Brookline Bancorp's Q2 Earnings Call Highlights Mixed Outlook with Improving Earnings and Merger Progress

Brookline Bancorp reported Q2 earnings of $22 million, or $0.25 per share, with a net interest margin growth of 10 basis points to 332 basis points. The company saw a $59 million increase in customer deposits and reduced noninterest expenses by $1.3 million. However, the Boston office portfolio experienced stress, and there was a decline in commercial real estate and equipment finance loans. The provision for credit losses increased to $7 million, and net charge-offs amounted to $5.1 million.

Brookline Bancorp, Inc. (BRKL) reported its second-quarter 2025 earnings, highlighting a significant improvement in financial performance. The company reported earnings of $22 million or $0.25 per share, with a net interest margin growth of 10 basis points to 332 basis points [1].

The company saw a $59 million increase in customer deposits, contributing to a margin expansion of 10 basis points during the quarter. This expansion was supported by higher asset yields and lower funding costs [1].

Brookline Bancorp also reported a reduction in noninterest expenses by $1.3 million, excluding merger charges, which was largely driven by lower expenses in nearly every category except marketing, which increased by $503,000 [2].

However, the company faced challenges with its Boston office portfolio, which remains under stress. The portfolio experienced slow lease-up rates and several credits were downgraded, leading to increased reserves for selected properties [2].

The loan portfolio contracted by $61 million in Q2, with commercial real estate and equipment finance loans decreasing by $95 million and $46 million, respectively. This contraction was intentional and aimed at reducing exposures in commercial real estate and specialty vehicles while growing commercial and consumer loan portfolios [1].

The provision for credit losses increased to $7 million, with total net charge-offs at $5.1 million. The increase in provisions was driven by additional credit reserves for selected properties in the Boston office market, including two Eastern Funding credits [1].

Brookline Bancorp announced the proposed merger of equals with Berkshire Hills, which was approved by stockholders in May. The merger is expected to enhance products and services for combined customers and is anticipated to be completed in early 2026, after regulatory approval [1].

The company anticipates modest improvements in net margin and expects loan portfolio growth in the low single digits for the remainder of 2025. Noninterest income is projected at $5.5 million to $6.5 million per quarter. The effective tax rate is expected to be 24.25%, excluding nondeductible merger charges [2].

References:
[1] https://www.ainvest.com/news/brookline-bancorp-q2-2025-key-contradictions-merger-timeline-loan-pricing-expense-management-2507/
[2] https://finance.yahoo.com/news/brookline-bancorp-inc-brkl-q2-072042870.html