Exhibit 99.1
Brookline Bancorp Announces 2005 First Quarter Operating Results and Dividend
Declaration
BROOKLINE, Mass.--(BUSINESS WIRE)--April 21, 2005--Brookline
Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its
earnings for the 2005 first quarter and the approval by its Board of
Directors of a regular quarterly dividend of $0.085 per share payable
May 13, 2005 to stockholders of record on April 29, 2005.
The Company earned $5,532,000, or $0.09 per share (on a basic and
diluted basis), for the quarter ended March 31, 2005 compared to
$4,652,000, or $0.08 per share (on a basic and diluted basis), for the
quarter ended March 31, 2004. Included in the 2005 and 2004 quarterly
periods are after-tax securities gains of $381,000 and $373,000,
respectively. The 18.9% increase in quarterly earnings was
attributable primarily to the inclusion of the operating results of
Mystic Financial, Inc. and its subsidiaries ("Mystic") and improvement
in the Company's net interest margin.
As previously reported, the Company acquired Mystic on January 7,
2005 for approximately $65.5 million. That amount consisted of the
issuance of 2,516,525 shares of the Company's common stock, payment of
cash of approximately $27.7 million and related income tax benefits of
approximately $1.3 million. Mystic was the parent of Medford
Co-operative Bank ("Medford"), a bank with seven retail offices. Total
assets acquired were approximately $440 million, including loans of
$343 million, and deposits assumed were approximately $331 million. Of
the total premium paid, approximately $11.8 million was classified as
a core deposit intangible asset to be amortized to expense on an
accelerated basis over nine years and approximately $36.6 million was
classified as goodwill. Amortization of the core deposit intangible,
which is deductible for income tax purposes, amounted to $593,000 in
the 2005 quarter. Goodwill, which is not tax deductible, will be
subject to at least an annual test for impairment. If impairment is
deemed to have occurred, the amount of impairment will be charged to
expense when identified.
As part of the acquisition, Mystic was merged into the Company
and, on April 11, 2005, the operating systems of Medford were
converted to the Company's operating systems. Merger/conversion
related expenses of $382,000 were incurred in the quarter ended March
31, 2005. Annualized cost savings will substantially exceed the 30%
savings rate projected at the time the acquisition was announced.
Net interest income was $4,879,000, or 40.1%, higher in the 2005
quarter compared to the 2004 quarter as a result of a $535 million
(34.9%) increase in average earning assets and improvement in interest
rate spread from 2.29% to 2.59% and interest rate margin from 3.19% to
3.31% in the respective quarters. The asset growth was attributable to
the Mystic acquisition and the indirect automobile loan portfolio
which increased $143 million in average balances outstanding between
the 2005 and 2004 quarters.
We have previously reported that the Company's net interest margin
is greatly influenced by interest rates established by the Federal
Reserve for overnight borrowings between banks. Since a high percent
of the Company's assets (28.9% in the 2005 quarter and 38.8% in the
2004 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.
Rising interest rates cause the opposite effect. In the second half of
2004, the Federal Reserve increased the overnight borrowing rate from
1.00% to 2.25% and, in the 2005 first quarter, to 2.75%. These rate
increases had a positive impact on the Company's net interest income
in the 2005 first quarter. 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 fixed rate borrowings that
mature in periods in the two to three year range. Trends in interest
rates depend on many factors and, accordingly, actual rates in the
future could vary significantly with the Company's rate predictions.
To reduce the risk related to rising interest rates resulting from
the Mystic acquisition, in the 2005 quarter, the Company sold $29.9
million of fixed rate residential mortgage loans with 15 to 30 year
maturities and $8.6 million of callable bonds with maturities
extendable to over 10 years.
The provision for loan losses increased from $330,000 in the 2004
quarter to $654,000 in the 2005 quarter. The increase was attributable
to the indirect automobile loan portfolio which grew from $274 million
at March 31, 2004 to $369 million at December 31, 2004 and $392
million at March 31, 2005. Net charge-offs in the 2005 quarter were
$319,000, resulting in an annualized net charge-off rate of 0.33%. The
rate of net charge-offs in the year 2004 was 0.40% of average loans
outstanding. At March 31, 2005, indirect automobile loans delinquent
more than 30 days were $3,127,000, or 0.80% of the portfolio, compared
to $3,192,000, or 0.87% of the portfolio, at December 31, 2004. At
March 31, 2005, non-accrual loans were $489,000 ($371,000 from the
Medford portfolio), repossessed vehicles were $343,000, other real
estate owned (from the Medford portfolio) was $1,400,000 and the
allowance for loan losses was $21,383,000, or 1.35% of total loans
outstanding.
The decline in non-interest income in the 2005 quarter compared to
the 2004 quarter resulted from a $474,000 reduction in fees from
mortgage loan prepayments. The increase in non-interest expense
between the two periods was attributable primarily to the Mystic
acquisition, the opening of a new branch in the fall of 2004, higher
premiums for employee medical benefits and higher professional fees
resulting primarily from compliance with the requirements of the
Sarbanes Oxley Act. In the opinion of management, the added expense to
comply with such requirements greatly exceeded the minimal benefit
derived.
Excluding the increases resulting from the Mystic acquisition and
indirect automobile loan originations, the loan portfolio remained
relatively unchanged during the 2005 quarter. Increased competition
for loans resulted in irrational pricing by some other banks which the
Company was not inclined to match. Excluding the increase resulting
from the Mystic acquisition, deposits grew approximately $37.2
million, or 4.8%, in the 2005 quarter. Of that growth, approximately
$22.6 million took place at the Medford branches due in part to
promotional programs offered.
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)
March 31, December 31, March 31,
2005 2004 2004
----------- ----------- ------------
ASSETS
--------
Cash and due from banks $ 10,491 $ 8,937 $ 14,886
Short-term investments 133,549 127,928 140,402
Securities available for sale 366,374 260,852 285,768
Securities held to maturity
(market value of $895, $914
and $1,308, respectively) 875 889 1,272
Restricted equity securities 22,557 17,444 14,239
Loans 1,586,884 1,269,637 1,129,540
Allowance for loan losses (21,383) (17,540) (16,388)
----------- ----------- -----------
Net loans 1,565,501 1,252,097 1,113,152
----------- ----------- -----------
Other investment 4,438 4,456 4,256
Accrued interest receivable 8,189 5,801 5,306
Bank premises and equipment, net 11,647 3,900 2,683
Other real estate owned 1,400 - -
Deferred tax asset 8,434 9,980 8,109
Prepaid income taxes 1,513 270 -
Core deposit intangible 11,249 - -
Goodwill 36,605 - -
Other assets 2,172 1,945 1,135
----------- ----------- -----------
Total assets $2,184,994 $1,694,499 $1,591,208
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits $1,143,461 $ 773,958 $ 709,641
Borrowed funds 397,552 320,171 267,281
Subordinated debt 12,310 - -
Mortgagors' escrow accounts 5,961 4,464 5,253
Income taxes payable - - 1,734
Accrued expenses and other
liabilities 13,402 10,893 11,146
----------- ----------- -----------
Total liabilities 1,572,686 1,109,486 995,055
----------- ----------- -----------
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; 62,996,235
shares, 60,477,939 shares and
60,275,256 shares issued,
respectively 630 605 603
Additional paid-in capital 511,768 471,799 470,248
Retained earnings, partially
restricted 132,196 144,081 157,439
Accumulated other
comprehensive income (loss) (1,028) 560 2,411
Treasury stock, at cost -
1,336,799 shares,
1,335,299 shares and
1,335,299 shares,
respectively (17,040) (17,017) (17,017)
Unearned compensation -
recognition and retention
plans (10,241) (10,963) (13,233)
Unallocated common stock held
by ESOP - 729,355 shares,
743,221 shares and 788,323
shares, respectively (3,977) (4,052) (4,298)
----------- ----------- -----------
Total stockholders' equity 612,308 585,013 596,153
----------- ----------- -----------
Total liabilities and
stockholders' equity $2,184,994 $1,694,499 $1,591,208
=========== =========== ===========
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands except share data)
Three months ended
March 31,
-----------------------
2005 2004
----------- -----------
Interest income:
Loans $ 21,724 $ 15,059
Debt securities 2,267 1,506
Marketable equity securities 74 78
Restricted equity securities 219 70
Short-term investments 846 298
----------- -----------
Total interest income 25,130 17,011
----------- -----------
Interest expense:
Deposits 4,559 2,697
Borrowed funds 3,382 2,139
Subordinated debt 135 -
----------- -----------
Total interest expense 8,076 4,836
----------- -----------
Net interest income 17,054 12,175
Provision for loan losses 654 330
----------- -----------
Net interest income after provision for loan
losses 16,400 11,845
----------- -----------
Non-interest income:
Fees and charges 851 1,121
Gains on sales of securities, net 594 581
Other income 174 179
----------- -----------
Total non-interest income 1,619 1,881
----------- -----------
Non-interest expense:
Compensation and employee benefits 3,950 3,262
Occupancy 704 417
Equipment and data processing 1,591 993
Advertising and marketing 204 187
Professional services 349 153
Dividend equivalent rights 363 375
Merger/conversion 382 -
Amortization of core deposit intangible 593 -
Other 590 454
----------- -----------
Total non-interest expense 8,726 5,841
----------- -----------
Income before income taxes 9,293 7,885
Provision for income taxes 3,761 3,233
----------- -----------
Net income $ 5,532 $ 4,652
=========== ===========
Earnings per common share:
Basic $ 0.09 $ 0.08
Diluted 0.09 0.08
Weighted average common shares outstanding
during the period:
Basic 59,944,866 57,076,261
Diluted 60,737,986 58,055,753
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended March 31,
-------------------------------
2005
-------------------------------
Average
Average Interest yield/
balance (1) cost
------------ -------- --------
(Dollars in thousands)
Assets
- -------
Interest-earning assets:
Short-term investments $ 139,702 $ 846 2.46 %
Debt securities (2) 317,408 2,295 2.89
Equity securities (2) 31,740 320 4.08
Mortgage loans (3) 1,109,888 16,670 6.01
Money market loan participations 172 1 2.44
Other commercial loans (3) 77,580 1,106 5.70
Indirect automobile loans (3) 389,468 3,897 4.06
Other consumer loans (3) 2,959 50 6.76
----------- -------
Total interest-earning assets 2,068,917 25,185 4.87 %
------- --------
Allowance for loan losses (20,156)
Non-interest earning assets 90,180
-----------
Total assets $2,138,941
===========
Liabilities and Stockholders' Equity
- ------------------------------------
Interest-bearing liabilities:
Deposits:
NOW accounts $ 96,909 35 0.15 %
Savings accounts 159,470 548 1.39
Money market savings accounts 294,652 947 1.30
Certificate of deposit accounts 472,052 3,028 2.60
----------- -------
Total deposits 1,023,083 4,558 1.81
Borrowed funds 403,962 3,381 3.35
Subordinated debt 11,032 136 4.93
----------- -------
Total interest bearing liabilities 1,438,077 8,075 2.28 %
------- --------
Non-interest-bearing demand
checking accounts 66,140
Other liabilities 17,058
-----------
Total liabilities 1,521,275
Stockholders' equity 617,666
-----------
Total liabilities and
stockholders' equity $2,138,941
===========
Net interest income (tax equivalent
basis)/interest rate spread (4) 17,110 2.59 %
========
Less adjustment of tax exempt income 55
-------
Net interest income $17,055
=======
Net interest margin (5) 3.31 %
========
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) 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 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 253,160 2,139 3.34
Subordinated debt - - -
----------- -------
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 (4) 12,213 2.29 %
========
Less adjustment of tax exempt income 38
-------
Net interest income $12,175
=======
Net interest margin (5) 3.19 %
========
(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) Net interest spread represents the difference between the yield on
interest-earning assets and the cost of interest-bearing
liabilities.
(5) Net interest margin represents net interest income (tax equivalent
basis) divided by average interest-earning assets
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Ratios and Other Data
Three months ended
March 31,
-----------------------
2005 2004
-----------------------
Performance Ratios (annualized):
Return on average assets 1.03 % 1.20 %
Return on average stockholders' equity 3.58 % 3.09 %
Interest rate spread 2.59 % 2.29 %
Net interest margin 3.31 % 3.19 %
Dividends paid per share during period $ 0.285 $ 0.285
At At At
March 31, Dec. 31, March 31,
2005 2004 2004
--------- --------- ---------
(dollars in thousands except
per share data)
Capital Ratio:
Stockholders' equity to total assets 28.02 % 34.52 % 37.47 %
Asset Quality:
Non-performing loans $ 489 $ 111 $ 18
Non-performing assets 2,232 439 84
Allowance for loan losses 21,383 17,540 16,388
Allowance for loan losses as a percent of
total loans 1.35 % 1.38 % 1.45 %
Non-performing assets as a percent of
total assets 0.10 % 0.03 % 0.01 %
Per Share Data:
Book value per share $ 9.93 $ 9.89 $ 10.11
Tangible book value per share 9.15 9.89 10.11
Market value per share 14.90 16.32 15.95
CONTACT: Brookline Bancorp, Inc.
Paul R. Bechet, 617-730-3500
Chief Financial Officer