e424b5
The
information in this preliminary prospectus supplement and the
accompanying prospectus is not complete and may be changed. This
preliminary prospectus supplement and the accompanying
prospectus are not an offer to sell these securities, and we are
not soliciting offers to buy these securities in any
jurisdiction where the offer or sale is not permitted.
|
Filed
Pursuant to Rule 424(b)(5)
Registration
333-137246
SUBJECT
TO COMPLETION, DATED MAY 11, 2009
PRELIMINARY
PROSPECTUS SUPPLEMENT
(To Prospectus Dated September 25, 2006)
Shares of Common Stock
We are
offering shares
of our common stock, par value $0.01 per share. We have granted
the underwriters an option to
purchase additional
shares of our common stock to cover over-allotments, if any.
Our common stock is listed on the NASDAQ Global Select Market
under the symbol BHLB. On May 8, 2009, the
closing price of our common stock on NASDAQ was $24.11 per share.
Investing in our common stock involves risks. See Risk
Factors beginning on
page S-10
of this prospectus supplement.
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Per Share
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Total
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Public offering price
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$
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$
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30,000,000
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Underwriting discount
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$
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$
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Proceeds, before expenses, to us
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$
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$
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The underwriters expect to deliver the common stock, through the
facilities of The Depository Trust Company, against payment
on or
about ,
2009.
These securities are not deposits or obligations of a bank or
savings association and are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental
agency.
Neither the Securities and Exchange Commission nor any state
or foreign securities commission or regulatory authority has
approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
|
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Sandler
Oneill + Partners, l.p.
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Keefe, Bruyette & Woods
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The date of this prospectus supplement is
May , 2009
TABLE OF
CONTENTS
Prospectus
Supplement
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S-2
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S-2
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S-3
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S-6
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S-7
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S-10
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S-19
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S-20
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S-21
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S-22
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S-23
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S-26
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S-26
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S-26
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S-27
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You should rely only on the information contained or
incorporated by reference in this prospectus supplement or the
accompanying prospectus. We have not, and the underwriters have
not, authorized anyone to provide you with different
information. We, and the underwriters, are offering to sell
shares of common stock and seeking offers to buy shares of
common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus
supplement and the accompanying prospectus is accurate only as
of the date of each document regardless of the time of delivery
of this prospectus supplement and the accompanying prospectus or
any sale of these securities. In case there are any differences
or inconsistencies between this prospectus supplement, the
accompanying prospectus and the information incorporated by
reference in them, you should rely on the information in the
document with the latest date. Unless the context indicates
otherwise, all references in this prospectus supplement to we,
our, and us, or the Company refer to Berkshire Hills Bancorp,
Inc., including our wholly owned subsidiaries, Berkshire Bank,
Berkshire Insurance Group, Berkshire Bank Municipal Bank and
Berkshire Hills Capital Trust I on a consolidated basis;
except that in the discussion of our capital stock and related
matters these terms refer solely to Berkshire Hills Bancorp,
Inc. and not to any of our subsidiaries
In this prospectus supplement we rely on and refer to
information and statistics regarding the banking industry, and
our banking market. We obtained this market data from
independent publications or other publicly available
information. Although we believe these sources are reliable, we
have not independently verified and do not guarantee the
accuracy and completeness of this information.
S-1
ABOUT
THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying prospectus are
part of a registration statement that we filed with the
Securities and Exchange Commission using a shelf registration
process. Under the shelf registration process, we may offer from
time to time shares, and warrants to purchase shares, of common
stock, debt securities, preferred stock, or any combination of
the foregoing securities of which this offering is a part. In
the accompanying prospectus, we provide you with a general
description of the common stock, debt securities or preferred
stock we may offer from time to time under our shelf
registration statement. In this prospectus supplement, we
provide you with specific information about the shares of our
common stock that we are selling in this offering. Both this
prospectus supplement and the accompanying prospectus include
important information about us, our common stock and other
information you should know before investing. This prospectus
supplement also adds, updates and changes information contained
in the accompanying prospectus. You should read both this
prospectus supplement and the accompanying prospectus as well as
additional information described under Where You Can Find
More Information on
page S-26
of this prospectus supplement before investing in our common
stock.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus supplement, the
accompanying prospectus and in the documents incorporated by
reference in them, that are not historical facts, may constitute
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended, and are intended to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements involve risks and
uncertainties. These statements, which are based on certain
assumptions and describe our future plans, strategies and
expectations, can generally be identified by the use of the
words may, will, should,
could, would, plan,
potential, estimate,
project, believe, intend,
anticipate, expect, target
and similar expressions. These statements include, among others,
statements regarding our strategy, evaluations of future
interest rate trends and liquidity, prospects for growth in
assets and prospects for overall results over the long term. You
should not place undue reliance on our forward-looking
statements. You should exercise caution in interpreting and
relying on forward-looking statements because they are subject
to significant risks, uncertainties and other factors which are,
in some cases, beyond our control.
Forward-looking statements are based on the current assumptions
and beliefs of management and are only expectations of future
results. Our actual results could differ materially from those
projected in the forward-looking statements as a result of,
among others, factors referenced herein under the section
captioned Risk Factors; adverse conditions in the
capital and debt markets and the impact of such conditions on
our activities; changes in interest rates; competitive pressures
from other financial institutions; a deterioration in general
economic conditions on a national basis or in the local markets
in which we operate, including changes which adversely affect
borrowers ability to service and repay our loans; changes
in loan defaults and charge-off rates; increases in our loan
loss reserves; reduction in deposit levels necessitating
increased borrowing to fund loans and investments; the passing
of adverse government regulation; the risk that goodwill and
intangibles recorded in our financial statements will become
impaired; and risks related to the identification and
implementation of acquisitions; as well as the other risks and
uncertainties detailed in our Annual Report on
Form 10-K
and other filings submitted to the Securities and Exchange
Commission. Forward-looking statements speak only as of the date
on which they are made. We do not undertake any obligation to
update any forward-looking statement to reflect circumstances or
events that occur after the date the forward-looking statements
are made.
S-2
PROSPECTUS
SUPPLEMENT SUMMARY
This prospectus supplement summary contains basic information
about us and this offering. Because it is a summary, it does not
contain all the information that you should consider before
investing. To understand this offering fully, you should
carefully read this entire prospectus supplement, including the
Risk Factors section beginning on
page S-10,
the accompanying prospectus and the information incorporated by
reference in them, including our consolidated financial
statements and the accompanying notes included in our filings
with the Securities and Exchange Commission. Unless otherwise
indicated, all share information in this prospectus supplement
assumes no exercise of the underwriters over-allotment
option.
Berkshire Hills Bancorp, Inc., or the Company, is a Delaware
corporation and the holding company for Berkshire Bank.
Established in 1846, Berkshire Bank is one of
Massachusetts oldest and largest independent banks and is
the largest banking institution based in Western Massachusetts.
The Bank is headquartered in Pittsfield, Massachusetts and
operates 39 full-service banking offices serving communities
throughout Western Massachusetts, Northeastern New York and in
Southern Vermont. The Bank currently operates in four regions:
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The Berkshire County Region, with twelve offices in Berkshire
County. Berkshire County is the Companys 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 make it a leisure and
tourism destination and an attractive location for an emerging
creative economy.
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The Pioneer Valley Region with ten offices along the Connecticut
River valley north and west of Springfield, Massachusetts. The
Company entered this region through the acquisition of Woronoco
Bancorp, Inc. in June 2005. 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.
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The New York Region with 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. Albany
is the state capital and is part of New Yorks 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.
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The Vermont region with seven offices serving Southern Vermont.
The Company entered this region through the acquisition of
Factory Point Bancorp, Inc. 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 Vermonts Green Mountains.
|
These four regions are viewed as having favorable demographics
and provide an attractive regional niche for Berkshire Bank to
distinguish itself from larger super-regional banks and smaller
community banks. The Company is pursuing growth through
acquisitions, de novo branching, product development, and
organic growth. It made acquisitions of insurance and financial
planning providers in 2004 and 2005, followed by the acquisition
of five insurance agencies in the fourth quarter of 2006. These
insurance acquisitions were merged and integrated into the
Berkshire Insurance Group, which was made a subsidiary of the
Company.
The Company offers a wide range of deposit, lending, investment,
wealth management, and insurance products to retail, commercial,
not-for-profit, and municipal customers in its market areas. In
addition to traditional retail and commercial banking products,
the Companys product offerings also include retail and
commercial electronic banking, commercial cash management, and
commercial interest rate swaps. The Companys commercial
banking products are offered within its regions and to
commercial relationships in Massachusetts, Connecticut, and
Rhode Island. The Company stresses a culture of teamwork and
performance excellence to produce customer satisfaction to
support its strategic growth and profitability.
The Banks Wealth Management Group provides consultative
investment management and trust relationships to individuals,
businesses, and institutions, with an emphasis on personal
investment management. The Group has built a track record over
more than a decade with its dedicated in-house investment
management team. At quarter-end March 31, 2009, assets
under management totaled approximately $639.0 million.
Specialized wealth management services offered include
investment management, trust administration, estate
S-3
planning, and private banking. The Group provides a full line of
investment products, financial planning, and brokerage services
utilizing Commonwealth Financial Network as the broker/dealer.
In January 2008, the Group expanded into the Albany area with
the acquisition of the Center for Financial Planning.
Berkshire Insurance Group is one of the largest and fastest
growing insurance agencies in Western Massachusetts. As an
independent insurance agent, it represents a carefully selected
group of financially sound, reputable insurance companies
offering attractive coverage at competitive prices. When there
is a loss, Berkshire Insurance Group works with its customers to
assure that claims are processed fairly and promptly. The Group
offers a full line of personal and commercial property and
casualty insurance. It also offers employee benefits insurance
and a full line of personal life, health, and financial services
insurance products. The executive team draws on over
175 years of independent agency management and sales
experience and manages a combined sales force of fifteen agents.
Berkshire Insurance Group sells all lines of insurance in
Western Massachusetts, Southern Vermont, Upstate New York and
Northwestern Connecticut. Berkshire Insurance Group operates a
focused cross-sell program of insurance and banking products
through all offices and branches of Berkshire Bank.
The Company has invested in its infrastructure in order to
position itself for further growth as a regional consolidator
with an objective of filling in and expanding its footprint in
its New England and New York markets. The Company has absorbed
expenses related to its ten branch de novo expansion into the
attractive New York market. Its acquisitions of banks, insurance
agencies, and wealth management companies have resulted in near
term dilution to per share tangible common book value in order
for the Company to achieve the scale, positioning, and momentum
to support future beneficial growth.
The Company views its markets as geographically conservative,
and these markets have experienced less exposure to speculative
development, real estate inflation, and subprime lending
activities compared to many other regions of the country. The
Companys markets are not contiguous with the densely
populated Boston and New York City metropolitan areas. The
Company believes that it has a closer and more consistent focus
on its markets compared to national competitors.
On April 29, 2009, the Company announced its proposed
acquisition of CNB Financial Corp., the holding company for
Commonwealth National Bank. CNB Financial Corp. had total assets
of $295 million, total loans of $242 million and total
deposits of $197 million at December 31, 2008. The
Company will pay 0.3696 shares of Berkshire Hills common
stock for each share of CNB Financial Corp. common stock, or
approximately $19.5 million of merger consideration in the
aggregate based on an assumed price of $23.00 for the
Companys stock price. The Company anticipates closing this
transaction in the third quarter of 2009, subject to approval by
the stockholders of CNB Financial, and other customary
conditions, including regulatory approval. Berkshire expects
that the acquisition will be $0.10 accretive to earnings per
common share beginning in the year 2010, although we cannot
assure you that the transaction will be accretive. The Company
expects that the transaction will be $0.24 per share dilutive to
tangible common stock book value in 2009 due to closing
adjustments and net transaction expenses. Berkshire expects to
offset this dilution within two quarters based on its overall
earnings, and within three years based on the accretion related
to the merger.
In April, 2009, the Company announced that it had recruited a
new Regional Commercial Executive for its New York Capital
Region and that it has made additional hires to expand its team
of commercial lenders in this growing market. These individuals
collectively bring eight decades of experience representing
regional and national institutions providing commercial
solutions to the Albany middle market. The Company also
announced that it has appointed David B. Farrell as Executive
Vice President, Integrated Services. Mr. Farrell will be
responsible for the management and expansion of the insurance
and wealth management business lines, which contributed 18% of
total net revenues in 2008. Mr. Farrell had served as a
director of the Company since 2005 and resigned from the Board
of Directors in conjunction with this appointment.
The Company has applied to repay the preferred stock issued to
the U.S. Department of Treasury in the fourth quarter of
2008. Such repayment is subject to approval by the Treasury
Department, following consultation by the Company with the
Office of Thrift Supervision. The Company expects that any such
repayment would be funded by $40 million from cash on hand
at the holding company as of March 31, 2009. The Company
expects to enter into negotiations with the government for the
repurchase of the associated
S-4
warrant for common shares. There can be no assurance that the
Company can redeem this equity or that the federal government
will allow for the redemption of this preferred stock or the
repurchase of the warrants.
In October 2005, we opened Berkshire Municipal Bank, an
FDIC-insured, New York-chartered limited purpose commercial
bank, organized principally to accept deposits from New York
municipalities and other governmental entities. Berkshire
Municipal Bank was renamed Berkshire Bank Municipal Bank in
February 2008. It operates as a subsidiary of Berkshire Bank.
Our principal executive offices are located at 24 North Street,
Pittsfield, Massachusetts 01201, and our telephone number is
(413) 443-5601.
Our website is www.berkshirebank.com. Information on our website
is not incorporated by reference and is not a part of this
prospectus supplement.
S-5
THE
OFFERING
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Issuer |
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Berkshire Hills Bancorp, Inc., a Delaware corporation |
|
Common Stock Offered by Us(1) |
|
1,244,297 shares |
|
Common Stock to be Outstanding after this Offering(2) |
|
13,550,212 shares |
|
Use of Proceeds |
|
We expect to receive net proceeds from this offering of
approximately $27.9 million after deducting the
underwriting discounts and commissions and our estimated
expenses (or approximately $32.1 million if the
underwriters exercise their over-allotment option in full). We
intend to use the net proceeds from this offering for general
corporate purposes which may include, among other things,
support for organic and opportunistic acquisition-based growth.
Although our growth strategy contemplates future acquisitions,
we have no present agreements or definitive plans relating to
any acquisitions other than the proposed acquisition of CNB
Financial Corp. and active negotiations to acquire a wealth
management company. In addition, we have applied for regulatory
approval to repurchase the preferred stock and warrants that we
issued to the U.S. Department of Treasury in connection with the
Treasurys Capital Purchase Program, although there can be
no assurance that our application will be approved. The Company
expects to repurchase the preferred stock with $40 million
from cash on hand and expects to enter into negotiations with
Treasury to repurchase the warrants. |
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NASDAQ Symbol |
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BHLB |
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(1) |
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Assuming a stock price of $24.11 per share. |
|
(2) |
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The number of shares of common stock to be outstanding after the
offering is based on actual shares outstanding as of
March 31, 2009 and assumes no exercise of the
underwriters over-allotment option. The number of shares
of common stock indicated excludes 425,979 shares of common
stock issuable upon exercise of options outstanding as of
March 31, 2009 under our equity incentive plan, having a
weighted average exercise price of $22.67 per share, and
843,874 shares issuable upon our acquisition of CNB
Financial Corp. (not including any shares issued as a result of
the exercise of CNB Financial stock options which will be
exchanged for Company stock options). In addition, the number of
shares shown does not include 226,330 shares of common
stock that may be issued upon exercise of warrants issued to the
U.S. Department of Treasury in connection with Treasurys
Capital Purchase Program. |
Risk
Factors
Investing in our securities involves risks. You should carefully
consider the information under Risk Factors
beginning on
page S-10
and the other information included in this prospectus supplement
and the accompanying prospectus before investing in our
securities.
S-6
SUMMARY
HISTORICAL FINANCIAL INFORMATION
The following tables contain certain information concerning our
consolidated financial position and results of operations. The
selected historical financial information at December 31,
2008 and 2007 and for each of the three years in the period
ended December 31, 2008 is derived in part from our audited
consolidated financial statements and related notes that are
incorporated by reference into this prospectus supplement and
the accompanying prospectus. The information at
December 31, 2006, 2005 and 2004 is derived in part from
our audited consolidated financial statements and notes thereto
that are not incorporated by reference into this prospectus
supplement or the accompanying prospectus. The information at
March 31, 2009 and for the three months ended
March 31, 2009 and 2008 was not audited, but in the opinion
of management, reflects all adjustments necessary for a fair
presentation. The results of operations for the three months
ended March 31, 2009 are not necessarily indicative of the
results of operations that may be expected for the entire year.
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At March 31,
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At December 31,
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2009
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2008
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|
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2007
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|
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2006
|
|
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2005
|
|
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2004
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(Dollars in thousands)
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Selected Financial Data:
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Total assets
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$
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2,724,351
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$
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2,666,729
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$
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2,513,432
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$
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2,149,642
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|
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$
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2,035,553
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$
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1,310,115
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Loans, net
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|
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1,946,475
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|
|
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1,984,244
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1,921,900
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|
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1,679,617
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|
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1,407,229
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|
|
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818,842
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Securities
|
|
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343,536
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|
|
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341,516
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|
|
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258,497
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|
|
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234,174
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420,320
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|
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414,363
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Goodwill and intangibles
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|
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178,545
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|
|
|
178,830
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|
|
|
182,452
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|
|
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121,341
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|
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99,616
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|
|
|
7,254
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Deposits
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1,938,080
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1,829,580
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|
|
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1,822,563
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1,521,938
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|
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1,371,218
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|
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845,789
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Borrowings and subordinated debentures
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|
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342,624
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|
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|
374,621
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|
|
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349,938
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360,469
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412,917
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|
|
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327,926
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Total preferred stockholders equity
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36,959
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36,822
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Total common stockholders equity
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375,859
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|
|
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371,603
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|
|
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326,837
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|
|
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258,161
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|
|
|
246,066
|
|
|
|
131,736
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|
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|
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Total stockholders equity
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412,818
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|
|
|
408,425
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|
|
|
326,837
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|
|
|
258,161
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|
|
|
246,066
|
|
|
|
131,736
|
|
S-7
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For the Three
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Months Ended
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March 31,
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|
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For the Years Ended December 31,
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|
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2009
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|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
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2005
|
|
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2004
|
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|
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(Dollars in thousands, except per share amounts)
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|
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Selected Operating Data:
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total interest and dividend income
|
|
$
|
29,880
|
|
|
$
|
34,523
|
|
|
$
|
133,211
|
|
|
$
|
131,944
|
|
|
$
|
118,051
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|
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$
|
87,732
|
|
|
$
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61,081
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Total interest expense
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|
|
12,169
|
|
|
|
16,229
|
|
|
|
57,471
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|
|
|
68,019
|
|
|
|
57,811
|
|
|
|
36,115
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|
|
|
20,724
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
17,711
|
|
|
|
18,294
|
|
|
|
75,740
|
|
|
|
63,925
|
|
|
|
60,240
|
|
|
|
51,617
|
|
|
|
40,357
|
|
Provision for loan losses
|
|
|
2,500
|
|
|
|
825
|
|
|
|
4,580
|
|
|
|
4,300
|
|
|
|
7,860
|
|
|
|
1,313
|
|
|
|
1,565
|
|
Total fee income
|
|
|
8,385
|
|
|
|
9,166
|
|
|
|
30,334
|
|
|
|
26,654
|
|
|
|
13,539
|
|
|
|
9,373
|
|
|
|
5,493
|
|
All other non-interest income (loss)
|
|
|
287
|
|
|
|
306
|
|
|
|
1,261
|
|
|
|
(2,011
|
)
|
|
|
(1,491
|
)
|
|
|
5,550
|
|
|
|
2,271
|
|
Total non-interest expense
|
|
|
18,453
|
|
|
|
18,074
|
|
|
|
71,699
|
|
|
|
65,494
|
|
|
|
48,868
|
|
|
|
48,998
|
|
|
|
28,977
|
|
Provision for income taxes continuing operations
|
|
|
1,547
|
|
|
|
2,818
|
|
|
|
8,812
|
|
|
|
5,239
|
|
|
|
4,668
|
|
|
|
8,003
|
|
|
|
5,639
|
|
Net income (loss) from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
371
|
|
|
|
|
|
|
|
(431
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,883
|
|
|
$
|
6,049
|
|
|
$
|
22,244
|
|
|
$
|
13,535
|
|
|
$
|
11,263
|
|
|
$
|
8,226
|
|
|
$
|
11,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cumulative preferred stock dividend and accretion
|
|
|
637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
3,246
|
|
|
$
|
6,049
|
|
|
$
|
22,244
|
|
|
$
|
13,535
|
|
|
$
|
11,263
|
|
|
$
|
8,226
|
|
|
$
|
11,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share(1)
|
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
$
|
0.63
|
|
|
$
|
0.58
|
|
|
$
|
0.56
|
|
|
$
|
0.52
|
|
|
$
|
0.48
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.27
|
|
|
|
0.58
|
|
|
|
2.08
|
|
|
|
1.47
|
|
|
|
1.28
|
|
|
|
1.16
|
|
|
|
2.26
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.04
|
|
|
|
|
|
|
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0.27
|
|
|
$
|
0.58
|
|
|
$
|
2.08
|
|
|
$
|
1.47
|
|
|
$
|
1.32
|
|
|
$
|
1.16
|
|
|
$
|
2.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.27
|
|
|
$
|
0.58
|
|
|
$
|
2.06
|
|
|
$
|
1.44
|
|
|
$
|
1.25
|
|
|
$
|
1.10
|
|
|
$
|
2.08
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.04
|
|
|
|
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0.27
|
|
|
$
|
0.58
|
|
|
$
|
2.06
|
|
|
$
|
1.44
|
|
|
$
|
1.29
|
|
|
$
|
1.10
|
|
|
$
|
2.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
12,164
|
|
|
|
10,386
|
|
|
|
10,700
|
|
|
|
9,223
|
|
|
|
8,538
|
|
|
|
7,122
|
|
|
|
5,284
|
|
Diluted
|
|
|
12,247
|
|
|
|
10,457
|
|
|
|
10,791
|
|
|
|
9,370
|
|
|
|
8,730
|
|
|
|
7,503
|
|
|
|
5,731
|
|
|
|
|
(1) |
|
All per share amounts refer to common stock. |
S-8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Three
|
|
|
|
|
|
|
Months Ended
|
|
|
|
|
|
|
March 31,
|
|
|
At or for the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Selected Operating Ratios and Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
0.59
|
|
|
|
0.97
|
|
|
|
0.87
|
%
|
|
|
0.60
|
%
|
|
|
0.53
|
%
|
|
|
0.47
|
%
|
|
|
0.89
|
%
|
Return on average equity
|
|
|
3.83
|
|
|
|
7.38
|
|
|
|
6.47
|
|
|
|
4.69
|
|
|
|
4.40
|
|
|
|
4.19
|
|
|
|
9.06
|
|
Interest rate spread
|
|
|
2.71
|
|
|
|
3.01
|
|
|
|
3.06
|
|
|
|
2.79
|
|
|
|
2.81
|
|
|
|
3.00
|
|
|
|
3.10
|
|
Net interest margin
|
|
|
3.11
|
|
|
|
3.41
|
|
|
|
3.44
|
|
|
|
3.26
|
|
|
|
3.24
|
|
|
|
3.33
|
|
|
|
3.37
|
|
Non-interest income to total net revenue
|
|
|
32.87
|
|
|
|
34.11
|
|
|
|
29.44
|
|
|
|
27.82
|
|
|
|
16.67
|
|
|
|
22.43
|
|
|
|
16.13
|
|
Non-interest expense to average assets
|
|
|
2.80
|
|
|
|
2.93
|
|
|
|
2.81
|
|
|
|
2.90
|
|
|
|
2.31
|
|
|
|
2.81
|
|
|
|
2.25
|
|
Dividend payout ratio
|
|
|
59.26
|
|
|
|
25.86
|
|
|
|
30.58
|
|
|
|
40.28
|
|
|
|
43.41
|
|
|
|
44.83
|
|
|
|
23.88
|
|
Capital Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital to average assets Bank
|
|
|
9.11
|
|
|
|
8.02
|
|
|
|
9.34
|
|
|
|
7.97
|
|
|
|
7.69
|
|
|
|
7.79
|
|
|
|
8.08
|
|
Total capital to risk weighted assets Bank
|
|
|
12.21
|
|
|
|
10.52
|
|
|
|
12.28
|
|
|
|
10.40
|
|
|
|
10.27
|
|
|
|
11.12
|
|
|
|
12.69
|
|
Stockholders equity to total assets
|
|
|
15.15
|
|
|
|
12.91
|
|
|
|
15.32
|
|
|
|
13.00
|
|
|
|
12.01
|
|
|
|
12.09
|
|
|
|
10.06
|
|
Asset Quality Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans to total loans
|
|
|
0.63
|
|
|
|
0.63
|
|
|
|
0.61
|
|
|
|
0.54
|
|
|
|
0.45
|
|
|
|
0.08
|
|
|
|
0.14
|
|
Nonperforming assets to total assets(1)
|
|
|
0.47
|
|
|
|
0.51
|
|
|
|
0.48
|
|
|
|
0.45
|
|
|
|
0.35
|
|
|
|
0.06
|
|
|
|
0.09
|
|
Net loans charged-off to average total loans
|
|
|
0.51
|
|
|
|
0.17
|
|
|
|
0.19
|
|
|
|
0.34
|
|
|
|
0.07
|
|
|
|
0.08
|
|
|
|
0.15
|
|
Allowance for loan losses to total loans
|
|
|
1.16
|
|
|
|
1.14
|
|
|
|
1.14
|
|
|
|
1.14
|
|
|
|
1.14
|
|
|
|
0.92
|
|
|
|
1.13
|
|
Allowance for loan losses to nonperforming loans
|
|
|
1.84
|
|
|
|
1.82
|
|
|
|
1.88
|
x
|
|
|
2.10
|
x
|
|
|
2.55
|
x
|
|
|
10.96
|
x
|
|
|
8.11
|
x
|
Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per common share
|
|
$
|
30.54
|
|
|
$
|
31.38
|
|
|
$
|
30.33
|
|
|
$
|
31.15
|
|
|
$
|
29.63
|
|
|
$
|
28.81
|
|
|
$
|
22.43
|
|
Market price at period end
|
|
$
|
22.92
|
|
|
|
25.19
|
|
|
$
|
30.86
|
|
|
$
|
26.00
|
|
|
$
|
33.46
|
|
|
$
|
33.50
|
|
|
$
|
37.15
|
|
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of bank branches
|
|
|
39
|
|
|
|
38
|
|
|
|
39
|
|
|
|
38
|
|
|
|
27
|
|
|
|
24
|
|
|
|
12
|
|
Full time equivalent employees
|
|
|
612
|
|
|
|
581
|
|
|
|
581
|
|
|
|
560
|
|
|
|
522
|
|
|
|
399
|
|
|
|
241
|
|
|
|
|
(1) |
|
Total nonperforming assets does not include repossessed
automobiles which totaled $377,000, $509,000, $373,000,
$461,000, $245,000, $181,000 and $274,000 at March 31,
2009, March 31, 2008, December 31, 2008, 2007, 2006,
2005 and 2004, respectively. |
S-9
RISK
FACTORS
In addition to other information contained in this prospectus
supplement and the accompanying prospectus, you should carefully
consider the risks described below and incorporated by reference
to our Annual Report on
Form 10-K
for the year ended December 31, 2008, as updated by our
subsequent filings under the Securities Exchange Act of 1934, as
amended, in evaluating our company and our business before
making a decision to invest in our common stock. These risks are
not the only ones faced by us. Additional risks not presently
known or that are currently deemed immaterial could also
materially and adversely affect our financial condition, results
of operations, business and prospects. The trading price of our
common stock could decline due to any of these risks, and you
may lose all or part of your investment. This prospectus
supplement, the accompanying prospectus, and the documents
incorporated herein and therein by reference also contain
forward-looking statements that involve risks and uncertainties.
Actual results could differ materially from those anticipated in
these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in
this prospectus supplement, the accompanying prospectus, and the
documents incorporated herein and therein by reference. Please
refer to the section entitled Special Note Regarding
Forward-Looking Statements in this prospectus
supplement.
Risks
Related to this Offering
Market
conditions and other factors may affect the value of our common
stock.
The trading price of the shares of our common stock will depend
on many factors, which may change from time to time, including:
|
|
|
|
|
conditions in the regional and national credit, mortgage and
housing markets, the markets for securities relating to
mortgages or housing, and developments with respect to financial
institutions generally;
|
|
|
|
market interest rates;
|
|
|
|
the market for similar securities;
|
|
|
|
government action or regulation;
|
|
|
|
general economic conditions or conditions in the financial
markets;
|
|
|
|
changes in global financial markets and global economies and
general market conditions, such as interest or foreign exchange
rates, stock, commodity or real estate valuations or volatility;
|
|
|
|
our past and future dividend practice; and
|
|
|
|
our financial condition, performance, creditworthiness and
prospects.
|
Accordingly, the shares of common stock that an investor
purchases, whether in this offering or in the secondary market,
may trade at a price lower than that at which they were
purchased.
The
market price and trading volume of our common stock may be
volatile.
The stock market and, in particular, the market for financial
institution stocks, has experienced significant volatility
recently. As a result, the market price of our common stock may
be volatile. In addition, the trading volume in our common stock
may fluctuate and cause significant price variations to occur.
The average daily trading volume of our common stock during the
quarter ended March 31, 2009 was 44,979 shares. We
cannot predict the extent to which investor interest in us will
lead to a more active trading market in our common stock or how
liquid that market might become.
If the market price of our common stock declines significantly,
you may be unable to resell your shares at or above the public
offering price. We cannot assure you that the market price of
our common stock will not fluctuate or decline significantly in
the future.
S-10
Some of the factors that could negatively affect our share price
or result in fluctuations in the price or trading volume of our
common stock include:
|
|
|
|
|
quarterly variations in our operating results or the quality of
our assets;
|
|
|
|
operating results that vary from the expectations of management,
securities analysts and investors;
|
|
|
|
changes in expectations as to our future financial performance;
|
|
|
|
announcements of innovations, new products, strategic
developments, significant contracts, acquisitions and other
material events by us or our competitors;
|
|
|
|
changes in regulations affecting financial institutions;
|
|
|
|
the operating and securities price performance of other
companies that investors believe are comparable to us;
|
|
|
|
future sales of our equity or equity-related securities; and
|
|
|
|
changes in global financial markets and global economies and
general market conditions, such as interest or foreign exchange
rates, stock, commodity or real estate valuations or volatility.
|
In addition, recently the stock market generally has experienced
extreme price and volume fluctuations. Industry factors and
general economic and political conditions and events, such as
economic slowdowns or recessions, interest rate changes or
credit loss trends, could also cause our stock price to decrease
regardless of operating results. In the past, stockholders often
have brought securities class action litigation against a
company following periods of volatility in the market price of
their securities. Although we have not been subject to such
litigation to date, we cannot assure you that we will not be the
target of similar litigation in the future, which could result
in substantial costs and divert managements attention and
resources.
The
number of shares available for future sale could adversely
affect the market price of our common stock.
We cannot predict whether future issuances of shares of our
common stock or the availability of shares for resale in the
open market will decrease the market price per share of our
common stock. We are not restricted from issuing additional
shares of common stock, including any securities that are
convertible into or exchangeable for, or that represent the
right to receive shares of common stock. Sales of a substantial
number of shares of our common stock in the public market or the
perception that such sales might occur could materially
adversely affect the market price of the shares of our common
stock. Because our decision to issue securities in any future
offering will depend on market conditions and other factors
beyond our control, we cannot predict or estimate the amount,
timing or nature of our future offerings. Thus, our stockholders
bear the risk of our future stock issuances reducing the market
price of our common stock and diluting their stock holdings in
us.
The exercise of the underwriters over-allotment option,
the exercise of any options granted to directors, executive
officers and other employees under our stock compensation plans,
the issuance of shares of common stock in acquisitions and other
issuances of our common stock could have an adverse effect on
the market price of the shares of our common stock, and the
existence of options, or shares of our common stock reserved for
issuance as restricted shares of our common stock may materially
adversely affect the terms upon which we may be able to obtain
additional capital through the sale of equity securities. In
addition, future issuances of shares of our common stock may be
dilutive to existing stockholders.
Future
offerings of debt, which would be senior to our common stock
upon liquidation, and/or preferred equity securities which may
be senior to our common stock for purposes of dividend
distributions or upon liquidation, may adversely affect the
market price of our common stock.
In the future, we may attempt to increase our capital resources
or, if our banking subsidiarys capital ratios fall below
the required minimums, we or our banking subsidiary could be
forced to raise additional capital by making additional
offerings of debt or preferred equity securities, including
medium-term notes,
S-11
trust preferred securities, senior or subordinated notes and
preferred stock. Upon liquidation, holders of our debt
securities and shares of preferred stock and lenders with
respect to other borrowings will receive distributions of our
available assets prior to the holders of our common stock.
Additional equity offerings may dilute the holdings of our
existing stockholders or reduce the market price of our common
stock, or both. Holders of our common stock are not entitled to
preemptive rights or other protections against dilution.
You
may not receive dividends on the common stock.
Holders of our common stock are entitled to receive dividends
only when, as and if declared by our Board of Directors.
Although we have historically declared cash dividends on our
common stock, we are not required to do so and our Board of
Directors may reduce or eliminate our common stock dividend in
the future.
In addition, our payment of dividends is subject to certain
restrictions as a result of our issuance of preferred stock to
the U.S. Treasury on December 19, 2008 under
Treasurys Capital Purchase Program (CPP).
Prior to December 19, 2011, unless we have redeemed all the
preferred stock issued to the U.S. Treasury on
December 19, 2008 under the CPP, or unless the
U.S. Treasury has transferred all the preferred stock to a
third party, the consent of the U.S. Treasury will be
required for us to declare or pay any dividend or make any
distribution on common stock other than (i) regular
quarterly cash dividends of not more than $0.16 per share, as
adjusted for any stock split, stock dividend, reverse stock
split, reclassification or similar transaction,
(ii) dividends payable solely in shares of common stock and
(iii) dividends or distributions of rights or junior stock
in connection with a stockholders rights plan.
Risks
Related to Our Business
Overall
Business Risks
The
Companys Business May Be Adversely Affected by Conditions
in the Financial Markets and Economic Conditions
Generally
Since December 2007, the United States has been in a recession.
Business activity across a wide range of industries and regions
is greatly reduced and local governments and many businesses are
in serious difficulty due to declines in revenues, the lack of
consumer spending and the lack of liquidity in the credit
markets. Unemployment has increased significantly. Overall,
during 2008 and 2009, the business environment has been adverse
for many households and businesses in the United States and
worldwide. The business environment in the markets in which the
Company operates has been less adverse than in the United States
generally but continues to deteriorate and the Company has
experienced an increase in non-performing assets and
charge-offs. It is expected that the business environment in the
Companys markets, the United States and worldwide will
continue to weaken for the near future. There can be no
assurance that these conditions will improve in the near term.
Such conditions could adversely affect the credit quality of the
Companys loans, results of operations and financial
condition, particularly if collateral values continue to
deteriorate and non-performing assets continue to increase.
Since mid-2007, and particularly during the second half of 2008
and the first quarter of 2009, the financial services industry
and the securities markets generally were materially and
adversely affected by significant declines in the values of
nearly all asset classes and by a serious lack of liquidity.
This was initially triggered by declines in home prices and the
values of subprime mortgages, but spread to all mortgage and
real estate asset classes, to leveraged bank loans and to nearly
all asset classes, including equities. The global markets have
been characterized by substantially increased volatility and
short-selling and an overall loss of investor confidence,
initially in financial institutions, but more recently in
companies in a number of other industries and in the broader
markets.
Market conditions have also led to the failure or merger of a
number of prominent financial institutions. Financial
institution failures or near-failures have resulted in further
losses as a consequence of defaults on securities issued by them
and defaults under contracts entered into with such entities as
counterparties.
S-12
Furthermore, declining asset values, defaults on mortgages and
consumer loans, and the lack of market and investor confidence,
as well as other factors, have all combined to increase credit
default swap spreads, to cause rating agencies to lower credit
ratings, and to otherwise increase the cost and decrease the
availability of liquidity, despite very significant declines in
Federal Reserve borrowing rates and other government actions.
Some banks and other lenders have suffered significant losses
and have become reluctant to lend, even on a secured basis, due
to the increased risk of default and the impact of declining
asset values on the value of collateral. The foregoing has
significantly weakened the strength and liquidity of some
financial institutions worldwide. In 2008, the
U.S. government, the Federal Reserve and other regulators
have taken numerous steps to increase liquidity and to restore
investor confidence, including investing significantly in the
equity of banking organizations, but asset values have continued
to decline and access to liquidity continues to be very limited.
We May
Fail to Complete the Proposed Merger with CNB Financial Corp. or
Realize the Anticipated Benefits of the Proposed
Merger
The proposed merger with CNB Financial Corp. is subject to a
variety of conditions, including the approval of the
stockholders of CNB Financial Corp. as well as regulatory
approvals. There can be no assurance that such approvals will be
obtained, or that the regulatory approvals will not contain a
material adverse condition precluding closing the merger.
The success of the proposed merger with CNB Financial Corp., the
holding company for Commonwealth National Bank, will depend on,
among other things, our ability to realize anticipated cost
savings and to combine the businesses of Berkshire Bank and
Commonwealth National Bank in a manner that permits growth
opportunities and does not materially disrupt the existing
customer relationships of Commonwealth National Bank nor result
in decreased revenues resulting from any loss of customers. We
anticipate cost savings of approximately $2.3 million. If
we are not able to successfully achieve these objectives,
including the anticipated cost savings, the anticipated benefits
of the merger may not be realized fully or at all or may take
longer to realize than expected. Additionally, we will make fair
value estimates of certain assets and liabilities in recording
the merger. Actual values of these assets and liabilities could
differ from our estimates, which could result in our not
achieving the anticipated benefits of the merger.
Our future growth and profitability depends, in part, on our
ability to successfully complete our acquisition of CNB
Financial Corp. and manage combined operations. For the
acquisition to be successful, we will have to succeed in
combining our personnel and operations with those of CNB
Financial Corp. and in achieving expense savings by eliminating
selected redundant operations. We cannot assure you that our
plan to integrate and operate the combined operations will be
timely or efficient, or that we will successfully retain
existing customer relationships of Commonwealth National Bank.
In addition, the proposed merger expands our market area into
Worcester, Massachusetts. While this new market area is
contiguous to our existing market area, there is a risk that we
will lose customers in the new market areas, and may not
adequately address this new market in terms of the products and
services we propose to offer.
We and CNB Financial Corp. have operated and, until the
completion of the merger, will continue to operate,
independently. Certain employees of CNB Financial Corp. will not
be employed by us after the merger. In addition, employees of
CNB Financial Corp. that we wish to retain may elect to
terminate their employment as a result of the merger, which
could delay or disrupt the integration process. It is possible
that the integration process could result in the disruption of
CNB Financial Corp.s ongoing businesses or inconsistencies
in standards, controls, procedures and policies that adversely
affect our ability to maintain relationships with customers and
employees or to achieve the anticipated benefits of the merger.
S-13
Lending
Continued
and Prolonged Deterioration in the Housing Sector and Related
Markets and the Economy May Adversely Affect Our Business and
Financial Results.
Residential real estate markets continued to decline throughout
2008 and 2009. Economic measures declined at an accelerating
rate, leading to a 6.1% annualized decline in the U.S. GDP
in the first quarter of 2009. Unemployment rose as economic
conditions deteriorated. We do not expect improvement in the
economy or in real estate and financial market conditions in the
near future. A worsening of these negative conditions could
adversely impact the ability of our borrowers to service their
debt, along with the value and liquidity of collateral and other
forms of loan support. The quality and value of our investment
securities may also be impacted. Emergency government measures
may affect our rights as creditors and owners of securities.
Adverse developments could affect our net interest income,
charge-offs, loan loss provision, asset and goodwill valuations,
and our prospects for growth. Regulatory promulgations could
affect our operations and financial condition.
Our
Emphasis on Commercial Lending May Expose Us to Increased
Lending Risks, Which Could Hurt Our Profits.
Commercial loans are historically more sensitive to economic
downturns. Such sensitivity includes potentially higher default
rates and possible reduction of collateral values. Commercial
lending involves larger loan sizes and larger relationship
exposures, which can have a greater impact on profits in the
event of adverse loan performance. Commercial lending involves
more development financing, which is dependent on the future
success of new operations. Residential construction loans depend
significantly on the residential real estate and lending markets
for the repayment of these loans. Commercial loans also include
lending to nonprofit organizations which in some cases are
particularly sensitive to negative economic events. In addition,
at December 31, 2008, CNB Financial Corp.s loan
portfolio consisted of $152.1 million, or 63%, of
commercial real estate loans and $53.4 million, or 22%, of
commercial and industrial loans. These loans generally are
characterized by greater credit risk than residential mortgage
loans. CNB Financial Corp.s commercial loan portfolio,
which consists of commercial real estate loans and commercial
and industrial loans has increased from $150.2 million at
December 31, 2005 to $205.5 million at
December 31, 2008, a 37% increase. A portion of this
commercial loan portfolio is unseasoned and does not provide us
with a significant payment history pattern with which to judge
future collectibility. These loans have recently been subjected
to unfavorable economic conditions. As a result, it is difficult
to predict the future performance of this part of CNB Financial
Corp.s loan portfolio.
Our
Allowance for Loan Losses May Prove to be Insufficient to Absorb
Losses in Our Loan Portfolio.
Like all financial institutions, we maintain an allowance for
loan losses to provide for loans in our portfolio that may not
be repaid in their entirety. We believe that our allowance for
loan losses is maintained at a level adequate to absorb probable
losses inherent in our loan portfolio as of the corresponding
balance sheet date. However, our allowance for loan losses may
not be sufficient to cover actual loan losses, and future
provisions for loan losses could materially and adversely affect
our operating results. The Company has seen a significant
increase in the level of potential problem loans and other loans
with higher than normal risk. The Company expects to receive
more frequent requests from borrowers to modify residential
mortgage and consumer loans. The related accounting measurements
related to impairment and the loan loss allowance require
significant estimates which are subject to uncertainty and
changes relating to new information and changing circumstances.
Our estimates of the risk of loss and amount of loss on any loan
are complicated by the significant uncertainties surrounding our
borrowers abilities to successfully execute their business
models through changing economic environments, competitive
challenges and other factors. Because of the degree of
uncertainty and susceptibility of these factors to change, our
actual losses may vary from our current estimates.
State and federal regulators, as an integral part of their
examination process, periodically review our allowance for loan
losses and may require us to increase our allowance for loan
losses by recognizing
S-14
additional provisions for loan losses charged to expense, or to
decrease our allowance for loan losses by recognizing loan
charge-offs, net of recoveries. Any such additional provisions
for loan losses or charge-offs, as required by these regulatory
agencies, could have a material adverse effect on our financial
condition and results of operations.
Operating
A
Continuing Downturn in the Local Economy or Local Real Estate
Values Could Hurt Our Profits.
Our success depends to a significant extent upon economic
conditions in our market areas. The demand for our products and
services, and our ability to maintain satisfactory pricing
margins, may be affected by market conditions. Adverse economic
conditions in our market areas could reduce our growth rate,
affect the ability of our customers to repay their loans and
generally affect our financial condition and results of
operations. Any sustained period of increased payment
delinquencies, foreclosures or losses caused by adverse market
or economic conditions in our market areas could adversely
affect the value of our assets, revenues, results of operations
and financial condition. Moreover, we cannot give any assurance
we will benefit from any market growth or favorable economic
conditions in our primary market areas if they do occur.
Our
Geographic Expansion and Growth, If Not Successful, Could
Negatively Impact Earnings.
We plan to achieve significant growth both organically and
through acquisitions. We have recently expanded into new
geographic markets and anticipate that we will expand into
additional new geographic markets, including Worcester, as we
expand as a regional bank. The success of this expansion depends
on our ability to continue to maintain and develop an
infrastructure appropriate to support such growth. Also, our
success depends on the acceptance by customers of us and our
services in these new markets and, in the case of expansion
through acquisitions, our success depends on many factors,
including the long-term retention of key personnel and acquired
customer relationships. The profitability of our expansion
strategy also depends on whether the income we generate in the
new markets will offset the increased expenses of operating a
larger entity with increased personnel, more branch locations
and additional product offerings.
Competition
From Financial Institutions and Other Financial Service
Providers May Adversely Affect Our Growth and
Profitability.
The banking business is highly competitive and we experience
competition in each of our markets from many other financial
institutions. Due to the interventions of the federal
government, some of the institutions that we compete with are
receiving substantial federal financial support which may not be
available to our Company. Many institutions have been allowed to
convert to banking charters and to offer insured deposits for
the first time. The federal government has guaranteed money
market funds which traditionally compete with bank deposits. The
federal government has offered significant guarantees of new
debt issuances to some of the Companys competitors to help
them fund their operations. Fannie Mae and Freddie Mac are now
in federal receivership and may operate directly as a competitor
in some lending markets in the future. Emergency measures
designed to support some of the Companys competitors may
provide no advantage to the Company or place it at a
disadvantage. Emergency changes in deposit insurance, financial
market regulation, bank regulation, and policy of the Federal
Home Loan Bank system may all affect the competitive environment
for the Company and other market participants.
The
Terms of Our Capital May Change and Our Access to Capital
Markets and Financial Markets May Not Be Available When It Is
Needed.
The Company has participated in the U.S. Treasury Capital
Purchase Program. The terms of this program are subject to
changes by Congress and the burden of the program is affected by
inspections and program management. Congress continues to add
new terms to this program and the Treasurys involvement as
a partner is evolving. Uncertainty about the direction of this
program and adverse changes in this program could affect the
Companys ability to operate and generate earnings,
including the impact of dividend payments and the impact of
compensation and operating restrictions. The possible
nationalization of portions of the U.S. financial system
and/or
failures or restructurings of major market participants may
create
S-15
unpredictable and adverse changes in the availability of capital
and other financial resources. We are required by federal and
state regulatory authorities to maintain adequate levels of
capital to support our operations. Regulatory capital
requirements and their impact on the Company may change. We may
at some point need to raise additional capital to support our
operations and continued growth. Our ability to raise capital,
if needed, will depend on conditions in the capital markets at
that time, which are outside of our control, and on our
financial performance. If we cannot raise additional capital
when needed, it could affect our operations and our ability to
execute our strategic plan, which includes further expanding our
operations through internal growth and acquisitions.
We are
Subject to Security and Operational Risks Relating to Our Use of
Technology that Could Damage Our Reputation and Our
Business.
Security breaches in our internet banking activities could
expose us to possible liability and damage our reputation. Any
compromise of our security also could deter customers from using
our internet banking services that involve the transmission of
confidential information. We rely on industry standard internet
security systems to provide the security and authentication
necessary to effect secure transmission of data. These
precautions may not protect our systems from compromises or
breaches of our security measures that could result in damage to
our reputation and our business. We utilize third party core
banking software and for some systems we outsource our data
processing to a third party. If our third party providers
encounter difficulties or if we have difficulty in communicating
with such third parties, it could significantly affect our
ability to adequately process and account for customer
transactions, which could significantly affect our business
operations. Due to the recession, there may be a rising risk of
fraud or illegal acts. Disaster and disaster recovery risks
could affect our ability to operate and our reputation.
Conditions
in Insurance Markets Could Adversely Affect Our
Earnings.
Revenue levels from our insurance segment could be negatively
impacted by the fluctuating premiums in the insurance market
caused by capacity constraints and losses due to natural
disasters. Premium levels and commission structures may be
affected by changes in the financial condition of insurers due
to the financial and economic downturn. Other factors that
affect our insurance revenue are profitability and growth of our
clients, continued development of new products and services, as
well as our access to markets and the impact of state insurance
regulations.
Liquidity
Our
Wholesale Funding Sources May Prove Insufficient to Replace
Deposits at Maturity and Support Our Operations and Future
Growth.
We must maintain sufficient funds to respond to the needs of
depositors and borrowers. As a part of our liquidity management,
we use a number of funding sources in addition to core deposit
growth and repayments and maturities of loans and investments.
As we continue to grow, we may become more dependent on these
sources, which include Federal Home Loan Bank advances, proceeds
from the sale of loans, and liquidity resources at the holding
company. Our financial flexibility will be severely constrained
if we are unable to maintain our access to funding or if
adequate financing is not available to accommodate future growth
at acceptable costs. Finally, if we are required to rely more
heavily on more expensive funding sources to support future
growth, our revenues may not increase proportionately to cover
our costs. In this case, our operating margins and profitability
would be adversely affected.
Lack
of Consumer Confidence in Financial Institutions May Decrease
Our Level of Deposits.
Our level of deposits may be affected by lack of consumer
confidence in financial institutions, which have caused fewer
depositors to be willing to maintain deposits that are not
insured by the Federal Deposit Insurance Corporation. That may
cause depositors to withdraw deposits and place them in other
institutions or to invest uninsured funds in investments
perceived as being more secure, such as securities issued by the
U.S. Treasury. These consumer preferences may cause us to
be forced to pay higher interest rates to retain deposits and
may constrain liquidity as we seek to meet funding needs caused
by reduced deposit levels.
S-16
Our
Ability to Service Our Debt, Pay Dividends and Otherwise Pay Our
Obligations as They Come Due Is Substantially Dependent on
Capital Distributions from Berkshire Bank, and These
Distributions Are Subject to Regulatory Limits and Other
Restrictions.
While the Company maintained a high level of cash balances at
year-end 2008 and March 31, 2009, those balances may
decrease due to changes in the Companys capital structure,
possible acquisitions, and possible further investments in the
Bank. Over the long term, a substantial source of our income
from which we service our debt, pay our obligations and from
which we can pay dividends is the receipt of dividends from
Berkshire Bank. The availability of dividends from Berkshire
Bank is limited by various statutes and regulations. It is
possible, depending upon the financial condition of Berkshire
Bank, and other factors, that the applicable regulatory
authorities could assert that payment of dividends or other
payments is an unsafe or unsound practice. If Berkshire Bank is
unable to pay dividends to us, we may not be able to service our
debt, pay our obligations or pay dividends on our common stock.
The inability to receive dividends from Berkshire Bank would
adversely affect our business, financial condition, results of
operations and prospects.
Economic
Conditions May Adversely Affect Our Liquidity.
In the past year, reduced confidence by and between financial
institutions, and significant declines in the values of
mortgage-backed securities and derivative securities by
financial institutions, government sponsored entities, and major
commercial and investment banks have led to decreased liquidity
in financial markets among borrowers, lenders, and depositors,
as well as disruption and extreme volatility in the capital and
credit markets and the failure of some entities in the financial
sector. As a result, many lenders and institutional investors
have reduced or ceased to provide funding to borrowers.
Continued turbulence in the capital and credit markets may
adversely affect our liquidity and financial condition and the
willingness of certain counterparties and customers to do
business with us.
Interest
Rates
Changes
in Interest Rates Could Adversely Affect Our Results of
Operations and Financial Condition.
Net interest income is our largest source of income. Changes in
interest rates can affect the level of net interest income. The
Companys interest rate sensitivity is discussed in more
detail in Item 7A of our Annual Report on
Form 10-K.
We principally manage interest rate risk by managing our volume
and mix of our earning assets and funding liabilities. In a
changing interest rate environment, we may not be able to manage
this risk effectively. If we are unable to manage interest rate
risk effectively, our business, financial condition and results
of operations could be materially harmed. Changes in interest
rates can also affect the demand for our products and services,
and the supply conditions in the U.S. financial and capital
markets. Changes in the level of interest rates may negatively
affect our ability to originate real estate loans, the value of
our assets and our ability to realize gains from the sale of our
assets, all of which ultimately affect our earnings.
Securities
Market Values
Continued
or Further Declines in the Value of Certain Investment
Securities Could Require Write-Downs, Which Would Reduce Our
Earnings.
The unrealized losses on the investment securities portfolio are
due to an increase in credit spreads and liquidity issues in the
marketplace. We have concluded these unrealized losses are
temporary in nature since they are not related to the underlying
credit quality of the issuers, and we have the intent and
ability to hold these investments for a time necessary to
recover our cost or stated maturity (at which time, full payment
is expected). However, a continued decline in the value of these
securities or other factors could result in an
other-than-temporary impairment write-down which would reduce
our earnings. Some of the Banks securities are locally
originated economic development bonds to nonprofit
organizations. These securities could become impaired due to
economic and real estate market conditions which also affect
loan risk.
S-17
If
Dividends Paid On Our Investment in the Federal Home Loan Bank
of Boston Continue to be Suspended, or If Our Investment is
Classified as Other-Than-Temporarily Impaired or as Permanently
Impaired, Our Earnings and/or Stockholders Equity Could
Decrease.
We own common stock of the Federal Home Loan Bank of Boston
(FHLBB) to qualify for membership in the Federal
Home Loan Bank System and to be eligible to borrow funds under
the FHLBBs advance program. There is no market for our
FHLBB common stock. On February 26, 2009, the FHLBB
reported a net annual loss of $73.2 million. The loss was
primarily due to an other-than-temporary impairment charge of
$339.1 million on its private-label mortgage backed
securities portfolio. The FHLBB believes that it will recover a
substantial portion of the impairment losses over time and
expects to hold the securities until maturity. As a result of
the loss, the FHLBB also announced that the dividend paid on its
common stock has been suspended indefinitely and that the
payment of any dividend in 2009 is unlikely. The continued
suspension of the dividend will decrease our income. In an
extreme situation, it is possible that the capitalization of a
Federal Home Loan Bank, including the FHLBB, could be
substantially diminished or reduced to zero. Consequently, we
believe that there is a risk that our investment in FHLBB common
stock could be deemed other-than-temporarily impaired at some
time in the future, and if this occurs, it would cause our
earnings and stockholders equity to decrease by the
after-tax amount of the impairment charge. We have been notified
by the FHLBB that future dividend levels may be different from
past levels, and a reduction or elimination of this dividend
would reduce our earnings.
Regulatory
Recent
Legislative and Regulatory Initiatives May Not Stabilize the
Banking System.
The potential exists for additional federal or state laws and
regulations regarding lending, funding practices, and liquidity
standards, and bank regulatory agencies are expected to be more
active in responding to concerns and trends identified in
examinations, including the expected issuance of many formal
enforcement orders. Actions taken to date, as well as potential
actions, may not have the beneficial effects that are intended,
particularly with respect to the extreme levels of volatility
and limited credit availability currently being experienced. In
addition, new laws, regulations, and other regulatory changes
will increase our Federal Deposit Insurance Corporation
insurance premiums and may also increase our costs of regulatory
compliance and of doing business, and otherwise affect our
operations. New laws, regulations, and other regulatory changes,
along with negative developments in the financial industry and
the domestic and international credit markets, may significantly
affect the markets in which we do business, the markets for and
value of our loans and investments, and our ongoing operations,
costs and profitability.
Future
Legislative or Regulatory Actions Responding to Perceived
Financial and Market Problems Could Impair Our Rights Against
Borrowers.
There have been proposals made by members of Congress and others
that would reduce the amount distressed borrowers are otherwise
contractually obligated to pay under their mortgage loans and
limit an institutions ability to foreclose on mortgage
collateral. Were proposals such as these, or other proposals
limiting our rights as a creditor, to be implemented, we could
experience increased credit losses or increased expense in
pursuing our remedies as a creditor.
The
Federal Deposit Insurance Corporation is imposing an emergency
assessment on financial institutions, which will decrease our
earnings in 2009.
On February 27, 2009, the Federal Deposit Insurance
Corporation (FDIC) announced a one-time special
assessment of 20 basis points on all insured deposits
regardless of the risk or size of the depository institution.
This special assessment is payable by September 30, 2009
based on deposits as of June 30, 2009. The FDIC
subsequently announced that it would reduce the special
assessment to 10 basis points if Congress increases the
FDICs borrowing authority with the U.S. Department of
the Treasury. In addition, the FDIC may assess additional
special premiums in the future.
S-18
Changes
In Federal Statutes May Adversely Affect the Terms of our
Capital Purchase Program Letter Agreement with the U.S.
Treasury.
The Treasury may amend any provision of the Agreement to comply
with changes to federal statutes. Any change in such Agreement
could have a material impact on us and our operations. Future
federal statutory changes may adversely affect the terms of the
Capital Purchase Program and our financial condition. Any
retroactive restrictions which may adversely affect our ability
to comply with the terms of the Agreement or effectively manage
our business or our ability to repay the preferred stock.
Current terms of the agreement require approval by bank
regulators before the stock may be repaid.
Provisions
of our Certificate of Incorporation, Bylaws and Delaware Law, as
well as State and Federal Banking Regulations, Could Delay or
Prevent a Takeover of us by a Third Party.
Provisions in our certificate of incorporation and bylaws, the
corporate law of the State of Delaware, and state and federal
regulations could delay, defer or prevent a third party from
acquiring us, despite the possible benefit to our stockholders,
or otherwise adversely affect the price of our common stock.
These provisions include: limitations on voting rights of
beneficial owners of more than 10% of our common stock,
supermajority voting requirements for certain business
combinations; the election of directors to staggered terms of
three years; and advance notice requirements for nominations for
election to our board of directors and for proposing matters
that stockholders may act on at stockholder meetings. In
addition, we are subject to Delaware laws, including one that
prohibits us from engaging in a business combination with any
interested stockholder for a period of three years from the date
the person became an interested stockholder unless certain
conditions are met. These provisions may discourage potential
takeover attempts, discourage bids for our common stock at a
premium over market price or adversely affect the market price
of, and the voting and other rights of the holders of, our
common stock. These provisions could also discourage proxy
contests and make it more difficult for you and other
stockholders to elect directors other than the candidates
nominated by our Board.
Goodwill
Our
Acquisitions Have Resulted in Significant Goodwill, Which if it
Becomes Impaired Would be Required to be Written Down, Which
Would Negatively Impact Earnings.
We acquired Factory Point Bancorp, Inc. in 2007 and Woronoco
Bancorp in 2005 and have purchased insurance and financial
planning businesses in the last three years, including the five
insurance agencies we acquired on October 31, 2006. We will
pursue additional opportunities for acquisitions in the future,
including acquisitions in adjacent states. The success of
acquisitions depends on many factors, including the long term
retention of key personnel and acquired customer relationships.
The initial recording and subsequent impairment testing of
goodwill and other intangible assets requires subjective
judgments about the estimates of the fair value of assets
acquired. Factors that may significantly affect the estimates
include specific industry or market sector conditions, changes
in revenue growth trends, customer behavior, competitive forces,
cost structures and changes in discount rates. It is possible
that future impairment testing could result in an impairment of
the value of goodwill or intangible assets, or both. If we
determine impairment exists at a given point in time, our
earnings and the book value of the related intangible asset(s)
will be reduced by the amount of the impairment. Notwithstanding
the foregoing, the results of impairment testing on goodwill and
core deposit intangible assets have no impact on our tangible
book value or regulatory capital levels. These are non-GAAP
financial measures. They are not a substitute for GAAP measures
and should only be considered in conjunction with the
Companys GAAP financial information.
DIVIDEND
POLICY
We presently plan to pay cash dividends on our common stock on a
quarterly basis dependent upon the results of operations of the
immediately preceding quarters. However, declaration of
dividends by the Board of Directors will depend on a number of
factors, including capital requirements, regulatory limitations,
our operating results and financial condition and general
economic conditions. We have used dividends from
S-19
Berkshire Bank as a source of cash to pay dividends. These
dividends from Berkshire Bank are dependent on its future
earnings, capital requirements and financial condition, and are
also subject to regulatory oversight discussed below. Prior to
December 19, 2011, unless we have redeemed all the
preferred stock issued to the U.S. Treasury on
December 19, 2008 under the CPP, or unless the
U.S. Treasury has transferred all the preferred stock to a
third party, the consent of the U.S. Treasury will be
required for us to declare or pay any dividend or make any
distribution on common stock other than (i) regular
quarterly cash dividends of not more than $0.16 per share, as
adjusted for any stock split, stock dividend, reverse stock
split, reclassification or similar transaction,
(ii) dividends payable solely in shares of common stock and
(iii) dividends or distributions of rights or junior stock
in connection with a stockholders rights plan.
We paid dividends on our common stock of $2.0 million from
January 1, 2009 through March 31, 2009, and
$6.8 million and $5.4 million in 2008 and 2007,
respectively.
We are a legal entity separate and distinct from our banking and
other subsidiaries. These subsidiaries are our principal assets,
and as such, provide our main source of payment of funds for the
dividends. As to the payment of dividends, as discussed below,
Berkshire Bank is our main source of funds for dividends and is
subject to the laws and regulations of its chartering
jurisdiction and to the regulations of its primary regulator. If
the banking regulator determines that a depository institution
under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice, the regulator may require, after
notice and hearing, that the institution cease and desist from
such practice. Depending on the financial condition of the
depository institution, an unsafe or unsound practice could
include the payment of dividends. The banking agencies have
indicated that paying dividends that deplete a depository
institutions capital base to an inadequate level would be
an unsafe and unsound banking practice.
USE OF
PROCEEDS
We estimate that the net proceeds from the sale of our common
stock in this offering will be approximately $27.9 million
after deducting the underwriting discounts and commissions and
our estimated offering expenses. If the underwriters exercise
their over-allotment option in full, we estimate that our net
proceeds will be approximately $32.1 million.
We intend to use the net proceeds from this offering for general
corporate purposes, which may include, among other things,
support for organic and opportunistic acquisition-based growth.
Although our growth strategy contemplates future acquisitions,
we have no present agreements or definitive plans relating to
any acquisitions other than the proposed acquisition of CNB
Financial Corp., as well as active negotiations to acquire a
wealth management company. In addition, we have applied for
regulatory approval to repurchase the preferred stock and
warrants that we issued to the U.S. Department of Treasury
in connection with the Treasurys Capital Purchase Program,
although there can be no assurance that our application will be
approved.
Our management will retain broad discretion in the allocation of
the net proceeds of this offering. Until we designate the use of
net proceeds, we will invest them temporarily in liquid
short-term securities. The precise amounts and timing of our use
of the net proceeds will depend upon market conditions and the
availability of other funds, among other factors. From time to
time, we may engage in additional capital financings as we
determine to be appropriate based upon our needs and prevailing
market conditions. These additional capital financings may
include the sale of other securities or the issuance of
securities as consideration in future acquisitions.
We expect that the impact of the offering will be dilutive to
fourth quarter earnings per share as proceeds are initially held
in lower yielding short-term investments or are used to repay
short-term borrowings. We expect that as the proceeds from the
offering are reinvested in growth opportunities, there will be
future benefit to earnings per share. This benefit would be in
addition to the benefit of the accretion to tangible book value
resulting from the offering.
S-20
PRICE
RANGE OF COMMON STOCK
Our common stock is listed on the NASDAQ Global Select Market
under the symbol BHLB. The following table sets
forth, for the periods indicated, the high and low closing
prices per share of our common stock as reported on NASDAQ.
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Cash Dividends per
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High
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Low
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Share
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Year Ended December 31, 2007
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First Quarter
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$
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34.71
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$
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32.59
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$
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0.14
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Second Quarter
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33.75
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31.51
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0.14
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Third Quarter
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32.52
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26.10
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0.15
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Fourth Quarter
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31.31
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24.27
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0.15
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Year Ended December 31, 2008
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First Quarter
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$
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25.85
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$
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20.61
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$
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0.15
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Second Quarter
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26.94
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22.52
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0.16
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Third Quarter
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32.00
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20.68
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0.16
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Fourth Quarter
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30.86
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23.03
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0.16
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Year Ending December 31, 2009
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First Quarter
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$
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31.15
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$
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19.00
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$
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0.16
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Second Quarter (through May 8, 2009)
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26.76
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22.35
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0.16
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The last reported closing price for our common stock on
May 8, 2009 was $24.11 per share. We had approximately
2,200 holders of record of common stock at March 31, 2009.
S-21
CAPITALIZATION
The following table shows our capitalization as of
March 31, 2009 on an actual basis and on an as adjusted
basis to give effect to the receipt of the net proceeds from the
offering. The as adjusted capitalization assumes no exercise of
the underwriters over-allotment option, that
1,244,297 shares of common stock are sold by us at an
offering price of $24.11 per share and that the net proceeds
from the offering, after deducting the estimated offering
expenses payable by us, are approximately $27.9 million.
The table does not reflect the proposed acquisition of CNB
Financial Corp., pursuant to which we anticipate issuing
approximately 843,874 shares of our common stock to the
stockholders of CNB Financial Corp. (not including any shares
issued as a result of the exercise of CNB Financial stock
options which will be exchanged for Company stock options).
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March 31,
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2009
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Actual
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As Adjusted(1)
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Dollars in thousands, except per share data
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Long-Term Indebtedness:
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Junior subordinated debentures(2)
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$
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15,464
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$
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15,464
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Stockholders Equity
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Preferred stock ($.01 par value; 1,000,000 shares
authorized; 40,000 shares issued with $1,000 liquidation
value)
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36,959
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36,959
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Common stock ($.01 par value; 26,000,000 shares
authorized; 14,238,825 shares issued and
15,483,122 shares issued as adjusted)
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142
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154
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Additional paid-in capital
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307,502
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335,390
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Unearned compensation
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(2,504
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)
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(2,504
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)
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Retained earnings
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129,176
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129,176
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Accumulated other comprehensive loss
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(9,285
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)
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(9,285
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)
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Treasury stock, at cost (1,932,910 shares)
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(49,172
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)
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(49,172
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)
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Total preferred stockholders equity
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36,959
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36,959
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Total common stockholders equity
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375,859
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403,759
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Total stockholders equity
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412,818
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440,718
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Total capitalization(3)
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428,282
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456,182
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Total common book value per common share
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30.54
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29.80
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Berkshire Bank Capital Ratios(4)
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Tier I capital to risk weighted assets
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11.09
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%
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11.09
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%
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Total capital to risk weighted assets
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12.21
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%
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12.21
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%
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Tier I capital to average tangible assets
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9.11
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%
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9.11
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%
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(1) |
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The number of shares of common stock to be outstanding after the
offering is based on actual shares outstanding as of
March 31, 2009 and assumes no exercise of the
underwriters over-allotment option. In addition, the
number of shares of common stock to be outstanding after this
offering excludes 425,979 shares of common stock issuable
upon exercise of options under our equity incentive plan, having
a weighted average exercise price of $22.67 per share and
warrants of the Company held by the U.S. Treasury totaling
226,330 shares, having a weighted average exercise price of
$26.51 as of March 31, 2009. |
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(2) |
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Consists of debt issued in connection with our
$15.5 million of trust preferred securities. |
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(3) |
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Includes total stockholders equity and junior subordinated
debentures. |
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(4) |
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Proceeds from stock issuance will initially remain at the
holding company Berkshire Hills Bancorp and will not impact
Berkshire Banks capital ratios. |
S-22
UNDERWRITING
We are offering the shares of our common stock described in this
prospectus supplement in an underwritten offering through
Sandler ONeill & Partners, L.P. and Keefe,
Bruyette & Woods, Inc. Sandler ONeill &
Partners, L.P. is acting as representative of the underwriters.
We have entered into an underwriting agreement with Sandler
ONeill & Partners, L.P. with respect to the
common stock being offered. Subject to the terms and conditions
contained in the underwriting agreement, each underwriter has
severally agreed to purchase the respective number of shares of
common stock set forth opposite its name below.
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Name
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Number of Shares
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Sandler ONeill & Partners, L.P.
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Keefe, Bruyette & Woods, Inc.
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Total
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The underwriting agreement provides that the underwriters
obligations to purchase shares of our common stock depends on
the satisfaction of the conditions contained in the underwriting
agreement, including:
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the representations and warranties made by us are true and
agreements have been performed;
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there is no material adverse change in the financial markets or
in our business; and
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we deliver customary closing documents.
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Subject to these conditions, the underwriters are committed to
purchase and pay for all shares of our common stock offered by
this prospectus supplement, if any such shares are taken.
However, the underwriters are not obligated to take or pay for
the shares of our common stock covered by the underwriters
over-allotment option described below, unless and until such
option is exercised.
Our common stock is listed on the NASDAQ Global Select Market
under the symbol BHLB.
Over-Allotment Option. We have granted the
underwriters an option, exercisable no later than 30 days
after the date of the underwriting agreement, to purchase up to
an aggregate
of
additional shares of common stock at the public offering price,
less the underwriting discounts and commissions set forth on the
cover page of this prospectus supplement. We will be obligated
to sell these shares of common stock to the underwriters to the
extent the over-allotment option is exercised. The underwriters
may exercise this option only to cover over-allotments made in
connection with the sale of our common stock offered by this
prospectus supplement.
Commissions and Expenses. The underwriters
propose to offer our common stock directly to the public at the
offering price set forth on the cover page of this prospectus
supplement and to dealers at the public offering price less a
concession not in excess of $ per
share. The underwriters may allow, and the dealers may reallow,
a concession not in excess of $
per share on sales to other brokers and dealers. After the
public offering of our common stock, the underwriters may change
the offering price, concessions and other selling terms.
The following table shows the per share and total underwriting
discounts and commissions that we will pay to the underwriters
and the proceeds we will receive before expenses. These amounts
are shown assuming both no exercise and full exercise of the
underwriters option to purchase additional shares of our
common stock.
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Total Without
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Total With
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Over-Allotment
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Over-Allotment
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Per Share
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Exercise
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Exercise
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Public offering price
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$
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Underwriting discount payable by us
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$
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Proceeds to us before expenses
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$
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S-23
We estimate that the total expenses of this offering, exclusive
of underwriting discounts and commissions, will be approximately
$ , and are payable by us.
Indemnity. We have agreed to indemnify the
underwriters, and persons who control the underwriters, against
certain liabilities, including liabilities under the Securities
Act of 1933, and to contribute to payments that the underwriters
may be required to make in respect of these liabilities.
Lock-Up
Agreement. We, and each of our directors and
executive officers, have agreed, for a period of 90 days
after the date of this prospectus supplement, not to sell,
offer, agree to sell, contract to sell, hypothecate, pledge,
grant any option to sell, make any short sale or otherwise
dispose of or hedge, directly or indirectly, any shares of our
common stock or securities convertible into, exchangeable or
exercisable for any shares of common stock or warrants or other
rights to purchase our common stock or other similar securities
without, in each case, the prior written consent of Sandler
ONeill & Partners, L.P. These restrictions are
expressly agreed to preclude us, and our executive officers and
directors, from engaging in any hedging or other transactions or
arrangement that is designed to, or which reasonably could be
expected to, lead to or result in a sale, disposition or
transfer, in whole or in part, of any of the economic
consequences of ownership of our common stock, whether such
transaction would be settled by delivery of common stock or
other securities, in cash or otherwise. The
90-day
restricted period described above will be automatically extended
if (1) during the last 18 days of the
90-day
restricted period, we issue an earnings release or material news
or a material event relating to us occurs or (2) prior to
the expiration of the
90-day
restricted period, we announce we will release earnings results
or become aware that material news or a material event will
occur during the
16-day
period beginning on the last day of the
90-day
restricted period, in which case the restricted period will
continue to apply until the expiration of the
18-day
period beginning on the date on which the earnings release is
issued or the material news or material event related to us
occurs.
Stabilization. In connection with this
offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering
transactions and penalty bids.
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Stabilizing transactions permit bids to purchase shares of
common stock so long as the stabilizing bids do not exceed a
specified maximum, and are engaged in for the purpose of
preventing or retarding a decline in the market price of the
common stock while the offering is in progress.
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Over-allotment transactions involve sales by the underwriters of
shares of common stock in excess of the number of shares the
underwriters are obligated to purchase. This creates a syndicate
short position which may be either a covered short position or a
naked short position. In a covered short position, the number of
shares of common stock over-allotted by the underwriters is not
greater than the number of shares that they may purchase in the
over-allotment option. In a naked short position, the number of
shares involved is greater than the number of shares in the
over-allotment option. The underwriters may close out any short
position by exercising their over-allotment option
and/or
purchasing shares in the open market.
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Syndicate covering transactions involve purchases of common
stock in the open market after the distribution has been
completed in order to cover syndicate short positions. In
determining the source of shares to close out the short
position, the underwriters will consider, among other things,
the price of shares available for purchase in the open market as
compared with the price at which they may purchase shares
through exercise of the over-allotment option. If the
underwriters sell more shares than could be covered by exercise
of the over-allotment option and, therefore, have a naked short
position, the position can be closed out only by buying shares
in the open market. A naked short position is more likely to be
created if the underwriters are concerned that after pricing
there could be downward pressure on the price of the shares in
the open market that could adversely affect investors who
purchase in the offering.
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Penalty bids permit the underwriters to reclaim a selling
concession from a syndicate member when the common stock
originally sold by that syndicate member is purchased in
stabilizing or syndicate covering transactions to cover
syndicate short positions.
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S-24
These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining
the market price of our common stock or preventing or retarding
a decline in the market price of our common stock. As a result,
the price of our common stock in the open market may be higher
than it would otherwise be in the absence of these transactions.
Neither we nor the underwriters make any representation or
prediction as to the effect that the transactions described
above may have on the price of our common stock. These
transactions may be effected on the NASDAQ Global Select Market,
in the over-the-counter market or otherwise and, if commenced,
may be discontinued at any time.
Passive Market Making. In connection with this
offering, the underwriters and selected dealers, if any, who are
qualified market makers on the NASDAQ Global Select Market, may
engage in passive market making transactions in our common stock
on the NASDAQ Global Select Market in accordance with
Rule 103 of Regulation M under the Securities Act of
1933. Rule 103 permits passive market making activity by
the participants in our common stock offering. Passive market
making may occur before the pricing of our offering, or before
the commencement of offers or sales of our common stock. Each
passive market maker must comply with applicable volume and
price limitations and must be identified as a passive market
maker. In general, a passive market maker must display its bid
at a price not in excess of the highest independent bid for the
security. If all independent bids are lowered below the bid of
the passive market maker, however, the bid must then be lowered
when purchase limits are exceeded. Net purchases by a passive
market maker on each day are limited to a specified percentage
of the passive market makers average daily trading volume
in the common stock during a specified period and must be
discontinued when that limit is reached. The underwriters and
other dealers are not required to engage in passive market
making and may end passive market making activities at any time.
Selling
Restrictions
European Economic Area. In relation to each
Member State of the European Economic Area which has implemented
the Prospectus Directive (each, a Relevant Member State), each
Underwriter has represented and agreed that with effect from and
including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the Relevant
Implementation Date) it has not made and will not make an offer
of shares to the public in that Relevant Member State prior to
the publication of a prospectus in relation to the shares which
has been approved by the competent authority in that Relevant
Member State or, where appropriate, approved in another Relevant
Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus
Directive, except that it may, with effect from and including
the Relevant Implementation Date, make an offer of shares to the
public in that Relevant Member State at any time: (a) to
legal entities which are authorized or regulated to operate in
the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of
(1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts;(c) to fewer than 100 natural or legal
persons (other than qualified investors as defined in the
Prospectus Directive) subject to obtaining the prior consent of
the representative for any such offer; or (d) in any other
circumstances which do not require the publication by the Issuer
of a prospectus pursuant to Article 3 of the Prospectus
Directive. For the purposes of this provision, the expression an
offer of shares to the public in relation to any
shares in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the shares to be offered so as to enable an
investor to decide to purchase or subscribe for the shares, as
the same may be varied in that Relevant Member State by any
measure implementing the Prospectus Directive in that Relevant
Member State, and the expression Prospectus Directive means
Directive 2003/71/EC and includes any relevant implementing
measure in each Relevant Member State.
United Kingdom. Each Underwriter has
represented and agreed that:(a) it has only communicated or
caused to be communicated and will only communicate or cause to
be communicated an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of
the Financial Services and Markets Act 2000, as amended (the
FSMA)) received by it in connection with the issue
or sale of the shares in circumstances in which
Section 21(1) of the FSMA does not apply to the Issuer; and
(b) it has complied
S-25
and will comply with all applicable provisions of the FSMA with
respect to anything done by it in relation to the shares in,
from or otherwise involving the United Kingdom.
Our Relationship with the
Underwriters. Sandler ONeill &
Partners, L.P. and Keefe, Bruyette & Woods and some of
their respective affiliates have performed and expect to
continue to perform financial advisory and investment banking
services for us in the ordinary course of their respective
businesses, and may have received, and may continue to receive,
compensation for such services.
Keefe, Bruyette & Woods acted as a financial advisor
to, and rendered a fairness opinion to, CNB Financial Corp.
in connection with our proposed acquisition of CNB Financial
Corp. Keefe, Bruyette & Woods has received a fee for
such services and will receive an additional fee upon the
closing of the acquisition.
Our common stock is being offered by the underwriters, subject
to prior sale, when, as and if issued to and accepted by them,
subject to approval of certain legal matters by counsel for the
underwriters and other conditions.
LEGAL
MATTERS
Certain legal matters, including the validity of the common
stock offered hereby, will be passed upon for us by Luse Gorman
Pomerenk & Schick, P.C., Washington, D.C.,
and for the underwriters by Sonneschein Nath &
Rosenthal LLP, Washington, D.C.
EXPERTS
Our consolidated financial statements as of December 31,
2008 and 2007, and for each of the years in the three-year
period ended December 31, 2008, and managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2008, have been
incorporated by reference herein, in reliance upon the report of
Wolf & Company, P.C., an independent registered
public accounting firm, also incorporated by reference herein,
and upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any
document we file with the SEC at the SECs public reference
rooms at 100 F Street, N.E. Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference rooms. The SEC
also maintains a web site that contains reports, proxy and
information statements, and other information regarding
registrants that file electronically with the SEC at
http://www.sec.gov.
In addition, we maintain a website that contains information
about us at
http://www.berkshirebank.com/.
The information on our website is not part of this prospectus
supplement or the accompanying prospectus.
We have filed with the SEC a registration statement on
Form S-3
(File
No. 333-137246),
of which this prospectus supplement and the accompanying
prospectus are a part, including exhibits, schedules and
amendments filed with, or incorporated by reference in, such
registration statement, under the Securities Act of 1933, as
amended. This prospectus supplement and the accompanying
prospectus do not contain all of the information set forth in
the registration statement and exhibits and schedules to the
registration statement. For further information with respect to
our company, reference is made to the registration statement,
including the exhibits to the registration statement. Statements
contained in this prospectus supplement and the accompanying
prospectus as to the contents of any contract or other document
referred to in, or incorporated by reference in, this prospectus
supplement and the accompanying prospectus are not necessarily
complete and, where that contract is an exhibit to the
registration statement, each statement is qualified in all
respects by the exhibit to which the reference relates. Copies
of the registration statement, including the exhibits and
schedules to the registration statement, may be examined at the
SECs public reference rooms at 100 F Street,
N.E. Room 1580, Washington, DC 20549. Please call the SEC
at
1-800-SEC-0330
for further information on the public reference rooms. Copies of
all or a portion of the registration statement can be obtained
from the public reference room of the SEC upon payment of
prescribed fees. The registration statement is also available to
you on the SECs website,
http://www.sec.gov.
S-26
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SECs rules allow us to incorporate by
reference information we file with the SEC into this
prospectus supplement. This means that we can disclose important
information to you by referring you to another document filed
separately with the SEC. The information incorporated by
reference is considered to be a part of this prospectus
supplement. Any information incorporated by reference in this
prospectus supplement that we file with the SEC after the date
of this prospectus supplement will automatically update and
supersede information contained in this prospectus supplement.
Our SEC file number is
000-51584.
We are incorporating by reference in this prospectus supplement
the documents listed below and any future filings that we make
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, prior to the
termination of this offering, provided, however, that we are not
incorporating by reference any information furnished (but not
filed) under Item 2.02 or Item 7.01 of any Current
Report on
Form 8-K,
except as specifically noted below:
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our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, filed on
March 16, 2009;
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our Quarterly Report on Form
10-Q for the
fiscal quarter ended March 31, 2009, filed on May 11,
2009;
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our Definitive Proxy Statement on Schedule 14A, filed on
March 27, 2009; and
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our Current Reports on
Form 8-K
filed on January 6, 2009; February 4, 2009;
February 23, 2009; and April 30, 2009 (except for
information furnished under Item 2.02).
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You can obtain copies of documents incorporated by reference in
this prospectus supplement, without charge, excluding any
exhibits to those documents, unless the exhibit is specifically
incorporated by reference as an exhibit in this prospectus, by
requesting them in writing or by telephone from us at the
following address and phone number: Ann Racine, Investor
Relations Department, Berkshire Hills Bancorp, Inc., 24 North
Street, Pittsfield, Massachusetts 01201,
(413) 236-3239.
S-27
$125,000,000
Berkshire
Hills Bancorp, Inc.
Debt
Securities
Common Stock
Preferred Stock
We may offer and sell from time to time, in one or more series,
our unsecured debt securities, which may consist of notes,
debentures, or other evidences of indebtedness, shares of our
common stock or shares of our preferred stock. The debt
securities and preferred stock may be convertible into or
exchangeable for other securities of ours. This prospectus
provides you with a general description of these securities.
Each time we offer any securities pursuant to this prospectus,
we will provide you with a prospectus supplement, and, if
necessary, a pricing supplement, that will describe the specific
amounts, prices and terms of the securities being offered. These
supplements may also add, update or change information contained
in this prospectus. To understand the terms of the securities
offered, you should carefully read this prospectus with the
applicable supplements, which together provide the specific
terms of the securities we are offering.
These securities are not deposits or obligations of a bank or
savings association and are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental
agency.
This prospectus may be used to offer and sell securities only if
accompanied by the prospectus supplement for those securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined that this prospectus or the
accompanying prospectus supplement is accurate or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is September 25, 2006
IMPORTANT
NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We may provide information to you about the securities we are
offering in three separate documents that progressively provide
more detail:
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this prospectus, which provides general information, some of
which may not apply to your securities;
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the accompanying prospectus supplement, which describes the
terms of the securities, some of which may not apply to your
securities; and
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if necessary, a pricing supplement, which describes the specific
terms of your securities.
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If the terms of your securities vary among the pricing
supplement, the prospectus supplement and the accompanying
prospectus, you should rely on the information in the following
order of priority:
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the pricing supplement, if any;
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the prospectus supplement; and
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the prospectus.
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We include cross-references in this prospectus and the
accompanying prospectus supplement to captions in these
materials where you can find further related discussions. The
following Table of Contents and the Table of Contents included
in the accompanying prospectus supplement provide the pages on
which these captions are located.
Unless indicated in the applicable prospectus supplement, we
have not taken any action that would permit us to publicly sell
these securities in any jurisdiction outside the United States.
If you are an investor outside the United States, you should
inform yourself about and comply with any restrictions as to the
offering of the securities and the distribution of this
prospectus.
i
TABLE OF
CONTENTS
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ii
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission, the
SEC, utilizing a shelf registration
process. Under this shelf registration process, we may from time
to time offer and sell the senior debt securities, subordinated
debt securities, preferred stock or common stock described in
this prospectus in one or more offerings, up to a total dollar
amount of $125,000,000. We may also sell other securities under
the registration statement that will reduce the total dollar
amount of securities that we may sell under this prospectus.
This prospectus provides you with a general description of the
securities covered by it. Each time we offer these securities,
we will provide a prospectus supplement that will contain
specific information about the terms of the offer and include a
discussion of any risk factors or other special considerations
that apply to the securities. The prospectus supplement may also
add, update or change information contained in this prospectus.
You should read both this prospectus and any prospectus
supplement together with the additional information described
under the heading Where You Can Find More
Information.
Unless otherwise indicated or unless the context requires
otherwise, all references in this prospectus to Berkshire
Hills Bancorp, the Company, we,
us, our or similar references mean
Berkshire Hills Bancorp, Inc. and references to the
Bank mean Berkshire Bank.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the
Securities Act of 1933, the Securities Act, that
registers, among other securities, the offer and sale of the
securities that we may offer under this prospectus. The
registration statement, including the attached exhibits and
schedules included or incorporated by reference in the
registration statement, contains additional relevant information
about us. The rules and regulations of the SEC allow us to omit
certain information included in the registration statement from
this prospectus. In addition, we file reports, proxy statements
and other information with the SEC under the Securities Exchange
Act of 1934, the Exchange Act.
You may read and copy this information at the following
locations of the SEC:
Public Reference Room
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
Northeast Regional Office
The Woolworth Building
233 Broadway
New York, New York 10279
Midwest Regional Office
500 West Madison Street
Suite 1400
Chicago, Illinois
60661-2511
You may also obtain copies of this information by mail from the
Public Reference Section of the SEC, 100 F Street,
N.E., Room 1580, Washington, D.C. 20549, at prescribed
rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at
1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that
contains reports, proxy statements and other information about
issuers like us who file electronically with the SEC. The
address of that site is:
http://www.sec.gov
1
The SEC allows us to incorporate by reference
information into this prospectus. This means that we can
disclose important information to you by referring you to
another document that we file separately with the SEC. The
information incorporated by reference is considered to be a part
of this prospectus, except for any information that is
superseded by information that is included directly in this
document or in a more recent incorporated document.
This prospectus incorporates by reference the documents listed
below that we have previously filed with the SEC.
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SEC Filings
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Period or Filing Date (as applicable)
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Annual Report on
Form 10-K
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Year ended December 31, 2005
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Quarterly Report on
Form 10-Q
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Quarter ended March 31, 2006
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Quarterly Report on
Form 10-Q
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Quarter ended June 30, 2006
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Current Reports on
Form 8-K
(in each case other than those portions furnished under
Item 2.02 or 7.01 of
Form 8-K)
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July 27, 2006
June 30, 2006
June 20, 2006
June 15, 2006
April 25, 2006
April 14, 2006
April 3, 2006
March 1, 2006
February 27, 2006
February 24, 2006
February 13, 2006
February 1, 2006
January 30, 2006
January 27, 2006
January 18, 2006
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The description of Berkshire Hills Bancorp common stock and
preferred stock set forth in the registration statement on
Form 8-A
(No. 0-51584)
and any amendment or report filed with the SEC for the purpose
of updating this description
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October 25, 2005
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In addition, we also incorporate by reference all future
documents that we file with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of our
initial registration statement relating to the securities until
the completion of the distribution of the debt securities,
preferred stock and common stock covered by this prospectus.
These documents include periodic reports, such as annual reports
on
Form 10-K,
quarterly reports on
Form 10-Q
and current reports on
Form 8-K
(other than current reports furnished under Items 2.02 or
7.01 of
Form 8-K),
as well as proxy statements.
The information incorporated by reference contains information
about us and our financial condition and is an important part of
this prospectus.
You can obtain any of the documents incorporated by reference in
this document through us, or from the SEC through the SECs
Internet world wide web site at www.sec.gov. Documents
incorporated by reference are available from us without charge,
excluding any exhibits to those documents, unless the exhibit is
2
specifically incorporated by reference as an exhibit in this
prospectus. You can obtain documents incorporated by reference
in this prospectus by requesting them in writing or by telephone
from us at the following address:
Investor Relations Department
Berkshire Hills Bancorp, Inc.
24 North Street
Pittsfield, Massachusetts 01201
(413) 443-5601
In addition, we maintain a corporate website,
www.berkshirebank.com. We make available, through our
website, our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and any amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the SEC. This
reference to our website is for the convenience of investors as
required by the SEC and shall not be deemed to incorporate any
information on the website into this Registration Statement.
We have not authorized anyone to give any information or make
any representation about us that is different from, or in
addition to, those contained in this prospectus or in any of the
materials that we have incorporated into this prospectus. If
anyone does give you information of this sort, you should not
rely on it. If you are in a jurisdiction where offers to sell,
or solicitations of offers to purchase, the securities offered
by this document are unlawful, or if you are a person to whom it
is unlawful to direct these types of activities, then the offer
presented in this document does not extend to you. The
information contained in this document speaks only as of the
date of this document unless the information specifically
indicates that another date applies.
3
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the other documents we incorporate by
reference in this prospectus, may include forward-looking
statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934.
Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies, and
expectations of the Company, are generally identified by use of
the words anticipate, believe,
estimate, expect, intend,
plan, project, seek,
strive, try, or future or conditional
verbs such as will, would,
should, could, may, or
similar expressions. The Companys ability to predict
results or the actual effects of its plans or strategies is
inherently uncertain. Although we believe that our plans,
intentions and expectations, as reflected in these
forward-looking statements are reasonable, we can give no
assurance that these plans, intentions or expectations will be
achieved or realized. Our ability to predict results or the
actual effects of our plans and strategies are inherently
uncertain. Actual results, performance or achievements could
differ materially from those contemplated, expressed or implied
by the forward-looking statements contained in this prospectus.
Important factors that could cause actual results to differ
materially from our forward-looking statements are set forth
under Item 1A Risk Factors in our
most recent annual report on
Form 10-K
and in other reports filed with the Securities and Exchange
Commission. There are a number of factors, many of which are
beyond our control, that could cause actual conditions, events,
or results to differ significantly from those described in the
forward-looking statements. These factors include, but are not
limited to: general economic conditions, either nationally or
locally in some or all of the areas in which we conduct our
business; conditions in the securities markets or the banking
industry; changes in interest rates, which may affect our net
income or future cash flows; changes in deposit flows, and in
demand for deposit, loan, and investment products and other
financial services in our local markets; changes in real estate
values, which could impact the quality of the assets securing
our loans; changes in the quality or composition of the loan or
investment portfolios; changes in competitive pressures among
financial institutions or from non-financial institutions; the
ability to successfully integrate any assets, liabilities,
customers, systems, and management personnel we may acquire into
our operations and our ability to realize related revenue
synergies and cost savings within expected time frames; our
timely development of new and competitive products or services
in a changing environment, and the acceptance of such products
or services by our customers; the outcome of pending or
threatened litigation or of other matters before regulatory
agencies, whether currently existing or commencing in the
future; changes in accounting principles, policies, practices,
or guidelines; changes in legislation and regulation;
operational issues
and/or
capital spending necessitated by the potential need to adapt to
industry changes in information technology systems, on which we
are highly dependent; changes in the monetary and fiscal
policies of the U.S. Government, including policies of the
U.S. Treasury and the Federal Reserve Board; war or
terrorist activities; and other economic, competitive,
governmental, regulatory, and geopolitical factors affecting the
Companys operations, pricing, and services. Additionally,
the timing and occurrence or non-occurrence of events may be
subject to circumstances beyond our control.
You should not place undue reliance on these forward-looking
statements, which reflect our expectations only as of the date
of this prospectus. We do not assume any obligation to revise
forward-looking statements except as may be required by law.
4
BERKSHIRE
HILLS BANCORP, INC.
We are a Delaware corporation and the holding company for
Berkshire Bank. Established in 1846, Berkshire Bank is one of
Massachusetts oldest and largest independent banks and is
the largest banking institution based in Western Massachusetts.
Berkshire Bank is headquartered in Pittsfield, Massachusetts and
operates 27 full-service banking offices serving communities
throughout Western Massachusetts and in Northeastern New York.
Berkshire Bank is structured to operate in three regions: its
traditional Berkshire County Region; the Pioneer Valley Region
along the Connecticut River valley in Massachusetts; and the New
York Region serving Albany and the surrounding area in
Northeastern New York.
Berkshire Bank is aggressively transitioning from a community
bank to a regional bank. It plans to increase the size of its
branch network and grow its commercial banking program.
Additionally, Berkshire Bank seeks growth through whole bank,
branch, insurance agency
and/or trust
business acquisitions, including possible expansion into
Southern Vermont and Northern Connecticut. Berkshire Bank
entered the Pioneer Valley area of Massachusetts in 2005 with
the acquisition of Woronoco Bancorp, Inc., and has made
acquisitions of insurance and financial planning providers in
the last two years. Berkshire Bank is positioning itself as the
financial institution of choice in its three regions. These
three regions are viewed as having favorable demographics and
provide an attractive regional niche for Berkshire Bank to
distinguish itself as the preferred choice compared to larger
super-regional banks and smaller community banks.
Berkshire Bank is a full-scale provider of deposit, lending,
investment, and insurance products by a team of employees with
extensive experience in banking, insurance and investment
management. We stress quality control, including using Six Sigma
tools to improve operational effectiveness and efficiency. We
are enhancing our credit and risk management functions to
maintain strong asset quality and careful interest rate
management. We stress a culture of teamwork and performance
excellence to produce customer satisfaction as the basis for our
strategic growth and profitability. At June 30, 2006, we
had total assets of $2.15 billion, total deposits of
$1.46 billion, and total consolidated stockholders
equity of $248.3 million.
Our common stock trades on the Nasdaq Stock Market under the
symbol BHLB.
Berkshire Bank is subject to comprehensive regulation,
examination and supervision by the Massachusetts Commissioner of
Banks and the Federal Deposit Insurance Corporation, the
FDIC. Berkshire Hills Bancorp is subject to
regulation, examination and supervision by the Office of Thrift
Supervision, the OTS, as a savings and loan holding
company.
Our principal executive offices are located at 24 North Street,
Pittsfield, Massachusetts 01201, and our telephone number is
(413) 443-5601.
Additional information about us and our subsidiaries is included
in documents incorporated by reference in this prospectus. See
Where You Can Find More Information on
page 1 of this prospectus.
CONSOLIDATED
RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges were as
follows for the periods presented:
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Six Months Ended
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Years Ended December 31,
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June 30, 2006
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2005
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2004
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2003
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2002
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2001
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Ratios of Earnings to Fixed Charges
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1.82
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1.75
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For the purpose of computing the ratios of earnings to fixed
charges, the term fixed charges means the sum of
interest expensed, amortization of capitalized expenses related
to indebtedness and an estimate of the interest within rental
expense. The term earnings is the amount resulting
from adding income from continuing operations before income
taxes, the adjustment for minority interests in consolidated
subsidiaries and fixed charges. A statement setting forth
details of the computation of the ratios of earnings to fixed
charges is included as Exhibit 12 to the registration
statement.
5
USE OF
PROCEEDS
We intend to use the net proceeds from the sale of the
securities for general corporate purposes unless otherwise
indicated in the prospectus supplement relating to a specific
issue of securities. Our general corporate purposes may include
repurchasing our outstanding common stock, financing possible
acquisitions of branches, other financial institutions, other
businesses that are related to banking or diversification into
other banking-relating businesses, extending credit to, or
funding investments in, our subsidiaries and repaying, reducing
or refinancing indebtedness.
The precise amounts and the timing of our use of the net
proceeds will depend upon market conditions, our
subsidiaries funding requirements, the availability of
other funds and other factors. Until we use the net proceeds
from the sale of any of our securities for general corporate
purposes, we will use the net proceeds to reduce our
indebtedness or for temporary investments. We expect that we
will, on a recurrent basis, engage in additional financings as
the need arises to finance our corporate strategies, to fund our
subsidiaries, to finance acquisitions or otherwise.
REGULATION AND
SUPERVISION
Our principal subsidiary, Berkshire Bank, is a
Massachusetts-chartered savings bank and is subject to
regulation and supervision by the Massachusetts Commissioner of
Banks and by the FDIC. As the holding company for Berkshire
Bank, we are a savings and loan holding company subject to
regulation and supervision by the OTS.
Because we are a holding company, our rights and the rights of
our creditors, including the holders of the debt securities,
preferred stock and common stock we are offering under this
prospectus, to participate in the assets of any of our
subsidiaries upon the subsidiarys liquidation or
reorganization will be subject to the prior claims of the
subsidiarys creditors, except to the extent that we may
ourselves be a creditor with recognized claims against the
subsidiary.
In addition, dividends, loans and advances from the Bank are
restricted by federal and state statutes and regulations. Under
applicable banking statutes, at June 30, 2006, the Bank
could have declared additional dividends of $5.0 million
without further regulatory approval. The FDIC, the OTS and the
Massachusetts Commissioner of Banks can limit the Banks
payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank.
In addition, there are various statutory and regulatory
limitations on the extent to which the Bank can finance us or
otherwise transfer funds or assets to us or to our nonbanking
subsidiaries, whether in the form of loans, extensions of
credit, investments or asset purchases. These extensions of
credit and other transactions involving the Bank and us or a
nonbanking subsidiary of ours are limited in amount to 10% of
the Banks capital and surplus and, with respect to us and
all our nonbanking subsidiaries, to an aggregate of 20% of the
Banks capital and surplus. Furthermore, loans and
extensions of credit are required to be secured in specified
amounts and are required to be on terms and conditions
consistent with safe and sound banking practices.
For a discussion of the material elements of the regulatory
framework applicable to savings and loan holding companies and
their subsidiaries, and specific information relevant to us, you
should refer to our Annual Report on
Form 10-K
for the year ended December 31, 2005, and any other
subsequent reports filed by us with the SEC, which are
incorporated by reference in this prospectus. This regulatory
framework is intended primarily for the protection of depositors
and the deposit insurance funds that insure deposits of banks,
rather than for the protection of security holders. A change in
the statutes, regulations or regulatory policies applicable to
us or our subsidiaries may have a material effect on our
business.
Changes to the laws and regulations can affect the operating
environment of savings and loan holding companies and their
subsidiaries in substantial and unpredictable ways. We cannot
accurately predict whether those changes in laws and regulations
will occur, and, if those changes occur, the ultimate effect
they would have upon our or our subsidiaries financial
condition or results of operations.
6
DESCRIPTION
OF THE SECURITIES
This prospectus contains a summary of the senior debt
securities, the subordinated debt securities, the common stock
and the preferred stock. The following summaries are not meant
to be a complete description of each security. However, this
prospectus, the accompanying prospectus supplement and the
accompanying pricing supplement, if applicable, contain the
material terms and conditions for each security. You should read
these documents as well as the documents filed as exhibits to or
incorporated by reference to this registration statement.
Capitalized terms used in this prospectus that are not defined
will have the meanings given them in these documents.
DESCRIPTION
OF DEBT SECURITIES
We may issue senior debt securities or subordinated debt
securities. Senior debt securities will be issued under an
indenture, the senior indenture, between us and
Wilmington Trust Company, as senior indenture trustee.
Subordinated debt securities will be issued under a separate
indenture, the subordinated indenture, between us
and Wilmington Trust Company, as subordinated indenture
trustee. The senior indenture and the subordinated indenture are
sometimes collectively referred to in this prospectus as the
indentures. The indentures will be subject to and
governed by the Trust Indenture Act of 1939. A copy of the
form of each of these indentures is an exhibit to the
registration statement of which this prospectus is a part. This
prospectus describes the general terms and provisions of the
debt securities. When we offer to sell a particular series of
debt securities, we will describe the specific terms of the
securities in a supplement to this prospectus. The prospectus
supplement will also indicate whether the general terms and
provisions described in this prospectus apply to a particular
series of debt securities.
The following briefly describes the general terms and provisions
of the debt securities and the indentures governing them which
may be offered. The particular terms of the debt securities
offered, and the extent, if any, to which these general
provisions may apply to the debt securities so offered, will be
described in a prospectus supplement relating to those
securities. The following descriptions of the indentures are not
complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the respective indentures.
General
The indentures permit us to issue the debt securities from time
to time, without limitation as to aggregate principal amount,
and in one or more series. The indentures also do not limit or
otherwise restrict the amount of other indebtedness which we may
incur or other securities which we or our subsidiaries may
issue, including indebtedness which may rank senior to the debt
securities. Nothing in the subordinated indenture prohibits the
issuance of securities representing subordinated indebtedness
that is senior or junior to the subordinated debt securities.
Unless we give you different information in the prospectus
supplement, the senior debt securities will be unsubordinated
obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness. Payments on the
subordinated debt securities will be subordinated to the prior
payment in full of all of our senior indebtedness, as described
under Description of Debt Securities
Subordination and in the applicable prospectus
supplement.
We may issue debt securities if the conditions contained in the
applicable indenture are satisfied. These conditions include the
adoption of resolutions by our board of directors that establish
the terms of the debt securities being issued. Any resolution
approving the issuance of any issue of debt securities will
include the terms of that issue of debt securities, which may
include:
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the title and series designation;
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the aggregate principal amount and the limit, if any, on the
aggregate principal amount or initial issue price of the debt
securities which may be issued under the applicable indenture;
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the principal amount payable, whether at maturity or upon
earlier acceleration;
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whether the principal amount payable will be determined with
reference to an index, formula or other method which may be
based on one or more currencies, currency units, composite
currencies, commodities, equity indices or other indices;
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whether the debt securities will be issued as original issue
discount securities (as defined below);
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the date or dates on which the principal of the debt securities
is payable;
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any fixed or variable interest rate or rates per annum or the
method or formula for determining an interest rate;
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the date from which any interest will accrue;
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any interest payment dates;
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whether the debt securities are senior or subordinated, and if
subordinated, the terms of the subordination;
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the price or prices at which the debt securities will be issued,
which may be expressed as a percentage of the aggregate
principal amount of those debt securities;
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the stated maturity date;
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whether the debt securities are to be issued in global form;
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any sinking fund requirements;
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any provisions for redemption, the redemption price and any
remarketing arrangements;
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the denominations of the securities or series of securities;
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whether the debt securities are denominated or payable in United
States dollars or a foreign currency or units of two or more
foreign currencies;
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any restrictions on the offer, sale and delivery of the debt
securities;
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the place or places where payments or deliveries on the debt
securities will be made and may be presented for registration of
transfer or exchange;
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whether any of the debt securities will be subject to defeasance
in advance of the date for redemption or the stated maturity
date;
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the terms, if any, upon which the debt securities are
convertible into other securities of ours or another issuer and
the terms and conditions upon which any conversion will be
effected, including the initial conversion price or rate, the
conversion period and any other provisions in addition to or
instead of those described in this prospectus;
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any other terms of the debt securities which are not
inconsistent with the provisions of the applicable indenture;
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a description of any documents or certificates that must be
received prior to the issuance of any definitive securities;
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whether and under what circumstances additional amounts will be
paid to
non-U.S. citizens
in connection with any tax, assessment or governmental charge
and whether securities may be redeemed in lieu of paying such
additional fees;
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the identity of each security registrar or paying agent (if
other than trustee);
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any provisions granting special rights to securities holders
upon the occurrence of specified events;
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any deletions from, modifications of, or additions to any
default events or covenants set forth in the form of indenture;
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the portion of the principal amount payable upon the declaration
of acceleration of the maturity of any securities; and
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the date any bearer securities of or within the series and any
temporary global security representing outstanding securities
shall be dated, if other than date of original issuance.
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The debt securities may be issued as original issue
discount securities which bear no interest or interest at
a rate which at the time of issuance is below market rates and
which will be sold at a substantial discount below their
principal amount. If the maturity of any original issue discount
security is accelerated, the amount payable to the holder of the
security will be determined by the applicable prospectus
supplement, the terms of the security and the relevant
indenture, but may be an amount less than the amount payable at
the maturity of the principal of that original issue discount
security. Special federal income tax and other considerations
relating to original issue discount securities will be described
in the applicable prospectus supplement.
Please see the prospectus supplement or pricing supplement you
have received or will receive for the terms of the specific debt
securities we are offering.
You should be aware that special U.S. Federal income tax,
accounting and other considerations may apply to the debt
securities. The prospectus supplement relating to an issue of
debt securities will describe these considerations.
Registration
and Transfer
Holders may present debt securities in registered form for
transfer or exchange for other debt securities of the same
series at the offices of the applicable indenture trustee
according to the terms of the applicable indenture and the debt
securities.
Unless otherwise indicated in the applicable prospectus
supplement, the debt securities will be issued in fully
registered form, and in denominations of $1,000 and any integral
multiple thereof and the bearer securities of such series other
than bearer securities issued in global form shall be issuable
in denominations of $5,000.
No service charge will be required for any transfer or exchange
of the debt securities but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable
in connection with any transfer or exchange.
Payment
and Place of Payment
We will pay or deliver principal and any premium and interest in
the manner, at the places and subject to the restrictions set
forth in the applicable indenture, the debt securities and the
applicable prospectus supplement. However, at our option, we may
pay any interest by check mailed to the holders of registered
debt securities at their registered addresses.
Global
Securities
Each indenture provides that we may issue debt securities in
global form. If any series of debt securities is issued in
global form, the prospectus supplement will describe any
circumstances under which beneficial owners of interests in any
of those global debt securities may exchange their interests for
debt securities of that series and of like tenor and principal
amount in any authorized form and denomination.
9
Events of
Default
Unless otherwise indicated in the applicable prospectus
supplement, the following are events of default under the senior
indenture with respect to the senior debt securities and under
the subordinated indenture with respect to the subordinated debt
securities:
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default in the payment of any principal or premium or make-whole
amount, if any, on the debt securities when due;
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default in the payment of any interest on the debt securities,
or of any coupon pertaining thereto, when due, which continues
for 30 days;
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default in the deposit of any sinking fund payment on the debt
securities when due;
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default in the performance or breach of any other obligation
contained in the applicable indenture for the benefit of that
series of debt securities (other than defaults or breaches
otherwise specifically addressed), which continues for
60 days after written notice of the default or breach;
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default in the payment of any of our other indebtedness of the
Company or the indebtedness of any subsidiary for which the
Company is responsible or which the Company has guaranteed
(whether currently existing or created in the future) having a
principal amount outstanding that exceeds the minimum amount set
forth in any indenture supplement which results in acceleration
of that indebtedness and such acceleration has not been
rescinded or annulled within 30 days of the related
declaration of default;
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specified events in bankruptcy, insolvency or reorganization of
the Company or any significant subsidiary of the Company; and
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any other event of default provided with respect to the debt
securities of any series.
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If an event of default (other than an event of default arising
from specified events in bankruptcy of the Company or any
significant subsidiary) occurs and is continuing for any series
of debt securities, the indenture trustee or the holders of not
less than 25% in aggregate principal amount or, under certain
circumstances, issue price of the outstanding debt securities of
that series may declare all amounts, or any lesser amount
provided for in the debt securities of that series, to be
immediately due and payable.
At any time after the applicable indenture trustee or the
holders have accelerated a series of debt securities, but before
the applicable indenture trustee has obtained a judgment or
decree for payment of money due, the holders of a majority in
aggregate principal amount of outstanding debt securities of
that series may rescind and annul that acceleration and its
consequences, provided that all payments
and/or
deliveries due, other than those due as a result of
acceleration, have been made and all events of default have been
remedied or waived.
The holders of a majority in principal amount or aggregate issue
price of the outstanding debt securities of any series may waive
any default with respect to that series, except a default:
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in the payment of any amounts due and payable or deliverable
under the debt securities of that series; or
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in an obligation contained in, or a provision of, an indenture
which cannot be modified under the terms of that indenture
without the consent of each holder of each series of debt
securities affected.
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The holders of a majority in principal amount or, under certain
circumstances, issue price of the outstanding debt securities of
a series may direct the time, method and place of conducting any
proceeding for any remedy available to the applicable indenture
trustee or exercising any trust or power conferred on the
indenture trustee with respect to debt securities of that
series, provided that any direction is not in conflict with any
rule of law or the applicable indenture and the trustee may take
other actions, other than those that might lead to personal
liability, not inconsistent with the direction. Subject to the
provisions of the applicable indenture relating to the duties of
the indenture trustee, before proceeding to exercise any right
or power under the indenture at the direction of the holders,
the indenture trustee is entitled to receive from those holders
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reasonable security or indemnity against the costs, expenses and
liabilities which it might incur in complying with any direction.
A holder of any debt security of any series will have the right
to institute a proceeding with respect to the applicable
indenture or for any remedy under the indenture, if:
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that holder previously gives to the indenture trustee written
notice of a continuing event of default with respect to debt
securities of that series;
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the holders of not less than 25% in principal amount of the
outstanding securities of that series have made written request
and offered the indenture trustee indemnity satisfactory to the
indenture trustee to institute that proceeding as indenture
trustee;
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the indenture trustee will not have received from the holders of
a majority in principal amount or, under certain circumstances,
issue price of the outstanding debt securities of that series a
direction inconsistent with the request; and
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the indenture trustee fails to institute the proceeding within
60 days.
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However, the holder of any debt security or coupon has the right
to receive payment of the principal of (and premium or
make-whole amount, if any) and interest on, and any additional
amounts in respect of, such debt security or payment of such
coupon on the respective due dates (or, in the case of
redemption, on the redemption date) and to institute suit for
the enforcement of any such payment.
We are required to furnish to the indenture trustees annually a
statement as to the performance of our obligations under the
indentures and as to any default in that performance.
Modification
and Waiver
Unless otherwise indicated in the applicable indenture
supplement, the Company and the applicable indenture trustee may
amend and modify each indenture or debt securities under that
indenture with the consent of holders of at least a majority in
principal amount or, under certain circumstances, issue price of
each series of all outstanding debt securities then outstanding
under the indenture affected. However, without the consent of
each holder of any debt security issued under the applicable
indenture, we may not amend or modify that indenture to:
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change the stated maturity date of the principal of (or premium
or make-whole amount, if any, on), or any installment of
principal or interest on, any debt security issued under that
indenture;
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reduce the principal amount of or any make-whole amount, the
rate of interest on or any additional amounts payable in respect
thereof, or any premium payable upon the redemption of any debt
security issued under that indenture;
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reduce the amount of principal of an original issue discount
security or make-whole amount, if any, issued under that
indenture payable upon acceleration of its maturity; or provable
in bankruptcy or adversely affect any right of repayment of a
debt security;
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change the place or currency of payment of principal or any
premium or any make-whole amount or interest on, any debt
security issued under that indenture;
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impair the right to institute suit for the enforcement of any
payment or delivery on or with respect to any debt security
issued under that indenture;
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reduce the percentage in principal amount of debt securities of
any series issued under that indenture, the consent of whose
holders is required to modify or amend the indenture or to waive
compliance with certain provisions of the indenture; or
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make any change that adversely affects the right to convert or
exchange any security or decrease the conversion/exchange rate
or increase the conversion/exchange price.
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The holders of at least a majority in principal amount of the
outstanding debt securities of any series issued under that
indenture may, with respect to that series, waive past defaults
under the indenture, except as described under
Events of Default.
Unless otherwise indicated in the applicable prospectus
supplement, we and the applicable indenture trustee may also
amend and modify each indenture without the consent of any
holder for any of the following purposes:
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to evidence the succession of another person to the Company;
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to add to our covenants for the benefit of the holders of all or
any series of debt securities;
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to add events of default for the benefit of the holders of all
or any series of debt securities;
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to add or change any provisions of the indentures to facilitate
the issuance of bearer securities;
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to change or eliminate any of the provisions of the applicable
indenture in respect of any series of debt securities, so long
as any such change or elimination will become effective only in
respect of any series of securities when there is no outstanding
security of that series which is entitled to the benefit of that
provision;
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to establish the form or terms of debt securities of any series;
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to evidence and provide for the acceptance of appointment by a
successor indenture trustee;
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to cure any ambiguity, to correct or supplement any provision in
the applicable indenture, or to make any other provisions with
respect to matters or questions arising under that indenture, so
long as the interests of holders of debt securities of any
series are not adversely affected in any material respect by the
actions taken to cure, correct or supplement a provision in an
indenture;
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to secure securities;
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to provide for conversion rights of the holders of the debt
securities of any series to enable those holders to convert
those securities into other securities;
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to close the indenture with respect to the authentication and
delivery of additional series of securities or to qualify or
maintain qualifications of the applicable indenture under the
Trust Indenture Act; or
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to supplement any of the provisions of an indenture as is
necessary to permit or facilitate the defeasance or discharge of
any series of securities under specified provisions of the
indenture, provided that any such action shall not adversely
affect the interests of the holders of securities of such series
or any other series of securities under the indenture in any
material respect.
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Voting
The indentures contain provisions for convening meetings of the
holders of debt securities of a series. A meeting will be
permitted to be called at any time by the applicable trustee,
and also, upon request, by us or the holders of at least 25% in
principal amount of the outstanding debt securities of such
series, in any such case upon notice given as provided in such
indenture. Except for any consent that must be given by the
holder of each debt security affected by the modifications and
amendments of an indenture described above, any resolution
presented at a meeting or adjourned meeting duly reconvened at
which a quorum is present may be adopted by the affirmative vote
of the holders of a majority of the aggregate principal amount
of the outstanding debt securities of that series represented at
such meeting.
Notwithstanding the preceding paragraph, except as referred to
above, any resolution relating to a request, demand,
authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the holders of a
specified percentage, which is less than a majority, of the
aggregate principal amount of the outstanding debt securities of
a series may be adopted at a meeting or adjourned meeting duly
reconvened at which a quorum is present by the affirmative vote
of such specified percentage.
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Any resolution passed or decision taken at any properly held
meeting of holders of debt securities of any series will be
binding on all holders of such series. The quorum at any meeting
called to adopt a resolution, and at any reconvened meeting,
will be persons holding or representing a majority in principal
amount of the outstanding debt securities of a series. However,
if any action is to be taken relating to a consent or waiver
which may be given by the holders of at least a specified
percentage in principal amount of the outstanding debt
securities of a series, the persons holding such percentage will
constitute a quorum.
Notwithstanding the foregoing provisions, the indentures provide
that if any action is to be taken at a meeting with respect to
any request, demand, authorization, direction, notice, consent,
waiver and other action that such indenture expressly provides
may be made, given or taken by the holders of a specified
percentage in principal amount of all outstanding debt
securities affected by such action, or of the holders of such
series and one or more additional series:
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there shall be no minimum quorum requirement for such
meeting; and
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the principal amount of the outstanding debt securities of such
series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such
request, demand, authorization, direction, notice, consent,
waiver or other action has been made, given or taken under such
indenture.
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Consolidation,
Merger and Sale of Assets
Unless otherwise indicated in the applicable prospectus
supplement, we may consolidate or merge with or into any other
corporation, and we may sell, lease or convey all or
substantially all of our assets to any corporation, provided
that the resulting corporation, if other than the Company, is a
corporation organized and existing under the laws of the United
States of America or any U.S. state and assumes all of our
obligations to:
(1) pay or deliver the principal and any premium or
make-whole amount, if any, and any interest on, the debt
securities;
(2) perform and observe all of our other obligations under
the indentures and supplemental indentures; and
(3) we are not, or any successor corporation, as the case
may be, is not, immediately after any consolidation or merger,
in default under the indentures.
The indentures do not provide for any right of acceleration in
the event of a consolidation, merger, sale of all or
substantially all of the assets, recapitalization or change in
our stock ownership. In addition, the indentures do not contain
any provision which would protect the holders of debt securities
against a sudden and dramatic decline in credit quality
resulting from takeovers, recapitalizations or similar
restructurings.
Regarding
the Indenture Trustee
The indenture trustee provides trust services to us and our
affiliates in connection with certain trust preferred securities
and related junior subordinated debentures that we currently
have outstanding.
The occurrence of any default under either the senior indenture,
the subordinated indenture or the indenture between the Company
and the indenture trustee relating to our junior subordinated
debentures could create a conflicting interest for the indenture
trustee under the Trust Indenture Act. If that default has
not been cured or waived within 90 days after the indenture
trustee has or acquired a conflicting interest, the indenture
trustee would generally be required by the Trust Indenture
Act to eliminate that conflicting interest or resign as
indenture trustee with respect to the debt securities issued
under the senior indenture or the subordinated indenture, or
with respect to the junior subordinated debentures issued to
certain Delaware statutory trusts of ours under a separate
indenture. If the indenture trustee resigns, we are required to
promptly appoint a successor trustee with respect to the
affected securities.
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The Trust Indenture Act also imposes certain limitations on
the right of the indenture trustee, as a creditor of ours, to
obtain payment of claims in certain cases, or to realize on
certain property received in respect to any cash claim or
otherwise. The indenture trustee will be permitted to engage in
other transactions with us, provided that, if it acquires a
conflicting interest within the meaning of Section 310 of
the Trust Indenture Act, it must generally either eliminate
that conflict or resign.
International
Offering
If specified in the applicable prospectus supplement, we may
issue debt securities outside the United States. Those debt
securities will be described in the applicable prospectus
supplement. In connection with any offering outside the United
States, we will designate paying agents, registrars or other
agents with respect to the debt securities, as specified in the
applicable prospectus supplement.
We will describe in the applicable prospectus supplement whether
our debt securities issued outside the United States:
(1) may be subject to certain selling restrictions;
(2) may be listed on one or more foreign stock exchanges;
and (3) may have special United States tax and other
considerations applicable to an offering outside the United
States.
Defeasance
We may terminate or defease our obligations under
the senior indenture with respect to the senior debt securities
of any series by taking the following steps:
(1) depositing irrevocably with the senior indenture
trustee an amount, which through the payment of interest,
principal or premium, if any, will provide an amount sufficient
to pay the entire amount of the senior debt securities:
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in the case of senior debt securities denominated in
U.S. dollars, U.S. dollars or U.S. government
obligations;
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in the case of senior debt securities denominated in a foreign
currency, of money in that foreign currency or foreign
government obligations of the foreign government or governments
issuing that foreign currency; or
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a combination of money and U.S. government obligations or
foreign government obligations, as applicable;
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(2) delivering:
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an opinion of independent counsel that the holders of the senior
debt securities of that series will have no federal income tax
consequences as a result of that deposit and termination;
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an opinion of independent counsel that registration is not
required under Investment Company Act of 1940;
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an opinion of counsel as to certain other matters;
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officers certificates certifying as to compliance with the
senior indenture and other matters; and
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(3) paying all amounts due under the senior indenture.
Further, the defeasance cannot cause an event of default under
the senior indenture or any other agreement or instrument and no
default under the senior indenture or any such other agreement
or instrument can exist at the time the defeasance occurs.
Subordination
The subordinated debt securities will be subordinated in right
of payment to all senior debt, as defined in the
subordinated indenture. In certain circumstances relating to our
liquidation, dissolution, receivership, reorganization,
insolvency or similar proceedings, the holders of all senior
debt will first be entitled to receive
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payment in full before the holders of the subordinated debt
securities will be entitled to receive any payment on the
subordinated debt securities.
If the maturity of any subordinated debt securities is
accelerated, we will have to repay all senior debt before we can
make any payment on the subordinated debt securities.
In addition, we may make no payment on the subordinated debt
securities in the event:
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there is an event of default with respect to any senior
indebtedness which permits the holders of that senior
indebtedness to accelerate the maturity of the senior
indebtedness; and
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the default is the subject of judicial proceedings or we receive
notice of the default from an authorized person under the
subordinated indenture.
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By reason of this subordination in favor of the holders of
senior indebtedness, in the event of an insolvency our creditors
who are not holders of senior indebtedness or the subordinated
debt securities may recover less, proportionately, than holders
of senior indebtedness and may recover more, proportionately,
than holders of the subordinated debt securities. Unless
otherwise specified in the prospectus supplement relating to the
particular series of subordinated debt securities, senior
debt is defined in the subordinated indenture as:
the principal, premium, if any, unpaid interest (including
interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether
or not a claim for post-filing interest is allowed in such
proceeding), fees, charges, expenses, reimbursement and
indemnification obligations, and all other amounts payable under
or in respect of the following indebtedness of the Company for
money borrowed, whether any such indebtedness exists as of the
date of the indenture or is created, incurred, assumed or
guaranteed after such date:
(i) any debt (a) for money borrowed by the Company, or
(b) evidenced by a bond, note, debenture, or similar
instrument (including purchase money obligations) given in
connection with the acquisition of any business, property or
assets, whether by purchase, merger, consolidation or otherwise,
but shall not include any account payable or other obligation
created or assumed in the ordinary course of business in
connection with the obtaining of materials or services, or
(c) which is a direct or indirect obligation which arises
as a result of bankers acceptances or bank letters of
credit issued to secure obligations of the Company, or to secure
the payment of revenue bonds issued for the benefit of the
Company whether contingent or otherwise;
(ii) any debt of others described in the preceding
clause (i) which the Company has guaranteed or for which it
is otherwise liable;
(iii) the obligation of the Company as lessee under any
lease of property which is reflected on the Companys
balance sheet as a capitalized lease; and
(iv) any deferral, amendment, renewal, extension,
supplement or refunding of any liability of the kind described
in any of the preceding clauses (i), (ii) and (iii).
Senior debt does not include:
(1) any such indebtedness, obligation or liability referred
to in clauses (i) through (iv) above as to which, in
the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is provided that such
indebtedness, obligation or liability is not superior in right
of payment to the subordinated debt securities, or ranks pari
passu with the subordinated debt securities, (2) any such
indebtedness, obligation or liability which is subordinated to
indebtedness of the Company to substantially the same extent as
or to a greater extent than the subordinated debt securities are
subordinated, (3) any indebtedness to a subsidiary of the
Company and (4) the subordinated debt securities.
The subordinated indenture does not limit or prohibit the
incurrence of additional senior indebtedness, which may include
indebtedness that is senior to the subordinated debt securities,
but subordinate to our other obligations. Any prospectus
supplement relating to a particular series of subordinated debt
securities will set
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forth the aggregate amount of our indebtedness senior to the
subordinated debt securities as of a recent practicable date.
The prospectus supplement may further describe the provisions,
if any, which may apply to the subordination of the subordinated
debt securities of a particular series.
Restrictive
Covenants
The subordinated indenture does not contain any significant
restrictive covenants. The prospectus supplement relating to a
series of subordinated debt securities may describe certain
restrictive covenants, if any, to which we may be bound under
the subordinated indenture.
DESCRIPTION
OF COMMON STOCK
Company
Berkshire Hills Bancorp, which is incorporated under the General
Corporation Law of the State of Delaware, is authorized to issue
26,000,000 shares of its common stock, $0.01 par
value, of which 8,665,081 shares were issued and
outstanding as of September 7, 2006. Berkshire Hills
Bancorp is also authorized to issue 1,000,000 shares of its
preferred stock, $0.01 par value, of which none have been
issued as of September 7, 2006. Berkshire Hills
Bancorps board of directors may at any time, without
additional approval of the holders of preferred stock or common
stock, issue additional authorized shares of preferred stock or
common stock.
Voting
Rights
The holders of common stock are entitled to one vote per share
on all matters presented to stockholders. Holders of common
stock are not entitled to cumulate their votes in the election
of directors. However, Berkshire Hills Bancorps
Certificate of Incorporation provides that a record owner of
Berkshire Hills Bancorps common stock who beneficially
owns, either directly or indirectly, in excess of 10% of
Berkshire Hills Bancorps outstanding shares, is not
entitled to any vote in respect of the shares held in excess of
the 10% limit.
No
Preemptive or Conversion Rights
The holders of common stock do not have preemptive rights to
subscribe for a proportionate share of any additional securities
issued by Berkshire Hills Bancorp before such securities are
offered to others. The absence of preemptive rights increases
Berkshire Hills Bancorps flexibility to issue additional
shares of common stock in connection with Berkshire Hills
Bancorps acquisitions, employee benefit plans and for
other purposes, without affording the holders of common stock a
right to subscribe for their proportionate share of those
additional securities. The holders of common stock are not
entitled to any redemption privileges, sinking fund privileges
or conversion rights.
Dividends
Holders of common stock are entitled to receive dividends
ratably when, as and if declared by Berkshire Hills
Bancorps board of directors from assets legally available
therefor, after payment of all dividends on preferred stock, if
any is outstanding. Under Delaware law, Berkshire Hills Bancorp
may pay dividends out of surplus or net profits for the fiscal
year in which declared
and/or for
the preceding fiscal year, even if our surplus accounts are in a
deficit position. Dividends paid by our subsidiary bank and
proceeds received from the offering of trust preferred
securities have historically been the primary source of funds
available to Berkshire Hills Bancorp. Berkshire Hills Bancorp
expects to use these sources of funds in the future, as well as
proceeds it may obtain from the offering of common stock,
preferred stock
and/or debt
securities for payment of dividends to our stockholders, the
repurchase of our common stock and for other needs. Berkshire
Hills Bancorps board of directors intends to maintain its
present policy of paying regular quarterly cash
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dividends. The declaration and amount of future dividends will
depend on circumstances existing at the time, including
Berkshire Hills Bancorps earnings, financial condition and
capital requirements, as well as regulatory limitations and such
other factors as Berkshire Hills Bancorps board of
directors deems relevant. See Regulation and
Supervision.
Berkshire Hills Bancorps principal assets and sources of
income consist of investments in our operating subsidiaries,
which are separate and distinct legal entities.
Liquidation
Upon liquidation, dissolution or the winding up of the affairs
of Berkshire Hills Bancorp, holders of common stock are entitled
to receive their pro rata portion of the remaining assets of
Berkshire Hills Bancorp after the holders of Berkshire Hills
Bancorps preferred stock, if any, have been paid in full
any sums to which they may be entitled.
Certain
Certificate of Incorporation and Bylaw Provisions Affecting
Stock
Berkshire Hills Bancorps Certificate of Incorporation and
Bylaws contain several provisions that may make Berkshire Hills
Bancorp a less attractive target for an acquisition of control
by anyone who does not have the support of Berkshire Hills
Bancorps board of directors. Such provisions include,
among other things, the requirement of a supermajority vote of
stockholders or directors to approve certain business
combinations and other corporate actions, a minimum price
provision, several special procedural rules, a staggered board
of directors, a vote limitation provision and the limitation
that stockholder actions may only be taken at a meeting and may
not be taken by unanimous written stockholder consent. The
foregoing is qualified in its entirely by reference to Berkshire
Hills Bancorps Certificate of Incorporation and Bylaws,
both of which are on file with the SEC.
Restrictions
on Ownership
Under the federal Change in Bank Control Act, a notice must be
submitted to the Office of Thrift Supervision if any person
(including a company), or group acting in concert, seeks to
acquire control of a savings and loan holding
company or savings association. An acquisition of
control can occur upon the acquisition of 10.0% or
more of the voting stock of a savings and loan holding company
or savings institution or as otherwise defined by the Office of
Thrift Supervision. Under the Change in Bank Control Act, the
Office of Thrift Supervision has 60 days from the filing of
a complete notice to act, taking into consideration certain
factors, including the financial and managerial resources of the
acquirer and the anti-trust effects of the acquisition. Any
company that so acquires control would then be subject to
regulation as a savings and loan holding company.
DESCRIPTION
OF PREFERRED STOCK
The following summary contains a description of the general
terms of the preferred stock that we may issue. The specific
terms of any series of preferred stock will be described in the
prospectus supplement relating to that series of preferred
stock. The terms of any series of preferred stock may differ
from the terms described below. Certain provisions of the
preferred stock described below and in any prospectus supplement
are not complete. You should refer to the amendment to our
Certificate of Incorporation or the Certificate of Designation,
with respect to the establishment of a series of preferred stock
which will be filed with the SEC in connection with the offering
of such series of preferred stock.
General
Our Certificate of Incorporation permits our board of directors
to authorize the issuance of up to 1,000,000 shares of
preferred stock, par value $0.01, in one or more series, without
stockholder action. The board of directors can fix the
designation, powers, preferences and rights of each series.
Therefore, without stockholder approval, our board of directors
can authorize the issuance of preferred stock with voting,
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dividend, liquidation and conversion and other rights that could
dilute the voting power of the common stock and may assist
management in impeding any unfriendly takeover or attempted
change in control. None of our preferred stock is currently
outstanding.
The preferred stock has the terms described below unless
otherwise provided in the prospectus supplement relating to a
particular series of the preferred stock. You should read the
prospectus supplement relating to the particular series of the
preferred stock being offered for specific terms, including:
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the designation and stated value per share of the preferred
stock and the number of shares offered;
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the amount of liquidation preference per share;
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the price at which the preferred stock will be issued;
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the dividend rate, or method of calculation, the dates on which
dividends will be payable, whether dividends will be cumulative
or noncumulative and, if cumulative, the dates from which
dividends will commence to accumulate;
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any redemption or sinking fund provisions;
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any conversion provisions; and
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any other rights, preferences, privileges, limitations and
restrictions on the preferred stock.
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The preferred stock will, when issued, be fully paid and
nonassessable. Unless otherwise specified in the prospectus
supplement, each series of the preferred stock will rank equally
as to dividends and liquidation rights in all respects with each
other series of preferred stock. The rights of holders of shares
of each series of preferred stock will be subordinate to those
of our general creditors.
We may, at our option, with respect to any series of the
preferred stock, elect to offer fractional interests in shares
of preferred stock. The fractional interest will be specified in
the prospectus supplement relating to a particular series of the
preferred stock.
Rank
Any series of the preferred stock will, with respect to the
priority of the payment of dividends and the priority of
payments upon liquidation, winding up and dissolution, rank:
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senior to all classes of common stock and all equity securities
issued by us the terms of which specifically provide that the
equity securities will rank junior to the preferred stock (the
junior securities);
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equally with all equity securities issued by us the terms of
which specifically provide that the equity securities will rank
equally with the preferred stock (the parity
securities); and
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junior to all equity securities issued by us the terms of which
specifically provide that the equity securities will rank senior
to the preferred stock.
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Dividends
Holders of the preferred stock of each series will be entitled
to receive, when, as and if declared by our board of directors,
cash dividends at such rates and on such dates described, if
any, in the prospectus supplement. Different series of preferred
stock may be entitled to dividends at different rates or based
on different methods of calculation. The dividend rate may be
fixed or variable or both. Dividends will be payable to the
holders of record as they appear on our stock books on record
dates fixed by our board of directors, as specified in the
applicable prospectus supplement.
Dividends on any series of the preferred stock may be cumulative
or noncumulative, as described in the applicable prospectus
supplement. If our board of directors does not declare a
dividend payable on a dividend payment date on any series of
noncumulative preferred stock, then the holders of that
noncumulative preferred stock will have no right to receive a
dividend for that dividend payment date, and we will have no
obligation
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to pay the dividend accrued for that period, whether or not
dividends on that series are declared payable on any future
dividend payment dates. Dividends on any series of cumulative
preferred stock will accrue from the date we initially issue
shares of such series or such other date specified in the
applicable prospectus supplement.
No full dividends may be declared or paid or funds set apart for
the payment of any dividends on any parity securities unless
dividends have been paid or set apart for payment on the
preferred stock. If full dividends are not paid, the preferred
stock will share dividends pro rata with the parity securities.
No dividends may be declared or paid or funds set apart for the
payment of dividends on any junior securities unless full
cumulative dividends for all dividend periods terminating on or
prior to the date of the declaration or payment will have been
paid or declared and a sum sufficient for the payment set apart
for payment on the preferred stock.
Our ability to pay dividends on our preferred stock is subject
to policies established by the Office of Thrift Supervision.
Rights
Upon Liquidation
If we dissolve, liquidate or wind up our affairs, either
voluntarily or involuntarily, the holders of each series of
preferred stock will be entitled to receive, before any payment
or distribution of assets is made to holders of junior
securities, liquidating distributions in the amount described in
the prospectus supplement relating to that series of the
preferred stock, plus an amount equal to accrued and unpaid
dividends and, if the series of the preferred stock is
cumulative, for all dividend periods prior to that point in
time. If the amounts payable with respect to the preferred stock
of any series and any other parity securities are not paid in
full, the holders of the preferred stock of that series and of
the parity securities will share proportionately in the
distribution of our assets in proportion to the full liquidation
preferences to which they are entitled. After the holders of
preferred stock and the parity securities are paid in full, they
will have no right or claim to any of our remaining assets.
Because we are a savings and loan holding company, our rights,
the rights of our creditors and of our stockholders, including
the holders of the preferred stock offered by this prospectus,
to participate in the assets of any subsidiary upon the
subsidiarys liquidation or recapitalization may be subject
to the prior claims of the subsidiarys creditors except to
the extent that we may ourselves be a creditor with recognized
claims against the subsidiary.
Redemption
We may provide that a series of the preferred stock may be
redeemable, in whole or in part, at our option with prior Office
of Thrift Supervision approval. In addition, a series of
preferred stock may be subject to mandatory redemption pursuant
to a sinking fund or otherwise. The redemption provisions that
may apply to a series of preferred stock, including the
redemption dates and the redemption prices for that series, will
be described in the prospectus supplement.
In the event of partial redemptions of preferred stock, whether
by mandatory or optional redemption, our board of directors will
determine the method for selecting the shares to be redeemed,
which may be by lot or pro rata or by any other method
determined to be equitable.
On or after a redemption date, unless we default in the payment
of the redemption price, dividends will cease to accrue on
shares of preferred stock called for redemption. In addition,
all rights of holders of the shares will terminate except for
the right to receive the redemption price.
Unless otherwise specified in the applicable prospectus
supplement for any series of preferred stock, if any dividends
on any other series of preferred stock ranking equally as to
payment of dividends and liquidation rights with such series of
preferred stock are in arrears, no shares of any such series of
preferred stock may be redeemed, whether by mandatory or
optional redemption, unless all shares of preferred stock are
redeemed, and we will not purchase any shares of such series of
preferred stock. This requirement, however,
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will not prevent us from acquiring such shares pursuant to a
purchase or exchange offer made on the same terms to holders of
all such shares outstanding.
Voting
Rights
Unless otherwise described in the applicable prospectus
supplement, holders of the preferred stock will have no voting
rights except as otherwise required by law or in our articles of
organization.
Under regulations adopted by the Office of Thrift Supervision,
if the holders of any series of the preferred stock are or
become entitled to vote for the election of directors, such
series may then be deemed a class of voting
securities and a holder of 10% or more of such series, may
then be subject to regulation as a savings and loan holding
company. In addition, at such time as such series is deemed a
class of voting securities, (a) any other holding company
may be required to obtain the approval of the Office of Thrift
Supervision to acquire or retain 5% or more of that series and
(b) any person other than a savings and loan holding
company may be required to obtain the approval of the Office of
Thrift Supervision to acquire or retain 10% or more of that
series.
Exchangeability
We may provide that the holders of shares of preferred stock of
any series may be required at any time or at maturity to
exchange those shares for our debt securities. The applicable
prospectus supplement will specify the terms of any such
exchange.
PLAN OF
DISTRIBUTION
We may sell our securities in any of three ways (or in any
combination):
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through underwriters or dealers;
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directly to a limited number of purchasers or to a single
purchaser; or
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through agents.
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Each time that we use this prospectus to sell our securities, we
will also provide a prospectus supplement that contains the
specific terms of the offering. The prospectus supplement will
set forth the terms of the offering of such stock, including:
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the name or names of any underwriters, dealers or agents and the
type and amounts of securities underwritten or purchased by each
of them; and
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the public offering price of the securities and the proceeds to
us and any discounts, commissions or concessions allowed or
reallowed or paid to dealers.
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Any public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time
to time.
If underwriters are used in the sale of any securities, the
securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. The securities may be either offered to the public
through underwriting syndicates represented by managing
underwriters, or directly by underwriters. Generally, the
underwriters obligations to purchase the securities will
be subject to certain conditions precedent. The underwriters
will be obligated to purchase all of the securities if they
purchase any of the securities.
We may sell the securities through agents from time to time. The
prospectus supplement will name any agent involved in the offer
or sale of our securities and any commissions we pay to them.
Generally, any agent will be acting on a best efforts basis for
the period of its appointment.
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We may authorize underwriters, dealers or agents to solicit
offers by certain purchasers to purchase our securities at the
public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. The contracts will
be subject only to those conditions set forth in the prospectus
supplement, and the prospectus supplement will set forth any
commissions or discounts we pay for solicitation of these
contracts.
Agents and underwriters may be entitled to indemnification by us
against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended, or to contribution with
respect to payments which the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may
be customers of, engage in transactions with, or perform
services for us in the ordinary course of business.
We may enter into derivative transactions with third parties, or
sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If the applicable
prospectus supplement indicates in connection with those
derivatives then the third parties may sell securities covered
by this prospectus and the applicable prospectus supplement,
including in short sale transactions. If so, the third party may
use securities pledged by us or borrowed from us or others to
settle those sales or to close out any related open borrowings
of stock, and may use securities received from us in settlement
of those derivatives to close out any related open borrowings of
securities. The third party in such sale transactions will be an
underwriter and will be identified in the applicable prospectus
supplement (or a post-effective amendment).
LEGAL
OPINION
The validity of the securities offered hereby will be passed
upon for us by Muldoon Murphy & Aguggia LLP,
Washington, D.C.
EXPERTS
The consolidated financial statements of Berkshire Hills
Bancorp, Inc. and its subsidiaries as of
December 31, 2005 and 2004, and for each of the years in
the three-year period ended December 31, 2005, and
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2005,
have been incorporated by reference into this document in
reliance upon the respective reports of Wolf &
Company, P.C., independent registered public accounting
firm, which are incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
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Shares
BERKSHIRE HILLS BANCORP,
INC.
Common Stock
PROSPECTUS
SUPPLEMENT
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Sandler
ONeill + Partners, L.P. |
Keefe, Bruyette & Woods |
2009