Dividend Declared
PITTSFIELD, Mass.--(BUSINESS WIRE)--
Berkshire Hills Bancorp (BHLB) reported third quarter 2009 net income of
$1.9 million, or $0.14 per share. Included in the quarter's results was
a charge of $0.08 per share after tax resulting from the Company's
decision to accelerate the disposition of a nonperforming loan. The
Company's earnings per share were $0.22 before this charge. Quarterly
earnings were also net of a $0.05 per share charge after tax related to
an increase in the loan loss allowance to 1.22% of total loans from
1.16% during the quarter.
Third quarter earnings per share increased from the prior quarter
results, which included charges of $1.3 million representing a special
FDIC industry-wide assessment and $3.3 million in non-recurring
preferred stock dividends. These dividends consisted mostly of a
one-time deemed dividend which was non-cash and had no impact on
stockholders' equity, and which was related to the prepayment of
preferred stock held by the U.S. Treasury. For the first nine months of
the year, Berkshire reported net income of $8.1 million, or $0.63 per
share before these charges. Including these charges, nine month 2009
GAAP earnings per share totaled $0.32.
THIRD QUARTER HIGHLIGHTS
-- Strong quarterly growth in targeted loans and deposits
o 12% annualized commercial loan growth
o 16% annualized non-maturity deposit growth
-- Significant linked quarter revenue growth
o 11% annualized growth in net interest income compared to linked
quarter, with the net interest margin improving to 2.96% from 2.91%
and reaching 3.03% in September
o 36% increase in fee income related to deposits, loans, interest rate
swaps, and wealth management compared to linked quarter
-- Continuing solid loan performance
o 0.60% nonperforming assets/assets excluding the above mentioned loan
targeted for liquidation; 0.85% including this loan
o 0.42% accruing delinquent loans/loans
o 0.59% annualized net charge-offs to average loans in third quarter;
0.52% for the year-to-date
o 1.22% allowance/loans, increased from 1.16% during the quarter
Michael P. Daly, President and Chief Executive Officer, stated, "We
produced broad-based revenue increases in the third quarter, together
with strong growth in targeted loans and deposits. Our franchise is well
positioned to serve the needs of our markets, as we increase our market
share by providing solutions in place of national providers who are less
active in our region. Through careful pricing, we have begun to increase
our net interest margin and we are benefiting from improved market
conditions in our wealth management business. Our regional teams are
seeing the benefit of community outreach over the past year, and we are
pleased with the initial contributions from the new leadership that
joined us in our attractive New York region in the second quarter."
Mr. Daly continued, "Our basic operations strengthened and moved forward
in the third quarter. In that context, we made a decision to accelerate
the disposition of the previously mentioned secured nonperforming loan,
which we hope to liquidate at a 22% discount in the fourth quarter. Our
provision included a $1.9 million charge related to this loan, which was
written down to $6.6 million. The performance of our other loans
remained strong, and our total loan charge-offs have remained moderate.
Nonetheless, we believe that the accumulating impacts of the recession
and unemployment are a growing burden on many of our commercial and
non-profit customers. We are expanding our portfolio monitoring as we
obtain updated financial information from our customers, and we will be
assessing risk management strategies actively as we evaluate the
economic and financial conditions in our markets."
Mr. Daly concluded, "We opened our new Pioneer Valley regional
headquarters in Springfield last week. This well located facility will
provide a convenient base for our growing team to service this market,
along with other business opportunities through our relationship
connections in Massachusetts and Connecticut. We also will continue to
maintain a strong regional presence in our Westfield facility to service
our longstanding customer base. We will be opening our new branch in our
Springfield headquarters in November, and this will be a model of
improvements that we are designing into our retail service delivery as
America's Most Exciting BankSM."
SPRINGFIELD REGION HEADQUARTERS
Berkshire's new Springfield region headquarters will service the
Company's 15 banking and insurance offices in its Pioneer Valley,
Massachusetts region. The headquarters is located at 1259 East Columbus
Avenue, and has immediate North and South-bound access to Interstate-91
from a convenient address in Springfield's downtown business district.
Springfield is among the top six metropolitan statistical areas in New
England, and the Hartford-Springfield market is the second largest metro
area in the region. Springfield is strategically located at the
intersection of Interstate-91 which runs the length of New England and
Interstate-90 which runs across New England. This headquarters will
provide Berkshire with more convenient access to its customers in
adjacent markets, including Hartford and Worcester. The Springfield area
is an educational hub for more than 100,000 students in 29 colleges and
universities. The area enjoys an attractive cost-of-living, ready
airport access, and is at the crossroads of major regional and national
telecommunications backbones. A public/private collaborative recently
announced plans to build a green world class high performance computing
facility in the region. Berkshire's team in the region is led by Senior
Vice President Thomas Creed and includes retail and commercial banking,
insurance, and wealth management professionals.
SHELF REGISTRATION FILING
The Company plans to file a $150 million universal shelf registration
with the SEC during the fourth quarter. This replaces the prior $125
million shelf registration which expired in September and which was used
for common and preferred stock issuances over the last twelve months.
The Company has no current plans to issue securities under this
registration, but it will be available to facilitate capital offerings
over the next three years as Berkshire continues to pursue attractive
growth opportunities through de novo and acquisition initiatives as it
increases the breadth and depth of its footprint in the attractive New
England and northeastern New York financial services markets.
DIVIDEND DECLARED
The Board of Directors maintained the cash dividend on Berkshire's
common stock, declaring a dividend of $0.16 per share to stockholders of
record at the close of business on November 12, 2009 and payable on
November 25, 2009.
FINANCIAL CONDITION
Total assets have remained steady at $2.7 billion during 2009. A $58
million increase in securities since year-end has been funded through
the utilization of short-term investments and cash flow from the planned
run-off of indirect auto loans. A $137 million increase in deposits was
used to reduce borrowings and short term liabilities. A second quarter
common stock issuance raised $32 million which was the primary source of
funds to repay $40 million of U.S. Treasury preferred stock. The Company
currently has no funded participation in any federal stimulus programs;
it continues to voluntarily purchase unlimited FDIC transaction account
deposit insurance.
Total securities increased by $30 million in the third quarter and by
$58 million for the first nine months of 2009. Berkshire has purchased
high grade short duration debt securities with the expectation that
funds will gradually be re-invested in loan growth. Loans totaled $2.0
billion at the most recent quarter-end, increasing by $17 million in the
third quarter and decreasing by $21 million for the year-to-date. Auto
loans decreased by $46 million for the year-to-date due to the planned
run-off of the Company's indirect auto portfolio. Loan growth has been
concentrated mainly in commercial loans, where loan growth totaled $30
million in the third quarter (12% annualized) and $52 million for the
year-to date (7% annualized). Most of this growth has been in commercial
mortgages; the origination pace has picked up since the markets began to
recover in the second quarter from the previous steep drop-off in
activity. New York commercial originations have also benefited from the
new commercial leadership which was recruited in the second quarter.
Commercial loan growth offset a decline in residential mortgages, which
had decreased by $49 million during the first six months due to the high
volume of loan refinancing into low fixed rate loans which were sold to
government agencies. The Company held more mortgages in portfolio in the
third quarter and promoted jumbo mortgage originations; as a result the
portfolio only declined by $2 million during the quarter. Home equity
and other consumer loan outstandings increased at a 15% annualized rate
during the first nine months primarily due to home equity promotions in
the first half of the year.
Excluding the $6.6 million balance of the nonperforming loan which is
expected to be liquidated, nonperforming assets measured 0.60% of total
assets at September 30, 2009. Including this loan, this ratio stood at
0.85%. This is an increase from 0.42% at mid-year and 0.48% at the prior
year-end. This increase is due to two condominium construction loans
that became nonperforming in the most recent quarter. One of these loans
is targeted for liquidation as noted above; the other loan is carried at
$5.1 million, and unit sales in this project have resumed following a
homeowner dispute resolution in September. Accruing delinquent loans
decreased to 0.42% of total loans at quarter-end, compared to 0.66% at
the prior quarter-end, due primarily to the resolution of two commercial
loans which became current during the quarter. Annualized net loan
charge-offs measured 0.59% in the third quarter and 0.52% for the
year-to-date. Net loan charge-offs of $2.9 million in the most recent
quarter included $2.3 million related to the above two construction
loans. The loan loss allowance was 1.22% of total loans at quarter-end,
increasing from 1.16% at the start of the quarter. The allowance
provided 152% coverage of nonperforming loans at quarter-end, excluding
the construction loan targeted for liquidation. Despite the generally
favorable continuing performance of the loan portfolio, management
believes that portfolio risk may be increasing due to the accumulating
impacts of the recession, and this will be monitored as updated
information is received from borrowers.
Total deposits were $2.0 billion at September 30, 2009, increasing by
$15 million (at a 3% annualized rate) in the most recent quarter and by
$137 million (at a 10% annualized rate) for the year-to-date. Growth was
concentrated in non-maturity deposits, which grew at a 14% annualized
rate for the year-to-date, including the benefit of 18% annualized
demand deposit growth. The Company repriced maturing time deposits in
the third quarter reflecting current market conditions, and this
contributed to the $32 million decrease in these balances. By
emphasizing lower cost non-maturity deposits and lowering time deposit
costs, Berkshire has reduced the cost of its deposits in order to offset
the impact of lower asset yields in the current low interest rate
environment. Much of the year-to-date deposit growth has been
concentrated in the Berkshire's New York market, reflecting ongoing
market share growth resulting from Berkshire's de novo expansion in this
attractive region.
Total stockholders' equity was $410 million at September 30, 2009,
increasing from $408 million at the start of the year. Berkshire's
equity benefited by $8 million due to an increase in the market values
for the Company's securities and derivatives contracts. During the
second quarter, Berkshire raised $32 million in net proceeds from a
public common stock offering and repaid $40 million in preferred stock
previously issued to the U.S. Treasury. The ratio of tangible common
equity to assets improved to a strong 9.3% at September 30, 2009, while
the ratio of total equity to assets measured 15.3%. Tangible book value
per common share improved to $16.76 from $15.73 at the start of the
year. Quarter-end total book value per share measured $29.46, compared
to $30.33 at the start of the year. These changes included the impact of
the second quarter common stock offering, which was issued at an
offering price of $21.50 per share.
RESULTS OF OPERATIONS
Third quarter 2009 net income was $1.9 million, compared to $5.3 million
in the third quarter of 2008. For the first nine months of 2009, net
income was $8.1 million, compared to $17.0 million in the same period of
2008. The decrease in income in 2009 was primarily related to lower net
interest income, higher FDIC insurance premiums, and an increase in the
loan loss provision. Earnings per share also decreased, including the
impact of additional common and preferred shares issued over the last
twelve months.
The net interest margin rebounded in the most recent quarter, increasing
to 2.96% from 2.91% in the prior quarter due to the benefit of
commercial loan growth and deposit gathering strategies. The
year-to-year decline in net interest income was due to margin
compression from 3.48% in the third quarter of 2008. The low interest
rate environment has negatively impacted the Company's asset sensitive
net interest income, as management has chosen to sacrifice current yield
to protect earnings in the event of future rate increases. Market
deposit interest rate floors and runoff of mortgage and auto loans have
also pressured margins. Income was also reduced by the elimination in
2009 of dividends from the Federal Home Loan Bank of Boston; these
dividends totaled $0.7 million in the first nine months of 2008.
Quarterly non-interest income also rebounded, increasing year-to-year in
the third quarter. There was also a 36% increase in fees in the most
recent quarter related to deposits, loans, interest rate swaps, and
wealth management fees compared to the linked quarter. Berkshire has
benefited from volume growth of deposit accounts, along with the benefit
of mortgage origination fees and interest rate swap fees. Wealth
management fees increased due to a rebound in stock prices in the most
recent quarter; assets under management increased at a 10% annualized
rate for the year-to-date. Insurance fees year-to-date decreased
primarily due to lower contingency income and ongoing tighter pricing
conditions in the consumer and commercial markets. Insurance fee income
is seasonal, with most contingency income received in the first half of
the year. Non-recurring income totaled $1.2 million in 2009, primarily
due to $1.0 million in fees related to the June termination of the
merger agreement with CNB Financial Corp.
The loan loss provision increased in 2009, exceeding net loan
charge-offs and resulting in an increase in the allowance for loan
losses to 1.22% of total loans from 1.16% during the third quarter. Net
loan charge-offs measured 0.52% for the year-to-date in 2009, increasing
from 0.16% in the first nine months of 2008 primarily due to higher
commercial loan charge-offs. Commercial loan losses annualized measured
0.75% of average loans for the current year-to-date, including 0.24%
related to decisions to accelerate the disposition of problem loans.
Third quarter non-interest expense increased from year-to-year primarily
due to the impact of higher FDIC premiums. The FDIC has raised its
industry premium rates in 2009. Excluding these charges, all other
expenses were up 4% year-to-year in the third quarter. Linked quarter
compensation expense increased due primarily to higher mortgage
department costs recorded as compensation expense, along with higher
compensation for the expanded New York commercial team. Year-to-date
expense included a $1.3 million second quarter FDIC special industry
assessment ($0.06 per share after tax), as well as $0.6 million in
non-core second quarter charges related to the terminated CNB merger
agreement and restructuring charges. The Company recorded a $0.7 million
income tax benefit in the most recent quarter, resulting in a year-to
date effective tax rate of 15%. This rate was down from 29% in the same
period of 2008 due to the lower level of pretax income in 2009.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 9:00 A.M. eastern
time on Wednesday, October 28, 2009 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 through November 4,
2009 by calling 877-344-7529 and entering conference number: 434382. 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 $2.7 billion in assets and is the parent of Berkshire Bank -- America's
Most Exciting BankSM. The Company provides personal and
business banking, insurance, investment, and wealth management services
through 46 financial centers in western Massachusetts, northeastern New
York, and southern Vermont. Berkshire Bank provides 100% deposit
insurance protection, regardless of amount, based on a combination of
FDIC insurance and the Depositors Insurance Fund (DIF). For more
information, visit www.berkshirebank.com
or call 800-773-5601.
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 2008 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. In the
first quarter of 2009, the Company adjusted core earnings per share and
core return on tangible common equity to be net of preferred stock
dividends. These measures were not adjusted in this manner in the second
quarter of 2009. The second quarter deemed dividend was a nonrecurring
non-cash charge with no impact on stockholders' equity and did not
reflect a core economic event in the Company's view. Additionally, the
Company held cash at near-zero interest rates in the second quarter
while it awaited the approval of the U.S. Treasury to repay the
preferred stock. Accordingly, the preferred stock cash dividend and
accretion charges were viewed by the Company as non-core one-time
charges against income available to common stockholders related to the
process of repaying the preferred stock.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
September 30, June 30, December 31,
(In thousands) 2009 2009 2008
Assets
Total cash and cash equivalents $ 21,857 $ 30,746 $ 26,582
Federal funds sold and short-term 4,598 36,037 18,216
investments
Trading security 16,641 16,247 18,144
Securities available for sale, at 328,446 303,546 274,380
fair value
Securities held to maturity, at 31,535 26,851 25,872
amortized cost
Federal Home Loan Bank stock and 23,120 23,120 23,120
other restricted securities
Total securities 399,742 369,764 341,516
Loans held for sale 1,500 8,901 1,768
Residential mortgages 625,864 627,958 677,254
Commercial mortgages 857,884 833,598 805,456
Commercial business loans 178,337 172,341 178,934
Consumer loans 324,099 334,882 345,508
Total loans 1,986,184 1,968,779 2,007,152
Less: Allowance for loan losses (24,297 ) (22,917 ) (22,908 )
Net loans 1,961,887 1,945,862 1,984,244
Premises and equipment, net 36,062 36,197 37,448
Goodwill 161,725 161,725 161,178
Other intangible assets 15,155 15,987 17,652
Cash surrender value of life 36,569 36,267 35,668
insurance policies
Derivative assets 4,181 2,765 3,741
Other assets 37,358 36,835 38,716
Total assets $ 2,680,634 $ 2,681,086 $ 2,666,729
Liabilities and stockholders' equity
Demand deposits $ 264,827 $ 257,133 $ 233,040
NOW deposits 195,496 176,238 190,828
Money market deposits 522,901 506,100 448,238
Savings deposits 212,683 209,232 211,156
Total non-maturity deposits 1,195,907 1,148,703 1,083,262
Time deposits 770,911 802,691 746,318
Total deposits 1,966,818 1,951,394 1,829,580
Borrowings 259,559 281,860 359,157
Junior subordinated debentures 15,464 15,464 15,464
Derivative liabilities 17,991 13,838 24,068
Other liabilities 10,497 10,980 30,035
Total liabilities 2,270,329 2,273,536 2,258,304
Total preferred stockholders' equity - - 36,822
Total common stockholders' equity 410,305 407,550 371,603
Total stockholders' equity 410,305 407,550 408,425
Total liabilities and stockholders' $ 2,680,634 $ 2,681,086 $ 2,666,729
equity
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
LOAN ANALYSIS
September June 30, December Annualized Growth %
30, 2009 2009 31, 2008
(Dollars in Quarter ended
millions) Balance Balance Balance September 30, Year to date
2009
Total
residential $ 626 $ 628 $ 677 (1 ) % (10 ) %
mortgages
Commercial
mortgages:
Construction 128 135 130 (21 ) (2 )
Single and 81 67 70 83 21
multi-family
Commercial real 649 632 605 11 10
estate
Total commercial 858 834 805 11 9
mortgages
Commercial 178 172 179 14 (1 )
business loans
Total commercial 1,036 1,006 984 12 7
loans
Consumer
loans:
Auto 87 101 133 (55 ) (46 )
Home equity 237 234 213 5 15
and other
Total
consumer 324 335 346 (13 ) (8 )
loans
Total loans $ 1,986 $ 1,969 $ 2,007 3 % (1 ) %
DEPOSIT ANALYSIS
September June 30, December Annualized Growth %
30, 2009 2009 31, 2008
(Dollars in Quarter ended
millions) Balance Balance Balance September 30, Year to date
2009
Demand $ 265 $ 257 $ 233 12 % 18 %
NOW 195 176 191 43 3
Money market 523 506 448 13 22
Savings 213 209 211 8 1
Total
non-maturity 1,196 1,148 1,083 16 14
deposits
Time less than 385 403 395 (17 ) (3 )
$100,000
Time $100,000 or 386 400 351 (14 ) 13
more
Total time 771 803 746 (16 ) 4
deposits
Total $ 1,967 $ 1,951 $ 1,829 3 % 10 %
deposits
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands, except per share 2009 2008 2009 2008
data)
Interest and dividend income
Loans $ 25,034 $ 30,078 $ 76,836 $ 91,224
Securities and other 3,426 3,014 10,269 9,225
Total interest and dividend income 28,460 33,092 87,105 100,449
Interest expense
Deposits 8,045 9,676 25,195 32,485
Borrowings and junior subordinated 3,250 4,087 10,310 11,694
debentures
Total interest expense 11,295 13,763 35,505 44,179
Net interest income 17,165 19,329 51,600 56,270
Non-interest income
Deposit, loan and interest rate 3,286 3,079 8,220 8,185
swap fees
Insurance commissions and fees 2,337 2,640 10,180 11,480
Wealth management fees 1,369 1,338 3,671 4,533
Total fee income 6,992 7,057 22,071 24,198
Other 272 174 1,092 1,042
(Loss) gain on sale of securities, (5 ) 4 (4 ) (22 )
net
Non-recurring income 1 - 1,178 -
Total non-interest income 7,260 7,235 24,337 25,218
Total net revenue 24,425 26,564 75,937 81,488
Provision for loan losses 4,300 1,250 9,000 3,180
Non-interest expense
Salaries and employee benefits 9,757 9,796 28,011 29,294
Occupancy and equipment 2,674 2,760 8,661 8,502
Marketing, data processing, and 2,574 2,121 6,897 6,423
professional services
FDIC premiums and special 669 118 3,748 226
assessment
Non-recurring expenses - - 601 683
Amortization of intangible assets 833 889 2,499 2,992
Other 2,437 2,053 6,958 6,323
Total non-interest expense 18,944 17,737 57,375 54,443
Income before income taxes 1,181 7,577 9,562 23,865
Income tax (benefit) expense (741 ) 2,301 1,426 6,827
Net income $ 1,922 $ 5,276 $ 8,136 $ 17,038
Less: Cumulative preferred stock - - 1,030 -
dividend and accretion
Less: Deemed dividend resulting - - 2,954 -
from preferred stock repayment
Net income available to common $ 1,922 $ 5,276 $ 4,152 $ 17,038
stockholders
Basic earnings per common share $ 0.14 $ 0.51 $ 0.32 $ 1.65
Diluted earnings per common share $ 0.14 $ 0.51 $ 0.32 $ 1.64
Weighted average common shares
outstanding
Basic 13,806 10,303 12,977 10,330
Diluted 13,857 10,400 13,145 10,421
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Quarters Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(In thousands, except 2009 2009 2009 2008 2008
per share data)
Interest and dividend
income
Loans $ 25,034 $ 25,370 $ 26,432 $ 29,343 $ 30,078
Securities and other 3,426 3,395 3,448 3,419 3,014
Total interest and 28,460 28,765 29,880 32,762 33,092
dividend income
Interest expense
Deposits 8,045 8,677 8,473 9,248 9,676
Borrowings and junior 3,250 3,364 3,696 4,044 4,087
subordinated debentures
Total interest expense 11,295 12,041 12,169 13,292 13,763
Net interest income 17,165 16,724 17,711 19,470 19,329
Non-interest income
Deposit, loan and 3,286 2,307 2,627 2,826 3,079
interest rate swap fees
Insurance commissions 2,337 3,274 4,569 2,139 2,640
and fees
Wealth management fees 1,369 1,113 1,189 1,171 1,338
Total fee income 6,992 6,694 8,385 6,136 7,057
Other 272 468 352 241 174
(Loss) gain on sale of (5 ) 3 (2 ) - 4
securities, net
Non-recurring income 1 1,240 (63 ) - -
(loss)
Total non-interest 7,260 8,405 8,672 6,377 7,235
income
Total net revenue 24,425 25,129 26,383 25,847 26,564
Provision for loan 4,300 2,200 2,500 1,400 1,250
losses
Non-interest expense
Salaries and employee 9,757 8,902 9,352 8,988 9,796
benefits
Occupancy and equipment 2,674 2,859 3,128 2,736 2,760
Marketing, data
processing, and 2,574 2,233 2,090 1,803 2,003
professional services
FDIC premiums and 669 2,387 692 535 118
special assessment
Non-recurring expenses - 601 - - -
Amortization of 833 833 833 838 889
intangible assets
Other 2,437 2,163 2,358 2,356 2,171
Total non-interest 18,944 19,978 18,453 17,256 17,737
expense
Income before income 1,181 2,951 5,430 7,191 7,577
taxes
Income tax (benefit) (741 ) 620 1,547 1,985 2,301
expense
Net income $ 1,922 $ 2,331 $ 3,883 $ 5,206 $ 5,276
Less: Cumulative
preferred stock dividend - 393 637 - -
and accretion
Less: Deemed dividend
resulting from preferred - 2,954 - - -
stock repayment
Net income available to $ 1,922 $ (1,016 ) $ 3,246 $ 5,206 $ 5,276
common stockholders
Basic earnings per $ 0.14 $ (0.08 ) $ 0.27 $ 0.44 $ 0.51
common share
Diluted earnings per $ 0.14 $ (0.08 ) $ 0.27 $ 0.44 $ 0.51
common share
Weighted average common
shares outstanding
Basic 13,806 12,946 12,164 11,804 10,303
Diluted 13,857 12,946 12,247 11,892 10,400
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
ASSET QUALITY ANALYSIS
At or for the Quarters Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(Dollars in 2009 2009 2009 2008 2008
thousands)
NON-PERFORMING
ASSETS
Non-accruing loans:
Residential $ 2,399 $ 2,396 $ 2,740 $ 1,646 $ 1,315
mortgages
Commercial 17,077 6,087 7,276 7,738 6,178
mortgages
Commercial business 2,041 1,442 1,861 1,921 2,210
loans
Consumer loans 1,089 1,326 587 866 650
Total non-accruing 22,606 11,251 12,464 12,171 10,353
loans
Other real estate 130 130 371 498 941
owned
Total
non-performing $ 22,736 $ 11,381 $ 12,835 $ 12,669 $ 11,294
assets
Total non-accruing 1.14 % 0.57 % 0.63 % 0.61 % 0.52 %
loans/total loans
Total
non-performing 0.85 % 0.42 % 0.47 % 0.48 % 0.44 %
assets/total assets
PROVISION AND
ALLOWANCE FOR LOAN
LOSSES
Balance at $ 22,917 $ 22,903 $ 22,908 $ 22,886 $ 22,581
beginning of period
Charged-off loans (2,955 ) (2,291 ) (2,643 ) (1,474 ) (1,331 )
Recoveries on 35 105 138 96 386
charged-off loans
Net loans (2,920 ) (2,186 ) (2,505 ) (1,378 ) (945 )
charged-off
Provision for loan 4,300 2,200 2,500 1,400 1,250
losses
Balance at end of $ 24,297 $ 22,917 $ 22,903 $ 22,908 $ 22,886
period
Allowance for loan
losses/non-accruing 107 % 204 % 184 % 188 % 221 %
loans
Allowance for loan 1.22 % 1.16 % 1.16 % 1.14 % 1.15 %
losses/total loans
NET LOAN
CHARGE-OFFS
Residential $ - $ (27 ) $ (117 ) $ - $ (119 )
mortgages
Commercial (2,348 ) (755 ) (1,448 ) (900 ) (63 )
mortgages
Commercial business (72 ) (795 ) (150 ) (10 ) (265 )
loans
Consumer loans (500 ) (609 ) (790 ) (468 ) (498 )
Total, net $ (2,920 ) $ (2,186 ) $ (2,505 ) $ (1,378 ) $ (945 )
Net charge-offs
(current quarter 0.59 % 0.45 % 0.51 % 0.27 % 0.19 %
annualized)/average
loans
Net charge-offs
(YTD 0.52 % 0.48 % 0.51 % 0.19 % 0.16 %
annualized)/average
loans
DELINQUENT
LOANS/TOTAL LOANS
30-89 Days 0.34 % 0.63 % 0.45 % 0.46 % 0.45 %
delinquent
90+ Days delinquent 0.08 % 0.03 % 0.01 % 0.05 % 0.03 %
and still accruing
Total accruing 0.42 % 0.66 % 0.46 % 0.51 % 0.48 %
delinquent loans
Non-accruing loans 1.14 % 0.57 % 0.63 % 0.61 % 0.52 %
Total delinquent 1.56 % 1.23 % 1.09 % 1.12 % 1.00 %
loans
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
At or for the Quarters Ended
Sept. 30, June 30, Mar. 31, Dec. Sep.
31, 30,
2009 2009 2009 2008 2008
PERFORMANCE RATIOS
Core return on 0.44 % 0.45 % 0.77 % 0.98 % 1.03 %
tangible assets
Return on total 0.29 0.35 0.59 0.79 0.82
assets
Core return on
tangible common 4.70 5.23 8.54 12.70 15.85
equity
Return on total 1.86 2.38 3.52 5.62 6.26
common equity
Net interest
margin, fully 2.96 2.91 3.11 3.41 3.48
taxable equivalent
Core tangible
non-interest income 1.16 1.15 1.42 1.04 1.21
to tangible assets
Non-interest income 1.08 1.26 1.32 0.97 1.13
to assets
Core tangible
non-interest 2.88 2.97 2.86 2.68 2.82
expense to tangible
assets
Non-interest 2.82 2.99 2.80 2.62 2.76
expense to assets
Efficiency ratio 72.49 75.85 65.23 62.24 62.18
GROWTH
Total loans,
year-to-date (1 ) % (4 ) % (8 ) % 3 % 3 %
(annualized)
Total deposits,
year-to-date 10 13 24 - 1
(annualized)
Total net revenues,
year-to-date, (7 ) (6 ) (5 ) 21 29
compared to prior
year
FINANCIAL DATA (In
millions)
Total $ 2,681 $ 2,681 $ 2,724 $ 2,667 $ 2,566
assets
Total 1,986 1,969 1,969 2,007 1,922
loans
Total intangible 177 178 179 179 180
assets
Total deposits 1,967 1,951 1,938 1,830 1,837
Total common
stockholders' 410 408 376 372 333
equity
Total core income 1.9 2.0 3.9 5.2 5.3
Total net income 1.9 2.3 3.9 5.2 5.3
ASSET QUALITY RATIOS
Net charge-offs
(current quarter 0.59 % 0.45 % 0.51 % 0.27 % 0.19 %
annualized)/average
loans
Non-performing 0.85 0.42 0.47 0.48 0.44
assets/total assets
Allowance for loan 1.22 1.16 1.16 1.14 1.15
losses/total loans
Allowance for loan
losses/non-accruing 1.07 x 2.04 x 1.84 x 1.88 x 2.21 x
loans
PER COMMON SHARE DATA
Core earnings, $ 0.14 $ 0.15 $ 0.27 $ 0.44 $ 0.51
diluted
Net earnings, 0.14 (0.08 ) 0.27 0.44 0.51
diluted
Tangible common 16.76 16.52 16.02 15.73 14.58
book value
Total common book 29.46 29.29 30.54 30.33 31.71
value
Market price at 21.94 20.78 22.92 30.86 32.00
period end
Dividends 0.16 0.16 0.16 0.16 0.16
CAPITAL RATIOS
Common
stockholders' 15.31 % 15.20 % 13.80 % 13.82 % 12.97 %
equity to total
assets
Tangible common
stockholders' 9.32 9.18 7.74 7.62 6.41
equity to tangible
assets
(1)
Reconciliations of Non-GAAP financial measures, including all references to
core and tangible amounts, appear on pages F-9 and F-10. 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.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE BALANCES
Quarters Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(In thousands) 2009 2009 2009 2008 2008
Assets
Loans
Residential $ 621,632 $ 637,232 $ 675,905 $ 679,000 $ 672,363
mortgages
Commercial mortgages 832,716 810,421 804,109 808,308 787,543
Commercial business 177,720 173,486 173,055 185,434 192,065
loans
Consumer loans 329,177 338,506 343,296 343,894 346,068
Total loans 1,961,245 1,959,645 1,996,365 2,016,636 1,998,039
Securities 384,204 346,274 335,414 304,466 266,720
Federal funds sold
and short-term 30,956 73,874 49,966 15,345 4,384
investments
Total earning assets 2,376,405 2,379,793 2,381,745 2,336,447 2,269,143
Goodwill and other 177,233 178,164 178,711 179,187 180,387
intangible assets
Other assets 115,223 125,446 113,471 105,097 105,937
Total assets $ 2,668,861 $ 2,683,403 $ 2,673,927 $ 2,620,731 $ 2,555,467
Liabilities and
stockholders' equity
Deposits
NOW $ 179,837 $ 187,174 $ 193,038 $ 196,326 $ 193,192
Money market 511,191 483,302 462,518 453,977 447,184
Savings 213,016 210,678 213,074 220,565 221,746
Time 781,732 795,155 762,940 746,913 734,195
Total
interest-bearing 1,685,776 1,676,309 1,631,570 1,617,781 1,596,317
deposits
Borrowings and 287,812 310,323 365,833 382,015 380,453
debentures
Total
interest-bearing 1,973,588 1,986,632 1,997,403 1,999,796 1,976,770
liabilities
Non-interest-bearing 261,592 251,565 232,480 229,175 232,762
demand deposits
Other liabilities 23,716 30,146 32,960 17,566 10,804
Total liabilities 2,258,896 2,268,343 2,262,843 2,246,537 2,220,336
Total stockholders' 409,965 392,321 374,207 368,991 335,131
common equity
Total stockholders' - 22,739 36,877 5,203 -
preferred equity
Total stockholders' 409,965 415,060 411,084 374,194 335,131
equity
Total liabilities
and stockholders' $ 2,668,861 $ 2,683,403 $ 2,673,927 $ 2,620,731 $ 2,555,467
equity
Supplementary data
Total non-maturity $ 1,165,636 $ 1,132,719 $ 1,101,110 $ 1,100,043 $ 1,094,884
deposits
Total deposits 1,947,368 1,927,874 1,864,050 1,846,956 1,829,079
Fully taxable
equivalent income 555 562 566 532 532
adj.
(1) Average balances for securities available-for-sale are based on amortized cost.
Total loans include non-accruing loans.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
Quarters Ended
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
Earning assets
Loans
Residential mortgages 5.38 % 5.46 % 5.56 % 5.64 % 5.65 %
Commercial mortgages 5.02 5.17 5.39 6.01 6.24
Commercial business 5.53 5.76 5.96 5.99 6.41
loans
Consumer loans 4.33 4.46 4.64 5.46 5.86
Total loans 5.06 5.19 5.37 5.79 5.99
Securities 4.11 4.58 4.85 5.14 5.27
Federal funds sold and
short-term investments 0.24 0.24 0.17 0.54 1.45
Total earning assets 4.84 4.94 5.18 5.67 5.89
Funding liabilities
Deposits
NOW 0.36 0.45 0.40 0.52 0.64
Money Market 1.25 1.42 1.40 1.73 1.86
Savings 0.31 0.34 0.44 0.68 0.61
Time 3.10 3.32 3.43 3.54 3.76
Total interest-bearing 1.89 2.08 2.11 2.27 2.41
deposits
Borrowings and 4.48 4.35 4.10 4.21 4.27
debentures
Total interest-bearing 2.27 2.43 2.47 2.64 2.77
liabilities
Net interest spread 2.57 2.51 2.71 3.03 3.12
Net interest margin 2.96 2.91 3.11 3.41 3.48
Cost of funds 2.00 2.16 2.21 2.37 2.48
Cost of deposits 1.64 1.81 1.84 1.99 2.10
(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 2009 2009 2009 2008 2008
thousands)
Net income $ 1,922 $ 2,331 $ 3,883 $ 5,206 $ 5,276
Adj: Loss
(gain) on
sale of 5 (3 ) 2 - (4 )
securities,
net
Less: Merger
termination - (970 ) - - -
fee
Less: Other
non-recurring (1 ) (270 ) 63 - -
income
Plus: Merger
related - 215 - - -
expenses
Plus: Other
non-recurring - 386 - - -
expense
Adj: Income (2 ) 269 (27 ) - 2
taxes
Total core (A) $ 1,924 $ 1,958 $ 3,921 $ 5,206 $ 5,274
income
Plus:
Amortization 833 833 833 838 889
of intangible
assets
Total
tangible core (B) $ 2,757 $ 2,791 $ 4,754 $ 6,044 $ 6,163
income
Total
non-interest $ 7,260 $ 8,405 $ 8,672 $ 6,377 $ 7,235
income
Adj: Loss
(gain) on
sale of 5 (3 ) 2 - (4 )
securities,
net
Less:
Non-recurring (1 ) (1,240 ) 63 - -
income
Total core
non-interest (C) 7,264 7,162 8,737 6,377 7,231
income
Net interest 17,165 16,724 17,711 19,470 19,329
income
Total core (D) $ 24,429 $ 23,886 $ 26,448 $ 25,847 $ 26,560
revenue
Total
non-interest $ 18,944 $ 19,978 $ 18,453 $ 17,256 $ 17,737
expense
Less:
Non-recurring - (601 ) - - -
expense
Core
non-interest (E) 18,944 19,377 18,453 17,256 17,737
expense
Less:
Amortization (833 ) (833 ) (833 ) (838 ) (889 )
of intangible
assets
Total core
tangible (F) $ 18,111 $ 18,544 $ 17,620 $ 16,418 $ 16,848
non-interest
expense
(Dollars in
millions,
except per
share data)
Total average $ 2,669 $ 2,683 $ 2,674 $ 2,621 $ 2,555
assets
Less: Average
intangible (177 ) (178 ) (179 ) (179 ) (180 )
assets
Total average
tangible (G) $ 2,492 $ 2,505 $ 2,495 $ 2,442 $ 2,375
assets
Total average
stockholders' $ 410 $ 415 $ 411 $ 374 $ 335
equity
Less: Average
intangible (177 ) (178 ) (179 ) (179 ) (180 )
assets
Total average
tangible 233 237 232 195 155
stockholders'
equity
Less: Average
preferred - (23 ) (37 ) (6 ) -
equity
Total average
tangible
common (H) $ 233 $ 214 $ 195 $ 189 $ 155
stockholders'
equity
Total
stockholders' $ 410 $ 408 $ 413 $ 408 $ 335
equity,
period-end
Less:
Intangible (177 ) (178 ) (179 ) (179 ) (180 )
assets,
period-end
Total
tangible
stockholders' 233 230 234 229 155
equity,
period-end
Less:
Preferred - - (37 ) (37 ) -
equity,
period-end
Total
tangible
common (I) $ 233 $ 230 $ 197 $ 192 $ 155
stockholders'
equity,
period-end
Total common
shares
outstanding, (J) 13,928 13,916 12,306 12,253 10,493
period-end
(thousands)
Average
diluted
common shares (K) 13,857 12,946 12,247 11,892 10,400
outstanding
(thousands)
Core earnings
per common (A/K) $ 0.14 $ 0.15 $ 0.27 $ 0.44 $ 0.51
share,
diluted (1)
Tangible book
value per (I/J) $ 16.76 $ 16.52 $ 16.02 $ 15.73 $ 14.58
common share,
period-end
Core return
on tangible (B/G) 0.44 % 0.45 % 0.77 % 0.98 % 1.03 %
assets
Core return
on tangible (B/H) 4.70 5.23 8.54 12.70 15.85
common equity
(1)
Core tangible
non-interest
income to (C/G) 1.16 1.15 1.42 1.04 1.21
tangible
assets
Core tangible
non-interest
expense to (F/G) 2.88 2.97 2.86 2.68 2.82
tangible
assets
Efficiency 72.49 75.85 65.23 62.24 62.18
ratio (2)
(1) March 31, 2009 EPS and ratios include a $637,000 reduction in core income and
tangible core income related to cumulative preferred stock dividend and accretion.
Preferred dividend charges recorded in Q2 were deemed non-core due to preferred
stock repayment.
(2) 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.
(3) Ratios are annualized and based on average balance sheet amounts, where
applicable.
(4) Quarterly data may not sum to year-to-date data due to rounding.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
At or for the Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2009 2008
Net income $ 8,136 $ 17,038
Adj: Loss (gain) on sale of securities, 4 22
net
Less: Merger termination fee (970 ) -
Less: Other non-recurring income (208 ) -
Plus: Merger related expenses 215 -
Plus: Other non-recurring expense 386 683
Adj: Income taxes 240 (699 )
Total core income (A) $ 7,803 $ 17,044
Plus: Amortization of intangible assets 2,499 2,992
Total tangible core income (B) $ 10,302 $ 20,036
Total non-interest income $ 24,337 $ 25,218
Adj: Loss (gain) on sale of securities, 4 22
net
Less: Non-recurring income (1,178 ) -
Total core non-interest income (C) 23,163 25,240
Net interest income 51,600 56,270
Total core revenue (D) $ 74,763 $ 81,510
Total non-interest expense $ 57,375 $ 54,443
Less: Non-recurring expense (601 ) (683 )
Core non-interest expense (E) 56,774 53,760
Less: Amortization of intangible assets (2,499 ) (2,992 )
Total core tangible non-interest expense (F) $ 54,275 $ 50,768
(Dollars in millions, except per share
data)
Total average assets $ 2,675 $ 2,528
Less: Average intangible assets (178 ) (181 )
Total average tangible assets (G) $ 2,497 $ 2,347
Total average stockholders' equity $ 412 $ 331
Less: Average intangible assets (178 ) (182 )
Total average tangible stockholders' 234 149
equity
Less: Average preferred equity (20 ) -
Total average tangible common (H) $ 214 $ 149
stockholders' equity
Total stockholders' equity, period-end $ 410 $ 335
Less: Intangible assets, period-end (177 ) (180 )
Total tangible stockholders' equity, 233 155
period-end
Less: Preferred equity, period-end - -
Total tangible common stockholders' (I) $ 233 $ 155
equity, period-end
Total common shares outstanding, (J) 13,928 10,493
period-end (thousands)
Average diluted common shares outstanding (K) 13,145 10,421
(thousands)
Core earnings per common share, diluted (A/K) $ 0.55 $ 1.64
(1)
Tangible book value per common share, (I/J) $ 16.73 $ 14.58
period-end
Core return on tangible assets (B/G) 0.55 % 1.14 %
Core return on tangible common equity (1) (B/H) 6.14 17.61
Core tangible non-interest income to (C/G) 1.24 1.44
tangible assets
Core tangible non-interest expense to (F/G) 2.91 2.89
tangible assets
Efficiency ratio (2) 71.00 61.12
(1) September 30, 2009 EPS and ratios include a $637,000 reduction in core
income and tangible core income for cumulative preferred stock dividend and
accretion accumulated during Q1 2009. Preferred dividend charges recorded in Q2
were deemed non-core due to preferred stock repayment.
(2) Efficiency ratio is computed by dividing total tangible core non-interest
expense by the sum of total net interest income on a fully 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.
(3) Ratios are annualized and based on average balance sheet amounts,
where applicable.
(4) Quarterly data may not sum to year-to-date data due to rounding.
Source: Berkshire Hills Bancorp
Contact: Berkshire Hills Bancorp
Investor Relations Contact
David H. Gonci, 413-281-1973
Capital Markets Officer
or
Media Contact
Fedelina Madrid, 413-236-3733
Vice President - Marketing