<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
COMMISSION FILE NUMBER 0-23695
BROOKLINE BANCORP, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3402944
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of stock, as of the latest practicable date.
Common Stock, $0.01 par value - 27,596,186 shares outstanding as of May 3,
2000.
================================================================================
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
as of March 31, 2000 and December 31, 1999 1
Consolidated Statements of Income for the three
months ended March 31, 2000 and 1999 2
Consolidated Statements of Comprehensive Income for
the three months ended March 31, 2000 and 1999 3
Consolidated Statements of Changes in Stockholders'
Equity for the three months ended March 31, 2000 and 1999 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures about Market Risks 17
PART II OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks.............................................................. $ 7,717 $ 8,203
Short-term investments............................................................... 20,684 9,435
Securities available for sale........................................................ 120,656 128,275
Securities held to maturity (market value of $86,112
and $102,451, respectively)...................................................... 87,110 103,434
Restricted equity securities......................................................... 6,279 6,279
Loans, excluding money market loan participations 653,765 635,556
Money market loan participations..................................................... 15,300 15,400
Allowance for loan losses............................................................ (14,027) (13,874)
------- -------
Net loans...................................................................... 655,038 637,082
------- -------
Other investment..................................................................... 3,077 3,022
Accrued interest receivable.......................................................... 5,673 5,811
Bank premises and equipment, net..................................................... 2,281 1,535
Other real estate owned, net......................................................... 695 707
Deferred tax asset................................................................... 4,774 3,226
Other assets......................................................................... 467 325
------- -------
Total assets................................................................... $ 914,451 $ 907,334
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits............................................................................. $ 524,525 $ 512,136
Borrowed funds....................................................................... 106,800 108,800
Mortgagors' escrow accounts.......................................................... 4,042 3,624
Income taxes payable................................................................. 520 898
Accrued expenses and other liabilities............................................... 6,797 7,076
------- -------
Total liabilities.............................................................. 642,684 632,534
------- -------
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized,
none issued..................................................................... - -
Common stock, $.01 par value; 45,000,000 shares authorized,
29,641,500 shares issued........................................................ 296 296
Additional paid-in capital........................................................ 140,341 140,355
Retained earnings................................................................. 154,067 150,098
Accumulated other comprehensive income............................................ 5,561 7,759
Treasury stock, at cost - 1,965,314 shares and
1,491,700 shares, respectively.................................................. (20,827) (16,334)
Unearned compensation- recognition and retention plan ............................ (1,919) (2,316)
Unallocated common stock held by ESOP - 482,652 shares
and 407,218 shares, respectively................................................ (5,752) (5,058)
------- -------
Total stockholders' equity..................................................... 271,767 274,800
------- -------
Total liabilities and stockholders' equity..................................... $ 914,451 $ 907,334
======= =======
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
1
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
--------- --------
(UNAUDITED)
<S> <C> <C>
Interest income:
Loans, excluding money market loan participations.................................. $ 13,189 $ 11,516
Money market loan participations................................................... 250 505
Debt securities.................................................................... 2,859 3,287
Marketable equity securities....................................................... 259 183
Restricted equity securities....................................................... 110 79
Short-term investments............................................................. 217 238
-------- --------
Total interest income........................................................... 16,884 15,808
-------- --------
Interest expense:
Deposits........................................................................... 5,340 5,139
Borrowed funds..................................................................... 1,603 1,474
-------- --------
Total interest expense ......................................................... 6,943 6,613
-------- --------
Net interest income................................................................... 9,941 9,195
Provision for loan losses............................................................. 150 150
-------- --------
Net interest income after provision for loan losses............................. 9,791 9,045
-------- --------
Non-interest income:
Fees and charges................................................................... 160 177
Gains on sales of securities, net.................................................. 2,342 1,190
Other real estate owned income, net................................................ 18 53
Other income....................................................................... 114 33
-------- --------
Total non-interest income....................................................... 2,634 1,453
-------- --------
Non-interest expense:
Compensation and employee benefits................................................. 1,586 1,507
Recognition and retention plan . . . . . . . . . . . . . . . . . . . . ............ 397 -
Occupancy.......................................................................... 187 177
Equipment and data processing...................................................... 291 274
Advertising and marketing.......................................................... 180 112
Internet bank start-up............................................................. 567 -
Other.............................................................................. 477 326
-------- --------
Total non-interest expense...................................................... 3,685 2,396
-------- --------
Income before income taxes............................................................ 8,740 8,102
Provision for income taxes............................................................ 3,116 2,919
-------- --------
Net income...................................................................... $ 5,624 $ 5,183
======== ========
Weighted average common shares
outstanding during the period 27,154,027 28,477,913
========== ==========
Basic and diluted earnings per common share $ 0.21 $ 0.18
==== ====
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
2
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
2000 1999
----- ----
(UNAUDITED)
<S> <C> <C>
Net income............................................................................ $ 5,624 $ 5,183
--------- --------
Other comprehensive income, net of taxes:
Unrealized holding losses.......................................................... (1,092) (638)
Income tax benefit................................................................. (396) (312)
--------- --------
Net unrealized holding losses............................................... (696) (326)
--------- --------
Less reclassification adjustment for gains included in net income:
Realized gains.................................................................. (2,342) (1,190)
Income tax expense.............................................................. 840 498
--------- --------
Net reclassification adjustment............................................. (1,502) (692)
--------- --------
Total other comprehensive loss.............................................. (2,198) (1,018)
--------- --------
Comprehensive income.................................................................. $ 3,426 $ 4,165
======== ========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
3
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN RETAINED COMPREHENSIVE TREASURY
STOCK CAPITAL EARNINGS INCOME STOCK
------------ --------------- ---------------------------------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998................... $ 291 $ 134,490 $ 135,282 $ 14,416 $ (1,316)
Net income..................................... - - 5,183 - -
Unrealized loss on securities
available for sale, net of
reclassification adjustment................. - - - (1,018) -
Common stock dividend of
$0.05 per share ............................ - - (1,429) - -
Treasury stock purchases
(403,700 shares) ........................... - - - - (4,624)
Common stock held by ESOP
committed to be released
(7,849 shares).............................. - (5) - - -
---------- --------------- ------------- ------------ ------------
Balance at March 31, 1999...................... $ 291 $ 134,485 $ 139,036 $ 13,398 $ (5,940)
========== ============== ============= ============ ============
</TABLE>
<TABLE>
<CAPTION>
UNALLOCATED
UNEARNED COMMON
COMPENSATION - STOCK TOTAL
RECOGNITION AND HELD BY STOCKHOLDERS'
RETENTION PLAN ESOP EQUITY
-------------------- --------------------- ---------------------
<S> <C> <C> <C>
Balance at December 31, 1998................... $ - $ (4,941) $ 278,222
Net income..................................... - - 5,183
Unrealized loss on securities
available for sale, net of
reclassification adjustment................. - - (1,018)
Common stock dividend of
$0.05 per share ............................ - - (1,429)
Treasury stock purchases
(403,700 shares) ........................... - - (4,624)
Common stock held by ESOP
committed to be released
(7,849 shares).............................. - 101 96
---------- ------------- ---------------
Balance at March 31, 1999...................... $ - $ (4,840) $ 276,430
========== ============= ==============
</TABLE>
(Continued)
4
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN RETAINED COMPREHENSIVE TREASURY
STOCK CAPITAL EARNINGS INCOME STOCK
------------ --------------- ---------- ------------------ ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1999................... $ 296 $ 140,355 $ 150,098 $ 7,759 $ (16,334)
Net income..................................... - - 5,624 - -
Unrealized loss on securities
available for sale, net of
reclassification adjustment................. - - - (2,198) -
Common stock dividend of
$0.06 per share ............................ - - (1,655) - -
Treasury stock purchases
(473,614 shares) .......................... - - - - (4,493)
Compensation under recognition
and retention plan ......................... - - - - -
Common stock acquired by ESOP
(84,386 shares) ............................ - - - - -
Common stock held by ESOP
committed to be released
(8,952 shares).............................. - (14) - - -
------- --------------- ------------- ------------ -----------
Balance at March 31, 2000...................... $ 296 $ 140,341 $ 154,067 $ 5,561 $ (20,827)
======= ============== ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
UNEARNED UNALLOCATED
COMPENSATION- COMMON
RECOGNITION STOCK TOTAL
AND RETENTION HELD BY STOCKHOLDERS'
PLAN ESOP EQUITY
-------------------- --------- --------------
<S> <C> <C> <C>
Balance at December 31, 1999................... $ (2,316) $ (5,058) $ 274,800
Net income..................................... - - 5,624
Unrealized loss on securities
available for sale, net of
reclassification adjustment................. - - (2,198)
Common stock dividend of
$0.06 per share ............................ - - (1,655)
Treasury stock purchases
(473,614 shares) .......................... - - (4,493)
Compensation under recognition
and retention plan ......................... 397 - 397
Common stock acquired by ESOP
(84,386 shares) ............................ - (802) (802)
Common stock held by ESOP
committed to be released
(8,952 shares).............................. - 108 94
---------- ------------ --------------
Balance at March 31, 2000...................... $ (1,919) $ (5,752) $ 271,767
========== ============ ==============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
5
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
2000 1999
---------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................................... $ 5,624 $ 5,183
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses...................................................... 150 150
Release of ESOP shares......................................................... 94 96
Depreciation and amortization.................................................. 127 125
Amortization, net of accretion, of securities premiums
and discounts............................................................... 339 404
Accretion of deferred loan origination fees
and unearned discounts...................................................... (130) (153)
Net gains from sales of securities available for sale.......................... (2,342) (1,190)
Equity interest in earnings of other investment................................ (55) -
Compensation under recognition and retention plan.............................. 397 -
Deferred income taxes.......................................................... (312) (8)
(Increase) decrease in:
Accrued interest receivable................................................. 138 27
Other assets................................................................ (142) 10
Decrease in:
Income taxes payable........................................................ (378) (2,850)
Accrued expenses and other liabilities...................................... (279) (371)
------- -------
Net cash provided from operating activities.............................. 3,231 1,423
------- -------
Cash flows from investing activities:
Proceeds from sales and calls of securities available for sale....................... 2,765 1,210
Proceeds from redemptions and maturities of securities
available for sale................................................................ 16,137 10,000
Proceeds from redemptions and maturities of securities
held to maturity.................................................................. 16,041 10,697
Purchase of securities available for sale............................................ (12,431) (14,086)
Purchase of securities held to maturity.............................................. - (15,463)
Purchase of Federal Home Loan Bank of Boston stock................................... - (228)
Net increase in loans................................................................ (25,459) (27,202)
Proceeds from sales of participations in loans....................................... 7,383 -
Purchase of bank premises and equipment.............................................. (867) (130)
Capital expenditures on other real estate owned...................................... - (6)
Proceeds from sales of other real estate owned....................................... 6 7
------- -------
Net cash provided from (used for) investing activities................... 3,575 (35,201)
------- -------
</TABLE>
(Continued)
6
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2000 1999
----------- -------------
(UNAUDITED)
<S> <C> <C>
Cash flows from financing activities:
Increase (decrease) in demand deposits and NOW, savings and
money market savings accounts...................................................... $ 9,959 $ 10,370
Increase (decrease) in certificates of deposit........................................ 2,430 (1,472)
Proceeds from Federal Home Loan Bank of Boston advances............................... - 10,000
Repayment of Federal Home Loan Bank of Boston advances................................ (2,000) (2,000)
Increase in mortgagors' escrow deposits............................................... 418 380
Purchase of common stock for ESOP..................................................... (802) -
Purchase of treasury stock............................................................ (4,493) (4,624)
Payment of dividends on common stock.................................................. (1,655) (1,429)
------- ---------
Net cash provided from financing activities.................................. 3,857 11,225
------- ---------
Net increase (decrease) in cash and cash equivalents.................................... 10,663 (22,553)
Cash and cash equivalents at beginning of period........................................ 33,038 73,617
------- ---------
Cash and cash equivalents at end of period.............................................. $ 43,701 $ 51,064
======= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowed funds............................................ $ 6,948 $ 6,596
Income taxes....................................................................... 3,795 5,772
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
7
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information and the
instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation have been included.
Results for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2000.
(2) REORGANIZATION AND STOCK OFFERING (DOLLARS IN THOUSANDS)
Brookline Bancorp, Inc. (the "Company") is a Massachusetts
corporation that was organized in November 1997 at the direction of
the Board of Trustees of Brookline Savings Bank (the "Bank") for the
purpose of acquiring all of the capital stock of the Bank upon
completion of the Bank's reorganization from a mutual savings bank
into a mutual holding company structure. As part of the
reorganization, the Company offered for sale 47% of the shares of its
common stock in an offering fully subscribed for by eligible
depositors of the Bank (the "Offering"). The remaining 53% of the
Company's shares of common stock were issued to Brookline Bancorp,
MHC (the "MHC"), a state-chartered mutual holding company
incorporated in Massachusetts. The reorganization and Offering were
completed on March 24, 1998.
Completion of the Offering resulted in the issuance of 29,095,000
shares of common stock, 15,420,350 shares (53%) of which were issued
to the MHC and 13,674,650 shares (47%) of which were sold to eligible
depositors of the Bank at $10.00 per share. Net proceeds from the
Offering amounted to $134,790.
(3) EMPLOYEE STOCK OWNERSHIP PLAN (DOLLARS IN THOUSANDS)
On March 24, 1998, the Board of Directors of the Bank approved an
employee stock ownership plan (the "ESOP"). All employees meeting age
and service requirements are eligible to participate in the ESOP. The
ESOP is authorized to purchase up to 4% of the common stock sold in
the Offering, or 546,986 shares, in the open market and to borrow up
to $7,500 from the Company to finance the purchase of such shares.
The loan is payable in quarterly installments over 30 years and bears
interest at 8.50% per annum. The loan can be prepaid without penalty.
Loan payments are principally funded by cash contributions from the
Bank and dividends on unallocated shares of Company stock held by the
ESOP, subject to IRS limitations.
Through March 31, 2000, the ESOP purchased 546,986 shares of common
stock in the open market at an aggregate cost of $6,598. For the
three months ended March 31, 2000 and 1999, $85 and $92,
respectively, were charged to compensation and employee benefits
expense based on the commitment to release 8,952 and 7,849 shares,
respectively, to eligible employees.
8
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
(4) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income by the
weighted average number of shares outstanding during the periods
presented. Diluted earnings per share gives effect to all dilutive
potential shares resulting from options that were outstanding during
the periods presented.
The components of basic and diluted earnings per share for the three
months ended March 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
WEIGHTED NET INCOME
NET INCOME AVERAGE SHARES PER SHARE
-------------------------- ------------------------------ ----------------
2000 1999 2000 1999 2000 1999
---------- -------- ------------- ----------- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS
ENDED MARCH 31,
Basic $ 5,624 $ 5,183 27,154,027 28,477,913 $ 0.21 $ 0.18
Effect of dilutive
stock options - - - - - -
----- ----- ---------- ---------- ---- ----
Dilutive $ 5,624 $ 5,183 27,154,027 28,477,913 $ 0.21 $ 0.18
===== ===== ========== ========== ==== ====
</TABLE>
(5) ACCUMULATED OTHER COMPREHENSIVE INCOME (DOLLARS IN THOUSANDS)
Accumulated other comprehensive income is comprised entirely of
unrealized gains on securities available for sale, net of income
taxes. At March 31, 2000 and December 31, 1999, such taxes amounted
to $3,238 and $4,474, respectively.
(6) COMMITMENTS AND SWAP AGREEMENT (DOLLARS IN THOUSANDS)
At March 31, 2000, the Company had outstanding commitments to
originate loans of $70,643, $60,545 of which were commercial real
estate and multi-family mortgage loans. Unused lines of credit
available to customers were $10,859, $9,524 of which were equity
lines of credit.
Effective April 14, 1998, the Bank entered into an interest-rate swap
agreement with a third-party that matures April 14, 2005. The
notional amount of the agreement is $5,000. Under this agreement,
each quarter the Bank pays interest on the notional amount at an
annual fixed rate of 5.9375% and receives from the third-party
interest on the notional amount at the floating three month U.S.
dollar LIBOR rate. The Bank entered into this transaction to match
more closely the repricing of its assets and liabilities and to
reduce its exposure to increases in interest rates. The net interest
income received was $2 and $4 for the three months ended March 31,
2000 and 1999, respectively.
(7) DIVIDEND DECLARATION
On April 20, 2000, the Board of Directors of the Company approved and
declared a regular quarterly cash dividend of $.06 per share of
common stock to shareholders of record as of May 1, 2000 and payable
on May 16, 2000.
9
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
(8) 1999 STOCK OPTION PLAN AND 1999 RECOGNITION AND RETENTION PLAN
--------------------------------------------------------------
At the annual meeting of stockholders on April 15, 1999, the
stockholders approved the Company's 1999 Stock Option Plan (the
"Stock Option Plan") and the 1999 Recognition and Retention Plan (the
"RRP").
Under the Stock Option Plan, 1,367,465 shares of the Company's
common stock were reserved for issuance to officers, employees and
non-employee directors of the Company. Shares issued upon the
exercise of a stock option may be either authorized but unissued
shares or reacquired shares held by the Company as treasury shares.
Any shares subject to an award which expires or is terminated
unexercised will again be available for issuance under the Stock
Option Plan. On April 19, 1999, 1,265,500 options were awarded to
officers and non-employee directors of the Company at an exercise
price of $10.8125 per share, the fair market value of the common
stock of the Company on that date. Of the total options awarded,
410,460 options are incentive stock options and 855,040 options are
non-qualified stock options. Options awarded vest over periods
ranging from less than six months through five years. As of March 31,
2000, 500,000 options have vested, 19,000 options were forfeited and
none were exercised. If an individual to whom a stock option was
granted ceases to maintain continuous service by reason of normal
retirement, death or disability, or following a change in control,
all options and rights granted and not fully exercisable become
exercisable in the full upon the happening of such event and shall
remain exercisable for a one year period. The Company is accounting
for the Stock Option Plan by using the intrinsic value based method
of accounting prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees."
Under the RRP, 546,986 shares of the Company's common stock were
reserved for issuance as restricted stock awards to officers,
employees and non-employee directors in recognition of prior service
and as an incentive for such individuals to remain with the Company.
Shares issued upon vesting may be either authorized but unissued
shares or reacquired shares held by the Company as treasury shares.
Any shares not issued because vesting requirements are not met will
again be available for issuance under the RRP. On April 19, 1999,
546,500 shares were awarded to officers and non-employee directors of
the Company. The shares vest over varying time periods ranging from
six months up to eight years. In the event a recipient ceases to
maintain continuous service with the Company by reason of normal
retirement, death or disability, or following a change in control,
RRP shares still subject to restrictions will vest and be free of
such restrictions. In 1999, 227,125 shares vested and 201,447 are
scheduled to vest in 2000; 3,500 shares were forfeited in 2000.
Expense is recognized for shares awarded over the vesting period at
the fair market value of the shares on the date they were awarded, or
$10.8125 per share.
10
<PAGE>
BROOKLINE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
Assuming all shares vest according to the terms of the awards, the Company's
pre-tax operating expenses have been or will be charged by the following amounts
in the periods indicated (in thousands):
YEAR 1999
Second quarter (actual expense) $ 1,274
Third quarter (actual expense) 1,637
Fourth quarter (actual expense) 682
------
3,593
YEAR 2000
First quarter (actual expense) 397
Second quarter 370
Third quarter 365
Fourth quarter 114
------
1,246
------
Year 2001 167
Year 2002 167
Year 2003 167
Year 2004 161
Year 2005 158
Year 2006 158
Year 2007 48
-------
$ 5,865
=======
(9) ESTABLISHMENT OF A NEW INTERNET BANK SUBSIDIARY
On April 12, 2000, the Company received regulatory approval for
Lighthouse Bank to commence operations. The Company intends to
provide Lighthouse Bank with $25 million in capital. Lighthouse Bank
expects to commence offering products and services to the public in
the second quarter of 2000. During the three months ended March 31,
2000, the Company incurred expenses of $567 in connection with the
formation of Lighthouse Bank. The expenses were comprised primarily
of compensation, occupancy, equipment depreciation, marketing and
legal fees.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Brookline Bancorp, Inc. (the "Company") was organized in November 1997 for
the purpose of acquiring all of the capital stock of Brookline Savings Bank (the
"Bank") upon completion of the Bank's reorganization from a mutual savings bank
into a mutual holding company structure. As part of the reorganization, the
Company offered for sale 47% of the shares of its common stock in an offering
fully subscribed for by eligible depositors of the Bank (the "Offering"). The
remaining 53% of the Company's shares of common stock were issued to Brookline
Bancorp, MHC, a state-chartered mutual holding company incorporated in
Massachusetts. The reorganization and Offering were completed on March 24, 1998.
This quarterly report on Form 10-Q contains forward-looking statements. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes", "anticipates", "plans", "expects" and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the Company's actual results
to differ materially from those contemplated by such forward-looking statements.
These important factors include, without limitation, the Bank's continued
ability to originate quality loans, fluctuation of interest rates, real estate
market conditions in the Bank's lending areas, general and local economic
conditions, the Bank's continued ability to attract and retain deposits, the
Company's ability to control costs, new accounting pronouncements and changing
regulatory requirements.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND DECEMBER 31, 1999
Total assets increased by $7.1 million, or 0.8%, from $907.3 million at
December 31, 1999 to $914.4 million at March 31, 2000. Excluding money market
loan participations, the loan portfolio increased by $18.2 million, or 2.9%,
from $635.6 million at December 31, 1999 to $653.8 million at March 31, 2000.
Growth took place primarily in the commercial real estate mortgage loan sector
of the portfolio ($9.4 million, or 4.3%), the multi-family mortgage loan sector
($3.2 million, or 1.1%) and the one-to-four family residential mortgage loan
sector (2.5 million, or 3.4%). Money market loan participations amounted to
$15.3 million at March 31, 2000 compared to $15.4 million at December 31, 1999.
Generally, the participations represent purchases of a portion of loans to
national companies and organizations originated and serviced by money center
banks that mature between one day and three months. The Company views such
participations as an alternative investment to slightly lower yielding
short-term investments.
Short-term investments, securities available for sale and securities held to
maturity declined from $241.1 million at December 31, 1999 to $228.4 million at
March 31, 2000. Proceeds resulting from the decline were used to fund part of
the loan growth and the repurchase of Company stock.
Total deposits were $524.5 million at March 31, 2000 compared to $512.1
million at December 31, 1999, an increase of $12.4 million, or 2.4%. Most of
the growth was attributable to an $8.8 million, or 4.4%, increase in money
market savings accounts. Certificate of deposit accounts increased by $2.4
million, or 1.0%. Since June 1999, the Federal Reserve Board has raised the
federal funds rate by 25 basis points on five separate occasions. Such
increases, as well as the possibility of further increases taking place in
2000, seem to have prompted depositors to place their funds in accounts with
shorter maturities or immediate availability. Depending on the frequency and
extent of future rate increases, depositors might place more of their funds
in longer-term and higher interest-bearing certificates of deposit. Such a
development could have a negative effect on the Company's profitability.
Total stockholders' equity declined from $274.8 million at December 31, 1999
to $271.8 million at March 31, 2000. For the three months ended March 31, 2000,
net income was $5.6 million and cash dividends paid to stockholders were $1.7
million, or $0.06 per share. In addition, the Company purchased 558,000 shares
of the
12
<PAGE>
Company's stock at an aggregate cost of $5.3 million, or $9.49 per share. As a
result of such purchases, the Company completed its first stock repurchase
program (1,454,750 shares), its purchase of shares for the ESOP (546,986 shares)
and commenced purchasing shares as part of a new repurchase plan approved by the
Company's regulators on March 10, 2000. Under the new plan, 610,995 shares can
be purchased, 123,000 of which were purchased through the end of the quarter. As
of March 31, 2000, 2,512,300 shares have been purchased since becoming a public
company at a total cost of $27.4 million, or $10.92 per share.
Unrealized gains on securities available for sale are reported as
accumulated other comprehensive income. Such gains amounted to $8.8 million
($5.6 million on an after-tax basis) at March 31, 2000 and $12.2 million ($7.8
million on an after-tax basis) at December 31, 1999. The net decrease is after
realization of $2.3 million ($1.5 million on an after-tax basis) of gains from
sales and calls of marketable equity securities during the first quarter of
2000.
NON-PERFORMING ASSETS, RESTRUCTURED LOANS AND ALLOWANCE FOR LOAN LOSSES
The following table sets forth information regarding non-performing assets,
restructured loans and the allowance for loan losses:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Non-accrual loans $ - $ -
Other real estate owned, net of allowance
for losses of $86 and $86, respectively 695 707
------- -------
Total non-performing assets $ 695 $ 707
======= =======
Restructured loans $ - $ -
---------- ----------
Allowance for loan losses $ 14,027 $ 13,874
====== ======
Allowance for loan losses as a percent
of total loans 2.10% 2.13%
Allowance for loan losses as a percent
of total loans, excluding money market
participation loans 2.15 2.18
Non-accrual loans as a percent of total loans - -
Non-performing assets as a percent of
total assets 0.08 0.08
</TABLE>
In addition to identifying non-performing loans, the Company identifies loans
that are characterized as "impaired" pursuant to generally accepted accounting
principles. The definition of "impaired loans" is not the same as the definition
of "non-accrual loans," although the two categories tend to overlap. Impaired
loans amounted to $109,000 at March 31, 2000 and December 31, 1999. None of the
impaired loans at those dates required a specific allowance for impairment due
primarily to prior charge-offs and the sufficiency of collateral values.
During the three months ended March 31, 2000, recoveries of loans previously
charged off amounted to $3,000 and there were no loan charge-offs. Despite net
loan recoveries and no non-performing loans at March 31, 2000, the Company
increased its allowance for loan losses by providing $150,000 as a charge to
earnings in the first quarter of 2000. Management deemed it prudent to increase
the allowance in light of the $18.2 million quarterly increase in net loans
outstanding (exclusive of money market loan participations), most of which
occurred in the higher risk categories of multi-family and commercial real
estate mortgage loans.
13
<PAGE>
While management believes that, based on information currently available, the
allowance for loan losses is sufficient to cover losses inherent in the
Company's loan portfolio at this time, no assurance can be given that the level
of allowance will be sufficient to cover future loan losses or that future
adjustments to the allowance will not be necessary if economic and/or other
conditions differ substantially from the economic and other conditions
considered by management in evaluating the adequacy of the current level of the
allowance.
In March 1999, four federal banking agencies and the Securities and Exchange
Commission announced they had formed a working group to come up with new
guidelines for the documentation, disclosure and reporting of bank loan loss
reserves because of "continued uncertainty among financial institutions as to
the expectations of the banking and securities regulators" on how banks should
calculate and report loan loss reserves. During 2000, it is expected that the
working group will issue guidance regarding (1) the procedures necessary for a
reasoned assessment of losses inherent in a loan portfolio, (2) documentation
that should exist to support the allowance and (3) enhanced disclosure of credit
loss allowances, including changes in risk factors and asset quality that affect
allowances for credit losses. It is not possible at this time to anticipate what
effect, if any, guidelines developed by the working group will have on the
financial condition or operating results of the Company.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND 1999
GENERAL
Operating results are primarily dependent on the Company's net interest
income, which is the difference between the interest earned on the Company's
loan and investment portfolios and the interest paid on deposits and borrowings.
Operating results are also affected by provisions for loan losses, the level of
income from non-interest sources such as service fees and sales of investment
securities and other assets, operating expenses and income taxes. Operating
results are also significantly affected by general economic conditions,
particularly changes in interest rates, as well as government policies and
actions of regulatory authorities.
Net income for the three months ended March 31, 2000 was $5.6 million ($0.21
per share) compared to $5.2 million ($0.18 per share) for the three months ended
March 31, 1999, an increase of $441,000, or 8.5%. Basic and diluted earnings per
share are the same in both the 2000 and 1999 quarterly periods. The 2000 period
included $2.3 million of gains from sales of marketable equity securities ($1.5
million on an after-tax basis, or $0.06 per share) compared to $1.2 million
($692,000 on an after-tax basis, or $0.02 per share) in the 1999 period.
Included in the after-tax gains for the 2000 quarter was $525,000 ($0.02 per
share) representing the Company's share of proceeds from the merger of an
electric utility company in which it had invested. The merger transaction was
announced in 1998 and was not completed until the end of March 2000.
The 2000 quarter also included $397,000 ($231,000 on an after-tax basis, or
$0.01 per share) of expenses related to the recognition and retention plan
approved by stockholders in the second quarter of 1999 and $567,000 ($369,000 on
an after-tax basis, or $0.01 per share) of expense related to the formation of
Lighthouse Bank, the first chartered internet-only bank in New England.
Excluding these expenses and the securities gains, net operating income was $4.7
million ($0.17 per share) for the 2000 first quarter compared to $4.5 million
($0.16 per share) for the 1999 first quarter, an increase of $231,000, or 5.1%.
The improved operating results were derived primarily from an increase in
interest rate spread and a higher volume of interest-earning assets.
Interest rate spread (the difference between yields earned on assets and
rates paid on deposits and borrowings) increased from 2.58% in the first quarter
of 1999 to 2.97% in the first quarter of 2000. The higher interest rate spread
resulted from an increase in the percent of average loans outstanding to total
average assets from 64% in the 1999 quarter to 71% in the 2000 quarter and
improved yields on the investment portfolio.
14
<PAGE>
INTEREST INCOME
Interest income on loans, excluding money market loan participations, was
$13.2 million in the first quarter of 2000 compared to $11.5 million in the
first quarter of 1999, an increase of $1.7 million, or 14.5%. The additional
income resulted from an increase in average loans outstanding of $81.3 million,
or 14.5%, in the first quarter of 2000 compared to the first quarter in 1999.
The average rate earned on loans declined slightly from 8.21% in the 1999
quarter to 8.18% in the 2000 quarter.
The average balance invested in money market loan participations during the
three months ended March 31, 2000 and 1999 were $16.9 million and $39.9 million,
respectively, and the yields earned on those balances were 5.92% and 5.14%,
respectively. As the loan portfolio has grown since the Company's conversion to
stock in March 1998, part of the growth has been funded by reducing the level of
balances maintained in lower yielding money market loan participations and
investment securities.
Interest income on debt securities declined 13.0% from $3.3 million in the
first quarter of 1999 to $2.9 million in the first quarter of 2000 as a result
of a $32.0 million, or 14.1%, reduction in the average balances invested in debt
securities from $226.7 million in the 1999 quarter to $194.7 million in the 2000
quarter. Yields earned on those balances were 5.87% in the 2000 quarter and
5.80% in the 1999 quarter.
INTEREST EXPENSE
Interest expense on deposits was $5.3 million for the three months ended
March 31, 2000, a 3.9% increase from the $5.1 million expended for the three
months ended March 31, 1999. All of the increase was due to a 4.9% growth in
the average balance of deposits from $493.8 million in the 1999 quarter to
$518.0 million in the 2000 quarter. The average rates paid on
interest-bearing deposits were 4.24% in the 2000 quarter and 4.32% in the
1999 quarter. As previously mentioned, the Federal Reserve Board has raised
the federal funds rate by 25 basis points on five separate occasions since
June 1999. It took such action so as to reduce the possibility of inflation
adversely affecting the economy. Further rate increases could take place in
2000 if the Federal Reserve believes that inflationary trends are
accelerating. Continuation of increases in the federal funds rates inevitably
will cause interest rates paid on deposits and borrowed funds to rise. Such a
development could have a negative effect on the Company's profitability.
The Company increased its use of borrowings from the FHLB as part of its
management of interest rate risk. The average balances of advances outstanding
were $107.5 million in the first quarter of 2000 compared to $97.7 million in
the first quarter of 1999 and the average rates paid on such balances were 5.98%
and 6.12%, respectively.
NON-INTEREST INCOME
Sales and calls of marketable equity securities during the three months ended
March 31, 2000 and 1999 resulted in gains of $2.3 million and $1.2 million,
respectively. Included in the 2000 quarter was a gain of $819,000 representing
the Company's share of proceeds from the merger of an electric utility company
in which it had invested. The merger transaction was announced in 1998 and was
not completed until the end of March 2000. Marketable equity securities are held
by the Company primarily for capital appreciation and not for trading purposes.
The decline in other real estate owned income from $53,000 in the 1999
quarter to $18,000 in the 2000 quarter resulted from the sale of an income
producing property in the third quarter of 1999.The increase in other
non-interest income is due primarily to $55,000 of income representing the
Company's 30.5% equity interest in the earnings of Eastern Funding LLC, a
company specializing in the financing of coin operated laundry and dry cleaning
equipment in the greater metropolitan New York area and selected other locations
in the Northeast.
15
<PAGE>
NON-INTEREST EXPENSE
The 2000 quarter included $397,000 of expenses related to the recognition and
retention plan approved by the stockholders on April 15, 1999 (See note 8 to the
unaudited consolidated financial statements on page 10 herein). The 2000 quarter
also included $567,000 of expense related to the establishing of a new internet
bank subsidiary to be called Lighthouse Bank. The expenses were comprised
primarily of compensation, occupancy, equipment depreciation, marketing and
legal fees.
Excluding the expenses mentioned in the preceding paragraph, total
non-interest expense increased $325,000, or 13.6%, from $2.4 million for the
three months ended March 31, 1999 to $2.7 million for the three months ended
March 31, 2000. Most of the increase resulted from higher compensation and
employee benefits expense ($79,000), higher marketing expenses ($68,000), higher
data processing expenses ($31,000) and higher professional fees ($145,000)
relating to special corporate initiatives and a review of security controls
pertaining to the electronic banking capabilities of Brookline Savings Bank.
INCOME TAXES
The effective rate of income taxes was 35.7% in the first quarter of 2000
compared to 36.0% in the first quarter of 1999. The rate of state income taxes
was low in both quarters because of the existence of a real estate investment
trust subsidiary and utilization of investment security subsidiaries.
PROJECTED IMPACT OF NEW INTERNET BANK SUBSIDIARY (LIGHTHOUSE BANK)
On July 15, 1999, the Company announced its intention to establish a new
internet bank subsidiary to be called Lighthouse Bank. In April 2000, the
Company received regulatory approval allowing Lighthouse Bank to commence
operations in the second quarter of 2000.
The new bank will likely incur losses in its first two years. After-tax
operating losses of Lighthouse Bank, including foregone income on the Company's
contemplated $25 million capital investment in Lighthouse Bank, could be in the
range of $2.7 million to $3.0 million for the remainder of 2000 and $2.0 million
to $2.3 million in 2001. These estimates of future operating results constitute
forward-looking statements (within the meaning of the Private Securities
Litigation Reform Act of 1995) and are subject to risks and uncertainties that
could cause actual results to differ materially. Factors that might cause such a
difference include, but are not limited to, general economic conditions, changes
in interest rates, regulatory considerations, competition, technological
developments, recruitment of qualified personnel and market acceptance of
Lighthouse Bank's pricing, products and services.
ASSET/LIABILITY MANAGEMENT
The Bank's Asset/Liability Committee is responsible for managing interest
rate risk and reviewing with the Board of Directors on a quarterly basis its
activities and strategies, the effect of those strategies on the Bank's
operating results, the Bank's interest rate risk position and the effect changes
in interest rates would have on the Bank's net interest income.
Generally, it is the Bank's policy to reasonably match the rate sensitivity
of its assets and liabilities. The interest rate sensitivity gap is defined as
the difference between the amount of interest-earning assets maturing or
repricing within a specific time period and the amount of interest-bearing
liabilities maturing or repricing within the same time period. Also taken into
consideration are interest rate swap agreements entered into by the Bank. At
March 31, 2000, interest-earning assets maturing or repricing within one year
amounted to $363.6 million and interest-bearing liabilities maturing or
repricing within one year amounted to $450.5 million resulting in a cumulative
one-year negative gap position of $86.9 million, or 9.5% of total assets.
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits, principal and interest
payments on loans and debt securities and borrowings from the FHLB. While
maturities and scheduled amortization of loans and investments are predictable
sources of funds, deposit flows and mortgage loan prepayments are greatly
influenced by interest rate trends, economic conditions and competition.
During the past few years, the combination of generally low interest rates
on deposit products and the attraction of alternative investments such as mutual
funds and annuities has resulted in little growth or a net decline in deposits
in certain time periods. Based on its monitoring of historic deposit trends and
its current pricing strategy for deposits, management believes the Company will
retain a large portion of its existing deposit base.
From time to time, the Company utilizes advances from the FHLB primarily in
connection with its management of the interest rate sensitivity of its assets
and liabilities. During the three months ended March 31, 2000, the Company
repaid advances of $2.0 million and obtained no new advances. Total advances
outstanding at March 31, 2000 amounted to $106.8 million.
The Company's most liquid assets are cash and due from banks, short-term
investments, debt securities and money market loan participations that generally
mature within 90 days. At March 31, 2000, such assets amounted to $75.7 million,
or 8.3% of total assets.
At March 31, 2000, the Company and the Bank exceeded all regulatory capital
requirements. The Bank's leverage capital was $202.5 million, or 24.0% of
adjusted assets. The minimum required leverage capital ratio is 3.00% to 5.00%
depending on a bank's supervisory rating.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
For a discussion of the Company's management of market risk exposure, see
"Asset/Liability Management" in Item 2 of Part 1 of this report and pages 12
through 14 of the Company's Annual Report incorporated by reference in Part II
item 7A of Form 10-K for the fiscal year ended December 31, 1999.
For quantitative information about market risk, see pages 12 through 14 of
the Company's 1999 Annual Report.
There have been no material changes in the quantitative disclosures about
market risk as of March 31, 2000 from those presented in the Company's 1999
Annual Report.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are not involved in any litigation, nor is
the Company aware of any pending litigation, other than legal proceedings
incident to the business of the Company. Management believes the results of any
current pending litigation would be immaterial to the consolidated financial
condition or results of operations of the Company.
17
<PAGE>
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27. Financial Data Schedule
All other required exhibits are included in Part I under Financial
Statements (Unaudited) and Management's Discussion and Analysis of
Operations, and are incorporated by reference, herein.
There were no reports filed on Form 8-K.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
BROOKLINE BANCORP, INC.
DATE: MAY 3, 2000 BY: /S/ RICHARD P. CHAPMAN, JR.
------------------------------------
RICHARD P. CHAPMAN, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DATE: MAY 3, 2000 BY: /S/ PAUL R. BECHET
-------------------------------------------------
PAUL R. BECHET
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,717
<INT-BEARING-DEPOSITS> 909
<FED-FUNDS-SOLD> 35,075
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 126,935
<INVESTMENTS-CARRYING> 87,110
<INVESTMENTS-MARKET> 86,112
<LOANS> 669,065
<ALLOWANCE> 14,027
<TOTAL-ASSETS> 914,451
<DEPOSITS> 524,525
<SHORT-TERM> 106,800
<LIABILITIES-OTHER> 11,359
<LONG-TERM> 0
0
0
<COMMON> 296
<OTHER-SE> 271,471
<TOTAL-LIABILITIES-AND-EQUITY> 914,451
<INTEREST-LOAN> 13,439
<INTEREST-INVEST> 3,228
<INTEREST-OTHER> 217
<INTEREST-TOTAL> 16,884
<INTEREST-DEPOSIT> 5,340
<INTEREST-EXPENSE> 6,943
<INTEREST-INCOME-NET> 9,941
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 2,342
<EXPENSE-OTHER> 3,685
<INCOME-PRETAX> 8,740
<INCOME-PRE-EXTRAORDINARY> 5,624
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,624
<EPS-BASIC> 0.21
<EPS-DILUTED> 0.21
<YIELD-ACTUAL> 4.43
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 108
<ALLOWANCE-OPEN> 13,874
<CHARGE-OFFS> 0
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 14,027
<ALLOWANCE-DOMESTIC> 10,963
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,064
</TABLE>
