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Brookline Bancorp Announces First Quarter Results

Net Income of $22.5 million, EPS of $0.28

Quarterly Dividend Increase of 4.8%

BOSTON, April 24, 2019 (GLOBE NEWSWIRE) -- Brookline Bancorp, Inc. ( BRKL ) (the “Company”) today announced net income of $22.5 million, or $0.28 per basic and diluted share, for the first quarter of 2019, compared to $21.1 million, or $0.26 per basic and diluted share, for the fourth quarter of 2018, and $18.6 million, or $0.24 per basic and diluted share, for the first quarter of 2018.

Paul Perrault, President and Chief Executive Officer of the Company, commented on the first quarter earnings, “Brookline Bancorp experienced a strong start to 2019, today we report earnings of $22.5 million for the first quarter of 2019 or $0.28 per share. We are looking forward to building on this growth during the rest of the year.”

EASTERN FUNDING, LLC ACQUISITION

On January 4, 2019, Brookline Bank, a subsidiary of the Company, completed the purchase of the remaining 15.93 percent interest in Eastern Funding, LLC for a total cash consideration of $35.9 million.

BALANCE SHEET

Total assets at March 31, 2019 increased $126.3 million to $7.5 billion from $7.4 billion at December 31, 2018, and increased $271.0 million from $7.2 billion at March 31, 2018 driven by growth in the loan portfolio. At March 31, 2019, total loans and leases were $6.4 billion, representing an increase of $84.7 million from December 31, 2018, and an increase of $273.7 million from March 31, 2018 driven by growth in all major loan categories.

The Company continued to redirect cash flows from the investment portfolio to fund loan demand. Investment securities at March 31, 2019 decreased $14.7 million to $607.1 million, comprising 8.07 percent of total assets, as compared to $621.8 million, or 8.41 percent of total assets, at December 31, 2018, and decreased approximately $68.7 million from $675.7 million, or 9.32 percent of total assets, at March 31, 2018.

Total deposits at March 31, 2019 increased $166.6 million to $5.6 billion from $5.5 billion at December 31, 2018 and increased $429.1 million from $5.2 billion at March 31, 2018 driven primarily by growth in certificates of deposit.

Total borrowings at March 31, 2019 decreased $54.5 million to $866.0 million from $920.5 million at December 31, 2018 and decreased $233.4 million from $1.1 billion at March 31, 2018 as deposit growth was used to pay down borrowings.

The ratio of stockholders’ equity to total assets was 11.98 percent at March 31, 2019, as compared to 12.18 percent at December 31, 2018, and 11.94 percent at March 31, 2018. The ratio of tangible stockholders’ equity to tangible assets was 9.99 percent at March 31, 2019, as compared to 10.15 percent at December 31, 2018, and 9.85 percent at March 31, 2018. Tangible book value per share increased $0.01 from $9.21 at December 31, 2018 to $9.22 at March 31, 2019, compared to $8.69 at March 31, 2018.

NET INTEREST INCOME

Net interest income decreased $0.2 million to $63.0 million during the first quarter of 2019 from the quarter ended December 31, 2018 due to the number of days in the quarter. The net interest margin increased 6 basis points to 3.64 percent for the three months ended March 31, 2019.

NON-INTEREST INCOME

Non-interest income for the quarter ended March 31, 2019 increased $0.1 million to $6.6 million from $6.5 million for the quarter ended December 31, 2018. The increase was primarily driven by a mark to market gain on investment securities compared to a loss in the prior quarter.

PROVISION FOR CREDIT LOSSES

The Company recorded a provision for credit losses of $1.4 million for the quarter ended March 31, 2019, compared to $0.1 million for the quarter ended December 31, 2018.

Total net charge-offs for the first quarter of 2019 were $2.1 million compared to $1.3 million in the fourth quarter of 2018. Charge-offs were largely related to taxi medallion loans against previously established specific reserves. The ratio of net charge-offs to average loans and leases on an annualized basis increased to 13 basis points for the first quarter of 2019 from 8 basis points for the fourth quarter of 2018.

The allowance for loan and lease losses represented 0.91 percent of total loans and leases at March 31, 2019, compared to 0.93 percent at December 31, 2018, and 0.96 percent at March 31, 2018. The allowance for loan and lease losses related to originated loans and leases represented 0.93 percent of originated loans and leases at March 31, 2019, compared to 0.96 percent at December 31, 2018, and 1.03 percent at March 31, 2018.

NON-INTEREST EXPENSE

Non-interest expense for the quarter ended March 31, 2019 decreased $1.4 million to $38.9 million from $40.3 million for the quarter ended December 31, 2018. The decrease was primarily driven by decreases of $0.7 million in compensation and employee benefits, $0.1 million in professional services, $0.1 million in FDIC insurance, $0.1 million in amortization of identified intangible assets, $0.5 million in merger and acquisition expense and $0.9 million in other non-interest expense, partially offset by increases 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 23.4 percent and 24.1 percent for the three months ended March 31, 2019 and December 31, 2018, respectively.

RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

The annualized return on average assets increased to 1.21 percent during the first quarter of 2019 from 1.15 percent for the fourth quarter of 2018. The annualized return on average tangible assets increased to 1.24 percent for the first quarter of 2019 from 1.17 percent for the fourth quarter of 2018.

The annualized return on average stockholders' equity increased to 10.14 percent during the first quarter of 2019 from 9.40 percent for the fourth quarter of 2018. The annualized return on average tangible stockholders’ equity increased to 12.48 percent for the first quarter of 2019 from 11.54 percent for the fourth quarter of 2018.

ASSET QUALITY

The ratio of nonperforming loans and leases to total loans and leases was 0.36 percent at March 31, 2019 as compared to 0.38 percent at December 31, 2018. Nonperforming loans and leases decreased $1.3 million to $22.8 million at March 31, 2019 from $24.1 million at December 31, 2018. The ratio of nonperforming assets to total assets was 0.36 percent at March 31, 2019 as compared to 0.38 percent at December 31, 2018. Nonperforming assets decreased $1.4 million to $26.7 million at March 31, 2019 from $28.1 million at December 31, 2018.

DIVIDEND DECLARED

The Company’s Board of Directors approved a dividend of $0.11 per share for the quarter ended March 31, 2019, an increase of half a cent from the prior period. The dividend will be paid on May 24, 2019 to stockholders of record on May 10, 2019, representing an increase of 4.8 percent from the prior quarter and a 10 percent increase from the prior year.

CONFERENCE CALL

The Company will conduct a conference call/webcast at 1:30 PM Eastern Daylight Time on Thursday, April 25, 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 10130049. 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 $7.5 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 (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.

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
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
(Dollars In Thousands Except per Share Data)
Earnings Data:
Net interest income $ 62,999 $ 63,159 $ 62,332 $ 62,717 $ 59,491
Provision for credit losses 1,353 123 2,717 1,470 641
Non-interest income 6,630 6,461 7,069 5,526 6,168
Non-interest expense 38,871 40,282 37,310 37,702 39,938
Income before provision for income taxes 29,405 29,215 29,374 29,071 25,080
Net income attributable to Brookline Bancorp, Inc. 22,467 21,138 22,460 20,831 18,633
Performance Ratios:
Net interest margin (1) 3.64 % 3.58 % 3.57 % 3.64 % 3.66 %
Interest-rate spread (1) 3.18 % 3.25 % 3.27 % 3.36 % 3.38 %
Return on average assets (annualized) 1.21 % 1.15 % 1.23 % 1.15 % 1.08 %
Return on average tangible assets (annualized) (non-GAAP) 1.24 % 1.17 % 1.26 % 1.17 % 1.10 %
Return on average stockholders' equity (annualized) 10.14 % 9.40 % 10.10 % 9.53 % 8.98 %
Return on average tangible stockholders' equity (annualized) (non-GAAP) 12.48 % 11.54 % 12.44 % 11.80 % 11.01 %
Efficiency ratio (2) 55.83 % 57.86 % 53.76 % 55.25 % 60.83 %
Per Common Share Data:
Net income — Basic $ 0.28 $ 0.26 $ 0.28 $ 0.26 $ 0.24
Net income — Diluted 0.28 0.26 0.28 0.26 0.24
Cash dividends declared 0.110 0.105 0.105 0.100 0.100
Book value per share (end of period) 11.30 11.30 11.08 10.94 10.80
Tangible book value per share (end of period) (non-GAAP) 9.22 9.21 9.00 8.85 8.69
Stock price (end of period) 14.40 13.82 16.70 18.60 16.20
Balance Sheet:
Total assets $ 7,519,130 $ 7,392,805 $ 7,320,596 $ 7,285,710 $ 7,248,114
Total loans and leases 6,388,197 6,303,516 6,227,707 6,171,274 6,114,461
Total deposits 5,620,633 5,454,044 5,233,611 5,198,280 5,191,520
Brookline Bancorp, Inc. stockholders’ equity 900,572 900,140 890,368 877,283 865,777
Asset Quality:
Nonperforming assets $ 26,721 $ 28,116 $ 29,718 $ 30,145 $ 30,242
Nonperforming assets as a percentage of total assets 0.36 % 0.38 % 0.41 % 0.41 % 0.42 %
Allowance for loan and lease losses $ 58,041 $ 58,692 $ 59,997 $ 57,981 $ 58,714
Allowance for loan and lease losses as a percentage of total loans and leases 0.91 % 0.93 % 0.96 % 0.94 % 0.96 %
Net loan and lease charge-offs $ 2,101 $ 1,252 $ 564 $ 2,330 $ 505
Net loan and lease charge-offs as a percentage of average loans and leases (annualized) 0.13 % 0.08 % 0.04 % 0.15 % 0.03 %
Capital Ratios:
Stockholders’ equity to total assets 11.98 % 12.18 % 12.16 % 12.04 % 11.94 %
Tangible stockholders’ equity to tangible assets (non-GAAP) 9.99 % 10.15 % 10.11 % 9.97 % 9.85 %
(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)
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
ASSETS (In Thousands Except Share Data)
Cash and due from banks $ 51,276 $ 47,542 $ 30,762 $ 32,724 $ 34,713
Short-term investments 61,063 42,042 23,114 22,754 49,743
Total cash and cash equivalents 112,339 89,584 53,876 55,478 84,456
Investment securities available-for-sale 489,020 502,793 534,788 558,602 558,357
Investment securities held-to-maturity 113,694 114,776 115,684 116,670 117,352
Equity securities held-for-trading 4,341 4,207 4,169
Total investment securities 607,055 621,776 654,641 675,272 675,709
Loans and leases held-for-sale 869 3,247 937 1,034 756
Loans and leases:
Commercial real estate loans:
Commercial real estate mortgage 2,355,507 2,330,725 2,287,979 2,269,520 2,284,488
Multi-family mortgage 855,703 847,711 828,849 816,311 793,006
Construction 199,258 173,300 164,217 178,335 169,440
Total commercial real estate loans 3,410,468 3,351,736 3,281,045 3,264,166 3,246,934
Commercial loans and leases:
Commercial 741,577 736,418 771,200 761,964 761,540
Equipment financing 995,863 982,089 954,579 920,643 892,341
Condominium association 49,142 50,451 52,205 53,537 52,739
Total commercial loans and leases 1,786,582 1,768,958 1,777,984 1,736,144 1,706,620
Consumer loans:
Residential mortgage 775,578 782,968 759,167 754,818 766,687
Home equity 376,126 376,484 380,303 382,597 364,928
Other consumer 39,443 23,370 29,208 33,549 29,292
Total consumer loans 1,191,147 1,182,822 1,168,678 1,170,964 1,160,907
Total loans and leases 6,388,197 6,303,516 6,227,707 6,171,274 6,114,461
Allowance for loan and lease losses (58,041 ) (58,692 ) (59,997 ) (57,981 ) (58,714 )
Net loans and leases 6,330,156 6,244,824 6,167,710 6,113,293 6,055,747
Restricted equity securities 54,192 61,751 63,963 68,343 66,164
Premises and equipment, net of accumulated depreciation 75,520 76,382 77,886 79,194 80,268
Right-of-use asset operating leases 26,205
Deferred tax asset 27,084 21,495 22,249 20,826 19,198
Goodwill 160,427 160,427 160,427 160,427 160,896
Identified intangible assets, net of accumulated amortization 5,684 6,086 6,623 7,160 7,697
Other real estate owned and repossessed assets 3,912 4,019 3,934 4,352 3,963
Other assets 115,687 103,214 108,350 100,331 93,260
Total assets $ 7,519,130 $ 7,392,805 $ 7,320,596 $ 7,285,710 $ 7,248,114
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing deposits:
Demand checking accounts $ 1,011,031 $ 1,033,551 $ 1,017,234 $ 1,002,954 $ 987,153
Interest-bearing deposits:
NOW accounts 369,896 336,317 322,587 346,936 342,374
Savings accounts 625,770 619,961 612,210 603,079 637,920
Money market accounts 1,706,708 1,675,050 1,623,220 1,704,652 1,862,351
Certificate of deposit accounts 1,907,228 1,789,165 1,658,360 1,540,659 1,361,722
Total interest-bearing deposits 4,609,602 4,420,493 4,216,377 4,195,326 4,204,367
Total deposits 5,620,633 5,454,044 5,233,611 5,198,280 5,191,520
Borrowed funds:
Advances from the FHLBB 730,018 784,375 959,446 991,091 982,533
Subordinated debentures and notes 83,472 83,433 83,392 83,352 83,311
Other borrowed funds 52,515 52,734 40,048 36,480 33,585
Total borrowed funds 866,005 920,542 1,082,886 1,110,923 1,099,429
Operating lease liabilities 26,205
Mortgagors’ escrow accounts 7,517 7,426 8,227 8,122 8,395
Accrued expenses and other liabilities 98,198 100,174 96,047 82,017 74,024
Total liabilities 6,618,558 6,482,186 6,420,771 6,399,342 6,373,368
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, 85,177,172 shares issued, 85,177,172 shares issued, and 85,177,172 shares issued, respectively 852 852 852 852 852
Additional paid-in capital 736,872 755,629 753,941 756,254 755,843
Retained earnings, partially restricted 226,929 212,838 200,151 185,734 172,934
Accumulated other comprehensive loss (4,393 ) (9,460 ) (15,599 ) (13,415 ) (11,666 )
Treasury stock, at cost;
5,020,025 shares, 5,020,025 shares, 4,291,317 shares, 4,409,501 shares, and 4,401,333 shares, respectively (59,121 ) (59,120 ) (48,334 ) (51,454 ) (51,454 )
Unallocated common stock held by the Employee Stock Ownership Plan;
104,079 shares, 109,950 shares, 118,050 shares,126,144 shares, and 134,238 shares, respectively (567 ) (599 ) (643 ) (688 ) (732 )
Total Brookline Bancorp, Inc. stockholders’ equity 900,572 900,140 890,368 877,283 865,777
Noncontrolling interest in subsidiary 10,479 9,457 9,085 8,969
Total stockholders' equity 900,572 910,619 899,825 886,368 874,746
Total liabilities and stockholders' equity $ 7,519,130 $ 7,392,805 $ 7,320,596 $ 7,285,710 $ 7,248,114

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
(In Thousands Except Share Data)
Interest and dividend income:
Loans and leases $ 80,672 $ 78,791 $ 75,877 $ 73,329 $ 67,272
Debt securities 3,236 3,489 3,585 3,563 3,323
Marketable and restricted equity securities 911 1,008 1,029 1,003 924
Short-term investments 267 256 145 179 120
Total interest and dividend income 85,086 83,544 80,636 78,074 71,639
Interest expense:
Deposits 15,948 13,744 11,916 9,219 7,099
Borrowed funds 6,139 6,641 6,388 6,138 5,049
Total interest expense 22,087 20,385 18,304 15,357 12,148
Net interest income 62,999 63,159 62,332 62,717 59,491
Provision for credit losses 1,353 123 2,717 1,470 641
Net interest income after provision for credit losses 61,646 63,036 59,615 61,247 58,850
Non-interest income:
Deposit fees 2,523 2,669 2,648 2,620 2,463
Loan fees 413 390 417 330 290
Loan level derivative income, net 1,745 1,811 2,192 571 866
Gain (loss) on investment securities, net 134 (692 ) (243 ) 1,162
Gain on sales of loans and leases held-for-sale 289 327 535 722 299
Other 1,526 1,956 1,520 1,283 1,088
Total non-interest income 6,630 6,461 7,069 5,526 6,168
Non-interest expense:
Compensation and employee benefits 23,743 24,413 22,338 22,565 22,314
Occupancy 3,947 3,240 3,913 3,879 3,959
Equipment and data processing 4,661 4,626 4,601 4,368 4,618
Professional services 1,076 1,130 1,075 1,055 1,144
FDIC insurance 593 727 846 514 635
Advertising and marketing 1,069 773 1,068 1,118 1,057
Amortization of identified intangible assets 402 537 537 539 467
Merger and acquisition expense 526 22 334 2,905
Other 3,380 4,310 2,910 3,330 2,839
Total non-interest expense 38,871 40,282 37,310 37,702 39,938
Income before provision for income taxes 29,405 29,215 29,374 29,071 25,080
Provision for income taxes 6,895 7,055 6,140 7,342 5,652
Net income before noncontrolling interest in subsidiary 22,510 22,160 23,234 21,729 19,428
Less net income attributable to noncontrolling interest in subsidiary 43 1,022 774 898 795
Net income attributable to Brookline Bancorp, Inc. $ 22,467 $ 21,138 $ 22,460 $ 20,831 $ 18,633
Earnings per common share:
Basic $ 0.28 $ 0.26 $ 0.28 $ 0.26 $ 0.24
Diluted $ 0.28 $ 0.26 $ 0.28 $ 0.26 $ 0.24
Weighted average common shares outstanding during the period:
Basic 79,658,583 80,258,456 80,315,050 80,184,977 77,879,593
Diluted 79,843,578 80,407,525 80,515,467 80,505,614 78,167,800
Dividends paid per common share $ 0.105 $ 0.105 $ 0.100 $ 0.100 $ 0.090

...
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Asset Quality Analysis (Unaudited)
At and for the Three Months Ended
March 31,
2019
December 31,
2018
September 30,
2018
June 30,
2018
March 31,
2018
(Dollars in Thousands)
NONPERFORMING ASSETS:
Loans and leases accounted for on a nonaccrual basis:
Commercial real estate mortgage $ 2,889 $ 3,928 $ 3,369 $ 3,774 $ 4,080
Multi-family mortgage 101 330 357 568 588
Construction 396 396 640 640 860
Total commercial real estate loans 3,386 4,654 4,366 4,982 5,528
Commercial 5,728 6,621 7,862 9,487 11,150
Equipment financing 10,253 9,500 9,659 8,825 6,661
Condominium association 224 265 295
Total commercial loans and leases 16,205 16,386 17,816 18,312 17,811
Residential mortgage 2,188 2,132 2,538 1,571 1,962
Home equity 1,022 908 1,053 923 925
Other consumer 8 17