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 September 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 6,581,192 shares of common stock, par value $0.01 per share,
outstanding as of November 9, 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
September 30, 2001 and December 31, 2000
Consolidated Statements of Income for the Three and Nine 2
Months Ended September 30, 2001 and 2000
Consolidated Statements of Changes in Stockholders' Equity 3
for the Nine Months Ended September 30, 2001 and 2000
Consolidated Statements of Cash Flows for the 4
Nine Months Ended September 30, 2001 and 2000
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
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 18
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
September December 31,
30, 2001 2000
------------- --------------
(In thousands)
Assets:
Cash and due from banks $ 25,009 $ 26,891
Short-term investments 25,003 16,721
------------- --------------
Total cash and cash equivalents 50,012 43,612
Securities available for sale, at fair value 93,423 99,309
Securities held to maturity, at amortized cost 27,341 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 815,208 793,621
Loans held for sale, at fair value 1,265 --
Allowance for loan losses (10,841) (10,216)
------------- --------------
Net loans 805,632 783,405
Premises and equipment, net 13,719 12,370
Foreclosed real estate -- 50
Accrued interest receivable 6,036 6,310
Goodwill 11,600 6,260
Other assets 20,542 20,092
------------- --------------
Total assets $1,037,375 $1,011,340
============= ==============
Liabilities and Stockholders' Equity:
Deposits $742,389 $729,594
Federal Home Loan Bank advances 135,869 101,385
Securities sold under agreements to repurchase 1,850 2,030
Net deferred tax liability 3,571 4,482
Loans sold with recourse -- 7,740
Accrued expenses and other liabilities 8,105 4,787
------------- --------------
Total liabilities 891,784 850,018
------------- --------------
Minority Interests 529 --
Stockholders' equity:
Preferred stock ($.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 September 30, 2001
and December 31, 2000; shares outstanding: 6,839,470
at September 30, 2001 and 7,673,761 at December 31, 2000)
Additional paid-in capital 74,221 74,054
Unearned compensation (11,502) (7,187)
Retained earnings 79,599 74,554
Accumulated other comprehensive income 18,095 19,824
Treasury stock, at cost (834,291 shares at September 30, 2001) (15,428) --
------------- --------------
Total stockholders' equity 145,062 161,322
------------- --------------
Total liabilities and stockholders' equity $1,037,375 $1,011,340
============= ==============
See accompanying notes to unaudited consolidated financial statements.
1
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Unaudited Unaudited
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ---------------------------
2001 2000 2001 2000
----------- ----------- ----------- ------------
(In thousands, except per share amounts)
Interest and Dividend Income:
Bond interest $1,286 $1,444 $4,250 $3,911
Stock dividends 393 491 1,143 1,179
Short-term investment interest 128 118 272 300
Loan interest 17,289 16,773 51,831 46,125
----------- ----------- ----------- ------------
Total interest and dividend income 19,096 18,826 57,496 51,515
----------- ----------- ----------- ------------
Interest expense:
Interest on deposits 6,749 7,059 20,999 20,111
Interest on FHLB advances 1,703 1,550 5,077 4,062
Interest on securities sold under agreements
to repurchase and other borrowings 11 30 251 60
----------- ----------- ----------- ------------
Total interest expense 8,463 8,639 26,327 24,233
----------- ----------- ----------- ------------
Net interest income 10,633 10,187 31,169 27,282
Provision for loan losses 945 810 2,625 2,430
----------- ----------- ----------- ------------
Net interest income, after provision for loan losses 9,688 9,377 28,544 24,852
----------- ----------- ----------- ------------
Non-interest income:
Customer service fees 434 399 1,357 1,194
Trust department fees 428 408 1,303 1,234
Loan fees 235 164 486 569
Gain (loss) on securities, net (11) 72 266 293
License maintenance & processing fees 1,006 -- 1,006 --
License sales & other fees 1,390 -- 1,390 --
Other income 124 118 355 214
----------- ----------- ----------- ------------
Total non-interest income 3,606 1,161 6,163 3,504
----------- ----------- ----------- ------------
Operating expenses:
Salaries and benefits 5,063 3,583 12,665 10,381
Occupancy and equipment 1,291 1,069 3,332 3,250
Marketing and advertising 120 132 409 331
Data processing 424 435 864 1,129
Professional services 429 149 859 327
Office supplies 162 126 682 559
Foreclosed real estate and other loans, net 604 356 1,840 984
Amortization of goodwill 196 137 445 412
Contributions -- -- -- 5,684
Minority Interests 29 -- 29 --
Other expenses 1,111 755 2,879 2,070
----------- ----------- ----------- ------------
Total operating expenses 9,429 6,742 24,004 25,127
----------- ----------- ----------- ------------
Income before taxes 3,865 3,796 10,703 3,229
Provision for income taxes 1,258 1,297 3,511 1,104
----------- ----------- ----------- ------------
Net income $2,607 $2,499 $7,192 $2,125
=========== =========== =========== ============
Earnings per share:
Basic $ 0.42 $ 0.35 $ 1.12 NA
Diluted $ 0.40 $ 0.35 $ 1.06 NA
Weighted average shares outstanding:
Basic 6,196 7,065 6,432 NA
Diluted 6,568 7,065 6,755 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 NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
UNAUDITED
(In Thousands)
Common Additional Unearned Retained
Stock Paid-in Compensation Earnings
Capital
------------------------------------------------------------
Balance at December 31, 2000 $ 77 $ 74,054 $(7,187) $ 74,554
Comprehensive income:
Net income -- -- -- 7,192
Change in net unrealized gain on
securities available for sale, net of
reclassification adjustments and
tax effects -- -- -- --
Total comprehensive income
Cash dividends declared -- -- -- (2,147)
Treasury stock purchased -- -- -- --
Purchase of common stock - MRP -- -- (5,453) --
Change in unearned compensation - MRP -- -- 727 --
Change in unearned compensation - ESOP -- 167 411 --
------------------------------------------------------------
Balance at September 30, 2001 $ 77 $ 74,221 $ (11,502) $ 79,599
============================================================
Balance at December 31, 1999 $ -- $ -- $ -- $ 70,679
Comprehensive income:
Net income -- -- -- 2,125
Change in net unrealized gain on
securities available for sale, net of
reclassification adjustments and
tax effects -- -- -- --
Total comprehensive income
Issuance of common stock in connection
with conversion from mutual to stock-
owned bank holding company 77 74,023 -- --
Cash dividends declared -- -- -- (707)
Change in unearned compensation - ESOP -- 12 (7,572) --
------------------------------------------------------------
Balance at September 30, 2000 $ 77 $ 74,035 $(7,572) $ 72,097
============================================================
Accumulated
Other
Comprehensive Treasury Total
Income Stock
---------------------------------------------------
Balance at December 31, 2000 $ 19,824 $ -- $161,322
Comprehensive income:
Net income -- -- 7,192
Change in net unrealized gain on
securities available for sale, net of
reclassification adjustments and
tax effects (1,729) -- (1,729)
-----------------
Total comprehensive income 5,463
Cash dividends declared -- -- (2,147)
Treasury stock purchased -- (15,428) (15,428)
Purchase of common stock - MRP -- -- (5,453)
Change in unearned compensation - MRP -- -- 727
Change in unearned compensation - ESOP -- -- 578
---------------------------------------------------
Balance at September 30, 2001 $ 18,095 $(15,428) $145,062
===================================================
Balance at December 31, 1999 $ 17,673 $ -- $88,352
Comprehensive income:
Net income -- -- 2,125
Change in net unrealized gain on
securities available for sale, net of
reclassification adjustments and
tax effects (518) -- (518)
-----------------
Total comprehensive income 1,607
Issuance of common stock in connection
with conversion from mutual to stock-
owned bank holding company -- -- 74,100
Cash dividends declared -- -- (707)
Change in unearned compensation - ESOP -- -- (7,560)
---------------------------------------------------
Balance at September 30, 2000 $ 17,155 $ -- $155,792
===================================================
See accompanying notes to unaudited consolidated financial statements.
3
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Nine Months Ended September 30,
-------------------------------------
2001 2000
------------------ --------------
(In thousands)
Cash flows from operating activities:
Net income $ 7,192 $ 2,125
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 2,625 2,430
Net amortization of securities 131 157
Charitable contribution in the form of equity securities -- 5,684
Depreciation and amortization expense 1,441 1,283
Amortization of goodwill 445 412
Management Rewards Plan expense 727 --
Employee stock ownership plan expense 578 141
Gain on securities, net (266) (293)
Losses on foreclosed real estate, net -- 36
Loss on sale of equipment 35 18
Deferred tax provision (benefit) 9 (3,125)
Loans originated for sale (18,769) (8,250)
Principal balance of loans sold 17,504 8,250
Minority interest 29 --
Changes in operating assets and liabilities:
Accrued interest receivable and other assets 395 (5,804)
Accrued expenses and other liabilities 2,250 235
------------------ --------------
Net cash provided by operating activities 14,326 3,299
Cash flows from investing activities:
Activity in available-for-sale securities:
Sales 8,315 32,520
Maturities 22,369 36,412
Principal payments 11,280 7,976
Purchases (38,624) (79,967)
Activity in held-to-maturity securities:
Maturities 11,597 9,041
Principal payments 16,462 7,516
Purchases (23,130) (31,371)
Purchase of Federal Home Loan Bank stock (1,376) (1,808)
Loan originations, net of principal payments (23,613) (120,368)
Additions to banking premises and equipment (1,836) (2,028)
Proceeds from sales of foreclosed real estate 76 164
Proceeds from sale of equipment 20 3
Loan to fund employee stock ownership plan -- (7,701)
Payment for purchase of EastPoint Technologies, LLC (7,300) --
------------------ --------------
Net cash used in investing activities (25,760) (149,611)
(continued)
See accompanying notes to unaudited consolidated financial statements.
4
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
Unaudited
Nine Months Ended September 30,
------------------------------------
2001 2000
----------------- --------------
(In thousands)
Cash flows from financing activities:
Net increase in deposits 14,298 21,484
Net increase (decrease) in securities sold under agreements to
repurchase (180) 1,801
Proceeds from Federal Home Loan Bank advances with maturities
in excess of three months 122,000 107,000
Repayments of Federal Home Loan Bank advances with maturities
in excess of three months (87,516) (58,796)
Proceeds of borrowings with maturities of three months or less, net of
repayments -- 5,026
Net decrease in loans sold with recourse (7,740) --
Treasury stock purchased (15,428) --
Purchase of common stock in connection with employee and non-
employee directors benefit programs
(5,453) --
Dividends paid (2,147) --
Net proceeds from initial public offering -- 68,416
----------------- --------------
Net cash provided by financing activities 17,834 144,931
Net change in cash and cash equivalents 6,400 (1,381)
Cash and cash equivalents at beginning of period 43,612 24,642
----------------- --------------
Cash and cash equivalents at end of period $ 50,012 $ 23,261
================= ==============
Supplemental cash flow information:
Interest paid on deposits $ 21,013 $ 20,080
Interest paid on borrowed funds 5,146 3,884
Income taxes paid, net 2,316 4,787
Transfers from loans to foreclosed real estate 26 80
See accompanying notes to unaudited consolidated financial statements.
5
BERKSHIRE HILLS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 September 30, 2001
and for the three and nine month periods ended September 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 September 30, 2001, the Company had outstanding commitments to originate
new residential and commercial loans totaling $21.5 million, which are not
reflected on the consolidated balance sheet. In addition, unadvanced funds on
home equity lines totaled $37.4 million while unadvanced commercial lines,
including unadvanced construction loan funds, totaled $63.1 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 nine months ended
September 30, 2001, and for the three months ended September 30, 2000, but not
for the nine months ended September 30, 2000, since shares of common stock were
not issued until June 27, 2000.
Earnings per share equaled $0.42 for the quarter ending September 30, 2001,
based on 6,196,013 average shares outstanding. Diluted earnings per share
equaled $0.40 for the quarter ending September 30, 2001, based on 6,567,976
average shares outstanding. For the nine months ending September 30, 2001,
earnings per share equaled $1.12 based on 6,432,179 shares outstanding. Diluted
earnings per share equaled $1.06 based on 6,754,663 shares outstanding.
Note 4. Book Value
- --------------------
The book value per share of Berkshire Hills' common stock on September 30,
2001 was $21.21, based on total equity of $145.1 million and outstanding shares
of 6,839,470. This compares to December 31, 2000's book value of $21.02, based
on total equity of $161.3 million and total outstanding shares of 7,673,761.
6
Note 5. Acquisition
- ---------------------
On June 29, 2001, the Company, through its wholly-owned subsidiary
Berkshire Hills Technology, Inc., purchased a controlling interest in EastPoint
Technologies, LLC, ("EastPoint") 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 six clients of M&I EastPoint
Technology, Inc. and/or Preferred Financial Systems, Inc. and at June 29, 2001,
one other of said clients had received the necessary approvals to participate in
the purchase. As a result, the Company's equity interest in EastPoint was 93.6%
for the third quarter of 2001. Three other banks received the necessary
approvals by the end of October, dropping the Company's equity interest to
66.7%. The remaining bank is expecting a regulatory decision by November 30,
2001. If its application is approved, the Company's equity interest in EastPoint
will decline to 60.3% and represent a total investment of $4.7 million.
EastPoint is committed to position itself as a leader in the development of
client/server software applications to the financial industry.
Note 6. 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.
Note 7. Termination of Defined Benefit Pension Plan
- -----------------------------------------------------
During 2001, the Company terminated 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.
7
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 nine months ended September 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, national and
regional 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.
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, an additional 568,427 shares of Berkshire Hills common stock
were donated to the Berkshire Hills Foundation, a charitable foundation.
On July 25, 2001, our Board of Directors approved the payment of a cash
dividend of $0.11 per share, payable on August 24, 2001, to stockholders of
record on August 7, 2001.
8
Comparison of Financial Condition at September 30, 2001 and December 31, 2000
Total assets at September 30, 2001 were $1.04 billion, an increase of $26.0
million, or 2.6%, from $1.01 billion at December 31, 2000. Additional borrowings
of $34.5 million from the Federal Home Loan Bank of Boston, along with increased
deposits of $12.8 million, funded a $22.9 million increase in loans outstanding
and the purchase of $20.9 million of the Company's common stock for the
authorized stock repurchase programs (834,291 shares) and 2001 Stock-Based
Incentive Plan (306,950 shares).
Loans
Total loans outstanding increased $22.9 million, or 2.9%, during the first
nine months of 2001. Berkshire County tourism remained strong in the first three
quarters of 2001, prompting loan demand from lodging, leisure, and cultural
organizations. As a result, commercial one-to four-family, commercial real
estate, and commercial construction loans increased $32.6 million, to $116.0
million at September 30, 2001, from $83.4 million at December 31, 2000.
Meanwhile, residential one-to four-family loans experienced a decline of $6.5
million due to the sale of long-term fixed rate mortgages to a third party.
At September 30, 2001 At December 31, 2000
------------------------------ ------------------------------
Percent Percent
Balance of Total Balance of Total
-------------- ------------- ------------- --------------
(Dollars in thousands)
Mortgage loans on real estate:
Residential one-to four-family $237,833 29.13% $244,290 30.78%
Commercial one-to four-family 11,522 1.41% 11,063 1.39%
Commercial real estate 87,035 10.66% 63,871 8.05%
Commercial construction 17,482 2.14% 8,480 1.07%
Multi-family 15,842 1.94% 15,699 1.98%
-------------- -------------
Total real estate loans 369,714 45.28% 343,403 43.27%
Commercial loans 165,275 20.24% 167,085 21.05%
Consumer loans:
Automobile 225,997 27.68% 230,648 29.06%
Home equity loans 33,920 4.15% 34,471 4.34%
Other 21,567 2.64% 18,014 2.27%
-------------- -------------
Total consumer loans 281,484 34.48% 283,133 35.68%
Total loans 816,473 793,621
Less: Allowance for loan losses (10,841) 1.33% (10,216) 1.29%
-------------- -------------
Loans, net $805,632 $783,405
============== =============
Consumer loans fell $1.6 million to $281.5 million during the first nine
months of 2001 as new loan originations did not keep pace with monthly loan
amortization and payoffs. Automobile loans decreased by $4.7 million and now
comprise only 27.7% of total loans outstanding, down from 29.1% at December 31,
2000, due to the Company's decision to lessen its emphasis on automobile lending
and refocus its marketing efforts toward other types of loans.
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
9
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 September 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 such as the credit history and credit quality of the borrower, the type
and geographic concentration of loans in the portfolio, and the local economic
environment. 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 September 30, 2001, the allowance for loan losses totaled $10.8 million,
or 1.33% of total loans as compared to $10.2 million, or 1.29% of total loans on
December 31, 2000. Charged-off loans totaled $2.6 million during the first nine
months this year as compared to $1.0 million last year due to weakness in the
indirect automobile portfolio and a more aggressive charge-off policy. However,
recoveries totaled $591,000 this year as compared to $310,000 last year, an
increase of $281,000, as the Company bolstered efforts to collect previously
charged-off loans. On September 30, 2001, the allowance expressed as a
percentage of nonperforming loans was 179.58% while on September 30, 2000, it
was 621.53%.
At and for the
Nine Months Ended
----------------------------------
September 30, September 30,
2001 2000
---------------- -----------------
(Dollars in thousands)
Allowance for loan losses, beginning of period $ 10,216 $8,534
Charged-off loans:
Mortgage loans on real estate 33 19
Commercial 139 226
Consumer 2,419 780
---------------- -----------------
Total charged-off loans 2,591 1,025
Recoveries:
Mortgage loans on real estate -- 46
Commercial 225 106
Consumer 366 158
---------------- -----------------
Total recoveries 591 310
Provision for loan losses 2,625 2,430
---------------- -----------------
Allowance for loan losses, end of period $ 10,841 $ 10,249
================ =================
Net loans charged-off to total loans 0.24% 0.09%
Allowance for loan losses to total loans 1.33% 1.29%
Allowance for loan losses to nonperforming loans 179.58% 621.53%
Recoveries to charge-offs 22.81% 30.24%
10
Nonperforming Assets
The following table sets forth information regarding nonperforming assets
as of September 30, 2001 and December 31, 2000.
At September 30, At December 31,
2001 2000
------------------------------------------
(Dollars in thousands)
Nonaccruing loans:
Mortgage loans on real estate:
Residential one-to four-family $ 78 $ 390
Commercial one-to four-family -- --
Commercial real estate -- --
Commercial construction -- --
Multi - family 712 --
Commercial 1,480 466
Consumer 3,767 2,013
------------------ ------------------
Total 6,037 2,869
------------------ ------------------
Other real estate owned -- 50
------------------ ------------------
Total nonperforming assets $6,037 $ 2,919
================== ==================
Total nonperforming loans as a percentage
of total loans 0.74% 0.36%
Total nonperforming assets as a percentage of
total assets 0.58% 0.29%
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 September 30, 2001, the Company had no 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 September 30, 2001, total
nonaccruing loans amounted to $6.0 million, an increase of $3.2 million, or
110.4%, from $2.9 million at December 31, 2000. Nonaccruing consumer loans,
primarily indirect automobile loans, totaled $3.8 million at September 30, 2001
up from $2.0 million at December 31, 2000 as a slowing local economy in
industries other than those that are tourist related and the negative economic
effects that have occurred in the aftermath of the events of September 11, 2001
have adversely affected the automobile portfolio. As a result, the ratio of
nonperforming loans as a percentage of total loans increased to 0.74% in
September of 2001, from 0.36% as of December 31, 2000. Commercial and
multi-family loan nonaccruals have also increased as three loans totaling $1.6
million have been placed on nonperforming status.
Investment Securities
Securities totaled $129.8 million at the end of September 2001 as compared
to $139.2 million at December 31, 2000. Balances declined during the first nine
months of 2001 as maturing funds from investments were used to support other
operating activities. The net unrealized gain in the portfolio decreased by $1.7
million from December 31, 2000 due to weakness in the stock market. This change
was recognized in accumulated other comprehensive income on the consolidated
statement of changes in stockholders' equity.
11
Goodwill
Goodwill totaled $11.6 million on September 30, 2001, a $5.3 million, or
85.3%, rise from December 31, 2000. This increase was wholly attributable to
estimated goodwill of $5.7 million connected with the June 29, 2001 investment
in EastPoint Technologies, LLC. An appraisal of EastPoint's software is expected
to be completed during the fourth quarter, which may result in an adjustment to
the estimate.
Miscellaneous Assets
From December 31, 2000 to September 30, 2001, other assets and premises and
equipment rose a combined $1.8 million. Foremost in the increase is the
Company's $3.4 million allocated portion of EastPoint's miscellaneous assets
such as accounts receivable, software and equipment. Partially offsetting this
increase was a $744,000 decline in repossessed automobiles and the January 2,
2001 collection of a $1.0 million security that matured on Sunday, December 31,
2000.
Deposits
Customers' deposits have always been the primary funding vehicle for the
Company's asset base. The following table sets forth the Company's deposit
stratification as of September 30, 2001 and December 31, 2000.
At September 30, 2001 At December 31, 2000
--------------------------------- ----------------------------------
% of % of
Balance Deposits Balance Deposits
-------------- ------------- -------------- --------------
(Dollars in thousands)
Demand deposits $78,430 10.56% $76,750 10.52%
NOW accounts 78,652 10.59% 79,978 10.96%
Savings accounts 146,723 19.76% 137,293 18.82%
Money Market accounts 106,513 14.35% 115,800 15.87%
Certificates of Deposit 332,071 44.73% 319,773 43.83%
-------------- --------------
Total $742,389 $729,594
============== ==============
Total deposits were $742.4 million on September 30, 2001, an increase of
1.8% for the first nine months of the year. A seasonally strong third quarter
coupled with increased investments in certificates of deposit by customers
looking for a guaranteed positive return instead of investing in the volatile
stock market accounted for the deposit growth. Core deposits, which the Company
considers to be all but certificates of deposit, were 55.3% of total deposits on
September 30, 2001 as compared to 56.2% on December 31, 2000.
Borrowings
Since deposit growth in previous quarters 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 $34.5 million to $135.9 million since
the end of last year. The Company's borrowing capacity at the Federal Home Loan
Bank of Boston is in excess of $190 million.
Stockholders' Equity and Regulatory Capital
At September 30, 2001, the Company had $145.1 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 awards under the
Company's 2001 Stock-Based Incentive Plan and the purchase of 834,291 shares at
a cost of $15.4 million during the Company's 2001 repurchase programs. So far
this year, the Company has completed two 5% repurchase programs and is
12
currently involved in its third. The Company also declared and paid cash
dividends totaling $0.32 per common share, amounting to $2.1 million during the
first nine months of 2001. Partially offsetting these decreases in stockholders'
equity was net income of $7.2 million.
The Company's capital to assets ratios for September 30, 2001, and December
31, 2000, were 13.98% and 15.95%, respectively. The various regulatory capital
ratios for the Company on September 30, 2001 and December 31, 2000 were as
follows:
September 30, 2001 December 31, 2000
------------------ -----------------
Total capital to risk weighted assets 16.25% 20.15%
Tier 1 capital to risk weighted assets 13.56% 17.12%
Tier 1 capital to average assets 11.66% 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 September 30, 2001.
Comparison of Operating Results for the Three Months Ended September 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 $446,000, or 4.4%, to $10.6 million for the third quarter
of 2001. The Company's net interest margin decreased to 4.36% this quarter from
4.45% for the same quarter last year as lower market interest rates led to lower
loan interest rates and yields on investments.
Total interest and dividend income increased $270,000, or 1.4%, to $19.1
million for the third quarter of 2001 as compared to the same period last year.
Loan interest grew to $17.3 million in the current quarter, an increase of
$516,000, or 3.1%, from the same period last year as strong commercial real
estate and commercial construction loan growth contributed to a higher level of
interest earnings.
Total interest expense fell $176,000, or 2.0%, to $8.5 million this year
due primarily to lower rates paid on certificates of deposit. Deposit expense
fell by $310,000 this year to $6.7 million while interest on FHLB advances
increased $153,000, to $1.7 million from $1.6 million last year as higher loan
balances more than offset lower borrowing rates.
The Company's provision for loan losses was $945,000 in the third quarter
of this year as compared to $810,000 in the same quarter last year. In setting
the provision for the third 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, increased
delinquencies in the loan portfolio, prospects for loan charge-offs, especially
automobile loan charge-offs, current recoveries and the likelihood for
recoveries of previously charged-off loans, among other items. The $945,000
provision for loan losses in the third quarter was $36,000 less than the
$981,000 in net loans charged off.
13
After the provision for loan losses, net interest income was $9.7 million
for the quarter ending September 30, 2001, as compared to $9.4 million for the
same period last year, an increase of $311,000, or 3.3%.
Non-interest Income. For the three months ending September 30, 2001,
non-interest income totaled $3.6 million, an increase of $2.4 million from the
same quarter last year. This increase was due to two new income sources for the
Company derived from the June 29, 2001 investment in EastPoint. License sales
and other fees totaled $1.4 million this quarter and license maintenance and
processing fees amounted to $1.0 million for the quarter. License sales and
other fees were positively impacted by the payment of a one-time incremental
licensing fee of $1.1 million by one of EastPoint's clients. In other areas, an
increase in loan fees of $71,000 offset an $83,000 loss on securities.
Non-interest Expenses. Non-interest (operating) expenses amounted to $9.4
million for the three months ending September 30, 2001, an increase of $2.7
million, or 39.9%, from last year's $6.7 million. Salaries and benefits expense
rose $1.5 million, to $5.1 million this year, from $3.6 million last year.
Included in this increase was a $1.1 million salaries expense for EastPoint and
a $440,000 increase in 401(k), ESOP and Stock-Based Incentive Plan costs.
Non-interest expenses also rose due to a $222,000 increase in occupancy and
equipment expenses, a $280,000 increase in professional services, and a $356,000
increase in other expenses. The EastPoint expenditures for these categories were
$304,000, $170,000, and $269,000, respectively. Expenses attributable to
foreclosed real estate and other loans increased by $248,000 due to a higher
level of repossessed automobiles.
Excluding the operating expenses of EastPoint, which equaled $2.0 million,
this quarter's operating expenses totaled $7.5 million, a $709,000 increase, or
7.3%, from last year's third quarter.
Income Taxes. Income taxes were $1.3 million in this year's third quarter
with an effective tax rate of 32.5%. In the third quarter of last year, the
effective rate was 34.2%. The effective tax rate for 2001 is lower than 2000 due
to the establishment of a real estate investment trust earlier this year.
Comparison of Operating Results for the Nine Months Ended September 30, 2001 and
2000
Net Interest Income. Net interest income before the provision for loan
losses rose $3.9 million, or 14.2%, to $31.2 million during the first nine
months of 2001. Higher loan balances were primarily responsible for the
increase. The Company's net interest margin increased to 4.31% for the first
nine months of 2001 versus 4.22% for the first nine months of 2000, based on the
strength of the first six months of this year.
Total interest and dividend income from the loan and investment portfolios
increased $6.0 million, or 11.6%, to $57.5 million over the first nine months of
2001 as compared to the first nine months of 2000. Due largely to the growth in
loans outstanding, particularly commercial real estate and commercial
construction loans, loan interest rose to $51.8 million in 2001 from $46.1
million in 2000. In addition, investment income rose $275,000 to $5.7 million
this year as the Company benefited from higher yields and a higher level of
investment in fixed income securities earlier this year.
Interest expense rose $2.1 million, or 8.6%, to $26.3 million in the first
nine months of 2001. Borrowings from the Federal Home Loan Bank of Boston have
been used to support loan growth and have increased significantly over the past
nine months. Interest paid on the borrowings increased to $5.1 million for the
first nine months this year from $4.1 million over the comparable period last
year. Interest on deposits rose more slowly, increasing $888,000 to $21.0
million
14
this year, due to an increasing certificate of deposit base. In addition, other
interest expense rose $191,000 to $251,000 this year primarily due to interest
expense related to loans sold with recourse.
The Company's provision for loan losses was $2.6 million in the first nine
months of this year, as compared to $2.4 million in the same period last year.
In setting the provision for the first nine months 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, increased delinquencies in the loan portfolio, prospects for loan
charge-offs, especially automobile loan charge-offs, current recoveries and the
likelihood for recoveries of previously charged-off loans, among other items.
After the provision for loan losses, the Company's net interest income for
the first three quarters of 2001 was $28.5 million, up from $24.9 million for
the same period in 2000, an increase of 14.9%.
Non-interest Income. Through the first nine months of the year,
non-interest income rose $2.7 million, or 75.9%, over the comparable period last
year. A large portion of this increase, $2.4 million, was a result of the
Company's June 29, 2001 investment in EastPoint. Excluding this portion,
non-interest income rose $263,000 to $3.8 million from $3.5 million last year.
The increase came primarily from a $163,000 rise in customer service fees and a
$141,000 increase in other income.
Non-interest Expenses. Non-interest (operating) expenses totaled $24.0
million over 2001's first nine months, a decrease of $1.1 million over 2000's
$25.1 million. Salaries and benefits totaled $12.7 million, an increase of $2.3
million from $10.4 million last year. Included in this figure are $1.1 million
in EastPoint personnel expenses and a $1.5 million increase in expenses relating
to pension, retirement and Stock-Based Incentive Plans. Professional services
increased $532,000 to $859,000 this year primarily due to additional audit fees
along with legal and other costs associated with the EastPoint investment.
Foreclosed real estate and other loan expenses rose to $1.8 million from $1.0
million last year due to higher delinquencies in the automobile portfolio and
increased expenses related to the administration and collection of the
portfolio. Other expenses increased $809,000 to $2.9 million as new expenses
associated with being a public company contributed $498,000 to the total and the
investment in EastPoint contributed $269,000. On the other hand, data processing
costs decreased $265,000, to $864,000 from $1.1 million as savings have been
realized from the switch to an in-house imaging system from an outsourced
operation.
Included in 2000's figure is a one-time $5.7 million donation to Berkshire
Hills Foundation made in the second quarter. Included in 2001's figures are
third quarter expenses related to EastPoint totaling $2.0 million. Removing
these two expenses, net operating expenses rose $2.6 million, or 13.3%, over
last year's comparable period.
Income Taxes. Income taxes for the nine months ended September 30, 2001
increased $2.4 million from last year. The provision for taxes totaled $3.5
million, with an effective rate of 32.8%. The effective tax rate for 2000 was
34.2%. The effective tax rate for 2001 is lower than 2000 due to the
establishment of a real estate investment trust earlier this year.
15
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, the
Bank's excess deposit insurer.
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;
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.
16
For Berkshire Bank, market risk also includes price risk, primarily
security price risk. The securities portfolio had unrealized gains before taxes
of $27.8 million at September 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
decreased $1.7 million. 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 September 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 September 30, 2001
in Basis Points --------------------------------------------------------
(Rate Shock) Amount $ Change % Change
- --------------------------- --------------- -------------- -------------
(Dollars in thousands)
200 $ 47,287 $ 993 2.14%
100 46,260 (34) (0.07)
Static 46,294 -- --
(100) 47,673 1,379 2.98
(200) 49,203 2,909 6.28
The above table indicates that if there is a sudden and sustained rise or
fall in prevailing market interest rates of 200 basis points, Berkshire Bank's
net interest income would be expected to increase by $993,000 and $2.9 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.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS OF 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) None
18
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: November 9, 2001 By: /s/ James A. Cunningham, Jr.
-----------------------------------
James A. Cunningham, Jr.
President, Chief Executive Officer
and Director
(principal executive officer)
Dated: November 9, 2001 By: /s/ Charles F. Plungis, Jr.
------------------------------------------
Charles F. Plungis, Jr.
Senior Vice President, Treasurer
and Chief Financial Officer
(principal financial and accounting officer)
19