Brookline Bancorp(US:BRKL)2025-05-08 14:38Part I - Financial Information Item 1. Unaudited Consolidated Financial Statements This section presents Brookline Bancorp, Inc.'s unaudited consolidated financial statements as of March 31, 2025, and for the three months then ended, along with detailed notes on financial accounts and presentation basis Unaudited Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $11.52 billion from $11.91 billion, primarily due to reduced cash and net loans, while total liabilities decreased to $10.28 billion from $10.68 billion, and total stockholders' equity increased to $1.24 billion from $1.22 billion Consolidated Balance Sheet Highlights (in thousands) | Account | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $11,519,869 | $11,905,326 | | Total cash and cash equivalents | $357,546 | $543,670 | | Net loans and leases | $9,518,577 | $9,654,205 | | Goodwill | $241,222 | $241,222 | | Total Liabilities | $10,279,687 | $10,683,387 | | Total deposits | $8,911,452 | $8,901,644 | | Total borrowed funds | $1,155,827 | $1,519,846 | | Total Stockholders' Equity | $1,240,182 | $1,221,939 | Unaudited Consolidated Statements of Income For the three months ended March 31, 2025, net income increased 30.2% to $19.1 million from $14.7 million year-over-year, driven by higher net interest income and lower provision for credit losses, resulting in diluted EPS of $0.21 compared to $0.16 Consolidated Income Statement Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net interest income | $85,830 | $81,588 | | Provision for credit losses | $5,986 | $7,379 | | Non-interest income | $5,660 | $6,284 | | Non-interest expense | $60,022 | $61,014 | | Net income | $19,100 | $14,665 | | Diluted EPS | $0.21 | $0.16 | Unaudited Consolidated Statements of Cash Flows For the first three months of 2025, net cash provided by operating activities was $8.0 million, investing activities provided $172.9 million, and financing activities used $367.0 million, resulting in a net decrease in cash and cash equivalents of $186.1 million Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided from operating activities | $8,014 | $8,840 | | Net cash provided from investing activities | $172,859 | $17,754 | | Net cash (used for) provided from financing activities | ($366,997) | $142,265 | | Net (decrease) increase in cash and cash equivalents | ($186,124) | $168,859 | Notes to Unaudited Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial data, covering loan and investment portfolios, ACL methodology, goodwill, derivatives, and commitments, while confirming operation as a single business segment and adoption of ASU 2023-07 - The Company is a bank holding company parent to Brookline Bank, BankRI, and PCSB Bank, providing commercial, business, and retail banking services primarily in New England and the Lower Hudson Valley of New York2628 - The company operates as a single business segment, with the Chairman and CEO acting as the Chief Operating Decision Maker (CODM), who reviews financial information focused on net interest income and net income3940 - The company adopted ASU 2023-07, "Segment Reporting," as of January 1, 2024, which did not materially impact the financial statements as the company continues to operate as one reportable segment42 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2025 financial performance, highlighting a 30.2% increase in net income to $19.1 million, alongside balance sheet changes, stable asset quality, and strong capital ratios Executive Overview In Q1 2025, total assets decreased to $11.5 billion, while net income rose 30.2% to $19.1 million ($0.21 per share) due to higher net interest income and lower credit provisions, with the net interest margin improving to 3.22%, asset quality remaining stable at 0.56% nonperforming assets, and capital ratios strengthening to a 10.81% Common Equity Tier 1 ratio Q1 2025 Key Performance Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $19.1 million | $14.7 million | | Diluted EPS | $0.21 | $0.16 | | Net Interest Margin | 3.22% | 3.06% | | Return on Average Assets (Annualized) | 0.66% | 0.51% | | Return on Average Equity (Annualized) | 6.19% | 4.88% | - Total assets decreased by $385.5 million (13.0% annualized) to $11.5 billion, primarily due to decreases in cash and loans218 - Nonperforming assets were $64.0 million, or 0.56% of total assets, down from $70.5 million (0.59%) at year-end 2024224 - The company remains "well-capitalized" with a Common Equity Tier 1 capital ratio of 10.81% and a Total risk-based capital ratio of 12.79% as of March 31, 2025226 Financial Condition As of March 31, 2025, total loans and leases decreased 5.6% (annualized) to $9.64 billion, with commercial real estate loans down 9.5% to $5.58 billion, while nonperforming assets decreased to $64.0 million, the allowance for loan and lease losses stood at 1.29%, deposits remained stable at $8.91 billion with core deposits growing to 70.3%, and borrowed funds decreased by $364.0 million to $1.2 billion Loan Portfolio Composition (in thousands) | Loan Category | Balance at Mar 31, 2025 | % of Total | Balance at Dec 31, 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Commercial real estate | $5,580,982 | 57.9% | $5,716,114 | 58.4% | | Commercial loans and leases | $2,512,912 | 26.1% | $2,506,664 | 25.6% | | Consumer loans | $1,548,828 | 16.0% | $1,556,510 | 16.0% | | Total loans and leases | $9,642,722 | 100.0% | $9,779,288 | 100.0% | - Nonperforming assets decreased to $64.0 million (0.56% of total assets) at Q1 2025, down from $70.5 million (0.59%) at year-end 2024269272 - The allowance for loan and lease losses was $124.1 million, or 1.29% of total loans, compared to $125.1 million, or 1.28%, at the end of 2024277 - Total deposits increased slightly by $9.8 million to $8.91 billion, with core deposits growing by $120.6 million while brokered deposits decreased by $104.0 million293294296 Results of Operations For Q1 2025, net interest income increased by $4.2 million to $85.8 million year-over-year, with the net interest margin expanding 16 basis points to 3.22% due to a 29 basis point decrease in the cost of interest-bearing liabilities, while the provision for credit losses decreased to $6.0 million, non-interest income fell to $5.7 million, and non-interest expense decreased to $60.0 million, with an effective tax rate of 25.0% - Net interest income increased $4.2 million YoY to $85.8 million, driven by a $6.0 million decrease in interest expense321 - The net interest margin rose to 3.22% from 3.06% in Q1 2024, as the cost of interest-bearing liabilities fell 29 bps to 3.29%322324 - The provision for credit losses was $6.0 million, a decrease of $1.4 million from Q1 2024, mainly due to a reduction in loan and commitment balances offsetting specific reserve increases340 - Non-interest expense decreased by $1.0 million to $60.0 million; excluding a new $1.0 million merger expense, operating non-interest expense fell by $2.0 million, driven by lower compensation and marketing costs345346 Liquidity and Capital Resources The company maintained a strong liquidity position as of March 31, 2025, with $1.2 billion in cash and available-for-sale securities, access to $2.9 billion in FHLB borrowing capacity and $400.7 million at the Federal Reserve Discount Window, while capital levels remain robust, exceeding "well-capitalized" requirements with a Common Equity Tier 1 ratio of 10.81% and a Total Risk-Based Capital ratio of 12.79% - As of March 31, 2025, cash, cash equivalents, and investment securities available-for-sale totaled $1.2 billion, representing 10.8% of total assets350 - The company has significant available liquidity, including $2.9 billion in total borrowing limit from the FHLB and $400.7 million of borrowing capacity at the FRB Discount Window353355 Regulatory Capital Ratios (Consolidated) as of March 31, 2025 | Capital Ratio | Actual | Minimum for Adequacy + Buffer | | :--- | :--- | :--- | | Common Equity Tier 1 | 10.81% | 7.00% | | Tier 1 Risk-Based | 10.92% | 8.50% | | Total Risk-Based | 12.79% | 10.50% | | Tier 1 Leverage | 9.17% | 4.00% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages its primary market risk, interest-rate risk, through ALCO using income simulation and gap analysis, indicating a modestly asset-sensitive profile as of March 31, 2025, with varying impacts on net interest income and Economic Value of Equity under rate changes - The company's primary market risk is interest-rate risk, which is managed by the Asset/Liability Committee (ALCO) through strategies like adjusting portfolio maturities and using interest rate swaps367369370 Net Interest Income Sensitivity Analysis (as of March 31, 2025) | Change in Interest Rate Levels (Ramp) | Estimated % Change in NII | | :--- | :--- | | Up 200 basis points | +2.0% | | Up 100 basis points | +1.1% | | Down 100 basis points | -0.7% | | Down 200 basis points | -1.9% | Economic Value of Equity (EVE) at Risk Analysis | Parallel Shock in Interest Rate Levels | Estimated % Change in EVE (Mar 31, 2025) | Estimated % Change in EVE (Dec 31, 2024) | | :--- | :--- | :--- | | Up 300 basis points | (2.2)% | (5.5)% | | Up 100 basis points | 0.0% | (1.3)% | | Down 100 basis points | (1.6)% | (0.8)% | | Down 300 basis points | (9.6)% | (6.6)% | - The company's asset sensitivity decreased from December 31, 2024, to March 31, 2025, due to changes in balance sheet composition, including lower cash equivalents and higher non-maturity deposits374 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report381 - There were no changes in the company's internal controls over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting382 Part II - Other Information Item 1. Legal Proceedings The company reports no material pending legal proceedings beyond those in the normal course of business, with no expected material impact on financial position or results of operations - There are no material pending legal proceedings other than those that arise in the normal course of business, and their outcome is not expected to materially affect the Company's financial condition384 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in the risk factors from those described in the Annual Report on Form 10-K for the year ended December 31, 2024385 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Item 2, along with Items 3 and 4, are reported as 'Not applicable'386 Item 5. Other Information During the three months ended March 31, 2025, none of the company's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter387 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL interactive data files389