BERKSHIRE HILLS BANCORP, INC. PITTSFIELD, Mass., Jan. 30, 2017 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported record earnings of $59 million in 2016, an increase of 18% over the prior year. Earnings grew due to positive operating leverage from business expansion and improved efficiency. Fourth quarter 2016 results included the operations of First Choice Bank from the date of its acquisition on December 2.
Fourth quarter 2016 GAAP earnings per share totaled $0.32 and were net of non-core charges (after-tax) totaling $0.24 per share, which were primarily related to merger- related costs. Core earnings per share totaled $0.56 during the quarter. Core earnings is a non-GAAP measure excluding non-core items viewed as not related to normalized operations. EPS results included the impact of 4.4 million shares issued as merger consideration to First Choice Bank shareholders.
FOURTH QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated).
-- $9.2 billion in total period-end assets, including $1.1 billion added
with the First Choice acquisition
-- 8% increase in total loans
-- 15% increase in total deposits
-- 17% increase in equity
-- 9% increase in fee income
-- 0.24% non-performing assets/assets
-- 0.21% net loan charge-offs/average loans
CEO Michael Daly stated, "The final quarter of the year was very strong and included the addition of $1.1 billion in assets from the acquisition of First Choice Bank in the Princeton, New Jersey area on December 2. This acquisition was completed on time and on plan, and positions Berkshire for higher revenue and earnings in 2017. Ongoing business activity remained solid. Our fourth quarter momentum contributed to a year of record earnings."
Mr. Daly continued, "Berkshire is entering 2017 well-positioned for the expanded business opportunities before us. We continue to pursue our goals of enhancing profitability and strengthening our franchise. Our announcement of a 5% dividend increase at this time reflects our positive outlook for future operations. We improved our balance sheet fundamentals and overall infrastructure and controls in 2016. This supports current operations and provides a strong foundation to support future opportunities."
DIVIDEND INCREASED
The Board of Directors voted to increase the quarterly cash dividend by 5% to $0.21 per share, effective with the next payment to shareholders of record at the close of business on February 16, 2017 and payable on March 2, 2017. The dividend equates to a 2.6% annualized yield based on the $32.16 average closing price of Berkshire's common stock during the fourth quarter of 2016.
FINANCIAL CONDITION
Total assets increased in the most recent quarter by $1.2 billion, or 16%, to $9.2 billion including $1.1 billion in assets related to the acquisition of First Choice Bank. Most categories of assets and liabilities increased as a result of the merger, including 8% loan growth and 15% deposit growth. Excluding acquired First Choice loans, organic loan growth was 5% annualized for the quarter and was spread among most major loan categories, including 17% in commercial and industrial loans. The Company adjusted its loan and deposit mix strategies during the quarter while integrating the acquired First Choice balances. Organic growth of transaction accounts measured 7% for the quarter. The organic decrease in total deposits included the planned run-off of certain higher costing First Choice balances after the merger date. With the benefit of the acquired First Choice deposits, the ratio of loans/deposits improved to 99% at year-end. The ratio of equity/assets improved to 11.9% and the ratio of tangible equity/assets remained unchanged at 7.7%. Book value per share increased to $30.65 and tangible book value per share increased to $18.81. Tangible equity/assets and tangible book value are non-GAAP financial measures. Including the impact of purchase accounting, the ratio of problem assets/assets improved to 0.24% and the ratio of charge-offs to average loans improved to 0.21% for the quarter.
RESULTS OF OPERATIONS
GAAP earnings decreased in the most recent quarter compared to the linked quarter and the fourth quarter of the prior year due primarily to the merger-related charges recorded for the First Choice acquisition. GAAP earnings per share were $0.32 in the most recent quarter. Core earnings measured $0.56 per share. Total revenue and expense included the impact of the acquired First Choice operations beginning on December 2. Most categories of revenue and expense increased including these acquired operations.
Fourth quarter net interest income increased by 2% over the prior quarter. The fourth quarter 2016 net interest margin measured 3.19%. Purchased loan accretion totaled $1.9 million in the most recent quarter, compared to $2.2 million in the prior quarter. Excluding the impact of purchased loan accretion, the margin measured 3.09% compared to 3.13% in the prior quarter. The change in the margin included the impact of the lower margin First Choice balances.
Total fee income increased by 9% compared to the prior quarter. Non-interest income is net of charges for the amortization of tax credit related investments. These charges totaled $4.4 million in the most recent quarter, compared to $1.5 million in the prior quarter. These charges are more than offset by credits to net income tax expense. Tax credit related investments contributed $0.02 in net earnings per share in the fourth quarter, compared to $0.01 in the prior quarter and $0.04 in the fourth quarter of 2015.
Fourth quarter non-interest expense increased over the prior quarter due primarily to the non-core charges related to the First Choice Bank acquisition. Merger and restructuring charges totaled $11.6 million and $2.2 million in these two periods respectively. Non-core expense is a non-GAAP measure that excludes costs not viewed as related to normalized operations. Core non-interest expense increased by 5% between these two periods including the new First Choice operations. Full time equivalent staff increased to 1,731 positions at quarter-end, compared to 1,208 positions at the start of the quarter, including 505 positions added with the First Choice operations. The efficiency ratio (a non-GAAP financial measure) increased to 59.1% due to the change in business mix with First Choice operations. The effective tax rate decreased to 3% due to the lower pretax income resulting from the merger charges. The effective tax rate on core income decreased to 21% in the most recent quarter from 30% in the prior quarter due to additional tax credit related investments that became operational during the period.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, January 31, 2017 to discuss the results for the quarter and provide guidance about expected future results. Participants are encouraged to pre-register for the conference call using the following link: http://dpregister.com/10098880. Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call, and will immediately receive simple instructions via email. Interested persons may reach the registration link and access the webcast by logging in through the investor section of Berkshire's website at http://ir.berkshirebank.com. Those parties who do not have internet access or are otherwise unable to pre-register for this event may still participate at the above time by dialing 1-844-792-3726 and asking to join the Berkshire Hills Bancorp (BHLB) earnings call. A telephone replay of the call will be available through Tuesday, February 7, 2017 by dialing 877-344-7529 and entering access number 10098880. The webcast will be available on Berkshire's website for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank - America's Most Exciting Bank®. Berkshire has approximately $9.2 billion in assets and 97 full-service branch offices in Massachusetts, New York, Connecticut, Vermont, Pennsylvania and New Jersey providing personal and business banking, insurance, and wealth management services. For more information, visit www.berkshirebank.com.
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 on pages F-9 and F-10 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 items which the Company does not view as related to its normalized operations. These items include securities gains/losses, merger costs, restructuring costs, and systems conversion costs. Non-core adjustments are presented net of an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income. The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees. These charges are related to the following business combinations: First Choice Bank, 44 Business Capital, Hampden Bancorp, and Firestone Financial. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales. The Company's disclosures of organic growth of loans and deposits in 2016 are adjusted for the business combinations with 44 Business Capital and First Choice Bank.
CONTACTS
Investor Relations Contact
Allison O'Rourke; Executive Vice President, Finance; 413-236-3149
Media Contact
Elizabeth Mach; First Vice President, Marketing Officer; 413-445-8390
TABLE
INDEX CONSOLIDATED UNAUDITED FINANCIAL
SCHEDULES
----- ---------------------------------
F-1 Selected Financial Highlights
F-2 Balance Sheets
F-3 Loan and Deposit Analysis
F-4 Statements of Income
F-5 Statements of Income (Five Quarter
Trend)
F-6 Average Yields and Costs
F-7 Average Balances
F-8 Asset Quality Analysis
F-9 Reconciliation of Non-GAAP Financial
Measures (Five Quarter Trend) and
Supplementary Data
F-10 Reconciliation of Non-GAAP Financial
Measures (Year-to-Date) and
Supplementary Data
BERKSHIRE HILLS BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)
------------------------------------------------
At or for the Quarters Ended (1)(2)
----------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2016 (3) 2016 2016 (4) 2016 2015
------- ---- ------- ---- ----
PER SHARE DATA
Net earnings, diluted $0.32 $0.53 $0.52 $0.52 $0.52
Core earnings, diluted (5) 0.56 0.57 0.54 0.54 0.54
Total book value 30.65 29.97 29.64 29.18 28.64
Tangible book value (5) 18.81 18.78 18.44 18.44 17.84
Market price at period end 36.85 27.71 26.92 26.89 29.11
Dividends 0.20 0.20 0.20 0.20 0.19
PERFORMANCE RATIOS (6)
Return on assets 0.50% 0.82% 0.82% 0.82% 0.82%
Core return on assets (5) 0.87 0.88 0.85 0.85 0.85
Return on equity 4.29 7.29 7.17 7.19 7.34
Core return on equity (5) 7.49 7.75 7.42 7.40 7.58
Core return on tangible equity (5) 12.23 12.99 12.45 12.20 12.68
Net interest margin, fully taxable
equivalent (FTE) (7) 3.19 3.25 3.31 3.33 3.35
Net interest margin (FTE),
excluding purchased loan
accretion (5) 3.09 3.13 3.20 3.21 3.22
Fee income/Net interest and fee
income 24.99 23.81 21.16 21.04 19.62
Efficiency ratio (5) 59.06 57.90 58.71 59.86 60.56
GROWTH (Year-to-date)
Total commercial loans,
(annualized) 18% 9% 11% 6% 29%
Total loans, (annualized) 14 7 10 0 22
Total deposits, (annualized) 18 4 2 0 20
Total net revenues, (compared to
prior year) 11 13 14 26 18
Earnings per share, (compared to
prior year) 9 31 48 49 27
Core earnings per share, (compared
to prior year) 4 6 5 8 16
FINANCIAL DATA (In millions)
Total assets $9,163 $7,931 $8,044 $7,808 $7,832
Total earning assets 8,340 7,229 7,327 7,142 7,140
Total investments 1,670 1,162 1,304 1,399 1,402
Total loans 6,550 6,047 6,000 5,727 5,725
Allowance for loan losses 44 43 41 40 39
Total intangible assets 422 348 349 334 335
Total deposits 6,622 5,750 5,657 5,584 5,589
Total shareholders' equity 1,093 933 923 906 887
Net income 10.3 16.4 16.0 16.0 16.0
Core income (5) 18.0 17.4 16.5 16.5 16.5
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter
annualized)/average loans 0.21% 0.20% 0.22% 0.23% 0.25%
Allowance for loan losses/total
loans 0.67 0.71 0.69 0.70 0.69
Loans/deposits 99 105 106 103 102
Shareholders' equity to total
assets 11.93 11.76 11.48 11.60 11.33
Tangible shareholders' equity to
tangible assets (5) 7.68 7.70 7.46 7.66 7.37
(1) Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily related
to acquisitions and restructuring activities
(2) Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on
pages F-9 and F-10.
(3) The Company acquired First Choice Bank on December 2, 2016.
(4) The Company acquired certain assets and operations related to 44 Business Capital on
April 29, 2016.
(5) Non-GAAP financial measure. See F-9 and F-10 for reconciliations of non-GAAP
financial measures.
(6) All performance ratios are annualized and are based on average balance sheet amounts, where
applicable.
(7) Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)
----------------------------------------------
December 31, September 30, December 31,
------------ ------------- ------------
(In thousands) 2016 (1) 2016 2015
------------- ------- ---- ----
Assets
Cash and due from banks $71,494 $61,107 $72,918
Short-term investments 41,581 8,178 30,644
Total cash and short-
term investments 113,075 69,285 103,562
Trading security 13,229 14,149 14,189
Securities available for
sale, at fair value 1,209,537 946,853 1,154,457
Securities held to
maturity, at amortized
cost 334,368 131,467 131,652
Federal Home Loan Bank
stock and other
restricted securities 71,112 61,277 71,018
Total securities 1,628,246 1,153,746 1,371,316
Loans held for sale, at
fair value 120,673 20,471 13,191
Commercial real estate 2,616,438 2,327,044 2,059,767
Commercial and
industrial loans 1,062,038 994,874 1,048,263
Residential mortgages 1,893,131 1,818,111 1,815,035
Consumer loans 978,180 906,975 802,171
-------------- ------- ------- -------
Total loans 6,549,787 6,047,004 5,725,236
Less: Allowance for loan
losses (43,998) (43,105) (39,308)
------------------------ ------- ------- -------
Net loans 6,505,789 6,003,899 5,685,928
Premises and equipment,
net 93,215 85,794 88,072
Other real estate owned 151 80 1,725
Goodwill 402,871 339,975 323,943
Other intangible assets 19,445 8,308 10,664
Cash surrender value of
bank-owned life
insurance 139,257 127,880 125,233
Deferred tax asset, net 43,817 34,616 42,526
Other assets 96,003 87,107 64,926
------------
Total assets $9,162,542 $7,931,161 $7,831,086
------------ ---------- ---------- ----------
Liabilities and shareholders' equity
Demand deposits $1,278,875 $1,113,733 $1,081,860
NOW deposits 570,583 476,189 510,807
Money market deposits 1,781,605 1,469,075 1,408,107
Savings deposits 657,486 607,868 601,761
Time deposits 2,333,543 2,082,889 1,986,600
Total deposits 6,622,092 5,749,754 5,589,135
Senior borrowings 1,224,836 1,048,914 1,174,335
Subordinated borrowings 89,161 89,116 88,983
----------------------- ------ ------ ------
Total borrowings 1,313,997 1,138,030 1,263,318
Other liabilities 133,155 110,784 91,444
----------------- ------- ------- ------
Total liabilities 8,069,244 6,998,568 6,943,897
Total common
shareholders' equity 1,093,298 932,593 887,189
---------------------
Total liabilities and
shareholders' equity $9,162,542 $7,931,161 $7,831,086
--------------------- ---------- ---------- ----------
Net shares outstanding 35,673 31,122 30,974
---------------------- ------ ------ ------
(1) The Company acquired First Choice Bank on December 2, 2016.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3)
LOAN ANALYSIS
-------------
Organic Annualized Growth % (1)
------------------------------
(in millions) December 31, 2016 Acquired First Choice September 30, 2016 December 31, 2015 Quarter ended Year to Date
Balance Bank Balance (2) Balance Balance December 31, 2016
--- ------- --------------- ------- ------- -----------------
Commercial real estate - construction $288 $11 $242 $254 57% 9%
Commercial real estate - other 2,329 315 2,085 1,806 (14) 9
------------------------------ ----- --- ----- ----- --- ---
Total commercial real estate (3) 2,617 326 2,327 2,060 (6) 9
Commercial and industrial loans 1,062 24 995 1,048 17 (1)
------------------------------- ----- --- --- ----- --- ---
Total commercial loans 3,679 350 3,322 3,108 1 6
Total residential mortgages 1,893 26 1,818 1,815 11 3
Home equity 394 37 358 361 (2) (1)
Auto and other 584 13 549 441 17 30
-------------- --- --- --- --- --- ---
Total consumer loans 978 50 907 802 9 16
-------------------- --- --- --- --- --- ---
Total loans $6,550 $426 $6,047 $5,725 5% 6%
----------- ------ ---- ------ ------ --- ---
(1) Non-GAAP financial measure.
(2) Acquired First Choice Bank loans are as of December 2, 2016.
(3) Total commercial real estate loans include $37 million in loans acquired as part of the acquisition of certain assets and operations related to 44 Business Capital; however, the year
to date organic annualized growth excludes these acquired loans.
DEPOSIT ANALYSIS
----------------
Organic Annualized Growth % (1)
------------------------------
(in millions) December 31, 2016 Acquired First Choice September 30, 2016 December 31, 2015 Quarter ended Year to Date
Balance Bank Balance (2) Balance Balance December 31, 2016
--- ------- --------------- ------- ------- -----------------
Demand $1,279 $89 $1,114 $1,082 27% 10%
NOW 571 67 476 511 24 (1)
Money market 1,782 337 1,469 1,408 (7) 3
Savings 657 51 608 601 (1) 1
------- --- --- --- --- --- ---
Total non-maturity deposits 4,289 544 3,667 3,602 8 4
Total time deposits 2,333 349 2,083 1,987 (19) (0)
------------------- ----- --- ----- ----- --- ---
Total deposits $6,622 $893 $5,750 $5,589 (1)% 3%
-------------- ------ ---- ------ ------ --- ---
(1) Non-GAAP financial measure.
(2) Acquired First Choice Bank deposits are as of December 2, 2016.
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)
----------------------------------------------------
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
(In thousands, except per share data) 2016 2015 2016 2015
------------------------------------ ---- ---- ---- ----
Interest and dividend income
Loans $62,884 $59,055 $242,600 $211,347
Securities and other 9,550 9,369 37,839 35,683
-------------------- ----- ----- ------ ------
Total interest and dividend income 72,434 68,424 280,439 247,030
Interest expense
Deposits 8,556 6,661 30,883 22,948
Borrowings 4,720 3,015 17,289 10,233
---------- ----- ----- ------ ------
Total interest expense 13,276 9,676 48,172 33,181
---------------------- ------ ----- ------ ------
Net interest income 59,158 58,748 232,267 213,849
Non-interest income
Loan related income 5,648 2,707 16,694 8,310
Mortgage banking income 3,537 641 7,555 4,133
Deposit related fees 6,285 6,416 24,963 25,084
Insurance commissions and fees 2,323 2,254 10,477 10,251
Wealth management fees 1,911 2,326 8,917 9,702
---------------------- ----- ----- ----- -----
Total fee income 19,704 14,344 68,606 57,480
Other (2,849) (1,739) (3,289) (5,302)
Securities (losses) gains, net (652) (357) (551) 2,110
Gain on sale of business operations, net 522 - 1,085 -
Total non-interest income 16,725 12,248 65,851 54,288
------------------------- ------ ------ ------ ------
Total net revenue 75,883 70,996 298,118 268,137
Provision for loan losses 4,100 4,431 17,362 16,726
Non-interest expense
Compensation and benefits 28,103 25,819 104,600 97,370
Occupancy and equipment 7,320 7,308 27,220 28,486
Technology and communications 5,310 4,553 19,883 16,881
Marketing and promotion 1,080 1,012 3,161 3,306
Professional services 1,666 1,472 6,199 5,172
FDIC premiums and assessments 1,422 1,220 5,066 4,649
Other real estate owned and foreclosures (11) 33 691 833
Amortization of intangible assets 572 841 2,927 3,563
Merger, restructuring and conversion expense 11,633 1,118 15,461 17,611
Other 3,995 4,903 18,094 18,958
----- ----- ----- ------ ------
Total non-interest expense 61,090 48,279 203,302 196,829
-------------------------- ------ ------ ------- -------
Income before income taxes 10,693 18,286 77,454 54,582
Income tax expense 362 2,273 18,784 5,064
------------------ --- ----- ------ -----
Net income $10,331 $16,013 $58,670 $49,518
---------- ------- ------- ------- -------
Earnings per share:
Basic $0.32 $0.53 $1.89 $1.74
Diluted $0.32 $0.52 $1.88 $1.73
Weighted average shares outstanding:
Basic 32,185 30,500 30,988 28,393
Diluted 32,381 30,694 31,167 28,564
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED - (F-5)
----------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(In thousands, except per share data) 2016 2016 2016 2016 2015
------------------------------------ ---- ---- ---- ---- ----
Interest and dividend income
Loans $62,884 $61,571 $59,703 $58,442 $59,055
Securities and other 9,550 8,940 9,315 10,034 9,369
-------------------- ----- ----- ----- ------ -----
Total interest and dividend income 72,434 70,511 69,018 68,476 68,424
Interest expense
Deposits 8,556 7,790 7,378 7,159 6,661
Borrowings 4,720 4,750 4,199 3,620 3,015
---------- ----- ----- ----- ----- -----
Total interest expense 13,276 12,540 11,577 10,779 9,676
---------------------- ------ ------ ------ ------ -----
Net interest income 59,158 57,971 57,441 57,697 58,748
Non-interest income
Loan related income 5,648 5,102 2,898 3,046 2,707
Mortgage banking income 3,537 1,862 1,335 821 641
Deposit related fees 6,285 6,278 6,291 6,109 6,416
Insurance commissions and fees 2,323 2,601 2,660 2,893 2,254
Wealth management fees 1,911 2,269 2,235 2,502 2,326
---------------------- ----- ----- ----- ----- -----
Total fee income 19,704 18,112 15,419 15,371 14,344
Other (2,849) 188 (851) 223 (1,739)
Securities (losses) gains, net (652) 78 (13) 36 (357)
Gain on sale of business operations, net 522 563 - - -
Total non-interest income 16,725 18,941 14,555 15,630 12,248
------------------------- ------ ------ ------ ------ ------
Total net revenue 75,883 76,912 71,996 73,327 70,996
Provision for loan losses 4,100 4,734 4,522 4,006 4,431
Non-interest expense
Compensation and benefits 28,103 26,119 24,664 25,714 25,819
Occupancy and equipment 7,320 6,650 6,560 6,690 7,308
Technology and communications 5,310 4,902 4,814 4,857 4,553
Marketing and promotion 1,080 671 737 673 1,012
Professional services 1,666 1,744 1,509 1,280 1,472
FDIC premiums and assessments 1,422 1,208 1,203 1,233 1,220
Other real estate owned and foreclosures (11) 46 393 263 33
Amortization of intangible assets 572 749 787 819 841
Merger, restructuring and conversion expense 11,633 2,170 878 780 1,118
Other 3,995 4,585 4,723 4,791 4,903
-----
Total non-interest expense 61,090 48,844 46,268 47,100 48,279
-------------------------- ------ ------ ------ ------ ------
Income before income taxes 10,693 23,334 21,206 22,221 18,286
Income tax expense 362 6,953 5,249 6,220 2,273
------------------ --- ----- ----- ----- -----
Net income $10,331 $16,381 $15,957 $16,001 $16,013
---------- ------- ------- ------- ------- -------
Earnings per share:
Basic $0.32 $0.53 $0.52 $0.52 $0.53
Diluted $0.32 $0.53 $0.52 $0.52 $0.52
Weighted average shares outstanding:
Basic 32,185 30,621 30,605 30,511 30,500
Diluted 32,381 30,811 30,765 30,688 30,694
BERKSHIRE HILLS BANCORP, INC.
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-6)
-----------------------------------------------------------------------------------
Quarters Ended
--------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Earning assets
Loans:
Commercial real estate 4.21% 4.28% 4.45% 4.18% 4.17%
Commercial and industrial loans 4.96 5.15 4.93 5.04 5.51
Residential mortgages 3.56 3.60 3.63 3.86 3.72
Consumer loans 3.45 3.41 3.40 3.44 3.30
Total loans 4.05 4.10 4.14 4.13 4.15
Securities 3.35 3.26 3.28 3.26 2.96
Short-term investments and loans held for sale 2.13 1.69 1.29 0.91 0.89
Total earning assets 3.89 3.94 3.97 3.93 3.89
Funding liabilities
Deposits:
NOW 0.16 0.12 0.13 0.13 0.14
Money market 0.48 0.46 0.47 0.49 0.45
Savings 0.12 0.12 0.11 0.13 0.14
Time 1.14 1.10 1.06 0.99 0.93
Total interest-bearing deposits 0.69 0.67 0.65 0.63 0.59
Borrowings 1.64 1.53 1.38 1.19 0.96
Total interest-bearing liabilities 0.87 0.85 0.81 0.75 0.67
Net interest spread 3.02 3.09 3.16 3.18 3.22
Net interest margin 3.19 3.25 3.31 3.33 3.35
Cost of funds (1) 0.73 0.72 0.68 0.64 0.56
Cost of deposits (2) 0.56 0.54 0.53 0.51 0.48
(1) Cost of funds includes all deposits and borrowings.
(2) The average cost of deposits includes the deposits held for sale.
BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES - UNAUDITED - (F-7)
-----------------------------------
Quarters Ended
--------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(In thousands) 2016 2016 (2)(4) 2016 (2)(4) 2016 (2)(4) 2015
---- ---------- ---------- ---------- ----
Assets
Loans
Commercial real estate $2,442,515 $2,260,482 $2,173,539 $2,079,001 $2,034,917
Commercial and industrial loans 998,543 1,009,581 1,047,866 1,027,257 1,033,081
Residential mortgages 1,833,530 1,839,364 1,759,193 1,798,034 1,790,334
Consumer loans 936,957 900,432 844,759 807,888 807,768
-------------- ------- ------- ------- ------- -------
Total loans (1) 6,211,545 6,009,859 5,825,357 5,712,180 5,666,100
Securities (3) 1,255,207 1,197,760 1,247,357 1,342,590 1,368,505
Short-term investments and loans held for sale 83,057 40,259 41,449 56,042 51,241
---------------------------------------------- ------ ------ ------ ------ ------
Total earning assets 7,549,809 7,247,878 7,114,163 7,110,812 7,085,846
Goodwill and other intangible assets 362,567 349,059 344,832 333,948 335,440
Other assets 363,322 360,182 349,816 346,327 342,902
------------ ------- ------- ------- ------- -------
Total assets $8,275,698 $7,957,119 $7,808,811 $7,791,087 $7,764,188
------------ ---------- ---------- ---------- ---------- ----------
Liabilities and shareholders' equity
Deposits
NOW $499,852 $474,650 $492,901 $484,334 $491,445
Money market 1,612,160 1,448,108 1,403,629 1,417,068 1,455,267
Savings 620,092 608,365 612,261 602,414 604,215
Time 2,171,325 2,095,269 2,047,020 2,063,712 1,958,394
---- --------- --------- --------- --------- ---------
Total interest-bearing deposits 4,903,429 4,626,392 4,555,811 4,567,528 4,509,321
Borrowings 1,144,846 1,235,065 1,223,629 1,222,288 1,256,287
---------- --------- --------- --------- --------- ---------
Total interest-bearing liabilities 6,048,275 5,861,457 5,779,440 5,789,816 5,765,608
Non-interest-bearing demand deposits 1,178,308 1,084,786 1,032,951 1,026,447 1,033,844
Other liabilities 85,951 111,743 105,948 84,042 91,877
----------------- ------ ------- ------- ------ ------
Total liabilities 7,312,534 7,057,986 6,918,339 6,900,305 6,891,329
Total shareholders' equity 963,164 899,133 890,472 890,782 872,859
Total liabilities and shareholders' equity $8,275,698 $7,957,119 $7,808,811 $7,791,087 $7,764,188
------------------------------------------ ---------- ---------- ---------- ---------- ----------
Supplementary data
Total non-maturity deposits $3,910,412 $3,615,909 $3,541,742 $3,530,263 $3,584,771
Total deposits 6,081,737 5,711,178 5,588,762 5,593,975 5,543,165
Fully taxable equivalent income adjustment 1,339 1,200 1,180 1,134 1,108
Total average tangible equity (5) 600,597 550,074 545,640 556,834 537,419
(1) Total loans include non-accruing loans.
(2) The average balances of loans include loans associated with branch sales, which are presented under loans held for sale on the consolidated balance sheet.
(3) Average balances for securities available-for-sale are based on amortized cost.
(4) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated balance sheet.
(5) See page F-9.
BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS - UNAUDITED - (F-8)
-----------------------------------------
At or for the Quarters Ended
----------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(in thousands) 2016 2016 2016 2016 2015
------------- ---- ---- ---- ---- ----
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate $5,883 $6,295 $4,808 $5,001 $4,882
Commercial and industrial loans 7,523 6,714 7,590 7,480 8,259
Residential mortgages 3,795 4,374 4,882 4,732 3,966
Consumer loans 4,833 3,281 3,376 3,588 3,768
-------------- ----- ----- ----- ----- -----
Total non-accruing loans 22,034 20,664 20,656 20,801 20,875
Other real estate owned 151 80 595 1,440 1,725
----------------------- --- --- --- ----- -----
Total non-performing assets $22,185 $20,744 $21,251 $22,241 $22,600
--------------------------- ------- ------- ------- ------- -------
Total non-accruing loans/total loans 0.34% 0.34% 0.34% 0.36% 0.36%
Total non-performing assets/total assets 0.24% 0.26% 0.26% 0.28% 0.29%
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $43,105 $41,397 $40,055 $39,308 $38,180
Charged-off loans (3,488) (3,441) (3,393) (3,704) (3,538)
Recoveries on charged-off loans 281 415 213 445 235
------------------------------- --- --- --- --- ---
Net loans charged-off (3,207) (3,026) (3,180) (3,259) (3,303)
Provision for loan losses 4,100 4,734 4,522 4,006 4,431
------------------------- ----- ----- ----- ----- -----
Balance at end of period $43,998 $43,105 $41,397 $40,055 $39,308
------------------------ ------- ------- ------- ------- -------
Allowance for loan losses/total loans 0.67% 0.71% 0.69% 0.70% 0.69%
Allowance for loan losses/non-accruing loans 200% 209% 200% 193% 188%
NET LOAN CHARGE-OFFS
Commercial real estate $(676) $(547) $(534) $(1,043) $(1,152)
Commercial and industrial loans (1,148) (1,610) (1,720) (847) (1,056)
Residential mortgages (768) (452) (568) (774) (633)
Home equity (47) (65) (164) (221) (118)
Auto and other consumer (568) (352) (194) (374) (344)
----------------------- ---- ---- ---- ---- ----
Total, net $(3,207) $(3,026) $(3,180) $(3,259) $(3,303)
---------- ------- ------- ------- ------- -------
Net charge-offs (QTD annualized)/average loans 0.21% 0.20% 0.22% 0.23% 0.25%
Net charge-offs (YTD annualized)/average loans 0.21% 0.22% 0.22% 0.23% 0.25%
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent 0.35% 0.25% 0.25% 0.26% 0.34%
90+ Days delinquent and still accruing 0.15% 0.09% 0.08% 0.07% 0.09%
-------------------------------------- ---- ---- ---- ---- ----
Total accruing delinquent loans 0.50% 0.34% 0.33% 0.33% 0.43%
Non-accruing loans 0.34% 0.34% 0.34% 0.36% 0.36%
Total delinquent and non-accruing loans 0.84% 0.68% 0.67% 0.69% 0.79%
--------------------------------------- ---- ---- ---- ---- ----
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9)
--------------------------------------------------------------------------------------
At or for the Quarters Ended
----------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(in thousands) 2016 2016 2016 2016 2015
------------- ---- ---- ---- ---- ----
Net income $10,331 $16,381 $15,957 $16,001 $16,013
Adj: Net securities losses (gains) 652 (78) 13 (36) 357
Adj: Net (gains) on sale of business operations (522) (563) - - -
Adj: Merger and acquisition expense 10,820 1,453 701 527 1,230
Adj: Restructuring expense and other 1,113 717 177 253 (112)
Adj: Income taxes (4,373) (492) (334) (256) (959)
Total core income (A) $18,021 $17,418 $16,514 $16,489 $16,529
----------------- --- ------- ------- ------- ------- -------
Total revenue $75,883 $76,912 $71,996 $73,327 $70,996
Adj: Net securities losses (gains) 652 (78) 13 (36) 357
Adj: Net (gains) on sale of business operations (522) (563) - - -
Total core revenue (B) $76,013 $76,271 $72,009 $73,291 $71,353
------------------ --- ------- ------- ------- ------- -------
Total non-interest expense $61,090 $48,844 $46,268 $47,100 $48,279
Less: Total non-core expense (see above) (11,933) (2,170) (878) (780) (1,118)
Core non-interest expense (C) $49,157 $46,674 $45,390 $46,320 $47,161
------------------------- --- ------- ------- ------- ------- -------
(in millions, except per share data)
Total average assets (D) $8,276 $7,957 $7,809 $7,791 $7,764
Total average shareholders' equity (E) 963 899 890 891 873
Total average tangible shareholders' equity (F) 601 550 546 557 537
Total tangible shareholders' equity, period-end (1) (G) 671 584 574 572 553
Total tangible assets, period-end (1) (H) 8,740 7,583 7,695 7,474 7,497
Total common shares outstanding, period-end (thousands) (I) 35,673 31,122 31,156 31,039 30,974
Average diluted shares outstanding (thousands) (J) 32,381 30,811 30,765 30,688 30,694
Core earnings per share, diluted (A/J) $0.56 $0.57 $0.54 $0.54 $0.54
Tangible book value per share, period-end (G/I) 18.81 18.78 18.44 18.44 17.84
Total tangible shareholders' equity/total tangible assets (G)/(H) 7.68 7.70 7.46 7.66 7.37
Performance ratios (2)
GAAP return on assets 0.50% 0.82% 0.82% 0.82% 0.82%
Core return on assets (A/D) 0.87 0.88 0.85 0.85 0.85
GAAP return on equity 4.29 7.29 7.17 7.19 7.34
Core return on equity (A/E) 7.49 7.75 7.42 7.40 7.58
Core return on tangible equity (3) (A/F) 12.23 12.99 12.45 12.20 12.68
Efficiency ratio (4)(5) (C-M)/(B+K+N) 59.06 57.90 58.71 59.86 60.56
Net interest margin 3.19 3.25 3.31 3.33 3.35
Supplementary data (in thousands)
Tax benefit on tax-credit investments (6) (K) $4,918 $1,852 $2,777 $1,588 $4,029
Non-interest income charge on tax-credit investments (7) (L) (4,428) (1,525) (1,938) (1,101) (2,851)
Net income on tax-credit investments (K+L) 490 327 839 487 1,178
Intangible amortization (M) 572 749 787 819 841
Fully taxable equivalent income adjustment (N) 1,339 1,200 1,180 1,134 1,108
(1) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end.
Total tangible assets is computed by taking total assets less the intangible assets at period-end.
(2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due
to rounding.
(3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets,
assuming a 40% marginal rate, by tangible equity.
(4) Non-GAAP financial measure.
(5) 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.
(6) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic
rehabilitation, low-income housing, new market projects, and renewable energy projects.
(7) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED - (F-10)
----------------------------------------------------------------------------------------
At or for the Years Ended
-------------------------
Dec. 31, Dec. 31,
(Dollars in thousands) 2016 2015
--------------------- ---- ----
Net income $58,670 $49,518
Adj: Net securities losses (gains) 551 (2,110)
Adj: Net (gains) on sale of business operations (1,085) -
Adj: Merger and acquisition expenses 13,501 13,157
Adj: Restructuring expense and other 2,260 4,454
Adj: Income taxes (5,455) (5,409)
Total core income (A) $68,442 $59,610
----------------- --- ------- -------
Total revenue $298,118 $268,137
Adj: Net securities losses (gains) 551 (2,110)
Adj: Net (gains) on sale of business operations (1,085) -
Total core revenue (B) $297,584 $266,027
------------------ --- -------- --------
Total non-interest expense $203,302 $196,830
Less: Total non-core expense (see above) (15,761) (17,611)
Core non-interest expense (C) $187,541 $179,219
------------------------- --- -------- --------
(Dollars in millions, except per share data)
Total average assets (D) $7,958 $7,249
Total average shareholders' equity (E) 911 805
Total average tangible shareholders' equity (F) 563 494
Total tangible shareholders' equity, period-end (1) (G) 671 553
Total tangible assets, period-end (1) (H) 8,740 7,496
Total common shares outstanding, period-end (thousands) (I) 35,673 30,974
Average diluted shares outstanding (thousands) (J) 31,167 28,564
Core earnings per common share, diluted (A/J) $2.20 $2.09
Tangible book value per common share, period-end (G/I) 18.81 17.84
Total tangible shareholders' equity/total tangible assets (G/H) 7.68 7.37
Performance ratios (2)
GAAP return on assets 0.74% 0.68%
Core return on assets (A/D) 0.86 0.82
GAAP return on equity 6.44 6.15
Core return on equity (A/E) 7.51 7.40
Core return on tangible equity (3) (A/F) 12.47 12.49
Efficiency ratio (4)(5) (C-M) / (B+K+N) 58.87 61.34
Net interest margin 3.27 3.31
Supplementary data
Tax benefit on tax-credit investments (6) (K) $11,134 $16,127
Non-interest income charge on tax-credit investments (7) (L) (8,993) (11,406)
Net income on tax-credit investments (K+L) 2,143 4,721
Intangible amortization (M) 2,927 3,563
Fully taxable equivalent income adjustment (N) 4,853 4,196
(1) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end.
Total tangible assets is computed by taking total assets less the intangible assets at period-end.
(2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of
intangible assets, assuming a 40% marginal rate, by tangible equity.
(4) Non-GAAP financial measure.
(5) 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.
(6) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in
historic rehabilitation, low-income housing, new market projects, and renewable energy.
(7) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/berkshire-hills-reports-record-annual-earnings-dividend-increased-300398859.html
SOURCE Berkshire Hills Bancorp, Inc.
