Berkshire Bank, Legacy Create $4B Financial Entity

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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.

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Over 400 Get Vaccine at Berkshire County Arc

PITTSFIELD, Mass. Over the course of three weeks, CVS staff visited almost all of the 43 BCArc residential programs, vaccinating BCArc staff and the individuals with disabilities who live in the homes.

With the first round complete, the second and final shot is scheduled for February.

"This is a great opportunity for our staff and I’m glad most of them took advantage of it," Ken Singer, President & CEO said. "They worked through the entire pandemic, 24-7. So while it is a privilege to be part of Phase I, they earned it and I’m so proud of the way they took care of the individuals we serve. A recent meeting with the families of the BCArc community gave our staff the highest of marks."

Employees who missed the first round can still receive the vaccination, and as new staff join BCArc, they will have access to the vaccine as well, given their status as essential workers.

A number of homes were quarantined and missed the first round of shots. They will be scheduled for the vaccine once they are cleared by the Board of Health.

"So many people deserve credit for this," Singer said. "While I’d like to one day say that BCArc is 100 percent vaccinated, for now every person in the BCArc community who has been vaccinated protects all of us that much more."






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