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Section 1: 10-Q (10-Q)

Document
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019
 
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, MA
 
02116
(Address of principal executive offices)
 
(Zip Code)
(617) 425-4600
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  YES  x  NO  o
 
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  x  NO  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12-b-2 of the Exchange Act.
Large accelerated filer
 
x
 
Accelerated filer
 
o
 
 
 
 
 
 
 
Non-accelerated filer
 
o (Do not check if a smaller reporting company)
 
Smaller Reporting Company
 
o
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES  o  NO  x   
 
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
                                                                                                                                                         
At May 8, 2019, the number of shares of common stock, par value $0.01 per share, outstanding was 79,774,286.
 


Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
FORM 10-Q
Table of Contents
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Table of Contents

PART I — FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
 
At March 31, 2019
 
At December 31, 2018
 
(In Thousands Except Share Data)
ASSETS
 
 
 
Cash and due from banks
$
51,276

 
$
47,542

Short-term investments
61,063

 
42,042

Total cash and cash equivalents
112,339

 
89,584

Investment securities available-for-sale
489,020

 
502,793

Investment securities held-to-maturity (fair value of $113,089 and $112,830, respectively)
113,694

 
114,776

Equity securities held-for-trading
4,341

 
4,207

Total investment securities
607,055

 
621,776

Loans held-for-sale
869

 
3,247

Loans and leases:
 
 
 
Commercial real estate loans
3,410,468

 
3,351,736

Commercial loans and leases
1,786,582

 
1,768,958

Consumer loans
1,191,147

 
1,182,822

Total loans and leases
6,388,197

 
6,303,516

Allowance for loan and lease losses
(58,041
)
 
(58,692
)
Net loans and leases
6,330,156

 
6,244,824

Restricted equity securities
54,192

 
61,751

Premises and equipment, net of accumulated depreciation of $71,831 and $70,140, respectively
75,520

 
76,382

Right-of-use asset operating leases
26,205

 

Deferred tax asset
27,084

 
21,495

Goodwill
160,427

 
160,427

Identified intangible assets, net of accumulated amortization of $36,220 and $35,818, respectively
5,684

 
6,086

Other real estate owned ("OREO") and repossessed assets, net
3,912

 
4,019

Other assets
115,687

 
103,214

Total assets
$
7,519,130

 
$
7,392,805

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Deposits:
 
 
 
Demand checking accounts
$
1,011,031

 
$
1,033,551

Interest-bearing deposits:
 
 
 
NOW accounts
369,896

 
336,317

Savings accounts
625,770

 
619,961

Money market accounts
1,706,708

 
1,675,050

Certificate of deposit accounts
1,907,228

 
1,789,165

Total interest-bearing deposits
4,609,602

 
4,420,493

Total deposits
5,620,633

 
5,454,044

Borrowed funds:
 
 
 
Advances from the Federal Home Loan Bank of Boston ("FHLBB")
730,018

 
784,375

Subordinated debentures and notes
83,472

 
83,433

Other borrowed funds
52,515

 
52,734

Total borrowed funds
866,005

 
920,542

Operating lease liabilities
26,205

 

Mortgagors' escrow accounts
7,517

 
7,426

Accrued expenses and other liabilities
98,198

 
100,174

Total liabilities
6,618,558

 
6,482,186

 
 
 
 
Commitments and contingencies (Note 12)

 

Stockholders' Equity:
 
 
 
Brookline Bancorp, Inc. stockholders' equity:
 
 
 
Common stock, $0.01 par value; 200,000,000 shares authorized; 85,177,172 shares issued and 85,177,172 shares issued, respectively
852

 
852

Additional paid-in capital
736,872

 
755,629

Retained earnings, partially restricted
226,929

 
212,838

Accumulated other comprehensive loss
(4,393
)
 
(9,460
)
Treasury stock, at cost; 5,020,025 shares and 5,020,025 shares, respectively
(59,121
)
 
(59,120
)
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP"); 104,079 shares and 109,950 shares, respectively
(567
)
 
(599
)
Total Brookline Bancorp, Inc. stockholders' equity
900,572

 
900,140

Noncontrolling interest in subsidiary

 
10,479

Total stockholders' equity
900,572

 
910,619

Total liabilities and stockholders' equity
$
7,519,130

 
$
7,392,805


See accompanying notes to unaudited consolidated financial statements.
1

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
 
Three Months Ended March 31,
 
2019
 
2018
 
(In Thousands Except Share Data)
Interest and dividend income:
 
 
 
Loans and leases
$
80,672

 
$
67,272

Debt securities
3,236

 
3,323

Marketable and restricted equity securities
911

 
924

Short-term investments
267

 
120

Total interest and dividend income
85,086

 
71,639

Interest expense:
 
 
 
Deposits
15,948

 
7,099

Borrowed funds
6,139

 
5,049

Total interest expense
22,087

 
12,148

Net interest income
62,999

 
59,491

Provision for credit losses
1,353

 
641

Net interest income after provision for credit losses
61,646

 
58,850

Non-interest income:
 
 
 
Deposit fees
2,523

 
2,463

Loan fees
413

 
290

Loan level derivative income, net
1,745

 
866

Gain on investment securities, net
134

 
1,162

Gain on sales of loans and leases held-for-sale
289

 
299

Other
1,526

 
1,088

Total non-interest income
6,630

 
6,168

Non-interest expense:
 
 
 
Compensation and employee benefits
23,743

 
22,314

Occupancy
3,947

 
3,959

Equipment and data processing
4,661

 
4,618

Professional services
1,076

 
1,144

FDIC insurance
593

 
635

Advertising and marketing
1,069

 
1,057

Amortization of identified intangible assets
402

 
467

Merger and acquisition expense

 
2,905

Other
3,380

 
2,839

Total non-interest expense
38,871

 
39,938

Income before provision for income taxes
29,405

 
25,080

Provision for income taxes
6,895

 
5,652

Net income before noncontrolling interest in subsidiary
22,510

 
19,428

Less: net income attributable to noncontrolling interest in subsidiary
43

 
795

Net income attributable to Brookline Bancorp, Inc.
$
22,467

 
$
18,633

Earnings per common share:
 
 
 
Basic
$
0.28

 
$
0.24

Diluted
0.28

 
0.24

Weighted average common shares outstanding during the year:
 
 
 
Basic
79,658,583

 
77,879,593

Diluted
79,843,578

 
78,167,800

Dividends paid per common share
$
0.105

 
$
0.090



See accompanying notes to unaudited consolidated financial statements.
2

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Comprehensive Income
 
Three Months Ended March 31,
 
2019
 
2018
 
(In Thousands)
Net income before noncontrolling interest in subsidiary
$
22,510

 
$
19,428

 
 
 
 
Investment securities available-for-sale:
 
 
 
Unrealized securities holding gains (losses)
6,500

 
(7,401
)
Income tax (benefit) expense
(1,433
)
 
1,632

Net unrealized securities holding gains (losses) before reclassification adjustments, net of taxes
5,067

 
(5,769
)
Less reclassification adjustments for securities gains included in net income:
 
 
 
Loss on sales of securities, net

 
(68
)
Income tax benefit

 
15

Net reclassification adjustments for securities gains included in net income

 
(53
)
Net unrealized securities holding (losses) gains
5,067

 
(5,716
)
 
 
 
 
Comprehensive income
27,577

 
13,712

Less: Net income attributable to noncontrolling interest in subsidiary
43

 
795

Comprehensive income attributable to Brookline Bancorp, Inc.
$
27,534

 
$
12,917




See accompanying notes to unaudited consolidated financial statements.
3

Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Changes in Stockholders' Equity
Three Months Ended March 31, 2019 and 2018
 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Treasury
Stock
 
Unallocated
Common Stock
Held by ESOP
 
Total Brookline
Bancorp, Inc.
Stockholders'
Equity
 
Noncontrolling
Interest in
Subsidiary
 
Total Stockholders'
Equity
 
(In Thousands)
Balance at December 31, 2018
$
852

 
$
755,629

 
$
212,838

 
$
(9,460
)
 
$
(59,120
)
 
$
(599
)
 
$
900,140

 
$
10,479

 
$
910,619

Net income attributable to Brookline Bancorp, Inc. 

 

 
22,467

 

 

 

 
22,467

 

 
22,467

Net income attributable to noncontrolling interest in subsidiary

 

 

 

 

 

 

 
43

 
43

Common stock issued for acquisition

 

 

 

 

 

 

 

 

Issuance of noncontrolling interest

 

 

 

 

 

 

 

 

Other comprehensive income

 

 


 
5,067

 

 

 
5,067

 

 
5,067

Common stock dividends of $0.105 per share

 

 
(8,376
)
 

 

 

 
(8,376
)
 

 
(8,376
)
Dividend distribution to owners of noncontrolling interest in subsidiary

 
(930
)
 

 

 

 

 
(930
)
 

 
(930
)
Redemption of noncontrolling interest in subsidiary

 
(18,697
)
 

 

 

 

 
(18,697
)
 
(10,522
)
 
(29,219
)
Compensation under recognition and retention plan

 
814

 

 

 
(1
)
 

 
813

 

 
813

Common stock held by ESOP committed to be released (5,871 shares)

 
56

 

 

 

 
32

 
88

 

 
88

Balance at March 31, 2019
$
852

 
$
736,872

 
$
226,929

 
$
(4,393
)
 
$
(59,121
)
 
$
(567
)
 
$
900,572

 
$

 
$
900,572


 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Treasury
Stock
 
Unallocated
Common Stock
Held by ESOP
 
Total Brookline
Bancorp, Inc.
Stockholders'
Equity
 
Noncontrolling
Interest in
Subsidiary
 
Total Stockholders'
Equity
 
(In Thousands)
Balance at December 31, 2017
$
817

 
$
699,976

 
$
161,217

 
$
(5,950
)
 
$
(51,454
)
 
$
(776
)
 
$
803,830

 
$
8,753

 
$
812,583

Net income attributable to Brookline Bancorp, Inc. 

 

 
18,633

 

 

 

 
18,633

 

 
18,633

Net income attributable to noncontrolling interest in subsidiary

 

 

 

 

 

 

 
795

 
795

Common stock issued for acquisition
35

 
55,146

 

 

 

 

 
55,181

 

 
55,181

Issuance of noncontrolling interest

 

 

 

 

 

 

 
129

 
129

Other comprehensive income

 

 


 
(5,716
)
 

 

 
(5,716
)
 

 
(5,716
)
Common stock dividends of $0.09 per share

 

 
(6,916
)
 

 

 

 
(6,916
)
 

 
(6,916
)
Dividend distribution to owners of noncontrolling interest in subsidiary

 

 

 

 

 

 

 
(708
)
 
(708
)
Compensation under recognition and retention plans

 
633

 

 

 

 

 
633

 

 
633

Common stock held by ESOP committed to be released (8,094 shares)

 
88

 

 

 

 
44

 
132

 

 
132

Balance at March 31, 2018
$
852

 
$
755,843

 
$
172,934

 
$
(11,666
)
 
$
(51,454
)
 
$
(732
)
 
$
865,777

 
$
8,969

 
$
874,746





See accompanying notes to unaudited consolidated financial statements.
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Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
 
Three Months Ended March 31,
 
2019
 
2018
 
(In Thousands)
Cash flows from operating activities:
 
 
 
Net income attributable to Brookline Bancorp, Inc.
$
22,467

 
$
18,633

Adjustments to reconcile net income to net cash provided from operating activities:
 
 
 
Net income attributable to noncontrolling interest in subsidiary
43

 
795

Provision for credit losses
1,353

 
641

Origination of loans and leases held-for-sale
(5,511
)
 
(7,198
)
Proceeds from sales of loans and leases held-for-sale, net
8,109

 
9,362

Deferred income tax benefit
(390
)
 
(2,520
)
Depreciation of premises and equipment
1,782

 
1,801

Amortization of investment securities premiums and discounts, net
445

 
507

Amortization of deferred loan and lease origination costs, net
1,782

 
1,625

Amortization of identified intangible assets
402

 
467

Amortization of debt issuance costs
25

 
25

(Accretion) amortization of acquisition fair value adjustments, net
(704
)
 
1,185

Gain on sales of investment securities, net
(134
)
 
(1,162
)
Gain on sales of loans and leases held-for-sale
(289
)
 
(299
)
Write-down of OREO and other repossessed assets
49

 
197

Compensation under recognition and retention plans
861

 
682

ESOP shares committed to be released
88

 
132

Cash surrender value of bank-owned life insurance
(254
)
 
(254
)
Other assets
(12,219
)
 
(1,397
)
Accrued expenses and other liabilities
(1,926
)
 
6,143

Net cash provided from operating activities
15,979

 
29,365

 
 
 
 
Cash flows from investing activities:
 
 
 
Proceeds from sales of investment securities available-for-sale

 
1,470

Proceeds from maturities, calls, and principal repayments of investment securities available-for-sale
19,935

 
21,632

Purchases of investment securities available-for-sale

 
(49,108
)
Proceeds from maturities, calls, and principal repayments of investment securities held to maturity
1,475

 
1,158

Purchases of investment securities held-to-maturity
(500
)
 
(8,915
)
Proceeds from redemption/sales of restricted equity securities
7,958

 
1,230

Purchase of restricted equity securities
(399
)
 
(6,795
)
Proceeds from sales of loans and leases held-for-investment, net
3,408

 
285

Net increase in loans and leases
(92,280
)
 
(386,752
)
Acquisitions, net of cash and cash equivalents acquired

 
(25,126
)
Purchase of premises and equipment, net
(961
)
 
(1,827
)
Proceeds from sales of OREO and other repossessed assets
563

 
853

Net cash used for investing activities
(60,801
)
 
(451,895
)
 
 
 
(Continued)

 
 
 
 

See accompanying notes to unaudited consolidated financial statements.
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Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows (Continued)
 
Three Months Ended March 31,
 
2019
 
2018
 
(In Thousands)
Cash flows from financing activities:
 
 
 
Increase in demand checking, NOW, savings and money market accounts
48,526

 
165,925

Increase in certificates of deposit
118,694

 
153,091

Proceeds from FHLBB advances
1,621,000

 
3,250,390

Repayment of FHLBB advances
(1,675,357
)
 
(3,157,766
)
(Decrease) in other borrowed funds, net
(219
)
 
(14,054
)
Increase in mortgagors' escrow accounts, net
91

 
709

Proceeds from issuance of common stock
(1
)
 

Common stock issued for acquisition

 
55,181

Payment of dividends on common stock
(8,376
)
 
(6,916
)
Redemption of noncontrolling interest in subsidiary
(35,851
)
 

Proceeds from issuance of noncontrolling units

 
129

Payment of dividends to owners of noncontrolling interest in subsidiary
(930
)
 
(708
)
Net cash provided from financing activities
67,577

 
445,981

Net increase in cash and cash equivalents
22,755

 
23,451

Cash and cash equivalents at beginning of period
89,584

 
61,005

Cash and cash equivalents at end of period
$
112,339

 
$
84,456

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid during the period for:
 
 
 
Interest on deposits, borrowed funds and subordinated debt
$
23,230

 
$
12,880

Income taxes
8,774

 
928

Non-cash investing activities:
 
 
 
Transfer from loans to other real estate owned
505

 
594

Acquisition of First Commons Bank, N.A.:
 
 
 
Fair value of assets acquired, net of cash and cash equivalents acquired
$

 
$
292,025

Fair value of liabilities assumed

 
278,988




See accompanying notes to unaudited consolidated financial statements.
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Table of Contents

BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
Overview
Brookline Bancorp, Inc. (the "Company") is a bank holding company (within the meaning of the Bank Holding Company Act of 1956, as amended) and the parent of Brookline Bank, a Massachusetts-chartered savings bank; Bank Rhode Island ("BankRI"), a Rhode Island-chartered financial institution; and First Ipswich Bank ("First Ipswich"), a Massachusetts-chartered trust company (collectively referred to as the "Banks"). The Banks are all members of the Federal Reserve System. The Company is also the parent of Brookline Securities Corp. ("BSC"). The Company's primary business is to provide commercial, business and retail banking services to its corporate, municipal and retail customers through the Banks and its non-bank subsidiaries.
Brookline Bank, which includes its wholly-owned subsidiaries BBS Investment Corp., Longwood Securities Corp. ("LSC") and Eastern Funding LLC ("Eastern Funding"), operates 25 full-service banking offices in the greater Boston metropolitan area with 2 additional lending offices. As of December 31, 2018, Brookline Bank, a wholly-owned subsidiary of the Company, held an 84.07 percent ownership interest its subsidiary, Eastern Funding. As previously announced, on January 4, 2019, Brookline Bank completed the purchase of the remaining 15.93 percent interest in Eastern Funding for a total cash consideration of $35.9 million. BankRI, which includes its wholly-owned subsidiaries, Acorn Insurance Agency, BRI Realty Corp., Macrolease Corporation ("Macrolease"), BRI Investment Corp. and its wholly-owned subsidiary, BRI MSC Corp., operates 20 full-service banking offices in the greater Providence, Rhode Island area. First Ipswich, which includes its wholly-owned subsidiaries First Ipswich Insurance Agency and First Ipswich Securities II Corp., operates 6 full-service banking offices on the north shore of eastern Massachusetts.
The Company's activities include acceptance of commercial, municipal and retail deposits, origination of mortgage loans on commercial and residential real estate located principally in all New England states, 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.
The Company and the Banks are supervised, examined and regulated by the Board of Governors of the Federal Reserve System ("FRB"). As a Massachusetts-chartered savings bank and trust company respectively, Brookline Bank and First Ipswich are 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 subject to regulation under the laws of the State of Rhode Island and the jurisdiction of the Banking Division of the Rhode Island Department of Business Regulation.
The Federal Deposit Insurance Corporation ("FDIC") offers insurance coverage on all deposits up to $250,000 per depositor at each of the Banks. As FDIC-insured depository institutions, the Banks are also secondarily subject to supervision, examination and regulation by the FDIC. Additionally, as a Massachusetts-chartered savings bank, the deposits of Brookline Bank are insured by the Depositors Insurance Fund ("DIF"), a private industry-sponsored insurance company. The DIF insures savings bank deposits in excess of the FDIC insurance limits. As such, Brookline Bank offers 100% insurance on all deposits as a result of a combination of insurance from the FDIC and the DIF. Brookline Bank is required to file reports with the DIF.
Basis of Financial Statement Presentation
The unaudited consolidated financial statements of the Company presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“GAAP”). In the opinion of Management, 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, 2018

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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Table of Contents
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 loan and lease losses, the determination of fair market values of assets and liabilities, including acquired loans and leases, the review of goodwill and intangibles 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
In April 2019, FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments to improve the Codifications or correct any unintended application.  Codification improvements to Update 2016-13 (Topic 326) will be effective on the same date as requirements in 2016-13.  Codification improvements to Update 2017-12 (Topic 815) will be effective as of the beginning of the first annual period beginning after the issuance date and Update 2016-01 (Topic 825) will be effective for fiscal years beginning after December 15, 2019.  Management believes that this ASU does apply and has not determined the impact, if any, as of March 31, 2019.
In February 2016, FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This ASU requires lessees to record most leases on their balance sheet but recognize expenses on their income statements in a manner similar to current accounting.  Subsequently, the FASB has issued ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 to update provisions to ASU 2016-02.  The company has adopted all of the above mentioned ASU's regarding leases as of January 1, 2019.  The standard had a material impact on our consolidated balance sheet by recognizing right-of-use asset operating leases and operating lease liabilities on the balance sheet.  However, there was no impact on our consolidated income statement as the timing of the expense recognition has not changed.  Additional details can be found in Note 12.
In August 2018, FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), to add additional guidance to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement by providing guidance for determining when the arrangement includes a software license. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption of the amendments in this update is permitted, including adoption in any interim period, for all entities. Management is still determining the impact of this ASU, if any, as of March 31, 2019.
In August 2018, FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20), to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This ASU is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted. Management believes that this ASU does apply and has not determined the impact, if any, as of March 31, 2019.
In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management believes that this ASU does apply and has not determined the impact, if any, as of March 31, 2019.
In June 2016, the FASB issued ASU 2016-13, Financial instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The intent of this ASU is to replace the current GAAP method of calculating credit losses.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

Current GAAP uses a higher threshold at which likely losses can be calculated and recorded. The new process will require institutions to account for likely losses that originally would not have been part of the calculation. The calculation will incorporate future forecasting in addition to historical and current measures. For public entities that file with the SEC, this ASU is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This ASU must be applied prospectively to debt securities marked as other than temporarily impaired. A retrospective approach will be applied cumulatively to retained earnings. Early adoption is permitted as of the fiscal years beginning after December 15, 2018. In November 2018, FASB issued ASU 2018-19 to clarify that operating lease receivables are not in scope of the credit losses standard. Management has determined that ASU 2016-13 does apply, but has not determined the impact, if any, as of March 31, 2019. In preparation for the adoption in 2020 of this ASU, management formed a steering committee to oversee the adoption of ASU 2016-13. The steering committee, along with a project team, has developed an approach for implementation and has selected a third party software service provider. The project team is in the testing phase of the third party software.

9

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

(3) Investment Securities
The following tables set forth investment securities available-for-sale, held-to-maturity and equity securities held-for-trading at the dates indicated:
 
At March 31, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
(In Thousands)
Investment securities available-for-sale:
 
 
 
 
 
 
 
GSE debentures
$
183,607

 
$
640

 
$
1,402

 
$
182,845

GSE CMOs
103,113

 
20

 
3,015

 
100,118

GSE MBSs
161,809

 
300

 
2,337

 
159,772

SBA commercial loan asset-backed securities
43

 

 

 
43

Corporate debt obligations
32,584

 
48

 
277

 
32,355

U.S. Treasury bonds
13,822

 
111

 
46

 
13,887

Total investment securities available-for-sale
$
494,978

 
$
1,119

 
$
7,077

 
$
489,020

Investment securities held-to-maturity:
 
 
 
 
 
 
 
GSE debentures
$
50,551

 
$
70

 
$
481

 
$
50,140

GSEs MBSs
11,080

 

 
238

 
10,842

Municipal obligations
51,563

 
201

 
157

 
51,607

Foreign government obligations
500

 

 

 
500

Total investment securities held-to-maturity
$
113,694

 
$
271

 
$
876

 
$
113,089

Equity securities held-for-trading
 
 
 
 
 
 
$
4,341

 
December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
(In Thousands)
Investment securities available-for-sale:
 
 
 
 
 
 
 
GSE debentures
$
184,072

 
$
99

 
$
3,092

 
$
181,079

GSE CMOs
107,363

 
17

 
4,250

 
103,130

GSE MBSs
169,334

 
124

 
4,369

 
165,089

SBA commercial loan asset-backed securities
51

 

 

 
51

Corporate debt obligations
40,618

 

 
910

 
39,708

U.S. Treasury bonds
13,812

 
65

 
141

 
13,736

Total investment securities available-for-sale
$
515,250

 
$
305

 
$
12,762

 
$
502,793

Investment securities held-to-maturity:
 
 
 
 
 
 
 
GSE debentures
$
50,546

 
$
22

 
$
967

 
$
49,601

GSEs MBSs
11,426

 

 
295

 
11,131

Municipal obligations
52,304

 
10

 
716

 
51,598

Foreign government obligations
500

 

 

 
500

Total investment securities held-to-maturity
$
114,776

 
$
32

 
$
1,978

 
$
112,830

Equity securities held-for-trading
 
 
 
 
 
 
$
4,207

As of March 31, 2019, the fair value of all investment securities available-for-sale was $489.0 million, with net unrealized losses of $6.0 million, compared to a fair value of $502.8 million and net unrealized losses of $12.5 million as of December 31, 2018. As of March 31, 2019, $406.9 million, or 83.2% of the portfolio, had gross unrealized losses of $7.1 million, compared to $466.7 million, or 92.8% of the portfolio, with gross unrealized losses of $12.8 million as of December 31, 2018.

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Table of Contents
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

As of March 31, 2019, the fair value of all investment securities held-to-maturity was $113.1 million, with net unrealized losses of $0.6 million, compared to a fair value of $112.8 million with net unrealized losses of $1.9 million as of December 31, 2018. As of March 31, 2019, $80.8 million, or 71.5% of the portfolio, had gross unrealized losses of $0.9 million. As of December 31, 2018, $102.1 million, or 90.5% of the portfolio had gross unrealized losses of $2.0 million.
As of March 31, 2019, the Company reported a fair value of $4.3 million of equity securities held-for-trading. As of December 31, 2018, the Company reported a fair value of $4.2 million of equity securities held-for-trading.
Investment Securities as Collateral
As of March 31, 2019 and December 31, 2018, respectively, $420.8 million and $442.5 million of investment securities were 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, 2019 and December 31, 2018.
Other-Than-Temporary Impairment ("OTTI")
Investment securities as of March 31, 2019 and December 31, 2018 that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer are as follows:
 
At March 31, 2019
 
Less than
Twelve Months
 
Twelve Months
or Longer
 
Total
 
Estimated
Fair Value
 
Unrealized
Losses
 
Estimated
Fair Value
 
Unrealized
Losses
 
Estimated
Fair Value
 
Unrealized
Losses
 
(In Thousands)
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
GSE debentures
$

 
$

 
$
140,316

 
$
1,402

 
$
140,316

 
$
1,402

GSE CMOs

 

 
99,635

 
3,015

 
99,635

 
3,015

GSE MBSs

 

 
135,892

 
2,337

 
135,892

 
2,337

SBA commercial loan asset-backed securities

 

 
43

 

 
43

 

Corporate debt obligations

 

 
26,189

 
277

 
26,189

 
277

U.S. Treasury bonds

 

 
4,819

 
46

 
4,819

 
46

Temporarily impaired investment securities available-for-sale

 

 
406,894

 
7,077

 
406,894

 
7,077

Investment securities held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
GSE debentures

 

 
41,141

 
481

 
41,141

 
481

GSEs MBSs

 

 
10,756

 
238

 
10,756

 
238

Municipal obligations
1,444

 
2

 
27,507

 
155

 
28,951

 
157

Temporarily impaired investment securities held-to-maturity
1,444

 
2

 
79,404

 
874

 
80,848

 
876

Total temporarily impaired investment securities
$
1,444


$
2


$
486,298


$
7,951


$
487,742


$
7,953


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BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

 
December 31, 2018
 
Less than
Twelve Months
 
Twelve Months
or Longer
 
Total
 
Estimated
Fair Value
 
Unrealized
Losses
 
Estimated
Fair Value
 
Unrealized
Losses
 
Estimated
Fair Value
 
Unrealized
Losses
 
(In Thousands)
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
GSE debentures
$
25,780

 
$
191

 
$
130,284

 
$
2,901

 
$
156,064

 
$
3,092

GSE CMOs

 

 
102,630

 
4,250

 
102,630

 
4,250

GSE MBSs
21,487

 
113

 
138,051

 
4,256

 
159,538

 
4,369

SBA commercial loan asset-backed securities

 

 
51

 

 
51

 

Corporate debt obligations
10,019

 
93

 
29,689

 
817

 
39,708

 
910

U.S. Treasury bonds
3,927

 
37

 
4,753

 
104

 
8,680

 
141

Temporarily impaired investment securities available-for-sale
61,213

 
434

 
405,458

 
12,328

 
466,671

 
12,762

Investment securities held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
GSE debentures

 

 
40,653

 
967

 
40,653

 
967

GSEs MBSs

 

 
11,080

 
295

 
11,080

 
295

Municipal obligations
14,813

 
107

 
35,058

 
609

 
49,871

 
716

Foreign government obligations

 

 
500

 

 
500

 

Temporarily impaired investment securities held-to-maturity
14,813

 
107

 
87,291

 
1,871

 
102,104

 
1,978

Total temporarily impaired investment securities
$
76,026

 
$
541

 
$
492,749

 
$
14,199

 
$
568,775

 
$
14,740

The Company performs regular analysis of the investment securities available-for-sale portfolio to determine whether a decline in fair value indicates that an investment security is OTTI. In making these OTTI determinations, management considers, among other factors, the length of time and extent to which the fair value has been less than amortized cost; projected future cash flows; credit subordination and the creditworthiness; capital adequacy and near-term prospects of the issuers.
Management also considers the Company's capital adequacy, interest-rate risk, liquidity and business plans in assessing whether it is more likely than not that the Company will sell or be required to sell the investment securities before recovery. If the Company determines that a decline in fair value is OTTI and that it is more likely than not that the Company will not sell or be required to sell the investment security before recovery of its amortized cost, the credit portion of the impairment loss is recognized in the Company's unaudited consolidated statement of income and the noncredit portion is recognized in accumulated other comprehensive income. The credit portion of the OTTI impairment represents the difference between the amortized cost and the present value of the expected future cash flows of the investment security. If the Company determines that a decline in fair value is OTTI and it is more likely than not that it will sell or be required to sell the investment security before recovery of its amortized cost, the entire difference between the amortized cost and the fair value of the security will be recognized in the Company's unaudited consolidated statement of income.
Investment Securities Available-For-Sale Impairment Analysis
The following discussion summarizes, by investment security type, the basis for evaluating if the applicable investment securities within the Company’s available-for-sale portfolio were OTTI as of March 31, 2019. Based on the analysis below and the determination that, it is more likely than not that the Company will not sell or be required to sell the investment securities before recovery of its amortized cost. The Company's ability and intent to hold these investment securities until recovery is supported by the Company's strong capital and liquidity positions as well as its historically low portfolio turnover. As such, management has determined that the investment securities are not OTTI as of March 31, 2019. If market conditions for investment securities worsen or the creditworthiness of the underlying issuers deteriorates, it is possible that the Company may recognize additional OTTI in future periods.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

U.S. Government-Sponsored Enterprises
The Company invests in securities issued by U.S. Government-sponsored enterprises ("GSEs"), including GSE debentures, mortgage-backed securities ("MBSs"), and collateralized mortgage obligations ("CMOs"). GSE securities include obligations issued by the Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), the Government National Mortgage Association ("GNMA"), the FHLBB and the Federal Farm Credit Bank. As of March 31, 2019, only GNMA MBSs and CMOs, and Small Business Administration ("SBA") commercial loan asset-backed securities in our available-for-sale portfolio with an estimated fair value of $19.7 million were backed explicitly by the full faith and credit of the U.S. Government, compared to $20.6 million as of December 31, 2018.
As of March 31, 2019, the Company owned 60 GSE debentures with a total fair value of $182.8 million, and a net unrealized loss of $0.8 million. As of December 31, 2018, the Company held 60 GSE debentures with a total fair value of $181.1 million, with a net unrealized loss of $3.0 million. As of March 31, 2019, 46 of the 60 securities in this portfolio were in an unrealized loss position. As of December 31, 2018, 51 of the 60 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA/SBA) guarantee of the U.S Government. During the three months ended March 31, 2019, the Company did not purchase any GSE debentures. This compares to $33.9 million purchased during the same period in 2018.
As of March 31, 2019, the Company owned 61 GSE CMOs with a total fair value of $100.1 million and a net unrealized loss of $3.0 million. As of December 31, 2018, the Company held 61 GSE CMOs with a total fair value of $103.1 million with a net unrealized loss of $4.2 million. As of March 31, 2019, 46 of the 61 securities in this portfolio were in an unrealized loss position. As of December 31, 2018, 46 of the 61 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government. During the three months ended March 31, 2019 and 2018, the Company did not purchase any GSE CMOs.
As of March 31, 2019, the Company owned 160 GSE MBSs with a total fair value of $159.8 million and a net unrealized loss of $2.0 million. As of December 31, 2018, the Company held 165 GSE MBSs with a total fair value of $165.1 million with a net unrealized loss of $4.2 million. As of March 31, 2019, 83 of the 160 securities in this portfolio were in an unrealized loss position. As of December 31, 2018, 93 of the 165 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government. During the three months ended March 31, 2019, the Company did not purchase any GSE MBSs. This compares to $15.2 million purchased during the same period in 2018.
SBA Commercial Loan Asset-Backed
As of March 31, 2019, the Company owned 4 SBA securities with a total fair value of $43.0 thousand, which approximated amortized cost. As of December 31, 2018, the Company owned 4 SBA securities with a total fair value of $51.0 thousand, which approximated amortized cost. As of March 31, 2019 and December 31, 2018, all 4 of the securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the explicit guarantee of the U.S Government. During the three months ended March 31, 2019 and 2018, the Company did not purchase any SBA securities.
Corporate Obligations
The Company may invest in high-quality corporate obligations to provide portfolio diversification and improve the overall yield on the portfolio. As of March 31, 2019, the Company held 10 corporate obligation securities with a total fair value of $32.4 million and a net unrealized loss of $0.2 million. As of December 31, 2018, the Company held 11 corporate obligation securities with a total fair value of $39.7 million and a net unrealized loss of $0.9 million. As of March 31, 2019, 7 of the 10 securities in this portfolio were in an unrealized loss position. As of December 31, 2018, all 11 of the securities in this portfolio were in an unrealized loss position. Full collection of the obligations is expected because the financial condition of the issuers is sound, they have not defaulted on scheduled payments, the obligations are rated investment grade, and the Company has the ability and intent to hold the obligations for a period of time to recover the amortized cost. During the three months ended March 31, 2019 and 2018, the Company did not purchase any corporate obligations.

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Table of Contents
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

U.S. Treasury Bonds
The Company invests in securities issued by the U.S. government. As of March 31, 2019, the Company owned 3 U.S. Treasury bonds with a total fair value of $13.9 million and an unrealized loss of $0.1 million. This compares to 3 U.S. Treasury bonds with a total fair value of $13.7 million and an unrealized loss of $0.1 million as of December 31, 2018. During the three months ended March 31, 2019 and 2018, the Company did not purchase any U.S. Treasury bonds.
Equity Securities Held-for-Trading
From time to time, the Company will invest in equity securities held-for-trading. As of March 31, 2019 and December 31, 2018, the Company owned 3 equity securities held-for-trading with a fair value of $4.3 million and $4.2 million, respectively.
Investment Securities Held-to-Maturity Impairment Analysis
The following discussion summarizes by investment security type, the basis for evaluating if the applicable investment securities within the Company's held-to-maturity portfolio were OTTI at March 31, 2019. Management has the ability and the intent to hold the securities until maturity.
U.S. Government-Sponsored Enterprises
As of March 31, 2019, the Company owned 17 GSE debentures with a total fair value of $50.1 million and a net unrealized loss of $0.4 million. As of December 31, 2018, the Company owned 17 GSE debentures with a total fair value of $49.6 million and an unrealized loss of $0.9 million. As of March 31, 2019 and December 31, 2018, 14 of the 17 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government. During the three months ended March 31, 2019, the Company did not purchase any GSE debentures as compared to the same period in 2018, when the Company purchased a total of $8.9 million in GSE debentures.
As of March 31, 2019, the Company owned 11 GSE MBSs with a total fair value of $10.8 million and an unrealized loss of $0.2 million. As of December 31, 2018, the Company owned 11 GSE MBSs with a total fair value of $11.1 million and an unrealized loss of $0.3 million. As of March 31, 2019 and December 31, 2018, 8 of the 11 securities in this portfolio were in an unrealized loss position. All securities are performing and backed by the implicit (FHLB/FNMA/FHLMC) or explicit (GNMA) guarantee of the U.S Government. During the three months ended March 31, 2019 and 2018, the Company did not purchase any GSE MBSs.
Municipal Obligations
The Company invests in certain state and municipal securities with high credit ratings for portfolio diversification and tax planning purposes. As of March 31, 2019, the Company owned 97 municipal obligation securities with a total fair value of $51.6 million and a net unrealized loss of $44 thousand. As of December 31, 2018, the Company owned 98 municipal obligation securities with a total fair value of $51.6 million and an unrealized loss of $0.7 million. As of March 31, 2019, 53 of the 97 securities in this portfolio were in an unrealized loss position as compared to December 31, 2018, when 94 of the 98 securities were in an unrealized loss position. During the three months ended March 31, 2019 and 2018, the Company did not purchase any municipal obligations.
Foreign Government Obligations
As of March 31, 2019 and December 31, 2018, the Company owned 1 foreign government obligation security with a fair value of $0.5 million, which approximated cost. As of March 31, 2019 and December 31, 2018 respectively, the security was in an unrealized loss position. During the three months ended March 31, 2019 the Company repurchased the foreign government obligation that had matured as compared to the same period in 2018, when the Company did not purchase any foreign government obligations.

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BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

Portfolio Maturities
The final stated maturities of the debt securities are as follows for the periods indicated:
 
At March 31, 2019
 
At December 31, 2018
 
Amortized
Cost
 
Estimated
Fair Value
 
Weighted
Average
Rate
 
Amortized
Cost
 
Estimated
Fair Value
 
Weighted
Average
Rate
 
(Dollars in Thousands)
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Within 1 year
$
4,033

 
$
4,021

 
2.14
%
 
$
12,041

 
$
12,007

 
2.03
%
After 1 year through 5 years
199,200

 
198,209

 
2.13
%
 
195,701

 
192,692

 
2.14
%
After 5 years through 10 years
106,738

 
105,701

 
2.20
%
 
115,665

 
112,819

 
2.18
%
Over 10 years
185,007

 
181,089

 
2.16
%
 
191,843

 
185,275

 
2.17
%
 
$
494,978

 
$
489,020

 
2.16
%
 
$
515,250

 
$
502,793

 
2.16
%
Investment securities held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
Within 1 year
$
7,123

 
$
7,117

 
1.00
%
 
$
7,640

 
$
7,618

 
1.17
%
After 1 year through 5 years
75,544

 
75,185

 
1.90
%
 
72,735

 
71,492

 
1.84
%
After 5 years through 10 years
20,032

 
20,031

 
2.08
%
 
23,025

 
22,640

 
2.20
%
Over 10 years
10,995

 
10,756

 
2.03
%
 
11,376

 
11,080

 
2.13
%
 
$
113,694

 
$
113,089

 
1.89
%
 
$
114,776

 
$
112,830

 
1.89
%
Actual maturities of debt securities will differ from those presented above since certain obligations amortize and may also provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty. MBSs and CMOs are included above based on their final stated maturities; the actual maturities, however, may occur earlier due to anticipated prepayments and stated amortization of cash flows.
As of March 31, 2019, issuers of debt securities with an estimated fair value of $19.5 million had the right to call or prepay the obligations. Of the $19.5 million, approximately $8.5 million matures in 1 - 5 years, $11.0 million matures in 6 - 10 years, and none mature after ten years. As of December 31, 2018, issuers of debt securities with an estimated fair value of approximately $19.1 million had the right to call or prepay the obligations. Of the $19.1 million, $8.4 million matures in 1-5 years, $10.7 million matures in 6-10 years, and none mature after ten years.
Security Sales
On February 3, 2017, the Company, through BSC, received $319 in cash and 14.876 shares of Community Bank Systems, Inc. (“CBU”) common stock in exchange for each of the 9,721 shares of Northeast Retirement Services, Inc. (“NRS”) stock held by BSC. The exchange was completed in accordance with the merger agreement entered into between NRS and CBU. As part of the merger agreement, the Company was restricted to selling 5,071 shares of CBU per day in the open market. During the quarter ended March 31, 2017, the Company completed the sale of all the CBU shares acquired in the merger. When securities were sold, the adjusted cost of the specific security sold was used to compute the gain or loss on the sale.
On March 6, 2018, the Company, through its wholly owned subsidiary, BSC, received $0.6 million in cash and 11,303 shares of CBU common stock as settlement for the indemnification escrow on the 12 month anniversary date of the merger between NRS and CBU. The Company subsequently sold all 11,303 shares of the CBU stock and recognized a gain on the sale of $0.6 million.
During the month of March 2018, the Company, through Brookline Bank’s wholly owned subsidiary, LSC, sold three trust preferred securities with a book value of $1.5 million for a loss of $0.1 million. The table below includes the activity with respect to the sale of the trust preferred securities and restricted equity securities.
There were no securities sold during the three months ended March 31, 2019.

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Table of Contents
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

Sales of investment and restricted equity securities are summarized as follows:
 
Three Months Ended March 31, 2019

Three Months Ended March 31, 2018
 
(In Thousands)
Proceeds from sale of trust preferred, marketable and restricted equity securities
$

 
$
2,700

 
 
 
 
Gross gains from securities sales

 
1,230

Gross losses from securities sales

 
(68
)
Gain on sales of securities, net
$

 
$
1,162

(4) Loans and Leases
The following tables present loan and lease balances and weighted average coupon rates for the originated and acquired loan and lease portfolios at the dates indicated:
 
At March 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
$
2,244,088

 
4.66
%
 
$
111,419

 
4.65
%
 
$
2,355,507

 
4.66
%
Multi-family mortgage
808,583

 
4.56
%
 
47,120

 
4.57
%
 
855,703

 
4.56
%
Construction
180,775

 
5.61
%
 
18,483

 
6.74
%
 
199,258

 
5.72
%
Total commercial real estate loans
3,233,446

 
4.69
%
 
177,022

 
4.85
%
 
3,410,468

 
4.70
%
Commercial loans and leases:
 
 
 
 
 
 
 
 
 
 
 

Commercial
719,992

 
5.01
%
 
21,585

 
5.30
%
 
741,577

 
5.02
%
Equipment financing
993,138

 
7.69
%
 
2,725

 
5.98
%
 
995,863

 
7.68
%
Condominium association
49,142

 
4.78
%
 

 
%
 
49,142

 
4.78
%
Total commercial loans and leases
1,762,272

 
6.51
%
 
24,310

 
5.38
%
 
1,786,582

 
6.50
%
Consumer loans:
 
 
 
 
 
 
 
 
 
 
 

Residential mortgage
649,491

 
4.14
%
 
126,087

 
4.50
%
 
775,578

 
4.20
%
Home equity
333,474

 
5.13
%
 
42,652

 
5.44
%
 
376,126

 
5.16
%
Other consumer
39,337

 
5.20
%
 
106

 
17.80
%
 
39,443

 
5.23
%
Total consumer loans
1,022,302

 
4.50
%
 
168,845

 
4.75
%
 
1,191,147

 
4.54
%
Total loans and leases
$
6,018,020

 
5.19
%
 
$
370,177

 
4.84
%
 
$
6,388,197

 
5.17
%

16

Table of Contents
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

 
At December 31, 2018
 
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
$
2,208,904

 
4.61
%
 
$
121,821

 
4.62
%
 
$
2,330,725

 
4.61
%
Multi-family mortgage
799,813

 
4.51
%
 
47,898

 
4.58
%
 
847,711

 
4.51
%
Construction
151,138

 
5.62
%
 
22,162

 
6.74
%
 
173,300

 
5.76
%
Total commercial real estate loans
3,159,855

 
4.63
%
 
191,881

 
4.85
%
 
3,351,736

 
4.64
%
Commercial loans and leases:
 
 
 
 
 
 
 
 
 
 
 

Commercial
712,630

 
4.96
%
 
23,788

 
5.39
%
 
736,418

 
4.97
%
Equipment financing
978,840

 
7.61
%
 
3,249

 
5.97
%
 
982,089

 
7.60
%
Condominium association
50,451

 
4.70
%
 

 
%
 
50,451

 
4.70
%
Total commercial loans and leases
1,741,921

 
6.44
%
 
27,037

 
5.46
%
 
1,768,958

 
6.43
%
Consumer loans:
 
 
 
 
 
 
 
 
 
 
 

Residential mortgage
653,059

 
4.09
%
 
129,909

 
4.45
%
 
782,968

 
4.15
%
Home equity
331,014

 
5.05
%
 
45,470

 
5.39
%
 
376,484

 
5.09
%
Other consumer
23,260

 
5.55
%
 
110

 
17.81
%
 
23,370

 
5.61
%
Total consumer loans
1,007,333

 
4.44
%
 
175,489

 
4.70
%
 
1,182,822

 
4.48
%
Total loans and leases
$
5,909,109

 
5.13
%
 
$
394,407

 
4.83
%
 
$
6,303,516

 
5.11
%
The net unamortized deferred loan origination fees and costs included in total loans and leases were $15.7 million and $15.6 million as of March 31, 2019 and December 31, 2018, respectively.
The Banks and subsidiaries lend primarily in all New England states, with the exception of equipment financing, 26.6% of which is in the greater New York and New Jersey metropolitan area and 73.4% of which is in other areas in the United States of America as of March 31, 2019.
Accretable Yield for the Acquired Loan Portfolio
The following table summarizes activity in the accretable yield for the acquired loan portfolio for the periods indicated:
 
Three Months Ended March 31,
 
2019

2018
 
(In Thousands)
Balance at beginning of period
$
7,905

 
$
10,522

Accretion
(800
)
 
(1,185
)
Reclassification from nonaccretable difference as a result of changes in expected cash flows
61

 
316

Balance at end of period
$
7,166

 
$
9,653

On a quarterly basis, subsequent to acquisition, management reforecasts the expected cash flows for acquired ASC 310-30 loans, taking into account prepayment speeds, probability of default and loss given defaults. Management compares cash flow projections per the reforecast to the original cash flow projections and determines whether any reduction in cash flow expectations are due to deterioration, or if the change in cash flow expectation is related to noncredit events. This cash flow analysis is used to evaluate the need for a provision for loan and lease losses and/or prospective yield adjustments. During the three months ended March 31, 2019 and 2018, accretable yield adjustments totaling $61 thousand and $316 thousand, respectively, were made for certain loan pools. These accretable yield adjustments, which are subject to continued re-assessment, will be recognized over the remaining lives of those pools.

17

Table of Contents
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements (Continued)

Loans and Leases Pledged as Collateral
As of March 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018.
(5) Allowance for Loan and Lease Losses
The following tables present the changes in the allowance for loan and lease losses and the recorded investment in loans and leases by portfolio segment for the periods indicated:
 
Three Months Ended March 31, 2019
 
Commercial
Real Estate
 
Commercial
 
Consumer
 
Total
 
(In Thousands)
Balance at December 31, 2018
$
28,187

 
$
25,283

 
$
5,222

 
$
58,692

Charge-offs

 
(2,512
)
 
(30
)
 
(2,542
)
Recoveries

 
388

 
53

 
441

Provision for loan and lease losses
162

 
1,081

 
207

 
1,450

Balance at March 31, 2019
$
28,349

 
$
24,240

 
$
5,452

 
$
58,041

 
Three Months Ended March 31, 2018
 
Commercial
Real Estate
 
Commercial
 
Consumer
 
Total
 
(In Thousands)
Balance at December 31, 2017
$
27,112

 
$
26,333

 
$
5,147

 
$
58,592