-----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, MDwFlOmlrSZLNcYXo6rKPixWy7XMGjP4pnoLBzEWyN/TfSrQQDJ/gaX0kWlKh+s8 X/irS5rctj7mNTxAi9qxHQ== 0000909654-05-000263.txt : 20050127 0000909654-05-000263.hdr.sgml : 20050127 20050127113625 ACCESSION NUMBER: 0000909654-05-000263 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050126 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050127 DATE AS OF CHANGE: 20050127 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: 05552548 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 berkshirehills8kjan26.txt 1 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) January 26, 2005 ---------------- BERKSHIRE HILLS BANCORP, INC. ----------------------------- (Exact name of registrant as specified in its charter) Delaware 1-15781 04-3510455 -------- --------- ---------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) Identification No.) 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: [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)) 2 ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. --------------------------------------------- On January 26, 2005, Berkshire Hills Bancorp, Inc., the holding company for Berkshire Bank, announced: (1) its financial results for the quarter and year ended December 31, 2004; (2) the declaration of a quarterly dividend of $0.12 per share; and (3) that its 2005 annual meeting of stockholders will be held on May 5, 2005. The press release containing these announcements is filed as Exhibit 99.1 and incorporated herein by reference. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. --------------------------------- (a) Financial Statements of Businesses Acquired: Not applicable (b) Pro Forma Financial Information: Not applicable (c) Exhibits Number Description ------ ----------- 99.1 Press Release Dated January 26, 2005 2 3 SIGNATURES 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. Dated: January 26, 2005 By: /s/ Wayne F. Patenaude ------------------------------------- Wayne F. Patenaude Senior Vice President and Chief Financial Officer EX-99.1 2 berkshirehillsexb99jan26.txt 1 FOR IMMEDIATE RELEASE BERKSHIRE HILLS BANCORP, INC. REPORTS RECORD EARNINGS, WITH A 30% INCREASE IN 2004 EARNINGS FROM CONTINUING OPERATIONS DIVIDEND DECLARED AND ANNUAL MEETING DATE SET PITTSFIELD, MA - January 26, 2005 - Berkshire Hills Bancorp, Inc. (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"), today reported record earnings from continuing operations of $2.08 per diluted share for the year 2004, an increase of 30% over prior year results. Net income from continuing operations totaled $11.9 million for year 2004, compared to $9.2 million for 2003. Including the loss from discontinued operations of EastPoint Technologies, LLC, which was sold in June, net income for the year 2004 was a record $11.5 million, compared to $9.0 million for 2003. The Company also reported net income from continuing operations of $3.2 million for the fourth quarter of 2004, compared to $3.0 million for the prior quarter and $2.6 million for the fourth quarter of 2003. Earnings from continuing operations were $.55 per diluted share for the fourth quarter of 2004, an increase of 20%, compared to the same period last year. Commenting on the Company's performance, Michael P. Daly, President and Chief Executive Officer stated, "Our performance in 2004 benefited from a $2.8 million increase in net interest income, resulting from growth in loans and investments. Total service fee income increased by 10% in 2004, while non-interest expense growth was limited to 3%. These results reflect programs for excellence in customer service and operations that have become part of Berkshire Bank's culture. Net income increased each quarter in 2004, and we exceeded our expectations for growth and profitability for the year. Our ongoing focus on asset quality resulted in nonperforming assets declining to a comparatively low 0.1% of total assets at year-end." Mr. Daly concluded, "Our pursuit of value-enhancing strategies led to significant accomplishments during 2004. We sold our EastPoint Technologies, LLC investment in June, eliminating its operating costs and enhancing our technology opportunities. We continued our expansion into New York state with the acquisition of a branch in October, and we continued to build our wealth management business with the acquisition of Berkshire Financial Planning in December. Of course, our most exciting event was our announcement in December that we had entered into a definitive agreement to acquire Woronoco Bancorp, Inc., which will create a $2.0 billion company. The combined institution will be a formidable commercial and community banking franchise, with significant non-interest income potential, management synergies and solid asset quality. It will serve customers through a network of 22 full-service branches in western Massachusetts and New York." Dividend Declared The Board of Directors declared a quarterly cash dividend of $.12 per share, payable on February 22, 2005 to stockholders of record at the close of business on February 7, 2005. Annual Meeting The Company also announced that its 2005 Annual Meeting of Stockholders will be held on May 5, 2005 at the Crowne Plaza Hotel, One West Street, Pittsfield, MA at 10:00 A.M. (ET). The voting record date has been set as March 17, 2005. The Company intends to distribute proxy solicitation materials on or about April 1, 2005. 1 2 Fourth Quarter Highlights o Total commercial real estate loans increased $6 million, or 2%, from September 30, 2004. o Residential land development and construction loans increased $3 million, or 23%, from September 30, 2004. o Consumer loans increased $6 million, or 4%, from September 30, 2004. o Transaction accounts (demand deposits and NOW accounts) increased $10 million, or 5%, from September 30, 2004. o Service fee income increased $172,000, or 14%, as compared to the quarter ended September 30, 2004. The following table represents a reconciliation of GAAP net income to income from continuing operations and to core net income and EPS. In determining its core net income and earnings per share, the Company excludes net security gains and losses and those items it believes to be non-recurring.
4Q2004 FY 2004 - ------------------------------------------------------------------------------------------------------------- (In thousands, except earnings per share) - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- NET INCOME -GAAP $3,177 $11,509 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- Plus: Non-recurring loss from discontinued operations (1) - 431 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- NET INCOME - CONTINUING OPERATIONS 3,177 11,940 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- Less: Gain on sale of securities, net (2) 265 953 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- NET INCOME-CORE $2,912 $10,987 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- Earnings per diluted share - GAAP $0.55 $2.01 - ------------------------------------------------------------------------------------------------------------- Earnings per diluted share - continuing operations $0.55 $2.08 - ------------------------------------------------------------------------------------------------------------- Earnings per diluted share - core $0.51 $1.92 - ------------------------------------------------------------------------------------------------------------- Average diluted shares outstanding 5,725 5,731 - -------------------------------------------------------------------------------------------------------------
(1) Represents the operating loss and loss on the sale of the assets of EastPoint Technologies, LLC, tax effected using a tax rate of 34.0%. (2) Tax effected using a tax rate of 32.0%. Financial Condition Year-end total assets of $1.31 billion were unchanged from the prior quarter-end and increased by $92 million, or 8%, from the prior year-end due to growth in loans and investment securities. Loans totaling $828 million at year-end 2004 increased by $10 million, or 1%, and by $36 million, or 5%, from the prior quarter-end and year-end, respectively. During the year, loan growth was concentrated in total commercial real estate loans, which increased by $54 million, or 26%. Consumer loans increased by 2 3 $28 million, or 18% for the year. Residential mortgages decreased by $30 million, or 11%, in 2004 due to the securitization of $39 million in the first quarter. Investment securities totaled $414 million at year-end 2004, decreasing by $19 million, or 4%, in the most recent quarter, and increasing by $55 million, or 15%, for the full year. Securities growth in 2004 included the $39 million securitization of residential mortgages in the first quarter. During October, the Company sold $11 million of securitized loans. Proceeds were used to purchase $10 million of bank owned life insurance. Total deposits at year-end 2004 were $846 million, decreasing by $7 million, or 1%, during the most recent quarter and increasing by $16 million, or 2%, for the full year. The fourth quarter decrease included a $10 million decline in the balance of certificates of deposit primarily related to a change in municipal balances. The increase for the year was primarily due to a $22 million increase in core deposit balances (total deposits excluding certificates), which grew by 4% to $531 million at year-end. Contributing to this growth were increases of $13 million, or 7%, in transaction accounts and $17 million, or 12%, in money market accounts. Deposit growth included the benefit of the $8 million Oriskany Falls branch purchase in October. Federal Home Loan Bank advances totaled $328 million at year-end 2004, increasing by $3 million, or 1%, in the most recent quarter and by $76 million, or 30%, for the year. This increase funded the organic loan growth achieved during the year, and reflected the advantage of lower borrowing costs relative to the cost of certificates of deposit during much of the year. Tangible book value per share was $21.19, $20.89, and $19.13 at year-end 2004, the prior quarter-end, and the prior year-end, respectively. This value increased by 11% for the year 2004, primarily due to the benefit of retained earnings. The ratio of stockholders' equity to total assets measured 10.06%, 9.81%, and 10.11% at the same dates. Asset Quality Non-performing loans were $1.2 million, or 0.14% of total loans at year-end 2004, which was improved from 0.33% at the prior quarter-end and 0.40% at the prior year-end. This improvement included the benefit of the sale of the largest non-performing commercial loan relationship, which had a $1.3 million balance. Net loan charge-offs totaled $480,000 for the fourth quarter of 2004, compared to $221,000 and $903,000 in the prior quarter and the fourth quarter of 2003, respectively. Net charge-offs increased compared to the trailing quarter primarily due to the sale of the largest non-performing commercial loan relationship. The allowance for loan losses totaled $9.3 million, representing 1.13% of total loans at year-end 2004, compared to $9.4 million, or 1.15% of total loans, and $9.0 million, or 1.13% of total loans, at the prior quarter-end and year-end, respectively. In the most recent quarter, the effect of loan growth on the allowance was significantly offset by the reduction of problem assets, including the sale of the largest non-performing commercial loan relationship. Results of Operations The return on average stockholders' equity increased to 9.72% in the fourth quarter of 2004, compared to 9.71% and to 8.49% in the prior quarter and fourth quarter of 2003, respectively. The return on average assets increased to 0.97% from 0.92% and 0.86% for the same periods. The efficiency ratio also improved to 60.80% from 61.60% and 62.86% for the same periods. These improvements primarily resulted from 3 4 growth in net interest income and service fee income, together with a reduction in the ratio of non-interest expense to average assets during the year. Net interest income was $10.2 million in the fourth quarter of 2004, a decrease of $43,000 compared to the prior quarter and an increase of $455,000 compared to the fourth quarter of 2003. The net interest margin of 3.29% was unchanged from the prior quarter and decreased from 3.42% in the fourth quarter of 2003. The net interest margin would have increased to about 3.32% in the most recent quarter except for the shift from interest income to non-interest income related to the purchase of bank owned life insurance. The decrease from the prior year was due to the impact of a lower rate environment in 2004 and the execution of strategies in 2003, such as the increased emphasis on floating rate and adjustable rate loans, to better position the Bank for a potential rise in interest rates. The $425,000 provision for loan losses in the most recent quarter increased by $60,000, or 16%, compared to the prior quarter. The provision increased from the fourth quarter of 2003, when a credit of $225,000 was recorded due to a reduction in the loan loss allowance related to the sale of sub-prime automobile loans. Non-interest income was $2.2 million in the fourth quarter of 2004, an increase of $472,000, or 27%, compared to the prior quarter and an increase of $1.5 million, or 214%, compared to the fourth quarter of 2003. All major service fee categories increased in the most recent quarter compared to both of the prior periods. The largest fee increase was in wealth management service fees, which increased by 31% compared to the fourth quarter of 2003; total assets under management increased by 19% to $358 million at year-end 2004, compared to $302 million at the prior year-end. The category of other non-interest income also increased due to higher income earned on cash surrender value related to the purchase of additional bank owned life insurance in October 2004. In the fourth quarter of 2003, non-interest income totaled an unusually low $700,000 due primarily to a $2.1 million loss recorded on the sale of assets, primarily related to the aforementioned sale of sub-prime automobile loans. Non-interest expense was $7.3 million in the fourth quarter of 2004, an increase of $119,000 or 2%, compared to the prior quarter and an increase of $394,000, or 6%, compared to the fourth quarter of 2003. The increase compared to the prior quarter was primarily due to higher marketing and advertising expenses related to increased promotional activities. The increase compared to the prior year was due to salaries and benefits, including merit, bonus and pension components. This increase was partially offset by a $348,000 decrease in professional service expense and problem loan related expense following the asset sales and securitizations near the end of 2003. The efficiency ratio improved to 60.80% in the fourth quarter of 2004, compared to 61.60% in the prior quarter and to 62.86% in the fourth quarter of 2003 due to higher earning assets and service fee income. The effective income tax rate was 32.0% in the most recent quarter, compared to 32.0% in the prior quarter and to 29.9% in the fourth quarter of 2003. Results from continuing operations exclude the loss from discontinued operations following the sale of the Company's 60% interest in EastPoint Technologies, LLC in June 2004. These results include a $75,000 loss recorded on the sale. Michael P. Daly, President and Chief Executive Officer and Wayne F. Patenaude, Senior Vice President, Treasurer and Chief Financial Officer, will host a conference call at 10:00 A.M. (ET) on Thursday, January 27, 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 January 27, 2005 at 1:00 P.M. (ET) through February 3, 2005 at 4:00 P.M. (ET) by dialing 1-877-660-6853 and using Account #1628 and Conference ID#132928 (both numbers are needed to access the call). 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 4 5 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 office 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. --------------------- Statements contained in this news release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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 and other factors that may be described in the Company's quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and September 30 and in its annual report on Form 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) and to which reference is hereby ----------- made. Therefore, actual future results may differ significantly from results discussed in these forward-looking statements. Forward-looking statements also include, with limitation, those statements relating to the anticipated effects of the Company's proposed merger with Woronoco Bancorp. The following factors, among others, could cause the actual results of the merger to differ materially from expectations: the ability of the companies to obtain the required shareholder or regulatory approvals of the merger; the imposition of any regulatory conditions or requirements on the merger; the ability of the companies to consummate the merger; Berkshire's ability to successfully integrate Woronoco Bancorp following the merger, including integration of the data processing system and retention of key personnel; a materially adverse change in the financial condition, operations, or projected or actual earnings of either company; the ability to fully realize the expected cost savings and revenue enhancements; the ability to realize the expected cost savings and revenues on a timely basis; and any material change in the local markets in which each company operates. 5 6 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Unaudited ------------------------------- December 31, September 30, December 31, 2004 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------- (In thousands) ASSETS Cash and due from banks $ 15,237 $ 15,908 $ 15,583 Short term investments 2,665 6,689 1,859 ---------- ---------- ---------- Total cash and cash equivalents 17,902 22,597 17,442 Securities available for sale, at fair value 365,404 387,950 307,425 Securities held to maturity, at amortized cost 29,942 26,255 36,903 Federal Home Loan Bank stock, at cost 16,974 16,898 12,923 Savings Bank Life Insurance stock, at cost 2,043 2,043 2,043 Loans held for sale 1,053 571 - Loans 828,179 817,805 792,227 Less: Allowance for loan losses (9,337) (9,392) (8,969) ---------- ---------- ---------- Net loans 818,842 808,413 783,258 Premises and equipment, net 14,780 13,389 12,626 Accrued interest receivable 5,472 5,400 5,080 Goodwill and other intangibles 7,254 5,763 10,233 Net deferred tax asset 819 1,505 1,725 Bank owned life insurance 18,200 8,004 7,721 Due from broker - 378 7,089 Other assets 11,430 11,343 14,080 ---------- ---------- ---------- Total Assets $1,310,115 $1,310,509 $1,218,548 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 845,789 $ 853,115 $ 830,244 Federal Home Loan Bank advances 327,926 324,831 251,465 Loans sold with recourse - - 473 Due to broker - - 5,646 Accrued expenses and other liabilities 4,664 4,075 5,293 ------ ------ ------ Total liabilities 1,178,379 1,182,021 1,093,121 ---------- ---------- ---------- Minority interests - - 2,252 ---------- ---------- ---------- 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; 7,673,761 shares issued at December 31, 2004, September 30, 2004 and December 31, 2003; shares outstanding: 5,873,563 at December 31, 2004, 5,873,563 at September 30, 2004 and 5,903,082 at December 31, 2003) 77 77 77 Additional paid-in capital 77,588 77,154 75,764 Unearned compensation (7,414) (7,832) (8,507) Retained earnings 94,996 92,469 86,276 Accumulated other comprehensive income 4,214 4,345 5,559 Treasury stock at cost (1,800,198 shares at December 31, 2004, 1,800,198 at September 30, 2004 and 1,770,679 at December 31, 2003) (37,725) (37,725) (35,994) -------- -------- -------- Total stockholders' equity 131,736 128,488 123,175 ------- -------- -------- Total Liabilities & Stockholders' Equity $1,310,115 $1,310,509 $1,218,548 ========== ========== ==========
7 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES LOAN ANALYSIS
Unaudited Quarters Ended ------------------------------------------------------------------------ DECEMBER 31, 2004 SEPTEMBER 30, 2004 DECEMBER 31, 2003 ---------------------- --------------------- -------------------- Percent Percent Percent Balance of Total Balance of Total Balance of Total ---------- -------- --------- --------- -------- ---------- (Dollars in Thousands) Residential real estate loans Residential one-to four-family $217,159 26% $214,100 26% $254,939 32% Residential land development and construction 18,091 2% 14,754 2% 10,583 1% -------- ------- -------- -------- -------- ------- Total residential real estate loans 235,250 28% 228,854 28% 265,522 33% Commercial real estate loans Commercial one-to four-family 15,964 2% 15,461 2% 12,552 2% Commercial land development and construction 20,611 2% 20,560 3% 24,136 3% Multi-family 16,380 2% 16,616 2% 15,514 2% Other commercial real estate 207,619 25% 201,912 24% 154,244 19% -------- ------- -------- -------- -------- ------- Total commercial real estate loans 260,574 31% 254,549 31% 206,446 26% Commercial loans 150,879 18% 159,156 19% 166,296 21% Consumer loans Automobile 123,027 15% 119,787 15% 103,674 13% Home equity loans 54,157 7% 51,465 6% 45,783 6% Other 4,292 1% 3,994 1% 4,506 1% -------- ------- -------- -------- -------- ------- Total consumer loans 181,476 23% 175,246 22% 153,963 20% Total loans $828,179 100% $817,805 100% $792,227 100% ======== ======== ========
8 DEPOSIT ANALYSIS
Unaudited Quarters Ended -------------------------------------------------------------------------- DECEMBER 31, 2004 SEPTEMBER 30, 2004 DECEMBER 31, 2003 --------------------- ---------------------- ---------------------- Percent Percent Percent Balance of Total Balance of Total Balance of Total --------- -------- --------- --------- --------- --------- (Dollars in Thousands) Demand deposits $ 110,129 13% $104,204 12% $ 102,788 12% NOW accounts 100,709 12% 96,945 11% 94,606 11% Savings accounts 163,264 19% 166,720 20% 171,603 21% Money market accounts 156,412 19% 160,423 19% 139,897 17% -------- --- -------- --- --------- --- Total core accounts 530,514 63% 528,292 62% 508,894 61% Certificates of deposit 315,275 37% 324,823 38% 321,350 39% -------- -------- --------- Total deposits $ 845,789 100% $853,115 100% $ 830,244 100% ========= ======== =========
9 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Unaudited ----------------------------------------------------------------- Three Months Ended Twelve Months Ended ----------------------------- ---------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except earnings per share) INTEREST AND DIVIDEND INCOME Loans $ 11,519 $ 11,434 $ 43,766 $ 47,683 Debt securities 3,984 2,761 16,100 7,560 Equity securities dividends 289 209 1,176 956 Short-term investments 15 6 39 109 -------- -------- -------- ---------- TOTAL INTEREST AND DIVIDEND INCOME 15,807 14,410 61,081 56,308 -------- -------- -------- ---------- INTEREST EXPENSE Deposits 3,183 3,148 12,393 13,862 Borrowings 2,425 1,518 8,331 4,880 -------- -------- -------- ---------- TOTAL INTEREST EXPENSE 5,608 4,666 20,724 18,742 -------- -------- -------- ---------- NET INTEREST INCOME 10,199 9,744 40,357 37,566 PROVISION (CREDIT) FOR LOAN LOSSES 425 (225) 1,565 1,460 -------- -------- -------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,774 9,969 38,792 36,106 -------- -------- -------- ---------- NON-INTEREST INCOME Customer service fees 609 557 2,347 2,300 Wealth management service fees 688 527 2,523 2,090 Loan servicing fees 129 49 374 386 Gain on sale of securities, net 390 1,564 1,402 3,077 Gain (loss) on sale of loans, and securitized loans, net 81 (2,094) 166 (1,854) Loss on impairment of other assets - (206) - (206) Other non-interest income 301 303 952 655 -------- -------- -------- ---------- TOTAL NON-INTEREST INCOME 2,198 700 7,764 6,448 -------- -------- -------- ---------- NON-INTEREST EXPENSE Salaries and benefits 4,195 3,589 16,882 16,166 Occupancy and equipment 1,055 942 4,085 3,800 Marketing and advertising 357 299 991 678 Data processing 381 284 1,411 1,204 Professional services 326 485 1,552 1,227 Foreclosed real estate and other loans, net 118 307 522 1,047 Other non-interest expense 868 1,000 3,534 4,121 -------- -------- -------- ---------- TOTAL NON-INTEREST EXPENSE 7,300 6,906 28,977 28,243 -------- -------- -------- ---------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,672 3,763 17,579 14,311 Provision for income taxes 1,495 1,124 5,639 5,161 -------- -------- -------- ---------- INCOME FROM CONTINUING OPERATIONS 3,177 2,639 11,940 9,150 -------- -------- -------- ---------- Loss from discontinued operations - (73) (653) (282) Income tax benefit - (25) (222) (97) -------- -------- -------- ---------- NET LOSS FROM DISCONTINUED OPERATIONS - (48) (431) (185) -------- -------- -------- ---------- NET INCOME $ 3,177 $ 2,591 $ 11,509 $ 8,965 ======== ======== ======== ========== Earnings per share Basic $ 0.60 $ 0.50 $ 2.18 $ 1.70 Diluted $ 0.55 $ 0.45 $ 2.01 $ 1.57 Weighted average shares outstanding Basic 5,281 5,222 5,284 5,266 Diluted 5,725 5,717 5,731 5,703
10 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Unaudited Quarters Ended ----------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except earnings per share) INTEREST AND DIVIDEND INCOME Residential mortgage $ 2,967 $ 2,869 $ 2,567 $ 2,986 $ 3,793 Commercial real estate 3,761 3,630 3,389 3,225 2,969 Commercial 2,216 2,204 2,135 2,226 2,312 Indirect auto loans 1,752 1,695 1,589 1,610 1,665 Other consumer 823 733 697 692 695 -------- ------- ------- ------- ------- Total interest on loans 11,519 11,131 10,377 10,739 11,434 Securities 4,118 4,289 4,296 4,060 2,905 Federal Home Loan Bank 155 120 63 175 65 Short-term investments 15 6 1 16 6 -------- ------- ------- ------- ------- TOTAL INTEREST AND DIVIDEND INCOME 15,807 15,546 14,737 14,990 14,410 -------- ------- ------- ------- ------- INTEREST EXPENSE Deposits 3,183 3,097 3,026 3,088 3,148 Borrowings 2,425 2,207 1,959 1,740 1,518 -------- ------- ------- ------- ------- TOTAL INTEREST EXPENSE 5,608 5,304 4,985 4,828 4,666 -------- ------- ------- ------- ------- NET INTEREST INCOME 10,199 10,242 9,752 10,162 9,744 PROVISION (CREDIT) FOR LOAN LOSSES 425 365 425 350 (225) -------- ------- ------- ------- ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,774 9,877 9,327 9,812 9,969 -------- ------- ------- ------- ------- NON-INTEREST INCOME Customer service fees 609 580 634 524 557 Wealth management service fees 688 611 648 577 527 Loan servicing fees 129 63 103 79 49 Gain on sale of securities, net 390 310 377 325 1,564 Gain (loss) on sale of loans, and securitized loans, net 81 - (6) 90 (2,094) Loss on impairment of other assets - - - - (206) Other non-interest income 301 162 209 280 303 -------- ------- ------- ------- ------- TOTAL NON-INTEREST INCOME 2,198 1,726 1,965 1,875 700 -------- ------- ------- ------- ------- NON-INTEREST EXPENSE Salaries and benefits 4,195 4,195 3,890 4,603 3,589 Occupancy and equipment 1,055 997 975 1,059 942 Marketing and advertising 357 207 270 157 299 Data processing 381 305 331 394 284 Professional services 326 442 357 428 485 Foreclosed real estate and other loans, net 118 150 171 83 307 Other non-interest expense 868 885 939 839 1,000 -------- ------- ------- ------- ------- TOTAL NON-INTEREST EXPENSE 7,300 7,181 6,933 7,563 6,906 -------- ------- ------- ------- ------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,672 4,422 4,359 4,124 3,763 Provision for income taxes 1,495 1,415 1,402 1,325 1,124 -------- ------- ------- ------- ------- INCOME FROM CONTINUING OPERATIONS 3,177 3,007 2,957 2,799 2,639 -------- ------- ------- ------- ------- Loss from discontinued operations - - (386) (267) (73) Income tax benefit - - (131) (91) (25) -------- ------- ------- ------- ------- NET LOSS FROM DISCONTINUED OPERATIONS - - (255) (176) (48) -------- ------- ------- ------- ------- NET INCOME $ 3,177 $ 3,007 $ 2,702 $ 2,623 $ 2,591 ======== ======= ======= ======= ======= Earnings per share Basic $ 0.60 $ 0.57 $ 0.51 $ 0.50 $ 0.50 Diluted $ 0.55 $ 0.53 $ 0.47 $ 0.46 $ 0.45 Weighted average shares outstanding Basic 5,281 5,270 5,292 5,285 5,222 Diluted 5,725 5,721 5,725 5,757 5,717
11 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
Unaudited At or For the Quarters Ended - ------------------------------------------------------------------------------------------------------------------------------------ Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, NON-PERFORMING ASSETS 2004 2004 2004 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands) Non-accrual loans: Residential mortgage $ 327 $ 332 $ 266 $ 341 $ 348 Commercial real estate 147 614 934 484 496 Commercial 523 1,463 1,609 1,738 1,887 Indirect automobile loans 154 297 350 395 451 Other consumer 1 8 11 14 17 -------- -------- -------- -------- -------- Total non-accrual loans $ 1,152 $ 2,714 $ 3,170 $ 2,972 $ 3,199 Real estate owned ("REO") - - 25 25 - Total non-performing assets $ 1,152 $ 2,714 $ 3,195 $ 2,997 $ 3,199 Non-performing loans as a percentage of total loans 0.14% 0.33% 0.40% 0.39% 0.40% Non-performing assets as a percentage of total loans and REO 0.14% 0.33% 0.40% 0.39% 0.40% Non-performing assets to total assets 0.09% 0.21% 0.25% 0.24% 0.26% - ------------------------------------------------------------------------------------------------------------------------------------ PROVISION (CREDIT) AND ALLOWANCE FOR LOAN LOSSES - ------------------------------------------------------------------------------------------------------------------------------------ Balance at beginning of period $ 9,392 $ 9,248 $ 8,952 $ 8,969 $10,097 Charge-offs (737) (447) (390) (628) (1,074) Recoveries 257 226 261 261 171 -------- -------- -------- -------- -------- Net loan charge-offs (480) (221) (129) (367) (903) Provision (credit) for loan losses 425 365 425 350 (225) -------- -------- -------- -------- -------- Balance at end of period $ 9,337 $ 9,392 $ 9,248 $ 8,952 $ 8,969 ======== ======== ======== ======== ======== Allowance for loan losses as a percentage of non-performing loans 810.50% 346.06% 291.74% 301.21% 280.37% Allowance for loan losses as a percentage of total loans 1.13% 1.15% 1.16% 1.18% 1.13% - ------------------------------------------------------------------------------------------------------------------------------------ NET LOAN (CHARGE-OFFS) RECOVERIES - ------------------------------------------------------------------------------------------------------------------------------------ Residential mortgage $ - $ - $ - $ - $ - Commercial real estate (137) - - - - Commercial loans (164) (7) 23 96 (110) Consumer loans (primarily automobile loans) (179) (214) (152) (463) (793) -------- -------- -------- -------- -------- Total $ (480) $ (221) $ (129) $ (367) $ (903) ======== ======== ======== ======== ======== Net charge-offs as a percentage of total loans 0.06% 0.03% 0.02% 0.05% 0.11% - ------------------------------------------------------------------------------------------------------------------------------------ AVERAGE FICO SCORES OF CONSUMER LOANS 705 702 699 695 691 - ------------------------------------------------------------------------------------------------------------------------------------
12 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL RATIOS
Unaudited At or for the quarters ended - ------------------------------------------------------------------------------------------------------------------------------------ Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2004 2004 2004 2004 2003 -------- --------- -------- -------- --------- Performance Ratios (Annualized): Return on average assets 0.97 % 0.92 % 0.84 % 0.84 % 0.86 % Return on average stockholders' equity 9.72 9.71 8.40 8.39 8.49 Return on average tangible stockholders' equity 10.18 10.18 8.69 9.14 9.27 Net interest margin 3.29 3.29 3.19 3.44 3.42 (1) Non-interest income to average assets (2) 0.67 (3) 0.53 (3) 0.61 (3) 0.60 (3) 0.23 (4) Non-interest expense to average assets (5) 2.22 2.20 2.15 2.42 2.29 (6) Average earning assets to average assets 94.51 95.59 94.64 94.46 94.28 Efficiency ratio (7) 60.80 61.60 61.14 64.58 62.86 (8) Capital ratios (Percent) Stockholders' equity to total assets 10.06 9.81 9.42 10.12 10.11 Tier I capital to average adjusted assets 9.14 9.09 8.98 8.89 8.97 Tier I capital to risk weighted assets 12.86 12.90 12.77 12.71 12.59 Total capital to risk weighted assets 14.22 14.29 14.15 14.15 14.08 Other data Book value per share $ 22.43 $ 21.87 $ 20.79 $ 21.54 $ 20.86 Tangible book value per share 21.19 20.89 19.81 19.82 19.13 Stock price (9): High 38.01 39.14 37.10 38.61 37.40 Low 35.40 35.01 32.69 34.46 33.55 Close 37.15 36.95 37.10 34.90 36.20
- ------------------------------------------- (1) Excluding the forfeiture of $245,000 in interest income upon the sale of sub-prime automobile loans in December 2003, the net interest margin would have been 3.50%. (2) Excludes non-interest income from discontinued operations. (3) Excluding the gain on the sale of securities of $390,000, $310,000, $377,000 and $325,000 in the quarters ended December 2004, September 2004, June 2004 and March 2004, respectively, the ratios would have been 0.55%, 0.44%, 0.49%, and 0.50% , respectively. (4) Excluding the gain on sale of securities of $1.6 million, the $2.2 million loss on the sale of sub-prime automobile loans, and the loss of $206,000 on the impairment of other assets - repossessed vehicle inventory, the ratio would have been 0.51%. (5) Excludes non-interest expense from discontinued operations. (6) Excluding $363,000 representing the partial reversal of an $800,000 retirement benefit charge that was recorded in the second quarter of 2003, the ratio would have been 2.41%. (7) Efficiency ratio is non-interest expenses, less non-recurring items, divided by the total of net interest income, plus non-interest income, less securities gains, less non-recurring items. The ratio excludes discontinued operations. (8) Excludes the partial reversal of retirement benefit charges of $363,000 from non-interest expenses, $2.2 million of loss on the sale of sub-prime automobile loans, $245,000 in forfeiture of interest income associated with the sale of sub-prime automobile loans and the loss on the impairment of other assets - repossessed vehicle inventory of $206,000. (9) Based on daily closing prices. 13 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCES
Unaudited Quarters Ended -------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2004 2004 2004 2004 2003 ------------- --------------- ------------ ------------ -------------- (In thousands) Earning assets Short-term investments $ 2,628 $ 2,192 $ 1,031 $ 6,307 $ 2,853 Securities (1) 399,952 419,474 425,658 388,145 314,070 Federal Home Loan Bank 16,902 16,898 14,925 13,846 12,166 Loans Residential mortgage 234,817 225,198 216,164 232,001 287,518 Commercial real estate 255,901 250,323 237,727 219,991 193,728 Commercial 153,385 160,129 159,241 163,236 167,427 Indirect auto loans 114,480 111,117 106,883 99,754 103,821 Other consumer 63,406 60,627 59,556 57,775 57,013 ----------- ----------- ----------- ----------- ------------ Total loans 821,989 807,394 779,571 772,757 809,507 ----------- ----------- ----------- ----------- ------------ Total earning assets 1,241,471 1,245,958 1,221,185 1,181,055 1,138,596 Other assets 72,061 57,551 69,166 69,308 69,076 ----------- ----------- ----------- ----------- ------------ Total assets $ 1,313,532 $ 1,303,509 $ 1,290,351 $ 1,250,363 $ 1,207,672 ----------- ----------- ----------- ----------- ------------ Funding liabilities Deposits Non-interest-bearing deposits $ 108,832 $ 105,257 $ 102,881 $ 97,964 $ 98,392 Savings, NOW and money market 434,562 425,562 419,222 427,388 415,486 ----------- ----------- ----------- ----------- ------------ Total core deposits 543,394 530,819 522,103 525,352 513,878 Certificates of deposit 316,898 326,411 322,048 318,555 321,732 ----------- ----------- ----------- ----------- ------------ Total deposits 860,292 857,230 844,151 843,907 835,610 Federal Home Loan Bank advances 318,422 318,870 310,935 274,054 236,534 Total funding liabilities 1,178,714 1,176,100 1,155,086 1,117,961 1,072,144 Other liabilities 4,019 3,540 4,619 5,229 11,249 ----------- ----------- ----------- ----------- ------------ Total liabilities 1,182,733 1,179,640 1,159,705 1,123,190 1,083,393 Minority interest - - 1,977 2,130 2,261 Stockholders' Equity 130,799 123,869 128,669 125,043 122,018 ----------- ----------- ----------- ----------- ------------ Total liabilities and equity $ 1,313,532 $ 1,303,509 $ 1,290,351 $ 1,250,363 $ 1,207,672 ----------- ----------- ----------- ----------- ------------
(1) Average balances for securities available-for-sale are based on amortized cost. 14 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES AVERAGE YIELDS (Annualized)
Unaudited Quarters Ended --------------------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2004 2004 2004 2004 2003 ------------- ------------- ---------- ---------- ------------- Earning assets Short-term investments 2.28 % 1.09 % 0.39 % 1.01 % 0.84 % Securities (1) 4.12 4.09 4.04 4.18 3.70 Federal Home Loan Bank 3.67 2.84 1.69 5.06 2.14 Loans Residential mortgage 5.05 5.10 4.75 5.15 5.28 Commercial real estate 5.88 5.80 5.70 5.86 6.13 Commercial 5.79 5.51 5.36 5.45 5.52 Indirect auto loans 6.12 6.10 5.95 6.46 6.41 Other consumer 5.17 4.84 4.68 4.77 4.88 Total loans 5.61 5.51 5.32 5.56 5.65 Total earning assets 5.10 4.99 4.83 5.08 5.06 Funding liabilities Deposits Non-interest-bearing deposits - - - - - Savings, NOW and money market 0.86 0.79 0.79 0.80 0.78 Total core deposits 0.69 0.63 0.63 0.65 0.63 Certificates of deposit 2.84 2.77 2.73 2.80 2.90 Total deposits 1.48 1.45 1.43 1.46 1.51 Federal Home Loan Bank advances 3.05 2.77 2.52 2.54 2.57 Total funding liabilities 1.90 1.80 1.73 1.73 1.74 Net interest spread 3.20 3.19 3.10 3.35 3.32 Net interest margin 3.29 3.29 3.19 3.44 3.42
(1) Average yields for securities available-for-sale are based on amortized cost. - ------------------ Contact: Berkshire Hills Bancorp, Inc. Wayne F. Patenaude, 413-236-3195 Senior Vice President, Treasurer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----