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Berkshire Hills Reports Record Earnings for 2013; Board Change; Annual Meeting Date Set; Dividend Declared

PITTSFIELD, Mass., Jan. 27, 2014 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported record net income totaling $41 million in 2013, an increase of 24% compared to $33 million in the prior year.  Earnings per share increased by 11% to $1.65 and included the impact of shares issued in 2012 for bank acquisitions.  Core earnings increased to a record $47 million in 2013 primarily due to the benefit of growth in New York and Eastern Massachusetts.  Core earnings exclude net non-core charges for acquisitions, restructuring, and systems conversions.  Core earnings per share totaled $1.87 in 2013, compared to $1.98 in the prior year.

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

For the fourth quarter of 2013, Berkshire reported net income of $10.5 million ($0.42 per share), an increase of 13% over $9.3 million ($0.38 per share) in the fourth quarter of 2012.   Core earnings totaled $10.0 million ($0.40 per share) compared to $13.2 million ($0.54 per share) in 2012.  Year over year fourth quarter mortgage banking fees decreased by $5.4 million due to the decline in refinancing volumes driven by higher mortgage interest rates compared to the record low rates seen in the second half of 2012.

FOURTH QUARTER FINANCIAL HIGHLIGHTS

  • 16% annualized loan growth
  • 14% annualized growth in total commercial loans
  • 3% decrease in core non-interest expense compared to prior quarter
  • 7% decrease in core non-interest expense compared to second quarter
  • 0.53% non-performing assets/total assets
  • 0.31% net loan charge-offs/average loans

CEO Michael Daly stated, "We produced record revenue and earnings in 2013 due to ongoing expansion in our New England and New York footprint.  Loan growth was strong in all major categories in recent quarters and our goal is to produce further market share gains in 2014.  Fee revenues increased in the final months of the year and we further reduced operating expenses through our restructuring strategies.  We remain closely focused on the revenue and efficiency opportunities that we see for positive operating leverage based on the benefit of our expanded footprint and upgraded systems."

Mr. Daly continued, "We enter 2014 with further initiatives to build on our progress.  We recently completed the acquisition of 20 New York branches from Bank of America.  We welcomed more than 65,000 new customers, deepening our presence in the communities between Albany and Syracuse.  The Bank opened a new office in Loudonville, New York this month as part of our ongoing organic expansion.  The Bank has also expanded our brand awareness across our footprint through strategic media partnerships.  We will continue to be flexible and judicious in managing our growth with the objective of reliable and attractive returns to investors seeking a quality investment in these uncertain financial markets."

BOARD CHANGE

Berkshire also announced that Richard J. Murphy has been appointed to the Board of Directors, replacing Geno Auriemma, effective January 23, 2014.  Mr. Murphy serves as Vice President and General Manager of the Tri-City ValleyCats, a minor league baseball team based in Troy, New York.  With over 25 years of experience in professional sports management, Mr. Murphy brings to the Board a strong financial acumen, a solid background in brand and marketing, and close ties to the Albany, NY community. 

While Mr. Auriemma is stepping down from the Board, he will continue to serve as a spokesperson for Berkshire Bank.  As Board Chairman, Mr. Daly stated, "The Board thanks Mr. Auriemma for his significant contribution to expanding the America's Most Exciting Bank brand in Connecticut and we are pleased to be continuing that relationship.  We also congratulate him on his reappointment as the head coach of the U.S. Women's National Basketball Team and we wish him much success in his current season at the University of Connecticut."

ANNUAL MEETING DATE SET

The Board of Directors voted that the Annual Meeting of Shareholders shall be held on May 8, 2014 at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts at 10:00 a.m. The date of March 13, 2014 was established as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Annual Meeting.

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 February 13, 2014, payable on February 27, 2014.  This dividend equates to a 2.8% annualized yield based on the $25.97 average closing price of Berkshire's common stock during the fourth quarter of 2013.   

NEW YORK BRANCH ACQUISITION

On January 17, 2014, Berkshire acquired approximately $450 million in deposits from Bank of America, together with related assets, including approximately $4 million in loans.  Berkshire expects to use the proceeds to pay down certain borrowings and to purchase investment securities.  As part of this transaction, Berkshire acquired 20 branches in Central New York, two of which were consolidated as part of the transaction. 

FINANCIAL CONDITION

Berkshire increased its total assets by $223 million (4%) to $5.7 billion in the most recent quarter due to growth in loans and investment securities funded by borrowings.  For the year, total assets increased by 7%.  At year-end, measures of asset quality, liquidity, and capital remained within targets.  As of December 31, 2013, tangible book value per share increased to $16.27 and total book value per share grew to $27.08

Total loans increased by $157 million (16% annualized) in the fourth quarter, including double digit annualized growth in all major categories.  Berkshire's loan growth accelerated in the second half of the year, reflecting higher originations and a decline in runoff after the yield curve steepened in mid-year.  For the full year, loan growth was approximately 5% in total and in most major categories.  Growth of 15% in commercial business loans included contributions from new commercial banking teams recruited in Hartford, Syracuse, and Eastern Massachusetts.  In the latter market, Berkshire consolidated its commercial banking team into a new regional headquarters located on Route 128 in Burlington, and moved its Westborough regional team into a well located new commercial office.  During the year, Berkshire added a commercial leasing team and new leadership for its expanded small business lending program.  Berkshire also recruited additional mortgage loan originations leadership and expanded its automobile lending operations across its footprint under the direction of its Syracuse consumer lending team from the acquired Beacon Federal Bank. 

Berkshire increased its investment securities by $81 million in the fourth quarter, following a slightly larger increase in the prior quarter due to improved securities market conditions.  Investments have been concentrated in medium term U.S. agency mortgage backed instruments.  Berkshire is further increasing its portfolio with agency mortgage backed securities in conjunction with the New York branch acquisition subsequent to year-end.

Asset quality metrics remained favorable at year-end.  Annualized net loan charge-offs measured 0.31% of average loans in the final quarter and 0.29% for the year. Year-end non-performing assets were 0.53% of total assets, compared to 0.52% at the start of the year.  Accruing delinquent loans decreased to 0.73% of total loans from 1.11% during the year.  The loan loss allowance measured 0.80% of total loans at year-end, compared to 0.83% at the start of the year.  Approximately 24% of year-end loans were balances recorded at fair value in recent bank acquisitions.

Total non-maturity deposits increased by $29 million (4% annualized) in the fourth quarter, while time account balances decreased by $62 million (23% annualized) as higher yielding time accounts matured.  For the year, deposits decreased by $252 million (6%) due to the outplacement of non-relationship acquired balances and certain higher costing commercial balances primarily in the second quarter.   These changes were in anticipation of the New York branch purchase announced mid-year, which resulted in approximately a $450 million increase in deposits shortly after year-end.  The loan/deposit ratio measured 109% at year-end, and the pro-forma loan/deposit ratio was estimated at approximately 97% including the benefit of these acquired branches.  Total borrowings increased by $234 million in the fourth quarter to support the growth in earning assets.  Proceeds from the acquired deposits were planned to be used in part to repay certain borrowings. 

Total equity increased by $5 million during the fourth quarter and $11 million for the full year, including the benefit of retained earnings and net of stock repurchases earlier in the year.  The ratio of total equity/assets decreased to 12.0% from 12.6% during the year due to the 7% increase in total assets in 2013.  The ratio of tangible equity/assets decreased to 7.5% from 7.8% during the year. 

RESULTS OF OPERATIONS

Berkshire posted record revenue and earnings for the year due to expansion from organic and acquisition growth strategies, including team recruitment, de novo branch expansion, and business combinations.  Most categories of revenue and expense increased as a result of this expansion.  GAAP earnings include the impact of net non-core charges for acquisitions, restructuring, and systems conversions. The reconciliation of net income and core income, together with related financial measures, is shown on financial tables F-9 and F-10.  In the fourth quarter, the return on assets measured 0.77% and the return on equity measured 6.18%, with minor impact from non-core items. 

Berkshire's fourth quarter net revenue decreased by $4.1 million (7%) year over year.  This was primarily due to the $5.4 million decrease in mortgage banking fees from record volumes last year before rates increased near mid-year 2013.  Compared to the prior quarter, total net revenue decreased by $2.4 million (4%) as lower net interest income was partially offset by higher securities gains. 

Net interest income includes purchased loan accretion related to loans acquired in business combinations.  Purchased loan accretion totaled $2.4 million in the most recent quarter, compared to $8.5 million in the prior quarter; prior quarter results included elevated recoveries of purchased impaired loans together with an out-of-period accounting adjustment.  The net interest margin was 3.26% in the fourth quarter compared to 3.93% in the prior quarter.  Excluding purchased loan accretion, the net interest margin was 3.07% and 3.21% in these two quarters, respectively, due to lower earning asset yields in the most recent quarter.  The income impact of the margin change was partially offset by the 5% increase in average earning assets compared to the prior quarter. 

Total fee income increased at a 6% annualized rate in the fourth quarter compared to the linked quarter, including double digit annualized growth in several major categories.  Net securities gains increased to $3.4 million from $0.4 million due to the realization of gains on certain bank equity securities as a result of improved market conditions. 

The allowance for loan losses increased slightly to $33.3 million from $33.2 million during the year.  The provision for loan losses also increased in 2013 to $11.4 million from $9.6 million in the prior year.  Total net loan charge-offs increased to $11.3 million from $8.8 million primarily due to portfolio growth.  In the most recent quarter, the provision was $3.1 million and net charge-offs were $3.0 million.

Fourth quarter core non-interest expense decreased by 3% from the linked quarter and by 7% from the second quarter of 2013 due to the restructuring program initiated shortly after mid-year.  Most major categories of core expense decreased after mid-year.  Full time equivalent employees totaled 939 at year-end.  Total fourth quarter GAAP non-interest expense decreased by 16% year over year and 13% compared to the linked quarter including the impact of lower non-core charges.  The effective income tax rate was 31% for the most recent quarter and 29% for the full year 2013. 

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, January 28, 2014 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:       

4858232

Webcast:                    

berkshirebank.com (investor relations link)

A telephone replay of the call will be available through Wednesday, February 5, 2014 by calling 877-344-7529 and entering conference number: 10038874. The webcast 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®.  Including New York branches acquired in January, the Company has approximately $6.0 billion in assets and 92 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.govBerkshire 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 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.  In the second half of 2013, non-core restructuring charges are related to severance costs as a result of management and staffing changes, along with facilities costs related to excess facilities where the bank is exiting its occupancy and investment.  Non-core items recorded in the third quarter of 2013 also included the after-tax impact of an out-of-period accounting adjustment, along with an adjustment of variable compensation based on the additional revenue recognition.

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)




December 31,

September 30,

December 31,


(In thousands)

2013

2013

2012


Assets





Cash and due from banks

$              56,841

$              61,149

$              63,382


Short-term investments

18,698

15,710

34,862


Total cash and short-term investments

75,539

76,859

98,244







Trading security

14,840

15,330

16,893


Securities available for sale, at fair value

760,048

684,716

466,169


Securities held to maturity, at amortized cost

44,921

46,925

51,024


Federal Home Loan Bank stock and other restricted securities

50,282

42,342

39,785


Total securities

870,091

789,313

573,871







Loans held for sale

15,840

27,064

85,368







Residential mortgages

1,384,274

1,313,609

1,324,251


Commercial mortgages

1,417,120

1,366,104

1,413,544


Commercial business loans

687,293

668,983

600,126


Consumer loans

691,836

675,147

650,733


Total loans

4,180,523

4,023,843

3,988,654


Less: Allowance for loan losses

(33,323)

(33,248)

(33,208)


Net loans

4,147,200

3,990,595

3,955,446







Premises and equipment, net

84,459

83,136

86,461


Other real estate owned

2,758

3,561

1,929


Goodwill 

256,871

256,871

255,199


Other intangible assets

13,791

15,030

19,059


Cash surrender value of bank-owned life insurance

101,530

100,299

88,198


Deferred tax asset

50,711

61,617

57,729


Other assets

54,009

45,911

75,305


Total assets

$         5,672,799

$         5,450,256

$         5,296,809







Liabilities and stockholders' equity





Demand deposits

$            677,917

$            669,878

$            673,921


NOW deposits

353,612

352,762

379,880


Money market deposits

1,383,856

1,357,201

1,439,632


Savings deposits

431,496

438,135

436,387


Total non-maturity deposits

2,846,881

2,817,976

2,929,820


Time deposits

1,001,648

1,064,049

1,170,589


Total deposits

3,848,529

3,882,025

4,100,409







Senior borrowings

974,428

740,022

358,471


Subordinated notes

89,679

89,663

89,617


Total borrowings

1,064,107

829,685

448,088







Other liabilities 

82,101

65,351

81,047


Total liabilities

4,994,737

4,777,061

4,629,544







Total stockholders' equity

678,062

673,195

667,265







Total liabilities and stockholders' equity

$         5,672,799

$         5,450,256

$         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)


Dec. 31, 2013
Balance



Sept. 30, 2013
Balance



Dec. 31, 2012
Balance


Quarter ended
December 31, 2013

Year to date
















Total residential mortgages


$                            1,384



$                            1,314



$                      1,324


22

%

5

%















Commercial mortgages:














Construction


139



105



168


132


(17)


Single and multi-family


128



132



124


(10)


4


Commercial real estate


1,150



1,129



1,122


7


2


Total commercial mortgages


1,417



1,366



1,414


15


0
















Total commercial business loans

688



669



600


12


15
















Total commercial loans


2,105



2,035



2,014


14


5
















Consumer loans:














Home equity 


307



304



325


4


(6)


Other


385



371



326


16


18


Total consumer loans


692



675



651


10


6


Total loans


$                            4,181



$                            4,024



$                      3,989


16

%

5

%





























DEPOSIT ANALYSIS
























Annualized growth %

(Dollars in millions)


Dec. 31, 2013
Balance



Sept. 30, 2013
Balance



Dec. 31, 2012
Balance


Quarter ended
December 31, 2013

Year to date


Demand


$                               678



$                               670



$                         674


5

%

1

%

NOW


354



353



380


1


(7)


Money market


1,384



1,357



1,440


8


(4)


Savings


431



438



436


(6)


(1)


Total non-maturity deposits


2,847



2,818



2,930


4


(3)
















Total time deposits


1,002



1,064



1,170


(23)


(14)


Total deposits


$                            3,849



$                            3,882



$                      4,100


(3)

%

(6)

%















(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


Years Ended


December 31,


December 31,

(In thousands, except per share data)

2013


2012


2013


2012

Interest and dividend income    








Loans

$        43,566


$        47,601


$      186,115


$      160,936

Securities and other    

5,093


3,887


17,626


15,003

Total interest and dividend income    

48,659


51,488


203,741


175,939

Interest expense








Deposits

5,166


5,870


20,859


22,482

Borrowings and subordinated debentures

3,651


3,653


14,130


10,069

Total interest expense    

8,817


9,523


34,989


32,551

Net interest income

39,842


41,965


168,752


143,388

Non-interest income








Loan related fees

1,578


1,162


8,247


5,152

Mortgage banking fees

445


5,850


5,235


12,403

Deposit related fees

4,717


4,355


18,340


15,593

Insurance commissions and fees    

2,143


2,565


10,020


10,821

Wealth management fees    

2,212


1,865


8,683


7,296

Total fee income    

11,095


15,797


50,525


51,265

Other

1,227


421


2,949


1,306

Gain on sale of securities, net    

3,392


293


4,758


300

Non-recurring gain

-


1,142


-


1,185

Total non-interest income      

15,714


17,653


58,232


54,056

Total net revenue

55,556


59,618


226,984


197,444

Provision for loan losses   

3,100


2,840


11,378


9,590

Non-interest expense








Compensation and benefits

16,736


18,862


71,134


64,081

Occupancy and equipment     

5,421


5,985


22,540


19,469

Technology and communications

3,169


2,949


12,944


9,467

Marketing and promotion     

765


483


2,596


2,031

Professional services

1,558


1,600


6,569


5,785

FDIC premiums and assessments

899


919


3,473


3,377

Other real estate owned and foreclosures

255


66


700


281

Amortization of intangible assets     

1,239


1,357


5,268


5,339

Merger, restructuring and conversion related expenses     

2,493


7,497


14,848


18,019

Other

4,622


4,548


17,287


12,957

Total non-interest expense     

37,157


44,266


157,359


140,806









Income from continuing operations before income taxes       

15,299


12,512


58,247


47,048

Income tax expense

4,762


3,183


17,104


13,223

Net income from continuing operations

10,537


9,329


41,143


33,825

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 

$        10,537


$          9,329


$        41,143


$        33,188









Basic earnings per share:








Continuing operations

$            0.43


$            0.39


$            1.66


$            1.52

Discontinued operations

-


-


-


(0.03)

Total basic earnings per share

$            0.43


$            0.39


$            1.66


$            1.49









Diluted earnings per share:








Continuing operations

$            0.42


$            0.38


$            1.65


$            1.52

Discontinued operations

-


-


-


(0.03)

Total diluted earnings per share

$            0.42


$            0.38


$            1.65


$            1.49









Weighted average shares outstanding:      








Basic

24,701


24,165


24,802


22,201

Diluted

24,857


24,396


24,965


22,329

















 

 

BERKSHIRE HILLS BANCORP, INC.

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




Quarters Ended


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,


(In thousands, except per share data)

2013


2013


2013


2013


2012


Interest and dividend income    











Loans

$      43,566


$      50,025


$      45,443


$      47,081


$      47,601


Securities and other    

5,093


4,479


4,254


3,800


3,887


Total interest and dividend income    

48,659


54,504


49,697


50,881


51,488


Interest expense











Deposits

5,166


5,278


5,052


5,363


5,870


Borrowings and subordinated debentures

3,651


3,357


3,541


3,581


3,653


Total interest expense    

8,817


8,635


8,593


8,944


9,523


Net interest income

39,842


45,869


41,104


41,937


41,965


Non-interest income











Loan related fees

1,578


1,308


2,644


2,717


1,162


Mortgage banking fees

445


444


2,129


2,217


5,850


Deposit related fees

4,717


4,559


4,805


4,259


4,355


Insurance commissions and fees    

2,143


2,473


2,407


2,997


2,565


Wealth management fees    

2,212


2,137


2,070


2,264


1,865


Total fee income    

11,095


10,921


14,055


14,454


15,797


Other

1,227


832


546


344


421


Gain on sale of securities, net     

3,392


361


1,005


-


293


Non-recurring gain

-


-


-


-


1,142


Total non-interest income      

15,714


12,114


15,606


14,798


17,653


Total net revenue

55,556


57,983


56,710


56,735


59,618


Provision for loan losses   

3,100


3,178


2,700


2,400


2,840


Non-interest expense











Compensation and benefits

16,736


18,506


18,151


17,741


18,862


Occupancy and equipment     

5,421


5,614


5,737


5,768


5,985


Technology and communications

3,169


3,304


3,480


2,991


2,949


Marketing and promotion  

765


590


603


638


483


Professional services

1,558


1,757


1,764


1,490


1,600


FDIC premiums and assessments

899


856


890


828


919


Other real estate owned and foreclosures

255


138


284


23


66


Amortization of intangible assets     

1,239


1,307


1,345


1,377


1,357


Merger, restructuring and conversion related expenses     

2,493


6,516


775


5,064


7,497


Other

4,622


4,196


4,906


3,563


4,548


Total non-interest expense     

37,157


42,784


37,935


39,483


44,266













Income from continuing operations before income taxes       

15,299


12,021


16,075


14,852


12,512


Income tax expense 

4,762


3,917


4,038


4,387


3,183


Net income 

$      10,537


$        8,104


$      12,037


$      10,465


$        9,329
























Basic earnings per share:











Continuing operations

$          0.43


$          0.33


$          0.49


$          0.42


$          0.39


Discontinued operations

-


-


-


-


-


Total basic earnings per share

$          0.43


$          0.33


$          0.49


$          0.42


$          0.39













Diluted earnings per share:











Continuing operations

$          0.42


$          0.33


$          0.48


$          0.42


$          0.38


Discontinued operations

-


-


-


-


-


Total diluted earnings per share

$          0.42


$          0.33


$          0.48


$          0.42


$          0.38













Weighted average shares outstanding:      











Basic

24,701


24,748


24,779


24,927


24,165


Diluted

24,857


24,873


24,956


25,136


24,396













(1) The Company acquired Beacon Federal Bancorp on October 19, 2012. The income statements include operations of the acquired 

      institution as of that date.






















 

 

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - (F-5)

















At or for the Quarters Ended




Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,


(Dollars in thousands)



2013


2013


2013


2013


2012


NON-PERFORMING ASSETS













Non-accruing loans:













Residential mortgages



$            7,867


$          8,487


$             5,945


$              8,818


$             7,466


Commercial mortgages



13,739


13,800


14,948


12,396


12,617


Commercial business loans



2,356


2,753


3,481


3,519


3,681


Consumer loans



3,493


3,227


2,405


2,325


1,748


Total non-accruing loans



27,455


28,267


26,779


27,058


25,512


Other real estate owned



2,758


3,561


2,713


2,513


1,929


Total non-performing assets



$          30,213


$        31,828


$           29,492


$            29,571


$           27,441















Total non-accruing loans/total loans



0.66%


0.70%


0.69%


0.70%


0.64%


Total non-performing assets/total assets



0.53%


0.58%


0.56%


0.56%


0.52%















PROVISION AND ALLOWANCE FOR LOAN LOSSES











Balance at beginning of period



$          33,248


$        33,248


$           33,263


$            33,208


$           33,090


Charged-off loans



(3,462)


(3,417)


(3,457)


(2,501)


(3,073)


Recoveries on charged-off loans



437


239


742


156


351


Net loans charged-off



(3,025)


(3,178)


(2,715)


(2,345)


(2,722)


Provision for loan losses



3,100


3,178


2,700


2,400


2,840


Balance at end of period



$          33,323


$        33,248


$           33,248


$            33,263


$           33,208















Allowance for loan losses/total loans



0.80%


0.83%


0.86%


0.86%


0.83%


Allowance for loan losses/non-accruing loans



121%


118%


124%


123%


130%















NET LOAN CHARGE-OFFS













Residential mortgages



$             (564)


$            (351)


$              (852)


$               (260)


$           (1,034)


Commercial mortgages



(763)


(1,480)


(1,283)


(952)


(893)


Commercial business loans



(1,042)


(940)


(93)


(631)


(496)


Home equity 



45


(174)


(121)


(199)


(22)


Other consumer



(701)


(233)


(366)


(303)


(277)


Total, net



$          (3,025)


$         (3,178)


$           (2,715)


$            (2,345)


$           (2,722)















Net charge-offs (QTD annualized)/average loans 


0.31%


0.32%


0.27%


0.23%


0.28%


Net charge-offs (YTD annualized)/average loans 


0.29%


0.28%


0.26%


0.23%


0.26%















DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS










30-89 Days delinquent



0.51%


0.42%


0.70%


0.61%


0.63%


90+ Days delinquent and still accruing



0.22%


0.29%


0.40%


0.47%


0.48%


Total accruing delinquent loans



0.73%


0.71%


1.10%


1.08%


1.11%


Non-accruing loans



0.66%


0.70%


0.69%


0.70%


0.64%


Total delinquent and non-accruing loans



1.39%


1.41%


1.79%


1.78%


1.75%















 

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - (F-6)








At or for the Quarters Ended




Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,





2013


2013


2013


2013


2012















PER SHARE DATA












Core earnings, diluted

$         0.40


$         0.43


$         0.48


$         0.54


$        0.54



Net earnings, diluted

0.42


0.33


0.48


0.42


0.38



Tangible book value

16.27


16.08


15.96


15.87


15.63



Total book value

27.08


26.98


26.82


26.68


26.53



Market price at period end

27.27


25.11


27.76


25.54


23.86



Dividends


0.18


0.18


0.18


0.18


0.18















PERFORMANCE RATIOS












Core return on assets

0.73

%

0.81

%

0.92

%

1.03

%

1.02

%


Return on assets

0.77


0.61


0.93


0.80


0.72



Core return on equity

5.87


6.29


7.13


8.10


8.32



Core return on tangible equity

10.47


11.18


12.84


14.57


15.24



Return on equity

6.18


4.74


7.21


6.28


5.86



Net interest margin, fully taxable equivalent

3.26


3.93


3.63


3.73


3.67



Fee income/Net interest and fee income

21.78


19.23


25.48


25.63


27.35



Efficiency ratio 

63.21


60.98


63.05


57.14


59.68















GROWTH













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

5

%

1

%

(2)

%

0

%

29

%


Total loans, year-to-date (annualized)

5


1


(6)


(10)


35



Total deposits, year-to-date (annualized)

(6)


(7)


(14)


0


30



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

15


24


28


39


39



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

11


11


40


50


62



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

(6)


3


11


20


29















FINANCIAL DATA   (In millions)












Total assets


$       5,673


$       5,450


$       5,224


$       5,245


$      5,297



Total earning assets

5,085


4,856


4,629


4,646


4,683



Total loans


4,181


4,024


3,871


3,889


3,989



Allowance for loan losses

33


33


33


33


33



Total intangible assets

271


272


272


273


274



Total deposits


3,849


3,882


3,815


4,101


4,100



Total stockholders' equity

678


673


673


674


667



Total core income 

10.0


10.7


11.9


13.5


13.2



Total net income

10.5


8.1


12.0


10.5


9.3















ASSET QUALITY RATIOS












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

0.31

%

0.32

%

0.27

%

0.23

%

0.28

%


Allowance for loan losses/total loans

0.80


0.83


0.86


0.86


0.83















CAPITAL RATIOS












Stockholders' equity to total assets

11.95

%

12.35

%

12.88

%

12.85

%

12.60

%


Tangible stockholders' equity to tangible assets

7.54


7.74


8.10


8.06


7.82




























(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.



















 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - (F-7)




Quarters Ended


Dec. 31, 


Sept. 30, 


June 30, 


Mar. 31, 


Dec. 31, 

(In thousands)

2013


2013


2013


2013


2012

Assets










Loans:










Residential mortgages

$        1,330,674


$        1,247,661


$         1,218,192


$         1,290,989


$       1,340,375

Commercial mortgages

1,381,628


1,353,923


1,381,755


1,406,628


1,404,515

Commercial business loans

673,292


647,939


627,591


601,695


580,436

Consumer loans

687,540


651,565


634,715


644,674


598,802

Total loans

4,073,134


3,901,088


3,862,253


3,943,986


3,924,128

Securities

813,417


735,307


655,396


591,304


572,268

Short-term investments and loans held for sale

35,438


60,820


90,680


98,160


126,378

Total earning assets

4,921,989


4,697,215


4,608,329


4,633,450


4,622,774

Goodwill and other intangible assets

271,147


271,670


272,421


273,428


267,588

Other assets

305,617


317,722


317,856


333,485


312,665

Total assets

$        5,498,753


$        5,286,607


$         5,198,606


$         5,240,363


$       5,203,027











Liabilities and stockholders' equity










Deposits:










NOW

$           348,600


$           345,682


$            358,255


$            368,392


$          355,366

Money market

1,392,570


1,329,591


1,358,590


1,477,497


1,404,113

Savings

435,766


442,408


449,296


441,547


422,447

Time

1,044,850


1,064,199


1,087,357


1,148,345


1,161,175

Total interest-bearing deposits

3,221,786


3,181,880


3,253,498


3,435,781


3,343,101

Borrowings and notes

857,848


708,798


574,822


423,739


519,831

Total interest-bearing liabilities

4,079,634


3,890,678


3,828,320


3,859,520


3,862,932

Non-interest-bearing demand deposits

681,368


658,568


636,469


645,923


635,044

Other liabilities 

56,261


52,874


65,568


68,509


68,475

Total liabilities

4,817,263


4,602,120


4,530,357


4,573,952


4,566,451











Total stockholders' equity

681,490


684,487


668,249


666,411


636,576











Total liabilities and stockholders' equity

$        5,498,753


$        5,286,607


$         5,198,606


$         5,240,363


$       5,203,027





















Supplementary data










Total non-maturity deposits

$        2,858,304


$        2,776,249


$         2,802,610


$         2,933,359


$       2,816,970

Total deposits

3,903,154


3,840,448


3,889,967


4,081,704


3,978,145

Fully taxable equivalent income adjustment

639


652


644


629


667

Total average tangible equity 

410,343


412,817


395,828


392,983


368,988





















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



(2) Total average tangible equity results from the subtraction of average goodwill and other intangible assets from total average  

     stockholders' equity. 




















 

 

BERKSHIRE HILLS BANCORP, INC.

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













Quarters Ended


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,



2013


2013


2013


2013


2012













Earning assets











Loans:











Residential mortgages

3.98

%

3.99

%

4.19

%

4.04

%

4.00

%

Commercial mortgages

4.73


5.80


5.27


5.45


5.78


Commercial business loans

3.91


6.09


4.04


4.40


4.09


Consumer loans

4.01


4.39


4.78


4.94


4.56


Total loans

4.24


5.02


4.67


4.75


4.73


Securities

2.80


2.77


3.00


3.04


3.17


Short-term investments and loans held for sale

1.92


4.05


2.02


1.83


2.86


Total earning assets

3.97


4.66


4.38


4.51


4.49













Funding liabilities











Deposits:











NOW

0.18


0.18


0.26


0.29


0.35


Money market

0.44


0.44


0.39


0.39


0.43


Savings

0.16


0.16


0.17


0.18


0.20


Time

1.25


1.29


1.23


1.23


1.31


Total interest-bearing deposits

0.64


0.66


0.62


0.63


0.70


Borrowings and notes

1.69


1.88


2.47


3.43


2.80


Total interest-bearing liabilities

0.86


0.88


0.90


0.94


0.98













Net interest spread

3.11


3.78


3.48


3.57


3.51


Net interest margin

3.26


3.93


3.63


3.73


3.67













Cost of funds

0.73


0.75


0.77


0.81


0.84


Cost of deposits

0.53


0.55


0.52


0.53


0.59













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






 

 

 

BERKSHIRE HILLS BANCORP, INC.


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










At or for the Quarters Ended




Dec. 31, 


Sept. 30, 


June 30, 


Mar. 31, 


Dec. 31, 


(Dollars in thousands)


2013


2013


2013


2013


2012


Net income 


$     10,537


$       8,104


$     12,037


$     10,465


$       9,329


Adj: Gain on sale of securities and other non-recurring gain, net

(3,392)


(361)


(1,005)


-


(1,435)


Adj: Merger related expenses


932


1,307


775


4,984


5,852


Adj: Restructuring expenses


1,361


5,209


-


-


-


Adj: System conversion and other expenses


200


-


-


80


1,645


Adj: Out of period interest revenue adjustment (5) 


-


(2,222)


-


-


-


Adj: Variable compensation adjustment (5)


-


500


-


-


-


Adj:  Income taxes


364


(1,788)


93


(2,042)


(2,147)


Total core income

(A)

$     10,002


$     10,749


$     11,900


$     13,487


$     13,244














Total revenue 


$     55,556


$     57,983


$     56,710


$     56,735


$     59,618


Adj: Gain on sale of securities and other non-recurring gain, net

(3,392)


(361)


(1,005)


-


(1,435)


Adj: Out of period interest revenue adjustment


-


(2,222)


-


-


-


Total core revenue


$     52,164


$     55,400


$     55,705


$     56,735


$     58,183














Total non-interest expense


$     37,157


$     42,784


$     37,935


$     39,483


$     44,266


Less: Total non-core expense (see above)


(2,493)


(6,516)


(775)


(5,064)


(7,497)


Adj: Variable compensation adjustment (5)


-


(500)


-


-


-


Core non-interest expense                                    


$     34,664


$     35,768


$     37,160


$     34,419


$     36,769














(Dollars in millions, except per share data)












Total average assets                                                

(B)

$       5,499


$       5,287


$       5,199


$       5,240


$       5,203


Total average stockholders' equity                         

(C)

681


684


668


666


637


Total average tangible stockholders' equity                         

(D)

410


413


396


393


369














Total stockholders' equity, period-end


678


673


673


674


667


Less:  Intangible assets, period-end


(271)


(272)


(272)


(273)


(274)


Total tangible stockholders' equity, period-end   

(E)

$          407


$          401


$          401


$          401


$          393














Total shares outstanding, period-end (thousands)               

(F)

25,036


24,952


25,096


25,254


25,148


Average diluted shares outstanding (thousands)

(G)

24,857


24,873


24,956


25,136


24,396














Core earnings per share, diluted 

(A/G)

$         0.40


$         0.43


$         0.48


$         0.54


$         0.54


Tangible book value per share, period-end

(E/F)

$       16.27


$       16.08


$       15.96


$       15.87


$       15.63














Core return (annualized) on assets

(A/B)

0.73

%

0.81

%

0.92

%

1.03

%

1.02

%

Core return (annualized) on equity 

(A/C)

5.87


6.29


7.13


8.10


8.32


Core return (annualized) on tangible equity (4)

(A/D)

10.47


11.18


12.84


14.57


15.24


Efficiency ratio (1)


63.21


60.98


63.05


57.14


59.68














Supplementary data












Tax credit benefit of tax shelter investments


$            80


$          458


$          458


$          458


$          483


Intangible amortization


$      (1,239)


$     (1,307)


$      (1,345)


$      (1,377)


$      (1,357)


























(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully 




      taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments.  The  




      Company uses this non-GAAP measure, which is used widely in the banking industry, to provide important information regarding




      its operational efficiency.
























(2) Ratios are annualized and based on average balance sheet amounts, where applicable.



















(3) Quarterly data may not sum to year-to-date data due to the out-of-period adjustment recorded in the third quarter of 2013





      and 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) In the third quarter of 2013, additional revenue was recorded following an out-of-period adjustment. Based on this additional revenue




     variable compensation was also adjusted accordingly in the third quarter.




















 

 

 

BERKSHIRE HILLS BANCORP, INC.


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










At or for the Years Ended




December 31, 


December 31, 


(Dollars in thousands)


2013


2012


Net income 


$                   41,143


$                     33,188


Adj: Gain on sale of securities and other non-recurring gain, net


(4,758)


(1,485)


Adj: Merger related expenses


7,998


12,509


Adj: Restructuring expenses


6,570


-


Adj: System conversion and other expenses


280


6,147


Adj: Out of period interest revenue adjustment (5)


(1,287)


-


Adj: Variable compensation adjustment (5)


500


-


Adj: Income taxes


(3,750)


(6,114)


Total core income 

(A)

$                   46,696


$                     44,245








Total revenue 


$                 226,984


$                   197,514


Adj: Gain on sale of securities and other non-recurring gain, net


(4,758)


(1,485)


Adj: Out of period interest revenue adjustment


(1,287)


-


Total core revenue


$                 220,939


$                   196,029








Total non-interest expense


$                 157,359


$                   141,136


Less: Total non-core expense (see above)


(14,848)


(18,656)


Adj: Variable compensation adjustment (5)


(500)


-


Core non-interest expense                                    


$                 142,011


$                   122,480








(Dollars in millions, except per share data)






Total average assets                                                

(B)

$                     5,306


$                       4,529


Total average stockholders' equity                         

(C)

675


587


Total average tangible stockholders' equity                         

        (D)

403


344








Total stockholders' equity, period-end


678


667


Less: Intangible assets, period-end


(271)


(274)


Total tangible stockholders' equity, period-end   

(E)

$                        407


$                          393


Total common shares outstanding, period-end (thousands)               

(F)

25,036


25,148


Average diluted common shares outstanding (thousands)

(G)

24,965


22,329








Core earnings per common share, diluted 

(A/G)

$                       1.87


$                         1.98


Tangible book value per common share, period-end

(E/F)

$                     16.27


$                       15.63








Core return (annualized) on assets

(A/B)

0.88

%

0.98

%

Core return (annualized) on equity

(A/C)

6.92


7.54


Core return (annualized) on tangible equity (4)

(A/D)

12.37


13.77


Efficiency ratio (1)


60.79


58.71








Supplementary data






GAAP return on assets


0.78

%

0.73

%

GAAP return on equity 


6.09


5.66


Net interest margin


3.63


3.62


Tax credit benefit of tax shelter investments


$                     1,455


$                       1,976


Intangible amortization


$                    (5,268)


$                     (5,346)














(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully


     taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments.  The 


     Company uses this non-GAAP measure, which is used widely in the banking industry, to provide important information regarding


     its operational efficiency.












(2) Ratios are annualized and based on average balance sheet amounts, where applicable.









(3) Quarterly data may not sum to year-to-date data due to the out-of-period adjustment recorded in the third quarter of 2013

      and 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) In the third quarter of 2013, additional revenue was recorded following an out-of-period adjustment. Based on this additional revenue

     variable compensation was also adjusted accordingly in the third quarter.





(6) Amounts related to discontinued operations have not been reclassified on the above schedule, 


      although they are reclassified on the balance sheet and income statement. 








 

 

SOURCE Berkshire Hills Bancorp, Inc.

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