Exhibit 99.1
BERKSHIRE HILLS BANCORP, INC. TO ACQUIRE WORONOCO BANCORP, INC.
CREATING $2 BILLION INSTITUTION
BERKSHIRE BANK TO ADD $600 MILLION IN LOANS, $460 MILLION IN DEPOSITS,
10 BRANCHES AND TWO INSURANCE AGENCIES
December 17, 2004
PITTSFIELD and WESTFIELD, MA - Berkshire Hills Bancorp, Inc.
("Berkshire Hills") (AMEX: BHL) the holding company for Berkshire Bank, and
Woronoco Bancorp, Inc. ("Woronoco") (AMEX: WRO) the holding company for Woronoco
Savings Bank, announced today that they have signed a definitive merger
agreement under which Berkshire Hills will acquire Woronoco. Headquartered in
Westfield, Woronoco Savings Bank has assets of approximately $898.5 million at
September 30, 2004 and operates 10 banking offices and two insurance agency
offices in Hampden and Hampshire counties in western Massachusetts.
The combined institution will serve customers through a network of 22
full-service branches in western Massachusetts and New York, having total assets
of approximately $2.0 billion. As a result, Berkshire Bank will be the 4th
largest publicly traded bank headquartered in Massachusetts and the largest
headquartered in the western part of the state. Berkshire Hills and Woronoco
will merge operations and existing Woronoco Savings Bank branches will become
branches of Berkshire Bank.
Michael P. Daly will be President and Chief Executive Officer of both
Berkshire Hills and Berkshire Bank and the headquarters will remain in
Pittsfield. Lawrence A. Bossidy will be Chairman of the Board of Directors of
the combined companies. Cornelius D. Mahoney, Chairman, President and Chief
Executive Officer of Woronoco and Woronoco Savings Bank, and two other Woronoco
directors will join the Boards of Directors of Berkshire Hills and Berkshire
Bank when the merger is completed.
Under the terms of the merger agreement, which has been unanimously
approved by the Directors of both companies, Woronoco will merge with and into
Berkshire Hills. Stockholders of Woronoco will have the right to elect to
receive either $36.00 in cash or one share of Berkshire Hills common stock in
exchange for each share of Woronoco held by them, subject to proration
procedures so that 75 percent of the outstanding Woronoco common shares are
converted into Berkshire Hills common stock and the balance are converted into
the cash consideration. Based upon Berkshire Hills' closing price of $37.00 on
December 16, 2004, the transaction is valued at $36.75 per share, or
approximately $144.5 million in the aggregate. If not previously exercised,
Woronoco stock options will be converted into Berkshire Hills stock options upon
the completion of the merger on a one-for-one basis. Additionally, under the
terms of the agreement, Woronoco will pay its stockholders a one-time $0.25
special cash dividend. This dividend will be paid in addition to the regular
quarterly cash dividends to be paid by Woronoco.
The purchase price represents 172.7 % of Woronoco's tangible book
value, 23.1 times Woronoco's trailing twelve months earnings and a 19.0% premium
to core deposits.
Commenting on the merger, Mr. Daly said, "This transaction meets all of
the criteria we have recently articulated that must be present for us to do a
significant acquisition: it is accretive to earnings in one of the contiguous
regions of western Massachusetts, New York, Connecticut or Vermont, and Woronoco
complements our community banking strengths. Woronoco is a quality institution
with a strong consumer base, significant
business and wealth management growth opportunities, and a low risk profile.
Woronoco's insurance group will give us a platform to provide quality insurance
products to Berkshire Bank customers. In combination with Berkshire Bank's
strong commercial base, wealth management, trust services, and government
banking services, the combined institution will be a formidable commercial and
community banking franchise, with significant non-interest income potential,
management synergies, and solid asset quality."
Mr. Mahoney added, "We are very pleased to join Berkshire Hills and
Berkshire Bank and know that this new partnership will continue to serve our
customers, communities and employees with the same care and commitment
characteristic of Woronoco Savings Bank. Our Board of Directors placed great
value on the compatibility of the two organizations. I am very impressed with
their business strategy and execution, as well as the quality of their
management and Board of Directors. This is good news for our customers,
shareholders and employees."
In connection with the merger, Berkshire Hills plans to deleverage the
combined entity's balance sheet by up to $250 million through a combination of
investment portfolio and loan sales. Proceeds will be used to retire FHLB
borrowings and brokered certificates of deposit. Berkshire Hills expects the
deleveraging to improve the combined company's asset/liability position,
eliminate earnings from wholesale funding activities and refocus efforts on core
organic growth.
Excluding estimated one-time merger-related costs of approximately
$25.1 million, exclusive of balance sheet restructuring charges, but including
the impact of the planned balance sheet restructuring and cost savings, which
are currently estimated to total approximately 30% of Woronoco's current
non-interest expense levels, the acquisition is estimated to be nominally
accretive to Berkshire Hills' estimated 2005 earnings per share net of
securities gains. For 2006, the first full year of combined operations,
Berkshire Hills expects the transaction to be 6% accretive to its earnings per
share net of securities gains. Berkshire Hills has not factored any revenue
enhancements into its projections.
Neither Berkshire Bank Foundation, Greater Berkshire Foundation nor
Woronoco Savings Charitable Foundation will be affected by the merger. Each
foundation will remain independent entities dedicated to providing grants in its
local communities.
The merger is subject to approval by state and federal regulatory
agencies and the stockholders of both companies. The parties anticipate that the
transaction will close in the second quarter of 2005. Northeast Capital &
Advisory, Inc. served as the financial advisor for Berkshire Hills, and Sandler
O'Neill & Partners, L.P. advised Woronoco. Wachtell, Lipton, Rosen & Katz served
as outside legal counsel to Berkshire Hills, while Muldoon Murphy Faucette &
Aguggia LLP served as outside legal counsel to Woronoco.
CONFERENCE CALL
Berkshire Hills and Woronoco will hold a conference call regarding
these announcements at 11:00 a.m. EST today, Friday, December 17, 2004. The
conference call can be accessed by dialing 1-877-407-8035. Please call in a few
minutes prior to 11:00 a.m. (ET) to register for the event. A copy of the
investor presentation for this call will be available at Berkshire Bank's Web
site at www.berkshirebank.com, and in the presentations section of the investor
relations section of Woronoco Savings Bank's Web site at www.woronoco.com at
approximately 10:30 a.m. today. There will be no replay of this call.
The proposed transaction will be submitted to Berkshire Hills' and
Woronoco's stockholders for their consideration. Berkshire Hills and Woronoco
will file a registration statement, a joint proxy statement/prospectus, and
other relevant documents concerning the proposed transaction with the SEC.
Stockholders of Berkshire Hills and Woronoco are urged to read the registration
statement and the joint proxy statement/prospectus when it becomes available 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.
You will be able to obtain a free copy of the joint proxy statement/prospectus,
as well as other filings containing information about Berkshire Hills and
Woronoco, at the SEC's Web site (http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the SEC filings that will be incorporated by reference
in the joint proxy statement/prospectus can be obtained, without charge, by
directing a request to Rose A. Borotto, Investor Relations, Berkshire Hills
Bancorp, Inc., 24 North Street, Pittsfield, MA 01201 (413) 236-3144 or Mark
Roberts, Vice President, Finance, Woronoco Bancorp, Inc., 31 Court Street,
Westfield, MA 01085 (413) 564-6270. Each of Berkshire Hills and Woronoco and its
respective directors and executive officers may be deemed to be participants in
the solicitation of proxies from the stockholders of Berkshire Hills and
Woronoco, as the case may be, in connection with the merger. Information about
the directors and executive officers of Woronoco and their ownership of Woronoco
common stock is set forth in the proxy statement, dated March 22, 2004, for
Woronoco's 2004 annual meeting of stockholders, as filed with the SEC on a
Schedule 14A. Information about the directors and executive officers of
Berkshire Hills and their ownership of Berkshire Hills common stock is set forth
in the proxy statement, dated April 1, 2004, for Berkshire Hills' 2004 annual
meeting of stockholders, as filed with the SEC on a Schedule 14A. Additional
information regarding the interests of such participants may be obtained by
reading the joint proxy statement/prospectus when it becomes available.
Berkshire Hills Bancorp, Inc. is the holding company for Berkshire
Bank. Established in 1846, Berkshire Bank is one of Massachusetts' oldest and
largest independent banks and is the largest banking institution based in
western Massachusetts. The Bank is headquartered in Pittsfield, Massachusetts,
with 11 branch offices serving communities throughout Berkshire County, and a
representative office and one branch in New York. The bank is committed to
continue operation as an independent bank, delivering exceptional customer
service and a broad array of competitively priced retail and commercial products
to its customers. For more information on Berkshire Hills Bancorp, Inc., visit
www.berkshirebank.com or call (413) 443-5601.
Woronoco Bancorp, Inc. is the holding company for Woronoco Savings
Bank. Established in 1871, and headquartered in Westfield, Massachusetts,
Woronoco Savings Bank provides a wide variety of financial products and services
through its ten branch offices located in Hampden and Hampshire Counties in
western Massachusetts. Through its partnership with Infinex Financial Group, the
Bank offers access to a full range of investment products, including stocks,
bonds, mutual funds and annuities. The Bank's subsidiary, the Woronoco Insurance
Group, Inc., offers property and casualty insurance products and life insurance
and group life, group health and accident insurance products for individuals and
commercial clients. For more information regarding the Bank's products and
services, and for Woronoco Bancorp, Inc. investor-relations information, please
visit its web site at www.woronoco.com.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. This press
release contains certain forward-looking statements that are based on certain
assumptions and describe future plans, strategies and expectations of Berkshire
Hills Bancorp, Inc., Berkshire Bank, Woronoco Bancorp, Inc. and Woronoco Savings
Bank. These forward-looking statements include, but are not limited to,
statements about (i) the benefits of the merger between Berkshire Hills and
Woronoco, including future financial and operating results, cost savings, and
accretion to reported earnings that may be realized from the merger; and (ii)
Berkshire Hills' and Woronoco's plans, objectives, expectations and
intentions, and other statements contained in this presentation that are not
historical facts. These forward-looking statements are generally identified by
use of the words "believe," "expect," "intend," "anticipate," "estimate,"
"project" or similar expressions. Berkshire Hills' and Woronoco's ability to
predict results or the actual effect of future plans or strategies is inherently
uncertain. Factors that could have a material adverse effect on the operations
of Berkshire Hills, Woronoco and either's subsidiaries include, but are not
limited to, changes in interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
Berkshire's or Woronoco's market area and accounting principles and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Berkshire
Hills and Woronoco do not undertake - and specifically disclaim any obligation -
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
In addition, the following factors, among others, could cause actual
results to differ materially from the anticipated results or other expectations
expressed in the forward-looking statements: (1) the businesses of Berkshire
Hills and Woronoco may not be combined successfully, or such combination may
take longer to accomplish than expected; (2) the cost savings from the merger
may not be fully realized or take longer than expected; (3) operating costs,
customer loss and business disruption following the merger, including adverse
effects on relationships with employees, may be greater than expected; (4)
governmental approvals of the merger may not be obtained, or adverse regulatory
conditions may be imposed in connection with governmental approvals of the
merger; (5) the stockholders of Berkshire Hills and Woronoco may fail to approve
the merger; (6) adverse governmental or regulatory policies may be enacted; (7)
the risks associated with continued diversification of assets and adverse
changes to credit quality; (8) the risks associated with a proposed balance
sheet deleveraging; and (9) difficulties associated with achieving expected
future financial results. Additional factors that could cause actual results to
differ materially from those expressed in forward-looking statements are
discussed in Berkshire Hills' and Woronoco's reports (such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed
with the Securities and Exchange Commission and available on the SEC's Internet
site (http://www.sec.gov). All subsequent written and oral forward-looking
statements concerning the proposed transaction or other matters attributable to
Berkshire Hills or Woronoco or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements above. You are
cautioned not to place undue reliance on any forward-looking statements, which
speak only as of December 17, 2004. Except as required by law or regulation,
Berkshire Hills and Woronoco do not undertake any obligation to update any
forward-looking statement to reflect circumstances or events that occur after
December 17, 2004.
Media contacts:
Michael P. Daly Cornelius D. Mahoney
President and Chairman, President and
Chief Executive Officer Chief Executive Officer
Berkshire Hills Bancorp, Inc. Woronoco Bancorp, Inc.
(413) 236-3194 (413) 568-9141