1
BERKSHIRE HILLS BANCORP, INC. REPORTS 20% INCREASE IN CORE EARNINGS PER
DILUTED SHARE; QUARTERLY CASH DIVIDEND INCREASED 17%
PITTSFIELD, MA - July 27, 2005 - Berkshire Hills Bancorp, Inc. ("Berkshire" or
the "Company") (AMEX: BHL), the holding company for Berkshire Bank (the "Bank"),
today reported $0.53 in core net income per diluted share for the second quarter
of 2005, a 20% increase compared to $0.44 for the second quarter of 2004. Second
quarter core net income totaled $3.50 million in 2005, increasing by 40% from
$2.50 million in 2004, including the benefit from the acquisition of Woronoco
Bancorp, Inc. on June 1, 2005. Core earnings per share growth was less than core
earnings growth, primarily due to the issuance of shares for the acquisition.
Due primarily to the previously announced termination of its Employee Stock
Ownership Plan ("ESOP") in June 2005, the Company reported a net loss of $4.61
million, or $0.74 per basic and diluted share, for the second quarter of 2005.
This compared to net income of $2.70 million, or $0.47 per diluted share, in the
same quarter of 2004. The non-cash charge of $8.67 million recorded on the plan
termination in 2005 had no negative impact on stockholders' equity because the
charge to earnings was offset by credits to unearned compensation and additional
paid in capital.
For the first six months of 2005, core net income per diluted share increased by
22% to $1.05, compared to $0.86 in the first half of 2004. Core net income
increased by 32% to $6.47 million, from $4.90 million, for these periods. For
the first half of 2005, the Company reported a net loss of $1.36 million, or
$0.23 per basic and diluted share, including the $8.67 million charge related to
the ESOP termination. For the first half of 2004, the Company's net income
totaled $5.33 million, or $0.93 per diluted share.
Commenting on the second quarter results, Michael P. Daly, President and Chief
Executive Officer of the Company and the Bank stated, "Berkshire had a very
productive second quarter. We completed our acquisition of Woronoco Bancorp
Inc., and introduced our SOLUTIONS(SM) brand to the Pioneer Valley of Western
Massachusetts. We also completed a conversion of our core banking systems,
enhancing our service delivery platform, which will facilitate our conversion of
the Woronoco accounts, which is planned for next month. The growth in our core
earnings per share reflects the benefit of our acquisition of Woronoco and
continued organic growth in our markets, including organic loan growth at an 18%
annualized rate during the second quarter. We achieved these earnings gains
while also accomplishing a strategic de-leveraging to maintain the highest
regulatory capital designation. We are also pleased that the performance of our
combined loan portfolios continues to be excellent. We opened our first
full-service office in Albany, New York and are looking forward to opening our
Clifton Park branch next month and our East Greenbush branch in the fourth
quarter. We also moved closer to obtaining final regulatory approval of our
charter for Berkshire Municipal Bank, our New York-chartered bank being
organized to accept deposits from New York municipalities and other governmental
entities, which we expect will begin operations in the current quarter. Finally,
we were pleased to be recognized by the Boston Globe for the fourth consecutive
year, as one of the top performing publicly traded companies in Massachusetts."
DIVIDEND DECLARED
- -----------------
The Board of Directors declared a quarterly cash dividend of $0.14 per share,
payable on August 22, 2005 to stockholders of record at the close of business on
August 8, 2005. This is an increase of $0.02 per share, or 17%, compared to
recent quarters.
2
SECOND QUARTER HIGHLIGHTS
- -------------------------
o Completed acquisition of Woronoco Bancorp, Inc. on June 1, 2005,
increasing total assets from $1.3 billion to $2.1 billion.
o Completed strategic de-leveraging, with loan and security sales
totaling $192 million, the proceeds of which were used to reduce total
borrowings by the same amount.
o Announced completion of repurchase of 300,000 shares of its common
stock and the approval of an additional stock purchase program,
authorizing the purchase of up to 150,000 shares.
o Under its repurchase plans, the Company repurchased 50,697 shares of
its common stock at an average price of $32.14 per share during the
quarter.
o Achieved 18% annualized growth in total net loan originations.
o Opened a new full-service office in Albany, New York.
o Terminated ESOP, resulting in a net $8.4 million one-time charge after
taxes.
o Issued $15 million of trust preferred securities. The interest rate
will adjust quarterly during the 30 year term, based on the 3 month
LIBOR plus 1.85%. The initial interest rate is 5.34%.
o Converted core-banking system, providing branch staff increased access,
real-time functionality on all delivery channels and an upgraded
platform for continued expansion of our customer base.
CORE NET INCOME
- ---------------
The following table represents a reconciliation of GAAP net income to core net
income and earnings per share.
- -----------------------------------------------------------------------------------------------------------------
2Q2005 1Q2005 2Q2004 6mos2005 6mos2004
- -----------------------------------------------------------------------------------------------------------------
(In thousands, except earnings per share)
NET (LOSS) INCOME - GAAP $(4,608) $3,252 $2,702 $(1,356) $5,325
Less: Gain on sale of securities, net 902 279 256 1,181 477
Plus: Non-recurring loss on sale of
discontinued operations - - 50 - 50
Plus: ESOP termination expense 8,379 - - 8,379 -
Plus: Merger and conversion expense 626 - - 626 -
NET INCOME - CORE $ 3,495 $2,973 $2,496 $ 6,468 $4,898
(Loss) earnings per diluted share - GAAP $ (0.74) $ 0.57 $ 0.47 $ (0.23) $ 0.93
Earnings per diluted share - core $ 0.53 $ 0.52 $ 0.44 $ 1.05 $ 0.86
Average diluted shares outstanding 6,257 5,691 5,725 5,782 5,742
- -----------------------------------------------------------------------------------------------------------------
Adjustments to arrive at core net income are tax effected using a tax rate of
35.0% in 2005 and 32.0% in 2004. The ESOP termination expense is net of a
$288,000 tax benefit. Core earnings per share in 2005 include the effect of
dilutive shares totaling 359,000 in the second quarter and 375,000 in the
first six months.
2
3
FINANCIAL CONDITION
- -------------------
Total assets were $2.1 billion at mid-year, up from $1.3 billion at the prior
quarter-end and year-end, due primarily to the acquisition of Woronoco Bancorp,
Inc., which had approximately $767 million in assets at the time of acquisition.
As previously announced, a de-leveraging plan was also executed prior to the
acquisition, with sales of loans and securities totaling $192 million, the
proceeds of which were used to reduce borrowings. The Bank's securities
portfolio was reduced by $43 million in the first quarter of 2005, resulting in
a total de-leveraging of $235 million. Additionally, the Bank sold $46 million
in securities in the current quarter to pay $35 million for the acquisition's
cash consideration and $11 million for a portion of the deal costs. Most
categories of assets and liabilities increased primarily due to the acquisition
of Woronoco.
Loans totaled $1.42 billion at mid-year, increasing by $588 million, or 71%,
from year-end 2004. Total net loans originated in Berkshire's markets totaled
$66 million, representing a 16% annualized growth rate, in the first half of
2005. Investment securities totaled $443 million at mid-year, increasing by $28
million, or 7%, from year-end 2004.
Deposits totaled $1.31 billion at mid-year, increasing by $460 million, or 54%,
from year-end 2004. Excluding deposits acquired with Woronoco, total deposits
increased by 4% annualized in the first half of 2005. Borrowings totaled $504
million at mid-year, increasing by $176 million, or 54% from year-end 2004, due
to $237 million in borrowings acquired with Woronoco. Additionally, borrowings
included subordinated debt related to $15 million of trust preferred securities
which were issued in June.
Stockholders' equity totaled $244 million at mid-year 2005, increasing by $113
million, or 86%, from year-end 2004. Consideration paid for the Woronoco
acquisition was based on a ratio of 75% stock and 25% cash. In addition to $35
million in cash consideration, Berkshire issued 2.93 million new shares valued
at $108 million. As previously noted, the loss resulting from the ESOP
termination had no negative impact on stockholders' equity because the charge to
earnings was offset by credits to unearned compensation and additional paid in
capital. These credits also offset the $5 million impact of the transfer of
146,971 shares of treasury stock, which represented full payment of the ESOP
loan.
Goodwill increased to $90 million and intangible assets increased to $13 million
due to the Woronoco acquisition. As a result, tangible book value per share was
$16.56 at mid-year, compared to $21.19 at year-end 2004. The ratio of
stockholders' equity to total assets measured 11.8% at mid-year, compared to
10.1% at the prior year-end, due to the issuance of new common shares and the
de-leveraging program in conjunction with the Woronoco acquisition.
ASSET QUALITY
- -------------
Asset quality indicators have improved and remain favorable. The loans added
through the Woronoco acquisition were primarily concentrated in comparatively
low risk residential mortgage and home equity loans. As a result, the ratio of
non-performing assets to total assets declined to 0.08%, and the allowance for
loan losses declined to 0.92% of total loans. Accordingly, the ratio of the
allowance to non-performing loans measured 819% at mid-year, which was little
changed from 811% at year-end 2004. Second quarter net loan charge-offs totaled
$222,000, or 0.08% of total average loans on an annualized basis. The allowance
for loan losses totaled $13.0 million at mid-year, compared to $9.3 million at
year-end 2004, including a $3.3 million allowance related to loans acquired in
connection with the Woronoco acquisition.
3
4
RESULTS OF OPERATIONS
- ---------------------
During the second quarter, Berkshire recorded a net loss of $4.61 million. This
included the following non-core items (net of taxes): ESOP termination expense -
$8.38 million; net gains on the sale of securities - $902,000, and merger and
conversion expenses - $626,000. Core net income totaled $3.50 million, an
increase of $522,000, or 18%, compared to the preceding quarter. Core net income
increased by $999,000, or 40%, compared to the second quarter of 2004. These
increases included the benefit of the Woronoco acquisition. Core earnings per
share were $0.53 in the second quarter, increasing by 2% and 20% compared to the
preceding quarter and to the second quarter of 2004, respectively.
All major categories of income and expense increased in the second quarter,
reflecting the inclusion of one month's operations resulting from the Woronoco
acquisition on June 1. Net interest income was $11.5 million, increasing by
$1.48 million, or 15%, from the prior quarter and increasing by $1.76 million,
or 18%, from the second quarter of 2004. Average earning assets increased by 17%
and by 18% compared to the same periods, respectively. As anticipated, the
fully-taxable equivalent net interest margin declined to 3.26%, from 3.34%,
compared to the prior quarter and was unchanged from the second quarter of 2004.
Woronoco's lower yielding asset mix and greater reliance on higher cost
borrowings and time deposits contributed to the decline in the margin in the
second quarter.
The provision for loan losses in the most recent quarter was $300,000, compared
to $493,000 in the prior quarter and $425,000 in the second quarter of 2004,
respectively. The provision exceeded net loan charge-offs of $222,000 in the
most recent quarter.
Berkshire recorded higher net securities gains in the second quarter, choosing
to sell certain appreciated securities in light of favorable market conditions.
Net securities gains were $1.388 million in the second quarter, compared to
$429,000 in the prior quarter and $377,000 in the second quarter of 2004. Total
non-interest income increased in the second quarter due to these securities
gains. Excluding net securities gains, non-interest income totaled $2.53 million
in the most recent quarter, increasing by $213,000, or 9%, compared to the prior
quarter and increasing by $940,000, or 59%, compared to the second quarter of
2004. Results for the second quarter included $480,000 of non-interest income
from Pioneer Valley operations in June related to the Woronoco acquisition.
Excluding these operations, total service fee income increased by $97,000, or
7%, compared to the prior quarter and by $153,000, or 11%, compared to the
second quarter of 2004.
Non-interest expenses increased in the second quarter, primarily due to $8.67
million related to the termination of the ESOP and including $963,000 related to
the Woronoco acquisition and the conversion of the Bank's core banking systems.
Excluding these amounts, all other non-interest expense totaled $8.43 million in
the most recent quarter, increasing by $895,000, or 12%, compared to the prior
quarter and by $1.50 million, or 22%, compared to the second quarter of 2004.
Results for the most recent quarter included expenses of the Pioneer Valley
operations in June related to the Woronoco acquisition. The most recent quarter
also included $151,000 in June amortization of intangible assets related to the
Woronoco acquisition.
The $8.67 million ESOP termination expense resulted in a tax benefit of
$288,000. Excluding these amounts, the effective tax rate in the second quarter
was 34.2%, compared to 31.4% in the prior quarter and 32.2% in the second
quarter of 2004. Results in 2004 also included net charges of $255,000 in the
second quarter and $431,000 in the first six months, representing the 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 3:00 P.M. (ET) on Wednesday, July
4
5
27, 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 July
27, 2005 at 5:00 P.M. (ET) through August 5, 2005 at 4:00 P.M. (ET) by dialing
1-877-660-6853 and using Account #286 and Conference ID#157899 (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
branch offices serving communities throughout Western Massachusetts and
Northeastern New York and a representative office in New York. The Bank is
committed to operating as an independent super-community bank, delivering
exceptional customer service and a broad array of 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. Additionally, on June 1, 2005 the Company
completed a merger with Woronoco Bancorp, Inc. Risks and uncertainties related
to the merger include the integration of the data processing system and
retention of key personnel; the ability to realize fully the expected cost
savings and revenue enhancements; and the ability to realize the expected cost
savings and revenues on a timely basis. Additionally, other risks and
uncertainties 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
5
6
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------------
Unaudited
-----------------------------------------
June 30, December 31,
2005 2004
- -------------------------------------------------------------------------------------------------------------------------
(In thousands)
ASSETS
Cash and due from banks $ 42,665 $ 15,237
Short-term investments 329 2,665
----------- -----------
Total cash and cash equivalents 42,994 17,902
----------- -----------
Securities available-for-sale, at fair value 415,172 384,421
Securities held-to-maturity, at amortized cost 27,474 29,942
Loans held for sale 1,838 1,053
Total loans 1,415,840 828,179
Less: Allowance for loan losses (13,044) (9,337)
----------- -----------
Net loans 1,402,796 818,842
----------- -----------
Premises and equipment, net 25,461 14,780
Accrued interest receivable 8,073 5,472
Goodwill 89,605 6,782
Intangible assets 12,562 472
Bank owned life insurance 18,603 18,200
Other assets 22,015 12,249
------- -------
Total assets $ 2,066,593 $ 1,310,115
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,305,599 $ 845,789
Borrowings 504,390 327,926
Accrued expenses and other liabilities 12,107 4,664
----------- -----------
Total liabilities 1,822,096 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; 10,602,553 shares issued at June 30, 2005 and
7,673,761 at December 31, 2004; shares outstanding: 8,593,894
at June 30, 2005 and 5,873,563 at December 31, 2004) 106 77
Additional paid-in capital 198,739 77,588
Unearned compensation (2,141) (7,414)
Retained earnings 92,262 94,996
Accumulated other comprehensive income 2,060 4,214
Treasury stock at cost (2,008,659 shares at June 30, 2005 and
1,800,198 at December 31, 2004) (46,529) (37,725)
----------- -----------
Total stockholders' equity 244,497 131,736
----------- -----------
Total liabilities and stockholders' equity $ 2,066,593 $ 1,310,115
=========== ===========
7
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------------------------------------------------
LOAN ANALYSIS
Unaudited
- -------------------------------------------------------------------------------------------------------------------------
June 30, 2005 December 31, 2004
------------- -----------------
Percent Percent
Balance of Total Balance of Total
- -------------------------------------------------------------------------------------------------------------------------
(Dollars in millions)
Residential real estate loans:
Residential one-to four-family $ 533 37 % $ 217 26 %
Residential land development and construction 36 2 18 2
------- --- ----- ---
Total residential real estate loans 569 39 235 28
------- --- ----- ---
Commercial real estate loans:
Commercial one-to four-family 16 1 16 2
Commercial land development and construction 40 3 21 3
Multi-family 51 4 16 2
Other commercial real estate 278 20 208 25
------- --- ----- ---
Total commercial real estate loans 385 28 261 32
------- --- ----- ---
Commercial business loans 165 12 151 18
Consumer loans:
Automobile 143 10 123 15
Home equity and other loans 154 11 58 7
------- --- ----- ---
Total consumer loans 297 21 181 22
------- --- ----- ---
Total loans $ 1,416 100 % $ 828 100 %
======= === ===== ===
DEPOSIT ANALYSIS
Unaudited
----------------------------------------------------------
June 30, 2005 December 31, 2004
------------- -----------------
Percent Percent
Balance of Total Balance of Total
------- -------- ------- --------
(Dollars in millions)
Demand deposit accounts $ 162 12 % $ 110 13 %
NOW accounts 154 12 101 12
Money market accounts 225 18 156 19
Savings accounts 253 19 163 19
---- --- ----- ---
Total core accounts 794 61 530 63
Certificates of deposit - regular 442 34 315 37
Certificates of deposit - brokered 70 5 - -
--- -- ----- ---
Total certificates of deposits 512 39 315 37
Total deposits $ 1,306 100 % $ 845 100 %
======= === ===== ===
8
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
-------------------------------------------------------------------
Three Months Ended Six Months Ended
-------------------------------------------------------------------
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
-------------------------------------------------------------------
(In thousands, except earnings per share)
INTEREST AND DIVIDEND INCOME
Loans $ 15,226 $ 10,377 $ 27,142 $ 21,116
Debt securities, taxable 3,380 3,812 6,770 7,422
Debt securities, tax-exempt 363 336 758 564
Equity securities dividends 357 211 682 608
Short-term investments 22 1 38 17
-------- -------- -------- --------
Total interest and dividend income 19,348 14,737 35,390 29,727
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 4,318 3,026 7,691 6,112
Borrowings 3,522 1,959 6,159 3,699
-------- -------- -------- --------
Total interest expense 7,840 4,985 13,850 9,811
-------- -------- -------- --------
NET INTEREST INCOME 11,508 9,752 21,540 19,916
PROVISION FOR LOAN LOSSES 300 425 793 775
-------- -------- -------- --------
Net interest income after provision for loan losses 11,208 9,327 20,747 19,141
-------- -------- -------- --------
NON-INTEREST INCOME
Customer service fees 1,033 634 1,648 1,158
Wealth management service fees 838 699 1,540 1,326
Loan service fees 198 103 372 182
Increase in cash surrender value of life insurance 200 144 403 351
Gain on sales of securities, net 1,388 377 1,817 702
Gain on sale of loans, and securitized loans, net 162 (6) 751 84
Other non-interest income 97 14 125 37
-------- -------- -------- --------
Total non-interest income 3,916 1,965 6,656 3,840
-------- -------- -------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits 4,485 3,890 8,820 8,493
Termination of Employee Stock Ownership Plan 8,667 - 8,667 -
Occupancy and equipment 1,212 975 2,352 2,034
Marketing and advertising 200 270 361 427
Data processing 454 331 801 725
Professional services 363 357 838 785
Foreclosed real estate and repossessed assets, net 218 171 312 254
Merger and conversion expense 963 - 963 -
Other non-interest expense 1,499 939 2,484 1,779
-------- -------- -------- --------
Total non-interest expense 18,061 6,933 25,598 14,497
-------- -------- -------- --------
(Loss) income from continuing operations
before income taxes (2,937) 4,359 1,805 8,484
Provision for income taxes 1,671 1,402 3,161 2,728
-------- -------- -------- --------
(LOSS) INCOME FROM CONTINUING OPERATIONS (4,608) 2,957 (1,356) 5,756
-------- -------- -------- --------
Loss from discontinued operations - (386) - (653)
Income tax benefit - (131) - (222)
-------- -------- -------- --------
Net loss from discontinued operations - (255) - (431)
-------- -------- -------- --------
NET (LOSS) INCOME $ (4,608) $ 2,702 $ (1,356) $ 5,325
======== ======== ======== ========
(Loss) earnings per share
Basic $ (0.74) $ 0.51 $ (0.23) $ 1.01
Diluted $ (0.74) $ 0.47 $ (0.23) $ 0.93
Weighted average shares outstanding
Basic 6,257 5,292 5,782 5,291
Diluted 6,257 5,725 5,782 5,742
9
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
Quarters Ended
--------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except earnings per share)
INTEREST AND DIVIDEND INCOME
Residential mortgage $ 4,444 $ 3,059 $ 2,967 $ 2,869 $ 2,567
Commercial real estate 4,977 4,044 3,761 3,630 3,389
Commercial business loans 2,505 2,222 2,216 2,204 2,135
Auto loans 1,991 1,806 1,863 1,811 1,710
Other consumer 1,309 785 712 617 576
-------- ------- ------- ------- -------
Total interest on loans 15,226 11,916 11,519 11,131 10,377
Securities 4,100 4,110 4,273 4,409 4,359
Short-term investments 22 11 15 6 1
-------- ------- ------- ------- -------
Total interest and dividend income 19,348 16,037 15,807 15,546 14,737
-------- ------- ------- ------- -------
INTEREST EXPENSE
Deposits 4,318 3,373 3,183 3,097 3,026
Borrowings 3,522 2,637 2,425 2,207 1,959
-------- ------- ------- ------- -------
Total interest expense 7,840 6,010 5,608 5,304 4,985
-------- ------- ------- ------- -------
NET INTEREST INCOME 11,508 10,027 10,199 10,242 9,752
PROVISION FOR LOAN LOSSES 300 493 425 365 425
-------- ------- ------- ------- -------
Net interest income after provision for loan losses 11,208 9,534 9,774 9,877 9,327
-------- ------- ------- ------- -------
NON-INTEREST INCOME
Customer service fees 1,033 616 609 580 634
Wealth management service fees 838 702 715 658 699
Loan service fees 198 174 129 63 103
Increase in cash surrender value of life insurance 200 203 196 92 144
Gain on sale of securities, net 1,388 429 390 310 377
Gain (loss) on sale of loans, and securitized loans, net 162 588 81 - (6)
Other non-interest income 97 32 78 23 14
-------- ------- ------- ------- -------
Total non-interest income 3,916 2,744 2,198 1,726 1,965
-------- ------- ------- ------- -------
NON-INTEREST EXPENSE
Salaries and benefits 4,485 4,335 4,195 4,195 3,890
Termination of Employee Stock Ownership Plan 8,667 - - - -
Occupancy and equipment 1,212 1,140 1,055 997 975
Marketing and advertising 200 161 357 207 270
Data processing 454 347 381 305 331
Professional services 363 423 326 442 357
Foreclosed real estate and other loans, net 218 94 118 150 171
Merger and conversion expense 963 - - - -
Other non-interest expense 1,499 1,036 868 885 939
-------- ------- ------- ------- -------
Total non-interest expense 18,061 7,536 7,300 7,181 6,933
-------- ------- ------- ------- -------
(Loss) income from continuing operations
before income taxes (2,937) 4,742 4,672 4,422 4,359
Provision for income taxes 1,671 1,490 1,495 1,415 1,402
-------- ------- ------- ------- -------
(LOSS) INCOME FROM CONTINUING OPERATIONS (4,608) 3,252 3,177 3,007 2,957
-------- ------- ------- ------- -------
Loss from discontinued operations - - - - (386)
Income tax benefit - - - - (131)
-------- ------- ------- ------- -------
Net loss from discontinued operations - - - - (255)
-------- ------- ------- ------- -------
NET (LOSS) INCOME $ (4,608) $ 3,252 $ 3,177 $ 3,007 $ 2,702
======== ======= ======= ======= =======
(Loss) earnings per share
Basic $ (0.74) $ 0.61 $ 0.60 $ 0.57 $ 0.51
Diluted $ (0.74) $ 0.57 $ 0.55 $ 0.53 $ 0.47
Weighted average shares outstanding
Basic 6,257 5,300 5,281 5,270 5,292
Diluted 6,257 5,691 5,725 5,721 5,725
10
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
At or For the Quarters Ended
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
NON-PERFORMING ASSETS 2005 2005 2004 2004 2004
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
Non-accrual loans:
Residential mortgage $ 663 $ 298 $ 327 $ 332 $ 266
Commercial real estate 209 144 147 614 934
Commercial 613 832 523 1,463 1,609
Indirect automobile loans 78 95 154 297 350
Other consumer 29 1 1 8 11
------- ------- ------- ------- -------
Total non-accrual loans $ 1,592 $ 1,370 $ 1,152 $ 2,714 $ 3,170
Real estate owned ("REO") - - - - 25
Total non-performing assets $ 1,592 $ 1,370 $ 1,152 $ 2,714 $ 3,195
======= ======= ======= ======= =======
Non-performing loans as a percentage of total loans 0.11% 0.16% 0.14% 0.33% 0.40%
Non-performing assets to total assets 0.08% 0.11% 0.09% 0.21% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
PROVISION AND ALLOWANCE FOR LOAN LOSSES
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at beginning of period $ 9,645 $ 9,337 $ 9,392 $ 9,248 $ 8,952
Charge-offs (391) (328) (737) (447) (390)
Recoveries 169 143 257 226 261
------- ------- ------- ------- -------
Net loan charge-offs (222) (185) (480) (221) (129)
Allowance attributed to acquired loans 3,321
Provision for loan losses 300 493 425 365 425
------- ------- ------- ------- -------
Balance at end of period $13,044 $ 9,645 $ 9,337 $ 9,392 $ 9,248
======= ======= ======= ======= =======
Allowance for loan losses as a percentage of
non-performing loans 819% 704% 811% 346% 292%
Allowance for loan losses as a percentage of total loans 0.92% 1.13% 1.13% 1.15% 1.16%
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NET LOAN (CHARGE-OFFS) RECOVERIES
- ------------------------------------------------------------------------------------------------------------------------------------
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate (109) - (137) - -
Commercial loans - (4) (164) (7) 23
Consumer loans (primarily automobile loans) (113) (181) (179) (214) (152)
------- ------- ------- ------- -------
Total $ (222) $ (185) $ (480) $ (221) $ (129)
======= ======= ======= ======= =======
Net charge-offs as a percentage of total average loans 0.02% 0.02% 0.06% 0.03% 0.02%
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AVERAGE FICO SCORES OF CONSUMER
AUTOMOBILE LOANS 711 708 705 702 699
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11
SELECTED FINANCIAL RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited
At or For the Quarters Ended
- ------------------------------------------------------------------------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
---- ---- ---- ---- ----
PERFORMANCE RATIOS (annualized)
(Loss)/return on average assets (1.19)% 1.00 % 0.97 % 0.92 % 0.84 %
(Loss)/return on average stockholders' equity (11.26) 9.94 9.72 9.71 8.40
(Loss)/return on average tangible stockholders' equity (14.56) 10.51 10.18 10.18 8.69
Net interest margin (1) 3.26 3.34 3.37 3.36 3.26
Non-interest income to average assets (2) (3) 1.00 0.84 0.67 0.53 0.61
Non-interest expense to average assets (2) 2.16 2.30 2.22 2.20 2.15
Average earning assets to average assets 92.29 94.44 94.51 95.59 94.64
Efficiency ratio (1) (2) (4) 59.05 59.80 59.54 60.44 59.93
CAPITAL RATIOS
Stockholders' equity to total assets 11.80 9.92 10.06 9.81 9.42
Tangible stockholders' equity to total assets 6.89 9.36 9.50 9.36 8.97
SHARE DATA
Book value per share $ 28.45 $ 22.01 $ 22.43 $ 21.87 $ 20.79
Tangible book value per share 16.56 20.77 21.19 20.89 19.81
Stock price
High 34.90 37.64 38.01 39.14 37.10
Low 30.97 33.40 35.40 35.01 32.69
Close 33.32 33.75 37.15 36.95 37.10
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(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, expense of termination of Employee Stock
Ownership Plan, and merger and conversion expense.
(3) Excluding the gain on the sale of securities, the ratios would have been
0.65%, 0.71%, 0.55%, 0.44% and 0.49%, 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.
12
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES
Unaudited
Quarters Ended
--------------------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2005 (2) 2005 2004 2004 2004
--------------------------------------------------------------------------------
(In thousands)
Earning assets
Loans
Residential mortgage $ 352,776 $ 239,755 $ 234,817 $ 225,198 $ 216,164
Commercial real estate 314,778 276,417 255,901 250,323 237,727
Commercial 154,405 140,139 153,385 160,129 159,241
Auto loans 134,237 125,038 121,736 118,029 113,671
Other consumer 91,303 58,669 56,150 53,715 52,768
----------- ---------- ---------- --------- ----------
Total loans 1,047,499 840,018 821,989 807,394 779,571
Securities (1) 393,962 396,473 416,854 436,372 440,583
Short-term investments 1,873 1,672 2,628 2,192 1,031
----------- ---------- ---------- --------- ----------
Total earning assets 1,443,334 1,238,163 1,241,471 1,245,958 1,221,185
Other assets 120,611 72,860 72,061 57,551 69,166
----------- ---------- ---------- --------- ----------
Total assets $1,563,945 $1,311,023 $1,313,532 $1,303,509 $1,290,351
=========== ========== -========= ========== ==========
Funding liabilities
Deposits
NOW $ 112,775 $ 94,809 $ 99,394 $ 98,158 $ 97,704
Money Market 183,273 158,862 168,137 159,046 154,254
Savings 192,250 163,553 167,031 168,358 167,264
Certificates of deposit 384,443 319,682 316,898 326,411 322,048
----------- ---------- ---------- --------- ----------
Total interest bearing deposits 872,741 736,906 751,460 751,973 741,270
Borrowings 387,208 330,448 318,422 318,870 310,935
----------- ---------- ---------- --------- ----------
Total interest bearing liabilities 1,259,949 1,067,354 1,069,882 1,070,843 1,052,205
Non-interest-bearing demand deposits 129,700 107,835 108,832 105,257 102,881
Other liabilities 9,579 3,781 4,019 3,540 6,596
----------- ---------- ---------- --------- ----------
Total liabilities 1,399,228 1,178,970 1,182,733 1,179,640 1,161,682
Stockholders' Equity 164,717 132,053 130,799 123,869 128,669
----------- ---------- ---------- --------- ----------
Total liabilities and equity $1,563,945 $1,311,023 $1,313,532 $1,303,509 $1,290,351
=========== ========== -========= ========== ==========
Supplementary Data
Total Core Deposits 617,998 525,059 543,394 530,819 522,103
Total Deposits 1,002,441 844,741 860,292 857,230 844,151
- --------------------------------------------------------------------------------
(1) Average balances for securities available-for-sale are based on amortized
cost.
(2) Average balances for the second quarter of 2005 include one month's balances
related to the acquisition of Woronoco Bancorp, Inc. on June 1, 2005.
13
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
Unaudited
Quarters Ended
- --------------------------------------------------------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
- --------------------------------------------------------------------------------------------------------------------
Earning assets
Loans
Residential mortgage 5.04 % 5.10 % 5.05 % 5.10 % 4.75 %
Commercial real estate 6.34 5.93 5.88 5.80 5.70
Commercial 6.51 6.43 5.79 5.51 5.36
Auto loans 5.95 5.86 6.12 6.14 6.02
Other consumer 5.75 5.43 5.07 4.59 4.37
Total loans 5.83 5.73 5.61 5.51 5.32
Securities (1) 4.40 4.41 4.36 4.30 4.25
Short-term investments 2.91 2.67 2.28 1.09 0.39
Total earning assets 5.44 5.31 5.23 5.10 4.94
Funding liabilities
Deposits
NOW 0.18 0.18 0.09 0.08 0.09
Money Market 1.98 1.62 1.32 1.26 1.26
Savings 1.03 1.00 0.80 0.77 0.76
Certificates of deposit 2.99 2.91 2.84 2.77 2.73
Total interest bearing deposits 1.98 1.86 1.69 1.65 1.63
Borrowings 3.65 3.24 3.05 2.77 2.52
Total interest bearing liabilities 2.50 2.28 2.10 1.98 1.90
Net interest spread (FTE) 2.94 3.03 3.13 3.12 3.04
Net interest margin (FTE) 3.26 3.34 3.37 3.36 3.26
- --------------------------------------------------------------------------------
(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.