-----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, LX3/z0VwdO9KiHhkccA2L/xQ3cS4ASnq47qR8LnTFIgCFtIUFcze4evkrmj7sSlm tmBLNVQGJeBPFMoopL2apA== 0001157523-04-000260.txt : 20040116 0001157523-04-000260.hdr.sgml : 20040116 20040116114216 ACCESSION NUMBER: 0001157523-04-000260 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040115 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040116 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: 04528951 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 a4550832.txt BROOKLINE SAVINGS 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): January 15, 2004 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 January 15, 2004 Item 12. Results of Operations and Financial Condition The following information is furnished pursuant to this Item 12, "Disclosure of Results of Operations and Financial Condition." On January 15, 2004, Brookline Bancorp, Inc. (the "Company") announced its earnings for the 2003 fourth quarter and year 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 February 16, 2004 to stockholders of record on January 31, 2004. A copy of the press release dated January 15, 2004 is attached as Exhibit 99.1 to this report. The information in the preceding paragraph, as well as Exhibit 99.1 referenced therein, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933. 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: January 16, 2004 By: /s/ Paul R. Bechet ---------------------------------- Paul R. Bechet Senior Vice President, Treasurer and Chief Financial Officer EX-99 3 a4550832ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Brookline Bancorp Announces 2003 Fourth Quarter and Annual Earnings and Declaration of Per Share Regular Dividend of $0.085 and Extra Dividend of $0.20 BROOKLINE, Mass.--(BUSINESS WIRE)--Jan. 15, 2004--Brookline Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its earnings for the 2003 fourth quarter and year 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 February 16, 2004 to stockholders of record on January 31, 2004. The Company earned $3,439,000, or $0.06 per share (on a basic and diluted basis), for the quarter ended December 31, 2003 compared to $5,864,000, or $0.10 per share (on a basic and diluted basis) for the quarter ended December 31, 2002. The 2003 and 2002 quarters included securities gains of $1,593,000 ($1,022,000 after taxes) and $7,161,000 ($4,591,000 after taxes), respectively. The 2002 quarter also included a loss of $7,494,000 ($4,360,000 after taxes) resulting from prepayment of $97 million of borrowings from the Federal Home Loan Bank with high rates of interest. New borrowings of $62 million were obtained in the 2002 quarter at lower rates of interest and longer maturities. These financing transactions resulted in a significant reduction of interest expense in 2003 from what would otherwise have been incurred if the transactions had not been initiated. The decline in quarterly earnings was attributable primarily to (a) expense related to the 2003 Recognition and Retention Plan (the "2003 Recognition Plan"), (b) a higher rate of income taxes (42.3% versus 35.3%) caused primarily by the elimination of the favorable tax treatment of the Company's real estate investment subsidiary ("REIT") and (c) higher operating expenses and provision for loan losses. The increased operating expenses were due primarily to expanded indirect automobile lending activities. The increase in the provision for loan losses was caused primarily by growth of the loan portfolio. Non-performing assets were insignificant throughout 2003 and amounted to $133,000, or 0.01% of total assets at December 31, 2003. The Company entered the indirect automobile lending business in the first quarter of 2003. Total indirect automobile loans outstanding increased from $155 million at September 30, 2003 to $211 million at December 31, 2003. The average credit score of all loans outstanding at December 31, 2003 was over 730 and the total of loans with credit scores below 660 was less than 10%. The total of loans delinquent over 30 days at December 31, 2003 was $988,000, or 0.47% of the indirect automobile portfolio. As previously reported, on October 16, 2003, 1,158,000 shares were awarded to directors and certain employees of the Company under the 2003 Recognition Plan approved by the stockholders of the Company on August 27, 2003. The total expense of the shares awarded ($17,334,000) is being charged to expense over the periods in which the shares vest. The charge to pre-expense was $3,870,000 ($2,460,000 after taxes) in the fourth quarter and is projected to be, on a pre-tax basis, $2,760,000 in 2004 and $2,618,000 for each of the years 2005 through 2008. Net income for the year ended December 31, 2003 was $14,480,000, or $0.25 per share (on a basic and diluted basis), compared to $21,935,000, or $0.38 per share (on a basic and diluted basis) for the year ended December 31, 2002. The 2003 and 2002 years included securities gains of $2,102,000 ($1,348,000 after taxes) and $8,698,000 ($5,577,000 after taxes), respectively. The 2003 year also included the expense for the 2003 Recognition Plan and an after-tax charge of $2,788,000 resulting from settlement of a tax dispute relating to the state tax treatment of the Company's REIT subsidiary for the tax years 1999 through 2002. The 2002 year also included a loss of $7,776,000 ($4,524,000 after taxes) from the prepayment of borrowings from the Federal Home Loan Bank in the third and fourth quarter. In addition to the matters mentioned in the preceding paragraph, the decline in earnings for 2003 compared to 2002 was attributable primarily to (a) a higher rate of income taxes (41.4% versus 36.1%), (b) accelerated amortization of premiums paid in purchasing collateralized mortgage obligations and pass-through mortgage-backed securities (collectively "mortgage securities"), (c) higher operating expenses and provision for loan losses for the same reasons cited above in the third preceding paragraph (d) added expenses to operate a new branch opened in the third quarter of 2003, (e) payment of dividend equivalent rights ($361,000) to holders of unexercised options as a result of the $0.20 per share extra dividend paid to stockholders in August 2003 and (f) a decline in net interest margin from 3.58% in 2002 to 3.34% in 2003. In the second half of 2002 and the first four months of 2003, the Company invested a substantial part of the proceeds from its July 2002 stock offering in mortgage securities with relatively short maturities. Because of the declining interest rate environment, the investments were purchased at a premium which was to be amortized over the estimated life of the securities. Unprecedented prepayment of loans underlying the mortgage securities subsequent to their purchase shortened the estimated life of the securities significantly, thus necessitating the accelerated expensing of part of the premiums paid to purchase the securities. Due to the prepayments, the Company's investment in mortgage securities declined from $315 million at March 31, 2003 to $137 million at December 31, 2003. Total accelerated premium amortization was $2,370,000 in 2003 and the total of unamortized premiums at December 31, 2003 was $2,515,000. Continuation of higher than anticipated prepayments could require further accelerated expensing of unamortized premiums in the future. Despite an increase in average interest-earning assets of $141 million, or 10.9%, in 2003 compared to 2002, total interest income declined by $5,287,000, or 7.4%, between the two years. While part of the decline was attributable to the premium amortization referred to in the preceding paragraph, it was also due to the continuation of an interest rate environment that is the lowest experienced in over forty years. Continuation of that environment or further reductions in interest rates would likely have a negative impact on the Company's net interest income and net interest margin. Since a high percent of the Company's assets (40%) are funded by stockholders' equity, declining rates cause a greater reduction in interest income from lower asset yields than the reduction in interest expense from lower rates paid on deposits and borrowed funds. Conversely, rising interest rates would likely have a positive impact on the Company's net interest income and net interest margin. Total assets were $1.524 billion at December 31, 2003 compared to $1.458 billion at September 30, 2003 and $1.423 billion at December 31, 2002. While the rate of growth for the year was 7.1%, asset composition changed more significantly. Net loans as a percent of total assets increased from 56% at December 31, 2002 to 69% at December 31, 2003. Of the $267 million increase in net loans outstanding, $217 million related to the indirect automobile portfolio. Loan originations were funded primarily from maturing short-term investments, proceeds from the paydown of mortgage securities, deposit growth and borrowings from the Federal Home Loan Bank. Stockholders' equity declined from $632.4 million, or 44.4% of assets at December 31, 2002, to $606.7 million, or 39.8% of assets at December 31, 2003, due primarily to payment of dividends to stockholders in excess of net earnings ($16.4 million) and the purchase of 1,165,000 shares of the Company's common stock at an aggregate cost of $15.1 million. 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, potential future business initiatives and the reduction in tax rates on dividends that went into effect in 2003. 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 extra future dividends 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 and tax rates, regulatory considerations and competition. BROOKLINE BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands except share data) December September December 31, 2003 30, 2003 31, 2002 ASSETS Cash and due from banks $ 15,131 $ 12,547 $ 13,571 Short-term investments 127,572 121,610 224,897 Securities available for sale 287,952 293,222 361,049 Securities held to maturity (market value of $1,381, $1,450 and $4,944, respectively) 1,343 1,411 4,861 Restricted equity securities 11,401 9,423 9,423 Loans, excluding money market loan participations 1,072,740 1,013,764 803,425 Money market loan participations 2,000 3,000 4,000 Allowance for loan losses (16,195) (15,954) (15,052) Net loans 1,058,545 1,000,810 792,373 Other investment 4,251 4,166 3,979 Accrued interest receivable 5,248 5,046 5,224 Bank premises and equipment, net 2,737 2,763 1,813 Deferred tax asset 8,843 6,868 5,779 Other assets 1,011 593 388 Total assets $1,524,034 $1,458,459 $1,423,357 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 679,921 $ 667,771 $ 649,325 Borrowed funds 220,519 170,531 124,900 Mortgagors' escrow accounts 4,565 4,935 4,256 Income taxes payable 1,489 895 4,970 Accrued expenses and other liabilities 10,856 10,007 7,525 Total liabilities 917,350 854,139 790,976 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; 60,160,530 shares, 58,996,410 shares and 58,714,948 shares issued, respectively 602 590 587 Additional paid-in capital 469,493 451,512 449,254 Retained earnings, partially restricted 169,417 170,824 185,788 Accumulated other comprehensive income (A) 2,529 3,424 4,155 Treasury stock, at cost - 1,335,299 shares, 1,335,299 shares and 170,299 shares, respectively (17,017) (17,017) (1,944) Unearned compensation - recognition and retention plan (13,960) (548) (741) Unallocated common stock held by ESOP - 803,356 shares, 818,861 shares and 865,364 shares, respectively (4,380) (4,465) (4,718) Total stockholders' equity 606,684 604,320 632,381 Total liabilities and stockholders' equity $1,524,034 $1,458,459 $1,423,357 (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 Year ended December 31, December 31, 2003 2002 2003 2002 Interest income: Loans, excluding money market loan participations $12,684 $ 13,752 $52,176 $ 56,798 Money market loan participations 9 26 34 154 Indirect automobile loans 2,069 - 4,149 - Debt securities 1,735 2,692 7,648 10,016 Marketable equity securities 73 109 370 487 Restricted equity securities 70 82 289 339 Short-term investments 329 1,167 1,544 3,703 Total interest income 16,969 17,828 66,210 71,497 Interest expense: Deposits 2,770 3,677 12,295 15,790 Borrowed funds 1,874 1,783 6,313 9,729 Total interest expense 4,644 5,460 18,608 25,519 Net interest income 12,325 12,368 47,602 45,978 Provision (credit) for loan losses 313 (100) 1,288 (250) Net interest income after provision (credit) for loan losses 12,012 12,468 46,314 46,228 Non-interest income: Fees and charges 720 886 2,552 2,081 Gains on securities, net 1,593 7,161 2,102 8,698 Loss from prepayment of FHLB advances - (7,494) - (7,776) Swap agreement market valuation credit (charge) 67 9 163 (202) Other income 114 140 536 579 Total non-interest income 2,494 702 5,353 3,380 Non-interest expense: Compensation and employee benefits 2,488 2,117 9,636 8,357 Recognition and retention plans 3,885 40 3,992 161 Occupancy 376 319 1,517 1,186 Equipment and data processing 937 662 3,219 2,700 Advertising and marketing 198 219 761 742 Dividend equivalent rights - - 361 - Other 662 752 2,701 2,158 Total non-interest expense 8,546 4,109 22,187 15,304 Income before income taxes 5,960 9,061 29,480 34,304 Income tax expense: Provision for income taxes 2,521 3,197 12,212 12,369 Retroactive assessment related to REIT - - 2,788 - Total income tax expense 2,521 3,197 15,000 12,369 Net income $ 3,439 $ 5,864 $14,480 $ 21,935 Earnings per common share: Basic $ 0.06 $ 0.10 $ 0.25 $ 0.38 Diluted 0.06 0.10 0.25 0.38 Weighted average common shares outstanding during the period: Basic 56,713,171 57,537,731 56,869,065 57,527,296 Diluted 57,724,597 58,536,785 57,871,763 58,446,364 BROOKLINE BANCORP, INC. AND SUBSIDIARIES Average Yields / Costs Three months ended December 31, 2003 2002 ------------------------ -------------------------- Average Average Average Interest yield/ Average Interest yield/ balance (1) cost balance (1) cost (Dollars in thousands) Assets Interest-earning assets: Short-term investments $ 129,721 $ 329 1.01% $ 306,931 $ 1,167 1.51% Debt securities (2) (4) 276,752 1,744 2.52 277,388 2,692 3.88 Equity securities (2) 22,367 170 3.03 26,209 231 3.53 Mortgage loans (3) 818,696 12,224 5.97 778,975 13,344 6.85 Money market loan partici- pations 3,227 9 1.11 6,382 26 1.62 Other commercial loans (3) 29,077 415 5.71 21,455 340 6.34 Indirect automobile loans (3) 191,391 2,069 4.29 - - - Other consumer loans (3) 2,429 45 7.41 3,329 68 8.17 Total interest- earning assets 1,473,660 17,005 4.60 1,420,669 17,868 5.03% Allowance for loan losses (16,020) (15,156) Non-interest earning assets 31,307 27,440 Total assets $1,488,947 $1,432,953 Liabilities and Stockholders' Equity Interest-bearing liabilities: Deposits: NOW accounts $ 60,756 20 0.13% $ 73,404 47 0.25% Savings accounts (5) 25,694 27 0.42 14,494 29 0.79 Money market savings accounts 306,790 1,031 1.33 258,418 1,201 1.84 Certificate of deposit accounts 248,109 1,692 2.70 274,329 2,400 3.47 Total deposits 641,349 2,770 1.71 620,645 3,677 2.35 Borrowed funds 195,789 1,874 3.75 143,181 1,783 4.94 Total interest bearing liabilities 837,138 4,644 2.20 763,826 5,460 2.84 Non-interest- bearing demand checking accounts 32,530 18,040 Other liabilities 14,294 16,435 Total liabilities 883,962 798,301 Stockholders' equity 604,985 634,652 Total liabilities and stockholders' equity $1,488,947 $1,432,953 Net interest income (tax equivalent basis)/interest rate spread (6) 12,361 2.40% 12,408 2.19% Less adjustment of tax exempt income 36 40 Net interest income $12,325 $ 12,368 Net interest margin (7) 3.36% 3.49% (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 $93 of accelerated premium amortization on the collateralized mortgage obligations portfolio. Excluding the accelerated amortization, the average yield for the 2003 period would have been 2.66% for debt securities and 4.62% for total interest-earning assets. (5) Savings accounts include mortgagors' escrow accounts. (6) Net 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 Year ended ended December 31, December 31, 2003 2002 2003 2002 Performance Ratios (annualized): Return on average assets 0.98% 1.64% 1.03% 1.68% Return on average stockholders' equity 2.27% 3.70% 2.24% 4.81% Return on average stockholders' equity, excluding effect of unrealized gains on securities available for sale, net of taxes 2.28% 3.73% 2.25% 4.89% Interest rate spread 2.40% 2.19% 2.25% 2.41% Net interest margin 3.36% 3.49% 3.34% 3.58% Dividend paid per share during period $0.085 $0.085 $0.54 $0.316(A) (A) Adjusted to reflect exchange of shares resulting from reorganization on July 9, 2002. At At At Dec. 31, Sept. 30, Dec. 31, 2003 2003 2002 (dollars in thousands except per share data) Capital Ratio: Stockholders' equity to total assets 39.81% 41.44% 44.43% Asset Quality: Non-performing loans $ 50 $ 39 $ 5 Non-performing assets 133 111 5 Allowance for loan losses 16,195 15,954 15,052 Allowance for loan losses as a percent of total loans 1.51% 1.57% 1.86% Non-performing assets as a percent of total assets 0.01% 0.01% - Per Share Data: Book value per share $ 10.31 $ 10.48 $ 10.80 Market value per share $ 15.34 $ 14.77 $ 11.90 CONTACT: Brookline Bancorp, Inc. Paul Bechet, 617-278-6405 -----END PRIVACY-ENHANCED MESSAGE-----