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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
BERKSHIRE HILLS BANCORP, INC. ANNOUNCES
ADDITIONAL FOURTH QUARTER EVENTS
PITTSFIELD, MA, JANUARY 16, 2003 - Berkshire Hills Bancorp, Inc. (the
"Company") (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"),
today announced the completion of its recently announced management and
operations changes and additional fourth quarter events. The fourth quarter
events primarily include those announced by the Company in its previous fourth
quarter releases and related SEC filings. The additional charges result from
subsequent strategic actions taken by management. The Company also announced
that, although its year-end audit is not yet complete, it expects to incur a
loss of approximately $0.80 per share for the quarter ended December 31, 2002,
inclusive of these items. Exclusive of these fourth quarter items, and
utilizing a normalized effective tax rate, core earnings are estimated at $0.35
per share. A more detailed fourth quarter earnings release will be issued on or
about January 22, 2003. A summary of the fourth quarter events, including those
previously announced, is as follows:
4TH QUARTER EVENTS
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in thousands
Sale of Sub-Prime Indirect Automobile Loans $(11,200)
Management Severance Costs and Expenses ( 6,900)
Writedown of Repossessed Assets and Increased Allowance ( 3,300)
Borrowing Prepayment Penalties ( 1,100)
Investment Portfolio Restructuring and Writedowns, net 14,200
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$( 8,300)
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In further explaining these actions, Michael P. Daly, President and CEO,
stated, "While the steps we have taken have resulted in some net short-term
losses and charges, we believe that they are essential to our long-term
profitability and our ability to create a more valuable franchise."
SALE OF SUB-PRIME INDIRECT AUTOMOBILE LOANS
The Company completed the sale of $69.7 million of sub-prime indirect
automobile loans, which resulted in charges of approximately $11.2 million.
These consisted of a $10.7 million loss on the sale and an additional charge of
approximately $500,000 related to the forfeiture of accrued interest income
relating to the loans that were sold.
MANAGEMENT SEVERANCE COSTS AND EXPENSES
The Company completed its management restructuring which resulted in
approximately $6.6 million of charges. These consisted of the payment or
accrual of severance payments to three executive officers and one senior vice
president under existing contractual obligations and related severance
expenses.
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The Company also announced that seven directors have retired from the Boards of
the Company and the Bank and the number of seats on each Board has been
reduced. The retiring board members have been appointed to positions on the
Company's newly created advisory board and will participate in the Bank's
Directors Retirement Plan. As a result, the Company incurred a $300,000 charge
in the fourth quarter.
WRITEDOWN OF REPOSSESSED ASSETS AND INCREASED ALLOWANCE
As part of its revised policy and procedures for reviewing and estimating
writedowns of repossessed assets, the Company recognized a charge of $1.8
million of which $1.3 million was the result of writing down the values of
repossessed automobiles. Of this amount, $500,000 was related to the writedown
of one foreclosed property. The Company also increased its allowance for loan
losses by $1.5 million to reflect a lower estimate for recoverability of the
Bank's remaining sub-prime indirect automobile loans.
BORROWING PREPAYMENT PENALTIES
In late December, the Company incurred a penalty of $1.1 million for prepaying
approximately $21 million of high-cost FHLB advances. The Company replaced
these FHLB advances with lower-cost, shorter-term borrowings.
INVESTMENT PORTFOLIO RESTRUCTURING AND WRITEDOWNS
In December, the Company completed the sale of $18.8 million of equity
securities, which resulted in a gain of $14.8 million, and recorded a writedown
of approximately $600,000 due to an other than temporary decline in market
value of certain securities and other assets.
Mr. Daly added, "In the last 90 days, we have conducted an unprecedented review
of various aspects of the Company and the Bank. This has been a cooperative
effort by our employees and outside advisors. With this difficult work behind
us, we will focus our time and energy on customer service initiatives and
increasing shareholder value."
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. The Bank is
committed to operating as an independent bank, delivering exceptional customer
service and a broad array of competitively priced retail and commercial
products to customers.
This press release may contain certain forward-looking statements with regard
to the Company's prospective performance and strategies within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995, and is including this statement for purposes of said safe
harbor provisions.
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Forward-looking statements, which are based on certain assumptions, and
describe future plans, strategies, and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or other similar expressions. The
Company's ability to predict results, or the actual effects of its plans and
strategies, are inherently uncertain. Accordingly, actual results may differ
materially from anticipated results. Factors that could have a material adverse
effect on the operations of the Company and its subsidiaries include, but are
not limited to: changes in market interest rates, general economic conditions,
legislation, and regulation; changes in the monetary and fiscal policies of the
U.S. Government; changes in the quality or composition of the loan and
investment portfolios; changes in deposit flows, competition, and demand for
financial services and loan, deposit, and investment products in the Company's
local markets; changes in local real estate values; changes in accounting
principles and guidelines; war or terrorist activities; and other economic,
competitive, governmental, regulatory, geopolitical and technological factors
affecting the Company's operations, pricing, and services.
Specific factors that could cause future results to vary from current
management expectations are detailed from time to time in the Company's SEC
filings.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release. Except as required
by applicable law or regulation, the Company undertakes no obligation to update
these forward-looking statements to reflect events or circumstances that occur
after the date on which such statements were made.
MEDIA AND INVESTOR CONTACT:
MICHAEL P. DALY
413-236-3194
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