BERKSHIRE HILLS BANCORP, INC. REPORTS 10% INCREASE IN CORE QUARTERLY
EARNINGS PER DILUTED SHARE AND SUCCESFUL MERGER INTEGRATION
o RECENT ANNOUNCEMENTS HIGHLIGHT NEW BRANCHES AND ACQUISITIONS
o STOCK LISTING CHANGED TO NASDAQ, SYMBOL "BHLB"
o DIVIDEND DECLARED
PITTSFIELD, MA - October 27, 2005 - Berkshire Hills Bancorp, Inc. ("Berkshire"
or the "Company") (NASDAQ: BHLB), the holding Company for Berkshire Bank (the
"Bank"), today reported $0.54 in core net income per diluted share (EPS) for the
third quarter of 2005, a 10% increase compared to $0.49 for the third quarter of
2004. Core net income totaled $4.7 million for the third quarter of 2005,
increasing by 70% compared to $2.8 million for the third quarter of 2004,
primarily due to 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. The Company reported total net
income of $4.7 million ($0.54 per diluted share) for the third quarter of 2005,
compared to total net income of $3.0 million ($0.53 per diluted share) for the
third quarter of 2004.
Core earnings for the first nine months of 2005 were $1.59 per diluted share,
increasing by 13% compared to $1.41 per diluted share for the first nine months
of 2004. Core earnings were $11.2 million in 2005 compared to $8.1 million in
2004 for these same periods. GAAP net income for the first nine months of 2005
totaled $3.4 million ($0.48 per diluted share) as a result of an $8.7 million
non-cash charge related to the termination of the Bank's Employee Stock
Ownership Plan in June 2005. This charge had no negative impact on stockholders'
equity. GAAP net income for the first nine months of 2004 was $8.3 million
($1.45 per diluted share).
Commenting on the Company's performance, Michael P. Daly, President and Chief
Executive Officer of the Company and the Bank, stated, "Our acquisition of
Woronoco Bancorp Inc. has increased our market scope, resulting in improved
volume and efficiency which have benefited earnings, resulting in 10%
year-to-year growth in third quarter core earnings per share. The Woronoco
integration has been substantially completed and we have achieved our objectives
for cost savings and core account retention. Our earnings gains were achieved
despite the effort required for the successful integration of the Woronoco
operations, the cost of opening a third New York branch, and obtaining approval
for a fourth New York branch. Our net interest margin improved to 3.31% in the
most recent quarter, despite competitive market conditions and the continued
impact of the flattening yield curve. Our efficiency ratio improved to a record
55.3% in the third quarter. Additionally, with our attention to credit quality,
we continue to report favorable asset quality experience. Our high focus on
customer service is expected to generate future earnings gains from our growing
franchise."
DIVIDEND DECLARED
- -----------------
The Board of Directors declared a quarterly cash dividend of $0.14 per share,
payable on November 21, 2005, to stockholders of record at the close of business
on November 7, 2005. The quarterly cash dividend was increased to $0.14 per
share beginning in August, increasing by $0.02 per share, or 17%, compared to
recent quarters.
THIRD QUARTER AND LATEST HIGHLIGHTS
- -----------------------------------
o Completed successful integration of Woronoco operations, achieving cost
savings of 36%, exceeding 30% original target.
o Completed conversion of Woronoco core banking information systems in
August.
o Opened new full service office in Clifton Park, New York and obtained
regulatory approvals to open a new full service office in East
Greenbush, New York.
o Increased total transaction account deposit balances at a 9% annualized
rate during the third quarter.
o Repurchased 54,600 shares of the Company's common stock at an average
price of $32.93 per share.
o Changed common stock listing to NASDAQ national market with trading
symbol "BHLB".
o On October 26, 2005 acquired the MacDonald & Johnson (East Longmeadow)
and Onofrey (Springfield) insurance agencies.
CORE NET INCOME
- ---------------
The following table represents a reconciliation of GAAP net income to core net
income and earnings per share.
3Q2005 2Q2005 3Q2004 9mos2005 9mos2004
---------------------------------------------------------
(In thousands, except earnings per share)
---------------------------------------------------------
NET INCOME (LOSS) - GAAP $4,746 $(4,608) $3,007 $ 3,389 $8,333
Less: Gain on sale of securities, net 541 902 211 1,722 689
Plus: Non-recurring loss on sale of
discontinued operations - - - - 431
Plus: ESOP termination expense - 8,379 - 8,379 -
Plus: Merger and conversion expense 538 626 - 1,164 -
---------------------------------------------------------
NET INCOME - CORE $4,743 $ 3,495 $2,796 $11,210 $8,075
Earnings per diluted share - GAAP $ 0.54 $ (0.74) $ 0.53 $ 0.48 $ 1.45
Earnings per diluted share - core $ 0.54 $ 0.53 $ 0.49 $ 1.59 $ 1.41
Average diluted shares outstanding 8,856 6,257 5,721 7,061 5,735
The ESOP termination expense is net of a $288,000 tax benefit. Other
adjustments to arrive at core net income are tax effected using a tax rate of
35.0% in 2005 and 32.0% in 2004. Core earnings per share in the second quarter
of 2005 include the effect of dilutive shares totaling 359,000.
FINANCIAL CONDITION
- -------------------
Total assets were $2.0 billion at September 30, 2005, up from $1.3 billion at
year-end 2004. The increase included approximately $0.8 billion in assets
related to the Woronoco acquisition, and is net of a reduction of $243 million
in loans and securities under a de-leveraging plan executed in conjunction with
the acquisition. Most categories of assets and liabilities increased primarily
due to the acquisition of Woronoco.
Loans totaled $1.41 billion at September 30, 2005, increasing by $584 million
(71%) from year-end 2004. Loan growth included $528 million related to the
Woronoco acquisition. Excluding the impact of the loans acquired through the
Woronoco acquisition and $4 million in third quarter loan sales, total loans
increased by $60 million for the year-to-date, growing at a 10% annualized rate.
Growth was spread among all major loan categories and in all major markets.
While total loans declined by 1% during the most recent quarter, the loan
commitment pipeline grew to a record $87 million at September 30, 2005.
Investment securities totaled $426 million at the end of the third quarter,
increasing by $12 million (3%) compared to $414 million at year-end 2004. This
increase was due to securities acquired through the Woronoco acquisition, net of
sales and maturities under the aforementioned de-leveraging plan, along with the
sale of $46 million in securities by the Bank in the second quarter to provide
funds for the acquisition.
Deposits totaled $1.35 billion at the end of the third quarter, increasing by
$502 million (59%) from year-end 2004. Deposit growth included $443 million
related to the Woronoco acquisition. Total deposits increased at a 13%
annualized rate during the most recent quarter. Low cost transaction account
balances increased at a 9% annualized rate during the quarter. Excluding the
impact of the acquired Woronoco deposits, total deposits increased by $59
million for the year-to-date, growing at a 9% annualized rate.
Stockholders' equity totaled $246 million at the end of the third quarter,
increasing by $114 million, or 86%, from year-end 2004. Consideration for the
Woronoco acquisition included the issuance of 2.93 million new common shares
valued at $108 million, with an additional $4 million credit to equity for the
value of outstanding Woronoco stock options. The ESOP termination had no
negative impact on stockholders' equity because the related 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. The
contribution of core earnings was mostly offset by dividends, additional
treasury stock purchases of $5.0 million, and a $3.8 million decrease in
accumulated other comprehensive income due to lower securities prices.
Goodwill increased to $88 million and intangible assets increased to $12 million
due to the Woronoco acquisition. As a result, tangible book value per share was
$17.03 at September 30, 2005, compared to $21.19 at year-end 2004. Total book
value per share increased to $28.68 compared to $22.43 for these same periods.
The ratio of tangible equity to tangible assets was 7.55% at the end of the
third quarter, down from 9.55% at year-end 2004.
ASSET QUALITY
- -------------
Asset quality indicators remained favorable and were stable during the last
quarter. The loans added through the Woronoco acquisition were primarily
concentrated in comparatively low risk residential mortgage and home equity
loans. Through the first nine months, the annualized rate of net loan
charge-offs remained comparatively low at 0.06%. Additionally, the ratio of
non-performing assets to total assets declined during the nine months to 0.08%.
The allowance for loan losses declined to 0.93% of total loans, and the ratio of
the allowance to non-performing loans remained strong at 841% at the end of the
most recent quarter, compared to 811% at year-end 2004.
RESULTS OF OPERATIONS
- ---------------------
All major categories of income and expense increased in the third quarter of
2005 primarily due to the acquisition of Woronoco Bancorp on June 1, 2005.
Second quarter 2005 results included one month's contribution from Woronoco's
operations, and the third quarter was the first full quarter for the newly
combined entity.
Core earnings per share reflects the ongoing business operations of the Company,
and includes the impact of shares issued in conjunction with the Woronoco
acquisition. Third quarter core earnings per share increased by 10% in 2005
compared to 2004. The efficiency ratio improved to 55.3% in the third quarter of
2005, compared to 60.4% in the third quarter of 2004. The return on assets was
0.92% in both of these periods. Berkshire produced a 13.5% return on average
tangible equity in the third quarter of 2005, compared to 10.2% in the third
quarter of 2004.
Core earnings per share increased by 13% for the first nine months of 2005
compared to the same period in 2004. In addition to the benefits of the Woronoco
merger, this increase reflected the benefit of organic loan and deposit growth
recorded by Berkshire over this period. The improvements also reflected the
benefit of higher service fee income, including wealth management service fees,
as well as the benefit of controlled expense growth and gains on the sale of
securitized loans.
Core earnings and net income were approximately the same in the most recent
quarter. Merger and conversion expense totaling $828,000 pretax was excluded
from the determination of core earnings. The Woronoco core systems were
converted to the Berkshire systems in mid-August, and by the end of the quarter
most integration activities were substantially completed. Merger and conversion
expense consisted primarily of costs related to systems conversions, interim
systems, and operations integrations, as well as the cost of interim Woronoco
staff retained through the conversion dates. Net securities gains are also
excluded from the determination of core earnings. These gains totaled $832,000
pretax during the quarter and primarily represented gains on equity sales as the
Bank adjusted its position to decrease exposure to equity market fluctuations.
Berkshire's net interest margin increased to 3.31% in the third quarter of 2005,
compared to 3.26% in the second quarter of 2005, benefiting from the Bank's
positive sensitivity to higher interest rates, its deposit and loan pricing
strategies, and the de-leveraging program.
Non-interest income totaled $3.96 million in the third quarter of 2005, compared
to $3.92 million in the second quarter of 2005. Excluding net securities gains
of $832 thousand and $1.39 million, non-interest income totaled $3.12 million
and $2.53 million in these two quarters, respectively. The ratio of non-interest
income, excluding securities gains, to average assets was 0.60% in the most
recent quarter, compared to 0.65% in the prior quarter, partially due to the
lower ratio in the acquired Woronoco operations.
Non-interest expense totaled $11.6 million in the third quarter of 2005,
compared to $18.1 million in the second quarter of 2005. Excluding merger and
conversion expenses of $828 thousand and $963 thousand in the two quarters,
respectively, and excluding $8.67 million in ESOP termination expenses in the
second quarter, non-interest expense totaled $10.8 million and $8.4 million in
these two quarters, respectively. The ratio of non-interest expense, excluding
the above charges, to average assets decreased to 2.09% from 2.16% in these
linked quarters due to the efficiencies of the combined operations. Expenses in
the most recent quarter included $190,000 in operating costs of new branches and
intangible asset amortization expense of $470,000. The provision for loan losses
also decreased during the linked quarters primarily due to the lower net loan
charge-offs. The effective tax rate measured 34.1% in the third quarter of 2005,
which was a slight decrease from 34.2% in the prior quarter.
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 Friday, October 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 October 28, 2005 at 1:00 P.M.
(ET) through November 4, 2005 at 11:59 P.M. (ET) by dialing 1-877-660-6853 and
using Account #286 and Conference ID#171163 (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 municipal bank and 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 achievement of anticipated future earnings benefits.
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.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
===========================================================================================================================
Unaudited
--------------------------------------------
September 30, December 31,
2005 2004
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands)
ASSETS
Cash and due from banks $ 30,335 $ 15,237
Short-term investments 1,177 2,665
----------- -----------
Total cash and cash equivalents 31,512 17,902
Securities available-for-sale, at fair value 398,937 384,421
Securities held-to-maturity, at amortized cost 26,951 29,942
Loans held for sale 1,852 1,053
Total loans 1,412,109 828,179
Less: Allowance for loan losses (13,123) (9,337)
----------- -----------
Net loans 1,398,986 818,842
Premises and equipment, net 26,547 14,780
Accrued interest receivable 8,177 5,472
Goodwill 87,791 6,782
Identifiable intangible assets 11,951 472
Bank owned life insurance 18,800 18,200
Other assets 21,587 12,249
----------- -----------
Total assets $ 2,033,091 $ 1,310,115
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,347,751 $ 845,789
Borrowings 436,074 327,926
Accrued expenses and other liabilities 3,629 4,664
----------- -----------
Total liabilities 1,787,454 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 September 30, 2005 and
7,673,761 at December 31, 2004; shares outstanding: 8,565,596
at September 30, 2005 and 5,873,563 at December 31, 2004) 106 77
Additional paid-in capital 198,744 77,588
Unearned compensation (1,788) (7,414)
Retained earnings 95,811 94,996
Accumulated other comprehensive income 400 4,214
Treasury stock at cost (2,036,957 shares at September 30, 2005 and
1,800,198 at December 31, 2004) (47,636) (37,725)
----------- -----------
Total stockholders' equity 245,637 131,736
----------- -----------
Total liabilities and stockholders' equity $ 2,033,091 $ 1,310,115
=========== ===========
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
=========================================================================================================================
LOAN ANALYSIS
Unaudited
--------------------------------------------------------------
September 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 $ 517 37% $ 217 26%
Residential land development and construction 34 2 18 2
-------- --- ----- ---
Total residential real estate loans 551 39 235 28
Commercial real estate loans:
Commercial one-to four-family 21 1 16 2
Commercial land development and construction 50 4 21 3
Multi-family 47 3 16 2
Other commercial real estate 284 20 208 25
-------- --- ----- ---
Total commercial real estate loans 402 28 261 32
Commercial business loans 157 11 151 18
Consumer loans:
Automobile 150 11 123 15
Home equity and other loans 152 11 58 7
-------- --- ----- ---
Total consumer loans 302 22 181 22
-------- --- ----- ---
Total loans $ 1,412 100% $ 828 100%
======== === ===== ===
DEPOSIT ANALYSIS
Unaudited
--------------------------------------------------------------
September 30, 2005 December 31, 2004
------------------ -----------------
Percent Percent
Balance of Total Balance of Total
------- -------- ------- --------
(Dollars in millions)
Demand deposit accounts $ 178 13% $ 110 13%
NOW accounts 145 11 101 12
Money market accounts 241 18 156 19
Savings accounts 231 17 163 19
--------- --- ----- ---
Total core accounts 795 59 530 63
Certificates of deposit - regular 487 36 315 37
Certificates of deposit - brokered 66 5 - -
--------- --- ----- ---
Total certificates of deposit 553 41 315 37
Total deposits $ 1,348 100% $ 845 100%
========= === ===== ===
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
====================================================================================================================================
Unaudited
---------------------------------------------------------------------
Three Months Ended Nine Months Ended
---------------------------------------------------------------------
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
---------------------------------------------------------------------
(In thousands, except earnings per share)
INTEREST AND DIVIDEND INCOME
Loans $ 21,149 $ 11,131 $ 48,282 $ 32,247
Debt securities, taxable 3,274 3,754 9,744 11,081
Debt securities, tax-exempt 791 376 1,832 1,035
Equity securities dividends 563 279 1,263 887
Short-term investments 62 6 98 24
------------- ------------- ------------ ------------
Total interest and dividend income 25,839 15,546 61,219 45,274
------------- ------------- ------------ ------------
INTEREST EXPENSE
Deposits 5,979 3,097 13,689 9,209
Borrowings 4,806 2,207 10,951 5,906
------------- ------------- ------------ ------------
Total interest expense 10,785 5,304 24,640 15,115
------------- ------------- ------------ ------------
NET INTEREST INCOME 15,054 10,242 36,579 30,159
PROVISION FOR LOAN LOSSES 204 365 998 1,140
------------- ------------- ------------ ------------
Net interest income after provision for loan losses 14,850 9,877 35,581 29,019
------------- ------------- ------------ ------------
NON-INTEREST INCOME
Customer service fees 1,439 580 3,087 1,738
Wealth management service fees 680 587 2,013 1,809
Insurance fees 472 24 679 26
Loan service fees 179 63 560 245
Increase in cash surrender value of life insurance 245 93 648 443
Gain on sales of securities, net 832 310 2,649 1,013
Gain on sale of loans, and securitized loans, net 22 - 773 84
Other non-interest income 86 69 217 208
------------- ------------- ------------ ------------
Total non-interest income 3,955 1,726 10,626 5,566
------------- ------------- ------------ ------------
NON-INTEREST EXPENSE
Salaries and employee benefits 5,699 4,195 14,524 12,687
Termination of Employee Stock Ownership Plan - - 8,667 -
Occupancy and equipment 1,655 997 4,006 3,030
Marketing and advertising 372 207 732 634
Data processing 518 305 1,323 1,030
Professional services 590 442 1,427 1,226
Foreclosed real estate and repossessed assets, net 241 150 557 404
Merger and conversion expense 828 - 1,791 -
Other non-interest expense 1,697 885 4,170 2,666
------------- ------------- ------------ ------------
Total non-interest expense 11,600 7,181 37,197 21,677
------------- ------------- ------------ ------------
Income from continuing operations
before income taxes 7,205 4,422 9,010 12,908
Provision for income taxes 2,459 1,415 5,621 4,144
------------- ------------- ------------ ------------
INCOME FROM CONTINUING OPERATIONS 4,746 3,007 3,389 8,764
------------- ------------- ------------ ------------
Loss from discontinued operations - - - (653)
Income tax benefit - - - (222)
------------- ------------- ------------ ------------
Net loss from discontinued operations - - - (431)
------------- ------------- ------------ ------------
NET INCOME $ 4,746 $ 3,007 $ 3,389 $ 8,333
============= ============= ============ ============
Earnings per share
Basic $ 0.56 $ 0.57 $ 0.51 $ 1.58
Diluted $ 0.54 $ 0.53 $ 0.48 $ 1.45
Weighted average shares outstanding
Basic 8,456 5,270 6,683 5,284
Diluted 8,856 5,721 7,061 5,735
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
====================================================================================================================================
Unaudited
Quarters Ended
--------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005 2005 2005 2004 2004
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except earnings per share)
INTEREST AND DIVIDEND INCOME
Residential mortgage $ 7,101 $ 4,444 $ 3,059 $ 2,967 $ 2,869
Commercial real estate 6,673 4,977 4,044 3,761 3,630
Commercial business loans 2,884 2,505 2,222 2,216 2,204
Auto loans 2,274 1,991 1,806 1,863 1,811
Other consumer 2,217 1,309 785 712 617
------- ------- ------- ------- -------
Total interest on loans 21,149 15,226 11,916 11,519 11,131
Securities 4,628 4,100 4,110 4,273 4,409
Short-term investments 62 22 11 15 6
------- ------- ------- ------- -------
Total interest and dividend income 25,839 19,348 16,037 15,807 15,546
------- ------- ------- ------- -------
INTEREST EXPENSE
Deposits 5,979 4,318 3,373 3,183 3,097
Borrowings 4,806 3,522 2,637 2,425 2,207
------- ------- ------- ------- -------
Total interest expense 10,785 7,840 6,010 5,608 5,304
------- ------- ------- ------- -------
NET INTEREST INCOME 15,054 11,508 10,027 10,199 10,242
PROVISION FOR LOAN LOSSES 204 300 493 425 365
------- ------- ------- ------- -------
Net interest income after provision for loan losses 14,850 11,208 9,534 9,774 9,877
------- ------- ------- ------- -------
NON-INTEREST INCOME
Customer service fees 1,439 1,033 616 609 580
Wealth management service fees 680 663 670 714 587
Insurance fees 472 175 32 1 24
Loan service fees 179 198 174 129 63
Increase in cash surrender value of life insurance 245 200 203 196 93
Gain on sale of securities, net 832 1,388 429 390 310
Gain on sale of loans, and securitized loans, net 22 162 588 81 -
Other non-interest income 86 97 32 78 69
------- ------- ------- ------- -------
Total non-interest income 3,955 3,916 2,744 2,198 1,726
------- ------- ------- ------- -------
NON-INTEREST EXPENSE
Salaries and benefits 5,699 4,485 4,335 4,195 4,195
Termination of Employee Stock Ownership Plan - 8,667 - - -
Occupancy and equipment 1,655 1,212 1,140 1,055 997
Marketing and advertising 372 200 161 357 207
Data processing 518 454 347 381 305
Professional services 590 363 423 326 442
Foreclosed real estate and other loans, net 241 218 94 118 150
Merger and conversion expense 828 963 - - -
Other non-interest expense 1,697 1,499 1,036 868 885
------- ------- ------- ------- -------
Total non-interest expense 11,600 18,061 7,536 7,300 7,181
------- ------- ------- ------- -------
Income (loss) before income taxes 7,205 (2,937) 4,742 4,672 4,422
Provision for income taxes 2,459 1,671 1,490 1,495 1,415
------- ------- ------- ------- -------
NET INCOME (LOSS) $ 4,746 $ (4,608) $ 3,252 $ 3,177 $ 3,007
======= ======== ======= ======= =======
Earnings (loss) per share
Basic $ 0.56 $ (0.74) $ 0.61 $ 0.60 $ 0.57
Diluted $ 0.54 $ (0.74) $ 0.57 $ 0.55 $ 0.53
Weighted average shares outstanding
Basic 8,456 6,257 5,300 5,281 5,270
Diluted 8,856 6,257 5,691 5,725 5,721
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
====================================================================================================================================
Unaudited
At or For the Quarters Ended
--------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
NON-PERFORMING ASSETS 2005 2005 2005 2004 2004
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
Non-accrual loans:
Residential mortgage $ 393 $ 663 $ 298 $ 327 $ 332
Commercial real estate 130 209 144 147 614
Commercial 876 613 832 523 1,463
Indirect automobile loans 106 78 95 154 297
Other consumer 55 29 1 1 8
------- ------- ------- ------- -------
Total non-accrual loans $ 1,560 $ 1,592 $ 1,370 $ 1,152 $ 2,714
Real estate owned ("REO") - - - - -
Total non-performing assets $ 1,560 $ 1,592 $ 1,370 $ 1,152 $ 2,714
======= ======= ======= ======= =======
Non-performing loans as a percentage of total loans 0.11% 0.11% 0.16% 0.14% 0.33%
Non-performing assets to total assets 0.08% 0.08% 0.11% 0.09% 0.21%
====================================================================================================================================
PROVISION AND ALLOWANCE FOR LOAN LOSSES
====================================================================================================================================
Balance at beginning of period $13,044 $ 9,645 $ 9,337 $ 9,392 $ 9,248
Charge-offs (284) (391) (328) (737) (447)
Recoveries 159 169 143 257 226
------- ------- ------- ------- -------
Net loan charge-offs (125) (222) (185) (480) (221)
Allowance attributed to acquired loans - 3,321 - - -
Provision for loan losses 204 300 493 425 365
------- ------- ------- ------- -------
Balance at end of period $13,123 $13,044 $ 9,645 $ 9,337 $ 9,392
======= ======= ======= ======= =======
Allowance for loan losses as a percentage of
non-performing loans 841% 819% 704% 811% 346%
Allowance for loan losses as a percentage of total loans 0.93% 0.92% 1.13% 1.13% 1.15%
====================================================================================================================================
NET LOAN (CHARGE-OFFS) RECOVERIES
====================================================================================================================================
Residential mortgage $ - $ - $ - $ - $ -
Commercial real estate - - - (137) -
Commercial loans 4 (109) (4) (164) (7)
Consumer loans (primarily automobile loans) (129) (113) (181) (179) (214)
------- ------- ------- ------- -------
Total $ (125) $ (222) $ (185) $ (480) $ (221)
======= ======= ======= ======= =======
Net charge-offs as a percentage of total average loans 0.01% 0.02% 0.02% 0.06% 0.03%
====================================================================================================================================
AVERAGE FICO SCORES OF CONSUMER
AUTOMOBILE LOANS 715 711 708 705 702
====================================================================================================================================
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
====================================================================================================================================
Unaudited
At or For the Quarters Ended
-----------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005 2005 2005 2004 2004
---- ---- ---- ---- ----
PERFORMANCE RATIOS (annualized)
Return (loss) on average assets 0.92% (1.19)% 1.00% 0.97% 0.92%
Return (loss) on average stockholders' equity 7.90 (11.26) 9.94 9.72 9.71
Return (loss) on average tangible stockholders' equity 13.45 (14.56) 10.51 10.18 10.18
Net interest margin (1) 3.31 3.26 3.34 3.37 3.36
Non-interest income to average assets (2) 0.77 1.00 0.84 0.67 0.53
Non-interest expense to average assets (3) 2.25 4.62 2.30 2.22 2.20
Average earning assets to average assets 90.35 92.29 94.44 94.51 95.59
Efficiency ratio (4) 55.32 58.00 59.80 59.54 60.44
CAPITAL RATIOS
Stockholders' equity to total assets 12.08 11.80 9.92 10.06 9.81
Tangible stockholders' equity to tangible assets 7.55 7.25 9.42 9.55 9.41
SHARE DATA
Book value per share $ 28.68 $ 28.45 $ 22.01 $ 22.43 $ 21.87
Tangible book value per share $ 17.03 16.56 20.77 21.19 20.89
Stock price
High 35.20 34.90 37.64 38.01 39.14
Low 31.90 30.97 33.40 35.40 35.01
Close 34.00 33.32 33.75 37.15 36.95
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(1) Net interest margin and efficiency ratio are calculated on a fully-taxable
equivalent basis, using a 35% federal effective tax rate.
(2) Excluding the gain on the sale of securities, the ratios would have been
0.60%, 0.65%, 0.71%, 0.55% and 0.44%, respectively.
(3) Excluding the Employee Stock Ownership Plan termination expense, and
merger and conversion expense, the ratios would have been 2.09% and 2.16%
in the quarters ended September 30, 2005 and June 30, 2005, respectively.
(4) Efficiency ratio is non-interest expense, divided by the total of
fully-taxable net interest income and non-interest income.
For this ratio, non-interest income and expense are adjusted based on the
notes above.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES
Unaudited
Quarters Ended
------------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005 (2) 2005 (2) 2005 2004 2004
------------------------------------------------------------------------------------
(In thousands)
Earning assets
Loans
Residential mortgage $ 561,048 $ 352,776 $ 239,755 $ 234,817 $ 225,198
Commercial real estate 396,212 314,778 276,417 255,901 250,323
Commercial business 165,414 154,405 140,139 153,385 160,129
Auto loans 146,138 134,237 125,038 121,736 118,029
Other consumer 154,209 91,303 58,669 56,150 53,715
------------- ------------- ------------ ------------ ------------
Total loans 1,423,021 1,047,499 840,018 821,989 807,394
Securities (1) 435,853 393,962 396,473 416,854 436,372
Short-term investments 7,028 1,873 1,672 2,628 2,192
------------- ------------- ------------ ------------ ------------
Total earning assets 1,865,902 1,443,334 1,238,163 1,241,471 1,245,958
Other assets 199,349 120,611 72,860 72,061 57,551
------------- ------------- ------------ ------------ ------------
Total assets $ 2,065,251 $ 1,563,945 $ 1,311,023 $ 1,313,532 $ 1,303,509
============= ============= ============ ============ ============
Funding liabilities
Deposits
NOW $ 135,638 $ 112,775 $ 94,809 $ 99,394 $ 98,158
Money Market 241,088 183,273 158,862 168,137 159,046
Savings 240,396 192,250 163,553 167,031 168,358
Certificates of deposit 515,120 384,443 319,682 316,898 326,411
------------- ------------- ------------ ------------ ------------
Total interest bearing deposits 1,132,242 872,741 736,906 751,460 751,973
Borrowings 499,877 387,208 330,448 318,422 318,870
------------- ------------- ------------ ------------ ------------
Total interest bearing liabilities 1,632,119 1,259,949 1,067,354 1,069,882 1,070,843
Non-interest-bearing demand deposits 185,183 129,700 107,835 108,832 105,257
Other liabilities 6,409 9,579 3,781 4,019 3,540
------------- ------------- ------------ ------------ ------------
Total liabilities 1,823,711 1,399,228 1,178,970 1,182,733 1,179,640
Stockholders' Equity 241,540 164,717 132,053 130,799 123,869
------------- ------------- ------------ ------------ ------------
Total liabilities and equity $ 2,065,251 $ 1,563,945 $ 1,311,023 $ 1,313,532 $ 1,303,509
============= ============= ============ ============ ============
Supplementary Data
Total Core Deposits $ 802,305 $ 617,998 $ 525,059 $ 543,394 $ 530,819
Total Deposits 1,317,425 1,002,441 844,741 860,292 857,230
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(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. Average balances for the third quarter of 2005 include three months'
balances related to the acquisition of Woronoco Bancorp, Inc.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
Unaudited
Quarters Ended
-----------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2005 2005 2005 2004 2004
-----------------------------------------------------------------------------
Earning assets
Loans
Residential mortgage 5.06% 5.04% 5.10% 5.05% 5.10%
Commercial real estate 6.68 6.34 5.93 5.88 5.80
Commercial 6.92 6.51 6.43 5.79 5.51
Auto loans 6.17 5.95 5.86 6.12 6.14
Other consumer 5.70 5.75 5.43 5.07 4.59
Total loans 5.91 5.83 5.73 5.61 5.51
Securities (1) 4.69 4.40 4.41 4.36 4.30
Short-term investments 3.50 2.91 2.67 2.28 1.09
Total earning assets 5.60 5.44 5.31 5.23 5.10
Funding liabilities
Deposits
NOW 0.42 0.18 0.18 0.09 0.08
Money Market 2.07 1.98 1.62 1.32 1.26
Savings 0.86 1.03 1.00 0.80 0.77
Certificates of deposit 3.12 2.99 2.91 2.84 2.77
Total interest bearing deposits 2.10 1.98 1.86 1.69 1.65
Borrowings 3.81 3.65 3.24 3.05 2.77
Total interest bearing liabilities 2.62 2.50 2.28 2.10 1.98
Net interest spread (FTE) 2.98 2.94 3.03 3.13 3.12
Net interest margin (FTE) 3.31 3.26 3.34 3.37 3.36
Note: Cost of funds (2) 2.35 2.24 2.03 1.89 1.79
- --------------------------------------------------
(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.
(2) Cost of funds includes all deposits and borrowings.
===========================
Contact:
Berkshire Hills Bancorp, Inc.
Wayne F. Patenaude, 413-236-3195