EX-99.1 2 berkshire8kreleaseapr29.txt 1 [BERKSHIRE HILLS BANCORP LOGO] BERKSHIRE HILLS REPORTS 22% EARNINGS GROWTH AND RECORD QUARTERLY EARNINGS AND EPS; NET INTEREST MARGIN INCREASES; ASSET QUALITY REMAINS SOUND; DIVIDEND INCREASE DECLARED PITTSFIELD, MA - April 29, 2008 - 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: o 19% year-to-year growth in first quarter revenues o 12% annualized growth in total deposits o 9% annualized growth in personal demand deposit balances o 8% annualized growth in commercial mortgages o Net interest margin improved to 3.41% from 3.38% in the prior quarter and 3.24% in the first quarter of 2007 o Nonperforming assets were 0.51% of total assets at quarter-end o Accruing delinquent loans were 0.44% of total loans at quarter-end o Annualized net charge-offs were 0.17% of average loans o $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. o 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 BHLB - Berkshire Hills Bancorp Page 1 www.berkshirebank.com 2 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 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 BHLB - Berkshire Hills Bancorp Page 2 www.berkshirebank.com 3 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. BHLB - Berkshire Hills Bancorp Page 3 www.berkshirebank.com 4 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. BHLB - Berkshire Hills Bancorp Page 4 www.berkshirebank.com 5 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. # # # CONTACTS -------- Kevin P. Riley Executive Vice President and Chief Financial Officer 413-236-3195 David H. Gonci Corporate Finance Officer 413-281-1973 BHLB - Berkshire Hills Bancorp Page 5 www.berkshirebank.com 6
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 -----------------------------------------------------------------------------
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BERKSHIRE HILLS BANCORP, INC. CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED --------------------------------------------------------------------------------------- LOAN ANALYSIS ------------- (Dollars in millions) Mar. 31, 2008 Dec.l3, 2007 Annualized % Balance Balance $Change Change --------------------------------------------------------------------------------------- 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.l3, 2007 Annualized % Balance Balance $Change Change --------------------------------------------------------------------------------------- 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 % ---------------------------------------------------------------------------------------
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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
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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
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BERKSHIRE HILLS BANCORPAND 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% ------------------------------------------------------------------------------------------------------------
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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)/average loans 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/nonperforming loans 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. F-6 12
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. F-7 13
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. F-8 14
BERKSHIRE HILLS BANCORP AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES -------------------------------------------------------------------------------------------------------------------------- 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. F-9