Berkshire Hills Bancorp, Inc(NYSE: BHLB) reported a 5 percentincrease in core earnings per share to$0.46in the third quarter of 2014 from$0.44in the prior quarter. Berkshire Hills is the parent company of Berkshire Bank, with offices in southern Vermont, Massachusetts, New York and Connecticut.Third quarter core EPS advanced by 7 percent year-over-year.Berkshirecontinues to generate higher revenue as it builds business volumes across its regional markets.GAAP EPS was$0.48in the third quarter of 2014 and$0.46in the prior quarter, reflecting the$0.02per share quarterly benefit of a lower GAAP tax rate that resulted from non-core branch acquisition related costs in the first quarter.
THIRD QUARTER FINANCIAL HIGHLIGHTS(comparisons are to prior quarter):
- 5% increase in core earnings per share
- 5% annualized increase in net revenue
- 9% annualized increase in total loans
- 8% annualized increase in deposits
- 6% increase in demand deposits
- 0.44% non-performing assets/assets
- 0.28% net loan charge-offs/average loans
CEOMichael Dalystated, "Core EPS has grown by$0.02per share in each of the last three quarters and is now up 15 percent compared to the$0.40result in the fourth quarter of 2013. We continue to generate solid revenue growth from business expansion which is illustrated by balance sheet growth and year-over-year gains in all categories of fee income."
Daly continued, "TheBerkshireteam was strengthened across our franchise in the third quarter. A five person small business banking team joined us in Albany, following our first quarter branch purchase in New York. We recruited a senior commercial real estate lender inHartfordand added wealth management professionals in severalMassachusettsmarkets. Our strong electronic banking solution was enhanced with the addition of a leading online fraud protection service, and we added to our solutions for mobile customers. Our company's initiatives were recognized with several marketing, communications and philanthropic awards, and our growing small business banking team was named the top SBA lender in Western Massachusetts. In addition, we recently opened a new branch located within ourWestboroughoffice, which serves as the regional headquarters in ourCentral Massachusettsmarket."
Daly concluded, "Our management disciplines are evidenced by improvement in our efficiency ratio and return on assets, together with further strengthening of our asset quality metrics. I'm excited about our many opportunities to deliver on our brand promise to our markets and to further boost bottom line results for our investors."
DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of$0.18per share to shareholders of record at the close of business onNovember 13, 2014, payable onNovember 26, 2014. This dividend equates to a 3.0% annualized yield based on the$24.02average closing price ofBerkshire'scommon stock during the third quarter.
FINANCIAL CONDITION
In the most recent quarter,Berkshireproduced annualized growth of 9% for total loans and 8% for total deposits. Measures of capital, asset quality, liquidity, and interest rate sensitivity remained solid. Tangible book value per share increased during the quarter by 2% to$16.67and total book value per share increased by 1% to$27.69.Berkshire'sassets totaled$6.4 billionat quarter-end.
Berkshirerecorded organic growth in all major loan categories in the most recent quarter. Total commercial loans increased at a 4% annualized rate, bringing year-to-date annualized growth to 14%. Both commercial real estate and commercial and industrial balances advanced for the quarter and year-to-date. Commercial activity has been spread across the franchise, with the strongest third quarter production inEastern Massachusettsand New York. Residential mortgage balances advanced on higher originations volume. Consumer loan balances benefited from ongoing indirect auto originations together with improved home equity outstandings. Total consumer balances grew at an 18% annualized rate in the third quarter, bringing the year-to-date annualized growth rate to 17%.
Asset quality metrics remained favorable. Annualized net loan charge-offs measured 0.28% of average loans for the quarter. Quarter-end non-performing assets decreased to 0.44% of total assets and accruing delinquent loans decreased to 0.44% of total loans. The loan loss allowance remained at 0.77% of total loans; approximately 18% of quarter-end loans were balances recorded at fair value in recent bank acquisitions.
Annualized deposit growth of 8% in the third quarter was driven primarily by demand deposits and time accounts. Demand deposit balances increased at a strong 25% annualized rate, including growth in commercial balances following the significant increase in commercial lending balances over the year.Berkshirepromotes its non-interest bearing checking accounts as a focus for relationship acquisition and enhancement. Time deposit growth was accompanied by a 7 basis point decrease in the cost of these deposits during the quarter.
Investment securities, cash balances, and borrowings were all reduced during the quarter. At quarter-end, the ratio of loans/deposits stood at 100%. The ratio of equity/assets increased to 11.0% and tangible equity/assets improved to 6.9%.
RESULTS OF OPERATIONS
Third quarter 2014 core earnings increased by 4% to$11.4 million, or$0.46per share, from$10.9 million, or$0.44per share, in the prior quarter. Third quarter core earnings per share increased by 7% from$0.43in 2013. Non-core charges related to the bank's recent charter change were offset by securities gains. GAAP earnings in the most recent quarter totaled$12.0 million, or$0.48per share. GAAP EPS totaled$0.46in the second quarter of 2014 and$0.33in the third quarter of 2013.
The core return on tangible equity improved to 11.8% in the most recent quarter, representing the third consecutive quarterly increase in this metric. The GAAP return on equity improved to 7.0% which was the highest result in the last five quarters. The efficiency ratio improved to 62.89% from 62.96% in the prior quarter.
Third quarter net revenue increased by 1% compared to the prior quarter, including 1% increases in both net interest income and non-interest income. Growth in net interest income was driven by the 2% increase in average earning assets resulting from loan growth. The net interest margin decreased to 3.20% in the third quarter from 3.26% in the prior quarter. This decrease was primarily due to lower interest rates on newly originated mortgages and consumer loans reflecting the ongoing impact of the interest rate environment. Net interest income includes purchased loan accretion which is largely comprised of recoveries on the resolution of impaired loans purchased in previous bank acquisitions. This accretion totaled$1.2 millionin the most recent quarter, compared to$1.0 millionin the prior quarter, and it contributed 0.08% and 0.07% to the margin in these respective quarters.
Third quarter fee income was unchanged from the prior quarter. Mortgage banking revenue rose on higher business volume which benefited from an expanded originations team and product set. This growth offset the decrease in commercial loan interest rate swap income related to the elevated second quarter commercial loan growth. Total third quarter fee income increased by 27% year-over-year. This included organic growth in all major categories along with the benefit of theNew Yorkbranch acquisition inJanuary 2014.
The loan loss provision totaled$3.7 millionin the third quarter, decreasing from$4.0 millionin the prior quarter due to higher second quarter loan growth. Third quarter net loan charge-offs totaled$3.1 million, and the loan loss allowance increased by$0.6 million.
Third quarter non-interest expense increased by 1% over the prior quarter primarily due to increased compensation expense related to business expansion. The core tax rate was 30% in both periods and the GAAP tax rate was 26% due to the full year impact of the first quarter branch acquisition charges.
CONFERENCE CALL
Berkshirewill conduct a conference call/webcast at10:00 a.m. eastern timeonTuesday, October 28, 2014to discuss the results for the quarter and provide guidance about expected future results. Participants should dial-in to the call 10-15 minutes before it begins. Information about the conference call follows:
Dial-in: 888-317-6003
Elite Entry Number: 4239712
Webcast:berkshirebank.com (investor relations link)
A telephone replay of the call will be available throughWednesday, November 5, 2014by calling 877-344-7529 and entering conference number: 10053457. The webcast will be available atBerkshire'swebsite above for an extended period of time. A print-friendly version of this news release will be available at the web link shown above.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank.The company has $6.4 billionin assets and 91 full-service branch offices inMassachusetts,New York,Connecticut, andVermont providing personal and business banking, insurance, and wealth management services.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)
September 30,
June 30,
December 31,
(In thousands)
2014
2014
2013
Assets
Cash and due from banks
$ 58,624
$ 81,642
$ 56,841
Short-term investments
12,201
31,236
18,698
Total cash and short-term investments
70,825
112,878
75,539
Trading security
14,745
14,971
14,840
Securities available for sale, at fair value
1,058,965
1,080,668
760,048
Securities held to maturity, at amortized cost
42,596
43,178
44,921
Federal Home Loan Bank stock and other restricted securities
54,646
59,479
50,282
Total securities
1,170,952
1,198,296
870,091
Loans held for sale, at fair value
29,091
20,185
15,840
Residential mortgages
1,445,861
1,397,231
1,384,274
Commercial real estate
1,595,400
1,579,500
1,417,120
Commercial and industrial loans
732,960
727,959
687,293
Consumer loans
778,561
745,613
691,836
Total loans
4,552,782
4,450,303
4,180,523
Less: Allowance for loan losses
(34,966)
(34,353)
(33,323)
Net loans
4,517,816
4,415,950
4,147,200
Premises and equipment, net
87,166
86,936
84,459
Other real estate owned
4,854
2,445
2,758
Goodwill
264,770
264,770
256,871
Other intangible assets
12,524
13,761
13,791
Cash surrender value of bank-owned life insurance
103,749
102,988
101,530
Deferred tax asset, net
38,503
37,911
50,711
Other assets
51,908
55,254
54,009
Total assets
$ 6,352,158
$ 6,311,374
$ 5,672,799
Liabilities and stockholders' equity
Demand deposits
$ 844,480
$ 794,574
$ 677,917
NOW deposits
420,290
416,879
353,612
Money market deposits
1,394,558
1,425,348
1,383,856
Savings deposits
474,774
478,770
431,496
Time deposits
1,429,231
1,362,992
1,001,648
Total deposits
4,563,333
4,478,563
3,848,529
Senior borrowings
951,105
964,179
974,428
Subordinated borrowings
89,730
89,713
89,679
Total borrowings
1,040,835
1,053,892
1,064,107
Other liabilities
51,053
88,456
82,101
Total liabilities
5,655,221
5,620,911
4,994,737
Total stockholders' equity
696,937
690,463
678,062
Total liabilities and stockholders' equity
$ 6,352,158
$ 6,311,374
$ 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.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-2)
LOAN ANALYSIS
Annualized growth %
(Dollars in millions)
Sept. 30, 2014
Balance
June 30, 2014
Balance
Dec. 31, 2013
Balance
Quarter ended
September 30, 2014
Year to date
Total residential mortgages
$ 1,446
$ 1,397
$ 1,384
14
%
6
%
Commercial real estate
1,595
1,579
1,417
4
17
Commercial and industrial loans
733
728
688
3
9
Total commercial loans
2,328
2,307
2,105
4
14
Home equity
316
310
307
8
4
Auto and other
463
436
385
26
27
Total consumer loans
779
746
692
18
17
Total loans
$ 4,553
$ 4,450
$ 4,181
9
%
12
%
DEPOSIT ANALYSIS
Annualized growth %
(Dollars in millions)
Sept. 30, 2014
Balance
June 30, 2014
Balance
Acquired Balance (1)
Dec. 31, 2013
Balance
Quarter ended
September 30, 2014
Year to date
Demand
$ 844
$ 795
$ 110
$ 678
25
%
24
%
NOW
420
417
80
354
3
19
Money market
1,395
1,425
124
1,384
(8)
1
Savings
475
479
36
431
(3)
10
Total non-maturity deposits
3,134
3,116
350
2,847
2
10
Total time deposits
1,429
1,363
90
1,002
19
43
Total deposits
$ 4,563
$ 4,479
$ 440
$ 3,849
8
%
19
%
(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. Following the branch acquisition, year to date deposit growth is not annualized.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-3)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In thousands, except per share data)
2014
2013
2014
2013
Interest and dividend income
Loans
$ 43,958
$ 50,025
$ 128,761
$ 142,549
Securities and other
8,098
4,479
24,265
12,533
Total interest and dividend income
52,056
54,504
153,026
155,082
Interest expense
Deposits
4,877
5,278
14,076
15,693
Borrowings
2,230
3,357
6,906
10,479
Total interest expense
7,107
8,635
20,982
26,172
Net interest income
44,949
45,869
132,044
128,910
Non-interest income
Loan related income
1,471
1,308
4,565
6,669
Mortgage banking income
994
444
2,057
4,790
Deposit related fees
6,449
4,559
18,498
13,623
Insurance commissions and fees
2,632
2,473
8,141
7,877
Wealth management fees
2,330
2,137
7,173
6,471
Total fee income
13,876
10,921
40,434
39,430
Other
520
832
1,446
1,722
Gain on sale of securities, net
245
361
482
1,366
Loss on termination of hedges
-
-
(8,792)
-
Total non-interest income
14,641
12,114
33,570
42,518
Total net revenue
59,590
57,983
165,614
171,428
Provision for loan losses
3,685
3,178
11,070
8,278
Non-interest expense
Compensation and benefits
20,665
18,506
60,803
54,398
Occupancy and equipment
6,780
5,614
20,250
17,119
Technology and communications
3,484
3,304
11,062
9,775
Marketing and promotion
659
590
1,801
1,831
Professional services
830
1,757
3,006
5,011
FDIC premiums and assessments
1,163
856
3,201
2,574
Other real estate owned and foreclosures
13
138
569
445
Amortization of intangible assets
1,236
1,307
3,816
4,029
Merger, restructuring and conversion expenses
238
6,516
6,729
12,355
Other
4,619
4,196
13,072
12,665
Total non-interest expense
39,687
42,784
124,309
120,202
Income before income taxes
16,218
12,021
30,235
42,948
Income tax expense
4,230
3,917
7,888
12,342
Net income
$ 11,988
$ 8,104
$ 22,347
$ 30,606
Earnings per share:
Basic
$ 0.48
$ 0.33
$ 0.90
$ 1.23
Diluted
$ 0.48
$ 0.33
$ 0.90
$ 1.22
Weighted average shares outstanding:
Basic
24,747
24,748
24,721
24,835
Diluted
24,861
24,873
24,835
25,001
(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 branch acquisition related expenses and bank charter change related
expenses.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4)
Quarters Ended
Sept. 30,
June 30,
Mar. 31,
Dec. 31,
Sept. 30,
(In thousands, except per share data)
2014
2014
2014
2013
2013
Interest and dividend income
Loans
$ 43,958
$ 42,309
$ 42,494
$ 43,566
$ 50,025
Securities and other
8,098
8,866
7,301
5,093
4,479
Total interest and dividend income
52,056
51,175
49,795
48,659
54,504
Interest expense
Deposits
4,877
4,478
4,721
5,166
5,278
Borrowings
2,230
2,368
2,308
3,651
3,357
Total interest expense
7,107
6,846
7,029
8,817
8,635
Net interest income
44,949
44,329
42,766
39,842
45,869
Non-interest income
Loan related income
1,471
1,846
1,248
1,578
1,308
Mortgage banking income
994
691
372
445
444
Deposit related fees
6,449
6,610
5,439
4,717
4,559
Insurance commissions and fees
2,632
2,460
3,049
2,143
2,473
Wealth management fees
2,330
2,294
2,549
2,212
2,137
Total fee income
13,876
13,901
12,657
11,095
10,921
Other
520
402
524
1,227
832
Gain on sale of securities, net
245
203
34
3,392
361
Loss on termination of hedges
-
-
(8,792)
-
-
Total non-interest income
14,641
14,506
4,423
15,714
12,114
Total net revenue
59,590
58,835
47,189
55,556
57,983
Provision for loan losses
3,685
3,989
3,396
3,100
3,178
Non-interest expense
Compensation and benefits
20,665
20,279
19,859
16,736
18,506
Occupancy and equipment
6,780
6,656
6,814
5,421
5,614
Technology and communications
3,484
3,800
3,778
3,169
3,304
Marketing and promotion
659
621
521
765
590
Professional services
830
1,024
1,152
1,558
1,757
FDIC premiums and assessments
1,163
1,029
1,009
899
856
Other real estate owned and foreclosures
13
33
523
255
138
Amortization of intangible assets
1,236
1,274
1,306
1,239
1,307
Merger, restructuring and conversion expenses
238
190
6,301
2,493
6,516
Other
4,619
4,357
4,097
4,622
4,196
Total non-interest expense
39,687
39,263
45,360
37,157
42,784
Income (loss) before income taxes
16,218
15,583
(1,567)
15,299
12,021
Income tax expense (benefit)
4,230
4,119
(461)
4,762
3,917
Net income (loss)
$ 11,988
$ 11,464
$ (1,106)
$ 10,537
$ 8,104
Earnings (losses) per share:
Basic
$ 0.48
$ 0.46
$ (0.04)
$ 0.43
$ 0.33
Diluted
$ 0.48
$ 0.46
$ (0.04)
$ 0.42
$ 0.33
Weighted average shares outstanding:
Basic
24,747
24,715
24,698
24,701
24,748
Diluted
24,861
24,809
24,698
24,857
24,873
(1) See notes on Page F-3
BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS - UNAUDITED - (F-5)
At or for the Quarters Ended
Sept. 30,
June 30,
Mar. 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2014
2014
2014
2013
2013
NON-PERFORMING ASSETS
Non-accruing loans:
Residential mortgages
$ 4,810
$ 5,295
$ 6,071
$ 7,867
$ 8,487
Commercial real estate
12,192
12,583
13,036
13,739
13,800
Commercial and industrial loans
2,225
4,821
2,411
2,356
2,753
Consumer loans
3,660
3,359
3,846
3,493
3,227
Total non-accruing loans
22,887
26,058
25,364
27,455
28,267
Other real estate owned
4,854
2,445
2,418
2,758
3,561
Total non-performing assets
$ 27,741
$ 28,503
$ 27,782
$ 30,213
$ 31,828
Total non-accruing loans/total loans
0.50%
0.59%
0.60%
0.66%
0.70%
Total non-performing assets/total assets
0.44%
0.45%
0.46%
0.53%
0.58%
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period
$ 34,353
$ 33,602
$ 33,323
$ 33,248
$ 33,248
Charged-off loans
(3,360)
(3,516)
(3,317)
(3,462)
(3,417)
Recoveries on charged-off loans
288
278
200
437
239
Net loans charged-off
(3,072)
(3,238)
(3,117)
(3,025)
(3,178)
Provision for loan losses
3,685
3,989
3,396
3,100
3,178
Balance at end of period
$ 34,966
$ 34,353
$ 33,602
$ 33,323
$ 33,248
Allowance for loan losses/total loans
0.77%
0.77%
0.79%
0.80%
0.83%
Allowance for loan losses/non-accruing loans
153%
132%
132%
121%
118%
NET LOAN CHARGE-OFFS
Residential mortgages
$ (394)
$ (602)
$ (1,055)
$ (564)
$ (351)
Commercial real estate
(1,470)
(1,028)
(1,105)
(763)
(1,480)
Commercial and industrial loans
(687)
(1,341)
(215)
(1,042)
(940)
Home equity
(193)
(51)
(458)
45
(174)
Auto and other consumer
(328)
(216)
(284)
(701)
(233)
Total, net
$ (3,072)
$ (3,238)
$ (3,117)
$ (3,025)
$ (3,178)
Net charge-offs (QTD annualized)/average loans
0.28%
0.31%
0.30%
0.31%
0.32%
Net charge-offs (YTD annualized)/average loans
0.29%
0.30%
0.30%
0.29%
0.28%
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent
0.32%
0.34%
0.37%
0.51%
0.42%
90+ Days delinquent and still accruing
0.12%
0.21%
0.22%
0.22%
0.29%
Total accruing delinquent loans
0.44%
0.55%
0.59%
0.73%
0.71%
Non-accruing loans
0.50%
0.59%
0.60%
0.66%
0.70%
Total delinquent and non-accruing loans
0.94%
1.14%
1.19%
1.39%
1.41%
BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-6)
At or for the Quarters Ended
Sept. 30,
June 30,
Mar. 31,
Dec. 31,
Sept. 30,
2014
2014
2014
2013
2013
PER SHARE DATA
Core earnings, diluted
$ 0.46
$ 0.44
$ 0.42
$ 0.40
$ 0.43
Net earnings, diluted
0.48
0.46
(0.04)
0.42
0.33
Tangible book value
16.67
16.40
15.84
16.27
16.08
Total book value
27.69
27.49
26.99
27.08
26.98
Market price at period end
23.49
23.22
25.88
27.27
25.11
Dividends
0.18
0.18
0.18
0.18
0.18
PERFORMANCE RATIOS
Core return on assets
0.73
%
0.71
%
0.71
%
0.73
%
0.81
%
Return on assets
0.77
0.75
(0.08)
0.77
0.61
Core return on equity
6.59
6.32
6.02
5.87
6.29
Core return on tangible equity
11.76
11.34
10.84
10.47
11.18
Return on equity
6.95
6.64
(0.64)
6.18
4.74
Net interest margin, fully taxable equivalent
3.20
3.26
3.35
3.26
3.93
Fee income/Net interest and fee income
23.59
23.87
22.84
21.78
19.23
Efficiency ratio
62.89
62.96
64.42
63.21
60.98
GROWTH
Total commercial loans, year-to-date (annualized)
14
%
19
%
9
%
5
%
1
%
Total loans, year-to-date (annualized)
12
13
6
5
1
Total net revenues, year-to-date, compared to prior year
(3)
(7)
(17)
15
24
Earnings per share, year-to-date, compared to prior year
(27)
(54)
(110)
11
11
Core earnings per share, year-to-date, compared to prior year
(10)
(15)
(22)
(6)
3
FINANCIAL DATA(In millions)
Total assets
$ 6,352
$ 6,311
$ 6,010
$ 5,673
$ 5,450
Total earning assets
5,765
5,700
5,408
5,085
4,856
Total loans
4,553
4,450
4,243
4,181
4,024
Allowance for loan losses
35
34
34
33
33
Total intangible assets
277
279
280
271
272
Total deposits
4,563
4,479
4,219
3,849
3,882
Total stockholders' equity
697
690
678
678
673
Total core income
11.4
10.9
10.4
10.0
10.7
Total net income
12.0
11.5
(1.1)
10.5
8.1
ASSET QUALITY RATIOS
Net charge-offs (current quarter annualized)/average loans
0.28
%
0.31
%
0.30
%
0.31
%
0.32
%
Allowance for loan losses/total loans
0.77
0.77
0.79
0.80
0.83
CONDITION RATIOS
Stockholders' equity to total assets
10.97
%
10.94
%
11.27
%
11.95
%
12.35
%
Tangible stockholders' equity to tangible assets
6.91
6.81
6.94
7.54
7.74
Investments to total assets
18.43
18.99
19.05
15.34
14.48
Loans/deposits
100
99
101
109
104
(1)
Reconciliation of Non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 & F-10.
Tangible assets are total assets less total intangible assets.
(2)
All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(3)
See note on tangible equity on pages F-9 & F-10.
BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES - UNAUDITED - (F-7)
Quarters Ended
Sept. 30,
June 30,
Mar. 31,
Dec. 31,
Sept. 30,
(In thousands)
2014
2014
2014
2013
2013
Assets
Loans:
Residential mortgages
$ 1,412,720
$ 1,379,625
$ 1,379,266
$ 1,330,674
$ 1,247,661
Commercial real estate
1,579,258
1,488,462
1,420,382
1,381,628
1,353,923
Commercial and industrial loans
716,787
703,798
684,776
673,292
647,939
Consumer loans
763,296
729,654
699,598
687,540
651,565
Total loans
4,472,061
4,301,539
4,184,022
4,073,134
3,901,088
Securities
1,169,765
1,225,646
1,047,658
813,417
735,307
Short-term investments and loans held for sale
39,496
28,426
28,631
35,438
60,820
Total earning assets
5,681,322
5,555,611
5,260,311
4,921,989
4,697,215
Goodwill and other intangible assets
277,775
279,024
278,386
271,147
271,670
Other assets
305,698
311,176
312,145
305,617
317,722
Total assets
$ 6,264,795
$ 6,145,811
$ 5,850,842
$ 5,498,753
$ 5,286,607
Liabilities and stockholders' equity
Deposits:
NOW
$ 417,802
$ 425,824
$ 409,631
$ 348,600
$ 345,682
Money market
1,405,454
1,448,624
1,490,408
1,392,570
1,329,591
Savings
480,036
481,790
463,615
435,766
442,408
Time
1,406,914
1,152,651
1,069,987
1,044,850
1,064,199
Total interest-bearing deposits
3,710,206
3,508,889
3,433,641
3,221,786
3,181,880
Borrowings
980,135
1,113,431
899,458
857,848
708,798
Total interest-bearing liabilities
4,690,341
4,622,320
4,333,099
4,079,634
3,890,678
Non-interest-bearing demand deposits
824,489
779,775
749,982
681,368
658,568
Other liabilities
60,088
52,712
76,258
56,261
52,874
Total liabilities
5,574,918
5,454,807
5,159,339
4,817,263
4,602,120
Total stockholders' equity
689,877
691,004
691,503
681,490
684,487
Total liabilities and stockholders' equity
$ 6,264,795
$ 6,145,811
$ 5,850,842
$ 5,498,753
$ 5,286,607
Supplementary data
Total non-maturity deposits
$ 3,127,781
$ 3,136,013
$ 3,113,636
$ 2,858,304
$ 2,776,249
Total deposits
4,534,695
4,288,664
4,183,623
3,903,154
3,840,448
Fully taxable equivalent income adjustment
859
852
718
639
652
Total average tangible equity
412,102
411,980
413,117
410,343
412,817
(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) - UNAUDITED - (F-8)
Quarters Ended
Sept. 30,
June 30,
Mar. 31,
Dec. 31,
Sept. 30,
2014
2014
2014
2013
2013
Earning assets
Loans:
Residential mortgages
3.86
%
3.99
%
4.12
%
3.98
%
3.99
%
Commercial real estate
4.21
4.16
4.44
4.73
5.80
Commercial and industrial loans
3.79
3.82
3.97
3.91
6.09
Consumer loans
3.34
3.49
3.56
4.01
4.39
Total loans
3.91
3.96
4.13
4.26
5.02
Securities
2.98
3.13
3.04
2.72
2.77
Short-term investments and loans held for sale
1.65
1.40
1.51
1.92
4.05
Total earning assets
3.70
3.76
3.89
3.97
4.66
Funding liabilities
Deposits:
NOW
0.17
0.15
0.15
0.18
0.18
Money market
0.37
0.36
0.37
0.44
0.44
Savings
0.14
0.16
0.16
0.16
0.16
Time
0.91
0.98
1.15
1.25
1.29
Total interest-bearing deposits
0.52
0.51
0.56
0.64
0.66
Borrowings
0.90
0.85
1.04
1.69
1.88
Total interest-bearing liabilities
0.60
0.59
0.66
0.86
0.88
Net interest spread
3.10
3.17
3.23
3.11
3.78
Net interest margin
3.20
3.26
3.35
3.26
3.93
Cost of funds
0.51
0.51
0.56
0.73
0.75
Cost of deposits
0.43
0.42
0.46
0.53
0.55
(1) Cost of funds includes all deposits and borrowings.
(2) The average yields of deposits include the deposits held for sale.
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-9)
At or for the Quarters Ended
Sept. 30,
June 30,
Mar. 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2014
2014
2014
2013
2013
Net income (loss)
$ 11,988
$ 11,464
$ (1,106)
$ 10,537
$ 8,104
Adj: Gain on sale of securities, net
(245)
(203)
(34)
(3,392)
(361)
Adj: Loss on termination of hedges
-
-
8,792
-
-
Adj: Merger and acquisition expenses
-
52
3,637
932
1,307
Adj: Restructuring, conversion and other expenses (5)
238
138
2,665
1,561
5,709
Adj: Out-of-period adjustment (6)
-
-
1,381
-
(2,222)
Adj: Income taxes
(612)
(536)
(4,923)
364
(1,788)
Total core income
(A)
$ 11,369
$ 10,915
$ 10,412
$ 10,002
$ 10,749
Total revenue
$ 59,590
$ 58,835
$ 47,189
$ 55,556
$ 57,983
Adj: Gain on sale of securities, net
(245)
(203)
(34)
(3,392)
(361)
Adj: Loss on termination of hedges
-
-
8,792
-
-
Adj: Out-of-period adjustment (6)
-
-
1,381
-
(2,222)
Total core revenue
$ 59,345
$ 58,632
$ 57,328
$ 52,164
$ 55,400
Total non-interest expense
$ 39,687
$ 39,263
$ 45,360
$ 37,157
$ 42,784
Less: Total non-core expense (see above)
(238)
(190)
(6,302)
(2,493)
(7,016)
Core non-interest expense
$ 39,449
$ 39,073
$ 39,058
$ 34,664
$ 35,768
(Dollars in millions, except per share data)
Total average assets
(B)
$ 6,265
$ 6,146
$ 5,851
$ 5,499
$ 5,287
Total average stockholders' equity
(C)
690
691
692
681
684
Total average tangible stockholders' equity
(D)
412
412
413
410
413
Total tangible stockholders' equity, period-end (7)
(E)
420
411
398
407
401
Total common shares outstanding, period-end (thousands)
(F)
25,173
25,115
25,105
25,036
24,952
Average diluted shares outstanding (thousands) (8)
(G)
24,861
24,809
24,833
24,857
24,873
Core earnings per share, diluted
(A/G)
$ 0.46
$ 0.44
$ 0.42
$ 0.40
$ 0.43
Tangible book value per share, period-end
(E/F)
$ 16.67
$ 16.40
$ 15.84
$ 16.27
$ 16.08
Core return on assets
(A/B)
0.73
%
0.71
%
0.71
%
0.73
%
0.81
%
Core return on equity
(A/C)
6.59
6.32
6.02
5.87
6.29
Core return on tangible equity (4)
(A/D)
11.76
11.34
10.84
10.47
11.18
Efficiency ratio (1)
62.89
62.96
64.42
63.21
60.98
Supplementary data
Tax credit benefit of tax shelter investments
$ 555
$ 555
$ 555
$ 80
$ 458
Intangible amortization
$ 1,236
$ 1,274
$ 1,306
$ 1,239
$ 1,307
(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 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) Bank charter change related expenses and prior period variable compensation are 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, in the first quarter of 2014,
due to the GAAP net loss compared to core net income for the period.
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-10)
At or for the Nine Months Ended
Sept. 30,
Sept. 30,
(Dollars in thousands)
2014
2013
Net income
$ 22,347
$ 30,606
Adj: Gain on sale of securities, net
(482)
(1,366)
Adj: Loss on termination of hedges
8,792
-
Adj: Merger and acquisition expenses
3,689
12,355
Adj: Restructuring, conversion and other expenses (5)
3,041
500
Adj: Out-of-period adjustment (6)
1,381
(1,287)
Adj: Income taxes
(6,071)
(4,116)
Total core income
(A)
$ 32,697
$ 36,692
Total revenue
$ 165,614
$ 171,428
Adj: Gain on sale of securities and other non-recurring gain, net
(482)
(1,366)
Adj: Loss on termination of hedges
8,792
-
Adj: Out-of-period adjustment (6)
1,381
(1,287)
Total core revenue
$ 175,305
$ 168,775
Total non-interest expense
$ 124,310
$ 120,202
Less: Total non-core expense (see above)
(6,730)
(12,855)
Core non-interest expense
$ 117,580
$ 107,347
(Dollars in millions, except per share data)
Total average assets
(B)
$ 6,087
$ 5,242
Total average stockholders' equity
(C)
691
673
Total average tangible stockholders' equity
(D)
412
401
Total tangible stockholders' equity, period-end (7)
(E)
420
401
Total common shares outstanding, period-end (thousands)
(F)
25,173
24,952
Average diluted common shares outstanding (thousands)
(G)
24,835
25,001
Core earnings per common share, diluted
(A/G)
$ 1.32
$ 1.47
Tangible book value per common share, period-end
(E/F)
$ 16.67
$ 16.08
Core return on assets
(A/B)
0.72
%
0.93
%
Core return on equity
(A/C)
6.31
7.27
Core return on tangible equity (4)
(A/D)
11.31
13.02
Efficiency ratio (1)
63.41
60.04
Supplementary data
GAAP return on assets
0.49
%
0.47
%
GAAP return on equity
4.31
3.66
Net interest margin
3.27
2.58
Tax credit benefit of tax shelter investments
$ 1,664
$ 1,374
Intangible amortization
$ 3,816
$ 4,029
(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 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) Bank charter change related expenses and prior period variable compensation are 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.
PITTSFIELD, Mass.,Oct. 27, 2014/PRNewswire/ --Berkshire Hills Bancorp, Inc