Brookline Bancorp(BRKL) - 2025 Q2 - Quarterly Results

Executive Summary Brookline Bancorp reported strong Q2 2025 earnings with increased net income and EPS, driven by C&I portfolio growth and expanding net interest margin Second Quarter 2025 Financial Highlights Brookline Bancorp reported a solid second quarter 2025, with net income increasing to $22.0 million and EPS reaching $0.25. Operating earnings after tax also saw an increase, reflecting improved financial performance compared to both the previous quarter and the prior year Second Quarter 2025 Financial Highlights Table | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net Income (millions) | $22.0 | $19.1 | $16.4 | | EPS (basic and diluted) | $0.25 | $0.21 | $0.18 | | Operating Earnings After Tax (non-GAAP, millions) | $22.4 | $20.0 | $17.0 | | Operating EPS (non-GAAP) | $0.25 | $0.22 | $0.19 | - The Company declared a quarterly dividend of $0.135 per share[1] Management Commentary Mr. Perrault, commenting on the Q2 2025 performance, expressed satisfaction with solid earnings driven by growth in the C&I portfolio and deposits. He highlighted the expansion of the net interest margin despite an intentional contraction in the commercial real estate portfolio - Solid earnings for Q2 2025 were led by growth in the C&I portfolio and deposits[3] - Net interest margin expanded this quarter, despite intentional contraction in the commercial real estate portfolio[3] Selected Financial Highlights (Unaudited) This section provides a detailed overview of key financial metrics, including earnings, performance ratios, per share data, balance sheet, asset quality, and capital ratios for Q2 2025 Earnings Data Net interest income increased sequentially and year-over-year, reaching $88.7 million in Q2 2025. Provision for credit losses also increased to $7.0 million, while non-interest income saw a slight increase and non-interest expense decreased Earnings Data Table | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Net interest income | $88,685 | $85,830 | $80,001 | | Provision for credit losses on loans | $6,997 | $5,974 | $5,607 | | Non-interest income | $5,970 | $5,660 | $6,396 | | Non-interest expense | $58,061 | $60,022 | $59,184 | | Net income | $22,026 | $19,100 | $16,372 | Performance Ratios Key performance ratios improved in Q2 2025, with net interest margin expanding to 3.32% and return on average assets increasing to 0.77%. The efficiency ratio also improved, indicating better operational management Performance Ratios Table | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net interest margin (annualized) | 3.32% | 3.22% | 3.00% | | Return on average assets (annualized) | 0.77% | 0.66% | 0.57% | | Return on average tangible assets (annualized, non-GAAP) | 0.79% | 0.68% | 0.59% | | Return on average stockholders' equity (annualized) | 7.04% | 6.19% | 5.49% | | Return on average tangible stockholders' equity (annualized, non-GAAP) | 8.85% | 7.82% | 7.04% | | Efficiency ratio | 61.34% | 65.60% | 68.50% | Per Common Share Data Earnings per share increased to $0.25 for Q2 2025. Book value and tangible book value per share also showed positive growth Per Common Share Data Table | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net income — Basic | $0.25 | $0.21 | $0.18 | | Net income — Diluted | $0.25 | $0.21 | $0.18 | | Cash dividends declared | $0.135 | $0.135 | $0.135 | | Book value per share (end of period) | $14.08 | $13.92 | $13.48 | | Tangible book value per share (end of period, non-GAAP) | $11.20 | $11.03 | $10.53 | Balance Sheet Summary Total assets increased slightly quarter-over-quarter but decreased year-over-year. Total loans and leases decreased, while total deposits and stockholders' equity increased Balance Sheet Summary Table | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------- | :------------ | | Total assets | $11,568,745 | $11,519,869 | $11,635,292 | | Total loans and leases | $9,582,374 | $9,642,722 | $9,721,137 | | Total deposits | $8,961,202 | $8,911,452 | $8,737,036 | | Total stockholders' equity | $1,254,171 | $1,240,182 | $1,198,480 | Asset Quality Summary Nonperforming assets decreased slightly quarter-over-quarter, and the allowance for loan and lease losses as a percentage of total loans and leases increased Asset Quality Summary Table | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------- | :------------ |\ | Nonperforming assets | $63,596 | $64,021 | $62,683 | | Nonperforming assets as a percentage of total assets | 0.55% | 0.56% | 0.54% | | Allowance for loan and lease losses | $126,725 | $124,145 | $121,750 | | Allowance for loan and lease losses as a percentage of total loans and leases | 1.32% | 1.29% | 1.25% | | Net loan and lease charge-offs | $5,127 | $7,597 | $8,387 | | Net loan and lease charge-offs as a percentage of average loans and leases (annualized) | 0.21% | 0.31% | 0.35% | Capital Ratios Summary Stockholders' equity to total assets and tangible stockholders' equity to tangible assets both improved in Q2 2025 Capital Ratios Summary Table | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Stockholders' equity to total assets | 10.84% | 10.77% | 10.30% | | Tangible stockholders' equity to tangible assets (non-GAAP) | 8.82% | 8.73% | 8.23% | Consolidated Balance Sheets (Unaudited) The consolidated balance sheets detail the company's assets, liabilities, and stockholders' equity, showing changes quarter-over-quarter and year-over-year Assets Total assets increased by $48.9 million from Q1 2025 to $11.6 billion, primarily due to an increase in cash and cash equivalents, partially offset by a reduction in loans and leases. Year-over-year, total assets decreased by $66.5 million Assets Table | Asset (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------- | :------------ | :------------- | :------------ | | Total cash and cash equivalents | $506,748 | $357,546 | $343,084 | | Total investment securities | $866,684 | $882,353 | $856,439 | | Total loans and leases | $9,582,374 | $9,642,722 | $9,721,137 | | Goodwill | $241,222 | $241,222 | $241,222 | | Total assets | $11,568,745 | $11,519,869 | $11,635,292 | - Total loans and leases decreased by $60.3 million from March 31, 2025, and by $138.8 million from June 30, 2024[4] - Cash and cash equivalents increased by $149.2 million quarter-over-quarter and $163.6 million year-over-year[5] Liabilities Total deposits increased by $49.8 million from Q1 2025, primarily driven by customer deposits. Total borrowed funds remained flat quarter-over-quarter but decreased significantly year-over-year Liabilities Table | Liability (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------- | :------------ | | Total deposits | $8,961,202 | $8,911,452 | $8,737,036 | | Customer deposits increase | $58,300 | N/A | $391,200 | | Brokered deposits decline | $8,500 | N/A | $167,000 | | Total borrowed funds | $1,155,051 | $1,155,827 | $1,429,462 | | Total liabilities | $10,314,574 | $10,279,687 | $10,436,812 | - Total deposits increased by $224.2 million from June 30, 2024[6] - Total borrowed funds decreased by $274.4 million from June 30, 2024[7] Stockholders' Equity Stockholders' equity increased quarter-over-quarter and year-over-year, with the ratio of stockholders' equity to total assets improving to 10.84%. Tangible book value per common share also increased Stockholders' Equity Table | Equity Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------- | :------------ | :------------- | :------------ | | Total stockholders' equity | $1,254,171 | $1,240,182 | $1,198,480 | | Stockholders' equity to total assets | 10.84% | 10.77% | 10.30% | | Tangible stockholders' equity to tangible assets (non-GAAP) | 8.82% | 8.73% | 8.23% | | Tangible book value per common share (non-GAAP) | $11.20 | $11.03 | $10.53 | - Tangible book value per common share increased by $0.17 from Q1 2025 and by $0.67 from Q2 2024[8] Consolidated Statements of Income (Unaudited) This section presents the consolidated statements of income, highlighting net interest income, non-interest income, and expenses for both quarterly and year-to-date periods Three Months Ended June 30, 2025 For the second quarter of 2025, net interest income increased by $2.9 million from the prior quarter, driven by lower funding costs and higher yields on loans. Non-interest income also increased slightly, while non-interest expense decreased by $1.9 million Three Months Ended June 30, 2025 Table | Income Statement Item (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :----------------------------------- | :------ | :------ | :------ | | Total interest and dividend income | $154,072 | $153,728 | $155,355 | | Total interest expense | $65,387 | $67,898 | $75,354 | | Net interest income | $88,685 | $85,830 | $80,001 | | Provision for credit losses on loans | $6,997 | $5,974 | $5,607 | | Total non-interest income | $5,970 | $5,660 | $6,396 | | Total non-interest expense | $58,061 | $60,022 | $59,184 | | Income before provision for income taxes | $29,594 | $25,482 | $21,645 | | Net income | $22,026 | $19,100 | $16,372 | - Net interest margin increased 10 basis points to 3.32% for Q2 2025 from 3.22% for Q1 2025[9] - Non-interest expense decreased primarily due to lower compensation and employee benefits, merger and acquisition expense, and occupancy expense[16] Six Months Ended June 30, 2025 For the first six months of 2025, net interest income increased significantly compared to the same period in 2024, while total interest expense decreased. Net income for the six-month period also saw a substantial increase Six Months Ended June 30, 2025 Table | Income Statement Item (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Total interest and dividend income | $307,800 | $310,814 | | Total interest expense | $133,285 | $149,225 | | Net interest income | $174,515 | $161,589 | | Provision for credit losses on loans | $12,971 | $13,030 | | Total non-interest income | $11,630 | $12,680 | | Total non-interest expense | $118,083 | $120,198 | | Income before provision for income taxes | $55,076 | $41,124 | | Net income | $41,126 | $31,037 | - Net interest income for the six months ended June 30, 2025, increased by $12.9 million compared to the same period in 2024[37] - Net income for the six months ended June 30, 2025, increased by $10.1 million compared to the same period in 2024[38] Asset Quality Analysis (Unaudited) This analysis details nonperforming assets, provision for credit losses, allowance for loan and lease losses, and net charge-offs, reflecting the company's asset quality Nonperforming Assets Total nonperforming assets decreased slightly quarter-over-quarter, primarily due to a reduction in nonaccrual loans and leases, particularly commercial real estate loans, driven by the sale of two such loans Nonperforming Assets Table | Nonperforming Asset (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------- | :------------ | :------------- | :------------ | | Total nonaccrual loans and leases | $62,308 | $63,104 | $60,709 | | Commercial real estate loans | $2,420 | $17,418 | $11,659 | | Commercial loans and leases | $54,754 | $40,390 | $43,764 | | Total nonperforming assets | $63,596 | $64,021 | $62,683 | | Nonperforming assets as a percentage of total assets | 0.55% | 0.56% | 0.54% | - Total nonaccrual loans and leases decreased by $0.8 million, driven by the sale of two commercial real estate loans[15] Provision and Allowance for Loan and Lease Losses The provision for credit losses increased in Q2 2025, influenced by stress in the Boston office sector and additional specific reserves. The allowance for loan and lease losses as a percentage of total loans and leases also increased Provision and Allowance for Loan and Lease Losses Table | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Provision for credit losses on loans | $6,997 | $5,974 | $5,607 | | Allowance for loan and lease losses at end of period | $126,725 | $124,145 | $121,750 | | Allowance for loan and lease losses as a percentage of total loans and leases | 1.32% | 1.29% | 1.25% | - The increase in provision was driven by continued stress in the Boston office sector and additional specific reserves on two large Eastern Funding credits[11][12] Net Charge-offs Total net charge-offs decreased significantly in Q2 2025 compared to the prior quarter, primarily due to the sale of two commercial real estate loans Net Charge-offs Table | Net Charge-offs (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :----------------------------- | :------ | :------ | :------ | | Total net charge-offs | $5,127 | $7,597 | $8,387 | | Commercial real estate loans | $3,524 | $0 | $3,819 | | Commercial loans and leases | $1,640 | $7,647 | $4,571 | | Net loan and lease charge-offs as a percentage of average loans and leases (annualized) | 0.21% | 0.31% | 0.35% | - The $5.1 million in net charge-offs was driven by two commercial real estate loans sold during the quarter, resulting in a combined $3.5 million in net charge-offs[13] Average Yields / Costs (Unaudited) This section provides average yields on interest-earning assets and costs of interest-bearing liabilities, illustrating the net interest margin and interest-rate spread Three Months Ended For the three months ended June 30, 2025, the yield on total interest-earning assets increased to 5.74%, while the cost of total interest-bearing liabilities decreased to 3.17%. This led to an expansion of the net interest margin to 3.32% Three Months Ended Table | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Average Yield on Total Interest-Earning Assets | 5.74% | 5.67% | 5.79% | | Average Cost of Total Interest-Bearing Liabilities | 3.17% | 3.29% | 3.65% | | Net Interest Margin | 3.32% | 3.22% | 3.00% | | Interest-Rate Spread | 2.57% | 2.38% | 2.14% | - The increase in net interest margin was primarily driven by lower funding costs and higher yields on loans and leases[9] Six Months Ended For the six months ended June 30, 2025, the average yield on total interest-earning assets was 5.71%, and the average cost of total interest-bearing liabilities was 3.23%. The net interest margin for this period was 3.27%, an improvement over the prior year Six Months Ended Table | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Average Yield on Total Interest-Earning Assets | 5.71% | 5.79% | | Average Cost of Total Interest-Bearing Liabilities | 3.23% | 3.61% | | Net Interest Margin | 3.27% | 3.03% | | Interest-Rate Spread | 2.48% | 2.18% | Non-GAAP Financial Information (Unaudited) This section reconciles non-GAAP financial measures to their most directly comparable GAAP measures, providing additional insights into the company's performance Reconciliation Table The company provides non-GAAP financial measures, such as operating earnings after tax and tangible book value, to offer investors a clearer view of ongoing business activities. These reconciliations adjust for items like merger and restructuring expenses Reconciliation Table Table | Metric (in thousands, except per share) | Q2 2025 | Q2 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :------ | :------ | :--------------------------- | :--------------------------- | | Reported Pretax Income | $29,594 | $21,645 | $55,076 | $41,124 | | Add: Merger and restructuring expense | $439 | $823 | $1,410 | $823 | | Operating Pretax Income | $30,033 | $22,468 | $56,486 | $41,947 | | Operating earnings after tax | $22,443 | $16,995 | $42,478 | $31,658 | | Operating earnings per common share (Basic) | $0.25 | $0.19 | $0.48 | $0.36 | | Operating return on average assets (annualized) | 0.78% | 0.59% | 0.74% | 0.55% | | Operating return on average tangible stockholders' equity (annualized) | 8.98% | 7.31% | 8.55% | 6.78% | | Tangible book value per common share | $11.20 | $10.53 | N/A | N/A | - Non-GAAP measures are used to analyze financial trends and enhance comparability with peers in the financial services sector[26] Additional Company Information This section provides background on Brookline Bancorp, outlines forward-looking statement disclaimers, details the basis of financial presentation, and includes investor relations contact information About Brookline Bancorp, Inc. Brookline Bancorp, Inc. is a bank holding company headquartered in Boston, Massachusetts, with $11.6 billion in assets. It operates through Brookline Bank, Bank Rhode Island, and PCSB Bank, providing commercial and retail banking services across Central New England and the Lower Hudson Valley of New York State - Brookline Bancorp, Inc. is a bank holding company with $11.6 billion in assets[22] - Operates as the holding company for Brookline Bank, Bank Rhode Island, and PCSB Bank[22] - Provides commercial and retail banking services, cash management, and investment services in Massachusetts, Rhode Island, and the Lower Hudson Valley of New York State[22] Forward-Looking Statements The report contains forward-looking statements regarding the Company's business, credit quality, financial condition, liquidity, and results of operations. These statements are subject to various risks and uncertainties, including those related to interest rates, economic conditions, competitive pressures, regulatory changes, and the proposed merger with Berkshire Hills Bancorp, Inc - Forward-looking statements are identified by words such as 'believe,' 'expect,' 'anticipate,' 'intend,' 'estimate,' 'assume,' 'outlook,' 'will,' 'should,' and other expressions predicting future events[24] - Risks include potential termination of the merger agreement with Berkshire, delays in completing the transaction, failure to obtain regulatory approvals, changes in interest rates, general economic conditions, competitive pressures, and operational risks[24] - The Company does not undertake any obligation to update forward-looking statements[24] Basis of Presentation The consolidated financial statements are prepared in conformity with Generally Accepted Accounting Principles (GAAP) and SEC rules. Certain prior period amounts have been reclassified for consistent presentation - Consolidated financial statements are prepared in conformity with GAAP[25] - Certain amounts previously reported have been reclassified to conform to the current period's presentation[25] Investor Relations & Conference Call The Company held a conference call and webcast on July 24, 2025, to discuss the Q2 results and outlook. Details for accessing the webcast and a recorded playback were provided, along with investor relations contact information - A conference call/webcast was held on Thursday, July 24, 2025, at 1:30 PM Eastern Time[21] - Earnings Presentation is available on the Company's website, **www.brooklinebancorp.com**[21](index=21&type=chunk) - Investor Relations contact: Carl M. Carlson, Co-President and Chief Financial and Strategy Officer, (617) 425-5331, carl.carlson@brkl.com[27]