EX-99.1 2 form8kexh_071808.txt PRESS RELEASE FOR FORM 8-K 07 18 08 Berkshire Hills Reports 25% Earnings Growth and Record Second Quarter Earnings and EPS; Asset Performance Remains Solid; Net Interest Margin Increases Sequentially; $.16 Quarterly Dividend Declared PITTSFIELD, Mass., July 17, 2008 (PRIME NEWSWIRE) -- Berkshire Hills Bancorp, Inc. (Nasdaq:BHLB) reported a 25% increase in 2008 earnings to a second quarter record of $5.7 million. Earnings per share increased by 6% to a second quarter record of $0.55 compared to $0.52 in 2007. Berkshire is the parent of Berkshire Bank, America's Most Exciting Bank(sm). Berkshire reported record six month earnings of $11.8 million in 2008, which was an increase of 24% over the first half of 2007. First half earnings per share were a record $1.13 in 2008, an increase of 6% over $1.07 in 2007. Recent highlights include: * 24% increase in second quarter total revenue, compared to prior year * 16% decrease in nonperforming assets to 0.42% of total assets during second quarter * 13% decrease in accruing delinquent loans to 0.37% of total loans during second quarter * 9% increase annualized in personal demand deposit balances in the first six months * 13% increase annualized in total commercial loans in the first six months * 3.45% net interest margin, increased from 3.41% in the prior quarter and 3.15% in the second quarter of 2007 * 33% of first half revenues provided by non-interest income * 0.15% net loan charge-offs (percent of average loans) annualized in the first six months Michael P. Daly, President and Chief Executive Officer, stated, "We had a solid second quarter, maintaining our earnings momentum and reducing our already modest level of nonperforming assets. We produced 6% growth in earnings per share due to positive operating leverage, with revenue growth outpacing expenses. Our commercial loans grew at a 13% annualized rate in the first half, more than offsetting planned runoff in auto loans. We have also accepted run-off of higher cost time deposits and money market balances while focusing on relationship oriented deposits. These strategies helped to produce a 3.45% net interest margin, which is the highest quarterly margin we have reported since 2003. Our growing non-interest income is also contributing to the growth and stability of our earnings." Mr. Daly continued, "Our asset quality remains sound. Our problem assets, charge-offs, and delinquencies remain at modest levels. Our markets are geographically conservative, providing continued opportunity for moderate expansion in many sectors and buffering the economic difficulties that are affecting most other regions more dramatically. We recognize the potential that further economic challenges may lie ahead, but we feel that our risk management has positioned us to continue to maintain better-than-average asset quality. We have not operated subprime lending programs. We book conforming loans to borrowers in and around our markets, and this has allowed us to react promptly to minimize losses to date. We have the highest regulatory capital rating of "Well Capitalized" and have maintained a higher allowance for loan losses since we increased it with a special provision nearly two years ago. Additionally, all of our deposits are 100% insured as a result of our participation in both the FDIC and the Depositors Insurance Fund which is sponsored mutually among Massachusetts savings banks." Mr. Daly concluded, "With changes on the national banking scene, we have found that there is more demand for the solutions that we offer as a local bank. Our resulting strong earnings growth is adding to our capital strength. The American Banker newspaper recently featured us in an article about our success as America's Most Exciting BankSM. I'm also pleased to report that our continuing long run performance was recognized by the Boston Globe in May when, for the eighth year in a row, Berkshire was recognized as one of the 100 top performing Massachusetts-based public companies." First half 2008 earnings included the benefit of Berkshire's Vermont region, which was formed with the acquisition of Factory Point Bancorp in September 2007. Most major categories of revenue and expense increased due to this acquisition, and earnings per share included the impact of additional shares issued in the acquisition. First half earnings also included the seasonal benefit of insurance contingency revenue. DIVIDEND DECLARED The Board of Directors declared a quarterly cash dividend of $0.16 per share to stockholders of record on July 31, 2008 and payable on August 14, 2008. Including this dividend, the total dividends declared for the year-to-date in 2008 are $0.47 per share, which is a 9% increase over the same period in 2007. FINANCIAL CONDITION Total assets were $2.55 billion at mid-year 2008, increasing at a 3% annualized rate in the first half of the year due to 4% annualized loan growth to $1.98 billion. Total loans increased by $34 million in the first half due to commercial loan growth of $58 million. Commercial loans grew at a 13% annualized rate in the first half of the year due to commercial real estate loans around Berkshire's markets, representing increased market share as local business borrowers have relied more on regional lenders and less on national lenders. Permanent residential mortgages and home equity loans increased by $26 million at a 7% annualized rate in the first half of 2008. Auto loans decreased by $38 million due to a planned reduction related to pricing and underwriting conditions in that market. Consumer construction loans decreased by $12 million due to slower residential construction. Annualized net loan charge-offs remained low, declining to 0.13% of average loans in the second quarter, compared to 0.17% in the prior quarter and to 0.14% in the prior year second quarter. Second quarter charge-offs primarily consisted of consumer loan charge-offs, which have remained around $400 thousand per quarter for the last four quarters. Nonperforming assets decreased to 0.42% of total assets at mid-year, compared to 0.51% at the prior quarter-end and 0.46% at year-end 2007. This category included only two loans over $1 million, which totaled $4.2 million. Accruing loans delinquent over 30 days decreased to 0.37% of total loans at mid-year, compared to 0.44% at the prior quarter-end and 0.43% at year-end 2007. There were no loans over $1.0 million in this category. Foreclosed real estate totaled only $1.1 million at mid-year. For the first half of 2008, consumer non-maturity deposit balances increased by about $45 million (7%). This was primarily due to money market account promotions and steady growth in relationships, as reflected in the 9% annualized first half growth rate in personal demand deposit balances. Most of Berkshire's retail deposit and loan promotions are linked to companion checking accounts. Consumer deposit growth was offset by lower commercial balances and the planned paydown of $18 million in higher cost brokered time deposits in the second quarter. The number of commercial checking accounts increased at a 5% annualized rate in the first half, and commercial deposits (including municipalities) reflected targeted run-off of higher cost accounts. Excluding brokered deposits, total deposits increased by $7 million during the first half of the year. Deposit growth in the first quarter was offset by reductions in the second quarter as the Company targeted run-off of certain higher cost money market and time accounts. Berkshire began to promote time accounts around mid-year in anticipation of rising interest rates later in the year. Berkshire also entered into $140 million in interest rate swaps in the first half to fix the rate on variable rate borrowings, thereby reducing risk related to rising rates. Berkshire increased borrowings by $45 million during the first half to fund loan growth and brokered time deposit payoffs. Stockholders' equity increased at a 2% annualized rate to $330 million in the first half of 2008. The ratio of tangible equity to assets increased to 6.3% from 6.2% during the first half, while the ratio of total equity to assets remained at 13.0%. Most earnings were returned to stockholders as dividends and stock buybacks due to lower asset growth. Tangible book value per share increased at an 8% annualized rate to $14.36, and total book value per share increased to $31.78 at mid-year. During the second quarter, Berkshire repurchased 100,000 shares under its repurchase program, at an average price of $25.88 per share. RESULTS OF OPERATIONS Most major categories of income and expense increased primarily due to the contribution of Vermont operations resulting from the Factory Point Bancorp acquisition in September 2007. Net income increased by 25% in the second quarter and by 24% in the first half of 2008 compared to 2007. Total net revenue increased by 24% and 21% for these periods, respectively. On a per share basis, net income increased by 6% in both periods, and net revenue increased by 6% and 3% in the second quarter and first half, respectively. Per share results also included the benefit of stock buybacks. Second quarter earnings were lower than first quarter earnings due to the higher seasonal insurance revenues in the first quarter. Additionally, second quarter earnings included a non-core tax benefit of $0.04 per share which was offset by $0.04 per share of non-core after-tax non-interest expense charges. As a result, core earnings per share were the same as the $0.55 reported for GAAP earnings per share. Second quarter net interest income increased by $3.6 million (24%) year-to-year including the benefit of Vermont balances along with organic growth. Net interest income increased by $0.4 million at an 8% annualized rate compared to the prior quarter. This linked quarter growth was due to 4% annualized growth in average loan balances and an improvement in the net interest margin to 3.45% from 3.41%. The margin improvement resulted primarily from reductions in higher cost deposit balances, along with the benefit of second quarter loan growth. The net interest margin was up from 3.15% in the second quarter of 2007, benefiting from the Factory Point acquisition, along with pricing and balance sheet structural changes prior to the start of the year. Second quarter non-interest income increased by $1.6 million (23%) year-to-year including the additional Vermont income. Total bank fee income increased by 6% from the prior quarter due to deposit fee income growth. For the first six months, insurance fee income increased by 1% from the prior year, including the seasonally high first quarter. Second quarter wealth management new business bookings equated to 18% annualized growth, although linked quarter wealth management fees decreased due to market activity. Non-interest income was 33% of total first half revenues, including the benefit of seasonal insurance revenues. The second quarter loan loss provision was $1.1 million in 2008 compared to $0.1 million in 2007. The provision was unusually low in 2007 due to the outplacement of certain commercial loan balances in that period. The provision in the first half of 2008 totaled $1.9 million and exceeded first half net loan charge-offs of $1.5 million. As a result, the loan loss allowance increased and remained at 1.14% of total loans. Second quarter non-interest expense increased by $3.5 million (23%) year-to-year including the additional Vermont expense. Second quarter 2008 expense included $0.7 million in non-core charges related to severance and reversals of deferred loan costs and late fees receivable. Excluding these charges, non-interest expense decreased by $0.1 million compared to the prior quarter, contributing to improved operating leverage. The efficiency ratio in the first half of 2008 improved to 61% compared to 64% in the prior year. This ratio includes the impact of Berkshire's New York de novo branch program. The second quarter tax rate included a credit resulting from the reduction in the valuation reserve for deferred state tax assets due to higher taxable income in Berkshire Bank. The second quarter 2008 effective tax rate was 30% before the impact of this credit. The tax rate benefited from proportionally higher tax credits, and decreased from 32% in the prior quarter and in the same quarter of the prior year. CONFERENCE CALL Berkshire will conduct a conference call/webcast at 10:00 A.M. eastern time on Friday, July 18, 2008 to discuss second quarter results and guidance about expected future results. Information about the conference call follows: Dial-in: 800-860-2442 Webcast: www.berkshirebank.com (Investor Relations link) A telephone replay of the call will be available until July 25, 2008 by calling 877-344-7529 and entering replay passcode: 420677. The webcast and a podcast will be available at Berkshire's website above for an extended period of time. BACKGROUND Berkshire Hills Bancorp is headquartered in Pittsfield, Massachusetts. It has $2.5 billion in assets and is the parent of Berkshire Bank -- America's Most Exciting Bank(sm). Berkshire provides business and consumer banking, insurance, and wealth management services through 48 banking and insurance offices in Western Massachusetts, Northeastern New York, and Southern Vermont. For more information, visit www.berkshirebank.com or call 800-773-5601. The Berkshire Hills Bancorp, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=5000 FORWARD LOOKING STATEMENTS Statements in this news release regarding Berkshire Hills Bancorp that are not historical facts are "forward-looking statements". These statements reflect management's views of future events, and involve risks and uncertainties. For a discussion of factors that could cause actual results to differ materially from expectations, see "Forward Looking Statements" in the Company's 2007 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at the Securities and Exchange Commission's Internet website (www.sec.gov) and to which reference is hereby made. Actual future results may differ significantly from results discussed in these forward-looking statements, and undue reliance should not be placed on such statements. Except as required by law, the Company assumes no obligation to update any forward-looking statements. NON-GAAP FINANCIAL MEASURES This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including merger costs and restructuring costs. Similarly, the efficiency ratio is also adjusted for these non-core items. Additionally, the Company adjusts core income to exclude amortization of intangibles to arrive at a measure of the underlying operating cash return for the benefit of stockholders. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.
BERKSHIRE HILLS BANCORP, INC. CONSOLIDATED BALANCE SHEETS - UNAUDITED ---------------------------------------------------------------------- June 30, March 31, December 31, (In thousands) 2008 2008 2007 ---------------------------------------------------------------------- Assets Total cash and cash equivalents $ 31,470 $ 31,747 $ 33,259 Fed funds sold & short-term investments 2,247 51,838 7,883 Securities at fair value 14,959 -- -- Securities available for sale, at fair value 200,133 200,980 197,964 Securities held to maturity, at amortized cost 26,485 39,626 39,456 Federal Home Loan Bank stock 21,077 21,077 21,077 Loans held for sale 9,865 2,913 3,445 Residential mortgages 664,581 655,184 657,045 Commercial mortgages 768,365 718,318 704,764 Commercial business loans 197,580 200,048 203,564 Consumer loans 347,515 361,635 378,643 --------------------------------------------------------------------- Total loans 1,978,041 1,935,185 1,944,016 Less: Allowance for loan losses (22,581) (22,130) (22,116) --------------------------------------------------------------------- Net loans 1,955,460 1,913,055 1,921,900 Premises and equipment, net 38,054 38,489 38,806 Goodwill 161,526 162,000 161,632 Other intangible assets 19,379 20,398 20,820 Cash surrender value of life insurance policies 35,007 34,516 35,316 Other assets 31,213 29,744 31,874 --------------------------------------------------------------------- Total assets $2,546,875 $2,546,383 $2,513,432 --------------------------------------------------------------------- Liabilities and stockholders' equity Demand deposits $ 225,001 $ 224,471 $ 231,994 NOW deposits 193,551 208,913 213,150 Money market deposits 457,694 514,586 439,341 Savings deposits 217,605 213,054 210,186 --------------------------------------------------------------------- Total non-maturity deposits 1,093,851 1,161,024 1,094,671 Brokered time deposits 3,008 21,446 21,497 Other time deposits 714,371 697,633 706,395 --------------------------------------------------------------------- Total time deposits 717,379 719,079 727,892 --------------------------------------------------------------------- Total deposits 1,811,230 1,880,103 1,822,563 --------------------------------------------------------------------- Borrowings 379,376 308,283 334,474 Junior subordinated debentures 15,464 15,464 15,464 Other liabilities 10,769 13,792 14,094 --------------------------------------------------------------------- Total liabilities 2,216,839 2,217,642 2,186,595 Total stockholders' equity 330,036 328,741 326,837 --------------------------------------------------------------------- Total liabilities and stockholders' equity $2,546,875 $2,546,383 $2,513,432 ---------------------------------------------------------------------
BERKSHIRE HILLS BANCORP, INC. CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED ---------------------------------------------------------------------- LOAN ANALYSIS ------------- Dec. 31, June 30, 2008 March 31, 2008 2007 ---------------------------------------------------------------------- (Dollars in millions) Quarterly Quarterly annualized annualized Balance growth Balance growth Balance ---------------------------------------------------------------------- Residential mortgages: 1 - 4 Family $ 630 14% $ 609 (1)% $ 610 Construction 35 (96) 46 (9) 47 ---------------------------------------------------------------------- Total residential mortgages 665 6 655 (1) 657 Commercial mortgages: Construction 132 6 130 16 125 Single and multi-family 76 (15) 79 58 69 Other commercial mortgages 560 40 509 (1) 510 ---------------------------------------------------------------------- Total commercial mortgages 768 28 718 8 704 Commercial business loans 198 (4) 200 (8) 204 ---------------------------------------------------------------------- Total commercial loans 966 21 918 4 908 Consumer loans: Auto and other 173 (43) 194 (32) 211 Home equity 174 14 168 -- 168 ---------------------------------------------------------------------- Total consumer loans 347 (17) 362 (18) 379 ---------------------------------------------------------------------- Total loans $1,978 9% $1,935 (2)% $1,944 ----------------------------------------------------------------------
DEPOSIT ANALYSIS ---------------- Dec. 31, June 30, 2008 March 31, 2008 2007 ---------------------------------------------------------------------- (Dollars in millions) Quarterly Quarterly annualized annualized Balance growth Balance growth Balance ---------------------------------------------------------------------- Demand $ 225 2 % $ 224 (14)% $ 232 NOW 193 (31) 209 (8) 213 Money market 458 (44) 515 69 439 Savings 218 9 213 4 211 ---------------------------------------------------------------------- Total non-maturity deposits 1,094 (23) 1,161 24 1,095 Time less than $100,000 390 (11) 401 (8) 409 Time $100,000 or more 324 36 297 (1) 298 Brokered time 3 (343) 21 (9) 21 ---------------------------------------------------------------------- Total time deposits 717 (1) 719 (5) 728 ---------------------------------------------------------------------- Total deposits $1,811 (15)% $1,880 12% $1,823 ----------------------------------------------------------------------
BERKSHIRE HILLS BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED ---------------------------------------------------------------------- Three Months Ended Six Months Ended June 30, June 30, ---------------------------------------------------------------------- (In thousands, except per share data) 2008 2007 2008 2007 -------------------------------------------------- ------------------ Interest and dividend income Loans $29,823 $29,152 $61,146 $57,674 Securities and other 3,011 2,842 6,211 5,790 --------------------------------------------------------------------- Total interest and dividend income 32,834 31,994 67,357 63,464 Interest expense Deposits 10,521 12,318 22,809 24,267 Borrowings and junior subordinated debentures 3,666 4,638 7,607 8,969 --------------------------------------------------------------------- Total interest expense 14,187 16,956 30,416 33,236 --------------------------------------------------------------------- Net interest income 18,647 15,038 36,941 30,228 Non-interest income Insurance commissions and fees 3,694 3,786 8,840 8,777 Deposit service fees 2,486 1,788 4,641 3,302 Wealth management fees 1,567 968 3,195 1,887 Loan service fees 228 48 465 357 --------------------------------------------------------------------- Total fee income 7,975 6,590 17,141 14,323 Other 562 303 868 726 Gain (loss) on sale of securities, net (26) -- (26) 81 --------------------------------------------------------------------- Total non-interest income 8,511 6,893 17,983 15,130 --------------------------------------------------------------------- Total net revenue 27,158 21,931 54,924 45,358 Provision for loan losses 1,105 100 1,930 850 Non-interest expense Salaries and employee benefits 9,842 8,230 19,498 16,741 Occupancy and equipment 2,774 2,385 5,742 4,871 Marketing, data processing, and professional services 2,181 2,116 4,302 4,063 Non-recurring expense 683 -- 683 153 Amortization of intangible assets 1,019 662 2,103 1,324 Other 2,133 1,710 4,378 3,360 --------------------------------------------------------------------- Total non-interest expense 18,632 15,103 36,706 30,512 --------------------------------------------------------------------- Income before income taxes 7,421 6,728 16,288 13,996 Income tax expense 1,708 2,152 4,526 4,478 --------------------------------------------------------------------- Net income $ 5,713 $ 4,576 $11,762 $ 9,518 --------------------------------------------------------------------- --------------------------------------------------------------------- Basic earnings per share $ 0.55 $ 0.52 $ 1.14 $ 1.09 --------------------------------------------------------------------- --------------------------------------------------------------------- Diluted earnings per share $ 0.55 $ 0.52 $ 1.13 $ 1.07 --------------------------------------------------------------------- Weighted average shares outstanding Basic 10,302 8,732 10,344 8,697 Diluted 10,384 8,875 10,420 8,855
BERKSHIRE HILLS BANCORP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED -------------------------------------------------------------------- Quarters Ended -------------------------------------------------------------------- (In thousands, except per June 30, Mar. 31, Dec. 31, Sept. 30, June 30, share data) 2008 2008 2007 2007 2007 -------------------------------------------------------------------- Interest and dividend income Loans $29,823 $31,323 $32,666 $29,719 $29,152 Securities and other 3,011 3,200 3,183 2,912 2,842 -------------------------------------------------------------------- Total interest and dividend income 32,834 34,523 35,849 32,631 31,994 Interest expense Deposits 10,521 12,288 13,749 12,581 12,318 Borrowings and junior subordinated debentures 3,666 3,941 3,882 4,571 4,638 -------------------------------------------------------------------- Total interest expense 14,187 16,229 17,631 17,152 16,956 -------------------------------------------------------------------- Net interest income 18,647 18,294 18,218 15,479 15,038 Non-interest income Insurance commissions and fees 3,694 5,146 2,290 2,661 3,786 Deposit service fees 2,486 2,155 2,620 1,825 1,788 Wealth management fees 1,567 1,628 1,476 1,044 968 Loan service fees 228 237 91 324 48 -------------------------------------------------------------------- Total fee income 7,975 9,166 6,477 5,854 6,590 Other 562 306 551 433 303 Loss on securities, net (26) -- -- (672) -- Loss on prepayment of borrowings, net -- -- -- (1,180) -- Gain (loss) on sale of loans, net -- -- 41 (1,991) -- -------------------------------------------------------------------- Total non-interest income 8,511 9,472 7,069 2,444 6,893 -------------------------------------------------------------------- Total net revenue 27,158 27,766 25,287 17,923 21,931 Provision for loan losses 1,105 825 3,060 390 100 Non-interest expense Salaries and employee benefits 9,842 9,656 9,386 7,891 8,230 Occupancy and equipment 2,774 2,968 2,656 2,418 2,385 Marketing, data processing, and professional services 2,181 2,121 2,275 2,260 2,116 Non-recurring expense 683 -- 1,198 1,606 -- Amortization of intangible assets 1,019 1,084 1,050 684 662 Other 2,133 2,245 1,828 1,730 1,710 -------------------------------------------------------------------- Total non-interest expense 18,632 18,074 18,393 16,589 15,103 -------------------------------------------------------------------- Income before income taxes 7,421 8,867 3,834 944 6,728 Income tax expense 1,708 2,818 761 -- 2,152 -------------------------------------------------------------------- Net income $ 5,713 $ 6,049 $ 3,073 $ 944 $ 4,576 -------------------------------------------------------------------- Basic earnings per share $ 0.55 $ 0.58 $ 0.29 $ 0.11 $ 0.52 Diluted earnings per share $ 0.55 $ 0.58 $ 0.29 $ 0.10 $ 0.52 Weighted average shares outstanding Basic 10,302 10,386 10,524 8,922 8,732 Diluted 10,384 10,457 10,664 9,045 8,875
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES ASSET QUALITY ANALYSIS --------------------------------------------------------------------- At or for the Quarters Ended --------------------------------------------------------------------- (Dollars in June 30, Mar. 31, Dec. 31, Sept. 30, June 30, thousands) 2008 2008 2007 2007 2007 --------------------------------------------------------------------- NON-PERFORMING ASSETS Nonaccruing loans: Residential mortgages $ 763 $ 1,060 $ 726 $ 623 $ 533 Commercial mortgages 5,329 7,082 5,177 4,977 1,580 Commercial business loans 3,103 3,557 4,164 5,553 6,816 Indirect auto and installment loans 503 374 346 164 100 Home equity 74 67 95 110 110 --------------------------------------------------------------------- Total nonaccruing loans 9,772 12,140 10,508 11,427 9,139 Real estate owned 1,050 755 866 348 -- --------------------------------------------------------------------- Total nonperforming assets $10,822 $12,895 $11,374 $11,775 $ 9,139 --------------------------------------------------------------------- Total nonperforming loans/total loans 0.49% 0.63% 0.54% 0.59% 0.53% Total nonperforming assets/total assets 0.42% 0.51% 0.46% 0.48% 0.42% PROVISION AND ALLOWANCE FOR LOAN LOSSES Balance at beginning of period $22,130 $22,116 $22,108 $19,151 $19,652 Charged-off loans (754) (883) (3,117) (1,954) (678) Recoveries on charged-off loans 100 72 65 68 77 --------------------------------------------------------------------- Net loans charged-off (654) (811) (3,052) (1,886) (601) Acquired allowance -- -- -- 4,453 -- Provision for loan losses 1,105 825 3,060 390 100 --------------------------------------------------------------------- Balance at end of period $22,581 $22,130 $22,116 $22,108 $19,151 --------------------------------------------------------------------- Allowance for loan losses/nonperforming loans 231% 182% 210% 193% 210% Allowance for loan losses/total loans 1.14% 1.14% 1.14% 1.14% 1.11% NET LOAN CHARGE-OFFS Residential mortgages $ -- $ (24) $ -- $ -- $ -- Commercial mortgages (131) (175) -- -- -- Commercial business loans (121) (213) (2,683) (1,497) (406) Indirect auto and installment loans (402) (339) (319) (329) (195) Home equity -- (60) (50) (60) -- --------------------------------------------------------------------- Total net $ (654) $ (811) $(3,052) $(1,886) $ (601) --------------------------------------------------------------------- Net charge-offs (YTD annualized)/average loans 0.15% 0.17% 0.34% 0.23% 0.12% AVERAGE FICO SCORES OF CONSUMER AUTOMOBILE LOANS 731 731 730 729 730 DELINQUENT LOANS / TOTAL LOANS 30-89 Days delinquent 0.33% 0.41% 0.39% 0.61% 0.29% 90 + Days delinquent and still accruing 0.04% 0.03% 0.04% 0.10% 0.07% --------------------------------------------------------------------- Total accruing delinquent loans 0.37% 0.44% 0.43% 0.71% 0.36% Nonaccruing loans 0.49% 0.63% 0.54% 0.59% 0.53% --------------------------------------------------------------------- Total delinquent loans 0.86% 1.07% 0.97% 1.30% 0.89% ---------------------------------------------------------------------
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS ---------------------------------------------------------------------- At or for the Quarters Ended ---------------------------------------------------------------------- June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2008 2008 2007 2007 2007 ---------------------------------------------------------------------- PERFORMANCE RATIOS Core return on tangible assets 1.16% 1.24% 0.84% 0.97% 1.02% Return on total assets 0.91 0.97 0.50 0.18 0.84 Core return on tangible equity 17.89 19.52 13.03 13.64 14.39 Return on total equity 6.89 7.38 3.74 1.44 6.86 Net interest margin, fully taxable equivalent 3.45 3.41 3.38 3.20 3.15 Core tangible non- interest income to assets 1.47 1.64 1.23 1.21 1.33 Non-interest income to assets 1.36 1.52 1.14 0.44 1.26 Core tangible non- interest expense to assets 2.91 2.95 2.80 2.74 2.80 Non-interest expense to assets 2.97 2.89 2.95 3.00 2.76 Efficiency ratio 61.08 60.12 62.51 64.13 64.27 YEAR-TO-DATE GROWTH Total loans 4% (2)% 3% 4% --% Total deposits (1) 12 2 -- (2) Total revenues 21 19 23 24 22 FINANCIAL DATA (In millions) Total assets $2,547 $2,546 $2,513 $2,472 $2,170 Total loans 1,978 1,935 1,944 1,939 1,730 Total intangible assets 181 182 182 183 121 Total deposits 1,811 1,880 1,823 1,796 1,529 Total stockholders' equity 330 329 327 331 266 Total core income 5.7 6.0 3.8 4.4 4.6 Total net income 5.7 6.0 3.1 0.9 4.6 ASSET QUALITY RATIOS Net charge-offs (annualized)/average loans 0.13% 0.17% 0.34% 0.23% 0.12% Non-performing assets/ total assets 0.42 0.51 0.45 0.48 0.42 Loan loss allowance/ total loans 1.14 1.14 1.14 1.14 1.11 Loan loss allowance/ nonperforming loans 2.31x 1.82x 2.10x 1.93x 2.10x PER SHARE DATA Core earnings, diluted $ 0.55 $ 0.58 $ 0.36 $ 0.49 $ 0.52 Net earnings, diluted 0.55 0.58 0.29 0.10 0.52 Tangible book value 14.36 13.97 13.82 13.79 16.40 Total book value 31.78 31.38 31.15 30.82 30.12 Market price at period end 23.65 25.19 26.00 30.23 31.51 Dividends 0.16 0.15 0.15 0.15 0.14 CAPITAL RATIOS Stockholders' equity to total assets 12.96% 12.91% 13.00% 13.38% 12.28% Tangible stockholders' equity to tangible assets 6.30 6.19 6.22 6.47 7.08
---------------------------------------------------------------------- (1) Reconciliations of Non-GAAP financial measures, including all references to core and tangible amounts, appear on page F-9. Tangible assets are total assets less total intangible assets. (2) All performance ratios are annualized and are based on average balance sheet amounts, where applicable. (3) The Dec. 31, 2007 and Sept. 30, 2007 total loan annualized year-to-date growth calculations both exclude the acquired FAPB balances and $50 million in residential mortgage loans sold during September. (4) The Dec. 31, 2007 and Sept. 30, 2007 total deposit annualized year-to-date growth calculations both exclude the acquired FAPB balances, $22.7 million in repurchase liabilities converted to deposit accounts, and $21 million in brokered time deposit run-off. (5) Total revenue includes the impact of the insurance agencies and Factory Point Bancorp acquisitions.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES AVERAGE BALANCES --------------------------------------------------------------------- Quarters Ended --------------------------------------------------------------------- June 30, Mar. 31, Dec. 31, Sept. 30, June 30, (In thousands) 2008 2008 2007 2007 2007 --------------------------------------------------------------------- Assets Loans Residential mortgages $ 665,407 $ 659,406 $ 661,937 $ 634,374 $ 612,289 Commercial mortgages 745,727 712,317 694,339 608,891 593,134 Commercial business loans 196,962 201,433 203,539 171,334 191,967 Consumer loans 354,321 369,659 381,401 349,311 344,069 -------------------------------------------------------------------- Total loans 1,962,417 1,942,815 1,941,216 1,763,910 1,741,459 Securities 260,046 254,561 254,847 224,207 228,471 Short-term investments 12,633 16,498 4,526 4,511 5,232 -------------------------------------------------------------------- Total earning assets 2,235,096 2,213,874 2,200,589 1,992,628 1,975,162 Intangible assets 181,705 182,895 183,902 126,797 120,698 Other assets 105,109 104,027 105,525 93,165 91,320 -------------------------------------------------------------------- Total assets $2,521,910 $2,500,796 $2,490,016 $2,212,590 $2,187,180 -------------------------------------------------------------------- Liabilities and stockholders equity Deposits NOW $ 202,747 $ 208,275 $ 207,671 $ 141,529 $ 140,089 Money market 491,945 466,673 422,514 329,943 309,675 Savings 212,680 210,310 212,760 198,372 195,551 Time 705,305 715,026 749,785 701,062 703,595 -------------------------------------------------------------------- Total interest- bearing deposits 1,612,677 1,600,284 1,592,730 1,370,906 1,348,910 Borrowings and debentures 343,816 346,475 327,383 374,537 386,044 -------------------------------------------------------------------- Total interest- bearing liabilities 1,956,493 1,946,759 1,920,113 1,745,443 1,734,954 Non-interest- bearing demand deposits 221,471 217,355 225,507 186,654 178,356 Other liabilities 10,780 7,079 11,267 4,298 7,359 -------------------------------------------------------------------- Total liabilities 2,188,744 2,171,193 2,156,887 1,936,395 1,920,669 Stockholders' equity 333,166 329,603 333,129 276,195 266,511 -------------------------------------------------------------------- Total liabilities and stockholders equity $2,521,910 $2,500,796 $2,490,016 $2,212,590 $2,187,180 -------------------------------------------------------------------- Supplementary data Total non- maturity deposits $1,128,843 $1,102,613 $1,068,452 $ 856,498 $ 823,671 Total deposits 1,834,148 1,817,639 1,818,237 1,557,560 1,527,266 Fully taxable equivalent income adj 532 492 541 533 540
-------------------------------------------------------------------- (1) Average balances for securities available-for-sale are based on amortized cost.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) --------------------------------------------------------------------- Quarters Ended --------------------------------------------------------------------- June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2008 2008 2007 2007 2007 --------------------------------------------------------------------- Earning assets Loans Residential mortgages 5.66% 5.70% 5.54% 5.35% 5.36% Commercial mortgages 6.44 6.86 7.34 7.49 7.55 Commercial business loans 6.57 7.55 7.68 8.06 7.81 Consumer loans 6.02 6.58 6.91 7.03 6.98 Total loans 6.11 6.48 6.68 6.68 6.71 Securities 5.39 5.69 5.85 6.15 5.92 Federal funds sold and short-term investments 1.78 2.24 5.25 5.25 4.94 Total earning assets 6.00 6.36 6.56 6.70 6.63 Funding liabilities Deposits NOW 0.73 1.09 1.39 1.40 1.50 Money Market 2.14 2.88 3.41 3.67 3.73 Savings 0.71 0.97 1.10 1.17 1.08 Time 4.08 4.43 4.65 4.69 4.78 Total interest-bearing deposits 2.62 3.09 3.42 3.64 3.66 Borrowings and debentures 4.29 4.57 4.70 4.84 4.82 Total interest-bearing liabilities 2.91 3.35 3.64 3.90 3.92 Net interest spread 3.09 3.01 2.92 2.80 2.71 Net interest margin 3.45 3.41 3.38 3.20 3.15 Cost of funds 2.62 3.02 3.26 3.52 3.55 Cost of deposits 2.31 2.72 3.00 3.20 3.24
--------------------------------------------------------------------- (1) Average balances and yields for securities available-for-sale are based on amortized cost. (2) Cost of funds includes all deposits and borrowings.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES At or for the Quarters Ended ---------------------------------------------------------------------- (dollars in June 30, Mar. 31, Dec. 31 Sept. 30 June 30, thousands) 2008 2008 2007 2007 2007 ---------------------------------------------------------------------- Net income $ 5,713 $ 6,049 $ 3,073 $ 944 $ 4,576 Adj: Loss (gain) on sale of securities, net 26 -- -- 672 -- Adj: Loss on prepayment of borrowings, net -- -- -- 1,180 -- Adj: Loss on sale of loans, net -- -- -- 1,991 -- Plus: Other non- recurring expense 683 -- 1,198 1,606 -- Adj: Income taxes (701) -- (468) (1,995) -- ---------------------------------------------------------------------- Core income (A) 5,721 6,049 3,803 4,398 4,576 Plus: Amort. of intangible assets 1,019 1,084 1,050 684 662 ---------------------------------------------------------------------- Tangible core income (B) $ 6,740 $ 7,133 $ 4,853 $ 5,082 $ 5,238 ---------------------------------------------------------------------- Total non- interest income $ 8,511 $ 9,472 $ 7,069 $ 2,444 $ 6,893 Adj: Loss (gain) on sale of securities, net 26 -- -- 672 -- Adj: Loss on prepayment of borrowings, net -- -- -- 1,180 -- Adj: Loss on sale of loans, net -- -- -- 1,991 -- ---------------------------------------------------------------------- Total core non- interest income (C) 8,537 9,472 7,069 6,287 6,893 Net interest income 18,647 18,294 18,218 15,479 15,038 ---------------------------------------------------------------------- Total core revenue (D) $27,184 $27,766 $25,287 $21,766 $21,931 ---------------------------------------------------------------------- Total non- interest expense $18,632 $18,074 $18,393 $16,589 $15,103 Less: Other non- recurring expense (683) -- (1,198) (1,606) -- ---------------------------------------------------------------------- Core non-interest expense (E) 17,949 18,074 17,195 14,983 15,103 Less: Amortization of intangible assets (1,019) (1,084) (1,050) (684) (662) ---------------------------------------------------------------------- Total core tangible non- interest expense(F) $16,930 $16,990 $16,145 $14,299 $14,441 ---------------------------------------------------------------------- (Dollars in millions, except per share data) Total average assets $ 2,522 $ 2,501 $ 2,490 $ 2,213 $ 2,187 Less: Average intangible assets (182) (183) (184) (127) (121) ---------------------------------------------------------------------- Total average tangible assets (G) $ 2,340 $ 2,318 $ 2,306 $ 2,086 $ 2,066 ---------------------------------------------------------------------- Total average stockholders' equity $ 333 $ 330 $ 333 $ 276 $ 267 Less: Average intangible assets (182) (183) (184) (127) (121) ---------------------------------------------------------------------- Total average tangible stockholders' equity (H) $ 151 $ 147 $ 149 $ 149 $ 146 ---------------------------------------------------------------------- Total stockholders' equity, period- end $ 330 $ 329 $ 327 $ 331 $ 266 Less: Intangible assets, period- end (181) (182) (182) (183) (121) ---------------------------------------------------------------------- Total tangible stockholders' equity, period- end (I) $ 149 $ 147 $ 145 $ 148 $ 145 ---------------------------------------------------------------------- Total shares outstanding, period-end (thousands) (J) 10,385 10,475 10,493 10,729 8,842 Average diluted shares outstanding (thousands) (K) 10,384 10,457 10,664 9,045 8,875 Core earnings per share (A/K)$ 0.55 $ 0.58 $ 0.36 $ 0.49 $ 0.52 Tangible book value per share (I/J)$ 14.36 $ 13.97 $ 13.82 $ 13.79 $ 16.40 Core return on tangible assets (B/G) 1.16% 1.24% 0.84% 0.97% 1.02% Core return on tangible equity (B/H) 17.89 19.52 13.03 13.64 14.39 Core tangible non-interest income to assets(C/G) 1.47 1.64 1.23 1.21 1.33 Core tangible non-interest exp to assets (F/G) 2.91 2.95 2.80 2.74 2.80 Efficiency ratio 61.08 60.12 62.63 64.13 64.27
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For six months ended June 30, --------------------------------------------------------------------- (Dollars in thousands) 2008 2007 --------------------------------------------------------------------- Net income $11,762 $ 9,518 Adj: Loss (gain) on sale of securities, net 26 (81) Adj: Loss on prepayment of borrowings, net - - Adj: Loss on sale of loans, net - - Plus: Other non-recurring expense 683 153 Adj: Income taxes (701) (29) --------------------------------------------------------------------- Core income (A) 11,770 9,561 Plus: Amort. of intangible assets 2,103 1,324 --------------------------------------------------------------------- Tangible core income (B) $13,873 $10,885 --------------------------------------------------------------------- Total non-interest income 17,983 $15,130 Adj: Loss (gain) on sale of securities, net 26 (81) Adj: Loss on prepayment of borrowings, net - - Adj: Loss on sale of loans, net - - --------------------------------------------------------------------- Total core non-interest income (C) 18,009 15,049 Net interest income 36,941 30,228 --------------------------------------------------------------------- Total core revenue (D) 54,950 $45,277 --------------------------------------------------------------------- Total non-interest expense 36,706 $30,512 Less: Other non-recurring expense (683) (153) --------------------------------------------------------------------- Core non-interest expense (E) 36,023 30,359 Less: Amortization of intangible assets (2,103) (1,324) --------------------------------------------------------------------- Total core tangible non-interest expense (F) 33,920 $29,035 --------------------------------------------------------------------- (Dollars in millions, except per share data) Total average assets $ 2,511 $ 2,169 Less: Average intangible assets (182) (114) --------------------------------------------------------------------- Total average tangible assets (G) $ 2,329 $ 2,055 --------------------------------------------------------------------- Total average stockholders' equity $ 331 $ 262 Less: Average intangible assets (182) (114) --------------------------------------------------------------------- Total average tangible stockholders' equity (H) $ 149 $ 148 --------------------------------------------------------------------- Total stockholders' equity, period-end $ 330 $ 266 Less: Intangible assets, period-end (181) (121) --------------------------------------------------------------------- Total tangible stockholders' equity, period-end (I) $ 149 $ 145 --------------------------------------------------------------------- Total shares outstanding, period-end (thousands) (J) 10,385 8,842 Average diluted shares outstanding (thousands) (K) 10,420 8,855 --------------------------------------------------------------------- Core earnings per share (A/K) $ 1.13 $ 1.08 Tangible book value per share (I/J) $ 14.36 $ 16.40 --------------------------------------------------------------------- Core return on tangible assets (B/G) 1.20% 1.07% Core return on tangible equity (B/H) 18.52 14.79 Core tangible non-interest income to assets (C/G) 1.55 1.47 Core tangible non-interest exp to assets (F/G) 2.92 2.83 Efficiency ratio 60.60 62.62 ---------------------------------------------------------------------
(1) Efficiency ratio is computed by dividing total tangible core non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income. The Company uses this non-GAAP measure, which is used widely in the banking industry, to provide important information regarding its operational efficiency. (2) Ratios are annualized and based on average balance sheet amounts, where applicable. (3) Quarterly data may not sum to year-to-date data due to rounding. CONTACT: Berkshire Hills Bancorp Kevin P. Riley, Executive Vice President and Chief Financial Officer 413-236-3195 David H. Gonci, Corporate Finance Officer 413-281-1973