-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BmxjPORaiagoX/4H1/tArbaY4NQj5ju1+IIJPvReHioDQXxiPHD40SzE9w44K5Jh vyAE8v4Pae6GLf6g/sQzBw== 0001157523-03-003047.txt : 20030718 0001157523-03-003047.hdr.sgml : 20030718 20030718112721 ACCESSION NUMBER: 0001157523-03-003047 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030717 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030718 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROOKLINE BANCORP INC CENTRAL INDEX KEY: 0001049782 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23695 FILM NUMBER: 03792516 BUSINESS ADDRESS: STREET 1: 160 WASHINGTON STREET CITY: BROOKLINE STATE: MA ZIP: 02147 BUSINESS PHONE: 6177303500 MAIL ADDRESS: STREET 1: 160 WASHINGTON ST CITY: BROOKLINE STATE: MA ZIP: 02147 8-K 1 a4436303.txt BROOKLINE 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 17, 2003 BROOKLINE BANCORP, INC. ------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-23695 04-3402944 - --------------------------- ------------------------ ------------------- (State or other jurisdiction (Commission File No.) (I.R.S. Employer of incorporation) Identification No.) 160 Washington Street, Brookline, MA 02447-0469 - -------------------------------------- ---------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 730-3500 Not Applicable ------------------------------------------------------------------------ (Former name or former address, if changed since last report) Item 7. Financial Statements and Exhibits (a) Not Applicable (b) Not Applicable (c) Exhibits Exhibit No. Description 99.1 Press release dated July 17, 2003 Item 9. Regulation FD Disclosure The following information is furnished pursuant to this Item 9 and in satisfaction of Item 12, "Disclosure of Results of Operations and Financial Condition." On July 17, 2003, Brookline Bancorp, Inc. (the "Company") announced its earnings for the second quarter of 2003 and declaration of a regular quarterly dividend of $0.085 per share and an extra dividend of $0.20 per share. A copy of the press release dated July 17, 2003 is attached as Exhibit 99 to this report. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. BROOKLINE BANCORP, INC. Date: July 18, 2003 By: /s/ Paul R. Bechet ------------------------------------ Paul R. Bechet, Chief Financial Officer EX-99 3 a4436303ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Brookline Bancorp Announces 2003 Second Quarter Earnings and Declaration of Per Share Regular Dividend of $0.085 and Extra Dividend of $0.20 BROOKLINE, Mass.--(BUSINESS WIRE)--July 17, 2003--Brookline Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its earnings for the second quarter of 2003 and approval by its Board of Directors of a regular quarterly dividend of $0.085 per share and an extra dividend of $0.20 per share payable on August 15, 2003 to stockholders of record on July 31, 2003. The Company earned $6,687,000, or $0.12 per share (on a basic and diluted basis), for the quarter ended June 30, 2003 compared to $5,131,000, or $0.09 per share (on a basic and diluted basis), for the quarter ended June 30, 2002. The 2003 quarter included an after-tax credit of $2,727,000, or $0.05 per share, resulting from settlement of the matter addressed in the following paragraph. On March 5, 2003, a new law was enacted denying favorable tax treatment for dividend distributions from real estate investment trusts ("REITs") in determining Massachusetts taxable income not only for the year 2003 and thereafter, but also retroactively to tax years beginning in 1999. Because of the new law and as required by generally accepted accounting principles, $8,580,000 ($5,515,000 on an after-tax basis) was charged to the Company's earnings in the first quarter of 2003, despite initiatives by the Company to dispute and appeal taxes assessed. As previously communicated, on June 23, 2003, the Company signed an agreement with the Commissioner of Revenue of the Commonwealth of Massachusetts settling all disputes relating to assessments and the tax treatment of the Company's REIT subsidiary for the years 1999 through 2002. In accordance with that agreement, the Company paid $4,341,000 as full settlement of taxes and interest due. The credit mentioned in the preceding paragraph is the difference between the liability recorded in the first quarter of 2003 and the amount of the settlement paid, net of related tax benefits. Excluding the credit resulting from settlement of the REIT tax matter, net income in the second quarter of 2003 was $1,171,000 less than net income in the second quarter of 2002. The decline was attributable primarily to a $1,680,000 ($977,000 on an after-tax basis) write-down of unamortized premiums paid in purchasing collateralized mortgage obligations and pass-through mortgage-backed securities (collectively "mortgage securities"). Unprecedented prepayment of loans underlying the mortgage securities shortened the estimated life of the securities significantly, thus necessitating accelerated expensing of part of the premiums paid to purchase the securities. Continuation of unprecedented prepayment of loans underlying the mortgage securities could require further write-downs of unamortized premiums in the future. The total of unamortized premiums on mortgage securities at June 30, 2003 was $4,403,000, $2,143,000 of which is scheduled to amortize in the second half of 2003. The Company entered the indirect automobile lending business in the first quarter of 2003. Total indirect automobile loans outstanding increased from $12,996,000 at March 31, 2003 to $84,385,000 at June 30, 2003. The Company is doing business with over 80 dealerships. The average credit score of all loans originated is in excess of 725 and the total of loans with credit scores below 660 is less than 10%. The total of loans delinquent over 30 days at June 30, 2003 was $73,000, or 0.09% of the portfolio. As previously communicated, the Company expects the total of indirect automobile loan originations to be in the range of $175 million to $200 million in 2003 and the indirect automobile loan business to contribute modestly to the Company's net earnings in the second half of 2003. Average interest-earning assets increased $236 million, or 20%, in the 2003 second quarter compared to the 2002 second quarter due to proceeds from the Company's stock offering in July 2002. Despite such asset growth, net interest income was lower due to the premium write-down mentioned above and lower asset yields. The current interest rate environment is the lowest in over forty years. Continuation of that environment or further declines in interest rates will have a negative impact on the Company's net interest income and net interest margin. Since a high percent of the Company's assets (over 40%) are funded by stockholders' equity, declining rates cause a greater reduction in asset yields than the amount of reduction in rates paid on deposits and borrowed funds. Conversely, rising interest rates would have a positive effect on the Company's net interest income and net interest margin. Provision for loan losses in the 2003 quarter compared to the 2002 quarter was higher due primarily to loan growth. Non-performing assets remained diminimus ($29,000 at June 30, 2003). Non-interest income was higher due primarily to increased fees from mortgage loan prepayments, changes in the pricing of deposit services and valuation adjustments related to the Company's swap agreement. Non-interest expenses were higher because of commencement of the indirect automobile lending activities in 2003, the contemplated opening of a new branch in the third quarter, added personnel, higher employee benefits costs, higher occupancy costs, professional fees associated with the REIT matter, and added costs for corporate governance and stockholder related matters. The effective income tax rate is higher in 2003 than in 2002 primarily because of the loss of the favorable tax treatment previously applied to the activities of the Company's REIT subsidiary. Net income for the six months ended June 30, 2003 was $6,539,000, or $0.11 per share (on a basic and diluted basis) compared to $10,610,000, or $0.18 per share (on a basic and diluted basis) for the six months ended June 30, 2002. Excluding the $2,788,000 ($0.05 per share) after-tax net charge to earnings resulting from settlement of the REIT tax matter previously discussed, net income was $1,283,000 less in the 2003 six month period than in the 2002 six month period. The decline was attributable primarily to the write-down of unamortized premiums and lower asset yields previously discussed. Changes in the provision for loan losses, non-interest income, non-interest expenses and the effective income tax rate between the 2003 and 2002 six month periods were due primarily to the same reasons cited above regarding second quarter changes. In approving an extra dividend of $0.20 per share in addition to a regular quarterly dividend of $0.085 per share, the Board of Directors considered the capital requirements of the Company and the recent reduction in tax rates on dividends. While it is the intent of the Board for the foreseeable future to authorize payment of an extra dividend of $0.20 per share semi-annually, the payment and magnitude of any future extra dividend will be considered in light of changing opportunities to deploy capital effectively including the repurchase of stock, future income tax rates and general economic conditions. This press release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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, tax and regulatory considerations, and competition. BROOKLINE BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands except share data) June 30, December 31, June 30, 2003 2002 2002 (unaudited) (unaudited) Assets Cash and due from banks $12,870 $13,571 $16,802 Short-term investments 90,841 224,897 404,518 Securities available for sale 342,964 361,049 223,327 Securities held to maturity (market value of $1,597, $4,944 and $6,964, respectively) 1,548 4,861 6,921 Restricted equity securities 9,423 9,423 9,423 Loans, excluding money market loan participations 951,489 803,425 819,043 Money market loan participations - 4,000 36,000 Allowance for loan losses (15,811) (15,052) (15,214) Net loans 935,678 792,373 839,829 Other investment 3,969 3,979 3,923 Accrued interest receivable 5,377 5,224 5,982 Bank premises and equipment, net 2,533 1,813 1,812 Prepaid income taxes 1,376 - - Deferred tax asset 7,212 5,779 2,292 Other assets 417 388 613 Total assets $1,414,208 $1,423,357 $1,515,442 Liabilities and Stockholders' Equity Deposits $662,754 $649,325 $671,788 Borrowed funds 123,738 124,900 178,801 Stock offering subscription proceeds - - 351,946 Mortgagors' escrow accounts 4,361 4,256 4,217 Income taxes payable - 4,970 5,218 Accrued expenses and other liabilities 8,512 7,525 7,025 Total liabilities 799,365 790,976 1,218,995 Stockholders' equity: Preferred stock, $.01 par value; 50,000,000 shares, 50,000,000 shares and 5,000,000 shares authorized, respectively; none issued - - - Common stock, $0.01 par value; 200,000,000 shares, 200,000,000 shares and 45,000,000 shares authorized, respectively; 58,953,804 shares, 58,714,948 shares and 29,722,521 shares issued, respectively 589 587 297 Additional paid-in capital 451,151 449,254 141,412 Retained earnings, partially restricted 182,584 185,788 184,275 Accumulated other comprehensive income (A) 2,673 4,155 9,968 Treasury stock, at cost - 1,335,299 shares, 170,299 shares and 2,921,378 shares, respectively (17,017) (1,944) (33,813) Unearned compensation - recognition and retention plan (588) (741) (822) Unallocated common stock held by ESOP - 834,362 shares, 865,364 shares and 408,430 shares, respectively (4,549) (4,718) (4,870) Total stockholders' equity 614,843 632,381 296,447 Total liabilities and stockholders' equity $1,414,208 $1,423,357 $1,515,442 (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, 2003 2002 2003 2002 (unaudited) Interest income: Loans, excluding money market loan participations $13,914 $14,392 $27,169 $28,831 Money market loan participations 4 47 17 84 Debt securities 910 2,560 4,163 4,870 Marketable equity securities 96 138 208 269 Restricted equity securities 71 87 147 170 Short-term investments 350 462 928 813 Total interest income 15,345 17,686 32,632 35,037 Interest expense: Deposits 3,224 4,091 6,666 8,166 Borrowed funds 1,409 2,666 2,830 5,271 Total interest expense 4,633 6,757 9,496 13,437 Net interest income 10,712 10,929 23,136 21,600 Provision (credit) for loan losses 360 - 735 (100) Net interest income after provision (credit) for loan losses 10,352 10,929 22,401 21,700 Non-interest income: Fees and charges 714 448 1,260 816 Gains on securities, net 181 312 508 1,235 Swap agreement market valuation credit (charge) 18 (117) 37 (64) Other income 181 158 248 318 Total non-interest income 1,094 801 2,053 2,305 Non-interest expense: Compensation and employee benefits 2,422 2,131 4,815 4,214 Occupancy 443 275 781 562 Equipment and data processing 776 680 1,403 1,383 Advertising and marketing 188 175 375 337 Other 751 386 1,339 870 Total non-interest expense 4,580 3,647 8,713 7,366 Income before income taxes 6,866 8,083 15,741 16,639 Income tax expense: Provision for income taxes 2,906 2,952 6,414 6,029 Retroactive (credit) assessment related to REIT (2,727) - 2,788 - Total income tax expense 179 2,952 9,202 6,029 Net income $6,687 $5,131 $6,539 $10,610 Weighted average common shares outstanding during the period: Basic 56,599,521 57,530,747 57,031,545 57,493,593 Diluted 57,575,487 58,538,741 57,995,708 58,316,740 Earnings per common share: Basic $0.12 $0.09 $0.11 $0.18 Diluted $0.12 $0.09 $0.11 $0.18 Three months ended June 30, 2003 2002 Average Average Average yield/ Average yield/ balance Interest cost balance Interest cost (1) (1) (Dollars in thousands) Assets: Interest-earning assets: Short-term investments $120,409 $350 1.17% $106,811 $462 1.73% Debt securities (2)(4) 365,122 914 1.00 198,264 2,561 5.17 Equity securities (2) 21,241 202 3.81 29,229 273 3.74 Mortgage loans (3) 815,533 12,873 6.31 794,721 13,934 7.01 Commercial participation loans 1,132 4 1.42 9,998 47 1.89 Other commercial loans (3) 23,961 352 5.88 28,208 387 5.49 Consumer loans (3) 2,999 57 7.60 3,197 71 8.88 Auto finance loans (3) 56,441 632 4.49 - - - Total interest- earning assets 1,406,838 15,384 4.38 1,170,428 17,735 6.06 Allowance for loan losses (15,594) (15,280) Non-interest earning assets 28,596 34,045 Total assets $1,419,840 $1,189,193 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Deposits: NOW accounts $60,962 26 0.17% $75,993 93 0.49% Savings accounts (5) 20,777 38 0.73 15,014 39 1.04 Money market savings accounts 294,448 1,214 1.65 263,930 1,158 1.76 Certificate of deposit accounts 257,248 1,946 3.03 278,503 2,679 3.86 Total deposits 633,435 3,224 2.04 633,440 3,969 2.51 Borrowed funds 123,804 1,409 4.50 179,131 2,666 5.89 Total deposits and borrowed funds 757,239 4,633 2.45 812,571 6,635 3.28 Stock offering proceeds - - - 47,810 122 1.02 Total interest- bearing liabilities 757,239 4,633 2.45 860,381 6,757 3.15 Non-interest-bearing demand checking accounts 28,494 18,292 Other liabilities 20,730 17,878 Total liabilities 806,463 896,551 Stockholders' Equity 613,377 292,642 Total liabilities and stockholders' equity $1,419,840 $1,189,193 Net interest income (tax equivalent basis)/interest rate spread (6) 10,751 1.93% 10,978 2.91% Less adjustment of tax exempt income 39 49 Net interest income $10,712 $10,929 Net interest margin (7) 3.06% 3.74% (1) Tax exempt income on equity securities is included on a tax equivalent basis. (2) Average balances include unrealized gains 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) Included in interest income in the 2003 period is $1,680 of premium write-down on the CMO portfolio. Excluding the write-down, the average yield for the 2003 period would have been 2.84% for debt securities and 4.85% for total interest-earning assets. (5) Savings accounts include mortgagors' escrow accounts. (6) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. (7) 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 Six months ended June 30, June 30, 2003 2002 2003 2002 Performance Ratios (annualized): Return on average assets 1.88% 1.73% 0.92% 1.85% Return on average stockholders' equity 4.36% 7.01% 2.10% 7.31% Return on average stockholders' equity, excluding effect of unrealized gains on securities available for sale, net of taxes 4.38% 7.20% 2.12% 7.50% Interest rate spread 1.93% 2.91% 2.10% 2.94% Net interest margin 3.06% 3.74% 3.29% 3.83% Efficiency ratio (A) 39.40% 31.94% 35.31% 32.50% Dividend paid per share during period $0.085 $0.073(B) $0.17 $0.146(B) (A) Represents the ratio of non-interest expenses divided by the sum of net interest income and non-interest income (exclusive of securities gains). (B) Adjusted to reflect exchange of shares resulting from reorganization on July 9, 2002. June 30, December 31, June 30, 2003 2002 2002 (dollars in thousands except per share data) Capital Ratio: Stockholders' equity to total assets 43.48% 44.43% 19.56% Asset Quality: Non-performing loans $29 $5 $136 Non-performing assets 29 5 136 Allowance for loan losses 15,811 15,052 15,214 Allowance for loan losses as a percent of total loans, excluding money market loan participations 1.66% 1.87% 1.86% Non-performing assets as a percent of total assets - - - Per Share Data: Book value per share $10.67 $10.80 $11.06(B) Market value per share $14.00 $11.90 $11.57(B) CONTACT: Brookline Bancorp, Inc. Paul Bechet, 617-278-6405 -----END PRIVACY-ENHANCED MESSAGE-----