0001049782 brkl:CollateralizedMortgageObligationsIssuedByUSGovernmentSponsoredEnterprisesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)~~(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from N/A to .

Commission file number 0-23695

~~Brookline Bancorp, Inc.~~BROOKLINE BANCORP INC.

(Exact name of registrant as specified in its charter)



Delaware			04-3402944
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

131 Clarendon Street	Boston	MA	02116
(Address of principal executive offices)			(Zip Code)

(617) 425-4600

(Registrant’s telephone number, including area code)



~~Delaware~~			~~04-3402944~~Securities registered pursuant to Section 12(b) of the Act:
~~(State or other jurisdiction~~Title of ~~incorporation or organization)~~each class	Trading Symbol(s)	~~(I.R.S. Employer Identification No.)~~Name of each exchange on which registered
Common Stock	BRKL
~~131 Clarendon Street, Boston, MA~~		~~02116~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~Nasdaq Global Select Market

~~(617) 425-4600~~

~~(Registrant’s telephone number, including area code)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ~~YES~~ x NO oYes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ~~YES~~ x NO oYes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12-b-2 of the Exchange Act.



Large accelerated filer	x☒	Accelerated filer	o☐

Non-accelerated filer	o ☐(Do not check if a smaller reporting company)	Smaller Reporting Company	o☐

		Emerging growth company	o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~YES~~ o NO xYes ☐ No ☒

At ~~November 3, 2017,~~May 29, 2020, the number of shares of common stock, par value $0.01 per share, outstanding was ~~76,652,372.~~78,919,276.

EXPLANATORY NOTE

As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on May 11, 2020, in accordance with the U.S. Security and Exchange Commission’s “Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies” dated March 25, 2020 (Release No. 34-88465) (the “Order”), the Company relied on the relief provided by the Order to extend the filing of this Quarterly Report on Form 10-Q for the three months ended March 31, 2020 (the “Quarterly Report”). In compliance with public health orders related to the COVID-19 pandemic, the Company has transitioned to a remote working environment. The Company’s management has devoted significant time and attention to assessing the potential impact of the COVID-19 pandemic on the Company’s operations and financial position and developing operational and financial plans to address those matters, which has diverted management resources from completing tasks necessary to file this Quarterly Report by the original May 11, 2020 deadline.

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

FORM 10-Q

Table of Contents



		Page
Part I	Financial Information

Item 1.	Unaudited Consolidated Financial Statements

	Unaudited Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019	1

	Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 2020 and ~~Nine Months Ended September 30, 2017 and 2016~~2019	2

	Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and ~~Nine Months Ended September 30, 2017 and 2016~~2019	3

	Unaudited Consolidated Statements of Changes in Equity for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4

	Unaudited Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	65

	Notes to Unaudited Consolidated Financial Statements	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5649

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9485

Item 4.	Controls and Procedures	9787

Part II	Other Information

Item 1.	Legal Proceedings	9888

Item 1A.	Risk Factors	9888

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9888

Item 3.	Defaults Upon Senior Securities	9888

Item 4.	Mine Safety Disclosures	9888

Item 5.	Other Information	9888

Item 6.	Exhibits	9989

	Signatures	~~100~~90

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements


BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Balance Sheets	BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Balance Sheets						BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Balance Sheets
	At September 30, 2017			At December 31, 2016			At March 31, 2020			At December 31, 2019
	(In Thousands Except Share Data)						(In Thousands Except Share Data)
ASSETS
Cash and due from banks	$	35,392		$	36,055		$	86,996		$	33,589
Short-term investments	27,971			31,602			253,772			44,201
Total cash and cash equivalents	63,363			67,657			340,768			77,790
Investment securities available-for-sale	522,910			523,634			761,539			498,995
Investment securities held-to-maturity (fair value of $107,220 and $85,271, respectively)	107,738			87,120
Investment securities held-to-maturity (fair value of $0 and $87,561, respectively)							—			86,780
Equity securities held-for-trading							2,558			3,581
Total investment securities	630,648			610,754			764,097			589,356
Loans held-for-sale	2,973			13,078
Loans and leases:
Commercial real estate loans	3,029,009			2,918,567			3,762,158			3,669,222
Commercial loans and leases	1,585,296			1,495,408			1,826,866			1,838,748
Consumer loans	1,025,135			984,889			1,233,503			1,229,846
Total loans and leases	5,639,440			5,398,864			6,822,527			6,737,816
Allowance for loan and lease losses	(65,413		)	(53,666		)	(113,181		)	(61,082		)
Net loans and leases	5,574,027			5,345,198			6,709,346			6,676,734
Restricted equity securities	62,135			64,511			68,472			53,818
Premises and equipment, net of accumulated depreciation of $61,716 and $58,790, respectively	81,159			76,176
Premises and equipment, net of accumulated depreciation of $78,343 and $76,763, respectively							73,786			74,350
Right-of-use asset operating leases							24,789			24,876
Deferred tax asset	28,093			25,247			38,141			25,017
Goodwill	137,890			137,890			160,427			160,427
Identified intangible assets, net of accumulated amortization of $33,219 and $31,649, respectively	6,563			8,133
Identified intangible assets, net of accumulated amortization of $37,817 and $37,481, respectively							4,087			4,423
Other real estate owned ("OREO") and repossessed assets, net	4,398			1,399			2,038			2,631
Other assets	95,035			88,086			275,640			167,431
Total assets	$	6,686,284		$	6,438,129		$	8,461,591		$	7,856,853
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand checking accounts	$	905,472		$	900,474		$	1,175,329		$	1,141,578
Interest-bearing deposits:
NOW accounts	318,284			323,160
Savings accounts	665,558			613,061
Money market accounts	1,749,040			1,733,359
Certificate of deposit accounts	1,167,329			1,041,022
Total interest-bearing deposits	3,900,211			3,710,602
Interest-bearing deposits							4,714,609			4,688,494
Total deposits	4,805,683			4,611,076			5,889,938			5,830,072
Borrowed funds:
Advances from the Federal Home Loan Bank of Boston ("FHLBB")	872,579			910,774			1,137,431			758,469
Subordinated debentures and notes	83,229			83,105			83,630			83,591
Other borrowed funds	30,087			50,207			70,743			60,689
Total borrowed funds	985,895			1,044,086			1,291,804			902,749
Operating lease liabilities							24,789			24,876
Mortgagors' escrow accounts	8,151			7,645			7,441			7,232
Reserve for unfunded credits							17,222			1,880
Accrued expenses and other liabilities	74,019			72,573			317,829			144,438
Total liabilities	5,873,748			5,735,380			7,549,023			6,911,247

Commitments and contingencies (Note 12)
Stockholders' Equity:
Brookline Bancorp, Inc. stockholders' equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 81,695,695 shares issued and 75,744,445 shares issued, respectively	817			757
Common stock, $0.01 par value; 200,000,000 shares authorized; 85,177,172 shares issued and 85,177,172 shares issued, respectively							852			852
Additional paid-in capital	697,888			616,734			737,422			736,601
Retained earnings, partially restricted	160,225			136,671			227,359			265,376
Accumulated other comprehensive loss	(1,893		)	(3,818		)
Treasury stock, at cost; 4,572,954 shares and 4,707,096 shares, respectively	(51,452		)	(53,837		)
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 150,921 shares and 176,688 shares, respectively	(823		)	(963		)
Total Brookline Bancorp, Inc. stockholders' equity	804,762			695,544
Noncontrolling interest in subsidiary	7,774			7,205
Accumulated other comprehensive income							16,947			2,283
Treasury stock, at cost; 5,862,811 shares and 5,003,127 shares, respectively							(69,617		)	(59,073		)
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 72,441 shares and 79,548 shares, respectively							(395		)	(433		)
Total stockholders' equity	812,536			702,749			912,568			945,606
Total liabilities and stockholders' equity	$	6,686,284		$	6,438,129		$	8,461,591		$	7,856,853

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income



	Three Months Ended March 31,
	2020			2019
	(In Thousands Except Share Data)
Interest and dividend income:
Loans and leases	$	79,559		$	80,672
Debt securities	2,976			3,236
Marketable and restricted equity securities	778			911
Short-term investments	209			267
Total interest and dividend income	83,522			85,086
Interest expense:
Deposits	16,240			15,948
Borrowed funds	5,570			6,139
Total interest expense	21,810			22,087
Net interest income	61,712			62,999
Provision for credit losses	54,114			1,353
Net interest income after provision for credit losses	7,598			61,646
Non-interest income:
Deposit fees	2,458			2,523
Loan fees	550			413
Loan level derivative income, net	2,156			1,745
Gain on investment securities, net	1,330			134
Gain on sales of loans and leases held-for-sale	120			289
Other	2,714			1,526
Total non-interest income	9,328			6,630
Non-interest expense:
Compensation and employee benefits	25,219			23,743
Occupancy	3,953			3,947
Equipment and data processing	4,703			4,661
Professional services	1,651			1,076
FDIC insurance	378			593
Advertising and marketing	1,075			1,069
Amortization of identified intangible assets	336			402
Other	3,433			3,380
Total non-interest expense	40,748			38,871
(Loss) income before provision for income taxes	(23,822		)	29,405
(Benefit) provision for income taxes	(6,546		)	6,895
Net (loss) income before noncontrolling interest in subsidiary	(17,276		)	22,510
Less: net income attributable to noncontrolling interest in subsidiary	—			43
Net (loss) income attributable to Brookline Bancorp, Inc.	$	(17,276	)	$	22,467
Earnings per common share:
Basic	$	(0.22	)	$	0.28
Diluted	(0.22		)	0.28
Weighted average common shares outstanding during the year:
Basic	79,481,462			79,658,583
Diluted	79,665,774			79,843,578
Dividends paid per common share	$	0.115		$	0.105

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In Thousands Except Share Data)
Interest and dividend income:
Loans and leases $ 63,054
$ 57,858
$ 182,750
$ 167,474
Debt securities 3,154
2,822
9,310
8,829
Marketable and restricted equity securities 788
804
2,311
2,213
Short-term investments 180
47
342
149
Total interest and dividend income 67,176
61,531
194,713
178,665
Interest expense:
Deposits 5,984
5,112
16,607
14,875
Borrowed funds 4,349
4,069
12,582
11,980
Total interest expense 10,333
9,181
29,189
26,855
Net interest income 56,843
52,350
165,524
151,810
Provision for credit losses 2,911
2,215
17,186
7,138
Net interest income after provision for credit losses 53,932
50,135
148,338
144,672
Non-interest income:
Deposit fees 2,547
2,289
7,508
6,650
Loan fees 282
330
772
977
Loan level derivative income, net 844
858
1,432
3,697
Gain on sales of investment securities, net —
—
11,393
—
Gain on sales of loans and leases held-for-sale 1,049
588
1,709
1,986
Other 1,251
1,264
3,544
3,893
Total non-interest income 5,973
5,329
26,358
17,203
Non-interest expense:
Compensation and employee benefits 21,067
20,369
61,761
58,179
Occupancy 3,650
3,411
10,952
10,328
Equipment and data processing 4,210
3,826
12,437
11,468
Professional services 973
997
3,115
2,925
FDIC insurance 842
956
2,648
2,677
Advertising and marketing 839
844
2,513
2,558
Amortization of identified intangible assets 519
623
1,570
1,879
Merger and acquisition expense 205
—
205
—
Other 3,103
2,362
8,758
7,707
Total non-interest expense 35,408
33,388
103,959
97,721
Income before provision for income taxes 24,497
22,076
70,737
64,154
Provision for income taxes 8,330
7,804
24,924
22,868
Net income before noncontrolling interest in subsidiary 16,167
14,272
45,813
41,286
Less net income attributable to noncontrolling interest in subsidiary 801
655
2,122
2,203
Net income attributable to Brookline Bancorp, Inc. $ 15,366
$ 13,617
$ 43,691
$ 39,083
Earnings per common share:
Basic $ 0.20
$ 0.19
$ 0.59
$ 0.56
Diluted 0.20
0.19
0.59
0.56
Weighted average common shares outstanding during the year:
Basic 76,452,539
70,299,722
73,743,658
70,228,127
Diluted 76,759,430
70,450,760
74,117,180
70,394,465
Dividends declared per common share $ 0.09
$ 0.09
$ 0.27
$ 0.27

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In Thousands)
Net income before noncontrolling interest in subsidiary $ 16,167
$ 14,272
$ 45,813
$ 41,286

Investment securities available-for-sale:
Unrealized securities holding gains (losses) 439
(1,672 ) 3,002
11,486
Income tax (benefit) expense (157 ) 599
(1,077 ) (4,114 )
Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes 282
(1,073 ) 1,925
7,372

Comprehensive income 16,449
13,199
47,738
48,658
Net income attributable to noncontrolling interest in subsidiary 801
655
2,122
2,203
Comprehensive income attributable to Brookline Bancorp, Inc. $ 15,648
$ 12,544
$ 45,616
$ 46,455



	Three Months Ended March 31,
	2020			2019
	(In Thousands)
Net (loss) income before noncontrolling interest in subsidiary	$	(17,276	)	$	22,510

Investment securities available-for-sale:
Unrealized securities holding gains (losses)	18,810			6,500
Income tax (expense) benefit	(4,146		)	(1,433		)
Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	14,664			5,067
Net unrealized securities holding gains (losses)	14,664			5,067

Other comprehensive (loss) income, net of taxes	14,664			5,067

Comprehensive (loss) income	(2,612		)	27,577
Less: Net income attributable to noncontrolling interest in subsidiary	—			43
Comprehensive (loss) income attributable to Brookline Bancorp, Inc.	$	(2,612	)	$	27,534

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Stockholders' Equity

~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019



	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive (Loss) Income		Treasury Stock			Unallocated Common Stock Held by ESOP			Total Brookline Bancorp, Inc. Stockholders' Equity			Noncontrolling Interest in Subsidiary		Total Stockholders' Equity
	(In Thousands)
Balance at December 31, 2019	$	852	$	736,601	$	265,376		$	2,283	$	(59,073	)	$	(433	)	$	945,606		$	—	$	945,606
Net loss attributable to Brookline Bancorp, Inc.	—		—		(17,276		)	—		—			—			(17,276		)	—		(17,276		)
Other comprehensive income	—		—		—			14,664		—			—			14,664			—		14,664
Common stock dividends of $0.115 per share	—		—		(9,173		)	—		—			—			(9,173		)	—		(9,173		)
Compensation under recognition and retention plans	—		758		(45		)	—		(134		)	—			579			—		579
Treasury stock, repurchase shares	—		—		—			—		(10,410		)	—			(10,410		)	—		(10,410		)
Common stock held by ESOP committed to be released (7,107 shares)	—		63		—			—		—			38			101			—		101
Adoption of ASU 2016-13 (CECL)	—		—		(11,523		)	—		—			—			(11,523		)	—		(11,523		)
Balance at March 31, 2020	$	852	$	737,422	$	227,359		$	16,947	$	(69,617	)	$	(395	)	$	912,568		$	—	$	912,568

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Treasury
Stock

Unallocated
Common Stock
Held by ESOP

Total Brookline
Bancorp, Inc.
Stockholders'
Equity

Noncontrolling
Interest in
Subsidiary

Total Stockholders'
Equity
(In Thousands)
Balance at December 31, 2016 $ 757
$ 616,734
$ 136,671
$ (3,818 ) $ (53,837 ) $ (963 ) $ 695,544
$ 7,205
$ 702,749
Net income attributable to Brookline Bancorp, Inc. —
—
43,691
—
—
—
43,691
—
43,691
Net income attributable to noncontrolling interest in subsidiary —
—
—
—
—
—
—
2,122
2,122
Issuance of common stock 60
81,943
—
—
—
—
82,003
—
82,003
Issuance of noncontrolling units —
—
—
—
—
—
—
118
118
Other comprehensive income —
—

1,925
—
—
1,925
—
1,925
Common stock dividends of $0.27 per share —
—
(20,137 ) —
—
—
(20,137 ) —
(20,137 )
Dividend distribution to owners of noncontrolling interest in subsidiary —
—
—
—
—
—
—
(1,671 ) (1,671 )
Compensation under recognition and retention plan —
(1,016 ) —
—
2,385
—
1,369
—
1,369
Common stock held by ESOP committed to be released (25,767 shares) —
227
—
—
—
140
367
—
367
Balance at September 30, 2017 $ 817
$ 697,888
$ 160,225
$ (1,893 ) $ (51,452 ) $ (823 ) $ 804,762
$ 7,774
$ 812,536



	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Unallocated Common Stock Held by ESOP			Total Brookline Bancorp, Inc. Stockholders' Equity			Noncontrolling Interest in Subsidiary			Total Stockholders' Equity
	(In Thousands)
Balance at December 31, 2018	$	852	$	755,629		$	212,838		$	(9,460	)	$	(59,120	)	$	(599	)	$	900,140		$	10,479		$	910,619
Net income attributable to Brookline Bancorp, Inc.	—		—			22,467			—			—			—			22,467			—			22,467
Net income attributable to noncontrolling interest in subsidiary	—		—			—			—			—			—			—			43			43
Other comprehensive income	—		—			—			5,067			—			—			5,067			—			5,067
Common stock dividends of $0.105 per share	—		—			(8,376		)	—			—			—			(8,376		)	—			(8,376		)
Dividend distribution to owners of noncontrolling interest in subsidiary	—		(930		)	—			—			—			—			(930		)	—			(930		)
Redemption of noncontrolling interest in subsidiary	—		(18,697		)	—			—			—			—			(18,697		)	(10,522		)	(29,219		)
Compensation under recognition and retention plans	—		814			—			—			(1		)	—			813			—			813
Common stock held by ESOP committed to be released (5,871 shares)	—		56			—			—			—			32			88			—			88
Balance at March 31, 2019	$	852	$	736,872		$	226,929		$	(4,393	)	$	(59,121	)	$	(567	)	$	900,572		$	—		$	900,572

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Unaudited Consolidated Statements of Changes in Stockholders' Equity (Continued)~~

~~Nine Months Ended September 30, 2017 and 2016~~

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Treasury
Stock

Unallocated
Common Stock
Held by ESOP

Total Brookline
Bancorp, Inc.
Stockholders'
Equity

Noncontrolling
Interest in
Subsidiary

Total Stockholders'
Equity
(In Thousands)
Balance at December 31, 2015 $ 757
$ 616,899
$ 109,675
$ (2,476 ) $ (56,208 ) $ (1,162 ) $ 667,485
$ 6,001
$ 673,486
Net income attributable to Brookline Bancorp, Inc. —
—
39,083
—
—
—
39,083
—
39,083
Net income attributable to noncontrolling interest in subsidiary —
—
—
—
—
—
—
2,203
2,203
Issuance of noncontrolling interest —
—
—
—
—
—
—
76
76
Other comprehensive income —
—

7,372
—
—
7,372
—
7,372
Common stock dividends of $0.27 per share —
—
(19,018 ) —
—
—
(19,018 ) —
(19,018 )
Dividend distribution to owners of noncontrolling interest in subsidiary —
—
—
—
—
—
—
(1,734 ) (1,734 )
Compensation under recognition and retention plans —
(1,023 ) —
—
2,057
—
1,034
—
1,034
Common stock held by ESOP committed to be released (27,279 shares) —
266
—
—
—
149
415
—
415
Balance at September 30, 2016 $ 757
$ 616,142
$ 129,740
$ 4,896
$ (54,151 ) $ (1,013 ) $ 696,371
$ 6,546
$ 702,917

BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows	BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows						BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows

	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
	(In Thousands)						(In Thousands)
Cash flows from operating activities:
Net income attributable to Brookline Bancorp, Inc.	$	43,691		$	39,083
Net (loss) income attributable to Brookline Bancorp, Inc.							$	(17,276	)	$	22,467
Adjustments to reconcile net income to net cash provided from operating activities:
Net income attributable to noncontrolling interest in subsidiary	2,122			2,203			—			43
Provision for credit losses	17,186			7,138			54,114			1,353
Origination of loans and leases held-for-sale	(20,231		)	(35,568		)	—			(5,511		)
Proceeds from sales of loans and leases held-for-sale, net	23,852			37,516			—			8,109
Deferred income tax benefit	(3,923		)	(191		)	(17,270		)	(390		)
Depreciation of premises and equipment	5,446			5,320			1,581			1,782
Amortization of investment securities premiums and discounts, net	1,320			1,787			384			445
Amortization of deferred loan and lease origination costs, net	4,909			4,438			2,154			1,782
Amortization of identified intangible assets	1,570			1,879			336			402
Amortization of debt issuance costs	75			56			26			25
Accretion of acquisition fair value adjustments, net	(1,467		)	(3,105		)	(372		)	(704		)
Gain on sales of investment securities, net	(11,393		)	—
Gain on investment securities, net							(1,330		)	(134		)
Gain on sales of loans and leases held-for-sale	(1,709		)	(1,986		)	(120		)	(289		)
Gain on sales of OREO and other repossessed assets, net	(79		)	(84		)
Write-down of OREO and other repossessed assets	430			51			354			49
Compensation under recognition and retention plans	1,720			1,250			624			861
ESOP shares committed to be released	367			415			101			88
Net change in:
Cash surrender value of bank-owned life insurance	(780		)	(782		)	(254		)	(254		)
Other assets	(6,117		)	(20,493		)	(103,913		)	(12,219		)
Accrued expenses and other liabilities	1,301			8,661			173,346			(1,926		)
Net cash provided from operating activities	58,290			47,588			92,485			15,979

Cash flows from investing activities:
Proceeds from sales of investment securities available-for-sale							86,434			—
Proceeds from maturities, calls, and principal repayments of investment securities available-for-sale	54,966			76,207			25,530			19,935
Purchases of investment securities available-for-sale	(52,448		)	(77,275		)	(273,252		)	—
Proceeds from maturities, calls, and principal repayments of investment securities held to maturity	3,154			41,381			6,302			1,475
Purchases of investment securities held-to-maturity	(23,884		)	(25,045		)	—			(500		)
Proceeds from redemption/sales of restricted equity securities	18,111			2,817			2,944			7,958
Purchase of restricted equity securities	(4,342		)	(2,383		)	(17,598		)	(399		)
Proceeds from sales of loans and leases held-for-investment, net	25,445			23,116			5,800			3,408
Net increase in loans and leases	(273,700		)	(377,638		)	(96,414		)	(92,280		)
Purchase of premises and equipment, net	(10,604		)	(2,747		)	(1,071		)	(961		)
Proceeds from sales of OREO and other repossessed assets	2,873			2,647			1,972			563
Net cash used for investing activities	(260,429		)	(338,920		)	(259,353		)	(60,801		)

				(Continued)
										(Continued)

BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows (Continued)	BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows (Continued)						BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows (Continued)

	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
	(In Thousands)						(In Thousands)
Cash flows from financing activities:
Increase in demand checking, NOW, savings and money market accounts	68,300			240,714			57,871			48,526
Increase in certificates of deposit	126,307			18,247			2,333			118,694
Proceeds from FHLBB advances	3,158,111			5,137,549			1,736,600			1,621,000
Repayment of FHLBB advances	(3,195,278		)	(5,096,506		)	(1,357,638		)	(1,675,357		)
(Decrease) increase in other borrowed funds, net	(20,120		)	412
Increase (decrease) in other borrowed funds, net							10,054			(219		)
Increase in mortgagors' escrow accounts, net	506			650			209			91
Repurchases of common stock							(10,410		)	—
Proceeds from issuance of common stock	82,003			—			—			(1		)
Payment of dividends on common stock	(20,137		)	(19,018		)	(9,173		)	(8,376		)
Payment of income taxes for shares withheld in share based activity	(294		)	—
Proceeds from issuance of noncontrolling units	118			76
Redemption of noncontrolling interest in subsidiary							—			(35,851		)
Payment of dividends to owners of noncontrolling interest in subsidiary	(1,671		)	(1,734		)	—			(930		)
Net cash provided from financing activities	197,845			280,390			429,846			67,577
Net decrease in cash and cash equivalents	(4,294		)	(10,942		)
Net increase in cash and cash equivalents							262,978			22,755
Cash and cash equivalents at beginning of period	67,657			75,489			77,790			89,584
Cash and cash equivalents at end of period	$	63,363		$	64,547		$	340,768		$	112,339

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits, borrowed funds and subordinated debt	$	31,411		$	30,005		$	23,227		$	23,230
Income taxes	26,141			22,949			2,070			8,774
Non-cash investing activities:
Transfer from loans and leases held-for-sale to loans and leases	$	7,500		$	8,284
Transfer from loans to other real estate owned	6,223			2,423			$	1,733		$	505

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

(1) Basis of Presentation

Overview

Brookline Bancorp, Inc. (the "Company") is a bank holding company (within the meaning of the Bank Holding Company Act of 1956, as amended) and the parent of Brookline Bank, a Massachusetts-chartered ~~savings bank;~~trust company and Bank Rhode Island ("BankRI"), a Rhode Island-chartered financial ~~institution; and First Ipswich Bank ("First Ipswich"), a Massachusetts-chartered trust company~~institution (collectively referred to as the "Banks"). The Banks are ~~all~~both members of the Federal Reserve System. The Company is also the parent of Brookline Securities Corp. ("BSC"). The Company's primary business is to provide commercial, business and retail banking services to its corporate, municipal and retail customers through the Banks and its non-bank subsidiaries. Until February 15, 2020 (the "Merger Closing Date"), the Company was also the parent of First Ipswich Bank ("First Ipswich"), a Massachusetts-chartered trust company. Effective upon the Merger Closing Date, First Ipswich was merged with and into Brookline Bank, with Brookline as the surviving institution.

Brookline Bank, which includes its wholly-owned subsidiaries BBS Investment Corp., Longwood Securities Corp. ~~and its 84.2%-owned subsidiary,~~("LSC"), Eastern Funding LLC ("Eastern Funding"), First Ipswich Insurance Agency and First Ipswich Securities II Corp., operates 2531 full-service banking offices in the greater Boston metropolitan ~~area.~~area with 2 additional lending offices. BankRI, which includes its wholly-owned subsidiaries, Acorn Insurance Agency, BRI Realty Corp., Macrolease Corporation ("Macrolease"), BRI Investment Corp. and its wholly-owned subsidiary, BRI MSC Corp., operates 20 full-service banking offices in the greater Providence, Rhode Island area. First Ipswich, which includes its wholly-owned subsidiaries, First Ipswich Insurance Agency and First Ipswich Securities II Corp., operates six full-service banking offices on the north shore of eastern Massachusetts.

The ~~Company's~~Banks' activities include acceptance of commercial, municipal and retail deposits, origination of mortgage loans on commercial and residential real estate located principally in ~~Massachusetts and Rhode Island,~~New England, origination of commercial loans and leases to small- and mid-sized businesses, investment in debt and equity securities, and the offering of cash management and investment advisory services. ~~The Company~~Brookline Bank also provides specialty equipment financing through its subsidiaries Eastern Funding, which is based in New York City, New York, and Macrolease, which is based in Plainview, New York.

The Company and the Banks are supervised, examined and regulated by the Board of Governors of the Federal Reserve System ("the FRB"). As a Massachusetts-chartered ~~savings bank and~~ trust ~~companies,~~company, Brookline Bank ~~and First Ipswich, respectively, are~~is also subject to regulation under the laws of the Commonwealth of Massachusetts and the jurisdiction of the Massachusetts Division of ~~Banks.~~Banks (the "DOB"). As a Rhode Island-chartered financial institution, BankRI is subject to regulation under the laws of the State of Rhode Island and the jurisdiction of the Banking Division of the Rhode Island Department of Business Regulation.

The Federal Deposit Insurance Corporation ("FDIC") offers insurance coverage on all deposits up to $250,000 per depositor at each of the Banks. As FDIC-insured depository institutions, the Banks are also ~~secondarily~~ subject to supervision, examination and regulation by the FDIC. ~~Additionally, as~~As previously disclosed on a Form 8-K filed with the SEC, on July 31, 2019, Brookline Bank ended its membership in the Depositors Insurance Fund (“DIF”), a private industry-sponsored fund which insures Massachusetts-chartered savings bank deposit balances in excess of federal deposit insurance coverage. Brookline Bank’s growth in deposit size necessitated its withdrawal from the DIF and the concurrent charter conversion of Brookline Bank from a Massachusetts-chartered savings bank ~~Brookline Bank is also insured by the Depositors Insurance Fund ("DIF"),~~to a ~~private industry-sponsored insurance~~Massachusetts-chartered trust company. The DIF insures savings bank deposits in excess of the FDIC insurance limits. As such, Brookline Bank offers 100% insurance on all deposits as a result of a combination of insurance from the FDIC and the DIF. Brookline Bank is required to file reports with the DIF.

Basis of Financial Statement Presentation

The unaudited consolidated financial statements of the Company presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“GAAP”). In the opinion of ~~Management,~~management, all adjustments (consisting of normal recurring adjustments) and disclosures considered necessary for the fair presentation of the accompanying consolidated financial statements have been included. Interim results are not necessarily reflective of the results of the entire year. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2019.

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation.

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~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

In preparing these consolidated financial statements, ~~Management~~management is required to make significant estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosure of contingent assets and liabilities. Actual results could differ from those estimates based upon changing conditions, including economic conditions and future events. Material estimates that are particularly susceptible to significant ~~change~~changes in the near-term include the

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

determination of the allowance for loan and lease losses, the determination of fair market values of assets and liabilities, including acquired loans and leases, the review of goodwill and ~~intangibles~~intangible assets for impairment and the review of deferred tax assets for valuation allowances.

The judgments used by ~~Management~~management in applying these critical accounting policies may be affected by a further and prolonged deterioration in the economic environment, which may result in changes to future financial results. For example, subsequent evaluations of the loan and lease portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for loan and lease losses in future periods, and the inability to collect outstanding principal may result in increased loan and lease losses.

Reclassification

Certain previously reported amounts have been reclassified to conform to the current year's presentation.

Recent Accounting Pronouncements

Accounting Standards Adopted in 2020

In ~~May 2017,~~June 2016, the FASB issued ASU ~~2017-09, Compensation-Stock Compensation~~2016-13, “Financial Instruments - Credit Losses (Topic ~~718)~~326): ~~Scope~~Measurement of ~~Modification Accounting.~~Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 replaced the previous GAAP method of calculating credit losses. Previously, GAAP required the use of the incurred loss methodology, which used a higher threshold at which probable losses were calculated and recorded. ASU 2016-13 requires the use of an expected loss methodology, referred to as the current expected credit loss (“CECL”) methodology, which requires institutions to account for probable losses that previously would not have been part of the calculation. The CECL methodology incorporates future forecasting in addition to historical and current measures. The Company adopted all of the above mentioned ASU as of January 1, 2020. The standard had an impact on our consolidated balance sheet. On adoption, the Company recognized an increase in the allowance for loan and lease losses of $6.6 million, and an increase in the reserve for unfunded commitments of $8.9 million. The net, after-tax impact of the increase in the allowance for loan and lease losses and reserve for unfunded commitments was an decrease to retained earnings of $11.5 million shown in the Consolidated Statements of Changes in Stockholders’ Equity. Additional details can be found in Note 3, 4 and 5.

In August 2018, FASB issued ~~this Update~~ASU 2018-13, "Fair Value Measurement (Topic 820)" ("ASU 2018-13"), to ~~address~~modify the ~~diversity in practice as well as the cost and complexity when applying the guidance~~disclosure requirements on fair value measurements in Topic ~~718, Compensation - Stock Compensation, to a change to~~820, Fair Value Measurement, based on the ~~terms or conditions~~concepts set forth in the Concepts Statement, including the consideration of ~~a share-based payment award. For public entities, this~~costs and benefits. This ASU is effective for ~~annual reporting~~fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2017. Management has evaluated this~~2019. Certain provisions under ASU ~~and has determined that ASU 2017-09 does apply. As of September 30, 2017,~~2018-13 required prospective application, while other provisions required retrospective application to all periods presented in the consolidated financial statements upon adoption. The Company ~~has~~ adopted the provisions of ASU 2018-13 effective January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial statements.

~~In March 2017,~~

(2) Acquisitions and Mergers

First Ipswich Bank

On February 15, 2020, the ~~FASB issued Accounting Standards Update ASU 2017-07, Improving~~merger of First Ipswich Bank with and into Brookline Bank was completed. First Ipswich was already a wholly-owned subsidiary of the ~~Presentation of Net Periodic Pension Cost~~Company, therefore the merger qualified as a tax-free reorganization for federal income tax purposes and ~~Net Periodic Postretirement Benefit Cost (Topic 715). This ASU~~there was issued primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. This ASU is effective for annual reporting periods beginning after December 15, 2017. Management believes that this ASU applies and has determined theminimal impact to ~~be immaterial as~~customers. All of ~~September 30, 2017. Management will meet~~First Ipswich Bank's 6 branch locations were retained and converted to ~~discuss and will put together a project team to assess steps to adoption prior to implementation of the standard in 2018.~~Brookline Bank branches.

In February 2017, the FASB issued ASU 2017-05, Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20). This ASU was issued to clarify the scope of Subtopic 610-20, and to add guidance for partial sales of nonfinancial assets. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2017. Management believes that this ASU applies and has determined the impact to be immaterial as of September 30, 2017.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350). This ASU was issued to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. For public entities, this ASU is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted and application should be on a prospective basis. Management has evaluated this ASU and has determined that ASU 2017-04 does apply. As of September 30, 2017, the Company has adopted the ASU and determined the impact to be immaterial.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This ASU was issued to provide clarification and uniformity on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows under Topic 230. The amendments presented in this ASU are effective for fiscal years beginning after December 15, 2017. As of September 30, 2017, management believes that ASU 2016-15 does apply, and after completing an internal analysis has determined the impact of adoption of this ASU in 2018 to the financial statement presentation to be immaterial.

In June 2016, the FASB issued ASU 2016-13, Financial instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The intent of this ASU is to replace the current GAAP method of calculating credit losses. Current GAAP uses a higher threshold at which likely losses can be calculated and recorded. The new process will require institutions to account for likely losses that originally would not have been part of the calculation. The calculation will

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

(3) Investment Securities

Adoption of Topic 326

Effective January 1, 2020, the Company adopted the provisions of ASU 2016-13 using the modified retrospective method. Therefore, prior period comparative information has not been adjusted and continues to be reported under GAAP in effect prior to the adoption of Topic 326. There was a de minimis allowance for ~~the Nine Months Ended September 30, 2017 and 2016~~

incorporate future forecasting in addition to historical and current measures. For public entities that file with the SEC, this ASU is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This ASU must be applied prospectively tocredit loss ("ACL") on available-for-sale debt securities ~~marked as other than temporarily impaired. A retrospective approach will be applied cumulatively to retained earnings. Early~~recognized upon adoption ~~is permitted~~and as of the fiscal years beginning after December 15, 2018. Management has determined that ASU 2016-13 does apply, but has not determined the impact, if any, as of September 30, 2017. In preparation for the adoption in 2019 of this ASU, management formed a steering committee which has developed an approach for implementationMarch 31, 2020.

The following tables set forth investment securities available-for-sale, held-to-maturity and ~~has selected a third party software service provider.~~

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The intention of this ASU is to provide additional clarification on specific issues brought forth by the FASB and the International Accounting Standards Board Joint Transition Resource Group for Revenue Recognition in relation to Topic 606 and revenue recognition. This ASU is to have the same effective date as ASU 2015-14 which deferred the effective date of ASU 2014-09 to December 15, 2017. Management has determined that ASU 2016-12 does apply as of September 30, 2017. Management assembled a project team to address the changes pursuant to Topic 606 and the majority of the work was performed on the contracts and management believes there will be no material impact. The standard will be effective on January 1, 2018.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU was issued as part of the FASB Simplification Initiative which intends to reduce the complexity of GAAP while improving usefulness to users. The ASU was effective for annual periods beginning after December 15, 2016, and interim periods within those annual reporting periods with early adoption available. The Company adopted ASU 2016-09 effective January 1, 2017 and the adoption did not have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This ASU was issued to clarify how to recognize revenue depending on an entities position, in relation to another entity involved, on contracts with customers. The entity can either be a principal party or an agent, and must record revenue accordingly. This ASU is not yet effective. Since this ASU affects ASU 2014-09, and that effective date was deferred, this ASU remains suspended too. Management has determined that this ASU does apply as of September 30, 2017. Management assembled a project team to address the changes pursuant to Topic 606 and the majority of the work was performed on the contracts. The project is substantially complete and Management believes that there is no material impact as a result of the adoption. The standard will be effective on January 1, 2018.

In February 2016, FASB issued ASU 2016-02, Leases. This ASU requires lessees to put most leases on their balance sheet but recognize expenses on their income statements in a manner similar to current accounting. This ASU also eliminates current real estate-specific provisions for all companies. For lessors, this ASU modifies the classification criteria and the accounting for sales-type and direct financing leases. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods therein. Early adoption is permitted. Management believes that this ASU applies and has not determined the impact, if any, as of September 30, 2017. Management has met to discuss the impact and will assemble a project team to assess steps required for adoption prior to implementation of the standard in 2019.

~~In January 2016, the FASB issued ASU 2016-01, Financial Instruments. This ASU significantly revises an entity’s accounting related to (1) the classification and measurement of investments in~~ equity securities ~~and (2)~~held-for-trading at the ~~presentation~~dates indicated:



	At March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	231,779	$	6,176	$	138	$	237,817
GSE CMOs	62,391		1,151		15		63,527
GSE MBSs	319,088		9,551		141		328,498
SBA commercial loan asset-backed securities	1		—		—		1
Municipal obligations	44,976		645		3		45,618
Corporate debt obligations	25,389		570		—		25,959
U.S. Treasury bonds	55,776		3,858		—		59,634
Foreign government obligations	500		—		15		485
Total investment securities available-for-sale	$	739,900	$	21,951	$	312	$	761,539
Equity securities held-for-trading							$	2,558



	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	182,922	$	2,939	$	58	$	185,803
GSE CMOs	87,001		22		1,091		85,932
GSE MBSs	153,049		797		503		153,343
SBA commercial loan asset-backed securities	34		—		—		34
Corporate debt obligations	28,484		502		—		28,986
U.S. Treasury bonds	44,675		338		116		44,897
Total investment securities available-for-sale	$	496,165	$	4,598	$	1,768	$	498,995
Investment securities held-to-maturity:
GSE debentures	$	31,228	$	113	$	51	$	31,290
GSEs MBSs	9,360		—		81		9,279
Municipal obligations	45,692		822		—		46,514
Foreign government obligations	500		—		22		478
Total investment securities held-to-maturity	$	86,780	$	935	$	154	$	87,561
Equity securities held-for-trading							$	3,581

As of ~~certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with~~March 31, 2020, the fair value of ~~financial instruments. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods therein. Management has determined that this ASU does apply~~all investment securities available-for-sale was $761.5 million, with net unrealized gains of $21.6 million, compared to a fair value of $499.0 million and ~~has not determined the impact, if any,~~net unrealized gains of $2.8 million as of September 30, 2017. Management has put together a steering committee which has made progress identifying the additional data requirements necessary to implement the ASU and has determined an approach for implementation which includes the selectionDecember 31, 2019. As of ~~a third party software service provider. A project team will be formed to ensure the availability~~March 31, 2020, $58.8 million, or 7.7% of the ~~elements needed for exit price disclosure prior~~portfolio, had gross unrealized losses of $0.3 million, compared to ~~implementation~~$205.6 million, or 41.2% of the ~~standard in 2018.~~

~~In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts~~portfolio, with ~~Customers (Topic 606): Deferral~~gross unrealized losses of the Effective Date. This ASU was issued to defer the effective date of ASU 2014-09 for all entities by one year. In effect, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods (including interim reporting periods within those period) beginning after December 15, 2017. Management has determined that this ASU does apply$1.8 million as of ~~September 30, 2017. A significant amount of the Company's revenues are derived from interest income on financial assets, which are excluded from the scope of the amended guidance.~~December 31, 2019.

109

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Management assembled a project team to address the changes pursuant to Topic 606 and the project team has completed the scope assessment and contract review for in-scope revenue streams. To date, the Company has not identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company's implementation efforts are ongoing and such assessments may change prior to the implementation date of January 1, 2018.

~~(2) Acquisitions~~

~~First Commons Bank, N.A.~~

On September 20, 2017, the Company and First Commons Bank, N.A. (“First Commons Bank”) entered into a definitive agreement and plan of merger (the “Merger Agreement”) pursuant to which First Commons Bank will merge with and into Brookline Bank. The Company expects to consummate the transaction during the first quarter of 2018, subject to approval by First Commons Bank shareholders, the receipt of all required regulatory approvals, and the satisfaction of customary closing conditions.

Under the terms of the Merger Agreement, the Company will pay $16.70 per share for the outstanding shares and warrants and $2.9 million in cash for the outstanding options of First Commons Bank representing a total transaction value of approximately $56.0 million. First Commons Bank stockholders will receive 1.171 shares of the Company's common stock for each First Commons Bank share they own, subject to adjustment based on Company's ten-day, volume-weighted average stock price between $13.19 and $15.33. The Company has the option to pay up to 50% of the consideration for the outstanding shares in cash.

First Commons Bank is a national banking association which was organized in 2009 and is headquartered in Newton Centre, a village of Newton, Massachusetts. First Commons Bank operates its business from two banking offices located in Massachusetts. First Commons Bank is engaged principally in the business of attracting deposits from the general public and investing those deposits in residential and commercial real estate loans, and in consumer and small business loans.

At September 30, 2017, First Commons Bank had total consolidated assets of approximately $311.4 million, loans of approximately $259.7 million, deposits of approximately $267.5 million and stockholders’ equity of approximately $35.6 million.

~~The Company recorded $205.0 thousand of merger and acquisition expense in connection with the proposed acquisition of First Commons Bank for the three and nine months ended September 30, 2017.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~(3) Investment Securities~~

~~The following tables set forth investment securities available-for-sale and held-to-maturity at the dates indicated:~~

At September 30, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value
(In Thousands)
Investment securities available-for-sale:
GSE debentures $ 139,443
$ 481
$ 580
$ 139,344
GSE CMOs 138,137
34
2,891
135,280
GSE MBSs 182,913
590
1,385
182,118
SBA commercial loan asset-backed securities 77
—
—
77
Corporate debt obligations 58,638
336
83
58,891
U.S. Treasury bonds 4,822
—
11
4,811
Trust preferred securities 1,471
—
68
1,403
Marketable equity securities 975
16
5
986
Total investment securities available-for-sale $ 526,476
$ 1,457
$ 5,023
$ 522,910
Investment securities held-to-maturity:
GSE debentures $ 38,622
$ 11
$ 561
$ 38,072
GSEs MBSs 14,788
—
145
14,643
Municipal obligations 53,828
370
185
54,013
Foreign government obligations 500
—
8
492
Total investment securities held-to-maturity $ 107,738

$ 381

$ 899

$ 107,220

December 31, 2016

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value
(In Thousands)
Investment securities available-for-sale:
GSE debentures $ 98,122
$ 188
$ 1,290
$ 97,020
GSE CMOs 161,483
37
3,480
158,040
GSE MBSs 214,946
794
2,825
212,915
SBA commercial loan asset-backed securities 107
—
—
107
Corporate debt obligations 48,308
360
183
48,485
U.S. Treasury bonds 4,801
—
64
4,737
Trust preferred securities 1,469
—
111
1,358
Marketable equity securities 966
15
9
972
Total investment securities available-for-sale $ 530,202
$ 1,394
$ 7,962
$ 523,634
Investment securities held-to-maturity:
GSE debentures $ 14,735
$ —
$ 634
$ 14,101
GSEs MBSs 17,666
—
187
17,479
Municipal obligations 54,219
5
1,020
53,204
Foreign government obligations 500
—
13
487
Total investment securities held-to-maturity $ 87,120
$ 5
$ 1,854
$ 85,271

As of ~~September 30, 2017,~~March 31, 2020, all investment securities classified as held-to-maturity were reclassified as available for sale to prudently reflect the ability and intent to not hold these assets to maturity due to the economic uncertainty created by the COVID-19 pandemic. As a result of tainting of the held-to-maturity portfolio, the Company is precluded from classifying securities as held-to-maturity for a period of time. As of December 31, 2019, the fair value of ~~all~~ investment securities ~~available-for-sale was $522.9~~held-to-maturity had a fair value of $87.6 million with net unrealized ~~losses~~gains of ~~$3.6 million, compared to a fair value of $523.6 million and net unrealized losses of $6.6 million as~~$0.8 million. As of December 31, ~~2016. As of September 30, 2017, $377.4~~2019, $22.3 million, or ~~72.2%~~25.5% of the portfolio had gross unrealized losses of ~~$5.0~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~million, compared to $389.0 million, or 74.3% of the portfolio, with gross unrealized losses of $8.0 million as of December 31, 2016.~~$0.2 million.

As of ~~September 30, 2017,~~March 31, 2020, the ~~fair value of all investment securities held-to-maturity was $107.2 million, with net unrealized losses of $0.5 million, compared to~~Company recorded a fair value of ~~$85.3~~$2.6 million ~~with net unrealized losses~~ of ~~$1.8 million as~~equity securities held-for-trading. As of December 31, ~~2016. As~~2019, the Company recorded a fair value of ~~September 30, 2017, $61.2~~$3.6 million ~~or 57.1%~~ of ~~the portfolio, had gross unrealized losses of $0.9 million. There were $82.0 million, or 96.1% of the portfolio, with net unrealized losses $1.9 million as of December 31, 2016.~~equity securities held-for-trading.

Investment Securities as Collateral

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively, ~~$424.1~~$489.3 million and ~~$429.1~~$433.6 million of investment securities were pledged as collateral for repurchase agreements; municipal deposits; treasury, tax and loan deposits; swap agreements; FRB borrowings; and ~~FHLBB~~Federal Home Loan Bank of Boston ("FHLBB") borrowings. The Banks ~~did not have any~~had 0 outstanding FRB borrowings as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

Allowance for Credit Losses-Available-for-Sale Securities

For available-for-sale securities in an unrealized loss position, management first assesses whether (i) the Company intends to sell the security, or (ii) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either criterion is met, any previously recognized allowances are charged-off and the security's amortized cost is written down to fair value through income. If neither criterion is met, the security is evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance for credit loss is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income. Adjustments to the allowance are reported as a component of credit loss expense. Available-for-sale securities are charged-off against the allowance or, in the absence of any allowance, written down through income when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. The Company has made the accounting policy election to exclude accrued interest receivable on available-for-sale securities from the estimate of credit losses. Accrued interest receivables associated with debt securities available-for-sale totaled $2.4 million and $2.0 million, respectively, as of March 31, 2020 and December 31, 2019.

A debt security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a debt security placed on nonaccrual is reversed against interest income. There were no debt securities on nonaccrual status and therefore there was no accrued interest related to debt securities reversed against interest income for the three months ended March 31, 2020 and 2019.

1310

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and~~

Assessment for ~~the Nine Months Ended September 30, 2017 and 2016~~

Available for Sale Securities for Impairment

~~Other-Than-Temporary Impairment ("OTTI")~~

Investment securities as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer are as follows:


	At September 30, 2017												At March 31, 2020
	Less than Twelve Months				Twelve Months or Longer				Total				Less than Twelve Months				Twelve Months or Longer				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
	(In Thousands)												(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	81,964	$	492	$	3,008	$	88	$	84,972	$	580	$	43,783	$	138	$	—	$	—	$	43,783	$	138
GSE CMOs	85,854		1,338		48,779		1,553		134,633		2,891		—		—		1,428		15		1,428		15
GSE MBSs	132,593		1,129		5,656		256		138,249		1,385		8,012		50		3,973		91		11,985		141
SBA commercial loan asset-backed securities	36		—		34		—		70		—
Corporate debt obligations	10,304		22		2,446		61		12,750		83
U.S. Treasury bonds	4,811		11		—		—		4,811		11
Trust preferred securities	—		—		1,403		68		1,403		68
Marketable equity securities	506		5		—		—		506		5
Temporarily impaired investment securities available-for-sale	316,068		2,997		61,326		2,026		377,394		5,023
Investment securities held-to-maturity:
GSE debentures	26,166		561		—		—		26,166		561
GSEs MBSs	14,436		145		—		—		14,436		145
Municipal obligations	20,127		185		—		—		20,127		185		1,157		3		—		—		1,157		3
Foreign government obligations	492		8		—		—		492		8		485		15		—		—		485		15
Temporarily impaired investment securities held-to-maturity	61,221		899		—		—		61,221		899
Temporarily impaired investment securities available-for-sale													53,437		206		5,401		106		58,838		312
Total temporarily impaired investment securities	$	377,289	$	3,896	$	61,326	$	2,026	$	438,615	$	5,922	$	53,437	$	206	$	5,401	$	106	$	58,838	$	312



	December 31, 2019
	Less than Twelve Months				Twelve Months or Longer				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
	(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	10,965	$	58	$	—	$	—	$	10,965	$	58
GSE CMOs	28,659		217		55,885		874		84,544		1,091
GSE MBSs	42,046		115		42,257		388		84,303		503
SBA commercial loan asset-backed securities	—		—		33		—		33		—
U.S. Treasury bonds	25,754		116		—		—		25,754		116
Temporarily impaired investment securities available-for-sale	107,424		506		98,175		1,262		205,599		1,768
Investment securities held-to-maturity:
GSE debentures	8,714		30		2,977		21		11,691		51
GSEs MBSs	—		—		9,257		81		9,257		81
Municipal obligations	710		—		205		—		915		—
Foreign government obligations	478		22		—		—		478		22
Temporarily impaired investment securities held-to-maturity	9,902		52		12,439		102		22,341		154
Total temporarily impaired investment securities	$	117,326	$	558	$	110,614	$	1,364	$	227,940	$	1,922

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

December 31, 2016

Less than
Twelve Months

Twelve Months
or Longer
Total

Estimated
Fair Value

Unrealized
Losses

Estimated
Fair Value

Unrealized
Losses

Estimated
Fair Value

Unrealized
Losses
(In Thousands)
Investment securities available-for-sale:
GSE debentures $ 67,216
$ 1,290
$ —
$ —
$ 67,216
$ 1,290
GSE CMOs 118,450
2,162
38,852
1,318
157,302
3,480
GSE MBSs 149,687
2,822
198
3
149,885
2,825
SBA commercial loan asset-backed securities —
—
72
—
72
—
Corporate debt obligations 7,953
183
—
—
7,953
183
U.S. Treasury bonds 4,737
64
—
—
4,737
64
Trust preferred securities —
—
1,358
111
1,358
111
Marketable equity securities 503
9
—
—
503
9
Temporarily impaired investment securities available-for-sale 348,546
6,530
40,480
1,432
389,026
7,962
Investment securities held-to-maturity:
GSE debentures 14,101
634
—
—
14,101
634
GSEs MBSs 17,289
187
—
—
17,289
187
Municipal obligations 50,098
1,020
—
—
50,098
1,020
Foreign government obligations 487
13
—
—
487
13
Temporarily impaired investment securities held-to-maturity 81,975
1,854
—
—
81,975
1,854
Total temporarily impaired investment securities $ 430,521
$ 8,384
$ 40,480
$ 1,432
$ 471,001
$ 9,816

The Company performs regular ~~analysis on~~analyses of the investment securities available-for-sale portfolio to determine whether a decline in fair value indicates that an investment security is ~~OTTI.~~impaired. In making these ~~OTTI~~impairment determinations, management considers, among other factors, ~~the length of time and extent to which the fair value has been less than amortized cost;~~ projected future cash flows; credit subordination and the creditworthiness; capital adequacy and near-term prospects of the issuers.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Management also considers the Company's capital adequacy, interest-rate risk, liquidity and business plans in assessing whether it is more likely than not that the Company will sell or be required to sell the investment securities before recovery. If the Company determines that a decline in fair value is ~~OTTI~~impairment and that it is more likely than not that the Company will not sell or be required to sell the investment security before recovery of its amortized cost, the credit portion of the impairment loss is recognized in the Company's unaudited consolidated statement of income and the noncredit portion is recognized in accumulated other comprehensive income. The credit portion of the ~~OTTI~~ impairment represents the difference between the amortized cost and the present value of the expected future cash flows of the investment security. If the Company determines that a decline in fair value is ~~OTTI~~impairment and it is more likely than not that it will sell or be required to sell the investment security before recovery of its amortized cost, the entire difference between the amortized cost and the fair value of the security will be recognized in the Company's unaudited consolidated statement of income.

Investment Securities Available-For-Sale Impairment Analysis

The following discussion summarizes, by investment security type, the basis for evaluating if the applicable investment securities within the Company’s available-for-sale portfolio were ~~OTTI~~impaired as of ~~September 30, 2017.~~March 31, 2020. Based on the analysis below, ~~and the determination~~it was determined that is it is more likely than not that the Company will not sell or be required to sell the investment securities before recovery of its amortized cost. The Company's ability and intent to hold these investment securities until recovery is supported by the Company's strong capital and liquidity positions as well as its historically low portfolio turnover. As such, management has determined that the investment securities are not ~~OTTI~~impaired as of ~~September 30, 2017.~~March 31, 2020. If market

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

conditions for investment securities worsen or the creditworthiness of the underlying issuers deteriorates, it is possible that the Company may recognize additional ~~OTTI~~impairment in future periods.

U.S. Government-Sponsored Enterprises

The Company invests in securities issued by U.S. Government-sponsored enterprises ("GSEs"), including GSE debentures, mortgage-backed securities ("MBSs"), and collateralized mortgage obligations ("CMOs"). GSE securities include obligations issued by the Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), the Government National Mortgage Association ("GNMA"), the ~~Federal Home Loan Banks ("FHLB")~~FHLBB and the Federal Farm Credit Bank. As of ~~September 30, 2017,~~March 31, 2020, only GNMA MBSs and CMOs, and Small Business Administration ("SBA") commercial loan asset-backed securities in our available-for-sale portfolio with an estimated fair value of ~~$24.9~~$12.9 million were backed explicitly by the full faith and credit of the U.S. Government, compared to ~~$26.2~~$17.4 million as of December 31, ~~2016.~~2019.

As of ~~September 30, 2017,~~March 31, 2020, the Company owned 4473 GSE debentures with a total fair value of ~~$139.3~~$237.8 million, and a net unrealized ~~loss~~gain of ~~$0.1~~$6.0 million. As of December 31, ~~2016,~~2019, the Company held 2960 GSE debentures with a total fair value of ~~$97.0~~$185.8 million, ~~and~~with a net unrealized ~~loss~~gain of ~~$1.1~~$2.9 million. As of ~~September 30, 2017, 28~~March 31, 2020, 4 of the 4473 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2016, 21~~2019, 5 of the 2960 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA/SBA) guarantee of the U.S Government. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company purchased ~~a total of $42.1~~$75.2 million GSE debentures. This compares to ~~$32.3 million purchased during~~ the same period in ~~2016.~~2019 when the Company did 0t purchase any GSE debentures. During the three months ended March 31, 2020, the Company transferred 9 held-to-maturity GSE debentures with a total fair value of $25.5 million to the available-for-sale portfolio.

As of ~~September 30, 2017,~~March 31, 2020, the Company owned 6233 GSE CMOs with a total fair value of ~~$135.3~~$63.5 million and a net unrealized ~~loss~~gain of ~~$2.9~~$1.1 million. As of December 31, ~~2016,~~2019, the Company held 6261 GSE CMOs with a total fair value of ~~$158.0~~$85.9 million with a net unrealized loss of ~~$3.4~~$1.1 million. As of ~~September 30, 2017, 47~~March 31, 2020, 1 of the 6233 securities in this portfolio ~~were~~was in an unrealized loss position. As of December 31, ~~2016, 47~~2019, 45 of the 6261 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020 and 2019, the Company did ~~not~~0t purchase any ~~GSE CMOs, as compared to the same period in 2016, when the Company purchased a total of $3.1 million of~~ GSE CMOs.

As of ~~September 30, 2017,~~March 31, 2020, the Company owned ~~191~~135 GSE MBSs with a total fair value of ~~$182.1~~$328.5 million and a net unrealized ~~loss~~gain of ~~$0.8~~$9.4 million. As of December 31, ~~2016,~~2019, the Company held ~~195~~150 GSE MBSs with a total fair value of ~~$212.9~~$153.3 million with a net unrealized ~~loss~~gain of ~~$2.0~~$0.3 million. As of ~~September 30, 2017, 66~~March 31, 2020, 22 of the ~~191~~135 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2016, 60~~2019, 48 of the ~~195~~150 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company ~~did not purchase any~~purchased $176.9 million GSE ~~MBSs, as compared~~MBSs. This compares to the same period in ~~2016,~~2019 when the Company ~~purchased~~did 0t purchase any GSE MBSs. During the three months ended March 31, 2020, the Company transferred 8 held-to-maturity GSE MBSs with a total fair value of ~~$36.7~~$9.0 million to the available-for-sale portfolio.

Table of ~~GSE MBSs.~~Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

SBA Commercial Loan Asset-Backed

As of ~~September 30, 2017,~~March 31, 2020, the Company owned ~~five~~1 SBA security with a nominal fair value which approximated amortized cost. As of December 31, 2019, the Company owned 4 SBA securities with a total fair value of ~~$0.1 million,~~$34.0 thousand, which approximated amortized cost. As of ~~December~~March 31, ~~2016, the Company owned six SBA securities with a total fair value of $0.1 million, which approximated amortized cost. As of September 30, 2017, four~~2020, NaN of the ~~five~~ securities in this portfolio were in an unrealized loss position. As of December 31, ~~2016, four~~2019, 3 of the ~~six~~4 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the explicit guarantee of the U.S Government. During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company did ~~not~~0t purchase any SBA securities.

Corporate Obligations

The Company may invest in high-quality corporate obligations to provide portfolio diversification and improve the overall yield on the portfolio. As of ~~September 30, 2017,~~March 31, 2020, the Company held 187 corporate obligation securities with a total fair value of ~~$58.9~~$26.0 million and a net unrealized gain of ~~$0.3~~$0.6 million. As of December 31, ~~2016,~~2019, the Company held 168 corporate obligation securities with a total fair value of ~~$48.5~~$29.0 million and a net unrealized gain of ~~$0.2~~$0.5 million. As of ~~September 30, 2017, three~~March 31, 2020, NaN of the ~~eighteen~~ securities in this portfolio were in an unrealized loss position. As of December 31, ~~2016, three~~2019, NaN of the ~~sixteen~~ securities in this portfolio were in an unrealized loss position. Full collection of the obligations is expected because the financial condition of the issuers is sound, they have not defaulted on scheduled payments, the obligations are rated investment grade, and the Company has the ability and intent to hold the obligations for a period of time to recover the amortized cost.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company ~~purchased~~did 0t purchase any corporate obligations. During the three months ended March 31, 2020, the Company transferred 1 held-to-maturity corporate obligation security with a total fair value of ~~$10.3~~$0.5 million ~~and $5.1 million of corporate obligations, respectively.~~to the available-for-sale portfolio.

U.S. Treasury Bonds

The Company invests in securities issued by the U.S. government. As of ~~September 30, 2017,~~March 31, 2020, the Company owned ~~one~~12 U.S. Treasury ~~bond~~bonds with a total fair value of ~~$4.8~~$59.6 million and an unrealized gain of $3.9 million. This compares to 9 U.S. Treasury bonds with a total fair value of $44.9 million and an unrealized loss of ~~$11.0 thousand. This compares to one U.S. Treasury bond with a total fair value of $4.7 million and an unrealized loss of $0.1~~$0.2 million as of December 31, ~~2016. During the nine months ended September 30, 2017 and 2016, the Company did not purchase any U.S. Treasury bonds.~~

~~Trust Preferred Securities~~

~~Trust preferred securities represent subordinated debt issued by financial institutions.~~2019. As of September 30, 2017, the Company owned two trust preferred securities with a total fair value of $1.4 million and an unrealized loss of $0.1 million. This compares to two trust preferred securities with a total fair value of $1.4 million and an unrealized loss of $0.1 million as of DecemberMarch 31, ~~2016. As of September 30, 2017 and December 31, 2016, both~~2020, none of the securities in this portfolio were in unrealized loss positions. Full collection of the obligations is expected because the financial condition of the issuers is sound, neither of the issuers has defaulted on scheduled payments, the obligations are rated investment grade, and the Company has the ability and intent to hold the obligations for a period of time to recover the amortized cost.

~~Marketable Equity Securities~~

From time to time, the Company will invest in mutual funds for community reinvestment purposes. As of September 30, 2017 and December 31, 2016, the Company owned marketable equity securities with a fair value of $1.0 million, which approximated amortized cost. As of September 30, 2017 and December 31, 2016, one of the two securities in this portfolio was in an unrealized loss position. ~~During the nine months ended September 30, 2017 and 2016, the Company did not purchase any marketable equity securities.~~

~~Investment Securities Held-to-Maturity Impairment Analysis~~

The following discussion summarizes by investment security type, the basis for evaluating if the applicable investment securities within the Company's held-to-maturity portfolio were OTTI at September 30, 2017. Management has the ability and the intent to hold the securities until maturity.

~~U.S. Government-Sponsored Enterprises~~

~~As of September 30, 2017, the Company owned 13 GSE debentures with a total fair value of $38.1 million and a net unrealized loss of $0.6 million.~~ As of December 31, ~~2016, the Company owned five GSE debentures with a total fair value of $14.1 million and an unrealized loss of $0.6 million. As of September 30, 2017, nine~~2019, 5 of the ~~thirteen securities in this portfolio were in an unrealized loss position. At December 31, 2016, all five of the~~9 securities in this portfolio were in unrealized loss ~~positions. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government.~~position. During the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2020 the Company purchased ~~a total of $23.9~~$21.2 million ~~and $17.7 million in GSE debentures, respectively.~~

As of September 30, 2017, the Company owned 11 GSE MBSs with a total fair value of $14.6 million and an unrealized loss of $0.1 million. As of December 31, 2016, the Company owned 11 GSE MBSs with a total fair value of $17.5 million and an unrealized loss of $0.2 million. As of September 30, 2017 and December 31, 2016, eight of the eleven securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government. During the nine months ended September 30, 2017, the Company did not purchase any GSE MBSs, asU.S. Treasury bonds, compared to the same period in ~~2016,~~2019 when the Company ~~purchased a total of $2.4 million of GSE MBSs.~~did 0t purchase any U.S. Treasury bonds.

MunicipalObligations

The Company invests in certain state and municipal securities with high credit ratings for portfolio diversification and tax planning purposes. As of ~~September 30, 2017,~~March 31, 2020, the Company owned ~~100~~93 municipal obligation securities with a total fair value of ~~$54.0~~$45.6 million ~~and~~ and a net unrealized gain of ~~$0.2~~$0.6 million. As of ~~December~~March 31, ~~2016,~~2020, 9 of the 93 securities in this portfolio were in unrealized loss position. During the three months ended March 31, 2020, the Company ~~owned 100~~did not purchase any municipal ~~obligation~~obligations. During the three months ended March 31, 2020, the Company transferred 93 held-to-maturity municipal obligations securities with a total fair value of ~~$53.2~~$47.7 million to the available-for-sale portfolio.

Equity Securities Held-for-Trading

From time to time, the Company will invest in equity securities held-for-trading. As of March 31, 2020 and December 31, 2019, the Company owned equity securities held-for-trading with a fair value of $2.6 million and ~~an unrealized loss of $1.0 million. As of September 30, 2017, 37 of the 100 securities in this portfolio were in an unrealized loss position as compared to December 31, 2016, when 93 of the~~$3.6 million, respectively.

1713

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

100 securities were in an unrealized loss position. During the nine months ended September 30, 2017, the Company did not purchase any municipal obligations, as compared to the same period in 2016, when the Company purchased a total of $4.4 million of municipal obligations.

~~Foreign Government Obligations~~

The Company holds an investment in foreign government bonds. As of September 30, 2017 and December 31, 2016, the Company owned one foreign government obligation security with a fair value of $0.5 million, which approximated cost. As of September 30, 2017 and December 31, 2016 respectively, the security was in an unrealized loss position. During the nine months ended September 30, 2017, the Company did not purchase any foreign government obligations, as compared to the same period in 2016, when the Company repurchased the foreign government obligation security that matured.

Portfolio Maturities

The final stated maturities of the debt securities are as follows for the periods indicated:



	At March 31, 2020						At December 31, 2019
	Amortized Cost		Estimated Fair Value		Weighted Average Rate		Amortized Cost		Estimated Fair Value		Weighted Average Rate
	(Dollars in Thousands)
Investment securities available-for-sale:
Within 1 year	$	19,148	$	19,198	1.62	%	$	12,797	$	12,804	1.76	%
After 1 year through 5 years	226,455		234,676		2.09	%	217,569		220,757		2.19	%
After 5 years through 10 years	140,491		144,703		1.85	%	93,805		94,212		2.04	%
Over 10 years	353,806		362,962		2.10	%	171,994		171,222		2.12	%
	$	739,900	$	761,539	2.04	%	$	496,165	$	498,995	2.13	%
Investment securities held-to-maturity:
Within 1 year	$	—	$	—	—	%	$	6,366	$	6,381	1.33	%
After 1 year through 5 years	—		—		—	%	63,898		64,559		1.81	%
After 5 years through 10 years	—		—		—	%	7,177		7,364		1.79	%
Over 10 years	—		—		—	%	9,339		9,257		1.90	%
	$	—	$	—	—	%	$	86,780	$	87,561	1.82	%

At September 30, 2017 At December 31, 2016

Amortized
Cost

Estimated
Fair Value

Weighted
Average
Rate

Amortized
Cost

Estimated
Fair Value

Weighted
Average
Rate
(Dollars in Thousands)
Investment securities available-for-sale:
Within 1 year $ 13,589
$ 13,672
2.51% $ 13
$ 13
0.17%
After 1 year through 5 years 133,047
133,571
2.03% 81,524
81,833
2.14%
After 5 years through 10 years 128,377
127,821
2.03% 128,956
127,952
2.03%
Over 10 years 250,488
246,860
2.01% 318,743
312,864
2.03%
$ 525,501
$ 521,924
2.03% $ 529,236
$ 522,662
2.04%
Investment securities held-to-maturity: ��
Within 1 year $ 798
$ 798
1.00% $ 190
$ 190
1.00%
After 1 year through 5 years 49,124
49,214
1.69% 23,012
22,750
1.30%
After 5 years through 10 years 43,236
42,772
1.82% 46,442
45,042
1.75%
Over 10 years 14,580
14,436
1.93% 17,476
17,289
2.11%
$ 107,738
$ 107,220
1.77% $ 87,120
$ 85,271
1.70%

Actual maturities of debt securities will differ from those presented above since certain obligations amortize and may also provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty. MBSs and CMOs are included above based on their final stated maturities; the actual maturities, however, may occur earlier due to anticipated prepayments and stated amortization of cash flows.

As of ~~September 30, 2017,~~March 31, 2020, issuers of debt securities with an estimated fair value of ~~$21.5~~$97.9 million had the right to call or prepay the obligations. Of the ~~$21.5~~$97.9 million, approximately ~~$15.0~~$3.0 million matures within 1 year, $19.8 million matures in 1 - 5 years, ~~$6.5~~$46.4 million matures in 6 - 10 years, and ~~none mature~~$28.7 million matures after ten years. As of December 31, ~~2016,~~2019, issuers of debt securities with an estimated fair value of approximately ~~$27.9~~$37.6 million had the right to call or prepay the obligations. Of the ~~$27.9~~$37.6 million, approximately $3.0 million matures within 1 year, $34.6 million matures in 1-5 years, ~~$23.5 million matures in 6-10 years,~~ and ~~$1.4 million matures~~NaN mature after ~~ten~~5 years.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Security Sales

~~On February 3, 2017,~~There were $86.4 million securities sold during the Company, through its wholly owned subsidiary, Brookline Securities Corp. ("Brookline Securities"), received $319.04 in cash and 14.876 shares of Community Bank Systems, Inc. (“CBU”) common stock in exchange for each of the 9,721 shares of Northeast Retirement Services, Inc. (“NRS”) stock held by Brookline Securities. The exchange was completed in accordance with the merger agreement entered into between NRS and CBU. As part of the merger agreement, the Company was restricted to selling 5,071 shares of CBU per day in the open market. During the quarterthree months ended March 31, 2017, the Company completed the sale of all the CBU shares. When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The table below summarizes the activity with respect to the sale of the CBU shares.

Nine Months Ended September 30, 2017
(In Thousands)
Sales of marketable and restricted equity securities $ 11,393

Gross gains from sales 11,612
Gross losses from sales (219 )
Gain on sales of securities, net $ 11,393

Brookline Securities held one Class A Common Stock share and 2,070 Class B Common Stock shares of the Savings Bank Life Insurance Company of Massachusetts ("SBLI"). In July 2017, SBLI converted from a Massachusetts stock insurance company to a Massachusetts mutual insurance company and, as a result, Brookline Securities received $500 for one share of Class A Common Stock and $128 per share for its 2,070 shares of Class B Common Stock of SBLI, in exchange for $265.5 thousand in cash. Brookline Securities recognized a nominal gain on the exchange.

2020. There were ~~no security sales~~0 securities sold during the three ~~month period~~months ended ~~September 30, 2016~~March 31, 2019.

Sales of investment and ~~the nine month period ended September 30, 2016.~~

restricted equity securities are summarized as follows:



	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
	(In Thousands)
Sales of trading securities	$	86,435		$	—

Gross gains from securities sales	2,446			—
Gross losses from securities sales	(93		)	—
Gain on sales of securities, net	$	2,353		$	—

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

(4) Loans and Leases

The following ~~tables present~~table presents the amortized cost of loans and leases and weighted average coupon rates for the loan and lease ~~balances~~portfolios at the dates indicated:



	At March 31, 2020				At December 31, 2019
	Balance		Weighted Average Coupon		Balance		Weighted Average Coupon
	(Dollars In Thousands)
Commercial real estate loans:
Commercial real estate	$	2,526,923	4.19	%	$	2,491,011	4.33	%
Multi-family mortgage	963,273		4.06	%	932,163		4.20	%
Construction	271,962		4.43	%	246,048		5.09	%
Total commercial real estate loans	3,762,158		4.17	%	3,669,222		4.34	%
Commercial loans and leases:
Commercial	719,208		4.26	%	729,502		4.66	%
Equipment financing	1,055,053		7.63	%	1,052,408		7.71	%
Condominium association	52,605		4.78	%	56,838		4.84	%
Total commercial loans and leases	1,826,866		6.22	%	1,838,748		6.41	%
Consumer loans:
Residential mortgage	810,186		4.03	%	814,245		4.10	%
Home equity	388,550		3.52	%	376,819		4.46	%
Other consumer	34,767		3.99	%	38,782		4.48	%
Total consumer loans	1,233,503		3.87	%	1,229,846		4.22	%
Total loans and leases	$	6,822,527	4.66	%	$	6,737,816	4.88	%

Accrued interests on loans and leases, which were excluded from the amortized cost of loans and leases totaled $18.4 million and $17.4 million at March 31, 2020 and December 31, 2019, respectively, and were included in other assets in the consolidated balance sheets.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents the recorded investments of loans and leases and weighted average coupon rates for the originated and acquired loan and lease portfolios at the ~~dates~~date indicated:



	At December 31, 2019
	Originated				Acquired				Total
	Balance		Weighted Average Coupon		Balance		Weighted Average Coupon		Balance		Weighted Average Coupon
	(Dollars In Thousands)
Commercial real estate loans:
Commercial real estate	$	2,400,037	4.32	%	$	90,974	4.63	%	$	2,491,011	4.33	%
Multi-family mortgage	896,482		4.18	%	35,681		4.59	%	932,163		4.20	%
Construction	239,015		5.04	%	7,033		6.73	%	246,048		5.09	%
Total commercial real estate loans	3,535,534		4.33	%	133,688		4.73	%	3,669,222		4.34	%
Commercial loans and leases:
Commercial	713,875		4.65	%	15,627		5.14	%	729,502		4.66	%
Equipment financing	1,049,997		7.71	%	2,411		5.98	%	1,052,408		7.71	%
Condominium association	56,838		4.84	%	—		—	%	56,838		4.84	%
Total commercial loans and leases	1,820,710		6.42	%	18,038		5.25	%	1,838,748		6.41	%
Consumer loans:
Residential mortgage	711,522		4.06	%	102,723		4.40	%	814,245		4.10	%
Home equity	343,247		4.41	%	33,572		4.93	%	376,819		4.46	%
Other consumer	38,674		4.44	%	108		17.91	%	38,782		4.48	%
Total consumer loans	1,093,443		4.18	%	136,403		4.54	%	1,229,846		4.22	%
Total loans and leases	$	6,449,687	4.89	%	$	288,129	4.67	%	$	6,737,816	4.88	%

At September 30, 2017
Originated Acquired Total
Balance
Weighted
Average
Coupon
Balance
Weighted
Average
Coupon
Balance
Weighted
Average
Coupon
(Dollars In Thousands)
Commercial real estate loans:
Commercial real estate $ 2,002,369
4.11% $ 117,071
4.33% $ 2,119,440
4.12%
Multi-family mortgage 718,495
4.05% 25,417
4.48% 743,912
4.06%
Construction 165,657
4.33% —
—% 165,657
4.33%
Total commercial real estate loans 2,886,521
4.11% 142,488
4.36% 3,029,009
4.12%
Commercial loans and leases:
Commercial 679,984
4.24% 9,026
5.51% 689,010
4.26%
Equipment financing 837,702
7.24% 4,814
5.91% 842,516
7.23%
Condominium association 53,770
4.44% —
—% 53,770
4.44%
Total commercial loans and leases 1,571,456
5.85% 13,840
5.65% 1,585,296
5.85%
Consumer loans:
Residential mortgage 593,922
3.76% 58,493
4.22% 652,415
3.80%
Home equity 311,718
4.05% 45,264
4.49% 356,982
4.11%
Other consumer 15,627
5.36% 111
18.00% 15,738
5.45%
Total consumer loans 921,267
3.89% 103,868
4.35% 1,025,135
3.94%
Total loans and leases $ 5,379,244
4.58% $ 260,196
4.42% $ 5,639,440
4.57%

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

At December 31, 2016
Originated Acquired Total
Balance
Weighted
Average
Coupon
Balance
Weighted
Average
Coupon
Balance
Weighted
Average
Coupon
(Dollars In Thousands)
Commercial real estate loans:
Commercial real estate $ 1,907,254
3.95% $ 143,128
4.24 % $ 2,050,382
3.97%
Multi-family mortgage 701,450
3.79% 29,736
4.53 % 731,186
3.82%
Construction 136,785
3.79% 214
3.67 % 136,999
3.79%
Total commercial real estate loans 2,745,489
3.90% 173,078
4.29 % 2,918,567
3.92%
Commercial loans and leases:
Commercial 621,285
4.11% 14,141
5.44 % 635,426
4.14%
Equipment financing 793,702
7.06% 6,158
5.86 % 799,860
7.05%
Condominium association 60,122
4.39% —
— % 60,122
4.39%
Total commercial loans and leases 1,475,109
5.71% 20,299
5.57 % 1,495,408
5.71%
Consumer loans:
Residential mortgage 555,430
3.67% 68,919
3.98 % 624,349
3.70%
Home equity 289,361
3.50% 52,880
4.26 % 342,241
3.62%
Other consumer 18,171
5.48% 128
17.92 % 18,299
5.57%
Total consumer loans 862,962
3.65% 121,927
4.12 % 984,889
3.71%
Total loans and leases $ 5,083,560
4.38% $ 315,304
4.31 % $ 5,398,864
4.38%

The net unamortized deferred loan origination fees and costs included in total loans and leases were ~~$15.3~~$14.9 million and ~~$14.2~~$15.7 million as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively.

The ~~Company's~~ Banks and their subsidiaries lend primarily in ~~eastern Massachusetts, southern~~all New ~~Hampshire and Rhode Island,~~England states, with the exception of equipment financing, ~~28.1%~~27.8% of which is in the greater New York and New Jersey metropolitan area and ~~71.9%~~72.2% of which is in other areas in the United States of America as of ~~September 30, 2017.~~March 31, 2020.

Accretable Yield for the Acquired Loan Portfolio

On a quarterly basis prior to the adoption of ASU 2016-13, management reforecasted the expected cash flows for acquired ASC 310-30 loans, and took into account prepayment speeds, probability of default and loss given defaults. Management compared cash flow projections per the reforecast to the original cash flow projections and determined whether any reduction in cash flow expectations were due to deterioration, or if the change in cash flow expectation was related to noncredit events. This cash flow analysis was used to evaluate the need for a provision for loan and lease losses and/or prospective yield adjustments for the acquired portfolio. Upon adoption of ASU 2016-13, the Company did not reassess whether previously recognized purchased credit impaired loans accounted for under prior accounting guidance met the criteria of a purchased credit deteriorated (PCD) loan as of the date of adoption. PCD loans are initially recorded at fair value along with an ACL determined using the same methodology as originated loans. The sum of the loan's purchase price and ACL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL are recorded through provision for credit losses. As of March 31, 2020, there were no PCD loans in the Company's portfolios.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table summarizes activity in the accretable yield for the acquired loan portfolio for the periods indicated:



	Three Months Ended March 31, 2019

Balance at beginning of period	$	7,905
Accretion	(800		)
Reclassification from nonaccretable difference as a result of changes in expected cash flows	61
Balance at end of period	$	7,166

Three Months Ended September 30, Nine Months Ended September 30,
2017
2016 2017 2016
(In Thousands)
Balance at beginning of period $ 13,702
$ 18,038
$ 14,353
$ 20,796
Accretion (2,872 ) (1,479 ) (6,604 ) (3,914 )
Reclassification from (to) nonaccretable difference as a result of changes in expected cash flows 871
(377 ) 3,952
(700 )
Balance at end of period $ 11,701
$ 16,182
$ 11,701
$ 16,182

On a quarterly basis, subsequent to acquisition, management reforecasts the expected cash flows for acquired ASC 310-30 loans, taking into account prepayment speeds, probability of default and loss given defaults. Management compares cash flow projections per the reforecast to the original cash flow projections and determines whether any reduction in cash flow expectations are due to deterioration, or if the change in cash flow expectation is related to noncredit events. This cash flow analysis is used to evaluate the need for a provision for loan and lease losses and/or prospective yield adjustments. During the three months ended ~~September 30, 2017 and 2016,~~March 31, 2019, accretable yield adjustments totaling ~~$0.9 million and $0.4 million, respectively, were~~$61 thousand was made for certain loan pools. During the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2019, accretable yield

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

adjustments totaling ~~$4.0~~$0.1 million ~~and $0.7 million, respectively,~~ were made for certain loan pools. These accretable yield adjustments, which ~~are~~were subject to continued re-assessment, will be recognized over the remaining lives of those pools. As of March 31, 2019, the accretable yield was fully accreted.

Loans and Leases Pledged as Collateral

As of ~~September 30, 2017~~both March 31, 2020 and ~~December 31, 2016,~~2019, there were ~~$2.0~~$3.0 billion ~~and $2.1 billion, respectively,~~ of loans and leases pledged as collateral for repurchase agreements; municipal deposits; treasury, tax and loan deposits; swap agreements; FRB borrowings; and FHLBB borrowings. The Banks did not have any outstanding FRB borrowings as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

(5) Allowance for Loan and Lease Losses

The following tables present the changes in the allowance for loan and lease losses ~~and the recorded investment~~ in loans and leases by portfolio segment for the periods indicated:



	Three Months Ended March 31, 2020
	Commercial Real Estate		Commercial			Consumer			Total
	(In Thousands)
Balance at December 31, 2019	$	30,285	$	24,826		$	5,971		$	61,082
Adoption of ASU 2016-13 (CECL)	11,694		(2,672		)	(2,390		)	6,632
Charge-offs	—		(2,527		)	(12		)	(2,539		)
Recoveries	—		247			58			305
Provision for loan and lease losses excluding unfunded commitments	40,200		6,900			601			47,701
Balance at March 31, 2020	$	82,179	$	26,774		$	4,228		$	113,181

Three Months Ended September 30, 2017

Commercial
Real Estate
Commercial Consumer Total
(In Thousands)
Balance at June 30, 2017 $ 27,954
$ 31,099
$ 5,468
$ 64,521
Charge-offs (65 ) (1,965 ) (113 ) (2,143 )
Recoveries —
109
80
189
Provision for loan and lease losses 979
1,832
35
2,846
Balance at September 30, 2017 $ 28,868
$ 31,075
$ 5,470
$ 65,413



	Three Months Ended March 31, 2019
	Commercial Real Estate		Commercial			Consumer			Total
	(In Thousands)
Balance at December 31, 2018	$	28,187	$	25,283		$	5,222		$	58,692
Charge-offs	—		(2,512		)	(30		)	(2,542		)
Recoveries	—		388			53			441
Provision for loan and lease losses	162		1,081			207			1,450
Balance at March 31, 2019	$	28,349	$	24,240		$	5,452		$	58,041

Three Months Ended September 30, 2016

Commercial
Real Estate
Commercial Consumer Total
(In Thousands)
Balance at June 30, 2016 $ 29,861
$ 22,916
$ 4,481
$ 57,258
Charge-offs (50 ) (545 ) (244 ) (839 )
Recoveries —
170
149
319
(Credit) provision for loan and lease losses (1,755 ) 3,923
(14 ) 2,154
Balance at September 30, 2016 $ 28,056
$ 26,464
$ 4,372
$ 58,892

Nine Months Ended September 30, 2017

Commercial
Real Estate
Commercial Consumer Total
(In Thousands)
Balance at December 31, 2016 $ 27,645
$ 20,906
$ 5,115
$ 53,666
Charge-offs (294 ) (6,267 ) (329 ) (6,890 )
Recoveries 476
800
263
1,539
Provision for loan and lease losses 1,041
15,636
421
17,098
Balance at September 30, 2017 $ 28,868
$ 31,075
$ 5,470
$ 65,413

The allowance for credit losses for unfunded credit commitments, which is included in other liabilities, was $17.2 million and $1.9 million at March 31, 2020 and December 31, 2019, respectively. The increase in allowance for unfunded commitments

2217

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for~~

was primarily driven by the ~~Nine Months Ended September 30, 2017 and 2016~~

Nine Months Ended September 30, 2016

Commercial
Real Estate
Commercial Consumer Total
(In Thousands)
Balance at December 31, 2015 $ 30,151
$ 22,018
$ 4,570
$ 56,739
Charge-offs (1,534 ) (3,250 ) (1,254 ) (6,038 )
Recoveries —
495
605
1,100
(Credit) provision for loan and lease losses (561 ) 7,201
451
7,091
Balance at September 30, 2016 $ 28,056
$ 26,464
$ 4,372
$ 58,892

~~The liability for unfunded credit commitments,~~effect of the latest available economic forecast of the COVID-19 pandemic which ~~is included in other liabilities,~~ was ~~$1.5 million at September 30, 2017 and December 31, 2016, respectively. The changes~~embedded in the ~~liability for unfunded credit commitments reflect changes in the estimate of~~estimated loss ~~exposure associated with certain unfunded credit commitments. No~~models. NaN credit commitments were charged off against the liability account in the ~~nine-month~~three month periods ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.

Provision for Credit Losses

The provisions for credit losses are set forth below for the periods indicated:



	Three Months Ended March 31,
	2020		2019
	(In Thousands)
Provision for loan and lease losses:
Commercial real estate	$	40,200	$	162
Commercial	6,900		1,081
Consumer	601		207
Total provision for loan and lease losses	47,701		1,450
Unfunded credit commitments	6,413		(97		)
Total provision for credit losses	$	54,114	$	1,353

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In Thousands)
Provision (credit) for loan and lease losses:
Commercial real estate $ 979
$ (1,755 ) $ 1,041
$ (561 )
Commercial 1,832
3,923
15,636
7,201
Consumer 35
(14 ) 421
451
Total provision for loan and lease losses 2,846
2,154
17,098
7,091
Unfunded credit commitments 65
61
88
47
Total provision for credit losses $ 2,911
$ 2,215
$ 17,186
$ 7,138

Allowance for Loan and Lease Losses Methodology

Management has established a methodology to determine the adequacy of the allowance for ~~loan and lease~~credit losses that assesses the risks and losses ~~inherent in~~expected on the loan and lease portfolio. Additions to the allowance for ~~loan and lease~~credit losses are made by charges to the provision for credit losses. Losses on loans and leases are charged off against the allowance when all or a portion of a loan or lease is considered uncollectible. Subsequent recoveries on loans previously charged off, if any, are credited to the allowance when realized.

~~Management uses a consistent and systematic process and methodology to evaluate the adequacy of~~To calculate the allowance, ~~for loan and lease losses on~~management uses models developed by a quarterly basis. For purposes of determining the allowance for loan and lease losses, the Company has segmented certain loans and leases in the portfolio by product type into the following segments: (1) commercial real estate loans, (2) commercial loans and leases, and (3) consumer loans. Portfolio segments are further disaggregated into classes based on the associated risks within the segments.third party. The models include: Commercial real estate (CRE) lifetime, Commercial and industrial (C&I) lifetime, Retail lifetime, C&I historical, and Retail historical. Lifetime loss rate models calculate the expected losses over the life of the loan based on loan attributes and reasonable, supportable economic forecasts. Historical loss rate models apply a loss rate to the outstanding balance of the loan. Management uses historical loss rates for condominium association, auto, and government lease portfolio segments because these loans have distinct, historical, or expected loss patterns and a de minimus effect on the overall allowance and provision.

Management elected to use multiple economic forecasts in determining the reserve to account for economic uncertainty. The forecasts include various projections of GDP, interest rates, property price indices, and employment measures. The forecasts are ~~divided into three classes: commercial real estate~~probability-weighted in accordance with best practices and available information at the time of the calculation execution. Scenario weighting and model parameters are reviewed for each calculation and are subject to change. The models recognize that the life of a loan may exceed the economic forecast therefore the models employ mean reversion techniques to predict credit losses for loans ~~multi-family mortgage loans,~~that are expected to mature beyond the forecast period. The March 31, 2020 forecasts reflect the immediate and ~~construction loans. Commercial loans~~longer-term effects of the COVID-19 pandemic as well as the associated policies and ~~leases~~provision provided by local and national authorities.

The CRE lifetime loss rate, C&I lifetime loss rate, and Retail lifetime loss rate models were developed using the historical loss experience of all banks in the model’s developmental dataset. Banks in the model’s developmental dataset may have different loss experiences as well as variances in operational and underwriting procedures from the Company, and therefore, the Company calibrates expected losses for each model using a scalar. Each scalar was calculated by examining the loss rates of peer banks that have similar operations and asset bases. Peer group loss rates were used in the scalar calculation because management believes the peer group’s historical losses provide a better reflection of the Company’s current portfolio and operating procedures than the Company’s historical losses. Qualitative adjustments are divided into three classes: commercial loans which include taxi medallion loans, equipment financing, and loans to condominium associations. Consumer loans are divided into three classes: residential mortgage loans, home equity loans, and other consumer loans. A formula-based credit evaluation approach isalso applied to ~~each group, coupled with an analysis~~select segments of ~~certain~~the loan portfolio where applicable.

Specific reserves are established for loans for impairment. For each class of loan, management makes significant judgments in selecting the estimation method that fits the credit characteristics of its class and portfolio segment as set forth below.

~~The general allowance related to loans collectively~~individually evaluated for impairment when amortized cost basis is determined using a formula-based approach utilizing the risk ratings of individual credits and loss factors derived from historic portfolio loss rates, which include estimates of incurred losses over an estimated loss emergence period (“LEP”). The LEP was generated utilizing a charge-off

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

look-back analysis which studied the time from the first indication of elevated risk of repayment (or other early event indicating a problem) to eventual charge-off to support the LEP considered in the allowance calculation. This reserving methodology established the approximate number of months of LEP that represents incurred losses for each portfolio. In addition to quantitative measures, relevant qualitative factors include, but are not limited to: (1) levels and trends in past due and impaired loans, (2) levels and trends in charge-offs, (3) changes in underwriting standards, policy exceptions, and credit policy, (4) experience of lending management and staff, (5) economic trends, (6) industry conditions, (7) effects of changes in credit concentrations, (8) interest rate environment, and (9) regulatory and other changes. The general allowance related to the acquired loans collectively evaluated for impairment is determined based upon the degree, if any, of deterioration in the pooled loans subsequent to acquisition. The qualitative factors used in the determination are the same as those used for originated loans.

~~Specific valuation allowances are established for impaired originated loans with book values~~ greater than the discounted present value of expected future cash flows or, in the case of collateral-dependent ~~impaired~~ loans, ~~for any~~when there is an excess of a loan's ~~book balance~~amortized cost basis over the fair value of its underlying collateral. ~~Specific valuation allowances~~When loans and leases do not share risk

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

characteristics with other financial assets they are established for acquired loans with deterioration in the discounted present value of expected future cash flows since acquisitions or, in the case of collateral dependent impaired loans, for any increase in the excess of a loan's book balance greater than the fair value of its underlying collateral. A specific valuation allowance for losses on troubled debt restructured ("TDR") loans is determined by comparing the net carrying amount of the troubled debt restructured loan with the restructured loan's cash flows discounted at the original effective rate. Impairedevaluated individually. Individually evaluated loans are reviewed quarterly with adjustments made to the calculated reserve as necessary.

Beginning January 1, 2020, the Company implemented the CECL methodology to calculate the allowance for credit losses. As of January 1, 2020, the allowance for loan and lease losses increased by $6.6 million as a result of the adoption of CECL. Prior to January 1, 2020, the Company calculated the allowance for loan and lease losses using the incurred losses methodology.

The general allowance for loan and lease losses was $107.9 million as of March 31, 2020, compared to $59.3 million as of December 31, 2019. The increase in general allowance for loan and lease losses was driven by the effect of the latest available economic forecast of the COVID-19 pandemic on the Company's loan and lease portfolios. The specific allowance for loan and lease losses was $5.3 million as of March 31, 2020, compared to $1.8 million as of December 31, 2019. The specific allowance increased by $3.5 million during the three months ended March 31, 2020 primarily due to the reserves of $2.2 million for an individually evaluated commercial relationship and $1.7 million for another individually evaluated commercial reals estate relationship during the quarter.

As of ~~September 30, 2017,~~March 31, 2020, management believes that the methodology for calculating the allowance is sound and that the allowance provides a reasonable basis for determining and reporting on probable losses inover the lifetime of the Company’s loan portfolios.

As of September 30, 2017, the Company had a portfolio of approximately $27.1 million in loans secured by taxi medallions issued by the cities of Boston and Cambridge. As of December 31, 2016, this portfolio was approximately $31.1 million. Application-based mobile ride services, such as Uber and Lyft, have generated increased competition in the transportation sector, resulting in a reduction in taxi utilization and, as a result, a reduction in the collateral value and credit quality of taxi medallion loans. This has increased the likelihood that loans secured by taxi medallions may default, or that the borrowers may be unable to repay these loans at maturity, potentially resulting in an increase in past due loans, troubled debt restructurings, and charge-offs. The Company’s allowance calculation included a further segmentation of the commercial loans and leases to reflect the increased risk in the Company’s taxi medallion portfolio. This allowance calculation segmentation represents management’s estimations of the current risks associated with the portfolio.

As of September 30, 2017, the Company had an allowance for loan and lease losses associated with taxi medallion loans of $7.2 million of which $5.7 million were specific reserves and $1.5 million was a general reserve. As of December 31, 2016, the Company had an allowance for loan and lease losses associated with taxi medallion loans of $1.3 million of which $0.1 million were specific reserves and $1.2 million was a general reserve. The increase in the allowance for loan and leases associated with taxi medallion loans was primarily driven by the increase in specific reserves due to changes in the underlying collateral value of taxi medallions and the increase in general reserve due to the increase in the historical loss factor applied to the taxi medallion loans. The total troubled debt restructured loans and leases secured by taxi medallions increased by $0.6 million from $6.1 million at December 31, 2016 to $6.7 million at September 30, 2017 due to six taxi medallion relationships which were restructured during the first quarter of 2017. The total loans and leases secured by taxi medallions that were placed on nonaccrual increased to $15.1 million at September 30, 2017 from $13.4 million at December 31, 2016 due to the six restructured taxi medallion relationships mentioned above which were placed on nonaccrual status. In addition, further declines in demand for taxi services or further deterioration in the value of taxi medallions may result in higher delinquencies and losses beyond that provided for in the allowance for loan and lease losses.

The general allowance for loan and lease losses was $57.9 million as of September 30, 2017, compared to $53.5 million as of December 31, 2016. The general allowance for loan and lease losses increased by $4.4 million during the nine months ended September 30, 2017, as a result of the continued growth in the Company's loan portfolios and the increase in historical loss factors applied to taxi medallion and commercial real estate loan portfolios.

The specific allowance for loan and lease losses was $7.5 million as of September 30, 2017, compared to $0.2 million as of December 31, 2016. The specific allowance increased by $7.3 million during the nine months ended September 30, 2017,

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~primarily due to the reduction in collateral values for taxi medallion loans and the increase in specific reserves for one commercial loan.~~

Credit Quality Assessment

At the time of loan origination, a rating is assigned based on the capacity to pay and general financial strength of the borrower, the value of assets pledged as collateral, and the evaluation of third party support such as a guarantor. The Company continually monitors the credit quality of the loan portfolio using all available information. The officer responsible for handling each loan is required to initiate changes to risk ratings when changes in facts and circumstances occur that warrant an upgrade or downgrade in a loan rating. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, ~~impaired,~~adversely risk-rated, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower's ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt ~~restructuring.~~restructuring ("TDR") loan.

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For all loans, the Company utilizes an eight-grade loan rating system, which assigns a risk rating to each borrower based on a number of quantitative and qualitative factors associated with a loan transaction. Factors considered include industry and market conditions; position within the industry; earnings trends; operating cash flow; asset/liability values; debt capacity; guarantor strength; management and controls; financial reporting; collateral; and other considerations. In addition, the Company's independent loan review group evaluates the credit quality and related risk ratings in all loan portfolios. The results of these reviews are reported to the Risk Committee of the Board of Directors on a periodic basis and annually to the Board of Directors. For the consumer loans, the Company heavily relies on payment status for calibrating credit risk.

The ratings categories used for assessing credit risk in the commercial real estate, multi-family mortgage, construction, commercial, equipment financing, condominium association and other consumer loan and lease classes are defined as follows:

1 -4 Rating—Pass

Loan rating grades "1" through "4" are classified as "Pass," which indicates borrowers are performing in accordance with the terms of the loan and are less likely to result in loss due to the capacity of the borrower to pay and the adequacy of the value of assets pledged as collateral.

5 Rating—Other Assets Especially Mentioned ("OAEM")

Borrowers exhibit potential credit weaknesses or downward trends deserving management's attention. If not checked or corrected, these trends will weaken the Company's asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

6 Rating—Substandard

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Substandard loans may be inadequately protected by the current net worth and paying capacity of the obligors or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy. Although no loss of principal is envisioned, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

7 Rating—Doubtful

Borrowers exhibit well-defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

8 Rating—Definite Loss

Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Company is not warranted.

Assets rated as "OAEM," "substandard" or "doubtful" based on criteria established under banking regulations are collectively referred to as "criticized" assets.

Credit Quality Information

The following table presents the amortized cost basis of loans in each class by credit quality indicator and year of origination as of March 31, 2020.



	March 31, 2020
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Commercial Real Estate
Pass	$	79,035	$	405,437	$	304,254	$	284,975	$	289,293	$	1,069,498	$	52,470	$	11,622	$	2,496,584
OAEM	—		496		—		—		2,253		14,750		—		—		17,499
Substandard	—		—		466		228		46		12,033		—		67		12,840
Total	79,035		405,933		304,720		285,203		291,592		1,096,281		52,470		11,689		2,526,923
Multi-Family Mortgage
Pass	35,322		112,126		142,968		109,573		130,328		368,436		52,284		12,152		963,189
Substandard	—		—		—		—		84		—						84
Total	35,322		112,126		142,968		109,573		130,412		368,436		52,284		12,152		963,273
Construction
Pass	8,556		68,836		165,940		9,599		8,848		722		9,461		—		271,962
Total	8,556		68,836		165,940		9,599		8,848		722		9,461		—		271,962
Commercial
Pass	19,210		85,409		62,169		80,508		31,373		129,970		286,535		3,589		698,763
OAEM	—		—		25		—		73		40		4,302		376		4,816
Substandard	—		—		785		642		1,809		10,799		981		612		15,628

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~Credit Quality Information~~

~~The following tables present the recorded investment in loans in each class as of September 30, 2017, by credit quality indicator.~~


	At September 30, 2017
	Commercial Real Estate		Multi- Family Mortgage		Construction		Commercial		Equipment Financing		Condominium Association		Other Consumer		Total
	(In Thousands)
Originated:
Loan rating:
Doubtful																	—		—		—		—		—		—		—		1		1
Total																	19,210		85,409		62,979		81,150		33,255		140,809		291,818		4,578		719,208
Equipment Financing
Pass	$	1,990,531	$	717,703	$	164,797	$	644,134	$	826,837	$	53,770	$	15,598	$	4,413,370	81,915		372,988		270,215		165,961		83,859		66,392		1,261		736		1,043,327
OAEM	5,177		—		—		8,638		748		—		—		14,563		—		—		—		—		1,322		42		—		—		1,364
Substandard	6,460		792		860		24,128		5,729		—		29		37,998		—		969		2,429		2,168		1,457		2,127		—		—		9,150
Doubtful	201		—		—		3,084		4,388		—		—		7,673		—		342		366		310		94		100		—		—		1,212
Total originated	2,002,369		718,495		165,657		679,984		837,702		53,770		15,627		4,473,604

Acquired:
Loan rating:
Total																	81,915		374,299		273,010		168,439		86,732		68,661		1,261		736		1,055,053
Condominium Association
Pass																	809		10,848		6,002		9,380		6,371		16,759		1,659		574		52,402
Substandard																	—		—		—		—		130		73		—		—		203
Total																	809		10,848		6,002		9,380		6,501		16,832		1,659		574		52,605
Other Consumer
Pass																	929		662		8,984		553		579		593		22,446		19		34,765
Substandard																	—		—		—		—		—		2						2
Total																	929		662		8,984		553		579		595		22,446		19		34,767
Total
Pass	105,302		25,120		—		7,037		4,800		—		110		142,369		225,776		1,056,306		960,532		660,549		550,651		1,652,370		426,116		28,692		5,560,992
OAEM	9,906		—		—		269		—		—		1		10,176		—		496		25		—		3,648		14,832		4,302		376		23,679
Substandard	1,761		297		—		1,720		14		—		—		3,792		—		969		3,680		3,038		3,526		25,034		981		679		37,907
Doubtful	102		—		—		—		—		—		—		102		—		342		366		310		94		100		—		1		1,213
Total acquired	117,071		25,417		—		9,026		4,814		—		111		156,439

Total loans	$	2,119,440	$	743,912	$	165,657	$	689,010	$	842,516	$	53,770	$	15,738	$	4,630,043
Total																	$	225,776	$	1,058,113	$	964,603	$	663,897	$	557,919	$	1,692,336	$	431,399	$	29,748	$	5,623,791

~~As of September 30, 2017, there were no loans categorized as definite loss.~~

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

For residential mortgage and ~~for~~home equity loans, the ~~Nine Months Ended September 30, 2017 and 2016~~

borrowers' credit scores contribute as a reserve metric in the retail loss rate model.

At September 30, 2017
Residential Mortgage Home Equity
(Dollars In Thousands)
Originated:
Loan-to-value ratio:

Less than 50% $ 151,791
23.3 % $ 149,477
41.9 %
50% - 69% 256,413
39.3 % 75,490
21.1 %
70% - 79% 160,117
24.5 % 61,081
17.1 %
80% and over 24,318
3.7 % 25,626
7.2 %
Data not available* 1,283
0.2 % 44
— %
Total originated 593,922
91.0 % 311,718
87.3 %

Acquired:

Loan-to-value ratio:

Less than 50% 17,102
2.6 % 27,383
7.8 %
50%—69% 19,734
3.0 % 14,852
4.1 %
70%—79% 12,020
1.8 % 1,372
0.4 %
80% and over 8,552
1.3 % 859
0.2 %
Data not available* 1,085
0.3 % 798
0.2 %
Total acquired 58,493
9.0 % 45,264
12.7 %

Total loans $ 652,415
100.0 % $ 356,982
100.0 %



	At March 31, 2020
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Home Equity
Credit Scores
Over 700	$	819	$	4,499	$	4,370	$	3,853	$	1,330	$	16,556	$	275,436	$	3,778	$	310,641
661 - 700	33		522		591		693		350		3,813		43,883		1,746		51,631
600 and below	—		219		281		14		42		610		10,478		917		12,561
Data not available*	—		—		—		—		—		2,018		10,129		1,570		13,717
Total	852		5,240		5,242		4,560		1,722		22,997		339,926		8,011		388,550
Residential
Credit Scores
Over 700	22,590		109,958		83,081		68,973		60,377		155,544		3,793		—		504,316
661 - 700	5,083		22,555		14,052		19,070		11,256		29,870		—		—		101,886
600 and below	3,058		6,541		5,193		9,142		6,736		16,974		—		—		47,644
Data not available*	7,943		20,444		20,383		15,845		5,635		84,733		—		1,357		156,340
Total	$	38,674	$	159,498	$	122,709	$	113,030	$	84,004	$	287,121	$	3,793	$	1,357	$	810,186

* Represents ~~in process general ledger accounts~~loans and leases for which data are not available.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

The following tables present the recorded investment in loans in each class as of December 31, ~~2016,~~2019, by credit quality indicator.


	At December 31, 2016																At December 31, 2019
	Commercial Real Estate		Multi- Family Mortgage		Construction		Commercial		Equipment Financing		Condominium Association		Other Consumer		Total		Commercial Real Estate		Multi- Family Mortgage		Construction		Commercial		Equipment Financing		Condominium Association		Other Consumer		Total
	(In Thousands)																(In Thousands)
Originated:
Loan rating:
Pass	$	1,899,162	$	700,046	$	136,607	$	583,940	$	786,050	$	60,122	$	12,018	$	4,177,945	$	2,379,925	$	896,398	$	239,015	$	688,268	$	1,038,793	$	56,687	$	38,673	$	5,337,759
OAEM	1,538		—		178		8,675		824		—		—		11,215		17,006		—		—		10,803		1,389		—		—		29,198
Substandard	6,288		1,404		—		28,595		4,848		—		12		41,147		3,106		84		—		14,801		7,995		151		1		26,138
Doubtful	266		—		—		75		1,980		—		—		2,321		—		—		—		3		1,820		—		—		1,823
Total originated	1,907,254		701,450		136,785		621,285		793,702		60,122		12,030		4,232,628		2,400,037		896,482		239,015		713,875		1,049,997		56,838		38,674		5,394,918

Acquired:
Loan rating:
Pass	131,850		29,153		214		10,312		6,158		—		128		177,815		81,360		35,681		7,033		15,215		2,404		—		108		141,801
OAEM	1,408		270		—		249		—		—		—		1,927		597		—		—		210		—		—		—		807
Substandard	9,768		313		—		3,017		—		—		—		13,098		9,017		—		—		202		7		—		—		9,226
Doubtful	102		—		—		563		—		—		—		665		—		—		—		—		—		—		—		—
Total acquired	143,128		29,736		214		14,141		6,158		—		128		193,505		90,974		35,681		7,033		15,627		2,411		—		108		151,834

Total loans	$	2,050,382	$	731,186	$	136,999	$	635,426	$	799,860	$	60,122	$	12,158	$	4,426,133	$	2,491,011	$	932,163	$	246,048	$	729,502	$	1,052,408	$	56,838	$	38,782	$	5,546,752

As of December 31, ~~2016,~~2019, there were no loans categorized as definite loss.

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Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~


	At December 31, 2016								At December 31, 2019
	Residential Mortgage				Home Equity				Residential Mortgage				Home Equity
	(Dollars In Thousands)								(Dollars In Thousands)
Originated:
Loan-to-value ratio:
Less than 50%	$	138,030	22.1	%	$	153,679	44.9	%	$	184,628	22.7	%	$	132,736	35.2	%
50%—69%	229,799		36.9	%	61,553		18.1	%	293,976		36.1	%	91,681		24.3	%
70%—79%	162,614		26.0	%	49,987		14.6	%	204,600		25.1	%	81,459		21.6	%
80% and over	21,859		3.5	%	23,317		6.8	%	25,664		3.2	%	37,371		9.9	%
Data not available*	3,128		0.5	%	825		0.2	%	2,654		0.3	%	—		—	%
Total originated	555,430		89.0	%	289,361		84.6	%	711,522		87.4	%	343,247		91.0	%

Acquired:
Loan-to-value ratio:
Less than 50%	17,809		2.9	%	32,334		9.4	%	32,838		4.0	%	16,882		4.5	%
50%—69%	24,027		3.8	%	15,059		4.4	%	44,754		5.4	%	7,958		2.1	%
70%—79%	14,030		2.2	%	3,069		0.9	%	14,305		1.8	%	705		0.2	%
80% and over	10,069		1.6	%	1,016		0.3	%	4,608		0.6	%	4,726		1.3	%
Data not available*	2,984		0.5	%	1,402		0.4	%
Data not available									6,218		0.8	%	3,301		0.9	%
Total acquired	68,919		11.0	%	52,880		15.4	%	102,723		12.6	%	33,572		9.0	%

Total loans	$	624,349	100.0	%	$	342,241	100.0	%	$	814,245	100.0	%	$	376,819	100.0	%

* Represents in process general ledger accounts for which data are not available.

The following table presents information regarding foreclosed residential real estate property for the periods indicated:



	At March 31, 2020		At December 31, 2019
	(In Thousands)
Amortized cost basis in mortgage loans collateralized by residential real estate property that are in the process of foreclosure	$	—	$	110

At September 30, 2017 At December 31, 2016
(In Thousands)
Foreclosed residential real estate property held by the creditor $ —
$ 251
Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure 1,508
1,213

2924

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Age Analysis of Past Due Loans and Leases

The following ~~tables present~~table presents an age analysis of the ~~recorded investment~~amortized cost basis in ~~total~~ loans and leases as of ~~September 30, 2017 and December~~March 31, ~~2016.~~2020.


	At September 30, 2017																		At March 31, 2020
	Past Due												Loans and Leases Past Due Greater Than 90 Days and Accruing						Past Due																		Past Due Greater Than 90 Days and Accruing
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current		Total Loans and Leases				Nonaccrual Loans and Leases			31-60 Days			61-90 Days			Greater Than 90 Days			Total			Current			Total Loans and Leases			Non-accrual				Non-accrual with No Related Allowance
	(In Thousands)																		(In Thousands)
Originated:
Commercial real estate loans:
Commercial real estate	$	726	$	400	$	1,006	$	2,132	$	2,000,237	$	2,002,369	$	—		$	2,915		$	8,331		$	1,302		$	10,224		$	19,857		$	2,507,066		$	2,526,923				$	268		$	10,937		$	2,933
Multi-family mortgage	4,019		919		—		4,938		713,557		718,495		—			792			1,270			1,022			84			2,376			960,897			963,273			—			85			84
Construction	3,021		—		860		3,881		161,776		165,657		—			860			1,617			4,182			—			5,799			266,163			271,962			—			—			—
Total commercial real estate loans	7,766		1,319		1,866		10,951		2,875,570		2,886,521		—			4,567			11,218			6,506			10,308			28,032			3,734,126			3,762,158			268			11,022			3,017
Commercial loans and leases:
Commercial	1,241		944		15,118		17,303		662,681		679,984		—			21,335			3,173			8,559			3,169			14,901			704,307			719,208			18			12,991			8,922
Equipment financing	1,625		900		3,611		6,136		831,566		837,702		46			9,858			5,885			2,155			6,726			14,766			1,040,287			1,055,053			305			10,356			2,299
Condominium association	317		38		—		355		53,415		53,770		—			—			1,044			—			—			1,044			51,561			52,605			—			203			130
Total commercial loans and leases	3,183		1,882		18,729		23,794		1,547,662		1,571,456		46			31,193			10,102			10,714			9,895			30,711			1,796,155			1,826,866			323			23,550			11,351
Consumer loans:
Residential mortgage	963		214		1,516		2,693		591,229		593,922		—			1,730			662			—			2,458			3,120			807,066			810,186			452			3,446			3,077
Home equity	1,046		1		126		1,173		310,545		311,718		1			402			1,310			1			468			1,779			386,771			388,550			2			1,059			780
Other consumer	226		26		15		267		15,360		15,627		—			29			26			4			5			35			34,732			34,767			—			7			—
Total consumer loans	2,235		241		1,657		4,133		917,134		921,267		1			2,161			1,998			5			2,931			4,934			1,228,569			1,233,503			454			4,512			3,857
Total originated loans and leases	$	13,184	$	3,442	$	22,252	$	38,878	$	5,340,366	$	5,379,244	$	47		$	37,921
													(Continued)
Total loans and leases																			$	23,318		$	17,225		$	23,134		$	63,677		$	6,758,850		$	6,822,527		$	1,045		$	39,084		$	18,225

There is no interest income recognized on non-accrual loans for the three months ended March 31, 2020.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The following tables present an age analysis of the recorded investment in originated and ~~for the Nine Months Ended September 30, 2017~~acquired loans and ~~2016~~

leases as of December 31, 2019.



	At December 31, 2019
	Past Due												Loans and Leases Past Due Greater Than 90 Days and Accruing
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current		Total Loans and Leases		Loans and Leases Past Due Greater Than 90 Days and Accruing		Nonaccrual Loans and Leases
	(In Thousands)
Originated:
Commercial real estate loans:
Commercial real estate	$	3,330	$	2,032	$	1,606	$	6,968	$	2,393,069	$	2,400,037	$	51	$	2,751
Multi-family mortgage	3,559		553		—		4,112		892,370		896,482		—		84
Construction	—		—		—		—		239,015		239,015		—		—
Total commercial real estate loans	6,889		2,585		1,606		11,080		3,524,454		3,535,534		51		2,835
Commercial loans and leases:
Commercial	5,010		199		3,875		9,084		704,791		713,875		—		4,707
Equipment financing	3,098		1,558		7,246		11,902		1,038,095		1,049,997		—		9,822
Condominium association	458		—		—		458		56,380		56,838		—		151
Total commercial loans and leases	8,566		1,757		11,121		21,444		1,799,266		1,820,710		—		14,680
Consumer loans:
Residential mortgage	1,014		—		3		1,017		710,505		711,522		—		753
Home equity	794		501		139		1,434		341,813		343,247		2		276
Other consumer	46		1		1		48		38,626		38,674		—		1
Total consumer loans	1,854		502		143		2,499		1,090,944		1,093,443		2		1,030
Total originated loans and leases	$	17,309	$	4,844	$	12,870	$	35,023	$	6,414,664	$	6,449,687	$	53	$	18,545

At September 30, 2017
Past Due
Loans and
Leases Past
Due Greater
Than 90 Days
and Accruing

31-60
Days

61-90
Days

Greater
Than
90 Days
Total Current
Total Loans
and Leases

Nonaccrual
Loans and
Leases
(In Thousands)
Acquired:
Commercial real estate loans:
Commercial real estate $ 799
$ 147
$ 731
$ 1,677
$ 115,394
$ 117,071
$ 661
$ 136
Multi-family mortgage —
—
3
3
25,414
25,417
3
—
Total commercial real estate loans 799
147
734
1,680
140,808
142,488
664
136
Commercial loans and leases:
Commercial 5
21
1,198
1,224
7,802
9,026
167
1,032
Equipment financing —
—
14
14
4,800
4,814
14
—
Total commercial loans and leases 5
21
1,212
1,238
12,602
13,840
181
1,032
Consumer loans:
Residential mortgage 710
550
1,729
2,989
55,504
58,493
1,489
239
Home equity 557
74
269
900
44,364
45,264
142
645
Other consumer

—
—
—
111
111
—
—
Total consumer loans 1,267
624
1,998
3,889
99,979
103,868
1,631
884
Total acquired loans and leases $ 2,071
$ 792
$ 3,944
$ 6,807
$ 253,389
$ 260,196
$ 2,476
$ 2,052

Total loans and leases $ 15,255
$ 4,234
$ 26,196
$ 45,685
$ 5,593,755
$ 5,639,440
$ 2,523
$ 39,973

3126

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~



	At December 31, 2019
	Past Due												Loans and Leases Past Due Greater Than 90 Days and Accruing
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current		Total Loans and Leases		Loans and Leases Past Due Greater Than 90 Days and Accruing		Nonaccrual Loans and Leases⁽¹⁾
	(In Thousands)
Acquired:
Commercial real estate loans:
Commercial real estate	$	539	$	59	$	8,989	$	9,587	$	81,387	$	90,974	$	8,919	$	94
Multi-family mortgage	—		—		—		—		35,681		35,681		—		—
Construction	—		—		—		—		7,033		7,033		—		—
Total commercial real estate loans	539		59		8,989		9,587		124,101		133,688		8,919		94
Commercial loans and leases:
Commercial	—		—		—		—		15,627		15,627		—		202
Equipment financing	—		—		7		7		2,404		2,411		7		—
Total commercial loans and leases	—		—		7		7		18,031		18,038		7		202
Consumer loans:
Residential mortgage	35		75		1,090		1,200		101,523		102,723		1,090		—
Home equity	430		—		42		472		33,100		33,572		40		620
Other consumer	—		—		—		—		108		108		—		—
Total consumer loans	465		75		1,132		1,672		134,731		136,403		1,130		620
Total acquired loans and leases	$	1,004	$	134	$	10,128	$	11,266	$	276,863	$	288,129	$	10,056	$	916

Total loans and leases	$	18,313	$	4,978	$	22,998	$	46,289	$	6,691,527	$	6,737,816	$	10,109	$	19,461

At December 31, 2016
Past Due
Loans and
Leases Past
Due Greater
Than 90 Days
and Accruing

31-60
Days

61-90
Days

Greater
Than
90 Days
Total Current
Total Loans
and Leases

Nonaccrual
Loans and
Leases
(In Thousands)
Originated:
Commercial real estate loans:
Commercial real estate $ 1,525
$ 2,075
$ 429
$ 4,029
$ 1,903,225
$ 1,907,254
$ 2
$ 5,035
Multi-family mortgage 2,296
—
291
2,587
698,863
701,450
—
1,404
Construction 547
—
—
547
136,238
136,785
—
—
Total commercial real estate loans 4,368
2,075
720
7,163
2,738,326
2,745,489
2
6,439
Commercial loans and leases:
Commercial 5,396
815
10,014
16,225
605,060
621,285
—
20,587
Equipment financing 2,983
1,444
5,341
9,768
783,934
793,702
—
6,758
Condominium association 266
—
—
266
59,856
60,122
—
—
Total commercial loans and leases 8,645
2,259
15,355
26,259
1,448,850
1,475,109
—
27,345
Consumer loans:
Residential mortgage 3,745
2,294
163
6,202
549,228
555,430
—
2,455
Home equity 25
219
5
249
289,112
289,361
3
128
Other consumer 549
87
16
652
17,519
18,171
—
149
Total consumer loans 4,319
2,600
184
7,103
855,859
862,962
3
2,732
Total originated loans and leases $ 17,332
$ 6,934
$ 16,259
$ 40,525
$ 5,043,035
$ 5,083,560
$ 5
$ 36,516
(Continued)

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

At December 31, 2016
Past Due
Loans and
Leases Past
Due Greater
Than 90 Days
and Accruing

31-60
Days

61-90
Days

Greater
Than
90 Days
Total Current
Total Loans
and Leases

Nonaccrual
Loans and
Leases
(In Thousands)
Acquired:
Commercial real estate loans:
Commercial real estate $ 925
$ —
$ 4,011
$ 4,936
$ 138,192
$ 143,128
$ 3,786
$ 305
Multi-family mortgage —
—
—
—
29,736
29,736
—
—
Construction —
—
—
—
214
214
—
—
Total commercial real estate loans 925
—
4,011
4,936
168,142
173,078
3,786
305
Commercial loans and leases:
Commercial 306
—
2,651
2,957
11,184
14,141
264
2,387
Equipment financing —
—
—
—
6,158
6,158
—
—
Total commercial loans and leases 306
—
2,651
2,957
17,342
20,299
264
2,387
Consumer loans:
Residential mortgage —
318
2,865
3,183
65,736
68,919
2,820
46
Home equity 288
97
339
724
52,156
52,880
202
823
Other consumer —
1
—
1
127
128
—
—
Total consumer loans 288
416
3,204
3,908
118,019
121,927
3,022
869
Total acquired loans and leases $ 1,519
$ 416
$ 9,866
$ 11,801
$ 303,503
$ 315,304
$ 7,072
$ 3,561

Total loans and leases $ 18,851
$ 7,350
$ 26,125
$ 52,326
$ 5,346,538
$ 5,398,864
$ 7,077
$ 40,077

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~Commercial Real Estate Loans~~—As of September 30, 2017, loans outstanding in the three classes within this segment expressed as a percentage of total loans and leases outstanding were as follows: commercial real estate loans -- 37.6%; multi-family mortgage loans -- 13.2%; and construction loans -- 2.9%.

Loans in this portfolio that are on nonaccrual status and/or risk-rated "substandard" or worse are evaluated on an individual loan basis for impairment. For non-impaired commercial real estate loans, loss factors are applied to outstanding loans by risk rating for each of the three classes in the portfolio. The factors applied are based primarily on historic loan loss experience and an assessment of internal and external factors and other relevant information.

~~Commercial Loans and Leases~~—As of September 30, 2017, loans and leases outstanding in the three classes within this segment expressed as a percent of total loans and leases outstanding were as follows: commercial loans and leases -- 12.2%; equipment financing loans -- 14.9%; and loans to condominium associations -- 1.0%.

(1) Loans and leases in this portfolio that are on nonaccrual status and/or risk-rated "substandard" or worse are evaluated on an individual basis for impairment. For non-impaired commercial loans and leases, loss factors are applied to outstanding loans by risk rating for each of the three classes in the portfolio.

~~Consumer Loans~~—As of September 30, 2017, loans outstanding within the four classes within this segment expressed as a percent of total loans and leases outstanding were as follows: residential mortgage loans -- 11.6%, home equity loans -- 6.3%, and other consumer loans -- 0.3%.

Significant risk characteristics related to the residential mortgage and home equity loan portfolios are the geographic concentration of the properties financed within selected communities in the greater Boston and Providence metropolitan areas. The payment status and loan-to-value ratio are the primaryacquired with deteriorated credit quality ~~indicator used for residential mortgage loans and home equity loans. Generally, loans~~ are not made when the loan-to-value ratio exceeds 80% unless private mortgage insurance is obtained and/or there is a financially strong guarantor. Consumer loans that become 90 days or more past due, or are placed on nonaccrual.always accruing.

Impaired Loans and Leases

A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (both interest and principal) according to the contractual terms of the loan agreement. The loans and leases risk-rated "substandard" or worse are considered impaired. The Company has also defined the population of impaired loans to include nonaccrual loans and ~~troubled debt restructured ("TDR")~~TDR loans.

~~When~~ Impaired loans and leases which do not share similar risk characteristics with other loans are individually evaluated for credit losses. Specific reserves are established for loans and leases with deterioration in the ~~ultimate collectability~~present value of expected future cash flows or, in the ~~total principal~~case of ~~an impaired loan or lease is~~collateral-dependent loans and leases, any increase in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan or lease is not in doubt and the loan or lease isamortized cost basis over the fair value of the underlying collateral discounted for estimated selling costs. In contrast, the loans and leases which share similar risk characteristics and are not included in the individually evaluated population are collectively evaluated for credit losses.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The following tables present information regarding individually evaluated and collectively evaluated allowance for loan and lease losses for credit losses on ~~nonaccrual status, contractual interest is credited~~loans and leases at the dates indicated. Periods prior to ~~interest income when received, under the cash basis method.~~January 1, 2020 are presented in accordance with accounting rules effective at that time.



	At March 31, 2020
	Commercial Real Estate		Commercial		Consumer		Total
	(In Thousands)
Allowance for Loan and Lease Losses:
Individually evaluated	$	1,672	$	3,488	$	117	$	5,277
Collectively evaluated	80,507		23,286		4,111		107,904
Total	82,179		26,774		4,228		113,181

Loans and Leases:
Individually evaluated	$	15,134	$	29,726	$	8,187	$	53,047
Collectively evaluated	3,747,024		1,797,140		1,225,316		6,769,480
Total	3,762,158		1,826,866		1,233,503		6,822,527

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)



	At December 31, 2019
	Commercial Real Estate		Commercial		Consumer		Total
	(In Thousands)
Allowance for Loan and Lease Losses:
Originated:
Individually evaluated for impairment	$	7	$	1,672	$	70	$	1,749
Collectively evaluated for impairment	28,415		22,853		5,850		57,118
Total originated loans and leases	28,422		24,525		5,920		58,867

Acquired:
Individually evaluated for impairment	—		—		40		40
Collectively evaluated for impairment	65		197		11		273
Acquired with deteriorated credit quality	1,798		104		—		1,902
Total acquired loans and leases	1,863		301		51		2,215

Total allowance for loan and lease losses	$	30,285	$	24,826	$	5,971	$	61,082

Loans and Leases:
Originated:
Individually evaluated for impairment	$	3,956	$	20,019	$	3,326	$	27,301
Collectively evaluated for impairment	3,531,578		1,800,691		1,090,117		6,422,386
Total originated loans and leases	3,535,534		1,820,710		1,093,443		6,449,687

Acquired:
Individually evaluated for impairment	2,942		397		1,841		5,180
Collectively evaluated for impairment	79,465		15,465		110,758		205,688
Acquired with deteriorated credit quality	51,281		2,176		23,804		77,261
Total acquired loans and leases	133,688		18,038		136,403		288,129

Total loans and leases	$	3,669,222	$	1,838,748	$	1,229,846	$	6,737,816

The following tables include the recorded investment and unpaid principal balances of impaired loans and leases with the related allowance amount, if applicable, for the originated and acquired loan and lease portfolios at the dates indicated. Also presented are the average recorded investments in the impaired loans and leases and the related amount of interest recognized during the period that the impaired loans were impaired.

3429

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~


	At September 30, 2017						At December 31, 2016						At December 31, 2019
	Recorded Investment ₍₁₎		Unpaid Principal Balance		Related Allowance		Recorded Investment ₍₂₎		Unpaid Principal Balance		Related Allowance		Recorded Investment ₍₁₎		Unpaid Principal Balance		Related Allowance
	(In Thousands)												(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	9,620	$	9,612	$	—	$	9,113	$	9,104	$	—	$	3,899	$	3,892	$	—
Commercial	24,749		24,737		—		39,269		39,210		—		28,539		28,533		—
Consumer	3,545		3,536		—		4,823		4,815		—		2,237		2,223		—
Total originated with no related allowance recorded	37,914		37,885		—		53,205		53,129		—		34,675		34,648		—
With an allowance recorded:
Commercial real estate	3,061		3,061		1		3,984		3,984		28		68		68		7
Commercial	17,993		17,946		7,488		605		605		97		5,980		6,055		1,672
Consumer													1,224		1,220		70
Total originated with an allowance recorded	21,054		21,007		7,489		4,589		4,589		125		7,272		7,343		1,749
Total originated impaired loans and leases	58,968		58,892		7,489		57,794		57,718		125		41,947		41,991		1,749

Acquired:
With no related allowance recorded:
Commercial real estate	2,112		2,112		—		10,400		10,400		—		12,365		12,366		—
Commercial	2,042		2,042		—		3,948		3,948		—		437		437		—
Consumer	4,807		4,807		—		6,384		6,399		—		3,516		3,516		—
Total acquired with no related allowance recorded	8,961		8,961		—		20,732		20,747		—		16,318		16,319		—
With an allowance recorded:
Commercial real estate													—		—		—
Commercial													—		—		—
Consumer	171		171		21		253		253		27		447		447		40
Total acquired with an allowance recorded	171		171		21		253		253		27		447		447		40
Total acquired impaired loans and leases	9,132		9,132		21		20,985		21,000		27		16,765		16,766		40

Total impaired loans and leases	$	68,100	$	68,024	$	7,510	$	78,779	$	78,718	$	152	$	58,712	$	58,757	$	1,789

(1) Includes originated and acquired nonaccrual loans of ~~$37.5~~$18.5 million and ~~$2.1 million, respectively as of September 30, 2017.~~

~~(2) Includes originated and acquired nonaccrual loans of $34.1 million and $3.6~~$0.9 million, respectively as of December 31, ~~2016.~~2019.

3530

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~


	Three Months Ended								Three Months Ended
	September 30, 2017				September 30, 2016				March 31, 2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)								(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	9,841	$	83	$	6,636	$	49	$	8,699	$	65
Commercial	26,329		173		21,474		147		35,162		349
Consumer	3,559		14		3,480		18		2,732		8
Total originated with no related allowance recorded	39,729		270		31,590		214		46,593		422
With an allowance recorded:
Commercial real estate	3,061		38		4,549		48		469		1
Commercial	18,210		—		14,390		3		8,467		28
Consumer	—		—		248		—		663		6
Total originated with an allowance recorded	21,271		38		19,187		51		9,599		35
Total originated impaired loans and leases	61,000		308		50,777		265		56,192		457

Acquired:
With no related allowance recorded:
Commercial real estate	2,116		8		9,952		67		9,153		3
Commercial	2,218		8		4,127		29		559		4
Consumer	4,837		18		8,475		16		4,943		15
Total acquired with no related allowance recorded	9,171		34		22,554		112		14,655		22
With an allowance recorded:
Commercial real estate	—		—		—		—		—		—
Commercial	—		—		486		—		—		—
Consumer	171		1		423		2		153		1
Total acquired with an allowance recorded	171		1		909		2		153		1
Total acquired impaired loans and leases	9,342		35		23,463		114		14,808		23

Total impaired loans and leases	$	70,342	$	343	$	74,240	$	379	$	71,000	$	480

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Troubled Debt Restructuring Loans and ~~for the Nine Months Ended September 30, 2017 and 2016~~

Nine Months Ended
September 30, 2017 September 30, 2016
Average
Recorded
Investment Interest
Income
Recognized Average
Recorded
Investment Interest
Income
Recognized
(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate $ 10,200
$ 205
$ 5,655
$ 119
Commercial 24,206
522
16,602
412
Consumer 4,712
44
3,865
55
Total originated with no related allowance recorded 39,118
771
26,122
586
With an allowance recorded:
Commercial real estate 3,377
124
4,957
146
Commercial 20,771
1
13,017
5
Consumer —
—
165
—
Total originated with an allowance recorded 24,148
125
18,139
151
Total originated impaired loans and leases 63,266
896
44,261
737

Acquired:
With no related allowance recorded:
Commercial real estate 5,009
54
8,341
126
Commercial 2,615
26
4,254
66
Consumer 5,551
52
7,795
51
Total acquired with no related allowance recorded 13,175
132
20,390
243
With an allowance recorded:
Commercial real estate —
—
1,458
—
Commercial —
—
486
—
Consumer 169
3
490
6
Total acquired with an allowance recorded 169
3
2,434
6
Total acquired impaired loans and leases 13,344
135
22,824
249

Total impaired loans and leases $ 76,610
$ 1,031
$ 67,085
$ 986

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Lease

The following ~~tables present~~table sets forth information regarding ~~impaired and non-impaired~~TDR loans and leases at the dates indicated:



	At March 31, 2020		At December 31, 2019
	(In Thousands)
Troubled debt restructurings:
On accrual	$	16,480	$	17,076
On nonaccrual	5,819		6,104
Total troubled debt restructurings	$	22,299	$	23,180

At September 30, 2017
Commercial Real Estate Commercial Consumer Total
(In Thousands)
Allowance for Loan and Lease Losses:
Originated:
Individually evaluated for impairment $ 1
$ 7,488
$ —
$ 7,489
Collectively evaluated for impairment 28,058
23,499
5,364
56,921
Total originated loans and leases 28,059
30,987
5,364
64,410

Acquired:
Individually evaluated for impairment —
—
21
21
Collectively evaluated for impairment 156
14
22
192
Acquired with deteriorated credit quality 653
74
63
790
Total acquired loans and leases 809
88
106
1,003

Total allowance for loan and lease losses $ 28,868
$ 31,075
$ 5,470
$ 65,413

Loans and Leases:
Originated:
Individually evaluated for impairment $ 12,677
$ 37,545
$ 3,320
$ 53,542
Collectively evaluated for impairment 2,873,844
1,533,911
917,947
5,325,702
Total originated loans and leases 2,886,521
1,571,456
921,267
5,379,244

Acquired:
Individually evaluated for impairment —
1,522
1,912
3,434
Collectively evaluated for impairment 36,283
6,641
60,472
103,396
Acquired with deteriorated credit quality ⁽¹⁾
106,205
5,677
41,484
153,366
Total acquired loans and leases 142,488
13,840
103,868
260,196

Total loans and leases $ 3,029,009
$ 1,585,296
$ 1,025,135
$ 5,639,440

~~(1) Includes impaired loans of $5.3 million as of September 30, 2017.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

At December 31, 2016
Commercial Real Estate Commercial Consumer Total
(In Thousands)
Allowance for Loan and Lease Losses:
Originated:
Individually evaluated for impairment $ 28
$ 97
$ —
$ 125
Collectively evaluated for impairment 26,830
20,682
4,776
52,288
Total originated loans and leases 26,858
20,779
4,776
52,413

Acquired:
Individually evaluated for impairment —
—
27
27
Collectively evaluated for impairment 221
13
34
268
Acquired with deteriorated credit quality 566
114
278
958
Total acquired loans and leases 787
127
339
1,253

Total allowance for loan and lease losses $ 27,645
$ 20,906
$ 5,115
$ 53,666

Loans and Leases:
Originated:
Individually evaluated for impairment $ 13,097
$ 37,637
$ 4,711
$ 55,445
Collectively evaluated for impairment 2,732,392
1,437,472
858,251
5,028,115
Total originated loans and leases 2,745,489
1,475,109
862,962
5,083,560

Acquired:
Individually evaluated for impairment 690
3,047
2,028
5,765
Collectively evaluated for impairment 47,599
10,863
70,115
128,577
Acquired with deteriorated credit quality ⁽¹⁾
124,789
6,389
49,784
180,962
Total acquired loans and leases 173,078
20,299
121,927
315,304

Total loans and leases $ 2,918,567
$ 1,495,408
$ 984,889
$ 5,398,864

~~(1) Includes impaired loans of $14.6 million as of December 31, 2016.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~Troubled Debt Restructured Loans and Leases~~

A specific valuation allowance for losses on troubled debt restructured loans is determined by comparing the net carrying amount of the troubled debt restructured loan with the restructured loan's cash flows discounted at the original effective rate.

~~The following table sets forth information regarding troubled debt restructured~~Total TDR loans and leases ~~at the dates indicated:~~

At September 30, 2017
At December 31, 2016
(In Thousands)
Troubled debt restructurings:
On accrual $ 14,024
$ 13,883
On nonaccrual 15,290
11,919
Total troubled debt restructurings $ 29,314
$ 25,802

~~Total troubled debt restructuring loans and leases increased~~decreased by ~~$3.5~~$0.9 million to ~~$29.3~~$22.3 million at ~~September 30, 2017~~March 31, 2020 from

~~$25.8~~ $23.2 million at December 31, ~~2016,~~2019, driven primarily ~~driven~~ by the ~~restructuring of six~~payments on commercial ~~loans,~~TDRs, partially offset by the ~~repayment of other troubled debt restructured loans.~~advance on a current TDR loan.

The ~~recorded investment~~amortized cost basis in ~~troubled debt restructurings~~TDR loans and the associated specific ~~allowances~~credit losses for ~~loan and lease losses, in~~ the ~~originated and acquired~~ loan and lease portfolios, that were modified during the periods indicated, are as follows.


	At and for the Three Months Ended September 30, 2017																			At and for the Three Months Ended March 31, 2020
		Recorded Investment				Specific Allowance for Loan and Lease Losses									Defaulted ⁽¹⁾							Amortized Cost					Specific Allowance for Credit Losses						Defaulted ⁽¹⁾
	Number of Loans/ Leases	At Modification		At End of Period				Nonaccrual Loans and Leases			Additional Commitment			Number of Loans/ Leases		Recorded Investment			Number of Loans/ Leases		At Modification			At End of Period			Specific Allowance for Credit Losses		Nonaccrual Loans and Leases			Number of Loans/ Leases		Amortized Cost
	(Dollars in Thousands)																			(Dollars in Thousands)
Originated:						Specific Allowance for Loan and Lease Losses
Commercial real estate																				—		$	—				$	—		$	—		1		$	228
Commercial	1	$	350	$	350	$	152		$	350		$	—		—		$	—		1		$	297		$	295	$	—		$	295		—		$	—
Equipment financing	5	817		804		—			804			—			—		—			2		200			200		—			—			—		—
Total originated	6	$	1,167	$	1,154	$	152		$	1,154		$	—		—		$	—
Total																				3		$	497		$	495	$	—		$	295		1		$	228

(1) Includes loans and leases that have been modified within the past twelve months and subsequently had payment defaults during the period indicated.



	At and for the Three Months Ended March 31, 2019
		Recorded Investment				Specific Allowance for Loan and Lease Losses				Defaulted ⁽¹⁾
	Number of Loans/ Leases	At Modification		At End of Period		Specific Allowance for Loan and Lease Losses		Nonaccrual Loans and Leases		Number of Loans/ Leases	Recorded Investment
	(Dollars in Thousands)
Originated:
Commercial real estate	1	$	73	$	72	$	9	$	—	1	$	635
Commercial	6	16,754		16,730		—		—		3	1,074
Equipment financing	3	816		815		182		425		1	52
Residential mortgage	—	—		—		—		—		1	341
Total originated	10	$	17,643	$	17,617	$	191	$	425	6	$	2,102

~~There were no acquired loans and leases that met the definition of a troubled debt restructured during the three months ended September 30, 2017.~~______________________________________________________________________

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

At and for the Three Months Ended September 30, 2016
Recorded Investment
Specific
Allowance for
Loan and
Lease Losses

Defaulted ⁽¹⁾

Number of
Loans/
Leases

At
Modification

At End of
Period

Nonaccrual
Loans and
Leases

Additional
Commitment

Number of
Loans/
Leases

Recorded
Investment
(Dollars in Thousands)
Originated:
Commercial 2
$ 812
$ 812
$ 220
$ 473
$ —
1
$ 348
Equipment financing 1
433
433
—
433
—
2
353
Total originated 3
1,245
1,245
220
906
—
3
701

Acquired:
Home equity 4
323
323
20
146
—
—
—
Total acquired 4
323
323
20
146
—
—
—

Total loans and leases 7
$ 1,568
$ 1,568
$ 240
$ 1,052
$ —
3
$ 701

(1) Includes loans and leases that have been modified within the past twelve months and subsequently had payment defaults during the period indicated.

At and for the Nine Months Ended September 30, 2017
Recorded Investment
Specific
Allowance for
Loan and
Lease Losses

Defaulted ⁽¹⁾

Number of
Loans/
Leases

At
Modification

At End of
Period

Nonaccrual
Loans and
Leases

Additional
Commitment

Number of
Loans/
Leases

Recorded
Investment
(Dollars in Thousands)
Originated:
Commercial real estate 1
$ 190
$ 189
$ —
$ —
$ —
—
$ —
Commercial 10
7,861
6,793
2,520
5,111
—
2
3,431
Equipment financing 14
2,401
2,321
—
2,136
—
—
—
Total originated 25
$ 10,452
$ 9,303
$ 2,520
$ 7,247
$ —
2
$ 3,431

~~There were no acquired loans and leases that met the definition of a troubled debt restructured during the nine months ended September 30, 2017.~~

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

At and for the Nine Months Ended September 30, 2016
Recorded Investment
Specific
Allowance for
Loan and
Lease Losses

Defaulted ⁽¹⁾

Number of
Loans/
Leases

At
Modification

At End of
Period

Nonaccrual
Loans and
Leases

Additional
Commitment

Number of
Loans/
Leases

Recorded
Investment
(Dollars in Thousands)
Originated:
Commercial real estate 2
$ 1,155
$ 1,127
$ —
$ 1,127
$ —
—
$ —
Commercial 22
9,701
9,504
3,478
9,136
—
2
376
Equipment financing 3
797
786
—
786
—
2
353
Total originated 27
11,653
11,417
3,478
11,049
—
4
729

Acquired:
Commercial —
—
—
—
—
—
2
696
Residential mortgage 5
374
372
20
146
—
—
—
Total acquired 5
374
372
20
146
—
2
696

Total loans and leases 32
$ 12,027
$ 11,789
$ 3,498
$ 11,195
$ —
6
$ 1,425

The following table sets forth the Company's end-of-period ~~balances~~amortized cost basis for ~~troubled debt restructurings~~TDRs that were modified during the periods indicated, by type of modification.



	Three Months Ended March 31,
	2020		2019
	(In Thousands)
Loans with one modification:
Extended maturity	$	295	$	6,319
Combination maturity, principal, interest rate	200		11,298
Total loans with one modification	495		17,617

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In Thousands)
Loans with one modification:
Extended maturity $ —
$ 528
$ 4,463
$ 604
Adjusted principal —
—
19
410
Interest only 350
—
350
2,346
Combination maturity, principal, interest rate 804
1,040
2,253
8,201
Total loans with one modification 1,154
1,568
7,085
11,561

Loans with more than one modification:
Extended maturity —
—
1,870
228
Combination maturity, principal, interest rate —
—
348
—
Total loans with more than one modification —
—
2,218
228

Total loans with modifications $ 1,154
$ 1,568
$ 9,303
$ 11,789

The ~~troubled debt restructuring~~TDR loans and leases that were modified for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 were ~~$9.3~~$0.5 million and ~~$11.8~~$17.6 million, respectively. The decrease in ~~troubled debt restructuring~~TDR loans and leases that were modified for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was primarily due to the ~~decrease in the~~ modification of ~~loans and leases secured by taxi medallions.~~three commercial relationships of $16.5 million.

There ~~was $2.2 million in troubled debt restructuring~~were 0 TDR loans and leases with more than one modification during the ~~nine months ended September 30, 2017 and none during the~~ three months ended ~~September 30, 2017.~~March 31, 2020 and 2019.

The net charge-offs of the performing and nonperforming troubled debt restructuring loans and leases for the three and nine months ended September 30, 2017 were $0.6 million and $2.6 million, respectively, driven by the charge-off of five

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~commercial loans secured by taxi medallions.~~ The net charge-offs for performing and nonperforming ~~troubled debt restructuring~~TDR loans and leases for the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2020 and March 31, 2019 were ~~$28.0~~$134 thousand and ~~$110.0~~$878 thousand, respectively.

~~As of September 30, 2017 and 2016, there were no~~The commitments to lend funds to debtors owing receivables whose terms had been modified in ~~troubled debt restructurings.~~TDRs as of March 31, 2020 was $2.3 million. As of March 31, 2019, there were $2.8 million commitments to lend funds to debtors owing receivables whose terms had been modified in TDRs.

The Coronavirus Aid, Relief and Economic Relief ("CARES") Act and regulatory guidance recently issued by the Federal banking agencies provides that certain short-term loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by the COVID-19 pandemic are not required to be treated as TDRs under GAAP. As such, the Company suspended TDR accounting for COVID-19 pandemic related loan modifications meeting the loan modification criteria set forth under the CARES Act or as specified in the regulatory guidance. Further, loans granted payment deferrals related to COVID-19 pandemic are not required to be reported as past due or placed on non-accrual status (provided the loans were not past due or on non-accrual status prior to the deferral). Please refer to Note 14, Subsequent Events for further information regarding loans and leases modified under the CARES Act.

(6) Goodwill and Other Intangible Assets

The following table sets forth the carrying value of goodwill and other intangible assets at the dates indicated:



	At March 31, 2020		At December 31, 2019
	(In Thousands)
Goodwill (beginning)	$	160,427	$	160,427
Additions	—		—
Balance at end of period	160,427		160,427
Other intangible assets:
Core deposits	2,998		3,334
Trade name	1,089		1,089
Total other intangible assets	4,087		4,423
Total goodwill and other intangible assets	$	164,514	$	164,850

At September 30, 2017 At December 31, 2016
(In Thousands)
Goodwill $ 137,890
$ 137,890
Other intangible assets:
Core deposits 5,474
7,044
Trade name 1,089
1,089
Total other intangible assets 6,563
8,133
Total goodwill and other intangible assets $ 144,453
$ 146,023

At December 31, 2013, the Company concluded that the BankRI name would continue to be utilized in its marketing strategies; therefore, the trade name with carrying value of $1.1 million, has an indefinite life and ceased to amortize.

The weighted-average amortization period for the core deposit intangible is ~~8.1 years.~~6.1.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The estimated aggregate future amortization expense (in thousands) for other intangible assets for each of the next five years and thereafter is as follows:



Remainder of 2020	$	935
Year ending:
2021	857
2022	500
2023	268
2024	158
2025	104
Thereafter	176
Total	$	2,998

Remainder of 2017 $ 519
Year ending:
2018 1,669
2019 1,295
2020 944
2021 601
2022 299
Thereafter 147
Total $ 5,474

(7) Accumulated Other Comprehensive Income (Loss)

For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company’s accumulated other comprehensive (loss) income ~~(loss)~~ includes the following two components: (i) unrealized holding gains (losses) on investment securities available-for-sale; and (ii) adjustment of accumulated obligation for postretirement benefits.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Changes in accumulated other comprehensive income ~~(loss)~~ by component, net of tax, were as follows for the periods indicated:

Three Months Ended September 30, 2017

Investment
Securities
Available-for-Sale

Postretirement
Benefits

Accumulated Other
Comprehensive
Loss
(In Thousands)
Balance at June 30, 2017 $ (2,570 ) $ 395
$ (2,175 )
Other comprehensive income 282
—
282
Balance at September 30, 2017 $ (2,288 ) $ 395
$ (1,893 )



	Three Months Ended March 31, 2020
	Investment Securities Available-for-Sale		Postretirement Benefits		Accumulated Other Comprehensive Loss
	(In Thousands)
Balance at December 31, 2019	$	2,199	$	84	$	2,283
Other comprehensive income	14,664		—		14,664
Balance at March 31, 2020	$	16,863	$	84	$	16,947



	Three Months Ended March 31, 2019
	Investment Securities Available-for-Sale			Postretirement Benefits		Accumulated Other Comprehensive Loss
	(In Thousands)
Balance at December 31, 2018	$	(9,712	)	$	252	$	(9,460	)
Other comprehensive income	5,067			—		5,067
Balance at March 31, 2019	$	(4,645	)	$	252	$	(4,393	)

Three Months Ended September 30, 2016

Investment
Securities
Available-for-Sale

Postretirement
Benefits

Accumulated Other
Comprehensive
Loss
(In Thousands)
Balance at June 30, 2016 $ 5,618
$ 351
$ 5,969
Other comprehensive loss (1,073 ) —
(1,073 )
Balance at September 30, 2016 $ 4,545
$ 351
$ 4,896

Nine Months Ended September 30, 2017

Investment
Securities
Available-for-Sale

Postretirement
Benefits

Accumulated Other
Comprehensive
Loss
(In Thousands)
Balance at December 31, 2016 $ (4,213 ) $ 395
$ (3,818 )
Other comprehensive income 1,925
—
1,925
Balance at September 30, 2017 $ (2,288 ) $ 395
$ (1,893 )

Nine Months Ended September 30, 2016

Investment
Securities
Available-for-Sale

Postretirement
Benefits

Accumulated Other
Comprehensive
Loss
(In Thousands)
Balance at December 31, 2015 $ (2,827 ) $ 351
$ (2,476 )
Other comprehensive income

7,372
—
7,372
Balance at September 30, 2016 $ 4,545
$ 351
$ 4,896

The Company did ~~not~~0t reclassify any amounts out of accumulated other comprehensive income ~~(loss)~~ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~March 31, 2019.

(8) Derivatives and Hedging Activities

The Company utilizes loan level derivatives which consist of interest-rate contracts (swaps, caps and floors), and risk participation agreements as part of the Company's interest-rate risk management strategy for certain assets and liabilities and not for speculative purposes. Based on the Company's intended use for the loan level derivatives at inception, the Company designates the derivative as either an economic hedge of an asset or liability, or a hedging instrument subject to the hedge accounting provisions of FASB ASC Topic 815, "Derivatives and Hedging".

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Interest-rate swap, cap and floor agreements are entered into as hedges against future interest-rate fluctuations on specifically identified assets or liabilities. The Company did not have derivative fair value hedges or derivative cash flow hedges as of ~~September 30, 2017~~March 31, 2020 or December 31, ~~2016.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

2019.

Derivatives not designated as hedges are not speculative but rather result from a service the Company provides to certain customers for a fee. The Company executes loan level derivative products such as interest-rate swap agreements with commercial banking customers to aid them in managing their interest-rate risk. The interest-rate swap contracts allow the commercial banking customers to convert floating-rate loan payments to fixed-rate loan payments. The Company concurrently enters into offsetting swaps with a third party financial institution, effectively minimizing its net risk exposure resulting from such transactions. The third-party financial institution exchanges the customer's fixed-rate loan payments for floating-rate loan payments. As the interest-rate swap agreements associated with this program do not meet hedge accounting requirements, changes in the fair value are recognized directly in earnings.

The Company utilizes risk participation agreements with other banks participating in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. Risk participation agreements are derivative financial instruments and are recorded at fair value. These derivatives are not designated as hedges and therefore, changes in fair value are recorded directly through earnings at each reporting period.

Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower, for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower, for a fee received from the other bank.

The Company offers foreign exchange contracts to commercial borrowers to accommodate their business needs. These foreign exchange contracts do not qualify as hedges for accounting purposes. To mitigate the market and liquidity risk associated with these foreign exchange contracts, the Company enters into similar offsetting positions.

Asset derivatives and liability derivatives are included in other assets and accrued expenses and other liabilities on the unaudited consolidated balance sheets.

The following tables ~~presents~~present the Company's customer related derivative positions for the periods indicated below for those derivatives not designated as hedging.


	Notional Amount Maturing															Notional Amount Maturing
	Number of Positions	Less than 1 year		Less than 2 years		Less than 3 years		Less than 4 years		Thereafter		Total		Fair Value		Number of Positions	Less than 1 year		Less than 2 years		Less than 3 years		Less than 4 years		Thereafter		Total		Fair Value
	September 30, 2017															March 31, 2020
	(Dollars In Thousands)															(Dollars In Thousands)
Loan level derivatives
Receive fixed, pay variable	61	$	—	$	5,996	$	—	$	28,378	$	431,096	$	465,470	$	9,975	129	$	24,358	$	—	$	33,455	$	14,220	$	1,159,063	$	1,231,096	$	154,032
Pay fixed, receive variable	61	—		5,996		—		28,378		431,096		465,470		9,975		129	24,358		—		33,455		14,220		1,159,063		1,231,096		154,032
Risk participation-out agreements	5	—		—		—		8,732		20,126		28,858		49		40	13,731		—		7,110		12,773		200,232		233,846		2,473
Risk participation-in agreements	1	—		—		—		—		3,825		3,825		14		6	—		—		—		19,000		30,279		49,279		432

Foreign exchange contracts
Buys foreign currency, sells U.S. currency	25	$	1,200	$	—	$	—	$	—	$	—	$	1,200	$	22	24	$	1,422	$	—	$	—	$	—	$	—	$	1,422	$	200
Sells foreign currency, buys U.S. currency	50	1,208		—		—		—		—		1,208		14		25	1,530		—		—		—		—		1,530		224

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~



	Notional Amount Maturing
	Number of Positions	Less than 1 year		Less than 2 years		Less than 3 years		Less than 4 years		Thereafter		Total		Fair Value
	December 31, 2019
	(Dollars In Thousands)
Loan level derivatives
Receive fixed, pay variable	119	$	24,777	$	—	$	31,131	$	16,794	$	1,028,491	$	1,101,193	$	58,102
Pay fixed, receive variable	119	24,777		—		31,131		16,794		1,028,491		1,101,193		58,102
Risk participation-out agreements	40	13,967		—		—		7,143		214,583		235,693		1,229
Risk participation-in agreements	7	—		—		—		19,000		36,281		55,281		283

Foreign exchange contracts
Buys foreign currency, sells U.S. currency	16	$	1,125	$	—	$	—	$	—	$	—	$	1,125	$	54
Sells foreign currency, buys U.S. currency	18	1,230		—		—		—		—		1,230		53

Notional Amount Maturing
Number of Positions Less than 1 year Less than 2 years Less than 3 years Less than 4 years Thereafter Total Fair Value
December 31, 2016
(Dollars In Thousands)
Loan level derivatives
Receive fixed, pay variable 54
$ —
$ 4,025
$ 2,141
$ 29,501
$ 348,113
$ 383,780
$ 9,738
Pay fixed, receive variable 54
—
4,025
2,141
29,501
348,113
383,780
9,738
Risk participation-out agreements 5
—
—
—
9,078
7,883
16,961
20

Foreign exchange contracts
Buys foreign currency, sells U.S. currency 3
$ 195
$ —
$ —
$ —
$ —
$ 195
$ —
Sells foreign currency, buys U.S. currency 3
195
—
—
—
—
195
—

As of December 31, 2016, the Company held no risk participation-in agreements. As of December 31, 2016, the fair value of the foreign exchange contracts was nominal. Refer also to Note 11, "Fair Value of Financial Instruments."

Certain derivative agreements contain provisions that require the Company to post collateral if the derivative exposure exceeds a threshold amount. The Company posted collateral to dealer counterparties of ~~$28.4~~$155.2 million and ~~$34.5~~$86.5 million in the normal course of business as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. Dealer counterparties posted 0 collateral to the Company in the normal course of business as of March 31, 2020 and December 31, 2019.

The tables below present the offsetting of derivatives and amounts subject to master netting agreements not offset in the unaudited consolidated balance sheet at the dates indicated.


	At September 30, 2017																	At March 31, 2020
	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position			Net Amounts Presented in the Statement of Financial Position			Gross Amounts Not Offset in the Statement of Financial Position							Net Amount		Gross Amounts Recognized			Gross Amounts Offset in the Statement of Financial Position			Net Amounts Presented in the Statement of Financial Position			Gross Amounts Not Offset in the Statement of Financial Position						Net Amount
	Gross Amounts Recognized				Financial Instruments Pledged				Cash Collateral Pledged						Financial Instruments Pledged			Gross Amounts Recognized			Gross Amounts Offset in the Statement of Financial Position		Cash Collateral Pledged										Net Amount
	(In Thousands)																	(In Thousands)
Asset derivatives			Gross Amounts Offset in the Statement of Financial Position
Loan level derivatives	$	9,975	$	—			$	9,975		$	—		$	—		Net Amount		$	9,975	$	154,761		$			—		$	154,761		$	—		$	—	$	154,761
Risk participation-out agreements	49		—			49			—			—				49		2,473			—			2,473			—			—			2,473
Foreign exchange contracts	22		—			22			—			—				22		224			—			224			—			—			224
Total	$	10,046	$	—		$	10,046		$	—		$	—			$	10,046	$	157,458		$	—		$	157,458		$	—		$	—		$	157,458

Liability derivatives
Loan level derivatives	$	9,975	$	—		$	9,975		$	28,371		$	—			$	—	$	154,761		$	—		$	154,761		$	107,697		$	47,516		$	(452	)
Risk participation-in agreements	14		—			14			—			—				—		432			—			432			—			—			432
Foreign exchange contracts	14		—			14			—			—				—		200			—			200			—			—			200
Total	$	10,003	$	—		$	10,003		$	28,371		$	—			$	—	$	155,393		$	—		$	155,393		$	107,697		$	47,516		$	180

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~



	At December 31, 2019
	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position				Financial Instruments Pledged		Cash Collateral Pledged		Net Amount
	(In Thousands)
Asset derivatives
Loan level derivatives	$	59,365	$	—	$	59,365	$	—	$	11,900	$	47,465
Risk participation-out agreements	1,229		—		1,229		—		—		1,229
Foreign exchange contracts	54		—		54		—		—		54
Total	$	60,648	$	—	$	60,648	$	—	$	11,900	$	48,748

Liability derivatives
Loan level derivatives	$	59,365	$	—	$	59,365	$	86,521	$	—	$	(27,156	)
Risk participation-in agreements	283		—		283		—		—		283
Foreign exchange contracts	53		—		53		—		—		53
Total	$	59,701	$	—	$	59,701	$	86,521	$	—	$	(26,820	)

At December 31, 2016
Gross
Amounts Recognized
Gross Amounts
Offset in the
Statement of Financial Position
Net Amounts Presented in the Statement of Financial Position
Gross Amounts Not Offset in the
Statement of Financial Position
Net Amount
Financial Instruments Pledged Cash Collateral Pledged
(In Thousands)
Asset derivatives
Loan level derivatives $ 9,738
$ —
$ 9,738
$ —
$ —
$ 9,738
Risk participation-out agreements 20
—
20
—
—
20
Total $ 9,758
$ —
$ 9,758
$ —
$ —
$ 9,758

Liability derivatives
Loan level derivatives $ 9,738
$ —
$ 9,738
$ 33,744
$ 720
$ —
Total $ 9,738
$ —
$ 9,738
$ 33,744
$ 720
$ —

~~As of December 31, 2016, the Company held no risk participation-in agreements. As of December 31, 2016, the fair value of the foreign exchange contracts was nominal.~~

The Company has agreements with certain of its derivative counterparties that contain credit-risk-related contingent provisions. These provisions provide the counterparty with the right to terminate its derivative positions and require the Company to settle its obligations under the agreements if the Company defaults on certain of its indebtedness or if the Company fails to maintain its status as a well-capitalized institution.

(9) Stock Based Compensation

As of ~~September 30, 2017,~~March 31, 2020, the Company had ~~three~~2 active ~~recognition and retention~~equity plans: ~~the 2003 Recognition and Retention Plan (the "2003 RRP") with 1,250,000 authorized shares,~~ the 2011 Restricted Stock Award Plan ("2011 RSA") with 500,000 authorized shares and the 2014 Equity Incentive Plan ("2014 Plan") with 1,750,000 authorized shares. The ~~2003 RRP, the~~ 2011 RSA and the 2014 Plan are collectively referred to as the "Plans". The purpose of the Plans is to promote the long-term financial success of the Company and its subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company's stockholders.

Of the awarded shares, generally 50% vest ratably over three years with one-third of such shares vesting at each of the first, second and third anniversary dates of the awards. These are referred to as "time-based shares". The remaining 50% of each award has a cliff vesting schedule and will vest three years after the award date based on the level of the Company's achievement of identified performance targets in comparison to the level of achievement of such identified performance targets by a defined peer group comprised of 1715 financial institutions. These are referred to as "performance-based shares". The specific performance measure targets relate to return on assets, return on tangible equity, asset quality and total stockholder return (share price appreciation from date of award plus dividends paid as a percent of the Company's common stock share price on the date of award). If a participant leaves the Company prior to the third anniversary date of an award, any unvested shares are usually forfeited. Dividends declared with respect to shares awarded will be held by the Company and paid to the participant only when the shares vest.

Under ~~all~~ the Plans, shares of the Company's common stock were reserved for issuance as restricted stock awards to officers, employees, and non-employee directors of the Company. Shares issued upon vesting may be either authorized but unissued shares or reacquired shares held by the Company as treasury shares. Any shares not issued because vesting requirements are not met will be retired back to treasury and be made available again for issuance under the Plans.

During the three ~~and nine~~ months ended ~~September 30, 2017, 151,083~~March 31, 2020 and ~~163,204 shares were issued upon satisfaction of required conditions of the Plans. During the three and nine months ended September 30, 2016, 134,809 and 136,139~~2019, 0 shares were issued upon satisfaction of required conditions of the Plans.

Total expense for the Plans was ~~$0.7~~$0.6 million and ~~$0.6~~$0.9 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively. ~~Total expense for the Plans was $1.8 million and $1.4 million for the nine months ended September 30, 2017 and~~

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Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~2016, respectively. The increase in the total expense for the Plans for the three and nine months ended September 30, 2017 is~~ d~~ue to the increase in the grant price of the shares which is driven by the Company’s stock price.~~

(10) Earnings per Share ("EPS")

The following table is a reconciliation of basic EPS and diluted EPS:



	Three Months Ended
	March 31, 2020						March 31, 2019
	Basic			Fully Diluted			Basic		Fully Diluted
	(Dollars in Thousands, Except Per Share Amounts)
Numerator:
Net (loss) income	$	(17,276	)	$	(17,276	)	$	22,467	$	22,467

Denominator:
Weighted average shares outstanding	79,481,462			79,481,462			79,658,583		79,658,583
Effect of dilutive securities	—			184,312			—		184,995
Adjusted weighted average shares outstanding	79,481,462			79,665,774			79,658,583		79,843,578

EPS	$	(0.22	)	$	(0.22	)	$	0.28	$	0.28

Three Months Ended
September 30, 2017 September 30, 2016
Basic
Fully
Diluted
Basic
Fully
Diluted
(Dollars in Thousands, Except Per Share Amounts)
Numerator:
Net income $ 15,366
$ 15,366
$ 13,617
$ 13,617

Denominator:
Weighted average shares outstanding 76,452,539
76,452,539
70,299,722
70,299,722
Effect of dilutive securities —
306,891
—
151,038
Adjusted weighted average shares outstanding 76,452,539
76,759,430
70,299,722
70,450,760

EPS $ 0.20
$ 0.20
$ 0.19
$ 0.19

Nine Months Ended
September 30, 2017 September 30, 2016
Basic
Fully
Diluted
Basic
Fully
Diluted
(Dollars in Thousands, Except Per Share Amounts)
Numerator:
Net income $ 43,691

$ 43,691
$ 39,083

$ 39,083

Denominator:
Weighted average shares outstanding 73,743,658
73,743,658
70,228,127
70,228,127
Effect of dilutive securities —
373,522
—
166,338
Adjusted weighted average shares outstanding 73,743,658
74,117,180
70,228,127
70,394,465

EPS $ 0.59
$ 0.59
$ 0.56
$ 0.56

(11) Fair Value of Financial Instruments

A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring and non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. There were no changes in the valuation techniques used during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following tables set forth the carrying value of assets and liabilities measured at fair value on a recurring basis at the dates indicated:


	Carrying Value as of September 30, 2017								Carrying Value as of March 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In Thousands)								(In Thousands)
Assets:
Investment securities available-for-sale:
GSE debentures	$	—	$	139,344	$	—	$	139,344	$	—	$	237,816	$	—	$	237,816
GSE CMOs	—		135,280		—		135,280		—		63,527		—		63,527
GSE MBSs	—		182,118		—		182,118		—		328,499		—		328,499
SBA commercial loan asset-backed securities	—		77		—		77		—		1		—		1
Municipal obligations									—		45,618		—		45,618
Corporate debt obligations	—		58,891		—		58,891		—		25,959		—		25,959
U.S. Treasury bonds	—		4,811		—		4,811		—		59,634		—		59,634
Trust preferred securities	—		1,403		—		1,403
Marketable equity securities	986		—		—		986
Foreign government obligations									—		485		—		$	485
Total investment securities available-for-sale	$	986	$	521,924	$	—	$	522,910	$	—	$	761,539	$	—	$	761,539
Equity securities held-for-trading									$	1,527	$	1,031	$	—	$	2,558
Loan level derivatives	$	—	$	9,975	$	—	$	9,975	—		154,761		—		154,761
Risk participation-out agreements	—		49		—		49		—		2,473		—		2,473
Foreign exchange contracts	—		22		—		22		—		224		—		224
Liabilities:
Loan level derivatives	$	—	$	9,975	$	—	$	9,975	$	—	$	154,761	$	—	$	154,761
Risk participation-in agreements	—		14		—		14		—		432		—		432
Foreign exchange contracts	—		14		—		14		—		200		—		200

Carrying Value as of December 31, 2016
Level 1 Level 2 Level 3 Total
(In Thousands)
Assets:
Investment securities available-for-sale:
GSE debentures $ —
$ 97,020
$ —
$ 97,020
GSE CMOs —
158,040
—
158,040
GSE MBSs —
212,915
—
212,915
SBA commercial loan asset-backed securities —
107
—
107
Corporate debt obligations —
48,485
—
48,485
U.S. Treasury bonds —
4,737
—
4,737
Trust preferred securities —
1,358
—
1,358
Marketable equity securities 972
—
—
972
Total investment securities available-for-sale $ 972
$ 522,662
$ —

$ 523,634
Loan level derivatives $ —
$ 9,738
$ —
$ 9,738
Risk participation-out agreements —
20
—
20
Liabilities:

Loan level derivatives $ —
$ 9,738
$ —
$ 9,738

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Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

~~As of December 31, 2016, the fair value of the foreign exchange contracts was nominal. As of December 31, 2016, the Company held no risk participation-in agreements.~~



	Carrying Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Investment securities available-for-sale:
GSE debentures	$	—	$	185,803	$	—	$	185,803
GSE CMOs	—		85,932		—		85,932
GSE MBSs	—		153,343		—		153,343
SBA commercial loan asset-backed securities	—		34		—		34
Corporate debt obligations	—		28,986		—		28,986
U.S. Treasury bonds	—		44,897		—		44,897
Total investment securities available-for-sale	$	—	$	498,995	$	—	$	498,995
Equity securities held-for-trading	$	2,569	$	1,012	$	—	$	3,581
Loan level derivatives	—		59,365		—		59,365
Risk participation-out agreements	—		1,229		—		1,229
Foreign exchange contracts	—		54		—		54
Liabilities:
Loan level derivatives	$	—	$	59,365	$	—	$	59,365
Risk participation-in agreements	—		283		—		283
Foreign exchange contracts	—		53		—		53

Investment Securities Available-for-Sale

The fair value of investment securities is based principally on market prices and dealer quotes received from third-party and nationally-recognized pricing services for identical investment securities such as U.S. Treasury and agency securities. ~~The Company's marketable equity securities are priced this way and are included in Level 1.~~ These prices are validated by comparing the primary pricing source with an alternative pricing source when available. When quoted market prices for identical securities are unavailable, the Company uses market prices provided by independent pricing services based on recent trading activity and other observable information, including but not limited to market interest-rate curves, referenced credit spreads and estimated prepayment speeds where applicable. These investments include GSE debentures, GSE mortgage-related securities, SBA commercial loan asset backed securities, corporate debt securities, and trust preferred securities, all of which are included in Level 2. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, no investment securities were valued using pricing models included in Level 3.

Additionally, management reviews changes in fair value from period to period and performs testing to ensure that prices received from the third parties are consistent with management's expectation of the market. Changes in the prices obtained from the pricing service are analyzed from month to month, taking into consideration changes in market conditions including changes in mortgage spreads, changes in U.S. Treasury security yields and changes in generic pricing of 15-year and 30-year securities. Additional analysis may include a review of prices provided by other independent parties, a yield analysis, a review of average life changes using Bloomberg analytics and a review of historical pricing for a particular security.

Equity Securities Held-for-Trading

The fair value of equity securities held-for-trading is based principally on market prices and dealer quotes received from third-party and nationally-recognized pricing services. The Company's equity securities are priced this way and are included in Level 1 and Level 2. These prices are validated by comparing the primary pricing source with an alternative pricing source when available.

Derivatives and Hedging Instruments

The fair values for the interest-rate swap assets and liabilities, risk participation agreements (RPA in/out), and foreign exchange derivatives represent a Level 2 valuation and are based on settlement values adjusted for credit risks associated with the counterparties and the Company and observable market interest rate curves and foreign exchange rates where applicable.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Credit risk adjustments consider factors such as the likelihood of default by the Company and its counterparties, its net exposures and remaining contractual life. To date, the Company has not realized any losses due to a counterparty's inability to pay any net uncollateralized position. Refer also to Note 8, "Derivatives and Hedging Activities."

There were no transfers between levels for assets and liabilities recorded at fair value on a recurring basis during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis are summarized below at the dated indicated:


	Carrying Value as of September 30, 2017								Carrying Value as of March 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In Thousands)								(In Thousands)
Assets measured at fair value on a non-recurring basis:
Collateral-dependent impaired loans and leases	$	—	$	—	$	32,800	$	32,800	$	—	$	—	$	8,682	$	8,682
OREO	—		—		3,235		3,235
Repossessed assets	—		1,163		—		1,163		—		2,038		—		2,038
Total assets measured at fair value on a non-recurring basis	$	—	$	1,163	$	36,035	$	37,198	$	—	$	2,038	$	8,682	$	10,720



	Carrying Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets measured at fair value on a non-recurring basis:
Collateral-dependent impaired loans and leases	$	—	$	—	$	2,243	$	2,243
Repossessed assets	—		2,631		—		2,631
Total assets measured at fair value on a non-recurring basis	$	—	$	2,631	$	2,243	$	4,874

Carrying Value as of December 31, 2016
Level 1 Level 2 Level 3 Total
(In Thousands)
Assets measured at fair value on a non-recurring basis:
Collateral-dependent impaired loans and leases $ —
$ —
$ 27,282
$ 27,282
OREO —
—
618
618
Repossessed assets —
781
—
781
Total assets measured at fair value on a non-recurring basis $ —
$ 781
$ 27,900
$ 28,681

Collateral-Dependent Impaired Loans and Leases

For nonperforming loans and leases where the credit quality of the borrower has deteriorated significantly, fair values of the underlying collateral were estimated using purchase and sales agreements (Level 2), or comparable sales or recent appraisals (Level 3), adjusted for selling costs and other expenses.

Other Real Estate Owned

The Company records OREO at the lower of cost or fair value. In estimating fair value, the Company utilizes purchase and sales agreements (Level 2) or comparable sales, recent appraisals or cash flows discounted at an interest rate commensurate with the risk associated with these cash flows (Level 3), adjusted for selling costs and other expenses.

Repossessed Assets

Repossessed assets are carried at estimated fair value less costs to sell based on auction pricing (Level 2).

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The table below presents quantitative information about significant unobservable inputs (Level 3) for assets measured at fair value on a ~~recurring~~non-recurring basis at the dates indicated.

Fair Value Valuation Technique
At September 30, 2017 At December 31, 2016
(Dollars in Thousands)
Collateral-dependent impaired loans and leases $ 32,800
$ 27,282

Appraisal of collateral ⁽¹⁾
Other real estate owned 3,235
618

Appraisal of collateral ⁽¹⁾



	Fair Value				Valuation Technique
	At March 31, 2020		At December 31, 2019
	(Dollars in Thousands)
Collateral-dependent impaired loans and leases	$	8,682	$	2,243	Appraisal of collateral ⁽¹⁾

_______________________________________________________________________________

⁽¹⁾ Fair value is generally determined through independent appraisals of the underlying collateral. The Company may also use another available source of collateral assessment to determine a reasonable estimate of the fair value of the collateral. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of the unobservable inputs used may vary but is generally 0% - 10% on the discount for costs to sell and 0% - 15% on appraisal adjustments.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Summary of Estimated Fair Values of Financial Instruments

The following table presents the carrying amount, estimated fair value, and placement in the fair value hierarchy of the Company's financial instruments at the dates indicated. This table excludes financial instruments for which the carrying amount approximates fair value. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, restricted equity securities, and accrued interest receivable. Financial liabilities for which the fair value approximates carrying value include non-maturity deposits, short-term borrowings, and accrued interest payable.



			Fair Value Measurements at March 31, 2020
	Carrying Value	Estimated Fair Value	Level 1 Inputs	Level 2 Inputs	Level 3 Inputs
	(In Thousands)
Financial assets:
Loans and leases, net	6,709,346	6,718,600	—	—	6,718,600
Restricted equity securities	68,472	68,472	—	—	68,472
Financial liabilities:
Certificates of deposits	2,023,637	2,049,775	—	2,049,775	—
Borrowed funds	1,291,804	1,299,591	—	1,299,591	—

Fair Value Measurements
Carrying
Value Estimated
Fair Value Level 1
Inputs Level 2
Inputs Level 3
Inputs
(In Thousands)
At September 30, 2017
Financial assets:
Investment securities held-to-maturity:

GSE debentures $ 38,622
$ 38,072
$ —
$ 38,072
$ —
GSE MBSs 14,788
14,643
—
14,643
—
Municipal obligations 53,828
54,013
—
54,013
—
Foreign government obligations 500
492
—
—
492
Loans held-for-sale 2,973
2,973
—
2,973
—
Loans and leases, net 5,574,027
5,480,446
—
—
5,480,446
Restricted equity securities 62,135
62,135
—
—
62,135
Loan level derivatives 9,975
9,975
—
9,975
—
Risk participation-out agreements 49
49
—
49
—
Foreign exchange contracts 22
22
—
22
—
Financial liabilities:
Certificates of deposit 1,167,329
1,164,618
—
1,164,618
—
Borrowed funds 985,895
967,643
—
967,643
—
Loan level derivatives 9,975
9,975
—
9,975
—
Risk participation-in agreements 14
14
—
14
—
Foreign exchange contracts 14
14
—
14
—



					Fair Value Measurements at December 31, 2019
	Carrying Value		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In Thousands)
Financial assets:
Investment securities held-to-maturity:
GSE debentures	$	31,228	$	31,290	$	—	$	31,290	$	—
GSE MBSs	9,360		9,279		—		9,279		—
Municipal obligations	45,692		46,514		—		46,514		—
Foreign government obligations	500		478		—		—		478
Loans and leases, net	6,676,734		6,697,583		—		—		6,697,583
Restricted equity securities	53,818		53,818		—		—		53,818
Financial liabilities:
Certificates of deposit	2,021,642		2,026,683		—		2,026,683		—
Borrowed funds	902,749		902,670		—		902,670		—

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Fair Value Measurements
Carrying
Value Estimated
Fair Value Level 1
Inputs Level 2
Inputs Level 3
Inputs
(In Thousands)
At December 31, 2016
Financial assets:
Investment securities held-to-maturity:
GSE debentures $ 14,735
$ 14,101
$ —
$ 14,101
$ —
GSE MBSs 17,666
17,479
—
17,479
—
Municipal obligations 54,219
53,204
—
53,204
—
Foreign government obligations 500
487
—
—
487
Loans held-for-sale 13,078
13,078
—
13,078
—
Loans and leases, net 5,345,198
5,195,312
—
—
5,195,312
Restricted equity securities 64,511
75,589
—
—
75,589
Loan level derivatives 9,738
9,738
—
9,738
—
Risk participation-out agreements 20
20
—
20
—
Financial liabilities:
Certificates of deposit 1,041,022
1,042,653
—
1,042,653
—
Borrowed funds 1,044,086
1,030,753
—
1,030,753
—
Loan level derivatives 9,738
9,738
—
9,738
—

Investment Securities Held-to-Maturity

The fair values of certain investment securities held-to-maturity are estimated using market prices provided by independent pricing services based on recent trading activity and other observable information, including but not limited to market interest-rate curves, referenced credit spreads and estimated prepayment speeds where applicable. These investments include GSE debentures, GSE MBSs, and municipal obligations, all of which are included in Level 2. Additionally, fair values of foreign government obligations are estimated using pricing models and are considered to be Level 3.

~~Loans Held-for-Sale~~

Fair value is measured using quoted market prices when available. These assets are typically categorized as Level 1. If quoted market prices are not available, comparable market values may be utilized. These assets are typically categorized as Level 2.

Loans and Leases

The fair values of performing loans and leases was estimated by segregating the portfolio into its primary loan and lease categories—commercial real estate mortgage, multi-family mortgage, construction, commercial, equipment financing, condominium association, residential mortgage, home equity and other consumer. These categories were further disaggregated based upon significant financial characteristics such as type of interest rate (fixed / variable) and payment status (current / past-due). ~~The~~Using the exit price valuation method, the Company discounts the contractual cash flows for each loan category using interest rates currently being offered for loans with similar terms to borrowers of similar quality and incorporates estimates of future loan prepayments. ~~This method of estimating fair value does not incorporate the exit price concept of fair value.~~

Restricted Equity Securities

The fair values of certain restricted equity securities are estimated using observable inputs adjusted for other unobservable information, including but not limited to probability assumptions and similar discounts where applicable. These restricted equity securities are considered to be Level 3.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Notes to Unaudited Consolidated Financial Statements (Continued)~~

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Deposits

The fair values of deposit liabilities with no stated maturity (demand, NOW, savings and money market savings accounts) are equal to the carrying amounts payable on demand. The fair value of certificates of deposit represents contractual cash flows discounted using interest rates currently offered on deposits with similar characteristics and remaining maturities. The fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the Company's core deposit relationships (deposit-based intangibles).

Borrowed Funds

The fair value of federal funds purchased is equal to the amount borrowed. The fair value of FHLBB advances and repurchase agreements represents contractual repayments discounted using interest rates currently available for borrowings with similar characteristics and remaining maturities. The fair values reported for retail repurchase agreements are based on the discounted value of contractual cash flows. The discount rates used are representative of approximate rates currently offered on borrowings with similar characteristics and maturities. The fair values reported for subordinated deferrable interest debentures are based on the discounted value of contractual cash flows. The discount rates used are representative of approximate rates currently offered on instruments with similar terms and maturities.

(12) Commitments and Contingencies

Off-Balance Sheet Financial Instruments

The Company is party to off-balance sheet financial instruments in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include loan commitments, standby and commercial letters of ~~credits,~~credit, and loan level derivatives. According to GAAP, these financial instruments are not recorded in the financial statements until they are funded or related fees are incurred or received.

The contract amounts reflect the extent of the involvement the Company has in particular classes of these instruments. Such commitments involve, to varying degrees, elements of credit risk and interest-rate risk in excess of the amount recognized in the consolidated balance sheets. The Company's exposure to credit loss in the event of non-performance by the counterparty is represented by the fair value of the instruments. The Company uses the same policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

Financial instruments with off-balance-sheet risk at the dates indicated follow:



	At March 31, 2020		At December 31, 2019
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	40,933	$	50,034
Commercial	93,724		78,058
Residential mortgage	52,930		25,998
Unadvanced portion of loans and leases	713,352		808,681
Unused lines of credit:
Home equity	537,313		528,251
Other consumer	25,362		25,374
Other commercial	406		380
Unused letters of credit:
Financial standby letters of credit	11,094		10,166
Performance standby letters of credit	6,107		4,652
Commercial and similar letters of credit	3,823		3,823
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	1,231,096		1,101,193
Pay fixed, receive variable	1,231,096		1,101,193
Risk participation-out agreements	233,846		235,693
Risk participation-in agreements	49,279		55,281
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	1,422		1,125
Sells foreign currency, buys U.S. currency	1,530		1,230

At September 30, 2017
At December 31, 2016
(In Thousands)
Financial instruments whose contract amounts represent credit risk:

Commitments to originate loans and leases:

Commercial real estate $ 95,484

$ 27,750
Commercial 89,036

71,716
Residential mortgage 19,672

28,179
Unadvanced portion of loans and leases 526,532

580,416
Unused lines of credit:

Home equity 383,973

340,682
Other consumer 14,119

13,157
Other commercial 306

208
Unused letters of credit:

Financial standby letters of credit 11,270

11,720
Performance standby letters of credit 668

516
Commercial and similar letters of credit 855

785
Loan level derivatives (Notional principal amounts):

Receive fixed, pay variable 465,470

383,780
Pay fixed, receive variable 465,470

383,780
Risk participation-out agreements 28,858

16,961
Risk participation-in agreements 3,825
—
Foreign exchange contracts (Notional amounts):

Buys foreign currency, sells U.S. currency 1,200

195
Sells foreign currency, buys U.S. currency 1,208

195

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee by the customer. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if any, is based on management's credit evaluation of the borrower.

Standby and commercial letters of ~~credits~~credit are conditional commitments issued by the Company to guarantee performance of a customer to a third party. These standby and commercial letters of credit are primarily issued to support the financing needs of the Company's commercial customers. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

From time to time, the Company enters into loan level derivatives, risk participation agreements or foreign exchange contracts with commercial customers and third-party financial institutions. These derivatives allow the Company to offer long-term fixed-rate commercial loans while mitigating the interest-rate or foreign exchange risk of holding those loans. In a loan level derivative transaction, the Company lends to a commercial customer on a floating-rate basis and then enters into ana loan level derivative with that customer. Concurrently, the Company enters into offsetting swaps with a third-party financial institution, effectively minimizing its net interest-rate risk exposure resulting from such transactions.

The fair value of derivative assets and liabilities was ~~$10.0~~$157.5 million and ~~$10.0~~$155.4 million, respectively, as of ~~September 30, 2017.~~March 31, 2020. The fair value of derivative assets and liabilities was ~~$9.8~~$60.6 million and ~~$9.7~~$59.7 million, respectively, as of December 31, ~~2016.~~2019.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~At and for the Nine Months Ended September 30, 2017 and 2016~~

The fair value of foreign exchange assets and liabilities was ~~$22.0~~$224 thousand and ~~$14.0~~$200 thousand, respectively, as of ~~September 30, 2017.~~March 31, 2020. The fair value of foreign exchange assets and liabilities was ~~nominal~~$54 thousand and $53 thousand as of December 31, ~~2016.~~2019.

Lease Commitments

The Company leases certain office space under various noncancellable operating ~~leases.~~leases as well as certain other assets. These leases have original terms ranging from 53 years to over 25 years. Certain leases contain renewal options and escalation clauses which can increase rental expenses based principally on the consumer price index and fair market rental value provisions. All of the Company's current outstanding leases are classified as operating leases.

The Company considered the following criteria when determining whether a contract contains a lease, the existence of an identifiable asset and the right to obtain substantially all of the economic benefits from use of the asset through the period. The Company used the FHLB classic advance rates available as of the date of the lease origination as the discount rate to determine the net present value of the remaining lease payments.



	At March 31, 2020		At March 31, 2019
	(In Thousands)
The components of lease expense were as follow:
Operating lease cost	$	1,611	$	1,459

Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,658	$	1,525
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	—	$	71



	At March 31, 2020			At December 31, 2019
	(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets	$	24,789		$	24,876
Operating lease liabilities	24,789			24,876

Weighted Average Remaining Lease Term
Operating leases	7.32			7.47

Weighted Average Discount Rate
Operating leases	3.2		%	3.2		%

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

A summary of future minimum rental payments under such leases at the dates indicated follows:



	Minimum Rental Payments
	March 31, 2020
	(In Thousands)

Remainder of 2020	$	4,608
Year ending:
2021	5,560
2022	4,833
2023	3,907
2024	2,547
2025	1,515
Thereafter	4,675
Total	$	27,645
Less imputed interest	(2,856		)
Present value of lease liability	$	24,789

Minimum Rental Payments
(In Thousands)

Remainder of 2017 $ 1,325
Year ending:
2018 4,921
2019 4,053
2020 3,497
2021 2,988
2022 2,743
Thereafter 10,138
Total $ 29,665

Certain leases contain escalation clauses for real estate taxes and other expenditures, which are not included above. ~~Total rental expense was $1.4~~The total real estate taxes were $0.5 million and ~~$1.3~~other expenditures were $0.1 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively.~~2019. Total rental expense was ~~$4.2~~$1.6 million and ~~$3.9~~$1.4 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively. ~~The increase was due to the opening of a new branch in Danvers, Massachusetts for First Ipswich Bank, and the relocation of a branch in Brookline, Massachusetts for Brookline Bank.~~

Legal Proceedings

In the normal course of business, there are various outstanding legal proceedings. In the opinion of management, after consulting with legal counsel, the consolidated financial position and results of operations of the Company are not expected to be affected materially by the outcome of such proceedings.

(13) Revenue from Contracts with Customers

Overview

Revenue from contracts with customers in the scope of Accounting Standards Codification (“ASC”) ("Topic 606") is measured based on the consideration specified in the contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue from contracts with customers when it satisfies its performance obligations.

The Company’s performance obligations are generally satisfied as services are rendered and can either be satisfied at a point in time or over time. Unsatisfied performance obligations at the report date are not material to our consolidated financial statements.

In certain cases, other parties are involved with providing services to our customers. If the Company is a principal in the transaction (providing services itself or through a third party on its behalf), revenues are reported based on the gross consideration received from the customer and any related expenses are reported in gross noninterest expense. If the Company is an agent in the transaction (referring to another party to provide services), the Company reports its net fee or commission retained as revenue.

A substantial portion of the Company’s revenue is specifically excluded from the scope of Topic 606. This exclusion is associated with financial instruments, including interest income on loans and investment securities, in addition to loan derivative income and gains on loan and investment sales. For the revenue that is in-scope of Topic 606, the following is a description of principal activities from which the Company generates its revenue from contracts with customers, separated by the timing of revenue recognition.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Revenue Recognized at a Point in Time

The Company recognizes revenue that is transactional in nature and such revenue is earned at a point in time. Revenue that is recognized at a point in time includes card interchange fees (fee income related to debit card transactions), ATM fees, wire transfer fees, overdraft charge fees, and stop-payment and returned check fees. Additionally, revenue is collected from loan fees, such as letters of credit, line renewal fees and application fees. Such revenue is derived from transactional information and is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction.

Revenue Recognized Over Time

The Company recognizes revenue over a period of time, generally monthly, as services are performed and performance obligations are satisfied. Such revenue includes commissions on investments, insurance sales and service charges on deposit accounts. Fee revenue from service charges on deposit accounts represents the service charges assessed to customers who hold deposit accounts at the Banks.

(14) Subsequent Events

On March 27, 2020, Congress passed, and the President signed, the CARES Act to address the economic effects of the COVID-19 pandemic.

•

Paycheck Protection Program. The CARES Act appropriated $349 billion for “paycheck protection loans” through the U.S. Small Business Administration's (“SBA’s”) Paycheck Protection Program (“PPP”). The amount appropriated was subsequently increased to $659 billion. Loans under the PPP that meet SBA requirements may be forgiven in certain circumstances, and are 100% guaranteed by SBA. As of the filing date, the Banks have obtained SBA approval for 2,923 PPP loans totaling $589 million. All PPP loans have been funded. PPP loans are fully guaranteed by the U.S. government, have a two-year term and earn interest at rate of 1%. We currently expect a significant portion of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. In conjunction with the PPP, the FRB has created a lending facility for qualified financial institutions. The Paycheck Protection Program Liquidity Facility (the “PPPLF”) will extend credit to depository institutions with a term of up to two years at an interest rate of 0.35%. Only loans issued under the PPP can be pledged as collateral to access the facility. The Company began participating in the PPPLF in April 2020.

•

Troubled Debt Restructuring Relief. From March 1, 2020 through the earlier of December 31, 2020 or 60 days after the termination date of the national emergency declared by the President on March 13, 2020 concerning the COVID-19 outbreak (the “national emergency”), a financial institution may elect to suspend the requirements under accounting principles generally accepted in the U.S. for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a troubled debt restructured, including impairment accounting. This troubled debt restructuring relief applies for the term of the loan modification that occurs during the applicable period for a loan that was not more than 30 days past due as of December 31, 2019. Financial institutions are required to maintain records of the volume of loans involved in modifications to which troubled debt restructuring relief is applicable. As of the filing date, the banks have granted 5,293 short-term deferments on loan balances of $1.5 billion, which represented 21% of total loan balances as of March 31, 2020. These short-term deferments are not classified as troubled debt restructured loans and will not be reported as past due provided that they are performing in accordance with the modified terms.

•

CECL Delay. Banks, savings associations, credit unions, bank holding companies and their affiliates are not required to comply with ASU 2016-13, including CECL, from the date of the law’s enactment until the earlier of the end of the national emergency or December 31, 2020. On March 27, 2020, the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency issued an interim final rule that allows banking organizations that are required to adopt CECL this year to mitigate the estimated cumulative regulatory capital effects for up to two years. The relief afforded by the CARES Act and interim final rule is in addition to the three-year transition period already in place. The Company adopted CECL effective January 1, 2020.


•	Reduction of the Community Bank Leverage Ratio. The CARES Act reduced the community bank leverage ratio from 9% to 8% until the earlier of the end of the national emergency or December 31, 2020. In response to the CARES Act, federal banking regulators set the community bank leverage ratio at 8% for the remainder of 2020, 8.5% for 2021 and 9% thereafter.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


•	Revival of Bank Debt Guarantee Program. The CARES Act amends the Dodd-Frank Act to provide the FDIC with the authority to guarantee bank-issued debt and noninterest-bearing transaction accounts that exceed the FDIC's $250,000 limit through December 31, 2020. The FDIC has discretion to determine whether and how to exercise this authority.


•	Forbearance. The CARES Act codifies in part guidance from state and federal regulators and government-sponsored enterprises, including the 60-day suspension of foreclosures on federally-backed mortgages and requirements that servicers grant forbearance to borrowers affected by COVID-19.


•	Moratorium on Negative Credit Reporting. Any furnisher of credit information that agrees to defer payments, forbear on any delinquent credit or account, or provide any other relief to consumers affected by the COVID-19 pandemic must report the credit obligation or account as current if the credit obligation or account was current before the accommodation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements, which are based on certain assumptions and describe Brookline Bancorp, Inc.’s (the “Company’s”) future plans, strategies and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions. These statements include, among others, statements regarding the Company’s intent, belief or expectations with respect to economic conditions, trends affecting the Company’s financial condition or results of operations, and the Company’s exposure to market, liquidity, interest-rate and credit risk.

Forward-looking statements are based on the current assumptions underlying the statements and other information with respect to the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and the financial condition, results of operations, future performance and business are only expectations of future results. Although the Company believes that the expectations reflected in the Company’s forward-looking statements are reasonable, the Company’s

actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, ~~adverse~~the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; continued deterioration in general business and economic conditions on a national basis and in the local markets in which the Banks operate; continued turbulence in the capital and debt markets; changes in interest rates; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company ~~operates, including changes which adversely affect borrowers’ ability to service and repay their loans and leases;~~operates; changes in the value of securities and other assets in the Company’s investment portfolio; ~~changes~~increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels ~~necessitating increased~~that necessitate increases in borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and ~~natural disaster;~~future pandemics; changes in ~~government~~ regulation; reputational risks relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; and changes in assumptions used in making such forward-looking ~~statements, as well as~~statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2019 and other filings submitted to the Securities and Exchange ~~Commission.~~Commission ("SEC"). Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Introduction

Brookline Bancorp, Inc., a Delaware corporation, operates as a multi-bank holding company for Brookline Bank and its subsidiaries; Bank Rhode Island and its subsidiaries ("BankRI"); ~~First Ipswich Bank and its subsidiaries ("First Ipswich");~~ and Brookline Securities Corp. As previously disclosed, the merger of First Ipswich Bank into Brookline Bank was completed in the first quarter of 2020.

As a commercially-focused financial institution with 51 full-service banking offices throughout greater Boston, the north shore of Massachusetts and Rhode Island, the Company, through Brookline Bank ~~BankRI~~ and ~~First Ipswich (the “Banks”),~~BankRI, offers a wide range of commercial, business and retail banking services, including a full complement of cash management products, foreign exchange services, on-line and mobile banking services, consumer and residential loans and investment advisory services, designed to meet the financial needs of small- to mid-sized businesses and individuals throughout central New England. Specialty lending activities include equipment financing, ~~primarily~~27.8% of which is in the greater New York and New Jersey metropolitan ~~area.~~area and 72.2% of which is in other areas in the United States of America as of March 31, 2020.

The Company focuses its business efforts on profitably growing its commercial lending businesses, both organically and through acquisitions. The Company’s customer focus, multi-bank structure, and risk management are integral to its organic growth strategy and serve to differentiate the Company from its competitors. As full-service financial institutions, the Banks and their subsidiaries focus their efforts on developing and deepening long-term banking relationships with qualified customers through a full complement of products, ~~and~~ excellent customer service, and strong risk management.

The Company manages the Banks under a uniform strategic ~~objectives,~~objective, with one set of uniform policies consistently applied by one executive management team. Within this environment, the Company believes that the ability to make customer decisions locally enhances management's motivation, service levels and, as a consequence, the Company's financial results. As such, while most back-office functions are consolidated at the holding company level, branding and decision-making, including credit decisions and pricing, remain largely local in order to better meet the needs of bank customers and further motivate the

Banks’ commercial, business and retail bankers. These credit decisions, at the local level, are executed through corporate policies overseen by the Company's credit department.

The competition for loans and leases and deposits remains intense. ~~While the economy has improved in 2017, the~~The Company expects the operating environment to remain challenging. The volume of loan and lease originations and loan and lease losses will depend, to a large extent, on how the economy performs. Loan and lease growth and deposit growth are also greatly influenced by the rate-setting actions of the ~~Board of Governors of the Federal Reserve System (“FRB”).~~FRB. A sustained, low interest rate environment with a flat interest rate curve may negatively impact on the Company's yields and net interest margin. While the ~~company~~Company is slightly asset sensitive and should benefit from rising rates, ~~these rate increases~~changes in interest rates could also precipitate a change in the mix and volume of the Company's deposits and loans. The future operating results of the Company will depend on its ability to maintain or increase the current net interest margin, while minimizing exposure to credit risk, along with increasing sources of non-interest income, while controlling the growth of non-interest expenses.

The Company and the Banks are supervised, examined and regulated by the FRB. As a Massachusetts-chartered ~~savings bank and~~ trust company, ~~respectively,~~ Brookline Bank ~~and First Ipswich are~~is also subject to regulation under the laws of the Commonwealth of Massachusetts and the jurisdiction of the Massachusetts Division of Banks. As a Rhode Island-chartered financial institution, BankRI is also subject to regulation under the laws of the State of Rhode Island and the jurisdiction of the Banking Division of the Rhode Island Department of Business Regulation. The FDIC continues to insure each of the Banks’ deposits up to $250,000 per depositor. ~~Additionally, as~~As previously disclosed, on July 31, 2019, Brookline Bank converted its charter from a Massachusetts savings bank to a Massachusetts-chartered ~~savings bank, Brookline Bank is also insured by~~trust company and ended its membership in the Depositors Insurance Fund (“DIF”), a private industry-sponsored ~~company. The~~fund which insures Massachusetts-chartered savings bank deposit balances in excess of federal deposit insurance coverage. Brookline Bank’s growth in deposit size necessitated Brookline Bank’s withdrawal from the DIF ~~insures savings bank~~and the concurrent charter conversion of Brookline Bank. Brookline Bank’s deposit accounts will continue to be insured by the deposit insurance fund of the FDIC up to applicable limits. Excess deposits that were insured by the DIF on July 31, 2019 will continue to be insured by the DIF until July 31, 2020. Term deposits in excess of the FDIC insurance ~~limits. As such, Brookline Bank offers 100% insurance on all deposits as a result of a combination of insurance from~~coverage will continue to be insured by the ~~FDIC and the DIF.~~DIF until they reach maturity.

The Company’s common stock is traded on the Nasdaq Global Select Market^SM under the symbol “BRKL.”

Regulatory Developments - The CARES Act

On March 27, 2020, Congress passed, and the President signed, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to address the economic effects of the COVID-19 pandemic.

•

Paycheck Protection Program. The CARES Act appropriated $349 billion for “paycheck protection loans” through the SBA’s PPP. The amount appropriated was subsequently increased to $659 billion. Loans under the PPP that meet SBA requirements may be forgiven in certain circumstances, and are 100% guaranteed by SBA. As of the filing date, Brookline Bank and Bank Rhode Island have obtained SBA approval for 2,923 PPP loans totaling $589 million. All PPP loans have been funded. PPP loans are fully guaranteed by the U.S. government, have a two-year term and earn interest at rate of 1%. We currently expect a significant portion of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. In conjunction with the PPP, the FRB has created a lending facility for qualified financial institutions. The PPPLF will extend credit to depository institutions with a term of up to two years at an interest rate of 0.35%. Only loans issued under the PPP can be pledged as collateral to access the facility. The Company is participating in the PPPLF program.

•

Troubled Debt Restructuring Relief. From March 1, 2020 through the earlier of December 31, 2020 or 60 days after the termination date of the national emergency, a financial institution may elect to suspend the requirements under accounting principles generally accepted in the U.S. for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a troubled debt restructured, including impairment accounting. This troubled debt restructuring relief applies for the term of the loan modification that occurs during the applicable period for a loan that was not more than 30 days past due as of December 31, 2019. Financial institutions are required to maintain records of the volume of loans involved in modifications to which troubled debt restructuring relief is applicable. As of the filing date, the Banks have granted approximately 5,293 short-term deferments on loan balances of $1.5 billion, which represented 21% of total loan balances as of March 31, 2020. These short-term deferments are not classified as troubled debt restructured loans and will not be reported as past due provided that they are performing in accordance with the modified terms.

•

CECL Delay. Banks, savings associations, credit unions, bank holding companies and their affiliates are not required to comply with ASU 2016-13, including CECL, from the date of the law’s enactment until the earlier of the end of the national emergency or December 31, 2020. On March 27, 2020, the FRB, the FDIC and the Office of the Comptroller of the Currency issued an interim final rule that allows banking organizations that are required to adopt CECL this year to mitigate the estimated cumulative regulatory capital effects for up to two years. The relief afforded by the

CARES Act and interim final rule is in addition to the three-year transition period already in place, however the Company adopted CECL effective January 1, 2020.


•	Reduction of the Community Bank Leverage Ratio. The CARES Act reduced the community bank leverage ratio from 9% to 8% until the earlier of the end of the national emergency or December 31, 2020. In response to the CARES Act, federal banking regulators set the community bank leverage ratio at 8% for the remainder of 2020, 8.5% for 2021 and 9% thereafter.


•	Revival of Bank Debt Guarantee Program. The CARES Act amends the Dodd-Frank Act to provide the FDIC with the authority to guarantee bank-issued debt and noninterest-bearing transaction accounts that exceed the FDIC's $250,000 limit through December 31, 2020. The FDIC has discretion to determine whether and how to exercise this authority.


•	Forbearance. The CARES Act codifies in part guidance from state and federal regulators and government-sponsored enterprises, including the 60-day suspension of foreclosures on federally-backed mortgages and requirements that servicers grant forbearance to borrowers affected by COVID-19.


•	Moratorium on Negative Credit Reporting. Any furnisher of credit information that agrees to defer payments, forbear on any delinquent credit or account, or provide any other relief to consumers affected by the COVID-19 pandemic must report the credit obligation or account as current if the credit obligation or account was current before the accommodation.

Massachusetts COVID-19 Emergency Legislation

On April 20, 2020, legislation enacted in Massachusetts in response to the COVID-19 emergency declared by Governor Baker was signed into law by the Governor. The legislation establishes a temporary moratorium on foreclosures on one- to four-family, owner occupied residential real estate in Massachusetts. The legislation also requires a creditor to grant to a borrower of a mortgage loan secured by one- to four-family, owner occupied residential real estate in Massachusetts a forbearance of up to 180 days, if requested by the borrower, who must affirm that the borrower has experienced a financial impact from the COVID-19 pandemic. A borrower is entitled to request a forbearance while the legislation is in effect even if the borrower is already in default. In connection with a forbearance, a creditor may not charge fees, penalties or interest beyond the amounts scheduled and calculated as if the borrower made all contractual payments on time and in full under the terms of the relevant loan agreement. The legislation specifies that a payment subject to forbearance shall be added to the end of the term of the loan unless otherwise agreed by the parties. The legislation also prohibits a creditor from furnishing negative information to a consumer reporting agency related to mortgage payments subject to forbearance. Because the legislation was enacted on an emergency basis, it went into effect immediately upon being signed into law. The legislation provides that the temporary moratorium on foreclosures expires 120 days after the effective date of the legislation, which is August 18, 2020, or 45 days after the COVID-19 emergency declaration has been lifted, whichever is sooner. The Governor may extend the moratorium in increments of up 90 days as long as the moratorium ends not later than 45 days after the COVID-19 emergency declaration has been lifted. A borrower may request a forbearance under the legislation at any time while the foreclosure moratorium is in effect.

Selected Financial Data

The following is based in part on, and should be read in conjunction with, the consolidated financial statements and accompanying notes, and other information appearing elsewhere in this Quarterly Report on Form 10-Q.


	At and for the Three Months Ended															At and for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2017			2017			2016			2016			2020			2019			2019			2019			2019
	(Dollars in Thousands, Except Per Share Data)															(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA
Earnings per share - Basic	$	0.20		$	0.20		$	0.19		$	0.19		$	0.19		$	(0.22	)	$	0.28		$	0.28		$	0.26		$	0.28
Earnings per share - Diluted	0.20			0.20			0.19			0.19			0.19			(0.22		)	0.28			0.28			0.26			0.28
Book value per share (end of period)	10.52			10.42			10.00			9.88			9.90			11.57			11.87			11.70			11.53			11.30
Tangible book value per share (end of period) (1)	8.63			8.52			7.93			7.81			7.81			9.49			9.80			9.63			9.45			9.22
Dividends paid per common share	0.09			0.09			0.09			0.09			0.09			0.115			0.115			0.110			0.110			0.105
Stock price (end of period)	15.50			14.60			15.65			16.40			12.19			11.28			16.46			14.73			15.38			14.40

PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	3.57		%	3.59		%	3.53		%	3.40		%	3.48		%	3.31		%	3.43		%	3.45		%	3.55		%	3.64		%
Return on average assets	0.92		%	0.91		%	0.83		%	0.83		%	0.86		%	(0.87		)%	1.13		%	1.17		%	1.08		%	1.21		%
Return on average tangible assets (1)	0.94		%	0.93		%	0.85		%	0.85		%	0.88		%	(0.89		)%	1.15		%	1.19		%	1.11		%	1.24		%
Return on average stockholders' equity	7.64		%	7.76		%	7.58		%	7.59		%	7.83		%	(7.30		)%	9.42		%	9.74		%	8.98		%	10.14		%
Return on average tangible stockholders' equity (1)	9.31		%	9.58		%	9.55		%	9.60		%	9.94		%	(8.84		)%	11.42		%	11.85		%	10.98		%	12.48		%
Dividend payout ratio (1)	44.90		%	46.28		%	47.23		%	47.80		%	46.60		%	(53.10		)%	41.35		%	38.88		%	42.87		%	37.28		%
Efficiency ratio (3)	56.37		%	57.93		%	48.92		%	56.92		%	57.89		%	57.36		%	54.15		%	56.48		%	56.09		%	55.83		%

ASSET QUALITY RATIOS
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.14		%	0.17		%	0.07		%	0.62		%	0.04		%	0.13		%	0.10		%	0.02		%	0.19		%	0.13		%
Nonperforming loans and leases as a percentage of total loans and leases	0.71		%	0.76		%	0.83		%	0.74		%	0.70		%	0.57		%	0.29		%	0.33		%	0.33		%	0.36		%
Nonperforming assets as a percentage of total assets	0.66		%	0.71		%	0.73		%	0.64		%	0.61		%	0.49		%	0.28		%	0.30		%	0.30		%	0.36		%
Total allowance for loan and lease losses as a percentage of total loans and leases	1.16		%	1.17		%	1.21		%	0.99		%	1.10		%	1.66		%	0.91		%	0.89		%	0.90		%	0.91		%
Allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases (1)	1.20		%	1.20		%	1.25		%	1.03		%	1.15		%

CAPITAL RATIOS
Stockholders' equity to total assets	12.04		%	11.95		%	10.83		%	10.80		%	10.91		%	10.78		%	12.04		%	11.83		%	12.03		%	11.98		%
Tangible equity ratio (1)	10.09		%	9.99		%	8.79		%	8.73		%	8.82		%	9.02		%	10.15		%	9.94		%	10.08		%	9.99		%

FINANCIAL CONDITION DATA
Total assets	$	6,686,284		$	6,658,067		$	6,497,721		$	6,438,129		$	6,380,312		$	8,461,591		$	7,856,853		$	7,878,436		$	7,636,980		$	7,519,130
Total loans and leases	5,639,440			5,537,406			5,461,779			5,398,864			5,332,300			6,822,527			6,737,816			6,646,821			6,505,329			6,388,197
Allowance for loan and lease losses	65,413			64,521			66,133			53,666			58,892			113,181			61,082			59,135			58,635			58,041
Investment securities available-for-sale	522,910			540,976			528,433			523,634			524,295			761,539			498,995			467,339			482,497			489,020
Investment securities held-to-maturity	107,738			108,963			100,691			87,120			77,094			—			86,780			95,163			103,572			113,694
Equity securities held-for-trading																2,558			3,581			4,581			4,698			4,341
Goodwill and identified intangible assets	144,453			144,972			145,491			146,023			146,644			164,514			164,850			165,270			165,691			166,111
Total deposits	4,805,683			4,709,419			4,651,903			4,611,076			4,564,906			5,889,938			5,830,072			5,729,339			5,622,493			5,620,633
Total borrowed funds																1,291,804			902,749			986,405			930,764			866,005
Stockholders' equity																912,568			945,606			932,311			918,468			900,572
													(Continued)

																												(Continued)


	At and for the Three Months Ended										At and for the Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		March 31,			December 31,		September 30,		June 30,		March 31,
	2017		2017		2017		2016		2016		2020			2019		2019		2019		2019
	(Dollars in Thousands, Except Per Share Data)										(Dollars in Thousands, Except Per Share Data)

Total borrowed funds	985,895		1,066,643		1,056,785		1,044,086		1,022,653
Stockholders' equity	804,762		795,618		703,873		695,544		696,371

EARNINGS DATA
Net interest income	$	56,843	$	55,583	$	53,098	$	51,854	$	52,350	$	61,712		$	63,931	$	63,236	$	63,134	$	62,999
Provision for credit losses	2,911		873		13,402		3,215		2,215		54,114			3,602		871		3,757		1,353
Non-interest income	5,973		4,477		15,908		5,430		5,329		9,328			7,756		7,929		7,478		6,630
Non-interest expense	35,408		34,795		33,756		32,607		33,388		40,748			38,815		40,191		39,604		38,871
Net income	15,366		14,880		13,445		13,279		13,617
Net (loss) income											(17,276		)	22,183		22,596		20,471		22,467

(1) Refer to "Non-GAAP Financial Measures and Reconciliations to GAAP".

(2) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(3) Efficiency ratio is calculated by dividing non-interest expense by the sum of non-interest income and net interest income.

Executive Overview

Growth

Total assets of ~~$6.7~~$8.5 billion as of ~~September 30, 2017~~March 31, 2020 increased ~~$248.2~~$604.7 million, or ~~5.1%~~30.8% on an annualized basis, from December 31, ~~2016.~~2019. The increase was primarily driven by ~~increases~~growth in ~~loans~~cash and ~~leases.~~cash equivalents, investment securities, and the loan portfolio.

Total loans and leases ~~of $5.6 billion~~ as of ~~September 30, 2017~~March 31, 2020 increased ~~$240.6~~$84.7 million, or ~~5.9%~~5.0% on an annualized basis, to $6.8 billion from December 31, ~~2016.~~2019. The Company's commercial loan portfolios, which are comprised of commercial real estate loans and commercial loans and leases, totaled ~~$4.6~~$5.6 billion, or ~~81.8%~~81.9% of total loans and leases, as of ~~September 30, 2017,~~March 31, 2020, an increase of ~~$200.3~~$81.1 million, or ~~6.1%~~5.9% on an annualized basis, from ~~$4.4~~$5.5 billion, or ~~81.8%~~81.7% of total loans and leases, as of December 31, ~~2016.~~2019.

Cash and cash equivalents as of March 31, 2020 increased $263.0 million, or 1,352.2% on an annualized basis, to $340.8 million from December 31, 2019. Investment securities as March 31, 2020 increased $174.7 million, or 118.6% on annualized basis, to $764.1 million from December 31, 2019.

Total deposits of ~~$4.8~~$5.9 billion as of ~~September 30, 2017~~March 31, 2020 increased ~~$194.6~~$59.9 million, or ~~5.6%~~4.1% on an annualized basis, from ~~$4.6 billion as of~~ December 31, ~~2016.~~2019. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled ~~$3.6~~$3.9 billion, or ~~75.7%~~65.6% of total deposits as of ~~September 30, 2017,~~March 31, 2020, an increase of ~~$68.3~~$57.9 million, or ~~2.6%~~6.1% on an annualized basis from ~~$3.6~~$3.8 billion, or ~~77.4%~~65.3% of total deposits, as of December 31, ~~2016.~~2019. Certificate of deposit balances totaled $2.0 billion, or 34.4% of total deposits as of March 31, 2020, an increase of $2.0 million, or 0.4% on an annualized basis from $2.0 billion, or 34.7% of total deposits, as of December 31, 2019.

Total borrowed funds as of March 31, 2020 increased $389.1 million, or 172.4% on an annualized basis, to $1.3 billion from December 31, 2019.

Asset Quality

Nonperforming assets as of ~~September 30, 2017~~March 31, 2020 totaled ~~$44.4~~$41.1 million, or ~~0.66%~~0.49% of total assets, compared to ~~$41.5~~$22.1 million, or ~~0.64%~~0.28% of total assets, as of December 31, ~~2016.~~2019. Net charge-offs for the three months ended ~~September 30, 2017~~March 31, 2020 were ~~$2.0~~$2.2 million, or ~~0.14%~~0.13% of average loans and leases on an annualized basis, compared to ~~$0.5~~$2.1 million, or ~~0.04%~~0.13% of average loans and leases on an annualized basis, for the three months ended ~~September 30, 2016. The increase in nonperforming loans and leases and nonperforming assets was primarily driven by two taxi medallion loans and two commercial loans that were placed on nonaccrual.~~March 31, 2019.

The ratio of the allowance for loan and lease losses to total loans and leases was ~~1.16%~~1.66% as of ~~September 30, 2017,~~March 31, 2020, compared to ~~0.99%~~0.91% as of December 31, ~~2016. Excluding~~2019. On January 1, 2020, the ~~loans acquired from BankRI and First Ipswich,~~Company implemented the CECL methodology to calculate the allowance for loan and lease losses related to originated loans and leases as a percentage of the total originated loan and lease portfolio was 1.20% as of September 30, 2017, compared to 1.03% as of December 31, 2016. The Company continued to employ its historical underwriting methodology throughout the three month period ended September 30, 2017.credit losses. Refer also to Note 5, "Allowance for Loan and Lease Losses."

Capital Strength

The Company is a "well-capitalized" bank holding company as defined in the FRB's Regulation Y. The Company's common equity Tier 1 ~~Capital Ratio~~capital ratio was ~~12.07%~~10.42% as of ~~September 30, 2017,~~March 31, 2020, compared to ~~10.48%~~11.44% as of December 31, ~~2016.~~2019. The Company's Tier 1 ~~Leverage Ratio~~leverage ratio was ~~10.45%~~9.54% as of ~~September 30, 2017,~~March 31, 2020, compared to ~~9.16%~~10.28% as of December 31, ~~2016.~~2019. As of ~~September 30, 2017,~~March 31, 2020, the Company's Tier 1 ~~Risk-Based Capital Ratio~~risk-based capital ratio was ~~12.38%~~10.55%, compared to ~~10.79%~~11.58% as of December 31,

~~2016.~~ 2019. The Company's Total ~~Risk-Based Capital Ratio~~risk-based capital ratio was ~~14.92%~~12.86% as of ~~September 30, 2017,~~March 31, 2020, compared to ~~13.20%~~13.59% as of December 31, ~~2016.~~2019.

The Company's ratio of stockholders' equity to total assets was ~~12.04%~~10.78% and ~~10.80%~~12.04% as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. The Company's tangible equity ratio was ~~10.09%~~9.02% and ~~8.73%~~10.15% as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. The increase in the ratio of stockholders' equity to total assets and the tangible equity ratio is due to the Company's new issuance in the amount of 5,951,250 shares of the Company’s common stock at a price to the public of $14.50 per share on May 2, 2017. Refer to ~~“Stockholder's Equity and Dividends"~~ ~~below for further discussion.~~

Net Income (Loss)

For the three months ended ~~September 30, 2017,~~March 31, 2020, the Company reported a net ~~income~~loss of ~~$15.4~~$(17.3) million, or ~~$0.20~~$(0.22) per basic and diluted share, ~~an increase~~a decrease of ~~$1.7~~$39.7 million, from net income of $22.5 million, or ~~17.1% on an annualized basis, from $13.6 million, or $0.19~~$0.28 per basic and diluted share for the three months ended ~~September 30, 2016.~~March 31, 2019. This ~~increase in~~ net ~~income~~loss is primarily the result of ~~an increase in net interest income of $4.5 million and an increase in non-interest income of $0.6 million, offset by~~ an increase in the provision for credit losses of ~~$0.7~~$52.8 million, a decrease in net interest income of $1.3 million, and an increase in non-interest expense of ~~$2.0~~$1.9 million, ~~and an increase in provision for income taxes of $0.5 million. Refer to~~ ~~“Results of Operations"~~ ~~below for further discussion.~~

For the nine months ended September 30, 2017, the Company reported net income of $43.7 million, or $0.59 per basic and diluted share, up $4.6 million, or 15.7% on an annualized basis, from $39.1 million, or $0.56 per basic share, for the nine months ended September 30, 2016. This increase is the result of an increase in net interest income of $13.7 million,partially offset by an increase in non-interest income of ~~$9.2~~$2.7 million ~~offset by an increase~~and a decrease in the ~~provision for credit losses of $10.0 million, an increase in non-interest expense of $6.2 million, an increase in~~ provision for income taxes of ~~$2.1 million, and a decrease in net income attributed to noncontrolling interest of $0.1~~$13.4 million. Refer to “Results of Operations" below for further discussion.

The annualized return on average assets was ~~0.92%~~(0.87)% for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~0.86%~~1.21% for the three months ended ~~September 30, 2016.~~March 31, 2019. The annualized return on average stockholders' equity was ~~7.64%~~(7.30)% for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~7.83%~~10.14% for the three months ended ~~September 30, 2016.~~March 31, 2019.

The net interest margin was ~~3.57%~~3.31% for the three months ended ~~September 30, 2017, up~~March 31, 2020, down from ~~3.48%~~3.64% for the three months ended ~~September 30, 2016.~~March 31, 2019. The ~~increase~~decrease in the net interest margin is a result of ~~an increase~~a decrease in the yield on interest-earning assets ~~by 15~~of 38 basis points to ~~4.25%~~4.46% for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~4.10%~~4.84% for the three months ended ~~September 30, 2016,~~March 31, 2019, partially offset by ~~an increase~~a decrease of 610 basis points in the Company's overall cost of funds to ~~0.71%~~1.29% for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~0.65%~~1.39% for the three months ended ~~September 30, 2016.~~March 31, 2019.

The net interest margin was 3.56% for the nine months ended September 30, 2017, compared to 3.46% for the nine months ended September 30, 2016. The increase in the net interest margin in a highly competitive interest rate environment is, in part, the result of an increased in the yield on interest-earning assets by 12 basis points to 4.17% for the nine months ended September 30, 2017 from 4.05% for the nine months ended September 30, 2016 partially offset by an increase of 3 basis points in interest-bearing liabilities to 0.81% for the nine months ended September 30, 2017 from 0.78% for the nine months ended September 30, 2016.

~~The Company's~~Company’s net interest margin and net interest income ~~has shown improvement from~~is sensitive to the ~~most recent low interest rate environment. As~~structure and level of interest rates ~~rise, the Company's net interest margin and net interest income may continue to be under pressure due to~~as well as competitive pricing in all loan ~~categories~~ and ~~the Company’s ability to contain its cost of funds.~~deposit categories.

Critical Accounting Policies

The SEC defines “critical accounting policies” as those involving significant judgments and difficult or complex assumptions by management, often as a result of the need to make estimates about matters that are inherently uncertain or variable, which have, or could have, a material impact on the carrying value of certain assets or net income. The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. As discussed in the Company’s ~~2016~~2019 Annual Report on Form 10-K, management has identified the valuation of available-for-sale securities, accounting for assets and liabilities acquired, the determination of the allowance for loan and lease losses, the review of goodwill and intangibles for impairment, income tax accounting, and valuation of deferred tax assets as the Company’s most critical accounting policies.

As a result of the adoption of ASU 2016-13 effective January 1, 2020, the Company updated its critical accounting policy for the allowance of credit losses on loans. The updates in this standard replace the incurred loss impairment methodology in current GAAP with the CECL methodology. The CECL methodology incorporates current condition, and "reasonable and supportable" forecasts, as well as prepayments, to estimate loan losses over the life of the loan. See Note 5: "Allowance for Loan and Lease Losses" for further discussion on the new policy and processes.

Recent Accounting Developments

In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04") to provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to certain contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients provided that those elections are retained through the end of the hedging relationship. The amendments in this update are effective for all entities as of March 12, 2020 through December 31,2022 and do not apply to contract modifications made after December 31, 2022. The Company has not yet adopted the amendments in this update and is currently in the process of reviewing its contracts and existing processes in order to assess the risks and potential impact to the Company.

In August 2018, FASB issued ASU 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General

(Subtopic 715-20)" ("ASU 2018-14"), to modify the disclosure requirements for employers that sponsor defined benefit pension or other

postretirement plans. This ASU is effective for fiscal years beginning after December 15, 2020, for public business entities and

for fiscal years beginning after December 15, 2021, for all other entities. Early adoption is permitted. Management believes that

this ASU does apply and has not determined the impact, if any, as of March 31, 2020.

Non-GAAP Financial Measures and Reconciliation to GAAP

In addition to evaluating the Company’s results of operations in accordance with GAAP, management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures, such as operating earnings metrics, the return on average tangible assets, return on average tangible equity, the tangible equity ratio, tangible book value per share, and dividend payout ~~ratio, and the~~

~~ratio of the allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases.~~ratio. Management believes that these non-GAAP financial measures provide information useful to investors in understanding the Company’s underlying operating performance and trends, and facilitates comparisons with the performance assessment of financial performance, including non-interest expense control, while the tangible equity ratio and tangible book value per share are used to analyze the relative strength of the Company’s capital position.

The following table ~~summarizes~~reconciles the Company’s operating earnings, operating return on average assets and operating return on average stockholders’ equity for the periods indicated:

At and for the Three Months Ended
September 30, At and for the Nine Months Ended
September 30,
2017 2016 2017 2016

Net income, as reported $ 15,366
$ 13,617
$ 43,691
$ 39,083
Adjustments to arrive at operating earnings:
Merger and acquisition-related expenses 205
—
205
—
Tax effect (70 ) —
(72 ) —
Total adjustments, net of tax 135
—
133
—
Operating earnings $ 15,501
$ 13,617
$ 43,824
$ 39,083

Basic earnings per share, as reported $ 0.20
$ 0.19
$ 0.59
$ 0.56
Adjustments to arrive at basic operating earnings per share:
Merger and acquisition-related expenses —
—
—
—
Total adjustments per share —
—
—
—
Basic operating earnings per share $ 0.20
$ 0.19
$ 0.59
$ 0.56

Average total assets $ 6,681,042
$ 6,360,097
$ 6,567,101
$ 6,230,612
Operating return on average assets (annualized) 0.93 % 0.86 % 0.89 % 0.84 %

Average total stockholders’ equity $ 804,666
$ 695,205
$ 760,447
$ 686,134
Operating return on average stockholders’ equity (annualized) 7.71 % 7.83 % 7.68 % 7.59 %



	At and for the Three Months Ended March 31,
	2020			2019
	(Dollars in Thousands)
Net (loss) income, as reported	$	(17,276	)	$	22,467
Less:
Security gains (after-tax)	964			103
Operating earnings	$	(18,240	)	$	22,364

Basic earnings per share, as reported	$	(0.22	)	$	0.28
Less:
Security gains (after-tax)	0.01			—
Basic operating earnings per share	$	(0.23	)	$	0.28

The following ~~table summarizes~~tables reconcile the Company’s return on average tangible assets and return on average tangible stockholders’ equity for the periods indicated:


	Three Months Ended															Three Months Ended
	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
	(Dollars in Thousands)															(Dollars in Thousands)
Net income, as reported	$	15,366		$	14,880		$	13,445		$	13,279		$	13,617
Operating (loss) earnings																$	(18,240	)	$	22,082		$	23,528		$	20,203		$	22,364

Average total assets	$	6,681,042		$	6,556,665		$	6,461,183		$	6,425,983		$	6,360,097		$	7,965,826		$	7,860,593		$	7,746,492		$	7,571,396		$	7,434,038
Less: Average goodwill and average identified intangible assets, net	144,747			145,269			145,778			146,382			146,997			164,701			165,071			165,493			165,914			166,327
Average tangible assets	$	6,536,295		$	6,411,396		$	6,315,405		$	6,279,601		$	6,213,100		$	7,801,125		$	7,695,522		$	7,580,999		$	7,405,482		$	7,267,711

Return on average assets (annualized)																(0.87		)%	1.13		%	1.17		%	1.08		%	1.21		%
Less:
Security gains (losses)																0.05		%	0.01		%	—		%	0.01		%	0.01		%
Add:
Merger and restructuring-related expenses																—		%	—		%	0.04		%	—		%	—		%
Operating return on average assets (annualized)																(0.92		)%	1.12		%	1.21		%	1.07		%	1.20		%

Return on average tangible assets (annualized)	0.94		%	0.93		%	0.85		%	0.85		%	0.88		%	(0.89		)%	1.15		%	1.19		%	1.11		%	1.24		%
Less:
Security gains (losses)																0.05		%	0.01		%	—		%	0.02		%	0.01		%
Add:
Merger and restructuring-related expenses																—		%	—		%	0.05		%	—		%	—		%
Operating return on average tangible assets (annualized)																(0.94		)%	1.15		%	1.24		%	1.09		%	1.23		%

Average total stockholders' equity	$	804,666		$	766,529		$	709,095		$	699,749		$	695,205		$	946,138		$	941,891		$	928,063		$	911,824		$	886,639
Less: Average goodwill and average identified intangible assets, net	144,747			145,269			145,778			146,382			146,997			164,701			165,071			165,493			165,914			166,327
Average tangible stockholders' equity	$	659,919		$	621,260		$	563,317		$	553,367		$	548,208		$	781,437		$	776,820		$	762,570		$	745,910		$	720,312

Return on average tangible stockholders' equity (annualized)	9.31		%	9.58		%	9.55		%	9.60		%	9.94		%
Return on average stockholders' equity (annualized)																(7.30		)%	9.42		%	9.74		%	8.98		%	10.14		%
Less:
Security gains (losses)																0.41		%	0.04		%	(0.04		)%	0.12		%	0.05		%
Add:
Merger and restructuring-related expenses																—		%	—		%	0.36		%	—		%	—		%
Operating return on average stockholders' equity (annualized)																(7.71		)%	9.38		%	10.14		%	8.86		%	10.09		%




																												(Continued)



	Three Months Ended
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
	(Dollars in Thousands)
Return on average tangible stockholders' equity (annualized)	(8.84	)%	11.42	%	11.85	%	10.98	%	12.48	%
Less:
Security gains (losses)	0.49	%	0.05	%	(0.05	)%	0.15	%	0.06	%
Add:
Merger and restructuring-related expenses	—	%	—	%	0.44	%	—	%	—	%
Operating return on average tangible stockholders' equity (annualized)	(9.33	)%	11.37	%	12.34	%	10.83	%	12.42	%



	Three Months Ended
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
	(Dollars in Thousands)
Net (loss) income, as reported	$	(17,276	)	$	22,183		$	22,596		$	20,471		$	22,467

Average total assets	$	7,965,826		$	7,860,593		$	7,746,492		$	7,571,396		$	7,434,038
Less: Average goodwill and average identified intangible assets, net	164,701			165,071			165,493			165,914			166,327
Average tangible assets	$	7,801,125		$	7,695,522		$	7,580,999		$	7,405,482		$	7,267,711

Return on average tangible assets (annualized)	(0.89		)%	1.15		%	1.19		%	1.11		%	1.24		%

Average total stockholders' equity	$	946,138		$	941,891		$	928,063		$	911,824		$	886,639
Less: Average goodwill and average identified intangible assets, net	164,701			165,071			165,493			165,914			166,327
Average tangible stockholders' equity	$	781,437		$	776,820		$	762,570		$	745,910		$	720,312

Return on average tangible stockholders' equity (annualized)	(8.84		)%	11.42		%	11.85		%	10.98		%	12.48		%

The following ~~tables summarize~~table reconciles the Company's tangible equity ratio for the periods indicated:


	Three Months Ended															Three Months Ended
	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
	(Dollars in Thousands)															(Dollars in Thousands)
Total stockholders' equity	$	804,762		$	795,618		$	703,873		$	695,544		$	696,371		$	912,568		$	945,606		$	932,311		$	918,468		$	900,572
Less: Goodwill and identified intangible assets, net	144,453			144,972			145,491			146,023			146,644			164,514			164,850			165,270			165,691			166,111
Tangible stockholders' equity	$	660,309		$	650,646		$	558,382		$	549,521		$	549,727		$	748,054		$	780,756		$	767,041		$	752,777		$	734,461

Total assets	$	6,686,284		$	6,658,067		$	6,497,721		$	6,438,129		$	6,380,312		$	8,461,591		$	7,856,853		$	7,878,436		$	7,636,980		$	7,519,130
Less: Goodwill and identified intangible assets, net	144,453			144,972			145,491			146,023			146,644			164,514			164,850			165,270			165,691			166,111
Tangible assets	$	6,541,831		$	6,513,095		$	6,352,230		$	6,292,106		$	6,233,668		$	8,297,077		$	7,692,003		$	7,713,166		$	7,471,289		$	7,353,019

Tangible equity ratio	10.09		%	9.99		%	8.79		%	8.73		%	8.82		%	9.02		%	10.15		%	9.94		%	10.08		%	9.99		%

The following ~~tables summarize~~table reconciles the Company's tangible book value per share for the periods indicated:


	Three Months Ended										Three Months Ended
	September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
	(Dollars in Thousands)										(Dollars in Thousands)
Tangible stockholders' equity	$	660,309	$	650,646	$	558,382	$	549,521	$	549,727	$	748,054	$	780,756	$	767,041	$	752,777	$	734,461

Common shares issued	81,695,695		81,695,695		75,744,445		75,744,445		75,744,445		85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	4,572,954		4,717,775		4,707,096		4,707,096		4,734,512		5,862,811		5,003,127		5,003,127		5,025,764		5,020,025
Unallocated ESOP	150,921		159,510		168,099		176,688		185,787		72,441		79,548		92,337		98,208		104,079
Unvested restricted stock	471,702		457,966		476,854		476,854		476,938		395,085		406,450		407,784		377,122		390,636
Common shares outstanding	76,500,118		76,360,444		70,392,396		70,383,807		70,347,208		78,846,835		79,688,047		79,673,924		79,676,078		79,662,432

Tangible book value per share	$	8.63	$	8.52	$	7.93	$	7.81	$	7.81	$	9.49	$	9.80	$	9.63	$	9.45	$	9.22

The following table ~~summarizes~~reconciles the Company's dividend payout ratio for the periods indicated:


	Three Months Ended															Three Months Ended
	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
	(Dollars in Thousands)															(Dollars in Thousands)
Dividends paid	$	6,899		$	6,887		$	6,350		$	6,348		$	6,346		$	9,173		$	9,173		$	8,786		$	8,775		$	8,375

Net income, as reported	$	15,366		$	14,880		$	13,445		$	13,279		$	13,617
Net (loss) income, as reported																$	(17,276	)	$	22,183		$	22,596		$	20,471		$	22,467

Dividend payout ratio	44.90		%	46.28		%	47.23		%	47.80		%	46.60		%	(53.10		)%	41.35		%	38.88		%	42.87		%	37.28		%

The following table summarizes the Company’s allowance for loan and lease losses related to originated loans and leases as a percentage of total originated loans and leases for the periods indicated:

Three Months Ended
September 30,
2017 June 30,
2017 March 31, 2017 December 31, 2016 September 30,
2016

Allowance for loan and lease losses $ 65,413
$ 64,521
$ 66,133
$ 53,666
$ 58,892
Less: Allowance for acquired loan and lease losses 1,003
1,188
1,304
1,253
1,640
Allowance for originated loan and lease losses $ 64,410

$ 63,333

$ 64,829

$ 52,413

$ 57,252

Total loans and leases $ 5,639,440
$ 5,537,406
$ 5,461,779
$ 5,398,864
$ 5,332,300
Less: Total acquired loans and leases 260,196
271,157
295,055
315,304
346,377
Total originated loan and leases $ 5,379,244

$ 5,266,249

$ 5,166,724

$ 5,083,560

$ 4,985,923

Allowance for loan and lease losses related to originated loans and leases as a percentage of originated loan and leases 1.20 %
1.20 %
1.25 %
1.03 %
1.15 %

Financial Condition

Loans and Leases

The following table summarizes the Company's portfolio of loans and leases receivables as of the dates indicated:


	At September 30, 2017					At December 31, 2016					At March 31, 2020					At December 31, 2019
	Balance			Percent of Total		Balance			Percent of Total		Balance			Percent of Total		Balance			Percent of Total
	(Dollars in Thousands)										(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,119,440		37.6	%	$	2,050,382		38.1	%	$	2,526,923		37.0	%	$	2,491,011		37.0	%
Multi-family mortgage	743,912			13.2	%	731,186			13.5	%	963,273			14.1	%	932,163			13.8	%
Construction	165,657			2.9	%	136,999			2.5	%	271,962			4.0	%	246,048			3.7	%
Total commercial real estate loans	3,029,009			53.7	%	2,918,567			54.1	%	3,762,158			55.1	%	3,669,222			54.5	%
Commercial loans and leases:
Commercial	689,010			12.2	%	635,426			11.8	%	719,208			10.5	%	729,502			10.8	%
Equipment financing	842,516			14.9	%	799,860			14.8	%	1,055,053			15.5	%	1,052,408			15.6	%
Condominium association	53,770			1.0	%	60,122			1.1	%	52,605			0.8	%	56,838			0.8	%
Total commercial loans and leases	1,585,296			28.1	%	1,495,408			27.7	%	1,826,866			26.8	%	1,838,748			27.2	%
Consumer loans:
Residential mortgage	652,415			11.6	%	624,349			11.6	%	810,186			11.9	%	814,245			12.1	%
Home equity	356,982			6.3	%	342,241			6.3	%	388,550			5.7	%	376,819			5.6	%
Other consumer	15,738			0.3	%	18,299			0.3	%	34,767			0.5	%	38,782			0.6	%
Total consumer loans	1,025,135			18.2	%	984,889			18.2	%	1,233,503			18.1	%	1,229,846			18.3	%
Total loans and leases	5,639,440			100.0	%	5,398,864			100.0	%	6,822,527			100.0	%	6,737,816			100.0	%
Allowance for loan and lease losses	(65,413		)			(53,666		)			(113,181		)			(61,082		)
Net loans and leases	$	5,574,027				$	5,345,198				$	6,709,346				$	6,676,734

The following table sets forth the growth in the Company’s loan and lease portfolios during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:


	At September 30, 2017		At December 31, 2016		Dollar Change		Percent Change (Annualized)		At March 31, 2020		At December 31, 2019		Dollar Change			Percent Change (Annualized)
	(Dollars in Thousands)								(Dollars in Thousands)
Commercial real estate	$	3,029,009	$	2,918,567	$	110,442	5.0	%	$	3,762,158	$	3,669,222	$	92,936		10.1	%
Commercial	1,585,296		1,495,408		89,888		8.0	%	1,826,866		1,838,748		(11,882		)	-2.6	%
Consumer	1,025,135		984,889		40,246		5.4	%	1,233,503		1,229,846		3,657			1.2	%
Total loans and leases	$	5,639,440	$	5,398,864	$	240,576	5.9	%	$	6,822,527	$	6,737,816	$	84,711		5.0	%

The Company's loan portfolio consists primarily of first mortgage loans secured by commercial, multi-family and residential real estate properties located in the Company's primary lending area, loans to business entities, including commercial lines of credit, loans to condominium associations and loans and leases used to finance equipment used by small businesses. The Company also provides financing for construction and development projects, home equity and other consumer loans.

The Company employs seasoned commercial lenders and retail bankers who rely on community and business contacts as well as referrals from customers, attorneys and other professionals to generate loans and deposits. Existing borrowers are also an important source of business since many of them have more than one loan outstanding with the Company. The Company's ability to originate loans depends on the strength of the economy, trends in interest rates, and levels of customer demand and market competition.

The Company's current policy is that ~~the aggregate amount of loans outstanding~~a total credit exposure to ~~any~~ one ~~borrower or related entities~~obligor relationship may not exceed ~~$35.0~~$50.0 million unless approved by the ~~Board~~Company's Credit ~~Committee, a committee of the Company's Board of Directors.~~

Committee. As of ~~September 30, 2017,~~March 31, 2020, there were ~~ten~~2 borrowers with loans and

commitments over ~~$35.0~~$50.0 million. The total of those loans and commitments ~~were $424.8~~was $107.3 million, or ~~6.5%~~1.32% of total loans and commitments, as of ~~September 30, 2017.~~March 31, 2020. As of December 31, 2019, there were 3 borrowers with loans and commitments over $50.0 million. The total of those loans and commitments was $194.3 million, or 2.40% of total loans and commitments, as of December 31, 2019.

The Company has written underwriting policies to control the inherent risks in loan origination. The policies address approval limits, loan-to-value ratios, appraisal requirements, debt service coverage ratios, loan concentration limits and other matters relevant to loan underwriting.

Commercial Real Estate Loans

The commercial real estate portfolio is comprised of commercial real estate loans, multi-family mortgage loans, and construction loans and is the largest component of the Company's overall loan portfolio, representing ~~53.7%~~55.1% of total loans and leases outstanding as of ~~September 30, 2017.~~March 31, 2020.

Typically, commercial real estate loans are larger in size and involve a greater degree of risk than owner-occupied residential mortgage loans. Loan repayment is usually dependent on the successful operation and management of the properties and the value of the properties securing the loans. Economic conditions can greatly affect cash flows and property values.

A number of factors are considered in originating commercial real estate and multi-family mortgage loans. The qualifications and financial condition of the borrower (including credit history), as well as the potential income generation and the value and condition of the underlying property, are evaluated. When evaluating the qualifications of the borrower, the Company considers the financial resources of the borrower, the borrower's experience in owning or managing similar property and the borrower's payment history with the Company and other financial institutions. Factors considered in evaluating the underlying property include the net operating income of the mortgaged premises before debt service and depreciation, the debt service coverage ratio (the ratio of cash flow before debt service to debt service), the use of conservative capitalization rates, and the ratio of the loan amount to the appraised value. Generally, personal guarantees are obtained from commercial real estate loan borrowers.

Commercial real estate and multi-family mortgage loans are typically originated for terms of five to fifteen years with amortization periods of 20 to 30 years. Many of the loans are priced at inception on a fixed-rate basis generally for periods ranging from two to five years with repricing periods for longer-term loans. When possible, prepayment penalties are included in loan covenants on these loans. For commercial customers who are interested in loans with terms longer than five years, the Company offers loan level derivatives to accommodate customer need.

The Company's urban and suburban market area is characterized by a large number of apartment buildings, condominiums and office buildings. As a result, commercial real estate and multi-family mortgage lending has been a significant part of the Company's activities for many years. These types of loans typically generate higher yields, but also involve greater credit risk. Many of the Company's borrowers have more than one multi-family or commercial real estate loan outstanding with the Company.

The Company's commercial real estate portfolio is composed primarily of loans secured by apartment buildings ($~~741.6~~927.7 million), office buildings ($~~637.8~~722.8 million), retail stores ($~~507.2~~606.2 million), industrial properties ($~~358.6~~451.2 million), mixed-use properties ($~~214.1~~323.1 million), lodging services ($~~108.3~~148.5 million) and to food services ($~~42.7~~61.7 million) as of ~~September 30, 2017.~~March 31, 2020. At that date, ~~over 97.2%~~approximately 97.0% of the commercial real estate loans outstanding were secured by properties located in New England.

Construction and development financing is generally considered to involve a higher degree of risk than long-term financing on improved, occupied real estate and thus has lower concentration limits than do other commercial credit classes. Risk of loss on a construction loan is largely dependent upon the accuracy of the initial estimate of construction costs, the estimated time to sell or rent the completed property at an adequate price or rate of occupancy, and market conditions. If the estimates and projections prove to be inaccurate, the Company may be confronted with a project which, upon completion, has a value that is insufficient to assure full loan repayment.

Criteria applied in underwriting construction loans for which the primary source of repayment is the sale of the property are different from the criteria applied in underwriting construction loans for which the primary source of repayment is the stabilized cash flow from the completed project. For those loans where the primary source of repayment is from resale of the property, in addition to the normal credit analysis performed for other loans, the Company also analyzes project costs, the attractiveness of the property in relation to the market in which it is located and demand within the market area. For those construction loans where the source of repayment is the stabilized cash flow from the completed project, the Company analyzes

not only project costs but also how long it might take to achieve satisfactory occupancy and the reasonableness of projected rental rates in relation to market rental rates.

Commercial Loans

The Company's commercial loan and lease portfolio is comprised of commercial loans, equipment financing loans and leases and condominium association loans and represented ~~28.1%~~26.8% of total loans outstanding as of ~~September 30, 2017.~~March 31, 2020.

The Company's commercial loan and lease portfolio is composed primarily of loans to small to medium sized businesses ($~~489.9~~638.0 million), transportation services ($~~346.4~~376.8 million), food services ($152.2 million), recreation services ($~~145.9 million), food services ($118.1~~116.0 million), manufacturing ($~~97.5~~101.4 million), retail ($87.4 million), and rental and leasing services ($~~75.9 million) and retail ($70.5~~90.0 million) as of ~~September 30, 2017.~~March 31, 2020.

The Company provides commercial banking services to companies in its market area. Approximately ~~47.0%~~45.3% of the commercial loans outstanding as of ~~September 30, 2017~~March 31, 2020 were made to borrowers located in New England. The remaining ~~53.0%~~54.7% of the commercial loans outstanding were made to borrowers in other areas in the United States of America, primarily by the Company's equipment financing divisions. Product offerings include lines of credit, term loans, letters of credit, deposit services and cash management. These types of credit facilities have as their primary source of repayment cash flows from the operations of a business. Interest rates offered are available on a floating basis tied to the prime rate or a similar index or on a fixed-rate basis referenced on the Federal Home Loan Bank of Boston ("FHLBB") index.

Credit extensions are made to established businesses on the basis of loan purpose and assessment of capacity to repay as determined by an analysis of their financial statements, the nature of collateral to secure the credit extension and, in most instances, the personal guarantee of the owner of the business as well as industry and general economic conditions. The Company also participates in U.S. Government programs such the SBA as the ~~Small Business Administration (the "SBA")~~ in both the 7A program and as an SBA preferred lender.

The Company’s equipment financing divisions focus on market niches in which its lenders have deep experience and industry contacts, and on making loans to customers with business experience. An important part of the Company’s equipment financing loan origination volume comes from equipment manufacturers and existing customers as they expand their operations. The equipment financing portfolio is composed primarily of loans to finance laundry, tow trucks, fitness, dry cleaning and convenience store equipment. Approximately ~~16.0%~~24.3% of the commercial loans outstanding in the equipment financing division were made to borrowers located primarily in the greater New York and New Jersey metropolitan area. Typically, the loans are priced at a fixed rate of interest and require monthly payments over their ~~three-~~3- to ~~seven-year~~7-year life. The yields earned on equipment financing loans are higher than those earned on the commercial loans made by the Banks because they involve a higher degree of credit risk. Equipment financing customers are typically small-business owners who operate with limited financial resources and who face greater risks when the economy weakens or unforeseen adverse events arise. Because of these characteristics, personal guarantees of borrowers are usually obtained along with liens on available assets. The size of loan is determined by an analysis of cash flow and other characteristics pertaining to the business and the equipment to be financed, based on detailed revenue and profitability data of similar operations.

Loans to condominium associations are for the purpose of funding capital improvements, are made for five- to ten-year terms and are secured by a general assignment of condominium association revenues. Among the factors considered in the underwriting of such loans are the level of owner occupancy, the financial condition and history of the condominium association, the attractiveness of the property in relation to the market in which it is located and the reasonableness of estimates of the cost of capital improvements to be made. Depending on loan size, funds are advanced as capital improvements are made and, in more complex situations, after completion of engineering inspections.

Consumer Loans

The consumer loan portfolio, which is comprised of residential mortgage loans, home equity loans and lines of credit, and other consumer loans, ~~and~~ represented ~~18.2%~~18.1% of total loans outstanding as of ~~September 30, 2017.~~March 31, 2020. The Company focuses its mortgage and home equity lending on existing and new customers within its branch networks in its urban and suburban marketplaces in the greater Boston and Providence metropolitan areas.

The Company originates adjustable- and fixed-rate residential mortgage loans secured by one- to four-family residences. Each residential mortgage loan granted is subject to a satisfactorily completed application, employment verification, credit history and a demonstrated ability to repay the debt. Generally, loans are not made when the loan-to-value ratio exceeds 80% unless private mortgage insurance is obtained and/or there is a financially strong guarantor. Appraisals are performed by outside independent fee appraisers.

In general, the Company maintains three-, five- and seven-year adjustable-rate mortgage loans and ten-year fixed-rate fully amortizing mortgage loans in its portfolio. Fixed-rate mortgage loans with maturities beyond ten years, such as 15- and

30-year fixed-rate mortgages, are generally sold into the secondary market on a servicing-released basis. The Banks act as correspondent banks in these secondary-market transactions. Loan sales in the secondary market provide funds for additional lending and other banking activities.

Underwriting guidelines for home equity loans and lines of credit are similar to those for residential mortgage loans. Home equity loans and lines of credit are limited to no more than 80% of the appraised value of the property securing the loan including the amount of any existing first mortgage liens.

Other consumer loans have historically been a modest part of the Company's loan originations. As of ~~September 30, 2017,~~March 31, 2020, other consumer loans equaled ~~$15.7~~$34.8 million, or ~~0.3%~~0.5% of total loans outstanding.

Asset Quality

Criticized and Classified Assets

The Company's management rates certain loans and leases as "other assets especially ~~mentioned~~mentioned" ("OAEM")", "substandard" or "doubtful" based on criteria established under banking regulations.These loans and leases are collectively referred to as "criticized" assets. Loans and leases rated OAEM have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects of the loan or lease at some future date. Loans and leases rated as substandard are inadequately protected by the payment capacity of the obligor or of the collateral pledged, if any. Substandard loans and leases have a well-defined weakness or weaknesses that jeopardize the liquidation of debt and are characterized by the distinct possibility that the Company will sustain some loss if existing deficiencies are not corrected. Loans and leases rated as doubtful have well-defined weaknesses that jeopardize the orderly liquidation of debt and partial loss of principal is likely. As of ~~September 30, 2017,~~March 31, 2020, the Company had ~~$74.3~~$62.8 million of total ~~assets, including acquired~~ assets that were designated as criticized. This compares to ~~$70.4~~$67.2 million of assets designated as criticized as of December 31, ~~2016.~~2019. The ~~increase~~decrease of $4.4 million in criticized assets was primarily due to the ~~downgrade~~pay-off of ~~several~~a criticized commercial ~~real estate loans,~~loan and an upgrade to pass risk rating of another commercial loan, partially offset by ~~the payoffs of several~~loans becoming criticized ~~loans~~ during the first ~~nine~~three months of ~~2017.~~2020.

Nonperforming Assets

"Nonperforming assets" consist of ~~nonperforming~~nonaccrual loans and leases, other real estate owned ("OREO") and other repossessed assets. Under certain circumstances, the Company may restructure the terms of a loan or lease as a concession to a borrower, except for acquired loans and leases which are individually evaluated against expected performance on the date of acquisition. These restructured loans and leases are generally considered "nonperforming loans and leases" until a history of collection of at least six months on the restructured terms of the loan or lease has been established. OREO consists of real estate acquired through foreclosure proceedings and real estate acquired through acceptance of a deed in lieu of foreclosure. Other repossessed assets consist of assets that have been acquired through foreclosure that are not real estate and are included in other assets on the Company's unaudited consolidated balance sheets.

Accrual of interest on loans generally is discontinued when contractual payment of principal or interest becomes past due 90 days or, if in management's judgment, reasonable doubt exists as to the full timely collection of interest. Prior to the adoption of ASC 326, loans categorized as ASC 310-30 accrued regardless of past due status. Exceptions may be made if the loan has matured and is in the process of renewal or is well-secured and in the process of collection. When a loan is placed on nonaccrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current interest income. Interest payments on nonaccrual loans are generally applied to principal. If collection of the principal is reasonably assured, interest payments are recognized as income on the cash basis. Loans are generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured and a consistent record of at least six months of performance has been achieved.

In cases where a borrower experiences financial difficulties and the Company makes or reasonably expects to make certain concessionary modifications to contractual terms, the loan is classified as a troubled debt restructured loan. In determining whether a debtor is experiencing financial difficulties, the Company considers, among other factors, if the debtor is in payment default or is likely to be in payment default in the foreseeable future without the modification, the debtor declared or is in the process of declaring bankruptcy, there is substantial doubt that the debtor will continue as a going concern, the debtor's entity-specific projected cash flows will not be sufficient to service its debt, or the debtor cannot obtain funds from sources other than the existing creditors at market terms for debt with similar risk characteristics.

~~Nonperforming assets are composed of nonaccrual loans and leases, OREO and other repossessed assets.~~ As of ~~September 30, 2017,~~March 31, 2020, the Company had nonperforming assets of ~~$44.4~~$41.1 million, representing ~~0.66%~~0.49% of total assets, compared to nonperforming assets of ~~$41.5~~$22.1 million, or ~~0.64%~~0.28% of total assets as of December 31, ~~2016.~~2019. The increase in nonperforming assets was primarily ~~due to an increase~~driven by the inclusion of ~~$2.6~~$9.7 million of ASC 310-30 loans previously categorized in ~~OREO, as well as an increase~~nonperforming assets and one commercial relationship of ~~$0.4~~$8.5 million that was placed on nonaccrual status, partially offset by a decrease in other repossessed assets during ~~the~~ first ~~nine~~three months of ~~2017.~~

2020.

The Company evaluates the underlying collateral of each ~~nonperforming~~nonaccrual loan and lease and continues to pursue the collection of interest and principal. Management believes that the current level of nonperforming assets remains manageable relative to the size of the Company's loan and lease portfolio. If economic conditions were to worsen or if the marketplace were to experience prolonged economic stress, ~~management believes~~ it is likely that the level of nonperforming assets would increase, as would the level of charged-off loans.

Past Due and Accruing

Accrual of interest on loans generally is discontinued when contractual payment of principal or interest becomes past due 90 days or, if in management's judgment, reasonable doubt exists as to the full timely collection of interest. Exceptions may be made if the loan has matured and is in the process of renewal or is well-secured and in the process of collection. Prior to the adoption of ASC 326, loans categorized as ASC 310-30 accrued regardless of past due status. When a loan is placed on nonaccrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current interest income. Interest payments on nonaccrual loans are generally applied to principal. If collection of the principal is reasonably assured, interest payments are recognized as income on the cash basis. Loans are generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured and a consistent record of at least ~~six~~6 consecutive months of performance has been achieved.

As of ~~September 30, 2017,~~March 31, 2020, the Company had loans and leases greater than 90 days past due and accruing of ~~$2.5~~$1.0 million, or ~~0.04%~~0.02% of total loans and leases, compared to ~~$7.1~~$10.1 million, or ~~0.13%~~0.15% of total loans and leases, as of December 31, ~~2016,~~2019, representing ana decrease of ~~$4.6~~$9.1 million. The decrease in past due and accruing loans was primarily due to ~~the payoffs~~$9.1 million of ~~several~~ past due and accruing acquired loans ~~during the first nine months of 2017.~~previously accounted for under ASC 310-30, which are now disclosed as being on non-accrual status.

The following table sets forth information regarding nonperforming assets for the periods indicated:


	At September 30, 2017			At December 31, 2016			At March 31, 2020			At December 31, 2019
	(Dollars in Thousands)						(Dollars in Thousands)
Nonperforming loans and leases:
Nonaccrual loans and leases:
Commercial real estate	$	3,051		$	5,340		$	10,937		$	2,845
Multi-family mortgage	792			1,404			85			84
Construction	860			—
Total commercial real estate loans	4,703			6,744			11,022			2,929

Commercial	22,367			22,974			12,991			4,909
Equipment financing	9,858			6,758			10,356			9,822
Condominium association							203			151
Total commercial loans and leases	32,225			29,732			23,550			14,882

Residential mortgage	1,969			2,501			3,446			753
Home equity	1,047			951			1,059			896
Other consumer	29			149			7			1
Total consumer loans	3,045			3,601			4,512			1,650

Total nonaccrual loans and leases	39,973			40,077			39,084			19,461

Other real estate owned	3,235			618
Other repossessed assets	1,163			781			2,038			2,631
Total nonperforming assets	$	44,371		$	41,476		$	41,122		$	22,092

Loans and leases past due greater than 90 days and accruing	$	2,523		$	7,077		$	1,045		$	10,109
Total delinquent loans and leases 61-90 days past due							17,225			4,978
Restructured loans and leases not included in nonperforming assets							16,480			17,076

Total nonperforming loans and leases as a percentage of total loans and leases	0.71		%	0.74		%	0.57		%	0.29		%
Total nonperforming assets as a percentage of total assets	0.66		%	0.64		%	0.49		%	0.28		%
Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases							0.25		%	0.07		%

Troubled Debt ~~Restructured~~Restructuring Loans and Leases

Total TDR loans decreased by $0.9 million to $22.3 million at March 31, 2020 from $23.2 million at December 31, 2019. The decrease primarily resulted from the payments of TDR loans during the first three months of 2020.

As of ~~September 30, 2017, restructured~~March 31, 2020, total TDR loans included ~~$5.0 million of commercial real estate loans, $0.8 million of multi-family mortgage loans, $17.3~~$9.6 million of commercial loans, ~~$3.9~~$5.1 million of equipment financing loans and leases, ~~$1.1~~$2.2 million of residential mortgage loans, ~~and $1.2~~$2.0 million of home equity ~~loans. As of December 31, 2016, restructured~~ loans, ~~included $4.9~~$1.7 million of commercial real estate loans, ~~$2.0~~$1.5 million of construction loans, and $0.1 million of multi-family mortgage loans. As of December 31, 2019, total TDR loans ~~$13.7~~included $9.0 million of commercial loans, ~~$2.1~~$5.6 million of equipment financing loans and leases, ~~$1.3~~$2.1 million of residential mortgage loans, ~~and $1.8~~$1.9 million of home equity loans, $1.7 million of commercial real estate loans, $2.9 million of construction loans and $0.1 million of multi-family mortgage loans. A ~~restructured~~TDR loan is a loan for which the maturity date was extended, the principal was reduced, and/or the interest rate was modified to drop the required monthly payment to a more manageable amount for the borrower.

The following table sets forth information regarding ~~troubled debt restructured~~TDR loans and leases at the dates indicated:


	At September 30, 2017		At December 31, 2016		At March 31, 2020		At December 31, 2019
	(Dollars in Thousands)				(Dollars in Thousands)
Troubled debt restructurings:
On accrual	$	14,024	$	13,883	$	16,480	$	17,076
On nonaccrual	15,290		11,919		5,819		6,104
Total troubled debt restructurings	$	29,314	$	25,802	$	22,299	$	23,180

Changes in ~~troubled debt restructured~~TDR loans and leases were as follows for the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
	(Dollars in Thousands)												(Dollars in Thousands)
Balance at beginning of period	$	30,878		$	31,314		$	25,802		$	22,918		$	23,180		$	20,941
Additions	1,154			1,568			9,303			11,789			497			17,643
Net charge-offs	(590		)	28			(2,580		)	110			(140		)	(878		)
Repayments	(2,128		)	(892		)	(2,289		)	(2,799		)	(1,238		)	(1,566		)
Other reductions ⁽¹⁾	—			—			(922		)	—
Balance at end of period	$	29,314		$	32,018		$	29,314		$	32,018		$	22,299		$	36,140

^{__________________________________________________________________________________}

^{(1) Includes loans and leases that were removed from TDR status}

Allowances for Credit Losses

The allowance for ~~loan and lease~~credit losses consists of general and specific allowances and reflects management's estimate of ~~probable~~expected loan and lease losses inherent in the loan portfolio at the balance sheet date. Management uses a consistent and systematic process and methodology to evaluate the adequacy of the allowance for ~~loan and lease~~credit losses on a quarterly basis. The allowance is calculated by loan type: commercial real estate loans, commercial loans and leases, and consumer loans, each category of which is further segregated. A formula-based credit evaluation approach is applied to each group that is evaluated collectively, primarily by loss factors, which includes estimates of incurred losses over an estimated LEP, assigned to each risk rating by type, coupled with an analysis of certain loans individually evaluated for impairment. Management continuously evaluates and challenges inputs and assumptions in the allowance for ~~loan and lease loss.~~credit losses.

The process to determine the allowance for loan and lease losses requires management to exercise considerable judgment regarding the risk characteristics of the loan portfolios and the effect of relevant internal and external factors. While management evaluates currently available information in establishing the allowance for ~~loan and lease~~credit losses, future adjustments to the allowance for loan and lease losses may be necessary if conditions differ substantially from the assumptions used in making the evaluations. Management performs a comprehensive review of the allowance for ~~loan and lease~~credit losses on a quarterly basis. In addition, various regulatory agencies, as an integral part of their examination process, periodically review a financial institution's allowance ~~for loan and lease~~credit losses and carrying amounts of other real estate owned. Such agencies may require the financial institution to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

The Company’s ~~general~~ allowance methodology provides a quantification of probable losses in the portfolio. Under the current methodology, ~~Management combines~~management estimates losses over the ~~historical loss information~~life of the ~~Banks~~loan using reasonable and supportable forecasts. Forecasts, loan data, and model documentation is extensively analyzed and reviewed throughout the quarter to ~~generate a single set of ratios.~~

Management believes it is appropriate to aggregate the ratios as the Banks share common environmental factors, operate in similar markets, and utilize common underwriting standards in accordance with the Company's Credit Policy.

Management employs a similar analysis for the consolidation of the qualitative factors as it does for the quantitative factors. Again, Management believes the combination of the existing nine qualitative factors usedensure estimated losses are accurate at ~~each of the Banks into a single group of factors for use across the Company is appropriate based on the commonality of environmental factors, markets, and underwriting standards among the Banks.~~

The following tables present the changes in the allowance for loan and lease losses by portfolio category for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~

At and for the Three Months Ended September 30, 2017

Commercial
Real Estate
Commercial Consumer Total
(In Thousands)
Balance at June 30, 2017 $ 27,954
$ 31,099
$ 5,468
$ 64,521
Charge-offs (65 ) (1,965 ) (113 ) (2,143 )
Recoveries —
109
80
189
(Credit) provision for loan and lease losses 979
1,832
35
2,846
Balance at September 30, 2017 $ 28,868
$ 31,075
$ 5,470
$ 65,413

Total loans and leases $ 3,029,009
$ 1,585,296
$ 1,025,135
$ 5,639,440
Total allowance for loan and lease losses as a percentage of total loans and leases 0.95 % 1.96 % 0.53 % 1.16 %

At and for the Three Months Ended September 30, 2016

Commercial
Real Estate
Commercial Consumer Total
(In Thousands)
Balance at June 30, 2016 $ 29,861
$ 22,916
$ 4,481
$ 57,258
Charge-offs (50 ) (545 ) (244 ) (839 )
Recoveries —
170
149
319
Provision for loan and lease losses (1,755 ) 3,923
(14 ) 2,154
Balance at September 30, 2016 $ 28,056
$ 26,464
$ 4,372
$ 58,892

Total loans and leases $ 2,883,428
$ 1,470,866
$ 978,006
$ 5,332,300
Total allowance for loan and lease losses as a percentage of total loans and leases 0.97 % 1.80 % 0.45 % 1.10 %
2019.


	At and for the Nine Months Ended September 30, 2017												At and for the Three Months Ended March 31, 2020
	Commercial Real Estate			Commercial			Consumer			Total			Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)												(In Thousands)
Balance at December 31, 2016	$	27,645		$	20,906		$	5,115		$	53,666
Balance at December 31, 2019													$	30,285		$	24,826		$	5,971		$	61,082
Adoption of ASU 2016-13 (CECL)													11,694			(2,672		)	(2,390		)	6,632
Charge-offs	(294		)	(6,267		)	(329		)	(6,890		)	—			(2,527		)	(12		)	(2,539		)
Recoveries	476			800			263			1,539			—			247			58			305
Provision for loan and lease losses	1,041			15,636			421			17,098			40,200			6,900			601			47,701
Balance at September 30, 2017	$	28,868		$	31,075		$	5,470		$	65,413
Balance at March 31, 2020													$	82,179		$	26,774		$	4,228		$	113,181

Total loans and leases	$	3,029,009		$	1,585,296		$	1,025,135		$	5,639,440		$	3,762,158		$	1,826,866		$	1,233,503		$	6,822,527
Allowance for loan and lease losses as a percentage of total loans and leases	0.95		%	1.96		%	0.53		%	1.16		%
Total allowance for loan and lease losses as a percentage of total loans and leases													2.18		%	1.47		%	0.34		%	1.66		%


	At and for the Nine Months Ended September 30, 2016												At and for the Three Months Ended March 31, 2019
	Commercial Real Estate			Commercial			Consumer			Total			Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)												(In Thousands)
Balance at December 31, 2015	$	30,151		$	22,018		$	4,570		$	56,739
Balance at December 31, 2018													$	28,187		$	25,283		$	5,222		$	58,692
Charge-offs	(1,534		)	(3,250		)	(1,254		)	(6,038		)	—			(2,512		)	(30		)	(2,542		)
Recoveries	—			495			605			1,100			—			388			53			441
Provision for loan and lease losses	(561		)	7,201			451			7,091			162			1,081			207			1,450
Balance at September 30, 2016	$	28,056		$	26,464		$	4,372		$	58,892
Balance at March 31, 2019													$	28,349		$	24,240		$	5,452		$	58,041

Total loans and leases	$	2,883,428		$	1,470,866		$	978,006		$	5,332,300		$	3,410,468		$	1,786,582		$	1,191,147		$	6,388,197
Allowance for loan and lease losses as a percentage of total loans and leases	0.97		%	1.80		%	0.45		%	1.10		%
Total allowance for loan and lease losses as a percentage of total loans and leases													0.83		%	1.36		%	0.46		%	0.91		%

~~The~~

Beginning January 1, 2020, the Company implemented the CECL methodology to calculate the allowance for credit losses. As of January 1, 2020, the Company increased the allowance for loan and lease losses ~~was $65.4~~by $6.6 million due to CECL which requires the inclusion of the credit losses over the expected life of the loans, as well as consideration of ~~September 30, 2017,~~the risks based on the current conditions and reasonable and supportable forecasts about the future.

At March 31, 2020, the allowance for loan and lease losses increased to $113.2 million, or ~~1.16%~~1.66% of total loans and leases ~~outstanding.~~outstanding, as a result of the latest available forecast of economic effect of the COVID-19 pandemic on the Company's loan and lease portfolios. This compared to an allowance for loan and lease losses of ~~$53.5~~$61.1 million, or ~~0.99%~~0.91% of total loans and leases outstanding, as of December 31, ~~2016. The increase in~~2019. Prior to January 1, 2020, the Company calculated the allowance for loan and lease losses ~~and~~using the incurred losses methodology.

Net charge-offs in the ~~allowance~~loans and leases for ~~loan~~the three months ended March 31, 2020 and ~~lease losses as~~March 31, 2019 were $2.2 million and $2.1 million, respectively. As a percentage of ~~total~~average loans and leases, from December 31, 2016 to September 30, 2017 was primarily due to the increase in specific reserves for taxi medallion loans as a result of a change in the underlying collateral value, the increase in the specific reserve of a number of commercial loans, the increase in historical loss factors applied to commercial real estate and commercial loan portfolios including taxi medallion loans, and loan growth of $240.6 millionannualized net charge-offs for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020 and March 31, 2019 were 0.13% and 0.13%, respectively.

Management believes that the allowance for loan and lease losses as of ~~September 30, 2017~~March 31, 2020 is ~~appropriate based on the facts and circumstances discussed further below.~~

~~Commercial Real Estate Loans~~

The allowance for commercial real estate loan losses was $28.9 million, or 0.95% of total commercial real estate loans outstanding, as of September 30, 2017. This compared to an allowance for commercial real estate loan losses of $27.6 million, or 0.95% of total commercial real estate loans outstanding, as of December 31, 2016. Specific reserves on commercial real estate loans were $1.0 thousand and $28.0 thousand as of September 30, 2017 and December 31, 2016, respectively. The $1.3 million increase in the allowance for commercial real estate loan losses during the first nine months of 2017 was primarily driven by originated loan growth of $141.0 million, or 5.1% from December 31, 2016.

The ratio of total criticized and classified commercial real estate loans to total commercial real estate loans increased to 0.84% as of September 30, 2017 from 0.74% as of December 31, 2016. The ratio of originated commercial real estate loans on nonaccrual to total originated commercial real estate loans decreased to 0.16% as of September 30, 2017 from 0.23% as of December 31, 2016.

Net charge-offs in the commercial real estate loan portfolio for the three months ended September 30, 2017 and September 30, 2016 were $65.0 thousand and $50.0 thousand, respectively. As a percentage of average commercial real estate

~~loan portfolio, annualized net charge-offs for the three months ended September 30, 2017 and September 30, 2016 was 0.01% and 0.01%, respectively.~~

Net recoveries in the commercial real estate loan portfolio totaled $0.2 million for the nine months ended September 30, 2017, compared to net charge-offs of $1.5 million for the nine months ended September 30, 2016. As a percentage of average commercial real estate loan portfolio, annualized net recoveries for the nine months ended September 30, 2017 was 0.01% and annualized charge-offs for the nine month ended September 30, 2016 was 0.07%.

~~Commercial Loans and Leases~~

The allowance for commercial loan and lease losses was $31.1 million, or 1.96% of total commercial loans and leases outstanding, as of September 30, 2017, compared to $20.9 million, or 1.40% of total commercial loans and leases outstanding, as of December 31, 2016. Specific reserves on commercial loans and leases increased from $0.1 million as of December 31, 2016 to $7.5 million as of September 30, 2017. The $10.2 million increase in the allowance for commercial loans and lease losses during 2017 was primarily due to the increase in specific reserves for taxi medallion loans as a result of a change in the underlying collateral value, the increase in the specific reserve of a number of commercial loans, the increase in historical loss factors applied to commercial loan portfolios including taxi medallion portfolio in the first nine months of 2017, and the originated loan growth of 96.3 million, or 6.5% from December 31, 2016.

The ratio of total criticized and classified commercial loans and leases to total commercial loans and leases was 3.07% as of September 30, 2017, compared to 3.27% as of December 31, 2016. The ratio of originated commercial loans and leases on nonaccrual to total originated commercial loans and leases increased to 1.98% as of September 30, 2017 from 1.85% as of December 31, 2016.

Net charge-offs in the commercial loan and lease portfolio for the three months ended September 30, 2017 and September 30, 2016 were $1.9 million and $0.4 million, respectively. As a percentage of average commercial loans and leases, annualized net charge-offs for the three months ended September 30, 2017 and September 30, 2016 were 0.47% and 0.10%, respectively.

Net charge-offs in the commercial loan and lease portfolio for the nine months ended September 30, 2017 and September 30, 2016 were $5.5 million and $2.8 million, respectively. As a percentage of average commercial loans and leases, annualized net charge-offs for the nine months ended September 30, 2017 and September 30, 2016 were 0.47% and 0.26%, respectively.

~~Consumer Loans~~

The allowance for consumer loan losses, including residential loans and home equity loans and lines of credit, was $5.5 million, or 0.53% of total consumer loans outstanding, as of September 30, 2017, compared to $5.0 million, or 0.51% of consumer loans outstanding, as of December 31, 2016. Specific reserves on consumer loans were $21.0 thousand and $27.0 thousand as of September 30, 2017 and December 31, 2016, respectively. The $0.5 million increase in the allowance for consumer loans during the first nine months of 2017 was primarily driven by the increase in the historical loss factors applied to the consumer portfolios and the originated loan growth of $58.3 million, or 6.8%, from December 31, 2016. The ratio of originated consumer loans on nonaccrual to total originated consumer loans increased to 0.23% as of September 30, 2017 from 0.30% as of December 31, 2016. The risk of loss on a home equity loan is higher since the property securing the loan has often been previously pledged as collateral for a first mortgage loan. The Company gathers and analyzes delinquency data, to the extent that data are available on these first liens, for purposes of assessing the collectability of the second liens held by the Company even if these home equity loans are not delinquent. This data are further analyzed for performance differences between amortizing and non-amortizing home equity loans, the percentage borrowed to total loan commitment and by the amount of payments made by the borrowers. The loss exposure is not considered to be high due to the combination of current property values, the historically low loan-to-value ratios, the low level of losses experienced in the past few years and the low level of loan delinquencies as of September 30, 2017. If the local economy weakens, however, a rise in losses in those loan classes could occur. Historically, losses in these classes have been low.

Net charge-offs in the consumer loan portfolio for the three months ended September 30, 2017 and September 30, 2016 were $33.0 thousand and $95.0 thousand, respectively. Provisions for consumer loans recorded in these periods more than adequately covered charge-offs during those periods.

Net charge-offs in the consumer loan portfolio for the nine months ended September 30, 2017 and September 30, 2016 were $66.0 thousand and $649.0 thousand, respectively. Provisions for consumer loans recorded in these periods more than adequately covered charge-offs during those periods.

appropriate.

The following table sets forth the Company's percent of allowance for loan and lease losses to the total allowance for loan and lease losses and the percent of loans to total loans for each of the categories listed at the dates indicated.


	At September 30, 2017						At December 31, 2016						At March 31, 2020						At December 31, 2019
	Amount		Percent of Allowance to Total Allowance		Percent of Loans in Each Category to Total Loans		Amount		Percent of Allowance to Total Allowance		Percent of Loans in Each Category to Total Loans		Amount		Percent of Allowance in Each Category to Total Allowance		Percent of Loans in Each Category to Total Loans		Amount		Percent of Allowance in Each Category to Total Allowance		Percent of Loans in Each Category to Total Loans
	(Dollars in Thousands)												(Dollars in Thousands)
Commercial real estate	$	19,988	30.6	%	37.6	%	$	19,354	36.1	%	38.1	%	$	47,090	41.7	%	37.0	%	$	21,519	35.3	%	37.0	%
Multi-family mortgage	5,668		8.7	%	13.2	%	5,528		10.3	%	13.5	%	21,472		19.0	%	14.1	%	6,436		10.5	%	13.8	%
Construction	3,212		4.9	%	2.9	%	2,763		5.1	%	2.5	%	13,617		12.0	%	4.0	%	2,330		3.8	%	3.7	%
Total commercial real estate loans	28,868		44.2	%	53.7	%	27,645		51.5	%	54.1	%	82,179		72.7	%	55.1	%	30,285		49.6	%	54.5	%
Commercial	20,177		30.8	%	12.2	%	10,096		18.8	%	11.8	%	11,140		9.8	%	10.5	%	12,849		21.0	%	10.8	%
Equipment financing	10,482		16.0	%	14.9	%	10,345		19.3	%	14.8	%	15,524		13.7	%	15.5	%	11,595		19.0	%	15.6	%
Condominium association	416		0.6	%	1.0	%	465		0.9	%	1.1	%	110		0.1	%	0.8	%	382		0.6	%	0.8	%
Total commercial loans and leases	31,075		47.4	%	28.1	%	20,906		39.0	%	27.7	%	26,774		23.6	%	26.8	%	24,826		40.6	%	27.2	%
Residential mortgage	2,990		4.6	%	11.6	%	2,587		4.8	%	11.6	%	1,638		1.4	%	11.9	%	3,717		6.1	%	12.1	%
Home equity	2,305		3.5	%	6.3	%	2,356		4.4	%	6.3	%	2,394		2.1	%	5.7	%	2,132		3.5	%	5.6	%
Other consumer	175		0.3	%	0.3	%	172		0.3	%	0.3	%	196		0.2	%	0.5	%	122		0.2	%	0.6	%
Total consumer loans	5,470		8.4	%	18.2	%	5,115		9.5	%	18.2	%	4,228		3.7	%	18.1	%	5,971		9.8	%	18.3	%
Total	$	65,413	100.0	%	100.0	%	$	53,666	100.0	%	100.0	%	$	113,181	100.0	%	100.0	%	$	61,082	100.0	%	100.0	%

Investment Securities

The investment portfolio exists primarily for liquidity purposes, and secondarily as ~~sources~~a source of interest and dividend income, interest-rate risk management and tax planning as a counterbalance to loan and deposit flows. Investment securities are utilized as part of the Company's asset/liability management and may be sold in response to, or in anticipation of, factors such as changes in market conditions and interest rates, security prepayment rates, deposit outflows, liquidity concentrations and regulatory capital requirements.

The investment policy of the Company, which is reviewed and approved by the Board of Directors on an annual basis, specifies the types of investments that are acceptable, required investment ratings by at least one nationally recognized rating agency, concentration limits and duration guidelines. Compliance with the investment policy is monitored on a regular basis. In general, the Company seeks to maintain a high degree of liquidity and targets cash, cash equivalents and investment securities available-for-sale balances between 10% and 30% of total assets.

Cash, cash equivalents, and investment securities increased ~~$15.6~~$437.8 million, or ~~3.1%~~262.4% on an annualized basis, to ~~$694.0 million~~$1.1 billion as of ~~September 30, 2017~~March 31, 2020 from ~~$678.4~~$667.1 million as of December 31, ~~2016.~~2019. The increase was ~~primarily~~ driven by ~~an increase~~increases in ~~deposit balances, offset by growth in loans and leases~~total cash, cash equivalents and investment securities. Cash, cash equivalents, and investment securities were ~~10.4%~~13.1% of total assets as of ~~September 30, 2017,~~March 31, 2020, compared to ~~10.5%~~8.5% of total assets at December 31, ~~2016.~~2019.

The following table sets forth certain information regarding the amortized cost and market value of the Company's investment securities at the dates indicated:


	At September 30, 2017				At December 31, 2016				At March 31, 2020				At December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In Thousands)								(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	139,443	$	139,344	$	98,122	$	97,020	$	231,779	$	237,817	$	182,922	$	185,803
GSE CMOs	138,137		135,280		161,483		158,040		62,391		63,527		87,001		85,932
GSE MBSs	182,913		182,118		214,946		212,915		319,088		328,498		153,049		153,343
SBA commercial loan asset- backed securities	77		77		107		107		1		1		34		34
Municipal obligations									44,976		45,618		—		—
Corporate debt obligations	58,638		58,891		48,308		48,485		25,389		25,959		28,484		28,986
U.S. Treasury bonds	4,822		4,811		4,801		4,737		55,776		59,634		44,675		44,897
Trust preferred securities	1,471		1,403		1,469		1,358
Total debt securities	525,501		521,924		529,236		522,662
Marketable equity securities	975		986		966		972
Foreign government obligations									$	500	$	485
Total investment securities available-for-sale	$	526,476	$	522,910	$	530,202	$	523,634	$	739,900	$	761,539	$	496,165	$	498,995
Investment securities held-to-maturity:
GSE debentures	$	38,622	$	38,072	$	14,735	$	14,101	$	—	$	—	$	31,228	$	31,290
GSE MBSs	14,788		14,643		17,666		17,479		—		—		9,360		9,279
Municipal obligations	53,828		54,013		54,219		53,204		—		—		45,692		46,514
Foreign government obligations	500		492		500		487		—		—		500		478
Total investment securities held-to-maturity	$	107,738	$	107,220	$	87,120	$	85,271	$	—	$	—	$	86,780	$	87,561
Equity securities held-for-trading											$	2,558			$	3,581

The fair value of investment securities is based principally on market prices and dealer quotes received from third-party, nationally-recognized pricing services for identical investment securities such as U.S. Treasury and agency securities. The Company's marketable equity securities are priced this way and are included in Level 1.1 of the fair value hierarchy in accordance with ASC 820. These prices are validated by comparing the primary pricing source with an alternative pricing source when available. When quoted market prices for identical securities are unavailable, the Company uses market prices provided by independent pricing services based on recent trading activity and other observable information, including but not limited to market interest-rate curves, referenced credit spreads and estimated prepayment speeds where applicable. These investments include certain U.S. and government agency debt securities, municipal and corporate debt securities, GSE residential MBSs and CMOs, ~~and trust preferred securities,~~ all of which are included in Level 2 and equity securities held-for-trading, which are included in Level 1 and Level 2. Certain fair values are estimated using pricing models and are included in Level 3.

Additionally, management reviews changes in fair value from period to period and performs testing to ensure that prices received from the third parties are consistent with their expectation of the market. Changes in the prices obtained from the pricing service are analyzed from month to month, taking into consideration changes in market conditions including changes in mortgage spreads, changes in U.S. Treasury security yields and changes in generic pricing of 15-year and 30-year securities. Additional analysis may include a review of prices provided by other independent parties, a yield analysis, a review of average life changes using Bloomberg analytics and a review of historical pricing for the particular security.

Maturities, calls and principal repayments for investment securities available-for-sale totaled ~~$55.0~~$25.5 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$76.2~~$19.9 million for the same period in ~~2016. There were no sales~~2019. For the three months ended March 31, 2020, the Company sold $86.4 million of investment securities ~~available-for-sale~~available for sale , compared to none for the ~~nine~~same period in 2019. For the three months ended ~~September 30, 2017 and 2016. For the nine months ended September 30, 2017,~~March 31, 2020, the Company purchased ~~$52.4~~$273.3 million of investment securities available-for-sale, compared to ~~$77.3 million in purchases of investment securities available-for-sale~~none for the same period in ~~2016.~~2019.

Maturities, calls and principal repayments for investment securities held-to-maturity totaled ~~$3.2~~$6.3 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$41.4~~$1.5 million for the same period in ~~2016.~~2019. There were no sales of investment securities held-to-maturity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company ~~purchased $23.9 million of~~did not purchase any investment securities held-to-maturity, compared to ~~$25.0~~$0.5 million in purchases of investment

securities held-to-maturity for the same period in ~~2016.~~

2019. During the three months ended March 31, 2020, all held-to-maturity securities were transferred to the available-for-sale portfolio.

As of ~~September 30, 2017,~~March 31, 2020, the fair value of all investment securities available-for-sale was ~~$522.9~~$761.5 million and carried a total of ~~$3.6~~$21.6 million of net unrealized ~~losses,~~gains, compared to a fair value of ~~$523.6~~$499.0 million and net unrealized ~~losses~~gains of ~~$6.6~~$2.8 million as of December 31, ~~2016.~~2019. As of ~~September 30, 2017, $377.4~~March 31, 2020, $58.8 million, or ~~72.2%~~7.7%, of the portfolio, had gross unrealized losses of ~~$5.0~~$0.3 million. This compares to ~~$389.0~~$205.6 million, or ~~74.3%~~41.2%, of the portfolio with gross unrealized losses of ~~$8.0~~$1.8 million as of December 31, ~~2016.~~2019. The Company's unrealized ~~loss~~gain position has ~~decreased~~increased in ~~2017~~2020 driven by lower long-term interest rates.

As of ~~September 30, 2017,~~December 31, 2019, the fair value of all investment securities held-to-maturity was ~~$107.2 million and carried a total of $0.5 million of net unrealized losses, compared to a fair value of $85.3~~$87.6 million and net unrealized ~~losses~~gains of ~~$1.8 million as~~$0.8 million. As of December 31, ~~2016. As of September 30, 2017, $61.2~~2019, $22.3 million, or ~~57.1%~~25.5%, of the portfolio had gross unrealized losses of ~~$0.9~~$0.2 million. This compares to $82.0 million, or 96.1%, of the portfolio with gross unrealized losses of $1.9 million as of December 31, 2016. The Company's unrealized loss position decreased in 2017 driven by lower long-term interest rates.

Management believes that these negative differences between amortized cost and fair value do not include credit losses, but rather differences in interest rates between the time of purchase and the time of measurement. It is more likely than not that the Company will not sell or be required to sell the investment securities before recovery, and, as a result, it will recover the amortized cost basis of the investment securities. As such, management has determined that the securities are not other-than-temporarily impaired as of September 30, 2017. If market conditions for securities worsen or the creditworthiness of the underlying issuers deteriorates, it is possible that the Company may recognize additional other-than-temporary impairments in future periods. For additional discussion on how the Company validates fair values provided by the third-party pricing service, see Note 11, “Fair Value of Financial Instruments.”

Restricted Equity Securities

FHLBB Stock—The Company invests in the stock of the FHLBB as one of the requirements to ~~borrow.~~borrow from the FHLBB. The Company maintains an excess balance of capital stock, which allows for additional borrowing capacity at each of the Banks. As of ~~September 30, 2017,~~March 31, 2020, the excess balance of capital stock ~~is $3.9~~was $0.4 million, as compared to noa $0.7 million excess balance atas of December 31, ~~2016. On December 30th, 2016, the FHLBB initiated a stock buyback which reduced the Company's excess balance to zero.~~2019.

As of ~~September 30, 2017,~~March 31, 2020, the Company owned stock in the FHLBB with a carrying value of ~~$45.2~~$50.1 million, ~~a decrease~~an increase of ~~$2.1~~$14.6 million from ~~$47.3~~$35.5 million as of December 31, ~~2016.~~2019. As of ~~September 30, 2017,~~March 31, 2020, the FHLBB had total assets of ~~$61.0~~$68.9 billion and total capital of ~~$3.2~~$3.5 billion, of which ~~$1.3~~$1.5 billion was retained earnings. The FHLBB stated that it remained in compliance with all regulatory capital ratios as of ~~September 30, 2017~~March 31, 2020 and was classified as "adequately capitalized" by its regulator, based on the FHLBB's financial information as of ~~June 30, 2017.~~December 31, 2019.

Federal Reserve Bank Stock—The Company invests in the stock of the Federal Reserve Bank of Boston, as a condition ofto the Banks' membership ~~for the Banks~~ in the Federal Reserve System. As of ~~September 30, 2017 and December~~March 31, ~~2016,~~2020, the Company owned stock in the Federal Reserve Bank of Boston with a carrying value of ~~$16.8 million.~~$18.1 million, unchanged from December 31, 2019.

Other Stock—The Company invests in a small number of other restricted equity securities which ~~included Northeast Retirement Services, Inc. ("NRS")~~includes Infinex and American Financial Exchange. As of March 31, 2020, the ~~Savings Bank Life Insurance~~ Company ~~of Massachusetts ("SBLI").~~

~~The Company, through its wholly~~ owned ~~subsidiary, Brookline Securities Corp., ("Brookline Securities") held 9,721 shares of~~stock in other restricted equity securities with a carrying value of ~~NRS. This investment was recorded at cost of $122 thousand as no readily determinable fair value was available. On~~$0.3 million, unchanged from December 5, 2016, Community Bank Systems, Inc. ("CBU") announced entry into a merger agreement to acquire NRS. After receiving stockholder and regulatory approvals, CBU completed the acquisition of NRS on February 3, 2017. The Company exchanged the 9,721 shares of NRS and received $319.04 in cash and 14.876 shares of CBU common stock for each share of NRS held. As part of the merger agreement, the Company was restricted to selling 5,071 shares per day in the open market. The Company completed the sale of all CBU shares during the first quarter of 2017. The Company recognized a gain on the sale of securities of $11.4 million for the quarter ending March 31, ~~2017.~~2019.

Deposits

The following table presents the Company's deposit mix at the dates indicated.


	At September 30, 2017						At December 31, 2016						At March 31, 2020						At December 31, 2019
	Amount		Percent of Total		Weighted Average Rate		Amount		Percent of Total		Weighted Average Rate		Amount		Percent of Total		Weighted Average Rate		Amount		Percent of Total		Weighted Average Rate
	(Dollars in Thousands)												(Dollars in Thousands)
Non-interest-bearing deposits:
Demand checking accounts	$	905,472	18.8	%	—	%	$	900,474	19.5	%	—	%	$	1,175,329	20.0	%	—	%	$	1,141,578	19.6	%	—	%
Interest-bearing deposits:
NOW accounts	318,284		6.6	%	0.07	%	323,160		7.0	%	0.07	%	361,854		6.1	%	0.11	%	371,380		6.4	%	0.11	%
Savings accounts	665,558		13.8	%	0.20	%	613,061		13.3	%	0.20	%	653,026		11.1	%	0.31	%	613,467		10.5	%	0.46	%
Money market accounts	1,749,040		36.5	%	0.53	%	1,733,359		37.6	%	0.47	%	1,676,092		28.5	%	0.59	%	1,682,005		28.9	%	1.15	%
Certificate of deposit accounts	1,167,329		24.3	%	1.19	%	1,041,022		22.6	%	1.04	%	2,023,637		34.4	%	2.15	%	2,021,642		34.7	%	2.26	%
Total interest-bearing deposits	3,900,211		81.2	%	0.63	%	3,710,602		80.5	%	0.55	%	4,714,609		80.0	%	1.19	%	4,688,494		80.4	%	1.46	%
Total deposits	$	4,805,683	100.0	%	0.52	%	$	4,611,076	100.0	%	0.44	%	$	5,889,938	100.0	%	0.95	%	$	5,830,072	100.0	%	1.17	%

Total deposits increased ~~$194.6~~$59.9 million ~~or 5.6% on an annualized basis,~~ to ~~$4.8~~$5.9 billion as of ~~September 30, 2017,~~March 31, 2020, compared to ~~$4.6~~$5.8 billion as of December 31, ~~2016.~~2019. Deposits as a percentage of total assets ~~increased~~decreased to ~~71.9%~~69.6% as of ~~September 30, 2017, as~~March 31, 2020, compared to ~~71.6%~~74.2% as of December 31, ~~2016. The increase in deposits is primarily due to the growth in certificate of deposit accounts and savings accounts.~~2019.

As of ~~September 30, 2017,~~March 31, 2020, the Company had ~~$260.8~~$354.1 million of brokered deposits compared to ~~$203.4~~$349.9 million as of December 31, ~~2016.~~2019. Brokered deposits allow the Company to seek additional funding by attracting deposits from outside the Company's core market. The Company's investment policy limits the amount of brokered deposits to 15% of total assets.

Brokered deposits are included in the certificate of deposit balance, which increased ~~$126.3~~$2.0 million ~~or 16.2% on an annualized basis,~~ during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020. Certificates of deposit have also ~~increased~~decreased as a percentage of total deposits to ~~24.3%~~34.4% as of ~~September 30, 2017~~March 31, 2020 from ~~22.6%~~34.7% as of December 31, ~~2016.~~2019.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, core deposits increased ~~$68.3 million, or 2.6% on an annualized basis.~~$57.9 million. The ratio of core deposits to total deposits ~~decreased~~increased from ~~77.4%~~65.3% as of December 31, ~~2016~~2019 to ~~75.7%~~65.6% as of ~~September 30, 2017,~~March 31, 2020, primarily due to the shift in deposit mix and increase in ~~brokered deposits.~~certificate of deposit accounts.

The following table sets forth the distribution of the average balances of the Company's deposit accounts for the periods indicated and the weighted average interest rates on each category of deposits presented. Averages for the periods presented are based on daily balances.


	Three Months Ended September 30,												Three Months Ended March 31,
	2017						2016						2020						2019
	Average Balance		Percent of Total Average Deposits		Weighted Average Rate		Average Balance		Percent of Total Average Deposits		Weighted Average Rate		Average Balance		Percent of Total Average Deposits		Weighted Average Rate		Average Balance		Percent of Total Average Deposits		Weighted Average Rate
	(Dollars in Thousands)												(Dollars in Thousands)
Core deposits:
Non-interest-bearing demand checking accounts	$	918,054	19.3	%	—	%	$	863,854	19.1	%	—	%	$	1,134,314	19.4	%	—	%	$	1,026,970	18.6	%	—	%
NOW accounts	321,731		6.8	%	0.07	%	295,762		6.6	%	0.07	%	359,641		6.2	%	0.13	%	334,167		6.1	%	0.17	%
Savings accounts	605,303		12.7	%	0.20	%	566,192		12.5	%	0.22	%	626,945		10.7	%	0.41	%	626,414		11.4	%	0.39	%
Money market accounts	1,765,610		37.2	%	0.51	%	1,678,937		37.2	%	0.45	%	1,678,649		28.7	%	1.02	%	1,676,199		30.4	%	1.28	%
Total core deposits	3,610,698		76.0	%	0.29	%	3,404,745		75.4	%	0.26	%	3,799,549		65.1	%	0.53	%	3,663,750		66.5	%	0.66	%
Certificate of deposit accounts	1,139,699		24.0	%	1.17	%	1,112,831		24.6	%	1.01	%	2,040,903		34.9	%	2.22	%	1,844,511		33.5	%	2.18	%
Total deposits	$	4,750,397	100.0	%	0.50	%	$	4,517,576	100.0	%	0.45	%	$	5,840,452	100.0	%	1.11	%	$	5,508,261	100.0	%	1.16	%

Nine Months Ended September 30,
2017 2016

Average
Balance

Percent
of Total
Average
Deposits

Weighted
Average
Rate

Average
Balance

Percent
of Total
Average
Deposits

Weighted
Average
Rate
(Dollars in Thousands)
Core deposits:
Non-interest-bearing demand checking accounts $ 905,684
19.4 % — % $ 829,659
18.7 % — %
NOW accounts 319,633
6.8 % 0.07 % 289,908
6.5 % 0.07 %
Savings accounts 603,814
12.9 % 0.20 % 561,798
12.7 % 0.24 %
Money market accounts 1,759,449
37.6 % 0.49 % 1,654,700
37.2 % 0.45 %
Total core deposits 3,588,580
76.7 % 0.28 % 3,336,065
75.1 % 0.27 %
Certificate of deposit accounts 1,088,011
23.3 % 1.12 % 1,107,600
24.9 % 0.99 %
Total deposits $ 4,676,591
100.0 % 0.47 % $ 4,443,665
100.0 % 0.45 %

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the Company had outstanding certificates of deposit of ~~$100,000~~$250,000 or more, maturing as follows:


	At September 30, 2017				At December 31, 2016				At March 31, 2020				At December 31, 2019
	Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate
	(Dollars in Thousands)								(Dollars in Thousands)
Maturity period:
Six months or less	$	150,892	0.86	%	$	134,783	0.82	%	$	209,959	2.20	%	$	198,279	2.23	%
Over six months through 12 months	137,264		1.12	%	79,543		0.92	%	187,300		2.37	%	174,154		2.43	%
Over 12 months	224,115		1.68	%	222,342		1.44	%	158,410		2.37	%	185,078		2.56	%
Total certificate of deposit of $100,000 or more	$	512,271	1.29	%	$	436,668	1.15	%
Total certificate of deposit of $250,000 or more									$	555,669	2.30	%	$	557,511	2.40	%

Borrowed Funds

The following table sets forth certain information regarding advances from the FHLBB, subordinated debentures and notes and other borrowed funds for the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
	(Dollars in Thousands)												(Dollars in Thousands)
Borrowed funds:
Average balance outstanding	$	1,037,778		$	1,050,849		$	1,046,054		$	1,013,865		$	947,123		$	927,593
Maximum amount outstanding at any month-end during the period	1,070,681			1,050,118			1,093,693			1,050,118			1,291,804			987,835
Balance outstanding at end of period	985,896			1,022,653			985,896			1,022,653			1,291,804			866,005
Weighted average interest rate for the period	1.64		%	1.52		%	1.59		%	1.55		%	2.33		%	2.65		%
Weighted average interest rate at end of period	1.67		%	1.56		%	1.67		%	1.56		%	1.76		%	2.72		%

Advances from the FHLBB

On a long-term basis, the Company intends to continue to increase its core deposits. The Company also uses FHLBB borrowings and other wholesale borrowing as part of the Company's overall strategy to fund loan growth and manage interest-rate risk and liquidity. The advances are secured by a blanket security agreement which requires the Banks to maintain certain qualifying assets as collateral, principally mortgage loans and securities in an aggregate amount at least equal to outstanding advances. The maximum amount that the FHLBB will advance to member institutions, including the Company, fluctuates from time to time in accordance with the policies of the FHLBB. ~~The Company may also borrow from the FRB's "discount window" as necessary.~~

FHLBB borrowings ~~decreased~~increased by ~~$38.3~~$379.0 million to ~~$872.6 million~~$1.1 billion as of ~~September 30, 2017~~March 31, 2020 from the December 31, ~~2016~~2019 balance of ~~$910.8~~$758.5 million. The ~~decrease~~increase in FHLBB borrowings was primarily due to ~~a reduction~~an increase in new advances from the FHLBB ~~as the Company is utilizing other funding sources~~ to support ~~loan~~asset growth.

Subordinated Debentures and Notes

~~The~~As part of the acquisition of BankRI, the Company acquired two $5.0 million subordinated debentures due on June 26, 2033 and March 17, 2034, respectively. The Company is obligated to pay 3-month LIBOR plus 3.10% and 3-month LIBOR plus 2.79%, respectively, on a quarterly basis until the debentures mature.

The Company sold $75.0 million of 6.0% fixed-to-floating rate subordinated notes due September 15, 2029. The Company is obligated to pay 6.0% interest semiannually between September 2014 and September 2024. Subsequently, the Company is obligated to pay 3-month LIBOR plus 3.315% quarterly until the notes mature in September 2029.

The following table summarizes the Company's subordinated debentures and notes at the dates indicated.

Carrying Amount

Issue Date

Rate

Maturity Date

Next Call Date

September 30, 2017

December 31, 2016

Rate

Maturity Date

Next Call Date

March 31,
2020

December 31, 2019

(Dollars in Thousands)

June 26, 2003

Variable;

3-month LIBOR + 3.10%

June 26, 2033

December 26, 2017

4,772

4,752

Variable;

3-month LIBOR + 3.10%

June 26, 2033

June 25, 2020

4,832

4,826

March 17, 2004

Variable;

3-month LIBOR + 2.79%

March 17, 2034

December 18, 2017

4,657

4,628

Variable;

3-month LIBOR + 2.79%

March 17, 2034

June 16, 2020

4,747

4,739

September 15, 2014

6.0% Fixed-to-Variable;

3-month LIBOR + 3.315%

September 15, 2029

September 15, 2024

73,800

73,725

6.0% Fixed-to-Variable;

3-month LIBOR + 3.315%

September 15, 2029

September 15, 2024

74,051

74,026

Total

83,229

83,105

Total

83,630

83,591

The above carrying amounts of the subordinated debentures included ~~$0.6~~$0.4 million of accretion adjustments and ~~$1.2~~$0.9 million of capitalized debt issuance costs as of ~~September 30, 2017.~~March 31, 2020. This compares to ~~$0.6~~$0.4 million of accretion adjustments and ~~$1.3~~$1.0 million of capitalized debt issuance costs as of December 31, ~~2016.~~2019.

Other Borrowed Funds

In addition to advances from the FHLBB and subordinated debentures and notes, the Company utilizes other funding sources as part of the overall liquidity strategy. Those funding sources include repurchase agreements, and committed and uncommitted lines of credit with several financial institutions.

The Company periodically enters into repurchase agreements with its larger deposit and commercial customers as part of its cash management services which are typically overnight borrowings. Repurchase agreements with customers ~~decreased $20.1~~increased $13.1 million to ~~$30.1~~$55.7 million as of ~~September 30, 2017~~March 31, 2020 from ~~$50.2~~$42.7 million as of December 31, ~~2016.~~2019.

The Company has access to a $12.0 million committed line of credit as of ~~September 30, 2017.~~March 31, 2020. As of ~~September 30, 2017 and December~~March 31, ~~2016,~~2020, the Company ~~did not have any~~had $5 million outstanding of borrowings on this committed line of credit ~~outstanding.~~outstanding as compared to December 31, 2019, when the company had no borrowings on this outstanding committed line of credit.

The Banks also have access to funding through several uncommitted lines of credit of ~~$204.0~~$568.0 million. As of ~~September 30, 2017 and December~~March 31, ~~2016,~~2020, the Company ~~did not have any~~had $10.0 million borrowings on ~~these~~outstanding uncommitted lines of ~~credit.~~credit as compared to $18.0 million as of December 31, 2019.

Derivative Financial Instruments

The Company has entered into loan level derivatives, risk participation agreements, and foreign exchange contracts with certain of its commercial customers and concurrently enters into offsetting swaps with third-party financial institutions. The Company may also, from time to time, enter into risk participation agreements. The Company did not have derivative fair value hedges or derivative cash flow hedges at ~~September 30, 2017~~March 31, 2020 or December 31, ~~2016.~~ 2019.

The following table summarizes certain information concerning the Company's loan level derivatives, risk participation agreements, and foreign exchange contracts at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016:~~

2019:


	At September 30, 2017			At December 31, 2016			At March 31, 2020			At December 31, 2019
	(Dollars in Thousands)						(Dollars in Thousands)
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	$	465,470		$	383,780		$	1,231,096		$	1,101,193
Pay fixed, receive variable	465,470			383,780			1,231,096			1,101,193
Risk participation-out agreements	28,858			16,961			233,846			235,693
Risk participation-in agreements	3,825			—			49,279			55,281
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	$	1,200		$	195		$	1,422		$	1,125
Sells foreign currency, buys U.S. currency	1,208			195			1,530			1,230
Fixed weighted average interest rate from the Company to counterparty	4.15		%	4.13		%	3.32		%	3.54		%
Floating weighted average interest rate from counterparty to the Company	3.21		%	2.77		%	2.51		%	2.88		%
Weighted average remaining term to maturity (in months)	82			91			90			91
Fair value:
Recognized as an asset:
Loan level derivatives	$	9,975		$	9,738		$	154,761		$	59,365
Risk participation-out agreements	49			20			2,473			1,229
Foreign exchange contracts	22			—			224			54
Recognized as a liability:
Loan level derivatives	$	9,975		$	9,738		$	154,761		$	59,365
Risk participation-in agreements	14			—			432			283
Foreign exchange contracts	14			—			200			53

~~As of December 31, 2016, the Company held no risk participation-in agreements. As of December 31, 2016, the fair value of the foreign exchange contracts was nominal.~~

Stockholders' Equity and Dividends

The Company's total stockholders' equity was ~~$804.8~~$912.6 million as of ~~September 30, 2017,~~March 31, 2020, representing a ~~$109.2~~$33.0 million ~~increase~~decrease compared to ~~$695.5~~$945.6 million at December 31, ~~2016.~~2019. The ~~increase~~decrease primarily reflects net ~~income~~loss attributable to the Company of ~~$43.7~~$(17.3) million for the ~~nine~~three months ended ~~September 30, 2017, issuance~~March 31, 2020, a reduction to retained earnings of ~~common~~$11.5 million due to the CECL implementation, $10.4 million due to repurchase shares of treasury stock and dividends paid by the Company of ~~$81.9~~$9.2 million, anpartially offset by unrealized gain on securities available-for-sale of ~~$1.9 million, an increase of $1.0 million related to stock-based compensation, which was partially offset by dividends paid by the Company of $20.1 million in that same period.~~$14.7 million.

Stockholders' equity represented ~~12.04%~~10.78% of total assets as of ~~September 30, 2017~~March 31, 2020 and ~~10.80%~~12.04% of total assets as of December 31, ~~2016.~~2019. Tangible stockholders' equity (total stockholders' equity less goodwill and identified intangible assets, net) represented ~~10.09%~~9.02% of tangible assets (total assets less goodwill and identified intangible assets, net) as of ~~September 30, 2017~~March 31, 2020 and ~~8.73%~~10.15% as of December 31, ~~2016.~~2019.

On December 4, 2019, the Board of Directors approved a stock repurchase program authorizing management to repurchase up to $10.0 million of the Company’s common stock over a period of twelve months commencing on January 1, 2020 and ending on December 31, 2020. On March 9, 2020, the Board of Directors approved an increase in the repurchase amount of $10 million bringing the total authorized amount to $20 million. Subsequently, as previously disclosed, the Company suspended the stock repurchase program effective as of March 24, 2020. As of March 31, 2020, the Company has repurchased 848,319 shares at a weighted average price of $12.27. In 2019, 103,758 shares of the Company's common stock were repurchased by the Company.

The dividend payout ratio was ~~44.90%~~53.10% for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to ~~46.60%~~37.28% for the same period ~~of 2016 and 46.09% for the nine months ended September 30, 2017, compared to 48.66% for the same period of 2016.~~in 2019.

Results of Operations

The primary drivers of the Company's net income are net interest income, which is strongly affected by the net yield on and growth of interest-earning assets and liabilities, ~~("net interest margin"),~~ the quality of the Company's assets, its levels of non-interest income and non-interest expense, and its tax provision.

The Company's net interest income represents the difference between interest income earned on its investments, loans and leases, and its cost of funds. Interest income is dependent on the amount of interest-earning assets outstanding during the period and the yield earned thereon. Cost of funds is a function of the average amount of deposits and borrowed money outstanding during the year and the interest rates paid thereon. The net interest margin is calculated by dividing net interest income by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The increases or decreases, as applicable, in the

components of interest income and interest expense, expressed in terms of fluctuation in average volume and rate, are summarized under "Rate/Volume Analysis" below. Information as to the components of interest income, interest expense and average rates is provided under "Average Balances, Net Interest Income, Interest-Rate Spread and Net Interest Margin" below.

Because the Company's assets and liabilities are not identical in duration and in repricing dates, the differential between the two is vulnerable to changes in market interest rates as well as the overall shape of the yield curve. These vulnerabilities are inherent to the business of banking and are commonly referred to as "interest-rate risk." How interest-rate risk is measured and, once measured, how much interest-rate risk is taken on, are based on numerous assumptions and other subjective judgments. See the discussion in “Item 3. Quantitative and Qualitative Disclosures about Market Risk” below.

The quality of the Company's assets also influences its earnings. Loans and leases that are not paid on a timely basis and exhibit other weaknesses can result in the loss of principal and/or interest income. Additionally, the Company must make timely provisions to the allowance for loan and lease losses based on estimates of probable losses inherent in the loan and lease portfolio. These additions, which are charged against earnings, are necessarily greater when greater probable losses are expected. Further, the Company incurs expenses as a result of resolving troubled assets. These variables reflect the "credit risk" that the Company takes on in the ordinary course of business and are further discussed under "Financial Condition—Asset Quality" above.

Net Interest Income

Net interest income ~~increased $4.4~~decreased $1.3 million to ~~$56.8~~$61.7 million for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~$52.4~~$63.0 million for the three months ended ~~September 30, 2016.~~March 31, 2019. This ~~overall increase~~decrease reflects a ~~$5.2~~$1.1 million ~~increase~~decrease in interest income on loans and leases and a ~~$0.3~~$0.5 million ~~increase~~decrease in interest income on investment securities, partially offset by a ~~$1.2~~$0.3 million ~~increase~~decrease in interest expense on deposit and borrowings, which is reflective of the various portfolios repricing and replacing balances into the current interest rate environment. Refer to “Results of Operations - Comparison of the Three-Month Period Ended ~~September 30, 2017~~

March 31, 2020 and ~~September 30, 2016~~March 31, 2019 — Interest Income” and “Results of Operations - Comparison of the Three-Month Period Ended ~~September 30, 2017~~March 31, 2020 and ~~September 30, 2016~~March 31, 2019 — Interest Expense Deposit and Borrowed Funds” below for more details.

Net interest income increased $13.7 million to $165.5 million for the nine months ended September 30, 2017 from $151.8 million for the nine months ended September 30, 2016. This overall increase reflects a $15.3 million increase in interest income on loans and leases and a $0.6 million increase in interest income on investment securities, offset by a $2.3 million increase in interest expense on deposit and borrowings, which is reflective of the various portfolios repricing and replacing balances into the current interest rate environment. Refer to ~~“Results of Operations - Comparison of the Nine-Month Period Ended September 30, 2017 and September 30, 2016 — Interest Income”~~ ~~and~~ ~~“Results of Operations - Comparison of the Nine-Month Period Ended September 30, 2017 and September 30, 2016 — Interest Expense Deposit and Borrowed Funds”~~ ~~below for more details.~~

Net interest margin ~~increased~~decreased by 933 basis points to ~~3.57%~~3.31% for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~3.48%~~3.64% for the three months ended ~~September 30, 2016.~~March 31, 2019. The Company's weighted average interest rate on loans (prior to purchase accounting adjustments) ~~increased~~decreased to ~~4.52%~~4.71% for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~4.36%~~5.09% for the three months ended ~~September 30, 2016.~~March 31, 2019. Interest amortization and accretion on acquired loans totaled ~~$0.2~~$0.1 million and contributed 1 basis point to loan yields during both the three months ended ~~September 30, 2017 compared to $0.9 million, or 6 basis points, for the three months ended September 30, 2016.~~March 31, 2020 and 2019. The ~~increase~~decrease in ~~the~~ net interest margin over the period is ~~the~~a result of ~~repricing interest-earning assets in a slightly higher~~most asset categories being fully repriced into the current rate environment, ~~offset by~~while deposit costs decreased at a ~~comparable increase in funding costs.~~

~~Net interest margin increased by 10 basis points~~slower pace due to ~~3.56%~~market competition and shifting demand for the nine months ended September 30, 2017 from 3.46% for the nine months ended September 30, 2016. The Company's weighted average interest rate on loans (prior to purchase accounting adjustments) increased to 4.44% for the nine months ended September 30, 2017 from 4.32% for the nine months ended September 30, 2016. Interest amortization and accretion on acquired loans totaled $0.6 million and contributed 1 basis point to loan yields during the nine months ended September 30, 2017, compared to $1.3 million, or 3 basis points, for the nine months ended September 30, 2016. The increase in the net interest margin is the result of repricing and originating interest-earning assets in a higher rate environment offset by an increase in funding costs.non- maturity versus time deposits.

The yield on interest-earning assets ~~increased~~decreased to ~~4.25%~~4.46% for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~4.10%~~4.84% for the three months ended ~~September 30, 2016.~~March 31, 2019. This ~~increase~~decrease is the result of ~~higher~~lower yields on loans and leases ~~partially offset by a decrease in prepayment penalties~~ and ~~late charges.~~lower yields on investments. During the three months ended ~~September 30, 2017,~~March 31, 2020, the Company recorded $0.8 million in prepayment penalties and late charges, which contributed 54 basis points to yields on interest-earning assets in the three months ended ~~September 30, 2017~~March 31, 2020, compared to ~~$1.2~~$1.1 million, or 86 basis points, for the three months ended ~~September 30, 2016.~~March 31, 2019.

The yield on interest-earning assets increased to 4.17% for the nine months ended September 30, 2017 from 4.05% for the nine months ended September 30, 2016. This increase is the result of higher yields on loans and leases. During the nine months ended September 30, 2017, the Company recorded $2.6 million in prepayment penalties and late charges, which contributed 6 basis points to yields on interest-earning assets, compared to $2.7 million, or 6 basis points, in the nine months ended September 30, 2016.

The overall cost of funds (including non-interest-bearing demand checking accounts) ~~increased 6~~decreased 10 basis points to ~~0.71%~~1.29% for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~0.65%~~1.39% for the three months ended ~~September 30, 2016. The overall cost of funds increased 3 basis points to 0.68% for the nine months ended September 30, 2017 from 0.65% for the nine months ended September 30, 2016.~~March 31, 2019. Refer to "Financial Condition - Borrowed Funds" above for more details.

Management seeks to position the balance sheet to be neutral to asset sensitive to changes in interest rates. Since the end of 2016, short term interest rates have risen while at the same time net interest income, net interest spread, and net interest margin have also increased. During the first quarter of 2020 interest rates declined sharply in response to the economic impact of the COVID-19 pandemic. In general, the Company's balance sheet position should respond positively in a rising interest rate environment and when the rate curves are steepening which should result in a positive impact to net interest income, net interest spread, and the net interest margin. A declining interest rate or flattening yield curve environment is expected to have a negative impact on the Company's yields and net interest margin. ~~Additional risk factors include, but are not limited to:~~Due to, among other things, ongoing pricing pressures in ~~both~~ the loan and deposit portfolios, ~~the ability to increase the Company's core deposits, decrease its loan-to-deposit ratio, and decrease its reliance on FHLBB advances. Net~~net interest income may also be negatively affected by changes in the amount of accretion on acquired loans and leases, deposits and borrowed funds, which ~~are~~is included in interest income and interest expense, respectively.

Average Balances, Net Interest Income, Interest-Rate Spread and Net Interest Margin

The following table sets forth information about the Company's average balances, interest income and interest rates earned on average interest-earning assets, interest expense and interest rates paid on average interest-bearing liabilities, interest-rate spread and net interest margin for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~September 30, 2016.~~March 31, 2019. Average balances are derived from daily average balances and yields include fees, costs and purchase-accounting-related premiums and discounts which are considered adjustments to coupon yields in accordance with GAAP. Certain amounts previously reported have been reclassified to conform to the current presentation.


	Three Months Ended														Three Months Ended
	September 30, 2017							September 30, 2016							March 31, 2020							March 31, 2019
	Average Balance			Interest (1)		Average Yield/ Cost		Average Balance			Interest (1)		Average Yield/ Cost		Average Balance			Interest (1)		Average Yield/ Cost		Average Balance			Interest (1)		Average Yield/ Cost
	(Dollars in Thousands)														(Dollars in Thousands)
Assets:
Interest-earning assets:
Debt securities	$	642,018		$	3,264	2.03	%	$	604,394		$	2,910	1.93	%	$	605,885		$	3,024	2.00	%	$	608,194		$	3,289	2.16	%
Marketable and restricted equity securities	66,212			789		4.76	%	66,981			836		4.99	%	58,881			786		5.33	%	60,389			920		6.10	%
Short-term investments	52,674			180		1.36	%	36,273			47		0.51	%	84,309			209		0.99	%	33,034			267		3.23	%
Total investments	760,904			4,233		2.23	%	707,648			3,793		2.14	%	749,075			4,019		2.15	%	701,617			4,476		2.55	%
Commercial real estate loans ⁽²⁾	2,974,185			31,299		4.12	%	2,872,733			29,470		4.10	%	3,697,011			40,468		4.33	%	3,376,576			40,019		4.74	%
Commercial loans ⁽²⁾	760,115			7,959		4.10	%	717,265			7,130		3.90	%	783,309			8,328		4.21	%	792,695			9,603		4.85	%
Equipment financing ⁽²⁾	846,027			13,983		6.61	%	759,622			12,189		6.42	%	1,052,846			18,946		7.20	%	988,193			17,985		7.28	%
Residential mortgage loans ⁽²⁾	649,831			6,043		3.72	%	620,741			5,513		3.55	%	810,583			7,934		3.92	%	778,325			8,123		4.17	%
Other consumer loans ⁽²⁾	369,925			4,015		4.30	%	356,516			3,810		4.24	%	417,815			3,955		3.79	%	408,177			5,051		5.01	%
Total loans and leases	5,600,083			63,299		4.52	%	5,326,877			58,112		4.36	%	6,761,564			79,631		4.71	%	6,343,966			80,781		5.09	%
Total interest-earning assets	6,360,987			67,532		4.25	%	6,034,525			61,905		4.10	%	7,510,639			83,650		4.46	%	7,045,583			85,257		4.84	%
Allowance for loan and lease losses	(65,140		)					(58,032		)					(68,581		)					(58,749		)
Non-interest-earning assets	385,195							383,604							523,768							447,204
Total assets	$	6,681,042						$	6,360,097						$	7,965,826						$	7,434,038
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	321,731		55		0.07	%	$	295,762		52		0.07	%	$	359,641		116		0.13	%	$	334,167		142		0.17	%
Savings accounts	605,303			306		0.20	%	566,192			318		0.22	%	626,945			643		0.41	%	626,414			597		0.39	%
Money market accounts	1,765,610			2,267		0.51	%	1,678,937			1,905		0.45	%	1,678,649			4,241		1.02	%	1,676,199			5,275		1.28	%
Certificate of deposit	1,139,699			3,356		1.17	%	1,112,831			2,837		1.01	%	2,040,903			11,240		2.22	%	1,844,511			9,934		2.18	%
Total interest-bearing deposits ⁽³⁾	3,832,343			5,984		0.62	%	3,653,722			5,112		0.56	%	4,706,138			16,240		1.39	%	4,481,291			15,948		1.44	%
Advances from the FHLBB	913,206			3,028		1.30	%	921,396			2,778		1.18	%	772,462			4,097		2.10	%	755,542			4,610		2.44	%
Subordinated debentures and notes	83,204			1,274		6.13	%	83,036			1,259		6.07	%	83,609			1,284		6.14	%	83,451			1,308		6.27	%
Other borrowed funds	41,368			47		0.45	%	46,417			32		0.27	%	91,052			189		0.84	%	88,600			221		1.01	%
Total borrowed funds	1,037,778			4,349		1.64	%	1,050,849			4,069		1.52	%	947,123			5,570		2.33	%	927,593			6,139		2.65	%
Total interest-bearing liabilities	4,870,121			10,333		0.84	%	4,704,571			9,181		0.78	%	5,653,261			21,810		1.55	%	5,408,884			22,087		1.66	%
Non-interest-bearing liabilities:
Non-interest-bearing demand checking accounts ⁽³⁾	918,054							863,854							1,134,314							1,026,970
Other non-interest-bearing liabilities	80,616							90,025							232,113							111,174
Total liabilities	5,868,791							5,658,450							7,019,688							6,547,028
Brookline Bancorp, Inc. stockholders' equity	804,666							695,205							946,138							886,639
Noncontrolling interest in subsidiary	7,585							6,442							—							371
Total liabilities and stockholders' equity	$	6,681,042						$	6,360,097						$	7,965,826						$	7,434,038
Net interest income (tax-equivalent basis) / Interest-rate spread ⁽⁴⁾				57,199		3.41	%				52,724		3.32	%				61,840		2.91	%				63,170		3.18	%
Less adjustment of tax-exempt income				356							374							128							171
Net interest income				$	56,843						$	52,350						$	61,712						$	62,999
Net interest margin ⁽⁵⁾						3.57	%						3.48	%						3.31	%						3.64	%

(1) Tax-exempt income on debt securities, equity securities and industrial revenue bonds are included in commercial real estate loans on a tax-equivalent basis.

(2) Loans on nonaccrual status are included in the average balances.

(3) Including non-interest-bearing checking accounts, the average interest rate on total deposits was ~~0.50%~~1.12% and ~~0.45%~~1.17% in the three months ended ~~September 30, 2017~~March 31, 2020 and ~~September 30, 2016,~~March 31, 2019, respectively.

(4) Interest-rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

(5) Net interest margin represents net interest income (tax equivalent basis) divided by average interest-earning assets.

Nine Months Ended
September 30, 2017 September 30, 2016

Average
Balance
Interest (1)
Average
Yield/
Cost

Average
Balance
Interest (1)
Average
Yield/
Cost
(Dollars in Thousands)
Assets:
Interest-earning assets:
Investments :
Debt securities $ 631,549
$ 9,641
2.04 % $ 604,603
$ 9,078
2.00 %
Marketable and restricted equity securities 68,104
2,306
4.52 % 66,764
2,247
4.49 %
Short-term investments 42,922
342
1.06 % 46,198
149
0.43 %
Total investments 742,575
12,289
2.21 % 717,565
11,474
2.13 %
Loans and leases:
Commercial real estate loans ⁽²⁾
2,949,313
91,134
4.07 % 2,785,472
85,014
4.07 %
Commercial loans ⁽²⁾
730,453
22,737
4.11 % 692,634
20,430
3.88 %
Equipment financing ⁽²⁾
826,494
40,907
6.60 % 738,990
35,690
6.44 %
Residential mortgage loans ⁽²⁾
641,443
17,511
3.64 % 624,102
16,705
3.57 %
Other consumer loans ⁽²⁾
364,407
11,187
4.10 % 350,070
10,389
3.95 %
Total loans and leases 5,512,110
183,476
4.44 % 5,191,268
168,228
4.32 %
Total interest-earning assets 6,254,685
195,765
4.17 % 5,908,833
179,702
4.05 %
Allowance for loan and lease losses (62,142 ) (57,982 )
Non-interest-earning assets 374,558
379,761

Total assets $ 6,567,101
$ 6,230,612

Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 319,633
164
0.07 % $ 289,908
156
0.07 %
Savings accounts 603,814
916
0.20 % 561,798
998
0.24 %
Money market accounts 1,759,449
6,407
0.49 % 1,654,700
5,547
0.45 %
Certificate of deposit 1,088,011
9,120
1.12 % 1,107,600
8,174
0.99 %
Total interest-bearing deposits ⁽³⁾
3,770,907
16,607
0.59 % 3,614,006
14,875
0.55 %
Advances from the FHLBB 913,137
8,640
1.25 % 888,406
8,125
1.20 %
Subordinated debentures and notes 83,165
3,805
6.10 % 82,996
3,773
6.06 %
Other borrowed funds 49,752
137
0.37 % 42,463
82
0.26 %
Total borrowed funds 1,046,054
12,582
1.59 % 1,013,865
11,980
1.55 %
Total interest-bearing liabilities 4,816,961
29,189
0.81 % 4,627,871
26,855
0.78 %
Non-interest-bearing liabilities:
Non-interest-bearing deposits:
Non-interest-bearing demand checking accounts ⁽³⁾
905,684

829,659

Other non-interest-bearing liabilities 76,735

80,774

Total liabilities 5,799,380

5,538,304

Brookline Bancorp, Inc. stockholders' equity 760,447

686,134

Noncontrolling interest in subsidiary 7,274

6,174

Total liabilities and stockholders' equity $ 6,567,101

$ 6,230,612

Net interest income (tax-equivalent basis) / Interest-rate spread ⁽⁴⁾

166,576
3.36 %
152,847
3.27 %
Less adjustment of tax-exempt income
1,052

1,037

Net interest income
$ 165,524

$ 151,810

Net interest margin ⁽⁵⁾

3.56 %

3.46 %

~~(1) Tax-exempt income on debt securities, equity securities and industrial revenue bonds are included in commercial real estate loans on a tax-equivalent basis.~~

~~(2) Loans on nonaccrual status are included in the average balances.~~

(3) Including non-interest-bearing checking accounts, the average interest rate on total deposits was 0.47% and 0.45% in the nine months ended September 30, 2017 and September 30, 2016, respectively.

~~(4) Interest-rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.~~

~~(5) Net interest margin represents net interest income (tax equivalent basis) divided by average interest-earning assets.~~

Rate/Volume Analysis

The following table presents, on a tax-equivalent basis, the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities have affected the Company's interest income and interest expense during the periods indicated. Information is provided in each category with respect to: (i) changes attributable to

changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.


	Three Months Ended September 30, 2017 as Compared to the Three Months Ended September 30, 2016									Nine Months Ended September 30, 2017 as Compared to the Nine Months Ended September 30, 2016									Three Months Ended March 31, 2020 as Compared to the Three Months Ended March 31, 2019
	Increase (Decrease) Due To									Increase (Decrease) Due To									Increase (Decrease) Due To
	Volume			Rate			Net Change			Volume			Rate			Net Change			Volume			Rate			Net Change
	(In Thousands)																		(In Thousands)
Interest and dividend income:
Investments:
Debt securities	$	193		$	161		$	354		$	389		$	174		$	563		$	(13	)	$	(252	)	$	(265	)
Marketable and restricted equity securities	(9		)	(38		)	(47		)	44			15			59			(22		)	(112		)	(134		)
Short-term investments	28			105			133			(11		)	204			193			214			(272		)	(58		)
Total investments	212			228			440			422			393			815			179			(636		)	(457		)
Loans and leases:
Commercial real estate loans	1,607			222			1,829			6,120			—			6,120			3,836			(3,387		)	449
Commercial loans and leases	446			383			829			1,106			1,201			2,307			(105		)	(1,170		)	(1,275		)
Equipment financing	1,424			370			1,794			4,312			905			5,217			1,159			(198		)	961
Residential mortgage loans	262			268			530			473			333			806			318			(507		)	(189		)
Other consumer loans	149			56			205			414			384			798			122			(1,218		)	(1,096		)
Total loans	3,888			1,299			5,187			12,425			2,823			15,248			5,330			(6,480		)	(1,150		)
Total change in interest and dividend income	4,100			1,527			5,627			12,847			3,216			16,063			5,509			(7,116		)	(1,607		)
Interest expense:
Deposits:
NOW accounts	3			—			3			8			—			8			10			(36		)	(26		)
Savings accounts	19			(31		)	(12		)	79			(161		)	(82		)	1			45			46
Money market accounts	101			261			362			358			502			860			8			(1,042		)	(1,034		)
Certificate of deposit	69			450			519			(143		)	1,089			946			1,114			192			1,306
Total deposits	192			680			872			302			1,430			1,732			1,133			(841		)	292
Borrowed funds:
Advances from the FHLBB	(25		)	275			250			206			309			515			106			(619		)	(513		)
Subordinated debentures and notes	3			12			15			8			24			32			3			(27		)	(24		)
Other borrowed funds	(4		)	19			15			16			39			55			6			(38		)	(32		)
Total borrowed funds	(26		)	306			280			230			372			602			115			(684		)	(569		)
Total change in interest expense	166			986			1,152			532			1,802			2,334			1,248			(1,525		)	(277		)
Change in tax-exempt income	(18		)	—			(18		)	15			—			15			(43		)	—			(43		)
Change in net interest income	$	3,952		$	541		$	4,493		$	12,300		$	1,414		$	13,714		$	4,304		$	(5,591	)	$	(1,287	)

Interest Income

Loans and Leases


	Three Months Ended September 30,				Dollar Change			Percent Change			Nine Months Ended September 30,						Dollar Change			Percent Change		Three Months Ended March 31,						Dollar Change			Percent Change
	2017		2016				2017				2016				2020		Dollar Change			Percent Change		2019						Dollar Change			Percent Change
	(Dollars in Thousands)																					(Dollars in Thousands)
Interest income—loans and leases:					Dollar Change
Commercial real estate loans	$	31,298	$	29,470	$	1,828		Percent Change	6.2	%		$	91,133		$	85,014		$	6,119		7.2	%	$	40,468		$	40,019		$	449		1.1	%
Commercial loans	7,714		6,876		838			12.2	%		22,011			19,676			2,335			11.9	%	8,256			9,494			(1,238		)	(13.0	)%
Equipment financing	13,983		12,188		1,795			14.7	%		40,907			35,690			5,217			14.6	%	18,946			17,985			961			5.3	%
Residential mortgage loans	6,043		5,514		529			9.6	%		17,511			16,705			806			4.8	%	7,934			8,123			(189		)	(2.3	)%
Other consumer loans	4,016		3,810		206			5.4	%		11,188			10,389			799			7.7	%	3,955			5,051			(1,096		)	(21.7	)%
Total interest income—loans and leases	$	63,054	$	57,858	$	5,196		9.0	%		$	182,750		$	167,474		$	15,276		9.1	%	$	79,559		$	80,672		$	(1,113	)	(1.4	)%

Interest income from loans and leases was ~~$63.1~~$79.6 million for the three months ended ~~September 30, 2017,~~March 31, 2020, and represented a yield on total loans of ~~4.52%~~4.71%. This compares to ~~$57.9~~$80.7 million of interest on loans and a yield of ~~4.36%~~5.09% for ~~September 30, 2016.~~March 31, 2019. The ~~$5.2~~$1.1 million ~~increase~~decrease in interest income from loans and leases was primarily attributable to an increase of ~~$3.9~~$5.3 million due to an increase in origination volume, ~~and an increase~~more than offset by a decrease of ~~$1.3~~$6.5 million due to ~~the~~ changes in interest rates.

~~Accretion~~Interest amortization and accretion on acquired loans and leases ~~of $0.2~~totaled $0.1 million, ~~contributed~~or 1 basis point to the Company's net interest margin ~~for~~during both the three months ended ~~September 30, 2017, compared to $0.9 million~~March 31, 2020 and ~~6 basis points for the three months ended September 30, 2016.~~

Interest income from loans and leases was $182.8 million for the nine months ended September 30, 2017, resulting in a yield on total loans of 4.44%. This compares to $167.5 million of interest on loans and a yield of 4.32% for the nine months ended September 30, 2016. The year over year increase of $15.2 million in interest income from loans and leases was due to an increase of $12.4 million due to increase in origination volume and an increase of of $2.8 million due to changes in interest rates.

Accretion on acquired loans and leases of $0.6 million contributed 1 basis point to net interest margin for the nine months ended September 30, 2017, compared to $1.3 million and 3 basis point for the nine months ended September 30, 2016.

2019.

Investments


	Three Months Ended September 30,				Dollar Change				Percent Change			Nine Months Ended September 30,						Dollar Change			Percent Change		Three Months Ended March 31,						Dollar Change				Percent Change
	2017		2016					2017				2016				2020		Dollar Change			Percent Change		2019						Dollar Change				Percent Change
	(Dollars in Thousands)																						(Dollars in Thousands)
Interest income—investments:					Dollar Change
Debt securities	$	3,154	$	2,822	$	332			Percent Change	11.8	%		$	9,310		$	8,829		$	481		5.4	%	$	2,976		$	3,236		$	(260	)		(8.0	)%
Marketable and restricted equity securities	788		804		(16		)		-2.0	%		2,311			2,213			98			4.4	%	778			911			(133		)		(14.6	)%
Short-term investments	180		47		133				283.0	%		342			149			193			129.5	%	209			267			(58		)		(21.7	)%
Total interest income—investments	$	4,122	$	3,673	$	449			12.2	%		$	11,963		$	11,191		$	772		6.9	%	$	3,963		$	4,414		$	(451	)		(10.2	)%

Total investment income was ~~$4.1~~$4.0 million for the three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$3.7~~$4.4 million for the three months ended ~~September 30, 2016. As of September 30, 2017~~March 31, 2019. For the quarter ended March 31, 2020 and ~~2016,~~2019, the yield on total investments was 2.2% ~~and 2.1%, respectively.~~. The year over year ~~increase~~decrease in interest income on investments of ~~$0.4 million,~~$451 thousand, or ~~12.2%~~10.2%, was primarily driven by a ~~$228.0~~$636 thousand ~~increase~~decrease due to rates, ~~and a $212.0 thousand increase due to volume.~~

Total investment income was $12.0 million for the nine months ended September 30, 2017 compared to $11.2 million for the nine months ended September 30, 2016. As of September 30, 2017 and 2016, the yield on total investments was 2.2% and

~~2.1%, respectively. The year over year increase in interest income on investments of $0.8 million, or 6.9%, was driven~~partially offset by a ~~$393.0 thousand increase due to rates and a $422.0~~$179 thousand increase due to volume.

Interest Expense—Deposits and Borrowed Funds


	Three Months Ended September 30,				Dollar Change				Percent Change		Nine Months Ended September 30,				Dollar			Percent		Three Months Ended March 31,				Dollar Change			Percent Change
	2017		2016					2017			2016		Change		Change		2020			2019				Dollar Change			Percent Change
	(Dollars in Thousands)																			(Dollars in Thousands)
Interest expense:					Dollar Change
Deposits:									Percent Change
NOW accounts	$	55	$	52	$	3			5.8	%	$	164	$	156	$	8		5.1	%	$	116	$	142	$	(26	)	(18.3	)%
Savings accounts	306		318		(12		)		-3.8	%	916		998		(82		)	-8.2	%	643		597		46			7.7	%
Money market accounts	2,267		1,905		362				19.0	%	6,407		5,547		860			15.5	%	4,241		5,275		(1,034		)	(19.6	)%
Certificates of deposit	3,356		2,837		519				18.3	%	9,120		8,174		946			11.6	%	11,240		9,934		1,306			13.1	%
Total interest expense - deposits	5,984		5,112		872				17.1	%	16,607		14,875		1,732			11.6	%	16,240		15,948		292			1.8	%
Borrowed funds:
Advances from the FHLBB	3,028		2,778		250				9.0	%	8,640		8,125		515			6.3	%	4,097		4,610		(513		)	(11.1	)%
Subordinated debentures and notes	1,274		1,259		15				1.2	%	3,805		3,773		32			0.8	%	1,284		1,308		(24		)	(1.8	)%
Other borrowed funds	47		32		15				46.9	%	137		82		55			67.1	%	189		221		(32		)	(14.5	)%
Total interest expense - borrowed funds	4,349		4,069		280				6.9	%	12,582		11,980		602			5.0	%	5,570		6,139		(569		)	(9.3	)%
Total interest expense	$	10,333	$	9,181	$	1,152			12.5	%	$	29,189	$	26,855	$	2,334		8.7	%	$	21,810	$	22,087	$	(277	)	(1.3	)%

Deposits

For the three months ended ~~September 30, 2017,~~March 31, 2020, interest expense on deposits increased ~~$0.9~~$0.3 million, or ~~17.1%~~1.8%, as compared to the same period in ~~2016. Interest expense increased $0.7 million due to an~~2019. The increase in interest ~~rates and $0.2~~expense on deposits was driven by an increase of $1.1 million due to the growth in ~~deposits. There was no purchase~~deposits, partially offset by a decrease of $0.8 million due to a decrease in interest rates. Purchase accounting ~~accretion~~amortization on acquired deposits for the three months ended ~~September 30, 2017,~~March 31, 2020 was $44 thousand and no basis points, compared to ~~$24.0~~$185 thousand and 1 basis point for the three months ended ~~September 30, 2016. Purchase accounting accretion did not impact the Company's net interest margin for the three months ended September 30, 2017 and 2016.~~March 31, 2019.

Interest expense on deposits increased $1.7 million, or 11.6%, to $16.6 million for the nine months ended September 30, 2017 from $14.9 million for the nine months ended September 30, 2016. The increase in interest expense on deposits was due to a $1.4 million increase due to rates offered and a $0.3 million increase due to volume. There was no accretion on acquired deposits for the nine months ended September 30, 2017 compared to $73.0 thousand for the nine months ended September 30, 2016. Accretion did not have an impact on the Company's net interest margin for the nine months ended September 30, 2017 and 2016.

Borrowed Funds

During the three months ended ~~September 30, 2017,~~March 31, 2020, interest paid on borrowed funds ~~increased $0.3~~decreased by $0.6 million, or ~~6.9%~~9.3% year over year, primarily driven by ~~an increase~~a decrease in the rate paid on FHLBB borrowings. The cost of borrowed funds ~~increased~~decreased to ~~1.64%~~2.33% for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~1.52%~~2.65% for the three months ended ~~September 30, 2016.~~March 31, 2019. The ~~increase~~decrease in interest expense was driven by ~~an increase~~a decrease of ~~$306.0 thousand~~$0.7 million due to borrowing rates, ~~and a decrease~~partially offset by an increase of ~~$26.0 thousand~~$0.1 million due to volume. For both the three months ended ~~September 30, 2017,~~March 31, 2020 and 2019, there was no purchase accounting accretion of $14 thousand and no basis points on acquired borrowed funds compared to ~~$0.6 million and four basis points for the three months ended September 30, 2016.~~

Interest expense on borrowed funds increased by $0.6 million, or 5.0%, to $12.6 million for the nine months ended September 30, 2017 from $12.0 million for the nine months ended September 30, 2016. The costaccretion of borrowed funds increased to 1.59% for the nine months ended September 30, 2017 from 1.55% for the nine months ended September 30, 2016. The increase in interest expense was due to a $372.0 thousand increase due to higher borrowing rates and a $230.0 thousand increase due to higher volume. Accretion on acquired borrowed funds of $1.0 million improved the Company’s net interest margin by two basis points for the nine months ended September 30, 2017. This compared to $1.9 million and four basis points for the nine months ended September 30, 2016.$14 thousand.

Provision for Credit Losses

The provisions for credit losses are set forth below:


	Three Months Ended September 30,					Dollar			Percent		Nine Months Ended September 30,					Dollar			Percent		Three Months Ended March 31,					Dollar Change		Percent Change
	2017		2016			Change			Change		2017		2016			Change			Change		2020		2019					Percent Change
	(Dollars in Thousands)																				(Dollars in Thousands)
Provision for loan and lease losses:																										Dollar Change
Commercial real estate	$	979	$	(1,755	)	$	2,734		155.8	%	$	1,041	$	(561	)	$	1,602		285.6	%	$	40,200	$	162		$	40,038	24,714.8	%
Commercial	1,832		3,923			(2,091		)	-53.3	%	15,636		7,201			8,435			117.1	%	6,900		1,081			5,819		538.3	%
Consumer	35		(14		)	49			350.0	%	421		451			(30		)	-6.7	%	601		207			394		(190.3	)%
Total provision for loan and lease losses	2,846		2,154			692			32.1	%	17,098		7,091			10,007			141.1	%	47,701		1,450			46,251		3,189.7	%
Unfunded credit commitments	65		61			4			6.6	%	88		47			41			87.2	%	6,413		(97		)	6,510		6,711.3	%
Total provision for credit losses	$	2,911	$	2,215		$	696		31.4	%	$	17,186	$	7,138		$	10,048		140.8	%	$	54,114	$	1,353		$	52,761	3,899.6	%

For the three months ended ~~September 30, 2017,~~March 31, 2020, the provision for credit losses increased ~~$0.7~~$52.8 million ~~or 31.4%,~~ to ~~$2.9~~$54.1 million from ~~$2.2~~$1.3 million for the three months ended ~~September 30, 2016.~~March 31, 2019. The increase in the provision for credit losses for the three months ended September 30, 2017 was primarily driven by charge-offs on several taxi medallion loans during the quarter, as well as changes in loss factors of the commercial real estate portfolio during the third quarter of 2017.

~~For the nine months~~ ended September 30, 2017, the provision for credit losses increased $10.0 million, or 140.8%, to $17.2 million from $7.1 million for the nine months ended September 30, 2016. The increase in the provision for credit losses for the nine months ended September 30, 2017March 31, 2020 was primarily driven by the ~~continued loan growth~~significant increase in allowance for credit losses due to macroeconomic forecasts surrounding the COVID-19 pandemic during the first quarter of 2020. The latest available economic forecasts were used in the ~~commercial real estate~~loss models which reflected the immediate and ~~equipment financing portfolios and increases in specific reserves for taxi medallion loans.~~longer term effects of the COVID-19 pandemic.

See management’s discussion of “Financial Condition — Allowance for Loan and Lease Losses” and Note 5, “Allowance for Loan and Lease Losses,” to the unaudited consolidated financial statements for a description of how management determined the allowance for loan and lease losses for each portfolio and class of loans.

Non-Interest Income

The following table sets forth the components of non-interest income:


	Three Months Ended September 30,				Dollar Change				Percent Change		Nine Months Ended September 30,					Dollar Change			Percent Change		Three Months Ended March 31,						Dollar Change			Percent Change
	2017		2016					2017			2016				2020	Dollar Change			Percent Change		2019						Dollar Change			Percent Change
	(Dollars in Thousands)																				(Dollars in Thousands)
Deposit fees	$	2,547	$	2,289	Dollar Change		$	258	Percent Change			11.3	%	$	7,508	$	6,650		$	858			12.9	%	$	2,458	$	2,523		$	(65	)	(2.6	)%
Loan fees	282		330		(48		)		-14.5	%	772			977		(205		)	-21.0	%	550				413		137			33.2	%
Loan level derivative income, net	844		858		(14		)		-1.6	%	1,432			3,697		(2,265		)	-61.3	%	2,156				1,745		411			23.6	%
Gain on sales of investment securities, net	—		—		—				—	%	11,393			—		11,393			100.0	%
Gain on investment securities																					1,330				134		1,196			892.5	%
Gain on sales of loans and leases held-for-sale	1,049		588		461				78.4	%	1,709			1,986		(277		)	-13.9	%	120				289		(169		)	(58.5	)%
Other	1,251		1,264		(13		)		-1.0	%	3,544			3,893		(349		)	-9.0	%	2,714				1,526		1,188			77.9	%
Total non-interest income	$	5,973	$	5,329	$	644			12.1	%	$	26,358		$	17,203	$	9,155		53.2	%	$	9,328			$	6,630	$	2,698		40.7	%

For the three months ended ~~September 30, 2017,~~March 31, 2020, non-interest income increased ~~$0.6~~$2.7 million, or ~~12.1%~~40.7%, to ~~$6.0~~$9.3 million as compared to $6.6 million for the same period in ~~2016.~~2019. This increase is primarily due to a ~~$0.3 million increase in deposit fees and a $0.5 million increase in gain on sales of loans and leases held-for-sale.~~

For the nine months ended September 30, 2017, non-interest income increased $9.2 million, or 53.2%, to $26.4 million as compared to the same period of 2016. This increase is primarily due to a $0.9 million increase in deposit fees, offset by a $2.3 million decrease in loan level derivative income, and a $11.4$1.2 million increase in gain on sales of investment ~~securities.~~securities, a $1.2 million increase in other income and a $0.4 million increase in loan level derivative income.

~~Deposit fees~~Loan level derivative income increased ~~$0.3~~$0.4 million, or ~~11.3%~~23.6%, to ~~$2.5~~$2.2 million for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~$2.3~~$1.7 million for the same period ~~of 2016 and increased $0.9 million, or 12.9%, to $7.5 million for the nine months ended September 30, 2017 from $6.7 million for the same period of 2016. This increase is primarily due to growth~~ in ~~deposits.~~

Gain on sales of loans and leases held-for-sale increased $0.5 million, or 78.4%, to $1.0 million for the three months ended September 30, 2017 from $0.6 million for the same period of 2016. This increase is2019, primarily driven by ~~the gain recorded on the sale of loans.~~

~~Loan level derivative income decreased $2.3 million, or 61.3%, to $1.4 million for the nine months ended September 30, 2017 from $3.7 million for the same period of 2016, primarily driven by fewer~~an increase in loan level derivative transactions completed for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020.

~~No gain~~Gain on ~~sales of~~ investment securities ~~were recorded~~increased $1.2 million, or 892.5%, to $1.3 million for the three months ended ~~September 30, 2017 and 2016 and increased to $11.4~~March 31, 2020 from $0.1 million ~~or 100.0%, for the nine months ended September 30, 2017 from zero~~ for the same period ~~of 2016,~~in 2019, primarily driven by ~~the~~a $2.3 million gain on ~~investment~~sales of securities, partially offset by a $1.0 million loss on equity securities held for trading in the first quarter ~~2017.~~2020.

Other income increased $1.2 million, or 77.9%, to $2.7 million for the three months ended March 31, 2020 from $1.5 million for the same period in 2019, primarily driven by an increase in gain on interest rate derivatives, investment sales commissions, investment sales advisory fees, and bank-owned life insurance (BOLI) income.

Non-Interest Expense

The following table sets forth the components of non-interest expense:


	Three Months Ended September 30,				Dollar Change				Percent Change		Nine Months Ended September 30,					Dollar Change			Percent Change		Three Months Ended March 31,						Dollar Change			Percent Change
	2017		2016					2017			2016				2020	Dollar Change			Percent Change		2019						Dollar Change			Percent Change
	(Dollars in Thousands)																				(Dollars in Thousands)
Compensation and employee benefits	$	21,067	$	20,369	Dollar Change		$	698	Percent Change			3.4	%	$	61,761	$	58,179		$	3,582			6.2	%	$	25,219	$	23,743		$	1,476	6.2	%
Occupancy	3,650		3,411		239				7.0	%	10,952			10,328		624			6.0	%	3,953				3,947		6			0.2	%
Equipment and data processing	4,210		3,826		384				10.0	%	12,437			11,468		969			8.4	%	4,703				4,661		42			0.9	%
Professional services	973		997		(24		)		-2.4	%	3,115			2,925		190			6.5	%	1,651				1,076		575			53.4	%
FDIC insurance	842		956		(114		)		-11.9	%	2,648			2,677		(29		)	-1.1	%	378				593		(215		)	(36.3	)%
Advertising and marketing	839		844		(5		)		-0.6	%	2,513			2,558		(45		)	-1.8	%	1,075				1,069		6			0.6	%
Amortization of identified intangible assets	519		623		(104		)		-16.7	%	1,570			1,879		(309		)	-16.4	%	336				402		(66		)	(16.4	)%
Merger and acquisition expense	205		—		205				100.0	%	205			—		205			100.0	%
Other	3,103		2,362		741				31.4	%	8,758			7,707		1,051			13.6	%	3,433				3,380		53			1.6	%
Total non-interest expense	$	35,408	$	33,388	$	2,020			6.1	%	$	103,959		$	97,721	$	6,238		6.4	%	$	40,748			$	38,871	$	1,877		4.8	%

For the three months ended ~~September 30, 2017,~~March 31, 2020, non-interest expense increased ~~$2.0~~$1.9 million, or ~~6.1%~~4.8%, to ~~$35.4~~$40.7 million as compared to $38.9 million for the same period in ~~2016. This~~2019. The increase is ~~primarily~~ due to a ~~$0.7~~$1.5 million increase in compensation and employee benefits expense, and a ~~$0.4~~$0.6 million increase in ~~equipment and data processing expense, and~~professional services, partially offset by a ~~$0.7~~decrease of $0.2 million ~~increase~~ in ~~other expense.~~

For the nine months ended September 30, 2017, non-interest expense increased $6.2 million, or 6.4%, to $104.0 million as compared to the same period in 2016. This increase is primarily due to a $3.6 million increase in compensation and employee benefits expense, a $1.0 million increase in equipment and data processing expense, and a $1.1 million increase in other expense.

The efficiency ratio decreased to 56.37% for the three months ended September 30, 2017 from 57.89% for the same period in 2016 and decreased to 54.18% for the nine months ended September 30, 2017 from 57.82% for the same period in 2016. Efforts to drive revenue growth contributed to the overall improvement in the efficiency ratio, along with an $11.4 million gain on sales of investment securities in the first quarter of 2017.FDIC insurance.

Compensation and employee benefits expense increased ~~$0.7~~$1.5 million, or ~~3.4%~~6.2%, to ~~$21.1~~$25.2 million for the three months ended ~~September 30, 2017,~~March 31, 2020 from ~~$20.4~~$23.7 million for the same period in ~~2016~~2019, primarily driven by increases in employee headcount. annual salary increases, and health care benefits.

Professional services expense increased ~~$3.6~~$0.6 million, or ~~6.2%~~53.4%, to ~~$61.8~~$1.7 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 from ~~$58.2~~$1.1 million for the same period in ~~2016. This increase was~~2019, primarily driven by ~~an increase in employee headcount and incentive plan expenses.~~higher professional services fees related to the CECL implementation.

~~Equipment and data processing~~FDIC insurance expense ~~increased $0.4~~decreased $0.2 million, or ~~10.0%~~36.3%, to ~~$4.2~~$0.4 million for the three months ended ~~September 30, 2017~~March 31, 2020 from ~~$3.8~~$0.6 million for the same period in ~~2016 and increased $1.0 million, or 8.4%, to $12.4 million for the nine months ended September 30, 2017 from $11.5 million for the same period in 2016. This increase was~~2019, primarily driven by bank assessment credits from the FDIC.

Provision for Income Taxes



	Three Months Ended March 31,						Dollar Change			Percent Change
	2020			2019			Dollar Change			Percent Change
	(Dollars in Thousands)
Income before provision for income taxes	$	(23,822	)	$	29,405		$	(53,227	)	(181.0	)%
Provision for income taxes	(6,546		)	6,895			(13,441		)	(194.9	)%
Net (loss) income, before non-controlling interest in subsidiary	$	(17,276	)	$	22,510		$	(39,786	)	(176.7	)%
Effective tax rate	27.5		%	23.4		%	N/A			17.5	%

The Company recorded an ~~increase related to core processing, software licenses, and loan processing expense.~~

~~Other expense increased $0.7 million, or 31.4%, to $3.1~~income tax benefit of $6.5 million for the three months ended ~~September 30, 2017 from $2.4 million for the same period in 2016 and increased $1.1 million, or 13.6%,~~March 31, 2020, compared to ~~$8.8 million for the nine months ended September 30, 2017 from $7.7 million for the same period in 2016. This increase was primarily driven by~~ an ~~increase related to loan expenses.~~

~~Provision for Income Taxes~~

Three Months Ended September 30,
Dollar
Change

Percent
Change
Nine Months Ended September 30,
Dollar
Change

Percent
Change
2017
2016 2017 2016
(Dollars in Thousands)
Income before provision for income taxes $ 24,497
$ 22,076
$ 2,421
11.0 % $ 70,737
$ 64,154
$ 6,583
10.3 %
Provision for income taxes 8,330
7,804
526
6.7 % 24,924
22,868
2,056
9.0 %
Net income, before non-controlling interest in subsidiary $ 16,167
$ 14,272
$ 1,895
13.3 % $ 45,813
$ 41,286
$ 4,527
11.0 %
Effective tax rate 34.0 % 35.4 % N/A
-4.0 % 35.2 % 35.6 % N/A
-1.1 %

~~The Company recorded~~ income tax expense of ~~$8.3~~$6.9 million for the three months ended ~~September 30, 2017, compared to $7.8 million~~March 31, 2019, representing effective tax rates of 27.5% and 23.4%, respectively.

The changes in the Company's effective tax rate for the three months ended ~~September 30, 2016, representing effective~~March 31, 2020 and 2019 was primarily driven by the tax ~~rates~~benefit recognized by the Company's decision to amend its Brookline Bank and First Commons Bank tax returns. The CARES Act, allows net operating losses generated in tax years 2018-2020 to be carried back five years with an immediate refund of ~~34.0%~~taxes paid. The tax benefit for the Company is the difference between the 21% current tax rate and ~~35.4%, respectively.~~

the 34% tax rate seen in the carryback year. The Company ~~recorded income~~is amending the 2018 tax ~~expense~~returns to take advantage of ~~$24.9 million for the nine months ended September 30, 2017, compared to $22.9 million for the nine months ended September 30, 2016, representing effective tax rates of 35.2% and 35.6%, respectively.~~this change.

~~The decrease in the effective tax rates for the three and nine months ended September 30, 2017 was due to the adoption of ASU 2016-09. T~~his ASU requires that the excess tax benefit associated with stock compensation transactions be recorded through earnings as a discrete item within the Company's effective tax rate during the period of the transaction. The prior guidance required the recognition of the excess tax benefit through additional paid in capital. The majority of the Company's stock based compensation events occur in the third quarter. Refer also to Note 9, "Stock Based Compensation."

During the third quarter of 2017, the Company was notified by the Internal Revenue Service (IRS) of its intent to examine the Company's 2015 consolidated federal income tax return. Management believes that this examination will conclude during the next 12 months.

Liquidity and Capital Resources

Liquidity

Liquidity is defined as the ability to meet current and future financial obligations of a short-term nature. The Company further defines liquidity as the ability to respond to the needs of depositors and borrowers, as well as to earnings enhancement opportunities, in a changing marketplace. Liquidity management is monitored by an Asset/Liability Committee ("ALCO"), consisting of members of management, which is responsible for establishing and monitoring liquidity targets as well as strategies and tactics to meet these targets.

The primary source of funds for the payment of dividends and expenses by the Company is dividends paid to it by the Banks and Brookline Securities Corp. The primary sources of liquidity for the Banks consist of deposit inflows, loan repayments, borrowed funds, and maturing investment securities.

Management has reacted strategically to the COVID-19 pandemic and enhanced the liquidity positioning of the Company's balance sheet. The Company continues to execute on a contingent liquidity plan for a severely adverse operating environment. The most visible result of this plan is an increase to balance sheet liquidity in the form of excess cash and highly liquid securities. This increase of cash and securities is to meet customer borrowing needs, serve for unexpected deposit outflows and provide a buffer against a disruption in cash flows due to deferred payments of principal and interest from the loan portfolio.

Management has strategically enhanced the amount of balance sheet liquidity in the form of cash and investment securities available for sale since the start of the COVID-19 pandemic crisis. Cash and equivalents at the end of the quarter were $340.8 million, or 4.0% of the balance sheet, this compares to $77.8 million, or 1.0% of the balance sheet, as of December 31, 2019. Management also restructured the composition of the investment portfolio which resulted in an increase in highly liquid securities of $175.0 million quarter over quarter. In general, during a normal operating environment, the Company seeks to maintain liquidity and targets cash, cash equivalents and investment securities available-for-sale balances of between 5% and 10% of total assets. Due to the nature of the current challenging operating environment, that target operating range is between 10% and 15%. As of March 31, 2020, cash, cash equivalents and investment securities available-for-sale totaled $1.1 billion, or 13.0% of total assets. This compares to $576.8 million, or 7.3% of total assets, as of December 31, 2019.

Deposits, which are considered the most stable source of liquidity, totaled ~~$4.8~~$5.9 billion as of ~~September 30, 2017~~March 31, 2020 and represented ~~83.0%~~82.0% of total funding (the sum of total deposits and total borrowings), compared to deposits of ~~$4.6~~$5.8 billion, or ~~81.5%~~86.6% of total funding, as of December 31, ~~2016.~~2019. Core deposits, which consist of demand checking, NOW, savings and money market accounts, totaled ~~$3.6~~$3.9 billion as of ~~September 30, 2017~~March 31, 2020 and represented ~~75.7%~~65.6% of total deposits, compared to core deposits of ~~$3.6~~$3.8 billion, or ~~77.4%~~65.3% of total deposits, as of December 31, ~~2016.~~2019. Additionally, the Company had ~~$260.8~~$354.1 million of brokered deposits as of ~~September 30, 2017,~~March 31, 2020, which represented ~~5.4%~~6.0% of total deposits, compared to ~~$203.4~~$349.9 million or ~~4.4%~~6.0% of total deposits, as of December 31, ~~2016.~~2019. The Company offers attractive interest rates based on market conditions to increase deposits balances, while managing cost of funds.

Borrowings are used to diversify the Company's funding mix and to support asset growth. When profitable lending and investment opportunities exist, access to borrowings provides a means to grow the balance sheet. Borrowings totaled ~~$1.0~~$1.3 billion as of ~~September 30, 2017,~~March 31, 2020, representing ~~17.0%~~18.0% of total funding, compared to ~~$1.0 billion,~~$902.7 million, or ~~18.5%~~13.4% of total funding, as of December 31, ~~2016.~~2019.

As members of the FHLBB, the Banks have access to both short- and long-term borrowings. As of ~~September 30, 2017 and December~~March 31, ~~2016,~~2020, the Company's total borrowing limit from the FHLBB for advances and repurchase agreements was ~~$1.5~~$2.1 billion, compared to $2.1 billion as of December 31, 2019, based on the level of qualifying collateral available for these borrowings.

As of ~~September 30, 2017,~~March 31, 2020, the Banks also have access to funding through certain uncommitted lines of credit of ~~$204.0~~$568.0 million.

The Company had a $12.0 million committed line of credit for contingent liquidity as of ~~September 30, 2017.~~March 31, 2020. As of ~~September 30, 2017,~~March 31, 2020, the Company ~~did not have any~~had $5 million outstanding of borrowings on this committed line of credit outstanding.

The Company has access to the Federal Reserve Bank of Boston's "discount window" to supplement its liquidity. The Company has ~~$86.9~~$109.0 million of borrowing capacity at the Federal Reserve Bank as of ~~September 30, 2017.~~March 31, 2020. As of ~~September 30, 2017,~~March 31, 2020, the Company did not have any outstanding borrowings with the Federal Reserve ~~Bank outstanding.~~Bank.

Additionally, the Banks have access to liquidity through repurchase agreements and additional untapped brokered deposits.

In general, the Company seeks to maintain a high degree of liquidity and targets cash, cash equivalents and investment securities available-for-sale balances of between 10% and 30% of total assets. As of September 30, 2017, cash, cash equivalents and investment securities available-for-sale totaled $586.3 million, or 8.8% of total assets. This compares to $591.3 million, or 9.2% of total assets as of December 31, 2016.

While management believes that the Company has adequate liquidity to meet its commitments and to fund the Banks' lending and investment activities, the availabilities of these funding sources are subject to broad economic conditions and could be restricted in the future. Such restrictions would impact the Company's immediate liquidity and/or additional liquidity needs.

Off-Balance-Sheet Financial Instruments

The Company is party to off-balance-sheet financial instruments in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include loan commitments, standby and commercial letters of credit and interest-rate swaps. According to GAAP, these financial instruments are not recorded in the financial statements until they are funded or related fees are incurred or received.

The contract amounts reflect the extent of the involvement the Company has in particular classes of these instruments. Such commitments involve, to varying degrees, elements of credit risk and interest-rate risk in excess of the amount recognized in the consolidated balance sheet. The Company’s exposure to credit loss in the event of non-performance by the counterparty is represented by the contractual amount of the instruments. The Company uses the same policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Financial instruments with off-balance-sheet risk at the dates indicated follow:

At September 30, 2017 At December 31, 2016
(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate $ 95,484
$ 27,750
Commercial 89,036
71,716
Residential mortgage 19,672
28,179
Unadvanced portion of loans and leases 526,532
580,416
Unused lines of credit:
Home equity 383,973
340,682
Other consumer 14,119
13,157
Other commercial 306
208
Unused letters of credit:
Financial standby letters of credit 11,270
11,720
Performance standby letters of credit 668
516
Commercial and similar letters of credit 855
785
Loan level derivatives:
Receive fixed, pay variable 465,470
383,780
Pay fixed, receive variable 465,470
383,780
Risk participation-out agreements 28,858
16,961
Risk participation-in agreements 3,825
—
Foreign exchange contracts:
Buys foreign currency, sells U.S. currency 1,200
195
Sells foreign currency, buys U.S. currency 1,208
195

~~As of December 31, 2016, the Company held no risk participation-in agreements.~~



	At March 31, 2020		At December 31, 2019
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	40,933	$	50,034
Commercial	93,724		78,058
Residential mortgage	52,930		25,998
Unadvanced portion of loans and leases	713,352		808,681
Unused lines of credit:
Home equity	537,313		528,251
Other consumer	25,362		25,374
Other commercial	406		380
Unused letters of credit:
Financial standby letters of credit	11,094		10,166
Performance standby letters of credit	6,107		4,652
Commercial and similar letters of credit	3,823		3,823
Loan level derivatives:
Receive fixed, pay variable	1,231,096		1,101,193
Pay fixed, receive variable	1,231,096		1,101,193
Risk participation-out agreements	233,846		235,693
Risk participation-in agreements	49,279		55,281
Foreign exchange contracts:
Buys foreign currency, sells U.S. currency	1,422		1,125
Sells foreign currency, buys U.S. currency	1,530		1,230

Capital Resources

As of ~~September 30, 2017,~~March 31, 2020, the Company and the Banks are each under the primary regulation of, and must comply with, the capital requirements of the FRB. Under these rules, the Company and the Banks are each required to maintain a minimum common equity Tier 1 capital ratio of 4.5%, a minimum Tier 1 capital leverage ratio of 6.0%, a minimum total risk based capital ratio of 8% and a minimum Tier 1 leverage ratio of 4%. Additionally, the Company and the Banks are required to establish a capital conservation buffer of common equity Tier 1 capital in an amount above the minimum risk-based capital requirements for “adequately capitalized” institutions equal to 2.5% of total risk weighted assets, or face restrictions on the ability to pay dividends, pay discretionary bonuses, and to engage in share repurchases. As of ~~September 30, 2017,~~March 31, 2020, the Company and the Banks exceeded all regulatory capital requirements, and the Banks were each considered “well-capitalized” under prompt corrective action ~~regulations, as amended to reflect the changes under Basel III Capital Rules.~~ regulations.

The following table presents actual and required capital amounts and capital ratios as of ~~September 30, 2017~~March 31, 2020 for the Company and the Banks under the Basel III Capital Rules based on the phase-in provision of the Basel III Capital Rules and the minimum required capital levels as of January 1, 2019 when the Basel III Capital Rules have been fully phased in.Banks.

~~The Company's and the Banks' actual and required capital amounts and ratios were as follows:~~


	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer				Minimum Required to be Considered “Well-Capitalized” Under Prompt Corrective Action Provisions				Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer				Minimum Required to be Considered “Well-Capitalized” Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)																(Dollars in Thousands)
At September 30, 2017:
At March 31, 2020:
Brookline Bancorp, Inc.
Common equity Tier 1 capital ratio ⁽¹⁾	$	666,819	12.07	%	$	248,607	4.50	%	$	386,722	7.00	%	N/A		N/A		$	733,661	10.42	%	$	316,840	4.50	%	$	492,862	7.00	%	N/A		N/A
Tier 1 leverage capital ratio ⁽²⁾	683,868		10.45	%	261,768		4.00	%	261,768		4.00	%	N/A		N/A		743,240		9.54	%	311,631		4.00	%	311,631		4.00	%	N/A		N/A
Tier 1 risk-based capital ratio ⁽³⁾	683,868		12.38	%	331,438		6.00	%	469,538		8.50	%	N/A		N/A		743,240		10.55	%	422,696		6.00	%	598,819		8.50	%	N/A		N/A
Total risk-based capital ratio ⁽⁴⁾	824,622		14.92	%	442,157		8.00	%	580,330		10.50	%	N/A		N/A		905,842		12.86	%	563,510		8.00	%	739,607		10.50	%	N/A		N/A
Brookline Bank
Common equity Tier 1 capital ratio ⁽¹⁾	$	407,604	11.58	%	$	158,395	4.50	%	$	246,393	7.00	%	$	228,793	6.50	%	$	539,269	11.01	%	$	220,410	4.50	%	$	342,859	7.00	%	$	318,370	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	415,378		10.21	%	162,734		4.00	%	162,734		4.00	%	203,417		5.00	%	539,269		9.98	%	216,140		4.00	%	216,140		4.00	%	270,175		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	415,378		11.80	%	211,209		6.00	%	299,213		8.50	%	281,612		8.00	%	539,269		11.01	%	293,880		6.00	%	416,329		8.50	%	391,839		8.00	%
Total risk-based capital ratio ⁽⁴⁾	459,389		13.05	%	281,618		8.00	%	369,623		10.50	%	352,022		10.00	%	600,829		12.27	%	391,739		8.00	%	514,157		10.50	%	489,673		10.00	%
BankRI
Common equity Tier 1 capital ratio ⁽¹⁾	$	191,682	11.25	%	$	76,673	4.50	%	$	119,269	7.00	%	$	110,750	6.50	%	$	229,379	10.69	%	$	96,558	4.50	%	$	150,201	7.00	%	$	139,473	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	191,682		9.15	%	83,795		4.00	%	83,795		4.00	%	104,744		5.00	%	229,379		9.35	%	98,130		4.00	%	98,130		4.00	%	122,663		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	191,682		11.25	%	102,230		6.00	%	144,826		8.50	%	136,307		8.00	%	229,379		10.69	%	128,744		6.00	%	182,387		8.50	%	171,659		8.00	%
Total risk-based capital ratio ⁽⁴⁾	210,241		12.34	%	136,299		8.00	%	178,892		10.50	%	170,374		10.00	%	256,360		11.95	%	171,622		8.00	%	225,254		10.50	%	214,527		10.00	%
First Ipswich
Common equity Tier 1 capital ratio ⁽¹⁾	$	32,681	11.41	%	$	12,889	4.50	%	$	20,050	7.00	%	$	18,618	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	32,681		8.43	%	15,507		4.00	%	15,507		4.00	%	19,384		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	32,681		11.41	%	17,185		6.00	%	24,346		8.50	%	22,914		8.00	%
Total risk-based capital ratio ⁽⁴⁾	36,270		12.66	%	22,919		8.00	%	30,082		10.50	%	28,649		10.00	%

(1) Common equity Tier 1 capital ratio is calculated by dividing common equity Tier 1 capital by risk-weighted assets. ~~The ratio was established as part of the implementation of Basel III, effective January 1, 2015.~~

(2) Tier 1 leverage capital ratio is calculated by dividing Tier 1 capital by average assets.

(3) Tier 1 risk-based capital ratio is calculated by dividing Tier 1 capital by risk-weighted assets.

(4) Total risk-based capital ratio is calculated by dividing total capital by risk-weighted assets.

The following table presents actual and required capital amounts and capital ratios as of December 31, ~~2016~~2019 for the Company and the ~~Banks under the regulatory capital rules then in effect.~~Banks.


	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer				Minimum Required To Be Considered “Well-Capitalized” Under Prompt Corrective Action Provisions				Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer				Minimum Required To Be Considered “Well-Capitalized” Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)																(Dollars in Thousands)
At December 31, 2016:
At December 31, 2019:
Brookline Bancorp, Inc.
Common equity Tier 1 capital ratio ⁽¹⁾	$	559,644	10.48	%	$	240,305	4.50	%	$	373,808	7.00	%	N/A		N/A		$	780,962	11.44	%	$	307,197	4.50	%	$	477,861	7.00	%	N/A		N/A
Tier 1 leverage capital ratio ⁽²⁾	575,830		9.16	%	251,454		4.00	%	251,454		4.00	%	N/A		N/A		790,527		10.28	%	307,598		4.00	%	307,598		4.00	%	N/A		N/A
Tier 1 risk-based capital ratio ⁽³⁾	575,830		10.79	%	320,202		6.00	%	453,620		8.50	%	N/A		N/A		790,527		11.58	%	409,599		6.00	%	580,266		8.50	%	N/A		N/A
Total risk-based capital ratio ⁽⁴⁾	704,675		13.20	%	427,076		8.00	%	560,537		10.50	%	N/A		N/A		927,515		13.59	%	545,999		8.00	%	716,623		10.50	%	N/A		N/A
Brookline Bank
Common equity Tier 1 capital ratio ⁽¹⁾	$	384,759	11.31	%	$	153,087	4.50	%	$	238,136	7.00	%	$	221,126	6.50	%	$	513,311	11.44	%	$	201,914	4.50	%	$	314,089	7.00	%	$	291,654	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	391,964		10.07	%	155,696		4.00	%	155,696		4.00	%	194,620		5.00	%	513,311		10.42	%	197,048		4.00	%	197,048		4.00	%	246,310		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	391,964		11.53	%	203,971		6.00	%	288,959		8.50	%	271,961		8.00	%	513,311		11.44	%	269,219		6.00	%	381,394		8.50	%	358,959		8.00	%
Total risk-based capital ratio ⁽⁴⁾	428,966		12.61	%	272,143		8.00	%	357,188		10.50	%	340,179		10.00	%	555,474		12.38	%	358,949		8.00	%	471,121		10.50	%	448,687		10.00	%
BankRI
Common equity Tier 1 capital ratio ⁽¹⁾	$	182,202	10.94	%	$	74,946	4.50	%	$	116,583	7.00	%	$	108,255	6.50	%	$	240,362	11.75	%	$	92,054	4.50	%	$	143,194	7.00	%	$	132,966	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	182,202		8.97	%	81,249		4.00	%	81,249		4.00	%	101,562		5.00	%	240,362		9.97	%	96,434		4.00	%	96,434		4.00	%	120,543		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	182,202		10.94	%	99,928		6.00	%	141,565		8.50	%	133,237		8.00	%	240,362		11.75	%	122,738		6.00	%	173,879		8.50	%	163,651		8.00	%
Total risk-based capital ratio ⁽⁴⁾	197,702		11.87	%	133,245		8.00	%	174,884		10.50	%	166,556		10.00	%	258,719		12.65	%	163,617		8.00	%	214,747		10.50	%	204,521		10.00	%
First Ipswich
Common equity Tier 1 capital ratio ⁽¹⁾	$	33,433	12.61	%	$	11,931	4.50	%	$	18,559	7.00	%	$	17,234	6.50	%	$	41,320	13.45	%	$	13,825	4.50	%	$	21,505	7.00	%	$	19,969	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	33,433		9.23	%	14,489		4.00	%	14,489		4.00	%	18,111		5.00	%	41,320		8.80	%	18,782		4.00	%	18,782		4.00	%	23,477		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	33,433		12.61	%	15,908		6.00	%	22,536		8.50	%	21,210		8.00	%	41,320		13.45	%	18,433		6.00	%	26,113		8.50	%	24,577		8.00	%
Total risk-based capital ratio ⁽⁴⁾	36,053		13.60	%	21,208		8.00	%	27,835		10.50	%	26,510		10.00	%	43,762		14.24	%	24,585		8.00	%	32,268		10.50	%	30,732		10.00	%

(2) Tier 1 leverage capital ratio is calculated by dividing Tier 1 capital by average assets.

(3) Tier 1 risk-based capital ratio is calculated by dividing Tier 1 capital by risk-weighted assets.

(4) Total risk-based capital ratio is calculated by dividing total capital by risk-weighted assets.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Market risk is the risk that the market value or estimated fair value of the Company's assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that the Company's net income will be significantly reduced by interest-rate changes.

Interest-Rate Risk

The principal market risk facing the Company is interest-rate risk, which can occur in a variety of forms, including repricing risk, yield-curve risk, basis risk, and prepayment risk. Repricing risk occurs when the change in the average yield of either interest-earning assets or interest-bearing liabilities is more sensitive than the other to changes in market interest rates. Such a change in sensitivity could reflect a number of possible mismatches in the repricing opportunities of the Company's assets and liabilities. Yield-curve risk reflects the possibility that changes in the shape of the yield curve could have different effects on the Company's assets and liabilities. Basis risk occurs when different parts of the balance sheet are subject to varying base rates reflecting the possibility that the spread from those base rates will deviate. Prepayment risk is associated with financial instruments with an option to prepay before the stated maturity, often a disadvantage to person selling the option; this risk is most often associated with the prepayment of loans, callable investments, and callable borrowings.

Asset/Liability Management

Market risk and interest-rate risk management is governed by the Company's ~~Asset/Liability Committee ("ALCO").~~ALCO. The ALCO establishes exposure limits that define the Company's tolerance for interest-rate risk. The ALCO and the Company's Treasury Group measure and manage the composition of the balance sheet over a range of possible changes in interest rates while remaining responsive to market demand for loan and deposit products. The ALCO monitors current exposures versus limits and reports those results to the Board of Directors. The policy limits and guidelines serve as benchmarks for measuring interest-rate risk and for providing a framework for evaluation and interest-rate risk-management decision-making. The Company measures its interest-rate risk by using an asset/liability simulation model. The model considers several factors to determine the Company's potential exposure to interest-rate risk, including measurement of repricing gaps, duration, convexity, value-at-risk, market value of portfolio equity under assumed changes in the level of interest rates, the shape of yield curves, and general market volatility.

Management controls the Company's interest-rate exposure using several strategies, which include adjusting the maturities of securities in the Company's investment portfolio, limiting or expanding the terms of loans originated, limiting fixed-rate deposits with terms of more than five years, and adjusting maturities of FHLBB advances. The Company limits this risk by restricting the types of MBSs it invests ~~in to~~into those with limited average life changes under certain interest-rate-shock scenarios, or securities with embedded prepayment penalties. The Company also places limits on holdings of fixed-rate mortgage loans with maturities greater than five years. The Company may also use derivative instruments, principally interest-rate swaps, to manage its interest-rate risk; however, the Company had no derivative fair value hedges or derivative cash flows hedges as of ~~September 30, 2017~~March 31, 2020 or December 31, ~~2016.~~2019. See Note 8, “Derivatives and Hedging Activities,” to the unaudited consolidated financial statements.

Measuring Interest-Rate Risk

As noted above, interest-rate risk can be measured by analyzing the extent to which the repricing of assets and liabilities are mismatched to create an interest-rate sensitivity gap. An asset or liability is said to be interest-rate sensitive within a specific period if it will mature or reprice within that period. The interest-rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest-rate-sensitive assets exceeds the amount of interest-rate-sensitive liabilities. A gap is considered negative when the amount of interest-rate-sensitive liabilities exceeds the amount of interest-rate-sensitive assets. During a period of falling interest rates, therefore, a positive gap would tend to adversely affect net interest income. Conversely, during a period of rising interest rates, a positive gap position would tend to result in an increase in net interest income.

The Company's interest-rate risk position is measured using both income simulation and interest-rate sensitivity "gap" analysis. Income simulation is the primary tool for measuring the interest-rate risk inherent in the Company's balance sheet at a given point in time by showing the effect on net interest income, over a twelve-month period, of a variety of interest-rate shocks. These simulations take into account repricing, maturity, and prepayment characteristics of individual products. The ALCO reviews simulation results to determine whether exposure resulting from changes in market interest rates remains within

established tolerance levels over a twelve-month horizon, and develops appropriate strategies to manage this exposure. The Company's interest-rate risk analysis remains modestly asset-sensitive as of ~~September 30, 2017.~~March 31, 2020.

The assumptions used in the Company’s interest-rate sensitivity simulation discussed above are inherently uncertain and, as a result, the simulations cannot precisely measure net interest income or precisely predict the impact of changes in interest rates.

As of ~~September 30, 2017,~~March 31, 2020, net interest income simulation indicated that the Company's exposure to changing interest rates was within tolerance. The ALCO reviews the methodology utilized for calculating interest-rate risk exposure and may periodically adopt modifications to this methodology. The following table presents the estimated impact of interest-rate changes on the Company's estimated net interest income over the twelve-month periods indicated:

Estimated Exposure to Net Interest Income
over Twelve-Month Horizon Beginning
September 30, 2017 December 31, 2016
Gradual Change in Interest Rate Levels
Dollar
Change

Percent
Change
Dollar
Change Percent
Change
(Dollars in Thousands)
Up 300 basis points $ 11,110
4.9 % $ 6,403
3.0 %
Up 200 basis points 7,740
3.4 % 4,420
2.1 %
Up 100 basis points 4,063
1.8 % 2,288
1.1 %
Down 100 basis points (10,141 ) -4.4 % (5,196 ) -2.5 %



	Estimated Exposure to Net Interest Income over Twelve-Month Horizon Beginning
	March 31, 2020					December 31, 2019
Change in Interest Rate Levels	Dollar Change			Percent Change		Dollar Change			Percent Change
	(Dollars in Thousands)
Up 300 basis points shock	$	37,621		14.3	%	$	29,795		11.5	%
Up 200 basis points ramp	14,499			5.5	%	12,478			4.8	%
Up 100 basis points ramp	6,995			2.7	%	6,265			2.4	%
Down 100 basis points ramp	(11,259		)	(4.3	)%	(11,100		)	(4.3	)%

The estimated impact of a 300 basis point increase in market interest rates on the Company's estimated net interest income over a twelve-month horizon was a positive ~~4.9%~~14.3% as of ~~September 30, 2017,~~March 31, 2020, compared to a positive ~~3.0%~~11.5% as of December 31, ~~2016, the~~2019. The increase in asset sensitivity was due to ~~a change~~an increase in ~~the funding mix, as core deposits and issued common stock funded balance sheet growth.~~

short term liquidity positions.

The Company also uses interest-rate sensitivity “gap” analysis to provide a more general overview of its interest-rate risk profile. The interest-rate sensitivity gap is defined as the difference between interest-earning assets and interest-bearing

liabilities maturing or repricing within a given time period. At ~~September 30, 2017,~~March 31, 2020, the Company’s one-year cumulative gap was a negative ~~$55.6~~$73.2 million, or ~~0.9%~~0.93% of total interest-earning assets, compared with a ~~negative $275.3~~positive $4.7 million, or ~~4.56%~~0.06% of total interest-earning assets, at December 31, ~~2016.~~

2019.

The assumptions used in the Company's interest-rate sensitivity simulation discussed above are inherently uncertain and, as a result, the simulations cannot precisely measure net interest income or precisely predict the impact of changes in interest rates. For additional discussion on interest-rate risk see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” of the Company’s ~~2016~~2019 Annual Report on Form 10-K.

Economic Value of Equity ("EVE") at Risk Simulation is conducted in tandem with net interest income simulations to ascertain a longer term view of the Company’s interest-rate risk position by capturing longer-term repricing risk and options risk embedded in the balance sheet. It measures the sensitivity of the economic value of equity to changes in interest rates. The EVE at Risk Simulation values only the current balance sheet and does not incorporate growth assumptions. As with the net interest income simulation, this simulation captures product characteristics such as loan resets, repricing terms, maturity dates, and rate caps and floors. Key assumptions include loan prepayment speeds, deposit pricing elasticity, and non-maturity deposit attrition rates. These assumptions can have significant impacts on valuation results as the assumptions remain in effect for the entire life of each asset and liability. The Company conducts non-maturity deposit behavior studies on a periodic basis to support deposit assumptions used in the valuation process. All key assumptions are subject to a periodic review.

EVE at Risk is calculated by estimating the net present value of all future cash flows from existing assets and liabilities using current interest rates as well as parallel shocks to the current interest-rate environment. The following table sets forth the estimated percentage change in the Company’s EVE at Risk, assuming various shifts in interest rates. Given the interest rate environment as of ~~September 30, 2017,~~March 31, 2020, simulations for interest rate declines of more than 100 basis points were not deemed to be meaningful.


	Estimated Percent Change in Economic Value of Equity				Estimated Percent Change in Economic Value of Equity
Parallel Shock in Interest Rate Levels	At September 30, 2017		At December 31, 2016		At March 31, 2020		At December 31, 2019
Up 300 basis points	2.5	%	-4.6	%	1.2	%	6.0	%
Up 200 basis points	1.6	%	-4.4	%	(0.4	)%	5.1	%
Up 100 basis points	1.5	%	-1.6	%	(1.5	)%	3.3	%
Down 100 basis points	-9.1	%	-6.4	%	(11.4	)%	(7.2	)%

The Company's EVE sensitivity ~~for Up shock scenarios moved~~decreased from ~~a negative outcome at~~ December 31, ~~2016~~2019 to ~~a positive outcome at September 30, 2017~~March 31, 2020 due to the ~~issuance of common stock which replaced short wholesale funding as well as the~~lengthened duration of ~~assets shortened due to increased prepayments driven~~the loan and investment portfolios offset by ~~lower, long~~a larger short term ~~rates.~~liquidity position.

Item 4. Controls and Procedures

Controls and Procedures

Under the supervision and with the participation of the Company’s ~~Management,~~management, including the Company’s Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), the Company has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer considered that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s ~~Management,~~management, including its Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~There has been~~Effective January 1, 2020, the Company adopted ASU 2016-13. The Company implemented changes to its policies, processes, and controls over the allowance for credit losses methodology to support the adoption of ASU 2016-13. Many controls over this new accounting methodology mirror controls under the prior GAAP methodology. New controls were established, such as model validation done by an independent third-party and input review of econometric and other factors utilized in estimating the allowance. Except as related to the adoption of ASU 2016-13, there were no ~~change~~changes in the Company’s internal control over financial reporting identified in connection with the quarterly evaluation that occurred during the Company’s last fiscal quarter that has materially and detrimentally affected, or is reasonably likely to materially and detrimentally affect, the Company’s internal controls over financial reporting during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company’s ~~Management~~management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a -15(f). The Company’s internal control system was designed to provide reasonable assurance to its ~~Management~~management and the Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The Company’s ~~Management~~management assessed the effectiveness of its internal control over financial reporting as of the end of the period covered by this report.

Management’s Report on Internal Control Over Financial Reporting as of December 31, ~~2016~~2019 and the related Report of Independent Registered Public Accounting Firm thereon appear on pages F-1 and F-2 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings other than those that arise in the normal course of business. In the opinion of Management, after consulting with legal counsel, the consolidated financial position and results of operations of the Company are not expected to be affected materially by the outcome of such proceedings.

Item 1A. Risk Factors

~~There have been no material changes~~In addition to the ~~risk factors disclosed~~"Risk Factors" in Part I, Item 1A of the ~~Company’s~~Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019, please refer to the risk factors under Item 8.01. "Other Matters", in the Current Report on Form 8-K filed with the SEC on May 11, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a) Not applicable.

b) Not applicable.

c) ~~None.~~On December 4, 2019, the Board approved a stock repurchase program authorizing management to repurchase up to $10.0 million of the Company’s common stock. On March 9, 2020, the Board approved an increase to the stock repurchase program from $10.0 million to $20.0 million of its total outstanding shares of common stock. The stock repurchase program expires on December 31, 2020. On March 23, 2020, the Company suspended its stock repurchase program, effective as of March 24, 2020. During the quarter ended March 31, 2020, the Company repurchased $10.4 million, with a remaining $9.6 million to be repurchased.

Issuer Purchases of Equity Securities

Period

(a) Total number

of shares

purchased

(b) Average

price paid

per share

of shares

purchased as

part of publicly

announced plans

(d) Maximum

approximate dollar

value of shares that

may yet be purchased

under the plans

January 1- March 31, 2020

848,319

12.27

848,319

—

Item 3. Defaults Upon Senior Securities

a) None.

b) None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibits



Exhibit ~~2.1~~		Agreement and Plan of Merger dated as of September 20, 2017 by and among Brookline Bancorp, Inc., Brookline Bank, and First Commons Bank, N.A. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 21, 2017)

~~Exhibit 10.1~~		~~Form of Voting Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 21, 2017)~~

~~Exhibit 10.2~~		Consulting Agreement by and between Brookline Bank and Anthony G. Nuzzo dated September 20, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 21, 2017)

~~Exhibit~~ 31.1*		Certification of Chief Executive Officer

Exhibit 31.2*		Certification of Chief Financial Officer

Exhibit 32.1**		Section 1350 Certification of Chief Executive Officer

Exhibit 32.2**		Section 1350 Certification of Chief Financial Officer

~~Exhibit 101~~101.INS		~~The following materials from Brookline Bancorp, Inc.’s Quarterly Report on Form 10-Q for~~XBRL Instance Document - the ~~quarter ended September 30, 2017, formatted~~instance document does not appear in the Interactive Data File because its XBRL ~~(eXtensible Business Reporting Language): (1) Unaudited Consolidated Balance Sheets as of September 30, 2017 and September 30, 2016; (2) Unaudited Consolidated Statements of Income for~~tags are embedded within the three and nine months September 30, 2017 and September 30, 2016; (3) Unaudited Consolidated Statements of Comprehensive Income for the three and nine months September 30, 2017 and September 30, 2016; (4) Unaudited Consolidated Statements of Changes in Equity for the nine months ended September 30, 2017 and September 30, 2016; (5) Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and September 30, 2016; and (6) Notes to Unaudited Consolidated Financial Statements at and for the nine months ended September 30, 2017 and September 30, 2016.Inline XBRL document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

** Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	BROOKLINE BANCORP, INC.


Date: ~~November 3, 2017~~May 29, 2020	By:	/s/ Paul A. Perrault
		Paul A. Perrault
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~November 3, 2017~~May 29, 2020	By:	/s/ Carl M. Carlson
		Carl M. Carlson
		Chief Financial Officer
		(Principal Financial Officer)

~~100~~90



	Nine Months Ended September 30, 2017
	(In Thousands)
Sales of marketable and restricted equity securities	$	11,393

Gross gains from sales	11,612
Gross losses from sales	(219		)
Gain on sales of securities, net	$	11,393



	Three Months Ended September 30, 2017
	Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)
Balance at June 30, 2017	$	27,954		$	31,099		$	5,468		$	64,521
Charge-offs	(65		)	(1,965		)	(113		)	(2,143		)
Recoveries	—			109			80			189
Provision for loan and lease losses	979			1,832			35			2,846
Balance at September 30, 2017	$	28,868		$	31,075		$	5,470		$	65,413



	Three Months Ended September 30, 2016
	Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)
Balance at June 30, 2016	$	29,861		$	22,916		$	4,481		$	57,258
Charge-offs	(50		)	(545		)	(244		)	(839		)
Recoveries	—			170			149			319
(Credit) provision for loan and lease losses	(1,755		)	3,923			(14		)	2,154
Balance at September 30, 2016	$	28,056		$	26,464		$	4,372		$	58,892



	Nine Months Ended September 30, 2016
	Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)
Balance at December 31, 2015	$	30,151		$	22,018		$	4,570		$	56,739
Charge-offs	(1,534		)	(3,250		)	(1,254		)	(6,038		)
Recoveries	—			495			605			1,100
(Credit) provision for loan and lease losses	(561		)	7,201			451			7,091
Balance at September 30, 2016	$	28,056		$	26,464		$	4,372		$	58,892



	Nine Months Ended
	September 30, 2017				September 30, 2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	10,200	$	205	$	5,655	$	119
Commercial	24,206		522		16,602		412
Consumer	4,712		44		3,865		55
Total originated with no related allowance recorded	39,118		771		26,122		586
With an allowance recorded:
Commercial real estate	3,377		124		4,957		146
Commercial	20,771		1		13,017		5
Consumer	—		—		165		—
Total originated with an allowance recorded	24,148		125		18,139		151
Total originated impaired loans and leases	63,266		896		44,261		737

Acquired:
With no related allowance recorded:
Commercial real estate	5,009		54		8,341		126
Commercial	2,615		26		4,254		66
Consumer	5,551		52		7,795		51
Total acquired with no related allowance recorded	13,175		132		20,390		243
With an allowance recorded:
Commercial real estate	—		—		1,458		—
Commercial	—		—		486		—
Consumer	169		3		490		6
Total acquired with an allowance recorded	169		3		2,434		6
Total acquired impaired loans and leases	13,344		135		22,824		249

Total impaired loans and leases	$	76,610	$	1,031	$	67,085	$	986



Remainder of 2017	$	519
Year ending:
2018	1,669
2019	1,295
2020	944
2021	601
2022	299
Thereafter	147
Total	$	5,474



	Carrying Value as of December 31, 2016
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Investment securities available-for-sale:
GSE debentures	$	—	$	97,020	$	—	$	97,020
GSE CMOs	—		158,040		—		158,040
GSE MBSs	—		212,915		—		212,915
SBA commercial loan asset-backed securities	—		107		—		107
Corporate debt obligations	—		48,485		—		48,485
U.S. Treasury bonds	—		4,737		—		4,737
Trust preferred securities	—		1,358		—		1,358
Marketable equity securities	972		—		—		972
Total investment securities available-for-sale	$	972	$	522,662	$	—	$	523,634
Loan level derivatives	$	—	$	9,738	$	—	$	9,738
Risk participation-out agreements	—		20		—		20
Liabilities:
Loan level derivatives	$	—	$	9,738	$	—	$	9,738



					Fair Value Measurements
	Carrying Value		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In Thousands)
At September 30, 2017
Financial assets:
Investment securities held-to-maturity:
GSE debentures	$	38,622	$	38,072	$	—	$	38,072	$	—
GSE MBSs	14,788		14,643		—		14,643		—
Municipal obligations	53,828		54,013		—		54,013		—
Foreign government obligations	500		492		—		—		492
Loans held-for-sale	2,973		2,973		—		2,973		—
Loans and leases, net	5,574,027		5,480,446		—		—		5,480,446
Restricted equity securities	62,135		62,135		—		—		62,135
Loan level derivatives	9,975		9,975		—		9,975		—
Risk participation-out agreements	49		49		—		49		—
Foreign exchange contracts	22		22		—		22		—
Financial liabilities:
Certificates of deposit	1,167,329		1,164,618		—		1,164,618		—
Borrowed funds	985,895		967,643		—		967,643		—
Loan level derivatives	9,975		9,975		—		9,975		—
Risk participation-in agreements	14		14		—		14		—
Foreign exchange contracts	14		14		—		14		—



	At and for the Three Months Ended September 30,						At and for the Nine Months Ended September 30,
	2017			2016			2017			2016

Net income, as reported	$	15,366		$	13,617		$	43,691		$	39,083
Adjustments to arrive at operating earnings:
Merger and acquisition-related expenses	205			—			205			—
Tax effect	(70		)	—			(72		)	—
Total adjustments, net of tax	135			—			133			—
Operating earnings	$	15,501		$	13,617		$	43,824		$	39,083

Basic earnings per share, as reported	$	0.20		$	0.19		$	0.59		$	0.56
Adjustments to arrive at basic operating earnings per share:
Merger and acquisition-related expenses	—			—			—			—
Total adjustments per share	—			—			—			—
Basic operating earnings per share	$	0.20		$	0.19		$	0.59		$	0.56

Average total assets	$	6,681,042		$	6,360,097		$	6,567,101		$	6,230,612
Operating return on average assets (annualized)	0.93		%	0.86		%	0.89		%	0.84		%

Average total stockholders’ equity	$	804,666		$	695,205		$	760,447		$	686,134
Operating return on average stockholders’ equity (annualized)	7.71		%	7.83		%	7.68		%	7.59		%