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Berkshire Hills Reports 20% Increase in First Quarter Core EPS; Dividend Announced

LOGO. (PRNewsFoto/Berkshire Hills Bancorp, Inc.) (PRNewsFoto/)

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Berkshire Hills Bancorp, Inc.

Apr 29, 2013, 04:05 ET

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PITTSFIELD, Mass., April 29, 2013 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported first quarter core earnings per share totaling $0.54 in 2013, which was a 20% increase over 2012 first quarter core EPS of $0.45.  First quarter core earnings reached a record $13.5 million, which was a 43% increase over prior year first quarter results.  Berkshire has entered its fourth year of consecutive quarterly core earnings growth due to ongoing business expansion and improved profitability.  Per share results include the impact of shares issued for bank acquisitions in 2012. 

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

First quarter GAAP earnings in both years included the impact of net non-core charges related primarily to merger and integration expenses which were generally within the range of the Company's expectations.  These net charges totaled $0.12 and $0.17 per share after-tax in first quarter 2013 and 2012, respectively.  Including these non-core items, first quarter GAAP net income was $0.42 and $0.28 per share in 2013 and 2012, respectively.

FIRST QUARTER FINANCIAL HIGHLIGHTS

  • 20% increase in core earnings per share, compared to first quarter of 2012
  • 39% increase in net revenue, compared to first quarter of 2012
  • 12% annualized increase in commercial business loans during quarter
  • 10% annualized increase in average deposit balances over prior quarter
  • 3.73% net interest margin, increased from 3.67% in the prior quarter
  • 57% efficiency ratio, improved from 60% in the prior quarter
  • 0.56% non-performing assets/total assets
  • 0.23% annualized net loan charge-offs/average loans

Berkshire Chairman and CEO Michael Daly stated, "We achieved our bottom line objective in the first quarter, with a 20% increase in core earnings per share compared to the same period in 2012.  This follows the 29% full year increase we achieved in 2012 for core EPS.  We are generating business in our new markets by leveraging our brand and culture with increasingly sophisticated products and technologies.  During the first quarter, we also completed the integration of our Beacon Syracuse operations.  We are improving our efficiency, and achieved a 7% annualized increase in core earnings compared to the most recent quarter." 

Mr. Daly continued, "We remain focused on commercial lending, driven by 12% annualized growth in commercial business loans in the most recent quarter. During this quarter, we also announced the recruitment of an experienced Eastern Massachusetts commercial banking team, as well as the recruitment of an experienced Syracuse commercial  leader.  Our mortgage and consumer lending revenue is benefiting from our 2012 expansion in Eastern Massachusetts and now in Central New York.  We continue to pursue our growth targets for the year based on our multiple initiatives." 

DIVIDEND DECLARED

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 May 16, 2013, payable on May 30, 2013. This dividend equates to a 2.9% annualized yield based on the $24.59 average closing price of Berkshire's common stock in the first quarter of 2013.    

FINANCIAL CONDITION

Berkshire managed its balance sheet in the first quarter to build targeted business volumes while repositioning assets acquired through bank acquisitions in 2012 and benefiting the loan yield.  Targeted fixed rate mortgages were replaced with shorter duration securities that support the asset sensitive balance sheet profile in the event of future higher interest rates.  Measures of asset quality, liquidity, and capital remained favorable.

Total commercial loans benefited from 12% annualized growth in commercial business loans during the first quarter.  Berkshire is building business loan volume in its markets while it targets relationships with middle market customers who require a full range of products and services provided by a responsive local banking partner.  Total originations of commercial loan commitments were up 23% from the prior quarter and 48% from the prior year first quarter.  Collections of acquired impaired and other targeted commercial credit balances were approximately $19 million, or 4% of total commercial loans on an annualized basis, as the Company continues to make progress with integrating and optimizing acquired bank portfolios to contribute to its balanced portfolio growth objectives.  In the most recent quarter, Berkshire expanded its commercial lending program, including an experienced new team in Eastern Massachusetts, a new commercial leader in its recently acquired Syracuse market, and team additions in the Hartford/Springfield region.  These teams are expected to contribute to increased commercial originations in these regional markets where Berkshire increased its presence in 2012.

Asset quality metrics remained favorable in the most recent quarter.  Quarter-end non-performing assets were 0.56% of total assets.  Net loan charge-offs measured 0.23% of average loans, which was the lowest level in the last five quarters.   Accruing delinquent loans declined slightly to 1.08% of total loans during the quarter.  The loan loss allowance increased slightly to 0.86% of total loans during this period.  For loans from business activities (excluding acquired loans), net charge-offs averaged 0.26% and the related allowance measured 1.22% of these loans. 

Ongoing deposit acquisition resulted in 10% annualized growth in total average deposits, including 10% annualized growth in average transaction balances.  Outstanding balances were affected by seasonal factors at the start and end of the period.  Berkshire promotes lower cost transaction accounts as a focus of relationship based business development for retail and business accounts. 

Stockholders' equity increased based on retained earnings.  Tangible book value per share increased at a 6% annualized rate to $15.87, while the ratio of tangible equity/assets improved to 8.1% from 7.8% during the quarter.  Total book value per share increased to $26.68 and total equity/assets improved to 12.8%.  Near the end of the quarter, Berkshire announced that it had completed the repurchase of approximately 100 thousand outstanding common shares and authorized a new 500 thousand share repurchase program which will be available indefinitely for future stock buybacks.

RESULTS OF OPERATIONS

Berkshire posted strong growth in first quarter revenue, earnings, and earnings per share in 2013 compared to 2012.  Core profitability improved as a result of the positive operating leverage attributable to revenue growth and disciplined expense management.  Berkshire is achieving these results while bearing the costs of maintaining its asset sensitive interest rate risk profile, absorbing charges related to its branch and team expansion, and investing in technology and other infrastructure.  Results in 2013 included the operations of The Connecticut Bank and Trust Company and Beacon Federal Bancorp, along with mortgage operations in Eastern Massachusetts - all of which were acquired after the first quarter of 2012. 

The first quarter core return on equity was 8.1% in 2013, compared to 6.8% in 2012.  Including the amortization of intangible assets, Berkshire generated $0.59 in tangible equity per share, which equated to a 15.1% annualized return on starting tangible equity in the most recent quarter.  First quarter GAAP return on equity included net non-core charges and measured 6.3% and 4.2% in 2013 and 2012, respectively.  The reconciliation of net income and core income, together with related profitability measures, is shown on table F-9 of the financial tables. 

Berkshire's total first quarter net revenue increased by 39% to $57 million in 2013 compared to 2012.  Compared to the linked quarter, first quarter net interest income benefited from a 2% annualized increase in average loan balances and a 6 basis point increase in the net interest margin.  Net interest income declined slightly compared to the prior quarter due to fewer days in the first quarter of the year.

The net interest margin improved to 3.73% from 3.67% in the prior quarter and from 3.62% in the first quarter of 2012.  The improvement compared to the linked quarter included the benefit of lower amortization of mortgage premiums due to a decline in residential mortgage prepayment speeds.  Net interest income includes the net benefit from loan purchase accounting accretion which totaled $3.8 million and $3.2 million in the two most recent respective quarters, including approximately $2.3 million in each quarter from the collection of acquired impaired loans. 

Compared to the prior quarter, changes in fee income included seasonal factors for deposit and insurance fees.  Loan related fees decreased primarily due to lower volumes and margins in mortgage banking operations, including seasonal factors and processing related costs.  Wealth management fees increased by 21% to a quarterly record of $2.3 million compared to the prior quarter including the benefit of higher volume and stronger margins related to improved securities market conditions.

The first quarter provision for loan losses increased to $2.4 million in 2013 from $2.0 million in 2012.  Net loan charge-offs totaled $2.3 million and $1.8 million in these periods, respectively.  There were no significant changes in the Company's favorable charge-off metrics.  Following the loan loss provision, the loan loss allowance increased to $33.3 million from $33.2 million during the quarter.

First quarter 2013 non-interest expense totaled $39.5 million.  This included $5.1 million in non-recurring and merger related expense primarily related to the completion of the Beacon Federal acquisition and the related systems conversion.  Berkshire has substantially completed its projected cost savings and efficiencies totaling approximately $5.5 million annualized based on a 30% gross cost saving expectation for these acquired operations.  Net of the above charges, core first quarter non-interest expense totaled $34.4 million.  Most major categories of expense were flat or down from the prior quarter; the Company consolidated two New York branches during this period.  The efficiency ratio improved to 57% due to expense reductions from the prior quarter.  The core effective income tax rate was 32% in the most recent quarter.  This rate increased from 30% for the prior fiscal year due to higher expected pretax income in 2013 based on Berkshire's growth and the lower proportionate benefit of tax preference items. 

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. Eastern Time on Tuesday, April 30, 2013 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:           

888-317-6003

Elite Entry Number:       

3920732

Webcast:                    

berkshirebank.com (investor relations link)



A telephone replay of the call will be available through Tuesday, May 7, 2013 by calling 877-344-7529 and entering conference number: 10027117.  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®. The Company has approximately $5.2 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. 

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.gov.  Berkshire 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
Allison O'Rourke; Vice President - Investor Relations; 413-236-3149

Media Contact
Ray Smith, Assistant Vice President – Marketing; 413-236-3756

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)




March 31,


December 31,


(In thousands)

2013


2012


Assets





Cash and due from banks

$              53,683


$             63,382


Short-term investments

20,648


34,862


Total cash and short-term investments

74,331


98,244







Trading security

16,485


16,893


Securities available for sale, at fair value

558,875


466,169


Securities held to maturity, at amortized cost

50,472


51,024


Federal Home Loan Bank stock and other restricted securities

37,870


39,785


Total securities

663,702


573,871







Loans held for sale

72,348


85,368







Residential mortgages

1,234,616


1,324,251


Commercial mortgages

1,397,142


1,413,544


Commercial business loans

618,342


600,126


Consumer loans

638,972


650,733


Total loans

3,889,072


3,988,654


Less: Allowance for loan losses

(33,263)


(33,208)


Net loans

3,855,809


3,955,446







Premises and equipment, net

88,181


86,461


Other real estate owned

2,513


1,929


Goodwill 

255,529


255,199


Other intangible assets

17,682


19,059


Cash surrender value of bank-owned life insurance

88,893


88,198


Deferred tax asset

56,581


57,729


Other assets

69,765


75,305


Total assets

$         5,245,334


$        5,296,809







Liabilities and stockholders' equity





Demand deposits

$            656,706


$           673,921


NOW deposits

374,721


379,880


Money market deposits

1,504,092


1,439,632


Savings deposits

451,959


436,387


Total non-maturity deposits

2,987,478


2,929,820


Time deposits

1,113,113


1,170,589


Total deposits

4,100,591


4,100,409







Senior borrowings

309,598


358,471


Subordinated notes

89,632


89,617


Total borrowings

399,230


448,088







Other liabilities 

71,631


81,047


Total liabilities

4,571,452


4,629,544







Total stockholders' equity

673,882


667,265


Total liabilities and stockholders' equity

$         5,245,334


$        5,296,809







(1) Certain reclassifications have been made to prior year balances to conform to the current year presentation.

BERKSHIRE HILLS BANCORP, INC.

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


LOAN ANALYSIS
















Annualized growth %

(Dollars in millions)


March 31, 2013
Balance



Dec. 31, 2012
Balance


Quarter end
March 31, 2013










Total residential mortgages


$                                  1,235



$                        1,324


(27)

%










Commercial mortgages:









Construction


169



168


3


Single and multi-family


143



124


63


Commercial real estate


1,085



1,122


(13)


Total commercial mortgages

1,397



1,414


(5)











Total commercial business loans

618



600


12











Total commercial loans


2,015



2,014


0











Consumer loans:









Home equity 


317



325


(10)


Other


322



326


(6)


Total consumer loans


639



651


(7)


Total loans


$                                  3,889



$                        3,989


(10)

%



















DEPOSIT ANALYSIS
















Annualized growth %

(Dollars in millions)


March 31, 2013
Balance



Dec. 31, 2012
Balance


Quarter end 
March 31, 2013

Demand


$                                     656



$                           674


(11)

%

NOW


375



380


(5)


Money market


1,504



1,440


18


Savings


452



436


15


Total non-maturity deposits


2,987



2,930


8











Total time deposits


1,113



1,170


(19)


Total deposits


$                                  4,100



$                        4,100


0

%










(1)  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



March 31,


(In thousands, except per share data)

2013


2012


Interest and dividend income    





Loans

$        47,081


$        35,051


Securities and other    

3,800


3,621


Total interest and dividend income    

50,881


38,672


Interest expense





Deposits

5,363


5,502


Borrowings and subordinated debentures

3,581


2,025


Total interest expense    

8,944


7,527


Net interest income

41,937


31,145


Non-interest income





Loan related fees

4,934


1,373


Deposit related fees

4,259


3,500


Insurance commissions and fees    

2,997


2,746


Wealth management fees    

2,264


1,900


Total fee income    

14,454


9,519


Other

344


241


Non-recurring gain

-


42


Total non-interest income      

14,798


9,802


Total net revenue

56,735


40,947


Provision for loan losses   

2,400


2,000


Non-interest expense





Compensation and benefits

17,741


13,589


Occupancy and equipment     

5,768


4,395


Technology and communications

2,991


1,958


Marketing and promotion     

638


351


Professional services

1,490


1,365


FDIC premiums and assessments

828


681


Other real estate owned and foreclosures

23


179


Amortization of intangible assets     

1,377


1,311


Non-recurring and merger related expenses     

5,064


4,223


Other

3,563


2,142


Total non-interest expense     

39,483


30,194







Income from continuing operations before income taxes       

14,852


8,753


Income tax expense

4,387


2,272


Net income from continuing operations

10,465


6,481


Loss from discontinued operations before income taxes 





     (including gain on disposals of $63)

-


(261)


Income tax expense

-


376


Net loss from discontinued operations

-


(637)


Net income 

$        10,465


$          5,844







Basic and diluted earnings per share:





Continuing operations

$            0.42


$            0.31


Discontinued operations

-


(0.03)


Total basic and diluted earnings per share

$            0.42


$            0.28







Weighted average shares outstanding:      





Basic

24,927


20,955


Diluted

25,136


21,062












BERKSHIRE HILLS BANCORP, INC.

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




Quarters Ended


Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


(In thousands, except per share data)

2013


2012


2012


2012


2012


Interest and dividend income    











Loans

$      47,081


$      47,601


$      39,497


$      38,787


$      35,051


Securities and other    

3,800


3,887


3,626


3,869


3,621


Total interest and dividend income    

50,881


51,488


43,123


42,656


38,672


Interest expense











Deposits

5,363


5,870


5,628


5,482


5,502


Borrowings and subordinated debentures

3,581


3,653


2,270


2,121


2,025


Total interest expense    

8,944


9,523


7,898


7,603


7,527


Net interest income

41,937


41,965


35,225


35,053


31,145


Non-interest income











Loan related fees

4,934


7,012


5,646


3,524


1,373


Deposit related fees

4,259


4,355


3,775


3,963


3,500


Insurance commissions and fees    

2,997


2,565


2,742


2,768


2,746


Wealth management fees    

2,264


1,865


1,774


1,757


1,900


Total fee income    

14,454


15,797


13,937


12,012


9,519


Other

344


421


375


269


241


Gain on sale of securities, net     

-


1,435


-


7


-


Non-recurring gain

-


-


1


-


42


Total non-interest income      

14,798


17,653


14,313


12,288


9,802


Total net revenue

56,735


59,618


49,538


47,341


40,947


Provision for loan losses   

2,400


2,840


2,500


2,250


2,000


Non-interest expense











Compensation and benefits

17,741


18,862


15,992


15,638


13,589


Occupancy and equipment     

5,768


5,985


4,599


4,490


4,395


Technology and communications

2,991


2,949


2,302


2,258


1,958


Marketing and promotion  

638


483


419


778


351


Professional services

1,490


1,600


1,327


1,493


1,365


FDIC premiums and assessments

828


919


907


870


681


Other real estate owned and foreclosures

23


66


42


(6)


179


Amortization of intangible assets     

1,377


1,357


1,314


1,357


1,311


Non-recurring and merger related expenses     

5,064


7,497


2,214


4,085


4,223


Other

3,563


4,548


3,046


3,221


2,142


Total non-interest expense     

39,483


44,266


32,162


34,184


30,194













Income from continuing operations before income taxes       

14,852


12,512


14,876


10,907


8,753


Income tax expense 

4,387


3,183


4,847


2,921


2,272


Net income from continuing operations

10,465


9,329


10,029


7,986


6,481


Loss from discontinued operations before income taxes 











     (including gain on disposals of $63)

-


-


-


-


(261)


Income tax expense

-


-


-


-


376


Net loss from discontinued operations

-


-


-


-


(637)


Net income 

$      10,465


$        9,329


$      10,029


$        7,986


$        5,844
























Basic earnings per share:











Continuing operations

$          0.42


$          0.39


$          0.46


$          0.37


$          0.31


Discontinued operations

-


-


-


-


(0.03)


Total basic earnings per share

$          0.42


$          0.39


$          0.46


$          0.37


$          0.28













Diluted earnings per share:











Continuing operations

$          0.42


$          0.38


$          0.46


$          0.37


$          0.31


Discontinued operations

-


-


-


-


(0.03)


Total diluted earnings per share

$          0.42


$          0.38


$          0.46


$          0.37


$          0.28













Weighted average shares outstanding:      











Basic

24,927


24,165


21,921


21,742


20,955


Diluted

25,136


24,396


22,031


21,806


21,062













(1) The Company acquired The Connecticut Bank and Trust Company on April 20, 2012, purchased certain assets and assumed certain
limited
liabilities of Greenpark Mortgage Corporation on April 30, 2012, and acquired Beacon Federal Bancorp on October 19, 2012. The
income
statements include operations of the acquired institutions as of those dates.

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - (F-5)

















At or for the Quarters Ended




Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


(Dollars in thousands)



2013


2012


2012


2012


2012


NON-PERFORMING ASSETS













Non-accruing loans:













Residential mortgages



$            8,818


$          7,466


$        8,440


$        8,525


$        8,281


Commercial mortgages



12,396


12,617


13,552


15,336


12,151


Commercial business loans



3,519


3,681


2,024


1,047


1,029


Consumer loans



2,325


1,748


1,823


1,209


1,411


Total non-accruing loans



27,058


25,512


25,839


26,117


22,872


Other real estate owned



2,513


1,929


1,399


827


439


Total non-performing assets



$          29,571


$        27,441


$      27,238


$      26,944


$      23,311















Total non-accruing loans/total loans



0.70%


0.64%


0.76%


0.78%


0.75%


Total non-performing assets/total assets



0.56%


0.52%


0.59%


0.60%


0.58%















PROVISION AND ALLOWANCE FOR LOAN LOSSES











Balance at beginning of period



$          33,208


$        33,090


$      32,868


$      32,657


$      32,444


Charged-off loans



(2,501)


(3,073)


(2,353)


(2,102)


(1,923)


Recoveries on charged-off loans



156


351


75


63


136


Net loans charged-off



(2,345)


(2,722)


(2,278)


(2,039)


(1,787)


Provision for loan losses



2,400


2,840


2,500


2,250


2,000


Balance at end of period



$          33,263


$        33,208


$      33,090


$      32,868


$      32,657















Allowance for loan losses/total loans



0.86%


0.83%


0.97%


0.98%


1.07%


Allowance for loan losses/non-accruing loans


123%


130%


128%


126%


143%















NET LOAN CHARGE-OFFS













Residential mortgages



$             (260)


$         (1,034)


$         (243)


$         (886)


$         (381)


Commercial mortgages



(952)


(893)


(1,790)


(378)


(1,116)


Commercial business loans



(631)


(496)


(99)


(2)


(3)


Home equity 



(199)


(22)


(90)


(707)


(247)


Other consumer



(303)


(277)


(56)


(66)


(40)


Total, net



$          (2,345)


$         (2,722)


$      (2,278)


$      (2,039)


$      (1,787)















Net charge-offs (QTD annualized)/average loans 


0.23%


0.28%


0.27%


0.25%


0.24%


Net charge-offs (YTD annualized)/average loans 


0.23%


0.26%


0.25%


0.24%


0.24%















DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS










30-89 Days delinquent



0.61%


0.63%


0.62%


0.41%


0.55%


90+ Days delinquent and still accruing



0.47%


0.48%


0.38%


0.49%


0.40%


Total accruing delinquent loans



1.08%


1.11%


1.00%


0.90%


0.95%


Non-accruing loans



0.70%


0.64%


0.76%


0.78%


0.75%


Total delinquent and non-accruing loans



1.78%


1.75%


1.76%


1.68%


1.70%















(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





Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,






2013


2012


2012


2012


2012

















PER SHARE DATA













Core earnings, diluted

$        0.54


$         0.54


$         0.52


$         0.47


$        0.45




Net earnings, diluted

0.42


0.38


0.46


0.37


0.28




Tangible book value

15.87


15.63


15.86


15.49


15.81




Total book value

26.68


26.53


26.60


26.31


26.28




Market price at period end

25.54


23.86


22.88


22.00


22.92




Dividends


0.18


0.18


0.17


0.17


0.17

















PERFORMANCE RATIOS













Core return on assets

1.03

%

1.02

%

1.00

%

0.94

%

0.94

%



Return on assets

0.80


0.72


0.88


0.73


0.59




Core return on equity

8.10


8.32


7.81


7.13


6.80




Return on equity

6.28


5.86


6.89


5.58


4.23




Net interest margin, fully taxable equivalent

3.73


3.67


3.50


3.70


3.62




Fee income/Net interest and fee income

25.63


27.35


28.35


25.52


23.44




Efficiency ratio 

57.14


59.68


56.54


59.29


59.27

















GROWTH














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

0

%

29

%

22

%

30

%

3

%



Total loans, year-to-date (annualized)

(10)


35


21


27


11




Total deposits, year-to-date (annualized)

0


30


12


16


11




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

39


39


34


45


43




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

50


62


106


110


40




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

20


29


30


39


50

















FINANCIAL DATA   (In millions)













Total assets


$      5,245


$       5,297


$       4,634


$       4,508


$      4,029




Total earning assets

4,646


4,683


4,140


4,014


3,585




Total loans


3,889


3,989


3,418


3,366


3,039




Allowance for loan losses

33


33


33


33


33




Total intangible assets

273


274


239


240


222




Total deposits


4,101


4,100


3,450


3,410


3,184




Total stockholders' equity

674


667


591


583


557




Total core income 

13.5


13.2


11.4


10.2


9.4




Total net income

10.5


9.3


10.0


8.0


5.8

















ASSET QUALITY RATIOS













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

0.23

%

0.28

%

0.27

%

0.25

%

0.24

%



Allowance for loan losses/total loans

0.86


0.83


0.97


0.98


1.07

















CAPITAL RATIOS













Stockholders' equity to total assets

12.85

%

12.60

%

12.75

%

12.94

%

13.82

%



Tangible stockholders' equity to tangible assets

8.06


7.82


8.01


8.04


8.80































(1)

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



Tangible assets are total assets less total intangible assets.


(2)

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


(3)

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


Mar. 31, 


Dec. 31, 


Sept. 30, 


June 30, 


Mar. 31, 

(In thousands)

2013


2012


2012


2012


2012

Assets










Loans:










Residential mortgages

$      1,290,989


$      1,340,375


$      1,207,635


$      1,167,007


$    1,057,903

Commercial mortgages

1,406,628


1,404,515


1,276,909


1,250,741


1,153,690

Commercial business loans

601,695


580,436


545,988


490,983


412,237

Consumer loans

644,674


598,802


368,795


375,090


366,035

Total loans

3,943,986


3,924,128


3,399,327


3,283,821


2,989,865

Securities

591,304


572,268


559,116


549,479


525,109

Short-term investments and loans held for sale

98,160


126,378


115,835


47,302


15,107

Total earning assets

4,633,450


4,622,774


4,074,278


3,880,602


3,530,081

Goodwill and other intangible assets

273,428


267,588


239,186


235,961


223,930

Other assets

333,485


312,665


258,246


235,712


235,909

Total assets

$      5,240,363


$      5,203,027


$      4,571,710


$      4,352,275


$    3,989,920











Liabilities and stockholders' equity










Deposits:










NOW

$         368,392


$         355,366


$         291,158


$         297,431


$       272,239

Money market

1,477,497


1,404,113


1,170,840


1,136,161


1,084,948

Savings

441,547


422,447


376,064


370,182


359,859

Time

1,148,345


1,161,175


1,039,301


1,038,662


983,696

Total interest-bearing deposits

3,435,781


3,343,101


2,877,363


2,842,436


2,700,742

Borrowings and debentures

423,739


519,831


531,076


398,650


257,389

Total interest-bearing liabilities

3,859,520


3,862,932


3,408,439


3,241,086


2,958,131

Non-interest-bearing demand deposits

645,923


635,044


537,466


498,972


439,015

Other liabilities 

68,509


68,475


43,047


39,665


40,039

Total liabilities

4,573,952


4,566,451


3,988,952


3,779,723


3,437,185











Total stockholders' equity

666,411


636,576


582,758


572,552


552,735











Total liabilities and stockholders' equity

$      5,240,363


$      5,203,027


$      4,571,710


$      4,352,275


$    3,989,920





















Supplementary data










Total non-maturity deposits

$      2,933,359


$      2,816,970


$      2,375,528


$      2,302,746


$    2,156,061

Total deposits

4,081,704


3,978,145


3,414,829


3,341,408


3,139,757

Fully taxable equivalent income adjustment

629


667


623


638


669





















(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


Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,



2013


2012


2012


2012


2012













Earning assets











Loans:











Residential mortgages

4.04

%

4.00

%

4.28

%

4.58

%

4.63

%

Commercial loans

5.24


5.29


4.85


5.00


4.89


Consumer loans

4.94


4.56


3.97


3.93


3.98


Total loans

4.75


4.73


4.62


4.75


4.72


Securities

3.04


3.17


3.02


3.30


3.29


Short-term investments and loans held for sale

1.83


2.86


2.15


0.63


0.07


Total earning assets

4.51


4.49


4.27


4.49


4.48













Funding liabilities











Deposits:











NOW

0.29


0.35


0.28


0.30


0.26


Money market

0.39


0.43


0.47


0.49


0.55


Savings

0.18


0.20


0.18


0.18


0.20


Time

1.23


1.31


1.48


1.44


1.51


Total interest-bearing deposits

0.63


0.70


0.78


0.78


0.82


Borrowings and debentures

3.43


2.80


1.70


2.14


3.16


Total interest-bearing liabilities

0.94


0.98


0.92


0.95


1.02













Net interest spread

3.57


3.51


3.35


3.54


3.46


Net interest margin

3.73


3.67


3.50


3.70


3.62













Cost of funds

0.81


0.84


0.80


0.82


0.89


Cost of deposits

0.53


0.59


0.66


0.66


0.71













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

(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.


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










At or for the Quarters Ended




Mar. 31, 


Dec. 31, 


Sept. 30,