Brookline Bancorp Announces 2002 First Quarter Earnings.Business Editors/Banking and Financial Writers BROOKLINE Brookline (br  k`līn), town (1990 pop. 54,718), Norfolk co., E Mass., a suburb adjacent to Boston; settled 1630s, set off from Boston and inc. 1705. , Mass.--(BUSINESS WIRE)--April 18, 2002Brookline Bancorp, Inc. (the "Company") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : BRKL), the holding company for Brookline Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. , announced today that it earned $5,517,000, or $0.21 per share, for the quarter ended March 31, 2002 compared to $5,631,000, or $0.21 per share, for the quarter ended March 31, 2001. Basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were the same in each of the quarterly periods. The 2002 and 2001 quarters included, on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , securities gains of $591,000 ($0.02 per share) and $1,724,000 ($0.07 per share), respectively. The 2001 quarter also included a net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $751,000 ($0.03 per share) related to Lighthouse lighthouse, towerlike structure erected to give guidance and warning to ships and aircraft by either visible or radioelectrical means. Lighthouses were long built to conform in structure to their geographical location. Until the beginning of the 19th cent. Bank ("Lighthouse"), the Company's internet-only bank that was merged into Brookline on July July: see month. 17, 2001. Excluding securities gains and the Lighthouse net operating loss, net income was $4,926,000 ($0.19 per share) in the 2002 quarter, an increase of $268,000 (6%), or $0.02 per share (12%), over the $4,658,000 ($0.17 per share) earned in the 2001 quarter. Total assets were $1.130 billion at March 31, 2002, an increase of $30 million (3%) since December December: see month. 31, 2001 and $68 million (6%) since a year ago. While total loans (excluding money market loan participations) increased $74 million (10%) since a year ago, they declined $8.5 million (1%) since December 31, 2001. Of this decline, $3.2 million related to residential mortgage loans and $3.3 million to construction loans. Total deposits were $640 million at March 31, 2002 compared to $621 million at December 31, 2001 and $628 million a year ago. Last year's deposits included high yielding certificates of deposit obtained through promotions by Brookline and Lighthouse. Since March 31, 2001, total certificates of deposit declined $28 million (10%) as Brookline opted to offer lower rates when certificates matured. Offsetting this decline was a $40 million (12%) increase in transaction deposit accounts, primarily money market savings accounts Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: . Net interest income for the 2002 quarter was $10.7 million, or 1% higher than the $10.6 million earned in the 2001 quarter. The rate of increase was less than the 6% rate of growth in earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin between the two quarters due to a 127 basis point decline in the average yield realized on earning assets. Interest rates earned and paid are influenced greatly by the actions of the Federal Reserve in establishing the benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve interest rate for overnight loans between banks. The decline in asset yield was largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the eleven cuts in the federal funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. initiated by the Federal Reserve in 2001. Since over 25% of the Company's assets are funded by stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. , a decline in asset yield usually has a negative effect on the Company's net interest income. The impact of interest rate changes on operating results varies depending on the maturity and date of repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing of the Company's loans, investments, deposits and borrowed funds. It is not possible to predict, what actions, if any, the Federal Reserve will take in the future and the effect such actions might have on the Company's operating results in coming reporting periods. A credit for loan losses of $100,000 was taken to earnings in the 2002 quarter compared to a provision of $164 charged to earnings in the 2001 quarter. The credit resulted from the decline in loans outstanding since the end of last year and a $20,000 recovery on a loan charged off several years ago. Non-performing assets remained diminimus ($5,000 at March 31, 2002). A $2,000,000 corporate bond in the Company's investment portfolio that was in default at December 31, 2001 was paid in full in the 2002 quarter resulting in a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta securities gain of $495,000. The Company is obliged o·blige v. o·bliged, o·blig·ing, o·blig·es v.tr. 1. To constrain by physical, legal, social, or moral means. 2. to account for its outstanding swap agreement on a market value basis. As a result, earnings were charged $142,000 in the 2001 quarter and credited $53,000 in the 2002 quarter. Non-interest expense declined from $4,671,000 in the 2001 quarter to $3,720,000 in the 2002 quarter. The 2001 quarter included the operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of Lighthouse as a separate entity. Excluding such expenses, total non-interest expense would have been $3,075,000 in the 2001 quarter, or $645,000 less than the total for the 2002 quarter. The 2002 quarter included expenses for personnel who continue to operate a call center previously established by Lighthouse and data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a costs for the servicing of Lighthouse loan and deposit accounts that were merged into Brookline. The Company also announced that the Board of Directors approved a regular quarterly dividend of $0.16 per share of common stock to stockholders of record as of April 30, 2002 and payable May 15, 2002. Payment of this dividend on the shares owned by Brookline Bancorp, MHC MHC major histocompatibility complex. MHC abbr. major histocompatibility complex MHC major histocompatibility complex. was waived. This press release contains statements about future events that constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Projections about future events are subject to risks and uncertainties that could cause actual results to differ materially. Factors that might cause such differences include, but are not limited to, changes in general economic conditions, interest rates and assumptions used in projections, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. considerations and competition.
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands except share data)
March 31, December 31, March 31,
2002 2001 2001
(unaudited) (unaudited)
Assets
Cash and due from banks $ 13,431 $ 13,283 $ 12,498
Short-term investments 63,229 69,432 55,884
Securities available for sale 205,116 163,425 158,394
Securities held to maturity
(market value of $8,636,
$9,766 and 37,849
respectively) 8,547 9,558 37,661
Restricted equity securities 9,423 9,281 7,464
Loans, excluding money market
loan participations 819,860 828,360 745,700
Money market loan
participations 10,000 6,000 41,000
Allowance for loan losses (15,212) (15,301) (14,483)
Net loans 814,648 819,059 772,217
Other investment 3,772 3,686 3,450
Accrued interest receivable 5,230 5,041 5,878
Bank premises and equipment, net 1,803 1,907 3,770
Deferred tax asset 4,141 4,581 4,458
Other assets 515 343 624
Total assets $ 1,129,855 $ 1,099,596 $ 1,062,298
Liabilities and Stockholders' Equity
Deposits $ 640,409 $ 620,920 $ 627,994
Borrowed funds 178,970 178,130 133,400
Mortgagors' escrow
accounts 4,689 4,367 4,448
Income taxes payable 9,486 3,079 2,801
Accrued expenses and
other liabilities 6,627 7,655 7,516
Total liabilities 840,181 814,151 776,159
Stockholders' equity:
Preferred stock, $.01
par value; 5,000,000
shares authorized,
none issued -- -- --
Common stock, $0.01 par value;
45,000,000 shares authorized,
29,718,421 shares, 29,688,927
shares and 29,641,500 shares
issued, respectively 297 297 296
Additional paid-in capital 141,276 141,021 140,339
Retained earnings, partially
restricted 180,935 177,167 168,949
Accumulated other
comprehensive income (A) 6,798 6,720 5,962
Treasury stock, at cost -
2,921,378 shares, 2,921,378
shares and 2,190,928 shares,
respectively (33,813) (33,813) (23,052)
Unearned compensation -
recognition and retention plan (862) (903) (1,028)
Unallocated common stock held
by ESOP - 415,711 shares
422,992 shares and 446,750
shares, respectively (4,957) (5,044) (5,327)
Total stockholders' equity 289,674 285,445 286,139
Total liabilities and
stockholders' equity $ 1,129,855 $ 1,099,596 $ 1,062,298
(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
March 31,
2002 2001
(unaudited)
Interest income:
Loans, excluding
money market loan participations $ 14,500 $ 14,964
Money market loan participations 37 539
Debt securities 2,309 2,674
Marketable equity securities 132 196
Restricted equity securities 83 129
Short-term investments 351 1,037
Total interest income 17,412 19,539
Interest expense:
Deposits 4,076 6,855
Borrowed funds 2,604 2,050
Total interest expense 6,680 8,905
Net interest income 10,732 10,634
Provision (credit) for loan losses (100) 164
Net interest income after
provision (credit)
for loan losses 10,832 10,470
Non-interest income:
Fees and charges 368 297
Gains on sales of securities, net 922 2,802
SWAP market valuation charge 53 (142)
Other income 161 131
Total non-interest income 1,504 3,088
Non-interest expense:
Compensation and employee benefits 2,082 2,315
Occupancy 287 312
Equipment and data processing 703 861
Advertising and marketing 162 512
Other 486 671
Total non-interest expense 3,720 4,671
Income before income taxes 8,616 8,887
Provision for income taxes 3,099 3,256
Net income $ 5,517 $ 5,631
Weighted average common shares
outstanding during the period:
Basic 26,272,049 26,884,552
Diluted 26,708,550 27,119,622
Earnings per common share:
Basic $ 0.21 $ 0.21
Diluted 0.21 0.21
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Ratios and Other Data
Three months ended
March 31,
2002 2001
Performance Ratios (annualized):
Return on average assets 1.99% 2.15%
Return on average stockholders' equity 7.67% 7.89%
Return on average stockholders' equity,
excluding effect of unrealized gains on
securities available for sale, net of taxes 7.86% 8.08%
Interest rate spread 2.90% 2.68%
Net interest margin 3.91% 4.15%
Efficiency ratio (A) 32.88% 29.50%
Dividend paid per share during period $ 0.16 $ 0.07
(A) Represents the ratio of non-interest expenses divided by the sum
of net interest income and non-interest income (exclusive of
securities gains). Lighthouse Bank's income and expenses are
excluded in the 2001 period.
March 31, December 31, March 31,
2002 2001 2001
(dollars in thousands except per share data)
Capital Ratio:
Stockholders' equity
to total assets 25.64% 25.96% 26.94%
Asset Quality:
Non-performing loans $ 5 $ 140 $ --
Non-performing assets 5 1,580 --
Allowance for loan losses 15,212 15,301 14,483
Allowance for loan losses
as a percent of total loans,
excluding money market
loan participations 1.86% 1.85% 1.94%
Non-performing assets as
a percent of total assets -- 0.14% --
Per Share Data:
Book value per share $ 10.81 $ 10.66 $ 10.42
Market value per share 17.06 16.44 13.25
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