Exhibit 99.1
Brookline Bancorp Announces 2007 First Quarter Earnings, Dividend Declaration
and Approval for Additional Stock Repurchases
BROOKLINE, Mass.--(BUSINESS WIRE)--April 19, 2007--Brookline
Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its
earnings for the 2007 first quarter and approval by its Board of
Directors of a regular quarterly dividend of $0.085 per share payable
May 15, 2007 to stockholders of record on April 30, 2007 and a program
to repurchase an additional 2,500,000 shares of the Company's common
stock.
The Company earned $4,941,000, or $0.08 per share on a basic and
diluted basis, for the quarter ended March 31, 2007 compared to
$5,397,000, or $0.09 per share on a basic and diluted basis, for the
quarter ended March 31, 2006. The 2006 quarter included gains on the
sale of marketable equity securities of $558,000 ($358,000 on an
after-tax basis); no securities were sold in the 2007 quarter.
Excluding securities gains, 2006 first quarter net income was 1.9%
higher than 2007 first quarter net income.
In the past, we have commented on unfavorable interest rate market
conditions that caused the Company's interest rate spread and net
interest margin to erode. Interest rate spread declined from 2.17% in
the 2006 first quarter to 2.11% in the 2007 first quarter. Of note,
however, is the improvement in interest rate spread in the 2007 first
quarter from the 2.06% rate in the 2006 fourth quarter and the
improvement in net interest margin from 3.11% in the 2006 first
quarter to 3.12% in the 2006 fourth quarter and to 3.20% in the 2007
first quarter. The improvement is attributable primarily to a
significant increase in the average yield on the indirect automobile
loan portfolio, inclusion of the high yielding $127 million loan
portfolio of Eastern Funding LLC ("Eastern") and a slow down in the
rate of increase in the cost of funds. The inverted yield curve
environment which has existed for some time remains an obstacle to
achievement of meaningful improvement in interest rate spread and net
interest margin.
Interest income was 22% higher in the 2007 first quarter than in
the 2006 first quarter. Net interest income, however, increased only
9% as interest expense rose 40% between the two quarterly periods.
High rates continue to be offered in the market place for deposits
with shorter maturities. This has caused a significant shift of funds
from lower rate transaction deposit accounts to higher rate
certificates of deposit with maturities of one year or less.
Certificates of deposit comprised 62% of total retail deposits at
March 31, 2007 compared to 61% at December 31, 2006 and 56% at March
31, 2006.
The average rate earned on mortgage loans, the Company's largest
asset category, increased modestly from 6.29% in the 2006 first
quarter to 6.45% in the 2007 first quarter, but declined from the
6.46% average rate earned in the 2006 fourth quarter. Competition for
mortgage loans has made it increasingly difficult to incorporate the
rise in funding costs into the pricing of loan originations. Further,
commercial mortgage borrowers are demanding and obtaining rates of
interest that are not subject to adjustment during the first several
years of the loan term. Due in part to these market conditions, the
Company has refrained from aggressively seeking new mortgage loans. As
a result, the average balance of mortgage loans outstanding in the
2007 first quarter was $9 million less than in the 2006 fourth quarter
and $66 million less than in the 2006 first quarter.
Offsetting part of the decline in mortgage loan income was
interest income derived from the indirect automobile and Eastern loan
portfolios. The average balance of indirect automobile loans
outstanding was $80 million higher in the 2007 first quarter than in
the 2006 first quarter. The portfolio grew $20 million in the 2007
first quarter to $560 million at March 31, 2007. Of greater importance
was the increase in the average yield on the portfolio from 4.65% in
the 2006 first quarter to 5.83% in the 2007 first quarter. Eastern
loans outstanding were $127 million at March 31, 2007 and the average
rate earned on the loans was 11.03% in the 2007 first quarter. In
April 2006, the Company increased its ownership interest in Eastern
from approximately 28% to 87%. From that date, Eastern's operating
results are included in the consolidated financial statements of the
Company. Prior to that date, the Company accounted for its investment
in Eastern under the equity method and included its share of Eastern's
earnings in other income. Eastern specializes in the financing of
coin-operated laundromats, dry cleaning stores and convenience stores
in the greater metropolitan New York area and selected other locations
throughout the United States.
The provision for loan losses was $1,249,000 in the 2007 first
quarter compared to $748,000 in the 2006 first quarter. 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 $844,000 in the 2007 first quarter and $748,000 in
the 2006 first quarter. These amounts exceeded net charge-offs of
$767,000 and $479,000 in those respective periods, resulting in
annualized rates of net charge-offs of 0.55% and 0.40%, respectively.
The rise in net charge-offs is believed to be due in part to added
liquidity pressures on consumers in general and the decision in 2006
to moderately expand loan originations to borrowers with lower credit
scores. The Company left unchanged its policy of limiting the amount
of loans to borrowers with credit scores below 660 to no more than 15%
of the total portfolio. Loans to borrowers with credit scores below
660 represented 11.5% of the portfolio at March 31, 2007 compared to
8.9% at March 31, 2006. Loans delinquent 30 days and over declined
from $7,092,000, or 1.31% of loans outstanding at December 31, 2006,
to $5,594,000, or 1.00% of loans outstanding at March 31, 2007.
The provision for loan losses related to the Eastern portfolio was
$380,000 in the 2007 first quarter. Net charge-offs were $391,000, an
annualized rate of 1.22% based on the average balance of loans
outstanding during that period. Total loans delinquent more than 30
days increased from $1,436,000 (1.13% of total loans) at December 31,
2006 to $2,221,000 (1.75% of total loans) at March 31, 2007. Loans on
non-accrual at those respective dates increased from $657,000 (0.52%
of total loans) to $2,154,000 (1.70% of total loans). Of the increase
in non-accrual loans, $885,000 related to loans made to one borrower.
That amount is net of a $100,000 charge-off taken on one of the loans
in the 2007 first quarter. The total amount of the loans as of their
varying dates of origination was $1,200,000. The total allowance for
loan losses for Eastern loans was $2,285,000 at March 31, 2007, an
amount equal to 1.80% of the portfolio. Historically, due to the
nature of its portfolio, Eastern has maintained its allowance for loan
losses around that percent despite a rate of net charge-offs
considerably below that percent. Eastern's typical customer is a small
business owner with limited capital resources. The higher risk
exposure associated with these loans is the reason why the rates
earned on the loans significantly exceed the rates earned on the
Company's other types of loans.
Regarding the remainder of the Company's loan portfolio, which is
comprised primarily of mortgage loans, $25,000 was provided for loan
losses in the 2007 first quarter compared to none in the 2006 first
quarter. No mortgage loans were charged off in either of those
periods. Only one mortgage loan with a balance of $72,000 was
delinquent at March 31, 2007.
Excluding securities gains, non-interest income increased from
$642,000 in the 2006 first quarter to $1,049,000. The increase was due
primarily to higher mortgage loan prepayment fees and higher fees from
indirect automobile lending and Eastern's activities.
Non-interest expenses were $1,575,000, or 19%, higher in the 2007
first quarter than in the 2006 first quarter due primarily to (a)
inclusion of Eastern Funding ($1,190,000), (b) higher expenses related
to indirect automobile lending due to greater loan volume and
repossession expenses, (c) expenses related to a new branch opened in
April 2006 and (d) higher professional fees, offset in part by lower
marketing expenses.
In addition to approving the regular quarterly dividend of $0.085
per share, the Board of Directors approved a program to repurchase an
additional 2,500,000 shares of the Company's common stock. The new
program will become effective upon completion of the buy back of
1,437,532 shares remaining under an existing approved repurchase
program. Under both the existing and new repurchase programs, the
Board of Directors has delegated to the discretion of the Company's
senior management the authority to determine the timing of the
repurchases and the prices at which the repurchases will be made.
During the 2007 first quarter, 335,000 shares of the Company's common
stock were repurchased at an average cost of $12.35, exclusive of
transaction costs.
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)
March 31, December 31, March 31,
2007 2006 2006
------------ ------------ ------------
ASSETS
- -------------------------------
Cash and due from banks $ 16,314 $ 18,237 $ 15,307
Short-term investments 140,320 134,417 108,954
Securities available for sale 298,776 335,246 359,879
Securities held to maturity
(market value of $234, $242
and $406, respectively) 224 233 395
Restricted equity securities 26,563 28,567 24,608
Loans 1,807,053 1,792,062 1,673,313
Allowance for loan losses (23,097) (23,024) (22,478)
------------ ------------ ------------
Net loans 1,783,956 1,769,038 1,650,835
------------ ------------ ------------
Other investment - - 4,723
Accrued interest receivable 9,584 10,310 9,268
Bank premises and equipment,
net 9,192 9,335 9,755
Deferred tax asset 10,362 11,036 11,246
Prepaid income taxes 1,314 1,801 -
Goodwill 42,545 42,545 35,615
Identified intangible assets,
net of accumulated
amortization of $5,108, $4,604
and $2,897, respectively 7,844 8,348 8,945
Other assets 4,500 3,927 3,550
------------ ------------ ------------
Total assets $ 2,351,494 $ 2,373,040 $ 2,243,080
============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
- -------------------------------
Retail deposits $ 1,235,274 $ 1,210,206 $ 1,161,555
Brokered deposits 77,990 78,060 -
Borrowed funds 430,591 463,806 459,512
Subordinated debt 12,060 12,092 12,187
Mortgagors' escrow accounts 5,427 5,114 5,894
Income taxes payable - - 327
Accrued expenses and other
liabilities 21,139 19,494 13,065
------------ ------------ ------------
Total liabilities 1,782,481 1,788,772 1,652,540
------------ ------------ ------------
Minority interest in subsidiary 1,419 1,375 -
------------ ------------ ------------
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; 63,054,715
shares, 62,989,384 shares
and 62,989,384 shares
issued, respectively 631 630 630
Additional paid-in capital 509,428 508,248 505,267
Retained earnings, partially
restricted 83,388 96,229 108,845
Accumulated other
comprehensive loss (200) (640) (2,399)
Treasury stock, at cost -
1,740,611 shares, 1,405,611
shares and 1,405,611 shares,
respectively (22,297) (18,144) (18,144)
Unallocated common stock held
by ESOP - 615,554 shares,
629,081 shares and 671,142
shares, respectively (3,356) (3,430) (3,659)
------------ ------------ ------------
Total stockholders' equity 567,594 582,893 590,540
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 2,351,494 $ 2,373,040 $ 2,243,080
============ ============ ============
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands except share data)
Three months ended
March 31,
-----------------------
2007 2006
----------- -----------
Interest income:
Loans $29,594 $24,050
Debt securities 3,780 3,620
Short-term investments 1,684 1,112
Restricted equity securities 481 309
Marketable equity securities 28 33
----------- -----------
Total interest income 35,567 29,124
----------- -----------
Interest expense:
Retail deposits 10,718 7,446
Brokered deposits 1,027 -
Borrowed funds 5,456 4,843
Subordinated debt 233 207
----------- -----------
Total interest expense 17,434 12,496
----------- -----------
Net interest income 18,133 16,628
Provision for loan losses 1,249 748
----------- -----------
Net interest income after provision for
loan losses 16,884 15,880
----------- -----------
Non-interest income:
Fees and charges 1,019 573
Gains on securities, net - 558
Other income 30 69
----------- -----------
Total non-interest income 1,049 1,200
----------- -----------
Non-interest expense:
Compensation and employee benefits 5,239 4,346
Occupancy 855 793
Equipment and data processing 1,520 1,417
Professional services 479 311
Advertising and marketing 141 187
Amortization of identified intangible assets 503 526
Other 1,093 675
----------- -----------
Total non-interest expense 9,830 8,255
----------- -----------
Income before income taxes and minority
interest 8,103 8,825
Provision for income taxes 3,118 3,428
----------- -----------
Net income before minority interest 4,985 5,397
Minority interest in earnings of subsidiary 44 -
----------- -----------
Net income $ 4,941 $ 5,397
=========== ===========
Earnings per common share:
Basic $ 0.08 $ 0.09
Diluted 0.08 0.09
Weighted average common shares outstanding
during the period:
Basic 60,534,234 60,309,532
Diluted 61,182,972 61,051,157
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended March
31,
---------------------------
2007
---------------------------
Average
Average Interest yield/
balance (1) cost
------------------- -------
(Dollars in thousands)
Assets
- ------------------------------------------
Interest-earning assets:
Short-term investments $ 130,479 $ 1,684 5.23%
Debt securities (2) 314,769 3,865 4.91
Equity securities (2) 29,027 519 7.25
Mortgage loans (3) 1,037,923 16,734 6.45
Commercial loans - Eastern Funding (3) 128,100 3,483 11.03
Other commercial loans (3) 68,949 1,224 7.10
Indirect automobile loans (3) 562,721 8,088 5.83
Other consumer loans (3) 3,227 65 8.06
------------------
Total interest-earning assets 2,275,195 35,662 6.30%
-------- -------
Allowance for loan losses (22,975)
Non-interest earning assets 99,354
-----------
Total assets $2,351,574
===========
Liabilities and Stockholders' Equity
- ------------------------------------------
Interest-bearing liabilities:
Deposits:
NOW accounts $ 87,186 71 0.33%
Savings accounts 97,904 397 1.64
Money market savings accounts 210,090 1,403 2.71
Retail certificates of deposit 748,210 8,847 4.80
-------------------
Total retail deposits 1,143,390 10,718 3.80
Brokered certificates of deposit 77,465 1,027 5.38
-------------------
Total deposits 1,220,855 11,745 3.90
Borrowed funds 454,703 5,456 4.80
Subordinated debt 12,081 233 7.71
-------------------
Total interest bearing liabilities 1,687,639 17,434 4.19%
-------- -------
Non-interest-bearing demand
checking accounts 62,344
Other liabilities 25,682
-----------
Total liabilities 1,775,665
Stockholders' equity 575,909
-----------
Total liabilities and stockholders'
equity $2,351,574
===========
Net interest income (tax equivalent
basis)/interest rate spread (4) 18,228 2.11%
=======
Less adjustment of tax exempt income 95
--------
Net interest income $18,133
========
Net interest margin (5) 3.20%
=======
2006
-----------------------------
Average
Average Interest yield/
balance (1) cost
------------ -------- -------
(Dollars in thousands)
Assets
- ----------------------------------------
Interest-earning assets:
Short-term investments $ 103,473 $ 1,113 4.36%
Debt securities (2) 365,822 3,701 4.05
Equity securities (2) 27,597 353 5.18
Mortgage loans (3) 1,104,372 17,379 6.29
Commercial loans - Eastern Funding (3) - - -
Other commercial loans (3) 62,786 1,091 6.95
Indirect automobile loans (3) 482,534 5,528 4.65
Other consumer loans (3) 2,923 52 7.12
-------------------
Total interest-earning assets 2,149,507 29,217 5.45%
--------- -------
Allowance for loan losses (22,307)
Non-interest earning assets 97,862
-----------
Total assets $2,225,062
===========
Liabilities and Stockholders' Equity
- ----------------------------------------
Interest-bearing liabilities:
Deposits:
NOW accounts $ 91,573 52 0.23%
Savings accounts 117,860 405 1.39
Money market savings accounts 230,463 1,196 2.10
Retail certificates of deposit 645,318 5,793 3.64
--------------------
Total retail deposits 1,085,214 7,446 2.78
Brokered certificates of deposit - - -
--------------------
Total deposits 1,085,214 7,446 2.78
Borrowed funds 448,922 4,843 4.32
Subordinated debt 12,207 207 6.78
--------------------
Total interest bearing liabilities 1,546,343 12,496 3.28%
--------- -------
Non-interest-bearing demand
checking accounts 62,608
Other liabilities 19,549
-----------
Total liabilities 1,628,500
Stockholders' equity 596,562
-----------
Total liabilities and
stockholders' equity $2,225,062
===========
Net interest income (tax equivalent
basis)/interest rate spread (4) 16,721 2.17%
=======
Less adjustment of tax exempt income 93
---------
Net interest income $ 16,628
=========
Net interest margin (5) 3.11%
=======
(1) Tax exempt income on equity securities and municipal bonds 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
ended
March 31,
---------------
2007 2006
------- -------
Performance Ratios (annualized):
Return on average assets 0.84% 0.97%
Return on average stockholders' equity 3.43% 3.62%
Interest rate spread 2.11% 2.17%
Net interest margin 3.20% 3.11%
Dividends paid per share during period $0.285 $0.285
At March 31, At December 31, At March 31,
2007 2006 2006
(dollars in thousands except per share data)
Capital Ratio:
Stockholders' equity to
total assets 24.14% 24.56% 26.33%
Tangible stockholders'
equity to total assets 22.48% 22.91% 26.33%
Asset Quality:
Non-accrual loans $ 2,458 $ 900 $ 911
Non-performing assets 3,703 1,959 1,517
Allowance for loan
losses 23,097 (A) 23,024 (A) 22,478
Allowance for loan
losses as a percent of
total loans 1.28%(A) 1.28%(A) 1.34%
Non-performing assets
as a percent of total
assets 0.16% 0.08% 0.07%
(A) Net of transfers to allowance for unfunded loan commitments of
$1,307 at March 31, 2007 and $1,286 at December 31, 2006, which are
included in other liabilities at those dates. If the transfers had
not been made, the allowance for loan losses as a percent of total
loans would have been 1.35% at March 31, 2007 and 1.36% at December
31, 2006.
Per Share Data:
Book value per share $ 9.26 $ 9.47 $ 9.59
Tangible book value per
share 8.44 8.64 8.87
Market value per share 12.67 13.17 15.49
CONTACT: Brookline Bancorp, Inc.
Paul Bechet, 617-278-6405
Chief Financial Officer