Berkshire Hills Reports 21% Third Quarter Core EPS Growth; Dividend Increased; New York Stock Exchange Listing Announced

Oct 23, 2012, 16:15 ET from Berkshire Hills Bancorp, Inc.

PITTSFIELD, Mass., Oct. 23, 2012 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NASDAQ: BHLB) reported $0.52 in third quarter core earnings per share, a 21% increase over third quarter 2011 core earnings of $0.43 per share.  For the first nine months of the year, Berkshire reported $1.43 in core earnings per share in 2012, which was a 30% increase over 2011 nine month core results of $1.10 per share.  This growth resulted from positive operating leverage related to ongoing business expansion. 

(Logo: http://photos.prnewswire.com/prnh/20120131/NE44966LOGO )

Earnings in both years were also affected by net non-core charges for mergers and systems conversions.  Including non-core charges, third quarter GAAP earnings per share totaled $0.46 in 2012, compared to $0.22 in 2011.  For the first nine months of the year, GAAP earnings per share totaled $1.11 in 2012, compared to $0.54 in 2011.

THIRD QUARTER FINANCIAL HIGHLIGHTS

  • 21% increase in core earnings per share, compared to third quarter of 2011
  • 11% increase in core earnings per share, compared to the prior quarter
  • 5% revenue growth, compared to the prior quarter
  • 6% annualized  loan growth
  • 19% annualized growth in demand deposit balances
  • 10% annualized growth in non-maturity deposits
  • 0.59% non-performing assets/total assets
  • 0.27% annualized net loan charge-offs/average loans
  • 1.00% core ROA (0.88% GAAP ROA)
  • 57% efficiency ratio

Berkshire CEO Michael P. Daly stated, "Our third quarter results represent the tenth consecutive quarter of increased operating earnings, and we are ahead of plan to achieve the earnings and core profitability growth that we targeted for the year.  Across our markets, our teams are generating solid business - resulting in market share gains that demonstrate the value of our brand promise, service execution, and product capabilities.  The positive operating leverage that we are generating resulted in a third quarter core return on assets of 100 basis points.  We are currently generating tangible equity from core operations at an annualized rate of $2.31 per share, resulting in a 15% annualized return on tangible equity.  Our growing fee income is diversifying revenues and strengthening efficiency and earnings.  With our multiple earnings levers, we offset the impact of a managed reduction of 5 basis points in our core net interest margin, allowing us to maintain targeted organic growth momentum, competitive positioning, and future pricing flexibility.  Other margin impacts from accounting factors continue to vary on a quarterly basis, but the bottom line earnings trend continues to be solidly upward."

"We are achieving these strong operating results while continuing to build our franchise for the future," Mr. Daly continued.  "Last Friday we completed our acquisition of Beacon Federal Bancorp, which added nearly $1 billion in assets and solidifies our presence in Central New York, where we now have ten offices serving the Syracuse/Rome/Utica markets.  We continue to move forward in building revenues from our CBT and Greenpark Mortgage acquisitions earlier in the year.  In the third quarter, we announced the appointment of Sheryl McQuade as Senior Vice President and Regional Commercial leader for our growing Hartford/Springfield region.  During the quarter, we also completed the conversion of our core banking systems on schedule.  This is a major investment in our technology platform that is expected to contribute to future revenue and earnings growth."

Mr. Daly concluded, "Based on our consistent earnings growth, we are pleased to be announcing a one cent increase in the quarterly dividend to $0.18 per share.  This represents a 6% increase and follows by one year our last quarterly dividend increase.  We are very focused on shareholder value and shareholder return, and our goal is to deliver the benefits of our earnings driven capital accretion as we continue to expand and improve the quality of our franchise.  Recognizing our growth and our outlook, we have separately announced today that during November we plan to transfer our stock listing to the New York Stock Exchange, where we will join a number of the nation's most successful financial institutions."

DIVIDEND INCREASE

The Board of Directors voted to declare a cash dividend of $0.18 per share to shareholders of record at the close of business on November 8, 2012, payable on November 21, 2012.  This dividend provides a 3.2% yield based on the $22.40 average closing price of Berkshire's common stock during the third quarter.  This dividend represents a 35% payout compared to the $0.52 in core earnings per share recorded during the quarter.

NEW YORK STOCK EXCHANGE LISTING

In a separate news release today, Berkshire has announced that it will transfer the listing of its common stock to the New York Stock Exchange in November.  The stock symbol will remain "BHLB".

FINANCIAL CONDITION

Total assets increased by $127 million (11% annualized) in the most recent quarter.  Annualized loan growth was 6% and annualized deposit growth was 5%, reflecting ongoing business development in Berkshire's markets.  Loans held for sale also increased due to higher mortgage banking volume, and subordinated debt increased as the Company raised funds near the end of the quarter for the acquisition of Beacon, which was completed on October 19.  For the year-to-date, balance sheet growth included the impact of the acquisitions of CBT – The Connecticut Bank and Trust Company and the operations of Greenpark Mortgage, which were completed in the second quarter.  Overall measures of asset quality, capital, and liquidity remained strong through the first nine months of the year.

Loan growth totaling $53 million resulted primarily from a $49 million increase in commercial business loans.  Commercial business loans have increased by 39% since the start of the year.  Berkshire continues to build business loan volume in Central Massachusetts and New York as it targets banking relationships with middle market customers who need a full range of products and services provided by a responsive local banking partner.  During the quarter, growth in residential real estate loans partially offset runoff in commercial real estate balances.  For the year-to-date, excluding acquired CBT loan balances, total loans increased by $254 million at an 11% annualized rate as Berkshire continues to employ its capital to support the credit needs of its markets and generate shareholder returns.  Residential mortgage originations totaled $392 million for the quarter and $696 million for the year-to-date.  Including its expanded eastern Massachusetts operations, Berkshire is an increasingly important supplier of consumer credit supporting the region's housing market and helping individuals take advantage of the record low mortgage rates.

Third quarter asset quality metrics remained favorable.  At quarter-end, non-performing assets were 0.59% of total assets, compared to 0.60% at the start of the quarter.  Annualized net loan charge-offs measured 0.27% of average loans for the third quarter and 0.25% for the year-to-date.  Accruing delinquent loans were 1.00% of total loans at quarter-end, which was down from 1.01% a year ago.  The ratio of the allowance to total loans was 0.98% and 0.97% at the start and end of the quarter. 

Third quarter deposit growth totaled $40 million (5% annualized) and funded most of the $53 million increase in loan balances.  Demand deposit balances increased at a 19% annualized rate primarily due to ongoing promotion of relationship oriented personal accounts.  The Company continued to manage a decrease in time deposits as higher cost certificates rolled off.  For the year-to-date, excluding acquired CBT deposit balances, total deposits increased by $137 million at a 6% annualized rate.

Total shareholders' equity increased at a 5% annualized rate in the third quarter to $591 million due to the benefit of retained earnings.  Tangible book value per share increased at a 10% annualized rate to $15.86 during the quarter, while total book value per share increased at a 4% annualized rate to $26.60.  The ratio of tangible equity/assets remained at 8.0%, while the ratio of total equity to assets decreased slightly to 12.8% from 12.9%. 

RESULTS OF OPERATIONS

Berkshire posted strong core growth in revenue, earnings, and earnings per share for the third quarter and year-to-date.  Most core profitability measures also improved as a result of the positive operating leverage produced by the revenue growth, with core return on equity improving to 7.8% and with the efficiency ratio improving to 57% in the most recent quarter.  Berkshire is achieving these results while bearing the costs of maintaining its asset sensitive interest rate risk profile and absorbing the charges related to its branch and team expansion, and its investment in technology and other infrastructure.

Of note, the third quarter was the first complete quarter with the combined operations of CBT and Greenpark Mortgage, which were acquired during the second quarter.  Many categories of income and expense increased due to these acquisitions, and year-to-year increases include the impact of the Rome and Legacy acquisitions in 2011.  As a result, the discussion of operations primarily compares the third quarter of 2012 to the second quarter of 2012.    

Net income in most periods also reflected non-core charges which were primarily merger related, together with systems conversion costs.  The reconciliation of net income and core income is shown on table F-9 of the financial tables.  Non-core charges in the most recent quarter were primarily related to nonrecurring costs of the core systems conversion, which was completed during the quarter.  The Company does not view these non-core items as related to its underlying ongoing operating activities.  Including net non-core charges, the third quarter return on equity was 6.9%. 

Berkshire's total net revenue increased by $2.2 million (5%) in the third quarter compared to the prior quarter.  Mortgage production net revenue increased by $1.5 million to $4.3 million due to the full quarter of Greenpark operations, along with higher mortgage refinancings in the current low interest rate environment.  Non-interest income increased to 29% of total revenue.

Net interest income increased by $0.2 million (2% annualized) to $35.2 million in the third quarter compared to the prior quarter.  Average earning assets increased by 5% due to business development together with the benefit of a full quarter of CBT and Greenpark operations.  The Company estimates that the third quarter core net interest margin was compressed by 5 basis points due to the impact of lower interest rates.  The margin also decreased due to a 6 basis point credit received in the second quarter from one commercial loan prepayment.  Additionally, the Company recorded a 9 basis point decrease in the margin due to the writedown of deferred costs in conjunction with accelerated mortgage refinancings.  The income impact of these charges was more than offset by the higher mortgage production income also resulting from refinancing demand, which contributed to the higher EPS for the quarter. 

The quarterly margin has varied based on the impact of loan prepayments on deferred balances and purchase accounting entries.  Berkshire continues to target a core net interest margin above 3.50% before these impacts.  The Company also plans to maintain its asset sensitive interest rate risk profile in order to enhance its long-term earnings.  The Company has reduced its cost of funds by 12 basis points since the start of the year, with the potential for additional future targeted reductions as appropriate based on the operating environment.

The third quarter provision for loan losses increased to $2.5 million from $2.3 million in the prior quarter.  Net loan charge-offs totaled $2.3 million and $2.0 million in these periods, respectively.  There were no significant changes in the Bank's favorable charge-off metrics or in the metrics related to the loan loss allowance, which increased by $0.2 million to $33.1 million during the quarter.

Third quarter core non-interest expense decreased by 1% to $29.9 million.  Third quarter GAAP non-interest expense totaled $32.2 million, including $2.2 million in non-core charges primarily related to the core systems conversion.  Year-to-date non-core expense totaled $10.5 million, which was in line with the Company's guidance at the start of the year excluding the Beacon acquisition, which was announced in May and completed in the fourth quarter.  The third quarter effective income tax rate increased in line with expectations to about 33% due to the higher level of pretax income in relation to the Company's tax advantaged investments.

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Wednesday, October 24, 2012 to discuss the results for the quarter and provide guidance about expected future results.  Participants should dial-in to the call a few minutes before it begins.  Information about the conference call follows:

Dial-in:                

877-883-0383

Elite Entry Number:    

4373108

Webcast:                      

www.berkshirebank.com (investor relations link)

A telephone replay of the call will be available through Wednesday, October 31, 2012 by calling 877-344-7529 and entering conference number: 10018914.  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). Including the acquisition of Beacon Federal Bancorp, the Company has approximately $5.5 billion in assets and 73 full service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management 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). 

FORWARD LOOKING STATEMENTS

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

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, restructuring costs, and systems conversion costs.  Similarly, the efficiency ratio is also adjusted for these non-core items and for tax preference items.  The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.  Non-GAAP expense adjustments are primarily related to charges related to merger and acquisition activity.  These charges consist primarily of severance/benefit related expenses, contract termination costs, and professional fees.  There are additionally non-GAAP adjustments related to non-recurring securities gains, discontinued operations, the disposition of excess properties, and core systems conversion costs.  Tax adjustments are based on an analysis of tax accruals for core income and for GAAP income, with the net difference included with non-core items and reflecting the timing impacts of tax expense estimates.

CONTACTS

Investor Relations Contact David Gonci Investor Relations Officer 413-281-1973

Media Contact Lori Gazzillo AVP, Community Relations 413-822-1695

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)

September 30,

June 30,

December 31,

(In thousands)

2012

2012

2011

Assets

Cash and due from banks

$              48,214

$               44,696

$             46,713

Short-term investments

33,834

21,790

28,646

Trading security

17,237

17,365

17,395

Securities available for sale, at fair value

467,444

471,368

419,756

Securities held to maturity, at amortized cost

51,156

41,822

58,912

Federal Home Loan Bank stock and other restricted securities

37,135

37,174

37,118

Total securities

572,972

567,729

533,181

Loans held for sale

114,698

59,280

1,455

Residential mortgages

1,226,022

1,193,447

1,020,435

Commercial mortgages

1,255,172

1,281,058

1,156,241

Commercial business loans

568,781

519,684

410,292

Consumer loans

368,417

371,430

369,602

Total loans

3,418,392

3,365,619

2,956,570

Less: Allowance for loan losses

(33,090)

(32,868)

(32,444)

Net loans

3,385,302

3,332,751

2,924,126

Premises and equipment, net

70,707

68,569

60,139

Other real estate owned

1,399

827

1,900

Goodwill 

220,688

220,360

202,391

Other intangible assets

17,991

19,505

20,973

Cash surrender value of bank-owned life insurance

76,904

76,290

75,009

Other assets

91,525

95,926

91,309

Assets from discontinued operations

-

-

5,362

Total assets

$         4,634,234

$          4,507,723

$        3,991,204

Liabilities and stockholders' equity

Demand deposits

$            560,452

$             535,472

$           447,414

NOW deposits

296,219

298,236

272,204

Money market deposits

1,183,247

1,158,562

1,055,306

Savings deposits

381,604

371,668

350,517

Total non-maturity deposits

2,421,522

2,363,938

2,125,441

Time deposits

1,028,286

1,045,767

975,734

Total deposits

3,449,808

3,409,705

3,101,175

Borrowings

447,246

452,527

221,938

Subordinated debentures

89,602

15,464

15,464

Total borrowings

536,848

467,991

237,402

Other liabilities 

56,657

46,757

43,758

Liabilities from discontinued operations

-

-

55,504

Total liabilities

4,043,313

3,924,453

3,437,839

Total common stockholders' equity

590,921

583,270

553,365

Total liabilities and stockholders' equity

$         4,634,234

$          4,507,723

$        3,991,204

(1) At year end 2011, four branches were held for sale as discontinued operations and sold as of January 20, 2012.

(2) The Company acquired The Connecticut Bank and Trust Company ("CBT") on April 20, 2012 with total assets of $0.3 billion.

(3) The Company purchased certain assets and assumed certain limited liabilities of Greenpark Mortgage Corporation ("Greenpark") on April 30, 2012 with total assets of $0.1 billion.

 

BERKSHIRE HILLS BANCORP, INC.

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

LOAN ANALYSIS

Organic annualized growth %

(Dollars in millions)

September 30,  2012 Balance

June 30,  2012 Balance

Impact of CBT Merger Balance

December 31, 2011 Balance

Quarter ended Sept. 30, 2012

Year to date

Total residential mortgages

$               1,226

$               1,194

$                      7

$               1,020

11

%

26

%

Total commercial loans

1,824

1,801

187

1,567

5

6

Total consumer loans

368

371

13

370

(3)

(5)

Total loans

$               3,418

$               3,366

$                  207

$               2,957

6

%

11

%

DEPOSIT ANALYSIS

Organic annualized growth %

(Dollars in millions)

September 30,  2012 Balance

June 30,  2012 Balance

Impact of CBT Merger Balance

December 31, 2011 Balance

Quarter ended Sept. 30, 2012

Year to date

Demand/NOW

$                  857

$                  834

$                    77

$                  719

11

%

11

%

Money market

1,182

1,158

60

1,055

8

8

Savings

382

372

2

351

11

11

Total non-maturity deposits

2,421

2,364

139

2,125

10

10

Total time deposits

1,028

1,046

72

976

(7)

(3)

Total deposits

$               3,449

$               3,410

$                  211

$               3,101

5

%

6

%

(1)  Organic annualized growth rates are calculated on organic growth only, which excludes the impact of mergers and divestitures.  

(2)  Quarterly data may not sum to annualized data due to rounding.

 

BERKSHIRE HILLS BANCORP, INC.

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands, except per share data)

2012

2011

2012

2011

Interest and dividend income    

Loans

$        39,497

$        35,719

$      113,335

$        88,932

Securities and other    

3,626

3,547

11,116

10,300

Total interest and dividend income    

43,123

39,266

124,451

99,232

Interest expense

Deposits

5,628

6,097

16,612

17,580

Borrowings and subordinated debentures

2,270

2,131

6,416

6,267

Total interest expense    

7,898

8,228

23,028

23,847

Net interest income

35,225

31,038

101,423

75,385

Non-interest income

Loan related fees

5,646

934

10,543

2,305

Deposit related fees

3,775

3,885

11,238

9,792

Insurance commissions and fees    

2,742

2,431

8,256

8,943

Wealth management fees    

1,774

1,607

5,431

4,188

Total fee income    

13,937

8,857

35,468

25,228

Other

375

(158)

885

(355)

Gain on sale of securities, net    

-

-

7

6

Non-recurring gain

1

1,975

43

2,099

Total non-interest income      

14,313

10,674

36,403

26,978

Total net revenue

49,538

41,712

137,826

102,363

Provision for loan losses   

2,500

2,200

6,750

5,300

Non-interest expense

Compensation and benefits

15,992

13,195

45,219

36,373

Occupancy and equipment     

4,599

3,883

13,484

10,864

Technology and communications

2,302

1,996

6,518

4,993

Marketing and promotion     

419

498

1,548

1,120

Professional services

1,327

1,375

4,185

3,523

FDIC premiums and assessments

907

923

2,458

2,691

Other real estate owned and foreclosures

42

541

215

1,850

Amortization of intangible assets     

1,314

1,271

3,982

2,922

Non-recurring and merger related expenses     

2,214

9,091

10,522

16,250

Other

3,046

1,937

8,409

5,936

Total non-interest expense     

32,162

34,710

96,540

86,522

Income from continuing operations before income taxes       

14,876

4,802

34,536

10,541

Income tax expense

4,847

405

10,040

1,432

Net income from continuing operations

10,029

4,397

24,496

9,109

Loss from discontinued operations before income taxes

     (including gain on disposal of $63)

-

(8)

(261)

(8)

Income tax expense

-

(3)

376

(3)

Net loss from discontinued operations

-

(5)

(637)

(5)

Net income 

$        10,029

$          4,392

$        23,859

$          9,104

Basic and diluted earnings per share:

Continuing operations

$            0.46

$            0.22

$            1.14

$            0.54

Discontinued operations

-

-

(0.03)

-

Total basic and diluted earnings per share

$            0.46

$            0.22

$            1.11

$            0.54

Weighted average shares outstanding:      

Basic

21,921

20,009

21,541

16,863

Diluted

22,031

20,105

21,635

16,915

(1) The Company acquired Rome Bancorp on April 1, 2011.  The income statement includes operations from that date. 

(2) The Company acquired Legacy Bancorp on July 21, 2011.  The income statement includes operations from that date. 

(3) The Company acquired CBT on April 20, 2012. The income statement includes operations from that date.

(4) The Company purchased certain assets and assumed certain limited liabilities of Greenpark on April 30, 2012.  The income statement includes operations from that date.

 

BERKSHIRE HILLS BANCORP, INC.

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

Quarters Ended

(In thousands, except per share data)

Sept. 30,

2012

June 30,

2012

Mar. 31,

2012

Dec. 31,

2011

Sept. 30,

2011

Interest and dividend income    

Loans

$      39,497

$      38,787

$      35,051

$      35,466

$      35,719

Securities and other    

3,626

3,869

3,621

3,562

3,547

Total interest and dividend income    

43,123

42,656

38,672

39,028

39,266

Interest expense

Deposits

5,628

5,482

5,502

5,792

6,097

Borrowings and subordinated debentures

2,270

2,121

2,025

2,101

2,131

Total interest expense    

7,898

7,603

7,527

7,893

8,228

Net interest income

35,225

35,053

31,145

31,135

31,038

Non-interest income

Loan related fees

5,646

3,524

1,373

856

934

Deposit related fees

3,775

3,963

3,500

3,848

3,885

Insurance commissions and fees    

2,742

2,768

2,746

2,145

2,431

Wealth management fees    

1,774

1,757

1,900

1,650

1,607

Total fee income    

13,937

12,012

9,519

8,499

8,857

Other

375

269

241

318

(158)

Gain on sale of securities, net     

-

7

-

8

-

Non-recurring gain

1

-

42

-

1,975

Total non-interest income      

14,313

12,288

9,802

8,825

10,674

Total net revenue

49,538

47,341

40,947

39,960

41,712

Provision for loan losses   

2,500

2,250

2,000

2,263

2,200

Non-interest expense

Compensation and benefits

15,992

15,638

13,589

13,172

13,195

Occupancy and equipment     

4,599

4,490

4,395

4,063

3,883

Technology and communications

2,302

2,258

1,958

2,464

1,996

Marketing and promotion  

419

778

351

419

498

Professional services

1,327

1,493

1,365

1,146

1,375

FDIC premiums and assessments

907

870

681

542

923

Other real estate owned and foreclosures

42

(6)

179

153

541

Amortization of intangible assets     

1,314

1,357

1,311

1,314

1,271

Non-recurring and merger related expenses     

2,214

4,085

4,223

3,678

9,091

Other

3,046

3,221

2,142

2,579

1,937

Total non-interest expense     

32,162

34,184

30,194

29,530

34,710

Income from continuing operations before income taxes       

14,876

10,907

8,753

8,167

4,802

Income tax expense 

4,847

2,921

2,272

609

405

Net income from continuing operations

10,029

7,986

6,481

7,558

4,397

(Loss) gain from discontinued operations before income taxes 

       (including gain on disposals)

-

-

(261)

4,692

(8)

Income tax expense (benefit)

-

-

376

3,773

(3)

Net (loss) gain from discontinued operations

-

-

(637)

919

(5)

Net income 

$      10,029

$        7,986

$        5,844

$        8,477

$        4,392

Basic and diluted earnings per share:

Continuing operations

$          0.46

$          0.37

$          0.31

$          0.36

$          0.22

Discontinued operations

-

-

(0.03)

0.04

-

Total basic and diluted earnings per share

$          0.46

$          0.37

$          0.28

$          0.40

$          0.22

Weighted average shares outstanding:      

Basic

21,921

21,742

20,955

20,930

20,009

Diluted

22,031

21,806

21,062

21,043

20,105

(1) See notes on pages F-1 and F-3 regarding merger, acquisitions and divestiture.

 

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - (F-5)

At or for the Quarters Ended

Sept. 30,

2012

June 30,

2012

Mar. 31,

2012

Dec. 31,

2011

Sept. 30,

2011

(Dollars in thousands)

NON-PERFORMING ASSETS

Non-accruing loans:

Residential mortgages

$            8,440

$            8,525

$        8,281

$        7,010

$        4,750

Commercial mortgages

13,552

15,336

12,151

14,280

13,721

Commercial business loans

2,024

1,047

1,029

990

1,399

Consumer loans

1,823

1,209

1,411

1,954

1,834

Total non-accruing loans

25,839

26,117

22,872

24,234

21,704

Other real estate owned

1,399

827

439

1,900

2,200

Total non-performing assets

$          27,238

$          26,944

$      23,311

$      26,134

$      23,904

Total non-accruing loans/total loans

0.76%

0.78%

0.75%

0.82%

0.72%

Total non-performing assets/total assets

0.59%

0.60%

0.58%

0.65%

0.58%

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$          32,868

$          32,657

$      32,444

$      32,181

$      31,919

Charged-off loans

(2,353)

(2,102)

(1,923)

(2,313)

(2,061)

Recoveries on charged-off loans

75

63

136

313

123

Net loans charged-off

(2,278)

(2,039)

(1,787)

(2,000)

(1,938)

Provision for loan losses

2,500

2,250

2,000

2,263

2,200

Balance at end of period

$          33,090

$          32,868

$      32,657

$      32,444

$      32,181

Allowance for loan losses/total loans

0.97%

0.98%

1.07%

1.10%

1.07%

Allowance for loan losses/non-accruing loans

128%

126%

143%

134%

148%

NET LOAN CHARGE-OFFS

Residential mortgages

$             (243)

$             (886)

$         (381)

$         (449)

$         (292)

Commercial mortgages

(1,790)

(378)

(1,116)

(1,198)

(1,099)

Commercial business loans

(99)

(2)

(3)

(244)

(463)

Home equity 

(90)

(707)

(247)

(90)

7

Other consumer

(56)

(66)

(40)

(19)

(91)

Total, net

$          (2,278)

$          (2,039)

$      (1,787)

$      (2,000)

$      (1,938)

Net charge-offs (QTD annualized)/average loans 

0.27%

0.25%

0.24%

0.27%

0.27%

Net charge-offs (YTD annualized)/average loans 

0.25%

0.24%

0.24%

0.27%

0.27%

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS

30-89 Days delinquent

0.62%

0.41%

0.55%

0.55%

0.79%

90+ Days delinquent and still accruing

0.38%

0.49%

0.40%

0.34%

0.22%

Total accruing delinquent loans

1.00%

0.90%

0.95%

0.89%

1.01%

Non-accruing loans

0.76%

0.78%

0.75%

0.82%

0.72%

Total delinquent and non-accruing loans

1.76%

1.68%

1.70%

1.71%

1.73%

(1) Amounts related to loans and deposits of discontinued operations have not been reclassified on the above schedule, although they are reclassified out of loans and deposits on the balance sheet and income statement. 

 

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - (F-6)

At or for the Quarters Ended

Sept. 30,

June 30,

Mar. 31,

Dec. 31,

Sept. 30,

2012

2012

2012

2011

2011

PER SHARE DATA

Core earnings, diluted

$        0.52

$         0.47

$         0.45

$         0.44

$        0.43

Net earnings, diluted

0.46

0.37

0.28

0.40

0.22

Tangible book value

15.86

15.49

15.81

15.60

14.86

Total book value

26.60

26.31

26.28

26.17

25.87

Market price at period end

22.88

22.00

22.92

22.19

18.47

Dividends

0.17

0.17

0.17

0.17

0.16

PERFORMANCE RATIOS

Core return on assets

1.00

%

0.94

%

0.94

%

0.93

%

0.89

%

Return on assets

0.88

0.73

0.59

0.85

0.45

Core return on equity

7.81

7.13

6.80

6.74

6.50

Return on equity

6.89

5.58

4.23

6.16

3.31

Net interest margin, fully taxable equivalent

3.50

3.70

3.62

3.61

3.74

Fee income/Net interest and fee income

28.35

25.52

23.44

21.44

22.20

Efficiency ratio 

56.54

59.29

59.27

59.44

59.62

GROWTH

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

22

%

30

%

3

%

29

%

38

%

Total loans, year-to-date (annualized)

21

27

11

38

54

Total deposits, year-to-date (annualized)

12

16

11

41

63

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

34

45

43

33

28

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

106

110

40

(2)

(26)

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

30

39

50

53

50

FINANCIAL DATA   (In millions)

Total assets

$      4,634

$       4,508

$       4,029

$       3,991

$      4,087

Total loans

3,418

3,366

3,039

2,957

3,003

Allowance for loan losses

33

33

33

32

32

Total intangible assets

239

240

222

223

233

Total deposits

3,450

3,410

3,184

3,101

3,249

Total stockholders' equity

591

583

557

553

547

Total core income 

11.4

10.2

9.4

9.3

8.6

Total net income

10.0

8.0

5.8

8.5

4.4

ASSET QUALITY RATIOS

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

0.27

%

0.25

%

0.24

%

0.27

%

0.27

%

Non-performing assets/total assets

0.59

0.60

0.58

0.65

0.58

Allowance for loan losses/total loans

0.97

0.98

1.07

1.10

1.07

Allowance for loan losses/non-accruing loans

128

126

143

134

148

CAPITAL RATIOS

Stockholders' equity to total assets

12.75

%

12.94

%

13.82

%

13.86

%

13.38

%

Tangible stockholders' equity to tangible assets

8.01

8.04

8.80

8.76

8.15

(1)

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

(3)

Amounts related to loans and deposits of discontinued operations have not been reclassified on the above schedule, although they are reclassified out of loans and deposits on the balance sheet and income statement. 

 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - (F-7)

Quarters Ended

Sept. 30, 

June 30, 

Mar. 31, 

Dec. 31, 

Sept. 30, 

(In thousands)

2012

2012

2012

2011

2011

Assets

Loans:

Residential mortgages

$      1,207,635

$      1,167,007

$      1,057,903

$      1,039,025

$    1,004,950

Commercial mortgages

1,276,909

1,250,741

1,153,690

1,166,989

1,140,691

Commercial business loans

545,988

490,983

412,237

392,542

383,059

Consumer loans

368,795

375,090

366,035

376,385

376,754

Total loans

3,399,327

3,283,821

2,989,865

2,974,941

2,905,454

Securities

559,116

549,479

525,109

515,128

474,435

Short-term investments and loans held for sale

115,835

47,302

15,107

20,748

34,293

Total earning assets

4,074,278

3,880,602

3,530,081

3,510,817

3,414,182

Goodwill and other intangible assets

239,186

235,961

223,930

230,864

229,594

Other assets

258,246

235,712

235,909

247,376

226,757

Total assets

$      4,571,710

$      4,352,275

$      3,989,920

$      3,989,057

$    3,870,533

Liabilities and stockholders' equity

Deposits:

NOW

$         291,158

$         297,431

$         272,239

$         274,041

$       256,662

Money market

1,170,840

1,136,161

1,084,948

953,162

853,128

Savings

376,064

370,182

359,859

446,672

476,230

Time

1,039,301

1,038,662

983,696

1,028,817

1,029,555

Total interest-bearing deposits

2,877,363

2,842,436

2,700,742

2,702,692

2,615,575

Borrowings and debentures

531,076

398,650

257,389

248,611

253,018

Total interest-bearing liabilities

3,408,439

3,241,086

2,958,131

2,951,303

2,868,593

Non-interest-bearing demand deposits

537,466

498,972

439,015

448,952

432,381

Other liabilities 

43,047

39,665

40,039

38,110

38,431

Total liabilities

3,988,952

3,779,723

3,437,185

3,438,365

3,339,405

Total stockholders' equity

582,758

572,552

552,735

550,692

531,128

Total liabilities and stockholders' equity

$      4,571,710

$      4,352,275

$      3,989,920

$      3,989,057

$    3,870,533

Supplementary data

Total non-maturity deposits

$      2,375,528

$      2,302,746

$      2,156,061

$      2,122,827

$    2,018,401

Total deposits

3,414,829

3,341,408

3,139,757

3,151,644

3,047,956

Fully taxable equivalent income adj.

623

638

669

674

673

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

(2) Amounts related to loans and deposits of discontinued operations have not been reclassified on the above schedule, although they are reclassified out of loans and deposits on the balance sheet and income statement. 

 

BERKSHIRE HILLS BANCORP, INC.

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

Quarters Ended

Sept. 30,

June 30,

Mar. 31,

Dec. 31,

Sept. 30,

2012

2012

2012

2011

2011

Earning assets

Loans:

Residential mortgages

4.28

%

4.58

%

4.63

%

4.68

%

4.82

%

Commercial loans

4.85

5.00

4.89

4.98

5.27

Consumer loans

3.97

3.93

3.98

4.03

4.17

Total loans

4.62

4.75

4.72

4.74

4.97

Securities

3.02

3.30

3.29

3.26

3.53

Short-term investments and loans held for sale

2.15

1.55

0.07

0.14

0.03

Total earning assets

4.27

4.49

4.48

4.49

4.72

Funding liabilities