Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of the Company.

The following discussion contains forward-looking statements based on management's current expectations regarding economic, legislative and regulatory issues that may impact the Company's earnings and financial condition in the future. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Any statements included herein preceded by, followed by or which include the words "may", "could", "should", "will", "would", "believe", "expect", "anticipate", "estimate", "intend", "plan", "assume" or similar expressions constitute forward-looking statements.

Forward-looking statements, implicitly and explicitly, include assumptions underlying the statements. While the Company believes the expectations reflected in its forward-looking statements are reasonable, the statements involve risks and uncertainties that are subject to change based on various factors, some of which are outside the control of the Company. The following factors, among others, could cause the Company's actual performance to differ materially from the expectations, forecasts and projections expressed in the forward-looking statements: general and local economic conditions, changes in interest rates, demand for loans, real estate values, deposit flows, regulatory considerations, competition, technological developments, retention and recruitment of qualified personnel, and market acceptance of the Company's pricing, products and services.

Executive Level Overview

The following is a summary of operating and financial condition highlights as of
and for the three months ended March 31, 2009 and 2008.

                                         Operating Highlights
                                                                          Three months ended
                                                                               March 31,
                                                                       2009                 2008
                                                                    (In thousands except per share
                                                                               amounts)

Net interest income                                                  $    19,106          $   17,160
Provision for credit losses                                                2,801               2,114
Net impairment loss on securities                                           (726 )            (1,249 )
Non-interest income                                                        1,018                 994
Non-interest expense                                                      10,720              10,303
Income before income taxes                                                 5,877               4,488
Provision for income taxes                                                 2,394               1,748
Net income attributable to noncontrolling interest in subsidiary              39                  46
Net income attributable to Brookline Bancorp, Inc.                         3,444               2,694



Basic earnings per common share     $ 0.06     $ 0.05
Diluted earnings per common share     0.06       0.05

Interest rate spread                  2.38 %     2.02 %
Net interest margin                   3.00 %     2.96 %

                                    Financial Condition Highlights

                                                             At                At               At
                                                          March 31,       December 31,       March 31,
                                                            2009              2008             2008
                                                                         (In thousands)

Total assets                                             $ 2,623,913     $    2,613,005     $ 2,454,340
Net loans                                                  2,095,308          2,077,255       1,906,382
Retail
deposits                                                   1,436,352          1,327,844       1,311,245
Brokered
deposits                                                      26,381             26,381          67,904
Borrowed funds                                               648,775            737,418         540,134
Brookline Bancorp, Inc. stockholders'
equity                                                       484,309            493,869         507,966
Stockholders' equity to total
assets                                                         18.46 %            18.90 %         20.70 %

Allowance for loan
losses                                                   $    28,943     $       28,296     $    24,941
Non-performing
assets                                                         9,107              8,195           4,743

Among the factors that influenced the operating and financial condition highlights summarized above were the following:

? The interest rate environment. In both the 2009 and 2008 first quarters, interest rate spread and net interest margin were greatly influenced by the rate setting actions of the Federal Open Market Committee (the "FOMC") of the Federal Reserve System. The FOMC lowered the rate for overnight federal funds borrowings between banks three times from 4.25% to 2.25% in the 2008 first quarter and three times from 2.00% to a target range of between zero and 0.25% in the 2008 fourth quarter. The last rate reduction, which occurred on December 16, 2008, was the first time in over fifty years that the rate was lower than 1.00%. The rate reductions had a negative effect in the 2009 and 2008 first quarters on the yield of the Company's assets adjustable to market rates and those assets that replaced maturing or refinanced assets. The impact on rates paid for certificates of deposit and borrowed funds was less rapid as many of those liabilities matured later on. Interest rate spread and net interest margin are expected to improve in the coming quarters as those liabilities are rolled over at lower rates of interest. The extent of improvement will depend on how interest rates for loans, investments, deposits and borrowed funds are aligned in the market place.

? Higher provision for credit losses. The provision for credit losses was $687,000 higher in the 2009 first quarter than in the 2008 first quarter due primarily to rising charge-offs in the indirect automobile ("auto") loan portfolio.

? Impairment losses on securities. Impairment losses on securities recognized in the 2009 and 2008 first quarters were $726,000 ($472,000 after taxes) and $1,249,000 ($801,000 after taxes), respectively. The losses resulted primarily from write-downs in the carrying value of perpetual preferred stocks.

? Lack of dividend income on Federal Home Loan Bank of Boston ("FHLB") stock. As a member of the FHLB, the Company is obliged to own stock in the FHLB based on its level of borrowings from the FHLB. At March 31, 2009, the Company owned $36.0 million of FHLB stock. Due to reported losses resulting primarily from impairment in its portfolio of private-label mortgage-backed securities, the FHLB ceased the payment of dividends on its stock. The Company had no dividend income on its FHLB stock in the 2009 first quarter compared to $405,000 of dividend income in the 2008 first quarter. Based on announcements by the FHLB, no dividend income is expected to be received for the remainder of 2009.

? Asset quality and stockholders' equity remained strong. While non-performing assets have risen over the past several quarters, total non-performing assets ($9,107,000) remained modest equaling 0.35% of total assets at March 31, 2009 compared to 0.31% ($8,195,000) of total assets at December 31, 2008. The allowance for loan losses of $28,943,000, expressed as a percent of total loans, increased to 1.36% at March 31, 2009 from $28,296,000 (1.34%) at December 31, 2008. Stockholders' equity was $484.3 million at March 31, 2009, resulting in an equity to assets ratio of 18.46% at that date.

Average Balances, Net Interest Income, Interest Rate Spread and Net Interest
Margin

The following table sets forth information about the Company's average balances,
interest income and rates earned on average interest-earning assets, interest
expense and rates paid on interest-bearing liabilities, interest rate spread and
net interest margin for the three months ended March 31, 2009 and 2008. Average
balances are derived from daily average balances and yields include fees and
costs which are considered adjustments to yields.

                                               Three months ended March 31,
                                       2009                                   2008
                                                   Average                                 Average
                         Average                   yield/       Average                    yield/
                         balance     Interest (1)   cost        balance    Interest (1)     cost
                                                  (Dollars in thousands)
Assets
Interest-earning
assets:
Short-term
investments            $   100,736            202      0.81 % $   111,233    $      1,007      3.64 %
Debt securities (2)        287,279          3,086      4.30       287,839           3,502      4.87
Equity securities
(2)                         37,295             33      0.35        32,236             500      6.23
Mortgage loans (3)       1,240,550         17,182      5.54     1,046,967          16,095      6.15
Commercial loans
-Eastern Funding (3)       149,300          3,412      9.14       142,289           3,506      9.86
Other commercial
loans (3)                  116,472          1,302      4.51       105,500           1,601      6.07
Indirect automobile
loans (3)                  604,891          9,600      6.44       605,396           9,682      6.43
Other consumer loans
(3)                          3,762             56      5.95         3,669              70      7.63
Total
interest-earning
assets                   2,540,285         34,873      5.52 %   2,335,129          35,963      6.18 %
Allowance for loan
losses                     (28,286 )                              (24,294 )
Non-interest earning
assets                     108,094                                 99,547
Total assets           $ 2,620,093                            $ 2,410,382

Liabilities and
Equity
Interest-bearing
liabilities:
Deposits:
NOW accounts           $    83,834             40      0.19 % $    81,353              46      0.23 %
Savings accounts            86,011            268      1.26        87,244             328      1.51
Money market savings
accounts                   315,180          1,616      2.08       220,661           1,553      2.83
Retail certificates
of deposit                 825,774          6,656      3.27       815,509           9,585      4.73
Total retail
deposits                 1,310,799          8,580      2.65     1,204,767          11,512      3.84
Brokered
certificates of
deposit                     26,381            349      5.37        67,904             911      5.40
Total deposits           1,337,180          8,929      2.71     1,272,671          12,423      3.93
Borrowed funds             698,489          6,819      3.91       531,967           6,203      4.61
Subordinated debt                -              -         -         3,465              65      7.42
Total interest
bearing liabilities      2,035,669         15,748      3.14 %   1,808,103          18,691      4.16 %
Non-interest-bearing
demand checking
accounts                    67,301                                 62,532
Other liabilities           26,171                                 24,417
Total liabilities        2,129,141                              1,895,052
Brookline Bancorp,
Inc. stockholders'
equity                     489,129                                513,612
Noncontrolling
interest in
subsidiary                   1,823                                  1,718
Total liabilities
and equity             $ 2,620,093                            $ 2,410,382
Net interest income
(tax equivalent
basis)/interest rate
spread (4)                                 19,125      2.38 %                      17,272      2.02 %
Less adjustment of
tax exempt income                              19                                     112
Net interest income                        19,106                            $     17,160
Net interest margin
(5)                                                    3.00 %                                  2.96 %

Highlights from the table on the preceding page follow.

? Net interest income was 11.3% higher in the 2009 first quarter than in the 2008 first quarter due to improvement in interest rate spread and $205 million (8.8%) of growth in the average balance of interest-earnings assets, most of which was in the loan portfolio.

? Interest rate spread increased to 2.38% in the 2009 first quarter from 2.02% in the 2008 first quarter, but declined from 2.57% in the 2008 fourth quarter. The fluctuations resulted primarily from the movements in the federal funds overnight borrowing rates initiated by the FOMC and elimination of dividend income on FHLB stock owned by the Company mentioned earlier herein.

? Net interest margin improved to 3.00% in the 2009 first quarter from 2.96% in the 2008 first quarter, but declined from 3.22% in the 2008 fourth quarter. The fluctuations resulted primarily from the matters mentioned above and foregone interest income of approximately $192,000 in the 2009 first quarter caused by the $24.5 million reduction in the average balance of stockholders' equity between the 2009 and 2008 first quarters. The reduction resulted primarily from payments to stockholders of extra dividends of $0.20 per share each in August 2008 and February 2009.

? The average balance of total loans outstanding as a percent of the average balance of total interest-earning assets increased from 81.5% in the 2008 first quarter to 83.3% in the 2009 first quarter. Much of the loan growth was in commercial real estate and multi-family mortgage loans. Generally, the yield on loans is higher than the yield on investment securities.

? The average balance of short-term investments in the 2009 first quarter was $100.7 million, or 9.4% less than the average balance in the 2008 first quarter. Interest income on short-term investments, however, declined $805,000, or 79.9%, between the two periods caused primarily by the effect of the interest rate environment described earlier herein.

? The average balance of retail deposits in the 2009 first quarter increased $106.0 million (8.8%) compared to the average balance in the 2008 first quarter, $94.5 million of which was in money market savings accounts, and $69.8 million (5.6%) compared to the average balance in the 2008 fourth quarter, $63.5 million of which was in certificates of deposit with maturities primarily in the range of six months. Expressed as a percent of total retail deposits, certificates of deposit declined from 64.0% at March 31, 2008 to 59.2% at December 31, 2008, but rose to 59.4% at March 31, 2009, while money market savings accounts rose from 17.6% to 22.9% and 23.2% at those respective dates. Since money market savings accounts can be withdrawn at any time, the interest rate paid on those deposits is generally lower than the interest rates paid on certificates of deposit. We believe the shift in the mix of deposits was attributable primarily to the recent turmoil in the financial markets which led a number of depositors to place their funds in more liquid accounts.

? The average rate paid on retail deposits declined from 3.84% in the 2008 first quarter to 2.80% in the 2008 fourth quarter and 2.65% in the 2009 first quarter. Rates paid are influenced not only by the rate setting initiatives of the FOMC, but also by competitor rates. Depending on liquidity needs and other factors, occasionally competitors offer rates above those offered in the market place.

? The average balance of borrowings from the FHLB increased from $532.0 million in the 2008 first quarter to $737.3 million in the 2008 fourth quarter and declined to $698.5 million in the 2009 first quarter. The average rate paid on those funds was 4.61%, 3.81% and 3.91% in those respective periods. The rate increase in the most recent quarter resulted from the use of deposit inflow to pay down short-term borrowings with low interest rates. The average rate paid on FHLB borrowings is expected to decline in coming quarters as $84.5 million of borrowings with an average rate of 4.90% will mature in the 2009 second quarter, $54.0 million with an average rate of 5.11% will mature in the 2009 third quarter and $91.5 million with an average rate of 4.09% will mature in the 2009 fourth quarter. Additionally, $26.4 million of brokered deposits with an average rate of 5.37% will mature in the 2009 second quarter.

Auto Loans

The auto loan portfolio amounted to $580.1 million at March 31, 2009 compared to $597.2 million at December 31, 2008 and $591.1 million at March 31, 2008. The decline in the 2009 first quarter resulted from lower loan originations as the auto industry experienced a significant decline in sales. It is anticipated that the auto loan portfolio will shrink further in 2009 due to continuation of a lower than normal level of auto sales.

As a result of tightened underwriting, originations to borrowers with credit scores below 660 declined from 7.9% of loans originated in the 2008 first quarter to 5.1% for the entire 2008 year and 2.8% in the 2009 first quarter. The weighted average borrower credit score for loans originated in those respective periods improved from 745 to 751 and 760. Auto loans delinquent over 30 days declined from $13.1 million, or 2.20% of loans outstanding, at December 31, 2008 to $8.4 million (1.45%) at March 31, 2009.

Auto loan net charge-offs increased from $1,371,000 (or 0.93% of average loans outstanding on an annualized basis) in the 2008 first quarter to $1,868,000 (1.27%) in the 2009 first quarter. The rate of increase was more modest in comparison to the $1,863,000 (1.24%) of net charge-offs in the 2008 fourth quarter. The allowance for auto loan losses increased from $5,837,000 (0.99% of loans outstanding) at March 31, 2008 to $7,937,000 (1.33%) at December 31, 2008 and $8,169,000 (1.41%) at March 31, 2009.

Provision for Credit Losses

The provision for credit losses was $2,801,000 in the 2009 first quarter compared to $2,114,000 in the 2008 first quarter. The provision is comprised of amounts relating to the auto loan portfolio, equipment finance and small business loans originated by Eastern Funding LLC ("Eastern"), the remainder of the Company's loan portfolio and unfunded commitments.

The provision for auto loan losses was $2,100,000 in the 2009 first quarter compared to $1,546,000 in the 2008 first quarter. These amounts exceeded the net charge-offs in those respective periods. See the preceding subsection, "Auto Loans", for a discussion of the auto loan portfolio.

The provision for loan losses related to the Eastern loan portfolio was $351,000 in the 2009 first quarter compared to $268,000 in the 2008 first quarter. Net charge-offs in those periods were $287,000 and $220,000, respectively. The annualized rate of net charge-offs equaled 0.77% in the 2009 first quarter compared to 0.70% for the year 2008 and 0.82% for the year 2007. Eastern loans delinquent over 30 days increased from $2,929,000 (1.99% of loans outstanding) at December 31, 2008 to $3,286,000 (2.19%) at March 31, 2009. Eastern loans on watch, restructured loans and non-accrual loans rose from $8,213,000 at December 31, 2008 to $8,261,000 at March 31, 2009. The allowance for Eastern loan losses was $2,641,000 (1.76% of loans outstanding) at March 31, 2009 and $2,577,000 (1.75%) at December 31, 2008. Eastern's typical customer is a small business owned with limited capital resources who must rely primarily on the cash flow from his or her business to service debt. Such borrowers are less able to cope when economic conditions soften and, accordingly, represent higher risk borrowers. In view of weakened economic conditions, Eastern may experience higher loan charge-offs in the remainder of 2009.

The remainder of the Company's loan portfolio ($1.38 billion at March 31, 2009) is comprised primarily of commercial and multi-family mortgage loans, residential mortgage loans and commercial loans. This loan portfolio grew $33.9 million in the 2009 first quarter. The provision for loan losses related to the portfolio was $350,000 in the 2009 first quarter and $274,000 in the 2008 first quarter. The provisions were due to loan growth as no mortgage loans or commercial loans were charged off in those respective periods. The allowance for credit losses related to unfunded credit commitments was increased to $1,513,000 at March 31, 2008 by a $26,000 charge to the provision for credit losses. The balance of the allowance remained unchanged in the 2009 first quarter at $1,183,000.

Impairment Loss on Securities

In the 2009 first quarter, the impairment loss on securities of $726,000 resulted from write-downs in the carrying value of perpetual preferred stock issued by the Federal National Mortgage Association ("FNMA") and Merrill Lynch & Co., Inc. ("Merrill") of $103,000 and $572,000, respectively, and a $51,000 write-down in the carrying value of a trust preferred security. In the 2008 first quarter, the impairment loss on securities of $1,249,000 resulted from write-downs in the carrying value of perpetual preferred stock issued by FNMA ($773,000) and Merrill ($476,000). The stocks are included in the marketable equity securities portfolio of the Company.

The write-downs in the carrying value of the FNMA perpetual preferred stock were attributable to declines in the market value of the stock resulting from the reporting of significant operating losses over the past several quarters and the placement of FNMA under conservatorship and the control of its regulator, the Federal Housing Finance Agency. At March 31, 2009, the carrying value of the FNMA perpetual stock owned by the Company equaled its market value of $32,000.

Based on the significance of losses reported by Merrill, as well as the effect of the collapse of Bear Stearns & Co., Inc. on the market value of brokerage firms, the carrying value of the Merrill stock owned by the Company was written down in the 2008 first quarter to its market value at March 31, 2008. On September 15, 2008, it was announced that Merrill would be acquired by Bank of America Corporation ("B of A") in an all stock transaction. The acquisition was completed on January 1, 2009. At that time, the Merrill (now B of A) perpetual preferred stock had an investment grade rating. Subsequent to the closing of the acquisition, both Merrill and B of A reported losses, an agreement was entered into whereby the U.S. Government would provide B of A with $20 billion in additional capital and loss protection on $118 billion in toxic assets and B of A cut its quarterly dividend on its common stock to $0.01 per share. During the 2009 first quarter, rating agencies downgraded the former Merrill perpetual preferred stock to below investment grade. Based on all of these developments, the carrying value of the perpetual preferred stock owned by the Company was written-down to its market value of $360,000 at March 31, 2009.

See note 2 to the consolidated financial statements appearing elsewhere herein and the subsection which follows for information regarding the $51,000 write-down in a trust preferred security included in the corporate obligations owned by the Company at March 31, 2009.

Commentary on Certain Other Investment Securities

Mortgage-backed Securities and Collateralized Mortgage Obligations ("Mortgage Debt Securities")

At March 31, 2009, debt securities classified as available for sale and held to maturity amounted to $315.4 million and $159,000, respectively. Mortgage debt securities comprised $304.6 million of the available for sale portfolio and all of the held to maturity portfolio. All of the mortgage debt securities owned by the Company at March 31, 2009 were rated "AAA" and were issued by U.S. Government-sponsored enterprises. The estimated fair value of the mortgage debt securities exceeded their amortized cost by $4.9 million at March 31, 2009.

Auction Rate Municipal Obligations

Auction rate municipal obligations are debt securities issued by municipal, county and state entities that are generally repaid from revenue sources such as hospitals, transportation systems, student education loans and property taxes. The securities are not obligations of the issuing government entity. The obligations are variable rate securities with long-term maturities whose interest rates are set periodically through an auction process. The auction period typically ranges from 7 days to 35 days. The amount invested in such obligations was $5.0 million at March 31, 2009 compared to $5.2 million at December 31, 2008 and $13.0 million at December 31, 2007.

The auction rate obligations owned by the Company were rated "AAA" at the time of acquisition due, in part, to the guarantee of third party insurers who would have to pay the obligations if the issuers failed to pay the obligations when they become due. In the 2008 first quarter, public disclosures indicated that certain third party insurers were experiencing financial difficulties and, therefore, might not be able to meet their guarantee obligations if issuers failed to pay their contractual obligations. As a result, auctions failed to attract a sufficient number of investors and created a liquidity problem for those investors who were relying on the obligations to be redeemed at auctions. Since then, there has not been an active market for auction rate municipal obligations.

Based on an evaluation of market factors, the estimated fair value of the auction rate municipal obligations was $4,333,000, or $667,000 less than their face value. Full collection of the obligations is expected because the financial condition of the issuers is sound, none of the issuers has defaulted on scheduled payments, the obligations are rated investment grade and we have the ability and intent to hold the obligations for a period of time to recover the unrealized losses.

Preferred Trust Securities ("PreTSLs")

PreTSLs represent an investment instrument comprised of a pool of trust preferred securities that are debt obligations issued by a number of financial institutions and insurance companies. The investment instrument can be . . .