Berkshire Hills Reports Strong Fourth Quarter Operating Results

News provided by

Berkshire Hills Bancorp, Inc.

Jan 30, 2025, 07:30 ET

$0.46 GAAP EPS; $0.60 Operating EPS

  • Operating EPS growth of 3% quarter-over-quarter and 28% year-over-year; FY2024 Operating EPS of $2.22 up 4% year-over-year
  • Average deposit growth of 3% and Average loan growth of 0.4% quarter-over-quarter; Loans to deposits ratio improved further during the quarter
  • 0.52% delinquent and non-performing loans to total loans, lowest in nearly two decades
  • 7.6% return on tangible common equity; 9.9% operating return on tangible common equity
  • 13.0% common equity Tier 1 ratio

BOSTON, Jan. 30, 2025 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the fourth quarter of 2024. These results along with comparison periods are summarized below:

($ in millions, except per share data)


 Three Months Ended 


Twelve Months Ended



Dec. 31,
2024


Sep. 30,
2024


Dec. 31,
2023


Dec. 31,
2024


Dec. 31,
2023












Net income (loss)

$

19.7

$

37.5

$

(1.4)

$

61.0

$

69.6

        Per share


0.46


0.88


(0.03)


1.43


1.60

Operating earnings1


26.0


24.8


20.2


94.9


93.2

         Per share


0.60


0.58


0.47


2.22


2.14












Net interest income, non FTE

$

86.9

$

88.1

$

88.4

$

351.6

$

369.0

Net interest income, FTE


88.8


90.1


90.4


359.6


376.9

         Net interest margin, FTE


3.14 %


3.16 %


3.11 %


3.16 %


3.27 %

Non-interest income


23.3


37.6


(8.4)


48.4


42.8

Operating non-interest income1


23.2


21.5


16.7


82.1


67.8












Non-interest expense

$

77.6

$

72.0

$

79.0

$

296.5

$

301.5

Operating non-interest expense1


71.0


72.3


75.3


287.0


295.2

Efficiency ratio1


62.4 %


63.7 %


67.8 %


63.9 %


63.9 %












Average balances











Loans

$

9,271

$

9,233

$

8,990

$

9,176

$

8,814

Deposits


9,659


9,360


9,936


9,536


9,704












Period-end balances











Loans


9,385


9,212


9,040


9,385


9,040

Deposits


10,375


9,577


10,633


10,375


10,633






1. See non-GAAP financial measures and reconciliation to GAAP measures beginning on page 12.





1

Berkshire CEO Nitin Mhatre stated, "Berkshire continued its positive momentum and finished the year strong, highlighted by a year-over-year 28% increase in fourth quarter operating EPS and a 4% increase for full year operating EPS. This reflected the cumulative benefit of ongoing growth initiatives together with strategic optimization initiatives including the branch network sales and consolidations, and the sales of securities and targeted loan portfolios. Our results also benefited from strong credit discipline, rigorous expense management, investments in new client-facing bankers and enhancements to our digital platform and consumer product offerings. We achieved a 9.9% operating return on tangible common equity in the fourth quarter, and 9.6% for the full year, following a 10.1% result for the year 2023. Berkshire has been recognized by Newsweek as one of America's Best Regional Banks for the third year in a row, and our positive impact in the community was recognized by the American Bankers Association."

Mr. Mhatre continued, "In December we announced a definitive agreement with Brookline Bancorp, Inc. for a merger of equals to create a preeminent Northeast banking franchise positioned to deliver an exceptional client experience and create greater value for shareholders. We had a strong response from investors and successfully executed a capital raise of $100 million of common stock to support the merger, a reflection of confidence in our plans and accomplishments. I want to thank our teams for their continued dedication to transforming our franchise and for their service to our stakeholders as we work toward an exciting new chapter."

Berkshire CFO Brett Brbovic added, "Quarter-over-quarter operating income increased 5% on higher fee revenue and lower operating expense. The efficiency ratio was 62.4%, an improvement over prior periods. We posted a solid 3% growth in average deposits improving our loans to deposits profile further. The 4Q24 net interest margin was 3.14%, down 2 basis points linked quarter and up 3 basis points year over year. Asset quality remained solid, and liquidity and capital strength improved. Tangible book value per share advanced 1% linked quarter and 9% year-over-year."


As of and For the Three Months Ended


Dec. 31, 2024


Sept. 30, 2024


Dec. 31, 2023

Asset Quality






Net loan charge-offs to average loans

0.14 %


0.24 %


0.20 %

Non-performing loans to total loans

0.26 %


0.26 %


0.24 %







Returns






Return on average assets

0.68 %


1.28 %


(0.05) %

Operating return on average assets1

0.90 %


0.85 %


0.68 %

Return on tangible common equity1

7.59 %


14.83 %


(0.24) %

Operating return on tangible common equity1

9.93 %


9.91 %


8.90 %













Capital Ratios2






Tangible common equity/tangible assets1

9.4 %


9.1 %


8.0 %

Tier 1 leverage

11.0 %


9.9 %


9.6 %

Common equity Tier 1

13.0 %


11.9 %


12.0 %

Tier 1 risk-based

13.2 %


12.2 %


12.3 %

Total risk-based

15.4 %


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 December 31, 2024 and actual for the remaining periods.









2

Berkshire Hills Bancorp, Inc. (NYSE: BHLB) is the parent company of Berkshire Bank, a relationship-driven, community-focused bank with $12.3 billion in assets and 83 financial centers in New England and New York. Berkshire is headquartered in Boston and offers commercial, retail, wealth, and private banking solutions. Berkshire has a pending agreement to merge with Brookline Bancorp, Inc., a multi-bank holding company with $12 billion in assets and branches in Massachusetts, Rhode Island, and New York.

Q4 2024 Financial Highlights (comparisons are to the prior quarter unless otherwise noted).

Income Statement. Fourth quarter GAAP income was $20 million, or $0.46 per share. Operating earnings totaled $26 million, or $0.60 per share. GAAP results included $6.6 million in non-operating expenses related primarily to the pending merger. Operating earnings increased $1.2 million, or 5%, linked quarter primarily due to a $1.2 million decrease in operating non-interest expense. The fourth quarter was the first full quarter after the ten branch sale.  Fourth quarter operating EPS increased 3% linked quarter and 28% year-over-year, reflecting full year organic growth, improved efficiency, and lower provision expense.

For the full year 2024, GAAP income was $61 million, or $1.43 per share, compared to $70 million, or $1.60 per share, in 2023. Full year 2024 operating income was $95 million, or $2.22 per share, increasing from $93 million, or $2.14 per share, in 2023. The increase in operating income included the benefit of decreases in credit loss provision expense and in operating expenses, offset by the impact of a lower net interest margin.

The fourth quarter efficiency ratio improved to 62.4% from 63.7% linked quarter.

Quarterly net interest income decreased linked quarter by $1.2 million to $87 million in 4Q24.

  • The net interest margin decreased 2 basis points to 3.14%.
    • The earning asset yield decreased 20 basis points.
      • The loan yield decreased 23 basis points.
    • The cost of funds decreased 17 basis points.
      • The cost of deposits decreased 12 basis points.
  • Provision for credit losses totaled $6 million, increasing $0.5 million linked quarter.
    • Net loan charge-offs totaled $3.3 million, compared to $5.6 million linked quarter. 
    • The annualized loan net charge-off ratio was 0.14% for the quarter and 0.16% for the year.
  • GAAP and operating non-interest income was $23 million.
    • GAAP non-interest income decreased $14 million linked quarter due to a $16 million branch sale gain recorded in the prior quarter.
    • Operating non-interest income increased $1.7 million linked quarter due primarily to higher SBA loan sale gains. 
  • Non-interest expense totaled $78 million on a GAAP basis and $71 million on an operating basis.
    • GAAP non-interest expense increased $6 million linked quarter due to merger expenses recorded in the fourth quarter.
    • Operating non-interest expense decreased $1.2 million linked quarter.
  • The effective tax rate was 26% for the quarter and 23% for the year.
    • The tax rate on operating income was 21% for the quarter and 23% for the year.

3

Loans. Compared to the linked quarter, total loans increased $173 million, or 2% to $9.4 billion. For the year, total loans increased $489 million, or 5%, excluding $144 million in consumer and mortgage loans sold in the branch sale and other transactions.

  • Commercial real estate loans increased $107 million, or 2%, to $4.8 billion compared to the linked quarter.
  • Commercial and industrial loans increased $52 million, or 4%, to $1.5 billion.
  • Residential mortgage loans increased $13 million to $2.7 billion.
  • Consumer loans increased $1 million to $374 million.
  • The quarter-end allowance for credit losses on loans was unchanged linked quarter at 1.22% of total loans, and up from 1.17% at year-end 2023.
  • Non-performing loans to total loans was unchanged at 0.26% for the quarter.
  • Delinquent and non-performing loans were 0.52% of total loans, the lowest level in nearly two decades.

Deposits. Compared to the linked quarter, total deposits increased $798 million to $10.4 billion. Total deposits excluding payroll and brokered deposits increased 3% linked quarter. For the year, total deposits increased $125 million, or 1%, excluding $383 million in deposits sold in the branch sale.

  • Non-interest bearing deposits increased linked quarter by $57 million, or 3%,to $2.3 billion.
  • Time deposits increased linked quarter by $57 million, or 2%, to $2.6 billion.

Equity. Total shareholders' equity increased linked quarter by $97 million, or 9%, to $1.2 billion including a successful $100 million common stock issuance. For the year, equity increased by $155 million, or 15%. The ratio of tangible common equity to tangible assets measured 9.4% at period end.

Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. Eastern time on Thursday, January 30, 2025 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 the sections titled "Forward-Looking Statements" and "Risk Factors" in 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.

4

INVESTOR CONTACT
Kevin Conn
Investor Relations
617.641.9206
[email protected] 

MEDIA CONTACT
Gary Levante
Corporate Communications
413.447.1737
[email protected]

5

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS (1)




At or for the Quarters Ended




Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,





2024


2024


2024


2024


2023
















NOMINAL AND PER SHARE DATA













Net earnings/(loss) per common share, diluted

$        0.46


$          0.88


$         0.57


$        (0.47)


$        (0.03)




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

0.60


0.58


0.55


0.49


0.47




Net income/(loss), (thousands)

19,657


37,509


24,025


(20,188)


(1,445)




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

25,982


24,789


23,168


20,934


20,190




Net interest income, (thousands) non FTE

86,855


88,059


88,532


88,140


88,421




Net interest income, FTE (5)

88,798


90,082


90,545


90,146


90,442




Total common shares outstanding, end of period (thousands) 

46,424


42,982


42,959


43,415


43,501




Average diluted shares, (thousands)

43,064


42,454


42,508


43,028


43,101




Total book value per common share, end of period

25.15


24.90


23.58


23.26


23.27




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

24.82


24.53


23.18


22.84


22.82




Dividends declared per common share

0.18


0.18


0.18


0.18


0.18




Dividend payout ratio (7)

39.40

%

20.63

%

32.74

%

 N/M 

%

 N/M 

%















PERFORMANCE RATIOS (4)













Return on equity

7.18

%

14.29

%

9.49

%

(7.93)

%

(0.60)

%



Operating return on equity (2)(3)

9.49


9.44


9.15


8.23


8.36




Return on tangible common equity (2)(3)

7.59


14.83


9.99


(7.73)


(0.24)




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

9.93


9.91


9.65


8.73


8.90




Return on assets

0.68


1.28


0.82


(0.69)


(0.05)




Operating return on assets (2)(3)

0.90


0.85


0.79


0.71


0.68




Net interest margin, FTE (5)

3.14


3.16


3.20


3.15


3.11




Efficiency ratio (3)

62.43


63.74


63.40


66.26


67.77
















FINANCIAL DATA (in millions, end of period)













Total assets

$     12,273


$      11,605


$     12,219


$      12,147


$     12,431




Total earning assets

11,523


10,922


11,510


11,430


11,705




Total loans

9,385


9,212


9,229


9,086


9,040




Total funding liabilities

10,813


10,285


10,907


10,826


11,140




Total deposits

10,375


9,577


9,621


9,883


10,633




Loans/deposits (%)

90

%

96

%

96

%

92

%

85

%



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

$        (106)


$           (89)


$         (115)


$         (114)


$         (143)




Total shareholders' equity

1,167


1,070


1,013


1,010


1,012
















ASSET QUALITY













Allowance for credit losses, (millions)

$          115


$           112


$          112


$           107


$          105




Net charge-offs, (millions)

(3)


(6)


(2)


(4)


(4)




Net charge-offs (QTD annualized)/average loans

0.14

%

0.24

%

0.07

%

0.18

%

0.20

%



Provision (benefit)/expense, (millions)

$              6


$               6


$              6


$               6


$              7




Non-performing assets, (millions)

27


27


24


24


24




Non-performing loans/total loans

0.26

%

0.26

%

0.23

%

0.24

%

0.24

%



Allowance for credit losses/non-performing loans

469


467


525


500


492




Allowance for credit losses/total loans

1.22


1.22


1.22


1.18


1.17
















CAPITAL RATIOS













Risk weighted assets, (millions)(6)

$       9,747


$        9,651


$       9,604


$        9,615


$       9,552




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

13.0

%

11.9

%

11.6

%

11.6

%

12.0

%



Tier 1 capital leverage ratio (6)

11.0


9.9


9.6


9.5


9.6




Tangible common shareholders' equity/tangible assets (3)

9.4


9.1


8.2


8.2


8.0





























(1)

All financial tables presented are unaudited. 












(2)

Reconciliations of non-GAAP financial measures, including all references to operating and tangible amounts, appear on pages 13 and 14.



(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 pages 13 and 14 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 December 31, 2024 and actual for the remaining periods.



(7)

Dividend payout ratio is based on dividends declared. 


6

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

December 31,

September 30,

December 31,

(in thousands)

2024

2024

2023

Assets




Cash and due from banks

$               182,776

$             134,056

$             148,148

Short-term investments

945,633

435,911

1,055,096

Total cash and cash equivalents

1,128,409

569,967

1,203,244





Trading securities, at fair value

5,258

5,560

6,142

Equity securities, at fair value

655

13,278

13,029

Securities available for sale, at fair value

655,723

661,740

1,022,285

Securities held to maturity, at amortized cost

507,658

512,277

543,351

Federal Home Loan Bank stock 

19,565

30,685

22,689

Total securities

1,188,859

1,223,540

1,607,496

Less: Allowance for credit losses on investment securities

(64)

(65)

(68)

Net securities

1,188,795

1,223,475

1,607,428





Loans held for sale

3,076

50,634

2,237





Commercial real estate loans

4,848,824

4,741,689

4,527,012

Commercial and industrial loans

1,461,341

1,409,538

1,352,834

Residential mortgages

2,701,227

2,688,709

2,672,677

Consumer loans

373,602

372,386

487,163

Total loans

9,384,994

9,212,322

9,039,686

Less: Allowance for credit losses on loans 

(114,700)

(112,047)

(105,357)

Net loans

9,270,294

9,100,275

8,934,329





Premises and equipment, net

56,609

54,667

68,915

Other intangible assets

15,064

16,192

19,664

Other assets

604,231

582,422

584,066

Assets held for sale 

6,930

6,930

10,938

Total assets

$         12,273,408

$        11,604,562

$        12,430,821





Liabilities and shareholders' equity




Non-interest bearing deposits

$           2,324,879

$          2,267,595

$          2,469,164

NOW and other deposits

841,406

748,737

858,644

Money market deposits

3,610,521

3,042,712

3,565,516

Savings deposits

1,021,716

998,549

1,053,810

Time deposits

2,576,682

2,519,896

2,686,250

Total deposits

10,375,204

9,577,489

10,633,384





Federal Home Loan Bank advances

316,482

585,542

385,223

Subordinated borrowings

121,612

121,549

121,363

Total borrowings

438,094

707,091

506,586





Other liabilities 

292,686

249,531

278,630

Total liabilities

11,105,984

10,534,111

11,418,600





Common shareholders' equity

1,167,424

1,070,451

1,012,221

Total shareholders' equity

1,167,424

1,070,451

1,012,221

Total liabilities and shareholders' equity

$         12,273,408

$        11,604,562

$        12,430,821

7

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


Three Months Ended


Years Ended


December 31,


December 31,

(in thousands, except per share data)

2024


2023


2024


2023

Interest income    

$       150,555


$         150,537


$         613,938


$            576,299

Interest expense    

63,700


62,116


262,352


207,252

Net interest income, non FTE

86,855


88,421


351,586


369,047

Non-interest income








Deposit related fees

8,237


8,481


33,759


34,155

Loan related fees

3,039


2,058


11,280


10,595

Gain on SBA loans

4,635


2,382


12,648


10,334

Wealth management fees    

2,658


2,394


10,840


10,197

Fair value adjustments on securities

(352)


768


7


513

Other

4,943


591


13,576


2,045

Total non-interest income excluding gains and losses

23,160


16,674


82,110


67,839

Gain on sale of business operations and assets, net

193


-


16,241


-

(Loss) on sale of securities 

(28)


(25,057)


(49,937)


(25,057)

Total non-interest income      

23,325


(8,383)


48,414


42,782

Total net revenue

110,180


80,038


400,000


411,829









Provision expense for credit losses   

6,000


7,000


23,999


31,999

Non-interest expense 








Compensation and benefits

38,929


40,095


160,453


159,281

Occupancy and equipment     

7,334


8,553


31,469


35,718

Technology

10,241


11,326


40,395


41,878

Professional services

2,765


3,417


10,307


11,643

Regulatory expenses

1,851


1,854


7,395


7,019

Amortization of intangible assets     

1,128


1,205


4,601


4,820

Marketing

2,013


1,107


4,522


5,377

Merger, restructuring and other non-operating expenses

6,557


3,669


9,493


6,261

Other expenses

6,757


7,766


27,851


29,511

Total non-interest expense     

77,575


78,992


296,486


301,508

Total non-interest expense excluding non-operating expenses

71,018


75,323


286,993


295,247









Income before income taxes       

$          26,605


$           (5,954)


$            79,515


$              78,322

Income tax expense

6,948


(4,509)


18,512


8,724

Net income

$          19,657


$           (1,445)


$            61,003


$              69,598









Basic earnings per common share

$              0.46


$             (0.03)


$                1.44


$                  1.61

Diluted earnings per common share

$              0.46


$             (0.03)


$                1.43


$                  1.60









Weighted average shares outstanding:      








Basic

42,661


42,852


42,508


43,288

Diluted

43,064


43,101


42,761


43,504









8

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) 



Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,


(in thousands, except per share data)


2024


2024


2024


2024


2023


Interest income    


$    150,555


$      157,268


$      154,109


$      152,006


$      150,537


Interest expense    


63,700


69,209


65,577


63,866


62,116


Net interest income, non FTE


86,855


88,059


88,532


88,140


88,421


Non-interest income 












Deposit related fees


8,237


8,656


8,561


8,305


8,481


Loan related fees


3,039


3,214


2,364


2,663


2,058


Gain on SBA loans


4,635


3,020


3,294


1,699


2,382


Wealth management fees    


2,658


2,685


2,613


2,884


2,394


Fair value adjustments on securities


(352)


516


(42)


(115)


768


Other


4,943


3,416


3,343


1,874


591


Total non-interest income excluding gains and losses


23,160


21,507


20,133


17,310


16,674


Gain on sale of business operations and assets, net


193


16,048


-


-


-


Loss on sale of securities 


(28)


-


-


(49,909)


(25,057)


Total non-interest income      


23,325


37,555


20,133


(32,599)


(8,383)


Total net revenue 


110,180


125,614


108,665


55,541


80,038














Provision expense for credit losses   


6,000


5,500


6,499


6,000


7,000


Non-interest expense












Compensation and benefits


38,929


40,663


40,126


40,735


40,095


Occupancy and equipment     


7,334


7,373


8,064


8,698


8,553


Technology


10,241


10,014


10,236


9,904


11,326


Professional services


2,765


2,109


2,757


2,676


3,417


Regulatory expenses


1,851


1,851


1,848


1,845


1,854


Amortization of intangible assets     


1,128


1,128


1,140


1,205


1,205


Marketing


2,013


861


532


1,116


1,107


Merger, restructuring and other non-operating expenses


6,557


(297)


(384)


3,617


3,669


Other expenses


6,757


8,258


6,612


6,224


7,766


Total non-interest expense     


77,575


71,960


70,931


76,020


78,992


Total non-interest expense excluding non-operating expenses


71,018


72,257


71,315


72,403


75,323


























Income/(loss) before income taxes


$       26,605


$        48,154


$        31,235


$       (26,479)


$         (5,954)


Income tax expense/(benefit)


6,948


10,645


7,210


(6,291)


(4,509)


Net income/(loss)


$       19,657


$        37,509


$        24,025


$       (20,188)


$         (1,445)


























Diluted earnings/(loss) per common share


$           0.46


$            0.88


$            0.57


$           (0.47)


$           (0.03)














Weighted average shares outstanding:












Basic


42,661


42,170


42,437


42,777


42,852


Diluted


43,064


42,454


42,508


43,028


43,101


























9

BERKSHIRE HILLS BANCORP, INC.


AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS 



Quarters Ended




December 31, 2024


September 30, 2024


December 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


$         4,772

$         77

6.32

%


$         4,717

$         79

6.54

%


$         4,469

$         74

6.45

%

Commercial and industrial loans


1,435

27

7.24



1,380

27

7.79



1,367

26

7.60



Residential mortgages


2,690

29

4.32



2,712

30

4.31



2,656

27

4.06



Consumer loans


374

6

6.29



424

8

7.43



498

9

7.31



Total loans 


9,271

139

5.88



9,233

144

6.11



8,990

136

5.97



Securities (2)


1,347

9

2.66



1,340

8

2.49



2,080

12

2.40



Short-term investments and loans held for sale


466

5

4.25



563

7

4.98



350

4

4.22



New York branch loans held for sale (3)


-

-

-



31

-

5.44



-

-

-



Total earning assets


11,084

153

5.42



11,167

159

5.62



11,420

152

5.26



Goodwill and other intangible assets


15





17





20





Other assets


497





511





422





Total assets


$         11,596





$         11,695





$         11,862






















Liabilities and shareholders' equity

















Non-interest-bearing demand deposits


$           2,293

$            -

-

%


$         2,250

$            -

-

%


$         2,488

$            -

-

%

NOW and other


764

3

1.44



743

3

1.54



833

3

1.38



Money market


3,046

23

3.02



2,935

25

3.35



2,995

23

3.08



Savings


1,003

3

1.09



1,002

3

1.17



1,062

2

0.90



Time


2,553

27

4.22



2,430

26

4.31



2,558

25

3.77



Total deposits


9,659

56

2.30



9,360

57

2.42



9,936

53

2.11



Borrowings (4)


602

8

5.20



782

11

5.44



668

9

5.45



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

-

-

-



51

-

-



-

-

-



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


-

-

-



207

1

2.87



-

-

-



Total funding liabilities


10,261

64

2.47



10,400

69

2.64



10,604

62

2.32




















Other liabilities


240





245





292





Total liabilities


10,501





10,645





10,896






















Common shareholders' equity (5)


1,095





1,050





966





Total shareholders' equity


1,095





1,050





966





Total liabilities and shareholders' equity


$         11,596





$         11,695





$         11,862





Net interest margin, FTE




3.14





3.16





3.11




















Supplementary data

















Net Interest Income, non FTE


86.855





88.059





88.421





FTE income adjustment


1.943





2.023





2.021





Net Interest Income, FTE


88.798





90.082





90.442







































(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 the financing lease obligation 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 the current presentation.



10

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS 


At or for the Quarters Ended


Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,


(in thousands)

2024


2024


2024


2024


2023


NON-PERFORMING ASSETS











Commercial real estate 

$          10,393


$             10,270


$              5,976


$              4,762


$               4,453


Commercial and industrial loans

9,156


8,227


8,489


9,174


8,712


Residential mortgages

3,830


4,348


5,491


5,992


6,404


Consumer loans

1,068


1,124


1,392


1,526


1,838


Total non-performing loans

24,447


23,969


21,348


21,454


21,407


Repossessed assets

2,280


2,563


2,549


2,689


2,601


Total non-performing assets

$          26,727


$             26,532


$            23,897


$            24,143


$             24,008













Total non-performing loans/total loans

0.26 %


0.26 %


0.23 %


0.24 %


0.24 %


Total non-performing assets/total assets

0.22 %


0.23 %


0.20 %


0.20 %


0.19 %













PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS










Balance at beginning of period

$        112,047


$           112,167


$          107,331


$          105,357


$           102,792


Charged-off loans

(4,553)


(7,091)


(3,246)


(5,636)


(6,891)


Recoveries on charged-off loans

1,206


1,471


1,583


1,610


2,456


Net loans charged-off

(3,347)


(5,620)


(1,663)


(4,026)


(4,435)


Provision (benefit)/expense for loan credit losses

6,000


5,500


6,499


6,000


7,000


Balance at end of period

$        114,700


$           112,047


$          112,167


$          107,331


$           105,357













Allowance for credit losses/total loans

1.22 %


1.22 %


1.22 %


1.18 %


1.17 %


Allowance for credit losses/non-performing loans

469 %


467 %


525 %


500 %


492 %













NET LOAN CHARGE-OFFS











Commercial real estate

$              (121)


$                (999)


$                   22


$                 292


$                  316


Commercial and industrial loans

(2,309)


(1,009)


(711)


(1,772)


(2,309)


Residential mortgages

552


273


316


98


55


Home equity 

1


3


8


193


83


Other consumer loans

(1,470)


(3,888)


(1,298)


(2,837)


(2,580)


Total, net

$           (3,347)


$             (5,620)


$             (1,663)


$             (4,026)


$             (4,435)













Net charge-offs (QTD annualized)/average loans 

0.14 %


0.24 %


0.07 %


0.18 %


0.20 %


Net charge-offs (YTD annualized)/average loans 

0.16 %


0.16 %


0.13 %


0.18 %


0.26 %
























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

$          17,591

0.19 %

$             18,526

0.20 %

$            18,494

0.20 %

$            27,682

0.30 %

$             22,140

0.24 %

90+ Days delinquent and still accruing

6,417

0.07 %

6,280

0.07 %

11,672

0.13 %

5,882

0.06 %

5,537

0.06 %

Total accruing delinquent loans

24,008

0.26 %

24,806

0.27 %

30,166

0.33 %

33,564

0.36 %

27,677

0.30 %

Non-performing loans

24,447

0.26 %

23,969

0.26 %

21,348

0.23 %

21,454

0.24 %

21,407

0.24 %

Total delinquent and non-performing loans

$          48,455

0.52 %

$             48,775

0.53 %

$            51,514

0.56 %

$            55,018

0.60 %

$             49,084

0.54 %

11

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 the pending merger, branch sales and consolidations, and loss on sale of 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.

12

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA



At or for the Quarters Ended




Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,


(in thousands)



2024


2024


2024


2024


2023


Total non-interest income



$     23,325


$       37,555


$       20,133


$     (32,599)


$        (8,383)


Adj: Net (gains) on sale of business operations and assets



(193)


(16,048)


-


-


-


Adj: Loss on sale of securities



28


-


-


49,909


25,057


Total operating non-interest income (1)



$     23,160


$       21,507


$       20,133


$       17,310


$       16,674















Total revenue

(A)


$   110,180


$     125,614


$     108,665


$       55,541


$       80,038


Adj: Net (gains) on sale of business operations and assets



(193)


(16,048)


-


-


-


Adj: Loss on sale of securities



28


-


-


49,909


25,057


Total operating revenue (1)

(B)


$   110,015


$     109,566


$     108,665


$     105,450


$     105,095















Total non-interest expense

(C)


$     77,575


$       71,960


$       70,931


$       76,020


$       78,992


Adj: Merger, restructuring and other non-operating expenses



(6,557)


297


384


(3,617)


(3,669)


Operating non-interest expense (1)                                    

(D)


$     71,018


$       72,257


$       71,315


$       72,403


$       75,323















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

(A-C)


$     32,605


$       53,654


$       37,734


$     (20,479)


$         1,046


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

(B-D)


38,997


37,309


37,350


33,047


29,772















Net income/(loss)



$     19,657


$       37,509


$       24,025


$     (20,188)


$        (1,445)


Adj: Net (gains) on sale of business operations and assets



(193)


(16,048)


-


-


-


Adj: Loss on sale of securities



28


-


-


49,909


25,057


Adj: Merger, restructuring expense and other non-operating expenses



6,557


(297)


(384)


3,617


3,669


Adj: Income taxes (expense)/benefit



(67)


3,625


(473)


(12,404)


(7,091)


Total operating income (1)

(E)


$     25,982


$       24,789


$       23,168


$       20,934


$       20,190















(in millions, except per share data)













Total average assets                                                

(F)


$     11,596


$       11,695


$       11,692


$       11,755


$       11,862


Total average shareholders' equity

(G)


1,095


1,050


1,013


1,018


966


Total average tangible shareholders' equity (1)            

(I)


1,080


1,034


995


999


946


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



(106)


(89)


(115)


(114)


(143)


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

(K)


1,152


1,054


996


991


993


Total tangible assets, end of period (1)

(L)


12,258


11,588


12,202


12,128


12,411















Total common shares outstanding, end of period (thousands)               

(M)


46,424


42,982


42,959


43,415


43,501


Average diluted shares outstanding (thousands)

(N)


43,064


42,454


42,508


43,028


43,101















Earnings/(loss) per common share, diluted (1)



$          0.46


$           0.88


$           0.57


$         (0.47)


$          (0.03)


Operating earnings per common share, diluted (1)

(E/N)


0.60


0.58


0.55


0.49


0.47


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

(K/M)


24.82


24.53


23.18


22.84


22.82


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

(K/L)


9.40


9.10


8.16


8.17


8.00















Performance ratios (2)













Return on equity



7.18

%

14.29

%

9.49

%

(7.93)

%

(0.60)

%

Operating return on equity (1)

(E/G)


9.49


9.44


9.15


8.23


8.36


Return on tangible common equity (1)(3)



7.59


14.83


9.99


(7.73)


(0.24)


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

(E+Q)/(I)


9.93


9.91


9.65


8.73


8.90


Return on assets



0.68


1.28


0.82


(0.69)


(0.05)


Operating return on assets (1)

(E/F)


0.90


0.85


0.79


0.71


0.68


Efficiency ratio (1)(6)                                                                          

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


62.43


63.74


63.40


66.26


67.77




























Supplementary data (in thousands)













Tax benefit on tax-credit investments (4)

(O)


 N/M 


 N/M 


 N/M 


 N/M 


$         2,252


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

(P)


 N/M 


 N/M 


 N/M 


 N/M 


(2,060)


Net income on tax-credit investments

(O+P)


 N/M 


 N/M 


 N/M 


 N/M 


193


Effective tax rate



26.1

%

22.1

%

23.1

%

23.8

%

75.7

%














Intangible amortization

(Q)


$       1,128


$         1,128


$         1,140


$         1,205


$         1,205


Fully taxable equivalent income adjustment 

(R)


1,943


2,023


2,013


2,006


2,021









































(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. Excluding 


     the impact of tax credits in 2023, the efficiency ratio for the quarter ending December 31, 2023 was 69.19%.


13

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED



At or for the Years Ended




December 31,


December 31,


(in thousands)



2024


2023


Total non-interest income



$                  48,414


$                    42,782


Adj: Net (gains) on sale of business operations and assets



(16,241)


-


Adj: Loss on sale of securities



49,937


25,057


Total operating non-interest income (1)



$                  82,110


$                    67,839









Total revenue 

(A)


$                400,000


$                  411,829


Adj: Net (gains) on sale of business operations and assets



(16,241)


-


Adj: Loss on sale of securities



49,937


25,057


Total operating revenue (1)

(B)


$                433,696


$                  436,886









Total non-interest expense

(C)


$                296,486


$                  301,508


Less: Merger, restructuring and other non-operating expenses



(9,493)


(6,261)


Operating non-interest expense (1)                                    

(D)


$                286,993


$                  295,247









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

(A-C)


$                103,514


$                  110,321


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

(B-D)


146,703


141,639









Net income



$                  61,003


$                    69,598


Adj: Net (gains) on sale of business operations and assets



(16,241)


-


Adj: Loss on sale of securities



49,937


25,057


Adj: Merger, restructuring expense and other non-operating expenses



9,493


6,261


Adj: Income taxes (expense)



(9,319)


(7,723)


Total operating income (1)

(E)


$                  94,873


$                    93,193









(in millions, except per share data)







Total average assets                                                

(F)


$                  11,683


$                    11,838


Total average shareholders' equity

(G)


1,044


984


Total average tangible shareholders' equity (1)            

(I)


1,027


962


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



(106)


(143)


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

(K)


1,152


993


Total tangible assets, end of period (1)

(L)


12,258


12,411









Total common shares outstanding, end of period (thousands)               

(M)


46,424


43,501


Average diluted shares outstanding (thousands)

(N)


42,761


43,504









Earnings per common share, diluted (1)



$                       1.43


$                        1.60


Operating earnings per common share, diluted (1)

(E/N)


2.22


2.14


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

(K/M)


24.82


22.82


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

(K/L)


9.40


8.00









Performance ratios (2)







Return on equity 



5.84

%

7.07

%

Operating return on equity (1)

(E/G)


9.09


9.47


Return on tangible common equity (1)(3)



6.27


7.60


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

(E+Q)/(I)


9.56


10.05


Return on assets



0.52


0.59


Operating return on assets (1)

(E/F)


0.81


0.79


Efficiency ratio (1)(6)                                                                               

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


63.94


63.88


Net interest margin, FTE



3.16


3.27
















Supplementary data (in thousands)







Tax benefit on tax-credit investments (4)

(O)


 N/M 


$                      9,863


Non-interest income charge on tax-credit investments (5)

(P)


 N/M 


(8,018)


Net income on tax-credit investments

(O+P)


 N/M 


1,845









Intangible amortization

(Q)


$                    4,601


$                      4,820


Fully taxable equivalent income adjustment 

(R)


7,985


7,870






(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. Excluding the impact of tax credits in 2023, the efficiency ratio for the year ending December 31, 2023 was 65.30%.

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SOURCE Berkshire Hills Bancorp, Inc.