The upcoming report from Brookline Bancorp (BRKL) is expected to reveal quarterly earnings of $0.23 per share, indicating a decline of 41% compared to the year-ago period. Analysts forecast revenues of $89.38 million, representing an increase of 0.3% year over year.Over the past 30 days, the consensus EPS estimate for the quarter has remained unchanged. This demonstrates the covering analysts' collective reassessment of their initial projections during this period.Before a company announces its earnings, it ...

Consumer Loans The consumer loan portfolio, which is composed of residential mortgage loans, home equity loans and lines of credit, and other consumer loans, represented 15.6% of total loans outstanding as of September 30, 2023. The Company focuses its mortgage and home equity lending on existing and new customers within its branch networks in its urban and suburban marketplaces in the greater Boston, Lower Hudson Valley of New York, and Providence metropolitan areas. Table of Contents Criticized and Classi ...

Deposits B Floating (<3m) 21% Adj. 42% Fixed 37% Cumulative Net Interest Income Change by Quarter 09/30/2023 Flat Balance Sheet, simulations reflect a product weighted beta of 39% on total deposits. 22 Deposit and Funding Betas - Percentage Change in Cost versus Change in Federal Funds Rate The Federal Reserve began increasing the Federal Funds rate in March 2022 and has increased rates 525 basis points through September 2023. Q1'22: 0.25% Q2'22: 1.25% Q3'22: 1.50% Q4'22: 1.25% Q1'23: 0.50% Q2'23: 0.25% Q3' ...

Financial Data and Key Metrics Changes - The company reported net income of $22.7 million or $0.26 per share for the quarter [44] - Net charge-offs for the quarter were $11 million, representing approximately 14 basis points over the past 12 months [45] - The average cost of total deposits increased by 24 basis points to 228 basis points [60] - Net interest income declined by $2 million from the second quarter to $84 million [61] - Non-interest income remained consistent at $5.5 million for the quarter [62] Business Line Data and Key Metrics Changes - The loan portfolio grew by $40 million, with $562 million in loans originated at a weighted average coupon of 726 basis points [47][59] - Customer deposits increased by $88 million, with net growth in deposits of $49 million [60] - The yield on the loan portfolio increased by 14 basis points to 5.84% [59] Market Data and Key Metrics Changes - Nonperforming assets increased slightly but remain less than half of 1% of total assets [57] - The company is monitoring the office sector closely, which represents about 8% of its loans [26] Company Strategy and Development Direction - The company is focused on preserving capital for growth rather than stock buybacks at this time [23] - The company aims for loan growth of $80 million to $100 million per quarter, depending on deposit growth [96] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding loan pricing and customer base growth despite the current economic environment [8][9] - The company is seeing opportunities in the Equipment Finance and C&I sectors, with a positive outlook for the end of the year [104] Other Important Information - The Board approved maintaining the quarterly dividend of $0.135 per share, yielding approximately 6.3% annually [63] - The company is cautious about the commercial real estate sector but remains optimistic about well-managed properties [15][73] Q&A Session Summary Question: Loan pricing dynamics - Management noted that loan pricing is performing better than in the previous quarter, with optimism about future growth [8] Question: Expense trends - Management expects expenses to remain around $57 million per quarter with slight growth into next year [11] Question: Commercial real estate maturities - Management indicated that maturities are expected to be similar to the overall portfolio, with no significant stress anticipated [14][15] Question: Updates on Clarendon Private - Management stated that they are not reporting on this yet, but everything is proceeding as expected [19] Question: Buybacks strategy - Management is considering buybacks but is currently focused on preserving capital for growth [23][79] Question: Monitoring specific loan segments - Management is closely monitoring the office sector and is optimistic about well-managed properties [26][73] Question: Loan growth outlook - Management targets $80 million to $100 million in loan growth per quarter, contingent on deposit growth [96]

Part I Financial Information [Item 1. Unaudited Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Brookline Bancorp, Inc. and its subsidiaries, including balance sheets, statements of income, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial instrument details [Unaudited Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) The consolidated balance sheets show a significant increase in total assets, loans and leases, and deposits as of June 30, 2023, primarily driven by the PCSB acquisition. Stockholders' equity also increased, while cash and cash equivalents decreased Metric | Metric | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Total Assets | $11,206,078 | $9,185,836 |\n| Total Cash and Cash Equivalents | $224,432 | $382,959 |\n| Net Investment Securities | $909,777 | $656,664 |\n| Net Loans and Leases | $9,214,982 | $7,545,906 |\n| Total Deposits | $8,517,013 | $6,522,146 |\n| Total Borrowed Funds | $1,226,270 | $1,432,652 |\n| Total Stockholders' Equity | $1,162,308 | $992,125 | - Total assets increased by **$2.0 billion**, primarily due to the PCSB acquisition[422](index=422&type=chunk) - Total loans and leases increased by **$1.7 billion** to **$9.3 billion**[395](index=395&type=chunk) - Total deposits increased by **$2.0 billion** to **$8.5 billion**[424](index=424&type=chunk) [Unaudited Consolidated Statements of Income](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Income) The consolidated statements of income show a decrease in net income for both the three and six months ended June 30, 2023, compared to the prior year, despite an increase in net interest income. This decline was primarily due to higher provision for credit losses and increased non-interest expenses Metric | Metric | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Total Interest and Dividend Income | $145,357 | $78,029 | $277,908 | $153,140 |\n| Total Interest Expense | $59,320 | $6,162 | $105,822 | $11,425 |\n| Net Interest Income | $86,037 | $71,867 | $172,086 | $141,715 |\n| Provision for Credit Losses | $5,726 | $173 | $31,070 | $9 |\n| Total Non-Interest Income | $5,462 | $6,928 | $18,399 | $12,457 |\n| Total Non-Interest Expense | $57,825 | $44,871 | $122,601 | $87,358 |\n| Net Income | $21,850 | $25,195 | $29,410 | $49,900 |\n| Basic EPS | $0.25 | $0.33 | $0.34 | $0.65 |\n| Diluted EPS | $0.25 | $0.33 | $0.34 | $0.65 | - Net income for the three months ended June 30, 2023, decreased by **$3.3 million (13.3%) YoY**[428](index=428&type=chunk) - Net income for the six months ended June 30, 2023, decreased by **$20.5 million (41.1%) YoY**[400](index=400&type=chunk) [Unaudited Consolidated Statements of Comprehensive Income](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Comprehensive%20Income) The consolidated statements of comprehensive income show a decrease in comprehensive income for both the three and six months ended June 30, 2023, primarily due to net unrealized losses on investment securities and changes in fair value of cash flow hedges Metric | Metric | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Net Income | $21,850 | $25,195 | $29,410 | $49,900 |\n| Other Comprehensive Income (Loss), Net of Taxes | $(13,468) | $(15,655) | $(4,209) | $(44,867) |\n| Comprehensive Income | $8,382 | $9,540 | $25,201 | $5,033 | [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased significantly for the six months ended June 30, 2023, primarily due to the PCSB acquisition and net income, partially offset by common stock dividends and other comprehensive losses Metric | Metric | Balance at December 31, 2022 (In Thousands) | Balance at June 30, 2023 (In Thousands) | |:---|:---|:---|\n| Total Stockholders' Equity | $992,125 | $1,162,308 |\n| Net Income | $29,410 | $29,410 |\n| PCSB Acquisition | — | $167,330 |\n| Other Comprehensive Income (Loss) | — | $(4,209) |\n| Common Stock Dividends | — | $(23,939) | - Total stockholders' equity increased by **$170.2 million**, primarily reflecting the PCSB acquisition (**$167 million**) and net income (**$29.4 million**), partially offset by dividends paid (**$24 million**)[565](index=565&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased for the six months ended June 30, 2023, primarily due to significant cash used in investing activities, despite positive cash flow from operating and financing activities Metric | Metric | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|\n| Net Cash Provided from Operating Activities | $48,787 | $38,266 |\n| Net Cash Used for Investing Activities | $(349,987) | $(206,991) |\n| Net Cash Provided from (Used for) Financing Activities | $142,673 | $(68,683) |\n| Net Decrease in Cash and Cash Equivalents | $(158,527) | $(237,408) |\n| Cash and Cash Equivalents at End of Period | $224,432 | $90,329 | - Cash and cash equivalents decreased by **$158.5 million** to **$224.4 million** as of June 30, 2023, from **$383.0 million** as of December 31, 2022[394](index=394&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited consolidated financial statements, covering the company's business overview, significant accounting policies, recent acquisitions, investment securities, loan portfolio, credit loss allowances, intangible assets, derivatives, stock-based compensation, fair value measurements, and commitments and contingencies [1) Basis of Presentation](index=13&type=section&id=1%29%20Basis%20of%20Presentation) The financial statements are prepared in accordance with SEC rules for Form 10-Q and GAAP, including the accounts of Brookline Bancorp, Inc. and its wholly-owned subsidiaries. Management makes significant estimates and assumptions, particularly for credit losses, fair values of acquired assets/liabilities, goodwill impairment, and deferred tax assets. Certain prior period amounts have been reclassified for consistency - The Company is a bank holding company for Brookline Bank, Bank Rhode Island, and PCSB Bank, providing commercial, business, and retail banking services[60](index=60&type=chunk) - Material estimates susceptible to significant changes include allowance for credit losses, fair market values of acquired assets/liabilities, goodwill and intangible asset impairment, and deferred tax asset valuation allowances[39](index=39&type=chunk) - Certain previously reported amounts have been reclassified to conform to the current year's presentation[67](index=67&type=chunk) - The Company adopted ASU 2022-02 (Troubled Debt Restructurings and Vintage Disclosures) and ASU 2021-08 (Business Combinations) as of January 1, 2023, with no material impact on consolidated financial statements[81](index=81&type=chunk)[106](index=106&type=chunk) [2) Acquisitions](index=15&type=section&id=2%29%20Acquisitions) On January 1, 2023, the Company completed the acquisition of PCSB Financial Corporation, which was accounted for as a business combination. The acquisition resulted in $80.8 million of goodwill and a preliminary purchase price allocation to acquired assets and assumed liabilities. The Company also restructured the acquired investment portfolio from PCSB, selling a significant portion and reinvesting in short-duration securities - Acquisition of PCSB Financial Corporation completed on January 1, 2023, with each PCSB common stock share converted into cash (**$22.00**) or Company common stock (**1.3284 shares**), subject to allocation ensuring **60% conversion** to Company common stock[2](index=2&type=chunk) Preliminary Purchase Price Allocation (PCSB Acquisition) | Item | Amount (In Thousands) | |:---|:---|\n| Purchase Price Consideration | $297,791 |\n| Total Assets Acquired | $1,893,106 |\n| Total Liabilities Assumed | $1,676,110 |\n| Net Assets Acquired | $216,996 |\n| Goodwill | $80,795 | - The Company recorded **$80.8 million** of goodwill from the PCSB acquisition[99](index=99&type=chunk) - During the six months ended June 30, 2023, the Company restructured the investment portfolio acquired from PCSB, selling approximately **75% ($228.3 million book value)** of predominantly longer-dated Agency MBS, Agency CMOs, Corporate, and Municipal securities, recognizing a **$1.7 million gain**[103](index=103&type=chunk) - Proceeds from sales and additional cash were used to purchase **$295.6 million** of short-duration securities, mainly US Treasuries, Agency MBS, and short-term Municipal Bond Anticipation Notes[104](index=104&type=chunk) Supplemental Pro Forma Financial Information (PCSB Merger Impact) | Metric | Three Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | |:---|:---|:---|\n| Net Interest Income | $86,037 | $172,086 |\n| Non-Interest Income | $5,459 | $16,695 |\n| Net Income | $23,445 | $47,942 |\n| Total Merger-Related Expenses | $1,003 | $7,413 | [3) Investment Securities](index=18&type=section&id=3%29%20Investment%20Securities) The Company's investment securities portfolio, primarily available-for-sale, increased in fair value as of June 30, 2023, compared to December 31, 2022, but continued to show net unrealized losses. The portfolio is largely composed of U.S. Government-sponsored enterprise securities and U.S. Treasury bonds, with a significant portion pledged as collateral. Management assesses impairment regularly and intends to hold securities until recovery Investment Securities Available-for-Sale | Category | June 30, 2023 Fair Value (In Thousands) | December 31, 2022 Fair Value (In Thousands) | |:---|:---|:---|\n| GSE Debentures | $166,018 | $152,422 |\n| GSE CMOs | $64,446 | $18,220 |\n| GSE MBSs | $179,659 | $140,576 |\n| Municipal Obligations | $15,614 | $0 |\n| Corporate Debt Obligations | $31,898 | $13,764 |\n| U.S. Treasury Bonds | $452,098 | $331,307 |\n| Foreign Government Obligations | $477 | $477 |\n| **Total** | **$910,210** | **$656,766** | - As of June 30, 2023, the fair value of investment securities available-for-sale was **$910.2 million**, with net unrealized losses of **$80.6 million**, compared to **$656.8 million** and **$77.2 million**, respectively, as of December 31, 2022[91](index=91&type=chunk)[496](index=496&type=chunk) - Approximately **94.8%** of the portfolio (**$862.8 million**) had gross unrealized losses of **$80.7 million** as of June 30, 2023[91](index=91&type=chunk)[496](index=496&type=chunk) - As of June 30, 2023, **$575.0 million** of investment securities were pledged as collateral, up from **$387.9 million** at December 31, 2022[49](index=49&type=chunk) - The Company determined it is more likely than not that it will not sell or be required to sell investment securities before recovery of amortized cost, supported by strong capital and liquidity[122](index=122&type=chunk) Investment Securities Available-for-Sale Maturities | Maturity Period | June 30, 2023 Amortized Cost (In Thousands) | June 30, 2023 Fair Value (In Thousands) | December 31, 2022 Amortized Cost (In Thousands) | December 31, 2022 Fair Value (In Thousands) | |:---|:---|:---|:---|:---|\n| Within 1 year | $135,793 | $135,258 | $119,912 | $119,075 |\n| After 1 year through 5 years | $310,475 | $297,518 | $163,941 | $156,120 |\n| After 5 years through 10 years | $302,905 | $259,982 | $291,284 | $244,847 |\n| Over 10 years | $241,614 | $217,452 | $158,841 | $136,724 |\n| **Total** | **$990,787** | **$910,210** | **$733,978** | **$656,766** | Security Sales (Available-for-Sale) | Metric | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|\n| Proceeds from Sales | $229,981 | $0 |\n| Gross Gains from Sales | $2,705 | $0 |\n| Gross Losses from Sales | $(1,001) | $0 |\n| **Gain on Sales of Securities, Net** | **$1,704** | **$0** | [4) Loans and Leases](index=23&type=section&id=4%29%20Loans%20and%20Leases) The Company's total loans and leases increased significantly, primarily in commercial real estate, commercial, and consumer categories. The portfolio is diversified across New England and New York, with equipment financing extending nationwide. A substantial portion of loans and leases are pledged as collateral Loans and Leases Portfolio | Category | June 30, 2023 Balance (In Thousands) | June 30, 2023 Weighted Average Coupon | December 31, 2022 Balance (In Thousands) | December 31, 2022 Weighted Average Coupon | |:---|:---|:---|:---|:---|\n| Commercial Real Estate Loans | $5,670,771 | 5.30% | $4,404,148 | 4.95% |\n| Commercial Loans and Leases | $2,193,027 | 7.02% | $2,016,499 | 6.61% |\n| Consumer Loans | $1,477,001 | 5.18% | $1,223,741 | 4.90% |\n| **Total Loans and Leases** | **$9,340,799** | **5.67%** | **$7,644,388** | **5.38%** | - Total loans and leases increased by **$1.7 billion** to **$9.3 billion** as of June 30, 2023, from **$7.6 billion** as of December 31, 2022[395](index=395&type=chunk) - Commercial loan portfolios (commercial real estate, commercial loans and leases) totaled **$7.9 billion (84.2% of total loans)** as of June 30, 2023, an increase of **$1.4 billion** from December 31, 2022[395](index=395&type=chunk) - As of June 30, 2023, **$3.3 billion** of loans and leases were pledged as collateral, up from **$2.4 billion** at December 31, 2022[135](index=135&type=chunk) [5) Allowance for Credit Losses](index=24&type=section&id=5%29%20Allowance%20for%20Credit%20Losses) The allowance for credit losses (ACL) increased significantly for both the three and six months ended June 30, 2023, primarily due to overall loan growth and the PCSB acquisition. Management uses a comprehensive methodology, including third-party models and qualitative adjustments, to assess expected losses over the life of loans and unfunded commitments. Specific reserves also increased due to certain C&I and commercial real estate accounts Changes in Allowance for Loan and Lease Losses (Three Months Ended June 30) | Category | 2023 (In Thousands) | 2022 (In Thousands) | |:---|:---|:---|\n| Balance at March 31 | $120,865 | $95,463 |\n| Charge-offs | $(1,690) | $(1,533) |\n| Recoveries | $593 | $291 |\n| Provision for Loan and Lease Losses | $6,049 | $(1,033) |\n| **Balance at June 30** | **$125,817** | **$93,188** | Changes in Allowance for Loan and Lease Losses (Six Months Ended June 30) | Category | 2023 (In Thousands) | 2022 (In Thousands) | |:---|:---|:---|\n| Balance at December 31 | $98,482 | $99,084 |\n| Charge-offs | $(2,541) | $(3,877) |\n| Recoveries | $993 | $687 |\n| Provision for Loan and Lease Losses | $28,883 | $(2,706) |\n| **Balance at June 30** | **$125,817** | **$93,188** | - The ACL increased by **$5.7 million** for the three months ended June 30, 2023, due to overall loan growth[90](index=90&type=chunk) - The ACL increased by **$31.4 million** for the six months ended June 30, 2023, related to acquired loans from the PCSB acquisition[584](index=584&type=chunk) - The general allowance for loan and lease losses increased to **$111.0 million** as of June 30, 2023, from **$95.4 million** at December 31, 2022, with **$14.8 million** of the increase attributed to the PCSB acquisition[142](index=142&type=chunk) - Specific allowance for loan and lease losses increased by **$11.7 million** to **$14.8 million** as of June 30, 2023, primarily due to specific reserves on two C&I accounts (**$6 million**), commercial real estate loans (**$2.9 million**), and equipment financing loans (**$2.2 million**)[166](index=166&type=chunk) - Management applied qualitative adjustments to CRE, C&I, and Retail lifetime loss rate models to account for model limitations, historical loss patterns, specific risks, and general economic uncertainty, resulting in additions to reserves[165](index=165&type=chunk) Allowance for Loan and Lease Losses by Evaluation Type | Evaluation Type | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Individually evaluated | $14,845 | $3,112 |\n| Collectively evaluated | $110,972 | $95,370 |\n| **Total** | **$125,817** | **$98,482** | Loan Modifications (Six Months Ended June 30, 2023) | Type of Modification | Number of Loans | Amortized Cost (In Thousands) | % of Total Class of Loans and Leases | |:---|:---|:---|:---|\n| Maturity Extension (C&I) | 24 | $19,061 | 1.29% |\n| Combination (C&I) | 2 | $627 | 0.04% |\n| **Total Modifications** | **26** | **$19,688** | **1.33%** | [6) Goodwill and Other Intangible Assets](index=39&type=section&id=6%29%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill and other intangible assets increased significantly due to the PCSB acquisition. The core deposit intangible is amortized over 5.97 years, while the BankRI trade name has an indefinite life Goodwill and Other Intangible Assets | Asset | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Goodwill | $241,222 | $160,427 |\n| Core Deposits | $27,037 | $692 |\n| Trade Name | $1,089 | $1,089 |\n| **Total Goodwill and Other Intangible Assets** | **$269,348** | **$162,208** | - The increase in goodwill and core deposit intangibles is due to the PCSB acquisition[256](index=256&type=chunk) - The weighted-average amortization period for the core deposit intangible is **5.97 years**[283](index=283&type=chunk) - The BankRI trade name has an indefinite life and ceased to amortize as of December 31, 2013[228](index=228&type=chunk) Estimated Future Amortization Expense for Other Intangible Assets | Year Ending | Amount (In Thousands) | |:---|:---|\n| Remainder of 2023 | $3,909 |\n| 2024 | $6,636 |\n| 2025 | $5,507 |\n| 2026 | $4,398 |\n| 2027 | $3,329 |\n| 2028 | $2,177 |\n| Thereafter | $1,081 |\n| **Total** | **$27,037** | [7) Accumulated Other Comprehensive Income (Loss)](index=40&type=section&id=7%29%20Accumulated%20Other%20Comprehensive%20Income%20%28Loss%29) Accumulated other comprehensive income (loss) decreased for the three and six months ended June 30, 2023, primarily due to unrealized losses on investment securities available-for-sale and changes in the fair value of cash flow hedges Changes in Accumulated Other Comprehensive Income (Loss) (Three Months Ended June 30) | Component | 2023 (In Thousands) | 2022 (In Thousands) | |:---|:---|:---|\n| Investment Securities Available-for-Sale | $(62,554) | $(45,114) |\n| Change in Fair Value of Cash Flow Hedges | $(4,090) | $101 |\n| Postretirement Benefits | $488 | $36 |\n| **Total Accumulated Other Comprehensive Income (Loss)** | **$(66,156)** | **$(44,977)** | Changes in Accumulated Other Comprehensive Income (Loss) (Six Months Ended June 30) | Component | 2023 (In Thousands) | 2022 (In Thousands) | |:---|:---|:---|\n| Investment Securities Available-for-Sale | $(62,554) | $(45,114) |\n| Change in Fair Value of Cash Flow Hedges | $(4,090) | $101 |\n| Postretirement Benefits | $488 | $36 |\n| **Total Accumulated Other Comprehensive Income (Loss)** | **$(66,156)** | **$(44,977)** | [8) Derivatives and Hedging Activities](index=41&type=section&id=8%29%20Derivatives%20and%20Hedging%20Activities) The Company uses interest rate derivatives, including swaps, to manage interest rate risk, with some designated as cash flow hedges and others not. It also offers foreign exchange contracts and enters into risk participation agreements. Derivative positions have increased, and the Company posts collateral for derivative exposures - The Company uses interest rate swaps as cash flow hedges to manage interest rate risk, with effective portions of gains/losses reported in OCI and reclassified to earnings[289](index=289&type=chunk) Interest Rate Swaps on Loans (Cash Flow Hedges) | Metric | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Notional Amount | $225,000 | $150,000 |\n| Average Maturity (in years) | 3.40 | 3.77 |\n| Weighted Average Current Rate Paid | 5.07% | 4.11% |\n| Weighted Average Rate Received Fixed Swap Rate | 3.39% | 3.26% |\n| Fair Value | $(5,842) | $(3,030) | Customer-Related Derivative Positions (Not Designated as Hedging) | Derivative Type | June 30, 2023 Notional Amount (In Thousands) | December 31, 2022 Notional Amount (In Thousands) | |:---|:---|:---|\n| Loan Level Derivatives (Receive fixed, pay variable) | $1,762,448 | $1,489,709 |\n| Loan Level Derivatives (Pay fixed, receive variable) | $1,762,448 | $1,489,709 |\n| Risk Participation-Out Agreements | $510,611 | $393,624 |\n| Risk Participation-In Agreements | $74,293 | $75,223 |\n| Foreign Exchange Contracts (Buys foreign currency, sells U.S. currency) | $2,283 | $2,383 |\n| Foreign Exchange Contracts (Sells foreign currency, buys U.S. currency) | $2,300 | $2,400 | - The Company posted collateral to dealer counterparties of **$8.2 million** as of June 30, 2023, up from **$2.4 million** at December 31, 2022[268](index=268&type=chunk) [9) Stock Based Compensation](index=46&type=section&id=9%29%20Stock%20Based%20Compensation) The Company operates under the 2021 Stock Option and Incentive Plan, which grants restricted stock awards to officers, employees, and non-employee directors. Shares typically vest over three years, with 50% time-based and 50% performance-based. Total stock-based compensation expense increased for both the three and six months ended June 30, 2023 - The Company's active equity plan is the **2021 Stock Option and Incentive Plan**, which replaced the 2014 Plan[325](index=325&type=chunk) - Restricted stock awards generally vest **50% ratably over three years** (time-based) and **50% after three years** based on performance targets (performance-based)[301](index=301&type=chunk) Stock-Based Compensation Expense | Period | Expense (In Millions) | |:---|:---|\n| Three Months Ended June 30, 2023 | $0.9 |\n| Three Months Ended June 30, 2022 | $0.8 |\n| Six Months Ended June 30, 2023 | $1.8 |\n| Six Months Ended June 30, 2022 | $1.6 | [10) Earnings per Share ("EPS")](index=46&type=section&id=10%29%20Earnings%20per%20Share%20%28%22EPS%22%29) Basic and diluted EPS decreased for both the three and six months ended June 30, 2023, compared to the prior year, reflecting the decline in net income Earnings Per Common Share | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---|\n| Basic EPS | $0.25 | $0.33 | $0.34 | $0.65 |\n| Diluted EPS | $0.25 | $0.33 | $0.34 | $0.65 |\n| Weighted Average Common Shares Outstanding (Basic) | 88,665,135 | 77,091,013 | 87,620,194 | 77,352,666 |\n| Weighted Average Common Shares Outstanding (Diluted) | 88,926,543 | 77,419,288 | 87,887,980 | 77,671,601 | [11) Fair Value of Financial Instruments](index=47&type=section&id=11%29%20Fair%20Value%20of%20Financial%20Instruments) The Company measures certain financial instruments at fair value on a recurring basis, primarily investment securities and derivatives, using a valuation hierarchy (Level 1, 2, and 3). Investment securities are mostly Level 2, with a portion in Level 3. Derivatives are generally Level 2. Non-recurring fair value measurements are applied to collateral-dependent impaired loans and repossessed assets, typically using Level 2 or 3 inputs Assets Measured at Fair Value on a Recurring Basis (June 30, 2023) | Financial Instrument | Level 1 (In Thousands) | Level 2 (In Thousands) | Level 3 (In Thousands) | Total (In Thousands) | |:---|:---|:---|:---|:---|\n| Investment Securities Available-for-Sale | $0 | $890,608 | $19,602 | $910,210 |\n| Loan Level Derivatives | $0 | $126,985 | $0 | $126,985 |\n| Risk Participation-Out Agreements | $0 | $1,561 | $0 | $1,561 |\n| Foreign Exchange Contracts | $0 | $415 | $0 | $415 | Liabilities Measured at Fair Value on a Recurring Basis (June 30, 2023) | Financial Instrument | Level 1 (In Thousands) | Level 2 (In Thousands) | Level 3 (In Thousands) | Total (In Thousands) | |:---|:---|:---|:---|:---|\n| Interest Rate Derivatives | $0 | $5,842 | $0 | $5,842 |\n| Loan Level Derivatives | $0 | $126,985 | $0 | $126,985 |\n| Risk Participation-In Agreements | $0 | $22 | $0 | $22 |\n| Foreign Exchange Contracts | $0 | $398 | $0 | $398 | - As of June 30, 2023, **$19.6 million** of investment securities available-for-sale are included in Level 3, primarily subordinated debt of local banks and private placement municipal securities[332](index=332&type=chunk) - Fair value of interest rate derivatives, loan level derivatives, risk participation agreements, and foreign exchange contracts are Level 2 valuations[310](index=310&type=chunk) Assets Measured at Fair Value on a Non-Recurring Basis | Asset | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Collateral-Dependent Impaired Loans and Leases | $7,737 | $779 |\n| Repossessed Assets | $602 | $408 |\n| **Total** | **$8,339** | **$1,187** | Summary of Estimated Fair Values of Financial Instruments (June 30, 2023) | Financial Instrument | Carrying Value (In Thousands) | Estimated Fair Value (In Thousands) | |:---|:---|:---|\n| Loans and Leases, Net | $9,214,982 | $8,966,412 |\n| Certificates of Deposits | $2,343,754 | $2,316,697 |\n| Borrowed Funds | $1,226,270 | $1,220,928 | [12) Commitments and Contingencies](index=53&type=section&id=12%29%20Commitments%20and%20Contingencies) The Company is involved in various off-balance sheet financial instruments, including loan commitments, letters of credit, and derivatives, to meet customer needs and manage risk. Total lease commitments increased due to the PCSB acquisition. The Company does not expect material impact from legal proceedings Financial Instruments with Off-Balance-Sheet Risk | Instrument | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Commitments to Originate Loans and Leases | $387,210 | $711,441 |\n| Unadvanced Portion of Loans and Leases | $1,311,073 | $1,202,738 |\n| Unused Lines of Credit | $870,337 | $798,040 |\n| Unused Letters of Credit | $48,862 | $47,533 |\n| Interest Rate Derivatives | $225,000 | $150,000 |\n| Loan Level Derivatives (Notional Principal Amounts) | $3,524,896 | $2,979,418 |\n| Risk Participation Agreements | $584,908 | $468,847 |\n| Foreign Exchange Contracts (Notional Amounts) | $4,583 | $4,783 | - Total lease commitments increased from **$19.5 million** at December 31, 2022, to **$33.0 million** at June 30, 2023, due to **12 new leases** for PCSB Bank branch locations[354](index=354&type=chunk) Future Minimum Rental Payments (Operating Leases) | Year Ending | Amount (In Thousands) | |:---|:---|\n| Remainder of 2023 | $4,316 |\n| 2024 | $7,655 |\n| 2025 | $6,086 |\n| 2026 | $4,677 |\n| 2027 | $3,714 |\n| 2028 | $2,334 |\n| Thereafter | $9,512 |\n| **Total** | **$38,294** |\n| Less Imputed Interest | $(5,273) |\n| **Present Value of Lease Liability** | **$33,021** | - Management believes that the consolidated financial position and results of operations will not be materially affected by the outcome of outstanding legal proceedings[382](index=382&type=chunk) [13) Revenue from Contracts with Customers](index=56&type=section&id=13%29%20Revenue%20from%20Contracts%20with%20Customers) The Company recognizes revenue from contracts with customers either at a point in time (e.g., card interchange fees, ATM fees, loan fees) or over time (e.g., commissions on investments, insurance sales, service charges on deposit accounts). A substantial portion of the Company's revenue is excluded from ASC 606, primarily financial instruments like interest income and derivative income - Revenue recognized at a point in time includes card interchange fees, ATM fees, wire transfer fees, overdraft charge fees, stop-payment and returned check fees, and loan fees[362](index=362&type=chunk) - Revenue recognized over time includes commissions on investments, insurance sales, and service charges on deposit accounts[363](index=363&type=chunk) - A substantial portion of the Company's revenue, such as interest income on loans and investment securities, loan derivative income, and gains on loan and investment sales, is excluded from the scope of Topic 606[384](index=384&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=58&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition, highlighting the impact of the PCSB acquisition, changes in net income, net interest margin compression, and asset quality trends. It also discusses critical accounting policies, recent accounting developments, and reconciles non-GAAP financial measures [Introduction](index=58&type=section&id=Introduction) Brookline Bancorp, Inc. operates as a multi-bank holding company, focusing on commercial lending and providing a wide range of banking and wealth management services through its subsidiaries. The Company emphasizes local decision-making within a uniform strategic objective and is subject to extensive regulation. The recent PCSB acquisition significantly expanded its operations - Brookline Bancorp, Inc. operates as a multi-bank holding company for Brookline Bank, Bank Rhode Island, PCSB Bank, Brookline Securities Corp, and Clarendon Private, LLC[414](index=414&type=chunk) - The Company focuses on profitably growing its commercial lending businesses, both organically and through acquisitions, with a customer-focused, multi-bank structure and strong risk management[366](index=366&type=chunk) - The Company and its banks are supervised, examined, and regulated by the FRB, FDIC, and state banking divisions[417](index=417&type=chunk) - The acquisition of PCSB on January 1, 2023, added **14 banking offices** in the Lower Hudson Valley of New York State[391](index=391&type=chunk) [Selected Financial Data](index=60&type=section&id=Selected%20Financial%20Data) This section provides a snapshot of key financial and performance metrics for Brookline Bancorp, Inc. across several quarters, highlighting trends in earnings per share, book value, net interest margin, asset quality, and capital ratios. It shows the impact of the PCSB acquisition on total assets, loans, and deposits Metric | Metric | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | |:---|:---|:---|:---|:---|:---|\n| Earnings per share - Basic | $0.25 | $0.09 | $0.39 | $0.39 | $0.33 |\n| Book value per share (end of period) | $13.11 | $13.14 | $12.91 | $12.54 | $12.63 |\n| Net interest margin (taxable equivalent basis) | 3.26% | 3.36% | 3.81% | 3.80% | 3.56% |\n| Return on average assets | 0.78% | 0.27% | 1.34% | 1.40% | 1.18% |\n| Nonperforming loans and leases as a percentage of total loans and leases | 0.50% | 0.31% | 0.19% | 0.24% | 0.28% |\n| Total assets (in thousands) | $11,206,078 | $11,522,485 | $9,185,836 | $8,695,708 | $8,514,230 |\n| Total loans and leases (in thousands) | $9,340,799 | $9,246,965 | $7,644,388 | $7,421,304 | $7,291,912 |\n| Total deposits (in thousands) | $8,517,013 | $8,456,462 | $6,522,146 | $6,735,605 | $6,894,457 | [Executive Overview](index=61&type=section&id=Executive%20Overview) The Company experienced significant balance sheet growth due to the PCSB acquisition, with total assets, loans, and deposits increasing. However, net income decreased for both the three and six months ended June 30, 2023, primarily due to higher credit loss provisions and non-interest expenses. Net interest margin compressed due to increased cost of funds outpacing asset yield increases. Asset quality metrics showed an increase in nonperforming assets and the allowance for loan and lease losses, while capital ratios remained strong, exceeding regulatory requirements - Total assets increased **$2.0 billion** to **$11.2 billion** as of June 30, 2023, from **$9.2 billion** at December 31, 2022, primarily driven by the PCSB acquisition[422](index=422&type=chunk) - Total loans and leases increased **$1.7 billion** to **$9.3 billion**, with commercial loan portfolios comprising **84.2%** of total loans[395](index=395&type=chunk) - Total deposits increased **$2.0 billion** to **$8.5 billion**, with core deposits increasing by **$889.4 million** but decreasing as a percentage of total deposits (**72.5%** from **81.0%**). Brokered deposits significantly increased[424](index=424&type=chunk) - Net income for the three months ended June 30, 2023, decreased by **$3.3 million (13.3%)** to **$21.9 million**, primarily due to increased non-interest expense and provision for credit losses[428](index=428&type=chunk) - Net income for the six months ended June 30, 2023, decreased by **$20.5 million (41.1%)** to **$29.4 million**, driven by increased non-interest expense and provision for credit losses[400](index=400&type=chunk) - Net interest margin decreased to **3.26%** for the three months ended June 30, 2023 (from **3.56% YoY**) and to **3.31%** for the six months ended June 30, 2023 (from **3.53% YoY**), due to higher cost of funds outpacing asset yield increases[401](index=401&type=chunk)[430](index=430&type=chunk) - Nonperforming assets increased to **$46.9 million (0.42% of total assets)** as of June 30, 2023, from **$15.3 million (0.17%)** at December 31, 2022[397](index=397&type=chunk) - The ratio of allowance for loan and lease losses to total loans and leases was **1.35%** as of June 30, 2023, up from **1.29%** at December 31, 2022[425](index=425&type=chunk) - The Company remained 'well-capitalized' with a Common Equity Tier 1 capital ratio of **10.54%** and a Tier 1 leverage ratio of **8.79%** as of June 30, 2023[399](index=399&type=chunk) [Critical Accounting Policies and Estimates](index=62&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The Company's critical accounting policies involve significant judgments and estimates, particularly for the allowance for credit losses and goodwill impairment, which are susceptible to changes in economic conditions and future events - Critical accounting policies include the determination of the allowance for credit losses and the review of goodwill for impairment[403](index=403&type=chunk) - Judgments in applying these policies may be affected by prolonged economic deterioration, potentially leading to significant changes in future financial results[66](index=66&type=chunk) [Recent Accounting Developments](index=63&type=section&id=Recent%20Accounting%20Developments) The Company is evaluating the impact of ASU 2023-02, which allows the use of the proportional amortization method for tax equity investments under certain conditions, effective for fiscal years beginning after December 15, 2023 - FASB issued ASU 2023-02, 'Investments – Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method,' effective for fiscal years beginning after December 15, 2023[404](index=404&type=chunk) - Management is currently determining the impact of ASU 2023-02 as of June 30, 2023[404](index=404&type=chunk) [Non-GAAP Financial Measures and Reconciliation to GAAP](index=63&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliation%20to%20GAAP) Management uses non-GAAP financial measures, such as operating earnings metrics, return on average tangible assets/equity, tangible equity ratio, tangible book value per share, and dividend payout ratio, to provide investors with a clearer understanding of underlying operating performance and capital strength, reconciling them to GAAP figures - Non-GAAP financial measures are used to understand underlying operating performance, trends, and capital position[405](index=405&type=chunk) Operating Earnings Reconciliation | Metric | Three Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | |:---|:---|:---|\n| Reported Pretax Income | $27,815 | $36,483 |\n| Less: Security Gains | $3 | $1,704 |\n| Add: Day 1 PCSB CECL Provision | $0 | $16,744 |\n| Add: Merger and Acquisition Expense | $1,002 | $7,411 |\n| **Operating Pretax Income** | **$28,814** | **$58,934** |\n| Estimated Taxes | $5,587 | $11,427 |\n| **Operating Earnings After Tax** | **$23,227** | **$47,507** |\n| Operating Basic EPS | $0.26 | $0.54 |\n| Operating Diluted EPS | $0.26 | $0.54 | Tangible Equity Ratio Reconciliation | Metric | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Total Stockholders' Equity | $1,162,308 | $992,125 |\n| Less: Goodwill and Identified Intangible Assets, Net | $269,348 | $162,208 |\n| **Tangible Stockholders' Equity** | **$892,960** | **$829,917** |\n| Total Assets | $11,206,078 | $9,185,836 |\n| Less: Goodwill and Identified Intangible Assets, Net | $269,348 | $162,208 |\n| **Tangible Assets** | **$10,936,730** | **$9,023,628** |\n| **Tangible Equity Ratio** | **8.16%** | **9.20%** | Tangible Book Value Per Share Reconciliation | Metric | June 30, 2023 | December 31, 2022 | |:---|:---|:---|\n| Tangible Stockholders' Equity (In Thousands) | $892,960 | $829,917 |\n| Common Shares Outstanding | 88,665,135 | 76,844,232 |\n| **Tangible Book Value Per Share** | **$10.07** | **$10.80** | Dividend Payout Ratio Reconciliation | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | |:---|:---|:---|\n| Dividends Paid (In Thousands) | $11,969 | $10,030 |\n| Net Income, as Reported (In Thousands) | $21,850 | $25,195 |\n| **Dividend Payout Ratio** | **54.78%** | **39.81%** | [Financial Condition](index=67&type=section&id=Financial%20Condition) The Company's financial condition as of June 30, 2023, reflects significant growth in its loan and lease portfolios, primarily driven by commercial real estate and commercial loans. Deposits also increased, but with a shift in mix towards brokered and certificate of deposit accounts. Borrowed funds decreased, while stockholders' equity increased due to the PCSB acquisition. The Company actively manages its investment securities and derivative positions [Loans and Leases](index=67&type=section&id=Loans%20and%20Leases) The Company's loan and lease portfolio grew substantially, with commercial real estate loans being the largest component. Underwriting policies are in place to manage inherent risks. The portfolio is diversified geographically, with equipment financing extending nationwide. Consumer loans, including residential mortgages and home equity, also increased Loan and Lease Portfolio Growth | Category | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | Dollar Change (In Thousands) | Percent Change (Annualized) | |:---|:---|:---|:---|:---|\n| Commercial Real Estate | $5,670,771 | $4,404,148 | $1,266,623 | 57.5% |\n| Commercial | $2,193,027 | $2,016,499 | $176,528 | 17.5% |\n| Consumer | $1,477,001 | $1,223,741 | $253,260 | 41.4% |\n| **Total Loans and Leases** | **$9,340,799** | **$7,644,388** | **$1,696,411** | **44.4%** | - Commercial real estate loans represent **60.7%** of total loans and leases, with **78.3%** secured by properties in New England[469](index=469&type=chunk)[444](index=444&type=chunk) - Equipment financing focuses on market niches and small-business owners, with higher yields due to increased credit risk[448](index=448&type=chunk) - Consumer loans, including residential mortgages and home equity, represent **15.8%** of total loans[477](index=477&type=chunk) - As of June 30, 2023, there were **four borrowers** with loans and commitments over **$60.0 million**, totaling **$271.0 million (2.35% of total loans and commitments)**[467](index=467&type=chunk) [Asset Quality](index=70&type=section&id=Asset%20Quality) Asset quality deteriorated, with criticized assets and nonperforming assets increasing significantly as of June 30, 2023, primarily due to specific commercial and commercial real estate relationships. The allowance for credit losses also increased, reflecting management's estimate of expected losses, which includes qualitative adjustments for economic uncertainty. Net charge-offs remained low - Criticized assets increased by **$50.2 million** to **$158.4 million** as of June 30, 2023, from **$108.2 million** at December 31, 2022, driven by increases in commercial real estate and equipment financing relationships[479](index=479&type=chunk) - Nonperforming assets increased by **$31.6 million** to **$46.9 million (0.42% of total assets)** as of June 30, 2023, from **$15.3 million (0.17%)** at December 31, 2022[511](index=511&type=chunk) - The increase in nonperforming assets was primarily due to loans related to one commercial customer (**$9.3 million**) and multiple commercial real estate customers (**$5.2 million** and **$4.2 million**)[511](index=511&type=chunk) Nonperforming Assets | Category | June 30, 2023 (In Thousands) | December 31, 2022 (In Thousands) | |:---|:---|:---|\n| Total Nonaccrual Loans and Leases | $46,323 | $14,894 |\n| Other Repossessed Assets | $602 | $408 |\n| **Total Nonperforming Assets** | **$46,925** | **$15,302** |\n| Loans and Leases Past Due > 90 Days and Accruing | $490 | $33 |\n| Total Nonperforming Loans and Leases as % of Total Loans and Leases | 0.50% | 0.19% |\n| Total Nonperforming Assets as % of Total Assets | 0.42% | 0.17% | - The allowance for loan and lease losses increased to **$125.8 million (1.35% of total loans)** as of June 30, 2023, from **$98.5 million (1.29%)** at December 31, 2022[488](index=488&type=chunk) - Net charge-offs for the three months ended June 30, 2023, were **$1.1 million (0.05% annualized)**, compared to **$1.2 million (0.07% annualized)** in 2022[516](index=516&type=chunk) - Qualitative adjustments were applied to commercial real estate, commercial, and consumer portfolios to account for general economic uncertainty and specific risks, resulting in a net addition to total reserves[485](index=485&type=chunk) [Investment Securities](index=74&type=section&id=Investment%20Securities) The investment portfolio increased in fair value but continued to show net unrealized losses, primarily due to market rate rebalancing. The portfolio is mainly composed of GSE and U.S. Treasury securities, with a significant portion pledged as collateral. The Company also holds restricted equity securities in FHLB and Federal Reserve Banks - Cash, cash equivalents, and investment securities increased **$94.9 million (18.3% annualized)** to **$1.1 billion** as of June 30, 2023, from **$1.0 billion** at December 31, 2022[493](index=493&type=chunk) Investment Securities Available-for-Sale (Amortized Cost and Fair Value) | Category | June 30, 2023 Amortized Cost (In Thousands) | June 30, 2023 Fair Value (In Thousands) | December 31, 2022 Amortized Cost (In Thousands) | December 31, 2022 Fair Value (In Thousands) | |:---|:---|:---|:---|:---|\n| GSE Debentures | $189,075 | $166,018 | $176,751 | $152,422 |\n| GSE CMOs | $68,652 | $64,446 | $19,977 | $18,220 |\n| GSE MBSs | $199,087 | $179,659 | $159,824 | $140,576 |\n| Municipal Obligations | $15,769 | $15,614 | $0 | $0 |\n| Corporate Debt Obligations | $32,948 | $31,898 | $14,076 | $13,764 |\n| U.S. Treasury Bonds | $484,756 | $452,098 | $362,850 | $331,307 |\n| Foreign Government Obligations | $500 | $477 | $500 | $477 |\n| **Total** | **$990,787** | **$910,210** | **$733,978** | **$656,766** | - Net unrealized losses on available-for-sale securities were **$80.6 million** as of June 30, 2023, compared to **$77.2 million** at December 31, 2022[496](index=496&type=chunk) - The Company sold **$230.0 million** of available-for-sale securities and purchased **$279.0 million** during the six months ended June 30, 2023[521](index=521&type=chunk) - Restricted equity securities include FHLB stock (**$49.9 million**) and Federal Reserve Bank stock (**$21.4 million**) as of June 30, 2023[522](index=522&type=chunk)[523](index=523&type=chunk) [Deposits](index=76&type=section&id=Deposits) Total deposits increased significantly, driven by the PCSB acquisition, but the mix shifted with core deposits decreasing as a percentage of total deposits, while brokered deposits and certificates of deposit increased. The Company aims to increase core deposits long-term while using wholesale funding for growth - Total deposits increased **$2.0 billion** to **$8.5 billion** as of June 30, 2023, from **$6.5 billion** at December 31, 2022[524](index=524&type=chunk) Deposit Mix | Deposit Type | June 30, 2023 Amount (In Thousands) | June 30, 2023 Percent of Total | June 30, 2023 Weighted Average Rate | December 31, 2022 Amount (In Thousands) | December 31, 2022 Percent of Total | December 31, 2022 Weighted Average Rate | |:---|:---|:---|:---|:---|:---|:---|\n| Non-interest-bearing Demand Checking | $1,843,516 | 21.6% | 0.00% | $1,802,518 | 27.6% | 0.00% |\n| NOW Accounts | $699,119 | 8.2% | 0.61% | $544,118 | 8.3% | 0.18% |\n| Savings Accounts | $1,464,054 | 17.2% | 2.02% | $762,271 | 11.7% | 0.70% |\n| Money Market Accounts | $2,166,570 | 25.4% | 2.77% | $2,174,952 | 33.4% | 1.63% |\n| Certificate of Deposit Accounts | $1,410,905 | 16.6% | 3.06% | $928,143 | 14.2% | 1.68% |\n| Brokered Deposit Accounts | $932,849 | 11.0% | 4.25% | $310,144 | 4.8% | 3.00% |\n| **Total Deposits** | **$8,517,013** | **100.0%** | **2.08%** | **$6,522,146** | **100.0%** | **1.02%** | - Core deposits increased by **$889.4 million** but decreased as a percentage of total deposits from **81.0%** to **72.5%**[502](index=502&type=chunk) - Brokered deposits increased by **$622.7 million** to **$932.8 million**, representing **11.0%** of total deposits (up from **4.8%**)[525](index=525&type=chunk) - Certificates of deposit increased by **$0.5 billion** to **$1.4 billion**, representing **16.6%** of total deposits (up from **14.2%**)[552](index=552&type=chunk) Insured and Uninsured Deposit Mix (June 30, 2023) | Category | Amount (In Millions) | Percent | |:---|:---|:---|\n| Insured or Collateralized | $6,034 | 71% |\n| Uninsured | $2,517 | 29% |\n| **Total** | **$8,551** | **100%** | [Borrowed Funds](index=78&type=section&id=Borrowed%20Funds) Borrowed funds decreased as of June 30, 2023, primarily due to a reduction in FHLB borrowings, despite an increase in the weighted average interest rate. The Company also utilizes subordinated debentures and other funding sources like repurchase agreements and lines of credit - FHLB borrowings decreased **$194.4 million** to **$1.0 billion** as of June 30, 2023, with a total capacity of **$2.4 billion**[509](index=509&type=chunk) Borrowed Funds Information | Metric | Three Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | |:---|:---|:---|\n| Average Balance Outstanding | $1,362,418 | $1,434,352 |\n| Weighted Average Interest Rate for the Period | 4.70% | 4.62% |\n| Weighted Average Interest Rate at End of Period | 4.74% | 4.74% | Subordinated Debentures and Notes | Issue Date | Rate | Maturity Date | Next Call Date | June 30, 2023 Carrying Amount (In Thousands) | December 31, 2022 Carrying Amount (In Thousands) | |:---|:---|:---|:---|:---|:---|\n| June 26, 2003 | Variable; 3-month LIBOR + 3.10% | June 26, 2033 | September 25, 2023 | $4,896 | $4,887 |\n| March 17, 2004 | Variable; 3-month LIBOR + 2.79% | March 17, 2034 | September 17, 2023 | $4,843 | $4,830 |\n| September 15, 2014 | 6.0% Fixed-to-Variable; 3-month LIBOR + 3.315% | September 15, 2029 | September 15, 2024 | $74,377 | $74,327 |\n| **Total** | | | | **$84,116** | **$84,044** | - The Company has access to a **$30.0 million** committed line of credit and **$605.0 million** in uncommitted lines of credit, with no outstanding borrowings on these lines as of June 30, 2023[562](index=562&type=chunk)[536](index=536&type=chunk) [Stockholders' Equity and Dividends](index=80&type=section&id=Stockholders%27%20Equity%20and%20Dividends) Stockholders' equity increased significantly due to the PCSB acquisition and net income, while the dividend payout ratio increased for the three months ended June 30, 2023 - Total stockholders' equity increased by **$170.2 million** to **$1.2 billion** as of June 30, 2023, primarily due to the PCSB acquisition (**$167 million**) and net income (**$29.4 million**), partially offset by dividends paid (**$24 million**)[565](index=565&type=chunk) - Stockholders' equity represented **10.37%** of total assets as of June 30, 2023 (down from **10.80%** at December 31, 2022)[538](index=538&type=chunk) - Tangible stockholders' equity represented **8.16%** of tangible assets as of June 30, 2023 (down from **9.20%** at December 31, 2022)[538](index=538&type=chunk) - The dividend payout ratio was **54.78%** for the three months ended June 30, 2023, compared to **39.81%** for the same period in 2022[567](index=567&type=chunk) [Results of Operations](index=81&type=section&id=Results%20of%20Operations) The Company's results of operations for the three and six months ended June 30, 2023, show increased net interest income driven by higher interest rates and loan volumes, but this was offset by a significant rise in provision for credit losses and non-interest expenses, leading to a decrease in net income. Non-interest income saw mixed results, with gains on investment securities and other income increasing for the six-month period [Net Interest Income](index=81&type=section&id=Net%20Interest%20Income) Net interest income increased for both the three and six months ended June 30, 2023, driven by higher interest income from loans, leases, and investments, which outpaced the significant increase in interest expense on deposits and borrowings. However, net interest margin compressed due to the rising cost of funds - Net interest income increased **$14.2 million** to **$86.0 million** for the three months ended June 30, 2023, from **$71.9 million** in 2022[570](index=570&type=chunk) - Net interest income increased **$30.4 million** to **$172.1 million** for the six months ended June 30, 2023, from **$141.7 million** in 2022[541](index=541&type=chunk) - Net interest margin decreased by **30 basis points** to **3.26%** for the three months ended June 30, 2023 (from **3.56% YoY**)[113](index=113&type=chunk) - Net interest margin decreased by **22 basis points** to **3.31%** for the six months ended June 30, 2023 (from **3.53% YoY**)[571](index=571&type=chunk) - Yield on interest-earning assets increased to **5.49%** for the three months and **5.30%** for the six months ended June 30, 2023, due to higher yields on loans, leases, and investments[542](index=542&type=chunk)[573](index=573&type=chunk) - Overall cost of funds increased to **2.41%** for the three months and **2.18%** for the six months ended June 30, 2023, reflecting the rising interest rate environment[544](index=544&type=chunk) Interest Income - Loans and Leases | Category | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Commercial Real Estate Loans | $79,582 | $38,967 | $147,249 | $74,994 |\n| Commercial Loans | $13,457 | $7,026 | $27,437 | $14,966 |\n| Equipment Financing | $22,357 | $17,897 | $43,570 | $35,909 |\n| Residential Mortgage Loans | $11,431 | $7,123 | $22,504 | $14,115 |\n| Other Consumer Loans | $5,472 | $3,274 | $13,470 | $6,024 |\n| **Total Interest Income - Loans and Leases** | **$132,299** | **$74,287** | **$254,230** | **$146,008** | - Interest income from loans and leases increased by **$58.0 million** for the three months and **$108.2 million** for the six months ended June 30, 2023, primarily due to higher interest rates and origination volume (including PCSB acquisition)[591](index=591&type=chunk)[579](index=579&type=chunk) - Total investment income increased by **$9.3 million** for the three months and **$16.5 million** for the six months ended June 30, 2023, driven by higher rates and volume[592](index=592&type=chunk)[580](index=580&type=chunk) [Interest Expense—Deposits and Borrowed Funds](index=87&type=section&id=Interest%20Expense%E2%80%94Deposits%20and%20Borrowed%20Funds) Interest expense on deposits and borrowed funds increased substantially for both the three and six months ended June 30, 2023, primarily due to higher interest rates and increased volume in brokered deposits and FHLB borrowings Interest Expense - Deposits | Deposit Type | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| NOW Accounts | $1,069 | $216 | $1,970 | $319 |\n| Savings Accounts | $5,917 | $211 | $8,431 | $409 |\n| Money Market Accounts | $13,989 | $2,073 | $26,129 | $3,643 |\n| Certificate of Deposit Accounts | $10,021 | $1,694 | $17,477 | $3,542 |\n| Brokered Deposit Accounts | $12,151 | $88 | $18,508 | $140 |\n| **Total Interest Expense - Deposits** | **$43,147** | **$4,282** | **$72,515** | **$8,053** | - Interest expense on deposits increased by **$38.9 million** for the three months and **$64.5 million** for the six months ended June 30, 2023, primarily due to higher interest rates and growth in brokered deposit and certificate of deposit balances[581](index=581&type=chunk)[595](index=595&type=chunk) Interest Expense - Borrowed Funds | Borrowed Fund Type | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Advances from the FHLB | $14,287 | $489 | $28,818 | $676 |\n| Subordinated Debentures and Notes | $1,363 | $1,262 | $2,717 | $2,506 |\n| Other Borrowed Funds | $523 | $129 | $1,772 | $190 |\n| **Total Interest Expense - Borrowed Funds** | **$16,173** | **$1,880** | **$33,307** | **$3,372** | - Interest paid on borrowed funds increased by **$14.3 million** for the three months and **$29.9 million** for the six months ended June 30, 2023, primarily due to increased volume and rates on FHLB borrowings[596](index=596&type=chunk)[582](index=582&type=chunk) [Provision for Credit Losses](index=88&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses increased substantially for both the three and six months ended June 30, 2023, primarily driven by overall loan growth and the acquisition of PCSB, reflecting increased expected losses in the loan and lease portfolios Provision for Credit Losses | Category | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Commercial Real Estate | $1,603 | $990 | $16,135 | $840 |\n| Commercial | $3,981 | $(2,144) | $10,595 | $(3,749) |\n| Consumer | $465 | $121 | $2,153 | $203 |\n| Total Provision for Loan and Lease Losses | $6,049 | $(1,033) | $28,883 | $(2,706) |\n| Unfunded Credit Commitments | $(323) | $1,206 | $2,187 | $2,715 |\n| **Total Provision for Credit Losses** | **$5,726** | **$173** | **$31,070** | **$9** | - The Allowance for Credit Losses (ACL) increased **$5.7 million** for the three months ended June 30, 2023, due to overall loan growth[90](index=90&type=chunk) - The ACL increased **$31.4 million** for the six months ended June 30, 2023, related to acquired loans from the PCSB acquisition[584](index=584&type=chunk) [Non-Interest Income](index=88&type=section&id=Non-Interest%20Income) Non-interest income decreased for the three months ended June 30, 2023, primarily due to lower loan level derivative income. However, it increased for the six-month period, driven by gains on investment securities, sales of loans, and other income, including mark-to-market on interest rate swaps and wealth management fees Components of Non-Interest Income | Category | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Deposit Fees | $2,866 | $2,744 | $5,523 | $5,244 |\n| Loan Fees | $491 | $666 | $882 | $1,413 |\n| Loan Level Derivative Income, Net | $363 | $1,615 | $2,736 | $2,301 |\n| Gain (Loss) on Investment Securities, Net | $3 | $0 | $1,704 | $0 |\n| Gain on Sales of Loans and Leases Held-for-Sale | $308 | $291 | $1,946 | $635 |\n| Other | $1,431 | $1,612 | $5,608 | $2,864 |\n| **Total Non-Interest Income** | **$5,462** | **$6,928** | **$18,399** | **$12,457** | - Non-interest income decreased **$1.5 million (21.2%)** for the three months ended June 30, 2023, primarily due to a **$1.3 million** decrease in loan level derivative income[658](index=658&type=chunk)[644](index=644&type=chunk) - Non-interest income increased **$5.9 million (47.7%)** for the six months ended June 30, 2023, driven by increases in other income (**$2.7 million**), gain on investment securities (**$1.7 million**), and gain on sales of loans (**$1.3 million**)[659](index=659&type=chunk) - Gain on investment securities was **$1.7 million** for the six months ended June 30, 2023, primarily from the sale of PCSB investments[602](index=602&type=chunk) - Other income increased **$2.7 million** for the six months ended June 30, 2023, driven by mark-to-market on interest rate swaps on participated loans, higher bank-owned life insurance income, and wealth management fees[645](index=645&type=chunk) [Non-Interest Expense](index=89&type=section&id=Non-Interest%20Expense) Non-interest expense increased significantly for both the three and six months ended June 30, 2023, primarily due to higher compensation and employee benefits, merger and acquisition expenses related to PCSB, increased amortization of intangible assets, and equipment and data processing costs Components of Non-Interest Expense | Category | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Compensation and Employee Benefits | $33,438 | $28,772 | $70,003 | $55,656 |\n| Occupancy | $4,870 | $3,807 | $10,093 | $8,091 |\n| Equipment and Data Processing | $6,531 | $4,931 | $12,993 | $10,009 |\n| Professional Services | $1,986 | $1,219 | $3,416 | $2,445 |\n| FDIC Insurance | $2,609 | $739 | $3,853 | $1,467 |\n| Advertising and Marketing | $1,382 | $1,319 | $2,792 | $2,591 |\n| Amortization of Identified Intangible Assets | $1,954 | $120 | $3,920 | $254 |\n| Merger and Acquisition Expense | $1,002 | $535 | $7,411 | $535 |\n| Other | $4,053 | $3,429 | $8,120 | $6,310 |\n| **Total Non-Interest Expense** | **$57,825** | **$44,871** | **$122,601** | **$87,358** | - Non-interest expense increased **$13.0 million (28.9%)** for the three months and **$35.2 million (40.3%)** for the six months ended June 30, 2023[604](index=604&type=chunk)[661](index=661&type=chunk) - Compensation and employee benefits increased **$4.7 million** for the three months and **$14.3 million** for the six months, driven by headcount, salaries, and healthcare benefits[662](index=662&type=chunk) - Merger and acquisition expense increased **$0.5 million** for the three months and **$6.9 million** for the six months, primarily due to PCSB merger-related expenses[606](index=606&type=chunk) - Amortization of identified intangible assets increased **$1.8 million** for the three months and **$3.7 million** for the six months, driven by higher core deposit intangible expense for PCSB[663](index=663&type=chunk) - Equipment and data processing expense increased **$1.6 million** for the three months and **$3.0 million** for the six months, due to software licenses, core processing, data communications, and depreciation[648](index=648&type=chunk) [Provision for Income Taxes](index=90&type=section&id=Provision%20for%20Income%20Taxes) The provision for income taxes decreased for both the three and six months ended June 30, 2023, resulting in lower effective tax rates. This reduction was primarily due to energy tax credit deals, partially offset by merger expenses Provision for Income Taxes | Metric | Three Months Ended June 30, 2023 (In Thousands) | Three Months Ended June 30, 2022 (In Thousands) | Six Months Ended June 30, 2023 (In Thousands) | Six Months Ended June 30, 2022 (In Thousands) | |:---|:---|:---|:---|:---|\n| Income Before Provision for Income Taxes | $27,815 | $33,697 | $36,483 | $66,747 |\n| Provision for Income Taxes | $5,965 | $8,502 | $7,073 | $16,847 |\n| **Net Income** | **$21,850** | **$25,195** | **$29,410** | **$49,900** |\n| Effective Tax Rate | 21.4% | 25.2% | 19.4% | 25.2% | - The effective tax rate decreased to **19.4%** for the six months ended June 30, 2023 (from **25.2% YoY**), primarily due to energy tax credit deals, partially offset by PCSB merger expenses[649](index=649&type=chunk) [Liquidity and Capital Resources](index=90&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintained increased liquidity in Q2 2023, with cash and available-for-sale securities totaling 10.1% of total assets. Deposits remain the primary funding source, with core deposits representing 72.5% of total deposits. Borrowings are used to diversify funding and support asset growth. The Company and its Banks exceeded all regulatory capital requirements as of June 30, 2023, and were considered 'well-capitalized' [Liquidity](index=90&type=section&id=Liquidity) The Company increased its on-balance sheet liquidity in Q2 2023, with cash, cash equivalents, and available-for-sale securities totaling $1.1 billion (10.1% of total assets). Deposits are the most stable funding source, comprising 87.4% of total funding, with core deposits at 72.5% of total deposits. Borrowings, including FHLB advances and lines of credit, are used to diversify funding and support asset growth - Cash, cash equivalents, and investment securities available-for-sale totaled **$1.1 billion (10.1% of total assets)** as of June 30, 2023[609](index=609&type=chunk) - Deposits totaled **$8.5 billion (87.4% of total funding)** as of June 30, 2023, with core deposits at **$6.2 billion (72.5% of total deposits)**[687](index=687&type=chunk) - Brokered deposits were **$932.8 million (11.0% of total deposits)** as of June 30, 2023[687](index=687&type=chunk) - Borrowings totaled **$1.2 billion (12.6% of total funding)** as of June 30, 2023[610](index=610&type=chunk) - The Company's total borrowing limit from the FHLB was **$2.4 billion** as of June 30, 2023, and it had **$250.0 million** of borrowing capacity at the Federal Reserve Bank, with no outstanding borrowings[667](index=667&type=chunk)[611](index=611&type=chunk) - The Banks have access to **$605.0 million** in uncommitted lines of credit[652](index=652&type=chunk) [Capital Resources](index=93&type=section&id=Capital%20Resources) The Company and its Banks are well-capitalized, exceeding all regulatory capital requirements as of June 30, 2023. Capital ratios for Brookline Bancorp, Inc., Brookline Bank, BankRI, and PCSB Bank demonstrate strong capital positions - The Company and its Banks exceeded all regulatory capital requirements as of June 30, 2023, and were considered 'well-capitalized'[614](index=614&type=chunk) Capital Ratios (June 30, 2023) | Entity | Common Equity Tier 1 Capital Ratio | Tier 1 Leverage Capital Ratio | Tier 1 Risk-Based Capital Ratio | Total Risk-Based Capital Ratio | |:---|:---|:---|:---|:---|\n| Brookline Bancorp, Inc. | 10.54% | 8.79% | 10.64% | 12.71% |\n| Brookline Bank | 11.11% | 9.33% | 11.11% | 12.37% |\n| BankRI | 9.57% | 8.00% | 9.57% | 10.83% |\n| PCSB B

Financial Data and Key Metrics Changes - The company reported net income for the quarter of $21.9 million or $0.25 per share, with non-GAAP operating earnings of $23.2 million and operating EPS of $0.26 [4] - Total assets finished at $11.2 billion, which is $316 million lower than Q1, with cash and securities reduced by $419 million [57] - Net interest income was $86 million, consistent with the first quarter, while the net interest margin declined 10 basis points to 3.26% [73] Business Line Data and Key Metrics Changes - The loan portfolio grew by $94 million, with core deposits increasing by $110 million [21] - Non-interest income was $5.5 million for the quarter, down from $5.7 million when excluding security gains [6] - The provision for credit losses was $5.8 million, with the allowance for loan losses increasing to $125.8 million, representing 135 basis points on total loans [23][44] Market Data and Key Metrics Changes - Core deposits grew by $110 million, while brokered deposits were reduced by $49 million, resulting in net growth in deposits of $61 million [73] - The average cost of total deposits increased by 58 basis points to 204 basis points [73] - The weighted average coupon on the core loan portfolio rose by 20 basis points during the quarter to 568 basis points [45] Company Strategy and Development Direction - The company continues to prioritize paying a competitive dividend and funding organic growth, with no plans for share repurchase at this time [19] - There is optimism regarding loan growth, particularly in commercial real estate and equipment finance, despite declines in C&I and consumer loans [22][49] - The company is focused on maintaining a balance sheet liquidity of 8% to 12% in a normal operating environment [31][82] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued pressure on the funding side, but expects this to be offset by the repricing of assets [8] - There is significant uncertainty around the economic outlook and competition for deposits, which may affect net interest margin [8][26] - Management expressed confidence in the integration of the PCSB merger and the potential for future growth as new technologies are adopted [48][80] Other Important Information - Expenses for the quarter were $57.8 million, down from $64.8 million in Q1, with a notable decrease in compensation and benefits [58] - The company has seen a shift in deposit types, with transfers from DDA and NOW accounts into savings and CDs [39] Q&A Session Summary Question: What are the expectations for the net interest margin in the third quarter? - Management expects the margin to be down as much as 3 to 4 basis points or possibly flat, with significant uncertainty around the economic outlook and competition for deposits [8][26] Question: Can you provide details on the $9.3 million commercial relationship that went on non-accrual? - Management indicated that the loan is well reserved and is in the process of liquidation, with expectations for resolution over the balance of the year [76] Question: How is the company planning to manage expenses going forward? - Management noted that they are keeping a close eye on expenses, with expectations for moderation in legal and professional fees [12][64] Question: What is the outlook for participation income in the second half of the year? - Management expressed less optimism for participation income due to market conditions affecting banks' ability to participate [18][69]

Amounts as presented may differ slightly from the Company's Earnings Release due to rounding to foot schedules presented. 25 April 26, 2023 BROOKLINE BANCORP 1 Forward Looking Statements 2 Quarterly Net Income of $7.6 million and EPS of $0.09 Total Assets of $11.5 billion, growth of $2.3 billion. Deposits grew $1.9 billion to $8.5 billion. NPAs to total assets of 0.25%. Strong liquidity management which improved further with PCSB acquisition. 1Q 2023 Financial Results B Certain statements contained in this ...

Brookline Bancorp, Inc. (NASDAQ:BRKL) Q1 2023 Earnings Conference Call April 27, 2023 1:30 PM ET Company Participants Laura Vaughn - Investor Relations Paul Perrault - Chairman and Chief Executive Officer Carl Carlson - Chief Financial Officer Conference Call Participants Mark Fitzgibbon - Piper Sandler Steve Moss - Raymond James Chris O’Connell - KBW Operator Good afternoon and welcome to Brookline Bancorp, Inc.’s First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to . Commission file number 0-23695 BROOKLINE BANCORP INC. (Exact name of registrant as specified in its charter) Delaware 04-3402944 (State or other ju ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to . Commission file number 0-23695 BROOKLINE BANCORP INC. (Exact name of registrant as specified in its charter) Delaware 04-3402944 (State or other jurisdi ...