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

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

~~FORM~~
~~10-Q~~

(Mark One)



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

For the quarterly period ended March 31, ~~2020~~2021



☐			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

~~0-23695~~

BROOKLINE BANCORP ~~INC~~.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.)

~~Delaware~~

~~04-3402944~~

~~(State or other jurisdiction of~~

~~incorporation or organization)~~

~~(I.R.S. Employer Identification No.)~~

131 Clarendon Street

Boston

02116

(Address of principal executive offices)

(Zip Code)

(~~617~~) (617) 425-4600

(Registrant’s telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BRKL	Nasdaq Global Select Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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

☒

Accelerated filer

☐

~~Large accelerated filer~~

☒

~~Accelerated filer~~

☐

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller Reporting Company

☐

Emerging growth company

☐

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. ☐

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

At ~~May 29, 2020,~~April 30, 2021, the number of shares of common stock, par value $0.01 per share, outstanding was ~~78,919,276.~~

78,192,589.

~~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

			~~Page~~
~~Part I~~ Item 1.	~~Financial Information~~

~~Item 1.~~	Unaudited Consolidated Financial Statements

		Unaudited Consolidated Balance Sheets at March 31, ~~2020~~2021 and December 31, ~~2019~~2020		1

		Unaudited Consolidated Statements of Income for the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020		2

		Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020		3

		Unaudited Consolidated Statements of Changes in Equity for the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020		4

		Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020		5

		Notes to Unaudited Consolidated Financial Statements		76

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		4943

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		8577

Item 4.		Controls and Procedures		8779

Part II		Other Information

Item 1.		Legal Proceedings		8880

Item 1A.		Risk Factors		8880

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		8880

Item 3.		Defaults Upon Senior Securities		8880

Item 4.		Mine Safety Disclosures		8880

Item 5.		Other Information		8880

Item 6.		Exhibits		8981

		Signatures		9082

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements


BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Balance Sheets
	At March 31, 2021		At December 31, 2020
	(In Thousands Except Share Data)
ASSETS
Cash and due from banks	$	41,284	$	36,069
Short-term investments	89,643		398,848
Total cash and cash equivalents	130,927		434,917
Investment securities available-for-sale	729,901		745,822

Equity securities held-for-trading	518		526
Total investment securities	730,419		746,348

Loans and leases:
Commercial real estate loans	3,790,341		3,823,826
Commercial loans and leases	2,324,202		2,274,899
Consumer loans	1,153,009		1,170,828
Total loans and leases	7,267,552		7,269,553
Allowance for loan and lease losses	(109,837)		(114,379)
Net loans and leases	7,157,715		7,155,174
Restricted equity securities	40,400		49,786
Premises and equipment, net of accumulated depreciation of $83,290 and $82,233, respectively	72,524		71,568
Right-of-use asset operating leases	23,180		24,143
Deferred tax asset	42,857		40,129
Goodwill	160,427		160,427
Identified intangible assets, net of accumulated amortization of $38,984 and $38,752, respectively	2,920		3,152
Other real estate owned ("OREO") and repossessed assets, net	6,383		6,515
Other assets	192,058		250,265
Total assets	$	8,559,810	$	8,942,424
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand checking accounts	$	1,724,170	$	1,592,205





Interest-bearing deposits	5,142,616		5,318,491
Total deposits	6,866,786		6,910,696
Borrowed funds:
Advances from the Federal Home Loan Bank of Boston ("FHLBB")	378,646		648,849
Subordinated debentures and notes	83,783		83,746
Other borrowed funds	83,574		87,652
Total borrowed funds	546,003		820,247
Operating lease liabilities	23,180		24,143
Mortgagors' escrow accounts	6,483		5,901
Reserve for unfunded credits	13,705		13,071

Accrued expenses and other liabilities	158,254		226,588
Total liabilities	7,614,411		8,000,646

Commitments and contingencies (Note 12)	0		0
Stockholders' Equity:

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	737,882		737,178
Retained earnings, partially restricted	282,301		264,892
Accumulated other comprehensive income	2,082		16,490
Treasury stock, at cost; 6,534,602 shares and 6,525,783 shares, respectively	(77,463)		(77,343)
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 44,502 shares and 51,114 shares, respectively	(255)		(291)


Total stockholders' equity	945,399		941,778
Total liabilities and stockholders' equity	$	8,559,810	$	8,942,424

See accompanying notes to unaudited consolidated financial statements.

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
At March 31, 2020 At December 31, 2019
(In Thousands Except Share Data)
ASSETS
Cash and due from banks $ 86,996
$ 33,589
Short-term investments 253,772
44,201
Total cash and cash equivalents 340,768
77,790
Investment securities available-for-sale 761,539
498,995
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 764,097
589,356
Loans and leases:
Commercial real estate loans 3,762,158
3,669,222
Commercial loans and leases 1,826,866
1,838,748
Consumer loans 1,233,503
1,229,846
Total loans and leases 6,822,527
6,737,816
Allowance for loan and lease losses (113,181 ) (61,082 )
Net loans and leases 6,709,346
6,676,734
Restricted equity securities 68,472
53,818
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 38,141
25,017
Goodwill 160,427
160,427
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 2,038
2,631
Other assets 275,640
167,431
Total assets $ 8,461,591
$ 7,856,853
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand checking accounts $ 1,175,329
$ 1,141,578
Interest-bearing deposits 4,714,609
4,688,494
Total deposits 5,889,938
5,830,072
Borrowed funds:
Advances from the Federal Home Loan Bank of Boston ("FHLBB") 1,137,431
758,469
Subordinated debentures and notes 83,630
83,591
Other borrowed funds 70,743
60,689
Total borrowed funds 1,291,804
902,749
Operating lease liabilities 24,789
24,876
Mortgagors' escrow accounts 7,441
7,232
Reserve for unfunded credits 17,222
1,880
Accrued expenses and other liabilities 317,829
144,438
Total liabilities 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; 85,177,172 shares issued and 85,177,172 shares issued, respectively 852
852
Additional paid-in capital 737,422
736,601
Retained earnings, partially restricted 227,359
265,376
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 912,568
945,606
Total liabilities and stockholders' equity $ 8,461,591
$ 7,856,853

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income


	Three Months Ended March 31,						Three Months Ended March 31,
	2020			2019			2021		2020
	(In Thousands Except Share Data)						(In Thousands Except Share Data)
Interest and dividend income:						Interest and dividend income:
Loans and leases	$	79,559		$	80,672	Loans and leases	$	75,009	$	79,559
Debt securities	2,976			3,236		Debt securities	3,118		2,976
Marketable and restricted equity securities	778			911		Marketable and restricted equity securities	301		778
Short-term investments	209			267		Short-term investments	39		209
Total interest and dividend income	83,522			85,086		Total interest and dividend income	78,467		83,522
Interest expense:						Interest expense:
Deposits	16,240			15,948		Deposits	6,707		16,240
Borrowed funds	5,570			6,139		Borrowed funds	2,651		5,570
Total interest expense	21,810			22,087		Total interest expense	9,358		21,810
Net interest income	61,712			62,999		Net interest income	69,109		61,712
Provision for credit losses	54,114			1,353
(Credit) provision for credit losses						(Credit) provision for credit losses	(2,147)		54,114
Net interest income after provision for credit losses	7,598			61,646		Net interest income after provision for credit losses	71,256		7,598
Non-interest income:						Non-interest income:
Deposit fees	2,458			2,523		Deposit fees	2,281		2,458
Loan fees	550			413		Loan fees	599		550
Loan level derivative income, net	2,156			1,745		Loan level derivative income, net	474		2,156
Gain on investment securities, net	1,330			134
(Loss) gain on investment securities, net						(Loss) gain on investment securities, net	(7)		1,330
Gain on sales of loans and leases held-for-sale	120			289		Gain on sales of loans and leases held-for-sale	709		120

Other	2,714			1,526		Other	738		2,714
Total non-interest income	9,328			6,630		Total non-interest income	4,794		9,328
Non-interest expense:						Non-interest expense:
Compensation and employee benefits	25,219			23,743		Compensation and employee benefits	25,821		25,219
Occupancy	3,953			3,947		Occupancy	4,004		3,953
Equipment and data processing	4,703			4,661		Equipment and data processing	4,493		4,703
Professional services	1,651			1,076		Professional services	1,226		1,651
FDIC insurance	378			593		FDIC insurance	1,044		378
Advertising and marketing	1,075			1,069		Advertising and marketing	1,100		1,075
Amortization of identified intangible assets	336			402		Amortization of identified intangible assets	232		336

Other	3,433			3,380		Other	2,891		3,433
Total non-interest expense	40,748			38,871		Total non-interest expense	40,811		40,748
(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
Income (loss) before provision for income taxes						Income (loss) before provision for income taxes	35,239		(23,822)
Provision (benefit) for income taxes						Provision (benefit) for income taxes	8,785		(6,546)

Net income (loss)						Net income (loss)	$	26,454	$	(17,276)
Earnings per common share:						Earnings per common share:
Basic	$	(0.22	)	$	0.28	Basic	$	0.34	$	(0.22)
Diluted	(0.22		)	0.28		Diluted	0.34		(0.22)
Weighted average common shares outstanding during the year:						Weighted average common shares outstanding during the year:
Basic	79,481,462			79,658,583		Basic	78,143,752		79,481,462
Diluted	79,665,774			79,843,578		Diluted	78,404,063		79,665,774
Dividends paid per common share	$	0.115		$	0.105	Dividends paid per common share	$	0.115	$	0.115

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income (Loss)


	Three Months Ended March 31,
	2021		2020
	(In Thousands)
Net income (loss)	$	26,454	$	(17,276)

Investment securities available-for-sale:
Unrealized securities holding gains (losses)	(18,481)		18,810

Income tax (expense) benefit	4,073		(4,146)
Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	(14,408)		14,664






Cash flow hedges:
Change in fair value of cash flow hedges	2		0
Reclassification adjustment for (income) expense recognized in earnings	(2)		0
Net change in fair value of cash flow hedges	0		0






Other comprehensive income (loss), net of taxes	(14,408)		14,664



Comprehensive income (loss)	$	12,046	$	(2,612)

See accompanying notes to unaudited consolidated financial statements.

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

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Stockholders' Equity

Three Months Ended March 31, ~~2020~~2021 and ~~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, 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

2020


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Unallocated Common Stock Held by ESOP		Total Stockholders' Equity
	(In Thousands)
Balance at December 31, 2020	$	852	$	737,178	$	264,892	$	16,490	$	(77,343)	$	(291)	$	941,778
Net income	—		—		26,454		—		—		—		26,454



Other comprehensive income (loss)	—		—		—		(14,408)		—		—		(14,408)
Common stock dividends of $0.115 per share	—		—		(8,992)		—		—		—		(8,992)


Restricted stock awards issued, net of awards surrendered	—		120		—		—		(120)		—		0
Compensation under recognition and retention plans	—		537		(53)		—		—		—		484

Common stock held by ESOP committed to be released (6,612 shares)	—		47		—		—		—		36		83

Balance at March 31, 2021	$	852	$	737,882	$	282,301	$	2,082	$	(77,463)	$	(255)	$	945,399


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Unallocated Common Stock Held by ESOP		Total Stockholders' Equity
	(In Thousands)
Balance at December 31, 2019	$	852	$	736,601	$	265,376	$	2,283	$	(59,073)	$	(433)	$	945,606
Net loss	—		—		(17,276)		—		—		—		(17,276)



Other comprehensive income (loss)	—		—		—		14,664		—		—		14,664
Common stock dividends of $0.115 per share	—		—		(9,173)		—		—		—		(9,173)


Compensation under recognition and retention plans	—		758		(45)		—		(134)		—		579

Treasury stock, repurchase shares	—		—		—		—		(10,410)		—		(10,410)
Common stock held by ESOP committed to be released (7,107 shares)	—		63		—		—		—		38		101
Adoption of ASU 2016-13 (CECL)	—		—		(11,523)		—		—		—		(11,523)
Balance at March 31, 2020	$	852	$	737,422	$	227,359	$	16,947	$	(69,617)	$	(395)	$	912,568

See accompanying notes to unaudited consolidated financial statements.

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
Three Months Ended March 31,
2020 2019
(In Thousands)
Cash flows from operating activities:
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 —
43
Provision for credit losses 54,114
1,353
Origination of loans and leases held-for-sale —
(5,511 )
Proceeds from sales of loans and leases held-for-sale, net —
8,109
Deferred income tax benefit (17,270 ) (390 )
Depreciation of premises and equipment 1,581
1,782
Amortization of investment securities premiums and discounts, net 384
445
Amortization of deferred loan and lease origination costs, net 2,154
1,782
Amortization of identified intangible assets 336
402
Amortization of debt issuance costs 26
25
Accretion of acquisition fair value adjustments, net (372 ) (704 )
Gain on investment securities, net (1,330 ) (134 )
Gain on sales of loans and leases held-for-sale (120 ) (289 )
Write-down of OREO and other repossessed assets 354
49
Compensation under recognition and retention plans 624
861
ESOP shares committed to be released 101
88
Net change in:
Cash surrender value of bank-owned life insurance (254 ) (254 )
Other assets (103,913 ) (12,219 )
Accrued expenses and other liabilities 173,346
(1,926 )
Net cash provided from operating activities 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 25,530
19,935
Purchases of investment securities available-for-sale (273,252 ) —
Proceeds from maturities, calls, and principal repayments of investment securities held to maturity 6,302
1,475
Purchases of investment securities held-to-maturity —
(500 )
Proceeds from redemption/sales of restricted equity securities 2,944
7,958
Purchase of restricted equity securities (17,598 ) (399 )
Proceeds from sales of loans and leases held-for-investment, net 5,800
3,408
Net increase in loans and leases (96,414 ) (92,280 )
Purchase of premises and equipment, net (1,071 ) (961 )
Proceeds from sales of OREO and other repossessed assets 1,972
563
Net cash used for investing activities (259,353 ) (60,801 )

(Continued)

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows (Continued)
Three Months Ended March 31,
2020 2019
(In Thousands)
Cash flows from financing activities:
Increase in demand checking, NOW, savings and money market accounts 57,871
48,526
Increase in certificates of deposit 2,333
118,694
Proceeds from FHLBB advances 1,736,600
1,621,000
Repayment of FHLBB advances (1,357,638 ) (1,675,357 )
Increase (decrease) in other borrowed funds, net 10,054
(219 )
Increase in mortgagors' escrow accounts, net 209
91
Repurchases of common stock (10,410 ) —
Proceeds from issuance of common stock —
(1 )
Payment of dividends on common stock (9,173 ) (8,376 )
Redemption of noncontrolling interest in subsidiary —
(35,851 )
Payment of dividends to owners of noncontrolling interest in subsidiary —
(930 )
Net cash provided from financing activities 429,846
67,577
Net increase in cash and cash equivalents 262,978
22,755
Cash and cash equivalents at beginning of period 77,790
89,584
Cash and cash equivalents at end of period $ 340,768
$ 112,339

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits, borrowed funds and subordinated debt $ 23,227
$ 23,230
Income taxes 2,070
8,774
Non-cash investing activities:
Transfer from loans to other real estate owned $ 1,733
$ 505

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows


	Three Months Ended March 31,
	2021		2020
	(In Thousands)
Cash flows from operating activities:
Net income (loss)	$	26,454	$	(17,276)
Adjustments to reconcile net income to net cash provided from operating activities:

(Credit) provision for credit losses	(2,147)		54,114


Deferred income tax expense (benefit)	1,345		(17,270)
Depreciation of premises and equipment	1,318		1,581
Amortization of investment securities premiums and discounts, net	770		384
Amortization of deferred loan and lease origination costs, net	1,584		2,154
Amortization of identified intangible assets	232		336
Amortization of debt issuance costs	25		26
Accretion of acquisition fair value adjustments, net	(51)		(372)
Loss (gain) on investment securities, net	7		(1,330)
Gain on sales of loans and leases held-for-sale	(709)		(120)



Write-down of OREO and other repossessed assets	129		354
Compensation under recognition and retention plans	536		624
ESOP shares committed to be released	83		101
Net change in:
Cash surrender value of bank-owned life insurance	(251)		(254)

Other assets	58,480		(103,913)
Accrued expenses and other liabilities	(68,387)		173,346
Net cash provided from operating activities	19,418		92,485

Cash flows from investing activities:
Proceeds from sales of investment securities available-for-sale	0		86,434
Proceeds from maturities, calls, and principal repayments of investment securities available-for-sale	46,184		25,530
Purchases of investment securities available-for-sale	(49,514)		(273,252)
Proceeds from maturities, calls, and principal repayments of investment securities held to maturity	0		6,302

Proceeds from redemption/sales of restricted equity securities	9,386		2,944
Purchase of restricted equity securities	0		(17,598)
Proceeds from sales of loans and leases held-for-investment, net	50		5,800
Net increase in loans and leases	(995)		(96,414)



Purchase of premises and equipment, net	(2,347)		(1,071)
Proceeds from sales of OREO and other repossessed assets	385		1,972

Net cash provided from (used for) investing activities	3,149		(259,353)






			(Continued)

See accompanying notes to unaudited consolidated financial statements.

Table of Contents


	Three Months Ended March 31,
	2021		2020
	(In Thousands)
Cash flows from financing activities:
Increase in demand checking, NOW, savings and money market accounts	296,341		57,871
(Decrease) increase in certificates of deposit	(340,207)		2,333
Proceeds from FHLBB advances	63,300		1,736,600
Repayment of FHLBB advances	(333,503)		(1,357,638)



(Decrease) increase in other borrowed funds, net	(4,078)		10,054
Increase in mortgagors' escrow accounts, net	582		209

Repurchases of common stock	0		(10,410)


Payment of dividends on common stock	(8,992)		(9,173)





Net cash (used for) provided from financing activities	(326,557)		429,846
Net (decrease) increase in cash and cash equivalents	(303,990)		262,978
Cash and cash equivalents at beginning of period	434,917		77,790
Cash and cash equivalents at end of period	$	130,927	$	340,768

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits, borrowed funds and subordinated debt	$	11,007	$	23,227
Income taxes	2,212		2,070
Non-cash investing activities:

Transfer from loans to other real estate owned	$	382	$	1,733

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(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 trust company and Bank Rhode Island ("BankRI"), a Rhode Island-chartered financial institution (collectively referred to as the "Banks"). The Banks are 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. ("LSC"), Eastern Funding LLC ("Eastern Funding"), and First Ipswich Insurance Agency, ~~and First Ipswich Securities II Corp.,~~ operates 3130 full-service banking offices in the greater Boston metropolitan 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.

The Banks' activities include acceptance of commercial, municipal and retail deposits, origination of mortgage loans on commercial and residential real estate located principally in 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. ~~Brookline Bank~~The Company 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.~~York, respectively.

The Company and the Banks are supervised, examined and regulated by the Board of Governors of the Federal Reserve System ~~("the FRB"~~(the "FRB"). As a Massachusetts-chartered trust company, Brookline Bank is also subject to regulation under the laws of the Commonwealth of Massachusetts and the jurisdiction of the Massachusetts Division of 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 subject to supervision, examination and regulation by the FDIC. As previously disclosed, on ~~a Form 8-K filed with the SEC, on~~ July 31, 2019, Brookline Bank converted its charter from a Massachusetts savings bank to a Massachusetts-chartered trust company and ended its membership in the Depositors Insurance Fund ~~(“DIF”~~(the “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~~it's withdrawal from the DIF and the concurrent charter conversion of Brookline ~~Bank from a Massachusetts-chartered savings bank~~Bank. Brookline Bank’s deposit accounts are and will continue to ~~a Massachusetts-chartered trust company.~~be insured by the deposit insurance fund of the FDIC up to applicable limits. Term deposits in excess of the FDIC insurance coverage will continue to be insured by the DIF until they reach maturity.

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”)~~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, 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, ~~2019.~~

2020.

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.

In preparing these consolidated financial statements, 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 changes in the near-term include the

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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

The judgments used by 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.

(2) Recent Accounting Pronouncements

Accounting Standards Adopted in 2021 and 2020

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of 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~~lifetime expected 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 ana 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~~Notes 3, 4 and 5.

In August 2018, FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820)" ("ASU 2018-13"), to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts set forth in the Concepts Statement, including the consideration of costs and benefits. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain provisions under ASU 2018-13 required prospective application, while other provisions required retrospective application to all periods presented in the consolidated financial statements upon adoption. The Company 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.

~~(2) Acquisitions and Mergers~~

~~First Ipswich Bank~~

On February 15, 2020, the merger of First Ipswich Bank with and into Brookline Bank was completed. First Ipswich was already a wholly-owned subsidiary of the Company, therefore the merger qualified as a tax-free reorganization for federal income tax purposes and there was minimal impact to customers. All of First Ipswich Bank's 6 branch locations were retained and converted to Brookline Bank branches.

Table of Contents

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 credit loss ("ACL") on available-for-sale debt securities recognized upon adoption and as of ~~March~~December 31, 2020.

The following tables set forth investment securities available-for-sale, held-to-maturity and equity securities held-for-trading at the 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

indicate
d:


	At March 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	273,315	$	4,130	$	5,919	$	271,526
GSE CMOs	39,980		957		12		40,925
GSE MBSs	271,231		5,981		1,146		276,066




Corporate debt obligations	22,269		978		0		23,247
U.S. Treasury bonds	119,817		1,586		3,762		117,641
Foreign government obligations	500		0		4		496


Total investment securities available-for-sale	$	727,112	$	13,632	$	10,843	$	729,901






Equity securities held-for-trading							$	518

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


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	273,820	$	5,455	$	630	$	278,645
GSE CMOs	44,937		1,103		12		46,028
GSE MBSs	312,658		10,956		5		323,609




Corporate debt obligations	22,299		1,168		0		23,467
U.S. Treasury bonds	70,339		3,318		80		73,577

Foreign government obligations	500		0		4		496

Total investment securities available-for-sale	$	724,553	$	22,000	$	731	$	745,822






Equity securities held-for-trading							$	526

As of March 31, ~~2020,~~2021, the fair value of all investment securities available-for-sale was ~~$761.5~~$729.9 million, with net unrealized gains of ~~$21.6~~$2.8 million, compared to a fair value of ~~$499.0~~$745.8 million and net unrealized gains of ~~$2.8~~$21.3 million as of December 31, ~~2019.~~2020. As of March 31, ~~2020, $58.8~~2021, $261.6 million, or ~~7.7%~~35.8% of the portfolio, had gross unrealized losses of ~~$0.3~~$10.8 million, compared to ~~$205.6~~$86.9 million, or ~~41.2%~~11.7% of the portfolio, with gross unrealized losses of ~~$1.8~~$0.7 million as of December 31, ~~2019.~~2020.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

~~As of~~Effective 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 investment securities held-to-maturity had a fair value of $87.6 million with net unrealized gains of $0.8 million. As of December 31, 2019, $22.3 million, or 25.5% of the portfolio had gross unrealized losses of $0.2 million.

As of March 31, 2021 and December 31, 2020, the Company recorded a fair value of ~~$2.6~~$0.5 million of equity securities held-for-trading. As

Table of ~~December 31, 2019, the Company recorded a fair value of $3.6 million of equity securities held-for-trading.~~Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Investment Securities as Collateral

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, ~~$489.3~~$413.5 million and ~~$433.6~~$448.7 million of investment securities were pledged as collateral for repurchase agreements; municipal deposits; treasury, tax and loan deposits; swap agreements; FRB borrowings; and Federal Home Loan Bank of Boston ("FHLBB") borrowings. The Banks had 0 outstanding FRB borrowings as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.

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~~$2.5 million and ~~$2.0~~$2.6 million, respectively, as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.

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~~2021 and ~~2019.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

2020.

Assessment for Available for Sale Securities for Impairment

Investment securities as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020 that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer are as follows:


	At March 31, 2021
	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	$	118,064	$	5,919	$	0	$	0	$	118,064	$	5,919
GSE CMOs	513		10		707		2		1,220		12
GSE MBSs	70,289		1,145		95		1		70,384		1,146





U.S. Treasury bonds	71,450		3,762		0		0		71,450		3,762
Foreign government obligations	0		0		496		4		496		4


Temporarily impaired investment securities available-for-sale	260,316		10,836		1,298		7		261,614		10,843






Total temporarily impaired investment securities	$	260,316	$	10,836	$	1,298	$	7	$	261,614	$	10,843

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

At March 31, 2020

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 $ 43,783
$ 138
$ —
$ —
$ 43,783
$ 138
GSE CMOs —
—
1,428
15
1,428
15
GSE MBSs 8,012
50
3,973
91
11,985
141
Municipal obligations 1,157
3
—
—
1,157
3
Foreign government obligations 485
15
—
—
485
15
Temporarily impaired investment securities available-for-sale 53,437
206
5,401
106
58,838
312
Total temporarily impaired investment securities $ 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


	At December 31, 2020
	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	$	72,745	$	630	$	0	$	0	$	72,745	$	630
GSE CMOs	832		7		872		5		1,704		12
GSE MBSs	2,102		5		97		0		2,199		5




U.S. Treasury bonds	9,750		80		0		0		9,750		80
Foreign government obligations	0		0		496		4		496		4


Temporarily impaired investment securities available-for-sale	85,429		722		1,465		9		86,894		731






Total temporarily impaired investment securities	$	85,429	$	722	$	1,465	$	9	$	86,894	$	731

The Company performs regular analyses of the investment securities available-for-sale portfolio to determine whether a decline in fair value indicates that an investment security is impaired. In making these impairment determinations, management considers, among other factors, 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~~security investment is ~~impairment~~impaired 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 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~~security is ~~impairment~~impaired 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 impaired as of March 31, ~~2020. Based on the analysis below,~~2021.The Company has determined it ~~was determined that~~ is it 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 impaired as of March 31, ~~2020.~~2021. If market conditions for investment securities worsen or the creditworthiness of the underlying issuers deteriorates, it is possible that the Company may recognize additional 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 FHLBB and the Federal Farm Credit Bank. As of March 31, ~~2020, only~~2021, the Company held GNMA MBSs and CMOs, and Small Business Administration ("SBA") commercial loan asset-backed securities in ~~our~~its available-for-sale portfolio with an estimated fair value of ~~$12.9~~$6.3 million, all of which were backed explicitly by the full faith and credit of the U.S. Government, compared to ~~$17.4~~$7.3 million as of December 31, ~~2019.~~2020.

As of March 31, ~~2020,~~2021, the Company owned 7354 GSE debentures with a total fair value of ~~$237.8~~$271.5 million, and a net unrealized ~~gain~~loss of ~~$6.0~~$1.8 million. As of December 31, ~~2019,~~2020, the Company held 6054 GSE debentures with a total fair value of ~~$185.8~~

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

$278.6 million, with a net unrealized gain of ~~$2.9~~$4.8 million. As of March 31, ~~2020, 4~~2021, 12 of the 7354 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2019, 5~~2020, 7 of the 6054 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 three months ended March 31, ~~2020,~~2021, the Company ~~purchased $75.2 million~~did not purchase GSE debentures. This compares to the same period in ~~2019~~2020 when the Company ~~did 0t purchase any~~purchased $75.2 million 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 March 31, ~~2020,~~2021, the Company owned 33 GSE CMOs with a total fair value of ~~$63.5~~$40.9 million and a net unrealized gain of $0.9 million. As of December 31, 2020, the Company held 33 GSE CMOs with a total fair value of $46.0 million with a net unrealized gain of $1.1 million. As of ~~December 31, 2019, the Company held 61 GSE CMOs with a total fair value of $85.9 million with a net unrealized loss of $1.1 million. As of~~ March 31, ~~2020, 1~~2021, 2 of the 33 securities in this portfolio ~~was~~were in an unrealized loss position. As of December 31, ~~2019, 45~~2020, 2 of the 6133 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 three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company did 0t purchase any GSE CMOs.

As of March 31, ~~2020,~~2021, the Company owned ~~135~~139 GSE MBSs with a total fair value of ~~$328.5~~$276.1 million and a net unrealized gain of ~~$9.4~~$4.8 million. As of December 31, ~~2019,~~2020, the Company held ~~150~~140 GSE MBSs with a total fair value of ~~$153.3~~$323.6 million with a net unrealized gain of ~~$0.3~~$11.0 million. As of March 31, ~~2020, 22~~2021, 23 of the ~~135~~139 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2019, 48~~2020, 17 of the ~~150~~140 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 three months ended March 31, ~~2020,~~2021, the Company ~~purchased $176.9 million~~did not purchase any GSE MBSs. This compares to the same period in ~~2019~~2020 when the Company ~~did 0t purchase any~~purchased $176.9 million 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 $9.0 million to the available-for-sale portfolio.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

~~SBA Commercial Loan Asset-Backed~~

As of March 31, 2020, the Company owned 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 $34.0 thousand, which approximated amortized cost. As of March 31, 2020, NaN of the securities in this portfolio were in an unrealized loss position. As of December 31, 2019, 3 of the 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 three months ended March 31, 2020 and 2019, the Company did 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 March 31, ~~2020,~~2021, the Company held 76 corporate obligation securities with a total fair value of ~~$26.0~~$23.2 million and a net unrealized gain of ~~$0.6~~$1.0 million. As of December 31, ~~2019,~~2020, the Company held 86 corporate obligation securities with a total fair value of ~~$29.0~~$23.5 million and a net unrealized gain of ~~$0.5~~$1.2 million. As of March 31, ~~2020, NaN of the securities in this portfolio were in an unrealized loss position. As of~~2021 and December 31, ~~2019,~~2020, NaN of the 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. During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company 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 $0.5 million to the available-for-sale portfolio.

U.S. Treasury Bonds

The Company invests in securities issued by the U.S. government. As of March 31, ~~2020,~~2021, the Company owned 17 U.S. Treasury bonds with a total fair value of $117.6 million and an unrealized loss of $2.2 million. This compares to 12 U.S. Treasury bonds with a total fair value of ~~$59.6~~$73.6 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 $0.2~~$3.2 million as of December 31, ~~2019.~~2020. As of March 31, ~~2020, none~~2021, 8 of the 17 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2019, 5~~2020, 1 of the 912 securities in this portfolio ~~were in~~was an unrealized loss position. During the three months ended March 31, ~~2020~~2021 the Company purchased ~~$21.2~~$49.5 million U.S. Treasury bonds, compared to the same period in ~~2019~~2020 when the Company ~~did 0t purchase any~~purchased $21.2 million U.S. Treasury bonds.

Municipal Obligations

~~The Company invests in certain state and municipal securities with high credit ratings for portfolio diversification and tax planning purposes.~~ As of March 31, ~~2020, the Company owned 93 municipal obligation securities with a total fair value of $45.6 million~~2021 and ~~a net unrealized gain of $0.6 million. As of March 31, 2020, 9 of the 93 securities in this portfolio were in unrealized loss position. During the three months ended March~~December 31, 2020, the Company did ~~not~~0t own any municipal obligation securities. During the three months March 31, 2021 and 2020, the Company did 0t purchase any municipal 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 $47.7 million to ~~the~~our available-for-sale portfolio.

Foreign Government Obligations

As of March 31, 2021 and December 31, 2020, the Company owned 1 foreign government obligation security with a fair value of $0.5 million, which approximated cost. As of March 31, 2021 and December 31, 2020 respectively, the security was

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

in an unrealized loss position. During the three months ended March 31, 2021 and 2020, the Company did 0t purchase any foreign government obligations.

Equity Securities Held-for-Trading

From time to time, the Company will invest in equity securities held-for-trading. As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company owned equity securities held-for-trading with a fair value of ~~$2.6 million and $3.6 million, respectively.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

$0.5 million.

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 March 31, 2021						At December 31, 2020
	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	$	49,597	$	50,149	1.99	%	$	31,633	$	32,013	2.02	%
After 1 year through 5 years	132,676		138,463		2.23	%	146,274		153,262		2.22	%
After 5 years through 10 years	261,816		254,174		1.38	%	222,271		225,568		1.43	%
Over 10 years	283,023		287,115		2.01	%	324,375		334,979		1.86	%
	$	727,112	$	729,901	1.84	%	$	724,553	$	745,822	1.81	%

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 March 31, ~~2020,~~2021, issuers of debt securities with an estimated fair value of ~~$97.9~~$88.3 million had the right to call or prepay the obligations. Of the ~~$97.9~~$88.3 million, approximately ~~$3.0 million matures within 1 year, $19.8~~$12.7 million matures in 1 - 5 years, ~~$46.4~~$66.2 million matures in 6 - 10 years, and ~~$28.7~~$9.4 million matures after ten years. As of December 31, ~~2019,~~2020, issuers of debt securities with an estimated fair value of approximately ~~$37.6~~$90.8 million had the right to call or prepay the obligations. Of the ~~$37.6~~$90.8 million, ~~approximately $3.0 million matures within 1 year, $34.6~~$12.9 million matures in 1-5 years, and ~~NaN mature~~$68.1 million matures in 6 - 10 years, and $9.8 million matures after 5ten years.

Security Sales

~~There were~~NaN sale of investment securities available-for-sale or equity securities held-for-trading occurred during the three months ended March 31, 2021. This compares to $86.4 million securities sold during the three months ended March 31, 2020. ~~There were 0 securities sold during the three months ended March 31, 2019.~~

Sales of investment and 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
$ —


	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In Thousands)

Proceeds from sales of investment securities available-for-sale and equity securities held-for-trading	$	0	$	86,435

Gross gains from securities sales	0		2,446
Gross losses from securities sales	0		(93)
Gain on sales of securities, net	$	0	$	2,353

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

(4) Loans and Leases

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


	At March 31, 2021				At December 31, 2020
	Balance		Weighted Average Coupon		Balance		Weighted Average Coupon
	(Dollars In Thousands)
Commercial real estate loans:
Commercial real estate	$	2,595,240	3.48	%	$	2,578,773	3.58	%
Multi-family mortgage	1,000,474		3.48	%	1,013,432		3.53	%
Construction	194,627		3.60	%	231,621		3.49	%
Total commercial real estate loans	3,790,341		3.49	%	3,823,826		3.56	%
Commercial loans and leases:
Commercial1	1,206,977		2.35	%	1,131,668		2.55	%
Equipment financing	1,069,621		7.17	%	1,092,461		7.26	%
Condominium association	47,604		4.54	%	50,770		4.55	%
Total commercial loans and leases	2,324,202		4.61	%	2,274,899		4.86	%
Consumer loans:
Residential mortgage	781,854		3.68	%	791,317		3.74	%
Home equity	334,706		3.25	%	346,652		3.26	%
Other consumer	36,449		2.92	%	32,859		3.04	%
Total consumer loans	1,153,009		3.53	%	1,170,828		3.58	%
Total loans and leases	$	7,267,552	3.84	%	$	7,269,553	3.97	%

(1) Including $604,790 of PPP loans as of March 31, 2021. These loans are fully guaranteed by the SBA and therefore, have not been reserved for in the allowance for credit losses as of March 31, 2021.

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~~interest on loans and leases, which were excluded from the amortized cost of loans and leases totaled ~~$18.4~~$21.0 million and ~~$17.4~~$20.5 million at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and were included in other assets in the accompanying 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 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 %

The net unamortized deferred loan origination ~~fees and~~ costs included in total loans and leases were ~~$14.9~~$5.6 million and ~~$15.7~~$4.1 million as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

The Banks and their subsidiaries lend primarily in all New England states, with the exception of equipment financing, ~~27.8%~~12.7% of which is in the greater New York and New Jersey metropolitan area and ~~72.2%~~87.3% of which is in other areas in the United States of America as of March 31, ~~2020.~~2021.

~~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

During the three months ended March 31, 2019, accretable yield adjustments totaling $61 thousand was made for certain loan pools. During the three months ended March 31, 2019, accretable yield adjustments totaling $0.1 million were made for certain loan pools. These accretable yield adjustments, which 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 ~~both~~ March 31, ~~2020~~2021 and ~~2019,~~2020, there were ~~$3.0~~$3.3 billion and $3.5 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~~0t have any outstanding FRB borrowings as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

(5) Allowance for Loan and Lease Losses

The following tables present the changes in the allowance for loan and lease losses 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 March 31, 2021
	Commercial Real Estate		Commercial		Consumer		Total
	(In Thousands)
Balance at December 31, 2020	$	80,132	$	29,498	$	4,749	$	114,379

Charge-offs	0		(2,140)		(3)		(2,143)
Recoveries	0		331		52		383
(Credit) provision for loan and lease losses excluding unfunded commitments	(203)		(1,864)		(715)		(2,782)
Balance at March 31, 2021	$	79,929	$	25,825	$	4,083	$	109,837


													Three Months Ended March 31, 2020
	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, 2018	$	28,187	$	25,283		$	5,222		$	58,692
Balance at December 31, 2019												Balance at December 31, 2019	$	30,285	$	24,826	$	5,971	$	61,082
Adoption of ASU 2016-13 (CECL)												Adoption of ASU 2016-13 (CECL)	11,694		(2,672)		(2,390)		6,632
Charge-offs	—		(2,512		)	(30		)	(2,542		)	Charge-offs	0		(2,527)		(12)		(2,539)
Recoveries	—		388			53			441			Recoveries	0		247		58		305
Provision for loan and lease losses	162		1,081			207			1,450			Provision for loan and lease losses	40,200		6,900		601		47,701
Balance at March 31, 2019	$	28,349	$	24,240		$	5,452		$	58,041
Balance at March 31, 2020												Balance at March 31, 2020	$	82,179	$	26,774	$	4,228	$	113,181

The allowance for credit losses for unfunded credit commitments, which is included in other liabilities, was ~~$17.2~~$13.7 million and ~~$1.9~~$13.1 million at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. ~~The increase in allowance for unfunded commitments~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

was primarily driven by the effect of the latest available economic forecast of the COVID-19 pandemic which was embedded in the estimated loss models. NaN credit commitments were charged off against the liability account in the three month periods ended March 31, 2020 and 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 March 31,
	2021		2020
	(In Thousands)
Provision for loan and lease losses:
Commercial real estate	$	(203)	$	40,200
Commercial	(1,864)		6,900
Consumer	(715)		601

Total (credit) provision for loan and lease losses	(2,782)		47,701
Unfunded commitments	635		6,413
Total (credit) provision for credit losses	$	(2,147)	$	54,114

Allowance for Loan and Lease Losses Methodology

Management has established a methodology to determine the adequacy of the allowance for credit losses that assesses the risks and losses expected on the loan and lease ~~portfolio.~~portfolio and unfunded commitments. Additions to the allowance for 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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

To calculate the allowance for loans collectively evaluated, management uses models developed by a third party. The models include: Commercial real estate ~~(CRE) lifetime,~~("CRE"), Commercial and industrial ~~(C&I) lifetime,~~("C&I"), and Retail lifetime ~~C&I historical, and Retail historical. Lifetime~~ loss rate models calculate the expected losses over the life of the loan based on exposure at default loan attributes and reasonable, supportable economic forecasts. ~~Historical~~The exposure at default considers the current unpaid balance, prepayment assumptions and utilization of expected utilization assumptions. The expected loss ~~rate~~estimates for two small commercial portfolios and a runoff auto portfolio are based on historical loss rates.

Key assumptions used in the models ~~apply a~~include portfolio segmentation, prepayments, and the expected utilization of unfunded commitments, among others. The portfolios are segmented by loan level attributes such as loan type, loan size, date of origination, and delinquency status to create homogenous loan pools. Pool level metrics are calculated and loss ~~rate~~rates are subsequently applied to the ~~outstanding balance~~pools as the loans have like characteristics. Prepayment assumptions are embedded within the models and are based on the same data used for model development and incorporate adjustments for reasonable and supportable forecasts. Model development data and developmental time periods vary by model, but all use at least ten years of historical data and capture at least one recessionary period. Expected utilization is based on current utilization and a loan equivalency ("LEQ") factor. LEQ varies by current utilization and provides a reasonable estimate of expected draws and borrower behavior. Assumptions and model inputs are reviewed in accordance with model monitoring practices and as information becomes available.

The ACL estimate incorporates reasonable and supportable forecasts of various macro-economic variables over the remaining life of loans and leases. The development of the ~~loan. Management uses historical loss rates for condominium association, auto,~~reasonable and ~~government lease portfolio segments because these loans have distinct, historical, or expected loss patterns~~supportable forecast assume each macro-economic variable will revert to long-term expectations, with reversion characteristics unique to specific economic indicators and ~~a de minimus effect on~~forecasts. Reversion towards long-term expectations generally begins two to three years from the ~~overall allowance~~forecast start date and ~~provision.~~largely completes within the first five years. Because the reasonable and supportable economic forecasts used in the models are mean reverting, the models are therefore considered to be implicitly mean reverting.

Management elected to use multiple economic forecasts in determining the reserve to account for economic uncertainty. The forecasts include various projections of ~~GDP,~~Gross Domestic Product ("GDP"), interest rates, property price indices, and employment measures. ~~The forecasts are 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~~updated to ~~change. The models recognize that~~reflect facts and circumstances as of the ~~life of a loan may exceed the economic forecast therefore the models employ mean reversion techniques to predict credit losses for loans that are expected to mature beyond the forecast period.~~financial statement date. The March 31, ~~2020~~2021 forecasts reflect the immediate and longer-term effects of the COVID-19 pandemic as well as the associated policies and ~~provision~~fiscal support 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 due to geography and portfolio as well as variances in operational and underwriting procedures from the Company, and therefore, the Company calibrates expected losses using a scalar for each ~~model using a scalar.~~model. Each scalar was calculated by examining the loss rates of peer banks that have similar operations and asset ~~bases.~~bases to the Company and comparing these peer group loss rates to the model results. 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 also applied to ~~select~~the results of the three loss rate models.

For March 31, 2021, management applied qualitative adjustments to the CRE lifetime loss rate, C&I lifetime loss rate, and Retail lifetime loss rate models. These adjustments addressed model limitations, were based on historical loss patterns, and targeted specific risks within the certain portfolios. A general qualitative adjustment was applied to all models to account for general economic uncertainty by placing a greater probability on negative economic forecasts as compared to previous quarters. Additional qualitative adjustments were applied to the Commercial, Multifamily, and commercial real estate (includes owner occupied, non-owner occupied, and construction) portfolios based on the Company’s historical loss experience and the loss experience of the Company’s peer group. High risk segments of the ~~loan portfolio where applicable.~~Eastern Funding and Macrolease portfolios also received additional qualitative adjustments based on recent loss history and expected liquidation values. These qualitative adjustments resulted in additions to reserves for all portfolios, as compared to the model output.

Specific reserves are established for loans individually evaluated for impairment when amortized cost basis is greater than the discounted present value of expected future cash flows or, in the case of collateral-dependent loans, when there is an excess of a loan's amortized cost basis over the fair value of its underlying collateral. When loans and leases do not share risk

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

characteristics with other financial assets they are evaluated individually. Individually evaluated loans are reviewed quarterly with adjustments made to the calculated reserve as necessary.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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~~$108.7 million as of March 31, ~~2020,~~2021, compared to ~~$59.3~~$112.1 million as of December 31, ~~2019.~~2020. The ~~increase~~reduction in ~~general allowance for loan~~the ACL is attributable to portfolio contraction, continued low level of net charge-offs, an improving macro-economic forecast, 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.~~ qualitative adjustments that consider longer-term risks.

The specific allowance for loan and lease losses was ~~$5.3~~$1.1 million as of March 31, ~~2020,~~2021, compared to ~~$1.8~~$2.3 million as of December 31, ~~2019.~~2020. The specific allowance ~~increased~~decreased by ~~$3.5~~$1.2 million during the three months ended March 31, ~~2020~~2021 primarily due to the payoff of 2 commercial relationship which had a specific reserve of $0.3 million, 1 equipment financing relationship which had a specific reserve of $0.1 million, a partial charge off on 1 equipment financing relationship of $0.7 million and the and the decrease in specific reserves ~~of $2.2 million~~ for anthe remaining individually evaluated ~~commercial relationship and $1.7 million for another individually evaluated commercial reals estate relationship during the quarter.~~loans due to improving collection prospects.

As of March 31, ~~2020,~~2021, 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~~expected losses over the lifetime of the Company’s loan portfolios.

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, 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 ("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.

1917

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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.~~2021.


	March 31, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
			(In Thousands)
Commercial Real Estate
Pass	$	80,520	$	357,115	$	366,961	$	283,214	$	252,971	$	1,115,585	$	55,390	$	12,645	$	2,524,401
OAEM	693		736		27,369		0		0		35,014		0		0		63,812
Substandard	0		210		0		0		1,617		5,139		0		61		7,027

Total	81,213		358,061		394,330		283,214		254,588		1,155,738		55,390		12,706		2,595,240
Multi-Family Mortgage
Pass	14,673		124,227		145,143		165,079		99,440		416,861		5,218		27,457		998,098
OAEM	0		0		0		0		0		2,376		0		0		2,376


Total	14,673		124,227		145,143		165,079		99,440		419,237		5,218		27,457		1,000,474
Construction
Pass	2,272		46,896		46,555		85,292		665		632		4,697		0		187,009

Substandard	0		0		4,853		0		0		2,765		0		0		7,618

Total	2,272		46,896		51,408		85,292		665		3,397		4,697		0		194,627
Commercial

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)


	March 31, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
			(In Thousands)
Pass	237,440		451,623		55,419		37,516		35,407		129,638		226,438		1,716		1,175,197
OAEM	0		1,589		4,436		0		16,242		12		1,840		0		24,119
Substandard	0		0		0		118		345		2,902		3,716		578		7,659
Doubtful	0		0		0		0		0		0		0		2		2
Total	237,440		453,212		59,855		37,634		51,994		132,552		231,994		2,296		1,206,977
Equipment Financing
Pass	65,631		318,891		286,098		186,109		105,056		86,647		1,868		556		1,050,856
OAEM	0		196		1,058		293		96		709		0		0		2,352
Substandard	0		1,000		2,787		5,224		3,678		2,529		0		0		15,218
Doubtful	0		1		450		65		27		652		0		0		1,195
Total	65,631		320,088		290,393		191,691		108,857		90,537		1,868		556		1,069,621
Condominium Association
Pass	187		7,409		9,206		5,194		7,385		16,769		1,172		176		47,498

Substandard	0		0		0		0		0		106		0		0		106

Total	187		7,409		9,206		5,194		7,385		16,875		1,172		176		47,604
Other Consumer
Pass	35		852		523		1,827		31		869		32,295		15		36,447

Substandard	0		0		0		0		0		1		0		1		2

Total	35		852		523		1,827		31		870		32,295		16		36,449
Total
Pass	400,758		1,307,013		909,905		764,231		500,955		1,767,001		327,078		42,565		6,019,506
OAEM	693		2,521		32,863		293		16,338		38,111		1,840		0		92,659
Substandard	0		1,210		7,640		5,342		5,640		13,442		3,716		640		37,630
Doubtful	0		1		450		65		28		652		0		2		1,198
Total	$	401,451	$	1,310,745	$	950,858	$	769,931	$	522,961	$	1,819,206	$	332,634	$	43,207	$	6,150,993

As of March 31, 2021, there were 0 loans categorized as definite loss.

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 81,915
372,988
270,215
165,961
83,859
66,392
1,261
736
1,043,327
OAEM —
—
—
—
1,322
42
—
—
1,364
Substandard —
969
2,429
2,168
1,457
2,127
—
—
9,150
Doubtful —
342
366
310
94
100
—
—
1,212
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 225,776
1,056,306
960,532
660,549
550,651
1,652,370
426,116
28,692
5,560,992
OAEM —
496
25
—
3,648
14,832
4,302
376
23,679
Substandard —
969
3,680
3,038
3,526
25,034
981
679
37,907
Doubtful —
342
366
310
94
100
—
1
1,213
Total $ 225,776
$ 1,058,113
$ 964,603
$ 663,897
$ 557,919
$ 1,692,336
$ 431,399
$ 29,748
$ 5,623,791

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

For residential mortgage and home equity loans, the borrowers' credit scores contribute as a reserve metric in the retail loss rate model.

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 loans and leases for which data are not available.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	At March 31, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
			(In Thousands)
Residential
Credit Scores
Over 700	$	22,650	$	119,549	$	89,528	$	57,286	$	49,514	$	162,830	$	4,002	$	0	$	505,359
661 - 700	3,036		24,134		18,328		10,110		13,852		30,005		0		0		99,465
600 and below	682		6,914		4,700		5,053		4,234		16,956		0		0		38,539
Data not available*	2,177		17,969		17,003		15,591		13,248		71,181		0		1,322		138,491
Total	$	28,545	$	168,566	$	129,559	$	88,040	$	80,848	$	280,972	$	4,002	$	1,322	$	781,854
Home Equity
Credit Scores
Over 700	$	553	$	1,534	$	2,421	$	2,249	$	2,507	$	12,331	$	239,483	$	2,303	$	263,381
661 - 700	51		118		440		476		260		2,354		44,625		616		48,940
600 and below	0		58		106		260		13		550		10,267		1,058		12,312
Data not available*	0		68		0		0		0		1,318		7,719		968		10,073
Total	$	604	$	1,778	$	2,967	$	2,985	$	2,780	$	16,553	$	302,094	$	4,945	$	334,706

* Represents loans and leases for which data are not available.

The following tables present the recorded investment in loans in each class as of December 31, ~~2019,~~2020, by credit quality indicator.

At December 31, 2019

Commercial
Real Estate

Multi-
Family
Mortgage
Construction Commercial
Equipment
Financing

Condominium
Association

Other
Consumer
Total
(In Thousands)
Originated:
Loan rating:
Pass $ 2,379,925
$ 896,398
$ 239,015
$ 688,268
$ 1,038,793
$ 56,687
$ 38,673
$ 5,337,759
OAEM 17,006
—
—
10,803
1,389
—
—
29,198
Substandard 3,106
84
—
14,801
7,995
151
1
26,138
Doubtful —
—
—
3
1,820
—
—
1,823
Total originated 2,400,037
896,482
239,015
713,875
1,049,997
56,838
38,674
5,394,918

Acquired:
Loan rating:
Pass 81,360
35,681
7,033
15,215
2,404
—
108
141,801
OAEM 597
—
—
210
—
—
—
807
Substandard 9,017
—
—
202
7
—
—
9,226
Doubtful —
—
—
—
—
—
—
—
Total acquired 90,974
35,681
7,033
15,627
2,411
—
108
151,834

Total loans $ 2,491,011
$ 932,163
$ 246,048
$ 729,502
$ 1,052,408
$ 56,838
$ 38,782
$ 5,546,752

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


	December 31, 2020
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Commercial Real Estate
Pass	$	352,832	$	412,071	$	282,629	$	255,786	$	243,477	$	944,676	$	55,392	$	12,585	$	2,559,448
OAEM	0		477		0		0		3,312		8,991		0		0		12,780
Substandard	0		0		0		1,261		2		5,220		0		62		6,545
Doubtful	0		0		0		0		0		0		0		0		0
Total	352,832		412,548		282,629		257,047		246,791		958,887		55,392		12,647		2,578,773
Multi-Family Mortgage
Pass	125,434		136,620		162,180		103,997		127,873		304,224		15,845		34,871		1,011,044
OAEM	0		0		0		0		0		2,388		0		0		2,388


Total	125,434		136,620		162,180		103,997		127,873		306,612		15,845		34,871		1,013,432
Construction

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	December 31, 2020
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Pass	46,249		56,074		112,856		1,799		2,788		404		3,834		0		224,004

Substandard	0		4,853		0		0		2,764		0		0		0		7,617

Total	46,249		60,927		112,856		1,799		5,552		404		3,834		0		231,621
Commercial
Pass	574,542		66,278		41,325		62,112		22,085		113,715		226,495		1,687		1,108,239
OAEM	310		4,850		0		0		35		17		5,382		0		10,594
Substandard	80		0		129		389		29		7,612		3,930		664		12,833
Doubtful	0		0		0		0		0		0		0		2		2
Total	574,932		71,128		41,454		62,501		22,149		121,344		235,807		2,353		1,131,668
Equipment Financing
Pass	332,375		306,231		209,219		121,845		56,241		45,451		636		576		1,072,574
OAEM	196		1,066		290		93		609		85		0		0		2,339
Substandard	402		4,385		5,280		3,545		1,891		631		0		0		16,134
Doubtful	1		64		24		27		1,292		6		0		0		1,414
Total	332,974		311,746		214,813		125,510		60,033		46,173		636		576		1,092,461
Condominium Association
Pass	6,455		9,918		5,399		7,928		5,213		12,682		2,684		379		50,658

Substandard	0		0		0		0		112		0		0		0		112

Total	6,455		9,918		5,399		7,928		5,325		12,682		2,684		379		50,770
Other Consumer
Pass	694		549		1,938		32		570		301		28,755		18		32,857

Substandard	0		0		0		0		0		0		0		2		2

Total	694		549		1,938		32		570		301		28,755		20		32,859
Total
Pass	1,438,581		987,741		815,546		553,499		458,247		1,421,453		333,641		50,116		6,058,824
OAEM	506		6,393		290		93		3,956		11,481		5,382		0		28,101
Substandard	482		9,238		5,409		5,195		4,798		13,463		3,930		728		43,243
Doubtful	1		64		24		27		1,292		6		0		2		1,416
Total	$	1,439,570	$	1,003,436	$	821,269	$	558,814	$	468,293	$	1,446,403	$	342,953	$	50,846	$	6,131,584
As of December 31, 2020, there were 0 loans categorized as definite loss.

At December 31, 2019
Residential Mortgage Home Equity
(Dollars In Thousands)
Originated:
Loan-to-value ratio:

Less than 50% $ 184,628
22.7 % $ 132,736
35.2 %
50%—69% 293,976
36.1 % 91,681
24.3 %
70%—79% 204,600
25.1 % 81,459
21.6 %
80% and over 25,664
3.2 % 37,371
9.9 %
Data not available* 2,654
0.3 % —
— %
Total originated 711,522
87.4 % 343,247
91.0 %

Acquired:

Loan-to-value ratio:

Less than 50% 32,838
4.0 % 16,882
4.5 %
50%—69% 44,754
5.4 % 7,958
2.1 %
70%—79% 14,305
1.8 % 705
0.2 %
80% and over 4,608
0.6 % 4,726
1.3 %
Data not available 6,218
0.8 % 3,301
0.9 %
Total acquired 102,723
12.6 % 33,572
9.0 %

Total loans $ 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

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	At December 31, 2020
	2020		2019		2018		2017		2016		Prior		Revolving		Converted		Total
	(In Thousands)
Residential
Credit Scores
Over 700	$	119,566	$	94,300	$	62,452	$	53,662	$	47,327	$	124,999	$	4,442	$	0	$	506,748
661 - 700	21,820		19,426		10,943		15,616		8,132		23,282		0		0		99,219
600 and below	6,901		5,659		4,763		4,318		4,553		13,997		0		0		40,191
Data not available*	19,209		17,082		16,199		14,153		5,729		71,456		0		1,331		145,159
Total	$	167,496	$	136,467	$	94,357	$	87,749	$	65,741	$	233,734	$	4,442	$	1,331	$	791,317
Home Equity
Credit Scores
Over 700	$	1,546	$	2,832	$	2,440	$	2,770	$	910	$	12,804	$	247,538	$	2,397	$	273,237
661 - 700	122		459		499		566		305		2,793		45,356		1,334		51,434
600 and below	59		108		266		13		39		541		10,139		878		12,043
Data not available*	61		0		0		0		0		1,387		7,330		1,160		9,938
Total	$	1,788	$	3,399	$	3,205	$	3,349	$	1,254	$	17,525	$	310,363	$	5,769	$	346,652

Age Analysis of Past Due Loans and Leases

The following table presents an age analysis of the amortized cost basis in loans and leases as of March 31, ~~2020.~~

At March 31, 2020
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
Non-accrual

Non-accrual
with No Related Allowance
(In Thousands)
Commercial real estate loans:
Commercial real estate $ 8,331
$ 1,302
$ 10,224
$ 19,857
$ 2,507,066
$ 2,526,923
$ 268
$ 10,937
$ 2,933
Multi-family mortgage 1,270
1,022
84
2,376
960,897
963,273
—
85
84
Construction 1,617
4,182
—
5,799
266,163
271,962
—
—
—
Total commercial real estate loans 11,218
6,506
10,308
28,032
3,734,126
3,762,158
268
11,022
3,017
Commercial loans and leases:
Commercial 3,173
8,559
3,169
14,901
704,307
719,208
18
12,991
8,922
Equipment financing 5,885
2,155
6,726
14,766
1,040,287
1,055,053
305
10,356
2,299
Condominium association 1,044
—
—
1,044
51,561
52,605
—
203
130
Total commercial loans and leases 10,102
10,714
9,895
30,711
1,796,155
1,826,866
323
23,550
11,351
Consumer loans:
Residential mortgage 662
—
2,458
3,120
807,066
810,186
452
3,446
3,077
Home equity 1,310
1
468
1,779
386,771
388,550
2
1,059
780
Other consumer 26
4
5
35
34,732
34,767
—
7
—
Total consumer loans 1,998
5
2,931
4,934
1,228,569
1,233,503
454
4,512
3,857
Total loans and leases $ 23,318
$ 17,225
$ 23,134
$ 63,677
$ 6,758,850
$ 6,822,527
$ 1,045
$ 39,084
$ 18,225
2021.

~~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)


	At March 31, 2021
	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			Non-accrual		Non-accrual with No Related Allowance
	(In Thousands)
Commercial real estate loans:
Commercial real estate	$	5,489	$	3,946	$	3,366	$	12,801	$	2,582,439		$	2,595,240		$	0	$	3,611	$	2,902
Multi-family mortgage	1,141		0		0		1,141		999,333			1,000,474			0		0		0
Construction	3,764		0		3,853		7,617		187,010			194,627			0		3,853		3,853
Total commercial real estate loans	10,394		3,946		7,219		21,559		3,768,782			3,790,341			0		7,464		6,755
Commercial loans and leases:
Commercial	229		0		1,213		1,442		1,205,535			1,206,977			62		3,161		1,882
Equipment financing	4,010		2,115		9,501		15,626		1,053,995			1,069,621			1,113		15,772		4,260
Condominium association	0		0		0		0		47,604			47,604			0		106		106
Total commercial loans and leases	4,239		2,115		10,714		17,068		2,307,134			2,324,202			1,175		19,039		6,248
Consumer loans:
Residential mortgage	1,979		459		3,254		5,692		776,162			781,854			0		3,722		3,260
Home equity	1,056		1		531		1,588		333,118			334,706			4		792		557
Other consumer	12		1		1		14		36,435			36,449			0		2		0
Total consumer loans	3,047		461		3,786		7,294		1,145,715			1,153,009			4		4,516		3,817
Total loans and leases	$	17,680	$	6,522	$	21,719	$	45,921	$	7,221,631		$	7,267,552		$	1,179	$	31,019	$	16,820

There is 0 interest income recognized on non-accrual loans for the three months ended March 31, 2021.

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 acquired loans and leases as of December 31, ~~2019.~~2020.


	At December 31, 2020
	Past Due										Loans and Leases Past Due Greater Than 90 Days and Accruing				Non-accrual with No Related Allowance
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current					Total Loans and Leases					Non-accrual
	(In Thousands)

Commercial real estate loans:
Commercial real estate	$	18,294	$	12,402	$	7,272	$	37,968	$	2,540,805		$	2,578,773		$	4,722	$	3,300	$	2,580
Multi-family mortgage	813		0		0		813		1,012,619			1,013,432			0		0		0
Construction	0		0		7,617		7,617		224,004			231,621			3,764		3,853		3,853
Total commercial real estate loans	19,107		12,402		14,889		46,398		3,777,428			3,823,826			8,486		7,153		6,433
Commercial loans and leases:
Commercial	451		304		9,171		9,926		1,121,742			1,131,668			3,486		7,702		6,263
Equipment financing	5,970		2,263		9,391		17,624		1,074,837			1,092,461			0		16,757		4,062
Condominium association	282		297		0		579		50,191			50,770			0		112		112
Total commercial loans and leases	6,703		2,864		18,562		28,129		2,246,770			2,274,899			3,486		24,571		10,437
Consumer loans:
Residential mortgage	2,161		648		3,841		6,650		784,667			791,317			0		5,587		5,117
Home equity	580		215		588		1,383		345,269			346,652			3		1,136		824
Other consumer	13		0		1		14		32,845			32,859			0		1		0
Total consumer loans	2,754		863		4,430		8,047		1,162,781			1,170,828			3		6,724		5,941
Total loans and leases	$	28,564	$	16,129	$	37,881	$	82,574	$	7,186,979		$	7,269,553		$	11,975	$	38,448	$	22,811

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

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

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

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

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

~~(1) Loans and leases acquired with deteriorated credit quality are 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 TDR loans. 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 present value of expected future cash flows or, in the case of collateral-dependent loans and leases, any increase in the loan or lease amortized 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.

2724

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 loans and leases at the dates indicated. Periods prior to January 1, 2020 are presented in accordance with accounting rules effective at that time.


	At March 31, 2021
	Commercial Real Estate		Commercial		Consumer		Total
	(In Thousands)
Allowance for Loan and Lease Losses:

Individually evaluated	$	132	$	907	$	94	$	1,133
Collectively evaluated	79,797		24,918		3,989		108,704
Total	$	79,929	$	25,825	$	4,083	$	109,837









Loans and Leases:

Individually evaluated	$	14,927	$	20,198	$	6,414	$	41,539
Collectively evaluated	3,775,414		2,304,004		1,146,595		7,226,013
Total	$	3,790,341	$	2,324,202	$	1,153,009	$	7,267,552

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


	At December 31, 2020
	Commercial Real Estate		Commercial		Consumer		Total
	(In Thousands)
Allowance for Loan and Lease Losses:

Individually evaluated	$	183	$	2,020	$	108	$	2,311
Collectively evaluated	79,949		27,478		4,641		112,068
Total loans and leases	$	80,132	$	29,498	$	4,749	$	114,379










Loans and Leases:
Individually evaluated	$	14,159	$	24,727	$	8,760	$	47,646
Collectively evaluated	3,809,667		2,250,172		1,162,068		7,221,907








Total loans and leases	$	3,823,826	$	2,274,899	$	1,170,828	$	7,269,553

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.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

At December 31, 2019

Recorded
Investment ₍₁₎
Unpaid
Principal
Balance Related
Allowance
(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate $ 3,899
$ 3,892
$ —
Commercial 28,539
28,533
—
Consumer 2,237
2,223
—
Total originated with no related allowance recorded 34,675
34,648
—
With an allowance recorded:
Commercial real estate 68
68
7
Commercial 5,980
6,055
1,672
Consumer 1,224
1,220
70
Total originated with an allowance recorded 7,272
7,343
1,749
Total originated impaired loans and leases 41,947
41,991
1,749

Acquired:
With no related allowance recorded:
Commercial real estate 12,365
12,366
—
Commercial 437
437
—
Consumer 3,516
3,516
—
Total acquired with no related allowance recorded 16,318
16,319
—
With an allowance recorded:
Commercial real estate —
—
—
Commercial —
—
—
Consumer 447
447
40
Total acquired with an allowance recorded 447
447
40
Total acquired impaired loans and leases 16,765
16,766
40

Total impaired loans and leases $ 58,712
$ 58,757
$ 1,789

~~(1) Includes originated and acquired nonaccrual loans of $18.5 million and $0.9 million, respectively as of December 31, 2019.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

Three Months Ended
March 31, 2019
Average
Recorded
Investment Interest
Income
Recognized
(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate $ 8,699
$ 65
Commercial 35,162
349
Consumer 2,732
8
Total originated with no related allowance recorded 46,593
422
With an allowance recorded:
Commercial real estate 469
1
Commercial 8,467
28
Consumer 663
6
Total originated with an allowance recorded 9,599
35
Total originated impaired loans and leases 56,192
457

Acquired:
With no related allowance recorded:
Commercial real estate 9,153
3
Commercial 559
4
Consumer 4,943
15
Total acquired with no related allowance recorded 14,655
22
With an allowance recorded:
Commercial real estate —
—
Commercial —
—
Consumer 153
1
Total acquired with an allowance recorded 153
1
Total acquired impaired loans and leases 14,808
23

Total impaired loans and leases $ 71,000
$ 480

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

Troubled Debt Restructuring Loans and ~~Lease~~Leases

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


	At March 31, 2021		At December 31, 2020
	(In Thousands)
Troubled debt restructurings:
On accrual	$	16,770	$	11,483
On nonaccrual	6,293		7,476
Total troubled debt restructurings	$	23,063	$	18,959

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

Total TDR loans and leases ~~decreased~~increased by ~~$0.9~~$4.1 million to ~~$22.3~~$23.1 million at March 31, ~~2020~~2021 from ~~$23.2~~$19.0 million at December 31, ~~2019,~~2020, primarily driven ~~primarily~~ by ~~the payments on commercial TDRs,~~2 new TDR relationships, consisting of 1 $3.7 million construction relationship and 1 $1.3 million equipment financing relationship, partially offset by the ~~advance on a current~~payoff of one TDR ~~loan.~~relationship during the three months ended March 31, 2021.

The amortized cost basis in TDR loans and the associated specific credit losses for the loan and lease portfolios, that were modified during the periods indicated, are as follows.

At and for the Three Months Ended March 31, 2020
Amortized Cost
Specific
Allowance for
Credit Losses

Defaulted ⁽¹⁾

Number of
Loans/
Leases

At
Modification

At End of
Period

Nonaccrual
Loans and
Leases

Number of
Loans/
Leases
Amortized Cost
(Dollars in Thousands)
Originated:
Commercial real estate —
$ —

$ —
$ —
1
$ 228
Commercial 1
$ 297
$ 295
$ —
$ 295
—
$ —
Equipment financing 2
200
200
—
—
—
—
Total 3
$ 497
$ 495
$ —
$ 295
1
$ 228


	At and for the Three Months Ended March 31, 2021
		Amortized Cost				Specific Allowance for Credit Losses				Defaulted (1)
	Number of Loans/ Leases	At Modification		At End of Period				Nonaccrual Loans and Leases		Number of Loans/ Leases		Amortized Cost
	(Dollars in Thousands)

Commercial real estate	1	$	497	$	497	0		0		0		0


Construction	4	2,764		2,764		0		0		0		0
Equipment financing	12	1,718		1,731		0		234		0		0













Total loans and leases	17	$	4,979	$	4,992	$	0	$	234	$	0	$	0

(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, 2020
	At and for the Three Months Ended March 31, 2019																		Recorded Investment				Specific Allowance for Loan and Lease Losses						Defaulted (1)
		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			Number of Loans/ Leases		Recorded Investment
	Number of Loans/ Leases	At Modification		At End of Period				Nonaccrual Loans and Leases			Number of Loans/ Leases		Recorded Investment				(Dollars in Thousands)
	(Dollars in Thousands)
Originated:
Commercial real estate	1	$	73	$	72	$	9		$	—		1		$	635	Commercial real estate		0	0		0		0			0			1		228

Commercial	6	16,754		16,730		—			—			3		1,074		Commercial		1	297		295		0			295			0		0
Equipment financing	3	816		815		182			425			1		52		Equipment financing		2	200		200		0			0			0		0
Residential mortgage	—	—		—		—			—			1		341
Total originated	10	$	17,643	$	17,617	$	191		$	425		6		$	2,102

Total loans and leases																Total loans and leases		3	$	497	$	495	$	0		$	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.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

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

Table of Contents

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
BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	Three Months Ended March 31,
	2021		2020
	(In Thousands)

Extended maturity	$	4,300	$	295



Combination maturity, principal, interest rate	693		200
Total	$	4,993	$	495

The TDR loans and leases that were modified for the three months ended March 31, 2021 and 2020 ~~and 2019~~ were ~~$0.5~~$5.0 million and ~~$17.6~~$0.5 million, respectively. The ~~decrease~~increases in TDR loans and leases that were modified for the three months ended March 31, ~~2020 was~~2021 were primarily due to the modification of ~~three commercial~~2 construction relationships ~~of $16.5 million.~~

~~There were 0 TDR loans~~totaling $2.7 million and ~~leases with more than one modification~~5 equipment finance relationships totaling $1.7 million during the three months ended March 31, ~~2020 and 2019.~~2020.

The net charge-offs for performing and nonperforming TDR loans and leases for the three months ended March 31, 2021 and 2020 were $0.6 million and ~~March 31, 2019 were $134 thousand and $878 thousand,~~$0.1 million, respectively.

The commitments to lend funds to debtors owing receivables whose terms had been modified in TDRs as of March 31, ~~2020~~2021 was ~~$2.3~~$2.1 million. As of March 31, ~~2019,~~2020, there were ~~$2.8~~$2.3 million commitments to lend funds to debtors owing receivables whose terms had been modified in TDRs.

The Coronavirus Aid, Relief and Economic ~~Relief~~Security ("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 the 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~~As of March 31, 2021, the Company granted 4,603 short-term deferments on loan and lease balances of $1.1 billion of which 4,262 loans and leases ~~modified under~~representing balances $955.6 million returned to payment and 341 loans and leases representing balances of $125.7 million remain in deferment. The outstanding deferred loans and leases represent 1.7% of the ~~CARES Act.~~Company's total loan and lease balances.

(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 March 31, 2021		At December 31, 2020
	(In Thousands)
Goodwill	$	160,427	$	160,427



Other intangible assets:
Core deposits	1,831		2,063
Trade name	1,089		1,089

Total other intangible assets	2,920		3,152
Total goodwill and other intangible assets	$	163,347	$	163,579

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 ~~6.1.~~

5.5 years.

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 2021	$	644
Year ending:
2022	494
2023	263
2024	151
2025	103
2026	74
Thereafter	102
Total	$	1,831

(7) Accumulated Other Comprehensive Income (Loss)

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company’s accumulated other comprehensive income (loss) ~~income~~ includes the following ~~two~~three components: (i) unrealized holding gains (losses) on investment securities available-for-sale; (ii) change in the fair value of cash flow hedges and ~~(ii)~~(iii) adjustment of accumulated obligation for postretirement benefits.

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


	Three Months Ended March 31, 2021
	Investment Securities Available-for-Sale		Net Change in Fair Value of Cash Flow Hedges		Postretirement Benefits		Accumulated Other Comprehensive Income (Loss)
	(In Thousands)
Balance at December 31, 2020	$	16,582	$	7	$	(99)	$	16,490
Other comprehensive income (loss)	(14,408)		2		0		(14,406)
Reclassification adjustment for (income) expense recognized in earnings	0		(2)		0		(2)
Balance at March 31, 2021	$	2,174	$	7	$	(99)	$	2,082

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 March 31, 2020
	Investment Securities Available-for-Sale		Net Change in Fair Value of Cash Flow Hedges		Postretirement Benefits		Accumulated Other Comprehensive Income (Loss)
	(In Thousands)
Balance at December 31, 2019	$	2,199	$	0	$	84	$	2,283
Other comprehensive income (loss)	14,664		0		0		14,664
Balance at March 31, 2020	$	16,863	$	0	$	84	$	16,947

~~The Company did 0t reclassify any amounts out of accumulated other comprehensive income for the three months ended March 31, 2020 and March 31, 2019.~~

(8) Derivatives and Hedging Activities

The Company ~~utilizes~~executes loan level ~~derivatives which consist of interest-rate~~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 ~~(swaps, caps and floors), and~~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 ~~participation~~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 ~~as part of~~associated with this program do not meet hedge accounting requirements, changes in the ~~Company's interest-rate risk management strategy for certain assets and liabilities and not for speculative purposes.~~fair value are recognized directly in earnings. Based on the Company's intended use for the loan level derivatives at inception, the

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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~~believes using interest rate derivatives adds stability to interest income and expense and allows the Company to manage its exposure to interest rate movements. The Company enters into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed payments. The Company enters into interest rate swaps as hedging instruments against the interest rate risk associated with the Company's FHLB borrowings. For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of other comprehensive income ("OCI"), and is reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of March 31, ~~2020 or December 31, 2019.~~

~~Derivatives not~~2021, the Company paid its counterparties a fixed weighted average interest rate of 0.08% over a maximum period of 2 years for derivative instruments that are 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~~and qualify 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.cash flow hedging instruments.

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

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
March 31, 2020
(Dollars In Thousands)
Loan level derivatives
Receive fixed, pay variable 129
$ 24,358
$ —
$ 33,455
$ 14,220
$ 1,159,063
$ 1,231,096
$ 154,032
Pay fixed, receive variable 129
24,358
—
33,455
14,220
1,159,063
1,231,096
154,032
Risk participation-out agreements 40
13,731
—
7,110
12,773
200,232
233,846
2,473
Risk participation-in agreements 6
—
—
—
19,000
30,279
49,279
432

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


	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
	March 31, 2021
	(Dollars In Thousands)
Loan level derivatives
Receive fixed, pay variable	134	$	0	$	10,876	$	13,949	$118,504		$	1,089,153	$	1,232,482	$	71,310
Pay fixed, receive variable	134	0		10,876		13,949		118,504		1,089,153		1,232,482		71,310
Risk participation-out agreements	37	0		0		6,975		22,718		233,737		263,430		1,019
Risk participation-in agreements	8	0		0		18,929		0		41,360		60,289		205

Foreign exchange contracts
Buys foreign currency, sells U.S. currency	16	$	1,416	$	0	$	0	$	0	$	0	$	1,416	$	99
Sells foreign currency, buys U.S. currency	21	1,422		0		0		0		0		1,422		93

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	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, 2020
	(Dollars In Thousands)
Loan level derivatives
Receive fixed, pay variable	136	$	0	$	8,541	$	16,447	$	99,014	$	1,090,144	$	1,214,146	$	129,284
Pay fixed, receive variable	136	0		8,541		16,447		99,014		1,090,144		1,214,146		129,284
Risk participation-out agreements	37	0		0		7,009		22,733		222,913		252,655		1,843
Risk participation-in agreements	8	0		0		19,000		0		41,619		60,619		361

Foreign exchange contracts
Buys foreign currency, sells U.S. currency	18	$	1,266	$	0	$	0	$	0	$	0	$	1,266	$	156
Sells foreign currency, buys U.S. currency	20	1,273		0		0		0		0		1,273		148

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

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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 ~~$155.2~~$149.4 million and ~~$86.5~~$166.5 million in the normal course of business as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, 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 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
Financial Instruments Pledged Cash Collateral Pledged
(In Thousands)
Asset derivatives
Loan level derivatives $ 154,761
$ —
$ 154,761
$ —
$ —
$ 154,761
Risk participation-out agreements 2,473
—
2,473
—
—
2,473
Foreign exchange contracts 224
—
224
—
—
224
Total $ 157,458
$ —
$ 157,458
$ —
$ —
$ 157,458

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


	At March 31, 2021
	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
Derivatives designated as hedging instruments:
Interest rate derivatives	$	10	$	0	$	10	$	0	$	0	$	10
Derivatives not designated as hedging instruments:
Loan level derivatives	$	84,128	$	0	$	84,128	$	0	$	0	$	84,128
Risk participation-out agreements	1,019		0		1,019		0		0		1,019
Foreign exchange contracts	99		0		99		0		0		99
Total	$	85,256	$	0	$	85,256	$	0	$	0	$	85,256

Liability derivatives
Derivatives designated as hedging instruments:
Interest rate derivatives	$	2	$	0	$	2	$	0	$	0	$	2
Derivatives not designated as hedging instruments:
Loan level derivatives	$	84,128	$	0	$	84,128	$	138,110	$	11,280	$	(65,262)
Risk participation-in agreements	205		0		205		0		0		205
Foreign exchange contracts	93		0		93		0		0		93
Total	$	84,428	$	0	$	84,428	$	138,110	$	11,280	$	(64,962)

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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
Financial Instruments Pledged Cash Collateral Pledged
(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, 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
							Financial Instruments Pledged		Cash Collateral Pledged
	(In Thousands)
Asset derivatives
Interest rate derivatives	$	8	$	0	$	8	$	0	$	0	$	8
Loan level derivatives	131,328		0		131,328		0		0		131,328
Risk participation-out agreements	1,843		0		1,843		0		0		1,843
Foreign exchange contracts	156		0		156		0		0		156
Total	$	133,335	$	0	$	133,335	$	0	$	0	$	133,335

Liability derivatives
Loan level derivatives	$	131,328	$	0	$	131,328	$	155,220	$	11,280	$	(35,172)
Risk participation-in agreements	361		0		361		0		0		361
Foreign exchange contracts	148		0		148		0		0		148
Total	$	131,837	$	0	$	131,837	$	155,220	$	11,280	$	(34,663)

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.


	Fair Value
	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(Dollars in Thousands)

Derivatives designated as hedges	$	8	$	0
Gain in OCI on derivatives (effective portion), net of tax	$	7	$	0
Gain (loss) reclassified from OCI into interest income or interest expense (effective portion)	$	2	$	0

The guidance in ASU 2017-12 requires that amounts in accumulated other comprehensive income that are included in the assessment of effectiveness should be reclassified into earnings in the same period in which the hedged forecasted transactions impact earnings. A portion of the balance reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made or received on the Company’s interest rate swaps. The Company monitors the risk of counterparty default on an ongoing basis.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

(9) Stock Based Compensation

As of March 31, ~~2020,~~2021, the Company had 2 active equity plans: 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 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 1514 financial institutions. These are referred to as "performance-based shares". 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 the Plans, shares of the Company's common stock ~~were~~are 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 months ended March 31, ~~2020~~2021 and ~~2019,~~March 31, 2020, 0 shares were issued upon satisfaction of required conditions of the Plans.

Total expense for the Plans was ~~$0.6~~$0.5 million and ~~$0.9~~$0.6 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

(10) Earnings per Share ("EPS")

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


	Three Months Ended											Three Months Ended
	March 31, 2020						March 31, 2019					March 31, 2021				March 31, 2020
	Basic			Fully Diluted			Basic		Fully Diluted			Basic		Fully Diluted		Basic		Fully Diluted
	(Dollars in Thousands, Except Per Share Amounts)											(Dollars in Thousands, Except Per Share Amounts)
Numerator:											Numerator:
Net (loss) income	$	(17,276	)	$	(17,276	)	$	22,467	$	22,467
Net income											Net income	$	26,454	$	26,454	$	(17,276)	$	(17,276)

Denominator:											Denominator:
Weighted average shares outstanding	79,481,462			79,481,462			79,658,583		79,658,583		Weighted average shares outstanding	78,143,752		78,143,752		79,481,462		79,481,462
Effect of dilutive securities	—			184,312			—		184,995		Effect of dilutive securities	—		260,311		—		184,312
Adjusted weighted average shares outstanding	79,481,462			79,665,774			79,658,583		79,843,578		Adjusted weighted average shares outstanding	78,143,752		78,404,063		79,481,462		79,665,774

EPS	$	(0.22	)	$	(0.22	)	$	0.28	$	0.28	EPS	$	0.34	$	0.34	$	(0.22)	$	(0.22)

(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 months ended March 31, ~~2020~~2021 and ~~2019.~~

December 31, 2020.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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 March 31, 2020
Level 1 Level 2 Level 3 Total
(In Thousands)
Assets:

Investment securities available-for-sale:
GSE debentures $ —
$ 237,816
$ —
$ 237,816
GSE CMOs —
63,527
—
63,527
GSE MBSs —
328,499
—
328,499
SBA commercial loan asset-backed securities —
1
—
1
Municipal obligations —
45,618
—
45,618
Corporate debt obligations —
25,959
—
25,959
U.S. Treasury bonds —
59,634
—
59,634
Foreign government obligations —
485
—
$ 485
Total investment securities available-for-sale $ —
$ 761,539
$ —
$ 761,539
Equity securities held-for-trading $ 1,527
$ 1,031
$ —
$ 2,558
Loan level derivatives —
154,761
—
154,761
Risk participation-out agreements —
2,473
—
2,473
Foreign exchange contracts —
224
—
224
Liabilities:
Loan level derivatives $ —
$ 154,761
$ —
$ 154,761
Risk participation-in agreements —
432
—
432
Foreign exchange contracts —
200
—
200


	Carrying Value as of March 31, 2021
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Investment securities available-for-sale:
GSE debentures	$	0	$	271,526	$	0	$	271,526
GSE CMOs	0		40,925		0		40,925
GSE MBSs	0		276,066		0		276,066




Corporate debt obligations	0		23,247		0		23,247
U.S. Treasury bonds	0		117,641		0		117,641


Foreign government obligations	0		496		0		496
Total investment securities available-for-sale	$	0	$	729,901	$	0	$	729,901
Equity securities held-for-trading	$	0	$	518	$	0	$	518

Interest rate derivatives	0		10		0		10

Loan level derivatives	0		84,128		0		84,128
Risk participation-out agreements	0		1,019		0		1,019
Foreign exchange contracts	0		99		0		99
Liabilities:
Interest rate derivatives	$	0	$	2	$	0	$	2

Loan level derivatives	0		84,128		0		84,128
Risk participation-in agreements	0		205		0		205
Foreign exchange contracts	0		93		0		93

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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


	Carrying Value as of December 31, 2020
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Investment securities available-for-sale:
GSE debentures	$	0	$	278,645	$	0	$	278,645
GSE CMOs	0		46,028		0		46,028
GSE MBSs	0		323,609		0		323,609




Corporate debt obligations	0		23,467		0		23,467
U.S. Treasury bonds	0		73,577		0		73,577
Foreign government obligations	0		496		0		496


Total investment securities available-for-sale	$	0	$	745,822	$	0	$	745,822
Equity securities held-for-trading	$	0	$	526	$	0	$	526
Interest rate derivatives	0		8		0		8
Loan level derivatives	0		131,328		0		131,328
Risk participation-out agreements	0		1,843		0		1,843
Foreign exchange contracts	0		156		0		156
Liabilities:
Loan level derivatives	0		131,328		0		131,328
Risk participation-in agreements	0		361		0		361
Foreign exchange contracts	0		148		0		148

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. 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 March 31, ~~2020~~2021 and December 31, ~~2019, no~~2020, none of the 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,~~value of interest rate derivatives designated as hedging instruments, loan level derivatives, risk participation agreements (RPA in/out), and foreign exchange ~~derivatives~~contracts represent a Level 2 valuation and are based on settlement values

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

adjusted for credit risks associated with the counterparties and the Company and observable market interest rate curves and foreign exchange rates where applicable.

~~Table of Contents~~

~~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 months ended March 31, ~~2020~~2021 and ~~2019,~~December 31, 2020, respectively.

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 March 31, 2020									Carrying Value as of March 31, 2021
	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:									Assets measured at fair value on a non-recurring basis:
Collateral-dependent impaired loans and leases	$	—	$	—	$	8,682	$	8,682	Collateral-dependent impaired loans and leases	$	0	$	0	$	844	$	844
OREO									OREO	0		0		5,328		5,328
Repossessed assets	—		2,038		—		2,038		Repossessed assets	0		1,055		0		1,055
Total assets measured at fair value on a non-recurring basis	$	—	$	2,038	$	8,682	$	10,720	Total assets measured at fair value on a non-recurring basis	$	0	$	1,055	$	6,172	$	7,227

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, 2020
	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	$	0	$	0	$	3,445	$	3,445
OREO	0		0		5,415		5,415
Repossessed assets	0		1,100		0		1,100
Total assets measured at fair value on a non-recurring basis	$	0	$	1,100	$	8,860	$	9,960

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 non-recurring basis at the dates indicated.

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⁾

~~_______________________________________________________________________________~~


	Fair Value				Valuation Technique
	At March 31, 2021		At December 31, 2020
	(Dollars in Thousands)

Collateral-dependent impaired loans and leases	$	844	$	3,445	Appraisal of collateral (1)
Other real estate owned	5,328		5,415		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.

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, 2021
	Carrying Value		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In Thousands)
Financial assets:






Loans and leases, net	$	7,157,715	$	7,122,319	$	0	$	0	$	7,122,319
Restricted equity securities	40,400		40,400		0		0		40,400



Financial liabilities:

Certificates of deposits	1,743,656		1,751,374		0		1,751,374		0
Borrowed funds	546,003		539,957		0		539,957		0

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 at December 31, 2020
	Carrying Value	Estimated Fair Value	Level 1 Inputs	Level 2 Inputs	Level 3 Inputs
	(In Thousands)
Financial assets:






Loans and leases, net	7,155,174	7,116,854	0	0	7,116,854
Restricted equity securities	49,786	49,786	0	0	49,786


Financial liabilities:
Certificates of deposit	2,083,907	2,092,867	0	2,092,867	0
Borrowed funds	820,247	818,681	0	818,681	—

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
—

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~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 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). 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.

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.

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 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)

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 March 31, 2021		At December 31, 2020
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	107,597	$	174,240
Commercial	105,426		80,291
Residential mortgage	82,366		30,418
Unadvanced portion of loans and leases	826,545		759,053
Unused lines of credit:
Home equity	591,377		584,881
Other consumer	41,583		38,954
Other commercial	431		408
Unused letters of credit:
Financial standby letters of credit	15,953		14,746
Performance standby letters of credit	6,607		5,903
Commercial and similar letters of credit	5,369		5,105
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	1,232,482		1,214,146
Pay fixed, receive variable	1,232,482		1,214,146
Risk participation-out agreements	263,430		252,655
Risk participation-in agreements	60,289		60,619
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	1,416		1,266
Sells foreign currency, buys U.S. currency	1,422		1,273

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 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 a 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 $157.5 million and $155.4 million, respectively, as of March 31, 2020. The fair value of derivative assets and liabilities was $60.6 million and $59.7 million, respectively, as of December 31, 2019.

these derivatives are presented in Footnote 8.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The fair value of foreign exchange assets and liabilities was $224 thousand and $200 thousand, respectively, as of March 31, 2020. The fair value of foreign exchange assets and liabilities was $54 thousand and $53 thousand as of December 31, 2019.

Lease Commitments

The Company leases certain office space under various noncancellable operating leases as well as certain other assets. These leases have original terms ranging from 3 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~~March 31, 2021 as the discount rate to determine the net present value of the remaining lease payments.


	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In Thousands)
The components of lease expense were as follow:
Operating lease cost	$	1,563	$	1,611





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	$	1,579	$	1,658

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, 2021			At December 31, 2020
	(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets	$	23,180		$	24,143


Operating lease liabilities	23,180			24,143











Weighted Average Remaining Lease Term
Operating leases	6.80			6.95


Weighted Average Discount Rate
Operating leases	3.2		%	3.2		%

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 %
40

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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
	March 31, 2021
	(In Thousands)

Remainder of 2021	$	4,596
Year ending:
2022	5,569
2023	4,643
2024	3,366
2025	2,343
2026	1,559
Thereafter	3,571
Total	$	25,647
Less imputed interest	(2,467)
Present value of lease liability	$	23,180

Certain leases contain escalation clauses for real estate taxes and other expenditures, which are not included above. The total real estate taxes were $0.5 million and other expenditures were $0.1 million for both the three months ended March 31, ~~2020~~2021, and ~~2019.~~2020. Total rental expense was ~~$1.6~~$1.5 million and ~~$1.4~~$1.6 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

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.

4641

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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, 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; changes in consumer behavior due to changing political, business and economic conditions, including increased unemployment, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in 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 possibility that future credit losses may be higher than currently expected; due to changes in economic assumptions and adverse economic developments; 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; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 and other filings submitted to the Securities and Exchange ~~Commission ("SEC").~~Commission. 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"); 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 5150 full-service banking offices throughout greater Boston, the north shore of Massachusetts and Rhode Island, the Company, through Brookline Bank and 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, ~~27.8%~~12.7% of which is in the greater New York and New Jersey metropolitan area and ~~72.2%~~87.3% of which is in other areas in the United States of America as of March 31, ~~2020.~~2021.

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, excellent customer service, and strong risk management.

The Company manages the Banks under a uniform strategic 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

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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. 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 FRB. A sustained, low interest rate environment with a flat interest rate curve may negatively impact the Company's yields and net interest margin. While the Company is slightly asset sensitive and should benefit from rising rates, 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 trust company, Brookline Bank 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. As previously disclosed, on July 31, 2019, Brookline Bank converted its charter from a Massachusetts savings bank to a Massachusetts-chartered trust company and ended its membership in the Depositors Insurance Fund ~~(“DIF”~~(the “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 Brookline Bank’s withdrawal from the DIF 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 coverage will continue to be insured by the DIF until they reach maturity.

On March 27, 2020, Congress passed, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted 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. Additionally, on December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”) was signed into law and provides for a second round of PPP loans (the "PPP-2"). The Banks are participating in the PPP-2 as of March 31, 2021. PPP loans are fully guaranteed by the U.S. government, have an initial term of up to five years and earn interest at a 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. Through March 31, 2021, the Banks funded 1,342 PPP-2 loans representing $249.5 million. In the first round of PPP funding, the Banks funded 2,922 PPP loans totaling $581.7 million. In conjunction with the PPP, the FRB has created a lending facility for qualified financial institutions. The FRB's Paycheck Protection Program Liquidity Facility ("PPPLF") will extend credit to depository institutions with a term of up to five 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. As of the filing date, the Banks have obtained SBA approval for 1,613 PPP-2 loans totaling $260 million. All PPP-2 loans have been funded.

•Troubled Debt Restructuring Relief. From March 1, 2020 through the earlier of January 1, 2022 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 March 31, 2021, the Company granted 4,603 short-term deferments on loan and lease balances of $1.1 billion. Of these modifications, 4,262 loans and leases with total balances of $955.6 million have returned to the payment status and 341 loans and leases with total balances of $125.7 million remain on the deferral status, which represents 1.7% of the Company's total loan and lease balances. 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.

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~~

Table of ~~the COVID-19 pandemic.~~Contents

•

~~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
	March 31,			December 31,			September 30,			June 30,			March 31,
	2021			2020			2020			2020			2020
	(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA
Earnings per share - Basic	$	0.34		$	0.34		$	0.24		$	0.25		$	(0.22)
Earnings per share - Diluted	0.34			0.34			0.24			0.25			(0.22)
Book value per share (end of period)	12.10			12.05			11.84			11.75			11.57
Tangible book value per share (end of period) (1)	10.01			9.96			9.77			9.67			9.49
Dividends paid per common share	0.115			0.115			0.115			0.115			0.115
Stock price (end of period)	15.00			12.04			8.65			10.08			11.28

PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	3.39		%	3.23		%	3.08		%	3.09		%	3.31		%
Return on average assets	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%
Return on average tangible assets (1)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%
Return on average stockholders' equity	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%
Return on average tangible stockholders' equity (1)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%
Dividend payout ratio (1)	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%
Efficiency ratio (3)	55.22		%	55.27		%	57.83		%	55.46		%	57.36		%

ASSET QUALITY RATIOS
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.10		%	0.24		%	0.27		%	0.08		%	0.13		%
Nonperforming loans and leases as a percentage of total loans and leases	0.43		%	0.53		%	0.51		%	0.56		%	0.57		%
Nonperforming assets as a percentage of total assets	0.44		%	0.50		%	0.44		%	0.47		%	0.49		%
Total allowance for loan and lease losses as a percentage of total loans and leases	1.51		%	1.57		%	1.62		%	1.61		%	1.66		%

CAPITAL RATIOS
Stockholders' equity to total assets	11.04		%	10.53		%	10.39		%	10.21		%	10.78		%
Tangible equity ratio (1)	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%

FINANCIAL CONDITION DATA
Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591
Total loans and leases	7,267,552			7,269,553			7,396,358			7,407,697			6,822,527
Allowance for loan and lease losses	109,837			114,379			119,971			119,553			113,181
Investment securities available-for-sale	729,901			745,822			783,867			854,505			761,539
Investment securities held-to-maturity	—			—			—			—			—
Equity securities held-for-trading	518			526			525			1,992			2,558
Goodwill and identified intangible assets	163,347			163,579			163,891			164,203			164,514
Total deposits	6,866,786			6,910,696			6,792,523			6,440,233			5,889,938
Total borrowed funds	546,003			820,247			1,005,045			1,406,669			1,291,804
Stockholders' equity	945,399			941,778			935,558			926,413			912,568

													(Continued)

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At and for the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2020 2019 2019 2019 2019
(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA
Earnings per share - Basic $ (0.22 ) $ 0.28
$ 0.28
$ 0.26
$ 0.28
Earnings per share - Diluted (0.22 ) 0.28
0.28
0.26
0.28
Book value per share (end of period) 11.57
11.87
11.70
11.53
11.30
Tangible book value per share (end of period) (1) 9.49
9.80
9.63
9.45
9.22
Dividends paid per common share 0.115
0.115
0.110
0.110
0.105
Stock price (end of period) 11.28
16.46
14.73
15.38
14.40

PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis) 3.31 % 3.43 % 3.45 % 3.55 % 3.64 %
Return on average assets (0.87 )% 1.13 % 1.17 % 1.08 % 1.21 %
Return on average tangible assets (1) (0.89 )% 1.15 % 1.19 % 1.11 % 1.24 %
Return on average stockholders' equity (7.30 )% 9.42 % 9.74 % 8.98 % 10.14 %
Return on average tangible stockholders' equity (1) (8.84 )% 11.42 % 11.85 % 10.98 % 12.48 %
Dividend payout ratio (1) (53.10 )% 41.35 % 38.88 % 42.87 % 37.28 %
Efficiency ratio (3) 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) 0.13 % 0.10 % 0.02 % 0.19 % 0.13 %
Nonperforming loans and leases as a percentage of total loans and leases 0.57 % 0.29 % 0.33 % 0.33 % 0.36 %
Nonperforming assets as a percentage of total assets 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 1.66 % 0.91 % 0.89 % 0.90 % 0.91 %

CAPITAL RATIOS
Stockholders' equity to total assets 10.78 % 12.04 % 11.83 % 12.03 % 11.98 %
Tangible equity ratio (1) 9.02 % 10.15 % 9.94 % 10.08 % 9.99 %

FINANCIAL CONDITION DATA
Total assets $ 8,461,591
$ 7,856,853
$ 7,878,436
$ 7,636,980
$ 7,519,130
Total loans and leases 6,822,527
6,737,816
6,646,821
6,505,329
6,388,197
Allowance for loan and lease losses 113,181
61,082
59,135
58,635
58,041
Investment securities available-for-sale 761,539
498,995
467,339
482,497
489,020
Investment securities held-to-maturity —
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 164,514
164,850
165,270
165,691
166,111
Total deposits 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)


													At and for the Three Months Ended
	At and for the Three Months Ended												March 31,		December 31,		September 30,		June 30,		March 31,
	March 31,			December 31,		September 30,		June 30,		March 31,			2021		2020		2020		2020		2020
	2020			2019		2019		2019		2019			(Dollars in Thousands, Except Per Share Data)
	(Dollars in Thousands, Except Per Share Data)
EARNINGS DATA												EARNINGS DATA
Net interest income	$	61,712		$	63,931	$	63,236	$	63,134	$	62,999	Net interest income	$	69,109	$	68,225	$	65,938	$	64,288	$	61,712
Provision for credit losses	54,114			3,602		871		3,757		1,353		Provision for credit losses	(2,147)		(2,103)		4,528		5,347		54,114
Non-interest income	9,328			7,756		7,929		7,478		6,630		Non-interest income	4,794		4,219		4,862		6,235		9,328
Non-interest expense	40,748			38,815		40,191		39,604		38,871		Non-interest expense	40,811		40,038		40,947		39,109		40,748
Net (loss) income	(17,276		)	22,183		22,596		20,471		22,467
Net income (loss)												Net income (loss)	26,454		26,663		18,679		19,571		(17,276)

(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~~Balance Sheet

Total assets of ~~$8.5~~$8.6 billion as of March 31, ~~2020 increased $604.7~~2021 decreased $382.6 million, or ~~30.8%~~17.1% on an annualized basis, from December 31, ~~2019.~~2020. The ~~increase~~decrease was primarily driven by ~~growth~~decreases in cash and cash equivalents ~~investment securities,~~ and ~~the loan portfolio.~~other assets.

Cash and cash equivalents as of March 31, 2021 decreased $304.0 million, or 279.6% on an annualized basis, to $130.9 million from December 31, 2020.

Total loans and leases as of March 31, ~~2020 increased $84.7~~2021 decreased $2.0 million, or ~~5.0%~~0.1% on an annualized basis, to ~~$6.8~~$7.3 billion from December 31, ~~2019.~~2020. The Company's commercial loan portfolios, which are comprised of commercial real estate loans and commercial loans and leases, totaled ~~$5.6~~$6.1 billion, or ~~81.9%~~84.1% of total loans and leases as of March 31, ~~2020,~~2021, an increase of ~~$81.1~~$15.8 million, or ~~5.9%~~1.0% on an annualized basis, from ~~$5.5~~$6.1 billion, or ~~81.7%~~83.9% of total loans and leases, as of December 31, ~~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, 2019.2020.

Total deposits of ~~$5.9~~$6.9 billion as of March 31, ~~2020 increased $59.9~~2021 decreased $43.9 million, or ~~4.1%~~2.5% on an annualized basis, from December 31, ~~2019.~~2020. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled ~~$3.9~~$5.1 billion, or ~~65.6%~~74.6% of total deposits as of March 31, ~~2020,~~2021, an increase of ~~$57.9~~$296.3 million, or ~~6.1%~~24.6% on an annualized basis from ~~$3.8~~$4.8 billion, or ~~65.3%~~69.8% of total deposits, as of December 31, ~~2019.~~2020. Certificate of deposit balances totaled ~~$2.0~~$1.3 billion, or ~~34.4%~~18.5% of total deposits as of March 31, ~~2020, an increase~~2021, a decrease of ~~$2.0~~$116.9 million, or ~~0.4%~~33.6% on an annualized basis from ~~$2.0~~$1.4 billion, or ~~34.7%~~20.1% of total deposits, as of December 31, ~~2019.~~2020. Brokered deposits totaled $470.6 million, or 6.9% of total deposits as of March 31, 2021, a decrease of $223.4 million, or 128.8% on an annualized basis from $693.9 million, or 10.0% of total deposits, as of December 31, 2020.

Total borrowed funds as of March 31, ~~2020~~ ~~increased $389.1~~2021 decreased $274.2 million, or ~~172.4%~~133.7% on an annualized basis, to ~~$1.3~~$0.5 billion from December 31, ~~2019.~~2020.

Asset Quality

Nonperforming assets as of March 31, ~~2020~~2021 totaled ~~$41.1~~$37.4 million, or ~~0.49%~~0.44% of total assets, compared to ~~$22.1~~$45.0 million, or ~~0.28%~~0.50% of total assets, as of December 31, ~~2019.~~2020. Net charge-offs for the three months ended March 31, ~~2020~~2021 were ~~$2.2~~$1.8 million, or ~~0.13%~~0.10% of average loans and leases on an annualized basis, compared to ~~$2.1~~$2.2 million, or 0.13% of average loans and leases on an annualized basis, for the three months ended March 31, ~~2019.~~2020.

The ratio of the allowance for loan and lease losses to total loans and leases was ~~1.66%~~1.51% as of March 31, ~~2020,~~2021, compared to ~~0.91%~~1.57% as of December 31, ~~2019.~~2020. On January 1, 2020, the Company implemented the CECL methodology to calculate the allowance for credit losses. Refer also to Note 5, "Allowance for Loan and Lease Losses."

Table of Contents

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 was ~~10.42%~~11.65% as of March 31, ~~2020,~~2021, compared to ~~11.44%~~11.04% as of December 31, ~~2019.~~2020. The Company's Tier 1 leverage ratio was ~~9.54%~~9.26% as of March 31, ~~2020,~~2021, compared to ~~10.28%~~8.92% as of December 31, ~~2019.~~2020. As of March 31, ~~2020,~~2021, the Company's Tier 1 risk-based capital ratio was ~~10.55%~~11.79%, compared to ~~11.58%~~11.18% as of December 31, ~~2019.~~2020. The Company's Total risk-based capital ratio was ~~12.86%~~14.15% as of March 31, ~~2020,~~2021, compared to ~~13.59%~~13.51% as of December 31, ~~2019.~~

2020.

The Company's ratio of stockholders' equity to total assets was ~~10.78%~~11.04% and ~~12.04%~~10.53% as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The Company's tangible equity ratio was ~~9.02%~~9.31% and ~~10.15%~~8.86% as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Net Income (Loss)

For the three months ended March 31, ~~2020,~~2021, the Company reported anet income of $26.5 million, or $0.34 per basic and diluted share, an increase of $43.7 million, or 253.1%, from net loss of $(17.3) million, or $(0.22) per basic and diluted share ~~a decrease of $39.7 million, from net income of $22.5 million, or $0.28 per basic and diluted share~~ for the three months ended March 31, ~~2019.~~2020. This increase in net ~~loss~~income is primarily the result of ~~an increase~~a decrease in the provision for credit losses of ~~$52.8~~$56.3 million ~~a decrease~~and an increase in net interest income of ~~$1.3 million, and an increase in non-interest expense of $1.9~~$7.4 million, partially offset by an increase in ~~non-interest income of $2.7 million and a decrease in~~ the provision for income taxes of ~~$13.4~~$15.3 million and a decrease in non-interest income of $4.5 million. Refer to “Results of Operations" below for further discussion.

The annualized return on average assets was 1.21% for the three months ended March 31, 2021, compared to (0.87)% for the three months ended March 31, ~~2020, compared to 1.21% for the three months ended March 31, 2019.~~2020. The annualized return on average stockholders' equity was 11.18% for the three months ended March 31, 2021, compared to (7.30)% for the three months ended March 31, ~~2020, compared to 10.14%~~2020.

The net interest margin was 3.39% for the three months ended March 31, ~~2019.~~

~~The net interest margin was~~2021, up from 3.31% for the three months ended March 31, ~~2020, down from 3.64% for the three months ended March 31, 2019.~~2020. The ~~decrease~~increase in the net interest margin is a result of a decrease ~~in the yield on interest-earning assets~~ of ~~38 basis points to 4.46% for the three months ended March 31, 2020 from 4.84% for the three months ended March 31, 2019, partially offset by a decrease of 10~~79 basis points in the Company's overall cost of funds to 0.50% for the three months ended March 31, 2021 from 1.29% for the three months ended March 31, 2020, ~~from 1.39%~~partially offset by a decrease in the yield on interest-earning assets of 66 basis points to 3.80% for the three months ended March 31, ~~2019.~~2021 from 4.46% for the three months ended March 31, 2020.

The Company’s net interest margin and net interest income is sensitive to the structure and level of interest rates as well as competitive pricing in all loan and 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 ~~2019~~2020 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~~credit losses 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)~~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~~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~~Table of ~~March 31, 2020.~~Contents

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. 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 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
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



	At and for the Three Months Ended March 31,
	2021		2020
	(Dollars in Thousands)
Net income (loss), as reported	$	26,454	$	(17,276)

Less:
Security (losses) gains (after-tax)	(5)		964



Operating earnings (loss)	$	26,459	$	(18,240)

Basic earnings (loss) per share, as reported	$	0.34	$	(0.22)
Less:
Security (losses) gains (after-tax)	—		0.01




Basic operating earnings (loss) per share	$	0.34	$	(0.23)

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

Table of Contents


	Three Months Ended																Three Months Ended
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019				March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)																(Dollars in Thousands)
Operating (loss) earnings	$	(18,240	)	$	22,082		$	23,528		$	20,203		$	22,364
Operating earnings (loss)																Operating earnings (loss)	$	26,459		$	26,663		$	18,639		$	19,131		$	(18,240)

Average total assets	$	7,965,826		$	7,860,593		$	7,746,492		$	7,571,396		$	7,434,038		Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826
Less: Average goodwill and average identified intangible assets, net	164,701			165,071			165,493			165,914			166,327			Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible assets	$	7,801,125		$	7,695,522		$	7,580,999		$	7,405,482		$	7,267,711		Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125

Return on average assets (annualized)	(0.87		)%	1.13		%	1.17		%	1.08		%	1.21		%	Return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%
Less:																Less:
Security gains (losses)	0.05		%	0.01		%	—		%	0.01		%	0.01		%
Add:
Merger and restructuring-related expenses	—		%	—		%	0.04		%	—		%	—		%
Security gains																Security gains	—		%	—		%	—		%	0.02		%	0.05		%

Operating return on average assets (annualized)	(0.92		)%	1.12		%	1.21		%	1.07		%	1.20		%	Operating return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.86		%	(0.92)		%

Return on average tangible assets (annualized)	(0.89		)%	1.15		%	1.19		%	1.11		%	1.24		%	Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%
Less:																Less:
Security gains (losses)	0.05		%	0.01		%	—		%	0.02		%	0.01		%
Add:
Merger and restructuring-related expenses	—		%	—		%	0.05		%	—		%	—		%
Security gains																Security gains	—		%	—		%	—		%	0.02		%	0.05		%

Operating return on average tangible assets (annualized)	(0.94		)%	1.15		%	1.24		%	1.09		%	1.23		%	Operating return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.88		%	(0.94)		%

Average total stockholders' equity	$	946,138		$	941,891		$	928,063		$	911,824		$	886,639		Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138
Less: Average goodwill and average identified intangible assets, net	164,701			165,071			165,493			165,914			166,327			Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible stockholders' equity	$	781,437		$	776,820		$	762,570		$	745,910		$	720,312		Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437

Return on average stockholders' equity (annualized)	(7.30		)%	9.42		%	9.74		%	8.98		%	10.14		%	Return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%
Less:																Less:
Security gains (losses)	0.41		%	0.04		%	(0.04		)%	0.12		%	0.05		%	Security gains (losses)	—		%	—		%	0.01		%	0.19		%	0.41		%
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		%	Operating return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.98		%	8.26		%	(7.71)		%




Return on average tangible stockholders' equity (annualized)																Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%
Less:																Less:
Security gains (losses)																Security gains (losses)	—		%	—		%	0.02		%	0.24		%	0.49		%
													(Continued)

Operating return on average tangible stockholders' equity (annualized)																Operating return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.68		%	10.04		%	(9.33)		%

Table of Contents

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 %


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Net income (loss), as reported	$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)

Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125

Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%

Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437

Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%

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


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Total stockholders' equity	$	945,399		$	941,778		$	935,558		$	926,413		$	912,568
Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514
Tangible stockholders' equity	$	782,052		$	778,199		$	771,667		$	762,210		$	748,054

Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591
Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514
Tangible assets	$	8,396,463		$	8,778,845		$	8,836,301		$	8,905,464		$	8,297,077

Tangible equity ratio	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%

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Three Months Ended
March 31,
2020 December 31,
2019 September 30,
2019 June 30,
2019 March 31,
2019
(Dollars in Thousands)
Total stockholders' equity $ 912,568
$ 945,606
$ 932,311
$ 918,468
$ 900,572
Less: Goodwill and identified intangible assets, net 164,514
164,850
165,270
165,691
166,111
Tangible stockholders' equity $ 748,054
$ 780,756
$ 767,041
$ 752,777
$ 734,461

Total assets $ 8,461,591
$ 7,856,853
$ 7,878,436
$ 7,636,980
$ 7,519,130
Less: Goodwill and identified intangible assets, net 164,514
164,850
165,270
165,691
166,111
Tangible assets $ 8,297,077
$ 7,692,003
$ 7,713,166
$ 7,471,289
$ 7,353,019

Tangible equity ratio 9.02 % 10.15 % 9.94 % 10.08 % 9.99 %

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

Three Months Ended
March 31,
2020 December 31,
2019 September 30, 2019 June 30,
2019 March 31,
2019
(Dollars in Thousands)
Tangible stockholders' equity $ 748,054
$ 780,756
$ 767,041
$ 752,777
$ 734,461

Common shares issued 85,177,172
85,177,172
85,177,172
85,177,172
85,177,172
Less:
Treasury shares 5,862,811
5,003,127
5,003,127
5,025,764
5,020,025
Unallocated ESOP 72,441
79,548
92,337
98,208
104,079
Unvested restricted stock 395,085
406,450
407,784
377,122
390,636
Common shares outstanding 78,846,835
79,688,047
79,673,924
79,676,078
79,662,432

Tangible book value per share $ 9.49
$ 9.80
$ 9.63
$ 9.45
$ 9.22


	Three Months Ended
	March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
	(Dollars in Thousands)
Tangible stockholders' equity	$	782,052	$	778,199	$	771,667	$	762,210	$	748,054

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	6,534,602		6,525,783		5,629,854		5,859,708		5,862,811
Unallocated ESOP	44,502		51,114		58,227		65,334		72,441
Unvested restricted stock	449,981		458,800		487,318		398,188		395,085
Common shares outstanding	78,148,087		78,141,475		79,001,773		78,853,942		78,846,835

Tangible book value per share	$	10.01	$	9.96	$	9.77	$	9.67	$	9.49

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


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Dividends paid	$	8,992		$	9,055		$	9,092		$	9,076		$	9,173

Net income (loss), as reported	$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)

Dividend payout ratio	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Allowance for loan and lease losses	$	109,837		$	114,379		$	119,971		$	119,553		$	113,181

Total loans and leases	$	7,267,552		$	7,269,553		$	7,396,358		$	7,407,697		$	6,822,527
Less: Total PPP loans	604,790			489,216			568,383			565,768			—
Total loans and leases excluding PPP loans	$	6,662,762		$	6,780,337		$	6,827,975		$	6,841,929		$	6,822,527

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.65		%	1.69		%	1.76		%	1.75		%	1.66		%

Three Months Ended
March 31,
2020 December 31,
2019 September 30, 2019 June 30,
2019 March 31,
2019
(Dollars in Thousands)
Dividends paid $ 9,173
$ 9,173
$ 8,786
$ 8,775
$ 8,375

Net (loss) income, as reported $ (17,276 ) $ 22,183
$ 22,596
$ 20,471
$ 22,467

Dividend payout ratio (53.10 )% 41.35 % 38.88 % 42.87 % 37.28 %

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Financial Condition

Loans and Leases

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


	At March 31, 2021				At December 31, 2020
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,595,240	35.6	%	$	2,578,773	35.4	%
Multi-family mortgage	1,000,474		13.8	%	1,013,432		13.9	%
Construction	194,627		2.7	%	231,621		3.2	%
Total commercial real estate loans	3,790,341		52.1	%	3,823,826		52.5	%
Commercial loans and leases:
Commercial	1,206,977		16.6	%	1,131,668		15.6	%
Equipment financing	1,069,621		14.7	%	1,092,461		15.0	%
Condominium association	47,604		0.7	%	50,770		0.7	%
Total commercial loans and leases	2,324,202		32.0	%	2,274,899		31.3	%
Consumer loans:
Residential mortgage	781,854		10.8	%	791,317		10.9	%
Home equity	334,706		4.6	%	346,652		4.8	%
Other consumer	36,449		0.5	%	32,859		0.5	%
Total consumer loans	1,153,009		15.9	%	1,170,828		16.2	%
Total loans and leases	7,267,552		100.0	%	7,269,553		100.0	%
Allowance for loan and lease losses	(109,837)				(114,379)
Net loans and leases	$	7,157,715			$	7,155,174

At March 31, 2020 At December 31, 2019
Balance
Percent
of Total
Balance
Percent
of Total
(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate $ 2,526,923
37.0 % $ 2,491,011
37.0 %
Multi-family mortgage 963,273
14.1 % 932,163
13.8 %
Construction 271,962
4.0 % 246,048
3.7 %
Total commercial real estate loans 3,762,158
55.1 % 3,669,222
54.5 %
Commercial loans and leases:
Commercial 719,208
10.5 % 729,502
10.8 %
Equipment financing 1,055,053
15.5 % 1,052,408
15.6 %
Condominium association 52,605
0.8 % 56,838
0.8 %
Total commercial loans and leases 1,826,866
26.8 % 1,838,748
27.2 %
Consumer loans:
Residential mortgage 810,186
11.9 % 814,245
12.1 %
Home equity 388,550
5.7 % 376,819
5.6 %
Other consumer 34,767
0.5 % 38,782
0.6 %
Total consumer loans 1,233,503
18.1 % 1,229,846
18.3 %
Total loans and leases 6,822,527
100.0 % 6,737,816
100.0 %
Allowance for loan and lease losses (113,181 ) (61,082 )
Net loans and leases $ 6,709,346
$ 6,676,734

The following table sets forth the growth in the Company’s loan and lease portfolios during the three months ended March 31, ~~2020:~~2021:


	At March 31, 2020		At December 31, 2019		Dollar Change			Percent Change (Annualized)			At March 31, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)										(Dollars in Thousands)
Commercial real estate	$	3,762,158	$	3,669,222	$	92,936		10.1	%	Commercial real estate	$	3,790,341	$	3,823,826	$	(33,485)	-3.5	%
Commercial	1,826,866		1,838,748		(11,882		)	-2.6	%	Commercial	2,324,202		2,274,899		49,303		8.7	%
Consumer	1,233,503		1,229,846		3,657			1.2	%	Consumer	1,153,009		1,170,828		(17,819)		-6.1	%
Total loans and leases	$	6,822,527	$	6,737,816	$	84,711		5.0	%	Total loans and leases	$	7,267,552	$	7,269,553	$	(2,001)	(0.11)	%

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.

~~commitments over $50.0 million. The total of those loans and commitments was $107.3 million, or 1.32% of total loans and commitments, as of 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~~$118.2 million, or ~~2.40%~~1.4% of total loans and commitments, as of March 31, 2021. As of December 31, 2020, there were 2 borrowers with loans and commitments over

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$50.0 million. The total of those loans and commitments was $114.4 million, or 1.3% of total loans and commitments, as of December 31, ~~2019.~~2020.

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~~Asset Quality

Nonperforming assets as of March 31, 2021 totaled $37.4 million, or 0.44% of total assets, compared to $45.0 million, or 0.50% of total assets, as of December 31, 2020. Net charge-offs for the three months ended March 31, 2021 were $1.8 million, or 0.10% of average loans and leases on an annualized basis, compared to $2.2 million, or 0.13% of average loans and leases on an annualized basis, for the three months ended March 31, 2020.

The ~~commercial real estate portfolio is comprised~~ratio of ~~commercial real estate loans, multi-family mortgage~~the allowance for loan and lease losses to total loans and ~~construction loans~~leases was 1.51% as of March 31, 2021, compared to 1.57% as of December 31, 2020. On January 1, 2020, the Company implemented the CECL methodology to calculate the allowance for credit losses. Refer also to Note 5, "Allowance for Loan and Lease Losses."

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Capital Strength

The Company is a "well-capitalized" bank holding company as defined in the ~~largest component~~FRB's Regulation Y. The Company's common equity Tier 1 capital ratio was 11.65% as of March 31, 2021, compared to 11.04% as of December 31, 2020. The Company's Tier 1 leverage ratio was 9.26% as of March 31, 2021, compared to 8.92% as of December 31, 2020. As of March 31, 2021, the Company's Tier 1 risk-based capital ratio was 11.79%, compared to 11.18% as of December 31, 2020. The Company's Total risk-based capital ratio was 14.15% as of March 31, 2021, compared to 13.51% as of December 31, 2020.

The Company's ratio of stockholders' equity to total assets was 11.04% and 10.53% as of March 31, 2021 and December 31, 2020, respectively. The Company's tangible equity ratio was 9.31% and 8.86% as of March 31, 2021 and December 31, 2020, respectively.

Net Income (Loss)

For the three months ended March 31, 2021, the Company reported net income of $26.5 million, or $0.34 per basic and diluted share, an increase of $43.7 million, or 253.1%, from net loss of $(17.3) million, or $(0.22) per basic and diluted share for the three months ended March 31, 2020. This increase in net income is primarily the result of a decrease in the provision for credit losses of $56.3 million and an increase in net interest income of $7.4 million, partially offset by an increase in the provision for income taxes of $15.3 million and a decrease in non-interest income of $4.5 million. Refer to “Results of Operations" below for further discussion.

The annualized return on average assets was 1.21% for the three months ended March 31, 2021, compared to (0.87)% for the three months ended March 31, 2020. The annualized return on average stockholders' equity was 11.18% for the three months ended March 31, 2021, compared to (7.30)% for the three months ended March 31, 2020.

The net interest margin was 3.39% for the three months ended March 31, 2021, up from 3.31% for the three months ended March 31, 2020. The increase in the net interest margin is a result of a decrease of 79 basis points in the Company's overall cost of funds to 0.50% for the three months ended March 31, 2021 from 1.29% for the three months ended March 31, 2020, partially offset by a decrease in the yield on interest-earning assets of 66 basis points to 3.80% for the three months ended March 31, 2021 from 4.46% for the three months ended March 31, 2020.

The Company’s net interest margin and net interest income is sensitive to the structure and level of interest rates as well as competitive pricing in all loan and 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 2020 Annual Report on Form 10-K, management has identified the determination of the allowance for credit losses and the review of goodwill for impairment as the Company’s most critical accounting policies.

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 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.

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Non-GAAP Financial Measures and Reconciliation to GAAP

The following table 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 March 31,
	2021		2020
	(Dollars in Thousands)
Net income (loss), as reported	$	26,454	$	(17,276)

Less:
Security (losses) gains (after-tax)	(5)		964



Operating earnings (loss)	$	26,459	$	(18,240)

Basic earnings (loss) per share, as reported	$	0.34	$	(0.22)
Less:
Security (losses) gains (after-tax)	—		0.01




Basic operating earnings (loss) per share	$	0.34	$	(0.23)

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

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	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Operating earnings (loss)	$	26,459		$	26,663		$	18,639		$	19,131		$	(18,240)

Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125

Return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%
Less:
Security gains	—		%	—		%	—		%	0.02		%	0.05		%



Operating return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.86		%	(0.92)		%

Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%
Less:
Security gains	—		%	—		%	—		%	0.02		%	0.05		%



Operating return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.88		%	(0.94)		%

Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437

Return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%
Less:
Security gains (losses)	—		%	—		%	0.01		%	0.19		%	0.41		%



Operating return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.98		%	8.26		%	(7.71)		%




Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%
Less:
Security gains (losses)	—		%	—		%	0.02		%	0.24		%	0.49		%



Operating return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.68		%	10.04		%	(9.33)		%

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	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Net income (loss), as reported	$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)

Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125

Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%

Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437

Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%

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


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Total stockholders' equity	$	945,399		$	941,778		$	935,558		$	926,413		$	912,568
Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514
Tangible stockholders' equity	$	782,052		$	778,199		$	771,667		$	762,210		$	748,054

Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591
Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514
Tangible assets	$	8,396,463		$	8,778,845		$	8,836,301		$	8,905,464		$	8,297,077

Tangible equity ratio	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%

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


	Three Months Ended
	March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
	(Dollars in Thousands)
Tangible stockholders' equity	$	782,052	$	778,199	$	771,667	$	762,210	$	748,054

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	6,534,602		6,525,783		5,629,854		5,859,708		5,862,811
Unallocated ESOP	44,502		51,114		58,227		65,334		72,441
Unvested restricted stock	449,981		458,800		487,318		398,188		395,085
Common shares outstanding	78,148,087		78,141,475		79,001,773		78,853,942		78,846,835

Tangible book value per share	$	10.01	$	9.96	$	9.77	$	9.67	$	9.49

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


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Dividends paid	$	8,992		$	9,055		$	9,092		$	9,076		$	9,173

Net income (loss), as reported	$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)

Dividend payout ratio	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Allowance for loan and lease losses	$	109,837		$	114,379		$	119,971		$	119,553		$	113,181

Total loans and leases	$	7,267,552		$	7,269,553		$	7,396,358		$	7,407,697		$	6,822,527
Less: Total PPP loans	604,790			489,216			568,383			565,768			—
Total loans and leases excluding PPP loans	$	6,662,762		$	6,780,337		$	6,827,975		$	6,841,929		$	6,822,527

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.65		%	1.69		%	1.76		%	1.75		%	1.66		%

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Financial Condition

Loans and Leases

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


	At March 31, 2021				At December 31, 2020
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,595,240	35.6	%	$	2,578,773	35.4	%
Multi-family mortgage	1,000,474		13.8	%	1,013,432		13.9	%
Construction	194,627		2.7	%	231,621		3.2	%
Total commercial real estate loans	3,790,341		52.1	%	3,823,826		52.5	%
Commercial loans and leases:
Commercial	1,206,977		16.6	%	1,131,668		15.6	%
Equipment financing	1,069,621		14.7	%	1,092,461		15.0	%
Condominium association	47,604		0.7	%	50,770		0.7	%
Total commercial loans and leases	2,324,202		32.0	%	2,274,899		31.3	%
Consumer loans:
Residential mortgage	781,854		10.8	%	791,317		10.9	%
Home equity	334,706		4.6	%	346,652		4.8	%
Other consumer	36,449		0.5	%	32,859		0.5	%
Total consumer loans	1,153,009		15.9	%	1,170,828		16.2	%
Total loans and leases	7,267,552		100.0	%	7,269,553		100.0	%
Allowance for loan and lease losses	(109,837)				(114,379)
Net loans and leases	$	7,157,715			$	7,155,174

The following table sets forth the growth in the Company’s loan and lease portfolios during the three months ended March 31, 2021:


	At March 31, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	3,790,341	$	3,823,826	$	(33,485)	-3.5	%
Commercial	2,324,202		2,274,899		49,303		8.7	%
Consumer	1,153,009		1,170,828		(17,819)		-6.1	%
Total loans and leases	$	7,267,552	$	7,269,553	$	(2,001)	(0.11)	%

The Company's loan portfolio ~~representing 55.1%~~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's current policy is that a total credit exposure to one obligor relationship may not exceed $50.0 million unless approved by the Company's Credit Committee. As of March 31, 2021, there were 2 borrowers with loans and commitments over $50.0 million. The total of those loans and commitments was $118.2 million, or 1.4% of total loans and ~~leases outstanding~~commitments, as of March 31, ~~2020.~~2021. As of December 31, 2020, there were 2 borrowers with loans and commitments over

~~Typically, commercial real estate loans are larger in size and involve a greater degree~~

Table of ~~risk than owner-occupied residential mortgage loans. Loan repayment is usually dependent on the successful operation and management~~Contents

$50.0 million. The total 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 ($927.7 million), office buildings ($722.8 million), retail stores ($606.2 million), industrial properties ($451.2 million), mixed-use properties ($323.1 million), lodging services ($148.5 million) and food services ($61.7 million) as of March 31, 2020. At that date, 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 26.8%~~commitments was $114.4 million, or 1.3% of total loans ~~outstanding~~and commitments, as of ~~March 31, 2020.~~

The Company's commercial loan and lease portfolio is composed primarily of loans to small to medium sized businesses ($638.0 million), transportation services ($376.8 million), food services ($152.2 million), recreation services ($116.0 million), manufacturing ($101.4 million), retail ($87.4 million), and rental and leasing services ($90.0 million) as of MarchDecember 31, 2020.

The Company ~~provides commercial banking services~~has written underwriting policies to ~~companies~~control the inherent risks in ~~its market area. Approximately 45.3% of the commercial loans outstanding as of March 31, 2020 were made to borrowers located in New England.~~loan origination. The remaining 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~~policies address approval limits, loan-to-value ratios, appraisal requirements, debt service coverage ratios, 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 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 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 3- to 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 flowconcentration limits and other ~~characteristics pertaining~~matters relevant 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.~~underwriting.

~~Consumer Loans~~

The consumer loan portfolio, which is comprised of residential mortgage loans, home equity loans and lines of credit, and other consumer loans, represented 18.1% of total loans outstanding as of 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.

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 March 31, 2020, other consumer loans equaled $34.8 million, or 0.5% of total loans outstanding.~~

~~Asset Quality~~

~~Criticized and Classified Assets~~Restricted Equity Securities

Deposits

Borrowed Funds

(12) Commitments and Contingencies

Off-Balance Sheet Financial Instruments

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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


	At March 31, 2021		At December 31, 2020
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	107,597	$	174,240
Commercial	105,426		80,291
Residential mortgage	82,366		30,418
Unadvanced portion of loans and leases	826,545		759,053
Unused lines of credit:
Home equity	591,377		584,881
Other consumer	41,583		38,954
Other commercial	431		408
Unused letters of credit:
Financial standby letters of credit	15,953		14,746
Performance standby letters of credit	6,607		5,903
Commercial and similar letters of credit	5,369		5,105
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	1,232,482		1,214,146
Pay fixed, receive variable	1,232,482		1,214,146
Risk participation-out agreements	263,430		252,655
Risk participation-in agreements	60,289		60,619
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	1,416		1,266
Sells foreign currency, buys U.S. currency	1,422		1,273

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Lease Commitments

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 March 31, 2021 as the discount rate to determine the net present value of the remaining lease payments.


	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In Thousands)
The components of lease expense were as follow:
Operating lease cost	$	1,563	$	1,611





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	$	1,579	$	1,658


	At March 31, 2021			At December 31, 2020
	(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets	$	23,180		$	24,143


Operating lease liabilities	23,180			24,143











Weighted Average Remaining Lease Term
Operating leases	6.80			6.95


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, 2021
	(In Thousands)

Remainder of 2021	$	4,596
Year ending:
2022	5,569
2023	4,643
2024	3,366
2025	2,343
2026	1,559
Thereafter	3,571
Total	$	25,647
Less imputed interest	(2,467)
Present value of lease liability	$	23,180

Certain leases contain escalation clauses for real estate taxes and other expenditures, which are not included above. The total real estate taxes were $0.5 million and other expenditures were $0.1 million for both the three months ended March 31, 2021, and 2020. Total rental expense was $1.5 million and $1.6 million for the three months ended March 31, 2021 and 2020, respectively.

Legal Proceedings

In the normal course of business, there are various outstanding legal proceedings. In the opinion of management, ~~rates~~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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Revenue Recognized at a Point in Time

Revenue Recognized Over Time

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

Forward-Looking Statements

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, 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; 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; changes in consumer behavior due to changing political, business and economic conditions, including increased unemployment, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in 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 possibility that future credit losses may be higher than currently expected; due to changes in economic assumptions and adverse economic developments; 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; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other filings submitted to the Securities and Exchange Commission. 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

As a commercially-focused financial institution with 50 full-service banking offices throughout greater Boston, the north shore of Massachusetts and Rhode Island, the Company, through Brookline Bank and 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, 12.7% of which is in the greater New York and New Jersey metropolitan area and 87.3% of which is in other areas in the United States of America as of March 31, 2021.

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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 ~~as "other assets especially mentioned" ("OAEM"), "substandard" or "doubtful" based~~and deposits remains intense. 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 ~~criteria established under banking regulations.These loans~~how the economy performs. Loan and ~~leases~~lease growth and deposit growth 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 deteriorationalso greatly influenced by the rate-setting actions of the ~~repayment prospects~~FRB. A sustained, low interest rate environment with a flat interest rate curve may negatively impact the Company's yields and net interest margin. While the Company is slightly asset sensitive and should benefit from rising rates, 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 trust company, Brookline Bank 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. As previously disclosed, on July 31, 2019, Brookline Bank converted its charter from a Massachusetts savings bank to a Massachusetts-chartered trust company and ended its membership in the Depositors Insurance Fund (the “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 Brookline Bank’s withdrawal from the DIF 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. Term deposits in excess of the FDIC insurance coverage will continue to be insured by the DIF until they reach maturity.

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

•Troubled Debt Restructuring Relief. From March 1, 2020 through the earlier of January 1, 2022 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 ~~or lease at some future date. Loans and leases rated as substandard are inadequately protected by~~modification that occurs during the ~~payment capacity of the obligor or of the collateral pledged, if any. Substandard loans and leases have~~applicable period for a ~~well-defined weakness or weaknesses~~loan that ~~jeopardize the liquidation of debt and are characterized by the distinct possibility that the Company will sustain some loss if existing deficiencies are~~was 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 March 31, 2020, the Company had $62.8 million of total assets that were designated as criticized. This compares to $67.2 million of assets designated as criticizedmore than 30 days past due as of December 31, 2019. ~~The decrease of $4.4 million in criticized assets was primarily due~~Financial institutions are required to ~~the pay-off of a criticized commercial loan and an upgrade to pass risk rating of another commercial loan, partially offset by loans becoming criticized during the first three months of 2020.~~

~~Nonperforming Assets~~

"Nonperforming assets" consist of 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 termsmaintain records of the ~~loan or lease has been established. OREO consists~~volume of ~~real estate acquired through foreclosure proceedings and real estate acquired through acceptance of a deed~~loans involved 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~~which troubled debt ~~restructured loan. In determining whether a debtor~~restructuring relief 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.

applicable. As of March 31, ~~2020,~~2021, the Company ~~had nonperforming~~granted 4,603 short-term deferments on loan and lease balances of $1.1 billion. Of these modifications, 4,262 loans and leases with total balances of $955.6 million have returned to the payment status and 341 loans and leases with total balances of $125.7 million remain on the deferral status, which represents 1.7% of the Company's total loan and lease balances. 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.

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

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Selected Financial Data


	At and for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2021			2020			2020			2020			2020
	(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA
Earnings per share - Basic	$	0.34		$	0.34		$	0.24		$	0.25		$	(0.22)
Earnings per share - Diluted	0.34			0.34			0.24			0.25			(0.22)
Book value per share (end of period)	12.10			12.05			11.84			11.75			11.57
Tangible book value per share (end of period) (1)	10.01			9.96			9.77			9.67			9.49
Dividends paid per common share	0.115			0.115			0.115			0.115			0.115
Stock price (end of period)	15.00			12.04			8.65			10.08			11.28

PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	3.39		%	3.23		%	3.08		%	3.09		%	3.31		%
Return on average assets	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%
Return on average tangible assets (1)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%
Return on average stockholders' equity	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%
Return on average tangible stockholders' equity (1)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%
Dividend payout ratio (1)	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%
Efficiency ratio (3)	55.22		%	55.27		%	57.83		%	55.46		%	57.36		%

ASSET QUALITY RATIOS
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.10		%	0.24		%	0.27		%	0.08		%	0.13		%
Nonperforming loans and leases as a percentage of total loans and leases	0.43		%	0.53		%	0.51		%	0.56		%	0.57		%
Nonperforming assets as a percentage of total assets	0.44		%	0.50		%	0.44		%	0.47		%	0.49		%
Total allowance for loan and lease losses as a percentage of total loans and leases	1.51		%	1.57		%	1.62		%	1.61		%	1.66		%

CAPITAL RATIOS
Stockholders' equity to total assets	11.04		%	10.53		%	10.39		%	10.21		%	10.78		%
Tangible equity ratio (1)	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%

FINANCIAL CONDITION DATA
Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591
Total loans and leases	7,267,552			7,269,553			7,396,358			7,407,697			6,822,527
Allowance for loan and lease losses	109,837			114,379			119,971			119,553			113,181
Investment securities available-for-sale	729,901			745,822			783,867			854,505			761,539
Investment securities held-to-maturity	—			—			—			—			—
Equity securities held-for-trading	518			526			525			1,992			2,558
Goodwill and identified intangible assets	163,347			163,579			163,891			164,203			164,514
Total deposits	6,866,786			6,910,696			6,792,523			6,440,233			5,889,938
Total borrowed funds	546,003			820,247			1,005,045			1,406,669			1,291,804
Stockholders' equity	945,399			941,778			935,558			926,413			912,568

													(Continued)

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	At and for the Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2021		2020		2020		2020		2020
	(Dollars in Thousands, Except Per Share Data)

EARNINGS DATA
Net interest income	$	69,109	$	68,225	$	65,938	$	64,288	$	61,712
Provision for credit losses	(2,147)		(2,103)		4,528		5,347		54,114
Non-interest income	4,794		4,219		4,862		6,235		9,328
Non-interest expense	40,811		40,038		40,947		39,109		40,748
Net income (loss)	26,454		26,663		18,679		19,571		(17,276)

(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

Balance Sheet

Total assets of ~~$41.1 million, representing 0.49%~~$8.6 billion as of ~~total assets, compared to nonperforming assets of $22.1~~March 31, 2021 decreased $382.6 million, or ~~0.28% of total assets as of~~17.1% on an annualized basis, from December 31, ~~2019.~~2020. The ~~increase in nonperforming assets~~decrease was primarily driven by ~~the inclusion of $9.7 million of ASC 310-30 loans previously categorized~~decreases in ~~nonperforming assets~~cash and ~~one commercial relationship of $8.5 million that was placed on nonaccrual status, partially offset by a decrease in~~cash equivalents and other ~~repossessed assets during first three months of 2020.~~assets.

~~The Company evaluates the underlying collateral of each nonaccrual loan~~Cash 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, it is likely that the level of nonperforming assets would increase,cash equivalents 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 6 consecutive months of performance has been achieved.

As of March 31, ~~2020, the Company had~~2021 decreased $304.0 million, or 279.6% on an annualized basis, to $130.9 million from December 31, 2020.

Total loans and leases ~~greater than 90 days past due and accruing~~as of ~~$1.0~~March 31, 2021 decreased $2.0 million, or ~~0.02%~~0.1% on an annualized basis, to $7.3 billion from December 31, 2020. The Company's commercial loan portfolios, which are comprised of commercial real estate loans and commercial loans and leases, totaled $6.1 billion, or 84.1% of total loans and leases ~~compared to $10.1~~as of March 31, 2021, an increase of $15.8 million, or ~~0.15%~~1.0% on an annualized basis, from $6.1 billion, or 83.9% of total loans and leases, as of December 31, 2019, representing a decrease of $9.1 million. The decrease in past due and accruing loans was primarily due to $9.1 million of past due and accruing acquired loans 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 March 31, 2020 At December 31, 2019
(Dollars in Thousands)
Nonperforming loans and leases:
Nonaccrual loans and leases:
Commercial real estate $ 10,937
$ 2,845
Multi-family mortgage 85
84
Total commercial real estate loans 11,022
2,929

Commercial 12,991
4,909
Equipment financing 10,356
9,822
Condominium association 203
151
Total commercial loans and leases 23,550
14,882

Residential mortgage 3,446
753
Home equity 1,059
896
Other consumer 7
1
Total consumer loans 4,512
1,650

Total nonaccrual loans and leases 39,084
19,461

Other repossessed assets 2,038
2,631
Total nonperforming assets $ 41,122
$ 22,092

Loans and leases past due greater than 90 days and accruing $ 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 0.57 % 0.29 %
Total nonperforming assets as a percentage of total assets 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 Restructuring Loans and Leases~~2020.

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~~deposits of ~~TDR loans during the first three months of 2020.~~

As$6.9 billion as of March 31, ~~2020, total TDR loans included $9.6~~2021 decreased $43.9 million, of commercial loans, $5.1 million of equipment financing loans and leases, $2.2 million of residential mortgage loans, $2.0 million of home equity loans, $1.7 million of commercial real estate loans, $1.5 million of construction loans, and $0.1 million of multi-family mortgage loans. As ofor 2.5% on an annualized basis, from December 31, ~~2019,~~2020. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled $5.1 billion, or 74.6% of total ~~TDR loans included $9.0 million~~deposits as of commercial loans, $5.6 million of equipment financing loans and leases, $2.1 million of residential mortgage loans, $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 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 TDR loans and leases at the dates indicated:~~

At March 31, 2020 At December 31, 2019
(Dollars 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

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

Three Months Ended March 31,
2020
2019
(Dollars in Thousands)
Balance at beginning of period $ 23,180
$ 20,941
Additions 497
17,643
Net charge-offs (140 ) (878 )
Repayments (1,238 ) (1,566 )
Balance at end of period $ 22,299
$ 36,140

~~Allowances for Credit Losses~~

The allowance for credit losses consists of general and specific allowances and reflects management's estimate of 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 credit losses on a quarterly basis. Management continuously evaluates and challenges inputs and assumptions in the allowance for credit losses.

While management evaluates currently available information in establishing the allowance for 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 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 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 allowance methodology provides a quantification of probable losses in the portfolio. Under the current methodology, management estimates losses over the life of the loan using reasonable and supportable forecasts. Forecasts, loan data, and model documentation is extensively analyzed and reviewed throughout the quarter to ensure estimated losses are accurate at quarter end.

~~The following tables present the changes in the allowance for loan and lease losses by portfolio category for the three months ended~~ March 31, ~~2020 and 2019.~~

At and for the 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 40,200
6,900
601
47,701
Balance at March 31, 2020 $ 82,179
$ 26,774
$ 4,228
$ 113,181

Total loans and leases $ 3,762,158
$ 1,826,866
$ 1,233,503
$ 6,822,527
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 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

Total loans and leases $ 3,410,468
$ 1,786,582
$ 1,191,147
$ 6,388,197
Total allowance for loan and lease losses as a percentage of total loans and leases 0.83 % 1.36 % 0.46 % 0.91 %

~~Beginning January 1, 2020, the Company implemented the CECL methodology to calculate the allowance for credit losses. As~~2021, an increase of January 1, 2020, the Company increased the allowance for loan and lease losses 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 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~~$296.3 million, or ~~1.66%~~24.6% on an annualized basis from $4.8 billion, or 69.8% of total loans and leases 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 $61.1 million, or 0.91% of total loans and leases outstanding,deposits, as of December 31, ~~2019. Prior to January 1, 2020, the Company calculated the allowance for loan and lease losses using the incurred losses methodology.~~

~~Net charge-offs in the loans and leases for the three months ended March 31, 2020 and March 31, 2019 were $2.2 million and $2.1 million, respectively. As a percentage~~2020. Certificate of ~~average loans and leases, annualized net charge-offs for the three months ended March 31, 2020 and March 31, 2019 were 0.13% and 0.13%, respectively.~~

~~Management believes that the allowance for loan and lease losses~~deposit balances totaled $1.3 billion, or 18.5% of total deposits as of March 31, ~~2020 is appropriate.~~

~~The following table sets forth the Company's percent~~2021, a decrease 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 March 31, 2020 At December 31, 2019
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)
Commercial real estate $ 47,090
41.7 % 37.0 % $ 21,519
35.3 % 37.0 %
Multi-family mortgage 21,472
19.0 % 14.1 % 6,436
10.5 % 13.8 %
Construction 13,617
12.0 % 4.0 % 2,330
3.8 % 3.7 %
Total commercial real estate loans 82,179
72.7 % 55.1 % 30,285
49.6 % 54.5 %
Commercial 11,140
9.8 % 10.5 % 12,849
21.0 % 10.8 %
Equipment financing 15,524
13.7 % 15.5 % 11,595
19.0 % 15.6 %
Condominium association 110
0.1 % 0.8 % 382
0.6 % 0.8 %
Total commercial loans and leases 26,774
23.6 % 26.8 % 24,826
40.6 % 27.2 %
Residential mortgage 1,638
1.4 % 11.9 % 3,717
6.1 % 12.1 %
Home equity 2,394
2.1 % 5.7 % 2,132
3.5 % 5.6 %
Other consumer 196
0.2 % 0.5 % 122
0.2 % 0.6 %
Total consumer loans 4,228
3.7 % 18.1 % 5,971
9.8 % 18.3 %
Total $ 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 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,$116.9 million, 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~~33.6% on an ~~annual~~annualized 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%from $1.4 billion, or 20.1% of total ~~assets.~~

~~Cash, cash equivalents, and investment securities increased $437.8~~deposits, as of December 31, 2020. Brokered deposits totaled $470.6 million, or ~~262.4%~~6.9% of total deposits as of March 31, 2021, a decrease of $223.4 million, or 128.8% on an annualized basis from $693.9 million, or 10.0% of total deposits, as of December 31, 2020.

Total borrowed funds as of March 31, 2021 decreased $274.2 million, or 133.7% on an annualized basis, to ~~$1.1~~$0.5 billion ~~as of March 31, 2020~~ from ~~$667.1 million as of~~ December 31, 2019. The increase was driven by increases in total cash, cash equivalents and investment securities. Cash, cash equivalents, and investment securities were 13.1% of total assets as of March 31, 2020, compared to 8.5% of total assets at December 31, 2019.2020.

~~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 March 31, 2020 At December 31, 2019

Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
(In Thousands)
Investment securities available-for-sale:
GSE debentures $ 231,779
$ 237,817
$ 182,922
$ 185,803
GSE CMOs 62,391
63,527
87,001
85,932
GSE MBSs 319,088
328,498
153,049
153,343
SBA commercial loan asset- backed securities 1
1
34
34
Municipal obligations 44,976
45,618
—
—
Corporate debt obligations 25,389
25,959
28,484
28,986
U.S. Treasury bonds 55,776
59,634
44,675
44,897
Foreign government obligations $ 500
$ 485

Total investment securities available-for-sale $ 739,900
$ 761,539
$ 496,165
$ 498,995
Investment securities held-to-maturity:
GSE debentures $ —
$ —
$ 31,228
$ 31,290
GSE MBSs —
—
9,360
9,279
Municipal obligations —
—
45,692
46,514
Foreign government obligations —
—
500
478
Total investment securities held-to-maturity $ —
$ —
$ 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 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, 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 $25.5 million for the three months ended March 31, 2020 compared to $19.9 million for the same period in 2019. For the three months ended March 31, 2020, the Company sold $86.4 million of investment securities available for sale , compared to none for the same period in 2019. For the three months ended March 31, 2020, the Company purchased $273.3 million of investment securities available-for-sale, compared to none for the same period in 2019.

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

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

As of March 31, 2020, the fair value of all investment securities available-for-sale was $761.5 million and carried a total of $21.6 million of net unrealized gains, compared to a fair value of $499.0 million and net unrealized gains of $2.8 million as of December 31, 2019. As of March 31, 2020, $58.8 million, or 7.7%, of the portfolio, had gross unrealized losses of $0.3 million. This compares to $205.6 million, or 41.2%, of the portfolio with gross unrealized losses of $1.8 million as of December 31, 2019. The Company's unrealized gain position has increased in 2020 driven by lower long-term interest rates.

As of December 31, 2019, the fair value of all investment securities held-to-maturity was $87.6 million and net unrealized gains of $0.8 million. As of December 31, 2019, $22.3 million, or 25.5%, of the portfolio had gross unrealized losses of $0.2 million.

Restricted Equity Securities

Deposits

Borrowed Funds

(12) Commitments and Contingencies

Off-Balance Sheet Financial Instruments

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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


	At March 31, 2021		At December 31, 2020
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	107,597	$	174,240
Commercial	105,426		80,291
Residential mortgage	82,366		30,418
Unadvanced portion of loans and leases	826,545		759,053
Unused lines of credit:
Home equity	591,377		584,881
Other consumer	41,583		38,954
Other commercial	431		408
Unused letters of credit:
Financial standby letters of credit	15,953		14,746
Performance standby letters of credit	6,607		5,903
Commercial and similar letters of credit	5,369		5,105
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	1,232,482		1,214,146
Pay fixed, receive variable	1,232,482		1,214,146
Risk participation-out agreements	263,430		252,655
Risk participation-in agreements	60,289		60,619
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	1,416		1,266
Sells foreign currency, buys U.S. currency	1,422		1,273

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Lease Commitments

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 March 31, 2021 as the discount rate to determine the net present value of the remaining lease payments.


	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	(In Thousands)
The components of lease expense were as follow:
Operating lease cost	$	1,563	$	1,611





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	$	1,579	$	1,658


	At March 31, 2021			At December 31, 2020
	(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets	$	23,180		$	24,143


Operating lease liabilities	23,180			24,143











Weighted Average Remaining Lease Term
Operating leases	6.80			6.95


Weighted Average Discount Rate
Operating leases	3.2		%	3.2		%

Table of Contents

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, 2021
	(In Thousands)

Remainder of 2021	$	4,596
Year ending:
2022	5,569
2023	4,643
2024	3,366
2025	2,343
2026	1,559
Thereafter	3,571
Total	$	25,647
Less imputed interest	(2,467)
Present value of lease liability	$	23,180

Certain leases contain escalation clauses for real estate taxes and other expenditures, which are not included above. The total real estate taxes were $0.5 million and other expenditures were $0.1 million for both the three months ended March 31, 2021, and 2020. Total rental expense was $1.5 million and $1.6 million for the three months ended March 31, 2021 and 2020, respectively.

Legal Proceedings

(13) Revenue from Contracts with Customers

Overview

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Revenue Recognized at a Point in Time

Revenue Recognized Over Time

Table of Contents

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

Forward-Looking Statements

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, 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; 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; changes in consumer behavior due to changing political, business and economic conditions, including increased unemployment, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in 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 possibility that future credit losses may be higher than currently expected; due to changes in economic assumptions and adverse economic developments; 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; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other filings submitted to the Securities and Exchange Commission. 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

Table of Contents

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 Company and the Banks are supervised, examined and regulated by the FRB. As a Massachusetts-chartered trust company, Brookline Bank 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. As previously disclosed, on July 31, 2019, Brookline Bank converted its charter from a Massachusetts savings bank to a Massachusetts-chartered trust company and ended its membership in the Depositors Insurance Fund (the “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 Brookline Bank’s withdrawal from the DIF 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. Term deposits in excess of the FDIC insurance coverage will continue to be insured by the DIF until they reach maturity.

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

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

Table of Contents

Selected Financial Data


	At and for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2021			2020			2020			2020			2020
	(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA
Earnings per share - Basic	$	0.34		$	0.34		$	0.24		$	0.25		$	(0.22)
Earnings per share - Diluted	0.34			0.34			0.24			0.25			(0.22)
Book value per share (end of period)	12.10			12.05			11.84			11.75			11.57
Tangible book value per share (end of period) (1)	10.01			9.96			9.77			9.67			9.49
Dividends paid per common share	0.115			0.115			0.115			0.115			0.115
Stock price (end of period)	15.00			12.04			8.65			10.08			11.28

PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	3.39		%	3.23		%	3.08		%	3.09		%	3.31		%
Return on average assets	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%
Return on average tangible assets (1)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%
Return on average stockholders' equity	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%
Return on average tangible stockholders' equity (1)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%
Dividend payout ratio (1)	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%
Efficiency ratio (3)	55.22		%	55.27		%	57.83		%	55.46		%	57.36		%

ASSET QUALITY RATIOS
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.10		%	0.24		%	0.27		%	0.08		%	0.13		%
Nonperforming loans and leases as a percentage of total loans and leases	0.43		%	0.53		%	0.51		%	0.56		%	0.57		%
Nonperforming assets as a percentage of total assets	0.44		%	0.50		%	0.44		%	0.47		%	0.49		%
Total allowance for loan and lease losses as a percentage of total loans and leases	1.51		%	1.57		%	1.62		%	1.61		%	1.66		%

CAPITAL RATIOS
Stockholders' equity to total assets	11.04		%	10.53		%	10.39		%	10.21		%	10.78		%
Tangible equity ratio (1)	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%

FINANCIAL CONDITION DATA
Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591
Total loans and leases	7,267,552			7,269,553			7,396,358			7,407,697			6,822,527
Allowance for loan and lease losses	109,837			114,379			119,971			119,553			113,181
Investment securities available-for-sale	729,901			745,822			783,867			854,505			761,539
Investment securities held-to-maturity	—			—			—			—			—
Equity securities held-for-trading	518			526			525			1,992			2,558
Goodwill and identified intangible assets	163,347			163,579			163,891			164,203			164,514
Total deposits	6,866,786			6,910,696			6,792,523			6,440,233			5,889,938
Total borrowed funds	546,003			820,247			1,005,045			1,406,669			1,291,804
Stockholders' equity	945,399			941,778			935,558			926,413			912,568

													(Continued)

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	At and for the Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2021		2020		2020		2020		2020
	(Dollars in Thousands, Except Per Share Data)

EARNINGS DATA
Net interest income	$	69,109	$	68,225	$	65,938	$	64,288	$	61,712
Provision for credit losses	(2,147)		(2,103)		4,528		5,347		54,114
Non-interest income	4,794		4,219		4,862		6,235		9,328
Non-interest expense	40,811		40,038		40,947		39,109		40,748
Net income (loss)	26,454		26,663		18,679		19,571		(17,276)

(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

Balance Sheet

Total assets of $8.6 billion as of March 31, 2021 decreased $382.6 million, or 17.1% on an annualized basis, from December 31, 2020. The decrease was primarily driven by decreases in cash and cash equivalents and other assets.

Cash and cash equivalents as of March 31, 2021 decreased $304.0 million, or 279.6% on an annualized basis, to $130.9 million from December 31, 2020.

Total loans and leases as of March 31, 2021 decreased $2.0 million, or 0.1% on an annualized basis, to $7.3 billion from December 31, 2020. The Company's commercial loan portfolios, which are comprised of commercial real estate loans and commercial loans and leases, totaled $6.1 billion, or 84.1% of total loans and leases as of March 31, 2021, an increase of $15.8 million, or 1.0% on an annualized basis, from $6.1 billion, or 83.9% of total loans and leases, as of December 31, 2020.

Total deposits of $6.9 billion as of March 31, 2021 decreased $43.9 million, or 2.5% on an annualized basis, from December 31, 2020. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled $5.1 billion, or 74.6% of total deposits as of March 31, 2021, an increase of $296.3 million, or 24.6% on an annualized basis from $4.8 billion, or 69.8% of total deposits, as of December 31, 2020. Certificate of deposit balances totaled $1.3 billion, or 18.5% of total deposits as of March 31, 2021, a decrease of $116.9 million, or 33.6% on an annualized basis from $1.4 billion, or 20.1% of total deposits, as of December 31, 2020. Brokered deposits totaled $470.6 million, or 6.9% of total deposits as of March 31, 2021, a decrease of $223.4 million, or 128.8% on an annualized basis from $693.9 million, or 10.0% of total deposits, as of December 31, 2020.

Total borrowed funds as of March 31, 2021 decreased $274.2 million, or 133.7% on an annualized basis, to $0.5 billion from December 31, 2020.

Asset Quality

The ratio of the allowance for loan and lease losses to total loans and leases was 1.51% as of March 31, 2021, compared to 1.57% as of December 31, 2020. On January 1, 2020, the Company implemented the CECL methodology to calculate the allowance for credit losses. Refer also to Note 5, "Allowance for Loan and Lease Losses."

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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 was 11.65% as of March 31, 2021, compared to 11.04% as of December 31, 2020. The Company's Tier 1 leverage ratio was 9.26% as of March 31, 2021, compared to 8.92% as of December 31, 2020. As of March 31, 2021, the Company's Tier 1 risk-based capital ratio was 11.79%, compared to 11.18% as of December 31, 2020. The Company's Total risk-based capital ratio was 14.15% as of March 31, 2021, compared to 13.51% as of December 31, 2020.

Net Income (Loss)

The Company’s net interest margin and net interest income is sensitive to the structure and level of interest rates as well as competitive pricing in all loan and 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 2020 Annual Report on Form 10-K, management has identified the determination of the allowance for credit losses and the review of goodwill for impairment as the Company’s most critical accounting policies.

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 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.

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Non-GAAP Financial Measures and Reconciliation to GAAP

The following table 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 March 31,
	2021		2020
	(Dollars in Thousands)
Net income (loss), as reported	$	26,454	$	(17,276)

Less:
Security (losses) gains (after-tax)	(5)		964



Operating earnings (loss)	$	26,459	$	(18,240)

Basic earnings (loss) per share, as reported	$	0.34	$	(0.22)
Less:
Security (losses) gains (after-tax)	—		0.01




Basic operating earnings (loss) per share	$	0.34	$	(0.23)

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

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	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Operating earnings (loss)	$	26,459		$	26,663		$	18,639		$	19,131		$	(18,240)

Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125

Return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%
Less:
Security gains	—		%	—		%	—		%	0.02		%	0.05		%



Operating return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.86		%	(0.92)		%

Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%
Less:
Security gains	—		%	—		%	—		%	0.02		%	0.05		%



Operating return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.88		%	(0.94)		%

Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437

Return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%
Less:
Security gains (losses)	—		%	—		%	0.01		%	0.19		%	0.41		%



Operating return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.98		%	8.26		%	(7.71)		%




Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%
Less:
Security gains (losses)	—		%	—		%	0.02		%	0.24		%	0.49		%



Operating return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.68		%	10.04		%	(9.33)		%

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	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Net income (loss), as reported	$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)

Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125

Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%

Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138
Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701
Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437

Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%

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


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Total stockholders' equity	$	945,399		$	941,778		$	935,558		$	926,413		$	912,568
Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514
Tangible stockholders' equity	$	782,052		$	778,199		$	771,667		$	762,210		$	748,054

Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591
Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514
Tangible assets	$	8,396,463		$	8,778,845		$	8,836,301		$	8,905,464		$	8,297,077

Tangible equity ratio	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%

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


	Three Months Ended
	March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
	(Dollars in Thousands)
Tangible stockholders' equity	$	782,052	$	778,199	$	771,667	$	762,210	$	748,054

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	6,534,602		6,525,783		5,629,854		5,859,708		5,862,811
Unallocated ESOP	44,502		51,114		58,227		65,334		72,441
Unvested restricted stock	449,981		458,800		487,318		398,188		395,085
Common shares outstanding	78,148,087		78,141,475		79,001,773		78,853,942		78,846,835

Tangible book value per share	$	10.01	$	9.96	$	9.77	$	9.67	$	9.49

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


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Dividends paid	$	8,992		$	9,055		$	9,092		$	9,076		$	9,173

Net income (loss), as reported	$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)

Dividend payout ratio	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
	(Dollars in Thousands)
Allowance for loan and lease losses	$	109,837		$	114,379		$	119,971		$	119,553		$	113,181

Total loans and leases	$	7,267,552		$	7,269,553		$	7,396,358		$	7,407,697		$	6,822,527
Less: Total PPP loans	604,790			489,216			568,383			565,768			—
Total loans and leases excluding PPP loans	$	6,662,762		$	6,780,337		$	6,827,975		$	6,841,929		$	6,822,527

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.65		%	1.69		%	1.76		%	1.75		%	1.66		%

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Financial Condition

Loans and Leases

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


	At March 31, 2021				At December 31, 2020
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,595,240	35.6	%	$	2,578,773	35.4	%
Multi-family mortgage	1,000,474		13.8	%	1,013,432		13.9	%
Construction	194,627		2.7	%	231,621		3.2	%
Total commercial real estate loans	3,790,341		52.1	%	3,823,826		52.5	%
Commercial loans and leases:
Commercial	1,206,977		16.6	%	1,131,668		15.6	%
Equipment financing	1,069,621		14.7	%	1,092,461		15.0	%
Condominium association	47,604		0.7	%	50,770		0.7	%
Total commercial loans and leases	2,324,202		32.0	%	2,274,899		31.3	%
Consumer loans:
Residential mortgage	781,854		10.8	%	791,317		10.9	%
Home equity	334,706		4.6	%	346,652		4.8	%
Other consumer	36,449		0.5	%	32,859		0.5	%
Total consumer loans	1,153,009		15.9	%	1,170,828		16.2	%
Total loans and leases	7,267,552		100.0	%	7,269,553		100.0	%
Allowance for loan and lease losses	(109,837)				(114,379)
Net loans and leases	$	7,157,715			$	7,155,174

The following table sets forth the growth in the Company’s loan and lease portfolios during the three months ended March 31, 2021:


	At March 31, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	3,790,341	$	3,823,826	$	(33,485)	-3.5	%
Commercial	2,324,202		2,274,899		49,303		8.7	%
Consumer	1,153,009		1,170,828		(17,819)		-6.1	%
Total loans and leases	$	7,267,552	$	7,269,553	$	(2,001)	(0.11)	%

The Company's current policy is that a total credit exposure to one obligor relationship may not exceed $50.0 million unless approved by the Company's Credit Committee. As of March 31, 2021, there were 2 borrowers with loans and commitments over $50.0 million. The total of those loans and commitments was $118.2 million, or 1.4% of total loans and commitments, as of March 31, 2021. As of December 31, 2020, there were 2 borrowers with loans and commitments over

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$50.0 million. The total of those loans and commitments was $114.4 million, or 1.3% of total loans and commitments, as of December 31, 2020.

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 52.1% of total loans and leases outstanding as of March 31, 2021.

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.

The Company's commercial real estate portfolio is composed primarily of loans secured by apartment buildings ($939.1 million), office buildings ($677.5 million), retail stores ($593.9 million), industrial properties ($443.3 million), mixed-use properties ($303.3 million), lodging services ($150.5 million) and food services ($55.5 million) as of March 31, 2021. At that date, approximately 96.3% of the commercial real estate loans outstanding were secured by properties located in New England.

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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 32.0% of total loans outstanding as of March 31, 2021.

The Company's commercial loan and lease portfolio is composed primarily of loans and leases to small to medium sized businesses ($663.2 million), transportation services ($374.3 million), food services ($251.1 million), manufacturing ($147.8 million), recreation services ($137.3 million), rental and leasing services ($117.0 million), and retail ($99.5 million) as of March 31, 2021.

The Company provides commercial banking services to companies in its market area. Approximately 55.7% of the commercial loans outstanding as of March 31, 2021 were made to borrowers located in New England. The remaining 44.3% 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 as the SBA 7A program and as an SBA preferred lender. Included in the commercial loans balances are the PPP loans totaling $604.8 million as of March 31, 2021.

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 12.7% of the commercial loans outstanding in the equipment financing divisions 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 3- to 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, represented 15.9% of total loans outstanding as of March 31, 2021. 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.

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Other consumer loans have historically been a modest part of the Company's loan originations. As of March 31, 2021, other consumer loans equaled $36.4 million, or 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" ("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 March 31, 2021, the Company had $131.5 million of total assets that were designated as criticized. This compares to $72.8 million of assets designated as criticized as of December 31, 2020. The increase of $58.7 million in criticized assets was primarily driven by seven commercial real estate relationships totaling $54.7 million, two commercial loan relationships totaling $4.3 million which became criticized, partially offset by the relationships which were upgraded to pass risk rating during the first quarter of 2021.

Nonperforming Assets

"Nonperforming assets" consist of non-accrual 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 (purchased loans with deteriorating credit quality) 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 non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current interest income. Interest payments on non-accrual 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.

As of March 31, 2021, the Company had nonperforming assets of $37.4 million, representing 0.44% of total assets, compared to nonperforming assets of $45.0 million, or 0.50% of total assets as of December 31, 2020. The decrease in nonperforming assets was primarily driven by the payoff of one commercial relationship of $4.3 million, and the payoff of several equipment finance relationships totaling $2.4 million as well as several residential relationships that were removed from non-accrual status totaling $2.0 million, partially offset by the relationships that were placed on non-accrual status during the first quarter of 2021.

The Company evaluates the underlying collateral of each non-accrual 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, it is likely that the level of nonperforming assets would increase, as would the level of charged-off loans.

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Past Due and Accruing

As of March 31, 2021, the Company had loans and leases greater than 90 days past due and accruing of $1.2 million, or 0.02% of total loans and leases, compared to $12.0 million, or 0.16% of total loans and leases, as of December 31, 2020, representing a decrease of $10.8 million. The decrease in past due and accruing loans was primarily due to two commercial real estate relationships becoming current for $4.7 million, and one construction relationship becoming past due less than 90 days for $3.7 million, and the payoff of one commercial relationship of $3.4 million. Partially offset by several equipment financing relationships becoming past due greater than 90 days and accruing for $1.1 million during the first quarter of 2021.

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


	At March 31, 2021			At December 31, 2020
	(Dollars in Thousands)
Nonperforming loans and leases:
Nonaccrual loans and leases:
Commercial real estate	$	3,611		$	3,300
Multi-family mortgage	—			—
Construction	3,853			3,853
Total commercial real estate loans	7,464			7,153

Commercial	3,161			7,702
Equipment financing	15,772			16,757
Condominium association	106			112
Total commercial loans and leases	19,039			24,571

Residential mortgage	3,722			5,587
Home equity	792			1,136
Other consumer	2			1
Total consumer loans	4,516			6,724

Total nonaccrual loans and leases	31,019			38,448

Other real estate owned	5,328			5,415
Other repossessed assets	1,055			1,100
Total nonperforming assets	$	37,402		$	44,963

Loans and leases past due greater than 90 days and accruing	$	1,179		$	11,975
Total delinquent loans and leases 61-90 days past due	6,522			16,129
Restructured loans and leases not included in nonperforming assets	16,770			11,483

Total nonperforming loans and leases as a percentage of total loans and leases	0.43		%	0.53		%
Total nonperforming assets as a percentage of total assets	0.44		%	0.50		%
Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases	0.09		%	0.22		%

Troubled Debt Restructuring Loans and Leases

Total TDR loans increased by $4.1 million to $23.1 million at March 31, 2021 from $19.0 million at December 31, 2020. The increase was driven primarily by one construction relationship for $3.8 million and one commercial real estate relationship for $0.4 million becoming TDR during the three months ended March 31, 2021.

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As of March 31, 2021, total TDR loans included $6.4 million of commercial loans, $7.2 million of equipment financing loans and leases, $1.8 million of residential mortgage loans, $1.8 million of home equity loans, and $2.1 million of commercial real estate loans. As of December 31, 2020, total TDR loans included $6.5 million of commercial loans, $6.7 million of equipment financing loans and leases, $2.1 million of residential mortgage loans, $2.1 million of home equity loans, and $1.6 million of commercial real estate loans. A 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 TDR loans and leases at the dates indicated:


	At March 31, 2021		At December 31, 2020
	(Dollars in Thousands)
Troubled debt restructurings:
On accrual	$	16,770	$	11,483
On nonaccrual	6,293		7,476
Total troubled debt restructurings	$	23,063	$	18,959

Changes in TDR loans and leases were as follows for the periods indicated:


	Three Months Ended March 31,
		2021		2020
		(Dollars in Thousands)
Balance at beginning of period		$	18,959	$	23,180
Additions		4,980		497
Net charge-offs		(598)		(140)
Repayments		(278)		(1,238)

Balance at end of period		$	23,063	$	22,299

From March 1, 2020 through the earlier of January 1, 2022 or 60 days after the termination date of the national emergency declared by the President on March 13, 2020 concerning the COVID-19 pandemic (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. Through March 31, 2021, the Company granted 4,603 short-term deferments on loan and leases balances of $1.1 billion of which 4,262 loans and leases representing balances of $955.6 million returned to the payment status and 341 loans and leases representing balances of $125.7 million remain in deferment.The outstanding deferred loans and leases represent 1.7% of the Company's total loan and lease balances.

Allowance for Credit Losses

The allowance for credit losses consists of general and specific allowances and reflects management's estimate of expected loan and lease losses over the life of the loan or lease. Management uses a consistent and systematic process and methodology to evaluate the adequacy of the allowance for credit losses on a quarterly basis. Management continuously evaluates and challenges inputs and assumptions in the allowance for credit losses.

While management evaluates currently available information in establishing the allowance for 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 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 credit losses and carrying amounts of other real estate owned. Such agencies may require the financial institution to recognize additions or reductions to the allowance based on their judgments about information available to them at the time of their examination.

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data, and model documentation are extensively analyzed and reviewed throughout the quarter to ensure estimated losses are accurate at quarter end. Qualitative adjustments are applied when model output does not align with management expectations. These adjustments are thoroughly reviewed and documented to provide clarity and a reasonable basis for any deviations from the model. For March 31, 2021, qualitative adjustments were applied to the CRE, C&I, and Retail portfolios resulting in a net addition in total reserves compared to modeled calculations.

The following tables present the changes in the allowance for loan and lease losses by portfolio category for the three months ended March 31, 2021 and 2020.


	At and for the Three Months Ended March 31, 2021
	Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)
Balance at December 31, 2020	$	80,132		$	29,498		$	4,749		$	114,379

Charge-offs	—			(2,140)			(3)			(2,143)
Recoveries	—			331			52			383
Provision (credit) for loan and lease losses	(203)			(1,864)			(715)			(2,782)
Balance at March 31, 2021	$	79,929		$	25,825		$	4,083		$	109,837

Total loans and leases	$	3,790,341		$	2,324,202		$	1,153,009		$	7,267,552
Total allowance for loan and lease losses as a percentage of total loans and leases	2.11		%	1.11		%	0.35		%	1.51		%


	At and for the 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	40,200			6,900			601			47,701
Balance at March 31, 2020	$	82,179		$	26,774		$	4,228		$	113,181

Total loans and leases	$	3,762,158		$	1,826,866		$	1,233,503		$	6,822,527
Total allowance for loan and lease losses as a percentage of total loans and leases	2.18		%	1.47		%	0.34		%	1.66		%

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 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 the risks based on the current conditions and reasonable and supportable forecasts about the future.

At March 31, 2021, the allowance for loan and lease losses decreased to $109.8 million, or 1.51% of total loans and leases outstanding. This compared to an allowance for loan and lease losses of $114.4 million, or 1.57% of total loans and leases outstanding, as of December 31, 2020. Excluding PPP loans which are not subject to an allowance reserve since they are guaranteed by the SBA.

Net charge-offs in the loans and leases for the three months ended March 31, 2021 and 2020 were $1.8 million and $2.2 million, respectively. As a percentage of average loans and leases, annualized net charge-offs for the three months ended March 31, 2021 and 2020 were 0.10% and 0.13%, respectively. The decrease in the net charge-off for the three months ended March 31, 2021 was primarily due to the decrease in the net charge-off by $0.5 million on equipment financing loans, partially offset by the increase in the net charge off in commercial loans by $0.1 million.

Management believes that the allowance for loan and lease losses as of March 31, 2021 is appropriate.

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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 March 31, 2021						At December 31, 2020
	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)
Commercial real estate	$	46,945	42.7	%	35.6	%	$	46,357	40.6	%	35.4	%
Multi-family mortgage	22,361		20.4	%	13.8	%	22,559		19.7	%	13.9	%
Construction	10,623		9.7	%	2.7	%	11,216		9.8	%	3.2	%
Total commercial real estate loans	79,929		72.8	%	52.1	%	80,132		70.1	%	52.5	%
Commercial	8,584		7.8	%	16.6	%	8,089		7.1	%	15.6	%
Equipment financing	17,122		15.6	%	14.7	%	21,292		18.6	%	15.0	%
Condominium association	119		0.1	%	0.7	%	117		0.1	%	0.7	%
Total commercial loans and leases	25,825		23.5	%	32.0	%	29,498		25.8	%	31.3	%
Residential mortgage	1,797		1.6	%	10.8	%	1,967		1.7	%	10.9	%
Home equity	2,020		1.8	%	4.6	%	2,504		2.2	%	4.8	%
Other consumer	266		0.2	%	0.5	%	278		0.2	%	0.5	%
Total consumer loans	4,083		3.6	%	15.9	%	4,749		4.1	%	16.2	%

Total	$	109,837	99.9	%	100.0	%	$	114,379	100.0	%	100.0	%

Investment Securities

The investment portfolio exists primarily for liquidity purposes, and secondarily as 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 decreased $319.9 million, or 108.3% on an annualized basis, to $861.3 million as of March 31, 2021 from $1.2 billion as of December 31, 2020. The decrease was driven by decreases in total cash, cash equivalents. Cash, cash equivalents, and investment securities were 10.1% of total assets as of March 31, 2021, compared to 13.2% of total assets at December 31, 2020.

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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 March 31, 2021				At December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	273,315	$	271,526	$	273,820	$	278,645
GSE CMOs	39,980		40,925		44,937		46,028
GSE MBSs	271,231		276,066		312,658		323,609




Corporate debt obligations	22,269		23,247		22,299		23,467
U.S. Treasury bonds	119,817		117,641		70,339		73,577


Foreign government obligations	$	500	$	496	500		496
Total investment securities available-for-sale	$	727,112	$	729,901	$	724,553	$	745,822






Equity securities held-for-trading			$	518			$	526

Maturities, calls and principal repayments for investment securities available-for-sale totaled $46.2 million for the three months ended March 31, 2021 compared to $25.5 million for the same period in 2020. For the three months ended March 31, 2021, the Company did not sell any investment securities available for sale, compared to $86.4 million for the same period in 2020. For the three months ended March 31, 2021, the Company purchased $49.5 million of investment securities available-for-sale, compared to $273.3 million for the same period in 2020.

For the three months ended March 31, 2021 the Company did not own held-to-maturity securities. Compared to the three months ended March 31, 2020 the Company had maturities, calls and principal repayments of $6.3 million. The Company made no sales or purchases of held-to-maturity securities for the three months ended March 31, 2020. During the three months ended March 31, 2020, all held-to-maturity securities were transferred to the available-for-sale portfolio.

As of March 31, 2021, the fair value of all investment securities available-for-sale was $729.9 million and carried a total of $2.8 million of net unrealized gains, compared to a fair value of $745.8 million and net unrealized gains of $21.3 million as of December 31, 2020. As of March 31, 2021, $261.6 million, or 35.8%, of the portfolio, had gross unrealized losses of $10.8 million. This compares to $86.9 million, or 11.7%, of the portfolio with gross unrealized losses of $0.7 million as of December 31, 2020. The Company's unrealized gain position has decreased in 2021 driven by higher long-term interest rates.

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Restricted Equity Securities

FHLBB Stock—The Company invests in the stock of the FHLBB as one of the requirements to 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 March 31, ~~2020,~~2021, the excess balance of capital stock was ~~$0.4~~$1.1 million, as compared to a ~~$0.7~~$1.0 million excess balance as of December 31, ~~2019.~~2020.

As of March 31, ~~2020,~~2021, the Company owned stock in the FHLBB with a carrying value of ~~$50.1~~$21.9 million, ~~an increase~~a decrease of ~~$14.6~~$9.4 million from ~~$35.5~~$31.3 million as of December 31, ~~2019.~~2020. As of March 31, ~~2020,~~2021, the FHLBB had total assets of ~~$68.9~~$36.7 billion and total capital of ~~$3.5~~$2.7 billion, of which $1.5 billion was retained earnings. The FHLBB stated that it remained in compliance with all regulatory capital ratios as of March 31, ~~2020~~2021 and was classified as "adequately capitalized" by its regulator, based on the FHLBB's financial information as of December 31, ~~2019.~~2020 .

Federal Reserve Bank Stock—The Company invests in the stock of the Federal Reserve Bank of Boston, as a condition to the Banks' membership in the Federal Reserve System. As of March 31, 2021 and December 31, 2020, the Company owned stock in the Federal Reserve Bank of Boston with a carrying value of ~~$18.1 million, unchanged from December 31, 2019.~~$18.2 million.

Other Stock—The Company invests in a small number of other restricted equity securities which includes Infinex Financial Group and American Financial Exchange. As of March 31, ~~2020,~~2021, the Company owned stock in other restricted equity securities with a carrying value of $0.3 million, unchanged from December 31, ~~2019.~~2020.

Deposits

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


	At March 31, 2021						At December 31, 2020
	Amount		Percent of Total		Weighted Average Rate		Amount		Percent of Total		Weighted Average Rate
	(Dollars in Thousands)
Non-interest-bearing deposits:
Demand checking accounts	$	1,724,170	25.1	%	—	%	$	1,592,205	23.0	%	—	%
Interest-bearing deposits:
NOW accounts	481,988		7.0	%	0.09	%	513,948		7.4	%	0.09	%
Savings accounts	724,504		10.6	%	0.14	%	701,659		10.2	%	0.13	%
Money market accounts	2,192,468		31.9	%	0.28	%	2,018,977		29.2	%	0.31	%
Certificate of deposit accounts	1,273,105		18.5	%	1.13	%	1,389,998		20.2	%	1.44	%
Brokered deposit accounts	470,551		6.9	%	0.30	%	693,909		10.0	%	0.39	%
Total interest-bearing deposits	5,142,616		74.9	%	0.45	%	5,318,491		77.0	%	0.57	%
Total deposits	$	6,866,786	100.0	%	0.34	%	$	6,910,696	100.0	%	0.44	%

At March 31, 2020 At December 31, 2019
Amount
Percent
of Total

Weighted
Average
Rate
Amount
Percent
of Total

Weighted
Average
Rate
(Dollars in Thousands)
Non-interest-bearing deposits:
Demand checking accounts $ 1,175,329
20.0 % — % $ 1,141,578
19.6 % — %
Interest-bearing deposits:
NOW accounts 361,854
6.1 % 0.11 % 371,380
6.4 % 0.11 %
Savings accounts 653,026
11.1 % 0.31 % 613,467
10.5 % 0.46 %
Money market accounts 1,676,092
28.5 % 0.59 % 1,682,005
28.9 % 1.15 %
Certificate of deposit accounts 2,023,637
34.4 % 2.15 % 2,021,642
34.7 % 2.26 %
Total interest-bearing deposits 4,714,609
80.0 % 1.19 % 4,688,494
80.4 % 1.46 %
Total deposits $ 5,889,938
100.0 % 0.95 % $ 5,830,072
100.0 % 1.17 %

Total deposits ~~increased $59.9~~decreased $43.9 million to ~~$5.9~~$6.87 billion as of March 31, ~~2020,~~2021, compared to ~~$5.8~~$6.91 billion as of December 31, ~~2019.~~2020. Deposits as a percentage of total assets ~~decreased~~increased to ~~69.6%~~80.2% as of March 31, ~~2020,~~2021, compared to ~~74.2%~~77.3% as of December 31, ~~2019.~~2020.

AsDuring the three months ended March 31, 2021, core deposits increased $296.3 million. The ratio of core deposits to total deposits increased from 69.8% as of December 31, 2020 to 74.6% as of March 31, ~~2020, the Company had $354.1~~2021, primarily due to an increase in demand checking and money market accounts.

Certificate of deposit accounts decreased $116.9 million to $1.3 billion as of ~~brokered deposits~~March 31, 2021, compared to ~~$349.9~~$1.4 billion as of December 31, 2020. Certificate of deposit accounts decreased as a percentage of total deposits to 18.5% as of March 31, 2021 from 20.2% as of December 31, 2020.

Brokered deposits decreased $223.4 million to $470.6 million as of March 31, 2021, compared to $693.9 million as of December 31, ~~2019.~~2020. Brokered deposits decreased as a percentage of total deposits to 6.9% as of March 31, 2021 from 10.0% as of December 31, 2020. The decrease in brokered deposits was driven by market rates. 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.

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Brokered deposits are included in the certificate of deposit balance, which increased $2.0 million during the three months ended March 31, 2020. Certificates of deposit have also decreased as a percentage of total deposits to 34.4% as of March 31, 2020 from 34.7% as of December 31, 2019.

During the three months ended March 31, 2020, core deposits increased $57.9 million. The ratio of core deposits to total deposits increased from 65.3% as of December 31, 2019 to 65.6% as of March 31, 2020, primarily due to the shift in deposit mix and increase in 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 March 31,
2020 2019

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 $ 1,134,314
19.4 % — % $ 1,026,970
18.6 % — %
NOW accounts 359,641
6.2 % 0.13 % 334,167
6.1 % 0.17 %
Savings accounts 626,945
10.7 % 0.41 % 626,414
11.4 % 0.39 %
Money market accounts 1,678,649
28.7 % 1.02 % 1,676,199
30.4 % 1.28 %
Total core deposits 3,799,549
65.1 % 0.53 % 3,663,750
66.5 % 0.66 %
Certificate of deposit accounts 2,040,903
34.9 % 2.22 % 1,844,511
33.5 % 2.18 %
Total deposits $ 5,840,452
100.0 % 1.11 % $ 5,508,261
100.0 % 1.16 %


	Three Months Ended March 31,
	2021						2020
	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	$	1,643,373	23.9	%	—	%	$	1,134,314	19.4	%	—	%
NOW accounts	477,893		7.0	%	0.11	%	359,641		6.2	%	0.13	%
Savings accounts	712,728		10.4	%	0.13	%	626,945		10.7	%	0.41	%
Money market accounts	2,084,503		30.4	%	0.29	%	1,678,649		28.8	%	1.02	%
Total core deposits	4,918,497		71.7	%	0.15	%	3,799,549		65.1	%	0.53	%
Certificate of deposit accounts	1,328,112		19.4	%	1.27	%	1,682,900		28.8	%	2.21	%
Brokered deposit accounts	610,824		8.9	%	0.47	%	358,003		6.1	%	2.23	%
Total deposits	$	6,857,433	100.0	%	0.39	%	$	5,840,452	100.0	%	1.11	%

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had outstanding certificates of deposit of ~~$250,000~~$100,000 or more, maturing as follows:


	At March 31, 2020				At December 31, 2019					At March 31, 2021				At December 31, 2020
	Amount		Weighted Average Rate		Amount		Weighted Average Rate			Amount		Weighted Average Rate		Amount		Weighted Average Rate
	(Dollars in Thousands)									(Dollars in Thousands)
Maturity period:									Maturity period:
Six months or less	$	209,959	2.20	%	$	198,279	2.23	%	Six months or less	$	442,310	1.27	%	$	459,828	1.63	%
Over six months through 12 months	187,300		2.37	%	174,154		2.43	%	Over six months through 12 months	226,963		0.68	%	302,576		1.15	%
Over 12 months	158,410		2.37	%	185,078		2.56	%	Over 12 months	159,610		1.71	%	154,343		1.83	%
Total certificate of deposit of $250,000 or more	$	555,669	2.30	%	$	557,511	2.40	%
Total certificate of deposit of $100,000 or more									Total certificate of deposit of $100,000 or more	$	828,883	1.29	%	$	916,747	1.51	%

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 March 31,
	2021			2020
	(Dollars in Thousands)
Borrowed funds:
Average balance outstanding	$	664,692		$	947,123
Maximum amount outstanding at any month-end during the period	686,346			1,291,804
Balance outstanding at end of period	546,003			1,291,804
Weighted average interest rate for the period	1.60		%	2.33		%
Weighted average interest rate at end of period	2.33		%	1.76		%

Three Months Ended
March 31,
2020 2019
(Dollars in Thousands)
Borrowed funds:
Average balance outstanding $ 947,123
$ 927,593
Maximum amount outstanding at any month-end during the period 1,291,804
987,835
Balance outstanding at end of period 1,291,804
866,005
Weighted average interest rate for the period 2.33 % 2.65 %
Weighted average interest rate at end of period 1.76 % 2.72 %

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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.

FHLBB borrowings ~~increased~~decreased by ~~$379.0~~$270.2 million to ~~$1.1 billion~~$378.6 million as of March 31, ~~2020~~2021 from the December 31, ~~2019~~2020 balance of ~~$758.5~~$648.8 million. The ~~increase~~decrease in FHLBB borrowings was primarily due to ~~an increase in new advances from the FHLBB to support asset growth.~~borrowing maturities.

Subordinated Debentures and Notes

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

March 31,
2020

December 31, 2019

Issue Date

Rate

Maturity Date

Next Call Date

March 31,
2021

December 31, 2020

(Dollars in Thousands)

June 26, 2003

Variable;

3-month LIBOR + 3.10%

June 26, 2033

June 25, 2020

4,832

4,826

June 26, 2003

Variable;
3-month LIBOR + 3.10%

June 26, 2033

June 25, 2021

4,853

4,848

March 17, 2004

Variable;

3-month LIBOR + 2.79%

March 17, 2034

June 16, 2020

4,747

4,739

March 17, 2004

Variable;
3-month LIBOR + 2.79%

March 17, 2034

June 16, 2021

4,779

4,772

September 15, 2014

6.0% Fixed-to-Variable;

3-month LIBOR + 3.315%

September 15, 2029

September 15, 2024

74,051

74,026

September 15, 2014

6.0% Fixed-to-Variable;
3-month LIBOR + 3.315%

September 15, 2029

September 15, 2024

74,151

74,126

Total

83,630

83,591

Total

83,783

83,746

The above carrying amounts of the subordinated debentures included $0.4 million of accretion adjustments and ~~$0.9~~$0.8 million of capitalized debt issuance costs as of March 31, ~~2020.~~2021. This compares to $0.4 million of accretion adjustments and ~~$1.0~~$0.9 million of capitalized debt issuance costs as of December 31, ~~2019.~~2020.

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 ~~increased $13.1~~decreased $4.1 million to ~~$55.7~~$53.6 million as of March 31, ~~2020~~2021 from ~~$42.7~~$57.7 million as of December 31, ~~2019.~~2020.

The Company has access to a $12.0 million committed line of credit as of March 31, ~~2020.~~2021. As of March 31, 2021 and December 31, 2020, the Company ~~had $5 million outstanding of~~did not have any borrowings on this ~~committed line of credit 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 ~~$568.0~~$746.0 million. As of March 31, ~~2020,~~2021, the Company had ~~$10.0~~$30.0 million borrowings on outstanding uncommitted lines of credit as compared to ~~$18.0~~$30.0 million as of December 31, ~~2019.~~2020.

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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~~uses interest rate futures that are designated and qualify as cash flow ~~hedges at March 31, 2020 or December 31, 2019.~~hedging instruments.

The following table summarizes certain information concerning the Company's loan level derivatives, risk participation agreements, and foreign exchange contracts at March 31, ~~2020~~2021 and December 31, ~~2019:~~

2020:


	At March 31, 2020			At December 31, 2019				At March 31, 2021			At December 31, 2020
	(Dollars in Thousands)							(Dollars in Thousands)
Loan level derivatives (Notional principal amounts):							Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	$	1,231,096		$	1,101,193		Receive fixed, pay variable	$	1,232,482		$	1,214,146
Pay fixed, receive variable	1,231,096			1,101,193			Pay fixed, receive variable	1,232,482			1,214,146
Risk participation-out agreements	233,846			235,693			Risk participation-out agreements	263,430			252,655
Risk participation-in agreements	49,279			55,281			Risk participation-in agreements	60,289			60,619
Foreign exchange contracts (Notional amounts):							Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	$	1,422		$	1,125		Buys foreign currency, sells U.S. currency	$	1,416		$	1,266
Sells foreign currency, buys U.S. currency	1,530			1,230			Sells foreign currency, buys U.S. currency	1,422			1,273
Fixed weighted average interest rate from the Company to counterparty	3.32		%	3.54		%	Fixed weighted average interest rate from the Company to counterparty	3.06		%	3.07		%
Floating weighted average interest rate from counterparty to the Company	2.51		%	2.88		%	Floating weighted average interest rate from counterparty to the Company	0.93		%	0.99		%
Weighted average remaining term to maturity (in months)	90			91			Weighted average remaining term to maturity (in months)	83			85
Fair value:							Fair value:
Recognized as an asset:							Recognized as an asset:

Interest rate derivatives							Interest rate derivatives	$	10		$	8

Loan level derivatives	$	154,761		$	59,365		Loan level derivatives	84,128			131,328
Risk participation-out agreements	2,473			1,229			Risk participation-out agreements	1,019			1,843
Foreign exchange contracts	224			54			Foreign exchange contracts	99			156
Recognized as a liability:							Recognized as a liability:

Interest rate derivatives							Interest rate derivatives	$	2		$	—
Loan level derivatives	$	154,761		$	59,365		Loan level derivatives	84,128			131,328
Risk participation-in agreements	432			283			Risk participation-in agreements	205			361
Foreign exchange contracts	200			53			Foreign exchange contracts	93			148

Stockholders' Equity and Dividends

The Company's total stockholders' equity was ~~$912.6~~$945.4 million as of March 31, ~~2020,~~2021, representing a ~~$33.0~~$3.6 million ~~decrease~~increase compared to ~~$945.6~~$941.8 million at December 31, ~~2019.~~2020. The ~~decrease~~increase primarily reflects net ~~loss~~income attributable to the Company of ~~$(17.3)~~$26.5 million for the three months ended March 31, ~~2020, a reduction to retained earnings~~2021, offset by the unrealized loss on securities available-for-sale of ~~$11.5~~$14.4 million ~~due to the CECL implementation, $10.4 million due to repurchase shares of treasury stock~~ and dividends paid by the Company of ~~$9.2~~$9.0 million ~~partially offset by unrealized gain on securities available-for-sale of $14.7 million.~~for the three months ended March 31, 2021.

Stockholders' equity represented ~~10.78%~~11.04% of total assets as of March 31, ~~2020~~2021 and ~~12.04%~~10.53% of total assets as of December 31, ~~2019.~~2020. Tangible stockholders' equity (total stockholders' equity less goodwill and identified intangible assets, net) represented ~~9.02%~~9.31% of tangible assets (total assets less goodwill and identified intangible assets, net) as of March 31, ~~2020~~2021 and ~~10.15%~~8.86% as of December 31, ~~2019.~~2020.

On December 4, 2019, the Board of Directors (the "Board") approved a stock repurchase program (the "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~~$10.0 million bringing the total authorized amount to ~~$20~~$20.0 million. ~~Subsequently, as previously disclosed,~~Effective March 24, 2020, the Company suspended the ~~stock repurchase program effective as~~Program. On October 28, 2020, the Board authorized the resumption of ~~March 24, 2020.~~the Program. As of ~~March~~December 31, 2020, the Company has repurchased ~~848,319~~1,715,730 shares at a weighted average price of ~~$12.27. In 2019, 103,758 shares~~$11.66. As of December 31, 2020, the Company had completed the program.

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On January 27, 2021, the Board approved a stock repurchase program authorizing management to repurchase up to $10.0 million of the Company's common stock ~~were repurchased by the Company.~~commencing on February 1, 2021 and ending on December 31, 2021.

The dividend payout ratio was ~~53.10%~~33.99% for the three months ended March 31, ~~2020,~~2021, compared to ~~37.28%~~53.10% for the same period in ~~2019.~~2020.

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, 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 ~~decreased $1.3~~increased $7.4 million to $69.1 million for the three months ended March 31, 2021 from $61.7 million for the three months ended March 31, ~~2020 from $63.0 million for the three months ended March 31, 2019.~~2020. This ~~decrease~~increase reflects a ~~$1.1~~$4.6 million decrease in interest income on loans and leases and a $0.5 million decrease in interest income on investment securities, ~~partially~~ offset by a ~~$0.3~~$12.5 million decrease in interest expense on deposit and borrowings, which is reflective of the ~~various portfolios repricing and replacing balances into the current~~sustained, low interest rate environment. Refer to “Results of Operations - Comparison of the Three-Month Period Ended

March 31, ~~2020~~2021 and March 31, ~~2019~~2020 — Interest Income” and “Results of Operations - Comparison of the Three-Month Period Ended March 31, ~~2020~~2021 and March 31, ~~2019~~2020 — Interest Expense ~~Deposit~~-Deposit and Borrowed Funds” below for more details.

Net interest margin ~~decreased~~increased by 338 basis points to 3.39% for the three months ended March 31, 2021 from 3.31% for the three months ended March 31, ~~2020 from 3.64% for the three months ended March 31, 2019.~~2020. The Company's weighted average interest rate on loans (prior to purchase accounting adjustments) decreased to 4.13% for the three months ended March 31, 2021 from 4.71% for the three months ended March 31, 2020 from 5.09% for the three months ended March 31, 2019. Interest amortization and accretion on acquired loans totaled $0.1 million and contributed 1 basis point to loan yields during both the three months ended March 31, 2020 and 2019.2020. The ~~decrease~~increase in net interest margin over the period is a result of ~~most asset categories being fully repriced into~~additional fee income from participation in the ~~current rate environment, while deposit costs decreased at a slower pace due to market competition and shifting demand for non- maturity versus time deposits.~~PPP.

The yield on interest-earning assets decreased to 3.80% for the three months ended March 31, 2021 from 4.46% for the three months ended March 31, ~~2020 from 4.84% for the three months ended March 31, 2019.~~2020. This decrease is the result of lower yields on loans and leases and lower yields on investments. During the three months ended March 31, ~~2020,~~2021, the Company recorded ~~$0.8~~$1.2 million in prepayment penalties and late charges, which contributed 46 basis points to yields on interest-earning assets in the three months ended March 31, ~~2020,~~2021, compared to ~~$1.1~~$0.8 million, or 64 basis points, for the three months ended March 31, ~~2019.~~2020.

The overall cost of funds (including non-interest-bearing demand checking accounts) decreased 1079 basis points to 0.50% for the three months ended March 31, 2021 from 1.29% for the three months ended March 31, ~~2020 from 1.39% for the three months ended March 31, 2019.~~2020. Refer to "Financial Condition - Borrowed Funds" above for more details.

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Management seeks to position the balance sheet to be neutral to asset sensitive to changes in interest rates. ~~Since the end of 2016,~~From 2017 through 2019, short term interest rates ~~have risen~~rose while at the same time net interest income, net interest spread, and net interest margin ~~have~~ also increased. During the first ~~quarter~~three quarters 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. Due to, among other things, ongoing pricing pressures in the loan and deposit portfolios, 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 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 months ended March 31, ~~2020~~2021 and March 31, ~~2019.~~2020. 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.

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	Three Months Ended															Three Months Ended
	March 31, 2020							March 31, 2019								March 31, 2021						March 31, 2020
	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:															Assets:
Interest-earning assets:															Interest-earning assets:
Debt securities	$	605,885		$	3,024	2.00	%	$	608,194		$	3,289	2.16	%	Debt securities	$	754,699	$	3,118	1.65	%	$	605,885	$	3,024	2.00	%
Marketable and restricted equity securities	58,881			786		5.33	%	60,389			920		6.10	%	Marketable and restricted equity securities	45,673		301		2.64	%	58,881		786		5.33	%
Short-term investments	84,309			209		0.99	%	33,034			267		3.23	%	Short-term investments	191,751		39		0.08	%	84,309		209		0.99	%
Total investments	749,075			4,019		2.15	%	701,617			4,476		2.55	%	Total investments	992,123		3,458		1.39	%	749,075		4,019		2.15	%
Commercial real estate loans ⁽²⁾	3,697,011			40,468		4.33	%	3,376,576			40,019		4.74	%	Commercial real estate loans (2)	3,785,897		34,245		3.62	%	3,697,011		40,468		4.33	%
Commercial loans ⁽²⁾	783,309			8,328		4.21	%	792,695			9,603		4.85	%	Commercial loans (2)	1,249,824		12,746		4.08	%	783,309		8,328		4.21	%
Equipment financing ⁽²⁾	1,052,846			18,946		7.20	%	988,193			17,985		7.28	%	Equipment financing (2)	1,079,039		18,043		6.69	%	1,052,846		18,946		7.20	%
Residential mortgage loans ⁽²⁾	810,583			7,934		3.92	%	778,325			8,123		4.17	%	Residential mortgage loans (2)	780,785		7,232		3.71	%	810,583		7,934		3.92	%
Other consumer loans ⁽²⁾	417,815			3,955		3.79	%	408,177			5,051		5.01	%	Other consumer loans (2)	375,590		2,795		3.02	%	417,815		3,955		3.79	%
Total loans and leases	6,761,564			79,631		4.71	%	6,343,966			80,781		5.09	%	Total loans and leases	7,271,135		75,061		4.13	%	6,761,564		79,631		4.71	%
Total interest-earning assets	7,510,639			83,650		4.46	%	7,045,583			85,257		4.84	%	Total interest-earning assets	8,263,258		78,519		3.80	%	7,510,639		83,650		4.46	%
Allowance for loan and lease losses	(68,581		)					(58,749		)					Allowance for loan and lease losses	(115,458)						(68,581)
Non-interest-earning assets	523,768							447,204							Non-interest-earning assets	566,358						523,768
Total assets	$	7,965,826						$	7,434,038						Total assets	$	8,714,158					$	7,965,826
Liabilities and Stockholders' Equity:															Liabilities and Stockholders' Equity:
Interest-bearing liabilities:															Interest-bearing liabilities:
Interest-bearing deposits:															Interest-bearing deposits:
NOW accounts	$	359,641		116		0.13	%	$	334,167		142		0.17	%	NOW accounts	$	477,893	130		0.11	%	$	359,641	116		0.13	%
Savings accounts	626,945			643		0.41	%	626,414			597		0.39	%	Savings accounts	712,728		235		0.13	%	626,945		643		0.41	%
Money market accounts	1,678,649			4,241		1.02	%	1,676,199			5,275		1.28	%	Money market accounts	2,084,503		1,486		0.29	%	1,678,649		4,241		1.02	%
Certificate of deposit	2,040,903			11,240		2.22	%	1,844,511			9,934		2.18	%
Certificate of deposit accounts															Certificate of deposit accounts	1,328,112		4,154		1.27	%	1,682,900		9,251		2.21	%
Brokered deposit accounts															Brokered deposit accounts	610,824		702		0.47	%	358,003		1,989		2.23	%
Total interest-bearing deposits ⁽³⁾	4,706,138			16,240		1.39	%	4,481,291			15,948		1.44	%	Total interest-bearing deposits (3)	5,214,060		6,707		0.52	%	4,706,138		16,240		1.39	%
Advances from the FHLBB	772,462			4,097		2.10	%	755,542			4,610		2.44	%	Advances from the FHLBB	488,537		1,370		1.12	%	772,462		4,097		2.10	%
Subordinated debentures and notes	83,609			1,284		6.14	%	83,451			1,308		6.27	%	Subordinated debentures and notes	83,764		1,242		5.93	%	83,609		1,284		6.14	%
Other borrowed funds	91,052			189		0.84	%	88,600			221		1.01	%	Other borrowed funds	92,391		39		0.17	%	91,052		189		0.84	%
Total borrowed funds	947,123			5,570		2.33	%	927,593			6,139		2.65	%	Total borrowed funds	664,692		2,651		1.60	%	947,123		5,570		2.33	%
Total interest-bearing liabilities	5,653,261			21,810		1.55	%	5,408,884			22,087		1.66	%	Total interest-bearing liabilities	5,878,752		9,358		0.65	%	5,653,261		21,810		1.55	%
Non-interest-bearing liabilities:															Non-interest-bearing liabilities:
Non-interest-bearing demand checking accounts ⁽³⁾	1,134,314							1,026,970							Non-interest-bearing demand checking accounts (3)	1,643,373						1,134,314
Other non-interest-bearing liabilities	232,113							111,174							Other non-interest-bearing liabilities	245,551						232,113
Total liabilities	7,019,688							6,547,028							Total liabilities	7,767,676						7,019,688
Brookline Bancorp, Inc. stockholders' equity	946,138							886,639
Noncontrolling interest in subsidiary	—							371
Total stockholders' equity															Total stockholders' equity	946,482						946,138

Total liabilities and stockholders' equity	$	7,965,826						$	7,434,038						Total liabilities and stockholders' equity	$	8,714,158					$	7,965,826
Net interest income (tax-equivalent basis) / Interest-rate spread ⁽⁴⁾				61,840		2.91	%				63,170		3.18	%	Net interest income (tax-equivalent basis) / Interest-rate spread (4)			69,161		3.15	%			61,840		2.91	%
Less adjustment of tax-exempt income				128							171				Less adjustment of tax-exempt income			52						128
Net interest income				$	61,712						$	62,999			Net interest income			$	69,109					$	61,712
Net interest margin ⁽⁵⁾						3.31	%						3.64	%	Net interest margin (5)					3.39	%					3.31	%

(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 ~~1.12%~~0.40% and ~~1.17%~~1.12% in the three months ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, 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.

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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 March 31, 2021 as Compared to the Three Months Ended March 31, 2020
	Increase (Decrease) Due To
	Volume		Rate		Net Change
	(In Thousands)
Interest and dividend income:
Investments:
Debt securities	$	666	$	(572)	$	94
Marketable and restricted equity securities	(149)		(336)		(485)
Short-term investments	121		(291)		(170)
Total investments	638		(1,199)		(561)
Loans and leases:
Commercial real estate loans	860		(7,083)		(6,223)
Commercial loans and leases	4,678		(260)		4,418
Equipment financing	454		(1,357)		(903)
Residential mortgage loans	(286)		(416)		(702)
Other consumer loans	(385)		(775)		(1,160)
Total loans	5,321		(9,891)		(4,570)
Total change in interest and dividend income	5,959		(11,090)		(5,131)
Interest expense:
Deposits:
NOW accounts	34		(20)		14
Savings accounts	76		(484)		(408)
Money market accounts	830		(3,585)		(2,755)
Certificate of deposit accounts	(1,689)		(3,408)		(5,097)
Brokered deposit accounts	860		(2,147)		(1,287)
Total deposits	111		(9,644)		(9,533)
Borrowed funds:
Advances from the FHLBB	(1,202)		(1,525)		(2,727)
Subordinated debentures and notes	2		(44)		(42)
Other borrowed funds	3		(153)		(150)
Total borrowed funds	(1,197)		(1,722)		(2,919)
Total change in interest expense	(1,086)		(11,366)		(12,452)
Change in tax-exempt income	(76)		—		(76)
Change in net interest income	$	7,121	$	276	$	7,397

Three Months Ended March 31, 2020 as Compared to the Three Months Ended March 31, 2019

Increase
(Decrease) Due To

Volume Rate Net Change
(In Thousands)
Interest and dividend income:
Investments:
Debt securities $ (13 ) $ (252 ) $ (265 )
Marketable and restricted equity securities (22 ) (112 ) (134 )
Short-term investments 214
(272 ) (58 )
Total investments 179
(636 ) (457 )
Loans and leases:
Commercial real estate loans 3,836
(3,387 ) 449
Commercial loans and leases (105 ) (1,170 ) (1,275 )
Equipment financing 1,159
(198 ) 961
Residential mortgage loans 318
(507 ) (189 )
Other consumer loans 122
(1,218 ) (1,096 )
Total loans 5,330
(6,480 ) (1,150 )
Total change in interest and dividend income 5,509
(7,116 ) (1,607 )
Interest expense:
Deposits:
NOW accounts 10
(36 ) (26 )
Savings accounts 1
45
46
Money market accounts 8
(1,042 ) (1,034 )
Certificate of deposit 1,114
192
1,306
Total deposits 1,133
(841 ) 292
Borrowed funds:
Advances from the FHLBB 106
(619 ) (513 )
Subordinated debentures and notes 3
(27 ) (24 )
Other borrowed funds 6
(38 ) (32 )
Total borrowed funds 115
(684 ) (569 )
Total change in interest expense 1,248
(1,525 ) (277 )
Change in tax-exempt income (43 ) —
(43 )
Change in net interest income $ 4,304
$ (5,591 ) $ (1,287 )

Table of Contents

Interest Income

Loans and Leases


	Three Months Ended March 31,				Dollar Change			Percent Change			Three Months Ended March 31,					Dollar Change			Percent Change
	2020		2019							2021			2020
	(Dollars in Thousands)										(Dollars in Thousands)
Interest income—loans and leases:											Interest income—loans and leases:
Commercial real estate loans	$	40,468	$	40,019	$	449		1.1	%	Commercial real estate loans	$	34,245		$	40,468		$	(6,223)				(15.4)	%
Commercial loans	8,256		9,494		(1,238		)	(13.0	)%	Commercial loans	12,692			8,256		4,436				53.7		%
Equipment financing	18,946		17,985		961			5.3	%	Equipment financing	18,043			18,946		(903)			(4.8)		%
Residential mortgage loans	7,934		8,123		(189		)	(2.3	)%	Residential mortgage loans	7,232			7,934		(702)			(8.8)		%
Other consumer loans	3,955		5,051		(1,096		)	(21.7	)%	Other consumer loans	2,797			3,955		(1,158)			(29.3)		%
Total interest income—loans and leases	$	79,559	$	80,672	$	(1,113	)	(1.4	)%	Total interest income—loans and leases	$	75,009		$	79,559	$	(4,550)		(5.7)		%

~~Interest income~~Total interest from loans and leases was ~~$79.6~~$75.0 million for the three months ended March 31, ~~2020,~~2021, and represented a yield on total loans of ~~4.71%~~4.13%. This compares to ~~$80.7~~$79.6 million of interest on loans and a yield of ~~5.09%~~4.71% for the three months ended March 31, ~~2019.~~2020. The ~~$1.1~~$4.6 million decrease in interest income from loans and leases was primarily attributable to a decrease of $9.9 million due to changes in interest rates, offset by an increase of $5.3 million due to an increase in origination ~~volume, more than offset by a decrease of $6.5~~volume.

Investments


	Three Months Ended March 31,				Dollar Change		Percent Change
	2021		2020
	(Dollars in Thousands)
Interest income—investments:
Debt securities	$	3,118	$	2,976	$	142	4.8	%
Marketable and restricted equity securities	301		778		(477)		(61.3)	%
Short-term investments	39		209		(170)		(81.3)	%
Total interest income—investments	$	3,458	$	3,963	$	(505)	(12.7)	%

Total interest income from investments was $3.5 million ~~due to changes in interest rates.~~

~~Interest amortization and accretion on acquired loans and leases totaled $0.1 million, or 1 basis point to the Company's net interest margin during both~~for the three months ended March 31, ~~2020 and 2019.~~

~~Investments~~

Three Months Ended March 31,
Dollar
Change

Percent
Change
2020 2019
(Dollars in Thousands)
Interest income—investments:
Debt securities $ 2,976
$ 3,236
$ (260 ) (8.0 )%
Marketable and restricted equity securities 778
911
(133 ) (14.6 )%
Short-term investments 209
267
(58 ) (21.7 )%
Total interest income—investments $ 3,963
$ 4,414
$ (451 ) (10.2 )%

~~Total investment income was~~2021 compared to $4.0 million for the three months ended March 31, ~~2020 compared to $4.4 million for~~2020. For the three months ended March 31, ~~2019. For the quarter ended March 31,~~2021 and 2020, ~~and 2019,~~ the yield on total investments was 1.4% and 2.2%., respectively. The ~~year over year~~year-over-year decrease in interest income on investments of ~~$451 thousand,~~$0.5 million, or ~~10.2%~~12.7%, was primarily driven by a ~~$636 thousand decrease~~$0.7 million increase due to ~~rates,~~volume, partially offset by a ~~$179 thousand increase~~$1.2 million decrease due to ~~volume.~~

rates.

Table of Contents

Interest Expense—Deposits and Borrowed Funds


	Three Months Ended March 31,				Dollar Change			Percent Change			Three Months Ended March 31,					Dollar Change			Percent Change
	2020		2019							2021			2020
	(Dollars in Thousands)										(Dollars in Thousands)
Interest expense:											Interest expense:
Deposits:										Deposits:
NOW accounts	$	116	$	142	$	(26	)	(18.3	)%	NOW accounts	$	130		$	116		$	14				12.1	%
Savings accounts	643		597		46			7.7	%	Savings accounts	235			643		(408)				(63.5)		%
Money market accounts	4,241		5,275		(1,034		)	(19.6	)%	Money market accounts	1,486			4,241		(2,755)			(65.0)		%
Certificates of deposit	11,240		9,934		1,306			13.1	%
Certificate of deposit accounts										Certificate of deposit accounts	4,154			9,251		(5,097)			(55.1)		%
Brokered deposit accounts										Brokered deposit accounts	702			1,989		(1,287)			(64.7)		%
Total interest expense - deposits	16,240		15,948		292			1.8	%	Total interest expense - deposits	6,707			16,240		(9,533)			(58.7)		%
Borrowed funds:										Borrowed funds:
Advances from the FHLBB	4,097		4,610		(513		)	(11.1	)%	Advances from the FHLBB	1,370			4,097		(2,727)			(66.6)		%
Subordinated debentures and notes	1,284		1,308		(24		)	(1.8	)%	Subordinated debentures and notes	1,242			1,284		(42)			(3.3)		%
Other borrowed funds	189		221		(32		)	(14.5	)%	Other borrowed funds	39			189		(150)			(79.4)		%
Total interest expense - borrowed funds	5,570		6,139		(569		)	(9.3	)%	Total interest expense - borrowed funds	2,651			5,570		(2,919)			(52.4)		%
Total interest expense	$	21,810	$	22,087	$	(277	)	(1.3	)%	Total interest expense	$	9,358		$	21,810	$	(12,452)		(57.1)		%

Deposits

For the three months ended March 31, ~~2020,~~2021, interest expense on deposits ~~increased $0.3~~decreased $9.5 million, or ~~1.8%~~58.7%, as compared to the same period in ~~2019.~~2020. The ~~increase~~decrease in interest expense on deposits was driven by a decrease of $9.6 million due to lower interest rates, partially offset by an increase of ~~$1.1~~$0.1 million due to the growth in ~~deposits, partially offset by a decrease of $0.8 million due to a decrease in interest rates. Purchase~~deposits. There was no purchase accounting amortization on acquired deposits for the three months ended March 31, ~~2020 was~~2021, compared to $44 thousand ~~and no basis points, compared to $185 thousand and 1 basis point~~ for the three months ended March 31, ~~2019.~~2020. Purchase accounting amortization had no impact on the Company's net interest margin.

Borrowed Funds

During the three months ended March 31, ~~2020,~~2021, interest paid on borrowed funds decreased ~~by $0.6~~$2.9 million, or ~~9.3%~~52.4% year over ~~year, primarily driven by a decrease in the rate paid on FHLBB borrowings.~~year. The cost of borrowed funds decreased to 1.60% for the three months ended March 31, 2021 from 2.33% for the three months ended March 31, ~~2020 from 2.65% for the three months ended March 31, 2019.~~2020. The decrease in interest expense was driven by a decrease of ~~$0.7~~$1.7 million due to borrowing rates ~~partially offset by an increase~~and a decrease of ~~$0.1~~$1.2 million due to volume. For ~~both~~ the three months ended March 31, ~~2020 and 2019, there was~~2021, the purchase accounting accretion ~~of $14 thousand and no basis points~~ on acquired borrowed funds was $13.0 thousand compared to accretion of ~~$14 thousand.~~$14.0 thousand for the three months ended March 31, 2020. Purchase accounting accretion had no impact on the Company's net interest margin.

Provision for Credit Losses

The provisions for credit losses are set forth below:


	Three Months Ended March 31,				Dollar Change		Percent Change
	2021		2020
	(Dollars in Thousands)
Provision (credit) for loan and lease losses:
Commercial real estate	$	(203)	$	40,200	$	(40,403)	(100.5)	%
Commercial	(1,864)		6,900		(8,764)		(127.0)	%
Consumer	(715)		601		(1,316)		(219.0)	%

Total provision (credit) for loan and lease losses	(2,782)		47,701		(50,483)		(105.8)	%
Unfunded credit commitments	635		6,413		(5,778)		(90.1)	%
Total provision (credit) for credit losses	$	(2,147)	$	54,114	$	(56,261)	(104.0)	%

Three Months Ended March 31,
Dollar
Change

Percent
Change
2020
2019
(Dollars in Thousands)
Provision for loan and lease losses:
Commercial real estate $ 40,200
$ 162
$ 40,038
24,714.8 %
Commercial 6,900
1,081
5,819
538.3 %
Consumer 601
207
394
(190.3 )%
Total provision for loan and
lease losses
47,701
1,450
46,251
3,189.7 %
Unfunded credit commitments 6,413
(97 ) 6,510
6,711.3 %
Total provision for credit losses $ 54,114
$ 1,353
$ 52,761
3,899.6 %

Table of Contents

For the three months ended March 31, ~~2020,~~2021, the ~~provision~~Allowance for ~~credit losses increased $52.8~~Credit Losses ("ACL") decreased $3.9 million ~~to $54.1 million from $1.3 million~~resulting in a Provision for ~~the three months ended March 31, 2019.~~Credit Losses of ($2.1 million). The ~~increase~~reduction in the ~~provision for credit losses for the three months~~

~~ended March 31, 2020 was primarily driven by the significant increase in allowance for credit losses due~~ACL is attributable to ~~macroeconomic forecasts surrounding the COVID-19 pandemic during the first quarter~~portfolio contraction, continued low level of ~~2020. The latest available economic forecasts were used in the loss models which reflected the immediate~~net charge-offs, an improving macro-economic forecast, and ~~longer term effects of the COVID-19 pandemic.~~qualitative adjustments that consider longer-term risks.

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 March 31,				Dollar Change				Percent Change				Three Months Ended March 31,									Dollar Change				Percent Change
	2020		2019								2021						2020
	(Dollars in Thousands)												(Dollars in Thousands)
Deposit fees	$	2,458	$	2,523		$	(65	)			(2.6	)%	Deposit fees		$	2,281				$	2,458			$	(177)				(7.2)		%
Loan fees	550		413		137				33.2	%	Loan fees		599					550					49					8.9		%
Loan level derivative income, net	2,156		1,745		411				23.6	%	Loan level derivative income, net		474					2,156				(1,682)					(78.0)		%
Gain on investment securities	1,330		134		1,196				892.5	%
(Loss) gain on investment securities											(Loss) gain on investment securities		(7)					1,330				(1,337)				(100.5)		%
Gain on sales of loans and leases held-for-sale	120		289		(169		)		(58.5	)%	Gain on sales of loans and leases held-for-sale		709					120				589				490.8		%

Other	2,714		1,526		1,188				77.9	%	Other		738					2,714				(1,976)				(72.8)		%
Total non-interest income	$	9,328	$	6,630	$	2,698			40.7	%	Total non-interest income		$	4,794				$	9,328			$	(4,534)			(48.6)		%

For the three months ended March 31, ~~2020,~~2021, non-interest income ~~increased $2.7~~decreased $4.5 million, or ~~40.7%~~48.6%, to ~~$9.3~~$4.8 million as compared to ~~$6.6~~$9.3 million for the same period of 2020. This decrease was primarily driven by decreases of $2.0 million in ~~2019. This~~other non-interest income, $1.7 million in loan level derivative income, net, and $1.3 million in gain on investment securities, partially offset by an increase ~~is primarily due to a $1.2~~of $0.6 million ~~increase~~ in gain on sales of ~~investment securities, a $1.2 million increase in other income~~loans and ~~a $0.4 million increase in loan level derivative income.~~leases held-for-sale.

Loan level derivative income ~~increased $0.4~~decreased $1.7 million, or ~~23.6%~~78.0%, to ~~$2.2~~$0.5 million for the three months ended March 31, ~~2020~~2021 from ~~$1.7~~$2.2 million for the same period in ~~2019,~~2020, primarily driven by ~~an increase~~lower volume in loan level ~~derivative~~derivatives transactions completed for the three months ended March 31, ~~2020.~~2021.

Gain on investment securities ~~increased $1.2~~decreased $1.3 million, or ~~892.5%~~100.5%, to ~~$1.3 million~~a loss of $7.0 thousand for the three months ended March 31, ~~2020~~2021 from ~~$0.1~~a gain of $1.3 million for the same period in ~~2019,~~2020, primarily driven by a $2.3 million gain on sales of investment securities, partially offset by a $1.0 million loss on equity securities ~~held for trading~~held-for-trading in the first quarter ~~2020.~~of 2020 as compared to no sales of investment securities and a small change in market value on equity securities held-for-trading due to the majority of equity securities sold in December 2020 for the same period in 2021.

~~Other income~~Gain on sales of loans and leases held-for-sales increased ~~$1.2~~$0.6 million or ~~77.9%~~490.8%, to ~~$2.7~~0.7 million for the three months ended March 31, ~~2020~~2021 from ~~$1.5~~$0.1 million for the same period in ~~2019,~~2020, primarily driven by ~~an increase~~higher gain on sale to participant, partially offset by lower loan sale volume with servicing retained.

Other income decreased $2.0 million, or 72.8%, to $0.7 million for the three months ended March 31, 2021 from $2.7 million for the same period in ~~gain on~~2020, primarily driven by interest rate derivatives market value adjustment due to volatility in rates and lower commission income generated by investment sales ~~commissions, investment sales advisory fees, and bank-owned life insurance (BOLI) income.~~transactions.

Table of Contents

Non-Interest Expense

The following table sets forth the components of non-interest expense:


	Three Months Ended March 31,				Dollar Change			Percent Change				Three Months Ended March 31,									Dollar Change				Percent Change
	2020		2019							2021						2020
	(Dollars in Thousands)											(Dollars in Thousands)
Compensation and employee benefits	$	25,219	$	23,743		$	1,476			6.2	%	Compensation and employee benefits		$	25,821				$	25,219			$	602				2.4		%
Occupancy	3,953		3,947		6			0.2	%	Occupancy		4,004					3,953					51					1.3		%
Equipment and data processing	4,703		4,661		42			0.9	%	Equipment and data processing		4,493					4,703				(210)					(4.5)		%
Professional services	1,651		1,076		575			53.4	%	Professional services		1,226					1,651				(425)				(25.7)		%
FDIC insurance	378		593		(215		)	(36.3	)%	FDIC insurance		1,044					378				666				176.2		%
Advertising and marketing	1,075		1,069		6			0.6	%	Advertising and marketing		1,100					1,075				25				2.3		%
Amortization of identified intangible assets	336		402		(66		)	(16.4	)%	Amortization of identified intangible assets		232					336				(104)				(31.0)		%

Other	3,433		3,380		53			1.6	%	Other		2,891					3,433				(542)				(15.8)		%
Total non-interest expense	$	40,748	$	38,871	$	1,877		4.8	%	Total non-interest expense		$	40,811				$	40,748			$	63			0.2		%

For the three months ended March 31, ~~2020,~~2021, non-interest expense increased ~~$1.9~~$0.1 million, or ~~4.8%~~0.2%, to ~~$40.7~~$40.8 million as compared to ~~$38.9~~$40.7 million for the same period in ~~2019.~~2020. The increase ~~is due to a $1.5~~was primarily driven by increases of $0.7 million ~~increase~~in FDIC insurance expense and $0.6 million in compensation and employee benefits expense, ~~and a $0.6~~partially offset by decreases of $0.5 million ~~increase~~in other non-interest expenses, $0.4 million in professional services ~~partially offset by a decrease of~~and $0.2 million in ~~FDIC insurance.~~equipment and data processing expense.

Compensation and employee benefits expense increased ~~$1.5~~$0.6 million, or ~~6.2%~~2.4%, to ~~$25.2~~$25.8 million for the three months ended March 31, ~~2020~~2021 from ~~$23.7~~$25.2 million for the same period in ~~2019,~~2020, primarily driven by increases in employee ~~headcount.~~headcount, annual ~~salary~~merit increases and bonuses, partially offset by decreases in commissions, retirement plan and health care benefits.

~~Professional services~~Equipment and data processing expense ~~increased $0.6~~decreased $0.2 million, or ~~53.4%~~4.5%, to ~~$1.7~~$4.5 million for the three months ended March 31, ~~2020~~2021 from ~~$1.1~~$4.7 million for the same period in ~~2019,~~2020, primarily driven by lower core processing expenses, purchased software depreciation, other furniture and equipment depreciation, and data communications expenses, partially offset by higher ~~professional~~software licenses and subscriptions.

Professional services ~~fees related to the CECL implementation.~~

~~FDIC insurance~~ expense decreased ~~$0.2~~$0.4 million, or ~~36.3%~~25.7%, to ~~$0.4~~$1.2 million for the three months ended March 31, ~~2020~~2021 from ~~$0.6~~$1.7 million for the same period in ~~2019,~~2020, primarily driven by lower legal fees, audit fees and accounting fees, and outsourced internal audit fees.

FDIC insurance expense increased $0.7 million, or 176.2%, to $1.0 million for the three months ended March 31, 2021 from $0.4 million for the same period in 2020, primarily driven by higher bank assessment ~~credits~~fees from the FDIC.

Provision for Income Taxes


	Three Months Ended March 31,						Dollar Change				Percent Change				Three Months Ended March 31,									Dollar Change				Percent Change
	2020			2019									2021						2020
	(Dollars in Thousands)														(Dollars in Thousands)
Income before provision for income taxes	$	(23,822	)	$	29,405			$	(53,227	)			(181.0	)%	Income before provision for income taxes		$	35,239				$	(23,822)			$	59,061				(247.9)		%
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	)%
Provision (benefit) for income taxes													Provision (benefit) for income taxes		8,785					(6,546)					15,331					(234.2)		%
Net income (loss)													Net income (loss)		$	26,454				$	(17,276)			$	43,730				(253.1)		%
Effective tax rate	27.5		%	23.4		%	N/A				17.5	%	Effective tax rate		24.9		%			27.5		%		N/A				(9.5)		%

The Company recorded an income tax expense of $8.8 million for the three months ended March 31, 2021, compared to an income tax benefit of $6.5 million for the three months ended March 31, 2020, ~~compared to an income tax expense of $6.9 million for the three months ended March 31, 2019,~~ representing effective tax rates of ~~27.5%~~24.9% and ~~23.4%~~27.5%, respectively.

The changes in the Company's effective tax rate for the three months ended March 31, 2020 and 2019 was primarily driven by the tax 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

Table of taxes paid. The tax benefit for the Company is the difference between the 21% current tax rate and the 34% tax rate seen in the carryback year. The Company is amending the 2018 tax returns to take advantage of this change.Contents

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.

In the first quarter, the Company continued to operate with increased liquidity as a precautionary measure due to economic uncertainty associated with the COVID-19 pandemic. In particular, the Company has shifted its balance sheet asset mix to include additional cash and available for sale securities. Management ~~has reacted strategically~~will continue to monitor the economic markets and evaluate changes to the ~~COVID-19 pandemic and enhanced the~~Company’s 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.

as economic conditions improve.

Management ~~has strategically enhanced the amount~~continued holding higher levels of on balance sheet liquidity in the form of cash and ~~investment securities~~ available for sale ~~since~~securities in the ~~start of the COVID-19 pandemic crisis.~~first quarter. Cash and equivalents at the end of the quarter were ~~$340.8~~$130.9 million, or ~~4.0%~~1.5% of the balance sheet, ~~this compares~~compared to ~~$77.8~~$434.9 million, or ~~1.0%~~4.9% 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.~~2020. In general, ~~during~~in a normal operating environment, the Company seeks to maintain liquidity ~~and targets~~levels of 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~~management increased this target operating range isto between ~~10%~~5% and 15%. of total assets. As of March 31, ~~2020,~~2021, cash, cash equivalents and investment securities available-for-sale totaled ~~$1.1 billion,~~$860.8 million, or ~~13.0%~~10.1% of total assets. This compares to ~~$576.8 million,~~$1.2 billion, or ~~7.3%~~13.2% of total assets, as of December 31, ~~2019.~~2020.

Deposits, which are considered the most stable source of liquidity, totaled ~~$5.9~~$6.9 billion as of March 31, ~~2020~~2021 and represented ~~82.0%~~92.6% of total funding (the sum of total deposits and total borrowings), compared to deposits of ~~$5.8~~$6.9 billion, or ~~86.6%~~89.4% of total funding, as of December 31, ~~2019.~~2020. Core deposits, which consist of demand checking, NOW, savings and money market accounts, totaled ~~$3.9~~$5.1 billion as of March 31, ~~2020~~2021 and represented ~~65.6%~~74.6% of total deposits, compared to core deposits of ~~$3.8~~$4.8 billion, or ~~65.3%~~69.8% of total deposits, as of December 31, ~~2019.~~2020. Additionally, the Company had ~~$354.1~~$470.6 million of brokered deposits as of March 31, ~~2020,~~2021, which represented ~~6.0%~~6.9% of total deposits, compared to ~~$349.9~~$693.9 million or ~~6.0%~~10.0% of total deposits, as of December 31, ~~2019.~~2020. 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 ~~$1.3 billion~~$546.0 million as of March 31, ~~2020,~~2021, representing ~~18.0%~~7.4% of total funding, compared to ~~$902.7~~$820.2 million, or ~~13.4%~~10.6% of total funding, as of December 31, ~~2019.~~2020. The growth in the balance sheet is directly tied to the current operating environment, management will continue to monitor economic conditions and make adjustments to the balance sheet mix as appropriate.

As members of the FHLBB, the Banks have access to both short- and long-term borrowings. As of March 31, ~~2020,~~2021, the Company's total borrowing limit from the FHLBB for advances and repurchase agreements was ~~$2.1~~$1.8 billion, compared to ~~$2.1~~$1.9 billion as of December 31, ~~2019,~~2020, based on the level of qualifying collateral available for these borrowings.

As of March 31, ~~2020,~~2021, the Banks also have access to funding through certain uncommitted lines of credit of ~~$568.0~~$746.0 million.

The Company had a $12.0 million committed line of credit for contingent liquidity as of March 31, ~~2020.~~2021. As of March 31, ~~2020,~~2021, the Company ~~had $5 million~~did not have any outstanding of borrowings on this ~~committed line of credit outstanding.~~line.

The Company has access to the Federal Reserve ~~Bank of Boston's~~Bank's "discount window" to supplement its liquidity. The Company has ~~$109.0~~$590.9 million of borrowing capacity at the Federal Reserve Bank as of March 31, ~~2020.~~2021. As of March 31, ~~2020,~~2021, the Company did not have any outstanding borrowings with the Federal Reserve Bank.

Additionally, the Banks have access to liquidity through repurchase agreements and additional untapped brokered deposits.

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.

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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 March 31, 2021		At December 31, 2020
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	107,597	$	174,240
Commercial	105,426		80,291
Residential mortgage	82,366		30,418
Unadvanced portion of loans and leases	826,545		759,053
Unused lines of credit:
Home equity	591,377		584,881
Other consumer	41,583		38,954
Other commercial	431		408
Unused letters of credit:
Financial standby letters of credit	15,953		14,746
Performance standby letters of credit	6,607		5,903
Commercial and similar letters of credit	5,369		5,105
Loan level derivatives:
Receive fixed, pay variable	1,232,482		1,214,146
Pay fixed, receive variable	1,232,482		1,214,146
Risk participation-out agreements	263,430		252,655
Risk participation-in agreements	60,289		60,619
Foreign exchange contracts:
Buys foreign currency, sells U.S. currency	1,416		1,266
Sells foreign currency, buys U.S. currency	1,422		1,273

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

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Capital Resources

As of March 31, ~~2020,~~2021, 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 March 31, ~~2020,~~2021, the Company and the Banks exceeded all regulatory capital requirements, and the Banks were each considered “well-capitalized” under prompt corrective action regulations.

The following table presents actual and required capital amounts and capital ratios as of March 31, ~~2020~~2021 for the Company and the 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 March 31, 2020:
At March 31, 2021:																	At March 31, 2021:
Brookline Bancorp, Inc.																	Brookline Bancorp, Inc.
Common equity Tier 1 capital ratio ⁽¹⁾	$	733,661	10.42	%	$	316,840	4.50	%	$	492,862	7.00	%	N/A		N/A		Common equity Tier 1 capital ratio (1)	$	782,378	11.65	%	$	302,206	4.50	%	$	470,098	7.00	%	N/A		N/A
Tier 1 leverage capital ratio ⁽²⁾	743,240		9.54	%	311,631		4.00	%	311,631		4.00	%	N/A		N/A		Tier 1 leverage capital ratio (2)	792,010		9.26	%	342,121		4.00	%	342,121		4.00	%	N/A		N/A
Tier 1 risk-based capital ratio ⁽³⁾	743,240		10.55	%	422,696		6.00	%	598,819		8.50	%	N/A		N/A		Tier 1 risk-based capital ratio (3)	792,010		11.79	%	403,059		6.00	%	571,000		8.50	%	N/A		N/A
Total risk-based capital ratio ⁽⁴⁾	905,842		12.86	%	563,510		8.00	%	739,607		10.50	%	N/A		N/A		Total risk-based capital ratio (4)	950,627		14.15	%	537,457		8.00	%	705,412		10.50	%	N/A		N/A
Brookline Bank																	Brookline Bank
Common equity Tier 1 capital ratio ⁽¹⁾	$	539,269	11.01	%	$	220,410	4.50	%	$	342,859	7.00	%	$	318,370	6.50	%	Common equity Tier 1 capital ratio (1)	$	562,089	12.21	%	$	207,158	4.50	%	$	322,246	7.00	%	$	299,228	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	539,269		9.98	%	216,140		4.00	%	216,140		4.00	%	270,175		5.00	%	Tier 1 leverage capital ratio (2)	562,089		10.15	%	221,513		4.00	%	221,513		4.00	%	276,891		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	539,269		11.01	%	293,880		6.00	%	416,329		8.50	%	391,839		8.00	%	Tier 1 risk-based capital ratio (3)	562,089		12.21	%	276,211		6.00	%	391,299		8.50	%	368,281		8.00	%
Total risk-based capital ratio ⁽⁴⁾	600,829		12.27	%	391,739		8.00	%	514,157		10.50	%	489,673		10.00	%	Total risk-based capital ratio (4)	619,931		13.47	%	368,185		8.00	%	483,242		10.50	%	460,231		10.00	%
BankRI																	BankRI
Common equity Tier 1 capital ratio ⁽¹⁾	$	229,379	10.69	%	$	96,558	4.50	%	$	150,201	7.00	%	$	139,473	6.50	%	Common equity Tier 1 capital ratio (1)	$	243,118	11.42	%	$	95,800	4.50	%	$	149,022	7.00	%	$	138,377	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	229,379		9.35	%	98,130		4.00	%	98,130		4.00	%	122,663		5.00	%	Tier 1 leverage capital ratio (2)	243,118		7.84	%	124,040		4.00	%	124,040		4.00	%	155,050		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	229,379		10.69	%	128,744		6.00	%	182,387		8.50	%	171,659		8.00	%	Tier 1 risk-based capital ratio (3)	243,118		11.42	%	127,733		6.00	%	180,955		8.50	%	170,310		8.00	%
Total risk-based capital ratio ⁽⁴⁾	256,360		11.95	%	171,622		8.00	%	225,254		10.50	%	214,527		10.00	%	Total risk-based capital ratio (4)	269,903		12.68	%	170,286		8.00	%	223,500		10.50	%	212,857		10.00	%

(1) Common equity Tier 1 capital ratio is calculated by dividing common equity Tier 1 capital by risk-weighted assets.

(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.

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The following table presents actual and required capital amounts and capital ratios as of December 31, ~~2019~~2020 for the Company and the 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, 2019:
At December 31, 2020:																	At December 31, 2020:
Brookline Bancorp, Inc.																	Brookline Bancorp, Inc.
Common equity Tier 1 capital ratio ⁽¹⁾	$	780,962	11.44	%	$	307,197	4.50	%	$	477,861	7.00	%	N/A		N/A		Common equity Tier 1 capital ratio (1)	$	764,157	11.04	%	$	311,477	4.50	%	$	484,520	7.00	%	N/A		N/A
Tier 1 leverage capital ratio ⁽²⁾	790,527		10.28	%	307,598		4.00	%	307,598		4.00	%	N/A		N/A		Tier 1 leverage capital ratio (2)	773,777		8.92	%	346,985		4.00	%	346,985		4.00	%	N/A		N/A
Tier 1 risk-based capital ratio ⁽³⁾	790,527		11.58	%	409,599		6.00	%	580,266		8.50	%	N/A		N/A		Tier 1 risk-based capital ratio (3)	773,777		11.18	%	415,265		6.00	%	588,292		8.50	%	N/A		N/A
Total risk-based capital ratio ⁽⁴⁾	927,515		13.59	%	545,999		8.00	%	716,623		10.50	%	N/A		N/A		Total risk-based capital ratio (4)	934,933		13.51	%	553,624		8.00	%	726,632		10.50	%	N/A		N/A
Brookline Bank																	Brookline Bank
Common equity Tier 1 capital ratio ⁽¹⁾	$	513,311	11.44	%	$	201,914	4.50	%	$	314,089	7.00	%	$	291,654	6.50	%	Common equity Tier 1 capital ratio (1)	$	557,310	11.72	%	$	213,984	4.50	%	$	332,864	7.00	%	$	309,088	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	513,311		10.42	%	197,048		4.00	%	197,048		4.00	%	246,310		5.00	%	Tier 1 leverage capital ratio (2)	557,310		9.82	%	227,010		4.00	%	227,010		4.00	%	283,763		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	513,311		11.44	%	269,219		6.00	%	381,394		8.50	%	358,959		8.00	%	Tier 1 risk-based capital ratio (3)	557,310		11.72	%	285,312		6.00	%	404,192		8.50	%	380,416		8.00	%
Total risk-based capital ratio ⁽⁴⁾	555,474		12.38	%	358,949		8.00	%	471,121		10.50	%	448,687		10.00	%	Total risk-based capital ratio (4)	617,101		12.97	%	380,633		8.00	%	499,581		10.50	%	475,791		10.00	%
BankRI																	BankRI
Common equity Tier 1 capital ratio ⁽¹⁾	$	240,362	11.75	%	$	92,054	4.50	%	$	143,194	7.00	%	$	132,966	6.50	%	Common equity Tier 1 capital ratio (1)	$	239,337	11.03	%	$	97,644	4.50	%	$	151,891	7.00	%	$	141,042	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	240,362		9.97	%	96,434		4.00	%	96,434		4.00	%	120,543		5.00	%	Tier 1 leverage capital ratio (2)	239,337		7.78	%	123,052		4.00	%	123,052		4.00	%	153,816		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	240,362		11.75	%	122,738		6.00	%	173,879		8.50	%	163,651		8.00	%	Tier 1 risk-based capital ratio (3)	239,337		11.03	%	130,192		6.00	%	184,439		8.50	%	173,590		8.00	%
Total risk-based capital ratio ⁽⁴⁾	258,719		12.65	%	163,617		8.00	%	214,747		10.50	%	204,521		10.00	%	Total risk-based capital ratio (4)	266,633		12.29	%	173,561		8.00	%	227,799		10.50	%	216,951		10.00	%
First Ipswich
Common equity Tier 1 capital ratio ⁽¹⁾	$	41,320	13.45	%	$	13,825	4.50	%	$	21,505	7.00	%	$	19,969	6.50	%
Tier 1 leverage capital ratio ⁽²⁾	41,320		8.80	%	18,782		4.00	%	18,782		4.00	%	23,477		5.00	%
Tier 1 risk-based capital ratio ⁽³⁾	41,320		13.45	%	18,433		6.00	%	26,113		8.50	%	24,577		8.00	%
Total risk-based capital ratio ⁽⁴⁾	43,762		14.24	%	24,585		8.00	%	32,268		10.50	%	30,732		10.00	%

(1) Common equity Tier 1 capital ratio is calculated by dividing common equity Tier 1 capital by risk-weighted assets.

(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.

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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 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 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~~enters into interest rate swaps ~~to manage~~as part of its ~~interest-rate risk; however,~~interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for the Company had no derivative fair value hedges or derivative cash flows hedges as of March 31, 2020 or December 31, 2019. See Note 8, “Derivatives and Hedging Activities,” to the unaudited consolidated financial statements.making fixed payments.

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 March 31, ~~2020.~~2021.

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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 March 31, ~~2020,~~2021, 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
	March 31, 2021				December 31, 2020
Change in Interest Rate Levels	Dollar Change		Percent Change		Dollar Change		Percent Change
	(Dollars in Thousands)
Up 300 basis points shock	$	17,032	6.4	%	$	19,249	7.1	%
Up 200 basis points ramp	9,128		3.4	%	10,698		3.9	%
Up 100 basis points ramp	4,521		1.7	%	5,193		1.9	%
Down 100 basis points ramp	(5,702)		(2.1)	%	(5,999)		(2.2)	%

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 ~~14.3%~~6.4% as of March 31, ~~2020,~~2021, compared to a positive ~~11.5%~~7.1% as of December 31, ~~2019.~~2020. The ~~increase~~decrease in asset sensitivity was due to an ~~increase~~extension in ~~short term liquidity positions.~~the investment portfolio.

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 March 31, ~~2020,~~2021, the Company’s one-year cumulative gap was a negative ~~$73.2~~$135.9 million, or ~~0.93%~~1.68% of total interest-earning assets, compared with a ~~positive $4.7~~negative $330.0 million, or ~~0.06%~~3.92% of total interest-earning assets, at December 31, ~~2019.~~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. For additional discussion on interest-rate risk see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” of the Company’s ~~2019~~2020 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 March 31, ~~2020,~~2021, 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
Parallel Shock in Interest Rate Levels	At March 31, 2021		At December 31, 2020
Up 300 basis points	10.9	%	11.2	%
Up 200 basis points	7.7	%	8.3	%
Up 100 basis points	4.7	%	5.4	%
Down 100 basis points	(11.3)	%	(13.6)	%

Estimated Percent Change in Economic Value of Equity
Parallel Shock in Interest Rate Levels At March 31, 2020
At December 31, 2019
Up 300 basis points 1.2 % 6.0 %
Up 200 basis points (0.4 )% 5.1 %
Up 100 basis points (1.5 )% 3.3 %
Down 100 basis points (11.4 )% (7.2 )%

Table of Contents

The Company's EVE sensitivity ~~decreased~~increased from December 31, ~~2019~~2020 to March 31, ~~2020~~2021 due to the lengthened duration of the ~~loan and~~ investment ~~portfolios offset by a larger short term liquidity position.~~portfolio.

Item 4. Controls and Procedures

Controls and Procedures

Under the supervision and with the participation of the Company’s 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, including its Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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 changes in 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 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 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 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, ~~2019~~2020 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, ~~2019.~~2020.

Table of Contents

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

~~In addition~~There have been no material changes to the ~~"Risk Factors"~~risk factors disclosed in ~~Part I,~~ Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, ~~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) 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.None.

Issuer Purchases of Equity Securities
Period
(a) Total number
of shares
purchased

(b) Average
price paid
per share

(c) Total number
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.

Table of Contents

Item 6. Exhibits

Exhibits


Exhibit 10.1						Second Amendment to the Employment Agreement, dated March 10, 2021, by and among Brookline Bancorp, Inc., Brookline Bank and Paul A. Perrault (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on March 10, 2021)

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

~~101.INS~~
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the 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
104						Cover Page Interactive Data File (formatted in Inline XBRL and included in Exhibit 101)

* Filed herewith

** Furnished herewith

Table of Contents

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: May ~~29, 2020~~5, 2021	By:	/s/ Paul A. Perrault
		Paul A. Perrault
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: May ~~29, 2020~~5, 2021	By:	/s/ Carl M. Carlson
		Carl M. Carlson
		Chief Financial Officer
		(Principal Financial Officer)



	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	%



	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



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	81,915		372,988		270,215		165,961		83,859		66,392		1,261		736		1,043,327
OAEM	—		—		—		—		1,322		42		—		—		1,364
Substandard	—		969		2,429		2,168		1,457		2,127		—		—		9,150
Doubtful	—		342		366		310		94		100		—		—		1,212
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	225,776		1,056,306		960,532		660,549		550,651		1,652,370		426,116		28,692		5,560,992
OAEM	—		496		25		—		3,648		14,832		4,302		376		23,679
Substandard	—		969		3,680		3,038		3,526		25,034		981		679		37,907
Doubtful	—		342		366		310		94		100		—		1		1,213
Total	$	225,776	$	1,058,113	$	964,603	$	663,897	$	557,919	$	1,692,336	$	431,399	$	29,748	$	5,623,791



	At December 31, 2019
	Commercial Real Estate		Multi- Family Mortgage		Construction		Commercial		Equipment Financing		Condominium Association		Other Consumer		Total
	(In Thousands)
Originated:
Loan rating:
Pass	$	2,379,925	$	896,398	$	239,015	$	688,268	$	1,038,793	$	56,687	$	38,673	$	5,337,759
OAEM	17,006		—		—		10,803		1,389		—		—		29,198
Substandard	3,106		84		—		14,801		7,995		151		1		26,138
Doubtful	—		—		—		3		1,820		—		—		1,823
Total originated	2,400,037		896,482		239,015		713,875		1,049,997		56,838		38,674		5,394,918

Acquired:
Loan rating:
Pass	81,360		35,681		7,033		15,215		2,404		—		108		141,801
OAEM	597		—		—		210		—		—		—		807
Substandard	9,017		—		—		202		7		—		—		9,226
Doubtful	—		—		—		—		—		—		—		—
Total acquired	90,974		35,681		7,033		15,627		2,411		—		108		151,834

Total loans	$	2,491,011	$	932,163	$	246,048	$	729,502	$	1,052,408	$	56,838	$	38,782	$	5,546,752



	At December 31, 2019
	Recorded Investment ₍₁₎		Unpaid Principal Balance		Related Allowance
	(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	3,899	$	3,892	$	—
Commercial	28,539		28,533		—
Consumer	2,237		2,223		—
Total originated with no related allowance recorded	34,675		34,648		—
With an allowance recorded:
Commercial real estate	68		68		7
Commercial	5,980		6,055		1,672
Consumer	1,224		1,220		70
Total originated with an allowance recorded	7,272		7,343		1,749
Total originated impaired loans and leases	41,947		41,991		1,749

Acquired:
With no related allowance recorded:
Commercial real estate	12,365		12,366		—
Commercial	437		437		—
Consumer	3,516		3,516		—
Total acquired with no related allowance recorded	16,318		16,319		—
With an allowance recorded:
Commercial real estate	—		—		—
Commercial	—		—		—
Consumer	447		447		40
Total acquired with an allowance recorded	447		447		40
Total acquired impaired loans and leases	16,765		16,766		40

Total impaired loans and leases	$	58,712	$	58,757	$	1,789



	Three Months Ended
	March 31, 2019
	Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	8,699	$	65
Commercial	35,162		349
Consumer	2,732		8
Total originated with no related allowance recorded	46,593		422
With an allowance recorded:
Commercial real estate	469		1
Commercial	8,467		28
Consumer	663		6
Total originated with an allowance recorded	9,599		35
Total originated impaired loans and leases	56,192		457

Acquired:
With no related allowance recorded:
Commercial real estate	9,153		3
Commercial	559		4
Consumer	4,943		15
Total acquired with no related allowance recorded	14,655		22
With an allowance recorded:
Commercial real estate	—		—
Commercial	—		—
Consumer	153		1
Total acquired with an allowance recorded	153		1
Total acquired impaired loans and leases	14,808		23

Total impaired loans and leases	$	71,000	$	480



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



	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



	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