Brookline Bancorp, Inc. (NASDAQ:BRKL) (the “Company”) today announced net income of $15.4 million, or $0.20 per basic and diluted share, for the third quarter of 2017, compared to $14.9 million, or $0.20 per basic and diluted share, for the second quarter of 2017, and $13.6 million, or $0.19 per basic and diluted share, for the third quarter of 2016. The third quarter of 2017 net income included merger and acquisition costs in connection with the Company’s Agreement and Plan of Merger with First Commons Bank, N.A. executed on September 20, 2017.
“We are pleased to report that Brookline Bancorp maintained its consistent strong performance throughout the third quarter of 2017,” said Paul Perrault, President and Chief Executive Officer of the Company. “During the quarter, we generated steady growth in loans and deposits. We look forward to our continued success in growing our loans and deposit base organically, and welcoming customers of First Commons Bank to the Brookline family. The acquisition of First Commons Bank will add approximately $300 million in assets to our balance sheet in the first quarter of 2018 on condition of approval.”
BALANCE SHEET
Total assets at September 30, 2017 increased $28.2 million to $6.69 billion from $6.66 billion at June 30, 2017, and increased $306.0 million from $6.38 billion at September 30, 2016. At September 30, 2017, total loans and leases were $5.64 billion, representing an increase of $102.0 million from June 30, 2017, and an increase of $307.1 million from September 30, 2016. During the third quarter of 2017, total loans and leases increased 7.4 percent on an annualized basis.
Investment securities at September 30, 2017 decreased $19.3 million to $630.6 million, comprising 9.4 percent of total assets, as compared to $649.9 million, or 9.8 percent of total assets, at June 30, 2017, and increased approximately $29.3 million from $601.4 million, or 9.4 percent of total assets, at September 30, 2016.
Total deposits at September 30, 2017 increased $96.3 million to $4.81 billion from $4.71 billion at June 30, 2017 and increased $240.8 million from $4.56 billion at September 30, 2016. Core deposits, which consists of demand checking, NOW, savings, and money market accounts, increased $48.5 million from June 30, 2017 and increased $179.5 million from September 30, 2016.
Total borrowings at September 30, 2017 decreased $80.7 million to $985.9 million from $1.07 billion at June 30, 2017 and decreased $36.8 million from $1.02 billion at September 30, 2016.
The ratio of stockholders’ equity to total assets was 12.04 percent at September 30, 2017, as compared to 11.95 percent at June 30, 2017, and 10.91 percent at September 30, 2016, respectively. The ratio of tangible stockholders’ equity to tangible assets was 10.09 percent at September 30, 2017, as compared to 9.99 percent at June 30, 2017, and 8.82 percent at September 30, 2016. Tangible book value per share increased $0.11 from $8.52 at June 30, 2017 to $8.63 at September 30, 2017.
NET INTEREST INCOME
Net interest income increased $1.3 million to $56.8 million during the third quarter of 2017 from the quarter ended June 30, 2017. The net interest margin decreased 2 basis points to 3.57 percent for the three months ended September 30, 2017.
NON-INTEREST INCOME
Non-interest income for the quarter ended September 30, 2017 increased $1.5 million to $6.0 million from $4.5 million for the quarter ended June 30, 2017. The increase was primarily driven by increases of $0.7 million in loan level derivative income and in gain on sales of loans and leases.
PROVISION FOR CREDIT LOSSES
The Company recorded a provision for credit losses of $2.9 million for the quarter ended September 30, 2017, compared to $0.9 million for the quarter ended June 30, 2017. The increase in the provision for the quarter was primarily driven by growth in loans and an increase in the loss factors as a result of the ongoing assessment of loss factors.
Net charge-offs for the third quarter of 2017 were $2.0 million compared to $2.4 million in the second quarter of 2017. The ratio of net charge-offs to average loans and leases on an annualized basis decreased to 14 basis points for the third quarter of 2017 from 17 basis points for the second quarter of 2017. Net charge offs in the third quarter of 2017 primarily consisted of $1.3 million of taxi medallion loans and $0.3 million of equipment financing loans as compared to $2.3 million of commercial loans in the second quarter of 2017.
The allowance for loan and lease losses represented 1.16 percent of total loans and leases at September 30, 2017, compared to 1.17 percent at June 30, 2017, and 1.10 percent at September 30, 2016. The allowance for loan and lease losses related to originated loans and leases represented 1.20 percent of originated loans and leases at September 30, 2017, compared to 1.20 percent at June 30, 2017, and 1.15 percent at September 30, 2016.
NON-INTEREST EXPENSE
Non-interest expense for the quarter ended September 30, 2017 increased $0.6 million to $35.4 million from $34.8 million for the quarter ended June 30, 2017. The increase was primarily driven by an increase of $0.2 million in compensation and employee benefits, an increase of $0.2 million in merger and acquisition expense, and an increase of $0.4 million in other non-interest expense, offset by a decrease of $0.1 million in FDIC insurance. The efficiency ratio for the third quarter was 56.37 percent compared to 57.93 percent for the second quarter of 2017 and 57.89 percent for the third quarter of 2016.
PROVISION FOR INCOME TAXES
The effective tax rate was 34.0 percent and 35.2 percent for the three and nine months ended September 30, 2017, respectively. The third quarter’s effective tax rate was impacted by new accounting guidance that went into effect in 2017. This guidance requires that the excess tax benefit associated with stock compensation transactions be recorded through earnings as a discrete item within the Company’s effective tax rate during the period of the transaction. The majority of the Company’s stock compensation events typically occur in the third quarter. The prior guidance required the recognition of the excess tax benefit through additional paid in capital.
RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY
The annualized return on average assets increased to 0.92 percent during the third quarter of 2017 from 0.91 percent for the second quarter of 2017. The annualized return on average tangible assets increased to 0.94 percent for the third quarter of 2017 from 0.93 percent for the second quarter of 2017.
The annualized return on average stockholders’ equity decreased to 7.64 percent during the third quarter of 2017 from 7.76 percent for the second quarter of 2017. The annualized return on average tangible stockholders’ equity decreased to 9.31 percent for the third quarter of 2017 from 9.58 percent for the second quarter of 2017.
ASSET QUALITY
The ratio of nonperforming loans and leases to total loans and leases was 0.71 percent at September 30, 2017 as compared to 0.76 percent at June 30, 2017. Nonperforming loans and leases decreased $2.3 million to $40.0 million at September 30, 2017 from $42.3 million at June 30, 2017. The ratio of nonperforming assets to total assets was 0.66 percent at September 30, 2017 as compared to 0.71 percent at June 30, 2017. Nonperforming assets decreased $2.8 million to $44.4 million at September 30, 2017 from $47.1 million at June 30, 2017. The decrease in nonperforming assets is due to the payoff of several nonperforming loans, charge offs of several taxi medallion loans, and sales of $0.5 million of other real estate owned and repossessed assets in the third quarter of 2017.
DIVIDEND DECLARED
The Company’s Board of Directors approved a dividend of $0.09 per share for the quarter ended September 30, 2017. The dividend will be paid on November 17, 2017 to stockholders of record on November 3, 2017.
CONFERENCE CALL
The Company will conduct a conference call/webcast at 1:30 PM Eastern Daylight Time on Thursday, October 19, 2017 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 10112542. The call will be available live and in a recorded version on the Company’s website under “Investor Relations” at brooklinebancorp.com.
ABOUT BROOKLINE BANCORP, INC.
Brookline Bancorp, Inc., a bank holding company with $6.7 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: brooklinebank.com, bankri.com, and 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 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. Carlson
Chief Financial Officer
Brookline Bancorp, Inc.
Tel.: 617-425-5331
E–mail: ccarlson@brkl.com
About Brookline Bancorp, Inc.
Brookline Bancorp, Inc. operates as a multi-bank holding company for Brookline Bank and its subsidiaries; Bank Rhode Island and its subsidiaries; First Ipswich Bank and its subsidiaries, and Brookline Securities Corp. As a commercially-focused financial institution with approximately 50 banking offices in greater Boston, the north shore of Massachusetts and Rhode Island, the Company offers commercial, business and retail banking services, including cash management products, online banking services, consumer and residential loans and investment services in central New England. The Company’s activities include acceptance of commercial; municipal and retail deposits; origination of mortgage loans on commercial and residential real estate located principally in Massachusetts and Rhode Island; origination of commercial loans and leases to small- and mid-sized businesses; investment in debt and equity securities, and the offering of cash management and investment advisory services.
