1
BERKSHIRE HILLS BANCORP TO ACQUIRE FIVE INSURANCE AGENCIES
ANNOUNCES PLANNED STOCK OFFERING
THIRD QUARTER NET INCOME PER SHARE UP 6% TO $.57 BEFORE
INVESTMENT PORTFOLIO REPOSITIONING AND
LOAN LOSS ALLOWANCE ADJUSTMENT
DIVIDEND DECLARED
PITTSFIELD, MA - October 24, 2006 - Berkshire Hills Bancorp, Inc. (the
"Company") (NASDAQ: BHLB), the holding company for Berkshire Bank (the "Bank"),
today announced the following:
- Third quarter 2006 net income measured $5.0 million ($.57 per diluted
share) before charges for a loan loss allowance adjustment and
investment portfolio repositioning. This represented a 6% increase over
net income of $4.7 million ($.54 per diluted share) in the same quarter
of 2005. Including the above charges, the Company recorded a third
quarter 2006 net loss of $2.1 million ($.25 per diluted share). Nine
month 2006 net income before the same charges was $14.3 million ($1.63
per diluted share), which was 322% higher than nine month 2005 net
income of $3.4 million ($.48 per diluted share). Including these
charges, nine month 2006 net income was $7.2 million ($.82 per diluted
share), which was 111% higher than the same period of 2005.
- The Company plans to acquire five Western Massachusetts insurance
agencies: Reynolds, Barnes & Hebb and McCormick, Smith & Curry
Insurance Agency, both of Pittsfield; Minkler Insurance Agency, of
Stockbridge; H.S. Andrews Insurance Agency, of Great Barrington; and
MassOne Insurance Agency, of Greenfield. The Company plans to complete
the acquisitions within the next several weeks.
- The Bank increased its loan loss allowance from $13.5 million at June
30, 2006 to $19.2 million at September 30, 2006. The ratio of the
allowance to total loans increased from 0.87% to 1.18% during this most
recent quarter. The allowance was increased based on higher general
pool reserves, reflecting management's belief that loan losses may
increase above the negligible levels of recent years due to signs in
the third quarter of an economic slowing. The current ratio is similar
to the 1.16% industry average as of June 30, 2006 for all FDIC insured
institutions in the same size range. The Bank's current levels of
charge-offs, delinquencies, and nonperforming assets remain strong and
substantially lower than industry averages.
- The securities portfolio was repositioned through the sale of $167
million of available for sale investment securities. Approximately $100
million of proceeds were used to deleverage by paying off short term
borrowings. The remaining proceeds will be reinvested in higher
yielding securities. The sale resulted in an
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after-tax charge to third quarter earnings of $3.5 million. The loss on
these securities was already recorded in stockholders' equity, so this
transaction had no negative impact on stockholders' equity. The Company
expects that this repositioning will benefit net interest income by
approximately $1.8 million in the next twelve months.
- The Company announced that it currently plans to offer approximately
$30 million of common stock in a follow-on stock offering under the
terms of the universal securities shelf registration that it filed with
the Securities and Exchange Commission in September. The Company
expects to complete this offering in the fourth quarter.
Michael P. Daly, President and Chief Executive Officer, stated, "Third quarter
net income, before the allowance adjustment and repositioning charges, increased
6% compared to last year's quarter. We continued to produce strong organic
growth in the most recent quarter, with 20% annualized loan growth, 7%
annualized deposit growth, and 26% annualized growth in fee income compared to
the linked quarter. We produced strong earnings growth while also absorbing
expenses equating to $0.04 per share after tax related to recently opened
branches in New York."
Mr. Daly continued, "We are announcing several steps that we are taking to
expand and reposition our company. We are very excited to announce the insurance
agency acquisitions, which when combined with our Berkshire Insurance Group,
will provide us with a leading insurance market share in our Massachusetts
markets. They will provide a foundation for the expansion of this important
business line in our growing multi-state company, and for greater cross-sales of
all products. These acquisitions are expected to be 5% accretive to earnings per
share in 2007, with an attractive long-term return on investment."
Mr. Daly added, "We are also announcing two important steps we have taken to
strengthen our balance sheet for the current and anticipated environments that
we face. While current asset quality remains strong, we have increased our loan
loss allowance after a review of economic and real estate market factors and
management's resultant conclusion that loan losses may increase above current
negligible levels. Additionally, our investment repositioning improves our
interest rate sensitivity and balance sheet flexibility, and is expected to
benefit earnings per share by approximately $.12 over the next twelve months."
Mr. Daly concluded, "We currently plan to offer approximately $30 million of
common stock in a follow-on offering, increasing our outstanding common shares
by approximately 10%. Proceeds from the common stock offering will be available
for general corporate purposes, including potential financing for future
acquisitions. We want to be in an opportunistic position for situations that may
develop to make strategic acquisitions that provide attractive returns. The
initial earnings dilution from the equity issuance is expected to be less than
the annualized accretion from the insurance agency acquisitions, with a net
positive impact to 2007 EPS.
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DIVIDEND DECLARATION
- --------------------
The Board of Directors has declared a quarterly cash dividend of $0.14 per
share, payable on November 20, 2006, to stockholders of record at the close of
business on November 6, 2006.
RECONCILIATION OF NET INCOME
- ----------------------------
A reconciliation of net income is shown below. An additional reconciliation of
core income is presented in an exhibit to the financial statements. In the table
below, diluted shares totaling 8.805 million shares were used in calculating net
income before the listed charges. The gross loan loss adjustment amount before
taxes is $5.5 million, representing the general pool reserve adjustments.
Third Quarter, 2006 Nine Months, 2006
-------------------------- ---------------------------
Per Per
$000 Share $000 Share
----------- ---------- ----------- -----------
Net Income Before Charges Below $ 5,034 $ 0.57 $ 14,315 $ 1.63
Securities Repositioning, after tax (3,516) (0.40) (3,516) (0.40)
Loan Loss Allowance Adjustment, after tax (3,638) (0.42) (3,638) (0.41)
----------- ---------- ----------- -----------
Net Income, GAAP $ (2,120) $ (0.25) $ 7,161 $ 0.82
=========== ========== =========== ===========
INSURANCE AGENCY ACQUISITIONS
- -----------------------------
Commenting further on the insurance agency acquisitions, Mr. Daly said, "Each
insurance agency will retain its name, identity, management and personnel, each
operating as a division of Berkshire Insurance Group. Their clients will
continue to be served by the same insurance professionals to whom they currently
entrust their insurance business. The agencies will benefit from efficiencies of
scale that will be implemented and their clients will benefit from ease of
availability to the financial products and services of Berkshire Bank. The
agencies are affiliated with Alliance Berkshire, a consortium of insurance
agencies in Western Massachusetts, which will include Berkshire Insurance Group
once these acquisitions are completed."
Mr. Daly also stated, "The entire management team, all other licensed agents,
customer service representatives and other employees are expected to remain with
our organization. Ross Gorman, President of MassOne, will be President and Chief
Executive Officer of our Berkshire Insurance Group. Other members of senior
management are Bob Farrell of Reynolds Barnes & Hebb; Bob Curry of McCormick,
Smith & Curry and Tim Minkler of Minkler Insurance. Other key executives
operating in various capacities are Ed Burniske, George Greule, Steve Cronin,
Chris Minkler, Tom Andrews and Paul Lesukoski."
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Mr. Gorman responded, "We are very enthusiastic about the opportunities for our
clients presented by our combination with Berkshire Bank. Our insurance agencies
are among the leading agencies in Western Massachusetts. Choosing to affiliate
with Berkshire Bank was relatively easy for us, as we were impressed by Mike
Daly's leadership and Berkshire Bank's culture and its approach to its
customers. We share the same values in our commitment to our customers, our
employees and the communities in which we do business. Berkshire Bank is a
well-managed and solid financial institution, and we look forward to
contributing towards its goals as it transitions into a major regional financial
institution in its multi-state markets. We believe that our clients and
employees will benefit greatly from this combination."
Mr. Daly concluded, "We feel that the timing of this acquisition is excellent.
It provides new non-interest revenues as an offset to margin compression. Our
new Retail Banking Executive Vice President, John Howard, will help us integrate
insurance products into our relationship offerings. Insurance products will help
us gain market share in all markets, particularly in our de novo branching in
New York. This is key to our advantage as the only locally headquartered
regional bank in our markets."
The expanded Berkshire Insurance Group will be staffed by 100 employees,
currently operating in ten locations, with approximately $70 million in annual
premium volume, and expected annual revenues of over $12 million in 2007.
Berkshire Insurance Group offers complete lines of commercial and personal
property and casualty insurance and group and individual life, disability, and
health insurance. The group's insurance revenues are expected to boost
Berkshire's core non-interest income to approximately 28% of total core revenues
in 2007. The Company expects to complete these transactions within several weeks
using available cash and short term financing.
LOAN LOSS ALLOWANCE ADJUSTMENT
- ------------------------------
The loan loss allowance was increased to $19.2 million at September 30, 2006,
compared to $13.5 million at June 30, 2006. During the most recent quarter, the
Company determined that the credit risks in its environment had shifted from the
unusually benign conditions which have predominated in recent years. Signals of
an economic slowdown include signs of softening in real estate markets and the
impact of higher interest rates and prices, reflected in the completion of the
Federal Reserve tightening which had included 17 consecutive rate hikes. The
Company's loan losses have been significantly below FDIC bank averages, however
losses may not remain negligible. The Company's commercial loan charge-offs have
remained below 0.10% of commercial loans annually since 2002, and no commercial
loan charge-offs were recorded in the first nine months of 2006. The Bank
increased the allowance as a result of third quarter perceptions of economic
loss events, and the related review of pool reserves on major loan categories,
considering historic bank and FDIC loss data over historical periods believed by
management to be relevant to the current economic environment. The total loan
loss provision recorded in the third quarter was $6.2 million in order to
increase the allowance. The Company determined that approximately $0.7 million
of the provision
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was viewed as core (related principally to loan growth) and the remaining $5.5
million provision was viewed as non-core related to the pool reserve adjustment
at quarter-end.
INVESTMENT PORTFOLIO REPOSITIONING
- ----------------------------------
The Company made a decision at quarter-end to sell intermediate term mortgage
backed securities valued at $167 million. Of this amount, securities valued at
$95 million were sold with settlement scheduled for October, and the remainder
were sold and settled in October. Approximately $100 million of sale proceeds
are being used to deleverage by paying off short term borrowings. The remaining
proceeds are expected to be invested in higher yielding securities in the fourth
quarter. A loss on this repositioning was recorded in the third quarter in the
amount of $5.3 million. This charge had no impact on stockholders' equity
because these losses were already recorded to accumulated other comprehensive
income. This loss was based on securities values as of quarter-end. An
additional loss of approximately $300 thousand is expected to be incurred in the
fourth quarter based on final sales prices in October.
The $100 million deleveraging of the balance sheet reduces the liability
sensitivity of the balance sheet, reduces higher cost overnight balances, and
improves liquidity. The reinvestment in new securities will improve balance
sheet flexibility and provide higher interest income. The book yield on the
securities sold was about 4.1%, and the current cost of overnight borrowings is
about 5.25%, producing an improvement in net interest income as a result of this
repositioning. Management estimates that the total repositioning benefit to net
interest income in the next twelve months will approximate $1.8 million, or $.12
per diluted share after tax. The benefit to the net interest margin is projected
to be approximately 20-25 basis points over this period.
FINANCIAL CONDITION
- -------------------
Total assets were $2.2 billion at September 30, 2006. Total loans increased at a
20% annualized rate in the third quarter and for the year-to-date, totaling
$1.63 billion at quarter-end. While all major loan categories increased at a
double digit annualized rate during the quarter, growth was strongest in total
commercial loans, which grew at a 32% annualized rate in the third quarter and
at a 33% annualized rate for the year-to-date. Due primarily to the
deleveraging, total investment securities excluding those held for sale
decreased to $220 million at September 30, 2006, compared to $396 million at the
prior quarter-end. Additionally, securities sold in the repositioning which were
not settled totaled $95 million at quarter-end, and $72 million of securities
were designated as held for sale and were sold during October.
Asset quality remained favorable as of September 30, 2006. Annualized third
quarter charge-offs were 0.04% of average loans. Quarter-end delinquencies
(30-90 days) decreased to 0.29% of total loans at quarter-end. Total
non-accruing assets measured 0.24% of total assets, and there was no other real
estate owned at quarter-end. Nonaccruing assets increased during the third
quarter due primarily to three commercial relationships which were progressing
towards resolution at quarter-end.
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Total deposits, excluding brokered CDs, increased at an 8% annualized rate in
the third quarter to $1.44 billion at September 30, 2006, with annualized growth
measuring 13% for the year-to-date. The $117 million increase in deposits for
the year-to-date included $61 million in New York deposits in new branches, with
total New York deposits increasing from $41 million to $102 million over this
time. Annualized year-to-date deposit growth in the Massachusetts branches was
7%, excluding run-off of brokered time deposits. In addition to the six branches
that the Bank is operating in New York, the Bank has received regulatory
approvals for four new branches which are expected to open in the next two
quarters.
Total borrowings of $441 million at September 30, 2006 included $84 million of
overnight Federal Home Loan Bank of Boston (FHLBB) advances which were paid off
in October from securities sales proceeds. The ratio of stockholders' equity to
assets measured 11.6% at quarter-end, and the ratio of tangible equity to assets
increased to 7.4% from 7.3% during the quarter.
RESULTS OF OPERATIONS
- ---------------------
Most major categories of income and expense increased in 2006 compared to 2005,
primarily due to the acquisition of Woronoco Bancorp in June 2005, plus the
benefit of organic growth. Net income in 2005 was also affected by non-core
charges of $8.7 million related to the termination of the Employee Stock
Ownership Plan, and merger and systems conversion expenses related to the
Woronoco acquisition.
Income in the most recent quarter included a catch-up dividend from the FHLBB
totaling $420 thousand ($0.03 per diluted share after-tax) which made up for the
interruption in the dividend in the prior quarter. Adjusting for the delay in
the second quarter FHLBB dividend, third quarter core earnings per diluted share
increased at an 8% annualized rate to $.51, compared to $.50 in the linked
quarter. Third quarter GAAP results were a loss of $.25 per diluted share,
compared to net income of $.51 per share in the linked quarter.
Adjusting for the delayed FHLBB dividend, total third quarter 2006 core revenues
(net interest income and core non-interest income) increased at a 5% annualized
rate compared to the linked quarter, while core non-interest expense increased
at a 4% annualized rate, resulting in positive core operating leverage during
the quarter. GAAP operating leverage decreased due to the net securities losses.
Net interest income increased by $1.14 million in the third quarter of 2006,
compared to the linked quarter. This increase included $420 thousand
attributable to the FHLBB dividend which was delayed in the second quarter.
Adjusting for this amount, net interest income increased by $725 thousand (20%
annualized), primarily due to the 27% annualized increase in average loans over
this period. The net interest margin increased to 3.22% from 3.16%, but
adjusting for the FHLBB dividend, the margin decreased to 3.14% from 3.25%. This
decrease reflected continuing pressures on deposit pricing and
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movement of funds to higher paying deposit accounts. The inverted yield curve
has also contributed to margin pressures.
Third quarter 2006 non-interest income was ($1.8) million due to $5.1 million in
net securities losses. Securities losses included a $5.3 million loss due to the
investment repositioning, which was partially offset by $247 thousand of equity
gains recorded during the quarter. Linked quarter fee income increased at a 26%
annualized rate due to growth in wealth management, insurance, and loan fees
during the quarter.
The total loan loss provision of $6.2 million in the third quarter included
approximately $0.7 million related principally to growth during the quarter and
$5.5 million related to pool reserve changes in conjunction with the loan loss
allowance adjustment previously discussed. The $0.7 million related to quarterly
activity provided approximately 5X coverage of net loan charge-offs during the
quarter.
Third quarter 2006 non-interest expense decreased by $285 thousand compared to
the linked quarter. Core non-interest expense increased by $100 thousand (4%
annualized) compared to the linked quarter, primarily due to higher compensation
expense related to current business growth. Third quarter expenses included
expenses related to new branches totaling $580 thousand ($.04 per share after
tax).
The effective tax rate of the tax benefit recorded on the third quarter pretax
loss was approximately 39% due to the impact of the loan loss allowance
adjustment in the Bank, which has a higher tax rate than the consolidated
entities. The effective tax rate on third quarter core net income was estimated
to be 31.2%, compared to 31.1% in the linked quarter. Results for the second and
third quarters of 2006 also included income from discontinued operations from
the sale of the Company's data processing subsidiary in June, 2004. The Company
does not expect to record significant additional income from these discontinued
operations.
BACKGROUND
- ----------
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 the largest banking institution based in Western
Massachusetts. The Bank is headquartered in Pittsfield, Massachusetts with
branches serving communities throughout Western Massachusetts and Northeastern
New York. The Bank is transitioning into a regional bank and is positioning
itself as the financial institution of choice in its retail and commercial
markets, delivering exceptional customer service and a broad array of
competitively priced deposit, loan, insurance, wealth management and trust
services, and investment products. For more information on Berkshire Hills
Bancorp, Inc. or Berkshire Bank, visit www.berkshirebank.com or call
---------------------
800-773-5601.
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ADDITIONAL INFORMATION ABOUT PLANNED STOCK OFFERING
- ---------------------------------------------------
It is planned that the shares will be offered in an underwritten offering
managed by Sandler O'Neill & Partners L.P. This announcement shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state. To obtain a copy of the written
prospectus, when available, please contact Sandler O'Neill & Partners, L.P. at
919 Third Avenue, 6th Floor, New York, New York 10022.
FORWARD-LOOKING STATEMENTS
- --------------------------
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. 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; the quality or composition of the loan and investment
portfolios; and the achievement of anticipated future earnings benefits from
recent acquisitions. In addition, the following factors, among others, could
cause actual results to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements, including statements
relating to the Company's anticipated insurance acquisitions: (1) The insurance
agencies may not be acquired successfully, or such acquisitions may take longer
to accomplish than expected; (2) the cost savings from the acquisitions may not
be fully realized or take longer than expected; (3) operating costs, customer
loss and business disruption following the acquisitions, including adverse
effects on relationships with employees, may be greater than expected; (4)
adverse governmental or regulatory policies may be enacted; (5) the risks
associated with continued diversification of assets and adverse changes to
credit quality; and (6) difficulties associated with achieving expected future
financial results. 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 and undue reliance should
not be placed on such statements. The Company assumes no obligation to update
any forward-looking statements.
NON-GAAP FINANCIAL MEASURES
- ---------------------------
This press release contains certain non-GAAP financial measures in addition to
results presented in accordance with Generally Accepted Accounting Principles
("GAAP"). The Company's management uses certain non-GAAP measures for
operational and investment decisions and believes that these measures are among
several useful measures
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for understanding its operating results, performance trends, and financial
condition. These measures should not be construed as a substitute for GAAP
measures; they should be read and used in conjunction with the Company's GAAP
financial information. A reconciliation of non-GAAP financial measures to GAAP
measures is included in the accompanying financial tables and elsewhere in this
release.
For the most recent quarter, the Company has identified charges related to the
balance sheet repositioning and to the loan loss allowance adjustment as
non-core in the computation of core earnings. The company views these charges as
infrequent and not specifically related to the Company's operating activities
during the current period. The Company primarily utilizes the non-GAAP measure
of core earnings in evaluating operating trends during the current fiscal
period, and compared to the prior fiscal period. The core earnings measure is
not intended to substitute for GAAP net income, but is an additional measure
that the Company uses and believes is useful for understanding its operating
results.
CONFERENCE CALL
- ---------------
The Company will conduct a post-earnings conference call on Wednesday, October
25, 2006 at 8:30 A.M. Eastern Time. Information about the conference call
follows:
Dial-in: 1-877-407-8035
Replay Dial-in: 1-877-660-6853
Replay Access Codes: Account #286; Conference ID # 215330
(Both are needed to access the Replay)
Replay Dates: October 25, 2006 at 5:00 P.M. (ET) through
November 4, 2006 at 11:59 P.M. (ET)
All interested parties are welcome to access the conference call and are
requested to call in a few minutes prior to 8:30 A.M. (ET) to register for the
event.
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BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
- -----------------------------------------------------------------------------------------------------------------------
September 30, June 30, December 31,
2006 2006 2005
- -----------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
ASSETS
Cash and due from banks $ 25,371 $ 28,099 $ 30,977
Short-term investments 199 956 110
----------- ----------- -----------
Total cash and cash equivalents 25,570 29,055 31,087
Due from broker 95,022 1,384 1,425
Securities held for sale, at fair value 72,013 - -
Securities available for sale, at fair value 179,846 353,322 390,876
Securities held to maturity, at amortized cost 39,957 42,524 29,908
Total loans 1,629,083 1,551,112 1,416,449
Less: Allowance for loan losses (19,153) (13,537) (13,001)
----------- ----------- -----------
Net loans 1,609,930 1,537,575 1,403,448
Premises and equipment, net 27,944 28,005 26,236
Accrued interest receivable 9,395 8,361 8,508
Goodwill 88,594 88,544 88,092
Other intangible assets 10,071 10,556 11,524
Bank owned life insurance 19,602 19,402 19,002
Cash surrender value - other life insurance 10,445 10,418 11,503
Other assets 16,708 18,843 13,944
----------- ----------- -----------
Total assets $ 2,205,097 $ 2,147,989 $ 2,035,553
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,488,101 $ 1,463,545 $ 1,371,218
Borrowings 441,216 412,641 397,453
Junior subordinated debentures 15,464 15,464 15,464
Other liabilities 5,615 8,089 5,352
----------- ----------- -----------
Total liabilities 1,950,396 1,899,739 1,789,487
Total stockholders' equity 254,701 248,250 246,066
----------- ----------- -----------
Total liabilities and stockholders' equity $ 2,205,097 $ 2,147,989 $ 2,035,553
=========== =========== ===========
F-1
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BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
- ----------------------------------------------------------------------------------------------------------------------------
LOAN ANALYSIS
September 30, 2006 June 30, 2006 December 31, 2005
-------------------- ------------------- --------------------
Percent Percent Percent
Balance of Total Balance of Total Balance of Total
-------------------- ------------------- --------------------
(DOLLARS IN MILLIONS)
Residential mortgages
1 - 4 Family $ 553 34 % $ 535 34 % $ 514 37 %
Construction 32 2 34 2 35 2
------- ----- ------- ----- ------- -----
Total residential mortgages 585 36 569 36 549 39
Commercial mortgages
Construction 116 7 87 6 59 4
Single and multi-family 67 4 66 4 69 5
Other commercial real estate 334 21 322 21 283 20
------- ----- ------- ----- ------- -----
Total commercial mortgages 517 32 475 31 411 29
Commercial business loans 194 12 184 12 159 11
Consumer loans
Auto 181 11 168 11 148 10
Home equity and other 152 9 155 10 149 11
------- ----- ------- ----- ------- -----
Total consumer loans 333 20 323 21 297 21
Total loans $ 1,629 100 % $ 1,551 100 % $ 1,416 100 %
======= ===== ======= ===== ======= =====
DEPOSIT ANALYSIS
September 30, 2006 June 30, 2006 December 31, 2005
-------------------- ------------------- --------------------
Percent Percent Percent
Balance of Total Balance of Total Balance of Total
-------------------- ------------------- --------------------
(DOLLARS IN MILLIONS)
Demand $ 178 12 % $ 188 13 % $ 180 13 %
NOW 139 9 137 9 149 11
Money market 282 19 274 19 245 18
Savings 209 14 207 14 222 16
------- ----- ------- ----- ------- -----
Total non-maturity deposits 808 54 806 55 796 58
Time less than 100 thousand 364 24 355 24 308 23
Time 100 thousand or more 269 18 253 18 210 15
Brokered time 47 4 50 3 57 4
------- ----- ------- ----- ------- -----
Total time deposits 680 46 658 45 575 42
Total deposits $ 1,488 100 % $ 1,464 100 % $ 1,371 100 %
======= ===== ======= ===== ======= =====
F-2
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BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
- ------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
------------------------ ------------------------
September 30, September 30,
2006 2005 2006 2005
------------------------ ------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INTEREST AND DIVIDEND INCOME
Loans $ 26,388 $ 21,149 $ 72,761 $ 48,282
Securities 4,985 4,628 13,862 12,839
Short-term investments 15 62 47 98
-------- -------- -------- --------
Total interest and dividend income 31,388 25,839 86,670 61,219
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 10,766 5,979 29,365 13,689
Borrowings 5,019 4,806 12,636 10,951
-------- -------- -------- --------
Total interest expense 15,785 10,785 42,001 24,640
-------- -------- -------- --------
NET INTEREST INCOME 15,603 15,054 44,669 36,579
PROVISION FOR LOAN LOSSES 6,185 204 7,075 998
-------- -------- -------- --------
Net interest income after provision for loan losses 9,418 14,850 37,594 35,581
-------- -------- -------- --------
NON-INTEREST INCOME
Deposit fees 1,334 1,439 4,003 3,087
Wealth management fees 882 680 2,410 2,013
Insurance fees 623 472 2,112 679
Loan fees 209 179 560 560
Increase in cash surrender value of life insurance 227 245 767 648
(Loss) gain on sale of securities, net (5,080) 832 (4,054) 2,649
Gain on sale of loans and securitized loans, net - 22 - 773
Other 21 86 419 217
-------- -------- -------- --------
Total non-interest income (1,784) 3,955 6,217 10,626
-------- -------- -------- --------
NON-INTEREST EXPENSE
Salaries and benefits 6,001 5,699 17,412 14,524
Occupancy and equipment 1,885 1,655 5,638 4,006
Data processing and telecommunications 853 736 2,550 1,718
Professional services 376 590 1,311 1,376
Marketing and advertising 403 372 996 732
Foreclosed real estate and other loans, net 58 241 195 557
Amortization of intangible assets 478 481 1,434 667
Other recurring non-interest expense 1,299 998 4,295 3,159
Termination of Employee Stock Ownership Plan - - - 8,667
Other non-recurring expense - 828 385 1,791
-------- -------- -------- --------
Total non-interest expense 11,353 11,600 34,216 37,197
-------- -------- -------- --------
(Loss) income from continuing operations before income taxes (3,719) 7,205 9,595 9,010
Income tax (benefit) expense (1,466) 2,459 2,788 5,621
-------- -------- -------- --------
Net (loss) income from continuing operations (2,253) 4,746 6,807 3,389
======== ======== ======== ========
Income from discontinued operations before income taxes 217 - 576 -
Income tax expense 84 - 222 -
-------- -------- -------- --------
Net income from discontinued operations 133 - 354 -
======== ======== ======== ========
NET (LOSS) INCOME $ (2,120) $ 4,746 $ 7,161 $ 3,389
======== ======== ======== ========
(Loss) earnings per share
Basic $ (0.25) $ 0.56 $ 0.84 $ 0.51
Diluted $ (0.25) $ 0.54 $ 0.82 $ 0.48
Average shares outstanding
Basic 8,557 8,456 8,516 6,683
Diluted 8,557 8,856 8,776 7,061
F-3
13
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
- ------------------------------------------------------------------------------------------------------------------------------------
Quarters Ended
--------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2006 2006 2006 2005 2005
--------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Residential mortgages $ 7,541 $ 7,290 $ 7,055 $ 7,142 $ 7,101
Commercial mortgages 9,226 8,218 7,625 7,001 6,673
Commercial business loans 3,889 3,250 2,815 2,865 2,884
Consumer loans 5,732 5,259 4,861 4,812 4,491
---------- --------- -------- --------- -----------
Total interest on loans 26,388 24,017 22,356 21,820 21,149
Securities 4,985 4,180 4,697 4,679 4,628
Short-term investments 15 15 17 13 62
---------- --------- -------- --------- -----------
Total interest and dividend income 31,388 28,212 27,070 26,512 25,839
---------- --------- -------- --------- -----------
INTEREST EXPENSE
Deposits 10,766 9,843 8,756 7,359 5,979
Borrowings 5,019 3,911 3,706 4,116 4,806
---------- --------- -------- --------- -----------
Total interest expense 15,785 13,754 12,462 11,475 10,785
---------- --------- -------- --------- -----------
NET INTEREST INCOME 15,603 14,458 14,608 15,037 15,054
PROVISION FOR LOAN LOSSES 6,185 600 290 315 204
---------- --------- -------- --------- -----------
Net interest income after provision for loan losses 9,418 13,858 14,318 14,722 14,850
---------- --------- -------- --------- -----------
NON-INTEREST INCOME
Deposit fees 1,334 1,383 1,286 1,452 1,439
Wealth management fees 882 772 756 729 680
Insurance fees 623 581 908 664 472
Loan fees 209 125 226 189 179
Increase in cash surrender value of life insurance 227 247 293 244 245
(Loss) gain on sale of securities, net (5,080) 529 497 882 832
Gain on sale of loans and securitized loans, net - - - - 22
Other 21 273 125 137 86
---------- --------- -------- --------- -----------
Total non-interest income (1,784) 3,910 4,091 4,297 3,955
---------- --------- -------- --------- -----------
NON-INTEREST EXPENSE
Salaries and benefits 6,001 5,758 5,653 5,758 5,699
Occupancy and equipment 1,885 1,822 1,931 1,799 1,655
Data processing and telecommunications 853 813 884 875 736
Professional services 376 432 503 471 590
Marketing and advertising 403 350 243 355 372
Foreclosed real estate and other loans, net 58 105 32 187 241
Amortization of intangible assets 478 478 478 481 481
Other recurring non-interest expense 1,299 1,495 1,501 1,354 998
Termination of Employee Stock Ownership Plan - - - 168 -
Other non-recurring expense - 385 - 352 828
---------- --------- -------- --------- -----------
Total non-interest expense 11,353 11,638 11,225 11,800 11,600
---------- --------- -------- --------- -----------
(Loss) income from continuing operations before income taxes (3,719) 6,130 7,184 7,219 7,205
Income tax (benefit) expense (1,466) 1,888 2,366 2,381 2,459
---------- --------- -------- --------- -----------
Net (loss) income from continuing operations (2,253) 4,242 4,818 4,838 4,746
========== ========= ======== ========= ===========
Income from discontinued operations before income taxes 217 359 - - -
Income tax expense 84 138 - - -
---------- --------- -------- --------- -----------
Net income from discontinued operations 133 221 - - -
========== ========= ======== ========= ===========
NET (LOSS) INCOME $ (2,120) $ 4,463 $ 4,818 $ 4,838 $ 4,746
========== ========= ======== ========= ===========
(Loss) earnings per share
Basic $ (0.25) $ 0.52 $ 0.57 $ 0.57 $ 0.56
Diluted $ (0.25) $ 0.51 $ 0.55 $ 0.55 $ 0.54
Average shares outstanding
Basic 8,557 8,512 8,476 8,420 8,456
Diluted 8,557 8,760 8,755 8,813 8,856
Dividends per share $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14
F-4
14
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY ANALYSIS
- --------------------------------------------------------------------------------------------------------------------------
At or for the Quarters Ended
----------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
----------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
NON-PERFORMING ASSETS
Nonaccruing loans:
Residential mortgages $ 238 $ 234 $ 289 $ 360 $ 393
Commercial mortgages 2,427 - - 127 130
Commercial business loans 2,445 405 480 553 876
Consumer loans 122 133 139 146 161
-------- -------- -------- -------- ---------
Total nonaccruing loans $ 5,232 $ 772 $ 908 $ 1,186 $ 1,560
Real estate owned - 105 - - -
-------- -------- -------- -------- ---------
Total nonperforming assets $ 5,232 $ 877 $ 908 $ 1,186 $ 1,560
======== ======== ======== ======== =========
Total nonperforming loans/total loans 0.32% 0.05% 0.06% 0.08% 0.11%
Total nonperforming assets/total assets 0.24% 0.04% 0.04% 0.06% 0.08%
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $ 13,537 $ 13,090 $ 13,001 $ 13,123 $ 13,044
Charged-off loans (327) (364) (331) (538) (284)
Recoveries on charged-off loans 184 211 130 101 159
-------- -------- -------- -------- ---------
Net loans charged-off (143) (153) (201) (437) (125)
Transfer of commitment reserve (425) - - - -
Provision for loan losses 6,185 600 290 315 204
-------- -------- -------- -------- ---------
Balance at end of period $ 19,154 $ 13,537 $ 13,090 $ 13,001 $ 13,123
======== ======== ======== ======== =========
Allowance for loan losses/nonperforming loans 366% 1753% 1442% 1096% 841%
Allowance for loan losses/total loans 1.18% 0.87% 0.90% 0.92% 0.93%
NET LOAN (CHARGE-OFFS) RECOVERIES
Residential mortgages $ - $ (27) $ - $ - $ -
Commercial mortgages - - - - -
Commercial business loans (6) 5 3 (268) 4
Consumer loans (137) (131) (204) (169) (129)
-------- -------- -------- -------- ---------
Total net $ (143) $ (153) $ (201) $ (437) $ (125)
======== ======== ======== ======== =========
Net charge-offs (annualized)/average loans 0.04% 0.04% 0.06% 0.12% 0.04%
AVERAGE FICO SCORES OF CONSUMER
AUTOMOBILE LOANS 724 721 719 716 715
F-5
15
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
At or for the Quarters Ended
-----------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
-----------------------------------------------------------------------
PER SHARE DATA
Core earnings, diluted $ 0.54 $ 0.47 $ 0.51 $ 0.52 $ 0.54
Net (loss) earnings, diluted (0.25) 0.51 0.55 0.55 0.54
Tangible book value 17.96 17.30 17.26 17.15 17.04
Total book value 29.31 28.79 28.79 28.81 28.68
Market price at period end 35.59 35.48 34.94 33.50 34.00
PERFORMANCE RATIOS
Core return on tangible assets 0.97 % 0.89 % 0.98 % 1.02 % 1.04 %
(Loss) return on total assets (0.37) 0.85 0.94 0.96 0.92
Core return on tangible equity 12.68 11.41 12.63 13.49 14.47
(Loss) return on total equity (3.15) 7.00 7.64 7.89 7.90
Net interest margin, fully taxable equivalent 3.22 3.16 3.27 3.36 3.31
Core tangible non-interest income to assets 0.63 0.68 0.74 0.71 0.64
Non-interest income to assets (0.33) 0.75 0.80 0.85 0.77
Core tangible non-interest expense to assets 2.09 2.17 2.21 2.24 2.10
Non-interest expense to assets 2.08 2.23 2.20 2.32 2.25
Efficiency ratio 55.92 58.73 57.48 57.00 55.17
ASSET QUALITY RATIOS
Net charge-offs (annualized)/average loans 0.04 % 0.04 % 0.06 % 0.12 % 0.04 %
Non-performing assets/total assets 0.24 0.04 0.04 0.06 0.08
Loan loss allowance/total loans 1.18 0.87 0.90 0.92 0.93
Loan loss allowance/nonperforming loans 3.66 x 17.53 x 14.42 x 10.96 x 8.41 x
CAPITAL RATIOS
Stockholders' equity to total assets 11.55 % 11.56 % 12.04 % 12.09 % 12.08 %
Tangible stockholders' equity to tangible assets 7.41 7.28 7.59 7.56 7.55
ANNUALIZED YEAR-TO-DATE GROWTH
Total loans 20 % 19 % 9 % 71 % 94 %
Total deposits 11 14 23 62 79
FINANCIAL DATA (IN MILLIONS)
Total assets $ 2,205 $ 2,148 $ 2,056 $ 2,036 $ 2,033
Total loans 1,629 1,551 1,449 1,416 1,412
Total intangible assets 99 99 99 100 100
Total deposits 1,488 1,464 1,451 1,371 1,348
Total stockholders' equity 255 248 248 246 246
Total core income 4.7 4.1 4.5 4.6 4.7
Total net (loss) income (2.1) 4.5 4.8 4.8 4.7
- --------------------------------------------------------------------------------
(1) All performance ratios are annualized and are based on average balance
sheet amounts, where applicable.
(2) Data for the second quarter of 2006 had no revenue for Federal Home Loan
Bank dividends due to a delay in the dividend declaration schedule. Third
quarter data includes 2 such dividends, including $420,000 delayed from
the second quarter.
F-6
16
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES
- ------------------------------------------------------------------------------------------------------------------------------
Quarters Ended
--------------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
--------------------------------------------------------------------------------
(IN THOUSANDS)
Assets
Loans
Residential mortgages $ 576,105 $ 561,444 $ 554,833 $ 554,328 $ 561,048
Commercial mortgages 496,428 450,283 427,891 398,867 396,212
Commercial business loans 185,573 161,618 152,970 159,741 165,414
Consumer loans 327,746 312,813 298,020 298,917 300,347
----------- ----------- ----------- ----------- -----------
Total loans 1,585,852 1,486,158 1,433,714 1,411,853 1,423,021
Securities 398,915 408,542 418,744 425,237 435,853
Short-term investments 1,017 744 1,561 538 7,028
----------- ----------- ----------- ----------- -----------
Total earning assets 1,985,784 1,895,444 1,854,019 1,837,628 1,865,902
Intangible assets 98,793 98,944 99,318 99,862 100,955
Other assets 98,307 94,805 90,412 94,608 98,394
----------- ----------- ----------- ----------- -----------
Total assets $ 2,182,884 $ 2,089,193 $ 2,043,749 $ 2,032,098 $ 2,065,251
=========== =========== =========== =========== ===========
Liabilities and stockholders' equity
Deposits
NOW $ 131,687 $ 140,103 $ 141,364 $ 143,120 $ 135,638
Money market 283,194 284,447 269,685 251,462 241,088
Savings 212,706 208,345 217,475 226,267 240,396
Time 664,207 643,398 611,324 558,963 515,120
----------- ----------- ----------- ----------- -----------
Total interest-bearing deposits 1,291,794 1,276,293 1,239,848 1,179,812 1,132,242
Borrowings 445,494 380,131 380,019 424,293 499,877
----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities 1,737,288 1,656,424 1,619,867 1,604,105 1,632,119
Non-interest-bearing demand deposits 178,535 171,787 168,478 175,025 185,183
Other liabilities 8,221 6,456 5,099 6,661 6,409
----------- ----------- ----------- ----------- -----------
Total liabilities 1,924,044 1,834,667 1,793,444 1,785,791 1,823,711
Stockholders' equity 258,840 254,526 250,305 246,307 241,540
----------- ----------- ----------- ----------- -----------
Total liabilities and equity $ 2,182,884 $ 2,089,193 $ 2,043,749 $ 2,032,098 $ 2,065,251
=========== =========== =========== =========== ===========
Supplementary data
Total non-maturity deposits $ 806,122 $ 804,682 $ 797,002 $ 795,874 $ 802,305
Total deposits 1,470,329 1,448,080 1,408,326 1,354,837 1,317,425
- --------------------------------------------------------------------------------
(1) Average balances for securities available-for-sale are based on amortized
cost.
F-7
17
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
- --------------------------------------------------------------------------------------------------------------------
Quarters Ended
-------------------------------------------------------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2006 2006 2006 2005 2005
-------------------------------------------------------------------------
Earning assets
Loans
Residential mortgages 5.24 % 5.19 % 5.09 % 5.15 % 5.06 %
Commercial mortgages 7.37 7.32 7.23 6.96 6.68
Commercial business loans 8.31 8.07 7.46 7.12 6.92
Consumer loans 6.94 6.74 6.61 6.39 5.93
Total loans 6.58 6.46 6.21 6.15 5.91
Securities 5.55 4.59 4.96 4.87 4.69
Short-term investments 5.25 4.94 4.45 3.96 3.50
Total earning assets 6.38 6.07 5.99 5.83 5.60
Funding liabilities
Deposits
NOW 0.98 1.02 1.01 0.65 0.42
Money Market 3.51 3.36 3.12 2.61 2.07
Savings 1.02 0.78 0.76 0.77 0.86
Time 4.41 4.17 3.92 3.57 3.12
Total interest-bearing deposits 3.31 3.09 2.86 2.47 2.10
Borrowings 4.47 4.13 3.96 3.85 3.81
Total interest-bearing liabilities 3.60 3.33 3.12 2.84 2.62
Net interest spread 2.78 2.74 2.87 2.99 2.98
Net interest margin 3.22 3.16 3.27 3.36 3.31
Cost of funds 3.27 3.02 2.83 2.56 2.35
- --------------------------------------------------------------------------------
(1) Average balances and yields for securities available-for-sale are based on
amortized cost.
(2) Cost of funds includes all deposits and borrowings.
(3) Data for the second quarter of 2006 had no revenue for Federal Home Loan
Bank dividends due to a delay in the dividend declaration schedule. Third
quarter data includes 2 such dividends, including $420,000 delayed from the
second quarter.
F-8
18
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
- ------------------------------------------------------------------------------------------------------------------------------------
At or for the Quarters Ended For nine months ended
---------------------------------------------------------- ---------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, September 30,
2006 2006 2006 2005 2005 2006 2005
- ------------------------------------------------------------------------------------------------------------ ---------------------
(DOLLARS IN THOUSANDS)
Net (loss) income $(2,120) $ 4,463 $ 4,818 $ 4,838 $ 4,746 $ 7,161 $ 3,389
Adj: Loss (Gain) on sale of securities, net 5,080 (529) (497) (882) (832) 4,054 (2,649)
Less: income from discontinued operations (217) (359) - - - (576) -
Plus: Termination of ESOP - - - 168 - - 8,667
Plus: Loan loss allowance pool adjustment 5,512 - - - - 5,512 -
Plus: Other nonrecurring expense - 385 - 352 828 385 1,164
Adj: Income taxes (3,525) 166 164 119 1 (3,195) 639
------- ------- ------- ------- ------- ------- --------
Core income (A) 4,730 4,126 4,485 4,595 4,743 13,341 11,210
Plus: Amort. Intang. Assets (net of taxes) 320 320 320 322 322 961 447
------- ------- ------- ------- ------- ------- --------
Tangible core income (B)$ 5,050 $ 4,446 $ 4,805 $ 4,917 $ 5,065 $14,302 $11,657
======= ======= ======= ======= ======= ======= ========
Total non-interest income $(1,784) $ 3,910 $ 4,091 $ 4,297 $ 3,955 $ 6,217 $10,626
Adj: Loss (Gain) on sale of securities, net 5,080 (529) (497) (882) (832) 4,054 (2,649)
------- ------- ------- ------- ------- ------- --------
Total core non-interest income (C)$ 3,296 $ 3,381 $ 3,594 $ 3,415 $ 3,123 $10,271 $ 7,977
======= ======= ======= ======= ======= ======= ========
Total non-interest expense $11,353 $11,638 $11,225 $11,800 $11,600 $34,216 $37,197
Less: Termination of ESOP - - - (168) - - (8,667)
Less: Other non-recurring expense - (385) - (352) (828) (385) (1,791)
------- ------- ------- ------- ------- ------- --------
Core non-interest expense 11,353 11,253 11,225 11,280 10,772 33,831 26,739
Less: Amortization of intangible assets (478) (478) (478) (481) (481) (1,434) (667)
------- ------- ------- ------- ------- ------- --------
Total core tangible non-interest expense (D)$10,875 $10,775 $10,747 $10,799 $10,291 $32,397 $26,072
======= ======= ======= ======= ======= ======= ========
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Total average assets $ 2,183 $ 2,089 $ 2,044 $ 2,032 $ 2,065 $ 2,105 $ 1,647
Less: Average intangible assets (99) (99) (99) (100) (101) (99) (49)
------- ------- ------- ------- ------- ------- --------
Total average tangible assets (E)$ 2,084 $ 1,990 $ 1,944 $ 1,932 $ 1,964 $ 2,006 $ 1,598
======= ======= ======= ======= ======= ======= ========
Total average stockholders' equity $ 259 $ 255 $ 250 $ 246 $ 242 $ 254 $ 180
Less: Average intangible assets (99) (99) (99) (100) (101) (99) (49)
------- ------- ------- ------- ------- ------- --------
Total average tangible stockholders' equity (F)$ 160 $ 156 $ 151 $ 146 $ 141 $ 155 $ 131
======= ======= ======= ======= ======= ======= ========
Total stockholders' equity, period-end $ 255 $ 248 $ 248 $ 246 $ 246 $ 255 $ 246
Less: Intangible assets, period-end (99) (99) (99) (100) (100) (99) (100)
------- ------- ------- ------- ------- ------- --------
Total tangible stockholders' equity, period-end (G)$ 156 $ 149 $ 149 $ 146 $ 146 $ 156 $ 146
======= ======= ======= ======= ======= ======= ========
Total shares outstanding, period-end (thousands)(H) 8,689 8,622 8,601 8,540 8,564 8,689 8,564
Average diluted shares outstanding (thousands) (I) 8,557 8,760 8,755 8,813 8,856 8,776 7,061
Core earnings per share (A/I)$ 0.54 $ 0.47 $ 0.51 $ 0.52 $ 0.54 $ 1.52 $ 1.59
Tangible book value per share (G/H)$ 17.96 $ 17.30 $ 17.32 $ 17.15 $ 17.04 $ 17.96 $ 17.04
Core return on tangible assets (B/E) 0.97 % 0.89 % 0.98 % 1.02 % 1.04 % 0.95 % 0.97 %
Core return on tangible equity (B/F) 12.68 11.41 12.63 13.49 14.47 12.26 11.83
Core tangible non-interest income to assets (C/E) 0.63 0.68 0.74 0.71 0.64 0.68 0.67
Core tangible non-interest exp to assets (D/E) 2.09 2.17 2.21 2.24 2.10 2.15 2.17
Efficiency ratio 55.92 58.73 57.48 57.00 55.17 57.35 57.15
- --------------------------------------------------------------------------------
(1) Efficiency ratio is computed by dividing total tangible core non-interest
expense by the sum of total net interest income on a fully taxable
equivalent basis and total core non-interest income. The Company uses
this non-GAAP measure, which is used widely in the banking industry, to
provide important information regarding its operational efficiency.
(2) Ratios are annualized and based on average balance sheet amounts, where
applicable.
(3) In the third quarter 2006, the average diluted shares for core income per
share totaled 8,805,000.
CONTACTS:
For Berkshire Hills Bancorp, Inc.
Michael P. Daly, 413-236-3194
President and Chief Executive Officer
or
Wayne F. Patenaude, 413-236-3195
Senior Vice President, Chief Financial Officer,
and Treasurer