Brookline Bancorp sold off the lion’s share of its indirect auto loan business as it continued to shift its focus toward commercial lending in the first quarter.
The holding company for Brookline Bank, Bank Rhode Island and First Ipswich Bank posted $11.7 million in net income for the quarter ended March 31, representing an increase of a little more than 7 percent from the $10.9 million it recorded in the fourth quarter of 2014.
The company’s board of directors also approved a 5.9 percent increase in Brookline Bancorp’s quarterly cash dividend, the first such increase since the company completed its second-step conversion in 2002, President and CEO Paul Perrault said during a conference call to discuss the company’s earnings. The dividend of 9 cents per share will be paid on May 22 to shareholders of record on May 8.
The sale of $255.2 million in auto loans, representing more than 90 percent of its indirect auto loan portfolio, resulted in a nominal loss in the first quarter, though the bank’s management noted on a conference call that that sale happened in March and as such, Brookline Bancorp got the full benefit of those loan balances during the quarter. The company’s indirect auto portfolio decreased from $317 million, or 6.6 percent of total loans and leases at Dec. 31, 2014 to $23.3 million, or 0.5 percent of total loans and leases, at March 31.
Total assets declined $45.8 million during the first quarter to $5.8 billion, largely due to the aforementioned auto portfolio sale, but increased $335.7 million on a year-over-year basis. Total loans and leases, excluding the auto loan portfolio, increased $532.2 million year-over-year to $4.6 billion. Brookline Bancorp’s total commercial real estate and commercial loan and lease portfolio increased $93.3 million in the first quarter, or 9.4 percent on an annualized basis. On March 31, commercial loans made up 80.4 percent of Brookline Bancorp’s total loans and leases, compared with 75.4 percent in the fourth quarter last year and 73.6 percent a year ago.
Total deposits increased $267.1 million year-over-year to $4.1 billion at March 31. The increase in the first quarter was largely due to a $110.8 million increase in brokered deposits. Core deposits increased at a 6.9 percent annualized rate in the first quarter.
However, Brookline Bancorp also recorded a $2.3 million provision for loan and lease losses in the first quarter, compared with $1.7 million in the prior quarter. The company increased that line item $600,000 to cover additional loan growth during the quarter, as well as $1.6 million specifically reserved for one commercial relationship that was downgraded during the quarter. However, Brookline Bancorp also released $1.9 million of reserves due to the sale of its indirect auto loan portfolio.
That one troubled relationship also affected asset quality, largely driving the $9 million increase in nonperforming loans, which totaled $22.7 million at March 31. CFO Carl Carlson said during the conference call that that relationship was a Bank Rhode Island loan made about a year and a half ago to a well-established company that had since run into difficulty concerning one of its foreign contracts. While that client is operating on a break-even basis, he said, the bank decided it would be best to establish a $1.6 million reserve.
Net charge-offs stayed flat at $900,000 for the first quarter of 2015 and the fourth quarter of 2014. The ratio of net charge-offs to average loans on an annualized basis also remained flat over that time period at 0.07 percent.
The allowance for loan losses represented 1.19 percent of total loans and leases at March 31, compared with 1.11 percent at Dec. 31, 2014. The allowance for loan losses related to originated loans and leases as a percentage of originated loans and leases totaled 1.28 percent at March 31, 2015, compared with 1.20 percent at year-end 2014.
All appeared to be quiet on the M&A front, too.
When asked his thoughts about merger and acquisition activity in Eastern Massachusetts during the conference call’s Q&A session, Perrault answered, “I don’t know. You can line up all the usual suspects, and somebody may or may not buy them if they’re willing to be sold, I’d say you have a better guess at that than I would.”
