-----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, QMoIXMJFw7XlYfux3nsZxX3RAKMW8+Zl4xgWzR8JtQrCgKctvMXvcZUYV+t38NE2 U//yd4IpHGOf8dV0Sbh1Lg== 0001157523-04-003305.txt : 20040416 0001157523-04-003305.hdr.sgml : 20040416 20040416112414 ACCESSION NUMBER: 0001157523-04-003305 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040415 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040416 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROOKLINE BANCORP INC CENTRAL INDEX KEY: 0001049782 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23695 FILM NUMBER: 04737371 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 a4615716.txt BROOKLINE BANCORP 8-K DOCUMENT 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): April 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 April 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 April 15, 2004, Brookline Bancorp, Inc. (the "Company") announced its earnings for the 2004 first quarter and approval by its Board of Directors of a regular quarterly dividend of $0.085 per share payable on May 17, 2004 to stockholders of record as of April 30, 2004. A copy of the press release dated April 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: April 16, 2004 By: /s/ Paul R. Bechet ---------------------------------- Paul R. Bechet Senior Vice President, Treasurer and Chief Financial Officer EX-99.1 3 a4615716ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Brookline Bancorp Announces 2004 First Quarter Operating Results and Dividend Declaration BROOKLINE, Mass.--(BUSINESS WIRE)--April 15, 2004--Brookline Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today that it earned $4,652,000, or $0.08 per share on a basic and diluted basis, in the 2004 first quarter compared to a net loss of $148,000, or $0.00 per share on a basic and diluted basis, in the 2003 first quarter. The net loss in the 2003 quarter resulted from a $5,515,000, or $0.10 per share, charge to earnings related to a previously reported dispute with the Massachusetts Department of Revenue over the state tax treatment of the Company's real estate investment trust ("REIT") subsidiary. The dispute was settled in the second quarter of 2003 and resulted in an after-tax credit of $2,727,000, or $0.05 per share, in that quarterly period. Excluding the $5,515,000 charge mentioned in the preceding paragraph, net income in the 2003 first quarter was $5,367,000, or $715,000 higher than 2004 first quarter earnings. The decline in 2004 was attributable primarily to (a) the expense of stock awarded under the 2003 recognition and retention plan approved by the stockholders in August 2003 ($690,000, or $401,000 on an after tax basis), (b) the expensing of dividend equivalent rights resulting from the payment of a $0.20 special dividend to stockholders in February 2004 ($375,000, or $218,000 on an after-tax basis), (c) expenses related to a new branch opened in September 2003 and (d) less net interest income due to continuation of a low interest rate environment. The Company entered the indirect automobile lending business in the first quarter of 2003. Total indirect automobile loans outstanding grew to $211 million at the end of 2003 and $274 million at March 31, 2004. The average credit score of all loans outstanding at March 31, 2004 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 that date was $1,079,000, or 0.39% of the indirect automobile loan portfolio. Despite an increase in average interest-earning assets of $122 million, or 8.6%, in the 2004 first quarter compared to the 2003 first quarter, total net interest income declined $248,000, or 2.0%, between the two periods. The decline was attributable to continuation of an interest rate environment that is the lowest in over forty years. Since a high percent of the Company's assets (39% in the 2004 first quarter) are funded by stockholders' equity for which there is no charge for interest expense, 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. Continuation of the current low interest rate environment, or further reductions in interest rates, would likely have a negative impact on the Company's future net interest income and net interest margin. Conversely, rising interest rates would likely have a positive impact on the Company's future net interest income and net interest margin. As a result of the low interest rate environment, not only are new loans originated and investments purchased at lower yields but existing higher yielding loans and investments secured by mortgage loans are subject to prepayment before scheduled maturities. Prepayment of higher yielding assets in a declining interest rate environment can have a detrimental effect on net interest income. The Company experienced such an effect during the past two years and continued to experience such an effect in the first quarter of 2004. 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 collateralized mortgage obligations and pass-through mortgage-backed securities (collectively "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 during 2003 shortened the estimated life of the securities significantly, thus necessitating the accelerated expensing of part of the premiums paid to purchase the securities. Prepayments, which started to subside in the latter part of 2003, picked up once again in the first quarter of 2004. Due primarily to prepayments, the Company's investment in mortgage securities declined from $315 million at March 31, 2003 to $137 million at December 31, 2003 and $124 million at March 31, 2004. Total premium amortization in the 2004 first quarter was $889,000, $357,000 of which was accelerated amortization caused by prepayments. The remainder of unamortized premium at March 31, 2004 was $1,626,000. Of that amount, $1,074,000 is scheduled to amortize over the remainder of 2004. Continuation of higher than anticipated prepayments could require accelerated expensing in 2004 of the difference between the total unamortized premium at March 31, 2004 and the amount scheduled to be amortized in 2004. During the first quarter of 2004, approximately $30.8 million of mortgage loans were prepaid in entirety and a pay down of $4.0 million occurred on a construction loan. Much of the mortgage loan prepayments resulted from the sale of underlying multi-family and commercial real estate properties. While the pay-offs generated prepayment fee income of $863,000, they contributed to the decline in the average yield on the mortgage loan portfolio to 5.90% in the 2004 first quarter. The yield on that portfolio was 6.47% in the 2003 first quarter. Prepayments also occurred in the indirect automobile loan portfolio. Approximately $9.4 million was prepaid due in part to aggressive loan promotions by credit unions, banks and credit card issuers. In connection with the origination of indirect automobile loans, the interest rate charged to the borrower by the car dealer usually exceeds the "buy rate" or the rate earned by the Company. The difference between the two rates is referred to as the "spread." The computed dollar value of the spread is prepaid by the Company to the car dealer and included in deferred loan origination costs. Such costs, which are generally subject to rebate in the event the underlying loans are prepaid within a few months, are amortized as a charge to interest income over the life of the related loans. Due to loan prepayments after the rebate period, $340,000 of accelerated amortization of deferred loan origination costs was charged to interest income in the 2004 first quarter. Non-interest income in the 2004 first quarter was $921,000 higher than in the 2003 first quarter due primarily to greater mortgage loan prepayment fees, securities gains and income from the Company's equity investment in a specialty finance company. Non-interest expenses in the 2004 first quarter were $1,707,000 higher than the 2003 first quarter due primarily to the expense of the 2003 recognition and retention plan, dividend equivalent rights, a new branch office and operations related to indirect automobile lending activity. Total assets were $1.591 billion at March 31, 2004 compared to $1.524 billion at December 31, 2003 and $1.424 billion at March 31, 2003. Net loans as a percent of total assets increased from 58.1% at March 31, 2003 to 70.0% at March 31, 2004. Loan growth, most of which occurred in the indirect automobile lending segment, was funded by proceeds from mortgage securities, deposit growth and borrowings from the Federal Home Loan Bank. Deposit growth of $30 million in the 2004 first quarter was due primarily to a special promotion. Stockholders' equity declined from $606.7 million at December 31, 2003 to $596.2 million at March 31, 2004 due to payment of a special dividend of $0.20 per share to stockholders in excess of net earnings. The Board of Directors of the Company approved a quarterly dividend of $0.085 per share of common stock to stockholders of record as of April 30, 2004 and payable May 17, 2004. 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, regulatory considerations and competition. BROOKLINE BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands except share data) March 31, December 31, March 31, 2004 2003 2003 ------------ ------------ ------------ ASSETS Cash and due from banks $ 14,886 $ 15,131 $ 11,651 Short-term investments 140,402 127,572 148,897 Securities available for sale 285,768 287,952 393,017 Securities held to maturity (market value of $1,308, $1,381 and $3,776, respectively) 1,272 1,343 3,717 Restricted equity securities 14,239 11,401 9,423 Loans, excluding money market loan participations 1,129,540 1,072,740 842,811 Money market loan participations - 2,000 8,700 Allowance for loan losses (16,388 ) (16,195 ) (15,424 ) ----------- ----------- ----------- Net loans 1,113,152 1,058,545 836,087 ----------- ----------- ----------- Other investment 4,256 4,251 3,917 Accrued interest receivable 5,306 5,248 5,150 Bank premises and equipment, net 2,683 2,737 2,175 Deferred tax asset 8,109 8,843 9,516 Other assets 1,135 1,011 496 ----------- ----------- ----------- Total assets $1,591,208 $1,524,034 $1,424,046 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 709,641 $ 679,921 $ 663,018 Borrowed funds 267,281 220,519 123,945 Mortgagors' escrow accounts 5,253 4,565 4,790 Income taxes payable 1,734 1,489 10,248 Accrued expenses and other liabilities 11,146 10,856 8,534 ----------- ----------- ----------- Total liabilities 995,055 917,350 810,535 ----------- ----------- ----------- 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; 60,275,256 shares, 60,160,530 shares and 58,924,935 shares issued, respectively 603 602 589 Additional paid-in capital 470,248 469,493 450,893 Retained earnings, partially restricted 157,439 169,417 180,720 Accumulated other comprehensive income (A) 2,411 2,529 3,279 Treasury stock, at cost - 1,335,299 shares, 1,335,299 shares and 1,305,299 shares, respectively (17,017 ) (17,017 ) (16,635 ) Unearned compensation - recognition and retention plans (13,233 ) (13,960 ) (701 ) Unallocated common stock held by ESOP - 788,323 shares, 803,356 shares and 849,863 shares, respectively (4,298 ) (4,380 ) (4,634 ) ----------- ----------- ----------- Total stockholders' equity 596,153 606,684 613,511 ----------- ----------- ----------- Total liabilities and stockholders' equity $1,591,208 $1,524,034 $1,424,046 =========== =========== =========== (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 March 31, ----------------------- 2004 2003 ----------- ----------- (unaudited) Interest income: Loans $15,059 $13,268 Debt securities 1,506 3,253 Marketable equity securities 78 111 Restricted equity securities 70 77 Short-term investments 298 577 ----------- ----------- Total interest income 17,011 17,286 ----------- ----------- Interest expense: Deposits 2,697 3,442 Borrowed funds 2,139 1,421 ----------- ----------- Total interest expense 4,836 4,863 ----------- ----------- Net interest income 12,175 12,423 Provision for loan losses 330 375 ----------- ----------- Net interest income after provision for loan losses 11,845 12,048 ----------- ----------- Non-interest income: Fees and charges 1,121 546 Gains on sales of securities, net 581 328 Swap agreement market valuation credit 39 18 Other income 140 68 ----------- ----------- Total non-interest income 1,881 960 ----------- ----------- Non-interest expense: Compensation and employee benefits 2,535 2,352 Recognition and retention plans 728 40 Occupancy 417 337 Equipment and data processing 993 627 Advertising and marketing 187 187 Dividend equivalent rights 375 - Other 606 591 ----------- ----------- Total non-interest expense 5,841 4,134 ----------- ----------- Income before income taxes 7,885 8,874 ----------- ----------- Income tax expense: Provision for income taxes 3,233 3,507 Retroactive assessment related to REIT - 5,515 ----------- ----------- Total income tax expense 3,233 9,022 ----------- ----------- ----------- ----------- Net income (loss) $ 4,652 $ (148 ) =========== =========== Earnings per common share: Basic $ 0.08 $ (0.00 ) Diluted 0.08 (0.00 ) Weighted average common shares outstanding during the period: Basic 57,076,261 57,468,369 Diluted 58,055,753 57,468,369 BROOKLINE BANCORP, INC. AND SUBSIDIARIES Average Yields / Costs Three months ended March 31, ---------------------------- 2004 ---------------------------- Average Average Interest yield/ balance (1) cost ----------- -------- ------- (Dollars in thousands) Assets - ------ Interest-earning assets: Short-term investments $ 121,359 $298 0.98 % Debt securities (2) (4) 276,666 1,515 2.19 Equity securities (2) 24,111 177 2.94 Mortgage loans (3) 830,366 12,251 5.90 Money market loan participations 1,726 5 1.16 Other commercial loans (3) 30,441 426 5.60 Indirect automobile loans (3) 246,542 2,335 3.80 Other consumer loans (3) 2,240 42 7.50 ----------- -------- Total interest-earning assets 1,533,451 17,049 4.44 % -------- ----- Allowance for loan losses (16,347) Non-interest earning assets 34,389 ----------- Total assets $1,551,493 =========== Liabilities and Stockholders' Equity - ------------------------------------ Interest-bearing liabilities: Deposits: NOW accounts $ 61,245 20 0.13 % Savings accounts (5) 38,330 94 0.98 Money market savings accounts 293,923 938 1.28 Certificate of deposit accounts 255,015 1,645 2.59 ----------- -------- Total deposits 648,513 2,697 1.67 Borrowed funds (6) 253,160 2,139 3.34 ----------- -------- Total interest bearing liabilities 901,673 4,836 2.15 % -------- ----- Non-interest-bearing demand checking accounts 32,833 Other liabilities 15,747 ----------- Total liabilities 950,253 Stockholders' equity 601,240 ----------- Total liabilities and stockholders' equity $1,551,493 =========== Net interest income (tax equivalent basis)/interest rate spread 12,213 2.29 % ===== Less adjustment of tax exempt income 38 -------- Net interest income $12,175 ======== Net interest margin 3.19 % ===== Three months ended March 31, ----------------------------- 2003 ----------------------------- Average Average Interest yield/ balance (1) cost ------------ -------- ------- (Dollars in thousands) Assets - ------ Interest-earning assets: Short-term investments $ 191,207 $577 1.22 % Debt securities (2) (4) 371,163 3,253 3.51 Equity securities (2) 22,872 229 4.02 Mortgage loans (3) 793,170 12,820 6.47 Money market loan participations 3,921 13 1.34 Other commercial loans (3) 22,833 344 6.03 Indirect automobile loans (3) 2,911 29 4.04 Other consumer loans (3) 3,305 63 7.62 ------------- -------- Total interest-earning assets 1,411,382 17,328 4.91 % -------- ----- Allowance for loan losses (15,187 ) Non-interest earning assets 27,416 ------------- Total assets $1,423,611 ============= Liabilities and Stockholders' Equity - ------------------------------------ Interest-bearing liabilities: Deposits: NOW accounts $65,237 35 0.22 % Savings accounts (5) 16,992 35 0.84 Money market savings accounts 278,233 1,244 1.81 Certificate of deposit accounts 265,539 2,128 3.25 ------------- -------- Total deposits 626,001 3,442 2.23 Borrowed funds (6) 124,088 1,421 4.58 ------------- -------- Total interest bearing liabilities 750,089 4,863 2.63 % -------- ----- Non-interest-bearing demand checking accounts 27,017 Other liabilities 16,319 ------------- Total liabilities 793,425 Stockholders' equity 630,186 ------------- Total liabilities and stockholders' equity $1,423,611 ============= Net interest income (tax equivalent basis)/interest rate spread 12,465 2.28 % ===== Less adjustment of tax exempt income 42 -------- Net interest income $12,423 ======== Net interest margin 3.53 % ===== - ------------------------------------ (1) Tax exempt income on equity securities and municipal bonds 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 on debt securities in the 2004 period is $357 of accelerated amortization of investment premium. Excluding this charge, the yield on the debt securities portfolio would have been 2.71%. Included in interest income on indirect automobile loans in the 2004 period is $340 of accelerated amortization of deferred loan origination costs due to prepaid loan payoffs. Excluding this charge, the yield on the indirect automobile loan portfolio would have been 4.35%. Excluding both of the charges, the yield on interest-earning assets would have been 4.62%. (5) Savings accounts include mortgagors' escrow accounts. (6) The 2003 period includes a $25 interest charge on a prepaid FHLB advance that relates to a prior period. Excluding this charge, the rate on borrowed funds would have been 4.50%. BROOKLINE BANCORP, INC. AND SUBSIDIARIES Selected Financial Ratios and Other Data Three months ended March 31, -------------------- 2004 2003 -------- ---------- Performance Ratios (annualized): Return on average assets 1.20 % (0.04 ) % Return on average stockholders' equity 3.09 % (0.09 ) % Return on average stockholders' equity, excluding effect of unrealized gains on securities available for sale, net of taxes 3.11 % (0.09 ) % Interest rate spread 2.29 % 2.28 % Net interest margin 3.19 % 3.53 % Dividends paid per share during period $0.285 $ 0.085 At At At March 31, Dec. 31, March 31, 2004 2003 2003 ---------- --------- --------- (dollars in thousands except per share data) Capital Ratio: Stockholders' equity to total assets 37.47 % 39.81 % 43.08 % Asset Quality: Non-performing loans $ 18 $ 50 $ 137 Non-performing assets 84 133 137 Allowance for loan losses 16,388 16,195 15,424 Allowance for loan losses as a percent of total loans 1.45 % 1.51 % 1.83 % Non-performing assets as a percent of total assets 0.01 % 0.01 % - Per Share Data: Book value per share $ 10.11 $ 10.31 $ 10.65 Market value per share $ 15.95 $ 15.34 $ 12.52 CONTACT: Brookline Bancorp, Inc. Paul Bechet, 617-278-6405 -----END PRIVACY-ENHANCED MESSAGE-----