Brookline Bancorp Announces 2006 First Quarter Operating Results and Dividend Declaration.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. -- Brookline Bancorp, Inc. (the
"Company") (NASDAQ NASDAQin 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) announced today its earnings for the 2006 first quarter and the approval by its Board of Directors of a regular quarterly dividend of $0.085 per share payable May 15, 2006 to stockholders of record on April 28, 2006. The Company earned $5,397,000, or $0.09 per share (on a basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis), for the quarter ended March 31, 2006 compared to $5,532,000, or $0.09 per share (on a basic and diluted basis) for the quarter ended March 31, 2005. Included in the 2006 and 2005 quarterly periods were after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. securities gains of $358,000 and $381,000, respectively. The 2.4% decline in quarterly earnings was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a reduction in interest rate spread and net interest margin. Interest rate spread has been declining steadily from 2.59% in the 2005 first quarter to 2.33% in the 2005 fourth quarter and 2.17% in the 2006 first quarter. These declines resulted from a more rapid increase in the average rates paid on deposits and borrowed funds than in the increase in the average rates earned on assets. While interest income was 16% higher in the 2006 first quarter than in the 2005 first quarter, interest expense rose by 55% between the two quarterly periods. This significant increase in expense resulted primarily from the rate setting actions of the Federal Reserve, increased competition for deposits and a shift in the mix of deposits. Customarily cus·tom·ar·y adj. 1. Commonly practiced, used, or encountered; usual. See Synonyms at usual. 2. Based on custom or tradition rather than written law or contract. , higher rates are paid on certificates of deposit than on transaction deposit accounts. Certificates of deposit comprised 56% of total deposits at March 31, 2006 compared to 55% at December December: see month. 31, 2005 and 41% at December 31, 2004. Commencing in June June: see month. 2004 and extending to the end of the 2006 first quarter, the Board of Governors of the Federal Reserve System Board of Governors of the Federal Reserve System The managing body of the Federal Reserve System, which sets policies on bank practices and the money supply. approved 15 rate increases of 0.25% each 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. for overnight borrowings between banks. As a result of these rate setting actions, a flat yield curve Flat Yield Curve A chart that shows that the yields of bonds with short maturities are equal to the yields of bonds with longer maturities. evolved. The yield curve represents the difference in rates paid on U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. obligations with varying time periods to maturity. An upward slope in the yield curve means that long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. rates are higher than short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. rates. Generally, an upward slope in the yield curve is favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. for banks. Over the past few quarters, the slope of the yield curve has been close to flat. This scenario A scenario (from Italian, that which is pinned to the scenery) is a synthetic description of an event or series of actions and events. In the Commedia dell'arte has caused the Company's net interest income to shrink shrink Vox populi noun A psychiatrist . Improvement in net interest income will continue to be difficult to achieve until an upward slope in the yield curve starts to develop. The trend in net interest margin (net interest income divided by average interest-earning assets) was similar to that in interest rate spread. It declined from 3.31% in the 2005 first quarter to 3.19% in the 2005 fourth quarter and 3.11% in the 2006 first quarter. The declines resulted from the developments mentioned in the two preceding paragraphs and a reduction in the percent of total interest-earnings assets comprised of mortgage loans from 54% in the 2005 first quarter to 51% in the 2006 first quarter. Typically, the yield on mortgage loans is higher than the yields earned on the Company's other interest-earning assets. It should be noted, however, that loan pricing has been subjected to greater competitive pressure over the past two years and, as a result, it has been increasingly difficult to incorporate the rise in funding costs into the pricing of new loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . The Company is hopeful that two new initiatives will help to improve asset yields prospectively. On April 13, 2006, the Company increased its ownership of Eastern Funding LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Eastern") from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 28% to 87%. Eastern is a company that specializes primarily in the financing of coin operated laundry Laundry can be:
Before industrialization and dry cleaning dry cleaning, process of cleaning fabrics without water. Special solvents and soaps are used so as not to harm fabrics and dyes that will not withstand the effects of ordinary soap and water. Dry cleaning began in France about the middle of the 19th cent. equipment in the greater metropolitan New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of area and selected other locations in the Northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. . Yields earned on Eastern's $107 million loan portfolio are significantly greater than the yields earned on the Company's loans. The second important initiative relates to the hiring in February February: see month. 2006 of an experienced senior officer who will be responsible for growing the Company's commercial loan portfolio. Lending to commercial enterprises can be rewarding not only because the loans typically are priced at attractive rates and on a variable rate basis but also because of the deposits that accompany To go along with; to go with or to attend as a companion or associate. A motor vehicle statute may require beginning drivers or drivers under a certain age to be accompanied by a licensed adult driver whenever operating an automobile. the lending relationships. Meaningful improvement in the Company's earnings as a result of these two initiatives will take some time to occur. The provision for loan losses increased from $654,000 in the 2005 first quarter to $748,000 in the 2006 first quarter. The increase was due to the indirect automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of loan portfolio which grew from $392 million at March 31, 2005 to $459 million at December 31, 2005 and $491 million at March 31, 2006. Net charge-offs in the 2006 first quarter were $479,000, resulting in an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. net charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. rate of 0.40%. Indirect automobile loans delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. more than 30 days were $4.2 million, or 0.86% of the portfolio, at March 31, 2006 compared to $5.5 million, or 1.21% of the portfolio, at December 31, 2005. In the 2005 first quarter, $50,000 was credited to income due to payments made on loans acquired in the acquisition of Mystic Mystic, rivers, United States Mystic. 1 River, c.10 mi (16 km) long, rising in SE Conn. and flowing S past Old Mystic and Mystic villages to the Long Island Sound. Mystic Seaport, a maritime museum, is at its mouth. 2 River, c. Financial, Inc. ("Mystic") which was completed on January January: see month. 7, 2005. Non-performing assets remained modest at $1.5 million, or 0.07% of total assets, at March 31, 2006. The allowance for loan losses was $22.5 million at March 31, 2006, or 1.34% of total loans. Non-interest income was $419,000 less in the 2006 first quarter than in the 2005 first quarter due primarily to a $356,000 decline in fees from mortgage loan prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. . Non-interest expense was $471,000, or 5%, less in the 2006 first quarter than in the 2005 first quarter. In 2005, the Company experienced $382,000 in expenses related to the merger/conversion of Mystic into the Company. Additionally, as a result, of a new accounting pronouncement, dividends of $169,000 paid on unvested restricted stock were expensed in 2006 whereas similar dividends of $228,000 paid in 2005 were not expensed, and dividend equivalent rights of $363,000 paid in the 2006 first quarter were not expensed whereas $363,000 of dividend equivalent rights paid in the 2005 first quarter were expensed. Excluding these items, non-interest expenses were $105,000, or 1%, higher in the 2006 first quarter compared to the 2005 first quarter. The effective income tax rate declined from 40.5% in the 2005 first quarter to 38.8% in the 2006 first quarter due to a higher portion of taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. being earned by the Company's investment security subsidiaries. Income in those subsidiaries is subject to a lower rate of state taxation than income earned by the Company and its other subsidiaries. The above text 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 could cause such differences included, but are not limited to, general economic conditions, changes in interest rates, 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,
2006 2005 2005
------------ ------------ ------------
ASSETS
Cash and due from banks $ 15,307 $ 15,507 $ 10,491
Short-term investments 108,954 102,888 133,549
Securities available for sale 359,879 374,906 366,374
Securities held to maturity
(market value of $406, $423
and $895, respectively) 395 410 875
Restricted equity securities 24,608 23,081 22,557
Loans 1,673,313 1,636,755 1,586,884
Allowance for loan losses (22,478) (22,248) (21,383)
----------- ----------- -----------
Net loans 1,650,835 1,614,507 1,565,501
----------- ----------- -----------
Other investment 4,723 4,662 4,438
Accrued interest receivable 9,268 9,189 8,189
Bank premises and equipment,
net 9,755 10,010 11,647
Other real estate owned - - 1,400
Deferred tax asset 11,246 11,347 8,434
Prepaid income taxes - - 1,513
Core deposit intangible 8,945 9,471 11,249
Goodwill 35,615 35,615 36,605
Other assets 3,550 3,111 2,172
----------- ----------- -----------
Total assets $2,243,080 $2,214,704 $2,184,994
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
-------------------------------
Deposits $1,161,555 $1,168,307 $1,143,461
Borrowed funds 459,512 411,507 397,552
Subordinated debt 12,187 12,218 12,310
Mortgagors' escrow accounts 5,894 5,377 5,961
Income taxes payable 327 630 -
Accrued expenses and other
liabilities 13,065 14,215 13,402
----------- ----------- -----------
Total liabilities 1,652,540 1,612,254 1,572,686
----------- ----------- -----------
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, 62,989,384 shares
and 62,996,235 shares
issued, respectively 630 630 630
Additional paid-in capital 505,267 512,338 511,768
Retained earnings, partially
restricted 108,845 121,042 132,196
Accumulated other
comprehensive income (loss) (2,399) (1,577) (1,028)
Treasury stock, at cost -
1,405,611 shares,
1,405,611 shares and
1,336,799 shares,
respectively (18,144) (18,144) (17,040)
Unearned compensation -
recognition and retention
plans - (8,103) (10,241)
Unallocated common stock held
by ESOP - 671,142 shares,
685,161 shares and 729,355
shares, respectively (3,659) (3,736) (3,977)
----------- ----------- -----------
Total stockholders' equity 590,540 602,450 612,308
----------- ----------- -----------
Total liabilities and
stockholders' equity $2,243,080 $2,214,704 $2,184,994
=========== =========== ===========
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands except share data)
Three months ended
March 31,
-----------------------
2006 2005
----------- -----------
Interest income:
Loans $24,050 $21,724
Debt securities 3,620 2,267
Marketable equity securities 33 74
Restricted equity securities 309 219
Short-term investments 1,112 846
----------- -----------
Total interest income 29,124 25,130
----------- -----------
Interest expense:
Deposits 7,446 4,559
Borrowed funds 4,843 3,382
Subordinated debt 207 135
----------- -----------
Total interest expense 12,496 8,076
----------- -----------
Net interest income 16,628 17,054
Provision for loan losses 748 654
----------- -----------
Net interest income after provision for
loan losses 15,880 16,400
----------- -----------
Non-interest income:
Fees and charges 573 851
Gains on sales of securities, net 558 594
Other income 69 174
----------- -----------
Total non-interest income 1,200 1,619
----------- -----------
Non-interest expense:
Compensation and employee benefits 4,177 3,950
Dividends on unvested restricted stock 169 -
Dividend equivalent rights - 363
Occupancy 793 704
Equipment and data processing 1,417 1,591
Advertising and marketing 187 204
Professional services 311 349
Merger/conversion - 382
Amortization of core deposit intangible 526 593
Other 675 590
----------- -----------
Total non-interest expense 8,255 8,726
----------- -----------
Income before income taxes 8,825 9,293
Provision for income taxes 3,428 3,761
----------- -----------
Net income $ 5,397 $ 5,532
=========== ===========
Earnings per common share:
Basic $ 0.09 $ 0.09
Diluted 0.09 0.09
Weighted average common shares outstanding
during the period:
Basic 60,309,532 59,944,866
Diluted 61,051,157 60,737,986
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Average Yields / Costs
Three months ended March 31,
----------------------------------------------------
2006 2005
----------------------------------------------------
Average Average
Average Interest yield/ Average Interest yield/
balance (1) cost balance (1) cost
---------- -------- ------- -------- -------- ------
(Dollars in thousands)
Assets
-----------------
Interest-earning
assets:
Short-term
investments $ 103,473 $ 1,112 4.36% $ 139,702 $ 846 2.46%
Debt securities
(2) 365,822 3,701 4.05 317,408 2,295 2.89
Equity
securities (2) 27,597 354 5.18 31,740 320 4.08
Mortgage loans
(3) 1,104,372 17,379 6.29 1,109,888 16,670 6.01
Other
commercial
loans (3) 62,786 1,091 6.95 77,752 1,107 5.70
Indirect
automobile
loans (3) 482,534 5,528 4.65 389,468 3,896 4.06
Other consumer
loans (3) 2,923 52 7.12 2,959 51 6.76
---------- -------- ---------- --------
Total
interest-
earning
assets 2,149,507 29,217 5.45% 2,068,917 25,185 4.87%
------------- -------------
Allowance for
loan losses (22,307) (20,156)
Non-interest
earning assets 97,862 90,180
----------- -----------
Total assets $2,225,062 $2,138,941
=========== ===========
Liabilities and
Stockholders'
Equity
-----------------
Interest-bearing
liabilities:
Deposits:
NOW accounts $ 91,573 52 0.23% $ 96,909 35 0.15%
Savings
accounts 117,860 405 1.39 159,470 548 1.39
Money market
savings
accounts 230,463 1,196 2.10 294,652 947 1.30
Certificate of
deposit
accounts 645,318 5,793 3.64 472,052 3,029 2.60
----------- -------- ----------- --------
Total
deposits 1,085,214 7,446 2.78 1,023,083 4,559 1.81
Borrowed funds 448,922 4,843 4.32 403,962 3,382 3.35
Subordinated
debt 12,207 207 6.78 11,032 135 4.93
----------- -------- ----------- --------
Total interest
bearing
liabilities 1,546,343 12,496 3.28% 1,438,077 8,076 2.28%
-------- ----- -------- -----
Non-interest-
bearing demand
checking
accounts 62,608 66,140
Other liabilities 19,549 17,058
----------- -----------
Total
liabilities 1,628,500 1,521,275
Stockholders'
equity 596,562 617,666
----------- -----------
Total
liabilities
and
stockholders'
equity $2,225,062 $2,138,941
=========== ===========
Net interest
income (tax
equivalent
basis)/interest
rate spread (4) 16,721 2.17% 17,109 2.59%
===== =====
Less adjustment
of tax exempt
income 93 55
-------- --------
Net interest
income $16,628 $17,054
======== ========
Net interest
margin (5) 3.11% 3.31%
===== =====
(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,
-----------------
2006 2005
------- --------
Performance Ratios (annualized):
Return on average assets 0.97 % 1.03 %
Return on average stockholders= equity 3.62 % 3.58 %
Interest rate spread 2.17 % 2.59 %
Net interest margin 3.11 % 3.31 %
Dividends paid per share during period $0.285 $0.285
At At At
March December March
31, 31, 31,
2006 2005 2005
--------- --------- --------
(dollars in thousands except
per share data)
Capital Ratio:
Stockholders= equity to total assets 26.33% 27.20% 28.02%
Asset Quality:
Non-performing loans $ 911 $ 480 $ 489
Non-performing assets 1,517 973 2,232
Allowance for loan losses 22,478 22,248 21,383
Allowance for loan losses as a percent
of total loans 1.34% 1.36% 1.35%
Non-performing assets as a percent of
total assets 0.07% 0.04% 0.10%
Per Share Data:
Book value per share $ 9.59 $ 9.78 $ 9.93
Tangible book value per share 8.87 9.05 9.15
Market value per share 15.49 14.17 14.90
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