Despite a one time write-down of $9 million due to tax reform, Brookline Bank’s parent company reported strong earnings as the company continues to shrink its volatile taxi medallion portfolio.
The bank reported net income of $6.8 million, or $.09 per basic and diluted share, for the fourth quarter of 2017, compared to $13.3 million, or $.19 per basic and diluted share, for the fourth quarter of 2016.
On the year, Brookline reported net income of $50.5 million, or $0.68 per basic and diluted share, compared to $52.4 million, or $0.74 per basic and diluted share, in 2016.
“We closed 2017 on a solid basis with record pretax income and, excluding the impact of the tax changes, we reported record net income and earnings per share,” Paul Perrault, president and CEO of the company, said in a statement. “Our bankers continue to succeed in meeting the needs of our clients and helping our clients grow their businesses. We experienced significant growth in loans and deposits throughout the year.
The bank last last year announced the acquisition of First Commons Bank and its two branches in Newton and Wellesley. First Commons has about $320 million in assets, $260 million of which are loans.
The acquisition was the first by Brookline Bank since it raised $82 million from a stock offering at the beginning of 2017.
Brookline executives also said the bank had reduced its taxi medallion portfolio from $30.4 million at the end of the second quarter of 2017 to over $19 million by the end of 2017. Executives reported $7.2 million in charge-offs from taxi medallion loans.
Of the company’s $27.2 million in non-accrual loans at the end of the year, executives said $7.8 million of those were related to taxi medallions.
However, Perrault said the bank views a $9.3 million piece of the current $19 million portfolio essentially as a commercial and industrial loan. The repayment is not on the medallion and has significant assets behind it, he said.
The bank has set aside $3.8 million reserves for the current portfolio.
“It’s still murky as hell, but it hasn’t changed much in recent quarter,”Perrault told investors on a conference call, adding that borrowers are still making their payments. “We have been fortunate enough to be very, very aggressive in charging off some of these balances … but there is really no clarity in the marketplace to indicate what values might be, but I think its coming. The big thing that is missing piece is real market financing for someone acquiring one (medallion).”
Total loans at the $6.78 billion asset bank grew $332 million, reaching $5.73 billion, mainly due to growth in commercial real estate and equipment financing. Net interest income for the year was $57.7 million, up almost $6 million from 2016.
The net interest margin grew at 3.59 percent grew 19 basis points year-over-year. Non-interest income for the year was $32.2 million, up about $10 million from 2016.
The provision for loan losses for the fourth quarter was $1.8 million, down from about $3.1 million in the fourth quarter of 2016. The allowance for loan and lease losses represented 1.02 percent of total loans for 2017, compared to 0.99 percent for 2016.
