-----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, LME63JM4RhGnBkmac0krFfTwhvk/DcGkI+5VtXOv+Wca2zB7mMzdMKsUeXPxVwlk E/uTyoWEKvzmohO3HwOwbw== 0000909654-05-001555.txt : 20050727 0000909654-05-001555.hdr.sgml : 20050727 20050727163413 ACCESSION NUMBER: 0000909654-05-001555 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050727 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050727 DATE AS OF CHANGE: 20050727 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: 05977697 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 berkshire8kjuly27.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) July 27, 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: [ ] 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 July 27, 2005, Berkshire Hills Bancorp, Inc., the holding company for Berkshire Bank, announced its financial results for the three and six months ended June 30, 2005 and the declaration of a quarterly dividend of $0.14 per share. 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 July 27, 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: July 27, 2005 By: /s/ Wayne F. Patenaude ---------------------------------- Wayne F. Patenaude Senior Vice President and Chief Financial Officer EX-99.1 2 berkshireexb99july27.txt 1 BERKSHIRE HILLS BANCORP, INC. REPORTS 20% INCREASE IN CORE EARNINGS PER DILUTED SHARE; QUARTERLY CASH DIVIDEND INCREASED 17% PITTSFIELD, MA - July 27, 2005 - Berkshire Hills Bancorp, Inc. ("Berkshire" or the "Company") (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"), today reported $0.53 in core net income per diluted share for the second quarter of 2005, a 20% increase compared to $0.44 for the second quarter of 2004. Second quarter core net income totaled $3.50 million in 2005, increasing by 40% from $2.50 million in 2004, including the benefit from the acquisition of Woronoco Bancorp, Inc. on June 1, 2005. Core earnings per share growth was less than core earnings growth, primarily due to the issuance of shares for the acquisition. Due primarily to the previously announced termination of its Employee Stock Ownership Plan ("ESOP") in June 2005, the Company reported a net loss of $4.61 million, or $0.74 per basic and diluted share, for the second quarter of 2005. This compared to net income of $2.70 million, or $0.47 per diluted share, in the same quarter of 2004. The non-cash charge of $8.67 million recorded on the plan termination in 2005 had no negative impact on stockholders' equity because the charge to earnings was offset by credits to unearned compensation and additional paid in capital. For the first six months of 2005, core net income per diluted share increased by 22% to $1.05, compared to $0.86 in the first half of 2004. Core net income increased by 32% to $6.47 million, from $4.90 million, for these periods. For the first half of 2005, the Company reported a net loss of $1.36 million, or $0.23 per basic and diluted share, including the $8.67 million charge related to the ESOP termination. For the first half of 2004, the Company's net income totaled $5.33 million, or $0.93 per diluted share. Commenting on the second quarter results, Michael P. Daly, President and Chief Executive Officer of the Company and the Bank stated, "Berkshire had a very productive second quarter. We completed our acquisition of Woronoco Bancorp Inc., and introduced our SOLUTIONS(SM) brand to the Pioneer Valley of Western Massachusetts. We also completed a conversion of our core banking systems, enhancing our service delivery platform, which will facilitate our conversion of the Woronoco accounts, which is planned for next month. The growth in our core earnings per share reflects the benefit of our acquisition of Woronoco and continued organic growth in our markets, including organic loan growth at an 18% annualized rate during the second quarter. We achieved these earnings gains while also accomplishing a strategic de-leveraging to maintain the highest regulatory capital designation. We are also pleased that the performance of our combined loan portfolios continues to be excellent. We opened our first full-service office in Albany, New York and are looking forward to opening our Clifton Park branch next month and our East Greenbush branch in the fourth quarter. We also moved closer to obtaining final regulatory approval of our charter for Berkshire Municipal Bank, our New York-chartered bank being organized to accept deposits from New York municipalities and other governmental entities, which we expect will begin operations in the current quarter. Finally, we were pleased to be recognized by the Boston Globe for the fourth consecutive year, as one of the top performing publicly traded companies in Massachusetts." DIVIDEND DECLARED - ----------------- The Board of Directors declared a quarterly cash dividend of $0.14 per share, payable on August 22, 2005 to stockholders of record at the close of business on August 8, 2005. This is an increase of $0.02 per share, or 17%, compared to recent quarters. 2 SECOND QUARTER HIGHLIGHTS - ------------------------- o Completed acquisition of Woronoco Bancorp, Inc. on June 1, 2005, increasing total assets from $1.3 billion to $2.1 billion. o Completed strategic de-leveraging, with loan and security sales totaling $192 million, the proceeds of which were used to reduce total borrowings by the same amount. o Announced completion of repurchase of 300,000 shares of its common stock and the approval of an additional stock purchase program, authorizing the purchase of up to 150,000 shares. o Under its repurchase plans, the Company repurchased 50,697 shares of its common stock at an average price of $32.14 per share during the quarter. o Achieved 18% annualized growth in total net loan originations. o Opened a new full-service office in Albany, New York. o Terminated ESOP, resulting in a net $8.4 million one-time charge after taxes. o Issued $15 million of trust preferred securities. The interest rate will adjust quarterly during the 30 year term, based on the 3 month LIBOR plus 1.85%. The initial interest rate is 5.34%. o Converted core-banking system, providing branch staff increased access, real-time functionality on all delivery channels and an upgraded platform for continued expansion of our customer base. CORE NET INCOME - --------------- The following table represents a reconciliation of GAAP net income to core net income and earnings per share.
- ----------------------------------------------------------------------------------------------------------------- 2Q2005 1Q2005 2Q2004 6mos2005 6mos2004 - ----------------------------------------------------------------------------------------------------------------- (In thousands, except earnings per share) NET (LOSS) INCOME - GAAP $(4,608) $3,252 $2,702 $(1,356) $5,325 Less: Gain on sale of securities, net 902 279 256 1,181 477 Plus: Non-recurring loss on sale of discontinued operations - - 50 - 50 Plus: ESOP termination expense 8,379 - - 8,379 - Plus: Merger and conversion expense 626 - - 626 - NET INCOME - CORE $ 3,495 $2,973 $2,496 $ 6,468 $4,898 (Loss) earnings per diluted share - GAAP $ (0.74) $ 0.57 $ 0.47 $ (0.23) $ 0.93 Earnings per diluted share - core $ 0.53 $ 0.52 $ 0.44 $ 1.05 $ 0.86 Average diluted shares outstanding 6,257 5,691 5,725 5,782 5,742 - -----------------------------------------------------------------------------------------------------------------
Adjustments to arrive at core net income are tax effected using a tax rate of 35.0% in 2005 and 32.0% in 2004. The ESOP termination expense is net of a $288,000 tax benefit. Core earnings per share in 2005 include the effect of dilutive shares totaling 359,000 in the second quarter and 375,000 in the first six months. 2 3 FINANCIAL CONDITION - ------------------- Total assets were $2.1 billion at mid-year, up from $1.3 billion at the prior quarter-end and year-end, due primarily to the acquisition of Woronoco Bancorp, Inc., which had approximately $767 million in assets at the time of acquisition. As previously announced, a de-leveraging plan was also executed prior to the acquisition, with sales of loans and securities totaling $192 million, the proceeds of which were used to reduce borrowings. The Bank's securities portfolio was reduced by $43 million in the first quarter of 2005, resulting in a total de-leveraging of $235 million. Additionally, the Bank sold $46 million in securities in the current quarter to pay $35 million for the acquisition's cash consideration and $11 million for a portion of the deal costs. Most categories of assets and liabilities increased primarily due to the acquisition of Woronoco. Loans totaled $1.42 billion at mid-year, increasing by $588 million, or 71%, from year-end 2004. Total net loans originated in Berkshire's markets totaled $66 million, representing a 16% annualized growth rate, in the first half of 2005. Investment securities totaled $443 million at mid-year, increasing by $28 million, or 7%, from year-end 2004. Deposits totaled $1.31 billion at mid-year, increasing by $460 million, or 54%, from year-end 2004. Excluding deposits acquired with Woronoco, total deposits increased by 4% annualized in the first half of 2005. Borrowings totaled $504 million at mid-year, increasing by $176 million, or 54% from year-end 2004, due to $237 million in borrowings acquired with Woronoco. Additionally, borrowings included subordinated debt related to $15 million of trust preferred securities which were issued in June. Stockholders' equity totaled $244 million at mid-year 2005, increasing by $113 million, or 86%, from year-end 2004. Consideration paid for the Woronoco acquisition was based on a ratio of 75% stock and 25% cash. In addition to $35 million in cash consideration, Berkshire issued 2.93 million new shares valued at $108 million. As previously noted, the loss resulting from the ESOP termination had no negative impact on stockholders' equity because the charge to earnings was offset by credits to unearned compensation and additional paid in capital. These credits also offset the $5 million impact of the transfer of 146,971 shares of treasury stock, which represented full payment of the ESOP loan. Goodwill increased to $90 million and intangible assets increased to $13 million due to the Woronoco acquisition. As a result, tangible book value per share was $16.56 at mid-year, compared to $21.19 at year-end 2004. The ratio of stockholders' equity to total assets measured 11.8% at mid-year, compared to 10.1% at the prior year-end, due to the issuance of new common shares and the de-leveraging program in conjunction with the Woronoco acquisition. ASSET QUALITY - ------------- Asset quality indicators have improved and remain favorable. The loans added through the Woronoco acquisition were primarily concentrated in comparatively low risk residential mortgage and home equity loans. As a result, the ratio of non-performing assets to total assets declined to 0.08%, and the allowance for loan losses declined to 0.92% of total loans. Accordingly, the ratio of the allowance to non-performing loans measured 819% at mid-year, which was little changed from 811% at year-end 2004. Second quarter net loan charge-offs totaled $222,000, or 0.08% of total average loans on an annualized basis. The allowance for loan losses totaled $13.0 million at mid-year, compared to $9.3 million at year-end 2004, including a $3.3 million allowance related to loans acquired in connection with the Woronoco acquisition. 3 4 RESULTS OF OPERATIONS - --------------------- During the second quarter, Berkshire recorded a net loss of $4.61 million. This included the following non-core items (net of taxes): ESOP termination expense - $8.38 million; net gains on the sale of securities - $902,000, and merger and conversion expenses - $626,000. Core net income totaled $3.50 million, an increase of $522,000, or 18%, compared to the preceding quarter. Core net income increased by $999,000, or 40%, compared to the second quarter of 2004. These increases included the benefit of the Woronoco acquisition. Core earnings per share were $0.53 in the second quarter, increasing by 2% and 20% compared to the preceding quarter and to the second quarter of 2004, respectively. All major categories of income and expense increased in the second quarter, reflecting the inclusion of one month's operations resulting from the Woronoco acquisition on June 1. Net interest income was $11.5 million, increasing by $1.48 million, or 15%, from the prior quarter and increasing by $1.76 million, or 18%, from the second quarter of 2004. Average earning assets increased by 17% and by 18% compared to the same periods, respectively. As anticipated, the fully-taxable equivalent net interest margin declined to 3.26%, from 3.34%, compared to the prior quarter and was unchanged from the second quarter of 2004. Woronoco's lower yielding asset mix and greater reliance on higher cost borrowings and time deposits contributed to the decline in the margin in the second quarter. The provision for loan losses in the most recent quarter was $300,000, compared to $493,000 in the prior quarter and $425,000 in the second quarter of 2004, respectively. The provision exceeded net loan charge-offs of $222,000 in the most recent quarter. Berkshire recorded higher net securities gains in the second quarter, choosing to sell certain appreciated securities in light of favorable market conditions. Net securities gains were $1.388 million in the second quarter, compared to $429,000 in the prior quarter and $377,000 in the second quarter of 2004. Total non-interest income increased in the second quarter due to these securities gains. Excluding net securities gains, non-interest income totaled $2.53 million in the most recent quarter, increasing by $213,000, or 9%, compared to the prior quarter and increasing by $940,000, or 59%, compared to the second quarter of 2004. Results for the second quarter included $480,000 of non-interest income from Pioneer Valley operations in June related to the Woronoco acquisition. Excluding these operations, total service fee income increased by $97,000, or 7%, compared to the prior quarter and by $153,000, or 11%, compared to the second quarter of 2004. Non-interest expenses increased in the second quarter, primarily due to $8.67 million related to the termination of the ESOP and including $963,000 related to the Woronoco acquisition and the conversion of the Bank's core banking systems. Excluding these amounts, all other non-interest expense totaled $8.43 million in the most recent quarter, increasing by $895,000, or 12%, compared to the prior quarter and by $1.50 million, or 22%, compared to the second quarter of 2004. Results for the most recent quarter included expenses of the Pioneer Valley operations in June related to the Woronoco acquisition. The most recent quarter also included $151,000 in June amortization of intangible assets related to the Woronoco acquisition. The $8.67 million ESOP termination expense resulted in a tax benefit of $288,000. Excluding these amounts, the effective tax rate in the second quarter was 34.2%, compared to 31.4% in the prior quarter and 32.2% in the second quarter of 2004. Results in 2004 also included net charges of $255,000 in the second quarter and $431,000 in the first six months, representing the after-tax loss on discontinued operations of EastPoint Technologies, LLC, which was sold in June 2004. 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 3:00 P.M. (ET) on Wednesday, July 4 5 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 July 27, 2005 at 5:00 P.M. (ET) through August 5, 2005 at 4:00 P.M. (ET) by dialing 1-877-660-6853 and using Account #286 and Conference ID#157899 (both numbers are needed to access the replay). Berkshire Hills Bancorp, Inc. is the holding company for Berkshire Bank. Established in 1846, Berkshire Bank is one of Massachusetts' oldest and largest independent banks and is the largest banking institution based in Western Massachusetts. The Bank is headquartered in Pittsfield, Massachusetts with branch offices serving communities throughout Western Massachusetts and Northeastern New York and a representative office in New York. The Bank is committed to operating as an independent super-community bank, delivering exceptional customer service and a broad array of competitively priced retail and commercial products to its customers. For more information on Berkshire Hills Bancorp, Inc., visit www.berkshirebank.com or call 413-443-5601. --------------------- Statements contained in this news release contain forward-looking statements 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. Additionally, on June 1, 2005 the Company completed a merger with Woronoco Bancorp, Inc. Risks and uncertainties related to the merger include the integration of the data processing system and retention of key personnel; the ability to realize fully the expected cost savings and revenue enhancements; and the ability to realize the expected cost savings and revenues on a timely basis. Additionally, other risks and uncertainties 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. News Contact: Wayne F. Patenaude Senior Vice President, Treasurer and Chief Financial Officer 413-236-3195 5 6 BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------- Unaudited ----------------------------------------- June 30, December 31, 2005 2004 - ------------------------------------------------------------------------------------------------------------------------- (In thousands) ASSETS Cash and due from banks $ 42,665 $ 15,237 Short-term investments 329 2,665 ----------- ----------- Total cash and cash equivalents 42,994 17,902 ----------- ----------- Securities available-for-sale, at fair value 415,172 384,421 Securities held-to-maturity, at amortized cost 27,474 29,942 Loans held for sale 1,838 1,053 Total loans 1,415,840 828,179 Less: Allowance for loan losses (13,044) (9,337) ----------- ----------- Net loans 1,402,796 818,842 ----------- ----------- Premises and equipment, net 25,461 14,780 Accrued interest receivable 8,073 5,472 Goodwill 89,605 6,782 Intangible assets 12,562 472 Bank owned life insurance 18,603 18,200 Other assets 22,015 12,249 ------- ------- Total assets $ 2,066,593 $ 1,310,115 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 1,305,599 $ 845,789 Borrowings 504,390 327,926 Accrued expenses and other liabilities 12,107 4,664 ----------- ----------- Total liabilities 1,822,096 1,178,379 ----------- ----------- Stockholders' equity: Preferred stock ($.01 par value; 1,000,000 shares - - authorized; none issued or outstanding) Common stock ($.01 par value; 26,000,000 shares authorized; 10,602,553 shares issued at June 30, 2005 and 7,673,761 at December 31, 2004; shares outstanding: 8,593,894 at June 30, 2005 and 5,873,563 at December 31, 2004) 106 77 Additional paid-in capital 198,739 77,588 Unearned compensation (2,141) (7,414) Retained earnings 92,262 94,996 Accumulated other comprehensive income 2,060 4,214 Treasury stock at cost (2,008,659 shares at June 30, 2005 and 1,800,198 at December 31, 2004) (46,529) (37,725) ----------- ----------- Total stockholders' equity 244,497 131,736 ----------- ----------- Total liabilities and stockholders' equity $ 2,066,593 $ 1,310,115 =========== ===========
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES - ------------------------------------------------------------------------------------------------------------------------- LOAN ANALYSIS Unaudited - ------------------------------------------------------------------------------------------------------------------------- June 30, 2005 December 31, 2004 ------------- ----------------- Percent Percent Balance of Total Balance of Total - ------------------------------------------------------------------------------------------------------------------------- (Dollars in millions) Residential real estate loans: Residential one-to four-family $ 533 37 % $ 217 26 % Residential land development and construction 36 2 18 2 ------- --- ----- --- Total residential real estate loans 569 39 235 28 ------- --- ----- --- Commercial real estate loans: Commercial one-to four-family 16 1 16 2 Commercial land development and construction 40 3 21 3 Multi-family 51 4 16 2 Other commercial real estate 278 20 208 25 ------- --- ----- --- Total commercial real estate loans 385 28 261 32 ------- --- ----- --- Commercial business loans 165 12 151 18 Consumer loans: Automobile 143 10 123 15 Home equity and other loans 154 11 58 7 ------- --- ----- --- Total consumer loans 297 21 181 22 ------- --- ----- --- Total loans $ 1,416 100 % $ 828 100 % ======= === ===== ===
DEPOSIT ANALYSIS Unaudited ---------------------------------------------------------- June 30, 2005 December 31, 2004 ------------- ----------------- Percent Percent Balance of Total Balance of Total ------- -------- ------- -------- (Dollars in millions) Demand deposit accounts $ 162 12 % $ 110 13 % NOW accounts 154 12 101 12 Money market accounts 225 18 156 19 Savings accounts 253 19 163 19 ---- --- ----- --- Total core accounts 794 61 530 63 Certificates of deposit - regular 442 34 315 37 Certificates of deposit - brokered 70 5 - - --- -- ----- --- Total certificates of deposits 512 39 315 37 Total deposits $ 1,306 100 % $ 845 100 % ======= === ===== ===
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------------ Unaudited ------------------------------------------------------------------- Three Months Ended Six Months Ended ------------------------------------------------------------------- June 30, June 30, June 30, June 30, 2005 2004 2005 2004 ------------------------------------------------------------------- (In thousands, except earnings per share) INTEREST AND DIVIDEND INCOME Loans $ 15,226 $ 10,377 $ 27,142 $ 21,116 Debt securities, taxable 3,380 3,812 6,770 7,422 Debt securities, tax-exempt 363 336 758 564 Equity securities dividends 357 211 682 608 Short-term investments 22 1 38 17 -------- -------- -------- -------- Total interest and dividend income 19,348 14,737 35,390 29,727 -------- -------- -------- -------- INTEREST EXPENSE Deposits 4,318 3,026 7,691 6,112 Borrowings 3,522 1,959 6,159 3,699 -------- -------- -------- -------- Total interest expense 7,840 4,985 13,850 9,811 -------- -------- -------- -------- NET INTEREST INCOME 11,508 9,752 21,540 19,916 PROVISION FOR LOAN LOSSES 300 425 793 775 -------- -------- -------- -------- Net interest income after provision for loan losses 11,208 9,327 20,747 19,141 -------- -------- -------- -------- NON-INTEREST INCOME Customer service fees 1,033 634 1,648 1,158 Wealth management service fees 838 699 1,540 1,326 Loan service fees 198 103 372 182 Increase in cash surrender value of life insurance 200 144 403 351 Gain on sales of securities, net 1,388 377 1,817 702 Gain on sale of loans, and securitized loans, net 162 (6) 751 84 Other non-interest income 97 14 125 37 -------- -------- -------- -------- Total non-interest income 3,916 1,965 6,656 3,840 -------- -------- -------- -------- NON-INTEREST EXPENSE Salaries and employee benefits 4,485 3,890 8,820 8,493 Termination of Employee Stock Ownership Plan 8,667 - 8,667 - Occupancy and equipment 1,212 975 2,352 2,034 Marketing and advertising 200 270 361 427 Data processing 454 331 801 725 Professional services 363 357 838 785 Foreclosed real estate and repossessed assets, net 218 171 312 254 Merger and conversion expense 963 - 963 - Other non-interest expense 1,499 939 2,484 1,779 -------- -------- -------- -------- Total non-interest expense 18,061 6,933 25,598 14,497 -------- -------- -------- -------- (Loss) income from continuing operations before income taxes (2,937) 4,359 1,805 8,484 Provision for income taxes 1,671 1,402 3,161 2,728 -------- -------- -------- -------- (LOSS) INCOME FROM CONTINUING OPERATIONS (4,608) 2,957 (1,356) 5,756 -------- -------- -------- -------- Loss from discontinued operations - (386) - (653) Income tax benefit - (131) - (222) -------- -------- -------- -------- Net loss from discontinued operations - (255) - (431) -------- -------- -------- -------- NET (LOSS) INCOME $ (4,608) $ 2,702 $ (1,356) $ 5,325 ======== ======== ======== ======== (Loss) earnings per share Basic $ (0.74) $ 0.51 $ (0.23) $ 1.01 Diluted $ (0.74) $ 0.47 $ (0.23) $ 0.93 Weighted average shares outstanding Basic 6,257 5,292 5,782 5,291 Diluted 6,257 5,725 5,782 5,742
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------------ Unaudited Quarters Ended -------------------------------------------------------------------- June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2005 2005 2004 2004 2004 - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except earnings per share) INTEREST AND DIVIDEND INCOME Residential mortgage $ 4,444 $ 3,059 $ 2,967 $ 2,869 $ 2,567 Commercial real estate 4,977 4,044 3,761 3,630 3,389 Commercial business loans 2,505 2,222 2,216 2,204 2,135 Auto loans 1,991 1,806 1,863 1,811 1,710 Other consumer 1,309 785 712 617 576 -------- ------- ------- ------- ------- Total interest on loans 15,226 11,916 11,519 11,131 10,377 Securities 4,100 4,110 4,273 4,409 4,359 Short-term investments 22 11 15 6 1 -------- ------- ------- ------- ------- Total interest and dividend income 19,348 16,037 15,807 15,546 14,737 -------- ------- ------- ------- ------- INTEREST EXPENSE Deposits 4,318 3,373 3,183 3,097 3,026 Borrowings 3,522 2,637 2,425 2,207 1,959 -------- ------- ------- ------- ------- Total interest expense 7,840 6,010 5,608 5,304 4,985 -------- ------- ------- ------- ------- NET INTEREST INCOME 11,508 10,027 10,199 10,242 9,752 PROVISION FOR LOAN LOSSES 300 493 425 365 425 -------- ------- ------- ------- ------- Net interest income after provision for loan losses 11,208 9,534 9,774 9,877 9,327 -------- ------- ------- ------- ------- NON-INTEREST INCOME Customer service fees 1,033 616 609 580 634 Wealth management service fees 838 702 715 658 699 Loan service fees 198 174 129 63 103 Increase in cash surrender value of life insurance 200 203 196 92 144 Gain on sale of securities, net 1,388 429 390 310 377 Gain (loss) on sale of loans, and securitized loans, net 162 588 81 - (6) Other non-interest income 97 32 78 23 14 -------- ------- ------- ------- ------- Total non-interest income 3,916 2,744 2,198 1,726 1,965 -------- ------- ------- ------- ------- NON-INTEREST EXPENSE Salaries and benefits 4,485 4,335 4,195 4,195 3,890 Termination of Employee Stock Ownership Plan 8,667 - - - - Occupancy and equipment 1,212 1,140 1,055 997 975 Marketing and advertising 200 161 357 207 270 Data processing 454 347 381 305 331 Professional services 363 423 326 442 357 Foreclosed real estate and other loans, net 218 94 118 150 171 Merger and conversion expense 963 - - - - Other non-interest expense 1,499 1,036 868 885 939 -------- ------- ------- ------- ------- Total non-interest expense 18,061 7,536 7,300 7,181 6,933 -------- ------- ------- ------- ------- (Loss) income from continuing operations before income taxes (2,937) 4,742 4,672 4,422 4,359 Provision for income taxes 1,671 1,490 1,495 1,415 1,402 -------- ------- ------- ------- ------- (LOSS) INCOME FROM CONTINUING OPERATIONS (4,608) 3,252 3,177 3,007 2,957 -------- ------- ------- ------- ------- Loss from discontinued operations - - - - (386) Income tax benefit - - - - (131) -------- ------- ------- ------- ------- Net loss from discontinued operations - - - - (255) -------- ------- ------- ------- ------- NET (LOSS) INCOME $ (4,608) $ 3,252 $ 3,177 $ 3,007 $ 2,702 ======== ======= ======= ======= ======= (Loss) earnings per share Basic $ (0.74) $ 0.61 $ 0.60 $ 0.57 $ 0.51 Diluted $ (0.74) $ 0.57 $ 0.55 $ 0.53 $ 0.47 Weighted average shares outstanding Basic 6,257 5,300 5,281 5,270 5,292 Diluted 6,257 5,691 5,725 5,721 5,725
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES - ------------------------------------------------------------------------------------------------------------------------------------ Unaudited At or For the Quarters Ended June 30, Mar. 31, Dec. 31, Sept. 30, June 30, NON-PERFORMING ASSETS 2005 2005 2004 2004 2004 - ------------------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands) Non-accrual loans: Residential mortgage $ 663 $ 298 $ 327 $ 332 $ 266 Commercial real estate 209 144 147 614 934 Commercial 613 832 523 1,463 1,609 Indirect automobile loans 78 95 154 297 350 Other consumer 29 1 1 8 11 ------- ------- ------- ------- ------- Total non-accrual loans $ 1,592 $ 1,370 $ 1,152 $ 2,714 $ 3,170 Real estate owned ("REO") - - - - 25 Total non-performing assets $ 1,592 $ 1,370 $ 1,152 $ 2,714 $ 3,195 ======= ======= ======= ======= ======= Non-performing loans as a percentage of total loans 0.11% 0.16% 0.14% 0.33% 0.40% Non-performing assets to total assets 0.08% 0.11% 0.09% 0.21% 0.25% - ------------------------------------------------------------------------------------------------------------------------------------ PROVISION AND ALLOWANCE FOR LOAN LOSSES - ------------------------------------------------------------------------------------------------------------------------------------ Balance at beginning of period $ 9,645 $ 9,337 $ 9,392 $ 9,248 $ 8,952 Charge-offs (391) (328) (737) (447) (390) Recoveries 169 143 257 226 261 ------- ------- ------- ------- ------- Net loan charge-offs (222) (185) (480) (221) (129) Allowance attributed to acquired loans 3,321 Provision for loan losses 300 493 425 365 425 ------- ------- ------- ------- ------- Balance at end of period $13,044 $ 9,645 $ 9,337 $ 9,392 $ 9,248 ======= ======= ======= ======= ======= Allowance for loan losses as a percentage of non-performing loans 819% 704% 811% 346% 292% Allowance for loan losses as a percentage of total loans 0.92% 1.13% 1.13% 1.15% 1.16% - ------------------------------------------------------------------------------------------------------------------------------------ NET LOAN (CHARGE-OFFS) RECOVERIES - ------------------------------------------------------------------------------------------------------------------------------------ Residential mortgage $ - $ - $ - $ - $ - Commercial real estate (109) - (137) - - Commercial loans - (4) (164) (7) 23 Consumer loans (primarily automobile loans) (113) (181) (179) (214) (152) ------- ------- ------- ------- ------- Total $ (222) $ (185) $ (480) $ (221) $ (129) ======= ======= ======= ======= ======= Net charge-offs as a percentage of total average loans 0.02% 0.02% 0.06% 0.03% 0.02% - ------------------------------------------------------------------------------------------------------------------------------------ AVERAGE FICO SCORES OF CONSUMER AUTOMOBILE LOANS 711 708 705 702 699 - ------------------------------------------------------------------------------------------------------------------------------------
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SELECTED FINANCIAL RATIOS - ------------------------------------------------------------------------------------------------------------------------------------ Unaudited At or For the Quarters Ended - ------------------------------------------------------------------------------------------------------------------------------------ June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2005 2005 2004 2004 2004 ---- ---- ---- ---- ---- PERFORMANCE RATIOS (annualized) (Loss)/return on average assets (1.19)% 1.00 % 0.97 % 0.92 % 0.84 % (Loss)/return on average stockholders' equity (11.26) 9.94 9.72 9.71 8.40 (Loss)/return on average tangible stockholders' equity (14.56) 10.51 10.18 10.18 8.69 Net interest margin (1) 3.26 3.34 3.37 3.36 3.26 Non-interest income to average assets (2) (3) 1.00 0.84 0.67 0.53 0.61 Non-interest expense to average assets (2) 2.16 2.30 2.22 2.20 2.15 Average earning assets to average assets 92.29 94.44 94.51 95.59 94.64 Efficiency ratio (1) (2) (4) 59.05 59.80 59.54 60.44 59.93 CAPITAL RATIOS Stockholders' equity to total assets 11.80 9.92 10.06 9.81 9.42 Tangible stockholders' equity to total assets 6.89 9.36 9.50 9.36 8.97 SHARE DATA Book value per share $ 28.45 $ 22.01 $ 22.43 $ 21.87 $ 20.79 Tangible book value per share 16.56 20.77 21.19 20.89 19.81 Stock price High 34.90 37.64 38.01 39.14 37.10 Low 30.97 33.40 35.40 35.01 32.69 Close 33.32 33.75 37.15 36.95 37.10
- ------------------------------------------------------------------------------- (1) Net interest margin and efficiency ratio are calculated on a fully-taxable equivalent basis, using a 35% effective tax rate. (2) Excludes discontinued operations, expense of termination of Employee Stock Ownership Plan, and merger and conversion expense. (3) Excluding the gain on the sale of securities, the ratios would have been 0.65%, 0.71%, 0.55%, 0.44% and 0.49%, respectively. (4) Efficiency ratio is non-interest expense, divided by the total of fully-taxable net interest income and non-interest income, less securities gains. 12
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCES Unaudited Quarters Ended -------------------------------------------------------------------------------- June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2005 (2) 2005 2004 2004 2004 -------------------------------------------------------------------------------- (In thousands) Earning assets Loans Residential mortgage $ 352,776 $ 239,755 $ 234,817 $ 225,198 $ 216,164 Commercial real estate 314,778 276,417 255,901 250,323 237,727 Commercial 154,405 140,139 153,385 160,129 159,241 Auto loans 134,237 125,038 121,736 118,029 113,671 Other consumer 91,303 58,669 56,150 53,715 52,768 ----------- ---------- ---------- --------- ---------- Total loans 1,047,499 840,018 821,989 807,394 779,571 Securities (1) 393,962 396,473 416,854 436,372 440,583 Short-term investments 1,873 1,672 2,628 2,192 1,031 ----------- ---------- ---------- --------- ---------- Total earning assets 1,443,334 1,238,163 1,241,471 1,245,958 1,221,185 Other assets 120,611 72,860 72,061 57,551 69,166 ----------- ---------- ---------- --------- ---------- Total assets $1,563,945 $1,311,023 $1,313,532 $1,303,509 $1,290,351 =========== ========== -========= ========== ========== Funding liabilities Deposits NOW $ 112,775 $ 94,809 $ 99,394 $ 98,158 $ 97,704 Money Market 183,273 158,862 168,137 159,046 154,254 Savings 192,250 163,553 167,031 168,358 167,264 Certificates of deposit 384,443 319,682 316,898 326,411 322,048 ----------- ---------- ---------- --------- ---------- Total interest bearing deposits 872,741 736,906 751,460 751,973 741,270 Borrowings 387,208 330,448 318,422 318,870 310,935 ----------- ---------- ---------- --------- ---------- Total interest bearing liabilities 1,259,949 1,067,354 1,069,882 1,070,843 1,052,205 Non-interest-bearing demand deposits 129,700 107,835 108,832 105,257 102,881 Other liabilities 9,579 3,781 4,019 3,540 6,596 ----------- ---------- ---------- --------- ---------- Total liabilities 1,399,228 1,178,970 1,182,733 1,179,640 1,161,682 Stockholders' Equity 164,717 132,053 130,799 123,869 128,669 ----------- ---------- ---------- --------- ---------- Total liabilities and equity $1,563,945 $1,311,023 $1,313,532 $1,303,509 $1,290,351 =========== ========== -========= ========== ========== Supplementary Data Total Core Deposits 617,998 525,059 543,394 530,819 522,103 Total Deposits 1,002,441 844,741 860,292 857,230 844,151
- -------------------------------------------------------------------------------- (1) Average balances for securities available-for-sale are based on amortized cost. (2) Average balances for the second quarter of 2005 include one month's balances related to the acquisition of Woronoco Bancorp, Inc. on June 1, 2005. 13
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) Unaudited Quarters Ended - -------------------------------------------------------------------------------------------------------------------- June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2005 2005 2004 2004 2004 - -------------------------------------------------------------------------------------------------------------------- Earning assets Loans Residential mortgage 5.04 % 5.10 % 5.05 % 5.10 % 4.75 % Commercial real estate 6.34 5.93 5.88 5.80 5.70 Commercial 6.51 6.43 5.79 5.51 5.36 Auto loans 5.95 5.86 6.12 6.14 6.02 Other consumer 5.75 5.43 5.07 4.59 4.37 Total loans 5.83 5.73 5.61 5.51 5.32 Securities (1) 4.40 4.41 4.36 4.30 4.25 Short-term investments 2.91 2.67 2.28 1.09 0.39 Total earning assets 5.44 5.31 5.23 5.10 4.94 Funding liabilities Deposits NOW 0.18 0.18 0.09 0.08 0.09 Money Market 1.98 1.62 1.32 1.26 1.26 Savings 1.03 1.00 0.80 0.77 0.76 Certificates of deposit 2.99 2.91 2.84 2.77 2.73 Total interest bearing deposits 1.98 1.86 1.69 1.65 1.63 Borrowings 3.65 3.24 3.05 2.77 2.52 Total interest bearing liabilities 2.50 2.28 2.10 1.98 1.90 Net interest spread (FTE) 2.94 3.03 3.13 3.12 3.04 Net interest margin (FTE) 3.26 3.34 3.37 3.36 3.26
- -------------------------------------------------------------------------------- (1) Average balances and yields for securities available-for-sale are based on amortized cost. Securities yields are calculated on a fully-taxable equivalent basis. -----END PRIVACY-ENHANCED MESSAGE-----