Brookline Bancorp 2017, 4Q profit fall after new tax law

BOSTON-BASED BROOKLINE BANCORP, parent of Bank Rhode Island, reported fourth-quarter and full-year earnings that were negatively impacted by the federal tax overhaul.
BOSTON-BASED BROOKLINE BANCORP, parent of Bank Rhode Island, reported fourth-quarter and full-year earnings that were negatively impacted by the federal tax overhaul.

BOSTON – Brookline Bancorp Inc. suffered a $9 million noncash charge on deferred tax assets stemming from the federal tax overhaul, depressing both full-year and fourth-quarter profit.

The Boston-based parent of Bank Rhode Island reported 2017 net income fell 2.9 percent to $53.6 million, or 68 cents per diluted share, compared with $55.2 million, or 74 cents per diluted share, a year earlier.

Profit for the quarter ended Dec. 31, meanwhile, fell 44 percent to $7.8 million, or 9 cents per diluted share, compared with $13.9 million, or 19 cents per diluted share, during the prior year.

Excluding the $9 million charge, stemming from the federal Tax Cuts and Jobs Act of 2017 signed into law in December, the bank would have realized year-over-year profit increases for the quarter and 2017.

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“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,” said Paul Perrault, president and CEO.

The new tax law had a short-term negative impact on financial institutions carrying deferred tax assets, such as Brookline and Washington Trust Bancorp Inc. did.

However, banks with deferred tax liabilities, including Citizens Financial Group, largely realized gains.

Net-interest margin for the year grew to 3.57 percent compared with 3.44 percent a year earlier.

For 2017, total interest and dividend income, and total noninterest income increased 12.5 percent to $295.2 million thanks largely to gains realized on interest and dividend income as well as gains on sales of investment securities. The bank reported growth in all three of its overarching branches of lending: commercial real estate, commercial loans and leases and consumer loans.

The company reported fourth-quarter total interest and dividend income and total noninterest income grew 11.7 percent to $74.2 million.

Total assets grew 5.3 percent to $6.8 billion. Total deposits grew 5.6 percent to $4.9 billion. Total loans and leases grew 6.1 percent to $5.7 billion on the year. Allowance for loan and lease losses as a percentage of total loans and leases, meanwhile, grew to 1.02 percent compared with 0.99 percent a year earlier.

Excluding the $9 million charge on deferred tax assets, Brookline would have posted net income of $62.6 million for the full year, and $16.8 million for the fourth quarter.

Bank Rhode Island numbers were not immediately available. The parent company last year announced it would add First Commons Bank to its group of subsidiaries. The deal is expected to close in March.

“Our bankers continue to succeed in meeting the needs of our clients and helping our clients grow their businesses,” Perrault said.

­Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.

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