PITTSFIELD, Mass., Jan. 26, 2009 (GLOBE NEWSWIRE) -- Berkshire Hills Bancorp (Nasdaq:BHLB) reported fourth quarter earnings totaled $5.2 million, or $0.44 per share. For the year 2008, earnings were $22.2 million, or $2.06 per share. Core earnings per share increased by 8% in 2008, reflecting the benefit of acquisitions and organic growth. GAAP earnings per share increased by 43% due to non-core charges in 2007.
Most categories of income and expense increased in the first nine months of 2008 including the benefit of the acquired Vermont operations. Results in 2007 included non-core charges primarily due to the completion of that merger and a related balance sheet restructuring. Net income in 2007 totaled $13.5 million, or $1.44 per share. Fourth quarter 2007 net income was $3.1 million, or $0.29 per share.
Fourth Quarter Financial Highlights
* $0.44 core earnings per share vs. $0.36 in 2007; GAAP EPS of $0.44 vs. $0.29 * 0.48% nonperforming assets to total assets at year-end; accruing delinquent loans were 0.51% of total loans * 0.27% annualized charge-offs on average loans * Public issuance of nearly $40 million in common stock and the issuance of $40 million of preferred stock under the U.S. Treasury Capital Purchase Program
Annual Financial Highlights
* 8% increase in core EPS; 43% increase in GAAP EPS * 12% increase in year-end tangible book value per share to $15.47; 3% decrease in total book value per share to $30.07 * 21% increase in total net revenue * 3.44% net interest margin * 8% increase in total commercial loans; 7% increase in total residential mortgage and home equity loans * 61.4% efficiency ratio, improved from 62.9% in 2007
Michael P. Daly, President and Chief Executive Officer, stated, "We had another solid quarter, and finished out a strong year with higher earnings and earnings per share. We generated positive operating leverage due to organic growth and the benefit of our Vermont operations acquired last year. Despite growing headwinds towards the end of the year, we generated higher earnings and core earnings per share in every quarter of the year."
Mr. Daly continued, "We produced these solid results despite the impact of our October common stock offering, which reduced EPS by $0.06 in the fourth quarter and by $0.07 for the year. This successful public offering totaled nearly $40 million and bolstered our equity capital, which totaled 15% of total assets at year-end -- our highest equity capital ratio since we went public. We combined the common equity with $40 million in preferred stock issued under the Treasury Capital Purchase Program to better position the Company to expand the flow of credit and support economic vitality in the communities that we serve."
Mr. Daly concluded, "Our loan performance continued to hold up through year-end, and our charge-offs remained modest in 2008. We also had no writedowns on any of our investment securities during the year and our investment portfolio remained high quality at year-end. We recognize that the coming year will be challenging for our industry and we will again be disciplined in our budgeting process. The interest rate reductions by the Federal Reserve Bank have negatively impacted our pricing, thereby reducing our net interest margin. Should economic conditions continue to deteriorate in 2009, it is likely that we will increase our provision despite our strong loan performance through year-end 2008. We will also be incurring some earnings dilution from the common stock offering and the Treasury preferred stock. We aggressively supplemented our capital to prepare for the current environment, and we plan to be proactive in developing programs to meet the needs of our markets and in working promptly to address loan problems if they develop."
DIVIDEND DECLARED
The Board of Directors declared a quarterly cash dividend of $0.16 per share to stockholders of record at the close of business on February 12, 2009 and payable on February 26, 2009. Common stock dividends totaled $0.63 per share in 2008, an increase of 9% over 2007.
ANNUAL MEETING SET
The 2009 annual meeting of stockholders will be held on May 7, 2009 at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts at 10:00 A.M. (ET). The voting record date has been set as March 10, 2009.
FINANCIAL CONDITION
Total assets were $2.7 billion at year-end 2008, increasing by 6% over year-end 2007. Total loans increased by 8% in 2008 excluding auto loans, reflecting growth in total commercial loans, along with higher residential mortgage and home equity loans. Growth in commercial real estate loans mostly reflected loan opportunities previously serviced by national providers in the Company's New England lending areas. Home equity loan growth was due to new lines opened as a result of relationship promotions. Residential and home equity underwriting is based on prime lending standards with 80% maximum loan-to-value. Commercial business loans decreased due to paydowns. The bank made a decision early in the year to discontinue originations of indirect auto loans and this portfolio is declining as existing balances runoff. Fourth quarter loan activity generally reflected these annual trends.
In the fourth quarter, securities available for sale increased by $71 million and short term investments increased by $10 million, primarily reflecting the utilization of stock issuance proceeds pending further investment activities in 2009. Securities purchases consisted primarily of short duration collateralized mortgage obligations issued by federal agencies. The Company's securities portfolio consists primarily of U.S. agency mortgage backed securities, and municipal and economic development bonds. All debt securities are rated investment grade except for $40 million in unrated local municipal and economic development bonds. The total unrealized loss on securities available for sale was $3 million at year-end 2008, all of which was deemed to be temporary.
The Company's problem loan measures at year-end 2008 remained comparatively low and were not significantly changed from the prior year-end. Year-end 2008 nonperforming assets totaled 0.48% of total assets, and accruing delinquent loans were up moderately to 0.51% of total loans. The year-end loan loss allowance was 1.14% of total loans for 2008 and 2007. The portion of the allowance assigned to specific reserves on impaired loans was $1.0 million at year-end 2008 and $1.2 million at year-end 2007.
Total deposits increased by $7 million to $1.83 billion in 2008. Deposit activity included an estimated $45 million in targeted run-off of higher cost municipal, commercial, and brokered time deposit accounts primarily in the second quarter. Estimated deposit growth excluding this run-off was 3%. Most of the Company's retail deposit and loan promotions are linked to companion checking accounts. The Company offers 100% insurance on all deposit balances due to its participation in the Massachusetts Depositors Insurance Fund. The Bank expects to benefit from the temporary increase in FDIC deposit insurance limits and it is also participating in the optional temporary unlimited transaction account insurance offered by the FDIC.
Stockholders' equity increased by $82 million in 2008 primarily due to the benefit of the common and preferred stock offerings. The contribution from earnings was partially offset by dividends and an unrealized mark-to-market loss on interest rate swaps. Total equity to assets increased to 15.3% at year-end 2008, while tangible equity to assets measured 9.2%. The risk based capital ratio of Berkshire Bank was approximately 12% at year-end. Total return on equity was 6.5% in 2008, while the core return on tangible equity was 16.2%. The Company views this latter measure as an important measure of its capital generation and capital strength. Tangible common book value per share was $15.47 at year-end 2008, compared to $13.82 at the prior year-end. Total common book value per share was $30.07 and $31.15 at these two dates, respectively.
RESULTS OF OPERATIONS
Most major categories of income and expense increased in 2008 primarily due to the contribution of Vermont operations resulting from the Factory Point Bancorp acquisition in September 2007. Total annual core revenue increased by 16%, while total core income increased by 25%. Several non-core charges related principally to the Factory Point acquisition reduced revenue and income in 2007. As a result, total GAAP revenue increased by 21% and total GAAP earnings increased by 64% in 2008 compared to 2007. Fourth quarter GAAP earnings increased by 69%, including results from Vermont operations in both periods. The increase was primarily due to non-core charges and a larger loan loss provision in 2007.
Net interest income increased by 18% in 2008 and increased sequentially in all quarters during the year. Average earning assets also increased sequentially in each quarter in 2008, with the fourth quarter average exceeding the 2007 fourth quarter average by 6%. This was primarily driven by continuous loan growth, despite the impact of runoff in the indirect auto loan portfolio. The net interest margin increased sequentially in the first three quarters to a five year peak of 3.48%, and then declined in the fourth quarter to 3.41% due to market floors on deposit rates following the drop in the federal funds rate to the lowest levels since 1954. The net interest margin improvement to 3.44% in 2008 reflected disciplined loan and deposit pricing throughout the year, together with the benefit of the Factory Point acquisition and the related balance sheet restructuring in 2007.
Fee income increased by 14% in 2008, resulting from higher deposit, loan, and interest rate swap fee income. Insurance fees decreased by 1% in 2008 primarily due to softer pricing conditions in the property casualty markets. Wealth management fees increased by 29% in 2008; however they were adversely affected by stock market conditions in the fourth quarter. The stock market decline caused a 21% reduction in fourth quarter wealth management revenues. Non-interest income in 2007 included non-core balance sheet restructuring charges related to the Factory Point acquisition.
The loan loss provision increased by 7% in 2008, which was in line with the growth in total loans during the year. The 2008 loan loss provision was $4.6 million, while net loan charge-offs totaled $3.8 million in 2008, compared to $6.0 million in 2007.
The 9% increase in non-interest expense in 2008 was primarily due to the Factory Point acquisition. Fourth quarter results included the acquired Vermont operations in both 2008 and 2007, and fourth quarter core expenses were flat from year to year. Non-core charges were recorded in 2007 primarily due to the Factory Point acquisition, and there were additional non-core expense restructuring charges recorded in both years. The Bank's efficiency ratio improved to 59% in 2008, while the consolidated ratio improved to 61%. The effective income tax rate was 28% in both 2008 and 2007, and also in the most recent quarter. The tax rate in 2008 included a second quarter non-core credit resulting from the reduction in the valuation reserve for deferred state tax assets.
CONFERENCE CALL
The Company will conduct a conference call/webcast at 9:00 A.M. eastern time on Tuesday, January 27, 2009 to discuss the results for the quarter and the year, and guidance about expected future results. Additionally, the Company intends to post a document with supplemental information in the Investor Relations section of its web site at www.berkshirebank.com shortly before the commencement of the call.
Information about the conference call follows:
Dial-in: 800-860-2442 Webcast: www.berkshirebank.com (Investor Relations link)
A telephone replay of the call will be available until February 4, 2009 by calling 877-344-7529 and entering replay passcode: 426862. The webcast and a podcast will be available at the Company's website above for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is headquartered in Pittsfield, Massachusetts. It has approximately $2.7 billion in assets and is the parent of Berkshire Bank -- America's Most Exciting Bank(sm). The Company provides business and consumer banking, insurance, wealth management, and investment services through 48 banking and insurance offices in Western Massachusetts, Northeastern New York, and Southern Vermont. For more information, visit www.berkshirebank.com or call 800-773-5601.
The Berkshire Hills Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5000
FORWARD LOOKING STATEMENTS
Statements in this news release regarding Berkshire Hills Bancorp that are not historical facts are "forward-looking statements". These statements reflect management's views of future events, and involve risks and uncertainties. For a discussion of factors that could cause actual results to differ materially from expectations, see "Forward Looking Statements" in the Company's 2007 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at the Securities and Exchange Commission's Internet website (www.sec.gov) and to which reference is hereby made. Actual future results may differ significantly from results discussed in these forward-looking statements, and undue reliance should not be placed on such statements. Except as required by law, the Company assumes no obligation to update any forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including merger costs and restructuring costs. Similarly, the efficiency ratio is also adjusted for these non-core items. Additionally, the Company adjusts core income to exclude amortization of intangibles to arrive at a measure of the underlying operating cash return for the benefit of stockholders. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
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December 31, September 30, December 31,
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(In thousands) 2008 2008 2007
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Assets
Total cash and cash
equivalents $ 26,582 $ 26,445 $ 33,259
Fed funds sold & short-term
investments 18,216 8,124 7,883
Trading securities 18,144 15,267 --
Securities available for sale,
at fair value 276,423 205,554 197,964
Securities held to maturity,
at amortized cost 25,872 25,923 39,456
Federal Home Loan Bank stock 21,077 21,077 21,077
Loans held for sale 1,768 5,401 3,445
Residential mortgages 677,254 672,004 657,045
Commercial mortgages 808,591 794,780 704,764
Commercial business loans 175,799 181,224 203,564
Consumer loans 345,508 344,359 378,643
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Total loans 2,007,152 1,992,367 1,944,016
Less: Allowance for loan
losses (22,908) (22,886) (22,116)
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Net loans 1,984,244 1,969,481 1,921,900
Premises and equipment, net 37,448 37,902 38,806
Goodwill 161,178 161,178 161,632
Other intangible assets 17,652 18,490 20,820
Cash surrender value of life
insurance policies 35,668 35,331 35,316
Other assets 42,457 35,526 31,874
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Total assets $ 2,666,729 $ 2,565,699 $ 2,513,432
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Liabilities and stockholders'
equity
Demand deposits $ 233,040 $ 227,271 $ 231,994
NOW deposits 190,828 196,217 213,150
Money market deposits 448,238 450,818 439,341
Savings deposits 211,156 220,800 210,186
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Total non-maturity deposits 1,083,262 1,095,106 1,094,671
Brokered time deposits 2,942 3,008 21,497
Other time deposits 743,376 739,090 706,395
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Total time deposits 746,318 742,098 727,892
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Total deposits 1,829,580 1,837,204 1,822,563
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Borrowings 359,157 366,092 334,474
Junior subordinated
debentures 15,464 15,464 15,464
Derivative liabilities 23,868 2,608 --
Due to broker 19,895 -- --
Other liabilities 10,340 11,649 14,094
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Total liabilities 2,258,304 2,233,017 2,186,595
Total stockholders' equity 408,425 332,682 326,837
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Total liabilities and
stockholders' equity $ 2,666,729 $ 2,565,699 $ 2,513,432
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BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
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LOAN ANALYSIS
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Sept. 30, Dec. 31,
Dec. 31, 2008 2008 2007
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Quarterly
annualized Annual
(Dollars in millions) Balance growth growth Balance Balance
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Residential mortgages:
1 - 4 Family $ 642 4% 5% $ 636 $ 610
Construction 35 (11) (26) 36 47
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Total residential
mortgages 677 3 3 672 657
Commercial mortgages:
Construction 130 (12) 4 134 125
Single and multi-family 70 -- 1 70 69
Other commercial
mortgages 608 12 19 591 510
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Total commercial
mortgages 808 7 15 795 704
Commercial business
loans 176 (11) (14) 181 204
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Total commercial loans 984 3 8 976 908
Consumer loans:
Auto and other 140 (43) (34) 157 211
Home equity 206 41 23 187 168
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Total consumer loans 346 2 (9) 344 379
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Total loans $2,007 3% 3% $1,992 $1,944
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DEPOSIT ANALYSIS
----------------
Sept. 30, Dec. 31,
Dec. 31, 2008 2008 2007
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Quarterly
annualized Annual
(Dollars in millions) Balance growth growth Balance Balance
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Demand $ 233 11% --% $ 227 $ 232
NOW 191 (10) (10) 196 213
Money market 448 (3) 2 451 439
Savings 211 (18) -- 221 211
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Total non-maturity
deposits 1,083 (4) (1) 1,095 1,095
Time less than $100,000 392 (2) (4) 394 409
Time $100,000 or more 351 7 18 345 298
Brokered time 3 -- (86) 3 21
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Total time deposits 746 2 2 742 728
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Total deposits $1,829 (2)% --% $1,837 $1,823
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BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
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Three Months Ended Years Ended
December 31, December 31,
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(In thousands, except
per share data) 2008 2007 2008 2007
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Interest and dividend
income
Loans $ 29,343 $ 32,666 $ 120,567 $ 120,059
Securities and other 3,419 3,183 12,644 11,885
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Total interest and
dividend income 32,762 35,849 133,211 131,944
Interest expense
Deposits 9,248 13,749 41,733 50,597
Borrowings and junior
subordinated debentures 4,044 3,882 15,738 17,422
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Total interest expense 13,292 17,631 57,471 68,019
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Net interest income 19,470 18,218 75,740 63,925
Non-interest income
Insurance commissions and
fees 2,139 2,290 13,619 13,728
Deposit service fees 2,623 2,620 9,782 7,747
Wealth management fees 1,171 1,476 5,704 4,407
Loan service and interest
rate swap fees 203 91 1,229 772
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Total fee income 6,136 6,477 30,334 26,654
Other 241 551 1,283 1,710
Loss on sale of
securities, net -- -- (22) (591)
Loss on prepayment of
borrowings, net -- -- -- (1,180)
Gain (loss) on sale of
loans, net -- 41 -- (1,950)
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Total non-interest income 6,377 7,069 31,595 24,643
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Total net revenue 25,847 25,287 107,335 88,568
Provision for loan losses 1,400 3,060 4,580 4,300
Non-interest expense
Salaries and employee
benefits 8,988 9,386 38,282 34,018
Occupancy and equipment 2,736 2,656 11,238 9,945
Marketing, data
processing, and
professional services 2,338 2,275 8,761 8,598
Non-recurring expense -- 1,198 683 2,956
Amortization of intangible
assets 838 1,050 3,830 3,058
Other 2,356 1,828 8,905 6,919
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Total non-interest expense 17,256 18,393 71,699 65,494
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Income before income taxes 7,191 3,834 31,056 18,774
Income tax expense 1,985 761 8,812 5,239
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Net income $ 5,206 $ 3,073 $ 22,244 $ 13,535
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Basic earnings per common
share $ 0.44 $ 0.29 $ 2.08 $ 1.47
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Diluted earnings per
common share $ 0.44 $ 0.29 $ 2.06 $ 1.44
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Weighted average common
shares outstanding
Basic 11,804 10,524 10,700 9,223
Diluted 11,892 10,664 10,791 9,370
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
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Quarters Ended
---------------------------------------------------------------------
(In thousands,
except per share Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
data) 2008 2008 2008 2008 2007
---------------------------------------------------------------------
Interest and dividend
income
Loans $ 29,343 $ 30,078 $ 29,823 $ 31,323 $ 32,666
Securities and other 3,419 3,014 3,011 3,200 3,183
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Total interest and
dividend income 32,762 33,092 32,834 34,523 35,849
Interest expense
Deposits 9,248 9,676 10,521 12,288 13,749
Borrowings and junior
subordinated
debentures 4,044 4,087 3,666 3,941 3,882
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Total interest
expense 13,292 13,763 14,187 16,229 17,631
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Net interest income 19,470 19,329 18,647 18,294 18,218
Non-interest income
Insurance commissions
and fees 2,139 2,640 3,694 5,146 2,290
Deposit service fees 2,623 2,518 2,486 2,155 2,620
Wealth management
fees 1,171 1,338 1,567 1,628 1,476
Loan service and
interest rate swap
fees 203 561 228 237 91
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Total fee income 6,136 7,057 7,975 9,166 6,477
Other 241 174 562 306 551
Gain (loss) on
securities, net -- 4 (26) -- --
Gain on sale of
loans, net -- -- -- -- 41
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Total non-interest
income 6,377 7,235 8,511 9,472 7,069
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Total net revenue 25,847 26,564 27,158 27,766 25,287
Provision for loan
losses 1,400 1,250 1,105 825 3,060
Non-interest expense
Salaries and employee
benefits 8,988 9,796 9,842 9,656 9,386
Occupancy and
equipment 2,736 2,760 2,774 2,968 2,656
Marketing, data
processing, and
professional
services 2,338 2,121 2,181 2,121 2,275
Non-recurring expense -- -- 683 -- 1,198
Amortization of
intangible assets 838 889 1,019 1,084 1,050
Other 2,356 2,171 2,133 2,245 1,828
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Total non-interest
expense 17,256 17,737 18,632 18,074 18,393
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Income before income
taxes 7,191 7,577 7,421 8,867 3,834
Income tax expense 1,985 2,301 1,708 2,818 761
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Net income $ 5,206 $ 5,276 $ 5,713 $ 6,049 $ 3,073
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Basic earnings per
share $ 0.44 $ 0.51 $ 0.55 $ 0.58 $ 0.29
Diluted earnings per
share $ 0.44 $ 0.51 $ 0.55 $ 0.58 $ 0.29
Weighted average
shares outstanding
Basic 11,804 10,303 10,302 10,386 10,524
Diluted 11,892 10,400 10,384 10,457 10,664
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
ASSET QUALITY ANALYSIS
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At or for the Quarters Ended
----------------------------------------------------------------------
(Dollars in Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
thousands) 2008 2008 2008 2008 2007
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NON-PERFORMING ASSETS
Nonaccruing loans:
Residential
mortgages $ 1,646 $ 1,315 $ 763 $ 1,060 $ 726
Commercial mortgages 7,738 6,178 5,329 7,082 5,177
Commercial business
loans 1,921 2,210 3,103 3,557 4,164
Indirect auto and
installment loans 693 576 503 374 346
Home equity 173 74 74 67 95
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Total nonaccruing
loans 12,171 10,353 9,772 12,140 10,508
Other real estate
owned 498 941 1,050 755 866
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Total nonperforming
assets $ 12,669 $ 11,294 $ 10,822 $ 12,895 $ 11,374
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Total nonperforming
loans/total loans 0.61% 0.52% 0.49% 0.63% 0.54%
Total nonperforming
assets/total assets 0.48% 0.44% 0.42% 0.51% 0.46%
PROVISION AND
ALLOWANCE FOR LOAN
LOSSES
Balance at beginning
of period $ 22,886 $ 22,581 $ 22,130 $ 22,116 $ 22,108
Charged-off loans (1,474) (1,331) (754) (883) (3,117)
Recoveries on
charged-off loans 96 386 100 72 65
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Net loans charged-off (1,378) (945) (654) (811) (3,052)
Acquired allowance -- -- -- -- --
Provision for loan
losses 1,400 1,250 1,105 825 3,060
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Balance at end of
period $ 22,908 $ 22,886 $ 22,581 $ 22,130 $ 22,116
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Allowance for loan
losses/nonperforming
loans 188% 221% 231% 182% 210%
Allowance for loan
losses/total loans 1.14% 1.15% 1.14% 1.14% 1.14%
NET LOAN CHARGE-OFFS
Residential
mortgages $ -- $ (119) $ -- $ (24) $ --
Commercial mortgages (900) (63) (131) (175) --
Commercial business
loans (10) (265) (121) (213) (2,683)
Indirect auto and
installment loans (468) (498) (402) (339) (319)
Home equity -- -- -- (60) (50)
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Total net $ (1,378) $ (945) $ (654) $ (811) $ (3,052)
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Net charge-offs
(YTD annualized)/
average loans 0.19% 0.16% 0.15% 0.17% 0.34%
DELINQUENT LOANS /
TOTAL LOANS
30-89 Days delinquent 0.46% 0.45% 0.33% 0.41% 0.39%
90 + Days delinquent
and still accruing 0.05% 0.03% 0.04% 0.03% 0.04%
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Total accruing
delinquent loans 0.51% 0.48% 0.37% 0.44% 0.43%
Nonaccruing loans 0.61% 0.52% 0.49% 0.63% 0.54%
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Total delinquent
loans 1.12% 1.00% 0.86% 1.07% 0.97%
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BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
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At or for the Quarters Ended
----------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2008 2008 2008 2008 2007
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PERFORMANCE RATIOS
Core return on
tangible assets 0.98% 1.03% 1.16% 1.24% 0.83%
Return on total
assets 0.79 0.82 0.91 0.97 0.50
Core return on
tangible common
equity 12.70 15.85 17.89 19.52 12.90
Return on total
common equity 5.62 6.26 6.89 7.38 3.74
Net interest margin,
fully taxable
equivalent 3.41 3.48 3.45 3.41 3.38
Core tangible
non-interest income
to tangible assets 1.04 1.21 1.47 1.64 1.23
Non-interest income
to assets 0.97 1.13 1.36 1.52 1.14
Core tangible
non-interest
expense to tangible
assets 2.68 2.82 2.91 2.95 2.80
Non-interest expense
to assets 2.62 2.76 2.97 2.89 2.95
Efficiency ratio 62.24 62.18 61.08 60.12 62.51
YEAR-TO-DATE GROWTH
Total loans 3% 3% 4% (2)% 3%
Total deposits -- 1 (1) 12 2
Total revenues 21 29 21 19 23
FINANCIAL DATA
(In millions)
Total assets $ 2,667 $ 2,566 $ 2,547 $ 2,546 $ 2,513
Total loans 2,007 1,992 1,978 1,935 1,944
Total intangible
assets 179 180 181 182 182
Total deposits 1,830 1,837 1,811 1,880 1,823
Total stockholders'
equity 408 333 330 329 327
Total stockholders'
common equity 368 333 330 329 327
Total core income 5.2 5.3 5.7 6.0 3.8
Total net income 5.2 5.3 5.7 6.0 3.1
ASSET QUALITY RATIOS
Net charge-offs
(annualized)/
average loans 0.27% 0.19% 0.13% 0.17% 0.34%
Non-performing
assets/total assets 0.48 0.44 0.42 0.51 0.45
Loan loss allowance/
total loans 1.14 1.15 1.14 1.14 1.14
Loan loss allowance/
nonperforming loans 1.88x 2.21x 2.31x 1.82x 2.10x
PER SHARE DATA
Core earnings,
diluted $ 0.44 $ 0.51 $ 0.55 $ 0.58 $ 0.36
Net earnings,
diluted 0.44 0.51 0.55 0.58 0.29
Tangible common book
value 15.47 14.58 14.36 13.97 13.82
Total common book
value 30.07 31.71 31.78 31.38 31.15
Market price at
period end 30.86 32.00 23.65 25.19 26.00
Dividends 0.16 0.16 0.16 0.15 0.15
CAPITAL RATIOS
Common stockholders'
equity to total
assets 13.82% 12.97% 12.96% 12.91% 13.00%
Tangible common
stockholders'
equity to tangible
assets 7.62 6.41 6.30 6.19 6.22
Stockholders' equity
to total assets 15.32% 12.97% 12.96% 12.91% 13.00%
Tangible
stockholders'
equity to tangible
assets 9.23 6.41 6.30 6.19 6.22
----------------------------------------------------------------------
(1) Reconciliations of Non-GAAP financial measures, including all
references to core and tangible amounts, appear on page F-9.
Tangible assets are total assets less total intangible assets.
(2) All performance ratios are annualized and are based on average
balance sheet amounts, where applicable.
(3) The Dec. 31, 2007 total loan annualized year-to-date growth
calculations exclude the acquired FAPB balances and $50 million
in residential mortgage loans sold during September 07.
(4) The Dec. 31, 2007 total deposit annualized year-to-date growth
calculations both exclude the acquired FAPB balances, $22.7
million in repurchase liabilities converted to deposit accounts,
and $21 million in brokered time deposit run-off.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE BALANCES
--------------------------------------------------------------------
Quarters Ended
--------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
(In thousands) 2008 2008 2008 2008 2007
--------------------------------------------------------------------
Assets
Loans
Residential
mortgages $ 679,000 $ 672,363 $ 665,407 $ 659,406 $ 661,937
Commercial
mortgages 808,308 787,543 745,727 712,317 694,339
Commercial
business
loans 185,434 192,065 196,962 201,433 203,539
Consumer
loans 343,894 346,068 354,321 369,659 381,401
---------------------------------------------------------------------
Total loans 2,016,636 1,998,039 1,962,417 1,942,815 1,941,216
Securities 304,466 266,720 260,046 254,561 254,847
Short-term
investments 15,345 4,384 12,633 16,498 4,526
---------------------------------------------------------------------
Total
earning
assets 2,336,447 2,269,143 2,235,096 2,213,874 2,200,589
Goodwill &
other
intangible
assets 179,187 180,387 181,705 182,895 183,902
Other assets 105,097 105,937 105,109 104,027 105,525
---------------------------------------------------------------------
Total assets $2,620,731 $2,555,467 $2,521,910 $2,500,796 $2,490,016
---------------------------------------------------------------------
Liabilities and
stockholders' equity
Deposits
NOW $ 196,326 $ 193,192 $ 202,747 $ 208,275 $ 207,671
Money market 453,977 447,184 491,945 466,673 422,514
Savings 220,565 221,746 212,680 210,310 212,760
Time 746,913 734,195 705,305 715,026 749,785
---------------------------------------------------------------------
Total
interest-
bearing
deposits 1,617,781 1,596,317 1,612,677 1,600,284 1,592,730
Borrowings
and
debentures 382,015 380,453 343,816 346,475 327,383
---------------------------------------------------------------------
Total
interest-
bearing
liabilities 1,999,796 1,976,770 1,956,493 1,946,759 1,920,113
Non-interest
-bearing
demand
deposits 229,175 232,762 221,471 217,355 225,507
Other
liabilities 17,566 10,804 10,780 7,079 11,267
---------------------------------------------------------------------
Total
liabilities 2,246,537 2,220,336 2,188,744 2,171,193 2,156,887
Stock-
holders'
equity 374,194 335,131 333,166 329,603 333,129
---------------------------------------------------------------------
Total
liabilities
and
stock-
holders'
equity $2,620,731 $2,555,467 $2,521,910 $2,500,796 $2,490,016
---------------------------------------------------------------------
Supplementary data
Total non-
maturity
deposits $1,100,043 $1,094,884 $1,128,843 $1,102,613 $1,068,452
Total
deposits 1,846,956 1,829,079 1,834,148 1,817,639 1,818,237
Fully
taxable
equivalent
income adj. 532 532 532 492 541
---------------------------------------------------------------------
(1) Average balances for securities available-for-sale are based
on amortized cost.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
---------------------------------------------------------------------
Quarters Ended
---------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2008 2008 2008 2008 2007
---------------------------------------------------------------------
Earning assets
Loans
Residential mortgages 5.64% 5.65% 5.66% 5.70% 5.54%
Commercial mortgages 6.01 6.24 6.44 6.86 7.34
Commercial business loans 5.99 6.41 6.57 7.55 7.68
Consumer loans 5.46 5.86 6.02 6.58 6.91
Total loans 5.79 5.99 6.11 6.48 6.68
Securities 5.14 5.27 5.39 5.69 5.85
Federal funds sold and
short-term investments 0.54 1.45 1.78 2.24 5.25
Total earning assets 5.67 5.89 6.00 6.36 6.56
Funding liabilities
Deposits
NOW 0.52 0.64 0.73 1.09 1.39
Money Market 1.73 1.86 2.14 2.88 3.41
Savings 0.68 0.61 0.71 0.97 1.10
Time 3.54 3.76 4.08 4.43 4.65
Total interest-bearing
deposits 2.27 2.41 2.62 3.09 3.42
Borrowings and debentures 4.21 4.27 4.29 4.57 4.70
Total interest-bearing
liabilities 2.64 2.77 2.91 3.35 3.64
Net interest spread 3.03 3.12 3.09 3.01 2.92
Net interest margin 3.41 3.48 3.45 3.41 3.38
Cost of funds 2.37 2.48 2.62 3.02 3.26
Cost of deposits 1.99 2.10 2.31 2.72 3.00
---------------------------------------------------------------------
(1) Average balances and yields for securities available-for-sale are
based on amortized cost.
(2) Cost of funds includes all deposits and borrowings.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
--------------------------------------------------------------------
At or for the Quarters Ended
----------------------------------------------------------------------
(Dollars in Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
thousands) 2008 2008 2008 2008 2007
----------------------------------------------------------------------
Net income $ 5,206 $ 5,276 $ 5,713 $ 6,049 $ 3,073
Adj: Loss (gain) on
sale of securities,
net -- (4) 26 -- --
Plus: Other non-
recurring expense -- -- 683 -- 1,198
Adj: Income taxes -- 2 (701) -- (468)
----------------------------------------------------------------------
Core income (A) 5,206 5,274 5,721 6,049 3,803
Plus: Amort. of
intangible assets 838 889 1,019 1,084 1,050
----------------------------------------------------------------------
Tangible core
income (B)$ 6,044 $ 6,163 $ 6,740 $ 7,133 $ 4,853
----------------------------------------------------------------------
Total non-interest
income $ 6,377 $ 7,235 $ 8,511 $ 9,472 $ 7,069
Adj: Loss (gain) on
sale of securities,
net -- (4) 26 -- --
----------------------------------------------------------------------
Total core non-
interest income (C) 6,377 7,231 8,537 9,472 7,069
Net interest income 19,470 19,329 18,647 18,294 18,218
----------------------------------------------------------------------
Total core revenue (D)$25,847 $26,560 $27,184 $27,766 $25,287
----------------------------------------------------------------------
Total non-interest
expense $17,256 $17,737 $18,632 $18,074 $18,393
Less: Other non-
recurring expense -- -- (683) -- (1,198)
----------------------------------------------------------------------
Core non-interest
expense (E) 17,256 17,737 17,949 18,074 17,195
Less: Amortization
of intangible
assets (838) (889) (1,019) (1,084) (1,050)
----------------------------------------------------------------------
Total core tangible
non-interest
expense (F)$16,418 $16,848 $ 16,930 $16,990 $16,145
----------------------------------------------------------------------
(Dollars in
millions, except
per share data)
Total average assets $ 2,621 $ 2,555 $ 2,522 $ 2,501 $ 2,490
Less: Average
intangible assets (179) (180) (182) (183) (184)
----------------------------------------------------------------------
Total average
tangible assets (G)$ 2,442 $ 2,375 $ 2,340 $ 2,318 $ 2,306
----------------------------------------------------------------------
Total average
stockholders'
equity $ 374 $ 335 $ 333 $ 330 $ 333
Less: Average
intangible assets (179) (180) (182) (183) (184)
----------------------------------------------------------------------
Total average
tangible stock-
holders' equity 195 155 151 147 149
Less: Preferred
equity (6) -- -- -- --
----------------------------------------------------------------------
Total average
tangible common
stockholders'
equity (H)$ 189 $ 155 $ 151 $ 147 $ 149
----------------------------------------------------------------------
Total stockholders'
equity, period-end $ 408 $ 335 $ 330 $ 329 $ 327
Less: Intangible
assets, period-end (179) (180) (181) (182) (182)
----------------------------------------------------------------------
Total tangible
stockholders'
equity, period-end 229 155 149 147 145
Less: Preferred
equity (40) -- -- -- --
----------------------------------------------------------------------
Total tangible
common stock-
holders' equity,
period-end (I)$ 189 $ 155 $ 149 $ 147 $ 145
----------------------------------------------------------------------
Total shares
outstanding,
period-end
(thousands) (J) 12,253 10,493 10,385 10,475 10,493
Average diluted
shares outstanding
(thousands) (K) 11,892 10,400 10,384 10,457 10,664
Core earnings per
share (A/K)$ 0.44 $ 0.51 $ 0.55 $ 0.58 $ 0.36
Tangible book value
per share (I/J)$ 15.47 $ 14.58 $ 14.36 $ 13.97 $ 13.82
Core return on
tangible assets (B/G) 0.98% 1.03% 1.16% 1.24% 0.84%
Core return on
tangible common
equity (B/H) 12.70 15.84 17.89 19.52 13.03
Core tangible non-
interest income to
tang. assets (C/G) 1.04 1.21 1.47 1.64 1.23
Core tangible non-
interest exp to
tang. assets (F/G) 2.68 2.82 2.91 2.95 2.80
Efficiency ratio 62.24 62.18 61.08 60.12 62.63
----------------------------------------------------------------------
(1) Efficiency ratio is computed by dividing total tangible core
non-interest expense by the sum of total net interest income on
a fully taxable equivalent basis and total core non-interest
income. The Company uses this non-GAAP measure, which is used
widely in the banking industry, to provide important information
regarding its operational efficiency.
(2) Ratios are annualized and based on average balance sheet amounts,
where applicable.
(3) Quarterly data may not sum to year-to-date data due to rounding.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
For years ended
--------------------------------------------------------------------
Dec. 31,
(Dollars in thousands) 2008 2007
--------------------------------------------------------------------
Net income $22,244 $13,535
Adj: Loss on sale of securities, net 22 591
Adj: Loss on prepayment of borrowings, net -- 1,180
Adj: Loss on sale of loans, net -- 1,991
Plus: Other non-recurring expense 683 2,956
Adj: Income taxes (699) (2,492)
--------------------------------------------------------------------
Core income (A) 22,250 17,761
Plus: Amort. of intangible assets 3,830 3,058
--------------------------------------------------------------------
Tangible core income (B)$26,080 $20,819
--------------------------------------------------------------------
Total non-interest income 31,595 $24,643
Adj: Loss on sale of securities, net 22 591
Adj: Loss on prepayment of borrowings, net -- 1,180
Adj: Loss on sale of loans, net -- 1,991
Total core non-interest income (C) 31,617 28,405
Net interest income 75,740 63,925
--------------------------------------------------------------------
Total core revenue (D)107,357 $92,330
--------------------------------------------------------------------
Total non-interest expense 71,699 $65,494
Less: Other non-recurring expense (683) (2,956)
--------------------------------------------------------------------
Core non-interest expense (E) 71,016 62,538
Less: Amortization of intangible assets (3,830) (3,058)
--------------------------------------------------------------------
Total core tangible non-interest expense (F) 67,186 $59,480
--------------------------------------------------------------------
(Dollars in millions, except per share data)
Total average assets $ 2,551 $ 2,262
Less: Average intangible assets (180) (138)
--------------------------------------------------------------------
Total average tangible assets (G)$ 2,371 $ 2,124
--------------------------------------------------------------------
Total average stockholders' equity $ 343 $ 288
Less: Average intangible assets (180) (138)
--------------------------------------------------------------------
Total average tangible stockholders' equity 163 150
--------------------------------------------------------------------
Less: Preferred equity (1) --
--------------------------------------------------------------------
Total average tangible common stockholders'
equity (H)$ 162 $ 150
--------------------------------------------------------------------
Total stockholders' equity, period-end $ 408 $ 327
Less: Intangible assets, period-end (179) (182)
--------------------------------------------------------------------
Total tangible stockholders' equity, period-end 229 145
Less: Preferred equity (40) --
--------------------------------------------------------------------
Total tangible common stockholders' equity,
period-end (I)$ 189 $ 145
--------------------------------------------------------------------
Total shares outstanding, period-end
(thousands) (J) 12,253 10,493
Average diluted shares outstanding (thousands) (K) 10,791 9,370
Core earnings per share (A/K)$ 2.06 $ 1.90
Tangible book value per share (I/J)$ 15.47 $ 13.82
Core return on tangible assets (B/G) 1.10% 0.98%
Core return on tangible common equity (B/H) 16.16 13.88
Core tangible non-interest income to tang.
assets (C/G) 1.33 1.34
Core tangible non-interest exp to tang. assets (F/G) 2.83 2.80
Efficiency ratio 61.40 62.94
--------------------------------------------------------------------
(1) Efficiency ratio is computed by dividing total tangible core
non-interest expense by the sum of total net interest income on a
fully taxable equivalent basis and total core non-interest
income. The Company uses this non-GAAP measure, which is used
widely in the banking industry, to provide important information
regarding its operational efficiency.