Brookline Bancorp boosted its bottom line in 2015 on commercial lending and fee income from interest rate swaps.
The company posted net income totaling $49.8 million for the year ended Dec. 31, up 15 percent from $43.3 million in 2014. Net income for the fourth quarter totaled $13.3 million, compared with $10.9 million in the same period in 2014.
The holding company for Brookline Bank, Bank Rhode Island and First Ipswich Bank saw particular success in its commercial loan portfolio. Total commercial loans and leases increased about 12 percent year-over-year to $1.4 billion in the fourth quarter, while commercial real estate loans increased about 8 percent to $2.7 billion over that time period.
During the company’s quarterly conference call, President and CEO Paul A. Perrault ruminated on the pulse of the Boston real estate market in response to an investor’s question.
“I’d say the office market continues to be pretty strong, possibly rents maybe even rising in that area. In multifamily, we think that perhaps rents have stopped going up. We think that supply is coming on at a pace which is causing a little bit of softness,” he said. “The vacancy is still low, and I’d say one of the other big differentiators from past cycles here in metro Boston is that the population is growing pretty well, and it’s growing in areas that provide younger people with very strong incomes.”
He added, “We’re obviously careful about this and not predicting any kind of collapse, but it’s probably not as hot as it was a year or two years ago.”
Another investor queried Perrault and CFO Carl M. Carlson on the bank holding company’s taxi loan portfolio. Perrault replied that the company had had two foreclosures in that portfolio, but he did not blame the rise of ride-sharing apps for that.
“They each have a little story behind them that we don’t believe were entirely affected by the car services,” he said. “Although their revenues have certainly decreased, it is still sufficient to pay the debt and make a living and things seem to have stabilized in the market.”
Brookline Bancorp also benefitted from an increase in noninterest income in the fourth quarter, which increased $1.3 million quarter-over-quarter to $6.1 million. Much of that increase was due to income from interest rate swaps and gains on sales of loans and leases held-for-sale, the company said.
Commenting on the interest rate swaps during the company’s quarterly conference call, Perrault said Brookline Bancorp was “relatively new to the business” and that some customers had wanted to lock in long-term interest rates in anticipation of the Fed’s move to raise rates.
“Whereas in the past, a customer might have stayed with us but if they wanted the fixed rate, they might have gone somewhere else with that particular property, we are now able to keep those in house,” he said. “In a very minor way, we are gaining market share in the swap business and I think it’s going to be a function of appetite that is going to determine much of that business that we do.”
Total deposits increased about 8 percent year-over-year to $4.3 billion in the fourth quarter, and balances increased across all deposit types during the fourth quarter, the company said.
Total assets increased about 4 percent to $6 billion at Dec. 31, compared with $5.8 billion at year-end 2014.
