Exhibit 99.1
Brookline Bancorp Announces 2004 Fourth Quarter and Annual Earnings
and Dividend Declarations
BROOKLINE, Mass.--(BUSINESS WIRE)--Jan. 20, 2005--Brookline
Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its
earnings for the 2004 fourth quarter and year and the approval by its
Board of Directors of a regular quarterly dividend of $0.085 per share
and an extra dividend of $0.20 per share payable February 15, 2005 to
stockholders of record on January 31, 2005.
The Company earned $3,996,000, or $0.07 per share (on a basic and
diluted basis), for the quarter ended December 31, 2004 compared to
$3,439,000, or $0.06 per share (on a basic and diluted basis), for the
quarter ended December 31, 2003. Net income for the year 2004 was
$17,767,000, or $0.31 per share (on a basic and diluted basis),
compared to $14,480,000, or $0.25 per share (on a basic and diluted
basis), for the year 2003. Included in the year 2003 is 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 increase in quarterly earnings was due primarily to a
reduction in the expense for stock awarded under the Company's
recognition and retention plans from $3,885,000 in the 2003 quarter to
$722,000 in the 2004 quarter. The 2003 amount was abnormally high
since a portion of the shares awarded under a plan approved by the
stockholders in October 2003 had a very short vesting period.
Offsetting the benefit derived from this expense reduction was a
decline in securities gains (none in the 2004 quarter compared to
$1,593,000 in the 2003 quarter), a $307,000 decline in fees from
mortgage loan prepayments and the effect of an increase in the income
tax rate from 42.3% in the 2003 quarter to 44.5% in the 2004 quarter.
The increase in the tax rate was due primarily to (a) additional state
taxes resulting from dividend transfers from Company subsidiaries to
the parent Company in anticipation of funding the acquisition of
Mystic Financial Inc. which was completed on January 7, 2005, (b) the
non-deductibility of a part of executive compensation and (c) the
non-deductibility of certain other expenses for state tax purposes.
These factors also caused the effective income tax rate for the year
2004 to increase to 41.9% from 41.4% in the 2003 year.
Net interest income was $938,000, or 7.6%, higher in the 2004
quarter than in the 2003 quarter as average earning assets grew $181
million, or 12.3%, interest rate spread declined from 2.40% to 2.36%
and net interest margin also declined from 3.36% to 3.21%. Net
interest income was $3,384,000, or 7.1%, higher in 2004 than in 2003
as average earning assets increased $165 million, or 11.5%, and
interest rate spread improved from 2.26% to 2.34%, but net interest
margin declined from 3.34% to 3.21%.
We have previously reported that the Company's decline in net
interest margin was caused by one of the lowest interest rate
environments of the past forty years. Since a high percent of the
Company's assets (36.9% in 2004 and 42.6% in 2003) were funded by
stockholders' equity for which there is no charge for interest
expense, declining rates caused 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. In the second half of
2004, the Federal Reserve increased the federal funds rate for
overnight borrowings between banks from 1.00% to 2.25%. As a result,
net interest margin improved from 3.14% in the 2004 third quarter to
3.21% in the 2004 fourth quarter. While the recent rise in interest
rates will likely have a positive impact on the Company's future net
income, earnings improvement will continue to be restrained as long as
existing assets originated in the past at higher rates 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 December 31,
2004, interest-earning assets maturing or repricing within one year
amounted to $769 million and interest-bearing liabilities maturing or
repricing within one year amounted to $623 million, resulting in a
cumulative one year positive gap of $146 million, or 8.6% of total
assets.
The provision for loan losses increased from $313,000 in the 2003
fourth quarter to $927,000 in the 2004 fourth quarter and from
$1,288,000 in the 2003 year to $2,603,000 in the 2004 year. The
increases were due primarily to growth of the indirect automobile loan
portfolio and higher net charge-offs in that portfolio. Indirect
automobile loans outstanding increased from $211 million at the end of
2003 to $369 million at the end of 2004 and net charge-offs increased
from $157,000 in 2003 to $1,246,000 in 2004. The rate of net
charge-offs expressed as a percent of average loans outstanding was
0.40% in the year 2004 and 0.59% in the 2004 fourth quarter.
Typically, charge-offs rise in the fourth quarter due to seasonal
factors. At December 31, 2004, indirect automobile loans delinquent
more than 30 days were $3,192,000, or 0.87% of the portfolio. At that
date, there were no mortgage loans delinquent more than 30 days,
non-performing assets (comprised of loans past due 90 days or more and
repossessed assets) were $439,000 and the allowance for loan losses of
$17,540,000 was equal to 1.38% of total loans outstanding.
Excluding the expense of the recognition and retention plans,
other non-interest expenses increased $360,000, or 7.7%, in the 2004
fourth quarter compared to the 2003 fourth quarter and $1,904,000, or
10.5%, in the year 2004 compared to the year 2003. The increases were
due primarily to the expanded volume of the indirect automobile loan
business which commenced in February 2003, the opening of a new branch
in the fall of 2003 and the fall of 2004, increased dividend
equivalent rights payments attributable to the semi-annual extra
dividends paid to stockholders, and higher professional fees due to
compliance with the requirements of the Sarbanes-Oxley Act.
In approving an extra dividend of $0.20 per share in addition to a
regular quarterly dividend of $0.085 per share, the Board of Directors
considered the capital requirements of the Company, potential future
business initiatives and other factors. While it is the intent of the
Board for the foreseeable future to authorize payment of an extra
dividend semi-annually, the payment and magnitude of any future extra
dividend will be considered in light of changing opportunities to
deploy capital effectively, including the repurchase of stock, future
interest rates, expansion of the Company's business and general
economic condition.
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)
Dec. 31, Sept. 30, Dec. 31,
2004 2004 2003
---------------------------------------
ASSETS
- -------------------------------
Cash and due from banks $ 8,937 $ 8,262 $ 15,131
Short-term investments 127,928 99,556 127,572
Securities available for sale 260,852 270,432 287,952
Securities held to maturity
(market value of $914, $1,228
and $1,381, respectively) 889 1,198 1,343
Restricted equity securities 17,444 16,554 11,401
Loans 1,269,637 1,239,926 1,074,740
Allowance for loan losses (17,540) (17,161) (16,195)
---------------------------------------
Net loans 1,252,097 1,222,765 1,058,545
---------------------------------------
Other investment 4,456 4,453 4,251
Accrued interest receivable 5,801 5,588 5,248
Bank premises and equipment,
net 3,900 3,110 2,737
Deferred tax asset 9,980 9,725 8,843
Prepaid income taxes 270 59 -
Other assets 1,945 1,572 1,011
---------------------------------------
Total assets $ 1,694,499 $1,643,274 $ 1,524,034
=======================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
- -------------------------------
Deposits $ 773,958 $ 735,306 $ 679,921
Borrowed funds 320,171 305,490 220,519
Mortgagors' escrow accounts 4,464 4,978 4,565
Income taxes payable - - 1,489
Accrued expenses and other
liabilities 10,893 12,457 10,856
---------------------------------------
Total liabilities 1,109,486 1,058,231 917,350
---------------------------------------
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, 60,477,939 shares
and 60,160,530 shares
issued, respectively 605 605 602
Additional paid-in capital 471,799 471,580 469,493
Retained earnings, partially
restricted 144,081 144,977 169,417
Accumulated other
comprehensive income (A) 560 717 2,529
Treasury stock, at cost -
1,335,299 shares (17,017) (17,017) (17,017)
Unearned compensation -
recognition and retention
plans (10,963) (11,685) (13,960)
Unallocated common stock held
by ESOP - 743,221 shares,
758,257 shares and 803,356
shares, respectively (4,052) (4,134) (4,380)
---------------------------------------
Total stockholders' equity 585,013 585,043 606,684
---------------------------------------
- --- ---
Total liabilities and
stockholders' equity $ 1,694,499 $1,643,274 $ 1,524,034
=======================================
(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 Year ended
December 31, December 31,
-----------------------------------------------
2004 2003 2004 2003
-----------------------------------------------
Interest income:
Loans $ 16,880 $ 14,762 $ 63,527 $ 56,359
Debt securities 1,459 1,735 6,333 7,648
Marketable equity
securities 69 73 281 370
Restricted equity
securities 149 70 429 289
Short-term
investments 536 329 1,540 1,544
-----------------------------------------------
Total interest
income 19,093 16,969 72,110 66,210
-----------------------------------------------
Interest expense:
Deposits 3,204 2,770 11,708 12,295
Borrowed funds 2,626 1,874 9,416 6,313
----------- ---------------------------------
Total interest
expense 5,830 4,644 21,124 18,608
----------- ---------------------------------
Net interest income 13,263 12,325 50,986 47,602
Provision for loan
losses 927 313 2,603 1,288
----------- ---------------------------------
Net interest income
after provision for
loan losses 12,336 12,012 48,383 46,314
----------- ---------------------------------
Non-interest income:
Fees and charges 411 720 2,577 2,552
Gains on securities,
net - 1,593 1,767 2,102
Swap agreement market
valuation credit 53 67 231 163
Other income 142 114 635 536
-----------------------------------------------
Total non-interest
income 606 2,494 5,210 5,353
-----------------------------------------------
Non-interest expense:
Compensation and
employee benefits 2,455 2,488 10,004 9,636
Recognition and
retention plans 722 3,885 2,890 3,992
Occupancy 414 376 1,604 1,517
Equipment and data
processing 1,209 937 4,458 3,219
Advertising and
marketing 148 198 638 761
Dividend equivalent
rights - - 734 361
Other 795 662 2,661 2,701
-----------------------------------------------
Total non-interest
expense 5,743 8,546 22,989 22,187
-----------------------------------------------
Income before income
taxes 7,199 5,960 30,604 29,480
-----------------------------------------------
Income tax expense:
Provision for income
taxes 3,203 2,521 12,837 12,212
Retroactive
assessment related
to REIT - - - 2,788
-----------------------------------------------
Total income tax
expense 3,203 2,521 12,837 15,000
-----------------------------------------------
-----------------------------------------------
Net income $ 3,996 $ 3,439 $ 17,767 $ 14,480
===============================================
Earnings per common
share:
Basic $ 0.07 $ 0.06 $ 0.31 $ 0.25
Diluted 0.07 0.06 0.31 0.25
Weighted average common
shares outstanding
during the period:
Basic 57,424,472 56,713,171 57,278,329 56,869,065
Diluted 58,274,797 57,724,597 58,131,107 57,871,763
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended December 31,
---------------------------------------------
2004
---------------------------------------------
Average Average
balance Interest (1) yield/cost
---------------------------------------------
(Dollars in thousands)
Assets
- ------------------------
Interest-earning assets:
Short-term investments $ 111,083 $ 536 1.91%
Debt securities (2) 255,180 1,466 2.30
Equity securities (2) 26,460 244 3.66
Mortgage loans (3) 836,814 12,468 5.96
Money market loan
participations 3,130 15 1.90
Commercial loans (3) 51,229 615 4.80
Indirect automobile
loans (3) 367,951 3,738 4.03
Other consumer loans
(3) 2,491 44 7.07
-------------------------
Total interest-
earning assets 1,654,338 19,126 4.60%
------------------------
Allowance for loan
losses (17,133)
Non-interest earning
assets 32,610
--------------
Total assets $1,669,815
==============
Liabilities and
Stockholders' Equity
- ------------------------
Interest-bearing
liabilities:
Deposits:
NOW accounts $ 63,473 23 0.14%
Savings accounts (4) 82,964 385 1.84
Money market savings
accounts 266,336 748 1.11
Certificate of
deposit accounts 304,262 2,048 2.67
-----------------------------
Total deposits 717,035 3,204 1.77
Borrowed funds 315,189 2,626 3.26
-----------------------------
Total interest
bearing
liabilities 1,032,224 5,830 2.24%
--------------------------
Non-interest-bearing
demand
checking accounts 38,435
Other liabilities 13,989
--------------
Total liabilities 1,084,648
Stockholders' equity 585,167
--------------
Total liabilities
and
stockholders'
equity $1,669,815
==============
Net interest income (tax
equivalent
basis)/interest rate
spread 13,296 2.36%
================
Less adjustment of tax
exempt income 33
---------------
Net interest income $ 13,263
===============
Net interest margin 3.21%
================
Three months ended December 31,
---------------------------------------------
2003
---------------------------------------------
Average Average
balance Interest (1) yield/cost
---------------------------------------------
(Dollars in thousands)
Assets
- ------------------------
Interest-earning assets:
Short-term investments $ 129,721 $ 329 1.01%
Debt securities (2) 276,752 1,744 2.52
Equity securities (2) 22,367 170 3.03
Mortgage loans (3) 818,696 12,224 5.97
Money market loan
participations 3,227 9 1.11
Commercial loans (3) 29,077 415 5.71
Indirect automobile
loans (3) 191,391 2,069 4.29
Other consumer loans
(3) 2,429 45 7.41
-------------------------
Total interest-
earning assets 1,473,660 17,005 4.60%
--------------------------
Allowance for loan
losses (16,020)
Non-interest earning
assets 31,307
--------------
Total assets $1,488,947
==============
Liabilities and
Stockholders' Equity
- ------------------------
Interest-bearing
liabilities:
Deposits:
NOW accounts $ 60,756 20 0.13%
Savings accounts (4) 25,694 27 0.42
Money market savings
accounts 306,790 1,031 1.33
Certificate of
deposit accounts 248,109 1,692 2.70
-----------------------------
Total deposits 641,349 2,770 1.71
Borrowed funds 195,789 1,874 3.75
-----------------------------
Total interest
bearing
liabilities 837,138 4,644 2.20%
-------------------------------
Non-interest-bearing
demand
checking accounts 32,530
Other liabilities 14,294
--------------
Total liabilities 883,962
Stockholders' equity 604,985
--------------
Total liabilities
and
stockholders'
equity $1,488,947
============
Net interest income
(tax equivalent
basis)/interest rate
spread 12,361 2.40%
=========
Less adjustment of tax
exempt income 36
---------------
Net interest income $ 12,325
===============
Net interest margin 3.36%
============
(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) Savings accounts include mortgagors' escrow accounts
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Ratios and Other Data
Three months ended Year ended
December 31, December 31,
-------------------------------------
2004 2003 2004 2003
-------------------------------------
Performance Ratios (annualized):
Return on average assets 0.96% 0.92% 1.10% 1.00%
Return on average stockholders'
equity 2.73% 2.27% 2.99% 2.36%
Interest rate spread 2.36% 2.40% 2.34% 2.26%
Net interest margin 3.21% 3.36% 3.21% 3.34%
Dividends paid per share during
period $0.085 $0.085 $0.74 $0.54
At At At
December 31, September 30, December 31,
2004 2004 2003
------------ ------------- ------------
(Dollars in thousands
except per share data)
Capital Ratio:
Stockholders'
equity to total assets 34.52% 35.60% 39.81%
Asset Quality:
Non-performing loans $ 111 $ 91 $ 50
Non-performing assets 439 336 133
Allowance for loan losses 17,540 17,161 16,195
Allowance for loan losses
as a percent of total
loans 1.38% 1.38% 1.51%
Non-performing assets
as a percent of total assets 0.03% 0.02% 0.01%
Per Share Data:
Book value per share $ 9.89 $ 9.89 $ 10.31
Market value per share $ 16.32 $ 15.67 $ 15.34
CONTACT: Brookline Bancorp
Paul Bechet, 617-730-3500