THE POWER OF
INVESTMENT
Life is exciting. Let us help.®
2015 Summary Annual Report
THE POWER OF INVESTMENT
DEAR SHAREHOLDERS, CUSTOMERS
AND EMPLOYEES:
There’s no better way to unleash the potential of a company than to engage smart,
accomplished people and give them the opportunity to add value and be held
accountable for their contributions. Since taking over as CEO at Berkshire 14 years
ago, I’ve made it a priority to build a culture where employees are passionate about
their work, excited about confronting challenges and driven to achieve more than they
ever thought possible. It’s this investment in developing the America's Most Exciting
Bank® culture that transformed our bank into a regional franchise, positioning us as a
preferred financial partner to customers across New England and New York.
It’s also this investment that has helped us to achieve double-digit returns for our
shareholders in 2015. For the year, we recorded 18% revenue growth, 16% core EPS
growth, double-digit loan and deposit growth, and substantial improvements in our
profitability ratios. Our core results improved steadily in every quarter. We bolstered
our presence in the middle of our footprint through the acquisition of Hampden
Bancorp and diversified our business lending through the expansion of our SBA lending
program and the acquisition of Firestone Financial. In short, I'm pleased with our
results and our momentum heading into 2016.
Growing Our Franchise
The last year was marked by solid organic growth, expanding margins and disciplined
acquisitions. We continued to enhance our presence across the footprint, investing in
employees and communities, and establishing ourselves as a significant contender in
newer markets. We are actively growing our influence in Eastern Mass., Connecticut
and New York, and helping to fuel the vitality of these regions, while maintaining our
commitment to our long-standing markets of Western Mass. and Vermont.
2015 Growth Highlights
(GAAP)
22%
20%
18%
27%
26%
Loans
Deposits
Revenue
EPS
ROE
CULTURE
As America's Most
Exciting Bank®, we
are passionate about
practicing and living
by the RIGHT values
(Respect, Integrity,
Guts, Having Fun
and Teamwork).
FOOTPRINT
We offer services
across New England
and New York—
reaching customers
from Boston to
Syracuse and multiple
regions in between.
VISION
By bringing together
a strong employee base,
a dedicated strategy
and operational
efficiency, we can
offer our customers
the products and
services they need,
our employees an
inspirational place to
work, our communities
the support they are
looking for and our
shareholders the
returns they deserve.
1
2015 Summary Annual Report
Rochester
Rome
Utica
Syracuse
VT
NH
NY
Manchester
Manchester
Albany
Albany
Berkshire’s total loan growth for the year was 22%,
including 8% organic growth coupled with contributions
from the Hampden and Firestone acquisitions. Organic
commercial loan growth measured 9%, and our teams
continued to drive relationship-based C&I business across the
region. We enhanced our commercial lending teams, brought in
a new auto lending leader to build relationships throughout our
footprint and continued to expand our residential lending group.
Meanwhile, deposit growth kept pace, growing 20% year-over-
year, including double-digit organic growth in demand deposit
balances. We continued to enhance our products and services
suite for our deposit customers with the addition of Apple Pay™*,
instant issue debit cards and an instant customer feedback
tool available in branches. We brought in a new leader for our
cash management team and rolled out additional services for
our business customers. We also expanded our private banker
and MyBanker groups across the footprint. These teams work
hand in hand with our wealth and commercial teams to provide
concierge-level service to our customers.
During the second quarter, we closed and integrated the
acquisition of Hampden Bank. This brought with it seven
new branches, a strong customer base and well-established
commercial and business banking teams. It also bumped us into
the top four in deposit market share in the Springfield, Mass.
region and positioned us well to stay competitive in that market.
We followed up with the acquisition of Firestone Financial, a
specialty equipment financing company headquartered in
Needham, Mass. The Firestone team, made up of disciplined and
dedicated lenders who bring years of experience in specialty
lending, has already made an impact, helping us to diversify our
loan portfolio and our product suite. Both deals were accretive
to earnings, capital and profitability measures, and are good
examples of our disciplined acquisition strategy.
On the business banking side, we've been focused on
streamlining our processes and upgrading our offerings, and
we're proud of what the team has accomplished. For the fiscal
year 2015, Berkshire was named the #1 Small Business Lender
*Apple Pay is a trademark of Apple Inc.
9191
MA
Pittsfield
Burlington
Burlington
Burlington
Burlington
Westborououghghgh
Boston
Boston
Boston
Boston
128128128
Springfield
Springfield
90
HartHartford
CT
RI
Select Financial Information
Balance Sheet
($ millions - period end)
Total assets
Total securities
Total loans
FY15
FY14
$7,832 $6,502
1,371
1,206
5,725
4,681
Goodwill and intangibles
335
276
Deposits
Borrowings
5,589
4,655
1,264
1,052
Shareholders’ equity
887
709
Operating Results
($ millions)
FY15
FY14
Net interest
$214
$179
Non-interest income
Total net revenue
Provision for loan losses
Non-interest expense
Net income
Per Share Data
($)
54
268
17
197
50
47
226
15
166
34
FY15
FY14
Earnings, diluted*
$1.73
$1.36
Dividends
Book value
0.76
0.72
28.64
28.17
Tangible book value
17.84
17.19
* Note: Net non-core operating charges totaled $0.36 per share FY15,
and $0.44 per share FY14.
Berkshire Hills Bancorp—BHLB // berkshirebank.com
2
in Western Mass., the state of Vermont, and the Albany to Syracuse
region of New York. We also announced the planned addition of a
nationally ranked SBA team based in the Philadelphia, Penn. area and
are excited about these continued prospects.
We upgraded and expanded our wealth management group in 2015,
bringing in veteran portfolio managers and trust advisors, and
promoting a new leadership team. The enhanced team has strong
ties in our communities and produced good results last year, beating
the benchmarks in a tough market. We also continued to build on the
insurance side, where we've added a new benefits team and increased
our product offerings.
Importantly, we’ve expanded our margins and improved our
profitability through all of this growth. We ended the year with double-
digit improvement in both return on assets and return on equity. Our
efficiency ratio has improved to just over 60%, and our tangible book
value per share grew by 4%, including the impact of acquisitions. At
least as important was our ability to expand our net interest margin in a
competitive, low-interest-rate environment. I'm proud of how hard our
teams worked to accomplish this, focusing on extremely disciplined
growth throughout the year.
Contributing to Our Communities
Having a positive impact on the communities we serve is integral to
the values of our bank. Our employees take pride in the work they do
to support local charities, and we do our best to support their efforts
through paid time off for volunteering and by running a foundation that
has funded millions in community grants across our footprint. In 2015,
we added to our program with focused efforts on supporting local
veterans, active military and their families through volunteer projects,
grants, and new product and service offerings. We also launched a
corporate initiative to become a more environmentally sustainable
® represents our strong culture
The new
and mission to be America's Most Exciting
Bank®, our desire to help customers find life's
exciting moments and our commitment to
high performance.
Strategic Partnerships
Strategic Partnerships
The
The
of
of
NESN’s
NESN’s
Boston Bruins
coverage
Ray Bourque
Ray Bourque
Berkshire Bank spokesperson
Berkshire Bank spokesperson
and hockey legend
and hockey legend
As the home financing and retail banking
provider of MTA Benefits, Berkshire
Bank created unique mortgage, checking
account, consumer and equity loan products
specifically for Massachusetts Teachers
Association members and their families.
3 2015 Summary Annual Report
company, with goals to reduce our carbon footprint
in the coming years.
Investment in People
One of the most important things we did this year
was strengthen the leadership team through the
reorganization of responsibilities and subsequent
promotions at the executive level. In September,
Richard Marotta was promoted to President of the
Bank and Sean Gray was named Chief Operating
Officer. Each has been essential to the growth of this
company, and their promotions reflect that fact.
We also expanded the executive team, promoting eight
members to executive vice president, representing
each of our primary business lines and the roles
they play in this company going forward. Each of
these new executives have demonstrated strong
integrity and high energy, and have new ideas to drive
higher performance. Each is also deeply committed
to the AMEB culture and to fostering growth and
opportunities for employees at this company. As I
said at the beginning of this letter, I don't think there's
a better way to unleash the potential of a company
than through engagement and accountability, and
I'm excited about our future opportunities, having
empowered this kind of talent and energy.
Earnings
30% Compound Annual Growth
$41
$33
$34
$50
$17
2011
2012
2013
2014
2015
Values shown in millions
Revenue
17% Compound Annual Growth
$227
$226
$197
$268
$142
2011
2012
2013
2014
2015
Coming Full Circle
As I look back over 2015, I'm happy with the results we've produced. It’s been a year of smart, disciplined growth.
We have the right people in place with the right priorities to take this company to the next level. As a fellow
shareholder, I'm pleased with the double-digit stock return this year. Our tangible book value continues to grow as
does our market cap and the liquidity in our stock. We raised the dividend by 6% at the beginning of the year and
followed that up by another 5% raise at the beginning of 2016.
Values shown in millions
I'm also excited about our prospects for the year ahead. We’re focused on growing revenues, maintaining our
expense discipline, and improving our profitability and shareholder returns. We take very seriously our promises to
deliver for our shareholders, and I feel it's important that we continue to listen to and engage them.
We’ve worked hard to create a culture and build a footprint that sets us apart from our competitors, and I believe
those things will continue to be differentiators for us. I'm confident about our future opportunities and our ability to
capitalize on them. With your support, I'm looking forward to continuing to grow and strengthen this franchise.
Sincerely,
Michael P. Daly
President & CEO of Berkshire Hills Bancorp, Inc.
Berkshire Hills Bancorp—BHLB // berkshirebank.com
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CORPORATE
PROFILE
7.8 Billion
in Assets$
93
Branch Locations
» Retail banking, commercial
banking, insurance and
wealth management
» Branches located across
New England and New York
» Wealth assets under
management of $1.5 billion
INVESTMENT
CONSIDERATIONS
» Strong core earnings
momentum and improving
profitability
» Diversified revenue drivers
and controlled expenses
» Well-positioned footprint in
attractive markets
» AMEB culture – results driven
» Acquisition Discipline – a
strength in a consolidating
market
» Focused on profitability goals
and shareholder value
5 2015 Summary Annual Report
ABOUT US
Stock Information
as of 12 / 31 / 15
Ticker
Stock Price
Market Cap
Forward P/E (FY16 consensus)
Price / Book
Price / Tangible Book
52 Week Range
Annualized Dividend (1Q16)
Dividend Yield
Shares Outstanding
Average Daily Volume (FY15)
NYSE: BHLB
$29.11
$902 million
12.9x
1.02x
1.63x
$24.32–$30.40
$0.80
2.7%
31.0 million
112,000 shares
COMMUNITY
REINVESTMENT
A Path to a Sustainable Future
Through the AMEB GreenSM program we intend
to reduce both our paper use and energy
consumption by at least 10% over the next three
years. In addition, we are committed to dedicating
15% of our volunteer services to environmental
community causes.
XTEAM® Volunteer Snapshot
70% of our employees participated in volunteer
events in 2015. We provided 40,000 hours of
service throughout the year, supporting 258 company-sponsored
volunteer events and contributing to our largest "Company-Wide
Week of Service" in history. Our Foundation funded over $1.8 million
in community grants across our footprint, including partnerships with
United Way and Habitat for Humanity.
Military and Veterans’ Personal and
Business Services
Berkshire Bank is committed to making banking
easier for our servicemen and servicewomen
by providing discounts, money management
tools, banking and lending offers to save money.
In November 2015, we expanded our Military
and Veterans' personal and business banking
package designed for active duty and reservists
as well as disabled and retired veterans. In
addition, our Foundation provided a donation to
Soldier On in honor of Veterans Day.
LEADERSHIP TEAM
Berkshire Bank Executive Team
BACK: Gary F. Urkevich, Allison P. O’Rourke, George F. Bacigalupo, Linda A. Johnston, Sean A. Gray, Michael P. Daly, Richard M. Marotta,
Josephine Iannelli, Michael D. Carroll, Tami M. Gunsch. FRONT: Scott J. Houghtaling, Mark N. Foster, Deborah A. Stephenson, James T. Curran
Berkshire Bank Executive Team
Michael P. Daly
Chief Executive Officer
George F. Bacigalupo
SEVP, Commercial Banking
Richard M. Marotta
President
Linda A. Johnston
SEVP, Human Resources
Sean A. Gray
Chief Operating Officer
Michael D. Carroll
EVP, Chief Risk Officer
Josephine Iannelli
SEVP, Chief Financial Officer
James T. Curran
EVP, Regional Commercial
Leader – Central
Massachusetts and
Connecticut
Mark N. Foster
EVP, Regional Commercial
Leader – Eastern
Massachusetts and ABL
Allison P. O’Rourke
EVP, Investor Relations and
Financial Institutions
Banking
Tami M. Gunsch
EVP, Retail Banking
Scott J. Houghtaling
EVP, Regional Commercial
Leader – New York
Deborah A. Stephenson
EVP, Compliance and
Regulatory
Gary F. Urkevich
EVP, IT and Project
Management
Board of Directors
William J. Ryan
Chairman of the Board,
Former Chairman & CEO of
TD Banknorth Inc.
Paul T. Bossidy
President & CEO of
Patripabre Capital LLC
Thomas R. Burton
Former CEO of Hampden
Bancorp, Inc. & Hampden
Bank
Robert M. Curley
Berkshire Bank New York
Chairman & Former
Chairman & President for
Citizens Bank in New York
Michael P. Daly
President & CEO of
Berkshire Hills Bancorp, Inc.
John B. Davies
Former Executive
Vice President of
Massachusetts Mutual Life
Insurance Company
Rodney C. Dimock
Principal at Arrow Capital,
LLC & Former President of
Cornerstone Properties &
Aetna Realty Investors, Inc.
J. Williar Dunlaevy
Former Chairman & CEO
of Legacy Bancorp, Inc. &
Legacy Banks
Susan M. Hill
Founder & Former
Vice President of
Hill & Thompson, P.C.
Cornelius D. Mahoney
Former Chairman, President
& CEO of Woronoco
Bancorp, Inc. & Woronoco
Savings
Laurie Norton Moffatt
Director & CEO of the
Norman Rockwell Museum
Richard J. Murphy
Executive Vice President
& Chief Operating Officer
of the Tri-City ValleyCats
Barton D. Raser
Vice President & Co-owner
of Carr Hardware & Supply
Company, Inc.
Richard D. Suski
Former Principal of
RDS Associates
D. Jeffrey Templeton
Owner & President of
The Mosher Company, Inc.
Berkshire Hills Bancorp—BHLB // berkshirebank.com
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