Berkshire Hills, Hampden Bancorp Announce In-market Merger

PITTSFIELD — Berkshire Hills Bancorp Inc. and Hampden Bancorp Inc. announced that they have signed a definitive merger agreement under which Berkshire will acquire Hampden and its subsidiary, Hampden Bank, in an all-stock transaction valued at approximately $109 million. Berkshire’s total assets will increase to $7.1 billion, including the $706 million in acquired Hampden assets.

This in-market merger is expected to create efficiencies, strategic growth, and market-share benefits for the consolidated operations of the two banks in the Springfield area. Hampden operates 10 branches in the Greater Springfield area and reported $508 million in net loans and $490 million in deposits as of Sept. 30, 2014. Berkshire operates 11 branches with $627 million in deposits in this market. Berkshire will have a pro forma market cap of approximately $740 million and 100 branches serving customers and communities across New England and New York. Pro forma tangible equity to tangible assets is expected to improve to 7.4% when the merger is completed.

“We are pleased to welcome Hampden customers and employees to America’s most exciting bank,” said Michael Daly, president and CEO of Berkshire. “This in-market partnership will create a strong platform for serving our combined customers, while producing attractive returns for both our existing shareholders and the new shareholders from Hampden joining us in this transaction. We will move into the top-five position in deposit market share and plan to use this opportunity to further capitalize on our strong product set and culture of customer engagement. This merger complements our expansion initiatives in Central Massachusetts and Hartford, a combined market area that is the second-largest in New England.”

Added Glenn Welch, president and CEO of Hampden, “we are delighted to be joining the Berkshire franchise. Our two banks share rich histories, consistent core values, and a strong commitment to customers and communities. I’m proud of our 162 years of serving customers in our markets and believe the combination created by our two companies will benefit our clients, communities, and shareholders.”

Under the terms of the merger agreement, each outstanding share of Hampden common stock will be exchanged for 0.81 shares of Berkshire Hills common stock. The merger is valued at $20.53 per share of Hampden common stock based on the $25.35 average closing price of Berkshire’s stock for the five-day period ending Nov. 3, 2014. The $20.53 per-share value represents 133% of Hampden’s $15.49 tangible book value per share and a 6.0% premium to core deposits based on financial information as of Sept. 30, 2014.

“This is a solid business combination with efficiency benefits,” Daly said. “Hampden is a well-run company with an attractive core deposit base and a significant presence in the community. After integration, the transaction is expected to be accretive to Berkshire’s earnings per share, return on equity, and capital. We have a strong track record of execution, and our collective teams are positioned to complete this integration flawlessly.”