Trump announces trade deal with EU following months of negotiations
Introduction & Market Context
Brookline Bancorp (NASDAQ:BRKL) released its first quarter 2025 financial results on April 24, revealing a mixed performance with slight earnings misses but strategic progress on its planned merger with Berkshire Hills (NYSE:BHLB) Bancorp. Despite reporting earnings per share (EPS) of $0.21, below analyst expectations of $0.23, the company’s stock rose 2.45% to $10.45 in after-hours trading, suggesting investors were focused more on long-term strategic initiatives than short-term results.
The bank reported quarterly net income of $19.1 million, with operating earnings of $20.0 million after excluding $1 million in merger-related expenses. While revenue came in at $91.5 million, slightly below forecasts of $92.71 million, the company highlighted improvements in net interest margin and continued progress on its strategic objectives.
Quarterly Performance Highlights
Brookline Bancorp’s first quarter results showed improvement in several key metrics compared to both the previous quarter and the same period last year. Net interest income increased to $85.8 million, up $0.8 million from Q4 2024 and $4.2 million year-over-year, while net interest margin expanded by 10 basis points to 3.22%.
As shown in the following summary income statement, the company’s pretax income increased by $1.7 million from the linked quarter and $6 million from the year-ago period, demonstrating improving operational performance despite challenges:
The company’s efficiency ratio stood at 65.60%, while return on assets was 0.66% and return on tangible equity reached 7.82%. Operating earnings of $0.22 per share excluded approximately $971,000 in merger-related expenses that were largely not tax deductible:
Balance Sheet Management
Brookline’s balance sheet showed strategic adjustments during the quarter, with total loans decreasing by $136 million to $9.64 billion. This reduction was part of an intentional strategy to reduce exposure to investment commercial real estate (ICRE), which now stands at 375% of total risk-based capital.
The following summary balance sheet highlights these changes, including a $385 million reduction in total assets and a $364 million decrease in borrowings:
On the funding side, customer deposits increased by $113 million while brokered deposits decreased by $104 million, resulting in a net deposit increase of $9 million. The loan-to-deposit ratio was 108.21%, with tangible equity to tangible assets at 8.73%.
The company’s loan and deposit portfolios remain well-diversified, as illustrated in the following breakdown:
Strategic Initiatives
The most significant strategic development for Brookline Bancorp is its planned merger with Berkshire Hills Bancorp, announced on December 16, 2024. The merger will create a $24 billion Northeast banking franchise with complementary geographic footprints and top 10 deposit market share in its regions.
As shown in the following slide, the merger process is advancing with regulatory applications filed and stockholder meetings scheduled for May 21, 2025:
The combined entity is projected to achieve a 2026 return on average assets of 1.28% and return on average tangible common equity of 16.5%. Cost savings are expected to reach 12.6% of the combined company’s expense base, with system conversions planned for February 2026.
Credit Quality and Risk Management
Brookline’s credit metrics showed some mixed signals during the quarter. Non-performing loans declined by $6.2 million from the prior quarter, while net charge-offs totaled $7.6 million, primarily driven by a $7.1 million charge-off of a commercial and industrial loan that had a significant specific reserve.
The company’s commercial real estate portfolio shows a conservative risk profile, with loan-to-value ratios predominantly below 80% across property types:
The bank’s securities portfolio remains highly liquid and conservatively positioned, with 51% in U.S. Treasury securities and 20% in agency securities. The entire investment portfolio is classified as available for sale:
Interest Rate Management
Brookline’s interest rate risk management is reflected in its loan origination strategy and balance sheet positioning. The bank’s interest rate sensitivity analysis shows it is moderately positioned for various rate scenarios:
The company’s deposit and funding betas reflect its response to both the rising and declining interest rate environments. After the Federal Reserve began reducing rates in September 2024 with an initial cut of 50 basis points, followed by two 25-basis-point reductions in November and December, Brookline has adjusted its deposit pricing strategy accordingly.
Forward Outlook
Looking ahead, Brookline Bancorp’s primary focus will be completing its merger with Berkshire Hills Bancorp in the second half of 2025. The company maintains a strong capital position, with all regulatory ratios well above "well-capitalized" thresholds, providing flexibility for the merger integration.
The bank’s board of directors declared a quarterly dividend of $0.135 per share, payable on May 23, 2025, to stockholders of record on May 9, 2025, continuing its 28-year track record of dividend payments.
While the earnings miss suggests some near-term challenges, the strategic repositioning of the balance sheet, improving net interest margin, and progress on the merger integration point to potential longer-term benefits. Investors appear to be looking beyond the quarterly results to the strategic value of the Berkshire Hills combination, as evidenced by the positive stock price reaction despite the earnings shortfall.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.