BERKSHIRE HILLS BANCORP, INC. 
By PITTSFIELD, Mass., Jan. 24, 2011 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (Nasdaq: BHLB) reported another solid quarter of earnings growth and strong asset quality metrics. Core earnings per share reached $0.28 in the fourth quarter of 2010, representing growth of 12% over third quarter results. Asset quality trends continued to improve and the loan loss provision covered net charge-offs. For the quarter, GAAP earnings per share were $0.26 which included approximately $0.4 million in non-core charges relating to bank acquisitions. Core and GAAP earnings for the fourth quarter 2010 were $3.9 million and $3.6 million, respectively. For the year 2010, core earnings per share were $1.01, while GAAP earnings per share were $0.99. The strong results for the quarter and year position Berkshire well for improving targeted earnings in 2011.
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FOURTH QUARTER FINANCIAL HIGHLIGHTS (revenue and expense comparisons are to prior year fourth quarter, unless otherwise noted)
-- 12% increase in core earnings per share compared to prior quarter
-- 12% net interest income growth
-- 18% fee income growth
-- 17% annualized loan growth
-- 26% annualized deposit growth
-- 3.30% net interest margin, compared to 3.05% in the fourth quarter of
2009
-- 1% decrease in core non-interest expense (1% increase with merger
related costs)
-- 0.59% non-performing assets/total assets
-- 0.37% annualized net loan charge-offs/average loans
-- 233% allowance for loan losses/non-accruing loans
-- 1.49% allowance for loan losses/total loans
YEAR 2010 FINANCIAL HIGHLIGHTS
-- 11% net interest income growth
-- 6% fee income growth
-- 9% loan growth
-- 11% deposit growth
Michael P. Daly, President and Chief Executive Officer, stated, "We closed 2010 with our strongest quarterly core revenue growth of the year, on a seasonally adjusted basis. Our results exceeded our expectations for the quarter and for the year, with strong business generation in all of our regions and very solid contributions from our new asset based lending and private banking teams. This brought our full year core earnings per share to $1.01, before $0.02 in merger related charges. We produced positive operating leverage throughout the year by combining revenue growth with expense control, including a 1% decrease in fourth quarter core expenses before merger charges. Our asset quality has remained favorable, with improvements in major credit metrics in each quarter. We also continued our New York expansion, with the opening of two new branches in the fourth quarter. Our team has aggressively pursued growth and profitability initiatives in all business lines, producing high quality earnings and revenue growth for the year."
"We recently announced agreements to acquire Rome Bancorp in New York and Legacy Bancorp in our hometown of Pittsfield, Massachusetts. We expect to complete these acquisitions by midyear 2011, bringing our total assets above $4 billion, with more than 60 branch offices, including 24 in our fast growing New York region. These transactions are expected to be immediately accretive to earnings per share and offer the promise of strong investment returns, improved performance metrics, and higher market share. We have opportunistically reached out to potential merger partners and have demonstrated to these companies that we are an attractive partner and that our stock is desirable merger consideration. These announcements have been well received by the investment community, and we will continue to seek out profitable merger opportunities in and around our northeastern markets."
OUTLOOK
Berkshire expects to produce core earnings per share in the range of $1.40-$1.50 in 2011. This would represent growth in the range of nearly 40-50% over 2010 core results. Berkshire is targeting organic core revenue growth in the range of 6-9%, while core non-interest expense growth is expected to be limited to the range of 3-5%. Asset quality metrics are expected to continue to improve, including further reductions in the rate of net loan charge-offs to the 25-30 basis point range. Core earnings growth will also benefit from completion of the pending acquisitions of Rome Bancorp and Legacy Bancorp. Berkshire is targeting a return to a $2.00 annualized core EPS run rate by the end of 2012. The Company expects to record some non-core transaction costs related to these mergers as charges against GAAP earnings, but the accounting for these anticipated charges depends on timing and other factors which are presently indeterminate. Berkshire will provide additional information about its 2011 outlook in its conference call on January 25.
DIVIDEND DECLARED
The Board of Directors maintained the cash dividend on Berkshire's common stock, declaring a dividend of $0.16 per share to stockholders of record at the close of business on February 10, 2011 and payable on February 24, 2011. The $0.64 full year dividend in 2010 provided a 3.3% yield based on the average closing price of Berkshire's common stock in 2010.
FINANCIAL CONDITION
Total assets increased by 3% in the fourth quarter and by 7% for the year, ending 2010 with a balance of $2.9 billion. Asset growth was driven by loan growth of 4% for the quarter and 9% for the year. These increases were funded by deposit growth, which measured 7% for the quarter and 11% for the year. Liquidity remained strong, with loans/deposits improving to 97%.
Commercial loan growth of $174 million (17%) accounted for most of the loan growth in 2010. Berkshire continues to improve its market share with high grade loan originations in all of its lending areas. Berkshire's new Asset Based Lending Group contributed $98 million in net new outstandings for the year. It has also expanded the lending geography and diversified the Company's industry exposure with strong and established new commercial relationships that are well known to the Group's seasoned lending team. The Company's consumer lending also remained strong; the residential mortgage portfolio increased by 6% and the home equity loan portfolio increased by 7% for the year.
The level and trend of asset quality remained favorable through year-end 2010. Non-performing assets decreased to 0.59% of total assets and accruing delinquent loans were 0.31% of total loans at year-end. Annualized net loan charge-offs decreased to 0.37% of average loans in the fourth quarter, bringing the full year charge-off rate down to 0.42%.
Total deposits grew by 7% in the fourth quarter and by 11% for the year 2010. Transaction account balances increased by 7%, reflecting the ongoing emphasis on low cost relationship based balances. Most of the deposit growth resulted from higher money market balances, which increased by 34% during the year, including the benefit of new commercial and institutional accounts in the fourth quarter. Berkshire has promoted money market accounts in the current low rate environment, which resulted in some shifting of balances from time deposits, which decreased by 4%. Berkshire's new Private Banking Group, located in Springfield, contributed nearly $50 million to deposit growth in 2010. Berkshire opened its 11th New York office in September, adding its second Albany branch, and opened its 12th office in Latham, New York at the end of the year. The Bank is moving forward to open its next office, located in Rotterdam, New York during the first half of 2011.
Capital remained strong at year-end 2010, with equity/assets at 13.5% and tangible equity/assets at 7.9%. Tangible common equity increased by 3% in 2010, rising to $15.27 per share at year-end. Total common equity measured $27.56 at year-end, and was little changed during the year.
RESULTS OF OPERATIONS
Net income was $3.6 million ($0.26 per share) in the fourth quarter and $13.7 million ($0.99 per share) for the year 2010. Results of operations were improved from a loss of $24.2 million ($1.75 per share) and $16.1 million ($1.52 per share) in the same periods of 2009, reflecting a higher loan loss provision recorded in last year's fourth quarter. Total pre-tax, pre-provision income increased by $6.4 million (32%) in 2010 compared to 2009, demonstrating the positive operating leverage from revenue growth and expense control. The Company achieved this result while also absorbing the start-up losses of its successful expansion initiatives, including asset based lending, private banking, and de novo branches. On a seasonally adjusted basis, revenue growth and profitability were the strongest in the final quarter, creating strong momentum for further gains in 2011.
Total core revenue increased by 13% in the fourth quarter and by 9% for the year 2010 compared to the same periods in 2009, reaching $108 million for the year 2010. Revenue growth was primarily driven by higher net interest income, which increased by 12% in the fourth quarter and 11% for the year. Net interest income was boosted by an increase in the net interest margin to 3.30% in the most recent quarter from 3.05% in the fourth quarter of 2009. The margin improvement primarily reflected lower funding costs and included the benefit of borrowing and hedge restructurings and lower deposit costs. The Company improved its margin while also maintaining its asset sensitive interest rate sensitivity, positioning it for further gains if interest rates begin to rise. Interest income for 2010 also benefited from 6% growth in average earning assets between the first quarter and the final quarter, which primarily reflected the strong loan growth in the second half of the year.
Fee income increased by 18% for the fourth quarter and 6% for the full year of 2010 compared to 2009. Full year results benefited from higher deposit, loan, and interest rate swap fee income, which offset lower wealth management and insurance fee income reflecting conditions in those markets. Non-recurring charges to non-interest income in 2009 related to net costs of prepaying borrowings during the year.
The loan loss provision decreased for the quarter and the year in 2010 compared to 2009 due to last year's fourth quarter loan initiative. The provision slightly exceeded net loan charge-offs for both the quarter and the year in 2010. Year-end 2010 loan loss allowance coverage remained strong at 1.49% of total loans and 233% of non-accruing loans.
Total non-interest expense decreased by 1% in the fourth quarter before non-core merger related charges, and increased by 1% including these charges. Non-interest expense increased by 4% for the year. Business expansion has contributed to expense growth, including the new asset based lending and private banking groups and de novo branches. Compensation related expense increases have also included the restoration of incentive compensation and a decrease in compensation costs deferred or charged against non-interest income related to loan sales. Expenses in 2009 included a special FDIC industry assessment totaling $1.3 million and professional services related to the loan initiative. The 2010 effective income tax rate was 20% for the fourth quarter and 23% for the year.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. Eastern time on Tuesday, January 25, 2011 to discuss the results for the quarter and guidance for expected future results.
Information about the conference call follows:
Dial-in: 877-317-6789
Webcast: www.berkshirebank.com (investor relations link)
A telephone replay of the call will be available through February 1, 2011 by calling 877-344-7529 and entering conference number: 447156. The webcast and a podcast will be available at Berkshire's website above for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank - America's Most Exciting Bank(SM). The Company has $2.9 billion in assets and 42 full service branch offices in Massachusetts, New York, and Vermont. The Company provides personal and business banking, insurance, wealth management, investment, private banking, and asset based lending services. Berkshire Bank provides 100% deposit insurance protection for all deposit accounts, regardless of amount, based on a combination of FDIC insurance and the Depositors Insurance Fund (DIF). The Company currently has pending agreements to acquire Rome Bancorp, Inc. and Legacy Bancorp, Inc. For more information, visit www.berkshirebank.com or call 800-773-5601.
FORWARD LOOKING STATEMENTS
Certain statements contained in this news release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of our plans, objectives and expectations or those of our management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact, changes in the level of non-performing assets and charge-offs; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; inflation, interest rate, securities market and monetary fluctuations; political instability; acts of war or terrorism; the timely development and acceptance of new products and services and perceived overall value of these products and services by users; changes in consumer spending, borrowings and savings habits; changes in the financial performance and/or condition of our borrowers; technological changes; acquisitions and integration of acquired businesses; the ability to increase market share and control expenses; changes in the competitive environment among financial holding companies and other financial service providers; the quality and composition of our loan or investment portfolio; the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; changes in our organization, compensation and benefit plans; the costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; greater than expected costs or difficulties related to the opening of new branch offices or the integration of new products and lines of business, or both; and/or our success at managing the risk involved in the foregoing items.
ADDITIONAL INFORMATION FOR STOCKHOLDERS
The proposed transactions with Rome Bancorp, Inc. and Legacy Bancorp, Inc. will be submitted to their stockholders for their consideration, and Berkshire's stockholders are also expected to vote on the Legacy transaction. In connection with the proposed mergers, Berkshire will file with the Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4 for each of the two entities being acquired that will include a Proxy Statement of the entity being acquired and a Proxy Statement/Prospectus of Berkshire, as well as other relevant documents concerning the proposed transaction. Stockholders are urged to read these documents when they become available 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 Proxy Statement/Prospectus for each entity, as well as other filings containing information about Berkshire Hills, Rome, and Legacy, may be obtained at the SEC's Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Berkshire Hills Bancorp at www.berkshirebank.com under the tab "Investor Relations" or from Rome Bancorp's website at www.romesavings.com under the tab "Corporate Info" or from Legacy Bancorp by accessing Legacy Bancorp's website at www.legacy-banks.com under the tab "Investor Relations."
Under the terms of the Legacy Merger Agreement, Legacy and its advisors are permitted to solicit and consider acquisition proposals from third parties from the signing of the agreement through January 31, 2011. It is not anticipated that any developments will be disclosed by either party with regard to this process unless Legacy's Board of Directors makes a decision with respect to a potential superior acquisition proposal. There can be no assurance that the solicitation of proposals will result in an alternative transaction.
Berkshire, Rome, and Legacy and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Rome Bancorp and Legacy Bancorp in connection with the proposed mergers. Information about the directors and executive officers of Berkshire Hills Bancorp is set forth in the proxy statement for Berkshire Hills Bancorp's 2010 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 26, 2010. Information about the directors and executive officers of Rome is set forth in the proxy statement, dated April 1, 2010, for Rome's 2010 annual meeting of stockholders, as filed with the SEC on Schedule 14A. Information about the directors and executive officers of Legacy Bancorp is set forth in the proxy statement for Legacy Bancorp's 2010 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 25, 2010. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus documents regarding the proposed mergers 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 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 shareholders. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. In the first quarter of 2009, the Company adjusted core earnings per share and core return on tangible common equity to be net of preferred stock dividends. These measures were not adjusted in this manner in the second quarter of 2009. The second quarter deemed dividend was a nonrecurring non-cash charge with no impact on stockholders' equity and did not reflect a core economic event in the Company's view. Additionally, the Company held cash at near-zero interest rates in the second quarter while it awaited the approval of the U.S. Treasury to repay the preferred stock. Accordingly, the preferred stock cash dividend and accretion charges were viewed by the Company as non-core one-time charges against income available to common stockholders related to the process of repaying the preferred stock. Other significant non-GAAP adjustments in 2009 related to a terminated merger agreement, borrowings prepayments, and the termination of an interest rate swap. Non-GAAP adjustments in 2010 were primarily related to expense charges related to the pending Rome and Legacy mergers.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
December September December
31, 30, 31,
--------- ---------- ---------
(In thousands) 2010 2010 2009
-------------- ---- ---- ----
Assets
Cash and due from banks $24,643 $26,817 $25,770
Short-term investments 19,497 11,565 6,838
Trading security 16,155 17,398 15,880
Securities available for sale, at
fair value 310,242 315,213 324,345
Securities held to maturity, at
amortized cost 56,436 57,476 57,621
Federal Home Loan Bank stock and
other restricted securities 23,120 23,120 23,120
Total securities 405,953 413,207 420,966
Loans held for sale 1,043 3,445 4,146
Residential mortgages 644,973 638,829 609,007
Commercial mortgages 925,573 895,519 851,828
Commercial business loans 286,087 226,625 186,044
Consumer loans 285,529 293,136 314,779
-------------- ------- ------- -------
Total loans 2,142,162 2,054,109 1,961,658
Less: Allowance for loan losses (31,898) (31,836) (31,816)
------------------------------- ------- ------- -------
Net loans 2,110,264 2,022,273 1,929,842
Premises and equipment, net 38,546 37,858 37,390
Other real estate owned 3,386 2,900 30
Goodwill 161,725 161,725 161,725
Other intangible assets 11,354 12,072 14,375
Cash surrender value of bank-
owned life insurance 46,085 38,170 36,904
Other assets 58,220 68,407 62,438
------------
Total assets $2,880,716 $2,798,439 $2,700,424
------------ ---------- ---------- ----------
Liabilities and stockholders'
equity
Demand deposits $297,502 $278,165 $276,587
NOW deposits 212,143 213,734 197,176
Money market deposits 716,078 609,255 532,840
Savings deposits 237,594 220,564 208,597
---------------- ------- ------- -------
Total non-maturity deposits 1,463,317 1,321,718 1,215,200
Time deposits 741,124 747,029 771,562
Total deposits 2,204,441 2,068,747 1,986,762
Borrowings 244,837 293,812 291,204
Junior subordinated debentures 15,464 15,464 15,464
------------------------------ ------ ------ ------
Total borrowings 260,301 309,276 306,668
Other liabilities 28,014 37,501 22,413
----------------- ------ ------ ------
Total liabilities 2,492,756 2,415,524 2,315,843
Total stockholders' equity 387,960 382,915 384,581
Total liabilities and
stockholders' equity $2,880,716 $2,798,439 $2,700,424
--------------------- ---------- ---------- ----------
F-1
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
------------------------------------------------
LOAN ANALYSIS
-------------
December 31, September 30, December 31,
2010 2010 2009
------------- -------------- -------------
(Dollars in
millions) Balance Balance Balance
----------- ------- ------- -------
Total residential
mortgages $645 $639 $609
Commercial
mortgages:
Construction 127 115 111
Single and multi-
family 87 81 81
Commercial real
estate 712 700 660
--------------- --- --- ---
Total commercial
mortgages 926 896 852
Commercial business
loans:
Asset based lending 98 68 -
Other commercial
business loans 188 158 186
---------------- --- --- ---
Total commercial
business loans 286 226 186
Total commercial
loans 1,212 1,122 1,038
---------------- ----- ----- -----
Consumer loans:
Home equity 226 225 212
Other 59 68 103
----- --- ---
Total consumer loans 285 293 315
-------------------- --- --- ---
Total loans $2,142 $2,054 $1,962
----------- ------ ------ ------
Annualized
Growth %
----------
(Dollars in Quarter Year to
millions) ended date
December
----------- 31, 2010 --------
---------
Total residential
mortgages 4% 6%
Commercial
mortgages:
Construction 41 14
Single and multi-
family 30 8
Commercial real
estate 7 8
--------------- --- ---
Total commercial
mortgages 13 9
Commercial business
loans:
Asset based lending 176 N/M
Other commercial
business loans 76 1
---------------- --- ---
Total commercial
business loans 106 54
Total commercial
loans 32 17
---------------- --- ---
Consumer loans:
Home equity 2 7
Other (53) (43)
----- --- ---
Total consumer loans (11) (10)
-------------------- --- ---
Total loans 17% 9%
----------- --- ---
DEPOSIT ANALYSIS
----------------
December 31, September 30, December 31,
2010 2010 2009
------------- -------------- -------------
(Dollars in
millions) Balance Balance Balance
----------- ------- ------- -------
Demand $297 $278 $277
NOW 212 214 197
Money market 716 609 533
Savings 238 221 208
------- --- --- ---
Total non-maturity
deposits 1,463 1,322 1,215
Time less than
$100,000 369 376 382
Time $100,000 or
more 372 371 390
Total time deposits 741 747 772
------------------- --- --- ---
Total deposits $2,204 $2,069 $1,987
-------------- ------ ------ ------
Annualized
Growth %
----------
(Dollars in Quarter Year to
millions) ended date
December
31,
----------- 2010 --------
---------
Demand 27% 7%
NOW (4) 8
Money market 70 34
Savings 31 14
------- --- ---
Total non-maturity
deposits 43 20
Time less than
$100,000 (7) (3)
Time $100,000 or
more 1 (5)
Total time deposits (3) (4)
------------------- --- ---
Total deposits 26% 11%
-------------- --- ---
N/M - Not Meaningful
(1) Quarterly data may not sum to annualized data due to rounding.
F-2
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Three Months
Ended
December 31,
------------
(In thousands, except per
share data) 2010 2009
------------------------- ---- ----
Interest and dividend income
Loans $25,005 $24,869
Securities and other 3,364 3,502
-------------------- ----- -----
Total interest and dividend
income 28,369 28,371
Interest expense
Deposits 6,121 7,419
Borrowings and junior
subordinated debentures 2,153 2,956
------------------------ ----- -----
Total interest expense 8,274 10,375
---------------------- ----- ------
Net interest income 20,095 17,996
Non-interest income
Deposit, loan and interest
rate swap fees 3,996 2,978
Insurance commissions and
fees 2,150 1,991
Wealth management fees 1,051 1,141
---------------------- ----- -----
Total fee income 7,197 6,110
Other 586 613
Loss on sale of securities,
net - -
Non-recurring loss - (2,071)
Total non-interest income 7,783 4,652
------------------------- ----- -----
Total net revenue 27,878 22,648
Provision for loan losses 2,000 38,730
Non-interest expense
Compensation and benefits 11,093 10,269
Occupancy and equipment 3,043 2,953
Technology and
communications 1,519 1,440
Marketing and professional
services 1,520 2,643
Supplies, postage and
delivery 453 523
FDIC premiums and
assessments 887 796
Other real estate owned 184 104
Amortization of intangible
assets 718 779
Non-recurring expenses 426 -
Other 1,572 1,689
----- -----
Total non-interest expense 21,415 21,196
-------------------------- ------ ------
Income (loss) before income
taxes 4,463 (37,278)
Income tax expense (benefit) 893 (13,075)
---------------------------- --- -------
Net income (loss) $3,570 $(24,203)
----------------- ------ --------
Less: Cumulative preferred
stock dividend and
accretion - -
Less: Deemed dividend from
preferred stock repayment - -
Net income (loss) available
to common stockholders $3,570 $(24,203)
--------------------------- ------ --------
Earnings (loss) per common
share:
Basic $0.26 $(1.75)
Diluted $0.26 $(1.75)
Weighted average common
shares outstanding:
Basic 13,890 13,817
Diluted 13,934 13,817
Years Ended
December 31,
------------
(In thousands, except per
share data) 2010 2009
------------------------- ---- ----
Interest and dividend income
Loans $98,359 $101,705
Securities and other 13,918 13,771
-------------------- ------ ------
Total interest and dividend
income 112,277 115,476
Interest expense
Deposits 26,316 32,614
Borrowings and junior
subordinated debentures 9,014 13,266
------------------------ ------
Total interest expense 35,330 45,880
---------------------- ------ ------
Net interest income 76,947 69,596
Non-interest income
Deposit, loan and interest
rate swap fees 14,266 11,198
Insurance commissions and
fees 11,136 12,171
Wealth management fees 4,457 4,812
---------------------- ----- -----
Total fee income 29,859 28,181
Other 1,300 1,705
Loss on sale of securities,
net - (4)
Non-recurring loss - (893)
Total non-interest income 31,159 28,989
------------------------- ------ ------
Total net revenue 108,106 98,585
Provision for loan losses 8,526 47,730
Non-interest expense
Compensation and benefits 43,920 38,280
Occupancy and equipment 12,029 11,614
Technology and
communications 5,733 5,466
Marketing and professional
services 5,186 6,549
Supplies, postage and
delivery 2,088 2,610
FDIC premiums and
assessments 3,427 4,544
Other real estate owned 311 281
Amortization of intangible
assets 3,022 3,278
Non-recurring expenses 447 601
Other 5,566 5,348
-----
Total non-interest expense 81,729 78,571
-------------------------- ------ ------
Income (loss) before income
taxes 17,851 (27,716)
Income tax expense (benefit) 4,113 (11,649)
---------------------------- -------
Net income (loss) $13,738 $(16,067)
----------------- ------- --------
Less: Cumulative preferred
stock dividend and
accretion - 1,030
Less: Deemed dividend from
preferred stock repayment - 2,954
---
Net income (loss) available
to common stockholders $13,738 $(20,051)
--------------------------- ------- --------
Earnings (loss) per common
share:
Basic $0.99 $(1.52)
Diluted $0.99 $(1.52)
Weighted average common
shares outstanding:
Basic 13,862 13,189
Diluted 13,896 13,189
F-3
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Quarters Ended
--------------
Dec. Sept. June
31, 30, 30,
(In thousands, except per share
data) 2010 2010 2010
------------------------------- ---- ---- ----
Interest and dividend income
Loans $25,005 $24,917 $24,490
Securities and other 3,364 3,546 3,473
-------------------- ----- ----- -----
Total interest and dividend income 28,369 28,463 27,963
Interest expense
Deposits 6,121 6,512 6,787
Borrowings and junior subordinated
debentures 2,153 2,267 2,305
---------------------------------- ----- ----- -----
Total interest expense 8,274 8,779 9,092
---------------------- ----- ----- -----
Net interest income 20,095 19,684 18,871
Non-interest income
Deposit, loan and interest rate
swap fees 3,996 3,279 3,575
Insurance commissions and fees 2,150 2,316 3,197
Wealth management fees 1,051 1,090 1,140
---------------------- ----- ----- -----
Total fee income 7,197 6,685 7,912
Other 586 230 51
Non-recurring loss - - -
------------------
Total non-interest income 7,783 6,915 7,963
------------------------- ----- ----- -----
Total net revenue 27,878 26,599 26,834
Provision for loan losses 2,000 2,000 2,200
Non-interest expense
Compensation and benefits 11,093 10,870 10,960
Occupancy and equipment 3,043 2,988 2,963
Technology and communications 1,519 1,458 1,373
Marketing and professional services 1,520 1,253 1,116
Supplies, postage and delivery 453 520 542
FDIC premiums and assessments 887 893 874
Other real estate owned 184 100 -
Amortization of intangible assets 718 768 768
Non-recurring expenses 426 - -
Other 1,572 1,244 1,432
----- -----
Total non-interest expense 21,415 20,094 20,028
-------------------------- ------ ------ ------
Income (loss) before income taxes 4,463 4,505 4,606
Income tax expense (benefit) 893 1,081 1,198
---------------------------- --- ----- -----
Net income (loss) $3,570 $3,424 $3,408
----------------- ------ ------ ------
Earnings (loss) per common share:
Basic $0.26 $0.25 $0.25
Diluted $0.26 $0.25 $0.25
Weighted average common shares
outstanding:
Basic 13,890 13,865 13,856
Diluted 13,934 13,893 13,894
Quarters Ended
--------------
Mar.
31, Dec. 31,
(In thousands, except per share
data) 2010 2009
------------------------------- ---- ----
Interest and dividend income
Loans $23,947 $24,869
Securities and other 3,535 3,502
-------------------- ----- -----
Total interest and dividend income 27,482 28,371
Interest expense
Deposits 6,896 7,419
Borrowings and junior subordinated
debentures 2,289 2,956
---------------------------------- ----- -----
Total interest expense 9,185 10,375
---------------------- ----- ------
Net interest income 18,297 17,996
Non-interest income
Deposit, loan and interest rate
swap fees 3,416 2,978
Insurance commissions and fees 3,473 1,991
Wealth management fees 1,176 1,141
---------------------- ----- -----
Total fee income 8,065 6,110
Other 433 613
Non-recurring loss - (2,071)
------------------
Total non-interest income 8,498 4,652
------------------------- ----- -----
Total net revenue 26,795 22,648
Provision for loan losses 2,326 38,730
Non-interest expense
Compensation and benefits 10,997 10,269
Occupancy and equipment 3,035 2,953
Technology and communications 1,383 1,440
Marketing and professional services 1,297 2,643
Supplies, postage and delivery 573 523
FDIC premiums and assessments 773 796
Other real estate owned 27 104
Amortization of intangible assets 768 779
Non-recurring expenses 21 -
Other 1,318 1,689
----- -----
Total non-interest expense 20,192 21,196
-------------------------- ------ ------
Income (loss) before income taxes 4,277 (37,278)
Income tax expense (benefit) 941 (13,075)
---------------------------- --- -------
Net income (loss) $3,336 $(24,203)
----------------- ------ --------
Earnings (loss) per common share:
Basic $0.24 $(1.75)
Diluted $0.24 $(1.75)
Weighted average common shares
outstanding:
Basic 13,829 13,817
Diluted 13,858 13,817
F-4
BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS
At or for the Quarters Ended
----------------------------
Dec. Sept. June
31, 30, 30,
(Dollars in thousands) 2010 2010 2010
---------------------- ---- ---- ----
NON-PERFORMING ASSETS
Non-accruing loans:
Residential mortgages $2,174 $2,520 $2,251
Commercial mortgages 9,488 11,122 11,049
Commercial business loans 1,305 2,128 2,731
Consumer loans 745 616 498
-------------- --- --- ---
Total non-accruing loans 13,712 16,386 16,529
Other real estate owned 3,386 2,900 2,900
----------------------- ----- ----- -----
Total non-performing assets $17,098 $19,286 $19,429
--------------------------- ------- ------- -------
Total non-accruing loans/total
loans 0.64% 0.80% 0.82%
Total non-performing assets/
total assets 0.59% 0.69% 0.71%
PROVISION AND ALLOWANCE FOR LOAN
LOSSES
Balance at beginning of period $31,836 $31,848 $31,829
Charged-off loans (2,216) (2,121) (2,502)
Recoveries on charged-off loans 278 109 321
------------------------------- --- --- ---
Net loans charged-off (1,938) (2,012) (2,181)
Provision for loan losses 2,000 2,000 2,200
------------------------- ----- ----- -----
Balance at end of period $31,898 $31,836 $31,848
------------------------ ------- ------- -------
Allowance for loan losses/total
loans 1.49% 1.55% 1.58%
Allowance for loan losses/non-
accruing loans 233% 194% 193%
NET LOAN CHARGE-OFFS
Residential mortgages $(173) $(110) $32
Commercial mortgages (811) (740) (1,474)
Commercial business loans (733) (946) (485)
Home equity (42) (3) 1
Other consumer (179) (213) (255)
-------------- ---- ---- ----
Total, net $(1,938) $(2,012) $(2,181)
---------- ------- ------- -------
Net charge-offs (current quarter
annualized)/average loans 0.37% 0.40% 0.44%
Net charge-offs (YTD
annualized)/average loans 0.42% 0.43% 0.46%
DELINQUENT AND NON-ACCRUING
LOANS/TOTAL LOANS
30-89 Days delinquent 0.26% 0.28% 0.20%
90+ Days delinquent and still
accruing 0.05% 0.03% 0.01%
----------------------------- ---- ---- ----
Total accruing delinquent loans 0.31% 0.31% 0.21%
Non-accruing loans 0.64% 0.80% 0.82%
Total delinquent and non-accruing
loans 0.95% 1.11% 1.03%
--------------------------------- ---- ---- ----
At or for the Quarters Ended
----------------------------
Mar. Dec.
31, 31,
(Dollars in thousands) 2010 2009
---------------------- ---- ----
NON-PERFORMING ASSETS
Non-accruing loans:
Residential mortgages $3,289 $3,304
Commercial mortgages 14,433 31,917
Commercial business loans 3,211 3,115
Consumer loans 672 364
-------------- --- ---
Total non-accruing loans 21,605 38,700
Other real estate owned 3,250 30
----------------------- ----- ---
Total non-performing assets $24,855 $38,730
--------------------------- ------- -------
Total non-accruing loans/total loans 1.09% 1.97%
Total non-performing assets/total assets 0.92% 1.43%
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $31,816 $24,297
Charged-off loans (3,846) (31,254)
Recoveries on charged-off loans 1,533 43
------------------------------- ----- ---
Net loans charged-off (2,313) (31,211)
Provision for loan losses 2,326 38,730
------------------------- ----- ------
Balance at end of period $31,829 $31,816
------------------------ ------- -------
Allowance for loan losses/total loans 1.61% 1.62%
Allowance for loan losses/non-accruing
loans 147% 82%
NET LOAN CHARGE-OFFS
Residential mortgages $56 $(1,873)
Commercial mortgages (2,584) (23,024)
Commercial business loans 571 (4,864)
Home equity (35) (959)
Other consumer (321) (491)
-------------- ---- ----
Total, net $(2,313) $(31,211)
---------- ------- --------
Net charge-offs (current quarter
annualized)/average loans 0.47% 6.21%
Net charge-offs (YTD annualized)/average
loans 0.47% 1.99%
DELINQUENT AND NON-ACCRUING LOANS/TOTAL
LOANS
30-89 Days delinquent 0.30% 0.35%
90+ Days delinquent and still accruing 0.01% 0.01%
-------------------------------------- ---- ----
Total accruing delinquent loans 0.31% 0.36%
Non-accruing loans 1.09% 1.97%
Total delinquent and non-accruing loans 1.40% 2.33%
--------------------------------------- ---- ----
F-5
BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS
At or for the Quarters Ended
----------------------------
Dec. Sept. June
31, 30, 30,
2010 2010 2010
---- ---- ----
PERFORMANCE RATIOS
Core return on tangible assets 0.70% 0.65% 0.66%
Return on total assets 0.51 0.49 0.50
Core return on tangible common
equity 8.67 7.84 7.84
Return on total common equity 3.69 3.53 3.51
Net interest margin, fully taxable
equivalent 3.30 3.30 3.25
Non-interest income to assets 1.10 1.00 1.17
Non-interest income to net revenue 27.92 26.00 29.68
Non-interest expense to assets 3.03 2.90 2.95
Efficiency ratio 70.89 70.77 69.97
GROWTH
Total commercial loans, year-to-
date (annualized) 17% 11% 9%
Total loans, year-to-date
(annualized) 9 6 6
Total deposits, year-to-date
(annualized) 11 6 5
Total net revenues, year-to-date,
compared to prior year 10 6 4
Earnings per share, year-to-date,
compared to prior year N/M 128 172
Core earnings per share, year-to-
date, compared to prior year N/M 78 64
FINANCIAL DATA (In millions)
Total assets $2,881 $2,798 $2,748
Total loans 2,142 2,054 2,020
Allowance for loan losses 32 32 32
Total intangible assets 173 174 175
Total deposits 2,204 2,069 2,040
Total common stockholders' equity 388 383 385
Total core income (loss) 3.9 3.4 3.4
Total net income (loss) 3.6 3.4 3.4
ASSET QUALITY RATIOS
Net charge-offs (current quarter
annualized)/average loans 0.37% 0.40% 0.44%
Non-performing assets/total assets 0.59 0.69 0.71
Allowance for loan losses/total
loans 1.49 1.55 1.58
Allowance for loan losses/non-
accruing loans 233 194 193
PER COMMON SHARE DATA
Core earnings (loss), diluted $0.28 $0.25 $0.25
Net earnings (loss), diluted 0.26 0.25 0.25
Tangible common book value 15.27 14.89 14.96
Total common book value 27.56 27.28 27.40
Market price at period end 22.11 18.96 19.48
Dividends 0.16 0.16 0.16
CAPITAL RATIOS
Common stockholders' equity to total
assets 13.47% 13.68% 14.00%
Tangible common stockholders' equity
to tangible assets 7.94 7.96 8.16
At or for the Quarters Ended
----------------------------
Mar. Dec.
31, 31,
2010 2009
---- ----
PERFORMANCE RATIOS
Core return on tangible assets 0.66% (3.49)%
Return on total assets 0.50 (3.55)
Core return on tangible common equity 7.76 (37.31)
Return on total common equity 3.44 (23.26)
Net interest margin, fully taxable
equivalent 3.24 3.05
Non-interest income to assets 1.27 0.68
Non-interest income to net revenue 31.71 20.54
Non-interest expense to assets 3.02 3.11
Efficiency ratio 70.71 80.61
GROWTH
Total commercial loans, year-to-date
(annualized) - % 5%
Total loans, year-to-date
(annualized) 4 (2)
Total deposits, year-to-date
(annualized) 10 9
Total net revenues, year-to-date,
compared to prior year 2 (8)
Earnings per share, year-to-date,
compared to prior year (11) N/M
Core earnings per share, year-to-
date, compared to prior year (11) N/M
FINANCIAL DATA (In millions)
Total assets $2,705 $2,700
Total loans 1,981 1,962
Allowance for loan losses 32 32
Total intangible assets 175 176
Total deposits 2,037 1,987
Total common stockholders' equity 385 385
Total core income (loss) 3.3 (23.0)
Total net income (loss) 3.3 (24.2)
ASSET QUALITY RATIOS
Net charge-offs (current quarter
annualized)/average loans 0.47% 6.21%
Non-performing assets/total assets 0.92 1.43
Allowance for loan losses/total loans 1.61 1.62
Allowance for loan losses/non-
accruing loans 147 82
PER COMMON SHARE DATA
Core earnings (loss), diluted $0.24 $(1.66)
Net earnings (loss), diluted 0.24 (1.75)
Tangible common book value 14.97 14.98
Total common book value 27.47 27.64
Market price at period end 18.33 20.68
Dividends 0.16 0.16
CAPITAL RATIOS
Common stockholders' equity to total
assets 14.24% 14.24%
Tangible common stockholders' equity to
tangible assets 8.30 8.26
N/M - Not Meaningful
(1) Reconciliation of Non-GAAP financial measures, including all
references to core and tangible amounts, appear on page F-9 and 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.
F-6
BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES
Quarters Ended
--------------
Dec. 31, Sept. 30, June 30,
(In thousands) 2010 2010 2010
---- ---- ----
Assets
Loans:
Residential mortgages $639,470 $633,846 $636,009
Commercial mortgages 901,434 892,124 877,638
Commercial business loans 251,229 212,697 180,830
Consumer loans 288,782 296,827 302,928
-------------- ------- ------- -------
Total loans 2,080,915 2,035,494 1,997,405
Securities 411,207 402,604 407,696
Short-term investments 13,658 13,865 10,505
---------------------- ------ ------ ------
Total earning assets 2,505,780 2,451,963 2,415,606
Goodwill and other
intangible assets 173,386 174,124 174,887
Other assets 147,365 141,868 129,665
------------ ------- ------- -------
Total assets $2,826,531 $2,767,955 $2,720,158
------------ ---------- ---------- ----------
Liabilities and
stockholders' equity
Deposits:
NOW $210,487 $195,433 $196,387
Money market 635,745 612,106 598,007
Savings 232,494 219,701 221,196
Time 741,921 749,234 748,248
---- ------- ------- -------
Total interest-bearing
deposits 1,820,647 1,776,474 1,763,838
Borrowings and debentures 292,416 288,467 266,860
------------------------- ------- ------- -------
Total interest-bearing
liabilities 2,113,063 2,064,941 2,030,698
Non-interest-bearing
demand deposits 289,786 280,628 275,883
Other liabilities 36,490 34,158 25,148
----------------- ------ ------ ------
Total liabilities 2,439,339 2,379,727 2,331,729
Total stockholders' common
equity 387,192 388,228 388,429
Total liabilities and
stockholders' equity $2,826,531 $2,767,955 $2,720,158
--------------------- ---------- ---------- ----------
Supplementary data
Total non-maturity deposits $1,368,512 $1,307,868 $1,291,473
Total deposits 2,110,433 2,057,102 2,039,721
Fully taxable equivalent
income adj. 716 709 693
Quarters Ended
--------------
Mar. 31, Dec 31,
(In thousands) 2010 2009
---- ----
Assets
Loans:
Residential mortgages $614,561 $620,105
Commercial mortgages 855,828 869,087
Commercial business loans 170,322 186,898
Consumer loans 311,409 319,087
-------------- ------- -------
Total loans 1,952,120 1,995,177
Securities 411,957 407,144
Short-term investments 7,420 14,293
---------------------- ----- ------
Total earning assets 2,371,497 2,416,614
Goodwill and other
intangible assets 175,711 176,482
Other assets 129,872 112,159
------------ ------- -------
Total assets $2,677,080 $2,705,255
------------ ---------- ----------
Liabilities and
stockholders' equity
Deposits:
NOW $194,928 $192,693
Money market 542,185 540,539
Savings 223,722 212,402
Time 757,752 768,415
---- ------- -------
Total interest-bearing
deposits 1,718,587 1,714,049
Borrowings and debentures 280,102 272,997
------------------------- ------- -------
Total interest-bearing
liabilities 1,998,689 1,987,046
Non-interest-bearing
demand deposits 270,064 279,495
Other liabilities 20,494 25,972
----------------- ------ ------
Total liabilities 2,289,247 2,292,513
Total stockholders' common
equity 387,833 412,742
Total liabilities and
stockholders' equity $2,677,080 $2,705,255
--------------------- ---------- ----------
Supplementary data
Total non-maturity deposits $1,230,899 $1,225,129
Total deposits 1,988,651 1,993,544
Fully taxable equivalent
income adj. 646 609
(1) Average balances for securities available-for-sale are based on
amortized cost. Total loans include non-accruing loans.
F-7
BERKSHIRE HILLS BANCORP, INC.
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized)
Quarters Ended
--------------
Dec. Sept. June
31, 30, 30,
2010 2010 2010
---- ---- ----
Earning assets
Loans:
Residential mortgages 5.01% 5.17% 5.26%
Commercial mortgages 4.91 4.74 4.96
Commercial business
loans 4.83 5.86 4.99
Consumer loans 3.72 3.83 3.93
Total loans 4.77 4.86 4.90
Securities 3.94 4.19 4.09
Short-term investments 0.11 0.15 0.10
Total earning assets 4.60 4.72 4.75
Funding liabilities
Deposits:
NOW 0.35 0.32 0.35
Money Market 0.85 0.87 0.98
Savings 0.26 0.22 0.25
Time 2.36 2.59 2.68
Total interest-bearing
deposits 1.33 1.45 1.54
Borrowings and
debentures 2.92 3.12 3.46
Total interest-bearing
liabilities 1.55 1.69 1.79
Net interest spread 3.05 3.03 2.96
Net interest margin 3.30 3.30 3.25
Cost of funds 1.37 1.48 1.58
Cost of deposits 1.15 1.26 1.33
Quarters Ended
--------------
Mar. Dec.
31, 31,
2010 2009
---- ----
Earning assets
Loans:
Residential mortgages 5.31% 5.32%
Commercial mortgages 4.94 4.87
Commercial business
loans 4.88 5.30
Consumer loans 4.04 4.20
Total loans 4.91 4.95
Securities 4.06 4.01
Short-term investments 0.20 0.15
Total earning assets 4.75 4.76
Funding liabilities
Deposits:
NOW 0.39 0.40
Money Market 1.02 1.08
Savings 0.32 0.30
Time 2.71 2.88
Total interest-bearing
deposits 1.61 1.72
Borrowings and
debentures 3.27 4.30
Total interest-bearing
liabilities 1.84 2.07
Net interest spread 2.91 2.69
Net interest margin 3.24 3.05
Cost of funds 1.62 1.82
Cost of deposits 1.39 1.48
(1) Average balances and yields for securities are based on amortized
cost.
(2) Cost of funds includes all deposits and borrowings.
F-8
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
---------------------------------------------
At
or
for
the
Quarters
Ended
--------
Dec. Sept. June
31, 30, 30,
(Dollars in thousands) 2010 2010 2010
---------------------- ---- ---- ----
Net income (loss) $3,570 $3,424 $3,408
Adj: Loss on prepayment of
borrowings, net - - -
Plus: Other non-recurring expense 426 - -
Adj: Income taxes (78) - -
------------------ --- --- ---
Total core income (loss) (A) $3,918 $3,424 $3,408
Plus: Amortization of intangible
assets 718 768 768
Total tangible core income (loss) (B) $4,636 $4,192 $4,176
--------------------------------- --- ------ ------ ------
Total non-interest income $7,783 $6,915 $7,963
Adj: Loss on prepayment of
borrowings, net - - -
---
Total core non-interest income 7,783 6,915 7,963
Net interest income 20,095 19,684 18,871
-------------------
Total core revenue $27,878 $26,599 $26,834
------------------ ------- ------- -------
Total non-interest expense $21,415 $20,094 $20,028
Less: Non-recurring expense (426) - -
--------------------------- ---- --- ---
Core non-interest expense 20,989 20,094 20,028
Less: Amortization of intangible
assets (718) (768) (768)
--------------------------------
Total core tangible non-interest
expense $20,271 $19,326 $19,260
-------------------------------- ------- ------- -------
(Dollars in millions, except per
share data)
Total average assets $2,827 $2,768 $2,720
Less: Average intangible assets (173) (174) (175)
--------------------------------
Total average tangible assets (C) $2,654 $2,594 $2,545
----------------------------- --- ------ ------ ------
Total average stockholders'
equity $387 $388 $388
Less: Average intangible assets (173) (174) (175)
-------------------------------- ---- ---- ----
Total average tangible common
stockholders' equity (D) $214 $214 $213
----------------------------- --- ---- ---- ----
Total stockholders' equity,
period-end $388 $383 $385
Less: Intangible assets, period-
end (173) (174) (175)
--------------------------------- ---- ---- ----
Total tangible stockholders'
equity, period-end (E) 215 209 210
---------------------------- --- --- --- ---
Total common shares outstanding,
period-end (thousands) (F) 14,076 14,037 14,037
Average diluted common shares
outstanding (thousands) (G) 13,934 13,893 13,894
Core earnings (loss) per common (A/
share, diluted G) $0.28 $0.25 $0.25
Tangible book value per common (E/
share, period-end F) $15.27 $14.89 $14.96
Core return (annualized) on (B/
tangible assets C) 0.70% 0.65% 0.66%
Core return (annualized) on (B/
tangible common equity D) 8.67 7.84 7.84
Efficiency ratio (1) 70.89 70.77 69.97
At
or
for
the
Quarters
Ended
--------
Mar. Dec.
31, 31,
(Dollars in thousands) 2010 2009
---------------------- ---- ----
Net income (loss) $3,336 $(24,203)
Adj: Loss on prepayment of borrowings,
net - 2,071
Plus: Other non-recurring expense 21 -
Adj: Income taxes (9) (866)
------------------ --- ----
Total core income (loss) (A) $3,348 $(22,998)
Plus: Amortization of intangible assets 768 779
Total tangible core income (loss) (B) $4,116 $(22,219)
--------------------------------- --- ------ --------
Total non-interest income $8,498 $4,652
Adj: Loss on prepayment of borrowings,
net - 2,071
Total core non-interest income 8,498 6,723
Net interest income 18,297 17,996
------------------- ------
Total core revenue $26,795 $24,719
------------------ ------- -------
Total non-interest expense $20,192 $21,196
Less: Non-recurring expense (21) -
--------------------------- --- ---
Core non-interest expense 20,171 21,196
Less: Amortization of intangible assets (768) (779)
--------------------------------------- ----
Total core tangible non-interest expense $19,403 $20,417
---------------------------------------- ------- -------
(Dollars in millions, except per share
data)
Total average assets $2,677 $2,705
Less: Average intangible assets (176) (176)
-------------------------------- ----
Total average tangible assets (C) $2,501 $2,529
----------------------------- --- ------ ------
Total average stockholders' equity $388 $413
Less: Average intangible assets (176) (177)
-------------------------------- ---- ----
Total average tangible common
stockholders' equity (D) $212 $236
----------------------------- --- ---- ----
Total stockholders' equity, period-end $385 $385
Less: Intangible assets, period-end (175) (177)
------------------------------------ ---- ----
Total tangible stockholders' equity,
period-end (E) 210 208
------------------------------------ --- --- ---
Total common shares outstanding, period-
end (thousands) (F) 14,027 13,916
Average diluted common shares
outstanding (thousands) (G) 13,858 13,817
Core earnings (loss) per common share, (A/
diluted G) $0.24 $(1.66)
Tangible book value per common share, (E/
period-end F) $14.97 $14.98
Core return (annualized) on tangible (B/
assets C) 0.66% (3.49)%
Core return (annualized) on tangible (B/
common equity D) 7.76 (37.31)
Efficiency ratio (1) 70.71 80.61
(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
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
---------------------------------------------
At or for the Years Ended
-------------------------
December December
31, 31,
(Dollars in thousands) 2010 2009
---------------------- ---- ----
Net income (loss) $13,738 $(16,067)
Adj: Loss on sale of securities, net - 4
Adj: Non-recurring income - (1,982)
------------------------- --- ------
Adj: Loss on prepayment of
borrowings, net - 2,875
Plus: Non-recurring expense 447 601
Adj: Income taxes (87) (626)
----------------- --- ----
Total core income (A) $14,098 $(15,195)
Plus: Amortization of intangible
assets 3,022 3,278
-----
Total tangible core income (B) $17,120 $(11,917)
-------------------------- --- ------- --------
Total non-interest income $31,159 $28,989
Adj: Loss on sale of securities, net - 4
Adj: Non-recurring loss, net - 893
---------------------------- ---
Total core non-interest income 31,159 29,886
Net interest income 76,947 69,596
------------------- ------
Total core revenue $108,106 $99,482
------------------ -------- -------
Total non-interest expense $81,729 $78,571
Less: Non-recurring expense (447) (601)
--------------------------- ---- ----
Core non-interest expense 81,282 77,970
Less: Amortization of intangible
assets (3,022) (3,278)
--------------------------------
Total core tangible non-interest
expense $78,260 $74,692
-------------------------------- ------- -------
(Dollars in millions, except per
share data)
Total average assets $2,748 $2,683
Less: Average intangible assets (175) (178)
-------------------------------
Total average tangible assets (C) $2,573 $2,505
----------------------------- --- ------ ------
Total average stockholders' equity $388 $412
Less: Average intangible assets (175) (178)
------------------------------- ---- ----
Total average tangible stockholders'
equity 213 234
Less: Average preferred equity - (15)
------------------------------ ---
Total average tangible common
stockholders' equity (D) $213 $219
----------------------------- --- ---- ----
Total stockholders' equity, period-
end $388 $385
Less: Intangible assets, period-end (173) (176)
----------------------------------- ---- ----
Total tangible stockholders'
equity, period-end (E) $215 $208
---------------------------- --- ---- ----
Total common shares outstanding,
period-end (thousands) (F) 14,076 13,916
Average diluted common shares
outstanding (thousands) (G) 13,896 13,189
Core earnings per common share, (A/
diluted (1) G) $1.01 $(1.20)
Tangible book value per common (E/
share, period-end F) $15.27 $14.98
(B/
Core return on tangible assets C) 0.67% (0.48)%
Core return on tangible common (B/
equity (1) D) 8.03 (5.73)
Efficiency ratio (2) 70.59 73.39
(1) December 31, 2009 EPS and ratios include a $637,000 reduction in
core income and tangible core income for cumulative preferred stock
dividend and accretion accumulated during Q1 2009. Preferred dividend
charges recorded in Q2 2009 were deemed non-core
due to preferred stock repayment.
(2) Efficiency ratio is computed by dividing total tangible core non-
interest expense by the sum of total net interest income on a fully
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.
(3) Ratios are annualized and based on average balance sheet amounts,
where applicable.
(4) Quarterly data may not sum to year-to-date data due to rounding.
F-10
SOURCE Berkshire Hills Bancorp, Inc.
