Exhibit 99.1
Brookline Bancorp Announces 2006 Fourth Quarter and Annual Earnings and Dividend
Declarations
BROOKLINE, Mass.--(BUSINESS WIRE)--Jan. 18, 2007--Brookline Bancorp, Inc.
(the "Company") (NASDAQ:BRKL) announced today its earnings for the 2006 fourth
quarter and year 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
February 16, 2007 to stockholders of record on February 2, 2007.
The Company earned $5,377,000, or $0.09 per share on a basic and diluted
basis, for the quarter ended December 31, 2006 compared to $5,536,000, or $0.09
per share on a basic and diluted basis, for the quarter ended December 31, 2005.
The 2005 quarter included a gain of $322,000 ($187,000 on an after-tax basis)
from the sale of a building and a foreclosed property. In the 2006 quarter, the
adverse consequences on operating results of an inverted yield curve environment
was softened by the additional earnings resulting from the purchase of a
controlling interest in Eastern Funding LLC ("Eastern") on April 13, 2006 and a
lower provision for loan losses.
Net income for the year ended December 31, 2006 was $20,812,000, or $0.34
per share on a basic and diluted basis, compared to $22,030,000, or $0.37 per
share ($0.36 per share on a diluted basis), for the year ended December 31,
2005. Included in net income were after-tax securities gains of $358,000 in 2006
and $547,000 in 2005. Excluding securities gains, the $1,029,000, or 4.8%,
decline in net income was attributable to a $1,383,000 ($805,000 on an after-tax
basis) reduction in mortgage loan prepayment fees in 2006 compared to 2005 and
the adverse consequences of the inverted yield curve environment.
Interest rate spread has been declining steadily from 2.59% in the 2005
first quarter to 2.33% in the 2005 fourth quarter and 2.06% in the 2006 fourth
quarter. The trend in net interest margin was similar to that in interest rate
spread, although less pronounced in the degree of decline. Net interest margin
declined from 3.31% in the 2005 first quarter to 3.19% in the 2005 fourth
quarter and 3.12% in the 2006 fourth quarter. Net interest margin was aided in
the last three quarters of 2006 by inclusion of the higher yielding Eastern loan
portfolio. Improvement in interest rate spread and net interest margin will
continue to be difficult to achieve until the slope in the yield curve commences
an upward movement.
Interest income was 24% higher in the 2006 fourth quarter and year than in
the 2005 fourth quarter and year. Net interest income, however, increased only
5% and 3%, respectively, as interest expense rose 53% between the quarterly
periods and 60% between the years. The dramatic increase in interest expense
resulted from a rising interest rate environment triggered by rate setting
actions of the Federal Reserve, increased competition for deposits and a shift
in the mix of deposits. Customarily, higher rates are paid on certificates of
deposit than on transaction deposit accounts. Certificates of deposit comprised
61% of total retail deposits at December 31, 2006 compared to 55% at December
31, 2005 and 41% at December 31, 2004.
As to asset yields, rates earned on mortgage loans generally are higher
than the rates earned on most of the Company's other interest-earning assets.
Over the past year, mortgage loan pricing has been subjected to increased
competitive pressure and, as a result, it has been increasingly difficult to
incorporate the rise in funding costs into the pricing of new loan originations.
Due in part to this development, the average balance of mortgage loans
outstanding was $28 million less in the 2006 fourth quarter than in the 2006
third quarter and $19 million less in the year 2006 than in the year 2005.
Offsetting part of the decline in mortgage loan income was interest income
from the indirect automobile and Eastern loan portfolios. Indirect automobile
loans outstanding grew from $369 million at the end of 2004 to $459 million at
the end of 2005 and $540 million at the end of 2006. The average yield earned on
that portfolio grew from 4.30% in 2005 to 5.17% in 2006; the average yield in
the 2006 fourth quarter rose to 5.58%. Eastern loans outstanding at December 31,
2006 were $127 million and the average yield earned on the Eastern portfolio
since the acquisition in April 2006 was 10.83%. Eastern, which specializes in
the financing of coin-operated laundry, dry cleaning and grocery store equipment
in the greater metropolitan New York area and selected other locations in the
Northeast, is 86.7% owned by the Company.
The provision for loan losses was $129,000 in the 2006 fourth quarter
compared to $840,000 in the 2005 fourth quarter and $2,549,000 in the year 2006
compared to $2,483,000 in the year 2005. The provision for loan losses is
comprised of amounts relating to the indirect automobile loan portfolio, the
Eastern loan portfolio and the remainder of the Company's loan portfolio.
The provision for loan losses related to the indirect automobile loan
portfolio was $744,000 and $840,000, respectively, in the 2006 and 2005 quarters
and $3,098,000 and $2,859,000, respectively, in 2006 and 2005. These amounts
exceeded net charge-offs which amounted to $1,839,000 (0.35% of average loan
balances outstanding) in the year 2006 and $1,358,000 (0.32%) in the year 2005.
Loans delinquent 30 days or more were $7.1 million, or 1.31% of loans
outstanding at the end of 2006 compared to $5.9 million, or 1.28% of loans
outstanding at the end of 2005. The allowance for loan losses related to
indirect automobile loans increased from $2.9 million (0.64% of the portfolio)
at December 31, 2005 to $4.2 million (0.77% of the portfolio) at December 31,
2006.
The provision for loan losses related to the Eastern portfolio was $435,000
in the 2006 fourth quarter and $851,000 since the acquisition. Net charge-offs
in those periods were $442,000 and $515,000, respectively. Loans delinquent 30
days and over were $1.4 million, or 1.13% of loans outstanding at December 31,
2006.
Regarding the remainder of the Company's loan portfolio, a credit to the
provision for loan losses of $1,050,000 was taken to income in the 2006 fourth
quarter and credits of $1,400,000 and $375,000 were taken to income in the years
2006 and 2005, respectively. (There was no provision or credit to loan losses in
the 2005 fourth quarter). The credits resulted from reduction in outstanding
loans through pay down (including loans classified as higher credit risk loans)
and a reduction in the reserve factor applied to the multi-family mortgage loan
portfolio from 1.25% to 1.00%. That change, which was made after consideration
of a number of factors including loss experience, pay down of the portfolio and
current market conditions, resulted in an $828,000 reduction in the allocated
portion of the allowance for loan losses at December 31, 2006.
At December 31, 2006, the Company transferred $1,286,000 out of the
allowance for loan losses to other liabilities to conform with generally
accepted accounting principles. The transfer had no effect on earnings. The
amount represents the allowance for estimated losses on unfunded loan
commitments.
The decline in non-interest income from $5,297,000 in the year 2005 to
$3,850,000 in the year 2006 was due primarily to the decrease in gains from the
sales of assets mentioned earlier, less fees from prepayment of mortgage loans,
as well as lower earnings from Eastern before the Company's increase in
ownership.
Non-interest expenses in the year 2005 included $894,000 of
merger/conversion expenses related to the acquisition of Mystic Financial, Inc.
Excluding those expenses, the increases in non-interest expenses in the 2006
quarterly and yearly periods compared to the 2005 quarterly and yearly periods
were due primarily to the inclusion of Eastern's expenses since the date of
acquisition, the expenses related to the opening of a new branch in April 2006,
the hiring of new loan officers, and higher processing and servicing costs
resulting from growth of the indirect automobile loan portfolio.
The extra dividend of $0.20 per share to be paid on February 16, 2007 is
the eighth time since August 2003 that the Board of Directors has approved such
a payment. The aggregate amount paid, over $96 million or $1.60 per share,
represents a return of capital to stockholders (subject to taxation) rather than
a distribution of earnings. The payout of semi-annual extra dividends has been
an effective means of reducing the Company's excess capital in a measured way
and treating all stockholders equally. While it is the intent of the Board of
Directors to continue to return capital to stockholders through payment of an
extra dividend semi-annually, the magnitude of any future payment will be
considered in light of changing opportunities to deploy capital effectively,
including the repurchase of Company common stock and expansion of the Company's
business through acquisitions.
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. 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)
December September December
31, 30, 31,
2006 2006 2005
----------- ----------- -----------
ASSETS
- -------------------------------
Cash and due from banks $ 18,237 $ 16,483 $ 15,507
Short-term investments 134,417 97,454 102,888
Securities available for sale 335,246 367,373 374,906
Securities held to maturity
(market value of $242, $754
and $423, respectively) 233 745 410
Restricted equity securities 28,567 28,567 23,081
Loans 1,792,062 1,800,408 1,636,755
Allowance for loan losses (23,024 ) (25,066 ) (22,248 )
---------- ----------- -----------
Net loans 1,769,038 1,775,342 1,614,507
---------- ----------- -----------
Other investment - - 4,662
Accrued interest receivable 10,310 10,697 9,189
Bank premises and equipment,
net 9,335 9,681 10,010
Deferred income tax asset 11,036 11,581 11,347
Prepaid income taxes 1,801 1,690 -
Goodwill 42,545 42,489 35,615
Identified intangible assets,
net of accumulated
amortization of $4,604, $4,035
and $2,370, respectively 8,348 8,917 9,471
Other assets 3,927 4,453 3,111
----------- ----------- -----------
Total assets $2,373,040 $2,375,472 $2,214,704
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
- -------------------------------
Retail deposits $1,210,206 $1,187,700 $1,168,307
Brokered deposits 78,060 78,096 -
Borrowed funds 463,806 489,537 411,507
Subordinated debt 12,092 12,123 12,218
Mortgagors' escrow accounts 5,114 5,580 5,377
Income taxes payable - - 630
Accrued expenses and other
liabilities 19,494 20,223 14,215
----------- ----------- -----------
Total liabilities 1,788,772 1,793,259 1,612,254
----------- ----------- -----------
Minority interest in subsidiary 1,375 1,331 -
----------- ----------- -----------
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; 62,989,384
shares issued 630 630 630
Additional paid-in capital 508,248 507,056 512,338
Retained earnings, partially
restricted 96,229 95,938 121,042
Accumulated other
comprehensive loss (640 ) (1,091 ) (1,577 )
Treasury stock, at cost -
1,405,611 shares (18,144 ) (18,144 ) (18,144 )
Unearned compensation -
recognition and retention
plans - - (8,103 )
Unallocated common stock held
by ESOP - 629,081 shares,
643,104 shares and 685,161
shares, respectively (3,430 ) (3,507 ) (3,736 )
----------- ----------- -----------
Total stockholders' equity 582,893 580,882 602,450
----------- ----------- -----------
----------- ----------- -----------
Total liabilities and
stockholders' equity $2,373,040 $2,375,472 $2,214,704
=========== =========== ===========
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands except share data)
Three months ended Year ended
December 31, December 31,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Interest income:
Loans $29,388 $23,462 $110,744 $ 90,371
Debt securities 3,927 3,333 14,960 11,121
Short-term
investments 1,464 1,243 5,338 4,356
Restricted equity
securities 411 281 1,484 980
Marketable equity
securities 30 40 124 268
----------- ----------- ----------- -----------
Total interest
income 35,220 28,359 132,650 107,096
----------- ----------- ----------- -----------
Interest expense:
Deposits 10,421 7,101 35,775 23,172
Brokered deposits 1,057 - 2,663 -
Borrowed funds 5,815 4,145 23,127 15,193
Subordinated debt 239 201 906 685
----------- ------- ----------- -----------
Total interest
expense 17,532 11,447 62,471 39,050
----------- ------- ----------- -----------
Net interest income 17,688 16,912 70,179 68,046
Provision for loan
losses 129 840 2,549 2,483
----------- ------- ----------- -----------
Net interest income
after provision
for loan losses 17,559 16,072 67,630 65,563
----------- ------- ----------- -----------
Non-interest income:
Fees and charges 901 725 3,264 3,576
Gains on securities,
net - - 558 853
Gains on sales of
building and other
real estate owned - 322 - 322
Earnings from equity
interest in other
investment - 117 1 445
Other income 1 9 27 101
----------- ----------- ----------- -----------
Total non-interest
income 902 1,173 3,850 5,297
----------- ----------- ----------- -----------
Non-interest expense:
Compensation and
employee benefits 4,843 4,049 19,305 16,682
Occupancy 829 707 3,225 2,818
Equipment and data
processing 1,539 1,371 6,017 5,918
Professional
services 481 363 1,488 1,321
Advertising and
marketing 270 287 1,019 1,094
Merger/conversion - - - 894
Amortization of
identified
intangibles 569 593 2,234 2,370
Other 1,004 662 3,581 2,860
----------- ----------- ----------- -----------
Total non-interest
expense 9,535 8,032 36,869 33,957
----------- ----------- ----------- -----------
Income before income
taxes and minority
interest 8,926 9,213 34,611 36,903
Provision for income
taxes 3,505 3,677 13,614 14,873
----------- ----------- ----------- -----------
Net income before
minority interest 5,421 5,536 20,997 22,030
Minority interest in
earnings of
subsidiary 44 - 185 -
----------- ----------- ----------- -----------
Net income $ 5,377 $ 5,536 $ 20,812 $ 22,030
=========== =========== =========== ===========
Earnings per common
share:
Basic $ 0.09 $ 0.09 $ 0.34 $ 0.37
Diluted 0.09 0.09 0.34 0.36
Weighted average common
shares outstanding
during the period:
Basic 60,416,768 60,139,074 60,369,558 60,054,059
Diluted 61,098,544 60,853,521 61,073,491 60,836,211
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended December
31,
----------------------------
2006
----------------------------
Average
Average Interest yield/
balance (1) cost
----------- -------- -------
(Dollars in thousands)
Assets
- ----------------------------------------
Interest-earning assets:
Short-term investments $ 111,987 $ 1,464 5.19%
Debt securities (2) 345,533 4,016 4.65
Equity securities (2) 31,231 453 5.75
Mortgage loans (3) 1,047,249 16,905 6.46
Commercial loans -Eastern Funding (3) 127,057 3,478 10.86
Other commercial loans (3) 68,782 1,223 7.11
Indirect automobile loans (3) 549,190 7,718 5.58
Other consumer loans (3) 3,154 64 8.12
---------- --------
Total interest-earning assets 2,284,183 35,321 6.17%
-------- -------
Allowance for loan losses (25,075)
Non-interest earning assets 101,759
-----------
Total assets $2,360,867
===========
Liabilities and Stockholders' Equity
- ----------------------------------------
Interest-bearing liabilities:
Deposits:
NOW accounts $ 86,509 56 0.26%
Savings accounts 102,957 436 1.68
Money market savings accounts 208,001 1,380 2.63
Retail certificates of deposit 729,388 8,549 4.65
----------- --------
Total retail deposits 1,126,855 10,421 3.67
Brokered certificates of deposit 78,078 1,057 5.37
----------- --------
Total deposits 1,204,933 11,478 3.78
Borrowed funds 476,538 5,815 4.77
Subordinated debt 12,112 239 7.72
----------- --------
Total interest bearing liabilities 1,693,583 17,532 4.11%
-------- -------
Non-interest-bearing demand
checking accounts 62,295
Other liabilities 24,000
-----------
Total liabilities 1,779,878
Stockholders' equity 580,989
-----------
Total liabilities and
stockholders' equity $2,360,867
===========
Net interest income (tax equivalent
basis)/interest rate spread (4) 17,789 2.06%
=======
Less adjustment of tax exempt income 101
--------
Net interest income $17,688
========
Net interest margin (5) 3.12%
=======
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
-----------------------------
2005
-----------------------------
Average
Average Interest yield/
balance (1) cost
----------- -------- -------
Assets
- ----------------------------------------
Interest-earning assets:
Short-term investments $ 126,037 $ 1,243 3.91%
Debt securities (2) 357,630 3,412 3.82
Equity securities (2) 26,685 336 5.00
Mortgage loans (3) 1,086,170 16,959 6.25
Commercial loans -Eastern Funding (3) - - -
Other commercial loans (3) 70,233 1,143 6.51
Indirect automobile loans (3) 463,734 5,307 4.54
Other consumer loans (3) 2,981 54 7.25
---------- ---------
Total interest-earning assets 2,133,470 28,454 5.31%
--------- -------
Allowance for loan losses (21,987)
Non-interest earning assets 98,934
-----------
Total assets $2,210,417
===========
Liabilities and Stockholders' Equity
- ----------------------------------------
Interest-bearing liabilities:
Deposits:
NOW accounts $ 92,640 60 0.26%
Savings accounts 129,418 436 1.34
Money market savings accounts 243,669 1,179 1.92
Retail certificates of deposit 635,772 5,426 3.39
----------- ---------
Total retail deposits 1,101,499 7,101 2.56
Brokered certificates of deposit - - -
----------- ---------
Total deposits 1,101,499 7,101 2.56
Borrowed funds 412,412 4,145 3.93
Subordinated debt 12,238 201 6.43
----------- ---------
Total interest bearing liabilities 1,526,149 11,447 2.98%
--------- -------
Non-interest-bearing demand
checking accounts 65,286
Other liabilities 17,206
-----------
Total liabilities 1,608,641
Stockholders' equity 601,776
-----------
Total liabilities and
stockholders' equity $2,210,417
===========
Net interest income (tax equivalent
basis)/interest rate spread (4) 17,007 2.33%
=======
Less adjustment of tax exempt income 95
---------
Net interest income $ 16,912
=========
Net interest margin (5) 3.19%
=======
(1) Tax exempt income on equity securities and municipal obligations
is included on a tax equivalent basis.
(2) Average balances include unrealized gains (losses) 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 Year
ended ended
December 31, December 31,
----------------- ---------------
2006 2005 2006 2005
-------- -------- ------- -------
Performance Ratios (annualized):
Return on average assets 0.91 % 1.00 % 0.89 % 1.01 %
Return on average stockholders'
equity 3.70 % 3.68 % 3.53 % 3.61 %
Interest rate spread 2.06 % 2.33 % 2.14 % 2.48 %
Net interest margin 3.12 % 3.19 % 3.13 % 3.24 %
Dividends paid per share during
period $0.085 $0.085 $0.74 $0.74
At At At
December September December
31, 30, 31,
2006 2006 2005
--------- --------- ---------
(Dollars in thousands except per share
data)
Capital Ratio:
Stockholders' equity to total
assets 24.56 % 24.45 % 27.20 %
Tangible stockholders' equity
to total assets 22.91 % 22.78 % 25.69 %
Asset Quality:
Non-performing loans $ 900 $ 1,063 $ 480
Non-performing assets 1,959 2,299 973
Allowance for loan losses 23,024 (A) 25,066 (B) 22,248
Allowance for loan losses as
a percent of total loans 1.28 % (A) 1.39 % 1.36 %
Non-performing assets as a
percent of total assets 0.08 % 0.10 % 0.04 %
(A) Net of a $1,286 transfer to allowance for unfunded loan
commitments which is included in other liabilities. If the transfer
had not been made, the allowance for loan losses as a percent of
total loans would have been 1.36%.
(B) The increase in comparison to the total at December 31, 2005 is
attributable primarily to the acquisition of Eastern Funding LLC.
Per Share Data:
Book value per share $ 9.47 $ 9.43 $ 9.78
Tangible book value per share $ 8.64 $ 8.60 $ 9.05
Market value per share $ 13.17 $ 13.75 $ 14.17
CONTACT: Brookline Bancorp, Inc.
Paul R. Bechet, 617-278-6405