Exhibit 99.2
[BERKSHIRE HILLS BANCORP LOGO]
ACQUISITION OF
WORONOCO
BANCORP, INC.
[map of New York]
A SIGNIFICANT
STEP FORWARD
DECEMBER 17, 2004
Combined Organization
INITIALLY $2.1 BILLION IN ASSETS [BERKSHIRE HILLS BANCORP LOGO]
HEADQUARTERED IN PITTSFIELD, MA
MICHAEL P. DALY, PRESIDENT & CEO
23 BRANCHES THROUGHOUT BERKSHIRE,
HAMPSHIRE AND HAMPDEN COUNTIES, MA,
AND ALBANY* AND ONEIDA COUNTY, NY
*APPLICATION PENDING
LAWRENCE A. BOSSIDY, CHAIRMAN
14 MEMBER BOARD, 3 FROM WORONOCO
INCLUDING CORNELIUS D. MAHONEY
A SIGNIFICANT STEP FORWARD
A SIGNIFICANT STEP FORWARD [BERKSHIRE HILLS BANCORP LOGO]
WORONOCO BRINGS...
o QUALITY INSTITUTION WITH STRONG CONSUMER BASE
o STRONG BUSINESS AND WEALTH MANAGEMENT DEMOGRAPHICS
o PLATFORM AGENCY TO OFFER INSURANCE
o LOW RISK PROFILE
BERKSHIRE BRINGS...
o QUALITY INSTITUTION WITH STRONG COMMERCIAL BASE
o TRUST AND WEALTH MANAGEMENT
o GOVERNMENT BANKING
o HIGH ASSET QUALITY
COMBINED COMPANY...
o ATTRACTIVE COMMERCIAL AND COMMUNITY BANKING FRANCHISE
o NON-INTEREST INCOME POTENTIAL
o MANAGEMENT SYNERGIES
o SOLID ASSET QUALITY
o SATISFIES STATED ACQUISITION CRITERIA
o CAPITAL-FRIENDLY DISCIPLINED PRICING
o ACCRETIVE TO EARNINGS
o CONTIGUOUS MARKET
Compelling strategic fit
SUMMARY OF SIGNIFICANT TERMS [BERKSHIRE HILLS BANCORP LOGO]
PURCHASE PRICE PER SHARE: APPROXIMATELY $36.75 PER WORONOCO SHARE (1)
FIXED EXCHANGE RATIO: ELECTION OF $36 CASH OR 1.0 BHL SHARE PER
WRO SHARE. PRO RATED AT 75% STOCK, 25%
CASH. NO WALK AWAY, NO COLLARS.
AGGREGATE PURCHASE PRICE: $144.5 MILLION (1)
ESTIMATED COST SAVINGS: APPROXIMATELY 30% OF WORONOCO'S NON-INTEREST
EXPENSES
CASH BREAK-UP FEE: $6 MILLION
ESTIMATED MERGER-RELATED COSTS: $25.1 MILLION
BALANCE SHEET DELEVERAGING: UP TO $250 MILLION AT PRE-TAX SPREAD OF
0.41%
SPECIAL DIVIDEND $0.25 PER SHARE
ANTICIPATED CLOSING: SECOND QUARTER, 2005
Clean and transparent
(1) BASED ON BERKSHIRE'S CLOSING PRICE OF 37.00 AS OF DECEMBER 16, 2004.
TRANSACTION MULTIPLES [BERKSHIRE HILLS BANCORP LOGO]
BHL/WRO NEW ENGLAND NATIONWIDE
PREMIUM TO MARKET -1.4% 12.2% 22.9%
PRICE/LTM EARNINGS 23.1X 24.7X 21.3X
PRICE/TANGIBLE BOOK VALUE 172.7% 260.5% 209.5%
CORE DEPOSIT PREMIUM 19.0% 17.7% 17.7%
Compares favorably to similar transactions
Woronoco [BERKSHIRE HILLS BANCORP LOGO]
ATTRACTIVE COMMUNITY
BANKING FRANCHISE
o $898.5 MILLION IN ASSETS
o $597.9 MILLION IN LOANS
o $460.1 MILLION IN DEPOSITS
o 24% OF WORONOCO'S LOANS ARE COMM. RE, MULTI-FAMILY AND C&I
o ACQUIRED 3 INSURANCE AGENCIES W/$13 MILLION IN TOTAL PREMIUMS
o OPERATES 10 BRANCHES IN HAMPDEN AND HAMPSHIRE COUNTIES, MA
MARKET POSITION
o IN TERMS OF TOTAL DEPOSITS, WORONOCO RANKS 8TH IN HAMPDEN COUNTY, MA AND
10TH IN HAMPSHIRE COUNTY, MA
SOLID ASSET QUALITY
o NPAS/ASSETS: 0.05%
o RESERVES/NPLS: 7.9X
o NCOS/AVERAGE LOANS: 0.00%
Financially healthy and disciplined
STRATEGIC AND FINANCIAL RATIONALE [BERKSHIRE HILLS BANCORP LOGO]
FRANCHISE ENHANCING
o CONSISTENT WITH BERKSHIRE'S LONG TERM STRATEGIC PLAN
o NATURAL EXTENSION OF BERKSHIRE'S FRANCHISE INTO ADJACENT PIONEER VALLEY,
WITH ITS DIVERSIFICATION APPEAL
o COMPLIMENTS DE NOVO INITIATIVES INTO CAPITAL DISTRICT
FINANCIALLY COMPELLING
o NOMINAL ACCRETION TO EPS IN 2005, 3% ACCRETION IN 2006
o NET OF SECURITIES GAINS, EPS ACCRETION OF 6% IN 2006
o NO REVENUE ENHANCEMENTS ASSUMED
OPPORTUNITY TO ADD VALUE
QTR ENDING 9/30/04 BHL WRO
--- ---
o ROAA: 0.92% 0.62%
o ROAE: 9.71% 6.86%
o EFFICIENCY RATIO: 60.31% 69.07%
o NIM: 3.29% 2.59%
Enhances shareholder value
PRO FORMA MARKET SHARE [BERKSHIRE HILLS BANCORP LOGO]
>> 1ST IN PITTSFIELD AND WESTFIELD, MA AND BERKSHIRE COUNTY
>> 14TH IN MASSACHUSETTS
>> 4TH LARGEST PUBLICLY TRADED BANK HEADQUARTERED IN MA
Major player in the markets we serve
MARKET SHARE OPPORTUNITY [BERKSHIRE HILLS BANCORP LOGO]
>> 8TH IN HAMPDEN COUNTY, 10TH IN HAMPSHIRE COUNTY
BHL WRO
BERKSHIRE COUNTY HAMPDEN COUNTY
---------------- --------------
TOTAL BUSINESSES 6,525 14,506
TOTAL SALES ($M) 7,561 21,928
C&I AND COMM. RE LOANS ($M) 377 80
C&I AND COMM. RE LOANS /SALES 4.98% 0.37%
Commercial lending opportunity
Loan Portfolio [BERKSHIRE HILLS BANCORP LOGO]
Berkshire
Comm. RE 33%
Commercial 20%
Consumer 21%
1-4 Family 26%
Wornonco
Comm. RE 21%
Commercial 3%
Consumer 15%
1-4 Family 61%
Combined
Comm. RE 28%
Commercial 12%
Consumer 19%
1-4 Family 41%
Balanced asset mix
DEPOSIT ANALYSIS [BERKSHIRE HILLS BANCORP LOGO]
Berkshire
Transaction 24%
MM & Sav. 38%
Time<100k 17%
Jumbo 21%
Wornonco
Transaction 20%
MM & Sav. 34%
Time<100k 22%
Jumbo 6%
Brokered 18%
Combined
Transaction 22%
MM & Sav. 37%
Time<100k 19%
Jumbo 16%
Brokered 6%
Balanced asset mix
STRONG ASSET QUALITY [BERKSHIRE HILLS BANCORP LOGO]
BHL WRO COMBINED
--- --- --------
NON-PERFORMING ASSETS/ TOTAL ASSETS 0.21% 0.05% 0.14%
NON-PERFORMING ASSTS/ TOTAL LOANS 0.33% 0.08% 0.22%
RESERVES/ TOTAL LOANS 1.15% 0.60% 0.92%
RESERVES/ NON-PERFORMING LOANS 346.06% 786.71% 409.80%
NET CHARGE-OFFS/ AVERAGE LOANS 0.11% 0.00% 0.06%
Augments already strong asset base
Source: SNL Financial and Northeast Capital
PRO FORMA ASSUMPTIONS [BERKSHIRE HILLS BANCORP LOGO]
>> BERKSHIRE'S EARNINGS BASED ON CONSENSUS 2005 EPS ESTIMATE GROWN AT 10%
PER ANNUM
>> WORONOCO'S EARNINGS BASED ON 2005 EPS OF $1.56 (10% LOWER THAN
CONSENSUS) GROWN AT 7% PER ANNUM
>> ASSUMES COST SAVINGS EQUIVALENT TO 30% OF WORONOCO'S NON-INTEREST
EXPENSE BASE TAKING INTO ACCOUNT 5% ANNUAL EXPENSE GROWTH. COST SAVINGS
PHASED IN WITH 75% IN THE THIRD QUARTER OF 2005 AND 100% THEREAFTER
>> ASSUMES UP TO A $250 MILLION BALANCE SHEET DELEVERAGING THROUGH A
COMBINATION OF INVESTMENT PORTFOLIO REDUCTION AND LOAN
SALES/SECURITIZATION. ONE TIME RESTRUCTURING COSTS ARE ESTIMATED AT $3.9
MILLION AFTER-TAX. POSITIVE ANNUAL NET INCOME IMPACT OF $0.7 MILLION
>> ASSUMES A 4.00% PRE-TAX OPPORTUNITY COST OF CASH
>> CORE DEPOSIT INTANGIBLE EQUIVALENT TO 3.8% OF WORONOCO'S CORE DEPOSITS
AMORTIZED STRAIGHT LINE OVER 10 YEARS
>> ZERO REVENUE ENHANCEMENTS ASSUMED
Conservative assumptions
BALANCE SHEET RESTRUCTURING [BERKSHIRE HILLS BANCORP LOGO]
>> REDIRECTS CAPITAL TO HIGHER EARNINGS ASSETS
>> REDUCES SENSITIVITY TO RISING INTEREST RATES
>> INCREASES OUR PRO FORMA CAPITAL RATIO TO 6.75% FROM 7.57%
Assets:
Investments 135,753 4.21% 5,715
Purchased Loans 117,247 4.04% 4,737
-------------------------------
Total 253,000 4.13% 10,452
Liabilities:
FHLB Borrowings 220,500 4.81% 10,606
Brokered CDs 32,500 2.73% 887
Total 253,000 4.54% 11,493
Net Pre-Tax 0.41% 1,041
After Tax 0.28% 708
One time pre-payment Penalty (5,708)
After Tax (3,881)
Reduces risk and promotes growth opportunities
CONSERVATIVE COST SAVINGS [BERKSHIRE HILLS BANCORP LOGO]
CURRENT COST SAVINGS % OF
RUN RATE IDENTIFIED RUN RATE
ADMINISTRATIVE
SALARIES OPERATIONS/BACK OFFICE 8,053 731 14.94%
472
OCCUPANCY & EQUIPMENT 2,620 0 0.00%
OTHER OPERATING EXPENSES 5,784 1,049 18.14%
TOTAL OPERATING EXPENSES 16,457 2,252 13.68%
ESOP & MRP EXPENSES 2,070 2,070 100.00%
SENIOR MANAGEMENT, INTEREST
EXPENSE ON ESOP, SERP 1,766 1,766 100.00%
TOTAL NON-INTEREST EXPENSE 20,293 6,088 30.00%
Specific cost savings have been identified
DEAL COSTS [BERKSHIRE HILLS BANCORP LOGO]
($000S)
MERGER EXPENSE 4,419
CONTRACTS AND SEVERANCE 18,000
FACILITY AND EQUIPMENT 891
OTHER 1,813
TOTAL 25,123
EPS IMPACT [BERKSHIRE HILLS BANCORP LOGO]
PRO FORMA INCOME BREAKDOWN
20051 2006
----------------------------
Berkshire Net Income (Consensus Estimates) 12,232 13,413
Woronoco Net Income (Revised Estimates) 2,794 5,916
----- -----
Pro Forma Net Income 15,026 19,329
====== ======
AFTER TAX ACQUISITION ADJUSTMENTS:
- -----------------------------------------
Cost Savings (30.00%) 1,846 4,356
Amortization of Core Deposit Intangible (457) (914)
Amortization of Purchase Accounting Adjustments (194) (387)
Lost Income from Cash Used (763) (1,455)
Spread Gain from Balance Sheet Restructuring 354 708
--- ---
ADJUSTED NET INCOME 15,813 21,636
Pro Forma Core EPS $2.27 $2.52
Berkshire's Standalone Core EPS $2.26 $2.44
Accretion/(Dilution) 0.44% 3.28%
Pro Forma EPS (ex security gains) $2.13 $2.41
Berkshire's Stand Alone EPS (ex security gains) $2.10 $2.28
Accretion/(Dilution) 1.43% 5.70%
Pro Forma Core Return on Average Assets 0.97% 1.02%
Pro Forma Core Return on Average Equity 8.57% 8.78%
Pro Forma Tier 1 Leverage 7.18% 7.14%
1 ASSUMES THE TRANSACTION CLOSES ON 6/20/205.
A SIGNIFICANT STEP FORWARD [BERKSHIRE HILLS BANCORP LOGO]
[DIAGRAM OF MAP PINPOINTING AREA OF PITTSFIELD, MA]
A SIGNIFICANT STEP FORWARD [BERKSHIRE HILLS BANCORP LOGO]
WORONOCO BRINGS...
O QUALITY INSTITUTION WITH STRONG CONSUMER BASE
O STRONG BUSINESS AND WEALTH MANAGEMENT DEMOGRAPHICS
O PLATFORM AGENCY TO OFFER INSURANCE
O LOW RISK PROFILE
BERKSHIRE BRINGS...
O QUALITY INSTITUTION WITH STRONG COMMERCIAL BASE
O TRUST AND WEALTH MANAGEMENT
O GOVERNMENT BANKING
O HIGH ASSET QUALITY
COMBINED COMPANY...
O ATTRACTIVE COMMERCIAL AND COMMUNITY BANKING FRANCHISE
O NON-INTEREST INCOME POTENTIAL
O MANAGEMENT SYNERGIES
O SOLID ASSET QUALITY
O SATISFIES STATED ACQUISITION CRITERIA
O CAPITAL-FRIENDLY DISCIPLINED PRICING
O ACCRETIVE TO EARNINGS
O CONTIGUOUS MARKET
Compelling strategic fit
FORWARD LOOKING STATEMENTS [BERKSHIRE HILLS BANCORP LOGO]
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
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's 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's 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, 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 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.
FORWARD LOOKING STATEMENTS [BERKSHIRE HILLS BANCORP LOGO]
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 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 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's
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 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 and Woronoco do not undertake any obligation to update
any forward-looking statement to reflect circumstances or events that occur
after December 17, 2004.
ADDITIONAL INFORMATION [BERKSHIRE HILLS BANCORP LOGO]
The proposed transaction will be submitted to Berkshire's and
Woronoco's stockholders for their consideration. Berkshire 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 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 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 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 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 and their ownership of
Berkshire common stock is set forth in the proxy statement, dated April 1,
2004, for Berkshire's 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.