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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