Exhibit 99.1
Berkshire Hills Reports Earnings Per Share Increase in Third Quarter;
Dividend Declared
PITTSFIELD, MASS., October 24, 2016Berkshire Hills Bancorp, Inc. (NYSE:BHLB) reported an 8% improvement in third quarter GAAP earnings of $0.53 per share in 2016 compared to $0.49 in 2015. Profits increased due to revenue growth from business expansion, together with the benefit of higher efficiency. Core earnings is a non-GAAP measure excluding non-core items consisting primarily of merger and restructuring costs. Third quarter core earnings per share increased to $0.57 per share from $0.54. Compared to the prior quarter, GAAP earnings per share increased by $0.01 and core EPS was up $0.03.
THIRD QUARTER FINANCIAL HIGHLIGHTS(comparisons are to prior quarter unless otherwise stated):
| • | 7% increase in net revenue |
| • | 6% annualized commercial loan growth |
| • | 7% annualized deposit growth |
| • | 17% increase in fee income |
| • | 3.25% net interest margin(fully taxable equivalent) |
| • | 57.9% efficiency ratio(non-GAAP financial measure) |
| • | 0.26% non-performing assets/assets |
| • | 0.20% net loan charge-offs/average loans |
CEO Michael Daly stated,“Our business strategies are producing solid top and bottom line results. Loans and deposits grew well in the third quarter. Our specialty lending teams are generating more revenue, including our Philadelphia area SBA lending group, which added to fee income. Our SBA volume is expanding across our footprint, achieving the number one spot for SBA 7(a) Loan Program originations in Connecticut for the first time. We made progress with our new Boston Congress Street branch and expect to be open for business there early next year. We are also moving forward towards completing our First Choice Bank acquisition in Princeton, New Jersey. Our strategies are building our business and earnings power, and I’m optimistic about the further progress we expect to see over the next year.”
| BHLB – Berkshire Hills Bancorp | Page 1 | www.berkshirebank.com |
DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of $0.20 per share to shareholders of record at the close of business on November 10, 2016, payable on November 23, 2016. The dividend equates to a 2.9% annualized yield based on the $27.29 average closing price of Berkshire’s common stock during the third quarter.
FINANCIAL CONDITION
The 3% annualized growth in total loans was driven by 6% annualized commercial loan growth in the third quarter, with growth concentrated in New York and Connecticut. The 7% annualized deposit increase was led by growth in demand deposits, including growth in commercial balances. The Company completed the sale of two outlying branches in the third quarter and is in the process of consolidating another three branches, which is targeted for completion shortly after year-end. Due to the strong deposit growth, the ratio of loans/deposits improved to 105%. The benefit of retained earnings increased the ratio of equity/assets to 11.8% and the ratio of tangible equity/assets to 7.7%. Book value per share increased at a 4% annualized rate to $29.97, while tangible book value per share grew at a 7% annualized rate to $18.78. Tangible equity/assets and tangible book value are non-GAAP financial measures. Problem assets and net loan charge-offs remained comparatively low.
RESULTS OF OPERATIONS
Higher earnings reflected positive operating leverage driven by 7% revenue growth quarter over quarter. The third quarter GAAP return on assets remained unchanged at 0.82%, while the core return on assets advanced to 0.88%. GAAP return on equity improved to 7.3% and the core return on tangible equity increased to 13.0%. The efficiency ratio improved to 57.9%. Total net income increased by $0.4 million, or 3%, to $16.4 million quarter over quarter.
The $4.9 million revenue growth over the prior quarter was driven by a 17% increase in fee income, together with a 1% increase in net interest income. Loan fee revenues increased by $2.2 million to $5.1 million, including $1.0 million in SBA loan sale gains from the 44 Business Capital team, together with higher revenue from interest rate swaps. Additionally, mortgage banking revenue increased to $1.9 million due to the strong customer demand and market pricing conditions.
The $0.5 million increase in net interest income was due to the 3% increase in average loans compared to the linked quarter. The net interest margin decreased to 3.25% from 3.31% for these periods. The yield on earning assets decreased by 0.03% due to ongoing market yield compression. Purchased loan accretion totaled $2.2 million, compared to $2.0 million in the prior quarter. Funding costs increased including the impact of forward interest rate swaps which became active as scheduled and are now completely active.
| BHLB – Berkshire Hills Bancorp | Page 2 | www.berkshirebank.com |
Third quarter non-interest expense totaled $48.8 million and increased by $2.6 million, or 6%, compared to the prior quarter. This included a $1.5 million increase in compensation expense and a $1.3 million increase in non-core expense. Compensation increased primarily due to revenue growth, including commissions tied to fee revenues. Full time equivalent staff decreased to 1,208 positions at quarter-end, compared to 1,222 positions at midyear. Non-core expense totaled $2.2 million in the third quarter and included merger and restructuring costs. Non-core expense is a non-GAAP measure that excludes costs not viewed as related to normalized operations. The tax rate measured 30% in the most recent quarter, and earnings per share included a $0.01 net benefit from income tax investment projects, compared to $0.03 in the prior quarter.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, October 25, 2016 to discuss the results for the quarter and provide guidance about expected future results. Participants are encouraged to pre-register for the conference call using the following link:http://dpregister.com/10093590. Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call, and will immediately receive simple instructions via email. Participants may also reach the registration link and access the webcast by logging in through the investor section of Berkshire’s website athttp://ir.berkshirebank.com. Parties who do not have internet access or are otherwise unable to pre-register can still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join them to the Berkshire Hills Bancorp (BHLB) earnings call. A telephone replay of the call will be available through Tuesday, November 1, 2016 by dialing 877-344-7529 and entering access number 10093590. The webcast will be available on Berkshire's website for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank– America's Most Exciting Bank®. The Company, recognized for its entrepreneurial approach and distinctive culture, has approximately $7.9 billion in assets and 91 full service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services. The Company has a pending agreement to acquire First Choice Bank, a $1.1 billion bank with eight branches in the Princeton, New Jersey area and a national mortgage originations subsidiary. For more information, visitwww.berkshirebank.com.
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and
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10-Q filed with the Securities and Exchange Commission and available on the SEC’s website atwww.sec.gov. Berkshire does not undertake any obligation to update forward-looking statements.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, Berkshire has filed with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that includes a Proxy Statement of First Choice and a Prospectus of Berkshire, as well as other relevant documents concerning the proposed merger. Investors and stockholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the proposed merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the Registration Statement and Proxy Statement/Prospectus, as well as other filings containing information about Berkshire and First Choice, may be obtained at the SEC’s Internet site (www.sec.gov). Copies of the Registration Statement and Proxy Statement/Prospectus and the filings that will be incorporated by reference therein may also be obtained, free of charge, from Berkshire’s website atir.berkshirebank.comor by contacting Berkshire Investor Relations at 413-236-3149 or by contacting Lisa Tuccillo at First Choice at 609-503-4828.
PARTICIPANTS IN SOLICITATION
Berkshire and First Choice and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of First Choice in connection with the proposed merger. Information about the directors and executive officers of Berkshire is set forth in the proxy statement for Berkshire’s 2016 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 24, 2016. Information about the directors and executive officers of First Choice will be set forth in the Proxy Statement/Prospectus. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction and a description of their direct and indirect interests, by security holdings or otherwise, may be obtained by reading the Proxy Statement/Prospectus and other relevant documents regarding the proposed merger to be filed with the SEC (when they become available). Free copies of these documents may be obtained as described in the preceding paragraph.
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 on pages F-9 and F-10 in the accompanying financial tables. In all
| BHLB – Berkshire Hills Bancorp | Page 4 | www.berkshirebank.com |
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 items which the Company does not view as related to its normalized operations. These items include securities gains/losses, merger costs, restructuring costs, and systems conversion costs. Non-core adjustments are presented net of an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income. The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees. These charges are related to the following business combinations: First Choice (pending), 44 Business Capital, Hampden Bancorp, and Firestone Financial. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales. The Company’s disclosures of organic growth of loans in 2016 are adjusted for the acquisition of the business operations related to 44 Business Capital.
CONTACTS
Investor Relations Contact
Allison O’Rourke; Executive Vice President, Investor Relations Officer; 413-236-3149
Media Contact
Elizabeth Mach; First Vice President, Marketing Officer; 413-445-8390
TABLE INDEX | CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES | |
| F-1 | Selected Financial Highlights | |
| F-2 | Balance Sheets | |
| F-3 | Loan and Deposit Analysis | |
| F-4 | Statements of Income | |
| F-5 | Statements of Income (Five Quarter Trend) | |
| F-6 | Average Yields and Costs | |
| F-7 | Average Balances | |
| F-8 | Asset Quality Analysis | |
| F-9 | Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data | |
| F-10 | Reconciliation of Non-GAAP Financial Measures (Year-to-Date) and Supplementary Data |
| BHLB – Berkshire Hills Bancorp | Page 5 | www.berkshirebank.com |
| BERKSHIRE HILLS BANCORP, INC. | ||||||||||||||||||||||||
| SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1) | ||||||||||||||||||||||||
| At or for the Quarters Ended (1)(2) | ||||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||||
| 2016 | 2016 (3) | 2016 | 2015 | 2015 | ||||||||||||||||||||
| PER SHARE DATA | ||||||||||||||||||||||||
| Net earnings, diluted | $ | 0.53 | $ | 0.52 | $ | 0.52 | $ | 0.52 | $ | 0.49 | ||||||||||||||
| Core earnings, diluted(4) | 0.57 | 0.54 | 0.54 | 0.54 | 0.54 | |||||||||||||||||||
| Total book value | 29.97 | 29.64 | 29.18 | 28.64 | 28.48 | |||||||||||||||||||
| Tangible book value(4) | 18.78 | 18.44 | 18.44 | 17.84 | 17.61 | |||||||||||||||||||
| Market price at period end | 27.71 | 26.92 | 26.89 | 29.11 | 27.54 | |||||||||||||||||||
| Dividends | 0.20 | 0.20 | 0.20 | 0.19 | 0.19 | |||||||||||||||||||
| PERFORMANCE RATIOS(5) | ||||||||||||||||||||||||
| Return on assets | 0.82 | % | 0.82 | % | 0.82 | % | 0.82 | % | 0.78 | % | ||||||||||||||
| Core return on assets(4) | 0.88 | 0.85 | 0.85 | 0.85 | 0.86 | |||||||||||||||||||
| Return on equity | 7.29 | 7.17 | 7.19 | 7.34 | 6.90 | |||||||||||||||||||
| Core return on equity(4) | 7.75 | 7.42 | 7.40 | 7.58 | 7.58 | |||||||||||||||||||
| Core return on tangible equity(4) | 12.99 | 12.45 | 12.20 | 12.68 | 12.78 | |||||||||||||||||||
| Net interest margin, fully taxable equivalent (FTE)(6) | 3.25 | 3.31 | 3.33 | 3.35 | 3.37 | |||||||||||||||||||
| Net interest margin (FTE), excluding purchased loan accretion(4) | 3.13 | 3.20 | 3.21 | 3.22 | 3.22 | |||||||||||||||||||
| Fee income/Net interest and fee income | 23.81 | 21.16 | 21.04 | 19.62 | 19.38 | |||||||||||||||||||
| Efficiency ratio(4) | 57.90 | 58.71 | 59.86 | 60.56 | 60.35 | |||||||||||||||||||
| GROWTH(Year-to-date) | ||||||||||||||||||||||||
| Total commercial loans, (annualized) | 9 | % | 11 | % | 6 | % | 29 | % | 37 | % | ||||||||||||||
| Total loans, (annualized) | 7 | 10 | 0 | 22 | 28 | |||||||||||||||||||
| Total deposits, (annualized) | 4 | 2 | 0 | 20 | 24 | |||||||||||||||||||
| Total net revenues, (compared to prior year) | 13 | 14 | 26 | 18 | 19 | |||||||||||||||||||
| Earnings per share, (compared to prior year) | 31 | 48 | 49 | 27 | 34 | |||||||||||||||||||
| Core earnings per share, (compared to prior year) | 6 | 5 | 8 | 16 | 17 | |||||||||||||||||||
| FINANCIAL DATA(In millions) | ||||||||||||||||||||||||
| Total assets | $ | 7,931 | $ | 8,044 | $ | 7,808 | $ | 7,832 | $ | 7,804 | ||||||||||||||
| Total earning assets | 7,229 | 7,327 | 7,142 | 7,140 | 7,130 | |||||||||||||||||||
| Total investments | 1,162 | 1,304 | 1,399 | 1,402 | 1,439 | |||||||||||||||||||
| Total loans | 6,047 | 6,000 | 5,727 | 5,725 | 5,665 | |||||||||||||||||||
| Allowance for loan losses | 43 | 41 | 40 | 39 | 38 | |||||||||||||||||||
| Total intangible assets | 348 | 349 | 334 | 335 | 337 | |||||||||||||||||||
| Total deposits | 5,750 | 5,657 | 5,584 | 5,589 | 5,507 | |||||||||||||||||||
| Total shareholders' equity | 933 | 923 | 906 | 887 | 882 | |||||||||||||||||||
| Net income | 16.4 | 16.0 | 16.0 | 16.0 | 14.7 | |||||||||||||||||||
| Core income(4) | 17.4 | 16.5 | 16.5 | 16.5 | 16.2 | |||||||||||||||||||
| ASSET QUALITY AND CONDITION RATIOS | ||||||||||||||||||||||||
| Net charge-offs (current quarter annualized)/average loans | 0.20 | % | 0.22 | % | 0.23 | % | 0.25 | % | 0.26 | % | ||||||||||||||
| Allowance for loan losses/total loans | 0.71 | 0.69 | 0.70 | 0.69 | 0.67 | |||||||||||||||||||
| Loans/deposits | 105 | 106 | 103 | 102 | 103 | |||||||||||||||||||
| Shareholders' equity to total assets | 11.76 | 11.48 | 11.60 | 11.33 | 11.30 | |||||||||||||||||||
| Tangible shareholders' equity to tangible assets(4) | 7.70 | 7.46 | 7.66 | 7.37 | 7.30 | |||||||||||||||||||
| (1) | Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily related to acquisitions and restructuring activities. | ||
| (2) | Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10. | ||
| (3) | The Company acquired certain assets and operations related to 44 Business Capital on April 29, 2016. | ||
| (4) | Non-GAAP financial measure. See F-9 and F-10 for reconciliations of non-GAAP financial measures. | ||
| (5) | All performance ratios are annualized and are based on average balance sheet amounts, where applicable. | ||
| (6) | Fully taxable equivalent considers the impact of tax advantaged investment securities and loans. |
F-1
| BERKSHIRE HILLS BANCORP, INC. | ||||||||||||
| CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2) | ||||||||||||
| September 30, | June 30, | December 31, | ||||||||||
| (In thousands) | 2016 | 2016 (1) | 2015 | |||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 61,107 | $ | 58,332 | $ | 72,918 | ||||||
| Short-term investments | 8,178 | 16,247 | 30,644 | |||||||||
| Total cash and short-term investments | 69,285 | 74,579 | 103,562 | |||||||||
| Trading security | 14,149 | 14,479 | 14,189 | |||||||||
| Securities available for sale, at fair value | 946,853 | 1,073,370 | 1,154,457 | |||||||||
| Securities held to maturity, at amortized cost | 131,467 | 132,010 | 131,652 | |||||||||
| Federal Home Loan Bank stock and other restricted securities | 61,277 | 68,242 | 71,018 | |||||||||
| Total securities | 1,153,746 | 1,288,101 | 1,371,316 | |||||||||
| Loans held for sale, at fair value | 20,471 | 22,450 | 13,191 | |||||||||
| Commercial real estate | 2,327,044 | 2,237,582 | 2,059,767 | |||||||||
| Commercial and industrial loans | 994,874 | 1,034,559 | 1,048,263 | |||||||||
| Residential mortgages | 1,818,111 | 1,843,600 | 1,815,035 | |||||||||
| Consumer loans | 906,975 | 884,560 | 802,171 | |||||||||
| Total loans | 6,047,004 | 6,000,301 | 5,725,236 | |||||||||
| Less: Allowance for loan losses | (43,105 | ) | (41,397 | ) | (39,308 | ) | ||||||
| Net loans | 6,003,899 | 5,958,904 | 5,685,928 | |||||||||
| Premises and equipment, net | 85,794 | 86,274 | 88,072 | |||||||||
| Other real estate owned | 80 | 595 | 1,725 | |||||||||
| Goodwill | 339,975 | 339,929 | 323,943 | |||||||||
| Other intangible assets | 8,308 | 9,057 | 10,664 | |||||||||
| Cash surrender value of bank-owned life insurance | 127,880 | 127,000 | 125,233 | |||||||||
| Deferred tax asset, net | 34,616 | 32,945 | 42,526 | |||||||||
| Other assets | 87,107 | 103,825 | 64,926 | |||||||||
| Total assets | $ | 7,931,161 | $ | 8,043,659 | $ | 7,831,086 | ||||||
| Liabilities and shareholders' equity | ||||||||||||
| Demand deposits | $ | 1,113,733 | $ | 1,050,220 | $ | 1,081,860 | ||||||
| NOW deposits | 476,189 | 489,734 | 510,807 | |||||||||
| Money market deposits | 1,469,075 | 1,415,041 | 1,408,107 | |||||||||
| Savings deposits | 607,868 | 611,627 | 601,761 | |||||||||
| Time deposits | 2,082,889 | 2,090,102 | 1,986,600 | |||||||||
| Total deposits | 5,749,754 | 5,656,724 | 5,589,135 | |||||||||
| Senior borrowings | 1,048,914 | 1,231,164 | 1,174,335 | |||||||||
| Subordinated borrowings | 89,116 | 89,072 | 88,983 | |||||||||
| Total borrowings | 1,138,030 | 1,320,236 | 1,263,318 | |||||||||
| Other liabilities | 110,784 | 143,279 | 91,444 | |||||||||
| Total liabilities | 6,998,568 | 7,120,239 | 6,943,897 | |||||||||
| Total common shareholders' equity | 932,593 | 923,420 | 887,189 | |||||||||
| Total liabilities and shareholders' equity | $ | 7,931,161 | $ | 8,043,659 | $ | 7,831,086 | ||||||
| Net shares outstanding | 31,122 | 31,156 | 30,974 | |||||||||
| (1) | The Company acquired certain assets and operations related to 44 Business Capital on April 29, 2016. |
F-2
| BERKSHIRE HILLS BANCORP, INC. | ||||||||||||||||||||
| CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3) | ||||||||||||||||||||
| LOAN ANALYSIS | ||||||||||||||||||||
| Organic Annualized Growth % (1) | ||||||||||||||||||||
| (in millions) | September 30, 2016 Balance | June 30, 2016 Balance | December 31, 2015 Balance | Quarter ended September 30, 2016 | Year to Date | |||||||||||||||
| Commercial real estate - construction | $ | 242 | $ | 249 | $ | 254 | (11 | )% | (6 | )% | ||||||||||
| Commercial real estate - other | 2,085 | 1,989 | 1,806 | 19 | 18 | |||||||||||||||
| Total commercial real estate (2) | 2,327 | 2,238 | 2,060 | 16 | 15 | |||||||||||||||
| Commercial and industrial loans | 995 | 1,034 | 1,048 | (15 | ) | (7 | ) | |||||||||||||
| Total commercial loans | 3,322 | 3,272 | 3,108 | 6 | 8 | |||||||||||||||
| Total residential mortgages | 1,818 | 1,844 | 1,815 | (6 | ) | 0 | ||||||||||||||
| Home equity | 358 | 360 | 361 | (2 | ) | (1 | ) | |||||||||||||
| Auto and other | 549 | 524 | 441 | 19 | 33 | |||||||||||||||
| Total consumer loans | 907 | 884 | 802 | 10 | 17 | |||||||||||||||
| Total loans | $ | 6,047 | $ | 6,000 | $ | 5,725 | 3 | % | 7 | % | ||||||||||
| (1) Non-GAAP financial measure. | ||||||||||||
| (2) Total commercial real estate loans include $37 million in loans acquired as part of the acquisition of certain assets and operations related to 44 Business Capital; however, the year to date organic annualized growth excludes these acquired loans. | ||||||||||||
| DEPOSIT ANALYSIS | ||||||||||||
| Annualized Growth % | ||||||||||||||||||||
| (in millions) | September 30, 2016 Balance | June 30, 2016 Balance | December 31, 2015 Balance | Quarter ended September 30, 2016 | Year to Date | |||||||||||||||
| Demand | $ | 1,114 | $ | 1,050 | $ | 1,082 | 24 | % | 4 | % | ||||||||||
| NOW | 476 | 490 | 511 | (11 | ) | (9 | ) | |||||||||||||
| Money market | 1,469 | 1,415 | 1,408 | 15 | 6 | |||||||||||||||
| Savings | 608 | 612 | 601 | (3 | ) | 2 | ||||||||||||||
| Total non-maturity deposits | 3,667 | 3,567 | 3,602 | 11 | 2 | |||||||||||||||
| Total time deposits | 2,083 | 2,090 | 1,987 | (1 | ) | 6 | ||||||||||||||
| Total deposits | $ | 5,750 | $ | 5,657 | $ | 5,589 | 7 | % | 4 | % | ||||||||||
F-3
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (In thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Interest and dividend income | ||||||||||||||||
| Loans | $ | 61,571 | $ | 56,343 | $ | 179,716 | $ | 152,292 | ||||||||
| Securities and other | 8,940 | 9,109 | 28,289 | 26,314 | ||||||||||||
| Total interest and dividend income | 70,511 | 65,452 | 208,005 | 178,606 | ||||||||||||
| Interest expense | ||||||||||||||||
| Deposits | 7,790 | 6,046 | 22,327 | 16,287 | ||||||||||||
| Borrowings | 4,750 | 2,435 | 12,569 | 7,218 | ||||||||||||
| Total interest expense | 12,540 | 8,481 | 34,896 | 23,505 | ||||||||||||
| Net interest income | 57,971 | 56,971 | 173,109 | 155,101 | ||||||||||||
| Non-interest income | ||||||||||||||||
| Loan related income | 5,102 | 1,537 | 11,046 | 5,603 | ||||||||||||
| Mortgage banking income | 1,862 | 693 | 4,018 | 3,492 | ||||||||||||
| Deposit related fees | 6,278 | 6,549 | 18,678 | 18,668 | ||||||||||||
| Insurance commissions and fees | 2,601 | 2,544 | 8,154 | 7,997 | ||||||||||||
| Wealth management fees | 2,269 | 2,376 | 7,006 | 7,376 | ||||||||||||
| Total fee income | 18,112 | 13,699 | 48,902 | 43,136 | ||||||||||||
| Other | 188 | (1,050 | ) | (440 | ) | (3,563 | ) | |||||||||
| Securities gains, net | 78 | 49 | 101 | 2,467 | ||||||||||||
| Gain on branch sales, net | 563 | — | 563 | — | ||||||||||||
| Total non-interest income | 18,941 | 12,698 | 49,126 | 42,040 | ||||||||||||
| Total net revenue | 76,912 | 69,669 | 222,235 | 197,141 | ||||||||||||
| Provision for loan losses | 4,734 | 4,240 | 13,262 | 12,295 | ||||||||||||
| Non-interest expense | ||||||||||||||||
| Compensation and benefits | 26,119 | 25,237 | 76,497 | 71,551 | ||||||||||||
| Occupancy and equipment | 6,650 | 6,827 | 19,900 | 21,178 | ||||||||||||
| Technology and communications | 4,902 | 4,645 | 14,573 | 12,328 | ||||||||||||
| Marketing and promotion | 671 | 781 | 2,081 | 2,294 | ||||||||||||
| Professional services | 1,744 | 1,053 | 4,533 | 3,700 | ||||||||||||
| FDIC premiums and assessments | 1,208 | 1,157 | 3,644 | 3,429 | ||||||||||||
| Other real estate owned and foreclosures | 46 | 298 | 702 | 800 | ||||||||||||
| Amortization of intangible assets | 749 | 887 | 2,355 | 2,722 | ||||||||||||
| Merger, restructuring and conversion expense | 2,170 | 3,361 | 3,828 | 16,493 | ||||||||||||
| Other | 4,585 | 5,132 | 14,099 | 14,056 | ||||||||||||
| Total non-interest expense | 48,844 | 49,378 | 142,212 | 148,551 | ||||||||||||
| Income before income taxes | 23,334 | 16,051 | 66,761 | 36,295 | ||||||||||||
| Income tax expense | 6,953 | 1,350 | 18,422 | 2,791 | ||||||||||||
| Net income | $ | 16,381 | $ | 14,701 | $ | 48,339 | $ | 33,504 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.53 | $ | 0.49 | $ | 1.58 | $ | 1.21 | ||||||||
| Diluted | $ | 0.53 | $ | 0.49 | $ | 1.57 | $ | 1.20 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 30,621 | 29,893 | 30,584 | 27,685 | ||||||||||||
| Diluted | 30,811 | 30,069 | 30,757 | 27,847 | ||||||||||||
F-4
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED - (F-5)
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
| (In thousands, except per share data) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| Interest and dividend income | ||||||||||||||||||||
| Loans | $ | 61,571 | $ | 59,703 | $ | 58,442 | $ | 59,055 | $ | 56,343 | ||||||||||
| Securities and other | 8,940 | 9,315 | 10,034 | 9,369 | 9,109 | |||||||||||||||
| Total interest and dividend income | 70,511 | 69,018 | 68,476 | 68,424 | 65,452 | |||||||||||||||
| Interest expense | ||||||||||||||||||||
| Deposits | 7,790 | 7,378 | 7,159 | 6,661 | 6,046 | |||||||||||||||
| Borrowings | 4,750 | 4,199 | 3,620 | 3,015 | 2,435 | |||||||||||||||
| Total interest expense | 12,540 | 11,577 | 10,779 | 9,676 | 8,481 | |||||||||||||||
| Net interest income | 57,971 | 57,441 | 57,697 | 58,748 | 56,971 | |||||||||||||||
| Non-interest income | ||||||||||||||||||||
| Loan related income | 5,102 | 2,898 | 3,046 | 2,707 | 1,537 | |||||||||||||||
| Mortgage banking income | 1,862 | 1,335 | 821 | 641 | 693 | |||||||||||||||
| Deposit related fees | 6,278 | 6,291 | 6,109 | 6,416 | 6,549 | |||||||||||||||
| Insurance commissions and fees | 2,601 | 2,660 | 2,893 | 2,254 | 2,544 | |||||||||||||||
| Wealth management fees | 2,269 | 2,235 | 2,502 | 2,326 | 2,376 | |||||||||||||||
| Total fee income | 18,112 | 15,419 | 15,371 | 14,344 | 13,699 | |||||||||||||||
| Other | 188 | (851 | ) | 223 | (1,739 | ) | (1,050 | ) | ||||||||||||
| Securities gains, net | 78 | (13 | ) | 36 | (357 | ) | 49 | |||||||||||||
| Gain on branch sales, net | 563 | — | — | — | — | |||||||||||||||
| Total non-interest income | 18,941 | 14,555 | 15,630 | 12,248 | 12,698 | |||||||||||||||
| Total net revenue | 76,912 | 71,996 | 73,327 | 70,996 | 69,669 | |||||||||||||||
| Provision for loan losses | 4,734 | 4,522 | 4,006 | 4,431 | 4,240 | |||||||||||||||
| Non-interest expense | ||||||||||||||||||||
| Compensation and benefits | 26,119 | 24,664 | 25,714 | 25,819 | 25,237 | |||||||||||||||
| Occupancy and equipment | 6,650 | 6,560 | 6,690 | 7,308 | 6,827 | |||||||||||||||
| Technology and communications | 4,902 | 4,814 | 4,857 | 4,553 | 4,645 | |||||||||||||||
| Marketing and promotion | 671 | 737 | 673 | 1,012 | 781 | |||||||||||||||
| Professional services | 1,744 | 1,509 | 1,280 | 1,472 | 1,053 | |||||||||||||||
| FDIC premiums and assessments | 1,208 | 1,203 | 1,233 | 1,220 | 1,157 | |||||||||||||||
| Other real estate owned and foreclosures | 46 | 393 | 263 | 33 | 298 | |||||||||||||||
| Amortization of intangible assets | 749 | 787 | 819 | 841 | 887 | |||||||||||||||
| Merger, restructuring and conversion expense | 2,170 | 878 | 780 | 1,118 | 3,361 | |||||||||||||||
| Other | 4,585 | 4,723 | 4,791 | 4,903 | 5,132 | |||||||||||||||
| Total non-interest expense | 48,844 | 46,268 | 47,100 | 48,279 | 49,378 | |||||||||||||||
| Income before income taxes | 23,334 | 21,206 | 22,221 | 18,286 | 16,051 | |||||||||||||||
| Income tax expense | 6,953 | 5,249 | 6,220 | 2,273 | 1,350 | |||||||||||||||
| Net income | $ | 16,381 | $ | 15,957 | $ | 16,001 | $ | 16,013 | $ | 14,701 | ||||||||||
| Earnings per share: | ||||||||||||||||||||
| Basic | $ | 0.53 | $ | 0.52 | $ | 0.52 | $ | 0.53 | $ | 0.49 | ||||||||||
| Diluted | $ | 0.53 | $ | 0.52 | $ | 0.52 | $ | 0.52 | $ | 0.49 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 30,621 | 30,605 | 30,511 | 30,500 | 29,893 | |||||||||||||||
| Diluted | 30,811 | 30,765 | 30,688 | 30,694 | 30,069 | |||||||||||||||
F-5
BERKSHIRE HILLS BANCORP, INC.
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-6)
| Quarters Ended | ||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||
| Earning assets | ||||||||||||||||||||
| Loans: | ||||||||||||||||||||
| Commercial real estate | 4.28 | % | 4.45 | % | 4.18 | % | 4.17 | % | 4.47 | % | ||||||||||
| Commercial and industrial loans | 5.15 | 4.93 | 5.04 | 5.51 | 4.79 | |||||||||||||||
| Residential mortgages | 3.60 | 3.63 | 3.86 | 3.72 | 3.74 | |||||||||||||||
| Consumer loans | 3.41 | 3.40 | 3.44 | 3.30 | 3.29 | |||||||||||||||
| Total loans | 4.10 | 4.14 | 4.13 | 4.15 | 4.14 | |||||||||||||||
| Securities | 3.26 | 3.28 | 3.26 | 2.96 | 2.92 | |||||||||||||||
| Short-term investments and loans held for sale | 1.69 | 1.29 | 0.91 | 0.89 | 1.34 | |||||||||||||||
| Total earning assets | 3.94 | 3.97 | 3.93 | 3.89 | 3.87 | |||||||||||||||
| Funding liabilities | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| NOW | 0.12 | 0.13 | 0.13 | 0.14 | 0.14 | |||||||||||||||
| Money market | 0.46 | 0.47 | 0.49 | 0.45 | 0.42 | |||||||||||||||
| Savings | 0.12 | 0.11 | 0.13 | 0.14 | 0.15 | |||||||||||||||
| Time | 1.10 | 1.06 | 0.99 | 0.93 | 0.90 | |||||||||||||||
| Total interest-bearing deposits | 0.67 | 0.65 | 0.63 | 0.59 | 0.55 | |||||||||||||||
| Borrowings | 1.53 | 1.38 | 1.19 | 0.96 | 0.81 | |||||||||||||||
| Total interest-bearing liabilities | 0.85 | 0.81 | 0.75 | 0.67 | 0.61 | |||||||||||||||
| Net interest spread | 3.09 | 3.16 | 3.18 | 3.22 | 3.26 | |||||||||||||||
| Net interest margin | 3.25 | 3.31 | 3.33 | 3.35 | 3.37 | |||||||||||||||
| Cost of funds(1) | 0.72 | 0.68 | 0.64 | 0.56 | 0.51 | |||||||||||||||
| Cost of deposits(2) | 0.54 | 0.53 | 0.51 | 0.48 | 0.45 | |||||||||||||||
| (1) Cost of funds includes all deposits and borrowings. | ||||||||||||||||||||
| (2) The average cost of deposits includes the deposits held for sale. | ||||||||||||||||||||
F-6
BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES - UNAUDITED - (F-7)
| Quarters Ended | ||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||
| (In thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||||
| Assets | ||||||||||||||||||||||
| Loans | ||||||||||||||||||||||
| Commercial real estate | $ | 2,260,482 | $ | 2,173,539 | $ | 2,079,001 | $ | 2,034,917 | $ | 1,948,753 | ||||||||||||
| Commercial and industrial loans | 1,009,581 | 1,047,866 | 1,027,257 | 1,033,081 | 998,782 | |||||||||||||||||
| Residential mortgages | 1,839,364 | 1,759,193 | 1,798,034 | 1,790,334 | 1,664,505 | |||||||||||||||||
| Consumer loans | 900,432 | 844,759 | 807,888 | 807,768 | 813,986 | |||||||||||||||||
| Total loans(1) (2) | 6,009,859 | 5,825,357 | 5,712,180 | 5,666,100 | 5,426,026 | |||||||||||||||||
| Securities(3) | 1,197,760 | 1,247,357 | 1,342,590 | 1,368,505 | 1,353,818 | |||||||||||||||||
| Short-term investments and loans held for sale | 40,259 | 41,449 | 56,042 | 51,241 | 51,832 | |||||||||||||||||
| Total earning assets | 7,247,878 | 7,114,163 | 7,110,812 | 7,085,846 | 6,831,676 | |||||||||||||||||
| Goodwill and other intangible assets | 349,059 | 344,832 | 333,948 | 335,440 | 330,084 | |||||||||||||||||
| Other assets | 360,182 | 349,816 | 346,327 | 342,902 | 379,319 | |||||||||||||||||
| Total assets | $ | 7,957,119 | $ | 7,808,811 | $ | 7,791,087 | $ | 7,764,188 | $ | 7,541,079 | ||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||
| Deposits(4) | ||||||||||||||||||||||
| NOW | $ | 474,650 | $ | 492,901 | $ | 484,334 | $ | 491,445 | $ | 475,433 | ||||||||||||
| Money market | 1,448,108 | 1,403,629 | 1,417,068 | 1,455,267 | 1,474,389 | |||||||||||||||||
| Savings | 608,365 | 612,261 | 602,414 | 604,215 | 615,410 | |||||||||||||||||
| Time | 2,095,269 | 2,047,020 | 2,063,712 | 1,958,394 | 1,795,156 | |||||||||||||||||
| Total interest-bearing deposits | 4,626,392 | 4,555,811 | 4,567,528 | 4,509,321 | 4,360,388 | |||||||||||||||||
| Borrowings | 1,235,065 | 1,223,629 | 1,222,288 | 1,256,287 | 1,198,455 | |||||||||||||||||
| Total interest-bearing liabilities | 5,861,457 | 5,779,440 | 5,789,816 | 5,765,608 | 5,558,843 | |||||||||||||||||
| Non-interest-bearing demand deposits | 1,084,786 | 1,032,951 | 1,026,447 | 1,033,844 | 1,010,613 | |||||||||||||||||
| Other liabilities | 111,743 | 105,948 | 84,042 | 91,877 | 119,322 | |||||||||||||||||
| Total liabilities | 7,057,986 | 6,918,339 | 6,900,305 | 6,891,329 | 6,688,778 | |||||||||||||||||
| Total shareholders' equity | 899,133 | 890,472 | 890,782 | 872,859 | 852,301 | |||||||||||||||||
| Total liabilities and shareholders' equity | $ | 7,957,119 | $ | 7,808,811 | $ | 7,791,087 | $ | 7,764,188 | $ | 7,541,079 | ||||||||||||
| Supplementary data | ||||||||||||||||||||||
| Total non-maturity deposits(4) | $ | 3,615,909 | $ | 3,541,742 | $ | 3,530,263 | $ | 3,584,771 | $ | 3,575,845 | ||||||||||||
| Total deposits(4) | 5,711,178 | 5,588,762 | 5,593,975 | 5,543,165 | 5,371,001 | |||||||||||||||||
| Fully taxable equivalent income adjustment | 1,200 | 1,180 | 1,134 | 1,108 | 1,131 | |||||||||||||||||
| Total average tangible equity(5) | 550,074 | 545,640 | 556,834 | 537,419 | 522,217 | |||||||||||||||||
| (1) Total loans include non-accruing loans. | ||||||||||||||||||||||
| (2) The average balances of loans include the loans associated with the two branches in New York that are for sale and presented under loans held for sale on the consolidated balance sheet. | ||||||||||||||||||||||
| (3) Average balances for securities available-for-sale are based on amortized cost. | ||||||||||||||||||||||
| (4) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated balance sheet. | ||||||||||||||||||||||
| (5) See page F-9. | ||||||||||||||||||||||
F-7
| BERKSHIRE HILLS BANCORP, INC. | ||||||||||||||||||||
| ASSET QUALITY ANALYSIS - UNAUDITED - (F-8) | ||||||||||||||||||||
| At or for the Quarters Ended | ||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
| (in thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| NON-PERFORMING ASSETS | ||||||||||||||||||||
| Non-accruing loans: | ||||||||||||||||||||
| Commercial real estate | $ | 6,295 | $ | 4,808 | $ | 5,001 | $ | 4,882 | $ | 5,693 | ||||||||||
| Commercial and industrial loans | 6,714 | 7,590 | 7,480 | 8,259 | 8,092 | |||||||||||||||
| Residential mortgages | 4,374 | 4,882 | 4,732 | 3,966 | 4,565 | |||||||||||||||
| Consumer loans | 3,281 | 3,376 | 3,588 | 3,768 | 3,386 | |||||||||||||||
| Total non-accruing loans | 20,664 | 20,656 | 20,801 | 20,875 | 21,736 | |||||||||||||||
| Other real estate owned | 80 | 595 | 1,440 | 1,725 | 2,487 | |||||||||||||||
| Total non-performing assets | $ | 20,744 | $ | 21,251 | $ | 22,241 | $ | 22,600 | $ | 24,223 | ||||||||||
| Total non-accruing loans/total loans | 0.34 | % | 0.34 | % | 0.36 | % | 0.36 | % | 0.38 | % | ||||||||||
| Total non-performing assets/total assets | 0.26 | % | 0.26 | % | 0.28 | % | 0.29 | % | 0.31 | % | ||||||||||
| PROVISION AND ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||
| Balance at beginning of period | $ | 41,397 | $ | 40,055 | $ | 39,308 | $ | 38,180 | $ | 37,197 | ||||||||||
| Charged-off loans | (3,441 | ) | (3,393 | ) | (3,704 | ) | (3,538 | ) | (3,542 | ) | ||||||||||
| Recoveries on charged-off loans | 415 | 213 | 445 | 235 | 285 | |||||||||||||||
| Net loans charged-off | (3,026 | ) | (3,180 | ) | (3,259 | ) | (3,303 | ) | (3,257 | ) | ||||||||||
| Provision for loan losses | 4,734 | 4,522 | 4,006 | 4,431 | 4,240 | |||||||||||||||
| Balance at end of period | $ | 43,105 | $ | 41,397 | $ | 40,055 | $ | 39,308 | $ | 38,180 | ||||||||||
| Allowance for loan losses/total loans | 0.71 | % | 0.69 | % | 0.70 | % | 0.69 | % | 0.67 | % | ||||||||||
| Allowance for loan losses/non-accruing loans | 209 | % | 200 | % | 193 | % | 188 | % | 176 | % | ||||||||||
| NET LOAN CHARGE-OFFS | ||||||||||||||||||||
| Commercial real estate | $ | (547 | ) | $ | (534 | ) | $ | (1,043 | ) | $ | (1,152 | ) | $ | (1,343 | ) | |||||
| Commercial and industrial loans | (1,610 | ) | (1,720 | ) | (847 | ) | (1,056 | ) | (1,098 | ) | ||||||||||
| Residential mortgages | (452 | ) | (568 | ) | (774 | ) | (633 | ) | (354 | ) | ||||||||||
| Home equity | (65 | ) | (164 | ) | (221 | ) | (118 | ) | (135 | ) | ||||||||||
| Auto and other consumer | (352 | ) | (194 | ) | (374 | ) | (344 | ) | (327 | ) | ||||||||||
| Total, net | $ | (3,026 | ) | $ | (3,180 | ) | $ | (3,259 | ) | $ | (3,303 | ) | $ | (3,257 | ) | |||||
| Net charge-offs (QTD annualized)/average loans | 0.20 | % | 0.22 | % | 0.23 | % | 0.25 | % | 0.26 | % | ||||||||||
| Net charge-offs (YTD annualized)/average loans | 0.22 | % | 0.22 | % | 0.23 | % | 0.25 | % | 0.26 | % | ||||||||||
| DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | ||||||||||||||||||||
| 30-89 Days delinquent | 0.25 | % | 0.25 | % | 0.26 | % | 0.34 | % | 0.37 | % | ||||||||||
| 90+ Days delinquent and still accruing | 0.09 | % | 0.08 | % | 0.07 | % | 0.09 | % | 0.10 | % | ||||||||||
| Total accruing delinquent loans | 0.34 | % | 0.33 | % | 0.33 | % | 0.43 | % | 0.47 | % | ||||||||||
| Non-accruing loans | 0.34 | % | 0.34 | % | 0.36 | % | 0.36 | % | 0.38 | % | ||||||||||
| Total delinquent and non-accruing loans | 0.68 | % | 0.67 | % | 0.69 | % | 0.79 | % | 0.85 | % | ||||||||||
F-8
| BERKSHIRE HILLS BANCORP, INC. | ||||||||||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9) | ||||||||||||||||||||||||
| At or for the Quarters Ended | ||||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||||
| (in thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||||||
| Net income | $ | 16,381 | $ | 15,957 | $ | 16,001 | $ | 16,013 | $ | 14,701 | ||||||||||||||
| Adj: Net securities (gains) losses | (78 | ) | 13 | (36 | ) | 357 | (49 | ) | ||||||||||||||||
| Adj: Net gain on sale of branches | (563 | ) | — | — | — | — | ||||||||||||||||||
| Adj: Merger and acquisition expense | 1,453 | 701 | 527 | 1,230 | 2,987 | |||||||||||||||||||
| Adj: Restructuring expense | 717 | 177 | 253 | (112 | ) | 374 | ||||||||||||||||||
| Adj: Income taxes | (492 | ) | (334 | ) | (256 | ) | (959 | ) | (1,862 | ) | ||||||||||||||
| Total core income | (A) | $ | 17,418 | $ | 16,514 | $ | 16,489 | $ | 16,529 | $ | 16,151 | |||||||||||||
| Total revenue | $ | 76,912 | $ | 71,996 | $ | 73,327 | $ | 70,996 | $ | 69,669 | ||||||||||||||
| Adj: Net securities (gains) losses | (78 | ) | 13 | (36 | ) | 357 | (49 | ) | ||||||||||||||||
| Adj: Net gain on branch sales | (563 | ) | — | — | — | — | ||||||||||||||||||
| Total core revenue | (B) | $ | 76,271 | $ | 72,009 | $ | 73,291 | $ | 71,353 | $ | 69,620 | |||||||||||||
| Total non-interest expense | $ | 48,844 | $ | 46,268 | $ | 47,100 | $ | 48,279 | $ | 49,378 | ||||||||||||||
| Less: Total non-core expense (see above) | (2,170 | ) | (878 | ) | (780 | ) | (1,118 | ) | (3,361 | ) | ||||||||||||||
| Core non-interest expense | (C) | $ | 46,674 | $ | 45,390 | $ | 46,320 | $ | 47,161 | $ | 46,017 | |||||||||||||
| (in millions, except per share data) | ||||||||||||||||||||||||
| Total average assets | (D) | $ | 7,957 | $ | 7,809 | $ | 7,791 | $ | 7,764 | $ | 7,541 | |||||||||||||
| Total average shareholders' equity | (E) | 899 | 890 | 891 | 873 | 852 | ||||||||||||||||||
| Total average tangible shareholders' equity | (F) | 550 | 546 | 557 | 537 | 522 | ||||||||||||||||||
| Total tangible shareholders' equity, period-end(1) | (G) | 584 | 574 | 572 | 553 | 545 | ||||||||||||||||||
| Total tangible assets, period-end(1) | (H) | 7,583 | 7,695 | 7,474 | 7,497 | 7,468 | ||||||||||||||||||
| Total common shares outstanding, period-end (thousands) | (I) | 31,122 | 31,156 | 31,039 | 30,974 | 30,949 | ||||||||||||||||||
| Average diluted shares outstanding (thousands) | (J) | 30,811 | 30,765 | 30,688 | 30,694 | 30,069 | ||||||||||||||||||
| Core earnings per share, diluted | (A/J) | $ | 0.57 | $ | 0.54 | $ | 0.54 | $ | 0.54 | $ | 0.54 | |||||||||||||
| Tangible book value per share, period-end | (G/I) | 18.78 | 18.44 | 18.44 | 17.84 | 17.61 | ||||||||||||||||||
| Total tangible shareholders' equity/total tangible assets | (G)/(H) | 7.70 | 7.46 | 7.66 | 7.37 | 7.30 | ||||||||||||||||||
| Performance ratios(2) | ||||||||||||||||||||||||
| GAAP return on assets | 0.82 | % | 0.82 | % | 0.82 | % | 0.82 | % | 0.78 | % | ||||||||||||||
| Core return on assets | (A/D) | 0.88 | 0.85 | 0.85 | 0.85 | 0.86 | ||||||||||||||||||
| GAAP return on equity | 7.29 | 7.17 | 7.19 | 7.34 | 6.90 | |||||||||||||||||||
| Core return on equity | (A/E) | 7.75 | 7.42 | 7.40 | 7.58 | 7.58 | ||||||||||||||||||
| Core return on tangible equity(3) | (A/F) | 12.99 | 12.45 | 12.20 | 12.68 | 12.78 | ||||||||||||||||||
| Efficiency ratio(4)(5) | (C-M)/(B+K+N) | 57.90 | 58.71 | 59.86 | 60.56 | 60.35 | ||||||||||||||||||
| Net interest margin | 3.25 | 3.31 | 3.33 | 3.35 | 3.37 | |||||||||||||||||||
| Supplementary data(in thousands) | ||||||||||||||||||||||||
| Tax benefit on tax-credit investments(6) | (K) | $ | 1,852 | $ | 2,777 | $ | 1,588 | $ | 4,029 | $ | 4,029 | |||||||||||||
| Non-interest income charge on tax-credit investments(7) | (L) | (1,525 | ) | (1,938 | ) | (1,101 | ) | (2,851 | ) | (2,851 | )# | |||||||||||||
| Net income on tax-credit investments | (K+L) | 327 | 839 | 487 | 1,178 | 1,178 | ||||||||||||||||||
| Intangible amortization | (M) | 749 | 787 | 819 | 841 | 887 | ||||||||||||||||||
| Fully taxable equivalent income adjustment | (N) | 1,200 | 1,180 | 1,134 | 1,108 | 1,131 | ||||||||||||||||||
| (1) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Total tangible assets is computed by taking total assets less the intangible assets at period-end. | |||||||||||
| (2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding. | |||||||||||
| (3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, assuming a 40% marginal rate, by tangible equity. | |||||||||||
| (4) Non-GAAP financial measure. | |||||||||||
| (5) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The Company uses this non-GAAP measure to provide important information regarding its operational efficiency. | |||||||||||
| (6) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy projects. | |||||||||||
| (7) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. | |||||||||||
F-9
| BERKSHIRE HILLS BANCORP, INC. | ||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED - (F-10) | ||||||||||||
| At or for Nine Months Ended | ||||||||||||
| Sept. 30, | Sept. 30, | |||||||||||
| (Dollars in thousands) | 2016 | 2015 | ||||||||||
| Net income | $ | 48,339 | $ | 33,504 | ||||||||
| Adj: Net securities (gains) | (101 | ) | (2,467 | ) | ||||||||
| Adj: Net gain on sale of branches | (563 | ) | — | |||||||||
| Adj: Merger and acquisition expenses | 2,681 | 11,927 | ||||||||||
| Adj: Restructuring expense | 1,147 | 4,566 | ||||||||||
| Adj: Income taxes | (1,082 | ) | (4,449 | ) | ||||||||
| Total core income | (A) | $ | 50,421 | $ | 43,081 | |||||||
| Total revenue | 222,235 | 197,141 | ||||||||||
| Adj: Net securities (gains) losses | (101 | ) | (2,467 | ) | ||||||||
| Adj: Net gain on branch sales | (563 | ) | — | |||||||||
| Total core revenue | (B) | $ | 221,571 | $ | 194,674 | |||||||
| Total non-interest expense | $ | 142,212 | $ | 148,551 | ||||||||
| Less: Total non-core expense (see above) | (3,828 | ) | (16,493 | ) | ||||||||
| Core non-interest expense | (C) | $ | 138,384 | $ | 132,058 | |||||||
| (Dollars in millions, except per share data) | ||||||||||||
| Total average assets | (D) | $ | 7,852 | $ | 7,078 | |||||||
| Total average shareholders' equity | (E) | 893 | 783 | |||||||||
| Total average tangible shareholders' equity | (F) | 551 | 480 | |||||||||
| Total tangible shareholders' equity, period-end(1) | (G) | 584 | 545 | |||||||||
| Total tangible assets, period-end(1) | (H) | 7,583 | 7,468 | |||||||||
| Total common shares outstanding, period-end (thousands) | (I) | 31,122 | 30,949 | |||||||||
| Average diluted shares outstanding (thousands) | (J) | 30,757 | 27,847 | |||||||||
| Core earnings per common share, diluted | (A/J) | $ | 1.64 | $ | 1.55 | |||||||
| Tangible book value per common share, period-end | (G/I) | 18.78 | 17.61 | |||||||||
| Total tangible shareholders' equity/total tangible assets | (G/H) | 7.70 | 7.30 | |||||||||
| Performance ratios(2) | ||||||||||||
| GAAP return on assets | 0.82 | % | 0.63 | % | ||||||||
| Core return on assets | (A/D) | 0.86 | 0.81 | |||||||||
| GAAP return on equity | 7.21 | 5.71 | ||||||||||
| Core return on equity | (A/E) | 7.53 | 7.34 | |||||||||
| Core return on tangible equity(3) | (A/F) | 12.55 | 12.43 | |||||||||
| Efficiency ratio(4)(5) | (C-M) / (B+K+N) | 58.81 | 61.63 | |||||||||
| Net interest margin | 3.30 | 3.29 | ||||||||||
| Supplementary data | ||||||||||||
| Tax benefit on tax-credit investments(6) | (K) | $ | 6,217 | $ | 12,098 | |||||||
| Non-interest income charge on tax-credit investments(7) | (L) | (4,564 | ) | (8,554 | ) | |||||||
| Net income on tax-credit investments | (K+L) | 1,653 | 3,543 | |||||||||
| Intangible amortization | (M) | 2,355 | 2,722 | |||||||||
| Fully taxable equivalent income adjustment | (N) | 3,514 | 3,088 | |||||||||
| (1) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Total tangible assets is computed by taking total assets less the intangible assets at period-end. |
| (2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding. |
| (3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, assuming a 40% marginal rate, by tangible equity. |
| (4) Non-GAAP financial measure. |
| (5) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The Company uses this non-GAAP measure to provide important information regarding its operational efficiency. |
| (6) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy. |
| (7) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. |
F-10