Berkshire Hills reports 50 percent first quarter core EPS growth; dividend declared

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Berkshire Hills reports 50 percent first quarter core EPS growth; dividend declared

Wed, 04/25/2012 - 5:06am -- tim

Berkshire Hills Bancorp, Inc.  reported $0.45 in first quarter core earnings per share, a 50 percent increase over first quarter 2011 core earnings of $0.30 per share.  This increase resulted from ongoing business expansion together with the benefit of the acquisitions of Rome Bancorp and Legacy Bancorp.  GAAP net income included nonrecurring and merger related expenses, together with income from discontinued operations. These non-core items together equated to a first quarter after-tax charge of$0.17 per share in 2012 compared to $0.10 per share in 2011. Including these non-core items, first quarter GAAP net income was $0.28 per share, compared to $0.20 per share in the first quarter of 2011.
 
First Quarter Financial Highlights

50 percent increase in core earnings per share, compared to first quarter of 2011
10 percent annualized revenue growth, compared to linked quarter
11 percent annualized loan growth
11 percent annualized deposit growth
3.62 percent net interest margin
0.58 percent non-performing assets/total assets
0.24 percent annualized net loan charge-offs/average loans
0.94 percent core ROA (0.59% GAAP ROA)
59 percent efficiency ratio

Berkshire President and CEO, Michael P. Daly, stated, "We maintained strong momentum as we started the year, including a 9 percent annualized increase in core EPS compared to the prior quarter. We continue to have strong growth in our balance sheet, while maintaining a solid net interest margin. Our fee revenue also grew strongly during the quarter, while our focused expense discipline resulted in operating costs a little better than our expectations. Our core profitability improved and we are generating positive core operating leverage, with revenue growth exceeding expense growth. Our loan performance metrics remain favorable and improving.  We are maintaining the momentum we need to achieve our earnings growth targets and to generate revenue growth through further market share gains."
 
Mr. Daly continued, "We are pleased with the progress of our strategic acquisitions of the operations of Greenpark Mortgage Corporation and CBT ‘The Connecticut Bank and Trust Company. We look forward to having the well regarded Greenpark team join us in the current quarter, and our partnership with them contributed to our first quarter results. The Connecticut Bank and Trust Company acquisition was completed on schedule on April 20.  We are now operating 8 branches in the Greater Hartford area, bringing our total branch count to 68, and introducing our brand and products into this attractive market.  We look forward to additional revenue and earnings growth from both of these strategic initiatives, along with the benefits to all of our business lines from this further expansion of our footprint."
 
Dividend Declared
The Board of Directors voted to declare a cash dividend of $0.17 per share to shareholders of record at the close of business on May 10, 2012, payable on May 24, 2012. This dividend equated to a 3.0% yield based on the $22.67 average closing price of Berkshire's common stock in the first quarter of 2012.
 
Financial Condition
Total assets increased at a 4 percent annualized rate during the first quarter of 2012 including 11 percent annualized loan growth. The $82 million increase in loans primarily resulted from increased bookings of Massachusetts residential mortgages relating to the partnership with Greenpark Mortgage during the transition period prior to the planned acquisition in the second quarter. Commercial business loans increased at an 18 percent annualized rate, and the pipeline of pending commercial loans grew including the benefit of Berkshire's recent expansion in Central/Eastern Massachusetts with the opening of its Westborough commercial lending office. 
 
The Bank plans to continue to maintain an asset sensitive interest rate profile based on commercial loan growth and the integration of the CBT balance sheet. All major categories of deposit account balances increased, with growth continuing to come primarily from Berkshire's expanding New York region, including a new office in Colonie, New York. In January, the Company completed the divestiture of the deposits of four former Legacy New York offices which were reported as discontinued operations at the end of 2011. 
 
Asset performance remained favorable and improving in the most recent quarter, with non-performing assets decreasing to 0.58 percent of total assets, and the annualized ratio of net loan charge-offs/average loans decreasing to 0.24 percent. The allowance for loan losses increased slightly to$32.7 million, measuring 1.07 percent of loans and 143 percent of non-performing loans at the end of the quarter. 
 
Capital ratios were little changed during the most recent quarter, with tangible equity/assets measuring 8.8 percent and total equity/assets measuring 13.8 percent at quarter-end. Tangible book value per share increased to $15.81 from $15.60 during the quarter, while total book value per share increased to $26.28 from $26.17. 
 
RESULTS OF OPERATIONS
First quarter results in 2012 included the operations of Rome Bancorp (acquired on April 1, 2011) and Legacy Bancorp (acquired on July 21, 2011), along with the per share impact of shares issued as merger consideration for those acquisitions. Most first quarter categories of income and expense increased from year-to-year due to these acquisitions. This discussion therefore primarily compares the most recent quarter to the fourth quarter of 2011, which also included these acquired operations. The core return on assets increased to 0.94 percent in the most recent quarter from 0.93 percent in the prior quarter. The GAAP ROA was 0.59 percent compared to 0.85 percent for these periods, respectively, including noncore expense charges.
 
Total net revenue increased by $1.0 million (10 percent annualized) in the most recent quarter, compared to the linked quarter. This growth was due to an increase in fee income, including the benefit of increases in mortgage secondary market income, insurance income, and wealth management income. These increases included increased business volume in these areas, along with some seasonal and pricing related factors.  Net interest income was stable compared to the prior quarter, and the net interest margin increased slightly to 3.62 percent.  Loan growth was weighted towards the latter part of the quarter and is expected to produce a higher proportionate revenue benefit in the second quarter. The provision for loan losses decreased to $2.0 million in the most recent quarter from $2.3 million in the prior quarter. Net loan charge-offs totaled$1.8 million during the quarter. 
 
Core non-interest expense increased by $0.4 million (7 percent annualized) in the most recent quarter, compared to the linked quarter.  Expense growth included the impact of office expansion in retail and commercial banking.  The efficiency ratio remained unchanged at 59 percent. Net non-recurring and merger related expense totaled $2.9 million after-tax in the most recent quarter. This included merger related expenses for the Legacy and CBT acquisitions, disposition costs of excess premises in Pittsfield following the Legacy integration, and systems conversion costs related to the core systems conversion planned for later in 2012. Additionally, the Company recorded a $0.6 million after-tax non-core charge related to the divestiture of four New York branches in January. This charge included $0.4 million in income tax expense due to the non-deductibility of the goodwill associated with these branches.  The effective income tax rate on core income from continuing operations was 27 percent in the most recent quarter, compared to a 24 percent effective tax rate for the year 2011, reflecting the expectation of higher core income in 2012.
 
Unaudited Selected Financial Highlights of CBT ‘The Connecticut Bank AND Trust Company
Included in the financial exhibits to this news release are unaudited selected first quarter financial highlights of CBT. This information does not include all items which may affect the final financial statements of CBT as of March 31, 2012 and it does not include non-core charges related to the merger of CBT into Berkshire. Additional financial information about CBT will be provided in the notes to the financial statements of Berkshire as of June 30, 2012, which will reflect the acquisition of CBT as of April 20, 2012. 
 
Conference Call
Berkshire will conduct a conference call/webcast at 10:00 am eastern time on Wednesday, April 25, 2012 to discuss the results for the quarter and 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: 866-843-0890 
Elite Entry Number: 3494596 
Webcast: www.berkshirebank.com (investor relations link)
 
A telephone replay of the call will be available through May 2, 2012 by calling 877-344-7529 and entering access code: 10011976. The webcast and a podcast will be available at Berkshire's website above for an extended period of time.
 
Background
Berkshire Hills Bancorp is the parent of Berkshire Bank - America's Most Exciting Bank(SM).  Including the recently acquired operations of CBT, Berkshire has $4.3 billion in assets and 68 full service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services.  Berkshire Bank provides 100 percent deposit insurance protection for all deposit accounts, regardless of amount, based on a combination of FDIC insurance and the Depositors Insurance Fund (DIF).  For more information, visit www.berkshirebank.com or call 800-773-5601. 
 
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.
  

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - F-1

March 31,

December 31,

(In thousands)

2012

2011

Assets

Cash and due from banks

$      34,117

$         46,713

Short-term investments

11,186

28,646

Trading security

16,847

17,395

Securities available for sale, at fair value

423,580

419,756

Securities held to maturity, at amortized cost

59,533

58,912

Federal Home Loan Bank stock and other restricted securities

35,282

37,118

Total securities

535,242

533,181

Loans held for sale

-

1,455

Residential mortgages

1,100,663

1,020,435

Commercial mortgages

1,147,455

1,156,241

Commercial business loans

429,627

410,292

Consumer loans

361,255

369,602

Total loans

3,039,000

2,956,570

Less: Allowance for loan losses

(32,657)

(32,444)

Net loans

3,006,343

2,924,126

Premises and equipment, net

61,661

60,139

Other real estate owned

439

1,900

Goodwill 

202,397

202,391

Other intangible assets

19,662

20,973

Cash surrender value of bank-owned life insurance

75,652

75,009

Other assets

82,628

91,309

Assets from discontinued operations

-

5,362

Total assets

$ 4,029,327

$    3,991,204

Liabilities and stockholders' equity

Demand deposits

$    450,497

$       447,414

NOW deposits

294,411

272,204

Money market deposits

1,089,742

1,055,306

Savings deposits

365,289

350,517

Total non-maturity deposits

2,199,939

2,125,441

Time deposits

984,228

975,734

Total deposits

3,184,167

3,101,175

Borrowings

236,240

221,938

Junior subordinated debentures

15,464

15,464

Total borrowings

251,704

237,402

Other liabilities 

36,622

43,758

Liabilities from discontinued operations

-

55,504

Total liabilities

3,472,493

3,437,839

Total stockholders' equity

556,834

553,365

Total liabilities and stockholders' equity

$ 4,029,327

$    3,991,204

(1) At year end 2011, four branches were held for sale as discontinued operations and sold in the first quarter of 2012.

 
 
  

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - F-2

LOAN ANALYSIS

Organic annualized 
growth %

(Dollars in millions)

March 31,
 2012
Balance

December 31, 
2011
Balance

First
Quarter
2012

Total residential mortgages

$    1,101

$          1,020

32%

Total commercial mortgages

1,147

1,156

(3)

Total commercial business loans

430

411

18

Total commercial loans

1,577

1,567

3

Total consumer loans

361

370

(9)

Total loans

$    3,039

$          2,957

11%

DEPOSIT ANALYSIS

Organic annualized
growth %

(Dollars in millions)

March 31,
 2012
Balance

December 31, 
2011
Balance

First
Quarter
2012

Demand

$      451

$            447

4%

NOW

294

272

32

Money market

1,090

1,055

13

Savings

365

351

16

Total non-maturity deposits

2,200

2,125

14

Time less than $100,000

479

487

(7)

Time $100,000 or more

505

489

13

Total time deposits

984

976

3

Total deposits

$    3,184

$          3,101

11%

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

       divestitures.  

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

  

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - F-3

Three Months Ended

March 31,

(In thousands, except per share data)

2012

2011

Interest and dividend income    

Loans

$35,051

$24,606

Securities and other    

3,621

3,307

Total interest and dividend income    

38,672

27,913

Interest expense

Deposits

5,502

5,715

Borrowings and junior subordinated debentures

2,025

2,052

Total interest expense    

7,527

7,767

Net interest income

31,145

20,146

Non-interest income

Loan related fees

1,373

591

Deposit related fees

3,500

2,541

Insurance commissions and fees    

2,746

3,730

Wealth management fees    

1,900

1,192

Total fee income    

9,519

8,054

Other

241

80

Non-recurring gain

42

-

Total non-interest income      

9,802

8,134

Total net revenue

40,947

28,280

Provision for loan losses   

2,000

1,600

Non-interest expense

Compensation and benefits

13,589

11,151

Occupancy and equipment     

4,395

3,435

Technology and communications

1,958

1,466

Marketing and professional services     

1,716

1,213

Supplies, postage and delivery

562

454

FDIC premiums and assessments

681

1,027

Other real estate owned

179

609

Amortization of intangible assets     

1,311

716

Nonrecurring and merger related expenses     

4,223

1,708

Other

1,580

1,410

Total non-interest expense     

30,194

23,189

Income from continuing operations before income taxes       

8,753

3,491

Income tax expense

2,272

656

Net income from continuing operations

6,481

2,835

Loss from discontinued operations before income taxes

     (including gain on disposal of $63)

(261)

-

Income tax expense

376

-

Net loss from discontinued operations

(637)

-

Net income 

$  5,844

$  2,835

Basic and diluted earnings per share:

Continuing operations

$     0.31

$     0.20

Discontinued operations

(0.03)

-

Total basic and diluted earnings per share

$     0.28

$     0.20

Weighted average shares outstanding:      

Basic

20,955

13,943

Diluted

21,062

13,981

(1)  Discontinued operations are described in Note 3 on Page F-1.  Loss from discontinued operations includes operating losses

       in the first quarter of 2012 (including divestiture costs), and the gain on the sale of four branches in the same quarter, net
       of taxes.

 
  

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)

2012

2011

2011

2011

2011

Interest and dividend income    

Loans

$35,051

$35,466

$35,719

$28,607

$24,606

Securities and other    

3,621

3,562

3,547

3,446

3,307

Total interest and dividend income    

38,672

39,028

39,266

32,053

27,913

Interest expense

Deposits

5,502

5,792

6,097

5,768

5,715

Borrowings and junior subordinated debentures

2,025

2,101

2,131

2,084

2,052

Total interest expense    

7,527

7,893

8,228

7,852

7,767

Net interest income

31,145

31,135

31,038

24,201

20,146

Non-interest income

Loan related fees

1,373

856

934

780

591

Deposit related fees

3,500

3,848

3,885

3,366

2,541

Insurance commissions and fees    

2,746

2,145

2,431

2,782

3,730

Wealth management fees    

1,900

1,650

1,607

1,389

1,192

Total fee income    

9,519

8,499

8,857

8,317

8,054

Other

241

318

(158)

(277)

80

Gain on sale of securities, net     

-

8

-

6

-

Non-recurring gain

42

-

1,975

124

-

Total non-interest income      

9,802

8,825

10,674

8,170

8,134

Total net revenue

40,947

39,960

41,712

32,371

28,280

Provision for loan losses   

2,000

2,263

2,200

1,500

1,600

Non-interest expense

Compensation and benefits

13,589

13,172

13,195

12,027

11,151

Occupancy and equipment     

4,395

4,063

3,883

3,546

3,435

Technology and communications

1,958

2,464

1,996

1,531

1,466

Marketing and professional services     

1,716

1,565

1,873

1,557

1,213

Supplies, postage and delivery

562

555

545

507

454

FDIC premiums and assessments

681

542

923

741

1,027

Other real estate owned

179

153

541

700

609

Amortization of intangible assets     

1,311

1,314

1,271

935

716

Nonrecurring and merger related expenses     

4,223

3,678

9,091

5,451

1,708

Other

1,580

2,024

1,392

1,627

1,410

Total non-interest expense     

30,194

29,530

34,710

28,623

23,189

Income from continuing operations before income taxes       

8,753

8,167

4,802

2,248

3,491

Income tax expense 

2,272

609

405

371

656

Net income from continuing operations

6,481

7,558

4,397

1,877

2,835

(Loss) gain from discontinued operations before income taxes 

       (including gain on disposals)

(261)

4,692

(8)

-

-

Income tax expense (benefit)

376

3,773

(3)

-

-

Net (loss) gain from discontinued operations

(637)

919

(5)

-

-

Net income 

$  5,844

$  8,477

$  4,392

$  1,877

$  2,835

Basic and diluted earnings per share:

Continuing operations

$    0.31

$    0.36

$    0.22

$    0.11

$    0.20

Discontinued operations

(0.03)

0.04

-

-

-

Total basic and diluted earnings per share

$    0.28

$    0.44

$    0.22

$    0.11

$    0.20

Weighted average shares outstanding:      

Basic

20,955

20,930

20,009

16,580

13,943

Diluted

21,062

21,043

20,105

16,601

13,981

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

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

 
  

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)

2012

2011

2011

2011

2011

NON-PERFORMING ASSETS

Non-accruing loans:

Residential mortgages

$  8,281

$  7,010

$  4,750

$  2,811

$  1,529

Commercial mortgages

12,151

14,280

13,721

9,600

9,510

Commercial business loans

1,029

990

1,399

1,764

1,507

Consumer loans

1,411

1,954

1,834

862

763

Total non-accruing loans

22,872

24,234

21,704

15,037

13,309

Other real estate owned

439

1,900

2,200

1,700

2,400

Total non-performing assets

$23,311

$26,134

$23,904

$16,737

$15,709

Total non-accruing loans/total loans

0.75%

0.82%

0.72%

0.61%

0.62%

Total non-performing assets/total assets

0.58%

0.65%

0.58%

0.52%

0.54%

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$32,444

$32,181

$31,919

$31,898

$31,898

Charged-off loans

(1,923)

(2,313)

(2,061)

(1,564)

(1,758)

Recoveries on charged-off loans

136

313

123

85

158

Net loans charged-off

(1,787)

(2,000)

(1,938)

(1,479)

(1,600)

Provision for loan losses

2,000

2,263

2,200

1,500

1,600

Balance at end of period

$32,657

$32,444

$32,181

$31,919

$31,898

Allowance for loan losses/total loans

1.07%

1.10%

1.07%

1.30%

1.49%

Allowance for loan losses/non-accruing loans

143%

134%

148%

212%

240%

NET LOAN CHARGE-OFFS

Residential mortgages

$   (381)

$   (449)

$   (292)

$   (225)

$   (124)

Commercial mortgages

(1,116)

(1,198)

(1,099)

(597)

(963)

Commercial business loans

(3)

(244)

(463)

(435)

(222)

Home equity 

(247)

(90)

7

(68)

(79)

Other consumer

(40)

(19)

(91)

(154)

(212)

Total, net

$(1,787)

$(2,000)

$(1,938)

$(1,479)

$(1,600)

Net charge-offs (QTD annualized)/average loans 

0.24%

0.27%

0.27%

0.24%

0.30%

Net charge-offs (YTD annualized)/average loans 

0.24%

0.27%

0.27%

0.27%

0.30%

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS

30-89 Days delinquent

0.55%

0.55%

0.79%

0.50%

0.59%

90+ Days delinquent and still accruing

0.40%

0.34%

0.22%

0.12%

0.11%

Total accruing delinquent loans

0.95%

0.89%

1.01%

0.62%

0.70%

Non-accruing loans

0.75%

0.82%

0.72%

0.61%

0.62%

Total delinquent and non-accruing loans

1.70%

1.71%

1.73%

1.23%

1.32%

(1)  The above schedule includes balances associated with discontinued operations.

  

At or for the Quarters Ended

Mar. 31,

Dec. 31,

Sept. 30,

June 30,

Mar. 31,

2012

2011

2011

2011

2011

PERFORMANCE RATIOS

Core return on assets

0.94

%

0.93

%

0.89

%

0.72

%

0.59

%

Return on assets

0.59

0.85

0.45

0.23

0.39

Core return on equity

6.80

6.74

6.50

5.15

4.31

Return on equity

4.23

6.16

3.31

1.67

2.89

Net interest margin, fully taxable equivalent

3.62

3.61

3.74

3.52

3.30

Fee income/Net interest and fee income

23.44

21.44

22.20

25.58

28.56

Efficiency ratio 

59.27

59.44

59.62

66.22

71.03

GROWTH

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

3

%

29

%

38

%

20

%

-

%

Total loans, year-to-date (annualized)

11

38

54

29

-

Total deposits, year-to-date (annualized)

11

41

63

26

7

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

43

33

28

15

6

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

40

(2)

(26)

(37)

(17)

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

50

53

50

33

25

FINANCIAL DATA   (In millions )

Total assets

$4,029

$3,991

$4,087

$3,226

$2,886

Total loans

3,039

2,957

3,003

2,452

2,145

Allowance for loan losses

33

32

32

32

32

Total intangible assets

222

223

233

193

172

Total deposits

3,184

3,101

3,249

2,486

2,241

Total stockholders' equity

557

553

547

445

391

Total core income 

9.4

9.3

8.6

5.8

4.2

Total net income

5.8

8.5

4.4

1.9

2.8

ASSET QUALITY RATIOS

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

0.24

%

0.27

%

0.27

%

0.24

%

0.30

%

Non-performing assets/total assets

0.58

0.65

0.58

0.52

0.54

Allowance for loan losses/total loans

1.07

1.10

1.07

1.30

1.49

Allowance for loan losses/non-accruing loans

143

134

148

212

240

PER SHARE DATA

Core earnings, diluted

$  0.45

$  0.44

$  0.43

$  0.35

$  0.30

Net earnings, diluted

0.28

0.40

0.22

0.11

0.20

Tangible book value

15.81

15.60

14.86

15.07

15.52

Total book value

26.28

26.17

25.87

26.61

27.69

Market price at period end

22.92

22.19

18.47

22.39

20.83

Dividends

0.17

0.17

0.16

0.16

0.16

CAPITAL RATIOS

Stockholders' equity to total assets

13.82

%

13.86

%

13.38

%

13.80

%

13.54

%

Tangible stockholders' equity to tangible assets

8.80

8.76

8.15

8.31

8.07

(1) Reconciliation of Non-GAAP financial measures, including all references to core and tangible amounts, appear on pages 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)   The above schedule does not reclassify balances associated with discontinued operations, which are reclassified  from period end balances on the balance sheet.

 
  

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - F-7

Quarters Ended

Mar. 31, 

Dec. 31, 

Sept. 30, 

June 30, 

Mar. 31, 

(In thousands)

2012

2011

2011

2011

2011

Assets

Loans:

Residential mortgages

$1,057,903

$1,039,025

$1,004,950

$802,460

$651,059

Commercial mortgages

1,153,690

1,166,989

1,140,691

973,557

929,564

Commercial business loans

412,237

392,542

383,059

333,700

283,747

Consumer loans

366,035

376,385

376,754

311,057

281,069

Total loans

2,989,865

2,974,941

2,905,454

2,420,774

2,145,439

Securities

525,109

515,128

474,435

405,670

403,549

Short-term investments

15,107

20,748

34,293

4,688

12,035

Total earning assets

3,530,081

3,510,817

3,414,182

2,831,132

2,561,023

Goodwill and other intangible assets

223,930

230,864

229,594

196,292

172,653

Other assets

235,909

247,376

226,757

186,785

142,789

Total assets

$3,989,920

$3,989,057

$ 3,870,533

$ 3,214,209

$2,876,465

Liabilities and stockholders' equity

Deposits:

NOW

$ 272,239

$274,041

$256,662

$229,980

$215,191

Money market

1,084,948

953,162

853,128

778,055

746,366

Savings

359,859

446,672

476,230

317,232

234,838

Time

983,696

1,028,817

1,029,555

809,768

737,551

Total interest-bearing deposits

2,700,742

2,702,692

2,615,575

2,135,035

1,933,946

Borrowings and debentures

257,389

248,611

253,018

269,665

229,878

Total interest-bearing liabilities

2,958,131

2,951,303

2,868,593

2,404,700

2,163,824

Non-interest-bearing demand deposits

439,015

448,952

432,381

334,171

293,895

Other liabilities 

40,039

38,110

38,431

25,268

26,862

Total liabilities

3,437,185

3,438,365

3,339,405

2,764,139

2,484,581

Total stockholders' equity

552,735

550,692

531,128

450,070

391,884

Total liabilities and stockholders' equity

$3,989,920

$3,989,057

$3,870,533

$3,214,209

$2,876,465

Supplementary data

Total non-maturity deposits

$2,156,061

$2,122,827

$2,018,401

$1,659,438

$1,490,290

Total deposits

3,139,757

3,151,644

3,047,956

2,469,206

2,227,841

Fully taxable equivalent income adj.

669

674

673

675

679

(1) The above schedule does not reclassify balances associated with discontinued operations, which are reclassified  from period end balances on the 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,

2012

2011

2011

2011

2011

Earning assets

Loans:

Residential mortgages

4.63

%

4.68

%

4.82

%

4.97

%

5.04

%

Commercial mortgages

5.01

5.17

5.44

4.74

4.68

Commercial business loans

4.76

4.44

4.78

4.89

4.69

Consumer loans

3.98

4.03

4.17

3.97

3.63

Total loans

4.72

4.74

4.97

4.74

4.65

Securities

3.29

3.26

3.53

4.07

4.01

Short-term investments

0.07

0.14

0.03

0.19

0.13

Total earning assets

4.48

4.49

4.72

4.64

4.53

Funding liabilities

Deposits:

NOW

0.26

0.39

0.49

0.31

0.33

Money Market

0.55

0.62

0.66

0.69

0.75

Savings

0.20

0.19

0.18

0.26

0.31

Time

1.51

1.52

1.67

2.00

2.19

Total interest-bearing deposits

0.82

0.87

0.95

1.08

1.20

Borrowings and debentures

3.16

3.35

3.34

3.10

3.62

Total interest-bearing liabilities

1.02

1.06

1.16

1.31

1.46

Net interest spread

3.46

3.43

3.56

3.33

3.07

Net interest margin

3.62

3.61

3.74

3.52

3.30

Cost of funds

0.89

0.92

1.01

1.15

1.28

Cost of deposits

0.71

0.73

0.82

0.94

1.04

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

(2) The above schedule includes yields associated with discontinued operations, although the related income

       is excluded from income from continuing operations on the income statement.  This schedule also includes balances
      associated with discontinued operations.

 
 

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)

2012

2011

2011

2011

2011

Net income 

$  5,844

$  8,477

$  4,392

$  1,877

$  2,835

Adj: Gain on sale of securities, net

-

(8)

-

(6)

-

Adj:  Other non-recurring gain

(42)

-

(1,975)

(124)

-

Plus: Nonrecurring and merger related expense

4,223

3,678

9,091

5,451

1,708

Adj:  Income taxes

(1,255)

(1,947)

(2,884)

(1,400)

(316)

Adj: pre-tax loss (income) from discontinued operations

261

(4,692)

8

-

-

Adj: income taxes from discontinued operations

376

3,773

(3)

-

-

Total core income

(A)

$  9,407

$  9,281

$  8,629

$  5,798

$  4,227

Total non-interest income

$  9,878

$  8,825

$10,766

$  8,170

$  8,009

Adj: Gain on sale of securities, net

-

(8)

-

(6)

-

Adj:  Other non-recurring gain

(42)

-

(1,975)

(124)

-

Total core non-interest income                       

9,836

8,817

8,791

8,040

8,009

Net interest income

31,138

31,135

31,551

24,201

20,146

Total core revenue

$40,974

$39,952

$40,342

$32,241

$28,155

Total non-interest expense

$30,524

$29,533

$35,320

$28,623

$23,189

Less: Merger related expense

(4,223)

(3,678)

(9,091)

(5,451)

(1,708)

Core non-interest expense                                    

26,301

25,855

26,229

23,172

21,481

Less: Amortization of intangible assets

(1,318)

(1,314)

(1,382)

(935)

(716)

Total core tangible non-interest expense             

$24,983

$24,541

$24,847

$22,237

$20,765

(Dollars in millions, except per share data)

Total average assets                                                

(B)

$  3,990

$  3,989

$  3,871

$  3,214

$  2,876

Total average stockholders' equity                         

(C)

553

551

531

450

392

Total stockholders' equity, period-end

557

553

547

445

391

Less:  Intangible assets, period-end

(222)

(223)

(233)

(193)

(172)

Total tangible stockholders' equity, period-end   

(D)

335

330

314

252

219

Total shares outstanding, period-end (thousands)               

(E)

21,191

21,147

21,134

16,721

14,115

Average diluted shares outstanding (thousands)

(F)

21,062

21,043

20,105

16,601

13,981

Core earnings per share, diluted 

(A/F)

$    0.45

$    0.44

$    0.43

$    0.35

$    0.30

Tangible book value per share, period-end

(D/E)

$  15.81

$  15.60

$  14.86

$  15.07

$  15.52

Core return (annualized) on assets

(A/B)

0.94

%

0.93

%

0.89

%

0.72

%

0.59

%

Core return (annualized) on equity 

(A/C)

6.80

6.74

6.50

5.15

4.31

Efficiency ratio (1)

59.27

59.44

59.62

66.22

71.03

Supplementary data

Tax credit benefit of tax shelter investments

$    505

$    664

$    664

$    664

$    405

(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 rounding.

 
   

THE CONNECTICUT BANK AND TRUST COMPANY

UNAUDITED SELECTED FINANCIAL HIGHLIGHTS - F-10

March 31, 

December 31, 

(In thousands)

2012

2011

Selected Financial Condition Data:

Loans:

Commercial mortgages

$   130,242

$        133,215

Other commercial loans

58,732

68,022

Consumer and other loans

25,413

25,796

Total loans

214,387

227,033

Deposits:

Demand deposits

51,200

52,014

NOW deposits

26,835

24,002

Savings and money market deposits

66,572

67,252

Time deposits

72,575

76,737

Total deposits

217,182

220,005

Three Months Ended

March 31,

2012

2011

Selected Operating Data:

Core net interest income

$      2,380

$            2,494

Core non-interest income

227

208

Core non-interest expense

2,590

2,527

(1)  Core income and expense information excludes non-core merger related items.

 
Berkshire Hills Bank Inc. 4.24.2012.