Exhibit 99.1
Berkshire Hills Reports $0.24 EPS for First Quarter 2010,
3% Growth in Income Available to Common Shareholders,
And Accomplishment of Asset Initiatives
3% Growth in Income Available to Common Shareholders,
And Accomplishment of Asset Initiatives
Dividend Declared
Pittsfield, MA — April 21, 2010 — Berkshire Hills Bancorp (BHLB) reported net income of $3.3 million, or $0.24 per share, in the first quarter of 2010. Net income available to common shareholders increased by 3% from $3.2 million in the first quarter of 2009. First quarter earnings per share decreased from $0.27 in 2009 due to additional shares issued in the second quarter last year.
FIRST QUARTER FINANCIAL HIGHLIGHTS
• | 10% annualized deposit growth |
• | 3% increase in first quarter income available to common shareholders compared to the prior year |
• | 3.24% net interest margin, increased from 3.05% in the prior quarter |
• | 30% growth in banking fees for deposits, loans, and interest rate swaps compared to prior year |
• | 36% decrease in nonperforming assets to $25 million, or 0.92% of total assets |
• | $15 million reduction to $3 million in performing restructured loans |
• | 0.47% annualized net charge-offs/average total loans |
• | 0.31% ratio of accruing delinquent loans/loans — lowest since 2006 |
• | 147% ratio of the loan loss allowance to non-accruing loans |
Michael P. Daly, President and Chief Executive Officer, stated, “First quarter results demonstrate our positive momentum in building earnings available to common shareholders and in strengthening asset quality. Aggressive strategic actions in the fourth quarter last year have positioned Berkshire for higher growth and earnings in 2010 and beyond. We achieved first quarter results while carrying the costs of recent expansion into asset based lending and private banking, together with expansion of our regional offices in Albany and Springfield. These initiatives will contribute more significantly to revenue as we move through the year.”
BHLB — Berkshire Hills Bancorp | Page 1 | www.berkshirebank.com |
Mr. Daly continued, “Our nonperforming assets were elevated at the start of 2010 as we pursued workout strategies initiated near year-end to resolve potential risks in the loan portfolio. Nonperforming assets decreased to below 1% of total assets as we completed the resolution of several credits, and we anticipate more resolutions in the upcoming quarters. Net loan charge-offs averaged 0.47% annualized in the first quarter, and we ended the quarter with the lowest level of accruing delinquent loans in several years, compared to total loans. Our outlook for the region is cautiously optimistic, as local business confidence has rebounded to levels last seen in the third quarter of 2008.”
Mr. Daly concluded, “Berkshire is the largest locally headquartered regional bank, and is well positioned to meet the needs of our markets. Our double digit annualized deposit growth in the first quarter provides a solid base to support future organic loan growth. We are well capitalized and our dividend to shareholders provides a yield exceeding 3%. Going forward, we plan to post year-over-year EPS gains in line with our prior guidance, reflecting expected improvements in nearly all major business lines.”
DIVIDEND DECLARED
The Board of Directors maintained the cash dividend on Berkshire’s common stock, declaring a dividend of $0.16 per share to stockholders of record at the close of business on May 13, 2010 and payable on May 27, 2010.
FINANCIAL CONDITION
Total assets remained steady at $2.7 billion in the most recent quarter. Total loans increased by $20 million at a 4% annualized rate, including $27 million of growth in residential mortgages. Commercial loan originations included $13 million in bookings by the new asset based lending group, and the commercial loan pipeline increased during the quarter.
The $14 million reduction in commercial nonperforming assets was consistent with the Company’s plans at the start of the quarter. Nonperforming assets decreased to $25 million (0.92% of total assets) at quarter-end. These included a $6 million commercial loan restructured during the quarter, which is expected to become accruing later this year. No other nonperforming loan exceeded $2 million. Accruing delinquent loans decreased to a comparatively low 0.31% of total loans, with improvements in most major categories. Accruing renegotiated loans decreased to $3 million from $18 million in the first quarter based on payment histories and market level risk adjusted loan interest rates.
Total deposits increased by $51 million (10% annualized) during the first quarter, primarily due to growth in money market and savings accounts. Deposits increased in all of the Bank’s regions, and included the benefit of the new private banking business unit. The cost of deposits continued to decrease, falling to 1.39% in the most recent quarter, compared to 1.48% in the prior quarter. Funds from deposit growth were used to reduce borrowings by $50 million. The loan/deposit ratio continued to improve to 97%, demonstrating the Bank’s strong liquidity.
BHLB — Berkshire Hills Bancorp | Page 2 | www.berkshirebank.com |
Total stockholders’ equity increased slightly during the quarter, totaling $385 million at quarter-end. Tangible equity/assets remained unchanged at 8.3%, and total equity to assets remained unchanged at 14.2%. At quarter-end, tangible book value per share measured $14.97, while total book value per share was $27.47.
RESULTS OF OPERATIONS
First quarter 2010 net income available to common shareholders was $3.3 million, compared to $3.2 million in the same quarter of 2009. Results in 2009 included the impact of dividends on preferred stock which was repaid near the end of the second quarter. Before these dividends, net income was $3.9 million in the first quarter of 2009. Earnings per share were $0.24 in the most recent quarter, decreasing from $0.27 in the year ago quarter due to the issuance of additional common shares around the time of the preferred stock repayment last year.
First quarter total net revenue increased by $0.4 million (2%) in 2010 compared to 2009. Net interest income increased by $0.6 million (3%) due to an improvement in the net interest margin to 3.24% from 3.11%. Net interest income also improved from the fourth quarter of 2009, reflecting an improvement in the net interest margin from 3.05%. This linked quarter improvement was primarily due to lower funding costs for both deposits and borrowings.
First quarter non-interest income decreased by $0.2 million (2%) from the prior year due to a $1.1 million (24%) decrease in insurance revenue. Insurance revenue includes seasonal contingency income which declined due to lower payouts from major carriers. Banking fees for deposits, loans, and interest rate swaps increased by 30% over the first quarter of 2009, and by 15% over the prior quarter, including the benefit of higher business volumes.
The first quarter loan loss provision totaled $2.3 million in 2010, decreasing by $0.2 million from the prior year period. Net loan charge-offs also totaled $2.3 million and decreased by a similar amount, measuring 0.47% of average loans in 2010 compared to 0.51% in the first quarter of 2009. The loan loss allowance measured 1.61% of total loans and 147% of non-accruing loans at quarter-end, compared to 1.62% and 82% at the start of the quarter, respectively.
First quarter non-interest expense increased by $1.7 million (9%) from the prior year, including the impact of business expansion on compensation related expense. First quarter results benefited from a year-to-year reduction in the effective income tax rate to 22% from 28% reflecting the expected effective rate for the current year.
BHLB — Berkshire Hills Bancorp | Page 3 | www.berkshirebank.com |
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 A.M. eastern time on Thursday, April 22, 2010 to discuss the results for the quarter 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 through May 9, 2010 by calling 877-344-7529 and entering conference number: 439415. The webcast and a podcast will be available at Berkshire’s website above for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank — America’s Most Exciting BankSM - - the largest locally headquartered regional bank. The Company has $2.7 billion in assets and provides services through 45 offices in Massachusetts, New York, and Vermont. For more information, visitwww.berkshirebank.com or call 800-773-5601.
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 2009 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.
BHLB — Berkshire Hills Bancorp | Page 4 | www.berkshirebank.com |
NON-GAAP FINANCIAL MEASURES
This document 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 shareholders. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. In the first quarter of 2009, the Company adjusted core earnings per share and core return on tangible common equity to be net of preferred stock dividends. These measures were not adjusted in this manner in the second quarter of 2009. The second quarter deemed dividend was a nonrecurring non-cash charge with no impact on stockholders’ equity and did not reflect a core economic event in the Company’s view. Additionally, the Company held cash at near-zero interest rates in the second quarter while it awaited the approval of the U.S. Treasury to repay the preferred stock. Accordingly, the preferred stock cash dividend and accretion charges were viewed by the Company as non-core one-time charges against income available to common stockholders related to the process of repaying the preferred stock. Other significant non-GAAP adjustments in 2009 related to a terminated merger agreement, borrowings prepayments, and the termination of an interest rate swap.
# # #
CONTACTS
Investor Relations Contact
David H. Gonci
Capital Markets Officer
413-281-1973
David H. Gonci
Capital Markets Officer
413-281-1973
Media Contact
Fedelina Madrid
Vice President, Senior Marketing Officer
413-236-3733
Fedelina Madrid
Vice President, Senior Marketing Officer
413-236-3733
BHLB — Berkshire Hills Bancorp | Page 5 | www.berkshirebank.com |
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS — UNAUDITED
CONSOLIDATED BALANCE SHEETS — UNAUDITED
March 31, | December 31, | |||||||
(In thousands) | 2010 | 2009 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 23,880 | $ | 25,770 | ||||
Short-term investments | 2,697 | 6,838 | ||||||
Trading security | 15,816 | 15,880 | ||||||
Securities available for sale, at fair value | 313,968 | 324,345 | ||||||
Securities held to maturity, at amortized cost | 62,811 | 57,621 | ||||||
Federal Home Loan Bank stock and other restricted securities | 23,120 | 23,120 | ||||||
Total securities | 415,715 | 420,966 | ||||||
Loans held for sale | 1,874 | 4,146 | ||||||
Residential mortgages | 635,614 | 609,007 | ||||||
Commercial mortgages | 862,209 | 851,828 | ||||||
Commercial business loans | 177,532 | 186,044 | ||||||
Consumer loans | 305,986 | 314,779 | ||||||
Total loans | 1,981,341 | 1,961,658 | ||||||
Less: Allowance for loan losses | (31,829 | ) | (31,816 | ) | ||||
Net loans | 1,949,512 | 1,929,842 | ||||||
Premises and equipment, net | 37,396 | 37,390 | ||||||
Other real estate owned | 3,250 | 30 | ||||||
Goodwill | 161,725 | 161,725 | ||||||
Other intangible assets | 13,608 | 14,375 | ||||||
Cash surrender value of bank-owned life insurance | 34,973 | 36,904 | ||||||
Other assets | 60,829 | 62,438 | ||||||
Total assets | $ | 2,705,459 | $ | 2,700,424 | ||||
Liabilities and stockholders’ equity | ||||||||
Demand deposits | $ | 272,409 | $ | 276,587 | ||||
NOW deposits | 195,848 | 197,176 | ||||||
Money market deposits | 582,006 | 532,840 | ||||||
Savings deposits | 237,454 | 208,597 | ||||||
Total non-maturity deposits | 1,287,717 | 1,215,200 | ||||||
Time deposits | 749,576 | 771,562 | ||||||
Total deposits | 2,037,293 | 1,986,762 | ||||||
Borrowings | 241,577 | 291,204 | ||||||
Junior subordinated debentures | 15,464 | 15,464 | ||||||
Other liabilities | 25,804 | 22,413 | ||||||
Total liabilities | 2,320,138 | 2,315,843 | ||||||
Total stockholders’ equity | 385,321 | 384,581 | ||||||
Total liabilities and stockholders’ equity | $ | 2,705,459 | $ | 2,700,424 | ||||
F-1
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS — UNAUDITED
CONSOLIDATED LOAN & DEPOSIT ANALYSIS — UNAUDITED
LOAN ANALYSIS
Annualized Growth % | ||||||||||||
March 31, 2010 | December 31, 2009 | Quarter ended | ||||||||||
(Dollars in millions) | Balance | Balance | March 31, 2010 | |||||||||
Total residential mortgages | $ | 636 | $ | 609 | 18 | % | ||||||
Commercial mortgages: | ||||||||||||
Construction | 105 | 111 | (22 | ) | ||||||||
Single and multi-family | 80 | 81 | (5 | ) | ||||||||
Commercial real estate | 676 | 660 | 10 | |||||||||
Total commercial mortgages | 861 | 852 | 4 | |||||||||
Commercial business loans (1) | 178 | 186 | (17 | ) | ||||||||
Total commercial loans | 1,039 | 1,038 | 0 | |||||||||
Consumer loans: | ||||||||||||
Auto | 63 | 75 | (64 | ) | ||||||||
Home equity and other | 243 | 240 | 5 | |||||||||
Total consumer loans | 306 | 315 | (11 | ) | ||||||||
Total loans | $ | 1,981 | $ | 1,962 | 4 | % | ||||||
(1) | Total commercial business loans at March 31, 2010 includes asset based lending balances of $13 million. |
DEPOSIT ANALYSIS
Annualized Growth % | ||||||||||||
March 31, 2010 | December 31, 2009 | Quarter ended | ||||||||||
(Dollars in millions) | Balance | Balance | March 31, 2010 | |||||||||
Demand | $ | 272 | $ | 277 | (7 | )% | ||||||
NOW | 196 | 197 | (2 | ) | ||||||||
Money market | 582 | 533 | 37 | |||||||||
Savings | 237 | 208 | 56 | |||||||||
Total non-maturity deposits | 1,287 | 1,215 | 24 | |||||||||
Time less than $100,000 | 380 | 382 | (2 | ) | ||||||||
Time $100,000 or more | 370 | 390 | (21 | ) | ||||||||
Total time deposits | 750 | 772 | (12 | ) | ||||||||
Total deposits | $ | 2,037 | $ | 1,987 | 10 | % | ||||||
F-2
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
Three Months Ended | ||||||||
March 31, | ||||||||
(In thousands, except per share data) | 2010 | 2009 | ||||||
Interest and dividend income | ||||||||
Loans | $ | 23,947 | $ | 26,432 | ||||
Securities and other | 3,535 | 3,448 | ||||||
Total interest and dividend income | 27,482 | 29,880 | ||||||
Interest expense | ||||||||
Deposits | 6,896 | 8,473 | ||||||
Borrowings and junior subordinated debentures | 2,289 | 3,696 | ||||||
Total interest expense | 9,185 | 12,169 | ||||||
Net interest income | 18,297 | 17,711 | ||||||
Non-interest income | ||||||||
Deposit, loan and interest rate swap fees | 3,416 | 2,627 | ||||||
Insurance commissions and fees | 3,473 | 4,569 | ||||||
Wealth management fees | 1,176 | 1,189 | ||||||
Total fee income | 8,065 | 8,385 | ||||||
Other | 433 | 352 | ||||||
Loss on sale of securities, net | — | (2 | ) | |||||
Non-recurring loss | — | (63 | ) | |||||
Total non-interest income | 8,498 | 8,672 | ||||||
Total net revenue | 26,795 | 26,383 | ||||||
Provision for loan losses | 2,326 | 2,500 | ||||||
Non-interest expense | ||||||||
Compensation and benefits | 10,997 | 9,352 | ||||||
Occupancy and equipment | 3,035 | 3,128 | ||||||
Technology and communications | 1,383 | 1,285 | ||||||
Marketing and professional services | 1,297 | 1,083 | ||||||
Supplies, postage and delivery | 573 | 695 | ||||||
FDIC premiums and assessments | 773 | 692 | ||||||
Other real estate owned | 27 | 143 | ||||||
Amortization of intangible assets | 768 | 833 | ||||||
Non-recurring expenses | 21 | — | ||||||
Other | 1,318 | 1,242 | ||||||
Total non-interest expense | 20,192 | 18,453 | ||||||
Income before income taxes | 4,277 | 5,430 | ||||||
Income tax expense | 941 | 1,547 | ||||||
Net income | $ | 3,336 | $ | 3,883 | ||||
Less: Cumulative preferred stock dividend and accretion | — | 637 | ||||||
Net income available to common stockholders | $ | 3,336 | $ | 3,246 | ||||
Basic earnings per common share | $ | 0.24 | $ | 0.27 | ||||
Diluted earnings per common share | $ | 0.24 | $ | 0.27 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 13,829 | 12,164 | ||||||
Diluted | 13,858 | 12,247 |
F-3
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
Quarters Ended | ||||||||||||||||||||
Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||||||
(In thousands, except per share data) | 2010 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||
Interest and dividend income | ||||||||||||||||||||
Loans | $ | 23,947 | $ | 24,869 | $ | 25,034 | $ | 25,370 | $ | 26,432 | ||||||||||
Securities and other | 3,535 | 3,502 | 3,426 | 3,395 | 3,448 | |||||||||||||||
Total interest and dividend income | 27,482 | 28,371 | 28,460 | 28,765 | 29,880 | |||||||||||||||
Interest expense | ||||||||||||||||||||
Deposits | 6,896 | 7,419 | 8,045 | 8,677 | 8,473 | |||||||||||||||
Borrowings and junior subordinated debentures | 2,289 | 2,956 | 3,250 | 3,364 | 3,696 | |||||||||||||||
Total interest expense | 9,185 | 10,375 | 11,295 | 12,041 | 12,169 | |||||||||||||||
Net interest income | 18,297 | 17,996 | 17,165 | 16,724 | 17,711 | |||||||||||||||
Non-interest income | ||||||||||||||||||||
Deposit, loan and interest rate swap fees | 3,416 | 2,978 | 3,286 | 2,307 | 2,627 | |||||||||||||||
Insurance commissions and fees | 3,473 | 1,991 | 2,337 | 3,274 | 4,569 | |||||||||||||||
Wealth management fees | 1,176 | 1,141 | 1,369 | 1,113 | 1,189 | |||||||||||||||
Total fee income | 8,065 | 6,110 | 6,992 | 6,694 | 8,385 | |||||||||||||||
Other | 433 | 613 | 272 | 468 | 352 | |||||||||||||||
(Loss) gain on sale of securities, net | — | — | (5 | ) | 3 | (2 | ) | |||||||||||||
Non-recurring (loss) income | — | (2,071 | ) | 1 | 1,240 | (63 | ) | |||||||||||||
Total non-interest income | 8,498 | 4,652 | 7,260 | 8,405 | 8,672 | |||||||||||||||
Total net revenue | 26,795 | 22,648 | 24,425 | 25,129 | 26,383 | |||||||||||||||
Provision for loan losses | 2,326 | 38,730 | 4,300 | 2,200 | 2,500 | |||||||||||||||
Non-interest expense | ||||||||||||||||||||
Compensation and benefits | 10,997 | 10,269 | 9,757 | 8,902 | 9,352 | |||||||||||||||
Occupancy and equipment | 3,035 | 2,953 | 2,674 | 2,859 | 3,128 | |||||||||||||||
Technology and communications | 1,383 | 1,440 | 1,371 | 1,370 | 1,285 | |||||||||||||||
Marketing and professional services | 1,297 | 2,643 | 1,446 | 1,121 | 1,083 | |||||||||||||||
Supplies, postage and delivery | 573 | 523 | 702 | 689 | 695 | |||||||||||||||
Other real estate owned | 27 | 104 | 15 | 19 | 143 | |||||||||||||||
FDIC premiums and assessments | 773 | 796 | 669 | 2,387 | 692 | |||||||||||||||
Non-recurring expenses | 21 | — | — | 601 | — | |||||||||||||||
Amortization of intangible assets | 768 | 779 | 833 | 833 | 833 | |||||||||||||||
Other | 1,318 | 1,689 | 1,477 | 1,197 | 1,242 | |||||||||||||||
Total non-interest expense | 20,192 | 21,196 | 18,944 | 19,978 | 18,453 | |||||||||||||||
Income (loss) before income taxes | 4,277 | (37,278 | ) | 1,181 | 2,951 | 5,430 | ||||||||||||||
Income tax expense (benefit) | 941 | (13,075 | ) | (741 | ) | 620 | 1,547 | |||||||||||||
Net income (loss) | $ | 3,336 | $ | (24,203 | ) | $ | 1,922 | $ | 2,331 | $ | 3,883 | |||||||||
Less: Cumulative preferred stock dividend and accretion | — | — | — | 393 | 637 | |||||||||||||||
Less: Deemed dividend from preferred stock repayment | — | — | — | 2,954 | — | |||||||||||||||
Net income (loss) available to common stockholders | $ | 3,336 | $ | (24,203 | ) | $ | 1,922 | $ | (1,016 | ) | $ | 3,246 | ||||||||
Basic earnings (loss) per common share | $ | 0.24 | $ | (1.75 | ) | $ | 0.14 | $ | (0.08 | ) | $ | 0.27 | ||||||||
Diluted earnings (loss) per common share | $ | 0.24 | $ | (1.75 | ) | $ | 0.14 | $ | (0.08 | ) | $ | 0.27 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 13,829 | 13,817 | 13,806 | 12,946 | 12,164 | |||||||||||||||
Diluted | 13,858 | 13,817 | 13,857 | 12,946 | 12,247 |
F-4
BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS
ASSET QUALITY ANALYSIS
At or for the Quarters Ended | ||||||||||||||||||||
Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||||||
(Dollars in thousands) | 2010 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||
NON-PERFORMING ASSETS | ||||||||||||||||||||
Non-accruing loans: | ||||||||||||||||||||
Residential mortgages | $ | 3,289 | $ | 3,304 | $ | 2,399 | $ | 2,396 | $ | 2,740 | ||||||||||
Commercial mortgages | 14,433 | 31,917 | 17,077 | 6,087 | 7,276 | |||||||||||||||
Commercial business loans | 3,211 | 3,115 | 2,041 | 1,442 | 1,861 | |||||||||||||||
Consumer loans | 672 | 364 | 1,089 | 1,326 | 587 | |||||||||||||||
Total non-accruing loans | 21,605 | 38,700 | 22,606 | 11,251 | 12,464 | |||||||||||||||
Other real estate owned | 3,250 | 30 | 130 | 130 | 371 | |||||||||||||||
Total non-performing assets | $ | 24,855 | $ | 38,730 | $ | 22,736 | $ | 11,381 | $ | 12,835 | ||||||||||
Total non-accruing loans/total loans | 1.09 | % | 1.97 | % | 1.14 | % | 0.57 | % | 0.63 | % | ||||||||||
Total non-performing assets/total assets | 0.92 | % | 1.43 | % | 0.85 | % | 0.42 | % | 0.47 | % | ||||||||||
PROVISION AND ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||
Balance at beginning of period | $ | 31,816 | $ | 24,297 | $ | 22,917 | $ | 22,903 | $ | 22,908 | ||||||||||
Charged-off loans | (3,846 | ) | (31,254 | ) | (2,955 | ) | (2,291 | ) | (2,643 | ) | ||||||||||
Recoveries on charged-off loans | 1,533 | 43 | 35 | 105 | 138 | |||||||||||||||
Net loans charged-off | (2,313 | ) | (31,211 | ) | (2,920 | ) | (2,186 | ) | (2,505 | ) | ||||||||||
Provision for loan losses | 2,326 | 38,730 | 4,300 | 2,200 | 2,500 | |||||||||||||||
Balance at end of period | $ | 31,829 | $ | 31,816 | $ | 24,297 | $ | 22,917 | $ | 22,903 | ||||||||||
Allowance for loan losses/total loans | 1.61 | % | 1.62 | % | 1.22 | % | 1.16 | % | 1.16 | % | ||||||||||
Allowance for loan losses/non-accruing loans | 147 | % | 82 | % | 107 | % | 204 | % | 184 | % | ||||||||||
NET LOAN CHARGE-OFFS | ||||||||||||||||||||
Residential mortgages | $ | 56 | $ | (1,873 | ) | $ | — | $ | (27 | ) | $ | (117 | ) | |||||||
Commercial mortgages | (2,584 | ) | (23,024 | ) | (2,348 | ) | (755 | ) | (1,448 | ) | ||||||||||
Commercial business loans | 571 | (4,864 | ) | (72 | ) | (795 | ) | (150 | ) | |||||||||||
Auto | (275 | ) | (491 | ) | (443 | ) | (608 | ) | (753 | ) | ||||||||||
Home equity and other | (81 | ) | (959 | ) | (57 | ) | (1 | ) | (37 | ) | ||||||||||
Total, net | $ | (2,313 | ) | $ | (31,211 | ) | $ | (2,920 | ) | $ | (2,186 | ) | $ | (2,505 | ) | |||||
Net charge-offs (current quarter annualized)/average loans | 0.47 | % | 6.21 | % | 0.59 | % | 0.45 | % | 0.51 | % | ||||||||||
Net charge-offs (YTD annualized)/average loans | 0.47 | % | 1.99 | % | 0.52 | % | 0.48 | % | 0.51 | % | ||||||||||
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | ||||||||||||||||||||
30-89 Days delinquent | 0.30 | % | 0.35 | % | 0.34 | % | 0.63 | % | 0.45 | % | ||||||||||
90+ Days delinquent and still accruing | 0.01 | % | 0.01 | % | 0.08 | % | 0.03 | % | 0.01 | % | ||||||||||
Total accruing delinquent loans | 0.31 | % | 0.36 | % | 0.42 | % | 0.66 | % | 0.46 | % | ||||||||||
Non-accruing loans | 1.09 | % | 1.97 | % | 1.14 | % | 0.57 | % | 0.63 | % | ||||||||||
Total delinquent and non-accruing loans | 1.40 | % | 2.33 | % | 1.56 | % | 1.23 | % | 1.09 | % | ||||||||||
F-5
BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL HIGHLIGHTS
At or for the Quarters Ended | ||||||||||||||||||||
Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||||||
2010 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||||||
Core return on tangible assets | 0.66 | % | (3.49 | )% | 0.44 | % | 0.45 | % | 0.77 | % | ||||||||||
Return on total assets | 0.50 | (3.55 | ) | 0.29 | 0.35 | 0.59 | ||||||||||||||
Core return on tangible common equity | 7.76 | (37.31 | ) | 4.70 | 5.23 | 8.54 | ||||||||||||||
Return on total common equity | 3.44 | (23.26 | ) | 1.86 | 2.38 | 3.52 | ||||||||||||||
Net interest margin, fully taxable equivalent | 3.24 | 3.05 | 2.96 | 2.91 | 3.11 | |||||||||||||||
Core tangible non-interest income to tangible assets | 1.36 | 1.05 | 1.16 | 1.15 | 1.42 | |||||||||||||||
Non-interest income to assets | 1.27 | 0.68 | 1.08 | 1.26 | 1.32 | |||||||||||||||
Non-interest income to net revenue | 0.32 | 0.21 | 0.30 | 0.33 | 0.33 | |||||||||||||||
Core tangible non-interest expense to tangible assets | 3.10 | 3.20 | 2.88 | 2.97 | 2.86 | |||||||||||||||
Non-interest expense to assets | 3.02 | 3.11 | 2.82 | 2.99 | 2.80 | |||||||||||||||
Efficiency ratio | 70.71 | 80.61 | 72.49 | 75.85 | 65.23 | |||||||||||||||
GROWTH | ||||||||||||||||||||
Total loans, year-to-date (annualized) | 4 | % | (2 | )% | (1 | )% | (4 | )% | (8 | )% | ||||||||||
Total deposits, year-to-date (annualized) | 10 | 9 | 10 | 13 | 24 | |||||||||||||||
Total net revenues, year-to-date, compared to prior year | 2 | (8 | ) | (7 | ) | (6 | ) | (5 | ) | |||||||||||
FINANCIAL DATA(In millions) | ||||||||||||||||||||
Total assets | $ | 2,705 | $ | 2,700 | $ | 2,681 | $ | 2,681 | $ | 2,724 | ||||||||||
Total loans | 1,981 | 1,962 | 1,986 | 1,969 | 1,969 | |||||||||||||||
Allowance for loan losses | 32 | 32 | 24 | 23 | 23 | |||||||||||||||
Total intangible assets | 175 | 176 | 177 | 178 | 179 | |||||||||||||||
Total deposits | 2,037 | 1,987 | 1,967 | 1,951 | 1,938 | |||||||||||||||
Total common stockholders’ equity | 385 | 385 | 410 | 408 | 376 | |||||||||||||||
Total core income (loss) | 3.3 | (23.0 | ) | 1.9 | 2.0 | 3.9 | ||||||||||||||
Total net income (loss) | 3.3 | (24.2 | ) | 1.9 | 2.3 | 3.9 | ||||||||||||||
ASSET QUALITY RATIOS | ||||||||||||||||||||
Net charge-offs (current quarter annualized)/average loans | 0.47 | % | 6.21 | % | 0.59 | % | 0.45 | % | 0.51 | % | ||||||||||
Non-performing assets/total assets | 0.92 | 1.43 | 0.85 | 0.42 | 0.47 | |||||||||||||||
Allowance for loan losses/total loans | 1.61 | 1.62 | 1.22 | 1.16 | 1.16 | |||||||||||||||
Allowance for loan losses/non-accruing loans | 1.47 | x | 0.82 | x | 1.07 | x | 2.04 | x | 1.84 | x | ||||||||||
PER COMMON SHARE DATA | ||||||||||||||||||||
Core earnings (loss), diluted | $ | 0.24 | $ | (1.66 | ) | $ | 0.14 | $ | 0.15 | $ | 0.27 | |||||||||
Net earnings (loss), diluted | 0.24 | (1.75 | ) | 0.14 | (0.08 | ) | 0.27 | |||||||||||||
Tangible common book value | 14.97 | 14.98 | 16.76 | 16.52 | 16.02 | |||||||||||||||
Total common book value | 27.47 | 27.64 | 29.46 | 29.29 | 30.54 | |||||||||||||||
Market price at period end | 18.33 | 20.68 | 21.94 | 20.78 | 22.92 | |||||||||||||||
Dividends | 0.16 | 0.16 | 0.16 | 0.16 | 0.16 | |||||||||||||||
CAPITAL RATIOS | ||||||||||||||||||||
Common stockholders’ equity to total assets | 14.24 | % | 14.24 | % | 15.31 | % | 15.20 | % | 13.80 | % | ||||||||||
Tangible common stockholders’ equity to tangible assets | 8.30 | 8.26 | 9.32 | 9.18 | 7.74 |
(1) | Reconciliation 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. |
F-6
BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES
AVERAGE BALANCES
Quarters Ended | ||||||||||||||||||||
Mar. 31, | Dec 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||||||
(In thousands) | 2010 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||
Assets | ||||||||||||||||||||
Loans: | ||||||||||||||||||||
Residential mortgages | $ | 614,561 | $ | 620,105 | $ | 621,632 | $ | 637,232 | $ | 675,905 | ||||||||||
Commercial mortgages | 855,828 | 869,087 | 832,716 | 810,421 | 804,109 | |||||||||||||||
Commercial business loans | 170,322 | 186,898 | 177,720 | 173,486 | 173,055 | |||||||||||||||
Consumer loans | 311,409 | 319,087 | 329,177 | 338,506 | 343,296 | |||||||||||||||
Total loans | 1,952,120 | 1,995,177 | 1,961,245 | 1,959,645 | 1,996,365 | |||||||||||||||
Securities | 411,957 | 407,144 | 384,204 | 346,274 | 335,414 | |||||||||||||||
Short-term investments | 7,420 | 14,293 | 30,956 | 73,874 | 49,966 | |||||||||||||||
Total earning assets | 2,371,497 | 2,416,614 | 2,376,405 | 2,379,793 | 2,381,745 | |||||||||||||||
Goodwill and other intangible assets | 175,711 | 176,482 | 177,233 | 178,164 | 178,711 | |||||||||||||||
Other assets | 129,872 | 112,159 | 115,223 | 125,446 | 113,471 | |||||||||||||||
Total assets | $ | 2,677,080 | $ | 2,705,255 | $ | 2,668,861 | $ | 2,683,403 | $ | 2,673,927 | ||||||||||
Liabilities and stockholders’ equity | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
NOW | $ | 194,928 | $ | 192,693 | $ | 179,837 | $ | 187,174 | $ | 193,038 | ||||||||||
Money market | 542,185 | 540,539 | 511,191 | 483,302 | 462,518 | |||||||||||||||
Savings | 223,722 | 212,402 | 213,016 | 210,678 | 213,074 | |||||||||||||||
Time | 757,752 | 768,415 | 781,732 | 795,155 | 762,940 | |||||||||||||||
Total interest-bearing deposits | 1,718,587 | 1,714,049 | 1,685,776 | 1,676,309 | 1,631,570 | |||||||||||||||
Borrowings and debentures | 280,102 | 272,997 | 287,812 | 310,323 | 365,833 | |||||||||||||||
Total interest-bearing liabilities | 1,998,689 | 1,987,046 | 1,973,588 | 1,986,632 | 1,997,403 | |||||||||||||||
Non-interest-bearing demand deposits | 270,064 | 279,495 | 261,592 | 251,565 | 232,480 | |||||||||||||||
Other liabilities | 20,494 | 25,972 | 23,716 | 30,146 | 32,960 | |||||||||||||||
Total liabilities | 2,289,247 | 2,292,513 | 2,258,896 | 2,268,343 | 2,262,843 | |||||||||||||||
Total stockholders’ common equity | 387,833 | 412,742 | 409,965 | 392,321 | 374,207 | |||||||||||||||
Total stockholders’ preferred equity | — | — | — | 22,739 | 36,877 | |||||||||||||||
Total stockholders’ equity | 387,833 | 412,742 | 409,965 | 415,060 | 411,084 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,677,080 | $ | 2,705,255 | $ | 2,668,861 | $ | 2,683,403 | $ | 2,673,927 | ||||||||||
Supplementary data | ||||||||||||||||||||
Total non-maturity deposits | $ | 1,230,899 | $ | 1,225,129 | $ | 1,165,636 | $ | 1,132,719 | $ | 1,101,110 | ||||||||||
Total deposits | 1,988,651 | 1,993,544 | 1,947,368 | 1,927,874 | 1,864,050 | |||||||||||||||
Fully taxable equivalent income adj. | 646 | 609 | 555 | 562 | 566 |
(1) | Average balances for securities available-for-sale are based on amortized cost. Total loans include non-accruing loans. |
F-7
BERKSHIRE HILLS BANCORP, INC.
AVERAGE YIELDS (Fully Taxable Equivalent — Annualized)
AVERAGE YIELDS (Fully Taxable Equivalent — Annualized)
Quarters Ended | ||||||||||||||||||||
Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||||||
2010 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||
Earning assets | ||||||||||||||||||||
Loans: | ||||||||||||||||||||
Residential mortgages | 5.31 | % | 5.32 | % | 5.38 | % | 5.46 | % | 5.56 | % | ||||||||||
Commercial mortgages | 4.94 | 4.87 | 5.02 | 5.17 | 5.39 | |||||||||||||||
Commercial business loans | 4.88 | 5.30 | 5.53 | 5.76 | 5.96 | |||||||||||||||
Consumer loans | 4.04 | 4.20 | 4.33 | 4.46 | 4.64 | |||||||||||||||
Total loans | 4.91 | 4.95 | 5.06 | 5.19 | 5.37 | |||||||||||||||
Securities | 4.06 | 4.01 | 4.11 | 4.58 | 4.85 | |||||||||||||||
Short-term investments | 0.20 | 0.15 | 0.24 | 0.24 | 0.17 | |||||||||||||||
Total earning assets | 4.75 | 4.76 | 4.84 | 4.94 | 5.18 | |||||||||||||||
Funding liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
NOW | 0.39 | 0.40 | 0.36 | 0.45 | 0.40 | |||||||||||||||
Money Market | 1.02 | 1.08 | 1.25 | 1.42 | 1.40 | |||||||||||||||
Savings | 0.32 | 0.30 | 0.31 | 0.34 | 0.44 | |||||||||||||||
Time | 2.71 | 2.88 | 3.10 | 3.32 | 3.43 | |||||||||||||||
Total interest-bearing deposits | 1.61 | 1.72 | 1.89 | 2.08 | 2.11 | |||||||||||||||
Borrowings and debentures | 3.27 | 4.30 | 4.48 | 4.35 | 4.10 | |||||||||||||||
Total interest-bearing liabilities | 1.84 | 2.07 | 2.27 | 2.43 | 2.47 | |||||||||||||||
Net interest spread | 2.91 | 2.69 | 2.57 | 2.51 | 2.71 | |||||||||||||||
Net interest margin | 3.24 | 3.05 | 2.96 | 2.91 | 3.11 | |||||||||||||||
Cost of funds | 1.62 | 1.82 | 2.00 | 2.16 | 2.21 | |||||||||||||||
Cost of deposits | 1.39 | 1.48 | 1.64 | 1.81 | 1.84 |
(1) | Average balances and yields for securities available-for-sale are based on amortized cost. | |
(2) | Cost of funds includes all deposits and borrowings. |
F-8
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
At or for the Quarters Ended | ||||||||||||||||||||||||
Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||||||||||
(Dollars in thousands) | 2010 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||||||
Net income (loss) | $ | 3,336 | $ | (24,203 | ) | $ | 1,922 | $ | 2,331 | $ | 3,883 | |||||||||||||
Adj: Loss (gain) on sale of securities, net | — | — | 5 | (3 | ) | 2 | ||||||||||||||||||
Less: Merger termination fee | — | — | — | (970 | ) | — | ||||||||||||||||||
Adj: Other non-recurring income | — | — | (1 | ) | (270 | ) | — | |||||||||||||||||
Adj: Loss on prepayment of borrowings, net | — | 2,071 | — | — | 804 | |||||||||||||||||||
Adj: Gain on swap termination | — | — | — | — | (741 | ) | ||||||||||||||||||
Plus: Merger related expenses | — | — | — | 215 | — | |||||||||||||||||||
Plus: Other non-recurring expense | 21 | — | — | 386 | — | |||||||||||||||||||
Adj: Income taxes | (9 | ) | (866 | ) | (2 | ) | 269 | (27 | ) | |||||||||||||||
Total core income (loss) | (A | ) | $ | 3,348 | $ | (22,998 | ) | $ | 1,924 | $ | 1,958 | $ | 3,921 | |||||||||||
Plus: Amortization of intangible assets | 768 | 779 | 833 | 833 | 833 | |||||||||||||||||||
Total tangible core income (loss) | (B | ) | $ | 4,116 | $ | (22,219 | ) | $ | 2,757 | $ | 2,791 | $ | 4,754 | |||||||||||
Total non-interest income | $ | 8,498 | $ | 4,652 | $ | 7,260 | $ | 8,405 | $ | 8,672 | ||||||||||||||
Adj: Loss (gain) on sale of securities, net | — | — | 5 | (3 | ) | 2 | ||||||||||||||||||
Adj: Non-recurring loss | — | 2,071 | (1 | ) | (1,240 | ) | 63 | |||||||||||||||||
Total core non-interest income | (C | ) | 8,498 | 6,723 | 7,264 | 7,162 | 8,737 | |||||||||||||||||
Net interest income | 18,297 | 17,996 | 17,165 | 16,724 | 17,711 | |||||||||||||||||||
Total core revenue | (D | ) | $ | 26,795 | $ | 24,719 | $ | 24,429 | $ | 23,886 | $ | 26,448 | ||||||||||||
Total non-interest expense | $ | 20,192 | $ | 21,196 | $ | 18,944 | $ | 19,978 | $ | 18,453 | ||||||||||||||
Less: Non-recurring expense | (21 | ) | — | — | (601 | ) | — | |||||||||||||||||
Core non-interest expense | (E | ) | 20,171 | 21,196 | 18,944 | 19,377 | 18,453 | |||||||||||||||||
Less: Amortization of intangible assets | (768 | ) | (779 | ) | (833 | ) | (833 | ) | (833 | ) | ||||||||||||||
Total core tangible non-interest expense | (F | ) | $ | 19,403 | $ | 20,417 | $ | 18,111 | $ | 18,544 | $ | 17,620 | ||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||||||||
Total average assets | $ | 2,677 | $ | 2,705 | $ | 2,669 | $ | 2,683 | $ | 2,674 | ||||||||||||||
Less: Average intangible assets | (176 | ) | (176 | ) | (177 | ) | (178 | ) | (179 | ) | ||||||||||||||
Total average tangible assets | (G | ) | $ | 2,501 | $ | 2,529 | $ | 2,492 | $ | 2,505 | $ | 2,495 | ||||||||||||
Total average stockholders’ equity | $ | 388 | $ | 413 | $ | 410 | $ | 415 | $ | 411 | ||||||||||||||
Less: Average intangible assets | (176 | ) | (176 | ) | (177 | ) | (178 | ) | (179 | ) | ||||||||||||||
Total average tangible stockholders’ equity | 212 | 236 | 233 | 237 | 232 | |||||||||||||||||||
Less: Average preferred equity | — | — | — | (23 | ) | (37 | ) | |||||||||||||||||
Total average tangible common stockholders’ equity | (H | ) | $ | 212 | $ | 236 | $ | 233 | $ | 214 | $ | 195 | ||||||||||||
Total stockholders’ equity, period-end | $ | 385 | $ | 385 | $ | 410 | $ | 408 | $ | 413 | ||||||||||||||
Less: Intangible assets, period-end | (175 | ) | (176 | ) | (177 | ) | (178 | ) | (179 | ) | ||||||||||||||
Total tangible stockholders’ equity, period-end | 210 | 208 | 233 | 230 | 234 | |||||||||||||||||||
Less: Preferred equity, period-end | — | — | — | — | (37 | ) | ||||||||||||||||||
Total tangible common stockholders’ equity, period-end | (I | ) | $ | 210 | $ | 208 | $ | 233 | $ | 230 | $ | 197 | ||||||||||||
Total common shares outstanding, period-end (thousands) | (J | ) | 14,027 | 13,916 | 13,928 | 13,916 | 12,306 | |||||||||||||||||
Average diluted common shares outstanding (thousands) | (K | ) | 13,858 | 13,817 | 13,857 | 12,946 | 12,247 | |||||||||||||||||
Core earnings (loss) per common share, diluted (1) | (A/K | ) | $ | 0.24 | $ | (1.66 | ) | $ | 0.14 | $ | 0.15 | $ | 0.27 | |||||||||||
Tangible book value per common share, period-end | (I/J | ) | $ | 14.97 | $ | 14.98 | $ | 16.76 | $ | 16.52 | $ | 16.02 | ||||||||||||
Core return on tangible assets | (B/G | ) | 0.66 | % | (3.49 | )% | 0.44 | % | 0.45 | % | 0.77 | % | ||||||||||||
Core return on tangible common equity (1) | (B/H | ) | 7.76 | (37.31 | ) | 4.70 | 5.23 | 8.54 | ||||||||||||||||
Core tangible non-interest income to tangible assets | (C/G | ) | 1.36 | 1.05 | 1.16 | 1.15 | 1.42 | |||||||||||||||||
Core tangible non-interest expense to tangible assets | (F/G | ) | 3.10 | 3.20 | 2.88 | 2.97 | 2.86 | |||||||||||||||||
Efficiency ratio (2) | 70.71 | 80.61 | 72.49 | 75.85 | 65.23 |
(1) | March 31, 2009 EPS and ratios include a $637,000 reduction in core income and tangible core income related to cumulative preferred stock dividend and accretion. Preferred dividend charges recorded in Q2 2009 were deemed non-core due to preferred stock repayment. | |
(2) | 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. | |
(3) | Ratios are annualized and based on average balance sheet amounts, where applicable. | |
(4) | Quarterly data may not sum to year-to-date data due to rounding. |
F-9