Berkshire Hills Reports Record Earnings for 2013; Board Change; Annual Meeting Date Set; Dividend Declared

Berkshire Hills Reports Record Earnings for 2013; Board Change; Annual Meeting
                         Date Set; Dividend Declared

PR Newswire

PITTSFIELD, Mass., Jan. 27, 2014

PITTSFIELD, Mass., Jan. 27, 2014 /PRNewswire/ --Berkshire Hills Bancorp, Inc.
(NYSE: BHLB) reported record net income totaling $41 million in 2013, an
increase of 24% compared to $33 million in the prior year. Earnings per share
increased by 11% to $1.65 and included the impact of shares issued in 2012 for
bank acquisitions. Core earnings increased to a record $47 million in 2013
primarily due to the benefit of growth in New York and Eastern Massachusetts.
Core earnings exclude net non-core charges for acquisitions, restructuring,
and systems conversions. Core earnings per share totaled $1.87 in 2013,
compared to $1.98 in the prior year.

(Logo: http://photos.prnewswire.com/prnh/20120131/NE44966LOGO )

For the fourth quarter of 2013, Berkshire reported net income of $10.5 million
($0.42 per share), an increase of 13% over $9.3 million ($0.38 per share) in
the fourth quarter of 2012. Core earnings totaled $10.0 million ($0.40 per
share) compared to $13.2 million ($0.54 per share) in 2012. Year over year
fourth quarter mortgage banking fees decreased by $5.4 million due to the
decline in refinancing volumes driven by higher mortgage interest rates
compared to the record low rates seen in the second half of 2012.

FOURTH QUARTER FINANCIAL HIGHLIGHTS

  o16% annualized loan growth
  o14% annualized growth in total commercial loans
  o3% decrease in core non-interest expense compared to prior quarter
  o7% decrease in core non-interest expense compared to second quarter
  o0.53% non-performing assets/total assets
  o0.31% net loan charge-offs/average loans

CEO Michael Daly stated, "We produced record revenue and earnings in 2013 due
to ongoing expansion in our New England and New York footprint. Loan growth
was strong in all major categories in recent quarters and our goal is to
produce further market share gains in 2014. Fee revenues increased in the
final months of the year and we further reduced operating expenses through our
restructuring strategies. We remain closely focused on the revenue and
efficiency opportunities that we see for positive operating leverage based on
the benefit of our expanded footprint and upgraded systems."

Mr. Daly continued, "We enter 2014 with further initiatives to build on our
progress. We recently completed the acquisition of 20 New York branches from
Bank of America. We welcomed more than 65,000 new customers, deepening our
presence in the communities between Albany and Syracuse. The Bank opened a
new office in Loudonville, New York this month as part of our ongoing organic
expansion. The Bank has also expanded our brand awareness across our
footprint through strategic media partnerships. We will continue to be
flexible and judicious in managing our growth with the objective of reliable
and attractive returns to investors seeking a quality investment in these
uncertain financial markets."

BOARD CHANGE

Berkshire also announced that Richard J. Murphy has been appointed to the
Board of Directors, replacing Geno Auriemma, effective January 23, 2014. Mr.
Murphy serves as Vice President and General Manager of the Tri-City
ValleyCats, a minor league baseball team based in Troy, New York. With over
25 years of experience in professional sports management, Mr. Murphy brings to
the Board a strong financial acumen, a solid background in brand and
marketing, and close ties to the Albany, NY community.

While Mr. Auriemma is stepping down from the Board, he will continue to serve
as a spokesperson for Berkshire Bank. As Board Chairman, Mr. Daly stated,
"The Board thanks Mr. Auriemma for his significant contribution to expanding
the America's Most Exciting Bank brand in Connecticut and we are pleased to be
continuing that relationship. We also congratulate him on his reappointment
as the head coach of the U.S. Women's National BasketballTeam and we wish him
much success in his current season at the University of Connecticut."

ANNUAL MEETING DATE SET

The Board of Directors voted that the Annual Meeting of Shareholders shall be
held on May 8, 2014 at the Crowne Plaza Hotel, One West Street, Pittsfield,
Massachusetts at 10:00 a.m. The date of March 13, 2014 was established as the
record date for the determination of the shareholders entitled to notice of,
and to vote at, the Annual Meeting.

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 February 13, 2014, payable
on February 27, 2014. This dividend equates to a 2.8% annualized yield based
on the $25.97 average closing price of Berkshire's common stock during the
fourth quarter of 2013.

NEW YORK BRANCH ACQUISITION

On January 17, 2014, Berkshire acquired approximately $450 million in deposits
from Bank of America, together with related assets, including approximately $4
million in loans. Berkshire expects to use the proceeds to pay down certain
borrowings and to purchase investment securities. As part of this
transaction, Berkshire acquired 20 branches in Central New York, two of which
were consolidated as part of the transaction.

FINANCIAL CONDITION

Berkshire increased its total assets by $223 million (4%) to $5.7 billion in
the most recent quarter due to growth in loans and investment securities
funded by borrowings. For the year, total assets increased by 7%. At
year-end, measures of asset quality, liquidity, and capital remained within
targets. As of December 31, 2013, tangible book value per share increased to
$16.27 and total book value per share grew to $27.08.

Total loans increased by $157 million (16% annualized) in the fourth quarter,
including double digit annualized growth in all major categories. Berkshire's
loan growth accelerated in the second half of the year, reflecting higher
originations and a decline in runoff after the yield curve steepened in
mid-year. For the full year, loan growth was approximately 5% in total and in
most major categories. Growth of 15% in commercial business loans included
contributions from new commercial banking teams recruited in Hartford,
Syracuse, and Eastern Massachusetts. In the latter market, Berkshire
consolidated its commercial banking team into a new regional headquarters
located on Route 128 in Burlington, and moved its Westborough regional team
into a well located new commercial office. During the year, Berkshire added a
commercial leasing team and new leadership for its expanded small business
lending program. Berkshire also recruited additional mortgage loan
originations leadership and expanded its automobile lending operations across
its footprint under the direction of its Syracuse consumer lending team from
the acquired Beacon Federal Bank.

Berkshire increased its investment securities by $81 million in the fourth
quarter, following a slightly larger increase in the prior quarter due to
improved securities market conditions. Investments have been concentrated in
medium term U.S. agency mortgage backed instruments. Berkshire is further
increasing its portfolio with agency mortgage backed securities in conjunction
with the New York branch acquisition subsequent to year-end.

Asset quality metrics remained favorable at year-end. Annualized net loan
charge-offs measured 0.31% of average loans in the final quarter and 0.29% for
the year. Year-end non-performing assets were 0.53% of total assets, compared
to 0.52% at the start of the year. Accruing delinquent loans decreased to
0.73% of total loans from 1.11% during the year. The loan loss allowance
measured 0.80% of total loans at year-end, compared to 0.83% at the start of
the year. Approximately 24% of year-end loans were balances recorded at fair
value in recent bank acquisitions.

Total non-maturity deposits increased by $29 million (4% annualized) in the
fourth quarter, while time account balances decreased by $62 million (23%
annualized) as higher yielding time accounts matured. For the year, deposits
decreased by $252 million (6%) due to the outplacement of non-relationship
acquired balances and certain higher costing commercial balances primarily in
the second quarter. These changes were in anticipation of the New York
branch purchase announced mid-year, which resulted in approximately a $450
million increase in deposits shortly after year-end. The loan/deposit ratio
measured 109% at year-end, and the pro-forma loan/deposit ratio was estimated
at approximately 97% including the benefit of these acquired branches. Total
borrowings increased by $234 million in the fourth quarter to support the
growth in earning assets. Proceeds from the acquired deposits were planned to
be used in part to repay certain borrowings.

Total equity increased by $5 million during the fourth quarter and $11 million
for the full year, including the benefit of retained earnings and net of stock
repurchases earlier in the year. The ratio of total equity/assets decreased
to 12.0% from 12.6% during the year due to the 7% increase in total assets in
2013. The ratio of tangible equity/assets decreased to 7.5% from 7.8% during
the year.

RESULTS OF OPERATIONS

Berkshire posted record revenue and earnings for the year due to expansion
from organic and acquisition growth strategies, including team recruitment, de
novo branch expansion, and business combinations. Most categories of revenue
and expense increased as a result of this expansion. GAAP earnings include
the impact of net non-core charges for acquisitions, restructuring, and
systems conversions. The reconciliation of net income and core income,
together with related financial measures, is shown on financial tables F-9 and
F-10. In the fourth quarter, the return on assets measured 0.77% and the
return on equity measured 6.18%, with minor impact from non-core items.

Berkshire's fourth quarter net revenue decreased by $4.1 million (7%) year
over year. This was primarily due to the $5.4 million decrease in mortgage
banking fees from record volumes last year before rates increased near
mid-year 2013. Compared to the prior quarter, total net revenue decreased by
$2.4 million (4%) as lower net interest income was partially offset by higher
securities gains.

Net interest income includes purchased loan accretion related to loans
acquired in business combinations. Purchased loan accretion totaled $2.4
million in the most recent quarter, compared to $8.5 million in the prior
quarter; prior quarter results included elevated recoveries of purchased
impaired loans together with an out-of-period accounting adjustment. The net
interest margin was 3.26% in the fourth quarter compared to 3.93% in the prior
quarter. Excluding purchased loan accretion, the net interest margin was
3.07% and 3.21% in these two quarters, respectively, due to lower earning
asset yields in the most recent quarter. The income impact of the margin
change was partially offset by the 5% increase in average earning assets
compared to the prior quarter.

Total fee income increased at a 6% annualized rate in the fourth quarter
compared to the linked quarter, including double digit annualized growth in
several major categories. Net securities gains increased to $3.4 million from
$0.4 million due to the realization of gains on certain bank equity securities
as a result of improved market conditions.

The allowance for loan losses increased slightly to $33.3 million from $33.2
million during the year. The provision for loan losses also increased in 2013
to $11.4 million from $9.6 million in the prior year. Total net loan
charge-offs increased to $11.3 million from $8.8 million primarily due to
portfolio growth. In the most recent quarter, the provision was $3.1 million
and net charge-offs were $3.0 million.

Fourth quarter core non-interest expense decreased by 3% from the linked
quarter and by 7% from the second quarter of 2013 due to the restructuring
program initiated shortly after mid-year. Most major categories of core
expense decreased after mid-year. Full time equivalent employees totaled 939
at year-end. Total fourth quarter GAAP non-interest expense decreased by 16%
year over year and 13% compared to the linked quarter including the impact of
lower non-core charges. The effective income tax rate was 31% for the most
recent quarter and 29% for the full year 2013.

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on
Tuesday, January 28, 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:   4858232
Webcast: berkshirebank.com (investor relations link)

A telephone replay of the call will be available through Wednesday, February
5, 2014 by calling 877-344-7529 and entering conference number: 10038874. 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^®. Including New York branches acquired in January, the Company
has approximately $6.0 billion in assets and 92 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 merger costs, restructuring costs, and
systems conversion costs. Similarly, the efficiency ratio is also adjusted
for these non-core items and for tax preference items. The Company also
adjusts certain equity related measures to exclude intangible assets due to
the importance of these measures to the investment community. Non-GAAP
expense adjustments are primarily related to charges related to merger and
acquisition activity. These charges consist primarily of severance/benefit
related expenses, contract termination costs, and professional fees. There
are additionally non-GAAP adjustments related to non-recurring securities
gains, discontinued operations, the disposition of excess properties, and core
systems conversion costs. In the second half of 2013, non-core restructuring
charges are related to severance costs as a result of management and staffing
changes, along with facilities costs related to excess facilities where the
bank is exiting its occupancy and investment. Non-core items recorded in the
third quarter of 2013 also included the after-tax impact of an out-of-period
accounting adjustment, along with an adjustment of variable compensation based
on the additional revenue recognition.

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)
                               December 31,    September 30,   December 31,
(In thousands)                 2013            2013            2012
Assets
Cash and due from banks        $         $         $      
                               56,841         61,149         63,382
Short-term investments         18,698          15,710          34,862
Total cash and short-term      75,539          76,859          98,244
investments
Trading security               14,840          15,330          16,893
Securities available for sale, 760,048         684,716         466,169
at fair value
Securities held to maturity,   44,921          46,925          51,024
at amortized cost
Federal Home Loan Bank stock
and other restricted           50,282          42,342          39,785
securities
Total securities               870,091         789,313         573,871
Loans held for sale            15,840          27,064          85,368
Residential mortgages          1,384,274       1,313,609       1,324,251
Commercial mortgages           1,417,120       1,366,104       1,413,544
Commercial business loans      687,293         668,983         600,126
Consumer loans                 691,836         675,147         650,733
Total loans                    4,180,523       4,023,843       3,988,654
Less: Allowance for loan       (33,323)        (33,248)        (33,208)
losses
Net loans                      4,147,200       3,990,595       3,955,446
Premises and equipment, net    84,459          83,136          86,461
Other real estate owned        2,758           3,561           1,929
Goodwill                      256,871         256,871         255,199
Other intangible assets        13,791          15,030          19,059
Cash surrender value of        101,530         100,299         88,198
bank-owned life insurance
Deferred tax asset             50,711          61,617          57,729
Other assets                   54,009          45,911          75,305
Total assets                   $           $           $    
                               5,672,799       5,450,256       5,296,809
Liabilities and stockholders'
equity
Demand deposits                $          $          $     
                               677,917        669,878        673,921
NOW deposits                   353,612         352,762         379,880
Money market deposits          1,383,856       1,357,201       1,439,632
Savings deposits               431,496         438,135         436,387
Total non-maturity deposits    2,846,881       2,817,976       2,929,820
Time deposits                  1,001,648       1,064,049       1,170,589
Total deposits                 3,848,529       3,882,025       4,100,409
Senior borrowings              974,428         740,022         358,471
Subordinated notes             89,679          89,663          89,617
Total borrowings               1,064,107       829,685         448,088
Other liabilities             82,101          65,351          81,047
Total liabilities              4,994,737       4,777,061       4,629,544
Total stockholders' equity     678,062         673,195         667,265
Total liabilities and          $           $           $    
stockholders' equity           5,672,799       5,450,256       5,296,809
(1) Certain reclassifications have been made to prior year balances to conform
to the current year presentation.





BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-2)
LOAN ANALYSIS
                                                             Annualized growth
                                                             %
                                  Sept. 30,     Dec. 31,     Quarter    Year
(Dollars in       Dec. 31, 2013   2013          2012         ended      to
millions)         Balance         Balance       Balance      December   date
                                                             31, 2013
Total             $         $        $     
residential                                22     %   5    %
mortgages         1,384            1,314    1,324
Commercial
mortgages:
Construction      139             105           168          132        (17)
Single and        128             132           124          (10)       4
multi-family
Commercial real   1,150           1,129         1,122        7          2
estate
Total commercial  1,417           1,366         1,414        15         0
mortgages
Total commercial  688             669           600          12         15
business loans
Total commercial  2,105           2,035         2,014        14         5
loans
Consumer loans:
Home equity      307             304           325          4          (6)
Other             385             371           326          16         18
Total consumer    692             675           651          10         6
loans
                  $         $        $     
Total loans                                16     %   5    %
                  4,181            4,024    3,989
DEPOSIT ANALYSIS
                                                             Annualized growth
                                                             %
                                  Sept. 30,     Dec. 31,     Quarter    Year
(Dollars in       Dec. 31, 2013   2013          2012         ended      to
millions)         Balance         Balance       Balance      December   date
                                                             31, 2013
                  $         $        $     
Demand                                    5      %   1    %
                    678             670    674
NOW               354             353           380          1          (7)
Money market      1,384           1,357         1,440        8          (4)
Savings           431             438           436          (6)        (1)
Total
non-maturity      2,847           2,818         2,930        4          (3)
deposits
Total time        1,002           1,064         1,170        (23)       (14)
deposits
                  $         $        $     
Total deposits                             (3)    %   (6)  %
                  3,849            3,882    4,100
(1) Quarterly data may not sum to annualized
data due to rounding.





BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-3)
                            Three Months Ended        Years Ended
                            December 31,              December 31,
(In thousands, except per   2013         2012         2013         2012
share data)
Interest and dividend
income
Loans                       $         $         $          $  
                            43,566      47,601      186,115     160,936
Securities and other    5,093        3,887        17,626       15,003
Total interest and dividend 48,659       51,488       203,741      175,939
income
Interest expense
Deposits                    5,166        5,870        20,859       22,482
Borrowings and subordinated 3,651        3,653        14,130       10,069
debentures
Total interest expense  8,817        9,523        34,989       32,551
Net interest income         39,842       41,965       168,752      143,388
Non-interest income
Loan related fees           1,578        1,162        8,247        5,152
Mortgage banking fees       445          5,850        5,235        12,403
Deposit related fees        4,717        4,355        18,340       15,593
Insurance commissions and   2,143        2,565        10,020       10,821
fees
Wealth management fees  2,212        1,865        8,683        7,296
Total fee income        11,095       15,797       50,525       51,265
Other                       1,227        421          2,949        1,306
Gain on sale of securities, 3,392        293          4,758        300
net
Non-recurring gain          -            1,142        -            1,185
Total non-interest          15,714       17,653       58,232       54,056
income
Total net revenue           55,556       59,618       226,984      197,444
Provision for loan          3,100        2,840        11,378       9,590
losses
Non-interest expense
Compensation and benefits   16,736       18,862       71,134       64,081
Occupancy and               5,421        5,985        22,540       19,469
equipment
Technology and              3,169        2,949        12,944       9,467
communications
Marketing and               765          483          2,596        2,031
promotion
Professional services       1,558        1,600        6,569        5,785
FDIC premiums and           899          919          3,473        3,377
assessments
Other real estate owned and 255          66           700          281
foreclosures
Amortization of intangible  1,239        1,357        5,268        5,339
assets
Merger, restructuring and
conversion related          2,493        7,497        14,848       18,019
expenses
Other                       4,622        4,548        17,287       12,957
Total non-interest          37,157       44,266       157,359      140,806
expense
Income from continuing
operations before income    15,299       12,512       58,247       47,048
taxes
Income tax expense          4,762        3,183        17,104       13,223
Net income from continuing  10,537       9,329        41,143       33,825
operations
Loss from discontinued
operations before income
taxes
 (including gain on     -            -            -            (261)
disposals of $63)
Income tax expense          -            -            -            376
Net loss from discontinued  -            -            -            (637)
operations
Net income                 $         $        $         $   
                            10,537      9,329       41,143      33,188
Basic earnings per share:
Continuing operations       $       $       $       $     
                            0.43        0.39        1.66        1.52
Discontinued operations     -            -            -            (0.03)
Total basic earnings per    $       $       $       $     
share                       0.43        0.39        1.66        1.49
Diluted earnings per share:
Continuing operations       $       $       $       $     
                            0.42        0.38        1.65        1.52
Discontinued operations     -            -            -            (0.03)
Total diluted earnings per  $       $       $       $     
share                       0.42        0.38        1.65        1.49
Weighted average shares
outstanding:
Basic                       24,701       24,165       24,802       22,201
Diluted                     24,857       24,396       24,965       22,329





BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)
                        Quarters Ended
                        Dec. 31,   Sept. 30,  June 30,   Mar. 31,   Dec. 31,
(In thousands, except   2013       2013       2013       2013       2012
per share data)
Interest and dividend
income
Loans                   $        $        $        $        $  
                        43,566    50,025    45,443    47,081    47,601
Securities and          5,093      4,479      4,254      3,800      3,887
other
Total interest and      48,659     54,504     49,697     50,881     51,488
dividend income
Interest expense
Deposits                5,166      5,278      5,052      5,363      5,870
Borrowings and          3,651      3,357      3,541      3,581      3,653
subordinated debentures
Total interest          8,817      8,635      8,593      8,944      9,523
expense
Net interest income     39,842     45,869     41,104     41,937     41,965
Non-interest income
Loan related fees       1,578      1,308      2,644      2,717      1,162
Mortgage banking fees   445        444        2,129      2,217      5,850
Deposit related fees    4,717      4,559      4,805      4,259      4,355
Insurance commissions   2,143      2,473      2,407      2,997      2,565
and fees
Wealth management       2,212      2,137      2,070      2,264      1,865
fees
Total fee income    11,095     10,921     14,055     14,454     15,797
Other                   1,227      832        546        344        421
Gain on sale of         3,392      361        1,005      -          293
securities, net
Non-recurring gain      -          -          -          -          1,142
Total non-interest      15,714     12,114     15,606     14,798     17,653
income
Total net revenue       55,556     57,983     56,710     56,735     59,618
Provision for loan      3,100      3,178      2,700      2,400      2,840
losses
Non-interest expense
Compensation and        16,736     18,506     18,151     17,741     18,862
benefits
Occupancy and           5,421      5,614      5,737      5,768      5,985
equipment
Technology and          3,169      3,304      3,480      2,991      2,949
communications
Marketing and           765        590        603        638        483
promotion
Professional services   1,558      1,757      1,764      1,490      1,600
FDIC premiums and       899        856        890        828        919
assessments
Other real estate owned 255        138        284        23         66
and foreclosures
Amortization of         1,239      1,307      1,345      1,377      1,357
intangible assets
Merger, restructuring
and conversion related  2,493      6,516      775        5,064      7,497
expenses
Other                   4,622      4,196      4,906      3,563      4,548
Total non-interest      37,157     42,784     37,935     39,483     44,266
expense
Income from continuing
operations before       15,299     12,021     16,075     14,852     12,512
income taxes
Income tax expense     4,762      3,917      4,038      4,387      3,183
Net income             $        $       $        $        $   
                        10,537    8,104     12,037    10,465    9,329
Basic earnings per
share:
Continuing operations   $      $      $      $      $    
                        0.43      0.33      0.49      0.42      0.39
Discontinued operations -          -          -          -          -
Total basic earnings    $      $      $      $      $    
per share               0.43      0.33      0.49      0.42      0.39
Diluted earnings per
share:
Continuing operations   $      $      $      $      $    
                        0.42      0.33      0.48      0.42      0.38
Discontinued operations -          -          -          -          -
Total diluted earnings  $      $      $      $      $    
per share               0.42      0.33      0.48      0.42      0.38
Weighted average shares
outstanding:
Basic                   24,701     24,748     24,779     24,927     24,165
Diluted                 24,857     24,873     24,956     25,136     24,396
(1) The Company acquired Beacon Federal Bancorp on October 19, 2012. The
income statements include operations of the acquired
 institution as of
that date.





BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS - (F-5)
                           At or for the Quarters Ended
                           Dec. 31,   Sept.     June 30,  Mar. 31,   Dec. 31,
                                      30,
(Dollars in thousands)     2013       2013      2013      2013       2012
NON-PERFORMING ASSETS
Non-accruing loans:
                           $      $      $      $      $   
Residential mortgages       7,867    8,487                    
                                                5,945     8,818     7,466
Commercial mortgages       13,739     13,800    14,948    12,396     12,617
Commercial business        2,356      2,753     3,481     3,519      3,681
loans
Consumer loans             3,493      3,227     2,405     2,325      1,748
Total non-accruing loans   27,455     28,267    26,779    27,058     25,512
Other real estate owned    2,758      3,561     2,713     2,513      1,929
Total non-performing       $      $      $      $      $   
assets                     30,213    31,828            29,571   
                                                29,492               27,441
Total non-accruing         0.66%      0.70%     0.69%     0.70%      0.64%
loans/total loans
Total non-performing       0.53%      0.58%     0.56%     0.56%      0.52%
assets/total assets
PROVISION AND ALLOWANCE
FOR LOAN LOSSES
Balance at beginning of    $      $      $      $      $   
period                     33,248    33,248            33,208   
                                                33,263               33,090
Charged-off loans          (3,462)    (3,417)   (3,457)   (2,501)    (3,073)
Recoveries on              437        239       742       156        351
charged-off loans
Net loans charged-off      (3,025)    (3,178)   (2,715)   (2,345)    (2,722)
Provision for loan         3,100      3,178     2,700     2,400      2,840
losses
                           $      $      $      $      $   
Balance at end of period   33,323    33,248            33,263   
                                                33,248               33,208
Allowance for loan         0.80%      0.83%     0.86%     0.86%      0.83%
losses/total loans
Allowance for loan
losses/non-accruing        121%       118%      124%      123%       130%
loans
NET LOAN CHARGE-OFFS
                           $      $      $      $      $   
Residential mortgages        (564)                          
                                      (351)    (852)    (260)      (1,034)
Commercial mortgages       (763)      (1,480)   (1,283)   (952)      (893)
Commercial business        (1,042)    (940)     (93)      (631)      (496)
loans
Home equity               45         (174)     (121)     (199)      (22)
Other consumer             (701)      (233)     (366)     (303)      (277)
                           $      $      $      $      $   
Total, net                 (3,025)                               
                                      (3,178)   (2,715)   (2,345)   (2,722)
Net charge-offs (QTD
annualized)/average        0.31%      0.32%     0.27%     0.23%      0.28%
loans
Net charge-offs (YTD
annualized)/average        0.29%      0.28%     0.26%     0.23%      0.26%
loans
DELINQUENT AND NON-ACCRUING
LOANS/TOTAL LOANS
30-89 Days delinquent      0.51%      0.42%     0.70%     0.61%      0.63%
90+ Days delinquent and    0.22%      0.29%     0.40%     0.47%      0.48%
still accruing
Total accruing             0.73%      0.71%     1.10%     1.08%      1.11%
delinquent loans
Non-accruing loans         0.66%      0.70%     0.69%     0.70%      0.64%
Total delinquent and       1.39%      1.41%     1.79%     1.78%      1.75%
non-accruing loans



BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS - (F-6)
                                 At or for the Quarters Ended
                                 Dec.      Sept.     June    Mar.    Dec.
                                 31,       30,       30,     31,     31,
                                 2013      2013      2013    2013    2012
PER SHARE DATA
                                 $      $      $     $     $   
    Core earnings, diluted        0.40     0.43                0.54
                                                     0.48    0.54
    Net earnings, diluted        0.42      0.33      0.48    0.42    0.38
    Tangible book value          16.27     16.08     15.96   15.87   15.63
    Total book value             27.08     26.98     26.82   26.68   26.53
    Market price at period end   27.27     25.11     27.76   25.54   23.86
    Dividends                    0.18      0.18      0.18    0.18    0.18
PERFORMANCE RATIOS
    Core return on assets        0.73    % 0.81    % 0.92  % 1.03  % 1.02    %
    Return on assets             0.77      0.61      0.93    0.80    0.72
    Core return on equity        5.87      6.29      7.13    8.10    8.32
    Core return on tangible      10.47     11.18     12.84   14.57   15.24
    equity
    Return on equity             6.18      4.74      7.21    6.28    5.86
    Net interest margin, fully   3.26      3.93      3.63    3.73    3.67
    taxable equivalent
    Fee income/Net interest and  21.78     19.23     25.48   25.63   27.35
    fee income
    Efficiency ratio            63.21     60.98     63.05   57.14   59.68
GROWTH
    Total commercial loans,      5       % 1       % (2)   % 0     % 29      %
    year-to-date (annualized)
    Total loans, year-to-date    5         1         (6)     (10)    35
    (annualized)
    Total deposits, year-to-date (6)       (7)       (14)    0       30
    (annualized)
    Total net revenues,
    year-to-date, compared to    15        24        28      39      39
    prior year
    Earnings per share,
    year-to-date, compared to    11        11        40      50      62
    prior year
    Core earnings per share,
    year-to-date, compared to    (6)       3         11      20      29
    prior year
FINANCIAL DATA (In millions)
                                 $      $      $     $     $  
    Total assets                 5,673     5,450                   5,297
                                                     5,224   5,245
    Total earning assets         5,085     4,856     4,629   4,646   4,683
    Total loans                  4,181     4,024     3,871   3,889   3,989
    Allowance for loan losses    33        33        33      33      33
    Total intangible assets      271       272       272     273     274
    Total deposits               3,849     3,882     3,815   4,101   4,100
    Total stockholders' equity   678       673       673     674     667
    Total core income           10.0      10.7      11.9    13.5    13.2
    Total net income             10.5      8.1       12.0    10.5    9.3
ASSET QUALITY RATIOS
    Net charge-offs (current
    quarter annualized)/average  0.31    % 0.32    % 0.27  % 0.23  % 0.28    %
    loans
    Allowance for loan           0.80      0.83      0.86    0.86    0.83
    losses/total loans
CAPITAL RATIOS
    Stockholders' equity to      11.95   % 12.35   % 12.88 % 12.85 % 12.60   %
    total assets
    Tangible stockholders'       7.54      7.74      8.10    8.06    7.82
    equity to tangible assets
    Reconciliation of Non-GAAP financial measures, including all
(1) references to core and tangible amounts, appear on pages F-9 and
    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.



BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES - (F-7)
                      Quarters Ended
                      Dec. 31,    Sept. 30,  June 30,  Mar. 31,  Dec. 31,
(In thousands)        2013         2013        2013       2013       2012
Assets
Loans:
Residential mortgages $         $        $      $      $   
                      1,330,674   1,247,661  1,218,192  1,290,989  1,340,375
Commercial mortgages  1,381,628    1,353,923   1,381,755  1,406,628  1,404,515
Commercial business   673,292      647,939     627,591    601,695    580,436
loans
Consumer loans        687,540      651,565     634,715    644,674    598,802
Total loans           4,073,134    3,901,088   3,862,253  3,943,986  3,924,128
Securities            813,417      735,307     655,396    591,304    572,268
Short-term
investments and loans 35,438       60,820      90,680     98,160     126,378
held for sale
Total earning assets  4,921,989    4,697,215   4,608,329  4,633,450  4,622,774
Goodwill and other    271,147      271,670     272,421    273,428    267,588
intangible assets
Other assets          305,617      317,722     317,856    333,485    312,665
Total assets          $         $        $      $      $   
                      5,498,753   5,286,607  5,198,606  5,240,363  5,203,027
Liabilities and
stockholders' equity
Deposits:
                      $       $       $      $      $    
NOW                   348,600       345,682                       355,366
                                               358,255   368,392
Money market          1,392,570    1,329,591   1,358,590  1,477,497  1,404,113
Savings               435,766      442,408     449,296    441,547    422,447
Time                  1,044,850    1,064,199   1,087,357  1,148,345  1,161,175
Total
interest-bearing      3,221,786    3,181,880   3,253,498  3,435,781  3,343,101
deposits
Borrowings and notes  857,848      708,798     574,822    423,739    519,831
Total
interest-bearing      4,079,634    3,890,678   3,828,320  3,859,520  3,862,932
liabilities
Non-interest-bearing  681,368      658,568     636,469    645,923    635,044
demand deposits
Other liabilities    56,261       52,874      65,568     68,509     68,475
Total liabilities     4,817,263    4,602,120   4,530,357  4,573,952  4,566,451
Total stockholders'   681,490      684,487     668,249    666,411    636,576
equity
Total liabilities and $         $        $      $      $   
stockholders' equity  5,498,753   5,286,607  5,198,606  5,240,363  5,203,027
Supplementary data
Total non-maturity    $         $        $      $      $   
deposits              2,858,304   2,776,249  2,802,610  2,933,359  2,816,970
Total deposits        3,903,154    3,840,448   3,889,967  4,081,704  3,978,145
Fully taxable
equivalent income     639          652         644        629        667
adjustment
Total average         410,343      412,817     395,828    392,983    368,988
tangible equity
(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.





BERKSHIRE HILLS BANCORP, INC.
AVERAGE YIELDS (Fully Taxable Equivalent - Annualized) - (F-8)
                                   Quarters Ended
                                   Dec. 31,   Sept. 30,   June   Mar.   Dec.
                                                          30,    31,    31,
                                   2013       2013        2013   2013   2012
Earning assets
Loans:
Residential mortgages              3.98     % 3.99      % 4.19 % 4.04 % 4.00 %
Commercial mortgages               4.73       5.80        5.27   5.45   5.78
Commercial business loans          3.91       6.09        4.04   4.40   4.09
Consumer loans                     4.01       4.39        4.78   4.94   4.56
Total loans                        4.24       5.02        4.67   4.75   4.73
Securities                         2.80       2.77        3.00   3.04   3.17
Short-term investments and loans   1.92       4.05        2.02   1.83   2.86
held for sale
Total earning assets               3.97       4.66        4.38   4.51   4.49
Funding liabilities
Deposits:
NOW                                0.18       0.18        0.26   0.29   0.35
Money market                       0.44       0.44        0.39   0.39   0.43
Savings                            0.16       0.16        0.17   0.18   0.20
Time                               1.25       1.29        1.23   1.23   1.31
Total interest-bearing deposits    0.64       0.66        0.62   0.63   0.70
Borrowings and notes               1.69       1.88        2.47   3.43   2.80
Total interest-bearing liabilities 0.86       0.88        0.90   0.94   0.98
Net interest spread                3.11       3.78        3.48   3.57   3.51
Net interest margin                3.26       3.93        3.63   3.73   3.67
Cost of funds                      0.73       0.75        0.77   0.81   0.84
Cost of deposits                   0.53       0.55        0.52   0.53   0.59
(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
                                                             Dec.       Sept.     June       Mar.       Dec.
                                                             31,       30,      30,       31,       31,
(Dollars in thousands)                                       2013       2013      2013       2013       2012
Net income                                                  $        $      $        $        $   
                                                             10,537     8,104     12,037     10,465     9,329
Adj: Gain on sale of securities and other non-recurring      (3,392)    (361)     (1,005)    -          (1,435)
gain, net
Adj: Merger related expenses                                 932        1,307     775        4,984      5,852
Adj: Restructuring expenses                                  1,361      5,209     -          -          -
Adj: System conversion and other expenses                    200        -         -          80         1,645
Adj: Out of period interest revenue adjustment (5)          -          (2,222)   -          -          -
Adj: Variable compensation adjustment (5)                    -          500       -          -          -
Adj: Income taxes                                           364        (1,788)   93         (2,042)    (2,147)
Total core income                                      (A)   $        $       $        $        $  
                                                             10,002     10,749    11,900     13,487     13,244
Total revenue                                               $        $       $        $        $  
                                                             55,556     57,983    56,710     56,735     59,618
Adj: Gain on sale of securities and other non-recurring      (3,392)    (361)     (1,005)    -          (1,435)
gain, net
Adj: Out of period interest revenue adjustment               -          (2,222)   -          -          -
Total core revenue                                           $        $       $        $        $  
                                                             52,164     55,400    55,705     56,735     58,183
Total non-interest expense                                   $        $       $        $        $  
                                                             37,157     42,784    37,935     39,483     44,266
Less: Total non-core expense (see above)                     (2,493)    (6,516)   (775)      (5,064)    (7,497)
Adj: Variable compensation adjustment (5)                    -          (500)     -          -          -
Core non-interest                                            $        $       $        $        $  
expense                  34,664     35,768    37,160     34,419     36,769
(Dollars in millions, except per share data)
Total average                                          (B)   $       $      $       $       $   
assets       5,499      5,287     5,199      5,240      5,203
Total average stockholders'                            (C)   681        684       668        666        637
equity
Total average tangible stockholders'                   (D)   410        413       396        393        369
equity
Total stockholders' equity, period-end                       678        673       673        674        667
Less: Intangible assets, period-end                         (271)      (272)     (272)      (273)      (274)
Total tangible stockholders' equity, period-end     (E)   $       $      $       $       $   
                                                              407      401     401      401      393
Total shares outstanding, period-end                   (F)   25,036     24,952    25,096     25,254     25,148
(thousands)
Average diluted shares outstanding (thousands)         (G)   24,857     24,873    24,956     25,136     24,396
Core earnings per share, diluted                      (A/G) $       $      $       $       $   
                                                              0.40      0.43     0.48      0.54      0.54
Tangible book value per share, period-end              (E/F) $       $      $       $       $   
                                                             16.27      16.08     15.96      15.87      15.63
Core return (annualized) on assets                     (A/B) 0.73     % 0.81    % 0.92     % 1.03     % 1.02     %
Core return (annualized) on equity                    (A/C) 5.87       6.29      7.13       8.10       8.32
Core return (annualized) on tangible equity (4)        (A/D) 10.47      11.18     12.84      14.57      15.24
Efficiency ratio (1)                                         63.21      60.98     63.05      57.14      59.68
Supplementary data
Tax credit benefit of tax shelter investments                $       $      $       $       $   
                                                               80     458     458      458      483
Intangible amortization                                      $        $       $        $        $  
                                                             (1,239)   (1,307)   (1,345)   (1,377)   (1,357)
(1) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of
total net interest income on a fully
 taxable equivalent basis and total core non-interest income adjusted to include tax credit
benefit of tax shelter investments. The
 Company uses this non-GAAP measure, which is used widely in the banking industry, to provide
important information regarding
 its operational efficiency.
(2) Ratios are annualized and based on average balance sheet amounts, where
applicable.
(3) Quarterly data may not sum to year-to-date data due to 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) In the third quarter of 2013, additional revenue was recorded following an out-of-period
adjustment. Based on this additional revenue
 variable compensation was also adjusted accordingly in the third quarter.







BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - (F-10)
                                                               At or for the Years
                                                               Ended
                                                               December   December
                                                               31,       31,
(Dollars in thousands)                                         2013       2012
                                                               $       $   
Net income                                                              
                                                                          
                                                               41,143     33,188
Adj: Gain on sale of securities and other                      (4,758)    (1,485)
non-recurring gain, net
Adj: Merger related expenses                                   7,998      12,509
Adj: Restructuring expenses                                    6,570      -
Adj: System conversion and other expenses                      280        6,147
Adj: Out of period interest revenue adjustment (5)             (1,287)    -
Adj: Variable compensation adjustment (5)                      500        -
Adj: Income taxes                                              (3,750)    (6,114)
                                                               $       $   
Total core income                                     (A)               
                                                                          
                                                               46,696     44,245
                                                               $       $   
Total revenue                                                           
                                                                          
                                                               226,984    197,514
Adj: Gain on sale of securities and other                      (4,758)    (1,485)
non-recurring gain, net
Adj: Out of period interest revenue adjustment                 (1,287)    -
                                                               $       $   
Total core revenue                                                       
                                                                          
                                                               220,939    196,029
                                                               $       $   
Total non-interest expense                                               
                                                                          
                                                               157,359    141,136
Less: Total non-core expense (see above)                       (14,848)   (18,656)
Adj: Variable compensation adjustment (5)                      (500)      -
                                                               $       $   
Core non-interest                                                        
expense                               
                                                               142,011    122,480
(Dollars in millions, except per share data)
                                                               $       $   
Total average                                          (B)               
assets                    
                                                               5,306      4,529
Total average stockholders'                            (C)     675        587
equity
Total average tangible stockholders'                    403        344
equity                        (D)
Total stockholders' equity, period-end                         678        667
Less: Intangible assets, period-end                            (271)      (274)
                                                               $       $   
Total tangible stockholders' equity, period-end     (E)               
                                                                         
                                                               407        393
Total common shares outstanding, period-end            (F)     25,036     25,148
(thousands)
Average diluted common shares outstanding (thousands)  (G)     24,965     22,329
                                                               $       $   
Core earnings per common share, diluted               (A/G)             
                                                                         
                                                               1.87        1.98
                                                               $       $   
Tangible book value per common share, period-end       (E/F)             
                                                                          
                                                               16.27      15.63
Core return (annualized) on assets                     (A/B)   0.88     % 0.98     %
Core return (annualized) on equity                     (A/C)   6.92       7.54
Core return (annualized) on tangible equity (4)        (A/D)   12.37      13.77
Efficiency ratio (1)                                           60.79      58.71
Supplementary data
GAAP return on assets                                          0.78     % 0.73     %
GAAP return on equity                                         6.09       5.66
Net interest margin                                            3.63       3.62
                                                               $       $   
Tax credit benefit of tax shelter investments                            
                                                                          
                                                               1,455      1,976
                                                               $       $   
Intangible amortization                                                  
                                                                          
                                                               (5,268)   (5,346)
(1) Efficiency ratio is computed by dividing total core tangible non-interest
expense by the sum of total net interest income on a fully
 taxable equivalent basis and total core non-interest income adjusted to
include tax credit benefit of tax shelter investments. The
 Company uses this non-GAAP measure, which is used widely in the banking
industry, to provide important information regarding
 its operational efficiency.
(2) Ratios are annualized and based on average balance sheet amounts,
where applicable.
(3) Quarterly data may not sum to year-to-date data due to 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) In the third quarter of 2013, additional revenue was recorded following an
out-of-period adjustment. Based on this additional revenue
 variable compensation was also adjusted accordingly in
the third quarter.
(6) Amounts related to discontinued operations have not been reclassified on the
above schedule,
 although they are reclassified on the balance sheet and income statement.





SOURCE Berkshire Hills Bancorp, Inc.
 
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