Berkshire Bank, Legacy Create $4B Financial Entity

PRNewswire/FirstCall10:06AM / Wednesday, December 22, 2010Print Story | Email Story

PITTSFIELD, Mass. — Berkshire Hills Bancorp Inc. and Legacy Bancorp Inc. announced Tuesday 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 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 percent 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 Bank' 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 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."

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."

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 per share of Legacy common stock based on the $20.75 average closing price of Berkshire's stock for the 10-day period ending Dec. 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 percent of the merger consideration will be in the form of Berkshire stock and 10 percent will be in the form of cash. The $13 per share value represents 110 percent of Legacy's tangible book value per share and a 1.0 percent premium to core deposits based on financial information as of Sept. 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.

Sandler O'Neill & Partners LP was the financial adviser to Berkshire, and Keefe, Bruyette & Woods Inc. was the financial adviser for Legacy. Luse Gorman Pomerenk & Schick PC was outside legal counsel to Berkshire, while Nutter McClennan & Fish LLP was outside legal counsel to Legacy.

Regarding Berkshire's current-year performance, 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 a5nnualized pace of growth around 16 percent 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, Jan. 24, 2011, followed by a conference call/webcast at 10 a.m. on Tuesday, Jan. 25, 2011."

The preceding is from PRNewswire and edited for iBerkshires style. The full release can be found here. The merger is expected to cost up to 50 jobs.

iBerkshires.com Text Ads

CRUST PIZZA Williamstown

We keep our menu simple and let the dough and other high-quality ingredients speak for themselves

www.crustpz.com

Care Closer to Home!

North Adams Regional Hospital is North Berkshire's choice for healthcare services - Your Hospital!

www.berkshirehealthsystems.org

RIBCO Supply

Check out our great lineup of Boss Plows, and spreaders. 2 Locations Clarksburg & Pittsfield!

ribcosupply.com

If you would like to contribute information on this article, contact us at info@iberkshires.com.

Your Comments

iBerkshires.com welcomes critical, respectful dialogue. Name-calling, personal attacks, libel, slander or foul language is not allowed. All comments are reviewed before posting and will be deleted or edited as necessary.

Great. Another local conglomerate doomed to be bought out by a larger non-local bank. It's all about the stock holders folks and the executives looking for that golden parachute. Only matter of time before Berkshire is bought out too. I left Berkshire to go to Legacy because of their failings. Now what?
from: Townee	on: 12-22-2010 11:34AM I Agree (5) - I Disagree (4)

1). Berkshire Bank is a local bank, so your complaint regarding a non-local bank is wrong. 2). You left Beksgire to go to Legacy because of concerns regarding Berkshire? Legacy Banks has lost money 7 quarters in a row! Your facts are worse than Dan Vakenti's. Editor: Both banks are local, and have been for more than 150 years. They're just the predecessors of a succession of merged smaller banks. That said, there are other banks and credit unions to chose from and another trying to get off the ground.
from: Confused	on: 12-22-2010 01:20PM I Agree (2) - I Disagree (0)

Townee, You may want to get you facts straight before you start posting ridiculous comments.The merger just makes the most sense, and is most beneficial to their employees and members of the county...that is unless you want the Citizens or the Bank of America's of the world to come in and buy them> Meanwhile obiliterating our local economy and skyrocketing unemployment in the county. You left Berkshire to join Legacy? Welcome back to Berkshire. Editor: Who it's from has been deleted - no name-calling allowed.
from:	on: 12-23-2010 10:46AM I Agree (1) - I Disagree (1)

For the record, my comment was directed to "townee", not the editor. I though townee was off base. Editor: No, if that was you, your "name" was directed toward townee. "You're a ..." is name-calling.
from: Confused	on: 12-23-2010 11:26AM I Agree (0) - I Disagree (0)

It's been my experience that, when banks merge, the customer usually is the one who suffers. Watch out for increased fees and take-backs, regarding account benefits.
from: Bob	on: 12-23-2010 01:32PM I Agree (0) - I Disagree (5)

Merging of local banks is detrimental to competition within community. Both of these banks are individual results of other mergers. Other than Greylock, a credit union, Pittsfield will have only two home-grown commercial banking institutions, Pittsfield Coop and the newly merged bank. It's a shame!
from: John	on: 12-27-2010 07:36PM I Agree (0) - I Disagree (0)

This merger as being beneficial to the employees? Only if you are one of the few Legacy workers left who are going to stay through this change and not get laid off. For most of us our careers are in question now and our faith in this bank that said we are all "exceptional" is gone.
from: Inside and worried	on: 01-04-2011 10:50PM I Agree (0) - I Disagree (0)

Letter: Is the Select Board Listening to Dalton Voters?

Letter to the Editor12:00PM / Thursday, November 21, 2024

To the Editor:

A reasonable expectation by the people of a community is that their Select Board rises above personal preference and represents the collective interests of the community. On Tuesday night [Nov. 12], what occurred is reason for concern that might not be true in Dalton.

This all began when a Select Board member submitted his resignation effective Oct. 1 to the Town Clerk. Wishing to fill the vacated Select Board seat, in good faith I followed the state law, prepared a petition, and collected the required 200-plus signatures of which the Town Clerk certified 223. The Town Manager, who already had a copy of the Select Board member's resignation, was notified of the certified petitions the following day. All required steps had been completed.

Or had they? At the Oct. 9 Select Board meeting when Board members discussed the submitted petition, there was no mention about how they were informed of the petition or that they had not seen the resignation letter. Then a month later at the Nov. 12 Select Board meeting we learn that providing the resignation letter and certified petitions to the Town Manager was insufficient. However, by informing the Town Manager back in October the Select Board had been informed. Thus, the contentions raised at the Nov. 12 meeting by John Boyle seem like a thinly veiled attempt to delay a decision until the end of January deadline to have a special election has passed.

If this is happening with the Special Election, can we realistically hope that the present Board will listen to the call by residents to halt the rapid increases in spending and our taxes that have been occurring the last few years and pass a level-funded budget for next year, or to not harness the taxpayers in town with the majority of the cost for a new police station? I am sure these issues are of concern to many in town. However, to make a change many people need to speak up.

Please reach out to a Select Board member and let them know you are concerned and want the Special Election issue addressed and finalized at their Nov. 25 meeting.

Robert E.W. Collins
Dalton, Mass.

View Full Story