Press Release

Berkshire Hills Announces Fourth Quarter Results; Annual Meeting Date Announced

Company Release -
1/25/2021 12:00 AM ET

BOSTON, Jan. 25, 2021 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today announced fourth quarter 2020 net income of $15 million, or $0.30 per share, compared to $21 million, or $0.42 per share, in the prior quarter.  The fourth quarter non-GAAP measure of core earnings totaled $14 million, or $0.28 per share, compared to $26 million, or $0.53 per share, in the prior quarter.  The change in earnings is primarily due to pandemic related impacts, including a $9 million increase in the noncash provision for expected credit losses.  

(PRNewsfoto/Berkshire Hills Bancorp, Inc.)

FOURTH QUARTER FINANCIAL HIGHLIGHTS (non-GAAP measures are reconciled on pages F-9 and F-10)

  • 2.61% net interest margin
  • 71% efficiency ratio
  • 9.3% equity/assets
  • 79% loans/deposits
  • $23.37 book value per share; $22.68 tangible book value per share (non-GAAP measure)
  • 0.80% annualized net charge-offs/loans
  • 0.52% non-performing assets/assets

Acting CEO and President Sean Gray stated, "Fourth quarter results declined primarily due to higher noncash provisioning for expected credit losses reflecting the persistence of pandemic impacts on economic activity.  These impacts also contributed to lower operating revenue and higher operating expenses.  In this environment, the Bank adhered to its financial and operating disciplines.   Higher net charge-offs were primarily due to four hospitality relationships, including credits which were exited during the quarter.  Total criticized loans decreased, along with loans with payment deferrals.  The net interest margin was supported by a reduction in funding costs.   We managed down our staffing, as well as occupancy, and technology costs.  We continue to adjust operations to protect employees, customers and communities, including moving branch lobbies back to appointment-only access based on local conditions.  Management's actions are targeted to position the Bank for improved results as public health and economic conditions improve."

Mr. Gray continued, "We recently announced important strategic initiatives, starting with our best of breed digital account opening platform.  We've made the right technology investments to support customer preferences for electronic banking.  Consistent with these shifts, we announced the planned consolidation of 16 branches in the first half of 2021.   With the concierge banking offered by our growing team of MyBankers, we expect to smoothly transition customers to nearby branches.  Separately, we entered into an agreement to sell our eight mid-Atlantic branches and we are opening a new Providence commercial banking office.  When these initiatives are completed, we plan to have 106 branch offices located primarily in southern New England and eastern/central New York.  These actions are targeted to focus and deepen meaningful engagement with our communities as a 21st century purpose-driven community bank that helps everyone access the services they need to live healthier financial lives." 

ANNUAL MEETING

The Board of Directors determined that the Annual Meeting of Shareholders will be held on Thursday, May 20, 2021 and may be convened as a virtual meeting.   The date of Thursday,March 25, 2021 was established as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Annual Meeting.  Further information about the annual meeting will be available in early April at the Company's website at ir.berkshirebank.com.

FINANCIAL CONDITION

Total assets increased quarter-over-quarter by $224 million, or 2%, to $12.8 billion due to a $514 million increase in short-term payroll deposits at year-end, which resulted in higher short-term investments.  Excluding this increase, total assets decreased by $291 million, or 2%, due to ongoing loan runoff. Investment securities increased by $236 million as excess liquidity was reinvested into residential and commercial agency mortgage backed securities.

Total loans decreased by $901 million during the fourth quarter.  Due to the pending agreement for the sale of the Mid-Atlantic branches, Berkshire has reclassified $301 million in loans as assets held for sale.   Excluding this reclassification, total loans decreased by $600 million, or 7%, due to ongoing runoff in all major categories.  Paycheck Protection Program ("PPP") loans decreased by $75 million to $633 million as the SBA loan forgiveness program was initiated.

Total criticized loans decreased by $36 million, or 9%, to $359 million during the fourth quarter, including the sale of $22 million in criticized hospitality loans. Total loans with active and in-process deferrals decreased by $97 million, or 22%, to $350 million as conditions improved for commercial borrowers.    

Total delinquent and nonaccrual loans measured 1.14% of total loans at year-end, compared to 0.98% at the start of the quarter.   Accruing delinquent loans decreased to 0.34% of total loans from 0.45% during the quarter.  Total nonaccrual loans increased by $18 million to $65 million due primarily to two COVID sensitive commercial relationships which were rated as substandard prior to the pandemic, including one 2019 purchased credit deteriorated loan.  Net charge-offs totaled $17 million, or 0.80% annualized compared to average loans.  This included $12 million related to hospitality loans, of which $7 million was related to the above mentioned loan sale.  The allowance for credit losses on loans decreased quarter-over-quarter due to the decrease in total loans, including the impact of charge-offs.   The year-end ratio of the allowance to loans measured 1.58%.  Excluding PPP loans, this ratio measured 1.71% at year-end, and was not materially changed in the second half of the year.  

Total deposits decreased by $251 million during the fourth quarter.  Due to the branch sale, the Company has reclassified $617 million in deposits as liabilities held for sale.  Adjusting for this reclassification, total deposits increased by $367 million during the quarter, including the previously noted $514 million increase in short-term payroll deposits to $1.046 billion.  This was offset by a $209 million decrease in brokered time deposits to $605 million.  All other deposits increased by a total of $61 million, or 1%.  Total borrowings decreased by $131 million to $572 million.  The loans/deposits ratio measured 79% at year-end, decreasing from 86% at the start of the fourth quarter.

Year-end book value per share totaled $23.37 and the non-GAAP measure of tangible book value per share measured $22.68.  Year-end equity/assets measured 9.3% and the non-GAAP measure of tangible equity/tangible assets was 9.0%.  During the fourth quarter, the remaining balance of preferred stock was converted to common shares in accordance with contractual terms. 

RESULTS OF OPERATIONS – FOURTH QUARTER

Berkshire's earnings declined in the fourth quarter compared to the prior quarter, reflecting ongoing impacts of the pandemic on the Company's results of operations.  Most of the impact was due to the $9 million increase in the noncash provision for expected credit losses on loans.  Further, interest income was negatively impacted by non-accrual loans and expense was affected by higher loan workout expense.   GAAP earnings per share decreased by $0.12, or 29%, and the non-GAAP measure of core earnings per share decreased by $0.25 or 47%.  The GAAP measure of pre-tax, pre-provision net revenue ("PPNR") increased quarter-over-quarter by $3 million to $27 million, while the non-GAAP measure of core PPNR decreased by $6 million to $24 million.  The Company focuses on this measure of operations as a key measure of operating performance before accounting for estimations of future pandemic related credit losses. This decrease was due to a $2.6 million decrease in core revenue and a $3.7 million increase in core expense. 

The revenue decrease included a $1 million decrease in net interest income as a result of lower earning assets and higher nonaccrual loans.   The net interest margin was stable at 2.61% and benefited from a 0.14% decrease in the cost of deposits, along with higher interest revenue related to PPP loan forgiveness.  Time deposit costs decreased including the impact of lower brokered deposits and maturities of higher rate CD's.   The unamortized balance of deferred PPP fees totaled $13 million at year-end.   Total fee income decreased by $1 million due to a seasonal decrease in mortgage banking revenue. 

The provision for expected credit losses increased quarter-over-quarter by $9 million to $10 million, primarily due to a qualitative assessment of credit migration in the loan portfolio.   The level of the year-end allowance is intended to absorb pandemic related expected credit losses over the next seven quarters based on information and third party forecasts at year-end. 

Non-interest expense decreased quarter-over-quarter by $1 million, due to higher noncore costs recorded in the third quarter related to the CEO separation.   The non-GAAP measure of core non-interest expense increased by $4 million due primarily to a lending operations project which was completed during the quarter.   Full time equivalent staff in continuing operations at year-end totaled 1,505, compared to 1,507 positions at the start of the fourth quarter and to 1,550 positions at the start of the year.  Occupancy and technology expense decreased quarter-over-quarter.   The fourth quarter effective tax rate on continuing operations was a benefit of 10%.

Net non-core adjustments to core income totaled $1 million in the fourth quarter.  A final loss was recorded on discontinued national mortgage banking operations as the Company completed the wind-down of these operations, with no further cost recognition expected.  This was partially offset by net securities gains and other non-core items.  The Company has announced strategic initiatives for the sale and consolidation of branches in the first half of 2021.   The Company expects to recognize a noncore net gain on the sale of these operations and non-core charges in conjunction through these consolidations.

BE FIRST CORPORATE RESPONSIBILITY UPDATE

Berkshire is committed to delivering purpose-driven performance. Learn more about the steps Berkshire is taking to be a values-based brand for all its stakeholders at www.berkshirebank.com/csr and in its most recent Corporate Responsibility Report.

Key developments in the quarter and year include:

  • Continued Investment in Community Recovery & Resiliency: As people and small businesses in neighborhoods across the Company's footprint struggle through the impacts of the COVID-19 pandemic, Berkshire's Foundation is answering the call providing a record $3.8 million in grant funding to 502 organizations in 2020. These critical investments included recent contributions to local food banks to meet increasing demand for services across the Company's footprint. 
  • Enhancing Thirty Party ESG Ratings: The Company continued to improve its Environmental, Social and Governance (ESG) ratings with third party agencies and as of December 31, 2020 the Company received ratings of: MSCI ESG- BBB, ISS ESG Quality Score - Environment: 2, Social: 1, Governance: 3 and Bloomberg ESG Disclosure- 41.67. The company is also rated by Sustainalytics.   Additionally, the Company is included in the Bloomberg Gender Equality Index. 
  • Awards & Recognition: Berkshire was named a recipient of the 2020 Communitas Award for Leadership in Corporate Social Responsibility recognizing its' continued performance through the Be FIRST Commitment, as well as the company's comprehensive corporate responsibility, social impact and sustainability strategy. In addition, the Bank was recognized by the American Bankers Association Community Commitment Awards for its Be FIRST Commitment in the Economic Inclusion category.

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

Berkshire will post an investor presentation at its website at ir.berkshirebank.com with additional financial information and other information about the quarter.

Berkshire will also conduct a conference call/webcast at 10:00 a.m. Eastern time on Tuesday, January 26, 2021 to discuss the results for the quarter and provide guidance about expected future results.  Participants are encouraged to pre-register for the conference call using the following link:  https://dpregister.com/sreg/10151338/e0b6214914.  Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call.  Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email.  Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of Berkshire's website at http://ir.berkshirebank.com.  Those parties who do not have Internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call.  Participants are requested to dial-in a few minutes before the scheduled start of the call.    A telephone replay of the call will be available through Tuesday, February 2, 2021 by dialing 877-344-7529 and entering access number 10151338.  The webcast will be available on Berkshire's website for an extended period of time.

ABOUT BERKSHIRE HILLS BANCORP

Berkshire Hills Bancorp is the parent of Berkshire Bank, a 21st century community bank pursuing purpose driven performance based on its Be FIRST corporate responsibility culture.  Headquartered in Boston, Berkshire operates 130 banking offices in seven Northeastern states, with approximately $12.8 billion in assets.

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," "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.

Further, given its ongoing and dynamic nature, it is difficult to predict what continued effects the COVID-19 pandemic will have on our business and results of operations. The pandemic and the related local and national economic disruption may result in a continued decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in our allowance for credit losses on loans; a decline in the value of loan collateral, including real estate; a greater decline in the yield on our interest-earning assets than the decline in the cost of our interest-bearing liabilities; and increased cybersecurity risks, as employees increasingly work remotely.

Accordingly, 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.

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 provide supplemental perspectives on operating results, performance trends, and financial condition.  They 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 included on pages F-9 and F-10 in the accompanying financial tables.  In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. 

The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense.  These measures exclude items which the Company does not view as related to its normalized operations.  These items primarily include securities gains/losses, merger costs, restructuring costs, goodwill impairment, and discontinued operations.  Discontinued operations are the Company's national mortgage banking operations which the Company exited.  Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees.  Merger costs in 2019 were primarily related to the acquisition of SI Financial Group.  Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales.  Restructuring costs also include severance and consulting expenses related to the Company's strategic review.  They also include costs related to the consolidation of branches, including eight branches for the full year of 2019.  The Company recorded a full impairment of its goodwill in the second quarter of 2020, which was classified as noncore.  Noncore charges in the third and fourth quarters of 2020 included costs related to separation with the former CEO in the third quarter, and consulting for the CEO succession process in both quarters.   A non-core gain was recognized on the sale of a specialty commercial insurance business line in the fourth quarter.

The Company has introduced the measure of Core Pre-Provision Net Revenue ("Core PPNR") which measures core income before credit loss provision and tax expense.  Due to the non-cash projections introduced into the calculation of income by the new CECL accounting standard, the investment community is placing more emphasis on PPNR in order to measure the results of operations and to compare them across banks which may have widely varying estimates of future economic conditions that affect their provision expense and reported earnings.  The Company also calculates core PPNR/assets in order to utilize the PPNR measure in assessing its comparative operating profitability.

Non-core adjustments are presented net of an adjustment for income tax expense.  This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income.  The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items.  The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. References to organic growth and organic change exclude balances acquired in bank mergers. 

CONTACTS
Investor Relations Contact
David Gonci; Capital Markets Director; 413-281-1973

Media Contacts:
John Lovallo
Email: jlovallo@levick.com
Tel: (917) 612-8419

Cate Cronin
Email: ccronin@levick.com
Tel: (202) 738-7302

TABLE

INDEX

CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES

F-1

Selected Financial Highlights

F-2

Balance Sheets

F-3

Loan and Deposit Analysis

F-4

Statements of Operations

F-5

Statements of Operations (Five Quarter Trend)

F-6

Average Yields and Costs

F-7

Average Balances

F-8

Asset Quality Analysis

F-9

Reconciliation of Non-GAAP Financial Measures

 

and Supplementary Data (Five Quarter Trend)

F-10

Reconciliation of Non-GAAP Financial Measures

 

and Supplementary Data (Year-to-Date)

 

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)

   

At or for the Quarters Ended (1)

   

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

 

Dec. 31,

 
   

2020

 

2020

 

2020

 

2020

 

2019

 
                       

PER SHARE DATA

                   
 

Net earnings/(loss) per common share, diluted

$     0.30

 

$     0.42

 

$ (10.93)

 

$     (0.40)

 

$     0.51

 
 

Core earnings/(loss) per common share, diluted (2)

0.28

 

0.53

 

(0.13)

 

(0.07)

 

0.70

 
 

Total book value per common share

23.37

 

23.03

 

22.79

 

33.90

 

34.65

 
 

Tangible book value per common share (2)

22.68

 

22.22

 

21.94

 

22.00

 

22.56

 
 

Market price at period end

17.12

 

10.11

 

11.02

 

14.86

 

32.88

 
 

Dividends per common share

0.12

 

0.12

 

0.24

 

0.24

 

0.23

 
 

Dividends per preferred share

 NA 

 

0.24

 

0.48

 

0.48

 

0.46

 
                       

PERFORMANCE RATIOS (3)

                   
 

Return on assets

0.48

%

0.67

%

(16.38)

%

(0.62)

%

0.78

%

 

Core return on assets (2)

0.45

 

0.84

 

(0.19)

 

(0.11)

 

1.08

 
 

Return on equity

5.22

 

7.50

 

(131.17)

 

(4.58)

 

5.90

 
 

Core return on equity (2)

4.89

 

9.33

 

(1.54)

 

(0.84)

 

8.09

 
 

Core return on tangible common equity (2)

5.50

 

10.27

 

(2.05)

 

(0.94)

 

13.12

 
 

Net interest margin, fully taxable equivalent (FTE) (4)(5)

2.61

 

2.61

 

2.62

 

3.04

 

3.11

 
 

Fee income/Net interest and fee income from continuing operations

18.84

 

19.82

 

18.45

 

15.46

 

18.11

 
 

Efficiency ratio (2)

71.03

 

65.39

 

71.01

 

66.92

 

53.66

 
                       

CHANGE (Year-to-date)

                   
 

Total commercial loans (organic, annualized)

(1)

%

5

%

12

%

(5)

%

(7)

%

 

Total loans (organic, annualized)

(12)

 

(7)

 

(3)

 

(8)

 

(9)

 
 

Total deposits (organic, annualized)

5

 

2

 

9

 

(10)

 

0

 
 

Total net revenues from continuing operations (compared to prior year)

(15)

 

(15)

 

(14)

 

(14)

 

4

 
 

(Loss)/earnings per common share (compared to prior year) 

(638)

 

(847)

 

(1,200)

 

(178)

 

(14)

 
 

Core earnings/(loss) per common share (compared to prior year)(2)

(75)

 

(81)

 

(116)

 

(112)

 

(14)

 
                       

FINANCIAL DATA (in millions)

                   
 

Total assets

$ 12,838

 

$ 12,614

 

$ 13,063

 

$   13,122

 

$ 13,216

 
 

Total earning assets

12,090

 

11,832

 

12,267

 

11,785

 

11,916

 
 

Total securities

2,223

 

1,988

 

1,882

 

1,837

 

1,770

 
 

Total loans

8,082

 

8,982

 

9,370

 

9,303

 

9,502

 
 

Allowance for credit losses

127

 

134

 

139

 

114

 

64

 
 

Total intangible assets

35

 

41

 

42

 

598

 

599

 
 

Total deposits

10,216

 

10,467

 

10,776

 

10,072

 

10,336

 
 

Total shareholders' equity

1,188

 

1,179

 

1,164

 

1,722

 

1,759

 
 

Net income/(loss)

15.0

 

21.2

 

(549.4)

 

(19.9)

 

25.8

 
 

Core income/(loss) (2)

14.1

 

26.4

 

(6.5)

 

(3.6)

 

35.3

 
 

Purchase accounting accretion

2.2

 

2.5

 

2.1

 

3.1

 

5.1

 
 

Goodwill impairment

-

 

-

 

553.8

 

-

 

-

 
                       

ASSET QUALITY AND CONDITION RATIOS 

                   
 

Net charge-offs (current quarter annualized)/average loans

0.80

%

0.27

%

0.17

%

0.45

%

0.17

%

 

Total non-performing assets/total assets

0.52

 

0.39

 

0.36

 

0.40

 

0.31

 
 

Allowance for credit losses/total loans

1.58

 

1.50

 

1.49

 

1.22

 

0.67

 
 

Loans/deposits

79

 

86

 

87

 

92

 

92

 
 

Shareholders' equity to total assets

9.25

 

9.35

 

8.91

 

13.13

 

13.31

 
 

Tangible shareholders' equity to tangible assets (2)

9.01

 

9.05

 

8.61

 

8.98

 

9.19

 
   
   

(1)

Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10.

(2)

Non-GAAP financial measure. Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures.

(3)

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

(4)

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

(5)

The effect of purchase accounting accretion for loans, time deposits, and borrowings on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows beginning with the most recent quarter and ending with the earliest quarter: 0.07%, 0.08%, 0.07%, 0.11%, 0.17%.

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)

 

December 31,

 

September 30,

 

December 31,

(in thousands)

2020

 

2020

 

2019

Assets

         

Cash and due from banks

$          91,219

 

$           90,537

 

$        105,447

Short-term investments

1,466,656

 

844,755

 

474,382

Total cash and short-term investments

1,557,875

 

935,292

 

579,829

           

Trading security

9,708

 

9,525

 

10,769

Marketable equity securities, at fair value

18,513

 

31,993

 

41,556

Securities available for sale, at fair value

1,695,232

 

1,575,289

 

1,311,555

Securities held to maturity, at amortized cost

465,091

 

330,197

 

357,979

Federal Home Loan Bank stock and other restricted securities

34,873

 

40,520

 

48,019

Total securities

2,223,417

 

1,987,524

 

1,769,878

Less: Allowance for credit losses on investment securities

(104)

 

(96)

 

-

Net securities

2,223,313

 

1,987,428

 

1,769,878

           

Loans held for sale

17,748

 

15,854

 

36,664

           

Total loans

8,081,519

 

8,982,336

 

9,502,428

Less: Allowance for credit losses on loans 

(127,302)

 

(134,414)

 

(63,575)

Net loans

7,954,217

 

8,847,922

 

9,438,853

           

Premises and equipment, net

112,663

 

117,116

 

120,398

Other real estate owned

149

 

40

 

-

Goodwill 

-

 

-

 

553,762

Other intangible assets

34,819

 

40,947

 

45,615

Cash surrender value of bank-owned life insurance

232,695

 

231,217

 

227,894

Other assets

387,230

 

425,675

 

288,945

Assets held for sale

317,304

 

-

 

-

Assets from discontinued operations

-

 

12,966

 

154,132

Total assets 

$   12,838,013

 

$    12,614,457

 

$   13,215,970

           

Liabilities and shareholders' equity

         

Demand deposits

$     2,484,249

 

$      2,585,173

 

$     1,884,100

NOW and other deposits

1,003,005

 

1,522,289

 

1,492,569

Money market deposits

3,371,353

 

2,516,168

 

2,528,656

Savings deposits

972,116

 

952,836

 

841,283

Time deposits

2,385,085

 

2,890,093

 

3,589,369

Total deposits

10,215,808

 

10,466,559

 

10,335,977

           

Senior borrowings

474,357

 

605,483

 

730,501

Subordinated borrowings

97,280

 

97,223

 

97,049

Total borrowings

571,637

 

702,706

 

827,550

           

Other liabilities 

232,730

 

251,220

 

267,398

Liabilities held for sale

630,065

 

-

 

-

Liabilities from discontinued operations

-

 

14,947

 

26,481

Total liabilities

11,650,240

 

11,435,432

 

11,457,406

           

Preferred shareholders' equity

-

 

20,325

 

40,633

Common shareholders' equity

1,187,773

 

1,158,700

 

1,717,931

Total shareholders' equity

1,187,773

 

1,179,025

 

1,758,564

Total liabilities and shareholders' equity

$   12,838,013

 

$    12,614,457

 

$   13,215,970

           

Net common shares outstanding 

50,833

 

50,306

 

49,585

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3)

LOAN ANALYSIS

                         
                         
                 

Organic Annualized Growth %

(in millions)

December 31, 2020
Balance

 

December 31, 2020
HFS Balance

 

September 30, 2020
Balance

 

December 31, 2019
Balance

 

Quarter ended
December 31, 2020

 

Year to Date  

 
                         
                         

Total commercial real estate

$                      3,647

 

$                         188

 

$                       3,943

 

$                      4,034

 

(11)

%

(5)

%

Commercial and industrial loans 

1,959

 

14

 

2,147

 

1,841

 

(32)

 

7

 

Total commercial loans 

5,606

 

202

 

6,090

 

5,875

 

(19)

 

(1)

 
                         

Total residential mortgages

1,813

 

63

 

2,122

 

2,685

 

(46)

 

(30)

 
                         

Home equity 

295

 

31

 

350

 

381

 

(27)

 

(14)

 

Auto and other

368

 

5

 

420

 

561

 

(45)

 

(34)

 

Total consumer loans

663

 

36

 

770

 

942

 

(37)

 

(26)

 

Total loans

$                      8,082

 

$                         301

 

$                       8,982

 

$                      9,502

 

(27)

%

(12)

%

                         
                         
                         

DEPOSIT ANALYSIS

                         
               

Organic Annualized Growth %

(in millions)

December 31, 2020
Balance

 

December 31, 2020
HFS Balance

 

September 30, 2020
Balance

 

December 31, 2019
Balance

 

Quarter ended
December 31, 2020

 

Year to Date

 

Demand

$                      2,484

 

$                         107

 

$                       2,585

 

$                      1,884

 

1

%

38

%

NOW and other

1,003

 

112

 

1,523

 

1,493

 

(107)

 

(25)

 

Money market

3,372

 

220

 

2,516

 

2,529

 

171

 

42

 

Savings

972

 

17

 

953

 

841

 

15

 

18

 

Time deposits

2,385

 

161

 

2,890

 

3,589

 

(48)

 

(29)

 

Total deposits 

$                    10,216

 

$                         617

 

$                     10,467

 

$                    10,336

 

14

%

5

%

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4)

 

Three Months Ended

 

Years Ended

 

December 31,

 

December 31,

(in thousands, except per share data)

2020

 

2019

 

2020

 

2019

Interest and dividend income from continuing operations    

             

Loans

$     79,756

 

$      110,915

 

$        358,015

 

$      448,927

Securities and other    

12,375

 

14,526

 

51,767

 

60,586

Total interest and dividend income    

92,131

 

125,441

 

409,782

 

509,513

Interest expense from continuing operations 

             

Deposits

12,255

 

28,797

 

72,715

 

115,193

Borrowings

4,167

 

5,311

 

20,285

 

29,062

Total interest expense    

16,422

 

34,108

 

93,000

 

144,255

Net interest income from continuing operations

75,709

 

91,333

 

316,782

 

365,258

Non-interest income from continuing operations 

             

Mortgage banking originations

543

 

172

 

5,190

 

788

Loan related income

4,833

 

7,056

 

16,840

 

24,374

Deposit related fees

7,523

 

8,264

 

27,905

 

31,352

Insurance commissions and fees    

2,319

 

2,471

 

10,770

 

10,957

Wealth management fees    

2,359

 

2,239

 

9,285

 

9,353

Total fee income    

17,577

 

20,202

 

69,990

 

76,824

Other

2,105

 

75

 

2,597

 

1,438

Securities gains/(losses), net     

2,405

 

1,734

 

(7,520)

 

4,389

Gain on sale of business operations and assets, net

1,240

 

1,351

 

1,240

 

1,351

Total non-interest income      

23,327

 

23,362

 

66,307

 

84,002

Total net revenue from continuing operations

99,036

 

114,695

 

383,089

 

449,260

Provision for credit losses   

10,000

 

5,351

 

75,878

 

35,419

Non-interest expense from continuing operations

             

Compensation and benefits

36,719

 

35,355

 

147,840

 

140,906

Occupancy and equipment     

10,948

 

10,798

 

43,359

 

39,586

Technology and communications

7,988

 

6,702

 

32,364

 

26,523

Marketing and promotion     

634

 

1,046

 

3,703

 

4,474

Professional services

4,055

 

2,288

 

11,907

 

10,798

FDIC premiums and assessments

1,218

 

471

 

5,876

 

3,861

Other real estate owned and foreclosures

44

 

4

 

125

 

154

Amortization of intangible assets     

1,513

 

1,582

 

6,181

 

5,783

Goodwill impairment

-

 

-

 

553,762

 

-

Merger, restructuring and other expense 

523

 

5,713

 

5,839

 

28,046

Other

8,154

 

6,328

 

29,283

 

29,726

Total non-interest expense     

71,796

 

70,287

 

840,239

 

289,857

               

Income/(loss) from continuing operations before income taxes       

$     17,240

 

$        39,057

 

$      (533,028)

 

$      123,984

Income tax (benefit)/expense

(1,659)

 

6,421

 

(19,853)

 

22,463

Net income/(loss) from continuing operations

$     18,899

 

$        32,636

 

$      (513,175)

 

$      101,521

               

(Loss) from discontinued operations before income taxes

$      (5,114)

 

$        (9,514)

 

$        (26,855)

 

$        (5,539)

Income tax (benefit)

(1,224)

 

(2,629)

 

(7,013)

 

(1,468)

Net (loss) from discontinued operations

$      (3,890)

 

$        (6,885)

 

$        (19,842)

 

$        (4,071)

               

Net income/(loss)

$     15,009

 

$        25,751

 

$      (533,017)

 

$        97,450

Preferred stock dividend

-

 

240

 

313

 

960

Income/(loss) available to common shareholders

$     15,009

 

$        25,511

 

$      (533,330)

 

$        96,490

               

Basic earnings/(loss) per common share:

             

Continuing Operations

$         0.38

 

$            0.65

 

$          (10.21)

 

$            2.06

Discontinued Operations

(0.08)

 

(0.14)

 

(0.39)

 

(0.08)

Total

$         0.30

 

$            0.51

 

$          (10.60)

 

$            1.98

               

Diluted earnings/(loss) per common share:

             

Continuing Operations

$         0.38

 

$            0.65

 

$          (10.21)

 

$            2.05

Discontinued Operations

(0.08)

 

(0.14)

 

(0.39)

 

(0.08)

Total

$         0.30

 

$            0.51

 

$          (10.60)

 

$            1.97

               

Weighted average shares outstanding:      

             

Basic

50,308

 

50,494

 

50,270

 

49,263

Diluted

50,355

 

50,702

 

50,270

 

49,421

               

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) - UNAUDITED - (F-5)

   
 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

 

Dec. 31,

 

(in thousands, except per share data)

2020

 

2020

 

2020

 

2020

 

2019

 

Interest and dividend income from continuing operations    

                   

Loans

$   79,756

 

$   85,688

 

$       90,876

 

$   101,695

 

$   110,915

 

Securities and other    

12,375

 

12,080

 

12,812

 

14,500

 

14,526

 

Total interest and dividend income    

92,131

 

97,768

 

103,688

 

116,195

 

125,441

 

Interest expense from continuing operations

                   

Deposits

12,255

 

16,070

 

20,552

 

23,838

 

28,797

 

Borrowings

4,167

 

4,643

 

5,546

 

5,929

 

5,311

 

Total interest expense    

16,422

 

20,713

 

26,098

 

29,767

 

34,108

 

Net interest income from continuing operations

75,709

 

77,055

 

77,590

 

86,428

 

91,333

 

Non-interest income from continuing operations

                   

Mortgage banking originations

543

 

2,044

 

1,644

 

959

 

172

 

Loan related income

4,833

 

4,988

 

5,717

 

1,302

 

7,056

 

Deposit related fees

7,523

 

7,062

 

5,373

 

7,947

 

8,264

 

Insurance commissions and fees    

2,319

 

2,660

 

2,767

 

3,024

 

2,471

 

Wealth management fees    

2,359

 

2,299

 

2,057

 

2,570

 

2,239

 

Total fee income    

17,577

 

19,053

 

17,558

 

15,802

 

20,202

 

Other

2,105

 

1,927

 

(999)

 

(436)

 

75

 

Securities gains/(losses), net     

2,405

 

(1,017)

 

822

 

(9,730)

 

1,734

 

Gain on sale of business operations and assets, net

1,240

 

-

 

-

 

-

 

1,351

 

Total non-interest income      

23,327

 

19,963

 

17,381

 

5,636

 

23,362

 

Total net revenue from continuing operations

99,036

 

97,018

 

94,971

 

92,064

 

114,695

 

Provision for credit losses   

10,000

 

1,200

 

29,871

 

34,807

 

5,351

 

Non-interest expense from continuing operations

                   

Compensation and benefits

36,719

 

34,809

 

39,403

 

36,909

 

35,355

 

Occupancy and equipment     

10,948

 

11,084

 

10,195

 

11,132

 

10,798

 

Technology and communications

7,988

 

8,540

 

7,755

 

8,081

 

6,702

 

Marketing and promotion  

634

 

1,002

 

902

 

1,165

 

1,046

 

Professional services

4,055

 

2,567

 

2,565

 

2,720

 

2,288

 

FDIC premiums and assessments

1,218

 

1,518

 

1,658

 

1,482

 

471

 

Other real estate owned and foreclosures

44

 

40

 

14

 

27

 

4

 

Amortization of intangible assets     

1,513

 

1,530

 

1,558

 

1,580

 

1,582

 

Goodwill impairment

-

 

-

 

553,762

 

-

 

-

 

Merger, restructuring and other expense 

523

 

5,316

 

-

 

-

 

5,713

 

Other

8,154

 

6,437

 

6,463

 

8,229

 

6,328

 

Total non-interest expense     

71,796

 

72,843

 

624,275

 

71,325

 

70,287

 
                     

Income/(loss) from continuing operations before income taxes

$   17,240

 

$   22,975

 

$   (559,175)

 

$    (14,068)

 

$     39,057

 

Income tax (benefit)/expense

(1,659)

 

(68)

 

(16,130)

 

(1,996)

 

6,421

 

Net income/(loss) from continuing operations

$   18,899

 

$   23,043

 

$   (543,045)

 

$    (12,072)

 

$     32,636

 
                     

(Loss) from discontinued operations before income taxes

$   (5,114)

 

$   (2,477)

 

$       (8,635)

 

$    (10,629)

 

$      (9,514)

 

Income tax (benefit)

(1,224)

 

(659)

 

(2,299)

 

(2,831)

 

(2,629)

 

Net (loss) from discontinued operations

$   (3,890)

 

$   (1,818)

 

$       (6,336)

 

$      (7,798)

 

$      (6,885)

 
                     

Net income/(loss)

$   15,009

 

$   21,225

 

$   (549,381)

 

$    (19,870)

 

$     25,751

 

Preferred stock dividend

-

 

58

 

130

 

125

 

240

 

Income/(loss) available to common shareholders

$   15,009

 

$   21,167

 

$   (549,511)

 

$    (19,995)

 

$     25,511

 
                     
                     

Basic earnings/(loss) per common share:

                   

Continuing Operations

$       0.38

 

$       0.46

 

$       (10.80)

 

$        (0.24)

 

$         0.65

 

Discontinued Operations

(0.08)

 

(0.04)

 

(0.13)

 

(0.16)

 

(0.14)

 

Total

$       0.30

 

$       0.42

 

$       (10.93)

 

$        (0.40)

 

$         0.51

 
                     

Diluted earnings/(loss) per common share:

                   

Continuing Operations

$       0.38

 

$       0.46

 

$       (10.80)

 

$        (0.24)

 

$         0.65

 

Discontinued Operations

(0.08)

 

(0.04)

 

(0.13)

 

(0.16)

 

(0.14)

 

Total

$       0.30

 

$       0.42

 

$       (10.93)

 

$        (0.40)

 

$         0.51

 
                     

Weighted average shares outstanding:      

                   

Basic

50,308

 

50,329

 

50,246

 

50,204

 

50,494

 

Diluted

50,355

 

50,329

 

50,246

 

50,204

 

50,702

 
 

 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-6)

 

Quarters Ended

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

 

Dec. 31,

 
 

2020

 

2020

 

2020

 

2020

 

2019

 
                     

Earning assets 

                   

Loans:

                   

Commercial real estate

3.34

%

3.52

%

3.78

%

4.41

%

4.80

%

Commercial and industrial loans

4.05

 

3.88

 

4.02

 

5.03

 

5.35

 

Residential mortgages

3.78

 

3.78

 

3.78

 

3.77

 

3.61

 

Consumer loans

3.41

 

3.59

 

3.72

 

4.28

 

4.38

 

Total loans

3.62

 

3.68

 

3.83

 

4.33

 

4.52

 

Securities

2.69

 

2.78

 

3.07

 

3.32

 

3.31

 

Short-term investments and loans held for sale

0.57

 

0.21

 

0.50

 

1.78

 

3.15

 

Total earning assets

3.17

 

3.31

 

3.50

 

4.08

 

4.27

 
                     

Funding liabilities

                   

Deposits:

                   

NOW and other

0.17

 

0.24

 

0.30

 

0.46

 

0.54

 

Money market

0.32

 

0.38

 

0.58

 

0.98

 

1.18

 

Savings

0.08

 

0.10

 

0.10

 

0.13

 

0.14

 

Time

1.35

 

1.63

 

1.84

 

1.87

 

1.97

 

Total interest-bearing deposits

0.62

 

0.81

 

1.01

 

1.18

 

1.35

 

Borrowings

2.50

 

2.36

 

2.38

 

2.60

 

2.77

 

Total interest-bearing liabilities

0.79

 

0.95

 

1.16

 

1.33

 

1.48

 
                     

Net interest spread

2.38

 

2.36

 

2.34

 

2.75

 

2.79

 

Net interest margin

2.61

 

2.61

 

2.62

 

3.04

 

3.11

 
                     

Cost of funds (1)

0.60

 

0.73

 

0.92

 

1.11

 

1.23

 

Cost of deposits 

0.47

 

0.61

 

0.79

 

0.96

 

1.11

 
                     

(1) Cost of funds includes all deposits and borrowings.

 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - UNAUDITED - (F-7)

 

Quarters Ended

 

Dec. 31, 

 

Sept. 30, 

 

June 30, 

 

March 31, 

 

Dec. 31, 

 

(in thousands)

2020

 

2020

 

2020

 

2020

 

2019

 

Assets

                   

Loans

                   

Commercial real estate

$       3,843,263

 

$      3,986,424

 

$      4,005,018

 

$      4,000,461

 

$       4,056,244

 

Commercial and industrial loans

2,055,978

 

2,191,749

 

2,152,820

 

1,795,813

 

1,768,039

 

Residential mortgages

1,971,366

 

2,224,132

 

2,452,622

 

2,654,224

 

2,758,676

 

Consumer loans

725,810

 

800,824

 

865,318

 

921,810

 

974,889

 

Total loans (1) 

8,596,417

 

9,203,129

 

9,475,778

 

9,372,308

 

9,557,848

 

Securities (2)

1,967,527

 

1,873,533

 

1,793,381

 

1,744,635

 

1,752,968

 

Short-term investments and loans held for sale

977,375

 

766,447

 

697,138

 

374,894

 

444,622

 

Total earning assets (3)

11,541,319

 

11,843,109

 

11,966,297

 

11,491,837

 

11,755,438

 

Goodwill and other intangible assets

39,887

 

41,460

 

590,672

 

598,347

 

601,192

 

Other assets

852,810

 

759,534

 

751,702

 

663,056

 

737,396

 

Assets from discontinued operations

11,704

 

16,041

 

109,923

 

98,528

 

176,251

 

Total assets

$     12,445,720

 

$    12,660,144

 

$    13,418,594

 

$    12,851,768

 

$     13,270,277

 
                     

Liabilities and shareholders' equity

                   

Deposits 

                   

NOW and other

$       1,278,764

 

$      1,243,487

 

$      1,183,839

 

$      1,159,388

 

$       1,085,485

 

Money market

2,756,348

 

2,673,567

 

2,672,066

 

2,752,465

 

2,688,766

 

Savings

966,929

 

940,488

 

901,218

 

846,942

 

835,209

 

Time

2,628,608

 

3,056,419

 

3,399,222

 

3,333,070

 

3,827,175

 

Total interest-bearing deposits

7,630,649

 

7,913,961

 

8,156,345

 

8,091,865

 

8,436,635

 

Borrowings

657,622

 

777,369

 

942,033

 

949,316

 

853,911

 

Total interest-bearing liabilities

8,288,271

 

8,691,330

 

9,098,378

 

9,041,181

 

9,290,546

 

Non-interest-bearing demand deposits

2,541,916

 

2,558,981

 

2,343,173

 

1,849,295

 

1,898,045

 

Other liabilities 

459,845

 

254,273

 

272,690

 

203,797

 

304,504

 

Liabilities from discontinued operations

5,666

 

22,805

 

28,988

 

23,799

 

30,446

 

Total liabilities

11,295,698

 

11,527,389

 

11,743,229

 

11,118,072

 

11,523,541

 
                     

Preferred shareholders' equity

7,290

 

20,325

 

20,325

 

20,548

 

40,633

 

Common shareholders' equity

1,142,732

 

1,112,430

 

1,655,040

 

1,713,148

 

1,706,103

 

Total shareholders' equity

1,150,022

 

1,132,755

 

1,675,365

 

1,733,696

 

1,746,736

 

Total liabilities and shareholders' equity

$     12,445,720

 

$    12,660,144

 

$    13,418,594

 

$    12,851,768

 

$     13,270,277

 
                     
                     

Supplementary data

                   

Total average non-maturity deposits

$       7,543,957

 

$      7,416,523

 

$      7,100,296

 

$      6,608,090

 

$       6,507,505

 

Total average deposits 

10,172,565

 

10,472,942

 

10,499,518

 

9,941,160

 

10,334,680

 

Fully taxable equivalent income adjustment

1,485

 

1,512

 

1,580

 

1,824

 

1,934

 

Total average tangible equity (4)

1,110,135

 

1,091,295

 

1,084,693

 

1,135,349

 

1,145,544

 
                     

(1) Total loans include non-accruing loans.

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

(3) Excludes discontinued operations for presentation purposes. Performance ratios are calculated including the impact of discontinued operations. 

(4) See page F-9 for details on the calculation of total average tangible equity.

 

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - UNAUDITED - (F-8)

 

At or for the Quarters Ended

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

 

Dec. 31,

(in thousands)

2020

 

2020

 

2020

 

2020

 

2019

NON-PERFORMING ASSETS

                 

Non-accruing loans:

                 

Commercial real estate (1)

$          35,581

 

$          14,777

 

$          12,486

 

$          16,938

 

$          20,119

Commercial and industrial loans

12,921

 

15,035

 

15,045

 

18,370

 

11,373

Residential mortgages

8,347

 

7,928

 

9,840

 

9,636

 

3,343

Consumer loans

8,099

 

9,650

 

7,513

 

6,172

 

4,805

Total non-accruing loans

64,948

 

47,390

 

44,884

 

51,116

 

39,640

Other real estate owned

149

 

401

 

517

 

224

 

-

Repossessed assets

1,932

 

1,646

 

1,581

 

1,316

 

858

Total non-performing assets

$          67,029

 

$          49,437

 

$          46,982

 

$          52,656

 

$          40,498

                   

Total non-accruing loans/total loans

0.80%

 

0.53%

 

0.48%

 

0.55%

 

0.42%

Total non-performing assets/total assets

0.52%

 

0.39%

 

0.36%

 

0.40%

 

0.31%

                   

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at beginning of period

$        134,414

 

$        139,394

 

$        113,510

 

$          63,575

 

$          62,230

Adoption of ASU No. 2016-13 (2)

-

 

-

 

-

 

25,434

 

-

Balance after adoption of ASU No. 2016-13

134,414

 

139,394

 

113,510

 

89,009

 

62,230

Charged-off loans

(18,314)

 

(7,776)

 

(7,274)

 

(12,432)

 

(4,485)

Recoveries on charged-off loans

1,209

 

1,580

 

3,259

 

1,958

 

479

Net loans charged-off

(17,105)

 

(6,196)

 

(4,015)

 

(10,474)

 

(4,006)

Provision for loan credit losses

9,993

 

1,216

 

29,899

 

34,975

 

5,351

Balance at end of period

$        127,302

 

$        134,414

 

$        139,394

 

$        113,510

 

$          63,575

                   

Allowance for credit losses/total loans

1.58%

 

1.50%

 

1.49%

 

1.22%

 

0.67%

Allowance for credit losses/non-accruing loans

196%

 

284%

 

311%

 

222%

 

160%

                   

NET LOAN CHARGE-OFFS

                 

Commercial real estate

$        (11,862)

 

$             (635)

 

$          (1,679)

 

$          (5,990)

 

$          (1,419)

Commercial and industrial loans

(5,089)

 

(5,551)

 

(1,059)

 

(3,728)

 

(1,495)

Residential mortgages

250

 

517

 

(966)

 

(19)

 

(351)

Home equity 

141

 

(57)

 

(10)

 

(107)

 

(67)

Auto and other consumer

(545)

 

(470)

 

(301)

 

(630)

 

(674)

Total, net

$        (17,105)

 

$          (6,196)

 

$          (4,015)

 

$        (10,474)

 

$          (4,006)

                   

Net charge-offs (QTD annualized)/average loans 

0.80%

 

0.27%

 

0.17%

 

0.45%

 

0.17%

Net charge-offs (YTD annualized)/average loans 

0.41%

 

0.29%

 

0.31%

 

0.45%

 

0.35%

                   

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS

                 

30-89 Days delinquent

0.20%

 

0.31%

 

0.37%

 

0.43%

 

0.25%

90+ Days delinquent and still accruing

0.14%

 

0.14%

 

0.14%

 

0.05%

 

0.29%

Total accruing delinquent loans

0.34%

 

0.45%

 

0.51%

 

0.48%

 

0.54%

Non-accruing loans

0.80%

 

0.53%

 

0.48%

 

0.55%

 

0.42%

Total delinquent and non-accruing loans

1.14%

 

0.98%

 

0.99%

 

1.03%

 

0.96%

(1) This balance includes $17 million of PCD loans.

(2) This balance includes $12 million of PCD confirmed losses as of January 1, 2020.

 

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9)

   

At or for the Quarters Ended

   

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

 

Dec. 31,

 

(in thousands)

 

2020

 

2020

 

2020

 

2020

 

2019

 

Net income/(loss)

 

$    15,009

 

$       21,225

 

$    (549,381)

 

$     (19,870)

 

$      25,751

 

Adj: Net securities (gains)/losses (1)

 

(2,405)

 

1,017

 

(822)

 

9,730

 

(1,734)

 

Adj: Goodwill impairment

 

-

 

-

 

553,762

 

-

 

-

 

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

 

(1,240)

 

-

 

-

 

-

 

-

 

Adj: Merger and acquisition expense

 

-

 

-

 

-

 

-

 

3,611

 

Adj: Restructuring expense and other expense

 

523

 

5,316

 

-

 

-

 

2,102

 

Adj: Loss from discontinued operations before income taxes

 

5,114

 

2,477

 

8,635

 

10,629

 

9,514

 

Adj: Income taxes

 

(2,939)

 

(3,611)

 

(18,658)

 

(4,134)

 

(3,910)

 

Total core income/(loss) (2)

(A)

$    14,062

 

$       26,424

 

$        (6,464)

 

$       (3,645)

 

$      35,334

 
                       

Total revenue from continuing operations

 

$    99,036

 

$       97,018

 

$        94,971

 

$      92,064

 

$    114,695

 

Adj: Net securities (gains)/losses (1)

 

(2,405)

 

1,017

 

(822)

 

9,730

 

(1,734)

 

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

 

(1,240)

 

-

 

-

 

-

 

-

 

Total core revenue (2)

(B)

$    95,391

 

$       98,035

 

$        94,149

 

$    101,794

 

$    112,961

 
                       

Total non-interest expense from continuing operations

 

$    71,796

 

$       72,843

 

$      624,275

 

$      71,325

 

$      70,287

 

Less: Merger, restructuring and other expense (see above)

 

(523)

 

(5,316)

 

-

 

-

 

(5,713)

 

Less: Goodwill impairment

 

-

 

-

 

(553,762)

 

-

 

-

 

Core non-interest expense (2)                                    

(C)

$    71,273

 

$       67,527

 

$        70,513

 

$      71,325

 

$      64,574

 
                       

Total revenue

 

$    98,479

 

$       96,752

 

$        90,383

 

$      93,869

 

$    116,860

 

Total non-interest expense

 

76,353

 

75,054

 

628,322

 

83,759

 

81,966

 

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

 

$    22,126

 

$       21,698

 

$    (537,939)

 

$      10,110

 

$      34,894

 
                       

Total revenue from continuing operations

 

$    99,036

 

$       97,018

 

$        94,971

 

$      92,064

 

$    114,695

 

Total non-interest expense from continuing operations

 

71,796

 

72,843

 

624,275

 

71,325

 

70,287

 

Pre-tax, pre-provision net revenue (PPNR) from continuing operations 

 

$    27,240

 

$       24,175

 

$    (529,304)

 

$      20,739

 

$      44,408

 
                       

Total core revenue (2)

 

$    95,391

 

$       98,035

 

$        94,149

 

$    101,794

 

$    112,961

 

Core non-interest expense (2)                                    

 

71,273

 

67,527

 

70,513

 

71,325

 

64,574

 

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

 

$    24,118

 

$       30,508

 

$        23,636

 

$      30,469

 

$      48,387

 
                       

(in millions, except per share data)

                     

Total average assets                                                

(D)

$    12,446

 

$       12,660

 

$        13,419

 

$      12,852

 

$      13,270

 

Total average shareholders' equity                         

(E)

1,150

 

1,133

 

1,675

 

1,734

 

1,747

 

Total average tangible shareholders' equity (2)                        

(F)

1,110

 

1,091

 

1,085

 

1,135

 

1,146

 

Total average tangible common shareholders' equity (2)                        

(G)

1,103

 

1,071

 

1,064

 

1,115

 

1,105

 

Total tangible shareholders' equity, period-end (2)(3)

(H)

1,153

 

1,138

 

1,122

 

1,124

 

1,159

 

Total tangible common shareholders' equity, period-end (2)(3)

(I)

1,153

 

1,118

 

1,101

 

1,104

 

1,119

 

Total tangible assets, period-end (2)(3)

(J)

12,803

 

12,574

 

13,021

 

12,524

 

12,617

 
                       

Total common shares outstanding, period-end (thousands)               

(K)

50,833

 

50,306

 

50,192

 

50,199

 

49,585

 

Average diluted shares outstanding (thousands)

(L)

50,355

 

50,329

 

50,246

 

50,204

 

50,702

 
                       

Core earnings/(loss) per common share, diluted(2)

(A/L)

$        0.28

 

$           0.53

 

$          (0.13)

 

$         (0.07)

 

$          0.70

 

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

(I/K)

22.68

 

22.22

 

21.94

 

22.00

 

22.56

 

Total tangible shareholders' equity/total tangible assets (2)

(H)/(J)

9.01

 

9.05

 

8.61

 

8.98

 

9.19

 
                       

Performance ratios (4)

                     

GAAP return on assets

 

0.48

%

0.67

%

(16.38)

%

(0.62)

%

0.78

%

Core return on assets (2)

 

0.45

 

0.84

 

(0.19)

 

(0.11)

 

1.08

 

GAAP return on equity 

 

5.22

 

7.50

 

(131.17)

 

(4.58)

 

5.90

 

Core return on equity (2)

(A/E)

4.89

 

9.33

 

(1.54)

 

(0.84)

 

8.09

 

Core return on tangible common equity (2)(5)

(A+O)/(G)

5.50

 

10.27

 

(2.05)

 

(0.94)

 

13.12

 

PPNR/assets (2)

 

0.71

 

0.69

 

(16.04)

 

0.31

 

1.05

 

Core PPNR/assets (2)

 

0.78

 

0.97

 

0.71

 

0.96

 

1.48

 

Efficiency ratio (2)(6)                                                                                

(C-O)/(B+M+P)

71.03

 

65.39

 

71.01

 

66.92

 

53.66

 

Net interest margin

 

2.61

 

2.61

 

2.62

 

3.04

 

3.11

 
                       

Supplementary data (in thousands)

                     

Tax benefit on tax-credit investments (7)

(M)

$      1,334

 

$         1,377

 

$          1,379

 

$           608

 

$        2,503

 

Non-interest income charge on tax-credit investments (8)

(N)

(971)

 

(1,090)

 

(1,097)

 

(486)

 

(1,996)

 

Net income on tax-credit investments

(M+N)

363

 

287

 

282

 

122

 

507

 
                       

Intangible amortization

(O)

$      1,513

 

$         1,530

 

$          1,558

 

$        1,580

 

$        1,582

 

Fully taxable equivalent income adjustment 

(P)

1,485

 

1,512

 

1,580

 

1,824

 

1,934

 
                       

(1) Net securities (gains)/losses include the change in fair value of the Company's equity securities in compliance with the Company's adoption of ASU 2016-01.

(2) Non-GAAP financial measure.

(3) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. 

      Total tangible assets is computed by taking total assets less the intangible assets at period-end.  

(4) 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.

(5) Core return on tangible equity is computed by dividing the total core income/(loss) adjusted for the tax-effected amortization of intangible assets,

      assuming a 27% marginal rate, by tangible equity.

(6) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully 

     taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments.  The  

     Company uses this non-GAAP measure to provide important information regarding its operational efficiency.

(7) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic  

      rehabilitation and low-income housing.

(8) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. 

 

 

BERKSHIRE HILLS BANCORP, INC.

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED - (F-10)

     

Years Ended

     

Dec. 31,

 

Dec. 31,

 
 

(Dollars in thousands)

 

2020

 

2019

 
 

Net (loss)/income 

 

$  (533,017)

 

$    97,450

 
 

Adj: Net securities losses/(gains) (1)

 

7,520

 

(4,389)

 
 

Adj: Goodwill impairment

 

553,762

 

-

 
 

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

 

(1,240)

 

-

 
 

Adj: Merger and acquisition expenses

 

-

 

18,733

 
 

Adj: Restructuring expense and other

 

5,839

 

9,313

 
 

Adj: Loss from discontinued operations before income taxes

 

26,855

 

5,539

 
 

Adj: Income taxes

 

(29,342)

 

(7,799)

 
 

Total core income (2)

(A)

$      30,377

 

$  118,847

 
             
 

Total revenue from continuing operations

 

$    383,089

 

$  449,260

 
 

Adj: Net securities losses/(gains) (1)

 

7,520

 

(4,389)

 
 

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

 

(1,240)

 

-

 
 

Total core revenue(2)

(B)

$    389,369

 

$  444,871

 
 

Total non-interest expense from continuing operations

 

$    840,239

 

$  289,857

 
 

Less: Merger, restructuring and other expense (see above)

 

(5,839)

 

(28,046)

 
 

Less: Goodwill impairment

 

(553,762)

 

-

 
 

Core non-interest expense (2)                                    

(C)

$    280,638

 

$  261,811

 
             
 

Total revenue

 

$    379,483

 

$  490,490

 
 

Total non-interest expense

 

863,488

 

336,626

 
 

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

 

$  (484,005)

 

$  153,864

 
             
 

Total revenue from continuing operations

 

$    383,089

 

$  449,260

 
 

Total non-interest expense from continuing operations

 

840,239

 

289,857

 
 

Pre-tax, pre-provision net revenue (PPNR) from continuing operations 

 

$  (457,150)

 

$  159,403

 
             
 

Total core revenue (2)

 

$    389,369

 

$  444,871

 
 

Core non-interest expense (2)                                    

 

280,638

 

261,811

 
 

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

 

$    108,731

 

$  183,060

 
             
 

(in millions, except per share data)

         
 

Total average assets                                                

(D)

$      12,861

 

$    12,961

 
 

Total average shareholders' equity                         

(E)

1,421

 

1,694

 
 

Total average tangible shareholders' equity (2)                        

(F)

1,105

 

1,116

 
 

Total average tangible common shareholders' equity (2)                        

(G)

1,088

 

1,076

 
 

Total tangible shareholders' equity, period-end (2)(3)

(H)

1,153

 

1,159

 
 

Total tangible common shareholders' equity, period-end (2)(3)

(I)

1,153

 

1,119

 
 

Total tangible assets, period-end (2)(3)

(J)

12,803

 

12,613

 
 

Total common shares outstanding, period-end (thousands)               

(K)

50,833

 

49,585

 
 

Average diluted shares outstanding (thousands)

(L)

50,308

 

49,421

 
 

Core earnings per common share, diluted(2)

(A/L)

$          0.60

 

$        2.40

 
 

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

(I/K)

22.68

 

22.56

 
 

Total tangible shareholders' equity/total tangible assets (2)

(H)/(J)

9.01

 

9.19

 
             
 

Performance ratios (4)

         
 

GAAP return on assets

 

(4.15)

%

0.75

%

 

Core return on assets (2)

(A/D)

0.24

 

0.93

 
 

GAAP return on equity 

 

(37.46)

 

5.75

 
 

Core return on equity (2)

(A/E)

2.14

 

7.01

 
 

Core return on tangible common equity (2)(5)

(A+O)/(G)

3.18

 

11.35

 
 

PPNR/assets (2)

 

(3.76)

 

1.19

 
 

Core PPNR/assets (2)

 

0.85

 

1.41

 
 

Efficiency ratio (2)(6)                                                                               

(C-O)/(B+M+P)

68.53

 

55.63

 
 

Net interest margin

 

2.72

 

3.17

 
             
 

Supplementary data

         
 

Tax benefit on tax-credit investments (7)

(M)

$        4,699

 

$      7,950

 
 

Non-interest income charge on tax-credit investments (8)

(N)

(3,645)

 

(6,455)

 
 

Net income on tax-credit investments

(M+N)

1,054

 

1,495

 
             
 

Intangible amortization

(O)

6,181

 

5,783

 
 

Fully taxable equivalent income adjustment

(P)

6,402

 

7,451

 
             

(1)

Net securities losses/(gains) include the change in fair value of the Company's equity securities in compliance with the Company's adoption 

 

of ASU 2016-01.

(2)

Non-GAAP financial measure.

(3)

Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. 

 

Total tangible assets is computed by taking total assets less the intangible assets at period-end. 

(4)

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.

(5)

Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of 

 

intangible assets, assuming a 27% marginal rate, by tangible equity.

(6)

Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully 

 

taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments.  The  

 

Company uses this non-GAAP measure to provide important information regarding its operational efficiency.

(7)

The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in  

 

historic rehabilitation and low-income housing.

(8)

The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. 

 

 

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SOURCE Berkshire Hills Bancorp, Inc.

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