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 and six months ended June 30, 2009 and 2008.

                              Operating Highlights



                                     Three months ended            Six months ended
                                          June 30,                     June 30,
                                     2009           2008         2009            2008
                                         (In thousands except per share amounts)

Net interest income               $   21,816      $  18,046    $  40,923      $   35,205
Provision for credit losses            1,876          2,579        4,677           4,693
Fees, charges and other income           887          1,123        1,904           2,117
Gain on sales of securities              346              -          346               -
Impairment loss on securities              -              -         (726 )        (1,249 )
Penalty from prepayment of
borrowed funds                          (582 )            -         (582 )             -
FDIC insurance expense                 1,573             37        2,003              75
Other non-interest expenses           10,970         10,398       21,260          20,663
Income before income taxes and
minority interest                      8,048          6,155       13,925          10,642
Provision for income taxes             3,245          2,366        5,639           4,073
Net income attributable to
noncontrolling interest in
subsidiary                               125            115          165             200
Net income attributable to
Brookline Bancorp, Inc.                4,678          3,674        8,121           6,369

Basic earnings per common
share                             $     0.08      $    0.06    $    0.14      $     0.11
Diluted earnings per common
share                                   0.08           0.06         0.14            0.11

Interest rate spread                    2.85 %(A)      2.21 %       2.61 %(A)       2.12 %
Net interest margin                     3.41 %(A)      3.03 %       3.21 %(A)       2.99 %

                         Financial Condition Highlights



                                                    At               At              At
                                                 June 30,       December 31,      June 30,
                                                   2009             2008            2008
                                                               (In thousands)

Total assets                                    $ 2,641,113    $    2,613,005    $ 2,494,616
Loans                                             2,146,311         2,105,551      1,983,313
Retail deposits                                   1,500,959         1,327,844      1,282,114
Brokered deposits                                         -            26,381         27,047
Borrowed funds                                      628,768           737,418        652,798
Brookline Bancorp, Inc. stockholders' equity        485,641           493,869        505,845
Stockholders' equity to total assets                  18.39 %           18.90 %        20.28 %

Allowance for loan losses                       $    29,373    $       28,296    $    25,722
Non-performing assets                                 8,799             8,195          6,939

Operating and financial condition highlights included the following:

† Improvement in net interest margin in both the 2009 second quarter and six month periods

† $173.1 million (13.0%) of deposit growth (excluding brokered certificates of deposit) in the first half of 2009, $64.6 million of which occurred in the 2009 second quarter

† Reduced provisions for loan losses, especially in the 2009 second quarter, due primarily to a significant decline in indirect automobile ("auto") loan net charge-offs

† Receipt of $1,614,000 of income in the 2009 second quarter resulting from full payment of a loan on which there was unaccreted discount

† An FDIC insurance special assessment of $1,102,000 charged to expense in the 2009 second quarter

† A $346,000 gain on the sale of mortgage-backed securities in the 2009 second quarter

† Recognition of impairment losses on securities, net of non-credit losses, in the first quarters of 2009 and 2008 of $726,000 and $1,249,000, respectively

† A $582,000 penalty from prepayment of $13.5 million of borrowings from the Federal Home Loan Bank of Boston ("FHLB"), with a weighted average interest rate of 4.95%, charged to earnings in the 2009 second quarter

† No dividend income on FHLB stock in the first half of 2009 compared to $729,000 of dividend income in the first half of 2008

† Foregone interest income of $335,000 in the first half of 2009 due to a $22.5 million reduction in the average balance of stockholders' equity resulting from the payment of semi-annual extra dividends

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

The following tables set 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 and six months ended June 30, 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 June 30,
                                            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     $    82,174   $           46      0.22 %  $    73,119   $          405      2.22 %
Debt securities (2)            303,971            2,853      3.75        328,553            3,797      4.62
Equity securities (2)           37,402               31      0.33         34,009              402      4.74
Mortgage loans (3) (4)       1,221,807           18,518      6.06      1,051,557           15,594      5.93
Home equity loans (3)           46,087              423      3.68         36,291              438      4.84
Commercial loans -
Eastern (3)                    151,810            3,416      9.00        144,326            3,536      9.80
Other commercial loans
(3)                            118,580            1,380      4.66        109,966            1,511      5.50
Indirect automobile
loans (3)                      592,392            9,518      6.44        609,887            9,715      6.39
Other consumer loans (3)         3,882               53      5.46          3,924               58      5.91
Total interest-earning
assets (4)                   2,558,105           36,238      5.67 %    2,391,632           35,456      5.93 %
Allowance for loan
losses                         (28,901 )                                 (24,892 )
Non-interest earning
assets                         101,912                                    99,772
Total assets               $ 2,631,116                               $ 2,466,512

Liabilities and Equity
Interest-bearing
liabilities:
Deposits:
NOW accounts               $    90,872               43      0.19 %  $    88,338               61      0.28 %
Savings accounts                90,778              233      1.03         90,768              300      1.33
Money market savings
accounts                       348,590            1,429      1.64        226,999            1,205      2.13
Retail certificates of
deposit                        856,276            6,475      3.03        816,158            8,597      4.22
Total retail deposits        1,386,516            8,180      2.37      1,222,263           10,163      3.34
Brokered certificates of
deposit                          5,627               75      5.35         42,275              569      5.40
Total deposits               1,392,143            8,255      2.38      1,264,538           10,732      3.40
Borrowed funds                 654,478            6,151      3.72        602,133            6,600      4.34
Total interest-bearing
liabilities                  2,046,621           14,406      2.82 %    1,866,671           17,332      3.72 %
Non-interest-bearing
demand checking accounts        73,366                                    68,077
Other liabilities               23,921                                    23,523
Total liabilities            2,143,908                                 1,958,271
Brookline Bancorp, Inc.
stockholders' equity           485,521                                   506,606
Noncontrolling interest
in subsidiary                    1,687                                     1,635
Total liabilities and
equity                     $ 2,631,116                               $ 2,466,512
Net interest income (tax
equivalent
basis)/interest rate
spread (4) (5)                                   21,832      2.85 %                        18,124      2.21 %
Less adjustment of tax
exempt income                                        16                                        78
Net interest income                      $       21,816                            $       18,046
Net interest margin
(4) (6)                                                      3.41 %                                    3.03 %

(2) Average balances include unrealized gains (losses) on securities available for sale. Equity securities include marketable equity securities (preferred and common stocks) and restricted equity securities.

(3) Loans on non-accrual status are included in average balances.

(4) In the 2009 period, interest income includes $1,614 due to the payoff of a loan on which there was unaccreted discount. Excluding this income, the yield on mortgage loans and interest-earning assets would have been 5.53% and 5.42%, respectively. Interest rate spread and net interest margin would have been 2.60% and 3.16%, respectively

(5) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income (tax equivalent basis) divided by average interest-earning assets.

                                                        Six months ended June 30,
                                             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       $    91,404   $         248      0.55 %  $    92,176   $        1,411      3.07 %
Debt securities (2)              295,671           5,938      4.02        308,196            7,302      4.74
Equity securities (2)             37,349              64      0.34         33,122              902      5.46
Mortgage loans (3) (4)         1,209,660          35,310      5.84      1,031,832           31,167      6.04
Home equity loans (3)             44,637             814      3.68         35,576              960      5.41
Commercial loans - Eastern
(3)                              150,562           6,828      9.07        143,307            7,043      9.83
Other commercial loans (3)       117,532           2,682      4.59        107,733            3,112      5.78
Indirect automobile loans
(3)                              598,607          19,118      6.44        607,641           19,397      6.40
Other consumer loans (3)           3,823             110      5.75          3,797              127      6.69
Total interest-earning
assets (4)                     2,549,245          71,112      5.59 %    2,363,380           71,421      6.05 %
Allowance for loan losses        (28,595 )                                (24,592 )
Non-interest earning
assets                           104,985                                   99,659
Total assets                 $ 2,625,635                              $ 2,438,447

Liabilities and Equity
Interest-bearing
liabilities:
Deposits:
NOW accounts                 $    87,372              83      0.19 %  $    84,845              107      0.25 %
Savings accounts                  88,408             501      1.14         89,006              628      1.42
Money market savings
accounts                         331,977           3,045      1.85        223,830            2,758      2.47
Retail certificates of
deposit                          841,110          13,131      3.15        815,833           18,183      4.47
Total retail deposits          1,348,867          16,760      2.51      1,213,514           21,676      3.58
Brokered certificates of
deposit                           15,947             424      5.36         55,090            1,480      5.39
Total deposits                 1,364,814          17,184      2.54      1,268,604           23,156      3.66
Borrowed funds                   676,362          12,970      3.81        567,050           12,803      4.47
Subordinated debt                      -               -         -          1,733               65      7.42
Total interest bearing
liabilities                    2,041,176          30,154      2.98 %    1,837,387           36,024      3.93 %
Non-interest-bearing
demand checking accounts          70,350                                   65,304
Other liabilities                 24,685                                   23,961
Total liabilities              2,136,211                                1,926,652
Brookline Bancorp, Inc.
stockholders' equity             487,657                                  510,109
Noncontrolling interest in
subsidiary                         1,767                                    1,686
Total liabilities and
equity                       $ 2,625,635                              $ 2,438,447
Net interest income (tax
equivalent basis)/interest
rate spread (4) (5)                               40,958      2.61 %                        35,397      2.12 %
Less adjustment of tax
exempt income                                         35                                       192
Net interest income                               40,923                            $       35,205
Net interest margin
(4) (6)                                                       3.21 %                                    2.99 %

(2) Average balances include unrealized gains (losses) on securities available for sale. Equity securities include marketable equity securities (preferred and common stocks) and restricted equity securities.

(3) Loans on non-accrual status are included in average balances.

(4) In the 2009 period, interest income includes $1,614 due to the payoff of a loan on which there was unaccreted discount. Excluding this income, the yield on mortgage loans and interest-earning assets would have been 5.57% and 5.47%, respectively. Interest rate spread and net interest margin would have been 2.49% and 3.08%, respectively.

(5) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income (tax equivalent basis) divided by average interest-earning assets.

Highlights from the preceding tables follow.

† Interest earned on mortgage loans in the 2009 second quarter includes $1,614,000 of income from full payment of a loan on which there was unaccreted discount. Excluding that income, net interest income was higher in the 2009 second

quarter and six month periods than in the comparable 2008 periods by 11.9% and 11.7%, respectively, due to asset and deposit growth and improvement in net interest margin.

† The average balance of interest-earning assets in the 2009 second quarter compared to the average balance in the 2008 second quarter grew $166 million or 7.0%; growth in the first half of 2009 compared to the first half of 2008 was $186 million or 7.9%. All of the growth in those periods was in loans.

† The average balance of total deposits, excluding brokered certificates of deposit, increased $75.7 million (5.8%, or 23% on an annualized basis) in the 2009 second quarter compared to the 2009 first quarter and $164.3 million (13.4%) in the 2009 second quarter compared to the 2008 second quarter.

† Interest rate spread increased to 2.85% in the 2009 second quarter (2.60% excluding the $1,614,000 of income referred to above) from 2.38% in the 2009 first quarter and 2.21% in the 2008 second quarter and to 2.61% in the first half of 2009 (2.49% excluding the $1,614,000 of income) from 2.12% in the first half of 2008. The improvement in spread resulted primarily from reductions in rates paid on deposits and borrowed funds exceeding reductions in rates earned on assets. The improvement occurred despite the elimination of dividend income on FHLB stock owned by the Company.

† Net interest margin increased to 3.41% in the 2009 second quarter (3.16% excluding the $1,614,000 of income) from 3.00% in the 2009 first quarter and 3.03% in the 2008 second quarter and to 3.21% in the first half of 2009 (3.08% excluding the $1,614,000 of income) from 2.99% in the first half of 2008. The improvement in margin was attributable to the matters mentioned above and occurred despite the negative effect of foregone interest income of $335,000 in the first half of 2009 caused by the $22.5 million reduction in the average balance of stockholders' equity resulting from the payment of semi-annual extra dividends.

† The average balance of total deposits, excluding brokered certificates of deposit, comprised of money market savings accounts increased from 18.6% in the 2008 second quarter to 25.1% in the 2009 second quarter while the average balance comprised of certificates of deposit declined to 61.8% from 66.7% in those respective periods. Since money market savings accounts can be withdrawn at any time, the interest rate paid on those deposits is generally lower than the rates paid on certificates of deposit. We believe the shift in the mix of deposits was attributable in part to the recent turmoil in the financial markets which led a number of depositors to place their funds in more liquid accounts.

† In the 2009 second quarter, the remaining $26.4 million of brokered deposits matured and were not replaced with new brokered deposits. The average rate paid on those deposits was 5.37%.

† Part of the proceeds from deposit growth was used to reduce the amount of borrowings from the FHLB. The total of such borrowings declined from $737.4 million at December 31, 2008 to $628.8 million at June 30, 2009. The average rate paid on the $676.4 million of FHLB borrowings that were outstanding in the first half of 2009 was 3.81% compared to the average rate of 2.51% paid on deposits (excluding brokered deposits) in that period.

† Assuming the current interest rate environment does not change significantly in the second half of 2009, net interest margin should continue to improve in that time period. FHLB borrowings of $54 million with an average interest rate of 5.11% will mature in the 2009 third quarter and $88 million with an average interest rate of 4.05% will mature in the 2009 fourth quarter. It is expected that these borrowings, as well as certificates of deposit maturing during those periods, will be replaced with lower cost borrowings and deposits.

Auto Loans

The auto loan portfolio amounted to $573.2 million at June 30, 2009 compared to $580.1 million at March 31, 2009 and $597.2 million at December 31, 2008. The decline resulted from lower loan originations as the auto industry experienced a significant decline in auto sales. Underwriting continued to be conservative as only 2.9% of the $107.9 million of loans originated in the first half of 2009 were to borrowers with credit scores below 660. The average credit score of the borrowers related to those loan originations was 759. Auto loans delinquent over 30 days amounted to $10.6 million, or 1.86% of loans outstanding, at June 30, 2009 compared to $13.1 million (2.20%) at December 31, 2008.

Auto loan net charge-offs declined to $1,222,000 (or 0.85% of average loans outstanding on an annualized basis) in the 2009 second quarter from $1,868,000 (1.27%) in the 2009 first quarter and $1,688,000 (1.14%) in the 2008 second quarter. Net charge-offs in the first half of 2009 were $3,090,000 (1.06%) compared to $3,059,000 (1.03%) in the first half of 2008 and $6,671,000 (1.12%) in the year 2008.

Provision for Credit Losses

The provision for credit losses was $1,876,000 in the 2009 second quarter compared to $2,579,000 in the 2008

second quarter and $4,677,000 in the first half of 2009 compared to $4,693,000 in the first half of 2008. The provision is comprised of amounts relating to the auto loan portfolio, equipment finance and small business loans originated by a subsidiary, Eastern Funding LLC ("Eastern"), and the remainder of the Company's loan portfolio and unfunded credit commitments.

The provision for auto loan losses was $1,350,000 in the 2009 second quarter compared to $2,200,000 in the 2008 second quarter and $3,450,000 in the first half of 2009 compared to $3,746,000 in the first half of 2008. These amounts exceeded the net charge-offs in those respective periods. The allowance for auto loan losses increased from $7,937,000, or 1.33% of loans outstanding, at December 31, 2008 to $8,297,000 (1.45%) at June 30, 2009. See the preceding subsection, "Auto Loans", for further information about the auto loan portfolio.

The provision for Eastern loans was $296,000 in the 2009 second quarter compared to $129,000 in the 2008 second quarter and $647,000 in the first half of 2009 compared to $397,000 in the first half of 2008. Additionally, write-downs of assets acquired through repossession amounted to $162,000, $15,000, $356,000 and $134,000 in those respective periods. The annualized rate of net charge-offs, combined with the write-downs of assets acquired, equaled 1.15% in the first half of 2009 compared to 0.65% in the 2008 second quarter and 0.84% in the year 2008.

Eastern loans delinquent over 30 days decreased from $2,929,000 (1.99% of loans outstanding) at December 31, 2008 to $2,326,000 (1.52%) at June 30, 2009. The total of Eastern loans on watch, restructured loans and non-accrual loans decreased from $8,049,000 at December 31, 2008 to $7,576,000 at June 30, 2009. The allowance for Eastern loan losses was $2,715,000, or 1.77% of loans outstanding, at June 30, 2009 compared to $2,577,000 (1.75%) at December 31, 2008.

The remainder of the Company's loan portfolio at June 30, 2009 ($1.52 billion less unfunded credit commitments of $122 million) was comprised primarily of commercial and multi-family mortgage loans, residential mortgage loans and commercial loans. Most of the growth in this portfolio ($25 million in the 2009 second quarter and $34 million in the 2009 first quarter) was in multi-family mortgage loans ($48 million), commercial real estate loans ($10 million), commercial loans ($6 million) and home equity loans ($6 million); residential mortgage loans declined $13 million. Loans on non-accrual amounted to $4,097,000 at June 30, 2009 compared to $2,950,000 at December 31, 2008 and other loans on watch were $12.2 million at June 30, 2009 compared to $10.1 million at December 31, 2008. Loans on watch include loans with potential problem characteristics that are being monitored more closely for performance. At June 30, 2009, the total of such loans was comprised of $4.3 million in commercial loans, $4.0 million in construction loans, $3.3 million in commercial real estate loans and $0.6 million in residential mortgage loans.

The provision for losses related to the loans referred to in the preceding paragraph was $230,000 in the 2009 second quarter compared to $250,000 in the . . .