Berkshire Hills Bancorp (BHLB) reported a 22% increase in first quarter earnings to a record $6.0 million in 2008 from $4.9 million in 2007. First quarter earnings per share increased by 4% to a record $0.58 in 2008 compared to $0.56 in 2007. Berkshire is the parent of Berkshire Bank, America’s Most Exciting BankSM.
First quarter 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 quarter earnings also included the seasonal benefit of insurance contingency revenue.
First quarter financial highlights include:
- 19% year-to-year growth in first quarter revenues
- 12% annualized growth in total deposits
- 9% annualized growth in personal demand deposit balances
- 8% annualized growth in commercial mortgages
- Net interest margin improved to 3.41% from 3.38% in the prior quarter and 3.24% in the first quarter of 2007
- Nonperforming assets were 0.51% of total assets at quarter-end
- Accruing delinquent loans were 0.44% of total loans at quarter-end
- Annualized net charge-offs were 0.17% of average loans
- $47 million added to wealth management assets with the acquisition of the Center for Financial Planning in Albany in January 2008. Quarter-end assets under management totaled $792 million.
- Repurchased 100,000 shares under our program, at an average cost of $22.88 per share
Michael P. Daly, President and Chief Executive Officer, stated, “I’m pleased that we started the year with record quarterly earnings, which sets the pace for anticipated record earnings for the entire year. We are generating positive operating leverage, growing our revenues and keeping our expenses under control. Our strong deposit growth has positioned us to further reduce higher cost funding sources. Our earnings per share were up 4% in the first quarter, and we are targeting further growth as we move through the year. Meanwhile, our asset quality remains sound. We book conforming loans to borrowers in and around our markets, and our problem assets and charge-offs remain at modest levels.”
Mr. Daly continued, “We acquired the Center for Financial Planning in Albany which added nearly $50 million to our wealth management assets in the first quarter. It will provide the foundation for expanding our wealth management business in our growing New York region. We appointed Thomas Creed as the Senior Vice President, Regional Commercial Executive and Leader of our Pioneer Valley region. Tom was previously the Regional Executive for Sovereign Bank, and we look forward to his contribution to building our business in this market. Our new Vermont region is gaining momentum in small business lending and our Berkshire County commercial loan portfolio continued to grow during the quarter. We are excited about our prospects for building market share in all of our markets this year.”
Mr. Daly concluded, “Lastly, I’m pleased to announce that Sean Gray has been promoted to Senior Vice President – Retail Banking. Sean joined us in December 2006 and helped introduce our America’s Most Exciting BankSM brand, drawing on his retail experience with Bank of America and Citizens Bank. He has successfully integrated a sales and service culture throughout the branch network, and we are pleased to recognize him for his accomplishments and his vision. Guy Boyer, who has served as EVP – Retail Banking is moving to a leadership position at a mutual community bank and we wish him well in his new endeavor.”
DIVIDEND INCREASED
The Board of Directors declared a quarterly cash dividend of $0.16 per share to stockholders of record on May 8, 2008 and payable on May 22, 2008. This represents a 7% increase over the prior dividend of $0.15 per share and represents a yield of approximately 2.75% in comparison with the average first quarter closing price of the Company’s stock.
FINANCIAL CONDITION
Total assets were $2.5 billion at the end of the first quarter, increasing by $33 million (5% annualized) from year-end. Deposit growth of $57 million helped to fund a $26 million reduction in borrowings, and an increase in short-term investments of $44 million. Total loans decreased by $9 million (2% annualized) due to a $16 million reduction in indirect auto loans which was partially offset by a $10 million increase in commercial loans. Beginning in the second half of 2007, Berkshire adjusted the pricing and scope of its indirect auto business and has accepted portfolio runoff as a result. Berkshire’s lending focus is on commercial loans and primarily on commercial mortgages, which increased at an 8% annualized rate during the quarter, which is up slightly from the 7% organic growth rate in the year 2007.
Net loan charge-offs measured 0.17% annualized in the first quarter of 2008, which is viewed as nominal. Consumer loans represent the largest charge-off category, and these net charge-offs have not increased significantly over the last two quarters. Nonperforming assets increased slightly to 0.51% of total assets at quarter-end, compared to 0.46% at year-end 2007. This category included only two loans over $1 million, which totaled $4.5 million and were fully collateralized. Accruing loans delinquent over 30 days increased slightly to 0.44% of total loans from 0.43% during the quarter. There were no loans over $1 million in this category.
Total deposits increased at a 12% annualized pace in the first quarter. This increase was primarily based on growth in money market accounts. These accounts provide other relationship cross-sale opportunities and have allowed the Bank to decrease its cost of deposits as market interest rates have decreased. Promotions of these accounts drew in some time account balances. Personal checking balances grew at a 9% annualized rate, reflecting the emphasis on adding new retail relationships. Savings balances grew at a 4% annualized rate. Commercial checking and NOW balances decreased primarily due to seasonal influences. The cost of deposits decreased to 2.72% in the first quarter from 3.00% in the prior quarter. Short-term investment balances at quarter-end are expected to be used primarily to reduce higher cost funding balances in the second quarter.
Stockholders’ equity increased at a 2% annualized rate to $329 million in the first quarter. Tangible book value per share increased to $13.97, and total book value per share increased to $31.38 at quarter-end. The ratio of tangible equity to assets remained at 6.2%, while the ratio of total equity to assets decreased slightly to 12.9%. During the first quarter, Berkshire repurchased 100,000 shares under its repurchase program, at an average price of $22.88 per share.
RESULTS OF OPERATIONS
Most major categories of income and expense increased due to the contribution of Vermont operations resulting from the Factory Point Bancorp acquisition in September 2007. First quarter net income was $6.0 million in 2008, an increase of $1.1 million (22%) over $4.9 million in 2007.
First quarter net interest income increased by $3.1 million (20%) year-to-year including the benefit of Vermont loan and deposit balances. Net interest income increased at a 2% annualized rate compared to the fourth quarter of 2007 due to the improvement in the net interest margin to 3.41% from 3.38%. This improvement included the benefit of pricing and balance sheet structural changes prior to the start of the year. Net interest income also benefited from the 2% annualized growth in average earning assets over the fourth quarter of 2007.
First quarter non-interest income increased by $1.2 million (15%) year-to-year including the additional Vermont income. Non-interest income was 34% of total first quarter revenues and included the benefit of seasonally high insurance revenues related to annual contingency payments. First quarter insurance revenues increased 3% year-to-year. The timing of contingency payments varies, and higher year-to-year growth of insurance revenues is expected in future quarters. All other fee income categories increased compared to the fourth quarter of 2007 except for deposit service fees, which were down due to seasonal influences but nonetheless were 42% higher than the first quarter of 2007.
The first quarter loan loss provision was $825 thousand in 2008 compared to $750 thousand in 2007. This provision exceeded first quarter net loan charge-offs of $811 thousand in 2008, and the loan loss allowance remained at 1.14% of total loans.
First quarter non-interest expense increased by $2.7 million (17%) year-to-year including the additional Vermont expense. The efficiency ratio improved to 60.1% including the benefit of seasonal insurance revenues. The first quarter effective income tax rate decreased slightly to 31.8% in 2008 compared to 32.0% in 2007.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 A.M. eastern time on Wednesday, April 30, 2008 to discuss first quarter results and guidance about expected future results. Interested parties are requested to access the conference a few minutes prior to the call as follows:
Dial-in: 800-860-2442
Webcast: www.berkshirebank.com (Investor Relations link)
A telephone replay of the call will be available until May 6, 2008 by calling 877-344-7529 and entering replay passcode: 417887. The webcast will be available at Berkshire's website above for an extended period of time.
Berkshire will also have a podcast available from its website shortly after the call for those interested in downloading the conference call onto individual listening devices or computers.
BACKGROUND
Berkshire Hills Bancorp is a regional financial services company with assets of approximately $2.5 billion. Headquartered in Pittsfield, Massachusetts, it is the parent of Berkshire Bank –America’s Most Exciting BankSM. Through its subsidiaries, 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.
FORWARD LOOKING STATEMENTS
Statements in this news release regarding Berkshire Hills Bancorp that are not historical facts are “forward-looking statements”. These statements, which reflect management’s views of future events, 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 and elsewhere in this release. 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 | ||||||||
| March 31, | December 31, | |||||||
| (In thousands, except share data) | 2008 | 2007 | ||||||
| Assets | ||||||||
| Total cash and cash equivalents | $ | 31,747 | $ | 33,259 | ||||
| Fed funds sold & short-term investments | 51,838 | 7,883 | ||||||
| Securities available for sale, at fair value | 222,057 | 219,041 | ||||||
| Securities held to maturity, at amortized cost | 39,626 | 39,456 | ||||||
| Loans held for sale | 2,913 | 3,445 | ||||||
| Residential mortgages | 655,184 | 657,045 | ||||||
| Commercial mortgages | 718,318 | 704,764 | ||||||
| Commercial business loans | 200,048 | 203,564 | ||||||
| Consumer loans | 361,635 | - | 378,643 | |||||
| Total loans | 1,935,185 | 1,944,016 | ||||||
| Less: Allowance for loan losses | (22,130 | ) | (22,116 | ) | ||||
| Net loans | 1,913,055 | 1,921,900 | ||||||
| Premises and equipment, net | 38,489 | 38,806 | ||||||
| Goodwill | 162,000 | 161,632 | ||||||
| Other intangible assets | 20,398 | 20,820 | ||||||
| Cash surrender value of life insurance | 34,516 | 35,316 | ||||||
| Other assets | 29,744 | 31,874 | ||||||
| Total assets | $ | 2,546,383 | $ | 2,513,432 | ||||
| Liabilities and stockholders' equity | ||||||||
| Demand deposits | $ | 224,471 | $ | 231,994 | ||||
| NOW deposits | 208,913 | 213,150 | ||||||
| Money market deposits | 514,586 | 439,341 | ||||||
| Savings deposits | 213,054 | 210,186 | ||||||
| Total non-maturity deposits | 1,161,024 | 1,094,671 | ||||||
| Brokered time deposits | 21,446 | 21,497 | ||||||
| Other time deposits | 697,633 | 706,395 | ||||||
| Total time deposits | 719,079 | 727,892 | ||||||
| Total deposits | 1,880,103 | 1,822,563 | ||||||
| Borrowings | 308,283 | 334,474 | ||||||
| Junior subordinated debentures | 15,464 | 15,464 | ||||||
| Other liabilities | 13,792 | 14,094 | ||||||
| Total liabilities | 2,217,642 | 2,186,595 | ||||||
| Total stockholders' equity | 328,741 | 326,837 | ||||||
| Total liabilities and stockholders' equity | $ | 2,546,383 | $ | 2,513,432 | ||||
| BERKSHIRE HILLS BANCORP, INC. | |||||||||||||||
| CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED | |||||||||||||||
LOAN ANALYSIS | |||||||||||||||
| (Dollars in millions) |
Mar. 31, 2008 |
Dec. 31, 2007 | $ | Change |
Annualized % | ||||||||||
| Residential mortgages: | |||||||||||||||
| 1 - 4 Family | $ | 609 | $ | 610 | $ | (1 | ) | (1 | ) | % | |||||
| Construction | 46 | 47 | (1 | ) | (7 | ) | |||||||||
| Total residential mortgages | 655 | 657 | (2 | ) | (1 | ) | |||||||||
| Commercial mortgages: | |||||||||||||||
| Construction | 130 | 125 | 5 | 16 | |||||||||||
| Single and multi-family | 79 | 69 | 10 | 58 | |||||||||||
| Other commercial mortgages | 509 | 510 | (1 | ) | (1 | ) | |||||||||
| Total commercial mortgages | 718 | 704 | 14 | 8 | |||||||||||
| Commercial business loans | 200 | 204 | (4 | ) | (8 | ) | |||||||||
| Total commercial loans | 918 | 908 | 10 | 4 | |||||||||||
| Consumer loans: | |||||||||||||||
| Auto | 181 | 197 | (16 | ) | (32 | ) | |||||||||
| Home equity and other | 181 | 182 | (1 | ) | (2 | ) | |||||||||
| Total consumer loans | 362 | 379 | (17 | ) | (18 | ) | |||||||||
| Total loans | $ | 1,935 | $ | 1,944 | $ | (9 | ) | (2 | ) | % | |||||
DEPOSIT ANALYSIS | |||||||||||||||
| (Dollars in millions) |
Mar. 31, 2008 |
Dec. 31, 2007 | $ | Change |
Annualized % | ||||||||||
| Demand | $ | 224 | $ | 232 | $ | (8 | ) | (14 | ) | % | |||||
| NOW | 209 | 213 | (4 | ) | (8 | ) | |||||||||
| Money market | 515 | 439 | 76 | 69 | |||||||||||
| Savings | 213 | 211 | 2 | 4 | |||||||||||
| Total non-maturity deposits | 1,161 | 1,095 | 66 | 24 | |||||||||||
| Time less than $100,000 | 401 | 409 | (8 | ) | (8 | ) | |||||||||
| Time $100,000 or more | 297 | 298 | (1 | ) | (1 | ) | |||||||||
| Brokered time | 21 | 21 | (0 | ) | (9 | ) | |||||||||
| Total time deposits | 719 | 728 | (9 | ) | (5 | ) | |||||||||
| Total deposits | $ | 1,880 | $ | 1,823 | $ | 57 | 12 | % | |||||||
| BERKSHIRE HILLS BANCORP, INC. | ||||||
| CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| (In thousands, except per share data) | 2008 | 2007 | ||||
| Interest and dividend income | ||||||
| Loans | $ | 31,323 | $ | 28,522 | ||
| Securities and other | 3,200 | 2,948 | ||||
| Total interest and dividend income | 34,523 | 31,470 | ||||
| Interest expense | ||||||
| Deposits | 12,288 | 11,949 | ||||
| Borrowings and junior subordinated debentures | 3,941 | 4,331 | ||||
| Total interest expense | 16,229 | 16,280 | ||||
| Net interest income | 18,294 | 15,190 | ||||
| Non-interest income | ||||||
| Insurance commissions and fees | 5,146 | 4,991 | ||||
| Deposit service fees | 2,155 | 1,514 | ||||
| Wealth management fees | 1,628 | 919 | ||||
| Loan service fees | 237 | 309 | ||||
| Total fee income | 9,166 | 7,733 | ||||
| Other | 306 | 423 | ||||
| Gain on sale of securities, net | - | 81 | ||||
| Total non-interest income | 9,472 | 8,237 | ||||
| Total net revenue | 27,766 | 23,427 | ||||
| Provision for loan losses | 825 | 750 | ||||
| Non-interest expense | ||||||
| Salaries and employee benefits | 9,656 | 8,511 | ||||
| Occupancy and equipment | 2,968 | 2,486 | ||||
| Marketing, data processing, and professional services | 2,121 | 1,947 | ||||
| Non-recurring expense | - | 153 | ||||
| Amortization of intangible assets | 1,084 | 662 | ||||
| Other | 2,245 | 1,650 | ||||
| Total non-interest expense | 18,074 | 15,409 | ||||
| Income before income taxes | 8,867 | 7,268 | ||||
| Income tax expense | 2,818 | 2,326 | ||||
| Net income | $ | 6,049 | $ | 4,942 | ||
| Basic earnings per share | $ | 0.58 | $ | 0.57 | ||
| Diluted earnings per share | $ | 0.58 | $ | 0.56 | ||
| Weighted average shares outstanding | ||||||
| Basic | 10,386 | 8,662 | ||||
| Diluted | 10,457 | 8,842 | ||||
| BERKSHIRE HILLS BANCORP, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED | ||||||||||||||||
| Quarters Ended | ||||||||||||||||
| Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||
| (In thousands, except per share data) | 2008 | 2007 | 2007 | 2007 | 2007 | |||||||||||
| Interest and dividend income | ||||||||||||||||
| Loans | $ | 31,323 | $ | 32,666 | $ | 29,719 | $ | 29,152 | $ | 28,522 | ||||||
| Securities and other | 3,200 | 3,183 | 2,912 | 2,842 | 2,948 | |||||||||||
| Total interest and dividend income | 34,523 | 35,849 | 32,631 | 31,994 | 31,470 | |||||||||||
| Interest expense | ||||||||||||||||
| Deposits | 12,288 | 13,749 | 12,581 | 12,318 | 11,949 | |||||||||||
| Borrowings and junior subordinated debentures | 3,941 | 3,882 | 4,571 | 4,638 | 4,331 | |||||||||||
| Total interest expense | 16,229 | 17,631 | 17,152 | 16,956 | 16,280 | |||||||||||
| Net interest income | 18,294 | 18,218 | 15,479 | 15,038 | 15,190 | |||||||||||
| Non-interest income | ||||||||||||||||
| Insurance commissions and fees | 5,146 | 2,290 | 2,661 | 3,786 | 4,991 | |||||||||||
| Deposit service fees | 2,155 | 2,620 | 1,825 | 1,788 | 1,514 | |||||||||||
| Wealth management fees | 1,628 | 1,476 | 1,044 | 968 | 919 | |||||||||||
| Loan service fees | 237 | 91 | 324 | 48 | 309 | |||||||||||
| Total fee income | 9,166 | 6,477 | 5,854 | 6,590 | 7,733 | |||||||||||
| Other | 306 | 551 | 433 | 303 | 423 | |||||||||||
| (Loss) gain on sale of securities, net | - | - | (672 | ) | - | 81 | ||||||||||
| Loss on prepayment of borrowings, net | - | - | (1,180 | ) | - | - | ||||||||||
| Gain (loss) on sale of loans, net | - | 41 | (1,991 | ) | - | - | ||||||||||
| Total non-interest income | 9,472 | 7,069 | 2,444 | 6,893 | 8,237 | |||||||||||
| Total net revenue | 27,766 | 25,287 | 17,923 | 21,931 | 23,427 | |||||||||||
| Provision for loan losses | 825 | 3,060 | 390 | 100 | 750 | |||||||||||
| Non-interest expense | ||||||||||||||||
| Salaries and employee benefits | 9,656 | 9,386 | 7,891 | 8,230 | 8,511 | |||||||||||
| Occupancy and equipment | 2,968 | 2,656 | 2,418 | 2,385 | 2,486 | |||||||||||
| Marketing, data processing, and professional services | 2,121 | 2,275 | 2,260 | 2,116 | 1,947 | |||||||||||
| Non-recurring expense | - | 1,198 | 1,606 | - | 153 | |||||||||||
| Amortization of intangible assets | 1,084 | 1,050 | 684 | 662 | 662 | |||||||||||
| Other | 2,245 | 1,828 | 1,730 | 1,710 | 1,650 | |||||||||||
| Total non-interest expense | 18,074 | 18,393 | 16,589 | 15,103 | 15,409 | |||||||||||
| Income before income taxes | 8,867 | 3,834 | 944 | 6,728 | 7,268 | |||||||||||
| Income tax expense | 2,818 | 761 | - | 2,152 | 2,326 | |||||||||||
| Net income | $ | 6,049 | $ | 3,073 | $ | 944 | $ | 4,576 | $ | 4,942 | ||||||
| Basic earnings per share | $ | 0.58 | $ | 0.29 | $ | 0.11 | $ | 0.52 | $ | 0.57 | ||||||
| Diluted earnings per share | $ | 0.58 | $ | 0.29 | $ | 0.10 | $ | 0.52 | $ | 0.56 | ||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic | 10,386 | 10,524 | 8,922 | 8,732 | 8,662 | |||||||||||
| Diluted | 10,457 | 10,664 | 9,045 | 8,875 | 8,842 | |||||||||||
| BERKSHIRE HILLS BANCORP AND SUBSIDIARIES | ||||||||||||||||||||
| ASSET QUALITY ANALYSIS | ||||||||||||||||||||
| At or for the Quarters Ended | ||||||||||||||||||||
| Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||||||||
| (Dollars in thousands) | 2008 | 2007 | 2007 | 2007 | 2007 | |||||||||||||||
| NON-PERFORMING ASSETS | ||||||||||||||||||||
| Nonaccruing loans: | ||||||||||||||||||||
| Residential mortgages | $ | 1,060 | $ | 726 | $ | 623 | $ | 533 | $ | 22 | ||||||||||
| Commercial mortgages | 7,082 | 5,177 | 4,977 | 1,580 | 1,346 | |||||||||||||||
| Commercial business loans | 3,557 | 4,164 | 5,553 | 6,816 | 7,049 | |||||||||||||||
| Consumer loans | 441 | 441 | 274 | 210 | 124 | |||||||||||||||
| Total nonaccruing loans | 12,140 | 10,508 | 11,427 | 9,139 | 8,541 | |||||||||||||||
| Real estate owned | 755 | 866 | 348 | - | - | |||||||||||||||
| Total nonperforming assets | $ | 12,895 | $ | 11,374 | $ | 11,775 | $ | 9,139 | $ | 8,541 | ||||||||||
| Total nonperforming loans/total loans | 0.63 | % | 0.54 | % | 0.59 | % | 0.53 | % | 0.49 | % | ||||||||||
| Total nonperforming assets/total assets | 0.51 | % | 0.46 | % | 0.48 | % | 0.42 | % | 0.39 | % | ||||||||||
| PROVISION AND ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||
| Balance at beginning of period | $ | 22,116 | $ | 22,108 | $ | 19,151 | $ | 19,652 | $ | 19,370 | ||||||||||
| Charged-off loans | (883 | ) | (3,117 | ) | (1,954 | ) | (678 | ) | (627 | ) | ||||||||||
| Recoveries on charged-off loans | 72 | 65 | 68 | 77 | 159 | |||||||||||||||
| Net loans charged-off | (811 | ) | (3,052 | ) | (1,886 | ) | (601 | ) | (468 | ) | ||||||||||
| Acquired allowance | - | - | 4,453 | - | - | |||||||||||||||
| Provision for loan losses | 825 | 3,060 | 390 | 100 | 750 | |||||||||||||||
| Balance at end of period | $ | 22,130 | $ | 22,116 | $ | 22,108 | $ | 19,151 | $ | 19,652 | ||||||||||
| Allowance for loan losses/nonperforming loans | 182 | % | 210 | % | 193 | % | 210 | % | 230 | % | ||||||||||
| Allowance for loan losses/total loans | 1.14 | % | 1.14 | % | 1.14 | % | 1.11 | % | 1.14 | % | ||||||||||
| NET LOAN CHARGE-OFFS | ||||||||||||||||||||
| Residential mortgages | $ | (24 | ) | $ | - | $ | - | $ | - | $ | - | |||||||||
| Commercial mortgages | (175 | ) | - | - | - | - | ||||||||||||||
| Commercial business loans | (213 | ) | (2,683 | ) | (1,497 | ) | (406 | ) | (251 | ) | ||||||||||
| Consumer loans | (399 | ) | (369 | ) | (389 | ) | (195 | ) | (217 | ) | ||||||||||
| Total net | $ | (811 | ) | $ | (3,052 | ) | $ | (1,886 | ) | $ | (601 | ) | $ | (468 | ) | |||||
| Net charge-offs (YTD annualized)/average loans | 0.17 | % | 0.34 | % | 0.23 | % | 0.12 | % | 0.11 | % | ||||||||||
| AVERAGE FICO SCORES OF CONSUMER | ||||||||||||||||||||
| AUTOMOBILE LOANS | 731 | 730 | 729 | 730 | 728 | |||||||||||||||
| DELINQUENT LOANS / TOTAL LOANS | ||||||||||||||||||||
| 30-90 Days delinquent | 0.41 | % | 0.39 | % | 0.60 | % | 0.29 | % | 0.28 | % | ||||||||||
| 90 + Days delinquent and still accruing | 0.03 | % | 0.04 | % | 0.11 | % | 0.07 | % | 0.10 | % | ||||||||||
| Total accruing delinquent loans | 0.44 | % | 0.43 | % | 0.71 | % | 0.36 | % | 0.38 | % | ||||||||||
| Nonaccruing loans | 0.63 | % | 0.54 | % | 0.59 | % | 0.53 | % | 0.49 | % | ||||||||||
| Total delinquent loans | 1.07 | % | 0.97 | % | 1.30 | % | 0.89 | % | 0.87 | % | ||||||||||
| BERKSHIRE HILLS BANCORP AND SUBSIDIARIES | |||||||||||||||||||||||
| SELECTED FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||
| At or for the Quarters Ended | |||||||||||||||||||||||
| Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | |||||||||||||||||||
| 2008 | 2007 | 2007 | 2007 | 2007 | |||||||||||||||||||
| PERFORMANCE RATIOS | |||||||||||||||||||||||
| Core return on tangible assets | 1.24 | % | 0.84 | % | 0.97 | % | 0.97 | % | 1.07 | % | |||||||||||||
| Return on total assets | 0.97 | 0.50 | 0.18 | 0.84 | 0.92 | ||||||||||||||||||
| Core return on tangible equity | 19.52 | 13.03 | 13.64 | 13.75 | 15.40 | ||||||||||||||||||
| Return on total equity | 7.38 | 3.74 | 1.44 | 6.86 | 7.57 | ||||||||||||||||||
| Net interest margin, fully taxable equivalent | 3.41 | 3.38 | 3.20 | 3.15 | 3.24 | ||||||||||||||||||
| Core tangible non-interest income to assets | 1.64 | 1.23 | 1.21 | 1.33 | 1.60 | ||||||||||||||||||
| Non-interest income to assets | 1.52 | 1.14 | 0.44 | 1.26 | 1.53 | ||||||||||||||||||
| Core tangible non-interest expense to assets | 2.95 | 2.80 | 2.74 | 2.80 | 2.87 | ||||||||||||||||||
| Non-interest expense to assets | 2.89 | 2.95 | 3.00 | 2.76 | 2.86 | ||||||||||||||||||
| Efficiency ratio | 60.12 | 62.51 | 64.13 | 64.27 | 61.07 | ||||||||||||||||||
| YEAR-TO-DATE GROWTH | |||||||||||||||||||||||
| Total loans | (2 | ) | % | 3 | % | 4 | % | - | % | 7 | % | ||||||||||||
| Total deposits | 12 | 2 | - | (2 | ) | 3 | |||||||||||||||||
| Total revenues | 19 | 23 | 24 | 22 | 25 | ||||||||||||||||||
| FINANCIAL DATA (In millions) | |||||||||||||||||||||||
| Total assets | $ | 2,546 | $ | 2,513 | $ | 2,472 | $ | 2,170 | $ | 2,175 | |||||||||||||
| Total loans | 1,935 | 1,944 | 1,939 | 1,730 | 1,730 | ||||||||||||||||||
| Total intangible assets | 182 | 182 | 183 | 121 | 121 | ||||||||||||||||||
| Total deposits | 1,880 | 1,823 | 1,796 | 1,529 | 1,535 | ||||||||||||||||||
| Total stockholders' equity | 329 | 327 | 331 | 266 | 263 | ||||||||||||||||||
| Total core income | 6.0 | 3.8 | 4.4 | 4.6 | 5.0 | ||||||||||||||||||
| Total net income | 6.0 | 3.1 | 0.9 | 4.6 | 4.9 | ||||||||||||||||||
| ASSET QUALITY RATIOS | |||||||||||||||||||||||
Net charge-offs (annualized)/ | 0.17 | % | 0.34 | % | 0.23 | % | 0.12 | % | 0.11 | % | |||||||||||||
| Non-performing assets/total assets | 0.51 | 0.45 | 0.48 | 0.42 | 0.39 | ||||||||||||||||||
| Loan loss allowance/total loans | 1.14 | 1.14 | 1.14 | 1.11 | 1.14 | ||||||||||||||||||
Loan loss allowance/ | 1.82 | x | 2.10 | x | 1.93 | x | 2.10 | x | 2.30 | x | |||||||||||||
| PER SHARE DATA | |||||||||||||||||||||||
| Core earnings, diluted | $ | 0.58 | $ | 0.36 | $ | 0.49 | $ | 0.52 | $ | 0.56 | |||||||||||||
| Net earnings, diluted | 0.58 | 0.29 | 0.10 | 0.52 | 0.56 | ||||||||||||||||||
| Tangible book value | 13.97 | 13.82 | 13.79 | 16.40 | 16.13 | ||||||||||||||||||
| Total book value | 31.38 | 31.15 | 30.82 | 30.12 | 29.87 | ||||||||||||||||||
| Market price at period end | 25.19 | 26.00 | 30.23 | 31.51 | 33.65 | ||||||||||||||||||
| Dividends | 0.15 | 0.15 | 0.15 | 0.14 | 0.14 | ||||||||||||||||||
| CAPITAL RATIOS | |||||||||||||||||||||||
| Stockholders' equity to total assets | 12.91 | % | 13.00 | % | 13.38 | % | 12.28 | % | 12.10 | % | |||||||||||||
| Tangible stockholders' equity to tangible assets | 6.19 | 6.22 | 6.47 | 7.08 | 6.92 | ||||||||||||||||||
| (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 | ||||||||||||||
| Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||||||
| (In thousands) | 2008 | 2007 | 2007 | 2007 | 2007 | |||||||||
| Assets | ||||||||||||||
| Loans | ||||||||||||||
| Residential mortgages | $ | 659,406 | $ | 661,937 | $ | 634,374 | $ | 612,289 | $ | 603,858 | ||||
| Commercial mortgages | 712,317 | 694,339 | 608,891 | 593,134 | 577,645 | |||||||||
| Commercial business loans | 201,433 | 203,539 | 171,334 | 191,967 | 188,194 | |||||||||
| Consumer loans | 369,659 | 381,401 | 349,311 | 344,069 | 340,563 | |||||||||
| Total loans | 1,942,815 | 1,941,216 | 1,763,910 | 1,741,459 | 1,710,260 | |||||||||
| Securities | 254,561 | 254,847 | 224,207 | 228,471 | 231,035 | |||||||||
| Federal funds sold & short-term investments | 16,498 | 4,526 | 4,511 | 5,232 | 1,915 | |||||||||
| Total earning assets | 2,213,874 | 2,200,589 | 1,992,628 | 1,975,162 | 1,943,210 | |||||||||
| Intangible assets | 182,895 | 183,902 | 126,797 | 120,698 | 121,059 | |||||||||
| Other assets | 104,027 | 105,525 | 93,165 | 91,320 | 91,298 | |||||||||
| Total assets | $ | 2,500,796 | $ | 2,490,016 | $ | 2,212,590 | $ | 2,187,180 | $ | 2,155,567 | ||||
| Liabilities and stockholders' equity | ||||||||||||||
| Deposits | ||||||||||||||
| NOW | $ | 208,275 | $ | 207,671 | $ | 141,529 | $ | 140,089 | $ | 142,403 | ||||
| Money market | 466,673 | 422,514 | 329,943 | 309,675 | 294,015 | |||||||||
| Savings | 210,310 | 212,760 | 198,372 | 195,551 | 199,517 | |||||||||
| Time | 715,026 | 749,785 | 701,062 | 703,595 | 702,554 | |||||||||
| Total interest-bearing deposits | 1,600,284 | 1,592,730 | 1,370,906 | 1,348,910 | 1,338,489 | |||||||||
| Borrowings and debentures | 346,475 | 327,383 | 374,537 | 386,044 | 375,730 | |||||||||
| Total interest-bearing liabilities | 1,946,759 | 1,920,113 | 1,745,443 | 1,734,954 | 1,714,219 | |||||||||
| Non-interest-bearing demand deposits | 217,355 | 225,507 | 186,654 | 178,356 | 170,819 | |||||||||
| Other liabilities | 7,079 | 11,267 | 4,298 | 7,359 | 8,456 | |||||||||
| Total liabilities | 2,171,193 | 2,156,887 | 1,936,395 | 1,920,669 | 1,893,494 | |||||||||
| Stockholders' equity | 329,603 | 333,129 | 276,195 | 266,511 | 262,073 | |||||||||
| Total liabilities and stockholders' equity | $ | 2,500,796 | $ | 2,490,016 | $ | 2,212,590 | $ | 2,187,180 | $ | 2,155,567 | ||||
| Supplementary data | ||||||||||||||
| Total non-maturity deposits | $ | 1,102,613 | $ | 1,068,452 | $ | 856,498 | $ | 823,671 | $ | 806,754 | ||||
| Total deposits | 1,817,639 | 1,818,237 | 1,557,560 | 1,527,266 | 1,509,308 | |||||||||
| Fully taxable equivalent income adj. | 492 | 541 | 533 | 540 | 553 | |||||||||
| (1) Average balances for securities available-for-sale are based on amortized cost. | ||||||||||||||
| (2) Average residential mortgages include loans held for sale | ||||||||||||||
| BERKSHIRE HILLS BANCORP AND SUBSIDIARIES | ||||||||||
| AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) | ||||||||||
| Quarters Ended | ||||||||||
| Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | ||||||
| 2008 | 2007 | 2007 | 2007 | 2007 | ||||||
| Earning assets | ||||||||||
| Loans | ||||||||||
| Residential mortgages | 5.70 | % | 5.54 | % | 5.35 | % | 5.36 | % | 5.29 | % |
| Commercial mortgages | 6.86 | 7.34 | 7.49 | 7.55 | 7.47 | |||||
| Commercial business loans | 7.55 | 7.68 | 8.06 | 7.81 | 8.09 | |||||
| Consumer loans | 6.58 | 6.91 | 7.03 | 6.98 | 6.97 | |||||
| Total loans | 6.48 | 6.68 | 6.68 | 6.71 | 6.76 | |||||
| Securities | 5.69 | 5.85 | 6.15 | 5.92 | 6.06 | |||||
| Federal funds sold and | ||||||||||
| short-term investments | 2.24 | 5.25 | 5.25 | 4.94 | 4.45 | |||||
| Total earning assets | 6.36 | 6.56 | 6.70 | 6.63 | 6.63 | |||||
| Funding liabilities | ||||||||||
| Deposits | ||||||||||
| NOW | 1.09 | 1.39 | 1.40 | 1.50 | 1.54 | |||||
| Money Market | 2.88 | 3.41 | 3.67 | 3.73 | 3.63 | |||||
| Savings | 0.97 | 1.10 | 1.17 | 1.08 | 1.06 | |||||
| Time | 4.43 | 4.65 | 4.69 | 4.78 | 4.77 | |||||
| Total interest-bearing deposits | 3.09 | 3.42 | 3.64 | 3.66 | 3.62 | |||||
| Borrowings and debentures | 4.57 | 4.70 | 4.84 | 4.82 | 4.67 | |||||
| Total interest-bearing liabilities | 3.35 | 3.64 | 3.90 | 3.92 | 3.85 | |||||
| Net interest spread | 3.01 | 2.92 | 2.80 | 2.71 | 2.78 | |||||
| Net interest margin | 3.41 | 3.38 | 3.20 | 3.15 | 3.24 | |||||
| Cost of funds | 3.02 | 3.26 | 3.52 | 3.55 | 3.50 | |||||
| Cost of deposits | 2.72 | 3.00 | 3.20 | 3.24 | 3.21 | |||||
| (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 | |||||||||||||||||||||
| Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | |||||||||||||||||
| (Dollars in thousands) | 2008 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||
| Net income | $ | 6,049 | $ | 3,073 | $ | 944 | $ | 4,576 | $ | 4,942 | |||||||||||
| Adj: Loss (gain) on sale of securities, net | - | - | 672 | - | (81 | ) | |||||||||||||||
| Adj: Loss on prepayment of borrowings, net | - | - | 1,180 | - | - | ||||||||||||||||
| Adj: Loss on sale of loans, net | - | - | 1,991 | - | - | ||||||||||||||||
| Less: Income from discontinued operations | - | - | - | - | - | ||||||||||||||||
| Plus: Other non-recurring expense | - | 1,198 | 1,606 | - | 153 | ||||||||||||||||
| Adj: Income taxes | - | (468 | ) | (1,995 | ) | - | (29 | ) | |||||||||||||
| Core income | (A) | 6,049 | 3,803 | 4,398 | 4,576 | 4,985 | |||||||||||||||
| Plus: Amort. of intangible assets | 1,084 | 1,050 | 684 | 662 | 662 | ||||||||||||||||
| Tangible core income | (B) | $ | 7,133 | $ | 4,853 | $ | 5,082 | $ | 5,238 | $ | 5,647 | ||||||||||
| Total non-interest income | $ | 9,472 | $ | 7,069 | $ | 2,444 | $ | 6,893 | $ | 8,237 | |||||||||||
| Adj: Loss (gain) on sale of securities, net | - | - | 672 | - | (81 | ) | |||||||||||||||
| Adj: Loss on prepayment of borrowings, net | - | - | 1,180 | - | - | ||||||||||||||||
| Adj: Loss on sale of loans, net | - | - | 1,991 | - | - | ||||||||||||||||
| Total core non-interest income | (C) | 9,472 | 7,069 | 6,287 | 6,893 | 8,156 | |||||||||||||||
| Net interest income | 18,294 | 18,218 | 15,479 | 15,038 | 15,190 | ||||||||||||||||
| Total core revenue | (D) | $ | 27,766 | $ | 25,287 | $ | 21,766 | $ | 21,931 | $ | 23,346 | ||||||||||
| Total non-interest expense | $ | 18,074 | $ | 18,393 | $ | 16,589 | $ | 15,103 | $ | 15,409 | |||||||||||
| Less: Other non-recurring expense | - | (1,198 | ) | (1,606 | ) | - | (153 | ) | |||||||||||||
| Core non-interest expense | (E) | 18,074 | 17,195 | 14,983 | 15,103 | 15,256 | |||||||||||||||
| Less: Amortization of intangible assets | (1,084 | ) | (1,050 | ) | (684 | ) | (662 | ) | (662 | ) | |||||||||||
| Total core tangible non-interest expense | (F) | $ | 16,990 | $ | 16,145 | $ | 14,299 | $ | 14,441 | $ | 14,594 | ||||||||||
| (Dollars in millions, except per share data) | |||||||||||||||||||||
| Total average assets | $ | 2,501 | $ | 2,490 | $ | 2,213 | $ | 2,187 | $ | 2,156 | |||||||||||
| Less: Average intangible assets | (183 | ) | (184 | ) | (127 | ) | (121 | ) | (121 | ) | |||||||||||
| Total average tangible assets | (G) | $ | 2,318 | $ | 2,306 | $ | 2,086 | $ | 2,066 | $ | 2,035 | ||||||||||
| Total average stockholders' equity | $ | 330 | $ | 333 | $ | 276 | $ | 267 | $ | 262 | |||||||||||
| Less: Average intangible assets | (183 | ) | (184 | ) | (127 | ) | (121 | ) | (121 | ) | |||||||||||
| Total average tangible stockholders' equity | (H) | $ | 147 | $ | 149 | $ | 149 | $ | 146 | $ | 141 | ||||||||||
| Total stockholders' equity, period-end | $ | 329 | $ | 327 | $ | 331 | $ | 266 | $ | 263 | |||||||||||
| Less: Intangible assets, period-end | (182 | ) | (182 | ) | (183 | ) | (121 | ) | (121 | ) | |||||||||||
| Total tangible stockholders' equity, period-end | (I) | $ | 147 | $ | 145 | $ | 148 | $ | 145 | $ | 142 | ||||||||||
| Total shares outstanding, period-end (thousands) | (J) | 10,475 | 10,493 | 10,729 | 8,842 | 8,807 | |||||||||||||||
| Average diluted shares outstanding (thousands) | (K) | 10,457 | 10,664 | 9,045 | 8,875 | 8,842 | |||||||||||||||
| Core earnings per share | (A/K) | $ | 0.58 | $ | 0.36 | $ | 0.49 | $ | 0.52 | $ | 0.56 | ||||||||||
| Tangible book value per share | (I/J) | $ | 13.97 | $ | 13.82 | $ | 13.79 | $ | 16.40 | $ | 16.13 | ||||||||||
| Core return on tangible assets | (B/G) | 1.24 | % | 0.84 | % | 0.97 | % | 0.97 | % | 1.07 | % | ||||||||||
| Core return on tangible equity | (B/H) | 19.52 | 13.03 | 13.64 | 13.75 | 15.40 | |||||||||||||||
| Core tangible non-interest income to assets | (C/G) | 1.64 | 1.23 | 1.21 | 1.33 | 1.60 | |||||||||||||||
| Core tangible non-interest exp to assets | (F/G) | 2.95 | 2.80 | 2.74 | 2.80 | 2.87 | |||||||||||||||
| Efficiency ratio | 60.12 | 62.63 | 64.13 | 64.27 | 61.07 | ||||||||||||||||
| (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. | |||||||||||||||||||||
Contacts:
Kevin P. Riley, 413-236-3195
Executive
Vice President and Chief Financial Officer
or
David H. Gonci,
413-281-1973
Corporate Finance Officer
