Brookline Bancorp Announces First Quarter Results

Brookline Bancorp, Inc. (NASDAQ: BRKL) (the “Company”) today announced net income of $10.4 million, or $0.15 per basic share and diluted share, for the first quarter of 2014, compared to $8.8 million, or $0.13 per basic and diluted share, for the first quarter of 2013, and $7.7 million, or $0.11 per basic and diluted share, for the fourth quarter of 2013.

The Company’s 2014 first quarter results included $2.1 million in additional accretion related to a reforecast of certain acquired loans, the sale of a building resulting in a gain of $1.6 million, offset by charges of $1.3 million related to the consolidation of an operations center, discontinuance of two branch locations and CFO recruitment. Excluding these items, net income would have been $0.13 per basic and diluted share.

Paul Perrault, President and Chief Executive Officer of Brookline Bancorp, Inc., stated: "We continue to experience the rewards of the strong foundation that we built in order to be the preferred financial institution in our market area. Our commercial bankers produced strong loan growth in the quarter and prospects remain encouraging for the quarters ahead. Recently, Carl M. Carlson joined Brookline Bancorp, Inc. as its Chief Financial Officer and Treasurer. Carl is an accomplished banker and is settling in well with the management team.”

BALANCE SHEET

Total assets increased $93.7 million during the first quarter of 2014 to $5.4 billion at March 31, 2014, and increased $308.4 million from $5.1 billion at March 31, 2013. The growth in total assets during the first quarter of 2014 was primarily driven by loans and leases, which increased $99.5 million to $4.5 billion at March 31, 2014, representing 9.1 percent growth on an annualized basis. At March 31, 2014, the commercial real estate and commercial loan and lease portfolios totaled $3.3 billion, or 73.6 percent of total loans and leases, as compared to $3.2 billion, or 72.6 percent at December 31, 2013, and $2.9 billion, or 69.3 percent at March 31, 2013. Strong loan growth continued in our total commercial loan and lease portfolio, which increased $45.8 million during the first quarter of 2014, or 19.0 percent on an annualized basis. This growth offsets the decrease of $26.6 million in the indirect automobile loan portfolio during the same period.

Cash, cash equivalents, and investment securities increased $15.1 million quarter-to-quarter and $21.3 million year-to-year to $600.5 million, or 11.1 percent of total assets at March 31, 2014, as compared to $585.4 million, or 11.0 percent of total assets at December 31, 2013, and $579.2 million, or 11.3 percent of total assets at March 31, 2013. Deposits of $3.8 billion at March 31, 2014 were up $12.6 million from December 31, 2013 and up $221.6 million from March 31, 2013. Core deposits, which consist of demand checking, NOW, savings, and money market accounts, increased at a 4.1 percent annualized rate in the first quarter of 2014, raising the core deposit ratio to 76.1 percent at March 31, 2014 from 75.6 percent at December 31, 2013. Total borrowings at March 31, 2014 were $892.0 million, an increase of $79.5 million as compared to December 31, 2013, and $71.6 million as compared to March 31, 2013.

The ratio of stockholders’ equity to total assets was 11.46 percent at March 31, 2014, as compared to 11.53 percent at December 31, 2013. The ratio of tangible stockholders’ equity to tangible assets was 8.87 percent at March 31, 2014, as compared to 8.88 percent at December 31, 2013.

NET INTEREST INCOME

Net interest income for the first quarter of 2014 increased $4.0 million to $47.7 million from $43.7 million for the first quarter of 2013, largely as a result of a $0.6 million increase in interest income from investments, a $1.4 million increase in interest income from commercial real estate loans, a $2.8 million increase in accretion related to acquired loans, deposits and borrowed funds, a $1.7 million decrease in interest income due to the runoff in indirect auto loans and a $1.0 million decrease in interest expense on deposits and borrowings.

Net interest margin increased to 3.82 percent for the three months ended March 31, 2014 from 3.70 percent for the three months ended March 31, 2013.

PROVISION FOR LOAN LOSSES

The Company recorded a provision for loan losses of $2.4 million for the quarter ended March 31, 2014 as total loans grew, compared to $1.8 million a year earlier.

Net charge-offs were $0.7 million in the first quarter of 2014 compared to $0.4 million in the same period a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.06 percent compared to 0.04 percent a year ago.

The allowance for loan losses represented 1.13 percent of total loans at March 31, 2014 compared to 1.02 percent a year ago. The allowance for loan losses related to originated loans and leases as a percentage of originated loans and leases was 1.33 percent compared to 1.34 percent a year ago.

NON-INTEREST INCOME

Non-interest income for the quarter ended March 31, 2014 increased $1.8 million to $5.1 million from $3.3 million for the quarter ended March 31, 2013. Several factors contributed to the year-to-year increase, including a net $1.5 million gain on the sale of a building and a $0.3 million increase in gain on sales of loans held-for-sale, offset by a $0.2 million increase on the losses from investment in affordable housing projects, and a $0.1 million decrease in deposit fees.

NON-INTEREST EXPENSE

Non-interest expense for the quarter ended March 31, 2014 increased $2.8 million to $33.6 million from $30.8 million for the quarter ended March 31, 2013. The year-over-year increase in non-interest expense included an increase of $1.7 million in compensation and employee benefit expense driven primarily by additional staffing for certain initiatives including the opening of the Waltham, MA branch of Brookline Bank and to support the growth in Equipment Finance. Additionally, occupancy expense increased $1.3 million due, in part, to the recognition of future lease obligations associated with the consolidation of our operations center and two discontinued branch properties. These increases were offset by a decrease of $0.4 million in other expenses.

RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

The return on average assets increased during the first quarter of 2014 to 0.78 percent at March 31, 2014 from 0.70 percent for the first quarter of 2013.

The return on average tangible stockholders’ equity increased to 8.92 percent for the first quarter of 2014 from 7.70 percent for the quarter ended March 31, 2013.

ASSET QUALITY

Nonperforming loans and leases increased $1.6 million to $18.1 million at March 31, 2014 from $16.5 million at December 31, 2013. The ratio of nonperforming loans and leases to total loans and leases increased to 0.41 percent at March 31, 2014 from 0.38 percent at December 31, 2013. Nonperforming assets also increased $1.4 million to $19.4 million or 0.36 percent of total assets at March 31, 2014, from $18.1 million, or 0.34 percent of total assets, at December 31, 2013.

DIVIDEND DECLARED

The Company’s Board of Directors approved, for the 48th consecutive quarter, a dividend of $0.085 per share. The dividend will be paid on May 23, 2014 to shareholders of record on May 9, 2014.

CONFERENCE CALL

The Company will conduct a conference call/webcast at 1:30 PM Eastern Time on Thursday, April 24, 2014 to discuss the results for the quarter, business highlights and outlook. The call can be accessed by dialing 888-317-6016 (United States) or 412-317-6016 (internationally). A recorded playback of the call will be available for one week following the call at 877-344-7529 (United States) or 412-317-0088 (internationally). The passcode for the playback is 10042928. The call will be available live and in a recorded version on the Company’s website under “Investor Relations” at www.brooklinebancorp.com.

ABOUT BROOKLINE BANCORP, INC.

Brookline Bancorp, Inc., a bank holding company with approximately $5.4 billion in assets and branch locations throughout Massachusetts and Rhode Island, is headquartered in Boston, Massachusetts and operates as the holding company for Brookline Bank, Bank Rhode Island, and First Ipswich Bank. The Company provides commercial and retail banking services and cash management and investment services to customers throughout Central New England. More information about Brookline Bancorp, Inc. and its banks can be found at the following websites: www.brooklinebank.com, www.bankri.com, and www.firstipswich.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the risks outlined in the Company’s Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

BASIS OF PRESENTATION

The Company's consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) as set forth by the FASB in its Accounting Standards Codification and through the rules and interpretive releases of the SEC under the authority of federal securities laws. Certain amounts previously reported have been reclassified to conform to the current period's presentation.

NON-GAAP FINANCIAL MEASURES

The Company uses certain non-GAAP financial measures, such as the allowance for loan and lease losses related to originated loans and leases as a percentage of originated loans and leases, tangible book value per common share and tangible stockholders’ equity to tangible assets. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial services sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.

(1) Tax-exempt income on debt securities, equity securities and revenue bonds included in commercial real estate loans is included on a tax-equivalent basis.
(2) Average balances include unrealized gains (losses) on investment securities. Dividend payments may not be consistent and average yield on equity securities may vary from month to month.
(3) Loans on nonaccrual status are included in the 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.