Brookline Bancorp 2012 Annual Report

Brookline Bancorp is a growing bank in the Boston area, that wanted to communicate to its shareholders about recent mergers, improvements to its infrastructure, and new organizational efficiencies. The theme of the report is "Building On Who We Are," messaging that supported the bank's conservative, thoughtful and disciplined approach even in times of transformative change.

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Building On Who We Are.

CEO Letter

DEAR STOCKHOLDERS:

For Brookline Bancorp, 2012 was a transformative year with significant changes and accomplishments. Our strategic principles allowed us to continue to grow and maintain strong profitability, even with the changes. As a result, we are now well along in building a multi-bank holding company that can sustain growth without compromising our low risk profile.

Representative of all our efforts was the complete renovation of the former Publishers Building at 131 Clarendon Street in Boston’s historic Back Bay. This classic structure, purchased in 2011, now serves as the Company’s headquarters, bringing together teams who had been scattered in many different locations.

In 2012 we created operating enhancements and efficiencies across a number of fronts. The integration of First Ipswich Bank and Bank Rhode Island has continued smoothly. We have brought these banks’ leadership into the fold, establishing a single organization that supports the operating needs of our subsidiary banks while maintaining their local face and delivery.

We continued to prudently build out our infrastructure including technology, processes and people. The consolidation of our banks’operating systems onto a new, common platform continued on schedule. To streamline our regulatory and compliance requirements, we changed two of our banks’ charters so that all of our banks now operate under the supervision of the same primary regulator – the Federal Reserve Bank.

Our 2012 operating results are a function of both organic growth and the additive effect of Bank Rhode Island. Total assets increased 56% to $5.15 billion and net
income was up 34% to $37.1 million ($0.53 per share). Operating earnings increased 42% to $41.1 million ($0.59 per share). Total loans and leases were $4.18 billion at the end of 2012, an increase of $1.46 billion or 54%. In total, commercial loans and commercial real estate loans continued their strong growth, reaching $2.85 billion or 68% of all loans.

With this growth, we continued to maintain solid credit quality. This is reflected by our full-year rate of charge-offs of only 16 basis points. Our continued success in lending is due to bankers dedicated to the same lending standards that have guided our organization for so many years. Deposit growth, fueled by increases in both consumer and commercial accounts, showed continued strength. Total deposits were $3.62 billion, reflecting an increase of $1.36 billion or 61%.

We have continued to build on who we are through smart, responsible banking. We believe our systems integration, infrastructure build and consolidation efforts position us to better serve our customers and ultimately you, our stockholders, in 2013 and beyond.

Sincerely yours,
Paul A. Perrault
Chief Executive Officer

(Intro)

The Right Plan. The Right Way.

A well-thought-out strategic plan, like a well-designed blueprint, is a carefully plotted and coordinated program of action. For Brookline Bancorp, our strategic plan is a way forward, building on the strong foundation of who we are, where we have been, and where we want to go. The execution of our strategic plan underscores Brookline Bancorp’s story for 2012: keeping on task and building on our successes by staying with the right plan, and doing it the right way.

(Spread 1)

 

Building For Sustained Growth.

In 2012 we made long-needed improvements to our infrastructure. The most visible was our new headquarters building in Boston’s Back Bay. It now houses many of the Company’s shared services teams as well as Brookline Bank’s Retail, Commercial and Commercial Real Estate Banking units. Our information technology infrastructure has also undergone significant upgrades and enhancements to facilitate the integration of the entire organization onto one common enterprise network. 

Multiple systems had to be replaced to outfit the new corporate headquarters and to complete our core system conversions, including new servers, workstations and peripherals for all First Ipswich Bank and Brookline Bank branches. People are an essential piece of our infrastructure and we have selectively strengthened existing teams with new staff. Our growth and modernization are serving to attract new, top-leveltalent bringing fresh insights and energy to our organization.
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(Spread 2)

Creating Efficiencies Through Thoughtful Consolidation.

By consolidating systems and operational locations and by changing bank charters, we created efficiencies in 2012 resulting in standardization, better organizational control and cost savings. The conversion of three different bank operating systems onto a single platform is a step toward optimal efficiency. Consolidation is rapidly moving ahead with First Ipswich having converted in May, 2012, Brookline Bank in September, 2012, and Bank Rhode Island scheduled for May, 2013. 

Bank charter changes for First Ipswich Bank and Brookline Bank brought all three subsidiary banks under the supervision of the Federal Reserve Bank, allowing us to adhere to a common set of legal, audit and compliance requirements and expectations. Our new Brookline Bancorp building at 131 Clarendon consolidates teams from five locations under one roof. Additional consolidation was realized by combining deposit operations at the existing Bank Rhode Island operations center in Lincoln, Rhode Island. These moves are generating more synergistic working environments and enhanced teamwork.

(Spread 3)

Grounded In A Strong Foundation Of Principles.

Through the macroeconomic challenges of recent years, and with the growth and operational improvements that have taken place at Brookline Bancorp, our businesses and values remain based on the same solid foundation. Disciplined lending is a principle that has made us a strong, long-standing institution. This responsible approach to lending is still our philosophy. We lend directly where we know the borrowers and the marketplace. The result of this careful approach is a strong balance sheet, low loan losses and healthy reserves.

This strength has allowed us to stay with our customers and forge new relationships during a period when many banks have restricted lending or avoided deserving market segments. It’s about doing the right thing for our customers, not just in good times, but all the time.
 

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