Berkshire Hills Reports 20% Increase in Fourth Quarter Core EPS; Dividend Increased; Annual Meeting Date Set

PITTSFIELD, Mass., Jan. 26, 2015 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported a 20% increase in fourth quarter core earnings per share to $0.48 in 2014 compared to $0.40 in 2013.  Earnings growth was driven by a 17% increase in core revenue as the Company expanded operations in its footprint.   Fourth quarter GAAP EPS increased by 10% to $0.46 as earnings in both years were impacted by non-core charges related primarily to growth and restructuring.

LOGO

For the year, core earnings per share totaled $1.80 in 2014.  Core earnings decreased by 4% from $1.87 per share in 2013 as volume growth was offset by lower margins in the first half of the year.  GAAP EPS totaled $1.36 in 2014 and $1.65 in 2013.

FOURTH QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated):

  • 4% increase in core earnings per share
  • 8% annualized increase in net revenue
  • 17% year over year increase in fee income, with growth in all major categories
  • 11% annualized increase in total loans
  • 8% annualized increase in deposits
  • 12% annualized increase in demand deposits
  • 0.37% non-performing assets/assets
  • 0.29% net loan charge-offs/average loans

CEO Michael Daly stated, "We finished the year on pace, with growth of 2 cents per share in core earnings in each of the last four quarters.  We delivered on the market share opportunities of our expanded footprint.  Momentum continued in the fourth quarter, with strong growth in revenue, loans, and deposits compared to the linked quarter."

Mr. Daly continued, "We are well-positioned for further expansion in our footprint.  During the fourth quarter, Hampden Bancorp entered a merger agreement with us, which will deepen our presence in the Springfield market and the Hartford/Springfield economic area.  This merger is targeted for completion in the second quarter of 2015.  Our Westborough branch opened in October, completing the build out of this regional office serving the Worcester area and our Central Massachusetts market.  Our teams are building business volumes in Eastern Massachusetts and in New York, where earlier in the year we acquired 20 branches serving our Central and Eastern New York markets."

Mr. Daly concluded, "Our core return on assets improved during the year as we leveraged our franchise investment.  In the fourth quarter, our active balance sheet management produced an increase in our net interest margin, while our close focus on expense control improved our efficiency ratio.  We are targeting to extend these gains as we integrate our in-market merger with Hampden in 2015, and our teams across our franchise are delivering the right solutions for our markets and our investors.  In recognition of our progress and prospects, I'm pleased to also be announcing a 6% increase in our quarterly dividend to shareholders."

DIVIDEND INCREASED

The Board of Directors voted to declare a cash dividend of $0.19 per share to shareholders of record at the close of business on February 12, 2015, payable on February 26, 2015.  This is a penny increase from $0.18 and the new dividend equates to a 3.0% annualized yield based on the $25.05 average closing price of Berkshire's common stock during the fourth quarter. 

ANNUAL MEETING DATE SET

The Board of Directors voted that the Annual Meeting of Shareholders shall be held on May 7, 2015 at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts at 10:00 a.m. The date of March 12, 2015 was established as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Annual Meeting.

FINANCIAL CONDITION

Fourth quarter results demonstrated strong loan growth funded by solid deposit growth and supported by capital generation that also strengthened the capital foundation.  Loan growth was 11% annualized in the fourth quarter and 12% for the year 2014.  Organic deposit growth was 8% annualized in the fourth quarter.  Including the deposits from acquired branches, total deposits increased by 21% for the year.  As a result, the ratio of loans/deposits decreased during the year, measuring 101% at year-end.  The ratio of tangible equity to assets measured 7.0% at year-end, with total equity/assets measuring 10.9%.  Most capital ratios are targeted to increase with the acquisition of Hampden Bancorp.  Tangible book value per share increased by 6% to $17.19 in 2014 while total book value per share increased by 4% to $28.17Berkshire continues to manage its balance sheet with the objective of benefiting from expected future interest rate increases. 

Berkshire's 11% annualized fourth quarter loan growth resulted primarily from 15% annualized commercial loan growth, which matched the full year growth rate.  Commercial growth was concentrated in diversified commercial and industrial loans in the fourth quarter, while for the full year commercial balances increased primarily due to higher commercial real estate loans.  Residential mortgage balances advanced at a 14% annualized rate in the fourth quarter, including the benefit of stronger demand in the second half of the year.  Residential mortgage growth was 8% for the year.  Consumer loans grew by 11% for the year and declined by 5% annualized in the fourth quarter due to a planned de-emphasis of the auto loan portfolio.

Asset quality metrics remained favorable.  Annualized net loan charge-offs measured 0.29% of average loans for the quarter.   Quarter-end non-performing assets decreased to 0.37% of total assets and accruing delinquent loans measured 0.52% of total loans.  The loan loss allowance was 0.76% of total loans; approximately 16% of quarter-end loans were balances recorded at fair value in recent bank acquisitions.

Annualized fourth quarter deposit growth of 8% included increases in all major categories.  Growth was primarily in relationship oriented transaction accounts, with a concentration in new commercial balances.  Full year deposit growth of 21% included 11% related to balances totaling $440 million in acquired New York branches.

RESULTS OF OPERATIONS

The fourth quarter core return on tangible equity increased to 12.0% in 2014 compared to 10.5% in 2013.  Net non-core charges in both periods were primarily related to acquisition and restructuring activity.  GAAP return on equity improved to 6.5% from 6.2% in the above respective periods and the efficiency ratio improved to 62.5% from 63.2%.

The 20% year over year increase in fourth quarter core earnings per share reflected the benefit of 17% growth in core revenue, with an identical percentage increase in both net interest income and fee income.   This resulted primarily from volume growth in Berkshire's footprint, particularly in newer markets in Eastern Massachusetts and Central New York.  Fee income grew in all major categories, including a 30% increase in deposit related fees primarily from the New York branch acquisition. 

Compared to the linked quarter, growth in core earnings per share was primarily driven by 4% growth in net interest income.  This included the benefit of volume growth, together with an expansion of the net interest margin to 3.23% compared to 3.20% in the linked quarter; the margin was 3.26% in the fourth quarter of 2013.  Net interest income includes purchased loan accretion which is largely comprised of recoveries on the resolution of impaired loans acquired in previous bank acquisitions.  This accretion totaled $1.7 million in the most recent quarter, compared to $1.2 million in the linked quarter and $2.4 million in the fourth quarter of 2013.  Fourth quarter non-interest income was down 3% from the linked quarter, with seasonally lower fee income mostly offset by distributions from equity investments. 

The loan loss provision totaled $3.9 million in the fourth quarter.  Net loan charge-offs were $3.2 million, and the loan loss allowance increased by $0.7 million to $35.7 million.

Fourth quarter core non-interest expense increased by 1% over the prior quarter to $39.9 million.  Non-core expense increased due to the pending Hampden merger.  Full time equivalent staff totaled 1,091 at year-end.  The core tax rate was 29% and the GAAP tax rate of 25% was due to the full year impact of the first quarter branch acquisition charges.

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, January 27, 2015 to discuss the results for the quarter and provide guidance about expected future results. Participants should dial-in to the call 10-15 minutes before it begins. Information about the conference call follows:

Dial-in:  888-317-6003
Elite Entry Number:  1730849
Webcast:  berkshirebank.com (investor relations link)

A telephone replay of the call will be available through Wednesday, February 4, 2015 by calling 877-344-7529 and entering conference number: 10058299 The webcast will be available at Berkshire's website above for an extended period of time.  A print-friendly version of this news release will be available at the web link shown above.

BACKGROUND

Berkshire Hills Bancorp is the parent of Berkshire Bank – America's Most Exciting Bank®.  The Company has $6.5 billion in assets and 91 full-service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services.  Berkshire has a pending agreement to acquire Hampden Bancorp, the parent of Hampden Bank, which has $706 million in assets and operates ten offices in the Springfield, Massachusetts area.

FORWARD LOOKING STATEMENTS

This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.  There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.govBerkshire does not undertake any obligation to update forward-looking statements. 

ADDITIONAL INFORMATION FOR STOCKHOLDERS

In connection with the proposed merger with Hampden Bancorp, Berkshire has filed with the Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4 that includes a Proxy Statement of Hampden and a Prospectus of Berkshire, as well as other relevant documents concerning the proposed merger. Investors and stockholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the proposed merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the Registration Statement and Proxy Statement/Prospectus, as well as other filings containing information about Berkshire and Hampden, when they become available, may be obtained at the SEC's Internet site (www.sec.gov). Copies of the Registration Statement and Proxy Statement/Prospectus and the filings that will be incorporated by reference therein may also be obtained, free of charge, from Berkshire's website at ir.berkshirebank.com or by contacting Berkshire Investor Relations at 413-236-3149 or from Hampden's website at www.hampdenbank.com and selecting the "Investor Relations" link or by contacting Hampden Investor relations at 413-452-5150.

PARTICIPANTS IN SOLICITATION

Berkshire and Hampden and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Hampden in connection with the proposed merger. Information about the directors and executive officers of Berkshire is set forth in the proxy statement for Berkshire's 2014 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on April 1 and in the Form 8-k filed with the SEC on June 30, 2014. Information about the directors and executive officers of Hampden is set forth in the proxy statement for Hampden's 2014 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on September 26, 2014 and additional filings reporting results of the annual meeting on November 4, 2014. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction and a description of their direct and indirect interests, by security holdings or otherwise, may be obtained by reading the Proxy Statement/Prospectus and other relevant documents regarding the proposed merger filed with the SEC (when they become available). Free copies of these documents may be obtained as described in the preceding paragraph.

NON-GAAP FINANCIAL MEASURES

This document 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 securities gains/losses, losses recorded for hedge terminations, merger costs, restructuring costs, systems conversion costs, and out-of-period adjustments.  Non-core adjustments are presented net of an adjustment for income tax expense.  This adjustment in 2013 was based on the marginal tax rate applied to the net non-core pre-tax adjustments.  In 2014, due to the comparative magnitude of the non-core items, this adjustment was determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income.  Accordingly, GAAP net income exceeded core income in two quarters due to the higher effective full year tax rate on core income before the net non-core charges.  The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items.  The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community.  Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, and professional fees.  Systems conversion costs relate primarily to the Company's core systems conversion and related systems conversions costs.   Restructuring costs primarily consist of employee severance costs, as well as costs and losses associated with the disposition of assets which were undertaken as a project to right-size expenses following a decline in revenue in 2013.  Out-of-period accounting adjustments for interest income on acquired loans were recorded following systems conversions and merger related accounting activity and were deemed non-core.  Other non-core expenses include variable rate compensation related to non-core items as well as expenses related to the Bank's charter change.

CONTACTS

Investor Relations Contact
Allison O'Rourke, Senior Vice President - Investor Relations; 413-236-3149

Media Contact
Ray Smith, Assistant Vice President - Marketing; 413-236-3756

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)




December 31,


September 30,


December 31,


(In thousands)

2014


2014


2013


Assets







Cash and due from banks

$                    54,179


$             58,624


$             56,841


Short-term investments

17,575


12,201


18,698


Total cash and short-term investments

71,754


70,825


75,539









Trading security

14,909


14,745


14,840


Securities available for sale, at fair value

1,091,818


1,058,965


760,048


Securities held to maturity, at amortized cost

43,347


42,596


44,921


Federal Home Loan Bank stock and other restricted securities

55,720


54,646


50,282


Total securities

1,205,794


1,170,952


870,091









Loans held for sale, at fair value

19,493


29,091


15,840









Residential mortgages

1,496,204


1,445,861


1,384,274


Commercial real estate

1,611,567


1,595,400


1,417,120


Commercial and industrial loans

804,366


732,960


687,293


Consumer loans

768,463


778,561


691,836


Total loans (1)

4,680,600


4,552,782


4,180,523


Less: Allowance for loan losses

(35,662)


(34,966)


(33,323)


Net loans

4,644,938


4,517,816


4,147,200









Premises and equipment, net

87,279


87,166


84,459


Other real estate owned

2,049


4,854


2,758


Goodwill 

264,742


264,770


256,871


Other intangible assets

11,528


12,524


13,791


Cash surrender value of bank-owned life insurance

104,588


103,749


101,530


Deferred tax asset, net

28,776


38,503


50,711


Other assets

61,090


51,908


54,009


Total assets

$               6,502,031


$        6,352,158


$        5,672,799









Liabilities and stockholders' equity







Demand deposits

$                  869,302


$           844,480


$           677,917


NOW deposits

426,108


420,290


353,612


Money market deposits

1,407,179


1,394,558


1,383,856


Savings deposits

496,344


474,774


431,496


Time deposits

1,455,746


1,429,231


1,001,648


Total deposits (1)

4,654,679


4,563,333


3,848,529









Senior borrowings

962,576


951,105


974,428


Subordinated borrowings

89,747


89,730


89,679


Total borrowings

1,052,323


1,040,835


1,064,107









Other liabilities 

85,742


51,053


82,101


Total liabilities

5,792,744


5,655,221


4,994,737









Total stockholders' equity

709,287


696,937


678,062


Total liabilities and stockholders' equity

$               6,502,031


$        6,352,158


$        5,672,799









(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits

      and $4 million in loans.

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-2)


LOAN ANALYSIS





















Annualized growth %


(Dollars in millions)

Dec. 31, 2014
Balance


Sept. 30, 2014
Balance




Dec. 31, 2013
Balance


Quarter ended
December 31, 2014

Year to date















Total residential mortgages

$                   1,496


$                   1,446




$                      1,384


14

%

8

%














Commercial real estate

1,612


1,595




1,417


4


14


Commercial and industrial loans

804


733




688


39


17


Total commercial loans

2,416


2,328




2,105


15


15















Home equity 

319


316




307


3


4


Auto and other

450


463




385


(12)


17


Total consumer loans

769


779




692


(5)


11


Total loans

$                   4,681


$                   4,553




$                      4,181


11

%

12

%



























DEPOSIT ANALYSIS





















Annualized growth %



(Dollars in millions)

Dec. 31, 2014
Balance


Sept. 30, 2014
Balance


Acquired
Balance (1)


Dec. 31, 2013
Balance


Quarter ended
December 31, 2014

Year to date


Demand

$                      869


$                      844


$          110


$                         678


12

%

28

%

NOW

426


420


80


354


6


20


Money market

1,407


1,395


124


1,384


3


2


Savings

497


475


36


431


19


15


Total non-maturity deposits

3,199


3,134


350


2,847


8


12















Total time deposits

1,456


1,429


90


1,002


8


45


Total deposits

$                   4,655


$                   4,563


$          440


$                      3,849


8

%

21

%














(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits,

      as shown above, and $4 million in loans.

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-3)







Three Months Ended


Years Ended


December 31,


December 31,

(In thousands, except per share data)

2014


2013


2014


2013

Interest and dividend income    








Loans

$          45,706


$          43,566


$        174,467


$        186,115

Securities and other    

8,310


5,093


32,575


17,626

Total interest and dividend income    

54,016


48,659


207,042


203,741

Interest expense








Deposits

5,109


5,166


19,185


20,859

Borrowings

2,260


3,651


9,166


14,130

Total interest expense    

7,369


8,817


28,351


34,989

Net interest income

46,647


39,842


178,691


168,752

Non-interest income








Loan related income

1,763


1,578


6,328


8,247

Mortgage banking income

504


445


2,561


5,235

Deposit related fees

6,137


4,717


24,635


18,340

Insurance commissions and fees    

2,223


2,143


10,364


10,020

Wealth management fees    

2,373


2,212


9,546


8,683

Total fee income    

13,000


11,095


53,434


50,525

Other

1,200


1,227


2,646


2,949

Gain on sale of securities, net    

-


3,392


482


4,758

Loss on termination of hedges

-


-


(8,792)


-

Total non-interest income      

14,200


15,714


47,770


58,232

Total net revenue

60,847


55,556


226,461


226,984

Provision for loan losses   

3,898


3,100


14,968


11,378

Non-interest expense








Compensation and benefits

20,965


16,736


81,768


71,134

Occupancy and equipment     

6,655


5,421


26,905


22,540

Technology and communications

3,702


3,169


14,764


12,944

Marketing and promotion     

771


765


2,572


2,596

Professional services

1,205


1,558


4,211


6,569

FDIC premiums and assessments

1,083


899


4,284


3,473

Other real estate owned and foreclosures

232


255


801


700

Amortization of intangible assets     

996


1,239


4,812


5,268

Merger, restructuring and conversion expenses     

1,762


2,493


8,491


14,848

Other

4,305


4,622


17,378


17,287

Total non-interest expense     

41,676


37,157


165,986


157,359









Income before income taxes       

15,273


15,299


45,507


58,247

Income tax expense

3,875


4,762


11,763


17,104

Net income 

$          11,398


$          10,537


$          33,744


$          41,143









Earnings per share:








Basic

$              0.46


$              0.43


$              1.36


$              1.66

Diluted

$              0.46


$              0.42


$              1.36


$              1.65









Weighted average shares outstanding:      








Basic

24,758


24,701


24,730


24,802

Diluted

24,912


24,857


24,854


24,965









(1) The Company acquired 20 branches in Central New York on January 17, 2014. The income statement for the three

      months ended March 31, 2014 includes operations of the branch acquisition beginning on that date.

(2) Merger, restructuring and conversion expenses include branch acquisition related expenses and bank charter

      change related expenses.

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4)


Quarters Ended





Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,


(In thousands, except per share data)

2014


2014


2014


2014


2013


Interest and dividend income    











Loans

$      45,706


$      43,958


$      42,309


$      42,494


$      43,566


Securities and other    

8,310


8,098


8,866


7,301


5,093


Total interest and dividend income    

54,016


52,056


51,175


49,795


48,659


Interest expense











Deposits

5,109


4,877


4,478


4,721


5,166


Borrowings

2,260


2,230


2,368


2,308


3,651


Total interest expense    

7,369


7,107


6,846


7,029


8,817


Net interest income

46,647


44,949


44,329


42,766


39,842


Non-interest income











Loan related income

1,763


1,471


1,846


1,248


1,578


Mortgage banking income

504


994


691


372


445


Deposit related fees

6,137


6,449


6,610


5,439


4,717


Insurance commissions and fees    

2,223


2,632


2,460


3,049


2,143


Wealth management fees    

2,373


2,330


2,294


2,549


2,212


Total fee income    

13,000


13,876


13,901


12,657


11,095


Other

1,200


520


402


524


1,227


Gain on sale of securities, net     

-


245


203


34


3,392


Loss on termination of hedges

-


-


-


(8,792)


-


Total non-interest income      

14,200


14,641


14,506


4,423


15,714


Total net revenue

60,847


59,590


58,835


47,189


55,556


Provision for loan losses   

3,898


3,685


3,989


3,396


3,100


Non-interest expense











Compensation and benefits

20,965


20,665


20,279


19,859


16,736


Occupancy and equipment     

6,655


6,780


6,656


6,814


5,421


Technology and communications

3,702


3,484


3,800


3,778


3,169


Marketing and promotion  

771


659


621


521


765


Professional services

1,205


830


1,024


1,152


1,558


FDIC premiums and assessments

1,083


1,163


1,029


1,009


899


Other real estate owned and foreclosures

232


13


33


523


255


Amortization of intangible assets     

996


1,236


1,274


1,306


1,239


Merger, restructuring and conversion expenses     

1,762


238


190


6,301


2,493


Other

4,305


4,619


4,357


4,097


4,622


Total non-interest expense     

41,676


39,687


39,263


45,360


37,157













Income (loss) before income taxes

15,273


16,218


15,583


(1,567)


15,299


Income tax expense (benefit) 

3,875


4,230


4,119


(461)


4,762


Net income (loss)

$      11,398


$      11,988


$      11,464


$      (1,106)


$      10,537
























Earnings (loss) per share:











Basic 

$          0.46


$          0.48


$          0.46


$        (0.04)


$          0.43


Diluted 

$          0.46


$          0.48


$          0.46


$        (0.04)


$          0.42













Weighted average shares outstanding:      











Basic

24,758


24,747


24,715


24,698


24,701


Diluted

24,912


24,861


24,809


24,698


24,857













(1) See notes on Page F-3








 

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - UNAUDITED - (F-5)













At or for the Quarters Ended


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,


(Dollars in thousands)

2014


2014


2014


2014


2013


NON-PERFORMING ASSETS











Non-accruing loans:











Residential mortgages

$            3,908


$            4,810


$            5,295


$            6,071


$            7,867


Commercial real estate

12,878


12,192


12,583


13,036


13,739


Commercial and industrial loans

1,705


2,225


4,821


2,411


2,356


Consumer loans

3,214


3,660


3,359


3,846


3,493


Total non-accruing loans

21,705


22,887


26,058


25,364


27,455


Other real estate owned

2,049


4,854


2,445


2,418


2,758


Total non-performing assets

$          23,754


$          27,741


$          28,503


$          27,782


$          30,213













Total non-accruing loans/total loans

0.46%


0.50%


0.59%


0.60%


0.66%


Total non-performing assets/total assets

0.37%


0.44%


0.45%


0.46%


0.53%













PROVISION AND ALLOWANCE FOR LOAN LOSSES











Balance at beginning of period

$          34,966


$          34,353


$          33,602


$          33,323


$          33,248


Charged-off loans

(3,660)


(3,360)


(3,516)


(3,317)


(3,462)


Recoveries on charged-off loans

458


288


278


200


437


Net loans charged-off

(3,202)


(3,072)


(3,238)


(3,117)


(3,025)


Provision for loan losses

3,898


3,685


3,989


3,396


3,100


Balance at end of period

$          35,662


$          34,966


$          34,353


$          33,602


$          33,323













Allowance for loan losses/total loans

0.76%


0.77%


0.77%


0.79%


0.80%


Allowance for loan losses/non-accruing loans

164%


153%


132%


132%


121%













NET LOAN CHARGE-OFFS











Residential mortgages

$             (181)


$             (394)


$             (602)


$          (1,055)


$             (564)


Commercial real estate

(1,810)


(1,470)


(1,028)


(1,105)


(763)


Commercial and industrial loans

(540)


(687)


(1,341)


(215)


(1,042)


Home equity 

(240)


(193)


(51)


(458)


45


Auto and other consumer

(431)


(328)


(216)


(284)


(701)


Total, net

$          (3,202)


$          (3,072)


$          (3,238)


$          (3,117)


$          (3,025)













Net charge-offs (QTD annualized)/average loans 

0.29%


0.28%


0.31%


0.30%


0.31%


Net charge-offs (YTD annualized)/average loans 

0.29%


0.29%


0.30%


0.30%


0.29%













DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS











30-89 Days delinquent

0.42%


0.32%


0.34%


0.37%


0.51%


90+ Days delinquent and still accruing

0.10%


0.12%


0.21%


0.22%


0.22%


Total accruing delinquent loans

0.52%


0.44%


0.55%


0.59%


0.73%


Non-accruing loans

0.46%


0.50%


0.59%


0.60%


0.66%


Total delinquent and non-accruing loans

0.98%


0.94%


1.14%


1.19%


1.39%


 

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-6)








At or for the Quarters Ended




Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,





2014


2014


2014


2014


2013















PER SHARE DATA












Core earnings, diluted

$        0.48


$        0.46


$        0.44


$        0.42


$        0.40



Net earnings, diluted

0.46


0.48


0.46


(0.04)


0.42



Tangible book value

17.19


16.67


16.40


15.84


16.27



Total book value

28.17


27.69


27.49


26.99


27.08



Market price at period end

26.66


23.49


23.22


25.88


27.27



Dividends


0.18


0.18


0.18


0.18


0.18















PERFORMANCE RATIOS












Core return on assets

0.75

%

0.73

%

0.71

%

0.71

%

0.73

%


Return on assets

0.71


0.77


0.75


(0.08)


0.77



Core return on equity

6.89


6.59


6.32


6.02


5.87



Core return on tangible equity

11.96


11.76


11.34


10.84


10.47



Return on equity

6.52


6.95


6.64


(0.64)


6.18



Net interest margin, fully taxable equivalent

3.23


3.20


3.26


3.35


3.26



Fee income/Net interest and fee income

21.79


23.59


23.87


22.84


21.78



Efficiency ratio 

62.46


62.89


62.96


64.42


63.21















GROWTH













Total commercial loans, year-to-date (annualized)

15

%

14

%

19

%

9

%

5

%


Total loans, year-to-date (annualized)

12


12


13


6


5



Total net revenues, year-to-date, compared to prior year

(0)


(3)


(7)


(17)


15



Core earnings per share, year-to-date, compared to prior year

(4)


(10)


(15)


(22)


(6)



Earnings per share, year-to-date, compared to prior year

(18)


(27)


(54)


(110)


11















FINANCIAL DATA (In millions)












Total assets


$      6,502


$      6,352


$      6,311


$      6,010


$      5,673



Total earning assets

5,923


5,765


5,700


5,408


5,085



Total loans


4,681


4,553


4,450


4,243


4,181



Allowance for loan losses

36


35


34


34


33



Total intangible assets

276


277


279


280


271



Total deposits


4,655


4,563


4,479


4,219


3,849



Total stockholders' equity

709


697


690


678


678



Total core income 

12.0


11.4


10.9


10.4


10.0



Total net income

11.4


12.0


11.5


(1.1)


10.5















ASSET QUALITY RATIOS












Net charge-offs (current quarter annualized)/average loans

0.29

%

0.28

%

0.31

%

0.30

%

0.31

%


Allowance for loan losses/total loans

0.76


0.77


0.77


0.79


0.80















CONDITION RATIOS












Stockholders' equity to total assets

10.91

%

10.97

%

10.94

%

11.27

%

11.95

%


Tangible stockholders' equity to tangible assets

6.95


6.91


6.81


6.94


7.54



Investments to total assets

18.54


18.43


18.99


19.05


15.34



Loans/deposits

101


100


99


101


109




























(1)

Reconciliation of Non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 & F-10.



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)

See note on tangible equity on pages F-9 & F-10.


 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - UNAUDITED - (F-7)




Quarters Ended


Dec. 31, 


Sept. 30, 


June 30, 


Mar. 31, 


Dec. 31, 

(In thousands)

2014


2014


2014


2014


2013

Assets










Loans:










Residential mortgages

$          1,468,271


$          1,412,720


$          1,379,625


$          1,379,266


$          1,330,674

Commercial real estate

1,611,343


1,579,258


1,488,462


1,420,382


1,381,628

Commercial and industrial loans

733,750


716,787


703,798


684,776


673,292

Consumer loans

782,584


763,296


729,654


699,598


687,540

Total loans

4,595,948


4,472,061


4,301,539


4,184,022


4,073,134

Securities

1,190,182


1,169,765


1,225,646


1,047,658


813,417

Short-term investments and loans held for sale

54,843


39,496


28,426


28,631


35,438

Total earning assets

5,840,973


5,681,322


5,555,611


5,260,311


4,921,989

Goodwill and other intangible assets

276,645


277,775


279,024


278,386


271,147

Other assets

304,909


305,698


311,176


312,145


305,617

Total assets

$          6,422,527


$          6,264,795


$          6,145,811


$          5,850,842


$          5,498,753











Liabilities and stockholders' equity










Deposits:










NOW

$             415,806


$             417,802


$             425,824


$             409,631


$             348,600

Money market

1,426,722


1,405,454


1,448,624


1,490,408


1,392,570

Savings

479,988


480,036


481,790


463,615


435,766

Time

1,425,865


1,406,914


1,152,651


1,069,987


1,044,850

Total interest-bearing deposits

3,748,381


3,710,206


3,508,889


3,433,641


3,221,786

Borrowings

1,053,884


980,135


1,113,431


899,458


857,848

Total interest-bearing liabilities

4,802,265


4,690,341


4,622,320


4,333,099


4,079,634

Non-interest-bearing demand deposits

863,795


824,489


779,775


749,982


681,368

Other liabilities 

56,805


60,088


52,712


76,258


56,261

Total liabilities

5,722,865


5,574,918


5,454,807


5,159,339


4,817,263











Total stockholders' equity

699,662


689,877


691,004


691,503


681,490











Total liabilities and stockholders' equity

$          6,422,527


$          6,264,795


$          6,145,811


$          5,850,842


$          5,498,753





















Supplementary data










Total non-maturity deposits

$          3,186,311


$          3,127,781


$          3,136,013


$          3,113,636


$          2,858,304

Total deposits

4,612,176


4,534,695


4,288,664


4,183,623


3,903,154

Fully taxable equivalent income adjustment

887


859


852


718


639

Total average tangible equity 

423,017


412,102


411,980


413,117


410,343





















(1) Average balances for securities available-for-sale are based on amortized cost.  Total loans include non-accruing loans.

(2) Total average tangible equity results from the subtraction of average goodwill and other intangible assets from

      total average stockholders' equity. 

(3) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated

      balance sheet.

 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE YIELDS  (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-8)













Quarters Ended


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,



2014


2014


2014


2014


2013













Earning assets











Loans:











Residential mortgages

3.88

%

3.86

%

3.99

%

4.12

%

3.98

%

Commercial real estate

4.18


4.26


4.20


4.49


4.73


Commercial and industrial loans

4.22


3.79


3.82


3.97


3.91


Consumer loans

3.35


3.34


3.49


3.56


4.01


Total loans

3.96


3.91


3.96


4.13


4.26


Securities

3.00


2.98


3.13


3.04


2.72


Short-term investments and loans held for sale

1.37


1.65


1.40


1.51


1.92


Total earning assets

3.73


3.70


3.76


3.89


3.97













Funding liabilities











Deposits:











NOW

0.15


0.17


0.15


0.15


0.18


Money market

0.42


0.37


0.36


0.37


0.44


Savings

0.14


0.14


0.16


0.16


0.16


Time

0.91


0.91


0.98


1.15


1.25


Total interest-bearing deposits

0.54


0.52


0.51


0.56


0.64


Borrowings

0.85


0.90


0.85


1.04


1.69


Total interest-bearing liabilities

0.61


0.60


0.59


0.66


0.86













Net interest spread

3.12


3.10


3.17


3.23


3.11


Net interest margin

3.23


3.20


3.26


3.35


3.26













Cost of funds

0.52


0.51


0.51


0.56


0.73


Cost of deposits

0.44


0.43


0.42


0.46


0.53













(1) Cost of funds includes all deposits and borrowings.

(2) The average cost of deposits includes the deposits held for sale. 

 

BERKSHIRE HILLS BANCORP, INC.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-9)










At or for the Quarters Ended



Dec. 31, 


Sept. 30, 


June 30, 


Mar. 31, 


Dec. 31, 


(Dollars in thousands)


2014


2014


2014


2014


2013


Net income (loss)


$     11,398


$     11,988


$     11,464


$      (1,106)


$     10,537


Adj: Gain on sale of securities, net


-


(245)


(203)


(34)


(3,392)


Adj: Loss on termination of hedges


-


-


-


8,792


-


Adj: Merger and acquisition expenses


1,708


-


52


3,637


932


Adj: Restructuring and conversion expenses (5)


54


238


138


2,665


1,561


Adj: Out-of-period adjustment (6) 


-


-


-


1,381


-


Adj:  Income taxes


(1,114)


(612)


(536)


(4,923)


364


Total core income

(A)

$     12,046


$     11,369


$     10,915


$     10,412


$     10,002














Total revenue 


$     60,847


$     59,590


$     58,835


$     47,189


$     55,556


Adj: Gain on sale of securities, net


-


(245)


(203)


(34)


(3,392)


Adj: Loss on termination of hedges


-


-


-


8,792


-


Adj: Out-of-period adjustment (6) 


-


-


-


1,381


-


Total core revenue


$     60,847


$     59,345


$     58,632


$     57,328


$     52,164














Total non-interest expense


$     41,676


$     39,687


$     39,263


$     45,360


$     37,157


Less: Total non-core expense (see above)


(1,762)


(238)


(190)


(6,302)


(2,493)


Core non-interest expense                                    


$     39,914


$     39,449


$     39,073


$     39,058


$     34,664














(Dollars in millions, except per share data)












Total average assets                                                

(B)

$       6,423


$       6,265


$       6,146


$       5,851


$       5,499


Total average stockholders' equity                         

(C)

700


690


691


692


681


Total average tangible stockholders' equity                         

(D)

423


412


412


413


410


Total tangible stockholders' equity, period-end (7)

(E)

433


420


411


398


407














Total common shares outstanding, period-end (thousands)               

(F)

25,183


25,173


25,115


25,105


25,036


Average diluted shares outstanding (thousands) (8)

(G)

24,912


24,861


24,809


24,833


24,857














Core earnings per share, diluted 

(A/G)

$         0.48


$         0.46


$         0.44


$         0.42


$         0.40


Tangible book value per share, period-end

(E/F)

$       17.19


$       16.67


$       16.40


$       15.84


$       16.27














Core return on assets

(A/B)

0.75

%

0.73

%

0.71

%

0.71

%

0.73

%

Core return on equity 

(A/C)

6.89


6.59


6.32


6.02


5.87


Core return on tangible equity (4)

(A/D)

11.96


11.76


11.34


10.84


10.47


Efficiency ratio (1)


62.46


62.89


62.96


64.42


63.21














Supplementary data












Tax credit benefit of tax shelter investments


$          570


$          555


$          555


$          555


$            80


Intangible amortization


$          996


$       1,236


$       1,274


$       1,306


$       1,239


























(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income

      on a fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter




      investments. The Company uses this non-GAAP measure 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.















(4) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization of 




      intangible assets, assuming a 40% marginal rate, by tangible equity.
















(5) Bank charter change related expenses and prior period variable compensation are shown above under restructuring


      and conversion expenses.














(6) The out of period adjustments shown above relate to interest income earned on loans acquired in bank acquisitions. 
















(7) Total tangible stockholders' equity is computed by taking total stockholders' equity less the intangible assets at period-end. 
















(8) Average diluted shares computed for core earnings per share differ from GAAP average diluted shares, in the first




      quarter of 2014, due to the GAAP net loss compared to core net income for the period.




 

BERKSHIRE HILLS BANCORP, INC.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-10)










At or for the Years Ended




Dec.  31, 


Dec.  31, 


(Dollars in thousands)


2014


2013


Net income 


$                   33,744


$                   41,143


Adj: Gain on sale of securities, net


(482)


(4,758)


Adj: Loss on termination of hedges


8,792


-


Adj: Merger and acquisition expenses


5,397


7,998


Adj: Restructuring and conversion expenses (5)


3,095


7,350


Adj: Out-of-period adjustment (6) 


1,381


(1,287)


Adj: Income taxes


(7,185)


(3,750)


Total core income 

(A)

$                   44,742


$                   46,696








Total revenue 


$                 226,461


$                 226,984


Adj: Gain on sale of securities and other non-recurring gain, net


(482)


(4,758)


Adj: Loss on termination of hedges


8,792


-


Adj: Out-of-period adjustment (6) 


1,381


(1,287)


Total core revenue


$                 236,152


$                 220,939








Total non-interest expense


$                 165,986


$                 157,359


Less: Total non-core expense (see above)


(8,492)


(15,348)


Core non-interest expense                                    


$                 157,494


$                 142,011








(Dollars in millions, except per share data)






Total average assets                                                

(B)

$                     6,171


$                     5,306


Total average stockholders' equity                         

(C)

693


675


Total average tangible stockholders' equity                         

        (D)

415


403


Total tangible stockholders' equity, period-end (7)  

(E)

433


407


Total common shares outstanding, period-end (thousands)               

(F)

25,183


25,036


Average diluted common shares outstanding (thousands)

(G)

24,854


24,965








Core earnings per common share, diluted 

(A/G)

$                       1.80


$                       1.87


Tangible book value per common share, period-end

(E/F)

$                     17.19


$                     16.27








Core return on assets

(A/B)

0.73

%

0.88

%

Core return on equity

(A/C)

6.46


6.92


Core return on tangible equity (4)

(A/D)

11.48


12.37


Efficiency ratio (1)


63.17


60.79








Supplementary data






GAAP return on assets


0.55

%

0.78

%

GAAP return on equity 


4.87


6.09


Net interest margin


3.26


3.63


Tax credit benefit of tax shelter investments


$                     2,234


$                     1,455


Intangible amortization


$                     4,812


$                     5,268














(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income

      on a fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax   

      shelter investments. The Company uses this non-GAAP measure 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.







(4) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization

      of intangible assets, assuming a 40% marginal rate, by tangible equity.







(5) Bank charter change related expenses and prior period variable compensation are shown above under restructuring

      and conversion expenses.







(6) The out of period adjustments shown above relate to interest income earned on loans acquired in bank acquisitions. 







(7) Total tangible stockholders' equity is computed by taking total stockholders' equity less the intangible assets at

      period-end.

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/berkshire-hills-reports-20-increase-in-fourth-quarter-core-eps-dividend-increased-annual-meeting-date-set-300025726.html

SOURCE Berkshire Hills Bancorp, Inc.

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