Berkshire Hills Reports 25% Earnings Growth and Record Second Quarter Earnings
and EPS; Asset Performance Remains Solid; Net Interest Margin Increases
Sequentially; $.16 Quarterly Dividend Declared
PITTSFIELD, Mass., July 17, 2008 (PRIME NEWSWIRE) -- Berkshire Hills Bancorp,
Inc. (Nasdaq:BHLB) reported a 25% increase in 2008 earnings to a second quarter
record of $5.7 million. Earnings per share increased by 6% to a second quarter
record of $0.55 compared to $0.52 in 2007. Berkshire is the parent of Berkshire
Bank, America's Most Exciting Bank(sm).
Berkshire reported record six month earnings of $11.8 million in 2008, which was
an increase of 24% over the first half of 2007. First half earnings per share
were a record $1.13 in 2008, an increase of 6% over $1.07 in 2007.
Recent highlights include:
* 24% increase in second quarter total revenue, compared to prior year
* 16% decrease in nonperforming assets to 0.42% of total assets during
second quarter
* 13% decrease in accruing delinquent loans to 0.37% of total loans
during second quarter
* 9% increase annualized in personal demand deposit balances in the
first six months
* 13% increase annualized in total commercial loans in the first six
months
* 3.45% net interest margin, increased from 3.41% in the prior quarter
and 3.15% in the second quarter of 2007
* 33% of first half revenues provided by non-interest income
* 0.15% net loan charge-offs (percent of average loans) annualized in
the first six months
Michael P. Daly, President and Chief Executive Officer, stated, "We had a solid
second quarter, maintaining our earnings momentum and reducing our already
modest level of nonperforming assets. We produced 6% growth in earnings per
share due to positive operating leverage, with revenue growth outpacing
expenses. Our commercial loans grew at a 13% annualized rate in the first half,
more than offsetting planned runoff in auto loans. We have also accepted run-off
of higher cost time deposits and money market balances while focusing on
relationship oriented deposits. These strategies helped to produce a 3.45% net
interest margin, which is the highest quarterly margin we have reported since
2003. Our growing non-interest income is also contributing to the growth and
stability of our earnings."
Mr. Daly continued, "Our asset quality remains sound. Our problem assets,
charge-offs, and delinquencies remain at modest levels. Our markets are
geographically conservative, providing continued opportunity for moderate
expansion in many sectors and buffering the economic difficulties that are
affecting most other regions more dramatically. We recognize the potential that
further economic challenges may lie ahead, but we feel that our risk management
has positioned us to continue to maintain better-than-average asset quality. We
have not operated subprime lending programs. We book conforming loans to
borrowers in and around our markets, and
this has allowed us to react promptly to minimize losses to date. We have the
highest regulatory capital rating of "Well Capitalized" and have maintained a
higher allowance for loan losses since we increased it with a special provision
nearly two years ago. Additionally, all of our deposits are 100% insured as a
result of our participation in both the FDIC and the Depositors Insurance Fund
which is sponsored mutually among Massachusetts savings banks."
Mr. Daly concluded, "With changes on the national banking scene, we have found
that there is more demand for the solutions that we offer as a local bank. Our
resulting strong earnings growth is adding to our capital strength. The American
Banker newspaper recently featured us in an article about our success as
America's Most Exciting BankSM. I'm also pleased to report that our continuing
long run performance was recognized by the Boston Globe in May when, for the
eighth year in a row, Berkshire was recognized as one of the 100 top performing
Massachusetts-based public companies."
First half 2008 earnings included the benefit of Berkshire's Vermont region,
which was formed with the acquisition of Factory Point Bancorp in September
2007. Most major categories of revenue and expense increased due to this
acquisition, and earnings per share included the impact of additional shares
issued in the acquisition. First half earnings also included the seasonal
benefit of insurance contingency revenue.
DIVIDEND DECLARED
The Board of Directors declared a quarterly cash dividend of $0.16 per share to
stockholders of record on July 31, 2008 and payable on August 14, 2008.
Including this dividend, the total dividends declared for the year-to-date in
2008 are $0.47 per share, which is a 9% increase over the same period in 2007.
FINANCIAL CONDITION
Total assets were $2.55 billion at mid-year 2008, increasing at a 3% annualized
rate in the first half of the year due to 4% annualized loan growth to $1.98
billion. Total loans increased by $34 million in the first half due to
commercial loan growth of $58 million. Commercial loans grew at a 13% annualized
rate in the first half of the year due to commercial real estate loans around
Berkshire's markets, representing increased market share as local business
borrowers have relied more on regional lenders and less on national lenders.
Permanent residential mortgages and home equity loans increased by $26 million
at a 7% annualized rate in the first half of 2008. Auto loans decreased by $38
million due to a planned reduction related to pricing and underwriting
conditions in that market. Consumer construction loans decreased by $12 million
due to slower residential construction.
Annualized net loan charge-offs remained low, declining to 0.13% of average
loans in the second quarter, compared to 0.17% in the prior quarter and to 0.14%
in the prior year second quarter. Second quarter charge-offs primarily consisted
of consumer loan charge-offs, which have remained around $400 thousand per
quarter for the last four quarters. Nonperforming assets decreased to 0.42% of
total assets at mid-year, compared to 0.51% at the prior quarter-end and 0.46%
at year-end 2007. This category included only two loans over $1 million, which
totaled $4.2 million. Accruing loans delinquent over 30 days decreased to 0.37%
of total loans at mid-year, compared to 0.44% at the prior quarter-end and 0.43%
at year-end 2007. There were no loans over $1.0 million in this category.
Foreclosed real estate totaled only $1.1 million at mid-year.
For the first half of 2008, consumer non-maturity deposit balances increased by
about $45 million (7%). This was primarily due to money market account
promotions and steady growth in relationships, as reflected in the 9% annualized
first half growth rate in personal demand deposit balances. Most of Berkshire's
retail deposit and loan promotions are linked to companion checking accounts.
Consumer deposit growth was offset by lower commercial balances and the planned
paydown of $18 million in higher cost brokered time deposits in the second
quarter. The number of commercial checking accounts increased at a 5% annualized
rate in the first half, and commercial deposits (including municipalities)
reflected targeted run-off of higher cost accounts. Excluding brokered deposits,
total deposits increased by $7 million during the first half of the year.
Deposit growth in the first quarter was offset by reductions in the second
quarter as the Company targeted run-off of certain higher cost money market and
time accounts. Berkshire began to promote time accounts around mid-year in
anticipation of rising interest rates later in the year. Berkshire also entered
into $140 million in interest rate swaps in the first half to fix the rate on
variable rate borrowings, thereby reducing risk related to rising rates.
Berkshire increased borrowings by $45 million during the first half to fund loan
growth and brokered time deposit payoffs.
Stockholders' equity increased at a 2% annualized rate to $330 million in the
first half of 2008. The ratio of tangible equity to assets increased to 6.3%
from 6.2% during the first half, while the ratio of total equity to assets
remained at 13.0%. Most earnings were returned to stockholders as dividends and
stock buybacks due to lower asset growth. Tangible book value per share
increased at an 8% annualized rate to $14.36, and total book value per share
increased to $31.78 at mid-year. During the second quarter, Berkshire
repurchased 100,000 shares under its repurchase program, at an average price of
$25.88 per share.
RESULTS OF OPERATIONS
Most major categories of income and expense increased primarily due to the
contribution of Vermont operations resulting from the Factory Point Bancorp
acquisition in September 2007. Net income increased by 25% in the second quarter
and by 24% in the first half of 2008 compared to 2007. Total net revenue
increased by 24% and 21% for these periods, respectively. On a per share basis,
net income increased by 6% in both periods, and net revenue increased by 6% and
3% in the second quarter and first half, respectively. Per share results also
included the benefit of stock buybacks. Second quarter earnings were lower than
first quarter earnings due to the higher seasonal insurance revenues in the
first quarter. Additionally, second quarter earnings included a non-core tax
benefit of $0.04 per share which was offset by $0.04 per share of non-core
after-tax non-interest expense charges. As a result, core earnings per share
were the same as the $0.55 reported for GAAP earnings per share.
Second quarter net interest income increased by $3.6 million (24%) year-to-year
including the benefit of Vermont balances along with organic growth. Net
interest income increased by $0.4 million at an 8% annualized rate compared to
the prior quarter. This linked quarter growth was due to 4% annualized growth in
average loan balances and an improvement in the net interest margin to 3.45%
from 3.41%. The margin improvement resulted primarily from reductions in higher
cost deposit balances, along with the benefit of second quarter loan growth. The
net interest margin was up from 3.15% in the second quarter of 2007, benefiting
from the Factory Point acquisition, along with pricing and balance sheet
structural changes prior to the start of the year.
Second quarter non-interest income increased by $1.6 million (23%) year-to-year
including the additional Vermont income. Total bank fee income increased by 6%
from the prior quarter due to deposit fee income growth. For the first six
months, insurance fee income increased by 1% from the prior year, including the
seasonally high first quarter. Second quarter wealth management new business
bookings equated to 18% annualized growth, although linked quarter wealth
management fees decreased due to market activity. Non-interest income was 33% of
total first half revenues, including the benefit of seasonal insurance revenues.
The second quarter loan loss provision was $1.1 million in 2008 compared to $0.1
million in 2007. The provision was unusually low in 2007 due to the outplacement
of certain commercial loan balances in that period. The provision in the first
half of 2008 totaled $1.9 million and exceeded first half net loan charge-offs
of $1.5 million. As a result, the loan loss allowance increased and remained at
1.14% of total loans.
Second quarter non-interest expense increased by $3.5 million (23%) year-to-year
including the additional Vermont expense. Second quarter 2008 expense included
$0.7 million in non-core charges related to severance and reversals of deferred
loan costs and late fees receivable. Excluding these charges, non-interest
expense decreased by $0.1 million compared to the prior quarter, contributing to
improved operating leverage. The efficiency ratio in the first half of 2008
improved to 61% compared to 64% in the prior year. This ratio includes the
impact of Berkshire's New York de novo branch program. The second quarter tax
rate included a credit resulting from the reduction in the valuation reserve for
deferred state tax assets due to higher taxable income in Berkshire Bank. The
second quarter 2008 effective tax rate was 30% before the impact of this credit.
The tax rate benefited from proportionally higher tax credits, and decreased
from 32% in the prior quarter and in the same quarter of the prior year.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 A.M. eastern time on
Friday, July 18, 2008 to discuss second quarter results and guidance about
expected future results. Information about the conference call follows:
Dial-in: 800-860-2442
Webcast: www.berkshirebank.com (Investor Relations link)
A telephone replay of the call will be available until July 25, 2008 by calling
877-344-7529 and entering replay passcode: 420677. The webcast and a podcast
will be available at Berkshire's website above for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is headquartered in Pittsfield, Massachusetts. It has
$2.5 billion in assets and is the parent of Berkshire Bank -- America's Most
Exciting Bank(sm). Berkshire provides business and consumer banking, insurance,
and wealth management services through 48 banking and insurance offices in
Western Massachusetts, Northeastern New York, and Southern Vermont. For more
information, visit www.berkshirebank.com or call 800-773-5601.
The Berkshire Hills Bancorp, Inc. logo is available at
http://www.primenewswire.com/newsroom/prs/?pkgid=5000
FORWARD LOOKING STATEMENTS
Statements in this news release regarding Berkshire Hills Bancorp that are not
historical facts are "forward-looking statements". These statements reflect
management's views of future events, and involve risks and uncertainties. For a
discussion of factors that could cause actual results to differ materially from
expectations, see "Forward Looking Statements" in the Company's 2007 Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at
the Securities and Exchange Commission's Internet website (www.sec.gov) and to
which reference is hereby made. Actual future results may differ significantly
from results discussed in these forward-looking statements, and undue reliance
should not be placed on such statements. Except as required by law, the Company
assumes no obligation to update any forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This news release contains certain non-GAAP financial measures in addition to
results presented in accordance with Generally Accepted Accounting Principles
("GAAP"). These non-GAAP measures provide supplemental perspectives on operating
results, performance trends, and financial condition. They are not a substitute
for GAAP measures; they should be read and used in conjunction with the
Company's GAAP financial information. A reconciliation of non-GAAP financial
measures to GAAP measures is included in the accompanying financial tables. In
all cases, it should be understood that non-GAAP per share measures do not
depict amounts that accrue directly to the benefit of shareholders. The Company
utilizes the non-GAAP measure of core earnings in evaluating operating trends,
including components for core revenue and expense. These measures exclude
amounts which the Company views as unrelated to its normalized operations,
including merger costs and restructuring costs. Similarly, the efficiency ratio
is also adjusted for these non-core items. Additionally, the Company adjusts
core income to exclude amortization of intangibles to arrive at a measure of the
underlying operating cash return for the benefit of stockholders. The Company
also adjusts certain equity related measures to exclude intangible assets due to
the importance of these measures to the investment community.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
----------------------------------------------------------------------
June 30, March 31, December 31,
(In thousands) 2008 2008 2007
----------------------------------------------------------------------
Assets
Total cash and cash
equivalents $ 31,470 $ 31,747 $ 33,259
Fed funds sold & short-term
investments 2,247 51,838 7,883
Securities at fair value 14,959 -- --
Securities available for sale,
at fair value 200,133 200,980 197,964
Securities held to maturity,
at amortized cost 26,485 39,626 39,456
Federal Home Loan Bank stock 21,077 21,077 21,077
Loans held for sale 9,865 2,913 3,445
Residential mortgages 664,581 655,184 657,045
Commercial mortgages 768,365 718,318 704,764
Commercial business loans 197,580 200,048 203,564
Consumer loans 347,515 361,635 378,643
---------------------------------------------------------------------
Total loans 1,978,041 1,935,185 1,944,016
Less: Allowance for loan
losses (22,581) (22,130) (22,116)
---------------------------------------------------------------------
Net loans 1,955,460 1,913,055 1,921,900
Premises and equipment, net 38,054 38,489 38,806
Goodwill 161,526 162,000 161,632
Other intangible assets 19,379 20,398 20,820
Cash surrender value of life
insurance policies 35,007 34,516 35,316
Other assets 31,213 29,744 31,874
---------------------------------------------------------------------
Total assets $2,546,875 $2,546,383 $2,513,432
---------------------------------------------------------------------
Liabilities and stockholders'
equity
Demand deposits $ 225,001 $ 224,471 $ 231,994
NOW deposits 193,551 208,913 213,150
Money market deposits 457,694 514,586 439,341
Savings deposits 217,605 213,054 210,186
---------------------------------------------------------------------
Total non-maturity deposits 1,093,851 1,161,024 1,094,671
Brokered time deposits 3,008 21,446 21,497
Other time deposits 714,371 697,633 706,395
---------------------------------------------------------------------
Total time deposits 717,379 719,079 727,892
---------------------------------------------------------------------
Total deposits 1,811,230 1,880,103 1,822,563
---------------------------------------------------------------------
Borrowings 379,376 308,283 334,474
Junior subordinated debentures 15,464 15,464 15,464
Other liabilities 10,769 13,792 14,094
---------------------------------------------------------------------
Total liabilities 2,216,839 2,217,642 2,186,595
Total stockholders' equity 330,036 328,741 326,837
---------------------------------------------------------------------
Total liabilities and
stockholders' equity $2,546,875 $2,546,383 $2,513,432
---------------------------------------------------------------------
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
----------------------------------------------------------------------
LOAN ANALYSIS
-------------
Dec. 31,
June 30, 2008 March 31, 2008 2007
----------------------------------------------------------------------
(Dollars in millions) Quarterly Quarterly
annualized annualized
Balance growth Balance growth Balance
----------------------------------------------------------------------
Residential mortgages:
1 - 4 Family $ 630 14% $ 609 (1)% $ 610
Construction 35 (96) 46 (9) 47
----------------------------------------------------------------------
Total residential
mortgages 665 6 655 (1) 657
Commercial mortgages:
Construction 132 6 130 16 125
Single and
multi-family 76 (15) 79 58 69
Other commercial
mortgages 560 40 509 (1) 510
----------------------------------------------------------------------
Total commercial
mortgages 768 28 718 8 704
Commercial business
loans 198 (4) 200 (8) 204
----------------------------------------------------------------------
Total commercial
loans 966 21 918 4 908
Consumer loans:
Auto and other 173 (43) 194 (32) 211
Home equity 174 14 168 -- 168
----------------------------------------------------------------------
Total consumer loans 347 (17) 362 (18) 379
----------------------------------------------------------------------
Total loans $1,978 9% $1,935 (2)% $1,944
----------------------------------------------------------------------
DEPOSIT ANALYSIS
----------------
Dec. 31,
June 30, 2008 March 31, 2008 2007
----------------------------------------------------------------------
(Dollars in millions) Quarterly Quarterly
annualized annualized
Balance growth Balance growth Balance
----------------------------------------------------------------------
Demand $ 225 2 % $ 224 (14)% $ 232
NOW 193 (31) 209 (8) 213
Money market 458 (44) 515 69 439
Savings 218 9 213 4 211
----------------------------------------------------------------------
Total non-maturity
deposits 1,094 (23) 1,161 24 1,095
Time less than $100,000 390 (11) 401 (8) 409
Time $100,000 or more 324 36 297 (1) 298
Brokered time 3 (343) 21 (9) 21
----------------------------------------------------------------------
Total time deposits 717 (1) 719 (5) 728
----------------------------------------------------------------------
Total deposits $1,811 (15)% $1,880 12% $1,823
----------------------------------------------------------------------
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
- ----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
- ----------------------------------------------------------------------
(In thousands, except
per share data) 2008 2007 2008 2007
- -------------------------------------------------- ------------------
Interest and dividend income
Loans $29,823 $29,152 $61,146 $57,674
Securities and other 3,011 2,842 6,211 5,790
---------------------------------------------------------------------
Total interest and dividend
income 32,834 31,994 67,357 63,464
Interest expense
Deposits 10,521 12,318 22,809 24,267
Borrowings and junior
subordinated debentures 3,666 4,638 7,607 8,969
---------------------------------------------------------------------
Total interest expense 14,187 16,956 30,416 33,236
---------------------------------------------------------------------
Net interest income 18,647 15,038 36,941 30,228
Non-interest income
Insurance commissions and
fees 3,694 3,786 8,840 8,777
Deposit service fees 2,486 1,788 4,641 3,302
Wealth management fees 1,567 968 3,195 1,887
Loan service fees 228 48 465 357
---------------------------------------------------------------------
Total fee income 7,975 6,590 17,141 14,323
Other 562 303 868 726
Gain (loss) on sale of
securities, net (26) -- (26) 81
---------------------------------------------------------------------
Total non-interest income 8,511 6,893 17,983 15,130
---------------------------------------------------------------------
Total net revenue 27,158 21,931 54,924 45,358
Provision for loan losses 1,105 100 1,930 850
Non-interest expense
Salaries and employee
benefits 9,842 8,230 19,498 16,741
Occupancy and equipment 2,774 2,385 5,742 4,871
Marketing, data processing,
and professional services 2,181 2,116 4,302 4,063
Non-recurring expense 683 -- 683 153
Amortization of intangible
assets 1,019 662 2,103 1,324
Other 2,133 1,710 4,378 3,360
---------------------------------------------------------------------
Total non-interest expense 18,632 15,103 36,706 30,512
---------------------------------------------------------------------
Income before income taxes 7,421 6,728 16,288 13,996
Income tax expense 1,708 2,152 4,526 4,478
---------------------------------------------------------------------
Net income $ 5,713 $ 4,576 $11,762 $ 9,518
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic earnings per share $ 0.55 $ 0.52 $ 1.14 $ 1.09
---------------------------------------------------------------------
---------------------------------------------------------------------
Diluted earnings per share $ 0.55 $ 0.52 $ 1.13 $ 1.07
---------------------------------------------------------------------
Weighted average shares
outstanding
Basic 10,302 8,732 10,344 8,697
Diluted 10,384 8,875 10,420 8,855
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
--------------------------------------------------------------------
Quarters Ended
--------------------------------------------------------------------
(In thousands,
except per June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
share data) 2008 2008 2007 2007 2007
--------------------------------------------------------------------
Interest and dividend
income
Loans $29,823 $31,323 $32,666 $29,719 $29,152
Securities and other 3,011 3,200 3,183 2,912 2,842
--------------------------------------------------------------------
Total interest and
dividend income 32,834 34,523 35,849 32,631 31,994
Interest expense
Deposits 10,521 12,288 13,749 12,581 12,318
Borrowings and junior
subordinated
debentures 3,666 3,941 3,882 4,571 4,638
--------------------------------------------------------------------
Total interest expense 14,187 16,229 17,631 17,152 16,956
--------------------------------------------------------------------
Net interest income 18,647 18,294 18,218 15,479 15,038
Non-interest income
Insurance commissions
and fees 3,694 5,146 2,290 2,661 3,786
Deposit service fees 2,486 2,155 2,620 1,825 1,788
Wealth management fees 1,567 1,628 1,476 1,044 968
Loan service fees 228 237 91 324 48
--------------------------------------------------------------------
Total fee income 7,975 9,166 6,477 5,854 6,590
Other 562 306 551 433 303
Loss on securities, net (26) -- -- (672) --
Loss on prepayment of
borrowings, net -- -- -- (1,180) --
Gain (loss) on sale of
loans, net -- -- 41 (1,991) --
--------------------------------------------------------------------
Total non-interest
income 8,511 9,472 7,069 2,444 6,893
--------------------------------------------------------------------
Total net revenue 27,158 27,766 25,287 17,923 21,931
Provision for loan
losses 1,105 825 3,060 390 100
Non-interest expense
Salaries and employee
benefits 9,842 9,656 9,386 7,891 8,230
Occupancy and equipment 2,774 2,968 2,656 2,418 2,385
Marketing, data
processing, and
professional services 2,181 2,121 2,275 2,260 2,116
Non-recurring expense 683 -- 1,198 1,606 --
Amortization of
intangible assets 1,019 1,084 1,050 684 662
Other 2,133 2,245 1,828 1,730 1,710
--------------------------------------------------------------------
Total non-interest
expense 18,632 18,074 18,393 16,589 15,103
--------------------------------------------------------------------
Income before income
taxes 7,421 8,867 3,834 944 6,728
Income tax expense 1,708 2,818 761 -- 2,152
--------------------------------------------------------------------
Net income $ 5,713 $ 6,049 $ 3,073 $ 944 $ 4,576
--------------------------------------------------------------------
Basic earnings per
share $ 0.55 $ 0.58 $ 0.29 $ 0.11 $ 0.52
Diluted earnings per
share $ 0.55 $ 0.58 $ 0.29 $ 0.10 $ 0.52
Weighted average shares
outstanding
Basic 10,302 10,386 10,524 8,922 8,732
Diluted 10,384 10,457 10,664 9,045 8,875
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
ASSET QUALITY ANALYSIS
---------------------------------------------------------------------
At or for the Quarters Ended
---------------------------------------------------------------------
(Dollars in June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
thousands) 2008 2008 2007 2007 2007
---------------------------------------------------------------------
NON-PERFORMING ASSETS
Nonaccruing loans:
Residential mortgages $ 763 $ 1,060 $ 726 $ 623 $ 533
Commercial mortgages 5,329 7,082 5,177 4,977 1,580
Commercial business
loans 3,103 3,557 4,164 5,553 6,816
Indirect auto and
installment loans 503 374 346 164 100
Home equity 74 67 95 110 110
---------------------------------------------------------------------
Total nonaccruing
loans 9,772 12,140 10,508 11,427 9,139
Real estate owned 1,050 755 866 348 --
---------------------------------------------------------------------
Total nonperforming
assets $10,822 $12,895 $11,374 $11,775 $ 9,139
---------------------------------------------------------------------
Total nonperforming
loans/total loans 0.49% 0.63% 0.54% 0.59% 0.53%
Total nonperforming
assets/total assets 0.42% 0.51% 0.46% 0.48% 0.42%
PROVISION AND
ALLOWANCE FOR LOAN
LOSSES
Balance at beginning
of period $22,130 $22,116 $22,108 $19,151 $19,652
Charged-off loans (754) (883) (3,117) (1,954) (678)
Recoveries on
charged-off loans 100 72 65 68 77
---------------------------------------------------------------------
Net loans charged-off (654) (811) (3,052) (1,886) (601)
Acquired allowance -- -- -- 4,453 --
Provision for loan
losses 1,105 825 3,060 390 100
---------------------------------------------------------------------
Balance at end of
period $22,581 $22,130 $22,116 $22,108 $19,151
---------------------------------------------------------------------
Allowance for loan
losses/nonperforming
loans 231% 182% 210% 193% 210%
Allowance for loan
losses/total loans 1.14% 1.14% 1.14% 1.14% 1.11%
NET LOAN CHARGE-OFFS
Residential mortgages $ -- $ (24) $ -- $ -- $ --
Commercial mortgages (131) (175) -- -- --
Commercial business
loans (121) (213) (2,683) (1,497) (406)
Indirect auto and
installment loans (402) (339) (319) (329) (195)
Home equity -- (60) (50) (60) --
---------------------------------------------------------------------
Total net $ (654) $ (811) $(3,052) $(1,886) $ (601)
---------------------------------------------------------------------
Net charge-offs (YTD
annualized)/average
loans 0.15% 0.17% 0.34% 0.23% 0.12%
AVERAGE FICO SCORES
OF CONSUMER
AUTOMOBILE LOANS 731 731 730 729 730
DELINQUENT LOANS /
TOTAL LOANS
30-89 Days delinquent 0.33% 0.41% 0.39% 0.61% 0.29%
90 + Days delinquent
and still accruing 0.04% 0.03% 0.04% 0.10% 0.07%
---------------------------------------------------------------------
Total accruing
delinquent loans 0.37% 0.44% 0.43% 0.71% 0.36%
Nonaccruing loans 0.49% 0.63% 0.54% 0.59% 0.53%
---------------------------------------------------------------------
Total delinquent loans 0.86% 1.07% 0.97% 1.30% 0.89%
---------------------------------------------------------------------
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
----------------------------------------------------------------------
At or for the Quarters Ended
----------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
----------------------------------------------------------------------
PERFORMANCE RATIOS
Core return on tangible
assets 1.16% 1.24% 0.84% 0.97% 1.02%
Return on total assets 0.91 0.97 0.50 0.18 0.84
Core return on tangible
equity 17.89 19.52 13.03 13.64 14.39
Return on total equity 6.89 7.38 3.74 1.44 6.86
Net interest margin,
fully taxable equivalent 3.45 3.41 3.38 3.20 3.15
Core tangible non-
interest income to
assets 1.47 1.64 1.23 1.21 1.33
Non-interest income to
assets 1.36 1.52 1.14 0.44 1.26
Core tangible non-
interest expense to
assets 2.91 2.95 2.80 2.74 2.80
Non-interest expense to
assets 2.97 2.89 2.95 3.00 2.76
Efficiency ratio 61.08 60.12 62.51 64.13 64.27
YEAR-TO-DATE GROWTH
Total loans 4% (2)% 3% 4% --%
Total deposits (1) 12 2 -- (2)
Total revenues 21 19 23 24 22
FINANCIAL DATA
(In millions)
Total assets $2,547 $2,546 $2,513 $2,472 $2,170
Total loans 1,978 1,935 1,944 1,939 1,730
Total intangible assets 181 182 182 183 121
Total deposits 1,811 1,880 1,823 1,796 1,529
Total stockholders'
equity 330 329 327 331 266
Total core income 5.7 6.0 3.8 4.4 4.6
Total net income 5.7 6.0 3.1 0.9 4.6
ASSET QUALITY RATIOS
Net charge-offs
(annualized)/average
loans 0.13% 0.17% 0.34% 0.23% 0.12%
Non-performing assets/
total assets 0.42 0.51 0.45 0.48 0.42
Loan loss allowance/
total loans 1.14 1.14 1.14 1.14 1.11
Loan loss allowance/
nonperforming loans 2.31x 1.82x 2.10x 1.93x 2.10x
PER SHARE DATA
Core earnings, diluted $ 0.55 $ 0.58 $ 0.36 $ 0.49 $ 0.52
Net earnings, diluted 0.55 0.58 0.29 0.10 0.52
Tangible book value 14.36 13.97 13.82 13.79 16.40
Total book value 31.78 31.38 31.15 30.82 30.12
Market price at period
end 23.65 25.19 26.00 30.23 31.51
Dividends 0.16 0.15 0.15 0.15 0.14
CAPITAL RATIOS
Stockholders' equity to
total assets 12.96% 12.91% 13.00% 13.38% 12.28%
Tangible stockholders'
equity to tangible
assets 6.30 6.19 6.22 6.47 7.08
----------------------------------------------------------------------
(1) Reconciliations of Non-GAAP financial measures, including all references to
core and tangible amounts, appear on page F-9. Tangible assets are total
assets less total intangible assets.
(2) All performance ratios are annualized and are based on average balance
sheet amounts, where applicable.
(3) The Dec. 31, 2007 and Sept. 30, 2007 total loan annualized year-to-date
growth calculations both exclude the acquired FAPB balances and $50 million
in residential mortgage loans sold during September.
(4) The Dec. 31, 2007 and Sept. 30, 2007 total deposit annualized year-to-date
growth calculations both exclude the acquired FAPB balances, $22.7 million
in repurchase liabilities converted to deposit accounts, and $21 million in
brokered time deposit run-off.
(5) Total revenue includes the impact of the insurance agencies and Factory
Point Bancorp acquisitions.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE BALANCES
---------------------------------------------------------------------
Quarters Ended
---------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
(In thousands) 2008 2008 2007 2007 2007
---------------------------------------------------------------------
Assets
Loans
Residential
mortgages $ 665,407 $ 659,406 $ 661,937 $ 634,374 $ 612,289
Commercial
mortgages 745,727 712,317 694,339 608,891 593,134
Commercial
business
loans 196,962 201,433 203,539 171,334 191,967
Consumer
loans 354,321 369,659 381,401 349,311 344,069
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Total
loans 1,962,417 1,942,815 1,941,216 1,763,910 1,741,459
Securities 260,046 254,561 254,847 224,207 228,471
Short-term
investments 12,633 16,498 4,526 4,511 5,232
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Total
earning
assets 2,235,096 2,213,874 2,200,589 1,992,628 1,975,162
Intangible
assets 181,705 182,895 183,902 126,797 120,698
Other
assets 105,109 104,027 105,525 93,165 91,320
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Total
assets $2,521,910 $2,500,796 $2,490,016 $2,212,590 $2,187,180
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Liabilities
and
stockholders
equity
Deposits
NOW $ 202,747 $ 208,275 $ 207,671 $ 141,529 $ 140,089
Money market 491,945 466,673 422,514 329,943 309,675
Savings 212,680 210,310 212,760 198,372 195,551
Time 705,305 715,026 749,785 701,062 703,595
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Total
interest-
bearing
deposits 1,612,677 1,600,284 1,592,730 1,370,906 1,348,910
Borrowings
and
debentures 343,816 346,475 327,383 374,537 386,044
--------------------------------------------------------------------
Total
interest-
bearing
liabilities 1,956,493 1,946,759 1,920,113 1,745,443 1,734,954
Non-interest-
bearing
demand
deposits 221,471 217,355 225,507 186,654 178,356
Other
liabilities 10,780 7,079 11,267 4,298 7,359
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Total
liabilities 2,188,744 2,171,193 2,156,887 1,936,395 1,920,669
Stockholders'
equity 333,166 329,603 333,129 276,195 266,511
--------------------------------------------------------------------
Total
liabilities
and
stockholders
equity $2,521,910 $2,500,796 $2,490,016 $2,212,590 $2,187,180
--------------------------------------------------------------------
Supplementary
data
Total non-
maturity
deposits $1,128,843 $1,102,613 $1,068,452 $ 856,498 $ 823,671
Total
deposits 1,834,148 1,817,639 1,818,237 1,557,560 1,527,266
Fully
taxable
equivalent
income adj 532 492 541 533 540
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(1) Average balances for securities available-for-sale are based on amortized
cost.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
---------------------------------------------------------------------
Quarters Ended
---------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
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Earning assets
Loans
Residential mortgages 5.66% 5.70% 5.54% 5.35% 5.36%
Commercial mortgages 6.44 6.86 7.34 7.49 7.55
Commercial business
loans 6.57 7.55 7.68 8.06 7.81
Consumer loans 6.02 6.58 6.91 7.03 6.98
Total loans 6.11 6.48 6.68 6.68 6.71
Securities 5.39 5.69 5.85 6.15 5.92
Federal funds sold and
short-term investments 1.78 2.24 5.25 5.25 4.94
Total earning assets 6.00 6.36 6.56 6.70 6.63
Funding liabilities
Deposits
NOW 0.73 1.09 1.39 1.40 1.50
Money Market 2.14 2.88 3.41 3.67 3.73
Savings 0.71 0.97 1.10 1.17 1.08
Time 4.08 4.43 4.65 4.69 4.78
Total interest-bearing
deposits 2.62 3.09 3.42 3.64 3.66
Borrowings and
debentures 4.29 4.57 4.70 4.84 4.82
Total interest-bearing
liabilities 2.91 3.35 3.64 3.90 3.92
Net interest spread 3.09 3.01 2.92 2.80 2.71
Net interest margin 3.45 3.41 3.38 3.20 3.15
Cost of funds 2.62 3.02 3.26 3.52 3.55
Cost of deposits 2.31 2.72 3.00 3.20 3.24
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(1) Average balances and yields for securities available-for-sale are based on
amortized cost.
(2) Cost of funds includes all deposits and borrowings.
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
At or for the Quarters Ended
- ----------------------------------------------------------------------
(dollars in June 30, Mar. 31, Dec. 31 Sept. 30 June 30,
thousands) 2008 2008 2007 2007 2007
- ----------------------------------------------------------------------
Net income $ 5,713 $ 6,049 $ 3,073 $ 944 $ 4,576
Adj: Loss (gain)
on sale of
securities, net 26 -- -- 672 --
Adj: Loss on
prepayment of
borrowings, net -- -- -- 1,180 --
Adj: Loss on sale
of loans, net -- -- -- 1,991 --
Plus: Other non-
recurring
expense 683 -- 1,198 1,606 --
Adj: Income taxes (701) -- (468) (1,995) --
----------------------------------------------------------------------
Core income (A) 5,721 6,049 3,803 4,398 4,576
Plus: Amort. of
intangible
assets 1,019 1,084 1,050 684 662
----------------------------------------------------------------------
Tangible core
income (B) $ 6,740 $ 7,133 $ 4,853 $ 5,082 $ 5,238
----------------------------------------------------------------------
Total non-
interest income $ 8,511 $ 9,472 $ 7,069 $ 2,444 $ 6,893
Adj: Loss (gain)
on sale of
securities, net 26 -- -- 672 --
Adj: Loss on
prepayment of
borrowings, net -- -- -- 1,180 --
Adj: Loss on sale
of loans, net -- -- -- 1,991 --
----------------------------------------------------------------------
Total core non-
interest income (C) 8,537 9,472 7,069 6,287 6,893
Net interest
income 18,647 18,294 18,218 15,479 15,038
----------------------------------------------------------------------
Total core
revenue (D) $27,184 $27,766 $25,287 $21,766 $21,931
----------------------------------------------------------------------
Total non-
interest
expense $18,632 $18,074 $18,393 $16,589 $15,103
Less: Other non-
recurring
expense (683) -- (1,198) (1,606) --
----------------------------------------------------------------------
Core non-interest
expense (E) 17,949 18,074 17,195 14,983 15,103
Less:
Amortization
of intangible
assets (1,019) (1,084) (1,050) (684) (662)
----------------------------------------------------------------------
Total core
tangible non-
interest expense(F) $16,930 $16,990 $16,145 $14,299 $14,441
----------------------------------------------------------------------
(Dollars in
millions, except
per share data)
Total average
assets $ 2,522 $ 2,501 $ 2,490 $ 2,213 $ 2,187
Less: Average
intangible
assets (182) (183) (184) (127) (121)
----------------------------------------------------------------------
Total average
tangible assets (G) $ 2,340 $ 2,318 $ 2,306 $ 2,086 $ 2,066
----------------------------------------------------------------------
Total average
stockholders'
equity $ 333 $ 330 $ 333 $ 276 $ 267
Less: Average
intangible
assets (182) (183) (184) (127) (121)
----------------------------------------------------------------------
Total average
tangible
stockholders'
equity (H) $ 151 $ 147 $ 149 $ 149 $ 146
----------------------------------------------------------------------
Total
stockholders'
equity, period-
end $ 330 $ 329 $ 327 $ 331 $ 266
Less: Intangible
assets, period-
end (181) (182) (182) (183) (121)
----------------------------------------------------------------------
Total tangible
stockholders'
equity, period-
end (I) $ 149 $ 147 $ 145 $ 148 $ 145
----------------------------------------------------------------------
Total shares
outstanding,
period-end
(thousands) (J) 10,385 10,475 10,493 10,729 8,842
Average diluted
shares
outstanding
(thousands) (K) 10,384 10,457 10,664 9,045 8,875
Core earnings per
share (A/K)$ 0.55 $ 0.58 $ 0.36 $ 0.49 $ 0.52
Tangible book
value per share (I/J)$ 14.36 $ 13.97 $ 13.82 $ 13.79 $ 16.40
Core return on
tangible assets (B/G) 1.16% 1.24% 0.84% 0.97% 1.02%
Core return on
tangible equity (B/H) 17.89 19.52 13.03 13.64 14.39
Core tangible
non-interest
income to assets(C/G) 1.47 1.64 1.23 1.21 1.33
Core tangible
non-interest exp
to assets (F/G) 2.91 2.95 2.80 2.74 2.80
Efficiency ratio 61.08 60.12 62.63 64.13 64.27
---------------------------------------------------------------------
For six months ended
June 30,
---------------------------------------------------------------------
(Dollars in thousands) 2008 2007
---------------------------------------------------------------------
Net income $11,762 $ 9,518
Adj: Loss (gain) on sale of securities, net 26 (81)
Adj: Loss on prepayment of borrowings, net - -
Adj: Loss on sale of loans, net - -
Plus: Other non-recurring expense 683 153
Adj: Income taxes (701) (29)
---------------------------------------------------------------------
Core income (A) 11,770 9,561
Plus: Amort. of intangible assets 2,103 1,324
---------------------------------------------------------------------
Tangible core income (B) $13,873 $10,885
---------------------------------------------------------------------
Total non-interest income 17,983 $15,130
Adj: Loss (gain) on sale of securities, net 26 (81)
Adj: Loss on prepayment of borrowings, net - -
Adj: Loss on sale of loans, net - -
---------------------------------------------------------------------
Total core non-interest income (C) 18,009 15,049
Net interest income 36,941 30,228
---------------------------------------------------------------------
Total core revenue (D) 54,950 $45,277
---------------------------------------------------------------------
Total non-interest expense 36,706 $30,512
Less: Other non-recurring expense (683) (153)
---------------------------------------------------------------------
Core non-interest expense (E) 36,023 30,359
Less: Amortization of intangible assets (2,103) (1,324)
---------------------------------------------------------------------
Total core tangible non-interest expense (F) 33,920 $29,035
---------------------------------------------------------------------
(Dollars in millions, except per share data)
Total average assets $ 2,511 $ 2,169
Less: Average intangible assets (182) (114)
---------------------------------------------------------------------
Total average tangible assets (G) $ 2,329 $ 2,055
---------------------------------------------------------------------
Total average stockholders' equity $ 331 $ 262
Less: Average intangible assets (182) (114)
---------------------------------------------------------------------
Total average tangible stockholders' equity (H) $ 149 $ 148
---------------------------------------------------------------------
Total stockholders' equity, period-end $ 330 $ 266
Less: Intangible assets, period-end (181) (121)
---------------------------------------------------------------------
Total tangible stockholders' equity,
period-end (I) $ 149 $ 145
---------------------------------------------------------------------
Total shares outstanding,
period-end (thousands) (J) 10,385 8,842
Average diluted shares
outstanding (thousands) (K) 10,420 8,855
---------------------------------------------------------------------
Core earnings per share (A/K) $ 1.13 $ 1.08
Tangible book value per share (I/J) $ 14.36 $ 16.40
---------------------------------------------------------------------
Core return on tangible assets (B/G) 1.20% 1.07%
Core return on tangible equity (B/H) 18.52 14.79
Core tangible non-interest income to assets (C/G) 1.55 1.47
Core tangible non-interest exp to assets (F/G) 2.92 2.83
Efficiency ratio 60.60 62.62
---------------------------------------------------------------------
(1) Efficiency ratio is computed by dividing total tangible core non-interest
expense by the sum of total net interest income on a fully taxable
equivalent basis and total core non-interest income. The Company uses this
non-GAAP measure, which is used widely in the banking industry, to provide
important information regarding its operational efficiency.
(2) Ratios are annualized and based on average balance sheet amounts, where
applicable.
(3) Quarterly data may not sum to year-to-date data due to rounding.
CONTACT: Berkshire Hills Bancorp
Kevin P. Riley, Executive Vice President
and Chief Financial Officer
413-236-3195
David H. Gonci, Corporate Finance Officer
413-281-1973