Berkshire Hills Reports 13% Increase in Fourth Quarter Core EPS; Dividend Increased; Annual Meeting Date Set

Jan 25, 2016, 16:15 ET from Berkshire Hills Bancorp, Inc.

PITTSFIELD, Mass., Jan. 25, 2016 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported a 13% increase in fourth quarter core earnings per share to $0.54 in 2015 from $0.48 in 2014.  The earnings improvement was driven by 17% revenue growth produced by the Company's expanded operations.  Fourth quarter GAAP EPS increased to $0.52 from $0.46.  For the year, core earnings per share increased by 16% to $2.09 in 2015 from $1.80 in 2014, while GAAP EPS increased to $1.73 from $1.36.  GAAP results in all periods included net non-core charges primarily related to acquisitions and restructuring activities.

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

  • 10% annualized increase in core revenue (8% annualized increase in GAAP revenue)
  • 19% annualized increase in fee income
  • 3.35% net interest margin
  • 60.6% efficiency ratio
  • 4% annualized loan growth
  • 6% annualized deposit growth
  • 0.29% non-performing assets/assets
  • 0.25% net loan charge-offs/average loans

CEO Michael Daly stated, "We had a strong finish to the year, with ongoing organic growth and integration of our acquired operations.  We exceeded our earnings expectations while also continuing to fortify our balance sheet structure.  Our focus on revenue driven operating leverage boosted our profitability year-over-year and our balance sheet disciplines delivered further benefit in strong asset quality and improved capital metrics."

"For the year, we recorded 18% revenue growth and built on the power of our franchise investment in several ways.  We increased our market share in the middle of our footprint with the acquisition and integration of Hampden Bancorp in our Hartford/Springfield market.  Our teams continued to develop our market presence in Eastern Massachusetts and the Boston area, while business lending was further diversified through expansion into national equipment financing.  Fee revenue grew significantly with the benefit of investment in market teams across our business lines, including SBA small business lending, wealth management, and our recruitment of an auto lending team."

Mr. Daly concluded, "Business conditions are solid in our markets and we are moving forward on many fronts in delivering preferred solutions to our retail and commercial customers.  Our board has approved a 5% increase in our shareholder dividend, which follows the 6% increase granted one year ago.  I'm pleased with our continuing progress towards building a premier regional banking franchise and advancing towards our long term profitability objectives."

DIVIDEND INCREASED

The Board of Directors voted to declare a cash dividend of $0.20 per share to shareholders of record at the close of business on February 11, 2016, payable on February 25, 2016.  This is a penny increase from $0.19 and the new dividend equates to a 2.8% annualized yield based on the $29.02 average closing price of Berkshire's common stock during the fourth quarter. 

ANNUAL MEETING DATE SET

The Board of Directors voted that the Annual Meeting of Shareholders shall be held on May 5, 2016 at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts at 10:00 a.m. The date of March 10, 2016 was established as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Annual Meeting.

FINANCIAL CONDITION

Berkshire improved its balance sheet mix in the most recent quarter, and total assets measured $7.8 billion at year-end.  Ongoing loan originations supported a portfolio remix contributing to current strategic objectives.  Deposit generation funded loan growth and reduced borrowings, while capital and liquidity measures were further strengthened. 

Total loans increased at a 4% annualized rate in the fourth quarter.  For the year, total loans increased by 22%, including 8% annualized organic growth along with the benefit of the acquisitions of Hampden Bancorp and Firestone Financial.  Berkshire has emphasized growth of its commercial and industrial loans which are often variable rate and tied to other commercial relationship products and services.  These loans increased by 30% in 2015, including the benefit of acquired loans.  Average deposits increased at a 13% annualized rate in the fourth quarter.  For the year deposit growth totaled 20%, including 10% growth from acquired Hampden deposits.  Demand deposit balances increased by 24% in 2015 and are a focus of relationship oriented business development in Berkshire's retail and commercial banking markets. 

Asset quality metrics remained favorable during the quarter.  Annualized net loan charge-offs measured 0.25% of average loans and quarter-end non-performing assets measured 0.29% of total assets.  The loan loss allowance increased by 10% in 2015 primarily as a result of the 8% organic loan growth; no allowance was initially recorded for the acquired Hampden and Firestone loans, which were recorded at fair value.  

For the year 2015, shareholders' equity increased by $178 million including $157 million related to the issuance of 5.6 million shares for the Hampden and Firestone acquisitions.   Including the accretive benefit of the acquisitions, tangible common equity increased by $120 million.  This contributed to an increase in the ratio of tangible equity to assets to 7.4% from 7.0%.  Total equity similarly increased to 11.3% of assets from 10.9%.  Tangible book value per share increased by $0.65, or 4%, to $17.84 and total book value per share improved by $0.48, or 2%, to $28.64.

RESULTS OF OPERATIONS

The fourth quarter core return on tangible equity increased year-over-year to 12.7% in 2015 from 12.0% in 2014.  Net non-core charges in both periods were primarily related to acquisition activity.  GAAP return on equity improved to 7.3% from 6.5% in the above respective periods.  The efficiency ratio improved to 60.6% from 62.5% due to revenue driven positive operating leverage.

Fourth quarter core earnings increased at a 9% annualized rate compared to the linked quarter, including the benefit of 8% annualized revenue growth driven by higher loans and deposits.  The net interest margin decreased to 3.35% from 3.37%.   Net interest income includes purchased loan accretion which is largely comprised of recoveries on the resolution of impaired loans acquired in previous bank acquisitions.  This accretion totaled $2.4 million in the most recent quarter, compared to $2.7 million in the linked quarter and $1.7 million in the fourth quarter of 2014.  Excluding this accretion, the net interest margin remained unchanged at 3.22% compared to the linked quarter and benefited from Berkshire's loan portfolio mix strategies which offset the ongoing impact of low interest rates.  Before accretion, yields on all major categories of loans increased over the prior quarter.  Higher fourth quarter deposit costs reflected targeted promotions in support of the Company's growth strategies.  The 19% annualized increase in fee income was primarily due to higher loan related revenues including the benefit of increased commercial loan interest rate swap volume.

The fourth quarter $4.4 million loan loss provision was up slightly over the prior quarter, and contributed to growth in the allowance after absorbing net charge-offs.  Core non-interest expense increased including Firestone operations but decreased slightly in relation to average assets.  Full time equivalent staff totaled 1,221 positions at year-end. 

Berkshire's income tax rate on core income was 16% in the most recent quarter and 17% in the prior quarter.  Berkshire's income tax in both quarters benefited by $4.0 million from tax-advantaged commercial development projects including both tax credits and tax deductions on the $2.9 million investment amortization included as a charge against non-interest income.   Berkshire's tax rate on GAAP income was 12% in the most recent quarter and further reflected the tax benefit related to non-core Hampden merger related charges recorded earlier in the year.

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, January 26, 2016 to discuss the results for the quarter and provide guidance about expected future results.  Participants are encouraged to pre-register for the conference call using the following link: dpregister.com/10078526.  Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call, and will immediately receive simple instructions via email, with automatic scheduling as an event in their Outlook calendar.  Participants may also reach the registration link and access the webcast by logging in through the investor section of our website at ir.berkshirebank.com. Those parties who wish to participate by telephone may participate at the above time by dialing 1-844-792-3726 and asking to join the Berkshire Hills Bancorp (BHLB) earnings call.  Telephone participants should dial in a few minutes before the start of the call.  A telephone replay of the call will be available through Friday, February 26, 2016 by dialing 877-344-7529 and entering access number 10078526. The webcast will be available on Berkshire's website for an extended period of time.

BACKGROUND

Berkshire Hills Bancorp is the parent of Berkshire Bank – America's Most Exciting Bank®. Berkshire has $7.8 billion in assets and 93 full-service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services.

FORWARD LOOKING STATEMENTS

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

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP").  These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition.  They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information.  A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables.  In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.  The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense.  These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, losses recorded for hedge terminations, merger costs, restructuring costs, systems conversion costs, and out-of-period adjustments.  Non-core adjustments are presented net of an adjustment for income tax expense.  This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income.  The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items.  The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community.  Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, and professional fees.   Restructuring costs primarily consist of costs and losses associated with the disposition of assets and lease terminations.   In 2015, the Company's disclosures of organic growth of loans and deposits exclude balances acquired through the business combinations with Hampden Bancorp and Firestone Financial. 

CONTACTS

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

Media Contact Elizabeth Mach; Vice President, Marketing Officer; 413-445-8390

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)

December 31,

September 30,

December 31,

(In thousands)

2015

2015

2014

Assets

Cash and due from banks

$              72,918

$              50,716

$              54,179

Short-term investments

30,644

42,855

17,575

Total cash and short-term investments

103,562

93,571

71,754

Trading security

14,189

14,587

14,909

Securities available for sale, at fair value

1,154,457

1,176,609

1,091,818

Securities held to maturity, at amortized cost

131,652

132,186

43,347

Federal Home Loan Bank stock and other restricted securities

71,018

73,069

55,720

Total securities

1,371,316

1,396,451

1,205,794

Loans held for sale, at fair value

13,191

25,472

19,493

Residential mortgages

1,815,035

1,769,271

1,496,204

Commercial real estate

2,059,767

2,021,300

1,611,567

Commercial and industrial loans

1,048,263

1,065,325

804,366

Consumer loans

802,171

809,034

768,463

Total loans

5,725,236

5,664,930

4,680,600

Less: Allowance for loan losses

(39,308)

(38,180)

(35,662)

Net loans

5,685,928

5,626,750

4,644,938

Premises and equipment, net

88,072

86,809

87,279

Other real estate owned

1,725

2,487

2,049

Goodwill 

323,943

324,958

264,742

Other intangible assets

10,664

11,586

11,528

Cash surrender value of bank-owned life insurance

125,233

124,278

104,588

Deferred tax asset, net

42,526

42,198

28,776

Other assets

65,755

69,928

61,090

Total assets (1)

$         7,831,915

$         7,804,488

$         6,502,031

Liabilities and stockholders' equity

Demand deposits

$         1,081,860

$         1,001,777

$            869,302

NOW deposits

510,807

476,351

426,108

Money market deposits

1,408,107

1,485,392

1,407,179

Savings deposits

601,761

603,596

496,344

Time deposits

1,986,600

1,940,213

1,455,746

Total deposits

5,589,135

5,507,329

4,654,679

Senior borrowings

1,174,335

1,211,813

962,576

Subordinated borrowings

89,812

89,798

89,747

Total borrowings

1,264,147

1,301,611

1,052,323

Other liabilities 

91,444

113,980

85,742

Total liabilities

6,944,726

6,922,920

5,792,744

Total common stockholders' equity

887,189

881,568

709,287

Total liabilities and stockholders' equity

$         7,831,915

$         7,804,488

$         6,502,031

Net shares outstanding 

30,974

30,949

25,183

(1) The Company acquired Hampden Bancorp, Inc. ("Hampden") on April 17, 2015 with total assets of $688 million and Firestone Financial ("Firestone") on August 7, 2015 with total assets of $201 million.

 

BERKSHIRE HILLS BANCORP, INC.

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

LOAN ANALYSIS

Organic Annualized Growth %

(in millions)

Dec. 31, 2015 Balance

Sept. 30, 2015 Balance

Acquired

Hampden/

 Firestone

Balances

Dec. 31, 2014 Balance

Quarter ended Dec. 31, 2015

Year to date

Total residential mortgages

$         1,815

$         1,769

$            130

$         1,496

10

%

13

%

Commercial real estate

2,060

2,021

240

1,612

8

13

Commercial and industrial loans 

1,048

1,066

233

804

(7)

1

Total commercial loans 

3,108

3,087

473

2,416

3

9

Home equity 

361

357

35

319

5

2

Auto and other

441

452

47

450

(11)

(13)

Total consumer loans

802

809

82

769

(3)

(6)

Total loans

$         5,725

$         5,665

$            685

$         4,681

4

%

8

%

DEPOSIT ANALYSIS

Organic Annualized Growth %

(in millions)

Dec. 31, 2015 Balance

Sept. 30, 2015 Balance

Acquired

Hampden

Balance 

Dec. 31, 2014 Balance

Quarter ended Dec. 31, 2015

Year to date

Demand

$         1,082

$         1,002

$              97

$            869

32

%

13

%

NOW

511

476

51

426

29

8

Money market

1,408

1,485

62

1,407

(21)

(4)

Savings

601

604

120

497

(2)

(3)

Total non-maturity deposits

3,602

3,567

330

3,199

4

2

Total time deposits

1,987

1,940

154

1,456

10

26

Total deposits

$         5,589

$         5,507

$            484

$         4,655

6

%

10

%

 

BERKSHIRE HILLS BANCORP, INC.

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

Three Months Ended

Years Ended

Dec. 31,

Dec. 31,

(In thousands, except per share data)

2015

2014

2015

2014

Interest and dividend income    

Loans

$           59,055

$           45,706

$           211,347

$            174,467

Securities and other    

9,369

8,310

35,683

32,575

Total interest and dividend income    

68,424

54,016

247,030

207,042

Interest expense

Deposits

6,661

5,109

22,948

19,185

Borrowings

3,015

2,260

10,233

9,166

Total interest expense    

9,676

7,369

33,181

28,351

Net interest income

58,748

46,647

213,849

178,691

Non-interest income

Loan related income

2,707

1,763

8,310

6,328

Mortgage banking income

641

504

4,133

2,561

Deposit related fees

6,416

6,137

25,084

24,635

Insurance commissions and fees    

2,254

2,223

10,251

10,364

Wealth management fees    

2,326

2,373

9,702

9,546

Total fee income    

14,344

13,000

57,480

53,434

Other

(1,739)

1,200

(5,302)

2,646

Securities (losses) gains, net     

(357)

-

2,110

482

Loss on termination of hedges

-

-

-

(8,792)

Total non-interest income      

12,248

14,200

54,288

47,770

Total net revenue

70,996

60,847

268,137

226,461

Provision for loan losses   

4,431

3,898

16,726

14,968

Non-interest expense

Compensation and benefits

25,819

20,965

97,370

81,768

Occupancy and equipment     

7,308

6,655

28,486

26,905

Technology and communications

4,553

3,702

16,881

14,764

Marketing and promotion     

1,012

771

3,306

2,572

Professional services

1,472

1,205

5,172

4,211

FDIC premiums and assessments

1,220

1,083

4,649

4,284

Other real estate owned and foreclosures

33

232

833

801

Amortization of intangible assets     

841

996

3,563

4,812

Merger, restructuring and conversion expense (1)    

1,118

1,762

17,611

8,491

Other

4,903

4,305

18,958

17,378

Total non-interest expense     

48,279

41,676

196,829

165,986

Income before income taxes       

18,286

15,273

54,582

45,507

Income tax expense

2,273

3,875

5,064

11,763

Net income 

$           16,013

$           11,398

$             49,518

$              33,744

Earnings per share:

Basic

$               0.53

$               0.46

$                 1.74

$                  1.36

Diluted

$               0.52

$               0.46

$                 1.73

$                  1.36

Weighted average shares outstanding:      

Basic

30,500

24,758

28,393

24,730

Diluted

30,694

24,912

28,564

24,854

(1) Merger, restructuring and conversion expenses include Firestone acquisition, Hampden acquisition, branch restructuring, and Q1 2014 branch acquisition related expenses.

 

BERKSHIRE HILLS BANCORP, INC.

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

Quarters Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

(In thousands, except per share data)

2015

2015

2015

2015

2014

Interest and dividend income    

Loans

$        59,055

$        56,343

$         51,504

$      44,445

$      45,706

Securities and other    

9,369

9,109

8,899

8,306

8,310

Total interest and dividend income    

68,424

65,452

60,403

52,751

54,016

Interest expense

Deposits

6,661

6,046

5,292

4,949

5,109

Borrowings

3,015

2,435

2,474

2,309

2,260

Total interest expense    

9,676

8,481

7,766

7,258

7,369

Net interest income

58,748

56,971

52,637

45,493

46,647

Non-interest income

Loan related income

2,707

1,537

2,783

1,283

1,763

Mortgage banking income

641

693

1,546

1,253

504

Deposit related fees

6,416

6,549

6,442

5,677

6,137

Insurance commissions and fees    

2,254

2,544

2,486

2,967

2,223

Wealth management fees    

2,326

2,376

2,397

2,603

2,373

Total fee income    

14,344

13,699

15,654

13,783

13,000

Other

(1,739)

(1,050)

(1,258)

(1,255)

1,200

Securities gains, net     

(357)

49

2,384

34

-

Loss on termination of hedges

-

-

-

-

-

Total non-interest income      

12,248

12,698

16,780

12,562

14,200

Total net revenue

70,996

69,669

69,417

58,055

60,847

Provision for loan losses   

4,431

4,240

4,204

3,851

3,898

Non-interest expense

Compensation and benefits

25,819

25,237

24,503

21,811

20,965

Occupancy and equipment     

7,308

6,827

7,243

7,108

6,655

Technology and communications

4,553

4,645

4,090

3,593

3,702

Marketing and promotion  

1,012

781

800

713

771

Professional services

1,472

1,053

1,375

1,272

1,205

FDIC premiums and assessments

1,220

1,157

1,143

1,129

1,083

Other real estate owned and foreclosures

33

298

251

251

232

Amortization of intangible assets     

841

887

934

901

996

Merger, restructuring and conversion expense (1)    

1,118

3,361

8,711

4,421

1,762

Other

4,903

5,132

4,975

3,949

4,305

Total non-interest expense     

48,279

49,378

54,025

45,148

41,676

Income before income taxes

18,286

16,051

11,188

9,056

15,273

Income tax expense 

2,273

1,350

1,144

297

3,875

Net income

$        16,013

$        14,701

$         10,044

$        8,759

$      11,398

Earnings per share:

Basic 

$            0.53

$            0.49

$             0.35

$          0.35

$          0.46

Diluted 

$            0.52

$            0.49

$             0.35

$          0.35

$          0.46

Weighted average shares outstanding:      

Basic

30,500

29,893

28,301

24,803

24,758

Diluted

30,694

30,069

28,461

24,955

24,912

(1) See note on Page F-3

 

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - UNAUDITED - (F-5)

At or for the Quarters Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

(in thousands)

2015

2015

2015

2015

2014

NON-PERFORMING ASSETS

Non-accruing loans:

Residential mortgages

$            3,966

$            4,565

$            4,234

$         4,153

$         3,908

Commercial real estate

4,882

5,693

9,733

13,516

12,878

Commercial and industrial loans

8,259

8,092

3,031

1,308

1,705

Consumer loans

3,768

3,386

2,991

3,032

3,214

Total non-accruing loans

20,875

21,736

19,989

22,009

21,705

Other real estate owned

1,725

2,487

674

1,444

2,049

Total non-performing assets

$          22,600

$          24,223

$          20,663

$       23,453

$       23,754

Total non-accruing loans/total loans

0.36%

0.38%

0.38%

0.47%

0.46%

Total non-performing assets/total assets

0.29%

0.31%

0.27%

0.36%

0.37%

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$          38,180

$          37,197

$          36,286

$       35,662

$       34,966

Charged-off loans

(3,538)

(3,542)

(4,176)

(3,432)

(3,660)

Recoveries on charged-off loans

235

285

883

205

458

Net loans charged-off

(3,303)

(3,257)

(3,293)

(3,227)

(3,202)

Provision for loan losses

4,431

4,240

4,204

3,851

3,898

Balance at end of period

$          39,308

$          38,180

$          37,197

$       36,286

$       35,662

Allowance for loan losses/total loans

0.69%

0.67%

0.70%

0.77%

0.76%

Allowance for loan losses/non-accruing loans

188%

176%

186%

165%

164%

NET LOAN CHARGE-OFFS

Residential mortgages

$             (633)

$             (354)

$             (367)

$          (299)

$          (181)

Commercial real estate

(1,152)

(1,343)

(2,461)

(2,007)

(1,810)

Commercial and industrial loans

(1,056)

(1,098)

(124)

(375)

(540)

Home equity 

(118)

(135)

(174)

(202)

(240)

Auto and other consumer

(344)

(327)

(167)

(344)

(431)

Total, net

$          (3,303)

$          (3,257)

$          (3,293)

$       (3,227)

$       (3,202)

Net charge-offs (QTD annualized)/average loans 

0.25%

0.26%

0.26%

0.28%

0.29%

Net charge-offs (YTD annualized)/average loans 

0.25%

0.26%

0.26%

0.28%

0.29%

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS

30-89 Days delinquent

0.34%

0.37%

0.29%

0.28%

0.42%

90+ Days delinquent and still accruing

0.09%

0.10%

0.12%

0.15%

0.10%

Total accruing delinquent loans

0.43%

0.47%

0.41%

0.43%

0.52%

Non-accruing loans

0.36%

0.38%

0.38%

0.47%

0.46%

Total delinquent and non-accruing loans

0.79%

0.85%

0.79%

0.90%

0.98%

 

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-6)

At or for the Quarters Ended (1)

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

2015

2015

2015

2015

2014

PER SHARE DATA

Core earnings, diluted

$       0.54

$       0.54

$          0.51

$      0.50

$        0.48

Net earnings, diluted

0.52

0.49

0.35

0.35

0.46

Tangible book value

17.84

17.61

17.16

17.46

17.19

Total book value

28.64

28.48

28.02

28.36

28.17

Market price at period end

29.11

27.54

28.48

27.70

26.66

Dividends

0.20

0.19

0.19

0.19

0.18

PERFORMANCE RATIOS (2)

Core return on assets

0.85

%

0.86

%

0.81

%

0.76

%

0.75

%

Return on assets

0.82

0.78

0.56

0.54

0.71

Core return on equity

7.58

7.58

7.32

7.06

6.89

Core return on tangible equity

12.68

12.78

12.30

12.14

11.96

Return on equity

7.34

6.90

5.05

5.00

6.52

Net interest margin, fully taxable equivalent

3.35

3.37

3.30

3.18

3.23

Fee income/Net interest and fee income

19.62

19.38

22.92

23.25

21.79

Efficiency ratio 

60.56

60.35

61.51

63.27

62.46

GROWTH

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

9

%

11

%

11

%

14

%

15

%

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

8

9

5

4

12

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

18

19

20

23

-

Core earnings per share, year-to-date

16

17

17

19

(4)

Earnings per share, year-to-date (4)

27

34

69

 N/M 

(18)

FINANCIAL DATA   (In millions)

Total assets

$     7,832

$     7,804

$        7,519

$    6,571

$      6,502

Total earning assets

7,140

7,130

6,740

5,993

5,923

Total investments

1,371

1,396

1,379

1,216

1,206

Total loans

5,725

5,665

5,285

4,729

4,681

Allowance for loan losses

39

38

37

36

36

Total intangible assets

335

337

321

275

276

Total deposits

5,589

5,507

5,322

4,720

4,655

Total stockholders' equity

887

882

827

716

709

Total core income 

16.5

16.2

14.6

12.4

12.0

Total net income

16.0

14.7

10.0

8.8

11.4

ASSET QUALITY RATIOS

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

0.25

%

0.26

%

0.27

%

0.28

%

0.29

%

Allowance for loan losses/total loans

0.69

0.67

0.70

0.77

0.76

CONDITION RATIOS

Stockholders' equity to total assets

11.33

%

11.30

%

11.00

%

10.90

%

10.91

%

Tangible stockholders' equity to tangible assets (3)

7.37

7.30

7.04

7.00

6.95

Investments to total assets

17.51

17.89

18.35

18.51

18.54

Loans/deposits

102

103

99

100

101

(1)

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

(2)

All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(3)

Tangible assets are total assets less total intangible assets.

(4)

N/M means not meaningful.

 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - UNAUDITED - (F-7)

Quarters Ended

Dec. 31, 

Sept. 30, 

June 30, 

March 31,

Dec. 31, 

(In thousands)

2015

2015

2015

2015

2014

Assets

Loans

Residential mortgages

$    1,790,334

$    1,664,505

$    1,562,503

$    1,469,910

$    1,468,271

Commercial real estate

2,034,917

1,948,753

1,889,306

1,646,638

1,611,343

Commercial and industrial loans

1,033,081

998,782

886,297

806,710

733,750

Consumer loans

807,768

813,986

821,933

765,938

782,584

Total loans (1) (5)

5,666,100

5,426,026

5,160,039

4,689,196

4,595,948

Securities (2)

1,368,505

1,353,818

1,301,918

1,176,559

1,190,182

Short-term investments and loans held for sale

51,241

51,832

72,003

55,652

54,843

Total earning assets

7,085,846

6,831,676

6,533,960

5,921,407

5,840,973

Goodwill and other intangible assets

335,440

330,084

303,780

275,732

276,645

Other assets

342,902

379,319

357,026

300,264

304,909

Total assets

$    7,764,188

$    7,541,079

$    7,194,766

$    6,497,403

$    6,422,527

Liabilities and stockholders' equity

Deposits (4)

NOW

$       491,445

$       475,433

$       460,378

$       423,474

$       415,806

Money market

1,455,267

1,474,389

1,437,428

1,408,777

1,426,722

Savings

604,215

615,410

606,231

502,412

479,988

Time

1,958,394

1,795,156

1,558,350

1,419,706

1,425,865

Total interest-bearing deposits

4,509,321

4,360,388

4,062,387

3,754,369

3,748,381

Borrowings

1,256,287

1,198,455

1,287,319

1,106,541

1,053,884

Total interest-bearing liabilities

5,765,608

5,558,843

5,349,706

4,860,910

4,802,265

Non-interest-bearing demand deposits

1,033,844

1,010,613

974,160

869,780

863,795

Other liabilities 

91,877

119,322

75,487

65,453

56,805

Total liabilities

6,891,329

6,688,778

6,399,353

5,796,143

5,722,865

Total stockholders' equity

872,859

852,301

795,413

701,260

699,662

Total liabilities and stockholders' equity

$    7,764,188

$    7,541,079

$    7,194,766

$    6,497,403

$    6,422,527

Supplementary data

Total non-maturity deposits (4)

$    3,584,771

$    3,575,845

$    3,478,197

$    3,204,443

$    3,186,311

Total deposits (4)

5,543,165

5,371,001

5,036,547

4,624,149

4,612,176

Fully taxable equivalent income adjustment

1,108

1,131

1,068

889

887

Total average tangible equity (3)

537,419

522,217

491,633

425,528

423,017

(1) Total loans include non-accruing loans.

(2) Average balances for securities available-for-sale are based on amortized cost.

(3) Total average tangible equity results from the subtraction of average goodwill and other intangible assets from total average  stockholders' equity. 

(4) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated balance sheet.

(5) The average balances of loans include the loans associated with the Tennessee branch sale presented under loans held for sale on the consolidated balance sheet.

 

BERKSHIRE HILLS BANCORP, INC.

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

Quarters Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

2015

2015

2015

2015

2014

Earning assets

Loans

Residential mortgages

3.72

%

3.74

%

4.08

%

3.94

%

3.88

%

Commercial real estate

4.17

4.47

4.46

4.12

4.18

Commercial and industrial loans

5.51

4.79

3.64

3.70

4.22

Consumer loans

3.30

3.29

3.24

3.23

3.35

Total loans

4.15

4.14

4.02

3.86

3.96

Securities

2.96

2.92

2.99

3.10

3.00

Short-term investments and loans held for sale

0.89

1.34

1.13

1.40

1.37

Total earning assets

3.89

3.87

3.77

3.67

3.73

Funding liabilities

Deposits

NOW

0.14

0.14

0.15

0.14

0.15

Money market

0.45

0.42

0.37

0.40

0.42

Savings

0.14

0.15

0.17

0.15

0.14

Time

0.93

0.90

0.91

0.92

0.91

Total interest-bearing deposits

0.59

0.55

0.52

0.53

0.54

Borrowings

0.96

0.81

0.77

0.85

0.85

Total interest-bearing liabilities

0.67

0.61

0.58

0.61

0.61

Net interest spread

3.22

3.26

3.19

3.06

3.12

Net interest margin

3.35

3.37

3.30

3.18

3.23

Cost of funds (1)

0.56

0.51

0.49

0.51

0.52

Cost of deposits (2)

0.48

0.45

0.42

0.43

0.44

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

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

 

BERKSHIRE HILLS BANCORP, INC.

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

At or for the Quarters Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31, 

(in thousands)

2015

2015

2015

2015

2014

Net income

$   16,013

$   14,701

$   10,044

$     8,759

$   11,398

Adj: Net securities losses (gains)

357

(49)

(2,384)

(34)

-

Adj: Merger and acquisition expense

1,230

2,987

5,665

3,275

1,708

Adj: Restructuring expense

(112)

374

3,046

1,146

54

Adj:  Income taxes

(959)

(1,862)

(1,815)

(772)

(1,114)

Total core income

(A)

$   16,529

$   16,151

$   14,556

$   12,374

$   12,046

Total revenue 

$   70,996

$   69,669

$   69,417

$   58,055

$   60,847

Adj: Net securities losses (gains)

357

(49)

(2,384)

(34)

-

Total core revenue

(B)

$   71,353

$   69,620

$   67,033

$   58,021

$   60,847

Total non-interest expense

$   48,279

$   49,378

$   54,025

$   45,148

$   41,676

Less: Total non-core expense (see above)

(1,118)

(3,361)

(8,711)

(4,421)

(1,762)

Core non-interest expense                                    

(C)

$   47,161

$   46,017

$   45,314

$   40,727

$   39,914

(in millions, except per share data)

Total average assets                                                

(D)

$     7,764

$     7,541

$     7,195

$     6,497

$     6,423

Total average stockholders' equity                         

(E)

873

852

795

701

700

Total average tangible stockholders' equity                         

(F)

537

522

492

426

423

Total tangible stockholders' equity, period-end (1)

(G)

553

545

507

441

433

Total common shares outstanding, period-end (thousands)               

(H)

30,974

30,949

29,521

25,253

25,183

Average diluted shares outstanding (thousands)

(I)

30,694

30,069

28,461

24,955

24,912

Core earnings per share, diluted 

(A/I)

$       0.54

$       0.54

$       0.51

$       0.50

$       0.48

Tangible book value per share, period-end

(G/H)

$     17.84

$     17.61

$     17.16

$     17.46

$     17.19

Performance ratios (2)

Core return on assets

(A/D)

0.85

%

0.86

%

0.81

%

0.76

%

0.75

%

Core return on equity 

(A/E)

7.58

7.58

7.32

7.06

6.89

Core return on tangible equity (3)

(A/F)

12.68

12.78

12.30

12.14

11.96

Efficiency ratio 

(C-L)/(B+J+M)

60.56

60.35

61.51

63.27

62.46

Supplementary data (in thousands)

Tax benefit - tax-advantaged investments (4)

(J)

$     4,029

$     4,029

$     4,034

$     4,034

$        570

Non-interest income charge - tax-advantaged investments (5)

(K)

(2,851)

(2,851)

#

(2,851)

(2,851)

(417)

Net income on tax-advantaged investments

(J+K)

1,178

1,178

1,183

1,183

153

Intangible amortization

(L)

841

887

934

901

996

Fully taxable equivalent income adjustment

(M)

1,108

1,131

1,068

889

887

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

(2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.

(3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization of intangible assets, assuming a 40% marginal rate, by tangible equity.

(4) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy projects.  

(5) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. 

 

BERKSHIRE HILLS BANCORP, INC.

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

At or for the Years Ended

Dec. 31,

Dec. 31

(Dollars in thousands)

2015

2014

Net income 

$                   49,518

$                   33,744

Adj: Net securities (gains)

(2,110)

(482)

Adj: Loss on termination of hedges

-

8,792

Adj: Merger and acquisition expenses

13,157

5,397

Adj: Restructuring and conversion expense

4,454

3,095

Adj: Out-of-period adjustment (1) 

-

1,381

Adj: Income taxes

(5,409)

(7,185)

Total core income 

(A)

$                   59,610

$                   44,742

Total revenue 

268,137

226,461

Adj: Securities (gains)

(2,110)

(482)

Adj: Loss on termination of hedges

-

8,792

Adj: Out-of-period adjustment (1) 

-

1,381

Total core revenue

(B)

$                 266,027

$                 236,152

Total non-interest expense

$                 196,830

$                 165,986

Less: Total non-core expense (see above)

(17,611)

(8,492)

Core non-interest expense                                    

(C)

$                 179,219

$                 157,494

(Dollars in millions, except per share data)

Total average assets                                                

(D)

$                     7,249

$                     6,171

Total average stockholders' equity                         

(E)

805

693

Total average tangible stockholders' equity                         

(F)

494

415

Total tangible stockholders' equity, period-end (2)

(G)

553

433

Total common shares outstanding, period-end (thousands)               

(H)

30,974

25,183

Average diluted shares outstanding (thousands)

(I)

28,564

24,854

Core earnings per common share, diluted 

(A/I)

$                       2.09

$                       1.80

Tangible book value per common share, period-end

(G/H)

$                     17.84

$                     17.19

Performance ratios (3)

Core return on assets

(A/D)

0.82

%

0.73

%

Core return on equity

(A/E)

7.40

6.46

Core return on tangible equity (4)

(A/F)

12.49

11.48

Efficiency ratio

(C-L)/ (B+J+M)

61.34

63.17

Supplementary data

Tax benefit - tax-advantaged investments (5)

(J)

$                   16,127

$                     2,235

Non-interest income charge - tax-advantaged investments (6)

(K)

(11,406)

(1,668)

Net income on tax-advantaged investments

(J+K)

4,721

567

Intangible amortization

(L)

3,563

4,812

Fully taxable equivalent income adjustment

(M)

4,196

3,316

GAAP return on assets

0.68

%

0.55

%

GAAP return on equity 

6.15

4.87

Net interest margin

3.31

3.26

(1) The out of period adjustment shown above relates to interest income earned on loans acquired in bank acquisitions. 

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

(3) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding. 

(4) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization of intangible assets, assuming a 40% marginal rate, by tangible equity. 

(5) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy. 

(6) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. 

 

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SOURCE Berkshire Hills Bancorp, Inc.



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