PROVIDENCE – The parent company of Bank Rhode Island on Thursday posted a third-quarter profit of $22.7 million, down 24.7% from the same period a year ago as higher interest rates continue to take their toll on the quarterly financial performance of banks across the region.
Diluted earnings per common share for Boston-based Brookline Bancorp Inc. sank to 26 cents, down from 39 cents a year ago. The results did not meet Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 27 cents per share.
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Third-quarter revenue – interest and dividend income plus noninterest income – totaled $152.6 million, up 59.8% from $95.5 million in the third quarter of 2022.
But the significant revenue increase was offset by skyrocketing expenses. Because of higher interest rates, total interest expense climbed to $63 million for the quarter, nearly six times higher than the $10.6 million in interest expense posted in the year-ago period.
Brookline’s quarterly earnings report did not break out the performance of Providence-based Bank Rhode Island. The corporation also owns Brookline Bank and First Ipswich Bank in Massachusetts, and completed its acquisition of New York-based PCSB Financial Corp. in January.
Brookline Bancorp’s total assets of $11.8 billion as of Sept. 30 represented a 87% year-over-year increase, and total deposits increased 27% year over year to $8.5 billion, both primarily driven by the acquisition of PCSB Financial.
“We continue to make progress in all of our markets,” said Brookline CEO and Chairman Paul Perrault. “Our colleagues are keeping us well positioned to continue taking advantage of opportunities as they present themselves.”
Still, banks are seeing profits narrow with higher interest rates.
Brookline said its net interest margin, the difference between interest income generated versus the amount of interest paid out to depositors and lenders, fell 72 basis points to 3.18% in the third quarter compared with a year ago.
Measurements of the company’s asset quality dropped in the quarter, too. Nonperforming assets – typically loans and leases that are more than 90 days overdue – jumped from $18.3 million in the third quarter of 2022 to $51.5 million as of Sept. 30.
As a result, the percentage of nonperforming assets as a percentage of total assets more than doubled from 0.21% to 0.46% year over year in the third quarter.
Brookline noted that a $14.8 million “commercial real estate relationship” was categorized as nonaccrual during the quarter.
