Brookline Bancorp Announces 2007 First Quarter Earnings, Dividend Declaration and Approval for Additional Stock Repurchases.BROOKLINE, Mass. -- Brookline 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) 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 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, 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 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. ); 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 Erode (ĕrōd`), city (1991 urban agglomeration pop. 361,755), Tamil Nadu state, S India, on the Kaveri River. The city is located in a cotton-growing region, and its industries include cotton ginning and the manufacture of transport equipment. . 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 (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Eastern") and a slow down in the rate of increase in the cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. . The inverted yield curve Inverted Yield Curve Usually a chart showing long-term debt instruments that have lower yields than short-term debt instruments. It is sometimes referred to as a negative 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 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. . 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 Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge 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 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. stores and convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. 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 throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 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. 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 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. 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 Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real 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 Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. 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 The taking back of an item that has been sold on credit and delivered to the purchaser because the payments have not been made on it. For example, if an individual fails to render prompt payments on a new car, the car might be subject to repossession by the finance company, 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 Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). . 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. Factors that could cause such differences include, but are not limited to, general economic conditions, changes in interest rates, regulatory considerations and competition. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (1) Tax exempt income Exempt Income Certain types of income that are not subject to income tax. Notes: Examples of exempt income include: gifts under $10,000, death benefits, health benefits, and some scholarships. See also: Exemption on equity securities and municipal bonds is included on a tax equivalent basis. (2) Average balances include unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. (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. 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