Berkshire Hills Bancorp, Inc. Reports 10% Increase in Core Quarterly Earnings Per Diluted Share and Successful Merger Integration.PITTSFIELD Pittsfield, city (1990 pop. 48,622), seat of Berkshire co., W Mass., between mountain ranges, on branches of the Housatonic River; inc. as a town 1761, as a city 1889. The city is the metropolis of the Berkshire resort area. , Mass. -- Berkshire Hills Berkshire Hills (bûrk`shər, –shĭr), mountainous region of wooded hills with many small lakes and streams, W Mass. The Berkshires are a southern extension of the Green Mts. Bancorp, Inc. --Recent Announcements Highlight New Branches and Acquisitions --Stock Listing Changed to Nasdaq, Symbol "BHLB" --Dividend Declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. Berkshire Hills Bancorp, Inc. ("Berkshire Berkshire (bärk`shĭr, –shər, bûrk`–) or Berks (bärks, bûrks), former county, S central England. " or the "Company") (NASDAQ: BHLB), the holding Company for Berkshire Bank (the "Bank"), today reported $0.54 in core net income per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) for the third quarter of 2005, a 10% increase compared to $0.49 for the third quarter of 2004. Core net income totaled $4.7 million for the third quarter of 2005, increasing by 70% compared to $2.8 million for the third quarter of 2004, primarily due to the acquisition of Woronoco Bancorp, Inc. on June June: see month. 1, 2005. Core earnings per share growth was less than core earnings growth, primarily due to the issuance of shares for the acquisition. The Company reported total net income of $4.7 million ($0.54 per diluted share) for the third quarter of 2005, compared to total net income of $3.0 million ($0.53 per diluted share) for the third quarter of 2004. Core earnings for the first nine months of 2005 were $1.59 per diluted share, increasing by 13% compared to $1.41 per diluted share for the first nine months of 2004. Core earnings were $11.2 million in 2005 compared to $8.1 million in 2004 for these same periods. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for the first nine months of 2005 totaled $3.4 million ($0.48 per diluted share) as a result of an $8.7 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the Bank's Employee Stock Ownership Plan in June 2005. This charge had no negative impact on stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. . GAAP net income for the first nine months of 2004 was $8.3 million ($1.45 per diluted share). Commenting on the Company's performance, Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. P. Daly, President and Chief Executive Officer of the Company and the Bank, stated, "Our acquisition of Woronoco Bancorp Inc. has increased our market scope, resulting in improved volume and efficiency which have benefited earnings, resulting in 10% year-to-year growth in third quarter core earnings per share. The Woronoco integration has been substantially completed and we have achieved our objectives for cost savings and core account retention. Our earnings gains were achieved despite the effort required for the successful integration of the Woronoco operations, the cost of opening a third New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of branch, and obtaining approval for a fourth New York branch. Our net interest margin improved to 3.31% in the most recent quarter, despite competitive market conditions and the continued impact of the flattening
The flattening, ellipticity, or oblateness of an oblate spheroid is the "squashing" of the spheroid's pole, down towards its equator. yield curve. Our efficiency ratio improved to a record 55.3% in the third quarter. Additionally, with our attention to credit quality, we continue to report favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. asset quality experience. Our high focus on customer service is expected to generate future earnings gains from our growing franchise." DIVIDEND DECLARED The Board of Directors declared a quarterly cash dividend of $0.14 per share, payable on November November: see month. 21, 2005, to stockholders of record at the close of business on November 7, 2005. The quarterly cash dividend was increased to $0.14 per share beginning in August, increasing by $0.02 per share, or 17%, compared to recent quarters. THIRD QUARTER AND LATEST HIGHLIGHTS --Completed successful integration of Woronoco operations, achieving cost savings of 36%, exceeding 30% original target. --Completed conversion of Woronoco core banking information systems in August. --Opened new full service office in Clifton Park, New York Clifton Park is a town in Saratoga County, New York, United States. The population was 43,995 at the 2004 census. The name is derived from an early land patent. The Town of Clifton Park is in the south part of the county and is located approx. and obtained regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals to open a new full service office in East Greenbush East Greenbush is the name the following places in the United States of America:
--Increased total transaction account deposit balances at a 9% annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate during the third quarter. --Repurchased 54,600 shares of the Company's common stock at an average price of $32.93 per share. --Changed common stock listing to NASDAQ national market with trading symbol Trading symbol See: Ticker symbol "BHLB". --On October October: see month. 26, 2005 acquired the MacDonald Mac·don·ald , Sir John Alexander 1815-1891. Canadian politician and the first prime minister of the Dominion of Canada (1867-1873 and 1878-1891). He is considered the organizer of the Canadian confederation, established in 1867. & Johnson (East Longmeadow East Longmeadow, town (1990 pop. 13,367), Hampden co., SW Mass., a suburb of Springfield; settled c.1740, set off from Longmeadow and inc. 1894. It is chiefly residential, with some manufacturing industries. ) and Onofrey (Springfield Springfield. 1 City (1990 pop. 105,227), state capital and seat of Sangamon co., central Ill., on the Sangamon River; settled 1818, inc. as a city 1840. ) insurance agencies. CORE NET INCOME The following table represents a reconciliation of GAAP net income to core net income and earnings per share.
3Q2005 2Q2005 3Q2004 9mos2005 9mos2004
----------------------------------------
(In thousands, except earnings per share)
----------------------------------------
Net income (loss) - GAAP $4,746 $(4,608) $3,007 $3,389 $8,333
Less: Gain on sale of
securities, net 541 902 211 1,722 689
Plus: Non-recurring loss on
sale of discontinued
operations - - - - 431
Plus: ESOP termination expense - 8,379 - 8,379 -
Plus: Merger and conversion
expense 538 626 - 1,164 -
---------------------------------------
Net income - core $4,743 $3,495 $2,796 $11,210 $8,075
Earnings per diluted share -
GAAP $0.54 $(0.74) $0.53 $0.48 $1.45
Earnings per diluted share -
core $0.54 $0.53 $0.49 $1.59 $1.41
Average diluted shares
outstanding 8,856 6,257 5,721 7,061 5,735
The ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). termination expense is net of a $288,000 tax benefit. Other adjustments to arrive at core net income are tax effected using a tax rate of 35.0% in 2005 and 32.0% in 2004. Core earnings per share in the second quarter of 2005 include the effect of dilutive shares totaling 359,000. FINANCIAL CONDITION Total assets were $2.0 billion at September September: see month. 30, 2005, up from $1.3 billion at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2004. The increase included approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.8 billion in assets related to the Woronoco acquisition, and is net of a reduction of $243 million in loans and securities under a de-leveraging plan executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the acquisition. Most categories of assets and liabilities increased primarily due to the acquisition of Woronoco. Loans totaled $1.41 billion at September 30, 2005, increasing by $584 million (71%) from year-end 2004. Loan growth included $528 million related to the Woronoco acquisition. Excluding the impact of the loans acquired through the Woronoco acquisition and $4 million in third quarter loan sales, total loans increased by $60 million for the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , growing at a 10% annualized rate. Growth was spread among all major loan categories and in all major markets. While total loans declined by 1% during the most recent quarter, the loan commitment pipeline grew to a record $87 million at September 30, 2005. Investment securities totaled $426 million at the end of the third quarter, increasing by $12 million (3%) compared to $414 million at year-end 2004. This increase was due to securities acquired through the Woronoco acquisition, net of sales and maturities under the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. de-leveraging plan, along with the sale of $46 million in securities by the Bank in the second quarter to provide funds for the acquisition. Deposits totaled $1.35 billion at the end of the third quarter, increasing by $502 million (59%) from year-end 2004. Deposit growth included $443 million related to the Woronoco acquisition. Total deposits increased at a 13% annualized rate during the most recent quarter. Low cost transaction account balances increased at a 9% annualized rate during the quarter. Excluding the impact of the acquired Woronoco deposits, total deposits increased by $59 million for the year-to-date, growing at a 9% annualized rate. Stockholders' equity totaled $246 million at the end of the third quarter, increasing by $114 million, or 86%, from year-end 2004. Consideration for the Woronoco acquisition included the issuance of 2.93 million new common shares valued at $108 million, with an additional $4 million credit to equity for the value of outstanding Woronoco stock options. The ESOP termination had no negative impact on stockholders' equity because the related charge to earnings was offset by credits to unearned compensation and additional paid in capital. These credits also offset the $5 million impact of the transfer of 146,971 shares of treasury stock, which represented full payment of the ESOP loan. The contribution of core earnings was mostly offset by dividends, additional treasury stock purchases of $5.0 million, and a $3.8 million decrease in accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as due to lower securities prices. Goodwill increased to $88 million and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. increased to $12 million due to the Woronoco acquisition. As a result, tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book value per share was $17.03 at September 30, 2005, compared to $21.19 at year-end 2004. Total book value per share increased to $28.68 compared to $22.43 for these same periods. The ratio of tangible equity to tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. was 7.55% at the end of the third quarter, down from 9.55% at year-end 2004. ASSET QUALITY Asset quality indicators remained favorable and were stable during the last quarter. The loans added through the Woronoco acquisition were primarily concentrated in comparatively low risk residential mortgage and home equity loans. Through the first nine months, the annualized rate of net loan charge-offs remained comparatively low at 0.06%. Additionally, the ratio of non-performing assets to total assets declined during the nine months to 0.08%. The allowance for loan losses declined to 0.93% of total loans, and the ratio of the allowance to non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. remained strong at 841% at the end of the most recent quarter, compared to 811% at year-end 2004. RESULTS OF OPERATIONS All major categories of income and expense increased in the third quarter of 2005 primarily due to the acquisition of Woronoco Bancorp on June 1, 2005. Second quarter 2005 results included one month's contribution from Woronoco's operations, and the third quarter was the first full quarter for the newly combined entity. Core earnings per share reflects the ongoing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets of the Company, and includes the impact of shares issued in conjunction with the Woronoco acquisition. Third quarter core earnings per share increased by 10% in 2005 compared to 2004. The efficiency ratio improved to 55.3% in the third quarter of 2005, compared to 60.4% in the third quarter of 2004. The return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). was 0.92% in both of these periods. Berkshire produced a 13.5% return on average tangible equity in the third quarter of 2005, compared to 10.2% in the third quarter of 2004. Core earnings per share increased by 13% for the first nine months of 2005 compared to the same period in 2004. In addition to the benefits of the Woronoco merger, this increase reflected the benefit of organic loan and deposit growth recorded by Berkshire over this period. The improvements also reflected the benefit of higher service fee income, including wealth management service fees, as well as the benefit of controlled expense growth and gains on the sale of securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. loans. Core earnings and net income were approximately the same in the most recent quarter. Merger and conversion expense totaling $828,000 pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern was excluded from the determination of core earnings. The Woronoco core systems were converted to the Berkshire systems in mid-August Noun 1. mid-August - the middle part of August period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" , and by the end of the quarter most integration activities were substantially completed. Merger and conversion expense consisted primarily of costs related to systems conversions, interim systems, and operations integrations, as well as the cost of interim Woronoco staff retained through the conversion dates. Net securities gains are also excluded from the determination of core earnings. These gains totaled $832,000 pretax during the quarter and primarily represented gains on equity sales as the Bank adjusted its position to decrease exposure to equity market fluctuations. Berkshire's net interest margin increased to 3.31% in the third quarter of 2005, compared to 3.26% in the second quarter of 2005, benefiting from the Bank's positive sensitivity to higher interest rates, its deposit and loan pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. , and the de-leveraging program. Non-interest income totaled $3.96 million in the third quarter of 2005, compared to $3.92 million in the second quarter of 2005. Excluding net securities gains of $832 thousand and $1.39 million, non-interest income totaled $3.12 million and $2.53 million in these two quarters, respectively. The ratio of non-interest income, excluding securities gains, to average assets was 0.60% in the most recent quarter, compared to 0.65% in the prior quarter, partially due to the lower ratio in the acquired Woronoco operations. Non-interest expense totaled $11.6 million in the third quarter of 2005, compared to $18.1 million in the second quarter of 2005. Excluding merger and conversion expenses of $828 thousand and $963 thousand in the two quarters, respectively, and excluding $8.67 million in ESOP termination expenses in the second quarter, non-interest expense totaled $10.8 million and $8.4 million in these two quarters, respectively. The ratio of non-interest expense, excluding the above charges, to average assets decreased to 2.09% from 2.16% in these linked quarters due to the efficiencies of the combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
Michael P. Daly, President and Chief Executive Officer and Wayne Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. F. Patenaude, Senior Vice President, Treasurer TREASURER. An officer entrusted with the treasures or money either of a private individual, a corporation, a company, or a state. 2. It is his duty to use ordinary diligence in the performance of his office, and to account with those whose money he has. and Chief Financial Officer, will host a conference call at 10:00 A.M. (ET) on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , October 28, 2005. Persons wishing to access the conference call may do so by dialing 1-877-407-8035. Replays of the conference call will be available beginning October 28, 2005 at 1:00 P.M. (ET) through November 4, 2005 at 11:59 P.M. (ET) by dialing 1-877-660-6853 and using Account #286 and Conference ID#171163 (both numbers are needed to access the replay). Berkshire Hills Bancorp, Inc. is the holding company for Berkshire Bank. Established in 1846, Berkshire Bank is one of Massachusetts' oldest and largest independent banks and is the largest banking institution based in Western Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. . The Bank is headquartered in
Pittsfield, Massachusetts "Pittsfield" redirects here. For other places named Pittsfield, see Pittsfield (disambiguation).Pittsfield is the largest city and county seat of Berkshire County, Massachusetts, United States. with branch offices serving communities throughout Western Massachusetts and Northeastern north·east n. 1. Abbr. NE The direction or point on the mariner's compass halfway between due north and due east, or 45° east of due north. 2. An area or region lying in the northeast. 3. New York, and a municipal bank and representative office in New York. The Bank is committed to operating as an independent super-community bank, delivering exceptional customer service and a broad array of competitively priced retail and commercial products to its customers. For more information on Berkshire Hills Bancorp, Inc., visit www.berkshirebank.com or call 413-443-5601. Statements contained in this news release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on the beliefs and expectations of management, as well as the assumptions made using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. These risks and uncertainties include among others: changes in market interest rates and general and regional economic conditions; changes in government regulations; changes in accounting principles; and the quality or composition of the loan and investment portfolios. Additionally, on June 1, 2005 the Company completed a merger with Woronoco Bancorp, Inc. Risks and uncertainties related to the merger include the achievement of anticipated future earnings benefits. Additionally, other risks and uncertainties may be described in the Company's quarterly reports on Form 10-Q Form 10-Q See 10-Q. for the quarters ended March 31, June 30 and September 30 and in its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , each filed with the Securities and Exchange Commission, which are available at the Securities and Exchange Commission's internet website (www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. ) and to which reference is hereby made. Therefore, actual future results may differ significantly from results discussed in these forward-looking statements.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
--------------------------
September 30, December 31,
2005 2004
--------------------------
(In thousands)
Assets
Cash and due from banks $30,335 $15,237
Short-term investments 1,177 2,665
--------------------------
Total cash and cash equivalents 31,512 17,902
Securities available-for-sale, at fair
value 398,937 384,421
Securities held-to-maturity, at
amortized cost 26,951 29,942
Loans held for sale 1,852 1,053
Total loans 1,412,109 828,179
Less: Allowance for loan losses (13,123) (9,337)
--------------------------
Net loans 1,398,986 818,842
Premises and equipment, net 26,547 14,780
Accrued interest receivable 8,177 5,472
Goodwill 87,791 6,782
Identifiable intangible assets 11,951 472
Bank owned life insurance 18,800 18,200
Other assets 21,587 12,249
--------------------------
Total assets $2,033,091 $1,310,115
==========================
Liabilities and Stockholders' Equity
Deposits $1,347,751 $845,789
Borrowings 436,074 327,926
Accrued expenses and other liabilities 3,629 4,664
--------------------------
Total liabilities 1,787,454 1,178,379
--------------------------
Stockholders' equity:
Preferred stock ($.01 par value;
1,000,000 shares authorized; none
issued or outstanding) - -
Common stock ($.01 par value;
26,000,000 shares authorized;
10,602,553 shares issued at
September 30, 2005 and 7,673,761
at December 31, 2004; shares
outstanding: 8,565,596 at
September 30, 2005 and 5,873,563
at December 31, 2004) 106 77
Additional paid-in capital 198,744 77,588
Unearned compensation (1,788) (7,414)
Retained earnings 95,811 94,996
Accumulated other comprehensive income 400 4,214
Treasury stock at cost (2,036,957
shares at September 30, 2005 and
1,800,198 at December 31, 2004) (47,636) (37,725)
Total stockholders' equity 245,637 131,736
--------------------------
Total liabilities and
stockholders' equity $2,033,091 $1,310,115
==========================
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
LOAN ANALYSIS
Unaudited
------------------------------------
September 30, December 31,
2005 2004
------------------------------------
Percent Percent
Balance of Total Balance of Total
------------------------------------
(Dollars in millions)
Residential real estate loans:
Residential one-to four-family $ 517 37% $ 217 26%
Residential land development and
construction 34 2 18 2
---------------- ----------------
Total residential real
estate loans 551 39 235 28
Commercial real estate loans:
Commercial one-to four-family 21 1 16 2
Commercial land development and
construction 50 4 21 3
Multi-family 47 3 16 2
Other commercial real estate 284 20 208 25
---------------- ----------------
Total commercial real estate
loans 402 28 261 32
Commercial business loans 157 11 151 18
Consumer loans:
Automobile 150 11 123 15
Home equity and other loans 152 11 58 7
---------------- ----------------
Total consumer loans 302 22 181 22
---------------- ----------------
Total loans $ 1,412 100% $ 828 100%
================ ================
DEPOSIT ANALYSIS
Unaudited
------------------------------------
September 30, December 31,
2005 2004
------------------------------------
Percent Percent
Balance of Total Balance of Total
------------------------------------
(Dollars in millions)
Demand deposit accounts $ 178 13% $ 110 13%
NOW accounts 145 11 101 12
Money market accounts 241 18 156 19
Savings accounts 231 17 163 19
---------------- ----------------
Total core accounts 795 59 530 63
Certificates of deposit - regular 487 36 315 37
Certificates of deposit - brokered 66 5 - -
---------------- ----------------
Total certificates of deposit 553 41 315 37
Total deposits $ 1,348 100% $ 845 100%
================ ================
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
Unaudited
---------------------------------------
Three Months Ended Nine Months Ended
---------------------------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
-------- ------- -------- -------
(In thousands, except earnings per share)
Interest and dividend income
Loans $ 21,149 $11,131 $ 48,282 $32,247
Debt securities, taxable 3,274 3,754 9,744 11,081
Debt securities, tax-exempt 791 376 1,832 1,035
Equity securities dividends 563 279 1,263 887
Short-term investments 62 6 98 24
-------- ------- -------- -------
Total interest and
dividend income 25,839 15,546 61,219 45,274
-------- ------- -------- -------
Interest expense
Deposits 5,979 3,097 13,689 9,209
Borrowings 4,806 2,207 10,951 5,906
-------- ------- -------- -------
Total interest expense 10,785 5,304 24,640 15,115
-------- ------- -------- -------
Net interest income 15,054 10,242 36,579 30,159
Provision for loan losses 204 365 998 1,140
-------- ------- -------- -------
Net interest income after
provision for loan losses 14,850 9,877 35,581 29,019
-------- ------- -------- -------
Non-interest income
Customer service fees 1,439 580 3,087 1,738
Wealth management service
fees 680 587 2,013 1,809
Insurance fees 472 24 679 26
Loan service fees 179 63 560 245
Increase in cash surrender
value of life insurance 245 93 648 443
Gain on sales of
securities, net 832 310 2,649 1,013
Gain on sale of loans, and
securitized loans, net 22 - 773 84
Other non-interest income 86 69 217 208
-------- ------- -------- -------
Total non-interest income 3,955 1,726 10,626 5,566
-------- ------- -------- -------
Non-interest expense
Salaries and employee
benefits 5,699 4,195 14,524 12,687
Termination of Employee
Stock Ownership Plan - - 8,667 -
Occupancy and equipment 1,655 997 4,006 3,030
Marketing and advertising 372 207 732 634
Data processing 518 305 1,323 1,030
Professional services 590 442 1,427 1,226
Foreclosed real estate and
repossessed assets, net 241 150 557 404
Merger and conversion
expense 828 - 1,791 -
Other non-interest expense 1,697 885 4,170 2,666
-------- ------- -------- -------
Total non-interest
expense 11,600 7,181 37,197 21,677
-------- ------- -------- -------
Income from continuing
operations
before income taxes 7,205 4,422 9,010 12,908
Provision for income taxes 2,459 1,415 5,621 4,144
-------- ------- -------- -------
Income from continuing
operations 4,746 3,007 3,389 8,764
-------- ------- -------- -------
Loss from discontinued
operations - - - (653)
Income tax benefit - - - (222)
-------- ------- -------- -------
Net loss from discontinued
operations - - - (431)
-------- ------- -------- -------
Net income $ 4,746 $ 3,007 $ 3,389 $ 8,333
======== ======= ======== =======
Earnings per share
Basic $ 0.56 $ 0.57 $ 0.51 $ 1.58
Diluted $ 0.54 $ 0.53 $ 0.48 $ 1.45
Weighted average shares
outstanding
Basic 8,456 5,270 6,683 5,284
Diluted 8,856 5,721 7,061 5,735
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
Unaudited
Quarters Ended
--------------------------------------------
Sept. June Mar. Dec. Sept.
30, 30, 31, 31, 30,
2005 2005 2005 2004 2004
-------- -------- -------- -------- -------
(In thousands, except earnings per share)
Interest and dividend income
Residential mortgage $ 7,101 $ 4,444 $ 3,059 $ 2,967 $ 2,869
Commercial real estate 6,673 4,977 4,044 3,761 3,630
Commercial business
loans 2,884 2,505 2,222 2,216 2,204
Auto loans 2,274 1,991 1,806 1,863 1,811
Other consumer 2,217 1,309 785 712 617
-------- -------- -------- -------- -------
Total interest on
loans 21,149 15,226 11,916 11,519 11,131
Securities 4,628 4,100 4,110 4,273 4,409
Short-term investments 62 22 11 15 6
-------- -------- -------- -------- -------
Total interest and
dividend income 25,839 19,348 16,037 15,807 15,546
-------- -------- -------- -------- -------
Interest expense
Deposits 5,979 4,318 3,373 3,183 3,097
Borrowings 4,806 3,522 2,637 2,425 2,207
-------- -------- -------- -------- -------
Total interest
expense 10,785 7,840 6,010 5,608 5,304
-------- -------- -------- -------- -------
Net interest income 15,054 11,508 10,027 10,199 10,242
Provision for loan losses 204 300 493 425 365
-------- -------- -------- -------- -------
Net interest income after
provision for loan losses 14,850 11,208 9,534 9,774 9,877
-------- -------- -------- -------- -------
Non-interest income
Customer service fees 1,439 1,033 616 609 580
Wealth management
service fees 680 663 670 714 587
Insurance fees 472 175 32 1 24
Loan service fees 179 198 174 129 63
Increase in cash
surrender value of
life insurance 245 200 203 196 93
Gain on sale of
securities, net 832 1,388 429 390 310
Gain on sale of loans,
and securitized
loans, net 22 162 588 81 -
Other non-interest
income 86 97 32 78 69
-------- -------- -------- -------- -------
Total non-interest
income 3,955 3,916 2,744 2,198 1,726
-------- -------- -------- -------- -------
Non-interest expense
Salaries and benefits 5,699 4,485 4,335 4,195 4,195
Termination of
Employee Stock
Ownership Plan - 8,667 - - -
Occupancy and
equipment 1,655 1,212 1,140 1,055 997
Marketing and
advertising 372 200 161 357 207
Data processing 518 454 347 381 305
Professional services 590 363 423 326 442
Foreclosed real estate
and other loans, net 241 218 94 118 150
Merger and conversion
expense 828 963 - - -
Other non-interest
expense 1,697 1,499 1,036 868 885
-------- -------- -------- -------- -------
Total non-interest
expense 11,600 18,061 7,536 7,300 7,181
-------- -------- -------- -------- -------
Income (loss) before
income taxes 7,205 (2,937) 4,742 4,672 4,422
Provision for income
taxes 2,459 1,671 1,490 1,495 1,415
-------- -------- -------- -------- -------
Net income (loss) $ 4,746 $ (4,608)$ 3,252 $ 3,177 $ 3,007
======== ======== ======== ======== =======
Earnings (loss) per share
Basic $ 0.56 $ (0.74)$ 0.61 $ 0.60 $ 0.57
Diluted $ 0.54 $ (0.74)$ 0.57 $ 0.55 $ 0.53
Weighted average shares
outstanding
Basic 8,456 6,257 5,300 5,281 5,270
Diluted 8,856 6,257 5,691 5,725 5,721
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
Unaudited
At or For the Quarters Ended
---------------------------------------
Sept. June Mar. Dec. Sept.
30, 30, 31, 31, 30,
NON-PERFORMING ASSETS 2005 2005 2005 2004 2004
------------------------------- ------- ------- ------ ------ ------
(Dollars in thousands)
Non-accrual loans:
Residential mortgage $ 393 $ 663 $ 298 $ 327 $ 332
Commercial real estate 130 209 144 147 614
Commercial 876 613 832 523 1,463
Indirect automobile loans 106 78 95 154 297
Other consumer 55 29 1 1 8
------- ------- ------ ------ ------
Total non-accrual loans $ 1,560 $ 1,592 $1,370 $1,152 $2,714
Real estate owned ("REO") - - - - -
Total non-performing
assets $ 1,560 $ 1,592 $1,370 $1,152 $2,714
======= ======= ====== ====== ======
Non-performing loans as a
percentage of total loans 0.11% 0.11% 0.16% 0.14% 0.33%
Non-performing assets to total
assets 0.08% 0.08% 0.11% 0.09% 0.21%
----------------------------------------------------------------------
PROVISION AND ALLOWANCE FOR LOAN LOSSES
----------------------------------------------------------------------
Balance at beginning of period $13,044 $ 9,645 $9,337 $9,392 $9,248
Charge-offs (284) (391) (328) (737) (447)
Recoveries 159 169 143 257 226
------- ------- ------ ------ ------
Net loan charge-offs (125) (222) (185) (480) (221)
Allowance attributed to
acquired loans - 3,321 - - -
Provision for loan losses 204 300 493 425 365
------- ------- ------ ------ ------
Balance at end of period $13,123 $13,044 $9,645 $9,337 $9,392
======= ======= ====== ====== ======
Allowance for loan losses as a
percentage of
non-performing loans 841% 819% 704% 811% 346%
Allowance for loan losses as a
percentage of total loans 0.93% 0.92% 1.13% 1.13% 1.15%
----------------------------------------------------------------------
NET LOAN (CHARGE-OFFS) RECOVERIES
----------------------------------------------------------------------
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate - - - (137) -
Commercial loans 4 (109) (4) (164) (7)
Consumer loans (primarily
automobile loans) (129) (113) (181) (179) (214)
------- ------- ------ ------ ------
Total $ (125)$ (222)$ (185)$ (480) $ (221)
======= ======= ====== ====== ======
Net charge-offs as a percentage
of total average loans 0.01% 0.02% 0.02% 0.06% 0.03%
----------------------------------------------------------------------
AVERAGE FICO SCORES OF CONSUMER
AUTOMOBILE LOANS 715 711 708 705 702
------------------------------- ------- ------- ------ ------ ------
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
----------------------------------------------------------------------
Unaudited
At or For the Quarters Ended
------------------------------------------
Sept. June Mar. Dec. Sept.
30, 30, 31, 31, 30,
2005 2005 2005 2004 2004
--------- ------- ------- ------- -------
PERFORMANCE RATIOS (annualized)
Return (loss) on average
assets 0.92 % (1.19)% 1.00 % 0.97 % 0.92 %
Return (loss) on average
stockholders' equity 7.90 (11.26) 9.94 9.72 9.71
Return (loss) on average
tangible stockholders'
equity 13.45 (14.56) 10.51 10.18 10.18
Net interest margin (1) 3.31 3.26 3.34 3.37 3.36
Non-interest income to
average assets (2) 0.77 1.00 0.84 0.67 0.53
Non-interest expense to
average assets (3) 2.25 4.62 2.30 2.22 2.20
Average earning assets to
average assets 90.35 92.29 94.44 94.51 95.59
Efficiency ratio (4) 55.32 58.00 59.80 59.54 60.44
CAPITAL RATIOS
Stockholders' equity to
total assets 12.08 11.80 9.92 10.06 9.81
Tangible stockholders'
equity to tangible assets 7.55 7.25 9.42 9.55 9.41
SHARE DATA
Book value per share $28.68 $28.45 $22.01 $22.43 $21.87
Tangible book value per
share $17.03 16.56 20.77 21.19 20.89
Stock price
High 35.20 34.90 37.64 38.01 39.14
Low 31.90 30.97 33.40 35.40 35.01
Close 34.00 33.32 33.75 37.15 36.95
-----------------------------------------------------
(1)Net interest margin and efficiency ratio are calculated on a
fully-taxable equivalent basis, using a 35% federal effective tax
rate.
(2)Excluding the gain on the sale of securities, the ratios would have
been 0.60%, 0.65%, 0.71%, 0.55% and 0.44%, respectively.
(3)Excluding the Employee Stock Ownership Plan termination expense,
and merger and conversion expense, the ratios would have been
2.09% and 2.16% in the quarters ended September 30, 2005 and June
30, 2005, respectively.
(4)Efficiency ratio is non-interest expense, divided by the total of
fully-taxable net interest income and non-interest income. For
this ratio, non-interest income and expense are adjusted based on
the notes above.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES
Unaudited
Quarters Ended
-----------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005(2) 2005(2) 2005 2004 2004
---------- ---------- ---------- ---------- ---------
(In thousands)
Earning assets
Loans
Residential
mortgage $ 561,048 $ 352,776 $ 239,755 $ 234,817 $ 225,198
Commercial
real estate 396,212 314,778 276,417 255,901 250,323
Commercial
business 165,414 154,405 140,139 153,385 160,129
Auto loans 146,138 134,237 125,038 121,736 118,029
Other consumer 154,209 91,303 58,669 56,150 53,715
---------- ---------- ---------- ---------- ---------
Total loans 1,423,021 1,047,499 840,018 821,989 807,394
Securities (1) 435,853 393,962 396,473 416,854 436,372
Short-term
investments 7,028 1,873 1,672 2,628 2,192
---------- ---------- ---------- ---------- ---------
Total
earning
assets 1,865,902 1,443,334 1,238,163 1,241,471 1,245,958
Other assets 199,349 120,611 72,860 72,061 57,551
---------- ---------- ---------- ---------- ---------
Total assets$2,065,251 $1,563,945 $1,311,023 $1,313,532 $1,303,509
========== ========== ========== ========== =========
Funding liabilities
Deposits
NOW $ 135,638 $ 112,775 $ 94,809 $ 99,394 $ 98,158
Money Market 241,088 183,273 158,862 168,137 159,046
Savings 240,396 192,250 163,553 167,031 168,358
Certificates
of deposit 515,120 384,443 319,682 316,898 326,411
---------- ---------- ---------- ---------- ---------
Total
interest
bearing
deposits 1,132,242 872,741 736,906 751,460 751,973
Borrowings 499,877 387,208 330,448 318,422 318,870
---------- ---------- ---------- ---------- ---------
Total
interest
bearing
liabilities 1,632,119 1,259,949 1,067,354 1,069,882 1,070,843
Non-interest-
bearing demand
deposits 185,183 129,700 107,835 108,832 105,257
Other
liabilities 6,409 9,579 3,781 4,019 3,540
---------- ---------- ---------- ---------- ---------
Total
liabilities 1,823,711 1,399,228 1,178,970 1,182,733 1,179,640
Stockholders'
Equity 241,540 164,717 132,053 130,799 123,869
---------- ---------- ---------- ---------- ---------
Total
liabilities
and equity$2,065,251 $1,563,945 $1,311,023 $1,313,532 $1,303,509
========== ========== ========== ========== =========
Supplementary Data
Total Core
Deposits $ 802,305 $ 617,998 $ 525,059 $ 543,394 $ 530,819
Total
Deposits 1,317,425 1,002,441 844,741 860,292 857,230
------------------------------------------------------------
(1) Average balances for securities available- for-sale are based on
amortized cost.
(2) Average balances for the second quarter of 2005 include one
month's balances related to the acquisition of Woronoco Bancorp,
Inc. on June 1, 2005. Average balances for the third quarter of
2005 include three months' balances related to the acquisition of
Woronoco Bancorp, Inc.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
Unaudited
Quarters Ended
-----------------------------------------
Sept. June Mar. Dec. Sept.
30, 30, 31, 31, 30,
2005 2005 2005 2004 2004
-----------------------------------------
Earning assets
Loans
Residential mortgage 5.06% 5.04% 5.10% 5.05% 5.10%
Commercial real estate 6.68 6.34 5.93 5.88 5.80
Commercial 6.92 6.51 6.43 5.79 5.51
Auto loans 6.17 5.95 5.86 6.12 6.14
Other consumer 5.70 5.75 5.43 5.07 4.59
Total loans 5.91 5.83 5.73 5.61 5.51
Securities (1) 4.69 4.40 4.41 4.36 4.30
Short-term investments 3.50 2.91 2.67 2.28 1.09
Total earning assets 5.60 5.44 5.31 5.23 5.10
Funding liabilities
Deposits
NOW 0.42 0.18 0.18 0.09 0.08
Money Market 2.07 1.98 1.62 1.32 1.26
Savings 0.86 1.03 1.00 0.80 0.77
Certificates of deposit 3.12 2.99 2.91 2.84 2.77
Total interest bearing
deposits 2.10 1.98 1.86 1.69 1.65
Borrowings 3.81 3.65 3.24 3.05 2.77
Total interest bearing
liabilities 2.62 2.50 2.28 2.10 1.98
Net interest spread (FTE) 2.98 2.94 3.03 3.13 3.12
Net interest margin (FTE) 3.31 3.26 3.34 3.37 3.36
Note: Cost of funds (2) 2.35 2.24 2.03 1.89 1.79
-----------------------------------------------------
(1) Average balances and yields for securities available-for-sale are
based on amortized cost. Securities yields are calculated on a
fully-taxable equivalent basis.
(2) Cost of funds includes all deposits and borrowings.
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