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Berkshire Hills Reports 42 Cents First Quarter Core EPS; Dividend Declared

  Berkshire Hills Reports 42 Cents First Quarter Core EPS; Dividend Declared

PR Newswire

PITTSFIELD, Mass., April 28, 2014

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.

LOGO

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):

  o7% increase in net interest income
  o14% increase in fee income
  o9% annualized increase in commercial loans
  o11% annualized increase in consumer loans
  o10% increase in deposits, including acquired branches
  o3.35% net interest margin, increased from 3.26% in the prior quarter
  o0.46% non-performing assets/total assets
  o0.30% 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:            berkshirebank.com (investor relations link)

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     1,033,637           760,048
fair value
Securities held to maturity, at       43,159              44,921
amortized cost
Federal Home Loan Bank stock and      53,124              50,282
other restricted securities
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    102,343             101,530
life insurance
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'   $ 6,010,331         $  5,672,799
equity
(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          Mar. 31,                      Dec. 31,     Quarter ended
millions)            2014                          2013         March 31, 2014
                     Balance                       Balance
Total residential    $                         $        (2)      %
mortgages            1,378                         1,384
Total commercial     1,457                         1,417        11
real estate
Total commercial
and industrial       697                           688          5
loans
Total commercial     2,154                         2,105        9
loans
Home equity         305                           307          (3)
Auto and other       406                           385          22
Total consumer       711                           692          11
loans
Total loans          $                         $        6        %
                     4,243                         4,181
DEPOSIT ANALYSIS
                                                                Annualized
                                                                growth %
                                  Branch
(Dollars in          Mar. 31,                      Dec. 31,     Quarter ended
millions)            2014         Acquisition      2013         March 31, 2014
                     Balance                       Balance
                                  Balance
Demand               $       $         $       55       %
                     771           110          678
NOW                  435          80               354          92
Money market         1,459        124              1,384        22
Savings              478          36               431          44
Total non-maturity   3,143        350              2,847        42
deposits
Total time deposits  1,076        90               1,002        30
Total deposits       $        $         $        38       %
                     4,219          440          3,849
(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     6,301              5,064
expenses
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    $ (0.04)          $  0.42
share:
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 2014       2013       2013       2013      2013
share data)
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        49,795     48,659     54,504     49,697    50,881
dividend income
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            7,029      8,817      8,635      8,593     8,944
expense
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 3,049      2,143      2,473      2,407     2,997
fees
Wealth management         2,549      2,212      2,137      2,070     2,264
fees
Total fee income      12,657     11,095     10,921     14,055    14,454
Other                     524        1,227      832        546       344
Gain on sale of           34         3,392      361        1,005     -
securities, net
Loss on termination of    (8,792)    -          -          -         -
hedges
Total non-interest        4,423      15,714     12,114     15,606    14,798
income
Total net revenue         47,189     55,556     57,983     56,710    56,735
Provision for loan        3,396      3,100      3,178      2,700     2,400
losses
Non-interest expense
Compensation and benefits 19,859     16,736     18,506     18,151    17,741
Occupancy and             6,814      5,421      5,614      5,737     5,768
equipment
Technology and            3,778      3,169      3,304      3,480     2,991
communications
Marketing and promotion 521        765        590        603       638
Professional services     1,152      1,558      1,757      1,764     1,490
FDIC premiums and         1,009      899        856        890       828
assessments
Other real estate owned   523        255        138        284       23
and foreclosures
Amortization of           1,306      1,239      1,307      1,345     1,377
intangible assets
Merger, restructuring and 6,301      2,493      6,516      775       5,064
conversion expenses
Other                     4,097      4,622      4,196      4,906     3,563
Total non-interest        45,360     37,157     42,784     37,935    39,483
expense
(Loss) income before      (1,567)    15,299     12,021     16,075    14,852
income taxes
Income tax (benefit)      (461)      4,762      3,917      4,038     4,387
expense
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.     June 30,  Mar. 31,
                                                 30,
(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             2,411      2,356      2,753     3,481     3,519
industrial loans
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       $ 27,782   $ 30,213   $ 31,828  $ 29,492  $ 29,571
assets
Total non-accruing         0.60%      0.66%      0.70%     0.69%     0.70%
loans/total loans
Total non-performing       0.46%      0.53%      0.58%     0.56%     0.56%
assets/total assets
PROVISION AND ALLOWANCE
FOR LOAN LOSSES
Balance at beginning of    $ 33,323   $ 33,248   $ 33,248  $ 33,263  $ 33,208
period
Charged-off loans          (3,317)    (3,462)    (3,417)   (3,457)   (2,501)
Recoveries on              200        437        239       742       156
charged-off loans
Net loans charged-off      (3,117)    (3,025)    (3,178)   (2,715)   (2,345)
Provision for loan         3,396      3,100      3,178     2,700     2,400
losses
Balance at end of period   $ 33,602   $ 33,323   $ 33,248  $ 33,248  $ 33,263
Allowance for loan         0.79%      0.80%      0.83%     0.86%     0.86%
losses/total loans
Allowance for loan
losses/non-accruing        132%       121%       118%      124%      123%
loans
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             (215)      (1,042)    (940)     (93)      (631)
industrial loans
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        0.30%      0.31%      0.32%     0.27%     0.23%
loans
Net charge-offs (YTD
annualized)/average        0.30%      0.29%      0.28%     0.26%     0.23%
loans
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    0.22%      0.22%      0.29%     0.40%     0.47%
still accruing
Total accruing             0.59%      0.73%      0.71%     1.10%     1.08%
delinquent loans
Non-accruing loans         0.60%      0.66%      0.70%     0.69%     0.70%
Total delinquent and       1.19%      1.39%      1.41%     1.79%     1.78%
non-accruing loans



BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS - (F-6)
                                    At or for the Quarters Ended
                                    Mar. 31,   Dec.    Sept.   June    Mar.
                                               31,     30,     30,     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     3.35       3.26    3.93    3.63    3.73
     taxable equivalent
     Fee income/Net interest and    22.84      21.78   19.23   25.48   25.63
     fee income
     Efficiency ratio              64.42      63.21   60.98   63.05   57.14
 GROWTH
     Total commercial loans,        9        % 5     % 1     % (2)   % 0     %
     year-to-date (annualized)
     Total loans, year-to-date      6          5       1       (6)     (10)
     (annualized)
     Total deposits, year-to-date   38         (6)     (7)     (14)    0
     (annualized)
     Total net revenues,
     year-to-date, compared to      (17)       15      24      28      39
     prior year
     Earnings per share,
     year-to-date, compared to      (110)      11      11      40      50
     prior year
     Core earnings per share,
     year-to-date, compared to      (22)       (6)     3       11      20
     prior year
 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    0.30     % 0.31  % 0.32  % 0.27  % 0.23  %
     loans
     Allowance for loan             0.79       0.80    0.83    0.86    0.86
     losses/total loans
 CONDITION RATIOS
     Stockholders' equity to total  11.27    % 11.95 % 12.35 % 12.88 % 12.85 %
     assets
     Tangible stockholders' equity  6.94       7.54    7.74    8.10    8.06
     to tangible assets
     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.      June 30,  Mar. 31,
                                              30,
(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          684,776    673,292    647,939    627,591    601,695
industrial loans
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  28,631     35,438     60,820     90,680     98,160
and loans held for sale
Total earning assets    5,260,311  4,921,989  4,697,215  4,608,329  4,633,450
Goodwill and other      278,386    271,147    271,670    272,421    273,428
intangible assets
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  3,433,641  3,221,786  3,181,880  3,253,498  3,435,781
deposits
Borrowings              899,458    857,848    708,798    574,822    423,739
Total interest-bearing  4,333,099  4,079,634  3,890,678  3,828,320  3,859,520
liabilities
Non-interest-bearing    749,982    681,368    658,568    636,469    645,923
demand deposits
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'     691,503    681,490    684,487    668,249    666,411
equity
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       718        639        652        644        629
adjustment
Total average tangible  413,117    410,343    412,817    395,828    392,983
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.
(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.   June   Mar.
                                                         30,     30,    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   1.51       1.92       4.05    2.02   1.83
held for sale
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.      Dec.      Sept.     June      Mar.
                                                             31,      31,      30,      30,      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                                          (B)   $         $         $         $         $
assets       5,851    5,499    5,287    5,199    5,240
Total average stockholders'                            (C)   692       681       684       668       666
equity
Total average tangible stockholders'                   (D)   413       410       413       396       393
equity
Total tangible stockholders' equity, period-end (7)    (E)   398       407       401       401       401
Total shares outstanding, period-end                   (F)   25,105    25,036    24,952    25,096    25,254
(thousands)
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.

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SOURCE Berkshire Hills Bancorp

Website: http://www.berkshirebank.com
 
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