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SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-3510455 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
24 North Street, Pittsfield, Massachusetts | 01201 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of Exchange on which registered | |
Common stock, par value $0.01 per share | NASDAQ Stock Market LLC |
Large Accelerated Filero | Accelerated Filerþ | Non-Accelerated Filero | Smaller Reporting Companyo |
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• | Strong growth from organic, de novo, product and acquisition strategies | ||
• | Solid capital, core funding and risk management culture | ||
• | Experienced executive team focused on earnings and stockholder value | ||
• | Distinctive brand and culture as America’s Most Exciting BankSM | ||
• | Diversified integrated financial service revenues | ||
• | Positioned to be regional consolidator in attractive markets |
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• | The Berkshire County Region, with twelve offices in Berkshire County. Berkshire County is the Company’s traditional market, where it has a leading market share in many of its product lines. Berkshire County is renowned for its combination of nature, culture, and harmony which makes it a leisure and tourism destination and an attractive location for an emerging creative economy. Berkshire County is within commuting range of both Albany, New York and Springfield, Massachusetts and is also part of a mountain recreational area shared with Southern Vermont. Berkshire is an attractive second home and vacation area for New York City, and to a lesser extent for Boston. The Pittsfield MSA 2008 GDP was $5 billion. In 2009, the Bank’s Berkshire County region had average gross loans of $957 million and average deposits of $880 million. |
• | The Springfield Regionin the Pioneer Valley area with eleven offices along the Connecticut River valley in Springfield, Massachusetts, and north and west of Springfield. The Company entered this region through the acquisition of Woronoco Bancorp in June 2005 and also manages other New England commercial business through this region. Berkshire opened its new regional headquarters in Springfield, along with a new branch modeled on a new retailing concept, in the fourth quarter of 2009. This region is the metropolitan hub of Western Massachusetts and part of the Hartford/Springfield economic region centrally located between Boston and New York City at the crossroads of Interstate 91 which traverses the length of New England and Interstate 90 which traverses the width of Massachusetts. This region also has easy access to Bradley International Airport, which is the major airport serving central New England. The Springfield MSA 2008 GDP was $22 billion. In 2009, the Bank’s Springfield region had average gross loans of $545 million (including loans in other New England markets) and average deposits of $517 million. |
• | The Albany New York Regionwith ten offices serving Albany and the surrounding area in Northeastern New York. This region represents a de novo expansion by the Bank begun in 2005. In 2009, Berkshire recruited a prominent New York Chairman and an experienced commercial banking team to serve this market. Albany is the state capital and is part of New York’s Tech Valley which is gaining prominence as a world technology hub including leading edge nanotechnology initiatives representing a blend of private enterprise and public investment. The Albany/Schenectady MSA 2008 GDP was $39 billion. In 2009, the Bank’s Albany region had average gross loans of $251 million and average deposits of $234 million. |
• | The Vermont Regionwith seven offices serving Southern Vermont. The Company entered this region through the acquisition of Factory Point Bancorp in September 2007. The Southern Vermont region is contiguous to Berkshire County and shares similar characteristics, with a more pronounced focus on recreation activities in Vermont’s Green Mountains. Additionally, this region shares commerce with both the Berkshire and Albany markets, and provides the Bank with access to selected accounts in Northern Vermont. In 2009, the Bank’s Vermont region had average gross loans of $229 million and average deposits of $303 million. |
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2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||
Percent | Percent | Percent | Percent | Percent | ||||||||||||||||||||||||||||||||||||
of | of | of | of | of | ||||||||||||||||||||||||||||||||||||
(Dollars in millions) | Amount | Total | Amount | Total | Amount | Total | Amount | Total | Amount | Total | ||||||||||||||||||||||||||||||
Residential mortgages | $ | 609.0 | 31 | % | $ | 677.2 | 34 | % | $ | 657.0 | 33 | % | $ | 599.2 | 36 | % | $ | 549.8 | 39 | % | ||||||||||||||||||||
Commercial mortgages | 851.8 | 43 | 805.5 | 40 | 704.8 | 36 | 566.4 | 33 | 410.7 | 29 | ||||||||||||||||||||||||||||||
Commercial business | 186.0 | 10 | 178.9 | 9 | 203.6 | 11 | 190.5 | 11 | 158.7 | 11 | ||||||||||||||||||||||||||||||
Total commercial loans | 1,037.8 | 53 | 984.4 | 49 | 908.4 | 47 | 756.9 | 44 | 569.4 | 40 | ||||||||||||||||||||||||||||||
Consumer | 314.8 | 16 | 345.5 | 17 | 378.6 | 20 | 342.9 | 20 | 301.0 | 21 | ||||||||||||||||||||||||||||||
Total loans | $ | 1,961.6 | 100 | % | $ | 2,007.1 | 100 | % | $ | 1,944.0 | 100 | % | $ | 1,699.0 | 100 | % | $ | 1,420.2 | 100 | % | ||||||||||||||||||||
Allowance for loan losses | (31.8 | ) | (22.9 | ) | (22.1 | ) | (19.4 | ) | (13.0 | ) | ||||||||||||||||||||||||||||||
Net loans | $ | 1,929.8 | $ | 1,984.2 | $ | 1,921.9 | $ | 1,679.6 | $ | 1,407.2 | ||||||||||||||||||||||||||||||
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Contractual Maturity | One Year | More than One | More Than | |||||||||||||
(In thousands) | or Less | to Five Years | Five Years | Total | ||||||||||||
Construction mortgage loans: | ||||||||||||||||
Residential | $ | 9,479 | $ | 12,424 | $ | — | $ | 21,903 | ||||||||
Commercial | 63,835 | 46,868 | — | 110,703 | ||||||||||||
Commercial business loans | 111,718 | 41,931 | 32,395 | 186,044 | ||||||||||||
Total | $ | 185,032 | $ | 101,223 | $ | 32,395 | $ | 318,650 | ||||||||
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(Dollars in thousands) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Nonaccruing loans: | ||||||||||||||||||||
Residential mortgages | $ | 3,304 | $ | 1,646 | $ | 726 | $ | 15 | $ | 261 | ||||||||||
Commercial mortgages | 31,917 | 7,738 | 5,177 | 308 | 271 | |||||||||||||||
Commercial business | 3,115 | 1,921 | 4,164 | 7,203 | 553 | |||||||||||||||
Consumer | 364 | 866 | 441 | 66 | 101 | |||||||||||||||
Total nonperforming loans | 38,700 | 12,171 | 10,508 | 7,592 | 1,186 | |||||||||||||||
Real estate owned | 30 | 498 | 866 | — | — | |||||||||||||||
Total nonperforming assets | $ | 38,730 | $ | 12,669 | $ | 11,374 | $ | 7,592 | $ | 1,186 | ||||||||||
Troubled debt restructurings (accruing) | $ | 17,818 | $ | 7,456 | $ | 4,613 | $ | 5,268 | $ | 1,234 | ||||||||||
Accruing loans 90+ days past due | 91 | 923 | 823 | 281 | 110 | |||||||||||||||
Total nonperforming loans/total loans | 1.97 | % | 0.61 | % | 0.54 | % | 0.45 | % | 0.08 | % | ||||||||||
Total nonperforming assets/total assets | 1.43 | % | 0.48 | % | 0.45 | % | 0.35 | % | 0.06 | % |
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(Dollars in thousands) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Balance at beginning of year | $ | 22,908 | $ | 22,116 | $ | 19,370 | $ | 13,001 | $ | 9,337 | ||||||||||
Charged-off loans: | ||||||||||||||||||||
Residential mortgages | 2,016 | 143 | 110 | 27 | — | |||||||||||||||
Commercial mortgages | 27,596 | 1,384 | — | — | — | |||||||||||||||
Commercial business | 5,945 | 884 | 4,850 | 461 | 432 | |||||||||||||||
Consumer | 3,586 | 2,031 | 1,416 | 1,288 | 1,110 | |||||||||||||||
Total charged-off loans | 39,143 | 4,442 | 6,376 | 1,776 | 1,542 | |||||||||||||||
Recoveries on charged-off loans: | ||||||||||||||||||||
Commercial mortgages | 22 | 100 | — | — | — | |||||||||||||||
Commercial business | 64 | 290 | 13 | 43 | 55 | |||||||||||||||
Consumer | 235 | 264 | 356 | 667 | 517 | |||||||||||||||
Total recoveries | 321 | 654 | 369 | 710 | 572 | |||||||||||||||
Net loans charged-off | 38,822 | 3,788 | 6,007 | 1,066 | 970 | |||||||||||||||
Allowance attributed to loans acquired by merger | — | — | 4,453 | — | 3,321 | |||||||||||||||
Provision for loan losses | 47,730 | 4,580 | 4,300 | 7,860 | 1,313 | |||||||||||||||
Transfer of commitment reserve | — | — | — | (425 | ) | — | ||||||||||||||
Balance at end of year | $ | 31,816 | $ | 22,908 | $ | 22,116 | $ | 19,370 | $ | 13,001 | ||||||||||
Ratios: | ||||||||||||||||||||
Net loans charged-off/average total loans | 1.96 | % | 0.19 | % | 0.34 | % | 0.07 | % | 0.08 | % | ||||||||||
Recoveries/charged-off loans | 0.82 | 14.72 | 5.79 | 39.98 | 37.09 | |||||||||||||||
Allowance for loan losses/total loans | 1.62 | 1.14 | 1.14 | 1.14 | 0.92 | |||||||||||||||
Allowance for loan losses/nonperforming loans | 82.21 | 188.22 | 210.47 | 255.14 | 1,096.21 |
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||
Percent of | Percent of | Percent of | Percent of | Percent of | ||||||||||||||||||||||||||||||||||||
Amount Allocated | Amount Allocated | Amount Allocated | Amount Allocated | Amount Allocated | ||||||||||||||||||||||||||||||||||||
to Total | to Total | to Total | to Total | to Total | ||||||||||||||||||||||||||||||||||||
Amount | Loans in Each | Amount | Loans in Each | Amount | Loans in Each | Amount | Loans in Each | Amount | Loans in Each | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Allocated | Category | Allocated | Category | Allocated | Category | Allocated | Category | Allocated | Category | ||||||||||||||||||||||||||||||
Residential mortgages | $ | 3,169 | 0.52 | % | $ | 2,006 | 0.30 | % | $ | 2,028 | 0.31 | % | $ | 1,845 | 0.31 | % | $ | 1,649 | 0.30 | % | ||||||||||||||||||||
Commercial mortgages | 19,659 | 2.31 | 13,539 | 1.68 | 12,040 | 1.71 | 9,939 | 1.75 | 5,933 | 1.44 | ||||||||||||||||||||||||||||||
Commercial business | 6,099 | 3.28 | 4,184 | 2.34 | 5,787 | 2.84 | 5,199 | 2.74 | 3,517 | 2.22 | ||||||||||||||||||||||||||||||
Consumer | 2,889 | 0.92 | 3,179 | 0.92 | 2,261 | 0.60 | 2,387 | 0.70 | 1,902 | 0.63 | ||||||||||||||||||||||||||||||
Total | $ | 31,816 | 1.62 | % | $ | 22,908 | 1.14 | % | $ | 22,116 | 1.14 | % | $ | 19,370 | 1.14 | % | $ | 13,001 | 0.92 | % | ||||||||||||||||||||
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2009 | 2008 | 2007 | ||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||
(In thousands) | Cost | Value | Cost | Value | Cost | Value | ||||||||||||||||||
Securities available for sale | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 73,277 | $ | 74,784 | $ | 76,843 | $ | 75,414 | $ | 74,223 | $ | 75,186 | ||||||||||||
Mortgage-backed securities | 192,597 | 197,276 | 174,896 | 176,824 | 103,387 | 104,518 | ||||||||||||||||||
Other bonds and obligations | 51,707 | 49,722 | 24,341 | 21,043 | 15,601 | 15,265 | ||||||||||||||||||
Marketable equity securities | 2,679 | 2,563 | 1,177 | 1,099 | 793 | 952 | ||||||||||||||||||
Total securities available for sale | $ | 320,260 | $ | 324,345 | $ | 277,257 | $ | 274,380 | $ | 194,004 | $ | 195,921 | ||||||||||||
Securities held to maturity | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 14,737 | $ | 14,737 | $ | 9,892 | $ | 9,892 | $ | 9,017 | $ | 9,017 | ||||||||||||
Tax advantaged economic development bonds | 42,572 | 43,515 | 15,002 | 15,862 | 27,791 | 28,043 | ||||||||||||||||||
Other bonds and obligations | 173 | 173 | 172 | 172 | 173 | 173 | ||||||||||||||||||
Mortgage-backed securities | 139 | 142 | 806 | 803 | 2,475 | 2,456 | ||||||||||||||||||
Total securities held to maturity | $ | 57,621 | $ | 58,567 | $ | 25,872 | $ | 26,729 | $ | 39,456 | $ | 39,689 | ||||||||||||
Trading account security | $ | 15,000 | $ | 15,880 | $ | 15,000 | $ | 18,144 | $ | — | $ | — | ||||||||||||
Restricted equity securities | $ | 23,120 | $ | 23,120 | $ | 23,120 | $ | 23,120 | $ | 23,120 | $ | 23,120 |
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More than One | More than Five | |||||||||||||||||||||||||||||||||||||||
One Year or Less | Year to Five Years | Years to Ten Years | More than Ten Years | Total | ||||||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||||||||||||||||||||||||||
Amortized | Average | Amortized | Average | Amortized | Average | Amortized | Average | Amortized | Average | |||||||||||||||||||||||||||||||
(Dollars in millions) | Cost | Yield | Cost | Yield | Cost | Yield | Cost | Yield | Cost | Yield | ||||||||||||||||||||||||||||||
Municipal bonds and obligations | $ | 13.3 | 1.84 | % | $ | 5.2 | 3.62 | % | $ | 50.8 | 3.98 | % | $ | 61.5 | 4.53 | % | $ | 130.8 | 4.01 | % | ||||||||||||||||||||
Mortgage-backed securities | 10.3 | 0.67 | 21.7 | 1.88 | 35.4 | 3.66 | 125.4 | 4.30 | 192.7 | 3.72 | ||||||||||||||||||||||||||||||
Other bonds and obligations | 18.1 | 3.62 | 23.8 | 3.08 | 0.0 | 8.16 | 9.7 | 3.30 | 51.7 | 3.31 | ||||||||||||||||||||||||||||||
Total | $ | 41.7 | 2.33 | % | $ | 50.7 | 2.62 | % | $ | 86.2 | 3.85 | % | $ | 196.6 | 4.32 | % | $ | 375.2 | 3.76 | % | ||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||||||||||||||
Percent | Percent | Percent | ||||||||||||||||||||||||||||||||||
of Total | Weighted | of Total | Weighted | of Total | Weighted | |||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | Average | Average | Average | ||||||||||||||||||||||||||||
(Dollars in millions) | Balance | Deposits | Rate | Balance | Deposits | Rate | Balance | Deposits | Rate | |||||||||||||||||||||||||||
Demand | $ | 256.4 | 13 | % | — | % | $ | 225.2 | 12 | % | — | % | $ | 190.4 | 12 | % | — | % | ||||||||||||||||||
NOW | 188.2 | 10 | 0.43 | 200.1 | 11 | 0.75 | 157.9 | 10 | 1.46 | |||||||||||||||||||||||||||
Money market | 499.6 | 26 | 1.28 | 464.9 | 25 | 2.15 | 339.2 | 21 | 3.60 | |||||||||||||||||||||||||||
Savings | 212.3 | 11 | 0.33 | 216.4 | 12 | 0.74 | 201.6 | 13 | 1.09 | |||||||||||||||||||||||||||
Time | 777.1 | 40 | 3.18 | 725.4 | 40 | 3.94 | 714.1 | 44 | 4.75 | |||||||||||||||||||||||||||
Total | $ | 1,933.6 | 100 | % | 1.69 | % | $ | 1,832.0 | 100 | % | 2.28 | % | $ | 1,603.2 | 100 | % | 3.16 | % | ||||||||||||||||||
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Weighted | ||||||||
Average | ||||||||
Maturity Period | Amount | Rate | ||||||
(Dollars in thousands) | ||||||||
Three months or less | $ | 73,841 | 2.81 | % | ||||
Over 3 months through 6 months | 36,166 | 1.87 | ||||||
Over 6 months through 12 months | 109,298 | 2.88 | ||||||
Over 12 months | 171,116 | 3.76 | ||||||
Total | $ | 390,421 | 3.16 | % | ||||
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• | Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; |
• | Home Mortgage Disclosure Act, requiring financial institutions to provide certain information about home mortgage and refinance loans; |
• | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; |
• | Fair Credit Reporting Act, governing the provision of consumer information to credit reporting agencies and the use of consumer information; |
• | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and |
• | Electronic Funds Transfer Act, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. |
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• | actual or anticipated fluctuations in our operating results; | ||
• | changes in interest rates; | ||
• | changes in the legal or regulatory environment in which we operate; | ||
• | press releases, announcements or publicity relating to us or our competitors or relating to trends in our industry; | ||
• | changes in expectations as to our future financial performance, including financial estimates or recommendations by securities analysts and investors; | ||
• | future sales of our common stock; | ||
• | changes in economic conditions in our marketplace, general conditions in the U.S. economy, financial markets or the banking industry; and | ||
• | other developments affecting our competitors or us. |
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Dividends | ||||||||||||
High | Low | Declared | ||||||||||
2009 | ||||||||||||
First quarter | $ | 31.39 | $ | 18.46 | $ | 0.16 | ||||||
Second quarter | 26.99 | 19.87 | 0.16 | |||||||||
Third quarter | 24.88 | 19.92 | 0.16 | |||||||||
Fourth quarter | 22.85 | 18.05 | 0.16 | |||||||||
2008 | ||||||||||||
First quarter | $ | 26.29 | $ | 19.50 | $ | 0.15 | ||||||
Second quarter | 27.10 | 22.25 | 0.16 | |||||||||
Third quarter | 32.00 | 20.67 | 0.16 | |||||||||
Fourth quarter | 31.01 | 22.48 | 0.16 |
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Total number of shares | Maximum number of | |||||||||||||||
purchased as part of | shares that may yet | |||||||||||||||
Total number of | Average price | publicly announced | be purchased under | |||||||||||||
Period | shares purchased | paid per share | plans or programs | the plans or programs | ||||||||||||
October 1-31, 2009 | — | $ | — | — | 97,993 | |||||||||||
November 1-30, 2009 | — | — | — | 97,993 | ||||||||||||
December 1-31, 2009 | — | — | — | 97,993 | ||||||||||||
Total | — | $ | — | — | 97,993 | |||||||||||
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Period Ending | ||||||||||||||||||||||||
Index | 12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 | 12/31/09 | ||||||||||||||||||
Berkshire Hills Bancorp, Inc. | 100.00 | 91.57 | 92.96 | 73.67 | 89.60 | 61.82 | ||||||||||||||||||
NASDAQ Composite | 100.00 | 101.37 | 111.03 | 121.92 | 72.49 | 104.31 | ||||||||||||||||||
SNL Bank and Thrift | 100.00 | 101.57 | 118.68 | 90.50 | 52.05 | 51.35 |
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At or For the Years Ended December 31, | ||||||||||||||||||||
(In thousands, except per share data) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Selected Financial Data: | ||||||||||||||||||||
Total assets | $ | 2,700,424 | $ | 2,666,729 | $ | 2,513,432 | $ | 2,149,642 | $ | 2,035,553 | ||||||||||
Securities | 420,966 | 341,516 | 258,497 | 234,174 | 420,320 | |||||||||||||||
Loans | 1,961,658 | 2,007,152 | 1,944,016 | 1,698,987 | 1,420,230 | |||||||||||||||
Allowance for loan loss | (31,816 | ) | (22,908 | ) | (22,116 | ) | (19,370 | ) | (13,001 | ) | ||||||||||
Goodwill and other intangibles | 176,100 | 178,830 | 182,452 | 121,341 | 99,616 | |||||||||||||||
Deposits | 1,986,762 | 1,829,580 | 1,822,563 | 1,521,938 | 1,371,218 | |||||||||||||||
Borrowings and subordinated debentures | 306,668 | 374,621 | 349,938 | 360,469 | 412,917 | |||||||||||||||
Total stockholders’ equity | 384,581 | 408,425 | 326,837 | 258,161 | 246,066 | |||||||||||||||
Selected Operating Data: | ||||||||||||||||||||
Total interest and dividend income | $ | 115,476 | $ | 133,211 | $ | 131,944 | $ | 118,051 | $ | 87,732 | ||||||||||
Total interest expense | 45,880 | 57,471 | 68,019 | 57,811 | 36,115 | |||||||||||||||
Net interest income | 69,596 | 75,740 | 63,925 | 60,240 | 51,617 | |||||||||||||||
Fee income | 28,181 | 30,334 | 26,654 | 13,539 | 9,373 | |||||||||||||||
All other non-interest income (loss) | 808 | 1,261 | (2,011 | ) | (1,491 | ) | 5,550 | |||||||||||||
Total net revenue | 98,585 | 107,335 | 88,568 | 72,288 | 66,540 | |||||||||||||||
Provision for loan losses | 47,730 | 4,580 | 4,300 | 7,860 | 1,313 | |||||||||||||||
Total non-interest expense | 78,571 | 71,699 | 65,494 | 48,868 | 48,998 | |||||||||||||||
Income tax (benefit) expense — continuing operations | (11,649 | ) | 8,812 | 5,239 | 4,668 | 8,003 | ||||||||||||||
Net income from discontinued operations | — | — | — | 371 | — | |||||||||||||||
Net (loss) income | $ | (16,067 | ) | $ | 22,244 | $ | 13,535 | $ | 11,263 | $ | 8,226 | |||||||||
Less: Cumulative preferred stock dividends and accretion | 1,030 | — | — | — | — | |||||||||||||||
Less: Deemed dividend from preferred stock repayment | 2,954 | — | — | — | — | |||||||||||||||
Net (loss) income available to common stockholders | $ | (20,051 | ) | $ | 22,244 | $ | 13,535 | $ | 11,263 | $ | 8,226 | |||||||||
Dividends per common share | $ | 0.64 | $ | 0.63 | $ | 0.58 | $ | 0.56 | $ | 0.52 | ||||||||||
Basic earnings per common share | $ | (1.52 | ) | $ | 2.08 | $ | 1.47 | $ | 1.32 | $ | 1.16 | |||||||||
Diluted earnings per common share | $ | (1.52 | ) | $ | 2.06 | $ | 1.44 | $ | 1.29 | $ | 1.10 | |||||||||
Weighted average common shares outstanding — basic | 13,189 | 10,700 | 9,223 | 8,538 | 7,122 | |||||||||||||||
Weighted average common hares outstanding — diluted | 13,189 | 10,791 | 9,370 | 8,730 | 7,503 |
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At or For the Years Ended December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Selected Operating Ratios and Other Data: | ||||||||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Return on average assets | (0.60 | )% | 0.87 | % | 0.60 | % | 0.53 | % | 0.47 | % | ||||||||||
Return on average equity | (3.90 | ) | 6.47 | 4.69 | 4.40 | 4.19 | ||||||||||||||
Interest rate spread | 2.61 | 3.06 | 2.79 | 2.81 | 3.00 | |||||||||||||||
Net interest margin | 3.00 | 3.44 | 3.26 | 3.24 | 3.33 | |||||||||||||||
Non-interest income/total net revenue | 29.41 | 29.44 | 27.82 | 16.67 | 22.43 | |||||||||||||||
Non-interest expense/average assets | 2.93 | 2.81 | 2.90 | 2.31 | 2.81 | |||||||||||||||
Dividend payout ratio | N/M | 30.58 | 40.28 | 42.92 | 45.06 | |||||||||||||||
Growth Ratios: | ||||||||||||||||||||
Total loans | (2.27 | ) | 3.24 | 14.43 | 19.36 | 71.86 | ||||||||||||||
Total deposits | 8.59 | 0.39 | 19.75 | 10.99 | 62.12 | |||||||||||||||
Total net revenues | (8.15 | ) | 21.19 | 22.52 | 8.64 | 38.28 | ||||||||||||||
Capital Ratios: | ||||||||||||||||||||
Tier 1 capital to average assets — bank | 7.86 | 9.34 | 7.97 | 7.69 | 7.79 | |||||||||||||||
Total capital to risk-weighted assets — bank | 10.71 | 12.28 | 10.40 | 10.27 | 11.12 | |||||||||||||||
Stockholders’ equity/total assets | 14.24 | 15.32 | 13.00 | 12.01 | 12.09 | |||||||||||||||
Tangible common stockholders’ equity to tangible assets (1) | 8.26 | 7.75 | 6.22 | 6.75 | 7.56 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Nonperforming loans/total loans | 1.97 | 0.61 | 0.54 | 0.45 | 0.08 | |||||||||||||||
Nonperforming assets/total assets | 1.43 | 0.48 | 0.45 | 0.35 | 0.06 | |||||||||||||||
Net loans charged-off/average total loans | 1.96 | 0.19 | 0.34 | 0.07 | 0.08 | |||||||||||||||
Allowance for loan losses/total loans | 1.62 | 1.14 | 1.14 | 1.14 | 0.92 | |||||||||||||||
Allowance for loan losses/nonperforming loans | 0.82 | x | 1.88 | x | 2.10 | x | 2.55 | x | 10.96 | x | ||||||||||
Share Data: | ||||||||||||||||||||
Book value per share | $ | 27.64 | $ | 30.33 | $ | 31.15 | $ | 29.63 | $ | 28.81 | ||||||||||
Market price at year end | $ | 20.68 | $ | 30.86 | $ | 26.00 | $ | 33.46 | $ | 33.50 |
N/M | = Not Meaningful | |
(1) | Tangible common stockholders’ equity to tangible assets exclude goodwill and other intangibles. This is a non-GAAP financial measure that the Company believes provides investors with information that is useful in understanding our financial performance and condition. |
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• | 9% deposit growth |
• | 8% commercial loan growth, excluding net charge-offs |
• | 10% wealth management new business generation |
• | 3.00% net interest margin |
• | $32 million common stock raise in May followed by the $40 million TARP preferred stock repayment |
• | Borrowings restructuring, lowering future interest expense |
• | 8.3% tangible common equity to tangible assets at year-end. Total year-end equity to assets was 14.2% |
• | Strengthening of regional teams |
• | Recruitment of Robert Curley as Chairman of the New York region and a director of the Company. Mr. Curley was previously Chairman and President of Citizens Bank New York. |
• | Recruitment of a leading commercial banking team in the New York region |
• | Opening of the well located Springfield regional headquarters, along with a new retail concept branch |
• | Recruitment of new executive management |
• | David Farrell, formerly a Director of the Company, was named as EVP of Insurance and Wealth Management. Mr. Farrell was previously a division president at TJX Companies. |
• | Richard Marotta joined the Company as EVP, Risk Management. Mr. Marotta was previously an EVP and Group Head at KeyBank |
• | Establishment of new product lines through recruitment of experienced and well recognized teams |
• | Recruitment of New England middle market asset based lending team from TD Bank |
• | Recruitment of Springfield Private Banking team from TD Bank, together with a wealth management professional from Bank of America |
• | Lean Sigma initiative: re-engineering the Berkshire Insurance Group to create an enhanced sales and service delivery platform and improve group profitability in 2010 |
• | Innovative bundled solar energy financing package — combining lending, insurance, and tax credit financing |
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• | 21% increase in total net revenue |
• | 3.44% net interest margin, the highest since 2003 |
• | 8% increase in total commercial loans; 7% increase in total residential mortgage and home equity loans |
• | 0.48% nonperforming assets to total assets at year-end; accruing delinquent loans were 0.51% of total loans |
• | 0.19% charge-offs on average loans |
• | Public issuance of nearly $40 million in common stock and the issuance of $40 million of preferred stock under the U.S. Treasury Capital Purchase Program |
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2009 | 2008 | 2007 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||||||||
(Dollars in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 1,982.5 | $ | 101.7 | 5.13 | % | $ | 1,980.1 | $ | 120.6 | 6.09 | % | $ | 1,789.0 | $ | 120.1 | 6.71 | % | ||||||||||||||||||
Investment securities (2) | 368.5 | 16.0 | 4.34 | 271.2 | 14.5 | 5.37 | 235.2 | 13.9 | 5.91 | |||||||||||||||||||||||||||
Federal funds sold and short-term investments | 42.1 | 0.1 | 0.24 | 12.2 | 0.2 | 1.64 | 4.7 | 0.1 | 3.02 | |||||||||||||||||||||||||||
Total interest-earning assets | 2,393.1 | 117.8 | 4.92 | 2,263.5 | 135.3 | 5.98 | 2,028.9 | 134.1 | 6.61 | |||||||||||||||||||||||||||
Intangible assets | 177.6 | 180.3 | 138.3 | |||||||||||||||||||||||||||||||||
Other non-interest earning assets | 112.2 | 107.0 | 95.2 | |||||||||||||||||||||||||||||||||
Total assets | $ | 2,682.9 | $ | 2,550.8 | $ | 2,262.4 | ||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||
NOW accounts | $ | 188.2 | $ | 0.8 | 0.43 | % | $ | 200.1 | $ | 1.5 | 0.75 | % | $ | 157.9 | $ | 2.3 | 1.46 | % | ||||||||||||||||||
Money market accounts | 499.6 | 6.4 | 1.28 | 464.9 | 10.0 | 2.15 | 339.2 | 12.2 | 3.60 | |||||||||||||||||||||||||||
Savings accounts | 212.3 | 0.7 | 0.33 | 216.4 | 1.6 | 0.74 | 201.6 | 2.2 | 1.09 | |||||||||||||||||||||||||||
Certificates of deposit | 777.1 | 24.7 | 3.18 | 725.4 | 28.6 | 3.94 | 714.1 | 33.9 | 4.75 | |||||||||||||||||||||||||||
Total interest-bearing deposits | 1,677.2 | 32.6 | 1.94 | 1,606.8 | 41.7 | 2.60 | 1,412.8 | 50.6 | 3.58 | |||||||||||||||||||||||||||
Borrowings and debentures | 312.9 | 13.3 | 4.25 | 363.8 | 15.8 | 4.34 | 365.8 | 17.4 | 4.76 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 1,990.1 | 45.9 | 2.31 | 1,970.6 | 57.5 | 2.92 | 1,778.6 | 68.0 | 3.82 | |||||||||||||||||||||||||||
Non-interest-bearing demand deposits | 256.4 | 225.2 | 190.4 | |||||||||||||||||||||||||||||||||
Other non-interest-bearing liabilities | 24.2 | 11.0 | 5.4 | |||||||||||||||||||||||||||||||||
Total liabilities | 2,270.7 | 2,206.8 | 1,974.4 | |||||||||||||||||||||||||||||||||
Equity | 412.2 | 344.0 | 288.0 | |||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 2,682.9 | $ | 2,550.8 | $ | 2,262.4 | ||||||||||||||||||||||||||||||
Net interest-earning assets | $ | 403.0 | $ | 292.9 | $ | 250.3 | ||||||||||||||||||||||||||||||
Net interest income | $ | 71.9 | $ | 77.8 | $ | 66.1 | ||||||||||||||||||||||||||||||
Supplementary data | ||||||||||||||||||||||||||||||||||||
Total non-maturity deposits | $ | 1,156.5 | $ | 1,106.6 | $ | 889.1 | ||||||||||||||||||||||||||||||
Total deposits | 1,933.6 | 1,832.0 | 1,603.2 | |||||||||||||||||||||||||||||||||
Fully taxable equivalent adjustment | 2.3 | 2.1 | 2.2 | |||||||||||||||||||||||||||||||||
Interest rate spread | 2.61 | % | 3.06 | % | 2.79 | % | ||||||||||||||||||||||||||||||
Net interest margin | 3.00 | % | 3.44 | % | 3.26 | % | ||||||||||||||||||||||||||||||
Cost of funds | 2.04 | % | 2.62 | % | 3.45 | % | ||||||||||||||||||||||||||||||
Cost of deposits | 1.69 | % | 2.28 | % | 3.16 | % | ||||||||||||||||||||||||||||||
Interest-earning assets/interest-bearing liabilities | 120.25 | % | 114.86 | % | 114.07 | % |
(1) | The average balances of loans includes nonaccrual loans, loans held for sale, and deferred fees and costs. | |
(2) | The average balance of investment securities is based on amortized cost. |
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2009 Compared with 2008 | 2008 Compared with 2007 | |||||||||||||||||||||||
Increase (Decrease) Due to | Increase (Decrease) Due to | |||||||||||||||||||||||
(In thousands) | Rate | Volume | Net | Rate | Volume | Net | ||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Loans | $ | (19,031 | ) | $ | 143 | $ | (18,888 | ) | $ | (11,686 | ) | $ | 12,194 | $ | 508 | |||||||||
Investment securities | (3,813 | ) | 5,225 | 1,412 | (1,362 | ) | 1,979 | 617 | ||||||||||||||||
Short-term investments | (591 | ) | 491 | (100 | ) | (92 | ) | 134 | 42 | |||||||||||||||
Total interest income | (23,436 | ) | 5,859 | (17,577 | ) | (13,140 | ) | 14,307 | 1,167 | |||||||||||||||
Interest expense: | ||||||||||||||||||||||||
NOW accounts | (602 | ) | (90 | ) | (692 | ) | (1,318 | ) | 506 | (812 | ) | |||||||||||||
Money market accounts | (4,347 | ) | 747 | (3,600 | ) | (5,874 | ) | 3,654 | (2,220 | ) | ||||||||||||||
Savings accounts | (870 | ) | (30 | ) | (900 | ) | (783 | ) | 146 | (637 | ) | |||||||||||||
Certificates of deposit | (5,938 | ) | 2,038 | (3,900 | ) | (5,728 | ) | 533 | (5,195 | ) | ||||||||||||||
Total deposits | (11,757 | ) | 2,665 | (9,092 | ) | (13,703 | ) | 4,839 | (8,864 | ) | ||||||||||||||
Borrowings | (288 | ) | (2,212 | ) | (2,500 | ) | (1,587 | ) | (97 | ) | (1,684 | ) | ||||||||||||
Total interest expense | (12,045 | ) | 453 | (11,592 | ) | (15,290 | ) | 4,742 | (10,548 | ) | ||||||||||||||
Change in net interest income | $ | (11,391 | ) | $ | 5,406 | $ | (5,985 | ) | $ | 2,150 | $ | 9,565 | $ | 11,715 | ||||||||||
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Less than One | One to Three | Three to Five | After Five | |||||||||||||||||
(In thousands) | Total | Year | Years | Years | Years | |||||||||||||||
FHLBB borrowings (1) | $ | 291,204 | $ | 93,860 | $ | 35,417 | $ | 91,411 | $ | 70,516 | ||||||||||
Junior subordinated debentures | 15,464 | — | — | — | 15,464 | |||||||||||||||
Operating lease obligations (2) | 47,292 | 2,954 | 5,700 | 5,595 | 33,043 | |||||||||||||||
Investment tax credit obligations | 5,177 | 5,177 | — | — | — | |||||||||||||||
Purchase obligations (3) | 10,474 | 4,543 | 5,827 | 104 | — | |||||||||||||||
Total Contractual Obligations | $ | 369,611 | $ | 106,534 | $ | 46,944 | $ | 97,110 | $ | 119,023 | ||||||||||
(1) | Consists of borrowings from the Federal Home Loan Bank. The maturities extend through 2027 and the rates vary by borrowing. | |
(2) | Consists of leases, bank branches and ATMs through 2031. | |
(3) | Consists of obligations with multiple vendors to purchase a broad range of services. |
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Change in | ||||||||||||||||
Interest Rates-Basis | 1- 12 Months | 13- 24 Months | ||||||||||||||
Points (Rate Ramp) | $ Change | % Change | $ Change | % Change | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
At December 31, 2009 | ||||||||||||||||
+ 300 | $ | 1,748 | 2.39 | % | $ | 7,531 | 10.62 | % | ||||||||
+ 200 | 1,059 | 1.44 | 5,116 | 7.22 | ||||||||||||
+ 100 | 986 | 1.35 | 3,982 | 5.62 | ||||||||||||
- 100 | (1,411 | ) | (1.93 | ) | (4,586 | ) | (6.47 | ) | ||||||||
At December 31, 2008 | ||||||||||||||||
+ 300 | $ | 2,207 | 3.07 | % | $ | 7,065 | 10.24 | % | ||||||||
+ 200 | 1,587 | 2.21 | 5,283 | 7.66 | ||||||||||||
+ 100 | 869 | 1.21 | 2,778 | 4.03 | ||||||||||||
- 100 | (1,977 | ) | (2.75 | ) | (5,779 | ) | (8.38 | ) |
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/s/ Michael P. Daly | /s/ Kevin P. Riley | |||
Michael P. Daly | Kevin P. Riley | |||
President and Chief Executive Officer | Executive Vice President and Chief Financial Officer | |||
March 12, 2010 | March 12, 2010 |
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Berkshire Hills Bancorp, Inc.
March 12, 2010
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CONSOLIDATED BALANCE SHEETS
December 31, | ||||||||
(In thousands, except share data) | 2009 | 2008 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 25,770 | $ | 25,783 | ||||
Short-term investments | 6,838 | 19,015 | ||||||
Total cash and cash equivalents | 32,608 | 44,798 | ||||||
Trading security | 15,880 | 18,144 | ||||||
Securities available for sale, at fair value | 324,345 | 274,380 | ||||||
Securities held to maturity (fair values of $58,567 and $26,729) | 57,621 | 25,872 | ||||||
Federal Home Loan Bank stock and other restricted securities | 23,120 | 23,120 | ||||||
Total investment securities | 420,966 | 341,516 | ||||||
Loans held for sale | 4,146 | 1,768 | ||||||
Residential mortgages | 609,007 | 677,254 | ||||||
Commercial mortgages | 851,828 | 805,456 | ||||||
Commercial business loans | 186,044 | 178,934 | ||||||
Consumer loans | 314,779 | 345,508 | ||||||
Total loans | 1,961,658 | 2,007,152 | ||||||
Less: Allowance for loan losses | (31,816 | ) | (22,908 | ) | ||||
Net loans | 1,929,842 | 1,984,244 | ||||||
Premises and equipment, net | 37,390 | 37,448 | ||||||
Goodwill | 161,725 | 161,178 | ||||||
Other intangible assets | 14,375 | 17,652 | ||||||
Cash surrender value of bank-owned life insurance | 36,904 | 35,668 | ||||||
Derivative assets | 3,267 | 3,740 | ||||||
Other assets | 59,201 | 38,717 | ||||||
Total assets | $ | 2,700,424 | $ | 2,666,729 | ||||
Liabilities | ||||||||
Demand deposits | $ | 276,587 | $ | 233,040 | ||||
NOW deposits | 197,176 | 190,828 | ||||||
Money market deposits | 532,840 | 448,238 | ||||||
Savings deposits | 208,597 | 211,156 | ||||||
Time deposits | 771,562 | 746,318 | ||||||
Total deposits | 1,986,762 | 1,829,580 | ||||||
Short-term debt | 83,860 | 23,200 | ||||||
Long-term Federal Home Loan Bank advances | 207,344 | 318,957 | ||||||
Other long-term debt | — | 17,000 | ||||||
Junior subordinated debentures | 15,464 | 15,464 | ||||||
Derivative liabilities | 13,720 | 24,068 | ||||||
Other liabilities | 8,693 | 30,035 | ||||||
Total liabilities | 2,315,843 | 2,258,304 | ||||||
Commitments and contingencies (See notes 6 and 15) | ||||||||
Stockholders’ equity | ||||||||
Preferred stock ($.01 par value; 1,000,000 shares authorized; 40,000 shares issued in 2009 and none oustanding; 40,000 shares issued and outstanding in 2008 with a $1,000 liquidation value) | — | 36,822 | ||||||
Common stock ($.01 par value; 26,000,000 shares authorized; 15,848,825 shares issued in 2009 and 14,238,825 in 2008) | 158 | 142 | ||||||
Additional paid-in capital | 338,822 | 307,620 | ||||||
Unearned compensation | (1,318 | ) | (1,905 | ) | ||||
Retained earnings | 99,033 | 127,773 | ||||||
Accumulated other comprehensive loss | (2,968 | ) | (11,574 | ) | ||||
Treasury stock (1,932,731 shares in 2009 and 1,985,381 shares in 2008) | (49,146 | ) | (50,453 | ) | ||||
Total stockholders’ equity | 384,581 | 408,425 | ||||||
Total liabilities and stockholders’ equity | $ | 2,700,424 | $ | 2,666,729 | ||||
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CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, | ||||||||||||
(In thousands, except per share data) | 2009 | 2008 | 2007 | |||||||||
Interest and dividend income | ||||||||||||
Loans | $ | 101,705 | $ | 120,567 | $ | 120,059 | ||||||
Securities | 13,683 | 12,460 | 11,743 | |||||||||
Other | 88 | 184 | 142 | |||||||||
Total interest and dividend income | 115,476 | 133,211 | 131,944 | |||||||||
Interest expense | ||||||||||||
Deposits | 32,614 | 41,733 | 50,597 | |||||||||
Borrowings and junior subordinated debentures | 13,266 | 15,738 | 17,422 | |||||||||
Total interest expense | 45,880 | 57,471 | 68,019 | |||||||||
Net interest income | 69,596 | 75,740 | 63,925 | |||||||||
Non-interest income | ||||||||||||
Deposit, loan and interest rate swap fees | 11,198 | 11,011 | 8,519 | |||||||||
Wealth management fees | 4,812 | 5,704 | 4,407 | |||||||||
Insurance commissions and fees | 12,171 | 13,619 | 13,728 | |||||||||
Total fee income | 28,181 | 30,334 | 26,654 | |||||||||
Loss on sales of securities, net | (4 | ) | (22 | ) | (591 | ) | ||||||
Non-recurring losses, net | (893 | ) | — | (3,130 | ) | |||||||
Other | 1,705 | 1,283 | 1,710 | |||||||||
Total non-interest income | 28,989 | 31,595 | 24,643 | |||||||||
Total net revenue | 98,585 | 107,335 | 88,568 | |||||||||
Provision for loan losses | 47,730 | 4,580 | 4,300 | |||||||||
Non-interest expense | ||||||||||||
Salaries and employee benefits | 38,280 | 38,282 | 34,018 | |||||||||
Occupancy and equipment | 11,614 | 11,238 | 9,945 | |||||||||
Marketing, data processing, and professional services | 10,674 | 7,741 | 8,413 | |||||||||
FDIC premiums and special assessment | 4,544 | 761 | 185 | |||||||||
Non-recurring expenses | 601 | 683 | 2,956 | |||||||||
Amortization of intangible assets | 3,277 | 3,830 | 3,058 | |||||||||
Other | 9,581 | 8,905 | 6,919 | |||||||||
Total non-interest expense | 78,571 | 71,699 | 65,494 | |||||||||
(Loss) income before income taxes | (27,716 | ) | 31,056 | 18,774 | ||||||||
Income tax (benefit) expense | (11,649 | ) | 8,812 | 5,239 | ||||||||
Net (loss) income | $ | (16,067 | ) | $ | 22,244 | $ | 13,535 | |||||
Less: Cumulative preferred stock dividends and accretion | 1,030 | — | — | |||||||||
Less: Deemed dividend from preferred stock repayment | 2,954 | — | — | |||||||||
Net (loss) income available to common stockholders | $ | (20,051 | ) | $ | 22,244 | $ | 13,535 | |||||
Basic (loss) earnings per common share | $ | (1.52 | ) | $ | 2.08 | $ | 1.47 | |||||
Diluted (loss) earnings per common share | $ | (1.52 | ) | $ | 2.06 | $ | 1.44 | |||||
Weighted average common shares outstanding : | ||||||||||||
Basic | 13,189 | 10,700 | 9,223 | |||||||||
Diluted | 13,189 | 10,791 | 9,370 |
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Years Ended December 31, 2009, 2008 and 2007
Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | Unearned | other comp- | ||||||||||||||||||||||||||||||||||
Common stock | Preferred | paid-in | compen- | Retained | rehensive | Treasury | ||||||||||||||||||||||||||||||
(In thousands) | Shares | Amount | stock | capital | sation | earnings | income (loss) | stock | Total | |||||||||||||||||||||||||||
Balance at December 31, 2006 | 8,713 | $ | 106 | $ | — | $ | 200,975 | $ | (1,896 | ) | $ | 105,731 | $ | 92 | $ | (46,847 | ) | $ | 258,161 | |||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 13,535 | — | — | 13,535 | |||||||||||||||||||||||||||
Other net comprehensive income | — | — | — | — | — | — | 1,125 | — | 1,125 | |||||||||||||||||||||||||||
Total comprehensive income | 14,660 | |||||||||||||||||||||||||||||||||||
Acquisition of Factory Point Bancorp, Inc. | 1,913 | 19 | — | 63,331 | — | — | — | — | 63,350 | |||||||||||||||||||||||||||
Cash dividends declared ($0.58 per share) | — | — | — | — | — | (5,398 | ) | — | — | (5,398 | ) | |||||||||||||||||||||||||
Treasury stock purchased | (290 | ) | — | — | — | — | — | — | (7,822 | ) | (7,822 | ) | ||||||||||||||||||||||||
Forfeited shares | (41 | ) | — | — | (36 | ) | — | — | — | (1,112 | ) | (1,148 | ) | |||||||||||||||||||||||
Exercise of stock options | 132 | — | — | — | — | (481 | ) | — | 2,598 | 2,117 | ||||||||||||||||||||||||||
Reissuance of treasury stock — other | 66 | — | — | 1,001 | — | — | — | 1,166 | 2,167 | |||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 187 | — | — | — | — | 187 | |||||||||||||||||||||||||||
Tax benefit from stock compensation | — | — | — | 676 | — | — | — | — | 676 | |||||||||||||||||||||||||||
Change in unearned compensation | — | — | — | — | (113 | ) | — | — | — | (113 | ) | |||||||||||||||||||||||||
Balance at December 31, 2007 | 10,493 | 125 | — | 266,134 | (2,009 | ) | 113,387 | 1,217 | (52,017 | ) | 326,837 | |||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 22,244 | — | — | 22,244 | |||||||||||||||||||||||||||
Other net comprehensive loss | — | — | — | — | — | — | (12,791 | ) | — | (12,791 | ) | |||||||||||||||||||||||||
Total comprehensive income | 9,453 | |||||||||||||||||||||||||||||||||||
Issuance of preferred stock | — | — | 36,802 | — | — | — | — | — | 36,802 | |||||||||||||||||||||||||||
Fair value of warrant issued with preferred stock | — | — | — | 3,198 | — | — | — | — | 3,198 | |||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs of $2,879 | 1,725 | 17 | — | 38,504 | — | — | — | — | 38,521 | |||||||||||||||||||||||||||
Cash dividends declared ($0.63 per share) | — | — | — | — | — | (6,837 | ) | — | — | (6,837 | ) | |||||||||||||||||||||||||
Treasury stock purchased | (200 | ) | — | — | — | — | — | — | (4,880 | ) | (4,880 | ) | ||||||||||||||||||||||||
Forfeited shares | (3 | ) | — | — | (5 | ) | 70 | — | — | (65 | ) | — | ||||||||||||||||||||||||
Exercise of stock options | 185 | — | — | — | — | (1,206 | ) | — | 4,714 | 3,508 | ||||||||||||||||||||||||||
Reissuance of treasury stock — other | 68 | — | — | (193 | ) | (1,546 | ) | — | — | 1,739 | — | |||||||||||||||||||||||||
Stock-based compensation | — | — | — | 55 | 1,580 | — | — | — | 1,635 | |||||||||||||||||||||||||||
Tax loss from stock compensation | — | — | — | (73 | ) | — | — | — | — | (73 | ) | |||||||||||||||||||||||||
Other, net | (15 | ) | — | 20 | — | — | 185 | — | 56 | 261 | ||||||||||||||||||||||||||
Balance at December 31, 2008 | 12,253 | 142 | 36,822 | 307,620 | (1,905 | ) | 127,773 | (11,574 | ) | (50,453 | ) | 408,425 | ||||||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (16,067 | ) | — | — | (16,067 | ) | |||||||||||||||||||||||||
Other net comprehensive income | — | — | — | — | — | — | 8,606 | — | 8,606 | |||||||||||||||||||||||||||
Total comprehensive loss | (7,461 | ) | ||||||||||||||||||||||||||||||||||
Redemption of preferred stock, including deemed dividend of $2,954 | — | — | (37,046 | ) | — | — | (2,954 | ) | — | — | (40,000 | ) | ||||||||||||||||||||||||
Preferred stock discount accretion and dividends | — | — | 224 | — | — | (1,030 | ) | — | — | (806 | ) | |||||||||||||||||||||||||
Repurchase of warrant issued with preferred stock | — | — | — | (1,040 | ) | — | — | — | — | (1,040 | ) | |||||||||||||||||||||||||
Issuance of common stock, net of issuance costs of $2,266 | 1,610 | 16 | — | 32,349 | — | — | — | — | 32,365 | |||||||||||||||||||||||||||
Cash dividends declared ($0.64 per share) | — | — | — | — | — | (8,390 | ) | — | — | (8,390 | ) | |||||||||||||||||||||||||
Forfeited shares | (24 | ) | — | — | 12 | 579 | — | — | (591 | ) | — | |||||||||||||||||||||||||
Exercise of stock options | 23 | — | — | — | — | (236 | ) | — | 580 | 344 | ||||||||||||||||||||||||||
Reissuance of treasury stock — other | 59 | — | — | (136 | ) | (1,354 | ) | — | 1,490 | — | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 43 | 1,362 | — | — | — | 1,405 | |||||||||||||||||||||||||||
Other, net | (5 | ) | — | — | (26 | ) | — | (63 | ) | — | (172 | ) | (261 | ) | ||||||||||||||||||||||
Balance at December 31, 2009 | 13,916 | $ | 158 | $ | — | $ | 338,822 | $ | (1,318 | ) | $ | 99,033 | $ | (2,968 | ) | $ | (49,146 | ) | $ | 384,581 | ||||||||||||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2009, 2008 and 2007
(In thousands) | 2009 | 2008 | 2007 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net (loss) income | $ | (16,067 | ) | $ | 22,244 | $ | 13,535 | |||||
Adjustments to reconcile net (loss) income to net cash provided by continuing operating activities: | ||||||||||||
Provision for loan losses | 47,730 | 4,580 | 4,300 | |||||||||
Net amortization of securities | 1,784 | 173 | 250 | |||||||||
Change in unamortized net loan costs and premiums | 1,223 | 1,315 | (1,070 | ) | ||||||||
Premises depreciation and amortization expense | 3,859 | 3,835 | 3,404 | |||||||||
Stock-based compensation expense | 1,405 | 1,635 | 1,604 | |||||||||
Excess tax loss (benefit) from stock-based payment arrangements | — | 73 | (676 | ) | ||||||||
Amortization of other intangibles | 3,277 | 3,830 | 3,058 | |||||||||
Income from cash surrender value of bank-owned life insurance policies | (1,236 | ) | (1,462 | ) | (1,078 | ) | ||||||
Loss on sales of securities, net | 4 | 22 | 591 | |||||||||
Net (increase) decrease in loans held for sale | (2,378 | ) | 1,676 | (3,444 | ) | |||||||
Loss on sale of portfolio loans | — | — | 1,950 | |||||||||
Deferred income tax (benefit) provision, net | (5,166 | ) | 905 | 986 | ||||||||
Net change in federal and state tax receivable | (10,053 | ) | 2,807 | (4,537 | ) | |||||||
Increase in prepaid FDIC insurance premiums | (10,401 | ) | — | — | ||||||||
Net change in other | (371 | ) | (2,191 | ) | 3,557 | |||||||
Net cash provided by operating activities | 13,610 | 39,442 | 22,430 | |||||||||
Cash flows from investing activities: | ||||||||||||
Trading account security purchased | — | (15,000 | ) | — | ||||||||
Securities available for sale: | ||||||||||||
Sales | 6,303 | 10,058 | 59,141 | |||||||||
Proceeds from maturities, calls, and prepayments | 72,473 | 25,307 | 31,152 | |||||||||
Purchases | (143,458 | ) | (98,918 | ) | (45,810 | ) | ||||||
Securities held to maturity: | ||||||||||||
Proceeds from maturities, calls, and prepayments | 15,438 | 30,065 | 14,850 | |||||||||
Purchases | (47,191 | ) | (16,481 | ) | (14,344 | ) |
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CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)
Years Ended December 31, 2009, 2008 and 2007
(In thousands) | 2009 | 2008 | 2007 | |||||||||
Net investment in limited partnership tax credits | (3,197 | ) | (79 | ) | (1,139 | ) | ||||||
Loan originations and principal repayments, net | 5,659 | (69,110 | ) | (75,539 | ) | |||||||
Proceeds from sale of portfolio loans | — | — | 55,612 | |||||||||
Capital expenditures | (3,529 | ) | (2,477 | ) | (5,571 | ) | ||||||
Net cash paid for business acquisitions | — | (1,090 | ) | (8,050 | ) | |||||||
Net cash (used) provided by investing activities | (97,502 | ) | (137,725 | ) | 10,302 | |||||||
Cash flows from financing activities: | ||||||||||||
Net increase in deposits | 157,182 | 7,017 | 31,598 | |||||||||
Proceeds from Federal Home Loan Bank advances and other borrowings | 208,860 | 145,000 | 185,214 | |||||||||
Repayments of Federal Home Loan Bank advances and other borrowings | (276,813 | ) | (120,317 | ) | (231,127 | ) | ||||||
Net proceeds from common stock issuance | 32,365 | 38,521 | — | |||||||||
Treasury stock purchased | — | (4,880 | ) | (7,822 | ) | |||||||
Net proceeds from reissuance of treasury stock | 344 | 3,508 | 4,284 | |||||||||
Excess tax (loss) benefit from stock-based payment arrangements | — | (73 | ) | 676 | ||||||||
Proceeds from issuance of preferred stock and warrant | — | 40,000 | — | |||||||||
Redemption of preferred stock | (40,000 | ) | — | — | ||||||||
Repurchase of warrant issued with preferred stock | (1,040 | ) | — | — | ||||||||
Preferred stock cash dividends paid | (806 | ) | — | — | ||||||||
Common stock cash dividends paid | (8,390 | ) | (6,837 | ) | (5,398 | ) | ||||||
Net cash provided (used) by financing activities | 71,702 | 101,939 | (22,575 | ) | ||||||||
Net change in cash and cash equivalents | (12,190 | ) | 3,656 | 10,157 | ||||||||
Cash and cash equivalents at beginning of year | 44,798 | 41,142 | 30,985 | |||||||||
Cash and cash equivalents at end of year | $ | 32,608 | $ | 44,798 | $ | 41,142 | ||||||
Supplemental cash flow information: | ||||||||||||
Interest paid on deposits | $ | 32,614 | $ | 42,089 | $ | 50,759 | ||||||
Interest paid on borrowed funds | 13,690 | 14,902 | 17,686 | |||||||||
Income taxes paid, net | 1,970 | 6,043 | 5,405 | |||||||||
Fair value of non-cash assets acquired | — | 837 | 376,656 | |||||||||
Fair value of liabilities assumed | — | — | 305,592 | |||||||||
Fair value of common stock issued in acquisition | — | — | 63,350 | |||||||||
Due to broker, investment purchase | (19,895 | ) | 19,895 | — |
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Years Ended December 31, | ||||||||||||
(In thousands, except per share data) | 2009 | 2008 | 2007 | |||||||||
Net (loss) income | $ | (16,067 | ) | $ | 22,244 | $ | 13,535 | |||||
Less: Cumulative preferred stock dividends and accretion | 1,030 | — | — | |||||||||
Less: Deemed dividend resulting from preferred stock repayment | 2,954 | — | — | |||||||||
Net (loss) income available to common stockholders | $ | (20,051 | ) | $ | 22,244 | $ | 13,535 | |||||
Average number of common shares issued | 15,239 | 12,869 | 11,135 | |||||||||
Less: average number of treasury shares | 1,930 | 2,046 | 1,812 | |||||||||
Less: average number of unvested stock award shares | 120 | 123 | 100 | |||||||||
Average number of basic common shares outstanding | 13,189 | 10,700 | 9,223 | |||||||||
Plus: dilutive effect of unvested stock award shares | — | 20 | 100 | |||||||||
Plus: dilutive effect of stock options outstanding | — | 71 | 47 | |||||||||
Average number of diluted common shares outstanding | 13,189 | 10,791 | 9,370 | |||||||||
(Loss) earnings per average basic common share | $ | (1.52 | ) | $ | 2.08 | $ | 1.47 | |||||
(Loss) earnings per average diluted common share | $ | (1.52 | ) | $ | 2.06 | $ | 1.44 |
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Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
(In thousands) | Cost | Gains | Losses | Fair Value | ||||||||||||
December 31, 2009 | ||||||||||||||||
Securities available for sale | ||||||||||||||||
Debt securities: | ||||||||||||||||
Municipal bonds and obligations | $ | 73,277 | $ | 1,836 | $ | (329 | ) | $ | 74,784 | |||||||
Government guaranteed residential mortgage-backed securities | 12,923 | 224 | (116 | ) | 13,031 | |||||||||||
Government-sponsored residential mortgage-backed securities | 179,674 | 4,714 | (143 | ) | 184,245 | |||||||||||
Corporate bonds | 36,941 | 641 | (245 | ) | 37,337 | |||||||||||
Trust preferred securities | 9,285 | — | (2,370 | ) | 6,915 | |||||||||||
Other bonds and obligations | 5,481 | 9 | (20 | ) | 5,470 | |||||||||||
Total debt securities | 317,581 | 7,424 | (3,223 | ) | 321,782 | |||||||||||
Marketable equity securities | 2,679 | 55 | (171 | ) | 2,563 | |||||||||||
Total securities available for sale | 320,260 | 7,479 | (3,394 | ) | 324,345 | |||||||||||
Securities held to maturity | ||||||||||||||||
Municipal bonds and obligations | 14,737 | — | — | 14,737 | ||||||||||||
Government-sponsored residential mortgage-backed securities | 139 | 3 | — | 142 | ||||||||||||
Tax advantaged economic development bonds | 42,572 | 951 | (8 | ) | 43,515 | |||||||||||
Other bonds and obligations | 173 | — | — | 173 | ||||||||||||
Total securities held to maturity | 57,621 | 954 | (8 | ) | 58,567 | |||||||||||
Total | $ | 377,881 | $ | 8,433 | $ | (3,402 | ) | $ | 382,912 | |||||||
December 31, 2008 | ||||||||||||||||
Securities available for sale | ||||||||||||||||
Debt securities: | ||||||||||||||||
Municipal bonds and obligations | $ | 76,843 | $ | 401 | $ | (1,830 | ) | $ | 75,414 | |||||||
Residential mortgage-backed securities | 174,747 | 2,270 | (193 | ) | 176,824 | |||||||||||
Corporate bonds | 14,810 | 170 | (182 | ) | 14,798 | |||||||||||
Trust preferred securities | 9,362 | — | (3,414 | ) | 5,948 | |||||||||||
Other bonds and obligations | 318 | 5 | (26 | ) | 297 | |||||||||||
Total debt securities | 276,080 | 2,846 | (5,645 | ) | 273,281 | |||||||||||
Marketable equity securities | 1,177 | 32 | (110 | ) | 1,099 | |||||||||||
Total securities available for sale | 277,257 | 2,878 | (5,755 | ) | 274,380 | |||||||||||
Securities held to maturity | ||||||||||||||||
Municipal bonds and obligations | 9,892 | — | — | 9,892 | ||||||||||||
Residential mortgage-backed securities | 806 | 1 | (4 | ) | 803 | |||||||||||
Tax advantaged economic development bonds | 15,002 | 860 | — | 15,862 | ||||||||||||
Other bonds and obligations | 172 | — | — | 172 | ||||||||||||
Total securities held to maturity | 25,872 | 861 | (4 | ) | 26,729 | |||||||||||
Total | $ | 303,129 | $ | 3,739 | $ | (5,759 | ) | $ | 301,109 | |||||||
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Available for sale | Held to maturity | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
(In thousands) | Cost | Value | Cost | Value | ||||||||||||
Within 1 year | $ | 19,737 | $ | 20,033 | $ | 11,800 | $ | 11,800 | ||||||||
Over 1 year to 5 years | 27,353 | 27,612 | 1,600 | 1,600 | ||||||||||||
Over 5 years to 10 years | 19,797 | 20,304 | 30,971 | 31,326 | ||||||||||||
Over 10 years | 58,097 | 56,557 | 13,111 | 13,699 | ||||||||||||
Total bonds and obligations | 124,984 | 124,506 | 57,482 | 58,425 | ||||||||||||
Marketable equity securities | 2,679 | 2,563 | — | — | ||||||||||||
Residential mortgage-backed securities | 192,597 | 197,276 | 139 | 142 | ||||||||||||
Total | $ | 320,260 | $ | 324,345 | $ | 57,621 | $ | 58,567 | ||||||||
2009 | 2008 | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
(In thousands) | Cost | Value | Cost | Value | ||||||||||||
Securities pledged to swap counterparties | $ | 22,563 | $ | 23,314 | $ | 9,844 | $ | 10,032 | ||||||||
Securities pledged for municipal deposits | 10,882 | 11,297 | 8,257 | 8,480 | ||||||||||||
Securities pledged for customer deposits | 2,428 | 2,518 | 3,219 | 3,221 | ||||||||||||
Total | $ | 35,873 | $ | 37,129 | $ | 21,320 | $ | 21,733 | ||||||||
(In thousands) | 2009 | 2008 | 2007 | |||||||||
Gross realized gains | $ | 82 | $ | 62 | $ | 88 | ||||||
Gross realized losses | 86 | 84 | 679 | |||||||||
Net realized losses | $ | (4 | ) | $ | (22 | ) | $ | (591 | ) | |||
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Less Than Twelve Months | Over Twelve Months | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
(In thousands) | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
December 31, 2009 | ||||||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 17 | $ | 2,984 | $ | 312 | $ | 7,128 | $ | 329 | $ | 10,112 | ||||||||||||
Government guaranteed residential mortgage-backed securities | 116 | 5,113 | — | — | 116 | 5,113 | ||||||||||||||||||
Government-sponsored residential mortgage-backed securities | 143 | 21,610 | — | — | 143 | 21,610 | ||||||||||||||||||
Corporate bonds | — | — | 245 | 2,748 | 245 | 2,748 | ||||||||||||||||||
Trust preferred securities | — | — | 2,370 | 6,915 | 2,370 | 6,915 | ||||||||||||||||||
Other bonds and obligations | — | — | 20 | 440 | 20 | 440 | ||||||||||||||||||
Total debt securities | 276 | 29,707 | 2,947 | 17,231 | 3,223 | 46,938 | ||||||||||||||||||
Marketable equity securities | — | — | 171 | 1,104 | 171 | 1,104 | ||||||||||||||||||
Total securities available for sale | 276 | 29,707 | 3,118 | 18,335 | 3,394 | 48,042 | ||||||||||||||||||
Securities held to maturity | ||||||||||||||||||||||||
Tax advantaged economic development bonds | 8 | 1,569 | — | — | 8 | 1,569 | ||||||||||||||||||
Total securities held to maturity | 8 | 1,569 | — | — | 8 | 1,569 | ||||||||||||||||||
Total | $ | 284 | $ | 31,276 | $ | 3,118 | $ | 18,335 | $ | 3,402 | $ | 49,611 | ||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Municipal bonds and obligations | $ | 1,585 | $ | 39,573 | $ | 245 | $ | 4,070 | $ | 1,830 | $ | 43,643 | ||||||||||||
Residential mortgaged-backed securities | 139 | 16,292 | 54 | 2,142 | 193 | 18,434 | ||||||||||||||||||
Other bonds and obligations | 472 | 3,741 | 3,150 | 7,142 | 3,622 | 10,883 | ||||||||||||||||||
Total debt securities | 2,196 | 59,606 | 3,449 | 13,354 | 5,645 | 72,960 | ||||||||||||||||||
Marketable equity securities | — | 85 | 110 | 640 | 110 | 725 | ||||||||||||||||||
Total securities available for sale | 2,196 | 59,691 | 3,559 | 13,994 | 5,755 | 73,685 | ||||||||||||||||||
Securities held to maturity | ||||||||||||||||||||||||
Residential mortgaged-backed securities | — | — | 4 | 553 | 4 | 553 | ||||||||||||||||||
Total securities held to maturity | — | — | 4 | 553 | 4 | 553 | ||||||||||||||||||
Total | $ | 2,196 | $ | 59,691 | $ | 3,563 | $ | 14,547 | $ | 5,759 | $ | 74,238 | ||||||||||||
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(In thousands) | 2009 | 2008 | ||||||
Residential mortgages: | ||||||||
1-4 family | $ | 587,104 | $ | 642,733 | ||||
Construction | 21,903 | 34,521 | ||||||
Total residential mortgages | 609,007 | 677,254 | ||||||
Commercial mortgages: | ||||||||
Construction | 110,703 | 129,704 | ||||||
Single and multifamily | 80,624 | 69,964 | ||||||
Other | 660,501 | 605,788 | ||||||
Total commercial mortgages | 851,828 | 805,456 | ||||||
Commercial business | 186,044 | 178,934 | ||||||
Consumer: | ||||||||
Auto | 76,861 | 134,846 | ||||||
Home equity and other | 237,918 | 210,662 | ||||||
Total consumer | 314,779 | 345,508 | ||||||
Total loans | $ | 1,961,658 | $ | 2,007,152 | ||||
(In thousands) | 2009 | 2008 | ||||||
Unamortized net loan origination costs | $ | 7,133 | $ | 8,329 | ||||
Unamortized net premium on purchased loans | 102 | 129 | ||||||
Total unamortized net costs and premiums | $ | 7,235 | $ | 8,458 | ||||
(In thousands) | 2009 | 2008 | 2007 | |||||||||
Balance at beginning of year | $ | 22,908 | $ | 22,116 | $ | 19,370 | ||||||
Provision for loan losses | 47,730 | 4,580 | 4,300 | |||||||||
Allowance attributed to acquired loans | — | — | 4,453 | |||||||||
Loans charged-off | (39,143 | ) | (4,442 | ) | (6,376 | ) | ||||||
Recoveries | 321 | 654 | 369 | |||||||||
Balance at end of year | $ | 31,816 | $ | 22,908 | $ | 22,116 | ||||||
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(In thousands) | 2009 | 2008 | 2007 | |||||||||
Investment in impaired loans | $ | 56,897 | $ | 28,607 | $ | 14,751 | ||||||
Impaired loans with no valuation allowance | 27,015 | 21,503 | 7,224 | |||||||||
Impaired loans with a valuation allowance | 29,882 | 7,104 | 7,527 | |||||||||
Specific valuation allowance allocated to impaired loans | 6,409 | 1,014 | 1,230 | |||||||||
Average investment in impaired loans during the year | 39,310 | 16,293 | 9,259 | |||||||||
Cash basis impaired loan income received during the year | 1,124 | 560 | 881 | |||||||||
Non-accrual loans | 38,700 | 12,171 | 10,508 | |||||||||
Total loans past due ninety days or more and still accruing | 91 | 923 | 823 |
Estimated | ||||||||||
(In thousands) | 2009 | 2008 | Useful Life | |||||||
Land | $ | 3,836 | $ | 4,146 | N/A | |||||
Buildings and improvements | 34,481 | 33,335 | 5 - 39 years | |||||||
Furniture and equipment | 22,157 | 20,732 | 3 - 7 years | |||||||
Construction in process | 1,794 | 254 | ||||||||
Premises and equipment, gross | 62,268 | 58,467 | ||||||||
Accumulated depreciation and amortization | (24,878 | ) | (21,019 | ) | ||||||
Premises and equipment, net | $ | 37,390 | $ | 37,448 | ||||||
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(In thousands) | 2009 | 2008 | ||||||
Banking | $ | 138,549 | $ | 138,002 | ||||
Insurance | 23,176 | 23,176 | ||||||
Total | $ | 161,725 | $ | 161,178 | ||||
Gross | Net | |||||||||||
Intangible | Accumulated | Intangible | ||||||||||
(In thousands) | Assets | Amortization | Assets | |||||||||
December 31, 2009 | ||||||||||||
Non-maturity deposits | $ | 16,978 | $ | (8,209 | ) | $ | 8,769 | |||||
Insurance contracts | 7,463 | (2,444 | ) | 5,019 | ||||||||
All other intangible assets | 1,037 | (450 | ) | 587 | ||||||||
Total | $ | 25,478 | $ | (11,103 | ) | $ | 14,375 | |||||
December 31, 2008 | ||||||||||||
Non-maturity deposits | $ | 16,978 | $ | (5,718 | ) | $ | 11,260 | |||||
Insurance contracts | 7,463 | (1,708 | ) | 5,755 | ||||||||
Non-compete agreements | 2,318 | (2,318 | ) | — | ||||||||
All other intangible assets | 1,037 | (400 | ) | 637 | ||||||||
Total | $ | 27,796 | $ | (10,144 | ) | $ | 17,652 | |||||
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(In thousands) | 2009 | 2008 | ||||||
Net deferred tax asset | $ | 11,759 | $ | 12,235 | ||||
Capitalized mortgage servicing rights | 1,620 | 901 | ||||||
Accrued interest receivable | 8,498 | 8,995 | ||||||
Investment in tax credits | 8,688 | 5,491 | ||||||
Foreclosed and repossesed assets | 218 | 871 | ||||||
FDIC insurance | 10,903 | 344 | ||||||
Federal and state tax receivable | 12,329 | 2,276 | ||||||
Other | 5,186 | 7,604 | ||||||
Total other assets | $ | 59,201 | $ | 38,717 | ||||
(In thousands) | 2009 | 2008 | 2007 | |||||||||
Balance at beginning of year | $ | 901 | $ | 1,203 | $ | 986 | ||||||
Additions | 1,577 | — | 395 | |||||||||
Valuation allowance | (144 | ) | — | — | ||||||||
Amortization | (714 | ) | (302 | ) | (178 | ) | ||||||
Balance at end of year | $ | 1,620 | $ | 901 | $ | 1,203 | ||||||
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(In thousands) | 2009 | 2008 | ||||||
Maturity date: | ||||||||
Within 1 year | $ | 464,422 | $ | 453,435 | ||||
Over 1 year to 2 years | 134,733 | 149,452 | ||||||
Over 2 years to 3 years | 41,667 | 67,506 | ||||||
Over 3 years to 4 years | 58,936 | 19,511 | ||||||
Over 4 years to 5 years | 60,798 | 52,286 | ||||||
Over 5 years | 11,006 | 4,128 | ||||||
Total | $ | 771,562 | $ | 746,318 | ||||
Account balances: | ||||||||
Less than $100,000 | $ | 381,141 | $ | 394,655 | ||||
$100,000 or more | 390,421 | 351,663 | ||||||
Total | $ | 771,562 | $ | 746,318 | ||||
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2009 | 2008 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
(In thousands) | Amount | Average Rate | Amount | Average Rate | ||||||||||||
Fixed rate advances maturing: | ||||||||||||||||
2009 | $ | — | — | % | $ | 54,311 | 3.95 | % | ||||||||
2010 | 10,000 | 2.99 | 50,000 | 4.62 | ||||||||||||
2011 | 610 | 5.70 | 45,610 | 4.78 | ||||||||||||
2012 | — | — | 10,000 | 5.01 | ||||||||||||
2013 | 3,000 | 4.89 | 3,000 | 4.89 | ||||||||||||
2014 | 10,219 | 5.00 | 10,231 | 4.99 | ||||||||||||
2015 and beyond | 10,516 | 4.14 | 10,805 | 4.14 | ||||||||||||
Total fixed rate advances | 34,345 | 4.15 | 183,957 | 4.48 | ||||||||||||
Variable rate advances maturing: | ||||||||||||||||
2012 | 34,807 | 0.48 | 30,000 | 1.27 | ||||||||||||
2013 | 58,192 | 1.24 | 35,000 | 2.68 | ||||||||||||
2014 | 20,000 | 0.46 | 10,000 | 1.95 | ||||||||||||
2015 and beyond | 60,000 | 0.34 | 60,000 | 4.10 | ||||||||||||
Total variable rate advances | 172,999 | 0.68 | 135,000 | 2.94 | ||||||||||||
Total FHLBB advances | $ | 207,344 | 1.26 | % | $ | 318,957 | 3.83 | % | ||||||||
(In thousands) | 2009 | 2008 | ||||||
Due to broker | $ | — | $ | 19,895 | ||||
Other | 8,693 | 10,140 | ||||||
Total other liabilities | $ | 8,693 | $ | 30,035 | ||||
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(In thousands) | 2009 | 2008 | 2007 | |||||||||
Current: | ||||||||||||
Federal tax (benefit) expense | $ | (6,578 | ) | $ | 4,993 | $ | 2,924 | |||||
State tax expense | 95 | 2,914 | 1,329 | |||||||||
Total current (benefit) expense | (6,483 | ) | 7,907 | 4,253 | ||||||||
Deferred : | ||||||||||||
Federal tax (benefit) expense | (4,661 | ) | 1,327 | 677 | ||||||||
State tax (benefit) expense | (505 | ) | 371 | 461 | ||||||||
Total deferred (benefit) expense | (5,166 | ) | 1,698 | 1,138 | ||||||||
Decrease in valuation allowance | — | (793 | ) | (152 | ) | |||||||
Total income tax (benefit) expense | $ | (11,649 | ) | $ | 8,812 | $ | 5,239 | |||||
2009 | 2008 | 2007 | ||||||||||
Statutory tax rate | (35.0 | %) | 35.0 | % | 35.0 | % | ||||||
Increase (decrease) resulting from: | ||||||||||||
State taxes, net of federal tax benefit | 1.0 | 6.9 | 6.2 | |||||||||
Dividends received deduction | — | (0.1 | ) | (0.1 | ) | |||||||
Tax exempt income — investments | (6.3 | ) | (5.5 | ) | (8.0 | ) | ||||||
Bank-owned life insurance | (1.6 | ) | (1.6 | ) | (2.0 | ) | ||||||
Change in valuation allowance | — | (2.6 | ) | (0.8 | ) | |||||||
Investment tax credits | (0.9 | ) | (2.0 | ) | (1.9 | ) | ||||||
Other, net | 0.8 | (1.7 | ) | (0.5 | ) | |||||||
Effective tax rate | (42.0 | %) | 28.4 | % | 27.9 | % | ||||||
(In thousands) | 2009 | 2008 | ||||||
Allowance for loan losses | $ | 12,997 | $ | 9,358 | ||||
Employee benefit plans | 1,283 | 1,270 | ||||||
Net unrealized loss on swaps and securities available for sale in OCI | 2,489 | 8,131 | ||||||
Goodwill amortization | (3,953 | ) | (3,594 | ) | ||||
Investments | (1,846 | ) | (840 | ) | ||||
Purchase accounting adjustments | (3,340 | ) | (3,548 | ) | ||||
Investment tax credits | 4,582 | 2,243 | ||||||
Other | (453 | ) | (785 | ) | ||||
Deferred tax asset, net | $ | 11,759 | $ | 12,235 | ||||
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Weighted | Estimated | |||||||||||||||||||
Notional | Average | Weighted Average Rate | Fair Value | |||||||||||||||||
Amount | Maturity | Received | Paid | Asset (Liability) | ||||||||||||||||
(In thousands) | (In years) | (In thousands) | ||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Interest rate swaps on FHLBB borrowings | $ | 145,000 | 4.7 | 0.28 | % | 4.15 | % | $ | (8,874 | ) | ||||||||||
Interest rate swaps on junior subordinated debentures | 15,000 | 4.4 | 2.12 | 5.54 | (668 | ) | ||||||||||||||
Total cash flow hedges | 160,000 | (9,542 | ) | |||||||||||||||||
Economic hedges: | ||||||||||||||||||||
Interest rate swap on industrial revenue bond | 15,000 | 19.9 | 0.60 | 5.09 | (1,018 | ) | ||||||||||||||
Interest rate swaps on loans with commercial loan customers | 93,962 | 7.0 | 2.50 | 6.32 | (2,887 | ) | ||||||||||||||
Reverse interest rate swaps on loans with commercial loan customers | 93,962 | 7.0 | 6.32 | 2.50 | 2,962 | |||||||||||||||
Total economic hedges | 202,924 | (943 | ) | |||||||||||||||||
Non-hedging derivatives: | ||||||||||||||||||||
Commitments to originate residential mortgage loans | 22,668 | 0.2 | (273 | ) | ||||||||||||||||
Commitments to sell residential mortgage loans | 22,668 | 0.2 | 305 | |||||||||||||||||
Total non-hedging derivatives | 45,336 | 32 | ||||||||||||||||||
Total | $ | 408,260 | $ | (10,453 | ) | |||||||||||||||
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Weighted | Estimated | |||||||||||||||||||
Notional | Average | Weighted Average Rate | Fair Value | |||||||||||||||||
Amount | Maturity | Received | Paid | Gain (Loss) | ||||||||||||||||
(In thousands) | (In years) | (In thousands) | ||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||
Interest rate swaps on FHLBB borrowings | $ | 135,000 | 5.7 | 2.57 | % | 4.24 | % | $ | (15,657 | ) | ||||||||||
Interest rate swaps on junior subordinated debentures | 15,000 | 5.4 | 4.00 | 5.54 | (1,171 | ) | ||||||||||||||
Total cash flow hedges | 150,000 | (16,828 | ) | |||||||||||||||||
Economic hedges | ||||||||||||||||||||
Interest rate swap on industrial revenue bond | 15,000 | 20.9 | 2.27 | 5.09 | (3,299 | ) | ||||||||||||||
Interest rate swaps on loans with commercial loan customers | 38,948 | 6.2 | 4.14 | 6.42 | (3,941 | ) | ||||||||||||||
Reverse interest rate swaps on loans with commercial loan customers | 38,948 | 6.2 | 6.42 | 4.14 | 3,740 | |||||||||||||||
Total economic hedges | 92,896 | (3,500 | ) | |||||||||||||||||
Total | $ | 242,896 | $ | (20,328 | ) | |||||||||||||||
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Year Ended December 31, | ||||
(In thousands) | 2009 | |||
Interest rate swaps on FHLBB borrowings: | ||||
Unrealized gain recognized in accumulated other comprehensive loss | $ | 7,462 | ||
Reclassification of realized gain from accumulated other comprehensive loss to other non-interest income for termination of swaps | (741 | ) | ||
Reclassification of unrealized loss from accumulated other comprehensive loss to other non-interest income for hedge ineffectiveness | 62 | |||
Net tax expense on items recognized in accumulated other comprehensive loss | (2,601 | ) | ||
Interest rate swaps on junior subordinated debentures: | ||||
Unrealized gain recognized in accumulated other comprehensive loss | 503 | |||
Net tax expense on items recognized in accumulated other comprehensive loss | (197 | ) | ||
Other comprehensive income recorded in accumulated other comprehensive loss, net of reclassification adjustments and tax effects | $ | 4,488 | ||
Net interest expense recognized in interest expense on hedged FHLBB borrowings | $ | (4,587 | ) | |
Net interest expense recognized in interest expense on junior subordinated debentures | $ | (420 | ) |
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Year Ended December 31, | ||||
(In thousands) | 2009 | |||
Economic hedges | ||||
Interest rate swap on industrial revenue bond: | ||||
Net interest expense recognized in interest and dividend income on securities | $ | (665 | ) | |
Unrealized gain recognized in other non-interest income | 2,281 | |||
Interest rate swaps on loans with commercial loan customers: | ||||
Unrealized loss (gain) recognized in other non-interest income | (1,054 | ) | ||
Reverse interest rate swaps on loans with commercial loan customers: | ||||
Unrealized (loss) gain recognized in other non-interest income | 1,054 | |||
Favorable change in credit valuation adjustment recognized in other non-interest income | $ | 276 | ||
Non-hedging derivatives | ||||
Commitments to originate residential mortgage loans to be sold: | ||||
Unrealized loss recognized in other non-interest income | $ | (630 | ) | |
Commitments to sell residential mortgage loans: | ||||
Unrealized gain recognized in other non-interest income | $ | 769 |
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(In thousands) | 2009 | 2008 | ||||||
Commitments to originate new loans | $ | 78,800 | $ | 63,108 | ||||
Unused funds on commercial and other lines of credit | 115,493 | 70,156 | ||||||
Unadvanced funds on home equity lines of credit | 177,118 | 197,343 | ||||||
Unadvanced funds on construction and real estate loans | 61,004 | 66,135 | ||||||
Standby letters of credit | 28,503 | 41,402 | ||||||
Tax credit commitments | 5,177 | 1,299 | ||||||
Total | $ | 466,095 | $ | 439,443 |
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Minimum to be Well | ||||||||||||||||||||||||
Minimum | Capitalized Under | |||||||||||||||||||||||
Capital | Prompt Corrective | |||||||||||||||||||||||
Actual | Requirement | Action Provisions | ||||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
December 31, 2009 | ||||||||||||||||||||||||
Total capital to risk-weighted assets | $ | 224,594 | 10.71 | % | $ | 167,804 | 8.00 | % | $ | 209,754 | 10.00 | % | ||||||||||||
Tier 1 capital to risk-weighted assets | 198,305 | 9.45 | 83,902 | 4.00 | 125,853 | 6.00 | ||||||||||||||||||
Tier 1 capital to average assets | 198,305 | 7.86 | 100,974 | 4.00 | 126,217 | 5.00 | ||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Total capital to risk-weighted assets | $ | 250,729 | 12.28 | % | $ | 163,314 | 8.00 | % | $ | 204,142 | 10.00 | % | ||||||||||||
Tier 1 capital to risk-weighted assets | 227,821 | 11.16 | 81,657 | 4.00 | 122,485 | 6.00 | ||||||||||||||||||
Tier 1 capital to average assets | 227,821 | 9.34 | 97,602 | 4.00 | 122,002 | 5.00 |
(In thousands) | 2009 | 2008 | ||||||
Total stockholders’ equity per consolidated financial statements | $ | 384,581 | $ | 408,425 | ||||
Adjustments for Bank Tier 1 Capital: | ||||||||
Holding company equity adjustment | (40,845 | ) | (45,161 | ) | ||||
Net unrealized loss (gain) on available for sale securities | (2,675 | ) | 1,778 | |||||
Net unrealized loss on cash flow hedges | 5,149 | 9,046 | ||||||
Disallowed goodwill and other intangible assets | (147,905 | ) | (146,267 | ) | ||||
Total Bank Tier 1 Capital | 198,305 | 227,821 | ||||||
Adjustments for total capital: | ||||||||
Includible allowances for loan losses | 26,289 | 22,908 | ||||||
Total Bank capital per regulatory reporting | $ | 224,594 | $ | 250,729 | ||||
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(In thousands) | 2009 | 2008 | 2007 | |||||||||
Unrealized holding gain (loss) on AFS securities during the period | $ | 6,958 | $ | (4,816 | ) | $ | 1,089 | |||||
Reclassification adjustment for net realized loss on sale of AFS securities | 4 | 22 | 591 | |||||||||
Unrealized gain (loss) on AFS securities at period end | 6,962 | (4,794 | ) | 1,680 | ||||||||
Net loss (gain) on effective cash flow hedging derivatives | 7,286 | (16,828 | ) | 71 | ||||||||
Tax effects | (5,642 | ) | 8,831 | (626 | ) | |||||||
Total other comprehensive income (loss), net | $ | 8,606 | $ | (12,791 | ) | $ | 1,125 | |||||
(In thousands) | 2009 | 2008 | ||||||
Net unrealized holding gain (loss) on AFS securities | $ | 4,085 | $ | (2,877 | ) | |||
Net loss on effective cash flow hedging derivatives | (9,542 | ) | (16,828 | ) | ||||
Tax effects | 2,489 | 8,131 | ||||||
Accumulated other comprehensive loss | $ | (2,968 | ) | $ | (11,574 | ) | ||
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Non-vested Stock | ||||||||||||||||
Awards Outstanding | Stock Options Outstanding | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
Number of | Grant Date | Number of | Exercise | |||||||||||||
(Shares in thousands) | Shares | Fair Value | Shares | Price | ||||||||||||
Balance, December 31, 2008 | 123 | $ | 27.40 | 453 | $ | 23.00 | ||||||||||
Granted | 59 | 23.10 | — | — | ||||||||||||
Stock options exercised | — | — | (23 | ) | 15.17 | |||||||||||
Stock awards vested | (59 | ) | 29.16 | — | — | |||||||||||
Forfeited | (24 | ) | 24.62 | — | — | |||||||||||
Balance, December 31, 2009 | 99 | $ | 24.49 | 430 | $ | 23.35 | ||||||||||
Exercisable options, December 31, 2009 | 415 | $ | 22.98 | |||||||||||||
2007 | ||||
Expected dividends | 1.85 | % | ||
Expected term | 6 years | |||
Expected volatility | 19 | % | ||
Risk-free interest rate | 4.68 | % | ||
Weighed average grant date fair value | $ | 7.67 |
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2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In thousands) | Inputs | Inputs | Inputs | Fair Value | ||||||||||||
Trading account security | $ | — | $ | — | $ | 15,880 | $ | 15,880 | ||||||||
Available-for-sale securities | ||||||||||||||||
Municipal bonds and obligations | — | 74,784 | — | 74,784 | ||||||||||||
Government guaranteed residential mortgage-backed securities | — | 13,031 | — | 13,031 | ||||||||||||
Government-sponsored residential mortgage-backed securities | — | 184,245 | — | 184,245 | ||||||||||||
Corporate bonds | — | 37,337 | — | 37,337 | ||||||||||||
Trust preferred securities | — | 6,051 | 864 | 6,915 | ||||||||||||
Other bonds and obligations | — | 5,470 | — | 5,470 | ||||||||||||
Marketable equity securities | 1,411 | — | 1,152 | 2,563 | ||||||||||||
Derivative assets | — | 3,267 | — | 3,267 | ||||||||||||
Derivative liabilities | — | 13,447 | 273 | 13,720 |
2008 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(In thousands) | Inputs | Inputs | Inputs | Fair Value | ||||||||||||
Trading account security | $ | — | $ | — | $ | 18,144 | $ | 18,144 | ||||||||
Securities available for sale | 381 | 272,553 | 1,446 | 274,380 | ||||||||||||
Derivative assets | — | 3,740 | — | 3,740 | ||||||||||||
Derivative liabilities | — | 24,068 | — | 24,068 |
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Assets | Liabilities | |||||||||||
Trading | Securities | |||||||||||
Account | Available | Derivative | ||||||||||
(In thousands) | Security | for Sale | Liabilities | |||||||||
Balance as of December 31, 2008 | $ | 18,144 | $ | 1,446 | $ | — | ||||||
Unrealized loss recognized in other non-interest income | (2,264 | ) | — | (273 | ) | |||||||
Unrealized gain included in accumulated other comprehensive loss | — | 570 | — | |||||||||
Balance as of December 31, 2009 | $ | 15,880 | $ | 2,016 | $ | (273 | ) | |||||
Unrealized gains (losses) relating to instruments still held at December 31, 2009 | $ | 880 | $ | (1,913 | ) | $ | — |
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2009 | 2008 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
(In thousands) | Amount | Value | Amount | Value | ||||||||||||
Financial Assets | ||||||||||||||||
Cash and cash equivalents | $ | 32,608 | $ | 32,608 | $ | 44,798 | $ | 44,798 | ||||||||
Trading security | 15,880 | 15,880 | 18,144 | 18,144 | ||||||||||||
Securities available for sale | 324,345 | 324,345 | 274,380 | 274,380 | ||||||||||||
Securities held to maturity | 57,621 | 58,567 | 25,872 | 26,729 | ||||||||||||
Restricted equity securities | 23,120 | 23,120 | 23,120 | 23,120 | ||||||||||||
Net loans | 1,929,842 | 1,833,404 | 1,984,244 | 1,994,103 | ||||||||||||
Loans held for sale | 4,146 | 4,146 | 1,768 | 1,768 | ||||||||||||
Capitalized mortgage servicing rights | 1,620 | 1,620 | 901 | 901 | ||||||||||||
Accrued interest receivable | 8,498 | 8,498 | 8,995 | 8,995 | ||||||||||||
Cash surrender value of life insurance policies | 36,904 | 36,904 | 35,668 | 35,668 | ||||||||||||
Derivative assets | 3,267 | 3,267 | 3,740 | 3,740 | ||||||||||||
Financial Liabilities | ||||||||||||||||
Total deposits | $ | 1,986,762 | $ | 2,007,774 | $ | 1,829,580 | $ | 1,836,921 | ||||||||
Short-term debt | 83,860 | 83,860 | 23,200 | 23,200 | ||||||||||||
Long-term Federal Home Loan Bank advances | 207,344 | 208,831 | 318,957 | 329,356 | ||||||||||||
Other long-term debt | — | — | 17,000 | 16,683 | ||||||||||||
Junior subordinated debentures | 15,464 | 9,462 | 15,464 | 13,403 | ||||||||||||
Derivative liabilities | 13,720 | 13,720 | 23,868 | 23,868 |
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Total | ||||||||||||||||||||
(In thousands) | Banking | Insurance | Parent | Eliminations | Consolidated | |||||||||||||||
Year ended December 31, 2009 | ||||||||||||||||||||
Net interest income | $ | 70,673 | $ | — | $ | 13,911 | $ | (14,988 | ) | $ | 69,596 | |||||||||
Provision for loan losses | 47,730 | — | — | — | 47,730 | |||||||||||||||
Non-interest income | 15,764 | 12,255 | (29,290 | ) | 30,260 | 28,989 | ||||||||||||||
Non-interest expense | 67,167 | 10,165 | 1,241 | (2 | ) | 78,571 | ||||||||||||||
(Loss) income before income taxes | (28,460 | ) | 2,090 | (16,620 | ) | 15,274 | (27,716 | ) | ||||||||||||
Income tax expense (benefit) | (12,015 | ) | 919 | (553 | ) | — | (11,649 | ) | ||||||||||||
Net (loss) income | $ | (16,445 | ) | $ | 1,171 | $ | (16,067 | ) | $ | 15,274 | $ | (16,067 | ) | |||||||
Average assets (in millions) | $ | 2,647 | $ | 33 | $ | 385 | $ | (397 | ) | $ | 2,683 |
Total | ||||||||||||||||||||
(In thousands) | Banking | Insurance | Parent | Eliminations | Consolidated | |||||||||||||||
Year ended December 31, 2008 | ||||||||||||||||||||
Net interest income | $ | 77,486 | $ | — | $ | 18,722 | $ | (20,468 | ) | $ | 75,740 | |||||||||
Provision for loan losses | 4,580 | — | — | — | 4,580 | |||||||||||||||
Non-interest income | 17,906 | 13,694 | 3,277 | (3,282 | ) | 31,595 | ||||||||||||||
Non-interest expense | 60,448 | 10,450 | 801 | — | 71,699 | |||||||||||||||
Income before income taxes | 30,364 | 3,244 | 21,198 | (23,750 | ) | 31,056 | ||||||||||||||
Income tax expense (benefit) | 8,528 | 1,330 | (1,046 | ) | — | 8,812 | ||||||||||||||
Net income | $ | 21,836 | $ | 1,914 | $ | 22,244 | $ | (23,750 | ) | $ | 22,244 | |||||||||
Average assets (in millions) | $ | 2,515 | $ | 32 | $ | 340 | $ | (336 | ) | $ | 2,551 |
Total | ||||||||||||||||||||
(In thousands) | Banking | Insurance | Parent | Eliminations | Consolidated | |||||||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||
Net interest income | $ | 66,115 | $ | — | $ | 6,265 | $ | (8,455 | ) | $ | 63,925 | |||||||||
Provision for loan losses | 4,300 | — | — | — | 4,300 | |||||||||||||||
Non-interest income | 11,010 | 13,954 | 6,981 | (7,302 | ) | 24,643 | ||||||||||||||
Non-interest expense | 55,198 | 9,919 | 775 | (398 | ) | 65,494 | ||||||||||||||
Income before income taxes | 17,627 | 4,035 | 12,471 | (15,359 | ) | 18,774 | ||||||||||||||
Income tax expense (benefit) | 4,746 | 1,557 | (1,064 | ) | — | 5,239 | ||||||||||||||
Net income | $ | 12,881 | $ | 2,478 | $ | 13,535 | $ | (15,359 | ) | $ | 13,535 | |||||||||
Average assets (in millions) | $ | 2,229 | $ | 31 | $ | 378 | $ | (376 | ) | $ | 2,262 |
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December 31, | ||||||||
( In thousands) | 2009 | 2008 | ||||||
Assets | ||||||||
Cash due from Berkshire Bank | $ | 23,607 | $ | 46,529 | ||||
Investment in subsidiaries | 370,011 | 389,982 | ||||||
Other assets | 7,256 | 5,745 | ||||||
Total assets | $ | 400,874 | $ | 442,256 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Accrued expenses payable | $ | 829 | $ | 1,367 | ||||
Notes payable | — | 17,000 | ||||||
Junior subordinated debentures | 15,464 | 15,464 | ||||||
Stockholders’ equity | 384,581 | 408,425 | ||||||
Total liabilities and stockholders’ equity | $ | 400,874 | $ | 442,256 | ||||
Years Ended December 31, | ||||||||||||
(In thousands) | 2009 | 2008 | 2007 | |||||||||
Income: | ||||||||||||
Dividends from subsidiaries | $ | 15,000 | $ | 20,500 | $ | 8,445 | ||||||
Other | 984 | 27 | 113 | |||||||||
Total income | 15,984 | 20,527 | 8,558 | |||||||||
Interest expense | 1,089 | 1,778 | 2,227 | |||||||||
Operating expenses | 1,241 | 801 | 775 | |||||||||
Total expense | 2,330 | 2,579 | 3,002 | |||||||||
Income before income taxes and equity in undistributed income (loss) of subsidiaries | 13,654 | 17,948 | 5,556 | |||||||||
Income tax benefit | (553 | ) | (1,046 | ) | (1,064 | ) | ||||||
Income before equity in undistributed income (loss) of subsidiaries | 14,207 | 18,994 | 6,620 | |||||||||
Equity in undistributed (loss) income of subsidiaries | (30,274 | ) | 3,250 | 6,915 | ||||||||
Net (loss) income | $ | (16,067 | ) | $ | 22,244 | $ | 13,535 | |||||
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Years Ended December 31, | ||||||||||||
(In thousands) | 2009 | 2008 | 2007 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net (loss) income | $ | (16,067 | ) | $ | 22,244 | $ | 13,535 | |||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||
Equity in undistributed loss (income) of subsidiaries | 30,274 | (3,250 | ) | (6,915 | ) | |||||||
Other, net | (678 | ) | (781 | ) | (1,615 | ) | ||||||
Net cash provided by operating activities | 13,529 | 18,213 | 5,005 | |||||||||
Cash flows from investing activities: | ||||||||||||
Investment in insurance subsidiary | (1,400 | ) | — | — | ||||||||
Investment in bank subsidiary | — | (32,500 | ) | — | ||||||||
Net cash paid for Factory Point acquisition | — | — | (12,665 | ) | ||||||||
Purchase of securities | (524 | ) | (300 | ) | (120 | ) | ||||||
Net cash used by investing activities | (1,924 | ) | (32,800 | ) | (12,785 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from long-term debt | — | — | 20,000 | |||||||||
Repayment of long-term debt | (17,000 | ) | (18,000 | ) | — | |||||||
Proceeds from issuance of preferred stock and warrant | — | 40,000 | — | |||||||||
Redemption of preferred stock and warrant | (41,040 | ) | — | — | ||||||||
Net proceeds from common stock issuance | 32,365 | 38,521 | — | |||||||||
Net proceeds from reissuance of treasury stock | 344 | 3,508 | 4,284 | |||||||||
Treasury stock purchased | — | (4,880 | ) | (7,822 | ) | |||||||
Preferred stock cash dividends paid | (806 | ) | — | — | ||||||||
Common stock cash dividends paid | (8,390 | ) | (6,837 | ) | (5,398 | ) | ||||||
Net cash (used) provided by financing activities | (34,527 | ) | 52,312 | 11,064 | ||||||||
Net change in cash and cash equivalents | (22,922 | ) | 37,725 | 3,284 | ||||||||
Cash and cash equivalents at beginning of year | 46,529 | 8,804 | 5,520 | |||||||||
Cash and cash equivalents at end of year | $ | 23,607 | $ | 46,529 | $ | 8,804 | ||||||
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2009 | 2008 | |||||||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | Third | Second | First | |||||||||||||||||||||||||
(In thousands, except per share data) | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||||
Interest and dividend income | $ | 28,371 | $ | 28,460 | $ | 28,765 | $ | 29,880 | $ | 32,762 | $ | 33,092 | $ | 32,834 | $ | 34,523 | ||||||||||||||||
Interest expense | 10,375 | 11,295 | 12,041 | 12,169 | 13,292 | 13,763 | 14,187 | 16,229 | ||||||||||||||||||||||||
Net interest income | 17,996 | 17,165 | 16,724 | 17,711 | 19,470 | 19,329 | 18,647 | 18,294 | ||||||||||||||||||||||||
Non-interest income | 4,652 | 7,260 | 8,405 | 8,672 | 6,377 | 7,235 | 8,511 | 9,472 | ||||||||||||||||||||||||
Total revenue | 22,648 | 24,425 | 25,129 | 26,383 | 25,847 | 26,564 | 27,158 | 27,766 | ||||||||||||||||||||||||
Provision for loan losses | 38,730 | 4,300 | 2,200 | 2,500 | 1,400 | 1,250 | 1,105 | 825 | ||||||||||||||||||||||||
Non-interest expense | 21,196 | 18,944 | 19,978 | 18,453 | 17,256 | 17,737 | 18,632 | 18,074 | ||||||||||||||||||||||||
(Loss) income before income taxes | (37,278 | ) | 1,181 | 2,951 | 5,430 | 7,191 | 7,577 | 7,421 | 8,867 | |||||||||||||||||||||||
Income tax (benefit) expense | (13,075 | ) | (741 | ) | 620 | 1,547 | 1,985 | 2,301 | 1,708 | 2,818 | ||||||||||||||||||||||
Net (loss) income | $ | (24,203 | ) | $ | 1,922 | $ | 2,331 | $ | 3,883 | $ | 5,206 | $ | 5,276 | $ | 5,713 | $ | 6,049 | |||||||||||||||
Less: Preferred stock dividends and accretion | — | — | 393 | 637 | — | — | — | — | ||||||||||||||||||||||||
Less: Deemed dividend from stock repayment | — | — | 2,954 | — | — | — | — | — | ||||||||||||||||||||||||
Net (loss) income available to common stockholders | $ | (24,203 | ) | $ | 1,922 | $ | (1,016 | ) | $ | 3,246 | $ | 5,206 | $ | 5,276 | $ | 5,713 | $ | 6,049 | ||||||||||||||
Average diluted common shares outstanding (thousands) | 13,817 | 13,857 | 12,946 | 12,247 | 11,892 | 10,400 | 10,384 | 10,457 | ||||||||||||||||||||||||
Basic (loss) earnings per common share | $ | (1.75 | ) | $ | 0.14 | $ | (0.08 | ) | $ | 0.27 | $ | 0.44 | $ | 0.51 | $ | 0.55 | $ | 0.58 | ||||||||||||||
Diluted (loss) earnings per common share | $ | (1.75 | ) | $ | 0.14 | $ | (0.08 | ) | $ | 0.27 | $ | 0.44 | $ | 0.51 | $ | 0.55 | $ | 0.58 |
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Name | Age | Position | ||||
Michael P. Daly | 48 | President and Chief Executive Officer | ||||
Kevin P. Riley | 50 | Executive Vice President and Chief Financial Officer | ||||
Michael J. Oleksak | 51 | Executive Vice President of Commercial Banking | ||||
Richard M. Marotta | 51 | Executive Vice President, Chief Risk Officer | ||||
David B. Farrell | 54 | Executive Vice President of Integrated Services | ||||
Sean A. Gray | 33 | Senior Vice President of Retail Banking |
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(a) | Security Ownership of Certain Beneficial Owners | ||
Information required by this item is incorporated herein by reference to the section captioned“Stock Ownership”in the Proxy Statement. | |||
(b) | Security Ownership of Management | ||
Information required by this item is incorporated herein by reference to the section captioned“Stock Ownership”in the Proxy Statement. | |||
(c) | Changes in Control | ||
Management of Berkshire knows of no arrangements, including any pledge by any person of securities of Berkshire, the operation of which may at a subsequent date result in a change in control of the registrant. | |||
(d) | Equity Compensation Plan Information | ||
The following table sets forth information, as of December 31, 2009, about Company common stock that may be issued upon exercise of options under stock-based benefit plans maintained by the Company. |
Number of securities | ||||||||||||
Number of securities | remaining available for | |||||||||||
to be issued upon | Weighted-average | future issuance under | ||||||||||
exercise of | exercise price of | equity compensation plans | ||||||||||
outstanding options, | outstanding options, | (excluding securities | ||||||||||
Plan category | warrants and rights | warrants and rights | reflected in the first column) | |||||||||
Equity compensation plans approved by security holders | 430,000 | $ | 23.35 | 226,000 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 430,000 | $ | 23.35 | 226,000 | ||||||||
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(a) | [1] | Financial Statements |
• | Report of Independent Registered Public Accounting Firm | ||
• | Consolidated Balance Sheets as of December 31, 2009 and 2008 | ||
• | Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007 | ||
• | Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2009, 2008 and 2007 | ||
• | Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007 | ||
• | Notes to Consolidated Financial Statements |
The consolidated financial statements required to be filed in our Annual Report on Form 10-K are included in Part II, Item 8 hereof. | |||
[2] | Financial Statement Schedules | ||
All financial statement schedules are omitted because the required information is either included or is not applicable. | |||
[3] | Exhibits |
3.1 | Certificate of Incorporation of Berkshire Hills Bancorp, Inc.(1) | |||
3.2 | Certificate of Designations for the Series A Preferred Stock(2) | |||
3.3 | Bylaws of Berkshire Hills Bancorp, Inc. (3) | |||
4.1 | No long-term debt instrument issued by the Registrant exceeds 10% of consolidated assets or is registered. In accordance with paragraph 4(iii) of Item 601(b) of Regulation S-K, the Registrant will furnish the Securities and Exchange Commission copies of long-term debt instruments and related agreements upon request. | |||
10.1 | Amended and Restated Employment Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Michael P. Daly(4) | |||
10.2 | Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Kevin P. Riley(4) | |||
10.3 | Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and John S. Millet(4) | |||
10.4 | Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Michael J. Oleksak(4) | |||
10.5 | Amended and Restated Three Year Change in Control Agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Shepard D. Rainie(4) | |||
10.6 | Consulting Agreement between Berkshire Hills Bancorp, Inc. and David B. Farrell(5) | |||
10.7 | Amended and Restated Supplemental Executive Retirement Agreement between Berkshire Bank and Michael P. Daly(6) | |||
10.8 | *Amended and Restated Berkshire Hills Bancorp, Inc. 2003 Equity Compensation Plan(7) | |||
10.9 | *Form of Berkshire Bank Employee Severance Compensation Plan(1) | |||
10.10 | *Berkshire Hills Bancorp, Inc. 2001 Stock-Based Incentive Plan(8) |
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10.11 | *Woronoco Bancorp, Inc. 1999 Stock-Based Incentive Plan(9) | |||
10.12 | *Woronoco Bancorp, Inc. 2001 Stock Option Plan(10) | |||
10.13 | *Woronoco Bancorp, Inc. 2004 Equity Compensation Plan(11) | |||
10.14 | Factory Point Bancorp, Inc. 1999 Non-Employee Directors Stock Option Plan, as amended and restated (12) | |||
10.15 | Factory Point Bancorp, Inc. 1999 Stock Incentive Plan(12) | |||
10.16 | Factory Point Bancorp, Inc. 2004 Stock Incentive Plan, as amended and restated(11) | |||
10.17 | Berkshire Hills Bancorp, Inc. Management Incentive Compensation Plan | |||
10.18 | Three year change in control agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and David B. Farrell | |||
10.19 | Three year change in control agreement by and among Berkshire Bank, Berkshire Hills Bancorp, Inc. and Richard M. Marotta | |||
11.0 | Statement re: Computation of Per Share Earnings is incorporated herein by reference to Part II, Item 8, “Financial Statements and Supplementary Data” | |||
21.0 | Subsidiary Information is incorporated herein by reference to Part I, Item 1, “Business — Subsidiary Activities” | |||
23.0 | Consent of Wolf & Company, P.C. | |||
31.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||
31.2 | Rule 13a-14(a) Certification of Chief Financial Officer | |||
32.1 | Section 1350 Certification of Chief Executive Officer | |||
32.2 | Section 1350 Certification of Chief Financial Officer |
* | Management contract or compensatory plan, contract or arrangement. | |
(1) | Incorporated herein by reference from the Exhibits to Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No. 333-32146. | |
(2) | Incorporated by reference from the Exhibits to the Form 8-K filed on December 23, 2008. | |
(3) | Incorporated herein by reference from the Exhibits to the Form 8-K as filed on February 29, 2008. | |
(4) | Incorporated by reference from the Exhibits to the Form 8-K filed on January 6, 2009. | |
(5) | Incorporated by reference from the Exhibits to the Form 8-K filed on December 17, 2008. | |
(6) | Incorporated by reference from the Exhibits to Form 10-K filed on March 16, 2009. | |
(7) | Incorporated herein by reference from the Appendix to the Proxy Statement as filed on April 3, 2008. | |
(8) | Incorporated herein by reference from the Appendix to the Proxy Statement as filed on December 7, 2000. | |
(9) | Incorporated herein by reference from the Proxy Statement as filed on March 20, 2000 by Woronoco Bancorp, Inc. | |
(10) | Incorporated herein by reference from the Proxy Statement as filed on March 12, 2001 by Woronoco Bancorp, Inc. | |
(11) | Incorporated herein by reference from the Proxy Statement as filed on March 22, 2004 by Woronoco Bancorp, Inc. | |
(12) | Incorporated herein by reference from the exhibits to the registration statement on Form S-8 as filed on October 10, 2007, registration No. 333-146604. |
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Berkshire Hills Bancorp, Inc. | ||||
Date: March 16, 2010 | By: | /s/ Michael P. Daly | ||
Michael P. Daly | ||||
President and Chief Executive Officer |
/s/ Michael P. Daly | President and Chief Executive Officer (principal executive officer) | March 16, 2010 | ||
/s/ Kevin P. Riley | Executive Vice President and Chief Financial Officer (principal financial and accounting officer) | March 16, 2010 | ||
/s/ Lawrence A. Bossidy | Non-Executive Chairman | March 16, 2010 | ||
/s/ Robert M. Curley | Director | March 16, 2010 | ||
/s/ John B. Davies | Director | March 16, 2010 | ||
/s/ Rodney C. Dimock | Director | March 16, 2010 | ||
/s/ Susan M. Hill | Director | March 16, 2010 | ||
/s/ Cornelius D. Mahoney | Director | March 16, 2010 | ||
/s/ Catherine B. Miller | Director | March 16, 2010 | ||
/s/ David E. Phelps | Director | March 16, 2010 | ||
/s/ D. Jeffrey Templeton | Director | March 16, 2010 | ||
/s/ Corydon L. Thurston | Director | March 16, 2010 |
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