Berkshire Hills Reports First Quarter 2024 Results

News provided by

Berkshire Hills Bancorp, Inc.

Apr 18, 2024, 07:30 ET

Announces $362 Million Securities Sale

  • First quarter loss of $20 million, ($0.47) per share
  • Operating income of $21 million, $0.49 per share
  • Securities sale of $362 million resulted in a $49.9 million net non-operating loss ($0.89 per share after-tax)
  • Net loan charge-offs were 18 basis points annualized
  • TCE ratio of 8.2% and CET1 ratio of 11.6%; tangible book value per share of $22.84

BOSTON, April 18, 2024 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the first quarter of 2024. These results along with comparison periods are summarized below:

($ in millions, except per share data)


Three Months Ended




Mar. 31, 2024


Dec. 31, 2023


Mar. 31, 2023










Net (loss) income

$

($20.2)

$

(1.4)

$

27.6


        Per share


(0.47)


(0.03)


0.63


Operating earnings1


20.9


20.2


27.6


         Per share


0.49


0.47


0.63










Net interest income, non FTE

$

88.1

$

88.4

$

97.5


Net interest income, FTE


90.1


90.4


99.4


         Net interest margin, FTE


3.15 %


3.11 %


3.58 %


Non-interest income


(32.6)


(8.4)


16.6


Operating non-interest income1


17.3


16.7


16.6










Non-interest expense

$

76.0

$

79.0

$

72.0


Operating non-interest expense1


72.4


75.3


72.0


Efficiency ratio1


66.3 %


67.8 %


59.5 %










Average balances2








Loans

$

9,059

$

8,990

$

8,515


Deposits


9,978


9,936


9,676










Period-end balances2








Loans


9,144


9,040


8,682


Deposits


10,368


10,633


10,068




1. See non-GAAP financial measures and reconciliation to GAAP measures beginning on page 12. 1Q24 operating non-interest
income excludes $49.9 million securities loss ($38.3 million after-tax, or $0.89 per share). Operating non-interest expense excludes
 $3.6 million branch sale costs ($2.8 million after-tax, or $0.07 per share).

2. Loans and deposits include balances held for sale in branch transaction of $18 million and $149 million respectively (average),
and $58 million and $485 million (end of period).


Berkshire CEO Nitin Mhatre stated, "We had a solid start to the year, increasing operating earnings, growing loans, and maintaining solid asset quality and capital strength. In March, we announced the planned sale of ten branches which will enhance efficiency and profitability, while strengthening our focus in core New York markets. In anticipation of completing the branch sale in the third quarter, we sold lower yielding investment securities, resulting in a non-operating charge.  During the quarter, we announced key hires bolstering Berkshire's commercial and private banking teams. Newsweek magazine also ranked Berkshire as one of the top 10 most trusted banks in America, recognizing our commitment to integrity, respect, and transparency as a trusted client advisor and financial partner."

CFO David Rosato added, "First quarter operating earnings were $20.9 million, increasing $744 thousand linked quarter. We sold $362 million in securities, resulting in a $49.9 million non-operating charge ($38.3 million after-tax, or $0.89 per share). Net interest margin of 3.15 percent increased 4 basis points including the benefit of the 4Q23 securities sales.  Operating non-interest income increased $636 thousand linked quarter. Reflecting our focus on expense management, non-interest expense decreased $3.0 million linked quarter on a GAAP basis and $2.9 million on an operating basis. Non-operating expenses of $3.6 million ($2.8 million after-tax, or $0.07 per share) were related to the branch sale. Total shareholders' equity was not impacted by the securities sale and the common equity Tier 1 ratio remained a healthy 11.6 percent at period-end."


As of and For the Three Months Ended


Mar. 31, 2024


Dec. 31, 2023


Mar. 31, 2023

Asset Quality






Net loan charge-offs to average loans

0.18 %


0.20 %


0.32 %

Non-performing loans to total loans

0.24 %


0.24 %


0.31 %







Returns






Return on average assets

(0.69) %


(0.05) %


0.96 %

Operating return on average assets1

0.71 %


0.68 %


0.95 %

Return on tangible common equity1

(7.73) %


(0.24) %


11.96 %

Operating return on tangible common equity1

8.73 %


8.90 %


11.96 %













Capital Ratios2






Tangible common equity/tangible assets1

8.2 %


8.0 %


7.9 %

Tier 1 leverage

9.5 %


9.6 %


9.9 %

Common equity Tier 1

11.6 %


12.0 %


12.1 %

Tier 1 risk-based

11.8 %


12.3 %


12.4 %

Total risk-based

14.0 %


14.4 %


14.4 %




1. See non-GAAP measures and reconciliation to GAAP beginning on page 12. All performance ratios are annualized and are based
on average balance sheet amounts, where applicable.

2. Presented as estimated for March 31, 2024 and actual for the remaining periods.









Berkshire Hills Bancorp, Inc. (NYSE: BHLB) is the parent company of Berkshire Bank, a relationship-driven, community-focused bank with $12.1 billion in assets and 96 financial centers in New England and New York. Berkshire is headquartered in Boston and offers commercial, retail, wealth, and private banking solutions.

1Q 2024 Financial Highlights

Income Statement

  • GAAP loss of $20.2 million, or $(0.47) per share.
    • Operating earnings totaled $20.9 million, or $0.49 per share.
  • Net interest income totaled $88.1 million in 1Q24 compared to $88.4 million in 4Q23.
    • One less calendar day in 1Q24 (1% decrease in net interest income).
  • Net interest margin increased 4 basis points from 4Q23 to 3.15% reflecting the benefit of securities sales and reduction of higher cost borrowings.
    • The earning asset yield increased 18 basis points.
      • The loan yield increased 7 basis points.
    • The cost of funds increased 13 basis points.
      • The cost of deposits increased 18 basis points.
  • Provision for credit losses on loans totaled $6.0 million.
    • Allowance for credit losses on loans increased $2.0 million.
    • Net loan charge-offs totaled $4.0 million.
    • Net annualized loan charge-off ratio of 0.18%, down sequentially for last five quarters.
  • Operating non-interest income totaled $17.3 million in 1Q24 excluding the $49.9 million net loss on sale of AFS securities, compared to $16.7 million in 4Q23 excluding the $25.1 million loss on sale of AFS securities.
    • The tax credit amortization charge included in other non-interest income decreased $1.9 million linked quarter due to a change in accounting method (with offsetting increase in income tax expense).
    • Deposit related fee revenue decreased $176 thousand.
    • Loan related fees increased $605 thousand primarily due to higher swap revenue.
    • Gain on SBA loan sales decreased $683 thousand.
    • Wealth management revenue increased $490 thousand. At March 31, 2024, wealth assets under management were $1.5 billion.
    • Other non-interest income increased $1.3 million.
  • Non-interest expense in 1Q24 totaled $76.0 million on a GAAP basis and $72.4 million on an operating basis. These measures were $79.0 million and $75.3 million in 4Q23.
    • Non-operating expense totaled $3.6 million in 1Q24, and was related to the pending branch sale.
    • Compensation and benefits expense increased $640 thousand.
    • Occupancy and equipment expense increased $145 thousand.
    • Technology and communications expense decreased $1.4 million.
    • Professional services expense decreased $741 thousand.
    • Other non-interest expense decreased $1.5 million.
    • The efficiency ratio was 66.3% for 1Q24 compared to 67.8% for 4Q23.
  • Income tax expense was a benefit of $6.3 million in 1Q24 and the effective tax rate was 23.8%.

Loans

  • Commercial real estate loans totaled $4.6 billion at March 31, 2024, a $67 million increase from December 31, 2023.
    • Average commercial real estate loans totaled $4.6 billion in 1Q24, an $84 million increase from 4Q23.
  • Commercial and industrial loans totaled $1.4 billion at March 31, 2024, a $32 million increase from December 31, 2023.
    • Average commercial and industrial loans totaled $1.4 billion in 1Q24, a $12 million decrease from 4Q23.
  • Residential mortgage loans totaled $2.7 billion at March 31, 2024, a $4 million increase from December 31, 2023.
    • Average residential mortgage loans totaled $2.7 billion in 1Q24, a $12 million increase from 4Q23.
  • Consumer loans totaled $430 million at March 31, 2024, a $57 million decrease from December 31, 2023.
    • Average consumer loans totaled $465 million in 1Q24, a $33 million decrease from 4Q23.
  • Loans held for sale in conjunction with the planned branch sale totaled $58 million at March 31, 2024, and consisted primarily of consumer and residential mortgage loans.
    • Average loans held for sale in conjunction with the planned branch sale totaled $18 million based on the March 4, 2024 branch sale agreement date.
  • Non-performing loans to total loans was 0.24% at March 31, 2024, unchanged from December 31, 2023.
  • The allowance for credit losses to total loans was 1.18% at March 31, 2024, compared to 1.17% at December 31, 2023.

Deposits

  • Non-interest bearing deposits totaled $2.3 billion at March 31, 2024, a $207 million decrease from December 31, 2023.  
    • Average non-interest bearing deposits totaled $2.3 billion in 1Q24, a $140 million decrease from 4Q23.
  • Time deposits totaled $2.4 billion at March 31, 2024, a $281 million decrease from December 31, 2024.
    • Average time deposits totaled $2.6 billion in 1Q24, a $3 million increase from 4Q23.
  • Deposits held for sale in conjunction with the planned branch sale totaled $485 million at March 31, 2024.
    • Average deposits held for sale totaled $149 million in 1Q24 based on the March 4, 2024 sale agreement date.

1Q 2024 Corporate Responsibility and Sustainability Highlights

  • Berkshire was named one of the Most Trustworthy Companies in America 2024 by Newsweek magazine. 
  • The Company released its 2023 Sustainability Report highlighting all that Berkshire is doing to be a responsible, equitable and sustainable bank while elevating its client experience and community impact.  
  • Berkshire maintained its top quartile environmental, social and governance performance in the banking sector.

Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. eastern time on Thursday, April 18, 2024 to discuss results for the quarter and provide guidance about expected future results. Instructions for listening to the call may be found at the Company's website at ir.berkshirebank.com. Additional materials relating to the call may also be accessed at this website. The call will be archived at the website and will be available for an extended period of time.

Forward Looking Statements:  This document contains "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. You can identify these statements from the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "remain," "target" and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.

INVESTOR CONTACT
Kevin Conn
Investor Relations
617.641.9206
[email protected] 

MEDIA CONTACT
Gary Levante
Corporate Communications
413.447.1737
[email protected] 



BERKSHIRE HILLS BANCORP, INC.



SELECTED FINANCIAL HIGHLIGHTS (1)





At or for the Quarters Ended





March 31,


Dec. 31,


Sept. 30,


June 30,


March 31,






2024


2023


2023


2023


2023

















NOMINAL AND PER SHARE DATA













Net (loss)/earnings per common share, diluted

$       (0.47)


$        (0.03)


$         0.45


$         0.55


$         0.63




Operating earnings per common share, diluted (2)(3)

0.49


0.47


0.50


0.55


0.63




Net (loss)/income, (thousands)

(20,188)


(1,445)


19,545


23,861


27,637




Operating net income, (thousands) (2)(3)

20,934


20,190


21,516


23,878


27,608




Net interest income, (thousands) non FTE

88,140


88,421


90,334


92,759


97,533




Net interest income, FTE (5)

90,146


90,442


92,314


94,721


99,441




Total common shares outstanding, end of period (thousands)               

43,415


43,501


43,822


44,033


44,411




Average diluted shares, (thousands)

43,028


43,101


43,347


43,532


44,036




Total book value per common share, end of period

23.26


23.27


21.70


22.11


22.42




Tangible book value per common share, end of period (2)(3)

22.84


22.82


21.23


21.60


21.89




Dividends per common share

0.18


0.18


0.18


0.18


0.18




Dividend payout ratio

 N/M 

%

 N/M 

%

40.56

%

33.47

%

28.98

%
















PERFORMANCE RATIOS (4)













Return on equity

(7.93)

%

(0.60)

%

7.91

%

9.51

%

11.31

%



Operating return on equity (2)(3)

8.23


8.36


8.71


9.51


11.30




Return on tangible common equity (2)(3)

(7.73)


(0.24)


8.45


10.09


11.96




Operating return on tangible common equity (2)(3)

8.73


8.90


9.27


10.09


11.96




Return on assets

(0.69)


(0.05)


0.66


0.79


0.96




Operating return on assets (2)(3)

0.71


0.68


0.73


0.79


0.95




Net interest margin, FTE (5)

3.15


3.11


3.18


3.24


3.58




Efficiency ratio (3)

66.26


67.77


65.05


63.57


59.51

















FINANCIAL DATA (in millions, end of period)













Total assets


$    12,147


$     12,431


$     12,140


$     12,090


$     12,320




Total earning assets

11,430


11,705


11,400


11,370


11,615




Total loans


9,086


9,040


8,984


8,882


8,682




Total funding liabilities

10,826


11,140


10,906


10,864


11,093




Total deposits


9,883


10,633


9,981


10,068


10,068




Loans/deposits (%)

92

%

85

%

90

%

88

%

86

%



Total accumulated other comprehensive (loss) net of tax, end of period

$        (114)


$         (143)


$         (218)


$         (186)


$         (159)




Total shareholders' equity

1,010


1,012


951


973


995

















ASSET QUALITY













Allowance for credit losses, (millions)

$          107


$          105


$          103


$          100


$            98




Net charge-offs, (millions)

(4)


(4)


(5)


(6)


(7)




Net charge-offs (QTD annualized)/average loans

0.18

%

0.20

%

0.24

%

0.26

%

0.32

%



Provision (benefit)/expense, (millions)

$              6


$              7


$              8


$              8


$              9




Non-performing assets, (millions)

24


24


29


31


29




Non-performing loans/total loans

0.24

%

0.24

%

0.30

%

0.32

%

0.31

%



Allowance for credit losses/non-performing loans

500


492


386


353


363




Allowance for credit losses/total loans

1.18


1.17


1.14


1.13


1.13

















CAPITAL RATIOS













Risk weighted assets, (millions)(6)

$       9,628


$       9,552


$       9,594


$       9,523


$       9,454




Common equity Tier 1 capital to risk weighted assets (6)

11.6

%

12.0

%

12.1

%

12.1

%

12.1

%



Tier 1 capital leverage ratio (6)

9.5


9.6


9.8


9.6


9.9




Tangible common shareholders' equity/tangible assets (3)

8.2


8.0


7.7


7.9


7.9































(1)

All financial tables presented are unaudited. 












(2)

Reconciliations of non-GAAP financial measures, including all references to operating and tangible amounts, start on page 12.









(3)

Non-GAAP financial measure. Operating measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges







primarily related to acquisitions and restructuring activities. See page 13 for reconciliations of non-GAAP financial measures.









(4)

All performance ratios are annualized and are based on average balance sheet amounts, where applicable.











(5)

Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.












(6)

Presented as projected for March 31, 2024 and actual for the remaining periods.











BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


March 31,

December 31,

March 31,

(in thousands)

2024

2023

2023

Assets




Cash and due from banks

$               111,676

$             148,148

$             121,589

Short-term investments

1,082,019

1,055,096

884,973

Total cash and cash equivalents

1,193,695

1,203,244

1,006,562





Trading securities, at fair value

5,909

6,142

6,584

Equity securities, at fair value

12,823

13,029

13,072

Securities available for sale, at fair value

625,857

1,022,285

1,407,271

Securities held to maturity, at amortized cost

531,820

543,351

574,606

Federal Home Loan Bank stock 

20,522

22,689

44,245

Total securities

1,196,931

1,607,496

2,045,778

Less: Allowance for credit losses on investment securities

(61)

(68)

(71)

Net securities

1,196,870

1,607,428

2,045,707





Loans held for sale

6,345

2,237

1,906





Commercial real estate loans

4,593,692

4,527,012

4,231,510

Commercial and industrial loans

1,384,591

1,352,834

1,553,340

Residential mortgages

2,677,046

2,672,677

2,369,614

Consumer loans

430,424

487,163

527,503

Total loans

9,085,753

9,039,686

8,681,967

Less: Allowance for credit losses on loans 

(107,331)

(105,357)

(97,991)

Net loans

8,978,422

8,934,329

8,583,976





Premises and equipment, net

57,832

68,915

78,710

Other intangible assets

18,460

19,664

23,279

Other assets

611,967

584,066

571,616

Assets held for sale 

83,020

10,938

8,220

Total assets

$         12,146,611

$        12,430,821

$        12,319,976





Liabilities and shareholders' equity




Non-interest bearing deposits

$           2,261,794

$          2,469,164

$          2,650,937

NOW and other deposits

793,492

858,644

959,417

Money market deposits

3,411,672

3,565,516

3,274,630

Savings deposits

1,010,630

1,053,810

1,069,915

Time deposits

2,405,384

2,686,250

2,112,646

Total deposits

9,882,972

10,633,384

10,067,545





Federal Home Loan Bank advances

337,169

385,223

904,395

Subordinated borrowings

121,425

121,363

121,176

Total borrowings

458,594

506,586

1,025,571





Other liabilities 

297,663

278,630

231,380

Liabilities held for sale 

497,459

-

-

Total liabilities

11,136,688

11,418,600

11,324,496





Common shareholders' equity

1,009,923

1,012,221

995,480

Total shareholders' equity

1,009,923

1,012,221

995,480

Total liabilities and shareholders' equity

$         12,146,611

$        12,430,821

$        12,319,976

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


Three Months Ended



March 31,


(in thousands, except per share data)

2024


2023


Interest income    

$       152,006


$         132,316


Interest expense    

63,866


34,783


Net interest income, non FTE

88,140


97,533


Non-interest income





Deposit related fees

8,305


8,311


Loan related fees

2,663


2,469


Gain on SBA loans

1,699


2,494


Wealth management fees    

2,884


2,739


Fair value adjustments on securities

(115)


234


Other

1,874


359


Total non-interest income excluding sales of AFS securities

17,310


16,606


(Loss) on sale of AFS securities 

(49,909)


-


Total non-interest income      

(32,599)


16,606


Total net revenue

55,541


114,139







Provision expense for credit losses   

6,000


8,999


Non-interest expense 





Compensation and benefits

40,735


39,071


Occupancy and equipment     

8,698


9,379


Technology

9,904


9,471


Professional services

2,676


3,277


Regulatory expenses

1,845


1,426


Amortization of intangible assets     

1,205


1,205


Marketing

1,116


1,208


Merger, restructuring and other non-operating expenses

3,617


(36)


Other expenses

6,224


6,954


Total non-interest expense     

76,020


71,955


Total non-interest expense excluding non-operating expenses          

72,403


71,991







(Loss)/income before income taxes       

$        (26,479)


$           33,185


Income tax (benefit)/expense

(6,291)


5,548


Net (loss)/income

$        (20,188)


$           27,637







Basic (loss)/earnings per common share

$            (0.47)


$               0.63


Diluted (loss)/earnings per common share

$            (0.47)


$               0.63







Weighted average shares outstanding:      





Basic

42,777


43,693


Diluted

43,028


44,036







BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) 



March 31,


Dec. 31,


Sept. 30,


June 30,


March 31,


(in thousands, except per share data)


2024


2023


2023


2023


2023


Interest income    


$    152,006


$      150,537


$      148,021


$      145,425


$      132,316


Interest expense    


63,866


62,116


57,687


52,666


34,783


Net interest income, non FTE


88,140


88,421


90,334


92,759


97,533


Non-interest income 












Deposit related fees


8,305


8,481


8,792


8,571


8,311


Loan related fees


2,663


2,058


2,879


3,189


2,469


Gain on SBA loans


1,699


2,382


2,548


2,910


2,494


Wealth management fees    


2,884


2,394


2,481


2,583


2,739


Fair value adjustments on securities


(115)


768


(467)


(22)


234


Other


1,874


591


1,232


(137)


359


Total non-interest income excluding sales of AFS securities


17,310


16,674


17,465


17,094


16,606


Loss on sale of AFS securities 


(49,909)


(25,057)


-


-


-


Total non-interest income      


(32,599)


(8,383)


17,465


17,094


16,606


Total net revenue 


55,541


80,038


107,799


109,853


114,139














Provision expense for credit losses   


6,000


7,000


8,000


8,000


8,999


Non-interest expense












Compensation and benefits


40,735


40,095


40,155


39,960


39,071


Occupancy and equipment     


8,698


8,553


8,816


8,970


9,379


Technology


9,904


11,326


10,616


10,465


9,471


Professional services


2,676


3,417


2,423


2,526


3,277


Regulatory expenses


1,845


1,854


1,905


1,834


1,426


Amortization of intangible assets     


1,205


1,205


1,205


1,205


1,205


Marketing


1,116


1,107


1,552


1,510


1,208


Merger, restructuring and other non-operating expenses


3,617


3,669


2,607


21


(36)


Other expenses


6,224


7,766


7,234


7,557


6,954


Total non-interest expense     


76,020


78,992


76,513


74,048


71,955


Total non-interest expense excluding non-operating expenses


72,403


75,323


73,906


74,027


71,991


























(Loss)/income before income taxes       


$     (26,479)


$         (5,954)


$        23,286


$        27,805


$        33,185


Income tax (benefit)/expense


(6,291)


(4,509)


3,741


3,944


5,548


Net (loss)/income


$     (20,188)


$         (1,445)


$        19,545


$        23,861


$        27,637














Diluted (loss)/earnings per common share


$         (0.47)


$           (0.03)


$            0.45


$            0.55


$            0.63














Weighted average shares outstanding:












Basic


42,777


42,852


43,164


43,443


43,693


Diluted


43,028


43,101


43,347


43,532


44,036














BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS 


Quarters Ended


March 31, 2024


December 31, 2023


March 31, 2023




(in millions)

Average
Balance

Interest (1)

Average
Yield/Rate



Average
Balance

Interest (1)

Average
Yield/Rate



Average
Balance

Interest (1)

Average
Yield/Rate


Assets















Commercial real estate

$         4,553

$         75

6.53

%


$           4,469

$         74

6.45

%

$          4,166

$         61

5.88

%

Commercial and industrial loans

1,355

26

7.64



1,367

26

7.60



1,527

26

6.92


Residential mortgages

2,668

29

4.15



2,656

27

4.06



2,283

21

3.70


Consumer loans

465

8

7.24



498

9

7.31



539

10

7.24


Total loans 

9,041

138

6.04



8,990

136

5.97



8,515

118

5.57


Securities (2)

1,726

10

2.38



2,080

12

2.40



2,261

13

2.23


Short-term investments and loans held for sale

489

6

5.07



350

4

4.22



313

3

4.24


New York branch loans held for sale (3)

18

0

5.72



-

-

-



-

-

-


Total earning assets

11,274

154

5.44



11,420

152

5.26



11,089

134

4.85


Goodwill and other intangible assets

19





20





24




Other assets

462





422





456




Total assets

$        11,755





$         11,862





$         11,569



















Liabilities and shareholders' equity















Non-interest-bearing demand deposits

$          2,348

$            -

-

%


$           2,488

$            -

-

%

$          2,706

$            -

-

%

NOW and other

799

3

1.37



833

3

1.38



1,456

6

1.64


Money market

3,083

25

3.25



2,995

23

3.08



2,659

10

1.59


Savings

1,038

3

0.97



1,062

2

0.90



1,047

-

0.10


Time

2,561

26

4.07



2,558

25

3.77



1,808

10

2.13


Total deposits

9,829

57

2.29



9,936

53

2.11



9,676

26

1.09


Borrowings (4)

504

7

5.52



668

9

5.45



688

9

5.06


New York branch non-interest-bearing deposits
held for sale (3)

30

-

-



-

-

-



-

-

-


New York branch interest-bearing deposits 
held for sale (3)

119

1

2.75



-

-

-



-

-

-


Total funding liabilities

10,482

65

2.45



10,604

62

2.32



10,364

35

1.36

















Other liabilities

255





292





227




Total liabilities

10,737





10,896





10,591



















Common shareholders' equity (5)

1,018





966





978




Total shareholders' equity

1,018





966





978




Total liabilities and shareholders' equity

$         11,755





$         11,862





$         11,569




Net interest margin, FTE



3.15





3.11





3.58

















Supplementary data















Net Interest Income, non FTE

88.140





88.421





97.533




FTE income adjustment

2.006





2.021





1.908




Net Interest Income, FTE

90.146





90.442





99.441



















(1) Interest income and expense presented on a fully taxable equivalent basis. 

(2) Average balances for securities available-for-sale are based on amortized cost.

(3) New York branch loans and deposits moved to held for sale on March 4, 2024. 

(4) Average balances for borrowings includes financing lease obligations which is presented under other liabilities on the consolidated balance sheet. 

(5) Unrealized gains and losses, net of tax, are included in average equity. Prior period balances and financial metrics have been updated to reflect current presentation.

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS 


At or for the Quarters Ended


March 31,


Dec. 31,


Sept. 30,


June 30,


March 31,


(in thousands)

2024


2023


2023


2023


2023


NON-PERFORMING ASSETS











Commercial real estate 

$             4,762


$               4,453


$              5,288


$              1,509


$              2,546


Commercial and industrial loans

9,174


8,712


11,028


15,597


12,155


Residential mortgages

5,992


6,404


8,060


8,722


9,442


Consumer loans

1,526


1,838


2,260


2,560


2,848


Total non-performing loans

21,454


21,407


26,636


28,388


26,991


Repossessed assets

2,689


2,601


2,548


2,549


2,462


Total non-performing assets

$          24,143


$             24,008


$            29,184


$            30,937


$            29,453













Total non-performing loans/total
loans

0.24 %


0.24 %


0.30 %


0.32 %


0.31 %


Total non-performing assets/total
assets

0.20 %


0.19 %


0.24 %


0.26 %


0.24 %













PROVISION AND ALLOWANCE
FOR CREDIT LOSSES ON
LOANS










Balance at beginning of period

$        105,357


$           102,792


$          100,219


$            97,991


$            96,270


Adoption of ASU No. 2022-02

-


-


-


-


(401)


Balance after adoption of ASU
No. 2022-02

105,357


102,792


100,219


97,991


95,869


Charged-off loans

(5,636)


(6,891)


(6,744)


(7,686)


(7,936)


Recoveries on charged-off loans

1,610


2,456


1,317


1,914


1,059


Net loans charged-off

(4,026)


(4,435)


(5,427)


(5,772)


(6,877)


Provision (benefit)/expense for
loan credit losses

6,000


7,000


8,000


8,000


8,999


Balance at end of period

$        107,331


$           105,357


$          102,792


$          100,219


$            97,991













Allowance for credit losses/total
loans

1.18 %


1.17 %


1.14 %


1.13 %


1.13 %


Allowance for credit losses/non-
performing loans

500 %


492 %


386 %


353 %


363 %













NET LOAN CHARGE-OFFS











Commercial real estate

$                292


$                  316


$                   97


$                 664


$                 122


Commercial and industrial loans

(1,772)


(2,309)


(3,345)


(4,146)


(5,695)


Residential mortgages

98


55


23


(143)


305


Home equity 

193


83


208


126


16


Other consumer loans

(2,837)


(2,580)


(2,410)


(2,273)


(1,625)


Total, net

$           (4,026)


$             (4,435)


$             (5,427)


$             (5,772)


$             (6,877)













Net charge-offs (QTD
annualized)/average loans 

0.18 %


0.20 %


0.24 %


0.26 %


0.32 %


Net charge-offs (YTD
annualized)/average loans 

0.18 %


0.26 %


0.28 %


0.29 %


0.32 %
























DELINQUENT AND NON-
PERFORMING LOANS

Balance

Percent
 of Total
Loans

Balance

Percent
of Total
Loans

Balance

Percent
of Total
Loans

Balance

Percent
of Total
Loans

Balance

Percent
of Total
Loans

30-89 Days delinquent

$          27,682

0.30 %

$             22,140

0.24 %

$            18,700

0.21 %

$            15,147

0.17 %

$            14,210

0.16 %

90+ Days delinquent and still
accruing

5,882

0.06 %

5,537

0.06 %

5,744

0.06 %

7,812

0.09 %

6,937

0.08 %

Total accruing delinquent loans

33,564

0.36 %

27,677

0.30 %

24,444

0.27 %

22,959

0.26 %

21,147

0.24 %

Non-performing loans

21,454

0.24 %

21,407

0.24 %

26,636

0.30 %

28,399

0.32 %

26,991

0.31 %

Total delinquent and non-
performing loans

$          55,018

0.60 %

$             49,084

0.54 %

$            51,080

0.57 %

$            51,358

0.58 %

$            48,138

0.55 %

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP operating earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP operating earnings information set forth is not necessarily comparable to non- GAAP information which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information.

The Company utilizes the non-GAAP measure of operating earnings in evaluating operating trends, including components for operating revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations. These items primarily include restructuring costs. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch consolidations.

The Company also calculates operating earnings per share based on its measure of operating earnings and diluted common shares. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to merger and acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Adjustments in 2024 were primarily related to branch sales and loss on sale of AFS securities. Adjustments in 2023 were primarily related to branch consolidations, severance charges related to a workforce reduction, and loss on sale of AFS securities.

Management believes that the computation of non-GAAP operating earnings and operating earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA



At or for the Quarters Ended




March 31,


Dec. 31,


Sept. 30,


June 30,


March 31,


(in thousands)



2024


2023


2023


2023


2023


Total non-interest income



$   (32,599)


$        (8,383)


$       17,465


$       17,094


$       16,606


Adj: Loss on sale of AFS securities



49,909


25,057


-


-


-


Total operating non-interest income (1)



$     17,310


$       16,674


$       17,465


$       17,094


$       16,606















Total revenue

(A)


$     55,541


$       80,038


$     107,799


$     109,853


$     114,139


Adj: Loss on sale of AFS securities



49,909


25,057


-


-


-


Total operating revenue (1)

(B)


$   105,450


$     105,095


$     107,799


$     109,853


$     114,139















Total non-interest expense

(C)


$     76,020


$       78,992


$       76,513


$       74,048


$       71,955


Adj: Merger, restructuring and other non-operating expenses



(3,617)


(3,669)


(2,607)


(21)


36


Operating non-interest expense (1)                                    

(D)


$     72,403


$       75,323


$       73,906


$       74,027


$       71,991















Pre-tax, pre-provision net revenue (PPNR)

(A-C)


$   (20,479)


$         1,046


$       31,286


$       35,805


$       42,184


Operating pre-tax, pre-provision net revenue (PPNR) (1)

(B-D)


33,047


29,772


33,893


35,826


42,148















Net (loss)/income



$   (20,188)


$        (1,445)


$       19,545


$       23,861


$       27,637


Adj: Loss on sale of AFS securities



49,909


25,057


-


-


-


Adj: Restructuring expense and other non-operating expenses



3,617


3,669


2,607


21


(36)


Adj: Income taxes (expense)/benefit



(12,404)


(7,091)


(636)


(4)


7


Total operating income (1)

(E)


$     20,934


$       20,190


$       21,516


$       23,878


$       27,608















(in millions, except per share data)













Total average assets                                                

(F)


$     11,755


$       11,862


$       11,860


$       12,057


$       11,569


Total average shareholders' equity

(G)


1,018


966


988


1,004


978


Total average tangible shareholders' equity (1)            

(I)


999


946


967


981


954


Total accumulated other comprehensive (loss) net of tax, end of period



(114)


(143)


(218)


(186)


(159)


Total tangible shareholders' equity, end of period (1)

(K)


991


993


930


951


972


Total tangible assets, end of period (1)

(L)


12,128


12,411


12,119


12,068


12,297















Total common shares outstanding, end of period (thousands)               

(M)


43,415


43,501


43,822


44,033


44,411


Average diluted shares outstanding (thousands)

(N)


43,028


43,101


43,347


43,532


44,036















Earnings per common share, diluted (1)



$        (0.47)


$          (0.03)


$           0.45


$           0.55


$           0.63


Operating earnings per common share, diluted (1)

(E/N)


0.49


0.47


0.50


0.55


0.63


Tangible book value per common share, end of period (1)

(K/M)


22.84


22.82


21.23


21.60


21.89


Total tangible shareholders' equity/total tangible assets (1)

(K/L)


8.17


8.00


7.68


7.88


7.91















Performance ratios (2)













Return on equity



(7.93)

%

(0.60)


7.91

%

9.51

%

11.31

%

Operating return on equity (1)

(E/G)


8.23


8.36


8.71


9.51


11.30


Return on tangible common equity (1)(3)



(7.73)


(0.24)


8.45


10.09


11.96


Operating return on tangible common equity (1)(3)

(E+Q)/(I)


8.73


8.90


9.27


10.09


11.96


Return on assets



(0.69)


(0.05)


0.66


0.79


0.96


Operating return on assets (1)

(E/F)


0.71


0.68


0.73


0.79


0.95


Efficiency ratio (1)(6)                                                                          

(D-Q)/(B+O+R)


66.26


67.77


65.05


63.57


59.51




























Supplementary data (in thousands)













Tax benefit on tax-credit investments (4)

(O)


 N/M 


$         2,252


$         1,979


$         2,735


$         2,897


Non-interest income tax-credit investments amortization (5)

(P)


 N/M 


(2,060)


(1,463)


(2,210)


(2,285)


Net income on tax-credit investments

(O+P)


 N/M 


193


516


525


612


Effective tax rate



23.8

%

75.7

%

16.1

%

14.2

%

16.7

%














Intangible amortization

(Q)


$       1,205


$         1,205


$         1,205


$         1,205


$         1,205


Fully taxable equivalent income adjustment 

(R)


2,006


2,021


1,980


1,962


1,908









































(1) Non-GAAP financial measure.

(2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.

(3) Amortization of intangible assets is adjusted assuming a 27% marginal tax rate. 

(4) The tax benefit is the direct reduction to the income tax provision due to tax credit investments.

(5) The non-interest income amortization is the reduction to the tax-advantaged investments and are incurred as the tax credits are generated. 

(6) As of January 1, 2024, the Company elected the proportional amortization method for certain tax credits eliminating the need to adjust the efficiency ratio for tax credit impacts. 

SOURCE Berkshire Hills Bancorp, Inc.