PROVIDENCE – Rising interest rates haven’t helped Brookline Bancorp Inc.’s profit margin yet, with the Bank Rhode Island parent company on Wednesday reporting a 6.6% decrease in quarterly earnings compared with a year ago.
The $24.7 million in first-quarter profit reflects a 4.2% cut to its interest income, which totaled $75.1 million for the quarter that ended March 31. Coupled with falling interest income, the bank has also slowed down on dumping reserves from its credit-loss provisions after growing its stock piles during the first part of the pandemic. The company released $164,000 from its loan-loss reserves in the first quarter of 2022, versus the $2.1 million it dumped in the first quarter of 2021.
Earnings per diluted share fell 2 cents to 32 cents.
The U.S. Federal Reserve began hiking interest rates at the beginning of the year – usually a welcome sign for financial institutions improving profit margin. But the higher rates don’t appear to have moved the needle much for Brookline Bancorp. In addition to falling interest income, its interest expenses also declined by 43.8% to $5.3 million, opposite the typical increase in interest expense that accompanies a rate hike.
Net interest margin – the difference between interest income generated and the amount paid out – increased 10 basis points to 3.49%.
Earnings from nonincome sources such as fees on loans and deposits grew 15.3% year over year to $5.5 million. The biggest driver was “other income,” which increased nearly 70% to $1.2 million.
Noninterest expenses ticked up 4.1% to $42.5 million, including a $1 million bump to employee compensation and benefits.
Total quarterly assets stood at $8.6 billion, a .9% rise over a year ago. Total loans and leases ticked down .6% to $7.2 billion amid a $524 million cut in commercial loans as the income from Paycheck Protection Program loans ends. This was partially offset by increasing commercial real estate loans, which grew by $445 million over a year ago.
Total deposits of $7.1 billion marked a 3.3% increase year over year, with gain in demand for checking and money market accounts.
“Our bankers continued to generate strong loan and deposit growth during the first quarter,” Paul Perrault, chairman and CEO, said in a statement. “Asset quality continues to be strong as the economy in the markets we serve continues to improve.”
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. Bank Rhode Island has the fifth-highest share of in-state deposits in Rhode Island as of June 30, at $2.7 billion, according to the Federal Insurance Deposit Corp.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
