Exhibit 99.1
Brookline Bancorp Announces 2005 Second Quarter
Operating Results and Dividend Declarations
BROOKLINE, Mass.--(BUSINESS WIRE)--July 21, 2005--Brookline
Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its
earnings for the 2005 second quarter and 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 August 15, 2005 to
stockholders of record on July 29, 2005.
The Company earned $5,441,000, or $0.09 per share on a basic and
diluted basis, for the quarter ended June 30, 2005 compared to
$4,622,000, or $0.08 per share on a basic and diluted basis, for the
quarter ended June 30, 2004. The 17.7% increase in quarterly earnings
was attributable primarily to inclusion of the operating results of
Mystic Financial, Inc. and its subsidiaries ("Mystic") and higher
mortgage loan prepayment fees ($755,000 in the 2005 quarter compared
to $278,000 in the 2004 quarter). Included in the 2005 and 2004
quarterly periods were securities gains of $259,000 and $381,000,
respectively.
Net income for the six months ended June 30, 2005 was $10,973,000,
or $0.18 per share on a basic and diluted basis, compared to
$9,274,000, or $0.16 per share on a basic and diluted basis, for the
six months ended June 30, 2004. The 18.3% increase in six month
earnings was attributable primarily to inclusion of the operating
results of Mystic and improvement in the Company's net interest
margin. Included in the 2005 and 2004 six month periods were mortgage
loan prepayment fees of $1,145,000 and $1,141,000, respectively, and
securities gains of $853,000 and $961,000, respectively.
As previously reported, the Company acquired Mystic on January 7,
2005. Total assets acquired were approximately $440 million, including
loans of $343 million, and deposits assumed were approximately $331
million. The balance of Mystic loans acquired declined to $280 million
at June 30, 2005 as a result of (a) the sale of $30 million of
long-term fixed rate residential mortgage loans done to reduce the
risk related to rising interest rates and (b) loan payoffs, including
approximately $10 million in construction loans and $10 million in
residential mortgage loans. In light of the trend of rising prices in
the housing market, the Company has chosen to be cautious in
originating new construction and residential mortgage loans. The
balance of Mystic related deposits increased to $354 million at June
30, 2005. The attractive deposit base of Mystic was one of the
important reasons for pursuing the acquisition.
As part of the acquisition, Mystic was merged into the Company
and, on April 11, 2005, its operating systems were merged into the
Company's operating systems. Merger/conversion related expenses of
$893,000 were incurred in the six month period ended June 30, 2005,
$511,000 of which were incurred in the second quarter of 2005. No
further significant merger/conversion expenses are contemplated. Of
the total amount paid for the acquisition, $11.8 million was
classified as a core deposit intangible asset to be amortized over
nine years. Amortization of the core deposit intangible amounted to
$593,000 in the 2005 second quarter and $1,185,000 for the six months
ended June 30, 2005.
Net interest income was $4,243,000, or 32.9%, higher in the 2005
quarter compared to the 2004 quarter and $9,122,000, or 36.4%, higher
in the 2005 six month period compared to the 2004 six month period.
The increases were due to growth in assets, notably from the Mystic
acquisition and higher balances of indirect automobile loans, and
improvement in interest rate spread from 2.42% in the 2004 quarter to
2.52% in the 2005 quarter and from 2.35% in the 2004 six month period
to 2.55% in the 2005 six month period.
Net interest margin improved from 3.24% in the 2004 six month
period to 3.28% in the 2005 six month period, but declined from 3.29%
in the 2004 quarter to 3.26% in the 2005 quarter. The quarterly
decline in net interest margin was due to the reduction in the percent
of total assets funded by stockholders' equity for which there is no
charge for interest expense from 37.6% in the 2004 quarter to 28.0% in
the 2005 quarter. Offsetting most of the effect of the decrease in the
percent of assets funded by stockholders' equity was the increase in
the rate realized on interest-earning assets from 4.55% in the 2004
quarter to 4.99% in the 2005 quarter. The rate increase was due
primarily to the rise in interest rates established by the Federal
Reserve for overnight borrowings between banks from 1.00% in June 2004
to 2.25% at the end of 2004 and 3.25% at June 30, 2005. Because of the
high percent of the Company's assets funded by stockholders' equity, a
rising interest rate environment has a positive impact on the
Company's net interest income. It should be noted, however, that while
rates earned increase in a rising interest rate environment, interest
rates paid on deposits and borrowed funds likewise increase. For
example, the average rate paid on interest-bearing liabilities
increased from 2.13% in the 2004 second quarter to 2.28% in the 2005
first quarter and 2.47% in the 2005 second quarter. Trends in interest
rates depend on many factors and, accordingly, actual rates in the
future could vary significantly and cause fluctuations in the
Company's net interest income.
The provision for loan losses increased from $711,000 in the 2004
quarter to $957,000 in the 2005 quarter and from $1,041,000 in the
2004 six month period to $1,611,000 in the 2005 six month period. Of
these amounts, $501,000, $623,000, $883,000 and $1,327,000,
respectively, related to the indirect automobile loan portfolio which
grew from $211 million at December 31, 2003 to $313 million at June
30, 2004 and $420 million at June 30, 2005. Net charge-offs in that
portfolio amounted to $137,000 in the 2004 quarter, $237,000 in the
2005 quarter, $271,000 in the 2004 six month period and $556,000 in
the 2005 six month period. The annualized rate of net charge-offs for
the 2005 six month period was 0.28% of average indirect automobile
loans outstanding. The substantial excess of provisions over
charge-offs is in light of the growth of the portfolio. Such growth is
expected to continue as the Company recently expanded its geographic
market area to include Connecticut, Rhode Island and western
Massachusetts. The same underwriting criteria applied to date will be
applied to loans originated in the expanded market area.
The provision for loan losses not attributable to indirect
automobile lending related to growth of the remainder of the loan
portfolio and assignment of higher risk ratings to certain loans
acquired in the Mystic transaction. The Company is utilizing its more
conservative underwriting criteria in addressing collection of the
Mystic loans acquired and in the origination of new loans to the
customer base acquired.
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 earnings of the Company, its capital requirements,
potential future business initiatives and other factors. While it is
the intent of the Board of Directors for the foreseeable future to
authorize payment of an extra dividend semi-annually, the payment and
magnitude of any future dividend will be considered in light of
changing opportunities to deploy capital effectively, including the
repurchase of Company common stock, future interest rates, expansion
of the Company's business and general economic conditions.
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)
June 30, December 31, June 30,
2005 2004 2004
----------- ----------- -----------
ASSETS
- ----------------------------------
Cash and due from banks $ 17,558 $ 8,937 $ 9,639
Short-term investments 163,762 127,928 118,748
Securities available for sale 339,189 260,852 276,489
Securities held to maturity
(market value of $875, $914
and $1,251, respectively) 857 889 1,222
Restricted equity securities 23,081 17,444 15,125
Loans 1,608,295 1,269,637 1,183,005
Allowance for loan losses (22,175) (17,540) (16,962)
---------- ----------- -----------
Net loans 1,586,120 1,252,097 1,166,043
---------- ----------- -----------
Other investment 4,527 4,456 4,318
Accrued interest receivable 8,315 5,801 5,712
Bank premises and equipment, net 11,507 3,900 2,663
Other real estate owned 1,400 - -
Deferred tax asset 8,623 9,980 9,116
Prepaid income taxes 2,986 270 12
Core deposit intangible 10,656 - -
Goodwill 35,597 - -
Other assets 1,968 1,945 1,131
----------- ----------- -----------
Total assets $2,216,146 $1,694,499 $1,610,218
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Deposits $1,145,995 $ 773,958 $ 725,486
Borrowed funds 427,277 320,171 273,738
Subordinated debt 12,280 - -
Mortgagors' escrow accounts 5,121 4,464 4,579
Accrued expenses and other
liabilities 12,351 10,893 10,173
----------- ----------- -----------
Total liabilities 1,603,024 1,109,486 1,013,976
----------- ----------- -----------
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;
62,998,984 shares, 60,477,939
shares and 60,409,532 shares
issued, respectively 630 605 604
Additional paid-in capital 511,918 471,799 471,100
Retained earnings, partially
restricted 132,497 144,081 157,174
Accumulated other comprehensive
income (loss) (A) (287) 560 1,003
Treasury stock, at cost -
1,404,693 shares, 1,335,299
shares and 1,335,299 shares
issued, respectively (18,144) (17,017) (17,017)
Unearned compensation -
recognition and retention plans (9,591) (10,963) (12,406)
Unallocated common stock held by
ESOP -715,489 shares, 743,221
shares and 773,290 shares
issued, respectively (3,901) (4,052) (4,216)
----------- ----------- -----------
Total stockholders' equity 613,122 585,013 596,242
----------- ----------- -----------
Total liabilities and
stockholders' equity $2,216,146 $1,694,499 $1,610,218
=========== =========== ===========
(A) Represents net unrealized gains (losses) 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 Six months ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Interest income:
Loans $22,356 $15,506 $44,079 $30,565
Debt securities 2,644 1,942 4,911 3,448
Marketable equity
securities 76 69 150 148
Restricted equity
securities 239 71 458 140
Short-term
investments 1,009 305 1,855 603
----------- ----------- ----------- -----------
Total interest
income 26,324 17,893 51,453 34,904
----------- ----------- ----------- -----------
Interest expense:
Deposits 5,354 2,832 9,912 5,529
Borrowed funds 3,672 2,174 7,053 4,313
Subordinated debt 168 - 304 -
----------- ------- ----------- -----------
Total interest
expense 9,194 5,006 17,269 9,842
----------- ------- ----------- -----------
Net interest income 17,130 12,887 34,184 25,062
Provision for loan
losses 957 711 1,611 1,041
----------- ------- ----------- -----------
Net interest income
after provision
for loan losses 16,173 12,176 32,573 24,021
----------- ------- ----------- -----------
Non-interest income:
Fees and charges 1,206 549 2,053 1,670
Gains on securities,
net 259 381 853 961
Swap agreement
market valuation
credit 6 88 49 128
Other income 107 211 241 351
----------- ----------- ----------- -----------
Total non-interest
income 1,578 1,229 3,196 3,110
----------- ----------- ----------- -----------
Non-interest expense:
Compensation and
employee benefits 3,328 2,537 6,555 5,072
Recognition and
retention plans 651 718 1,373 1,446
Occupancy 685 374 1,390 791
Equipment and data
processing 1,596 1,091 3,186 2,084
Advertising and
marketing 251 189 455 376
Dividend equivalent
rights - - 363 375
Merger/conversion 511 - 893 -
Amortization of core
deposit intangible 593 - 1,185 -
Other 954 636 1,894 1,242
----------- ----------- ----------- -----------
Total non-interest
expense 8,569 5,545 17,294 11,386
----------- ----------- ----------- -----------
Income before income
taxes 9,182 7,860 18,475 15,745
Provision for income
taxes 3,741 3,238 7,502 6,471
----------- ----------- ----------- -----------
Net income $ 5,441 $ 4,622 $10,973 $ 9,274
=========== =========== =========== ===========
Earnings per common
share:
Basic $ 0.09 $ 0.08 $ 0.18 $ 0.16
Diluted 0.09 0.08 0.18 0.16
Weighted average common
shares outstanding
during the period:
Basic 60,086,614 57,247,354 59,984,623 57,156,108
Diluted 60,866,872 58,057,812 60,771,324 58,051,083
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended June 30,
-------------------------------------------------------
2005 2004
---------------------------- --------------------------
Average Average
Average Interest yield/ Average Interest yield/
balance (1) cost balance (1) cost
----------- -------- ------- ------- -------- ---------
(Dollars in thousands)
Assets
- --------------
Interest-
earning
assets:
Short-term
investments $142,570 $ 1,009 2.84% $118,387 $ 305 1.03%
Debt
securities (2) 339,102 2,671 3.15 273,969 1,951 2.85
Equity
securities (2) 31,513 343 4.36 25,202 167 2.63
Mortgage
loans (3) 1,104,434 16,857 6.11 817,699 12,032 5.89
Money market
loan
partici-
pations - - - 640 2 1.15
Other
commercial
loans (3) 75,013 1,104 5.89 30,916 434 5.62
Indirect
automobile
loans (3) 415,010 4,341 4.20 303,983 2,993 3.95
Other
consumer
loans (3) 3,044 54 7.10 2,341 44 7.52
---------- -------- ---------- --------
Total
interest-
earning
assets 2,110,686 26,379 4.99% 1,573,137 17,928 4.55%
-------- ----- -------- -----
Allowance for
loan losses (21,526) (16,501)
Non-interest
earning
assets 101,438 29,442
----------- -----------
Total
assets $2,190,598 $1,586,078
=========== ===========
Liabilities and
Stockholders'
Equity
- --------------
Interest-bearing
liabilities:
Deposits:
NOW
accounts $ 101,296 42 0.17% $ 62,666 22 0.14%
Savings
accounts 159,875 554 1.39 74,713 319 1.71
Money
market
savings
accounts 274,155 1,043 1.53 282,121 842 1.20
Certificate
of deposit
accounts 531,164 3,715 2.81 261,911 1,649 2.53
----------- -------- ----------- --------
Total
deposits 1,066,490 5,354 2.01 681,411 2,832 1.67
Borrowed
funds 413,234 3,672 3.52 259,327 2,174 3.32
Subordinated
debt 12,299 168 5.40 - - -
----------- -------- ----------- --------
Total
interest
bearing
liabili-
ties 1,492,023 9,194 2.47% 940,738 5,006 2.13%
-------- ----- -------- -----
Non-interest-
bearing demand
checking
accounts 69,188 35,286
Other
liabilities 14,770 13,744
----------- -----------
Total
liabili-
ties 1,575,981 989,768
Stockholders'
equity 614,617 596,310
----------- -----------
Total
liabili-
ties and
stock-
holders'
equity $2,190,598 $1,586,078
=========== ===========
Net interest
income (tax
equivalent
basis)/
interest rate
spread (4) 17,185 2.52% 12,922 2.42%
===== =====
Less adjustment
of tax exempt
income 55 35
-------- -------
Net interest
income $17,130 $12,887
======== ========
Net interest
margin (5) 3.26% 3.29%
===== =====
(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) Interest rate 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 Six months
ended ended
June 30, June 30,
----------------- ---------------
2005 2004 2005 2004
-------- -------- ------- -------
Performance Ratios (annualized):
Return on average assets 0.99% 1.17% 1.01% 1.18%
Return on average stockholders'
equity 3.54% 3.10% 3.56% 3.08%
Interest rate spread 2.52% 2.42% 2.55% 2.35%
Net interest margin 3.26% 3.29% 3.28% 3.24%
Dividends paid per share during
period $0.085 $0.085 $0.37 $0.37
At At At
June 30, Dec. 31, June 30,
2005 2004 2004
------- -------- --------
(Dollars in thousands except per share data)
Capital Ratio:
Stockholders' equity to total assets 27.67% 34.52% 37.03%
Asset Quality:
Non-performing loans $ 227 $ 111 $ 168
Non-performing assets 1,916 439 322
Allowance for loan losses 22,175 17,540 16,962
Allowance for loan losses as a percent
of total loans 1.38% 1.38% 1.43%
Non-performing assets as a percent of
total assets 0.09% 0.03% 0.02%
Per Share Data:
Book value per share $ 9.95 $ 9.89 $ 10.09
Tangible book value per share $ 9.20 $ 9.89 $ 10.09
Market value per share $ 16.26 $ 16.32 $ 14.67
CONTACT: Brookline Bancorp, Inc.
Paul R. Bechet, 617-730-3500
Chief Financial Officer