Brookline Bancorp's Q1 2025: Unpacking Contradictions in Merger Approvals, Loan Strategies, and Asset Quality

Regulatory timeline for Berkshire Hills merger, CRE runoff and loan growth strategy, loan portfolio composition and strategy, specialty vehicle portfolio strategy and exit, charge-offs and asset quality are the key contradictions discussed in Brookline Bancorp's latest 2025Q1 earnings call.



Revenue and Earnings Performance:
- Brookline Bancorp reported operating earnings of $20 million or $0.22 per share for Q1 2025, with net income on a GAAP basis at $19.1 million resulting in earnings per share of $0.21.
- The decrease in the loan portfolio by $136.6 million was intentional, reflecting a strategic reduction in commercial real estate exposures while maintaining customer relationships.
- The decline in the specialty vehicle portfolio contributed to the runoff, while customer deposits increased by $113.8 million, and the net interest margin improved by 10 basis points to 3.22%.

Loan Portfolio and Deposit Trends:
- Total assets stood at $11.5 billion, reflecting a decrease of $385.5 million from the end of 2024, primarily due to reductions in cash equivalents and specific loan segments.
- Despite a decline in commercial real estate and equipment finance loans by $135 million and $32 million, commercial loans saw growth, emphasizing strategic portfolio adjustments.
- Customer deposits increased by $113 million, with broker deposits and borrowings reduced by $468 million, indicating a shift in funding sources.

Merger and Strategic Initiatives:
- Brookline Bancorp's planned merger with Berkshire Hills Bancorp is progressing, with regulatory applications filed and stockholder meetings scheduled for May.
- The merger aims to create a combined entity with $11 billion in balance sheet size, potentially enhancing operational efficiencies and performance post-merger.
- The company is managing expenses cautiously, expecting growth in the loan portfolio and deposits, while noninterest income is projected to be $5.5 million to $6.5 million per quarter.