BERKSHIRE HILLS BANCORP, INC. PITTSFIELD, Mass., Jan. 25, 2016 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported a 13% increase in fourth quarter core earnings per share to $0.54 in 2015 from $0.48 in 2014. The earnings improvement was driven by 17% revenue growth produced by the Company's expanded operations. Fourth quarter GAAP EPS increased to $0.52 from $0.46. For the year, core earnings per share increased by 16% to $2.09 in 2015 from $1.80 in 2014, while GAAP EPS increased to $1.73 from $1.36. GAAP results in all periods included net non-core charges primarily related to acquisitions and restructuring activities.
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FOURTH QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated):
-- 10% annualized increase in core revenue (8% annualized increase in GAAP
revenue)
-- 19% annualized increase in fee income
-- 3.35% net interest margin
-- 60.6% efficiency ratio
-- 4% annualized loan growth
-- 6% annualized deposit growth
-- 0.29% non-performing assets/assets
-- 0.25% net loan charge-offs/average loans
CEO Michael Daly stated, "We had a strong finish to the year, with ongoing organic growth and integration of our acquired operations. We exceeded our earnings expectations while also continuing to fortify our balance sheet structure. Our focus on revenue driven operating leverage boosted our profitability year-over-year and our balance sheet disciplines delivered further benefit in strong asset quality and improved capital metrics."
"For the year, we recorded 18% revenue growth and built on the power of our franchise investment in several ways. We increased our market share in the middle of our footprint with the acquisition and integration of Hampden Bancorp in our Hartford/Springfield market. Our teams continued to develop our market presence in Eastern Massachusetts and the Boston area, while business lending was further diversified through expansion into national equipment financing. Fee revenue grew significantly with the benefit of investment in market teams across our business lines, including SBA small business lending, wealth management, and our recruitment of an auto lending team."
Mr. Daly concluded, "Business conditions are solid in our markets and we are moving forward on many fronts in delivering preferred solutions to our retail and commercial customers. Our board has approved a 5% increase in our shareholder dividend, which follows the 6% increase granted one year ago. I'm pleased with our continuing progress towards building a premier regional banking franchise and advancing towards our long term profitability objectives."
DIVIDEND INCREASED
The Board of Directors voted to declare a cash dividend of $0.20 per share to shareholders of record at the close of business on February 11, 2016, payable on February 25, 2016. This is a penny increase from $0.19 and the new dividend equates to a 2.8% annualized yield based on the $29.02 average closing price of Berkshire's common stock during the fourth quarter.
ANNUAL MEETING DATE SET
The Board of Directors voted that the Annual Meeting of Shareholders shall be held on May 5, 2016 at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts at 10:00 a.m. The date of March 10, 2016 was established as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Annual Meeting.
FINANCIAL CONDITION
Berkshire improved its balance sheet mix in the most recent quarter, and total assets measured $7.8 billion at year-end. Ongoing loan originations supported a portfolio remix contributing to current strategic objectives. Deposit generation funded loan growth and reduced borrowings, while capital and liquidity measures were further strengthened.
Total loans increased at a 4% annualized rate in the fourth quarter. For the year, total loans increased by 22%, including 8% annualized organic growth along with the benefit of the acquisitions of Hampden Bancorp and Firestone Financial. Berkshire has emphasized growth of its commercial and industrial loans which are often variable rate and tied to other commercial relationship products and services. These loans increased by 30% in 2015, including the benefit of acquired loans. Average deposits increased at a 13% annualized rate in the fourth quarter. For the year deposit growth totaled 20%, including 10% growth from acquired Hampden deposits. Demand deposit balances increased by 24% in 2015 and are a focus of relationship oriented business development in Berkshire's retail and commercial banking markets.
Asset quality metrics remained favorable during the quarter. Annualized net loan charge-offs measured 0.25% of average loans and quarter-end non-performing assets measured 0.29% of total assets. The loan loss allowance increased by 10% in 2015 primarily as a result of the 8% organic loan growth; no allowance was initially recorded for the acquired Hampden and Firestone loans, which were recorded at fair value.
For the year 2015, shareholders' equity increased by $178 million including $157 million related to the issuance of 5.6 million shares for the Hampden and Firestone acquisitions. Including the accretive benefit of the acquisitions, tangible common equity increased by $120 million. This contributed to an increase in the ratio of tangible equity to assets to 7.4% from 7.0%. Total equity similarly increased to 11.3% of assets from 10.9%. Tangible book value per share increased by $0.65, or 4%, to $17.84 and total book value per share improved by $0.48, or 2%, to $28.64.
RESULTS OF OPERATIONS
The fourth quarter core return on tangible equity increased year-over-year to 12.7% in 2015 from 12.0% in 2014. Net non-core charges in both periods were primarily related to acquisition activity. GAAP return on equity improved to 7.3% from 6.5% in the above respective periods. The efficiency ratio improved to 60.6% from 62.5% due to revenue driven positive operating leverage.
Fourth quarter core earnings increased at a 9% annualized rate compared to the linked quarter, including the benefit of 8% annualized revenue growth driven by higher loans and deposits. The net interest margin decreased to 3.35% from 3.37%. Net interest income includes purchased loan accretion which is largely comprised of recoveries on the resolution of impaired loans acquired in previous bank acquisitions. This accretion totaled $2.4 million in the most recent quarter, compared to $2.7 million in the linked quarter and $1.7 million in the fourth quarter of 2014. Excluding this accretion, the net interest margin remained unchanged at 3.22% compared to the linked quarter and benefited from Berkshire's loan portfolio mix strategies which offset the ongoing impact of low interest rates. Before accretion, yields on all major categories of loans increased over the prior quarter. Higher fourth quarter deposit costs reflected targeted promotions in support of the Company's growth strategies. The 19% annualized increase in fee income was primarily due to higher loan related revenues including the benefit of increased commercial loan interest rate swap volume.
The fourth quarter $4.4 million loan loss provision was up slightly over the prior quarter, and contributed to growth in the allowance after absorbing net charge-offs. Core non-interest expense increased including Firestone operations but decreased slightly in relation to average assets. Full time equivalent staff totaled 1,221 positions at year-end.
Berkshire's income tax rate on core income was 16% in the most recent quarter and 17% in the prior quarter. Berkshire's income tax in both quarters benefited by $4.0 million from tax-advantaged commercial development projects including both tax credits and tax deductions on the $2.9 million investment amortization included as a charge against non-interest income. Berkshire's tax rate on GAAP income was 12% in the most recent quarter and further reflected the tax benefit related to non-core Hampden merger related charges recorded earlier in the year.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, January 26, 2016 to discuss the results for the quarter and provide guidance about expected future results. Participants are encouraged to pre-register for the conference call using the following link: dpregister.com/10078526. Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call, and will immediately receive simple instructions via email, with automatic scheduling as an event in their Outlook calendar. Participants may also reach the registration link and access the webcast by logging in through the investor section of our website at ir.berkshirebank.com. Those parties who wish to participate by telephone may participate at the above time by dialing 1-844-792-3726 and asking to join the Berkshire Hills Bancorp (BHLB) earnings call. Telephone participants should dial in a few minutes before the start of the call. A telephone replay of the call will be available through Friday, February 26, 2016 by dialing 877-344-7529 and entering access number 10078526. The webcast will be available on Berkshire's website for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank - America's Most Exciting Bank(®). Berkshire has $7.8 billion in assets and 93 full-service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services.
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. Berkshire does not undertake any obligation to update forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including 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 an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income. The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) 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, systems conversion costs, and professional fees. Restructuring costs primarily consist of costs and losses associated with the disposition of assets and lease terminations. In 2015, the Company's disclosures of organic growth of loans and deposits exclude balances acquired through the business combinations with Hampden Bancorp and Firestone Financial.
CONTACTS
Investor Relations Contact
Allison O'Rourke; Executive Vice President, Investor Relations Officer; 413-236-3149
Media Contact
Elizabeth Mach; Vice President, Marketing Officer; 413-445-8390
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)
----------------------------------------------
December 31, September 30, December 31,
------------ ------------- ------------
(In thousands) 2015 2015 2014
------------- ---- ---- ----
Assets
Cash and due from banks $72,918 $50,716 $54,179
Short-term investments 30,644 42,855 17,575
Total cash and short-
term investments 103,562 93,571 71,754
Trading security 14,189 14,587 14,909
Securities available
for sale, at fair
value 1,154,457 1,176,609 1,091,818
Securities held to
maturity, at amortized
cost 131,652 132,186 43,347
Federal Home Loan Bank
stock and other
restricted securities 71,018 73,069 55,720
Total securities 1,371,316 1,396,451 1,205,794
Loans held for sale, at
fair value 13,191 25,472 19,493
Residential mortgages 1,815,035 1,769,271 1,496,204
Commercial real estate 2,059,767 2,021,300 1,611,567
Commercial and
industrial loans 1,048,263 1,065,325 804,366
Consumer loans 802,171 809,034 768,463
-------------- ------- ------- -------
Total loans 5,725,236 5,664,930 4,680,600
Less: Allowance for
loan losses (39,308) (38,180) (35,662)
------------------- ------- ------- -------
Net loans 5,685,928 5,626,750 4,644,938
Premises and equipment,
net 88,072 86,809 87,279
Other real estate owned 1,725 2,487 2,049
Goodwill 323,943 324,958 264,742
Other intangible assets 10,664 11,586 11,528
Cash surrender value of
bank-owned life
insurance 125,233 124,278 104,588
Deferred tax asset, net 42,526 42,198 28,776
Other assets 65,755 69,928 61,090
------------
Total assets (1) $7,831,915 $7,804,488 $6,502,031
--------------- ---------- ---------- ----------
Liabilities and stockholders' equity
Demand deposits $1,081,860 $1,001,777 $869,302
NOW deposits 510,807 476,351 426,108
Money market deposits 1,408,107 1,485,392 1,407,179
Savings deposits 601,761 603,596 496,344
Time deposits 1,986,600 1,940,213 1,455,746
Total deposits 5,589,135 5,507,329 4,654,679
Senior borrowings 1,174,335 1,211,813 962,576
Subordinated borrowings 89,812 89,798 89,747
----------------------- ------ ------ ------
Total borrowings 1,264,147 1,301,611 1,052,323
Other liabilities 91,444 113,980 85,742
----------------- ------ ------- ------
Total liabilities 6,944,726 6,922,920 5,792,744
Total common
stockholders' equity 887,189 881,568 709,287
---------------------
Total liabilities and
stockholders' equity $7,831,915 $7,804,488 $6,502,031
--------------------- ---------- ---------- ----------
Net shares outstanding 30,974 30,949 25,183
---------------------- ------ ------ ------
(1) The Company acquired Hampden Bancorp, Inc. ("Hampden") on April 17, 2015 with total assets of $688 million and Firestone Financial ("Firestone") on August 7, 2015 with total
assets of $201 million.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-2)
-------------------------------------------------------
LOAN ANALYSIS
-------------
Organic Annualized
Growth %
-------------------
(in millions) Dec. 31, 2015 Sept. 30, 2015 Acquired Dec. 31, 2014 Quarter Year to
ended date
Balance Balance Balance Dec. 31,
2015
Hampden/
Firestone
Balances
--- --------
Total residential
mortgages $1,815 $1,769 $130 $1,496 10% 13%
Commercial real estate 2,060 2,021 240 1,612 8 13
Commercial and
industrial loans 1,048 1,066 233 804 (7) 1
----------------- ----- ----- --- --- --- ---
Total commercial loans 3,108 3,087 473 2,416 3 9
Home equity 361 357 35 319 5 2
Auto and other 441 452 47 450 (11) (13)
-------------- --- --- --- ---
Total consumer loans 802 809 82 769 (3) (6)
-------------------- --- --- --- --- --- ---
Total loans $5,725 $5,665 $685 $4,681 4% 8%
----------- ------ ------ ---- ------ --- ---
DEPOSIT ANALYSIS
----------------
Organic Annualized
Growth %
-------------------
(in millions) Dec. 31, 2015 Sept. 30, 2015 Acquired Dec. 31, 2014 Quarter Year to
ended date
Balance Balance Balance Dec. 31,
2015
Hampden
Balance
--- -------
Demand $1,082 $1,002 $97 $869 32% 13%
NOW 511 476 51 426 29 8
Money market 1,408 1,485 62 1,407 (21) (4)
Savings 601 604 120 497 (2) (3)
------- --- --- --- --- --- ---
Total non-maturity
deposits 3,602 3,567 330 3,199 4 2
Total time deposits 1,987 1,940 154 1,456 10 26
------------------- ----- ----- --- ----- --- ---
Total deposits $5,589 $5,507 $484 $4,655 6% 10%
-------------- ------ ------ ---- ------ --- ---
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-3)
----------------------------------------------------
Three Months Ended Years Ended
Dec. 31, Dec. 31,
-------- --------
(In thousands, except per
share data) 2015 2014 2015 2014
------------------------- ---- ---- ---- ----
Interest and dividend income
Loans $59,055 $45,706 $211,347 $174,467
Securities and other 9,369 8,310 35,683 32,575
-------------------- ----- ----- ------ ------
Total interest and dividend
income 68,424 54,016 247,030 207,042
Interest expense
Deposits 6,661 5,109 22,948 19,185
Borrowings 3,015 2,260 10,233 9,166
---------- ----- ----- ------ -----
Total interest expense 9,676 7,369 33,181 28,351
---------------------- ----- ----- ------ ------
Net interest income 58,748 46,647 213,849 178,691
Non-interest income
Loan related income 2,707 1,763 8,310 6,328
Mortgage banking income 641 504 4,133 2,561
Deposit related fees 6,416 6,137 25,084 24,635
Insurance commissions and
fees 2,254 2,223 10,251 10,364
Wealth management fees 2,326 2,373 9,702 9,546
---------------------- ----- ----- ----- -----
Total fee income 14,344 13,000 57,480 53,434
Other (1,739) 1,200 (5,302) 2,646
Securities (losses) gains,
net (357) - 2,110 482
Loss on termination of
hedges - - - (8,792)
----------------------
Total non-interest income 12,248 14,200 54,288 47,770
------------------------- ------ ------ ------ ------
Total net revenue 70,996 60,847 268,137 226,461
Provision for loan losses 4,431 3,898 16,726 14,968
Non-interest expense
Compensation and benefits 25,819 20,965 97,370 81,768
Occupancy and equipment 7,308 6,655 28,486 26,905
Technology and
communications 4,553 3,702 16,881 14,764
Marketing and promotion 1,012 771 3,306 2,572
Professional services 1,472 1,205 5,172 4,211
FDIC premiums and
assessments 1,220 1,083 4,649 4,284
Other real estate owned and
foreclosures 33 232 833 801
Amortization of intangible
assets 841 996 3,563 4,812
Merger, restructuring and
conversion expense (1) 1,118 1,762 17,611 8,491
Other 4,903 4,305 18,958 17,378
----- ----- ----- ------ ------
Total non-interest expense 48,279 41,676 196,829 165,986
-------------------------- ------ ------ ------- -------
Income before income taxes 18,286 15,273 54,582 45,507
Income tax expense 2,273 3,875 5,064 11,763
------------------ ----- ----- ------
Net income $16,013 $11,398 $49,518 $33,744
---------- ------- ------- ------- -------
Earnings per share:
Basic $0.53 $0.46 $1.74 $1.36
Diluted $0.52 $0.46 $1.73 $1.36
Weighted average shares outstanding:
Basic 30,500 24,758 28,393 24,730
Diluted 30,694 24,912 28,564 24,854
(1) Merger, restructuring and conversion expenses include Firestone acquisition, Hampden acquisition, branch restructuring, and Q1 2014 branch acquisition related expenses.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)
----------------------------------------------------
Quarters Ended
--------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(In thousands, except per
share data) 2015 2015 2015 2015 2014
------------------------- ---- ---- ---- ---- ----
Interest and dividend income
Loans $59,055 $56,343 $51,504 $44,445 $45,706
Securities and other 9,369 9,109 8,899 8,306 8,310
-------------------- ----- ----- ----- ----- -----
Total interest and dividend
income 68,424 65,452 60,403 52,751 54,016
Interest expense
Deposits 6,661 6,046 5,292 4,949 5,109
Borrowings 3,015 2,435 2,474 2,309 2,260
---------- ----- ----- ----- ----- -----
Total interest expense 9,676 8,481 7,766 7,258 7,369
---------------------- ----- ----- ----- ----- -----
Net interest income 58,748 56,971 52,637 45,493 46,647
Non-interest income
Loan related income 2,707 1,537 2,783 1,283 1,763
Mortgage banking income 641 693 1,546 1,253 504
Deposit related fees 6,416 6,549 6,442 5,677 6,137
Insurance commissions and
fees 2,254 2,544 2,486 2,967 2,223
Wealth management fees 2,326 2,376 2,397 2,603 2,373
---------------------- ----- ----- ----- ----- -----
Total fee income 14,344 13,699 15,654 13,783 13,000
Other (1,739) (1,050) (1,258) (1,255) 1,200
Securities gains, net (357) 49 2,384 34 -
Loss on termination of
hedges - - - - -
----------------------
Total non-interest income 12,248 12,698 16,780 12,562 14,200
------------------------- ------ ------ ------ ------ ------
Total net revenue 70,996 69,669 69,417 58,055 60,847
Provision for loan losses 4,431 4,240 4,204 3,851 3,898
Non-interest expense
Compensation and benefits 25,819 25,237 24,503 21,811 20,965
Occupancy and equipment 7,308 6,827 7,243 7,108 6,655
Technology and
communications 4,553 4,645 4,090 3,593 3,702
Marketing and promotion 1,012 781 800 713 771
Professional services 1,472 1,053 1,375 1,272 1,205
FDIC premiums and
assessments 1,220 1,157 1,143 1,129 1,083
Other real estate owned and
foreclosures 33 298 251 251 232
Amortization of intangible
assets 841 887 934 901 996
Merger, restructuring and
conversion expense (1) 1,118 3,361 8,711 4,421 1,762
Other 4,903 5,132 4,975 3,949 4,305
-----
Total non-interest expense 48,279 49,378 54,025 45,148 41,676
-------------------------- ------ ------ ------ ------ ------
Income before income taxes 18,286 16,051 11,188 9,056 15,273
Income tax expense 2,273 1,350 1,144 297 3,875
------------------ ----- ----- ----- --- -----
Net income $16,013 $14,701 $10,044 $8,759 $11,398
---------- ------- ------- ------- ------ -------
Earnings per share:
Basic $0.53 $0.49 $0.35 $0.35 $0.46
Diluted $0.52 $0.49 $0.35 $0.35 $0.46
Weighted average shares outstanding:
Basic 30,500 29,893 28,301 24,803 24,758
Diluted 30,694 30,069 28,461 24,955 24,912
(1) See note on Page F-3
BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS - UNAUDITED - (F-5)
-----------------------------------------
At or for the Quarters Ended
----------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(in thousands) 2015 2015 2015 2015 2014
------------- ---- ---- ---- ---- ----
NON-PERFORMING ASSETS
Non-accruing loans:
Residential mortgages $3,966 $4,565 $4,234 $4,153 $3,908
Commercial real estate 4,882 5,693 9,733 13,516 12,878
Commercial and industrial loans 8,259 8,092 3,031 1,308 1,705
Consumer loans 3,768 3,386 2,991 3,032 3,214
-------------- ----- ----- ----- ----- -----
Total non-accruing loans 20,875 21,736 19,989 22,009 21,705
Other real estate owned 1,725 2,487 674 1,444 2,049
----------------------- ----- ----- --- ----- -----
Total non-performing assets $22,600 $24,223 $20,663 $23,453 $23,754
--------------------------- ------- ------- ------- ------- -------
Total non-accruing loans/total
loans 0.36% 0.38% 0.38% 0.47% 0.46%
Total non-performing assets/
total assets 0.29% 0.31% 0.27% 0.36% 0.37%
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $38,180 $37,197 $36,286 $35,662 $34,966
Charged-off loans (3,538) (3,542) (4,176) (3,432) (3,660)
Recoveries on charged-off loans 235 285 883 205 458
------------------------------- --- --- --- --- ---
Net loans charged-off (3,303) (3,257) (3,293) (3,227) (3,202)
Provision for loan losses 4,431 4,240 4,204 3,851 3,898
------------------------- ----- ----- ----- ----- -----
Balance at end of period $39,308 $38,180 $37,197 $36,286 $35,662
------------------------ ------- ------- ------- ------- -------
Allowance for loan losses/total
loans 0.69% 0.67% 0.70% 0.77% 0.76%
Allowance for loan losses/non-
accruing loans 188% 176% 186% 165% 164%
NET LOAN CHARGE-OFFS
Residential mortgages $(633) $(354) $(367) $(299) $(181)
Commercial real estate (1,152) (1,343) (2,461) (2,007) (1,810)
Commercial and industrial loans (1,056) (1,098) (124) (375) (540)
Home equity (118) (135) (174) (202) (240)
Auto and other consumer (344) (327) (167) (344) (431)
----------------------- ---- ---- ---- ---- ----
Total, net $(3,303) $(3,257) $(3,293) $(3,227) $(3,202)
---------- ------- ------- ------- ------- -------
Net charge-offs (QTD
annualized)/average loans 0.25% 0.26% 0.26% 0.28% 0.29%
Net charge-offs (YTD
annualized)/average loans 0.25% 0.26% 0.26% 0.28% 0.29%
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent 0.34% 0.37% 0.29% 0.28% 0.42%
90+ Days delinquent and still
accruing 0.09% 0.10% 0.12% 0.15% 0.10%
----------------------------- ---- ---- ---- ---- ----
Total accruing delinquent loans 0.43% 0.47% 0.41% 0.43% 0.52%
Non-accruing loans 0.36% 0.38% 0.38% 0.47% 0.46%
Total delinquent and non-
accruing loans 0.79% 0.85% 0.79% 0.90% 0.98%
------------------------- ---- ---- ---- ---- ----
BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-6)
------------------------------------------------
At or for the Quarters Ended (1)
-------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
PER SHARE DATA
Core earnings,
diluted $0.54 $0.54 $0.51 $0.50 $0.48
Net earnings, diluted 0.52 0.49 0.35 0.35 0.46
Tangible book value 17.84 17.61 17.16 17.46 17.19
Total book value 28.64 28.48 28.02 28.36 28.17
Market price at
period end 29.11 27.54 28.48 27.70 26.66
Dividends 0.20 0.19 0.19 0.19 0.18
PERFORMANCE RATIOS (2)
Core return on assets 0.85% 0.86% 0.81% 0.76% 0.75%
Return on assets 0.82 0.78 0.56 0.54 0.71
Core return on equity 7.58 7.58 7.32 7.06 6.89
Core return on
tangible equity 12.68 12.78 12.30 12.14 11.96
Return on equity 7.34 6.90 5.05 5.00 6.52
Net interest margin,
fully taxable
equivalent 3.35 3.37 3.30 3.18 3.23
Fee income/Net
interest and fee
income 19.62 19.38 22.92 23.25 21.79
Efficiency ratio 60.56 60.35 61.51 63.27 62.46
GROWTH
Total commercial
loans, year-to-
date (organic
annualized) 9% 11% 11% 14% 15%
Total loans, year-
to-date (organic
annualized) 8 9 5 4 12
Total net revenues,
year-to-date,
compared to prior
year 18 19 20 23 -
Core earnings per
share, year-to-
date 16 17 17 19 (4)
Earnings per share,
year-to-date (4) 27 34 69 N/M (18)
FINANCIAL DATA (In
millions)
Total assets $7,832 $7,804 $7,519 $6,571 $6,502
Total earning assets 7,140 7,130 6,740 5,993 5,923
Total investments 1,371 1,396 1,379 1,216 1,206
Total loans 5,725 5,665 5,285 4,729 4,681
Allowance for loan
losses 39 38 37 36 36
Total intangible
assets 335 337 321 275 276
Total deposits 5,589 5,507 5,322 4,720 4,655
Total stockholders'
equity 887 882 827 716 709
Total core income 16.5 16.2 14.6 12.4 12.0
Total net income 16.0 14.7 10.0 8.8 11.4
ASSET QUALITY RATIOS
Net charge-offs
(current quarter
annualized)/average
loans 0.25% 0.26% 0.27% 0.28% 0.29%
Allowance for loan
losses/total loans 0.69 0.67 0.70 0.77 0.76
CONDITION RATIOS
Stockholders' equity
to total assets 11.33% 11.30% 11.00% 10.90% 10.91%
Tangible
stockholders' equity
to tangible assets
(3) 7.37 7.30 7.04 7.00 6.95
Investments to total
assets 17.51 17.89 18.35 18.51 18.54
Loans/deposits 102 103 99 100 101
(1) Reconciliation of Non-GAAP financial measures, including all references to core and tangible
amounts, appear on pages F-9 and F-10.
(2) All performance ratios are annualized and are based on average balance sheet amounts, where
applicable.
(3) Tangible assets are total assets less total intangible assets.
(4) N/M means not meaningful.
BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES - UNAUDITED - (F-7)
-----------------------------------
Quarters Ended
--------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(In thousands) 2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Assets
Loans
Residential mortgages $1,790,334 $1,664,505 $1,562,503 $1,469,910 $1,468,271
Commercial real estate 2,034,917 1,948,753 1,889,306 1,646,638 1,611,343
Commercial and industrial
loans 1,033,081 998,782 886,297 806,710 733,750
Consumer loans 807,768 813,986 821,933 765,938 782,584
-------------- ------- ------- ------- ------- -------
Total loans (1) (5) 5,666,100 5,426,026 5,160,039 4,689,196 4,595,948
Securities (2) 1,368,505 1,353,818 1,301,918 1,176,559 1,190,182
Short-term investments
and loans held for sale 51,241 51,832 72,003 55,652 54,843
------------------------ ------ ------ ------ ------ ------
Total earning assets 7,085,846 6,831,676 6,533,960 5,921,407 5,840,973
Goodwill and other
intangible assets 335,440 330,084 303,780 275,732 276,645
Other assets 342,902 379,319 357,026 300,264 304,909
------------ ------- ------- ------- ------- -------
Total assets $7,764,188 $7,541,079 $7,194,766 $6,497,403 $6,422,527
------------ ---------- ---------- ---------- ---------- ----------
Liabilities and stockholders' equity
Deposits (4)
NOW $491,445 $475,433 $460,378 $423,474 $415,806
Money market 1,455,267 1,474,389 1,437,428 1,408,777 1,426,722
Savings 604,215 615,410 606,231 502,412 479,988
Time 1,958,394 1,795,156 1,558,350 1,419,706 1,425,865
---- --------- --------- --------- --------- ---------
Total interest-bearing
deposits 4,509,321 4,360,388 4,062,387 3,754,369 3,748,381
Borrowings 1,256,287 1,198,455 1,287,319 1,106,541 1,053,884
---------- --------- --------- --------- --------- ---------
Total interest-bearing
liabilities 5,765,608 5,558,843 5,349,706 4,860,910 4,802,265
Non-interest-bearing
demand deposits 1,033,844 1,010,613 974,160 869,780 863,795
Other liabilities 91,877 119,322 75,487 65,453 56,805
----------------- ------ ------- ------ ------ ------
Total liabilities 6,891,329 6,688,778 6,399,353 5,796,143 5,722,865
Total stockholders' equity 872,859 852,301 795,413 701,260 699,662
Total liabilities and
stockholders' equity $7,764,188 $7,541,079 $7,194,766 $6,497,403 $6,422,527
--------------------- ---------- ---------- ---------- ---------- ----------
Supplementary data
Total non-maturity
deposits (4) $3,584,771 $3,575,845 $3,478,197 $3,204,443 $3,186,311
Total deposits (4) 5,543,165 5,371,001 5,036,547 4,624,149 4,612,176
Fully taxable equivalent
income adjustment 1,108 1,131 1,068 889 887
Total average tangible
equity (3) 537,419 522,217 491,633 425,528 423,017
(1) Total loans include non-accruing loans.
(2) Average balances for securities available-for-sale are based on amortized cost.
(3) Total average tangible equity results from the subtraction of average goodwill and other intangible assets from total average stockholders' equity.
(4) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated balance sheet.
(5) The average balances of loans include the loans associated with the Tennessee branch sale presented under loans held for sale on the consolidated balance sheet.
BERKSHIRE HILLS BANCORP, INC.
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-8)
--------------------------------------------------------------------------
Quarters Ended
--------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Earning assets
Loans
Residential mortgages 3.72% 3.74% 4.08% 3.94% 3.88%
Commercial real estate 4.17 4.47 4.46 4.12 4.18
Commercial and
industrial loans 5.51 4.79 3.64 3.70 4.22
Consumer loans 3.30 3.29 3.24 3.23 3.35
Total loans 4.15 4.14 4.02 3.86 3.96
Securities 2.96 2.92 2.99 3.10 3.00
Short-term investments
and loans held for
sale 0.89 1.34 1.13 1.40 1.37
Total earning assets 3.89 3.87 3.77 3.67 3.73
Funding liabilities
Deposits
NOW 0.14 0.14 0.15 0.14 0.15
Money market 0.45 0.42 0.37 0.40 0.42
Savings 0.14 0.15 0.17 0.15 0.14
Time 0.93 0.90 0.91 0.92 0.91
Total interest-bearing
deposits 0.59 0.55 0.52 0.53 0.54
Borrowings 0.96 0.81 0.77 0.85 0.85
Total interest-bearing
liabilities 0.67 0.61 0.58 0.61 0.61
Net interest spread 3.22 3.26 3.19 3.06 3.12
Net interest margin 3.35 3.37 3.30 3.18 3.23
Cost of funds (1) 0.56 0.51 0.49 0.51 0.52
Cost of deposits (2) 0.48 0.45 0.42 0.43 0.44
(1) Cost of funds includes all deposits and borrowings.
(2) The average cost 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
----------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(in thousands) 2015 2015 2015 2015 2014
------------- ---- ---- ---- ---- ----
Net income $16,013 $14,701 $10,044 $8,759 $11,398
Adj: Net securities losses (gains) 357 (49) (2,384) (34) -
Adj: Merger and acquisition expense 1,230 2,987 5,665 3,275 1,708
Adj: Restructuring expense (112) 374 3,046 1,146 54
Adj: Income taxes (959) (1,862) (1,815) (772) (1,114)
Total core income (A) $16,529 $16,151 $14,556 $12,374 $12,046
----------------- --- ------- ------- ------- ------- -------
Total revenue $70,996 $69,669 $69,417 $58,055 $60,847
Adj: Net securities losses (gains) 357 (49) (2,384) (34) -
Total core revenue (B) $71,353 $69,620 $67,033 $58,021 $60,847
------------------ --- ------- ------- ------- ------- -------
Total non-interest expense $48,279 $49,378 $54,025 $45,148 $41,676
Less: Total non-core expense (see above) (1,118) (3,361) (8,711) (4,421) (1,762)
Core non-interest expense (C) $47,161 $46,017 $45,314 $40,727 $39,914
------------------------- --- ------- ------- ------- ------- -------
(in millions, except per share data)
Total average assets (D) $7,764 $7,541 $7,195 $6,497 $6,423
Total average stockholders' equity (E) 873 852 795 701 700
Total average tangible stockholders' equity (F) 537 522 492 426 423
Total tangible stockholders' equity, period-end (1) (G) 553 545 507 441 433
Total common shares outstanding, period-end (thousands) (H) 30,974 30,949 29,521 25,253 25,183
Average diluted shares outstanding (thousands) (I) 30,694 30,069 28,461 24,955 24,912
Core earnings per share, diluted (A/I) $0.54 $0.54 $0.51 $0.50 $0.48
Tangible book value per share, period-end (G/H) $17.84 $17.61 $17.16 $17.46 $17.19
Performance ratios (2)
Core return on assets (A/D) 0.85% 0.86% 0.81% 0.76% 0.75%
Core return on equity (A/E) 7.58 7.58 7.32 7.06 6.89
Core return on tangible equity (3) (A/F) 12.68 12.78 12.30 12.14 11.96
Efficiency ratio (C-L)/(B+J+M) 60.56 60.35 61.51 63.27 62.46
Supplementary data (in thousands)
Tax benefit - tax-advantaged investments (4) (J) $4,029 $4,029 $4,034 $4,034 $570
Non-interest income charge - tax-advantaged investments (5) (K) (2,851) (2,851) # (2,851) (2,851) (417)
Net income on tax-advantaged investments (J+K) 1,178 1,178 1,183 1,183 153
Intangible amortization (L) 841 887 934 901 996
Fully taxable equivalent income adjustment (M) 1,108 1,131 1,068 889 887
(1) Total tangible stockholders' equity is computed by taking total stockholders' equity less the intangible assets at period-end.
(2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(3) 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.
(4) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy projects.
(5) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-10)
-----------------------------------------------------------------
At or for the Years Ended
-------------------------
Dec. 31, Dec. 31
(Dollars in thousands) 2015 2014
--------------------- ---- ----
Net income $49,518 $33,744
Adj: Net securities (gains) (2,110) (482)
Adj: Loss on termination of hedges - 8,792
Adj: Merger and acquisition expenses 13,157 5,397
Adj: Restructuring and conversion expense 4,454 3,095
Adj: Out-of-period adjustment (1) - 1,381
Adj: Income taxes (5,409) (7,185)
Total core income (A) $59,610 $44,742
----------------- --- ------- -------
Total revenue 268,137 226,461
Adj: Securities (gains) (2,110) (482)
Adj: Loss on termination of hedges - 8,792
Adj: Out-of-period adjustment (1) - 1,381
Total core revenue (B) $266,027 $236,152
------------------ --- -------- --------
Total non-interest expense $196,830 $165,986
Less: Total non-core expense (see above) (17,611) (8,492)
Core non-interest expense (C) $179,219 $157,494
------------------------- --- -------- --------
(Dollars in millions, except per share data)
Total average assets (D) $7,249 $6,171
Total average stockholders' equity (E) 805 693
Total average tangible stockholders' equity (F) 494 415
Total tangible stockholders' equity, period-end (2) (G) 553 433
Total common shares outstanding, period-end (thousands) (H) 30,974 25,183
Average diluted shares outstanding (thousands) (I) 28,564 24,854
Core earnings per common share, diluted (A/I) $2.09 $1.80
Tangible book value per common share, period-end (G/H) $17.84 $17.19
Performance ratios (3)
Core return on assets (A/D) 0.82% 0.73%
Core return on equity (A/E) 7.40 6.46
Core return on tangible equity (4) (A/F) 12.49 11.48
Efficiency ratio (C-L)/ (B+J+M) 61.34 63.17
Supplementary data
Tax benefit - tax-advantaged investments (5) (J) $16,127 $2,235
Non-interest income charge - tax-advantaged investments (6) (K) (11,406) (1,668)
Net income on tax-advantaged investments (J+K) 4,721 567
Intangible amortization (L) 3,563 4,812
Fully taxable equivalent income adjustment (M) 4,196 3,316
GAAP return on assets 0.68% 0.55%
GAAP return on equity 6.15 4.87
Net interest margin 3.31 3.26
(1) The out of period adjustment shown above relates to interest income earned on loans acquired in bank acquisitions.
(2) Total tangible stockholders' equity is computed by taking total stockholders' equity less the intangible assets at period-end.
(3) Ratios are annualized and based on average balance sheet amounts, where applicable. 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) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy.
(6) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.
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SOURCE Berkshire Hills Bancorp, Inc.
