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| 8-K - BERKSHIRE HILLS BANCORP INC | v206259_8k.htm |
| EX-2.1 - AGREEMENT AND PLAN OF MERGER - BERKSHIRE HILLS BANCORP INC | v206259_ex2-1.htm |
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Joint
News Release
Berkshire
Hills and Legacy Announce In-Market Merger
Combined
Company Targets $4 Billion in Assets, With More Than 60 Branches Serving Western
New England and Northeastern New York
Berkshire
Hills Reaffirms Fourth Quarter Earnings Guidance and Announces Fourth Quarter
Earnings Release and Conference Call Dates
Pittsfield,
MA – December 21, 2010. Berkshire Hills Bancorp, Inc. (NASDAQ:BHLB),
and Legacy Bancorp, Inc. (NASDAQ:LEGC) announced today that they have signed a
definitive merger agreement under which Berkshire will acquire Legacy and its
subsidiary, Legacy Banks, in a transaction valued at approximately $108
million.
The
merger of Legacy into Berkshire will create a combined institution with $4
billion in assets. This in-market merger will create efficiencies and
market share benefits for the combined banks, which both have branches in
Western Massachusetts and Northeastern New York. Including
Berkshire’s pending merger with Rome Bancorp, the combined bank will have more
than 60 offices serving Berkshire County, the Pioneer Valley, New York, and
Southern Vermont.
Legacy
has nearly $1 billion in assets and 19 branches, while Berkshire has nearly $3
billion in assets and will have 47 branches including the Rome
branches. Both institutions offer a wide range of personal and
commercial banking products and services, as well as wealth management,
investments, and insurance services. Both banks are headquartered in
Pittsfield, Massachusetts and have histories stretching back more than 150 years
serving the Berkshire County market. The combined bank will be
well capitalized, with strong asset quality and strong planned revenue and core
earnings growth. Berkshire will have a market capitalization
exceeding $400 million and a dividend yield exceeding 3% based on current stock
market prices.
Michael
P. Daly, Berkshire’s President and Chief Executive Officer, stated, “This
in-market combination will create a strong platform headquartered in Berkshire
County for further growth of our Northeast regional franchise. I look forward to
welcoming the Legacy team into the culture of America’s Most Exciting BankSM as we
together provide the best financial support and solutions to our
markets. The transaction will be immediately accretive to core
earnings per share, and the other metrics of this merger demonstrate that it is
fairly priced and will produce an attractive return to
investors. Shareholders will also benefit from our larger market
capitalization and stock trading liquidity, and our strong franchise positioning
in the middle of the Northeast region. We expect to complete our
pending merger with Rome Bancorp in the first quarter of 2011 and to complete
the Legacy merger in the following quarter, accelerating our planned return to a
$2.00 annualized core EPS run-rate. Our strong executive team is
positioned to complete these integrations flawlessly, and we look forward to
welcoming Legacy executive Patrick Sullivan onto this team, along with two
Legacy directors onto our Board, including J. Williar
Dunlaevy.”
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Mr.
Dunlaevy stated, “Legacy and Berkshire have been friendly competitors over the
years, and now we’re joining the Berkshire team to create a larger combined
platform to serve our traditional and target markets. This
transaction produces a very attractive immediate return to our
shareholders. Additionally, Berkshire’s stock has excellent prospects
for further attractive investment returns, particularly including the benefits
of this partnership, which will provide long term benefits to all of our
constituencies.” Mr. Sullivan added, “As we considered our strategic
alternatives, there were compelling reasons for us to seek this partnership with
Berkshire. Berkshire is a company with strong momentum and is well
positioned as a bank that knows our communities, understands the customers we
serve, and offers a unique brand promise for customer engagement. I
look forward to joining the Berkshire executive team, and to successfully
integrating our neighboring operations and accelerating our combined earnings
growth in New England and New York.”
The
merger is valued at $13.00 per share of Legacy common stock based on the $20.75
average closing price of Berkshire’s stock for the ten day period ending
December 15, 2010. Under the terms of the merger agreement, each
outstanding share of Legacy common stock will be exchanged for 0.56385 Berkshire
common shares plus $1.30 in cash. As a result, 90% of the merger
consideration will be in the form of Berkshire stock and 10% will be in the form
of cash. The $13.00 per share value represents 110% of Legacy’s
tangible book value per share and a 1.0% premium to core deposits based on
financial information as of September 30, 2010. The merger is
expected to be completed by June 30, 2011. It is expected to be $0.10
accretive to Berkshire’s core earnings per share in 2012, which will
be the first full year of operations, and there will also be some accretive
benefit in the 2011 transition year.
The
transaction is intended to qualify as a reorganization for federal income tax
purposes, and as a result, it is expected that the exchange of Legacy shares for
Berkshire shares will be on a tax-free basis. The definitive agreement has been
unanimously approved by the Boards of Directors of both Berkshire and
Legacy. Consummation of the agreement is subject to the approval of
Berkshire’s and Legacy’s shareholders, as well as state and federal regulatory
agencies. It is anticipated that there will be some divestiture of
deposits in Berkshire County; any divestiture gains will be shared in
accordance with the merger agreement. Both the Berkshire Bank
Foundation and The Legacy Banks Foundation will continue to provide charitable
contributions to the communities.
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Sandler
O'Neill & Partners, L.P. served as the financial advisor to Berkshire, and
Keefe, Bruyette & Woods, Inc. served as the financial advisor for
Legacy. Luse Gorman Pomerenk & Schick, P.C. served as outside
legal counsel to Berkshire, while Nutter McClennan & Fish LLP served as
outside legal counsel to Legacy.
Regarding
Berkshire’s current year performance, Berkshire CEO Mike Daly added, “We are
pleased that our fourth quarter core earnings are anticipated to meet or exceed
our previous guidance of $0.26 per share, which reflects an annualized pace of
growth around 16% compared to the prior quarter. This results from
continued strong organic growth of our business and continued favorable asset
quality metrics. We expect some one-time charges related to the
Legacy and Rome merger agreements which will impact our GAAP
earnings. We look forward to announcing our fourth quarter and full
year 2010 results after the close of business on Monday, January 24, 2011,
followed by a conference call/webcast at 10:00 A.M. on Tuesday, January 25,
2011.”
CONFERENCE
CALL
Berkshire
will conduct a conference call/webcast with investors and the financial
community at 9:00 a.m. eastern time on Wednesday, December 22, 2010 to
discuss the merger. An information presentation with additional
information about the merger will be made available at www.berkshirebank.com
(investor relations link). Information about the conference call
follows:
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Dial-in:
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877-317-6789
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Webcast:
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www.berkshirebank.com
(investor relations link)
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BACKGROUND
About
Berkshire Hills Bancorp
Berkshire
Hills Bancorp is the parent of Berkshire Bank - America's Most Exciting
Bank(SM). The Company has $2.8 billion in assets and 41 full service
branch offices in Massachusetts, New York, and Vermont. Berkshire
Bank provides 100% deposit insurance protection for all deposit accounts,
regardless of amount, based on a combination of FDIC insurance and the
Depositors Insurance Fund (DIF). For more information, visit
www.berkshirebank.com or call 800-773-5601.
About
Legacy Bancorp
Legacy
Bancorp is a publicly held, one-bank holding company whose wholly-owned
subsidiary, Legacy Banks, is a full-service, community-oriented financial
institution offering products and services to individuals, families and
businesses through nineteen branch offices located in western Massachusetts and
eastern New York State. Predecessors to Legacy Banks have been serving the
area’s financial needs since 1835. Legacy Banks’ business consists primarily of
making loans to its customers, including residential mortgages, commercial real
estate loans, commercial loans and consumer loans, and investing in a variety of
investment and mortgage-backed securities. Legacy Banks funds these lending and
investment activities with deposits from the general public, funds generated
from operations and select borrowings. Legacy Banks also provides insurance and
investment products and services, investment portfolio management, debit and
credit card products and online banking.
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About
Rome Bancorp
Rome
Bancorp, Inc. is a publicly held, one-bank holding company whose wholly-owned
subsidiary, The Rome Savings Bank, maintains its corporate offices in Rome, New
York. Rome Bancorp, Inc. is incorporated in the state of Delaware.
The Rome Savings Bank, regulated by the Office of Thrift Supervision, operates
five full-service community banking offices in Rome, Lee, and New Hartford, New
York. Rome’s assets totaled $332 million as of September 30,
2010. Rome's primary lines of business include residential real
estate lending, small business loan and deposit services, as well as a variety
of consumer loan and deposit services.
FORWARD
LOOKING STATEMENTS
Certain
statements contained in this news release that are not statements of historical
fact constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such
statements are not specifically identified as such. In addition, certain
statements may be contained in our future filings with the SEC, in press
releases, and in oral and written statements made by us or with our approval
that are not statements of historical fact and constitute forward-looking
statements within the meaning of the Act. Examples of forward-looking statements
include, but are not limited to: (i) projections of revenues, expenses,
income or loss, earnings or loss per share, the payment or nonpayment of
dividends, capital structure and other financial items; (ii) statements of
our plans, objectives and expectations or those of our management or Board of
Directors, including those relating to products or services;
(iii) statements of future economic performance; and (iv) statements of
assumptions underlying such statements. Words such as “believes,” “anticipates,”
“expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may”
and other similar expressions are intended to identify forward-looking
statements but are not the exclusive means of identifying such
statements.
Forward-looking
statements involve risks and uncertainties that may cause actual results to
differ materially from those in such statements. Factors that could cause actual
results to differ from those discussed in the forward-looking statements
include, but are not limited to: local, regional, national and international
economic conditions and the impact they may have on us and our customers and our
assessment of that impact, changes in the level of non-performing assets and
charge-offs; changes in estimates of future reserve requirements based upon the
periodic review thereof under relevant regulatory and accounting requirements;
the effects of and changes in trade and monetary and fiscal policies and laws,
including the interest rate policies of the Federal Reserve Board; inflation,
interest rate, securities market and monetary fluctuations; political
instability; acts of war or terrorism; the timely development and acceptance of
new products and services and perceived overall value of these products and
services by users; changes in consumer spending, borrowings and savings habits;
changes in the financial performance and/or condition of our borrowers;
technological changes; acquisitions and integration of acquired businesses; the
ability to increase market share and control expenses; changes in the
competitive environment among financial holding companies and other financial
service providers; the quality and composition of our loan or investment
portfolio; the effect of changes in laws and regulations (including laws and
regulations concerning taxes, banking, securities and insurance) with which we
and our subsidiaries must comply; the effect of changes in accounting policies
and practices, as may be adopted by the regulatory agencies, as well as the
Public Company Accounting Oversight Board, the Financial Accounting Standards
Board and other accounting standard setters; changes in our organization,
compensation and benefit plans; the costs and effects of legal and regulatory
developments, including the resolution of legal proceedings or regulatory or
other governmental inquiries and the results of regulatory examinations or
reviews; greater than expected costs or difficulties related to the opening of
new branch offices or the integration of new products and lines of business, or
both; and/or our success at managing the risk involved in the foregoing
items.
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ADDITIONAL
INFORMATION FOR STOCKHOLDERS
In
connection with the proposed merger, Berkshire will file with the Securities and
Exchange Commission (“SEC”) a Registration Statement on Form S-4 that will
include a Proxy Statement of Legacy and a Proxy Statement/Prospectus of
Berkshire, as well as other relevant documents concerning the proposed
transaction. Stockholders are urged to read the Registration
Statement and the Proxy Statement/prospectus regarding the merger when it
becomes available and any other relevant documents filed with the SEC, as well
as any amendments or supplements to those documents, because they will contain
important information. A free copy of the Proxy Statement/Prospectus,
as well as other filings containing information about Berkshire Hills and
Legacy, may be obtained at the SEC’s Internet site
(http://www.sec.gov). You will also be able to obtain these
documents, free of charge, from Berkshire Hills Bancorp at www.berkshirebank.com
under the tab “Investor Relations” or from Legacy Bancorp by accessing Legacy
Bancorp’s website at www.legacy-banks.com under the tab “Investor
Relations.”
Under the
terms of the Agreement, Legacy and its advisors are permitted to solicit and
consider acquisition proposals from third parties from the signing of the
agreement through January 31, 2011. It is not anticipated that any
developments will be disclosed with regard to this process unless Legacy’s Board
of Directors makes a decision with respect to a potential superior acquisition
proposal. There can be no assurance that the solicitation of
proposals will result in an alternative transaction.
Berkshire
and Legacy and certain of their directors and executive officers may be deemed
to be participants in the solicitation of proxies from the stockholders of
Legacy Bancorp in connection with the proposed merger. Information
about the directors and executive officers of Berkshire Hills Bancorp is set
forth in the proxy statement for Berkshire Hills Bancorp’s 2010 annual meeting
of stockholders, as filed with the SEC on a Schedule 14A on March 26,
2010. Information about the directors and executive officers of
Legacy Bancorp is set forth in the proxy statement for Legacy Bancorp’s 2010
annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March
25, 2010. Additional information regarding the interests of those
participants and other persons who may be deemed participants in the transaction
may be obtained by reading the Proxy Statement/Prospectus regarding the proposed
merger when it becomes available. Free copies of this document may be
obtained as described in the preceding paragraph.
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NON-GAAP
FINANCIAL MEASURES
This news
release references non-GAAP financial measures incorporating tangible equity and
related measures, as well as core deposits. These measures are
commonly used by investors in evaluating business combinations and financial
condition. Tangible equity/tangible assets excludes intangible assets
from the numerator and denominator. Tangible book value per share
excludes intangible assets. Core deposits are total deposits less
time deposits over $100 thousand. Core earnings and earnings per
share exclude non-recurring items, including one-time merger related expenses
recorded against income in accordance with financial accounting standards for
business acquisitions.
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Source:
Berkshire Hills Bancorp, Inc.
Contact:
Berkshire
Hills Bancorp, Inc.: Michael P. Daly, President and Chief Executive
Officer. Telephone: 413-236-3194
Legacy
Bancorp, Inc.: J. Williar Dunlaevy, President and Chief Executive
Officer. Telephone: 413-445-3500
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