1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
BERKSHIRE HILLS BANCORP, INC. ANNOUNCES RECORD FIRST QUARTER EARNINGS
AND DECLARES QUARTERLY DIVIDEND
PITTSFIELD, MA - April 28, 2004 - Berkshire Hills Bancorp, Inc. (the "Company"),
(AMEX: BHL), the holding company for Berkshire Bank (the "Bank"), today reported
net income of $2.6 million, or $0.46 diluted earnings per share, for the quarter
ended March 31, 2004 as compared to $1.8 million, or $0.32, for the quarter
ended March 31, 2003, an increase of 44%.
Commenting on the Company's performance, Michael P. Daly, President and Chief
Executive Officer stated, "I am pleased to report another record quarter for the
Company as we continue to execute the plan we outlined a year ago. Commercial
and consumer loan activity remain strong, as well as, core deposit growth as we
continue to actively pursue relationships through our SOLUTIONS brand campaign.
We also remain focused on maintaining superior credit quality and on investing
in Six Sigma and risk management initiatives."
Dividend Declared
The Board of Directors declared a quarterly cash dividend of $0.12 per share,
payable on May 24, 2004 to stockholders of record at the close of business on
May 10, 2004.
First Quarter Highlights
o Commercial loans increased $10.3 million, or 2.8%, from December 31, 2003.
o Consumer loans increased $8.4 million, or 5.5%, from December 31, 2003,
with prime automobile loans increasing $6.9 million, or 6.7%.
o The Bank securitized $38.7 million of one-to four-family fixed rate
residential mortgages, in an effort to increase balance sheet liquidity and
strategic flexibility.
o Total delinquencies as a percentage of total loans were 0.54% at March 31,
2004.
Reconciliation of GAAP Net Income to Core Net Income and EPS
1Q 2004 1Q 2003
------------------ -----------------
(In thousands, except per share data)
Income before income taxes-GAAP $ 3,857 $ 3,665
Plus:
REIT interest charge - 44
Less:
Gain on sale of securities, net 325 840
Income before taxes-core 3,532 2,869
Less: Provision for taxes at 32.0% for 2004 and 36.0% for 2003 1,130 1,033
NET INCOME-CORE $ 2,402 $ 1,836
Earnings per diluted share-core $0.42 $ 0.32
Average diluted shares outstanding 5,757 5,731
2
Financial Condition
Loans decreased $30.7 million from December 31, 2003, primarily due to the
securitization of $38.7 million of one-to four-family fixed rate mortgages and
the sale of $6.5 million of one-to four-family fixed rate mortgages, partially
offset by increases of $10.3 million in commercial loans and $8.4 million in
consumer loans. Compared to March 31, 2003, loans declined $28.4 million,
primarily due to the sale of $9.9 million of sub-prime automobile loans, the
securitization of $55.0 million of one-to four-family fixed rate residential
mortgages and the sale of $58.6 million of one-to four-family fixed rate
mortgages. These decreases were partially offset by a purchase of $9.6 million
of residential loans and by organic growth in residential loans of $14.5
million, growth of $20.0 million in consumer loans and growth of $51.8 million
in commercial loans. Approximately $30.0 million of the growth in commercial
loans was attributed to loans originated in markets outside of Berkshire County,
particularly in eastern New York.
Securities available for sale increased $88.0 million from December 31, 2003 and
$243.5 million from March 31, 2003. These increases include $16.3 million of
loans that were securitized in December 2003 and $38.7 million in January 2004.
Security purchases were made to take advantage of a steep yield curve and were
primarily in mortgage-backed securities with durations averaging 3.5 years.
Earning assets were primarily funded by increases in borrowings. Borrowings from
the Federal Home Loan Bank were $299.1 million at March 31, 2004, an increase of
$47.6 million from December 31, 2003 and an increase of $162.3 million from
March 31, 2003. Core deposits (represented by demand, NOW, savings and money
market accounts) were $513.9 million at March 31, 2004, an increase of $5.0
million, or 1.0%, from December 31, 2003, and an increase of $58.1 million, or
12.8%, from March 31, 2003. Certificates of deposit decreased $5.4 million, or
1.7%, from December 31, 2003 and decreased $19.4 million, or 5.8%, from March
31, 2003, as the Bank used borrowings as a lower cost alternative to the
relatively higher cost of certificates of deposit.
The Company's tangible book value per share at March 31, 2004, December 31, 2003
and March 31, 2003 was $19.82, $19.13 and $18.07, respectively.
Asset Quality
For the second consecutive quarter, non-performing loans declined.
Non-performing loans were $3.0 million at March 31, 2004, a decrease of $227,000
from December 31, 2003 and a decrease of $910,000 from March 31, 2003. These
decreases were primarily in indirect automobile loans and commercial loans.
The ratio of loans delinquent 30 days or more to total loans continued to
decline and measured 0.54% at March 31, 2004, as compared to 0.67% at December
31, 2003, and 0.94% at March 31, 2003. The improvement in the delinquency ratio
from December 31, 2003 was primarily in consumer loans, which declined from
1.59% to 0.79%.
Net loan charge-offs totaled $367,000 for the quarter ended March 31, 2004,
compared to an average of $700,000 for 2003 and down from $903,000 in the fourth
quarter of 2003.
The allowance for loan losses totaled $9.0 million, representing 1.18% of total
loans at March 31, 2004, compared to $9.0 million, or 1.13% of total loans at
December 31, 2003, and $10.3 million, or 1.31%, of total loans at March 31,
2003. The decline in the allowance to total loans as compared to a year ago was
attributed to improving credit quality trends in the Bank's overall portfolio,
while the increase from year-end was attributed to increases in commercial real
estate and consumer loans, partially offset by a decline in residential mortgage
loans.
2
3
Results of Operations
Net interest income was $10.2 million for the first quarter of 2004, an increase
of $1.0 million compared to the quarter ended March 31, 2003. The Company's net
interest margin was 3.44% for the first quarter of 2004 compared to 3.42% and
3.67% for the fourth and first quarters of 2003, respectively. The lower margin
this quarter as compared to a year ago resulted from the impact of a lower
interest rate environment during 2003 and the execution of strategies in 2003,
such as the sale and securitization of longer duration fixed rate residential
mortgages to better position the Bank for a potential rise in interest rates.
The provision for loan losses was $350,000 for the quarter ended March 31, 2004
compared to $325,000 for the same quarter last year and down significantly from
a quarterly average of $615,000 for 2003. (The $615,000 excludes a reversal of
$1.0 million of a previously provided loan loss provision associated with $9.9
million of sub-prime automobile loans that were sold in December 2003.)
Non-interest income was $3.3 million for the quarter ended March 31, 2004, a
decrease of $244,000, or 6.8%, compared to non-interest income of $3.6 million
for the quarter ended March 31, 2003. Excluding gains on the sale of securities
and license maintenance and sales fees attributed to EastPoint Technologies,
LLC, ("EastPoint") the Company's majority-owned data processing subsidiary
occurring in each of the quarters ended March 31, 2004 and March 31, 2003 (all
of which are itemized in the table below), non-interest income was $1.6 million
for the quarter ended March 31, 2004, an increase of $450,000, or 40.9%,
compared to $1.1 million for the quarter ended March 31, 2003. This increase was
primarily the result of increases in trust department fees, gains on the sale of
loans and other income. The increase in other income was largely from increases
in the cash surrender value on life insurance policies in part due to a $7.5
million Bank Owned Life Insurance contract executed in May 2003.
License maintenance and processing fees and license sales and other fees, which
represent revenue from EastPoint, totaled $1.4 million in the quarter ended
March 31, 2004, decreasing $179,000 as compared to the same quarter in 2003.
Associated expenses for EastPoint, which are recorded in various expense
categories, totaled $1.8 million, net of minority interests, for the quarter
ended March 31, 2004, a decrease of $6,000 as compared to the same quarter in
2003.
Non-interest expense was $9.3 million for the quarter ended March 31, 2004, a
$620,000, or 7.2%, increase compared to non-interest expense of $8.7 million for
the quarter ended March 31, 2003. Excluding an interest charge on the Bank's
REIT and expenses attributable to EastPoint occurring in each of the quarters
ended March 31, 2004 and March 31, 2003 (all of which are itemized in the table
below), non-interest expense for the first quarter of 2004 was $7.5 million, an
increase of $670,000, or 9.9%, compared to $6.8 million for the first quarter of
2003. The majority of this increase, or $413,000, was in medical insurance,
employment taxes and retirement programs. Additionally, with the implementation
of the SOLUTIONS branding campaign, marketing expenses increased $54,000, and
with an increase in ATM and debit card usage, along with other costs, data
processing expense increased $74,000. Professional services fees increased
$232,000 primarily due to implementation of Six Sigma, a productivity
improvement program, and due to the additional costs of complying with Section
404 of the Sarbanes-Oxley Act. These increases were partially offset by a
reduction of $61,000 in FDIC insurance premium, reflecting the efforts made by
management to improve the Bank's risk and earnings profile.
3
4
The following tables contain a reconciliation of GAAP non-interest income and
non-interest expense to what the Company believes to be core or operating
non-interest income and expense and also shows core non-interest income and
expense exclusive of EastPoint:
1Q 2004 1Q 2003
----------- ------------
(In thousands)
Non-interest income-GAAP $ 3,317 $ 3,561
Less:
Gain on sale of securities, net 325 840
NON-INTEREST INCOME-CORE $ 2,992 $ 2,721
Less:
EastPoint license maintenance and sales fees 1,442 1,621
NON-INTEREST INCOME-CORE LESS EASTPOINT $ 1,550 $ 1,100
1Q 2004 1Q 2003
----------- ------------
(In thousands)
Non-interest expense-GAAP $ 9,271 $ 8,651
Less:
REIT interest charge - 44
NON-INTEREST EXPENSE-CORE $ 9,271 $ 8,607
Less:
EastPoint expense net of minority interest 1,809 1,815
NON-INTEREST EXPENSE-CORE LESS EASTPOINT $ 7,462 $ 6,792
The Company's effective tax rate was 32.0% for the quarter ended March 31, 2004
as compared to 36.0% for the quarter ended March 31, 2003. The decrease was due
in part to an increase in securities purchased in the Bank's subsidiary
securities corporations, as the income generated from these corporations is
taxed at a lower rate. The Company expects its effective tax rate will be
approximately 32.0% to 32.5% for the remainder of 2004.
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, April 29, 2004. This conference
call will include forward-looking information and may include other material
information. Persons wishing to access the conference call may dial
1-800-500-0177 and use access code 458554. Materials related to the topics to be
discussed in the conference call will be available on the Bank's web site,
www.berkshirebank.com, beginning at approximately 8:30 A.M. (ET) on April 29,
2004. Replays of the conference call will be available beginning April 29, 2004
at 1:00 P.M. (ET) through May 7, 2004 at 11:00 P.M. (ET) by dialing
1-888-203-1112 and using access code 458554. 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 operation as an independent bank, delivering exceptional
customer service and a broad array of competitively priced retail and commercial
products to its customers.
4
5
Statements contained in this news release contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on the beliefs and expectations of management, as
well as the assumptions made using information currently available to
management. Since these statements reflect the views of management concerning
future events, these statements involve risks, uncertainties and assumptions.
These risks and uncertainties include among others: changes in market interest
rates and general and regional economic conditions; changes in government
regulations; changes in accounting principles; and the quality or composition of
the loan and investment portfolios and other factors that may be described in
the Company's quarterly reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30 and in its annual report on Form 10-K, each filed with
the Securities and Exchange Commission, which are available at the Securities
and Exchange Commission's internet web site (www.sec.gov) and to which reference
is hereby made. Therefore, actual future results may differ significantly from
results discussed in these forward-looking statements.
5
6
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
====================================================================================================================================
Unaudited
At
---------------------------------------------------------
March 31, December 31, March 31,
2004 2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
ASSETS:
Cash and due from banks $ 14,273 $ 15,583 $ 15,073
Short term investments 194 1,859 2,104
----------- ----------- -----------
Total cash and cash equivalents 14,467 17,442 17,177
Securities available for sale, at fair value 395,443 307,425 151,902
Securities held to maturity, at amortized cost 33,790 36,903 55,901
Federal Home Loan Bank stock, at cost 15,055 12,923 7,440
Savings Bank Life Insurance stock, at cost 2,043 2,043 2,043
Loans held for sale 356 - -
Loans 761,546 792,227 789,897
Allowance for loan losses (8,952) (8,969) (10,349)
----------- ----------- -----------
Net loans 752,594 783,258 779,548
Premises and equipment, net 12,967 12,626 13,107
Foreclosed real estate, net 25 - -
Accrued interest receivable 5,437 5,080 5,336
Goodwill and other intangibles 10,182 10,233 10,385
Net deferred tax assets 546 1,725 3,111
Bank owned life insurance 7,817 7,721 -
Due from Broker - 7,089 -
Other assets 12,775 14,080 15,098
----------- ----------- -----------
TOTAL ASSETS $ 1,263,497 $ 1,218,548 $ 1,061,048
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $ 829,828 $ 830,244 $ 791,120
Federal Home Loan Bank advances 299,100 251,465 136,783
Loans sold with recourse 382 473 -
Due to broker - 5,646 965
Accrued expenses and other liabilities 4,275 5,293 11,011
----------- ----------- -----------
Total liabilities 1,133,585 1,093,121 939,879
----------- ----------- -----------
Minority interests 2,076 2,252 2,340
----------- ----------- -----------
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 March 31, 2004,
December 31, 2003 and March 31, 2003;
shares outstanding: 5,935,061 at March 31, 2004, 5,903,082
at December 31, 2003 and 6,000,862 at March 31, 2003) 77 77 77
Additional paid-in capital 76,571 75,764 75,302
Unearned compensation (8,669) (8,507) (9,662)
Retained earnings 88,212 86,276 81,129
Accumulated other comprehensive income 7,393 5,559 4,950
Treasury stock at cost (1,738,700 shares at March 31, 2004,
1,770,679 at December 31, 2003 and 1,672,899 shares
at March 31, 2003) (35,748) (35,994) (32,967)
----------- ----------- -----------
Total stockholders' equity 127,836 123,175 118,829
----------- ----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,263,497 $ 1,218,548 $ 1,061,048
=========== =========== ===========
7
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended
--------------------------------------------
March 31, March 31,
2004 2003
- -------------------------------------------------------------------------------------------------- -----------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Bond interest $ 3,838 $ 1,572
Stock dividends 397 263
Short-term investment interest 16 84
Loan interest 10,736 11,982
------------------ ---------------
TOTAL INTEREST AND DIVIDEND INCOME 14,987 13,901
------------------ ---------------
INTEREST EXPENSE:
Interest on deposits 3,086 3,758
Interest on FHLB advances and other borrowings 1,740 1,063
------------------ ---------------
TOTAL INTEREST EXPENSE 4,826 4,821
------------------ ---------------
NET INTEREST INCOME 10,161 9,080
PROVISION FOR LOAN LOSSES 350 325
------------------ ---------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,811 8,755
------------------ ---------------
NON-INTEREST INCOME:
Customer service fees 524 556
Trust Department fees 577 436
Loan fees 79 48
Gain on sale of securities, net 325 840
Gain on sales of loans, net 90 -
License maintenance, processing and sales fees 1,442 1,621
Other income 280 60
------------------ ---------------
TOTAL NON-INTEREST INCOME 3,317 3,561
------------------ ---------------
NON-INTEREST EXPENSE:
Salaries and benefits 5,909 5,286
Occupancy and equipment 1,424 1,381
Marketing and advertising 157 103
Data processing 295 221
Professional services 480 248
Office supplies 161 206
Foreclosed real estate and other loans, net 83 121
Amortization of other intangibles 51 51
Minority interests (176) (98)
Other expenses 887 1,132
------------------ ---------------
TOTAL NON-INTEREST EXPENSE 9,271 8,651
------------------ ---------------
INCOME BEFORE INCOME TAXES 3,857 3,665
Provision for income taxes 1,234 1,843
------------------ ---------------
NET INCOME $ 2,623 $ 1,822
================== ===============
Earnings per share:
Basic $ 0.50 $ 0.34
Diluted $ 0.46 $ 0.32
Weighted average shares outstanding:
Basic 5,285 5,357
Diluted 5,757 5,731
8
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
====================================================================================================================================
Unaudited
Quarters Ended
--------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2004 2003 2003 2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Residential mortgage $ 2,986 $ 3,793 $ 4,099 $ 4,564 $ 4,030
Commercial real estate 3,225 2,969 2,760 2,627 2,607
Commercial 2,226 2,312 2,401 2,474 2,544
Indirect auto loans 1,610 1,665 1,945 1,836 1,920
Other consumer 689 695 703 859 880
------- ------- ------- ------- -------
Total interest on loans 10,736 11,434 11,908 12,360 11,981
Securities 4,060 2,905 1,886 1,706 1,770
Federal Home Loan Bank 175 65 59 59 66
Short-term investments 16 6 5 14 84
------- ------- ------- ------- -------
TOTAL INTEREST AND DIVIDEND INCOME 14,987 14,410 13,858 14,139 13,901
------- ------- ------- ------- -------
INTEREST EXPENSE:
Interest on deposits 3,086 3,148 3,343 3,613 3,758
Interest on FHLB advances and other borrowings 1,740 1,518 1,206 1,093 1,063
------- ------- ------- ------- -------
TOTAL INTEREST EXPENSE 4,826 4,666 4,549 4,706 4,821
------- ------- ------- ------- -------
NET INTEREST INCOME 10,161 9,744 9,309 9,433 9,080
PROVISION (CREDIT) FOR LOAN LOSSES 350 (225) 575 785 325
------- ------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES 9,811 9,969 8,734 8,648 8,755
------- ------- ------- ------- -------
NON-INTEREST INCOME:
Customer service fees 524 557 568 619 556
Trust Department fees 577 527 573 554 436
Loan fees 79 49 142 147 48
Gain on sale of securities, net 325 1,564 356 317 840
License maintenance and sales fees 1,442 1,794 1,721 2,126 1,621
Net loan sales gains(losses), net 90 (2,094) 102 138 -
Loss on impairment of other assets - (206) - - -
Other non-interest income 280 303 171 121 60
------- ------- ------- ------- -------
TOTAL NON-INTEREST INCOME 3,317 2,494 3,633 4,022 3,561
------- ------- ------- ------- -------
NON-INTEREST EXPENSE:
Salaries and benefits 5,909 4,839 5,132 5,962 5,286
Occupancy and equipment 1,424 1,251 1,191 1,222 1,381
Professional and outside service fees 480 545 292 294 248
Marketing and advertising 157 299 137 139 103
Data processing 295 246 283 239 221
Foreclosed real estate and other loans, net 83 307 333 286 121
Amortization of other intangibles 51 51 51 51 51
Interest from disallowance of REIT - - - (15) 44
Other non-interest expense 872 1,235 1,176 1,589 1,196
------- ------- ------- ------- -------
TOTAL NON-INTEREST EXPENSE 9,271 8,773 8,595 9,767 8,651
------- ------- ------- ------- -------
INCOME BEFORE INCOME TAXES 3,857 3,690 3,772 2,903 3,665
Income tax effect resulting from REIT disallowance - - - (244) 487
Provision for income taxes 1,234 1,099 1,358 1,009 1,356
------- ------- ------- ------- -------
NET INCOME $ 2,623 $ 2,591 $ 2,414 $ 2,138 $ 1,822
======= ======= ======= ======= =======
Basic earnings per share $ 0.50 $ 0.50 $ 0.46 $ 0.40 $ 0.34
Diluted earnings per share $ 0.46 $ 0.45 $ 0.43 $ 0.38 $ 0.32
Average shares:
Basic 5,285 5,222 5,196 5,291 5,357
Diluted 5,757 5,717 5,655 5,687 5,731
9
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
====================================================================================================================================
Unaudited
At or For the Period Ended
- ------------------------------------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
NON-PERFORMING ASSETS 2004 2003 2003 2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
Non-accrual loans:
Residential mortgage $ 341 $ 348 $ 221 $ 213 $ 220
Commercial real estate 484 496 154 165 167
Commercial 1,738 1,887 2,578 2,490 2,641
Indirect automobile loans 395 451 696 710 706
Other consumer 14 17 2 10 148
------- ------- ------- ------- --------
Total non-accrual loans $ 2,972 $ 3,199 $ 3,651 $ 3,588 $ 3,882
Real estate owned ("REO"), net of allowance for losses 25 - - - -
Total non-performing assets $ 2,997 $ 3,199 $ 3,651 $ 3,588 $ 3,882
Non-performing loans as a percentage of total loans 0.39% 0.40% 0.46% 0.44% 0.49%
Non-performing assets as a percentage of total loans
and REO 0.39% 0.40% 0.46% 0.44% 0.49%
Non-performing assets to total assets 0.24% 0.26% 0.31% 0.32% 0.37%
Allowance for loan losses as a percentage of
non-performing loans 301.21% 280.37% 276.55% 286.57% 266.59%
Allowance for loan losses as a percentage of total loans 1.18% 1.13% 1.26% 1.25% 1.31%
Net charge-offs as a percentage of total loans 0.05% 0.11% 0.09% 0.10% 0.04%
====================================================================================================================================
PROVISION (CREDIT) AND ALLOWANCE FOR LOAN LOSSES
====================================================================================================================================
Balance at beginning of period $ 8,969 $ 10,097 $ 10,282 $ 10,349 $ 10,308
Charge-offs (628) (1,074) (1,015) (1,164) (1,111)
Recoveries 261 171 255 312 827
------- -------- -------- -------- --------
Net loan charge-offs (367) (903) (760) (852) (284)
Provision (credit) for loan losses 350 (225) 575 785 325
------- -------- -------- -------- --------
Balance at end of period $ 8,952 $ 8,969 $ 10,097 $ 10,282 $ 10,349
======= ======== ======== ======== ========
====================================================================================================================================
NET LOAN (CHARGE-OFFS) RECOVERIES
====================================================================================================================================
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate - - - - -
Commercial loans 96 (110) 21 (26) 399
Consumer loans (1) (463) (793) (781) (826) (683)
------- -------- -------- -------- --------
Total $ (367) $ (903) $ (760) $ (852) $ (284)
======= ======== ======== ======== ========
====================================================================================================================================
SUB-PRIME LOANS
====================================================================================================================================
Balance at end of period $ 1,043 $ 1,393 $ 13,006 $ 15,128 $ 17,238
Allowance for sub-prime loans/Total sub-prime loans 42.83% 44.94% 15.75% 15.79% 16.01%
====================================================================================================================================
AVERAGE FICO SCORES OF CONSUMER LOANS (1) 695 691 674 670 666
====================================================================================================================================
(1) Consists primarily of automobile loans
10
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
At or for the three months ended
Mar. 31, Dec 31, Sept 30, June 30, March 31,
2004 2003 2003 2003 2003
---- ---- ---- ---- ----
Performance Ratios (1):
Return on average assets 0.84% 0.86% 0.86% 0.80% 0.70%
Return on average stockholders' equity 8.39% 8.49% 8.10% 7.16% 6.06%
Return on average tangible stockholders' equity 9.14% 9.27% 8.87% 7.85% 6.33%
Net interest margin 3.44% 3.42% (2) 3.51% 3.73% 3.67%
Non-interest income to average assets 1.06% (3) 0.83% (4) 1.29% (3) 1.50% (3) 1.36% (3)
Non-interest expense to average assets 2.97% 2.91% (5) 3.05% 3.64% (6) 3.31% (7)
Average earning assets to average assets 94.46% 94.28% 94.14% 95.09% 94.67%
Efficiency ratio (8) 70.49% 68.40% (9) 68.29% 68.37% (10) 72.93%(11)
Capital ratios
Stockholders' equity to total assets 10.12% 10.11% 10.30% 10.57% 11.20%
Tier I capital to average adjusted assets 8.89% 8.97% 9.36% 9.66% 10.00%
Tier I capital to risk weighted assets 12.71% 12.59% 12.51% 12.06% 13.02%
Total capital to risk weighted assets 14.15% 14.08% 14.16% 13.75% 14.67%
Other data
Book value per share $ 21.54 $ 20.86 $ 20.46 $ 20.14 $ 19.80
Tangible book value per share $ 19.82 $ 19.13 $ 18.71 $ 18.38 $ 18.07
Stock price:
High $ 38.61 $ 37.40 $ 33.90 $ 28.40 $ 24.00
Low $ 34.46 $ 33.55 $ 28.10 $ 23.10 $ 21.86
Close $ 34.90 $ 36.20 $ 33.69 $ 28.40 $ 23.00
(1) Ratios are annualized for each of the quarters.
(2) Excluding the forfeiture of $245,000 in interest income upon the sale of sub-prime automobile loans in December 2003,
the net interest margin would have been 3.50%.
(3) Excluding the gain on the sale of securities of $325,000, $356,000, $317,000 and $804,000 in quarters ended March 2004,
September 2003, June 2003 and March 2003, respectively, the ratios would have been 0.96%, 1.16%, 1.38% and 1.04%, respectively.
(4) Excluding the gain on sale of securities of $1.6 million, the $2.2 million loss on the sale of sub-prime automobile loans, and
the loss of $206,000 on the impairment of other assets - repossessed vehicle inventory, the ratio would have been 1.12%.
(5) Excluding $363,000 representing the partial reversal of an $800,000 retirement benefit charge that was recorded in the
second quarter of 2003, the ratio would have been 3.21%.
(6) Excluding the retirement benefit charges of $800,000 and $15,000 representing the partial reversal of a $44,000 interest
charge associated with the disallowance of the dividend received deduction from the Bank's REIT that
was recorded in the first quarter of 2003, the ratio would have been 3.36%.
(7) Excluding the $44,000 interest charge associated with the disallowance of the Bank's dividend received deduction received
from the Bank's REIT, the ratio would have been 3.30%.
(8) Efficiency ratio is non-interest expenses, less non-recurring items, divided by the total of net interest income, plus
non-interest income, less securities gains, less non-recurring items.
(9) Excludes the partial reversal of retirement benefit charges of $363,000 from non-interest expenses, $2.2 million of loss on the
sale of sub-prime automobile loans, $245,000 in forfeiture of interest income associated with the sale of sub-prime automobile
loans and the loss on the impairment of other assets - repossessed vehicle inventory of $206,000.
(10) Excludes the retirement benefit charges of $800,000 and the $15,000 representing the partial reversal of a $44,000 interest
charge associated with the Bank's REIT that was recorded in the first quarter of 2003 from non-interest expenses.
(11) Excludes the $44,000 interest charge associated with the disallowance of the Bank's dividend received deduction
from the Bank's REIT.
11
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
Unaudited
Quarters Ended
March 31, 2004
----------------------------------------
Average Yield/
Balance Interest Rate (1)
- --------------------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 6,307 $ 16 1.01%
Securities (2) 388,145 4,060 4.18%
Federal Home Loan Bank 13,846 175 5.06%
Loans:
Residential mortgage 232,001 2,986 5.15%
Commercial real estate 219,991 3,225 5.86%
Commercial 163,236 2,226 5.45%
Indirect auto loans 99,754 1,610 6.46%
Other consumer 57,775 689 4.77%
----------- --------
Total loans 772,757 10,736 5.56%
----------- --------
Total earning assets 1,181,055 $ 14,987 5.08%
Other assets 69,308 ========
-----------
Total assets $ 1,250,363
-----------
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 97,964
Savings, NOW and money market 427,388 855 0.80%
----------- --------
Total core deposits 525,352 855 0.65%
Certificates of deposits 318,555 2,231 2.80%
----------- --------
Total deposits 843,907 3,086 1.46%
----------- --------
Borrowings:
Federal Home Loan Bank advances 274,054 1,740 2.54%
----------- --------
Total funding liabilities 1,117,961 $ 4,826 1.73%
Other liabilities 5,229 ========
-----------
Total liabilities 1,123,190
Minority Interest 2,130
Stockholders' Equity 125,043
-----------
Total liabilities and equity $ 1,250,363
-----------
Net interest income/spread $ 10,161 3.35%
--------
Net interest margin 3.44%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based
on amortized cost.
12
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
Unaudited
Quarters Ended
December 31, 2003
------------------------------------------
Average Yield/
Balance Interest Rate (1)
- --------------------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 2,853 $ 6 0.84%
Securities (2) 314,070 2,905 3.70%
Federal Home Loan Bank 12,166 65 2.14%
Loans:
Residential mortgage 287,518 3,793 5.28%
Commercial real estate 193,728 2,969 6.13%
Commercial 167,427 2,312 5.52%
Indirect auto loans 103,821 1,665 6.41%
Other consumer 57,013 695 4.88%
----------- --------
Total loans 809,507 11,434 5.65%
----------- --------
Total earning assets 1,138,596 $ 14,410 5.06%
========
Other assets 69,076
-----------
Total assets $ 1,207,672
-----------
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 98,392
Savings, NOW and money market 415,486 814 0.78%
----------- --------
Total core deposits 513,878 814 0.63%
Certificates of deposits 321,732 2,334 2.90%
----------- --------
Total deposits 835,610 3,148 1.51%
----------- --------
Borrowings:
Federal Home Loan Bank advances 236,534 1,518 2.57%
----------- --------
Total funding liabilities 1,072,144 $ 4,666 1.74%
========
Other liabilities 11,249
-----------
Total liabilities 1,083,393
Minority Interest 2,261
Stockholders' Equity 122,018
-----------
Total liabilities and equity $ 1,207,672
-----------
Net interest income/spread $ 9,744 3.32%
--------
Net interest margin 3.42%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on
amortized cost.
13
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
Unaudited
Quarters Ended
March 31, 2003
--------------------------------------
Average Yield/
Balance Interest Rate (1)
- --------------------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 22,799 $ 84 1.47%
Securities (2) 209,232 1,770 3.38%
Federal Home Loan Bank 7,440 66 3.55%
Loans:
Residential mortgage 265,884 4,030 6.06%
Commercial real estate 160,907 2,607 6.48%
Commercial 168,246 2,544 6.05%
Indirect auto loans 94,953 1,920 8.09%
Other consumer 59,769 880 5.89%
----------- --------
Total loans 749,759 11,981 6.39%
----------- --------
Total earning assets 989,230 $ 13,901 5.62%
========
Other assets 55,681
-----------
Total assets $ 1,044,911
-----------
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 86,304 -
Savings, NOW and money market 364,525 924 1.01%
----------- --------
Total core deposits 450,829 924 0.82%
Certificates of deposits 335,173 2,834 3.38%
----------- --------
Total deposits 786,002 3,758 1.91%
----------- --------
Borrowings:
Federal Home Loan Bank advances 131,124 1,062 3.24%
Repurchase Agreements 356 1 1.12%
----------- --------
Total borrowings 131,480 1,063 3.23%
----------- --------
Total funding liabilities 917,482 $ 4,821 2.10%
========
Other liabilities 4,773
-----------
Total liabilities 922,255
Minority Interest 2,418
Stockholders' Equity 120,238
-----------
Total liabilities and equity $ 1,044,911
-----------
Net interest income/spread $ 9,080 3.52%
--------
Net interest margin 3.67%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based
on amortized cost.
CONTACT:
Berkshire Hills Bancorp, Inc.
Wayne F. Patenaude, 413-236-3195