Brookline Bancorp Announces Fourth Quarter Net Income of $11.9 Million, EPS of $0.17

Brookline Bancorp Announces Fourth Quarter Net Income of $11.9 Million, EPS of $0.17

Solid Organic Loan and Deposit Growth Continues

Business Fundamentals Remain Strong

BOSTON--(BUSINESS WIRE)-- Brookline Bancorp, Inc. (NAS: BRKL) (the "Company") today announced net income of $11.9 million, or $0.17 per basic and diluted share, for the fourth quarter of 2012, compared to $7.1 million, or $0.12 per basic and diluted share, for the fourth quarter of 2011, and $11.4 million, or $0.16 per basic and diluted share, for the third quarter of 2012.

For the year ended December 31, 2012, net income totaled $37.1 million, or $0.53 per basic and diluted share, compared to $27.6 million, or $0.47 per basic and diluted share, for 2011. Operating earnings were $41.1 million, or $0.59 per basic and diluted share, for the year ended December 31, 2012, compared to $28.9 million, or $0.49 per basic and diluted share, for 2011.

Paul Perrault, President and Chief Executive Officer of Brookline Bancorp, Inc., stated: "Our strong fourth quarter and 2012 results reflect the significant progress we have made in carrying out our primary business objectives. We continue to generate strong loan growth while maintaining our traditionally strong asset quality. At the same time, we are also continuing to enhance our infrastructure to support this growth."

BALANCE SHEET

Total assets at December 31, 2012 grew to $5.15 billion, an annualized increase of 6.8 percent from the prior quarter and 4.9 percent from December 31, 2011 after adjustment for the $1.69 billion of total assets acquired from Bancorp Rhode Island, Inc. on January 1, 2012.

The loan and lease portfolio grew to $4.18 billion as of December 31, 2012, up 3.1 percent annualized from the prior quarter and 11.8 percent from December 31, 2011, after adjustment for the $1.14 billion in loans and leases acquired from Bancorp Rhode Island on January 1, 2012. Strong organic loan growth continued in the commercial loan and lease and commercial real estate portfolios, which reached $2.85 billion, or 68.3 percent of total loans, at December 31, 2012. The commercial loan and lease and commercial real estate portfolios increased to $2.05 billion, an increase of 19.6 percent for the full year 2012 after adjustment for the $803.0 million in commercial loan and lease and commercial real estate portfolios acquired from Bancorp Rhode Island. The commercial loan and lease portfolio increased 14.9 percent and the commercial real estate portfolio increased 5.9 percent on an annualized basis during the fourth quarter 2012. The indirect automobile portfolio decreased $31.9 million from September 30, 2012 to December 31, 2012, as anticipated, reflecting significant paydowns on the portfolio and the continuing pricing pressures in the auto lending market.

Deposits of $3.62 billion at December 31, 2012 were up 5.4 percent annualized from September 30, 2012 and 10.2 percent from December 31, 2011 after exclusion of the $1.13 billion of deposits acquired from Bancorp Rhode Island. This growth was fueled by increases in NOW accounts and demand checking accounts which grew at an annualized rate of 64.1 percent and 22.4 percent during the quarter ended December 31, 2012, respectively. Core deposits, which increased from 70.8 percent to 72.0 percent of deposits quarter-to-quarter, increased 12.6 percent annualized in the fourth quarter 2012. Total borrowings increased 12.4 percent on an annualized basis to $854.0 million at December 31, 2012.

Cash and cash equivalents were $117.1 million as of December 31, 2012 as compared to $76.3 million as of September 30, 2012. The increase during the fourth quarter 2012 was related largely to the timing of cash items due to the Company at December 31, 2012 that cleared in January 2013. Investment securities available-for-sale of $481.3 million also increased 12.4 percent from September 30, 2012 to December 31, 2012 on an annualized basis, with total investment securities at 10.7 percent of total assets.

Stockholders' equity to total assets was 11.89 percent at December 31, 2012. The tangible stockholders' equity to tangible assets ratio remained constant at 9.08 percent at December 31, 2012 when compared with 9.08 percent at September 30, 2012 and decreased from 13.93 percent at December 31, 2011 as a result of Brookline Bancorp's acquisition of Bancorp Rhode Island.

NET INTEREST INCOME

Net interest income for the fourth quarter 2012 decreased $1.8 million to $44.6 million from $46.4 million in the third quarter of 2012. The decrease in interest income on commercial loans and leases from the third quarter 2012 was largely a result of a nonrecurring $1.4 million of yield adjustments recorded in the quarter ended September 30, 2012. The remaining decrease in interest income on loans and leases was largely driven by continued rate pressures in the economic environment and decreases in interest rates that were partially offset by strong growth across various loan and lease portfolios. Interest expense decreased $0.6 million in the fourth quarter 2012 as compared to the third quarter 2012, largely as a result of decreased FHLB borrowing costs and a decrease in the interest rates associated with core deposits. Net interest income for the year ended December 31, 2012 increased to $177.4 million from $110.2 million in the year ended December 31, 2011.

Net interest margin for the fourth quarter 2012 was 3.79 percent, down from 4.00 percent at September 30, 2012, but only slightly less than third quarter 2012 net interest margin of 3.86 after excluding the $1.4 million of periodic yield adjustments recorded in accordance with GAAP. Net interest margin was up slightly from 3.78 percent for the quarter ended December 31, 2011. Strong loan growth in the majority of the Company's loan portfolios and a slight decrease in the cost of borrowing were offset by continued rate pressures on the commercial loan and lease and other consumer loan portfolios.

NON-INTEREST INCOME

Non-interest income was $6.5 million for the fourth quarter 2012, up $2.7 million from the third quarter 2012. The increase in non-interest income as compared to the third quarter is primarily due to a $1.9 million gain on a sale of equipment leases totaling $19.6 million during the quarter undertaken to manage concentration risk.

Non-interest income was $18.6 million for the year ended December 31, 2012, up $13.5 million from the year ended December 31, 2011. The growth in 2012 was primarily driven by $13.0 million in non-interest income attributable to Bancorp Rhode Island.

NON-INTEREST EXPENSE AND TAX PROVISION

Non-interest expense of $28.9 million in the fourth quarter 2012 decreased $1.6 million from the third quarter 2012. Significant changes in non-interest expense included the following:

• Compensation and employee benefit expense increased $1.0 million, or 7.1 percent during the fourth quarter 2012, as a result of the addition of loan officers and other individuals in key support areas of the Company. The increase in compensation and employee benefit expense was offset by a $0.4 million decrease in professional services expense.

• Equipment and data processing expense decreased $0.9 million, or 21.1 percent as a result of the reduction in conversion costs incurred in conjunction with Brookline Bank's core system conversion.

• The increase in other expenses in the third quarter as compared to the fourth quarter is associated with the Company's continued migration to standardized, consolidated operating and financial reporting platforms.

The effective tax rate increased by 5.4 percentage points, from 30.6 percent at September 30, 2012 to 36.0 percent of income before taxes at December 31, 2012, as a result of federal tax credits for the refurbishment of the Company's new headquarters taken in the third quarter 2012.

ASSET QUALITY

Asset quality remains stable and strong. Nonperforming loans and leases increased slightly from $21.3 million at September 30, 2012 to $22.2 million at December 31, 2012. The ratio of nonperforming loans to total loans and leases increased from 0.51 percent at September 30, 2012 to 0.53 percent at December 31, 2012. Nonperforming assets at December 31, 2012 totaled $23.7 million or 0.46 percent of total assets, which is consistent with $23.7 million, or 0.47 percent of total assets, at September 30, 2012.

The provision for loan and lease losses was $3.1 million for the fourth quarter 2012, up slightly from $3.0 million in the third quarter 2012, and up from $0.8 million in the fourth quarter 2011. Net charge-offs for the fourth quarter 2012 were $0.8 million, or 0.08 percent of average loans and leases on an annualized basis, compared to $1.5 million, or 0.15 percent of average loans and leases, in the third quarter 2012, and $0.3 million, or 0.04 percent of average loans and leases, for the fourth quarter 2011.

The allowance for loan and lease losses was $41.2 million at December 31, 2012, compared to $38.9 million at September 30, 2012 and $31.7 million at December 31, 2011, an increase that reflects the loan growth experienced across the Company. The allowance for loan and lease losses as a percent of total loans and leases was 0.98 percent at December 31, 2012, compared to 0.94 percent at September 30, 2012 and 1.17 percent at December 31, 2011. The allowance for loan and lease losses as a percent of originated loans and leases was 1.33 percent at December 31, 2012, as compared to 1.31 percent at September 30, 2012.

DIVIDEND DECLARED

The Company's Board of Directors approved a dividend of $0.085 per share. The dividend will be paid on February 27, 2013, to shareholders of record on February 13, 2013.

CONFERENCE CALL

The Company will conduct a conference call/webcast at 1:30PM eastern time on Thursday, January 31, 2013 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 playback is 10023656. 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 $5.15 billion in assets and 46 branches 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.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, the allowance for loan and lease losses 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 sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.