8-K: Brookline Bancorp Announces Fourth Quarter Results: Net Income Declines Amid Merger Preparations

Brookline Bancorp reports a net income of $17.5 million for Q4 2024, alongside the announcement of a quarterly dividend and updates on the proposed merger with Berkshire Hills Bancorp.

Summary

• Brookline Bancorp announced net income of $17.5 million, or $0.20 per share, for the fourth quarter of 2024.
• Operating earnings after tax (non-GAAP) were $20.7 million, or $0.23 per share, excluding $3.4 million of merger-related charges.
• For the year ended December 31, 2024, net income was $68.7 million, or $0.77 per share, compared to $75.0 million, or $0.85 per share, for the year ended December 31, 2023.
• The company's Board of Directors approved a regular quarterly dividend of $0.135 per share, payable on February 28, 2025.
• Total assets increased to $11.9 billion at December 31, 2024, up from $11.4 billion at December 31, 2023.
• Total loans and leases were $9.8 billion, an increase of $137.7 million from December 31, 2023.
• Total deposits increased to $8.9 billion, up $353.5 million from the previous year.
• The company is progressing with its proposed merger with Berkshire Hills Bancorp, expected to close by the end of the second half of 2025.
• Net interest income increased $2.0 million to $85.0 million during the fourth quarter of 2024 from $83.0 million for the quarter ended September 30, 2024.
• The net interest margin increased 5 basis points to 3.12 percent for the three months ended December 31, 2024 from 3.07 percent for the three months ended September 30, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While net income decreased, the company is growing assets and deposits, and the merger is expected to create future value. The merger expenses are weighing on current results.

Positives

• Total assets increased by $523.1 million year-over-year, reaching $11.9 billion.
• Total deposits increased by $353.5 million year-over-year, reaching $8.9 billion.
• The Board of Directors approved a dividend of $0.135 per share.
• Net interest income increased $2.0 million to $85.0 million during the fourth quarter of 2024 from $83.0 million for the quarter ended September 30, 2024.
• The net interest margin increased 5 basis points to 3.12 percent for the three months ended December 31, 2024 from 3.07 percent for the three months ended September 30, 2024.

Negatives

• Net income for the year ended December 31, 2024, decreased to $68.7 million from $75.0 million in the previous year.
• Operating earnings after tax (non-GAAP) for the year ended December 31, 2024, decreased to $72.4 million from $92.9 million in the previous year.
• The annualized return on average assets decreased to 0.60 percent for the year ended December 31, 2024, compared to 0.67 percent for the year ended December 31, 2023.
• Non-interest expense for the quarter ended December 31, 2024 increased $5.8 million to $63.7 million from $57.9 million for the quarter ended September 30, 2024.
• Net charge offs were $7.3 million for the quarter.

Risks

• The forward-looking statements include risks related to changes in interest rates, economic conditions, and competitive pressures.
• There are risks associated with the proposed merger with Berkshire Hills Bancorp, including regulatory approvals and stockholder approvals.
• Operational risks such as cybersecurity incidents, fraud, and natural disasters are also noted.
• The company acknowledges the possibility of future credit losses being higher than currently expected.
• The risk that goodwill and intangibles recorded in the Company's financial statements will become impaired is mentioned.

Future Outlook

The company is focused on completing the merger with Berkshire Hills Bancorp, Inc., expected to close by the end of the second half of 2025, subject to regulatory and stockholder approvals.

Management Comments

• Paul Perrault, Chairman and Chief Executive Officer, commented, 'Brookline Bancorp had an excellent year in 2024. We finished the year with solid deposit and loan growth and are well positioned as we look forward to 2025.'
• Paul Perrault also stated, 'We are looking forward to 2025 and our recently announced strategic merger with Berkshire Hills Bancorp.'

Industry Context

The announcement comes amid a period of consolidation in the banking industry, with Brookline Bancorp seeking to enhance its market position through a merger of equals with Berkshire Hills Bancorp.

Comparison to Industry Standards

• Brookline Bancorp's efficiency ratio of 69.58% for the quarter ended December 31, 2024, is comparable to other regional banks.
• The company's return on average assets (ROAA) of 0.61% is within the range of performance for similar-sized banks.
• The tangible equity to tangible assets ratio of 8.27% is a key metric watched by investors, and Brookline's ratio is in line with industry norms.

Stakeholder Impact

• Shareholders will receive a quarterly dividend of $0.135 per share.
• Employees are recognized for their contributions to the company's growth and success.
• Customers will continue to receive commercial and retail banking services.
• The merger with Berkshire Hills Bancorp is expected to create a stronger, more competitive institution.

Next Steps

• The company will conduct a conference call/webcast on January 30, 2025, to discuss the results.
• The company will work towards satisfying the closing conditions for the merger with Berkshire Hills Bancorp, including obtaining regulatory and stockholder approvals.

Key Dates