-----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, Rf/b+tnFpFrC0svioaYQoB/tjRl97gTIGkysQI8O96CC12BlqX/LR7lsVzShQdap HP5zgJMevNcOYIXN2FPZaQ== 0001157523-05-000426.txt : 20050121 0001157523-05-000426.hdr.sgml : 20050121 20050121092548 ACCESSION NUMBER: 0001157523-05-000426 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050120 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050121 DATE AS OF CHANGE: 20050121 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: 05540045 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 a4803560.txt BROOKLINE BANCORP, INC. 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 20, 2005 ----------------------- 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) (617) 730-3500 ------------------------------------------------------ (Registrant's telephone number, including area code) Item 2.02. Results of Operations and Financial Condition On January 20, 2005, Brookline Bancorp, Inc. (the "Company") issued a press release regarding its an earnings for the 2004 fourth quarter and year and the 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 February 15, 2005 to stockholders of record on January 31, 2005. The information in the preceding paragraphs, as well as Exhibits 99.1 and 99.2 referenced therein, is considered to be "furnished" under the Securities Exchange Act of 1934. Item 9.01. Financial Statements and Exhibits (a) Not Applicable (b) Not Applicable (c) Exhibits Exhibit No. Description ----------- ----------- 99.1 Press release dated January 20, 2005 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 21, 2005 By: /s/ Paul R. Bechet ------------------ Paul R. Bechet Senior Vice President, Treasurer and Chief Financial Officer EX-99.1 2 a4803560ex991.txt BROOKLINE BANCORP, INC. EXHIBIT 99.1 Exhibit 99.1 Brookline Bancorp Announces 2004 Fourth Quarter and Annual Earnings and Dividend Declarations BROOKLINE, Mass.--(BUSINESS WIRE)--Jan. 20, 2005--Brookline Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its earnings for the 2004 fourth quarter and year and the 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 February 15, 2005 to stockholders of record on January 31, 2005. The Company earned $3,996,000, or $0.07 per share (on a basic and diluted basis), for the quarter ended December 31, 2004 compared to $3,439,000, or $0.06 per share (on a basic and diluted basis), for the quarter ended December 31, 2003. Net income for the year 2004 was $17,767,000, or $0.31 per share (on a basic and diluted basis), compared to $14,480,000, or $0.25 per share (on a basic and diluted basis), for the year 2003. Included in the year 2003 is an after-tax charge of $2,788,000, or $0.05 per share, resulting from settlement of all disputes relating to the state tax treatment of the Company's real estate investment trust ("REIT") subsidiary for the years 1999 through 2002. The increase in quarterly earnings was due primarily to a reduction in the expense for stock awarded under the Company's recognition and retention plans from $3,885,000 in the 2003 quarter to $722,000 in the 2004 quarter. The 2003 amount was abnormally high since a portion of the shares awarded under a plan approved by the stockholders in October 2003 had a very short vesting period. Offsetting the benefit derived from this expense reduction was a decline in securities gains (none in the 2004 quarter compared to $1,593,000 in the 2003 quarter), a $307,000 decline in fees from mortgage loan prepayments and the effect of an increase in the income tax rate from 42.3% in the 2003 quarter to 44.5% in the 2004 quarter. The increase in the tax rate was due primarily to (a) additional state taxes resulting from dividend transfers from Company subsidiaries to the parent Company in anticipation of funding the acquisition of Mystic Financial Inc. which was completed on January 7, 2005, (b) the non-deductibility of a part of executive compensation and (c) the non-deductibility of certain other expenses for state tax purposes. These factors also caused the effective income tax rate for the year 2004 to increase to 41.9% from 41.4% in the 2003 year. Net interest income was $938,000, or 7.6%, higher in the 2004 quarter than in the 2003 quarter as average earning assets grew $181 million, or 12.3%, interest rate spread declined from 2.40% to 2.36% and net interest margin also declined from 3.36% to 3.21%. Net interest income was $3,384,000, or 7.1%, higher in 2004 than in 2003 as average earning assets increased $165 million, or 11.5%, and interest rate spread improved from 2.26% to 2.34%, but net interest margin declined from 3.34% to 3.21%. We have previously reported that the Company's decline in net interest margin was caused by one of the lowest interest rate environments of the past forty years. Since a high percent of the Company's assets (36.9% in 2004 and 42.6% in 2003) were funded by stockholders' equity for which there is no charge for interest expense, declining rates caused 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. In the second half of 2004, the Federal Reserve increased the federal funds rate for overnight borrowings between banks from 1.00% to 2.25%. As a result, net interest margin improved from 3.14% in the 2004 third quarter to 3.21% in the 2004 fourth quarter. While the recent rise in interest rates will likely have a positive impact on the Company's future net income, earnings improvement will continue to be restrained as long as existing assets originated in the past at higher rates are replaced with new assets at lower yields. In anticipation of a rising interest rate environment, the Company has restricted its purchase of investments over the past year to securities with maturities of two years or less and has funded part of its loan growth with borrowings at fixed rates and maturities in the two to three year range. These actions have slowed down short-term earnings improvement, but should enhance longer-term earnings if interest rates continue to rise. Trends in interest rates depend on many factors and, accordingly, actual rates in the future could vary significantly with the Company's rate predictions. At December 31, 2004, interest-earning assets maturing or repricing within one year amounted to $769 million and interest-bearing liabilities maturing or repricing within one year amounted to $623 million, resulting in a cumulative one year positive gap of $146 million, or 8.6% of total assets. The provision for loan losses increased from $313,000 in the 2003 fourth quarter to $927,000 in the 2004 fourth quarter and from $1,288,000 in the 2003 year to $2,603,000 in the 2004 year. The increases were due primarily to growth of the indirect automobile loan portfolio and higher net charge-offs in that portfolio. Indirect automobile loans outstanding increased from $211 million at the end of 2003 to $369 million at the end of 2004 and net charge-offs increased from $157,000 in 2003 to $1,246,000 in 2004. The rate of net charge-offs expressed as a percent of average loans outstanding was 0.40% in the year 2004 and 0.59% in the 2004 fourth quarter. Typically, charge-offs rise in the fourth quarter due to seasonal factors. At December 31, 2004, indirect automobile loans delinquent more than 30 days were $3,192,000, or 0.87% of the portfolio. At that date, there were no mortgage loans delinquent more than 30 days, non-performing assets (comprised of loans past due 90 days or more and repossessed assets) were $439,000 and the allowance for loan losses of $17,540,000 was equal to 1.38% of total loans outstanding. Excluding the expense of the recognition and retention plans, other non-interest expenses increased $360,000, or 7.7%, in the 2004 fourth quarter compared to the 2003 fourth quarter and $1,904,000, or 10.5%, in the year 2004 compared to the year 2003. The increases were due primarily to the expanded volume of the indirect automobile loan business which commenced in February 2003, the opening of a new branch in the fall of 2003 and the fall of 2004, increased dividend equivalent rights payments attributable to the semi-annual extra dividends paid to stockholders, and higher professional fees due to compliance with the requirements of the Sarbanes-Oxley Act. 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 other factors. While it is the intent of the Board for the foreseeable future to authorize payment of an extra dividend 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 interest rates, expansion of the Company's business and general economic condition. The above text 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 could 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) Dec. 31, Sept. 30, Dec. 31, 2004 2004 2003 --------------------------------------- ASSETS - ------------------------------- Cash and due from banks $ 8,937 $ 8,262 $ 15,131 Short-term investments 127,928 99,556 127,572 Securities available for sale 260,852 270,432 287,952 Securities held to maturity (market value of $914, $1,228 and $1,381, respectively) 889 1,198 1,343 Restricted equity securities 17,444 16,554 11,401 Loans 1,269,637 1,239,926 1,074,740 Allowance for loan losses (17,540) (17,161) (16,195) --------------------------------------- Net loans 1,252,097 1,222,765 1,058,545 --------------------------------------- Other investment 4,456 4,453 4,251 Accrued interest receivable 5,801 5,588 5,248 Bank premises and equipment, net 3,900 3,110 2,737 Deferred tax asset 9,980 9,725 8,843 Prepaid income taxes 270 59 - Other assets 1,945 1,572 1,011 --------------------------------------- Total assets $ 1,694,499 $1,643,274 $ 1,524,034 ======================================= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------- Deposits $ 773,958 $ 735,306 $ 679,921 Borrowed funds 320,171 305,490 220,519 Mortgagors' escrow accounts 4,464 4,978 4,565 Income taxes payable - - 1,489 Accrued expenses and other liabilities 10,893 12,457 10,856 --------------------------------------- Total liabilities 1,109,486 1,058,231 917,350 --------------------------------------- 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; 60,477,939 shares, 60,477,939 shares and 60,160,530 shares issued, respectively 605 605 602 Additional paid-in capital 471,799 471,580 469,493 Retained earnings, partially restricted 144,081 144,977 169,417 Accumulated other comprehensive income (A) 560 717 2,529 Treasury stock, at cost - 1,335,299 shares (17,017) (17,017) (17,017) Unearned compensation - recognition and retention plans (10,963) (11,685) (13,960) Unallocated common stock held by ESOP - 743,221 shares, 758,257 shares and 803,356 shares, respectively (4,052) (4,134) (4,380) --------------------------------------- Total stockholders' equity 585,013 585,043 606,684 --------------------------------------- - --- --- Total liabilities and stockholders' equity $ 1,694,499 $1,643,274 $ 1,524,034 ======================================= (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, ----------------------------------------------- 2004 2003 2004 2003 ----------------------------------------------- Interest income: Loans $ 16,880 $ 14,762 $ 63,527 $ 56,359 Debt securities 1,459 1,735 6,333 7,648 Marketable equity securities 69 73 281 370 Restricted equity securities 149 70 429 289 Short-term investments 536 329 1,540 1,544 ----------------------------------------------- Total interest income 19,093 16,969 72,110 66,210 ----------------------------------------------- Interest expense: Deposits 3,204 2,770 11,708 12,295 Borrowed funds 2,626 1,874 9,416 6,313 ----------- --------------------------------- Total interest expense 5,830 4,644 21,124 18,608 ----------- --------------------------------- Net interest income 13,263 12,325 50,986 47,602 Provision for loan losses 927 313 2,603 1,288 ----------- --------------------------------- Net interest income after provision for loan losses 12,336 12,012 48,383 46,314 ----------- --------------------------------- Non-interest income: Fees and charges 411 720 2,577 2,552 Gains on securities, net - 1,593 1,767 2,102 Swap agreement market valuation credit 53 67 231 163 Other income 142 114 635 536 ----------------------------------------------- Total non-interest income 606 2,494 5,210 5,353 ----------------------------------------------- Non-interest expense: Compensation and employee benefits 2,455 2,488 10,004 9,636 Recognition and retention plans 722 3,885 2,890 3,992 Occupancy 414 376 1,604 1,517 Equipment and data processing 1,209 937 4,458 3,219 Advertising and marketing 148 198 638 761 Dividend equivalent rights - - 734 361 Other 795 662 2,661 2,701 ----------------------------------------------- Total non-interest expense 5,743 8,546 22,989 22,187 ----------------------------------------------- Income before income taxes 7,199 5,960 30,604 29,480 ----------------------------------------------- Income tax expense: Provision for income taxes 3,203 2,521 12,837 12,212 Retroactive assessment related to REIT - - - 2,788 ----------------------------------------------- Total income tax expense 3,203 2,521 12,837 15,000 ----------------------------------------------- ----------------------------------------------- Net income $ 3,996 $ 3,439 $ 17,767 $ 14,480 =============================================== Earnings per common share: Basic $ 0.07 $ 0.06 $ 0.31 $ 0.25 Diluted 0.07 0.06 0.31 0.25 Weighted average common shares outstanding during the period: Basic 57,424,472 56,713,171 57,278,329 56,869,065 Diluted 58,274,797 57,724,597 58,131,107 57,871,763 BROOKLINE BANCORP, INC. AND SUBSIDIARIES Average Yields / Costs Three months ended December 31, --------------------------------------------- 2004 --------------------------------------------- Average Average balance Interest (1) yield/cost --------------------------------------------- (Dollars in thousands) Assets - ------------------------ Interest-earning assets: Short-term investments $ 111,083 $ 536 1.91% Debt securities (2) 255,180 1,466 2.30 Equity securities (2) 26,460 244 3.66 Mortgage loans (3) 836,814 12,468 5.96 Money market loan participations 3,130 15 1.90 Commercial loans (3) 51,229 615 4.80 Indirect automobile loans (3) 367,951 3,738 4.03 Other consumer loans (3) 2,491 44 7.07 ------------------------- Total interest- earning assets 1,654,338 19,126 4.60% ------------------------ Allowance for loan losses (17,133) Non-interest earning assets 32,610 -------------- Total assets $1,669,815 ============== Liabilities and Stockholders' Equity - ------------------------ Interest-bearing liabilities: Deposits: NOW accounts $ 63,473 23 0.14% Savings accounts (4) 82,964 385 1.84 Money market savings accounts 266,336 748 1.11 Certificate of deposit accounts 304,262 2,048 2.67 ----------------------------- Total deposits 717,035 3,204 1.77 Borrowed funds 315,189 2,626 3.26 ----------------------------- Total interest bearing liabilities 1,032,224 5,830 2.24% -------------------------- Non-interest-bearing demand checking accounts 38,435 Other liabilities 13,989 -------------- Total liabilities 1,084,648 Stockholders' equity 585,167 -------------- Total liabilities and stockholders' equity $1,669,815 ============== Net interest income (tax equivalent basis)/interest rate spread 13,296 2.36% ================ Less adjustment of tax exempt income 33 --------------- Net interest income $ 13,263 =============== Net interest margin 3.21% ================ Three months ended December 31, --------------------------------------------- 2003 --------------------------------------------- Average Average balance Interest (1) yield/cost --------------------------------------------- (Dollars in thousands) Assets - ------------------------ Interest-earning assets: Short-term investments $ 129,721 $ 329 1.01% Debt securities (2) 276,752 1,744 2.52 Equity securities (2) 22,367 170 3.03 Mortgage loans (3) 818,696 12,224 5.97 Money market loan participations 3,227 9 1.11 Commercial loans (3) 29,077 415 5.71 Indirect automobile loans (3) 191,391 2,069 4.29 Other consumer loans (3) 2,429 45 7.41 ------------------------- Total interest- earning assets 1,473,660 17,005 4.60% -------------------------- Allowance for loan losses (16,020) Non-interest earning assets 31,307 -------------- Total assets $1,488,947 ============== Liabilities and Stockholders' Equity - ------------------------ Interest-bearing liabilities: Deposits: NOW accounts $ 60,756 20 0.13% Savings accounts (4) 25,694 27 0.42 Money market savings accounts 306,790 1,031 1.33 Certificate of deposit accounts 248,109 1,692 2.70 ----------------------------- Total deposits 641,349 2,770 1.71 Borrowed funds 195,789 1,874 3.75 ----------------------------- Total interest bearing liabilities 837,138 4,644 2.20% ------------------------------- Non-interest-bearing demand checking accounts 32,530 Other liabilities 14,294 -------------- Total liabilities 883,962 Stockholders' equity 604,985 -------------- Total liabilities and stockholders' equity $1,488,947 ============ Net interest income (tax equivalent basis)/interest rate spread 12,361 2.40% ========= Less adjustment of tax exempt income 36 --------------- Net interest income $ 12,325 =============== Net interest margin 3.36% ============ (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) Savings accounts include mortgagors' escrow accounts BROOKLINE BANCORP, INC. AND SUBSIDIARIES Selected Financial Ratios and Other Data Three months ended Year ended December 31, December 31, ------------------------------------- 2004 2003 2004 2003 ------------------------------------- Performance Ratios (annualized): Return on average assets 0.96% 0.92% 1.10% 1.00% Return on average stockholders' equity 2.73% 2.27% 2.99% 2.36% Interest rate spread 2.36% 2.40% 2.34% 2.26% Net interest margin 3.21% 3.36% 3.21% 3.34% Dividends paid per share during period $0.085 $0.085 $0.74 $0.54 At At At December 31, September 30, December 31, 2004 2004 2003 ------------ ------------- ------------ (Dollars in thousands except per share data) Capital Ratio: Stockholders' equity to total assets 34.52% 35.60% 39.81% Asset Quality: Non-performing loans $ 111 $ 91 $ 50 Non-performing assets 439 336 133 Allowance for loan losses 17,540 17,161 16,195 Allowance for loan losses as a percent of total loans 1.38% 1.38% 1.51% Non-performing assets as a percent of total assets 0.03% 0.02% 0.01% Per Share Data: Book value per share $ 9.89 $ 9.89 $ 10.31 Market value per share $ 16.32 $ 15.67 $ 15.34 CONTACT: Brookline Bancorp Paul Bechet, 617-730-3500 -----END PRIVACY-ENHANCED MESSAGE-----