Brookline Bancorp(BRKL) - 2025 Q2 - Quarterly Report

Glossary of Acronyms and Terms This section provides definitions for key acronyms and terms used throughout the report Part I Financial Information This part presents the company's unaudited consolidated financial statements and management's discussion Item 1. Unaudited Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, comprehensive income, changes in equity, and cash flows, along with detailed notes on accounting policies, investment securities, loans, credit losses, intangible assets, derivatives, stock compensation, fair value measurements, commitments, and revenue recognition Unaudited Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $11,568,745 | $11,905,326 | | Total Loans and Leases | $9,582,374 | $9,779,288 | | Total Deposits | $8,961,202 | $8,901,644 | | Total Liabilities | $10,314,574 | $10,683,387 | | Total Stockholders' Equity | $1,254,171 | $1,221,939 | Unaudited Consolidated Statements of Income This section details the company's revenues, expenses, and net income over specific reporting periods | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net Interest Income | $88,685 | $80,001 | $174,515 | $161,589 | | Provision for Credit Losses | $7,000 | $5,568 | $12,986 | $12,947 | | Non-Interest Income | $5,970 | $6,396 | $11,630 | $12,680 | | Non-Interest Expense | $58,061 | $59,184 | $118,083 | $120,198 | | Net Income | $22,026 | $16,372 | $41,126 | $31,037 | | Basic EPS | $0.25 | $0.18 | $0.46 | $0.35 | | Diluted EPS | $0.25 | $0.18 | $0.46 | $0.35 | Unaudited Consolidated Statements of Comprehensive Income This section reports net income and other comprehensive income items, reflecting equity changes not from net income | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net Income | $22,026 | $16,372 | $41,126 | $31,037 | | Net unrealized securities holding gains (losses) before reclassification, net of taxes | $4,327 | $(910) | $14,064 | $(7,187) | | Net change in fair value of cash flow hedges, net of taxes | $(157) | $(759) | $(2,115) | $(3,340) | | Net adjustment of accumulated obligation for postretirement benefits | $(1,447) | — | $(1,447) | — | | Other comprehensive gain (loss), net of taxes | $3,120 | $(852) | $13,504 | $(8,895) | | Comprehensive Income | $25,146 | $15,520 | $54,630 | $22,142 | Unaudited Consolidated Statements of Changes in Stockholders' Equity This section outlines the changes in the components of stockholders' equity over the reported periods | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $1,254,171 | $1,221,939 | | Net Income (Six Months) | $41,126 | N/A | | Other Comprehensive Income (Loss) (Six Months) | $13,504 | N/A | | Common Stock Dividends (Six Months) | $(24,058) | N/A | Unaudited Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided from operating activities | $41,631 | $37,106 | | Net cash provided from (used for) investing activities | $251,621 | $(43,877) | | Net cash (used for) provided from financing activities | $(330,174) | $216,828 | | Net (decrease) increase in cash and cash equivalents | $(36,922) | $210,057 | | Cash and cash equivalents at end of period | $506,748 | $343,084 | Notes to Unaudited Consolidated Financial Statements These notes provide detailed information supporting the unaudited consolidated financial statements, covering the company's business operations, significant accounting policies, recent accounting pronouncements, and specific breakdowns of investment securities, loans, credit loss allowances, intangible assets, comprehensive income, derivatives, stock compensation, fair value measurements, commitments, and revenue recognition practices (1) Basis of Presentation This note describes the company's business operations and the basis for preparing consolidated financial statements - The Company operates as a bank holding company for Brookline Bank, BankRI, PCSB Bank, and Clarendon Private, providing commercial, business, and retail banking services, along with wealth management[26][28] - The Company operates as a single business segment, with the Chairman and Chief Executive Officer acting as the Chief Operating Decision Maker (CODM)[39][40] (2) Recent Accounting Pronouncements This note discusses recently adopted and pending accounting standards and their potential impact - The Company adopted ASU 2023-07 (Segment Reporting) on January 1, 2024, with no material impact on its consolidated financial statements[42] - The Company is currently determining the impact of ASU 2023-09 (Income Tax Disclosures), which is effective for annual periods beginning after December 15, 2024[247] (3) Investment Securities This note details the company's investment securities portfolio and related accounting policies | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Fair Value of AFS Securities | $866,684 | $895,034 | | Net Unrealized Losses | $51,215 | $69,355 | | Pledged Investment Securities | $769,000 | $792,000 | - The Company did not classify any securities as held to maturity; all securities were held as available-for-sale[46] - Management determined that investment securities are not impaired as of June 30, 2025, due to the Company's ability and intent to hold them until recovery, supported by strong capital and liquidity positions[56] (4) Loans and Leases This note details the composition of the company's loan and lease portfolio, including types and characteristics | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Loans and Leases | $9,582,374 | $9,779,288 | | Weighted Average Coupon Rate | 5.94% | 5.91% | | Loans and Leases Pledged as Collateral | $3,800,000 | $3,600,000 | (5) Allowance for Credit Losses This note explains the methodology and balances for the allowance for credit losses on loans and leases | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Allowance for Loan and Lease Losses | $126,725 | $125,083 | | Specific Allowance for Loan and Lease Losses | $21,709 | $17,546 | | General Allowance for Loan and Lease Losses | $105,016 | $107,537 | | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Provision for Credit Losses | $7,000 | $5,568 | $12,986 | $12,947 | - The specific allowance for loan and lease losses increased by $4.2 million during the six months ended June 30, 2025, primarily due to increases for equipment financing, consumer and industrial, and commercial real estate loans[90] | Loan Modifications (3 Months Ended June 30) | 2025 (Number of Loans) | 2025 (Amortized Cost, In Thousands) | 2024 (Number of Loans) | 2024 (Amortized Cost, In Thousands) | | :------------------------------------------ | :--------------------- | :---------------------------------- | :--------------------- | :---------------------------------- | | Total Modifications | 5 | $4,625 | 17 | $15,675 | (6) Goodwill and Other Intangible Assets This note provides information on the company's goodwill and other intangible assets, including amortization schedules | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Goodwill | $241,222 | $241,222 | | Total Other Intangible Assets | $14,600 | $17,461 | | Estimated Amortization Expense (In Thousands) | | :-------------------------------------------- | | Remainder of 2025: $2,701 | | 2026: $4,324 | | 2027: $3,243 | | 2028: $2,162 | | 2029: $1,081 | (7) Accumulated Other Comprehensive Income (Loss) This note details the components of accumulated other comprehensive income or loss within stockholders' equity | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Accumulated Other Comprehensive Income (Loss) | $(39,378) | $(52,882) | | Other Comprehensive Income (Loss) (Six Months Ended June 30, 2025) | $13,504 | N/A | (8) Derivatives and Hedging Activities This note describes the company's use of derivative financial instruments for risk management and hedging purposes | Derivative Type | Notional Amount (June 30, 2025, In Thousands) | Notional Amount (December 31, 2024, In Thousands) | | :------------------------------ | :-------------------------------------------- | :------------------------------------------------ | | Interest Rate Swaps on Loans | $225,000 | $225,000 | | Loan Level Derivatives (Receive fixed, pay variable) | $1,425,875 | $1,672,948 | | Loan Level Derivatives (Pay fixed, receive variable) | $1,425,875 | $1,672,948 | | Fair Value (In Thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Asset Derivatives | $63,525 | $103,603 | | Liability Derivatives | $63,847 | $105,255 | (9) Stock Based Compensation This note outlines the company's stock-based compensation plans and the related expense recognized | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Expense for Plans | $1,000 | $800 | $1,900 | $1,900 | (10) EPS This note presents the calculation of basic and diluted earnings per share for the reported periods | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.25 | $0.18 | $0.46 | $0.35 | | Diluted EPS | $0.25 | $0.18 | $0.46 | $0.35 | (11) Fair Value of Financial Instruments This note provides fair value measurements for various financial instruments held by the company | Financial Instrument | June 30, 2025 (Fair Value, In Thousands) | December 31, 2024 (Fair Value, In Thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------------- | | Investment Securities Available-for-Sale | $866,684 | $895,034 | | Collateral-Dependent Impaired Loans and Leases | $17,700 | $28,100 | | Loans and Leases, Net (Estimated Fair Value) | $9,300,465 | $9,298,057 | (12) Commitments and Contingencies This note details the company's off-balance sheet commitments and potential contingent liabilities | Off-Balance Sheet Item | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Commitments to Originate Loans and Leases | $176,972 | $170,454 | | Unused Lines of Credit | $937,820 | $894,450 | | Total Operating Lease Liabilities | $43,528 | $44,785 | - The Company is party to off-balance sheet financial instruments, including loan commitments, standby and commercial letters of credit, and loan level derivatives, which involve credit and interest-rate risk[195] - Management believes that outstanding legal proceedings are not expected to materially affect the Company's consolidated financial position or results of operations[208] (13) Revenue from Contracts with Customers This note explains the company's policies for recognizing revenue from contracts with its customers - Revenue recognized at a point in time includes transactional fees such as card interchange, ATM, wire transfer, overdraft, and loan fees[214] - Revenue recognized over time includes commissions on investments, insurance sales, and service charges on deposit accounts, generally on a monthly basis[215] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance and condition, highlighting key trends, strategic objectives, and the impact of economic factors. It covers balance sheet changes, asset quality, capital strength, profitability, and reconciliations of non-GAAP financial measures Forward-Looking Statements This section cautions readers about risks and uncertainties that may cause actual results to differ from projections - Forward-looking statements are based on current assumptions and expectations, but actual results may differ materially due to various risks and uncertainties[217] - Key risks include changes in interest rates, general economic conditions, competitive pressures, changes in consumer behavior, merger-related risks, operational risks, and regulatory changes[217] Introduction This section provides an overview of the company's business, strategic objectives, and recent significant developments - Brookline Bancorp operates as a multi-bank holding company, offering commercial, business, and retail banking services across New England and New York[218][219] - The Company's strategic objective is to profitably grow its commercial lending businesses, both organically and through acquisitions, emphasizing customer focus, multi-bank structure, and risk management[220] - A merger agreement with Berkshire Hills Bancorp, Inc. was approved by stockholders and is expected to close in the second half of 2025, subject to regulatory approvals[228] Executive Overview The Executive Overview summarizes the Company's financial performance and position for the quarter and year-to-date, highlighting key changes in assets, liabilities, equity, and profitability metrics. It notes a decrease in total assets and loans, an increase in deposits, and improved net income and net interest margin | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | Change (In Thousands) | Annualized Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :-------------------- | | Total Assets | $11,568,745 | $11,905,326 | $(336,581) | (5.7)% | | Total Loans and Leases | $9,582,374 | $9,779,288 | $(196,914) | (4.0)% | | Total Deposits | $8,961,202 | $8,901,644 | $59,558 | 1.3% | | Total Borrowed Funds | $1,155,051 | $1,519,846 | $(364,795) | (48.0)% | | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Nonperforming Assets as % of Total Assets | 0.55% | 0.59% | | Allowance for Loan and Lease Losses as % of Total Loans and Leases | 1.32% | 1.28% | | Common Equity Tier 1 Capital Ratio | 11.05% | 10.46% | | Tier 1 Leverage Ratio | 9.40% | 9.06% | | Stockholders' Equity as % of Total Assets | 10.84% | 10.26% | | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $22.0 million | $16.4 million | $41.1 million | $31.0 million | | Basic EPS | $0.25 | $0.18 | $0.46 | $0.35 | | Annualized Return on Average Assets | 0.77% | 0.57% | N/A | N/A | | Annualized Return on Average Stockholders' Equity | 7.04% | 5.49% | N/A | N/A | | Net Interest Margin | 3.32% | 3.00% | 3.27% | 3.03% | Critical Accounting Policies and Estimates This section identifies the company's most critical accounting policies and estimates requiring significant management judgment - The determination of the Allowance for Credit Losses (ACL) is identified as the Company's most critical accounting policy, involving significant judgments and estimates[245] Recent Accounting Developments This section updates on recently adopted or pending accounting standards and their impact on financial reporting - The Company adopted ASU 2023-07 (Segment Reporting) on January 1, 2024, with no material impact on its consolidated financial statements[246] - The Company is currently determining the impact of ASU 2023-09 (Income Tax Disclosures), which is effective for annual periods beginning after December 15, 2024[247] Non-GAAP Financial Measures and Reconciliation to GAAP This section provides reconciliations of non-GAAP financial measures, such as operating earnings, return on average tangible assets and equity, tangible stockholders' equity ratios, tangible book value per share, and dividend payout ratios, which management uses to assess underlying operating performance and capital strength | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Operating Earnings After Tax | $22,443 | $16,995 | | Operating Basic EPS | $0.25 | $0.19 | | Operating Diluted EPS | $0.25 | $0.19 | | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Tangible Stockholders' Equity to Tangible Assets | 8.82% | 8.27% | | Tangible Book Value Per Share | $11.20 | $10.81 | | Dividend Payout Ratio (3 Months Ended June 30) | 54.61% | 73.30% | Financial Condition This section details the composition and changes in the Company's balance sheet, including loans, investment securities, deposits, and borrowed funds. It also provides an in-depth analysis of asset quality, including criticized assets, nonperforming assets, and the allowance for credit losses Loans and Leases This section details the composition and changes in the company's loan and lease portfolio by category | Loan Category | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | Dollar Change (In Thousands) | Annualized Percent Change (%) | | :------------------------------ | :----------------------------- | :----------------------------- | :--------------------------- | :---------------------------- | | Commercial Real Estate Loans | $5,485,546 | $5,716,114 | $(230,568) | (8.1)% | | Commercial Loans and Leases | $2,520,347 | $2,506,664 | $13,683 | 1.1% | | Consumer Loans | $1,576,481 | $1,556,510 | $19,971 | 2.6% | | Total Loans and Leases | $9,582,374 | $9,779,288 | $(196,914) | (4.0)% | Commercial Real Estate Loans This section focuses on the characteristics and trends of the company's commercial real estate loan portfolio - Commercial real estate loans constitute 57.2% of the total loan portfolio as of June 30, 2025[258] - The portfolio is primarily secured by apartment buildings ($1.3 billion), retail stores ($903.6 million), industrial properties ($788.0 million), and office buildings ($713.4 million) as of June 30, 2025[263] - Approximately 78.3% of commercial real estate loans are located in New England, and 15.5% are in New York, primarily the Lower Hudson Valley region[263] Commercial Loans This section analyzes the company's commercial loan and lease portfolio, including its composition and risk factors - The commercial loan and lease portfolio represents 26.3% of total loans outstanding as of June 30, 2025[269] - The portfolio is primarily composed of loans and leases to small to medium-sized businesses ($888.3 million), food services ($339.5 million), and transportation services ($241.6 million)[270] - Equipment financing loans, which constitute a significant portion, typically carry higher yields due to a higher degree of credit risk[274] Consumer Loans This section describes the company's consumer loan portfolio, including residential mortgages and home equity loans - The consumer loan portfolio, including residential mortgage, home equity, and other consumer loans, represented 16.5% of total loans outstanding as of June 30, 2025[275] - Lending is focused on existing and new customers within the Company's branch networks in the Greater Boston, Providence, and Lower Hudson Valley areas[275] Asset Quality This section assesses the quality of the company's assets, including criticized assets and nonperforming assets | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Criticized Assets | $328,600 | $252,700 | | Total Nonperforming Assets | $63,596 | $70,452 | | Nonperforming Assets as % of Total Assets | 0.55% | 0.59% | | Loans and Leases Past Due > 90 Days and Accruing | $24,899 | $811 | - The increase in criticized assets was primarily driven by increases in commercial real estate, construction, equipment financing, and commercial relationships[278] - The increase in loans and leases greater than 90 days past due and accruing was primarily due to loans in the process of renewal or refinancing out of the bank[285] Allowance for Credit Losses This section discusses the allowance for credit losses, including changes and adequacy relative to the loan portfolio | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Allowance for Loan and Lease Losses | $126,725 | $125,083 | | Allowance for Loan and Lease Losses as % of Total Loans and Leases | 1.32% | 1.28% | | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net Charge-offs on Loans and Leases | $5,100 | $8,400 | | Annualized Net Charge-offs as % of Average Loans and Leases | 0.21% | 0.35% | - Qualitative adjustments were applied to commercial real estate, commercial, and consumer portfolios, resulting in a net addition to total reserves compared to modeled calculations[290] Investment Securities This section describes the company's investment portfolio, including fair values and unrealized gains/losses | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash, Cash Equivalents, and Investment Securities | $1,370,000 | $1,440,000 | | % of Total Assets | 11.9% | 12.1% | | Fair Value of AFS Securities | $866,700 | $895,000 | | Net Unrealized Losses | $51,200 | $69,400 | - The Company's unrealized loss position decreased in 2025 primarily due to a decrease in current market rates[305] - No investment securities available-for-sale were sold during the six months ended June 30, 2025 or 2024[303] Restricted Equity Securities This section details the company's holdings in restricted equity securities, such as FHLB and Federal Reserve Bank stock | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | FHLB Stock | $44,400 | $61,100 | | Federal Reserve Bank Stock | $21,900 | $21,900 | Deposits This section analyzes the composition, trends, and cost of the company's deposit base | Deposit Type | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | Weighted Average Rate (June 30, 2025) | Weighted Average Rate (December 31, 2024) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------------ | :---------------------------------------- | | Total Deposits | $8,961,202 | $8,901,644 | 2.31% | 2.85% | | Core Deposits | $6,320,000 | $6,140,000 | N/A | N/A | | Brokered Deposits | $756,431 | $868,953 | 4.31% | 4.42% | - Core deposits increased by $179.9 million, representing 70.6% of total deposits as of June 30, 2025[310] - Brokered deposits decreased by $112.5 million, reducing their percentage of total deposits to 8.4% as of June 30, 2025[312] Borrowed Funds This section details the company's short-term and long-term borrowings, including FHLB advances and other lines of credit | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Borrowed Funds | $1,155,051 | $1,519,846 | | Advances from the FHLB | $934,669 | $1,355,926 | | Outstanding Uncommitted Lines of Credit | $100,000 | — | - FHLB borrowings decreased by $421.3 million to $0.9 billion as of June 30, 2025[319] - The Company had $100.0 million in outstanding borrowings on uncommitted lines of credit as of June 30, 2025, compared to no borrowings at December 31, 2024[325] Derivative Financial Instruments This section describes the company's use of derivative financial instruments and their impact on financial position | Derivative Type | Notional Amount (June 30, 2025, In Thousands) | Notional Amount (December 31, 2024, In Thousands) | | :------------------------------ | :-------------------------------------------- | :------------------------------------------------ | | Interest Rate Derivatives | $225,000 | $225,000 | | Loan Level Derivatives (Receive fixed, pay variable) | $1,425,875 | $1,672,948 | Stockholders' Equity and Dividends This section reports on changes in stockholders' equity and the company's dividend policies and payouts | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $1,254,200 | $1,221,900 | | Stockholders' Equity as % of Total Assets | 10.84% | 10.26% | | Tangible Stockholders' Equity as % of Tangible Assets | 8.82% | 8.27% | | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Dividend Payout Ratio | 54.61% | 73.30% | Results of Operations This section analyzes the Company's income statement performance, focusing on the drivers of net interest income, changes in interest income and expense, provision for credit losses, non-interest income, non-interest expense, and income taxes. It highlights improvements in net interest income and margin, alongside shifts in various revenue and expense categories Net Interest Income This section details the sources and trends of the company's interest income from loans, investments, and other assets | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net Interest Income | $88,685 | $80,001 | $174,515 | $161,589 | | Net Interest Margin | 3.32% | 3.00% | 3.27% | 3.03% | | Cost of Interest-Bearing Liabilities | 3.17% | 3.65% | 3.23% | 3.61% | - The increase in net interest income was primarily due to a decrease in interest expense on deposits and borrowings, partially offset by a decrease in interest income on loans and leases[336][337] Rate/Volume Analysis This section analyzes the impact of changes in interest rates and volumes on the company's net interest income | Metric | Three Months Ended June 30, 2025 vs 2024 (In Thousands) | Six Months Ended June 30, 2025 vs 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------------- | :-------------------------------------------------- | | Net Change in Interest and Dividend Income | $(983) | $(2,420) | | Net Change in Interest Expense | $(9,967) | $(15,940) | | Change in Net Interest Income | $8,684 | $12,926 | - For the three months ended June 30, 2025, the increase in net interest income was driven by $7.6 million from rate changes and $1.1 million from volume changes[354] Interest Income This section details the sources and trends of the company's interest income from loans, investments, and other assets | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Interest Income—Loans and Leases | $143,933 | $145,585 | $287,242 | $290,850 | | Total Interest Income—Investments | $10,139 | $9,770 | $20,558 | $19,964 | - Interest income from loans and leases decreased by $1.7 million (1.1%) for the three months ended June 30, 2025, primarily due to portfolio composition and changes in interest rates[356] - Interest income from investments increased by $0.4 million (3.8%) for the three months ended June 30, 2025, driven by volume growth partially offset by lower rates[359] Interest Expense—Deposits and Borrowed Funds This section analyzes the interest expense incurred on the company's deposits and borrowed funds | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Interest Expense—Deposits | $52,682 | $59,721 | $106,160 | $116,605 | | Total Interest Expense—Borrowed Funds | $12,705 | $15,633 | $27,125 | $32,620 | - Interest expense on deposits decreased by $7.0 million (11.8%) for the three months ended June 30, 2025, primarily due to lower interest rates[362] - Interest expense on borrowed funds decreased by $2.9 million (18.7%) for the three months ended June 30, 2025, driven by both volume and lower borrowing rates[364] Provision for Credit Losses This section discusses the provision for credit losses, reflecting changes in credit quality and loan portfolio risk | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Provision for Credit Losses | $7,000 | $5,568 | $12,986 | $12,947 | - The provision for credit losses increased by $1.4 million for the three months ended June 30, 2025, primarily due to an increase in specific reserves on nonperforming credits and a reduction in loan and commitment balances[367] Non-Interest Income This section analyzes the various sources and trends of the company's non-interest income | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Non-Interest Income | $5,970 | $6,396 | $11,630 | $12,680 | | Deposit Fees | $2,472 | $3,001 | $4,833 | $5,898 | | Loan Level Derivative Income, Net | $(4) | $106 | $66 | $543 | | Other Non-Interest Income | $2,766 | $2,457 | $5,578 | $4,618 | - Total non-interest income decreased by $0.4 million (6.7%) for the three months ended June 30, 2025, primarily due to lower deposit fees and loan level derivative income[369][370][372] - Other income increased by $0.3 million (12.6%) for the three months ended June 30, 2025, driven by higher insurance commissions, miscellaneous income, foreign exchange wire income, and mark-to-market on interest rate swaps[373] Non-Interest Expense This section details the categories and trends of the company's non-interest expenses | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Non-Interest Expense | $58,061 | $59,184 | $118,083 | $120,198 | | Merger and Restructuring Expense | $439 | $823 | $1,410 | $823 | | Professional Services | $1,471 | $1,745 | $3,197 | $3,645 | | Advertising and Marketing | $1,371 | $1,504 | $2,239 | $3,078 | - Total non-interest expense decreased by $1.1 million (1.9%) for the three months ended June 30, 2025[374] - Merger and restructuring expense decreased by $0.4 million for the three months ended June 30, 2025, but increased by $0.6 million for the six months ended June 30, 2025[374] Provision for Income Taxes This section discusses the company's income tax expense and effective tax rates for the reported periods | Metric | Three Months Ended June 30, 2025 (In Thousands) | Three Months Ended June 30, 2024 (In Thousands) | Six Months Ended June 30, 2025 (In Thousands) | Six Months Ended June 30, 2024 (In Thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Provision for Income Taxes | $7,568 | $5,273 | $13,950 | $10,087 | | Effective Tax Rate | 25.6% | 24.4% | 25.3% | 24.5% | - The increase in the effective tax rate for both the three and six months ended June 30, 2025, was primarily driven by an increase in merger expenses[377][378] Liquidity and Capital Resources This section outlines the Company's liquidity management strategies, funding sources, and compliance with regulatory capital requirements. It details the levels of on-balance sheet liquidity, deposit mix, various borrowing capacities, and confirms the Company and its Banks are well-capitalized Liquidity This section describes the company's liquidity position, funding sources, and liquidity management strategies | Metric | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and Equivalents | $506,700 | $543,700 | | Cash, Cash Equivalents, and AFS Securities | $1,400,000 | $1,400,000 | | Deposits | $9,000,000 | $8,900,000 | | Borrowings | $1,200,000 | $1,500,000 | - The Company's on-balance sheet liquidity (cash, cash equivalents, and AFS securities) was 11.9% of total assets as of June 30, 2025[381] - FHLB borrowing limit was $2.8 billion, and FRB Discount Window borrowing capacity was $396.3 million as of June 30, 2025[384][386] Off-Balance-Sheet Financial Instruments This section details the company's off-balance sheet commitments and financial instruments | Off-Balance Sheet Item | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Commitments to Originate Loans and Leases | $176,972 | $170,454 | | Unused Lines of Credit | $937,820 | $894,450 | | Loan Level Derivatives (Notional Principal Amounts) | $1,425,875 | $1,672,948 | Capital Resources This section outlines the company's capital position and compliance with regulatory capital requirements - As of June 30, 2025, the Company and its Banks exceeded all regulatory capital requirements and were considered 'well-capitalized' under prompt corrective action regulations[390] | Capital Ratio (Brookline Bancorp, Inc.) | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Common Equity Tier 1 Capital Ratio | 11.05% | 10.46% | | Tier 1 Leverage Capital Ratio | 9.40% | 9.06% | | Tier 1 Risk-Based Capital Ratio | 11.15% | 10.56% | | Total Risk-Based Capital Ratio | 13.03% | 12.42% | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the Company's exposure to market risk, primarily interest-rate risk, and its management strategies. It describes how the Asset/Liability Committee (ALCO) measures and controls interest-rate risk using income simulation and gap analysis, and assesses the potential impact of interest rate changes on net interest income and economic value of equity Market Risk This section defines market risk, primarily interest-rate risk, and its potential impact on the company - Market risk is defined as the potential decline in the fair value of assets, liabilities, and derivatives due to changes in interest rates or financial market volatility[397] - The principal market risk is interest-rate risk, which includes repricing risk, yield-curve risk, basis risk, and prepayment risk[398] Asset/Liability Management This section describes the company's strategies and governance for managing market and interest-rate risk - Market risk and interest-rate risk management are governed by the Company's Asset/Liability Committee (ALCO), which sets exposure limits and monitors compliance[399] - Management controls interest-rate exposure by adjusting maturities of securities, limiting loan terms, and adjusting wholesale funding, and uses interest rate swaps as cash flow hedges[400] Measuring Interest-Rate Risk This section explains the methods used to measure and assess the company's exposure to interest-rate risk - Interest-rate risk is measured using income simulation and interest-rate sensitivity 'gap' analysis, with income simulation being the primary tool[402] - Net interest income simulation indicated that the Company's exposure to changing interest rates was within tolerance as of June 30, 2025[404] | Change in Interest Rate Levels | Estimated % Change in Net Interest Income (June 30, 2025) | Estimated % Change in Net Interest Income (December 31, 2024) | | :----------------------------- | :-------------------------------------------------------- | :-------------------------------------------------------- | | Up 400 basis points shock | (1.0)% | 3.9% | | Down 400 basis points shock | (2.0)% | (9.3)% | - The Company's one-year cumulative interest-rate sensitivity gap was negative $646.6 million (5.95% of total interest-earning assets) as of June 30, 2025, an improvement from negative $1.0 billion (9.31%) at December 31, 2024[405] | Parallel Shock in Interest Rate Levels | Estimated % Change in Economic Value of Equity (June 30, 2025) | Estimated % Change in Economic Value of Equity (December 31, 2024) | | :------------------------------------- | :------------------------------------------------------------- | :------------------------------------------------------------- | | Up 300 basis points | (5.5)% | (5.5)% | | Down 300 basis points | (3.7)% | (6.6)% | Item 4. Controls and Procedures The Company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures and internal control over financial reporting, concluding they were effective as of June 30, 2025, with no material changes during the quarter - The Company's disclosure controls and procedures were effective as of June 30, 2025[410] - There were no material changes in the Company's internal controls over financial reporting during the quarter ended June 30, 2025[411] Part II Other Information This part contains additional disclosures, including legal proceedings, risk factors, and other required information Item 1. Legal Proceedings The Company reports no material pending legal proceedings other than those arising in the normal course of business, and management does not expect them to materially affect the Company's financial position or results of operations - There are no material pending legal proceedings other than those that arise in the normal course of business[413] Item 1A. Risk Factors This section updates on significant risk factors that could materially affect the company's business and financial results - There have been no material changes in the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[414] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item reports on any unregistered sales of equity securities and the use of proceeds, if applicable - This item is not applicable[415] Item 3. Defaults Upon Senior Securities This item reports on any defaults upon senior securities, if applicable - This item is not applicable[415] Item 4. Mine Safety Disclosures This item reports on mine safety disclosures, if applicable - This item is not applicable[415] Item 5. Other Information The Company reports that no directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - None of the Company's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[416] Item 6. Exhibits This section lists all exhibits filed as part of the report, including certifications and financial data - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[418] Signatures This section contains the required signatures of the company's authorized officers