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 ~~June 30, 2021~~March 31, 2022


☐			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 ~~July 31, 2021,~~April 30, 2022, the number of shares of common stock, par value $0.01 per share, outstanding was ~~78,192,589.~~77,465,685.

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021	1

	Unaudited Consolidated Statements of Income for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	2

	Unaudited Consolidated Statements of Comprehensive Income for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	3

	Unaudited Consolidated Statements of Changes in Equity for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	4

	Unaudited Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	65

	Notes to Unaudited Consolidated Financial Statements	76

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4542

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8276

Item 4.	Controls and Procedures	8478

Part II	Other Information

Item 1.	Legal Proceedings	8579

Item 1A.	Risk Factors	8579

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8579

Item 3.	Defaults Upon Senior Securities	8579

Item 4.	Mine Safety Disclosures	8579

Item 5.	Other Information	8579

Item 6.	Exhibits	8680

	Signatures	8781

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 June 30, 2021		At December 31, 2020			At March 31, 2022		At December 31, 2021
		(In Thousands Except Share Data)					(In Thousands Except Share Data)
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	36,079	$	36,069	Cash and due from banks	$	89,032	$	66,265
Short-term investments	Short-term investments	284,370		398,848		Short-term investments	204,239		261,472
Total cash and cash equivalents	Total cash and cash equivalents	320,449		434,917		Total cash and cash equivalents	293,271		327,737
Investment securities available-for-sale	Investment securities available-for-sale	694,151		745,822		Investment securities available-for-sale	730,562		720,866

Equity securities held-for-trading		0		526

Total investment securities	Total investment securities	694,151		746,348		Total investment securities	730,562		720,866
Allowance for investment security losses						Allowance for investment security losses	(4)		—
Net investment securities						Net investment securities	730,558		720,866

Loans and leases:	Loans and leases:					Loans and leases:
Commercial real estate loans	Commercial real estate loans	3,815,581		3,823,826		Commercial real estate loans	4,235,325		4,103,040
Commercial loans and leases	Commercial loans and leases	2,038,851		2,274,899		Commercial loans and leases	1,800,383		1,887,136
Consumer loans	Consumer loans	1,165,843		1,170,828		Consumer loans	1,187,422		1,164,281
Total loans and leases	Total loans and leases	7,020,275		7,269,553		Total loans and leases	7,223,130		7,154,457
Allowance for loan and lease losses	Allowance for loan and lease losses	(106,474)		(114,379)		Allowance for loan and lease losses	(95,463)		(99,084)
Net loans and leases	Net loans and leases	6,913,801		7,155,174		Net loans and leases	7,127,667		7,055,373
Restricted equity securities	Restricted equity securities	31,627		49,786		Restricted equity securities	29,066		28,981
Premises and equipment, net of accumulated depreciation of $84,191 and $82,233, respectively		71,240		71,568
Premises and equipment, net of accumulated depreciation of $88,625 and $87,176, respectively						Premises and equipment, net of accumulated depreciation of $88,625 and $87,176, respectively	69,365		70,359
Right-of-use asset operating leases	Right-of-use asset operating leases	22,682		24,143		Right-of-use asset operating leases	19,571		20,508
Deferred tax asset	Deferred tax asset	41,324		40,129		Deferred tax asset	46,886		38,987
Goodwill	Goodwill	160,427		160,427		Goodwill	160,427		160,427
Identified intangible assets, net of accumulated amortization of $39,212 and $38,752, respectively		2,692		3,152
Identified intangible assets, net of accumulated amortization of $39,762 and $39,628, respectively						Identified intangible assets, net of accumulated amortization of $39,762 and $39,628, respectively	2,142		2,276
Other real estate owned ("OREO") and repossessed assets, net	Other real estate owned ("OREO") and repossessed assets, net	372		6,515		Other real estate owned ("OREO") and repossessed assets, net	990		718
Other assets	Other assets	203,199		250,265		Other assets	153,793		176,390
Total assets	Total assets	$	8,461,964	$	8,942,424	Total assets	$	8,633,736	$	8,602,622
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:	Deposits:					Deposits:
Demand checking accounts	Demand checking accounts	$	1,926,713	$	1,592,205	Demand checking accounts	$	1,903,331	$	1,888,462

Interest-bearing deposits	Interest-bearing deposits	4,967,988		5,318,491		Interest-bearing deposits	5,191,047		5,161,444
Total deposits	Total deposits	6,894,701		6,910,696		Total deposits	7,094,378		7,049,906
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")	204,154		648,849		Advances from the Federal Home Loan Bank of Boston ("FHLBB")	201,236		147,907
Subordinated debentures and notes	Subordinated debentures and notes	83,821		83,746		Subordinated debentures and notes	83,934		83,897
Other borrowed funds	Other borrowed funds	75,039		87,652		Other borrowed funds	107,727		125,517
Total borrowed funds	Total borrowed funds	363,014		820,247		Total borrowed funds	392,897		357,321
Operating lease liabilities	Operating lease liabilities	22,682		24,143		Operating lease liabilities	19,571		20,508
Mortgagors' escrow accounts	Mortgagors' escrow accounts	6,231		5,901		Mortgagors' escrow accounts	5,780		6,296
Reserve for unfunded credits	Reserve for unfunded credits	13,142		13,071		Reserve for unfunded credits	16,305		14,794

Accrued expenses and other liabilities	Accrued expenses and other liabilities	189,942		226,588		Accrued expenses and other liabilities	122,870		158,455
Total liabilities	Total liabilities	7,489,712		8,000,646		Total liabilities	7,651,801		7,607,280

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	738,557		737,178		Additional paid-in capital	737,658		736,826
Retained earnings, partially restricted	Retained earnings, partially restricted	304,466		264,892		Retained earnings, partially restricted	357,576		342,639
Accumulated other comprehensive income		6,089		16,490
Treasury stock, at cost; 6,536,478 shares and 6,525,783 shares, respectively		(77,493)		(77,343)
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 37,890 shares and 51,114 shares, respectively		(219)		(291)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	(29,322)		(110)
Treasury stock, at cost; 7,037,464 shares and 7,037,464 shares, respectively						Treasury stock, at cost; 7,037,464 shares and 7,037,464 shares, respectively	(84,718)		(84,718)
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 18,051 shares and 24,660 shares, respectively						Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 18,051 shares and 24,660 shares, respectively	(111)		(147)

Total stockholders' equity	Total stockholders' equity	972,252		941,778		Total stockholders' equity	981,935		995,342
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	8,461,964	$	8,942,424	Total liabilities and stockholders' equity	$	8,633,736	$	8,602,622

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(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	$	75,026	$	77,416	$	150,035	$	156,975	Loans and leases	$	71,721	$	75,009
Debt securities	Debt securities	3,121		3,701		6,239		6,677		Debt securities	2,996		3,118
Marketable and restricted equity securities	Marketable and restricted equity securities	233		908		534		1,686		Marketable and restricted equity securities	328		301
Short-term investments	Short-term investments	42		99		81		308		Short-term investments	66		39
Total interest and dividend income	Total interest and dividend income	78,422		82,124		156,889		165,646		Total interest and dividend income	75,111		78,467
Interest expense:	Interest expense:									Interest expense:
Deposits	Deposits	5,380		12,778		12,087		29,018		Deposits	3,771		6,707
Borrowed funds	Borrowed funds	1,936		5,058		4,587		10,628		Borrowed funds	1,492		2,651
Total interest expense	Total interest expense	7,316		17,836		16,674		39,646		Total interest expense	5,263		9,358
Net interest income	Net interest income	71,106		64,288		140,215		126,000		Net interest income	69,848		69,109
(Credit) provision for credit losses	(Credit) provision for credit losses	(3,331)		5,347		(5,478)		59,461		(Credit) provision for credit losses	(164)		(2,147)
Provision for investment losses										Provision for investment losses	4		—
Net interest income after provision for credit losses	Net interest income after provision for credit losses	74,437		58,941		145,693		66,539		Net interest income after provision for credit losses	70,008		71,256
Non-interest income:	Non-interest income:									Non-interest income:
Deposit fees	Deposit fees	3,015		1,929		5,296		4,387		Deposit fees	2,500		2,281
Loan fees	Loan fees	607		513		1,160		1,063		Loan fees	747		599
Loan level derivative income, net	Loan level derivative income, net	7		1,440		481		3,596		Loan level derivative income, net	686		474
Gain (loss) on investment securities, net		1		586		(6)		1,916
(Loss) gain on investment securities, net										(Loss) gain on investment securities, net	—		(7)
Gain on sales of loans and leases held-for-sale	Gain on sales of loans and leases held-for-sale	538		299		1,247		419		Gain on sales of loans and leases held-for-sale	344		709

Other	Other	1,742		1,468		2,526		4,182		Other	1,252		738
Total non-interest income	Total non-interest income	5,910		6,235		10,704		15,563		Total non-interest income	5,529		4,794
Non-interest expense:	Non-interest expense:									Non-interest expense:
Compensation and employee benefits	Compensation and employee benefits	25,161		24,619		50,982		49,838		Compensation and employee benefits	26,884		25,821
Occupancy	Occupancy	3,832		3,825		7,836		7,778		Occupancy	4,284		4,004
Equipment and data processing	Equipment and data processing	4,697		4,155		9,190		8,858		Equipment and data processing	5,078		4,493
Professional services	Professional services	1,245		1,056		2,471		2,707		Professional services	1,226		1,226
FDIC insurance	FDIC insurance	657		858		1,701		1,236		FDIC insurance	728		1,044
Advertising and marketing	Advertising and marketing	1,110		1,017		2,210		2,092		Advertising and marketing	1,272		1,100
Amortization of identified intangible assets	Amortization of identified intangible assets	228		311		460		647		Amortization of identified intangible assets	134		232

Other	Other	1,036		3,268		3,927		6,701		Other	2,881		2,891
Total non-interest expense	Total non-interest expense	37,966		39,109		78,777		79,857		Total non-interest expense	42,487		40,811
Income before provision for income taxes	Income before provision for income taxes	42,381		26,067		77,620		2,245		Income before provision for income taxes	33,050		35,239
Provision (benefit) for income taxes		10,779		6,496		19,564		(50)
Provision for income taxes										Provision for income taxes	8,345		8,785

Net income	Net income	$	31,602	$	19,571	$	58,056	$	2,295	Net income	$	24,705	$	26,454
Earnings per common share:	Earnings per common share:									Earnings per common share:
Basic	Basic	$	0.40	$	0.25	$	0.74	$	0.03	Basic	$	0.32	$	0.34
Diluted	Diluted	0.40		0.25		0.74		0.03		Diluted	0.32		0.34
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	78,150,364		78,849,282		78,147,076		79,165,372		Basic	77,617,227		78,143,752
Diluted	Diluted	78,470,451		79,015,274		78,437,275		79,340,524		Diluted	77,926,822		78,404,063
Dividends paid per common share	Dividends paid per common share	$	0.120	$	0.115	$	0.235	$	0.230	Dividends paid per common share	$	0.125	$	0.115

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income (Loss)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In Thousands)									(In Thousands)
Net income (loss)	Net income (loss)	$	31,602	$	19,571	$	58,056	$	2,295	Net income (loss)	$	24,705	$	26,454

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)	5,135		3,952		(13,346)		25,115		Unrealized securities holding gains (losses)	(37,542)		(18,481)

Income tax (expense) benefit	Income tax (expense) benefit	(1,132)		(867)		2,941		(5,533)		Income tax (expense) benefit	8,275		4,073
Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	4,003		3,085		(10,405)		19,582		Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes	(29,267)		(14,408)
Less reclassification adjustments for securities gains (losses) included in net income:
Gain (loss) on sales of securities, net		0		634		0		2,987
Income tax expense (benefit)		0		(140)		0		(660)
Net reclassification adjustments for securities gains (losses) included in net income		0		494		0		2,327
Net unrealized securities holding gains (losses)		4,003		2,591		(10,405)		17,255

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	8		0		9		0		Change in fair value of cash flow hedges	57		2
Reclassification adjustment for (income) expense recognized in earnings	Reclassification adjustment for (income) expense recognized in earnings	(4)		0		(5)		0		Reclassification adjustment for (income) expense recognized in earnings	(2)		(2)
Net change in fair value of cash flow hedges	Net change in fair value of cash flow hedges	4		0		4		0		Net change in fair value of cash flow hedges	55		—

Other comprehensive income (loss), net of taxes	Other comprehensive income (loss), net of taxes	4,007		2,591		(10,401)		17,255		Other comprehensive income (loss), net of taxes	(29,212)		(14,408)

Comprehensive income (loss)	Comprehensive income (loss)	$	35,609	$	22,162	$	47,655	$	19,550	Comprehensive income (loss)	$	(4,507)	$	12,046

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 ~~June 30,~~March 31, 2022 and 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 March 31, 2021 $ 852 $ 737,882 $ 282,301 $ 2,082 $ (77,463) $ (255) $ 945,399
Net income — — 31,602 — — — 31,602
Other comprehensive income (loss) — — — 4,007 — — 4,007
Common stock dividends of $0.120 per share — — (9,383) — — — (9,383)
Restricted stock awards issued, net of awards surrendered — 30 — — (30) — 0
Compensation under recognition and retention plans — 584 (54) — — — 530
Common stock held by ESOP committed to be released (6,612 shares) — 61 — — — 36 97
Balance at June 30, 2021 $ 852 $ 738,557 $ 304,466 $ 6,089 $ (77,493) $ (219) $ 972,252


	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, 2021	$	852	$	736,826	$	342,639	$	(110)	$	(84,718)	$	(147)	$	995,342
Net income	—		—		24,705		—		—		—		24,705



Other comprehensive income (loss)	—		—		—		(29,212)		—		—		(29,212)
Common stock dividends of $0.125 per share	—		—		(9,705)		—		—		—		(9,705)



Compensation under recognition and retention plans	—		757		(63)		—		—		—		694
Common stock held by ESOP committed to be released (6,609 shares)	—		75		—		—		—		36		111

Balance at March 31, 2022	$	852	$	737,658	$	357,576	$	(29,322)	$	(84,718)	$	(111)	$	981,935


																	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Unallocated Common Stock Held by ESOP		Total Stockholders' Equity
		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)
		(In Thousands)
Balance at March 31, 2020		$	852	$	737,422	$	227,359	$	16,947	$	(69,617)	$	(395)	$	912,568
Balance at December 31, 2020																Balance at December 31, 2020	$	852	$	737,178	$	264,892	$	16,490	$	(77,343)	$	(291)	$	941,778
Net income	Net income	—		—		19,571		—		—		—		19,571		Net income	—		—		26,454		—		—		—		26,454

Other comprehensive income (loss)	Other comprehensive income (loss)	—		—		—		2,591		—		—		2,591		Other comprehensive income (loss)	—		—		—		(14,408)		—		—		(14,408)
Common stock dividends of $0.115 per share	Common stock dividends of $0.115 per share	—		—		(9,076)		—		—		—		(9,076)		Common stock dividends of $0.115 per share	—		—		(8,992)		—		—		—		(8,992)

Restricted stock awards issued, net of awards surrendered																Restricted stock awards issued, net of awards surrendered	—		120		—		—		(120)		—		—
Compensation under recognition and retention plan	Compensation under recognition and retention plan	—		701		(46)		—		45		—		700		Compensation under recognition and retention plan	—		537		(53)		—		—		—		484

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

Common stock held by ESOP committed to be released (7,107 shares)		—		32		—		—		—		27		59
Balance at June 30, 2020		$	852	$	738,155	$	237,808	$	19,538	$	(69,572)	$	(368)	$	926,413
Balance at March 31, 2021																Balance at March 31, 2021	$	852	$	737,882	$	282,301	$	2,082	$	(77,463)	$	(255)	$	945,399

~~See accompanying notes to unaudited consolidated financial statements.~~

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

~~Unaudited Consolidated Statements of Changes in Stockholders' Equity~~

~~Six Months Ended June 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 — — 58,056 — — — 58,056
Other comprehensive income (loss) — — — (10,401) — — (10,401)
Common stock dividends of $0.235 per share — — (18,375) — — — (18,375)
Restricted stock awards issued, net of awards surrendered — 150 — — (150) — 0
Compensation under recognition and retention plans — 1,121 (107) — — — 1,014
Common stock held by ESOP committed to be released (13,224 shares) — 108 — — — 72 180
Balance at June 30, 2021 $ 852 $ 738,557 $ 304,466 $ 6,089 $ (77,493) $ (219) $ 972,252

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 — — 2,295 — — — 2,295
Other comprehensive income (loss) — — — 17,255 — — 17,255
Common stock dividends of $0.230 per share — — (18,249) — — — (18,249)
Compensation under recognition and retention plans — 1,459 (91) — (90) — 1,278
Treasury stock, repurchase shares — — — — (10,409) — (10,409)
Common stock held by ESOP committed to be released (14,214 shares) — 95 — — — 65 160
Adoption of ASU 2016-13 (CECL) — — (11,523) — — — (11,523)
Balance at June 30, 2020 $ 852 $ 738,155 $ 237,808 $ 19,538 $ (69,572) $ (368) $ 926,413

See accompanying notes to unaudited consolidated financial statements.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(In Thousands)					(In Thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	58,056	$	2,295	Net income	$	24,705	$	26,454
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		(5,478)		59,461
Credit for provision for credit losses						Credit for provision for credit losses	(164)		(2,147)

Deferred income tax expense (benefit)		1,746		(22,539)
Deferred income tax expense						Deferred income tax expense	376		1,345
Depreciation of premises and equipment	Depreciation of premises and equipment	2,805		3,025		Depreciation of premises and equipment	1,461		1,318
Amortization of investment securities premiums and discounts, net	Amortization of investment securities premiums and discounts, net	1,643		1,048		Amortization of investment securities premiums and discounts, net	646		770
Amortization of deferred loan and lease origination costs, net	Amortization of deferred loan and lease origination costs, net	3,057		3,913		Amortization of deferred loan and lease origination costs, net	1,438		1,584
Amortization of identified intangible assets	Amortization of identified intangible assets	460		647		Amortization of identified intangible assets	134		232
Amortization of debt issuance costs	Amortization of debt issuance costs	50		51		Amortization of debt issuance costs	26		25
Accretion of acquisition fair value adjustments, net	Accretion of acquisition fair value adjustments, net	(48)		(389)		Accretion of acquisition fair value adjustments, net	(3)		(51)
Loss (gain) on investment securities, net		6		(1,916)
Loss on investment securities, net						Loss on investment securities, net	—		7
Gain on sales of loans and leases held-for-sale	Gain on sales of loans and leases held-for-sale	(1,247)		(419)		Gain on sales of loans and leases held-for-sale	(344)		(709)

Gain on sales of OREO and other repossessed assets, net		(2,108)		0

Write-down of OREO and other repossessed assets		165		830

(Recovery) write-down of OREO and other repossessed assets						(Recovery) write-down of OREO and other repossessed assets	(8)		129
Compensation under recognition and retention plans	Compensation under recognition and retention plans	1,120		1,370		Compensation under recognition and retention plans	694		536
ESOP shares committed to be released	ESOP shares committed to be released	180		160		ESOP shares committed to be released	111		83
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	(505)		(509)		Cash surrender value of bank-owned life insurance	(252)		(251)
Equity securities held-for-trading		520		518

Other assets	Other assets	47,641		(120,680)		Other assets	22,908		58,480
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(36,753)		106,198		Accrued expenses and other liabilities	(35,584)		(68,387)
Net cash provided from operating activities	Net cash provided from operating activities	71,310		33,064		Net cash provided from operating activities	16,144		19,418

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from sales of investment securities available-for-sale		0		131,499

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	108,519		56,194		Proceeds from maturities, calls, and principal repayments of investment securities available-for-sale	36,251		46,184
Purchases of investment securities available-for-sale	Purchases of investment securities available-for-sale	(71,837)		(438,658)		Purchases of investment securities available-for-sale	(84,135)		(49,514)
Proceeds from maturities, calls, and principal repayments of investment securities held to maturity		0		6,302

Proceeds from redemption/sales of restricted equity securities	Proceeds from redemption/sales of restricted equity securities	19,120		3,662		Proceeds from redemption/sales of restricted equity securities	3,860		9,386
Purchase of restricted equity securities	Purchase of restricted equity securities	(961)		(21,482)		Purchase of restricted equity securities	(3,945)		—
Proceeds from sales of loans and leases held-for-investment, net	Proceeds from sales of loans and leases held-for-investment, net	720		5,901		Proceeds from sales of loans and leases held-for-investment, net	28,093		50
Net decrease (increase) in loans and leases		243,765		(685,516)
Net increase in loans and leases						Net increase in loans and leases	(100,454)		(995)

Purchase of premises and equipment, net	Purchase of premises and equipment, net	(2,638)		(1,906)		Purchase of premises and equipment, net	(497)		(2,347)
Proceeds from sales of OREO and other repossessed assets	Proceeds from sales of OREO and other repossessed assets	8,838		3,148		Proceeds from sales of OREO and other repossessed assets	427		385

Net cash provided from (used for) investing activities		305,526		(940,856)
Net cash (used for) provided from investing activities						Net cash (used for) provided from investing activities	(120,400)		3,149

									(Continued)

				(Continued)

See accompanying notes to unaudited consolidated financial statements.

Table of Contents


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(In Thousands)					(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	628,655		679,855		Increase in demand checking, NOW, savings and money market accounts	114,131		296,341
(Decrease) increase in certificates of deposit		(644,606)		(69,356)
Decrease in certificates of deposit						Decrease in certificates of deposit	(69,659)		(340,207)
Proceeds from FHLBB advances	Proceeds from FHLBB advances	113,300		2,225,600		Proceeds from FHLBB advances	230,000		63,300
Repayment of FHLBB advances	Repayment of FHLBB advances	(557,995)		(1,716,499)		Repayment of FHLBB advances	(176,671)		(333,503)

(Decrease) in other borrowed funds, net		(12,613)		(5,258)
Increase (decrease) in mortgagors' escrow accounts, net		330		(765)
Decrease in other borrowed funds, net						Decrease in other borrowed funds, net	(17,790)		(4,078)
(Decrease) increase in mortgagors' escrow accounts, net						(Decrease) increase in mortgagors' escrow accounts, net	(516)		582

Repurchases of common stock		0		(10,410)

Payment of dividends on common stock	Payment of dividends on common stock	(18,375)		(18,249)		Payment of dividends on common stock	(9,705)		(8,992)

Net cash (used for) provided from financing activities		(491,304)		1,084,918
Net (decrease) increase in cash and cash equivalents		(114,468)		177,126
Net cash provided from (used for) financing activities						Net cash provided from (used for) financing activities	69,790		(326,557)
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(34,466)		(303,990)
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	327,737		434,917
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	320,449	$	254,916	Cash and cash equivalents at end of period	$	293,271	$	130,927

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	$	17,572	$	40,577	Interest on deposits, borrowed funds and subordinated debt	$	6,331	$	11,007
Income taxes	Income taxes	11,720		13,160		Income taxes	2,221		2,212
Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:

Transfer from loans to other real estate owned		$	752	$	2,801
Transfer from loans to other repossessed assets						Transfer from loans to other repossessed assets	$	691	$	382

See accompanying notes to unaudited consolidated financial statements.

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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. Clarendon Private is a registered investment advisor with the Securities and Exchange Commission ("SEC"). Through Clarendon Private, the Company offers a wide range of wealth management services to individuals, families, endowments and foundations to help these clients meet their long-term financial goals.

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 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 bank deposit balances in excess of federal deposit insurance coverage. Brookline Bank’s growth in deposit size necessitated its withdrawal from the DIF and the concurrent charter conversion. 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. Clarendon Private is also subject to regulation by the SEC.

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.~~2021.

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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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)~~

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,~~March 2022, the ~~Financial Accounting Standards Board ("FASB")~~FASB issued ASU ~~2016-13, “Financial~~2022-02, "Financial Instruments - Credit Losses (Topic 326)~~: Measurement~~, Troubled Debt Restructurings and Vintage Disclosures" which addresses concerns regarding the complex accounting for loans modified as troubled debt restructurings (“TDR”s) and also the disclosure of ~~Credit Losses on Financial Instruments” (“~~gross writeoff information included in required vintage disclosures. Management has determined that ASU ~~2016-13”). ASU 2016-13 replaced~~2022-02 does apply to the ~~previous GAAP method of calculating credit losses. Previously, GAAP required the use of the incurred loss methodology, which used~~Company. The adoption is not expected to have 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 anmaterial impact on the ~~Company's~~Company’s consolidated ~~balance sheet. On~~financial statements.

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)" ("ASU 2021-06"), which updated 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 has adopted ASU 2021-06 as of December 31, 2021. The adoption did not have a material impact on 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.Company’s consolidated financial statements.

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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 0a de minimis allowance for credit loss ("ACL") on available-for-sale debt securities recognized as of ~~June 30, 2021.~~March 31, 2022.

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


		At June 30, 2021									At March 31, 2022
		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	$	245,960	$	3,583	$	3,209	$	246,334	GSE debentures	$	200,046	$	296	$	12,550	$	187,792
GSE CMOs	GSE CMOs	35,149		803		8		35,944		GSE CMOs	25,077		1		821		24,257
GSE MBSs	GSE MBSs	240,300		6,124		370		246,054		GSE MBSs	183,166		121		7,419		175,868

Corporate debt obligations	Corporate debt obligations	22,239		869		0		23,108		Corporate debt obligations	22,147		66		4		22,209
U.S. Treasury bonds	U.S. Treasury bonds	142,080		2,154		2,020		142,214		U.S. Treasury bonds	337,402		79		17,540		319,941
Foreign government obligations	Foreign government obligations	500		0		3		497		Foreign government obligations	500		—		5		495

Total investment securities available-for-sale	Total investment securities available-for-sale	$	686,228	$	13,533	$	5,610	$	694,151	Total investment securities available-for-sale	$	768,338	$	563	$	38,339	$	730,562


		December 31, 2020									December 31, 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	$	273,820	$	5,455	$	630	$	278,645	GSE debentures	$	219,723	$	2,017	$	4,235	$	217,505
GSE CMOs	GSE CMOs	44,937		1,103		12		46,028		GSE CMOs	27,892		274		27		28,139
GSE MBSs	GSE MBSs	312,658		10,956		5		323,609		GSE MBSs	196,930		3,749		907		199,772

Corporate debt obligations	Corporate debt obligations	22,299		1,168		0		23,467		Corporate debt obligations	22,178		505		—		22,683
U.S. Treasury bonds	U.S. Treasury bonds	70,339		3,318		80		73,577		U.S. Treasury bonds	253,878		1,136		2,746		252,268

Foreign government obligations	Foreign government obligations	500		0		4		496		Foreign government obligations	500		—		1		499

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	$	721,101	$	7,681	$	7,916	$	720,866

Equity securities held-for-trading								$	526

As of ~~June 30, 2021,~~March 31, 2022, the fair value of all investment securities available-for-sale was ~~$694.2~~$730.6 million, with net unrealized ~~gains~~losses of ~~$7.9~~$37.8 million, compared to a fair value of ~~$745.8~~$720.9 million and net unrealized ~~gains~~losses of ~~$21.3~~$0.2 million as of December 31, ~~2020.~~2021. As of ~~June 30, 2021, $214.2~~March 31, 2022, $630.7 million, or ~~30.9%~~86.3% of the portfolio, had gross unrealized losses of ~~$5.6~~$38.3 million, compared to ~~$86.9~~$353.8 million, or ~~11.7%~~49.1% of the portfolio, with gross unrealized losses of ~~$0.7~~$7.9 million as of December 31, ~~2020.~~2021.

~~As of June 30, 2021, the Company did 0t hold any equity securities held-for-trading, compared to a fair value of $0.5 million as of December 31, 2020.~~

Investment Securities as Collateral

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, ~~$402.1~~$379.5 million and ~~$448.7~~$491.8 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

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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 ~~$2.6~~$2.8 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

A debt security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a debt security placed on nonaccrual is reversed against interest income. There were no debt securities on nonaccrual status and therefore there was no accrued interest related to debt securities reversed against interest income for the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Assessment for Available for Sale Securities for Impairment

Investment securities as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer are as follows:


		At June 30, 2021													At March 31, 2022
		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	$	91,341	$	3,018	$	7,874	$	191	$	99,215	$	3,209	GSE debentures	$	35,850	$	756	$	99,573	$	11,794	$	135,423	$	12,550
GSE CMOs	GSE CMOs	0		0		924		8		924		8		GSE CMOs	23,490		793		490		28		23,980		821
GSE MBSs	GSE MBSs	49,570		367		374		3		49,944		370		GSE MBSs	115,072		3,042		52,113		4,377		167,185		7,419

Corporate debt obligations														Corporate debt obligations	2,498		4		—		—		2,498		4
U.S. Treasury bonds	U.S. Treasury bonds	63,658		2,020		0		0		63,658		2,020		U.S. Treasury bonds	250,457		12,273		50,664		5,267		301,121		17,540
Foreign government obligations	Foreign government obligations	0		0		497		3		497		3		Foreign government obligations	495		5		—		—		495		5

Temporarily impaired investment securities available-for-sale	Temporarily impaired investment securities available-for-sale	204,569		5,405		9,669		205		214,238		5,610		Temporarily impaired investment securities available-for-sale	427,862		16,873		202,840		21,466		630,702		38,339

Total temporarily impaired investment securities	Total temporarily impaired investment securities	$	204,569	$	5,405	$	9,669	$	205	$	214,238	$	5,610	Total temporarily impaired investment securities	$	427,862	$	16,873	$	202,840	$	21,466	$	630,702	$	38,339

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


		At December 31, 2020													At December 31, 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	$	72,745	$	630	$	0	$	0	$	72,745	$	630	GSE debentures	$	45,695	$	1,487	$	70,075	$	2,748	$	115,770	$	4,235
GSE CMOs	GSE CMOs	832		7		872		5		1,704		12		GSE CMOs	2,712		27		—		—		2,712		27
GSE MBSs	GSE MBSs	2,102		5		97		0		2,199		5		GSE MBSs	57,656		907		—		—		57,656		907

U.S. Treasury bonds	U.S. Treasury bonds	9,750		80		0		0		9,750		80		U.S. Treasury bonds	177,162		2,746		—		—		177,162		2,746
Foreign government obligations	Foreign government obligations	0		0		496		4		496		4		Foreign government obligations	499		1		—		—		499		1

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	283,724		5,168		70,075		2,748		353,799		7,916

Total temporarily impaired investment securities	Total temporarily impaired investment securities	$	85,429	$	722	$	1,465	$	9	$	86,894	$	731	Total temporarily impaired investment securities	$	283,724	$	5,168	$	70,075	$	2,748	$	353,799	$	7,916

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 ~~June 30, 2021.The~~March 31, 2022. 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 ~~June 30, 2021.~~March 31, 2022. 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 ~~June 30, 2021,~~March 31, 2022, 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 ~~$5.6~~$3.5 million, all of which were backed explicitly by the full faith and credit of the U.S. Government, compared to ~~$7.3~~$4.2 million as of December 31, ~~2020.~~

As of June 30, 2021, the Company owned 54 GSE debentures with a total fair value of $246.3 million, and a net unrealized gain of $0.4 million. As of December 31, 2020, the Company held 54 GSE debentures with a total fair value of2021.

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Notes to Unaudited Consolidated Financial Statements (Continued)

~~$278.6~~As of March 31, 2022, the Company owned 41 GSE debentures with a total fair value of $187.8 million, and a net unrealized loss of $12.3 million. As of December 31, 2021, the Company held 45 GSE debentures with a total fair value of $217.5 million, with a net unrealized ~~gain~~loss of ~~$4.8~~$2.2 million. As of ~~June 30, 2021, 10~~March 31, 2022, 21 of the 5441 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2020, 7~~2021, 12 of the 5445 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 ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, the Company did not purchase GSE debentures. This compares to the same period in 2020 when the Company purchased $169.0 million GSE debentures. During the six months ended June 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 ~~June 30, 2021,~~March 31, 2022, the Company owned 33 GSE CMOs with a total fair value of ~~$35.9~~$24.3 million and a net unrealized ~~gain~~loss of $0.8 million. As of December 31, ~~2020,~~2021, the Company held 33 GSE CMOs with a total fair value of ~~$46.0~~$28.1 million with a net unrealized gain of ~~$1.1~~$0.2 million. As of ~~June 30,~~March 31, 2022, 31 of the 33 securities in this portfolio were in an unrealized loss position. As of December 31, 2021, ~~and December 30, 2020, 2~~5 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 ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company did 0tnot purchase any GSE CMOs.

As of ~~June 30, 2021,~~March 31, 2022, the Company owned 139 GSE MBSs with a total fair value of ~~$246.1~~$175.9 million and a net unrealized ~~gain~~loss of ~~$5.8~~$7.3 million. As of December 31, ~~2020,~~2021, the Company held ~~140~~139 GSE MBSs with a total fair value of ~~$323.6~~$199.8 million with a net unrealized gain of ~~$11.0~~$2.8 million. As of ~~June 30, 2021, 20~~March 31, 2022, 99 of the 139 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2020, 17~~2021, 16 of the ~~140~~139 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 ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, the Company did not purchase any GSE MBSs. This compares to the same period in 2020 when the Company purchased $248.4 million GSE MBSs. During the six months ended June 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 ~~June 30,~~March 31, 2022, the Company held 6 corporate obligation securities with a total fair value of $22.2 million and a net unrealized gain of $0.1 million. As of December 31, 2021, the Company held 6 corporate obligation securities with a total fair value of ~~$23.1~~$22.7 million and a net unrealized gain of ~~$0.9~~$0.5 million. As of March 31, 2022, 1 of the 6 securities in this portfolio were in an unrealized loss position. 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 June 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 ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company did 0tnot purchase any corporate obligations. ~~During the six months ended June 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 ~~June 30, 2021,~~March 31, 2022, the Company owned 1940 U.S. Treasury bonds with a total fair value of ~~$142.2~~$319.9 million and an unrealized ~~gain~~loss of ~~$0.1~~$17.5 million. This compares to 1234 U.S. Treasury bonds with a total fair value of ~~$73.6~~$252.3 million and an unrealized ~~gain~~loss of ~~$3.2~~$1.6 million as of December 31, ~~2020.~~2021. As of ~~June 30, 2021, 7~~March 31, 2022, 37 of the 1940 securities in this portfolio were in an unrealized loss position. As of December 31, ~~2020, 1~~2021, 18 of the 1234 securities in this portfolio ~~was~~were in an unrealized loss position. During the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 the Company purchased ~~$71.8~~$83.6 million U.S. Treasury bonds, compared to the same period in ~~2020~~2021 when the Company purchased ~~$21.2~~$49.5 million U.S. Treasury bonds.

~~MunicipalObligations~~

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

Foreign Government Obligations

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company owned 1 foreign government obligation security with a fair value of $0.5 million, which approximated cost. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 respectively, the security was in an unrealized loss position. During the three months ended March 31, 2022, the Company repurchased the foreign government obligations that had matured.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

~~an unrealized loss position. During the six months ended June 30, 2021 and 2020, the Company did 0t purchase any foreign government obligations.~~

~~Equity Securities Held-for-Trading~~

From time to time, the Company will invest in equity securities held-for-trading. As of June 30, 2021, the Company did 0t 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 June 30, 2021						At December 31, 2020							At March 31, 2022						At December 31, 2021
		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	$	60,865	$	61,478	1.98	%	$	31,633	$	32,013	2.02	%	Within 1 year	$	52,242	$	52,492	2.24	%	$	53,791	$	54,183	2.09	%
After 1 year through 5 years	After 1 year through 5 years	251,542		256,988		1.95	%	146,274		153,262		2.22	%	After 1 year through 5 years	215,368		211,246		1.81	%	139,068		141,928		1.95	%
After 5 years through 10 years	After 5 years through 10 years	115,322		120,226		2.26	%	222,271		225,568		1.43	%	After 5 years through 10 years	311,298		286,351		1.30	%	322,873		317,324		1.29	%
Over 10 years	Over 10 years	258,499		255,459		1.31	%	324,375		334,979		1.86	%	Over 10 years	189,430		180,473		2.04	%	205,369		207,431		1.96	%
		$	686,228	$	694,151	1.77	%	$	724,553	$	745,822	1.81	%		$	768,338	$	730,562	1.70	%	$	721,101	$	720,866	1.67	%

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 ~~June 30, 2021,~~March 31, 2022, issuers of debt securities with an estimated fair value of ~~$67.8~~$62.4 million had the right to call or prepay the obligations. Of the ~~$67.8~~$62.4 million, approximately ~~$12.7~~$3.0 million matures in ~~1 - 5 years, $45.2~~less then a year, $9.1 million matures in ~~6 - 10~~1-5 years, $41.7 million matures in 6-10 years, and ~~$9.9~~$8.6 million matures after ten years. As of December 31, ~~2020,~~2021, issuers of debt securities with an estimated fair value of approximately ~~$90.8~~$67.0 million had the right to call or prepay the obligations. Of the ~~$90.8~~$67.0 million, ~~$12.9~~approximately $3.1 million matures in less then 1 year, $9.4 million matures in 1-5 years, ~~and $68.1~~$44.9 million matures in ~~6 - 10~~6-10 years, and ~~$9.8~~$9.6 million matures after ten years.

Security Sales

The Company ~~sold $0.5 million of~~did not sell any investment securities available-for-sale or equity securities held-for-trading during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021. ~~This compares to $132.0 million securities sold during the six months ended June 30, 2020.~~

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

Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
(In Thousands)
Proceeds from sales of investment securities available-for-sale and equity securities held-for-trading $ 520 $ 132,014
Gross gains from securities sales 1 3,152
Gross losses from securities sales 0 (167)
Gain on sales of securities, net $ 1 $ 2,985

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Notes to Unaudited Consolidated Financial Statements (Continued)

(4) Loans and Leases

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


		At June 30, 2021				At December 31, 2020					At March 31, 2022				At December 31, 2021
		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	$	2,646,104	3.45	%	$	2,578,773	3.58	%	Commercial real estate	$	2,958,705	3.44	%	$	2,842,791	3.41	%
Multi-family mortgage	Multi-family mortgage	967,891		3.44	%	1,013,432		3.53	%	Multi-family mortgage	1,116,010		3.27	%	1,099,818		3.26	%
Construction	Construction	201,586		3.65	%	231,621		3.49	%	Construction	160,610		3.72	%	160,431		3.60	%
Total commercial real estate loans	Total commercial real estate loans	3,815,581		3.46	%	3,823,826		3.56	%	Total commercial real estate loans	4,235,325		3.41	%	4,103,040		3.38	%
Commercial loans and leases:	Commercial loans and leases:									Commercial loans and leases:
Commercial (1)	Commercial (1)	918,345		2.86	%	1,131,668		2.55	%	Commercial (1)	647,795		3.67	%	734,388		3.31	%
Equipment financing	Equipment financing	1,074,088		7.07	%	1,092,461		7.26	%	Equipment financing	1,108,135		6.78	%	1,105,611		6.86	%
Condominium association	Condominium association	46,418		4.46	%	50,770		4.55	%	Condominium association	44,453		4.35	%	47,137		4.34	%
Total commercial loans and leases	Total commercial loans and leases	2,038,851		5.11	%	2,274,899		4.86	%	Total commercial loans and leases	1,800,383		5.60	%	1,887,136		5.42	%
Consumer loans:	Consumer loans:									Consumer loans:
Residential mortgage	Residential mortgage	799,027		3.61	%	791,317		3.74	%	Residential mortgage	811,960		3.49	%	799,737		3.49	%
Home equity	Home equity	331,038		3.26	%	346,652		3.26	%	Home equity	330,793		3.37	%	324,156		3.27	%
Other consumer	Other consumer	35,778		2.93	%	32,859		3.04	%	Other consumer	44,669		3.06	%	40,388		2.90	%
Total consumer loans	Total consumer loans	1,165,843		3.49	%	1,170,828		3.58	%	Total consumer loans	1,187,422		3.44	%	1,164,281		3.41	%
Total loans and leases	Total loans and leases	$	7,020,275	3.93	%	$	7,269,553	3.97	%	Total loans and leases	$	7,223,130	3.95	%	$	7,154,457	3.92	%

(1) Including ~~$348,411~~$14,013 and ~~$489,216~~$67,711 of PPP loans as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. These loans are fully guaranteed by the SBA and therefore, have not been reserved for in the allowance for credit losses as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Accrued interest on loans and leases, which were excluded from the amortized cost of loans and leases totaled ~~$18.5~~$17.5 million and ~~$20.5~~$16.7 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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 ~~$2.6~~$12.0 million and ~~$4.1~~$10.9 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

The Banks and their subsidiaries lend primarily in all New England states, with the exception of equipment financing, ~~27.7%~~26.4% of which is in the greater New York and New Jersey metropolitan area and ~~72.3%~~73.6% of which is in other areas in the United States of America as of ~~June 30, 2021.~~March 31, 2022.

Loans and Leases Pledged as Collateral

As of ~~June 30,~~March 31, 2022 and December 31, 2021, ~~and 2020,~~ there were ~~$3.1~~$2.2 billion and ~~$3.5~~$2.7 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 0tnot have any outstanding FRB borrowings as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

2021.

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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 June 30, 2021						Three Months Ended March 31, 2022
		Commercial Real Estate		Commercial		Consumer			Total			Commercial Real Estate		Commercial		Consumer		Total
		(In Thousands)						(In Thousands)
Balance at March 31, 2021		$	79,929	$	25,825	$	4,083		$	109,837
Balance at December 31, 2021											Balance at December 31, 2021	$	69,213	$	27,055	$	2,816	$	99,084

Charge-offs	Charge-offs	(28)		(1,184)		(9)			(1,221)		Charge-offs	(37)		(2,301)		(6)		(2,344)
Recoveries	Recoveries	11		489		126			626		Recoveries	6		353		38		397
(Credit) provision for loan and lease losses excluding unfunded commitments	(Credit) provision for loan and lease losses excluding unfunded commitments	(5,903)		3,234		(99)			(2,768)		(Credit) provision for loan and lease losses excluding unfunded commitments	(151)		(1,604)		81		(1,674)
Balance at June 30, 2021		$	74,009	$	28,364	$	4,101		$	106,474
Balance at March 31, 2022											Balance at March 31, 2022	$	69,031	$	23,503	$	2,929	$	95,463


		Three Months Ended June 30, 2020						Three Months Ended March 31, 2021
		Commercial Real Estate		Commercial		Consumer			Total			Commercial Real Estate		Commercial		Consumer		Total
		(In Thousands)						(In Thousands)
Balance at March 31, 2020		$	82,179	$	26,774	$	4,228		$	113,181
Balance at December 31, 2020											Balance at December 31, 2020	$	80,132	$	29,498	$	4,749	$	114,379

Charge-offs	Charge-offs	0		(1,794)		(9)			(1,803)		Charge-offs	—		(2,140)		(3)		(2,143)
Recoveries	Recoveries	94		296		30			420		Recoveries	—		331		52		383
(Credit) provision for loan and lease losses excluding unfunded commitments	(Credit) provision for loan and lease losses excluding unfunded commitments	7,738		(338)		355			7,755		(Credit) provision for loan and lease losses excluding unfunded commitments	(203)		(1,864)		(715)		(2,782)
Balance at June 30, 2020		$	90,011	$	24,938	$	4,604		$	119,553
Balance at March 31, 2021											Balance at March 31, 2021	$	79,929	$	25,825	$	4,083	$	109,837

Six Months Ended June 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) (3,323) (13) (3,364)
Recoveries 11 819 179 1,009
(Credit) provision for loan and lease losses excluding unfunded commitments (6,106) 1,370 (814) (5,550)
Balance at June 30, 2021 $ 74,009 $ 28,364 $ 4,101 $ 106,474

Six Months Ended June 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 0 (4,321) (21) (4,342)
Recoveries 94 543 88 725
Provision for loan and lease losses 47,938 6,562 956 55,456
Balance at June 30, 2020 $ 90,011 $ 24,938 $ 4,604 $ 119,553

The allowance for credit losses for unfunded credit commitments, which is included in other liabilities, was ~~$13.1~~$16.3 million and ~~$13.1~~$14.8 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

Provision for Credit Losses

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(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	$	(5,903)	$	7,738	$	(6,106)	$	47,938	Commercial real estate	$	(151)	$	(203)
Commercial	Commercial	3,234		(338)		1,370		6,562		Commercial	(1,604)		(1,864)
Consumer	Consumer	(99)		355		(814)		956		Consumer	81		(715)

Total (credit) provision for loan and lease losses	Total (credit) provision for loan and lease losses	(2,768)		7,755		(5,550)		55,456		Total (credit) provision for loan and lease losses	(1,674)		(2,782)
Unfunded commitments	Unfunded commitments	(563)		(2,408)		72		4,005		Unfunded commitments	1,510		635
Total (credit) provision for credit losses	Total (credit) provision for credit losses	$	(3,331)	$	5,347	$	(5,478)	$	59,461	Total (credit) provision for credit losses	$	(164)	$	(2,147)

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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

To calculate the allowance for loans collectively evaluated, management uses models developed by a third party. The models include: Commercial real estate ("CRE"), 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.

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 forecasts utilized at ~~June 30, 2021~~March 31, 2022 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.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

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 ~~June 30, 2021,~~March 31, 2022, 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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Beginning January 1, 2020, the Company implemented the ~~CECL~~current expected credit loss ("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 ~~$105.4~~$94.0 million as of ~~June 30, 2021,~~March 31, 2022, compared to ~~$112.1~~$95.8 million as of December 31, ~~2020.~~2021. The reduction in the ACL is attributable to 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~~$1.4 million as of ~~June 30, 2021,~~March 31, 2022, compared to ~~$2.3~~$3.3 million as of December 31, ~~2020.~~2021. The specific allowance decreased by ~~$1.2~~$1.9 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 primarily due to the ~~decrease in~~charge-off of a specific ~~reserves~~reserve for ~~the remaining individually evaluated loans due to improving collection prospects.The specific allowance for loan and lease losses was $1.1 million as of June 30, 2021 and March 31, 2021.~~a specialty finance relationship.

As of ~~June 30, 2021,~~March 31, 2022, 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.

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

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~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

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.

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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

7 Rating—Doubtful

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

8 Rating—Definite Loss

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

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

Credit Quality Information

The following table presents the amortized cost basis of loans in each class by credit quality indicator and year of origination as of ~~June 30, 2021.~~March 31, 2022.


	March 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
			(In Thousands)
Commercial Real Estate
Pass	$	184,982	$	650,153	$	318,320	$	387,494	$	238,036	$	1,069,088	$	44,430	$	11,443	$	2,903,946
OAEM	—		—		—		16,336		2,876		24,881		—		—		44,093
Substandard	—		668		—		—		—		7,331		—		2,667		10,666

Total	184,982		650,821		318,320		403,830		240,912		1,101,300		44,430		14,110		2,958,705
Multi-Family Mortgage
Pass	31,774		230,683		125,109		151,307		122,141		413,586		4,186		36,043		1,114,829
OAEM	—		—		—		—		—		1,181		—		—		1,181


Total	31,774		230,683		125,109		151,307		122,141		414,767		4,186		36,043		1,116,010
Construction
Pass	8,569		51,791		31,439		7,983		49,665		—		7,377		—		156,824

Substandard	—		—		—		3,786		—		—		—		—		3,786

Total	8,569		51,791		31,439		11,769		49,665		—		7,377		—		160,610

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	March 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
			(In Thousands)
Commercial
Pass	4,292		180,231		62,800		45,217		35,285		85,925		220,932		1,283		635,965
OAEM	—		2,667		1,439		2,693		2,275		0		395		0		9,469
Substandard	—		17		—		—		80		224		808		1,231		2,360
Doubtful	—		—		—		—		—		—		—		1		1
Total	4,292		182,915		64,239		47,910		37,640		86,149		222,135		2,515		647,795
Equipment Financing
Pass	91,062		338,486		243,368		196,461		116,153		99,461		8,269		1,649		1,094,909
OAEM	—		—		194		1,184		—		12		—		—		1,390
Substandard	—		288		931		3,262		3,211		4,130		—		—		11,822
Doubtful	—		—		—		—		1		13		—		—		14
Total	91,062		338,774		244,493		200,907		119,365		103,616		8,269		1,649		1,108,135
Condominium Association
Pass	828		4,605		9,196		7,107		3,937		16,906		1,763		34		44,376

Substandard	—		—		—		—		—		77		—		—		77

Total	828		4,605		9,196		7,107		3,937		16,983		1,763		34		44,453
Other Consumer
Pass	347		627		46		34		1,506		755		41,347		7		44,669



Total	347		627		46		34		1,506		755		41,347		7		44,669
Total
Pass	321,854		1,456,576		790,278		795,603		566,723		1,685,721		328,304		50,459		5,995,518
OAEM	—		2,667		1,633		20,213		5,151		26,074		395		—		56,133
Substandard	—		973		931		7,048		3,291		11,762		808		3,898		28,711
Doubtful	—		—		—		—		1		13		—		1		15
Total	$	321,854	$	1,460,216	$	792,842	$	822,864	$	575,166	$	1,723,570	$	329,507	$	54,358	$	6,080,377

As of March 31, 2022, there were no loans categorized as definite loss.

June 30, 2021
2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(In Thousands)
Commercial Real Estate

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

June 30, 2021
2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(In Thousands)
Pass $ 250,161 $ 353,110 $ 367,648 $ 247,536 $ 217,389 $ 1,054,660 $ 50,918 $ 14,237 $ 2,555,659
OAEM 687 834 27,398 0 4,902 42,220 0 0 76,041
Substandard 0 195 0 0 1,604 8,611 0 3,994 14,404
Total 250,848 354,139 395,046 247,536 223,895 1,105,491 50,918 18,231 2,646,104
Multi-Family Mortgage
Pass 60,027 124,950 144,801 115,350 93,077 394,645 4,784 27,518 965,152
OAEM 0 0 0 0 0 2,739 0 0 2,739
Total 60,027 124,950 144,801 115,350 93,077 397,384 4,784 27,518 967,891
Construction
Pass 4,663 52,601 46,573 87,246 658 6,023 0 0 197,764
Substandard 0 0 3,822 0 0 0 0 0 3,822
Total 4,663 52,601 50,395 87,246 658 6,023 0 0 201,586
Commercial
Pass 312,085 152,581 47,241 38,867 20,149 125,055 192,823 1,359 890,160
OAEM 0 1,592 3,933 0 12,840 7 1,521 0 19,893
Substandard 0 31 0 107 299 2,511 4,485 857 8,290
Doubtful 0 0 0 0 0 1 0 1 2
Total 312,085 154,204 51,174 38,974 33,288 127,574 198,829 2,217 918,345
Equipment Financing
Pass 149,995 304,555 265,845 168,156 89,716 74,929 2,139 618 1,055,953
OAEM 0 196 1,185 480 172 691 0 0 2,724
Substandard 0 1,094 2,939 5,013 3,529 1,873 0 0 14,448
Doubtful 0 1 381 1 6 574 0 0 963
Total 149,995 305,846 270,350 173,650 93,423 78,067 2,139 618 1,074,088
Condominium Association
Pass 717 9,132 8,390 4,531 6,301 15,624 1,586 40 46,321
Substandard 0 0 0 0 0 97 0 0 97
Total 717 9,132 8,390 4,531 6,301 15,721 1,586 40 46,418

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

June 30, 2021
2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(In Thousands)
Other Consumer
Pass 613 215 504 1,818 30 765 31,817 14 35,776
Substandard 0 0 0 0 0 1 0 1 2
Total 613 215 504 1,818 30 766 31,817 15 35,778
Total
Pass 778,261 997,144 881,002 663,504 427,320 1,671,701 284,067 43,786 5,746,785
OAEM 687 2,622 32,516 480 17,914 45,657 1,521 0 101,397
Substandard 0 1,320 6,761 5,120 5,432 13,093 4,485 4,852 41,063
Doubtful 0 1 381 1 7 575 0 1 966
Total $ 778,948 $ 1,001,087 $ 920,660 $ 669,105 $ 450,673 $ 1,731,026 $ 290,073 $ 48,639 $ 5,890,211

~~As of June 30, 2021, there were 0 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.

At June 30, 2021
2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(In Thousands)
Residential
Credit Scores
Over 700 $ 95,094 $ 111,814 $ 75,571 $ 49,291 $ 44,618 $ 152,417 $ 3,071 $ 0 $ 531,876
661 - 700 10,810 21,194 15,573 9,047 13,001 27,049 0 0 96,674
600 and below 2,174 6,034 4,321 3,602 4,205 15,194 0 0 35,530
Data not available* 12,590 11,956 16,217 15,553 13,139 65,134 0 358 134,947
Total $ 120,668 $ 150,998 $ 111,682 $ 77,493 $ 74,963 $ 259,794 $ 3,071 $ 358 $ 799,027
Home Equity
Credit Scores
Over 700 $ 955 $ 1,486 $ 2,064 $ 1,962 $ 1,885 $ 9,867 $ 238,867 $ 2,306 $ 259,392
661 - 700 75 113 320 464 253 2,112 43,102 396 46,835
600 and below 0 56 104 255 13 514 9,817 923 11,682
Data not available* 0 100 0 0 0 1,295 10,845 889 13,129
Total $ 1,030 $ 1,755 $ 2,488 $ 2,681 $ 2,151 $ 13,788 $ 302,631 $ 4,514 $ 331,038


	At March 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
			(In Thousands)
Residential
Credit Scores
Over 700	$	30,492	$	186,708	$	104,719	$	66,684	$	48,053	$	160,791	$	2,974	$	353	$	600,774
661 - 700	2,440		24,515		18,836		13,492		8,947		34,783		—		—		103,013
600 and below	682		4,126		5,661		3,390		2,296		16,637		—		—		32,792
Data not available*	5,864		8,294		723		1,950		—		58,550		—		—		75,381
Total	$	39,478	$	223,643	$	129,939	$	85,516	$	59,296	$	270,761	$	2,974	$	353	$	811,960
Home Equity
Credit Scores
Over 700	$	319	$	1,494	$	1,394	$	1,530	$	1,327	$	8,566	$	244,290	$	1,861	$	260,781
661 - 700	—		97		38		285		302		1,618		42,149		509		44,998
600 and below	—		91		52		99		—		433		8,502		609		9,786
Data not available*	—		—		—		—		—		1,158		13,729		341		15,228
Total	$	319	$	1,682	$	1,484	$	1,914	$	1,629	$	11,775	$	308,670	$	3,320	$	330,793

* 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, 2021, by credit quality indicator.


	December 31, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Commercial Real Estate
Pass	$	660,657	$	309,397	$	398,269	$	242,931	$	188,952	$	923,232	$	47,315	$	12,230	$	2,782,983
OAEM	—		—		16,891		2,888		3,877		22,929		—		—		46,585
Substandard	675		180		—		—		569		7,985		—		3,814		13,223

Total	661,332		309,577		415,160		245,819		193,398		954,146		47,315		16,044		2,842,791
Multi-Family Mortgage
Pass	230,219		124,897		149,580		120,683		84,124		347,991		4,095		37,040		1,098,629
OAEM	—		—		—		—		—		1,189		—		—		1,189


Total	230,219		124,897		149,580		120,683		84,124		349,180		4,095		37,040		1,099,818

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	December 31, 2021
	2021	2020	2019	2018	2017	Prior	Revolving Loans	Revolving Loans Converted to Term Loans	Total
	(In Thousands)
Construction
Pass	48,988	32,448	17,552	49,801	—	—	7,847	—	156,636

Substandard	—	—	3,795	—	—	—	—	—	3,795

Total	48,988	32,448	21,347	49,801	—	—	7,847	—	160,431
Commercial
Pass	231,829	76,535	44,454	36,498	9,009	99,724	221,861	1,335	721,245
OAEM	—	1,494	3,106	2,880	—	—	844	—	8,324
Substandard	17	13	—	90	189	1,826	773	1,909	4,817
Doubtful	—	—	—	—	—	—	—	2	2
Total	231,846	78,042	47,560	39,468	9,198	101,550	223,478	3,246	734,388
Equipment Financing
Pass	350,564	266,845	216,369	131,802	65,132	53,177	3,959	349	1,088,197
OAEM	—	196	1,622	277	65	16	—	—	2,176
Substandard	286	1,115	3,811	4,905	2,332	2,775	—	—	15,224
Doubtful	—	—	—	1	6	7	—	—	14
Total	350,850	268,156	221,802	136,985	67,535	55,975	3,959	349	1,105,611
Condominium Association
Pass	4,380	9,423	7,814	4,121	4,050	14,074	3,086	105	47,053

Substandard	—	—	—	—	—	84	—	—	84

Total	4,380	9,423	7,814	4,121	4,050	14,158	3,086	105	47,137
Other Consumer
Pass	562	133	46	1,508	28	730	37,378	2	40,387

Substandard	—	—	—	—	—	—	1	—	1

Total	562	133	46	1,508	28	730	37,379	2	40,388
Total
Pass	1,527,199	819,678	834,084	587,344	351,295	1,438,928	325,541	51,061	5,935,130
OAEM	—	1,690	21,619	6,045	3,942	24,134	844	—	58,274
Substandard	978	1,308	7,606	4,995	3,090	12,670	774	5,723	37,144

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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~~


	December 31, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Doubtful	—		—		—		1		6		7		—		2		16
Total	$	1,528,177	$	822,676	$	863,309	$	598,385	$	358,333	$	1,475,739	$	327,159	$	56,786	$	6,030,564

As of December 31, ~~2020, by credit quality indicator.~~2021, there were no loans categorized as definite loss.

December 31, 2020
2020 2019 2018 2017 2016 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(In Thousands)
Commercial Real Estate
Pass $ 352,832 $ 412,071 $ 282,629 $ 255,786 $ 243,477 $ 944,676 $ 55,392 $ 12,585 $ 2,559,448
OAEM 0 477 0 0 3,312 8,991 0 0 12,780
Substandard 0 0 0 1,261 2 5,220 0 62 6,545
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
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

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


		At December 31, 2020																			At December 31, 2021
		2020		2019		2018		2017		2016		Prior		Revolving		Converted		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	$	119,566	$	94,300	$	62,452	$	53,662	$	47,327	$	124,999	$	4,442	$	0	$	506,748	Over 700	$	182,759	$	111,380	$	69,901	$	51,454	$	40,467	$	127,303	$	2,990	$	355	$	586,609
661 - 700	661 - 700	21,820		19,426		10,943		15,616		8,132		23,282		0		0		99,219		661 - 700	24,370		19,078		14,011		9,018		12,846		25,294		—		—		104,617
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	4,145		6,368		3,408		2,996		3,492		13,801		—		—		34,210
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*	10,936		—		1,958		—		6,847		54,560		—		—		74,301
Total	Total	$	167,496	$	136,467	$	94,357	$	87,749	$	65,741	$	233,734	$	4,442	$	1,331	$	791,317	Total	$	222,210	$	136,826	$	89,278	$	63,468	$	63,652	$	220,958	$	2,990	$	355	$	799,737
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	$	1,530	$	1,469	$	1,790	$	1,520	$	1,561	$	8,254	$	242,980	$	1,844	$	260,948
661 - 700	661 - 700	122		459		499		566		305		2,793		45,356		1,334		51,434		661 - 700	98		51		297		392		210		1,658		42,542		541		45,789
600 and below	600 and below	59		108		266		13		39		541		10,139		878		12,043		600 and below	92		54		101		—		12		436		8,484		713		9,892
Data not available*	Data not available*	61		0		0		0		0		1,387		7,330		1,160		9,938		Data not available*	—		—		—		—		—		1,216		5,937		374		7,527
Total	Total	$	1,788	$	3,399	$	3,205	$	3,349	$	1,254	$	17,525	$	310,363	$	5,769	$	346,652	Total	$	1,720	$	1,574	$	2,188	$	1,912	$	1,783	$	11,564	$	299,943	$	3,472	$	324,156

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 ~~June 30, 2021.~~March 31, 2022.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


		At June 30, 2021											At March 31, 2022
		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	$	1,157	$	1,517	$	11,225	$	13,899	$	2,632,205			$	2,646,104		$	0		$	11,657	$	11,452	Commercial real estate	$	1,011	$	522	$	8,095	$	9,628		$	2,949,077	$	2,958,705	$	—		$	8,313	$	8,094
Multi-family mortgage	Multi-family mortgage	3,035		0		0		3,035		964,856				967,891			0			0		0		Multi-family mortgage	38		—		—		38			1,115,972		1,116,010		—			—		—
Construction	Construction	0		0		0		0		201,586				201,586			0			0		0		Construction	—		—		—		—			160,610		160,610		—			—		—
Total commercial real estate loans	Total commercial real estate loans	4,192		1,517		11,225		16,934		3,798,647				3,815,581			0			11,657		11,452		Total commercial real estate loans	1,049		522		8,095		9,666			4,225,659		4,235,325		—			8,313		8,094
Commercial loans and leases:	Commercial loans and leases:																							Commercial loans and leases:
Commercial	Commercial	153		761		1,182		2,096		916,249				918,345			0			3,207		1,723		Commercial	30,192		2,373		678		33,243			614,552		647,795		—			1,366		581
Equipment financing	Equipment financing	3,914		2,451		10,866		17,231		1,056,857				1,074,088			2,850			14,872		5,330		Equipment financing	3,619		1,074		6,235		10,928			1,097,207		1,108,135		2			11,685		510
Condominium association	Condominium association	453		85		0		538		45,880				46,418			0			97		0		Condominium association	—		—		—		—			44,453		44,453		—			77		—
Total commercial loans and leases	Total commercial loans and leases	4,520		3,297		12,048		19,865		2,018,986				2,038,851			2,850			18,176		7,053		Total commercial loans and leases	33,811		3,447		6,913		44,171			1,756,212		1,800,383		2			13,128		1,091
Consumer loans:	Consumer loans:																							Consumer loans:
Residential mortgage	Residential mortgage	1,075		1,119		3,104		5,298		793,729				799,027			301			3,638		3,185		Residential mortgage	1,391		74		1,621		3,086			808,874		811,960		—			3,394		2,085
Home equity	Home equity	363		0		530		893		330,145				331,038			3			744		512		Home equity	73		1		416		490			330,303		330,793		2			680		—
Other consumer	Other consumer	2		5		1		8		35,770				35,778			0			1		0		Other consumer	2		—		1		3			44,666		44,669		—			1		—
Total consumer loans	Total consumer loans	1,440		1,124		3,635		6,199		1,159,644				1,165,843			304			4,383		3,697		Total consumer loans	1,466		75		2,038		3,579			1,183,843		1,187,422		2			4,075		2,085
Total loans and leases	Total loans and leases	$	10,152	$	5,938	$	26,908	$	42,998	$	6,977,277			$	7,020,275		$	3,154		$	34,216	$	22,202	Total loans and leases	$	36,326	$	4,044	$	17,046	$	57,416		$	7,165,714	$	7,223,130	$	4		$	25,516	$	11,270

There is 0no interest income recognized on ~~non-accrual~~nonaccrual loans for the three months ended ~~June 30, 2021.~~March 31, 2022.

2423

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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.~~2021.


		At December 31, 2020											At December 31, 2021
		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	$	2,424	$	1,488	$	10,443	$	14,355		$	2,828,436		$	2,842,791		$	—	$	10,848	$	10,244
Multi-family mortgage	Multi-family mortgage	813		0		0		813		1,012,619				1,013,432			0			0		0		Multi-family mortgage	371		89		—		460			1,099,358			1,099,818			—		—		—
Construction	Construction	0		0		7,617		7,617		224,004				231,621			3,764			3,853		3,853		Construction	396		—		—		396			160,035			160,431			—		—		—
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	3,191		1,577		10,443		15,211			4,087,829			4,103,040			—		10,848		10,244
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	287		88		748		1,123			733,265			734,388			—		2,318		1,383
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	5,265		1,044		8,774		15,083			1,090,528			1,105,611			—		15,014		1,602
Condominium association	Condominium association	282		297		0		579		50,191				50,770			0			112		112		Condominium association	57		—		—		57			47,080			47,137			—		84		—
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	5,609		1,132		9,522		16,263			1,870,873			1,887,136			—		17,416		2,985
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	454		3,169		2,315		5,938			793,799			799,737			—		3,909		2,165
Home equity	Home equity	580		215		588		1,383		345,269				346,652			3			1,136		824		Home equity	424		201		114		739			323,417			324,156			1		285		—
Other consumer	Other consumer	13		0		1		14		32,845				32,859			0			1		0		Other consumer	5		2		1		8			40,380			40,388			—		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	883		3,372		2,430		6,685			1,157,596			1,164,281			1		4,195		2,165
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	$	9,683	$	6,081	$	22,395	$	38,159		$	7,116,298		$	7,154,457		$	1	$	32,459	$	15,394

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.

2524

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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 June 30, 2021						At March 31, 2022
		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	$	93	$	922	$	91		$	1,106	Individually evaluated	$	63	$	1,220	$	149	$	1,432
Collectively evaluated	Collectively evaluated	73,916		27,442		4,010			105,368		Collectively evaluated	68,968		22,283		2,780		94,031
Total	Total	$	74,009	$	28,364	$	4,101		$	106,474	Total	$	69,031	$	23,503	$	2,929	$	95,463

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

Individually evaluated	Individually evaluated	$	18,893	$	20,639	$	7,552		$	47,084	Individually evaluated	$	14,724	$	5,747	$	4,334	$	24,805
Collectively evaluated	Collectively evaluated	3,796,688		2,018,212		1,158,291			6,973,191		Collectively evaluated	4,220,601		1,794,636		1,183,088		7,198,325
Total	Total	$	3,815,581	$	2,038,851	$	1,165,843		$	7,020,275	Total	$	4,235,325	$	1,800,383	$	1,187,422	$	7,223,130


		At December 31, 2020						At December 31, 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	$	183	$	2,020	$	108		$	2,311	Individually evaluated	$	—	$	3,236	$	38	$	3,274
Collectively evaluated	Collectively evaluated	79,949		27,478		4,641			112,068		Collectively evaluated	69,213		23,819		2,778		95,810
Total loans and leases	Total loans and leases	$	80,132	$	29,498	$	4,749		$	114,379	Total loans and leases	$	69,213	$	27,055	$	2,816	$	99,084

Loans and Leases:	Loans and Leases:										Loans and Leases:
Individually evaluated	Individually evaluated	$	14,159	$	24,727	$	8,760		$	47,646	Individually evaluated	$	16,906	$	10,944	$	4,853	$	32,703
Collectively evaluated	Collectively evaluated	3,809,667		2,250,172		1,162,068			7,221,907		Collectively evaluated	4,086,134		1,876,192		1,159,428		7,121,754

Total loans and leases	Total loans and leases	$	3,823,826	$	2,274,899	$	1,170,828		$	7,269,553	Total loans and leases	$	4,103,040	$	1,887,136	$	1,164,281	$	7,154,457

2625

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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 June 30, 2021		At December 31, 2020			At March 31, 2022		At December 31, 2021
		(In Thousands)					(In Thousands)
Troubled debt restructurings:	Troubled debt restructurings:					Troubled debt restructurings:
On accrual	On accrual	$	14,387	$	11,483	On accrual	$	10,858	$	12,580
On nonaccrual	On nonaccrual	6,410		7,476		On nonaccrual	5,189		6,709
Total troubled debt restructurings	Total troubled debt restructurings	$	20,797	$	18,959	Total troubled debt restructurings	$	16,047	$	19,289

Total TDR loans and leases ~~increased~~decreased by ~~$1.8~~$3.3 million to ~~$20.8~~$16.0 million at ~~June 30, 2021~~March 31, 2022 from ~~$19.0~~$19.3 million at December 31, ~~2020,~~2021, primarily driven by ~~41 new TDR~~the payoffs of 1 commercial real estate relationship of $0.2 million, 3 commercial relationships ~~consisting of 40~~totaling $2.6 million, 4 equipment financing relationships totaling ~~of $2.9~~$0.2 million, and 1 ~~$0.8 million residential~~home equity relationship ~~partially offset by the payoff~~ of ~~8 TDR relationships totaling of $1.2~~$0.1 million, as well as the ~~payment~~payments on a TDR ~~relationships~~loans, partially offset by the new TDR loans during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

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 June 30, 2021													At and for the Three Months Ended March 31, 2022
			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)


Equipment financing	Equipment financing	28	1,236		1,222		9			483			5			211			Equipment financing	12		$	601		$	601	$	—		$	407		2		$	78
Residential mortgage		1	864		864		0			0			0			0
Home equity		1	312		312		0			0			0			0

Total loans and leases																			Total loans and leases	12		$	601		$	601	$	—		$	407		2		$	78

Total loans and leases		30	$	2,412	$	2,398	$	9		$	483		5			$	211

(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 June 30, 2020													At and for the Three Months Ended March 31, 2021
			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			$	221		Commercial real estate	1		$	497		$	497	$	—		$	—		—		$	—

Construction																			Construction	4		2,764			2,764		—			—			—		—
Equipment financing	Equipment financing	11	1,174		1,160		0			1,160			0			0			Equipment financing	12		1,718			1,731		—			234			—		—

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

Total loans and leases		11	$	1,174	$	1,160	$	0		$	1,160		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.

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

At and for the Six Months Ended June 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)
Originated:
Commercial real estate 1 $ 497 $ 497 $ 0 $ 0 $ 0 $ 0
Equipment financing 40 2,954 2,922 9 713 5 211
Residential mortgage 1 864 864 0 0 0 0
Home equity 1 312 312 0 0 0 0
Total loans and leases 43 $ 4,627 $ 4,595 $ 9 $ 713 5 $ 211

At and for the Six Months Ended June 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 Additional
Commitment Number of
Loans/
Leases Recorded
Investment
(Dollars in Thousands)
Originated:
Commercial real estate 0 $ 0 $ 0 $ 0 $ 0 0 1 $ 221
Commercial 2 297 302 0 0 0 0 0
Equipment financing 11 1,174 1,160 0 1,160 0 0 0
Home equity 1 200 200 0 0 0 0 0
Total loans and leases 14 $ 1,671 $ 1,662 $ 0 $ 1,160 $ 0 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.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In Thousands)									(In Thousands)

Extended maturity	Extended maturity	$	1,143	$	334	$	2,667	$	636	Extended maturity	$	311	$	4,300
Adjusted principal		0		44		0		44

Combination maturity, principal, interest rate	Combination maturity, principal, interest rate	1,255		782		1,928		982		Combination maturity, principal, interest rate	290		693

Total loans with modifications	Total loans with modifications	$	2,398	$	1,160	$	4,595	$	1,662	Total loans with modifications	$	601	$	4,993

The TDR loans and leases that were modified for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$2.4~~$0.6 million and ~~$1.2~~$5.0 million, respectively. The ~~increases~~decrease in TDR loans and leases that were modified for the three months ended ~~June 30, 2021~~March 31, 2022 were primarily due to the ~~modification~~payoff of 1 ~~home equity~~construction relationship ~~of $0.3~~for $2.7 million and ~~1 residential relationship of $0.9 million during the three months ended June 30, 2021.~~6 equipment financing relationships totaling $1.7 million.

The net charge-offs for performing and nonperforming TDR loans and leases for the ~~six month~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$0.5~~$0.0 million and $0.6 million respectively.

The commitments to lend funds to debtors owing receivables whose terms had been modified in TDRs as of ~~June 30, 2021~~March 31, 2022 was ~~$2.1~~$1.0 million. As of ~~June 30, 2020,~~March 31, 2021, there were ~~$1.8~~$2.1 million commitments to lend funds to debtors owing receivables whose terms had been modified in TDRs.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

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 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~~nonaccrual status (provided the loans were not past due or on ~~non-accrual~~nonaccrual status prior to the deferral). As of ~~June 30, 2021,~~March 31, 2022, the Company granted ~~4,401~~3,284 short-term deferments on loan and lease balances of ~~$991.3~~$789.6 million of which ~~4,250~~3,215 loans and leases representing balances ~~$895.3~~$774.6 million returned to payment and ~~151~~69 loans and leases representing balances of ~~$96.0~~$15.0 million remain in deferment. The outstanding deferred loans and leases represent ~~1.4%~~0.2% 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 June 30, 2021		At December 31, 2020			At March 31, 2022		At December 31, 2021
		(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	1,603		2,063		Core deposits	1,053		1,187
Trade name	Trade name	1,089		1,089		Trade name	1,089		1,089

Total other intangible assets	Total other intangible assets	2,692		3,152		Total other intangible assets	2,142		2,276
Total goodwill and other intangible assets	Total goodwill and other intangible assets	$	163,119	$	163,579	Total goodwill and other intangible assets	$	162,569	$	162,703

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 ~~5.61~~4.83 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		$	416
Remainder of 2022				Remainder of 2022	$	360
Year ending:	Year ending:			Year ending:
2022		494
2023	2023	263		2023	263
2024	2024	151		2024	151
2025	2025	103		2025	103
2026	2026	74		2026	74
2027				2027	87
Thereafter	Thereafter	102		Thereafter	15
Total	Total	$	1,603	Total	$	1,053

(7) Accumulated Other Comprehensive Income (Loss)

For the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 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; and (iii) adjustment of accumulated obligation for postretirement benefits.

~~Table of Contents~~

~~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 June 30, 2021									Three Months Ended March 31, 2022
		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 March 31, 2021		$	2,174	$	7	$	(99)	$	2,082
Balance at December 31, 2021										Balance at December 31, 2021	$	(183)	$	37	$	36	$	(110)
Other comprehensive income (loss)	Other comprehensive income (loss)	4,003		8		0		4,011		Other comprehensive income (loss)	(29,267)		57		—		(29,210)
Reclassification adjustment for (income) expense recognized in earnings	Reclassification adjustment for (income) expense recognized in earnings	0		(4)		0		(4)		Reclassification adjustment for (income) expense recognized in earnings	—		(2)		—		(2)
Balance at June 30, 2021		$	6,177	$	11	$	(99)	$	6,089
Balance at March 31, 2022										Balance at March 31, 2022	$	(29,450)	$	92	$	36	$	(29,322)


		Three Months Ended June 30, 2020									Three Months Ended March 31, 2021
		Investment Securities Available-for-Sale		Net Change in Fair Value of Cash Flow Hedges		Postretirement Benefits		Accumulated Other Comprehensive Income (Loss)			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 March 31, 2020		$	16,863	$	0	$	84	$	16,947
Balance at December 31, 2020										Balance at December 31, 2020	$	16,582	$	7	$	(99)	$	16,490
Other comprehensive income (loss)	Other comprehensive income (loss)	3,085		0		0		3,085		Other comprehensive income (loss)	(14,408)		2		—		(14,406)
Reclassification adjustment for (income) expense recognized in earnings	Reclassification adjustment for (income) expense recognized in earnings	494		0		0		494		Reclassification adjustment for (income) expense recognized in earnings	—		(2)		—		(2)
Balance at June 30, 2020		$	19,454	$	0	$	84	$	19,538
Balance at March 31, 2021										Balance at March 31, 2021	$	2,174	$	7	$	(99)	$	2,082

Six Months Ended June 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) (10,405) 9 0 (10,396)
Reclassification adjustment for (income) expense recognized in earnings 0 (5) 0 (5)
Balance at June 30, 2021 $ 6,177 $ 11 $ (99) $ 6,089

Six Months Ended June 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 $ 0 $ 84 $ 2,283
Other comprehensive income (loss) 19,582 0 0 19,582
Reclassification adjustment for (income) expense recognized in earnings 2,327 0 0 2,327
Balance at June 30, 2020 $ 19,454 $ 0 $ 84 $ 19,538

(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 ~~June 30, 2021,~~March 31, 2022, the Company paid its counterparties a fixed weighted average interest rate of ~~0.10%~~0.11% over a maximum period of ~~2 years~~5 months 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
		June 30, 2021																March 31, 2022
		(Dollars In Thousands)																(Dollars In Thousands)
Loan level derivatives	Loan level derivatives																Loan level derivatives
Receive fixed, pay variable	Receive fixed, pay variable	128	$	8,395	$	2,387	$	4,658	$160,737		$	1,010,330	$	1,186,507	$	83,306	Receive fixed, pay variable	138	$	66,594	$	56,100	$	102,660	$143,323		$	1,116,823	$	1,485,500	$	15,302
Pay fixed, receive variable	Pay fixed, receive variable	128	8,395		2,387		4,658		160,737		1,010,330		1,186,507		83,306		Pay fixed, receive variable	138	66,594		56,100		102,660		143,323		1,116,823		1,485,500		15,302
Risk participation-out agreements	Risk participation-out agreements	37	0		0		6,939		29,276		226,770		262,985		1,289		Risk participation-out agreements	41	—		6,833		22,657		6,573		252,782		288,845		785
Risk participation-in agreements	Risk participation-in agreements	8	0		0		18,859		0		41,102		59,961		232		Risk participation-in agreements	8	—		18,643		—		—		57,927		76,570		114

Foreign exchange contracts	Foreign exchange contracts																Foreign exchange contracts
Buys foreign currency, sells U.S. currency	Buys foreign currency, sells U.S. currency	11	$	1,360	$	0	$	0	$	0	$	0	$	1,360	$	62	Buys foreign currency, sells U.S. currency	11	$	2,329	$	—	$	—	$	—	$	—	$	2,329	$	94
Sells foreign currency, buys U.S. currency	Sells foreign currency, buys U.S. currency	16	1,362		0		0		0		0		1,362		59		Sells foreign currency, buys U.S. currency	11	2,331		—		—		—		—		2,331		88

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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, 2021
		(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	135	$	8,244	$	2,346	$	83,461	$	137,856	$	1,092,702	$	1,324,609	$	63,798
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	135	8,244		2,346		83,461		137,856		1,092,702		1,324,609		63,798
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	41	—		6,869		22,673		6,573		252,259		288,374		1,236
Risk participation-in agreements	Risk participation-in agreements	8	0		0		19,000		0		41,619		60,619		361		Risk participation-in agreements	8	—		18,718		—		—		58,298		77,016		207

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	10	$	2,004	$	—	$	—	$	—	$	—	$	2,004	$	9
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	11	2,006		—		—		—		—		2,006		7

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Certain derivative agreements contain provisions that require the Company to post collateral if the derivative exposure exceeds a threshold amount. The Company posted collateral to dealer counterparties of ~~$146.6~~$84.1 million and ~~$166.5~~$126.9 million in the normal course of business as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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 June 30, 2021																					At March 31, 2022
		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	$	12			$	0			$	12			$	0			$	0					$	12		Interest rate derivatives	$	116	$	—		$	116	$	—	$	—	$	116
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																					Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	$	89,726	$	0			$	89,726			$	—			$	0			$	89,726	Loan level derivatives	$	45,777				$	—	$	45,777		$	—	$	—	$	45,777
Risk participation-out agreements	Risk participation-out agreements	1,289		0				1,289				0				0				1,289		Risk participation-out agreements	785					—		785			—		—		785
Foreign exchange contracts	Foreign exchange contracts	62		0				62				0				0				62		Foreign exchange contracts	100					—		100			—		—		100
Total	Total	$	91,089	$	0			$	91,089			$	0			$	0			$	91,089	Total	$	46,778				$	—	$	46,778		$	—	$	—	$	46,778

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	$	0	$	0			$	0			$	0			$	0			$	0	Interest rate derivatives	$	—				$	—	$	—		$	—	$	—	$	—
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																					Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	$	89,726	$	0			$	89,726			$	135,300			$	11,280			$	(56,854)	Loan level derivatives	$	45,777				$	—	$	45,777		$	45,138	$	38,921	$	(38,282)
Risk participation-in agreements	Risk participation-in agreements	232		0				232				0				0				232		Risk participation-in agreements	114					—		114			—		—		114
Foreign exchange contracts	Foreign exchange contracts	59		0				59				0				0				59		Foreign exchange contracts	94					—		94			—		—		94
Total	Total	$	90,017	$	0			$	90,017			$	135,300			$	11,280			$	(56,563)	Total	$	45,985				$	—	$	45,985		$	45,138	$	38,921	$	(38,074)

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Notes to Unaudited Consolidated Financial Statements (Continued)


		At December 31, 2020																					At December 31, 2021
		Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position				Net Amounts Presented in the Statement of Financial Position				Gross Amounts Not Offset in the Statement of Financial Position								Net Amount			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:
Interest rate derivatives	Interest rate derivatives	$	8			$	0			$	8			$	0			$	0					$	8		Interest rate derivatives	$	43	$	—		$	43	$	—	$	—	$	43
Derivatives not designated as hedging instruments:																						Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	131,328		0				131,328				0				0				131,328		Loan level derivatives	73,462					—		73,462			—		—		73,462
Risk participation-out agreements	Risk participation-out agreements	1,843		0				1,843				0				0				1,843		Risk participation-out agreements	1,236					—		1,236			—		—		1,236
Foreign exchange contracts	Foreign exchange contracts	156		0				156				0				0				156		Foreign exchange contracts	9					—		9			—		—		9
Total	Total	$	133,335	$	0			$	133,335			$	0			$	0			$	133,335	Total	$	74,750				$	—	$	74,750		$	—	$	—	$	74,750

Liability derivatives	Liability derivatives																					Liability derivatives
Derivatives designated as hedging instruments:																						Derivatives designated as hedging instruments:
Interest rate derivatives																						Interest rate derivatives	$	1				$	—	$	1		$	—	$	—	$	1
Derivatives not designated as hedging instruments:																						Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	$	131,328	$	0			$	131,328			$	155,220			$	11,280			$	(35,172)	Loan level derivatives	73,462					—		73,462			118,461		8,410		(53,409)
Risk participation-in agreements	Risk participation-in agreements	361		0				361				0				0				361		Risk participation-in agreements	207					—		207			—		—		207
Foreign exchange contracts	Foreign exchange contracts	148		0				148				0				0				148		Foreign exchange contracts	7					—		7			—		—		7
Total	Total	$	131,837	$	0			$	131,837			$	155,220			$	11,280			$	(34,663)	Total	$	73,677				$	—	$	73,677		$	118,461	$	8,410	$	(53,194)

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
		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020			Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
		(Dollars in Thousands)					(Dollars in Thousands)

Derivatives designated as hedges	Derivatives designated as hedges	$	12	$	(6)	Derivatives designated as hedges	$	116	$	8
Gain in OCI on derivatives (effective portion), net of tax	Gain in OCI on derivatives (effective portion), net of tax	$	11	$	(5)	Gain in OCI on derivatives (effective portion), net of tax	$	91	$	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)	$	5	$	0	Gain (loss) reclassified from OCI into interest income or interest expense (effective portion)	$	2	$	2

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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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.

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

(9) Stock Based Compensation

As of ~~June 30, 2021,~~March 31, 2022, the Company had 1 active equity plan: the 2021 Brookline Bancorp, Inc. Stock Option and Incentive Plan ("2021 Plan") with 1,750,000 authorized 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") expired in July 2021, and the Company has not issued shares from the 2011 Plan since the adoption of the 2014 Plan. The 2021 Plan and the 2014 Plan ~~and the 2011 Plan are~~ together referred to as the "Plans."

Of the awarded shares under the ~~2014 Plan (and the 2011 Plan),~~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 ~~Plan,~~Plans, 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 six~~ months ended ~~June 30,~~March 31, 2022 and March 31, 2021, ~~and June 30, 2020, 0~~no shares were issued, respectively, upon satisfaction of required conditions of the Plans.

Total expense for the Plan was ~~$0.6~~$0.8 million and ~~$0.7~~$0.5 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~Total expense for the Plan was $1.1 million and $1.4 million for the six months ended June 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
		June 30, 2021				June 30, 2020					March 31, 2022				March 31, 2021
		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	$	31,602	$	31,602	$	19,571	$	19,571	Net income	$	24,705	$	24,705	$	26,454	$	26,454

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding	Weighted average shares outstanding	78,150,364		78,150,364		78,849,282		78,849,282		Weighted average shares outstanding	77,617,227		77,617,227		78,143,752		78,143,752
Effect of dilutive securities	Effect of dilutive securities	—		320,087		—		165,992		Effect of dilutive securities	—		309,595		—		260,311
Adjusted weighted average shares outstanding	Adjusted weighted average shares outstanding	78,150,364		78,470,451		78,849,282		79,015,274		Adjusted weighted average shares outstanding	77,617,227		77,926,822		78,143,752		78,404,063

EPS	EPS	$	0.40	$	0.40	$	0.25	$	0.25	EPS	$	0.32	$	0.32	$	0.34	$	0.34

3533

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Six Months Ended
June 30, 2021 June 30, 2020
Basic Fully
Diluted Basic Fully
Diluted
(Dollars in Thousands, Except Per Share Amounts)
Numerator:
Net income $ 58,056 $ 58,056 $ 2,295 $ 2,295
Denominator:
Weighted average shares outstanding 78,147,076 78,147,076 79,165,372 79,165,372
Effect of dilutive securities — 290,199 — 175,152
Adjusted weighted average shares outstanding 78,147,076 78,437,275 79,165,372 79,340,524
EPS $ 0.74 $ 0.74 $ 0.03 $ 0.03

(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 six~~ months ended ~~June 30, 2021 and June 30, 2020.~~March 31, 2022.

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 June 30, 2021									Carrying Value as of March 31, 2022
		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	$	246,334	$	0	$	246,334	GSE debentures	$	—	$	187,792	$	—	$	187,792
GSE CMOs	GSE CMOs	0		35,944		0		35,944		GSE CMOs	—		24,257		—		24,257
GSE MBSs	GSE MBSs	0		246,054		0		246,054		GSE MBSs	—		175,868		—		175,868

Corporate debt obligations	Corporate debt obligations	0		23,108		0		23,108		Corporate debt obligations	—		22,209		—		22,209
U.S. Treasury bonds	U.S. Treasury bonds	0		142,214		0		142,214		U.S. Treasury bonds	—		319,941		—		319,941

Foreign government obligations	Foreign government obligations	0		497		0		497		Foreign government obligations	—		495		—		495
Total investment securities available-for-sale	Total investment securities available-for-sale	$	0	$	694,151	$	0	$	694,151	Total investment securities available-for-sale	$	—	$	730,562	$	—	$	730,562

Interest rate derivatives	Interest rate derivatives	0		12		0		12		Interest rate derivatives	—		116		—		116

Derivatives not designated as hedging instruments:										Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	0		89,726		0		89,726		Loan level derivatives	—		45,777		—		45,777
Risk participation-out agreements	Risk participation-out agreements	0		1,289		0		1,289		Risk participation-out agreements	—		785		—		785
Foreign exchange contracts	Foreign exchange contracts	0		62		0		62		Foreign exchange contracts	—		100		—		100
Liabilities:	Liabilities:									Liabilities:

Interest rate derivatives										Interest rate derivatives	$	—	$	—	$	—	$	—
Derivatives not designated as hedging instruments:										Derivatives not designated as hedging instruments:
Loan level derivatives	Loan level derivatives	0		89,726		0		89,726		Loan level derivatives	—		45,777		—		45,777
Risk participation-in agreements	Risk participation-in agreements	0		232		0		232		Risk participation-in agreements	—		114		—		114
Foreign exchange contracts	Foreign exchange contracts	0		59		0		59		Foreign exchange contracts	—		94		—		94

3634

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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 December 31, 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	$	—	$	217,505	$	—	$	217,505
GSE CMOs	GSE CMOs	0		46,028		0		46,028		GSE CMOs	—		28,139		—		28,139
GSE MBSs	GSE MBSs	0		323,609		0		323,609		GSE MBSs	—		199,772		—		199,772

Corporate debt obligations	Corporate debt obligations	0		23,467		0		23,467		Corporate debt obligations	—		22,683		—		22,683
U.S. Treasury bonds	U.S. Treasury bonds	0		73,577		0		73,577		U.S. Treasury bonds	—		252,268		—		252,268
Foreign government obligations	Foreign government obligations	0		496		0		496		Foreign government obligations	—		499		—		499

Total investment securities available-for-sale	Total investment securities available-for-sale	$	0	$	745,822	$	0	$	745,822	Total investment securities available-for-sale	$	—	$	720,866	$	—	$	720,866
Equity securities held-for-trading		$	0	$	526	$	0	$	526

Interest rate derivatives	Interest rate derivatives	0		8		0		8		Interest rate derivatives	—		43		—		43
Loan level derivatives	Loan level derivatives	0		131,328		0		131,328		Loan level derivatives	—		73,462		—		73,462
Risk participation-out agreements	Risk participation-out agreements	0		1,843		0		1,843		Risk participation-out agreements	—		1,236		—		1,236
Foreign exchange contracts	Foreign exchange contracts	0		156		0		156		Foreign exchange contracts	—		9		—		9
Liabilities:	Liabilities:									Liabilities:
Interest rate derivatives										Interest rate derivatives	$	—	$	1	$	—	$	1
Loan level derivatives	Loan level derivatives	0		131,328		0		131,328		Loan level derivatives	—		73,462		—		73,462
Risk participation-in agreements	Risk participation-in agreements	0		361		0		361		Risk participation-in agreements	—		207		—		207
Foreign exchange contracts	Foreign exchange contracts	0		148		0		148		Foreign exchange contracts	—		7		—		7

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, none of the investment securities 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

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

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."

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

There were no transfers between levels for assets and liabilities recorded at fair value on a recurring basis ~~during the three and six months ended June 30, 2021~~at March 31, 2022 and December 31, ~~2020,~~2021, 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 June 30, 2021									Carrying Value as of March 31, 2022
		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	$	2,018	$	2,018	Collateral-dependent impaired loans and leases	$	—	$	—	$	1,002	$	1,002

Repossessed assets	Repossessed assets	0		372		0		372		Repossessed assets	—		990		—		990
Total assets measured at fair value on a non-recurring basis	Total assets measured at fair value on a non-recurring basis	$	0	$	372	$	2,018	$	2,390	Total assets measured at fair value on a non-recurring basis	$	—	$	990	$	1,002	$	1,992


		Carrying Value as of December 31, 2020									Carrying Value as of December 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(In Thousands)									(In Thousands)
Assets measured at fair value on a non-recurring basis:	Assets measured at fair value on a non-recurring basis:									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	$	—	$	—	$	802	$	802
OREO		0		0		5,415		5,415

Repossessed assets	Repossessed assets	0		1,100		0		1,100		Repossessed assets	—		718		—		718
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	$	—	$	718	$	802	$	1,520

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. As of March 31, 2022 and December 31, 2021, the Company recorded no OREO.

Repossessed Assets

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

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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

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

Fair Value Valuation Technique
At June 30,
2021 At December 31, 2020
(Dollars in Thousands)
Collateral-dependent impaired loans and leases $ 2,018 $ 3,445
Appraisal of collateral (1)
Other real estate owned 0 5,415
Appraisal of collateral (1)

Fair Value

Valuation Technique

At March 31,
2022

At December 31, 2021

(Dollars in Thousands)

Collateral-dependent impaired loans and leases

1,002

802

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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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 June 30, 2021											Fair Value Measurements at March 31, 2022
		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	$	6,913,801	$	6,894,100	$	0	$	0	$	6,894,100	Loans and leases, net	$	7,127,667	$	6,850,392	$	—	$	—	$	6,850,392
Restricted equity securities		31,627		31,627		0		0		31,627

Financial liabilities:	Financial liabilities:											Financial liabilities:

Certificates of deposits	Certificates of deposits	1,439,257		1,445,015		0		1,445,015		0		Certificates of deposits	1,163,583		1,155,545		—		1,155,545		—
Borrowed funds	Borrowed funds	363,014		358,056		0		358,056		0		Borrowed funds	392,897		382,616		—		382,616		—

Fair Value Measurements at December 31, 2020
Carrying
Value Estimated
Fair Value Level 1
Inputs Level 2
Inputs Level 3
Inputs
(In Thousands)
Financial assets:
Loans and leases, net 7,155,174 7,116,854 0 0 7,116,854
Restricted equity securities 49,786 49,786 0 0 49,786
Financial liabilities:
Certificates of deposit 2,083,907 2,092,867 0 2,092,867 0
Borrowed funds 820,247 818,681 0 818,681 0

~~Table of Contents~~

~~BROOKLINE BANCORP, INC. AND SUBSIDIARIES~~

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


					Fair Value Measurements at December 31, 2021
	Carrying Value		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In Thousands)
Financial assets:






Loans and leases, net	$	7,055,373	$	6,983,524	$	—	$	—	$	6,983,524



Financial liabilities:
Certificates of deposit	1,283,237		1,283,012		—		1,283,012		—
Borrowed funds	357,321		350,471		—		350,471		—

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).

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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.

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


	At March 31, 2022		At December 31, 2021
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	46,926	$	110,798
Commercial	195,662		162,931
Residential mortgage	41,777		28,685
Unadvanced portion of loans and leases	995,816		987,482
Unused lines of credit:
Home equity	616,407		611,212
Other consumer	80,521		64,589
Other commercial	430		414
Unused letters of credit:
Financial standby letters of credit	14,319		16,143
Performance standby letters of credit	19,095		17,145
Commercial and similar letters of credit	6,866		5,219
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	1,485,500		1,324,609
Pay fixed, receive variable	1,485,500		1,324,609
Risk participation-out agreements	288,845		288,374
Risk participation-in agreements	76,570		77,016
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	2,329		2,004
Sells foreign currency, buys U.S. currency	2,331		2,006

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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

At June 30, 2021 At December 31, 2020
(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate $ 118,828 $ 174,240
Commercial 126,158 80,291
Residential mortgage 39,720 30,418
Unadvanced portion of loans and leases 883,648 759,053
Unused lines of credit:
Home equity 602,307 584,881
Other consumer 39,457 38,954
Other commercial 408 408
Unused letters of credit:
Financial standby letters of credit 15,437 14,746
Performance standby letters of credit 12,261 5,903
Commercial and similar letters of credit 5,369 5,105
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable 1,186,507 1,214,146
Pay fixed, receive variable 1,186,507 1,214,146
Risk participation-out agreements 262,985 252,655
Risk participation-in agreements 59,961 60,619
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency 1,360 1,266
Sells foreign currency, buys U.S. currency 1,362 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~~Note 8.

~~Table of Contents~~

~~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~~uses the FHLB classic advance rates available as of ~~June 30, 2021~~the leases' start dates as the discount rate to determine the net present value of the remaining lease payments.

Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
(In Thousands)
The components of lease expense were as follow:
Operating lease cost $ 3,119 $ 3,233
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 3,179 $ 3,302

At June 30, 2021 At December 31, 2020
(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets $ 22,682 $ 24,143
Operating lease liabilities 22,682 24,143
Weighted Average Remaining Lease Term
Operating leases 6.66 6.95
Weighted Average Discount Rate
Operating leases 3.1 % 3.2 %


	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	(In Thousands)
The components of lease expense was as follows:
Operating lease cost	$	1,567	$	1,563





Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,638	$	1,579

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	At March 31, 2022			At December 31, 2021
	(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets	$	19,571		$	20,508


Operating lease liabilities	19,571			20,508











Weighted Average Remaining Lease Term
Operating leases	6.30			6.36


Weighted Average Discount Rate
Operating leases	3.1		%	3.1		%

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


		Minimum Rental Payments			Minimum Rental Payments
		June 30, 2021			March 31, 2022
		(In Thousands)			(In Thousands)

Remainder of 2021		$	2,950
Remainder of 2022				Remainder of 2022	$	4,609
Year ending:	Year ending:			Year ending:
2022		5,763
2023	2023	4,935		2023	5,312
2024	2024	3,581		2024	3,733
2025	2025	2,470		2025	2,456
2026	2026	1,697		2026	1,684
2027				2027	893
Thereafter	Thereafter	3,656		Thereafter	2,774
Total	Total	$	25,052	Total	$	21,461
Less imputed interest	Less imputed interest	(2,370)		Less imputed interest	(1,890)
Present value of lease liability	Present value of lease liability	$	22,682	Present value of lease liability	$	19,571

Certain leases contain escalation clauses for real estate taxes and other expenditures, which are not included above. The total real estate taxes were ~~$1.0 million and $0.9~~$0.5 million for both the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020, respectively.~~2021. Total other expenditures were ~~$0.2~~$0.1 million for both the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020. Total rental expense was $3.0 million and $3.1 million for the six months ended June 30, 2021 and 2020,~~ respectively. Total rental expense was $1.5 million ~~and $1.6 million~~ for both the three months ended ~~June 30,~~March 31, 2022 and 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 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.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

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~~ongoing disruptions ofdue to 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; ~~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;regulation, war, terrorism, civil unrest; 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~~2021 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 (collectively referred to as the "Banks"), 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~~The Banks and their subsidiaries lend primarily in all New England states, with the exception of equipment financing, ~~27.7%~~26.4% of which is in the greater New York and New Jersey metropolitan area and ~~72.3%~~73.6% of which is in other areas in the United States of America as of ~~June 30, 2021.~~March 31, 2022. Clarendon Private is a registered investment advisor with the SEC. Through Clarendon Private, the Company offers a wide range of wealth management services to individuals, families, endowments and foundations to help these clients meet their long-term financial goals.

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

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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 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. 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 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%. The 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 ~~June 30, 2021,~~March 31, 2022, the Banks funded a total of 4,700 ~~PPP~~U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans in the aggregate amount of $872.1 million. As of ~~June 30, 2021, $348.4~~March 31, 2022, $14.0 million in PPP loans remain outstanding, net of deferred ~~feed~~fees and costs of ~~$10.3~~$0.4 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~~While the Company ~~is participating in~~established a lending facility under the PPPLF ~~program.~~program, it has not been used.

•~~Troubl~~edTroubled Debt Restructuring Relief. From March 1, 2020 through ~~the earlier of~~ January 1, 2022, ~~or 60 days after the termination date of the national emergency,~~ a financial institution ~~may~~could 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 notnot 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 ~~June 30, 2021,~~March 31, 2022, the Company granted ~~4,401~~3,284 short-term deferments on loan and lease balances of ~~$1.0 billion.~~$789.6 million. Of these modifications, ~~4,250~~3,215 loans and leases with total balances of ~~$895.3~~$774.6 million have returned to the payment status and ~~151~~69 loans and leases with total balances of ~~$96.0~~$15.0 million remain on the deferral status, which represents ~~1.4%~~0.2% of the Company's total loan and lease balances. ~~Thes~~eThese 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
		June 30,			March 31,			December 31,			September 30,			June 30,				March 31,			December 31,			September 30,			June 30,			March 31,
		2021			2021			2020			2020			2020				2022			2021			2021			2021			2021
		(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	$	0.40		$	0.34		$	0.34		$	0.24		$	0.25		Earnings per share - Basic	$	0.32		$	0.37		$	0.37		$	0.40		$	0.34
Earnings per share - Diluted	Earnings per share - Diluted	0.40			0.34			0.34			0.24			0.25			Earnings per share - Diluted	0.32			0.37			0.37			0.40			0.34
Book value per share (end of period)	Book value per share (end of period)	12.44			12.10			12.05			11.84			11.75			Book value per share (end of period)	12.65			12.82			12.61			12.44			12.10
Tangible book value per share (end of period) (1)	Tangible book value per share (end of period) (1)	10.35			10.01			9.96			9.77			9.67			Tangible book value per share (end of period) (1)	10.56			10.73			10.51			10.35			10.01
Dividends paid per common share	Dividends paid per common share	0.120			0.115			0.115			0.115			0.115			Dividends paid per common share	0.125			0.125			0.120			0.120			0.115
Stock price (end of period)	Stock price (end of period)	14.95			15.00			12.04			8.65			10.08			Stock price (end of period)	15.82			16.19			15.26			14.95			15.00

PERFORMANCE RATIOS (2)	PERFORMANCE RATIOS (2)																PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	Net interest margin (taxable equivalent basis)	3.52		%	3.39		%	3.23		%	3.08		%	3.09		%	Net interest margin (taxable equivalent basis)	3.49		%	3.52		%	3.53		%	3.52		%	3.39		%
Return on average assets	Return on average assets	1.48		%	1.21		%	1.20		%	0.83		%	0.88		%	Return on average assets	1.16		%	1.35		%	1.38		%	1.48		%	1.21		%
Return on average tangible assets (1)	Return on average tangible assets (1)	1.51		%	1.24		%	1.22		%	0.84		%	0.90		%	Return on average tangible assets (1)	1.18		%	1.38		%	1.41		%	1.51		%	1.24		%
Return on average stockholders' equity	Return on average stockholders' equity	13.21		%	11.18		%	11.38		%	7.99		%	8.45		%	Return on average stockholders' equity	9.91		%	11.56		%	11.79		%	13.21		%	11.18		%
Return on average tangible stockholders' equity (1)	Return on average tangible stockholders' equity (1)	15.92		%	13.51		%	13.79		%	9.70		%	10.28		%	Return on average tangible stockholders' equity (1)	11.84		%	13.84		%	14.15		%	15.92		%	13.51		%
Dividend payout ratio (1)	Dividend payout ratio (1)	29.69		%	33.99		%	33.96		%	48.67		%	46.37		%	Dividend payout ratio (1)	39.28		%	34.00		%	32.54		%	29.69		%	33.99		%
Efficiency ratio (3)	Efficiency ratio (3)	49.30		%	55.22		%	55.27		%	57.83		%	55.46		%	Efficiency ratio (3)	56.37		%	52.23		%	53.64		%	49.30		%	55.22		%

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)	0.03		%	0.10		%	0.24		%	0.27		%	0.08		%	Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.11		%	0.12		%	0.07		%	0.03		%	0.10		%
Nonperforming loans and leases as a percentage of total loans and leases	Nonperforming loans and leases as a percentage of total loans and leases	0.49		%	0.43		%	0.53		%	0.51		%	0.56		%	Nonperforming loans and leases as a percentage of total loans and leases	0.35		%	0.45		%	0.52		%	0.49		%	0.43		%
Nonperforming assets as a percentage of total assets	Nonperforming assets as a percentage of total assets	0.41		%	0.44		%	0.50		%	0.44		%	0.47		%	Nonperforming assets as a percentage of total assets	0.31		%	0.39		%	0.44		%	0.41		%	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	1.52		%	1.51		%	1.57		%	1.62		%	1.61		%	Total allowance for loan and lease losses as a percentage of total loans and leases	1.32		%	1.38		%	1.48		%	1.52		%	1.51		%

CAPITAL RATIOS	CAPITAL RATIOS																CAPITAL RATIOS
Stockholders' equity to total assets	Stockholders' equity to total assets	11.49		%	11.04		%	10.53		%	10.39		%	10.21		%	Stockholders' equity to total assets	11.37		%	11.57		%	11.77		%	11.49		%	11.04		%
Tangible equity ratio (1)	Tangible equity ratio (1)	9.75		%	9.31		%	8.86		%	8.73		%	8.56		%	Tangible equity ratio (1)	9.67		%	9.87		%	10.01		%	9.75		%	9.31		%

FINANCIAL CONDITION DATA	FINANCIAL CONDITION DATA																FINANCIAL CONDITION DATA
Total assets	Total assets	$	8,461,964		$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		Total assets	$	8,633,736		$	8,602,622		$	8,312,649		$	8,461,964		$	8,559,810
Total loans and leases	Total loans and leases	7,020,275			7,267,552			7,269,553			7,396,358			7,407,697			Total loans and leases	7,223,130			7,154,457			6,931,694			7,020,275			7,267,552
Allowance for loan and lease losses	Allowance for loan and lease losses	106,474			109,837			114,379			119,971			119,553			Allowance for loan and lease losses	95,463			99,084			102,515			106,474			109,837
Investment securities available-for-sale	Investment securities available-for-sale	694,151			729,901			745,822			783,867			854,505			Investment securities available-for-sale	730,562			720,866			732,020			694,151			729,901
Investment securities held-to-maturity		—			—			—			—			—

Equity securities held-for-trading	Equity securities held-for-trading	—			518			526			525			1,992			Equity securities held-for-trading	—			—			—			—			518
Goodwill and identified intangible assets	Goodwill and identified intangible assets	163,119			163,347			163,579			163,891			164,203			Goodwill and identified intangible assets	162,569			162,703			162,911			163,119			163,347
Total deposits	Total deposits	6,894,701			6,866,786			6,910,696			6,792,523			6,440,233			Total deposits	7,094,378			7,049,906			6,873,010			6,894,701			6,866,786
Total borrowed funds	Total borrowed funds	363,014			546,003			820,247			1,005,045			1,406,669			Total borrowed funds	392,897			357,321			267,539			363,014			546,003
Stockholders' equity	Stockholders' equity	972,252			945,399			941,778			935,558			926,413			Stockholders' equity	981,935			995,342			978,452			972,252			945,399

														(Continued)
																														(Continued)

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		At and for the Three Months Ended
		June 30,		March 31,		December 31,		September 30,		June 30,			At and for the Three Months Ended
		2021		2021		2020		2020		2020			March 31,		December 31,		September 30,		June 30,		March 31,
		(Dollars in Thousands, Except Per Share Data)											2022		2021		2021		2021		2021
													(Dollars in Thousands, Except Per Share Data)
EARNINGS DATA	EARNINGS DATA											EARNINGS DATA
Net interest income	Net interest income	$	71,106	$	69,109	$	68,225	$	65,938	$	64,288	Net interest income	$	69,848	$	71,461	$	70,697	$	71,106	$	69,109
(Credit) provision for credit losses	(Credit) provision for credit losses	(3,331)		(2,147)		(2,103)		4,528		5,347		(Credit) provision for credit losses	(164)		751		(3,110)		(3,331)		(2,147)
Non-interest income	Non-interest income	5,910		4,794		4,219		4,862		6,235		Non-interest income	5,529		10,699		5,586		5,910		4,794
Non-interest expense	Non-interest expense	37,966		40,811		40,038		40,947		39,109		Non-interest expense	42,487		42,909		40,922		37,966		40,811
Net income	Net income	31,602		26,454		26,663		18,679		19,571		Net income	24,705		28,545		28,839		31,602		26,454

(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 $8.5 billion as of June 30, 2021 decreased $480.5~~increased $31.1 million, or ~~10.7%~~1.4% on an annualized basis, to $8.63 billion as of March 31, 2022 from $8.60 billion as of December 31, ~~2020.~~2021. The ~~decrease~~increase was primarily driven by ~~decreases~~an increase in loans and leases, ~~and~~partially offset by a decrease in cash and cash equivalents.

Cash and cash equivalents ~~as of June 30, 2021~~ decreased ~~$114.5~~$34.5 million, or ~~52.6%~~42.1% on an annualized basis, to ~~$320.4~~$293.3 million as of March 31, 2022 from $327.7 million as of December 31, ~~2020.~~2021.

Total loans and leases ~~as of June 30, 2021 decreased $249.3~~increased $68.7 million, or ~~6.9%~~3.8% on an annualized basis, to ~~$7.0~~$7.22 billion as of March 31, 2022 from $7.15 billion December 31, ~~2020.~~2021. The Company's commercial loan portfolios, which are comprised of commercial real estate loans and commercial loans and leases, totaled ~~$5.9~~$6.04 billion, or ~~83.4%~~83.6% of total loans and leases as of ~~June 30, 2021, a decrease~~March 31, 2022, an increase of ~~$244.3~~$45.5 million, or ~~8.0%~~3.0% on an annualized basis, from ~~$6.1~~$5.99 billion, or ~~83.9%~~83.7% of total loans and leases, as of December 31, ~~2020.~~2021.

~~Total deposits of $6.9 billion as of June 30, 2021~~PPP loans decreased ~~$16.0~~$53.7 million, or ~~0.5%~~317.2% on an annualized basis, to $14.0 million as of March 31, 2022 from $67.7 million as of December 31, ~~2020.~~2021.

Total deposits increased $44.5 million, or 2.5% on an annualized basis, to $7.09 billion as of March 31, 2022 from $7.05 billion as of December 31, 2021. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled ~~$5.5~~$5.9 billion, or ~~79.1%~~83.6% of total deposits as of ~~June 30, 2021,~~March 31, 2022, an increase of ~~$628.7~~$164.1 million, or ~~26.0%~~11.4% on an annualized basis, from ~~$4.8~~$5.8 billion, or ~~69.8%~~81.8% of total deposits, as of December 31, ~~2020.~~2021. Certificate of deposit balances totaled ~~$1.2~~$1.05 billion, or ~~17.1%~~14.8% of total deposits as of ~~June 30, 2021,~~March 31, 2022, a decrease of ~~$211.9~~$69.7 million, or ~~30.5%~~24.9% on an annualized basis, from ~~$1.4~~$1.12 billion, or ~~20.1%~~15.9% of total deposits, as of December 31, ~~2020.~~2021. Brokered deposits totaled ~~$261.1~~$115.5 million, or ~~3.8%~~1.6% of total deposits as of ~~June 30, 2021,~~March 31, 2022, a decrease of ~~$432.8~~$50.0 million, or ~~124.7%~~120.8% on an annualized basis, from ~~$693.9~~$165.5 million, or ~~10.0%~~2.3% of total deposits, as of December 31, ~~2020~~2021.

Total borrowed funds ~~as of June 30, 2021 decreased $457.2~~increased $35.6 million, or ~~111.5%~~39.8% on an annualized basis, to ~~$363.0~~$392.9 million as of March 31, 2022 from $357.3 million as of December 31, ~~2020.~~2021.

Asset Quality

Nonperforming assets as of ~~June 30, 2021~~March 31, 2022 totaled ~~$34.6~~$26.5 million, or ~~0.41%~~0.31% of total assets, compared to ~~$45.0~~$33.2 million, or ~~0.50%~~0.39% of total assets, as of December 31, ~~2020.~~2021. Net charge-offs for the three months ended ~~June 30, 2021~~March 31, 2022 were ~~$0.6~~$1.9 million, or ~~0.03%~~0.11% of average loans and leases on an annualized basis, compared to ~~$1.4~~$1.8 million, or ~~0.08%~~0.10% of average loans and leases on an annualized basis, for the three months ended ~~June 30, 2020.~~March 31, 2021.

The ratio of the allowance for loan and lease losses to total loans and leases was ~~1.52%~~1.32% as of ~~June 30, 2021,~~March 31, 2022, compared to ~~1.57%~~1.38% as of December 31, ~~2020.~~2021. 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."

The ratio of the allowance for loan and lease losses to nonaccrual loans and leases was 374.13% as of March 31, 2022, compared to 305.26% as of December 31, 2021.

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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 ~~11.98%~~12.01% as of ~~June 30, 2021,~~March 31, 2022, compared to ~~11.04%~~11.86% as of December 31, ~~2020.~~2021. The Company's Tier 1 leverage ratio was ~~9.71%~~10.24% as of ~~June 30, 2021,~~March 31, 2022, compared to ~~8.92%~~10.15% as of December 31, ~~2020.~~2021. As of ~~June 30, 2021,~~March 31, 2022, the Company's Tier 1 risk-based capital ratio was ~~12.12%~~12.14%, compared to ~~11.18%~~11.99% as of December 31, ~~2020.~~2021. The Company's Total risk-based capital ratio was ~~14.48%~~14.45% as of ~~June 30, 2021,~~March 31, 2022, compared to ~~13.51%~~14.30% as of December 31, ~~2020.~~2021.

The Company's ratio of stockholders' equity to total assets was ~~11.49%~~11.37% and ~~10.53%~~11.57% as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The Company's tangible equity ratio was ~~9.75%~~9.67% and ~~8.86%~~9.87% as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Net Income

For the three months ended ~~June 30, 2021,~~March 31, 2022, the Company reported net income of ~~$31.6~~$24.7 million, or ~~$0.40~~$0.32 per basic and diluted share, ~~an increase~~a decrease of ~~$12.0~~$1.7 million from net income of ~~$19.6~~$26.5 million, or ~~$0.25~~$0.34 per basic and diluted share, for the three months ended ~~June 30, 2020.~~March 31, 2021. This ~~increase~~decrease in net income is primarily the result of ~~a decrease~~an increase in the provision for credit losses of ~~$8.7~~$2.0 million and an increase in non-interest expense of $1.7 million, partially offset by an increase in net interest income of ~~$6.8~~$0.7 million, an increase in non-interest income of $0.7 million, and a decrease ~~in non-interest expense of $1.1 million, partially offset by an increase~~ in the provision for income taxes of ~~$4.3 million and a decrease in non-interest income of $0.3~~$0.4 million. Refer to “Results of Operations" below for further discussion.

For the six months ended June 30, 2021, the Company reported net income of $58.1 million, or $0.74 per basic and diluted share, an increase of $55.8 million from $2.3 million, or $0.03 per basic and diluted share, for the six months ended June 30, 2020. This increase in net income is primarily the result of a decrease in the provision for credit losses of $64.9 million, an increase in net interest income of $14.2 million and a decrease in non-interest expense of $1.1 million, partially offset by an increase in the provision for income taxes of $19.6 million and a decrease in non-interest income of $4.9 million. Refer to “Results of Operations" below for further discussion.

The annualized return on average assets was ~~1.48%~~1.16% for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~0.88%~~1.21% for the three months ended ~~June 30, 2020.~~March 31, 2021. The annualized return on average stockholders' equity was ~~13.21%~~9.91% for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~8.45%~~11.18% for the three months ended ~~June 30, 2020.~~March 31, 2021.

The net interest margin was ~~3.52%~~3.49% for the three months ended ~~June 30, 2021,~~March 31, 2022, up from ~~3.09%~~3.39% for the three months ended ~~June 30, 2020.~~March 31, 2021. The increase in the net interest margin is a result of a decrease of 5421 basis points in the Company's overall cost of funds to ~~0.40%~~0.29% for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~0.94%~~0.50% for the three months ended ~~June 30, 2020,~~March 31, 2021, partially offset by a decrease in the yield on interest-earning assets of 510 basis points to ~~3.87%~~3.70% for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~3.92%~~3.80% for the three months ended ~~June 30, 2020.~~

The net interest margin was 3.45% for the six months ended June 30, 2021, up from 3.19% for the six months ended June 30, 2020. The increase in the net interest margin is a result of a decrease of 65 basis points in the Company's overall cost of funds to 0.45% for the six months ended June 30, 2021 from 1.10% for the six months ended June 30, 2020, partially offset by a decrease in the yield on interest-earning assets of 34 basis points to 3.83% for the six months ended June 30, 2021 from 4.17% for the six months ended June 30, 2020.March 31, 2021.

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 and Estimates

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~~2021 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 2022, the FASB issued ASU 2022-02, "Financial Instruments - Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures" which addresses concerns regarding the complex accounting for loans modified as troubled debt restructurings (“TDR”s) and also the disclosure of gross writeoff information included in required vintage disclosures. Management has determined that ASU 2022-02 does apply to the Company. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2021, FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848)" an update to address concerns around structural risk of interbank offered rates, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR"). The amendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Management has determined that ASU 2021-01 does apply to the Company and management is determining the impact as of March 31, 2022.

In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04") to provide optional expedients and exceptions for applying GAAP to certain contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are

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met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference ~~the London Interbank Offered Rate ("LIBOR")~~ LIBOR

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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.

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 June 30,				At and for the Six Months Ended June 30,					At and for the Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(Dollars in Thousands)									(Dollars in Thousands)
Net income, as reported	Net income, as reported	$	31,602	$	19,571	$	58,056	$	2,295	Net income, as reported	$	24,705	$	26,454

Less:	Less:									Less:
Security gains (after-tax)		1		440		(4)		1,958
Security (losses) gains (after-tax)										Security (losses) gains (after-tax)	—		(5)

Operating earnings	Operating earnings	$	31,601	$	19,131	$	58,060	$	337	Operating earnings	$	24,705	$	26,459

Basic earnings per share, as reported	Basic earnings per share, as reported	$	0.40	$	0.25	$	0.74	$	0.03	Basic earnings per share, as reported	$	0.32	$	0.34
Less:	Less:									Less:
Security gains (after-tax)	Security gains (after-tax)	—		0.01		—		0.03		Security gains (after-tax)	—		—

Basic operating earnings per share	Basic operating earnings per share	$	0.40	$	0.24	$	0.74	$	—	Basic operating earnings per share	$	0.32	$	0.34

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
		June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020				March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
		(Dollars in Thousands)																(Dollars in Thousands)
Operating earnings	Operating earnings	$	31,601		$	26,459		$	26,663		$	18,639		$	19,131		Operating earnings	$	24,705	$	28,569	$	28,839	$	31,601	$	26,459

Average total assets	Average total assets	$	8,540,228		$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,224			163,457			163,758			164,072			164,385			Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	Average tangible assets	$	8,377,004		$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average assets (annualized)	Return on average assets (annualized)	1.48		%	1.21		%	1.20		%	0.83		%	0.88		%	Return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%
Less:	Less:																Less:
Security gains	Security gains	—		%	—		%	—		%	—		%	0.02		%	Security gains	—%		—%		—%		—%		—%

Operating return on average assets (annualized)	Operating return on average assets (annualized)	1.48		%	1.21		%	1.20		%	0.83		%	0.86		%	Operating return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%

Return on average tangible assets (annualized)	Return on average tangible assets (annualized)	1.51		%	1.24		%	1.22		%	0.84		%	0.90		%	Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%
Less:	Less:																Less:
Security gains	Security gains	—		%	—		%	—		%	—		%	0.02		%	Security gains	—%		—%		—%		—%		—%

Operating return on average tangible assets (annualized)	Operating return on average tangible assets (annualized)	1.51		%	1.24		%	1.22		%	0.84		%	0.88		%	Operating return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	Average total stockholders' equity	$	957,207		$	946,482		$	937,294		$	934,632		$	926,239		Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,224			163,457			163,758			164,072			164,385			Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	Average tangible stockholders' equity	$	793,983		$	783,025		$	773,536		$	770,560		$	761,854		Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average stockholders' equity (annualized)	Return on average stockholders' equity (annualized)	13.21		%	11.18		%	11.38		%	7.99		%	8.45		%	Return on average stockholders' equity (annualized)	9.91%		11.56%		11.79%		13.21%		11.18%
Less:	Less:																Less:
Security gains	Security gains	—		%	—		%	—		%	0.01		%	0.19		%	Security gains	—%		(0.01)%		—%		—%		—%

Operating return on average stockholders' equity (annualized)	Operating return on average stockholders' equity (annualized)	13.21		%	11.18		%	11.38		%	7.98		%	8.26		%	Operating return on average stockholders' equity (annualized)	9.91%		11.57%		11.79%		13.21%		11.18%

Return on average tangible stockholders' equity (annualized)	Return on average tangible stockholders' equity (annualized)	15.92		%	13.51		%	13.79		%	9.70		%	10.28		%	Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%
Less:	Less:																Less:
Security gains	Security gains	—		%	—		%	—		%	0.02		%	0.24		%	Security gains	—%		(0.01)%		—%		—%		—%

Operating return on average tangible stockholders' equity (annualized)	Operating return on average tangible stockholders' equity (annualized)	15.92		%	13.51		%	13.79		%	9.68		%	10.04		%	Operating return on average tangible stockholders' equity (annualized)	11.84%		13.85%		14.15%		15.92%		13.51%

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		Three Months Ended																Three Months Ended
		June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020				March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
		(Dollars in Thousands)																(Dollars in Thousands)
Net income, as reported	Net income, as reported	$	31,602		$	26,454		$	26,663		$	18,679		$	19,571		Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Average total assets	Average total assets	$	8,540,228		$	8,714,158		$	8,874,467		$	9,018,672		$	8,869,540		Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,224			163,457			163,758			164,072			164,385			Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	Average tangible assets	$	8,377,004		$	8,550,701		$	8,710,709		$	8,854,600		$	8,705,155		Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average tangible assets (annualized)	Return on average tangible assets (annualized)	1.51		%	1.24		%	1.22		%	0.84		%	0.90		%	Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	Average total stockholders' equity	$	957,207		$	946,482		$	937,294		$	934,632		$	926,239		Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	Less: Average goodwill and average identified intangible assets, net	163,224			163,457			163,758			164,072			164,385			Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	Average tangible stockholders' equity	$	793,983		$	783,025		$	773,536		$	770,560		$	761,854		Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average tangible stockholders' equity (annualized)	Return on average tangible stockholders' equity (annualized)	15.92		%	13.51		%	13.79		%	9.70		%	10.28		%	Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%

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


		Three Months Ended																Three Months Ended
		June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020				March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
		(Dollars in Thousands)																(Dollars in Thousands)
Total stockholders' equity	Total stockholders' equity	$	972,252		$	945,399		$	941,778		$	935,558		$	926,413		Total stockholders' equity	$	981,935	$	995,342	$	978,452	$	972,252	$	945,399
Less: Goodwill and identified intangible assets, net	Less: Goodwill and identified intangible assets, net	163,119			163,347			163,579			163,891			164,203			Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible stockholders' equity	Tangible stockholders' equity	$	809,133		$	782,052		$	778,199		$	771,667		$	762,210		Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Total assets	Total assets	$	8,461,964		$	8,559,810		$	8,942,424		$	9,000,192		$	9,069,667		Total assets	$	8,633,736	$	8,602,622	$	8,312,649	$	8,461,964	$	8,559,810
Less: Goodwill and identified intangible assets, net	Less: Goodwill and identified intangible assets, net	163,119			163,347			163,579			163,891			164,203			Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible assets	Tangible assets	$	8,298,845		$	8,396,463		$	8,778,845		$	8,836,301		$	8,905,464		Tangible assets	$	8,471,167	$	8,439,919	$	8,149,738	$	8,298,845	$	8,396,463

Tangible equity ratio	Tangible equity ratio	9.75		%	9.31		%	8.86		%	8.73		%	8.56		%	Tangible equity ratio	9.67%		9.87%		10.01%		9.75%		9.31%

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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
		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020			March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
		(Dollars in Thousands)											(Dollars in Thousands)
Tangible stockholders' equity	Tangible stockholders' equity	$	809,133	$	782,052	$	778,199	$	771,667	$	762,210	Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

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	6,536,478		6,534,602		6,525,783		5,629,854		5,859,708		Treasury shares	7,037,464		7,037,464		7,034,754		6,536,478		6,534,602
Unallocated ESOP	Unallocated ESOP	37,890		44,502		51,114		58,227		65,334		Unallocated ESOP	18,051		24,660		31,278		37,890		44,502
Unvested restricted stock	Unvested restricted stock	448,105		449,981		458,800		487,318		398,188		Unvested restricted stock	500,098		500,098		502,808		448,105		449,981
Common shares outstanding	Common shares outstanding	78,154,699		78,148,087		78,141,475		79,001,773		78,853,942		Common shares outstanding	77,621,559		77,614,950		77,608,332		78,154,699		78,148,087

Tangible book value per share	Tangible book value per share	$	10.35	$	10.01	$	9.96	$	9.77	$	9.67	Tangible book value per share	$	10.56	$	10.73	$	10.51	$	10.35	$	10.01

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


		Three Months Ended																Three Months Ended
		June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020				March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
		(Dollars in Thousands)																(Dollars in Thousands)
Dividends paid	Dividends paid	$	9,383		$	8,992		$	9,055		$	9,092		$	9,076		Dividends paid	$	9,705	$	9,705	$	9,383	$	9,383	$	8,992

Net income, as reported	Net income, as reported	$	31,602		$	26,454		$	26,663		$	18,679		$	19,571		Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Dividend payout ratio	Dividend payout ratio	29.69		%	33.99		%	33.96		%	48.67		%	46.37		%	Dividend payout ratio	39.28%		34.00%		32.54%		29.69%		33.99%


		Three Months Ended																Three Months Ended
		June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020				March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
		(Dollars in Thousands)																(Dollars in Thousands)
Allowance for loan and lease losses	Allowance for loan and lease losses	$	106,474		$	109,837		$	114,379		$	119,971		$	119,553		Allowance for loan and lease losses	$	95,463	$	99,084	$	102,515	$	106,474	$	109,837

Total loans and leases	Total loans and leases	$	7,020,275		$	7,267,552		$	7,269,553		$	7,396,358		$	7,407,697		Total loans and leases	$	7,223,130	$	7,154,457	$	6,931,694	$	7,020,275	$	7,267,552
Less: Total PPP loans	Less: Total PPP loans	348,411			604,790			489,216			568,383			565,768			Less: Total PPP loans	14,013		67,711		160,586		348,411		604,790
Total loans and leases excluding PPP loans	Total loans and leases excluding PPP loans	$	6,671,864		$	6,662,762		$	6,780,337		$	6,827,975		$	6,841,929		Total loans and leases excluding PPP loans	$	7,209,117	$	7,086,746	$	6,771,108	$	6,671,864	$	6,662,762

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	1.60		%	1.65		%	1.69		%	1.76		%	1.75		%	Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.32%		1.40%		1.51%		1.60%		1.65%

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Financial Condition

Loans and Leases

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


		At June 30, 2021				At December 31, 2020					At March 31, 2022				At December 31, 2021
		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	$	2,646,104	37.7	%	$	2,578,773	35.4	%	Commercial real estate	$	2,958,705	41.0	%	$	2,842,791	39.6	%
Multi-family mortgage	Multi-family mortgage	967,891		13.8	%	1,013,432		13.9	%	Multi-family mortgage	1,116,010		15.5	%	1,099,818		15.4	%
Construction	Construction	201,586		2.9	%	231,621		3.2	%	Construction	160,610		2.2	%	160,431		2.2	%
Total commercial real estate loans	Total commercial real estate loans	3,815,581		54.4	%	3,823,826		52.5	%	Total commercial real estate loans	4,235,325		58.7	%	4,103,040		57.2	%
Commercial loans and leases:	Commercial loans and leases:									Commercial loans and leases:
Commercial	Commercial	918,345		13.0	%	1,131,668		15.6	%	Commercial	633,782		8.8	%	666,677		9.4	%
Equipment financing	Equipment financing	1,074,088		15.3	%	1,092,461		15.0	%	Equipment financing	1,108,135		15.3	%	1,105,611		15.5	%
Condominium association	Condominium association	46,418		0.7	%	50,770		0.7	%	Condominium association	44,453		0.6	%	47,137		0.7	%
PPP										PPP	14,013		0.2	%	67,711		0.9	%
Total commercial loans and leases	Total commercial loans and leases	2,038,851		29.0	%	2,274,899		31.3	%	Total commercial loans and leases	1,800,383		24.9	%	1,887,136		26.5	%
Consumer loans:	Consumer loans:									Consumer loans:
Residential mortgage	Residential mortgage	799,027		11.4	%	791,317		10.9	%	Residential mortgage	811,960		11.2	%	799,737		11.2	%
Home equity	Home equity	331,038		4.7	%	346,652		4.8	%	Home equity	330,793		4.6	%	324,156		4.5	%
Other consumer	Other consumer	35,778		0.5	%	32,859		0.5	%	Other consumer	44,669		0.6	%	40,388		0.6	%
Total consumer loans	Total consumer loans	1,165,843		16.6	%	1,170,828		16.2	%	Total consumer loans	1,187,422		16.4	%	1,164,281		16.3	%
Total loans and leases	Total loans and leases	7,020,275		100.0	%	7,269,553		100.0	%	Total loans and leases	7,223,130		100.0	%	7,154,457		100.0	%
Allowance for loan and lease losses	Allowance for loan and lease losses	(106,474)				(114,379)				Allowance for loan and lease losses	(95,463)				(99,084)
Net loans and leases	Net loans and leases	$	6,913,801			$	7,155,174			Net loans and leases	$	7,127,667			$	7,055,373

The following table sets forth the growth in the Company’s loan and lease portfolios during the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:


		At June 30, 2021		At December 31, 2020		Dollar Change		Percent Change (Annualized)			At March 31, 2022		At December 31, 2021		Dollar Change		Percent Change (Annualized)
		(Dollars in Thousands)									(Dollars in Thousands)
Commercial real estate	Commercial real estate	$	3,815,581	$	3,823,826	$	(8,245)	-0.9	%	Commercial real estate	$	4,235,325	$	4,103,040	$	132,285	12.9	%
Commercial	Commercial	2,038,851		2,274,899		(236,048)		-41.5	%	Commercial	1,800,383		1,887,136		(86,753)		-18.4	%
Consumer	Consumer	1,165,843		1,170,828		(4,985)		-1.7	%	Consumer	1,187,422		1,164,281		23,141		8.0	%
Total loans and leases	Total loans and leases	$	7,020,275	$	7,269,553	$	(249,278)	(13.72)	%	Total loans and leases	$	7,223,130	$	7,154,457	$	68,673	3.84	%
Less: PPP										Less: PPP	14,013		67,711		(53,698)		-317.2	%
Total core loans and leases										Total core loans and leases	$	7,209,117	$	7,086,746	$	14,975	0.8	%

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.

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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 ~~June 30, 2021,~~March 31, 2022, there ~~was one borrower~~were seven borrowers with loans and commitments over $50.0 million. The total of those loans and commitments was ~~$57.3~~$390.4 million, or ~~0.3%~~4.4% of total loans and commitments, as of ~~June 30, 2021.~~March 31, 2022. As of December 31, ~~2020,~~2021, there were ~~two~~six borrowers with loans and commitments over

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~~$50.0~~ $50.0 million. The total of those loans and commitments was ~~$114.4~~$322.5 million, or ~~1.3%~~3.0% of total loans and commitments, as of December 31, ~~2020.~~2021.

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

~~Commercial Real Estate Loans~~Asset Quality

Nonperforming assets as of March 31, 2022 totaled $26.5 million, or 0.31% of total assets, compared to $33.2 million, or 0.39% of total assets, as of December 31, 2021. Net charge-offs for the three months ended March 31, 2022 were $1.9 million, or 0.11% of average loans and leases on an annualized basis, compared to $1.8 million, or 0.10% of average loans and leases on an annualized basis, for the three months ended March 31, 2021.

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 54.4% of~~and lease losses to total loans and leases ~~outstanding~~was 1.32% as of ~~June 30,~~March 31, 2022, compared to 1.38% as of December 31, 2021.

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

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, On January 1, 2020, the Company ~~considers~~implemented the ~~financial resources of~~CECL methodology to calculate the ~~borrower, the borrower's experience in owning or managing similar property~~allowance for credit losses. Refer also to Note 5, "Allowance for Loan 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 theLease Losses."

The ratio of the allowance for loan ~~amount~~and lease losses to ~~the appraised value. Generally, personal guarantees are obtained from commercial real estate loan borrowers.~~

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

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

The Company's commercial real estate portfolio is composed primarily of loans secured by apartment buildings ($922.4 million), office buildings ($642.5 million), retail stores ($592.2 million), industrial properties ($534.5 million), mixed-use properties ($282.6 million), lodging services ($152.5 million) and food services ($55.2 million)leases was 374.13% as of ~~June 30,~~March 31, 2022, compared to 305.26% as of December 31, 2021. ~~At that date, approximately 96.2% of the commercial real estate loans outstanding were secured by properties located in New England.~~

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

Criteria applied in underwriting construction loans for which the primary source of repayment is the sale of the property are different from the criteria applied in underwriting construction loans for which the primary source of repayment is the stabilized cash flow from the completed project. For those loans where the primary source of repayment is from resale of the property, in addition to the normal credit analysis performed for other loans, the Company also analyzes project costs, the attractiveness of the property in relation to the market in which it is located and demand within the market area. For those construction loans where the source of repayment is the stabilized cash flow from the completed project, the Company analyzes not only project costs but also how long it might take to achieve satisfactory occupancy and the reasonableness of projected rental rates in relation to market rental rates.

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~~Commercial Loans~~Capital Strength

The Company is a "well-capitalized" bank holding company as defined in the FRB's Regulation Y. The Company's ~~commercial loan and lease portfolio is comprised of commercial loans, equipment financing loans and leases and condominium association loans and represented 29.0% of total loans outstanding~~common equity Tier 1 capital ratio was 12.01% as of ~~June 30,~~March 31, 2022, compared to 11.86% as of December 31, 2021. The Company's Tier 1 leverage ratio was 10.24% as of March 31, 2022, compared to 10.15% as of December 31, 2021. As of March 31, 2022, the Company's Tier 1 risk-based capital ratio was 12.14%, compared to 11.99% as of December 31, 2021. The Company's Total risk-based capital ratio was 14.45% as of March 31, 2022, compared to 14.30% as of December 31, 2021.

The Company's ~~commercial loan~~ratio of stockholders' equity to total assets was 11.37% and lease portfolio is composed primarily of loans and leases to small to medium sized businesses ($663.3 million), transportation services ($364.4 million), food services ($203.9 million), manufacturing ($109.4 million), recreation services ($105.9 million), rental and leasing services ($94.9 million), and retail ($94.0 million)11.57% as of ~~June 30,~~March 31, 2022 and December 31, 2021, respectively. The Company's tangible equity ratio was 9.67% and 9.87% as of March 31, 2022 and December 31, 2021, respectively.

Net Income

For the three months ended March 31, 2022, the Company reported net income of $24.7 million, or $0.32 per basic and diluted share, a decrease of $1.7 million from net income of $26.5 million, or $0.34 per basic and diluted share, for the three months ended March 31, 2021. This decrease in net income is primarily the result of an increase in the provision for credit losses of $2.0 million and an increase in non-interest expense of $1.7 million, partially offset by an increase in net interest income of $0.7 million, an increase in non-interest income of $0.7 million, and a decrease in the provision for income taxes of $0.4 million. Refer to “Results of Operations" below for further discussion.

The annualized return on average assets was 1.16% for the three months ended March 31, 2022, compared to 1.21% for the three months ended March 31, 2021. The annualized return on average stockholders' equity was 9.91% for the three months ended March 31, 2022, compared to 11.18% for the three months ended March 31, 2021.

The ~~Company provides commercial banking services to companies in its market area. Approximately 50.2% of~~net interest margin was 3.49% for the ~~commercial loans outstanding as of June 30, 2021 were made to borrowers located in New England.~~three months ended March 31, 2022, up from 3.39% for the three months ended March 31, 2021. The ~~remaining 49.8% of the commercial loans outstanding were made to borrowers in other areas~~increase in the ~~United States~~net interest margin is a result of ~~America, primarily by~~a decrease of 21 basis points in the Company's ~~equipment financing divisions. Product offerings include lines~~overall cost of ~~credit, term loans, letters~~funds to 0.29% for the three months ended March 31, 2022 from 0.50% for the three months ended March 31, 2021, partially offset by a decrease in the yield on interest-earning assets of ~~credit, deposit services~~10 basis points to 3.70% for the three months ended March 31, 2022 from 3.80% for the three months ended March 31, 2021.

The Company’s net interest margin 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~~net interest income is sensitive to the ~~prime rate or a similar index or on a fixed-rate basis referenced on the Federal Home Loan Bank~~structure and level 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 businessinterest rates as well as ~~industry~~competitive pricing in all loan and ~~general economic conditions.~~ deposit categories.

Critical Accounting Policies and Estimates

The ~~Company also participates~~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. ~~Government programs such~~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 2021 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 ~~SBA 7A program~~Company’s most critical accounting policies.

Recent Accounting Developments

In January 2021, FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848)" an ~~SBA preferred lender. Included~~update to address concerns around structural risk of interbank offered rates, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR"). The amendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the ~~commercial loans balances are~~discounting transition. Management has determined that ASU 2021-01 does apply to the ~~PPP loans totaling $348.4 million~~Company and management is determining the impact as of ~~June 30, 2021.~~March 31, 2022.

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 partIn March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848)-Facilitation of the ~~Company’s equipment financing loan origination volume comes from equipment manufacturers~~Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04") to provide optional expedients and ~~existing customers as they expand their operations. The equipment financing portfolio is composed primarily of loans~~exceptions for applying GAAP to finance laundry, tow trucks, fitness, dry cleaning and convenience store equipment. Approximately 14.6% 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 flowcertain contracts, hedging relationships, and other ~~characteristics pertaining~~transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only 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,~~contracts, hedging relationships, and other consumer loans, represented 16.6% of total loans outstanding as of June 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.

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.transactions that reference LIBOR

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~~Other consumer loans have historically been a modest part~~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.

Non-GAAP Financial Measures and Reconciliation to GAAP

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



	At and for the Three Months Ended March 31,
	2022		2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	26,454

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



Operating earnings	$	24,705	$	26,459

Basic earnings per share, as reported	$	0.32	$	0.34
Less:
Security gains (after-tax)	—		—




Basic operating earnings per share	$	0.32	$	0.34

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

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	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Operating earnings	$	24,705	$	28,569	$	28,839	$	31,601	$	26,459

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average stockholders' equity (annualized)	9.91%		11.56%		11.79%		13.21%		11.18%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average stockholders' equity (annualized)	9.91%		11.57%		11.79%		13.21%		11.18%




Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average tangible stockholders' equity (annualized)	11.84%		13.85%		14.15%		15.92%		13.51%

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	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Total stockholders' equity	$	981,935	$	995,342	$	978,452	$	972,252	$	945,399
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Total assets	$	8,633,736	$	8,602,622	$	8,312,649	$	8,461,964	$	8,559,810
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible assets	$	8,471,167	$	8,439,919	$	8,149,738	$	8,298,845	$	8,396,463

Tangible equity ratio	9.67%		9.87%		10.01%		9.75%		9.31%

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	7,037,464		7,037,464		7,034,754		6,536,478		6,534,602
Unallocated ESOP	18,051		24,660		31,278		37,890		44,502
Unvested restricted stock	500,098		500,098		502,808		448,105		449,981
Common shares outstanding	77,621,559		77,614,950		77,608,332		78,154,699		78,148,087

Tangible book value per share	$	10.56	$	10.73	$	10.51	$	10.35	$	10.01

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Dividends paid	$	9,705	$	9,705	$	9,383	$	9,383	$	8,992

Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Dividend payout ratio	39.28%		34.00%		32.54%		29.69%		33.99%


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Allowance for loan and lease losses	$	95,463	$	99,084	$	102,515	$	106,474	$	109,837

Total loans and leases	$	7,223,130	$	7,154,457	$	6,931,694	$	7,020,275	$	7,267,552
Less: Total PPP loans	14,013		67,711		160,586		348,411		604,790
Total loans and leases excluding PPP loans	$	7,209,117	$	7,086,746	$	6,771,108	$	6,671,864	$	6,662,762

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.32%		1.40%		1.51%		1.60%		1.65%

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Financial Condition

Loans and Leases

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


	At March 31, 2022				At December 31, 2021
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,958,705	41.0	%	$	2,842,791	39.6	%
Multi-family mortgage	1,116,010		15.5	%	1,099,818		15.4	%
Construction	160,610		2.2	%	160,431		2.2	%
Total commercial real estate loans	4,235,325		58.7	%	4,103,040		57.2	%
Commercial loans and leases:
Commercial	633,782		8.8	%	666,677		9.4	%
Equipment financing	1,108,135		15.3	%	1,105,611		15.5	%
Condominium association	44,453		0.6	%	47,137		0.7	%
PPP	14,013		0.2	%	67,711		0.9	%
Total commercial loans and leases	1,800,383		24.9	%	1,887,136		26.5	%
Consumer loans:
Residential mortgage	811,960		11.2	%	799,737		11.2	%
Home equity	330,793		4.6	%	324,156		4.5	%
Other consumer	44,669		0.6	%	40,388		0.6	%
Total consumer loans	1,187,422		16.4	%	1,164,281		16.3	%
Total loans and leases	7,223,130		100.0	%	7,154,457		100.0	%
Allowance for loan and lease losses	(95,463)				(99,084)
Net loans and leases	$	7,127,667			$	7,055,373

The following table sets forth the growth in the Company’s loan and lease portfolios during the three months ended March 31, 2022:


	At March 31, 2022		At December 31, 2021		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	4,235,325	$	4,103,040	$	132,285	12.9	%
Commercial	1,800,383		1,887,136		(86,753)		-18.4	%
Consumer	1,187,422		1,164,281		23,141		8.0	%
Total loans and leases	$	7,223,130	$	7,154,457	$	68,673	3.84	%
Less: PPP	14,013		67,711		(53,698)		-317.2	%
Total core loans and leases	$	7,209,117	$	7,086,746	$	14,975	0.8	%

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.

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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 ~~June 30, 2021, other consumer~~March 31, 2022, there were seven borrowers with loans ~~equaled $35.8~~and commitments over $50.0 million. The total of those loans and commitments was $390.4 million, or ~~0.5%~~4.4% of total loans ~~outstanding.~~and commitments, as of March 31, 2022. As of December 31, 2021, there were six borrowers with loans and commitments over $50.0 million. The total of those loans and commitments was $322.5 million, or 3.0% of total loans and commitments, as of December 31, 2021.

Asset Quality

The ratio of the allowance for loan and lease losses to total loans and leases was 1.32% as of March 31, 2022, compared to 1.38% as of December 31, 2021. 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."

The ratio of the allowance for loan and lease losses to nonaccrual loans and leases was 374.13% as of March 31, 2022, compared to 305.26% as of December 31, 2021.

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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 12.01% as of March 31, 2022, compared to 11.86% as of December 31, 2021. The Company's Tier 1 leverage ratio was 10.24% as of March 31, 2022, compared to 10.15% as of December 31, 2021. As of March 31, 2022, the Company's Tier 1 risk-based capital ratio was 12.14%, compared to 11.99% as of December 31, 2021. The Company's Total risk-based capital ratio was 14.45% as of March 31, 2022, compared to 14.30% as of December 31, 2021.

The Company's ratio of stockholders' equity to total assets was 11.37% and 11.57% as of March 31, 2022 and December 31, 2021, respectively. The Company's tangible equity ratio was 9.67% and 9.87% as of March 31, 2022 and December 31, 2021, respectively.

Net Income

The net interest margin was 3.49% for the three months ended March 31, 2022, up from 3.39% for the three months ended March 31, 2021. The increase in the net interest margin is a result of a decrease of 21 basis points in the Company's overall cost of funds to 0.29% for the three months ended March 31, 2022 from 0.50% for the three months ended March 31, 2021, partially offset by a decrease in the yield on interest-earning assets of 10 basis points to 3.70% for the three months ended March 31, 2022 from 3.80% for the three months ended March 31, 2021.

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 and Estimates

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 2021 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

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Non-GAAP Financial Measures and Reconciliation to GAAP

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



	At and for the Three Months Ended March 31,
	2022		2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	26,454

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



Operating earnings	$	24,705	$	26,459

Basic earnings per share, as reported	$	0.32	$	0.34
Less:
Security gains (after-tax)	—		—




Basic operating earnings per share	$	0.32	$	0.34

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

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	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Operating earnings	$	24,705	$	28,569	$	28,839	$	31,601	$	26,459

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average stockholders' equity (annualized)	9.91%		11.56%		11.79%		13.21%		11.18%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average stockholders' equity (annualized)	9.91%		11.57%		11.79%		13.21%		11.18%




Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average tangible stockholders' equity (annualized)	11.84%		13.85%		14.15%		15.92%		13.51%

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	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Total stockholders' equity	$	981,935	$	995,342	$	978,452	$	972,252	$	945,399
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Total assets	$	8,633,736	$	8,602,622	$	8,312,649	$	8,461,964	$	8,559,810
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible assets	$	8,471,167	$	8,439,919	$	8,149,738	$	8,298,845	$	8,396,463

Tangible equity ratio	9.67%		9.87%		10.01%		9.75%		9.31%

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	7,037,464		7,037,464		7,034,754		6,536,478		6,534,602
Unallocated ESOP	18,051		24,660		31,278		37,890		44,502
Unvested restricted stock	500,098		500,098		502,808		448,105		449,981
Common shares outstanding	77,621,559		77,614,950		77,608,332		78,154,699		78,148,087

Tangible book value per share	$	10.56	$	10.73	$	10.51	$	10.35	$	10.01

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Dividends paid	$	9,705	$	9,705	$	9,383	$	9,383	$	8,992

Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Dividend payout ratio	39.28%		34.00%		32.54%		29.69%		33.99%


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Allowance for loan and lease losses	$	95,463	$	99,084	$	102,515	$	106,474	$	109,837

Total loans and leases	$	7,223,130	$	7,154,457	$	6,931,694	$	7,020,275	$	7,267,552
Less: Total PPP loans	14,013		67,711		160,586		348,411		604,790
Total loans and leases excluding PPP loans	$	7,209,117	$	7,086,746	$	6,771,108	$	6,671,864	$	6,662,762

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.32%		1.40%		1.51%		1.60%		1.65%

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Financial Condition

Loans and Leases

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


	At March 31, 2022				At December 31, 2021
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,958,705	41.0	%	$	2,842,791	39.6	%
Multi-family mortgage	1,116,010		15.5	%	1,099,818		15.4	%
Construction	160,610		2.2	%	160,431		2.2	%
Total commercial real estate loans	4,235,325		58.7	%	4,103,040		57.2	%
Commercial loans and leases:
Commercial	633,782		8.8	%	666,677		9.4	%
Equipment financing	1,108,135		15.3	%	1,105,611		15.5	%
Condominium association	44,453		0.6	%	47,137		0.7	%
PPP	14,013		0.2	%	67,711		0.9	%
Total commercial loans and leases	1,800,383		24.9	%	1,887,136		26.5	%
Consumer loans:
Residential mortgage	811,960		11.2	%	799,737		11.2	%
Home equity	330,793		4.6	%	324,156		4.5	%
Other consumer	44,669		0.6	%	40,388		0.6	%
Total consumer loans	1,187,422		16.4	%	1,164,281		16.3	%
Total loans and leases	7,223,130		100.0	%	7,154,457		100.0	%
Allowance for loan and lease losses	(95,463)				(99,084)
Net loans and leases	$	7,127,667			$	7,055,373

The following table sets forth the growth in the Company’s loan and lease portfolios during the three months ended March 31, 2022:


	At March 31, 2022		At December 31, 2021		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	4,235,325	$	4,103,040	$	132,285	12.9	%
Commercial	1,800,383		1,887,136		(86,753)		-18.4	%
Consumer	1,187,422		1,164,281		23,141		8.0	%
Total loans and leases	$	7,223,130	$	7,154,457	$	68,673	3.84	%
Less: PPP	14,013		67,711		(53,698)		-317.2	%
Total core loans and leases	$	7,209,117	$	7,086,746	$	14,975	0.8	%

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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, 2022, there were seven borrowers with loans and commitments over $50.0 million. The total of those loans and commitments was $390.4 million, or 4.4% of total loans and commitments, as of March 31, 2022. As of December 31, 2021, there were six borrowers with loans and commitments over $50.0 million. The total of those loans and commitments was $322.5 million, or 3.0% of total loans and commitments, as of December 31, 2021.

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 58.7% of total loans and leases outstanding as of March 31, 2022.

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

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

The Company's commercial real estate portfolio is composed primarily of loans secured by apartment buildings ($982.0 million), office buildings ($698.1 million), retail stores ($634.5 million), industrial properties ($605.6 million), mixed-use properties ($348.9 million), lodging services ($165.1 million) and food services ($56.9 million) as of March 31, 2022. At that date, approximately 93.0% of the commercial real estate loans outstanding were secured by properties located in New England.

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

Commercial Loans

The Company's commercial loan and lease portfolio is comprised of commercial loans, equipment financing loans and leases and condominium association loans which represented 24.9% of total loans outstanding as of March 31, 2022.

The Company's commercial loan and lease portfolio is composed primarily of loans and leases to small to medium sized businesses ($650.5 million), transportation services ($347.2 million), food services ($158.8 million), manufacturing ($108.8 million), recreation services ($92.2 million), rental and leasing services ($76.5 million), and retail ($77.2 million) as of March 31, 2022.

The Company provides commercial banking services to companies in its market area. Approximately 45.5% of the commercial loans outstanding as of March 31, 2022 were made to borrowers located in New England. The remaining 54.5% of the commercial loans outstanding were made to borrowers in other areas in the United States of America, primarily by the Company's equipment financing divisions. Product offerings include lines of credit, term loans, letters of credit, deposit services and cash management. These types of credit facilities have as their primary source of repayment cash flows from the operations of a business. Interest rates offered are available on a floating basis tied to the prime rate or a similar index or on a fixed-rate basis referenced on the Federal Home Loan Bank of Boston ("FHLBB") index.

Credit extensions are made to established businesses on the basis of loan purpose and assessment of capacity to repay as determined by an analysis of their financial statements, the nature of collateral to secure the credit extension and, in most instances, the personal guarantee of the owner of the business as well as industry and general economic conditions. The Company also participates in U.S. Government programs such as the SBA 7A program and as an SBA preferred lender. Included in the commercial loans balances are the PPP loans totaling $14.0 million as of March 31, 2022.

The Company’s equipment financing divisions focus on market niches in which its lenders have deep experience and industry contacts, and on making loans to customers with business experience. An important part of the Company’s equipment financing loan origination volume comes from equipment manufacturers and existing customers as they expand their operations. The equipment financing portfolio is composed primarily of loans to finance laundry, tow trucks, fitness, dry cleaning and convenience store equipment. Approximately 16.6% 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.

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 16.4% of total loans outstanding as of March 31, 2022. The Company focuses its mortgage and home equity lending on existing and new customers within its branch networks in its urban and suburban marketplaces in the greater Boston and Providence metropolitan areas.

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Other consumer loans have historically been a modest part of the Company's loan originations. As of March 31, 2022, other consumer loans equaled $44.7 million, or 0.6% 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 ~~June 30, 2021,~~March 31, 2022, the Company had ~~$143.4~~$84.9 million of total assets that were designated as criticized. This compares to ~~$72.8~~$95.4 million of assets designated as criticized as of December 31, ~~2020.~~2021. The ~~increase~~decrease of ~~$70.6~~$10.5 million in criticized assets was primarily driven by ~~nine~~seven commercial real estate relationships ~~totaling $76.1~~for ($18.5) million, ~~two~~several equipment financing relationships for ($3.9) million, seven commercial ~~relationships totaling $4.4~~relationship for ($1.9) million ~~which became~~paid off, and the payments made on criticized loans. This was partially offset by three commercial real estate relationships of $14.7 million becoming criticized for the ~~pay off of one construction relationship of $3.7 million, as well as the relationships which were upgraded to pass risk rating during the six month~~three months ended ~~June 30, 2021.~~March 31, 2022.

Nonperforming Assets

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

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

In cases where a borrower experiences financial difficulties and the Company makes or reasonably expects to make certain concessionary modifications to contractual terms, the loan is classified as a 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 ~~June 30, 2021,~~March 31, 2022, the Company had nonperforming assets of ~~$34.6~~$26.5 million, representing ~~0.41%~~0.31% of total assets, compared to nonperforming assets of ~~$45.0~~$33.2 million, or ~~0.50%~~0.39% of total assets as of December 31, ~~2020.~~2021. The decrease of ~~$10.4~~$6.7 million in nonperforming assets was primarily driven by ~~the~~ payoffs of four commercial real estate relationships of ($1.4) million, several equipment financing relationships totaling ($3.0) million, and one commercial relationship of $4.3 million, three residential relationships totaling $0.8 million, and several equipment finance relationships totaling $1.9 million. Additionally,there was one commercial relationship classified as OREO which was sold in the second quarter in the amount of $5.4($1.4) million, as well as ~~one construction relationship of $3.8 million, and three residential relationships totaling $1.1 million that were removed from~~the payments made on non-accrual ~~status. There were~~loans. This was partially offset by ~~the~~several equipment financing relationships ~~that were placed on~~totaling $0.7 million, and one commercial relationship of $0.6 million becoming non-accrual ~~status~~ during the ~~six month~~three months ended ~~June 30, 2021.~~March 31, 2022.

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The Company evaluates the underlying collateral of each ~~non-accrual~~nonaccrual loan and lease and continues to pursue the collection of interest and principal. Management believes that the current level of nonperforming assets remains manageable

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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.

Past Due and Accruing

As of ~~June 30,~~March 31, 2022, and December 31, 2021 the Company had minimal to no loans and leases greater than 90 days past due and accruing of $3.2 million, or 0.04% 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 $8.8 million. The decrease in past due and accruing loans was primarily due to one commercial real estate relationship becoming current for $4.7 million, and the payoffs of one construction relationship for $3.8 million, and one commercial relationship of $3.4 million. Partially offset by several equipment financing relationships totaling $2.8 million, and one residential relationship of $0.3 million becoming past due greater than 90 days and accruing for the six month ended June 30, 2021.accruing.

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


		At June 30, 2021			At December 31, 2020				At March 31, 2022			At December 31, 2021
		(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	$	11,657		$	3,300		Commercial real estate	$	8,313		$	10,848
Multi-family mortgage	Multi-family mortgage	—			—			Multi-family mortgage	—			—
Construction	Construction	—			3,853			Construction	—			—
Total commercial real estate loans	Total commercial real estate loans	11,657			7,153			Total commercial real estate loans	8,313			10,848

Commercial	Commercial	3,207			7,702			Commercial	1,366			2,318
Equipment financing	Equipment financing	14,872			16,757			Equipment financing	11,685			15,014
Condominium association	Condominium association	97			112			Condominium association	77			84
Total commercial loans and leases	Total commercial loans and leases	18,176			24,571			Total commercial loans and leases	13,128			17,416

Residential mortgage	Residential mortgage	3,638			5,587			Residential mortgage	3,394			3,909
Home equity	Home equity	744			1,136			Home equity	680			285
Other consumer	Other consumer	1			1			Other consumer	1			1
Total consumer loans	Total consumer loans	4,383			6,724			Total consumer loans	4,075			4,195

Total nonaccrual loans and leases	Total nonaccrual loans and leases	34,216			38,448			Total nonaccrual loans and leases	25,516			32,459

Other real estate owned	Other real estate owned	—			5,415			Other real estate owned	—			—
Other repossessed assets	Other repossessed assets	372			1,100			Other repossessed assets	990			718
Total nonperforming assets	Total nonperforming assets	$	34,588		$	44,963		Total nonperforming assets	$	26,506		$	33,177

Loans and leases past due greater than 90 days and accruing	Loans and leases past due greater than 90 days and accruing	$	3,154		$	11,975		Loans and leases past due greater than 90 days and accruing	$	4		$	1
Total delinquent loans and leases 61-90 days past due	Total delinquent loans and leases 61-90 days past due	5,938			16,129			Total delinquent loans and leases 61-90 days past due	4,044			6,081
Restructured loans and leases not included in nonperforming assets	Restructured loans and leases not included in nonperforming assets	14,387			11,483			Restructured loans and leases not included in nonperforming assets	10,858			12,580

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	0.49		%	0.53		%	Total nonperforming loans and leases as a percentage of total loans and leases	0.35		%	0.45		%
Total nonperforming assets as a percentage of total assets	Total nonperforming assets as a percentage of total assets	0.41		%	0.50		%	Total nonperforming assets as a percentage of total assets	0.31		%	0.39		%
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	0.08		%	0.22		%	Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases	0.06		%	0.08		%

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Troubled Debt Restructuring Loans and Leases

Total TDR loans and leases ~~increased by $1.8~~decreased $3.3 million to ~~$20.8~~$16.0 million at ~~June 30, 2021~~March 31, 2022 from ~~$19.0~~$19.3 million at December 31, ~~2020, the increase~~2021. The decrease was primarily driven by ~~41 new TDR~~two commercial relationships ~~consisting of 40 equipment financing relationships totaling of $2.9~~paid off for ($2.6) million, and ~~one $0.8 million residential relationship, partially offset by~~ the ~~payoff of eight TDR relationships totaling of $1.2 million, as well as the payment~~payments made on a TDR ~~relationships~~loan during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

As of ~~June 30, 2021,~~March 31, 2022, total TDR loans included ~~$6.1~~$2.5 million of commercial loans, ~~$7.9~~$7.6 million of equipment financing loans and leases, ~~$2.7~~$2.8 million of residential mortgage loans, ~~$2.2~~$1.9 million of home equity loans, and ~~$2.0~~$1.2 million of commercial real estate loans. As of December 31, ~~2020,~~2021, total TDR loans included ~~$6.5~~$5.4 million of commercial loans, ~~$6.7~~$7.5 million of equipment financing loans and leases, ~~$2.1~~$2.9 million of residential mortgage loans, ~~$2.1~~$2.0 million of home equity loans, and ~~$1.6~~$1.5 million of commercial real estate loans.

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


		At June 30, 2021		At December 31, 2020			At March 31, 2022		At December 31, 2021
		(Dollars in Thousands)					(Dollars in Thousands)
Troubled debt restructurings:	Troubled debt restructurings:					Troubled debt restructurings:
On accrual	On accrual	$	14,387	$	11,483	On accrual	$	10,858	$	12,580
On nonaccrual	On nonaccrual	6,410		7,476		On nonaccrual	5,189		6,709
Total troubled debt restructurings	Total troubled debt restructurings	$	20,797	$	18,959	Total troubled debt restructurings	$	16,047	$	19,289

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(Dollars in Thousands)									(Dollars in Thousands)
Balance at beginning of period	Balance at beginning of period	$	18,959	$	22,299	$	18,959	$	23,180	Balance at beginning of period	$	19,289	$	18,959
Additions	Additions	2,412		1,174		4,627		1,671		Additions	601		4,980
Net charge-offs	Net charge-offs	(490)		(473)		(830)		(607)		Net charge-offs	1		(598)
Repayments	Repayments	(84)		(6,856)		(1,959)		(8,100)		Repayments	(3,844)		(278)

Balance at end of period	Balance at end of period	$	20,797	$	16,144	$	20,797	$	16,144	Balance at end of period	$	16,047	$	23,063

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 GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR, including impairment accounting. This 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 ~~June 30, 2021,~~March 31, 2022, the Company granted ~~4,401~~3,284 short-term deferments on loan and lease balances of ~~$991.3~~$789.6 million of which ~~4,250~~3,215 loans and leases representing balances ~~$895.3~~$774.6 million have returned to payment and ~~151~~69 loans and leases representing balances of ~~$96.0~~$15.0 million remain in deferment. The outstanding deferred loans and leases represent ~~1.4%~~0.2% of the Company's total loan and lease ~~balances~~balances.

~~Allowance for Credit Losses~~Restricted Equity Securities

The ~~allowance~~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

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Borrowed Funds

(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, ~~losses consists~~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.

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


	At March 31, 2022		At December 31, 2021
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	46,926	$	110,798
Commercial	195,662		162,931
Residential mortgage	41,777		28,685
Unadvanced portion of loans and leases	995,816		987,482
Unused lines of credit:
Home equity	616,407		611,212
Other consumer	80,521		64,589
Other commercial	430		414
Unused letters of credit:
Financial standby letters of credit	14,319		16,143
Performance standby letters of credit	19,095		17,145
Commercial and similar letters of credit	6,866		5,219
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	1,485,500		1,324,609
Pay fixed, receive variable	1,485,500		1,324,609
Risk participation-out agreements	288,845		288,374
Risk participation-in agreements	76,570		77,016
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	2,329		2,004
Sells foreign currency, buys U.S. currency	2,331		2,006

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Lease Commitments

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


	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	(In Thousands)
The components of lease expense was as follows:
Operating lease cost	$	1,567	$	1,563





Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,638	$	1,579

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	At March 31, 2022			At December 31, 2021
	(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets	$	19,571		$	20,508


Operating lease liabilities	19,571			20,508











Weighted Average Remaining Lease Term
Operating leases	6.30			6.36


Weighted Average Discount Rate
Operating leases	3.1		%	3.1		%

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


	Minimum Rental Payments
	March 31, 2022
	(In Thousands)

Remainder of 2022	$	4,609
Year ending:
2023	5,312
2024	3,733
2025	2,456
2026	1,684
2027	893
Thereafter	2,774
Total	$	21,461
Less imputed interest	(1,890)
Present value of lease liability	$	19,571

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 for both the three months ended March 31, 2022 and 2021. Total other expenditures were $0.1 million for both the three months ended March 31, 2022 and 2021, respectively. Total rental expense was $1.5 million for both the three months ended March 31, 2022 and 2021, respectively.

Legal Proceedings

(13) Revenue from Contracts with Customers

Overview

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Revenue Recognized at a Point in Time

Revenue Recognized Over Time

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

Forward-Looking Statements

~~While management evaluates currently available information in establishing the allowance for credit losses, future adjustments to the allowance~~allowances for loan and lease ~~losses may be necessary if conditions differ substantially from~~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, war, terrorism, civil unrest; 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 ~~evaluations. Management performs a comprehensive review~~other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the ~~allowance~~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 ~~credit losses~~Brookline Bank and its subsidiaries; Bank Rhode Island and its subsidiaries ("BankRI"); Brookline Securities 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 (collectively referred to as the "Banks"), 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. The Banks and their subsidiaries lend primarily in all New England states, with the exception of equipment financing, 26.4% of which is in the greater New York and New Jersey metropolitan area and 73.6% of which is in other areas in the United States of America as of March 31, 2022. Clarendon Private is a registered investment advisor with the SEC. Through Clarendon Private, the Company offers a wide range of wealth management services to individuals, families, endowments and foundations to help these clients meet their long-term financial goals.

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 ~~quarterly basis. In addition, various regulatory agencies,~~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 ~~an integral part of their examination process, periodically review~~ 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

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~~institution's allowance for~~ credit ~~losses~~decisions and ~~carrying amounts~~pricing, remain largely local in order to better meet the needs of ~~other real estate owned. Such agencies may require~~bank customers and further motivate the ~~financial institution to recognize additions or reductions to the allowance based on their judgments about information available to them~~Banks’ commercial, business and retail bankers. These credit decisions, at the ~~time of their examination.~~local level, are executed through corporate policies overseen by the Company's credit department.

The ~~Company’s allowance methodology provides a quantification~~competition for loans and leases and deposits remains intense. The Company expects the operating environment to remain challenging. The volume of ~~probable losses in the portfolio. Under the current methodology, management estimates losses over the life of the~~ loan ~~using reasonable~~ and ~~supportable forecasts. Forecasts, loan data,~~lease originations and model documentation are extensively analyzed and reviewed throughout the quarter to ensure estimated losses are accurate at quarter end. Qualitative adjustments are applied when model output does not align with management expectations. These adjustments are thoroughly reviewed and documented to provide clarity and a reasonable basis for any deviations from the model. For June 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 will depend, to a large extent, on how the economy performs. Loan and lease growth and deposit growth are also greatly influenced by ~~portfolio category~~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 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 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. Through March 31, 2022, the Banks funded a total of 4,700 U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans in the aggregate amount of $872.1 million. As of March 31, 2022, $14.0 million in PPP loans remain outstanding, net of deferred fees and costs of $0.4 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. While the Company established a lending facility under the PPPLF program, it has not been used.

•Troubled Debt Restructuring Relief. From March 1, 2020 through January 1, 2022, a financial institution could 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 ~~three~~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, 2022, the Company granted 3,284 short-term deferments on loan and ~~six months ended June 30, 2021~~lease balances of $789.6 million. Of these modifications, 3,215 loans and ~~2020.~~leases with total balances of $774.6 million have returned to the payment status and 69 loans and leases with total balances of $15.0 million remain on the deferral status, which represents 0.2% 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.

At and for the Three Months Ended June 30, 2021
Commercial
Real Estate Commercial Consumer Total
(In Thousands)
Balance at March 31, 2021 $ 79,929 $ 25,825 $ 4,083 $ 109,837
Charge-offs (28) (1,184) (9) (1,221)
Recoveries 11 489 126 626
Provision (credit) for loan and lease losses (5,903) 3,234 (99) (2,768)
Balance at June 30, 2021 $ 74,009 $ 28,364 $ 4,101 $ 106,474
Total loans and leases $ 3,815,581 $ 2,038,851 $ 1,165,843 $ 7,020,275
Total allowance for loan and lease losses as a percentage of total loans and leases 1.94 % 1.39 % 0.35 % 1.52 %

At and for the Three Months Ended June 30, 2020
Commercial
Real Estate Commercial Consumer Total
(In Thousands)
Balance at March 31, 2020 $ 82,179 $ 26,774 $ 4,228 $ 113,181
Charge-offs — (1,794) (9) (1,803)
Recoveries 94 296 30 420
Provision (credit) for loan and lease losses 7,738 (338) 355 7,755
Balance at June 30, 2020 $ 90,011 $ 24,938 $ 4,604 $ 119,553
Total loans and leases $ 3,837,703 $ 2,361,463 $ 1,208,531 $ 7,407,697
Total allowance for loan and lease losses as a percentage of total loans and leases 2.35 % 1.06 % 0.38 % 1.61 %
The Company’s common stock is traded on the Nasdaq Global Select MarketSM under the symbol “BRKL.”

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Selected Financial Data


	At and for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2022			2021			2021			2021			2021
	(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA
Earnings per share - Basic	$	0.32		$	0.37		$	0.37		$	0.40		$	0.34
Earnings per share - Diluted	0.32			0.37			0.37			0.40			0.34
Book value per share (end of period)	12.65			12.82			12.61			12.44			12.10
Tangible book value per share (end of period) (1)	10.56			10.73			10.51			10.35			10.01
Dividends paid per common share	0.125			0.125			0.120			0.120			0.115
Stock price (end of period)	15.82			16.19			15.26			14.95			15.00

PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	3.49		%	3.52		%	3.53		%	3.52		%	3.39		%
Return on average assets	1.16		%	1.35		%	1.38		%	1.48		%	1.21		%
Return on average tangible assets (1)	1.18		%	1.38		%	1.41		%	1.51		%	1.24		%
Return on average stockholders' equity	9.91		%	11.56		%	11.79		%	13.21		%	11.18		%
Return on average tangible stockholders' equity (1)	11.84		%	13.84		%	14.15		%	15.92		%	13.51		%
Dividend payout ratio (1)	39.28		%	34.00		%	32.54		%	29.69		%	33.99		%
Efficiency ratio (3)	56.37		%	52.23		%	53.64		%	49.30		%	55.22		%

ASSET QUALITY RATIOS
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.11		%	0.12		%	0.07		%	0.03		%	0.10		%
Nonperforming loans and leases as a percentage of total loans and leases	0.35		%	0.45		%	0.52		%	0.49		%	0.43		%
Nonperforming assets as a percentage of total assets	0.31		%	0.39		%	0.44		%	0.41		%	0.44		%
Total allowance for loan and lease losses as a percentage of total loans and leases	1.32		%	1.38		%	1.48		%	1.52		%	1.51		%

CAPITAL RATIOS
Stockholders' equity to total assets	11.37		%	11.57		%	11.77		%	11.49		%	11.04		%
Tangible equity ratio (1)	9.67		%	9.87		%	10.01		%	9.75		%	9.31		%

FINANCIAL CONDITION DATA
Total assets	$	8,633,736		$	8,602,622		$	8,312,649		$	8,461,964		$	8,559,810
Total loans and leases	7,223,130			7,154,457			6,931,694			7,020,275			7,267,552
Allowance for loan and lease losses	95,463			99,084			102,515			106,474			109,837
Investment securities available-for-sale	730,562			720,866			732,020			694,151			729,901

Equity securities held-for-trading	—			—			—			—			518
Goodwill and identified intangible assets	162,569			162,703			162,911			163,119			163,347
Total deposits	7,094,378			7,049,906			6,873,010			6,894,701			6,866,786
Total borrowed funds	392,897			357,321			267,539			363,014			546,003
Stockholders' equity	981,935			995,342			978,452			972,252			945,399


													(Continued)

Table of Contents

At and for the Six Months Ended June 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) (3,323) (13) (3,364)
Recoveries 11 819 179 1,009
Provision (credit) for loan and lease losses (6,106) 1,370 (814) (5,550)
Balance at June 30, 2021 $ 74,009 $ 28,364 $ 4,101 $ 106,474
Total loans and leases $ 3,815,581 $ 2,038,851 $ 1,165,843 $ 7,020,275
Total allowance for loan and lease losses as a percentage of total loans and leases 1.94 % 1.39 % 0.35 % 1.52 %


	At and for the Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2022		2021		2021		2021		2021
	(Dollars in Thousands, Except Per Share Data)
EARNINGS DATA
Net interest income	$	69,848	$	71,461	$	70,697	$	71,106	$	69,109
(Credit) provision for credit losses	(164)		751		(3,110)		(3,331)		(2,147)
Non-interest income	5,529		10,699		5,586		5,910		4,794
Non-interest expense	42,487		42,909		40,922		37,966		40,811
Net income	24,705		28,545		28,839		31,602		26,454

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

At and for the Six Months Ended June 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 — (4,321) (21) (4,342)
Recoveries 94 543 88 725
Provision for loan and lease losses 47,938 6,562 956 55,456
Balance at June 30, 2020 $ 90,011 $ 24,938 $ 4,604 $ 119,553
Total loans and leases $ 3,837,703 $ 2,361,463 $ 1,208,531 $ 7,407,697
Total allowance for loan and lease losses as a percentage of total loans and leases 2.35 % 1.06 % 0.37 % 1.61 %

~~Beginning~~(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 increased $31.1 million, or 1.4% on an annualized basis, to $8.63 billion as of March 31, 2022 from $8.60 billion as of December 31, 2021. The increase was primarily driven by an increase in loans and leases, partially offset by a decrease in cash and cash equivalents.

Cash and cash equivalents decreased $34.5 million, or 42.1% on an annualized basis, to $293.3 million as of March 31, 2022 from $327.7 million as of December 31, 2021.

Total loans and leases increased $68.7 million, or 3.8% on an annualized basis, to $7.22 billion as of March 31, 2022 from $7.15 billion December 31, 2021. The Company's commercial loan portfolios, which are comprised of commercial real estate loans and commercial loans and leases, totaled $6.04 billion, or 83.6% of total loans and leases as of March 31, 2022, an increase of $45.5 million, or 3.0% on an annualized basis, from $5.99 billion, or 83.7% of total loans and leases, as of December 31, 2021.

PPP loans decreased $53.7 million, or 317.2% on an annualized basis, to $14.0 million as of March 31, 2022 from $67.7 million as of December 31, 2021.

Total deposits increased $44.5 million, or 2.5% on an annualized basis, to $7.09 billion as of March 31, 2022 from $7.05 billion as of December 31, 2021. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled $5.9 billion, or 83.6% of total deposits as of March 31, 2022, an increase of $164.1 million, or 11.4% on an annualized basis, from $5.8 billion, or 81.8% of total deposits, as of December 31, 2021. Certificate of deposit balances totaled $1.05 billion, or 14.8% of total deposits as of March 31, 2022, a decrease of $69.7 million, or 24.9% on an annualized basis, from $1.12 billion, or 15.9% of total deposits, as of December 31, 2021. Brokered deposits totaled $115.5 million, or 1.6% of total deposits as of March 31, 2022, a decrease of $50.0 million, or 120.8% on an annualized basis, from $165.5 million, or 2.3% of total deposits, as of December 31, 2021.

Total borrowed funds increased $35.6 million, or 39.8% on an annualized basis, to $392.9 million as of March 31, 2022 from $357.3 million as of December 31, 2021.

Asset Quality

The ratio of the allowance for loan and lease losses to total loans and leases was 1.32% as of March 31, 2022, compared to 1.38% as of December 31, 2021. On January 1, 2020, the Company implemented the CECL methodology to calculate the allowance for credit losses. AsRefer also to Note 5, "Allowance for Loan and Lease Losses."

The ratio 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 June 30, 2021, the allowance for loan and lease losses decreased to $106.5 million, or 1.52% of total~~nonaccrual loans and leases ~~outstanding. This~~was 374.13% as of March 31, 2022, compared to ~~an allowance for loan and lease losses of $114.4 million, or 1.57% of total loans and leases outstanding,~~305.26% as of December 31, ~~2020. 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 June 30, 2021 and 2020 were $0.6 million and $1.4 million, respectively. As a percentage of average loans and leases, annualized net charge-offs for the three months ended June 30, 2021 and 2020 were 0.03% and 0.08%, respectively. The decrease in the net charge-off for the three months ended June 30, 2021 was primarily due to the decrease in the net charge-off by $0.5 million on equipment financing loans, and the decrease on commercial loans by $0.3 million.

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.2021.

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At June 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
(Dollars in Thousands)
Commercial real estate $ 44,296 41.6 % 37.7 % $ 46,357 40.6 % 35.4 %
Multi-family mortgage 20,642 19.4 % 13.8 % 22,559 19.7 % 13.9 %
Construction 9,071 8.5 % 2.9 % 11,216 9.8 % 3.2 %
Total commercial real estate loans 74,009 69.5 % 54.4 % 80,132 70.1 % 52.5 %
Commercial 8,946 8.4 % 13.0 % 8,089 7.1 % 15.6 %
Equipment financing 19,302 18.1 % 15.3 % 21,292 18.6 % 15.0 %
Condominium association 116 0.1 % 0.7 % 117 0.1 % 0.7 %
Total commercial loans 28,364 26.6 % 29.0 % 29,498 25.8 % 31.3 %
Residential mortgage 1,953 1.8 % 11.4 % 1,967 1.7 % 10.9 %
Home equity 1,875 1.8 % 4.7 % 2,504 2.2 % 4.8 %
Other consumer 273 0.3 % 0.5 % 278 0.2 % 0.5 %
Total consumer loans 4,101 3.9 % 16.6 % 4,749 4.1 % 16.2 %
Total $ 106,474 100.0 % 100.0 % $ 114,379 100.0 % 100.0 %
Capital Strength

~~Management believes that~~The Company is a "well-capitalized" bank holding company as defined in the ~~allowance for loan and lease losses~~FRB's Regulation Y. The Company's common equity Tier 1 capital ratio was 12.01% as of ~~June 30, 2021 is appropriate.~~

~~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~~March 31, 2022, compared 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 $166.7 million, or 28.2% on an annualized basis, to $1.0 billion as of June 30, 2021 from $1.2 billion~~11.86% as of December 31, ~~2020.~~2021. The Company's Tier 1 leverage ratio was 10.24% as of March 31, 2022, compared to 10.15% as of December 31, 2021. As of March 31, 2022, the Company's Tier 1 risk-based capital ratio was 12.14%, compared to 11.99% as of December 31, 2021. The Company's Total risk-based capital ratio was 14.45% as of March 31, 2022, compared to 14.30% as of December 31, 2021.

Net Income

The annualized return on average assets was ~~driven~~1.16% for the three months ended March 31, 2022, compared to 1.21% for the three months ended March 31, 2021. The annualized return on average stockholders' equity was 9.91% for the three months ended March 31, 2022, compared to 11.18% for the three months ended March 31, 2021.

The net interest margin was 3.49% for the three months ended March 31, 2022, up from 3.39% for the three months ended March 31, 2021. The increase in the net interest margin is a result of a decrease of 21 basis points in the Company's overall cost of funds to 0.29% for the three months ended March 31, 2022 from 0.50% for the three months ended March 31, 2021, partially offset by a ~~decreases~~decrease in ~~short-term investments~~the yield on interest-earning assets of 10 basis points to 3.70% for the three months ended March 31, 2022 from 3.80% for the three months ended March 31, 2021.

The Company’s net interest margin and ~~investment securities available-for-sale. Cash, cash equivalents,~~net interest income is sensitive to the structure and ~~investment securities were 12.0%~~level of ~~total~~interest rates as well as competitive pricing in all loan and deposit categories.

Critical Accounting Policies and Estimates

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 2021 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 ~~13.2%~~provide optional expedients and exceptions for applying GAAP to certain contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR

Table of ~~total assets at~~Contents

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, ~~2020.~~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.

Non-GAAP Financial Measures and Reconciliation to GAAP

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



	At and for the Three Months Ended March 31,
	2022		2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	26,454

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



Operating earnings	$	24,705	$	26,459

Basic earnings per share, as reported	$	0.32	$	0.34
Less:
Security gains (after-tax)	—		—




Basic operating earnings per share	$	0.32	$	0.34

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

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	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Operating earnings	$	24,705	$	28,569	$	28,839	$	31,601	$	26,459

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average stockholders' equity (annualized)	9.91%		11.56%		11.79%		13.21%		11.18%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average stockholders' equity (annualized)	9.91%		11.57%		11.79%		13.21%		11.18%




Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average tangible stockholders' equity (annualized)	11.84%		13.85%		14.15%		15.92%		13.51%

Table of Contents


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Total stockholders' equity	$	981,935	$	995,342	$	978,452	$	972,252	$	945,399
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Total assets	$	8,633,736	$	8,602,622	$	8,312,649	$	8,461,964	$	8,559,810
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible assets	$	8,471,167	$	8,439,919	$	8,149,738	$	8,298,845	$	8,396,463

Tangible equity ratio	9.67%		9.87%		10.01%		9.75%		9.31%

Table of Contents

The following table ~~sets forth certain information regarding the amortized cost and market value of~~reconciles the Company's ~~investment securities at~~tangible book value per share for the ~~dates~~periods indicated:

At June 30, 2021 At December 31, 2020
Amortized
Cost Fair Value Amortized
Cost Fair Value
(In Thousands)
Investment securities available-for-sale:
GSE debentures $ 245,960 $ 246,334 $ 273,820 $ 278,645
GSE CMOs 35,149 35,944 44,937 46,028
GSE MBSs 240,300 246,054 312,658 323,609
Corporate debt obligations 22,239 23,108 22,299 23,467
U.S. Treasury bonds 142,080 142,214 70,339 73,577
Foreign government obligations $ 500 $ 497 500 496
Total investment securities available-for-sale $ 686,228 $ 694,151 $ 724,553 $ 745,822
Equity securities held-for-trading $ — $ 526


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	7,037,464		7,037,464		7,034,754		6,536,478		6,534,602
Unallocated ESOP	18,051		24,660		31,278		37,890		44,502
Unvested restricted stock	500,098		500,098		502,808		448,105		449,981
Common shares outstanding	77,621,559		77,614,950		77,608,332		78,154,699		78,148,087

Tangible book value per share	$	10.56	$	10.73	$	10.51	$	10.35	$	10.01

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. Thefollowing table reconciles 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 pricingdividend payout ratio for the ~~particular security.~~periods indicated:


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Dividends paid	$	9,705	$	9,705	$	9,383	$	9,383	$	8,992

Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Dividend payout ratio	39.28%		34.00%		32.54%		29.69%		33.99%

Maturities, calls and principal repayments for investment securities available-for-sale totaled $108.5 million for the six months ended June 30, 2021 compared to $56.2 million for the same period in 2020. For the six months ended June 30, 2021, the Company did not sell any investment securities available for sale, compared to $131.5 million for the same period in 2020. For the six months ended June 30, 2021, the Company purchased $71.8 million of investment securities available-for-sale, compared to $438.7 million for the same period in 2020.


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Allowance for loan and lease losses	$	95,463	$	99,084	$	102,515	$	106,474	$	109,837

Total loans and leases	$	7,223,130	$	7,154,457	$	6,931,694	$	7,020,275	$	7,267,552
Less: Total PPP loans	14,013		67,711		160,586		348,411		604,790
Total loans and leases excluding PPP loans	$	7,209,117	$	7,086,746	$	6,771,108	$	6,671,864	$	6,662,762

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.32%		1.40%		1.51%		1.60%		1.65%

For the six months ended June 30, 2021 the Company did not own held-to-maturity securities, for the six months ended June 31, 2020 the Company had maturities, calls and principal repayments of $6.3 million. The Company did not make any sales or purchases of held-to-maturity securities for the six months ended June 30, 2020. During the six months ended June 30, 2020, all held-to-maturity securities were transferred to the available-for-sale portfolio.

As of June 30, 2021, the fair value of all investment securities available-for-sale was $694.2 million and carried a total of $7.9 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 June 30, 2021, $214.2 million, or 30.9%, of the portfolio, had gross unrealized losses of $5.6 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.

6350

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Financial Condition

Loans and Leases

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


	At March 31, 2022				At December 31, 2021
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,958,705	41.0	%	$	2,842,791	39.6	%
Multi-family mortgage	1,116,010		15.5	%	1,099,818		15.4	%
Construction	160,610		2.2	%	160,431		2.2	%
Total commercial real estate loans	4,235,325		58.7	%	4,103,040		57.2	%
Commercial loans and leases:
Commercial	633,782		8.8	%	666,677		9.4	%
Equipment financing	1,108,135		15.3	%	1,105,611		15.5	%
Condominium association	44,453		0.6	%	47,137		0.7	%
PPP	14,013		0.2	%	67,711		0.9	%
Total commercial loans and leases	1,800,383		24.9	%	1,887,136		26.5	%
Consumer loans:
Residential mortgage	811,960		11.2	%	799,737		11.2	%
Home equity	330,793		4.6	%	324,156		4.5	%
Other consumer	44,669		0.6	%	40,388		0.6	%
Total consumer loans	1,187,422		16.4	%	1,164,281		16.3	%
Total loans and leases	7,223,130		100.0	%	7,154,457		100.0	%
Allowance for loan and lease losses	(95,463)				(99,084)
Net loans and leases	$	7,127,667			$	7,055,373

The following table sets forth the growth in the Company’s loan and lease portfolios during the three months ended March 31, 2022:


	At March 31, 2022		At December 31, 2021		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	4,235,325	$	4,103,040	$	132,285	12.9	%
Commercial	1,800,383		1,887,136		(86,753)		-18.4	%
Consumer	1,187,422		1,164,281		23,141		8.0	%
Total loans and leases	$	7,223,130	$	7,154,457	$	68,673	3.84	%
Less: PPP	14,013		67,711		(53,698)		-317.2	%
Total core loans and leases	$	7,209,117	$	7,086,746	$	14,975	0.8	%

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Commercial Real Estate Loans

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.

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

Commercial Loans

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 $14.0 million as of March 31, 2022.

The Company’s equipment financing divisions focus on market niches in which its lenders have deep experience and industry contacts, and on making loans to customers with business experience. An important part of the Company’s equipment financing loan origination volume comes from equipment manufacturers and existing customers as they expand their operations. The equipment financing portfolio is composed primarily of loans to finance laundry, tow trucks, fitness, dry cleaning and convenience store equipment. Approximately 16.6% 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.

Consumer Loans

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Other consumer loans have historically been a modest part of the Company's loan originations. As of March 31, 2022, other consumer loans equaled $44.7 million, or 0.6% 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, 2022, the Company had $84.9 million of total assets that were designated as criticized. This compares to $95.4 million of assets designated as criticized as of December 31, 2021. The decrease of $10.5 million in criticized assets was primarily driven by seven commercial real estate relationships for ($18.5) million, several equipment financing relationships for ($3.9) million, seven commercial relationship for ($1.9) million paid off, and the payments made on criticized loans. This was partially offset by three commercial real estate relationships of $14.7 million becoming criticized for the three months ended March 31, 2022.

Nonperforming Assets

"Nonperforming assets" consist of nonaccrual loans and leases, other real estate owned ("OREO") and other repossessed assets. Under certain circumstances, the Company may restructure the terms of a loan or lease as a concession to a borrower, except for acquired loans and leases which are individually evaluated against expected performance on the date of acquisition. These restructured loans and leases are generally considered "nonperforming loans and leases" until a history of collection of at least six months on the restructured 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. When a loan is placed on nonaccrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current interest income. Interest payments on nonaccrual loans are generally applied to principal. If collection of the principal is reasonably assured, interest payments are recognized as income on the cash basis. Loans are generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured and a consistent record of at least six months of performance has been achieved.

As of March 31, 2022, the Company had nonperforming assets of $26.5 million, representing 0.31% of total assets, compared to nonperforming assets of $33.2 million, or 0.39% of total assets as of December 31, 2021. The decrease of $6.7 million in nonperforming assets was primarily driven by payoffs of four commercial real estate relationships of ($1.4) million, several equipment financing relationships totaling ($3.0) million, and one commercial relationship of ($1.4) million, as well as the payments made on non-accrual loans. This was partially offset by several equipment financing relationships totaling $0.7 million, and one commercial relationship of $0.6 million becoming non-accrual during the three months ended March 31, 2022.

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

Past Due and Accruing

As of March 31, 2022, and December 31, 2021 the Company had minimal to no loans and leases greater than 90 days past due and accruing.

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


	At March 31, 2022			At December 31, 2021
	(Dollars in Thousands)
Nonperforming loans and leases:
Nonaccrual loans and leases:
Commercial real estate	$	8,313		$	10,848
Multi-family mortgage	—			—
Construction	—			—
Total commercial real estate loans	8,313			10,848

Commercial	1,366			2,318
Equipment financing	11,685			15,014
Condominium association	77			84
Total commercial loans and leases	13,128			17,416

Residential mortgage	3,394			3,909
Home equity	680			285
Other consumer	1			1
Total consumer loans	4,075			4,195

Total nonaccrual loans and leases	25,516			32,459

Other real estate owned	—			—
Other repossessed assets	990			718
Total nonperforming assets	$	26,506		$	33,177

Loans and leases past due greater than 90 days and accruing	$	4		$	1
Total delinquent loans and leases 61-90 days past due	4,044			6,081
Restructured loans and leases not included in nonperforming assets	10,858			12,580

Total nonperforming loans and leases as a percentage of total loans and leases	0.35		%	0.45		%
Total nonperforming assets as a percentage of total assets	0.31		%	0.39		%
Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases	0.06		%	0.08		%

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Troubled Debt Restructuring Loans and Leases

Total TDR loans and leases decreased $3.3 million to $16.0 million at March 31, 2022 from $19.3 million at December 31, 2021. The decrease was primarily driven by two commercial relationships paid off for ($2.6) million, and the payments made on a TDR loan during the three months ended March 31, 2022.

As of March 31, 2022, total TDR loans included $2.5 million of commercial loans, $7.6 million of equipment financing loans and leases, $2.8 million of residential mortgage loans, $1.9 million of home equity loans, and $1.2 million of commercial real estate loans. As of December 31, 2021, total TDR loans included $5.4 million of commercial loans, $7.5 million of equipment financing loans and leases, $2.9 million of residential mortgage loans, $2.0 million of home equity loans, and $1.5 million of commercial real estate loans.

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


	At March 31, 2022		At December 31, 2021
	(Dollars in Thousands)
Troubled debt restructurings:
On accrual	$	10,858	$	12,580
On nonaccrual	5,189		6,709
Total troubled debt restructurings	$	16,047	$	19,289

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


	Three Months Ended March 31,
	2022		2021
	(Dollars in Thousands)
Balance at beginning of period	$	19,289	$	18,959
Additions	601		4,980
Net charge-offs	1		(598)
Repayments	(3,844)		(278)

Balance at end of period	$	16,047	$	23,063

From March 1, 2020 through the earlier of January 1, 2022 or 60 days after the termination date of the national emergency, a financial institution may elect to suspend the requirements under GAAP for loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR, including impairment accounting. This 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, 2022, the Company granted 3,284 short-term deferments on loan and lease balances of $789.6 million of which 3,215 loans and leases representing balances $774.6 million have returned to payment and 69 loans and leases representing balances of $15.0 million remain in deferment. The outstanding deferred loans and leases represent 0.2% of the Company's total loan and lease balances.

Restricted Equity Securities

Deposits

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Borrowed Funds

(12) Commitments and Contingencies

Off-Balance Sheet Financial Instruments

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


	At March 31, 2022		At December 31, 2021
	(In Thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to originate loans and leases:
Commercial real estate	$	46,926	$	110,798
Commercial	195,662		162,931
Residential mortgage	41,777		28,685
Unadvanced portion of loans and leases	995,816		987,482
Unused lines of credit:
Home equity	616,407		611,212
Other consumer	80,521		64,589
Other commercial	430		414
Unused letters of credit:
Financial standby letters of credit	14,319		16,143
Performance standby letters of credit	19,095		17,145
Commercial and similar letters of credit	6,866		5,219
Loan level derivatives (Notional principal amounts):
Receive fixed, pay variable	1,485,500		1,324,609
Pay fixed, receive variable	1,485,500		1,324,609
Risk participation-out agreements	288,845		288,374
Risk participation-in agreements	76,570		77,016
Foreign exchange contracts (Notional amounts):
Buys foreign currency, sells U.S. currency	2,329		2,004
Sells foreign currency, buys U.S. currency	2,331		2,006

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Lease Commitments

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


	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	(In Thousands)
The components of lease expense was as follows:
Operating lease cost	$	1,567	$	1,563





Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,638	$	1,579

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)


	At March 31, 2022			At December 31, 2021
	(In Thousands)
Supplemental balance sheet information related to leases was as follows:
Operating Leases
Operating lease right-of-use assets	$	19,571		$	20,508


Operating lease liabilities	19,571			20,508











Weighted Average Remaining Lease Term
Operating leases	6.30			6.36


Weighted Average Discount Rate
Operating leases	3.1		%	3.1		%

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


	Minimum Rental Payments
	March 31, 2022
	(In Thousands)

Remainder of 2022	$	4,609
Year ending:
2023	5,312
2024	3,733
2025	2,456
2026	1,684
2027	893
Thereafter	2,774
Total	$	21,461
Less imputed interest	(1,890)
Present value of lease liability	$	19,571

Legal Proceedings

(13) Revenue from Contracts with Customers

Overview

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (Continued)

Revenue Recognized at a Point in Time

Revenue Recognized Over Time

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

Forward-Looking Statements

Forward-looking statements are based on the current assumptions underlying the statements and other information with respect to the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and the financial condition, results of operations, future performance and business are only expectations of future results. Although the Company believes that the expectations reflected in the Company’s forward-looking statements are reasonable, the Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, ongoing disruptions due to 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; 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 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, war, terrorism, civil unrest; 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, 2021 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"); Brookline Securities 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 (collectively referred to as the "Banks"), 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. The Banks and their subsidiaries lend primarily in all New England states, with the exception of equipment financing, 26.4% of which is in the greater New York and New Jersey metropolitan area and 73.6% of which is in other areas in the United States of America as of March 31, 2022. Clarendon Private is a registered investment advisor with the SEC. Through Clarendon Private, the Company offers a wide range of wealth management services to individuals, families, endowments and foundations to help these clients meet their long-term financial goals.

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credit decisions and pricing, remain largely local in order to better meet the needs of bank customers and further motivate the Banks’ commercial, business and retail bankers. These credit decisions, at the local level, are executed through corporate policies overseen by the Company's credit department.

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

•Troubled Debt Restructuring Relief. From March 1, 2020 through January 1, 2022, a financial institution could 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, 2022, the Company granted 3,284 short-term deferments on loan and lease balances of $789.6 million. Of these modifications, 3,215 loans and leases with total balances of $774.6 million have returned to the payment status and 69 loans and leases with total balances of $15.0 million remain on the deferral status, which represents 0.2% of the Company's total loan and lease balances. These short-term deferments are not classified as troubled debt restructured loans and will not be reported as past due provided that they are performing in accordance with the modified terms.

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

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Selected Financial Data


	At and for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2022			2021			2021			2021			2021
	(Dollars in Thousands, Except Per Share Data)
PER COMMON SHARE DATA
Earnings per share - Basic	$	0.32		$	0.37		$	0.37		$	0.40		$	0.34
Earnings per share - Diluted	0.32			0.37			0.37			0.40			0.34
Book value per share (end of period)	12.65			12.82			12.61			12.44			12.10
Tangible book value per share (end of period) (1)	10.56			10.73			10.51			10.35			10.01
Dividends paid per common share	0.125			0.125			0.120			0.120			0.115
Stock price (end of period)	15.82			16.19			15.26			14.95			15.00

PERFORMANCE RATIOS (2)
Net interest margin (taxable equivalent basis)	3.49		%	3.52		%	3.53		%	3.52		%	3.39		%
Return on average assets	1.16		%	1.35		%	1.38		%	1.48		%	1.21		%
Return on average tangible assets (1)	1.18		%	1.38		%	1.41		%	1.51		%	1.24		%
Return on average stockholders' equity	9.91		%	11.56		%	11.79		%	13.21		%	11.18		%
Return on average tangible stockholders' equity (1)	11.84		%	13.84		%	14.15		%	15.92		%	13.51		%
Dividend payout ratio (1)	39.28		%	34.00		%	32.54		%	29.69		%	33.99		%
Efficiency ratio (3)	56.37		%	52.23		%	53.64		%	49.30		%	55.22		%

ASSET QUALITY RATIOS
Net loan and lease charge-offs as a percentage of average loans and leases (annualized)	0.11		%	0.12		%	0.07		%	0.03		%	0.10		%
Nonperforming loans and leases as a percentage of total loans and leases	0.35		%	0.45		%	0.52		%	0.49		%	0.43		%
Nonperforming assets as a percentage of total assets	0.31		%	0.39		%	0.44		%	0.41		%	0.44		%
Total allowance for loan and lease losses as a percentage of total loans and leases	1.32		%	1.38		%	1.48		%	1.52		%	1.51		%

CAPITAL RATIOS
Stockholders' equity to total assets	11.37		%	11.57		%	11.77		%	11.49		%	11.04		%
Tangible equity ratio (1)	9.67		%	9.87		%	10.01		%	9.75		%	9.31		%

FINANCIAL CONDITION DATA
Total assets	$	8,633,736		$	8,602,622		$	8,312,649		$	8,461,964		$	8,559,810
Total loans and leases	7,223,130			7,154,457			6,931,694			7,020,275			7,267,552
Allowance for loan and lease losses	95,463			99,084			102,515			106,474			109,837
Investment securities available-for-sale	730,562			720,866			732,020			694,151			729,901

Equity securities held-for-trading	—			—			—			—			518
Goodwill and identified intangible assets	162,569			162,703			162,911			163,119			163,347
Total deposits	7,094,378			7,049,906			6,873,010			6,894,701			6,866,786
Total borrowed funds	392,897			357,321			267,539			363,014			546,003
Stockholders' equity	981,935			995,342			978,452			972,252			945,399


													(Continued)

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	At and for the Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2022		2021		2021		2021		2021
	(Dollars in Thousands, Except Per Share Data)
EARNINGS DATA
Net interest income	$	69,848	$	71,461	$	70,697	$	71,106	$	69,109
(Credit) provision for credit losses	(164)		751		(3,110)		(3,331)		(2,147)
Non-interest income	5,529		10,699		5,586		5,910		4,794
Non-interest expense	42,487		42,909		40,922		37,966		40,811
Net income	24,705		28,545		28,839		31,602		26,454

(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

Cash and cash equivalents decreased $34.5 million, or 42.1% on an annualized basis, to $293.3 million as of March 31, 2022 from $327.7 million as of December 31, 2021.

PPP loans decreased $53.7 million, or 317.2% on an annualized basis, to $14.0 million as of March 31, 2022 from $67.7 million as of December 31, 2021.

Total deposits increased $44.5 million, or 2.5% on an annualized basis, to $7.09 billion as of March 31, 2022 from $7.05 billion as of December 31, 2021. Core deposits, which include demand checking, NOW, money market and savings accounts, totaled $5.9 billion, or 83.6% of total deposits as of March 31, 2022, an increase of $164.1 million, or 11.4% on an annualized basis, from $5.8 billion, or 81.8% of total deposits, as of December 31, 2021. Certificate of deposit balances totaled $1.05 billion, or 14.8% of total deposits as of March 31, 2022, a decrease of $69.7 million, or 24.9% on an annualized basis, from $1.12 billion, or 15.9% of total deposits, as of December 31, 2021. Brokered deposits totaled $115.5 million, or 1.6% of total deposits as of March 31, 2022, a decrease of $50.0 million, or 120.8% on an annualized basis, from $165.5 million, or 2.3% of total deposits, as of December 31, 2021.

Total borrowed funds increased $35.6 million, or 39.8% on an annualized basis, to $392.9 million as of March 31, 2022 from $357.3 million as of December 31, 2021.

Asset Quality

The ratio of the allowance for loan and lease losses to nonaccrual loans and leases was 374.13% as of March 31, 2022, compared to 305.26% as of December 31, 2021.

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Capital Strength

Net Income

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 and Estimates

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 2021 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

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Non-GAAP Financial Measures and Reconciliation to GAAP

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



	At and for the Three Months Ended March 31,
	2022		2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	26,454

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



Operating earnings	$	24,705	$	26,459

Basic earnings per share, as reported	$	0.32	$	0.34
Less:
Security gains (after-tax)	—		—




Basic operating earnings per share	$	0.32	$	0.34

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

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	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Operating earnings	$	24,705	$	28,569	$	28,839	$	31,601	$	26,459

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average assets (annualized)	1.16%		1.35%		1.38%		1.48%		1.21%

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%
Less:
Security gains	—%		—%		—%		—%		—%



Operating return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average stockholders' equity (annualized)	9.91%		11.56%		11.79%		13.21%		11.18%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average stockholders' equity (annualized)	9.91%		11.57%		11.79%		13.21%		11.18%




Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%
Less:
Security gains	—%		(0.01)%		—%		—%		—%



Operating return on average tangible stockholders' equity (annualized)	11.84%		13.85%		14.15%		15.92%		13.51%

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	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Average total assets	$	8,531,043	$	8,462,231	$	8,360,635	$	8,540,228	$	8,714,158
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible assets	$	8,368,411	$	8,299,427	$	8,197,624	$	8,377,004	$	8,550,701

Return on average tangible assets (annualized)	1.18%		1.38%		1.41%		1.51%		1.24%

Average total stockholders' equity	$	997,293	$	987,522	$	978,371	$	957,207	$	946,482
Less: Average goodwill and average identified intangible assets, net	162,632		162,804		163,011		163,224		163,457
Average tangible stockholders' equity	$	834,661	$	824,718	$	815,360	$	793,983	$	783,025

Return on average tangible stockholders' equity (annualized)	11.84%		13.84%		14.15%		15.92%		13.51%

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Total stockholders' equity	$	981,935	$	995,342	$	978,452	$	972,252	$	945,399
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Total assets	$	8,633,736	$	8,602,622	$	8,312,649	$	8,461,964	$	8,559,810
Less: Goodwill and identified intangible assets, net	162,569		162,703		162,911		163,119		163,347
Tangible assets	$	8,471,167	$	8,439,919	$	8,149,738	$	8,298,845	$	8,396,463

Tangible equity ratio	9.67%		9.87%		10.01%		9.75%		9.31%

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Tangible stockholders' equity	$	819,366	$	832,639	$	815,541	$	809,133	$	782,052

Common shares issued	85,177,172		85,177,172		85,177,172		85,177,172		85,177,172
Less:
Treasury shares	7,037,464		7,037,464		7,034,754		6,536,478		6,534,602
Unallocated ESOP	18,051		24,660		31,278		37,890		44,502
Unvested restricted stock	500,098		500,098		502,808		448,105		449,981
Common shares outstanding	77,621,559		77,614,950		77,608,332		78,154,699		78,148,087

Tangible book value per share	$	10.56	$	10.73	$	10.51	$	10.35	$	10.01

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


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Dividends paid	$	9,705	$	9,705	$	9,383	$	9,383	$	8,992

Net income, as reported	$	24,705	$	28,545	$	28,839	$	31,602	$	26,454

Dividend payout ratio	39.28%		34.00%		32.54%		29.69%		33.99%


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021
	(Dollars in Thousands)
Allowance for loan and lease losses	$	95,463	$	99,084	$	102,515	$	106,474	$	109,837

Total loans and leases	$	7,223,130	$	7,154,457	$	6,931,694	$	7,020,275	$	7,267,552
Less: Total PPP loans	14,013		67,711		160,586		348,411		604,790
Total loans and leases excluding PPP loans	$	7,209,117	$	7,086,746	$	6,771,108	$	6,671,864	$	6,662,762

Allowance for loan and lease losses as a percentage of total loans and leases less PPP loans	1.32%		1.40%		1.51%		1.60%		1.65%

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Financial Condition

Loans and Leases

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


	At March 31, 2022				At December 31, 2021
	Balance		Percent of Total		Balance		Percent of Total
	(Dollars in Thousands)
Commercial real estate loans:
Commercial real estate	$	2,958,705	41.0	%	$	2,842,791	39.6	%
Multi-family mortgage	1,116,010		15.5	%	1,099,818		15.4	%
Construction	160,610		2.2	%	160,431		2.2	%
Total commercial real estate loans	4,235,325		58.7	%	4,103,040		57.2	%
Commercial loans and leases:
Commercial	633,782		8.8	%	666,677		9.4	%
Equipment financing	1,108,135		15.3	%	1,105,611		15.5	%
Condominium association	44,453		0.6	%	47,137		0.7	%
PPP	14,013		0.2	%	67,711		0.9	%
Total commercial loans and leases	1,800,383		24.9	%	1,887,136		26.5	%
Consumer loans:
Residential mortgage	811,960		11.2	%	799,737		11.2	%
Home equity	330,793		4.6	%	324,156		4.5	%
Other consumer	44,669		0.6	%	40,388		0.6	%
Total consumer loans	1,187,422		16.4	%	1,164,281		16.3	%
Total loans and leases	7,223,130		100.0	%	7,154,457		100.0	%
Allowance for loan and lease losses	(95,463)				(99,084)
Net loans and leases	$	7,127,667			$	7,055,373

The following table sets forth the growth in the Company’s loan and lease portfolios during the three months ended March 31, 2022:


	At March 31, 2022		At December 31, 2021		Dollar Change		Percent Change (Annualized)
	(Dollars in Thousands)
Commercial real estate	$	4,235,325	$	4,103,040	$	132,285	12.9	%
Commercial	1,800,383		1,887,136		(86,753)		-18.4	%
Consumer	1,187,422		1,164,281		23,141		8.0	%
Total loans and leases	$	7,223,130	$	7,154,457	$	68,673	3.84	%
Less: PPP	14,013		67,711		(53,698)		-317.2	%
Total core loans and leases	$	7,209,117	$	7,086,746	$	14,975	0.8	%

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Commercial Real Estate Loans

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.

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

Commercial Loans

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 $14.0 million as of March 31, 2022.

The Company’s equipment financing divisions focus on market niches in which its lenders have deep experience and industry contacts, and on making loans to customers with business experience. An important part of the Company’s equipment financing loan origination volume comes from equipment manufacturers and existing customers as they expand their operations. The equipment financing portfolio is composed primarily of loans to finance laundry, tow trucks, fitness, dry cleaning and convenience store equipment. Approximately 16.6% 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.

Consumer Loans

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Other consumer loans have historically been a modest part of the Company's loan originations. As of March 31, 2022, other consumer loans equaled $44.7 million, or 0.6% 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, 2022, the Company had $84.9 million of total assets that were designated as criticized. This compares to $95.4 million of assets designated as criticized as of December 31, 2021. The decrease of $10.5 million in criticized assets was primarily driven by seven commercial real estate relationships for ($18.5) million, several equipment financing relationships for ($3.9) million, seven commercial relationship for ($1.9) million paid off, and the payments made on criticized loans. This was partially offset by three commercial real estate relationships of $14.7 million becoming criticized for the three months ended March 31, 2022.

Nonperforming Assets

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. When a loan is placed on nonaccrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current interest income. Interest payments on nonaccrual loans are generally applied to principal. If collection of the principal is reasonably assured, interest payments are recognized as income on the cash basis. Loans are generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured and a consistent record of at least six months of performance has been achieved.

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Past Due and Accruing

As of March 31, 2022, and December 31, 2021 the Company had minimal to no loans and leases greater than 90 days past due and accruing.

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


	At March 31, 2022			At December 31, 2021
	(Dollars in Thousands)
Nonperforming loans and leases:
Nonaccrual loans and leases:
Commercial real estate	$	8,313		$	10,848
Multi-family mortgage	—			—
Construction	—			—
Total commercial real estate loans	8,313			10,848

Commercial	1,366			2,318
Equipment financing	11,685			15,014
Condominium association	77			84
Total commercial loans and leases	13,128			17,416

Residential mortgage	3,394			3,909
Home equity	680			285
Other consumer	1			1
Total consumer loans	4,075			4,195

Total nonaccrual loans and leases	25,516			32,459

Other real estate owned	—			—
Other repossessed assets	990			718
Total nonperforming assets	$	26,506		$	33,177

Loans and leases past due greater than 90 days and accruing	$	4		$	1
Total delinquent loans and leases 61-90 days past due	4,044			6,081
Restructured loans and leases not included in nonperforming assets	10,858			12,580

Total nonperforming loans and leases as a percentage of total loans and leases	0.35		%	0.45		%
Total nonperforming assets as a percentage of total assets	0.31		%	0.39		%
Total delinquent loans and leases 61-90 days past due as a percentage of total loans and leases	0.06		%	0.08		%

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Troubled Debt Restructuring Loans and Leases

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


	At March 31, 2022		At December 31, 2021
	(Dollars in Thousands)
Troubled debt restructurings:
On accrual	$	10,858	$	12,580
On nonaccrual	5,189		6,709
Total troubled debt restructurings	$	16,047	$	19,289

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


	Three Months Ended March 31,
	2022		2021
	(Dollars in Thousands)
Balance at beginning of period	$	19,289	$	18,959
Additions	601		4,980
Net charge-offs	1		(598)
Repayments	(3,844)		(278)

Balance at end of period	$	16,047	$	23,063

Allowance for Credit Losses

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

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

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The Company’s allowance methodology provides a quantification of 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 data, and model documentation are extensively analyzed and reviewed throughout the quarter to ensure estimated losses are accurate at quarter end. Qualitative adjustments are applied when model output does not align with management expectations. These adjustments are thoroughly reviewed and documented to provide clarity and a reasonable basis for any deviations from the model. For March 31, 2022, qualitative adjustments were applied to the CRE, C&I, and Retail portfolios resulting in a net addition in total reserves compared to modeled calculations.

The following tables present the changes in the allowance for loan and lease losses by portfolio category for the three months ended March 31, 2022 and 2021.


	At and for the Three Months Ended March 31, 2022
	Commercial Real Estate			Commercial			Consumer			Total
	(In Thousands)
Balance at December 31, 2021	$	69,213		$	27,055		$	2,816		$	99,084

Charge-offs	(37)			(2,301)			(6)			(2,344)
Recoveries	6			353			38			397
Provision (credit) for loan and lease losses	(151)			(1,604)			81			(1,674)
Balance at March 31, 2022	$	69,031		$	23,503		$	2,929		$	95,463

Total loans and leases	$	4,235,325		$	1,800,383		$	1,187,422		$	7,223,130
Total allowance for loan and lease losses as a percentage of total loans and leases	1.63		%	1.31		%	0.25		%	1.32		%


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

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

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

At March 31, 2022, the allowance for loan and lease losses decreased to $95.5 million, or 1.32% of total loans and leases outstanding. This compared to an allowance for loan and lease losses of $99.1 million, or 1.38% of total loans and leases outstanding, as of December 31, 2021. 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, 2022 and 2021 were $1.9 million and $1.8 million, respectively. As a percentage of average loans and leases, annualized net charge-offs for the three months ended March 31, 2022 and 2021 were 0.11% and 0.10%, respectively. The increase in the net charge-offs for the three months ended March 31, 2022 was primarily due to an increase in net charge-offs of $0.4 million in equipment financing loans, partially offset by a decrease in net charge-offs of $0.3 million in commercial loans.

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


	At March 31, 2022						At December 31, 2021
	Amount		Percent of Allowance in Each Category to Total Allowance		Percent of Loans in Each Category to Total Loans		Amount		Percent of Allowance in Each Category to Total Allowance		Percent of Loans in Each Category to Total Loans
	(Dollars in Thousands)
Commercial real estate	$	45,993	48.2	%	41.0	%	$	44,843	45.3	%	39.6	%
Multi-family mortgage	16,562		17.3	%	15.5	%	17,474		17.6	%	15.4	%
Construction	6,476		6.8	%	2.2	%	6,896		7.0	%	2.2	%
Total commercial real estate loans	69,031		72.3	%	58.7	%	69,213		69.9	%	57.2	%
Commercial	15,484		16.2	%	9.0	%	9,068		9.2	%	10.3	%
Equipment financing	7,948		8.3	%	15.3	%	17,907		18.0	%	15.5	%
Condominium association	71		0.1	%	0.6	%	80		0.1	%	0.7	%
Total commercial loans	23,503		24.6	%	24.9	%	27,055		27.3	%	26.5	%
Residential mortgage	1,450		1.5	%	11.2	%	1,297		1.3	%	11.2	%
Home equity	1,298		1.4	%	4.6	%	1,335		1.3	%	4.5	%
Other consumer	181		0.2	%	0.6	%	184		0.2	%	0.6	%
Total consumer loans	2,929		3.1	%	16.4	%	2,816		2.8	%	16.3	%

Total	$	95,463	100.0	%	100.0	%	$	99,084	100.0	%	100.0	%

Management believes that the allowance for loan and lease losses as of March 31, 2022 is appropriate.

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.

Cash, cash equivalents, and investment securities decreased $24.8 million, or 9.4% on an annualized basis, the balance as of March 31, 2022, and December 31, 2021 is $1.0 billion. The decrease was driven by a decrease in short-term investments. Cash, cash equivalents, and investment securities were 11.9% of total assets as of March 31, 2022, compared to 12.2% of total assets at December 31, 2021.

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


	At March 31, 2022				At December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In Thousands)
Investment securities available-for-sale:
GSE debentures	$	200,046	$	187,792	$	219,723	$	217,505
GSE CMOs	25,077		24,257		27,892		28,139
GSE MBSs	183,166		175,868		196,930		199,772




Corporate debt obligations	22,147		22,209		22,178		22,683
U.S. Treasury bonds	337,402		319,941		253,878		252,268


Foreign government obligations	$	500	$	495	500		499
Total investment securities available-for-sale	$	768,338	$	730,562	$	721,101	$	720,866

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.

Maturities, calls and principal repayments for investment securities available-for-sale totaled $36.3 million for the three months ended March 31, 2022 compared to $46.2 million for the same period in 2021. For the three months ended March 31, 2022 and 2021, the Company did not sell any investment securities available for sale. For the three months ended March 31, 2022, the Company purchased $84.1 million of investment securities available-for-sale, compared to $49.5 million for the same period in 2021.

As of March 31, 2022, the fair value of all investment securities available-for-sale was $730.6 million and carried a total of $37.8 million of net unrealized losses, compared to a fair value of $720.9 million and net unrealized losses of $0.2 million as of December 31, 2021. As of March 31, 2022, $630.7 million, or 86.3%, of the portfolio, had gross unrealized losses of $38.3 million. This compares to $353.8 million, or 49.1%, of the portfolio with gross unrealized losses of $7.9 million as of December 31, 2021. The Company's unrealized loss position has increased in 2022 driven by higher long-term interest rates.

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 ~~June 30, 2021,~~March 31, 2022, the ~~excess~~deficiency balance of capital stock was ~~$0.1~~$1.2 million, as compared to a ~~$1.0~~$0.1 million excess balance as of December 31, ~~2020.~~2021.

As of ~~June 30, 2021,~~March 31, 2022, the Company owned stock in the FHLBB with a carrying value of ~~$13.1~~$10.6 million, ~~a decrease~~an increase of ~~$18.2~~$0.1 million from ~~$31.3~~$10.5 million as of December 31, ~~2020.~~2021. As of ~~June 30, 2021,~~March 31, 2022, the FHLBB had total assets of ~~$35.7~~$32.4 billion and total capital of ~~$2.6~~$2.4 billion, of which ~~$1.5~~$1.6 billion was retained earnings. The FHLBB stated that it remained in compliance with all regulatory capital ratios as of ~~June 30, 2021~~March 31, 2022 and was classified as "adequately capitalized" by its regulator, based on the FHLBB's financial information as of ~~March~~December 31, 2021.

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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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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 ~~June 30, 2021,~~March 31, 2022, the Company owned stock in other restricted equity securities with a carrying value of $0.3 million, unchanged from December 31, ~~2020.~~2021.

Deposits

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


		At June 30, 2021						At December 31, 2020							At March 31, 2022						At December 31, 2021
		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	$	1,926,713	27.9	%	—	%	$	1,592,205	23.0	%	—	%	Demand checking accounts	$	1,903,331	26.8	%	—	%	$	1,888,462	26.8	%	—	%
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
NOW accounts	NOW accounts	495,598		7.2	%	0.09	%	513,948		7.4	%	0.09	%	NOW accounts	627,904		8.9	%	0.09	%	604,097		8.6	%	0.08	%
Savings accounts	Savings accounts	782,482		11.4	%	0.13	%	701,659		10.2	%	0.13	%	Savings accounts	967,183		13.6	%	0.09	%	915,804		13.0	%	0.09	%
Money market accounts	Money market accounts	2,250,651		32.6	%	0.26	%	2,018,977		29.2	%	0.31	%	Money market accounts	2,432,377		34.3	%	0.26	%	2,358,306		33.5	%	0.26	%
Certificate of deposit accounts	Certificate of deposit accounts	1,178,131		17.1	%	0.95	%	1,389,998		20.2	%	1.44	%	Certificate of deposit accounts	1,048,036		14.8	%	0.67	%	1,117,695		15.9	%	0.71	%
Brokered deposit accounts	Brokered deposit accounts	261,126		3.8	%	0.17	%	693,909		10.0	%	0.39	%	Brokered deposit accounts	115,547		1.6	%	0.01	%	165,542		2.3	%	0.04	%
Total interest-bearing deposits	Total interest-bearing deposits	4,967,988		72.1	%	0.38	%	5,318,491		77.0	%	0.57	%	Total interest-bearing deposits	5,191,047		73.2	%	0.29	%	5,161,444		73.2	%	0.30	%
Total deposits	Total deposits	$	6,894,701	100.0	%	0.28	%	$	6,910,696	100.0	%	0.44	%	Total deposits	$	7,094,378	100.0	%	0.21	%	$	7,049,906	100.0	%	0.22	%

Total deposits ~~decreased $16.0~~increased $44.5 million to ~~$6.89~~$7.1 billion as of ~~June 30, 2021,~~March 31, 2022, compared to ~~$6.91~~$7.0 billion as of December 31, ~~2020.~~2021. Deposits as a percentage of total assets increased to ~~81.5%~~82.2% as of ~~June 30, 2021,~~March 31, 2022, compared to ~~77.3%~~82.0% as of December 31, ~~2020.~~2021.

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, core deposits increased ~~$628.7~~$164.1 million. The ratio of core deposits to total deposits increased from ~~69.8%~~81.8% as of December 31, ~~2020~~2021 to ~~79.1%~~83.6% as of ~~June 30, 2021,~~March 31, 2022, primarily due to an increase in demand checking, savings and money market accounts.

Certificate of deposit accounts decreased ~~$211.9~~$69.7 million to ~~$1.2~~$1.0 billion as of ~~June 30, 2021,~~March 31, 2022, compared to ~~$1.4~~$1.1 billion as of December 31, ~~2020.~~2021. Certificate of deposit accounts decreased as a percentage of total deposits to ~~17.1%~~14.8% as of ~~June 30, 2021~~March 31, 2022 from ~~20.2%~~15.9% as of December 31, ~~2020.~~2021.

Brokered deposits decreased ~~$432.8~~$50.0 million to ~~$261.1~~$115.5 million as of ~~June 30, 2021,~~March 31, 2022, compared to ~~$693.9~~$165.5 million as of December 31, ~~2020.~~2021. Brokered deposits decreased as a percentage of total deposits to ~~3.8%~~1.6% as of ~~June 30, 2021~~March 31, 2022 from ~~10.0%~~2.3% as of December 31, ~~2020.~~2021. The decrease in brokered deposits was driven by ~~market rates.~~the balance of brokered NOW 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.

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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 June 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 $ 1,785,023 25.6 % — % $ 1,512,089 23.7 % — %
NOW accounts 499,883 7.2 % 0.12 % 395,158 6.2 % 0.12 %
Savings accounts 774,406 11.1 % 0.13 % 663,782 10.4 % 0.22 %
Money market accounts 2,247,997 32.4 % 0.27 % 1,784,343 28.0 % 0.47 %
Total core deposits 5,307,309 76.3 % 0.14 % 4,355,372 68.3 % 0.23 %
Certificate of deposit accounts 1,226,668 17.7 % 1.01 % 1,637,486 25.7 % 2.05 %
Brokered deposit accounts 418,166 6.0 % 0.37 % 381,709 6.0 % 1.97 %
Total deposits $ 6,952,143 100.0 % 0.31 % $ 6,374,567 100.0 % 0.80 %

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		Six Months Ended June 30,													Three Months Ended March 31,
		2021						2020							2022						2021
		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	$	1,714,589	24.8	%	—	%	$	1,323,202	21.7	%	—	%	Non-interest-bearing demand checking accounts	$	1,880,039	26.7	%	—	%	$	1,643,373	23.9	%	—	%
NOW accounts	NOW accounts	488,949		7.1	%	0.11	%	377,399		6.2	%	0.12	%	NOW accounts	589,891		8.4	%	0.07	%	477,893		7.0	%	0.11	%
Savings accounts	Savings accounts	743,738		10.8	%	0.13	%	645,363		10.6	%	0.31	%	Savings accounts	933,173		13.2	%	0.09	%	712,728		10.4	%	0.13	%
Money market accounts	Money market accounts	2,166,702		31.4	%	0.28	%	1,731,496		28.3	%	0.73	%	Money market accounts	2,416,577		34.3	%	0.26	%	2,084,503		30.4	%	0.29	%
Total core deposits	Total core deposits	5,113,978		74.1	%	0.15	%	4,077,460		66.8	%	0.37	%	Total core deposits	5,819,680		82.6	%	0.13	%	4,918,497		71.7	%	0.15	%
Certificate of deposit accounts	Certificate of deposit accounts	1,277,110		18.5	%	1.15	%	1,660,193		27.2	%	2.13	%	Certificate of deposit accounts	1,091,729		15.5	%	0.69	%	1,328,112		19.4	%	1.27	%
Brokered deposit accounts	Brokered deposit accounts	513,963		7.4	%	0.43	%	369,856		6.0	%	2.10	%	Brokered deposit accounts	132,751		1.9	%	0.16	%	610,824		8.9	%	0.47	%
Total deposits	Total deposits	$	6,905,051	100.0	%	0.35	%	$	6,107,509	100.0	%	0.95	%	Total deposits	$	7,044,160	100.0	%	0.21	%	$	6,857,433	100.0	%	0.39	%

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had outstanding certificates of deposit of ~~$100,000~~$250,000 or more, maturing as follows:


		At June 30, 2021				At December 31, 2020					At March 31, 2022				At December 31, 2021
		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	$	366,656	1.00	%	$	459,828	1.63	%	Six months or less	$	173,907	0.63	%	$	182,082	0.58	%
Over six months through 12 months	Over six months through 12 months	225,672		0.60	%	302,576		1.15	%	Over six months through 12 months	109,611		0.50	%	125,888		0.66	%
Over 12 months	Over 12 months	160,196		1.61	%	154,343		1.83	%	Over 12 months	38,978		2.10	%	51,377		1.86	%
Total certificate of deposit of $100,000 or more		$	752,524	1.01	%	$	916,747	1.51	%
Total certificate of deposit of $250,000 or more										Total certificate of deposit of $250,000 or more	$	322,496	0.77	%	$	359,347	0.79	%

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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 June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2021			2020			2021			2020				2022			2021
		(Dollars in Thousands)													(Dollars in Thousands)
Borrowed funds:	Borrowed funds:													Borrowed funds:
Average balance outstanding	Average balance outstanding	$	408,189		$	1,256,521		$	535,732		$	1,101,823		Average balance outstanding	$	317,873		$	664,692
Maximum amount outstanding at any month-end during the period	Maximum amount outstanding at any month-end during the period	448,025			1,406,669			686,346			1,406,669			Maximum amount outstanding at any month-end during the period	392,897			686,346
Balance outstanding at end of period	Balance outstanding at end of period	363,015			1,406,669			363,015			1,406,669			Balance outstanding at end of period	392,897			546,003
Weighted average interest rate for the period	Weighted average interest rate for the period	1.88		%	1.59		%	1.70		%	1.91		%	Weighted average interest rate for the period	1.88		%	1.60		%
Weighted average interest rate at end of period	Weighted average interest rate at end of period	3.15		%	1.35		%	3.15		%	1.35		%	Weighted average interest rate at end of period	1.76		%	2.33		%

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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 $444.7~~increased $53.3 million to ~~$204.2~~$201.2 million as of ~~June 30, 2021~~March 31, 2022 from the December 31, ~~2020~~2021 balance of ~~$648.8~~$147.9 million.

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 June 30,
2021 December 31, 2020
(Dollars in Thousands)
June 26, 2003 Variable;
3-month LIBOR + 3.10% June 26, 2033 September 25, 2021 $ 4,858 $ 4,848
March 17, 2004 Variable;
3-month LIBOR + 2.79% March 17, 2034 September 16, 2021 4,787 4,772
September 15, 2014 6.0% Fixed-to-Variable;
3-month LIBOR + 3.315% September 15, 2029 September 15, 2024 74,176 74,126
Total $ 83,821 $ 83,746

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Carrying Amount

Issue Date

Rate

Maturity Date

Next Call Date

March 31,
2022

December 31, 2021

(Dollars in Thousands)

June 26, 2003

Variable;
3-month LIBOR + 3.10%

June 26, 2033

June 25, 2022

4,873

4,868

March 17, 2004

Variable;
3-month LIBOR + 2.79%

March 17, 2034

June 16, 2022

4,809

4,802

September 15, 2014

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

September 15, 2029

September 15, 2024

74,252

74,227

Total

83,934

83,897

The above carrying amounts of the subordinated debentures included ~~$0.4~~$0.3 million of accretion adjustments and $0.7 million of capitalized debt issuance costs as of March 31, 2022. This compares to $0.3 million of accretion adjustments and $0.8 million of capitalized debt issuance costs as of ~~June 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.~~2021.

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 ~~$12.6~~$17.8 million to ~~$45.0~~$77.7 million as of ~~June 30, 2021~~March 31, 2022 from ~~$57.7~~$95.5 million as of December 31, ~~2020.~~2021.

The Company has access to a $12.0 million committed line of credit as of ~~June 30, 2021.~~March 31, 2022. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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~~$700.0 million. As of ~~June 30, 2021 and December~~March 31, ~~2020,~~2022, the Company had $30.0 million borrowings on outstanding uncommitted lines of ~~credit.~~credit as compared to $30.0 million as of December 31, 2021.

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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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		At June 30, 2021			At December 31, 2020				At March 31, 2022			At December 31, 2021
		(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	$	1,186,507		$	1,214,146		Receive fixed, pay variable	$	1,485,500		$	1,324,608
Pay fixed, receive variable	Pay fixed, receive variable	1,186,507			1,214,146			Pay fixed, receive variable	1,485,500			1,324,608
Risk participation-out agreements	Risk participation-out agreements	262,985			252,655			Risk participation-out agreements	288,845			288,374
Risk participation-in agreements	Risk participation-in agreements	59,961			60,619			Risk participation-in agreements	76,570			77,016
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	$	1,360		$	1,266		Buys foreign currency, sells U.S. currency	$	2,329		$	2,004
Sells foreign currency, buys U.S. currency	Sells foreign currency, buys U.S. currency	1,362			1,273			Sells foreign currency, buys U.S. currency	2,331			2,006
Fixed weighted average interest rate from the Company to counterparty	Fixed weighted average interest rate from the Company to counterparty	3.02		%	3.07		%	Fixed weighted average interest rate from the Company to counterparty	2.71		%	2.85		%
Floating weighted average interest rate from counterparty to the Company	Floating weighted average interest rate from counterparty to the Company	0.88		%	0.99		%	Floating weighted average interest rate from counterparty to the Company	1.03		%	0.78		%
Weighted average remaining term to maturity (in months)	Weighted average remaining term to maturity (in months)	81			85			Weighted average remaining term to maturity (in months)	74			82
Fair value:	Fair value:							Fair value:
Recognized as an asset:	Recognized as an asset:							Recognized as an asset:

Interest rate derivatives	Interest rate derivatives	$	12		$	8		Interest rate derivatives	$	116		$	43

Loan level derivatives	Loan level derivatives	89,726			131,328			Loan level derivatives	45,777			73,462
Risk participation-out agreements	Risk participation-out agreements	1,289			1,843			Risk participation-out agreements	785			1,236
Foreign exchange contracts	Foreign exchange contracts	62			156			Foreign exchange contracts	100			9
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	$	—		$	1
Loan level derivatives	Loan level derivatives	89,726			131,328			Loan level derivatives	45,777			73,462
Risk participation-in agreements	Risk participation-in agreements	232			361			Risk participation-in agreements	114			207
Foreign exchange contracts	Foreign exchange contracts	59			148			Foreign exchange contracts	94			7

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Stockholders' Equity and Dividends

The Company's total stockholders' equity was ~~$972.3~~$981.9 million as of ~~June 30, 2021,~~March 31, 2022, representing a ~~$30.5~~$13.4 million ~~increase~~decrease compared to ~~$941.8~~$995.3 million at December 31, ~~2020.~~2021. The ~~increase primarily reflects net income attributable to the Company of $58.1 million~~decrease for the ~~six~~three months ended ~~June 30, 2021, offset by~~March 31, 2022, primarily reflects the unrealized loss on securities available-for-sale of ~~$10.4~~$29.2 million and dividends paid by the Company of ~~$18.4~~$9.7 million, ~~for~~partially offset by net income attributable to the ~~six months ended June 30, 2021.~~Company of $24.7 million.

Stockholders' equity represented ~~11.49%~~11.37% of total assets as of ~~June 30, 2021~~March 31, 2022 and ~~10.53%~~11.57% of total assets as of December 31, ~~2020.~~2021. Tangible stockholders' equity (total stockholders' equity less goodwill and identified intangible assets, net) represented ~~9.75%~~9.67% of tangible assets (total assets less goodwill and identified intangible assets, net) as of ~~June 30, 2021~~March 31, 2022 and ~~8.86%~~9.87% 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 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. 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.

2021.

On January 27, 2021, the Company's Board of Directors (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.

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On November 10, 2021, the Board approved a stock repurchase program authorizing management to repurchase up to $20.0 million of the Company's common stock, commencing on November 15, 2021 and ending on December 31, 2022.

The dividend payout ratio was ~~29.69%~~39.28% for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~46.37%~~33.99% for the same period in ~~2020.~~2021.

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 ~~$6.8~~$0.7 million to ~~$71.1~~$69.8 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$64.3~~$69.1 million for the three months ended ~~June 30, 2020.~~March 31, 2021. This increase reflects a ~~$10.5~~$4.1 million decrease in interest expense on ~~deposit~~deposits and borrowings, which is reflective of the sustained, low interest rate environment, offset by a ~~$2.4~~$3.3 million decrease in interest income on loans and leases ~~and~~primarily due to lower fee income from PPP loans, along with a ~~$1.3~~$0.1 million decrease in interest income on investment securities. Refer to “Results of Operations - Comparison of the Three-Month Period Ended ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020 — Interest Income”~~ ~~and~~ ~~“Results~~

~~Table of Contents~~

~~of Operations - Comparison of the Three-Month Period Ended June 30, 2021 and June 30, 2020 — Interest Expense -Deposit and Borrowed Funds”~~ ~~below for more details.~~

Net interest income increased $14.2 million to $140.2 million for the six months ended June 30, 2021 from $126.0 million for the six months ended June 30, 2020. This overall increase reflects a $23.0 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 $6.9 million decrease in interest income on loans and leases and a $1.8 million decrease in interest income on investment securities. Refer to ~~“Results of Operations - Comparison of the Six-Month Period Ended June 30, 2021 and June 30, 2020~~ — Interest Income” and “Results of Operations - Comparison of the ~~Six-Month~~Three-Month Period Ended ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ — Interest Expense ~~Deposit~~-Deposit and Borrowed Funds” below for more details.

Net interest margin increased by 4310 basis points to ~~3.52%~~3.49% for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~3.09%~~3.39% for the three months ended ~~June 30, 2020, of which 15~~March 31, 2021. Excluding PPP loans, net interest margin increased by 16 basis points ~~is attributed~~ to ~~additional fee income received~~3.44% for the three months ended March 31, 2022 from ~~the PPP.~~3.28% for three months ended March 31, 2021. The Company's weighted average interest rate on loans (prior to purchase accounting adjustments) decreased to ~~4.21%~~4.00% for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~4.25%~~4.13% for the three months ended ~~June 30, 2020.~~

Net interest margin increased by 26 basis points to 3.45% for the six months ended June 30, 2021 from 3.19% for the six months ended June 30, 2020, of which 13 basis points is attributed to additional fee income received from the PPP. The Company's weighted average interest rate on loans (prior to purchase accounting adjustments) decreased to 4.17% for the six months ended June 30, 2021 from 4.47% for the six months ended June 30, 2020.March 31, 2021.

The yield on interest-earning assets decreased to ~~3.87%~~3.70% for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~3.92%~~3.80% for the three months ended ~~June 30, 2020.~~March 31, 2021. This decrease is ~~the~~a result of lower yields on loans and ~~leases and lower yields on investments.~~leases. During the three months ended ~~June 30, 2021,~~March 31, 2022, the Company recorded $1.5 million in prepayment penalties and late charges, which contributed 78 basis points to yields on interest-earning assets in the three months ended ~~June 30, 2021,~~March 31, 2022, compared to $1.2 million, or 56 basis points, for the three months ended ~~June 30, 2020.~~

The yield on interest-earning assets decreased to 3.83% for the six months ended June 30, 2021 from 4.17% for the six months ended June 30, 2020. This decrease is the result of lower yields on loans and leases and investments. During the six months ended June 30, 2021, the Company recorded $2.7 million in prepayment penalties and late charges, which contributed 7 basis points to yields on interest-earning assets in the six months ended June 30,March 31, 2021. ~~The company recorded $1.9 million in prepayment penalties and late charges, which contributed 5 basis points to yields on interest-earning assets in the six months ended June 30, 2020.~~

The overall cost of funds (including non-interest-bearing demand checking accounts) decreased 5421 basis points to ~~0.40%~~0.29% for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~0.94%~~0.50% for the three months ended ~~June 30, 2020.~~March 31, 2021. Refer to "Financial Condition - Borrowed Funds" above for more details.

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Management seeks to position the balance sheet to be neutral to asset sensitive 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.~~pandemic, and remained low throughout the first quarter of 2022. 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 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 six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~June 30, 2020.~~March 31, 2021. 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
		June 30, 2021						June 30, 2020							March 31, 2022						March 31, 2021
		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	$	721,029	$	3,121	1.73	%	$	773,523	$	3,719	1.92	%	Debt securities	$	720,263	$	2,996	1.66	%	$	754,699	$	3,118	1.65	%
Marketable and restricted equity securities	Marketable and restricted equity securities	34,989		233		2.67	%	71,058		915		5.15	%	Marketable and restricted equity securities	27,909		328		4.70	%	45,673		301		2.64	%
Short-term investments	Short-term investments	234,317		42		0.07	%	245,577		99		0.16	%	Short-term investments	192,475		66		0.14	%	191,751		39		0.08	%
Total investments	Total investments	990,335		3,396		1.37	%	1,090,158		4,733		1.74	%	Total investments	940,647		3,390		1.44	%	992,123		3,458		1.39	%
Commercial real estate loans (2)	Commercial real estate loans (2)	3,780,920		34,320		3.59	%	3,761,667		36,829		3.87	%	Commercial real estate loans (2)	4,152,414		36,027		3.47	%	3,785,897		34,245		3.62	%
Commercial loans (2)	Commercial loans (2)	1,115,910		13,040		4.62	%	1,234,537		10,450		3.35	%	Commercial loans (2)	755,809		7,998		4.23	%	1,249,824		12,746		4.08	%
Equipment financing (2)	Equipment financing (2)	1,074,469		17,963		6.69	%	1,069,192		18,973		7.10	%	Equipment financing (2)	1,105,194		18,012		6.52	%	1,079,039		18,043		6.69	%
Residential mortgage loans (2)	Residential mortgage loans (2)	788,296		6,927		3.51	%	814,431		8,068		3.96	%	Residential mortgage loans (2)	804,939		6,992		3.47	%	780,785		7,232		3.71	%
Other consumer loans (2)	Other consumer loans (2)	368,845		2,833		3.08	%	411,326		3,153		3.07	%	Other consumer loans (2)	366,534		2,750		3.04	%	375,590		2,795		3.02	%
Total loans and leases	Total loans and leases	7,128,440		75,083		4.21	%	7,291,153		77,473		4.25	%	Total loans and leases	7,184,890		71,779		4.00	%	7,271,135		75,061		4.13	%
Total interest-earning assets	Total interest-earning assets	8,118,775		78,479		3.87	%	8,381,311		82,206		3.92	%	Total interest-earning assets	8,125,537		75,169		3.70	%	8,263,258		78,519		3.80	%
Allowance for loan and lease losses	Allowance for loan and lease losses	(111,705)						(114,188)						Allowance for loan and lease losses	(98,960)						(115,458)
Non-interest-earning assets	Non-interest-earning assets	533,158						602,417						Non-interest-earning assets	504,466						566,358
Total assets	Total assets	$	8,540,228					$	8,869,540					Total assets	$	8,531,043					$	8,714,158
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	$	499,883	146		0.12	%	$	395,158	114		0.12	%	NOW accounts	$	589,891	103		0.07	%	$	477,893	130		0.11	%
Savings accounts	Savings accounts	774,406		248		0.13	%	663,782		357		0.22	%	Savings accounts	933,173		198		0.09	%	712,728		235		0.13	%
Money market accounts	Money market accounts	2,247,997		1,497		0.27	%	1,784,343		2,074		0.47	%	Money market accounts	2,416,577		1,570		0.26	%	2,084,503		1,486		0.29	%
Certificate of deposit accounts	Certificate of deposit accounts	1,226,668		3,102		1.01	%	1,637,486		8,364		2.05	%	Certificate of deposit accounts	1,091,729		1,848		0.69	%	1,328,112		4,154		1.27	%
Brokered deposit accounts	Brokered deposit accounts	418,166		387		0.37	%	381,709		1,869		1.97	%	Brokered deposit accounts	132,751		52		0.16	%	610,824		702		0.47	%
Total interest-bearing deposits (3)	Total interest-bearing deposits (3)	5,167,120		5,380		0.42	%	4,862,478		12,778		1.06	%	Total interest-bearing deposits (3)	5,164,121		3,771		0.30	%	5,214,060		6,707		0.52	%
Advances from the FHLBB	Advances from the FHLBB	250,102		663		1.05	%	1,102,079		3,751		1.35	%	Advances from the FHLBB	103,878		187		0.72	%	488,537		1,370		1.12	%
Subordinated debentures and notes	Subordinated debentures and notes	83,802		1,242		5.93	%	83,647		1,263		6.04	%	Subordinated debentures and notes	83,915		1,244		5.93	%	83,764		1,242		5.93	%
Other borrowed funds	Other borrowed funds	74,285		31		0.17	%	70,795		44		0.25	%	Other borrowed funds	130,080		61		0.19	%	92,391		39		0.17	%
Total borrowed funds	Total borrowed funds	408,189		1,936		1.88	%	1,256,521		5,058		1.59	%	Total borrowed funds	317,873		1,492		1.88	%	664,692		2,651		1.60	%
Total interest-bearing liabilities	Total interest-bearing liabilities	5,575,309		7,316		0.53	%	6,118,999		17,836		1.17	%	Total interest-bearing liabilities	5,481,994		5,263		0.39	%	5,878,752		9,358		0.65	%
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)	1,785,023						1,512,089						Non-interest-bearing demand checking accounts (3)	1,880,039						1,643,373
Other non-interest-bearing liabilities	Other non-interest-bearing liabilities	222,689						312,213						Other non-interest-bearing liabilities	171,717						245,551
Total liabilities	Total liabilities	7,583,021						7,943,301						Total liabilities	7,533,750						7,767,676
Total stockholders' equity	Total stockholders' equity	957,207						926,239						Total stockholders' equity	997,293						946,482

Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	8,540,228					$	8,869,540					Total liabilities and stockholders' equity	$	8,531,043					$	8,714,158
Net interest income (tax-equivalent basis) / Interest-rate spread (4)	Net interest income (tax-equivalent basis) / Interest-rate spread (4)			71,163		3.34	%			64,370		2.75	%	Net interest income (tax-equivalent basis) / Interest-rate spread (4)			69,906		3.31	%			69,161		3.15	%
Less adjustment of tax-exempt income	Less adjustment of tax-exempt income			57						82				Less adjustment of tax-exempt income			58						52
Net interest income	Net interest income			$	71,106					$	64,288			Net interest income			$	69,848					$	69,109
Net interest margin (5)	Net interest margin (5)					3.52	%					3.09	%	Net interest margin (5)					3.49	%					3.39	%

(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 ~~0.31%~~0.22% and ~~0.81%~~0.40% in the three months ended ~~June 30,~~March 31, 2022 and March 31, 2021, ~~and June 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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Six Months Ended
June 30, 2021 June 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 $ 737,771 $ 6,239 1.69 % $ 689,704 $ 6,743 1.96 %
Marketable and restricted equity securities 40,302 534 2.65 % 64,968 1,701 5.24 %
Short-term investments 213,152 81 0.08 % 164,943 308 0.37 %
Total investments 991,225 6,854 1.38 % 919,615 8,752 1.90 %
Commercial real estate loans (2)
3,783,394 68,565 3.60 % 3,729,339 77,297 4.10 %
Commercial loans (2)
1,182,498 25,786 4.34 % 1,008,923 18,778 3.68 %
Equipment financing (2)
1,076,741 36,006 6.69 % 1,061,019 37,919 7.15 %
Residential mortgage loans (2)
784,562 14,159 3.61 % 812,507 16,002 3.94 %
Other consumer loans (2)
372,198 5,628 3.05 % 414,570 7,108 3.43 %
Total loans and leases 7,199,393 150,144 4.17 % 7,026,358 157,104 4.47 %
Total interest-earning assets 8,190,618 156,998 3.83 % 7,945,973 165,856 4.17 %
Allowance for loan and lease losses (113,571) (91,384)
Non-interest-earning assets 549,692 563,094
Total assets $ 8,626,739 $ 8,417,683
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 488,949 276 0.11 % $ 377,399 230 0.12 %
Savings accounts 743,738 483 0.13 % 645,363 1,000 0.31 %
Money market accounts 2,166,702 2,983 0.28 % 1,731,496 6,315 0.73 %
Certificate of deposit 1,277,110 7,256 1.15 % 1,660,193 17,615 2.13 %
Brokered deposit accounts 513,963 1,089 0.43 % 369,856 3,858 2.10 %
Total interest-bearing deposits (3)
5,190,462 12,087 0.47 % 4,784,307 29,018 1.22 %
Advances from the FHLBB 368,661 2,033 1.10 % 937,271 7,848 1.66 %
Subordinated debentures and notes 83,783 2,484 5.93 % 83,628 2,547 6.09 %
Other borrowed funds 83,288 70 0.17 % 80,924 233 0.58 %
Total borrowed funds 535,732 4,587 1.70 % 1,101,823 10,628 1.91 %
Total interest-bearing liabilities 5,726,194 16,674 0.59 % 5,886,130 39,646 1.35 %
Non-interest-bearing liabilities:
Non-interest-bearing demand checking accounts 1,714,589 1,323,202
Other non-interest-bearing liabilities 234,082 272,162
Total liabilities 7,674,865 7,481,494
Total stockholders' equity 951,874 936,189
Total liabilities and stockholders' equity $ 8,626,739 $ 8,417,683
Net interest income (tax-equivalent basis) / Interest-rate spread (4)
140,324 3.24 % 126,210 2.82 %
Less adjustment of tax-exempt income 109 210
Net interest income $ 140,215 $ 126,000
Net interest margin (5)
3.45 % 3.19 %

~~(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 0.35% and 0.96% in the six months ended June 30, 2021 and June 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.~~

~~Table of Contents~~

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 June 30, 2021 as Compared to the Three Months Ended June 30, 2020						Six Months Ended June 30, 2021 as Compared to the Six Months Ended June 30, 2020							Three Months Ended March 31, 2022 as Compared to the Three Months Ended March 31, 2021
		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	$	(243)	$	(355)	$	(598)	$	451	$	(955)	$	(504)	Debt securities	$	(141)	$	19	$	(122)
Marketable and restricted equity securities	Marketable and restricted equity securities	(350)		(332)		(682)		(507)		(660)		(1,167)		Marketable and restricted equity securities	(145)		172		27
Short-term investments	Short-term investments	(4)		(53)		(57)		67		(294)		(227)		Short-term investments	—		27		27
Total investments	Total investments	(597)		(740)		(1,337)		11		(1,909)		(1,898)		Total investments	(286)		218		(68)
Loans and leases:	Loans and leases:													Loans and leases:
Commercial real estate loans	Commercial real estate loans	181		(2,690)		(2,509)		1,037		(9,769)		(8,732)		Commercial real estate loans	3,209		(1,427)		1,782
Commercial loans and leases	Commercial loans and leases	(1,057)		3,647		2,590		3,431		3,577		7,008		Commercial loans and leases	(5,190)		442		(4,748)
Equipment financing	Equipment financing	93		(1,103)		(1,010)		548		(2,461)		(1,913)		Equipment financing	426		(457)		(31)
Residential mortgage loans	Residential mortgage loans	(251)		(890)		(1,141)		(536)		(1,307)		(1,843)		Residential mortgage loans	221		(461)		(240)
Other consumer loans	Other consumer loans	(330)		10		(320)		(710)		(770)		(1,480)		Other consumer loans	(64)		19		(45)
Total loans	Total loans	(1,364)		(1,026)		(2,390)		3,770		(10,730)		(6,960)		Total loans	(1,398)		(1,884)		(3,282)
Total change in interest and dividend income	Total change in interest and dividend income	(1,961)		(1,766)		(3,727)		3,781		(12,639)		(8,858)		Total change in interest and dividend income	(1,684)		(1,666)		(3,350)
Interest expense:	Interest expense:													Interest expense:
Deposits:	Deposits:													Deposits:
NOW accounts	NOW accounts	32		—		32		65		(19)		46		NOW accounts	26		(53)		(27)
Savings accounts	Savings accounts	55		(164)		(109)		132		(649)		(517)		Savings accounts	52		(89)		(37)
Money market accounts	Money market accounts	456		(1,033)		(577)		1,273		(4,605)		(3,332)		Money market accounts	238		(154)		84
Certificate of deposit accounts	Certificate of deposit accounts	(1,741)		(3,521)		(5,262)		(3,460)		(6,899)		(10,359)		Certificate of deposit accounts	(647)		(1,659)		(2,306)
Brokered deposit accounts	Brokered deposit accounts	164		(1,646)		(1,482)		1,104		(3,873)		(2,769)		Brokered deposit accounts	(353)		(297)		(650)
Total deposits	Total deposits	(1,034)		(6,364)		(7,398)		(886)		(16,045)		(16,931)		Total deposits	(684)		(2,252)		(2,936)
Borrowed funds:	Borrowed funds:													Borrowed funds:
Advances from the FHLBB	Advances from the FHLBB	(2,399)		(689)		(3,088)		(3,737)		(2,078)		(5,815)		Advances from the FHLBB	(814)		(369)		(1,183)
Subordinated debentures and notes	Subordinated debentures and notes	2		(23)		(21)		5		(68)		(63)		Subordinated debentures and notes	2		—		2
Other borrowed funds	Other borrowed funds	2		(15)		(13)		7		(170)		(163)		Other borrowed funds	17		5		22
Total borrowed funds	Total borrowed funds	(2,395)		(727)		(3,122)		(3,725)		(2,316)		(6,041)		Total borrowed funds	(795)		(364)		(1,159)
Total change in interest expense	Total change in interest expense	(3,429)		(7,091)		(10,520)		(4,611)		(18,361)		(22,972)		Total change in interest expense	(1,479)		(2,616)		(4,095)
Change in tax-exempt income	Change in tax-exempt income	(25)		—		(25)		(101)		—		(101)		Change in tax-exempt income	6		—		6
Change in net interest income	Change in net interest income	$	1,493	$	5,325	$	6,818	$	8,493	$	5,722	$	14,215	Change in net interest income	$	(211)	$	950	$	739

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Interest Income

Loans and Leases


		Three Months Ended June 30,				Dollar Change				Percent Change				Six Months Ended June 30,								Dollar Change					Percent Change			Three Months Ended March 31,								Dollar Change			Percent Change
		2021		2020								2021				2020										2022					2021
		(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	$	34,320	$	36,830			$	(2,510)			(6.8)	%			$	68,565			$	77,297			$	(8,732)					(11.3)		%	Commercial real estate loans	$	36,027		$			34,245			$	1,782	5.2	%
Commercial loans	Commercial loans	12,984		10,393		2,591				24.9	%			25,677				18,649				7,028					37.7	%	Commercial loans	7,940					12,692			(4,752)				(37.4)		%
Equipment financing	Equipment financing	17,963		18,973		(1,010)				(5.3)	%			36,006				37,919				(1,913)					(5.0)	%	Equipment financing	18,012					18,043			(31)			(0.2)	%
Residential mortgage loans	Residential mortgage loans	6,927		8,067		(1,140)				(14.1)	%			14,159				16,002				(1,843)					(11.5)	%	Residential mortgage loans	6,992					7,232			(240)			(3.3)	%
Other consumer loans	Other consumer loans	2,832		3,153		(321)				(10.2)	%			5,628				7,108				(1,480)					(20.8)	%	Other consumer loans	2,750					2,797			(47)			(1.7)	%
Total interest income—loans and leases	Total interest income—loans and leases	$	75,026	$	77,416	$	(2,390)			(3.1)	%			$	150,035			$	156,975			$	(6,941)				(4.4)	%	Total interest income—loans and leases	$	71,721				$	75,009		$	(3,288)		(4.4)	%

Total interest from loans and leases was ~~$75.0~~$71.7 million for the three months ended ~~June 30, 2021,~~March 31, 2022, and represented a yield on total loans of ~~4.21%~~4.00%. This compares to ~~$77.4~~$75.0 million of interest on loans and a yield of ~~4.25%~~4.13% for the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~$2.4~~$3.3 million decrease in interest income from loans and leases was primarily ~~attributable~~due to a decrease of ~~$1.0~~$1.9 million ~~due~~in changes to ~~changes in~~ interest rates, and a decrease of $1.4 million ~~due to a decrease~~ in origination volume.

Interest income from loans and leases was $150.0 million for the six months ended June 30, 2021, and represented a yield on total loans of 4.17%. This compares to $157.0 million of interest on loans and a yield of 4.47% for the six months ended June 30, 2020. The $7 million decrease in interest income from loans and leases was primarily attributable to an increase of $3.8 million due to an increase in origination volume and an decrease of $10.7 million due to the changes in interest rates.

Investments


		Three Months Ended June 30,				Dollar Change				Percent Change					Six Months Ended June 30,								Dollar Change					Percent Change				Three Months Ended March 31,								Dollar Change				Percent Change
		2021		2020										2021			2020										2022						2021
		(Dollars in Thousands)																													(Dollars in Thousands)
Interest income—investments:	Interest income—investments:																													Interest income—investments:
Debt securities	Debt securities	$	3,121	$	3,701			$	(580)			(15.7)	%				$	6,239			$	6,677			$	(438)				(6.6)		%	Debt securities	$	2,996			$	3,118			$	(122)			(3.9)	%
Marketable and restricted equity securities	Marketable and restricted equity securities	233		908		(675)				(74.3)	%				534				1,686				(1,152)					(68.3)	%	Marketable and restricted equity securities		328				301				27				9.0	%
Short-term investments	Short-term investments	42		99		(57)				(57.6)	%				81				308				(227)					(73.7)	%	Short-term investments		66				39				27				69.2	%
Total interest income—investments	Total interest income—investments	$	3,396	$	4,708	$	(1,312)			(27.9)	%				$	6,854			$	8,671			$	(1,817)				(21.0)	%	Total interest income—investments		$	3,390			$	3,458			$	(68)			(2.0)	%

Total interest income from investments was $3.4 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~$4.7~~$3.5 million for the three months ended ~~June 30, 2020.~~March 31, 2021. For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the yield on total investments was 1.4% ~~and 1.7%, respectively.~~. The year-over-year decrease in interest income on investments of ~~$1.3~~$0.1 million, or ~~27.9%~~2.0%, was primarily driven by a ~~$0.6~~$0.3 million decrease due to volume and a ~~$0.7~~$0.2 million ~~decrease~~increase due to rates.

Total investment income was $6.9 million and $8.7 million for the six months ended June 30, 2021 and June 30, 2020, respectively. For the six months ended June 30, 2021 and 2020, the yield on total investments was 1.4% and 1.9%, respectively. The year-over-year decrease in interest income on investments of $1.8 million, or 21.0%, was primarily driven by a $1.8 million decrease due to rates, while volume remained unchanged.

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Interest Expense—Deposits and Borrowed Funds


		Three Months Ended June 30,				Dollar Change				Percent Change				Six Months Ended June 30,								Dollar Change					Percent Change			Three Months Ended March 31,								Dollar Change		Percent Change
		2021		2020								2021				2020										2022					2021
		(Dollars in Thousands)																												(Dollars in Thousands)
Interest expense:	Interest expense:																												Interest expense:
Deposits:	Deposits:																												Deposits:
NOW accounts	NOW accounts	$	146	$	114			$	32			28.1	%			$	276			$	230			$	46					20.0		%	NOW accounts	$	103		$		130			$	(27)	(20.8)	%
Savings accounts	Savings accounts	248		357		(109)				(30.5)	%			483				1,000				(517)					(51.7)	%	Savings accounts	198					235			(37)		(15.7)	%
Money market accounts	Money market accounts	1,497		2,074		(577)				(27.8)	%			2,983				6,315				(3,332)					(52.8)	%	Money market accounts	1,570					1,486			84		5.7	%
Certificate of deposit accounts	Certificate of deposit accounts	3,102		8,364		(5,262)				(62.9)	%			7,256				17,615				(10,359)					(58.8)	%	Certificate of deposit accounts	1,848					4,154			(2,306)		(55.5)	%
Brokered deposit accounts	Brokered deposit accounts	387		1,869		(1,482)				(79.3)	%			1,089				3,858				(2,769)					(71.8)	%	Brokered deposit accounts	52					702			(650)		(92.6)	%
Total interest expense - deposits	Total interest expense - deposits	5,380		12,778		(7,398)				(57.9)	%			12,087				29,018				(16,931)					(58.3)	%	Total interest expense - deposits	3,771					6,707			(2,936)		(43.8)	%
Borrowed funds:	Borrowed funds:																												Borrowed funds:
Advances from the FHLBB	Advances from the FHLBB	663		3,751		(3,088)				(82.3)	%			2,033				7,848				(5,815)					(74.1)	%	Advances from the FHLBB	187					1,370			(1,183)		(86.4)	%
Subordinated debentures and notes	Subordinated debentures and notes	1,242		1,263		(21)				(1.7)	%			2,484				2,547				(63)					(2.5)	%	Subordinated debentures and notes	1,244					1,242			2		0.2	%
Other borrowed funds	Other borrowed funds	31		44		(13)				(29.5)	%			70				233				(163)					(70.0)	%	Other borrowed funds	61					39			22		56.4	%
Total interest expense - borrowed funds	Total interest expense - borrowed funds	1,936		5,058		(3,122)				(61.7)	%			4,587				10,628				(6,041)					(56.8)	%	Total interest expense - borrowed funds	1,492					2,651			(1,159)		(43.7)	%
Total interest expense	Total interest expense	$	7,316	$	17,836	$	(10,520)			(59.0)	%			$	16,674			$	39,646			$	(22,972)				(57.9)	%	Total interest expense	$	5,263				$	9,358		$	(4,095)	(43.8)	%

Deposits

For the three months ended ~~June 30, 2021,~~March 31, 2022, interest expense on deposits decreased ~~$7.4~~$2.9 million, or ~~57.9%~~43.8%, as compared to the same period in ~~2020.~~2021. The decrease in interest expense on deposits was driven by a decrease of ~~$6.4~~$2.3 million due to lower interest rates and a decrease of ~~$1.0~~$0.7 million mainly due to lower certificate of deposit balances.

Interest expense on deposits decreased $16.9 million, or 58.3%, to $12.1 million for the six months ended June 30, 2021 from $29.0 million for the six months ended June 30, 2020. The decrease in interest expense on deposits was driven by a decrease of $16.0 million due to lower interest rates and a decrease of $0.9 million due to volume.

Borrowed Funds

During the three months ended ~~June 30, 2021,~~March 31, 2022, interest paid on borrowed funds decreased ~~$3.1~~$1.2 million, or ~~61.7%~~43.7% year over year. The cost of borrowed funds increased to 1.88% for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~1.59%~~1.60% for the three months ended ~~June 30, 2020.~~March 31, 2021. The decrease in interest expense was driven by a decrease of ~~$2.4~~$0.8 million due to volume and a decrease of ~~$0.7~~$0.4 million due to borrowing rates. For the three months ended ~~June 30, 2021,~~March 31, 2022, the purchase accounting accretion on acquired borrowed funds was ~~$13.0~~$12.0 thousand compared to ~~accretion of $14.0~~$13.0 thousand for the three months ended ~~June 30, 2020.~~March 31, 2021. Purchase accounting accretion had no impact on the Company's net interest margin.

Interest expense on borrowed funds decreased $6.0 million, or 56.8%, to $4.6 million for the six months ended June 30, 2021 from $10.6 million for the six months ended June 30, 2020. The cost of borrowed funds decreased to 1.7% for the six months ended June 30, 2021 from 1.91% for the six months ended June 30, 2020. The decrease in interest expense was driven by a decrease of $3.7 million due to volume and a decrease of $2.3 million due to borrowing rates. For the six months ended June 30, 2021, there was purchase accounting accretion of $25.0 thousand on acquired borrowed funds compared to accretion of $27.0 thousand for the six months ended June 30, 2020. Purchase accounting accretion had no impact on the Company's net interest margin.

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Provision for Credit Losses

The provisions for credit losses are set forth below:


		Three Months Ended June 30,				Dollar Change				Percent Change				Six Months Ended June 30,								Dollar Change					Percent Change			Three Months Ended March 31,								Dollar Change		Percent Change
		2021		2020								2021				2020										2022					2021
		(Dollars in Thousands)																												(Dollars in Thousands)
Provision (credit) for loan and lease losses:	Provision (credit) for loan and lease losses:																												Provision (credit) for loan and lease losses:
Commercial real estate	Commercial real estate	$	(5,903)	$	7,738			$	(13,641)			(176.3)	%			$	(6,106)			$	47,938			$	(54,044)					112.7		%	Commercial real estate	$	(151)		$		(203)			$	52	(25.6)	%
Commercial	Commercial	3,234		(338)		3,572				(1,056.8)	%			1,370				6,562				(5,192)					(79.1)	%	Commercial	(1,604)					(1,864)			260		(13.9)	%
Consumer	Consumer	(99)		355		(454)				(127.9)	%			(814)				956				(1,770)					(185.1)	%	Consumer	81					(715)			796		(111.3)	%

Total provision (credit) for loan and lease losses	Total provision (credit) for loan and lease losses	(2,768)		7,755		(10,523)				(135.7)	%			(5,550)				55,456				(61,006)					(110.0)	%	Total provision (credit) for loan and lease losses	(1,674)					(2,782)			1,108		(39.8)	%
Unfunded credit commitments	Unfunded credit commitments	(563)		(2,408)		1,845				76.6	%			72				4,005				(3,933)					(98.2)	%	Unfunded credit commitments	1,510					635			875		137.8	%
Total provision (credit) for credit losses	Total provision (credit) for credit losses	$	(3,331)	$	5,347	$	(8,678)			(162.3)	%			$	(5,478)			$	59,461			$	(64,939)				(109.2)	%	Total provision (credit) for credit losses	$	(164)				$	(2,147)		$	1,983	(92.4)	%

For the three months ended ~~June 30, 2021,~~March 31, 2022, the Allowance for Credit Losses ("ACL") decreased ~~$3.9~~$2.1 million resulting in a provision for credit losses of ~~$(3.3) million.~~

~~For the six months ended June 30, 2021, the ACL decreased $7.9 million resulting in a provision for credit losses of $(5.5)~~$(0.2) million. The reduction in the ACL for ~~both periods~~the three months ended March 31, 2022 is

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attributable to ~~portfolio contraction,~~the continued low level of net charge-offs and an improving macro-economic forecast, ~~and qualitative adjustments that consider longer-term risks.~~offset by portfolio growth.

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 June 30,				Dollar Change				Percent Change				Six Months Ended June 30,								Dollar Change					Percent Change			Three Months Ended March 31,								Dollar Change			Percent Change
		2021		2020								2021				2020										2022					2021
		(Dollars in Thousands)																												(Dollars in Thousands)
Deposit fees	Deposit fees	$	3,015	$	1,929			$	1,086			56.3	%			$	5,296			$	4,387			$	909					20.7		%	Deposit fees	$	2,500		$			2,281		$	219	9.6	%
Loan fees	Loan fees	607		513		94				18.3	%			1,160				1,063				97					9.1	%	Loan fees	747					599			148			24.7	%
Loan level derivative income, net	Loan level derivative income, net	7		1,440		(1,433)				(99.5)	%			481				3,596				(3,115)					(86.6)	%	Loan level derivative income, net	686					474			212			44.7	%
(Loss) gain on investment securities		1		586		(585)				(99.8)	%			(6)				1,916				(1,922)					(100.3)	%
(Loss) gain on investment securities, net																													(Loss) gain on investment securities, net	—					(7)			7			(100.0)	%
Gain on sales of loans and leases held-for-sale	Gain on sales of loans and leases held-for-sale	538		299		239				79.9	%			1,247				419				828					197.6	%	Gain on sales of loans and leases held-for-sale	344					709			(365)			(51.5)	%

Other	Other	1,742		1,468		274				18.7	%			2,526				4,182				(1,656)					(39.6)	%	Other	1,252					738			514			69.6	%
Total non-interest income	Total non-interest income	$	5,910	$	6,235	$	(325)			(5.2)	%			$	10,704			$	15,563			$	(4,859)				(31.2)	%	Total non-interest income	$	5,529				$	4,794		$	735		15.3	%

For the three months ended ~~June 30, 2021,~~March 31, 2022, non-interest income ~~decreased $0.3~~increased $0.7 million, or ~~5.2%~~15.3%, to ~~$5.9~~$5.5 million as compared to ~~$6.2~~$4.8 million for the same period of ~~2020.~~2021. The ~~decrease~~increase was primarily driven by ~~a decrease~~increases of ~~$1.4~~$0.5 million in other non-interest income, $0.2 million in deposit fees, and $0.2 million in loan level derivative income, ~~and~~partially offset by a decrease of ~~$0.6 million in gain on investment securities, partially offset by increases of $1.1 million in deposit fees, $0.3 million in other non-interest income and $0.2~~$0.4 million in gain on sales of loans and ~~leases.~~leases held-for-sale.

~~For~~Deposit fees increased $0.2 million, or 9.6%, to $2.5 million for the ~~six~~three months ended ~~June 30, 2021, non-interest income decreased $4.9 million, or 31.2%, to $10.7 million as compared to $15.6~~March 31, 2022 from $2.3 million for the same period in ~~2020. The decrease was~~2021, primarily driven by ~~decreases of $3.1 million in loan~~higher debit card income, insufficient funds fees ("NSF"), account service fees, ATM fees, and wire transfer fees.

Loan level derivative income $1.9 million in gain on investment securities and $1.7 million in other non-interest income, partially offset by an increase of $0.9 million in deposit fees and an increase of $0.8 million in gain on sales of loans and leases.

~~Deposit fees~~ increased ~~$1.1~~$0.2 million, or ~~56.3%~~44.7%, to ~~$3.0~~$0.7 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$1.9~~$0.5 million for the same period in ~~2020,~~2021, primarily driven by higher ~~foreign exchange incoming wire income, debit card income, ATM fees~~

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~~and insufficient funds fees ("NSF"). Deposit fees increased $0.9 million, or 20.7% to $5.3 million for the six months ended June 30, 2021 from $4.4 million for the same period~~volume in ~~2020, primarily driven by higher foreign exchange incoming wire income, debit card income and ATM fees, partially offset by lower NSF.~~

~~Loan~~loan level derivative ~~income decreased $1.4 million, or 99.5%, to $7.0 thousand~~transactions completed for the three months ended June 30, 2021 from $1.4 million for the same period in 2020, and decreased $3.1 million, or 86.6%, to $0.5 million for the six months ended June 30, 2021 from $3.6 million for the same period in 2020, primarily driven by lower volume in loan level derivatives transactions completed for the six months ended June 30, 2021.

(Loss) gain on investment securities decreased $0.6 million, or 99.8%, to a gain of $1.0 thousand for the three months ended June 30, 2021 from a gain of $0.6 million for the same period in 2020, and decreased $1.9 million, or 100.3%, to a loss of $6.0 thousand for the six months ended June 30, 2021 from a gain of $1.9 million for the same period in 2020, primarily driven by a $3.0 million gain on sales of investment securities, partially offset by a $1.1 million loss on equity securities held-for-trading in the first six 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.March 31, 2022.

Gain on sales of loans and leases ~~held-for-sales increased $0.2~~held-for-sale decreased $0.4 million, or ~~79.9%~~51.5%, to ~~$0.5~~$0.3 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$0.3~~$0.7 million for the same period in ~~2020, and~~2021, primarily driven by lower gain on sale to participant.

Other income increased ~~$0.8~~$0.5 million, or ~~197.6%~~69.6%, to ~~$1.2~~$1.3 million for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$0.4~~$0.7 million for the same period in ~~2020,~~2021, 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 increased $0.3 million, or 18.7%, to $1.7 million for the three months ended June 30, 2021 from $1.5 million for the same period in 2020, primarily driven by higher investment sales and insurance sales volume, and higher gain on interest rate derivatives, partially offset by lower rental income. Other income decreased $1.7 million, or 39.6%, to $2.5 million for the six months ended June 30, 2021 from $4.2 million for the same period in 2020, primarily driven by higher loss on interest rate derivatives due to volatility in rates, higher advisory fees on investment sales, 1031 exchange income, foreign exchange outgoing wire fees, rental income and ~~lower rental~~other income, partially offset by ~~higher~~lower commission on insurance ~~sales volume.~~and investment sales.

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Non-Interest Expense

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


		Three Months Ended June 30,				Dollar Change				Percent Change				Six Months Ended June 30,								Dollar Change					Percent Change			Three Months Ended March 31,								Dollar Change			Percent Change
		2021		2020								2021				2020										2022					2021
		(Dollars in Thousands)																												(Dollars in Thousands)
Compensation and employee benefits	Compensation and employee benefits	$	25,161	$	24,619			$	542			2.2	%			$	50,982			$	49,838			$	1,144					2.3		%	Compensation and employee benefits	$	26,884		$			25,821			$	1,063	4.1	%
Occupancy	Occupancy	3,832		3,825		7				0.2	%			7,836				7,778				58					0.7	%	Occupancy	4,284					4,004			280				7.0		%
Equipment and data processing	Equipment and data processing	4,697		4,155		542				13.0	%			9,190				8,858				332					3.7	%	Equipment and data processing	5,078					4,493			585			13.0	%
Professional services	Professional services	1,245		1,056		189				17.9	%			2,471				2,707				(236)					(8.7)	%	Professional services	1,226					1,226			—			—	%
FDIC insurance	FDIC insurance	657		858		(201)				(23.4)	%			1,701				1,236				465					37.6	%	FDIC insurance	728					1,044			(316)			(30.3)	%
Advertising and marketing	Advertising and marketing	1,110		1,017		93				9.1	%			2,210				2,092				118					5.6	%	Advertising and marketing	1,272					1,100			172			15.6	%
Amortization of identified intangible assets	Amortization of identified intangible assets	228		311		(83)				(26.7)	%			460				647				(187)					(28.9)	%	Amortization of identified intangible assets	134					232			(98)			(42.2)	%

Other	Other	1,036		3,268		(2,232)				(68.3)	%			3,927				6,701				(2,774)					(41.4)	%	Other	2,881					2,891			(10)			(0.3)	%
Total non-interest expense	Total non-interest expense	$	37,966	$	39,109	$	(1,143)			(2.9)	%			$	78,777			$	79,857			$	(1,080)				(1.4)	%	Total non-interest expense	$	42,487				$	40,811		$	1,676		4.1	%

For the three months ended ~~June 30, 2021,~~March 31, 2022, non-interest expense ~~decreased $1.1~~increased $1.7 million, or ~~2.9%~~4.1%, ~~to $38.0 million~~ as compared to ~~$39.1 million for~~ the same period in ~~2020.~~2021. The ~~decrease~~increase was primarily driven by decreases of $2.2 million in other non-interest expense and $0.2 million in FDIC insurance expense, partially offset by increases of $0.5 million in compensation and employee benefits expense, $0.5 million in equipment and data processing expense, and $0.2 million in professional services.

~~Table of Contents~~

For the six months ended June 30, 2021, non-interest expense decreased $1.1 million, or 1.4%, to $78.8 million as compared to $79.9 million for the same period in 2020. The decrease was primarily driven by decreases of $2.8 million in other non-interest expense and $0.2 million in professional services, partially offset by increases of $1.1 million in compensation and employee benefits, ~~expense, $0.5 million in FDIC insurance expense, and $0.3~~$0.6 million in equipment and data processing, ~~expense.~~and $0.3 million in occupancy, partially offset by a decrease of $0.3 million in FDIC insurance.

Compensation and employee benefits expense increased ~~$0.5~~$1.1 million, or ~~2.2%~~4.1%, to ~~$25.2~~$26.9 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$24.6~~$25.8 million for the same period in ~~2020, and increased $1.1 million, or 2.3%, to $51.0 million for the six months ended June 30,~~ 2021, ~~from $49.8 million for the same period in 2020,~~ primarily driven by increases in employee headcount, salaries, share-based compensations, and ~~salaries,~~commissions, partially offset by an increase in salaries-deferred costs and decreases in ~~retirement plan benefits, commissions~~incentive bonuses, incentive FICA/Medicare taxes, and ~~bonuses.~~temporary staff expense.

Occupancy expense increased $0.3 million, or 7.0%, to $4.3 million for the three months ended March 31, 2022 from $4.0 million for the same period in 2021, primarily driven by increases in building maintenance, utilities, and other occupancy expenses, partially offset by lower depreciation-leasehold improvement and amortization-building fair value adjustments.

Equipment and data processing expense increased ~~$0.5~~$0.6 million, or 13.0%, to ~~$4.7~~$5.1 million, for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$4.2~~$4.5 million for the same period in ~~2020, and increased $0.3 million, or 3.7%, to $9.2 million for the six months ended June 30,~~ 2021, ~~from $8.9 million for the same period in 2020,~~ primarily driven by ~~higher~~increases in computer equipment depreciation, software licenses and subscriptions, ~~commercial~~ATM maintenance, and loan processing ~~expenses, and computer equipment depreciation, partially offset by lower core processing expenses and lower purchased software depreciation.~~expense.

FDIC insurance expense decreased ~~$0.2~~$0.3 million, or ~~23.4%~~30.3%, to $0.7 million for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$0.9~~$1.0 million for the same period in ~~2020, and increased $0.5 million, or 37.6%, to $1.7 million for the six months ended June 30,~~ 2021, ~~from $1.2 million for the same period in 2020,~~ primarily driven by lower bank assessment fees from the FDIC.

Other expense decreased $2.2 million, or 68.3%, to $1.0 million for the three months ended June 30, 2021 from $3.3 million for the same period in 2020, and decreased $2.8 million, or 41.4% to $3.9 million for the six months ended June 30, 2021 from $6.7 million for the same period in 2020, primarily driven by a gain of $2.1 million on the sale of OREO property and a decrease in write-down on other repossessed assets.

Provision for Income Taxes


		Three Months Ended June 30,						Dollar Change				Percent Change				Six Months Ended June 30,										Dollar Change					Percent Change			Three Months Ended March 31,									Dollar Change		Percent Change
		2021			2020									2021					2020											2022					2021
		(Dollars in Thousands)																																(Dollars in Thousands)
Income before provision for income taxes	Income before provision for income taxes	$	42,381		$	26,067				$	16,314			62.6	%				$	77,620				$	2,245			$	75,375					3,357.5		%	Income before provision for income taxes	$	33,050			$		35,239			$	(2,189)	(6.2)	%
Provision (benefit) for income taxes	Provision (benefit) for income taxes	10,779			6,496			4,283				65.9	%			19,564					(50)					19,614					(39,228.0)	%	Provision (benefit) for income taxes	8,345					8,785				(440)		(5.0)	%
Net income (loss)	Net income (loss)	$	31,602		$	19,571		$	12,031			61.5	%			$	58,056				$	2,295				$	55,761				2,429.7	%	Net income (loss)	$	24,705				$	26,454			$	(1,749)	(6.6)	%
Effective tax rate	Effective tax rate	25.4		%	24.9		%	N/A				2.0	%			25.2		%			(2.2)		%			N/A					(1,245.5)	%	Effective tax rate	25.2		%			24.9		%		N/A		1.2	%

The Company recorded an income tax expense of ~~$10.8~~$8.3 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to an income tax expense of ~~$6.5~~$8.8 million for the three months ended ~~June 30, 2020, representing effective tax rates of 25.4% and 24.9%, respectively.~~

~~The Company recorded an income tax expense of $19.6 million for the six months ended June 30,~~March 31, 2021, ~~compared to an income tax benefit of $(50) thousand for the six months ended June 30, 2020,~~ representing effective tax rates of 25.2% and ~~(2.2)%~~24.9%, 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.

~~Table of Contents~~

In the ~~second~~first 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 ~~second~~first quarter. Cash and equivalents at the end of the quarter were ~~$320.4~~$293.3 million, or ~~3.8%~~3.4% of the balance sheet, compared to ~~$434.9~~$327.7 million, or ~~4.9%~~3.8% of the balance sheet, as of December 31, ~~2020.~~2021. 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 ~~June 30, 2021,~~March 31, 2022, cash, cash equivalents and investment securities available-for-sale totaled $1.0 billion, or ~~12.0%~~11.9% of total assets. This compares to ~~$1.2~~$1.0 billion, or ~~13.2%~~12.2% of total assets, as of December 31, ~~2020.~~2021.

Deposits, which are considered the most stable source of liquidity, totaled ~~$6.9~~$7.1 billion as of ~~June 30, 2021~~March 31, 2022 and represented ~~95.0%~~94.8% of total funding (the sum of total deposits and total borrowings), compared to deposits of ~~$6.9~~$7.0 billion, or ~~89.4%~~95.2% of total funding, as of December 31, ~~2020.~~2021. Core deposits, which consist of demand checking, NOW, savings and money market accounts, totaled ~~$5.5~~$5.9 billion as of ~~June 30, 2021~~March 31, 2022 and represented ~~79.1%~~83.6% of total deposits, compared to core deposits of ~~$4.8~~$5.8 billion, or ~~69.8%~~81.8% of total deposits, as of December 31, ~~2020.~~2021. Additionally, the Company had ~~$261.1~~$115.5 million of brokered deposits as of ~~June 30, 2021,~~March 31, 2022, which represented ~~3.8%~~1.6% of total deposits, compared to ~~$693.9~~$165.5 million or ~~10.0%~~2.3% of total deposits, as of December 31, ~~2020.~~2021. 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 ~~$363.0~~$392.9 million as of ~~June 30, 2021,~~March 31, 2022, representing ~~5.0%~~5.2% of total funding, compared to ~~$820.2~~$357.3 million, or ~~10.6%~~4.8% of total funding, as of December 31, ~~2020.~~2021. 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 ~~June 30, 2021,~~March 31, 2022, the Company's total borrowing limit from the FHLBB for advances and repurchase agreements was ~~$1.5~~$1.4 billion, compared to ~~$1.9~~$1.7 billion as of December 31, ~~2020,~~2021, based on the level of qualifying collateral available for these borrowings.

As of ~~June 30, 2021,~~March 31, 2022, the Banks also have access to funding through certain uncommitted lines of credit of ~~$746.0~~$700.0 million.

The Company had a $12.0 million committed line of credit for contingent liquidity as of ~~June 30, 2021.~~March 31, 2022. As of ~~June 30, 2021,~~March 31, 2022, 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 ~~$427.1~~$142.3 million of borrowing capacity at the Federal Reserve Bank as of ~~June 30, 2021.~~March 31, 2022. As of ~~June 30, 2021,~~March 31, 2022, 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.

~~Table of Contents~~

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


		At June 30, 2021		At December 31, 2020			At March 31, 2022		At December 31, 2021
		(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	$	118,828	$	174,240	Commercial real estate	$	46,926	$	110,798
Commercial	Commercial	126,158		80,291		Commercial	195,662		162,931
Residential mortgage	Residential mortgage	39,720		30,418		Residential mortgage	41,777		28,685
Unadvanced portion of loans and leases	Unadvanced portion of loans and leases	883,648		759,053		Unadvanced portion of loans and leases	995,816		987,482
Unused lines of credit:	Unused lines of credit:					Unused lines of credit:
Home equity	Home equity	602,307		584,881		Home equity	616,407		611,212
Other consumer	Other consumer	39,457		38,954		Other consumer	80,521		64,589
Other commercial	Other commercial	408		408		Other commercial	430		414
Unused letters of credit:	Unused letters of credit:					Unused letters of credit:
Financial standby letters of credit	Financial standby letters of credit	15,437		14,746		Financial standby letters of credit	14,319		16,143
Performance standby letters of credit	Performance standby letters of credit	12,261		5,903		Performance standby letters of credit	19,095		17,145
Commercial and similar letters of credit	Commercial and similar letters of credit	5,369		5,105		Commercial and similar letters of credit	6,866		5,219
Loan level derivatives:	Loan level derivatives:					Loan level derivatives:
Receive fixed, pay variable	Receive fixed, pay variable	1,186,507		1,214,146		Receive fixed, pay variable	1,485,500		1,324,609
Pay fixed, receive variable	Pay fixed, receive variable	1,186,507		1,214,146		Pay fixed, receive variable	1,485,500		1,324,609
Risk participation-out agreements	Risk participation-out agreements	262,985		252,655		Risk participation-out agreements	288,845		288,374
Risk participation-in agreements	Risk participation-in agreements	59,961		60,619		Risk participation-in agreements	76,570		77,016
Foreign exchange contracts:	Foreign exchange contracts:					Foreign exchange contracts:
Buys foreign currency, sells U.S. currency	Buys foreign currency, sells U.S. currency	1,360		1,266		Buys foreign currency, sells U.S. currency	2,329		2,004
Sells foreign currency, buys U.S. currency	Sells foreign currency, buys U.S. currency	1,362		1,273		Sells foreign currency, buys U.S. currency	2,331		2,006

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Capital Resources

As of ~~June 30, 2021,~~March 31, 2022, 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 ~~June 30, 2021,~~March 31, 2022, 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 ~~June 30, 2021~~March 31, 2022 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 June 30, 2021:
At March 31, 2022:																		At March 31, 2022:
Brookline Bancorp, Inc.	Brookline Bancorp, Inc.																	Brookline Bancorp, Inc.
Common equity Tier 1 capital ratio (1)	Common equity Tier 1 capital ratio (1)	$	805,395	11.98	%	$	302,527	4.50	%	$	470,598	7.00	%	N/A		N/A		Common equity Tier 1 capital ratio (1)	$	850,892	12.01	%	$	318,819	4.50	%	$	495,940	7.00	%	N/A		N/A
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	815,040		9.71	%	335,753		4.00	%	335,753		4.00	%	N/A		N/A		Tier 1 leverage capital ratio (2)	860,574		10.24	%	336,162		4.00	%	336,162		4.00	%	N/A		N/A
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	815,040		12.12	%	403,485		6.00	%	571,604		8.50	%	N/A		N/A		Tier 1 risk-based capital ratio (3)	860,574		12.14	%	425,325		6.00	%	602,544		8.50	%	N/A		N/A
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	973,701		14.48	%	537,956		8.00	%	706,068		10.50	%	N/A		N/A		Total risk-based capital ratio (4)	1,023,690		14.45	%	566,749		8.00	%	743,858		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)	$	567,162	12.29	%	$	207,667	4.50	%	$	323,038	7.00	%	$	299,964	6.50	%	Common equity Tier 1 capital ratio (1)	$	578,253	11.96	%	$	217,570	4.50	%	$	338,442	7.00	%	$	314,268	6.50	%
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	567,162		10.37	%	218,770		4.00	%	218,770		4.00	%	273,463		5.00	%	Tier 1 leverage capital ratio (2)	578,253		10.51	%	220,077		4.00	%	220,077		4.00	%	275,097		5.00	%
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	567,162		12.29	%	276,890		6.00	%	392,260		8.50	%	369,186		8.00	%	Tier 1 risk-based capital ratio (3)	578,253		11.96	%	290,093		6.00	%	410,966		8.50	%	386,791		8.00	%
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	625,148		13.55	%	369,091		8.00	%	484,432		10.50	%	461,364		10.00	%	Total risk-based capital ratio (4)	638,880		13.22	%	386,614		8.00	%	507,431		10.50	%	483,268		10.00	%
BankRI	BankRI																	BankRI
Common equity Tier 1 capital ratio (1)	Common equity Tier 1 capital ratio (1)	$	251,561	11.82	%	$	95,772	4.50	%	$	148,979	7.00	%	$	138,337	6.50	%	Common equity Tier 1 capital ratio (1)	$	263,515	11.62	%	$	102,050	4.50	%	$	158,744	7.00	%	$	147,405	6.50	%
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	251,561		8.29	%	121,380		4.00	%	121,380		4.00	%	151,726		5.00	%	Tier 1 leverage capital ratio (2)	263,515		8.62	%	122,281		4.00	%	122,281		4.00	%	152,851		5.00	%
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	251,561		11.82	%	127,696		6.00	%	180,903		8.50	%	170,261		8.00	%	Tier 1 risk-based capital ratio (3)	263,515		11.62	%	136,066		6.00	%	192,761		8.50	%	181,422		8.00	%
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	278,291		13.08	%	170,209		8.00	%	223,399		10.50	%	212,761		10.00	%	Total risk-based capital ratio (4)	291,949		12.87	%	181,476		8.00	%	238,187		10.50	%	226,845		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.

8074

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The following table presents actual and required capital amounts and capital ratios as of December 31, ~~2020~~2021 for the Company and the Banks.


		Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer				Minimum Required To Be Considered “Well-Capitalized” Under Prompt Corrective Action Provisions					Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required for Fully Phased in Capital Adequacy Purposes plus Capital Conservation Buffer				Minimum Required To Be Considered “Well-Capitalized” Under Prompt Corrective Action Provisions
		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio			Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
		(Dollars in Thousands)																	(Dollars in Thousands)
At December 31, 2020:
At December 31, 2021:																		At December 31, 2021:
Brookline Bancorp, Inc.	Brookline Bancorp, Inc.																	Brookline Bancorp, Inc.
Common equity Tier 1 capital ratio (1)	Common equity Tier 1 capital ratio (1)	$	764,157	11.04	%	$	311,477	4.50	%	$	484,520	7.00	%	N/A		N/A		Common equity Tier 1 capital ratio (1)	$	834,988	11.86	%	$	316,817	4.50	%	$	492,826	7.00	%	N/A		N/A
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	773,777		8.92	%	346,985		4.00	%	346,985		4.00	%	N/A		N/A		Tier 1 leverage capital ratio (2)	844,658		10.15	%	332,870		4.00	%	332,870		4.00	%	N/A		N/A
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	773,777		11.18	%	415,265		6.00	%	588,292		8.50	%	N/A		N/A		Tier 1 risk-based capital ratio (3)	844,658		11.99	%	422,681		6.00	%	598,798		8.50	%	N/A		N/A
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	934,933		13.51	%	553,624		8.00	%	726,632		10.50	%	N/A		N/A		Total risk-based capital ratio (4)	1,007,237		14.30	%	563,489		8.00	%	739,580		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)	$	557,310	11.72	%	$	213,984	4.50	%	$	332,864	7.00	%	$	309,088	6.50	%	Common equity Tier 1 capital ratio (1)	$	570,278	11.94	%	$	214,929	4.50	%	$	334,334	7.00	%	$	310,453	6.50	%
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	557,310		9.82	%	227,010		4.00	%	227,010		4.00	%	283,763		5.00	%	Tier 1 leverage capital ratio (2)	570,278		10.51	%	217,042		4.00	%	217,042		4.00	%	271,303		5.00	%
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	557,310		11.72	%	285,312		6.00	%	404,192		8.50	%	380,416		8.00	%	Tier 1 risk-based capital ratio (3)	570,278		11.94	%	286,572		6.00	%	405,977		8.50	%	382,096		8.00	%
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	617,101		12.97	%	380,633		8.00	%	499,581		10.50	%	475,791		10.00	%	Total risk-based capital ratio (4)	630,194		13.20	%	381,936		8.00	%	501,291		10.50	%	477,420		10.00	%
BankRI	BankRI																	BankRI
Common equity Tier 1 capital ratio (1)	Common equity Tier 1 capital ratio (1)	$	239,337	11.03	%	$	97,644	4.50	%	$	151,891	7.00	%	$	141,042	6.50	%	Common equity Tier 1 capital ratio (1)	$	260,679	11.36	%	$	103,262	4.50	%	$	160,630	7.00	%	$	149,156	6.50	%
Tier 1 leverage capital ratio (2)	Tier 1 leverage capital ratio (2)	239,337		7.78	%	123,052		4.00	%	123,052		4.00	%	153,816		5.00	%	Tier 1 leverage capital ratio (2)	260,679		8.58	%	121,529		4.00	%	121,529		4.00	%	151,911		5.00	%
Tier 1 risk-based capital ratio (3)	Tier 1 risk-based capital ratio (3)	239,337		11.03	%	130,192		6.00	%	184,439		8.50	%	173,590		8.00	%	Tier 1 risk-based capital ratio (3)	260,679		11.36	%	137,683		6.00	%	195,050		8.50	%	183,577		8.00	%
Total risk-based capital ratio (4)	Total risk-based capital ratio (4)	266,633		12.29	%	173,561		8.00	%	227,799		10.50	%	216,951		10.00	%	Total risk-based capital ratio (4)	289,454		12.61	%	183,635		8.00	%	241,020		10.50	%	229,543		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.~~Asset/Liability Committee ("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 ~~June 30, 2021.~~March 31, 2022.

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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 ~~June 30, 2021,~~March 31, 2022, 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
June 30, 2021 December 31, 2020
Change in Interest Rate Levels Dollar
Change Percent
Change Dollar
Change Percent
Change
(Dollars in Thousands)
Up 300 basis points shock $ 23,540 8.9 % $ 19,249 7.1 %
Up 200 basis points ramp 10,587 4.0 % 10,698 3.9 %
Up 100 basis points ramp 5,064 1.9 % 5,193 1.9 %
Down 100 basis points ramp (4,221) (1.6) % (5,999) (2.2) %


	Estimated Exposure to Net Interest Income over Twelve-Month Horizon Beginning
	March 31, 2022				December 31, 2021
Change in Interest Rate Levels	Dollar Change		Percent Change		Dollar Change		Percent Change
	(Dollars in Thousands)
Up 300 basis points shock	$	26,873	9.4	%	$	27,487	10.2	%
Up 200 basis points ramp	$	11,305	4.0	%	$	16,549	6.1	%
Up 100 basis points ramp	$	5,650	2.0	%	$	10,875	4.0	%
Down 100 basis points ramp	$	(6,375)	(2.2)	%	$	(4,340)	(1.6)	%

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 8.9%~~9.4% as of ~~June 30, 2021,~~March 31, 2022, compared to ~~a positive 7.1%~~10.2% as of December 31, ~~2020.~~2021. The ~~increase in~~balance sheet became less asset ~~sensitivity~~sensitive as loan growth was funded with cashflow from the forgiveness of PPP loans and excess liquidity as well as lengthening of the investment and loan portfolio as prepayment speeds slowed down due to ~~a shift of funding sources from shorter-term FHLB borrowings and Brokered CDs to non-maturity deposits.~~rising rates.

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 ~~June 30, 2021,~~March 31, 2022, the Company’s one-year cumulative gap was a positive ~~$469.3~~$325.6 million, or ~~5.85%~~3.99% of total interest-earning assets, compared with a ~~negative $330.0~~positive $445.5 million, or ~~3.92%~~5.48% of total interest-earning assets, at December 31, ~~2020.~~2021.

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~~2021 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 ~~June 30, 2021,~~March 31, 2022, 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, 2022		At December 31, 2021
Up 300 basis points	4.9	%	8.2	%
Up 200 basis points	2.9	%	5.8	%
Up 100 basis points	2.2	%	3.7	%
Down 100 basis points	(6.3)	%	(9.4)	%

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Estimated Percent Change in Economic Value of Equity
Parallel Shock in Interest Rate Levels At June 30, 2021 At December 31, 2020
Up 300 basis points 12.2 % 11.2 %
Up 200 basis points 8.6 % 8.3 %
Up 100 basis points 5.2 % 5.4 %
Down 100 basis points (11.8) % (13.6) %

The Company's ~~EVE~~EVE-at-risk asset sensitivity ~~remained similar~~decreased from December 31, ~~2020~~2021 to ~~June 30, 2021.~~March 31, 2022 as loan growth was funded with cashflow from the forgiveness of PPP loans and excess liquidity.

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~~2021 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.~~2021.

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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.~~2021.

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~~						~~Brookline Bancorp, Inc. 2021 Stock Option and Incentive Plan (incorporated by reference to the Company's Current Report on Form 8-K filed on May 13, 2021~~

~~Exhibit 10.2~~						Form of Restricted Stock Award Agreement under the Brookline Bancorp, Inc. 2021 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company's Registration Statement on Form S-8).

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: ~~August~~May 6, ~~2021~~2022	By:	/s/ Paul A. Perrault
		Paul A. Perrault
		Chief Executive Officer
		(Principal Executive Officer)

Date: ~~August~~May 6, ~~2021~~2022	By:	/s/ Carl M. Carlson
		Carl M. Carlson
		Co-President and Chief Financial Officer
		(Principal Financial Officer)

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	Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
	(In Thousands)

Proceeds from sales of investment securities available-for-sale and equity securities held-for-trading	$	520	$	132,014

Gross gains from securities sales	1		3,152
Gross losses from securities sales	0		(167)
Gain on sales of securities, net	$	1	$	2,985



	Six Months Ended
	June 30, 2021				June 30, 2020
	Basic		Fully Diluted		Basic		Fully Diluted
	(Dollars in Thousands, Except Per Share Amounts)
Numerator:
Net income	$	58,056	$	58,056	$	2,295	$	2,295

Denominator:
Weighted average shares outstanding	78,147,076		78,147,076		79,165,372		79,165,372
Effect of dilutive securities	—		290,199		—		175,152
Adjusted weighted average shares outstanding	78,147,076		78,437,275		79,165,372		79,340,524

EPS	$	0.74	$	0.74	$	0.03	$	0.03