1
FOR IMMEDIATE RELEASE
BERKSHIRE HILLS BANCORP, INC. ANNOUNCES RECORD THIRD QUARTER EARNINGS
AND DECLARES QUARTERLY DIVIDEND
EPS INCREASES 23% OVER THIRD QUARTER 2003; YEAR TO DATE EPS UP 30%
PITTSFIELD, MA - October 27, 2004 - Berkshire Hills Bancorp, Inc. (the
"Company"), (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"),
today reported net income of $3.0 million, or $0.53 diluted earnings per share,
for the quarter ended September 30, 2004 as compared to $2.4 million, or $0.43
diluted earnings per share, for the quarter ended September 30, 2003. Diluted
earnings per share for the three months ended September 30, 2004 increased 23.3%
compared to the same period in 2003. Net income for the first nine months of
2004 was $8.3 million, or $1.45 diluted earnings per share, as compared to $6.4
million, or $1.12 diluted earnings per share, for the same period last year.
Diluted earnings per share for the nine months ended September 30, 2004
increased 29.5% over the same period in 2003.
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. We continue to experience strong organic growth in loans and core
deposits and benefit from our productivity initiatives and exceptional credit
quality. We are also pleased that our net interest margin responded favorably to
the rise in short term interest rates."
Dividend Declared
The Board of Directors declared a quarterly cash dividend of $0.12 per share,
payable on November 22, 2004 to stockholders of record at the close of business
on November 8, 2004.
Third Quarter Highlights
o Commercial loans increased $8.0 million, or 2.0%, from June 30, 2004.
o Residential loans increased $9.0 million, or 4.1%, from June 30, 2004.
o Consumer loans increased $5.5 million, or 3.2%, from June 30, 2004.
o Core deposits increased $6.2 million, or 1.2%, from June 30, 2004.
o Net interest margin increased 10 basis points as compared to the quarter ended
June 30, 2004.
The following table represents a reconciliation of GAAP net income to core net
income and EPS. In determining its core net income and earnings per share, the
Company excludes net security gains and losses and those items it believes to be
non-recurring.
3Q 2004 2Q 2004 3Q 2003
------- ------- -------
(In thousands, except per share data)
- ---------------------------------------------------------------------------------------
Net income -GAAP $ 3,007 $ 2,702 $ 2,414
- ---------------------------------------------------------------------------------------
Plus:
- ---------------------------------------------------------------------------------------
Non-recurring loss from discontinued operations (1) - 255 1
- ---------------------------------------------------------------------------------------
Less:
- ---------------------------------------------------------------------------------------
Gain on sale of securities, net (2) 211 256 228
- ---------------------------------------------------------------------------------------
2
NET INCOME-CORE $ 2,796 $ 2,701 $ 2,187
- ---------------------------------------------------------------------------------------
Earnings per diluted share-core $ 0.49 $ 0. 47 $ 0.39
- ---------------------------------------------------------------------------------------
Average diluted shares outstanding 5,721 5,725 5,655
- ---------------------------------------------------------------------------------------
(1) Represents the operating loss and loss on the sale of EastPoint
Technologies, LLC, tax effected using a tax rate of 34.0%.
(2) Tax effected using a tax rate of 32.0% for 2004, and 36.0% for 2003.
Financial Condition
Loans increased $22.4 million and $25.6 million from June 30, 2004 and December
31, 2003, respectively. The increase from June 30, 2004 was primarily due to
growth of $9.0 million in residential loans, $8.0 million in commercial loans
and $5.5 million in consumer loans. The increase in consumer loans was primarily
in home equity loans. The growth from December 31, 2003 was primarily due to
increases of $41.0 million in commercial loans and $21.3 million in consumer
loans, partially offset by the securitization of $38.7 million of one- to
four-family fixed rate mortgages during the first quarter of 2004.
Securities decreased a total of $7.7 million from June 30, 2004 and increased
$73.9 million from December 31, 2003. The decrease from June 30, 2004 was
largely due to a decline in purchase activity in the current quarter as compared
to the previous quarter, as the Bank directed cash flows from the securities
portfolio and growth in deposits to fund loan growth. The increase from December
31, 2003 included the securitization of $38.7 million of one- to four-family
fixed rate mortgages. Security purchases, which occurred primarily in the first
quarter of 2004, were made to take advantage of a steep yield curve and were
primarily in mortgage-backed securities with durations averaging 3.5 years with
limited risk of durations extending, particularly in a rising rate environment.
Borrowings from the Federal Home Loan Bank were $324.8 million at September 30,
2004, an increase of $3.1 million from June 30, 2004. Borrowings were up $73.4
million from December 31, 2003, as the Bank took advantage of the lower cost of
borrowings relative to the cost of deposits to fund earning asset growth.
Deposits increased $5.7 million from June 30, 2004 and increased $22.9 million
from December 31, 2003. Core deposits (represented by demand, NOW, savings and
money market accounts) were $528.3 million at September 30, 2004, an increase of
$6.2 million, or 1.2%, and $19.4 million, or 3.8%, from June 30, 2004 and
December 31, 2003, respectively.
The Company's tangible book value per share at September 30, 2004, June 30, 2004
and December 31, 2003 was $20.89, $19.81 and $19.82, respectively.
Asset Quality
Non-performing loans were $2.7 million, or 0.33% of total loans at September 30,
2004, as compared to $3.2 million, or 0.40%, at June 30, 2004 and December 31,
2003.
Delinquent and non-accrual loans to total loans measured 0.73% at September 30,
2004, as compared to 0.55% and 0.67% at June 30, 2004 and December 31, 2003,
respectively. The increase in delinquencies during the third quarter of 2004 was
the result of two commercial real estate loan relationships totaling $722,000 at
September 30, 2004 and a $600,000 commercial relationship that was paid-off
subsequent to September 30, 2004.
Net loan charge-offs totaled $221,000 for the quarter ended September 30, 2004,
compared to $129,000 and $903,000 in the second quarter of 2004 and the fourth
quarter of 2003, respectively. An increase of
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$62,000 in net consumer charge-offs and $30,000 in net commercial charge-offs
accounted for the increase from June 30, 2004.
The allowance for loan losses totaled $9.4 million, representing 1.15% of total
loans at September 30, 2004, compared to $9.2 million, or 1.16%, of total loans
and $9.0 million, or 1.13% of total loans at June 30, 2004 and December 31,
2003, respectively.
Results of Operations
Net interest income was $10.2 million for the third quarter of 2004, an increase
of $490,000 and $933,000 compared to the quarters ended June 30, 2004 and
September 30, 2003, respectively. Net interest margin was 3.29% for the third
quarter of 2004 compared to 3.19% and 3.51% for the second quarter of 2004 and
the third quarter of 2003, respectively. The increase in the margin compared to
the second quarter of 2004 was primarily attributed to an increase in short term
interest rates, primarily the prime rate, and slower prepayment activity in the
third quarter on loans and securities. The lower margin for the third quarter of
2004 as compared to a year ago, resulted from the impact of a lower interest
rate environment during 2004 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 $365,000 for the quarter ended September 30,
2004, a decrease of $60,000, or 14.1%, as compared to the quarter ended June 30,
2004, and a decrease of $210,000, or 36.5%, as compared to the same quarter last
year. The decrease compared to a year ago was primarily attributed to improved
credit quality, primarily in the consumer area, while the decrease compared to
the previous quarter was consistent with the decrease in nonperforming loans and
a higher allowance for loan losses to nonperforming loans.
Non-interest income was $1.7 million for the quarter ended September 30, 2004, a
decrease of $239,000, or 12.2%, compared to the quarter ended June 30, 2004, and
a decrease of $186,000, or 9.7%, compared to the quarter ended September 30,
2003. The decrease as compared to the second quarter of 2004 was due to a
decrease in annual safe deposit box fees of $102,000, as these fees are largely
recorded annually in the second quarter, and a decrease in the net gains on sale
of securities of $67,000. Other income declined $51,000 due to a higher level of
cash surrender value earned on certain life insurance policies in the previous
quarter than in the third quarter. The decrease as compared to the same quarter
last year was primarily due to a decrease of $181,000 in loan fees and net loan
sales gains due to lower residential loan originations and no loan sales in the
third quarter of this year.
Non-interest expense was $7.2 million for the quarter ended September 30, 2004,
a $248,000, or 3.6%, increase compared to non-interest expense of $6.9 million
for the quarter ended June 30, 2004, and a $308,000, or 4.5%, increase compared
to non-interest expense of $6.9 million for the quarter ended September 30,
2003. The increase as compared to the second quarter of 2004 was primarily
attributed to higher salaries and benefits expense and higher professional and
outside service fees. The increase in salary and benefits was largely associated
with certain retirement benefit charges and semi-annual director fees. Also, a
decrease in commercial loan originations contributed to a lower level of
deferred salary expense, recorded in accordance with Financial Accounting
Standards Board No. 91. Higher professional and outside service fees were
attributed to cost associated with the compliance with section 404 of Sarbanes
Oxley and other risk management initiatives. The increase compared to the same
quarter last year was also due to an increase in retirement benefits, director
fees and professional services. Increases in depreciation expense and marketing
initiatives, partially offset by lower foreclosed real estate and other loan
expenses associated with the Bank's automobile repossession and sales
activities, also contributed to the increase.
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The Company's effective tax rate was 32.0% for the quarters ended September 30,
2004 and June 30, 2004. The Company expects its effective tax rate will be
approximately 32.0% 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, October 28, 2004. This
conference call will include forward-looking information and may include other
material information. Persons wishing to access the conference call may dial
1-877-407-8035. 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 28, 2004. Replays of the
conference call will be available beginning October 28, 2004 at 1:00 P.M. (ET)
through November 4, 2004 at 4:00 P.M. (ET) by dialing 1-877-660-6853 and using
the access codes of Account #1628 and Conference ID# 118464. 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, and a
representative office and one branch in New York. 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.
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 website (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.
News Contact: Wayne F. Patenaude
Senior Vice President, Treasurer
and Chief Financial Officer
413-236-3195
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5
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
At
- ------------------------------------------------------------------------------------------------------------------------------------
September 30, June 30, December 31,
2004 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
ASSETS:
Cash and due from banks $ 15,908 $ 15,981 $ 15,583
Short term investments 6,689 5,167 1,859
---------- ---------- ----------
Total cash and cash equivalents 22,597 21,148 17,442
Securities available for sale, at fair value 387,950 394,469 307,425
Securities held to maturity, at amortized cost 26,255 27,435 36,903
Federal Home Loan Bank stock, at cost 16,898 16,898 12,923
Savings Bank Life Insurance stock, at cost 2,043 2,043 2,043
Loans held for sale 571 - -
Loans 817,805 795,365 792,227
Allowance for loan losses (9,392) (9,248) (8,969)
---------- ---------- ----------
Net loans 808,413 786,117 783,258
Premises and equipment, net 13,389 13,137 12,626
Foreclosed real estate, net - 25 -
Accrued interest receivable 5,400 5,292 5,080
Goodwill and other intangibles 5,763 5,763 10,233
Net deferred tax assets 1,505 3,999 1,725
Bank owned life insurance 8,004 7,912 7,721
Due from broker 378 458 7,089
Other assets 11,343 11,391 14,080
---------- ---------- ----------
TOTAL ASSETS $1,310,509 $1,296,087 $1,218,548
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $ 853,115 $ 847,403 $ 830,244
Federal Home Loan Bank advances 324,831 321,722 251,465
Loans sold with recourse - 191 473
Due to broker - - 5,646
Accrued expenses and other liabilities 4,075 4,716 5,293
---------- ---------- ----------
Total liabilities 1,182,021 1,174,032 1,093,121
---------- ---------- ----------
Minority interests - - 2,252
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, 2004,
June 30, 2004 and December 31, 2003;
shares outstanding: 5,873,563 at September 30, 2004, 5,871,261
at June 30, 2004 and 5,903,082 at December 31, 2003) 77 77 77
Additional paid-in capital 77,154 76,921 75,764
Unearned compensation (7,832) (8,251) (8,507)
Retained earnings 92,469 90,114 86,276
Accumulated other comprehensive income 4,345 1,080 5,559
Treasury stock at cost (1,800,198 shares at September 30, 2004,
1,802,500 at June 30, 2004 and 1,770,679 at December 31, 2003) (37,725) (37,886) (35,994)
---------- ---------- ----------
Total stockholders' equity 128,488 122,055 123,175
---------- ---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,310,509 $1,296,087 $1,218,548
========== ========== ==========
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Bond interest $ 4,130 $ 1,676 $ 12,116 $ 4,799
Stock dividends 279 269 887 747
Short-term investment interest 6 5 24 103
Loan interest 11,131 11,908 32,247 36,249
-------- ------- -------- ----------
TOTAL INTEREST AND DIVIDEND INCOME 15,546 13,858 45,274 41,898
-------- ------- -------- ----------
INTEREST EXPENSE:
Interest on deposits 3,097 3,343 9,209 10,714
Interest on FHLB advances and other borrowings 2,207 1,206 5,906 3,362
-------- ------- -------- ----------
TOTAL INTEREST EXPENSE 5,304 4,549 15,115 14,076
-------- ------- -------- ----------
NET INTEREST INCOME 10,242 9,309 30,159 27,822
PROVISION FOR LOAN LOSSES 365 575 1,140 1,685
-------- ------- -------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,877 8,734 29,019 26,137
-------- ------- -------- ----------
NON-INTEREST INCOME:
Customer service fees 580 568 1,738 1,743
Trust Department fees 611 573 1,835 1,563
Loan fees 63 142 245 337
Gain on sale of securities, net 310 356 1,013 1,513
Gain on sale of loans, net - 102 84 240
Other income 162 171 651 352
-------- ------- -------- ----------
TOTAL NON-INTEREST INCOME 1,726 1,912 5,566 5,748
-------- ------- -------- ----------
NON-INTEREST EXPENSE:
Salaries and benefits 4,195 3,877 12,687 12,577
Occupancy and equipment 997 895 3,030 2,858
Marketing and advertising 207 137 634 379
Data processing 305 375 1,030 920
Professional services 442 260 1,226 742
Office supplies 126 146 387 473
Foreclosed real estate and other loans, net 150 333 404 740
Other expenses 759 850 2,279 2,648
-------- ------- -------- ----------
TOTAL NON-INTEREST EXPENSE 7,181 6,873 21,677 21,337
-------- ------- -------- ----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,422 3,773 12,908 10,548
Provision for income taxes 1,415 1,358 4,144 4,037
-------- ------- -------- ----------
INCOME FROM CONTINUING OPERATIONS 3,007 2,415 8,764 6,511
-------- ------- -------- ----------
Loss from discontinued operations - (1) (653) (208)
(including June 2004 loss on sale of $75,000)
Income tax benefit - - (222) (71)
-------- ------- -------- ----------
NET LOSS FROM DISCONTINUED OPERATIONS - (1) (431) (137)
-------- ------- -------- ----------
NET INCOME $ 3,007 $ 2,414 $ 8,333 $ 6,374
======== ======== ======== ==========
Earnings per share:
Basic 0.57 0.46 1.58 1.20
Diluted 0.53 0.43 1.45 1.12
Weighted average shares outstanding:
Basic 5,270 5,196 5,284 5,301
Diluted 5,721 5,655 5,735 5,711
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
Quarters Ended
- ------------------------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2004 2004 2004 2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME:
Residential mortgage $ 2,869 $ 2,567 $ 2,986 $ 3,793 $ 4,099
Commercial real estate 3,630 3,389 3,225 2,969 2,760
Commercial 2,204 2,135 2,226 2,312 2,401
Indirect auto loans 1,695 1,589 1,610 1,665 1,945
Other consumer 733 697 692 695 703
-------- -------- -------- -------- ---------
Total interest on loans 11,131 10,377 10,739 11,434 11,908
Securities 4,289 4,296 4,060 2,905 1,886
Federal Home Loan Bank 120 63 175 65 59
Short-term investments 6 1 16 6 5
-------- -------- -------- -------- ---------
TOTAL INTEREST AND DIVIDEND INCOME 15,546 14,737 14,990 14,410 13,858
-------- -------- -------- -------- ---------
INTEREST EXPENSE:
Interest on deposits 3,097 3,026 3,088 3,148 3,343
Interest on FHLB advances and other borrowings 2,207 1,959 1,740 1,518 1,206
-------- -------- -------- -------- ---------
TOTAL INTEREST EXPENSE 5,304 4,985 4,828 4,666 4,549
-------- -------- -------- -------- ---------
NET INTEREST INCOME 10,242 9,752 10,162 9,744 9,309
PROVISION (CREDIT) FOR LOAN LOSSES 365 425 350 (225) 575
-------- -------- -------- -------- ---------
NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES 9,877 9,327 9,812 9,969 8,734
-------- -------- -------- -------- ---------
NON-INTEREST INCOME:
Customer service fees 580 634 524 557 568
Trust Department fees 611 648 577 527 573
Loan fees 63 103 79 49 142
Gain on sale of securities, net 310 377 325 1,564 356
Net loan sales gains (losses), net - (6) 90 (2,094) 102
Loss on impairment of other assets - - - (206) -
Other non-interest income 162 209 280 303 171
-------- -------- -------- -------- ---------
TOTAL NON-INTEREST INCOME 1,726 1,965 1,875 700 1,912
-------- -------- -------- -------- ---------
NON-INTEREST EXPENSE:
Salaries and benefits 4,195 3,890 4,603 3,589 3,877
Occupancy and equipment 997 975 1,059 942 895
Professional and outside service fees 442 357 428 485 260
Marketing and advertising 207 270 157 299 137
Data processing 305 331 394 284 375
Foreclosed real estate and other loans, net 150 171 83 307 333
Other non-interest expense 885 939 839 1,000 996
-------- -------- -------- -------- ---------
TOTAL NON-INTEREST EXPENSE 7,181 6,933 7,563 6,906 6,873
-------- -------- -------- -------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,422 4,359 4,124 3,763 3,773
Provision for income taxes 1,415 1,402 1,325 1,124 1,358
-------- -------- -------- -------- ---------
INCOME FROM CONTINUING OPERATIONS 3,007 2,957 2,799 2,639 2,415
-------- -------- -------- -------- ---------
Loss from discontinued operations - (386) (267) (73) (1)
Income tax benefit - (131) (91) (25) -
-------- -------- -------- -------- ---------
NET LOSS FROM DISCONTINUED OPERATIONS - (255) (176) (48) (1)
-------- -------- -------- -------- ---------
NET INCOME $ 3,007 $ 2,702 $ 2,623 $ 2,591 $ 2,414
======== ======== ======== ======== =========
Basic earnings per share $ 0.57 $ 0.51 $ 0.50 $ 0.50 $ 0.46
Diluted earnings per share $ 0.53 $ 0.47 $ 0.46 $ 0.45 $ 0.43
Average shares:
Basic 5,270 5,292 5,285 5,222 5,196
Diluted 5,721 5,725 5,757 5,717 5,655
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
At or For the Period Ended
- ------------------------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
NON-PERFORMING ASSETS 2004 2004 2004 2003 2003
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
Non-accrual loans:
Residential mortgage $ 332 $ 266 $ 341 $ 348 $ 221
Commercial real estate 614 934 484 496 154
Commercial 1,463 1,609 1,738 1,887 2,578
Indirect automobile loans 297 350 395 451 696
Other consumer 8 11 14 17 2
--------- --------- --------- --------- --------
Total non-accrual loans $ 2,714 $ 3,170 $ 2,972 $ 3,199 $ 3,651
Real estate owned ("REO"), net of allowance for losses - 25 25 - -
Total non-performing assets $ 2,714 $ 3,195 $ 2,997 $ 3,199 $ 3,651
Non-performing loans as a percentage of total loans 0.33% 0.40% 0.39% 0.40% 0.46%
Non-performing assets as a percentage of total loans
and REO 0.33% 0.40% 0.39% 0.40% 0.46%
Non-performing assets to total assets 0.21% 0.25% 0.24% 0.26% 0.31%
- ------------------------------------------------------------------------------------------------------------------------------------
PROVISION (CREDIT) AND ALLOWANCE FOR LOAN LOSSES
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at beginning of period $ 9,248 $ 8,952 $ 8,969 $ 10,097 $ 10,282
Charge-offs (447) (390) (628) (1,074) (1,015)
Recoveries 226 261 261 171 255
--------- --------- --------- --------- --------
Net loan charge-offs (221) (129) (367) (903) (760)
Provision (credit) for loan losses 365 425 350 (225) 575
--------- --------- --------- --------- --------
Balance at end of period $ 9,392 $ 9,248 $ 8,952 $ 8,969 $ 10,097
========= ========= ========= ========= ========
Allowance for loan losses as a percentage of
non-performing loans 346.06% 291.74% 301.21% 280.37% 276.55%
Allowance for loan losses as a percentage of total loans 1.15% 1.16% 1.18% 1.13% 1.26%
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOAN (CHARGE-OFFS) RECOVERIES
- ------------------------------------------------------------------------------------------------------------------------------------
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate - - - - -
Commercial loans (7) 23 96 (110) 21
Consumer loans (1) (214) (152) (463) (793) (781)
--------- --------- --------- --------- --------
Total $ (221) $ (129) $ (367) $ (903) $ (760)
========= ========== ========= ========= ========
Net charge-offs as a percentage of total loans 0.03% 0.02% 0.05% 0.11% 0.09%
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE FICO SCORES OF CONSUMER LOANS (1) 702 699 695 691 674
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Consists primarily of automobile loans
9
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
At or for the three months ended
- ------------------------------------------------------------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2004 2004 2004 2003 2003
---- ---- ---- ---- ----
Performance Ratios (1):
Return on average assets 0.92% 0.84% 0.84% 0.86% 0.86%
Return on average stockholders' equity 9.71% 8.40% 8.39% 8.49% 8.10%
Return on average tangible stockholders' equity 10.18% 8.69% 9.14% 9.27% 8.87%
Net interest margin 3.29% 3.19% 3.44% 3.42% (2) 3.51%
Non-interest income to average assets (3) 0.53% (4) 0.61% (4) 0.60% (4) 0.23% (5) 0.68% (4)
Non-interest expense to average assets (6) 2.20% 2.15% 2.42% 2.29% (7) 2.44%
Average earning assets to average assets 95.59% 94.64% 94.46% 94.28% 94.14%
Efficiency ratio (8) 61.60% 61.14% 64.58% 62.86% (9) 63.25%
Capital ratios
Stockholders' equity to total assets 9.81% 9.42% 10.12% 10.11% 10.30%
Tier I capital to average adjusted assets 9.09% 8.98% 8.89% 8.97% 9.36%
Tier I capital to risk weighted assets 12.90% 12.77% 12.71% 12.59% 12.51%
Total capital to risk weighted assets 14.29% 14.15% 14.15% 14.08% 14.16%
Other data
Book value per share $ 21.87 $ 20.79 $ 21.54 $ 20.86 $ 20.46
Tangible book value per share $ 20.89 $ 19.81 $ 19.82 $ 19.13 $ 18.71
Stock price:
High $ 39.14 $ 37.10 $ 38.61 $ 37.40 $ 33.90
Low $ 35.01 $ 32.69 $ 34.46 $ 33.55 $ 28.10
Close $ 36.95 $ 37.10 $ 34.90 $ 36.20 $ 33.69
- ----------------------------------
(1) Ratios are annualized.
(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) Excludes non-interest income from discontinued operations.
(4) Excluding the gain on the sale of securities of $310,355, $377,000, $325,000
and $356,000 in the quarters ended September 2004, June 2004, March 2004 and
September 2003, respectively, the ratios would have been 0.44%, 0.49%, 0.50%
and 0.55%, respectively.
(5) 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 0.51%.
(6) Excludes non-interest expense from discontinued operations.
(7) 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 2.41%.
(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. The ratio excludes discontinued
operations.
(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
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
Unaudited
Quarters Ended
September 30, 2004
- --------------------------------------------------------------------------------
Average Yield/
Balance Interest Rate (1)
- --------------------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 2,192 $ 6 1.09%
Securities (2) 419,474 4,289 4.09%
Federal Home Loan Bank 16,898 120 2.84%
Loans:
Residential mortgage 225,198 2,869 5.10%
Commercial real estate 250,323 3,630 5.80%
Commercial 160,129 2,204 5.51%
Indirect auto loans 111,117 1,695 6.10%
Other consumer 60,627 733 4.84%
----------- --------
Total loans 807,394 11,131 5.51%
----------- --------
Total earning assets 1,245,958 $ 15,546 4.99%
========
Other assets 57,551
-----------
Total assets $ 1,303,509
-----------
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 105,257
Savings, NOW and money market 425,562 838 0.79%
----------- --------
Total core deposits 530,819 838 0.63%
Certificates of deposits 326,411 2,259 2.77%
----------- --------
Total deposits 857,230 3,097 1.45%
----------- --------
Borrowings:
Federal Home Loan Bank advances 318,870 2,207 2.77%
----------- --------
Total funding liabilities 1,176,100 $ 5,304 1.80%
========
Other liabilities 3,540
-----------
Total liabilities 1,179,640
Stockholders' Equity 123,869
-----------
Total liabilities and equity $ 1,303,509
-----------
Net interest income/spread $ 10,242 3.19%
--------
Net interest margin 3.29%
(1) Average yields earned and rates paid are annualized.
(2) Average balances and yields for securities available for sale are based on
amortized cost.
11
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
Unaudited
Quarters Ended
June 30, 2004
---------------------------------------
Average Yield/
Balance Interest Rate (1)
- --------------------------------------------------------------------------------
(In thousands)
Earning assets:
Short-term investments $ 1,031 $ 1 0.39%
Securities (2) 425,658 4,296 4.04%
Federal Home Loan Bank 14,925 63 1.69%
Loans:
Residential mortgage 216,164 2,567 4.75%
Commercial real estate 237,727 3,389 5.70%
Commercial 159,241 2,135 5.36%
Indirect auto loans 106,883 1,589 5.95%
Other consumer 59,556 697 4.68%
----------- --------
Total loans 779,571 10,377 5.32%
----------- --------
Total earning assets 1,221,185 $ 14,737 4.83%
========
Other assets 69,166
-----------
Total assets $ 1,290,351
-----------
Funding liabilities:
Deposits:
Non-interest-bearing deposits $ 102,881
Savings, NOW and money market 419,222 826 0.79%
----------- --------
Total core deposits 522,103 826 0.63%
Certificates of deposits 322,048 2,200 2.73%
----------- --------
Total deposits 844,151 3,026 1.43%
----------- --------
Borrowings:
Federal Home Loan Bank advances 310,935 1,959 2.52%
----------- --------
Total funding liabilities 1,155,086 $ 4,985 1.73%
========
Other liabilities 4,619
-----------
Total liabilities 1,159,705
Minority interests 1,977
Stockholders' Equity 128,669
-----------
Total liabilities and equity $ 1,290,351
-----------
Net interest income/spread $ 9,752 3.10%
--------
Net interest margin 3.19%
(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
September 30, 2003
---------------------------------------
Average Yield/
Balance Interest Rate (1)
- --------------------------------------------------------------------------------
(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%
----------- --------
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
amortized cost.