BROOKLINE BANCORP INC - 10-Q filing on 2020-05-29

Loans and Leases

3 Months Ended

Mar. 31, 2020

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



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

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

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



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

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

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

Accretable Yield for the Acquired Loan Portfolio

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

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



	Three Months Ended March 31, 2019

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

During the three months ended March 31, 2019, accretable yield adjustments totaling $61 thousand was made for certain loan pools. During the three months ended March 31, 2019, accretable yield adjustments totaling $0.1 million were made for certain loan pools. These accretable yield adjustments, which were subject to continued re-assessment, will be recognized over the remaining lives of those pools. As of March 31, 2019, the accretable yield was fully accreted.

Loans and Leases Pledged as Collateral

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