % — % Add: Day 1 PCSB CECL provision * — % — % 0.25 % — % Merger and acquisition expense (after-tax) * 0.03 % 0.02 % 0.11 % 0.01 % Operating return on average tangible assets * 0.82 % 1.23 % 0.87 % 1.20 % Return on average stockholders' equity * 7.44 % 10.32 % 5.04 % 10.11 % Less: Security gains (after-tax) * — % — % 0.24 % — % Add: Day 1 PCSB CECL provision * — % — % 2.31 % — % Merger and acquisition expense (after-tax) * 0.28 % 0.16 % 1.02 % 0.08 % Operating return on average stockholders' equity * 7.72 % 10.48 % 8.13 % 10.19 % Return on average tangible stockholders' equity * 9.67 % 12.39 % 6.59 % 12.11 % Less: Security gains (after-tax) * — % — % 0.31 % — % Add: Day 1 PCSB CECL provision * — % — % 3.02 % — % Merger and acquisition expense (after-tax) * 0.36 % 0.20 % 1.34 % 0.10 % Operating return on average tangible stockholders' equity * 10.03 % 12.59 % 10.64 % 12.21 % * Ratios at and for the three months ended are annualized. At and for the Three Months Ended June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022(Dollars in Thousands) Net income, as reported $ 21,850 $ 7,560 $ 29,695 $ 30,149 $ 25,195 Average total assets $ 11,272,672 $ 11,131,087 $ 8,857,631 $ 8,586,420 $ 8,515,330 Less: Average goodwill and average identified intangible assets, net 270,147 278,135 162,266 162,387 162,507 Average tangible assets $ 11,002,525 $ 10,852,952 $ 8,695,365 $ 8,424,033 $ 8,352,823 Return on average tangible assets (annualized) 0.79 % 0.28 % 1.37 % 1.43 % 1.21 % Average total stockholders’ equity $ 1,174,167 $ 1,159,635 $ 982,306 $ 981,379 $ 976,167 Less: Average goodwill and average identified intangible assets, net 270,147 278,135 162,266 162,387 162,507 Average tangible stockholders’ equity $ 904,020 $ 881,500 $ 820,040 $ 818,992 $ 813,660 Return on average tangible stockholders’ equity (annualized) 9.67 % 3.43 % 14.48 % 14.72 % 12.39 % Total stockholders’ equity $ 1,162,308 $ 1,165,066 $ 992,125 $ 963,618 $ 968,496 Less: Goodwill 241,222 241,222 160,427 160,427 160,427 Identified intangible assets, net 28,126 30,080 1,781 1,902 2,022 Tangible stockholders' equity $ 892,960 $ 893,764 $ 829,917 $ 801,289 $ 806,047 Total assets $ 11,206,078 $ 11,522,485 $ 9,185,836 $ 8,695,708 $ 8,514,230 Less: Goodwill 241,222 241,222 160,427 160,427 160,427 Identified intangible assets, net 28,126 30,080 1,781 1,902 2,022 Tangible assets $ 10,936,730 $ 11,251,183 $ 9,023,628 $ 8,533,379 $ 8,351,781 Tangible stockholders’ equity to tangible assets 8.16 % 7.94 % 9.20 % 9.39 % 9.65 % Tangible stockholders' equity $ 892,960 $ 893,764 $ 829,917 $ 801,289 $ 806,047 Number of common shares issued 96,998,075 96,998,075 85,177,172 85,177,172 85,177,172 Less: Treasury shares 7,734,891 7,734,891 7,731,445 7,730,945 7,995,888 Unallocated ESOP shares — — — 4,833 11,442 Unvested restricted shares 598,049 598,049 601,495 601,995 497,297 Number of common shares outstanding 88,665,135 88,665,135 76,844,232 76,839,399 76,672,545 Tangible book value per common share $ 10.07 $ 10.08 $ 10.80 $ 10.43 $ 10.51 PDF available: http://ml.globenewswire.com/Resource/Download/678d5864-2488-44b6-bfdf-b753e8c63f3b