PITTSFIELD, Mass., April 28, 2014 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported that core earnings per share increased by 5% to $0.42 in the first quarter of 2014 compared to $0.40 in the previous quarter due to strong balance sheet growth. Core earnings per share decreased from $0.54 in the first quarter of 2013 due primarily to lower income on real estate related loans resulting from interest rate related market shifts in 2013.
On January 17, 2014, Berkshire completed the acquisition of 20 branches in Central New York from Bank of America. During the first quarter, the Company recorded non-core charges totaling $0.46 per share after-tax, primarily related to one-time costs recorded with this acquisition. This included $0.25 per share from the Company's election to terminate interest rate swaps; these charges had no net impact on shareholders' equity. Including non-core charges, Berkshire recorded a GAAP loss of $0.04 per share during the first quarter of 2014, compared to per share income of $0.42 in the prior quarter and the first quarter of 2013.
FIRST QUARTER FINANCIAL HIGHLIGHTS (income related comparisons are to prior quarter):
- 7% increase in net interest income
- 14% increase in fee income
- 9% annualized increase in commercial loans
- 11% annualized increase in consumer loans
- 10% increase in deposits, including acquired branches
- 3.35% net interest margin, increased from 3.26% in the prior quarter
- 0.46% non-performing assets/total assets
- 0.30% net loan charge-offs/average loans
CEO Michael Daly stated, "We started the year with solid growth. Commercial loans increased at a near double digit annualized rate, as our lending teams continue to garner market share and new relationships across our footprint. We opened a new branch office in Loudonville, New York and continued to develop our consumer deposit and loan business. Our insurance and wealth management revenues improved and we are extending our reach in newer markets.
"We completed the acquisition of 20 Central New York branches near the start of the year. The integration of these new customers has been successful and our total branch count has increased to 90 full service offices, including 46 in New York. We also announced the recruitment of Scott Houghtaling as SVP/Commercial Leader for our expanded New York operations."
Mr. Daly concluded, "Our net interest margin improved as a result of the branch acquisition. While non-interest expense also increased, organic expense growth was mostly limited to seasonal factors. Our non-core costs were primarily due to the branch acquisition and related termination of interest rate swaps which were previously disclosed. Going forward, we anticipate that our net results will mirror our core operating profitability. We continue to be selective and disciplined in managing our revenue growth, with a goal of maintaining forward momentum in operating results."
DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of $0.18 per share to shareholders of record at the close of business on May 15, 2014, payable on May 29, 2014. This dividend equates to a 2.8% annualized yield based on the $25.56 average closing price of Berkshire's common stock during the first quarter of 2014.
FINANCIAL CONDITION
Berkshire increased its total assets by $338 million (6%) in the most recent quarter due to growth in loans and investment securities. Acquired deposits were used to repay borrowings and to fund asset growth. At quarter-end, measures of asset quality, liquidity, interest rate sensitivity, and capital remained within targets.
As of March 31, 2014, tangible book value per share measured $15.84, compared to $16.27 at the start of the quarter due primarily to the impacts of the branch acquisition. Total book value per share measured $26.99 and $27.08 at these dates, respectively.
Investment securities increased by $275 million during the first quarter. Growth consisted primarily of medium term U.S. agency collateralized mortgage securities, along with municipal bonds and corporate equities.
Total loans increased by $62 million (6% annualized) including 9% annualized commercial loan growth and 11% annualized consumer loan growth. This follows the trend of double digit annualized growth in these loans reported in prior quarters. All regions contributed to commercial loan originations, with strong contributions from Berkshire County and Central and Eastern Massachusetts, as well as asset based lending. Consumer loan growth was primarily in automobile loans reflecting continued expansion by the Syracuse based consumer team. Most of the total loan growth was recorded in the final month of the quarter.
Asset quality metrics remained favorable. Annualized net loan charge-offs measured 0.30% of average loans. Quarter-end non-performing assets decreased to 0.46% of total assets and accruing delinquent loans decreased to 0.59% of total loans. The loan loss allowance measured 0.79% of total loans; approximately 23% of quarter-end loans were balances recorded at fair value in recent bank acquisitions.
Total deposits increased by $370 million (10%) during the first quarter. Deposits added from the New York branch acquisition were recorded at $440 million and acquired balances were retained during the quarter. In conjunction with the deposit acquisition, the Company has de-emphasized select municipal deposit sources and other higher cost deposits. Ongoing development of consumer relationships was demonstrated by a 5% organic increase in personal demand deposit balances, excluding acquired balances. Due to the deposit growth, the loans/deposits ratio decreased to 101% from 109% during the quarter.
Borrowings were initially reduced with the acquired funds and subsequently were increased to fund asset growth. In conjunction with the branch acquisition, the Company terminated all of its interest rate swaps associated with FHLB advances, which had a notional value of $410 million. During the quarter, the Company initiated $300 million in new medium term forward starting swaps.
The ratio of equity/assets measured 11.3% at quarter-end, decreasing from 12.0% at the start of the quarter due to the 6.0% increase in total assets following the branch acquisition. This transaction also increased goodwill and intangible assets. Excluding these assets, the ratio of tangible equity/assets decreased to 6.9% from 7.5%.
RESULTS OF OPERATIONS
First quarter 2014 core earnings totaled $10.4 million ($0.42 per share), compared to $10.0 million ($0.40 per share) in the prior quarter and to $13.5 million ($0.54 per share) in the first quarter of 2013. The core return on assets measured 0.71%, 0.73%, and 1.03% for these periods respectively. The branch acquisition resulted in higher core revenue and expenses in the most recent quarter, compared to the prior quarter.
GAAP earnings include the impact of net non-core charges. The reconciliation of net income and core income, together with related financial measures, is shown in financial table F-9. Non-core charges totaled $11.5 million ($0.46 per share) after-tax in the most recent quarter. These charges included $0.25 per share recorded as a loss on termination of interest rate swap hedges. This was a charge with no impact on shareholders' equity and was related to the branch acquisition. Other non-core charges included $0.10 per share in transaction and integration expenses for the branch acquisition, $0.07 per share in expenses for restructuring and systems conversions, and $0.04 per share for an out-of-period adjustment to interest income recorded on loans previously acquired in business combinations. Including these net non-core charges, first quarter 2014 GAAP results were a loss of $1.1 million ($0.04 per share). GAAP net income totaled $10.5 million ($0.42 per share) in both the prior quarter and in the first quarter of 2013. The GAAP loss resulted in a GAAP ROA of (0.08%) in the most recent quarter, compared to 0.77% and 0.80% in the prior periods, respectively.
Total net interest and fee revenue was $55.4 million in the most recent quarter, which was a 9% increase over the prior quarter, and 2% lower than the first quarter of the previous year due to the decline in residential mortgage fees. First quarter 2014 net interest income totaled $42.8 million, increasing by 7% over the prior quarter and 2% over the first quarter of 2013.
The net interest margin measured 3.35%, 3.26% and 3.73% for these periods, respectively. In the most recent quarter, the margin benefited from the lower cost of acquired deposits and lower interest cost on borrowings as a result of the swap terminations. The cost of funds decreased to 0.56% from 0.73% in the prior quarter and from 0.81% in the first quarter of 2013.
Net interest income includes purchased loan accretion related to loans acquired in business combinations, including recoveries on the collection of acquired impaired loans. Current period purchased loan accretion totaled $2.8 million in the most recent quarter, compared to $2.4 million in the prior quarter, and $3.8 million in the first quarter of 2013. Excluding current and out-of-period purchased loan accretion, the net interest margin was 3.24%, 3.07%, and 3.39% in these respective periods.
Fee income totaled $12.7 million, increasing by $1.6 million (14%) compared to the prior quarter and including the benefit of acquired branch operations and seasonal insurance contingency revenues. Fee income decreased by $1.8 million (12%) compared to the first quarter of 2013. Revenue from mortgage banking and loan related fee income decreased from elevated levels last year due to the midyear increase in interest rates in 2013. Wealth management fees increased by 13% over the first quarter of 2013 due to account growth and improved market conditions. Wealth management generated new business at a 9% annualized rate in the most recent quarter, and the portfolio totaled $1.3 billion at quarter-end. Insurance fees increased by 2% over this period.
The provision for loan losses totaled $3.4 million, continuing its gradual increasing trend as loan volume has increased and acquired loans season. Net charge-offs totaled $3.1 million during the quarter. The provision totaled $3.1 million in the prior quarter and $2.4 million in the first quarter of 2013.
First quarter 2014 core non-interest expense totaled $39.1 million. Including the 20 acquired branches, core expense increased by $4.4 million (13%) compared to the prior quarter and by a similar amount compared to the first quarter of 2013. First quarter expense includes seasonally higher benefits and maintenance expense. Expense growth in the most recent quarter also included targeted investment in commercial and retail market teams. Including net charges for non-core merger, conversion, and restructuring costs previously discussed, GAAP non-interest expense totaled $45.4 million in the most recent quarter. Full time equivalent staff totaled 1,050 at quarter-end, compared to 939 at the start of the quarter. During the first quarter, Berkshire consolidated two of the acquired New York branches which had overlap with existing locations. Additionally, two other branches have been consolidated in 2014 as part of the expense restructuring program. The effective income tax rate was 29% in the most recent quarter, unchanged from the effective rate for the year 2013.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, April 29, 2014 to discuss the results for the quarter and provide guidance about expected future results. Participants should dial-in to the call a few minutes before it begins. Information about the conference call follows:
Dial-in: |
888-317-6003 |
Elite Entry Number: |
0011655 |
Webcast: |
A PDF version of this earnings release is available at the above link. A telephone replay of the call will be available through Wednesday, May 7, 2014 by calling 877-344-7529 and entering conference number: 10043772. The webcast will be available at Berkshire's website above for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank – America's Most Exciting Bank®. The Company has $6.0 billion in assets and 90 full service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services.
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent report on Form 10-K filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. Berkshire does not undertake any obligation to update forward-looking statements.
OUT OF PERIOD ADJUSTMENT
In the first quarter of 2014, the Company recorded a correction of an error to reduce interest income by $1.4 million representing interest income previously recorded on loans acquired in prior years. After evaluating the quantitative and qualitative aspects of these adjustments, the Company concluded that its prior period financial statements were not materially misstated and, therefore, no restatement was required.
NON-GAAP FINANCIAL MEASURES
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, losses recorded for hedge terminations, merger costs, restructuring costs, systems conversion costs, and out-of-period adjustments. Non-core adjustments are presented net of estimated income tax expense or benefit. Similarly, the efficiency ratio is also adjusted for these non-core items and for tax preference items. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, and professional fees. Systems conversion costs relate primarily to the Company's core systems conversion and systems conversions costs in conjunction with this which have been recorded in recent periods. Restructuring costs primarily consist of employee severance costs and costs and losses associated with the disposition of assets which were undertaken as a project to right-size expenses following a decline in revenue in 2013. Out-of-period accounting adjustments for interest income on acquired loans were recorded following systems conversions and merger related accounting activity and were deemed non-core. Non-core expenses include variable rate compensation related to non-core items. The Company evaluates GAAP, core, and non-core items to analyze its effective tax rate and to arrive at core income that is net of an effective core tax rate which is consistent with its analysis of expected core tax items for the year.
CONTACTS
Investor Relations Contact
Allison O'Rourke, Vice President - Investor Relations; 413-236-3149
Media Contact
Ray Smith, Assistant Vice President - Marketing; 413-236-3756
BERKSHIRE HILLS BANCORP, INC. |
||||
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1) |
||||
March 31, |
December 31, |
|||
(In thousands) |
2014 |
2013 |
||
Assets |
||||
Cash and due from banks |
$ 60,023 |
$ 56,841 |
||
Short-term investments |
12,650 |
18,698 |
||
Total cash and short-term investments |
72,673 |
75,539 |
||
Trading security |
14,923 |
14,840 |
||
Securities available for sale, at fair value |
1,033,637 |
760,048 |
||
Securities held to maturity, at amortized cost |
43,159 |
44,921 |
||
Federal Home Loan Bank stock and other restricted securities |
53,124 |
50,282 |
||
Total securities |
1,144,843 |
870,091 |
||
Loans held for sale, at fair value |
7,669 |
15,840 |
||
Residential mortgages |
1,377,771 |
1,384,274 |
||
Commercial real estate |
1,456,976 |
1,417,120 |
||
Commercial and industrial loans |
696,895 |
687,293 |
||
Consumer loans |
710,985 |
691,836 |
||
Total loans |
4,242,627 |
4,180,523 |
||
Less: Allowance for loan losses |
(33,602) |
(33,323) |
||
Net loans |
4,209,025 |
4,147,200 |
||
Premises and equipment, net |
87,805 |
84,459 |
||
Other real estate owned |
2,418 |
2,758 |
||
Goodwill |
264,770 |
256,871 |
||
Other intangible assets |
15,035 |
13,791 |
||
Cash surrender value of bank-owned life insurance |
102,343 |
101,530 |
||
Deferred tax asset, net |
40,202 |
50,711 |
||
Other assets |
63,548 |
54,009 |
||
Total assets |
$ 6,010,331 |
$ 5,672,799 |
||
Liabilities and stockholders' equity |
||||
Demand deposits |
$ 770,841 |
$ 677,917 |
||
NOW deposits |
434,833 |
353,612 |
||
Money market deposits |
1,459,062 |
1,383,856 |
||
Savings deposits |
478,107 |
431,496 |
||
Time deposits |
1,075,740 |
1,001,648 |
||
Total deposits |
4,218,583 |
3,848,529 |
||
Senior borrowings |
936,747 |
974,428 |
||
Subordinated borrowings |
89,696 |
89,679 |
||
Total borrowings |
1,026,443 |
1,064,107 |
||
Other liabilities |
87,715 |
82,101 |
||
Total liabilities |
5,332,741 |
4,994,737 |
||
Total stockholders' equity |
677,590 |
678,062 |
||
Total liabilities and stockholders' equity |
$ 6,010,331 |
$ 5,672,799 |
||
(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits |
||||
and $4 million in loans from the branch acquisition as of that date. |
BERKSHIRE HILLS BANCORP, INC. |
|||||||||
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-2) |
|||||||||
LOAN ANALYSIS |
|||||||||
Annualized growth % |
|||||||||
(Dollars in millions) |
Mar. 31, 2014 |
Dec. 31, 2013 |
Quarter ended |
||||||
Total residential mortgages |
$ 1,378 |
$ 1,384 |
(2) |
% |
|||||
Total commercial real estate |
1,457 |
1,417 |
11 |
||||||
Total commercial and industrial loans |
697 |
688 |
5 |
||||||
Total commercial loans |
2,154 |
2,105 |
9 |
||||||
Home equity |
305 |
307 |
(3) |
||||||
Auto and other |
406 |
385 |
22 |
||||||
Total consumer loans |
711 |
692 |
11 |
||||||
Total loans |
$ 4,243 |
$ 4,181 |
6 |
% |
|||||
DEPOSIT ANALYSIS |
|||||||||
Annualized growth % |
|||||||||
(Dollars in millions) |
Mar. 31, 2014 |
Branch Acquisition Balance |
Dec. 31, 2013 |
Quarter ended |
|||||
Demand |
$ 771 |
$ 110 |
$ 678 |
55 |
% |
||||
NOW |
435 |
80 |
354 |
92 |
|||||
Money market |
1,459 |
124 |
1,384 |
22 |
|||||
Savings |
478 |
36 |
431 |
44 |
|||||
Total non-maturity deposits |
3,143 |
350 |
2,847 |
42 |
|||||
Total time deposits |
1,076 |
90 |
1,002 |
30 |
|||||
Total deposits |
$ 4,219 |
$ 440 |
$ 3,849 |
38 |
% |
||||
(1) The Company acquired 20 branches in Central New York on January 17, 2014, including $440 million in deposits, |
|||||||||
as shown above, and $4 million in loans from the branch acquisition as of that date. |
BERKSHIRE HILLS BANCORP, INC. |
||||
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-3) |
||||
Three Months Ended |
||||
March 31, |
||||
(In thousands, except per share data) |
2014 |
2013 |
||
Interest and dividend income |
||||
Loans |
$ 42,494 |
$ 47,081 |
||
Securities and other |
7,301 |
3,800 |
||
Total interest and dividend income |
49,795 |
50,881 |
||
Interest expense |
||||
Deposits |
4,721 |
5,363 |
||
Borrowings |
2,308 |
3,581 |
||
Total interest expense |
7,029 |
8,944 |
||
Net interest income |
42,766 |
41,937 |
||
Non-interest income |
||||
Loan related fees |
1,248 |
2,717 |
||
Mortgage banking fees |
372 |
2,217 |
||
Deposit related fees |
5,439 |
4,259 |
||
Insurance commissions and fees |
3,049 |
2,997 |
||
Wealth management fees |
2,549 |
2,264 |
||
Total fee income |
12,657 |
14,454 |
||
Other |
524 |
344 |
||
Gain on sale of securities, net |
34 |
- |
||
Loss on termination of hedges |
(8,792) |
- |
||
Total non-interest income |
4,423 |
14,798 |
||
Total net revenue |
47,189 |
56,735 |
||
Provision for loan losses |
3,396 |
2,400 |
||
Non-interest expense |
||||
Compensation and benefits |
19,859 |
17,741 |
||
Occupancy and equipment |
6,814 |
5,768 |
||
Technology and communications |
3,778 |
2,991 |
||
Marketing and promotion |
521 |
638 |
||
Professional services |
1,152 |
1,490 |
||
FDIC premiums and assessments |
1,009 |
828 |
||
Other real estate owned and foreclosures |
523 |
23 |
||
Amortization of intangible assets |
1,306 |
1,377 |
||
Merger, restructuring and conversion expenses |
6,301 |
5,064 |
||
Other |
4,097 |
3,563 |
||
Total non-interest expense |
45,360 |
39,483 |
||
(Loss) income before income taxes |
(1,567) |
14,852 |
||
Income tax (benefit) expense |
(461) |
4,387 |
||
Net (loss) income |
$ (1,106) |
$ 10,465 |
||
Basic and diluted (loss) earnings per share: |
$ (0.04) |
$ 0.42 |
||
Weighted average shares outstanding: |
||||
Basic |
24,698 |
24,948 |
||
Diluted |
24,698 |
25,143 |
||
(1) The Company acquired 20 branches in Central New York on January 17, 2014. The income statement for the |
||||
three months ended March 31, 2014 includes operations of the branch acquisition beginning on that date. |
||||
(2) Merger, restructuring and conversion expenses include acquisition related expenses. |
BERKSHIRE HILLS BANCORP, INC. |
||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4) |
||||||||||
Quarters Ended |
||||||||||
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, |
Mar. 31, |
||||||
(In thousands, except per share data) |
2014 |
2013 |
2013 |
2013 |
2013 |
|||||
Interest and dividend income |
||||||||||
Loans |
$ 42,494 |
$ 43,566 |
$ 50,025 |
$ 45,443 |
$ 47,081 |
|||||
Securities and other |
7,301 |
5,093 |
4,479 |
4,254 |
3,800 |
|||||
Total interest and dividend income |
49,795 |
48,659 |
54,504 |
49,697 |
50,881 |
|||||
Interest expense |
||||||||||
Deposits |
4,721 |
5,166 |
5,278 |
5,052 |
5,363 |
|||||
Borrowings |
2,308 |
3,651 |
3,357 |
3,541 |
3,581 |
|||||
Total interest expense |
7,029 |
8,817 |
8,635 |
8,593 |
8,944 |
|||||
Net interest income |
42,766 |
39,842 |
45,869 |
41,104 |
41,937 |
|||||
Non-interest income |
||||||||||
Loan related fees |
1,248 |
1,578 |
1,308 |
2,644 |
2,717 |
|||||
Mortgage banking fees |
372 |
445 |
444 |
2,129 |
2,217 |
|||||
Deposit related fees |
5,439 |
4,717 |
4,559 |
4,805 |
4,259 |
|||||
Insurance commissions and fees |
3,049 |
2,143 |
2,473 |
2,407 |
2,997 |
|||||
Wealth management fees |
2,549 |
2,212 |
2,137 |
2,070 |
2,264 |
|||||
Total fee income |
12,657 |
11,095 |
10,921 |
14,055 |
14,454 |
|||||
Other |
524 |
1,227 |
832 |
546 |
344 |
|||||
Gain on sale of securities, net |
34 |
3,392 |
361 |
1,005 |
- |
|||||
Loss on termination of hedges |
(8,792) |
- |
- |
- |
- |
|||||
Total non-interest income |
4,423 |
15,714 |
12,114 |
15,606 |
14,798 |
|||||
Total net revenue |
47,189 |
55,556 |
57,983 |
56,710 |
56,735 |
|||||
Provision for loan losses |
3,396 |
3,100 |
3,178 |
2,700 |
2,400 |
|||||
Non-interest expense |
||||||||||
Compensation and benefits |
19,859 |
16,736 |
18,506 |
18,151 |
17,741 |
|||||
Occupancy and equipment |
6,814 |
5,421 |
5,614 |
5,737 |
5,768 |
|||||
Technology and communications |
3,778 |
3,169 |
3,304 |
3,480 |
2,991 |
|||||
Marketing and promotion |
521 |
765 |
590 |
603 |
638 |
|||||
Professional services |
1,152 |
1,558 |
1,757 |
1,764 |
1,490 |
|||||
FDIC premiums and assessments |
1,009 |
899 |
856 |
890 |
828 |
|||||
Other real estate owned and foreclosures |
523 |
255 |
138 |
284 |
23 |
|||||
Amortization of intangible assets |
1,306 |
1,239 |
1,307 |
1,345 |
1,377 |
|||||
Merger, restructuring and conversion expenses |
6,301 |
2,493 |
6,516 |
775 |
5,064 |
|||||
Other |
4,097 |
4,622 |
4,196 |
4,906 |
3,563 |
|||||
Total non-interest expense |
45,360 |
37,157 |
42,784 |
37,935 |
39,483 |
|||||
(Loss) income before income taxes |
(1,567) |
15,299 |
12,021 |
16,075 |
14,852 |
|||||
Income tax (benefit) expense |
(461) |
4,762 |
3,917 |
4,038 |
4,387 |
|||||
Net (loss) income |
$ (1,106) |
$ 10,537 |
$ 8,104 |
$ 12,037 |
$ 10,465 |
|||||
(Loss) earnings per share: |
||||||||||
Basic |
$ (0.04) |
$ 0.43 |
$ 0.33 |
$ 0.49 |
$ 0.42 |
|||||
Diluted |
$ (0.04) |
$ 0.42 |
$ 0.33 |
$ 0.48 |
$ 0.42 |
|||||
Weighted average shares outstanding: |
||||||||||
Basic |
24,698 |
24,701 |
24,748 |
24,779 |
24,948 |
|||||
Diluted |
24,698 |
24,857 |
24,873 |
24,956 |
25,143 |
|||||
(1) See notes on Page F-3 |
BERKSHIRE HILLS BANCORP, INC. |
||||||||||||
ASSET QUALITY ANALYSIS - (F-5) |
||||||||||||
At or for the Quarters Ended |
||||||||||||
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, |
Mar. 31, |
||||||||
(Dollars in thousands) |
2014 |
2013 |
2013 |
2013 |
2013 |
|||||||
NON-PERFORMING ASSETS |
||||||||||||
Non-accruing loans: |
||||||||||||
Residential mortgages |
$ 6,071 |
$ 7,867 |
$ 8,487 |
$ 5,945 |
$ 8,818 |
|||||||
Commercial real estate |
13,036 |
13,739 |
13,800 |
14,948 |
12,396 |
|||||||
Commercial and industrial loans |
2,411 |
2,356 |
2,753 |
3,481 |
3,519 |
|||||||
Consumer loans |
3,846 |
3,493 |
3,227 |
2,405 |
2,325 |
|||||||
Total non-accruing loans |
25,364 |
27,455 |
28,267 |
26,779 |
27,058 |
|||||||
Other real estate owned |
2,418 |
2,758 |
3,561 |
2,713 |
2,513 |
|||||||
Total non-performing assets |
$ 27,782 |
$ 30,213 |
$ 31,828 |
$ 29,492 |
$ 29,571 |
|||||||
Total non-accruing loans/total loans |
0.60% |
0.66% |
0.70% |
0.69% |
0.70% |
|||||||
Total non-performing assets/total assets |
0.46% |
0.53% |
0.58% |
0.56% |
0.56% |
|||||||
PROVISION AND ALLOWANCE FOR LOAN LOSSES |
||||||||||||
Balance at beginning of period |
$ 33,323 |
$ 33,248 |
$ 33,248 |
$ 33,263 |
$ 33,208 |
|||||||
Charged-off loans |
(3,317) |
(3,462) |
(3,417) |
(3,457) |
(2,501) |
|||||||
Recoveries on charged-off loans |
200 |
437 |
239 |
742 |
156 |
|||||||
Net loans charged-off |
(3,117) |
(3,025) |
(3,178) |
(2,715) |
(2,345) |
|||||||
Provision for loan losses |
3,396 |
3,100 |
3,178 |
2,700 |
2,400 |
|||||||
Balance at end of period |
$ 33,602 |
$ 33,323 |
$ 33,248 |
$ 33,248 |
$ 33,263 |
|||||||
Allowance for loan losses/total loans |
0.79% |
0.80% |
0.83% |
0.86% |
0.86% |
|||||||
Allowance for loan losses/non-accruing loans |
132% |
121% |
118% |
124% |
123% |
|||||||
NET LOAN CHARGE-OFFS |
||||||||||||
Residential mortgages |
$ (1,055) |
$ (564) |
$ (351) |
$ (852) |
$ (260) |
|||||||
Commercial real estate |
(1,105) |
(763) |
(1,480) |
(1,283) |
(952) |
|||||||
Commercial and industrial loans |
(215) |
(1,042) |
(940) |
(93) |
(631) |
|||||||
Home equity |
(458) |
45 |
(174) |
(121) |
(199) |
|||||||
Auto and other consumer |
(284) |
(701) |
(233) |
(366) |
(303) |
|||||||
Total, net |
$ (3,117) |
$ (3,025) |
$ (3,178) |
$ (2,715) |
$ (2,345) |
|||||||
Net charge-offs (QTD annualized)/average loans |
0.30% |
0.31% |
0.32% |
0.27% |
0.23% |
|||||||
Net charge-offs (YTD annualized)/average loans |
0.30% |
0.29% |
0.28% |
0.26% |
0.23% |
|||||||
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS |
||||||||||||
30-89 Days delinquent |
0.37% |
0.51% |
0.42% |
0.70% |
0.61% |
|||||||
90+ Days delinquent and still accruing |
0.22% |
0.22% |
0.29% |
0.40% |
0.47% |
|||||||
Total accruing delinquent loans |
0.59% |
0.73% |
0.71% |
1.10% |
1.08% |
|||||||
Non-accruing loans |
0.60% |
0.66% |
0.70% |
0.69% |
0.70% |
|||||||
Total delinquent and non-accruing loans |
1.19% |
1.39% |
1.41% |
1.79% |
1.78% |
BERKSHIRE HILLS BANCORP, INC. |
|||||||||||||
SELECTED FINANCIAL HIGHLIGHTS - (F-6) |
|||||||||||||
At or for the Quarters Ended |
|||||||||||||
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, |
Mar. 31, |
|||||||||
2014 |
2013 |
2013 |
2013 |
2013 |
|||||||||
PER SHARE DATA |
|||||||||||||
Core earnings, diluted |
$ 0.42 |
$ 0.40 |
$ 0.43 |
$ 0.48 |
$ 0.54 |
||||||||
Net earnings, diluted |
(0.04) |
0.42 |
0.33 |
0.48 |
0.42 |
||||||||
Tangible book value |
15.84 |
16.27 |
16.08 |
15.96 |
15.87 |
||||||||
Total book value |
26.99 |
27.08 |
26.98 |
26.82 |
26.68 |
||||||||
Market price at period end |
25.88 |
27.27 |
25.11 |
27.76 |
25.54 |
||||||||
Dividends |
0.18 |
0.18 |
0.18 |
0.18 |
0.18 |
||||||||
PERFORMANCE RATIOS |
|||||||||||||
Core return on assets |
0.71 |
% |
0.73 |
% |
0.81 |
% |
0.92 |
% |
1.03 |
% |
|||
Return on assets |
(0.08) |
0.77 |
0.61 |
0.93 |
0.80 |
||||||||
Core return on equity |
6.02 |
5.87 |
6.29 |
7.13 |
8.10 |
||||||||
Core return on tangible equity |
10.84 |
10.47 |
11.18 |
12.84 |
14.57 |
||||||||
Return on equity |
(0.64) |
6.18 |
4.74 |
7.21 |
6.28 |
||||||||
Net interest margin, fully taxable equivalent |
3.35 |
3.26 |
3.93 |
3.63 |
3.73 |
||||||||
Fee income/Net interest and fee income |
22.84 |
21.78 |
19.23 |
25.48 |
25.63 |
||||||||
Efficiency ratio |
64.42 |
63.21 |
60.98 |
63.05 |
57.14 |
||||||||
GROWTH |
|||||||||||||
Total commercial loans, year-to-date (annualized) |
9 |
% |
5 |
% |
1 |
% |
(2) |
% |
0 |
% |
|||
Total loans, year-to-date (annualized) |
6 |
5 |
1 |
(6) |
(10) |
||||||||
Total deposits, year-to-date (annualized) |
38 |
(6) |
(7) |
(14) |
0 |
||||||||
Total net revenues, year-to-date, compared to prior year |
(17) |
15 |
24 |
28 |
39 |
||||||||
Earnings per share, year-to-date, compared to prior year |
(110) |
11 |
11 |
40 |
50 |
||||||||
Core earnings per share, year-to-date, compared to prior year |
(22) |
(6) |
3 |
11 |
20 |
||||||||
FINANCIAL DATA (In millions) |
|||||||||||||
Total assets |
$ 6,010 |
$ 5,673 |
$ 5,450 |
$ 5,224 |
$ 5,245 |
||||||||
Total earning assets |
5,408 |
5,085 |
4,856 |
4,629 |
4,646 |
||||||||
Total loans |
4,243 |
4,181 |
4,024 |
3,871 |
3,889 |
||||||||
Allowance for loan losses |
34 |
33 |
33 |
33 |
33 |
||||||||
Total intangible assets |
280 |
271 |
272 |
272 |
273 |
||||||||
Total deposits |
4,219 |
3,849 |
3,882 |
3,815 |
4,101 |
||||||||
Total stockholders' equity |
678 |
678 |
673 |
673 |
674 |
||||||||
Total core income |
10.4 |
10.0 |
10.7 |
11.9 |
13.5 |
||||||||
Total net income |
(1.1) |
10.5 |
8.1 |
12.0 |
10.5 |
||||||||
ASSET QUALITY RATIOS |
|||||||||||||
Net charge-offs (current quarter annualized)/average loans |
0.30 |
% |
0.31 |
% |
0.32 |
% |
0.27 |
% |
0.23 |
% |
|||
Allowance for loan losses/total loans |
0.79 |
0.80 |
0.83 |
0.86 |
0.86 |
||||||||
CONDITION RATIOS |
|||||||||||||
Stockholders' equity to total assets |
11.27 |
% |
11.95 |
% |
12.35 |
% |
12.88 |
% |
12.85 |
% |
|||
Tangible stockholders' equity to tangible assets |
6.94 |
7.54 |
7.74 |
8.10 |
8.06 |
||||||||
Investments to total assets |
19.05 |
15.34 |
14.48 |
12.85 |
12.65 |
||||||||
Loans/deposits |
101 |
109 |
104 |
101 |
95 |
||||||||
(1) |
Reconciliation of Non-GAAP financial measures, including all references to core and tangible amounts, appear on page F-9. |
||||||||||||
Tangible assets are total assets less total intangible assets. |
|||||||||||||
(2) |
All performance ratios are annualized and are based on average balance sheet amounts, where applicable. |
||||||||||||
(3) |
See note on Page F-9 on tangible equity. |
BERKSHIRE HILLS BANCORP, INC. |
||||||||||
AVERAGE BALANCES - (F-7) |
||||||||||
Quarters Ended |
||||||||||
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, |
Mar. 31, |
||||||
(In thousands) |
2014 |
2013 |
2013 |
2013 |
2013 |
|||||
Assets |
||||||||||
Loans: |
||||||||||
Residential mortgages |
$ 1,379,266 |
$ 1,330,674 |
$ 1,247,661 |
$ 1,218,192 |
$ 1,290,989 |
|||||
Commercial real estate |
1,420,382 |
1,381,628 |
1,353,923 |
1,381,755 |
1,406,628 |
|||||
Commercial and industrial loans |
684,776 |
673,292 |
647,939 |
627,591 |
601,695 |
|||||
Consumer loans |
699,598 |
687,540 |
651,565 |
634,715 |
644,674 |
|||||
Total loans |
4,184,022 |
4,073,134 |
3,901,088 |
3,862,253 |
3,943,986 |
|||||
Securities |
1,047,658 |
813,417 |
735,307 |
655,396 |
591,304 |
|||||
Short-term investments and loans held for sale |
28,631 |
35,438 |
60,820 |
90,680 |
98,160 |
|||||
Total earning assets |
5,260,311 |
4,921,989 |
4,697,215 |
4,608,329 |
4,633,450 |
|||||
Goodwill and other intangible assets |
278,386 |
271,147 |
271,670 |
272,421 |
273,428 |
|||||
Other assets |
312,145 |
305,617 |
317,722 |
317,856 |
333,485 |
|||||
Total assets |
$ 5,850,842 |
$ 5,498,753 |
$ 5,286,607 |
$ 5,198,606 |
$ 5,240,363 |
|||||
Liabilities and stockholders' equity |
||||||||||
Deposits: |
||||||||||
NOW |
$ 409,631 |
$ 348,600 |
$ 345,682 |
$ 358,255 |
$ 368,392 |
|||||
Money market |
1,490,408 |
1,392,570 |
1,329,591 |
1,358,590 |
1,477,497 |
|||||
Savings |
463,615 |
435,766 |
442,408 |
449,296 |
441,547 |
|||||
Time |
1,069,987 |
1,044,850 |
1,064,199 |
1,087,357 |
1,148,345 |
|||||
Total interest-bearing deposits |
3,433,641 |
3,221,786 |
3,181,880 |
3,253,498 |
3,435,781 |
|||||
Borrowings |
899,458 |
857,848 |
708,798 |
574,822 |
423,739 |
|||||
Total interest-bearing liabilities |
4,333,099 |
4,079,634 |
3,890,678 |
3,828,320 |
3,859,520 |
|||||
Non-interest-bearing demand deposits |
749,982 |
681,368 |
658,568 |
636,469 |
645,923 |
|||||
Other liabilities |
76,258 |
56,261 |
52,874 |
65,568 |
68,509 |
|||||
Total liabilities |
5,159,339 |
4,817,263 |
4,602,120 |
4,530,357 |
4,573,952 |
|||||
Total stockholders' equity |
691,503 |
681,490 |
684,487 |
668,249 |
666,411 |
|||||
Total liabilities and stockholders' equity |
$ 5,850,842 |
$ 5,498,753 |
$ 5,286,607 |
$ 5,198,606 |
$ 5,240,363 |
|||||
Supplementary data |
||||||||||
Total non-maturity deposits |
$ 3,113,636 |
$ 2,858,304 |
$ 2,776,249 |
$ 2,802,610 |
$ 2,933,359 |
|||||
Total deposits |
4,183,623 |
3,903,154 |
3,840,448 |
3,889,967 |
4,081,704 |
|||||
Fully taxable equivalent income adjustment |
718 |
639 |
652 |
644 |
629 |
|||||
Total average tangible equity |
413,117 |
410,343 |
412,817 |
395,828 |
392,983 |
|||||
(1) Average balances for securities available-for-sale are based on amortized cost. Total loans include non-accruing loans. |
||||||||||
(2) Total average tangible equity results from the subtraction of average goodwill and other intangible assets from total average |
||||||||||
stockholders' equity. |
||||||||||
(3) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated balance sheet. |
BERKSHIRE HILLS BANCORP, INC. |
||||||||||
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) - (F-8) |
||||||||||
Quarters Ended |
||||||||||
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, |
Mar. 31, |
||||||
2014 |
2013 |
2013 |
2013 |
2013 |
||||||
Earning assets |
||||||||||
Loans: |
||||||||||
Residential mortgages |
4.12 |
% |
3.98 |
% |
3.99 |
% |
4.19 |
% |
4.04 |
% |
Commercial real estate |
4.44 |
4.73 |
5.80 |
5.27 |
5.45 |
|||||
Commercial and industrial loans |
3.97 |
3.91 |
6.09 |
4.04 |
4.40 |
|||||
Consumer loans |
3.56 |
4.01 |
4.39 |
4.78 |
4.94 |
|||||
Total loans |
4.13 |
4.26 |
5.02 |
4.67 |
4.75 |
|||||
Securities |
3.04 |
2.72 |
2.77 |
3.00 |
3.04 |
|||||
Short-term investments and loans held for sale |
1.51 |
1.92 |
4.05 |
2.02 |
1.83 |
|||||
Total earning assets |
3.89 |
3.97 |
4.66 |
4.38 |
4.51 |
|||||
Funding liabilities |
||||||||||
Deposits: |
||||||||||
NOW |
0.15 |
0.18 |
0.18 |
0.26 |
0.29 |
|||||
Money market |
0.37 |
0.44 |
0.44 |
0.39 |
0.39 |
|||||
Savings |
0.16 |
0.16 |
0.16 |
0.17 |
0.18 |
|||||
Time |
1.15 |
1.25 |
1.29 |
1.23 |
1.23 |
|||||
Total interest-bearing deposits |
0.56 |
0.64 |
0.66 |
0.62 |
0.63 |
|||||
Borrowings |
1.04 |
1.69 |
1.88 |
2.47 |
3.43 |
|||||
Total interest-bearing liabilities |
0.66 |
0.86 |
0.88 |
0.90 |
0.94 |
|||||
Net interest spread |
3.23 |
3.11 |
3.78 |
3.48 |
3.57 |
|||||
Net interest margin |
3.35 |
3.26 |
3.93 |
3.63 |
3.73 |
|||||
Cost of funds |
0.56 |
0.73 |
0.75 |
0.77 |
0.81 |
|||||
Cost of deposits |
0.46 |
0.53 |
0.55 |
0.52 |
0.53 |
|||||
(1) Cost of funds includes all deposits and borrowings. |
BERKSHIRE HILLS BANCORP, INC. |
|||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - (F-9) |
|||||||||||
At or for the Quarters Ended |
|||||||||||
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, |
Mar. 31, |
|||||||
(Dollars in thousands) |
2014 |
2013 |
2013 |
2013 |
2013 |
||||||
Net income |
$ (1,106) |
$ 10,537 |
$ 8,104 |
$ 12,037 |
$ 10,465 |
||||||
Adj: Gain on sale of securities, net |
(34) |
(3,392) |
(361) |
(1,005) |
- |
||||||
Adj: Loss on termination of hedges |
8,792 |
- |
- |
- |
- |
||||||
Adj: Merger and acquisition expenses |
3,637 |
932 |
1,307 |
775 |
4,984 |
||||||
Adj: Restructuring, conversion and other expenses (5) |
2,665 |
1,561 |
5,709 |
- |
80 |
||||||
Adj: Out-of-period adjustment (6) |
1,381 |
- |
(2,222) |
- |
- |
||||||
Adj: Income taxes |
(4,923) |
364 |
(1,788) |
93 |
(2,042) |
||||||
Total core income |
(A) |
$ 10,412 |
$ 10,002 |
$ 10,749 |
$ 11,900 |
$ 13,487 |
|||||
Total revenue |
$ 47,189 |
$ 55,556 |
$ 57,983 |
$ 56,710 |
$ 56,735 |
||||||
Adj: Gain on sale of securities, net |
(34) |
(3,392) |
(361) |
(1,005) |
- |
||||||
Adj: Loss on termination of hedges |
8,792 |
- |
- |
- |
- |
||||||
Adj: Out-of-period adjustment (6) |
1,381 |
- |
(2,222) |
- |
- |
||||||
Total core revenue |
$ 57,328 |
$ 52,164 |
$ 55,400 |
$ 55,705 |
$ 56,735 |
||||||
Total non-interest expense |
$ 45,360 |
$ 37,157 |
$ 42,784 |
$ 37,935 |
$ 39,483 |
||||||
Less: Total non-core expense (see above) |
(6,302) |
(2,493) |
(7,016) |
(775) |
(5,064) |
||||||
Core non-interest expense |
$ 39,058 |
$ 34,664 |
$ 35,768 |
$ 37,160 |
$ 34,419 |
||||||
(Dollars in millions, except per share data) |
|||||||||||
Total average assets |
(B) |
$ 5,851 |
$ 5,499 |
$ 5,287 |
$ 5,199 |
$ 5,240 |
|||||
Total average stockholders' equity |
(C) |
692 |
681 |
684 |
668 |
666 |
|||||
Total average tangible stockholders' equity |
(D) |
413 |
410 |
413 |
396 |
393 |
|||||
Total tangible stockholders' equity, period-end (7) |
(E) |
398 |
407 |
401 |
401 |
401 |
|||||
Total shares outstanding, period-end (thousands) |
(F) |
25,105 |
25,036 |
24,952 |
25,096 |
25,254 |
|||||
Average diluted shares outstanding (thousands) (8) |
(G) |
24,833 |
24,857 |
24,873 |
24,956 |
25,143 |
|||||
Core earnings per share, diluted |
(A/G) |
$ 0.42 |
$ 0.40 |
$ 0.43 |
$ 0.48 |
$ 0.54 |
|||||
Tangible book value per share, period-end |
(E/F) |
$ 15.84 |
$ 16.27 |
$ 16.08 |
$ 15.96 |
$ 15.87 |
|||||
Core return on assets |
(A/B) |
0.71 |
% |
0.73 |
% |
0.81 |
% |
0.92 |
% |
1.03 |
% |
Core return on equity |
(A/C) |
6.02 |
5.87 |
6.29 |
7.13 |
8.10 |
|||||
Core return on tangible equity (4) |
(A/D) |
10.84 |
10.47 |
11.18 |
12.84 |
14.57 |
|||||
Efficiency ratio (1) |
64.42 |
63.21 |
60.98 |
63.05 |
57.14 |
||||||
Supplementary data |
|||||||||||
Tax credit benefit of tax shelter investments |
$ 555 |
$ 80 |
$ 458 |
$ 458 |
$ 458 |
||||||
Intangible amortization |
$ 1,306 |
$ 1,239 |
$ 1,307 |
$ 1,345 |
$ 1,377 |
||||||
(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully |
|||||||||||
taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The |
|||||||||||
Company uses this non-GAAP measure to provide important information regarding its operational efficiency. |
|||||||||||
(2) Ratios are annualized and based on average balance sheet amounts, where applicable. |
|||||||||||
(3) Quarterly data may not sum to year-to-date data due to the out-of-period adjustment recorded in the third quarter of 2013 |
|||||||||||
and rounding. |
|||||||||||
(4) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization of |
|||||||||||
intangible assets, assuming a 40% marginal rate, by tangible equity. |
|||||||||||
(5) Prior period variable compensation is shown above under restructuring, conversion and other expenses. |
|||||||||||
(6) The out of period adjustments shown above relate to interest income earned on loans acquired in bank acquisitions. |
|||||||||||
(7) Total tangible stockholders' equity is computed by taking total stockholders' equity less the intangible assets at period-end. |
|||||||||||
(8) Average diluted shares computed for core earnings per share differ from GAAP average diluted shares due to the GAAP net loss compared to core net |
|||||||||||
income for the period. |
Photo - http://photos.prnewswire.com/prnh/20120131/NE44966LOGO
SOURCE Berkshire Hills Bancorp
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article