Exhibit 99.1
Brookline Bancorp Announces 2004 Third Quarter Operating Results
and Quarterly Dividend of $0.085 Per Share
BROOKLINE, Mass.--(BUSINESS WIRE)--Oct. 21, 2004--Brookline
Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its
earnings for the 2004 third quarter and approval by its Board of
Directors of a regular quarterly dividend of $0.085 per share payable
November 15, 2004 to stockholders of record on October 29, 2004.
The Company earned $4,497,000, or $0.08 per share on a basic and
diluted basis, for the three months ended September 30, 2004 compared
to $4,502,000, or $0.08 per share on a basic and diluted basis, for
the three months ended September 30, 2003. Net income for the nine
months ended September 30, 2004 was $13,771,000, or $0.24 per share on
a basic and diluted basis, compared to $11,041,000, or $0.19 per share
on a basic and diluted basis, for the nine months ended September 30,
2003. The 2003 nine month period included an after-tax charge of
$2,788,000, or $0.05 per share, resulting from settlement of all
disputes relating to the state tax treatment of the Company's real
estate investment trust ("REIT") subsidiary for the years 1999 through
2002.
The average balance of interest-earning assets increased $191
million, or 13.4%, in the 2004 third quarter compared to the 2003
third quarter and $64 million, or 4.1%, since the 2004 second quarter.
All of the increase from the prior year quarter and the immediately
preceding quarter came from the indirect automobile loan portfolio
which grew by $212 million and $64 million, respectively, during those
periods. Total indirect automobile loans outstanding were $345 million
at September 30, 2004.
Despite the 13.4% rate of asset growth, net interest income
increased by only 4.50% between the 2004 and 2003 quarterly periods
due to a decline in interest rate spread from 2.41% to 2.28% in the
respective periods. The decline was attributable primarily to the
payment and maturity of higher yielding loans and investments and the
replacement of such assets with new loans and investments with lower
yields.
We have previously reported that the interest rate environment of
the past two years has been the lowest in over forty years. As a
result, asset yields have declined steadily. Since a high percent of
the Company's assets (36% in the 2004 third 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. From June to
September 2004, the Federal Reserve increased the federal funds rate
for overnight borrowings between banks from 1.00% to 1.75%. While this
rise in rates will likely have a positive impact on the Company's
future net interest income, earnings improvement will continue to be
restrained as long as existing assets are replaced with new assets at
lower yields.
In anticipation of a rising interest rate environment, the Company
has restricted its purchase of investments over the past year to
securities with maturities of two years or less and has funded part of
its loan growth with borrowings at fixed rates and maturities in the
two to three year range. These actions have slowed down short-term
earnings improvement, but should enhance longer-term earnings if
interest rates continue to rise. Trends in interest rates depend on
many factors and, accordingly, actual rates in the future could vary
significantly with the Company's rate predictions. At September 30,
2004, interest-earning assets maturing or repricing within one year
amounted to $719.9 million and interest-bearing liabilities maturing
or repricing within one year amounted to $518.2 million, resulting in
a cumulative one year positive gap position of $201.7 million, or
12.3% of total assets.
Interest yields have continued to be affected by prepayment of
certain investments and loans. Some of the investment securities
purchased by the Company in 2002 and the first four months of 2003 are
secured by mortgage loans. Prepayment of some of the mortgage loans
underlying the securities purchased shortened their estimated life and
resulted in the accelerated expensing of part of the premiums paid to
purchase the securities. Accelerated premium amortization related to
such securities in the 2004 and 2003 nine month periods was $250,000
and $1,806,000, respectively. Mortgage loan payoffs generated
prepayment fees of $1,364,000 in the 2004 nine month period compared
to $762,000 in the 2003 nine month period. Prepayments also occurred
in 2004 in the indirect automobile loan portfolio. Upon a loan
prepayment, the remainder of unamortized costs incurred in originating
the loan must be expensed as a charge to interest income. Such charges
amounted to $356,000 in the 2004 third quarter and $1,018,000 in the
2004 nine month period. Charges in the 2003 periods were
insignificant.
The provision for loan losses increased from $240,000 in the 2003
third quarter to $635,000 in the 2004 third quarter and from $975,000
in the 2003 nine month period to $1,676,000 in the 2004 nine month
period. The increases were due primarily to growth of the indirect
automobile loan portfolio. Non-performing assets, comprised of loans
past due 90 days or more and repossessed assets, were insignificant
($336,000) at September 30, 2004. The allowance for loan losses was
$17,161,000, or 1.38% of total loans outstanding, at that date.
Securities gains were $806,000 and none, respectively, in the 2004
and 2003 third quarters and $1,767,000 and $508,000, respectively, in
the 2004 and 2003 nine month periods. The gains resulted from sales of
marketable equity securities.
The expense for restricted stock awarded under the Company's
recognition and retention plan amounted to $722,000 and $40,000,
respectively, in the 2004 and 2003 third quarters and $2,168,000 and
$106,000, respectively, in the 2004 and 2003 nine month periods. The
increases resulted from awards made under the plan approved by
stockholders in October 2003. Other non-interest expense increased
$249,000, or 5.1%, in the 2004 third quarter compared to the 2003
third quarter and $1,542,000, or 11.4%, in the 2004 nine month period
compared to the 2003 nine month period. Such increases were due
primarily to operation of the indirect automobile loan business which
commenced in February 2003, the opening of a new branch in the fall of
2003 and the payment of dividend equivalent rights of $734,000 in the
2004 nine month period compared to $361,000 in the 2003 nine month
period.
The above text 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 could 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)
September 30, December 31, September 30,
2004 2003 2003
------------ ------------ ------------
ASSETS
-------
Cash and due from banks $ 8,262 $ 15,131 $ 12,547
Short-term investments 99,556 127,572 121,610
Securities available for sale 270,432 287,952 293,222
Securities held to maturity
(market value of $1,228,
$1,381 and $1,450, respectively) 1,198 1,343 1,411
Restricted equity securities 16,554 11,401 9,423
Loans, excluding money market
loan participations 1,233,926 1,072,740 1,013,764
Money market loan participations 6,000 2,000 3,000
Allowance for loan losses (17,161) (16,195) (15,954)
----------- ----------- -----------
Net loans 1,222,765 1,058,545 1,000,810
----------- ----------- -----------
Other investment 4,453 4,251 4,166
Accrued interest receivable 5,588 5,248 5,046
Bank premises and equipment, net 3,110 2,737 2,763
Deferred tax asset 9,725 8,843 6,868
Prepaid income taxes 59 - -
Other assets 1,572 1,011 593
----------- ----------- -----------
Total assets $1,643,274 $1,524,034 $1,458,459
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits $ 735,306 $ 679,921 $ 667,771
Borrowed funds 305,490 220,519 170,531
Mortgagors' escrow accounts 4,978 4,565 4,935
Income taxes payable - 1,489 895
Accrued expenses and other
liabilities 12,457 10,856 10,007
----------- ----------- -----------
Total liabilities 1,058,231 917,350 854,139
----------- ----------- -----------
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; 60,477,939
shares, 60,160,530 shares
and 58,996,410 shares
issued, respectively 605 602 590
Additional paid-in capital 471,580 469,493 451,512
Retained earnings, partially
restricted 144,977 169,417 170,824
Accumulated other
comprehensive income (A) 717 2,529 3,424
Treasury stock, at cost -
1,335,299 shares (17,017) (17,017) (17,017)
Unearned compensation -
recognition and retention
plans (11,685) (13,960) (548)
Unallocated common stock held
by ESOP - 758,257 shares,
803,356 shares and 818,861
shares, respectively (4,134) (4,380) (4,465)
----------- ----------- -----------
Total stockholders' equity 585,043 606,684 604,320
----------- ----------- -----------
Total liabilities and ----------- ----------- -----------
stockholders' equity $1,643,274 $1,524,034 $1,458,459
=========== =========== ===========
(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 Nine months ended
September 30, September 30,
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Interest income:
Loans $16,081 $14,410 $46,646 $41,597
Debt securities 1,427 1,750 4,874 5,912
Marketable equity
securities 65 90 213 298
Restricted equity
securities 139 71 280 219
Short-term
investments 401 288 1,004 1,215
----------- ----------- ----------- -----------
Total interest
income 18,113 16,609 53,017 49,241
----------- ----------- ----------- -----------
Interest expense:
Deposits 2,975 2,860 8,504 9,525
Borrowed funds 2,477 1,608 6,790 4,439
----------- ------- ----------- -----------
Total interest
expense 5,452 4,468 15,294 13,964
----------- ------- ----------- -----------
Net interest income 12,661 12,141 37,723 35,277
Provision for loan
losses 635 240 1,676 975
----------- ------- ----------- -----------
Net interest income
after provision
for loan losses 12,026 11,901 36,047 34,302
----------- ------- ----------- -----------
Non-interest income:
Fees and charges 496 572 2,166 1,832
Gains on securities, net 806 - 1,767 508
Swap agreement market
valuation credit 50 60 178 97
Other income 142 173 493 421
----------- ----------- ----------- -----------
Total non-interest
income 1,494 805 4,604 2,858
----------- ----------- ----------- -----------
Non-interest expense:
Compensation and
employee benefits 2,477 2,399 7,549 7,148
Recognition and
retention plans 722 40 2,168 106
Occupancy 399 360 1,189 1,141
Equipment and data
processing 1,164 879 3,249 2,282
Advertising and
marketing 113 188 490 563
Dividend equivalent
rights 359 361 734 361
Other 625 701 1,866 2,040
----------- ----------- ----------- -----------
Total non-interest
expense 5,859 4,928 17,245 13,641
----------- ----------- ----------- -----------
Income before income
taxes 7,661 7,778 23,406 23,519
----------- ----------- ----------- -----------
Income tax expense:
Provision for income
taxes 3,164 3,276 9,635 9,690
Retroactive
assessment related
to REIT - - - 2,788
----------- ----------- ----------- -----------
Total income tax
expense 3,164 3,276 9,635 12,478
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income $ 4,497 $ 4,502 $13,771 $11,041
=========== =========== =========== ===========
Earnings per common
share:
Basic $ 0.08 $ 0.08 $ 0.24 $ 0.19
Diluted 0.08 0.08 0.24 0.19
Weighted average common
shares outstanding
during the period:
Basic 57,373,970 56,644,208 57,229,259 56,901,014
Diluted 58,144,811 57,658,817 58,028,856 57,881,992
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended September 30,
----------------------------------------------------
2004 2003
---------------------------- -----------------------
Average Average
Average Interest yield/ Average Interest yield/
balance (1) cost balance (1) cost
----------- -------- ------- ------- -------- ------
(Dollars in thousands)
Assets
- ------
Interest-earning assets:
Short-term
investments $114,288 $401 1.39% $115,109 $288 0.99%
Debt securities
(2) (4) 262,097 1,435 2.19 302,612 1,759 2.33
Equity
securities (2) 26,188 228 3.46 21,535 194 3.59
Mortgage
loans (3) 819,984 12,066 5.89 828,683 12,564 6.06
Money market loan
participations 3,768 14 1.47 2,653 7 1.12
Commercial
loans (3) 49,358 563 4.56 26,052 372 5.71
Indirect automobile
loans (3) 338,820 3,394 3.97 127,067 1,419 4.43
Other consumer
loans (3) 2,471 44 7.12 2,561 48 7.50
--------- ------- -------- -------
Total interest-
earning assets 1,616,974 18,145 4.47% 1,426,272 16,651 4.67%
------- ----- ------- -----
Allowance for loan
losses (17,042) (15,868)
Non-interest
earning assets 30,503 29,044
----------- -----------
Total assets $1,630,435 $1,439,448
=========== ===========
Liabilities and
Stockholders' Equity
- ---------------------
Interest-bearing
liabilities:
Deposits:
NOW accounts $62,775 21 0.13% $59,804 22 0.15%
Savings accounts 81,173 374 1.83 23,591 29 0.49
Money market
savings accounts 276,164 767 1.10 306,958 1,077 1.39
Certificate of
deposit accounts 274,607 1,813 2.62 243,624 1,732 2.82
--------- ----- -------- ------
Total deposits 694,719 2,975 1.70 633,977 2,860 1.79
Borrowed funds 294,749 2,477 3.29 152,000 1,608 4.14
--------- ----- -------- ------
Total interest
bearing
liabilities 989,468 5,452 2.19% 785,977 4,468 2.26%
------ ----- ------ -----
Non-interest-
bearing demand
checking accounts 36,563 32,130
Other liabilities 13,925 12,315
--------- --------
Total
liabilities 1,039,956 830,422
Stockholders'
equity 590,479 609,026
--------- --------
Total
liabilities
and
stockholders'
equity $1,630,435 $1,439,448
=========== ===========
Net interest income
(tax equivalent
basis)/interest
rate spread 12,693 2.28% 12,183 2.41%
===== =====
Less adjustment of
tax exempt income 32 42
-------- --------
Net interest income $12,661 $12,141
======== ========
Net interest margin 3.14% 3.42%
===== =====
(1) Tax exempt income on equity securities 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 $124 of accelerated amortization of premiums on
mortgage securities. Excluding this charge, the yield on debt
securities in the 2004 period would have been 2.38%. Included
in interest income in the 2003 period is $126 of accelerated
amortization of premiums on mortgage securities. Excluding
this charge, the yield on debt securities in the 2003 period
would have been 2.49%. Excluding these adjustments on debt
securities, the yield on interest-earning assets for the 2004
and 2003 periods would have been 4.50% and 4.70%, respectively.
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Ratios and Other Data
Three months Nine months
ended ended
September 30, September 30,
----------------- -----------------
2004 2003 2004 2003
-------- -------- -------- --------
Performance Ratios (annualized):
Return on average assets 1.10 % 1.25 % 1.17 % 1.04 %
Return on average stockholders'
equity 3.05 % 2.96 % 3.08 % 2.38 %
Return on average stockholders'
equity, excluding effect of
unrealized gains on securities
available for sale, net of taxes 3.05 % 2.97 % 3.09 % 2.40 %
Interest rate spread 2.28 % 2.41 % 2.33 % 2.21 %
Net interest margin 3.14 % 3.42 % 3.20 % 3.34 %
Dividends paid per share during
period $0.285 $0.285 $0.655 $0.455
At At At
September December September
30, 31, 30,
2004 2003 2003
--------- -------- ---------
(Dollars in thousands except
per share data)
Capital Ratio:
Stockholders' equity to total assets 35.60 % 39.81 % 41.44 %
Asset Quality:
Non-performing loans $ 91 $ 50 $ 39
Non-performing assets 336 133 111
Allowance for loan losses 17,161 16,195 15,954
Allowance for loan losses as a percent
of total loans 1.38 % 1.51 % 1.57 %
Non-performing assets as a percent of
total assets 0.02 % 0.01 % 0.01 %
Per Share Data:
Book value per share $ 9.89 $ 10.31 $ 10.48
Market value per share $ 15.67 $ 15.34 $ 14.77
CONTACT: Brookline Bancorp, Inc.
Paul R. Bechet, 617-278-6405