1
BERKSHIRE HILLS BANCORP, INC. NET INCOME INCREASES 24% IN FIRST QUARTER
QUARTERLY CASH DIVIDEND DECLARED; REGULATORY APPROVALS FOR
NEW YORK BRANCHES RECEIVED
PITTSFIELD, MA - April 28, 2005 - Berkshire Hills Bancorp, Inc. ("Berkshire" or
the "Company") (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"),
today reported record earnings of $3.25 million, or $0.57 per diluted share, for
the first quarter of 2005. Net income increased by 24% from $2.62 million, or
$0.46 per diluted share, in the first quarter of 2004.
Commenting on the quarter's results, Michael P. Daly, President and Chief
Executive Officer of the Company and the Bank stated, "Berkshire continued to
produce strong growth in the first quarter, while also devoting significant
effort towards its planned merger with Woronoco Bancorp, Inc. Total loans grew
at a 13% annualized rate during the quarter, and service fee income increased by
21% from the prior year first quarter. Our expansion into New York and other
business solicitation outside of Berkshire County have contributed to this
growth. Higher earnings were achieved despite the effects of tighter margins
resulting from market conditions. Results were aided by gains on the sale of
securitized loans, related to our de-emphasis of balance sheet leverage prior to
the Woronoco merger. Total non-interest expense was reduced, despite the impact
of higher training and equipment expenses related to improvements in our
information technology." Mr. Daly continued, "We are pleased that our company
and Woronoco received strong support from our respective shareholders earlier
this month for our proposed merger. Subject to our receiving regulatory
approvals, we look forward to completing the transaction during the second
quarter, as originally announced. I'm also pleased to announce that this month
Berkshire completed its core operating system conversion and we are preparing to
convert Woronoco to our new system after the merger transaction is completed."
DIVIDEND DECLARED
- -----------------
The Board of Directors declared a quarterly cash dividend of $0.12 per share,
payable on May 23, 2005 to stockholders of record at the close of business on
May 9, 2005.
NEW YORK EXPANSION
- ------------------
The Company also announced that its expansion into New York is continuing with
its receipt of regulatory approvals to open branches in Downtown Albany at 41
State Street and at 15 Park Avenue, Shoppers World Plaza in Clifton Park, New
York. Announcements will be made later of the opening dates for these branches.
Additionally, the Company is currently working on other strategic branch
locations in the Albany Capital District and is hopeful it will be able to
announce regulatory approvals for another branch in the Albany area later this
year. Lastly, the Bank has applied for regulatory approval to organize a New
York institution to accept deposits from New York municipalities and other
governmental entities. It's anticipated that this will complement and expand the
Bank's already highly successful Government Banking Department.
FIRST QUARTER HIGHLIGHTS
- ------------------------
o Total commercial real estate loans increased $16 million, or 6%, from December
31, 2004.
o Total residential real estate loans increased $9 million, or 4%, from December
31, 2004.
o Consumer loans increased $6 million, or 4%, from December 31, 2004.
o Service fee income increased $39,000, or 11% annualized, compared to the prior
quarter.
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o The Company repurchased 99,058 shares of its stock at an average price of
$35.88 per share during the quarter.
CORE NET INCOME
- ---------------
The following table represents a reconciliation of GAAP net income to core net
income and earnings per share.
- --------------------------------------------------------------------------------------------------------
1Q2005 4Q2004 1Q2004
- --------------------------------------------------------------------------------------------------------
(In thousands, except earnings per share)
- --------------------------------------------------------------------------------------------------------
NET INCOME - GAAP $3,252 $3,177 $2,623
- --------------------------------------------------------------------------------------------------------
Less: Gain on sale of securities, net (1) 279 265 221
- --------------------------------------------------------------------------------------------------------
Plus: Loss from discontinued operations (2) - - 176
- --------------------------------------------------------------------------------------------------------
NET INCOME - CORE $2,973 $2,912 $2,578
- --------------------------------------------------------------------------------------------------------
Earnings per diluted share - GAAP $0.57 $0.55 $0.46
- --------------------------------------------------------------------------------------------------------
Earnings per diluted share - core $0.52 $0.51 $0.45
- --------------------------------------------------------------------------------------------------------
Average diluted shares outstanding 5,691 5,725 5,757
- --------------------------------------------------------------------------------------------------------
(1) Tax effected using a tax rate of 35.0% in 2005 and 32.0% in 2004.
(2) Represents the after-tax operating loss of EastPoint Technologies, LLC,
which was sold in June 2004.
FINANCIAL CONDITION
- -------------------
Total assets were $1.29 billion at quarter-end, and were essentially flat
compared to year-end 2004. Total loans grew by $27 million during the quarter.
The securities portfolio decreased by $43 million, providing funds for loan
growth, as well as reducing borrowings by $13 million.
Loans totaled $845 million at quarter-end, increasing by $27 million, or 3%,
from year-end 2004. Loan growth was concentrated in commercial real estate loans
($16 million) and residential real estate loans ($9 million). There were no
significant loan purchases in the first quarter. Real estate loan originations
continued to benefit from the Bank's expanded presence in New York. Residential
mortgage growth primarily consisted of originations of adjustable-rate
residential mortgages.
Investment securities totaled $371 million at quarter-end, decreasing $43
million, or 10%, from year-end 2004. This decrease was primarily due to the sale
of $29 million of loans, which had been securitized in the prior fifteen months
in order to provide liquidity to help fund loan growth. The remaining $14
million decrease was due to amortization and cash flow.
Deposits totaled $847 million at quarter-end, and were essentially flat compared
to year-end 2004. A $9 million decrease in NOW account deposits was offset by a
$7 million increase in certificates of deposit. The decrease in NOW account
deposits was primarily in public funds, which fluctuate based on government
spending. Certificate of deposit demand has increased as interest rates have
risen. Borrowings were reduced by 4% to $314 million during the quarter, due to
less attractive rates.
Tangible book value per share was $20.77 at quarter-end, compared to $21.19 at
year-end 2004. Despite the contribution from record earnings, stockholders'
equity decreased by $3 million to $128 million due to a $4 million decrease in
net unrealized securities gains included in accumulated other comprehensive
income, and a $3 million net increase in treasury stock due to share purchases
during the quarter. The
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ratio of stockholders' equity to total assets measured 9.92% at quarter-end,
compared to 10.06% at the prior year-end.
ASSET QUALITY
- -------------
Asset quality indicators remained favorable. Non-performing loans were $1.4
million, or 0.16% of total loans, at quarter-end. Net loan charge-offs totaled
$185,000, or 0.08% of total average loans on an annualized basis. The allowance
for loan losses totaled $9.6 million, representing 1.13% of total loans at
quarter-end, which ratio was unchanged from year-end 2004.
RESULTS OF OPERATIONS
- ---------------------
First quarter net income of $3.25 million increased by $75,000, or 2%, compared
to the prior quarter. Net income increased by $629,000, or 24%, compared to the
first quarter of 2004. The return on average stockholders' equity increased to
9.9% in the first quarter of 2005, compared to 9.7% and 8.4% in the prior
quarter and first quarter of 2004, respectively. The return on average assets
increased to 1.00% from 0.97% and 0.84% for the same periods. The efficiency
ratio measured 59.8% in the most recent quarter compared to 59.5% and 63.5%, for
the same periods. The improvements generally reflect higher service fee income
and controlled expense growth, along with the benefit of sale gains on
investment securities and securitized loans.
Net interest income was $10.0 million in the first quarter of 2005, a decrease
of $172,000 from the prior quarter and $134,000 from the first quarter of 2004.
Average earning assets were essentially flat in the most recent quarter,
compared to the prior quarter, and increased by 5% compared to the first quarter
of 2004. The fully taxable equivalent net interest margin measured 3.34% in the
most recent quarter, declining from 3.37% in the prior quarter and from 3.51% in
the first quarter of 2004. These decreases primarily reflect the impact of a
flattening yield curve and the Bank's increased emphasis on lower yielding
shorter duration earning assets to better position the Bank for potential future
increases in interest rates.
The $493,000 provision for loan losses in the most recent quarter increased by
$68,000 and $143,000 compared to the previous quarter and the first quarter of
2004, respectively. The increases included the impact of loan growth. The
provision exceeded net loan charge-offs of $185,000 in the most recent quarter.
Non-interest income was $2.74 million in the first quarter of 2005, increasing
by $546,000, or 25% compared to the prior quarter and increasing by $869,000, or
46%, compared to the first quarter of 2004. These increases were primarily due
to higher gains on the sale of securities and securitized loans. Additionally,
total service fee income increased by $39,000, or 11% annualized, compared to
the prior quarter and by $262,000, or 21% annualized, compared to the first
quarter of 2004. Service fees benefited from the introduction of an overdraft
protection program, growth in wealth management service fees due to new assets
under management, and higher loan service fee income.
Non-interest expense was $7.54 million in the first quarter of 2005, an increase
of $236,000, or 3%, compared to the prior quarter and a decrease of $26,000
compared to the first quarter of 2004. Increases in occupancy and total other
expenses measured $253,000 and $279,000 for the same periods. This growth was
due to new offices opened or acquired last year, volume-related general costs
and equipment costs related to new technology. Salaries and benefits increased
$140,000, or 3% from the prior quarter and included $105,000 in training
expenses related to the core systems conversion. Salaries and benefits decreased
by $268,000, or 6% from the prior year first quarter, including lower variable
compensation and reductions in certain retirement expenses.
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4
The effective income tax rate improved to 31.4% in the most recent quarter,
compared to 32.0% in the prior quarter and 32.1% in the first quarter of 2004.
This improvement primarily reflects a lower effective state income tax rate on
bank operations. For the first quarter of 2004, results also included a $176,000
after-tax loss on discontinued operations of EastPoint Technologies, LLC, which
was sold in June 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 2:00 P.M. (ET) on Thursday, April 28, 2005. Persons wishing
to access the conference call may do so by dialing 1-877-407-8035. Replays of
the conference call will be available beginning April 28, 2005 at 5:00 P.M. (ET)
through May 6, 2005 at 4:00 P.M. (ET) by dialing 1-877-660-6853 and using
Account #286 and Conference ID#144107 (both numbers are needed to access the
replay).
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 office in New York. The Bank is committed
to continue operation as an independent super community bank, delivering
exceptional customer service and a broad array of locally managed and
competitively priced retail and commercial products to its customers. For more
information on Berkshire Hills Bancorp, Inc., visit www.berkshirebank.com or
call 413-443-5601.
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.
Forward-looking statements also include, with limitation, those statements
relating to the anticipated effects of the Company's proposed merger with
Woronoco Bancorp, Inc. The following factors, among others, could cause the
actual results of the merger to differ materially from expectations: the ability
of the companies to obtain the required regulatory approvals of the merger; the
imposition of any regulatory conditions or requirements on the merger; the
ability of the companies to consummate the merger; the Company's ability to
successfully integrate Woronoco Bancorp, Inc. following the merger, including
integration of the data processing system and retention of key personnel; a
materially adverse change in the financial condition, operations, or projected
or actual earnings of either company; the ability to fully realize the expected
cost savings and revenue enhancements; the ability to realize the expected cost
savings and revenues on a timely basis; and any material change in the local
markets in which each company operates.
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5
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------------
Unaudited
----------------------------------------
March 31, December 31,
2005 2004
- ------------------------------------------------------------------------------------------------------------------------
(In thousands)
ASSETS
Cash and due from banks $ 14,862 $ 15,237
Short-term investments 100 2,665
----------- -----------
Total cash and cash equivalents 14,962 17,902
----------- -----------
Securities available-for-sale, at fair value 344,341 384,421
Securities held-to-maturity, at amortized cost 26,971 29,942
Loans held for sale 1,087 1,053
Total loans 855,016 828,179
Less: Allowance for loan losses (9,645) (9,337)
----------- -----------
Net loans 845,371 818,842
----------- -----------
Premises and equipment, net 15,567 14,780
Accrued interest receivable 5,460 5,472
Goodwill and other intangibles 7,235 7,254
Bank owned life insurance 18,403 18,200
Other assets 14,903 12,249
----------- -----------
Total assets $ 1,294,300 $ 1,310,115
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 847,381 $ 845,789
Borrowings 314,471 327,926
Accrued expenses and other liabilities 4,022 4,664
----------- -----------
Total liabilities 1,165,874 1,178,379
----------- -----------
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; 7,673,761 shares issued at March 31, 2005 and
December 31, 2004; shares outstanding: 5,835,447 at March 31, 2005
and 5,873,563 at December 31, 2004) 77 77
Additional paid-in capital 78,399 77,588
Unearned compensation (7,598) (7,414)
Retained earnings 97,569 94,996
Accumulated other comprehensive income 321 4,214
Treasury stock at cost (1,838,314 shares at March 31, 2005 and
1,800,198 at December 31, 2004) (40,342) (37,725)
----------- -----------
Total stockholders' equity 128,426 131,736
----------- -----------
Total liabilities and stockholders' equity $ 1,294,300 $ 1,310,115
============ ===========
6
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
LOAN ANALYSIS
Unaudited
------------------------------------------------------
March 31, 2005 December 31, 2004
---------------------- ---------------------
Percent Percent
of of
Balance Total Balance Total
- ---------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
Residential real estate loans:
Residential one-to four-family $ 226,145 27% $ 217,159 26%
Residential land development and construction 17,974 2 18,091 2
--------- ----- --------- -----
Total residential real estate loans 244,119 29 235,250 28
--------- ----- --------- -----
Commercial real estate loans:
Commercial one-to four-family 16,489 2 15,964 2
Commercial land development and construction 27,183 3 20,611 2
Multi-family 15,675 2 16,380 2
Other commercial real estate 217,700 25 207,619 25
--------- ----- --------- -----
Total commercial real estate loans 277,047 32 260,574 31
--------- ----- --------- -----
Commercial business loans 145,896 17 150,879 18
Consumer loans:
Automobile 128,956 15 123,027 15
Home equity loans 55,090 6 54,157 7
Other consumer loans 3,908 1 4,292 1
--------- ----- --------- -----
Total consumer loans 187,954 22 181,476 23
--------- ----- --------- -----
Total loans $ 855,016 100% $ 828,179 100%
========== ===== ========== =====
DEPOSIT ANALYSIS Unaudited
------------------------------------------------------
March 31, 2005 December 31, 2004
---------------------- ---------------------
Percent Percent
of of
Balance Total Balance Total
- ---------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
Demand deposit accounts $ 109,671 13 % $ 110,129 13 %
NOW accounts 92,030 11 100,709 12
Money market accounts 158,800 19 156,412 19
Savings accounts 164,879 19 163,264 19
--------- ----- --------- -----
Total core accounts 525,380 62 530,514 63
Certificates of deposit 322,001 38 315,275 37
-------- --- -------- ---
Total deposits $ 847,381 100 % $ 845,789 100 %
========== ===== ========== =====
7
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- -----------------------------------------------------------------------------------------
Unaudited
----------------------------
Three Months Ended
----------------------------
March 31, March 31,
(In thousands, except earnings per share) 2005 2004
---------- ---------
INTEREST AND DIVIDEND INCOME
Loans $ 11,916 $ 10,736
Debt securities, taxable 3,390 3,610
Debt securities, tax-exempt 395 228
Equity securities dividends 325 397
Short-term investments 11 16
---------- ---------
Total interest and dividend income 16,037 14,987
---------- ---------
INTEREST EXPENSE
Deposits 3,373 3,086
Borrowings 2,637 1,740
---------- ---------
Total interest expense 6,010 4,826
---------- ---------
NET INTEREST INCOME 10,027 10,161
PROVISION FOR LOAN LOSSES 493 350
---------- ---------
Net interest income after provision for loan losses 9,534 9,811
---------- ---------
NON-INTEREST INCOME
Customer service fees 616 524
Wealth management service fees 702 627
Loan service fees 174 79
Increase in cash surrender value of life insurance 203 207
Gain on sales of securities, net 429 325
Gain on sale of loans, and securitized loans, net 588 90
Other non-interest income 32 23
---------- ---------
Total non-interest income 2,744 1,875
---------- ---------
NON-INTEREST EXPENSE
Salaries and employee benefits 4,335 4,603
Occupancy and equipment 1,140 1,059
Marketing and advertising 161 157
Data processing 347 394
Professional services 423 428
Foreclosed real estate and repossessed assets, net 94 83
Other non-interest expense 1,036 838
---------- ---------
Total non-interest expense 7,536 7,562
---------- ---------
Income from continuing operations before income taxes 4,742 4,124
Provision for income taxes 1,490 1,325
---------- ---------
INCOME FROM CONTINUING OPERATIONS 3,252 2,799
---------- ---------
Loss from discontinued operations - (267)
Income tax benefit - (91)
---------- ---------
Net loss from discontinued operations - (176)
---------- ---------
NET INCOME $ 3,252 $ 2,623
========== =========
Earnings per share
Basic $ 0.61 $ 0.50
Diluted $ 0.57 $ 0.46
Weighted average shares outstanding
Basic 5,300 5,285
Diluted 5,691 5,757
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BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
Unaudited
Quarters Ended
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except Mar. 31, Dec.31, Sept. 30, June 30, Mar. 31,
earnings per share) 2005 2004 2004 2004 2004
-------- -------- ---------- --------- ----------
INTEREST AND DIVIDEND INCOME
Residential mortgage $ 3,059 $ 2,967 $ 2,869 $ 2,567 $ 2,986
Commercial real estate 4,044 3,761 3,630 3,389 3,222
Commercial business loans 2,222 2,216 2,204 2,135 2,226
Auto loans 1,806 1,863 1,811 1,710 1,736
Other consumer 785 712 617 576 566
-------- -------- ---------- --------- ----------
Total interest on loans 11,916 11,519 11,131 10,377 10,736
Securities 4,110 4,273 4,409 4,359 4,235
Short-term investments 11 15 6 1 16
-------- -------- ---------- --------- ----------
Total interest and dividend income 16,037 15,807 15,546 14,737 14,987
-------- -------- ---------- --------- ----------
INTEREST EXPENSE
Deposits 3,373 3,183 3,097 3,026 3,086
Borrowings 2,637 2,425 2,207 1,959 1,740
-------- -------- ---------- --------- ----------
Total interest expense 6,010 5,608 5,304 4,985 4,826
-------- -------- ---------- --------- ----------
NET INTEREST INCOME 10,027 10,199 10,242 9,752 10,161
PROVISION FOR LOAN LOSSES 493 425 365 425 350
-------- -------- ---------- --------- ----------
Net interest income after provision for loan losses 9,534 9,774 9,877 9,327 9,811
-------- -------- ---------- --------- ----------
NON-INTEREST INCOME
Customer service fees 616 609 580 634 524
Wealth management service fees 702 715 658 699 627
Loan service fees 174 129 63 103 79
Increase in cash surrender value of life insurance 203 196 92 144 207
Gain on sale of securities, net 429 390 310 377 325
Gain (loss) on sale of loans, and securitized loans, net 588 81 - (6) 90
Other non-interest income 32 78 23 14 23
-------- -------- ---------- --------- ----------
Total non-interest income 2,744 2,198 1,726 1,965 1,875
-------- -------- ---------- --------- ----------
NON-INTEREST EXPENSE
Salaries and benefits 4,335 4,195 4,195 3,890 4,603
Occupancy and equipment 1,140 1,055 997 975 1,059
Marketing and advertising 161 357 207 270 157
Data processing 347 381 305 331 394
Professional services 423 326 442 357 428
Foreclosed real estate and other loans, net 94 118 150 171 83
Other non-interest expense 1,036 868 885 939 838
-------- -------- ---------- --------- ----------
Total non-interest expense 7,536 7,300 7,181 6,933 7,562
-------- -------- ---------- --------- ----------
Income from continuing operations before income taxes 4,742 4,672 4,422 4,359 4,124
Provision for income taxes 1,490 1,495 1,415 1,402 1,325
-------- -------- ---------- --------- ----------
INCOME FROM CONTINUING OPERATIONS 3,252 3,177 3,007 2,957 2,799
-------- -------- ---------- --------- ----------
Loss from discontinued operations - - - (386) (267)
Income tax benefit - - - (131) (91)
-------- -------- ---------- --------- ----------
Net loss from discontinued operations - - - (255) (176)
-------- -------- ---------- --------- ----------
NET INCOME $ 3,252 $ 3,177 $ 3,007 $ 2,702 $ 2,623
======== ======== ========== ========= ==========
Earnings per share
Basic $ 0.61 $ 0.60 $ 0.57 $ 0.51 $ 0.50
Diluted $ 0.57 $ 0.55 $ 0.53 $ 0.47 $ 0.46
Weighted average shares outstanding
Basic 5,300 5,281 5,270 5,292 5,285
Diluted 5,691 5,725 5,721 5,725 5,757
9
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Unaudited
At or For the Quarters Ended
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
NON-PERFORMING ASSETS 2005 2004 2004 2004 2004
-------- -------- -------- -------- --------
(Dollars in thousands)
Non-accrual loans:
Residential mortgage $ 298 $ 327 $ 332 $ 266 $ 341
Commercial real estate 144 147 614 934 484
Commercial 832 523 1,463 1,609 1,738
Indirect automobile loans 95 154 297 350 395
Other consumer 1 1 8 11 14
-------- -------- -------- -------- ---------
Total non-accrual loans $ 1,370 $ 1,152 $ 2,714 $ 3,170 $ 2,972
Real estate owned ("REO") - - - 25 25
Total non-performing assets $ 1,370 $ 1,152 $ 2,714 $ 3,195 $ 2,997
======== ======== ======== ======== =========
Non-performing loans as a percentage of total loans 0.16% 0.14% 0.33% 0.40% 0.39%
Non-performing assets to total assets 0.11% 0.09% 0.21% 0.25% 0.24%
- ------------------------------------------------------------------------------------------------------------------------------------
PROVISION AND ALLOWANCE FOR LOAN LOSSES
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at beginning of period $ 9,337 $ 9,392 $ 9,248 $ 8,952 $ 8,969
Charge-offs (328) (737) (447) (390) (628)
Recoveries 143 257 226 261 261
-------- -------- -------- -------- ---------
Net loan charge-offs (185) (480) (221) (129) (367)
Provision for loan losses 493 425 365 425 350
-------- -------- -------- -------- ---------
Balance at end of period $ 9,645 $ 9,337 $ 9,392 $ 9,248 $ 8,952
======== ======== ======== ======== =========
Allowance for loan losses as a percentage of
non-performing loans 704% 811% 346% 292% 301%
Allowance for loan losses as a percentage of total loans 1.13% 1.13% 1.15% 1.16% 1.18%
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOAN (CHARGE-OFFS) RECOVERIES
- ------------------------------------------------------------------------------------------------------------------------------------
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate - (137) - - -
Commercial loans (4) (164) (7) 23 96
Consumer loans (primarily automobile loans) (181) (179) (214) (152) (463)
-------- -------- -------- -------- ---------
Total $ (185) $ (480) $ (221) $ (129) $ (367)
======== ======== ======== ======== =========
Net charge-offs as a percentage of total average loans 0.02% 0.06% 0.03% 0.02% 0.05%
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE FICO SCORES OF CONSUMER LOANS 708 705 702 699 695
- ------------------------------------------------------------------------------------------------------------------------------------
10
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
- --------------------------------------------------------------------------------
Unaudited
At or for the quarters ended
- --------------------------------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept.30, June 30, Mar. 31,
2005 2004 2004 2004 2004
-------- -------- -------- -------- --------
PERFORMANCE RATIOS (annualized)
Return on average assets 1.00% 0.97% 0.92% 0.84% 0.84%
Return on average stockholders' equity 9.94 9.72 9.71 8.40 8.39
Return on average tangible stockholders' equity 10.51 10.18 10.18 8.69 9.14
Net interest margin (1) 3.34 3.37 3.36 3.26 3.51
Non-interest income to average assets (2) (3) 0.84 0.67 0.53 0.61 0.60
Non-interest expense to average assets (2) 2.30 2.22 2.20 2.15 2.42
Average earning assets to average assets 94.44 94.51 95.59 94.64 94.46
Efficiency ratio (1) (2) (4) 59.80 59.54 60.44 59.93 63.49
CAPITAL RATIOS
Stockholders' equity to total assets 9.92 10.06 9.81 9.42 10.12
Tier I capital to average adjusted assets 9.26 9.14 9.09 8.98 8.89
Tier I capital to risk weighted assets 12.85 12.86 12.90 12.77 12.71
Total capital to risk weighted assets 14.21 14.22 14.29 14.15 14.15
SHARE DATA
Book value per share $ 22.01 $ 22.43 $ 21.87 $ 20.79 $ 21.54
Tangible book value per share 20.77 21.19 20.89 19.81 19.82
Stock price
High 37.64 38.01 39.14 37.10 38.61
Low 33.40 35.40 35.01 32.69 34.46
Close 33.75 37.15 36.95 37.10 34.90
- --------------------------------------------------------------------------------
(1) Net interest margin and efficiency ratio are calculated on a
fully taxable equivalent basis, using a 35% effective tax rate.
(2) Excludes discontinued operations.
(3) Excluding the gain on the sale of securities, the ratios would
have been 0.71%, 0.55%, 0.44%, 0.49% and 0.50%, respectively.
(4) Efficiency ratio is non-interest expense, divided by the total
of fully taxable net interest income and non-interest income,
less securities gains.
11
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES
Unaudited
Quarters Ended
------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June30, Mar. 31,
2005 2004 2004 2004 2004
----------- ----------- ----------- ----------- ---------
(In thousands)
Earning assets
Loans
Residential mortgage $ 239,755 $ 234,817 $ 225,198 $ 216,164 $ 232,001
Commercial real estate 276,417 255,901 250,323 237,727 219,991
Commercial 140,139 153,385 160,129 159,241 163,236
Auto loans 125,038 121,736 118,029 113,671 106,448
Other consumer 58,669 56,150 53,715 52,768 51,081
----------- ----------- ----------- ----------- ---------
Total loans 840,018 821,989 807,394 779,571 772,757
----------- ----------- ----------- ----------- ---------
Securities (1) 396,473 416,854 436,372 440,583 401,991
Short-term investments 1,672 2,628 2,192 1,031 6,307
----------- ----------- ----------- ----------- ---------
Total earning assets 1,238,163 1,241,471 1,245,958 1,221,185 1,181,055
Other assets 72,860 72,061 57,551 69,166 69,308
----------- ----------- ----------- ----------- ---------
Total assets $ 1,311,023 $ 1,313,532 $ 1,303,509 $ 1,290,351 $ 1,250,363
=========== =========== =========== =========== ===========
Funding liabilities
Deposits
NOW $ 94,809 $ 99,394 $ 98,158 $ 97,704 $ 95,767
Money Market 158,862 168,137 159,046 154,254 160,921
Savings 163,553 167,031 168,358 167,264 170,700
Certificates of deposit 319,682 316,898 326,411 322,048 318,555
----------- ----------- ----------- ----------- ---------
Total interest bearing deposits 736,906 751,460 751,973 741,270 745,943
Borrowings 330,448 318,422 318,870 310,935 274,054
----------- ----------- ----------- ----------- ---------
Total interest bearing liabilities 1,067,354 1,069,882 1,070,843 1,052,205 1,019,997
Non-interest-bearing demand deposits 107,835 108,832 105,257 102,881 97,964
Other liabilities and minority interest 3,781 4,019 3,540 6,596 7,359
----------- ----------- ----------- ----------- ---------
Total liabilities 1,178,970 1,182,733 1,179,640 1,161,682 1,125,320
Stockholders' Equity 132,053 130,799 123,869 128,669 125,043
----------- ----------- ----------- ----------- ---------
Total liabilities and equity $ 1,311,023 $ 1,313,532 $ 1,303,509 $ 1,290,351 $ 1,250,363
=========== =========== =========== =========== ===========
Supplementary Data
Total Core Deposits 525,059 543,394 530,819 522,103 525,352
Total Deposits 844,741 860,292 857,230 844,151 843,907
- -------------------------------------------------------------------------------
(1) Average balances for securities available-for-sale are based on amortized
cost.
12
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE YIELDS (FULLY TAXABLE EQUIVALENT - ANNUALIZED)
Unaudited
Quarters Ended
- --------------------------------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2005 2004 2004 2004 2004
- --------------------------------------------------------------------------------------------------------------------
Earning assets
Loans
Residential mortgage 5.10 % 5.05 % 5.10 % 4.75 % 5.15 %
Commercial real estate 5.93 5.88 5.80 5.70 5.86
Commercial 6.43 5.79 5.51 5.36 5.45
Auto loans 5.86 6.12 6.14 6.02 6.52
Other consumer 5.43 5.07 4.59 4.37 4.43
Total loans 5.73 5.61 5.51 5.32 5.56
Securities (1) 4.41 4.36 4.30 4.25 4.38
Short-term investments 2.67 2.28 1.09 0.39 1.01
Total earning assets 5.31 5.23 5.10 4.94 5.16
Funding liabilities
Deposits
NOW 0.18 0.09 0.08 0.09 0.10
Money Market 1.62 1.32 1.26 1.26 1.31
Savings 1.00 0.80 0.77 0.76 0.76
Certificates of deposit 2.91 2.84 2.77 2.73 2.80
Total interest bearing deposits 1.86 1.69 1.65 1.63 1.65
Borrowings 3.24 3.05 2.77 2.52 2.54
Total interest bearing liabilities 2.28 2.10 1.98 1.90 1.89
Net interest spread (FTE) 3.03 3.13 3.12 3.04 3.27
Net interest margin (FTE) 3.34 3.37 3.36 3.26 3.51
- ------------------------------------------------
(1) Average balances and yields for securities available-for-sale are based on amortized cost. Securities yields
are calculated on a fully taxable equivalent basis.
- --------------------------
News Contact: Berkshire Hills Bancorp, Inc.
Wayne F. Patenaude
Senior Vice President, Treasurer
and Chief Financial Officer
413-236-3195