Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Sandler O'Neill + Partners East Coast Financial Conference (November 2008)
23 slides from Beacon Financial's conference presentation, Nov 13, 2008
Slide 1: Forward Looking Statements
This presentation contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements, including factors
Slide 2: Michael P. Daly, President and CEO
Michael P. Daly President and CEO Phone: (413) 236-3194 Email: mdaly@berkshirebank.com P.O. Box 1308, Pittsfield, MA 01202-1308 -- Executive Offices – 66 West Street, Pittsfield, MA 01201 David H. Gonci Corporate Finance Officer Phone: (413) 281-1973 Email: dgonci@berkshirebank.com Kevin P. Riley EV
Slide 3: Our Growing Regional Franchise
Our Growing Regional Franchise $2.6 billion in assets 48 total stores 38 bank branches 10 insurance offices Three-state franchise Massachusetts, New York and Vermont Largest locally headquartered regional financial services company in primary market $800 million in wealth management assets under man
Slide 4: Experienced Management Team
Total Years of Experience Background BHLB Title Name Experienced Management Team Health Care Telecommunications President, Berkshire Insurance Group John Millet Bank of Boston SVP, Wealth Management Thomas Barney Bank of America SVP, Retail Banking Sean Gray Bank of America EVP, Chief Risk Officer S
Slide 5: Delivering a Superior Customer Experience
Delivering a Superior Customer Experience Execution Six Sigma Productivity Profitability Our Brand Promise
Slide 6: Building a Distinctive Culture
Building a Distinctive Culture Our Vision To be a world class financial services company through an engaging and exciting environment where customers want to do business and employees want to work. Core Values
Slide 7: Attractive Markets – MA, NY, VT
Attractive Markets – MA, NY, VT Residential property values more stable in Western MA Foreclosures remain low Albany prices – continued appreciation House Prices Massachusetts reported 1% economic growth in September Low unemployment IBM and AMD announce $6 billion total New York Tech Valley investm
Slide 8: Loan Mix Managed for Quality Growth
9% 40% Loan Mix Managed for Quality Growth 5% organic CAGR excluding indirect auto Higher growth in commercial real estate – 12% organic CAGR Indirect lending running off at 37% annual rate Residential and home equity focus on retail side Strong credit disciplines - no high LTV or sub-prime or Alt A
Slide 9: Diversified Commercial Loan Portfolio
Diversified Commercial Loan Portfolio 100% Total ($976 million as of 9/30/08) 12% Services – All other 7% Services – Health, education, religion 15% Misc. commercial 10% Retailers 7% Apartments 9% Real estate developers 13% Lodging 27% Commercial real estate - Rental (office, retail, etc.) Loans are
Slide 10: Favorable Deposit Growth
37% 40% Favorable Deposit Growth 5% core deposit organic CAGR Strong 28% growth in checking balances including Vermont Targeted run-off of higher cost municipal and brokered deposits Growing deposit base in New York and Pioneer Valley Reduction in deposit costs contributing to higher net interest ma
Slide 11: Fee Income Growing Strongly
19% 45% Fee Income Growing Strongly Fees provide 30% of revenue Fee growth 20% for 2008 YTD Insurance and Wealth Management provide 64% of total fees Annualized 36% $31,250
Slide 12: Record Revenues and Earnings per Share in 2008
Record Revenues and Earnings per Share in 2008 Core EPS up 4%, pre-provision core EPS up 11% Revenue growth from acquisitions and organic growth Seasonal first half revenue and earnings from insurance business Note: Core and GAAP EPS the same in all quarters except for 3Q07 (core $0.49 and GAAP $0.1
Slide 13: Solid Nine Month 2008 Results
SNL Bank & Thrift Median (1) BHLB Performance Measure Solid Nine Month 2008 Results 1.13% 0.44% Non-performing assets / assets 0.31% 0.16% Net loan charge-offs / loans 67.1% 61.1% Efficiency ratio 11.3% 29.7% Fee income / operating revenue 3.43% 3.45% Net interest margin 6.3% 15.0% Return on average
Slide 14: Net Interest Margin Highest Since 2003
Net Interest Margin Highest Since 2003 Benefited from Factory Point acquisition and balance sheet restructuring in Q3 2007 Favorable shift in deposit composition in recent periods, reducing reliance on time deposits and boosting transaction accounts acquired through commercial relationships Discipli
Slide 15: Positive Operating Leverage and Improved Efficiency Ratio
Positive Operating Leverage and Improved Efficiency Ratio Change in 2007 due to insurance acquisition and de novo branches Bank ratio 58- 60% excluding insurance and including 10 de novo branches Benefiting from higher margins, growth and expense control Insurance ratio 67% due to different revenue/
Slide 16: Positive Operating Leverage Expected in Q4 2008
Positive Operating Leverage Expected in Q4 2008 +4% Core non-interest expense +6% Core non-interest income +7% Net interest income Six consecutive quarters of net interest income growth Non-interest income growing despite soft markets in insurance and wealth management Bottom line benefiting from ma
Slide 17: Solid Credit Quality
Solid Credit Quality Excludes $4 million (0.23%) charge for one fraud related commercial loan Nonperforming Assets to Total Assets Net Charge-offs to Average Loans Annualized Total delinquencies only 1.00% of total loans at 9/30/08 Only four loans over $1 million totaling $6.8 million delinquent at
Slide 18: Consistent Allowance Coverage
2Q08 3Q08 1Q08 Consistent Allowance Coverage 231% 1.14% 169% 221% 182% Allowance / Non-performing loans 1.15% 1.14% Allowance / loans 132% 102% Provision / charge-offs Provision covering charge-offs and loan growth Allowance increased by $5.5 million (40%) in Q3 2006
Slide 19: Conservative Investment Portfolio
Conservative Investment Portfolio No Fannie Mae or Freddie Mac equities No impairment write-offs Corporate bonds total $14 million, all performing and investment grade including $9 million trust preferreds Total investment portfolio unrealized loss $4.2 million at 09/30/08 Total Portfolio - $247 Mil
Slide 20: Raising Capital to Support Growth
Raising Capital to Support Growth $232 Pro forma tangible equity Application for TARP CPP Follow-on stock offering w/over-allotment $153 Tangible equity 09/30/08 (Millions) Supplementing internal 15% tangible capital generation Increasing tangible equity/assets to 9.4% pro forma from 6.4%. Goal to r
Slide 21: Success in M & A and de Novo Expansion
Success in M & A and de Novo Expansion Jun 05 $769 MM in assets Extended franchise to Springfield/Hartford corridor Pioneer Valley, MA (Springfield area) Woronoco Bancorp, Inc. 2005 to $158 MM in Deposits as of 9/30/08 Extended franchise to Northeast New York – 10 de novo branches Capital Region, NY
Slide 22: Favorable Valuation Compared to Peers
Price / 2008 EPS (%) TBV (%) Book Value (%) Market Cap. ($mm) Total Assets ($mm) Ticker City, State Price Company Favorable Valuation Compared to Peers Note: Pricing as of 11/03/08. BHLB book value pricing ratios include adjustments for October stock offering. 2008 estimated EPS is from First Call M
Slide 23: Why Invest in Berkshire Hills Bancorp
Why Invest in Strong and experienced management team Distinctive culture and core values Favorable position in attractive markets Strong credit culture and asset quality discipline Above average growth in loans, deposits and fee income Diversified revenues with strong commercial components Earnings