-----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, NRWTV0Rsv4mlOfziBSWWQM1p9fONq/miw+cdGM4UfPoOqiMZJL6d9GWCC0EktsDO FKOQ5YR5GlJYZ0Dqxokd4Q== 0001157523-06-000473.txt : 20060120 0001157523-06-000473.hdr.sgml : 20060120 20060120122221 ACCESSION NUMBER: 0001157523-06-000473 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060119 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060120 DATE AS OF CHANGE: 20060120 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: 06540020 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 a5060129.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 19, 2006 ----------------------- 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, Massachusetts 02447-0469 - ----------------------------------------------- -------------- (Address of principal executive offices) (Zip Code) (617) 730-3500 ---------------------------------------------------- (Registrant's telephone number, including area code) Not applicable -------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition --------------------------------------------- On January 19, 2006, Brookline Bancorp, Inc. (the "Company") announced its earnings for the 2005 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 February 15, 2006 to stockholders of record on January 31, 2006. A copy of the press release dated January 19, 2006 is attached as Exhibit 99.1 to this report. Item 9.01 Financial Statements and Exhibits --------------------------------- The Index of Exhibits immediately precedes the attached exhibits. 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 20, 2006 By: /s/ Paul R. Bechet ---------------------- Paul R. Bechet Senior Vice President and Chief Financial Officer EXHIBIT INDEX The following exhibits are furnished as part of this report: Exhibit No. Description ----------- ----------- 99.1 Press release of Brookline Bancorp, Inc. dated January 19, 2006 EX-99.1 2 a5060129ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Brookline Bancorp Announces 2005 Fourth Quarter and Annual Earnings and Dividend Declarations BROOKLINE, Mass.--(BUSINESS WIRE)--Jan. 19, 2006--Brookline Bancorp, Inc. (the "Company") (NASDAQ:BRKL) announced today its earnings for the 2005 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 February 15, 2006 to stockholders of record on January 31, 2006. The Company earned $5,536,000, or $0.09 per share on a basic and diluted basis, for the quarter ended December 31, 2005 compared to $3,996,000, or $0.07 per share on a basic and diluted basis, for the quarter ended December 31, 2004. The 39% increase in quarterly earnings was attributable primarily to inclusion of the operating results of Mystic Financial, Inc. and its subsidiaries ("Mystic"). Net income for the year ended December 31, 2005 was $22,030,000, or $0.37 per share ($0.36 per share on a diluted basis), compared to $17,767,000, or $0.31 per share on a basic and diluted basis, for the year ended December 31, 2004. Included in net income were after-tax securities gains of $547,000 ($0.01 per share) in 2005 and $1,134,000 ($0.02 per share) in 2004. The 24% increase in net income was likewise attributable primarily to inclusion of Mystic's operating results. As previously reported, the Company acquired Mystic on January 7, 2005. Total assets acquired were $440 million, including loans of $343 million, and deposits assumed were $331 million. The balance of Mystic loans acquired declined to $255 million at September 30, 2005 and $240 million at December 31, 2005 as a result of loan payoffs and the sale in the 2005 first quarter of $30 million of long-term fixed rate residential mortgage loans done to reduce interest rate risk. In view of rising interest rates and signs of a weakening real estate market, the Company chose to be cautious in originating new construction and real estate loans and in renewing lines of credit to small business commercial borrowers. The balance of Mystic related deposits increased $17 million from the date of acquisition to $348 million at December 31, 2005. The attractive deposit base of Mystic was one of the important reasons for making the acquisition. As part of the acquisition, Mystic was merged into the Company and in April 2005 its operating systems were merged into the Company's operating systems. Merger/conversion related expenses amounted to $894,000, substantially all of which were incurred in the first half of 2005. Of the total amount paid for the acquisition, $11.8 million was classified as a core deposit intangible that is being amortized on an accelerated basis over nine years and $35.6 million was classified as goodwill, none of which was amortized or written-down in 2005. Amortization of the core deposit intangible charged to expense amounted to $593,000 in the fourth quarter and $2,370,000 in the year ended December 31, 2005. Net interest income was $3,649,000, or 28% higher, in the 2005 fourth quarter than in the 2004 fourth quarter and $17,060,000, or 33% higher, in the 2005 year than in the 2004 year. The increases were due to growth in assets, notably from the Mystic acquisition and the indirect automobile loan portfolio, and a higher interest rate environment. While interest rate spread improved from 2.34% in the 2004 year to 2.48% in the 2005 year, it declined steadily throughout 2005 from 2.59% in the first quarter to 2.52% in the second quarter, 2.42% in the third quarter and 2.33% in the fourth quarter. These declines resulted from a more rapid increase in the average rates paid on deposits and borrowed funds than in the increase in the average rates earned on assets. The rise in the average rates paid for funds resulted from the rate setting actions of the Federal Reserve (13 rate increases of 0.25% each in the federal funds rate for overnight borrowings between banks since June 2004), increased competition for deposits and a shift in the mix of deposits. Customarily, higher rates are paid on certificates of deposit than on transaction deposit accounts. Certificates of deposit comprised 55% of total deposits at December 31, 2005 compared to 52% at September 30, 2005, 48% at June 30, 2005 and 41% at December 31, 2004. The trend in net interest margin was similar to that in interest rate spread, albeit less pronounced. It improved from 3.21% in the 2004 year to 3.24% in the 2005 year, but declined steadily throughout 2005 from 3.31% in the first quarter to 3.26% in the second quarter, 3.20% in the third quarter and 3.19% in the fourth quarter. The 2005 quarterly declines resulted primarily from the developments mentioned in the preceding paragraph, the existence of a flat yield curve environment (an environment where interest rates offered on assets with longer maturities in the five to ten year range differ little with rates offered on assets with shorter maturities in the one to two year range) and a reduction in the percent of total interest-earning assets comprised of mortgage loans from 54% in the first quarter to 52% in the second quarter and 51% in the third and fourth quarters. Typically, the yield on mortgage loans is higher than the yields earned on the Company's other interest-earning assets. It should be noted, however, that loan pricing has also been subjected to greater competitive pressure over the past two years and, as a result, it has been increasingly difficult to incorporate the rise in funding costs into the pricing of new loan originations. A high percent of the Company's assets (26% at December 31, 2005 and 35% at December 31, 2004) are funded by tangible equity (stockholders' equity less goodwill and core deposit intangible) on which no interest expense is incurred. Because of this and our belief that the interest rate environment of the past several months will continue at least in the first half of 2006, we expect net interest income in 2006 to continue to rise, but at a considerably more modest rate of annual increase. It is worth noting that net interest income is reduced whenever the Company pays extra dividends. Each extra dividend of $0.20 per share reduces stockholders' equity by approximately $12.3 million and interest income by the amount that otherwise would have been earned if the dividend had not been paid. Continuation of the market trends mentioned above will likely cause interest rate spread to decline in the first half of 2006 and possibly thereafter and make it challenging to improve net interest margin from its existing level. Trends in interest rates depend on many factors and, accordingly, actual rates in the future could vary significantly from the Company's predictions. The provision for loan losses was $840,000 in the 2005 fourth quarter compared to $927,000 in the 2004 fourth quarter and $2,483,000 in the 2005 year compared to $2,603,000 in the 2004 year. All of the provision in the 2005 fourth quarter and $742,000 of the provision in the 2004 fourth quarter related to the indirect automobile loan portfolio as movements in the non-indirect automobile loan portfolio did not require much change in the allowance for loan losses related to such loans. Due primarily to the payoff of Mystic loans, including several loans deemed to have higher than normal risk exposures, $376,000 was credited to the 2005 provision for loan losses related to non-indirect automobile loans; in 2004, $404,000 was charged to the provision for loan losses primarily due to loan growth. The indirect automobile loan portfolio has grown from $211 million at the end of 2003 to $369 million at the end of 2004 and $459 million at the end of 2005. Net charge-offs were $1,358,000 in 2005 and $1,246,000 in 2004, or 0.28% and 0.40% of the average balance of indirect automobile loans outstanding in those respective years. While charge-off experience to date has been favorable, indirect automobile loans delinquent 30 days or more increased from $3.2 million, or 0.85% of the portfolio, at December 31, 2004 to $4.5 million, or 1.00% of the portfolio, at September 30, 2005 and $5.5 million, or 1.21% of the portfolio, at December 31, 2005. The increase is considered to be due in part to the change in the bankruptcy law which occurred in October 2005. The substantial excess provisions over net charge-offs reflect the rapid growth of the portfolio and our assumption that the rate of charge-offs may increase in the future. Most of the increase in non-interest income in the quarterly and yearly periods presented is attributable to the Mystic acquisition. In the 2005 fourth quarter, the sales of a building and a foreclosed residential property owned by Mystic resulted in a gain of $322,000. In the 2005 third quarter, $250,000 was charged to expense to reduce the carrying value of the foreclosed property to its estimated fair value. Excluding merger/conversion expenses, amortization of the core deposit intangible and the write-down referred to in the preceding paragraph, higher non-interest expenses in the 2005 fourth quarter and year compared to the 2004 fourth quarter and year were attributable primarily to the Mystic acquisition, the opening of a new branch in the fall of 2004, higher premiums for employee medical benefits and higher professional fees due mostly to meeting the added compliance requirements of the Sarbanes-Oxley Act. In approving an extra dividend of $0.20 per share in addition to the regular quarterly dividend of $0.085 per share, the Board of Directors considered the earnings of the Company, its capital requirements, potential future business initiatives and other factors. While the Board of Directors has authorized semi-annual extra dividend payments of $0.20 per share since the second half of 2003, the payment and magnitude of any future dividends will depend on available opportunities to deploy capital effectively, including the repurchase of Company common stock, future interest rates, expansion of the Company's business, regulatory considerations and general economic conditions. 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) December 31, September 30, December 31, 2005 2005 2004 ------------ ------------- ------------ ASSETS - ------------------------------ Cash and due from banks $ 15,507 $ 16,004 $ 8,937 Short-term investments 102,888 133,707 127,928 Securities available for sale 374,906 349,813 260,852 Securities held to maturity (market value of $423, $857 and $914, respectively) 410 841 889 Restricted equity securities 23,081 23,081 17,444 Loans 1,636,755 1,620,090 1,269,637 Allowance for loan losses (22,248) (21,900) (17,540) ----------- ------------ ----------- Net loans 1,614,507 1,598,190 1,252,097 ----------- ------------ ----------- Other investment 4,662 4,545 4,456 Accrued interest receivable 9,189 8,609 5,801 Bank premises and equipment, net 10,010 11,198 3,900 Other real estate owned - 1,150 - Deferred tax asset 11,347 9,486 9,980 Prepaid income taxes - 1,813 270 Core deposit intangible 9,471 10,064 - Goodwill 35,615 35,615 - Other assets 3,111 2,972 1,945 ----------- ------------ ----------- Total assets $2,214,704 $ 2,207,088 $1,694,499 =========== ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------ Deposits $1,168,307 $ 1,153,854 $ 773,958 Borrowed funds 411,507 421,896 320,171 Subordinated debt 12,218 12,249 - Mortgagors' escrow accounts 5,377 5,465 4,464 Income taxes payable 630 - - Accrued expenses and other liabilities 14,215 12,118 10,893 ----------- ------------ ----------- Total liabilities 1,612,254 1,605,582 1,109,486 ----------- ------------ ----------- 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; 62,989,384 shares, 62,989,384 shares and 60,477,939 shares issued, respectively 630 630 605 Additional paid-in capital 512,338 512,163 471,799 Retained earnings, partially restricted 121,042 120,620 144,081 Accumulated other comprehensive income (loss) (A) (1,577) (1,158) 560 Treasury stock, at cost - 1,405,611 shares, 1,405,611 shares and 1,335,299 shares issued, respectively (18,144) (18,144) (17,017) Unearned compensation - recognition and retention plans (8,103) (8,779) (10,963) Unallocated common stock held by ESOP - 685,161 shares, 701,623 shares and 743,221 shares, respectively (3,736) (3,826) (4,052) ----------- ------------ ----------- Total stockholders' equity 602,450 601,506 585,013 ----------- ------------ ----------- ----------- ------------ ----------- Total liabilities and stockholders' equity $2,214,704 $ 2,207,088 $1,694,499 =========== ============ =========== (A) Represents net unrealized gains (losses) 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, ----------------------- ----------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Interest income: Loans $23,462 $16,880 $ 90,371 $63,527 Debt securities 3,333 1,459 11,121 6,333 Marketable equity securities 40 69 268 281 Restricted equity securities 281 149 980 429 Short-term investments 1,243 536 4,356 1,540 ----------- ----------- ----------- ----------- Total interest income 28,359 19,093 107,096 72,110 ----------- ----------- ----------- ----------- Interest expense: Deposits 7,101 3,204 23,172 11,708 Borrowed funds 4,145 2,626 15,193 9,416 Subordinated debt 201 - 685 - ----------- ------- ----------- ----------- Total interest expense 11,447 5,830 39,050 21,124 ----------- ------- ----------- ----------- Net interest income 16,912 13,263 68,046 50,986 Provision for loan losses 840 927 2,483 2,603 ----------- ------- ----------- ----------- Net interest income after provision for loan losses 16,072 12,336 65,563 48,383 ----------- ------- ----------- ----------- Non-interest income: Fees and charges 725 411 3,576 2,577 Gains on securities, net - - 853 1,767 Gains on sales of building and other real estate owned 322 - 322 - Swap agreement market valuation credit - 53 49 231 Other income 126 142 497 635 ----------- ----------- ----------- ----------- Total non-interest income 1,173 606 5,297 5,210 ----------- ----------- ----------- ----------- Non-interest expense: Compensation and employee benefits 3,373 2,455 13,264 10,004 Recognition and retention plans 676 722 2,716 2,890 Occupancy 707 414 2,818 1,604 Equipment and data processing 1,371 1,196 5,918 4,390 Advertising and marketing 287 148 1,094 638 Dividend equivalent rights - - 702 734 Merger/conversion - - 894 - Amortization of core deposit intangible 593 - 2,370 - Other 1,025 808 4,181 2,729 ----------- ----------- ----------- ----------- Total non-interest expense 8,032 5,743 33,957 22,989 ----------- ----------- ----------- ----------- Income before income taxes 9,213 7,199 36,903 30,604 Provision for income taxes 3,677 3,203 14,873 12,837 ----------- ----------- ----------- ----------- Net income $ 5,536 $ 3,996 $ 22,030 $17,767 =========== =========== =========== =========== Earnings per common share: Basic $ 0.09 $ 0.07 $ 0.37 $ 0.31 Diluted 0.09 0.07 0.36 0.31 Weighted average common shares outstanding during the period: Basic 60,139,074 57,424,472 60,054,059 57,278,329 Diluted 60,853,521 58,274,797 60,836,211 58,128,232 BROOKLINE BANCORP, INC. AND SUBSIDIARIES Average Yields / Costs Three months ended December 31, ------------------------------------------------------- 2005 2004 ---------------------------- -------------------------- Average Average Average Interest yield/ Average Interest yield/ balance (1) cost balance (1) cost ----------- -------- ------- ------- -------- --------- (Dollars in thousands) Assets - -------------- Interest-earning assets: Short-term investments $ 126,037 $ 1,243 3.91% $ 111,083 $ 536 1.91% Debt securities (2) 357,630 3,412 3.82 255,180 1,466 2.30 Equity securities (2) 26,685 336 5.00 26,460 244 3.66 Mortgage loans (3) 1,086,170 16,959 6.25 836,814 12,468 5.96 Money market loan participations - - - 3,130 15 1.90 Other commercial loans (3) 70,233 1,143 6.51 51,229 615 4.80 Indirect automobile loans (3) 463,734 5,307 4.54 367,951 3,738 4.03 Other consumer loans (3) 2,981 54 7.25 2,491 44 7.07 ---------- -------- ---------- -------- Total interest- earning assets 2,133,470 28,454 5.31% 1,654,338 19,126 4.60% -------- ----- -------- ----- Allowance for loan losses (21,987) (17,133) Non-interest earning assets 98,934 32,610 ----------- ----------- Total assets $2,210,417 $1,669,815 =========== =========== Liabilities and Stockholders' Equity - -------------- Interest-bearing liabilities: Deposits: NOW accounts $ 92,640 60 0.26% $ 63,473 23 0.14% Savings accounts 129,418 436 1.34 82,964 385 1.84 Money market savings accounts 243,669 1,179 1.92 266,336 748 1.11 Certificate of deposit accounts 635,772 5,426 3.39 304,262 2,048 2.67 ----------- -------- ----------- -------- Total deposits 1,101,499 7,101 2.56 717,035 3,204 1.77 Borrowed funds 412,412 4,145 3.93 315,189 2,626 3.26 Subordinated debt 12,238 201 6.43 - - - ----------- -------- ----------- -------- Total interest bearing liabil- ities 1,526,149 11,447 2.98% 1,032,224 5,830 2.24% -------- ----- -------- ----- Non-interest- bearing demand checking accounts 65,286 38,435 Other liabilities 17,206 13,989 ----------- ----------- Total liabilities 1,608,641 1,084,648 Stockholders' equity 601,776 585,167 ----------- ----------- Total liabilities and stock- holders' equity $2,210,417 $1,669,815 =========== =========== Net interest income (tax equivalent basis)/ interest rate spread (4) 17,007 2.33% 13,296 2.36% ===== ===== Less adjustment of tax exempt income 95 33 -------- -------- Net interest income $16,912 $13,263 ======== ======== Net interest margin (5) 3.19% 3.21% ===== ===== (1) Tax exempt income on debt and equity securities is included on a tax equivalent basis. (2) Average balances include unrealized gains (losses) 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) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. (5) 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, ----------------- --------------- 2005 2004 2005 2004 -------- -------- ------- ------- Performance Ratios (annualized): Return on average assets 1.00% 0.96% 1.01% 1.10% Return on average stockholders' equity 3.68% 2.73% 3.61% 2.99% Interest rate spread 2.33% 2.36% 2.48% 2.34% Net interest margin 3.19% 3.21% 3.24% 3.21% Dividends paid per share during period $0.085 $0.085 $0.74 $0.74 At At At December September December 31, 30, 31, 2005 2005 2004 -------- --------- -------- (Dollars in thousands except per share data) Capital Ratio: Stockholders' equity to total assets 27.20% 27.25% 34.52% Asset Quality: Non-performing loans $ 480 $ 300 $ 111 Non-performing assets 973 1,869 439 Allowance for loan losses 22,248 21,900 17,540 Allowance for loan losses as a percent of total loans 1.36% 1.35% 1.38% Non-performing assets as a percent of total assets 0.04% 0.08% 0.03% Per Share Data: Book value per share $ 9.78 $ 9.77 $ 9.89 Tangible book value per share $ 9.05 $ 9.03 $ 9.89 Market value per share $ 14.17 $ 15.82 $ 16.32 CONTACT: Brookline Bancorp, Inc. Paul R. Bechet, 617-730-3500 Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----