BRKL Brookline Bancorp Inc

Net Income of $21.1 million, EPS of $0.26

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

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

Operating Earnings (Non-GAAP)

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

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

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

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

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

Eastern Funding, LLC Acquisition

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

BALANCE SHEET

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

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

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

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

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

NET INTEREST INCOME

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

NON-INTEREST INCOME

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

PROVISION FOR CREDIT LOSSES

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

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

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

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

NON-INTEREST EXPENSE

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

PROVISION FOR INCOME TAXES

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

RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

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

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

ASSET QUALITY

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

DIVIDEND DECLARED

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

CONFERENCE CALL

The Company will conduct a conference call/webcast at 1:30 PM Eastern Standard Time on Thursday, January 31, 2019 to discuss the results for the quarter, business highlights and outlook. The call can be accessed by dialing 877-504-4120 (United States) or 412-902-6650 (internationally). A recorded playback of the call will be available for one week following the call at 877-344-7529 (United States) or 412-317-0088 (internationally). The passcode for the playback is 10127371. The call will be available live and in a recorded version on the Company’s website under “Investor Relations” at www.brooklinebancorp.com.

ABOUT BROOKLINE BANCORP, INC.

Brookline Bancorp, Inc., a bank holding company with $7.4 billion in assets and branch locations in Massachusetts and Rhode Island, is headquartered in Boston, Massachusetts and operates as the holding company for Brookline Bank, Bank Rhode Island, and First Ipswich Bank (the "banks"). The Company provides commercial and retail banking services, cash management and investment services to customers throughout Central New England. More information about Brookline Bancorp, Inc. and its banks can be found at the following websites: www.brooklinebank.com, www.bankri.com, and www.firstipswich.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the risks outlined in the Company’s Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission ("SEC"). The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

BASIS OF PRESENTATION

The Company's consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) as set forth by the Financial Accounting Standards Board in its Accounting Standards Codification and through the rules and interpretive releases of the SEC under the authority of federal securities laws. Certain amounts previously reported have been reclassified to conform to the current period's presentation.

NON-GAAP FINANCIAL MEASURES

The Company uses certain non-GAAP financial measures, such as operating earnings, operating return on average assets, operating return on average tangible assets, operating return on average stockholders' equity, operating return on average tangible stockholders' equity, the allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases, tangible book value per common share, tangible stockholders’ equity to tangible assets, return on average tangible assets and return on average tangible stockholders' equity. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial services sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.

Contact:Carl M. CarlsonBrookline Bancorp, Inc.Chief Financial Officer(617) 425-5331ccarlson@brkl.com

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Highlights (Unaudited)
	At and for the Three Months Ended																				At and for the TwelveMonths Ended
	December 31, 2018				September 30, 2018				June 30, 2018				March 31, 2018				December 31, 2017				December 31, 2018				December 31, 2017
	(Dollars In Thousands Except per Share Data)
Earnings Data:
Net interest income	$	63,159			$	62,332			$	62,717			$	59,491			$	57,657			$	247,699			$	223,181
Provision for credit losses		123				2,717				1,470				641				1,802				4,951				18,988
Non-interest income		6,461				7,069				5,526				6,168				5,815				25,224				32,173
Non-interest expense		40,282				37,310				37,702				39,938				35,152				155,232				139,111
Income before provision for income taxes		29,215				29,374				29,071				25,080				26,518				112,740				97,255
Net income attributable to Brookline Bancorp, Inc.		21,138				22,460				20,831				18,633				6,827				83,062				50,518
Performance Ratios:
Net interest margin (1)		3.58	%			3.57	%			3.64	%			3.66	%			3.59	%			3.61	%			3.57	%
Interest-rate spread (1)		3.25	%			3.27	%			3.36	%			3.38	%			3.42	%			3.32	%			3.38	%
Return on average assets (annualized)		1.15	%			1.23	%			1.15	%			1.08	%			0.41	%			1.15	%			0.76	%
Return on average tangible assets (annualized) (non-GAAP)		1.17	%			1.26	%			1.17	%			1.10	%			0.41	%			1.18	%			0.78	%
Return on average stockholders' equity (annualized)		9.40	%			10.10	%			9.53	%			8.98	%			3.37	%			9.51	%			6.53	%
Return on average tangible stockholders' equity (annualized) (non-GAAP)		11.54	%			12.44	%			11.80	%			11.01	%			4.09	%			11.70	%			8.04	%
Efficiency ratio (2)		57.86	%			53.76	%			55.25	%			60.83	%			55.38	%			56.88	%			54.48	%
Per Common Share Data:
Net income — Basic	$	0.26			$	0.28			$	0.26			$	0.24			$	0.09			$	1.04			$	0.68
Net income — Diluted		0.26				0.28				0.26				0.24				0.09				1.04				0.68
Cash dividends declared		0.105				0.100				0.100				0.090				0.090				0.395				0.360
Book value per share (end of period)		11.30				11.08				10.94				10.80				10.49				11.30				10.49
Tangible book value per share (end of period) (non-GAAP)		9.21				9.00				8.85				8.69				8.61				9.21				8.61
Stock price (end of period)		13.82				16.70				18.60				16.20				15.70				13.82				15.70
Balance Sheet:
Total assets	$	7,392,805			$	7,320,596			$	7,285,710			$	7,248,114			$	6,780,249			$	7,392,805			$	6,780,249
Total loans and leases		6,303,516				6,227,707				6,171,274				6,114,461				5,730,679				6,303,516				5,730,679
Total deposits		5,454,044				5,233,611				5,198,280				5,191,520				4,871,343				5,454,044				4,871,343
Brookline Bancorp, Inc. stockholders’ equity		900,140				890,368				877,283				865,777				803,830				900,140				803,830
Asset Quality:
Nonperforming assets	$	28,116			$	29,718			$	30,145			$	30,242			$	31,691			$	28,116			$	31,691
Nonperforming assets as a percentage of total assets		0.38	%			0.41	%			0.41	%			0.42	%			0.47	%			0.38	%			0.47	%
Allowance for loan and lease losses	$	58,692			$	59,997			$	57,981			$	58,714			$	58,592			$	58,692			$	58,592
Allowance for loan and lease losses as a percentage of total loans and leases		0.93	%			0.96	%			0.94	%			0.96	%			1.02	%			0.93	%			1.02	%
Net loan and lease charge-offs	$	1,252			$	564			$	2,330			$	505			$	8,507			$	4,651			$	13,858
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)		0.08	%			0.04	%			0.15	%			0.03	%			0.60	%			0.08	%			0.25	%
Capital Ratios:
Stockholders’ equity to total assets		12.18	%			12.16	%			12.04	%			11.94	%			11.86	%			12.18	%			11.86	%
Tangible stockholders’ equity to tangible assets (non-GAAP)		10.15	%			10.11	%			9.97	%			9.85	%			9.94	%			10.15	%			9.94	%
(1) Calculated on a fully tax-equivalent basis.
(2) Calculated as non-interest expense as a percentage of net interest income plus non-interest income.

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
	December 31,2018				September 30,2018				June 30, 2018				March 31, 2018				December 31,2017
ASSETS	(In Thousands Except Share Data)
Cash and due from banks	$	47,542			$	30,762			$	32,724			$	34,713			$	25,622
Short-term investments		42,042				23,114				22,754				49,743				35,383
Total cash and cash equivalents		89,584				53,876				55,478				84,456				61,005
Investment securities available-for-sale		502,793				534,788				558,602				558,357				540,124
Investment securities held-to-maturity		114,776				115,684				116,670				117,352				109,730
Investment securities trading		4,207				4,169				—				—				—
Total investment securities		621,776				654,641				675,272				675,709				649,854
Loans and leases held-for-sale		3,247				937				1,034				756				2,628
Loans and leases:
Commercial real estate loans:
Commercial real estate mortgage		2,330,725				2,287,979				2,269,520				2,284,488				2,174,969
Multi-family mortgage		847,711				828,849				816,311				793,006				760,670
Construction		173,300				164,217				178,335				169,440				140,138
Total commercial real estate loans		3,351,736				3,281,045				3,264,166				3,246,934				3,075,777
Commercial loans and leases:
Commercial		736,418				771,200				761,964				761,540				705,004
Equipment financing		982,089				954,579				920,643				892,341				866,488
Condominium association		50,451				52,205				53,537				52,739				52,619
Total commercial loans and leases		1,768,958				1,777,984				1,736,144				1,706,620				1,624,111
Consumer loans:
Residential mortgage		782,968				759,167				754,818				766,687				660,065
Home equity		376,484				380,303				382,597				364,928				355,954
Other consumer		23,370				29,208				33,549				29,292				14,772
Total consumer loans		1,182,822				1,168,678				1,170,964				1,160,907				1,030,791
Total loans and leases		6,303,516				6,227,707				6,171,274				6,114,461				5,730,679
Allowance for loan and lease losses		(58,692	)			(59,997	)			(57,981	)			(58,714	)			(58,592	)
Net loans and leases		6,244,824				6,167,710				6,113,293				6,055,747				5,672,087
Restricted equity securities		61,751				63,963				68,343				66,164				59,369
Premises and equipment, net of accumulated depreciation		76,382				77,886				79,194				80,268				80,283
Deferred tax asset ("DTA")		21,495				22,249				20,826				19,198				15,061
Goodwill		160,427				160,427				160,427				160,896				137,890
Identified intangible assets, net of accumulated amortization		6,086				6,623				7,160				7,697				6,044
Other real estate owned and repossessed assets		4,019				3,934				4,352				3,963				4,419
Other assets		103,214				108,350				100,331				93,260				91,609
Total assets	$	7,392,805			$	7,320,596			$	7,285,710			$	7,248,114			$	6,780,249
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing deposits:
Demand checking accounts	$	1,033,551			$	1,017,234			$	1,002,954			$	987,153			$	942,583
Interest-bearing deposits:
NOW accounts		336,317				322,587				346,936				342,374				350,568
Savings accounts		619,961				612,210				603,079				637,920				646,359
Money market accounts		1,675,050				1,623,220				1,704,652				1,862,351				1,724,363
Certificate of deposit accounts		1,789,165				1,658,360				1,540,659				1,361,722				1,207,470
Total interest-bearing deposits		4,420,493				4,216,377				4,195,326				4,204,367				3,928,760
Total deposits		5,454,044				5,233,611				5,198,280				5,191,520				4,871,343
Borrowed funds:
Advances from the FHLBB		784,375				959,446				991,091				982,533				889,909
Subordinated debentures and notes		83,433				83,392				83,352				83,311				83,271
Other borrowed funds		52,734				40,048				36,480				33,585				47,639
Total borrowed funds		920,542				1,082,886				1,110,923				1,099,429				1,020,819
Mortgagors’ escrow accounts		7,426				8,227				8,122				8,395				7,686
Accrued expenses and other liabilities		100,174				96,047				82,017				74,024				67,818
Total liabilities		6,482,186				6,420,771				6,399,342				6,373,368				5,967,666
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 81,695,695 shares issued, respectively		852				852				852				852				817
Additional paid-in capital		755,629				753,941				756,254				755,843				699,976
Retained earnings, partially restricted		212,838				200,151				185,734				172,934				161,217
Accumulated other comprehensive (loss) income		(9,460	)			(15,599	)			(13,415	)			(11,666	)			(5,950	)
Treasury stock, at cost;
5,020,025 shares, 4,291,317 shares, 4,409,501 shares, 4,401,333 shares, and 4,440,665 shares, respectively		(59,120	)			(48,334	)			(51,454	)			(51,454	)			(51,454	)
Unallocated common stock held by the Employee Stock Ownership Plan;
109,950 shares, 118,050 shares, 126,144 shares, 134,238 shares, and 142,332 shares, respectively		(599	)			(643	)			(688	)			(732	)			(776	)
Total Brookline Bancorp, Inc. stockholders’ equity		900,140				890,368				877,283				865,777				803,830
Noncontrolling interest in subsidiary		10,479				9,457				9,085				8,969				8,753
Total stockholders' equity		910,619				899,825				886,368				874,746				812,583
Total liabilities and stockholders' equity	$	7,392,805			$	7,320,596			$	7,285,710			$	7,248,114			$	6,780,249

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
	Three Months Ended
	December 31, 2018				September 30, 2018				June 30, 2018			March 31, 2018			December 31, 2017
	(In Thousands Except Share Data)
Interest and dividend income:
Loans and leases	$	78,791			$	75,877			$	73,329		$	67,272		$	64,272
Debt securities		3,489				3,585				3,563			3,323			3,214
Marketable and restricted equity securities		1,008				1,029				1,003			924			751
Short-term investments		256				145				179			120			100
Total interest and dividend income		83,544				80,636				78,074			71,639			68,337
Interest expense:
Deposits		13,744				11,916				9,219			7,099			6,681
Borrowed funds		6,641				6,388				6,138			5,049			3,999
Total interest expense		20,385				18,304				15,357			12,148			10,680
Net interest income		63,159				62,332				62,717			59,491			57,657
Provision for credit losses		123				2,717				1,470			641			1,802
Net interest income after provision for credit losses		63,036				59,615				61,247			58,850			55,855
Non-interest income:
Deposit fees		2,669				2,648				2,620			2,463			2,542
Loan fees		390				417				330			290			338
Loan level derivative income, net		1,811				2,192				571			866			755
(Loss) gain on investment securities, net		(692	)			(243	)			—			1,162			—
Gain on sales of loans and leases held-for-sale		327				535				722			299			935
Other		1,956				1,520				1,283			1,088			1,245
Total non-interest income		6,461				7,069				5,526			6,168			5,815
Non-interest expense:
Compensation and employee benefits		24,413				22,338				22,565			22,314			20,652
Occupancy		3,240				3,913				3,879			3,959			3,594
Equipment and data processing		4,626				4,601				4,368			4,618			4,417
Professional services		1,130				1,075				1,055			1,144			1,200
FDIC insurance		727				846				514			635			678
Advertising and marketing		773				1,068				1,118			1,057			856
Amortization of identified intangible assets		537				537				539			467			519
Merger and acquisition expense		526				22				334			2,905			206
Other		4,310				2,910				3,330			2,839			3,030
Total non-interest expense		40,282				37,310				37,702			39,938			35,152
Income before provision for income taxes		29,215				29,374				29,071			25,080			26,518
Provision for income taxes - operating		7,055				6,140				7,342			5,652			9,747
Impact of revaluation of DTA		—				—				—			—			8,965
Total provision for income taxes		7,055				6,140				7,342			5,652			18,712
Net income before noncontrolling interest in subsidiary		22,160				23,234				21,729			19,428			7,806
Less net income attributable to noncontrolling interest in subsidiary		1,022				774				898			795			979
Net income attributable to Brookline Bancorp, Inc.	$	21,138			$	22,460			$	20,831		$	18,633		$	6,827
Earnings per common share:
Basic	$	0.26			$	0.28			$	0.26		$	0.24		$	0.09
Diluted	$	0.26			$	0.28			$	0.26		$	0.24		$	0.09
Weighted average common shares outstanding during the period:
Basic		80,258,456				80,315,050				80,184,977			77,879,593			76,583,712
Diluted		80,407,525				80,515,467				80,505,614			78,167,800			76,868,307
Dividends declared per common share	$	0.105			$	0.100			$	0.100		$	0.090		$	0.090

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
	Twelve Months Ended December 31,
		2018			2017
	(In Thousands Except Share Data)
Interest and dividend income:
Loans and leases	$	295,269		$	247,022
Debt securities		13,960			12,524
Marketable and restricted equity securities		3,964			3,062
Short-term investments		700			442
Total interest and dividend income		313,893			263,050
Interest expense:
Deposits		41,978			23,288
Borrowed funds		24,216			16,581
Total interest expense		66,194			39,869
Net interest income		247,699			223,181
Provision for credit losses		4,951			18,988
Net interest income after provision for credit losses		242,748			204,193
Non-interest income:
Deposit Fees		10,400			10,050
Loan Fees		1,427			1,110
Loan level derivative income, net		5,440			2,187
Gain on investment securities, net		227			11,393
Gain on sales of loans and leases held-for-sale		1,883			2,644
Other		5,847			4,789
Total non-interest income		25,224			32,173
Non-interest expense:
Compensation and employee benefits		91,535			82,413
Occupancy		14,991			14,546
Equipment and data processing		18,213			16,854
Professional services		4,404			4,315
FDIC insurance		2,722			3,326
Advertising and marketing		4,016			3,369
Amortization of identified intangible assets		2,080			2,089
Merger and acquisition expense		3,787			411
Other		13,484			11,788
Total non-interest expense		155,232			139,111
Income before provision for income taxes		112,740			97,255
Provision for income taxes - operating		26,189			34,671
Impact of revaluation of DTA		—			8,965
Total provision for income taxes		26,189			43,636
Net income before noncontrolling interest in subsidiary		86,551			53,619
Less net income attributable to noncontrolling interest in subsidiary		3,489			3,101
Net income attributable to Brookline Bancorp, Inc.	$	83,062		$	50,518
Earnings per common share:
Basic	$	1.04		$	0.68
Diluted	$	1.04		$	0.68
Weighted average common shares outstanding during the period:
Basic		79,669,660			74,459,508
Diluted		79,909,243			74,811,408
Dividends declared per common share	$	0.395		$	0.360

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Asset Quality Analysis (Unaudited)
	At and for the Three Months Ended
	December 31, 2018				September 30, 2018				June 30, 2018				March 31, 2018				December 31, 2017
	(Dollars in Thousands)
NONPERFORMING ASSETS:
Loans and leases accounted for on a nonaccrual basis:
Commercial real estate mortgage	$	3,928			$	3,369			$	3,774			$	4,080			$	3,313
Multi-family mortgage		330				357				568				588				608
Construction		396				640				640				860				860
Total commercial real estate loans		4,654				4,366				4,982				5,528				4,781
Commercial		6,621				7,862				9,487				11,150				11,619
Equipment financing		9,500				9,659				8,825				6,661				8,106
Condominium association		265				295				—				—				—
Total commercial loans and leases		16,386				17,816				18,312				17,811				19,725
Residential mortgage		2,132				2,538				1,571				1,962				1,979
Home equity		908				1,053				923				925				744
Other consumer		17				11				5				53				43
Total consumer loans		3,057				3,602				2,499				2,940				2,766
Total nonaccrual loans and leases		24,097				25,784				25,793				26,279				27,272
Other real estate owned		3,054				3,136				3,436				3,235				3,235
Other repossessed assets		965				798				916				728				1,184
Total nonperforming assets	$	28,116			$	29,718			$	30,145			$	30,242			$	31,691
Loans and leases past due greater than 90 days and still accruing	$	13,482			$	14,954			$	12,340			$	5,240			$	3,020
Troubled debt restructurings on accrual		12,257				12,657				12,911				14,294				16,241
Troubled debt restructurings on nonaccrual		8,684				8,779				9,391				8,610				9,770
Total troubled debt restructurings	$	20,941			$	21,436			$	22,302			$	22,904			$	26,011
Total nonaccrual loans and leases as a percentage of total loans and leases		0.38	%			0.41	%			0.42	%			0.43	%			0.48	%
Nonperforming assets as a percentage of total assets		0.38	%			0.41	%			0.41	%			0.42	%			0.47	%
PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES:
Allowance for loan and lease losses at beginning of period	$	59,997			$	57,981			$	58,714			$	58,592			$	65,413
Charge-offs		(1,604	)			(1,227	)			(3,605	)			(792	)			(8,921	)
Recoveries		352				663				1,275				287				414
Net charge-offs		(1,252	)			(564	)			(2,330	)			(505	)			(8,507	)
(Credit) provision for loan and lease losses		(53	)			2,580				1,597				627				1,686
Allowance for loan and lease losses at end of period	$	58,692			$	59,997			$	57,981			$	58,714			$	58,592
Allowance for loan and lease losses as a percentage of total loans and leases		0.93	%			0.96	%			0.94	%			0.96	%			1.02	%
Allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases (non-GAAP)		0.96	%			1.00	%			0.98	%			1.03	%			1.05	%
NET CHARGE-OFFS:
Commercial real estate loans	$	—			$	—			$	100			$	3			$	200
Commercial loans and leases		883				579				2,304				532				8,290
Consumer loans		369				(15	)			(74	)			(30	)			17
Total net charge-offs	$	1,252			$	564			$	2,330			$	505			$	8,507
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)		0.08	%			0.04	%			0.15	%			0.03	%			0.60	%

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs (Unaudited)
	Three Months Ended
	December 31, 2018										September 30, 2018										December 31, 2017
	Average Balance				Interest (1)			AverageYield/Cost			Average Balance				Interest (1)			AverageYield/Cost			Average Balance				Interest (1)			AverageYield/Cost
	(Dollars in Thousands)
Assets:
Interest-earning assets:
Investments:
Debt securities (2)	$	637,803			$	3,542		2.22	%		$	663,125			$	3,638		2.20	%		$	644,958			$	3,323		2.06	%
Marketable and restricted equity securities (2)		69,374				1,017		5.87	%			67,607				1,029		6.09	%			59,720				759		5.08	%
Short-term investments		50,728				256		2.02	%			31,061				145		1.87	%			34,689				100		1.15	%
Total investments		757,905				4,815		2.54	%			761,793				4,812		2.53	%			739,367				4,182		2.26	%
Loans and Leases:
Commercial real estate loans (3)		3,310,185				39,014		4.61	%			3,260,634				37,332		4.48	%			3,026,124				31,866		4.12	%
Commercial loans (3)		825,582				10,007		4.75	%			819,383				9,862		4.72	%			762,493				8,132		4.18	%
Equipment financing (3)		959,706				17,145		7.15	%			933,007				16,220		6.95	%			846,734				14,292		6.75	%
Residential mortgage loans (3)		763,775				7,840		4.11	%			756,421				7,648		4.04	%			659,226				6,082		3.69	%
Other consumer loans (3)		404,747				4,883		4.78	%			412,248				4,928		4.73	%			373,559				4,141		4.40	%
Total loans and leases		6,263,995				78,889		5.04	%			6,181,693				75,990		4.92	%			5,668,136				64,513		4.55	%
Total interest-earning assets		7,021,900				83,704		4.77	%			6,943,486				80,802		4.65	%			6,407,503				68,695		4.29	%
Allowance for loan and lease losses		(59,806	)									(58,576	)									(65,434	)
Non-interest-earning assets		420,837										417,503										383,661
Total assets	$	7,382,931									$	7,302,413									$	6,725,730
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Deposits:
NOW accounts	$	333,592				88		0.10	%		$	344,760				72		0.08	%		$	331,724				61		0.07	%
Savings accounts		616,766				526		0.34	%			599,514				472		0.31	%			671,035				381		0.23	%
Money market accounts		1,647,346				4,914		1.18	%			1,668,402				4,367		1.04	%			1,766,045				2,456		0.55	%
Certificates of deposit		1,701,254				8,216		1.92	%			1,612,551				7,005		1.72	%			1,202,656				3,783		1.25	%
Total interest-bearing deposits		4,298,958				13,744		1.27	%			4,225,227				11,916		1.12	%			3,971,460				6,681		0.67	%
Borrowings
Advances from the FHLBB		903,342				5,227		2.26	%			907,306				4,979		2.15	%			798,572				2,690		1.32	%
Subordinated debentures and notes		83,410				1,302		6.24	%			83,370				1,301		6.24	%			83,248				1,276		6.13	%
Other borrowed funds		50,829				112		0.87	%			56,918				108		0.75	%			34,499				33		0.37	%
Total borrowings		1,037,581				6,641		2.50	%			1,047,594				6,388		2.39	%			916,319				3,999		1.71	%
Total interest-bearing liabilities		5,336,539				20,385		1.52	%			5,272,821				18,304		1.38	%			4,887,779				10,680		0.87	%
Non-interest-bearing liabilities:
Demand checking accounts		1,028,086										1,023,610										933,690
Other non-interest-bearing liabilities		109,261										107,449										85,018
Total liabilities		6,473,886										6,403,880										5,906,487
Brookline Bancorp, Inc. stockholders’ equity		899,244										889,259										811,219
Noncontrolling interest in subsidiary		9,801										9,274										8,024
Total liabilities and equity	$	7,382,931									$	7,302,413									$	6,725,730
Net interest income (tax-equivalent basis) /Interest-rate spread (4)						63,319		3.25	%							62,498		3.27	%							58,015		3.42	%
Less adjustment of tax-exempt income						160										166										358
Net interest income					$	63,159									$	62,332									$	57,657
Net interest margin (5)								3.58	%									3.57	%									3.59	%
(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.

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs (Unaudited)
	Twelve Months Ended
	December 31, 2018										December 31, 2017
	Average Balance				Interest (1)			AverageYield/Cost			Average Balance				Interest (1)			AverageYield/Cost
	(Dollars in Thousands)
Assets:
Interest-earning assets:
Investments:
Debt securities (2)	$	653,652			$	14,174		2.17	%		$	634,930			$	12,964		2.04	%
Marketable and restricted equity securities (2)		67,640				3,973		5.88	%			65,992				3,065		4.64	%
Short-term investments		38,437				700		1.82	%			40,847				442		1.08	%
Total investments		759,729				18,847		2.48	%			741,769				16,471		2.22	%
Loans and Leases:
Commercial real estate loans (3)		3,235,101				146,147		4.46	%			2,968,673				123,000		4.09	%
Commercial loans (3)		813,815				37,616		4.56	%			739,369				30,904		4.13	%
Equipment financing (3)		919,047				63,968		6.96	%			830,755				55,164		6.64	%
Residential mortgage loans (3)		746,372				29,773		3.99	%			645,925				23,593		3.65	%
Other consumer loans (3)		401,425				18,216		4.53	%			366,713				15,328		4.18	%
Total loans and leases		6,115,760				295,720		4.84	%			5,551,435				247,989		4.47	%
Total interest-earning assets		6,875,489				314,567		4.58	%			6,293,204				264,460		4.20	%
Allowance for loan and lease losses		(59,154	)									(62,972	)
Non-interest-earning assets		406,746										377,002
Total assets	$	7,223,081									$	6,607,234
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Deposits:
NOW accounts	$	340,194				283		0.08	%		$	322,681				225		0.07	%
Savings accounts		618,674				1,804		0.29	%			620,757				1,297		0.21	%
Money market accounts		1,715,057				15,369		0.90	%			1,761,112				8,863		0.50	%
Certificates of deposit		1,497,473				24,522		1.64	%			1,116,909				12,903		1.16	%
Total interest-bearing deposits		4,171,398				41,978		1.01	%			3,821,459				23,288		0.61	%
Borrowings
Advances from the FHLBB		946,017				18,650		1.94	%			884,266				11,330		1.26	%
Subordinated debentures and notes		83,350				5,181		6.22	%			83,186				5,081		6.11	%
Other borrowed funds		46,079				385		0.83	%			45,908				170		0.37	%
Total borrowings		1,075,446				24,216		2.22	%			1,013,360				16,581		1.61	%
Total interest-bearing liabilities		5,246,844				66,194		1.26	%			4,834,819				39,869		0.82	%
Non-interest-bearing liabilities:
Demand checking accounts		997,179										912,743
Other non-interest-bearing liabilities		96,560										78,965
Total liabilities		6,340,583										5,826,527
Brookline Bancorp, Inc. stockholders’ equity		873,388										773,244
Noncontrolling interest in subsidiary		9,110										7,463
Total liabilities and equity	$	7,223,081									$	6,607,234
Net interest income (tax-equivalent basis) /Interest-rate spread (4)						248,373		3.32	%							224,591		3.38	%
Less adjustment of tax-exempt income						674										1,410
Net interest income					$	247,699									$	223,181
Net interest margin (5)								3.61	%									3.57	%
(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.

 

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Non-GAAP Financial Information (Unaudited)
													At and for the Three Months Ended December 31,								At and for the Twelve Months Ended December 31,
														2018				2017				2018				2017
Reconciliation Table - Non-GAAP Financial Information													(Dollars in Thousands Except Share Data)
Net income attributable to Brookline Bancorp, Inc.													$	21,138			$	6,827			$	83,062			$	50,518
Less:
Security (loss) gains (after-tax)														(525	)			—				174				7,303
Add:
Impact of Tax Reform Act														—				8,965				—				8,965
Merger and acquisition-related expenses (after-tax)														399				130				2,908				264
Operating earnings													$	22,062			$	15,922			$	85,796			$	52,444
Operating earnings per common share:
Basic													$	0.27			$	0.21			$	1.08			$	0.70
Diluted														0.27				0.21				1.07				0.70
Weighted average common shares outstanding during the period:
Basic														80,258,456				76,583,712				79,669,660				74,459,508
Diluted														80,407,525				76,868,307				79,909,243				74,811,408
Return on average assets *														1.15	%			0.41	%			1.15	%			0.76	%
Less:
Security (loss) gains (after-tax) *														(0.03	)%			—	%			—	%			0.11	%
Add:
Impact of Tax Reform Act *														—	%			0.53	%			—	%			0.14	%
Merger and acquisition-related expenses (after-tax) *														0.02	%			0.01	%			0.04	%			—	%
Operating return on average assets *														1.20	%			0.95	%			1.19	%			0.79	%
Return on average tangible assets *														1.17	%			0.41	%			1.18	%			0.78	%
Less:
Security (loss) gains (after-tax) *														(0.03	)%			—	%			—	%			0.11	%
Add:
Impact of Tax Reform Act *														—	%			0.55	%			—	%			0.14	%
Merger and acquisition-related expenses (after-tax) *														0.02	%			0.01	%			0.04	%			—	%
Operating return on average tangible assets *														1.22	%			0.97	%			1.22	%			0.81	%
Return on average stockholders' equity *														9.40	%			3.37	%			9.51	%			6.53	%
Less:
Security (loss) gains (after-tax) *														(0.23	)%			—	%			0.02	%			0.94	%
Add:
Impact of Tax Reform Act *														—	%			4.42	%			—	%			1.17	%
Merger and acquisition-related expenses (after-tax) *														0.18	%			0.06	%			0.33	%			0.03	%
Operating return on average stockholders' equity *														9.81	%			7.85	%			9.82	%			6.79	%
Return on average tangible stockholders' equity *														11.54	%			4.09	%			11.70	%			8.04	%
Less:
Security (loss) gains (after-tax) *														(0.29	)%			—	%			0.02	%			1.16	%
Add:
Impact of Tax Reform Act *														—	%			5.38	%			—	%			1.43	%
Merger and acquisition-related expenses (after-tax) *														0.22	%			0.08	%			0.41	%			0.04	%
Operating return on average tangible stockholders' equity *														12.05	%			9.55	%			12.09	%			8.35	%
* Ratios at and for the three months ended are annualized.
																									(Continued)
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Non-GAAP Financial Information (Unaudited)
	At and for the Three Months Ended																				At and for the Twelve Months Ended
	December 31, 2018				September 30, 2018				June 30,2018				March 31,2018				December 31, 2017				December 31, 2018				December 31, 2017
	(Dollars in Thousands)
Net income, as reported	$	21,138			$	22,460			$	20,831			$	18,633			$	6,827			$	83,062			$	50,518
Average total assets	$	7,382,931			$	7,302,413			$	7,273,793			$	6,927,309			$	6,725,730			$	7,223,081			$	6,607,234
Less: Average goodwill and average identified intangible assets, net		166,777				167,313				168,185				152,377				144,226				163,712				145,000
Average tangible assets	$	7,216,154			$	7,135,100			$	7,105,608			$	6,774,932			$	6,581,504			$	7,059,369			$	6,462,234
Return on average tangible assets (annualized)		1.17	%			1.26	%			1.17	%			1.10	%			0.41	%			1.18	%			0.78	%
Average total stockholders’ equity	$	899,244			$	889,259			$	874,513			$	829,598			$	811,219			$	873,388			$	773,244
Less: Average goodwill and average identified intangible assets, net		166,777				167,313				168,185				152,377				144,226				163,712				145,000
Average tangible stockholders’ equity	$	732,467			$	721,946			$	706,328			$	677,221			$	666,993			$	709,676			$	628,244
Return on average tangible stockholders’ equity (annualized)		11.54	%			12.44	%			11.80	%			11.01	%			4.09	%			11.70	%			8.04	%
Brookline Bancorp, Inc. stockholders’ equity	$	900,140			$	890,368			$	877,283			$	865,777			$	803,830			$	900,140			$	803,830
Less:
Goodwill		160,427				160,427				160,427				160,896				137,890				160,427				137,890
Identified intangible assets, net		6,086				6,623				7,160				7,697				6,044				6,086				6,044
Tangible stockholders' equity	$	733,627			$	723,318			$	709,696			$	697,184			$	659,896			$	733,627			$	659,896
Total assets	$	7,392,805			$	7,320,596			$	7,285,710			$	7,248,114			$	6,780,249			$	7,392,805			$	6,780,249
Less:
Goodwill		160,427				160,427				160,427				160,896				137,890				160,427				137,890
Identified intangible assets, net		6,086				6,623				7,160				7,697				6,044				6,086				6,044
Tangible assets	$	7,226,292			$	7,153,546			$	7,118,123			$	7,079,521			$	6,636,315			$	7,226,292			$	6,636,315
Tangible stockholders’ equity to tangible assets		10.15	%			10.11	%			9.97	%			9.85	%			9.94	%			10.15	%			9.94	%
Tangible stockholders' equity	$	733,627			$	723,318			$	709,696			$	697,184			$	659,896			$	733,627			$	659,896
Number of common shares issued		85,177,172				85,177,172				85,177,172				85,177,172				81,695,695				85,177,172				81,695,695
Less:
Treasury shares		5,020,025				4,291,317				4,409,501				4,401,333				4,440,665				5,020,025				4,440,665
Unallocated ESOP shares		109,950				118,050				126,144				134,238				142,332				109,950				142,332
Unvested restricted shares		393,636				398,094				455,283				455,283				455,283				393,636				455,283
Number of common shares outstanding		79,653,561				80,369,711				80,186,244				80,186,318				76,657,415				79,653,561				76,657,415
Tangible book value per common share	$	9.21			$	9.00			$	8.85			$	8.69			$	8.61			$	9.21			$	8.61
Allowance for loan and lease losses	$	58,692			$	59,997			$	57,981			$	58,714			$	58,592			$	58,692			$	58,592
Less:
Allowance for acquired loans and leases losses		1,814				1,817				1,961				910				1,040				1,814				1,040
Allowance for originated loan and lease losses	$	56,878			$	58,180			$	56,020			$	57,804			$	57,552			$	56,878			$	57,552
Total loans and leases	$	6,303,516			$	6,227,707			$	6,171,274			$	6,114,461			$	5,730,679			$	6,303,516			$	5,730,679
Less:
Total acquired loans and leases		394,407				426,865				460,142				482,237				240,057				394,407				240,057
Total originated loans and leases	$	5,909,109			$	5,800,842			$	5,711,132			$	5,632,224			$	5,490,622			$	5,909,109			$	5,490,622
Allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases		0.96	%			1.00	%			0.98	%			1.03	%			1.05	%			0.96	%			1.05	%