Photo by James Sanna | Banker & Tradesman Staff
Brookline Bancorp is cutting back amidst a challenging rate environment. In the company’s second-quarter earnings call last week, executives discussed their exit from its specialty vehicle finance business which also led to a reduction in staff.
Brookline Bancorp is the parent company to Brookline Bank, Bank Rhode Island and Westchester County, New York’s PCSB Bank.
The specialty vehicle financing business primarily focused on tow trucks and Brookline’s Chairman and CEO Paul Perrault said that the decision was driven by more competitors continuing to enter the market as well as increased collections costs.
“We closed our office in Melville, Long Island and had a reduction of staff of 21. The portfolio of $250 million in specialty vehicle loans will run out over time and will be a slight headwind to the overall relative vehicle equipment finance portfolio. We estimate run off over the next 12 months to be $115 million,” he said.
Pearrult mentioned that Amazon’s involvement in the delivery business affected its specialty vehicle finance business.
Brookline reported that non-interest expense decreased $1.8 million to $59.2 million from $61.0 million for the quarter ended March 31, 2024. The main drivers of the decrease were $1.9 million in compensation and employee benefits expense and $0.3 million in equipment and data processing expense. The company did note that the expense was partially offset by a $0.8 million non-recurring restructuring charge due to its exit from the specialty vehicle finance business.
Net interest income also decreased $1.6 million to $80.0 million during the second quarter of 2024 from $81.6 million in the quarter ending on March 31. Net interest margin also decreased six basis points to 3 percent from 3.06 percent, This was primarily driven by the reversal of interest relating to new nonaccrual loans and higher funding costs, executive said.
Brookline is experimenting with interest rate changes in some of its banking products. Brookline Co-President and CFO Carl Carlson and Perrault mentioned that, fairly recently, various products have seen interest rates drop by 10 basis points.
Brookline began the year by acquiring PCSB Financial Corp., a bank holding company based in New York. Perrault told stock analysts on the call that it is still a difficult environment for mergers and acquisitions but that an improved M&A climate could be on the horizon.
“It’s still a very difficult environment,” he said in response to an analyst’s question. “I think we’re closer to getting to a more normal M&A activity, but we’re not quite there yet and I’m not aware that there’s all that much around us anyway.”
Total assets for Brookline increased by $92 million which is credited to growth in loans – $66 million worth of growth – and higher cash and equivalents, for a total of $11.63 billion. Deposits also increased by $18 million, for a total of $8.74 billion.
