Berkshire Hills Reports 42 Cents First Quarter Core EPS; Dividend Declared - KPLC 7 News, Lake Charles, Louisiana

Berkshire Hills Reports 42 Cents First Quarter Core EPS; Dividend Declared

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SOURCE Berkshire Hills Bancorp

PITTSFIELD, Mass., April 28, 2014 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported that core earnings per share increased by 5% to $0.42 in the first quarter of 2014 compared to $0.40 in the previous quarter due to strong balance sheet growth.  Core earnings per share decreased from $0.54 in the first quarter of 2013 due primarily to lower income on real estate related loans resulting from interest rate related market shifts in 2013.

LOGO

On January 17, 2014, Berkshire completed the acquisition of 20 branches in Central New York from Bank of America.  During the first quarter, the Company recorded non-core charges totaling $0.46 per share after-tax, primarily related to one-time costs recorded with this acquisition.   This included $0.25 per share from the Company's election to terminate interest rate swaps; these charges had no net impact on shareholders' equity.  Including non-core charges, Berkshire recorded a GAAP loss of $0.04 per share during the first quarter of 2014, compared to per share income of $0.42 in the prior quarter and the first quarter of 2013.

FIRST QUARTER FINANCIAL HIGHLIGHTS (income related comparisons are to prior quarter):

  • 7% increase in net interest income
  • 14% increase in fee income
  • 9% annualized increase in commercial loans
  • 11% annualized increase in consumer loans
  • 10% increase in deposits, including acquired branches
  • 3.35% net interest margin, increased from 3.26% in the prior quarter
  • 0.46% non-performing assets/total assets
  • 0.30% net loan charge-offs/average loans

CEO Michael Daly stated, "We started the year with solid growth.  Commercial loans increased at a near double digit annualized rate, as our lending teams continue to garner market share and new relationships across our footprint.  We opened a new branch office in Loudonville, New York and continued to develop our consumer deposit and loan business.  Our insurance and wealth management revenues improved and we are extending our reach in newer markets. 

"We completed the acquisition of 20 Central New York branches near the start of the year.  The integration of these new customers has been successful and our total branch count has increased to 90 full service offices, including 46 in New York.  We also announced the recruitment of Scott Houghtaling as SVP/Commercial Leader for our expanded New York operations." 

Mr. Daly concluded, "Our net interest margin improved as a result of the branch acquisition.  While non-interest expense also increased, organic expense growth was mostly limited to seasonal factors. Our non-core costs were primarily due to the branch acquisition and related termination of interest rate swaps which were previously disclosed.  Going forward, we anticipate that our net results will mirror our core operating profitability.  We continue to be selective and disciplined in managing our revenue growth, with a goal of maintaining forward momentum in operating results."

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 15, 2014, payable on May 29, 2014.  This dividend equates to a 2.8% annualized yield based on the $25.56 average closing price of Berkshire's common stock during the first quarter of 2014.   

FINANCIAL CONDITION

Berkshire increased its total assets by $338 million (6%) in the most recent quarter due to growth in loans and investment securities.  Acquired deposits were used to repay borrowings and to fund asset growth.  At quarter-end, measures of asset quality, liquidity, interest rate sensitivity, and capital remained within targets. 

As of March 31, 2014, tangible book value per share measured $15.84, compared to $16.27 at the start of the quarter due primarily to the impacts of the branch acquisition.  Total book value per share measured $26.99 and $27.08 at these dates, respectively.

Investment securities increased by $275 million during the first quarter.  Growth consisted primarily of medium term U.S. agency collateralized mortgage securities, along with municipal bonds and corporate equities.

Total loans increased by $62 million (6% annualized) including 9% annualized commercial loan growth and 11% annualized consumer loan growth.  This follows the trend of double digit annualized growth in these loans reported in prior quarters.  All regions contributed to commercial loan originations, with strong contributions from Berkshire County and Central and Eastern Massachusetts, as well as asset based lending.  Consumer loan growth was primarily in automobile loans reflecting continued expansion by the Syracuse based consumer team.  Most of the total loan growth was recorded in the final month of the quarter. 

Asset quality metrics remained favorable.  Annualized net loan charge-offs measured 0.30% of average loans.   Quarter-end non-performing assets decreased to 0.46% of total assets and accruing delinquent loans decreased to 0.59% of total loans.  The loan loss allowance measured 0.79% of total loans; approximately 23% of quarter-end loans were balances recorded at fair value in recent bank acquisitions.

Total deposits increased by $370 million (10%) during the first quarter.  Deposits added from the New York branch acquisition were recorded at $440 million and acquired balances were retained during the quarter.    In conjunction with the deposit acquisition, the Company has de-emphasized select municipal deposit sources and other higher cost deposits.  Ongoing development of consumer relationships was demonstrated by a 5% organic increase in personal demand deposit balances, excluding acquired balances.  Due to the deposit growth, the loans/deposits ratio decreased to 101% from 109% during the quarter. 

Borrowings were initially reduced with the acquired funds and subsequently were increased to fund asset growth.  In conjunction with the branch acquisition, the Company terminated all of its interest rate swaps associated with FHLB advances, which had a notional value of $410 million.  During the quarter, the Company initiated $300 million in new medium term forward starting swaps. 

The ratio of equity/assets measured 11.3% at quarter-end, decreasing from 12.0% at the start of the quarter due to the 6.0% increase in total assets following the branch acquisition.  This transaction also increased goodwill and intangible assets.  Excluding these assets, the ratio of tangible equity/assets decreased to 6.9% from 7.5%.

RESULTS OF OPERATIONS

First quarter 2014 core earnings totaled $10.4 million ($0.42 per share), compared to $10.0 million ($0.40 per share) in the prior quarter and to $13.5 million ($0.54 per share) in the first quarter of 2013.  The core return on assets measured 0.71%, 0.73%, and 1.03% for these periods respectively.  The branch acquisition resulted in higher core revenue and expenses in the most recent quarter, compared to the prior quarter. 

GAAP earnings include the impact of net non-core charges.  The reconciliation of net income and core income, together with related financial measures, is shown in financial table F-9.  Non-core charges totaled $11.5 million ($0.46 per share) after-tax in the most recent quarter.  These charges included $0.25 per share recorded as a loss on termination of interest rate swap hedges.  This was a charge with no impact on shareholders' equity and was related to the branch acquisition.   Other non-core charges included $0.10 per share in transaction and integration expenses for the branch acquisition, $0.07 per share in expenses for restructuring and systems conversions, and $0.04 per share for an out-of-period adjustment to interest income recorded on loans previously acquired in business combinations.  Including these net non-core charges, first quarter 2014 GAAP results were a loss of $1.1 million ($0.04 per share).  GAAP net income totaled $10.5 million ($0.42 per share) in both the prior quarter and in the first quarter of 2013.  The GAAP loss resulted in a GAAP ROA of (0.08%) in the most recent quarter, compared to 0.77% and 0.80% in the prior periods, respectively.

Total net interest and fee revenue was $55.4 million in the most recent quarter, which was a 9% increase over the prior quarter, and 2% lower than the first quarter of the previous year due to the decline in residential mortgage fees.  First quarter 2014 net interest income totaled $42.8 million, increasing by 7% over the prior quarter and 2% over the first quarter of 2013.

The net interest margin measured 3.35%, 3.26% and 3.73% for these periods, respectively.  In the most recent quarter, the margin benefited from the lower cost of acquired deposits and lower interest cost on borrowings as a result of the swap terminations.  The cost of funds decreased to 0.56% from 0.73% in the prior quarter and from 0.81% in the first quarter of 2013. 

Net interest income includes purchased loan accretion related to loans acquired in business combinations, including recoveries on the collection of acquired impaired loans.   Current period purchased loan accretion totaled $2.8 million in the most recent quarter, compared to $2.4 million in the prior quarter, and $3.8 million in the first quarter of 2013.  Excluding current and out-of-period purchased loan accretion, the net interest margin was 3.24%, 3.07%, and 3.39% in these respective periods.

Fee income totaled $12.7 million, increasing by $1.6 million (14%) compared to the prior quarter and including the benefit of acquired branch operations and seasonal insurance contingency revenues.  Fee income decreased by $1.8 million (12%) compared to the first quarter of 2013.  Revenue from mortgage banking and loan related fee income decreased from elevated levels last year due to the midyear increase in interest rates in 2013.  Wealth management fees increased by 13% over the first quarter of 2013 due to account growth and improved market conditions.  Wealth management generated new business at a 9% annualized rate in the most recent quarter, and the portfolio totaled $1.3 billion at quarter-end.  Insurance fees increased by 2% over this period.

The provision for loan losses totaled $3.4 million, continuing its gradual increasing trend as loan volume has increased and acquired loans season.  Net charge-offs totaled $3.1 million during the quarter.  The provision totaled $3.1 million in the prior quarter and $2.4 million in the first quarter of 2013.

First quarter 2014 core non-interest expense totaled $39.1 million.  Including the 20 acquired branches, core expense increased by $4.4 million (13%) compared to the prior quarter and by a similar amount compared to the first quarter of 2013.  First quarter expense includes seasonally higher benefits and maintenance expense.  Expense growth in the most recent quarter also included targeted investment in commercial and retail market teams.  Including net charges for non-core merger, conversion, and restructuring costs previously discussed, GAAP non-interest expense totaled $45.4 million in the most recent quarter.  Full time equivalent staff totaled 1,050 at quarter-end, compared to 939 at the start of the quarter.   During the first quarter, Berkshire consolidated two of the acquired New York branches which had overlap with existing locations.  Additionally, two other branches have been consolidated in 2014 as part of the expense restructuring program.  The effective income tax rate was 29% in the most recent quarter, unchanged from the effective rate for the year 2013.

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, April 29, 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:

0011655

Webcast:

berkshirebank.com (investor relations link)

A PDF version of this earnings release is available at the above link.  A telephone replay of the call will be available through Wednesday, May 7, 2014 by calling 877-344-7529 and entering conference number: 10043772. 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®.  The Company has $6.0 billion in assets and 90 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 report on Form 10-K 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.

OUT OF PERIOD ADJUSTMENT

In the first quarter of 2014, the Company recorded a correction of an error to reduce interest income by $1.4 million representing interest income previously recorded on loans acquired in prior years.  After evaluating the quantitative and qualitative aspects of these adjustments, the Company concluded that its prior period financial statements were not materially misstated and, therefore, no restatement was required.

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP").  These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition.  They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information.  A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables.  In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.  The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense.  These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, losses recorded for hedge terminations, merger costs, restructuring costs, systems conversion costs, and out-of-period adjustments.  Non-core adjustments are presented net of estimated income tax expense or benefit.  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.  Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, and professional fees.  Systems conversion costs relate primarily to the Company's core systems conversion and systems conversions costs in conjunction with this which have been recorded in recent periods.  Restructuring costs primarily consist of employee severance costs and costs and losses associated with the disposition of assets which were undertaken as a project to right-size expenses following a decline in revenue in 2013.  Out-of-period accounting adjustments for interest income on acquired loans were recorded following systems conversions and merger related accounting activity and were deemed non-core.  Non-core expenses include variable rate compensation related to non-core items.  The Company evaluates GAAP, core, and non-core items to analyze its effective tax rate and to arrive at core income that is net of an effective core tax rate which is consistent with its analysis of expected core tax items for the year.

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)

2014


2013


Assets





Cash and due from banks

$     60,023


$        56,841


Short-term investments

12,650


18,698


Total cash and short-term investments

72,673


75,539







Trading security

14,923


14,840


Securities available for sale, at fair value

1,033,637


760,048


Securities held to maturity, at amortized cost

43,159


44,921


Federal Home Loan Bank stock and other restricted securities

53,124


50,282


Total securities

1,144,843


870,091







Loans held for sale, at fair value

7,669


15,840







Residential mortgages

1,377,771


1,384,274


Commercial real estate

1,456,976


1,417,120


Commercial and industrial loans

696,895


687,293


Consumer loans

710,985


691,836


Total loans

4,242,627


4,180,523


Less: Allowance for loan losses

(33,602)


(33,323)


Net loans

4,209,025


4,147,200







Premises and equipment, net

87,805


84,459


Other real estate owned

2,418


2,758


Goodwill 

264,770


256,871


Other intangible assets

15,035


13,791


Cash surrender value of bank-owned life insurance

102,343


101,530


Deferred tax asset, net

40,202


50,711


Other assets

63,548


54,009


Total assets

$ 6,010,331


$   5,672,799







Liabilities and stockholders' equity





Demand deposits

$   770,841


$      677,917


NOW deposits

434,833


353,612


Money market deposits

1,459,062


1,383,856


Savings deposits

478,107


431,496


Time deposits

1,075,740


1,001,648


Total deposits

4,218,583


3,848,529







Senior borrowings

936,747


974,428


Subordinated borrowings

89,696


89,679


Total borrowings

1,026,443


1,064,107







Other liabilities 

87,715


82,101


Total liabilities

5,332,741


4,994,737







Total stockholders' equity

677,590


678,062


Total liabilities and stockholders' equity

$ 6,010,331


$   5,672,799







(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits

      and $4 million in loans from the branch acquisition as of that date.

 

BERKSHIRE HILLS BANCORP, INC.

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


LOAN ANALYSIS



















Annualized growth %

(Dollars in millions)


Mar. 31, 2014
Balance




Dec. 31, 2013
Balance


Quarter ended
March 31, 2014











Total residential mortgages


$         1,378




$         1,384


(2)

%











Total commercial real estate


1,457




1,417


11


Total commercial and industrial loans


697




688


5


Total commercial loans


2,154




2,105


9












Home equity 


305




307


(3)


Auto and other


406




385


22


Total consumer loans


711




692


11


Total loans


$         4,243




$         4,181


6

%





















DEPOSIT ANALYSIS



















Annualized growth %

(Dollars in millions)


Mar. 31, 2014
Balance


Branch

Acquisition

Balance


Dec. 31, 2013
Balance


Quarter ended
March 31, 2014

Demand


$            771


$                   110


$            678


55

%

NOW


435


80


354


92


Money market


1,459


124


1,384


22


Savings


478


36


431


44


Total non-maturity deposits


3,143


350


2,847


42












Total time deposits


1,076


90


1,002


30


Total deposits


$         4,219


$                   440


$         3,849


38

%











(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits,

       as shown above, and $4 million in loans from the branch acquisition as of that date.

 

BERKSHIRE HILLS BANCORP, INC.

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




Three Months Ended



March 31,


(In thousands, except per share data)

2014


2013


Interest and dividend income    





Loans

$ 42,494


$ 47,081


Securities and other    

7,301


3,800


Total interest and dividend income    

49,795


50,881


Interest expense





Deposits

4,721


5,363


Borrowings

2,308


3,581


Total interest expense    

7,029


8,944


Net interest income

42,766


41,937


Non-interest income





Loan related fees

1,248


2,717


Mortgage banking fees

372


2,217


Deposit related fees

5,439


4,259


Insurance commissions and fees    

3,049


2,997


Wealth management fees    

2,549


2,264


Total fee income    

12,657


14,454


Other

524


344


Gain on sale of securities, net    

34


-


Loss on termination of hedges

(8,792)


-


Total non-interest income      

4,423


14,798


Total net revenue

47,189


56,735


Provision for loan losses   

3,396


2,400


Non-interest expense





Compensation and benefits

19,859


17,741


Occupancy and equipment     

6,814


5,768


Technology and communications

3,778


2,991


Marketing and promotion     

521


638


Professional services

1,152


1,490


FDIC premiums and assessments

1,009


828


Other real estate owned and foreclosures

523


23


Amortization of intangible assets     

1,306


1,377


Merger, restructuring and conversion expenses     

6,301


5,064


Other

4,097


3,563


Total non-interest expense     

45,360


39,483







(Loss) income before income taxes       

(1,567)


14,852


Income tax (benefit) expense

(461)


4,387


Net (loss) income 

$ (1,106)


$ 10,465







Basic and diluted (loss) earnings per share:

$  (0.04)


$    0.42







Weighted average shares outstanding:      





Basic

24,698


24,948


Diluted

24,698


25,143







(1) The Company acquired 20 branches in Central New York on January 17, 2014. The income statement for the 

      three months ended March 31, 2014 includes operations of the branch acquisition beginning on that date.

(2) Merger, restructuring and conversion expenses include acquisition related expenses.

 

BERKSHIRE HILLS BANCORP, INC.

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


Quarters Ended





Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


(In thousands, except per share data)

2014


2013


2013


2013


2013


Interest and dividend income    











Loans

$ 42,494


$ 43,566


$ 50,025


$ 45,443


$ 47,081


Securities and other    

7,301


5,093


4,479


4,254


3,800


Total interest and dividend income    

49,795


48,659


54,504


49,697


50,881


Interest expense











Deposits

4,721


5,166


5,278


5,052


5,363


Borrowings

2,308


3,651


3,357


3,541


3,581


Total interest expense    

7,029


8,817


8,635


8,593


8,944


Net interest income

42,766


39,842


45,869


41,104


41,937


Non-interest income











Loan related fees

1,248


1,578


1,308


2,644


2,717


Mortgage banking fees

372


445


444


2,129


2,217


Deposit related fees

5,439


4,717


4,559


4,805


4,259


Insurance commissions and fees    

3,049


2,143


2,473


2,407


2,997


Wealth management fees    

2,549


2,212


2,137


2,070


2,264


Total fee income    

12,657


11,095


10,921


14,055


14,454


Other

524


1,227


832


546


344


Gain on sale of securities, net     

34


3,392


361


1,005


-


Loss on termination of hedges

(8,792)


-


-


-


-


Total non-interest income      

4,423


15,714


12,114


15,606


14,798


Total net revenue

47,189


55,556


57,983


56,710


56,735


Provision for loan losses   

3,396


3,100


3,178


2,700


2,400


Non-interest expense











Compensation and benefits

19,859


16,736


18,506


18,151


17,741


Occupancy and equipment     

6,814


5,421


5,614


5,737


5,768


Technology and communications

3,778


3,169


3,304


3,480


2,991


Marketing and promotion  

521


765


590


603


638


Professional services

1,152


1,558


1,757


1,764


1,490


FDIC premiums and assessments

1,009


899


856


890


828


Other real estate owned and foreclosures

523


255


138


284


23


Amortization of intangible assets     

1,306


1,239


1,307


1,345


1,377


Merger, restructuring and conversion expenses     

6,301


2,493


6,516


775


5,064


Other

4,097


4,622


4,196


4,906


3,563


Total non-interest expense     

45,360


37,157


42,784


37,935


39,483













(Loss) income before income taxes

(1,567)


15,299


12,021


16,075


14,852


Income tax (benefit) expense 

(461)


4,762


3,917


4,038


4,387


Net (loss) income 

$ (1,106)


$ 10,537


$  8,104


$ 12,037


$ 10,465
























(Loss) earnings per share:











Basic 

$  (0.04)


$    0.43


$    0.33


$    0.49


$    0.42


Diluted 

$  (0.04)


$    0.42


$    0.33


$    0.48


$    0.42













Weighted average shares outstanding:      











Basic

24,698


24,701


24,748


24,779


24,948


Diluted

24,698


24,857


24,873


24,956


25,143













(1) See notes on Page F-3











 

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)



2014


2013


2013


2013


2013


NON-PERFORMING ASSETS













Non-accruing loans:













Residential mortgages



$  6,071


$  7,867


$  8,487


$  5,945


$  8,818


Commercial real estate



13,036


13,739


13,800


14,948


12,396


Commercial and industrial loans



2,411


2,356


2,753


3,481


3,519


Consumer loans



3,846


3,493


3,227


2,405


2,325


Total non-accruing loans



25,364


27,455


28,267


26,779


27,058


Other real estate owned



2,418


2,758


3,561


2,713


2,513


Total non-performing assets



$ 27,782


$ 30,213


$ 31,828


$ 29,492


$ 29,571















Total non-accruing loans/total loans



0.60%


0.66%


0.70%


0.69%


0.70%


Total non-performing assets/total assets



0.46%


0.53%


0.58%


0.56%


0.56%















PROVISION AND ALLOWANCE FOR LOAN LOSSES











Balance at beginning of period



$ 33,323


$ 33,248


$ 33,248


$ 33,263


$ 33,208


Charged-off loans



(3,317)


(3,462)


(3,417)


(3,457)


(2,501)


Recoveries on charged-off loans



200


437


239


742


156


Net loans charged-off



(3,117)


(3,025)


(3,178)


(2,715)


(2,345)


Provision for loan losses



3,396


3,100


3,178


2,700


2,400


Balance at end of period



$ 33,602


$ 33,323


$ 33,248


$ 33,248


$ 33,263















Allowance for loan losses/total loans



0.79%


0.80%


0.83%


0.86%


0.86%


Allowance for loan losses/non-accruing loans



132%


121%


118%


124%


123%















NET LOAN CHARGE-OFFS













Residential mortgages



$ (1,055)


$   (564)


$   (351)


$   (852)


$   (260)


Commercial real estate



(1,105)


(763)


(1,480)


(1,283)


(952)


Commercial and industrial loans



(215)


(1,042)


(940)


(93)


(631)


Home equity 



(458)


45


(174)


(121)


(199)


Auto and other consumer



(284)


(701)


(233)


(366)


(303)


Total, net



$ (3,117)


$ (3,025)


$ (3,178)


$ (2,715)


$ (2,345)















Net charge-offs (QTD annualized)/average loans 


0.30%


0.31%


0.32%


0.27%


0.23%


Net charge-offs (YTD annualized)/average loans 


0.30%


0.29%


0.28%


0.26%


0.23%















DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS










30-89 Days delinquent



0.37%


0.51%


0.42%


0.70%


0.61%


90+ Days delinquent and still accruing



0.22%


0.22%


0.29%


0.40%


0.47%


Total accruing delinquent loans



0.59%


0.73%


0.71%


1.10%


1.08%


Non-accruing loans



0.60%


0.66%


0.70%


0.69%


0.70%


Total delinquent and non-accruing loans



1.19%


1.39%


1.41%


1.79%


1.78%


 

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,






2014


2013


2013


2013


2013

















PER SHARE DATA













Core earnings, diluted

$   0.42


$   0.40


$   0.43


$  0.48


$   0.54




Net earnings, diluted

(0.04)


0.42


0.33


0.48


0.42




Tangible book value

15.84


16.27


16.08


15.96


15.87




Total book value

26.99


27.08


26.98


26.82


26.68




Market price at period end

25.88


27.27


25.11


27.76


25.54




Dividends


0.18


0.18


0.18


0.18


0.18

















PERFORMANCE RATIOS













Core return on assets

0.71

%

0.73

%

0.81

%

0.92

%

1.03

%



Return on assets

(0.08)


0.77


0.61


0.93


0.80




Core return on equity

6.02


5.87


6.29


7.13


8.10




Core return on tangible equity

10.84


10.47


11.18


12.84


14.57




Return on equity

(0.64)


6.18


4.74


7.21


6.28




Net interest margin, fully taxable equivalent

3.35


3.26


3.93


3.63


3.73




Fee income/Net interest and fee income

22.84


21.78


19.23


25.48


25.63




Efficiency ratio 

64.42


63.21


60.98


63.05


57.14

















GROWTH














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

9

%

5

%

1

%

(2)

%

0

%



Total loans, year-to-date (annualized)

6


5


1


(6)


(10)




Total deposits, year-to-date (annualized)

38


(6)


(7)


(14)


0




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

(17)


15


24


28


39




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

(110)


11


11


40


50




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

(22)


(6)


3


11


20

















FINANCIAL DATA   (In millions)













Total assets


$ 6,010


$ 5,673


$ 5,450


$ 5,224


$ 5,245




Total earning assets

5,408


5,085


4,856


4,629


4,646




Total loans


4,243


4,181


4,024


3,871


3,889




Allowance for loan losses

34


33


33


33


33




Total intangible assets

280


271


272


272


273




Total deposits


4,219


3,849


3,882


3,815


4,101




Total stockholders' equity

678


678


673


673


674




Total core income 

10.4


10.0


10.7


11.9


13.5




Total net income

(1.1)


10.5


8.1


12.0


10.5

















ASSET QUALITY RATIOS













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

0.30

%

0.31

%

0.32

%

0.27

%

0.23

%



Allowance for loan losses/total loans

0.79


0.80


0.83


0.86


0.86

















CONDITION RATIOS













Stockholders' equity to total assets

11.27

%

11.95

%

12.35

%

12.88

%

12.85

%



Tangible stockholders' equity to tangible assets

6.94


7.54


7.74


8.10


8.06




Investments to total assets

19.05


15.34


14.48


12.85


12.65




Loans/deposits


101


109


104


101


95































(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)

See note on Page F-9 on tangible equity.

 

BERKSHIRE HILLS BANCORP, INC.


AVERAGE BALANCES - (F-7)






Quarters Ended



Mar. 31, 


Dec. 31, 


Sept. 30, 


June 30, 


Mar. 31, 


(In thousands)

2014


2013


2013


2013


2013


Assets











Loans:











Residential mortgages

$ 1,379,266


$ 1,330,674


$ 1,247,661


$ 1,218,192


$ 1,290,989


Commercial real estate

1,420,382


1,381,628


1,353,923


1,381,755


1,406,628


Commercial and industrial loans

684,776


673,292


647,939


627,591


601,695


Consumer loans

699,598


687,540


651,565


634,715


644,674


Total loans

4,184,022


4,073,134


3,901,088


3,862,253


3,943,986


Securities

1,047,658


813,417


735,307


655,396


591,304


Short-term investments and loans held for sale

28,631


35,438


60,820


90,680


98,160


Total earning assets

5,260,311


4,921,989


4,697,215


4,608,329


4,633,450


Goodwill and other intangible assets

278,386


271,147


271,670


272,421


273,428


Other assets

312,145


305,617


317,722


317,856


333,485


Total assets

$ 5,850,842


$ 5,498,753


$ 5,286,607


$ 5,198,606


$ 5,240,363













Liabilities and stockholders' equity











Deposits:











NOW

$   409,631


$   348,600


$   345,682


$   358,255


$   368,392


Money market

1,490,408


1,392,570


1,329,591


1,358,590


1,477,497


Savings

463,615


435,766


442,408


449,296


441,547


Time

1,069,987


1,044,850


1,064,199


1,087,357


1,148,345


Total interest-bearing deposits

3,433,641


3,221,786


3,181,880


3,253,498


3,435,781


Borrowings

899,458


857,848


708,798


574,822


423,739


Total interest-bearing liabilities

4,333,099


4,079,634


3,890,678


3,828,320


3,859,520


Non-interest-bearing demand deposits

749,982


681,368


658,568


636,469


645,923


Other liabilities 

76,258


56,261


52,874


65,568


68,509


Total liabilities

5,159,339


4,817,263


4,602,120


4,530,357


4,573,952













Total stockholders' equity

691,503


681,490


684,487


668,249


666,411













Total liabilities and stockholders' equity

$ 5,850,842


$ 5,498,753


$ 5,286,607


$ 5,198,606


$ 5,240,363
























Supplementary data











Total non-maturity deposits

$ 3,113,636


$ 2,858,304


$ 2,776,249


$ 2,802,610


$ 2,933,359


Total deposits

4,183,623


3,903,154


3,840,448


3,889,967


4,081,704


Fully taxable equivalent income adjustment

718


639


652


644


629


Total average tangible equity 

413,117


410,343


412,817


395,828


392,983
























(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. 

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

 

BERKSHIRE HILLS BANCORP, INC.

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













Quarters Ended


Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,



2014


2013


2013


2013


2013













Earning assets











Loans:











Residential mortgages

4.12

%

3.98

%

3.99

%

4.19

%

4.04

%

Commercial real estate

4.44


4.73


5.80


5.27


5.45


Commercial and industrial loans

3.97


3.91


6.09


4.04


4.40


Consumer loans

3.56


4.01


4.39


4.78


4.94


Total loans

4.13


4.26


5.02


4.67


4.75


Securities

3.04


2.72


2.77


3.00


3.04


Short-term investments and loans held for sale

1.51


1.92


4.05


2.02


1.83


Total earning assets

3.89


3.97


4.66


4.38


4.51













Funding liabilities











Deposits:











NOW

0.15


0.18


0.18


0.26


0.29


Money market

0.37


0.44


0.44


0.39


0.39


Savings

0.16


0.16


0.16


0.17


0.18


Time

1.15


1.25


1.29


1.23


1.23


Total interest-bearing deposits

0.56


0.64


0.66


0.62


0.63


Borrowings

1.04


1.69


1.88


2.47


3.43


Total interest-bearing liabilities

0.66


0.86


0.88


0.90


0.94













Net interest spread

3.23


3.11


3.78


3.48


3.57


Net interest margin

3.35


3.26


3.93


3.63


3.73













Cost of funds

0.56


0.73


0.75


0.77


0.81


Cost of deposits

0.46


0.53


0.55


0.52


0.53













(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




Mar. 31, 


Dec. 31, 


Sept. 30, 


June 30, 


Mar. 31, 


(Dollars in thousands)


2014


2013


2013


2013


2013


Net income 


$ (1,106)


$ 10,537


$  8,104


$ 12,037


$ 10,465


Adj: Gain on sale of securities, net


(34)


(3,392)


(361)


(1,005)


-


Adj: Loss on termination of hedges


8,792


-


-


-


-


Adj: Merger and acquisition expenses


3,637


932


1,307


775


4,984


Adj: Restructuring, conversion and other expenses (5)


2,665


1,561


5,709


-


80


Adj: Out-of-period adjustment (6) 


1,381


-


(2,222)


-


-


Adj:  Income taxes


(4,923)


364


(1,788)


93


(2,042)


Total core income

(A)

$ 10,412


$ 10,002


$ 10,749


$ 11,900


$ 13,487














Total revenue 


$ 47,189


$ 55,556


$ 57,983


$ 56,710


$ 56,735


Adj: Gain on sale of securities, net


(34)


(3,392)


(361)


(1,005)


-


Adj: Loss on termination of hedges


8,792


-


-


-


-


Adj: Out-of-period adjustment (6) 


1,381


-


(2,222)


-


-


Total core revenue


$ 57,328


$ 52,164


$ 55,400


$ 55,705


$ 56,735














Total non-interest expense


$ 45,360


$ 37,157


$ 42,784


$ 37,935


$ 39,483


Less: Total non-core expense (see above)


(6,302)


(2,493)


(7,016)


(775)


(5,064)


Core non-interest expense                                    


$ 39,058


$ 34,664


$ 35,768


$ 37,160


$ 34,419














(Dollars in millions, except per share data)












Total average assets                                                

(B)

$  5,851


$  5,499


$  5,287


$  5,199


$  5,240


Total average stockholders' equity                         

(C)

692


681


684


668


666


Total average tangible stockholders' equity                         

(D)

413


410


413


396


393


Total tangible stockholders' equity, period-end (7)

(E)

398


407


401


401


401














Total shares outstanding, period-end (thousands)               

(F)

25,105


25,036


24,952


25,096


25,254


Average diluted shares outstanding (thousands) (8)

(G)

24,833


24,857


24,873


24,956


25,143














Core earnings per share, diluted 

(A/G)

$    0.42


$    0.40


$    0.43


$    0.48


$    0.54


Tangible book value per share, period-end

(E/F)

$  15.84


$  16.27


$  16.08


$  15.96


$  15.87














Core return on assets

(A/B)

0.71

%

0.73

%

0.81

%

0.92

%

1.03

%

Core return on equity 

(A/C)

6.02


5.87


6.29


7.13


8.10


Core return on tangible equity (4)

(A/D)

10.84


10.47


11.18


12.84


14.57


Efficiency ratio (1)


64.42


63.21


60.98


63.05


57.14














Supplementary data












Tax credit benefit of tax shelter investments


$     555


$       80


$     458


$     458


$     458


Intangible amortization


$  1,306


$  1,239


$  1,307


$  1,345


$  1,377


























(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 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) Prior period variable compensation is shown above under restructuring, conversion and other expenses.













(6) The out of period adjustments shown above relate to interest income earned on loans acquired in bank acquisitions. 













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













(8) Average diluted shares computed for core earnings per share differ from GAAP average diluted shares due to the GAAP net loss compared to core net

      income for the period.

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