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Brookline Bancorp Announces Third Quarter Results

Net Income of $22.6 million, EPS of $0.28

Quarterly Dividend Increase of 4.5%

BOSTON, Oct. 23, 2019 (GLOBE NEWSWIRE) -- Brookline Bancorp, Inc. (BRKL) (the “Company”) today announced net income of $22.6 million, or $0.28 per basic and diluted share, for the third quarter of 2019, compared to $20.5 million, or $0.26 per basic and diluted share, for the second quarter of 2019, and $22.5 million, or $0.28 per basic and diluted share, for the third quarter of 2018.

Paul Perrault, President and Chief Executive Officer of the Company commented on the third quarter earnings, "We continued to produce strong results in the third quarter, including favorable loan and deposit growth. With this growth we have maintained our commitment to achieving solid returns for our stockholders. Our Board has again voted to increase our dividend, from $0.110 to $0.115. We look forward to a productive fourth quarter.”

FIRST IPSWICH BANK CHARTER CONSOLIDATION

On October 23, 2019, Brookline Bank and First Ipswich Bank, both wholly-owned subsidiaries of the Company, entered into a merger agreement pursuant to which First Ipswich Bank will merge with and into Brookline Bank with Brookline Bank as the surviving institution. We anticipate closing the transaction in the first quarter of 2020. There are no branch closings as part of this charter consolidation.

BALANCE SHEET

Total assets at September 30, 2019 increased $241.5 million to $7.9 billion from $7.6 billion at June 30, 2019, and increased $557.8 million from $7.3 billion at September 30, 2018, primarily driven by growth in the loan portfolio. At September 30, 2019, total loans and leases were $6.6 billion, representing an increase of $141.5 million from June 30, 2019, and an increase of $419.1 million from September 30, 2018, primarily driven by growth in the commercial real estate portfolio.

Investment securities at September 30, 2019 decreased $23.7 million to $567.1 million, as compared to $590.8 million at June 30, 2019, and decreased approximately $87.6 million from $654.6 million at September 30, 2018. As of September 30, 2019, securities, cash and cash equivalents represented 9.5 percent of total assets as compared to 9.0 percent and 9.7 percent as of June 30, 2019 and September 30, 2018, respectively.

Total deposits at September 30, 2019 increased $106.8 million from $5.6 billion at June 30, 2019 to $5.7 billion and increased $495.7 million from $5.2 billion at September 30, 2018 driven primarily by growth in demand deposits.

Total borrowed funds at September 30, 2019 increased $55.6 million to $986.4 million from $930.8 million at June 30, 2019 and decreased $96.5 million from $1.1 billion at September 30, 2018.

The ratio of stockholders’ equity to total assets was 11.83 percent at September 30, 2019, as compared to 12.03 percent at June 30, 2019, and 12.16 percent at September 30, 2018. The ratio of tangible stockholders’ equity to tangible assets was 9.94 percent at September 30, 2019, as compared to 10.08 percent at June 30, 2019, and 10.11 percent at September 30, 2018. Tangible book value per share increased $0.18 from $9.45 at June 30, 2019 to $9.63 at September 30, 2019, compared to $9.00 at September 30, 2018.

NET INTEREST INCOME

Net interest income increased $0.1 million to $63.2 million during the third quarter of 2019 from $63.1 million at the quarter ended June 30, 2019. The net interest margin decreased 10 basis points to 3.45 percent for the three months ended September 30, 2019.

NON-INTEREST INCOME

Non-interest income for the quarter ended September 30, 2019 increased $0.4 million to $7.9 million from $7.5 million for the quarter ended June 30, 2019. The increase was primarily driven by increases of $0.3 million in loan fees, $0.5 million in loan level derivative income and $0.1 million in other non-interest income, partially offset by a decrease of $0.5 million in gain on securities.

PROVISION FOR CREDIT LOSSES

The Company recorded a provision for credit losses of $0.9 million for the quarter ended September 30, 2019, compared to $3.8 million for the quarter ended June 30, 2019. The improved, lower provision in the third quarter results from a reduction in classified assets, recoveries and lower charge-offs.

Total net charge-offs for the third quarter of 2019 were $0.4 million compared to $3.1 million in the second quarter of 2019. The ratio of net loan and lease charge-offs to average loans and leases on an annualized basis decreased to 2 basis points for the third quarter of 2019 from 19 basis points for the second quarter of 2019.

The allowance for loan and lease losses represented 0.89 percent of total loans and leases at September 30, 2019, compared to 0.90 percent at June 30, 2019, and 0.96 percent at September 30, 2018. The allowance for loan and lease losses related to originated loans and leases represented 0.90 percent of originated loans and leases at September 30, 2019, compared to 0.92 percent at June 30, 2019, and 1.00 percent at September 30, 2018.

NON-INTEREST EXPENSE

Non-interest expense for the quarter ended September 30, 2019 increased $0.6 million to $40.2 million from $39.6 million for the quarter ended June 30, 2019. The increase was primarily driven by increases of $0.9 million in compensation and employee benefits expense, $0.1 million in occupancy, $0.1 million in equipment and data processing, and $1.1 million in merger and restructuring expense related to the First Ipswich Bank Charter consolidation referenced above, partially offset by decreases of $0.7 million in FDIC insurance and $0.9 million in other non-interest expense.

PROVISION FOR INCOME TAXES

The effective tax rate was 24.9 percent and 24.4 percent for the three and nine months ended September 30, 2019, respectively, compared to 20.9 percent and 22.9 for the three and nine months ended September 30, 2018, respectively.

RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

The annualized return on average assets increased to 1.17 percent during the third quarter of 2019 from 1.08 percent for the second quarter of 2019. The annualized return on average tangible assets increased to 1.19 percent for the third quarter of 2019 from 1.11 percent for the second quarter of 2019.

The annualized return on average stockholders' equity increased to 9.74 percent during the third quarter of 2019 from 8.98 percent for the second quarter of 2019. The annualized return on average tangible stockholders’ equity increased to 11.85 percent for the third quarter of 2019 from 10.98 percent for the second quarter of 2019.

ASSET QUALITY

The ratio of nonperforming loans and leases to total loans and leases was 0.33 percent at September 30, 2019, unchanged from 0.33 percent at June 30, 2019. Nonperforming loans and leases increased $0.3 million to $21.6 million at September 30, 2019 from $21.3 million at June 30, 2019. The ratio of nonperforming assets to total assets was 0.30 percent at September 30, 2019, unchanged from 0.30 percent at June 30, 2019. Nonperforming assets increased $0.5 million to $23.8 million at September 30, 2019 from $23.3 million at June 30, 2019.

DIVIDEND DECLARED

The Company’s Board of Directors approved a dividend of $0.115 per share for the quarter ended September 30, 2019, an increase of half a cent from the prior period. The dividend will be paid on November 22, 2019 to stockholders of record on November 8, 2019, representing an increase of 4.5 percent from the prior quarter and a 9.5 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, October 24, 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 10134880. 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 $7.9 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
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
  September 30,
2018
   
  (Dollars In Thousands Except per Share Data)
Earnings Data:                  
Net interest income $ 63,236     $ 63,134     $ 62,999     $ 63,159     $ 62,332  
Provision for credit losses   871       3,757       1,353       123       2,717  
Non-interest income   7,929       7,478       6,630       6,461       7,069  
Non-interest expense   40,191       39,604       38,871       40,282       37,310  
Income before provision for income taxes   30,103       27,251       29,405       29,215       29,374  
Net income attributable to Brookline Bancorp, Inc.   22,596       20,471       22,467       21,138       22,460  
                   
Performance Ratios:                  
Net interest margin (1)   3.45 %     3.55 %     3.64 %     3.58 %     3.57 %
Interest-rate spread (1)   3.06 %     3.13 %     3.18 %     3.25 %     3.27 %
Return on average assets (annualized)   1.17 %     1.08 %     1.21 %     1.15 %     1.23 %
Return on average tangible assets (annualized) (non-GAAP)   1.19 %     1.11 %     1.24 %     1.17 %     1.26 %
Return on average stockholders' equity (annualized)   9.74 %     8.98 %     10.14 %     9.40 %     10.10 %
Return on average tangible stockholders' equity (annualized) (non-GAAP)   11.85 %     10.98 %     12.48 %     11.54 %     12.44 %
Efficiency ratio (2)   56.48 %     56.09 %     55.83 %     57.86 %     53.76 %
                   
Per Common Share Data:                  
Net income — Basic $ 0.28     $ 0.26     $ 0.28     $ 0.26     $ 0.28  
Net income — Diluted   0.28       0.26       0.28       0.26       0.28  
Cash dividends declared   0.115       0.110       0.110       0.105       0.105  
Book value per share (end of period)   11.70       11.53       11.30       11.30       11.08  
Tangible book value per share (end of period) (non-GAAP)   9.63       9.45       9.22       9.21       9.00  
Stock price (end of period)   14.73       15.38       14.40       13.82       16.70  
                   
Balance Sheet:                  
Total assets $ 7,878,436     $ 7,636,980     $ 7,519,130     $ 7,392,805     $ 7,320,596  
Total loans and leases   6,646,821       6,505,329       6,388,197       6,303,516       6,227,707  
Total deposits   5,729,339       5,622,493       5,620,633       5,454,044       5,233,611  
Brookline Bancorp, Inc. stockholders’ equity   932,311       918,468       900,572       900,140       890,368  
                   
Asset Quality:                  
Nonperforming assets $ 23,760     $ 23,267     $ 26,721     $ 28,116     $ 29,718  
Nonperforming assets as a percentage of total assets   0.30 %     0.30 %     0.36 %     0.38 %     0.41 %
Allowance for loan and lease losses $ 59,135     $ 58,635     $ 58,041     $ 58,692     $ 59,997  
Allowance for loan and lease losses as a percentage of total loans and leases   0.89 %     0.90 %     0.91 %     0.93 %     0.96 %
Net loan and lease charge-offs $ 366     $ 3,082     $ 2,101     $ 1,252     $ 564  
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)   0.02 %     0.19 %     0.13 %     0.08 %     0.04 %
                   
Capital Ratios:                  
Stockholders’ equity to total assets   11.83 %     12.03 %     11.98 %     12.18 %     12.16 %
Tangible stockholders’ equity to tangible assets (non-GAAP)   9.94 %     10.08 %     9.99 %     10.15 %     10.11 %
                   
(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.                  
                   


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BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
  September 30, 2019   June 30, 2019   March 31, 2019   December 31, 2018   September 30,
2018
   
ASSETS (In Thousands Except Share Data)
Cash and due from banks $ 93,841     $ 46,532     $ 51,276     $ 47,542     $ 30,762  
Short-term investments   84,689       46,264       61,063       42,042       23,114  
Total cash and cash equivalents   178,530       92,796       112,339       89,584       53,876  
Investment securities available-for-sale   467,339       482,497       489,020       502,793       534,788  
Investment securities held-to-maturity   95,163       103,572       113,694       114,776       115,684  
Equity securities held-for-trading   4,581       4,698       4,341       4,207       4,169  
Total investment securities   567,083       590,767       607,055       621,776       654,641  
Loans and leases held-for-sale         1,575       869       3,247       937  
Loans and leases:                  
Commercial real estate loans:                  
Commercial real estate mortgage   2,441,091       2,421,104       2,355,507       2,330,725       2,287,979  
Multi-family mortgage   919,234       877,330       855,703       847,711       828,849  
Construction   229,126       195,120       199,258       173,300       164,217  
Total commercial real estate loans   3,589,451       3,493,554       3,410,468       3,351,736       3,281,045  
Commercial loans and leases:                  
Commercial   766,883       763,145       741,577       736,418       771,200  
Equipment financing   1,029,280       1,015,205       995,863       982,089       954,579  
Condominium association   54,225       47,986       49,142       50,451       52,205  
Total commercial loans and leases   1,850,388       1,826,336       1,786,582       1,768,958       1,777,984  
Consumer loans:                  
Residential mortgage   792,733       769,983       775,578       782,968       759,167  
Home equity   375,257       374,746       376,126       376,484       380,303  
Other consumer   38,992       40,710       39,443       23,370       29,208  
Total consumer loans   1,206,982       1,185,439       1,191,147       1,182,822       1,168,678  
Total loans and leases`   6,646,821       6,505,329       6,388,197       6,303,516       6,227,707  
Allowance for loan and lease losses   (59,135 )     (58,635 )     (58,041 )     (58,692 )     (59,997 )
Net loans and leases   6,587,686       6,446,694       6,330,156       6,244,824       6,167,710  
Restricted equity securities   57,896       55,270       54,192       61,751       63,963  
Premises and equipment, net of accumulated depreciation   75,229       75,373       75,520       76,382       77,886  
Right-of-use asset operating leases   26,216       25,928       26,205              
Deferred tax asset   25,204       25,629       27,084       21,495       22,249  
Goodwill   160,427       160,427       160,427       160,427       160,427  
Identified intangible assets, net of accumulated amortization   4,843       5,264       5,684       6,086       6,623  
Other real estate owned and repossessed assets   2,132       1,966       3,912       4,019       3,934  
Other assets   193,190       155,291       115,687       103,214       108,350  
Total assets $ 7,878,436     $ 7,636,980     $ 7,519,130     $ 7,392,805     $ 7,320,596  
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Deposits:                  
Non-interest-bearing deposits:                  
Demand checking accounts $ 1,106,684     $ 1,042,854     $ 1,011,031     $ 1,033,551     $ 1,017,234  
Interest-bearing deposits:                  
NOW accounts   340,321       340,082       369,896       336,317       322,587  
Savings accounts   604,481       585,322       625,770       619,961       612,210  
Money market accounts   1,666,231       1,669,782       1,706,708       1,675,050       1,623,220  
Certificate of deposit accounts   2,011,622       1,984,453       1,907,228       1,789,165       1,658,360  
Total interest-bearing deposits   4,622,655       4,579,639       4,609,602       4,420,493       4,216,377  
Total deposits   5,729,339       5,622,493       5,620,633       5,454,044       5,233,611  
Borrowed funds:                  
Advances from the FHLBB   854,481       791,559       730,018       784,375       959,446  
Subordinated debentures and notes   83,551       83,512       83,472       83,433       83,392  
Other borrowed funds   48,373       55,693       52,515       52,734       40,048  
Total borrowed funds   986,405       930,764       866,005       920,542       1,082,886  
Operating lease liabilities   26,216