UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission File Number 1-15781
BERKSHIRE HILLS BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3510455
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24 North Street, Pittsfield, Massachusetts 01201
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(413) 443-5601
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changes since
last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The Issuer had 6,925,570 shares of common stock, par value $0.01 per
share, outstanding as of August 10, 2001.
BERKSHIRE HILLS BANCORP, INC.
FORM 10-Q
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of 1
June 30, 2001 and December 31, 2000
Consolidated Statements of Operations for the Three and Six 2
Months Ended June 30, 2001 and 2000
Consolidated Statements of Changes in Stockholders' Equity 3
for the Six Months Ended June 30, 2001 and 2000
Consolidated Statements of Cash Flows for the 4
Six Months Ended June 30, 2001 and 2000
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 19
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
June 30, December 31,
2001 2000
----------- -----------
(In thousands)
Assets:
Cash and due from banks $ 21,268 $ 26,891
Short-term investments 9,743 16,721
----------- -----------
Total cash and cash equivalents 31,011 43,612
Securities available for sale, at fair value 97,326 99,309
Securities held to maturity, at amortized cost 31,581 32,238
Federal Home Loan Bank stock, at cost 7,027 5,651
Savings Bank Life Insurance stock, at cost 2,043 2,043
Loans 822,283 793,621
Loans held for sale, at fair value 1,200 --
Allowance for loan losses (10,877) (10,216)
----------- -----------
Net loans 812,606 783,405
Premises and equipment, net 13,823 12,370
Foreclosed real estate 26 50
Accrued interest receivable 5,952 6,310
Goodwill 11,887 6,260
Other assets 17,507 20,092
----------- -----------
Total assets $ 1,030,789 $ 1,011,340
=========== ===========
Liabilities and Stockholders' Equity:
Deposits $ 723,933 $ 729,594
Federal Home Loan Bank advances 140,536 101,385
Securities sold under agreements to repurchase 1,030 2,030
Net deferred tax liability 4,610 4,482
Loans sold with recourse 1,198 7,740
Accrued expenses and other liabilities 5,754 4,787
----------- -----------
Total liabilities 877,061 850,018
----------- -----------
Minority Interests 500 --
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 77 77
authorized; shares issued: 7,673,761 at June 30, 2001
and December 31, 2000; shares outstanding: 7,290,073
at June 30, 2001 and 7,673,761 at December 31, 2000)
Additional paid-in capital 74,162 74,054
Unearned compensation (11,929) (7,187)
Retained earnings 77,690 74,554
Accumulated other comprehensive income 20,052 19,824
Treasury stock, at cost (383,688 shares at June 30, 2001) (6,824) --
----------- -----------
Total stockholders' equity 153,228 161,322
----------- -----------
Total liabilities and stockholders' equity $ 1,030,789 $ 1,011,340
=========== ===========
See accompanying notes to unaudited consolidated financial statements.
1
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
2001 2000 2001 2000
-------- -------- -------- --------
(In thousands, except per share amounts)
Interest and Dividend Income:
Bond interest $ 1,451 $ 1,305 $ 2,964 $ 2,467
Stock dividends 356 370 750 688
Short-term investment interest 69 130 144 182
Loan interest 17,388 15,429 34,542 29,503
-------- -------- -------- --------
Total interest and dividend income 19,264 17,234 38,400 32,840
-------- -------- -------- --------
Interest expense:
Interest on deposits 6,989 6,732 14,250 13,052
Interest on FHLB advances 1,701 1,502 3,374 2,512
Interest on securities sold under agreements
to repurchase and other borrowings 61 16 240 30
-------- -------- -------- --------
Total interest expense 8,751 8,250 17,864 15,594
-------- -------- -------- --------
Net interest income 10,513 8,984 20,536 17,246
Provision for loan losses 840 810 1,680 1,620
-------- -------- -------- --------
Net interest income, after provision for loan losses 9,673 8,174 18,856 15,626
-------- -------- -------- --------
Non-interest income:
Customer service fees 516 459 923 795
Trust department fees 445 287 875 826
Loan servicing fees 132 96 251 254
Gain (loss) on securities, net 278 (12) 277 221
Other income 76 44 231 96
-------- -------- -------- --------
Total non-interest income 1,447 874 2,557 2,192
-------- -------- -------- --------
Operating expenses:
Salaries and benefits 3,980 3,363 7,602 6,798
Occupancy and equipment 952 1,083 2,041 2,181
Marketing and advertising 143 120 289 199
Data processing 269 350 440 694
Professional services 177 96 430 242
Office supplies 235 159 520 433
Foreclosed real estate and other loan expenses, net 700 297 1,236 628
Amortization of goodwill 125 137 249 274
Contributions -- 5,684 -- 5,684
Other expenses 793 665 1,768 1,252
-------- -------- -------- --------
Total operating expenses 7,374 11,954 14,575 18,385
-------- -------- -------- --------
Income (loss) before taxes 3,746 (2,906) 6,838 (567)
Provision (benefit) for income taxes 1,239 (975) 2,253 (193)
-------- -------- -------- --------
Net income (loss) $ 2,507 $ (1,931) $ 4,585 $ (374)
======== ======== ======== ========
Earnings per share:
Basic $ 0.39 NA $ 0.70 NA
Diluted $ 0.37 NA $ 0.67 NA
Weighted average shares outstanding:
Basic 6,425 NA 6,550 NA
Diluted 6,784 NA 6,847 NA
See accompanying notes to unaudited consolidated financial statements.
2
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
UNAUDITED
(In Thousands)
Accumulated
Additional Other
Common Paid-in Unearned Retained Comprehensive Treasury
Stock Capital Compensation Earnings Income Stock Total
--------- --------- --------- --------- --------- ----- ---------
Balance at December 31, 2000 $ 77 $ 74,054 $ (7,187) $ 74,554 $ 19,824 $ -- $ 161,322
Comprehensive income:
Net income -- -- -- 4,585 -- -- 4,585
Change in net unrealized gain on
securities available for sale, net of
reclassification adjustments and
tax effects -- -- -- -- 228 -- 228
---------
Total comprehensive income 4,813
Cash dividends declared -- -- -- (1,449) -- -- (1,449)
Treasury stock purchased -- -- -- -- -- (6,824) (6,824)
Purchase of common stock - MRP -- -- (5,453) -- -- -- (5,453)
Change in unearned compensation - MRP -- -- 454 -- -- -- 454
Change in unearned compensation - ESOP -- 108 257 -- -- -- 365
--------- --------- --------- --------- --------- ----- ---------
Balance at June 30, 2001 $ 77 $ 74,162 $ (11,929) $ 77,690 $ 20,052 $ (6,824) $ 153,228
========= ========= ========= ========= ========= ========= =========
Balance at December 31, 1999 $ -- $ -- $ -- $ 70,679 $ 17,673 $ -- $ 88,352
Comprehensive income (loss):
Net income (loss) -- -- -- (374) -- -- (374)
Change in net unrealized gain on
securities available for sale, net of
reclassification adjustments and
tax effects -- -- -- -- (4,265) -- (4,265)
---------
Total comprehensive income (loss) (4,639)
Issuance of common stock in connection
with conversion from mutual to stock-
owned bank holding company 77 74,057 (6,139) -- -- -- 67,995
--------- --------- --------- --------- --------- ----- ---------
Balance at June 30, 2000 $ 77 $ 74,057 $ (6,139) $ 70,305 $ 13,408 $ -- $ 151,708
========= ========= ========= ========= ========= ========= =========
See accompanying notes to unaudited consolidated financial statements.
3
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended June 30,
-------------------------
2001 2000
--------- ---------
(In thousands)
Cash flows from operating activities:
Net income (loss) $ 4,585 $ (374)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Provision for loan losses 1,680 1,620
Net amortization of securities 86 136
Charitable contribution in the form of equity securities -- 5,684
Depreciation and amortization expense 857 892
Amortization of goodwill 249 274
Management Rewards Plan expense 454 --
Employee stock ownership plan expense 365 --
Gain on securities, net (277) (221)
Losses on foreclosed real estate, net -- 36
Loss on sale of equipment 35 18
Deferred tax provision (benefit) (3) (3,125)
Loans originated for sale (15,515) (8,250)
Principal balance of loans sold 14,315 8,250
Changes in operating assets and liabilities:
Accrued interest receivable and other assets 3,514 (3,059)
Accrued expenses and other liabilities (101) 123
--------- ---------
Net cash provided by operating activities 10,244 2,004
Cash flows from investing activities:
Activity in available-for-sale securities:
Sales 6,430 10,443
Maturities 17,202 22,041
Principal payments 6,806 4,213
Purchases (27,930) (69,288)
Activity in held-to-maturity securities:
Maturities 6,149 4,480
Principal payments 10,269 3,937
Purchases (15,736) (19,500)
Purchase of Federal Home Loan Bank stock (1,376) (1,454)
Loan originations, net of principal payments (29,707) (79,448)
Additions to banking premises and equipment (1,447) (1,630)
Proceeds from sales of foreclosed real estate 50 164
Proceeds from sale of equipment 20 3
Loan to fund employee stock ownership plan -- (6,139)
Payment for purchase of EastPoint Technologies, LLC (7,300) --
--------- ---------
Net cash used in investing activities (36,570) (132,178)
(continued)
See accompanying notes to unaudited consolidated financial statements.
4
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
Unaudited
Six Months Ended June 30,
-------------------------
2001 2000
--------- ---------
(In thousands)
Cash flows from financing activities:
Net increase (decrease) in deposits (4,158) 49,939
Net increase (decrease) in securities sold under agreements to repurchase (1,000) 320
Proceeds from Federal Home Loan Bank advances with maturities 90,000 74,000
in excess of three months
Repayments of Federal Home Loan Bank advances with maturities (50,849) (38,174)
in excess of three months
Proceeds of borrowings with maturities of three months or less, net of -- --
repayments
Net decrease in loans sold with recourse (6,542) --
Treasury stock purchased (6,824) --
Purchase of common stock in connection with employee and non-
employee directors benefit programs (5,453) --
Dividends paid (1,449) --
Net proceeds from initial public offering -- 68,450
--------- ---------
Net cash provided by financing activities 13,725 154,535
Net change in cash and cash equivalents (12,601) 24,361
Cash and cash equivalents at beginning of period 43,612 24,642
--------- ---------
Cash and cash equivalents at end of period $ 31,011 $ 49,003
========= =========
Supplemental cash flow information:
Interest paid on deposits $ 14,461 $ 13,022
Interest paid on borrowed funds 3,374 2,353
Income taxes paid (refunded), net 1,120 3,177
Transfers from loans to foreclosed real estate 26 --
See accompanying notes to unaudited consolidated financial statements.
5
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001 and 2000
(Unaudited)
Note 1. Basis of Presentation
- -------------------------------
The consolidated interim financial statements of Berkshire
Hills Bancorp, Inc. ("Berkshire Hills" or the "Company") and its wholly-owned
subsidiaries, Berkshire Bank (the "Bank"), Berkshire Hills Funding Corp., and
Berkshire Hills Technology, Inc. herein presented are intended to be read in
conjunction with the consolidated financial statements presented in the
Company's most recent Securities and Exchange Commission Form 10-K and
accompanying notes to the Consolidated Financial Statements filed by the Company
for the year ended December 31, 2000. The consolidated financial information at
June 30, 2001 and for the three and six month periods ended June 30, 2001 and
2000 are derived from unaudited consolidated financial statements but, in the
opinion of management, reflect all adjustments necessary to present fairly the
results for these interim periods in accordance with accounting principles
generally accepted in the United States of America. These adjustments consist
only of normal recurring adjustments. The interim results are not necessarily
indicative of the results of operations that may be expected for the entire
year.
Note 2. Commitments
- ---------------------
At June 30, 2001, the Company had outstanding commitments to
originate new residential and commercial loans totaling $23.9 million which are
not reflected on the consolidated balance sheet. In addition, unadvanced funds
on home equity lines totaled $36.5 million while unadvanced commercial lines,
including unadvanced construction loan funds, totaled $69.1 million. The Company
anticipates it will have sufficient funds to meet these commitments.
Note 3. Earnings Per Share
- ----------------------------
Basic earnings per share represents net income divided by the
weighted-average number of common shares outstanding during the period. Diluted
earnings per share reflects additional common shares that would have been
outstanding if potential diluted shares, such as stock options, had been issued.
Unallocated shares of common stock held by the Bank's employee stock ownership
plan (the "ESOP") are not included in the weighted-average number of common
shares outstanding for either basic or diluted earnings per share calculations.
Earnings per share data is presented for the three and six months ended June 30,
2001, but not for the three and six months ended June 30, 2000, since shares of
common stock were not issued until June 27, 2000.
Earnings per share equaled $0.39 for the quarter ending June
30, 2001, based on 6,425,239 average shares outstanding. Diluted earnings per
share equaled $0.37 for the quarter ending June 30, 2001, based on 6,783,784
average shares outstanding. For the six months ending June 30, 2001, earnings
per share equaled $0.70 based on 6,550,071 shares outstanding. Diluted earnings
per share equaled $0.67 based on 6,847,244 shares outstanding.
6
Note 4. Acquisition
- ---------------------
On June 29, 2001, the Company, through it's wholly-owned
subsidiary Berkshire Hills Technology, Inc., purchased a controlling interest in
EastPoint Technologies, LLC, which on the same date acquired all of the domestic
operations and service contracts of M&I EastPoint Technology, Inc., Bedford, New
Hampshire, a software and data processing provider for financial institutions,
as well as substantially all of the operations and service contracts of
Preferred Financial Systems, Inc., Arden Hills, Minnesota, a data processing
service provider which utilized the EastPoint system. EastPoint Technologies,
LLC was formed by a consortium of several clients of M&I EastPoint Technology,
Inc. and/or Preferred Financial Systems, Inc. and intends to position itself as
a leader in the development of client/server software applications for the
financial industry. A portion of the Company's initial investment in EastPoint
Technologies, LLC may be purchased by other consortium participants upon their
receipt of the necessary regulatory approvals.
Note 5. Recent Accounting Pronouncements
- ------------------------------------------
On June 30, 2001, the Financial Accounting Standards Board
("FASB") issued Statements of Financial Accounting Standards ("SFAS") No. 141,
Business Combinations, and No. 142, Goodwill and Other Intangible Assets. SFAS
No. 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting. With the adoption of SFAS
No. 142, effective January 1, 2001, goodwill is no longer subject to
amortization over its estimated useful life. Goodwill will be subject to at
least an annual assessment for impairment by applying a fair value based test.
Additionally, under SFAS No. 142, acquired intangible assets should be
separately recognized if the benefit of the intangible asset is obtained through
contractual or other legal rights, or if the intangible asset can be sold,
transferred, licensed, rented, or exchanged, regardless of intent to do so.
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------------------------------------------------------------------------
Results of Operations.
----------------------
The following analysis discusses changes in the financial
condition and results of operations at and for the three and six months ended
June 30, 2001 and 2000, and should be read in conjunction with Berkshire Hills
Bancorp, Inc.'s Consolidated Financial Statements and the notes thereto,
appearing in Part I, Item 1 of this document.
Forward Looking Statements
This report contains forward-looking statements that are based
on assumptions and may describe future plans, strategies, and expectations of
Berkshire Hills and Berkshire Bank. These forward-looking statements are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. Berkshire Hills'
and Berkshire Bank's ability to predict results or the actual effect of future
plans or strategies is inherently uncertain. Factors which could have a material
adverse effect on the operations of Berkshire Hills and its subsidiaries
include, but are not limited to, changes in interest rates, general economic
conditions, legislative/regulatory changes, monetary and fiscal policies of the
U.S. Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality and composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
Berkshire Hills' and Berkshire Bank's market area, changes in real estate market
values in Berkshire Hills' market area, and changes in relevant accounting
principles and guidelines. These risks and uncertainties should be considered in
evaluating forward looking statements and undue reliance should not be placed on
such statements. Except as required by applicable law or regulation, Berkshire
Hills does not undertake, and specifically disclaims any obligation, to publicly
release the result of any revisions which may be made to any forward looking
statements to reflect events or circumstances after the date of the statements
or to reflect the occurrence of anticipated or unanticipated events.
7
General
Berkshire Hills is a Delaware corporation and the holding
company for Berkshire Bank, a state-chartered savings bank headquartered in
Pittsfield, Massachusetts. Established in 1846, Berkshire Bank is one of
Massachusetts' oldest and largest independent banks. With eleven full service
branch offices serving communities throughout Berkshire County, Berkshire Bank
is the largest banking institution based in Western Massachusetts. The Bank is a
community-based financial institution that originates a variety of loan products
including real estate loans, commercial loans, and consumer loans primarily in
Berkshire County, Massachusetts and its surrounding areas. The Bank offers a
wide variety of deposit products and other investment products and financial
services to its customers, including asset management and trust services.
In connection with the mutual to stock conversion of Berkshire
Bancorp, the Bank's former mutual holding company, on June 27, 2000, Berkshire
Hills sold 7,105,334 shares of common stock raising net proceeds of $68,415,488.
As part of the conversion, 568,427 shares of Berkshire Hills common stock were
donated to the Berkshire Hills Foundation, a charitable foundation.
On April 25, 2001, our Board of Directors approved the payment
of a cash dividend of $0.11 per share, payable on May 25, 2001, to stockholders
of record on May 7, 2001. The book value per share of Berkshire Hills' common
stock was $21.02 at June 30, 2001, unchanged from December 31, 2000.
On June 29, 2001, the Company, through it's wholly-owned
subsidiary Berkshire Hills Technology, Inc., purchased a controlling interest in
EastPoint Technologies, LLC, which on the same date acquired all of the domestic
operations and service contracts of M&I EastPoint Technology, Inc., Bedford, New
Hampshire, a software and data processing provider for financial institutions,
as well as substantially all of the operations and service contracts of
Preferred Financial Systems, Inc., Arden Hills, Minnesota, a data processing
service provider which utilized the EastPoint system. EastPoint Technologies,
LLC was formed by a consortium of several clients of M&I EastPoint Technology,
Inc. and/or Preferred Financial Systems, Inc. and intends to position itself as
a leader in the development of client/server software applications for the
financial industry. A portion of the Company's initial investment in EastPoint
Technologies, LLC may be purchased by other consortium participants upon their
receipt of the necessary regulatory approvals.
8
Comparison of Financial Condition at June 30, 2001 and December 31, 2000
Total assets at June 30, 2001 were $1,030.8 million, an
increase of $19.4 million, or 1.9%, from $1,011.3 million at December 31, 2000.
Additional borrowings of $39.2 million from the Federal Home Loan Bank of Boston
along with the decline of $12.6 million in cash and cash equivalents funded a
$5.7 million decrease in deposits, a $29.9 million increase in loans
outstanding, the purchase of 383,688 shares under the Company's 5% stock
repurchase program and the purchase of 306,950 shares to fund the Company's 2001
Stock-Based Incentive Plan.
Loans
Total loans outstanding increased $29.9 million, or 3.8%,
during the first six months of 2001. Increased commercial real estate related
and commercial loan activity more than offset a small decline in residential
one-to four-family real estate loans. Berkshire County tourism remained strong
in the first half of 2001, prompting loan demand from lodging, leisure, and
cultural organizations. As a result, commercial real estate related and
commercial loans increased $27.0 million, to $277.5 million at June 30, 2001,
from $250.5 million at December 31, 2000.
At June 30, 2001 At December 31, 2000
------------------------ ------------------------
Balance Percent Balance Percent
of Total of Total
-------- ------- -------- ---------
(Dollars in thousands)
Mortgage loans on real estate:
Residential 1 - 4 family $241,448 29.32% $244,290 30.78%
Commercial 1 - 4 family 12,032 1.46% 11,063 1.39%
Commercial real estate 82,596 10.03% 63,871 8.05%
Commercial construction 11,556 1.40% 8,480 1.07%
Multi-family 15,579 1.89% 15,699 1.98%
-------- --------
Total real estate loans 363,211 44.11% 343,403 43.27%
Commercial loans 171,364 20.81% 167,085 21.05%
Consumer loans:
Automobile 232,169 28.19% 230,648 29.06%
Home equity loans 34,708 4.21% 34,471 4.34%
Other 22,031 2.68% 18,014 2.27%
-------- --------
Total consumer loans 288,908 35.08% 283,133 35.68%
Total loans 823,483 793,621
Less: Allowance for loan losses (10,877) 1.32% (10,216) 1.29%
-------- --------
Loans, net $812,606 $783,405
======== ========
Consumer loans grew $5.8 million, or 2.0%, to $288.9 million
during the first six months of 2001. Automobile loans increased $1.5 million as
new originations more than offset the sale of $11.6 million of loans. However,
9
automobile loans now comprise only 28.2% of total loans outstanding, as compared
to 29.1% at December 31, 2000. Automobile loan growth is being affected by the
Company's decision to refocus its marketing efforts towards other consumer
loans. Other consumer loans increased $4.0 million, or 22.3%, to $22.0 million
due to a number of smaller consumer loans other than automobile and home equity
loans being granted.
Allowance for Loan Losses
All banks that manage loan portfolios will experience losses
to varying degrees. The allowance for loan losses is the amount available to
absorb these losses and represents management's evaluation of the risks inherent
in the portfolio including the collectibility of the loans, changing collateral
values, past loan loss history, specific borrower situations, and general
economic conditions. Management continually assesses the adequacy of the
allowance for loan losses and makes monthly provisions in an amount considered
adequate to cover losses in the loan portfolio. Because future events affecting
the loan portfolio cannot be predicted with complete accuracy, there can be no
assurances that management's estimates are correct and that the existing
allowance for loan losses is adequate. However, management believes that based
on the information available to it on June 30, 2001, the Company's allowance for
loan losses is sufficient to cover losses inherent in the Company's current loan
portfolio.
The allowance consists of allocated, general and unallocated
components. The allocated component relates to loans that are classified as
either doubtful, substandard or special mention. For such loans that are also
classified as impaired, an allowance is established when the discounted cash
flows (or collateral value or observable market price) of the impaired loan is
lower than the carrying value of that loan. The general component covers
non-classified loans and is based on historical loss experience adjusted for
qualitative factors. An unallocated component is maintained to cover
uncertainties that could affect management's estimate of probable losses. The
unallocated component of the allowance reflects the margin of imprecision
inherent in the underlying assumptions used in the methodologies for estimating
losses in the portfolio.
On June 30, 2001, the allowance for loan losses totaled $10.9
million, or 1.32%, of total loans as compared to $10.2 million, or 1.29%, of
total loans on December 31, 2000. Charged-off loans increased $859,000 to $1.5
million during the first six months this year as compared to $630,000 last year
due to weakness in the indirect automobile portfolio and a more aggressive
charge-off policy. However, recoveries totaled $470,000 this year as compared to
$203,000 last year as the Company bolstered efforts to collect previously
charged-off loans. On June 30, 2001, the allowance expressed as a percentage of
nonperforming loans was 268.63% while on June 30, 2000, it was 461.65%.
At and for the
Six Months Ended
-----------------------------
June 30, June 30,
2001 2000
----------- ------------
(Dollars in thousands)
Allowance for loan losses, beginning of period $ 10,216 $8,534
Charged-off loans:
Real estate 0 --
Consumer 1,454 504
Commercial 35 126
----------- ------------
Total charged-off loans 1,489 630
Recoveries:
Real estate -- 46
Consumer 250 119
Commercial 220 38
----------- ------------
Total recoveries 470 203
Provision for loan losses 1,680 1,620
----------- ------------
Allowance for loan losses, end of period $ 10,877 $9,727
=========== ============
Net loans charged-off to total loans 0.12% 0.06%
Allowance for loan losses to total loans 1.32% 1.29%
Allowance for loan losses to nonperforming loans 268.63% 461.65%
Recoveries to charge-offs 31.56% 32.22%
10
Nonperforming Assets
The following table sets forth information regarding
nonperforming assets as of June 30, 2001 and December 31, 2000.
At June 30, At December 31,
2001 2001
----------- ---------------
(Dollars in thousands)
Nonaccruing loans:
One-to four-family real estate $ 231 $ 390
Commercial real estate -- --
Commercial 761 466
Consumer 3,057 1,993
Home equity -- 20
------ ------
Total 4,049 2,869
------ ------
Real estate owned 26 50
------ ------
Total nonperforming assets $4,075 $ 2,919
====== =======
Total nonperforming loans as a percentage 0.49% 0.36%
of total loans
Total nonperforming assets as a percentage of 0.40% 0.29%
total assets
Generally, the Company ceases accruing interest on all loans
when principal or interest payments are 90 days or more past due unless
management determines the principal and interest to be fully secured and in the
process of collection. Once management determines that interest is uncollectible
and ceases accruing interest on a loan, all previously accrued interest is
reversed against current interest income. At June 30, 2001, the Company had
$34,000 of loans that were 90 days or more past due but which were still
accruing interest.
As has been the case with charged-off loans, the amount of
nonaccruing loans increased since December 31, 2000. As of June 30, 2001, total
nonaccruing loans amounted to $4.0 million, an increase of $1.2 million, or
41.1%, from $2.9 million at December 31, 2000. The negative effect of a slowing
economy in industries other than those that are tourist related, coupled with
the normal aging of the automobile portfolio, has resulted in an increase in
nonaccruing consumer loans, primarily indirect automobile loans, as balances now
total $3.1 million against $2.0 million at December 31, 2000. As a result, the
ratio of nonperforming loans as a percentage of total loans increased to 0.49%
in June of 2001, from 0.36% as of December 31, 2000.
11
Investment Securities
Securities totaled $138.0 million at the end of June 2001 as
compared to $139.2 million at December 31, 2000. Balances declined during the
first six months of 2001 as maturing funds from investments were used to support
other operating activities. The net unrealized gain in the portfolio increased
$228,000 from December 31, 2000 as falling interest rates bolstered bond prices.
This change was recognized in accumulated other comprehensive income on the
consolidated statement of changes in stockholders' equity.
Other Assets
From December 31, 2000 to June 30, 2001, other assets fell
$2.6 million. Prominent in the decline was a decrease of $837,000 in repossessed
automobiles from $3.2 million at December 31, 2000 to $2.3 million at June 30,
2001 as a continuing strong sales effort during the first half of 2001 enabled
the Bank to bring down the balance of its repossessed automobile portfolio.
Other assets also declined due to the January 2, 2001 collection of a $1.0
million security that matured on Sunday, December 31, 2000.
Deposits
Customers' deposits are the primary funding vehicle for the
Company's asset base. The following table sets forth the Company's deposit
stratification as of June 30, 2001 and December 31, 2000.
At June 30, 2001 At December 31, 2000
---------------------------- ----------------------------
Balance % of Balance % of
Deposits Deposits
-------- -------- -------- --------
(Dollars in thousands)
Demand deposits $ 71,835 9.92% $ 76,750 10.52%
NOW accounts 76,401 10.55% 79,978 10.96%
Savings accounts 139,835 19.32% 137,293 18.82%
Money Market accounts 108,532 14.99% 115,800 15.87%
Certificates of Deposit 327,330 45.22% 319,773 43.83%
-------- --------
Total $723,933 $729,594
======== ========
Total deposits were $723.9 million on June 30, 2001, a
decrease of 0.78% for the first six months of the year. Core deposits, which the
Company considers to be all but certificates of deposit, were 54.8% of total
deposits on June 30, 2001 as compared to 56.2% on December 31, 2000.
Historically, the first quarter of the year is a difficult period for deposit
growth. This year was no exception. Although deposits rebounded in the second
quarter, they remain below year-end 2000 levels.
Borrowings
Since deposit growth has been insufficient to keep up with
loan growth, the Company has found it necessary to supplement its funding of the
loan portfolio with borrowings from the Federal Home Loan Bank of Boston. The
amount of these borrowings increased $39.2 million to $140.5 million since the
end of last year. The Company's borrowing capacity at the Federal Home Loan Bank
of Boston is in excess of $230 million.
Stockholders' Equity and Regulatory Capital
At June 30, 2001, the Company had $153.2 million in
stockholders' equity compared to $161.3 million at December 31, 2000. The
decrease was primarily due to the purchase of 306,950 shares of the Company's
common stock at a cost of $5.5 million to fund the granting of restricted stock
12
awards under the Company's 2001 Stock-Based Incentive Plan and the purchase of
383,688 shares at a cost of $6.8 million to complete a 5% repurchase program.
The Company also declared and paid cash dividends totaling $0.21 per common
share, amounting to $1.4 million during the first half of 2001. Partially
offsetting these decreases in stockholders' equity was net income of $4.6
million.
The Company's capital to assets ratios for June 30, 2001, and
December 31, 2000, were 14.87% and 15.95%, respectively. The various regulatory
capital ratios for the Company on June 30, 2001 and December 31, 2000 were as
follows:
June 30, 2001 December 31, 2000
----------------- -----------------
Total capital to risk weighted assets 17.94% 20.15%
Tier 1 capital to risk weighted assets 14.97% 17.12%
Tier 1 capital to average assets 12.35% 14.54%
Regulations have been established that require the Company and
the Bank to maintain minimum amounts and ratios of Tier 1 and total capital to
average assets to ensure capital adequacy. Failure to meet these requirements
can initiate regulatory actions that could have a material effect on the
Company's financial statements. As of December 31, 2000, the Company was in
compliance with all capital adequacy requirements to be categorized as well
capitalized. Management knows of no events that have since occurred that would
jeopardize this rating and believes that the Company would continue to be
considered well capitalized on June 30, 2001.
Comparison of Operating Results for the Three Months Ended June 30, 2001 and
2000
Net Interest Income. Net interest income is the largest
component of the Company's revenue stream and is the difference between the
interest and dividends earned on the loan and investment portfolios and the
interest paid on the Company's funding sources, primarily customer deposits and
advances from the Federal Home Loan Bank of Boston. Net interest income, before
the provision for loan losses, increased $1.5 million or 17.0%, to $10.5 million
for the second quarter of 2001. The Company's net interest margin increased to
4.37% this quarter from 4.15% for the same quarter last year. Higher yields in
the loan and investment portfolios were the main contributors to the increase in
net interest margin.
Total interest and dividend income increased $2.0 million, or
11.8%, to $19.3 million for the second quarter of 2001 as compared to the same
period last year. Loan interest grew to $17.4 million in the current quarter, an
increase of $2.0 million, or 12.7%, from the same period last year as strong
commercial real estate and other commercial loan growth contributed to a higher
level of interest earnings. Investment income rose $71,000 as higher yields in
2001 were partially offset by higher invested balances in 2000.
Interest expense rose $501,000, or 6.1%, to $8.8 million this
year due to a higher concentration of certificates of deposit and additional
FHLB advances. Deposit expense grew by $257,000 this year to $7.0 million while
interest on FHLB advances increased $199,000, to $1.7 million from $1.5 million
last year. Other interest expense rose $45,000 due to interest expense related
to loans sold with recourse.
The Company's provision for loan losses was $840,000 in the
second quarter of this year as compared to $810,000 in the same quarter last
year. In setting the provision for the second quarter of 2001, management
considered the current level of commercial and automobile loan originations,
which generally bear a greater degree of risk than one-to four-family real
estate loans, current delinquencies in the loan portfolio, prospects for future
loan delinquencies, especially automobile loans, current recoveries and the
likelihood for future recoveries of previously charged-off loans, among other
items.
13
After the provision, net interest income was $9.7 million for
the quarter ending June 30, 2001, as compared to $8.2 million for the same
period last year, an increase of $1.5 million, or 18.3%.
Non-interest Income. Non-interest income earned by the Company
comes primarily from three sources: Trust department fees, customer service
fees, and servicing fees on loans sold to others. For the three months ending
June 30, 2001, non-interest income totaled $1.4 million, an increase of
$573,000, or 65.6%, from the same quarter last year. Trust department fees
jumped $158,000 as 2000's second quarter was abnormally low. Customer service
fees rose $57,000 primarily due to increased ATM fees and overdraft fees. Loan
servicing fees increased $36,000 as the Company initiated a program to sell its
newly originated fixed rate mortgages to a third party. In addition, $278,000 of
securities gains were realized in the second quarter this year versus a loss of
$12,000 in the same period last year.
Non-interest Expense. Non-interest (operating) expense
amounted to $7.4 million for the three months ending June 30, 2001 as compared
to $12.0 million for the same three months last year. Included in 2000's figure
is a donation of $5.7 million to Berkshire Hills Foundation, a charitable
foundation established by the Company in conjunction with the June 27, 2000
stock conversion. Excluding this expense, non-interest expense rose $1.1 million
in the current quarter as compared to the same quarter last year. Expenses
related to foreclosed real estate, and in particular, automobile loans rose
$403,000 to $700,000 this year due to increased delinquencies in the automobile
loan portfolio. Salaries and benefits expense increased $617,000 to $4.0 million
as the Company incurred $167,000 in one-time expenses in connection with the
termination of its defined benefit pension plan. The Company expects to book a
one-time gain of approximately $2.3 million in the fourth quarter of 2001 upon
final settlement of the plan. Other pension and benefit costs, including ESOP
and Stock-Based Incentive Plan costs, caused salaries and benefits expense to
increase $535,000 in 2001. Professional services increased $81,000 due to
additional audit fees along with legal and other expenses incurred in connection
with the EastPoint Technologies, LLC acquisition. Partially offsetting these
increases was a decline in occupancy and equipment expense of $131,000 resulting
from the closing of one branch in April 2000 and a second branch in February
2001. Also, data processing expenses decreased $81,000 as the Company realized
cost savings from bringing its imaging system in-house.
Income Taxes. Income taxes were $1.2 million in this year's
second quarter with an effective tax rate of 33.1%. Due to the contribution to
Berkshire Hills Foundation, the Company's effective tax rate for the second
quarter of 2000 was negative.
Comparison of Operating Results for the Six Months Ended June 30, 2001 and 2000
Net Interest Income. Net interest income before the provision
for loan losses rose $3.3 million, or 19.1%, to $20.5 million during the first
half of 2001. Higher loan balances along with higher yields were primarily
responsible for the increase. For principally the same reasons, the Company's
net interest margin was 4.28% for the first six months of 2001 versus 4.13% for
the first six months of 2000.
Total interest and dividend income from the loan and
investment portfolios increased $5.6 million, or 16.9%, to $38.4 million over
the first six months of 2001 as compared to the first six months of 2000. Due
largely to the growth in loans outstanding, particularly commercial real estate
related and other commercial loans, loan interest rose to $34.5 million in 2001
from $29.5 million in 2000. In addition, investment income rose $521,000 to $3.9
million this year as the Company benefited from higher yields and a higher level
of investment in fixed income securities.
14
Interest expense rose $2.3 million, or 14.6%, to $17.9 million
in the first six months of 2001. Borrowings from the Federal Home Loan Bank of
Boston have been used to support loan growth and increased significantly over
the past six months causing interest paid on the borrowings to increase to $3.4
million this year from $2.5 million last year. Interest on deposits rose more
slowly, increasing $1.2 million to $14.3 million this year, as slightly higher
rates were paid on a growing certificate of deposit base. In addition, other
interest expense rose $210,000 to $240,000 this year primarily due to interest
expense related to loans sold with recourse.
The Company's provision for loan losses was $1.7 million in
the first six months of this year, as compared to $1.6 million in the same
period last year. In setting the provision for the first half of 2001,
management considered the current level of commercial and automobile loan
originations, which generally bear a greater degree of risk than one-to
four-family real estate loans, current delinquencies in the loan portfolio,
prospects for future loan delinquencies, especially automobile, current
recoveries and the likelihood for future recoveries of previously charged-off
loans, among other items.
After the provision, the Company's net interest income for the
first six months of 2001 was $18.9 million, up from $15.6 million for the same
period in 2000, an increase of 20.7%.
Non-interest Income. Through the first six months of this
year, non-interest income rose $365,000, or 16.7%, over the comparable period
last year. Customer service fees increased to $923,000 through June 30, 2001, as
compared to $795,000 for the same period last year, primarily due to increased
ATM fees and overdraft fees. Trust department fees advanced $49,000 to $875,000
due to increased assets under management. Realized gains on security sales
increased $56,000 to $277,000 over the first six months of this year and other
income rose $135,000, primarily from the proceeds of an insurance policy.
Non-interest Expense. Non-interest (operating) expenses
totaled $14.6 million over 2001's first six months, a decrease of $3.8 million,
or 20.7%, over 2000's $18.4 million. Included in 2000's figure is a one-time
$5.7 million donation to Berkshire Hills Foundation made in the second quarter.
Excluding this expense, operating expenses rose $1.9 million, or 14.8%, for the
first six months of this year. Foreclosed real estate and other loan expense
rose to $1.2 million in 2001, from $628,000 in 2000, an increase of $608,000, or
96.8%, due to higher delinquencies in the automobile portfolio and increased
expenses related to the administration and collection of the portfolio. Salary
and benefit expense increased $804,000 to $7.6 million for this year. Included
in the figure for 2001 was a one-time charge of $167,000 related to the
termination of the Company's defined benefit pension plan. Also, expenses
related to employee benefits, such as the 401(k) plan, ESOP, and 2001
Stock-Based Incentive Plan added $934,000 to the increase. Partially offsetting
this increase was a decline of $258,000 in employee cash compensation.
Professional services expense increased $188,000 to $430,000 this year,
primarily due to additional audit fees along with legal and other costs
associated with the EastPoint Technologies, LLC acquisition. Other expenses
increased $516,000 to $1.8 million in 2001 as new expenses associated with being
a public company contributed $424,000 to the total. On the other hand, data
processing costs fell $254,000, to $440,000 this year as savings have been
realized from the switch to an in-house imaging system from an outsourced
operation. Occupancy and equipment costs have also declined, falling $140,000 to
$2.0 million in 2001, from cost savings associated with the closing of one
branch office in April 2000 and a second one in February 2001.
15
Income Taxes. Income taxes for the six months ended June 30,
2001 were $2.3 million, with an effective tax rate of 32.9%, an increase of $2.4
million from last year. The corresponding tax figure for 2000 was negative due
to the $5.7 million contribution made to Berkshire Hills Foundation, a
charitable foundation.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial
obligations of a short-term nature. Berkshire Bank further defines liquidity as
the ability to respond to the needs of depositors and borrowers as well as
maintaining the flexibility to take advantage of investment opportunities.
Berkshire Bank's primary investing activities are: (1)
originating residential one-to four-family mortgage loans, commercial business
and real estate loans, multi-family loans, home equity loans and lines of
credit, and consumer loans; and (2) investing in mortgage-and asset-backed
securities, U.S. Government and agency obligations, and corporate equity
securities and debt obligations. These activities are funded primarily by
principal and interest payments on loans, maturities of securities, deposits and
Federal Home Loan Bank of Boston advances. While maturities and scheduled
amortization of loans and securities are predictable sources of funds, deposit
flows and mortgage prepayments are greatly influenced by interest rates,
economic conditions, and competition. Additionally, deposit flows are affected
by the overall level of interest rates, the interest rates and products offered
by Berkshire Bank and its local competitors, and other factors. Berkshire Bank
closely monitors its liquidity position on a daily basis. If Berkshire Bank
should require funds beyond its ability to generate them internally, additional
sources of funds are available through advances or a line of credit with the
Federal Home Loan Bank and through a repurchase agreement with the Depositors
Insurance Fund.
Berkshire Bank relies primarily on competitive rates, customer
service, and long-standing relationships with customers to retain deposits.
Occasionally, Berkshire Bank will also offer special competitive promotions to
its customers to increase retention and promote deposit growth. Based upon
Berkshire Bank's historical experience with deposit retention, management
believes that, although it is not possible to predict future terms and
conditions upon renewal, a significant portion of its deposits will remain with
Berkshire Bank.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
-----------------------------------------------------------
Berkshire Bank's most significant form of market risk is
interest rate risk. The principal objectives of Berkshire Bank's interest rate
risk management are to evaluate the interest rate risk inherent in certain
balance sheet accounts, determine the level of risk appropriate given its
business strategy, operating environment, capital and liquidity requirements and
performance objectives, and manage the risk consistent with its established
policies. Berkshire Bank maintains an Asset/Liability Committee that is
responsible for reviewing its asset/liability policies and interest rate risk
position, which meets quarterly and reports to the Executive Committee of the
Bank and the Board of Directors. The Asset/Liability Committee consists of
Berkshire Bank's President and Chief Executive Officer, Senior Vice President,
Treasurer and Chief Financial Officer, Executive Vice President-Senior Loan
Officer, and Executive Vice President-Retail Banking. The extent of the movement
of interest rates is an uncertainty that could have a negative impact on the
earnings of Berkshire Bank.
Berkshire Bank manages interest rate risk by:
o emphasizing the origination of adjustable-rate loans and, from time to
time, selling a portion of its longer term fixed-rate loans as market
interest rate conditions dictate;
o originating shorter-term commercial and consumer loans;
o investing in a high quality liquid securities portfolio that provides
adequate liquidity and flexibility to take advantage of opportunities
that may arise from fluctuations in market interest rates, the overall
maturity and duration of which is monitored in relation to the
repricing of its loan portfolio;
16
o promoting lower cost liability accounts such as core deposits; and
o using Federal Home Loan Bank advances to better structure maturities of
its interest rate sensitive liabilities.
For Berkshire Bank, market risk also includes price risk,
primarily security price risk. The securities portfolio had unrealized gains
before taxes of $30.8 million at June 30, 2001. Changes in this figure are
reflected, net of taxes, in accumulated other comprehensive income as a separate
component of Berkshire Bank's equity. Since December 31, 2000, this component
has risen $228,000. It is not possible to predict with complete accuracy the
direction and magnitude of securities price changes. Unfavorable market
conditions or other factors could cause price declines in the securities
portfolio.
Berkshire Bank uses a simulation model to measure the
potential change in net interest income, incorporating various assumptions
regarding the shape of the yield curve, the pricing characteristics of loans,
deposits and borrowings, prepayments on loans and securities, and changes in
balance sheet mix. The table below sets forth, as of June 30, 2001, estimated
net interest income and the estimated changes in Berkshire Bank's net interest
income for the next twelve month period which may result given instantaneous
increases or decreases in market interest rates of 100 and 200 basis points.
Increase/ (Decrease)
in Market Interest Rates At June 30, 2001
in Basis Points -------------------------------------------------
(Rate Shock) Amount $ Change % Change
----------- ------ -------- --------
(Dollars in thousands)
200 $ 46,042 $ 690 1.52%
100 45,862 510 1.12%
Static 45,352 -- --
(100) 44,476 (876) (1.93)%
(200) 43,666 (1,686) (3.72)%
The above table indicates that in the event of a sudden and
sustained decline in prevailing market interest rates of 100 basis points and
200 basis points, Berkshire Bank's net interest income would be expected to
decrease by $876,000 and $1.7 million respectively.
Computation of prospective effects of hypothetical interest
rate changes are based on a number of assumptions including the level of market
interest rates, the degree to which certain assets and liabilities with similar
maturities or periods to repricing react to changes in market interest rates,
the expected prepayment rates on loans and investments, the degree to which
early withdrawals occur on certificates of deposit, and other deposit flows. As
a result, these computations should not be relied upon as indicative of actual
results. Further, the computations do not reflect any actions that management
may undertake in response to changes in interest rates.
Impact of Inflation and Changing Prices
The consolidated financial statements and related data
presented have been prepared in conformity with generally accepted accounting
principles, which require the measurement of financial position and operating
results in terms of historical dollars, without considering changes in the
relative purchasing power of money over time due to inflation. Unlike many
industrial companies, substantially all of the assets and liabilities of
Berkshire Bank are monetary in nature. As a result, interest rates have a more
significant impact on Berkshire Bank's performance than the general level of
inflation. Over short periods of time, interest rates may not necessarily move
in the same direction or in the same magnitude as inflation.
17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
The Company is not involved in any legal proceedings other
than routine legal proceedings occurring in the normal course of business. Such
routine proceedings, in the aggregate, are believed by management to be
immaterial to the Company's financial condition or results of operations.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
None.
Item 3. Defaults Upon Senior Securities.
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
The annual meeting of the Stockholders of the Company was held
on May 3, 2001. The results of the vote were as follows:
1. The following individuals were elected as directors, each for a
three-year term:
VOTES FOR VOTES WITHHELD
--------- --------------
Henry D. Granger 6,395,303 1,427
Edward G. McCormick 6,394,754 1,976
Raymond B. Murray, III 6,395,413 1,317
Robert A. Wells 6,309,037 87,693
Ann H. Trabulsi 6,395,413 1,317
Anne Everest Wojtkowski 6,395,139 1,591
2. The appointment of Wolf & Company, P.C. as independent auditors of
Berkshire Hills Bancorp, Inc. for the fiscal year ending December 31,
2001 was ratified by the stockholders by the following vote:
FOR AGAINST ABSTAIN
--- ------- -------
6,336,284 31,554 28,892
Item 5. Other Information.
-----------------
None.
18
Item 6. Exhibits and Reports on Form 8-K (ss.249.308 of this Chapter).
(a) Exhibits
3.1 Certificate of Incorporation of Berkshire Hills
Bancorp, Inc.(1)
3.2 Bylaws of Berkshire Hills Bancorp, Inc.(1)
4.0 Stock Certificate of Berkshire Hills Bancorp, Inc.(1)
(1) Incorporated by reference into this document from the Exhibits
filed with the Registration Statement on Form S-1, and any
amendments thereto, Registration No. 333-32146.
(b) Reports on Form 8-K
On May 14, 2001, the "Company" issued a press release which
reported that earnings for the three months ended March 31, 2001 were
$0.31 per share as previously reported. A press release announcing the
revised basic earnings per share was filed by exhibit.
19
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BERKSHIRE HILLS BANCORP, INC.
Dated: August 10, 2001 By: /s/ James A. Cunningham, Jr.
----------------------------
James A. Cunningham, Jr.
President, Chief Executive Officer
and Director
(principal executive officer)
Dated: August 10, 2001 By: /s/ Charles F. Plungis, Jr.
---------------------------
Charles F. Plungis, Jr.
Senior Vice President, Treasurer
and Chief Financial Officer
(principal financial and accounting officer)