PITTSFIELD, Mass., Oct. 23, 2008 (GLOBE NEWSWIRE) -- Berkshire Hills Bancorp (Nasdaq:BHLB) reported third quarter 2008 earnings of $5.3 million, or $0.51 per share. Earnings for the first nine months of the year were a record $17.0 million, or $1.64 per share. Berkshire's 2008 core earnings per share were up 4% over 2007 core results for both the third quarter and the year-to-date, including the benefit of a stronger net interest margin and improved efficiency. Berkshire is the parent of Berkshire Bank, America's Most Exciting Bank(sm).
Nine month 2007 earnings were $10.5 million, or $1.17 per share, and core earnings per share were $1.57. Results in 2007 included non-core charges related to the third quarter acquisition of Factory Point Bancorp and to balance sheet and expense restructurings. Berkshire's third quarter 2007 core earnings per share were $0.49, while total earnings were $0.9 million, or $0.10 per share.
Berkshire's results in the first nine months of 2008 included the benefit of the acquisition of Factory Point Bancorp in September 2007. Most major categories of revenue and expense increased due to this acquisition, and earnings per share included the impact of additional shares issued in the acquisition. First half earnings also included the seasonal benefit of insurance contingency revenue.
Third quarter highlights include:
* Decrease in non-performing assets to 0.44% of assets compared to
0.48% a year ago
* Decrease in accruing delinquent loans to 0.48% of loans compared
to 0.71% a year ago
* 0.19% net loan charge-offs (percent of average loans --
annualized)
* 3.48% net interest margin, the highest quarterly margin since
2003
* 3% increase in total loans (annualized)
* 6% increase in total deposits (annualized)
Michael P. Daly, President and Chief Executive Officer, stated, "We had another solid quarter, and we are pleased with our record results for earnings and EPS through the first nine months of the year. Our loan performance remained solid, with nonperformers and delinquencies up modestly during the quarter but still down from a year ago. Our deposit growth picked up to a 6% annualized rate in the third quarter, and we posted increases in our mortgage, commercial, and home equity loan portfolios. We are focused on serving the needs of our markets and on traditional and disciplined relationship oriented banking, delivered with our unique emphasis on an engaging customer experience."
Mr. Daly continued, "We were pleased with the strong investor demand for our October stock offering, and as a result, we increased the offering amount by 20% to $36 million. The offering proceeds will bolster our capital and position us well to continue to support our markets with loans and deposits, and to take advantage of growth opportunities that may develop as a result of current economic and financial events. The offering brought our pro forma quarter-end tangible book value per share to $15.57, with total book value per share of $30.55, Our strong balance sheet capital is also supplemented by our record earnings, which produced an 18% annualized core return on tangible equity in the first nine months, with a 7% return on total equity."
Mr. Daly concluded, "We are managing cautiously through these challenging financial markets, and we are mindful of the possible effects of an economic downturn. Nonetheless, we are also focused on the positive economic events in our area. Since June, IBM has announced a planned $1.5 billion expansion in the New York area, and AMD just recently affirmed plans to proceed with building a $4.5 billion chip plant in our New York region. These investments are expected to produce thousands of jobs. We continue to have positive economic drivers in our markets and anticipate that these drivers will benefit our markets, particularly in comparison to national markets."
DIVIDEND DECLARED
The Board of Directors declared a quarterly cash dividend of $0.16 per share to stockholders of record on November 6, 2008 and payable on November 20, 2008. Including this dividend, the total dividends declared for the year-to-date in 2008 are $0.63 per share, which is a 9% increase over 2007.
RESULTS OF OPERATIONS
Most major categories of income and expense increased, primarily due to the contribution of Vermont operations resulting from the Factory Point Bancorp acquisition in September 2007. Core income in 2008 increased by 20% in the third quarter and 22% year-to-date compared to the prior year. Total core revenue increased by 22% in each of these periods. On a per share basis, core income increased by 4% in both periods, and core revenue increased by 6% and 4% in these periods, respectively. Third quarter 2007 income was reduced by non-core charges related to acquisition integration expenses. Income and revenue in that period were also reduced by non-core charges related to balance sheet restructuring and other restructuring actions.
Third quarter net interest income increased by $3.8 million (25%) year-to-year, including the benefit of Vermont balances along with organic growth and a growing net interest margin. Net interest income increased by $0.7 million, growing by 4%, compared to the linked quarter. This linked quarter growth was due in part to 1.5% growth in average earning assets. Net interest income also benefited from a linked quarter increase in the net interest margin to 3.48% from 3.45%. The margin improvement was primarily due to a reduction in deposit costs across all major categories and better pricing opportunities in quality commercial loans.
Third quarter fee income increased by $1.2 million (21%) year-to-year including the additional Vermont income. Linked quarter bank fees grew by 3%, despite a decline in wealth management fees which are linked to stock market performance. Third quarter insurance fees declined seasonally from the linked quarter and were down 1% year-to-year due to the softer insurance market.
The third quarter loan loss provision was $1.2 million in 2008 compared to $0.4 million in 2007. The provision in the most recent quarter exceeded net charge-offs by $0.3 million. Annualized net loan charge-offs remained low at 0.19% of average loans in the third quarter. The quarter-end allowance for loan losses increased to 1.15% of total loans, compared to 1.14% in the linked quarter and last year's third quarter.
Third quarter core non-interest expense increased by $2.8 million (18%) year-to-year primarily due to the Factory Point acquisition. This expense decreased by $0.2 million (1%) compared to the linked quarter. Including the impact of non-core items, total third quarter non-interest expense increased by 7% year-to-year and decreased by 5% compared to the linked quarter. The third quarter efficiency ratio improved to 62% in 2008 from 64% in 2007; it changed from 61% in the linked quarter due to seasonally lower insurance revenues. The effective tax rate was 30% in the most recent quarter, which was unchanged from the linked quarter core effective tax rate. The linked quarter tax rate included a non-core credit resulting from the reduction in the valuation reserve for deferred state tax assets due to higher taxable income in Berkshire Bank.
FINANCIAL CONDITION
Total assets were $2.57 billion at September 30, 2008, representing a 3% annualized increase during the first nine months of the year due to annualized loan growth of 3% to $1.99 billion. Total loans increased by $48 million for the year-to-date, primarily due to $90 million of commercial mortgage growth, representing a 17% annualized increase. Commercial mortgage growth represented increased market share primarily because national lenders and lending conduits have been less active in Berkshire's markets. National lenders have been impacted by capital, liquidity, and asset quality issues in other areas of the country. Despite the decrease in residential home construction, Berkshire's total residential mortgages increased by $15 million at a 3% annualized rate for the year-to-date as the Bank continues to serve the market needs for prime conforming mortgages. Home equity line balances increased by $19 million at a 15% annualized rate. This was due to promotions and market share growth in the Bank's newer markets, underwritten to traditional conforming guidelines. Commercial business loans decreased by $23 million year-to-date due to paydowns, and auto loans decreased by $54 million due to planned runoff in the indirect auto loan portfolio.
Annualized net loan charge-offs remained low at 0.19% of average loans in the third quarter. Quarter-end nonperforming assets totaled 0.44% of total assets, which was down from 0.48% a year ago. Similarly, accruing delinquent loans were 0.48% of total loans, which was down from 0.71%. Nonperforming assets included only two loans over $1 million, which totaled $3.9 million, and accruing delinquent loans included two loans over $1 million, which totaled $2.8 million. Foreclosed assets totaled only $0.9 million at quarter-end, and foreclosures related to residential real estate continue to be nominal. Performing troubled debt restructurings totaled $6.6 million at quarter-end, compared to $7.6 million at the start of the quarter.
Berkshire's securities portfolio consists primarily of U.S. agency mortgage backed securities and municipal bonds and obligations. Berkshire did not own any equity securities in Fannie Mae or Freddie Mac, and its total portfolio of marketable equity securities is less than $3 million. All of the Company's investment securities are performing according to terms, and its entire $14 million portfolio of corporate debt obligations continues to be investment grade.
Total deposits grew by $26 million at a 6% annualized rate to $1.84 billion in the most recent quarter, with increases in most major categories. Most of Berkshire's retail deposit and loan promotions are linked to companion checking accounts. Our third quarter deposit growth was primarily produced in our New York region, where total deposits increased by $14 million at a 42% annualized rate to $152 million. Annualized total deposit growth of 1% for the year-to-date reflected targeted run-off of higher cost municipal, commercial, and brokered time deposit accounts primarily in the second quarter. Berkshire offers 100% insurance on all deposit balances due to its participation in the Massachusetts Depositors Insurance Fund, a private, industry-sponsored insurance company insuring all deposits over the FDIC limit at Massachusetts-chartered savings banks. Early in the fourth quarter, the Company has experienced accelerated deposit growth as customers have moved liquid funds out of unsettled financial markets.
STOCKHOLDERS' EQUITY AND FOURTH QUARTER COMMON STOCK OFFERING
Berkshire completed a public common stock offering of $36 million on October 14, which was increased by 20% from the original offering amount due to strong investor response. The offering was priced at $24 per share, and 1.5 million shares of stock were issued. Total shares outstanding increased by 14% to 12.0 million, and the underwriters were granted a 30 day option to purchase an over-allotment of 225,000 shares. Proceeds from the capital offering are initially being held primarily in short-term investments as management considers its reinvestment plans.
Total stockholders' equity increased by $3 million at a 3% annualized rate to $333 million in the third quarter of 2008. The benefit of retained earnings and stock option exercises was partially offset by a change in accumulated other comprehensive income. The unrealized loss on securities available for sale was $3.1 million, net of tax at quarter-end. Pro forma stockholders' equity including proceeds from the stock offering was $366 million as of quarter-end. Including the stock offering proceeds, the pro forma September 30 ratio of tangible equity to assets increased to 7.7%, and the pro forma ratio of total equity to assets increased to 14.1%. The Bank continues to have the highest regulatory capital rating of "Well Capitalized."
Including the pro forma benefits of the October capital offering, September 30 tangible book value per share increased to $15.57, and total book value per share decreased to $30.55. Tangible book value per share increased to $14.58 at September 30 due to the 16% annualized core return on tangible equity in the third quarter. Total book value per share increased to $31.71 per share, including the benefit of a 6% annualized third quarter return on total equity.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 A.M. Eastern Time on Friday, October 24, 2008 to discuss the results for the quarter and guidance about expected future results. 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 January 25, 2009 by calling 877-344-7529 and entering replay passcode: 423747. The webcast and a podcast will be available at Berkshire's website above for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is headquartered in Pittsfield, Massachusetts. It has approximately $2.6 billion in assets and is the parent of Berkshire Bank -- America's Most Exciting Bank(sm). Berkshire 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
-------------------------------------------------------------------
September 30, June 30, December 31,
-------------------------------------------------------------------
(In thousands) 2008 2008 2007
-------------------------------------------------------------------
Assets
Total cash and cash
equivalents $ 26,445 $ 31,470 $ 33,259
Fed funds sold & short-term
investments 8,124 2,247 7,883
Trading securities 15,267 14,959 --
Securities available for
sale, at fair value 205,554 200,133 197,964
Securities held to maturity,
at amortized cost 25,923 26,485 39,456
Federal Home Loan Bank stock 21,077 21,077 21,077
Loans held for sale 5,401 9,865 3,445
Residential mortgages 672,004 664,581 657,045
Commercial mortgages 794,780 768,365 704,764
Commercial business loans 181,224 197,580 203,564
Consumer loans 344,359 347,515 378,643
-------------------------------------------------------------------
Total loans 1,992,367 1,978,041 1,944,016
Less: Allowance for
loan losses (22,886) (22,581) (22,116)
-------------------------------------------------------------------
Net loans 1,969,481 1,955,460 1,921,900
Premises and equipment, net 37,902 38,054 38,806
Goodwill 161,178 161,526 161,632
Other intangible assets 18,490 19,379 20,820
Cash surrender value of
life insurance policies 35,331 35,007 35,316
Other assets 35,526 31,213 31,874
-------------------------------------------------------------------
Total assets $ 2,565,699 $ 2,546,875 $ 2,513,432
===================================================================
Liabilities and stockholders'
equity
Demand deposits $ 227,271 $ 225,001 $ 231,994
NOW deposits 196,217 193,551 213,150
Money market deposits 450,818 457,694 439,341
Savings deposits 220,800 217,605 210,186
-------------------------------------------------------------------
Total non-maturity deposits 1,095,106 1,093,851 1,094,671
Brokered time deposits 3,008 3,008 21,497
Other time deposits 739,090 714,371 706,395
-------------------------------------------------------------------
Total time deposits 742,098 717,379 727,892
-------------------------------------------------------------------
Total deposits 1,837,204 1,811,230 1,822,563
-------------------------------------------------------------------
Borrowings 366,092 379,376 334,474
Junior subordinated
debentures 15,464 15,464 15,464
Other liabilities 14,257 10,769 14,094
-------------------------------------------------------------------
Total liabilities 2,233,017 2,216,839 2,186,595
Total stockholders' equity 332,682 330,036 326,837
-------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 2,565,699 $ 2,546,875 $ 2,513,432
===================================================================
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
------------------------------------------------------------------
LOAN ANALYSIS
-------------
Sept. 30, June 30, Dec. 31,
2008 2008 2007
------------------------------------------------------------------
(Dollars in Quarterly Year-to-Date
millions) annualized annualized
Balance growth Balance growth Balance
------------------------------------------------------------------
Residential
mortgages:
1 - 4 Family $ 636 4% $ 630 7% $ 610
Construction 36 11 35 (51) 47
------------------------------------------------------------------
Total residential
mortgages 672 4 665 2 657
Commercial
mortgages:
Construction 134 6 132 11 125
Single and
multi-family 70 (32) 76 20 69
Other commercial
mortgages 591 22 560 20 510
------------------------------------------------------------------
Total commercial
mortgages 795 14 768 18 704
Commercial
business loans 181 (34) 198 (6) 204
------------------------------------------------------------------
Total commercial
loans 976 4 966 26 908
Consumer loans:
Auto and other 157 (37) 173 (36) 211
Home equity 187 30 174 7 168
------------------------------------------------------------------
Total consumer
loans 344 (3) 347 (17) 379
------------------------------------------------------------------
Total loans $1,992 3% $1,978 3% $1,944
==================================================================
DEPOSIT ANALYSIS
----------------
Sept. 30, June 30, Dec. 31,
2008 2008 2007
------------------------------------------------------------------
(Dollars in Quarterly Year-to-Date
millions) annualized annualized
Balance growth Balance growth Balance
------------------------------------------------------------------
Demand $ 227 4% $ 225 (6)% $ 232
NOW 196 6 193 (19) 213
Money market 451 (6) 458 9 439
Savings 221 6 218 7 211
------------------------------------------------------------------
Total non-
maturity deposits 1,095 -- 1,094 (0) 1,095
Time less than
$100,000x 394 4 390 (9) 409
Time $100,000x
or more 345 26 324 17 298
Brokered time 3 -- 3 (172) 21
------------------------------------------------------------------
Total time
deposits 742 14 717 (3) 728
------------------------------------------------------------------
Total deposits $1,837 6% $1,811 (1)% $1,823
==================================================================
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------------------------------------
(In thousands,
except per
share data) 2008 2007 2008 2007
------------------------------------------------------------------
Interest and
dividend income
Loans $ 30,078 $ 29,719 $ 91,224 $ 87,393
Securities
and other 3,014 2,912 9,225 8,702
------------------------------------------------------------------
Total interest
and dividend
income 33,092 32,631 100,449 96,095
Interest expense
Deposits 9,676 12,581 32,485 36,849
Borrowings and
junior
subordinated
debentures 4,087 4,571 11,694 13,539
------------------------------------------------------------------
Total interest
expense 13,763 17,152 44,179 50,388
------------------------------------------------------------------
Net interest income 19,329 15,479 56,270 45,707
Non-interest income
Insurance
commissions
and fees 2,640 2,661 11,480 11,438
Deposit service
fees 2,518 1,825 7,159 5,127
Wealth management
fees 1,338 1,044 4,533 2,931
Loan service and
interest rate
swap fees 561 324 1,026 681
------------------------------------------------------------------
Total fee income 7,057 5,854 24,198 20,177
Other 174 433 1,042 1,160
Gain (loss) on
sale of
securities, net 4 (672) (22) (591)
Loss on prepayment
of borrowings, net -- (1,180) -- (1,180)
Loss on sale of
loans, net -- (1,991) -- (1,991)
------------------------------------------------------------------
Total non-interest
income 7,235 2,444 25,218 17,575
------------------------------------------------------------------
Total net revenue 26,564 17,923 81,488 63,282
Provision for loan
losses 1,250 390 3,180 1,240
Non-interest
expense
Salaries and
employee benefits 9,796 7,891 29,294 24,632
Occupancy and
equipment 2,760 2,418 8,502 7,289
Marketing, data
processing, and
professional
services 2,121 2,260 6,423 6,323
Non-recurring
expense -- 1,606 683 1,758
Amortization of
intangible assets 889 684 2,992 2,008
Other 2,171 1,730 6,549 5,092
------------------------------------------------------------------
Total non-interest
expense 17,737 16,589 54,443 47,102
------------------------------------------------------------------
Income before
income taxes 7,577 944 23,865 14,940
Income tax expense 2,301 -- 6,827 4,478
------------------------------------------------------------------
Net income $ 5,276 $ 944 $ 17,038 $ 10,462
==================================================================
------------------------------------------------------------------
Basic earnings
per share $ 0.51 $ 0.11 $ 1.65 $ 1.19
------------------------------------------------------------------
------------------------------------------------------------------
Diluted earnings
per share $ 0.51 $ 0.10 $ 1.64 $ 1.17
------------------------------------------------------------------
Weighted average
shares outstanding
Basic 10,303 8,922 10,330 8,774
Diluted 10,400 9,045 10,421 8,921
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
------------------------------------------------------------------
Quarters Ended
------------------------------------------------------------------
(In thousands,
except per Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
share data) 2008 2008 2008 2007 2007
------------------------------------------------------------------
Interest and
dividend income
Loans $30,078 $29,823 $31,323 $32,666 $29,719
Securities
and other 3,014 3,011 3,200 3,183 2,912
------------------------------------------------------------------
Total interest
and dividend
income 33,092 32,834 34,523 35,849 32,631
Interest expense
Deposits 9,676 10,521 12,288 13,749 12,581
Borrowings and
junior
subordinated
debentures 4,087 3,666 3,941 3,882 4,571
------------------------------------------------------------------
Total interest
expense 13,763 14,187 16,229 17,631 17,152
------------------------------------------------------------------
Net interest
income 19,329 18,647 18,294 18,218 15,479
Non-interest
income
Insurance
commissions
and fees 2,640 3,694 5,146 2,290 2,661
Deposit service
fees 2,518 2,486 2,155 2,620 1,825
Wealth management
fees 1,338 1,567 1,628 1,476 1,044
Loan service and
interest rate
swap fees 561 228 237 91 324
------------------------------------------------------------------
Total fee income 7,057 7,975 9,166 6,477 5,854
Other 174 562 306 551 433
Gain (loss) on
securities, net 4 (26) -- -- (672)
Loss on prepayment
of borrowings, net -- -- -- -- (1,180)
Gain (loss) on
sale of loans, net -- -- -- 41 (1,991)
------------------------------------------------------------------
Total non-interest
income 7,235 8,511 9,472 7,069 2,444
------------------------------------------------------------------
Total net revenue 26,564 27,158 27,766 25,287 17,923
Provision for
loan losses 1,250 1,105 825 3,060 390
Non-interest
expense
Salaries and
employee benefits 9,796 9,842 9,656 9,386 7,891
Occupancy and
equipment 2,760 2,774 2,968 2,656 2,418
Marketing, data
processing, and
professional
services 2,121 2,181 2,121 2,275 2,260
Non-recurring
expense -- 683 -- 1,198 1,606
Amortization of
intangible assets 889 1,019 1,084 1,050 684
Other 2,171 2,133 2,245 1,828 1,730
------------------------------------------------------------------
Total non-interest
expense 17,737 18,632 18,074 18,393 16,589
------------------------------------------------------------------
Income before
income taxes 7,577 7,421 8,867 3,834 944
Income tax expense 2,301 1,708 2,818 761 --
------------------------------------------------------------------
Net income $ 5,276 $ 5,713 $ 6,049 $ 3,073 $ 944
==================================================================
Basic earnings
per share $ 0.51 $ 0.55 $ 0.58 $ 0.29 $ 0.11
Diluted earnings
per share $ 0.51 $ 0.55 $ 0.58 $ 0.29 $ 0.10
Weighted average
shares outstanding
Basic 10,303 10,302 10,386 10,524 8,922
Diluted 10,400 10,384 10,457 10,664 9,045
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
ASSET QUALITY ANALYSIS
------------------------------------------------------------------
At or for the Quarters Ended
------------------------------------------------------------------
(Dollars in Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
thousands) 2008 2008 2008 2007 2007
------------------------------------------------------------------
NON-PERFORMING
ASSETS
Nonaccruing
loans:
Residential
mortgages $ 1,315 $ 763 $ 1,060 $ 726 $ 623
Commercial
mortgages 6,178 5,329 7,082 5,177 4,977
Commercial
business loans 2,210 3,103 3,557 4,164 5,553
Indirect auto
and installment
loans 576 503 374 346 164
Home equity 74 74 67 95 110
------------------------------------------------------------------
Total nonaccruing
loans 10,353 9,772 12,140 10,508 11,427
Other real estate
owned 941 1,050 755 866 348
------------------------------------------------------------------
Total
nonperforming
assets $11,294 $10,822 $12,895 $11,374 $11,775
==================================================================
Total
nonperforming
loans/total loans 0.52% 0.49% 0.63% 0.54% 0.59%
Total
nonperforming
assets/total
assets 0.44% 0.42% 0.51% 0.46% 0.48%
PROVISION AND
ALLOWANCE FOR
LOAN LOSSES
Balance at
beginning
of period $22,581 $22,130 $22,116 $22,108 $19,151
Charged-off
loans (1,331) (754) (883) (3,117) (1,954)
Recoveries on
charged-off loans 386 100 72 65 68
------------------------------------------------------------------
Net loans
charged-off (945) (654) (811) (3,052) (1,886)
Acquired allowance -- -- -- -- 4,453
Provision for
loan losses 1,250 1,105 825 3,060 390
------------------------------------------------------------------
Balance at end
of period $22,886 $22,581 $22,130 $22,116 $22,108
==================================================================
Allowance for
loan losses/
nonperforming
loans 221% 231% 182% 210% 193%
Allowance for
loan losses/
total loans 1.15% 1.14% 1.14% 1.14% 1.14%
NET LOAN
CHARGE-OFFS
Residential
mortgages $ (119) $- $ (24) $- $-
Commercial
mortgages (63) (131) (175) -- --
Commercial
business loans (265) (121) (213) (2,683) (1,497)
Indirect auto and
installment loans (498) (402) (339) (319) (329)
Home equity -- -- (60) (50) (60)
------------------------------------------------------------------
Total net $ (945) $ (654) $ (811) $(3,052) $(1,886)
==================================================================
Net charge-offs
(YTD annualized)/
average loans 0.16% 0.15% 0.17% 0.34% 0.23%
DELINQUENT LOANS /
TOTAL LOANS
30-89 Days
delinquent 0.45% 0.33% 0.41% 0.39% 0.61%
90 + Days
delinquent and
still accruing 0.03% 0.04% 0.03% 0.04% 0.10%
------------------------------------------------------------------
Total accruing
delinquent loans 0.48% 0.37% 0.44% 0.43% 0.71%
Nonaccruing loans 0.52% 0.49% 0.63% 0.54% 0.59%
------------------------------------------------------------------
Total delinquent
loans 1.00% 0.86% 1.07% 0.97% 1.30%
==================================================================
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
------------------------------------------------------------------
At or for the Quarters Ended
------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2008 2008 2008 2007 2007
------------------------------------------------------------------
PERFORMANCE RATIOS
Core return on
tangible assets 1.03% 1.16% 1.24% 0.84% 0.97%
Return on
total assets 0.82 0.91 0.97 0.50 0.18
Core return on
tangible equity 15.85 17.89 19.52 13.03 13.64
Return on total
equity 6.26 6.89 7.38 3.74 1.44
Net interest
margin, fully
taxable
equivalent 3.48 3.45 3.41 3.38 3.20
Core tangible
non-interest
income to
tangible assets 1.21 1.47 1.64 1.23 1.21
Non-interest
income to assets 1.13 1.36 1.52 1.14 0.44
Core tangible
non-interest
expense to
tangible assets 2.82 2.91 2.95 2.80 2.74
Non-interest
expense
to assets 2.76 2.97 2.89 2.95 3.00
Efficiency ratio 62.18 61.08 60.12 62.51 64.13
YEAR-TO-DATE GROWTH
Total loans 3% 4% (2)% 3% 4%
Total deposits 1 (1) 12 2 --
Total revenues 29 21 19 23 24
FINANCIAL DATA
(In millions)
Total assets $ 2,566 $ 2,547 $ 2,546 $ 2,513 $ 2,472
Total loans 1,992 1,978 1,935 1,944 1,939
Total intangible
assets 180 181 182 182 183
Total deposits 1,837 1,811 1,880 1,823 1,796
Total
stockholders'
equity 333 330 329 327 331
Total core income 5.3 5.7 6.0 3.8 4.4
Total net income 5.3 5.7 6.0 3.1 0.9
ASSET QUALITY RATIOS
Net charge-offs
(annualized)/
average loans 0.16% 0.13% 0.17% 0.34% 0.23%
Non-performing
assets/total
assets 0.44 0.42 0.51 0.45 0.48
Loan loss
allowance/total
loans 1.15 1.14 1.14 1.14 1.14
Loan loss
allowance/
nonperforming
loans 2.21x 2.31x 1.82x 2.10x 1.93x
PER SHARE DATA
Core earnings,
diluted $ 0.51 $ 0.55 $ 0.58 $ 0.36 $ 0.49
Net earnings,
diluted 0.51 0.55 0.58 0.29 0.10
Tangible book
value 14.58 14.36 13.97 13.82 13.79
Total book value 31.71 31.78 31.38 31.15 30.82
Market price at
period end 32.00 23.65 25.19 26.00 30.23
Dividends 0.16 0.16 0.15 0.15 0.15
CAPITAL RATIOS
Stockholders'
equity to
total assets 12.97% 12.96% 12.91% 13.00% 13.38%
Tangible
stockholders'
equity to
tangible assets 6.41 6.30 6.19 6.22 6.47
------------------------------------------------------------------
(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 and Sept. 30, 2007 total loan annualized
year-to-date growth calculations both exclude the acquired FAPB
balances and $50 million in residential mortgage loans sold
during September.
(4) The Dec. 31, 2007 and Sept. 30, 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.
(5) Total revenue includes the impact of the insurance agencies and
Factory Point Bancorp acquisitions.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE BALANCES
---------------------------------------------------------------------
Quarters Ended
---------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(In thousands) 2008 2008 2008 2007 2007
---------------------------------------------------------------------
Assets
Loans
Residential
mortgages $ 672,363 $ 665,407 $ 659,406 $ 661,937 $ 634,374
Commercial
mortgages 787,543 745,727 712,317 694,339 608,891
Commercial
business
loans 192,065 196,962 201,433 203,539 171,334
Consumer
loans 346,068 354,321 369,659 381,401 349,311
---------------------------------------------------------------------
Total loans 1,998,039 1,962,417 1,942,815 1,941,216 1,763,910
Securities 266,720 260,046 254,561 254,847 224,207
Short-term
investments 4,384 12,633 16,498 4,526 4,511
---------------------------------------------------------------------
Total earning
assets 2,269,143 2,235,096 2,213,874 2,200,589 1,992,628
Goodwill &
other
intangible
assets 180,387 181,705 182,895 183,902 126,797
Other assets 105,937 105,109 104,027 105,525 93,165
---------------------------------------------------------------------
Total assets $2,555,467 $2,521,910 $2,500,796 $2,490,016 $2,212,590
=====================================================================
Liabilities and
stockholders'
equity
Deposits
NOW $ 193,192 $ 202,747 $ 208,275 $ 207,671 $ 141,529
Money market 447,184 491,945 466,673 422,514 329,943
Savings 221,746 212,680 210,310 212,760 198,372
Time 734,195 705,305 715,026 749,785 701,062
---------------------------------------------------------------------
Total interest-
bearing
deposits 1,596,317 1,612,677 1,600,284 1,592,730 1,370,906
Borrowings and
debentures 380,453 343,816 346,475 327,383 374,537
---------------------------------------------------------------------
Total interest-
bearing
liabilities 1,976,770 1,956,493 1,946,759 1,920,113 1,745,443
Non-interest-
bearing demand
deposits 232,762 221,471 217,355 225,507 186,654
Other
liabilities 10,804 10,780 7,079 11,267 4,298
---------------------------------------------------------------------
Total
liabilities 2,220,336 2,188,744 2,171,193 2,156,887 1,936,395
Stockholders'
equity 335,131 333,166 329,603 333,129 276,195
---------------------------------------------------------------------
Total
liabilities
and
stockholders'
equity $2,555,467 $2,521,910 $2,500,796 $2,490,016 $2,212,590
=====================================================================
Supplementary
data
Total non-
maturity
deposits $1,094,884 $1,128,843 $1,102,613 $1,068,452 $ 856,498
Total deposits 1,829,079 1,834,148 1,817,639 1,818,237 1,557,560
Fully taxable
equivalent
income adj. 532 532 492 541 533
---------------------------------------------------------------------
(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
---------------------------------------------------------------------
Sept.30, June 30, Mar. 31, Dec. 31, Sept.30,
2008 2008 2008 2007 2007
---------------------------------------------------------------------
Earning assets
Loans
Residential mortgages 5.65% 5.66% 5.70% 5.54% 5.35%
Commercial mortgages 6.24 6.44 6.86 7.34 7.49
Commercial business loans 6.41 6.57 7.55 7.68 8.06
Consumer loans 5.86 6.02 6.58 6.91 7.03
Total loans 5.99 6.11 6.48 6.68 6.68
Securities 5.27 5.39 5.69 5.85 6.15
Federal funds sold and
short-term investments 1.45 1.78 2.24 5.25 5.25
Total earning assets 5.89 6.00 6.36 6.56 6.70
Funding liabilities
Deposits
NOW 0.64 0.73 1.09 1.39 1.40
Money Market 1.86 2.14 2.88 3.41 3.67
Savings 0.61 0.71 0.97 1.10 1.17
Time 3.76 4.08 4.43 4.65 4.69
Total interest-bearing
deposits 2.41 2.62 3.09 3.42 3.64
Borrowings and debentures 4.27 4.29 4.57 4.70 4.84
Total interest-bearing
liabilities 2.77 2.91 3.35 3.64 3.90
Net interest spread 3.12 3.09 3.01 2.92 2.80
Net interest margin 3.48 3.45 3.41 3.38 3.20
Cost of funds 2.48 2.62 3.02 3.26 3.52
Cost of deposits 2.10 2.31 2.72 3.00 3.20
---------------------------------------------------------------------
(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
---------------------------------------------------------------------
Sept.30, June 30, Mar.31, Dec.31, Sept.30,
(Dollars in thousands) 2008 2008 2008 2007 2007
---------------------------------------------------------------------
Net income $ 5,276 $ 5,713 $ 6,049 $ 3,073 $ 944
Adj: Loss (gain) on
sale of securities,
net (4) 26 -- -- 672
Adj: Loss on
prepayment of
borrowings, net -- -- -- -- 1,180
Adj: Loss on sale of
loans, net -- -- -- -- 1,991
Plus: Other non-
recurring expense -- 683 -- 1,198 1,606
Adj: Income taxes 2 (701) -- (468) (1,995)
---------------------------------------------------------------------
Core income (A) 5,274 5,721 6,049 3,803 4,398
Plus: Amort. of
intangible assets 889 1,019 1,084 1,050 684
---------------------------------------------------------------------
Tangible core income (B) $ 6,163 $ 6,740 $ 7,133 $ 4,853 $ 5,082
---------------------------------------------------------------------
Total non-interest
income $ 7,235 $ 8,511 $ 9,472 $ 7,069 $ 2,444
Adj: Loss (gain) on
sale of securities,
net (4) 26 -- -- 672
Adj: Loss on
prepayment of
borrowings, net -- -- -- -- 1,180
Adj: Loss on sale of
loans, net -- -- -- -- 1,991
---------------------------------------------------------------------
Total core non-
interest income (C) 7,231 8,537 9,472 7,069 6,287
Net interest income 19,329 18,647 18,294 18,218 15,479
---------------------------------------------------------------------
Total core revenue (D) $26,560 $27,184 $27,766 $25,287 $21,766
---------------------------------------------------------------------
Total non-interest
expense $17,737 $18,632 $18,074 $18,393 $16,589
Less: Other non-
recurring expense -- (683) -- (1,198) (1,606)
---------------------------------------------------------------------
Core non-interest
expense (E) 17,737 17,949 18,074 17,195 14,983
Less: Amortization of
intangible assets (889) (1,019) (1,084) (1,050) (684)
---------------------------------------------------------------------
Total core tangible
non-interest expense (F) $16,848 $16,930 $16,990 $16,145 $14,299
---------------------------------------------------------------------
(Dollars in millions,
except per share data)
Total average assets $ 2,555 $ 2,522 $ 2,501 $ 2,490 $ 2,213
Less: Average
intangible assets (180) (182) (183) (184) (127)
---------------------------------------------------------------------
Total average tangible
assets (G) $ 2,375 $ 2,340 $ 2,318 $ 2,306 $ 2,086
---------------------------------------------------------------------
Total average
stockholders' equity $ 335 $ 333 $ 330 $ 333 $ 276
Less: Average
intangible assets (180) (182) (183) (184) (127)
---------------------------------------------------------------------
Total average tangible
stockholders' equity (H) $ 155 $ 151 $ 147 $ 149 $ 149
---------------------------------------------------------------------
Total stockholders'
equity, period-end $ 335 $ 330 $ 329 $ 327 $ 331
Less: Intangible
assets, period-end (180) (181) (182) (182) (183)
---------------------------------------------------------------------
Total tangible
stockholders' equity,
period-end (I) $ 155 $ 149 $ 147 $ 145 $ 148
---------------------------------------------------------------------
Total shares
outstanding, period-
end (thousands) (J) 10,493 10,385 10,475 10,493 10,729
Average diluted shares
outstanding
(thousands) (K) 10,400 10,384 10,457 10,664 9,045
Core earnings per
share (A/K)$ 0.51 $ 0.55 $ 0.58 $ 0.36 $ 0.49
Tangible book value
per share (I/J)$ 14.58 $ 14.36 $ 13.97 $ 13.82 $ 13.79
Core return on
tangible assets (B/G) 1.03% 1.16% 1.24% 0.84% 0.97%
Core return on
tangible equity (B/H) 15.84 17.89 19.52 13.03 13.64
Core tangible non-
interest income to
tang. assets (C/G) 1.21 1.47 1.64 1.23 1.21
Core tangible non-
interest exp to tang.
assets (F/G) 2.82 2.91 2.95 2.80 2.74
Efficiency ratio 62.18 61.08 60.12 62.63 64.13
---------------------------------------------------------------------
For nine months ended
---------------------------------------------------------------------
Sept. 30,
(Dollars in thousands) 2008 2007
---------------------------------------------------------------------
Net income $ 17,038 $ 10,462
Adj: Loss (gain) 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 1,758
Adj: Income taxes (699) (2,023)
---------------------------------------------------------------------
Core income (A) 17,044 13,959
Plus: Amort. of intangible assets 2,992 2,008
---------------------------------------------------------------------
Tangible core income (B)$ 20,036 $ 15,967
---------------------------------------------------------------------
Total non-interest income 25,218 $ 17,574
Adj: Loss (gain) 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) 25,240 21,336
Net interest income 56,270 45,707
---------------------------------------------------------------------
Total core revenue (D)$ 81,510 $ 67,043
---------------------------------------------------------------------
Total non-interest expense $ 54,443 $ 47,101
Less: Other non-recurring expense (683) (1,758)
---------------------------------------------------------------------
Core non-interest expense (E) 53,760 45,343
Less: Amortization of intangible assets (2,992) (2,008)
---------------------------------------------------------------------
Total core tangible non-interest expense (F)$ 50,768 $ 43,335
---------------------------------------------------------------------
(Dollars in millions, except per share data)
Total average assets $ 2,528 $ 2,175
Less: Average intangible assets (181) (121)
---------------------------------------------------------------------
Total average tangible assets (G)$ 2,347 $ 2,054
---------------------------------------------------------------------
Total average stockholders' equity $ 331 $ 264
Less: Average intangible assets (182) (121)
---------------------------------------------------------------------
Total average tangible stockholders' equity (H)$ 149 $ 143
---------------------------------------------------------------------
Total stockholders' equity, period-end $ 335 $ 331
Less: Intangible assets, period-end (180) (183)
---------------------------------------------------------------------
Total tangible stockholders' equity,
period-end (I)$ 155 $ 148
---------------------------------------------------------------------
Total shares outstanding,
period-end (thousands) (J) 10,493 10,729
Average diluted shares outstanding (thousands)(K) 10,421 8,921
Core earnings per share (A/K)$ 1.64 $ 1.57
Tangible book value per share (I/J)$ 14.58 $ 13.79
Core return on tangible assets (B/G) 1.14% 0.99%
Core return on tangible equity (B/H) 17.61 14.30
Core tangible non-interest income to tang.
assets (C/G) 1.44 1.39
Core tangible non-interest exp to tang.
assets (F/G) 2.89 2.81
Efficiency ratio 61.12 63.10
--------------------------------------------------------------------
(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.