Brookline Bancorp(BRKL) - 2024 Q3 - Quarterly Results

Third Quarter 2024 Financial Highlights Financial Performance Summary The company reported improved Q3 2024 performance with net income of $20.1 million, expressing confidence in future profitability Q3 2024 Earnings Summary | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Income | $20.1M | $16.4M | $22.7M | | EPS (Diluted) | $0.23 | $0.18 | $0.26 | - Chairman and CEO Paul Perrault commented on the improved performance and expressed confidence that the bank's profitability will better reflect its service as interest rates normalize[2] Balance Sheet Analysis Total assets grew to $11.7 billion as of September 30, 2024, driven by increases in loans, leases, and cash equivalents Balance Sheet Key Metrics (as of Sep 30, 2024) | Metric | Q3 2024 | Change from Q2 2024 | Change from Q3 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $11.7B | +$41.4M | +$496.2M | | Total Loans & Leases | $9.8B | +$34.1M | +$374.5M | | Total Deposits | $8.7B | -$4.8M | +$166.3M | | Total Borrowed Funds | $1.5B | +$68.1M | +$362.5M | - Customer deposits increased by $103.2 million during the quarter, but this was offset by a $107.9 million decrease in brokered deposits[4] Key Capital and Book Value Ratios | Ratio | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | :--- | | Stockholders' Equity to Total Assets | 10.54% | 10.30% | 10.36% | | Tangible Stockholders' Equity to Tangible Assets (non-GAAP) | 8.50% | 8.23% | 8.16% | | Tangible Book Value per Share (non-GAAP) | $10.89 | $10.53 | $10.02 | Income Statement Analysis Net interest income increased to $83.0 million in Q3 2024, with the net interest margin expanding by 7 basis points to 3.07% - Net interest income rose by $3.0 million from the second quarter, and the net interest margin increased by 7 basis points to 3.07%, primarily due to higher yields on loans and leases[6] - Total non-interest income was relatively flat at $6.3 million for the quarter[7] - Non-interest expense decreased by $1.2 million to $57.9 million compared to the second quarter; excluding a prior one-time charge, the decrease was $0.4 million[10] Credit Quality and Provisions The provision for credit losses decreased to $4.8 million, while asset quality metrics deteriorated due to a single financing relationship - The provision for credit losses was $4.8 million, down from $5.6 million in Q2 2024, mainly due to improving economic forecasts[8] Asset Quality Metrics | Metric | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | | Net Charge-offs | $3.8M | $8.4M | | NPLs to Total Loans | 0.73% | 0.62% | | NPAs to Total Assets | 0.62% | 0.54% | | Allowance for Loan Losses to Total Loans | 1.31% | 1.25% | - Nonaccrual loans and leases increased by $10.5 million, driven by one equipment financing relationship of $9.3 million, which has been reserved at 55 percent[9] Profitability and Shareholder Returns Profitability ratios improved quarter-over-quarter with an increased return on assets, and the company declared a quarterly dividend Profitability Ratios (Annualized) | Ratio | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | | Return on Average Assets (ROA) | 0.70% | 0.57% | | Return on Average Stockholders' Equity (ROE) | 6.63% | 5.49% | | Return on Average Tangible Stockholders' Equity | 8.44% | 7.04% | - The Board of Directors approved a quarterly dividend of $0.135 per share, payable on November 29, 2024, to stockholders of record on November 15, 2024[13] Detailed Financial Statements and Data Selected Financial Highlights This section provides a comprehensive unaudited summary of key financial data for the five quarters ending September 30, 2024 Quarterly Performance Trends | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $83.0M | $80.0M | $84.1M | | Net Income | $20.1M | $16.4M | $22.7M | | Net Interest Margin | 3.07% | 3.00% | 3.18% | | ROA (annualized) | 0.70% | 0.57% | 0.81% | | Tangible Book Value/Share | $10.89 | $10.53 | $10.02 | Consolidated Balance Sheets The unaudited balance sheets show the company's financial position, with total assets growing to $11.7 billion Balance Sheet Components (in thousands) | Account | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | :--- | | Total Cash & Equivalents | $407,889 | $343,084 | $161,001 | | Net Loans & Leases | $9,627,920 | $9,599,387 | $9,261,701 | | Total Deposits | $8,732,271 | $8,737,036 | $8,566,013 | | Total Borrowed Funds | $1,497,547 | $1,429,462 | $1,135,068 | | Total Stockholders' Equity | $1,230,362 | $1,198,480 | $1,157,871 | Consolidated Statements of Income The income statements detail revenues and expenses, showing Q3 2024 net income of $20.1 million on increased net interest income Q3 2024 Income Statement (in thousands) | Account | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $83,008 | $80,001 | $84,070 | | Provision for Credit Losses | $4,660 | $5,568 | $3,031 | | Non-interest Income | $6,348 | $6,396 | $5,508 | | Non-interest Expense | $57,948 | $59,184 | $57,679 | | Net Income | $20,142 | $16,372 | $22,701 | - For the nine months ended September 30, 2024, net income was $51.2 million, compared to $52.1 million for the same period in 2023[25] Asset Quality Details This section details nonperforming assets, which increased to $72.8 million primarily due to nonaccrual equipment and commercial loans Nonperforming Assets Breakdown (in thousands) | Category | Sep 30, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | | Total Nonaccrual Loans & Leases | $71,242 | $60,709 | | - Equipment Financing | $37,223 | $27,128 | | - Commercial Real Estate | $13,346 | $11,659 | | Total Nonperforming Assets | $72,821 | $62,683 | Provision and Allowance for Loan and Lease Losses The allowance for loan and lease losses increased to $127.3 million, representing 1.31% of total loans ALLL Activity for Q3 2024 (in thousands) | Item | Amount | | :--- | :--- | | Beginning Balance (Jun 30, 2024) | $121,750 | | Net Charge-offs | ($3,808) | | Provision for Loan Losses | $9,374 | | Ending Balance (Sep 30, 2024) | $127,316 | - Net charge-offs of $3.8 million in Q3 were primarily driven by commercial loans and leases[28] Average Yields and Costs The tax-equivalent net interest margin expanded to 3.07% in Q3 2024, driven by higher loan yields outpacing funding cost increases Key Yields and Costs (Q3 2024 vs Q2 2024) | Metric | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | | Avg. Yield on Total Loans & Leases | 6.17% | 6.02% | | Avg. Cost of Total Interest-Bearing Deposits | 3.39% | 3.39% | | Avg. Cost of Total Interest-Bearing Liabilities | 3.67% | 3.65% | | Net Interest Spread (tax-equivalent) | 2.26% | 2.14% | | Net Interest Margin (tax-equivalent) | 3.07% | 3.00% | Non-GAAP Financial Measures Reconciliation of Non-GAAP Measures This section reconciles GAAP to non-GAAP operating earnings, adjusting for items like merger and restructuring expenses - For the nine months ended September 30, 2024, reported pretax income of $67.9 million was adjusted for $0.8 million in merger and restructuring expenses to arrive at an operating pretax income of $68.7 million[33] - There were no non-operating activities for the three months ended September 30, 2024, and September 30, 2023, meaning reported net income equals operating earnings for those specific quarters[36] Tangible Asset and Equity Calculations This section details non-GAAP tangible financial measures, showing tangible book value per share increased to $10.89 Tangible Equity Calculation (Sep 30, 2024, in thousands) | Item | Amount | | :--- | :--- | | Total Stockholders' Equity | $1,230,362 | | Less: Goodwill | ($241,222) | | Less: Identified Intangible Assets, net | ($19,162) | | Tangible Stockholders' Equity | $969,978 | Tangible Book Value Per Share | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | :--- | | Tangible Book Value Per Share | $10.89 | $10.53 | $10.02 | Corporate Information and Disclosures About Brookline Bancorp, Inc. Brookline Bancorp, Inc. is an $11.7 billion bank holding company operating in Massachusetts, Rhode Island, and New York - The company is a bank holding company with $11.7 billion in assets[15] - It operates as the holding company for Brookline Bank, Bank Rhode Island, and PCSB Bank, with locations in Massachusetts, Rhode Island, and the Lower Hudson Valley of New York State[15] Conference Call Information The company will host a conference call on October 24, 2024, to discuss third-quarter results - A conference call and webcast to discuss Q3 results is scheduled for 1:30 PM Eastern Time on Thursday, October 24, 2024[14] - Access details, including webcast links and dial-in numbers (Access Code 414186), are provided for interested parties[14] Forward-Looking Statements and Basis of Presentation This section contains the safe harbor disclosure for forward-looking statements and confirms the use of U.S. GAAP - The press release contains forward-looking statements that are subject to risks and uncertainties, including changes in interest rates, economic conditions, and regulatory changes[16] - The company's consolidated financial statements are prepared in conformity with GAAP[17]