Brookline Bancorp Announces Third Quarter Net Income of $11.4 Million, EPS of $0.16

Brookline Bancorp Announces Third Quarter Net Income of $11.4 Million, EPS of $0.16

Business Fundamentals Remain Strong

Loan and Deposit Growth Continues

BROOKLINE, Mass.--(BUSINESS WIRE)-- Brookline Bancorp, Inc. (NAS: BRKL) today reported net income of $11.4 million, or $0.16 fully diluted earnings per share (EPS), for the quarter ended September 30, 2012. Net income for the nine months ended September 30, 2012 was $25.3 million, or $0.36 fully diluted EPS, compared to $20.5 million, or $0.35 fully diluted EPS, for the first nine months of 2011.

Paul Perrault, President and Chief Executive Officer of Brookline Bancorp, Inc., stated: "Our core business fundamentals remain strong, with continued growth in loans and deposits in the third quarter. Net interest income has benefited from that growth and I'm happy to report that provisions for loan and lease losses have returned to normal levels. The second phase of our core system conversion was successful and we are looking forward to moving into our new headquarters over the weekend."

NET INTEREST INCOME

Net interest income for the third quarter 2012 increased $3.6 million to $46.4 million from $42.8 million in the second quarter of 2012 and $27.9 million in the third quarter 2011 as a result of the acquisition of Bancorp Rhode Island. An increase of $3.1 million in interest income on loans and leases accounts for the majority of the $3.6 million increase, with an increase in investment income accounting for another $0.4 million of the increase in net interest income. Interest expense was flat for the third quarter 2012 as compared to the second quarter. Included in interest income on loans and leases is $1.4 million of periodic yield adjustments on acquired loans as required under GAAP. The remaining $1.7 million increase in interest income on loans and leases is largely driven by growth in the lending portfolios. Net interest income for the first nine months of 2012 increased to $132.8 million from $81.7 million in the first nine months of 2011.

Net interest margin for the third quarter 2012 was 4.00 percent, up from 3.81 percent at June 30, 2012. The inclusion of the $1.4 million of yield adjustments in income accounted for 14 basis points of the 19 basis-point increase in net interest margin for the third quarter 2012. The normalized net interest margin of 3.86 percent is up from 3.81 percent at June 30, 2012 largely as a result of Brookline Bancorp's continuing efforts to maintain loan yields in a persistently challenging interest-rate environment.

BALANCE SHEET

Total assets at September 30, 2012 grew to $5.1 billion, an annualized increase of 7.2 percent from the prior quarter and 60.3 percent from September 30, 2011.

The loan and lease portfolio grew to $4.1 billion as of September 30, 2012, up 13.3 percent annualized from the prior quarter and 14.2 percent annualized from December 31, 2011, after adjustment for the $1.1 billion in loans and leases acquired from Bancorp Rhode Island, Inc., on January 1, 2012. The Company continued to benefit from strong growth in its commercial real estate and commercial loan and lease portfolios, which reached $2.8 billion, or 67.4 percent of total loans, at September 30, 2012. The commercial real estate and commercial loan and lease portfolios increased 18.1 percent annualized during the third quarter 2012 and 21.5 percent annualized for the first nine months of 2012, after adjustment for the $0.8 billion in commercial real estate and commercial loans and leases acquired from Bancorp Rhode Island, to $2.8 billion. These increases offset the annualized 4.7 percent decline from June 30, 2012 to September 30, 2012 in the indirect automobile portfolio, a decline that reflected the Company's selectiveness in the interest rates at which it is willing to lend in a highly competitive market.

Deposits of $3.6 billion at September 30, 2012 were up 5.3 percent annualized from June 30, 2012 and 63.7 percent from September 30, 2011. Core deposits, which increased from 70.2 percent to 70.8 percent of deposits quarter-to-quarter, increased 8.7 percent annualized in the third quarter 2012. Demand checking accounts grew at an annualized rate of 32.3 percent during the quarter ended September 30, 2012. Total borrowings increased 17.2 percent on an annualized basis to $0.8 billion at September 30, 2012.

Cash and cash equivalents were $76.3 million as of September 30, 2012 as compared to $217.1 million as of June 30, 2012, a decrease that reflects the redeployment of cash to fund loan growth and security reinvestment efforts to reduce further pre-payment risk. As a result, investment securities available-for-sale of $466.8 million increased 21.4 percent from June 30, 2012 to September 30, 2012, with total investment securities at 10.6 percent of total assets.

Stockholders' equity to total assets was 11.97 percent at September 30, 2012. The tangible stockholders' equity to tangible assets ratio remained relatively constant at 9.08 percent at September 30, 2012 when compared with 9.07 percent at June 30, 2012 and declined from 14.49 percent at September 30, 2011 as a result of the Brookline Bancorp's acquisition of Bancorp Rhode Island.

NON-INTEREST INCOME

Non-interest income was $3.8 million for the third quarter 2012, down $0.9 million from the second quarter 2012, in part, as a result of the Company waiving certain deposit fees during the month of the core system conversion and, in part, as a result of a reduction of late fee income on several large loans that paid off during the quarter. Additionally, gains on sales of investment securities in the third quarter decreased $0.8 million as compared to the second quarter, which included $0.8 million of gains on sales of investment securities in connection with a partial restructuring of the investment portfolios. Non-interest income was $12.1 million for the first nine months of 2012, up $8.5 million from the first nine months of 2011. The growth in the first nine months of 2012 was primarily driven by $7.9 million of non-interest income attributable to Bancorp Rhode Island.

NON-INTEREST EXPENSE AND TAX PROVISION

Non-interest expense of $30.4 million in the third quarter 2012 increased $1.8 million from the second quarter 2012 and $13.4 million from the third quarter 2011. The increase from third quarter 2011 to third quarter 2012 reflects the Company's acquisition of Bancorp Rhode Island. Although compensation expense increased $0.9 million in the third quarter 2012, it remained consistent with compensation expense as reported in the first quarter 2012 despite business and infrastructure growth. This increase in compensation quarter-to-quarter was offset by a decrease of $0.6 million in professional services and a $0.3 million decline in FDIC insurance premiums quarter-to-quarter. Equipment and data processing expense for the quarter ended September 30, 2012 increased $0.4 million, largely as a result of software license termination fees. Other non-interest expense increased $1.3 million on a linked quarter basis reflecting operating expenses related to the Company's continued migration to standardized operating and financial reporting platforms.

The tax provision benefited, in part, from the inclusion of approximately $0.3 million in additional federal tax credits for the refurbishment of the Company's new headquarters.

ASSET QUALITY

Asset quality remains strong. Nonperforming loans and leases increased slightly from $21.1 million at June 30, 2012 to $21.3 million at September 30, 2012. However, due to growth in the loan and lease portfolio, the ratio of nonperforming loans to total loans and leases decreased slightly from 0.52 percent at June 30, 2012 to 0.51 percent at September 30, 2012. Nonperforming assets at September 30, 2012 totaled $23.7 million or 0.47 percent of total assets, down from $23.8 million, or 0.48 percent of total assets, at June 30, 2012.

The provision for loan and lease losses was $3.0 million for the third quarter 2012, down from $6.7 million in the second quarter 2012, and up from $0.9 million in the third quarter 2011. Net charge-offs for the third quarter 2012 were $1.5 million, or 0.15 percent of average loans and leases on an annualized basis, compared to $3.7 million, or 0.37 percent of average loans and leases, in the second quarter 2012, and $0.6 million, or 0.09 percent of average loans and leases, for the third quarter 2011.

The allowance for loan and lease losses was $38.9 million at September 30, 2012, compared to $37.4 million at June 30, 2012 and $31.1 million at September 30, 2011. The allowance for loan and lease losses as a percent of total originated and acquired loans and leases was 0.94 percent at September 30, 2012, compared to 0.93 percent at June 30, 2012 and 1.17 percent at September 30, 2011. The allowance for loan and lease losses as a percent of originated loans and leases was 1.30 percent at September 30, 2012, as compared to 1.33 percent at June 30, 2012.

DIVIDEND DECLARED

The Company's Board of Directors approved a dividend of $0.085 per share. The dividend will be paid on November 23, 2012, to shareholders of record on November 9, 2012.

CONFERENCE CALL

The Company will conduct a conference call/webcast at 1:30 pm eastern time on Thursday, October 25, 2012 to discuss the results for the quarter, business highlights and outlook. The call can be accessed by dialing 877-317-6789 (United States) or 412-317-6789 (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 playback is 10019385. The call will be available live or in a recorded version on the Company's website under "Investor Relations" at www.brooklinebank.com.

ABOUT BROOKLINE BANCORP, INC.

Brookline Bancorp, Inc., a bank holding company with approximately $5.1 billion in assets and 44 branches throughout Massachusetts and Rhode Island, is headquartered in Brookline, 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.fnbi.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 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 net earnings from operations, 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 sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.