PROVIDENCE – Brookline Bancorp Inc., the Boston-based parent company for Bank Rhode Island, saw year-over-year earnings slashed nearly in half amid the ongoing pandemic.
The company on Wednesday reported a $47.6 million 2020 profit, a 45.7% cut over the 2019 earnings. Earnings per diluted share also fell, from $1.10 to 60 cents.
The dramatic drop in profit margins reflected, in part, the more than six-fold increase in annual provision for credit losses. The $61.9 million set aside in 2020 in anticipation of bad loans caused by the pandemic is a 545.8% increase over 2019 provisions.
A continued low-interest rate environment also contributed to lower profits, with interest income falling $20.8 million to $326.8 million in 2020. The low interest rates also affected net interest margin – the difference between interest income generated and the amount paid out to lenders – which declined 34 basis points to 3.17%.
Noninterest income dipped 17.3% to $24.6 million, including a 48.3% cut to net loan level derivative income.
Total revenue of $351.5 million represented a 6.9% year-over-year decline. This was partially offset by a 29.3% cut to interest expenses, both deposits and borrowed funds. Noninterest expenses rose 2.1% to $160.8 million, including $101 million in employee compensation and benefits.
Total year-end assets stood at $8.7 billion, a 13.4% year-over-year increase that included a 10.6% bump in total loans and leases. Of the $7.2 billion in 2020 loans and leases, commercial real estate loans accounted for $3.8 billion, while the company’s participation in the Paycheck Protection Program amounted to $581.7 million across 2,922 loans.
Total deposits of $6.9 billion represented an 18.5% increase over the prior year.
Despite year-end losses, the fourth-quarter earnings came in stronger than the fourth quarter of 2019, increasing 20.2% to $26.7 million. Quarterly earnings per diluted share increased 6 cents to 34 cents.
After three prior quarters of significant set-asides for credit loss provisions, the company took out $2.1 million from its reserves in the fourth quarter as a result of fewer outstanding loans and commitments and a “modestly improved economic outlook” for the year ahead, the company stated. The $4.4 million in quarterly net charge-offs represented 0.24% of average annualized loans and leases.
Fourth-quarter revenue of $84.7 million declined 11% year over year amid lower interest rates and losses in net loan level derivative income. However, interest expenses also fell, including a 50% cut to deposit expenses.
“Given the challenges of this past year, I am very pleased with our financial performance and this quarter’s earnings report,” Paul Perrault, CEO and president said in a statement. “We are cautiously optimistic and think that we are well-positioned as we look forward to what we hope is a more positive environment in 2021 but remain diligent and prudent as we continue to navigate our way through these challenging times.”
Brookline’s earnings report did not break out the performance of Providence-based Bank Rhode Island. Brookline Bancorp is also the parent company for Brookline Bank and First Ipswich Bank in Massachusetts.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
