Brookline Bancorp Announces 2007 Third Quarter Earnings and Dividend Declaration.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 third quarter and approval by the Board of Directors of a regular quarterly dividend of $0.085 per share payable November 15, 2007 to stockholders of record on October 31, 2007. The Company earned $4,249,000, or $0.07 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 September 30, 2007 compared to $5,109,000, or $0.08 per share on a basic and diluted basis, for the quarter ended September 30, 2006. The decline in net income was attributable primarily to lower dividend income from the Federal Home Loan Bank of Boston ("FHLB FHLB Federal Home Loan Bank "), a higher provision for loan losses and higher expenses for professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. and loan collection costs. As a result of a change in policy regarding the timing of dividend declarations, the FHLB declared cash dividends on its common stock in the 2006 third quarter that were equivalent to two quarters of income. Of the $761,000 of dividend income received in the 2006 third quarter, $378,000 ($220,000 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. ) is the amount that would have been recognized in the 2006 second quarter if the FHLB had not changed its policy. Net income for the nine months ended September 30, 2007 was $14,043,000, or $0.24 per share ($0.23 per share on a diluted basis), compared to $15,435,000, or $0.25 per share on a basic and diluted basis. These earnings include the operating results of Eastern Funding LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Eastern") since April 2006, the date the Company acquired a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in Eastern. The 2006 period included gains on the sale of marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. equity securities of $558,000 ($358,000 on an after-tax basis); no securities were sold in the 2007 period. The decline in net income was also attributable primarily to the same factors depressing third quarter results, exclusive of the FHLB dividend matter. Interest rate spread declined from 2.16% in the 2006 nine month period to 2.13% in the 2007 nine month period and from 2.17% in the 2006 third quarter to 2.14% in the 2007 third quarter, but improved from 2.11% in the 2007 first quarter and 2.13% in the 2007 second quarter. Net interest margin increased from 3.13% in the 2006 nine month period to 3.18% in the 2007 nine month period. The improvement in net interest margin resulted primarily from an increase in higher yielding loans. Net interest margin, however, declined from 3.20% in the 2007 first quarter to 3.18% in the 2007 second quarter and 3.16% in the 2007 third quarter. The decline was due to a reduction in 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. resulting primarily from repurchases of the Company's common stock. 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. , which existed for some time, started to modestly slope upward in the 2007 second quarter. Meaningful improvement in interest rate spread and net interest margin, however, will continue to be difficult until the yield curve becomes more upward in slope. Interest income was 11% higher in the first nine months of 2007 than in the first nine months of 2006. Net interest income, however, increased only 3% as interest expense rose 21%. The Company's mix of deposits continued to shift from lower rate transaction deposit accounts to higher rate certificates of deposit. Certificates of deposit comprised 64% of total retail deposits at September 30, 2007 compared to 61% at December 31, 2006. The average rate earned on mortgage loans, the Company's largest asset category, declined from 6.44% in the 2006 third quarter to 6.34% in the 2007 third quarter. Over the past year, it was increasingly difficult to incorporate rising funding costs into the pricing of mortgage 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. . Some financial institutions and other entities active in mortgage lending sought to enhance yields by originating higher risk mortgage loans. The Company refrained from such originations and, at September 30, 2007, its loan portfolio did not include any subprime mortgage loans. The decision to maintain high underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. standards and aggressive loan pricing by competitors resulted in less loan originations and a decline of $56 million in the average balance of mortgage loans outstanding in the first nine months of 2006 compared to the first nine months of 2007. Mortgage loans, net of unadvanced funds, amounted to $1.02 billion at September 30, 2007. Offsetting a decline in mortgage loan income was interest income derived from indirect automobile ("auto") loans, Eastern loans and commercial loans. The average balance of auto loans outstanding increased $77 million in the 2007 nine month period compared to the 2006 nine month period and $22 million in the 2007 third quarter compared to the 2007 second quarter. Auto loans amounted to $606 million at September 30, 2007. Of greater importance was the increase in the yield on auto loans in those respective periods from 5.01% to 6.09% and from 6.14% to 6.31%. The average balance of Eastern loans outstanding increased from $129 million in the 2007 second quarter to $140 million in the 2007 third quarter. The yields on those loans were 10.70% and 10.57%, respectively. The average balance of commercial loans grew $6.8 million in the 2007 third quarter to $76 million and the average yield on those loans was 7.14%. The provision for loan losses, which is comprised of amounts relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the auto loan portfolio, the Eastern loan portfolio and the remainder of the Company's loan portfolio, was $1,503,000 in the 2007 third quarter compared to $813,000 in the 2006 third quarter and $3,860,000 in the 2007 nine month period compared to $2,420,000 in the 2006 nine month period. The amounts provided for auto loan losses in the 2007 and 2006 third quarters were $1,389,000 and $850,000, respectively, and $3,012,000 and $2,355,000, respectively, in the 2007 and 2006 nine month periods. The increases resulted from higher loan balances and a rise in charge-offs. Net charge-offs were $1,232,000 in the 2007 third quarter (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. rate of net charge-offs of 0.80% based on the average balance of loans outstanding) and $2,527,000 in the 2007 nine month period (0.57% annualized rate of net charge-offs). Net charge-offs in the 2006 nine month period were $1,381,000 (0.36% annualized rate of net charge-offs). 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 or more were $7,437,000, or 1.23% of loans outstanding at September 30, 2007, compared to $7,092,000 (1.31%) at December 31, 2006. The rise in net charge-offs is due primarily to economic pressures affecting the ability of consumers to service their debt and larger per unit losses upon auto 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, due to weaker demand and slowing retail auto business activity. The provisions for loan losses related to the Eastern portfolio in the 2007 and 2006 third quarters were $114,000 and $238,000, respectively, $823,000 in the 2007 nine month period and $415,000 in the six month period ended September 30, 2006. Net charge-offs declined from $391,000 in the 2007 first quarter to $288,000 in the 2007 second quarter and $63,000 in the 2007 third quarter, which was aided by recoveries of $179,000 in that quarter. The resulting annualized rate of net charge-offs for the 2007 nine month period was 0.75% of average loans outstanding. Loans delinquent 30 days or more increased from $1,436,000 (1.13% of total loans) at December 31, 2006 to $2,002,000 (1.45%) at June 30, 2007 and $3,414,000 (2.44%) at September 30, 2007. Loans on non-accrual at those respective dates were $657,000 (0.52% of total loans), $2,254,000 (1.63%) and $2,169,000 (1.55%). The total allowance for loan losses related to Eastern's loans was $2,377,000, or 1.80% of loans outstanding at September 30, 2007 (excluding seasoned loans purchased at the end of the 2007 second quarter). Despite a much lower rate of 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. experience, the allowance is maintained at 1.80% in recognition of the higher risk exposure associated with Eastern's loans. The higher risk exposure is the reason why the rates charged on the loans are significantly above those on other segments of the Company's loan portfolio. Regarding the remainder of the Company's loan portfolio, which is comprised primarily of mortgage loans and commercial loans, the provisions for loan losses in the 2007 third quarter and nine month period were none and $25,000, respectively. In the 2006 third quarter and nine month period, credits to the provision for loan losses of $275,000 and $350,000, respectively, were taken to income as a result of reductions in loans outstanding caused by payoffs. No mortgage loans or commercial loans were charged off in 2007 or 2006. Loans delinquent 30 days or more at September 30, 2007 were insignificant at $956,000. Excluding securities gains, the increases in non-interest income in the 2007 third quarter and nine month periods compared to the same periods for 2006 were due primarily to higher deposit service and loan fees, including fees from 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. of loans. Non-interest expenses were $763,000, or 7.9%, higher in the 2007 third quarter than in the 2006 third quarter due primarily to higher expenses related to auto loan growth, higher marketing expenses for promotion of deposit programs, higher legal fees and higher costs for loan collections and auto repossessions. The $3,116,000, or 11.4%, increase in non-interest expenses for the 2007 nine month period compared to the 2006 nine month period was due primarily to the inclusion of Eastern for only six months in 2006, higher professional fees for legal and audit services, and higher costs for loan collections and auto repossessions. During the 2007 third quarter, the Company repurchased 457,300 shares of its common stock at a total cost of $4,831,000, or $10.56 per share including 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). . In the 2007 nine month period, the Company repurchased 2, 517,300 shares of its common stock at a total cost of $29,671,000, or $11.79 per share including transaction costs. The foregone fore·gone v. Past participle of forego1. adj. Having gone before; previous. Usage Note: The word foregone has recently developed a new meaning as a truncation of the phrase interest income resulting from the stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. was approximately $357,000 in the 2007 third quarter and $527,000 in the 2007 nine month period. As of September 30, 2007, the Company remained authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by the Board of Directors to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. an additional 3,755,232 shares. 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] [TABLE OMITTED] [TABLE OMITTED] |
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