UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

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,~~September 30, 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

BROOKLINE BANCORP INC.

(Exact name of registrant as specified in its charter)

Delaware

04-3402944

(State or other jurisdiction of
incorporation or organization)

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

131 Clarendon Street

Boston

02116

(Address of principal executive offices)

(Zip Code)

(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

☐

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 ~~April 30,~~October 31, 2021, the number of shares of common stock, par value $0.01 per share, outstanding was ~~78,192,589.~~77,639,610.

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

FORM 10-Q

Table of Contents


		Page
Part I	Financial Information

Item 1.	Unaudited Consolidated Financial Statements

	Unaudited Consolidated Balance Sheets at ~~March 31,~~September 30, 2021 and December 31, 2020	1

	Unaudited Consolidated Statements of Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020	2

	Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020	3

	Unaudited Consolidated Statements of Changes in Equity for the Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020	4

	Unaudited Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2021 and 2020	56

	Notes to Unaudited Consolidated Financial Statements	67

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4346

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7784

Item 4.	Controls and Procedures	7986

Part II	Other Information

Item 1.	Legal Proceedings	8087

Item 1A.	Risk Factors	8087

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8087

Item 3.	Defaults Upon Senior Securities	8087

Item 4.	Mine Safety Disclosures	8087

Item 5.	Other Information	8087

Item 6.	Exhibits	8188

	Signatures	8289

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements


BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Balance Sheets	BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Balance Sheets					BROOKLINE BANCORP, INC. AND SUBSIDIARIES Unaudited Consolidated Balance Sheets
		At March 31, 2021		At December 31, 2020			At September 30, 2021		At December 31, 2020
		(In Thousands Except Share Data)					(In Thousands Except Share Data)
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	41,284	$	36,069	Cash and due from banks	$	28,865	$	36,069
Short-term investments	Short-term investments	89,643		398,848		Short-term investments	210,279		398,848
Total cash and cash equivalents	Total cash and cash equivalents	130,927		434,917		Total cash and cash equivalents	239,144		434,917
Investment securities available-for-sale	Investment securities available-for-sale	729,901		745,822		Investment securities available-for-sale	732,020		745,822

Equity securities held-for-trading	Equity securities held-for-trading	518		526		Equity securities held-for-trading	—		526
Total investment securities	Total investment securities	730,419		746,348		Total investment securities	732,020		746,348

Loans and leases:	Loans and leases:					Loans and leases:
Commercial real estate loans	Commercial real estate loans	3,790,341		3,823,826		Commercial real estate loans	3,909,011		3,823,826
Commercial loans and leases	Commercial loans and leases	2,324,202		2,274,899		Commercial loans and leases	1,869,686		2,274,899
Consumer loans	Consumer loans	1,153,009		1,170,828		Consumer loans	1,152,997		1,170,828
Total loans and leases	Total loans and leases	7,267,552		7,269,553		Total loans and leases	6,931,694		7,269,553
Allowance for loan and lease losses	Allowance for loan and lease losses	(109,837)		(114,379)		Allowance for loan and lease losses	(102,515)		(114,379)
Net loans and leases	Net loans and leases	7,157,715		7,155,174		Net loans and leases	6,829,179		7,155,174
Restricted equity securities	Restricted equity securities	40,400		49,786		Restricted equity securities	28,098		49,786
Premises and equipment, net of accumulated depreciation of $83,290 and $82,233, respectively		72,524		71,568
Premises and equipment, net of accumulated depreciation of $85,679 and $82,233, respectively						Premises and equipment, net of accumulated depreciation of $85,679 and $82,233, respectively	70,811		71,568
Right-of-use asset operating leases	Right-of-use asset operating leases	23,180		24,143		Right-of-use asset operating leases	21,879		24,143
Deferred tax asset	Deferred tax asset	42,857		40,129		Deferred tax asset	39,643		40,129
Goodwill	Goodwill	160,427		160,427		Goodwill	160,427		160,427
Identified intangible assets, net of accumulated amortization of $38,984 and $38,752, respectively		2,920		3,152
Identified intangible assets, net of accumulated amortization of $39,420 and $38,752, respectively						Identified intangible assets, net of accumulated amortization of $39,420 and $38,752, respectively	2,484		3,152
Other real estate owned ("OREO") and repossessed assets, net	Other real estate owned ("OREO") and repossessed assets, net	6,383		6,515		Other real estate owned ("OREO") and repossessed assets, net	601		6,515
Other assets	Other assets	192,058		250,265		Other assets	188,363		250,265
Total assets	Total assets	$	8,559,810	$	8,942,424	Total assets	$	8,312,649	$	8,942,424
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:	Deposits:					Deposits:
Demand checking accounts	Demand checking accounts	$	1,724,170	$	1,592,205	Demand checking accounts	$	1,816,116	$	1,592,205

Interest-bearing deposits	Interest-bearing deposits	5,142,616		5,318,491		Interest-bearing deposits	5,056,894		5,318,491
Total deposits	Total deposits	6,866,786		6,910,696		Total deposits	6,873,010		6,910,696
Borrowed funds:	Borrowed funds:					Borrowed funds:
Advances from the Federal Home Loan Bank of Boston ("FHLBB")	Advances from the Federal Home Loan Bank of Boston ("FHLBB")	378,646		648,849		Advances from the Federal Home Loan Bank of Boston ("FHLBB")	113,977		648,849
Subordinated debentures and notes	Subordinated debentures and notes	83,783		83,746		Subordinated debentures and notes	83,859		83,746
Other borrowed funds	Other borrowed funds	83,574		87,652		Other borrowed funds	69,703		87,652
Total borrowed funds	Total borrowed funds	546,003		820,247		Total borrowed funds	267,539		820,247
Operating lease liabilities	Operating lease liabilities	23,180		24,143		Operating lease liabilities	21,879		24,143
Mortgagors' escrow accounts	Mortgagors' escrow accounts	6,483		5,901		Mortgagors' escrow accounts	6,455		5,901
Reserve for unfunded credits	Reserve for unfunded credits	13,705		13,071		Reserve for unfunded credits	12,736		13,071

Accrued expenses and other liabilities	Accrued expenses and other liabilities	158,254		226,588		Accrued expenses and other liabilities	152,578		226,588
Total liabilities	Total liabilities	7,614,411		8,000,646		Total liabilities	7,334,197		8,000,646

Commitments and contingencies (Note 12)	Commitments and contingencies (Note 12)	0		0		Commitments and contingencies (Note 12)	0		0
Stockholders' Equity:	Stockholders' Equity:					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	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		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	Additional paid-in capital	737,882		737,178		Additional paid-in capital	735,990		737,178
Retained earnings, partially restricted	Retained earnings, partially restricted	282,301		264,892		Retained earnings, partially restricted	323,862		264,892
Accumulated other comprehensive income	Accumulated other comprehensive income	2,082		16,490		Accumulated other comprehensive income	2,615		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)
Treasury stock, at cost; 7,034,754 shares and 6,525,783 shares, respectively						Treasury stock, at cost; 7,034,754 shares and 6,525,783 shares, respectively	(84,684)		(77,343)
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 31,278 shares and 51,114 shares, respectively						Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 31,278 shares and 51,114 shares, respectively	(183)		(291)

Total stockholders' equity	Total stockholders' equity	945,399		941,778		Total stockholders' equity	978,452		941,778
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	8,559,810	$	8,942,424	Total liabilities and stockholders' equity	$	8,312,649	$	8,942,424

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(In Thousands Except Share Data)				(In Thousands Except Share Data)
Interest and dividend income:	Interest and dividend income:							Interest and dividend income:
Loans and leases	Loans and leases	$	75,009	$	79,559			Loans and leases	$	74,332	$	76,240	$	224,367	$	233,215
Debt securities	Debt securities	3,118		2,976				Debt securities	2,967		3,746		9,206		10,423
Marketable and restricted equity securities	Marketable and restricted equity securities	301		778				Marketable and restricted equity securities	313		672		847		2,358
Short-term investments	Short-term investments	39		209				Short-term investments	83		46		164		354
Total interest and dividend income	Total interest and dividend income	78,467		83,522				Total interest and dividend income	77,695		80,704		234,584		246,350
Interest expense:	Interest expense:							Interest expense:
Deposits	Deposits	6,707		16,240				Deposits	4,571		10,583		16,658		39,601
Borrowed funds	Borrowed funds	2,651		5,570				Borrowed funds	2,427		4,183		7,014		14,811
Total interest expense	Total interest expense	9,358		21,810				Total interest expense	6,998		14,766		23,672		54,412
Net interest income	Net interest income	69,109		61,712				Net interest income	70,697		65,938		210,912		191,938
(Credit) provision for credit losses	(Credit) provision for credit losses	(2,147)		54,114				(Credit) provision for credit losses	(3,110)		4,528		(8,588)		63,989
Net interest income after provision for credit losses	Net interest income after provision for credit losses	71,256		7,598				Net interest income after provision for credit losses	73,807		61,410		219,500		127,949
Non-interest income:	Non-interest income:							Non-interest income:
Deposit fees	Deposit fees	2,281		2,458				Deposit fees	2,629		2,305		7,925		6,692
Loan fees	Loan fees	599		550				Loan fees	487		397		1,647		1,460
Loan level derivative income, net	Loan level derivative income, net	474		2,156				Loan level derivative income, net	218		527		699		4,123
(Loss) gain on investment securities, net		(7)		1,330
Gain (loss) on investment securities, net								Gain (loss) on investment securities, net	—		54		(6)		1,970
Gain on sales of loans and leases held-for-sale	Gain on sales of loans and leases held-for-sale	709		120				Gain on sales of loans and leases held-for-sale	557		632		1,804		1,051

Other	Other	738		2,714				Other	1,695		947		4,221		5,129
Total non-interest income	Total non-interest income	4,794		9,328				Total non-interest income	5,586		4,862		16,290		20,425
Non-interest expense:	Non-interest expense:							Non-interest expense:
Compensation and employee benefits	Compensation and employee benefits	25,821		25,219				Compensation and employee benefits	27,206		26,092		78,188		75,931
Occupancy	Occupancy	4,004		3,953				Occupancy	3,567		3,802		11,403		11,580
Equipment and data processing	Equipment and data processing	4,493		4,703				Equipment and data processing	4,556		4,293		13,746		13,152
Professional services	Professional services	1,226		1,651				Professional services	1,072		1,112		3,543		3,819
FDIC insurance	FDIC insurance	1,044		378				FDIC insurance	662		1,363		2,363		2,599
Advertising and marketing	Advertising and marketing	1,100		1,075				Advertising and marketing	1,077		1,024		3,287		3,116
Amortization of identified intangible assets	Amortization of identified intangible assets	232		336				Amortization of identified intangible assets	208		312		668		959

Other	Other	2,891		3,433				Other	2,574		2,949		6,501		9,650
Total non-interest expense	Total non-interest expense	40,811		40,748				Total non-interest expense	40,922		40,947		119,699		120,806
Income (loss) before provision for income taxes		35,239		(23,822)
Income before provision for income taxes								Income before provision for income taxes	38,471		25,325		116,091		27,568
Provision (benefit) for income taxes	Provision (benefit) for income taxes	8,785		(6,546)				Provision (benefit) for income taxes	9,632		6,646		29,196		6,596

Net income (loss)		$	26,454	$	(17,276)
Net income								Net income	$	28,839	$	18,679	$	86,895	$	20,972
Earnings per common share:	Earnings per common share:							Earnings per common share:
Basic	Basic	$	0.34	$	(0.22)			Basic	$	0.37	$	0.24	$	1.11	$	0.27
Diluted	Diluted	0.34		(0.22)				Diluted	0.37		0.24		1.11		0.27
Weighted average common shares outstanding during the year:	Weighted average common shares outstanding during the year:							Weighted average common shares outstanding during the year:
Basic	Basic	78,143,752		79,481,462				Basic	78,000,261		78,948,139		78,097,600		79,092,424
Diluted	Diluted	78,404,063		79,665,774				Diluted	78,240,633		79,055,901		78,371,190		79,245,113
Dividends paid per common share	Dividends paid per common share	$	0.115	$	0.115			Dividends paid per common share	$	0.120	$	0.115	$	0.355	$	0.345

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,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(In Thousands)				(In Thousands)
Net income (loss)	Net income (loss)	$	26,454	$	(17,276)			Net income (loss)	$	28,839	$	18,679	$	86,895	$	20,972

Investment securities available-for-sale:	Investment securities available-for-sale:							Investment securities available-for-sale:
Unrealized securities holding gains (losses)	Unrealized securities holding gains (losses)	(18,481)		18,810				Unrealized securities holding gains (losses)	(4,450)		(735)		(17,797)		24,380

Income tax (expense) benefit	Income tax (expense) benefit	4,073		(4,146)				Income tax (expense) benefit	981		167		3,923		(5,366)
Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	(14,408)		14,664				Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	(3,469)		(568)		(13,874)		19,014

Less reclassification adjustments for securities gains (losses) included in net income:								Less reclassification adjustments for securities gains (losses) included in net income:
Gain (loss) on sales of securities, net								Gain (loss) on sales of securities, net	—		250		—		3,237
Income tax expense (benefit)								Income tax expense (benefit)	—		(55)		—		(715)
Net reclassification adjustments for securities gains (losses) included in net income								Net reclassification adjustments for securities gains (losses) included in net income	—		195		—		2,522
Net unrealized securities holding gains (losses)								Net unrealized securities holding gains (losses)	(3,469)		(763)		(13,874)		16,492

Cash flow hedges:	Cash flow hedges:							Cash flow hedges:
Change in fair value of cash flow hedges	Change in fair value of cash flow hedges	2		0				Change in fair value of cash flow hedges	(3)		7		6		7
Reclassification adjustment for (income) expense recognized in earnings	Reclassification adjustment for (income) expense recognized in earnings	(2)		0				Reclassification adjustment for (income) expense recognized in earnings	(2)		—		(7)		—
Net change in fair value of cash flow hedges	Net change in fair value of cash flow hedges	0		0				Net change in fair value of cash flow hedges	(5)		7		(1)		7

Other comprehensive income (loss), net of taxes	Other comprehensive income (loss), net of taxes	(14,408)		14,664				Other comprehensive income (loss), net of taxes	(3,474)		(756)		(13,875)		16,499

Comprehensive income (loss)	Comprehensive income (loss)	$	12,046	$	(2,612)			Comprehensive income (loss)	$	25,365	$	17,923	$	73,020	$	37,471

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Stockholders' Equity

Three Months Ended ~~March 31,~~September 30, 2021 and 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 June 30, 2021	$	852	$	738,557	$	304,466	$	6,089	$	(77,493)	$	(219)	$	972,252
Net income	—		—		28,839		—		—		—		28,839



Other comprehensive income (loss)	—		—		—		(3,474)		—		—		(3,474)
Common stock dividends of $0.120 per share	—		—		(9,383)		—		—		—		(9,383)


Compensation under recognition and retention plans	—		750		(60)		—		—		—		690
Restricted stock awards issued, net of awards surrendered	—		(3,376)		—		—		2,788		—		(588)

Common stock held by ESOP committed to be released (6,612 shares)			59								36		95
Treasury stock, repurchase shares	—		—		—		—		(9,979)		—		(9,979)

Balance at September 30, 2021	$	852	$	735,990	$	323,862	$	2,615	$	(84,684)	$	(183)	$	978,452



	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 June 30, 2020	$	852	$	738,155	$	237,808	$	19,538	$	(69,572)	$	(368)	$	926,413
Net income	—		—		18,679		—		—		—		18,679



Other comprehensive income (loss)	—		—		—		(756)		—		—		(756)
Common stock dividends of $0.115 per share	—		—		(9,093)		—		—		—		(9,093)


Compensation under recognition and retention plan	—		681		(56)		—		—		—		625
Restricted stock awards issued, net of awards surrendered	—		(2,571)		—		—		2,196		—		(375)

Common stock held by ESOP committed to be released (7,107 shares)	—		29		—		—		—		38		67
Balance at Adoption of ASU 2016-13 (CECL)	—		—		(2)		—		—		—		(2)
Balance at September 30, 2020	$	852	$	736,294	$	247,336	$	18,782	$	(67,376)	$	(330)	$	935,558

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Stockholders' Equity

Nine Months Ended September 30, 2021 and 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	—		—		86,895		—		—		—		86,895



Other comprehensive income (loss)	—		—		—		(13,875)		—		—		(13,875)
Common stock dividends of $0.355 per share	—		—		(27,758)		—		—		—		(27,758)
Compensation under recognition and retention plans	—		1,871		(167)		—		—		—		1,704


Restricted stock awards issued, net of awards surrendered	—		(3,226)		—		—		2,638		—		(588)
Treasury stock, repurchase shares	—		—		—		—		(9,979)		—		(9,979)
Common stock held by ESOP committed to be released (19,836 shares)	—		167		—		—		—		108		275


Balance at September 30, 2021	$	852	$	735,990	$	323,862	$	2,615	$	(84,684)	$	(183)	$	978,452


	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 Income	—		—		20,972		—		—		—		20,972



Other comprehensive income (loss)	—		—		—		16,499		—		—		16,499
Common stock dividends of $0.345 per share	—		—		(27,342)		—		—		—		(27,342)


Compensation under recognition and retention plans	—		2,051		(147)		—		—		—		1,904
Restricted stock awards issued, net of awards surrendered	—		(2,482)		—		—		2,107		—		(375)
Treasury stock, repurchase shares	—		—		—		—		(10,410)		—		(10,410)
Common stock held by ESOP committed to be released (21,231 shares)	—		124		—		—		—		103		227
Adoption of ASU 2016-13 (CECL)	—		—		(11,523)		—		—		—		(11,523)
Balance at September 30, 2020	$	852	$	736,294	$	247,336	$	18,782	$	(67,376)	$	(330)	$	935,558

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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
		(In Thousands)					(In Thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	26,454	$	(17,276)
Net income						Net income	$	86,895	$	20,972
Adjustments to reconcile net income to net cash provided from operating activities:	Adjustments to reconcile net income to net cash provided from operating activities:					Adjustments to reconcile net income to net cash provided from operating activities:

(Credit) provision for credit losses	(Credit) provision for credit losses	(2,147)		54,114		(Credit) provision for credit losses	(8,588)		63,989

Deferred income tax expense (benefit)	Deferred income tax expense (benefit)	1,345		(17,270)		Deferred income tax expense (benefit)	4,409		(21,889)
Depreciation of premises and equipment	Depreciation of premises and equipment	1,318		1,581		Depreciation of premises and equipment	4,292		4,278
Amortization of investment securities premiums and discounts, net	Amortization of investment securities premiums and discounts, net	770		384		Amortization of investment securities premiums and discounts, net	2,337		1,980
Amortization of deferred loan and lease origination costs, net	Amortization of deferred loan and lease origination costs, net	1,584		2,154		Amortization of deferred loan and lease origination costs, net	4,499		5,667
Amortization of identified intangible assets	Amortization of identified intangible assets	232		336		Amortization of identified intangible assets	668		959
Amortization of debt issuance costs	Amortization of debt issuance costs	25		26		Amortization of debt issuance costs	75		75
Accretion of acquisition fair value adjustments, net	Accretion of acquisition fair value adjustments, net	(51)		(372)		Accretion of acquisition fair value adjustments, net	(64)		(403)
Loss (gain) on investment securities, net	Loss (gain) on investment securities, net	7		(1,330)		Loss (gain) on investment securities, net	6		(1,970)
Gain on sales of loans and leases held-for-sale	Gain on sales of loans and leases held-for-sale	(709)		(120)		Gain on sales of loans and leases held-for-sale	(1,804)		(1,051)

Gain on sales of OREO and other repossessed assets, net						Gain on sales of OREO and other repossessed assets, net	(2,108)		—

Write-down of OREO and other repossessed assets	Write-down of OREO and other repossessed assets	129		354		Write-down of OREO and other repossessed assets	174		864
Compensation under recognition and retention plans	Compensation under recognition and retention plans	536		624		Compensation under recognition and retention plans	1,704		1,910
ESOP shares committed to be released	ESOP shares committed to be released	83		101		ESOP shares committed to be released	275		227
Net change in:	Net change in:					Net change in:
Cash surrender value of bank-owned life insurance	Cash surrender value of bank-owned life insurance	(251)		(254)		Cash surrender value of bank-owned life insurance	(436)		(767)

Equity securities held-for-trading						Equity securities held-for-trading	520		1,782
Other assets	Other assets	58,480		(103,913)		Other assets	62,403		(84,626)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(68,387)		173,346		Accrued expenses and other liabilities	(73,963)		78,774
Net cash provided from operating activities	Net cash provided from operating activities	19,418		92,485		Net cash provided from operating activities	81,294		70,771

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from sales of investment securities available-for-sale	Proceeds from sales of investment securities available-for-sale	0		86,434		Proceeds from sales of investment securities available-for-sale	—		131,750
Proceeds from maturities, calls, and principal repayments of investment securities available-for-sale	Proceeds from maturities, calls, and principal repayments of investment securities available-for-sale	46,184		25,530		Proceeds from maturities, calls, and principal repayments of investment securities available-for-sale	146,821		175,069
Purchases of investment securities available-for-sale	Purchases of investment securities available-for-sale	(49,514)		(273,252)		Purchases of investment securities available-for-sale	(153,153)		(488,806)
Proceeds from maturities, calls, and principal repayments of investment securities held to maturity	Proceeds from maturities, calls, and principal repayments of investment securities held to maturity	0		6,302		Proceeds from maturities, calls, and principal repayments of investment securities held to maturity	—		6,302

Proceeds from redemption/sales of restricted equity securities	Proceeds from redemption/sales of restricted equity securities	9,386		2,944		Proceeds from redemption/sales of restricted equity securities	24,586		21,393
Purchase of restricted equity securities	Purchase of restricted equity securities	0		(17,598)		Purchase of restricted equity securities	(2,898)		(29,290)
Proceeds from sales of loans and leases held-for-investment, net	Proceeds from sales of loans and leases held-for-investment, net	50		5,800		Proceeds from sales of loans and leases held-for-investment, net	172,807		6,803
Net increase in loans and leases		(995)		(96,414)
Net decrease (increase) in loans and leases						Net decrease (increase) in loans and leases	157,596		(681,752)

Purchase of premises and equipment, net	Purchase of premises and equipment, net	(2,347)		(1,071)		Purchase of premises and equipment, net	(3,720)		(2,524)
Proceeds from sales of OREO and other repossessed assets	Proceeds from sales of OREO and other repossessed assets	385		1,972		Proceeds from sales of OREO and other repossessed assets	9,176		3,823

Net cash provided from (used for) investing activities	Net cash provided from (used for) investing activities	3,149		(259,353)		Net cash provided from (used for) investing activities	351,215		(857,232)

									(Continued)

				(Continued)

See accompanying notes to unaudited consolidated financial statements.

Table of Contents


							Nine Months Ended September 30,
							2021		2020
		Three Months Ended March 31,					(In Thousands)
		2021		2020
		(In Thousands)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Increase in demand checking, NOW, savings and money market accounts	Increase in demand checking, NOW, savings and money market accounts	296,341		57,871		Increase in demand checking, NOW, savings and money market accounts	404,059		796,627
(Decrease) increase in certificates of deposit	(Decrease) increase in certificates of deposit	(340,207)		2,333		(Decrease) increase in certificates of deposit	(441,701)		166,162
Proceeds from FHLBB advances	Proceeds from FHLBB advances	63,300		1,736,600		Proceeds from FHLBB advances	188,340		2,917,521
Repayment of FHLBB advances	Repayment of FHLBB advances	(333,503)		(1,357,638)		Repayment of FHLBB advances	(723,212)		(2,834,821)

(Decrease) increase in other borrowed funds, net	(Decrease) increase in other borrowed funds, net	(4,078)		10,054		(Decrease) increase in other borrowed funds, net	(17,949)		19,480
Increase in mortgagors' escrow accounts, net		582		209
Increase (decrease) in mortgagors' escrow accounts, net						Increase (decrease) in mortgagors' escrow accounts, net	554		(803)

Repurchases of common stock	Repurchases of common stock	0		(10,410)		Repurchases of common stock	(9,979)		(10,410)

Payment of dividends on common stock	Payment of dividends on common stock	(8,992)		(9,173)		Payment of dividends on common stock	(27,758)		(27,342)

Payment of income taxes for shares withheld in share based activity						Payment of income taxes for shares withheld in share based activity	(636)		(410)

Net cash (used for) provided from financing activities	Net cash (used for) provided from financing activities	(326,557)		429,846		Net cash (used for) provided from financing activities	(628,282)		1,026,004
Net (decrease) increase in cash and cash equivalents	Net (decrease) increase in cash and cash equivalents	(303,990)		262,978		Net (decrease) increase in cash and cash equivalents	(195,773)		239,543
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	434,917		77,790		Cash and cash equivalents at beginning of period	434,917		77,790
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	130,927	$	340,768	Cash and cash equivalents at end of period	$	239,144	$	317,333

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest on deposits, borrowed funds and subordinated debt	Interest on deposits, borrowed funds and subordinated debt	$	11,007	$	23,227	Interest on deposits, borrowed funds and subordinated debt	$	25,926	$	57,020
Income taxes	Income taxes	2,212		2,070		Income taxes	22,170		26,255
Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:

Transfer from loans to other real estate owned	Transfer from loans to other real estate owned	$	382	$	1,733	Transfer from loans to other real estate owned	$	1,328	$	3,469

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") and Clarendon Private, LLC ("Clarendon Private"). 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.

Brookline Bank, which includes its wholly-owned subsidiaries, Longwood Securities Corp. ("LSC"), Eastern Funding LLC ("Eastern Funding") and First Ipswich Insurance Agency, operates 30 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. 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, respectively.

The Company and the Banks are supervised, examined and regulated by the Board of Governors of the Federal Reserve System (the "FRB"). As a Massachusetts-chartered 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 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 ~~it's~~its withdrawal from the DIF and the concurrent charter ~~conversion of Brookline Bank.~~conversion. Brookline Bank’s deposit accounts are and 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.

Basis of Financial Statement Presentation

The unaudited consolidated financial statements of the Company presented herein have been prepared pursuant to the rules of the 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, 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 determination of the allowance for credit losses, the determination of fair market values of assets and liabilities, including

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~determination of the allowance for credit losses, the determination of fair market values of assets and liabilities,~~acquired loans, 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~~Financial Accounting Standards Board ("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 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~~the Company's 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 a decrease to retained earnings of $11.5 million shown in the Consolidated Statements of Changes in Stockholders’ Equity. Additional details can be found in 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.

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. ASU 2018-14 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 has evaluated ASU 2018-14 and as of December 31, 2020, the Company has adopted ASU 2018-14 and determined the impact to be immaterial.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

(3) Investment Securities

Adoption of Topic 326

Effective January 1, 2020, the Company adopted the provisions of ASU 2016-13 using the modified retrospective method. There was ~~a de minimis~~no allowance for credit loss ("ACL") on available-for-sale debt securities recognized ~~upon adoption and~~ as of ~~December 31, 2020.~~September 30, 2021.

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


		At March 31, 2021									At September 30, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
		(In Thousands)									(In Thousands)
Investment securities available-for-sale:	Investment securities available-for-sale:									Investment securities available-for-sale:
GSE debentures	GSE debentures	$	273,315	$	4,130	$	5,919	$	271,526	GSE debentures	$	234,078	$	2,948	$	3,740	$	233,286
GSE CMOs	GSE CMOs	39,980		957		12		40,925		GSE CMOs	31,210		625		7		31,828
GSE MBSs	GSE MBSs	271,231		5,981		1,146		276,066		GSE MBSs	217,279		5,289		751		221,817

Corporate debt obligations	Corporate debt obligations	22,269		978		0		23,247		Corporate debt obligations	22,209		760		—		22,969
U.S. Treasury bonds	U.S. Treasury bonds	119,817		1,586		3,762		117,641		U.S. Treasury bonds	223,273		1,749		3,400		221,622
Foreign government obligations	Foreign government obligations	500		0		4		496		Foreign government obligations	500		—		2		498

Total investment securities available-for-sale	Total investment securities available-for-sale	$	727,112	$	13,632	$	10,843	$	729,901	Total investment securities available-for-sale	$	728,549	$	11,371	$	7,900	$	732,020

Equity securities held-for-trading								$	518


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

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

Foreign government obligations	Foreign government obligations	500		0		4		496		Foreign government obligations	500		—		4		496

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

Equity securities held-for-trading	Equity securities held-for-trading							$	526	Equity securities held-for-trading							$	526

As of ~~March 31,~~September 30, 2021, the fair value of all investment securities available-for-sale was ~~$729.9~~$732.0 million, with net unrealized gains of ~~$2.8~~$3.5 million, 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,~~September 30, 2021, ~~$261.6~~$319.6 million, or ~~35.8%~~43.7% of the portfolio, had gross unrealized losses of ~~$10.8~~$7.9 million, compared to $86.9 million, or 11.7% of the portfolio, with gross unrealized losses of $0.7 million as of December 31, 2020.

~~Effective March 31, 2020, all investment securities classified as held-to-maturity were reclassified as available for sale to prudently reflect~~As of September 30, 2021, the ~~ability and intent to~~Company did not hold ~~these assets~~any equity securities held-for-trading, compared to ~~maturity due to the economic uncertainty created by the COVID-19 pandemic.~~

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

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

Investment Securities as Collateral

As of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, ~~$413.5~~$426.1 million and $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 0no outstanding FRB borrowings as of ~~March 31,~~September 30, 2021 and December 31, 2020.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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 ~~$2.5~~$2.8 million ~~and~~as of September 30, 2021, compared to $2.6 million ~~respectively,~~ as of ~~March 31, 2021 and~~ December 31, 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~~nine months ended ~~March 31,~~September 30, 2021 and 2020.

Assessment for Available for Sale Securities for Impairment

Investment securities as of ~~March 31,~~September 30, 2021 and December 31, 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													At September 30, 2021
		Less than Twelve Months				Twelve Months or Longer				Total					Less than Twelve Months				Twelve Months or Longer				Total
		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
		(In Thousands)													(In Thousands)
Investment securities available-for-sale:	Investment securities available-for-sale:													Investment securities available-for-sale:
GSE debentures	GSE debentures	$	118,064	$	5,919	$	0	$	0	$	118,064	$	5,919	GSE debentures	$	71,645	$	2,358	$	44,929	$	1,382	$	116,574	$	3,740
GSE CMOs	GSE CMOs	513		10		707		2		1,220		12		GSE CMOs	—		—		737		7		737		7
GSE MBSs	GSE MBSs	70,289		1,145		95		1		70,384		1,146		GSE MBSs	39,177		547		7,806		204		46,983		751

U.S. Treasury bonds	U.S. Treasury bonds	71,450		3,762		0		0		71,450		3,762		U.S. Treasury bonds	154,779		3,400		—		—		154,779		3,400
Foreign government obligations	Foreign government obligations	0		0		496		4		496		4		Foreign government obligations	—		—		498		2		498		2

Temporarily impaired investment securities available-for-sale	Temporarily impaired investment securities available-for-sale	260,316		10,836		1,298		7		261,614		10,843		Temporarily impaired investment securities available-for-sale	265,601		6,305		53,970		1,595		319,571		7,900

Total temporarily impaired investment securities	Total temporarily impaired investment securities	$	260,316	$	10,836	$	1,298	$	7	$	261,614	$	10,843	Total temporarily impaired investment securities	$	265,601	$	6,305	$	53,970	$	1,595	$	319,571	$	7,900

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


		At December 31, 2020													At December 31, 2020
		Less than Twelve Months				Twelve Months or Longer				Total					Less than Twelve Months				Twelve Months or Longer				Total
		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
		(In Thousands)													(In Thousands)
Investment securities available-for-sale:	Investment securities available-for-sale:													Investment securities available-for-sale:
GSE debentures	GSE debentures	$	72,745	$	630	$	0	$	0	$	72,745	$	630	GSE debentures	$	72,745	$	630	$	—	$	—	$	72,745	$	630
GSE CMOs	GSE CMOs	832		7		872		5		1,704		12		GSE CMOs	832		7		872		5		1,704		12
GSE MBSs	GSE MBSs	2,102		5		97		0		2,199		5		GSE MBSs	2,102		5		97		—		2,199		5

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

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

Total temporarily impaired investment securities	Total temporarily impaired investment securities	$	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.

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 security investment is 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 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 security is 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 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,~~September 30, 2021.The Company has determined it is more likely than not that the Company will not sell or be required to sell the investment securities before recovery of its amortized cost. The Company's ability and intent to hold these investment securities until recovery is supported by the Company's strong capital and liquidity positions as well as its historically low portfolio turnover. As such, management has determined that the investment securities are not impaired as of ~~March 31,~~September 30, 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,~~September 30, 2021, the Company held GNMA MBSs and CMOs, and Small Business Administration ("SBA") commercial loan asset-backed securities in its available-for-sale portfolio with an estimated fair value of ~~$6.3~~$4.6 million, all of which were backed explicitly by the full faith and credit of the U.S. Government, compared to $7.3 million as of December 31, 2020.

As of March 31, 2021, the Company owned 54 GSE debentures with a total fair value of $271.5 million, and a net unrealized loss of $1.8 million. As of December 31, 2020, the Company held 54 GSE debentures with a total fair value of

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~$278.6~~As of September 30, 2021, the Company owned 49 GSE debentures with a total fair value of $233.3 million, and a net unrealized loss of $0.8 million. As of December 31, 2020, the Company held 54 GSE debentures with a total fair value of $278.6 million, with a net unrealized gain of $4.8 million. As of ~~March 31,~~September 30, 2021, 12 of the 5449 securities in this portfolio were in an unrealized loss position. As of December 31, 2020, 7 of the 54 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~~nine months ended ~~March 31,~~September 30, 2021, the Company did not purchase GSE debentures. This compares to the same period in 2020 when the Company purchased ~~$75.2~~$208.9 million GSE debentures. During the ~~three~~nine months ended ~~March 31,~~September 30, 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,~~September 30, 2021, the Company owned 33 GSE CMOs with a total fair value of ~~$40.9~~$31.8 million and a net unrealized gain of ~~$0.9~~$0.6 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 ~~March 31,~~September 30, 2021 ~~2 of the 33 securities in this portfolio were in an unrealized loss position. As of~~and December ~~31,~~30, 2020, 2 of the 33 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~~nine months ended ~~March 31,~~September 30, 2021 and 2020, the Company did 0tnot purchase any GSE CMOs.

As of ~~March 31,~~September 30, 2021, the Company owned 139 GSE MBSs with a total fair value of ~~$276.1~~$221.8 million and a net unrealized gain of ~~$4.8~~$4.5 million. As of December 31, 2020, the Company held 140 GSE MBSs with a total fair value of $323.6 million with a net unrealized gain of $11.0 million. As of ~~March 31,~~September 30, 2021, 2320 of the 139 securities in this portfolio were in an unrealized loss position. As of December 31, 2020, 17 of the 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~~nine months ended ~~March 31,~~September 30, 2021, the Company did not purchase any GSE MBSs. This compares to the same period in 2020 when the Company purchased ~~$176.9~~$258.7 million GSE MBSs. During the ~~three~~nine months ended ~~March 31,~~September 30, 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.

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,~~September 30, 2021, the Company held 6 corporate obligation securities with a total fair value of ~~$23.2~~$23.0 million and a net unrealized gain of ~~$1.0~~$0.8 million. As of December 31, 2020, the Company held 6 corporate obligation securities with a total fair value of $23.5 million and a net unrealized gain of $1.2 million. As of ~~March 31,~~September 30, 2021 and December 31, 2020, ~~NaN~~none 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~~nine months ended ~~March 31,~~September 30, 2021 and 2020, the Company did 0tnot purchase any corporate obligations. During the ~~three~~nine months ended ~~March 31,~~September 30, 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,~~September 30, 2021, the Company owned 1727 U.S. Treasury bonds with a total fair value of ~~$117.6~~$221.6 million and an unrealized loss of ~~$2.2~~$1.7 million. This compares to 12 U.S. Treasury bonds with a total fair value of $73.6 million and an unrealized gain of $3.2 million as of December 31, 2020. As of ~~March 31,~~September 30, 2021, 816 of the 1727 securities in this portfolio were in an unrealized loss position. As of December 31, 2020, 1 of the 12 securities in this portfolio was an unrealized loss position. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021 the Company purchased ~~$49.5~~$153.2 million U.S. Treasury bonds, compared to the same period in 2020 when the Company purchased $21.2 million U.S. Treasury bonds.

Municipal Obligations

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company did 0tnot own any municipal obligation securities. During the ~~three~~nine months ~~March 31,~~ended September 30, 2021 and 2020, the Company did 0tnot purchase any municipal obligations. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, the Company transferred 93 held-to-maturity municipal obligations securities with a total fair value of $47.7 million to ~~our~~the available-for-sale portfolio.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Foreign Government Obligations

As of ~~March 31,~~September 30, 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,~~September 30, 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~~nine months ended ~~March 31,~~September 30, 2021 and 2020, the Company did 0tnot 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,~~September 30, 2021, ~~and~~the Company did not own any equity securities held-for-trading. As of December 31, 2020, the Company owned equity securities held-for-trading with a fair value of $0.5 million.

Portfolio Maturities

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


		At March 31, 2021						At December 31, 2020							At September 30, 2021						At December 31, 2020
		Amortized Cost		Estimated Fair Value		Weighted Average Rate		Amortized Cost		Estimated Fair Value		Weighted Average Rate			Amortized Cost		Estimated Fair Value		Weighted Average Rate		Amortized Cost		Estimated Fair Value		Weighted Average Rate
		(Dollars in Thousands)													(Dollars in Thousands)
Investment securities available-for-sale:	Investment securities available-for-sale:													Investment securities available-for-sale:
Within 1 year	Within 1 year	$	49,597	$	50,149	1.99	%	$	31,633	$	32,013	2.02	%	Within 1 year	$	55,747	$	56,194	2.05	%	$	31,633	$	32,013	2.02	%
After 1 year through 5 years	After 1 year through 5 years	132,676		138,463		2.23	%	146,274		153,262		2.22	%	After 1 year through 5 years	108,071		112,301		2.26	%	146,274		153,262		2.22	%
After 5 years through 10 years	After 5 years through 10 years	261,816		254,174		1.38	%	222,271		225,568		1.43	%	After 5 years through 10 years	336,673		331,392		1.30	%	222,271		225,568		1.43	%
Over 10 years	Over 10 years	283,023		287,115		2.01	%	324,375		334,979		1.86	%	Over 10 years	228,058		232,133		1.92	%	324,375		334,979		1.86	%
		$	727,112	$	729,901	1.84	%	$	724,553	$	745,822	1.81	%		$	728,549	$	732,020	1.70	%	$	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,~~September 30, 2021, issuers of debt securities with an estimated fair value of ~~$88.3~~$67.5 million had the right to call or prepay the obligations. Of the ~~$88.3~~$67.5 million, approximately ~~$12.7~~$3.0 million matures in less then a year, $9.6 million matures in 1 - 5 years, ~~$66.2~~$45.1 million matures in 6 - 10 years, and ~~$9.4~~$9.8 million matures after ten years. As of December 31, 2020, issuers of debt securities with an estimated fair value of approximately $90.8 million had the right to call or prepay the obligations. Of the $90.8 million, $12.9 million matures in 1-5 years, and $68.1 million matures in 6 - 10 years, and $9.8 million matures after ten years.

Security Sales

~~NaN sale~~The Company sold $0.5 million of investment securities available-for-sale or equity securities held-for-trading ~~occurred~~ during the ~~three~~nine months ended ~~March 31,~~September 30, 2021. This compares to ~~$86.4~~$143.3 million securities sold during the ~~three~~nine months ended ~~March 31,~~September 30, 2020.

~~Sales of investment and restricted equity securities are summarized as follows:~~

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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Notes to Unaudited Consolidated Financial Statements (Continued)

Sales of investment and restricted equity securities are summarized as follows:


	Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020
	(In Thousands)

Proceeds from sales of investment securities available-for-sale and equity securities held-for-trading	$	520	$	143,315

Gross gains from securities sales	1		3,412
Gross losses from securities sales	—		(175)
Gain on sales of securities, net	$	1	$	3,237

(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					At September 30, 2021				At December 31, 2020
		Balance		Weighted Average Coupon		Balance		Weighted Average Coupon			Balance		Weighted Average Coupon		Balance		Weighted Average Coupon
		(Dollars In Thousands)									(Dollars In Thousands)
Commercial real estate loans:	Commercial real estate loans:									Commercial real estate loans:
Commercial real estate	Commercial real estate	$	2,595,240	3.48	%	$	2,578,773	3.58	%	Commercial real estate	$	2,707,100	3.45	%	$	2,578,773	3.58	%
Multi-family mortgage	Multi-family mortgage	1,000,474		3.48	%	1,013,432		3.53	%	Multi-family mortgage	1,007,168		3.37	%	1,013,432		3.53	%
Construction	Construction	194,627		3.60	%	231,621		3.49	%	Construction	194,743		3.51	%	231,621		3.49	%
Total commercial real estate loans	Total commercial real estate loans	3,790,341		3.49	%	3,823,826		3.56	%	Total commercial real estate loans	3,909,011		3.43	%	3,823,826		3.56	%
Commercial loans and leases:	Commercial loans and leases:									Commercial loans and leases:
Commercial1		1,206,977		2.35	%	1,131,668		2.55	%
Commercial (1)										Commercial (1)	739,023		3.07	%	1,131,668		2.55	%
Equipment financing	Equipment financing	1,069,621		7.17	%	1,092,461		7.26	%	Equipment financing	1,085,028		6.95	%	1,092,461		7.26	%
Condominium association	Condominium association	47,604		4.54	%	50,770		4.55	%	Condominium association	45,635		4.36	%	50,770		4.55	%
Total commercial loans and leases	Total commercial loans and leases	2,324,202		4.61	%	2,274,899		4.86	%	Total commercial loans and leases	1,869,686		5.35	%	2,274,899		4.86	%
Consumer loans:	Consumer loans:									Consumer loans:
Residential mortgage	Residential mortgage	781,854		3.68	%	791,317		3.74	%	Residential mortgage	789,990		3.55	%	791,317		3.74	%
Home equity	Home equity	334,706		3.25	%	346,652		3.26	%	Home equity	327,906		3.27	%	346,652		3.26	%
Other consumer	Other consumer	36,449		2.92	%	32,859		3.04	%	Other consumer	35,101		2.91	%	32,859		3.04	%
Total consumer loans	Total consumer loans	1,153,009		3.53	%	1,170,828		3.58	%	Total consumer loans	1,152,997		3.45	%	1,170,828		3.58	%
Total loans and leases	Total loans and leases	$	7,267,552	3.84	%	$	7,269,553	3.97	%	Total loans and leases	$	6,931,694	3.94	%	$	7,269,553	3.97	%

(1) Including ~~$604,790~~$160,586 and $489,216 of PPP loans as of ~~March~~September 30, 2021 and December 31, ~~2021.~~2020, respectively. These loans are fully guaranteed by the SBA and therefore, have not been reserved for in the allowance for credit losses as of ~~March~~September 30, 2021 and December 31, ~~2021.~~2020.

Accrued interest on loans and leases, which were excluded from the amortized cost of loans and leases totaled ~~$21.0~~$17.6 million and $20.5 million at ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, and were included in other assets in the accompanying consolidated balance sheets.

The net unamortized deferred loan origination costs included in total loans and leases were ~~$5.6~~$7.4 million and $4.1 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

The Banks and their subsidiaries lend primarily in all New England states, with the exception of equipment financing, ~~12.7%~~27.8% of which is in the greater New York and New Jersey metropolitan area and ~~87.3%~~72.2% of which is in other areas in the United States of America as of ~~March~~September 30, 2021.

Loans and Leases Pledged as Collateral

As of September 30, 2021 and 2020, there were $2.9 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 have any outstanding FRB borrowings as of September 30, 2021 and December 31, ~~2021.~~

2020.

~~Loans and Leases Pledged as Collateral~~

As of March 31, 2021 and 2020, there were $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 0t have any outstanding FRB borrowings as of March 31, 2021 and December 31, 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, 2021						Three Months Ended September 30, 2021
		Commercial Real Estate		Commercial		Consumer			Total			Commercial Real Estate		Commercial		Consumer		Total
		(In Thousands)						(In Thousands)
Balance at December 31, 2020		$	80,132	$	29,498	$	4,749		$	114,379
Balance at June 30, 2021											Balance at June 30, 2021	$	74,009	$	28,364	$	4,101	$	106,474

Charge-offs	Charge-offs	0		(2,140)		(3)			(2,143)		Charge-offs	—		(1,583)		(17)		(1,600)
Recoveries	Recoveries	0		331		52			383		Recoveries	1		308		36		345
(Credit) provision for loan and lease losses excluding unfunded commitments	(Credit) provision for loan and lease losses excluding unfunded commitments	(203)		(1,864)		(715)			(2,782)		(Credit) provision for loan and lease losses excluding unfunded commitments	(1,630)		101		(1,175)		(2,704)
Balance at March 31, 2021		$	79,929	$	25,825	$	4,083		$	109,837
Balance at September 30, 2021											Balance at September 30, 2021	$	72,380	$	27,190	$	2,945	$	102,515

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 0 (2,527) (12) (2,539)
Recoveries 0 247 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


	Three Months Ended September 30, 2020
	Commercial Real Estate		Commercial		Consumer		Total
	(In Thousands)
Balance at June 30, 2020	$	90,011	$	24,938	$	4,604	$	119,553

Charge-offs	(70)		(5,429)		(12)		(5,511)
Recoveries	—		512		36		548
(Credit) provision for loan and lease losses excluding unfunded commitments	(2,721)		8,557		(455)		5,381
Balance at September 30, 2020	$	87,220	$	28,578	$	4,173	$	119,971



	Nine Months Ended September 30, 2021
	Commercial Real Estate		Commercial		Consumer		Total
	(In Thousands)
Balance at December 31, 2020	$	80,132	$	29,498	$	4,749	$	114,379


Charge-offs	(28)		(4,907)		(29)		(4,964)
Recoveries	12		1,127		215		1,354
(Credit) provision for loan and lease losses excluding unfunded commitments	(7,736)		1,472		(1,990)		(8,254)
Balance at September 30, 2021	$	72,380	$	27,190	$	2,945	$	102,515

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)



	Nine Months Ended September 30, 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	(70)		(9,750)		(33)		(9,853)
Recoveries	94		1,055		124		1,273
Provision for loan and lease losses	45,217		15,119		501		60,837
Balance at September 30, 2020	$	87,220	$	28,578	$	4,173	$	119,971

The allowance for credit losses for unfunded credit commitments, which is included in other liabilities, was ~~$13.7~~$12.7 million and $13.1 million at ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

Provision for Credit Losses

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


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(In Thousands)				(In Thousands)
Provision for loan and lease losses:	Provision for loan and lease losses:							Provision for loan and lease losses:
Commercial real estate	Commercial real estate	$	(203)	$	40,200			Commercial real estate	$	(1,630)	$	(2,721)	$	(7,736)	$	45,217
Commercial	Commercial	(1,864)		6,900				Commercial	101		8,557		1,472		15,119
Consumer	Consumer	(715)		601				Consumer	(1,175)		(455)		(1,990)		501

Total (credit) provision for loan and lease losses	Total (credit) provision for loan and lease losses	(2,782)		47,701				Total (credit) provision for loan and lease losses	(2,704)		5,381		(8,254)		60,837
Unfunded commitments	Unfunded commitments	635		6,413				Unfunded commitments	(406)		(853)		(334)		3,152
Total (credit) provision for credit losses	Total (credit) provision for credit losses	$	(2,147)	$	54,114			Total (credit) provision for credit losses	$	(3,110)	$	4,528	$	(8,588)	$	63,989

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 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.

~~Table of Contents~~

~~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"), Commercial and industrial ("C&I"), and Retail 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. The exposure at default considers the current unpaid balance, prepayment assumptions and utilization of expected utilization assumptions. The expected loss estimates for two small commercial portfolios ~~and a runoff auto portfolio~~ are based on historical loss rates.

Key assumptions used in the models 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 rates are subsequently applied to the 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~~available.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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 reasonable and supportable forecast assume each macro-economic variable will revert to long-term expectations, with reversion characteristics unique to specific economic indicators and forecasts. Reversion towards long-term expectations generally begins two to three years from the forecast start date and 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 Gross Domestic Product ("GDP"), interest rates, property price indices, and employment measures. Scenario weighting and model parameters are reviewed for each calculation and updated to reflect facts and circumstances as of the financial statement date. The ~~March 31,~~forecasts utilized at September 30, 2021 ~~forecasts~~ reflect the immediate and longer-term effects of the COVID-19 pandemic as well as the associated policies and 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. Each scalar was calculated by examining the loss rates of peer banks that have similar operations and asset 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 the results of the three loss rate models.

For ~~March 31,~~September 30, 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.~~forecasts. 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 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 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. 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 ~~$108.7~~$99.9 million as of ~~March 31,~~September 30, 2021, compared to $112.1 million as of December 31, 2020. The reduction in the ACL is attributable to ~~portfolio contraction,~~ continued low level of net charge-offs, an improving macro-economic forecast, and a reduction in qualitative adjustments that consider longer-term risks.

The specific allowance for loan and lease losses was ~~$1.1~~$2.6 million as of ~~March 31,~~September 30, 2021, compared to $2.3 million as of December 31, 2020. The specific allowance ~~decreased~~increased by ~~$1.2~~$0.3 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 primarily due to ~~the payoff of 2 commercial relationship which had~~ a single 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 for ~~the remaining individually evaluated loans due to improving collection prospects.~~specialty finance loan.

As of ~~March 31,~~September 30, 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 expected losses over the lifetime of the Company’s loan portfolios.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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.

~~Table of Contents~~

~~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.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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,~~September 30, 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


	September 30, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
			(In Thousands)
Commercial Real Estate
Pass	$	386,301	$	338,130	$	373,300	$	229,218	$	215,040	$	1,037,632	$	64,352	$	12,839	$	2,656,812
OAEM	681		—		17,003		—		4,902		15,029		—		—		37,615
Substandard	—		188		—		—		572		8,024		—		3,889		12,673

Total	386,982		338,318		390,303		229,218		220,514		1,060,685		64,352		16,728		2,707,100
Multi-Family Mortgage
Pass	112,438		126,230		142,913		135,995		90,960		364,682		3,746		27,476		1,004,440
OAEM	—		—		—		—		—		2,728		—		—		2,728


Total	112,438		126,230		142,913		135,995		90,960		367,410		3,746		27,476		1,007,168
Construction
Pass	19,779		56,241		40,654		68,092		—		—		6,169		—		190,935

Substandard	—		—		3,808		—		—		—		—		—		3,808

Total	19,779		56,241		44,462		68,092		—		—		6,169		—		194,743
Commercial
Pass	226,200		82,416		45,541		36,200		15,693		119,477		186,604		1,178		713,309
OAEM	—		1,549		3,519		—		12,722		—		999		—		18,789
Substandard	19		13		—		100		254		1,974		2,538		2,025		6,923
Doubtful	—		—		—		—		—		1		—		1		2
Total	226,219		83,978		49,060		36,300		28,669		121,452		190,141		3,204		739,023
Equipment Financing
Pass	249,109		286,749		238,840		149,004		75,543		61,910		2,142		437		1,063,734
OAEM	—		982		1,831		301		90		26		—		—		3,230
Substandard	—		1,269		4,968		5,811		2,878		2,477		—		—		17,403
Doubtful	—		1		120		1		6		533		—		—		661
Total	249,109		289,001		245,759		155,117		78,517		64,946		2,142		437		1,085,028
Condominium Association
Pass	2,870		8,610		8,071		4,309		4,181		14,509		2,919		75		45,544

Substandard	—		—		—		—		—		91		—		—		91

Total	2,870		8,610		8,071		4,309		4,181		14,600		2,919		75		45,635

1820

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


		March 31, 2021										September 30, 2021
		2021		2020		2019		2018		2017			Prior			Revolving Loans		Revolving Loans Converted to Term Loans		Total			2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
				(In Thousands)											(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	Other Consumer																					Other Consumer
Pass	Pass	35		852		523		1,827		31			869			32,295		15		36,447		Pass	431		171		61		1,512		29		765		32,125		6		35,100

Substandard	Substandard	0		0		0		0		0			1			0		1		2		Substandard	—		—		—		—		—		1		—		—		1

Total	Total	35		852		523		1,827		31			870			32,295		16		36,449		Total	431		171		61		1,512		29		766		32,125		6		35,101
Total	Total																					Total
Pass	Pass	400,758		1,307,013		909,905		764,231		500,955			1,767,001			327,078		42,565		6,019,506		Pass	997,128		898,547		849,380		624,330		401,446		1,598,975		298,057		42,011		5,709,874
OAEM	OAEM	693		2,521		32,863		293		16,338			38,111			1,840		0		92,659		OAEM	681		2,531		22,353		301		17,714		17,783		999		—		62,362
Substandard	Substandard	0		1,210		7,640		5,342		5,640			13,442			3,716		640		37,630		Substandard	19		1,470		8,776		5,911		3,704		12,567		2,538		5,914		40,899
Doubtful	Doubtful	0		1		450		65		28			652			0		2		1,198		Doubtful	—		1		120		1		7		534		—		1		664
Total	Total	$	401,451	$	1,310,745	$	950,858	$	769,931	$	522,961		$	1,819,206		$	332,634	$	43,207	$	6,150,993	Total	$	997,828	$	902,549	$	880,629	$	630,543	$	422,871	$	1,629,859	$	301,594	$	47,926	$	5,813,799

As of ~~March 31,~~September 30, 2021, there were 0no loans categorized as definite loss.

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

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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


		At March 31, 2021												At September 30, 2021
		2021		2020		2019		2018		2017		Prior				Revolving Loans		Revolving Loans Converted to Term Loans		Total			2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
				(In Thousands)											(In Thousands)
Residential	Residential																					Residential
Credit Scores	Credit Scores																					Credit Scores
Over 700	Over 700	$	22,650	$	119,549	$	89,528	$	57,286	$	49,514	$	162,830			$	4,002	$	0	$	505,359	Over 700	$	137,291	$	119,509	$	81,223	$	54,555	$	44,078	$	134,036	$	3,937	$	357	$	574,986
661 - 700	661 - 700	3,036		24,134		18,328		10,110		13,852		30,005				0		0		99,465		661 - 700	16,285		20,439		15,225		10,124		12,926		26,010		—		—		101,009
600 and below	600 and below	682		6,914		4,700		5,053		4,234		16,956				0		0		38,539		600 and below	3,819		6,426		4,843		3,318		3,521		14,819		—		—		36,746
Data not available*	Data not available*	2,177		17,969		17,003		15,591		13,248		71,181				0		1,322		138,491		Data not available*	9,586		—		1,119		—		6,891		59,653		—		—		77,249
Total	Total	$	28,545	$	168,566	$	129,559	$	88,040	$	80,848	$	280,972			$	4,002	$	1,322	$	781,854	Total	$	166,981	$	146,374	$	102,410	$	67,997	$	67,416	$	234,518	$	3,937	$	357	$	789,990
Home Equity	Home Equity																					Home Equity
Credit Scores	Credit Scores																					Credit Scores
Over 700	Over 700	$	553	$	1,534	$	2,421	$	2,249	$	2,507	$	12,331			$	239,483	$	2,303	$	263,381	Over 700	$	1,186	$	1,540	$	1,913	$	1,573	$	1,696	$	9,092	$	244,174	$	1,892	$	263,066
661 - 700	661 - 700	51		118		440		476		260		2,354				44,625		616		48,940		661 - 700	100		109		309		404		216		1,710		43,297		532		46,677
600 and below	600 and below	0		58		106		260		13		550				10,267		1,058		12,312		600 and below	—		55		103		—		13		456		9,045		717		10,389
Data not available*	Data not available*	0		68		0		0		0		1,318				7,719		968		10,073		Data not available*	—		—		—		—		—		1,237		6,114		423		7,774
Total	Total	$	604	$	1,778	$	2,967	$	2,985	$	2,780	$	16,553			$	302,094	$	4,945	$	334,706	Total	$	1,286	$	1,704	$	2,325	$	1,977	$	1,925	$	12,495	$	302,630	$	3,564	$	327,906

* 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, 2020, by credit quality indicator.~~

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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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


	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	—		477		—		—		3,312		8,991		—		—		12,780
Substandard	—		—		—		1,261		2		5,220		—		62		6,545

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	—		—		—		—		—		2,388		—		—		2,388


Total	125,434		136,620		162,180		103,997		127,873		306,612		15,845		34,871		1,013,432
Construction
Pass	46,249		56,074		112,856		1,799		2,788		404		3,834		—		224,004

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

Total	46,249		60,927		112,856		1,799		5,552		404		3,834		—		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		—		—		35		17		5,382		—		10,594
Substandard	80		—		129		389		29		7,612		3,930		664		12,833
Doubtful	—		—		—		—		—		—		—		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		—		—		2,339
Substandard	402		4,385		5,280		3,545		1,891		631		—		—		16,134
Doubtful	1		64		24		27		1,292		6		—		—		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	—		—		—		—		112		—		—		—		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	—		—		—		—		—		—		—		2		2

Total	694		549		1,938		32		570		301		28,755		20		32,859
Total

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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	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		—		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		—		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 no loans categorized as definite loss.


		At December 31, 2020																			At December 31, 2020
		2020		2019		2018		2017		2016		Prior		Revolving		Converted		Total			2020		2019		2018		2017		2016		Prior		Revolving		Converted		Total
		(In Thousands)																			(In Thousands)
Residential	Residential																			Residential
Credit Scores	Credit Scores																			Credit Scores
Over 700	Over 700	$	119,566	$	94,300	$	62,452	$	53,662	$	47,327	$	124,999	$	4,442	$	0	$	506,748	Over 700	$	119,566	$	94,300	$	62,452	$	53,662	$	47,327	$	124,999	$	4,442	$	—	$	506,748
661 - 700	661 - 700	21,820		19,426		10,943		15,616		8,132		23,282		0		0		99,219		661 - 700	21,820		19,426		10,943		15,616		8,132		23,282		—		—		99,219
600 and below	600 and below	6,901		5,659		4,763		4,318		4,553		13,997		0		0		40,191		600 and below	6,901		5,659		4,763		4,318		4,553		13,997		—		—		40,191
Data not available*	Data not available*	19,209		17,082		16,199		14,153		5,729		71,456		0		1,331		145,159		Data not available*	19,209		17,082		16,199		14,153		5,729		71,456		—		1,331		145,159
Total	Total	$	167,496	$	136,467	$	94,357	$	87,749	$	65,741	$	233,734	$	4,442	$	1,331	$	791,317	Total	$	167,496	$	136,467	$	94,357	$	87,749	$	65,741	$	233,734	$	4,442	$	1,331	$	791,317
Home Equity	Home Equity																			Home Equity
Credit Scores	Credit Scores																			Credit Scores
Over 700	Over 700	$	1,546	$	2,832	$	2,440	$	2,770	$	910	$	12,804	$	247,538	$	2,397	$	273,237	Over 700	$	1,546	$	2,832	$	2,440	$	2,770	$	910	$	12,804	$	247,538	$	2,397	$	273,237
661 - 700	661 - 700	122		459		499		566		305		2,793		45,356		1,334		51,434		661 - 700	122		459		499		566		305		2,793		45,356		1,334		51,434
600 and below	600 and below	59		108		266		13		39		541		10,139		878		12,043		600 and below	59		108		266		13		39		541		10,139		878		12,043
Data not available*	Data not available*	61		0		0		0		0		1,387		7,330		1,160		9,938		Data not available*	61		—		—		—		—		1,387		7,330		1,160		9,938
Total	Total	$	1,788	$	3,399	$	3,205	$	3,349	$	1,254	$	17,525	$	310,363	$	5,769	$	346,652	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,~~September 30, 2021.

2223

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


		At March 31, 2021											At September 30, 2021
		Past Due										Past Due Greater Than 90 Days and Accruing							Past Due												Past Due Greater Than 90 Days and Accruing
		31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current						Total Loans and Leases				Non-accrual		Non-accrual with No Related Allowance			31-60 Days		61-90 Days		Greater Than 90 Days				Current	Past Due Greater Than 90 Days and Accruing		Total Loans and Leases				Non-accrual	Non-accrual with No Related Allowance
		(In Thousands)											(In Thousands)
Commercial real estate loans:	Commercial real estate loans:																							Commercial real estate loans:
Commercial real estate	Commercial real estate	$	5,489	$	3,946	$	3,366	$	12,801	$	2,582,439			$	2,595,240		$	0		$	3,611	$	2,902	Commercial real estate	$	2,296	$	296	$	10,545	$	13,137		$	2,693,963	$	2,707,100	$	—		$	10,963	$	10,571
Multi-family mortgage	Multi-family mortgage	1,141		0		0		1,141		999,333				1,000,474			0			0		0		Multi-family mortgage	3,307		—		—		3,307			1,003,861		1,007,168		—			—		—
Construction	Construction	3,764		0		3,853		7,617		187,010				194,627			0			3,853		3,853		Construction	396		—		—		396			194,347		194,743		—			—		—
Total commercial real estate loans	Total commercial real estate loans	10,394		3,946		7,219		21,559		3,768,782				3,790,341			0			7,464		6,755		Total commercial real estate loans	5,999		296		10,545		16,840			3,892,171		3,909,011		—			10,963		10,571
Commercial loans and leases:	Commercial loans and leases:																							Commercial loans and leases:
Commercial	Commercial	229		0		1,213		1,442		1,205,535				1,206,977			62			3,161		1,882		Commercial	305		801		1,430		2,536			736,487		739,023		573			2,539		1,549
Equipment financing	Equipment financing	4,010		2,115		9,501		15,626		1,053,995				1,069,621			1,113			15,772		4,260		Equipment financing	5,256		1,616		8,793		15,665			1,069,363		1,085,028		61			17,655		4,320
Condominium association	Condominium association	0		0		0		0		47,604				47,604			0			106		106		Condominium association	12		44		—		56			45,579		45,635		—			91		—
Total commercial loans and leases	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		Total commercial loans and leases	5,573		2,461		10,223		18,257			1,851,429		1,869,686		634			20,285		5,869
Consumer loans:	Consumer loans:																							Consumer loans:
Residential mortgage	Residential mortgage	1,979		459		3,254		5,692		776,162				781,854			0			3,722		3,260		Residential mortgage	1,917		—		2,965		4,882			785,108		789,990		203			4,150		2,729
Home equity	Home equity	1,056		1		531		1,588		333,118				334,706			4			792		557		Home equity	521		56		114		691			327,215		327,906		1			461		172
Other consumer	Other consumer	12		1		1		14		36,435				36,449			0			2		0		Other consumer	3		2		1		6			35,095		35,101		—			1		—
Total consumer loans	Total consumer loans	3,047		461		3,786		7,294		1,145,715				1,153,009			4			4,516		3,817		Total consumer loans	2,441		58		3,080		5,579			1,147,418		1,152,997		204			4,612		2,901
Total loans and leases	Total loans and leases	$	17,680	$	6,522	$	21,719	$	45,921	$	7,221,631			$	7,267,552		$	1,179		$	31,019	$	16,820	Total loans and leases	$	14,013	$	2,815	$	23,848	$	40,676		$	6,891,018	$	6,931,694	$	838		$	35,860	$	19,341

There is 0no interest income recognized on non-accrual loans for the three months ended ~~March 31,~~September 30, 2021.

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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, 2020.


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

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

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.

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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						At September 30, 2021
		Commercial Real Estate		Commercial		Consumer			Total			Commercial Real Estate		Commercial		Consumer		Total
		(In Thousands)						(In Thousands)
Allowance for Loan and Lease Losses:	Allowance for Loan and Lease Losses:										Allowance for Loan and Lease Losses:

Individually evaluated	Individually evaluated	$	132	$	907	$	94		$	1,133	Individually evaluated	$	87	$	2,441	$	90	$	2,618
Collectively evaluated	Collectively evaluated	79,797		24,918		3,989			108,704		Collectively evaluated	72,293		24,749		2,855		99,897
Total	Total	$	79,929	$	25,825	$	4,083		$	109,837	Total	$	72,380	$	27,190	$	2,945	$	102,515

Loans and Leases:	Loans and Leases:										Loans and Leases:

Individually evaluated	Individually evaluated	$	14,927	$	20,198	$	6,414		$	41,539	Individually evaluated	$	16,954	$	17,438	$	7,720	$	42,112
Collectively evaluated	Collectively evaluated	3,775,414		2,304,004		1,146,595			7,226,013		Collectively evaluated	3,892,057		1,852,248		1,145,277		6,889,582
Total	Total	$	3,790,341	$	2,324,202	$	1,153,009		$	7,267,552	Total	$	3,909,011	$	1,869,686	$	1,152,997	$	6,931,694


	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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Troubled Debt Restructuring Loans and Leases

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


		At March 31, 2021		At December 31, 2020			At September 30, 2021		At December 31, 2020
		(In Thousands)					(In Thousands)
Troubled debt restructurings:	Troubled debt restructurings:					Troubled debt restructurings:
On accrual	On accrual	$	16,770	$	11,483	On accrual	$	13,526	$	11,483
On nonaccrual	On nonaccrual	6,293		7,476		On nonaccrual	6,655		7,476
Total troubled debt restructurings	Total troubled debt restructurings	$	23,063	$	18,959	Total troubled debt restructurings	$	20,181	$	18,959

Total TDR loans and leases increased by ~~$4.1~~$1.2 million to ~~$23.1~~$20.2 million at ~~March 31,~~September 30, 2021 from $19.0 million at December 31, 2020, primarily driven by ~~2 new TDR relationships, consisting of 1 $3.7~~a net increase in residential loans by $0.6 million ~~construction relationship~~ and ~~1 $1.3 million~~a net increase in the equipment financing ~~relationship,~~loans by $1.3 million, partially offset by ~~the payoff of one TDR relationship~~a net decrease in commercial loans by $0.6 million, and net decrease in commercial real estate by $0.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 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, 2021														At and for the Three Months Ended September 30, 2021
			Amortized Cost				Specific Allowance for Credit Losses						Defaulted (1)										Amortized Cost					Specific Allowance for Credit Losses						Defaulted (1)
		Number of Loans/ Leases	At Modification		At End of Period				Nonaccrual Loans and Leases			Number of Loans/ Leases			Amortized Cost				Number of Loans/ Leases			At Modification			At End of Period					Nonaccrual Loans and Leases			Number of Loans/ Leases		Amortized Cost
		(Dollars in Thousands)														(Dollars in Thousands)

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

Construction		4	2,764		2,764		0			0			0				0
Commercial																				Commercial	1		19			19		—			—			—		—

Equipment financing	Equipment financing	12	1,718		1,731		0			234			0				0			Equipment financing	6		827			$	816	—			147			5		211

Total loans and leases																				Total loans and leases	7		$	846		$	835	$	—		$	147		5		$	211

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 September 30, 2020
			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)

Commercial real estate	Commercial real estate	0	0		0		0			0			1			228			Commercial real estate	—		$	—		$	—	$	—		$	—		1		$	221

Commercial	Commercial	1	297		295		0			295			0			0			Commercial	1		1,098			1,098		—			—			—		—
Equipment financing	Equipment financing	2	200		200		0			0			0			0			Equipment financing	4		212			212		11			212			—		—

Home equity																			Home equity	1		276			276		—			276			—		—

Total loans and leases	Total loans and leases	3	$	497	$	495	$	0		$	295		1			$	228		Total loans and leases	6		$	1,586		$	1,586	$	11		$	488		1		$	221

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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)



	At and for the Nine Months Ended September 30, 2021
		Amortized Cost				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		Amortized Cost
	(Dollars in Thousands)

Commercial real estate	1	$	497	$	494	$	—	$	—	$	—	$	—

Commercial	1	19		19		—		—		—		—
Equipment financing	43	3,627		3,382		91		2,165		6		257
Residential mortgage	1	864		859		—		—		—		—
Home equity	1	312		312		—		—		—		—











Total loans and leases	47	$	5,319	$	5,066	$	91	$	2,165	6		$	257



	At and for the Nine Months Ended September 30, 2020
		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
	(Dollars in Thousands)

Commercial real estate	—	$	—	$	—	$	—	$	—	1	$	221

Commercial	3	1,401		1,401		—		—		—	—
Equipment financing	15	1,406		1,340		11		1,297		—	—

Home equity	2	476		476		—		276		—	—











Total loans and leases	20	$	3,283	$	3,217	$	11	$	1,573	1	$	221

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.

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~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(In Thousands)				(In Thousands)

Extended maturity	Extended maturity	$	4,300	$	295			Extended maturity	$	—	$	1,114	$	2,333	$	1,743

Adjusted principal								Adjusted principal	—		—		—		44

Combination maturity, principal, interest rate	Combination maturity, principal, interest rate	693		200				Combination maturity, principal, interest rate	835		472		2,732		1,430
Total		$	4,993	$	495

Total loans with modifications								Total loans with modifications	$	835	$	1,586	$	5,065	$	3,217

The TDR loans and leases that were modified for the three months ended ~~March 31,~~September 30, 2021 and 2020 were ~~$5.0~~$0.8 million and ~~$0.5~~$1.6 million, respectively. The ~~increases~~decrease in TDR loans and leases that were modified for the three months ended ~~March 31,~~September 30, 2021 were primarily due to the ~~modification~~payoff of ~~2 construction relationships totaling $2.7~~1 home equity relationship of $0.3 million, ~~and 5 equipment finance relationships totaling $1.7 million~~as well as the payments on a TDR loan during the three months ended ~~March 31, 2020.~~September 30, 2021.

The net charge-offs for performing and nonperforming TDR loans and leases for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 were ~~$0.6~~$0.7 million and ~~$0.1~~$0.8 million respectively.

The commitments to lend funds to debtors owing receivables whose terms had been modified in TDRs as of ~~March 31,~~September 30, 2021 was ~~$2.1~~$0.6 million. As of ~~March 31,~~September 30, 2020, there were ~~$2.3~~$1.7 million commitments to lend funds to debtors owing receivables whose terms had been modified in TDRs.

The Coronavirus Aid, Relief and Economic Security ("CARES") Act and regulatory guidance issued by the Federal banking agencies provides that certain short-term loan modifications to borrowers experiencing financial distress as a result of

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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). As of ~~March 31,~~September 30, 2021, the Company granted ~~4,603~~4,095 short-term deferments on loan and lease balances of ~~$1.1 billion~~$941.1 million of which ~~4,262~~4,018 loans and leases representing balances ~~$955.6~~$885.4 million returned to payment and ~~341~~77 loans and leases representing balances of ~~$125.7~~$55.7 million remain in deferment. The outstanding deferred loans and leases represent ~~1.7%~~0.8% of the 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, 2021		At December 31, 2020			At September 30, 2021		At December 31, 2020
		(In Thousands)					(In Thousands)
Goodwill	Goodwill	$	160,427	$	160,427	Goodwill	$	160,427	$	160,427

Other intangible assets:	Other intangible assets:					Other intangible assets:
Core deposits	Core deposits	1,831		2,063		Core deposits	1,395		2,063
Trade name	Trade name	1,089		1,089		Trade name	1,089		1,089

Total other intangible assets	Total other intangible assets	2,920		3,152		Total other intangible assets	2,484		3,152
Total goodwill and other intangible assets	Total goodwill and other intangible assets	$	163,347	$	163,579	Total goodwill and other intangible assets	$	162,911	$	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 ~~5.5~~5.72 years.

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~~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 2021	Remainder of 2021	$	644	Remainder of 2021	$	208
Year ending:	Year ending:			Year ending:
2022	2022	494		2022	494
2023	2023	263		2023	263
2024	2024	151		2024	151
2025	2025	103		2025	103
2026	2026	74		2026	74
Thereafter	Thereafter	102		Thereafter	102
Total	Total	$	1,831	Total	$	1,395

(7) Accumulated Other Comprehensive Income (Loss)

For the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, the Company’s accumulated other comprehensive income (loss) includes the following three components: (i) unrealized holding gains (losses) on investment securities available-for-sale; (ii) change in the fair value of cash flow ~~hedges~~hedges; and (iii) adjustment of accumulated obligation for postretirement benefits.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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									Three Months Ended September 30, 2021
		Investment Securities Available-for-Sale		Net Change in Fair Value of Cash Flow Hedges		Postretirement Benefits		Accumulated Other Comprehensive Income (Loss)			Investment Securities Available-for-Sale		Net Change in Fair Value of Cash Flow Hedges		Postretirement Benefits		Accumulated Other Comprehensive Income (Loss)
		(In Thousands)									(In Thousands)
Balance at December 31, 2020		$	16,582	$	7	$	(99)	$	16,490
Balance at June 30, 2021										Balance at June 30, 2021	$	6,177	$	11	$	(99)	$	6,089
Other comprehensive income (loss)	Other comprehensive income (loss)	(14,408)		2		0		(14,406)		Other comprehensive income (loss)	(3,469)		(3)		—		(3,472)
Reclassification adjustment for (income) expense recognized in earnings	Reclassification adjustment for (income) expense recognized in earnings	0		(2)		0		(2)		Reclassification adjustment for (income) expense recognized in earnings	—		(2)		—		(2)
Balance at March 31, 2021		$	2,174	$	7	$	(99)	$	2,082
Balance at September 30, 2021										Balance at September 30, 2021	$	2,708	$	6	$	(99)	$	2,615

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


	Three Months Ended September 30, 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 June 30, 2020	$	19,454	$	—	$	84	$	19,538
Other comprehensive income (loss)	(568)		7		—		(561)
Reclassification adjustment for (income) expense recognized in earnings	195		—		—		195
Balance at September 30, 2020	$	18,691	$	7	$	84	$	18,782



	Nine Months Ended September 30, 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)	(13,874)		6		—		(13,868)
Reclassification adjustment for (income) expense recognized in earnings	—		(7)		—		(7)
Balance at September 30, 2021	$	2,708	$	6	$	(99)	$	2,615



	Nine Months Ended September 30, 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	$	—	$	84	$	2,283
Other comprehensive income (loss)	19,014		7		—		19,021
Reclassification adjustment for (income) expense recognized in earnings	2,522		—		—		2,522
Balance at September 30, 2020	$	18,691	$	7	$	84	$	18,782

(8) Derivatives and Hedging Activities

The Company executes loan level derivative products such as interest rate swap agreements with commercial banking customers to aid them in managing their interest rate risk. The interest rate swap contracts allow the commercial banking customers to convert floating rate loan payments to fixed rate loan payments. The Company concurrently enters into offsetting swaps with a third party financial institution, effectively minimizing its net risk exposure resulting from such transactions. The third party financial institution exchanges the customer's fixed rate loan payments for floating rate loan payments. As the interest rate swap agreements associated with this program do not meet hedge accounting requirements, changes in the fair value are recognized directly in earnings. Based on the Company's intended use for the loan level derivatives at inception, the

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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".

The Company 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,~~September 30, 2021, the Company paid its counterparties a fixed weighted average interest rate of ~~0.08%~~0.10% over a maximum period of 2 years for derivative instruments that are designated as and qualify as 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.

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																Notional Amount Maturing
		Number of Positions	Less than 1 year		Less than 2 years		Less than 3 years		Less than 4 years		Thereafter		Total		Fair Value			Number of Positions	Less than 1 year		Less than 2 years		Less than 3 years		Less than 4 years		Thereafter		Total		Fair Value
		March 31, 2021																September 30, 2021
		(Dollars In Thousands)																(Dollars In Thousands)
Loan level derivatives	Loan level derivatives																Loan level derivatives
Receive fixed, pay variable	Receive fixed, pay variable	134	$	0	$	10,876	$	13,949	$118,504		$	1,089,153	$	1,232,482	$	71,310	Receive fixed, pay variable	127	$	8,320	$	2,366	$	24,502	$172,285		$	980,680	$	1,188,153	$	74,299
Pay fixed, receive variable	Pay fixed, receive variable	134	0		10,876		13,949		118,504		1,089,153		1,232,482		71,310		Pay fixed, receive variable	127	8,320		2,366		24,502		172,285		980,680		1,188,153		74,299
Risk participation-out agreements	Risk participation-out agreements	37	0		0		6,975		22,718		233,737		263,430		1,019		Risk participation-out agreements	—	—		—		6,904		37,780		217,840		262,524		1,125
Risk participation-in agreements	Risk participation-in agreements	8	0		0		18,929		0		41,360		60,289		205		Risk participation-in agreements	8	—		—		18,788		—		40,841		59,629		201

Foreign exchange contracts	Foreign exchange contracts																Foreign exchange contracts
Buys foreign currency, sells U.S. currency	Buys foreign currency, sells U.S. currency	16	$	1,416	$	0	$	0	$	0	$	0	$	1,416	$	99	Buys foreign currency, sells U.S. currency	9	$	1,680	$	—	$	—	$	—	$	—	$	1,680	$	19,191
Sells foreign currency, buys U.S. currency	Sells foreign currency, buys U.S. currency	21	1,422		0		0		0		0		1,422		93		Sells foreign currency, buys U.S. currency	13	1,681		—		—		—		—		1,681		19,719

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Notes to Unaudited Consolidated Financial Statements (Continued)


		Notional Amount Maturing																Notional Amount Maturing
		Number of Positions	Less than 1 year		Less than 2 years		Less than 3 years		Less than 4 years		Thereafter		Total		Fair Value			Number of Positions	Less than 1 year		Less than 2 years		Less than 3 years		Less than 4 years		Thereafter		Total		Fair Value
		December 31, 2020																December 31, 2020
		(Dollars In Thousands)																(Dollars In Thousands)
Loan level derivatives	Loan level derivatives																Loan level derivatives
Receive fixed, pay variable	Receive fixed, pay variable	136	$	0	$	8,541	$	16,447	$	99,014	$	1,090,144	$	1,214,146	$	129,284	Receive fixed, pay variable	136	$	—	$	8,541	$	16,447	$	99,014	$	1,090,144	$	1,214,146	$	129,284
Pay fixed, receive variable	Pay fixed, receive variable	136	0		8,541		16,447		99,014		1,090,144		1,214,146		129,284		Pay fixed, receive variable	136	—		8,541		16,447		99,014		1,090,144		1,214,146		129,284
Risk participation-out agreements	Risk participation-out agreements	37	0		0		7,009		22,733		222,913		252,655		1,843		Risk participation-out agreements	37	—		—		7,009		22,733		222,913		252,655		1,843
Risk participation-in agreements	Risk participation-in agreements	8	0		0		19,000		0		41,619		60,619		361		Risk participation-in agreements	8	—		—		19,000		—		41,619		60,619		361

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

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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 ~~$149.4~~$135.2 million and $166.5 million in the normal course of business as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

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, 2021																					At September 30, 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			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												Financial Instruments Pledged						Cash Collateral Pledged
		(In Thousands)																								(In Thousands)
Asset derivatives	Asset derivatives																					Asset derivatives
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:																					Derivatives designated as hedging instruments:
Interest rate derivatives	Interest rate derivatives	$	10			$	0			$	10			$	0			$	0					$	10		Interest rate derivatives	$	3	$	—		$	3	$	—	$	—	$	3
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																					Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	$	84,128	$	0			$	84,128			$	0			$	0			$	84,128	Loan level derivatives	$	82,025				$	—	$	82,025		$	—	$	—	$	82,025
Risk participation-out agreements	Risk participation-out agreements	1,019		0				1,019				0				0				1,019		Risk participation-out agreements	1,125					—		1,125			—		—		1,125
Foreign exchange contracts	Foreign exchange contracts	99		0				99				0				0				99		Foreign exchange contracts	20					—		20			—		—		20
Total	Total	$	85,256	$	0			$	85,256			$	0			$	0			$	85,256	Total	$	83,173				$	—	$	83,173		$	—	$	—	$	83,173

Liability derivatives	Liability derivatives																					Liability derivatives
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:																					Derivatives designated as hedging instruments:
Interest rate derivatives	Interest rate derivatives	$	2	$	0			$	2			$	0			$	0			$	2	Interest rate derivatives	$	2				$	—	$	2		$	—	$	—	$	2
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																					Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	$	84,128	$	0			$	84,128			$	138,110			$	11,280			$	(65,262)	Loan level derivatives	$	82,025				$	—	$	82,025		$	128,492	$	6,690	$	(53,157)
Risk participation-in agreements	Risk participation-in agreements	205		0				205				0				0				205		Risk participation-in agreements	201					—		201			—		—		201
Foreign exchange contracts	Foreign exchange contracts	93		0				93				0				0				93		Foreign exchange contracts	19					—		19			—		—		19
Total	Total	$	84,428	$	0			$	84,428			$	138,110			$	11,280			$	(64,962)	Total	$	82,247				$	—	$	82,247		$	128,492	$	6,690	$	(52,935)

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Notes to Unaudited Consolidated Financial Statements (Continued)


		At December 31, 2020																					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			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												Financial Instruments Pledged						Cash Collateral Pledged
		(In Thousands)																								(In Thousands)
Asset derivatives	Asset derivatives																					Asset derivatives
Interest rate derivatives	Interest rate derivatives	$	8			$	0			$	8			$	0			$	0					$	8		Interest rate derivatives	$	8	$	—		$	8	$	—	$	—	$	8
Loan level derivatives	Loan level derivatives	131,328		0				131,328				0				0				131,328		Loan level derivatives	131,328					—		131,328			—		—		131,328
Risk participation-out agreements	Risk participation-out agreements	1,843		0				1,843				0				0				1,843		Risk participation-out agreements	1,843					—		1,843			—		—		1,843
Foreign exchange contracts	Foreign exchange contracts	156		0				156				0				0				156		Foreign exchange contracts	156					—		156			—		—		156
Total	Total	$	133,335	$	0			$	133,335			$	0			$	0			$	133,335	Total	$	133,335				$	—	$	133,335		$	—	$	—	$	133,335

Liability derivatives	Liability derivatives																					Liability derivatives
Loan level derivatives	Loan level derivatives	$	131,328	$	0			$	131,328			$	155,220			$	11,280			$	(35,172)	Loan level derivatives	$	131,328				$	—	$	131,328		$	155,220	$	11,280	$	(35,172)
Risk participation-in agreements	Risk participation-in agreements	361		0				361				0				0				361		Risk participation-in agreements	361					—		361			—		—		361
Foreign exchange contracts	Foreign exchange contracts	148		0				148				0				0				148		Foreign exchange contracts	148					—		148			—		—		148
Total	Total	$	131,837	$	0			$	131,837			$	155,220			$	11,280			$	(34,663)	Total	$	131,837				$	—	$	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					Fair Value
		Three Months Ended March 31, 2021		Three Months Ended March 31, 2020			Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020
		(Dollars in Thousands)					(Dollars in Thousands)

Derivatives designated as hedges	Derivatives designated as hedges	$	8	$	0	Derivatives designated as hedges	$	1	$	10
Gain in OCI on derivatives (effective portion), net of tax	Gain in OCI on derivatives (effective portion), net of tax	$	7	$	0	Gain in OCI on derivatives (effective portion), net of tax	$	6	$	7
Gain (loss) reclassified from OCI into interest income or interest expense (effective portion)	Gain (loss) reclassified from OCI into interest income or interest expense (effective portion)	$	2	$	0	Gain (loss) reclassified from OCI into interest income or interest expense (effective portion)	$	7	$	1

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,~~September 30, 2021, the Company had 21 active equity ~~plans:~~plan: the ~~2011 Restricted~~2021 Brookline Bancorp, Inc. Stock ~~Award~~Option and Incentive Plan ("~~2011 RSA"~~2021 Plan") with ~~500,000~~1,750,000 authorized ~~shares and~~shares. As a result of the Plan having been approved by the Company's stockholders at the 2021 annual meeting of stockholders, the Company discontinued granting awards under the 2014 Equity Incentive Plan ("(the "2014 Plan"), and no further shares will be granted as awards under the 2014 Plan. The Company's 2011 Restricted Stock Plan (the "2011 Plan") ~~with 1,750,000 authorized shares.~~expired in July 2021, and the Company has not issued shares from the 2011 Plan since the adoption of the 2014 Plan. The ~~2011 RSA~~2021 Plan and the 2014 Plan ~~are collectively~~together 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."Plans."

Of the awarded shares under the Plans, 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 14 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,~~Plan, shares of the Company's common stock 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 and nine months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020, 0228,756 and 268,936 shares were issued, respectively, upon satisfaction of required conditions of the Plans.

Total expense for the ~~Plans~~Plan was ~~$0.5~~$0.7 million and ~~$0.6~~$0.7 million for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Total expense for the Plan was $1.9 million and $2.1 million for the nine months ended September 30, 2021 and 2020, respectively.

(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, 2021				March 31, 2020					September 30, 2021				September 30, 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:									Numerator:
Net income	Net income	$	26,454	$	26,454	$	(17,276)	$	(17,276)	Net income	$	28,839	$	28,839	$	18,679	$	18,679

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding	Weighted average shares outstanding	78,143,752		78,143,752		79,481,462		79,481,462		Weighted average shares outstanding	78,000,261		78,000,261		78,948,139		78,948,139
Effect of dilutive securities	Effect of dilutive securities	—		260,311		—		184,312		Effect of dilutive securities	—		240,372		—		107,762
Adjusted weighted average shares outstanding	Adjusted weighted average shares outstanding	78,143,752		78,404,063		79,481,462		79,665,774		Adjusted weighted average shares outstanding	78,000,261		78,240,633		78,948,139		79,055,901

EPS	EPS	$	0.34	$	0.34	$	(0.22)	$	(0.22)	EPS	$	0.37	$	0.37	$	0.24	$	0.24

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)



	Nine Months Ended
	September 30, 2021				September 30, 2020
	Basic		Fully Diluted		Basic		Fully Diluted
	(Dollars in Thousands, Except Per Share Amounts)
Numerator:
Net income	$	86,895	$	86,895	$	20,972	$	20,972

Denominator:
Weighted average shares outstanding	78,097,600		78,097,600		79,092,424		79,092,424
Effect of dilutive securities	—		273,590		—		152,689
Adjusted weighted average shares outstanding	78,097,600		78,371,190		79,092,424		79,245,113

EPS	$	1.11	$	1.11	$	0.27	$	0.27

(11) Fair Value of Financial Instruments

A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring and non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. There were no changes in the valuation techniques used during the three and nine months ended ~~March 31,~~September 30, 2021 and ~~December 31,~~September 30, 2020.

~~Table of Contents~~

~~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, 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, 2020									Carrying Value as of September 30, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(In Thousands)									(In Thousands)
Assets:	Assets:									Assets:
Investment securities available-for-sale:	Investment securities available-for-sale:									Investment securities available-for-sale:
GSE debentures	GSE debentures	$	0	$	278,645	$	0	$	278,645	GSE debentures	$	—	$	233,286	$	—	$	233,286
GSE CMOs	GSE CMOs	0		46,028		0		46,028		GSE CMOs	—		31,828		—		31,828
GSE MBSs	GSE MBSs	0		323,609		0		323,609		GSE MBSs	—		221,817		—		221,817

Corporate debt obligations	Corporate debt obligations	0		23,467		0		23,467		Corporate debt obligations	—		22,969		—		22,969
U.S. Treasury bonds	U.S. Treasury bonds	0		73,577		0		73,577		U.S. Treasury bonds	—		221,622		—		221,622
Foreign government obligations		0		496		0		496

Foreign government obligations										Foreign government obligations	—		498		—		498
Total investment securities available-for-sale	Total investment securities available-for-sale	$	0	$	745,822	$	0	$	745,822	Total investment securities available-for-sale	$	—	$	732,020	$	—	$	732,020
Equity securities held-for-trading		$	0	$	526	$	0	$	526

Interest rate derivatives	Interest rate derivatives	0		8		0		8		Interest rate derivatives	—		3		—		3
Derivatives not designated as hedging instruments:										Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	0		131,328		0		131,328		Loan level derivatives	—		82,025		—		82,025
Risk participation-out agreements	Risk participation-out agreements	0		1,843		0		1,843		Risk participation-out agreements	—		1,125		—		1,125
Foreign exchange contracts	Foreign exchange contracts	0		156		0		156		Foreign exchange contracts	—		20		—		20
Liabilities:	Liabilities:									Liabilities:
Interest rate derivatives										Interest rate derivatives	$	—	$	2	$	—	$	2
Derivatives not designated as hedging instruments:										Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	0		131,328		0		131,328		Loan level derivatives	—		82,025		—		82,025
Risk participation-in agreements	Risk participation-in agreements	0		361		0		361		Risk participation-in agreements	—		201		—		201
Foreign exchange contracts	Foreign exchange contracts	0		148		0		148		Foreign exchange contracts	—		19		—		19

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


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




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


Total investment securities available-for-sale	$	—	$	745,822	$	—	$	745,822
Equity securities held-for-trading	$	—	$	526	$	—	$	526
Interest rate derivatives	—		8		—		8
Loan level derivatives	—		131,328		—		131,328
Risk participation-out agreements	—		1,843		—		1,843
Foreign exchange contracts	—		156		—		156
Liabilities:
Loan level derivatives	—		131,328		—		131,328
Risk participation-in agreements	—		361		—		361
Foreign exchange contracts	—		148		—		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,~~September 30, 2021 and December 31, 2020, none of the investment securities ~~were~~was 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 value of interest rate derivatives designated as hedging instruments, loan level derivatives, risk participation agreements (RPA in/out), and foreign exchange contracts represent a Level 2 valuation and are based on settlement values adjusted for credit risks associated with the counterparties and the Company and observable market interest rate curves and

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

There were no transfers between levels for assets and liabilities recorded at fair value on a recurring basis during the three and nine months ended ~~March 31,~~September 30, 2021 and 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, 2021									Carrying Value as of September 30, 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:									Assets measured at fair value on a non-recurring basis:
Collateral-dependent impaired loans and leases	Collateral-dependent impaired loans and leases	$	0	$	0	$	844	$	844	Collateral-dependent impaired loans and leases	$	—	$	—	$	798	$	798
OREO		0		0		5,328		5,328

Repossessed assets	Repossessed assets	0		1,055		0		1,055		Repossessed assets	—		601		—		601
Total assets measured at fair value on a non-recurring basis	Total assets measured at fair value on a non-recurring basis	$	0	$	1,055	$	6,172	$	7,227	Total assets measured at fair value on a non-recurring basis	$	—	$	601	$	798	$	1,399


		Carrying Value as of December 31, 2020									Carrying Value as of December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(In Thousands)									(In Thousands)
Assets measured at fair value on a non-recurring basis:	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	Collateral-dependent impaired loans and leases	$	0	$	0	$	3,445	$	3,445	Collateral-dependent impaired loans and leases	$	—	$	—	$	3,445	$	3,445
OREO	OREO	0		0		5,415		5,415		OREO	—		—		5,415		5,415
Repossessed assets	Repossessed assets	0		1,100		0		1,100		Repossessed assets	—		1,100		—		1,100
Total assets measured at fair value on a non-recurring basis	Total assets measured at fair value on a non-recurring basis	$	0	$	1,100	$	8,860	$	9,960	Total assets measured at fair value on a non-recurring basis	$	—	$	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

Fair Value

Valuation Technique

At March 31,
2021

At December 31, 2020

At September 30,
2021

At December 31, 2020

(Dollars in Thousands)

Collateral-dependent impaired loans and leases

844

3,445

Appraisal of collateral (1)

Collateral-dependent impaired loans and leases

798

3,445

Appraisal of collateral (1)

Other real estate owned

5,328

5,415

Appraisal of collateral (1)

Other real estate owned

—

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											Fair Value Measurements at September 30, 2021
		Carrying Value		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs			Carrying Value		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
		(In Thousands)											(In Thousands)
Financial assets:	Financial assets:											Financial assets:

Loans and leases, net	Loans and leases, net	$	7,157,715	$	7,122,319	$	0	$	0	$	7,122,319	Loans and leases, net	$	6,829,179	$	6,776,949	$	—	$	—	$	6,776,949
Restricted equity securities	Restricted equity securities	40,400		40,400		0		0		40,400		Restricted equity securities	28,098		28,098		—		—		28,098

Financial liabilities:	Financial liabilities:											Financial liabilities:

Certificates of deposits	Certificates of deposits	1,743,656		1,751,374		0		1,751,374		0		Certificates of deposits	1,327,405		1,332,028		—		1,332,028		—
Borrowed funds	Borrowed funds	546,003		539,957		0		539,957		0		Borrowed funds	267,539		261,520		—		261,520		—


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

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

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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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, 2021		At December 31, 2020			At September 30, 2021		At December 31, 2020
		(In Thousands)					(In Thousands)
Financial instruments whose contract amounts represent credit risk:	Financial instruments whose contract amounts represent credit risk:					Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:	Commitments to originate loans and leases:					Commitments to originate loans and leases:
Commercial real estate	Commercial real estate	$	107,597	$	174,240	Commercial real estate	$	198,806	$	174,240
Commercial	Commercial	105,426		80,291		Commercial	201,443		80,291
Residential mortgage	Residential mortgage	82,366		30,418		Residential mortgage	58,450		30,418
Unadvanced portion of loans and leases	Unadvanced portion of loans and leases	826,545		759,053		Unadvanced portion of loans and leases	897,542		759,053
Unused lines of credit:	Unused lines of credit:					Unused lines of credit:
Home equity	Home equity	591,377		584,881		Home equity	602,200		584,881
Other consumer	Other consumer	41,583		38,954		Other consumer	58,546		38,954
Other commercial	Other commercial	431		408		Other commercial	431		408
Unused letters of credit:	Unused letters of credit:					Unused letters of credit:
Financial standby letters of credit	Financial standby letters of credit	15,953		14,746		Financial standby letters of credit	14,690		14,746
Performance standby letters of credit	Performance standby letters of credit	6,607		5,903		Performance standby letters of credit	14,237		5,903
Commercial and similar letters of credit	Commercial and similar letters of credit	5,369		5,105		Commercial and similar letters of credit	5,219		5,105
Loan level derivatives (Notional principal amounts):	Loan level derivatives (Notional principal amounts):					Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	Receive fixed, pay variable	1,232,482		1,214,146		Receive fixed, pay variable	1,188,153		1,214,146
Pay fixed, receive variable	Pay fixed, receive variable	1,232,482		1,214,146		Pay fixed, receive variable	1,188,153		1,214,146
Risk participation-out agreements	Risk participation-out agreements	263,430		252,655		Risk participation-out agreements	262,524		252,655
Risk participation-in agreements	Risk participation-in agreements	60,289		60,619		Risk participation-in agreements	59,629		60,619
Foreign exchange contracts (Notional amounts):	Foreign exchange contracts (Notional amounts):					Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	Buys foreign currency, sells U.S. currency	1,416		1,266		Buys foreign currency, sells U.S. currency	1,680		1,266
Sells foreign currency, buys U.S. currency	Sells foreign currency, buys U.S. currency	1,422		1,273		Sells foreign currency, buys U.S. currency	1,681		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 these derivatives are presented in Footnote 8.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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 ~~March 31,~~September 30, 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			Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020
		(In Thousands)					(In Thousands)
The components of lease expense were as follow:	The components of lease expense were as follow:					The components of lease expense were as follow:
Operating lease cost	Operating lease cost	$	1,563	$	1,611	Operating lease cost	$	4,628	$	4,828

Supplemental cash flow information related to leases was as follows:	Supplemental cash flow information related to leases was as follows:					Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	Operating cash flows for operating leases	$	1,579	$	1,658	Operating cash flows for operating leases	$	4,733	$	4,909


		At March 31, 2021			At December 31, 2020				At September 30, 2021			At December 31, 2020
		(In Thousands)							(In Thousands)
Supplemental balance sheet information related to leases was as follows:	Supplemental balance sheet information related to leases was as follows:							Supplemental balance sheet information related to leases was as follows:
Operating Leases	Operating Leases							Operating Leases
Operating lease right-of-use assets	Operating lease right-of-use assets	$	23,180		$	24,143		Operating lease right-of-use assets	$	21,879		$	24,143

Operating lease liabilities	Operating lease liabilities	23,180			24,143			Operating lease liabilities	21,879			24,143

Weighted Average Remaining Lease Term	Weighted Average Remaining Lease Term							Weighted Average Remaining Lease Term
Operating leases	Operating leases	6.80			6.95			Operating leases	6.43			6.95

Weighted Average Discount Rate	Weighted Average Discount Rate							Weighted Average Discount Rate
Operating leases	Operating leases	3.2		%	3.2		%	Operating leases	3.1		%	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			Minimum Rental Payments
		March 31, 2021			September 30, 2021
		(In Thousands)			(In Thousands)

Remainder of 2021	Remainder of 2021	$	4,596	Remainder of 2021	$	1,535
Year ending:	Year ending:			Year ending:
2022	2022	5,569		2022	6,137
2023	2023	4,643		2023	5,231
2024	2024	3,366		2024	3,638
2025	2025	2,343		2025	2,367
2026	2026	1,559		2026	1,594
Thereafter	Thereafter	3,571		Thereafter	3,537
Total	Total	$	25,647	Total	$	24,039
Less imputed interest	Less imputed interest	(2,467)		Less imputed interest	(2,160)
Present value of lease liability	Present value of lease liability	$	23,180	Present value of lease liability	$	21,879

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~~$1.4 million for both the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020. Total other expenditures were $0.2 million and $0.3 million for the nine months ended September 30, 2021 and 2020, respectively. Total rental expense was ~~$1.5~~$1.4 million and ~~$1.6~~$1.5 million for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Total rental expense was $4.4 million and $4.6 million for the nine months ended September 30, 2021 and 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”)~~ASC 606 ("Topic 606") is measured based on the consideration specified in the contract with a customer and excludes amounts collected on behalf of third parties. The Company recognizes revenue from contracts with customers when it satisfies its performance obligations.

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

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

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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Revenue Recognized at a Point in Time

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

Revenue Recognized Over Time

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

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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; turbulence in the capital and debt markets; changes in interest rates; competitive pressures from other financial institutions; ~~the effects of weakness~~changes 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,~~concerns about inflation, 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

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.~~Corp; and Clarendon Private, LLC.

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%~~27.8% of which is in the greater New York and New Jersey metropolitan area and ~~87.3%~~72.2% of which is in other areas in the United States of America as of ~~March 31,~~September 30, 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.~~Board of Governors of the Federal Reserve System (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.

•Paycheck Protection ~~Program~~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"). On March 11, 2021, the American Rescue Plan Act (“ARP”) was signed into law providing an additional $1.9 trillion in COVID-19 economic relief. The ~~Banks are participating in~~ARP included provisions on aid to state and local governments, hard-hit industries and communities, additional direct stimulus payments to qualifying individuals, additional funding for the ~~PPP-2 as of March 31, 2021.~~PPP and other provisions. On May 4, 2021, the SBA announced that PPP funding has been exhausted and that it has stopped accepting application from most lenders. 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%. WeThe Company 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,~~September 30, 2021, the Banks funded ~~1,342 PPP-2 loans representing $249.5 million. In the first round~~a total of ~~PPP funding, the Banks funded 2,922~~4,700 PPP loans ~~totaling $581.7~~in the aggregate amount of $872.1 million. As of September 30, 2021, $160.6 million in PPP loans remain outstanding, net of deferred fees and costs of $5.4 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 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. As of ~~March 31,~~September 30, 2021, the Company granted ~~4,603~~4,095 short-term deferments on loan and lease balances of ~~$1.1 billion.~~$941.1 million. Of these modifications, ~~4,262~~4,018 loans and leases with total balances of ~~$955.6~~$885.4 million have returned to the payment status and ~~341~~77 loans and leases with total balances of ~~$125.7~~$55.7 million remain on the deferral status, which represents ~~1.7%~~ 0.8%

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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

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


		At and for the Three Months Ended																At and for the Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,				September 30,			June 30,			March 31,			December 31,			September 30,
		2021			2020			2020			2020			2020				2021			2021			2021			2020			2020
		(Dollars in Thousands, Except Per Share Data)																(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA	PER COMMON SHARE DATA																PER COMMON SHARE DATA
Earnings per share - Basic	Earnings per share - Basic	$	0.34		$	0.34		$	0.24		$	0.25		$	(0.22)		Earnings per share - Basic	$	0.37		$	0.40		$	0.34		$	0.34		$	0.24
Earnings per share - Diluted	Earnings per share - Diluted	0.34			0.34			0.24			0.25			(0.22)			Earnings per share - Diluted	0.37			0.40			0.34			0.34			0.24
Book value per share (end of period)	Book value per share (end of period)	12.10			12.05			11.84			11.75			11.57			Book value per share (end of period)	12.61			12.44			12.10			12.05			11.84
Tangible book value per share (end of period) (1)	Tangible book value per share (end of period) (1)	10.01			9.96			9.77			9.67			9.49			Tangible book value per share (end of period) (1)	10.51			10.35			10.01			9.96			9.77
Dividends paid per common share	Dividends paid per common share	0.115			0.115			0.115			0.115			0.115			Dividends paid per common share	0.120			0.120			0.115			0.115			0.115
Stock price (end of period)	Stock price (end of period)	15.00			12.04			8.65			10.08			11.28			Stock price (end of period)	15.26			14.95			15.00			12.04			8.65

PERFORMANCE RATIOS (2)	PERFORMANCE RATIOS (2)																PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	Net interest margin (taxable equivalent basis)	3.39		%	3.23		%	3.08		%	3.09		%	3.31		%	Net interest margin (taxable equivalent basis)	3.53		%	3.52		%	3.39		%	3.23		%	3.08		%
Return on average assets	Return on average assets	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%	Return on average assets	1.38		%	1.48		%	1.21		%	1.20		%	0.83		%
Return on average tangible assets (1)	Return on average tangible assets (1)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%	Return on average tangible assets (1)	1.41		%	1.51		%	1.24		%	1.22		%	0.84		%
Return on average stockholders' equity	Return on average stockholders' equity	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%	Return on average stockholders' equity	11.79		%	13.21		%	11.18		%	11.38		%	7.99		%
Return on average tangible stockholders' equity (1)	Return on average tangible stockholders' equity (1)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%	Return on average tangible stockholders' equity (1)	14.15		%	15.92		%	13.51		%	13.79		%	9.70		%
Dividend payout ratio (1)	Dividend payout ratio (1)	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%	Dividend payout ratio (1)	32.54		%	29.69		%	33.99		%	33.96		%	48.67		%
Efficiency ratio (3)	Efficiency ratio (3)	55.22		%	55.27		%	57.83		%	55.46		%	57.36		%	Efficiency ratio (3)	53.64		%	49.30		%	55.22		%	55.27		%	57.83		%

ASSET QUALITY RATIOS	ASSET QUALITY RATIOS																ASSET QUALITY RATIOS
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	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		%	Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.07		%	0.03		%	0.10		%	0.24		%	0.27		%
Nonperforming loans and leases as a percentage of total loans and leases	Nonperforming loans and leases as a percentage of total loans and leases	0.43		%	0.53		%	0.51		%	0.56		%	0.57		%	Nonperforming loans and leases as a percentage of total loans and leases	0.52		%	0.49		%	0.43		%	0.53		%	0.51		%
Nonperforming assets as a percentage of total assets	Nonperforming assets as a percentage of total assets	0.44		%	0.50		%	0.44		%	0.47		%	0.49		%	Nonperforming assets as a percentage of total assets	0.44		%	0.41		%	0.44		%	0.50		%	0.44		%
Total allowance for loan and lease losses as a percentage of total loans and leases	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		%	Total allowance for loan and lease losses as a percentage of total loans and leases	1.48		%	1.52		%	1.51		%	1.57		%	1.62		%

CAPITAL RATIOS	CAPITAL RATIOS																CAPITAL RATIOS
Stockholders' equity to total assets	Stockholders' equity to total assets	11.04		%	10.53		%	10.39		%	10.21		%	10.78		%	Stockholders' equity to total assets	11.77		%	11.49		%	11.04		%	10.53		%	10.39		%
Tangible equity ratio (1)	Tangible equity ratio (1)	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%	Tangible equity ratio (1)	10.01		%	9.75		%	9.31		%	8.86		%	8.73		%

FINANCIAL CONDITION DATA	FINANCIAL CONDITION DATA																FINANCIAL CONDITION DATA
Total assets	Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591		Total assets	$	8,312,649		$	8,461,964		$	8,559,810		$	8,942,424		$	9,000,192
Total loans and leases	Total loans and leases	7,267,552			7,269,553			7,396,358			7,407,697			6,822,527			Total loans and leases	6,931,694			7,020,275			7,267,552			7,269,553			7,396,358
Allowance for loan and lease losses	Allowance for loan and lease losses	109,837			114,379			119,971			119,553			113,181			Allowance for loan and lease losses	102,515			106,474			109,837			114,379			119,971
Investment securities available-for-sale	Investment securities available-for-sale	729,901			745,822			783,867			854,505			761,539			Investment securities available-for-sale	732,020			694,151			729,901			745,822			783,867
Investment securities held-to-maturity		—			—			—			—			—

Equity securities held-for-trading	Equity securities held-for-trading	518			526			525			1,992			2,558			Equity securities held-for-trading	—			—			518			526			525
Goodwill and identified intangible assets	Goodwill and identified intangible assets	163,347			163,579			163,891			164,203			164,514			Goodwill and identified intangible assets	162,911			163,119			163,347			163,579			163,891
Total deposits	Total deposits	6,866,786			6,910,696			6,792,523			6,440,233			5,889,938			Total deposits	6,873,010			6,894,701			6,866,786			6,910,696			6,792,523
Total borrowed funds	Total borrowed funds	546,003			820,247			1,005,045			1,406,669			1,291,804			Total borrowed funds	267,539			363,014			546,003			820,247			1,005,045
Stockholders' equity	Stockholders' equity	945,399			941,778			935,558			926,413			912,568			Stockholders' equity	978,452			972,252			945,399			941,778			935,558

														(Continued)
																														(Continued)

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		At and for the Three Months Ended
		March 31,		December 31,		September 30,		June 30,		March 31,			At and for the Three Months Ended
		2021		2020		2020		2020		2020			September 30,		June 30,		March 31,		December 31,		September 30,
		(Dollars in Thousands, Except Per Share Data)											2021		2021		2021		2020		2020
													(Dollars in Thousands, Except Per Share Data)
EARNINGS DATA	EARNINGS DATA											EARNINGS DATA
Net interest income	Net interest income	$	69,109	$	68,225	$	65,938	$	64,288	$	61,712	Net interest income	$	70,697	$	71,106	$	69,109	$	68,225	$	65,938
Provision for credit losses		(2,147)		(2,103)		4,528		5,347		54,114
(Credit) provision for credit losses												(Credit) provision for credit losses	(3,110)		(3,331)		(2,147)		(2,103)		4,528
Non-interest income	Non-interest income	4,794		4,219		4,862		6,235		9,328		Non-interest income	5,586		5,910		4,794		4,219		4,862
Non-interest expense	Non-interest expense	40,811		40,038		40,947		39,109		40,748		Non-interest expense	40,922		37,966		40,811		40,038		40,947
Net income (loss)		26,454		26,663		18,679		19,571		(17,276)
Net income												Net income	28,839		31,602		26,454		26,663		18,679

(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~~$8.3 billion as of ~~March 31,~~September 30, 2021 decreased ~~$382.6~~$629.8 million, or ~~17.1%~~9.4% on an annualized basis, from December 31, 2020. The decrease was primarily driven by decreases in loans and leases, and cash and cash ~~equivalents and other assets.~~equivalents.

Cash and cash equivalents as of ~~March 31,~~September 30, 2021 decreased ~~$304.0~~$195.8 million, or ~~279.6%~~60.0% on an annualized basis, to ~~$130.9~~$239.1 million from December 31, 2020.

Total loans and leases as of ~~March 31,~~September 30, 2021 decreased ~~$2.0~~$337.9 million, or ~~0.1%~~6.2% on an annualized basis, to ~~$7.3~~$6.9 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~~$5.8 billion, or ~~84.1%~~83.4% of total loans and leases as of ~~March 31,~~September 30, 2021, ~~an increase~~a decrease of ~~$15.8~~$320.0 million, or ~~1.0%~~7.0% 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,~~September 30, 2021 decreased ~~$43.9~~$37.7 million, or ~~2.5%~~0.7% on an annualized basis, from December 31, 2020. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled ~~$5.1~~$5.5 billion, or ~~74.6%~~80.7% of total deposits as of ~~March 31,~~September 30, 2021, an increase of ~~$296.3~~$718.8 million, or ~~24.6%~~19.9% 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~~$1.1 billion, or ~~18.5%~~16.6% of total deposits as of ~~March 31,~~September 30, 2021, a decrease of ~~$116.9~~$248.1 million, or ~~33.6%~~23.8% on an annualized basis, from $1.4 billion, or 20.1% of total deposits, as of December 31, 2020. Brokered deposits totaled ~~$470.6~~$185.5 million, or ~~6.9%~~2.7% of total deposits as of ~~March 31,~~September 30, 2021, a decrease of ~~$223.4~~$508.4 million, or ~~128.8%~~97.7% on an annualized basis, from $693.9 million, or 10.0% of total deposits, as of December 31, ~~2020.~~2020

Total borrowed funds as of ~~March 31,~~September 30, 2021 decreased ~~$274.2~~$552.7 million, or ~~133.7%~~89.8% on an annualized basis, to ~~$0.5 billion~~$267.5 million from December 31, 2020.

Asset Quality

Nonperforming assets as of ~~March 31,~~September 30, 2021 totaled ~~$37.4~~$36.5 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,~~September 30, 2021 were ~~$1.8~~$1.3 million, or ~~0.10%~~0.07% of average loans and leases on an annualized basis, compared to ~~$2.2~~$5.0 million, or ~~0.13%~~0.27% of average loans and leases on an annualized basis, for the three months ended ~~March 31,~~September 30, 2020.

The ratio of the allowance for loan and lease losses to total loans and leases was ~~1.51%~~1.48% as of ~~March 31,~~September 30, 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%~~12.02% as of ~~March 31,~~September 30, 2021, compared to 11.04% as of December 31, 2020. The Company's Tier 1 leverage ratio was ~~9.26%~~10.04% as of ~~March 31,~~September 30, 2021, compared to 8.92% as of December 31, 2020. As of ~~March 31,~~September 30, 2021, the Company's Tier 1 risk-based capital ratio was ~~11.79%~~12.16%, compared to 11.18% as of December 31, 2020. The Company's Total risk-based capital ratio was ~~14.15%~~14.51% as of ~~March 31,~~September 30, 2021, compared to 13.51% as of December 31, 2020.

The Company's ratio of stockholders' equity to total assets was ~~11.04%~~11.77% and 10.53% as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. The Company's tangible equity ratio was ~~9.31%~~10.01% and 8.86% as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

Net Income ~~(Loss)~~

For the three months ended ~~March 31,~~September 30, 2021, the Company reported net income of ~~$26.5~~$28.8 million, or ~~$0.34~~$0.37 per basic and diluted share, an increase of ~~$43.7~~$10.2 million from net income of $18.7 million, or ~~253.1%, from net loss of $(17.3) million, or $(0.22)~~$0.24 per basic and diluted share, for the three months ended ~~March 31,~~September 30, 2020. This increase in net income is primarily the result of a decrease in the provision for credit losses of ~~$56.3~~$7.6 million, ~~and~~ an increase in net interest income of ~~$7.4~~$4.8 million and an increase in non-interest income of $0.7 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~~$3.0 million. Refer to “Results of Operations" below for further discussion.

For the nine months ended September 30, 2021, the Company reported net income of $86.9 million, or $1.11 per basic and diluted share, an increase of $65.9 million from $21.0 million, or $0.27 per basic and diluted share, for the nine months ended September 30, 2020. This increase in net income is primarily the result of a decrease in the provision for credit losses of $72.6 million, an increase in net interest income of $19.0 million and a decrease in non-interest expense of $1.1 million, partially offset by an increase in the provision for income taxes of $22.6 million and a decrease in non-interest income of $4.1 million. Refer to “Results of Operations" below for further discussion.

The annualized return on average assets was ~~1.21%~~1.38% for the three months ended ~~March 31,~~September 30, 2021, compared to ~~(0.87)%~~0.83% for the three months ended ~~March 31,~~September 30, 2020. The annualized return on average stockholders' equity was ~~11.18%~~11.79% for the three months ended ~~March 31,~~September 30, 2021, compared to ~~(7.30)%~~7.99% for the three months ended ~~March 31,~~September 30, 2020.

The net interest margin was ~~3.39%~~3.53% for the three months ended ~~March 31,~~September 30, 2021, up from ~~3.31%~~3.08% for the three months ended ~~March 31,~~September 30, 2020. The increase in the net interest margin is a result of a decrease of 7936 basis points in the Company's overall cost of funds to ~~0.50%~~0.39% for the three months ended ~~March 31,~~September 30, 2021 from ~~1.29%~~0.75% for the three months ended ~~March 31,~~September 30, 2020, and an increase in the yield on interest-earning assets of 12 basis points to 3.91% for the three months ended September 30, 2021 from 3.79% for the three months ended September 30, 2020.

The net interest margin was 3.48% for the nine months ended September 30, 2021, up from 3.15% for the nine months ended September 30, 2020. The increase in the net interest margin is a result of a decrease of 55 basis points in the Company's overall cost of funds to 0.43% for the nine months ended September 30, 2021 from 0.98% for the nine months ended September 30, 2020, partially offset by a decrease in the yield on interest-earning assets of 6618 basis points to ~~3.80%~~3.86% for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 from ~~4.46%~~4.04% for the ~~three~~nine months ended ~~March 31,~~September 30, 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

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

In August 2021, the FASB issued ASU 2021-06, "Presentation of Financial Statements (Topic 205), Financial Services – Depository and Lending (Topic 942), and Financial Services – Investment Companies (Topic 946) which will update guidance to align with new SEC regulations with regards to statistical disclosures for banking and savings and loan institutions. This ASU is effective for fiscal years ending on or after December 15, 2021. The Company will adopt ASU 2021-06 as of December 31, 2021. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

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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,
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)



	At and for the Three Months Ended September 30,				At and for the Nine Months Ended September 30,
	2021		2020		2021		2020
	(Dollars in Thousands)
Net income, as reported	$	28,839	$	18,679	$	86,895	$	20,972

Less:
Security gains (after-tax)	—		40		(4)		1,499



Operating earnings	$	28,839	$	18,639	$	86,899	$	19,473

Basic earnings per share, as reported	$	0.37	$	0.24	$	1.11	$	0.27
Less:
Security gains (after-tax)	—		—		—		0.02




Basic operating earnings per share	$	0.37	$	0.24	$	1.11	$	0.25

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																Three Months Ended
		March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020				September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
		(Dollars in Thousands)																(Dollars in Thousands)
Operating earnings (loss)		$	26,459		$	26,663		$	18,639		$	19,131		$	(18,240)
Operating earnings																	Operating earnings	$	28,839	$	31,601	$	26,459	$	26,663	$	18,639

Average total assets	Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826		Average total assets	$	8,360,635	$	8,540,228	$	8,714,158	$	8,874,467	$	9,018,672
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701			Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible assets	Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125		Average tangible assets	$	8,197,624	$	8,377,004	$	8,550,701	$	8,710,709	$	8,854,600

Return on average assets (annualized)	Return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.88		%	(0.87)		%	Return on average assets (annualized)	1.38%		1.48%		1.21%		1.20%		0.83%
Less:	Less:																Less:
Security gains	Security gains	—		%	—		%	—		%	0.02		%	0.05		%	Security gains	—%		—%		—%		—%		—%

Operating return on average assets (annualized)	Operating return on average assets (annualized)	1.21		%	1.20		%	0.83		%	0.86		%	(0.92)		%	Operating return on average assets (annualized)	1.38%		1.48%		1.21%		1.20%		0.83%

Return on average tangible assets (annualized)	Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%	Return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%
Less:	Less:																Less:
Security gains	Security gains	—		%	—		%	—		%	0.02		%	0.05		%	Security gains	—%		—%		—%		—%		—%

Operating return on average tangible assets (annualized)	Operating return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.88		%	(0.94)		%	Operating return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%

Average total stockholders' equity	Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138		Average total stockholders' equity	$	978,371	$	957,207	$	946,482	$	937,294	$	934,632
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701			Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible stockholders' equity	Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437		Average tangible stockholders' equity	$	815,360	$	793,983	$	783,025	$	773,536	$	770,560

Return on average stockholders' equity (annualized)	Return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.99		%	8.45		%	(7.30)		%	Return on average stockholders' equity (annualized)	11.79%		13.21%		11.18%		11.38%		7.99%
Less:	Less:																Less:
Security gains (losses)		—		%	—		%	0.01		%	0.19		%	0.41		%
Security gains																	Security gains	—%		—%		—%		—%		0.01%

Operating return on average stockholders' equity (annualized)	Operating return on average stockholders' equity (annualized)	11.18		%	11.38		%	7.98		%	8.26		%	(7.71)		%	Operating return on average stockholders' equity (annualized)	11.79%		13.21%		11.18%		11.38%		7.98%

Return on average tangible stockholders' equity (annualized)	Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%	Return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.70%
Less:	Less:																Less:
Security gains (losses)		—		%	—		%	0.02		%	0.24		%	0.49		%
Security gains																	Security gains	—%		—%		—%		—%		0.02%

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)		%	Operating return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.68%

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		Three Months Ended																Three Months Ended
		March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020				September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
		(Dollars in Thousands)																(Dollars in Thousands)
Net income (loss), as reported		$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)
Net income, as reported																	Net income, as reported	$	28,839	$	31,602	$	26,454	$	26,663	$	18,679

Average total assets	Average total assets	$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		$	7,965,826		Average total assets	$	8,360,635	$	8,540,228	$	8,714,158	$	8,874,467	$	9,018,672
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701			Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible assets	Average tangible assets	$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		$	7,801,125		Average tangible assets	$	8,197,624	$	8,377,004	$	8,550,701	$	8,710,709	$	8,854,600

Return on average tangible assets (annualized)	Return on average tangible assets (annualized)	1.24		%	1.22		%	0.84		%	0.90		%	(0.89)		%	Return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%

Average total stockholders' equity	Average total stockholders' equity	$	946,482		$	937,294		$	934,632		$	926,239		$	946,138		Average total stockholders' equity	$	978,371	$	957,207	$	946,482	$	937,294	$	934,632
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,457			163,758			164,072			164,385			164,701			Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible stockholders' equity	Average tangible stockholders' equity	$	783,025		$	773,536		$	770,560		$	761,854		$	781,437		Average tangible stockholders' equity	$	815,360	$	793,983	$	783,025	$	773,536	$	770,560

Return on average tangible stockholders' equity (annualized)	Return on average tangible stockholders' equity (annualized)	13.51		%	13.79		%	9.70		%	10.28		%	(8.84)		%	Return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.70%

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


		Three Months Ended																Three Months Ended
		March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020				September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
		(Dollars in Thousands)																(Dollars in Thousands)
Total stockholders' equity	Total stockholders' equity	$	945,399		$	941,778		$	935,558		$	926,413		$	912,568		Total stockholders' equity	$	978,452	$	972,252	$	945,399	$	941,778	$	935,558
Less: Goodwill and identified intangible assets, net	Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514			Less: Goodwill and identified intangible assets, net	162,911		163,119		163,347		163,579		163,891
Tangible stockholders' equity	Tangible stockholders' equity	$	782,052		$	778,199		$	771,667		$	762,210		$	748,054		Tangible stockholders' equity	$	815,541	$	809,133	$	782,052	$	778,199	$	771,667

Total assets	Total assets	$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		$	8,461,591		Total assets	$	8,312,649	$	8,461,964	$	8,559,810	$	8,942,424	$	9,000,192
Less: Goodwill and identified intangible assets, net	Less: Goodwill and identified intangible assets, net	163,347			163,579			163,891			164,203			164,514			Less: Goodwill and identified intangible assets, net	162,911		163,119		163,347		163,579		163,891
Tangible assets	Tangible assets	$	8,396,463		$	8,778,845		$	8,836,301		$	8,905,464		$	8,297,077		Tangible assets	$	8,149,738	$	8,298,845	$	8,396,463	$	8,778,845	$	8,836,301

Tangible equity ratio	Tangible equity ratio	9.31		%	8.86		%	8.73		%	8.56		%	9.02		%	Tangible equity ratio	10.01%		9.75%		9.31%		8.86%		8.73%

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


		Three Months Ended											Three Months Ended
		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020			September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
		(Dollars in Thousands)											(Dollars in Thousands)
Tangible stockholders' equity	Tangible stockholders' equity	$	782,052	$	778,199	$	771,667	$	762,210	$	748,054	Tangible stockholders' equity	$	815,541	$	809,133	$	782,052	$	778,199	$	771,667

Common shares issued	Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172		Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:	Less:											Less:
Treasury shares	Treasury shares	6,534,602		6,525,783		5,629,854		5,859,708		5,862,811		Treasury shares	7,034,754		6,536,478		6,534,602		6,525,783		5,629,854
Unallocated ESOP	Unallocated ESOP	44,502		51,114		58,227		65,334		72,441		Unallocated ESOP	31,278		37,890		44,502		51,114		58,227
Unvested restricted stock	Unvested restricted stock	449,981		458,800		487,318		398,188		395,085		Unvested restricted stock	502,808		448,105		449,981		458,800		487,318
Common shares outstanding	Common shares outstanding	78,148,087		78,141,475		79,001,773		78,853,942		78,846,835		Common shares outstanding	77,608,332		78,154,699		78,148,087		78,141,475		79,001,773

Tangible book value per share	Tangible book value per share	$	10.01	$	9.96	$	9.77	$	9.67	$	9.49	Tangible book value per share	$	10.51	$	10.35	$	10.01	$	9.96	$	9.77

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


		Three Months Ended																Three Months Ended
		March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020				September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
		(Dollars in Thousands)																(Dollars in Thousands)
Dividends paid	Dividends paid	$	8,992		$	9,055		$	9,092		$	9,076		$	9,173		Dividends paid	$	9,383	$	9,383	$	8,992	$	9,055	$	9,092

Net income (loss), as reported		$	26,454		$	26,663		$	18,679		$	19,571		$	(17,276)
Net income, as reported																	Net income, as reported	$	28,839	$	31,602	$	26,454	$	26,663	$	18,679

Dividend payout ratio	Dividend payout ratio	33.99		%	33.96		%	48.67		%	46.37		%	(53.10)		%	Dividend payout ratio	32.54%		29.69%		33.99%		33.96%		48.67%


		Three Months Ended																Three Months Ended
		March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020				September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
		(Dollars in Thousands)																(Dollars in Thousands)
Allowance for loan and lease losses	Allowance for loan and lease losses	$	109,837		$	114,379		$	119,971		$	119,553		$	113,181		Allowance for loan and lease losses	$	102,515	$	106,474	$	109,837	$	114,379	$	119,971

Total loans and leases	Total loans and leases	$	7,267,552		$	7,269,553		$	7,396,358		$	7,407,697		$	6,822,527		Total loans and leases	$	6,931,694	$	7,020,275	$	7,267,552	$	7,269,553	$	7,396,358
Less: Total PPP loans	Less: Total PPP loans	604,790			489,216			568,383			565,768			—			Less: Total PPP loans	160,586		348,411		604,790		489,216		568,383
Total loans and leases excluding PPP loans	Total loans and leases excluding PPP loans	$	6,662,762		$	6,780,337		$	6,827,975		$	6,841,929		$	6,822,527		Total loans and leases excluding PPP loans	$	6,771,108	$	6,671,864	$	6,662,762	$	6,780,337	$	6,827,975

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	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		%	Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.51%		1.60%		1.65%		1.69%		1.76%

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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					At September 30, 2021				At December 31, 2020
		Balance		Percent of Total		Balance		Percent of Total			Balance		Percent of Total		Balance		Percent of Total
		(Dollars in Thousands)									(Dollars in Thousands)
Commercial real estate loans:	Commercial real estate loans:									Commercial real estate loans:
Commercial real estate	Commercial real estate	$	2,595,240	35.6	%	$	2,578,773	35.4	%	Commercial real estate	$	2,707,100	39.1	%	$	2,578,773	35.4	%
Multi-family mortgage	Multi-family mortgage	1,000,474		13.8	%	1,013,432		13.9	%	Multi-family mortgage	1,007,168		14.5	%	1,013,432		13.9	%
Construction	Construction	194,627		2.7	%	231,621		3.2	%	Construction	194,743		2.8	%	231,621		3.2	%
Total commercial real estate loans	Total commercial real estate loans	3,790,341		52.1	%	3,823,826		52.5	%	Total commercial real estate loans	3,909,011		56.4	%	3,823,826		52.5	%
Commercial loans and leases:	Commercial loans and leases:									Commercial loans and leases:
Commercial	Commercial	1,206,977		16.6	%	1,131,668		15.6	%	Commercial	739,023		10.6	%	1,131,668		15.6	%
Equipment financing	Equipment financing	1,069,621		14.7	%	1,092,461		15.0	%	Equipment financing	1,085,028		15.7	%	1,092,461		15.0	%
Condominium association	Condominium association	47,604		0.7	%	50,770		0.7	%	Condominium association	45,635		0.7	%	50,770		0.7	%
Total commercial loans and leases	Total commercial loans and leases	2,324,202		32.0	%	2,274,899		31.3	%	Total commercial loans and leases	1,869,686		27.0	%	2,274,899		31.3	%
Consumer loans:	Consumer loans:									Consumer loans:
Residential mortgage	Residential mortgage	781,854		10.8	%	791,317		10.9	%	Residential mortgage	789,990		11.4	%	791,317		10.9	%
Home equity	Home equity	334,706		4.6	%	346,652		4.8	%	Home equity	327,906		4.7	%	346,652		4.8	%
Other consumer	Other consumer	36,449		0.5	%	32,859		0.5	%	Other consumer	35,101		0.5	%	32,859		0.5	%
Total consumer loans	Total consumer loans	1,153,009		15.9	%	1,170,828		16.2	%	Total consumer loans	1,152,997		16.6	%	1,170,828		16.2	%
Total loans and leases	Total loans and leases	7,267,552		100.0	%	7,269,553		100.0	%	Total loans and leases	6,931,694		100.0	%	7,269,553		100.0	%
Allowance for loan and lease losses	Allowance for loan and lease losses	(109,837)				(114,379)				Allowance for loan and lease losses	(102,515)				(114,379)
Net loans and leases	Net loans and leases	$	7,157,715			$	7,155,174			Net loans and leases	$	6,829,179			$	7,155,174

The following table sets forth the growth in the Company’s loan and lease portfolios during the ~~three~~nine months ended ~~March 31,~~September 30, 2021:


		At March 31, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)			At September 30, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)
		(Dollars in Thousands)									(Dollars in Thousands)
Commercial real estate	Commercial real estate	$	3,790,341	$	3,823,826	$	(33,485)	-3.5	%	Commercial real estate	$	3,909,011	$	3,823,826	$	85,185	8.9	%
Commercial	Commercial	2,324,202		2,274,899		49,303		8.7	%	Commercial	1,869,686		2,274,899		(405,213)		-71.2	%
Consumer	Consumer	1,153,009		1,170,828		(17,819)		-6.1	%	Consumer	1,152,997		1,170,828		(17,831)		-6.1	%
Total loans and leases	Total loans and leases	$	7,267,552	$	7,269,553	$	(2,001)	(0.11)	%	Total loans and leases	$	6,931,694	$	7,269,553	$	(337,859)	(18.59)	%

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

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

The Company's current policy is that 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,~~September 30, 2021, there ~~were 2 borrowers~~was one borrower with loans and commitments over $50.0 million. The total of those loans and commitments was ~~$118.2~~$57.3 million, or ~~1.4%~~0.7% of total loans and commitments, as of ~~March 31,~~September 30, 2021. As of December 31, 2020, there were 2two borrowers with loans and commitments ~~over~~

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~~$50.0~~over $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.

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 September 30, 2021 totaled $36.5 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 September 30, 2021 were $1.3 million, or 0.07% of average loans and leases on an annualized basis, compared to $5.0 million, or 0.27% of average loans and leases on an annualized basis, for the three months ended September 30, 2020.

The ~~commercial real estate portfolio is comprised of commercial real estate loans, multi-family mortgage loans, and construction loans and is the largest component~~ratio of the ~~Company's overall~~allowance for loan ~~portfolio, representing 52.1% of~~and lease losses to total loans and leases ~~outstanding~~was 1.48% as of September 30, 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 12.02% as of September 30, 2021, compared to 11.04% as of December 31, 2020. The Company's Tier 1 leverage ratio was 10.04% as of September 30, 2021, compared to 8.92% as of December 31, 2020. As of September 30, 2021, the Company's Tier 1 risk-based capital ratio was 12.16%, compared to 11.18% as of December 31, 2020. The Company's Total risk-based capital ratio was 14.51% as of September 30, 2021, compared to 13.51% as of December 31, 2020.

The Company's ratio of stockholders' equity to total assets was 11.77% and 10.53% as of September 30, 2021 and December 31, 2020, respectively. The Company's tangible equity ratio was 10.01% and 8.86% as of September 30, 2021 and December 31, 2020, respectively.

Net Income

For the three months ended September 30, 2021, the Company reported net income of $28.8 million, or $0.37 per basic and diluted share, an increase of $10.2 million from net income of $18.7 million, or $0.24 per basic and diluted share, for the three months ended September 30, 2020. This increase in net income is primarily the result of a decrease in the provision for credit losses of $7.6 million, an increase in net interest income of $4.8 million and an increase in non-interest income of $0.7 million, partially offset by an increase in the provision for income taxes of $3.0 million. Refer to “Results of Operations" below for further discussion.

The annualized return on average assets was 1.38% for the three months ended September 30, 2021, compared to 0.83% for the three months ended September 30, 2020. The annualized return on average stockholders' equity was 11.79% for the three months ended September 30, 2021, compared to 7.99% for the three months ended September 30, 2020.

The net interest margin was 3.53% for the three months ended September 30, 2021, up from 3.08% for the three months ended September 30, 2020. The increase in the net interest margin is a result of a decrease of 36 basis points in the Company's overall cost of funds to 0.39% for the three months ended September 30, 2021 from 0.75% for the three months ended September 30, 2020, and an increase in the yield on interest-earning assets of 12 basis points to 3.91% for the three months ended September 30, 2021 from 3.79% for the three months ended September 30, 2020.

The net interest margin was 3.48% for the nine months ended September 30, 2021, up from 3.15% for the nine months ended September 30, 2020. The increase in the net interest margin is a result of a decrease of 55 basis points in the Company's overall cost of funds to 0.43% for the nine months ended September 30, 2021 from 0.98% for the nine months ended September 30, 2020, partially offset by a decrease in the yield on interest-earning assets of 18 basis points to 3.86% for the nine months ended September 30, 2021 from 4.04% for the nine months ended September 30, 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

Recent Accounting Developments

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~~Typically, commercial real estate loans are larger in size and involve~~ The adoption is not expected to have a ~~greater degree of risk than owner-occupied residential mortgage loans. Loan repayment is usually dependent~~material impact on the ~~successful operation~~Company’s consolidated financial statements.

Non-GAAP Financial Measures and Reconciliation to GAAP

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.Company’s capital position.

The ~~Company's urban~~following table reconciles the Company’s operating earnings, operating return on average assets 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 ofoperating return on average stockholders’ equity for 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.periods indicated:



	At and for the Three Months Ended September 30,				At and for the Nine Months Ended September 30,
	2021		2020		2021		2020
	(Dollars in Thousands)
Net income, as reported	$	28,839	$	18,679	$	86,895	$	20,972

Less:
Security gains (after-tax)	—		40		(4)		1,499



Operating earnings	$	28,839	$	18,639	$	86,899	$	19,473

Basic earnings per share, as reported	$	0.37	$	0.24	$	1.11	$	0.27
Less:
Security gains (after-tax)	—		—		—		0.02




Basic operating earnings per share	$	0.37	$	0.24	$	1.11	$	0.25

The ~~Company's commercial real estate portfolio is composed primarily~~following tables reconcile the Company’s return on average tangible assets and return on average tangible stockholders’ equity for the periods indicated:

Table 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.Contents

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.



	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Operating earnings	$	28,839	$	31,601	$	26,459	$	26,663	$	18,639

Average total assets	$	8,360,635	$	8,540,228	$	8,714,158	$	8,874,467	$	9,018,672
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible assets	$	8,197,624	$	8,377,004	$	8,550,701	$	8,710,709	$	8,854,600

Return on average assets (annualized)	1.38%		1.48%		1.21%		1.20%		0.83%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average assets (annualized)	1.38%		1.48%		1.21%		1.20%		0.83%

Return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%

Average total stockholders' equity	$	978,371	$	957,207	$	946,482	$	937,294	$	934,632
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible stockholders' equity	$	815,360	$	793,983	$	783,025	$	773,536	$	770,560

Return on average stockholders' equity (annualized)	11.79%		13.21%		11.18%		11.38%		7.99%
Less:
Security gains	—%		—%		—%		—%		0.01%



Operating return on average stockholders' equity (annualized)	11.79%		13.21%		11.18%		11.38%		7.98%




Return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.70%
Less:
Security gains	—%		—%		—%		—%		0.02%



Operating return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.68%

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~~Commercial Loans~~


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Net income, as reported	$	28,839	$	31,602	$	26,454	$	26,663	$	18,679

Average total assets	$	8,360,635	$	8,540,228	$	8,714,158	$	8,874,467	$	9,018,672
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible assets	$	8,197,624	$	8,377,004	$	8,550,701	$	8,710,709	$	8,854,600

Return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%

Average total stockholders' equity	$	978,371	$	957,207	$	946,482	$	937,294	$	934,632
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible stockholders' equity	$	815,360	$	793,983	$	783,025	$	773,536	$	770,560

Return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.70%

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 byfollowing table reconciles 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~~tangible equity ratio 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.periods indicated:

~~Consumer Loans~~


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Total stockholders' equity	$	978,452	$	972,252	$	945,399	$	941,778	$	935,558
Less: Goodwill and identified intangible assets, net	162,911		163,119		163,347		163,579		163,891
Tangible stockholders' equity	$	815,541	$	809,133	$	782,052	$	778,199	$	771,667

Total assets	$	8,312,649	$	8,461,964	$	8,559,810	$	8,942,424	$	9,000,192
Less: Goodwill and identified intangible assets, net	162,911		163,119		163,347		163,579		163,891
Tangible assets	$	8,149,738	$	8,298,845	$	8,396,463	$	8,778,845	$	8,836,301

Tangible equity ratio	10.01%		9.75%		9.31%		8.86%		8.73%

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.

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.

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


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Tangible stockholders' equity	$	815,541	$	809,133	$	782,052	$	778,199	$	771,667

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	7,034,754		6,536,478		6,534,602		6,525,783		5,629,854
Unallocated ESOP	31,278		37,890		44,502		51,114		58,227
Unvested restricted stock	502,808		448,105		449,981		458,800		487,318
Common shares outstanding	77,608,332		78,154,699		78,148,087		78,141,475		79,001,773

Tangible book value per share	$	10.51	$	10.35	$	10.01	$	9.96	$	9.77

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


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Dividends paid	$	9,383	$	9,383	$	8,992	$	9,055	$	9,092

Net income, as reported	$	28,839	$	31,602	$	26,454	$	26,663	$	18,679

Dividend payout ratio	32.54%		29.69%		33.99%		33.96%		48.67%


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Allowance for loan and lease losses	$	102,515	$	106,474	$	109,837	$	114,379	$	119,971

Total loans and leases	$	6,931,694	$	7,020,275	$	7,267,552	$	7,269,553	$	7,396,358
Less: Total PPP loans	160,586		348,411		604,790		489,216		568,383
Total loans and leases excluding PPP loans	$	6,771,108	$	6,671,864	$	6,662,762	$	6,780,337	$	6,827,975

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.51%		1.60%		1.65%		1.69%		1.76%

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Financial Condition

Loans and Leases

The following table summarizes the Company's portfolio of loans ~~have historically been a modest part~~and leases receivables as of the dates indicated:


	At September 30, 2021				At December 31, 2020
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,707,100	39.1	%	$	2,578,773	35.4	%
Multi-family mortgage	1,007,168		14.5	%	1,013,432		13.9	%
Construction	194,743		2.8	%	231,621		3.2	%
Total commercial real estate loans	3,909,011		56.4	%	3,823,826		52.5	%
Commercial loans and leases:
Commercial	739,023		10.6	%	1,131,668		15.6	%
Equipment financing	1,085,028		15.7	%	1,092,461		15.0	%
Condominium association	45,635		0.7	%	50,770		0.7	%
Total commercial loans and leases	1,869,686		27.0	%	2,274,899		31.3	%
Consumer loans:
Residential mortgage	789,990		11.4	%	791,317		10.9	%
Home equity	327,906		4.7	%	346,652		4.8	%
Other consumer	35,101		0.5	%	32,859		0.5	%
Total consumer loans	1,152,997		16.6	%	1,170,828		16.2	%
Total loans and leases	6,931,694		100.0	%	7,269,553		100.0	%
Allowance for loan and lease losses	(102,515)				(114,379)
Net loans and leases	$	6,829,179			$	7,155,174

The following table sets forth the growth in the Company’s loan and lease portfolios during the nine months ended September 30, 2021:


	At September 30, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	3,909,011	$	3,823,826	$	85,185	8.9	%
Commercial	1,869,686		2,274,899		(405,213)		-71.2	%
Consumer	1,152,997		1,170,828		(17,831)		-6.1	%
Total loans and leases	$	6,931,694	$	7,269,553	$	(337,859)	(18.59)	%

The Company's loan ~~originations.~~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'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,~~September 30, 2021, ~~other consumer~~there was one borrower with loans ~~equaled $36.4~~and commitments over $50.0 million. The total of those loans and commitments was $57.3 million, or ~~0.5%~~0.7% of total loans ~~outstanding.~~and commitments, as of September 30, 2021. As of December 31, 2020, there were two borrowers with loans and commitments

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over $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.

Asset Quality

The ratio of the allowance for loan and lease losses to total loans and leases was 1.48% as of September 30, 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

Net Income

The net interest margin was 3.48% for the nine months ended September 30, 2021, up from 3.15% for the nine months ended September 30, 2020. The increase in the net interest margin is a result of a decrease of 55 basis points in the Company's overall cost of funds to 0.43% for the nine months ended September 30, 2021 from 0.98% for the nine months ended September 30, 2020, partially offset by a decrease in the yield on interest-earning assets of 18 basis points to 3.86% for the nine months ended September 30, 2021 from 4.04% for the nine months ended September 30, 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

Recent Accounting Developments

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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 September 30,				At and for the Nine Months Ended September 30,
	2021		2020		2021		2020
	(Dollars in Thousands)
Net income, as reported	$	28,839	$	18,679	$	86,895	$	20,972

Less:
Security gains (after-tax)	—		40		(4)		1,499



Operating earnings	$	28,839	$	18,639	$	86,899	$	19,473

Basic earnings per share, as reported	$	0.37	$	0.24	$	1.11	$	0.27
Less:
Security gains (after-tax)	—		—		—		0.02




Basic operating earnings per share	$	0.37	$	0.24	$	1.11	$	0.25

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
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Operating earnings	$	28,839	$	31,601	$	26,459	$	26,663	$	18,639

Average total assets	$	8,360,635	$	8,540,228	$	8,714,158	$	8,874,467	$	9,018,672
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible assets	$	8,197,624	$	8,377,004	$	8,550,701	$	8,710,709	$	8,854,600

Return on average assets (annualized)	1.38%		1.48%		1.21%		1.20%		0.83%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average assets (annualized)	1.38%		1.48%		1.21%		1.20%		0.83%

Return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%

Average total stockholders' equity	$	978,371	$	957,207	$	946,482	$	937,294	$	934,632
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible stockholders' equity	$	815,360	$	793,983	$	783,025	$	773,536	$	770,560

Return on average stockholders' equity (annualized)	11.79%		13.21%		11.18%		11.38%		7.99%
Less:
Security gains	—%		—%		—%		—%		0.01%



Operating return on average stockholders' equity (annualized)	11.79%		13.21%		11.18%		11.38%		7.98%




Return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.70%
Less:
Security gains	—%		—%		—%		—%		0.02%



Operating return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.68%

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	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Net income, as reported	$	28,839	$	31,602	$	26,454	$	26,663	$	18,679

Average total assets	$	8,360,635	$	8,540,228	$	8,714,158	$	8,874,467	$	9,018,672
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible assets	$	8,197,624	$	8,377,004	$	8,550,701	$	8,710,709	$	8,854,600

Return on average tangible assets (annualized)	1.41%		1.51%		1.24%		1.22%		0.84%

Average total stockholders' equity	$	978,371	$	957,207	$	946,482	$	937,294	$	934,632
Less: Average goodwill and average identified intangible assets, net	163,011		163,224		163,457		163,758		164,072
Average tangible stockholders' equity	$	815,360	$	793,983	$	783,025	$	773,536	$	770,560

Return on average tangible stockholders' equity (annualized)	14.15%		15.92%		13.51%		13.79%		9.70%

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


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Total stockholders' equity	$	978,452	$	972,252	$	945,399	$	941,778	$	935,558
Less: Goodwill and identified intangible assets, net	162,911		163,119		163,347		163,579		163,891
Tangible stockholders' equity	$	815,541	$	809,133	$	782,052	$	778,199	$	771,667

Total assets	$	8,312,649	$	8,461,964	$	8,559,810	$	8,942,424	$	9,000,192
Less: Goodwill and identified intangible assets, net	162,911		163,119		163,347		163,579		163,891
Tangible assets	$	8,149,738	$	8,298,845	$	8,396,463	$	8,778,845	$	8,836,301

Tangible equity ratio	10.01%		9.75%		9.31%		8.86%		8.73%

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


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Tangible stockholders' equity	$	815,541	$	809,133	$	782,052	$	778,199	$	771,667

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	7,034,754		6,536,478		6,534,602		6,525,783		5,629,854
Unallocated ESOP	31,278		37,890		44,502		51,114		58,227
Unvested restricted stock	502,808		448,105		449,981		458,800		487,318
Common shares outstanding	77,608,332		78,154,699		78,148,087		78,141,475		79,001,773

Tangible book value per share	$	10.51	$	10.35	$	10.01	$	9.96	$	9.77

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


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Dividends paid	$	9,383	$	9,383	$	8,992	$	9,055	$	9,092

Net income, as reported	$	28,839	$	31,602	$	26,454	$	26,663	$	18,679

Dividend payout ratio	32.54%		29.69%		33.99%		33.96%		48.67%


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	(Dollars in Thousands)
Allowance for loan and lease losses	$	102,515	$	106,474	$	109,837	$	114,379	$	119,971

Total loans and leases	$	6,931,694	$	7,020,275	$	7,267,552	$	7,269,553	$	7,396,358
Less: Total PPP loans	160,586		348,411		604,790		489,216		568,383
Total loans and leases excluding PPP loans	$	6,771,108	$	6,671,864	$	6,662,762	$	6,780,337	$	6,827,975

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.51%		1.60%		1.65%		1.69%		1.76%

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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 September 30, 2021				At December 31, 2020
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,707,100	39.1	%	$	2,578,773	35.4	%
Multi-family mortgage	1,007,168		14.5	%	1,013,432		13.9	%
Construction	194,743		2.8	%	231,621		3.2	%
Total commercial real estate loans	3,909,011		56.4	%	3,823,826		52.5	%
Commercial loans and leases:
Commercial	739,023		10.6	%	1,131,668		15.6	%
Equipment financing	1,085,028		15.7	%	1,092,461		15.0	%
Condominium association	45,635		0.7	%	50,770		0.7	%
Total commercial loans and leases	1,869,686		27.0	%	2,274,899		31.3	%
Consumer loans:
Residential mortgage	789,990		11.4	%	791,317		10.9	%
Home equity	327,906		4.7	%	346,652		4.8	%
Other consumer	35,101		0.5	%	32,859		0.5	%
Total consumer loans	1,152,997		16.6	%	1,170,828		16.2	%
Total loans and leases	6,931,694		100.0	%	7,269,553		100.0	%
Allowance for loan and lease losses	(102,515)				(114,379)
Net loans and leases	$	6,829,179			$	7,155,174

The following table sets forth the growth in the Company’s loan and lease portfolios during the nine months ended September 30, 2021:


	At September 30, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	3,909,011	$	3,823,826	$	85,185	8.9	%
Commercial	1,869,686		2,274,899		(405,213)		-71.2	%
Consumer	1,152,997		1,170,828		(17,831)		-6.1	%
Total loans and leases	$	6,931,694	$	7,269,553	$	(337,859)	(18.59)	%

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 September 30, 2021, there was one borrower with loans and commitments over $50.0 million. The total of those loans and commitments was $57.3 million, or 0.7% of total loans and commitments, as of September 30, 2021. As of December 31, 2020, there were two borrowers with loans and commitments

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over $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 56.4% of total loans and leases outstanding as of September 30, 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 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 ($936.0 million), office buildings ($683.7 million), retail stores ($595.7 million), industrial properties ($530.2 million), mixed-use properties ($276.2 million), lodging services ($156.6 million) and food services ($56.4 million) as of September 30, 2021. At that date, approximately 93.9% 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 27.0% of total loans outstanding as of September 30, 2021.

The Company's commercial loan and lease portfolio is composed primarily of loans and leases to small to medium sized businesses ($663.1 million), transportation services ($355.9 million), food services ($179.1 million), manufacturing ($91.0 million), recreation services ($100.2 million), rental and leasing services ($82.7 million), and retail ($81.7 million) as of September 30, 2021.

The Company provides commercial banking services to companies in its market area. Approximately 54.8% of the commercial loans outstanding as of September 30, 2021 were made to borrowers located in New England. The remaining 45.2% 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.

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 15.9% 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 16.6% of total loans outstanding as of September 30, 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 September 30, 2021, other consumer loans equaled $35.1 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,~~September 30, 2021, the Company had ~~$131.5~~$103.9 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~~$31.1 million in criticized assets was primarily driven by ~~seven~~the increase in commercial real estate relationships totaling ~~$54.7~~$27.5 million, ~~two commercial loan~~and C&I relationships totaling ~~$4.3~~$3.6 million ~~which became criticized, partially offset by~~for the ~~relationships which were upgraded to pass risk rating during the first quarter of~~nine months ended September 30, 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.~~TDR. 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,~~September 30, 2021, the Company had nonperforming assets of ~~$37.4~~$36.5 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 of $8.5 in nonperforming assets was primarily driven by ~~the payoff~~payoffs of four commercial relationships of $5.1 million, one equipment financing relationship of $0.5 million. Additionally, there was one commercial relationship classified as OREO which was sold in the second quarter in the amount of ~~$4.3 million, and the payoff of several equipment finance relationships totaling $2.4~~$5.4 million as well as ~~several residential relationships that were~~one construction relationship of $3.8 million removed from ~~non-accrual status totaling $2.0 million,~~non accrual status. partially offset by one commercial real estate relationship of $8.4 million, and the relationships that were placed on non-accrual status during the ~~first quarter of~~nine months ended September 30, 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,~~September 30, 2021, the Company had loans and leases greater than 90 days past due and accruing of ~~$1.2~~$0.8 million, or ~~0.02%~~0.01% 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.~~2020. The decrease in past due and accruing loans was primarily due to ~~two~~ commercial real estate relationships ~~becoming current for $4.7~~totaling $8.5 million, C&I relationships totaling $2.9 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~~consumer relationships ~~becoming past due greater than 90 days and accruing~~totaling $0.2 million for ~~$1.1 million during~~ the ~~first quarter of~~nine months ended September 30, 2021.

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


		At March 31, 2021			At December 31, 2020				At September 30, 2021			At December 31, 2020
		(Dollars in Thousands)							(Dollars in Thousands)
Nonperforming loans and leases:	Nonperforming loans and leases:							Nonperforming loans and leases:
Nonaccrual loans and leases:	Nonaccrual loans and leases:							Nonaccrual loans and leases:
Commercial real estate	Commercial real estate	$	3,611		$	3,300		Commercial real estate	$	10,963		$	3,300
Multi-family mortgage	Multi-family mortgage	—			—			Multi-family mortgage	—			—
Construction	Construction	3,853			3,853			Construction	—			3,853
Total commercial real estate loans	Total commercial real estate loans	7,464			7,153			Total commercial real estate loans	10,963			7,153

Commercial	Commercial	3,161			7,702			Commercial	2,539			7,702
Equipment financing	Equipment financing	15,772			16,757			Equipment financing	17,655			16,757
Condominium association	Condominium association	106			112			Condominium association	91			112
Total commercial loans and leases	Total commercial loans and leases	19,039			24,571			Total commercial loans and leases	20,285			24,571

Residential mortgage	Residential mortgage	3,722			5,587			Residential mortgage	4,150			5,587
Home equity	Home equity	792			1,136			Home equity	461			1,136
Other consumer	Other consumer	2			1			Other consumer	1			1
Total consumer loans	Total consumer loans	4,516			6,724			Total consumer loans	4,612			6,724

Total nonaccrual loans and leases	Total nonaccrual loans and leases	31,019			38,448			Total nonaccrual loans and leases	35,860			38,448

Other real estate owned	Other real estate owned	5,328			5,415			Other real estate owned	—			5,415
Other repossessed assets	Other repossessed assets	1,055			1,100			Other repossessed assets	601			1,100
Total nonperforming assets	Total nonperforming assets	$	37,402		$	44,963		Total nonperforming assets	$	36,461		$	44,963

Loans and leases past due greater than 90 days and accruing	Loans and leases past due greater than 90 days and accruing	$	1,179		$	11,975		Loans and leases past due greater than 90 days and accruing	$	838		$	11,975
Total delinquent loans and leases 61-90 days past due	Total delinquent loans and leases 61-90 days past due	6,522			16,129			Total delinquent loans and leases 61-90 days past due	2,815			16,129
Restructured loans and leases not included in nonperforming assets	Restructured loans and leases not included in nonperforming assets	16,770			11,483			Restructured loans and leases not included in nonperforming assets	13,526			11,483

Total nonperforming loans and leases as a percentage of total loans and leases	Total nonperforming loans and leases as a percentage of total loans and leases	0.43		%	0.53		%	Total nonperforming loans and leases as a percentage of total loans and leases	0.52		%	0.53		%
Total nonperforming assets as a percentage of total assets	Total nonperforming assets as a percentage of total assets	0.44		%	0.50		%	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	Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases	0.09		%	0.22		%	Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases	0.04		%	0.22		%

Troubled Debt Restructuring Loans and Leases

Total TDR loans and leases increased by ~~$4.1~~$1.2 million to ~~$23.1~~$20.2 million at ~~March 31,~~September 30, 2021 from $19.0 million at December 31, 2020. The increase was primarily driven ~~primarily~~ by ~~one construction relationship for $3.8~~three new TDR relationships consisting of two equipment financing relationships totaling $1.1 million and one ~~commercial real estate~~$0.8 million residential relationship, ~~for $0.4~~partially offset by the payoff of two TDR relationships totaling $0.7 million ~~becoming TDR~~ during the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

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As of ~~March 31,~~September 30, 2021, total TDR loans included ~~$6.4~~$6.0 million of commercial loans, ~~$7.2~~$8.0 million of equipment financing loans and leases, ~~$1.8~~$2.7 million of residential mortgage loans, ~~$1.8~~$2.0 million of home equity loans, and ~~$2.1~~$1.5 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			At September 30, 2021		At December 31, 2020
		(Dollars in Thousands)					(Dollars in Thousands)
Troubled debt restructurings:	Troubled debt restructurings:					Troubled debt restructurings:
On accrual	On accrual	$	16,770	$	11,483	On accrual	$	13,526	$	11,483
On nonaccrual	On nonaccrual	6,293		7,476		On nonaccrual	6,655		7,476
Total troubled debt restructurings	Total troubled debt restructurings	$	23,063	$	18,959	Total troubled debt restructurings	$	20,181	$	18,959

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
			(Dollars in Thousands)						(Dollars in Thousands)
Balance at beginning of period	Balance at beginning of period		$	18,959		$	23,180	Balance at beginning of period	$	20,797	$	23,180	$	18,959	$	23,180
Additions	Additions		4,980			497		Additions	$	846	$	1,586	$	5,318	$	3,283
Net charge-offs	Net charge-offs		(598)			(140)		Net charge-offs	$	(223)	$	(232)	$	(713)	$	(839)
Repayments	Repayments		(278)			(1,238)		Repayments	$	(1,239)	$	(7,483)	$	(3,383)	$	(8,573)

Balance at end of period	Balance at end of period		$	23,063		$	22,299	Balance at end of period	$	20,181	$	17,051	$	20,181	$	17,051

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.~~GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a ~~troubled debt restructured,~~TDR, including impairment accounting. This ~~troubled debt restructuring~~TDR 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,~~September 30, 2021, the Company granted ~~4,603~~4,095 short-term deferments on loan and ~~leases~~lease balances of ~~$1.1 billion~~$941.1 million of which ~~4,262~~4,018 loans and leases representing balances $885.4 million have returned to payment and 77 loans and leases representing balances of ~~$955.6 million returned to the payment status and 341 loans and leases representing balances of $125.7~~$55.7 million remain in ~~deferment.The~~deferment. The outstanding deferred loans and leases represent ~~1.7%~~0.8% of the Company's total loan and lease ~~balances.~~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.

The Company’s allowance methodology provides a quantification of ~~probable~~estimated losses in the portfolio. Under the current methodology, management estimates losses over the life of the loan using reasonable and supportable forecasts. Forecasts, loan

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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

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the model. For ~~March 31,~~September 30, 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 and nine months ended ~~March 31,~~September 30, 2021 and 2020.


		At and for the Three Months Ended March 31, 2021									At and for the Three Months Ended September 30, 2021
		Commercial Real Estate			Commercial			Consumer				Total				Commercial Real Estate			Commercial			Consumer			Total
		(In Thousands)									(In Thousands)
Balance at December 31, 2020		$	80,132		$	29,498		$	4,749			$	114,379
Balance at June 30, 2021															Balance at June 30, 2021	$	74,009		$	28,364		$	4,101		$	106,474

Charge-offs	Charge-offs	—			(2,140)			(3)				(2,143)			Charge-offs	—			(1,583)			(17)			(1,600)
Recoveries	Recoveries	—			331			52				383			Recoveries	1			308			36			345
Provision (credit) for loan and lease losses	Provision (credit) for loan and lease losses	(203)			(1,864)			(715)				(2,782)			Provision (credit) for loan and lease losses	(1,630)			101			(1,175)			(2,704)
Balance at March 31, 2021		$	79,929		$	25,825		$	4,083			$	109,837
Balance at September 30, 2021															Balance at September 30, 2021	$	72,380		$	27,190		$	2,945		$	102,515

Total loans and leases	Total loans and leases	$	3,790,341		$	2,324,202		$	1,153,009			$	7,267,552		Total loans and leases	$	3,909,011		$	1,869,686		$	1,152,997		$	6,931,694
Total allowance for loan and lease losses as a percentage of total loans and leases	Total allowance for loan and lease losses as a percentage of total loans and leases	2.11		%	1.11		%	0.35		%		1.51		%	Total allowance for loan and lease losses as a percentage of total loans and leases	1.85		%	1.45		%	0.26		%	1.48		%


		At and for the Three Months Ended March 31, 2020									At and for the Three Months Ended September 30, 2020
		Commercial Real Estate			Commercial			Consumer				Total				Commercial Real Estate			Commercial			Consumer			Total
		(In Thousands)									(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
Balance at June 30, 2020															Balance at June 30, 2020	$	90,011		$	24,938		$	4,604		$	119,553

Charge-offs	Charge-offs	—			(2,527)			(12)				(2,539)			Charge-offs	(70)			(5,429)			(12)			(5,511)
Recoveries	Recoveries	—			247			58				305			Recoveries	—			512			36			548
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
Provision (credit) for loan and lease losses															Provision (credit) for loan and lease losses	(2,721)			8,557			(455)			5,381
Balance at September 30, 2020															Balance at September 30, 2020	$	87,220		$	28,578		$	4,173		$	119,971

Total loans and leases	Total loans and leases	$	3,762,158		$	1,826,866		$	1,233,503			$	6,822,527		Total loans and leases	$	3,835,372		$	2,354,613		$	1,206,373		$	7,396,358
Total allowance for loan and lease losses as a percentage of total loans and leases	Total allowance for loan and lease losses as a percentage of total loans and leases	2.18		%	1.47		%	0.34		%		1.66		%	Total allowance for loan and lease losses as a percentage of total loans and leases	2.27		%	1.21		%	0.35		%	1.62		%



	At and for the Nine Months Ended September 30, 2021
	Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)
Balance at December 31, 2020	$	80,132		$	29,498		$	4,749		$	114,379


Charge-offs	(28)			(4,907)			(29)			(4,964)
Recoveries	12			1,127			215			1,354
Provision (credit) for loan and lease losses	(7,736)			1,472			(1,990)			(8,254)
Balance at September 30, 2021	$	72,380		$	27,190		$	2,945		$	102,515

Total loans and leases	$	3,909,011		$	1,869,686		$	1,152,997		$	6,931,694
Total allowance for loan and lease losses as a percentage of total loans and leases	1.85		%	1.45		%	0.26		%	1.48		%

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	At and for the Nine Months Ended September 30, 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
Balance at beginning of period, adjusted	41,979			22,154			3,581			67,714
Charge-offs	(70)			(9,750)			(33)			(9,853)
Recoveries	94			1,055			124			1,273
Provision for loan and lease losses	45,217			15,119			501			60,837
Balance at September 30, 2020	$	87,220		$	28,578		$	4,173		$	119,971
Total loans and leases	$	3,835,372		$	2,354,613		$	1,206,373		$	7,396,358
Total allowance for loan and lease losses as a percentage of total loans and leases	2.27		%	1.21		%	0.35		%	1.62		%

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,~~September 30, 2021, the allowance for loan and lease losses decreased to ~~$109.8~~$102.5 million, or ~~1.51%~~1.48% 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~~Both figures exclude 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,~~September 30, 2021 and 2020 were ~~$1.8~~$1.3 million and ~~$2.2~~$5.0 million, respectively. As a percentage of average loans and leases, annualized net charge-offs for the three months ended ~~March 31,~~September 30, 2021 and 2020 were ~~0.10%~~0.07% and ~~0.13%~~0.27%, respectively. The decrease in the net charge-off for the three months ended ~~March 31,~~September 30, 2021 was primarily due to the decrease in the net charge-off by $4.2 million on commercial loans, partially offset by an increase in the net charge offs 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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loans.

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							At September 30, 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			Amount		Percent of Allowance in Each Category to Total Allowance		Percent of Loans in Each Category to Total Loans		Amount		Percent of Allowance in Each Category to Total Allowance		Percent of Loans in Each Category to Total Loans
		(Dollars in Thousands)													(Dollars in Thousands)
Commercial real estate	Commercial real estate	$	46,945	42.7	%	35.6	%	$	46,357	40.6	%	35.4	%	Commercial real estate	$	44,083	43.0	%	39.1	%	$	46,357	40.6	%	35.4	%
Multi-family mortgage	Multi-family mortgage	22,361		20.4	%	13.8	%	22,559		19.7	%	13.9	%	Multi-family mortgage	19,627		19.1	%	14.5	%	22,559		19.7	%	13.9	%
Construction	Construction	10,623		9.7	%	2.7	%	11,216		9.8	%	3.2	%	Construction	8,670		8.5	%	2.8	%	11,216		9.8	%	3.2	%
Total commercial real estate loans	Total commercial real estate loans	79,929		72.8	%	52.1	%	80,132		70.1	%	52.5	%	Total commercial real estate loans	72,380		70.6	%	56.4	%	80,132		70.1	%	52.5	%
Commercial	Commercial	8,584		7.8	%	16.6	%	8,089		7.1	%	15.6	%	Commercial	7,907		7.7	%	10.6	%	8,089		7.1	%	15.6	%
Equipment financing	Equipment financing	17,122		15.6	%	14.7	%	21,292		18.6	%	15.0	%	Equipment financing	19,169		18.7	%	15.7	%	21,292		18.6	%	15.0	%
Condominium association	Condominium association	119		0.1	%	0.7	%	117		0.1	%	0.7	%	Condominium association	114		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	%
Total commercial loans														Total commercial loans	27,190		26.5	%	27.0	%	29,498		25.8	%	31.3	%
Residential mortgage	Residential mortgage	1,797		1.6	%	10.8	%	1,967		1.7	%	10.9	%	Residential mortgage	1,376		1.4	%	11.4	%	1,967		1.7	%	10.9	%
Home equity	Home equity	2,020		1.8	%	4.6	%	2,504		2.2	%	4.8	%	Home equity	1,449		1.4	%	4.7	%	2,504		2.2	%	4.8	%
Other consumer	Other consumer	266		0.2	%	0.5	%	278		0.2	%	0.5	%	Other consumer	120		0.1	%	0.5	%	278		0.2	%	0.5	%
Total consumer loans	Total consumer loans	4,083		3.6	%	15.9	%	4,749		4.1	%	16.2	%	Total consumer loans	2,945		2.9	%	16.6	%	4,749		4.1	%	16.2	%

Total	Total	$	109,837	99.9	%	100.0	%	$	114,379	100.0	%	100.0	%	Total	$	102,515	100.0	%	100.0	%	$	114,379	100.0	%	100.0	%

Management believes that the allowance for loan and lease losses as of September 30, 2021 is appropriate.

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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~~$210.1 million, or ~~108.3%~~23.7% on an annualized basis, to ~~$861.3 million~~$1.0 billion as of ~~March 31,~~September 30, 2021 from $1.2 billion as of December 31, 2020. The decrease was driven by a decreases in ~~total cash, cash equivalents.~~short-term investments and investment securities available-for-sale. Cash, cash equivalents, and investment securities were ~~10.1%~~11.7% of total assets as of ~~March 31,~~September 30, 2021, compared to 13.2% of total assets at December 31, 2020.

~~Table of Contents~~

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					At September 30, 2021				At December 31, 2020
		Amortized Cost		Fair Value		Amortized Cost		Fair Value			Amortized Cost		Fair Value		Amortized Cost		Fair Value
		(In Thousands)									(In Thousands)
Investment securities available-for-sale:	Investment securities available-for-sale:									Investment securities available-for-sale:
GSE debentures	GSE debentures	$	273,315	$	271,526	$	273,820	$	278,645	GSE debentures	$	234,078	$	233,286	$	273,820	$	278,645
GSE CMOs	GSE CMOs	39,980		40,925		44,937		46,028		GSE CMOs	31,210		31,828		44,937		46,028
GSE MBSs	GSE MBSs	271,231		276,066		312,658		323,609		GSE MBSs	217,279		221,817		312,658		323,609

Corporate debt obligations	Corporate debt obligations	22,269		23,247		22,299		23,467		Corporate debt obligations	22,209		22,969		22,299		23,467
U.S. Treasury bonds	U.S. Treasury bonds	119,817		117,641		70,339		73,577		U.S. Treasury bonds	223,273		221,622		70,339		73,577

Foreign government obligations	Foreign government obligations	$	500	$	496	500		496		Foreign government obligations	$	500	$	498	500		496
Total investment securities available-for-sale	Total investment securities available-for-sale	$	727,112	$	729,901	$	724,553	$	745,822	Total investment securities available-for-sale	$	728,549	$	732,020	$	724,553	$	745,822

Equity securities held-for-trading	Equity securities held-for-trading			$	518			$	526	Equity securities held-for-trading			$	—			$	526

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 ~~$46.2~~$146.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$25.5~~$175.1 million for the same period in 2020. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company did not sell any investment securities available for sale, compared to ~~$86.4~~$131.8 million for the

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same period in 2020. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company purchased ~~$49.5~~$153.2 million of investment securities available-for-sale, compared to ~~$273.3~~$488.8 million for the same period in 2020.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2021 the Company did not own held-to-maturity securities. ~~Compared to~~For the ~~three~~nine months ended ~~March 31,~~September 30, 2020 the Company had maturities, calls and principal repayments of $6.3 million. The Company ~~made no~~did not make any sales or purchases of held-to-maturity securities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, all held-to-maturity securities were transferred to the available-for-sale portfolio.

As of ~~March 31,~~September 30, 2021, the fair value of all investment securities available-for-sale was ~~$729.9~~$732.0 million and carried a total of ~~$2.8~~$3.5 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,~~September 30, 2021, ~~$261.6~~$319.6 million, or ~~35.8%~~43.7%, of the portfolio, had gross unrealized losses of ~~$10.8~~$7.9 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.

~~Table of Contents~~

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,~~September 30, 2021, the excess balance of capital stock was ~~$1.1~~$0.1 million, as compared to a $1.0 million excess balance as of December 31, 2020.

As of ~~March 31,~~September 30, 2021, the Company owned stock in the FHLBB with a carrying value of ~~$21.9~~$9.6 million, a decrease of ~~$9.4~~$21.7 million from $31.3 million as of December 31, 2020. As of ~~March 31,~~September 30, 2021, the FHLBB had total assets of ~~$36.7~~$34.4 billion and total capital of ~~$2.7~~$2.6 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,~~September 30, 2021 and was classified as "adequately capitalized" by its regulator, based on the FHLBB's financial information as of ~~December 31, 2020 .~~June 30, 2021.

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,~~September 30, 2021 and December 31, 2020, the Company owned stock in the Federal Reserve Bank of Boston with a carrying value of $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,~~September 30, 2021, the Company owned stock in other restricted equity securities with a carrying value of $0.3 million, unchanged from December 31, 2020.

Deposits

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


		At March 31, 2021						At December 31, 2020							At September 30, 2021						At December 31, 2020
		Amount		Percent of Total		Weighted Average Rate		Amount		Percent of Total		Weighted Average Rate			Amount		Percent of Total		Weighted Average Rate		Amount		Percent of Total		Weighted Average Rate
		(Dollars in Thousands)													(Dollars in Thousands)
Non-interest-bearing deposits:	Non-interest-bearing deposits:													Non-interest-bearing deposits:
Demand checking accounts	Demand checking accounts	$	1,724,170	25.1	%	—	%	$	1,592,205	23.0	%	—	%	Demand checking accounts	$	1,816,116	26.4	%	—	%	$	1,592,205	23.0	%	—	%
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
NOW accounts	NOW accounts	481,988		7.0	%	0.09	%	513,948		7.4	%	0.09	%	NOW accounts	513,032		7.5	%	0.09	%	513,948		7.4	%	0.09	%
Savings accounts	Savings accounts	724,504		10.6	%	0.14	%	701,659		10.2	%	0.13	%	Savings accounts	823,095		12.0	%	0.12	%	701,659		10.2	%	0.13	%
Money market accounts	Money market accounts	2,192,468		31.9	%	0.28	%	2,018,977		29.2	%	0.31	%	Money market accounts	2,393,362		34.8	%	0.26	%	2,018,977		29.2	%	0.31	%
Certificate of deposit accounts	Certificate of deposit accounts	1,273,105		18.5	%	1.13	%	1,389,998		20.2	%	1.44	%	Certificate of deposit accounts	1,141,861		16.6	%	0.76	%	1,389,998		20.2	%	1.44	%
Brokered deposit accounts	Brokered deposit accounts	470,551		6.9	%	0.30	%	693,909		10.0	%	0.39	%	Brokered deposit accounts	185,544		2.7	%	0.01	%	693,909		10.0	%	0.39	%
Total interest-bearing deposits	Total interest-bearing deposits	5,142,616		74.9	%	0.45	%	5,318,491		77.0	%	0.57	%	Total interest-bearing deposits	5,056,894		73.6	%	0.33	%	5,318,491		77.0	%	0.57	%
Total deposits	Total deposits	$	6,866,786	100.0	%	0.34	%	$	6,910,696	100.0	%	0.44	%	Total deposits	$	6,873,010	100.0	%	0.24	%	$	6,910,696	100.0	%	0.44	%

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Total deposits decreased ~~$43.9~~$37.7 million to $6.87 billion as of ~~March 31,~~September 30, 2021, compared to ~~$6.91~~$6.9 billion as of December 31, 2020. Deposits as a percentage of total assets increased to ~~80.2%~~82.7% as of ~~March 31,~~September 30, 2021, compared to 77.3% as of December 31, 2020.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, core deposits increased ~~$296.3~~$718.8 million. The ratio of core deposits to total deposits increased from 69.8% as of December 31, 2020 to ~~74.6%~~80.7% as of ~~March 31,~~September 30, 2021, primarily due to an increase in demand checking, savings and money market accounts.

Certificate of deposit accounts decreased ~~$116.9~~$248.1 million to ~~$1.3~~$1.1 billion as of ~~March 31,~~September 30, 2021, compared to $1.4 billion as of December 31, 2020. Certificate of deposit accounts decreased as a percentage of total deposits to ~~18.5%~~16.6% as of ~~March 31,~~September 30, 2021 from 20.2% as of December 31, 2020.

Brokered deposits decreased ~~$223.4~~$508.4 million to ~~$470.6~~$185.5 million as of ~~March 31,~~September 30, 2021, compared to $693.9 million as of December 31, 2020. Brokered deposits decreased as a percentage of total deposits to ~~6.9%~~2.7% as of ~~March 31,~~September 30, 2021 from 10.0% as of December 31, 2020. The decrease in brokered deposits was driven by ~~market rates.~~the maturity of brokered certificate of deposit accounts. 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 total amount of brokered deposits the Company may hold to 15% of total assets.

~~Table of Contents~~

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,													Three Months Ended September 30,
		2021						2020							2021						2020
		Average Balance		Percent of Total Average Deposits		Weighted Average Rate		Average Balance		Percent of Total Average Deposits		Weighted Average Rate			Average Balance		Percent of Total Average Deposits		Weighted Average Rate		Average Balance		Percent of Total Average Deposits		Weighted Average Rate
		(Dollars in Thousands)													(Dollars in Thousands)
Core deposits:	Core deposits:													Core deposits:
Non-interest-bearing demand checking accounts	Non-interest-bearing demand checking accounts	$	1,643,373	23.9	%	—	%	$	1,134,314	19.4	%	—	%	Non-interest-bearing demand checking accounts	$	1,827,501	26.6	%	—	%	$	1,569,411	23.6	%	—	%
NOW accounts	NOW accounts	477,893		7.0	%	0.11	%	359,641		6.2	%	0.13	%	NOW accounts	502,093		7.3	%	0.09	%	427,009		6.4	%	0.12	%
Savings accounts	Savings accounts	712,728		10.4	%	0.13	%	626,945		10.7	%	0.41	%	Savings accounts	785,657		11.4	%	0.12	%	688,223		10.4	%	0.15	%
Money market accounts	Money market accounts	2,084,503		30.4	%	0.29	%	1,678,649		28.8	%	1.02	%	Money market accounts	2,387,080		34.7	%	0.27	%	1,855,803		28.0	%	0.36	%
Total core deposits	Total core deposits	4,918,497		71.7	%	0.15	%	3,799,549		65.1	%	0.53	%	Total core deposits	5,502,331		80.0	%	0.14	%	4,540,446		68.4	%	0.18	%
Certificate of deposit accounts	Certificate of deposit accounts	1,328,112		19.4	%	1.27	%	1,682,900		28.8	%	2.21	%	Certificate of deposit accounts	1,160,113		16.9	%	0.83	%	1,536,969		23.2	%	1.82	%
Brokered deposit accounts	Brokered deposit accounts	610,824		8.9	%	0.47	%	358,003		6.1	%	2.23	%	Brokered deposit accounts	216,112		3.1	%	0.30	%	562,112		8.4	%	1.07	%
Total deposits	Total deposits	$	6,857,433	100.0	%	0.39	%	$	5,840,452	100.0	%	1.11	%	Total deposits	$	6,878,556	100.0	%	0.27	%	$	6,639,527	100.0	%	0.64	%

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	Nine Months Ended September 30,
	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	$	1,752,640	25.4	%	—	%	$	1,405,871	22.4	%	—	%
NOW accounts	493,378		7.2	%	0.11	%	394,057		6.3	%	0.12	%
Savings accounts	757,864		11.0	%	0.13	%	659,754		10.5	%	0.25	%
Money market accounts	2,240,968		32.5	%	0.27	%	1,773,234		28.2	%	0.60	%
Total core deposits	5,244,850		76.1	%	0.15	%	4,232,916		67.4	%	0.30	%
Certificate of deposit accounts	1,237,682		17.9	%	1.05	%	1,618,818		25.7	%	2.03	%
Brokered deposit accounts	413,588		6.0	%	0.40	%	434,409		6.9	%	1.65	%
Total deposits	$	6,896,120	100.0	%	0.32	%	$	6,286,143	100.0	%	0.84	%

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had outstanding certificates of deposit of $100,000 or more, maturing as follows:


		At March 31, 2021				At December 31, 2020					At September 30, 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:									Maturity period:
Six months or less	Six months or less	$	442,310	1.27	%	$	459,828	1.63	%	Six months or less	$	324,760	0.62	%	$	459,828	1.63	%
Over six months through 12 months	Over six months through 12 months	226,963		0.68	%	302,576		1.15	%	Over six months through 12 months	271,602		0.65	%	302,576		1.15	%
Over 12 months	Over 12 months	159,610		1.71	%	154,343		1.83	%	Over 12 months	134,211		1.56	%	154,343		1.83	%
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	%	Total certificate of deposit of $100,000 or more	$	730,573	0.80	%	$	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,							Three Months Ended September 30,					Nine Months Ended September 30,
		2021			2020						2021			2020			2021			2020
		(Dollars in Thousands)						(Dollars in Thousands)
Borrowed funds:	Borrowed funds:									Borrowed funds:
Average balance outstanding	Average balance outstanding	$	664,692		$	947,123				Average balance outstanding	$	279,263		$	1,147,521		$	449,302		$	1,117,167
Maximum amount outstanding at any month-end during the period	Maximum amount outstanding at any month-end during the period	686,346			1,291,804					Maximum amount outstanding at any month-end during the period	308,120			1,192,020			686,346			1,406,669
Balance outstanding at end of period	Balance outstanding at end of period	546,003			1,291,804					Balance outstanding at end of period	267,539			1,005,045			267,539			1,005,045
Weighted average interest rate for the period	Weighted average interest rate for the period	1.60		%	2.33		%			Weighted average interest rate for the period	3.40		%	1.43		%	2.06		%	1.74		%
Weighted average interest rate at end of period	Weighted average interest rate at end of period	2.33		%	1.76		%			Weighted average interest rate at end of period	2.22		%	1.81		%	2.22		%	1.81		%

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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 decreased by ~~$270.2~~$534.9 million to ~~$378.6~~$114.0 million as of ~~March 31,~~September 30, 2021 from the December 31, 2020 balance of $648.8 million. ~~The decrease in FHLBB borrowings was primarily due to 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,
2021

December 31, 2020

Issue Date

Rate

Maturity Date

Next Call Date

September 30,
2021

December 31, 2020

(Dollars in Thousands)

June 26, 2003

Variable;
3-month LIBOR + 3.10%

June 26, 2033

June 25, 2021

4,853

4,848

June 26, 2003

Variable;
3-month LIBOR + 3.10%

June 26, 2033

December 25, 2021

4,863

4,848

March 17, 2004

Variable;
3-month LIBOR + 2.79%

March 17, 2034

June 16, 2021

4,779

4,772

March 17, 2004

Variable;
3-month LIBOR + 2.79%

March 17, 2034

December 16, 2021

4,795

4,772

September 15, 2014

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

September 15, 2029

September 15, 2024

74,151

74,126

September 15, 2014

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

September 15, 2029

September 15, 2024

74,201

74,126

Total

83,783

83,746

Total

83,859

83,746

The above carrying amounts of the subordinated debentures included ~~$0.4~~$0.3 million of accretion adjustments and $0.8 million of capitalized debt issuance costs as of ~~March 31,~~September 30, 2021. This compares to $0.4 million of accretion adjustments and $0.9 million of capitalized debt issuance costs as of December 31, 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 decreased ~~$4.1~~$18.0 million to ~~$53.6~~$39.7 million as of ~~March 31,~~September 30, 2021 from $57.7 million as of December 31, 2020.

The Company has access to a $12.0 million committed line of credit as of ~~March 31,~~September 30, 2021. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company did not have any borrowings on this committed line of credit.

The Banks also have access to funding through several uncommitted lines of credit of ~~$746.0~~$865.0 million. As of ~~March 31,~~September 30, 2021, the Company had $30.0 million borrowings on outstanding uncommitted lines of credit as compared to $30.0 million as of December 31, 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 uses interest rate futures that are designated and qualify as cash flow 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,~~September 30, 2021 and December 31, 2020:


		At March 31, 2021			At December 31, 2020				At September 30, 2021			At December 31, 2020
		(Dollars in Thousands)							(Dollars in Thousands)
Loan level derivatives (Notional principal amounts):	Loan level derivatives (Notional principal amounts):							Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	Receive fixed, pay variable	$	1,232,482		$	1,214,146		Receive fixed, pay variable	$	1,188,153		$	1,214,146
Pay fixed, receive variable	Pay fixed, receive variable	1,232,482			1,214,146			Pay fixed, receive variable	1,188,153			1,214,146
Risk participation-out agreements	Risk participation-out agreements	263,430			252,655			Risk participation-out agreements	262,524			252,655
Risk participation-in agreements	Risk participation-in agreements	60,289			60,619			Risk participation-in agreements	59,629			60,619
Foreign exchange contracts (Notional amounts):	Foreign exchange contracts (Notional amounts):							Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	Buys foreign currency, sells U.S. currency	$	1,416		$	1,266		Buys foreign currency, sells U.S. currency	$	1,680		$	1,266
Sells foreign currency, buys U.S. currency	Sells foreign currency, buys U.S. currency	1,422			1,273			Sells foreign currency, buys U.S. currency	1,681			1,273
Fixed weighted average interest rate from the Company to counterparty	Fixed weighted average interest rate from the Company to counterparty	3.06		%	3.07		%	Fixed weighted average interest rate from the Company to counterparty	3.00		%	3.07		%
Floating weighted average interest rate from counterparty to the Company	Floating weighted average interest rate from counterparty to the Company	0.93		%	0.99		%	Floating weighted average interest rate from counterparty to the Company	0.85		%	0.99		%
Weighted average remaining term to maturity (in months)	Weighted average remaining term to maturity (in months)	83			85			Weighted average remaining term to maturity (in months)	78			85
Fair value:	Fair value:							Fair value:
Recognized as an asset:	Recognized as an asset:							Recognized as an asset:

Interest rate derivatives	Interest rate derivatives	$	10		$	8		Interest rate derivatives	$	3		$	8

Loan level derivatives	Loan level derivatives	84,128			131,328			Loan level derivatives	82,025			131,328
Risk participation-out agreements	Risk participation-out agreements	1,019			1,843			Risk participation-out agreements	1,125			1,843
Foreign exchange contracts	Foreign exchange contracts	99			156			Foreign exchange contracts	20			156
Recognized as a liability:	Recognized as a liability:							Recognized as a liability:

Derivatives not designated as hedging instruments:								Derivatives not designated as hedging instruments:
Interest rate derivatives	Interest rate derivatives	$	2		$	—		Interest rate derivatives	$	2		$	—
Loan level derivatives	Loan level derivatives	84,128			131,328			Loan level derivatives	82,025			131,328
Risk participation-in agreements	Risk participation-in agreements	205			361			Risk participation-in agreements	201			361
Foreign exchange contracts	Foreign exchange contracts	93			148			Foreign exchange contracts	19			148

Stockholders' Equity and Dividends

The Company's total stockholders' equity was ~~$945.4~~$978.5 million as of ~~March 31,~~September 30, 2021, representing a ~~$3.6~~$36.7 million increase compared to $941.8 million at December 31, 2020. The increase primarily reflects net income attributable to the Company of ~~$26.5~~$86.9 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, offset by the dividends paid by the Company of $27.8 million, the unrealized loss on securities available-for-sale of ~~$14.4~~$13.9 million, and ~~dividends paid by~~ the ~~Company~~common stock repurchase of ~~$9.0~~$10 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

Stockholders' equity represented ~~11.04%~~11.77% of total assets as of ~~March 31,~~September 30, 2021 and 10.53% of total assets as of December 31, 2020. Tangible stockholders' equity (total stockholders' equity less goodwill and identified intangible assets, net) represented ~~9.31%~~10.01% of tangible assets (total assets less goodwill and identified intangible assets, net) as of ~~March 31,~~September 30, 2021 and 8.86% as of December 31, 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. On March 9, 2020, the Board of Directors approved an increase in the repurchase amount of $10.0 million bringing the total authorized amount to $20.0 million. Effective March 24, 2020, the Company suspended the Program. On October 28, 2020, the Board authorized the resumption of the Program. As of December 31, 2020, the Company has repurchased 1,715,730 shares at a weighted average price of $11.66. As of December 31, 2020, the Company had completed the program.

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October 28, 2020, the Board of Directors authorized the resumption of the Program. In 2020, 1,715,730 shares of the Company's common stock were repurchased by the Company at a weighted average price of $11.66.

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 commencing on February 1, 2021 and ending on December 31, 2021. As of September 30, 2021, 690,253 shares of the Company's common stock were repurchased by the Company at a weighted average price of $14.46.

The dividend payout ratio was ~~33.99%~~32.54% for the three months ended ~~March 31,~~September 30, 2021, compared to ~~53.10%~~48.67% for the same period in 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 increased ~~$7.4~~$4.8 million to ~~$69.1~~$70.7 million for the three months ended ~~March 31,~~September 30, 2021 from ~~$61.7~~$65.9 million for the three months ended ~~March 31,~~September 30, 2020. This increase reflects a ~~$4.6~~$7.8 million decrease in interest expense on deposits and borrowings, which is reflective of the sustained, low interest rate environment, offset by a $1.9 million decrease in interest income on loans and leases and a ~~$0.5~~$1.1 million decrease in interest income on investment ~~securities, offset by a $12.5 million decrease in interest expense on deposit and borrowings, which is reflective of the sustained, low interest rate environment.~~securities. Refer to “Results of Operations - Comparison of the Three-Month Period Ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020 — Interest Income” and “Results of Operations - Comparison of the Three-Month Period Ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020 — Interest Expense -Deposit and Borrowed Funds” below for more details.

Net interest income increased $19.0 million to $210.9 million for the nine months ended September 30, 2021 from $191.9 million for the nine months ended September 30, 2020. This overall increase reflects a $30.7 million decrease in interest expense on deposit and borrowings, which is reflective of the various portfolios repricing and replacing balances into the current interest rate environment, offset by a $8.8 million decrease in interest income on loans and leases and a $2.9 million decrease in interest income on investment securities. Refer to “Results of Operations - Comparison of the Six-Month Period Ended September 30, 2021 and September 30, 2020 — Interest Income” and “Results of Operations - Comparison of the Six-Month Period Ended September 30, 2021 and September 30, 2020 — Interest Expense Deposit and Borrowed Funds” below for more details.

Net interest margin increased by 845 basis points to ~~3.39%~~3.53% for the three months ended ~~March 31,~~September 30, 2021 from ~~3.31%~~3.08% for the three months ended ~~March 31,~~September 30, 2020, of which 17 basis points is attributed to additional fee income received from the

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PPP. The Company's weighted average interest rate on loans (prior to purchase accounting adjustments) decreased to 4.26% for the three months ended September 30, 2021 from 4.12% for the three months ended September 30, 2020.

Net interest margin increased by 33 basis points to 3.48% for the nine months ended September 30, 2021 from 3.15% for the nine months ended September 30, 2020. The Company's weighted average interest rate on loans (prior to purchase accounting adjustments) decreased to ~~4.13%~~4.20% for the nine months ended September 30, 2021 from 4.35% for the nine months ended September 30, 2020.

The yield on interest-earning assets increased to 3.91% for the three months ended ~~March 31,~~September 30, 2021 from ~~4.71%~~3.79% for the three months ended ~~March 31,~~September 30, 2020. ~~The~~This increase ~~in net interest margin over~~is the ~~period is a~~ result of ~~additional fee income from participation~~higher yields on loans and leases and higher yields on investments. During the three months ended September 30, 2021, the Company recorded $1.6 million in prepayment penalties and late charges, which contributed 8 basis points to yields on interest-earning assets in the ~~PPP.~~three months ended September 30, 2021, compared to $1.0 million, or 5 basis points, for the three months ended September 30, 2020.

The yield on interest-earning assets decreased to ~~3.80%~~3.86% for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 from ~~4.46%~~4.04% for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. This decrease is the result of lower yields on loans and leases and ~~lower yields on~~ investments. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company recorded ~~$1.2~~$4.2 million in prepayment penalties and late charges, which contributed 67 basis points to yields on interest-earning assets in the ~~three~~nine months ended ~~March 31, 2021, compared to $0.8~~September 30, 2021. The company recorded $2.9 million ~~or 4~~in prepayment penalties and late charges, which contributed 5 basis points ~~for~~to yields on interest-earning assets in the ~~three~~nine months ended ~~March 31,~~September 30, 2020.

The overall cost of funds (including non-interest-bearing demand checking accounts) decreased 7936 basis points to ~~0.50%~~0.39% for the three months ended ~~March 31,~~September 30, 2021 from ~~1.29%~~0.75% for the three months ended ~~March 31,~~September 30, 2020. Refer to "Financial Condition - Borrowed Funds" above for more details.

~~Table of Contents~~

Management seeks to position the balance sheet to be neutral to asset sensitive changes in interest rates. From 2017 through 2019, short term interest rates rose while at the same time net interest income, net interest spread, and net interest margin also increased. During the first 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,~~factors, 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 and nine months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 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, 2021						March 31, 2020							September 30, 2021						September 30, 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:													Assets:
Interest-earning assets:	Interest-earning assets:													Interest-earning assets:
Debt securities	Debt securities	$	754,699	$	3,118	1.65	%	$	605,885	$	3,024	2.00	%	Debt securities	$	713,593	$	2,967	1.66	%	$	851,608	$	3,746	1.76	%
Marketable and restricted equity securities	Marketable and restricted equity securities	45,673		301		2.64	%	58,881		786		5.33	%	Marketable and restricted equity securities	28,877		313		4.33	%	66,154		670		4.06	%
Short-term investments	Short-term investments	191,751		39		0.08	%	84,309		209		0.99	%	Short-term investments	220,110		83		0.15	%	192,446		46		0.10	%
Total investments	Total investments	992,123		3,458		1.39	%	749,075		4,019		2.15	%	Total investments	962,580		3,363		1.40	%	1,110,208		4,462		1.61	%
Commercial real estate loans (2)	Commercial real estate loans (2)	3,785,897		34,245		3.62	%	3,697,011		40,468		4.33	%	Commercial real estate loans (2)	3,851,677		35,124		3.57	%	3,831,826		35,615		3.64	%
Commercial loans (2)	Commercial loans (2)	1,249,824		12,746		4.08	%	783,309		8,328		4.21	%	Commercial loans (2)	901,862		11,715		5.09	%	1,281,202		10,677		3.27	%
Equipment financing (2)	Equipment financing (2)	1,079,039		18,043		6.69	%	1,052,846		18,946		7.20	%	Equipment financing (2)	1,079,059		17,725		6.57	%	1,089,058		19,018		6.99	%
Residential mortgage loans (2)	Residential mortgage loans (2)	780,785		7,232		3.71	%	810,583		7,934		3.92	%	Residential mortgage loans (2)	788,874		6,989		3.54	%	814,559		7,860		3.86	%
Other consumer loans (2)	Other consumer loans (2)	375,590		2,795		3.02	%	417,815		3,955		3.79	%	Other consumer loans (2)	364,914		2,830		3.07	%	395,990		3,127		3.13	%
Total loans and leases	Total loans and leases	7,271,135		75,061		4.13	%	6,761,564		79,631		4.71	%	Total loans and leases	6,986,386		74,383		4.26	%	7,412,635		76,297		4.12	%
Total interest-earning assets	Total interest-earning assets	8,263,258		78,519		3.80	%	7,510,639		83,650		4.46	%	Total interest-earning assets	7,948,966		77,746		3.91	%	8,522,843		80,759		3.79	%
Allowance for loan and lease losses	Allowance for loan and lease losses	(115,458)						(68,581)						Allowance for loan and lease losses	(108,719)						(120,214)
Non-interest-earning assets	Non-interest-earning assets	566,358						523,768						Non-interest-earning assets	520,388						616,043
Total assets	Total assets	$	8,714,158					$	7,965,826					Total assets	$	8,360,635					$	9,018,672
Liabilities and Stockholders' Equity:	Liabilities and Stockholders' Equity:													Liabilities and Stockholders' Equity:
Interest-bearing liabilities:	Interest-bearing liabilities:													Interest-bearing liabilities:
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
NOW accounts	NOW accounts	$	477,893	130		0.11	%	$	359,641	116		0.13	%	NOW accounts	$	502,093	116		0.09	%	$	427,009	128		0.12	%
Savings accounts	Savings accounts	712,728		235		0.13	%	626,945		643		0.41	%	Savings accounts	785,657		248		0.12	%	688,223		258		0.15	%
Money market accounts	Money market accounts	2,084,503		1,486		0.29	%	1,678,649		4,241		1.02	%	Money market accounts	2,387,080		1,616		0.27	%	1,855,803		1,658		0.36	%
Certificate of deposit accounts	Certificate of deposit accounts	1,328,112		4,154		1.27	%	1,682,900		9,251		2.21	%	Certificate of deposit accounts	1,160,113		2,430		0.83	%	1,536,969		7,022		1.82	%
Brokered deposit accounts	Brokered deposit accounts	610,824		702		0.47	%	358,003		1,989		2.23	%	Brokered deposit accounts	216,112		161		0.30	%	562,112		1,517		1.07	%
Total interest-bearing deposits (3)	Total interest-bearing deposits (3)	5,214,060		6,707		0.52	%	4,706,138		16,240		1.39	%	Total interest-bearing deposits (3)	5,051,055		4,571		0.36	%	5,070,116		10,583		0.83	%
Advances from the FHLBB	Advances from the FHLBB	488,537		1,370		1.12	%	772,462		4,097		2.10	%	Advances from the FHLBB	119,043		1,152		3.79	%	944,865		2,876		1.19	%
Subordinated debentures and notes	Subordinated debentures and notes	83,764		1,242		5.93	%	83,609		1,284		6.14	%	Subordinated debentures and notes	83,840		1,242		5.92	%	83,687		1,246		5.96	%
Other borrowed funds	Other borrowed funds	92,391		39		0.17	%	91,052		189		0.84	%	Other borrowed funds	76,380		33		0.17	%	118,969		61		0.21	%
Total borrowed funds	Total borrowed funds	664,692		2,651		1.60	%	947,123		5,570		2.33	%	Total borrowed funds	279,263		2,427		3.40	%	1,147,521		4,183		1.43	%
Total interest-bearing liabilities	Total interest-bearing liabilities	5,878,752		9,358		0.65	%	5,653,261		21,810		1.55	%	Total interest-bearing liabilities	5,330,318		6,998		0.52	%	6,217,637		14,766		0.94	%
Non-interest-bearing liabilities:	Non-interest-bearing liabilities:													Non-interest-bearing liabilities:
Non-interest-bearing demand checking accounts (3)	Non-interest-bearing demand checking accounts (3)	1,643,373						1,134,314						Non-interest-bearing demand checking accounts (3)	1,827,501						1,569,411
Other non-interest-bearing liabilities	Other non-interest-bearing liabilities	245,551						232,113						Other non-interest-bearing liabilities	224,445						296,992
Total liabilities	Total liabilities	7,767,676						7,019,688						Total liabilities	7,382,264						8,084,040
Total stockholders' equity	Total stockholders' equity	946,482						946,138						Total stockholders' equity	978,371						934,632

Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	8,714,158					$	7,965,826					Total liabilities and stockholders' equity	$	8,360,635					$	9,018,672
Net interest income (tax-equivalent basis) / Interest-rate spread (4)	Net interest income (tax-equivalent basis) / Interest-rate spread (4)			69,161		3.15	%			61,840		2.91	%	Net interest income (tax-equivalent basis) / Interest-rate spread (4)			70,748		3.39	%			65,993		2.85	%
Less adjustment of tax-exempt income	Less adjustment of tax-exempt income			52						128				Less adjustment of tax-exempt income			51						55
Net interest income	Net interest income			$	69,109					$	61,712			Net interest income			$	70,697					$	65,938
Net interest margin (5)	Net interest margin (5)					3.39	%					3.31	%	Net interest margin (5)					3.53	%					3.08	%

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

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

(3) Including non-interest-bearing checking accounts, the average interest rate on total deposits was ~~0.40%~~0.26% and ~~1.12%~~0.63% in the three months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 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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	Nine Months Ended
	September 30, 2021						September 30, 2020
	Average Balance		Interest (1)		Average Yield/ Cost		Average Balance		Interest (1)		Average Yield/ Cost
	(Dollars in Thousands)
Assets:
Interest-earning assets:
Debt securities	$	729,623	$	9,206	1.68	%	$	744,065	$	10,489	1.88	%
Marketable and restricted equity securities	36,451		847		3.10	%	65,367		2,371		4.84	%
Short-term investments	215,496		164		0.10	%	174,177		354		0.27	%
Total investments	981,570		10,217		1.39	%	983,609		13,214		1.79	%
Commercial real estate loans (2)	3,806,405		103,689		3.59	%	3,763,750		112,912		3.94	%
Commercial loans (2)	1,087,924		37,501		4.55	%	1,100,346		29,455		3.52	%
Equipment financing (2)	1,077,522		53,731		6.65	%	1,070,433		56,937		7.09	%
Residential mortgage loans (2)	786,015		21,148		3.59	%	813,196		23,862		3.91	%
Other consumer loans (2)	369,744		8,458		3.05	%	408,332		10,235		3.33	%
Total loans and leases	7,127,610		224,527		4.20	%	7,156,057		233,401		4.35	%
Total interest-earning assets	8,109,180		234,744		3.86	%	8,139,666		246,615		4.04	%
Allowance for loan and lease losses	(111,936)						(101,064)
Non-interest-earning assets	539,816						580,873
Total assets	$	8,537,060					$	8,619,475
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	493,378	392		0.11	%	$	394,057	358		0.12	%
Savings accounts	757,864		731		0.13	%	659,754		1,258		0.25	%
Money market accounts	2,240,968		4,599		0.27	%	1,773,234		7,973		0.60	%
Certificate of deposit accounts	1,237,682		9,686		1.05	%	1,618,818		24,637		2.03	%
Brokered deposit accounts	413,588		1,250		0.40	%	434,409		5,375		1.65	%
Total interest-bearing deposits (3)	5,143,480		16,658		0.43	%	4,880,272		39,601		1.08	%
Advances from the FHLBB	284,540		3,185		1.48	%	939,821		10,724		1.50	%
Subordinated debentures and notes	83,802		3,726		5.93	%	83,648		3,793		6.05	%
Other borrowed funds	80,960		103		0.17	%	93,698		294		0.42	%
Total borrowed funds	449,302		7,014		2.06	%	1,117,167		14,811		1.74	%
Total interest-bearing liabilities	5,592,782		23,672		0.57	%	5,997,439		54,412		1.21	%
Non-interest-bearing liabilities:
Non-interest-bearing demand checking accounts (3)	1,752,640						1,405,871
Other non-interest-bearing liabilities	230,834						280,499
Total liabilities	7,576,256						7,683,809
Total stockholders' equity	960,804						935,666

Total liabilities and stockholders' equity	$	8,537,060					$	8,619,475
Net interest income (tax-equivalent basis) / Interest-rate spread (4)			211,072		3.29	%			192,203		2.83	%
Less adjustment of tax-exempt income			160						265
Net interest income			$	210,912					$	191,938
Net interest margin (5)					3.48	%					3.15	%

_________________________________________________________________________

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

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

(3) Including non-interest-bearing checking accounts, the average interest rate on total deposits was 0.32% and 0.84% in the six months ended September 30, 2021 and September 30, 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							Three Months Ended September 30, 2021 as Compared to the Three Months Ended September 30, 2020					Nine Months Ended September 30, 2021 as Compared to the Nine Months Ended September 30, 2020
		Increase (Decrease) Due To								Increase (Decrease) Due To						Increase (Decrease) Due To
		Volume		Rate		Net Change						Volume		Rate		Net Change		Volume		Rate		Net Change
		(In Thousands)						(In Thousands)
Interest and dividend income:	Interest and dividend income:										Interest and dividend income:
Investments:	Investments:										Investments:
Debt securities	Debt securities	$	666	$	(572)	$	94				Debt securities	$	(577)	$	(202)	$	(779)	$	(198)	$	(1,085)	$	(1,283)
Marketable and restricted equity securities	Marketable and restricted equity securities	(149)		(336)		(485)					Marketable and restricted equity securities	(400)		43		(357)		(841)		(683)		(1,524)
Short-term investments	Short-term investments	121		(291)		(170)					Short-term investments	8		29		37		69		(259)		(190)
Total investments	Total investments	638		(1,199)		(561)					Total investments	(969)		(130)		(1,099)		(970)		(2,027)		(2,997)
Loans and leases:	Loans and leases:										Loans and leases:
Commercial real estate loans	Commercial real estate loans	860		(7,083)		(6,223)					Commercial real estate loans	183		(674)		(491)		1,186		(10,409)		(9,223)
Commercial loans and leases	Commercial loans and leases	4,678		(260)		4,418					Commercial loans and leases	(3,721)		4,759		1,038		(331)		8,377		8,046
Equipment financing	Equipment financing	454		(1,357)		(903)					Equipment financing	(171)		(1,122)		(1,293)		370		(3,576)		(3,206)
Residential mortgage loans	Residential mortgage loans	(286)		(416)		(702)					Residential mortgage loans	(240)		(631)		(871)		(787)		(1,927)		(2,714)
Other consumer loans	Other consumer loans	(385)		(775)		(1,160)					Other consumer loans	(239)		(58)		(297)		(940)		(837)		(1,777)
Total loans	Total loans	5,321		(9,891)		(4,570)					Total loans	(4,188)		2,274		(1,914)		(502)		(8,372)		(8,874)
Total change in interest and dividend income	Total change in interest and dividend income	5,959		(11,090)		(5,131)					Total change in interest and dividend income	(5,157)		2,144		(3,013)		(1,472)		(10,399)		(11,871)
Interest expense:	Interest expense:										Interest expense:
Deposits:	Deposits:										Deposits:
NOW accounts	NOW accounts	34		(20)		14					NOW accounts	22		(34)		(12)		70		(36)		34
Savings accounts	Savings accounts	76		(484)		(408)					Savings accounts	39		(49)		(10)		155		(682)		(527)
Money market accounts	Money market accounts	830		(3,585)		(2,755)					Money market accounts	427		(469)		(42)		1,744		(5,118)		(3,374)
Certificate of deposit accounts	Certificate of deposit accounts	(1,689)		(3,408)		(5,097)					Certificate of deposit accounts	(1,427)		(3,165)		(4,592)		(4,901)		(10,050)		(14,951)
Brokered deposit accounts	Brokered deposit accounts	860		(2,147)		(1,287)					Brokered deposit accounts	(625)		(731)		(1,356)		(245)		(3,880)		(4,125)
Total deposits	Total deposits	111		(9,644)		(9,533)					Total deposits	(1,564)		(4,448)		(6,012)		(3,177)		(19,766)		(22,943)
Borrowed funds:	Borrowed funds:										Borrowed funds:
Advances from the FHLBB	Advances from the FHLBB	(1,202)		(1,525)		(2,727)					Advances from the FHLBB	(4,031)		2,307		(1,724)		(7,398)		(141)		(7,539)
Subordinated debentures and notes	Subordinated debentures and notes	2		(44)		(42)					Subordinated debentures and notes	3		(7)		(4)		7		(74)		(67)
Other borrowed funds	Other borrowed funds	3		(153)		(150)					Other borrowed funds	(18)		(10)		(28)		(36)		(155)		(191)
Total borrowed funds	Total borrowed funds	(1,197)		(1,722)		(2,919)					Total borrowed funds	(4,046)		2,290		(1,756)		(7,427)		(370)		(7,797)
Total change in interest expense	Total change in interest expense	(1,086)		(11,366)		(12,452)					Total change in interest expense	(5,610)		(2,158)		(7,768)		(10,604)		(20,136)		(30,740)
Change in tax-exempt income	Change in tax-exempt income	(76)		—		(76)					Change in tax-exempt income	(4)		—		(4)		(105)		—		(105)
Change in net interest income	Change in net interest income	$	7,121	$	276	$	7,397				Change in net interest income	$	457	$	4,302	$	4,759	$	9,237	$	9,737	$	18,974

6874

Table of Contents

Interest Income

Loans and Leases


		Three Months Ended March 31,				Dollar Change				Percent Change						Three Months Ended September 30,					Dollar Change			Percent Change		Nine Months Ended September 30,						Dollar Change		Percent Change
		2021		2020											2021	2020							2021			2020
		(Dollars in Thousands)										(Dollars in Thousands)
Interest income—loans and leases:	Interest income—loans and leases:																Interest income—loans and leases:
Commercial real estate loans	Commercial real estate loans	$	34,245	$	40,468			$	(6,223)				(15.4)	%						Commercial real estate loans	$	35,124		$	35,614	$	(490)		(1.4)		%	$	103,690	$	112,911	$	(9,221)		(8.2)	%
Commercial loans	Commercial loans	12,692		8,256		4,436				53.7	%						Commercial loans	11,663			10,621			1,042		9.8		%	37,340			29,270		8,070		27.6		%
Equipment financing	Equipment financing	18,043		18,946		(903)				(4.8)	%						Equipment financing	17,725			19,018			(1,293)		(6.8)		%	53,731			56,937		(3,206)		(5.6)		%
Residential mortgage loans	Residential mortgage loans	7,232		7,934		(702)				(8.8)	%						Residential mortgage loans	6,990			7,861			(871)		(11.1)		%	21,148			23,862		(2,714)		(11.4)		%
Other consumer loans	Other consumer loans	2,797		3,955		(1,158)				(29.3)	%						Other consumer loans	2,830			3,126			(296)		(9.5)		%	8,458			10,235		(1,777)		(17.4)		%
Total interest income—loans and leases	Total interest income—loans and leases	$	75,009	$	79,559	$	(4,550)			(5.7)	%						Total interest income—loans and leases	$	74,332		$	76,240		$	(1,908)	(2.5)		%	$	224,367		$	233,215	$	(8,848)	(3.8)		%

Total interest from loans and leases was ~~$75.0~~$74.3 million for the three months ended ~~March 31,~~September 30, 2021, and represented a yield on total loans of ~~4.13%~~4.26%. This compares to ~~$79.6~~$76.2 million of interest on loans and a yield of ~~4.71%~~4.12% for the three months ended ~~March 31,~~September 30, 2020. The ~~$4.6~~$1.9 million decrease in interest income from loans and leases was primarily ~~attributable~~due to an increase of $2.3 million in changes to interest rates, and a decrease of $4.2 million in origination volume.

Total interest income from loans and leases was $224.4 million for the nine months ended September 30, 2021, and represented a yield on total loans of 4.20%. This compares to $233.2 million of interest on loans and a yield of 4.35% for the nine months ended September 30, 2020. The $8.8 million decrease in interest income from loans and leases was primarily due to a decrease of ~~$9.9~~$0.5 million ~~due to changes in interest rates, offset by an increase of $5.3 million due to an increase~~ in origination ~~volume.~~volume, and a decrease of $8.4 million million in changes to interest rates.

Investments


		Three Months Ended March 31,				Dollar Change				Percent Change						Three Months Ended September 30,					Dollar Change		Percent Change						Nine Months Ended September 30,					Dollar Change		Percent Change
		2021		2020											2021	2020									2021				2020
		(Dollars in Thousands)										(Dollars in Thousands)
Interest income—investments:	Interest income—investments:																Interest income—investments:
Debt securities	Debt securities	$	3,118	$	2,976			$	142				4.8	%						Debt securities	$	2,967	$	3,746		$	(779)			(20.8)	%			$	9,206	$	10,423	$	(1,217)		(11.7)	%
Marketable and restricted equity securities	Marketable and restricted equity securities	301		778		(477)				(61.3)	%						Marketable and restricted equity securities	313			672		(359)			(53.4)		%				847		2,358		(1,511)		(64.1)		%
Short-term investments	Short-term investments	39		209		(170)				(81.3)	%						Short-term investments	83			46		37			80.4		%				164		354		(190)		(53.7)		%
Total interest income—investments	Total interest income—investments	$	3,458	$	3,963	$	(505)			(12.7)	%						Total interest income—investments	$	3,363		$	4,464	$	(1,101)		(24.7)		%				$	10,217	$	13,135	$	(2,918)	(22.2)		%

Total interest income from investments was ~~$3.5~~$3.4 million for the three months ended ~~March 31,~~September 30, 2021, compared to ~~$4.0~~$4.5 million for the three months ended ~~March 31,~~September 30, 2020. For the three months ended ~~March 31,~~September 30, 2021 and 2020, the yield on total investments was 1.4% and ~~2.2%~~1.6%, respectively. The year-over-year decrease in interest income on investments of ~~$0.5~~$1.1 million, or ~~12.7%~~24.7%, was primarily driven by a ~~$0.7~~$1.0 million ~~increase~~decrease due to volume ~~partially offset by~~and a ~~$1.2~~$0.1 million decrease due to rates.

Total investment income was $10.2 million and $13.1 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. For the nine months ended September 30, 2021 and 2020, the yield on total investments was 1.4% and 1.8%, respectively. The year-over-year decrease in interest income on investments of $2.9 million, or 22.2%, was primarily driven by a $0.9 million decrease due to volume and a $2.0 million decrease due to rates .

6975

Table of Contents

Interest Expense—Deposits and Borrowed Funds


		Three Months Ended March 31,				Dollar Change				Percent Change						Three Months Ended September 30,					Dollar Change			Percent Change		Nine Months Ended September 30,						Dollar Change		Percent Change
		2021		2020											2021	2020							2021			2020
		(Dollars in Thousands)										(Dollars in Thousands)
Interest expense:	Interest expense:																Interest expense:
Deposits:	Deposits:																Deposits:
NOW accounts	NOW accounts	$	130	$	116			$	14				12.1	%						NOW accounts	$	116		$	128	$	(12)		(9.4)		%	$	392	$	358	$	34		9.5	%
Savings accounts	Savings accounts	235		643		(408)				(63.5)	%						Savings accounts	248			258			(10)		(3.9)		%	731			1,258		(527)		(41.9)		%
Money market accounts	Money market accounts	1,486		4,241		(2,755)				(65.0)	%						Money market accounts	1,616			1,658			(42)		(2.5)		%	4,599			7,973		(3,374)		(42.3)		%
Certificate of deposit accounts	Certificate of deposit accounts	4,154		9,251		(5,097)				(55.1)	%						Certificate of deposit accounts	2,430			7,022			(4,592)		(65.4)		%	9,686			24,637		(14,951)		(60.7)		%
Brokered deposit accounts	Brokered deposit accounts	702		1,989		(1,287)				(64.7)	%						Brokered deposit accounts	161			1,517			(1,356)		(89.4)		%	1,250			5,375		(4,125)		(76.7)		%
Total interest expense - deposits	Total interest expense - deposits	6,707		16,240		(9,533)				(58.7)	%						Total interest expense - deposits	4,571			10,583			(6,012)		(56.8)		%	16,658			39,601		(22,943)		(57.9)		%
Borrowed funds:	Borrowed funds:																Borrowed funds:
Advances from the FHLBB	Advances from the FHLBB	1,370		4,097		(2,727)				(66.6)	%						Advances from the FHLBB	1,152			2,876			(1,724)		(59.9)		%	3,185			10,724		(7,539)		(70.3)		%
Subordinated debentures and notes	Subordinated debentures and notes	1,242		1,284		(42)				(3.3)	%						Subordinated debentures and notes	1,242			1,246			(4)		(0.3)		%	3,726			3,793		(67)		(1.8)		%
Other borrowed funds	Other borrowed funds	39		189		(150)				(79.4)	%						Other borrowed funds	33			61			(28)		(45.9)		%	103			294		(191)		(65.0)		%
Total interest expense - borrowed funds	Total interest expense - borrowed funds	2,651		5,570		(2,919)				(52.4)	%						Total interest expense - borrowed funds	2,427			4,183			(1,756)		(42.0)		%	7,014			14,811		(7,797)		(52.6)		%
Total interest expense	Total interest expense	$	9,358	$	21,810	$	(12,452)			(57.1)	%						Total interest expense	$	6,998		$	14,766		$	(7,768)	(52.6)		%	$	23,672		$	54,412	$	(30,740)	(56.5)		%

Deposits

For the three months ended ~~March 31,~~September 30, 2021, interest expense on deposits decreased ~~$9.5~~$6.0 million, or ~~58.7%~~56.8%, as compared to the same period in 2020. The decrease in interest expense on deposits was driven by a decrease of ~~$9.6~~$4.4 million due to lower interest rates ~~partially offset~~and a decrease of $1.6 million mainly due to lower certificate of deposit balances.

Interest expense on deposits decreased $22.9 million, or 57.9%, to $16.7 million for the nine months ended September 30, 2021 from $39.6 million for the nine months ended September 30, 2020. The decrease in interest expense on deposits was driven by ~~an increase~~a decrease of ~~$0.1~~$19.8 million due to ~~the growth in deposits. There was no purchase accounting amortization on acquired deposits for the three months ended March 31, 2021, compared~~lower interest rates and a decrease of $3.2 million due to ~~$44 thousand for the three months ended March 31, 2020. Purchase accounting amortization had no impact on the Company's net interest margin.~~volume.

Borrowed Funds

During the three months ended ~~March 31,~~September 30, 2021, interest paid on borrowed funds decreased ~~$2.9~~$1.8 million, or ~~52.4%~~42.0% year over year. The cost of borrowed funds ~~decreased~~increased to ~~1.60%~~3.40% for the three months ended ~~March 31,~~September 30, 2021 from ~~2.33%~~1.43% for the three months ended ~~March 31,~~September 30, 2020. The decrease in interest expense was driven by a decrease of ~~$1.7~~$4.0 million due to volume, partially offset by an increase of $2.3 million due to borrowing ~~rates and a decrease of $1.2 million due to volume.~~rates. For the three months ended ~~March 31,~~September 30, 2021, the purchase accounting accretion on acquired borrowed funds was $13.0 thousand compared to accretion of $14.0 thousand for the three months ended ~~March 31,~~September 30, 2020. Purchase accounting accretion had no impact on the Company's net interest margin.

Interest expense on borrowed funds decreased $7.8 million, or 52.6%, to $7.0 million for the nine months ended September 30, 2021 from $14.8 million for the nine months ended September 30, 2020. The cost of borrowed funds increased to 2.1% for the nine months ended September 30, 2021 from 1.74% for the nine months ended September 30, 2020. The decrease in interest expense was driven by a decrease of $7.4 million due to volume and a decrease of $0.4 million due to borrowing rates. For the nine months ended September 30, 2021, there was purchase accounting accretion of $38.0 thousand on acquired borrowed funds compared to accretion of $41.0 thousand for the nine months ended September 30, 2020. Purchase accounting accretion had no impact on the Company's net interest margin.

Table of Contents

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) %

~~Table of Contents~~


	Three Months Ended September 30,				Dollar Change		Percent Change		Nine Months Ended September 30,				Dollar Change		Percent Change
	2021		2020						2021		2020
	(Dollars in Thousands)
Provision (credit) for loan and lease losses:
Commercial real estate	$	(1,630)	$	(2,721)	$	1,091	(40.1)	%	$	(7,736)	$	45,217	$	(52,953)	117.1	%
Commercial	101		8,557		(8,456)		(98.8)	%	1,472		15,119		(13,647)		(90.3)	%
Consumer	(1,175)		(455)		(720)		158.2	%	(1,990)		501		(2,491)		(497.2)	%

Total provision (credit) for loan and lease losses	(2,704)		5,381		(8,085)		(150.3)	%	(8,254)		60,837		(69,091)		(113.6)	%
Unfunded credit commitments	(406)		(853)		447		52.4	%	(334)		3,152		(3,486)		(110.6)	%
Total provision (credit) for credit losses	$	(3,110)	$	4,528	$	(7,638)	(168.7)	%	$	(8,588)	$	63,989	$	(72,577)	(113.4)	%

For the three months ended ~~March 31,~~September 30, 2021, the Allowance for Credit Losses ("ACL") decreased ~~$3.9~~$4.0 million resulting in a ~~Provision~~provision for ~~Credit Losses~~credit losses of ~~($2.1 million).~~$(3.1) million.

For the nine months ended September 30, 2021, the ACL decreased $11.9 million resulting in a provision for credit losses of $(8.6) million. The reduction in the ACL for both periods is attributable to portfolio contraction, continued low level of net charge-offs, an improving macro-economic forecast, and 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 September 30,					Dollar Change			Percent Change		Nine Months Ended September 30,						Dollar Change		Percent Change
		2021		2020											2021	2020							2021			2020
		(Dollars in Thousands)										(Dollars in Thousands)
Deposit fees	Deposit fees	$	2,281	$	2,458			$	(177)				(7.2)	%						Deposit fees	$	2,629		$	2,305	$	324		14.1		%	$	7,925	$	6,692	$	1,233		18.4	%
Loan fees	Loan fees	599		550		49				8.9	%						Loan fees	487			397			90		22.7		%	1,647			1,460		187		12.8		%
Loan level derivative income, net	Loan level derivative income, net	474		2,156		(1,682)				(78.0)	%						Loan level derivative income, net	218			527			(309)		(58.6)		%	699			4,123		(3,424)		(83.0)		%
(Loss) gain on investment securities		(7)		1,330		(1,337)				(100.5)	%
Gain (loss) on investment securities, net																	Gain (loss) on investment securities, net	—			54			(54)		(100.0)		%	(6)			1,970		(1,976)		(100.3)		%
Gain on sales of loans and leases held-for-sale	Gain on sales of loans and leases held-for-sale	709		120		589				490.8	%						Gain on sales of loans and leases held-for-sale	557			632			(75)		(11.9)		%	1,804			1,051		753		71.6		%

Other	Other	738		2,714		(1,976)				(72.8)	%						Other	1,695			947			748		79.0		%	4,221			5,129		(908)		(17.7)		%
Total non-interest income	Total non-interest income	$	4,794	$	9,328	$	(4,534)			(48.6)	%						Total non-interest income	$	5,586		$	4,862		$	724	14.9		%	$	16,290		$	20,425	$	(4,135)	(20.2)		%

For the three months ended ~~March 31,~~September 30, 2021, non-interest income ~~decreased $4.5~~increased $0.7 million, or ~~48.6%~~14.9%, to ~~$4.8~~$5.6 million as compared to ~~$9.3~~$4.9 million for the same period of 2020. ~~This~~The increase was primarily driven by an increase of $0.7 million in other non-interest income and an increase of $0.3 million in deposit fees, partially offset by a decrease of $0.3 million in loan level derivative income.

For the nine months ended September 30, 2021, non-interest income decreased $4.1 million, or 20.2%, to $16.3 million as compared to $20.4 million for the same period in 2020. The decrease was primarily driven by decreases of ~~$2.0 million in other non-interest income, $1.7~~$3.4 million in loan level derivative income, ~~net, and $1.3~~$2.0 million in gain on investment securities and $0.9 million in other non-interest income, partially offset by an increase of ~~$0.6~~$1.2 million in deposit fees and an increase of $0.8 million in gain on sales of loans and ~~leases held-for-sale.~~leases.

Table of Contents

Deposit fees increased $0.3 million, or 14.1%, to $2.6 million for the three months ended September 30, 2021 from $2.3 million for the same period in 2020, primarily driven by higher debit card income, insufficient funds fees ("NSF"), service charges, ATM fees, as well as wire transfer fees. Deposit fees increased $1.2 million, or 18.4% to $7.9 million for the nine months ended September 30, 2021 from $6.7 million for the same period in 2020, primarily driven by higher debit card income, foreign exchange incoming wire income and ATM fees, partially offset by lower NSF.

Loan level derivative income decreased ~~$1.7~~$0.3 million, or ~~78.0%~~58.6%, to ~~$0.5~~$0.2 million for the three months ended ~~March 31,~~September 30, 2021 from ~~$2.2~~$0.5 million for the same period in 2020, and decreased $3.4 million, or 83.0%, to $0.7 million for the nine months ended September 30, 2021 from $4.1 million for the same period in 2020, primarily driven by lower volume in loan level derivatives transactions completed for the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

Gain (loss) on investment securities decreased ~~$1.3~~$2.0 million, or ~~100.5%~~100.3%, to a loss of ~~$7.0~~$6.0 thousand for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 from a gain of ~~$1.3~~$2.0 million for the same period in 2020, primarily driven by a ~~$2.3~~$3.2 million gain on sales of investment securities, partially offset by a ~~$1.0~~$1.3 million loss on equity securities held-for-trading in the first ~~quarter~~nine months 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.

Gain on sales of loans and leases ~~held-for-sales increased $0.6 million~~held-for-sale decreased $75.0 thousand, or ~~490.8%~~11.9%, to ~~0.7 million~~$557.0 thousand for the three months ended ~~March 31,~~September 30, 2021 from ~~$0.1~~$632.0 thousand for the same period in 2020, primarily driven by lower gain on sale to participant. Gain on sales of loans and leases held-for-sale increased $0.8 million, or 71.6% to $1.8 million for the nine months ended September 30, 2021 from $1.1 million for the same period in 2020, primarily driven by higher gain on sale to participant and higher loan sale volume with servicing released, partially offset by lower loan sale volume with servicing retained.

Other income ~~decreased $2.0~~increased $0.7 million, or ~~72.8%~~79.0%, to ~~$0.7~~$1.7 million for the three months ended ~~March 31,~~September 30, 2021 from ~~$2.7~~$0.9 million for the same period in 2020, primarily driven by lower loss on interest rate derivatives ~~market value adjustment~~ due to volatility in rates, ~~and lower commission~~higher bank owned life insurance income ~~generated by~~due to a death benefit payout, higher 1031 exchange income, higher advisory fees on investment sales, ~~transactions.~~

and higher rental income. Other income decreased $0.9 million, or 17.7%, to $4.2 million for the nine months ended September 30, 2021 from $5.1 million for the same period in 2020, primarily driven by higher loss on interest rate derivatives due to volatility in rates, lower rental income and other income, partially offset by higher insurance sales and investment sales volume, higher bank owned life insurance income due to a death benefit payout and higher 1031 exchange income.

~~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 September 30,					Dollar Change			Percent Change		Nine Months Ended September 30,						Dollar Change		Percent Change
		2021		2020											2021	2020							2021			2020
		(Dollars in Thousands)										(Dollars in Thousands)
Compensation and employee benefits	Compensation and employee benefits	$	25,821	$	25,219			$	602				2.4	%						Compensation and employee benefits	$	27,206		$	26,092	$	1,114		4.3		%	$	78,188	$	75,931	$	2,257		3.0	%
Occupancy	Occupancy	4,004		3,953		51				1.3	%						Occupancy	3,567			3,802			(235)		(6.2)		%	11,403			11,580		(177)		(1.5)		%
Equipment and data processing	Equipment and data processing	4,493		4,703		(210)				(4.5)	%						Equipment and data processing	4,556			4,293			263		6.1		%	13,746			13,152		594		4.5		%
Professional services	Professional services	1,226		1,651		(425)				(25.7)	%						Professional services	1,072			1,112			(40)		(3.6)		%	3,543			3,819		(276)		(7.2)		%
FDIC insurance	FDIC insurance	1,044		378		666				176.2	%						FDIC insurance	662			1,363			(701)		(51.4)		%	2,363			2,599		(236)		(9.1)		%
Advertising and marketing	Advertising and marketing	1,100		1,075		25				2.3	%						Advertising and marketing	1,077			1,024			53		5.2		%	3,287			3,116		171		5.5		%
Amortization of identified intangible assets	Amortization of identified intangible assets	232		336		(104)				(31.0)	%						Amortization of identified intangible assets	208			312			(104)		(33.3)		%	668			959		(291)		(30.3)		%

Other	Other	2,891		3,433		(542)				(15.8)	%						Other	2,574			2,949			(375)		(12.7)		%	6,501			9,650		(3,149)		(32.6)		%
Total non-interest expense	Total non-interest expense	$	40,811	$	40,748	$	63			0.2	%						Total non-interest expense	$	40,922		$	40,947		$	(25)	(0.1)		%	$	119,699		$	120,806	$	(1,107)	(0.9)		%

For the three months ended ~~March 31,~~September 30, 2021, non-interest expense ~~increased $0.1~~decreased $25.0 thousand, or 0.1%, as compared to the same period in 2020. The decrease was primarily driven by decreases of $0.7 million in FDIC insurance expense, $0.4 million in other non-interest expense, and $0.2 million in occupancy expense, partially offset by an increase of $1.1 million in compensation and employee benefits expense, and an increase of $0.3 million in equipment and data processing expense.

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For the nine months ended September 30, 2021, non-interest expense decreased $1.1 million, or ~~0.2%~~0.9%, to ~~$40.8~~$119.7 million as compared to ~~$40.7~~$120.8 million for the same period in 2020. The ~~increase~~decrease was primarily driven by ~~increases~~decreases of ~~$0.7~~$3.1 million in other non-interest expense, $0.3 million in professional services, $0.3 million in amortization of identified intangible assets, and $0.2 million in FDIC insurance expense, ~~and $0.6~~partially offset by an increase of $2.3 million in compensation and employee benefits expense, ~~partially offset by decreases~~and an increase of ~~$0.5 million in other non-interest expenses, $0.4 million in professional services and $0.2~~$0.6 million in equipment and data processing expense.

Compensation and employee benefits expense increased ~~$0.6~~$1.1 million, or ~~2.4%~~4.3%, to ~~$25.8~~$27.2 million for the three months ended ~~March 31,~~September 30, 2021 from ~~$25.2~~$26.1 million for the same period in 2020, and increased $2.3 million, or 3.0%, to $78.2 million for the nine months ended September 30, 2021 from $75.9 million for the same period in 2020, primarily driven by increases in employee headcount, ~~annual merit increases~~salaries and incentive bonuses, partially offset by decreases in ~~commissions,~~ retirement plan benefits, commissions and ~~health care benefits.~~retail bonuses.

~~Equipment and data processing~~FDIC insurance expense decreased ~~$0.2~~$0.7 million, or ~~4.5%~~51.4%, to ~~$4.5~~$0.7 million for the three months ended ~~March 31,~~September 30, 2021 from ~~$4.7~~$1.4 million for the same period in 2020, and decreased $0.2 million, or 9.1%, to $2.4 million for the nine months ended September 30, 2021 from $2.6 million for the same period in 2020, primarily driven by lower core processing expenses, purchased software depreciation, other furniture and equipment depreciation, and data communications expenses, partially offset by higher software licenses and subscriptions.bank assessment fees from the FDIC.

~~Professional services~~Other expense decreased $0.4 million, or ~~25.7%~~12.7%, to ~~$1.2~~$2.6 million for the three months ended ~~March 31,~~September 30, 2021 from ~~$1.7~~$2.9 million for the same period in 2020, primarily driven by ~~lower legal~~decreases in loan workout expense, business and professional meetings, entertainment, SEC filing fees, ~~audit fees~~telephone expense, armored courier, debit and ~~accounting fees,~~ATM card losses, and ~~outsourced internal audit fees.~~

~~FDIC insurance~~an increase in deferred loan costs, partially offset by increases in customer losses with Zelle transactions and travel and accommodations expense. Other expense ~~increased $0.7~~decreased $3.1 million, or ~~176.2%,~~32.6% to ~~$1.0~~$6.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 from ~~$0.4~~$9.7 million for the same period in 2020, primarily driven by ~~higher bank assessment fees from~~a gain of $2.1 million on the ~~FDIC.~~

sale of other real estate owned property in the second quarter of 2021 and decreases in write-down on other repossessed assets, customer losses and charge offs, and miscellaneous expense, partially offset by a decrease in deferred loan costs and an increase in appraisal search expense.

Provision for Income Taxes


		Three Months Ended March 31,						Dollar Change				Percent Change						Three Months Ended September 30,						Dollar Change				Percent Change		Nine Months Ended September 30,						Dollar Change			Percent Change
		2021			2020												2021	2020									2021			2020
		(Dollars in Thousands)												(Dollars in Thousands)
Income before provision for income taxes	Income before provision for income taxes	$	35,239		$	(23,822)				$	59,061				(247.9)	%							Income before provision for income taxes	$	38,471			$	25,325	$	13,146		51.9		%	$	116,091		$	27,568	$	88,523		321.1	%
Provision (benefit) for income taxes	Provision (benefit) for income taxes	8,785			(6,546)			15,331				(234.2)	%						Provision (benefit) for income taxes	9,632				6,646				2,986		44.9		%	29,196			6,596			22,600		342.6		%
Net income (loss)	Net income (loss)	$	26,454		$	(17,276)		$	43,730			(253.1)	%						Net income (loss)	$	28,839			$	18,679			$	10,160	54.4		%	$	86,895		$	20,972		$	65,923	314.3		%
Effective tax rate	Effective tax rate	24.9		%	27.5		%	N/A				(9.5)	%						Effective tax rate	25.0		%		26.2		%		N/A		(4.6)		%	25.1		%	23.9		%	N/A		5.0		%

The Company recorded an income tax expense of ~~$8.8~~$9.6 million for the three months ended ~~March 31,~~September 30, 2021, compared to an income tax ~~benefit~~expense of ~~$6.5~~$6.6 million for the three months ended ~~March 31,~~September 30, 2020, representing effective tax rates of ~~24.9%~~25.0% and ~~27.5%~~26.2%, respectively.

The Company recorded an income tax expense of $29.2 million for the nine months ended September 30, 2021, compared to an income tax expense of $6.6 million for the nine months ended September 30, 2020, representing effective tax rates of 25.1% and 23.9%, respectively.

~~Table of 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.

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

Management continued holding higher levels of on balance sheet liquidity in the form of cash and available for sale securities in the ~~first~~third quarter. Cash and equivalents at the end of the quarter were ~~$130.9~~$239.1 million, or ~~1.5%~~2.9% of the balance sheet, compared to $434.9 million, or 4.9% of the balance sheet, as of December 31, 2020. In general, in a normal operating environment, the Company seeks to maintain liquidity levels of cash, cash equivalents and investment securities available-for-sale of between 5% and 10% of total assets. Due to the current environment, management increased ~~this~~the target operating range to between 5% and 15% of total assets. As of ~~March 31,~~September 30, 2021, cash, cash equivalents and investment securities available-for-sale totaled ~~$860.8 million,~~$1.0 billion, or ~~10.1%~~11.7% of total assets. This compares to $1.2 billion, or 13.2% of total assets, as of December 31, 2020.

Deposits, which are considered the most stable source of liquidity, totaled $6.9 billion as of ~~March 31,~~September 30, 2021 and represented ~~92.6%~~96.3% of total funding (the sum of total deposits and total borrowings), compared to deposits of $6.9 billion, or 89.4% of total funding, as of December 31, 2020. Core deposits, which consist of demand checking, NOW, savings and money market accounts, totaled ~~$5.1~~$5.5 billion as of ~~March 31,~~September 30, 2021 and represented ~~74.6%~~80.7% of total deposits, compared to core deposits of $4.8 billion, or 69.8% of total deposits, as of December 31, 2020. Additionally, the Company had ~~$470.6~~$185.5 million of brokered deposits as of ~~March 31,~~September 30, 2021, which represented ~~6.9%~~2.7% of total deposits, compared to $693.9 million or 10.0% of total deposits, as of December 31, 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 ~~$546.0~~$267.5 million as of ~~March 31,~~September 30, 2021, representing ~~7.4%~~3.7% of total funding, compared to $820.2 million, or 10.6% of total funding, as of December 31, 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,~~September 30, 2021, the Company's total borrowing limit from the FHLBB for advances and repurchase agreements was $1.8 billion, compared to $1.9 billion as of December 31, 2020, based on the level of qualifying collateral available for these borrowings.

As of ~~March 31,~~September 30, 2021, the Banks also have access to funding through certain uncommitted lines of credit of ~~$746.0~~$865.0 million.

The Company had a $12.0 million committed line of credit for contingent liquidity as of ~~March 31,~~September 30, 2021. As of ~~March 31,~~September 30, 2021, the Company did not have any outstanding borrowings on this line.

The Company has access to the Federal Reserve Bank's "discount window" to supplement its liquidity. The Company has ~~$590.9~~$300.7 million of borrowing capacity at the Federal Reserve Bank as of ~~March 31,~~September 30, 2021. As of ~~March 31,~~September 30, 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.

~~Table of Contents~~

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.

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


		At March 31, 2021		At December 31, 2020			At September 30, 2021		At December 31, 2020
		(In Thousands)					(In Thousands)
Financial instruments whose contract amounts represent credit risk:	Financial instruments whose contract amounts represent credit risk:					Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:	Commitments to originate loans and leases:					Commitments to originate loans and leases:
Commercial real estate	Commercial real estate	$	107,597	$	174,240	Commercial real estate	$	198,806	$	174,240
Commercial	Commercial	105,426		80,291		Commercial	201,443		80,291
Residential mortgage	Residential mortgage	82,366		30,418		Residential mortgage	58,450		30,418
Unadvanced portion of loans and leases	Unadvanced portion of loans and leases	826,545		759,053		Unadvanced portion of loans and leases	897,542		759,053
Unused lines of credit:	Unused lines of credit:					Unused lines of credit:
Home equity	Home equity	591,377		584,881		Home equity	602,200		584,881
Other consumer	Other consumer	41,583		38,954		Other consumer	58,546		38,954
Other commercial	Other commercial	431		408		Other commercial	431		408
Unused letters of credit:	Unused letters of credit:					Unused letters of credit:
Financial standby letters of credit	Financial standby letters of credit	15,953		14,746		Financial standby letters of credit	14,690		14,746
Performance standby letters of credit	Performance standby letters of credit	6,607		5,903		Performance standby letters of credit	14,237		5,903
Commercial and similar letters of credit	Commercial and similar letters of credit	5,369		5,105		Commercial and similar letters of credit	5,219		5,105
Loan level derivatives:	Loan level derivatives:					Loan level derivatives:
Receive fixed, pay variable	Receive fixed, pay variable	1,232,482		1,214,146		Receive fixed, pay variable	1,188,153		1,214,146
Pay fixed, receive variable	Pay fixed, receive variable	1,232,482		1,214,146		Pay fixed, receive variable	1,188,153		1,214,146
Risk participation-out agreements	Risk participation-out agreements	263,430		252,655		Risk participation-out agreements	262,524		252,655
Risk participation-in agreements	Risk participation-in agreements	60,289		60,619		Risk participation-in agreements	59,629		60,619
Foreign exchange contracts:	Foreign exchange contracts:					Foreign exchange contracts:
Buys foreign currency, sells U.S. currency	Buys foreign currency, sells U.S. currency	1,416		1,266		Buys foreign currency, sells U.S. currency	1,680		1,266
Sells foreign currency, buys U.S. currency	Sells foreign currency, buys U.S. currency	1,422		1,273		Sells foreign currency, buys U.S. currency	1,681		1,273

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Capital Resources

As of ~~March 31,~~September 30, 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,~~September 30, 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,~~September 30, 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, 2021:
At September 30, 2021:																		At September 30, 2021:
Brookline Bancorp, Inc.	Brookline Bancorp, Inc.																	Brookline Bancorp, Inc.
Common equity Tier 1 capital ratio (1)	Common equity Tier 1 capital ratio (1)	$	782,378	11.65	%	$	302,206	4.50	%	$	470,098	7.00	%	N/A		N/A		Common equity Tier 1 capital ratio (1)	$	815,226	12.02	%	$	305,201	4.50	%	$	474,757	7.00	%	N/A		N/A
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	792,010		9.26	%	342,121		4.00	%	342,121		4.00	%	N/A		N/A		Tier 1 leverage capital ratio (2)	824,884		10.04	%	328,639		4.00	%	328,639		4.00	%	N/A		N/A
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	792,010		11.79	%	403,059		6.00	%	571,000		8.50	%	N/A		N/A		Tier 1 risk-based capital ratio (3)	824,884		12.16	%	407,015		6.00	%	576,605		8.50	%	N/A		N/A
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	950,627		14.15	%	537,457		8.00	%	705,412		10.50	%	N/A		N/A		Total risk-based capital ratio (4)	984,260		14.51	%	542,666		8.00	%	712,249		10.50	%	N/A		N/A
Brookline Bank	Brookline Bank																	Brookline Bank
Common equity Tier 1 capital ratio (1)	Common equity Tier 1 capital ratio (1)	$	562,089	12.21	%	$	207,158	4.50	%	$	322,246	7.00	%	$	299,228	6.50	%	Common equity Tier 1 capital ratio (1)	$	578,625	12.51	%	$	208,138	4.50	%	$	323,771	7.00	%	$	300,644	6.50	%
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	562,089		10.15	%	221,513		4.00	%	221,513		4.00	%	276,891		5.00	%	Tier 1 leverage capital ratio (2)	578,625		10.89	%	212,534		4.00	%	212,534		4.00	%	265,668		5.00	%
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	562,089		12.21	%	276,211		6.00	%	391,299		8.50	%	368,281		8.00	%	Tier 1 risk-based capital ratio (3)	578,625		12.51	%	277,518		6.00	%	393,150		8.50	%	370,024		8.00	%
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	619,931		13.47	%	368,185		8.00	%	483,242		10.50	%	460,231		10.00	%	Total risk-based capital ratio (4)	636,684		13.76	%	370,165		8.00	%	485,842		10.50	%	462,706		10.00	%
BankRI	BankRI																	BankRI
Common equity Tier 1 capital ratio (1)	Common equity Tier 1 capital ratio (1)	$	243,118	11.42	%	$	95,800	4.50	%	$	149,022	7.00	%	$	138,377	6.50	%	Common equity Tier 1 capital ratio (1)	$	256,214	11.80	%	$	97,709	4.50	%	$	151,991	7.00	%	$	141,135	6.50	%
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	243,118		7.84	%	124,040		4.00	%	124,040		4.00	%	155,050		5.00	%	Tier 1 leverage capital ratio (2)	256,214		8.33	%	123,032		4.00	%	123,032		4.00	%	153,790		5.00	%
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	243,118		11.42	%	127,733		6.00	%	180,955		8.50	%	170,310		8.00	%	Tier 1 risk-based capital ratio (3)	256,214		11.80	%	130,278		6.00	%	184,561		8.50	%	173,704		8.00	%
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	269,903		12.68	%	170,286		8.00	%	223,500		10.50	%	212,857		10.00	%	Total risk-based capital ratio (4)	283,498		13.05	%	173,792		8.00	%	228,102		10.50	%	217,240		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, 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
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
At December 31, 2020:
Brookline Bancorp, Inc.
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)	773,777		8.92	%	346,985		4.00	%	346,985		4.00	%	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)	934,933		13.51	%	553,624		8.00	%	726,632		10.50	%	N/A		N/A
Brookline Bank
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)	557,310		9.82	%	227,010		4.00	%	227,010		4.00	%	283,763		5.00	%
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)	617,101		12.97	%	380,633		8.00	%	499,581		10.50	%	475,791		10.00	%
BankRI
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)	239,337		7.78	%	123,052		4.00	%	123,052		4.00	%	153,816		5.00	%
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)	266,633		12.29	%	173,561		8.00	%	227,799		10.50	%	216,951		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 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.

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,~~September 30, 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,~~September 30, 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									Estimated Exposure to Net Interest Income over Twelve-Month Horizon Beginning
		March 31, 2021				December 31, 2020					September 30, 2021				December 31, 2020
Change in Interest Rate Levels	Change in Interest Rate Levels	Dollar Change		Percent Change		Dollar Change		Percent Change		Change in Interest Rate Levels	Dollar Change		Percent Change		Dollar Change		Percent Change
		(Dollars in Thousands)									(Dollars in Thousands)
Up 300 basis points shock	Up 300 basis points shock	$	17,032	6.4	%	$	19,249	7.1	%	Up 300 basis points shock	$	24,936	9.5	%	$	19,249	7.1	%
Up 200 basis points ramp	Up 200 basis points ramp	9,128		3.4	%	10,698		3.9	%	Up 200 basis points ramp	9,678		3.7	%	10,698		3.9	%
Up 100 basis points ramp	Up 100 basis points ramp	4,521		1.7	%	5,193		1.9	%	Up 100 basis points ramp	4,596		1.8	%	5,193		1.9	%
Down 100 basis points ramp	Down 100 basis points ramp	(5,702)		(2.1)	%	(5,999)		(2.2)	%	Down 100 basis points ramp	(3,857)		(1.5)	%	(5,999)		(2.2)	%

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 6.4%~~9.5% as of ~~March 31,~~September 30, 2021, compared to ~~a positive~~ 7.1% as of December 31, 2020. The ~~decrease~~increase in asset sensitivity was due to an ~~extension~~accumulation of deposits which were used to pay down borrowings, with the excess held in ~~the investment portfolio.~~cash.

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,~~September 30, 2021, the Company’s one-year cumulative gap was a ~~negative $135.9~~positive $268.1 million, or ~~1.68%~~3.40% of total interest-earning assets, compared with a negative $330.0 million, or 3.92% of total interest-earning assets, at December 31, 2020.

The assumptions used in the Company's interest-rate sensitivity simulation discussed above are inherently uncertain and, as a result, the simulations cannot precisely measure net interest income or precisely predict the impact of changes in interest rates. For additional discussion on interest-rate risk see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” of the Company’s 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,~~September 30, 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 September 30, 2021		At December 31, 2020
Up 300 basis points	9.3	%	11.2	%
Up 200 basis points	6.6	%	8.3	%
Up 100 basis points	4.1	%	5.4	%
Down 100 basis points	(10.5)	%	(13.6)	%

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The Company's ~~EVE~~EVE-at-risk asset sensitivity ~~increased~~decreased from December 31, 2020 to ~~March 31,~~September 30, 2021 due to the ~~lengthened~~purchase of longer duration investment securities and the paydown of ~~the investment portfolio.~~shorter-term PPP loans.

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.

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, 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, 2020.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings other than those that arise in the normal course of business. In the opinion of Management, after consulting with legal counsel, the consolidated financial position and results of operations of the Company are not expected to be affected materially by the outcome of such proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

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

a) Not applicable.

b) Not applicable.

c) None.

Item 3. Defaults Upon Senior Securities

a) None.

b) None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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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						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

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

Date: ~~May~~November 5, 2021	By:	/s/ Carl M. Carlson
		Carl M. Carlson
		Co-President and Chief Financial Officer
		(Principal Financial Officer)

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