4
FOR IMMEDIATE RELEASE
BERKSHIRE HILLS BANCORP, INC. ANNOUNCES THIRD QUARTER 2003 EARNINGS
PITTSFIELD, MA - October 22, 2003 - Berkshire Hills Bancorp, Inc. (the
"Company"), (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"),
today reported net income of $2.4 million, or $0.43 diluted earnings per share
for the quarter ended September 30, 2003 as compared to $2.1 million, or $0.38,
for the quarter ended June 30, 2003 and $2.3 million, or $0.40 for the quarter
ended September 30, 2002. Net income totaled $6.4 million for the first nine
months of 2003, as compared to $6.3 million for the first nine months of 2002.
Earnings per diluted share for the first nine months of 2003 were $1.12 compared
to $1.07 for the first nine months of 2002.
Exclusive of gains on the sale of securities, earnings for the current quarter
were $2.2 million, or $0.39 per diluted share. This compares to $0.38 per
diluted share for the quarter ended June 30, 2003, where gains on the sale of
securities and a tax credit from the Real Estate Investment Trust ("REIT")
settlement were offset by a non-recurring retirement benefit charge.
"I am pleased with the Company's third quarter financial performance. We have
been vigilant in our efforts to balance short and long term investments in
anticipation of rising interest rates and at the same time drive current
earnings. This objective has been facilitated by a combination of expense
reduction and strong performance of our loan portfolio. In light of the earnings
for the first nine months and our current business outlook we are comfortable
with analyst's consensus estimates of at least $1.46 per share for the full
year. While our attention to current period results go unabated we are also
focused on planning the Bank's future," stated Michael P. Daly, President and
Chief Executive Officer.
As compared to the third quarter of 2002, earnings for the current quarter
benefited from a lower loan loss provision, which was consistent with an
improved credit risk profile and a reduction in operating expenses, offset by a
decline in net interest income and a higher effective income tax rate. As
compared to the second quarter of 2003, lower net interest income, which was
primarily attributed to heavy prepayment activity on loans, was offset by a
lower loan loss provision.
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 November 21, 2003
to shareholders of record at the close of business on November 6, 2003.
Third Quarter Highlights
o The Bank sold $38.0 million in one-to four-family fixed rate residential
mortgages, as the Bank continued to reduce its exposure to long duration
assets.
o Commercial loans increased $10.2 million, or 3.0%, and consumer loans
increased $5.6 million, or 3.5%, from June 30, 2003.
o Core deposits increased $16.2 million, or 3.3%, from June 30, 2003.
5
o Operating expenses, exclusive of EastPoint, decreased 3.5%, as compared to
the same quarter last year.
Financial Condition
Loans increased $77.3 million from December 31, 2002, attributed primarily to
growth in residential real estate loans, up $43.6 million, or 18.0%, and
commercial real estate loans, up $27.0 million, or 17.2%. Loans declined $22.6
million from June 30, 2003 primarily due to the sale of residential loans,
partially offset by an increase in commercial real estate loans and an increase
in consumer loans. Securities available for sale increased $70.3 million from
December 31, 2002, with $64.4 million of this growth occurring since June 30,
2003, as the Company took advantage of a rise in interest rates during the
current quarter and a steep yield curve. Investments were made primarily in
mortgage-backed securities with durations averaging 3.5 years.
Earning assets were funded by growth in deposits and increases in borrowings.
Deposits increased $45.4 million, or 5.8%, from December 31, 2002 to $827.8
million at September 30, 2003, and were up $11.0 million, or 1.4%, from June 30,
2003. Deposit growth resulted from gains in core deposits, represented by
demand, NOW, savings and money market accounts, as time deposits were
essentially flat. Borrowings from the Federal Home Loan Bank increased $34.2
million from June 30, 2003, and increased $58.3 million from December 31, 2002.
Non-performing loans were $3.7 million at September 30, 2003, an increase of
$63,000 from June 30, 2003, and a decline of $90,000 from December 31, 2002. The
Bank held no foreclosed real estate at September 30, 2003 and June 30, 2003
compared to $1.5 million at December 31, 2002.
Sub-prime automobile loans totaled $13.0 million at September 30, 2003, a
decrease of $2.1 million, or 14.0%, from June 30, 2003 and a decrease of $6.6
million, or 33.6%, from December 31, 2002. These loans are expected to continue
to decline at a pace of approximately $2.1 million per quarter, which is
consistent with the 2003 quarterly trend.
The ratio of loans delinquent 30 days or more to total loans was 0.98% at
September 30, 2003, consistent with 1.06% at June 30, 2003, and reflective of
improvement in the Bank's credit risk profile as compared to a ratio of 1.40% at
December 31, 2002.
The allowance for loan losses totaled $10.1 million, representing 1.26% of total
loans at September 30, 2003 compared to $10.3 million, or 1.25% of total loans
at June 30, 2003, and $10.3 million, or 1.43% of total loans at December 31,
2002.
The Company's tangible book value per share at September 30, 2003, June 30,
2003, and December 31, 2002 was $18.71, $18.38 and $18.00, respectively.
Results of Operations
Net interest income was $9.3 million for the third quarter of 2003, decreasing
$124,000 and $1.3 million, compared to the quarters ended June 30, 2003 and
September 30, 2002, respectively. The Company's net interest margin was 3.51%
for the third quarter of 2003 compared to 3.73% for the second quarter of 2003,
and 4.21% for the third quarter last year. The decline in the net interest
margin from the preceding quarter was attributable to heavy prepayments on
one-to four-family residential loans and, to a lesser extent, from the actions
taken by management to shorten the duration of earning assets, better
positioning
6
the Company's balance sheet given the current historically low interest rate
environment. Prepayments are expected to slow significantly in the remaining
months of 2003.
The provision for loan losses totaled $575,000 for the quarter ended September
30, 2003, a reduction of $210,000 from $785,000 for the quarter ended June 30,
2003 and $475,000 from $1.1 million for the same period in 2002. Net loan
charge-offs totaled $760,000 for the quarter ended September 30, 2003, a
decrease of $92,000, or 10.8%, compared to $852,000 for the quarter ended June
30, 2003 and a decrease of $576,000, or 43.1%, from $1.3 million for the quarter
ended September 30, 2002.
Excluding license maintenance and sales fees from EastPoint and gains on the
sale of securities, noninterest income was $1.6 million for the quarter ended
September 30, 2003, essentially flat compared to the quarter ended June 30, 2003
and an increase of $440,000, or 39.3%, from $1.1 million for the quarter ended
September 30, 2002. This increase compared to the same period last year was
primarily the result of increases in trust department and loan fees and gains on
the sale of loans.
License maintenance and processing fees and license sales and other fees, which
represent revenue from EastPoint totaled $1.7 million in the current quarter,
decreasing $405,000 from June 30, 2003 and $452,000 as compared to the same
quarter last year. Associated expenses, which are recorded in various expense
categories, totaled $1.8 million, net of minority interests, for the current
quarter, a decrease of $412,000 from June 30, 2003 and $481,000 as compared to
the same quarter last year.
Exclusive of EastPoint expenses and an $800,000 non-recurring retirement benefit
charge taken in the second quarter of 2003, operating expenses totaled $6.8
million for the third quarter of 2003, a decrease of $244,000, or 3.5%, compared
to the same quarter last year and up $39,000, or less than 1%, compared to the
quarter ended June 30, 2003. The decrease was primarily due to decreases in
salaries and benefits expense and in foreclosed real estate and other loan
expenses. The decline in foreclosed real estate and other loan expenses resulted
from a decline in expenses associated with the Bank's automobile repossession
and sales activities.
The Company's effective tax rate was 36.0% in the quarter ended September 30,
2003, an increase compared to 32.6% for the same quarter last year. The increase
was primarily due to the State's disallowance of a dividend received deduction
paid to the Bank by the Bank's REIT. The effective tax rate is expected to
remain at approximately 36.0% for the remaining quarter of 2003.
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 10:00 A.M. (ET) on Thursday, October 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 1-800-289-0529, and use access code 233673. Materials 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 8:30 A.M. (ET) on
October 23, 2003. Replays of the conference call will be available beginning
October 23, 2003 at 5:00 P.M. (ET) through October 31, 2003 at 11:00 P.M. (ET)
by dialing 1-888-203-1112, using access code 233673. 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.
7
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.
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.
8
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
At
-------------------------------------------------
September 30, June 30, Dec. 31,
2003 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
(In thousands)
ASSETS:
Cash and due from banks $ 17,803 $ 11,303 $ 17,258
Short term investments 9,262 8,024 43,397
-------- -------- -----------
Total cash and cash equivalents 27,065 19,327 60,655
Securities available for sale, at fair value 243,451 179,011 173,169
Securities held to maturity, at amortized cost 41,380 46,476 44,267
Federal Home Loan Bank stock, at cost 11,416 7,858 7,440
Savings Bank Life Insurance stock, at cost 2,043 2,043 2,043
Loans 800,280 822,873 723,022
Allowance for loan losses (10,097) (10,282) (10,308)
-------- -------- -----------
Net loans 790,183 812,591 712,714
Premises and equipment, net 12,816 13,132 13,267
Foreclosed real estate - - 1,500
Accrued interest receivable 5,096 5,256 5,125
Goodwill and other intangibles (1) 10,284 10,334 10,435
Net deferred tax assets 2,843 2,601 2,185
Bank owned life insurance 7,626 7,529 -
Other assets 13,703 12,211 13,315
----------- ----------- -----------
TOTAL ASSETS $ 1,167,906 $ 1,118,369 $ 1,046,115
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $ 827,782 $ 816,772 $ 782,360
Federal Home Loan Bank advances 191,318 157,156 133,002
Securities sold under agreements to repurchase - - 700
Loans sold with recourse 598 765 1,201
Due to broker 20,019 16,411 -
Accrued expenses and other liabilities (1) 5,632 6,714 5,846
----------- ----------- -----------
Total liabilities 1,045,349 997,818 923,109
----------- ----------- -----------
Minority interests 2,300 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 September 30, 2003
and December 31, 2002; shares outstanding: 5,878,920
at September 30, 2003 and 6,117,134 at December 31, 2002) 77 77 77
Additional paid-in capital 75,605 75,430 74,632
Unearned compensation (8,892) (9,273) (9,535)
Retained earnings (1) 84,362 82,603 80,010
Accumulated other comprehensive income 5,427 5,870 5,542
Treasury stock at cost (1,794,841 shares at September 30, 2003
and 1,556,627 shares at December 31, 2002) (36,322) (36,457) (30,158)
----------- ----------- -----------
Total stockholders' equity 120,257 118,250 120,568
----------- ----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,167,906 $ 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.
9
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
Three Months Ended Nine Months Ended
-------------------------------- ------------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
- ----------------------------------------------------------------------------- ------------- ------------- -------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Bond interest $ 1,676 $ 1,368 $ 4,799 $ 3,940
Stock dividends 269 411 747 1,031
Short term investment interest 5 121 103 326
Loan interest 11,908 14,551 36,249 44,282
---------------- ------------- ------------- -------------
TOTAL INTEREST AND DIVIDEND INCOME 13,858 16,451 41,898 49,579
---------------- ------------- ------------- -------------
INTEREST EXPENSE:
Interest on deposits 3,343 4,425 10,714 13,556
Interest on FHLB advances and other borrowings 1,206 1,467 3,362 4,325
---------------- ------------- ------------- ------------
TOTAL INTEREST EXPENSE 4,549 5,892 14,076 17,881
---------------- ------------- ------------- ------------
NET INTEREST INCOME 9,309 10,559 27,822 31,698
PROVISION FOR LOAN LOSSES 575 1,050 1,685 3,875
---------------- ------------- ------------- ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 8,734 9,509 26,137 27,823
---------------- ------------- ------------- ------------
NON-INTEREST INCOME:
Customer service fees 568 557 1,743 1,666
Trust Department fees 573 411 1,563 1,365
Loan fees 142 79 337 394
Gain/ (Loss) on sale of securities, net 356 (29) 1,513 (37)
Gain on sale of loans 102 - 240 -
License maintenance and processing fees 1,060 1,098 3,337 3,268
License sales and other fees 661 1,075 2,131 1,984
Other income 171 69 352 450
---------------- ------------- ------------- -------------
TOTAL NON-INTEREST INCOME 3,633 3,260 11,216 9,090
---------------- ------------- ------------- -------------
OPERATING EXPENSE:
Salaries and benefits 5,132 5,411 16,380 16,261
Occupancy and equipment 1,191 1,236 3,794 3,932
Marketing and advertising 137 177 379 389
Data processing 283 148 743 494
Professional services 292 337 834 942
Office supplies 164 154 525 531
Foreclosed real estate and other loans, net 333 581 740 1,821
Amortization of other intangibles (1) 51 51 153 153
Minority interests (1) (43) (137) (300)
Other expenses 1,013 1,268 3,602 3,342
---------------- ------------- ------------- -------------
TOTAL OPERATING EXPENSE 8,595 9,320 27,013 27,565
---------------- ------------- ------------- -------------
INCOME BEFORE TAXES 3,772 3,449 10,340 9,348
---------------- ------------- ------------- -------------
Provision for income taxes (1) 1,358 1,123 3,966 3,043
---------------- ------------- ------------- -------------
NET INCOME $ 2,414 $ 2,326 $ 6,374 $ 6,305
================ ============= ============== ==============
Earnings per share:
Basic $ 0.46 $ 0.43 $ 1.20 $ 1.16
Diluted $ 0.43 $ 0.40 $ 1.12 $ 1.07
Weighted average shares outstanding:
Basic 5,196 5,378 5,301 5,457
Diluted 5,655 5,850 5,711 5,907
(1) For the quarter and nine months ended September 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.
10
BERKSHIRE HILLS BANCORP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
Quarters Ended
-----------------------------------------------------------------------
Sept. 30, June 30, Mar.31, Dec. 31, Sept. 30,
2003 2003 2003 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Residential mortgage $ 4,099 $ 4,564 $ 4,030 $ 3,896 $ 3,969
Commercial real estate 2,760 2,627 2,607 2,521 2,411
Commercial 2,401 2,474 2,544 2,559 2,820
Indirect auto loans 1,945 1,836 1,920 2,686 4,365
Other consumer 703 859 880 967 986
------- ------- ------- -------- -------
Total interest on loans 11,908 12,360 11,981 12,629 14,551
Securities 1,886 1,706 1,770 1,721 1,711
Federal Home Loan Bank 59 59 66 70 68
Short-term investments 5 14 84 129 121
------- ------- ------- -------- -------
Total interest and dividend income 13,858 14,139 13,901 14,549 16,451
------- ------- ------- -------- -------
INTEREST EXPENSE:
Deposits 3,343 3,613 3,758 4,221 4,425
Borrowings 1,206 1,093 1,063 1,326 1,467
------- ------- ------- -------- -------
Total interest expense 4,549 4,706 4,821 5,547 5,892
------- ------- ------- -------- -------
Net interest income 9,309 9,433 9,080 9,002 10,559
Provision for loan losses 575 785 325 2,305 1,050
------- ------- ------- -------- -------
Net interest income after provision for loan losses 8,734 8,648 8,755 6,697 9,509
------- ------- ------- -------- -------
NON-INTEREST INCOME:
Customer service fees 568 619 556 567 557
Trust Department fees 573 554 436 431 411
Loan fees 142 147 48 46 79
Net security gains(losses) 356 317 840 14,507 (29)
License maintenance and sales fees 1,721 2,126 1,621 1,739 2,173
Net loan sales gains(losses) 102 138 - (10,702) -
Loss on impairment of other assets - - - (1,262) -
Penalty on prepayment of borrowings - - - (1,067) -
Other non-interest income 171 121 60 69 69
------- ------- ------- -------- -------
Total non-interest income 3,633 4,022 3,561 4,328 3,260
------- ------- ------- -------- -------
NON-INTEREST EXPENSE:
Salaries and benefits 5,132 5,962 5,286 12,227 5,411
Occupancy and equipment 1,191 1,222 1,381 1,356 1,236
Professional and outside service fees 292 294 248 442 337
Marketing and advertising 137 139 103 259 177
Data processing 283 239 221 264 148
REO and other loan expenses 333 286 121 1,429 581
Amortization of other intangibles 51 51 51 51 51
Interest from disallowance of REIT - (15) 44 - -
Other non-interest expense 1,176 1,589 1,196 1,717 1,379
------- ------- ------- -------- -------
Total non-interest expense 8,595 9,767 8,651 17,745 9,320
------- ------- ------- -------- -------
Income before income tax expense 3,772 2,903 3,665 (6,720) 3,449
Income tax effect resulting from REIT disallowance - (244) 487 - -
Provision for income taxes 1,358 1,009 1,356 (2,513) 1,123
------- ------- ------- -------- -------
NET INCOME $ 2,414 $ 2,138 $ 1,822 $ (4,207) $ 2,326
======= ======= ======= ======== =======
Basic earnings per share $ 0.46 $ 0.40 $ 0.34 $ (0.78) $ 0.43
Diluted earnings per share $ 0.43 $ 0.38 $ 0.32 $ (0.78) $ 0.40
Average shares:
Basic 5,196 5,291 5,357 5,370 5,378
Diluted 5,655 5,687 5,731 5,370 5,850
11
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
Unaudited
NON-PERFORMING ASSETS At
- -----------------------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2003 2003 2003 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
(In thousands)
Non-accrual loans:
Residential mortgage $ 221 $ 213 $ 220 $ 230 $ 166
Commercial real estate 154 165 167 - -
Commercial 2,578 2,490 2,641 2,850 1,490
Indirect automobile loans 696 710 706 593 759
Other consumer 2 10 148 68 99
---------- ---------- ---------- ---------- ----------
Total non-accrual loans $ 3,651 $ 3,588 $ 3,882 $ 3,741 $ 2,514
Real estate owned ("REO"), net of allowance for losses - - - 1,500 2,000
Total non-performing assets $ 3,651 $ 3,588 $ 3,882 $ 5,241 $ 4,514
Non-performing loans as a percentage of total loans 0.46% 0.44% 0.49% 0.52% 0.32%
Non-performing assets as a percentage of total loans
and REO 0.46% 0.44% 0.49% 0.72% 0.57%
Allowance for loan losses as a percentage of
non-performing loans 276.55% 286.57% 266.59% 275.54% 424.66%
Allowance for loan losses as a percentage of total loans 1.26% 1.25% 1.31% 1.43% 1.36%
Net charge-offs as a percentage of total loans 0.09% 0.10% 0.04% 0.37% 0.17%
=================================================================================================================================
PROVISION AND ALLOWANCE FOR LOAN LOSSES
=================================================================================================================================
Balance at beginning of period $ 10,282 $ 10,349 $ 10,308 $ 10,676 $ 10,962
Charge-offs (1,015) (1,164) (1,111) (3,174) (1,840)
Recoveries 255 312 827 501 504
---------- ---------- ---------- --------- ---------
Net loan charge-offs (760) (852) (284) (2,673) (1,336)
Provision for loan losses 575 785 325 2,305 1,050
---------- ---------- ---------- --------- ---------
Balance at end of period $ 10,097 $ 10,282 $ 10,349 $ 10,308 $ 10,676
========== ========== ========== ========= =========
=================================================================================================================================
NET LOAN (CHARGE-OFFS) RECOVERIES
=================================================================================================================================
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate - - - - (150)
Commercial loans 21 (26) 399 (196) 18
Consumer loans (1) (781) (826) (683) (2,477) (1,204)
---------- ---------- ---------- --------- ---------
Total $ (760) $ (852) $ (284) $ (2,673) $ (1,336)
========== ========== ========== ========= =========
=================================================================================================================================
SUBPRIME LOANS
=================================================================================================================================
Balance at end of period $ 13,006 $ 15,128 $ 17,238 $ 19,573 $ 88,200
Allowance for subprime loans/Total subprime loans 15.75% 15.79% 16.01% 15.83% 4.08%
==================================================================================================================================
AVERAGE FICO SCORES CONSUMER LOANS (1) 674 670 666 665 623
==================================================================================================================================
(1) Consists primarily of automobile loans
12
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
- -----------------------------------------------------------------------------------------------------------------------------------
Unaudited
At or for the three months ended
Sept 30, June 30, March 31, Dec 31, Sept 30,
2003 2003 2003 2002 2002
---- ---- ---- ---- ----
(In thousands, except per share data)
Performance Ratios (1):
Return (loss)on average assets 0.86% 0.80% 0.70% (1.47%) 0.88%
Return (loss)on average stockholders' equity 8.10% 7.16% 6.06% (12.09%) 6.76%
Return (loss)on average tangible stockholders' equity 8.87% 7.85% 6.33% (13.14%) 7.31%
Net interest margin 3.51% 3.73% 3.67% 3.89% (2) 4.21%
Noninterest income to average assets 1.16% 1.38% 1.04% 1.06% (3) 1.24%
Noninterest expense to average assets 3.05% 3.35% (4) 3.31% 3.85% (4) 3.52%
Average earning assets to average assets 94.14% 95.09% 94.67% 94.88% 94.90%
Efficiency ratio 68.29% 68.25% (4) 73.31% 87.27% (3,4) 68.20%
Asset Quality Ratios (5):
Non-performing loans $ 3,651 $ 3,588 $ 3,882 $ 3,741 $ 2,514
Foreclosed real estate $ - $ - $ - $ 1,500 $ 2,000
Non-performing assets $ 3,651 $ 3,588 $ 3,882 $ 5,241 $ 4,514
Net charged-off loans to total loans 0.09% 0.10% 0.04% 0.37% 0.17%
Nonperforming loans to total loans 0.46% 0.44% 0.49% 0.52% 0.32%
Nonperforming assets to total loans and REO 0.46% 0.44% 0.49% 0.72% 0.57%
Nonperforming assets to total assets 0.31% 0.32% 0.37% 0.50% 0.42%
Allowance for loan losses to non-performing loans 276.55% 286.57% 266.59% 275.54% 424.66%
Allowance for loan losses to total loans 1.26% 1.25% 1.31% 1.43% 1.36%
Capital ratios (5):
Stockholders' equity to total assets 10.30% 10.57% 11.20% 11.53% 12.48%
Tier I capital to average adjusted assets 9.36% 9.66% 10.00% 10.30% 10.82%
Tier I capital to risk weighted assets 12.51% 12.06% 13.02% 13.45% 12.97%
Total capital to risk weighted assets 14.19% 13.75% 14.67% 15.19% 15.32%
Other data (5):
Book value per share $ 20.46 $ 20.14 $ 19.80 $ 19.71 $ 21.78
Tangible book value per share $ 18.71 $ 18.38 $ 18.07 $ 18.00 $ 20.08
Stock price:
High $ 33.90 $ 28.40 $ 24.00 $ 25.25 $ 27.25
Low $ 28.10 $ 23.10 $ 21.86 $ 22.94 $ 20.99
Close $ 33.69 $ 28.40 $ 23.00 $ 23.55 $ 23.50
(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
restructuring charges in fourth quarter of 2002
(5) End of period prices and values
13
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS (1)
Unaudited
Quarters ended
September 30, 2003
------------------
Average Yield/
Balance Interest Rate
- ------------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 2,626 $ 5 0.76%
Securities (2) 220,514 1,886 3.42%
Federal Home Loan Bank 8,406 59 2.81%
Loans:
Residential mortgage 324,272 4,099 5.06%
Commercial real estate 177,306 2,760 6.23%
Commercial 169,653 2,401 5.66%
Indirect auto loans 104,252 1,945 7.46%
Other consumer 54,684 703 5.14%
---------- --------
Total loans 830,167 11,908 5.74%
---------- --------
Total earning assets 1,061,713 $ 13,858 5.22%
========
Other assets 65,993
----------
Total assets $1,127,706
==========
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 99,351
Savings, NOW and money market 407,451 832 0.82%
---------- --------
Total core deposits 506,802 832 0.66%
Certificates of deposits 330,821 2,511 3.04%
---------- --------
Total deposits 837,623 3,343 1.60%
---------- -------- -
Borrowings:
Federal Home Loan Bank advances 165,011 1,206 2.92%
Repurchase Agreements - - -
---------- --------
Total borrowings 165,011 1,206 2.92%
---------- --------
Total funding liabilities 1,002,634 $ 4,549 1.81%
========
Other liabilities 3,650
----------
Total liabilities 1,006,284
Minority Interest 2,279
Stockholders' Equity 119,143
----------
Total liabilities and equity $1,127,706
==========
Net interest income/spread $ 9,309 3.41%
========
Net interest margin 3.51%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on
amoritized cost.
14
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS (1)
Unaudited
Quarters ended
June 30, 2003
-------------
Average Yield/
Balance Interest Rate
- ----------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 2,834 $ 14 1.98%
Securities (2) 186,975 1,705 3.65%
Federal Home Loan Bank 7,496 60 3.20%
Loans:
Residential mortgage 324,366 4,564 5.63%
Commercial real estate 164,997 2,627 6.37%
Commercial 171,007 2,474 5.79%
Indirect auto loans 93,772 1,836 7.83%
Other consumer 60,316 859 5.70%
---------- -------
Total loans 814,458 12,360 6.07%
---------- -------
Total earning assets 1,011,763 $14,139 5.59%
=======
Other assets 60,165
----------
Total assets $1,071,928
==========
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 86,299
Savings, NOW and money market 385,992 964 1.00%
---------- -------
Total core deposits 472,291 964 0.82%
Certificates of deposits 332,879 2,649 3.18%
---------- -------
Total deposits 805,170 3,613 1.79%
----------- --------
Borrowings:
Federal Home Loan Bank advances 136,685 1,093 3.20%
Repurchase Agreements - - na
--------- -------
Total borrowings 136,685 1,093 3.20%
---------- ------
Total funding liabilities 941,855 $4,706 2.00%
======
Other liabilities 8,376
----------
Total liabilities 950,231
Minority Interest 2,339
Stockholders' Equity 119,358
----------
Total liabilities and equity $1,071,928
==========
Net interest income/spread $9,433 3.59%
======
Net interest margin 3.73%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on
amoritized cost.
15
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS (1)
Unaudited
Quarters ended
September 30, 2002
------------------
Average Yield/
Balance Interest Rate
- --------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 30,073 $ 121 1.61%
Securities (2) 161,875 1,711 4.23%
Federal Home Loan Bank 7,378 68 3.69%
Loans:
Residential mortgage 240,840 3,976 6.60%
Commercial real estate 140,366 2,410 6.87%
Commercial 173,177 2,821 6.52%
Indirect auto loans 191,029 4,359 9.13%
Other consumer 59,618 985 6.61%
---------- -------
Total loans 805,030 14,551 7.23%
---------- -------
Total earning assets 1,004,356 $16,451 6.55%
=======
Other assets 52,521
----------
Total assets $1,056,877
==========
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 82,900
Savings, NOW and money market 357,677 1,365 1.53%
---------- ---------
Total core deposits 440,577 1,365 1.24%
Certificates of deposits 323,336 3,060 3.79%
---------- -------
Total deposits 763,913 4,425 2.32%
---------- -------
Borrowings:
Federal Home Loan Bank advances $ 146,581 1,463 3.99%
Repurchase Agreements 1,075 4 1.49%
---------- -------
Total borrowings 147,656 1,467 3.97%
---------- -------
Total funding liabilities 911,569 $ 5,892 2.59%
=======
Other liabilities 7,571
----------
Total liabilities 919,140
Minority Interest 2,818
Stockholders' Equity 134,919
----------
Total liabilities and equity $1,056,877
==========
Net interest income/spread $10,559 3.97
=======
Net interest margin 4.21%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on
amoritized cost.
News contact: Wayne F. Patenaude 413-236-3195
Senior Vice President, Treasurer
and Chief Financial Officer