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BROOKLINE BANCORP INC (BRKL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered stable topline and margin expansion: net interest income rose to $85.8M and net interest margin expanded 10 bps to 3.22%, with total revenue at $91.5M, flat sequentially .
  • EPS was $0.21 GAAP and $0.22 operating (ex-merger costs), up versus Q4’s $0.20 GAAP but slightly below Q4’s $0.23 operating; credit costs increased with $6.0M provision and $7.6M net charge-offs, largely from one $7.1M C&I charge-off previously reserved .
  • Deposits grew and funding mix improved: customer deposits +$113.8M, brokered deposits −$104.0M; borrowings −$364.0M; tangible book value/share increased to $11.03 .
  • Management guided to further margin improvement (+4–8 bps in Q2), 2025 loan growth in low-single digits, deposit growth of 4–5%, noninterest income of $5.5–$6.5M/quarter, expenses ≤$247M (ex-merger), and effective tax rate ~24.25% (ex-nondeductible merger charges) .
  • Merger with Berkshire Hills progressing: S-4 effective, stockholder meetings May 21, expected close H2 2025; core platform decided, system conversion targeted for Feb 2026—cost saves timing modestly delayed but operating expense discipline offsets near term .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded 10 bps to 3.22% QoQ on lower funding costs, with net interest income up $0.8M QoQ to $85.8M; total revenue held at $91.5M, supporting earnings quality .
  • Funding mix improved: customer deposits +$113.8M, brokered deposits −$104.0M, and borrowings −$364.0M; equity ratios strengthened and tangible book rose $0.22 to $11.03 .
  • Strategic repositioning is advancing: commercial real estate exposure reduced intentionally (CRE −$135M), while C&I originations were strong ($411M at ~7.18% weighted coupon); “We are pleased to report solid earnings… reduce CRE exposure while increasing participation in C&I” .

What Went Wrong

  • Credit costs elevated: provision for credit losses increased to $6.0M QoQ, and net charge-offs rose to $7.6M, driven by one large $7.1M C&I charge-off; NPL ratio improved, but charge-offs pressured earnings .
  • Average interest-earning assets declined ~$50M, partially offsetting margin tailwind; noninterest income fell by $0.9M QoQ due to lower loan-level derivative income .
  • Macro uncertainty (rates, tariffs) temper visibility: “we expected market rates to normalize… the opposite occurred”; tariff unease is dampening activity in underwriting and customer behavior .

Financial Results

Quarterly trend (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Net Interest Income ($USD Millions)$83.0 $85.0 $85.8
Non-Interest Income ($USD Millions)$6.3 $6.6 $5.7
Total Revenue ($USD Millions)N/A$91.5 $91.5
Net Income ($USD Millions)$20.1 $17.5 $19.1
Diluted EPS ($USD)$0.23 $0.20 $0.21
Operating EPS ($USD)N/A$0.23 $0.22
Net Interest Margin (%)3.07% 3.12% 3.22%
Efficiency Ratio (%)64.85% 69.58% 65.60%
Provision for Credit Losses on Loans ($USD Millions)$4.8 $4.1 $6.0
Net Loan & Lease Charge-offs ($USD Millions)$3.8 $7.3 $7.6

YoY comparison

MetricQ1 2024Q1 2025
Net Income ($USD Millions)$14.7 $19.1
Diluted EPS ($USD)$0.16 $0.21
Net Interest Margin (%)3.06% 3.22%
Nonperforming Assets / Total Assets (%)0.37% 0.56%
Total Deposits ($USD Billions)$8.72 $8.91
Total Loans & Leases ($USD Billions)$9.66 $9.64

Segment/portfolio breakdown (loans)

Loans Category ($USD Billions)Q1 2024Q4 2024Q1 2025
Commercial Real Estate$5.76 $5.72 $5.58
Commercial Loans & Leases$2.42 $2.51 $2.51
Consumer$1.48 $1.56 $1.55
Total Loans & Leases$9.66 $9.78 $9.64

KPIs and asset quality

KPIQ3 2024Q4 2024Q1 2025
NPLs / Total Loans (%)0.73% 0.71% 0.65%
NPAs / Total Assets (%)0.62% 0.59% 0.56%
Allowance for Loan & Lease Losses (% of Loans)1.31% 1.28% 1.29%
Tangible Book Value per Share ($)$10.89 $10.81 $11.03
Customer Deposits Δ QoQ ($USD Millions)+$103.2 +$115.9 +$113.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginQ2 2025Not provided+4–8 bps QoQ expected, contingent on market and Fed actions New
Loan GrowthFY 2025Not providedLow single digits (C&I and consumer growth offset by specialty vehicle runoff and lower CRE activity) New
Deposit GrowthFY 2025Not provided4–5%, skewed to interest-bearing accounts New
Noninterest IncomeQuarterly run-rateNot provided$5.5M–$6.5M per quarter; components may vary New
Noninterest Expense (ex-merger)FY 2025Not provided≤$247M New
Effective Tax Rate (ex-nondeductible merger costs)FY 2025Not provided~24.25% New
DividendQ1 2025$0.135 per share$0.135 per share declared Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
Net interest margin trajectoryNIM up 7 bps to 3.07% on higher loan yields NIM up 5 bps to 3.12% on lower funding costs NIM up 10 bps to 3.22%; +4–8 bps guided for Q2 Improving, guided higher
Credit costs/asset qualityNPLs rose due to EF exposure; NCOs fell QoQ NCOs increased on one EF charge-off; allowance 1.28% Provision up to $6.0M; one $7.1M C&I charge-off; NPLs ratio down Elevated but targeted; ratios stable/improving
CRE exposure and runoffCRE balances stable; reserve build CRE modest decline; mix adjustments Intentional CRE reduction (−$135M); focus on lead roles, limit participations Proactive de-risking
Funding mix and depositsBrokered down; customer up $103.2M Deposits +$169.4M; customer +$115.9M; brokered +$53.4M Customer +$113.8M; brokered −$104.0M; borrowings −$364.0M Mix improving, lower wholesale
Merger with Berkshire HillsAnnounced Dec 16; integration planning Ongoing; terms outlined S-4 effective; shareholder meetings set; core chosen; conversion Feb 2026 Advancing per plan
Macro rates/uncertaintyAnticipated normalization Funding costs trending lower Rates volatile; still expect 2025 NIM improvement Uncertain but constructive
Tariffs/macro impact on underwritingNot highlightedNot highlightedUnease dampening activity; embedded in underwriting Emerging headwind

Management Commentary

  • “We had solid core operating results for the first quarter with operating earnings of $20 million or $0.22 per share… The contraction in our loan portfolio… is intentional as we reduce commercial real estate exposures while maintaining our focus on important customer relationships.”
  • “Customer deposits increased $113.8 million, and our margin increased 10 basis points during the quarter… we expect to see our net interest margin continue to improve throughout 2025.”
  • “We are currently estimating [NIM] an increase of 4 to 8 basis points in Q2… We continue to anticipate growth in the loan portfolio to be in the low single digits… deposit growth of 4% to 5%…”
  • Merger update: “Regulatory applications have been filed… S-4… effective… stockholder meetings… May 21. We anticipate closing… second half of 2025… core banking platform… determined, with conversion planning well underway… System conversions are scheduled for February [2026].”

Q&A Highlights

  • Rate sensitivity: A 25 bp cut at the short end with a steeper curve is generally beneficial to margin; Q2 NIM guidance (+4–8 bps) does not assume Fed cuts .
  • Credit event detail: The $7.1M charge-off was a ~$13M C&I exposure with a ~$5M specific reserve; executed via sale of note; sector described as food manufacturing with leveraged buyout issues .
  • C&I originations and pricing: ~$411M originations at ~7.18% weighted average coupon vs portfolio ~5.91%; competitive dynamics favor disciplined pricing as large banks are “tepid” .
  • Expense outlook: Q2 expenses expected “fairly stable” vs Q1; merger-related hiring caution; marketing down QoQ .
  • Office/lab exposure: ~$11M office resolution imminent with no additional loss anticipated; total lab exposure ~$50M, diversified (not concentrated in Cambridge) .
  • Dividend policy pro forma: Intent to align combined company dividend with Brookline’s current rate post-close .

Estimates Context

  • S&P Global consensus estimates for BRKL were unavailable due to a CIQ mapping issue; as a result, explicit EPS/revenue consensus comparisons for Q1 2025 cannot be provided at this time (Wall Street consensus from S&P Global not retrievable).
  • Given management guidance, models may need to reflect: Q2 NIM upward bias (+4–8 bps), deposit growth of 4–5% for 2025, quarterly noninterest income run-rate of $5.5–$6.5M, and full-year noninterest expense ≤$247M (ex-merger); credit assumptions should incorporate $6.0M Q1 provision and targeted CRE runoff .

Key Takeaways for Investors

  • Margin expansion and improved funding mix are intact, with further NIM gains guided for Q2, supporting NII resilience despite lower average earning assets .
  • Credit costs were concentrated in one large, previously reserved C&I exposure; asset quality ratios improved sequentially (NPLs/loans to 0.65%, NPAs/assets to 0.56%), and reserve coverage held at ~1.29% .
  • Strategic repositioning (CRE reduction, specialty vehicle runoff) should moderate risk while C&I originations at ~7.18% coupon drive earning asset yield uplift .
  • Deposits are growing and mix is improving (customer +$113.8M, brokered −$104.0M), while borrowings were reduced by $364.0M—a constructive balance sheet move for funding costs and capital .
  • Merger with Berkshire Hills is advancing (S-4 effective; shareholder votes May 21; conversion Feb 2026) with identified cost saves (12.6% of combined expenses) and expected profitability enhancement post-close; near-term timing shifts modestly delay some savings but operating discipline offsets .
  • Near-term trading: focus on Q2 NIM progression and credit normalization vs Q1; medium-term thesis hinges on merger execution, cost saves realization, and continued deposit growth with lower wholesale funding reliance .

Additional Source Documents

  • Q1 2025 press release (EX-99.1 via 8-K): Brookline Bancorp Announces First Quarter Results .
  • Q1 2025 press release (GLOBE NEWSWIRE): Brookline Bancorp Announces First Quarter Results .
  • Q1 2025 earnings call transcript: Full prepared remarks and Q&A .
  • Q4 2024 press release: Brookline Bancorp Announces Fourth Quarter Results .
  • Q3 2024 press release: Brookline Bancorp Announces Third Quarter Results .

Note: Wall Street consensus estimates from S&P Global could not be retrieved due to a mapping issue; comparisons to consensus are therefore not included.