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Berkshire Hills Reports a Solid Second Quarter Net Income of $24.0 million, or $0.57 Per Share

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Berkshire Hills Bancorp (NYSE: BHLB) reported solid Q2 2024 results with net income of $24.0 million, or $0.57 per share. Operating EPS increased 12% to $0.55, driven by 3% growth in operating revenue and a 2% decrease in operating expenses. Key highlights include:

- Net interest margin improved to 3.20%, up 5 basis points
- Net loan charge-offs were low at 7 basis points annualized
- Loan growth of $143 million, primarily in commercial loans
- Efficiency ratio improved to 63.4% from 66.3%
- Tangible book value per share increased to $23.18

The company completed the consolidation of three branch offices and remains on track to conclude the sale of ten offices in H2 2024. Berkshire also bolstered its cash management and government banking capabilities through promotions and new hires.

Positive
  • Net income increased to $24.0 million, or $0.57 per share
  • Operating EPS grew 12% to $0.55
  • Operating revenue increased 3% quarter-over-quarter
  • Operating expenses decreased 2% quarter-over-quarter
  • Net interest margin improved by 5 basis points to 3.20%
  • Loan growth of $143 million, primarily in commercial loans
  • Efficiency ratio improved to 63.4% from 66.3%
  • Tangible book value per share increased to $23.18 from $22.84
  • Low net loan charge-offs at 7 basis points annualized
Negative
  • Total deposits decreased by $262 million to $9.62 billion
  • Non-interest bearing deposits decreased by $40 million
  • Time deposits decreased by $56 million

Insights

Berkshire Hills Bancorp's second quarter results present a mixed but overall positive performance. Notably, the company reported a net income of $24.0 million or $0.57 per share, a significant improvement from the prior quarter's net loss of $20.2 million. An increase in Operating EPS by 12% to $0.55 is a positive financial indicator, driven by loan growth and higher fee income. Operating revenue increased by 3%, while operating expenses decreased by 2%, leading to a notable improvement in the efficiency ratio from 66.3% to 63.4%. These figures indicate enhanced operational efficiency and cost management.

Moreover, the net interest margin (NIM) increased by 5 basis points to 3.20%, reflecting better asset yields. However, it's worth noting that net interest income is still down compared to the same period last year. On the asset quality front, the decline in net loan charge-offs to 7 basis points and non-performing loans to 0.23% of total loans reflects sound credit quality. Although deposits decreased, which could be a concern, the overall reduction in non-interest expenses and the strong capital ratios, including a 14.1% total risk-based capital ratio, portray a stable financial position. Retail investors should consider this stability but remain cautious about the deposit trends.

Berkshire Hills Bancorp's strategic moves, including the consolidation of three branch offices and the planned sale of ten offices, indicate a strategic shift towards optimizing operations and managing costs. These consolidations are part of a broader trend in the banking industry to enhance digital services and reduce physical branch dependency. Additionally, the promotion of Brett Brbovic to CFO signals internal continuity and stability, which is typically favorable for stakeholders. The recognition by TIME as one of America's Best Mid-Size Companies 2024 enhances the bank’s public image, potentially increasing investor confidence.

However, the reduction in total deposits by $262 million could be a potential red flag suggesting possible customer attrition or shifting market dynamics. The decline in non-interest-bearing deposits also suggests a change in depositor behavior which could impact the bank's future liquidity management. While the increase in loan balances is positive, the market should closely monitor the bank's ability to maintain deposit growth to fund these loans. Retail investors should weigh these strategic shifts and market trends when evaluating their investment decisions.

Operating EPS of $0.55 increased 12% linked quarter 

  • Operating revenue increased 3% linked quarter
  • Operating expense decreased 2% linked quarter
  • Net interest margin 3.20%, increased 5 basis points linked quarter
  • Net loan charge-offs were 7 basis points annualized

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

($ in millions, except per share data)


         Three Months Ended




June 30, 2024


Mar. 31, 2024


June 30, 2023










Net income (loss)

$

24.0

$

(20.2)

$

23.9


        Per share


0.57


(0.47)


0.55


Operating earnings1


23.2


20.9


23.9


         Per share


0.55


0.49


0.55










Net interest income, non FTE

$

88.5

$

88.1

$

92.8


Net interest income, FTE


90.5


90.1


94.7


         Net interest margin, FTE


3.20 %


3.15 %


3.24 %


Non-interest income


20.1


(32.6)


17.1


Operating non-interest income1


20.1


17.3


17.1










Non-interest expense

$

70.9

$

76.0

$

74.0


Operating non-interest expense1


71.3


72.4


74.0


Efficiency ratio1


63.4 %


66.3 %


63.6 %










Average balances2








Loans

$

9,214

$

9,059

$

8,791


Deposits


9,779


9,978


9,568










Period-end balances2








Loans


9,284


9,144


8,882


Deposits


10,095


10,368


10,068




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

2. Loans and deposits in 2Q24 include balances held for sale in branch transaction of $57 million and $483

million respectively (average), and $55 million and $474 million (end of period). These balances in 1Q24
were $18 million and $149 million respectively (average), and $58 million and $485 million (end of period).


Berkshire CEO Nitin Mhatre stated, "Operating income advanced for the second consecutive quarter and we benefited from loan growth, credit quality, and expense management.  The consolidation of three branch offices was completed, bringing our branch count to 93, and we remain on target to conclude the pending sale of ten offices in the second half of the year.  Berkshire bolstered its cash management and government banking capabilities through promotions and new hires, and Brett Brbovic was promoted to CFO from his position as Chief Accounting Officer. Brett will continue our forward momentum supported by the strong team that he has built over his many years at Berkshire. Finally, I'm proud that TIME named us one of America's Best Mid-Size Companies 2024 recognizing our progress on financial performance, employee satisfaction and commitment to sustainability."

Mr. Brbovic added, "The margin increase benefited from loan growth and impacts from prior quarter securities sales.  Net interest income increased $392 thousand linked quarter, following several quarters of decreases.  Operating non-interest income increased $2.8 million, primarily due to higher gain on SBA loans.  The loan loss provision increased by approximately $500 thousand, supporting loan growth and increasing the credit loss allowance to 1.22% of total loans.  Linked quarter operating expenses decreased $1.1 million due primarily to lower compensation and occupancy expense. The efficiency ratio improved to 63.4% from 66.3%. Capital ratios remained strong, with the tangible common equity ratio remaining unchanged at 8.2%."


As of and For the Three Months Ended


June 30, 2024


Mar. 31, 2024


June 30, 2023

Asset Quality






Net loan charge-offs to average loans

0.07 %


0.18 %


0.26 %

Non-performing loans to total loans

0.23 %


0.24 %


0.32 %







Returns






Return on average assets

0.82 %


(0.69) %


0.79 %

Operating return on average assets1

0.79 %


0.71 %


0.79 %

Return on tangible common equity1

9.99 %


(7.73) %


10.09 %

Operating return on tangible common equity1

9.65 %


8.73 %


10.09 %













Capital Ratios2






Tangible common equity/tangible assets1

8.2 %


8.2 %


7.9 %

Tier 1 leverage

9.6 %


9.5 %


9.6 %

Common equity Tier 1

11.6 %


11.6 %


12.1 %

Tier 1 risk-based

11.8 %


11.8 %


12.3 %

Total risk-based

14.1 %


14.0 %


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 June 30, 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 $12.2 billion in assets and 93 financial centers in New England and New York. Berkshire is headquartered in Boston and offers commercial, retail, wealth, and private banking solutions.

2Q 2024 Financial Highlights (comparisons are to the prior quarter unless otherwise noted).

Income Statement. GAAP income was $24.0 million, or $0.57 per share. Operating earnings totaled $23.2 million, or $0.55 per share. GAAP results improved from a loss in the prior quarter which included a non-operating loss on the sale of securities. Operating EPS improved 12% due to loan growth, higher fee income, and lower operating expenses.

  • Net interest income totaled $88.5 million in 2Q24 compared to $88.1 million in 1Q24.
  • Net interest margin increased 5 basis points linked quarter to 3.20% reflecting the benefit of loan growth and securities sales.
    • The earning asset yield increased 13 basis points.
      • The loan yield increased 5 basis points.
    • The cost of funds increased 8 basis points.
      • The cost of deposits increased 6 basis points.
  • Provision for credit losses on loans totaled $6.5 million.
    • Allowance for credit losses on loans increased $4.8 million.
    • Net loan charge-offs totaled $1.7 million.
    • Net annualized loan charge-off ratio of 0.07%, down sequentially for last six quarters.
  • GAAP and operating non-interest income totaled $20.1 million. Operating non-interest income increased $2.8 million linked quarter.
    • Gain on SBA loan sales increased $1.6 million to a five quarter high of $3.3 million
  • Non-interest expense totaled $70.9 million on a GAAP basis and $71.3 million on an operating basis. Operating non-interest expense decreased $1.1 million linked quarter.
    • Compensation and benefits expense decreased $609 thousand.
    • Occupancy and equipment expense decreased $634 thousand.
    • The efficiency ratio was 63.4% compared to 66.3% linked quarter.
  • Income tax expense was $7.2 million and the effective tax rate was 23.1%.

Loans. Total loans increased $143 million to $9.23 billion due to commercial loan growth. Problem loans decreased and the allowance for credit losses increased.

  • Commercial real estate loans increased $113 million to $4.71 billion.
  • Commercial and industrial loans increased $37 million to $1.42 billion.
  • Residential mortgage loans decreased $2 million to $2.67 billion. Loans held for sale included $47 million of seasoned mortgages pending sale (not related to the pending NY branch sale).
  • Consumer loans decreased $5 million to $425 million.
  • Included in assets held for sale were loans related to the branch sale totaling $55 million at period-end.
  • The allowance for credit losses to total loans was 1.22% at June 30, 2024, compared to 1.18% at prior quarter-end.  Annualized net charge-offs were 0.07% of loans in the quarter.
  • Non-performing loans to total loans was 0.23% at June 30, 2024, down from 0.24% at prior quarter-end.

Deposits. Total deposits decreased $262 million to $9.62 billion

  • Non-interest bearing deposits decreased $40 million to $2.22 billion.
  • Non-maturity interest bearing deposits decreased $166 million to $5.05 billion.
  • Time deposits decreased $56 million to $2.35 billion.
  • Excluded from total deposits were branch sale deposits totaling $474 million at period-end, which were included in liabilities held for sale.

Equity. Total shareholders' equity increased by $3 million to $1.01 billion. The Company repurchased approximately 612 thousand shares totaling $13 million during the second quarter. Tangible book value per share advanced to $23.18 from $22.84.

2Q 2024 Corporate Responsibility and Sustainability Highlights

Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. eastern time on Thursday, July 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
kaconn@berkshirebank.com 

MEDIA CONTACT
Gary Levante
Corporate Communications
413.447.1737
glevante@berkshirebank.com

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS (1)




At or for the Quarters Ended




June 30,


March 31,


Dec. 31,


Sept. 30,


June 30,





2024


2024


2023


2023


2023















NOMINAL AND PER SHARE DATA












Net earnings/(loss) per common share, diluted

$        0.57


$        (0.47)


$        (0.03)


$         0.45


$         0.55



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

0.55


0.49


0.47


0.50


0.55



Net income/(loss), (thousands)

24,025


(20,188)


(1,445)


19,545


23,861



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

23,168


20,934


20,190


21,516


23,878



Net interest income, (thousands) non FTE

88,532


88,140


88,421


90,334


92,759



Net interest income, FTE (5)

90,545


90,146


90,442


92,314


94,721



Total common shares outstanding, end of period (thousands)               

42,959


43,415


43,501


43,822


44,033



Average diluted shares, (thousands)

42,508


43,028


43,101


43,347


43,532



Total book value per common share, end of period

23.58


23.26


23.27


21.70


22.11



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

23.18


22.84


22.82


21.23


21.60



Dividends per common share

0.18


0.18


0.18


0.18


0.18



Dividend payout ratio

32.74

%

 N/M 

%

 N/M 

%

40.56

%

33.47

%














PERFORMANCE RATIOS (4)












Return on equity

9.49

%

(7.93)

%

(0.60)

%

7.91

%

9.51

%


Operating return on equity (2)(3)

9.15


8.23


8.36


8.71


9.51



Return on tangible common equity (2)(3)

9.99


(7.73)


(0.24)


8.45


10.09



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

9.65


8.73


8.90


9.27


10.09



Return on assets

0.82


(0.69)


(0.05)


0.66


0.79



Operating return on assets (2)(3)

0.79


0.71


0.68


0.73


0.79



Net interest margin, FTE (5)

3.20


3.15


3.11


3.18


3.24



Efficiency ratio (3)

63.40


66.26


67.77


65.05


63.57















FINANCIAL DATA (in millions, end of period)












Total assets


$    12,219


$      12,147


$     12,431


$     12,140


$     12,090



Total earning assets

11,510


11,430


11,705


11,400


11,370



Total loans


9,229


9,086


9,040


8,984


8,882



Total funding liabilities

10,907


10,826


11,140


10,906


10,864



Total deposits


9,621


9,883


10,633


9,981


10,068



Loans/deposits (%)

96

%

92

%

85

%

90

%

88

%


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

$        (115)


$         (114)


$         (143)


$         (218)


$         (186)



Total shareholders' equity

1,013


1,010


1,012


951


973















ASSET QUALITY












Allowance for credit losses, (millions)

$         112


$           107


$          105


$          103


$          100



Net charge-offs, (millions)

(2)


(4)


(4)


(5)


(6)



Net charge-offs (QTD annualized)/average loans

0.07

%

0.18

%

0.20

%

0.24

%

0.26

%


Provision (benefit)/expense, (millions)

$              6


$               6


$              7


$              8


$              8



Non-performing assets, (millions)

24


24


24


29


31



Non-performing loans/total loans

0.23

%

0.24

%

0.24

%

0.30

%

0.32

%


Allowance for credit losses/non-performing loans

525


500


492


386


353



Allowance for credit losses/total loans

1.22


1.18


1.17


1.14


1.13















CAPITAL RATIOS












Risk weighted assets, (millions)(6)

$      9,602


$        9,615


$       9,552


$       9,594


$       9,523



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

11.6

%

11.6

%

12.0

%

12.1

%

12.1

%


Tier 1 capital leverage ratio (6)

9.6


9.5


9.6


9.8


9.6



Tangible common shareholders' equity/tangible assets (3)

8.2


8.2


8.0


7.7


7.9




























(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 June 30, 2024 and actual for the remaining periods.











 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


June 30,

March 31,

December 31,

June 30,

(in thousands)

2024

2024

2023

2023

Assets





Cash and due from banks

$               112,085

$             111,676

$             148,148

$             120,285

Short-term investments

988,207

1,082,019

1,055,096

520,315

Total cash and cash equivalents

1,100,292

1,193,695

1,203,244

640,600






Trading securities, at fair value

5,699

5,909

6,142

6,405

Equity securities, at fair value

12,736

12,823

13,029

12,868

Securities available for sale, at fair value

611,711

625,857

1,022,285

1,340,331

Securities held to maturity, at amortized cost

520,239

531,820

543,351

563,765

Federal Home Loan Bank stock 

35,010

20,522

22,689

34,714

Total securities

1,185,395

1,196,931

1,607,496

1,958,083

Less: Allowance for credit losses on investment securities

(65)

(61)

(68)

(71)

Net securities

1,185,330

1,196,870

1,607,428

1,958,012






Loans held for sale

52,072

6,345

2,237

8,708






Commercial real estate loans

4,706,810

4,593,692

4,527,012

4,315,202

Commercial and industrial loans

1,421,921

1,384,591

1,352,834

1,464,922

Residential mortgages

2,674,611

2,677,046

2,672,677

2,584,959

Consumer loans

425,184

430,424

487,163

517,319

Total loans

9,228,526

9,085,753

9,039,686

8,882,402

Less: Allowance for credit losses on loans 

(112,167)

(107,331)

(105,357)

(100,219)

Net loans

9,116,359

8,978,422

8,934,329

8,782,183






Premises and equipment, net

55,893

57,832

68,915

76,903

Other intangible assets

17,319

18,460

19,664

22,074

Other assets

615,882

611,967

584,066

593,621

Assets held for sale 

76,307

83,020

10,938

8,220

Total assets

$         12,219,454

$        12,146,611

$        12,430,821

$        12,090,321






Liabilities and shareholders' equity





Non-interest bearing deposits

$           2,222,012

$          2,261,794

$          2,469,164

$          2,594,528

NOW and other deposits

766,641

793,492

858,644

944,775

Money market deposits

3,278,753

3,411,672

3,565,516

3,005,081

Savings deposits

1,004,320

1,010,630

1,053,810

1,088,405

Time deposits

2,349,733

2,405,384

2,686,250

2,435,618

Total deposits

9,621,459

9,882,972

10,633,384

10,068,407






Federal Home Loan Bank advances

689,606

337,169

385,223

674,345

Subordinated borrowings

121,487

121,425

121,363

121,238

Total borrowings

811,093

458,594

506,586

795,583






Other liabilities 

287,312

297,663

278,630

252,950

Liabilities held for sale 

486,648

497,459

-

-

Total liabilities

11,206,512

11,136,688

11,418,600

11,116,940






Common shareholders' equity

1,012,942

1,009,923

1,012,221

973,381

Total shareholders' equity

1,012,942

1,009,923

1,012,221

973,381

Total liabilities and shareholders' equity

$         12,219,454

$        12,146,611

$        12,430,821

$        12,090,321

 

BERKSHIRE HILLS BANCORP, INC.

'CONSOLIDATED STATEMENTS OF OPERATIONS


Three Months Ended


Years Ended


June 30,


June 30,

(in thousands, except per share data)

2024


2023


2024


2023

Interest income    

$       154,109


$         145,425


$         306,115


$            277,741

Interest expense    

65,577


52,666


129,443


87,449

Net interest income, non FTE

88,532


92,759


176,672


190,292

Non-interest income








Deposit related fees

8,561


8,571


16,866


16,882

Loan related fees

2,364


3,189


5,027


5,658

Gain on SBA loans

3,294


2,910


4,993


5,404

Wealth management fees    

2,613


2,583


5,497


5,322

Fair value adjustments on securities

(42)


(22)


(157)


212

Other

3,343


(137)


5,217


222

Total non-interest income excluding sales of AFS securities

20,133


17,094


37,443


33,700

(Loss) on sale of AFS securities 

-


-


(49,909)


-

Total non-interest income      

20,133


17,094


(12,466)


33,700

Total net revenue

108,665


109,853


164,206


223,992









Provision expense for credit losses   

6,499


8,000


12,499


16,999

Non-interest expense 








Compensation and benefits

40,126


39,960


80,861


79,031

Occupancy and equipment     

8,064


8,970


16,762


18,349

Technology

10,236


10,465


20,140


19,936

Professional services

2,757


2,526


5,433


5,803

Regulatory expenses

1,848


1,834


3,693


3,260

Amortization of intangible assets     

1,140


1,205


2,345


2,410

Marketing

532


1,510


1,648


2,718

Merger, restructuring and other non-operating expenses

(384)


21


3,233


(15)

Other expenses

6,612


7,557


12,836


14,511

Total non-interest expense     

70,931


74,048


146,951


146,003

Total non-interest expense excluding non-operating expenses

71,315


74,027


143,718


146,018









Income before income taxes       

$         31,235


$           27,805


$             4,756


$              60,990

Income tax expense

7,210


3,944


919


9,492

Net income

$         24,025


$           23,861


$             3,837


$              51,498









Basic earnings per common share

$              0.57


$               0.55


$                0.09


$                  1.18

Diluted earnings per common share

$              0.57


$               0.55


$                0.09


$                  1.18









Weighted average shares outstanding:      








Basic

42,437


43,443


42,602


43,564

Diluted

42,508


43,532


42,763


43,780









 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend)  



June 30,


March 31,


Dec. 31,


Sept. 30,


June 30,


(in thousands, except per share data)


2024


2024


2023


2023


2023


Interest income    


$    154,109


$      152,006


$      150,537


$      148,021


$      145,425


Interest expense    


65,577


63,866


62,116


57,687


52,666


Net interest income, non FTE


88,532


88,140


88,421


90,334


92,759


Non-interest income 












Deposit related fees


8,561


8,305


8,481


8,792


8,571


Loan related fees


2,364


2,663


2,058


2,879


3,189


Gain on SBA loans


3,294


1,699


2,382


2,548


2,910


Wealth management fees    


2,613


2,884


2,394


2,481


2,583


Fair value adjustments on securities


(42)


(115)


768


(467)


(22)


Other


3,343


1,874


591


1,232


(137)


Total non-interest income excluding sales of AFS securities


20,133


17,310


16,674


17,465


17,094


Loss on sale of AFS securities 


-


(49,909)


(25,057)


-


-


Total non-interest income      


20,133


(32,599)


(8,383)


17,465


17,094


Total net revenue 


108,665


55,541


80,038


107,799


109,853














Provision expense for credit losses   


6,499


6,000


7,000


8,000


8,000


Non-interest expense












Compensation and benefits


40,126


40,735


40,095


40,155


39,960


Occupancy and equipment     


8,064


8,698


8,553


8,816


8,970


Technology


10,236


9,904


11,326


10,616


10,465


Professional services


2,757


2,676


3,417


2,423


2,526


Regulatory expenses


1,848


1,845


1,854


1,905


1,834


Amortization of intangible assets     


1,140


1,205


1,205


1,205


1,205


Marketing


532


1,116


1,107


1,552


1,510


Merger, restructuring and other non-operating expenses


(384)


3,617


3,669


2,607


21


Other expenses


6,612


6,224


7,766


7,234


7,557


Total non-interest expense     


70,931


76,020


78,992


76,513


74,048


Total non-interest expense excluding non-operating expenses


71,315


72,403


75,323


73,906


74,027


























Income/(loss) before income taxes


$      31,235


$       (26,479)


$         (5,954)


$        23,286


$        27,805


Income tax expense/(benefit)


7,210


(6,291)


(4,509)


3,741


3,944


Net income/(loss)


$      24,025


$       (20,188)


$         (1,445)


$        19,545


$        23,861


























Diluted earnings/(loss) per common share


$          0.57


$           (0.47)


$           (0.03)


$            0.45


$            0.55














Weighted average shares outstanding:












Basic


42,437


42,777


42,852


43,164


43,443


Diluted


42,508


43,028


43,101


43,347


43,532


























 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS 


Quarters Ended



June 30, 2024


March 31, 2024

June 30, 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


$         4,649

$         77

6.52

%


$         4,553

$         75

6.53

%

$         4,283

$         67

6.16

%

Commercial and industrial loans


1,384

27

7.62



1,355

26

7.64


1,496

27

7.27


Residential mortgages


2,694

28

4.21



2,668

29

4.15


2,488

24

3.87


Consumer loans


430

8

7.47



465

8

7.24


524

9

7.28


Total loans 


9,157

140

6.05



9,041

138

6.04


8,791

127

5.77


Securities (2)


1,332

8

2.44



1,726

10

2.38


2,236

13

2.27


Short-term investments and loans held for sale


597

8

5.07



489

6

5.07


560

7

4.94


New York branch loans held for sale (3)


57

1

5.86



18

-

5.72


-

-

-


Total earning assets


11,143

157

5.57



11,274

154

5.44


11,587

147

5.05


Goodwill and other intangible assets


18





19




22




Other assets


531





462




448




Total assets


$         11,692





$         11,755




$         12,057



















Liabilities and shareholders' equity















Non-interest-bearing demand deposits


$         2,244

$            -

-

%


$         2,348

$            -

-

%

$         2,594

$            -

-

%

NOW and other


763

3

1.44



799

3

1.37


1,055

4

1.35


Money market


2,909

24

3.32



3,083

25

3.25


2,555

14

2.13


Savings


1,004

3

1.06



1,038

3

0.97


1,077

-

0.50


Time


2,376

25

4.22



2,561

26

4.07


2,287

18

3.07


Total deposits


9,296

55

2.35



9,829

57

2.29


9,568

36

1.51


Borrowings (4)


610

9

5.55



504

7

5.52


1,288

17

5.14


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

97

-

-



30

-

-


-

-

-


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


386

3

2.80



119

1

2.75


-

-

-


Total funding liabilities


10,389

67

2.53



10,482

65

2.45


10,856

53

1.94

















Other liabilities


290





255




197




Total liabilities


10,679





10,737




11,053



















Common shareholders' equity (5)


1,013





1,018




1,004




Total shareholders' equity


1,013





1,018




1,004




Total liabilities and shareholders' equity


$         11,692





$         11,755




$         12,057




Net interest margin, FTE




3.20





3.15




3.24

















Supplementary data















Net Interest Income, non FTE


88.532





88.140




92.759




FTE income adjustment


2.013





2.006




1.962




Net Interest Income, FTE


90.545





90.146




94.721


































(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.

 

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS 


At or for the Quarters Ended


June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

(in thousands)

2024

2024

2023

2023

2023

NON-PERFORMING ASSETS











Commercial real estate 

$             5,976


$              4,762


$               4,453


$              5,288


$              1,509


Commercial and industrial loans

8,489


9,174


8,712


11,028


15,597


Residential mortgages

5,491


5,992


6,404


8,060


8,722


Consumer loans

1,392


1,526


1,838


2,260


2,560


Total non-performing loans

21,348


21,454


21,407


26,636


28,388


Repossessed assets

2,549


2,689


2,601


2,548


2,549


Total non-performing assets

$          23,897


$            24,143


$             24,008


$            29,184


$            30,937













Total non-performing loans/total loans

0.23 %


0.24 %


0.24 %


0.30 %


0.32 %


Total non-performing assets/total assets

0.20 %


0.20 %


0.19 %


0.24 %


0.26 %













PROVISION AND ALLOWANCE FOR CREDIT
LOSSES ON LOANS










Balance at beginning of period

$        107,331


$          105,357


$           102,792


$          100,219


$            97,991


Charged-off loans

(3,246)


(5,636)


(6,891)


(6,744)


(7,686)


Recoveries on charged-off loans

1,583


1,610


2,456


1,317


1,914


Net loans charged-off

(1,663)


(4,026)


(4,435)


(5,427)


(5,772)


Provision (benefit)/expense for loan credit
losses

6,499


6,000


7,000


8,000


8,000


Balance at end of period

$        112,167


$          107,331


$           105,357


$          102,792


$          100,219













Allowance for credit losses/total loans

1.22 %


1.18 %


1.17 %


1.14 %


1.13 %


Allowance for credit losses/non-performing
loans

525 %


500 %


492 %


386 %


353 %













NET LOAN CHARGE-OFFS











Commercial real estate

$                  22


$                 292


$                  316


$                   97


$                 664


Commercial and industrial loans

(711)


(1,772)


(2,309)


(3,345)


(4,146)


Residential mortgages

316


98


55


23


(143)


Home equity 

8


193


83


208


126


Other consumer loans

(1,298)


(2,837)


(2,580)


(2,410)


(2,273)


Total, net

$           (1,663)


$             (4,026)


$             (4,435)


$             (5,427)


$             (5,772)













Net charge-offs (QTD annualized)/average
loans 

0.07 %


0.18 %


0.20 %


0.24 %


0.26 %


Net charge-offs (YTD annualized)/average
loans 

0.13 %


0.18 %


0.26 %


0.28 %


0.29 %
























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

$          18,494

0.20 %

$            27,682

0.30 %

$             22,140

0.24 %

$            18,700

0.21 %

$            15,147

0.17 %

90+ Days delinquent and still accruing

11,672

0.13 %

5,882

0.06 %

5,537

0.06 %

5,744

0.06 %

7,812

0.09 %

Total accruing delinquent loans

30,166

0.33 %

33,564

0.36 %

27,677

0.30 %

24,444

0.27 %

22,959

0.26 %

Non-performing loans

21,348

0.23 %

21,454

0.24 %

21,407

0.24 %

26,636

0.30 %

28,399

0.32 %

Total delinquent and non-performing loans

$          51,514

0.56 %

$            55,018

0.60 %

$             49,084

0.54 %

$            51,080

0.57 %

$            51,358

0.58 %

 

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 consolidations 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




June 30,


March 31,


Dec. 31,


Sept. 30,


June 30,


(in thousands)



2024


2024


2023


2023


2023


Total non-interest income



$     20,133


$     (32,599)


$        (8,383)


$       17,465


$       17,094


Adj: Loss on sale of AFS securities



-


49,909


25,057


-


-


Total operating non-interest income (1)



$     20,133


$       17,310


$       16,674


$       17,465


$       17,094















Total revenue

(A)


$   108,665


$       55,541


$       80,038


$     107,799


$     109,853


Adj: Loss on sale of AFS securities



-


49,909


25,057


-


-


Total operating revenue (1)

(B)


$   108,665


$     105,450


$     105,095


$     107,799


$     109,853















Total non-interest expense

(C)


$     70,931


$       76,020


$       78,992


$       76,513


$       74,048


Adj: Merger, restructuring and other non-operating expenses



384


(3,617)


(3,669)


(2,607)


(21)


Operating non-interest expense (1)                                    

(D)


$     71,315


$       72,403


$       75,323


$       73,906


$       74,027















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

(A-C)


$     37,734


$     (20,479)


$         1,046


$       31,286


$       35,805


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

(B-D)


37,350


33,047


29,772


33,893


35,826















Net income/(loss)



$     24,025


$     (20,188)


$        (1,445)


$       19,545


$       23,861


Adj: Loss on sale of AFS securities



-


49,909


25,057


-


-


Adj: Restructuring expense and other non-operating expenses



(384)


3,617


3,669


2,607


21


Adj: Income taxes (expense)/benefit



(473)


(12,404)


(7,091)


(636)


(4)


Total operating income (1)

(E)


$     23,168


$       20,934


$       20,190


$       21,516


$       23,878















(in millions, except per share data)













Total average assets                                                

(F)


$     11,692


$       11,755


$       11,862


$       11,860


$       12,057


Total average shareholders' equity

(G)


1,013


1,018


966


988


1,004


Total average tangible shareholders' equity (1)            

(I)


995


999


946


967


981


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



(115)


(114)


(143)


(218)


(186)


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

(K)


996


991


993


930


951


Total tangible assets, end of period (1)

(L)


12,202


12,128


12,411


12,119


12,068















Total common shares outstanding, end of period (thousands)               

(M)


42,959


43,415


43,501


43,822


44,033


Average diluted shares outstanding (thousands)

(N)


42,508


43,028


43,101


43,347


43,532















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



$          0.57


$         (0.47)


$          (0.03)


$           0.45


$           0.55


Operating earnings per common share, diluted (1)

(E/N)


0.55


0.49


0.47


0.50


0.55


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

(K/M)


23.18


22.84


22.82


21.23


21.60


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

(K/L)


8.16


8.17


8.00


7.68


7.88















Performance ratios (2)













Return on equity



9.49

%

(7.93)

%

(0.60)


7.91

%

9.51

%

Operating return on equity (1)

(E/G)


9.15


8.23


8.36


8.71


9.51


Return on tangible common equity (1)(3)



9.99


(7.73)


(0.24)


8.45


10.09


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

(E+Q)/(I)


9.65


8.73


8.90


9.27


10.09


Return on assets



0.82


(0.69)


(0.05)


0.66


0.79


Operating return on assets (1)

(E/F)


0.79


0.71


0.68


0.73


0.79


Efficiency ratio (1)(6)                                                                          

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


63.40


66.26


67.77


65.05


63.57




























Supplementary data (in thousands)













Tax benefit on tax-credit investments (4)

(O)


 N/M 


 N/M 


$         2,252


$         1,979


$         2,735


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

(P)


 N/M 


 N/M 


(2,060)


(1,463)


(2,210)


Net income on tax-credit investments

(O+P)


 N/M 


 N/M 


193


516


525


Effective tax rate



23.1

%

23.8

%

75.7

%

16.1

%

14.2

%














Intangible amortization

(Q)


$       1,140


$         1,205


$         1,205


$         1,205


$         1,205


Fully taxable equivalent income adjustment 

(R)


2,013


2,006


2,021


1,980


1,962





























(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. 

 

BERKSHIRE HILLS BANCORP, INC.

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



At or for the Six Months Ended




June 30,


June 30,


(in thousands)



2024


2023


Total non-interest income



$                (12,466)


$                    33,700


Adj: Loss on sale of AFS securities



49,909


-


Total operating non-interest income (1)



$                  37,443


$                    33,700









Total revenue 

(A)


$                164,206


$                  223,992


Adj: Loss/(gain) on sale of AFS securities



49,909


-


Total operating revenue (1)

(B)


$                214,115


$                  223,992









Total non-interest expense

(C)


$                146,951


$                  146,003


Less: Merger, restructuring and other non-operating expenses



(3,233)


15


Operating non-interest expense (1)                                    

(D)


$                143,718


$                  146,018









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

(A-C)


$                  17,255


$                    77,989


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

(B-D)


70,397


77,974









Net income



$                    3,837


$                    51,498


Adj: Loss/(gain) on sale of AFS securities



49,909


-


Adj: Restructuring expense and other non-operating expenses



3,233


(15)


Adj: Income taxes (expense)/benefit



(12,877)


3


Total operating income (1)

(E)


$                  44,102


$                    51,486









(in millions, except per share data)







Total average assets                                                

(F)


$                  11,723


$                    11,814


Total average shareholders' equity

(G)


1,015


991


Total average tangible shareholders' equity (1)            

(I)


997


968


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



(115)


(186)


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

(K)


996


951


Total tangible assets, end of period (1)

(L)


12,202


12,068









Total common shares outstanding, end of period (thousands)               

(M)


42,959


44,033


Average diluted shares outstanding (thousands)

(N)


42,763


43,780









Earnings per common share, diluted (1)



$                       0.09


$                        1.18


Operating earnings per common share, diluted (1)

(E/N)


1.03


1.18


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

(K/M)


23.18


21.60


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

(K/L)


8.16


7.88









Performance ratios (2)







Return on equity 



0.76

%

10.39

%

Operating return on equity (1)

(E/G)


8.69


10.39


Return on tangible common equity (1)(3)



1.11


11.01


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

(E+Q)/(I)


9.19


11.01


Return on assets



0.07


0.87


Operating return on assets (1)

(E/F)


0.75


0.87


Efficiency ratio (1)(6)                                                                               

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


64.81


61.50


Net interest margin, FTE



3.18


3.40
















Supplementary data (in thousands)







Tax benefit on tax-credit investments (4)

(O)


 N/M 


$                      5,632


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

(P)


 N/M 


(4,495)


Net income on tax-credit investments

(O+P)


 N/M 


1,137









Intangible amortization

(Q)


$                    2,345


$                      2,410


Fully taxable equivalent income adjustment 

(R)


4,019


3,869





(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. 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/berkshire-hills-reports-a-solid-second-quarter-net-income-of-24-0-million-or-0-57-per-share-302199972.html

SOURCE Berkshire Hills Bancorp, Inc.

FAQ

What was Berkshire Hills Bancorp's (BHLB) net income for Q2 2024?

Berkshire Hills Bancorp (BHLB) reported a net income of $24.0 million, or $0.57 per share, for Q2 2024.

How did Berkshire Hills Bancorp's (BHLB) operating EPS change in Q2 2024?

Berkshire Hills Bancorp's (BHLB) operating EPS increased by 12% to $0.55 in Q2 2024 compared to the previous quarter.

What was Berkshire Hills Bancorp's (BHLB) net interest margin in Q2 2024?

Berkshire Hills Bancorp's (BHLB) net interest margin improved to 3.20% in Q2 2024, up 5 basis points from the previous quarter.

How much did Berkshire Hills Bancorp's (BHLB) loan portfolio grow in Q2 2024?

Berkshire Hills Bancorp's (BHLB) loan portfolio grew by $143 million in Q2 2024, primarily driven by growth in commercial loans.

What was Berkshire Hills Bancorp's (BHLB) efficiency ratio in Q2 2024?

Berkshire Hills Bancorp's (BHLB) efficiency ratio improved to 63.4% in Q2 2024, down from 66.3% in the previous quarter.

Berkshire Hills Bancorp, Inc.

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