Table of Contents
SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-3510455 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
24 North Street, Pittsfield, Massachusetts | 01201 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of Exchange on which registered | |
Common stock, par value $0.01 per share | NASDAQ Stock Market LLC |
Large Accelerated Filero | Accelerated Filerþ | Non-Accelerated Filero | Smaller Reporting Companyo |
3 | ||||||||
3 | ||||||||
23 | ||||||||
30 | ||||||||
30 | ||||||||
30 | ||||||||
30 | ||||||||
31 | ||||||||
31 | ||||||||
33 | ||||||||
34 | ||||||||
47 | ||||||||
50 | ||||||||
93 | ||||||||
93 | ||||||||
93 | ||||||||
93 | ||||||||
93 | ||||||||
95 | ||||||||
95 | ||||||||
96 | ||||||||
96 | ||||||||
97 | ||||||||
97 | ||||||||
99 | ||||||||
Exhibit 10.7 | ||||||||
Exhibit 23.0 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
- 2 -
Table of Contents
• | The Berkshire County Region, with twelve offices in Berkshire County. Berkshire County is the Company’s traditional market, where it has a leading market share in many of its product lines. Berkshire County is renowned for its combination of nature, culture, and harmony which make it a leisure and tourism destination and an attractive location for an emerging creative economy. |
• | The Pioneer Valley Region with ten offices along the Connecticut River valley north and west of Springfield, Massachusetts. The Company entered this region through the acquisition of Woronoco Bancorp, Inc. in June 2005. This region is the metropolitan hub of Western Massachusetts and part of the Hartford/Springfield economic region centrally located between Boston and New York City. |
• | The New York Region with ten offices serving Albany and the surrounding area in Northeastern New York. This region represents a de novo expansion by the Bank begun in 2005. Albany is the state capital and is part of New York’s Tech Valley which is gaining prominence as a world technology hub including leading edge nanotechnology initiatives representing a blend of private enterprise and public investment. |
• | The Vermont region with seven offices serving Southern Vermont. The Company entered this region through the acquisition of Factory Point Bancorp, Inc. in September 2007. The Southern Vermont region is contiguous to Berkshire County and shares similar characteristics, with a more pronounced focus on recreation activities in Vermont’s Green Mountains. |
- 3 -
Table of Contents
- 4 -
Table of Contents
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||||||||||||||||
Percent | Percent | Percent | Percent | Percent | ||||||||||||||||||||||||||||||||||||
of | of | of | of | of | ||||||||||||||||||||||||||||||||||||
(Dollars in millions) | Amount | Total | Amount | Total | Amount | Total | Amount | Total | Amount | Total | ||||||||||||||||||||||||||||||
Residential mortgages | $ | 677.2 | 34 | % | $ | 657.0 | 34 | % | $ | 599.2 | 36 | % | $ | 549.8 | 39 | % | $ | 235.2 | 28 | % | ||||||||||||||||||||
Commercial mortgages | 805.5 | 40 | 704.8 | 36 | 566.4 | 33 | 410.7 | 29 | 260.5 | 32 | ||||||||||||||||||||||||||||||
Commercial business | 178.9 | 9 | 203.6 | 11 | 190.5 | 11 | 158.7 | 11 | 150.9 | 18 | ||||||||||||||||||||||||||||||
Total commercial loans | 984.4 | 49 | 908.4 | 47 | 756.9 | 44 | 569.4 | 40 | 411.4 | 50 | ||||||||||||||||||||||||||||||
Consumer | 345.5 | 17 | 378.6 | 19 | 342.9 | 20 | 301.0 | 21 | 181.5 | 22 | ||||||||||||||||||||||||||||||
Total loans | 2,007.1 | 100 | % | 1,944.0 | 100 | % | 1,699.0 | 100 | % | 1,420.2 | 100 | % | 828.1 | 100 | % | |||||||||||||||||||||||||
Allowance for loan losses | (22.9 | ) | (22.1 | ) | (19.4 | ) | (13.0 | ) | (9.3 | ) | ||||||||||||||||||||||||||||||
Net loans | $ | 1,984.2 | $ | 1,921.9 | $ | 1,679.6 | $ | 1,407.2 | $ | 818.8 | ||||||||||||||||||||||||||||||
- 5 -
Table of Contents
- 6 -
Table of Contents
- 7 -
Table of Contents
Contractual Maturity | One Year | More than One | More Than | |||||||||||||
(In thousands) | or Less | to Five Years | Five Years | Total | ||||||||||||
Construction mortgage loans: | ||||||||||||||||
Residential | $ | 22,404 | $ | 12,117 | $ | — | $ | 34,521 | ||||||||
Commercial | 61,507 | 68,197 | — | 129,704 | ||||||||||||
Commercial business loans | 87,310 | 37,538 | 54,086 | 178,934 | ||||||||||||
Total | $ | 171,221 | $ | 117,852 | $ | 54,086 | $ | 343,159 | ||||||||
- 8 -
Table of Contents
(Dollars in thousands) | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
Nonaccruing loans: | ||||||||||||||||||||
Residential mortgages | $ | 1,646 | $ | 726 | $ | 15 | $ | 261 | $ | 327 | ||||||||||
Commercial mortgages | 7,738 | 5,177 | 308 | 271 | 147 | |||||||||||||||
Commercial business | 1,921 | 4,164 | 7,203 | 553 | 523 | |||||||||||||||
Consumer | 866 | 441 | 66 | 101 | 155 | |||||||||||||||
Total nonperforming loans | 12,171 | 10,508 | 7,592 | 1,186 | 1,152 | |||||||||||||||
Real estate owned | 498 | 866 | — | — | — | |||||||||||||||
Total nonperforming assets | $ | 12,669 | $ | 11,374 | $ | 7,592 | $ | 1,186 | $ | 1,152 | ||||||||||
Troubled debt restructurings (accruing) | $ | 7,456 | $ | 4,613 | $ | 5,268 | $ | 1,234 | $ | 510 | ||||||||||
Accruing loans 90+ days past due | 923 | 823 | 281 | 110 | 65 | |||||||||||||||
Total nonperforming loans/total loans | 0.61 | % | 0.54 | % | 0.45 | % | 0.08 | % | 0.14 | % | ||||||||||
Total nonperforming assets/total assets | 0.48 | % | 0.45 | % | 0.35 | % | 0.06 | % | 0.09 | % |
- 9 -
Table of Contents
- 10 -
Table of Contents
(Dollars in thousands) | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
Balance at beginning of year | $ | 22,116 | $ | 19,370 | $ | 13,001 | $ | 9,337 | $ | 8,969 | ||||||||||
Charged-off loans: | ||||||||||||||||||||
Residential mortgages | 143 | 110 | 27 | — | — | |||||||||||||||
Commercial mortgages | 1,384 | — | — | — | 138 | |||||||||||||||
Commercial business | 884 | 4,850 | 461 | 432 | 218 | |||||||||||||||
Consumer | 2,031 | 1,416 | 1,288 | 1,110 | 1,846 | |||||||||||||||
Total charged-off loans | 4,442 | 6,376 | 1,776 | 1,542 | 2,202 | |||||||||||||||
Recoveries on charged-off loans: | ||||||||||||||||||||
Commercial mortgages | 100 | — | — | — | — | |||||||||||||||
Commercial business | 290 | 13 | 43 | 55 | 296 | |||||||||||||||
Consumer | 264 | 356 | 667 | 517 | 709 | |||||||||||||||
Total recoveries | 654 | 369 | 710 | 572 | 1,005 | |||||||||||||||
Net loans charged-off | 3,788 | 6,007 | 1,066 | 970 | 1,197 | |||||||||||||||
Allowance attributed to loans acquired by merger | — | 4,453 | — | 3,321 | — | |||||||||||||||
Provision for loan losses | 4,580 | 4,300 | 7,860 | 1,313 | 1,565 | |||||||||||||||
Transfer of commitment reserve | — | — | (425 | ) | — | — | ||||||||||||||
Allowance for loan losses, balance at end of year | $ | 22,908 | $ | 22,116 | $ | 19,370 | $ | 13,001 | $ | 9,337 | ||||||||||
Ratios: | ||||||||||||||||||||
Net loans charged-off/average total loans | 0.19 | % | 0.34 | % | 0.07 | % | 0.08 | % | 0.15 | % | ||||||||||
Recoveries/charged-off loans | 14.72 | 5.79 | 39.98 | 37.09 | 45.64 | |||||||||||||||
Net loans charged-off/allowance for loan losses | 16.54 | 27.16 | 5.50 | 7.46 | 12.82 | |||||||||||||||
Allowance for loan losses/total loans | 1.14 | 1.14 | 1.14 | 0.92 | 1.13 | |||||||||||||||
Allowance for loan losses/nonperforming loans | 1.88 | x | 2.10 | x | 2.55 | x | 10.96 | x | 8.11 | x |
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||||||||||||||||
Percent of | Percent of | Percent of | Percent of | Percent of | ||||||||||||||||||||||||||||||||||||
Loans | Loans | Loans | Loans | Loans | ||||||||||||||||||||||||||||||||||||
in Each | in Each | in Each | in Each | in Each | ||||||||||||||||||||||||||||||||||||
Amount | Category to | Amount | Category to | Amount | Category to | Amount | Category to | Amount | Category to | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Allocated | Total Loans | Allocated | Total Loans | Allocated | Total Loans | Allocated | Total Loans | Allocated | Total Loans | ||||||||||||||||||||||||||||||
Residential mortgages | $ | 2,006 | 34 | % | $ | 2,028 | 34 | % | $ | 1,845 | 36 | % | $ | 1,649 | 39 | % | $ | 435 | 28 | % | ||||||||||||||||||||
Commercial mortgages | 13,539 | 40 | 12,040 | 36 | 9,939 | 33 | 5,933 | 29 | 3,828 | 32 | ||||||||||||||||||||||||||||||
Commercial business | 4,184 | 9 | 5,787 | 11 | 5,199 | 11 | 3,517 | 11 | 3,344 | 18 | ||||||||||||||||||||||||||||||
Consumer | 3,179 | 17 | 2,261 | 19 | 2,387 | 20 | 1,902 | 21 | 1,730 | 22 | ||||||||||||||||||||||||||||||
Total | $ | 22,908 | 100 | % | $ | 22,116 | 100 | % | $ | 19,370 | 100 | % | $ | 13,001 | 100 | % | $ | 9,337 | 100 | % | ||||||||||||||||||||
- 11 -
Table of Contents
2008 | 2007 | 2006 | ||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||
(In thousands) | Cost | Value | Cost | Value | Cost | Value | ||||||||||||||||||
Available for sale securities | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 76,843 | $ | 75,414 | $ | 74,223 | $ | 75,186 | $ | 63,788 | $ | 64,503 | ||||||||||||
Mortgage-backed securities | 174,896 | 176,978 | 103,387 | 104,518 | 85,102 | 84,334 | ||||||||||||||||||
Other bonds and obligations | 24,341 | 20,889 | 15,601 | 15,265 | 20,392 | 20,439 | ||||||||||||||||||
Equity securities | 1,177 | 1,099 | 793 | 952 | 878 | 1,121 | ||||||||||||||||||
Total available for sale securities | $ | 277,257 | $ | 274,380 | $ | 194,004 | $ | 195,921 | $ | 170,160 | $ | 170,397 | ||||||||||||
Held to maturity securities | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 25,066 | $ | 25,926 | $ | 36,981 | $ | 37,233 | $ | 35,572 | $ | 35,286 | ||||||||||||
Mortgage-backed securities | 806 | 803 | 2,475 | 2,456 | 4,396 | 4,400 | ||||||||||||||||||
Total held to maturity securities | $ | 25,872 | $ | 26,729 | $ | 39,456 | $ | 39,689 | $ | 39,968 | $ | 39,686 | ||||||||||||
Trading account security | $ | 15,000 | $ | 18,144 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Restricted equity securities | $ | 23,120 | $ | 23,120 | $ | 23,120 | $ | 23,120 | $ | 23,809 | $ | 23,809 |
More than One Year | More than Five Years | |||||||||||||||||||||||||||||||||||||||
One Year or Less | to Five Years | to Ten Years | More than Ten Years | Total | ||||||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||||||||||||||||||||||||||
Amortized | Average | Amortized | Average | Amortized | Average | Amortized | Average | Amortized | Average | |||||||||||||||||||||||||||||||
(Dollars in millions) | Cost | Yield | Cost | Yield | Cost | Yield | Cost | Yield | Cost | Yield | ||||||||||||||||||||||||||||||
Municipal bonds and obligations | $ | 10.0 | 2.83 | % | $ | 5.1 | 3.62 | % | $ | 26.6 | 2.82 | % | $ | 60.2 | 4.39 | % | $ | 101.9 | 3.79 | % | ||||||||||||||||||||
Mortgage-backed securities | 0.5 | 3.30 | 8.9 | 3.31 | 25.9 | 5.25 | 140.4 | 4.69 | 175.7 | 4.70 | ||||||||||||||||||||||||||||||
Other bonds and obligations | — | — | 11.8 | 6.24 | 3.0 | 5.18 | 9.5 | 5.25 | 24.3 | 5.72 | ||||||||||||||||||||||||||||||
Total | $ | 10.5 | 2.86 | % | $ | 25.8 | 4.71 | % | $ | 55.5 | 4.08 | % | $ | 210.1 | 4.63 | % | $ | 301.9 | 4.47 | % | ||||||||||||||||||||
- 12 -
Table of Contents
2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||
Percent | Percent | Percent | ||||||||||||||||||||||||||||||||||
of Total | Weighted | of Total | Weighted | of Total | Weighted | |||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | Average | Average | Average | ||||||||||||||||||||||||||||
(Dollars in millions) | Balance | Deposits | Rate | Balance | Deposits | Rate | Balance | Deposits | Rate | |||||||||||||||||||||||||||
Demand | $ | 225.2 | 12 | % | — | % | $ | 190.4 | 12 | % | — | % | $ | 174.5 | 12 | % | — | % | ||||||||||||||||||
NOW | 200.1 | 11 | 0.75 | 157.9 | 10 | 1.46 | 137.8 | 9 | 1.09 | |||||||||||||||||||||||||||
Money market | 464.9 | 25 | 2.15 | 339.2 | 21 | 3.60 | 284.4 | 19 | 3.41 | |||||||||||||||||||||||||||
Savings | 216.4 | 12 | 0.74 | 201.6 | 13 | 1.09 | 210.6 | 14 | 0.90 | |||||||||||||||||||||||||||
Time | 725.4 | 40 | 3.94 | 714.1 | 44 | 4.75 | 651.7 | 46 | 4.28 | |||||||||||||||||||||||||||
Total | $ | 1,832.0 | 100 | % | 2.28 | % | $ | 1,603.2 | 100 | % | 3.16 | % | $ | 1,459.0 | 100 | % | 2.81 | % | ||||||||||||||||||
Weighted | ||||||||
Maturity Period | Average | |||||||
(Dollars in thousands) | Amount | Rate | ||||||
Three months or less | $ | 56,422 | 3.18 | % | ||||
Over 3 months through 6 months | 35,338 | 3.14 | ||||||
Over 6 months through 12 months | 102,815 | 3.48 | ||||||
Over 12 months | 157,088 | 4.18 | ||||||
Total | $ | 351,663 | 3.71 | % | ||||
- 13 -
Table of Contents
- 14 -
Table of Contents
- 15 -
Table of Contents
- 16 -
Table of Contents
- 17 -
Table of Contents
- 18 -
Table of Contents
- 19 -
Table of Contents
- 20 -
Table of Contents
- 21 -
Table of Contents
• | Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; Home Mortgage Disclosure Act, requiring financial institutions to provide certain information about home mortgage and refinance loans; Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; |
• | Fair Credit Reporting Act, governing the provision of consumer information to credit reporting agencies and the use of consumer information; |
• | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and |
• | Electronic Funds Transfer Act, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. |
- 22 -
Table of Contents
- 23 -
Table of Contents
- 24 -
Table of Contents
- 25 -
Table of Contents
- 26 -
Table of Contents
- 27 -
Table of Contents
- 28 -
Table of Contents
• | actual or anticipated fluctuations in our operating results; | ||
• | changes in interest rates; | ||
• | changes in the legal or regulatory environment in which we operate; | ||
• | press releases, announcements or publicity relating to us or our competitors or relating to trends in our industry; | ||
• | changes in expectations as to our future financial performance, including financial estimates or recommendations by securities analysts and investors; | ||
• | future sales of our common stock; | ||
• | changes in economic conditions in our marketplace, general conditions in the U.S. economy, financial markets or the banking industry; and | ||
• | other developments affecting our competitors or us. |
- 29 -
Table of Contents
- 30 -
Table of Contents
Dividends | ||||||||||||
High | Low | Declared | ||||||||||
2008 | ||||||||||||
First quarter | $ | 26.29 | $ | 19.50 | $ | 0.15 | ||||||
Second quarter | 27.10 | 22.25 | 0.16 | |||||||||
Third quarter | 32.00 | 20.67 | 0.16 | |||||||||
Fourth quarter | 31.01 | 22.48 | 0.16 | |||||||||
2007 | ||||||||||||
First quarter | $ | 34.71 | $ | 32.59 | $ | 0.14 | ||||||
Second quarter | 33.75 | 31.51 | 0.14 | |||||||||
Third quarter | 32.52 | 26.10 | 0.15 | |||||||||
Fourth quarter | 31.31 | 24.27 | 0.15 |
- 31 -
Table of Contents
Period Ending | ||||||||||||||||||||||||
Index | 12/31/03 | 12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 | ||||||||||||||||||
Berkshire Hills Bancorp, Inc. | 100.00 | 104.01 | 95.24 | 96.68 | 76.63 | 93.20 | ||||||||||||||||||
NASDAQ Composite | 100.00 | 108.59 | 110.08 | 120.56 | 132.39 | 78.72 | ||||||||||||||||||
SNL Bank and Thrift | 100.00 | 111.98 | 113.74 | 132.90 | 101.34 | 58.28 |
- 32 -
Table of Contents
At or For the Years Ended December 31, | ||||||||||||||||||||
(In thousands, except per share data) | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
Selected Financial Data: | ||||||||||||||||||||
Total assets | $ | 2,666,729 | $ | 2,513,432 | $ | 2,149,642 | $ | 2,035,553 | $ | 1,310,115 | ||||||||||
Securities | 341,516 | 258,497 | 234,174 | 420,320 | 414,363 | |||||||||||||||
Loans, net | 1,984,244 | 1,921,900 | 1,679,617 | 1,407,229 | 818,842 | |||||||||||||||
Goodwill and intangibles | 178,830 | 182,452 | 121,341 | 99,616 | 7,254 | |||||||||||||||
Deposits | 1,829,580 | 1,822,563 | 1,521,938 | 1,371,218 | 845,789 | |||||||||||||||
Borrowings and subordinated debentures | 374,621 | 349,938 | 360,469 | 412,917 | 327,926 | |||||||||||||||
Total stockholders’ equity | 408,425 | 326,837 | 258,161 | 246,066 | 131,736 | |||||||||||||||
Selected Operating Data: | ||||||||||||||||||||
Total interest and dividend income | $ | 133,211 | $ | 131,944 | $ | 118,051 | $ | 87,732 | $ | 61,081 | ||||||||||
Total interest expense | 57,471 | 68,019 | 57,811 | 36,115 | 20,724 | |||||||||||||||
Net interest income | 75,740 | 63,925 | 60,240 | 51,617 | 40,357 | |||||||||||||||
Service charges and fee income | 30,334 | 26,654 | 13,539 | 9,373 | 5,493 | |||||||||||||||
All other non-interest income (loss) | 1,261 | (2,011 | ) | (1,491 | ) | 5,550 | 2,271 | |||||||||||||
Total net revenue | 107,335 | 88,568 | 72,288 | 66,540 | 48,121 | |||||||||||||||
Provision for loan losses | 4,580 | 4,300 | 7,860 | 1,313 | 1,565 | |||||||||||||||
Total non-interest expense | 71,699 | 65,494 | 48,868 | 48,998 | 28,977 | |||||||||||||||
Provision for income taxes — continuing operations | 8,812 | 5,239 | 4,668 | 8,003 | 5,639 | |||||||||||||||
Net income (loss) from discontinued operations | — | — | 371 | — | (431 | ) | ||||||||||||||
Net income | $ | 22,244 | $ | 13,535 | $ | 11,263 | $ | 8,226 | $ | 11,509 | ||||||||||
Dividends per share | $ | 0.63 | $ | 0.58 | $ | 0.56 | $ | 0.52 | $ | 0.48 | ||||||||||
Basic earnings per share | $ | 2.08 | $ | 1.47 | $ | 1.32 | $ | 1.16 | $ | 2.18 | ||||||||||
Diluted earnings per share | $ | 2.06 | $ | 1.44 | $ | 1.29 | $ | 1.10 | $ | 2.01 | ||||||||||
Weighted average shares outstanding — basic | 10,700 | 9,223 | 8,538 | 7,122 | 5,284 | |||||||||||||||
Weighted average shares outstanding — diluted | 10,791 | 9,370 | 8,730 | 7,503 | 5,731 |
- 33 -
Table of Contents
At or For the Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Selected Operating Ratios and Other Data: | ||||||||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Return on average assets | 0.87 | % | 0.60 | % | 0.53 | % | 0.47 | % | 0.89 | % | ||||||||||
Return on average equity | 6.47 | 4.69 | 4.40 | 4.19 | 9.06 | |||||||||||||||
Interest rate spread | 3.06 | 2.79 | 2.81 | 3.00 | 3.10 | |||||||||||||||
Net interest margin | 3.44 | 3.26 | 3.24 | 3.33 | 3.37 | |||||||||||||||
Non-interest income/total net revenue | 29.44 | 27.82 | 16.67 | 22.43 | 16.13 | |||||||||||||||
Non-interest expense/average assets | 2.81 | 2.90 | 2.31 | 2.81 | 2.25 | |||||||||||||||
Dividend payout ratio | 30.58 | 40.28 | 42.92 | 45.06 | 22.02 | |||||||||||||||
Capital Ratios: | ||||||||||||||||||||
Tier 1 capital to average assets — bank | 9.34 | 7.97 | 7.69 | 7.79 | 8.08 | |||||||||||||||
Total capital to risk-weighted assets — bank | 12.28 | 10.40 | 10.27 | 11.12 | 12.69 | |||||||||||||||
Stockholders’ equity/total assets | 15.32 | 13.00 | 12.01 | 12.09 | 10.06 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Nonperforming loans/total loans | 0.61 | 0.54 | 0.45 | 0.08 | 0.14 | |||||||||||||||
Nonperforming assets/total assets | 0.48 | 0.45 | 0.35 | 0.06 | 0.09 | |||||||||||||||
Net loans charged-off/average total loans | 0.19 | 0.34 | 0.07 | 0.08 | 0.15 | |||||||||||||||
Allowance for loan losses/total loans | 1.14 | 1.14 | �� | 1.14 | 0.92 | 1.13 | ||||||||||||||
Allowance for loan losses/nonperforming loans | 1.88 | x | 2.10 | x | 2.55 | x | 10.96 | x | 8.11 | x | ||||||||||
Share Data: | ||||||||||||||||||||
Book value per share | $ | 30.33 | $ | 31.15 | $ | 29.63 | $ | 28.81 | $ | 22.43 | ||||||||||
Market price at year end | $ | 30.86 | $ | 26.00 | $ | 33.46 | $ | 33.50 | $ | 37.15 |
- 34 -
Table of Contents
• | 21% increase in total net revenue |
• | 3.44% net interest margin, the highest since 2003 |
• | 8% increase in total commercial loans; 7% increase in total residential mortgage and home equity loans |
- 35 -
Table of Contents
• | 61.4% efficiency ratio, improved from 62.9% in 2007 |
• | 0.48% nonperforming assets to total assets at year-end; accruing delinquent loans were 0.51% of total loans |
• | 0.19% charge-offs on average loans |
• | Public issuance of nearly $40 million in common stock and the issuance of $40 million of preferred stock under the U.S. Treasury Capital Purchase Program |
- 36 -
Table of Contents
- 37 -
Table of Contents
- 38 -
Table of Contents
- 39 -
Table of Contents
- 40 -
Table of Contents
- 41 -
Table of Contents
• | $10.0 million increase in insurance commissions and fees (from first full year of operations from acquired insurance agencies) |
• | 33% increase in deposit service fees |
• | 34% increase in wealth management fees |
• | 14% increase in loans (primarily from the Factory Point acquisition) |
• | 32% non-maturity deposit growth (23% from the Factory Point acquisition and 9% from organic growth) |
• | Acquired Factory Point Bancorp, contributing to a 17% increase in total assets |
• | Opened four new branches in New York increasing our presence to ten branches in the New York Capital region |
• | Introduced a new brand identity to improve our overall competitive positioning |
• | First full year of operations for the expanded Berkshire Insurance Group — contributed $2.5 million in net income |
• | Net interest margin of 3.38% for the fourth quarter of 2007 — highest level in fourteen quarters |
• | Solid asset quality with nonperforming assets at 0.45% of total assets at December 31, 2007 |
- 42 -
Table of Contents
- 43 -
Table of Contents
2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||||||||
(Dollars in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 1,980.1 | $ | 120.6 | 6.09 | % | $ | 1,789.0 | $ | 120.1 | 6.71 | % | $ | 1,547.3 | $ | 100.8 | 6.51 | % | ||||||||||||||||||
Investment securities (2) | 271.2 | 14.5 | 5.37 | 235.2 | 13.9 | 5.91 | 370.8 | 19.1 | 5.15 | |||||||||||||||||||||||||||
Short-term investments | 12.2 | 0.2 | 1.64 | 4.7 | 0.1 | 3.02 | 4.9 | 0.3 | 6.12 | |||||||||||||||||||||||||||
Total interest-earning assets | 2,263.5 | 135.3 | 5.98 | 2,028.9 | 134.1 | 6.61 | 1,923.0 | 120.2 | 6.25 | |||||||||||||||||||||||||||
Intangible assets | 180.3 | 138.3 | 103.2 | |||||||||||||||||||||||||||||||||
Other non-interest earning assets | 107.0 | 95.2 | 90.1 | |||||||||||||||||||||||||||||||||
Total assets | $ | 2,550.8 | $ | 2,262.4 | $ | 2,116.3 | ||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||
NOW accounts | $ | 200.1 | 1.5 | 0.75 | % | $ | 157.9 | 2.3 | 1.46 | % | $ | 137.8 | 1.5 | 1.09 | % | |||||||||||||||||||||
Money market accounts | 464.9 | 10.0 | 2.15 | 339.2 | 12.2 | 3.60 | 284.4 | 9.7 | 3.41 | |||||||||||||||||||||||||||
Savings accounts | 216.4 | 1.6 | 0.74 | 201.6 | 2.2 | 1.09 | 210.6 | 1.9 | 0.90 | |||||||||||||||||||||||||||
Certificates of deposit | 725.4 | 28.6 | 3.94 | 714.1 | 33.9 | 4.75 | 651.7 | 27.9 | 4.28 | |||||||||||||||||||||||||||
Total interest-bearing deposits | 1,606.8 | 41.7 | 2.60 | 1,412.8 | 50.6 | 3.58 | 1,284.5 | 41.0 | 3.19 | |||||||||||||||||||||||||||
Borrowings | 363.8 | 15.8 | 4.34 | 365.8 | 17.4 | 4.76 | 394.4 | 16.8 | 4.26 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 1,970.6 | 57.5 | 2.92 | 1,778.6 | 68.0 | 3.82 | 1,678.9 | 57.8 | 3.44 | |||||||||||||||||||||||||||
Non-interest-bearing demand deposits | 225.2 | 190.4 | 174.5 | |||||||||||||||||||||||||||||||||
Other non-interest-bearing liabilities | 11.0 | 5.4 | 7.2 | |||||||||||||||||||||||||||||||||
Total liabilities | 2,206.8 | 1,974.4 | 1,860.6 | |||||||||||||||||||||||||||||||||
Equity | 344.0 | 288.0 | 255.7 | |||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 2,550.8 | $ | 2,262.4 | $ | 2,116.3 | ||||||||||||||||||||||||||||||
Net interest-earning assets | $ | 292.9 | $ | 250.3 | $ | 244.1 | ||||||||||||||||||||||||||||||
Net interest income | $ | 77.8 | $ | 66.1 | $ | 62.4 | ||||||||||||||||||||||||||||||
Interest rate spread | 3.06 | % | 2.79 | % | 2.81 | % | ||||||||||||||||||||||||||||||
Net interest margin | 3.44 | % | 3.26 | % | 3.24 | % | ||||||||||||||||||||||||||||||
Interest-earning assets/interest-bearing liabilities | 114.86 | % | 114.07 | % | 114.54 | % | ||||||||||||||||||||||||||||||
Fully taxable equivalent adjustment | $ | 2.1 | $ | 2.2 | $ | 2.1 |
(1) | The average balances of loans includes nonaccrual loans, loans held for sale, and deferred fees and costs. | |
(2) | The average balance of investment securities is based on amortized cost. |
- 44 -
Table of Contents
2008 Compared with 2007 | 2007 Compared with 2006 | |||||||||||||||||||||||
Increase (Decrease) Due to | Increase (Decrease) Due to | |||||||||||||||||||||||
(In thousands) | Rate | Volume | Net | Rate | Volume | Net | ||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Loans | $ | (11,686 | ) | $ | 12,194 | $ | 508 | $ | 2,944 | $ | 16,280 | $ | 19,224 | |||||||||||
Investment securities | (1,362 | ) | 1,979 | 617 | 2,548 | (7,714 | ) | (5,166 | ) | |||||||||||||||
Short-term investments | (92 | ) | 134 | 42 | (103 | ) | (11 | ) | (114 | ) | ||||||||||||||
Total interest income | (13,140 | ) | 14,307 | 1,167 | 5,389 | 8,555 | 13,944 | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||||
NOW accounts | (1,318 | ) | 506 | (812 | ) | 616 | 235 | 851 | ||||||||||||||||
Money market accounts | (5,874 | ) | 3,654 | (2,220 | ) | 601 | 1,953 | 2,554 | ||||||||||||||||
Savings accounts | (783 | ) | 146 | (637 | ) | 442 | (77 | ) | 365 | |||||||||||||||
Certificates of deposit | (5,728 | ) | 533 | (5,195 | ) | 2,996 | 2,812 | 5,808 | ||||||||||||||||
Total deposits | (13,703 | ) | 4,839 | (8,864 | ) | 4,655 | 4,923 | 9,578 | ||||||||||||||||
Borrowings | (1,587 | ) | (97 | ) | (1,684 | ) | 1,926 | (1,273 | ) | 653 | ||||||||||||||
Total interest expense | (15,290 | ) | 4,742 | (10,548 | ) | 6,581 | 3,650 | 10,231 | ||||||||||||||||
Change in net interest income | $ | 2,150 | $ | 9,565 | $ | 11,715 | $ | (1,192 | ) | $ | 4,905 | $ | 3,713 | |||||||||||
- 45 -
Table of Contents
Less than One | One to Three | Three to Five | After Five | |||||||||||||||||
(In thousands) | Total | Year | Years | Years | Years | |||||||||||||||
FHLBB borrowings (1) | $ | 342,332 | $ | 77,686 | $ | 95,610 | $ | 78,000 | $ | 91,036 | ||||||||||
Junior subordinated debentures | 15,464 | — | — | — | 15,464 | |||||||||||||||
Operating lease obligations (2) | 42,180 | 2,558 | 4,925 | 4,667 | 30,030 | |||||||||||||||
Note payable | 17,000 | 625 | 16,375 | — | — | |||||||||||||||
Purchase obligations (3) | 4,777 | 2,945 | 968 | 864 | — | |||||||||||||||
Total Contractual Obligations | $ | 421,753 | $ | 83,814 | $ | 117,878 | $ | 83,531 | $ | 136,530 | ||||||||||
(1) | Consists of borrowings from the Federal Home Loan Bank. The maturities extend through 2027 and the rates vary by borrowing. | |
(2) | Consists of leases, bank branches and ATMs through 2031. | |
(3) | Consists of obligations with multiple vendors to purchase a broad range of services. |
- 46 -
Table of Contents
Change in | ||||||||||||||||
Interest Rates-Basis | ||||||||||||||||
Points (Rate Ramp) | 1 – 12 Months | 13 – 24 Months | ||||||||||||||
(Dollars in thousands) | $ Change | % Change | $ Change | % Change | ||||||||||||
At December 31, 2008 | ||||||||||||||||
+ 300 | $ | 2,207 | 3.07 | % | $ | 7,065 | 10.24 | % | ||||||||
+ 200 | 1,587 | 2.21 | 5,283 | 7.66 | ||||||||||||
+ 100 | 869 | 1.21 | 2,778 | 4.03 | ||||||||||||
- 100 | (1,977 | ) | (2.75 | ) | (5,779 | ) | (8.38 | ) | ||||||||
At December 31, 2007 | ||||||||||||||||
+ 200 | $ | (1,373 | ) | (1.88 | )% | $ | (1,704 | ) | (2.31 | )% | ||||||
+ 100 | (732 | ) | (1.00 | ) | (649 | ) | (0.88 | ) | ||||||||
- 100 | 428 | 0.59 | (119 | ) | (0.16 | ) | ||||||||||
- 200 | 101 | 0.14 | (1,971 | ) | (2.67 | ) |
- 47 -
Table of Contents
- 48 -
Table of Contents
- 49 -
Table of Contents
/s/ Michael P. Daly | /s/ Kevin P. Riley | |||
President and Chief Executive Officer | Executive Vice President and Chief Financial Officer | |||
March 13, 2009 | March 13, 2009 |
- 50 -
Table of Contents
Berkshire Hills Bancorp, Inc.
March 16, 2009
- 51 -
Table of Contents
December 31, | ||||||||
(In thousands, except share data) | 2008 | 2007 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 26,582 | $ | 33,259 | ||||
Short-term investments | 18,216 | 7,883 | ||||||
Total cash and cash equivalents | 44,798 | 41,142 | ||||||
Trading security | 18,144 | — | ||||||
Securities available for sale, at fair value | 274,380 | 195,921 | ||||||
Securities held to maturity (fair values of $26,729 and $39,689) | 25,872 | 39,456 | ||||||
Restricted equity securities | 23,120 | 23,120 | ||||||
Residential mortgages | 677,254 | 657,045 | ||||||
Commercial mortgages | 805,456 | 704,764 | ||||||
Commercial business loans | 178,934 | 203,564 | ||||||
Consumer loans | 345,508 | 378,643 | ||||||
Total loans | 2,007,152 | 1,944,016 | ||||||
Less: Allowance for loan losses | (22,908 | ) | (22,116 | ) | ||||
Net loans | 1,984,244 | 1,921,900 | ||||||
Premises and equipment, net | 37,448 | 38,806 | ||||||
Goodwill | 161,178 | 161,632 | ||||||
Other intangible assets | 17,652 | 20,820 | ||||||
Cash surrender value of life insurance | 35,668 | 35,316 | ||||||
Other assets | 44,225 | 35,319 | ||||||
Total assets | $ | 2,666,729 | $ | 2,513,432 | ||||
Liabilities | ||||||||
Demand deposits | $ | 233,040 | $ | 231,994 | ||||
NOW deposits | 190,828 | 213,150 | ||||||
Money market deposits | 448,238 | 439,341 | ||||||
Savings deposits | 211,156 | 210,186 | ||||||
Time deposits | 746,318 | 727,892 | ||||||
Total deposits | 1,829,580 | 1,822,563 | ||||||
Short-term debt | 23,200 | 92,800 | ||||||
Long term Federal Home Loan Bank advances | 318,957 | 221,674 | ||||||
Other long-term debt | 17,000 | 20,000 | ||||||
Junior subordinated debentures | 15,464 | 15,464 | ||||||
Other liabilities | 54,103 | 14,094 | ||||||
Total liabilities | 2,258,304 | 2,186,595 | ||||||
Commitments and contingencies (See note 15) | ||||||||
Stockholders’ equity | ||||||||
Preferred stock ($.01 par value; 1,000,000 shares authorized; 40,000 shares with $1,000 liquidation value in 2008 and no shares issued in 2007) | 36,822 | — | ||||||
Common stock ($.01 par value; 26,000,000 shares authorized; 14,238,825 shares issued in 2008 and 12,513,825 in 2007) | 142 | 125 | ||||||
Additional paid-in capital | 307,620 | 266,134 | ||||||
Unearned compensation | (1,905 | ) | (2,009 | ) | ||||
Retained earnings | 127,773 | 113,387 | ||||||
Accumulated other comprehensive (loss) income | (11,574 | ) | 1,217 | |||||
Treasury stock (1,985,381 shares in 2008 and 2,021,120 shares in 2007) | (50,453 | ) | (52,017 | ) | ||||
Total stockholders’ equity | 408,425 | 326,837 | ||||||
Total liabilities and stockholders’ equity | $ | 2,666,729 | $ | 2,513,432 | ||||
- 52 -
Table of Contents
Years Ended December 31, | ||||||||||||
(In thousands, except per share data) | 2008 | 2007 | 2006 | |||||||||
Interest and dividend income | ||||||||||||
Loans | $ | 120,567 | $ | 120,059 | $ | 100,836 | ||||||
Securities | 12,460 | 11,743 | 16,957 | |||||||||
Other | 184 | 142 | 258 | |||||||||
Total interest and dividend income | 133,211 | 131,944 | 118,051 | |||||||||
Interest expense | ||||||||||||
Deposits | 41,733 | 50,597 | 41,044 | |||||||||
Borrowings and junior subordinated debentures | 15,738 | 17,422 | 16,767 | |||||||||
Total interest expense | 57,471 | 68,019 | 57,811 | |||||||||
Net interest income | 75,740 | 63,925 | 60,240 | |||||||||
Non-interest income | ||||||||||||
Deposit service fees | 9,782 | 7,747 | 5,803 | |||||||||
Wealth management fees | 5,704 | 4,407 | 3,287 | |||||||||
Insurance commissions and fees | 13,619 | 13,728 | 3,757 | |||||||||
Loan and swap fees | 1,229 | 772 | 692 | |||||||||
Total fee income | 30,334 | 26,654 | 13,539 | |||||||||
Loss on sales of securities, net | (22 | ) | (591 | ) | (3,130 | ) | ||||||
Loss on sale of loans and prepayment of borrowings | — | (3,130 | ) | — | ||||||||
Other | 1,283 | 1,710 | 1,639 | |||||||||
Total non-interest income | 31,595 | 24,643 | 12,048 | |||||||||
Total net revenue | 107,335 | 88,568 | 72,288 | |||||||||
Provision for loan losses | 4,580 | 4,300 | 7,860 | |||||||||
Non-interest expense | ||||||||||||
Salaries and employee benefits | 38,282 | 34,018 | 24,708 | |||||||||
Occupancy and equipment | 11,238 | 9,945 | 7,699 | |||||||||
Marketing, data processing, and professional services | 8,761 | 8,598 | 6,648 | |||||||||
Merger, integration and restructuring | 683 | 2,956 | 1,510 | |||||||||
Amortization of intangible assets | 3,830 | 3,058 | 2,035 | |||||||||
Other | 8,905 | 6,919 | 6,268 | |||||||||
Total non-interest expense | 71,699 | 65,494 | 48,868 | |||||||||
Income from continuing operations before income taxes | 31,056 | 18,774 | 15,560 | |||||||||
Income tax expense | 8,812 | 5,239 | 4,668 | |||||||||
Net income from continuing operations | 22,244 | 13,535 | 10,892 | |||||||||
Income from discontinued operations before income taxes | — | — | 606 | |||||||||
Income tax expense | — | — | 235 | |||||||||
Net income from discontinued operations | — | — | 371 | |||||||||
Net income | $ | 22,244 | $ | 13,535 | $ | 11,263 | ||||||
Basic earnings per share | ||||||||||||
Continuing operations | $ | 2.08 | $ | 1.47 | $ | 1.28 | ||||||
Discontinued operations | — | — | 0.04 | |||||||||
Total | $ | 2.08 | $ | 1.47 | $ | 1.32 | ||||||
Diluted earnings per share | ||||||||||||
Continuing operations | $ | 2.06 | $ | 1.44 | $ | 1.25 | ||||||
Discontinued operations | — | — | 0.04 | |||||||||
Total | $ | 2.06 | $ | 1.44 | $ | 1.29 | ||||||
Weighted average shares outstanding | ||||||||||||
Basic | 10,700 | 9,223 | 8,538 | |||||||||
Diluted | 10,791 | 9,370 | 8,730 |
- 53 -
Table of Contents
Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | Unearned | other comp- | ||||||||||||||||||||||||||||||||||
Common stock | Preferred | paid-in | compen- | Retained | rehensive | Treasury | ||||||||||||||||||||||||||||||
(In thousands) | Shares | Amount | stock | capital | sation | earnings | income (loss) | stock | Total | |||||||||||||||||||||||||||
Balance at December 31, 2005 | 8,540 | $ | 106 | $ | — | $ | 198,667 | $ | (1,435 | ) | $ | 99,429 | $ | (2,239 | ) | $ | (48,462 | ) | $ | 246,066 | ||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 11,263 | — | — | 11,263 | |||||||||||||||||||||||||||
Other net comprehensive income | — | — | — | — | — | — | 2,331 | — | 2,331 | |||||||||||||||||||||||||||
Total comprehensive income | 13,594 | |||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.56 per share) | — | — | — | — | — | (4,834 | ) | — | — | (4,834 | ) | |||||||||||||||||||||||||
Treasury stock purchased/transferred | (76 | ) | — | — | — | — | — | — | (2,876 | ) | (2,876 | ) | ||||||||||||||||||||||||
Exercise of stock options | 197 | — | — | — | — | (127 | ) | — | 3,556 | 3,429 | ||||||||||||||||||||||||||
Reissuance of treasury stock — other | 53 | — | — | 853 | — | — | — | 935 | 1,788 | |||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 195 | — | — | — | — | 195 | |||||||||||||||||||||||||||
Tax benefit from stock compensation | — | — | — | 1,260 | — | — | — | — | 1,260 | |||||||||||||||||||||||||||
Change in unearned compensation | — | — | — | — | (461 | ) | — | — | — | (461 | ) | |||||||||||||||||||||||||
Balance at December 31, 2006 | 8,713 | 106 | — | 200,975 | (1,896 | ) | 105,731 | 92 | (46,847 | ) | 258,161 | |||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 13,535 | — | — | 13,535 | |||||||||||||||||||||||||||
Other net comprehensive income | — | — | — | — | — | — | 1,125 | — | 1,125 | |||||||||||||||||||||||||||
Total comprehensive income | 14,660 | |||||||||||||||||||||||||||||||||||
Acquisition of Factory Point Bancorp, Inc. | 1,913 | 19 | — | 63,331 | — | — | — | — | 63,350 | |||||||||||||||||||||||||||
Cash dividends declared ($0.58 per share) | — | — | — | — | — | (5,398 | ) | — | — | (5,398 | ) | |||||||||||||||||||||||||
Treasury stock purchased | (290 | ) | — | — | — | — | — | — | (7,822 | ) | (7,822 | ) | ||||||||||||||||||||||||
Forfeited shares | (41 | ) | — | — | (36 | ) | — | — | — | (1,112 | ) | (1,148 | ) | |||||||||||||||||||||||
Exercise of stock options | 132 | — | — | — | — | (481 | ) | — | 2,598 | 2,117 | ||||||||||||||||||||||||||
Reissuance of treasury stock — other | 66 | — | — | 1,001 | — | — | — | 1,166 | 2,167 | |||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 187 | — | — | — | — | 187 | |||||||||||||||||||||||||||
Tax benefit from stock compensation | — | — | — | 676 | — | — | — | — | 676 | |||||||||||||||||||||||||||
Change in unearned compensation | — | — | — | — | (113 | ) | — | — | — | (113 | ) | |||||||||||||||||||||||||
Balance at December 31, 2007 | 10,493 | 125 | — | 266,134 | (2,009 | ) | 113,387 | 1,217 | (52,017 | ) | 326,837 | |||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 22,244 | — | — | 22,244 | |||||||||||||||||||||||||||
Other net comprehensive loss | — | — | — | — | — | — | (12,791 | ) | — | (12,791 | ) | |||||||||||||||||||||||||
Total comprehensive income | 9,453 | |||||||||||||||||||||||||||||||||||
Issuance of preferred stock | — | — | 36,802 | — | — | — | — | — | 36,802 | |||||||||||||||||||||||||||
Fair value of warrant issued with preferred stock | — | — | — | 3,198 | — | — | — | — | 3,198 | |||||||||||||||||||||||||||
Issuance of common stock | 1,725 | 17 | — | 38,504 | — | — | — | — | 38,521 | |||||||||||||||||||||||||||
Cash dividends declared ($0.63 per share) | — | — | — | — | — | (6,837 | ) | — | — | (6,837 | ) | |||||||||||||||||||||||||
Treasury stock purchased | (200 | ) | — | — | — | — | — | — | (4,880 | ) | (4,880 | ) | ||||||||||||||||||||||||
Forfeited shares | (3 | ) | — | — | (5 | ) | 70 | — | — | (65 | ) | — | ||||||||||||||||||||||||
Exercise of stock options | 185 | — | — | — | — | (1,206 | ) | — | 4,714 | 3,508 | ||||||||||||||||||||||||||
Reissuance of treasury stock — other | 53 | — | 20 | (193 | ) | — | 185 | — | 1,795 | 1,807 | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 55 | — | — | — | — | 55 | |||||||||||||||||||||||||||
Tax loss from stock compensation | — | — | — | (73 | ) | — | — | — | — | (73 | ) | |||||||||||||||||||||||||
Change in unearned compensation | — | — | — | — | 34 | — | — | — | 34 | |||||||||||||||||||||||||||
Balance at December 31, 2008 | 12,253 | $142 | $36,822 | $307,620 | $(1,905 | ) | $127,773 | $(11,574 | ) | $(50,453 | ) | $408,425 | ||||||||||||||||||||||||
- 54 -
Table of Contents
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Cash flows from operating activities: | ||||||||||||
Continuing operations: | ||||||||||||
Net income | $ | 22,244 | $ | 13,535 | $ | 10,892 | ||||||
Adjustments to reconcile net income to net cash provided by continuing operating activities: | ||||||||||||
Provision for loan losses | 4,580 | 4,300 | 7,860 | |||||||||
Net amortization of securities | 173 | 250 | 943 | |||||||||
Net loan amortization and deferrals | 2,949 | 3,767 | 2,981 | |||||||||
Premises depreciation and amortization expense | 3,835 | 3,404 | 2,831 | |||||||||
Stock-based compensation expense | 1,635 | 1,604 | 1,338 | |||||||||
Excess tax loss (benefit) from stock-based payment arrangements | 73 | (676 | ) | (1,260 | ) | |||||||
Amortization of other intangibles | 3,830 | 3,058 | 2,035 | |||||||||
Increase in cash surrender value of bank owned life insurance | (352 | ) | (1,078 | ) | (1,034 | ) | ||||||
Loss on sales of securities, net | 22 | 591 | 3,130 | |||||||||
Loss on sale of loans | — | 1,950 | — | |||||||||
Loss on prepayment of borrowings | — | 1,180 | — | |||||||||
Deferred income tax provision (benefit), net | 905 | 986 | (1,762 | ) | ||||||||
Net change in other | (704 | ) | (9,440 | ) | (3,540 | ) | ||||||
Net cash provided by continuing operating activities | 39,190 | 23,431 | 24,414 | |||||||||
Discontinued operations: | ||||||||||||
Pre-tax income | — | — | 606 | |||||||||
Net cash provided by discontinued operations | — | — | 606 | |||||||||
Total net cash provided by operating activities: | 39,190 | 23,431 | 25,020 | |||||||||
Cash flows from investing activities: | ||||||||||||
Trading account security purchased | (15,000 | ) | — | — | ||||||||
Securities available for sale: | ||||||||||||
Sales | 10,058 | 59,141 | 190,009 | |||||||||
Proceeds from maturities, calls, and prepayments | 25,307 | 31,152 | 46,138 | |||||||||
Purchases | (98,918 | ) | (45,810 | ) | (40,155 | ) | ||||||
Securities held to maturity: | ||||||||||||
Proceeds from maturities, calls, and prepayments | 30,065 | 14,850 | 16,319 | |||||||||
Purchases | (16,481 | ) | (14,344 | ) | (26,379 | ) |
- 55 -
Table of Contents
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Increase in loans, net | (70,744 | ) | (77,679 | ) | (279,458 | ) | ||||||
Proceeds from sales of loans | — | 55,612 | — | |||||||||
Additions to premises and equipment, net | (2,477 | ) | (5,571 | ) | (6,095 | ) | ||||||
Net cash paid for business acquisitions | (1,090 | ) | (8,050 | ) | (22,541 | ) | ||||||
Net cash (used) provided by continuing investing activities | (139,280 | ) | 9,301 | (122,162 | ) | |||||||
Cash flows from financing activities: | ||||||||||||
Net increase in deposits | 7,017 | 31,598 | 150,720 | |||||||||
Proceeds from Federal Home Loan Bank advances | 145,000 | 150,214 | 257,014 | |||||||||
Repayments of Federal Home Loan Bank advances | (102,317 | ) | (216,127 | ) | (324,462 | ) | ||||||
Proceeds from notes payable | — | 35,000 | 15,000 | |||||||||
Repayments of notes payable | (18,000 | ) | (15,000 | ) | — | |||||||
Proceeds from issuance of preferred stock and warrant | 40,000 | — | — | |||||||||
Proceeds from common stock issuance | 38,521 | — | — | |||||||||
Payments to acquire treasury stock | (4,880 | ) | (7,822 | ) | (2,876 | ) | ||||||
Proceeds from reissuance of treasury stock | 5,315 | 4,284 | 5,218 | |||||||||
Excess tax loss (benefit) from stock-based payment arrangements | (73 | ) | 676 | 1,260 | ||||||||
Cash dividends paid | (6,837 | ) | (5,398 | ) | (4,834 | ) | ||||||
Net cash provided (used) by financing activities | 103,746 | (22,575 | ) | 97,040 | ||||||||
Net change in cash and cash equivalents | 3,656 | 10,157 | (102 | ) | ||||||||
Cash and cash equivalents at beginning of year | 41,142 | 30,985 | 31,087 | |||||||||
Cash and cash equivalents at end of year | $ | 44,798 | $ | 41,142 | $ | 30,985 | ||||||
Supplemental cash flow information: | ||||||||||||
Interest paid on deposits | $ | 42,089 | $ | 50,759 | $ | 40,992 | ||||||
Interest paid on borrowed funds | 14,902 | 17,686 | 16,760 | |||||||||
Income taxes paid, net | 6,043 | 5,405 | 931 | |||||||||
Fair value of non-cash assets acquired | 837 | 376,656 | 9,835 | |||||||||
Fair value of liabilities assumed | — | 305,592 | 3,492 | |||||||||
Fair value of common stock issued in acquisition | — | 63,350 | — | |||||||||
Due to broker, investment purchase | 19,895 | — | — |
- 56 -
Table of Contents
- 57 -
Table of Contents
- 58 -
Table of Contents
- 59 -
Table of Contents
- 60 -
Table of Contents
- 61 -
Table of Contents
Years Ended December 31, | ||||||||||||
(In thousands, except per share data) | 2008 | 2007 | 2006 | |||||||||
Net income applicable to common stock | $ | 22,244 | $ | 13,535 | $ | 11,263 | ||||||
Average number of common shares issued | 12,869 | 11,135 | 10,600 | |||||||||
Less: average number of treasury shares | (2,046 | ) | (1,812 | ) | (1,963 | ) | ||||||
Less: average number of unvested stock award shares | (123 | ) | (100 | ) | (99 | ) | ||||||
Average number of basic shares outstanding | 10,700 | 9,223 | 8,538 | |||||||||
Plus: dilutive effect of unvested stock award shares | 123 | 100 | 78 | |||||||||
Plus: dilutive effect of stock options outstanding | (32 | ) | 47 | 114 | ||||||||
Average number of diluted shares outstanding | 10,791 | 9,370 | 8,730 | |||||||||
Earnings per average basic share | $ | 2.08 | $ | 1.47 | $ | 1.32 | ||||||
Earnings per average diluted share | $ | 2.06 | $ | 1.44 | $ | 1.29 |
- 62 -
Table of Contents
- 63 -
Table of Contents
- 64 -
Table of Contents
- 65 -
Table of Contents
- 66 -
Table of Contents
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
(In thousands) | Cost | Gains | Losses | Fair Value | ||||||||||||
December 31, 2008 | ||||||||||||||||
Securities available for sale | ||||||||||||||||
Debt securities: | ||||||||||||||||
Municipal bonds and obligations | $ | 76,843 | $ | 401 | $ | (1,830 | ) | $ | 75,414 | |||||||
Mortgaged-backed securities | 174,896 | 2,275 | (193 | ) | 176,978 | |||||||||||
Other bonds and obligations | 24,341 | 170 | (3,622 | ) | 20,889 | |||||||||||
Total debt securities | 276,080 | 2,846 | (5,645 | ) | 273,281 | |||||||||||
Equity securities: | ||||||||||||||||
Marketable equity securities | 1,177 | 32 | (110 | ) | 1,099 | |||||||||||
Total securities available for sale | 277,257 | 2,878 | (5,755 | ) | 274,380 | |||||||||||
Securities held to maturity | ||||||||||||||||
Municipal bonds and obligations | 25,066 | 860 | — | 25,926 | ||||||||||||
Mortgaged-backed securities | 806 | 1 | (4 | ) | 803 | |||||||||||
Total securities held to maturity | 25,872 | 861 | (4 | ) | 26,729 | |||||||||||
Total | $ | 303,129 | $ | 3,739 | $ | (5,759 | ) | $ | 301,109 | |||||||
December 31, 2007 | ||||||||||||||||
Securities available for sale | ||||||||||||||||
Debt securities: | ||||||||||||||||
Municipal bonds and obligations | $ | 74,223 | $ | 1,028 | $ | (65 | ) | $ | 75,186 | |||||||
Mortgaged-backed securities | 103,387 | 1,152 | (21 | ) | 104,518 | |||||||||||
Other bonds and obligations | 15,601 | 38 | (374 | ) | 15,265 | |||||||||||
Total debt securities | 193,211 | 2,218 | (460 | ) | 194,969 | |||||||||||
Equity securities: | ||||||||||||||||
Marketable equity securities | 793 | 197 | (38 | ) | 952 | |||||||||||
Total securities available for sale | 194,004 | 2,415 | (498 | ) | 195,921 | |||||||||||
Securities held to maturity | ||||||||||||||||
Municipal bonds and obligations | 36,981 | 377 | (125 | ) | 37,233 | |||||||||||
Mortgaged-backed securities | 2,475 | — | (19 | ) | 2,456 | |||||||||||
Total securities held to maturity | 39,456 | 377 | (144 | ) | 39,689 | |||||||||||
Total | $ | 233,460 | $ | 2,792 | $ | (642 | ) | $ | 235,610 | |||||||
- 67 -
Table of Contents
Available for sale | Held to maturity | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
(In thousands) | Cost | Value | Cost | Value | ||||||||||||
Within 1 year | $ | 2,365 | $ | 2,380 | $ | 7,662 | $ | 7,662 | ||||||||
Over 1 year to 5 years | 15,635 | 15,824 | 1,376 | 1,380 | ||||||||||||
Over 5 years to 10 years | 27,413 | 27,311 | 2,150 | 2,212 | ||||||||||||
Over 10 years | 55,771 | 50,788 | 13,878 | 14,672 | ||||||||||||
Total bonds and obligations | 101,184 | 96,303 | 25,066 | 25,926 | ||||||||||||
Marketable equity securities | 1,177 | 1,099 | — | — | ||||||||||||
Mortgage-backed securities | 174,896 | 176,978 | 806 | 803 | ||||||||||||
Total | $ | 277,257 | $ | 274,380 | $ | 25,872 | $ | 26,729 | ||||||||
2008 | 2007 | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
(In thousands) | Cost | Value | Cost | Value | ||||||||||||
Securities pledged to swap counterparties | $ | 9,844 | $ | 10,032 | $ | — | $ | — | ||||||||
Securities pledged for municipal deposits | 8,257 | 8,480 | 8,394 | 8,520 | ||||||||||||
Securities pledged to the Federal Reserve Bank of Boston | 3,219 | 3,221 | 4,212 | 4,280 | ||||||||||||
Total | $ | 21,320 | $ | 21,733 | $ | 12,606 | $ | 12,800 | ||||||||
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Gross realized gains | $ | 62 | $ | 88 | $ | 2,449 | ||||||
Gross realized losses | 84 | 679 | 5,579 | |||||||||
Net realized losses | $ | (22 | ) | $ | (591 | ) | $ | (3,130 | ) | |||
- 68 -
Table of Contents
Less Than Twelve Months | Over Twelve Months | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
(In thousands) | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 1,585 | $ | 39,573 | $ | 245 | $ | 4,070 | $ | 1,830 | $ | 43,643 | ||||||||||||
Mortgaged-backed securities | 139 | 16,292 | 54 | 2,142 | 193 | 18,434 | ||||||||||||||||||
Other bonds and obligations | 472 | 3,741 | 3,150 | 7,142 | 3,622 | 10,883 | ||||||||||||||||||
Total debt securities | 2,196 | 59,606 | 3,449 | 13,354 | 5,645 | 72,960 | ||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Marketable equity securities | — | 85 | 110 | 640 | 110 | 725 | ||||||||||||||||||
Total securities available for sale | 2,196 | 59,691 | 3,559 | 13,994 | 5,755 | 73,685 | ||||||||||||||||||
Securities held to maturity | ||||||||||||||||||||||||
Municipal bonds and obligations | — | — | — | — | — | — | ||||||||||||||||||
Mortgaged-backed securities | — | — | 4 | 553 | 4 | 553 | ||||||||||||||||||
Total securities held to maturity | — | — | 4 | 553 | 4 | 553 | ||||||||||||||||||
Total | $ | 2,196 | $ | 59,691 | $ | 3,563 | $ | 14,547 | $ | 5,759 | $ | 74,238 | ||||||||||||
December 31, 2007 | ||||||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 5 | $ | 2,255 | $ | 60 | $ | 3,274 | $ | 65 | $ | 5,529 | ||||||||||||
Mortgaged-backed securities | — | 149 | 21 | 6,713 | 21 | 6,862 | ||||||||||||||||||
Other bonds and obligations | 254 | 5,026 | 120 | 4,939 | 374 | 9,965 | ||||||||||||||||||
Total debt securities | 259 | 7,430 | 201 | 14,926 | 460 | 22,356 | ||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Marketable equity securities | 38 | 412 | — | — | 38 | 412 | ||||||||||||||||||
Total securities available for sale | 297 | 7,842 | 201 | 14,926 | 498 | 22,768 | ||||||||||||||||||
Securities held to maturity: | ||||||||||||||||||||||||
Municipal bonds and obligations | 125 | 8,423 | — | — | 125 | 8,423 | ||||||||||||||||||
Mortgaged-backed securities | 2 | 1,382 | 17 | 1,032 | 19 | 2,414 | ||||||||||||||||||
Total securities held to maturity | 127 | 9,805 | 17 | 1,032 | 144 | 10,837 | ||||||||||||||||||
Total | $ | 424 | $ | 17,647 | $ | 218 | $ | 15,958 | $ | 642 | $ | 33,605 | ||||||||||||
- 69 -
Table of Contents
(In thousands) | 2008 | 2007 | ||||||
Residential mortgages | ||||||||
1-4 family | $ | 642,733 | $ | 610,231 | ||||
Construction | 34,521 | 46,814 | ||||||
Total residential mortgages | 677,254 | 657,045 | ||||||
Commercial mortgages | ||||||||
Construction | 129,704 | 125,349 | ||||||
Single and multifamily | 69,964 | 69,724 | ||||||
Other | 605,788 | 509,691 | ||||||
Total commercial mortgages | 805,456 | 704,764 | ||||||
Commercial business | 178,934 | 203,564 | ||||||
Consumer | ||||||||
Auto | 134,846 | 196,748 | ||||||
Home equity and other | 210,662 | 181,895 | ||||||
Total consumer | 345,508 | 378,643 | ||||||
Total loans | $ | 2,007,152 | $ | 1,944,016 | ||||
Unamortized net loan origination costs | $ | 8,329 | $ | 9,574 | ||||
Unamortized net premium on purchased loans | 129 | 199 | ||||||
Total unamortized net costs and premiums | $ | 8,458 | $ | 9,773 | ||||
- 70 -
Table of Contents
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Balance at beginning of year | $ | 22,116 | $ | 19,370 | $ | 13,001 | ||||||
Provision for loan losses | 4,580 | 4,300 | 7,860 | |||||||||
Transfer of commitment reserve | — | — | (425 | ) | ||||||||
Allowance attributed to acquired loans | — | 4,453 | — | |||||||||
Loans charged-off | (4,442 | ) | (6,376 | ) | (1,776 | ) | ||||||
Recoveries | 654 | 369 | 710 | |||||||||
Balance at end of year | $ | 22,908 | $ | 22,116 | $ | 19,370 | ||||||
- 71 -
Table of Contents
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Investment in impaired loans | $ | 28,607 | $ | 14,751 | $ | 13,632 | ||||||
Impaired loans with no valuation allowance | 21,503 | 7,224 | 5,115 | |||||||||
Impaired loans with a valuation allowance | 7,104 | 7,527 | 8,517 | |||||||||
Specific valuation allowance allocated to impaired loans | 1,014 | 1,230 | 812 | |||||||||
Average investment in impaired loans during the year | 16,293 | 9,259 | 2,954 | |||||||||
Cash basis impaired loan income received during the year | 560 | 881 | 290 | |||||||||
Non-accrual loans | 12,171 | 10,508 | 7,592 | |||||||||
Total loans past due ninety days or more and still accruing | 923 | 823 | 281 |
(In thousands) | 2008 | 2007 | ||||||
Land | $ | 4,146 | $ | 4,175 | ||||
Buildings and improvements | 33,335 | 32,512 | ||||||
Furniture and equipment | 20,732 | 18,794 | ||||||
Construction in process | 254 | 555 | ||||||
Premises and equipment, gross | 58,467 | 56,036 | ||||||
Accumulated depreciation and amortization | (21,019 | ) | (17,230 | ) | ||||
Premises and equipment, net | $ | 37,448 | $ | 38,806 | ||||
(In thousands) | 2008 | 2007 | ||||||
Woronoco acquisition | $ | 77,954 | $ | 77,954 | ||||
Factory Point acquisition | 53,014 | 53,721 | ||||||
Insurance agencies | 23,176 | 23,176 | ||||||
Other | 7,034 | 6,781 | ||||||
Total | $ | 161,178 | $ | 161,632 | ||||
- 72 -
Table of Contents
Gross | Net | |||||||||||
Intangible | Accumulated | Intangible | ||||||||||
(In thousands) | Assets | Amortization | Assets | |||||||||
December 31, 2008 | ||||||||||||
Non-maturity deposits | $ | 16,978 | $ | (5,718 | ) | $ | 11,260 | |||||
Insurance contracts | 7,463 | (1,708 | ) | 5,755 | ||||||||
Non-compete agreements | 2,318 | (2,318 | ) | — | ||||||||
All other intangible assets | 1,037 | (400 | ) | 637 | ||||||||
Total | $ | 27,796 | $ | (10,144 | ) | $ | 17,652 | |||||
December 31, 2007 | ||||||||||||
Non-maturity deposits | $ | 16,978 | $ | (3,140 | ) | $ | 13,838 | |||||
Insurance contracts | 7,463 | (961 | ) | 6,502 | ||||||||
Non-compete agreements | 2,318 | (1,996 | ) | 322 | ||||||||
All other intangible assets | 375 | (217 | ) | 158 | ||||||||
Total | $ | 27,134 | $ | (6,314 | ) | $ | 20,820 | |||||
(In thousands) | 2008 | 2007 | ||||||
Loans held for sale | $ | 1,768 | $ | 3,444 | ||||
Net deferred tax asset | 12,235 | 4,310 | ||||||
Capitalized mortgage servicing rights | 901 | 1,203 | ||||||
Accrued interest receivable | 8,995 | 10,077 | ||||||
Investment in tax credits | 4,908 | 4,799 | ||||||
Foreclosed and repossesed assets | 871 | 1,327 | ||||||
Derivative assets | 3,740 | — | ||||||
Other | 10,807 | 10,159 | ||||||
Total other assets | $ | 44,225 | $ | 35,319 | ||||
- 73 -
Table of Contents
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Balance at beginning of year | $ | 1,203 | $ | 986 | $ | 1,168 | ||||||
Additions | — | 395 | — | |||||||||
Amortization | (302 | ) | (178 | ) | (182 | ) | ||||||
Balance at end of year | $ | 901 | $ | 1,203 | $ | 986 | ||||||
(In thousands) | 2008 | 2007 | ||||||
Maturity date: | ||||||||
Within 1 year | $ | 453,435 | $ | 596,319 | ||||
Over 1 year to 2 years | 149,452 | 67,767 | ||||||
Over 2 years to 3 years | 67,506 | 18,245 | ||||||
Over 3 years to 4 years | 19,511 | 9,261 | ||||||
Over 4 years to 5 years | 52,286 | 12,841 | ||||||
Over 5 years | 4,128 | 23,459 | ||||||
Total | $ | 746,318 | $ | 727,892 | ||||
Account balance: | ||||||||
Less than $100,000 | $ | 394,655 | $ | 429,884 | ||||
$100,000 or more | 351,663 | 298,008 | ||||||
Total | $ | 746,318 | $ | 727,892 | ||||
- 74 -
Table of Contents
(In thousands) | 2008 | 2007 | ||||||
Due to broker | $ | 19,895 | $ | — | ||||
Derivative liabilities | 24,068 | — | ||||||
Other | 10,140 | 14,094 | ||||||
Total other liabilities | $ | 54,103 | $ | 14,094 | ||||
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Current | ||||||||||||
Federal | $ | 4,993 | $ | 2,924 | $ | 5,159 | ||||||
State | 2,914 | 1,329 | 1,506 | |||||||||
Total current | 7,907 | 4,253 | 6,665 | |||||||||
Deferred | ||||||||||||
Federal | 1,327 | 677 | (1,779 | ) | ||||||||
State | 371 | 461 | (335 | ) | ||||||||
Total deferred | 1,698 | 1,138 | (2,114 | ) | ||||||||
Change in valuation allowance | (793 | ) | (152 | ) | 352 | |||||||
Total income tax expense | $ | 8,812 | $ | 5,239 | $ | 4,903 | ||||||
- 75 -
Table of Contents
2008 | 2007 | 2006 | ||||||||||
Statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Increase (decrease) resulting from: | ||||||||||||
State taxes, net of federal tax benefit | 6.9 | 6.2 | 6.1 | |||||||||
Dividends received deduction | (0.1 | ) | (0.1 | ) | (0.2 | ) | ||||||
Tax exempt income — investments | (5.5 | ) | (8.0 | ) | (8.3 | ) | ||||||
Bank-owned life insurance | (1.6 | ) | (2.0 | ) | (2.2 | ) | ||||||
Change in valuation allowance | (2.6 | ) | (0.8 | ) | 2.2 | |||||||
Investment tax credits | (2.0 | ) | (1.9 | ) | (1.4 | ) | ||||||
Other, net | (1.7 | ) | (0.5 | ) | (0.9 | ) | ||||||
Effective tax rate | 28.4 | % | 27.9 | % | 30.3 | % | ||||||
(In thousands) | 2008 | 2007 | ||||||
Allowance for loan losses | $ | 9,358 | $ | 9,395 | ||||
Employee benefit plans | 1,270 | 1,835 | ||||||
Net unrealized loss (gain) on swaps and securities available for sale in OCI | 8,131 | (700 | ) | |||||
Goodwill amortization | (3,594 | ) | (1,525 | ) | ||||
Investments | (840 | ) | (711 | ) | ||||
Purchase accounting adjustments | (3,548 | ) | (3,786 | ) | ||||
Investment tax credits | 2,243 | 396 | ||||||
Other | (785 | ) | 199 | |||||
Valuation allowance | — | (793 | ) | |||||
Deferred tax asset, net | $ | 12,235 | $ | 4,310 | ||||
- 76 -
Table of Contents
Weighted | Estimated | |||||||||||||||||||
Notional | Average | Weighted Average Rate | Fair Value | |||||||||||||||||
Amount | Maturity | Received | Paid | Gain (Loss) | ||||||||||||||||
(In thousands) | (In years) | (In thousands) | ||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||
Interest rate swaps on FHLBB borrowings | $ | 135,000 | 5.7 | 2.57 | % | 4.24 | % | $ | (15,657 | ) | ||||||||||
Interest rate swaps on junior subordinated debentures | 15,000 | 5.4 | 4.00 | 5.54 | (1,171 | ) | ||||||||||||||
Total cash flow hedges | 150,000 | (16,828 | ) | |||||||||||||||||
Economic hedges | ||||||||||||||||||||
Interest rate swap on industrial revenue bond | 15,000 | 20.9 | 2.27 | 5.09 | (3,299 | ) | ||||||||||||||
Interest rate swaps on loans with commercial loan customers | 38,948 | 6.2 | 4.14 | 6.42 | (3,941 | ) | ||||||||||||||
Reverse interest rate swaps on loans with commercial loan customers | 38,948 | 6.2 | 6.42 | 4.14 | 3,740 | |||||||||||||||
Total economic hedges | 92,896 | (3,500 | ) | |||||||||||||||||
Total | $ | 242,896 | $ | (20,328 | ) | |||||||||||||||
- 77 -
Table of Contents
- 78 -
Table of Contents
(In thousands) | 2008 | 2007 | ||||||
Commitments to originate new loans | $ | 63,108 | $ | 46,813 | ||||
Unused funds on commercial and other lines of credit | 70,156 | 210,747 | ||||||
Unadvanced funds on home equity lines of credit | 197,343 | 180,795 | ||||||
Unadvanced funds on construction and real estate loans | 66,135 | 102,311 | ||||||
Standby letters of credit | 41,402 | 29,013 | ||||||
Commercial letters of credit | — | 1,500 |
- 79 -
Table of Contents
Minimum to be Well | ||||||||||||||||||||||||
Minimum | Capitalized Under | |||||||||||||||||||||||
Capital | Prompt Corrective | |||||||||||||||||||||||
Actual | Requirement | Action Provisions | ||||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Total capital to risk-weighted assets | $ | 250,729 | 12.28 | % | $ | 163,314 | 8.00 | % | $ | 204,142 | 10.00 | % | ||||||||||||
Tier 1 capital to risk-weighted assets | 227,821 | 11.16 | 81,657 | 4.00 | 122,485 | 6.00 | ||||||||||||||||||
Tier 1 capital to average assets | 227,821 | 9.34 | 97,602 | 4.00 | 122,002 | 5.00 | ||||||||||||||||||
December 31, 2007 | ||||||||||||||||||||||||
Total capital to risk-weighted assets | $ | 206,080 | 10.40 | % | $ | 158,462 | 8.00 | % | $ | 198,077 | 10.00 | % | ||||||||||||
Tier 1 capital to risk-weighted assets | 183,530 | 9.27 | 79,231 | 4.00 | 118,846 | 6.00 | ||||||||||||||||||
Tier 1 capital to average assets | 183,530 | 7.97 | 92,136 | 4.00 | 115,169 | 5.00 |
(In thousands) | 2008 | 2007 | ||||||
Total stockholders’ equity per consolidated financial statements | $ | 408,425 | $ | 326,837 | ||||
Adjustments for Bank Tier 1 Capital: | ||||||||
Holding company equity adjustment | (45,161 | ) | 10,648 | |||||
Net unrealized loss (gain) on available for sale securities | 1,778 | (1,241 | ) | |||||
Net unrealized loss on cash flow hedges | 9,046 | — | ||||||
Disallowed goodwill and intangible assets | (146,267 | ) | (152,714 | ) | ||||
Total Bank Tier 1 Capital | 227,821 | 183,530 | ||||||
Adjustments for total capital: | ||||||||
Allowed unrealized gains on equity securities | — | 89 | ||||||
Includible allowances for loan losses and unused lines of credit | 22,908 | 22,461 | ||||||
Total Bank capital per regulatory reporting | $ | 250,729 | $ | 206,080 | ||||
- 80 -
Table of Contents
- 81 -
Table of Contents
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Unrealized holding (loss) gain on available for sale securities during the period | $ | (4,816 | ) | $ | 1,089 | $ | 768 | |||||
Reclassification adjustment for net loss realized in income | 22 | 591 | 3,130 | |||||||||
Unrealized (loss) gain on available for sale securities | (4,794 | ) | 1,680 | 3,898 | ||||||||
Net loss (gain) on effective cash flow hedging derivatives | (16,828 | ) | 71 | (18 | ) | |||||||
Tax effects | 8,831 | (626 | ) | (1,549 | ) | |||||||
Total other comprehensive (loss) income, net | $ | (12,791 | ) | $ | 1,125 | $ | 2,331 | |||||
(In thousands) | 2008 | 2007 | ||||||
Net unrealized holding (loss) gain on available for sale securities | $ | (2,877 | ) | $ | 1,917 | |||
Net loss on effective cash flow hedging derivatives | (16,828 | ) | — | |||||
Tax effects | 8,131 | (700 | ) | |||||
Accumulated other comprehensive (loss) income | $ | (11,574 | ) | $ | 1,217 | |||
- 82 -
Table of Contents
Non-vested Stock | ||||||||||||||||
Awards Outstanding | Stock Options Outstanding | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
Number of | Grant Date | Number of | Exercise | |||||||||||||
(Shares in thousands) | Shares | Fair Value | Shares | Price | ||||||||||||
Balance, December 31, 2007 | 105 | $ | 31.88 | 644 | $ | 21.90 | ||||||||||
Granted | 68 | 22.80 | — | — | ||||||||||||
Stock options exercised | — | — | (185 | ) | 18.96 | |||||||||||
Stock awards vested | (47 | ) | 30.03 | — | — | |||||||||||
Forfeited | (3 | ) | 27.67 | (6 | ) | 33.46 | ||||||||||
Balance, December 31, 2008 | 123 | $ | 27.40 | 453 | $ | 23.00 | ||||||||||
Exercisable options, December 31, 2008 | 437 | $ | 22.61 | |||||||||||||
- 83 -
Table of Contents
(In thousands) | 2007 | 2006 | ||||||
Expected dividends | 1.85 | % | 1.85 | % | ||||
Expected term | 6 years | 6 years | ||||||
Expected volatility | 19 | % | 19 | % | ||||
Risk-free interest rate | 4.68 | % | 4.86 | % | ||||
Weighed average grant date fair value | $ | 7.67 | $ | 8.05 |
- 84 -
Table of Contents
• | Level 1 Inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
• | Level 2 Inputs — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. |
• | Level 3 Inputs — Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In thousands) | Inputs | Inputs | Inputs | Fair Value | ||||||||||||
Trading account security | $ | — | $ | — | $ | 18,144 | $ | 18,144 | ||||||||
Securities available for sale | 381 | 272,553 | 1,446 | 274,380 | ||||||||||||
Derivative assets | — | 3,740 | — | 3,740 | ||||||||||||
Derivative liabilities | — | 24,068 | — | 24,068 |
- 85 -
Table of Contents
Assets | ||||||||
Trading | Securities | |||||||
Account | Available | |||||||
(In thousands) | Security | for Sale | ||||||
Balance as of January 1, 2008 | $ | — | $ | — | ||||
Transfers into Level 3 | 18,144 | 1,446 | ||||||
Balance as of December 31, 2008 | $ | 18,144 | $ | 1,446 | ||||
Change in unrealized gains/(losses) relating to instruments still held at the reporting date | $ | 3,144 | $ | (1,799 | ) |
- 86 -
Table of Contents
2008 | 2007 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
(In thousands) | Amount | Value | Amount | Value | ||||||||||||
Financial Assets | ||||||||||||||||
Cash and cash equivalents | $ | 44,798 | $ | 44,798 | $ | 41,142 | $ | 41,142 | ||||||||
Trading security | 15,000 | 18,144 | — | — | ||||||||||||
Securities available for sale | 274,380 | 274,380 | 195,921 | 195,921 | ||||||||||||
Securities held to maturity | 25,872 | 26,729 | 39,456 | 39,689 | ||||||||||||
Restricted equity securities | 23,120 | 23,120 | 23,120 | 23,120 | ||||||||||||
Net loans | 1,984,244 | 1,994,103 | 1,921,900 | 1,964,983 | ||||||||||||
Loans held for sale | 1,768 | 1,768 | 3,444 | 3,444 | ||||||||||||
Capitalized mortgage servicing rights | 901 | 901 | 1,203 | 1,203 | ||||||||||||
Accrued interest receivable | 8,995 | 8,995 | 10,077 | 10,077 | ||||||||||||
Cash surrender value of life insurance policies | 35,668 | 35,668 | 35,316 | 35,316 | ||||||||||||
Derivative assets | 3,740 | 3,740 | — | — | ||||||||||||
Financial Liabilities | ||||||||||||||||
Total deposits | $ | 1,829,580 | $ | 1,836,921 | $ | 1,822,563 | $ | 1,827,705 | ||||||||
Short-term debt | 23,200 | 23,200 | 92,800 | 92,800 | ||||||||||||
Long term Federal Home Loan Bank advances | 318,957 | 329,356 | 221,674 | 223,431 | ||||||||||||
Long-term debt | 17,000 | 16,683 | 20,000 | 20,054 | ||||||||||||
Junior subordinated debentures | 15,464 | 13,403 | 15,464 | 15,506 | ||||||||||||
Derivative liabilities | 24,068 | 24,068 | — | — |
- 87 -
Table of Contents
- 88 -
Table of Contents
Total | ||||||||||||||||||||
(In thousands) | Banking | Insurance | Parent | Eliminations | Consolidated | |||||||||||||||
Year ended December 31, 2008 | ||||||||||||||||||||
Net interest income | $ | 77,486 | $ | — | $ | 18,722 | $ | (20,468 | ) | $ | 75,740 | |||||||||
Provision for loan losses | 4,580 | — | — | — | 4,580 | |||||||||||||||
Non-interest income | 17,906 | 13,694 | 3,277 | (3,282 | ) | 31,595 | ||||||||||||||
Non-interest expense | 60,448 | 10,450 | 801 | — | 71,699 | |||||||||||||||
Income before income taxes | 30,364 | 3,244 | 21,198 | (23,750 | ) | 31,056 | ||||||||||||||
Income tax expense (benefit) | 8,528 | 1,330 | (1,046 | ) | — | 8,812 | ||||||||||||||
Net income | $ | 21,836 | $ | 1,914 | $ | 22,244 | $ | (23,750 | ) | $ | 22,244 | |||||||||
Average assets (in millions) | $ | 2,515 | $ | 32 | $ | 340 | $ | (336 | ) | $ | 2,551 |
Total | ||||||||||||||||||||
(In thousands) | Banking | Insurance | Parent | Eliminations | Consolidated | |||||||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||
Net interest income | $ | 66,115 | $ | — | $ | 6,265 | $ | (8,455 | ) | $ | 63,925 | |||||||||
Provision for loan losses | 4,300 | — | — | — | 4,300 | |||||||||||||||
Non-interest income | 11,010 | 13,954 | 6,981 | (7,302 | ) | 24,643 | ||||||||||||||
Non-interest expense | 55,198 | 9,919 | 775 | (398 | ) | 65,494 | ||||||||||||||
Income before income taxes | 17,627 | 4,035 | 12,471 | (15,359 | ) | 18,774 | ||||||||||||||
Income tax expense (benefit) | 4,746 | 1,557 | (1,064 | ) | — | 5,239 | ||||||||||||||
Net income | $ | 12,881 | $ | 2,478 | $ | 13,535 | $ | (15,359 | ) | $ | 13,535 | |||||||||
Average assets (in millions) | $ | 2,229 | $ | 31 | $ | 378 | $ | (376 | ) | $ | 2,262 |
Total | ||||||||||||||||||||
(In thousands) | Banking | Insurance | Parent | Eliminations | Consolidated | |||||||||||||||
Year ended December 31, 2006 | ||||||||||||||||||||
Net Interest income | $ | 61,478 | $ | — | $ | 13,741 | $ | (14,979 | ) | $ | 60,240 | |||||||||
Provision for loan losses | 7,860 | — | — | — | 7,860 | |||||||||||||||
Net interest income after provision for loan losses | 53,618 | — | 13,741 | (14,979 | ) | 52,380 | ||||||||||||||
Non-interest income | 8,321 | 3,811 | — | (84 | ) | 12,048 | ||||||||||||||
Non-interest expense | 44,865 | 3,372 | 3,630 | (2,999 | ) | 48,868 | ||||||||||||||
Income (loss) from continuing operations before income taxes | 17,074 | 439 | 10,111 | (12,064 | ) | 15,560 | ||||||||||||||
Income tax expense (benefit) | 5,273 | 176 | (781 | ) | — | 4,668 | ||||||||||||||
Net income (loss) from continuing operations | 11,801 | 263 | 10,892 | (12,064 | ) | 10,892 | ||||||||||||||
Net income from discontinued operations | — | — | 371 | — | 371 | |||||||||||||||
Net income (loss) | $ | 11,801 | $ | 263 | $ | 11,263 | $ | (12,064 | ) | $ | 11,263 | |||||||||
Average assets (in millions) | $ | 2,103 | $ | 10 | $ | 289 | $ | (286 | ) | $ | 2,116 |
- 89 -
Table of Contents
December 31, | ||||||||
(In thousands) | 2008 | 2007 | ||||||
Assets | ||||||||
Cash due from Berkshire Bank | $ | 46,529 | $ | 8,804 | ||||
Investment in subsidiaries | 389,982 | 364,808 | ||||||
Other assets | 5,745 | 4,007 | ||||||
Total assets | $ | 442,256 | $ | 377,619 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Accrued expenses payable | $ | 1,367 | $ | 318 | ||||
Notes payable | 17,000 | 35,000 | ||||||
Junior subordinated debentures | 15,464 | 15,464 | ||||||
Stockholders’ equity | 408,425 | 326,837 | ||||||
Total liabilities and stockholders’ equity | $ | 442,256 | $ | 377,619 | ||||
Years Ended December 31, | ||||||||||||
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Income: | ||||||||||||
Dividends from subsidiaries | $ | 20,500 | $ | 8,445 | $ | 15,087 | ||||||
Other | 27 | 113 | 606 | |||||||||
Total income | 20,527 | 8,558 | 15,693 | |||||||||
Interest expense | 1,778 | 2,227 | 1,271 | |||||||||
Operating expenses | 801 | 775 | 714 | |||||||||
Total expense | 2,579 | 3,002 | 1,985 | |||||||||
Income before income taxes and equity in undistributed income of subsidiaries | 17,948 | 5,556 | 13,708 | |||||||||
Income tax benefit | (1,046 | ) | (1,064 | ) | (471 | ) | ||||||
Income before equity in undistributed income of subsidiaries | 18,994 | 6,620 | 14,179 | |||||||||
Equity in undistributed income (loss) of subsidiaries | 3,250 | 6,915 | (2,916 | ) | ||||||||
Net income | $ | 22,244 | $ | 13,535 | $ | 11,263 | ||||||
- 90 -
Table of Contents
Years Ended December 31, | ||||||||||||
(In thousands) | 2008 | 2007 | 2006 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 22,244 | $ | 13,535 | $ | 11,263 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Equity in undistributed (income) loss of subsidiaries | (3,250 | ) | (6,915 | ) | 2,916 | |||||||
Other, net | (2,588 | ) | (1,615 | ) | (2,359 | ) | ||||||
Net cash provided by operating activities | 16,406 | 5,005 | 11,820 | |||||||||
Cash flows from investing activities: | ||||||||||||
Investment in insurance subsidiary | — | — | (28,843 | ) | ||||||||
Investment in bank subsidiary | (32,500 | ) | — | — | ||||||||
Net cash paid for Factory Point acquisition | — | (12,665 | ) | — | ||||||||
Purchase of investment securities | (300 | ) | (120 | ) | (300 | ) | ||||||
Net cash used by investing activities | (32,800 | ) | (12,785 | ) | (29,143 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Net (repayment of) proceeds from notes payable | (18,000 | ) | 20,000 | 15,000 | ||||||||
Net proceeds from issuance of preferred stock and warrant | 40,000 | |||||||||||
Net proceeds from issuance of common stock | 38,521 | — | — | |||||||||
Proceeds from reissuance of treasury stock | 5,315 | 4,284 | 5,218 | |||||||||
Payments to acquire treasury stock | (4,880 | ) | (7,822 | ) | (2,876 | ) | ||||||
Cash dividends declared and paid | (6,837 | ) | (5,398 | ) | (4,834 | ) | ||||||
Net cash provided by financing activities | 54,119 | 11,064 | 12,508 | |||||||||
Net change in cash and cash equivalents | 37,725 | 3,284 | (4,815 | ) | ||||||||
Cash and cash equivalents at beginning of year | 8,804 | 5,520 | 10,335 | |||||||||
Cash and cash equivalents at end of year | $ | 46,529 | $ | 8,804 | $ | 5,520 | ||||||
- 91 -
Table of Contents
2008 | 2007 | |||||||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | Third | Second | First | |||||||||||||||||||||||||
(In thousands, except per share data) | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||||
Interest and dividend income | $ | 32,762 | $ | 33,092 | $ | 32,834 | $ | 34,523 | $ | 35,849 | $ | 32,631 | $ | 31,994 | $ | 31,470 | ||||||||||||||||
Interest expense | 13,292 | 13,763 | 14,187 | 16,229 | 17,631 | 17,152 | 16,956 | 16,280 | ||||||||||||||||||||||||
Net interest income | 19,470 | 19,329 | 18,647 | 18,294 | 18,218 | 15,479 | 15,038 | 15,190 | ||||||||||||||||||||||||
Non-interest income | 6,377 | 7,235 | 8,511 | 9,472 | 7,069 | 2,444 | 6,893 | 8,237 | ||||||||||||||||||||||||
Total revenue | 25,847 | 26,564 | 27,158 | 27,766 | 25,287 | 17,923 | 21,931 | 23,427 | ||||||||||||||||||||||||
Provision for loan losses | 1,400 | 1,250 | 1,105 | 825 | 3,060 | 390 | 100 | 750 | ||||||||||||||||||||||||
Non-interest expense | 17,256 | 17,737 | 18,632 | 18,074 | 18,393 | 16,589 | 15,103 | 15,409 | ||||||||||||||||||||||||
Income before income taxes | 7,191 | 7,577 | 7,421 | 8,867 | 3,834 | 944 | 6,728 | 7,268 | ||||||||||||||||||||||||
Income tax expense | 1,985 | 2,301 | 1,708 | 2,818 | 761 | — | 2,152 | 2,326 | ||||||||||||||||||||||||
Net income | $ | 5,206 | $ | 5,276 | $ | 5,713 | $ | 6,049 | $ | 3,073 | $ | 944 | $ | 4,576 | $ | 4,942 | ||||||||||||||||
Basic earnings per share | $ | 0.44 | $ | 0.51 | $ | 0.55 | $ | 0.58 | $ | 0.29 | $ | 0.11 | $ | 0.52 | $ | 0.57 | ||||||||||||||||
Diluted earnings per share | $ | 0.44 | $ | 0.51 | $ | 0.55 | $ | 0.58 | $ | 0.29 | $ | 0.11 | $ | 0.52 | $ | 0.56 |
- 92 -
Table of Contents
Name | Age | Position | ||||
Michael P. Daly | 47 | President and Chief Executive Officer | ||||
Kevin P. Riley | 49 | Executive Vice President, Chief Financial Officer and Treasurer | ||||
Michael J. Oleksak | 50 | Executive Vice President of Commercial Banking | ||||
Shepard D. Rainie | 56 | Executive Vice President and Chief Risk Officer | ||||
John Millet | 43 | President — Berkshire Insurance Group |
- 93 -
Table of Contents
- 94 -
Table of Contents
(a) | Security Ownership of Certain Beneficial Owners | ||
Information required by this item is incorporated herein by reference to the section captioned“Stock Ownership”in the Proxy Statement. | |||
(b) | Security Ownership of Management | ||
Information required by this item is incorporated herein by reference to the section captioned“Stock Ownership”in the Proxy Statement. | |||
(c) | Changes in Control | ||
Management of Berkshire Hills knows of no arrangements, including any pledge by any person of securities of Berkshire Hills, the operation of which may at a subsequent date result in a change in control of the registrant. | |||
(d) | Equity Compensation Plan Information | ||
The following table sets forth information, as of December 31, 2008, about Company common stock that may be issued upon exercise of options under stock-based benefit plans maintained by the Company. |
Number of securities | ||||||||||||
Number of securities | remaining available for | |||||||||||
to be issued upon | Weighted-average | future issuance under | ||||||||||
exercise of | exercise price of | equity compensation plans | ||||||||||
outstanding options, | outstanding options, | (excluding securities | ||||||||||
Plan category | warrants and rights | warrants and rights | reflected in the first column) | |||||||||
Equity compensation plans approved by security holders | 453,000 | $ | 23.00 | 261,000 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 453,000 | $ | 23.00 | 261,000 | ||||||||
- 95 -
Table of Contents
- 96 -
Table of Contents
(a) | [1]Financial Statements |
• | Report of Independent Registered Public Accounting Firm | ||
• | Consolidated Balance Sheets as of December 31, 2008 and 2007 | ||
• | Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006 | ||
• | Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2008, 2007 and 2006 | ||
• | Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006 | ||
• | Notes to Consolidated Financial Statements |
[2]Financial Statement Schedules |
All financial statement schedules are omitted because the required information is either included or is not applicable. |
[3]Exhibits |
3.1 | Certificate of Incorporation of Berkshire Hills Bancorp, Inc.(1) | |||
3.2 | Certificate of Designations for the Series A Preferred Stock(2) | |||
3.3 | Bylaws of Berkshire Hills Bancorp, Inc. (3) | |||
4.1 | No long-term debt instrument issued by the Registrant exceeds 10% of consolidated assets or is registered. In accordance with paragraph 4(iii) of Item 601(b) of Regulation S-K, the Registrant will furnish the Securities and Exchange Commission copies of long-term debt instruments and related agreements upon request. | |||
10.1 | *Amended and Restated Employment Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Michael P. Daly(4) | |||
10.2 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Kevin P. Riley(4) | |||
10.3 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and John S. Millet(4) | |||
10.4 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Michael J. Oleksak(4) | |||
10.5 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Shepard D. Rainie(4) | |||
10.6 | *Consulting Agreement between Berkshire Hills Bancorp, Inc. and David B. Farrell(5) | |||
10.7 | *Amended and Restated Supplemental Executive Retirement Agreement between Berkshire Bank and Michael P. Daly | |||
10.8 | *Amended and Restated Berkshire Hills Bancorp, Inc. 2003 Equity Compensation Plan(6) | |||
10.9 | *Form of Berkshire Bank Employee Severance Compensation Plan(1) | |||
10.10 | *Berkshire Hills Bancorp, Inc. 2001 Stock-Based Incentive Plan(7) | |||
10.11 | *Woronoco Bancorp, Inc. 1999 Stock-Based Incentive Plan(8) |
- 97 -
Table of Contents
10.12 | *Woronoco Bancorp, Inc. 2001 Stock Option Plan(9) | |||
10.13 | *Woronoco Bancorp, Inc. 2004 Equity Compensation Plan(10) | |||
10.14 | *Factory Point Bancorp, Inc. 1999 Non-Employee Directors Stock Option Plan, as amended and restated(11) | |||
10.15 | *Factory Point Bancorp, Inc. 1999 Stock Incentive Plan(11) | |||
10.16 | *Factory Point Bancorp, Inc. 2004 Stock Incentive Plan, as amended and restated(11) | |||
11.0 | Statement re: Computation of Per Share Earnings is incorporated herein by reference to Part II, Item 8, “Financial Statements and Supplementary Data” | |||
21.0 | Subsidiary Information is incorporated herein by reference to Part I, Item 1, “Business — Subsidiary Activities” | |||
23.0 | Consent of Wolf & Company, P.C. | |||
31.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||
31.2 | Rule 13a-14(a) Certification of Chief Financial Officer | |||
32.1 | Section 1350 Certification of Chief Executive Officer | |||
32.2 | Section 1350 Certification of Chief Financial Officer |
* | Management contract or compensatory plan, contract or arrangement. | |
(1) | Incorporated herein by reference from the Exhibits to Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No. 333-32146. | |
(2) | Incorporated by reference from the Exhibits to the Form 8-K filed on December 23, 2008. | |
(3) | Incorporated herein by reference from the Exhibits to the Form 8-K as filed on February 29, 2008. | |
(4) | Incorporated by reference from the Exhibits to the Form 8-K filed on January 6, 2009. | |
(5) | Incorporated by reference from the Exhibits to the Form 8-K filed on December 17, 2008. | |
(6) | Incorporated herein by reference from the Appendix to the Proxy Statement as filed on April 3, 2008. | |
(7) | Incorporated herein by reference from the Appendix to the Proxy Statement as filed on December 7, 2000. | |
(8) | Incorporated herein by reference from the Proxy Statement as filed on March 20, 2000 by Woronoco Bancorp, Inc. | |
(9) | Incorporated herein by reference from the Proxy Statement as filed on March 12, 2001 by Woronoco Bancorp, Inc. | |
(10) | Incorporated herein by reference from the Proxy Statement as filed on March 22, 2004 by Woronoco Bancorp, Inc. | |
(11) | Incorporated herein by reference from the exhibits to the registration statement on Form S-8 as filed on October 10, 2007, registration No. 333-146604. |
- 98 -
Table of Contents
Berkshire Hills Bancorp, Inc. | ||||
Date: March 16, 2009 | By: | /s/ Michael P. Daly | ||
Michael P. Daly | ||||
President, Chief Executive Officer and Director |
/s/ Michael P. Daly | President, Chief Executive Officer and Director (principal executive officer) | March 16, 2009 | ||
/s/ Kevin P. Riley | Chief Financial Officer and Treasurer (principal financial and accounting officer) | March 16, 2009 | ||
/s/ Lawrence A. Bossidy | Non-Executive Chairman | March 16, 2009 | ||
/s/ Wallace W. Altes | Director | March 16, 2009 | ||
/s/ John B. Davies | Director | March 16, 2009 | ||
/s/ Rodney C. Dimock | Director | March 16, 2009 | ||
/s/ David B. Farrell | Director | March 16, 2009 | ||
/s/ Susan M. Hill | Director | March 16, 2009 | ||
/s/ Cornelius D. Mahoney | Director | March 16, 2009 | ||
/s/ Catherine B. Miller | Director | March 16, 2009 | ||
/s/ David E. Phelps | Director | March 16, 2009 | ||
/s/ D. Jeffrey Templeton | Director | March 16, 2009 | ||
/s/ Corydon L. Thurston | Director | March 16, 2009 |
- 99 -
Table of Contents
Exhibit | ||||
Number | Description | |||
3.1 | Certificate of Incorporation of Berkshire Hills Bancorp, Inc.(1) | |||
3.2 | Certificate of Designations for the Series A Preferred Stock(2) | |||
3.3 | Bylaws of Berkshire Hills Bancorp, Inc. (3) | |||
4.1 | No long-term debt instrument issued by the Registrant exceeds 10% of consolidated assets or is registered. In accordance with paragraph 4(iii) of Item 601(b) of Regulation S-K, the Registrant will furnish the Securities and Exchange Commission copies of long-term debt instruments and related agreements upon request. | |||
10.1 | *Amended and Restated Employment Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Michael P. Daly(4) | |||
10.2 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Kevin P. Riley(4) | |||
10.3 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and John S. Millet(4) | |||
10.4 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Michael J. Oleksak(4) | |||
10.5 | *Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Shepard D. Rainie(4) | |||
10.6 | *Consulting Agreement between Berkshire Hills Bancorp, Inc. and David B. Farrell(5) | |||
10.7 | *Amended and Restated Supplemental Executive Retirement Agreement between Berkshire Bank and Michael P. Daly | |||
10.8 | *Amended and Restated Berkshire Hills Bancorp, Inc. 2003 Equity Compensation Plan(6) | |||
10.9 | *Form of Berkshire Bank Employee Severance Compensation Plan(1) | |||
10.10 | *Berkshire Hills Bancorp, Inc. 2001 Stock-Based Incentive Plan(7) | |||
10.11 | *Woronoco Bancorp, Inc. 1999 Stock-Based Incentive Plan(8) | |||
10.12 | *Woronoco Bancorp, Inc. 2001 Stock Option Plan(9) | |||
10.13 | *Woronoco Bancorp, Inc. 2004 Equity Compensation Plan(10) | |||
10.14 | *Factory Point Bancorp, Inc. 1999 Non-Employee Directors Stock Option Plan, as amended and restated(11) | |||
10.15 | *Factory Point Bancorp, Inc. 1999 Stock Incentive Plan(11) | |||
10.16 | *Factory Point Bancorp, Inc. 2004 Stock Incentive Plan, as amended and restated(11) | |||
11.0 | Statement re: Computation of Per Share Earnings is incorporated herein by reference to Part II, Item 8, “Financial Statements and Supplementary Data” | |||
21.0 | Subsidiary Information is incorporated herein by reference to Part I, Item 1, “Business — Subsidiary Activities” | |||
23.0 | Consent of Wolf & Company, P.C. | |||
31.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||
31.2 | Rule 13a-14(a) Certification of Chief Financial Officer | |||
32.1 | Section 1350 Certification of Chief Executive Officer | |||
32.2 | Section 1350 Certification of Chief Financial Officer |
Table of Contents
* | Management contract or compensatory plan, contract or arrangement. | |
(1) | Incorporated herein by reference from the Exhibits to Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No. 333-32146. | |
(2) | Incorporated by reference from the Exhibits to the Form 8-K filed on December 23, 2008. | |
(3) | Incorporated herein by reference from the Exhibits to the Form 8-K as filed on February 29, 2008. | |
(4) | Incorporated by reference from the Exhibits to the Form 8-K filed on January 6, 2009. | |
(5) | Incorporated by reference from the Exhibits to the Form 8-K filed on December 17, 2008. | |
(6) | Incorporated herein by reference from the Appendix to the Proxy Statement as filed on April 3, 2008. | |
(7) | Incorporated herein by reference from the Appendix to the Proxy Statement as filed on December 7, 2000. | |
(8) | Incorporated herein by reference from the Proxy Statement as filed on March 20, 2000 by Woronoco Bancorp, Inc. | |
(9) | Incorporated herein by reference from the Proxy Statement as filed on March 12, 2001 by Woronoco Bancorp, Inc. | |
(10) | Incorporated herein by reference from the Proxy Statement as filed on March 22, 2004 by Woronoco Bancorp, Inc. | |
(11) | Incorporated herein by reference from the exhibits to the registration statement on Form S-8 as filed on October 10, 2007, registration No. 333-146604. |