EX-99.1 2 berkshire8kearnoct-05ex99.txt BERKSHIRE HILLS BANCORP, INC. REPORTS 10% INCREASE IN CORE QUARTERLY EARNINGS PER DILUTED SHARE AND SUCCESFUL MERGER INTEGRATION o RECENT ANNOUNCEMENTS HIGHLIGHT NEW BRANCHES AND ACQUISITIONS o STOCK LISTING CHANGED TO NASDAQ, SYMBOL "BHLB" o DIVIDEND DECLARED PITTSFIELD, MA - October 27, 2005 - Berkshire Hills Bancorp, Inc. ("Berkshire" or the "Company") (NASDAQ: BHLB), the holding Company for Berkshire Bank (the "Bank"), today reported $0.54 in core net income per diluted share (EPS) for the third quarter of 2005, a 10% increase compared to $0.49 for the third quarter of 2004. Core net income totaled $4.7 million for the third quarter of 2005, increasing by 70% compared to $2.8 million for the third quarter of 2004, primarily due to the acquisition of Woronoco Bancorp, Inc. on June 1, 2005. Core earnings per share growth was less than core earnings growth, primarily due to the issuance of shares for the acquisition. The Company reported total net income of $4.7 million ($0.54 per diluted share) for the third quarter of 2005, compared to total net income of $3.0 million ($0.53 per diluted share) for the third quarter of 2004. Core earnings for the first nine months of 2005 were $1.59 per diluted share, increasing by 13% compared to $1.41 per diluted share for the first nine months of 2004. Core earnings were $11.2 million in 2005 compared to $8.1 million in 2004 for these same periods. GAAP net income for the first nine months of 2005 totaled $3.4 million ($0.48 per diluted share) as a result of an $8.7 million non-cash charge related to the termination of the Bank's Employee Stock Ownership Plan in June 2005. This charge had no negative impact on stockholders' equity. GAAP net income for the first nine months of 2004 was $8.3 million ($1.45 per diluted share). Commenting on the Company's performance, Michael P. Daly, President and Chief Executive Officer of the Company and the Bank, stated, "Our acquisition of Woronoco Bancorp Inc. has increased our market scope, resulting in improved volume and efficiency which have benefited earnings, resulting in 10% year-to-year growth in third quarter core earnings per share. The Woronoco integration has been substantially completed and we have achieved our objectives for cost savings and core account retention. Our earnings gains were achieved despite the effort required for the successful integration of the Woronoco operations, the cost of opening a third New York branch, and obtaining approval for a fourth New York branch. Our net interest margin improved to 3.31% in the most recent quarter, despite competitive market conditions and the continued impact of the flattening yield curve. Our efficiency ratio improved to a record 55.3% in the third quarter. Additionally, with our attention to credit quality, we continue to report favorable asset quality experience. Our high focus on customer service is expected to generate future earnings gains from our growing franchise." DIVIDEND DECLARED ----------------- The Board of Directors declared a quarterly cash dividend of $0.14 per share, payable on November 21, 2005, to stockholders of record at the close of business on November 7, 2005. The quarterly cash dividend was increased to $0.14 per share beginning in August, increasing by $0.02 per share, or 17%, compared to recent quarters. THIRD QUARTER AND LATEST HIGHLIGHTS ----------------------------------- o Completed successful integration of Woronoco operations, achieving cost savings of 36%, exceeding 30% original target. o Completed conversion of Woronoco core banking information systems in August. o Opened new full service office in Clifton Park, New York and obtained regulatory approvals to open a new full service office in East Greenbush, New York. o Increased total transaction account deposit balances at a 9% annualized rate during the third quarter. o Repurchased 54,600 shares of the Company's common stock at an average price of $32.93 per share. o Changed common stock listing to NASDAQ national market with trading symbol "BHLB". o On October 26, 2005 acquired the MacDonald & Johnson (East Longmeadow) and Onofrey (Springfield) insurance agencies. CORE NET INCOME --------------- The following table represents a reconciliation of GAAP net income to core net income and earnings per share.
3Q2005 2Q2005 3Q2004 9mos2005 9mos2004 --------------------------------------------------------- (In thousands, except earnings per share) --------------------------------------------------------- NET INCOME (LOSS) - GAAP $4,746 $(4,608) $3,007 $ 3,389 $8,333 Less: Gain on sale of securities, net 541 902 211 1,722 689 Plus: Non-recurring loss on sale of discontinued operations - - - - 431 Plus: ESOP termination expense - 8,379 - 8,379 - Plus: Merger and conversion expense 538 626 - 1,164 - --------------------------------------------------------- NET INCOME - CORE $4,743 $ 3,495 $2,796 $11,210 $8,075 Earnings per diluted share - GAAP $ 0.54 $ (0.74) $ 0.53 $ 0.48 $ 1.45 Earnings per diluted share - core $ 0.54 $ 0.53 $ 0.49 $ 1.59 $ 1.41 Average diluted shares outstanding 8,856 6,257 5,721 7,061 5,735
The ESOP termination expense is net of a $288,000 tax benefit. Other adjustments to arrive at core net income are tax effected using a tax rate of 35.0% in 2005 and 32.0% in 2004. Core earnings per share in the second quarter of 2005 include the effect of dilutive shares totaling 359,000. FINANCIAL CONDITION ------------------- Total assets were $2.0 billion at September 30, 2005, up from $1.3 billion at year-end 2004. The increase included approximately $0.8 billion in assets related to the Woronoco acquisition, and is net of a reduction of $243 million in loans and securities under a de-leveraging plan executed in conjunction with the acquisition. Most categories of assets and liabilities increased primarily due to the acquisition of Woronoco. Loans totaled $1.41 billion at September 30, 2005, increasing by $584 million (71%) from year-end 2004. Loan growth included $528 million related to the Woronoco acquisition. Excluding the impact of the loans acquired through the Woronoco acquisition and $4 million in third quarter loan sales, total loans increased by $60 million for the year-to-date, growing at a 10% annualized rate. Growth was spread among all major loan categories and in all major markets. While total loans declined by 1% during the most recent quarter, the loan commitment pipeline grew to a record $87 million at September 30, 2005. Investment securities totaled $426 million at the end of the third quarter, increasing by $12 million (3%) compared to $414 million at year-end 2004. This increase was due to securities acquired through the Woronoco acquisition, net of sales and maturities under the aforementioned de-leveraging plan, along with the sale of $46 million in securities by the Bank in the second quarter to provide funds for the acquisition. Deposits totaled $1.35 billion at the end of the third quarter, increasing by $502 million (59%) from year-end 2004. Deposit growth included $443 million related to the Woronoco acquisition. Total deposits increased at a 13% annualized rate during the most recent quarter. Low cost transaction account balances increased at a 9% annualized rate during the quarter. Excluding the impact of the acquired Woronoco deposits, total deposits increased by $59 million for the year-to-date, growing at a 9% annualized rate. Stockholders' equity totaled $246 million at the end of the third quarter, increasing by $114 million, or 86%, from year-end 2004. Consideration for the Woronoco acquisition included the issuance of 2.93 million new common shares valued at $108 million, with an additional $4 million credit to equity for the value of outstanding Woronoco stock options. The ESOP termination had no negative impact on stockholders' equity because the related charge to earnings was offset by credits to unearned compensation and additional paid in capital. These credits also offset the $5 million impact of the transfer of 146,971 shares of treasury stock, which represented full payment of the ESOP loan. The contribution of core earnings was mostly offset by dividends, additional treasury stock purchases of $5.0 million, and a $3.8 million decrease in accumulated other comprehensive income due to lower securities prices. Goodwill increased to $88 million and intangible assets increased to $12 million due to the Woronoco acquisition. As a result, tangible book value per share was $17.03 at September 30, 2005, compared to $21.19 at year-end 2004. Total book value per share increased to $28.68 compared to $22.43 for these same periods. The ratio of tangible equity to tangible assets was 7.55% at the end of the third quarter, down from 9.55% at year-end 2004. ASSET QUALITY ------------- Asset quality indicators remained favorable and were stable during the last quarter. The loans added through the Woronoco acquisition were primarily concentrated in comparatively low risk residential mortgage and home equity loans. Through the first nine months, the annualized rate of net loan charge-offs remained comparatively low at 0.06%. Additionally, the ratio of non-performing assets to total assets declined during the nine months to 0.08%. The allowance for loan losses declined to 0.93% of total loans, and the ratio of the allowance to non-performing loans remained strong at 841% at the end of the most recent quarter, compared to 811% at year-end 2004. RESULTS OF OPERATIONS --------------------- All major categories of income and expense increased in the third quarter of 2005 primarily due to the acquisition of Woronoco Bancorp on June 1, 2005. Second quarter 2005 results included one month's contribution from Woronoco's operations, and the third quarter was the first full quarter for the newly combined entity. Core earnings per share reflects the ongoing business operations of the Company, and includes the impact of shares issued in conjunction with the Woronoco acquisition. Third quarter core earnings per share increased by 10% in 2005 compared to 2004. The efficiency ratio improved to 55.3% in the third quarter of 2005, compared to 60.4% in the third quarter of 2004. The return on assets was 0.92% in both of these periods. Berkshire produced a 13.5% return on average tangible equity in the third quarter of 2005, compared to 10.2% in the third quarter of 2004. Core earnings per share increased by 13% for the first nine months of 2005 compared to the same period in 2004. In addition to the benefits of the Woronoco merger, this increase reflected the benefit of organic loan and deposit growth recorded by Berkshire over this period. The improvements also reflected the benefit of higher service fee income, including wealth management service fees, as well as the benefit of controlled expense growth and gains on the sale of securitized loans. Core earnings and net income were approximately the same in the most recent quarter. Merger and conversion expense totaling $828,000 pretax was excluded from the determination of core earnings. The Woronoco core systems were converted to the Berkshire systems in mid-August, and by the end of the quarter most integration activities were substantially completed. Merger and conversion expense consisted primarily of costs related to systems conversions, interim systems, and operations integrations, as well as the cost of interim Woronoco staff retained through the conversion dates. Net securities gains are also excluded from the determination of core earnings. These gains totaled $832,000 pretax during the quarter and primarily represented gains on equity sales as the Bank adjusted its position to decrease exposure to equity market fluctuations. Berkshire's net interest margin increased to 3.31% in the third quarter of 2005, compared to 3.26% in the second quarter of 2005, benefiting from the Bank's positive sensitivity to higher interest rates, its deposit and loan pricing strategies, and the de-leveraging program. Non-interest income totaled $3.96 million in the third quarter of 2005, compared to $3.92 million in the second quarter of 2005. Excluding net securities gains of $832 thousand and $1.39 million, non-interest income totaled $3.12 million and $2.53 million in these two quarters, respectively. The ratio of non-interest income, excluding securities gains, to average assets was 0.60% in the most recent quarter, compared to 0.65% in the prior quarter, partially due to the lower ratio in the acquired Woronoco operations. Non-interest expense totaled $11.6 million in the third quarter of 2005, compared to $18.1 million in the second quarter of 2005. Excluding merger and conversion expenses of $828 thousand and $963 thousand in the two quarters, respectively, and excluding $8.67 million in ESOP termination expenses in the second quarter, non-interest expense totaled $10.8 million and $8.4 million in these two quarters, respectively. The ratio of non-interest expense, excluding the above charges, to average assets decreased to 2.09% from 2.16% in these linked quarters due to the efficiencies of the combined operations. Expenses in the most recent quarter included $190,000 in operating costs of new branches and intangible asset amortization expense of $470,000. The provision for loan losses also decreased during the linked quarters primarily due to the lower net loan charge-offs. The effective tax rate measured 34.1% in the third quarter of 2005, which was a slight decrease from 34.2% in the prior quarter. 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 Friday, October 28, 2005. Persons wishing to access the conference call may do so by dialing 1-877-407-8035. Replays of the conference call will be available beginning October 28, 2005 at 1:00 P.M. (ET) through November 4, 2005 at 11:59 P.M. (ET) by dialing 1-877-660-6853 and using Account #286 and Conference ID#171163 (both numbers are needed to access the replay). Berkshire Hills Bancorp, Inc. is the holding company for Berkshire Bank. Established in 1846, Berkshire Bank is one of Massachusetts' oldest and largest independent banks and is the largest banking institution based in Western Massachusetts. The Bank is headquartered in Pittsfield, Massachusetts with branch offices serving communities throughout Western Massachusetts and Northeastern New York, and a municipal bank and representative office in New York. The Bank is committed to operating as an independent super-community bank, delivering exceptional customer service and a broad array of competitively priced retail and commercial products to its customers. For more information on Berkshire Hills Bancorp, Inc., visit www.berkshirebank.com or call 413-443-5601. --------------------- Statements contained in this news release contain forward-looking statements 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 achievement of anticipated future earnings benefits. 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.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS =========================================================================================================================== Unaudited -------------------------------------------- September 30, December 31, 2005 2004 --------------------------------------------------------------------------------------------------------------------------- (In thousands) ASSETS Cash and due from banks $ 30,335 $ 15,237 Short-term investments 1,177 2,665 ----------- ----------- Total cash and cash equivalents 31,512 17,902 Securities available-for-sale, at fair value 398,937 384,421 Securities held-to-maturity, at amortized cost 26,951 29,942 Loans held for sale 1,852 1,053 Total loans 1,412,109 828,179 Less: Allowance for loan losses (13,123) (9,337) ----------- ----------- Net loans 1,398,986 818,842 Premises and equipment, net 26,547 14,780 Accrued interest receivable 8,177 5,472 Goodwill 87,791 6,782 Identifiable intangible assets 11,951 472 Bank owned life insurance 18,800 18,200 Other assets 21,587 12,249 ----------- ----------- Total assets $ 2,033,091 $ 1,310,115 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 1,347,751 $ 845,789 Borrowings 436,074 327,926 Accrued expenses and other liabilities 3,629 4,664 ----------- ----------- Total liabilities 1,787,454 1,178,379 ----------- ----------- Stockholders' equity: Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued or outstanding) - - Common stock ($.01 par value; 26,000,000 shares authorized; 10,602,553 shares issued at September 30, 2005 and 7,673,761 at December 31, 2004; shares outstanding: 8,565,596 at September 30, 2005 and 5,873,563 at December 31, 2004) 106 77 Additional paid-in capital 198,744 77,588 Unearned compensation (1,788) (7,414) Retained earnings 95,811 94,996 Accumulated other comprehensive income 400 4,214 Treasury stock at cost (2,036,957 shares at September 30, 2005 and 1,800,198 at December 31, 2004) (47,636) (37,725) ----------- ----------- Total stockholders' equity 245,637 131,736 ----------- ----------- Total liabilities and stockholders' equity $ 2,033,091 $ 1,310,115 =========== ===========
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES ========================================================================================================================= LOAN ANALYSIS Unaudited -------------------------------------------------------------- September 30, 2005 December 31, 2004 ------------------ ----------------- Percent Percent Balance of Total Balance of Total ------- -------- ------- -------- (Dollars in millions) Residential real estate loans: Residential one-to four-family $ 517 37% $ 217 26% Residential land development and construction 34 2 18 2 -------- --- ----- --- Total residential real estate loans 551 39 235 28 Commercial real estate loans: Commercial one-to four-family 21 1 16 2 Commercial land development and construction 50 4 21 3 Multi-family 47 3 16 2 Other commercial real estate 284 20 208 25 -------- --- ----- --- Total commercial real estate loans 402 28 261 32 Commercial business loans 157 11 151 18 Consumer loans: Automobile 150 11 123 15 Home equity and other loans 152 11 58 7 -------- --- ----- --- Total consumer loans 302 22 181 22 -------- --- ----- --- Total loans $ 1,412 100% $ 828 100% ======== === ===== ===
DEPOSIT ANALYSIS Unaudited -------------------------------------------------------------- September 30, 2005 December 31, 2004 ------------------ ----------------- Percent Percent Balance of Total Balance of Total ------- -------- ------- -------- (Dollars in millions) Demand deposit accounts $ 178 13% $ 110 13% NOW accounts 145 11 101 12 Money market accounts 241 18 156 19 Savings accounts 231 17 163 19 --------- --- ----- --- Total core accounts 795 59 530 63 Certificates of deposit - regular 487 36 315 37 Certificates of deposit - brokered 66 5 - - --------- --- ----- --- Total certificates of deposit 553 41 315 37 Total deposits $ 1,348 100% $ 845 100% ========= === ===== ===
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ==================================================================================================================================== Unaudited --------------------------------------------------------------------- Three Months Ended Nine Months Ended --------------------------------------------------------------------- September 30, September 30, September 30, September 30, 2005 2004 2005 2004 --------------------------------------------------------------------- (In thousands, except earnings per share) INTEREST AND DIVIDEND INCOME Loans $ 21,149 $ 11,131 $ 48,282 $ 32,247 Debt securities, taxable 3,274 3,754 9,744 11,081 Debt securities, tax-exempt 791 376 1,832 1,035 Equity securities dividends 563 279 1,263 887 Short-term investments 62 6 98 24 ------------- ------------- ------------ ------------ Total interest and dividend income 25,839 15,546 61,219 45,274 ------------- ------------- ------------ ------------ INTEREST EXPENSE Deposits 5,979 3,097 13,689 9,209 Borrowings 4,806 2,207 10,951 5,906 ------------- ------------- ------------ ------------ Total interest expense 10,785 5,304 24,640 15,115 ------------- ------------- ------------ ------------ NET INTEREST INCOME 15,054 10,242 36,579 30,159 PROVISION FOR LOAN LOSSES 204 365 998 1,140 ------------- ------------- ------------ ------------ Net interest income after provision for loan losses 14,850 9,877 35,581 29,019 ------------- ------------- ------------ ------------ NON-INTEREST INCOME Customer service fees 1,439 580 3,087 1,738 Wealth management service fees 680 587 2,013 1,809 Insurance fees 472 24 679 26 Loan service fees 179 63 560 245 Increase in cash surrender value of life insurance 245 93 648 443 Gain on sales of securities, net 832 310 2,649 1,013 Gain on sale of loans, and securitized loans, net 22 - 773 84 Other non-interest income 86 69 217 208 ------------- ------------- ------------ ------------ Total non-interest income 3,955 1,726 10,626 5,566 ------------- ------------- ------------ ------------ NON-INTEREST EXPENSE Salaries and employee benefits 5,699 4,195 14,524 12,687 Termination of Employee Stock Ownership Plan - - 8,667 - Occupancy and equipment 1,655 997 4,006 3,030 Marketing and advertising 372 207 732 634 Data processing 518 305 1,323 1,030 Professional services 590 442 1,427 1,226 Foreclosed real estate and repossessed assets, net 241 150 557 404 Merger and conversion expense 828 - 1,791 - Other non-interest expense 1,697 885 4,170 2,666 ------------- ------------- ------------ ------------ Total non-interest expense 11,600 7,181 37,197 21,677 ------------- ------------- ------------ ------------ Income from continuing operations before income taxes 7,205 4,422 9,010 12,908 Provision for income taxes 2,459 1,415 5,621 4,144 ------------- ------------- ------------ ------------ INCOME FROM CONTINUING OPERATIONS 4,746 3,007 3,389 8,764 ------------- ------------- ------------ ------------ Loss from discontinued operations - - - (653) Income tax benefit - - - (222) ------------- ------------- ------------ ------------ Net loss from discontinued operations - - - (431) ------------- ------------- ------------ ------------ NET INCOME $ 4,746 $ 3,007 $ 3,389 $ 8,333 ============= ============= ============ ============ Earnings per share Basic $ 0.56 $ 0.57 $ 0.51 $ 1.58 Diluted $ 0.54 $ 0.53 $ 0.48 $ 1.45 Weighted average shares outstanding Basic 8,456 5,270 6,683 5,284 Diluted 8,856 5,721 7,061 5,735
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ==================================================================================================================================== Unaudited Quarters Ended -------------------------------------------------------------------- Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 2005 2005 2005 2004 2004 ------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except earnings per share) INTEREST AND DIVIDEND INCOME Residential mortgage $ 7,101 $ 4,444 $ 3,059 $ 2,967 $ 2,869 Commercial real estate 6,673 4,977 4,044 3,761 3,630 Commercial business loans 2,884 2,505 2,222 2,216 2,204 Auto loans 2,274 1,991 1,806 1,863 1,811 Other consumer 2,217 1,309 785 712 617 ------- ------- ------- ------- ------- Total interest on loans 21,149 15,226 11,916 11,519 11,131 Securities 4,628 4,100 4,110 4,273 4,409 Short-term investments 62 22 11 15 6 ------- ------- ------- ------- ------- Total interest and dividend income 25,839 19,348 16,037 15,807 15,546 ------- ------- ------- ------- ------- INTEREST EXPENSE Deposits 5,979 4,318 3,373 3,183 3,097 Borrowings 4,806 3,522 2,637 2,425 2,207 ------- ------- ------- ------- ------- Total interest expense 10,785 7,840 6,010 5,608 5,304 ------- ------- ------- ------- ------- NET INTEREST INCOME 15,054 11,508 10,027 10,199 10,242 PROVISION FOR LOAN LOSSES 204 300 493 425 365 ------- ------- ------- ------- ------- Net interest income after provision for loan losses 14,850 11,208 9,534 9,774 9,877 ------- ------- ------- ------- ------- NON-INTEREST INCOME Customer service fees 1,439 1,033 616 609 580 Wealth management service fees 680 663 670 714 587 Insurance fees 472 175 32 1 24 Loan service fees 179 198 174 129 63 Increase in cash surrender value of life insurance 245 200 203 196 93 Gain on sale of securities, net 832 1,388 429 390 310 Gain on sale of loans, and securitized loans, net 22 162 588 81 - Other non-interest income 86 97 32 78 69 ------- ------- ------- ------- ------- Total non-interest income 3,955 3,916 2,744 2,198 1,726 ------- ------- ------- ------- ------- NON-INTEREST EXPENSE Salaries and benefits 5,699 4,485 4,335 4,195 4,195 Termination of Employee Stock Ownership Plan - 8,667 - - - Occupancy and equipment 1,655 1,212 1,140 1,055 997 Marketing and advertising 372 200 161 357 207 Data processing 518 454 347 381 305 Professional services 590 363 423 326 442 Foreclosed real estate and other loans, net 241 218 94 118 150 Merger and conversion expense 828 963 - - - Other non-interest expense 1,697 1,499 1,036 868 885 ------- ------- ------- ------- ------- Total non-interest expense 11,600 18,061 7,536 7,300 7,181 ------- ------- ------- ------- ------- Income (loss) before income taxes 7,205 (2,937) 4,742 4,672 4,422 Provision for income taxes 2,459 1,671 1,490 1,495 1,415 ------- ------- ------- ------- ------- NET INCOME (LOSS) $ 4,746 $ (4,608) $ 3,252 $ 3,177 $ 3,007 ======= ======== ======= ======= ======= Earnings (loss) per share Basic $ 0.56 $ (0.74) $ 0.61 $ 0.60 $ 0.57 Diluted $ 0.54 $ (0.74) $ 0.57 $ 0.55 $ 0.53 Weighted average shares outstanding Basic 8,456 6,257 5,300 5,281 5,270 Diluted 8,856 6,257 5,691 5,725 5,721
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES ==================================================================================================================================== Unaudited At or For the Quarters Ended -------------------------------------------------------------------- Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, NON-PERFORMING ASSETS 2005 2005 2005 2004 2004 ------------------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands) Non-accrual loans: Residential mortgage $ 393 $ 663 $ 298 $ 327 $ 332 Commercial real estate 130 209 144 147 614 Commercial 876 613 832 523 1,463 Indirect automobile loans 106 78 95 154 297 Other consumer 55 29 1 1 8 ------- ------- ------- ------- ------- Total non-accrual loans $ 1,560 $ 1,592 $ 1,370 $ 1,152 $ 2,714 Real estate owned ("REO") - - - - - Total non-performing assets $ 1,560 $ 1,592 $ 1,370 $ 1,152 $ 2,714 ======= ======= ======= ======= ======= Non-performing loans as a percentage of total loans 0.11% 0.11% 0.16% 0.14% 0.33% Non-performing assets to total assets 0.08% 0.08% 0.11% 0.09% 0.21% ==================================================================================================================================== PROVISION AND ALLOWANCE FOR LOAN LOSSES ==================================================================================================================================== Balance at beginning of period $13,044 $ 9,645 $ 9,337 $ 9,392 $ 9,248 Charge-offs (284) (391) (328) (737) (447) Recoveries 159 169 143 257 226 ------- ------- ------- ------- ------- Net loan charge-offs (125) (222) (185) (480) (221) Allowance attributed to acquired loans - 3,321 - - - Provision for loan losses 204 300 493 425 365 ------- ------- ------- ------- ------- Balance at end of period $13,123 $13,044 $ 9,645 $ 9,337 $ 9,392 ======= ======= ======= ======= ======= Allowance for loan losses as a percentage of non-performing loans 841% 819% 704% 811% 346% Allowance for loan losses as a percentage of total loans 0.93% 0.92% 1.13% 1.13% 1.15% ==================================================================================================================================== NET LOAN (CHARGE-OFFS) RECOVERIES ==================================================================================================================================== Residential mortgage $ - $ - $ - $ - $ - Commercial real estate - - - (137) - Commercial loans 4 (109) (4) (164) (7) Consumer loans (primarily automobile loans) (129) (113) (181) (179) (214) ------- ------- ------- ------- ------- Total $ (125) $ (222) $ (185) $ (480) $ (221) ======= ======= ======= ======= ======= Net charge-offs as a percentage of total average loans 0.01% 0.02% 0.02% 0.06% 0.03% ==================================================================================================================================== AVERAGE FICO SCORES OF CONSUMER AUTOMOBILE LOANS 715 711 708 705 702 ====================================================================================================================================
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL RATIOS ==================================================================================================================================== Unaudited At or For the Quarters Ended ----------------------------------------------------------------------- Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 2005 2005 2005 2004 2004 ---- ---- ---- ---- ---- PERFORMANCE RATIOS (annualized) Return (loss) on average assets 0.92% (1.19)% 1.00% 0.97% 0.92% Return (loss) on average stockholders' equity 7.90 (11.26) 9.94 9.72 9.71 Return (loss) on average tangible stockholders' equity 13.45 (14.56) 10.51 10.18 10.18 Net interest margin (1) 3.31 3.26 3.34 3.37 3.36 Non-interest income to average assets (2) 0.77 1.00 0.84 0.67 0.53 Non-interest expense to average assets (3) 2.25 4.62 2.30 2.22 2.20 Average earning assets to average assets 90.35 92.29 94.44 94.51 95.59 Efficiency ratio (4) 55.32 58.00 59.80 59.54 60.44 CAPITAL RATIOS Stockholders' equity to total assets 12.08 11.80 9.92 10.06 9.81 Tangible stockholders' equity to tangible assets 7.55 7.25 9.42 9.55 9.41 SHARE DATA Book value per share $ 28.68 $ 28.45 $ 22.01 $ 22.43 $ 21.87 Tangible book value per share $ 17.03 16.56 20.77 21.19 20.89 Stock price High 35.20 34.90 37.64 38.01 39.14 Low 31.90 30.97 33.40 35.40 35.01 Close 34.00 33.32 33.75 37.15 36.95
-------------------------------------------------- (1) Net interest margin and efficiency ratio are calculated on a fully-taxable equivalent basis, using a 35% federal effective tax rate. (2) Excluding the gain on the sale of securities, the ratios would have been 0.60%, 0.65%, 0.71%, 0.55% and 0.44%, respectively. (3) Excluding the Employee Stock Ownership Plan termination expense, and merger and conversion expense, the ratios would have been 2.09% and 2.16% in the quarters ended September 30, 2005 and June 30, 2005, respectively. (4) Efficiency ratio is non-interest expense, divided by the total of fully-taxable net interest income and non-interest income. For this ratio, non-interest income and expense are adjusted based on the notes above.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCES Unaudited Quarters Ended ------------------------------------------------------------------------------------ Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 2005 (2) 2005 (2) 2005 2004 2004 ------------------------------------------------------------------------------------ (In thousands) Earning assets Loans Residential mortgage $ 561,048 $ 352,776 $ 239,755 $ 234,817 $ 225,198 Commercial real estate 396,212 314,778 276,417 255,901 250,323 Commercial business 165,414 154,405 140,139 153,385 160,129 Auto loans 146,138 134,237 125,038 121,736 118,029 Other consumer 154,209 91,303 58,669 56,150 53,715 ------------- ------------- ------------ ------------ ------------ Total loans 1,423,021 1,047,499 840,018 821,989 807,394 Securities (1) 435,853 393,962 396,473 416,854 436,372 Short-term investments 7,028 1,873 1,672 2,628 2,192 ------------- ------------- ------------ ------------ ------------ Total earning assets 1,865,902 1,443,334 1,238,163 1,241,471 1,245,958 Other assets 199,349 120,611 72,860 72,061 57,551 ------------- ------------- ------------ ------------ ------------ Total assets $ 2,065,251 $ 1,563,945 $ 1,311,023 $ 1,313,532 $ 1,303,509 ============= ============= ============ ============ ============ Funding liabilities Deposits NOW $ 135,638 $ 112,775 $ 94,809 $ 99,394 $ 98,158 Money Market 241,088 183,273 158,862 168,137 159,046 Savings 240,396 192,250 163,553 167,031 168,358 Certificates of deposit 515,120 384,443 319,682 316,898 326,411 ------------- ------------- ------------ ------------ ------------ Total interest bearing deposits 1,132,242 872,741 736,906 751,460 751,973 Borrowings 499,877 387,208 330,448 318,422 318,870 ------------- ------------- ------------ ------------ ------------ Total interest bearing liabilities 1,632,119 1,259,949 1,067,354 1,069,882 1,070,843 Non-interest-bearing demand deposits 185,183 129,700 107,835 108,832 105,257 Other liabilities 6,409 9,579 3,781 4,019 3,540 ------------- ------------- ------------ ------------ ------------ Total liabilities 1,823,711 1,399,228 1,178,970 1,182,733 1,179,640 Stockholders' Equity 241,540 164,717 132,053 130,799 123,869 ------------- ------------- ------------ ------------ ------------ Total liabilities and equity $ 2,065,251 $ 1,563,945 $ 1,311,023 $ 1,313,532 $ 1,303,509 ============= ============= ============ ============ ============ Supplementary Data Total Core Deposits $ 802,305 $ 617,998 $ 525,059 $ 543,394 $ 530,819 Total Deposits 1,317,425 1,002,441 844,741 860,292 857,230
-------------------------------------------------- (1) Average balances for securities available-for-sale are based on amortized cost. (2) Average balances for the second quarter of 2005 include one month's balances related to the acquisition of Woronoco Bancorp, Inc. on June 1, 2005. Average balances for the third quarter of 2005 include three months' balances related to the acquisition of Woronoco Bancorp, Inc.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) Unaudited Quarters Ended ----------------------------------------------------------------------------- Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 2005 2005 2005 2004 2004 ----------------------------------------------------------------------------- Earning assets Loans Residential mortgage 5.06% 5.04% 5.10% 5.05% 5.10% Commercial real estate 6.68 6.34 5.93 5.88 5.80 Commercial 6.92 6.51 6.43 5.79 5.51 Auto loans 6.17 5.95 5.86 6.12 6.14 Other consumer 5.70 5.75 5.43 5.07 4.59 Total loans 5.91 5.83 5.73 5.61 5.51 Securities (1) 4.69 4.40 4.41 4.36 4.30 Short-term investments 3.50 2.91 2.67 2.28 1.09 Total earning assets 5.60 5.44 5.31 5.23 5.10 Funding liabilities Deposits NOW 0.42 0.18 0.18 0.09 0.08 Money Market 2.07 1.98 1.62 1.32 1.26 Savings 0.86 1.03 1.00 0.80 0.77 Certificates of deposit 3.12 2.99 2.91 2.84 2.77 Total interest bearing deposits 2.10 1.98 1.86 1.69 1.65 Borrowings 3.81 3.65 3.24 3.05 2.77 Total interest bearing liabilities 2.62 2.50 2.28 2.10 1.98 Net interest spread (FTE) 2.98 2.94 3.03 3.13 3.12 Net interest margin (FTE) 3.31 3.26 3.34 3.37 3.36 Note: Cost of funds (2) 2.35 2.24 2.03 1.89 1.79
-------------------------------------------------- (1) Average balances and yields for securities available-for-sale are based on amortized cost. Securities yields are calculated on a fully-taxable equivalent basis. (2) Cost of funds includes all deposits and borrowings. =========================== Contact: Berkshire Hills Bancorp, Inc. Wayne F. Patenaude, 413-236-3195