Exhibit 99.1
Brookline Bancorp Announces 2004 First Quarter Operating Results and
Dividend Declaration
BROOKLINE, Mass.--(BUSINESS WIRE)--April 15, 2004--Brookline
Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today that it
earned $4,652,000, or $0.08 per share on a basic and diluted basis, in
the 2004 first quarter compared to a net loss of $148,000, or $0.00
per share on a basic and diluted basis, in the 2003 first quarter. The
net loss in the 2003 quarter resulted from a $5,515,000, or $0.10 per
share, charge to earnings related to a previously reported dispute
with the Massachusetts Department of Revenue over the state tax
treatment of the Company's real estate investment trust ("REIT")
subsidiary. The dispute was settled in the second quarter of 2003 and
resulted in an after-tax credit of $2,727,000, or $0.05 per share, in
that quarterly period.
Excluding the $5,515,000 charge mentioned in the preceding
paragraph, net income in the 2003 first quarter was $5,367,000, or
$715,000 higher than 2004 first quarter earnings. The decline in 2004
was attributable primarily to (a) the expense of stock awarded under
the 2003 recognition and retention plan approved by the stockholders
in August 2003 ($690,000, or $401,000 on an after tax basis), (b) the
expensing of dividend equivalent rights resulting from the payment of
a $0.20 special dividend to stockholders in February 2004 ($375,000,
or $218,000 on an after-tax basis), (c) expenses related to a new
branch opened in September 2003 and (d) less net interest income due
to continuation of a low interest rate environment.
The Company entered the indirect automobile lending business in
the first quarter of 2003. Total indirect automobile loans outstanding
grew to $211 million at the end of 2003 and $274 million at March 31,
2004. The average credit score of all loans outstanding at March 31,
2004 was over 730 and the total of loans with credit scores below 660
was less than 10%. The total of loans delinquent over 30 days at that
date was $1,079,000, or 0.39% of the indirect automobile loan
portfolio.
Despite an increase in average interest-earning assets of $122
million, or 8.6%, in the 2004 first quarter compared to the 2003 first
quarter, total net interest income declined $248,000, or 2.0%, between
the two periods. The decline was attributable to continuation of an
interest rate environment that is the lowest in over forty years.
Since a high percent of the Company's assets (39% in the 2004 first
quarter) are funded by stockholders' equity for which there is no
charge for interest expense, declining rates cause a greater reduction
in interest income from lower asset yields than the reduction in
interest expense from lower rates paid on deposits and borrowed funds.
Continuation of the current low interest rate environment, or further
reductions in interest rates, would likely have a negative impact on
the Company's future net interest income and net interest margin.
Conversely, rising interest rates would likely have a positive impact
on the Company's future net interest income and net interest margin.
As a result of the low interest rate environment, not only are new
loans originated and investments purchased at lower yields but
existing higher yielding loans and investments secured by mortgage
loans are subject to prepayment before scheduled maturities.
Prepayment of higher yielding assets in a declining interest rate
environment can have a detrimental effect on net interest income. The
Company experienced such an effect during the past two years and
continued to experience such an effect in the first quarter of 2004.
In the second half of 2002 and the first four months of 2003, the
Company invested a substantial part of the proceeds from its July 2002
stock offering in collateralized mortgage obligations and pass-through
mortgage-backed securities (collectively "mortgage securities") with
relatively short maturities. Because of the declining interest rate
environment, the investments were purchased at a premium which was to
be amortized over the estimated life of the securities. Unprecedented
prepayment of loans underlying the mortgage securities during 2003
shortened the estimated life of the securities significantly, thus
necessitating the accelerated expensing of part of the premiums paid
to purchase the securities. Prepayments, which started to subside in
the latter part of 2003, picked up once again in the first quarter of
2004. Due primarily to prepayments, the Company's investment in
mortgage securities declined from $315 million at March 31, 2003 to
$137 million at December 31, 2003 and $124 million at March 31, 2004.
Total premium amortization in the 2004 first quarter was $889,000,
$357,000 of which was accelerated amortization caused by prepayments.
The remainder of unamortized premium at March 31, 2004 was $1,626,000.
Of that amount, $1,074,000 is scheduled to amortize over the remainder
of 2004. Continuation of higher than anticipated prepayments could
require accelerated expensing in 2004 of the difference between the
total unamortized premium at March 31, 2004 and the amount scheduled
to be amortized in 2004.
During the first quarter of 2004, approximately $30.8 million of
mortgage loans were prepaid in entirety and a pay down of $4.0 million
occurred on a construction loan. Much of the mortgage loan prepayments
resulted from the sale of underlying multi-family and commercial real
estate properties. While the pay-offs generated prepayment fee income
of $863,000, they contributed to the decline in the average yield on
the mortgage loan portfolio to 5.90% in the 2004 first quarter. The
yield on that portfolio was 6.47% in the 2003 first quarter.
Prepayments also occurred in the indirect automobile loan
portfolio. Approximately $9.4 million was prepaid due in part to
aggressive loan promotions by credit unions, banks and credit card
issuers. In connection with the origination of indirect automobile
loans, the interest rate charged to the borrower by the car dealer
usually exceeds the "buy rate" or the rate earned by the Company. The
difference between the two rates is referred to as the "spread." The
computed dollar value of the spread is prepaid by the Company to the
car dealer and included in deferred loan origination costs. Such
costs, which are generally subject to rebate in the event the
underlying loans are prepaid within a few months, are amortized as a
charge to interest income over the life of the related loans. Due to
loan prepayments after the rebate period, $340,000 of accelerated
amortization of deferred loan origination costs was charged to
interest income in the 2004 first quarter.
Non-interest income in the 2004 first quarter was $921,000 higher
than in the 2003 first quarter due primarily to greater mortgage loan
prepayment fees, securities gains and income from the Company's equity
investment in a specialty finance company. Non-interest expenses in
the 2004 first quarter were $1,707,000 higher than the 2003 first
quarter due primarily to the expense of the 2003 recognition and
retention plan, dividend equivalent rights, a new branch office and
operations related to indirect automobile lending activity.
Total assets were $1.591 billion at March 31, 2004 compared to
$1.524 billion at December 31, 2003 and $1.424 billion at March 31,
2003. Net loans as a percent of total assets increased from 58.1% at
March 31, 2003 to 70.0% at March 31, 2004. Loan growth, most of which
occurred in the indirect automobile lending segment, was funded by
proceeds from mortgage securities, deposit growth and borrowings from
the Federal Home Loan Bank. Deposit growth of $30 million in the 2004
first quarter was due primarily to a special promotion.
Stockholders' equity declined from $606.7 million at December 31,
2003 to $596.2 million at March 31, 2004 due to payment of a special
dividend of $0.20 per share to stockholders in excess of net earnings.
The Board of Directors of the Company approved a quarterly
dividend of $0.085 per share of common stock to stockholders of record
as of April 30, 2004 and payable May 17, 2004.
This press release contains statements about future events that
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Projections about
future events are subject to risks and uncertainties that could cause
actual results to differ materially. Factors that might cause such
differences include, but are not limited to, general economic
conditions, changes in interest rates, regulatory considerations and
competition.
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands except share data)
March 31, December 31, March 31,
2004 2003 2003
------------ ------------ ------------
ASSETS
Cash and due from banks $ 14,886 $ 15,131 $ 11,651
Short-term investments 140,402 127,572 148,897
Securities available for sale 285,768 287,952 393,017
Securities held to maturity
(market value of $1,308,
$1,381 and $3,776,
respectively) 1,272 1,343 3,717
Restricted equity securities 14,239 11,401 9,423
Loans, excluding money market
loan participations 1,129,540 1,072,740 842,811
Money market loan
participations - 2,000 8,700
Allowance for loan losses (16,388 ) (16,195 ) (15,424 )
----------- ----------- -----------
Net loans 1,113,152 1,058,545 836,087
----------- ----------- -----------
Other investment 4,256 4,251 3,917
Accrued interest receivable 5,306 5,248 5,150
Bank premises and equipment,
net 2,683 2,737 2,175
Deferred tax asset 8,109 8,843 9,516
Other assets 1,135 1,011 496
----------- ----------- -----------
Total assets $1,591,208 $1,524,034 $1,424,046
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 709,641 $ 679,921 $ 663,018
Borrowed funds 267,281 220,519 123,945
Mortgagors' escrow accounts 5,253 4,565 4,790
Income taxes payable 1,734 1,489 10,248
Accrued expenses and other
liabilities 11,146 10,856 8,534
----------- ----------- -----------
Total liabilities 995,055 917,350 810,535
----------- ----------- -----------
Stockholders' equity:
Preferred stock, $0.01 par
value; 50,000,000 shares
authorized; none issued - - -
Common stock, $0.01 par
value; 200,000,000 shares
authorized; 60,275,256
shares, 60,160,530 shares
and 58,924,935 shares
issued, respectively 603 602 589
Additional paid-in capital 470,248 469,493 450,893
Retained earnings, partially
restricted 157,439 169,417 180,720
Accumulated other
comprehensive income (A) 2,411 2,529 3,279
Treasury stock, at cost -
1,335,299 shares,
1,335,299 shares and
1,305,299 shares,
respectively (17,017 ) (17,017 ) (16,635 )
Unearned compensation -
recognition and retention
plans (13,233 ) (13,960 ) (701 )
Unallocated common stock held
by ESOP - 788,323 shares,
803,356 shares and 849,863
shares, respectively (4,298 ) (4,380 ) (4,634 )
----------- ----------- -----------
Total stockholders' equity 596,153 606,684 613,511
----------- ----------- -----------
Total liabilities and
stockholders' equity $1,591,208 $1,524,034 $1,424,046
=========== =========== ===========
(A) Represents net unrealized gains on securities available for sale,
net of taxes.
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands except share data)
Three months ended
March 31,
-----------------------
2004 2003
----------- -----------
(unaudited)
Interest income:
Loans $15,059 $13,268
Debt securities 1,506 3,253
Marketable equity securities 78 111
Restricted equity securities 70 77
Short-term investments 298 577
----------- -----------
Total interest income 17,011 17,286
----------- -----------
Interest expense:
Deposits 2,697 3,442
Borrowed funds 2,139 1,421
----------- -----------
Total interest expense 4,836 4,863
----------- -----------
Net interest income 12,175 12,423
Provision for loan losses 330 375
----------- -----------
Net interest income after provision for
loan losses 11,845 12,048
----------- -----------
Non-interest income:
Fees and charges 1,121 546
Gains on sales of securities, net 581 328
Swap agreement market valuation credit 39 18
Other income 140 68
----------- -----------
Total non-interest income 1,881 960
----------- -----------
Non-interest expense:
Compensation and employee benefits 2,535 2,352
Recognition and retention plans 728 40
Occupancy 417 337
Equipment and data processing 993 627
Advertising and marketing 187 187
Dividend equivalent rights 375 -
Other 606 591
----------- -----------
Total non-interest expense 5,841 4,134
----------- -----------
Income before income taxes 7,885 8,874
----------- -----------
Income tax expense:
Provision for income taxes 3,233 3,507
Retroactive assessment related to REIT - 5,515
----------- -----------
Total income tax expense 3,233 9,022
----------- -----------
----------- -----------
Net income (loss) $ 4,652 $ (148 )
=========== ===========
Earnings per common share:
Basic $ 0.08 $ (0.00 )
Diluted 0.08 (0.00 )
Weighted average common shares outstanding
during the period:
Basic 57,076,261 57,468,369
Diluted 58,055,753 57,468,369
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended March 31,
----------------------------
2004
----------------------------
Average
Average Interest yield/
balance (1) cost
----------- -------- -------
(Dollars in thousands)
Assets
- ------
Interest-earning assets:
Short-term investments $ 121,359 $298 0.98 %
Debt securities (2) (4) 276,666 1,515 2.19
Equity securities (2) 24,111 177 2.94
Mortgage loans (3) 830,366 12,251 5.90
Money market loan participations 1,726 5 1.16
Other commercial loans (3) 30,441 426 5.60
Indirect automobile loans (3) 246,542 2,335 3.80
Other consumer loans (3) 2,240 42 7.50
----------- --------
Total interest-earning assets 1,533,451 17,049 4.44 %
-------- -----
Allowance for loan losses (16,347)
Non-interest earning assets 34,389
-----------
Total assets $1,551,493
===========
Liabilities and Stockholders' Equity
- ------------------------------------
Interest-bearing liabilities:
Deposits:
NOW accounts $ 61,245 20 0.13 %
Savings accounts (5) 38,330 94 0.98
Money market savings accounts 293,923 938 1.28
Certificate of deposit accounts 255,015 1,645 2.59
----------- --------
Total deposits 648,513 2,697 1.67
Borrowed funds (6) 253,160 2,139 3.34
----------- --------
Total interest bearing liabilities 901,673 4,836 2.15 %
-------- -----
Non-interest-bearing demand
checking accounts 32,833
Other liabilities 15,747
-----------
Total liabilities 950,253
Stockholders' equity 601,240
-----------
Total liabilities and
stockholders' equity $1,551,493
===========
Net interest income (tax equivalent
basis)/interest rate spread 12,213 2.29 %
=====
Less adjustment of tax exempt income 38
--------
Net interest income $12,175
========
Net interest margin 3.19 %
=====
Three months ended March 31,
-----------------------------
2003
-----------------------------
Average
Average Interest yield/
balance (1) cost
------------ -------- -------
(Dollars in thousands)
Assets
- ------
Interest-earning assets:
Short-term investments $ 191,207 $577 1.22 %
Debt securities (2) (4) 371,163 3,253 3.51
Equity securities (2) 22,872 229 4.02
Mortgage loans (3) 793,170 12,820 6.47
Money market loan participations 3,921 13 1.34
Other commercial loans (3) 22,833 344 6.03
Indirect automobile loans (3) 2,911 29 4.04
Other consumer loans (3) 3,305 63 7.62
------------- --------
Total interest-earning assets 1,411,382 17,328 4.91 %
-------- -----
Allowance for loan losses (15,187 )
Non-interest earning assets 27,416
-------------
Total assets $1,423,611
=============
Liabilities and Stockholders' Equity
- ------------------------------------
Interest-bearing liabilities:
Deposits:
NOW accounts $65,237 35 0.22 %
Savings accounts (5) 16,992 35 0.84
Money market savings accounts 278,233 1,244 1.81
Certificate of deposit accounts 265,539 2,128 3.25
------------- --------
Total deposits 626,001 3,442 2.23
Borrowed funds (6) 124,088 1,421 4.58
------------- --------
Total interest bearing liabilities 750,089 4,863 2.63 %
-------- -----
Non-interest-bearing demand
checking accounts 27,017
Other liabilities 16,319
-------------
Total liabilities 793,425
Stockholders' equity 630,186
-------------
Total liabilities and
stockholders' equity $1,423,611
=============
Net interest income (tax equivalent
basis)/interest rate spread 12,465 2.28 %
=====
Less adjustment of tax exempt income 42
--------
Net interest income $12,423
========
Net interest margin 3.53 %
=====
- ------------------------------------
(1) Tax exempt income on equity securities and municipal bonds is
included on a tax equivalent basis.
(2) Average balances include unrealized gains on securities available
for sale. Equity securities include marketable equity securities
(preferred and common stocks) and restricted equity securities.
(3) Loans on non-accrual status are included in average balances.
(4) Included in interest income on debt securities in the 2004 period
is $357 of accelerated amortization of investment premium.
Excluding this charge, the yield on the debt securities portfolio
would have been 2.71%. Included in interest income on indirect
automobile loans in the 2004 period is $340 of accelerated
amortization of deferred loan origination costs due to prepaid
loan payoffs. Excluding this charge, the yield on the indirect
automobile loan portfolio would have been 4.35%. Excluding both of
the charges, the yield on interest-earning assets would have been
4.62%.
(5) Savings accounts include mortgagors' escrow accounts.
(6) The 2003 period includes a $25 interest charge on a prepaid FHLB
advance that relates to a prior period. Excluding this charge, the
rate on borrowed funds would have been 4.50%.
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Ratios and Other Data
Three months ended
March 31,
--------------------
2004 2003
-------- ----------
Performance Ratios (annualized):
Return on average assets 1.20 % (0.04 ) %
Return on average stockholders' equity 3.09 % (0.09 ) %
Return on average stockholders' equity,
excluding effect of unrealized gains on
securities available for sale, net of taxes 3.11 % (0.09 ) %
Interest rate spread 2.29 % 2.28 %
Net interest margin 3.19 % 3.53 %
Dividends paid per share during period $0.285 $ 0.085
At At At
March 31, Dec. 31, March 31,
2004 2003 2003
---------- --------- ---------
(dollars in thousands except per share data)
Capital Ratio:
Stockholders' equity to total assets 37.47 % 39.81 % 43.08 %
Asset Quality:
Non-performing loans $ 18 $ 50 $ 137
Non-performing assets 84 133 137
Allowance for loan losses 16,388 16,195 15,424
Allowance for loan losses as a percent
of total loans 1.45 % 1.51 % 1.83 %
Non-performing assets as a percent of
total assets 0.01 % 0.01 % -
Per Share Data:
Book value per share $ 10.11 $ 10.31 $ 10.65
Market value per share $ 15.95 $ 15.34 $ 12.52
CONTACT: Brookline Bancorp, Inc.
Paul Bechet, 617-278-6405