Carl Carlson
Thank you, Paul. At the end of the quarter, total assets stood at $11.5 billion, reflecting a decrease of $385.5 million from the end of the year. This reduction was due to a deliberate decrease in both cash equivalents and components of our loan portfolio. Specifically, loans declined by $136.6 million with commercial real estate and equipment finance dropping by $135 million and $32 million dollars respectively, while commercial loans saw growth.
Owner occupied commercial real estate fell by $10 million and the investment commercial real estate portfolio decreased by $125 million bringing the percentage of investment commercial real estate to total risk-based capital to 375% at year end, that quarter end. The decline in equipment finance was primarily driven by the continued runoff of the specialty vehicle portfolio, which decreased by $29 million during the quarter to $267 million.
On the funding side, customer deposits increased by $113 million while broker deposits and borrowings were reduced by [$40768] million. Stockholders' equity rose by $18 million due to the retained earnings and lower mark to market on the available for sale portfolio with tangible book value per share rising $0.22 to $11.03 from December 31.
The net interest margin improved 10 basis points of 3.22%, driven by lower funding costs. However, this was partially offset by a decline of $50 million in average interest earning assets. Consequently, net interest income reached $85.8 million, an increase of $800,000 from the previous quarter.
Lower derivative activity resulted in lower fee for the quarter, bringing total revenues for the quarter to $91.5 million, consistent with Q4. The provision for credit losses was $6 million, $2 million higher than Q4. We had had $7.6 million in that charge offs, $5.2 million were previously reserved for. The reserve coverage slightly increased to 129 basis points total loans.
The weightings of the Moody's economic scenarios remained at 40% baseline, 35% moderate recession, and 25% stronger near-term growth, which are consistent with the weightings at year end. We have evaluated the post quarter end increase in economic uncertainty and will continue to monitor how this uncertainty is captured by future scenarios and adjust as necessary.
Non-interest expense, excluding merger charges was $59 million for Q1, a decrease of $1.3 million from Q4 due to lower compensation and marketing costs. Merger expenses for the quarter were $971,000 and are largely non-tax deductible, contributing to a higher effective tax rate.
Excluding merger charges, operating EPS was $0.22 per share. Yesterday, the board approved maintaining our quarterly dividend at $0.135 per share to be paid on May 23 to stockholders of record on May 9. Looking forward, the interest rate environment, the potential impact of tariffs and how our customers respond remains uncertain, and the need to continually adapt is greater than ever.
While modest improvements to the net margin are increasingly uncertain, we are currently estimating an increase of 4 basis points to 8 basis points in Q2. This is dependent upon market conditions, deposit flows, in the direction, timing, and magnitude of future actions by the Federal Reserve.
We continue to anticipate growth in the loan portfolio to be in the low single digits for the balance of 2025 as growth in commercial and consumer loans will be tempered by the runoff of specialty vehicle and lower commercial real estate activity. On the deposit side, we anticipate growth of 4% to 5%, with growth generally favoring interest bearing accounts.
[Non-interest] income is projected to be in the range of $5.5 million to $6.5 million per quarter, although components may vary significantly. We are managing expenses to $247 million or less for the full year, excluding merger-related costs. Our effective tax rate is expected to be in the range of 24.25%, excluding the impact of non-deductible merger charges.
Regarding the merger of equals with Berkshire Hills Bancorp, we have added slide 11 into our earnings presentation, providing an update. Regulatory applications have been filed, and we will respond to comments or follow-up questions from the regulators if and as they arise. On April 8, the S4 and proxy went effective with the SEC, and mailing commenced the stockholders of both entities.
The stockholder meetings for both Brookline and Berkshire are scheduled for May 21. We anticipate closing the transaction in the second half of 2025, which will include the merger of all four bank charters. While we are encouraged by the recent regulatory approval process experienced by other institutions, we will make no predictions or observations with respect to our own applications.
At the time of the transaction announcement, we had not decided on a core banking platform. I'm pleased to say the diligence was completed and the core banking platform and related technologies have been determined, with conversion planning well underway. System conversions are scheduled for February.
As you can appreciate, we are unable to comment further on the transaction beyond what has been publicly disclosed. This concludes my formal comments and we'll turn it back to Paul.
Paul Perrault
Thanks, Carl and [Lydia], we will now open it up for questions.
Operator
(Operator Instructions)
Mark Fitzgibbon, Piper Sandler
Mark Fitzgibbon
Hey guys, good afternoon.
Carl Carlson
Hi Mark.
Mark Fitzgibbon
I was just curious, and this may be a question for you, Carl, trying to get a sense for the impact of a '25 base point Fed rate cut. What do you think that means for the margin on a standalone basis, pre-Berkshire Hills
Carl Carlson
Well I think it all depends on what happens with the rest of the yield curve naturally. So if you get that slightly steepening of the yield curve, just shut cut at the short end, that would certainly be beneficial to us. But again, it's highly dependable on what the market is like and what is going on with the market and why that cut is happening. But generally, just from a modeling perspective and a cut in short term rates and longer term or midterm rates staying where they are, that's beneficial.
Mark Fitzgibbon
Okay, for your guidance though of 4 basis points to 8 basis points out, that doesn't assume any Fed Rate cuts, correct?
Carl Carlson
But that does not reflect Fed Rate cuts in the second quarter.
Mark Fitzgibbon
Okay. Secondly, I wondered if you could give us any color on that $7.1 million commercial charge off you had. What was the story with that loan? Was that the transportation one that you've talked about in the past?
Carl Carlson
No, that was a large CNI credit that we, it was about a $13 million credit, $13 to change that we had a specific reserve for that was around $5 million already on the books. So there was a little extra provisioning that requiring to cover that full charge off. We had to give it a sale of a note.
Mark Fitzgibbon
Okay.And then lastly, I just wondered maybe at a high level if you could share with us your thoughts on sort of the tariff implications on things like your equipment finance book and and maybe your manufacturing loan book, which I think was around $250 million. Are you seeing any impact? Are you hearing from customers that it's become a significant problem, the tariffs or not so much?
Paul Perrault
Credit administration is all over that, like a wet blanket, and they're hearing that people are not doing very much, but are very uneasy about it. And when we look at new credits that has become part of the underwriting process to see how that how that might have affected things. And so it is having a dampening effect on everything as we go forward, but there's nothing tangible yet.
Mark Fitzgibbon
Okay. Thank you.
Paul Perrault
Welcome, Mark.
Operator
Steve Moss, Raymond James
Carl Carlson
Good afternoon.
Steve Moss
Hey Paul, just maybe on the loan pricing here, just kind of curious, what you guys are seeing for loan pricing that these these days and as you are also adding more CNI customers. What's the sentiment with those borrowers and your thoughts around pull through here?
Paul Perrault
I'll pull through what?
Steve Moss
(inaudible) Is it, do you think it's going to extend out towards the latter part of the year, or, are you reasonably optimistic in your term, let me put it that way?
Paul Perrault
I'm reasonably optimistic, but we're we're obviously going to be very careful like walking through glue or something, but the pipelines are okay, and the quality of the stuff that's in the pipeline I've been very impressed with and the pricing has generally been pretty good. It feels like the dominant very large banks in our markets are pretty tepid about things right now, so we're not being pushed around too much.
The smaller banks have tended to be a lot more aggressive, but our full service paying close attention nature, I think, has made us attractive for companies that feel a little bit abused in this time. So, we're going to go carefully but I'm still optimistic with the numbers that Carl's told you about for the balance of the year.
Carl Carlson
Just to give you a little bit more, get a little bit more specific on pricing, I think it might be helpful. So we booked about $411 million of originations in the quarter and the weighted average coupon on that book was 718 basis points. And the weight average coupon of our overall book is about 591 basis points.
It gives you a sense of, how that's continuing every quarter that goes by we're still, we're getting a benefit on that ,unless the Fed cuts and then we priced out, but that's that's what I like.
Steve Moss
Right. Okay, that's helpful there. Appreciate that color and then just in terms of expenses here, down quarter or quarter compensation in particular, just kind of curious, how you think about expenses for the second quarter. I apologize if I missed that.
Carl Carlson
Well, I think they'll probably be fairly stable with whatever happened in the first quarter. I did guidance for the full year that we have an annual budget that we try to manage towards, and we're doing much better than that at this point. As you probably understand, we've got the merger of equals with Berkshire Hills.
So we are being very careful about any hires and things of that nature, or even replacing folks as we know that the opportunity to be able to fill those positions on a combined basis will be enhanced when that happens. So, that's, and I took mention the marketing expenses are down, quarter over quarter. I think you were just being thoughtful about where we're spending our money, marketing dollars and keeping some powder dry for the merger.
Steve Moss
Okay, great. Those were my primary two questions. I really appreciate the call here. I'll step back in the queue.
Carl Carlson
Okay, Steve. See you.
Operator
Laurie Hunsicker, Seaport Research
Laurie Hunsicker
Yeah. Hi Paul and Carl. Good afternoon. Just circling back to credit here. So the $7.6 million in CNI charge up $7.1 million was one loan. Was that I guess -- what type of loan was that? Was that an equipment finance loan? Was that a grocery store? What was that?
Paul Perrault
It's in the food manufacturing business, if you will, and it was not entirely the [$7.6], but it was primarily so that that loan. It had been a family business that was subject to a leveraged buyout by private equity firms and things haven't gone according to oil.
Laurie Hunsicker
Okay, and then your special vehicle booked down to $267 million that's great. How much were charge off there in the quarter?
Carl Carlson
Not much at all. Who's the minimis.
Laurie Hunsicker
Okay. Okay, alright, and then just wondered, can you give us an update the office, the $11 million office loan that I think is supposed to, I think it's supposed to close in Q2. Is that still the case? .
Paul Perrault
Yes, it's under PNS and it's imminent to close sometime soon. I don't know exactly the timing, but it's fully expected to close.
Carl Carlson
Yeah, we, and we're not anticipating any additional loss associated with that.
Laurie Hunsicker
Okay, perfect. That was my question. Okay great and then I see here, I love that you give this update your 95% pass rated on that which is maturing. What -- where does your whole book stand in terms of pass rated? I think I last had that at around 90%. I don't know if you have that number refresh or if that's still approximately the number?
Carl Carlson
It's approximately 95%.
Laurie Hunsicker
Oh, for the whole book, okay.
Carl Carlson
Yeah.
Laurie Hunsicker
Okay, great, and let me just go up here. Do you have a spot margin for March?
Carl Carlson
323.
Laurie Hunsicker
Thank you. Okay, and then I guess, just sort of fast forwarding and I appreciate that you don't want to comment any further on the timing, but just fast forwarding the Brooklyn Berkshire Hills merger is closed. Can you talk a little bit about sort of two things on a go forward basis? So number one, obviously there was that non-binding letter of intent in Company A to potentially acquire you 50% higher.
So I guess how do you think about what direction are you going to do as a combined company to get that value from where we are here to sort of 50% higher? That's my first question. And then my second question is, previously you were pretty active in buybacks.
You're obviously very well capitalized, credit looks good, obviously many uncertainties at the moment, but we are seeing companies amp up the buyback just taking advantage of stock price. Can you tell us a little bit about how you would think about the buyback once this is closed. Thanks.
Carl Carlson
Sure. So, again, we can't talk too much about adding any additional information, but I would certainly refer you back to when we announced the transaction and the benefits associated with that transaction, particularly the operational efficiencies, the results and performance of the organization, excluding purchase accounting because purchase counting, as we all know, is moving in many different ways every day.
But the benefits of getting the purchase counting done as well will add significantly to to the performance, as a lot of banks in particular have done restructuring of their investment portfolios to enhance the yields going forward and their margins going forward, and here you're taking basically one organization. So, $11 billion of the balance sheet and doing the purchase accounting on that and getting the benefits of that going forward.
So, I think you can refer to that to see, hey, what is the returns on this going forward and of course, we're in the process of doing the conversion and the cost savings and we feel really good about the process so far. Regarding stock buybacks, I'd say it's just too early to talk about that at this point.
And we'll we'll see what the capital ratios and how that will, how the balance sheet is restructured as we come together and the board will review what the capital opportunities are there and then optimize the capital structure and if if buybacks are appropriate that that will get discussed.
Laurie Hunsicker
Okay, thanks. And one more question with respect to capital management. Is it still the intent to take the Berkshire Hills, pro forma combined company dividend up to a rate that's that's on par with where Brookline is currently? Is that still the plan?
Carl Carlson
That's correct.
Laurie Hunsicker
Okay, great. Thanks, I'll leave it there.
Carl Carlson
Okay, Laurie.
Operator
Chris O'Connell, KBW
Chris O'Connell
Just wanted to start off on the CRE runoff, which, I know you guys was planned, wondering how much more is kind of earmarked, to be run off over, the next few quarters and if that, will continue after the merger calls?
Carl Carlson
Well, excellent question. So we did plan for the ICR runoff we identified certain areas that we would not try to pursue certain customers or certain transactions. I wouldn't want to call them customers certain transactions. It was accelerated a bit in the first quarter, a little bit more than we had originally planned.
So, outside of that I don't see a lot of reduction in that space to the magnitude going forward, but that was a planned planned approach to 2025. On a go forward it after the combination of the two companies, we'll be looking at that and where we stand and what we want to be focused on. I would say we're not focused on participating commercial real estate transactions into the bank.
We'd like to do the lead. Occasionally, we'll do that with friends and family, but that's not something that we would want to be doing on a go forward basis and we'd be looking at the combined portfolio and looking at those types of transactions and not really pursuing those going forward. So the timing around that and seeing that, we rather preserve our capital or funding for taking care of our customers in our in our footprint.
Chris O'Connell
Understood. Thank you and appreciate the standalone, expense guide in the comments, for flat-ish into Q2. Just rough calculations, you guys did a really good job, here in the first quarter, keeping expenses low, if it's relatively flatten into Q2.
That leaves about, $11 million of growth in the back half of the year, to kind of get towards that guidance number. Is there any, particular dynamics I guess that are, driving up the cost, that much in the back half of the year?
Carl Carlson
No, not at all. It just was our original budget. Both compnies are doing much better on the, on the expense side as we're very careful on how we're spending money as we're going into this.
Chris O'Connell
Okay, great. And And then with the conversion now, booked, for February 2026? Is that consistent with the original timing? I know it was a little bit up in the air at the time of the announcement and does it change any of, the cost safe timings or shift them out a little further?
Paul Perrault
Only a little bit. It's a little bit later than we had hoped it would be, and this has a lot to do with scheduling with providers and synchronizing all of the stuff that has to happen. And so some of the cost savings are going to be slightly delayed, but to the extent that both companies are managing their costs very well.
In the meantime, I'm not viewing it as having any material effect at that point, even though technically, some of the some of the expenses are going to be longer than in the original plan but at a lower level.
Carl Carlson
It's going to be harder to cut expenses that you're not even incurring. So, Paul's staying at the timing we're kind of front loading some of those savings and so economically at the end of the day I would imagine we probably probably going to be better off, so.
Chris O'Connell
Yeah, understood. And then, on the, I appreciate the kind of overall office commentary, was hoping to get, if you had your exposures to the Cambridge market and your overall lab exposure and just, any color around kind of, what you guys are seeing or what you guys are hearing in terms of any market developments in those areas.
Paul Perrault
It's a pretty small share of our book. We haven't done very much in the Cambridge area that I can recall. Carl, do you have any sense of the numbers?
Carl Carlson
It approximately approximately $50 million in the lab.
Paul Perrault
No, all over. So it's $50 million overall in lab in lab space. So it's pretty small exposure. We just haven't been exposed to that sort of stuff. We tend to bank real estate professionals who really haven't played all that much in the lab space.
Chris O'Connell
Okay, great. That's all I have. Thank you.
Paul Perrault
Okay, Chris.
Operator
This concludes our question and answer session. So I'd like to turn the conference back over to Mr. Perrault for any closing remarks.
Paul Perrault
Thank you,[Lydia], and thank you all for joining us this afternoon, and we will look forward to talking with you again next quarter. Good Day.
Operator
This concludes today's call. Thank you very much for joining. We may now disconnect your line.
