-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WwH/INKcON8ozY1fZoyVeEaEtmhGFE+Vqew9Mk45xvtMi4dz5pqWzmrreua3rM3n TZlkDoKdUJUQvren0eQnug== 0000898822-04-001137.txt : 20041217 0000898822-04-001137.hdr.sgml : 20041217 20041217084724 ACCESSION NUMBER: 0000898822-04-001137 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041217 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041217 DATE AS OF CHANGE: 20041217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE HILLS BANCORP INC CENTRAL INDEX KEY: 0001108134 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 043510455 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15781 FILM NUMBER: 041209888 BUSINESS ADDRESS: STREET 1: 24 NORTH ST. CITY: PITTSFIELD STATE: MA ZIP: 01201 BUSINESS PHONE: 4134435601 MAIL ADDRESS: STREET 1: 24 NORTH ST CITY: PITTSFIELD STATE: MA ZIP: 01201 8-K 1 dec8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): December 17, 2004 Berkshire Hills Bancorp, Inc. (Exact name of registrant as specified in its charter) DELAWARE 1-15781 04-3510455 (State or other (Commission File Number) (IRS Employer jurisdiction Identification No.) of incorporation) 24 North Street, Pittsfield, Massachusetts 01201 ------------------------------------------ ------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (413) 443-5601 -------------- Not Applicable -------------- (Former name or former address, if changed since last report) ------------------------------ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [x] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 7.01 REGULATION FD DISCLOSURE On December 17, 2004, Berkshire Hills Bancorp, Inc., a Delaware corporation (the "Company"), announced that it has entered into an agreement to acquire Woronoco Bancorp, Inc., a Delaware corporation. A copy of the press release announcing the transaction is furnished with this report as Exhibit 99.1, and a copy of the investor presentation relating to the transaction is furnished with this report as Exhibit 99.2, and are incorporated herein by reference. The information in this report is being furnished, not filed, pursuant to Item 7.01 of Form 8-K. Accordingly, the information in this report, including the press release and the investor presentation, will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99.1 Press Release Announcing the Transaction, dated December 17, 2004. 99.2 Investor Presentation Regarding the Transaction. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BERKSHIRE HILLS BANCORP, INC. Date: December 17, 2004 By:/s/ Michael P. Daly -------------------------------- Name: Michael P. Daly Title: President and Chief Executive Officer EX-99 2 pressrelease.txt EXHIBIT 99.1 - PRESS RELEASE Exhibit 99.1 BERKSHIRE HILLS BANCORP, INC. TO ACQUIRE WORONOCO BANCORP, INC. CREATING $2 BILLION INSTITUTION BERKSHIRE BANK TO ADD $600 MILLION IN LOANS, $460 MILLION IN DEPOSITS, 10 BRANCHES AND TWO INSURANCE AGENCIES December 17, 2004 PITTSFIELD and WESTFIELD, MA - Berkshire Hills Bancorp, Inc. ("Berkshire Hills") (AMEX: BHL) the holding company for Berkshire Bank, and Woronoco Bancorp, Inc. ("Woronoco") (AMEX: WRO) the holding company for Woronoco Savings Bank, announced today that they have signed a definitive merger agreement under which Berkshire Hills will acquire Woronoco. Headquartered in Westfield, Woronoco Savings Bank has assets of approximately $898.5 million at September 30, 2004 and operates 10 banking offices and two insurance agency offices in Hampden and Hampshire counties in western Massachusetts. The combined institution will serve customers through a network of 22 full-service branches in western Massachusetts and New York, having total assets of approximately $2.0 billion. As a result, Berkshire Bank will be the 4th largest publicly traded bank headquartered in Massachusetts and the largest headquartered in the western part of the state. Berkshire Hills and Woronoco will merge operations and existing Woronoco Savings Bank branches will become branches of Berkshire Bank. Michael P. Daly will be President and Chief Executive Officer of both Berkshire Hills and Berkshire Bank and the headquarters will remain in Pittsfield. Lawrence A. Bossidy will be Chairman of the Board of Directors of the combined companies. Cornelius D. Mahoney, Chairman, President and Chief Executive Officer of Woronoco and Woronoco Savings Bank, and two other Woronoco directors will join the Boards of Directors of Berkshire Hills and Berkshire Bank when the merger is completed. Under the terms of the merger agreement, which has been unanimously approved by the Directors of both companies, Woronoco will merge with and into Berkshire Hills. Stockholders of Woronoco will have the right to elect to receive either $36.00 in cash or one share of Berkshire Hills common stock in exchange for each share of Woronoco held by them, subject to proration procedures so that 75 percent of the outstanding Woronoco common shares are converted into Berkshire Hills common stock and the balance are converted into the cash consideration. Based upon Berkshire Hills' closing price of $37.00 on December 16, 2004, the transaction is valued at $36.75 per share, or approximately $144.5 million in the aggregate. If not previously exercised, Woronoco stock options will be converted into Berkshire Hills stock options upon the completion of the merger on a one-for-one basis. Additionally, under the terms of the agreement, Woronoco will pay its stockholders a one-time $0.25 special cash dividend. This dividend will be paid in addition to the regular quarterly cash dividends to be paid by Woronoco. The purchase price represents 172.7 % of Woronoco's tangible book value, 23.1 times Woronoco's trailing twelve months earnings and a 19.0% premium to core deposits. Commenting on the merger, Mr. Daly said, "This transaction meets all of the criteria we have recently articulated that must be present for us to do a significant acquisition: it is accretive to earnings in one of the contiguous regions of western Massachusetts, New York, Connecticut or Vermont, and Woronoco complements our community banking strengths. Woronoco is a quality institution with a strong consumer base, significant business and wealth management growth opportunities, and a low risk profile. Woronoco's insurance group will give us a platform to provide quality insurance products to Berkshire Bank customers. In combination with Berkshire Bank's strong commercial base, wealth management, trust services, and government banking services, the combined institution will be a formidable commercial and community banking franchise, with significant non-interest income potential, management synergies, and solid asset quality." Mr. Mahoney added, "We are very pleased to join Berkshire Hills and Berkshire Bank and know that this new partnership will continue to serve our customers, communities and employees with the same care and commitment characteristic of Woronoco Savings Bank. Our Board of Directors placed great value on the compatibility of the two organizations. I am very impressed with their business strategy and execution, as well as the quality of their management and Board of Directors. This is good news for our customers, shareholders and employees." In connection with the merger, Berkshire Hills plans to deleverage the combined entity's balance sheet by up to $250 million through a combination of investment portfolio and loan sales. Proceeds will be used to retire FHLB borrowings and brokered certificates of deposit. Berkshire Hills expects the deleveraging to improve the combined company's asset/liability position, eliminate earnings from wholesale funding activities and refocus efforts on core organic growth. Excluding estimated one-time merger-related costs of approximately $25.1 million, exclusive of balance sheet restructuring charges, but including the impact of the planned balance sheet restructuring and cost savings, which are currently estimated to total approximately 30% of Woronoco's current non-interest expense levels, the acquisition is estimated to be nominally accretive to Berkshire Hills' estimated 2005 earnings per share net of securities gains. For 2006, the first full year of combined operations, Berkshire Hills expects the transaction to be 6% accretive to its earnings per share net of securities gains. Berkshire Hills has not factored any revenue enhancements into its projections. Neither Berkshire Bank Foundation, Greater Berkshire Foundation nor Woronoco Savings Charitable Foundation will be affected by the merger. Each foundation will remain independent entities dedicated to providing grants in its local communities. The merger is subject to approval by state and federal regulatory agencies and the stockholders of both companies. The parties anticipate that the transaction will close in the second quarter of 2005. Northeast Capital & Advisory, Inc. served as the financial advisor for Berkshire Hills, and Sandler O'Neill & Partners, L.P. advised Woronoco. Wachtell, Lipton, Rosen & Katz served as outside legal counsel to Berkshire Hills, while Muldoon Murphy Faucette & Aguggia LLP served as outside legal counsel to Woronoco. CONFERENCE CALL Berkshire Hills and Woronoco will hold a conference call regarding these announcements at 11:00 a.m. EST today, Friday, December 17, 2004. The conference call can be accessed by dialing 1-877-407-8035. Please call in a few minutes prior to 11:00 a.m. (ET) to register for the event. A copy of the investor presentation for this call will be available at Berkshire Bank's Web site at www.berkshirebank.com, and in the presentations section of the investor relations section of Woronoco Savings Bank's Web site at www.woronoco.com at approximately 10:30 a.m. today. There will be no replay of this call. The proposed transaction will be submitted to Berkshire Hills' and Woronoco's stockholders for their consideration. Berkshire Hills and Woronoco will file a registration statement, a joint proxy statement/prospectus, and other relevant documents concerning the proposed transaction with the SEC. Stockholders of Berkshire Hills and Woronoco are urged to read the registration statement and the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about Berkshire Hills and Woronoco, at the SEC's Web site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC filings that will be incorporated by reference in the joint proxy statement/prospectus can be obtained, without charge, by directing a request to Rose A. Borotto, Investor Relations, Berkshire Hills Bancorp, Inc., 24 North Street, Pittsfield, MA 01201 (413) 236-3144 or Mark Roberts, Vice President, Finance, Woronoco Bancorp, Inc., 31 Court Street, Westfield, MA 01085 (413) 564-6270. Each of Berkshire Hills and Woronoco and its respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Berkshire Hills and Woronoco, as the case may be, in connection with the merger. Information about the directors and executive officers of Woronoco and their ownership of Woronoco common stock is set forth in the proxy statement, dated March 22, 2004, for Woronoco's 2004 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Information about the directors and executive officers of Berkshire Hills and their ownership of Berkshire Hills common stock is set forth in the proxy statement, dated April 1, 2004, for Berkshire Hills' 2004 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Additional information regarding the interests of such participants may be obtained by reading the joint proxy statement/prospectus when it becomes available. 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. The Bank is headquartered in Pittsfield, Massachusetts, with 11 branch offices serving communities throughout Berkshire County, and a representative office and one branch in New York. The bank is committed to continue operation as an independent 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. Woronoco Bancorp, Inc. is the holding company for Woronoco Savings Bank. Established in 1871, and headquartered in Westfield, Massachusetts, Woronoco Savings Bank provides a wide variety of financial products and services through its ten branch offices located in Hampden and Hampshire Counties in western Massachusetts. Through its partnership with Infinex Financial Group, the Bank offers access to a full range of investment products, including stocks, bonds, mutual funds and annuities. The Bank's subsidiary, the Woronoco Insurance Group, Inc., offers property and casualty insurance products and life insurance and group life, group health and accident insurance products for individuals and commercial clients. For more information regarding the Bank's products and services, and for Woronoco Bancorp, Inc. investor-relations information, please visit its web site at www.woronoco.com. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release contains certain forward-looking statements that are based on certain assumptions and describe future plans, strategies and expectations of Berkshire Hills Bancorp, Inc., Berkshire Bank, Woronoco Bancorp, Inc. and Woronoco Savings Bank. These forward-looking statements include, but are not limited to, statements about (i) the benefits of the merger between Berkshire Hills and Woronoco, including future financial and operating results, cost savings, and accretion to reported earnings that may be realized from the merger; and (ii) Berkshire Hills' and Woronoco's plans, objectives, expectations and intentions, and other statements contained in this presentation that are not historical facts. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. Berkshire Hills' and Woronoco's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on the operations of Berkshire Hills, Woronoco and either's subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in Berkshire's or Woronoco's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Berkshire Hills and Woronoco do not undertake - and specifically disclaim any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. In addition, the following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the businesses of Berkshire Hills and Woronoco may not be combined successfully, or such combination may take longer to accomplish than expected; (2) the cost savings from the merger may not be fully realized or take longer than expected; (3) operating costs, customer loss and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected; (4) governmental approvals of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; (5) the stockholders of Berkshire Hills and Woronoco may fail to approve the merger; (6) adverse governmental or regulatory policies may be enacted; (7) the risks associated with continued diversification of assets and adverse changes to credit quality; (8) the risks associated with a proposed balance sheet deleveraging; and (9) difficulties associated with achieving expected future financial results. Additional factors that could cause actual results to differ materially from those expressed in forward-looking statements are discussed in Berkshire Hills' and Woronoco's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available on the SEC's Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to Berkshire Hills or Woronoco or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of December 17, 2004. Except as required by law or regulation, Berkshire Hills and Woronoco do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after December 17, 2004. Media contacts: Michael P. Daly Cornelius D. Mahoney President and Chairman, President and Chief Executive Officer Chief Executive Officer Berkshire Hills Bancorp, Inc. Woronoco Bancorp, Inc. (413) 236-3194 (413) 568-9141 EX-99 3 investorpresfinal.txt EXHIBIT 99.2 - INVESTOR PRESENTATION Exhibit 99.2 [BERKSHIRE HILLS BANCORP LOGO] ACQUISITION OF WORONOCO BANCORP, INC. [map of New York] A SIGNIFICANT STEP FORWARD DECEMBER 17, 2004 Combined Organization INITIALLY $2.1 BILLION IN ASSETS [BERKSHIRE HILLS BANCORP LOGO] HEADQUARTERED IN PITTSFIELD, MA MICHAEL P. DALY, PRESIDENT & CEO 23 BRANCHES THROUGHOUT BERKSHIRE, HAMPSHIRE AND HAMPDEN COUNTIES, MA, AND ALBANY* AND ONEIDA COUNTY, NY *APPLICATION PENDING LAWRENCE A. BOSSIDY, CHAIRMAN 14 MEMBER BOARD, 3 FROM WORONOCO INCLUDING CORNELIUS D. MAHONEY A SIGNIFICANT STEP FORWARD A SIGNIFICANT STEP FORWARD [BERKSHIRE HILLS BANCORP LOGO] WORONOCO BRINGS... o QUALITY INSTITUTION WITH STRONG CONSUMER BASE o STRONG BUSINESS AND WEALTH MANAGEMENT DEMOGRAPHICS o PLATFORM AGENCY TO OFFER INSURANCE o LOW RISK PROFILE BERKSHIRE BRINGS... o QUALITY INSTITUTION WITH STRONG COMMERCIAL BASE o TRUST AND WEALTH MANAGEMENT o GOVERNMENT BANKING o HIGH ASSET QUALITY COMBINED COMPANY... o ATTRACTIVE COMMERCIAL AND COMMUNITY BANKING FRANCHISE o NON-INTEREST INCOME POTENTIAL o MANAGEMENT SYNERGIES o SOLID ASSET QUALITY o SATISFIES STATED ACQUISITION CRITERIA o CAPITAL-FRIENDLY DISCIPLINED PRICING o ACCRETIVE TO EARNINGS o CONTIGUOUS MARKET Compelling strategic fit SUMMARY OF SIGNIFICANT TERMS [BERKSHIRE HILLS BANCORP LOGO] PURCHASE PRICE PER SHARE: APPROXIMATELY $36.75 PER WORONOCO SHARE (1) FIXED EXCHANGE RATIO: ELECTION OF $36 CASH OR 1.0 BHL SHARE PER WRO SHARE. PRO RATED AT 75% STOCK, 25% CASH. NO WALK AWAY, NO COLLARS. AGGREGATE PURCHASE PRICE: $144.5 MILLION (1) ESTIMATED COST SAVINGS: APPROXIMATELY 30% OF WORONOCO'S NON-INTEREST EXPENSES CASH BREAK-UP FEE: $6 MILLION ESTIMATED MERGER-RELATED COSTS: $25.1 MILLION BALANCE SHEET DELEVERAGING: UP TO $250 MILLION AT PRE-TAX SPREAD OF 0.41% SPECIAL DIVIDEND $0.25 PER SHARE ANTICIPATED CLOSING: SECOND QUARTER, 2005 Clean and transparent (1) BASED ON BERKSHIRE'S CLOSING PRICE OF 37.00 AS OF DECEMBER 16, 2004. TRANSACTION MULTIPLES [BERKSHIRE HILLS BANCORP LOGO] BHL/WRO NEW ENGLAND NATIONWIDE PREMIUM TO MARKET -1.4% 12.2% 22.9% PRICE/LTM EARNINGS 23.1X 24.7X 21.3X PRICE/TANGIBLE BOOK VALUE 172.7% 260.5% 209.5% CORE DEPOSIT PREMIUM 19.0% 17.7% 17.7% Compares favorably to similar transactions Woronoco [BERKSHIRE HILLS BANCORP LOGO] ATTRACTIVE COMMUNITY BANKING FRANCHISE o $898.5 MILLION IN ASSETS o $597.9 MILLION IN LOANS o $460.1 MILLION IN DEPOSITS o 24% OF WORONOCO'S LOANS ARE COMM. RE, MULTI-FAMILY AND C&I o ACQUIRED 3 INSURANCE AGENCIES W/$13 MILLION IN TOTAL PREMIUMS o OPERATES 10 BRANCHES IN HAMPDEN AND HAMPSHIRE COUNTIES, MA MARKET POSITION o IN TERMS OF TOTAL DEPOSITS, WORONOCO RANKS 8TH IN HAMPDEN COUNTY, MA AND 10TH IN HAMPSHIRE COUNTY, MA SOLID ASSET QUALITY o NPAS/ASSETS: 0.05% o RESERVES/NPLS: 7.9X o NCOS/AVERAGE LOANS: 0.00% Financially healthy and disciplined STRATEGIC AND FINANCIAL RATIONALE [BERKSHIRE HILLS BANCORP LOGO] FRANCHISE ENHANCING o CONSISTENT WITH BERKSHIRE'S LONG TERM STRATEGIC PLAN o NATURAL EXTENSION OF BERKSHIRE'S FRANCHISE INTO ADJACENT PIONEER VALLEY, WITH ITS DIVERSIFICATION APPEAL o COMPLIMENTS DE NOVO INITIATIVES INTO CAPITAL DISTRICT FINANCIALLY COMPELLING o NOMINAL ACCRETION TO EPS IN 2005, 3% ACCRETION IN 2006 o NET OF SECURITIES GAINS, EPS ACCRETION OF 6% IN 2006 o NO REVENUE ENHANCEMENTS ASSUMED OPPORTUNITY TO ADD VALUE QTR ENDING 9/30/04 BHL WRO --- --- o ROAA: 0.92% 0.62% o ROAE: 9.71% 6.86% o EFFICIENCY RATIO: 60.31% 69.07% o NIM: 3.29% 2.59% Enhances shareholder value PRO FORMA MARKET SHARE [BERKSHIRE HILLS BANCORP LOGO] >> 1ST IN PITTSFIELD AND WESTFIELD, MA AND BERKSHIRE COUNTY >> 14TH IN MASSACHUSETTS >> 4TH LARGEST PUBLICLY TRADED BANK HEADQUARTERED IN MA Major player in the markets we serve MARKET SHARE OPPORTUNITY [BERKSHIRE HILLS BANCORP LOGO] >> 8TH IN HAMPDEN COUNTY, 10TH IN HAMPSHIRE COUNTY BHL WRO BERKSHIRE COUNTY HAMPDEN COUNTY ---------------- -------------- TOTAL BUSINESSES 6,525 14,506 TOTAL SALES ($M) 7,561 21,928 C&I AND COMM. RE LOANS ($M) 377 80 C&I AND COMM. RE LOANS /SALES 4.98% 0.37% Commercial lending opportunity Loan Portfolio [BERKSHIRE HILLS BANCORP LOGO] Berkshire Comm. RE 33% Commercial 20% Consumer 21% 1-4 Family 26% Wornonco Comm. RE 21% Commercial 3% Consumer 15% 1-4 Family 61% Combined Comm. RE 28% Commercial 12% Consumer 19% 1-4 Family 41% Balanced asset mix DEPOSIT ANALYSIS [BERKSHIRE HILLS BANCORP LOGO] Berkshire Transaction 24% MM & Sav. 38% Time<100k 17% Jumbo 21% Wornonco Transaction 20% MM & Sav. 34% Time<100k 22% Jumbo 6% Brokered 18% Combined Transaction 22% MM & Sav. 37% Time<100k 19% Jumbo 16% Brokered 6% Balanced asset mix STRONG ASSET QUALITY [BERKSHIRE HILLS BANCORP LOGO] BHL WRO COMBINED --- --- -------- NON-PERFORMING ASSETS/ TOTAL ASSETS 0.21% 0.05% 0.14% NON-PERFORMING ASSTS/ TOTAL LOANS 0.33% 0.08% 0.22% RESERVES/ TOTAL LOANS 1.15% 0.60% 0.92% RESERVES/ NON-PERFORMING LOANS 346.06% 786.71% 409.80% NET CHARGE-OFFS/ AVERAGE LOANS 0.11% 0.00% 0.06% Augments already strong asset base Source: SNL Financial and Northeast Capital PRO FORMA ASSUMPTIONS [BERKSHIRE HILLS BANCORP LOGO] >> BERKSHIRE'S EARNINGS BASED ON CONSENSUS 2005 EPS ESTIMATE GROWN AT 10% PER ANNUM >> WORONOCO'S EARNINGS BASED ON 2005 EPS OF $1.56 (10% LOWER THAN CONSENSUS) GROWN AT 7% PER ANNUM >> ASSUMES COST SAVINGS EQUIVALENT TO 30% OF WORONOCO'S NON-INTEREST EXPENSE BASE TAKING INTO ACCOUNT 5% ANNUAL EXPENSE GROWTH. COST SAVINGS PHASED IN WITH 75% IN THE THIRD QUARTER OF 2005 AND 100% THEREAFTER >> ASSUMES UP TO A $250 MILLION BALANCE SHEET DELEVERAGING THROUGH A COMBINATION OF INVESTMENT PORTFOLIO REDUCTION AND LOAN SALES/SECURITIZATION. ONE TIME RESTRUCTURING COSTS ARE ESTIMATED AT $3.9 MILLION AFTER-TAX. POSITIVE ANNUAL NET INCOME IMPACT OF $0.7 MILLION >> ASSUMES A 4.00% PRE-TAX OPPORTUNITY COST OF CASH >> CORE DEPOSIT INTANGIBLE EQUIVALENT TO 3.8% OF WORONOCO'S CORE DEPOSITS AMORTIZED STRAIGHT LINE OVER 10 YEARS >> ZERO REVENUE ENHANCEMENTS ASSUMED Conservative assumptions BALANCE SHEET RESTRUCTURING [BERKSHIRE HILLS BANCORP LOGO] >> REDIRECTS CAPITAL TO HIGHER EARNINGS ASSETS >> REDUCES SENSITIVITY TO RISING INTEREST RATES >> INCREASES OUR PRO FORMA CAPITAL RATIO TO 6.75% FROM 7.57% Assets: Investments 135,753 4.21% 5,715 Purchased Loans 117,247 4.04% 4,737 ------------------------------- Total 253,000 4.13% 10,452 Liabilities: FHLB Borrowings 220,500 4.81% 10,606 Brokered CDs 32,500 2.73% 887 Total 253,000 4.54% 11,493 Net Pre-Tax 0.41% 1,041 After Tax 0.28% 708 One time pre-payment Penalty (5,708) After Tax (3,881) Reduces risk and promotes growth opportunities CONSERVATIVE COST SAVINGS [BERKSHIRE HILLS BANCORP LOGO] CURRENT COST SAVINGS % OF RUN RATE IDENTIFIED RUN RATE ADMINISTRATIVE SALARIES OPERATIONS/BACK OFFICE 8,053 731 14.94% 472 OCCUPANCY & EQUIPMENT 2,620 0 0.00% OTHER OPERATING EXPENSES 5,784 1,049 18.14% TOTAL OPERATING EXPENSES 16,457 2,252 13.68% ESOP & MRP EXPENSES 2,070 2,070 100.00% SENIOR MANAGEMENT, INTEREST EXPENSE ON ESOP, SERP 1,766 1,766 100.00% TOTAL NON-INTEREST EXPENSE 20,293 6,088 30.00% Specific cost savings have been identified DEAL COSTS [BERKSHIRE HILLS BANCORP LOGO] ($000S) MERGER EXPENSE 4,419 CONTRACTS AND SEVERANCE 18,000 FACILITY AND EQUIPMENT 891 OTHER 1,813 TOTAL 25,123 EPS IMPACT [BERKSHIRE HILLS BANCORP LOGO] PRO FORMA INCOME BREAKDOWN 20051 2006 ---------------------------- Berkshire Net Income (Consensus Estimates) 12,232 13,413 Woronoco Net Income (Revised Estimates) 2,794 5,916 ----- ----- Pro Forma Net Income 15,026 19,329 ====== ====== AFTER TAX ACQUISITION ADJUSTMENTS: - ----------------------------------------- Cost Savings (30.00%) 1,846 4,356 Amortization of Core Deposit Intangible (457) (914) Amortization of Purchase Accounting Adjustments (194) (387) Lost Income from Cash Used (763) (1,455) Spread Gain from Balance Sheet Restructuring 354 708 --- --- ADJUSTED NET INCOME 15,813 21,636 Pro Forma Core EPS $2.27 $2.52 Berkshire's Standalone Core EPS $2.26 $2.44 Accretion/(Dilution) 0.44% 3.28% Pro Forma EPS (ex security gains) $2.13 $2.41 Berkshire's Stand Alone EPS (ex security gains) $2.10 $2.28 Accretion/(Dilution) 1.43% 5.70% Pro Forma Core Return on Average Assets 0.97% 1.02% Pro Forma Core Return on Average Equity 8.57% 8.78% Pro Forma Tier 1 Leverage 7.18% 7.14% 1 ASSUMES THE TRANSACTION CLOSES ON 6/20/205. A SIGNIFICANT STEP FORWARD [BERKSHIRE HILLS BANCORP LOGO] [DIAGRAM OF MAP PINPOINTING AREA OF PITTSFIELD, MA] A SIGNIFICANT STEP FORWARD [BERKSHIRE HILLS BANCORP LOGO] WORONOCO BRINGS... O QUALITY INSTITUTION WITH STRONG CONSUMER BASE O STRONG BUSINESS AND WEALTH MANAGEMENT DEMOGRAPHICS O PLATFORM AGENCY TO OFFER INSURANCE O LOW RISK PROFILE BERKSHIRE BRINGS... O QUALITY INSTITUTION WITH STRONG COMMERCIAL BASE O TRUST AND WEALTH MANAGEMENT O GOVERNMENT BANKING O HIGH ASSET QUALITY COMBINED COMPANY... O ATTRACTIVE COMMERCIAL AND COMMUNITY BANKING FRANCHISE O NON-INTEREST INCOME POTENTIAL O MANAGEMENT SYNERGIES O SOLID ASSET QUALITY O SATISFIES STATED ACQUISITION CRITERIA O CAPITAL-FRIENDLY DISCIPLINED PRICING O ACCRETIVE TO EARNINGS O CONTIGUOUS MARKET Compelling strategic fit FORWARD LOOKING STATEMENTS [BERKSHIRE HILLS BANCORP LOGO] This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release contains certain forward-looking statements that are based on certain assumptions and describe future plans, strategies and expectations of Berkshire Hills Bancorp, Inc., Berkshire Bank, Woronoco Bancorp, Inc. and Woronoco Savings Bank. These forward-looking statements include, but are not limited to, statements about (i) the benefits of the merger between Berkshire and Woronoco, including future financial and operating results, cost savings, and accretion to reported earnings that may be realized from the merger; and (ii) Berkshire's and Woronoco's plans, objectives, expectations and intentions, and other statements contained in this presentation that are not historical facts. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. Berkshire's and Woronoco's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on the operations of Berkshire, Woronoco and either's subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in Berkshire's or Woronoco's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Berkshire and Woronoco do not undertake - and specifically disclaim any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. FORWARD LOOKING STATEMENTS [BERKSHIRE HILLS BANCORP LOGO] In addition, the following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the businesses of Berkshire and Woronoco may not be combined successfully, or such combination may take longer to accomplish than expected; (2) the cost savings from the merger may not be fully realized or take longer than expected; (3) operating costs, customer loss and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected; (4) governmental approvals of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; (5) the stockholders of Berkshire and Woronoco may fail to approve the merger; (6) adverse governmental or regulatory policies may be enacted; (7) the risks associated with continued diversification of assets and adverse changes to credit quality; (8) the risks associated with a proposed balance sheet deleveraging; and (9) difficulties associated with achieving expected future financial results. Additional factors that could cause actual results to differ materially from those expressed in forward-looking statements are discussed in Berkshire's and Woronoco's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission and available on the SEC's Internet site (HTTP://WWW.SEC.GOV). All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to Berkshire or Woronoco or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of December 17, 2004. Except as required by law or regulation, Berkshire and Woronoco do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after December 17, 2004. ADDITIONAL INFORMATION [BERKSHIRE HILLS BANCORP LOGO] The proposed transaction will be submitted to Berkshire's and Woronoco's stockholders for their consideration. Berkshire and Woronoco will file a registration statement, a joint proxy statement/prospectus, and other relevant documents concerning the proposed transaction with the SEC. Stockholders of Berkshire and Woronoco are urged to read the registration statement and the joint proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about Berkshire and Woronoco, at the SEC's Web site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC filings that will be incorporated by reference in the joint proxy statement/prospectus can be obtained, without charge, by directing a request to Rose A. Borotto, Investor Relations, Berkshire Hills Bancorp, Inc., 24 North Street, Pittsfield, MA 01201 (413) 236-3144 or Mark Roberts, Vice President, Finance, Woronoco Bancorp, Inc., 31 Court Street, Westfield, MA 01085 (413) 564-6270. Each of Berkshire and Woronoco and its respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Berkshire and Woronoco, as the case may be, in connection with the merger. Information about the directors and executive officers of Woronoco and their ownership of Woronoco common stock is set forth in the proxy statement, dated March 22, 2004, for Woronoco's 2004 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Information about the directors and executive officers of Berkshire and their ownership of Berkshire common stock is set forth in the proxy statement, dated April 1, 2004, for Berkshire's 2004 annual meeting of stockholders, as filed with the SEC on a Schedule 14A. Additional information regarding the interests of such participants may be obtained by reading the joint proxy statement/prospectus when it becomes available. -----END PRIVACY-ENHANCED MESSAGE-----