4
EXHIBIT 99.1 PRESS RELEASE
5
FOR IMMEDIATE RELEASE
BERKSHIRE HILLS BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS, UP 17.3%
COMPARED TO FIRST QUARTER '03; CHAIRMAN WELLS TO RETIRE
PITTSFIELD, MA - July 22, 2003 - Berkshire Hills Bancorp, Inc. (the "Company"),
(AMEX: BHL), the holding company for Berkshire Bank (the "Bank"), today reported
net income of $2.1 million, or $0.38 diluted earnings per share for the quarter
ended June 30, 2003 as compared to $1.8 million, or $0.32, for the quarter ended
March 31, 2003 and $2.2 million, or $0.38 for the quarter ended June 30, 2002.
Net income totaled $3.9 million for the first six months of 2003, essentially
even with the first six months of 2002. Earnings per diluted share for the first
six months of 2003 were $0.69 compared to $0.67 for the first six months of
2002.
"I am very pleased with the Company's second quarter performance and encouraged
that the plan we articulated earlier this year appears to be gaining momentum. I
am particularly encouraged that in a low interest rate environment, we were able
to absorb a reduction in net interest income of over $2.5 million through six
months and out perform comparable numbers by two cents. This resulted from
senior management's commitment to increasing earning assets, effectively
controlling expenses and improving credit quality. While we are running ahead of
earlier guidance and have confidence that our momentum will continue, it would
be imprudent for us to adjust our earnings guidance for 2003 in view of today's
uncertain economic environment," stated Michael P. Daly, President and Chief
Executive Officer.
Higher net interest income and increases in fee based income were largely
responsible for a $316,000, or 17.3%, increase in net income compared to the
first quarter of 2003.
As compared to the second quarter of 2002, an improved credit risk profile, an
increase in earning assets and diligent expense control nearly offset a decline
of $1.2 million in net interest income. A lower loan loss provision and lower
operating expenses, exclusive of a non-recurring retirement benefit charge and
expenses of EastPoint Technologies, LLC ("EastPoint") offset, in part, the
decline in net interest income.
The Company recorded a non-recurring retirement benefit charge of $512,000 after
taxes in the current quarter, which was largely offset by net security gains of
$203,000 after taxes and $259,000 representing a partial reversal of the charge
in the first quarter of 2003 associated with the State's disallowance of the
REIT dividend received deduction.
Dividend Declared
The Company reported that the Board of Directors declared a quarterly cash
dividend of $0.12 per common share. The dividend is payable on August 22, 2003
to shareholders of record at the close of business on August 7, 2003.
6
Second Quarter Highlights
o Loans increased $33.0 million, or 4.2%, from March 31, 2003.
o Core deposits increased $28.4 million, or 6.2%, from March 31, 2003.
o Net interest margin increased six basis points to 3.73%, from March 31, 2003.
o The Company completed its fifth stock repurchase program, and commenced a
sixth 5% stock repurchase program, purchasing a total of 132,616 shares at
an average price of $26.67.
Financial Condition
Assets totaled $1.1 billion at June 30, 2003 compared to $1.0 billion at
December 31, 2002, an increase of $72.3 million. This growth was primarily
attributable to an increase of $99.9 million in loans which totaled $822.9
million at June 30, 2003. The majority of this increase was in one- to
four-family residential mortgage loans. Additionally, the Bank executed a single
premium bank-owned life insurance contract for $7.5 million in June 2003. This
transaction is expected to earn a tax-equivalent return in excess of other
earning assets with similar risk characteristics.
Non-performing assets were $3.6 million at June 30, 2003, a decline of $1.6
million from December 31, 2002. The Bank held no foreclosed real estate at June
30, 2003 compared to $1.5 million at December 31, 2002.
The ratio of loans delinquent 30 days or more to total loans was 1.06%, 1.40%
and 1.49% at June 30, 2003, December 31, 2002, and June 30, 2002, respectively.
The allowance for loan losses totaled $10.3 million, representing 1.25% of total
loans at June 30, 2003 compared to $10.3 million, or 1.43% of total loans at
December 31, 2002.
The Company's tangible book value per share at June 30, 2003 and December 31,
2002 was $18.38 and $18.00, respectively.
Results of Operations
Net interest income was $9.4 million for the second quarter of 2003, increasing
$353,000 compared to the first quarter of 2003, while decreasing $1.2 million
compared to the same period last year. The Company's net interest margin
increased to 3.73% for the second quarter of 2003 compared to 3.67% from the
first quarter of 2003, but was down from 4.36% for the same quarter last year,
largely due to the sale of high yielding sub-prime loans in December of 2002.
The provision for loan losses totaled $785,000 for the quarter ended June 30,
2003, a reduction of $530,000 from $1.3 million for the same period in 2002.
Although up from the first quarter of 2003, the provision for the current
quarter is consistent with the growth in the loan portfolio and net charge-offs
associated with the remaining level of sub-prime automobile loans. Net loan
7
charge-offs totaled $852,000 for the quarter ended June 30, 2003, a decrease of
$260,000, or 23.4%, from $1.1 million at June 30, 2002.
As compared to the first quarter of 2003, increases in customer service, trust
department and loan fees contributed to an increase of $461,000, or a 12.9%
increase in non-interest income.
Excluding license maintenance and sales fees from EastPoint, noninterest income
increased $448,000 to $1.9 million for the three months ended June 30, 2003
compared to the same period last year. This increase was the result of an
increase in net gains on the sale of securities and loans, and increased Trust
Department fees.
Exclusive of EastPoint expenses and a pre-tax $800,000 non-recurring retirement
benefit charge recorded in the current quarter, operating expenses totaled $6.8
million for the second quarter of 2003, a decrease of $577,000, or 7.9% from
$7.3 million for the same period last year. This decline was primarily due to
decreases in foreclosed real estate and other loan expenses, $405,000 of which
is associated with the Bank's automobile repossession and sales activities, and
a reduction in salaries and benefits exclusive of the aforementioned retirement
charge. This non-recurring retirement benefit charge is attributed to
obligations owed the Company's and the Bank's Chairman upon his retirement as
further discussed below.
License maintenance and processing fees and license sales and other fees, which
represent revenue from EastPoint totaled $2.1 million in the current quarter,
increasing $488,000 as compared to the same quarter last year. Associated
expenses, which are recorded in various expense categories, totaled $2.2 million
net of minority interests, increasing $400,000 as compared to the same quarter
last year.
Other Events
Robert A. Wells will retire as Chairman of the Boards of the Company, and the
Bank as of December 31, 2003. He will continue to serve as a director on these
boards. "Bob has been a great leader of this organization for many years. His
leadership paved the way for Berkshire Bank to become the largest community bank
in western Massachusetts and the leading bank in the Berkshires", said Mr. Daly.
"I am pleased with what I have been able to contribute to the organization, but
after over 40 years in banking, it's time for me to retire from active
management. I'm looking forward to continuing to contribute as a director, as
well as my on-going community involvement," stated Mr. Wells.
Mr. Wells began his banking career in 1959 working for banks in Massachusetts
and New York before joining Berkshire County Savings Bank in 1965. He was
elected President in 1977, CEO in 1981 and Chairman in 1997 prior to its merger
with Great Barrington Savings Bank to form Berkshire Bank. Lawrence A. Bossidy
will remain the non-Executive Chairman of the Board of Directors of each of the
Company and the Bank. There are no immediate plans to fill Mr. Wells's position
as Executive Chairman of the Board of the Company and the Bank.
8
Mr. Wells will also retire as Chairman of Berkshire Hills Foundation and the
Greater Berkshire Foundation, Inc., on December 31, 2003, and Mr. Daly will
succeed him as Chairman of each foundation. Mr. Wells will remain a director of
those organizations.
Michael P. Daly, President and Chief Executive Officer and Wayne F. Patenaude,
Senior Vice President, Treasurer and Chief Financial Officer, will host a
conference call at 2:00 P.M. (ET) on Wednesday, July 23, 2003. This conference
call will include forward-looking information and may include other material
information. Persons wishing to access the conference call may do so by dialing
1-888-855-5428, and use access code 647567. A series of tables and graphs
related to the topics to be discussed in the conference call will be available
on the Bank's website, www.berkshirebank.com beginning at approximately 12:30
P.M. (ET) on July 23, 2003. Replays of the conference call will be available
beginning July 23, 2003 at 5:00 P.M. (ET) through July 30, 2003 at 11:00 P.M.
(ET) by dialing 1-888-203-1112, using access code 647567. If you have difficulty
accessing the material, please contact Rose Borotto at 413-236-3144.
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 continuing to operate as an independent bank, delivering
exceptional customer service and a broad array of competitively priced retail
and commercial products to its 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.
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:
the price of loans or other assets sold by the Bank in the future; 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.
9
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.
News contact: Wayne F. Patenaude 413-236-3195
10
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------
Unaudited
At
--------------------------------
June 30, Dec. 31,
2003 2002
- ------------------------------------------------------------------------------- ------------
(In thousands)
ASSETS:
Cash and due from banks $ 11,303 $ 17,258
Short term investments 8,024 43,397
-------- --------
Total cash and cash equivalents 19,327 60,655
Securities available for sale, at fair value 179,011 173,169
Securities held to maturity, at amortized cost 46,476 44,267
Federal Home Loan Bank stock, at cost 7,858 7,440
Savings Bank Life Insurance stock, at cost 2,043 2,043
Loans 822,873 723,022
Allowance for loan losses (10,282) (10,308)
-------- ---------
Net loans 812,591 712,714
Premises and equipment, net 13,132 13,267
Foreclosed real estate - 1,500
Accrued interest receivable 5,256 5,125
Goodwill and other intangibles (1) 10,334 10,435
Net deferred tax assets 2,601 2,185
Bank owned life insurance 7,529 -
Other assets 12,211 13,315
--------- ---------
TOTAL ASSETS $ 1,118,369 $ 1,046,115
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $ 816,772 $ 782,360
Federal Home Loan Bank advances 157,156 133,002
Securities sold under agreements to repurchase - 700
Loans sold with recourse 765 1,201
Due to broker 16,411 -
Accrued expenses and other liabilities (1) 6,714 5,846
--------- ---------
Total liabilities 997,818 923,109
--------- ---------
Minority interests 2,301 2,438
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
authorized; shares issued: 7,673,761 at June 30, 2003
and December 31, 2002; shares outstanding: 5,871,316
at June 30, 2003 and 6,117,134 at December 31, 2002) 77 77
Additional paid-in capital 75,430 74,632
Unearned compensation (9,273) (9,535)
Retained earnings (1) 82,603 80,010
Accumulated other comprehensive income 5,870 5,542
Treasury stock at cost (1,802,445 shares at June 30, 2003
and 1,556,627 shares at December 31, 2002) (36,457) (30,158)
---------- ----------
Total stockholders' equity 118,250 120,568
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,118,369 $ 1,046,115
========== ==========
(1) For the period ended December 2002, the information reflects the adoption of SFAS 147.
The impact resulted in increases to goodwill of $497,000, deferred taxes of $169,000, and $328,000 to retained earnings.
11
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
Three Months Ended Six Months Ended
---------------------------------- ----------------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
- ------------------------------------------------------------------- ------------- ----------- ------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Bond interest $ 1,551 $ 1,316 $ 3,123 $ 2,572
Stock dividends 214 330 478 620
Short-term investment interest 14 148 98 205
Loan interest 12,360 14,774 24,341 29,731
------- ---------- --------- ----------
TOTAL INTEREST AND DIVIDEND INCOME 14,139 16,568 28,040 33,128
------- ---------- --------- ----------
INTEREST EXPENSE:
Interest on deposits 3,613 4,467 7,371 9,131
Interest on FHLB advances and other borrowings 1,093 1,436 2,156 2,858
------- ---------- --------- ----------
TOTAL INTEREST EXPENSE 4,706 5,903 9,527 11,989
------- ---------- --------- ----------
NET INTEREST INCOME 9,433 10,665 18,513 21,139
PROVISION FOR LOAN LOSSES 785 1,315 1,110 2,825
------- ---------- --------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 8,648 9,350 17,403 18,314
NON-INTEREST INCOME:
Customer service fees 619 592 1,175 1,039
Trust Department fees 554 467 990 954
Loan fees 147 185 195 385
Gain/ (Loss) on sale of securities, net 317 12 1,157 (8)
Gain/ (Loss) on sale of loans 138 - 138 -
License maintenance and processing fees 1,136 1,093 2,277 2,170
License sales and other fees 990 545 1,470 909
Other income 121 192 181 381
------- ---------- --------- ----------
TOTAL NON-INTEREST INCOME 4,022 3,086 7,583 5,830
------- ---------- --------- ----------
OPERATING EXPENSE:
Salaries and benefits 5,962 5,322 11,248 10,850
Occupancy and equipment 1,222 1,278 2,603 2,696
Marketing and advertising 139 124 242 212
Data processing 239 156 460 346
Professional services 294 306 542 605
Office supplies 155 194 361 377
Foreclosed real estate and other loans, net 286 757 407 1,240
Amortization of other intangibles (1) 51 51 101 102
Minority interests (38) (90) (136) (257)
Other expenses 1,457 1,046 2,590 2,075
-------- ----------- --------- ----------
TOTAL OPERATING EXPENSE 9,767 9,144 18,418 18,246
-------- ----------- --------- ----------
INCOME BEFORE TAXES 2,903 3,292 6,568 5,898
Provision for income taxes (1) 765 1,070 2,608 1,918
-------- ----------- --------- ----------
NET INCOME $ 2,138 $ 2,222 $ 3,960 $ 3,980
======== =========== ========= ==========
Earnings per share:
Basic $ 0.40 $ 0.41 $ 0.74 $ 0.72
Diluted $ 0.38 $ 0.38 $ 0.69 $ 0.67
Weighted average shares outstanding:
Basic 5,291 5,455 5,355 5,497
Diluted 5,687 5,906 5,733 5,935
(1) For the quarter and six months ended June 30, 2002, the information reflects the adoption of SFAS 147. The impact
for the quarter, and every quarter in 2002, resulted in a decrease of $124,000 in amortization expense, and an
increase of $42,000 in the provision for income taxes.
12
BERKSHIRE HILLS BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------------------------
Unaudited
Quarters Ended
-----------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2003 2003 2002 2002 2002
- --------------------------------------------------------------------------------------------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Residential mortgage $ 4,564 $ 4,030 $ 3,896 $ 3,969 $ 3,975
Commercial real estate 2,627 2,607 2,521 2,411 2,296
Commercial 2,474 2,544 2,559 2,820 2,905
Indirect auto loans 1,836 1,920 2,686 4,365 4,625
Other consumer 859 880 967 986 973
-----------------------------------------------------
Total interest on loans 12,360 11,981 12,629 14,551 14,774
Securities 1,706 1,770 1,721 1,711 1,583
Federal Home Loan Bank 59 66 70 68 63
Short-term investments 14 84 129 121 148
-----------------------------------------------------
Total interest and dividend income 14,139 13,901 14,549 16,451 16,568
INTEREST EXPENSE:
Deposits 3,613 3,758 4,221 4,425 4,467
Borrowings 1,093 1,063 1,326 1,467 1,436
-----------------------------------------------------
Total interest expense 4,706 4,821 5,547 5,892 5,903
-----------------------------------------------------
Net interest income 9,433 9,080 9,002 10,559 10,665
Provision for loan losses 785 325 2,305 1,050 1,315
-----------------------------------------------------
Net interest income after provision for
loan losses 8,648 8,755 6,697 9,509 9,350
-----------------------------------------------------
NON-INTEREST INCOME:
Customer service fees 619 556 567 557 662
Trust Department fees 554 436 431 411 467
Loan fees 147 48 46 79 115
Net security gains(losses) 317 840 14,507 (29) 12
License maintenance and sales fees 2,126 1,621 1,739 2,173 1,638
Net loan sales gains(losses) 138 - (10,702) - -
Loss on impairment of other assets - - (1,262) - -
Penalty on prepayment of borrowings - - (1,067) - -
Other non-interest income 121 60 69 69 192
-----------------------------------------------------
Total non-interest income 4,022 3,561 4,328 3,260 3,086
-----------------------------------------------------
NON-INTEREST EXPENSE:
Salaries and benefits 5,962 5,286 12,227 5,411 5,322
Occupancy and equipment 1,222 1,381 1,356 1,236 1,278
Professional and outside service fees 294 248 442 337 306
Marketing and advertising 139 103 259 177 124
Data processing 239 221 264 148 156
REO and other loan expenses 286 121 1,429 581 757
Amortization of other intangibles 51 51 51 51 51
Interest from disallowance of REIT (15) 44 - - -
Other non-interest expense 1,589 1,196 1,717 1,379 1,150
------------------------------------------------------
Total non-interest expense 9,767 8,651 17,745 9,320 9,144
------------------------------------------------------
Income before income tax expense 2,903 3,665 (6,720) 3,449 3,292
Income tax resulting from REIT disallowance (244) 487 - - -
Provision for income taxes 1,009 1,356 (2,513) 1,123 1,070
---------- ------------------------------- ----------
NET INCOME $ 2,138 $ 1,822 $(4,207) $ 2,326 $ 2,222
---------- ------------------------------- ----------
Basic earnings per share $ 0.40 $ 0.34 $ (0.78) $0.43 $ 0.41
Diluted earnings per share $ 0.38 $ 0.32 $ (0.78) $0.40 $ 0.38
---------- ------------------------------- ----------
Average shares:
Basic 5,291 5,357 5,370 5,378 5,455
Diluted 5,687 5,731 5,370 5,850 5,906
13
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
NON-PERFORMING ASSETS
- ----------------------------------------------------------------------------------------------------------------------
Unaudited
At
-------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2003 2003 2002 2002 2002
- ----------------------------------------------------------------------------------------------------------------------
(In thousands)
Non-accrual loans:
Residential mortgage $ 213 $ 220 $ 230 $ 166 $ 169
Commercial real estate 165 167 - - 60
Commercial 2,490 2,641 2,850 1,490 1,612
Indirect automobile loans 710 706 593 759 448
Other consumer 10 148 68 99 95
-----------------------------------------------------------
Total non-accrual loans $ 3,588 $ 3,882 $ 3,741 $2,514 $2,384
Real estate owned ("REO"), net of allowance for losses - - 1,500 2,000 2,000
Total non-performing assets $ 3,588 $ 3,882 $ 5,241 $4,514 $4,384
Non-performing loans as a percentage of total loans 0.44% 0.49% 0.52% 0.32% 0.30%
Non-performing assets as a percentage of total loans
and REO 0.44% 0.49% 0.72% 0.57% 0.55%
Allowance for loan losses as a percentage of
non-performing loans 286.57% 266.59% 275.54% 424.66% 460.01%
Allowance for loan losses as a percentage of tota1 loans 1.25% 1.31% 1.43% 1.36% 1.37%
Net charge-offs as a percentage of total loans 0.10% 0.04% 0.37% 0.17% 0.14%
- -----------------------------------------------------------------------------------------------------------------------
Quarters Ended
-------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
PROVISION AND ALLOWANCE FOR LOAN LOSSES 2003 2003 2002 2002 2002
- -----------------------------------------------------------------------------------------------------------------------
Balance at beginning of period $10,349 $ 10,308 $10,676 $10,962 $10,759
Charge-offs (1,164) (1,111) (3,174) (1,840) (1,925)
Recoveries 312 827 501 504 813
-------------------------------------------------------------
Net loan charge-offs (852) (284) (2,673) (1,336) (1,112)
Provision for loan losses 785 325 2,305 1,050 1,315
-------------------------------------------------------------
Balance at end of period $10,282 $ 10,349 $10,308 $10,676 $10,962
- -----------------------------------------------------------------------------------------------------------------------
Quarters Ended
-------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
NET LOAN (CHARGE-OFFS) RECOVERIES 2003 2003 2002 2002 2002
- -----------------------------------------------------------------------------------------------------------------------
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate - - - (150) -
Commercial loans (26) 399 (196) 18 (80)
Consumer loans (1) (826) (683) (2,477) (1,204) (1,032)
-------------------------------------------------------------
Total $ (852) $ (284) $(2,673) $(1,336) $(1,112)
- -----------------------------------------------------------------------------------------------------------------------
(1) Consists primarily of automobile loans
14
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
- ----------------------------------------------------------------------------------------------------------
Unaudited
At or for the three months ended
June March Dec Sept June
2003 2003 2002 2002 2002
---- ----- ---- ---- ----
(In thousands, except per share data)
Performance Ratios (1):
Return (loss)on average assets 0.80% 0.70% -1.47% 0.88% 0.85%
Return (loss)on average stockholders' equity 7.16% 6.06% -12.09% 6.76% 6.39%
Return (loss)on average tangible stockholders' equity 7.85% 6.33% -13.14% 7.31% 6.92%
equity
Net interest margin (2) 3.73% 3.67% 3.89% 4.21% 4.36%
Noninterest income to average assets (3) 1.50% 1.04% 1.06% 1.24% 1.18%
Noninterest expense to average assets (4) 3.35% 3.31% 3.85% 3.52% 3.50%
Average earning assets to average assets 95.09% 94.67% 94.88% 94.90% 93.63%
Efficiency ratio (3) (4) 68.25% 73.31% 87.27% 68.20% 67.46%
Asset Quality Ratios (5):
Non-performing loans $ 3,588 $ 3,882 $ 3,741 $ 2,514 $ 2,384
Foreclosed real estate $ - $ - $ 1,500 $ 2,000 $ 2,000
Non-performing assets $ 3,588 $ 3,882 $ 5,241 $ 4,514 $ 4,384
Net charged-off loans to total loans 0.10% 0.04% 0.37% 0.17% 0.14%
Nonperforming loans to total loans 0.44% 0.49% 0.52% 0.32% 0.30%
Nonperforming assets to total loans and REO 0.44% 0.49% 0.72% 0.57% 0.55%
Nonperforming assets to total assets 0.32% 0.37% 0.50% 0.42% 0.42%
Allowance for loan losses to non-performing loans 286.57% 266.59% 275.54% 424.66% 460.01%
Allowance for loan losses to total loans 1.25% 1.31% 1.43% 1.36% 1.37%
Capital ratios (5 )
Stockholders' equity to total assets 10.57% 11.20% 11.53% 12.48% 12.96%
Tier I capital to average adjusted assets 9.66% 10.00% 10.30% 10.82% 10.49%
Tier I capital to risk weighted assets 12.06% 13.02% 13.45% 12.97% 12.73%
Total capital to risk weighted assets 13.75% 14.67% 15.19% 15.32% 15.38%
Other data (5)
Book value per share $ 20.14 $ 19.80 $ 19.71 $ 21.78 $ 22.00
Tangible book value per share $ 18.38 $ 18.07 $ 18.00 $ 20.08 $ 20.29
Stock price:
High $ 28.40 $ 24.00 $ 25.25 $ 27.25 $ 26.20
Low $ 23.10 $ 21.86 $ 22.94 $ 20.99 $ 21.98
Close $ 28.40 $ 23.00 $ 23.55 $ 23.50 $ 26.20
(1) Ratios are annualized for each of the quarters
(2) Adjusted for impact of the forfeiture of $758,000 in interest income upon
the sale of subprime automobile loans in December 2002
(3) Excludes net securities gains/losses, and, excludes charges related to the
sale of subprime auto loans and other restructuring charges in fourth
quarter of 2002
(4) Excludes retirement benefit charges in second quarter of 2003 and severance
costs and other management restructing charges in fourth quarter of 2002
15
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS (1)
Unaudited
Quarters ended
June 30, 2003 Mar. 31, 2003 June 30, 2002
---------------------------------------------------------------------------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
- --------------------------------------------------------------------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 2,834 $ 14 1.98% $ 22,799 $ 84 1.47% $ 27,203 $ 148 2.18%
Securities (2) 186,975 1,705 3.65% 209,232 1,769 3.38% 151,332 1,581 4.18%
Federal Home Loan Bank 7,496 60 3.20% 7,440 66 3.55% 7,303 65 3.56%
Loans:
Residential mortgage 324,366 4,564 5.63% 265,884 4,031 6.06% 229,632 3,975 6.92%
Commercial real estate 164,997 2,627 6.37% 160,907 2,607 6.48% 129,956 2,182 6.72%
Commercial 171,007 2,474 5.79% 168,246 2,544 6.05% 176,892 2,905 6.57%
Indirect auto loans 93,772 1,836 7.83% 94,953 1,920 8.09% 198,652 4,625 9.31%
Other consumer 60,316 859 5.70% 59,769 880 5.89% 57,565 1,087 7.55%
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Total loans 814,458 12,360 6.07% 749,759 11,982 6.39% 792,697 14,774 7.46%
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Total earning assets 1,011,763 14,139 5.59% 989,230 13,901 5.62% 978,535 16,568 6.77%
Other assets 60,165 55,681 66,318
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Total assets $1,071,928 $1,044,911 $1,044,853
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Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 86,299 $ 86,304 $ 80,573
Savings, NOW and money market 385,992 964 1.00% 364,525 924 1.01% 357,146 1,372 1.54%
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Total core deposits 472,291 964 0.82% 450,829 924 0.82% 437,719 1,372 1.25%
Certificates of deposits 332,879 2,649 3.18% 335,173 2,834 3.38% 315,781 3,095 3.92%
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Total deposits 805,170 3,613 1.79% 786,002 3,758 1.91% 753,500 4,467 2.37%
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Borrowings:
Federal Home Loan Bank advances 136,685 1,093 3.20% 131,124 1,062 3.24% 139,884 1,430 4.09%
Repurchase Agreements - - - 356 1 1.12% 1,364 6 1.76%
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Total borrowings 136,685 1,093 3.20% 131,480 1,063 3.23% 141,248 1,436 4.07%
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Total funding liabilities 941,855 4,706 2.00% 917,482 4,821 2.10% 894,748 5,903 2.64%
Other liabilities 8,376 4,773 10,434
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Total liabilities 950,231 922,255 905,182
Minority Interest 2,339 2,418 2,877
Stockholders' Equity 119,358 120,238 136,794
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Total liabilities and equity $1,071,928 $1,044,911 $1,044,853
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Net interest income/spread $ 9,433 3.59% $ 9,080 3.52% $ 10,665 4.13%
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Net interest margin 3.73% 3.67% 4.36%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on amortized cost.