Brookline Bancorp Announces Second Quarter Earnings and 129% Increase in Per Share Quarterly Dividend.Business Editors 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)--July 19, 2001Brookline 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. ("Brookline"), announced that it earned $3,434,000 ($0.13 per share) for the three months ended June June: see month. 30, 2001 compared to $5,462,000 ($0.20 per share) for the three months ended June 30, 2000. Net income for the six months ended June 30, 2001 was $9,065,000 ($0.34 per share) compared to $11,086,000 ($0.41 per share) for the six months ended June 30, 2000. 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 and six month periods. Key components of these operating results were as follows:
Three Months Ended June 30,
Pre-Tax After-Tax Earnings Per Share
2001 2000 2001 2000 2001 2000
(in thousands)
Brookline operating
income $ 7,257 $ 7,575 $ 4,650 $ 4,900 $ 0.17 $ 0.18
Recognition and
retention plan
expense (42) (370) (24) (215) -- (0.01)
Securities gains
(losses) (495) 1,801 (318) 1,142 (0.01) 0.04
Lighthouse net
loss* (751) (641) (488) (365) (0.02) (0.01)
Pension plan gain 3,667 -- 1,890 -- 0.07 --
Restructuring
charge (3,912) -- (2,276) -- (0.08) --
Net income $ 5,724 $ 8,365 $ 3,434 $ 5,462 $ 0.13 $ 0.20
Six Months Ended June 30,
Pre-Tax After-Tax Earnings Per Share
2001 2000 2001 2000 2001 2000
(in thousands)
Brookline operating
income $ 14,538 $ 14,937 $ 9,331 $ 9,622 $ 0.35 $ 0.36
Recognition and
retention plan
expense (83) (767) (48) (446) -- (0.02)
Securities gains
(losses) 2,307 4,143 1,407 2,644 0.05 0.10
Lighthouse net
loss* (1,906) (1,208) (1,239) (734) (0.05) (0.03)
Pension plan
gain 3,667 -- 1,890 -- 0.07 --
Restructuring
charge (3,912) -- (2,276) -- (0.08) --
Net income $ 14,611 $ 17,105 $ 9,065 $ 11,086 $ 0.34 $ 0.41
* Excludes intercompany securities gains
As previously communicated in a press release issued July July: see month. 18, 2001, the Company and its affiliates converted from state to federal charters and 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"), an internet-only bank, was merged into Brookline. In contemplation Contemplation Compleat Angler, The Izaak Walton’s classic treatise on the Contemplative Man’s Recreation. [Br. Lit.: The Compleat Angler] Thinker, The sculpture by Rodin, depicting contemplative man. of the merger, a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $3,912,000 was recorded in the second quarter of 2001 to provide for merger-related expenses. Those expenses include personnel severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when payments, termination of contracts with third party vendors, occupancy rent obligations, write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of equipment and software, and other miscellaneous items. Certain 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. associated with servicing former Lighthouse customers A lighthouse customer is an early customer of a given company, product, or technology. Typically this will be a large, sophisticated customer that, in addition to using the vendor's product or technology, will also provide considerable and candid feedback to help the vendor will continue through the third quarter of 2001 until transfer of accounts to Brookline systems and records is completed. The restructuring charge was partially offset by a pre-tax gain of $3,667,000 resulting from termination of Brookline's defined benefit pension plan. A defined contribution plan Defined contribution plan A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan has been established to replace the terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: plan. The pre-tax operating results of Brookline were $318,000, or 4%, less in the second quarter of 2001 than in the second quarter of 2000. The decline was attributable to a $325,000 increase in the provision for loan losses from $150,000 in the 2000 quarter to $475,000 in the 2001 quarter. The higher provision resulted from loan growth as non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. remained minimal. Pre-tax operating results for the first half declined $399,000, or 3%, of which $285,000 was attributable to a higher provision for loan losses caused by loan growth. Offsetting the decline in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. were lower expenses related to shares awarded in connection with the Company's recognition and retention plan ("RRP RRP n abbr (= recommended retail price) → PVP m "). While interest rate spread declined from 3.03% in the second quarter of 2000 to 2.79% in the second quarter of 2001, it increased from the 2.68% spread realized in the first quarter of 2001. The improved spread in the most recent quarter resulted primarily from loan growth, a reduction in rates paid on deposits and the effect of three reductions 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. by the Federal Reserve in both the first and second quarters of 2001. Average loans outstanding as a percent of total average 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 increased from 73% in the second quarter of 2000 and 70% in the first quarter of 2001 to 75% in the second quarter of 2001. The decline in rates paid on deposits was partly attributable to the maturity of high cost certificates of deposit obtained through promotions in the fourth quarter of 2000 and federal funds rate reductions by the Federal Reserve. The aggregate rate reductions were 2.75% in the first six months of 2001 compared to rate increases of 1.00% in the first six months of 2000. The impact of 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, investment securities, deposits and borrowed funds. Total assets were $1.079 billion at June 30, 2001, $17 million (2%) higher than at March 31, 2001 and $156 million (17%) higher than at June 30, 2000. Total loans, which amounted to $817 million at June 30, 2001, increased $71 million (10%) since March 31, 2001 and $148 million (22%) since a year ago. Of the annual increase, $55 million related to residential mortgage loans originated by Lighthouse. The level of loan growth in the most recent quarter was abnormally high and is not expected to continue in the second half of 2001. In connection with the merger of Lighthouse, the level of residential mortgage lending will be reduced. Loan growth was funded through deposit growth, increased borrowings from the Federal Home Loan Bank and redemptions of 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. investments. While deposits increased $94 million (18%) since a year ago to $619 million at June 30, 2001, deposits declined $9 million (1%) since March 31, 2001. Deposits at Lighthouse were $57 million at June 30, 2001, down from $65 million at March 31, 2001. High cost certificates of deposit at Lighthouse were reduced by $18 million during the second quarter while transaction based deposits grew $9 million. No investment securities were sold in the second quarter of 2001 except for an intercompany transaction Intercompany transaction Transaction carried out between two units of the same corporation. between Lighthouse and Brookline. In each of the previous eight quarters, the Company had realized 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. gains from 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 in the range of $1.1 million to $1.7 million. Those gains effectively offset Lighthouse losses and the expense of the RRP. Resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of securities gains in the future, if any, will be highly dependent on factors outside the control of the Company and, accordingly, cannot be assured. In the second quarter of 2001, the Company charged earnings $495,000 to recognize an other than temporary impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. in the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of a $2,000,000 bond issued by Southern California Edison Southern California Edison (or SCE Corp), the largest subsidiary of Edison International (NYSE: EIX), is the primary electricity supply company for much of Southern California. It provides 11 million people with electricity. that matured on June 1, 2001. Interest of $65,000 due on the bond was received at the maturity date and applied as a reduction of the carrying value of the bond instead of being credited to interest income. Repayment of the bond will depend on resolution of issues related to the present energy crisis in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . As a result of the charter conversions, the Board of Directors of Brookline Bancorp, MHC MHC major histocompatibility complex. MHC abbr. major histocompatibility complex MHC major histocompatibility complex. , the majority stockholder of the Company, has requested non-objection by the Office of Thrift Supervision The Office of Thrift Supervision (OTS) was established as a bureau of the Treasury Department in August 1989 as part of a major Reorganization Plan of the thrift regulatory structure mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.A. ("OTS See Office of Thrift Supervision. ") to waive To intentionally or voluntarily relinquish a known right or engage in conduct warranting an inference that a right has been surrendered. For example, an individual is said to waive the right to bring a tort action when he or she renounces the remedy provided by law for such receipt of dividends to be paid by the Company. In expectation of no objection A formal attestation or declaration of disapproval concerning a specific point of law or procedure during the course of a trial; a statement indicating disagreement with a judge's ruling. by the OTS, the Board of Directors of the Company approved a quarterly dividend of $0.16 per share of common stock to stockholders of record as of July 31, 2001 and payable August 22, 2001. The amount of dividend paid in the preceding quarter was $0.07 per share. 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, general economic conditions, changes in interest rates, regulatory considerations and competition.
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands except share data)
June 30, December 31, June 30,
2001 2000 2000
Assets
Cash and due from banks $ 13,144 $ 13,505 $ 11,996
Short-term investments 28,972 66,870 4,950
Securities available for sale 166,893 149,361 125,947
Securities held to maturity
(market value of $29,527,
$50,337 and $75,365,
respectively) 29,304 50,447 75,583
Restricted equity securities 8,506 7,145 6,279
Loans, excluding money market
loan participations 817,143 716,559 668,735
Money market loan
participations 9,000 28,250 24,800
Allowance for loan losses (14,982) (14,315) (14,184)
Net loans 811,161 730,494 679,351
Other investment 3,505 3,360 3,166
Accrued interest
receivable 5,819 6,521 5,863
Bank premises and
equipment, net 3,770 3,768 3,032
Other real estate
owned, net -- -- 535
Deferred tax asset 5,475 3,999 5,435
Other assets 2,509 680 883
Total assets $ 1,079,058 $ 1,036,150 $ 923,020
Liabilities and Stockholders' Equity
Deposits $ 618,646 $ 608,621 $ 525,143
Borrowed funds 156,250 133,400 112,300
Mortgagors' escrow accounts 4,211 3,762 3,751
Income taxes payable 3,098 169 1,042
Accrued expenses and
other liabilities 10,475 7,613 7,206
Total liabilities 792,680 753,565 649,442
Stockholders' equity:
Preferred stock,
$.01 par value;
5,000,000 shares
authorized, none issued -- -- --
Common stock,
$.01 par value;
45,000,000 shares
authorized,
29,641,500 shares
issued 296 296 296
Additional paid-in
capital 140,356 140,327 140,332
Retained earnings 170,496 165,210 157,900
Accumulated other
comprehensive
income(A) 6,684 6,244 4,742
Treasury stock,
at cost -
2,351,428 shares,
2,185,928 shares
and 2,140,428,
respectively (25,248) (22,987) (22,498)
Unearned
compensation -
recognition and
retention plan (987) (1,070) (1,548)
Unallocated common
stock held by ESOP -
473,729 shares,
455,771 shares and
473,700 shares,
respectively (5,219) (5,435) (5,646)
Total stockholders'
equity 286,378 282,585 273,578
Total liabilities
and stockholders'
equity $ 1,079,058 $ 1,036,150 $ 923,020
(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 Six months ended
June 30, June 30,
2001 2000 2001 2000
Interest income:
Loans, excluding
money market loan
participations $15,510 $13,694 $30,474 $26,883
Money market loan
participations 269 378 808 628
Debt securities 2,748 2,728 5,422 5,586
Marketable equity
securities 181 225 377 484
Restricted equity
securities 117 112 246 222
Short-term investments 384 242 1,420 460
Total interest income 19,209 17,379 38,747 34,263
Interest expense:
Deposits 6,294 5,529 13,148 10,868
Borrowed funds 2,154 1,731 4,204 3,335
Total interest
expense 8,448 7,260 17,352 14,203
Net interest income 10,761 10,119 21,395 20,060
Provision for loan losses 495 150 659 300
Net interest
income after
provision for
loan losses 10,266 9,969 20,736 19,760
Non-interest income:
Fees and charges 344 221 641 423
Gains (losses) on
securities, net (495) 1,801 2,307 4,143
Other real estate
owned income, net -- 46 -- 65
Gain from
termination of
pension plan 3,667 -- 3,667 --
Other income 113 160 102 231
Total non-interest
income 3,629 2,228 6,717 4,862
Non-interest
expense:
Compensation and
employee benefits 2,329 1,866 4,602 3,451
Recognition and
retention plan 42 370 83 767
Occupancy 265 220 577 407
Equipment and data
processing 885 363 1,747 655
Advertising and
marketing 258 455 770 636
Internet bank
start-up -- 179 -- 746
Restructuring
charge 3,912 -- 3,912 --
Other 480 379 1,151 855
Total
non-interest
expense 8,171 3,832 12,842 7,517
Income before
income taxes 5,724 8,365 14,611 17,105
Provision for
income taxes 2,290 2,903 5,546 6,019
Net income $ 3,434 $ 5,462 $ 9,065 $11,086
Weighted average
common shares
outstanding
during the period 26,847,348 26,781,234 26,868,560 26,967,631
Basic and diluted
earnings per
common share $ 0.13 $ 0.20 $ 0.34 $ 0.41
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Ratios and Other Data
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
(dollars in thousands except per share data)
Performance Ratios (annualized):
Return on average assets 1.29% 2.37% 1.72% 2.42%
Return on average
stockholders' equity 4.77% 8.00% 6.32% 8.11%
Return on average stockholders'
equity, excluding effect of
unrealized gains on
securities available for
sale, net of taxes 4.93% 8.15% 6.55% 8.29%
Interest rate spread 2.79% 3.03% 2.77% 3.02%
Net interest margin 4.13% 4.49% 4.13% 4.47%
Efficiency ratio 26.80% 24.42% 27.94% 25.49%
Dividend paid per share
during period $ 0.07 $ 0.06 $ 0.14 $ 0.12
At At At
June 30, Dec. 31, June 30,
2001 2000 2000
Capital Ratio:
Stockholders' equity to total assets 26.54% 27.27% 29.64%
Asset Quality:
Non-performing loans $ 143 $ -- $ --
Non-performing assets 1,583 -- 535
Allowance for loan losses 14,982 14,315 14,184
Allowance for loan losses
as a percent of total loans,
excluding money market
loan participations 1.83% 2.00% 2.12%
Non-performing assets as
a percent of total assets 0.15% 0.00% 0.06%
Per Share Data:
Book value per share at
end of period $10.49 $10.29 $ 9.95
Market value per share at
end of period 14.04 11.50 11.44
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