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EXHIBIT 99.1 PRESS RELEASE
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BERKSHIRE HILLS BANCORP, INC., REPORTS 2001 FOURTH QUARTER AND YEAR END EARNINGS
PITTSFIELD, MA - January 23, 2002 - Berkshire Hills Bancorp, Inc. (the
"Company"), (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"),
reported net income of $1.7 million for the quarter ended December 31, 2001 as
compared to $2.5 million for the quarter ended December 31, 2000. For the year
ended December 31, 2001, net income was $8.9 million as compared to $4.6 million
for the year ended December 31, 2000. The results for 2001 include a $2.2
million gain from the dissolution of the Bank's defined benefit pension plan,
while the results for 2000 include a non-recurring, one-time expense of $5.7
million related to the funding of Berkshire Hills Foundation, a charitable
foundation, with Company stock in connection with the Company's mutual to stock
conversion in June 2000.
Berkshire Hills Bancorp's annualized return on average assets and annualized
return on average equity for the fourth quarter of 2001 were 0.67% and 4.87%,
respectively, compared with 0.98% and 6.19%, respectively, for the corresponding
quarter of 2000. For the year ended December 31, 2001, Berkshire Hills Bancorp's
return on average assets and return on average equity were 0.86% and 5.74%
respectively, compared with 0.49% and 3.72% for the year ended December 31,
2000.
Basic and diluted earnings per share for the quarter ended December 31, 2001
were $0.30 and $0.28, respectively. For the quarter ended December 31, 2000,
basic earnings per share was $0.35. There was no potential issuance of common
stock equivalents in 2000 which would cause dilution of earnings. Basic and
diluted earnings per share for the year ended December 31, 2001 were $1.42 and
$1.35, respectively. There is no comparable figure for 2000, as the Company
became a public company in June 2000. The Company's book value per share at
December 31, 2001, September 30, 2001, and December 31, 2000 was $21.68, $21.21,
and $21.02, respectively.
Dividend Declared
Berkshire Hills Bancorp also reported that the Board of Directors declared a
quarterly cash dividend of $0.12 per common share, an increase of $0.01 per
share from the previous quarter, payable on February 22, 2002 to stockholders of
record as of February 7, 2002.
Annual Meeting
Berkshire Hills Bancorp, Inc., announced today that it has established May 2,
2002 as the date of its 2002 Annual Meeting of Stockholders. The meeting will be
held at the Crowne Plaza Hotel, One West Street, Pittsfield, MA at 10:00 a.m.
The voting record date has been set as March 14, 2002. The Company intends to
distribute proxy solicitation materials on or about March 28, 2002.
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Stock Repurchases
During 2001, the Company successfully completed three 5% stock repurchase
programs totaling 1,094,469 shares at a cost of $20.2 million. The Company is
currently engaged in its fourth 5% repurchase program having purchased 154,152
shares out of an authorized 328,964 shares as of December 31, 2001 at a cost of
$3.1 million. Due primarily to the stock repurchase programs, stockholders'
equity declined to $139.3 million on December 31, 2001 from $161.3 million on
December 31, 2000.
Financial Condition
Total assets at December 31, 2001 were $1.03 billion as compared to $1.01
billion at December 31, 2000, an increase of $20.5 million, or 2.0%. Loans
increased $9.3 million to $803.0 million from $793.6 million last year.
Commercial real estate loans and commercial construction loans increased $31.5
million, and more than offset a $14.6 million decline in automobile loans, and
$11.3 million decline in residential loans. Commercial real estate loan growth
and commercial construction loan growth was centered in loans to
retirement/assisted living facilities throughout Berkshire County as well as in
loans to various hotels, motels, and bed & breakfasts in the lodging industry.
Automobile loan balances declined as the Company continued its strategy to
reduce the level of lower quality indirect automobile loans in its portfolio and
focus its origination efforts on higher quality automobile loans. This change in
strategy also resulted in a change in its risk management practices for these
loans. A highly competitive local marketplace, along with the sale of all newly
originated fixed rate mortgage loans, contributed to the decline in residential
loans.
Asset growth was supported by a $13.1 million, or 1.8%, increase in deposits to
$742.7 million at December 31, 2001 from $729.6 million at December 31, 2000
along with a $32.6 million increase in borrowings from the Federal Home Loan
Bank of Boston. As interest rates declined precipitously throughout 2001 making
borrowing more affordable, the Company also noted a shifting of customer deposit
preferences from certificates of deposit and money market accounts into savings
accounts and demand deposit accounts.
Net interest income, before the provision for loan losses, totaled $11.1 million
for the quarter ended December 31, 2001 up $799,000, or 7.8%, from $10.3 million
for the same quarter last year. Rapidly declining interest rates had a bigger
impact on interest expense than interest and dividend income when comparing this
past quarter to 2000's fourth quarter. For the twelve months ended December 31,
2001, net interest income totaled $42.2 million, an increase of $4.7 million, or
12.5%, from the $37.6 million earned in 2000. The Bank's assets were repricing
more rapidly than its liabilities early in the year. However, the situation
reversed late in the year as the Bank altered its deposit pricing strategies.
This change enabled margins to remain wide throughout 2001. For the three months
and twelve months ended December 31, 2001, the Bank's net interest margin was
4.57% and 4.35%, respectively, as compared to 4.38% and 4.25%, respectively, for
the same time periods last year.
Net interest income, after provision for loan losses, totaled $6.5 million for
the three months ended December 31, 2001, a decrease of $3.0 million, or 31.6%,
from the same quarter in 2000.
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As a measure to further enhance its risk management practices, the Bank
initiated a more aggressive charge-off policy for automobile loans whereby all
automobile loans that are 120 days or more past due, except for those customers
who are in bankruptcy proceedings, were charged-off. The change in policy
resulted in an additional $2.6 million in automobile charge-offs in the fourth
quarter. In conjunction with this change, the Bank established a new
classification for automobile loans that were 90 days or more past due but still
accruing interest. Automobile loans in the amount of $1.3 million were 90 days
or more past due and still accruing interest at the end of 2001 as compared to
zero at the end of the previous year. The change in policy, coupled with an
$840,000 provision for commercial loan losses and an additional provision of
$1.1 million, resulted in a total provision of $4.6 million for 2001's fourth
quarter as compared to $740,000 for 2000's fourth quarter. For the year ended
December 31, 2001, net interest income, after provision for loan losses, totaled
$35.1 million, an increase of $681,000, or 2.0%, from 2000's $34.4 million. The
total provisions for loan losses in 2001 and 2000 were $7.2 million and $3.2
million, respectively.
The allowance for loan losses was $11.0 million at December 31, 2001 as compared
to $10.2 million at December 31, 2000 and represented 1.37% and 1.29% of total
loans, respectively. The increase in 2001 was reflective of the increased risk
associated with maintaining commercial loan and consumer automobile loan
portfolios in a weakening economic environment. Non-performing loans as a
percentage of total loans were 0.34% at December 31, 2001 as compared to 0.36%
at December 31, 2000.
EastPoint Technologies, LLC
Six months ago, the Company announced its investment in EastPoint Technologies,
LLC. The Company was one of a consortium of six banks who agreed to buy
EastPoint. With all banks having received the necessary approvals, the Company's
equity interest in EastPoint equals 60.3%. EastPoint contributed $185,000 in
pre-tax income over the final six months of 2001. Eastpoint's revenues and
expenses are included in various non-interest income and operating expense
categories on the Consolidated Statements of Income.
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. The Bank is
committed to continuing to operate as an independent bank, delivering
exceptional customer service and a broad array of competitively priced retail
and commercial products to customers.
Statements contained in this news release, which are not historical facts, are
forward-looking statements as that term is defined in the Private Securities
Legislation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ materially
from those currently anticipated due to a number of factors, which include, but
are not limited to, factors discussed in documents filed by the Company with the
Securities and Exchange Commission from time to time.
News contact: Charles F. Plungis, Jr. 413-236-3295
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
DECEMBER 31, DECEMBER 31,
2001 2000
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IN THOUSANDS
ASSETS
- ------
Cash and due from banks $ 22,652 $ 26,891
Short term investments 19,471 16,721
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Total cash and cash equivalents 42,123 43,612
Securities available for sale, at fair value 104,446 99,309
Securities held to maturity, at amortized cost 33,263 32,238
Federal Home Loan Bank stock, at cost 7,027 5,651
Savings Bank Life Insurance stock, at cost 2,043 2,043
Loans 800,414 793,621
Loans held for sale 2,540 -
Allowance for loan losses (11,034) (10,216)
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Net loans 791,920 783,405
Premises and equipment, net 14,187 12,370
Foreclosed real estate - 50
Accrued interest receivable 5,873 6,310
Goodwill and other intangibles 10,618 6,260
Other assets 20,304 20,092
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TOTAL ASSETS $1,031,804 $1,011,340
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Deposits $ 742,729 $ 729,594
Federal Home Loan Bank advances 133,964 101,385
Securities sold under agreements to repurchase 1,890 2,030
Net deferred tax liability 4,761 4,482
Loans sold with recourse - 7,740
Accrued expenses and other liabilities 6,014 4,787
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Total Liabilities 889,358 850,018
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Minority Interests 3,123 -
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Stockholders' Equity:
Preferred stock ($.01 par value; 1,000,000 shares - -
authorized; none issued or outstanding)
Common stock ( $.01 par value: 26,000,000 shares 77 77
authorized; shares issued: 7,673,761 at December 31, 2001
and December 31, 2000; shares outstanding: 6,425,140
at December 31, 2001 and 7,673,761 at December 31, 2000)
Additional paid-in capital 74,146 74,054
Unearned compensation (11,101) (7,187)
Retained earnings 80,657 74,554
Accumulated other comprehensive income 18,836 19,824
Treasury stock, at cost (1,248,621 shares at December 31, 2001) (23,292) -
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Total stockholders' equity 139,323 161,322
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,031,804 $1,011,340
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED UNAUDITED
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------------------- ------------------------------
2001 2000 2001 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INTEREST AND DIVIDEND INCOME
Bond interest $ 1,358 $ 1,419 $ 5,608 $ 5,330
Stock dividends 341 183 1,484 1,362
Short term investment interest 141 362 413 662
Loan interest 16,460 17,539 68,291 63,664
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TOTAL INTEREST AND DIVIDEND INCOME 18,300 19,503 75,796 71,018
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INTEREST EXPENSE
Interest on deposits 5,686 7,492 26,685 27,603
Interest on FHLB advances 1,536 1,704 6,613 5,766
Interest on securities sold under agreements to
repurchase and other borrowings 11 39 262 99
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TOTAL INTEREST EXPENSE 7,233 9,235 33,560 33,468
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NET INTEREST INCOME 11,067 10,268 42,236 37,550
PROVISION FOR LOAN LOSSES 4,550 740 7,175 3,170
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NET INTEREST INCOME, AFTER PROVISION 6,517 9,528 35,061 34,380
FOR LOAN LOSSES
NON-INTEREST INCOME
Customer service fees 453 396 1,810 1,590
Trust department fees 479 473 1,782 1,707
Loan servicing fees 109 (123) 595 446
Gain on securities, net 2 130 268 423
License maintenance and processing fees 1,094 - 2,100 -
License sales and other fees 754 - 2,144 -
Gain on curtailment of defined benefit pension plan 2,173 - 2,173 -
Other income 135 366 490 580
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TOTAL NON-INTEREST INCOME 5,199 1,242 11,362 4,746
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OPERATING EXPENSES
Salaries and benefits 4,925 3,250 17,590 13,631
Occupancy and equipment 1,357 928 4,689 4,178
Marketing and advertising 220 247 629 578
Data processing 201 636 1,065 1,765
Professional services 455 523 1,314 850
Office supplies 217 147 899 706
Foreclosed real estate and other loans, net 398 436 2,238 1,165
Amortization of goodwill and other intangibles 382 137 827 549
Contributions - - - 5,684
Minority Interests (148) - (119) -
Other expenses 1,152 753 4,031 3,078
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TOTAL OPERATING EXPENSES 9,159 7,057 33,163 32,184
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INCOME BEFORE TAXES 2,557 3,713 13,260 6,942
Provision for income taxes 838 1,256 4,349 2,360
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NET INCOME $ 1,719 $ 2,457 $ 8,911 $ 4,582
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Earnings per share:
Basic $ 0.30 $ 0.35 $ 1.42 NA
Diluted $ 0.28 $ 0.35 $ 1.35 NA
Weighted average shares outstanding:
Basic 5,763 7,086 6,264 NA
Diluted 6,157 7,086 6,604 NA
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
UNAUDITED
DECEMBER 31, 2001 DECEMBER 31, 2000
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Percent Percent
LOAN ANALYSIS Balance of Total Balance of Total
- ------------- Dollars in Thousands
Mortgage loans on real estate
Residential 1-4 family $ 233,017 29.02% $244,290 30.78%
Commercial 1 -4 family 11,517 1.43% 11,063 1.39%
Commercial Real Estate 84,538 10.53% 63,871 8.05%
Commercial Construction 19,351 2.41% 8,480 1.07%
Multi-family 13,183 1.64% 15,699 1.98%
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Total real estate 361,606 45.03% 343,403 43.27%
Commercial loans 170,305 21.21% 167,085 21.05%
Consumer loans
Automobile 216,026 26.90% 230,648 29.06%
Home Equity Loans 34,439 4.30% 34,471 4.34%
Other 20,578 2.56% 18,014 2.27%
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Total consumer loans 271,043 33.76% 283,133 35.68%
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Total loans 802,954 793,621
Less: Allowance for loan losses (11,034) 1.37% (10,216) 1.29%
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Loans, net $ 791,920 $783,405
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DEPOSIT ANALYSIS Percent Percent
- ---------------- Balance of Total Balance of Total
Dollars in Thousands
Demand Deposits $ 82,757 11.14% $ 76,750 10.52%
NOW Accounts 80,970 10.90% 79,978 10.96%
Savings Accounts 151,566 20.41% 137,293 18.82%
Money Market Accounts 110,199 14.84% 115,800 15.87%
Term Certificates 317,237 42.71% 319,773 43.83%
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Total Deposits $742,729 $729,594
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
UNAUDITED UNAUDITED
AT OR FOR THE AT OR FOR THE
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
2001 2000 2001 2000
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DOLLARS IN THOUSANDS DOLLARS IN THOUSANDS
Performance Ratios (1):
Return on average assets 0.67% 0.98% 0.86% 0.49%
Return on average equity 4.87% 6.19% 5.74% 3.72%
Net interest margin as % of average earning assets 4.57% 4.38% 4.35% 4.25%
Non-interest income to average earning assets 2.15% 0.53% 1.17% 0.54%
Non-interest expense to average earning assets 3.78% 3.01% 3.41% 3.64%
Asset Quality Ratios (2):
Average earning assets to average assets 93.78% 93.72% 93.80% 94.35%
Net charged-off loans to total loans 0.54% 0.10% 0.79% 0.19%
Non-performing loans to total loans 0.34% 0.36% 0.34% 0.36%
Non-performing assets to total assets 0.26% 0.29% 0.26% 0.29%
Allowance for loan losses to non-performing loans 408.36% 356.08% 408.36% 356.08%
Allowance for loan losses to total loans 1.37% 1.29% 1.37% 1.29%
Capital ratios (2):
Stockholders' equity to total assets 13.50% 15.95% 13.50% 15.95%
Tier I capital to average assets 11.00% 14.54% 11.00% 14.54%
Tier I capital to risk weighted assets 12.97% 17.12% 12.97% 17.12%
Total capital to risk weighted assets 15.73% 20.15% 15.73% 20.15%
Other data (2):
Non-performing loans $ 2,702 $ 2,869 $ 2,702 $ 2,869
Foreclosed real estate $ - $ 50 $ - $ 50
Non-performing assets $ 2,702 $ 2,919 $ 2,702 $ 2,919
Efficiency ratio (3) 56.31% 62.01% 62.18% 76.86%
Book value per share $ 21.68 $ 21.02 $ 21.68 $ 21.02
(1) Ratios are annualized for the three and twelve months ended December 31, 2001 and 2000
(2) End of period ratios and balances
(3) Efficiency ratio equals operating expense divided by net interest income plus non-interest income less
gain (loss) on securities.