BOSTON, Oct. 20, 2022 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported third quarter 2022 earnings per share ("EPS") totaling $0.42. The non-GAAP measure of adjusted EPS totaled $0.62 for this period.
GAAP EPS decreased from $0.50 in the prior quarter due to $11 million in third quarter charges primarily consisting of branch restructuring costs following the completion of the previously announced branch consolidation program.
Excluding these charges, adjusted EPS increased by 21% from $0.51 in the prior quarter. Results benefited from a 13% increase in net interest income driven by a 37 basis point increase in the net interest margin due to loan growth and higher market interest rates.
Third quarter GAAP EPS decreased from $1.31 in 2021 due to $52 million in gains recorded on the sale of branch and insurance operations in 2021. Excluding these gains, adjusted EPS increased year-over-year by 18%. Berkshire's 2022 results demonstrate positive operating leverage from its BEST strategic transformation initiatives.
THIRD QUARTER FINANCIAL HIGHLIGHTS (Changes are quarter-over-quarter unless otherwise stated. Non-GAAP measures are reconciled on pages F-9 and F-10).
- 6.8% return on tangible common equity and 9.9% adjusted return on tangible common equity
- 11% increase quarter-over-quarter in total net revenue; 10% increase in adjusted net revenue
- 3.48% net interest margin, increased from 3.11% in 2Q22 and 2.56% in 3Q21
- 62% efficiency ratio, improved from 67% in 2Q22 and 69% in 3Q21
- 2% end-of-period loan growth quarter-over-quarter; 16% growth year-over-year
- 0.74% delinquent and non-accrual loans/loans
- 7% reduction in period-end shares outstanding year-over-year reflecting stock buybacks
- Prepayment of $75 million in subordinated debt in September 2022
CEO Nitin Mhatre stated "Berkshire posted strong revenue growth in the third quarter and achieved the highest adjusted per share earnings since 2019. We're ahead of our BEST strategic transformation plan targets for performance improvement and accelerating our progress towards our vision of becoming a high-performing, leading socially responsible community bank."
"Berkshire posted another quarter of loan growth and asset quality remains strong. Our balance sheet remains positioned to benefit from further increases in market interest rates. The Company's expense discipline continues to support positive operating leverage and improved efficiency, allowing us to reinvest in targeted business lines. Our focused capital management has improved our capital returns to shareholders while also maintaining a strong capital base to support further franchise growth."
Mr. Mhatre concluded, "We continue to evolve our organization to meet shifting consumer, business, community, and employee expectations while enhancing our DigitouchSM model of customer engagement. We've increased our base pay rates, announced a number of promotions, and continue targeted recruiting of frontline bankers. Our teams are finding opportunities to add new relationships in the changing local banking landscape. We're making steady progress in our multi-billion BEST Community Comeback program along with our ESG activities and are encouraged by the ongoing momentum within our organization and communities."
RESULTS OF OPERATIONS
Earnings: Third quarter EPS of $0.42 decreased from $0.50 quarter-over-quarter, while adjusted EPS increased by 21% to $0.62 from $0.51. Third quarter EPS decreased from $1.31 in 2021 due to gains recorded on the sale of business operations in 2021. Third quarter adjusted EPS increased from $0.53 in 2021.
The improvement in adjusted earnings reflects positive operating leverage, with 11% revenue growth and 3% growth in adjusted operating expense compared to the prior quarter. The efficiency ratio improved to 62% in the most recent quarter, compared to 67% in the linked quarter and to 69% in the third quarter of 2021.
The third quarter 2022 return on tangible common equity measured 6.8% and the non-GAAP measure of adjusted return on tangible common equity measured 9.9%, The return on assets measured 0.66% and the non-GAAP measure of adjusted return on assets measured 0.99%.
The Company also utilizes the financial measure of Pre-tax Pre-Provision Net Revenue ("PPNR") to evaluate the results of operations before the impact of the provision and tax expense. Compared to the prior quarter, PPNR decreased by $2 million to $27 million due to the restructuring expenses. The non-GAAP measure of adjusted PPNR increased by 28% to $39 million. Adjusted PPNR increased by 53% on a year-over-year basis.
Earnings per share benefited from share repurchases in most quarters during 2021 and 2022. At period-end, the Company had approximately $35 million remaining in its 2022 share repurchase authorization.
Revenue and expense comparisons to the third quarter of 2021 include the impact of the sale of branch and insurance operations at the end of that period. Revenue and expense related to those operations were components of operating income in that period and in prior periods.
Revenue: Total net revenue increased by 11% quarter-over-quarter and decreased by 25% year-over-year, due to the gains recorded on the sale of operations in the third quarter of 2021. The Company's non-GAAP measure of adjusted revenue increased by 10% and 17% for the above periods.
Net interest income has been the primary driver of revenue growth in recent periods. Third quarter net interest income increased by $11 million, or 13%, compared to the linked quarter and by $21 million, or 29%, compared to the third quarter of 2021. After several quarters of relative stability, including a 2.56% margin in the third quarter of 2021, the margin expanded strongly to 3.11% in the second quarter of 2022, and then rose further to 3.48% in the third quarter of 2022.
This improvement primarily reflected the impact of rapidly rising market interest rates which the Company was positioned to benefit from due to the positive asset sensitivity of its balance sheet. The margin also reflected the benefit of the reduction in higher cost wholesale funds as well as the reinvestment of excess cash into loan growth. The interest margin has also benefited from a lag in the responsiveness of deposit costs to the initial upward move in market interest rates.
The yield on average earning assets improved quarter-over-quarter to 3.91% from 3.34%. The cost of funds increased to 0.46% from 0.24%, while the cost of deposits increased to 0.33% from 0.17%. The Company's interest rate sensitivity remained positive at period-end and was positioned to benefit from further interest rate increases anticipated by the market.
Deposit fees increased 5% quarter-over-quarter and 9% year-over-year, reflecting increased customer activity. Most lending related fees were down due to lower commercial activity in the most recent quarter.
Provision for Credit Losses on Loans: Berkshire recorded a $3 million provision for credit losses in the third quarter of 2022, compared to a zero provision in the second quarter of 2022 and a credit of $4 million in the third quarter of 2021. The Company continues to maintain strong credit quality, and the allowance for credit losses on loans decreased by $3 million to $96 million during the quarter.
Non-Interest Expense: Berkshire has maintained quarterly operating non-interest expenses generally stable within a targeted range of $68-70 million for more than a year, with a goal of reinvesting expense savings into frontline bankers and technology. Total expense increased to $82 million in the most recent quarter, primarily due to the $11 million charge for restructuring and other expense. The non-GAAP measure of adjusted non-interest expense totaled $70 million during this quarter. Total compensation expense increased by $2 million quarter-over-quarter including wage increases and increased performance based compensation. Full time equivalent staff totaled 1,300 positions at period-end, compared to 1,319 positions at the start of the year. The effective tax rate was 21% in the most recent quarter, which was an increase from 20% for the year 2021.
BALANCE SHEET (references are to period-end balances unless otherwise stated)
Summary: Total loans grew by 2% quarter over quarter and by 16% year-over-year, including increases near double digits or greater across all major categories. Total deposits decreased by 1% quarter-over-quarter and 4% year-over-year, due primarily due to reductions of brokered deposits and overnight payroll deposits. Period-end liquidity and capital remained strong, with the ratio of loans/deposits measuring 80% and tangible common equity/tangible assets measuring 8.1%. The Company remained positively sensitive to interest rate increases based on its asset/liability profile at period-end.
Loans: Quarter-over-quarter loan growth was concentrated in a 12% increase in residential mortgages. Year-over-year loan growth was concentrated in a 41% increase in residential mortgages and a 10% increase in commercial loans. Berkshire has expanded its mortgage origination team and its in-footprint relationship bank channel. The Company expanded its commercial teams over the last year, and business volumes and credit usage have benefited from improved market demand. Loan growth has also benefited from a decline in prepayments in the prevailing rising rate environment.
Asset Quality: Asset quality metrics remained within historically favorable ranges through the third quarter. Period-end non-performing assets measured 0.35% of total assets, and total delinquent and non-accruing loans were 0.74% of total loans. Annualized net loan charge-offs measured 0.16% of average loans for the first nine months of the year. The ratio of the allowance for loan credit losses on loans to total loans decreased to 1.21% from 1.27% at midyear and from 1.55% at the start of the year.
Deposits and Borrowings: Total deposits decreased by 1% quarter-over-quarter and 4% year-over-year. Excluding changes in overnight payroll deposits and changes in brokered deposits, total deposits increased by 1% and decreased by 1% for these respective periods. During the third quarter, Berkshire prepaid its ten-year-old 6.875% $75 million subordinated note. The Company completed the issuance of an investment grade rated $100 million sustainable subordinated bond offering in June 2022.
Equity: The $71 million, or 7%, quarter-over-quarter decrease in shareholders' equity included a $61 million net decrease due to after-tax unrealized bond losses caused by rising interest rates. Stock buybacks in the most recent quarter totaled approximately $20 million consisting of approximately 705,000 shares. At period-end, book value per share totaled $20.93 and tangible book value per share totaled $20.36.
ESG & CORPORATE RESPONSIBILITY UPDATE
Berkshire Bank is committed to purpose-driven, community-centered banking that enhances value for all stakeholders as it pursues its vision of being a high-performing, leading socially responsible community bank in New England and beyond. Learn more about the steps Berkshire is taking at berkshirebank.com/csr and in its most recent Corporate Responsibility Report.
Key developments in the quarter include:
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BEST Community Comeback: As a result of the collective efforts of its employees, Berkshire is making steady progress towards the achievement of its "BEST Community Comeback" goals. The multi-year plan focuses on four key areas: fueling small businesses, community financing and philanthropy, financial access and empowerment, and funding environmental sustainability. Additional information can be found at berkshirebank.com/comeback.
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Current ESG Performance: The Company remained within its BEST ESG goal with a top 23% composite performance in leading ESG indexes in the U.S. for its Environmental, Social and Governance (ESG) ratings. As of September 30, 2022 the Company has ratings of: MSCI ESG- BBB; ISS ESG Quality Score - Environment: 2, Social: 1, Governance: 2; and Bloomberg ESG Disclosure- 62.81. The Company also receives a rating by Sustainalytics. Berkshire continues to rank among the top 1% of all U.S. Banks for ESG in Bloomberg this year.
-
Recognition & Continued Community Impact: The Boston Business Journal named Berkshire one of Massachusetts' Top Charitable Contributors for the tenth consecutive year. The honor further demonstrates Berkshire's deep commitment to lifting-up its communities which includes recent announcements of $100,000 in scholarships to forty (40) students continuing in their pursuit of an undergraduate degree from an accredited non-profit college or technical school and more than $600,000 in third quarter philanthropic contributions through Berkshire's Foundation to support projects enhancing the quality of life and economic vibrancy in communities where the bank operates.
INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION
Berkshire will conduct a conference call/webcast at 10:00 a.m. Eastern time on Thursday, October 20, 2022 to discuss 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://www.netroadshow.com/events/login?show=4f8bbd69&confId=42577
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 relations section of Berkshire's website at 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 844-200-6205 and using participant access code: 197166. 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 for one week by dialing 866-813-9403 and using access code: 027908. 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. The Bank's goal is to be a high-performing, leading socially responsible community bank in New England, Upstate New York, and beyond. Berkshire Bank provides business and consumer banking, mortgage, wealth management, and investment services. Headquartered in Boston, Berkshire has approximately $11.3 billion in assets and operates 100 financial centers in New England and New York, and is a member of the Bloomberg Gender-Equality Index. To learn more, call 800-773-5601 or follow us on Facebook, Twitter, Instagram, and LinkedIn.
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.
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 adjusted earnings in evaluating operating trends, including components for adjusted 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, other gains/losses, merger costs, restructuring costs, goodwill impairment, and discontinued operations. In 2021, the Company recorded a third quarter net gain of $52 million on the sale of the Company's insurance subsidiary and the Mid-Atlantic branch operations. Expense adjustments in the first quarter 2021 were primarily related to branch consolidations. Third quarter 2021 adjustments included Federal Home Loan Bank borrowings prepayment costs. They also included other restructuring charges for efficiency initiatives in operations areas including write-downs on real estate moved to held for sale and severance related to staff reductions. The fourth quarter 2021 revenue adjustment was primarily related to trailing revenue on a previously reported sale, and the expense adjustment was due primarily to branch restructuring costs. The revenue adjustments in 2022 were related to fair market value changes in equity and trading investments. The restructuring expense adjustment in third quarter of 2022 primarily related to the termination of leasehold interests and the write-down of related right of use assets and leasehold improvements in conjunction with branch consolidations and real estate reductions.
The Company utilizes Adjusted Pre-Provision Net Revenue ("Adjusted PPNR") which measures adjusted income before credit loss provision and tax expense. PPNR is used by the investment community due to the volatility and variability across banks related to credit loss provision expense under the Current Expected Credit Loss accounting standard. The Company also calculates Adjusted PPNR/assets in order to utilize the PPNR measure in assessing its comparative operating profitability.
Non-GAAP 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 adjusted income. The efficiency ratio is adjusted for adjusted 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.
CONTACTS
Investor Relations Contacts
Kevin Conn, SVP, Investor Relations & Corporate Development
Email: KAConn@berkshirebank.com
Tel: (617) 641-9206
David Gonci, Capital Markets Director
Email: dgonci@berkshirebank.com
Tel: (413) 281-1973
Media Contact:
Gary Levante, SVP, Corporate Responsibility & Communications
Email: glevante@berkshirebank.com
Tel: (413) 447-1737
BERKSHIRE HILLS BANCORP, INC.
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SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)
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Sept. 30,
|
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Dec. 31,
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March 31,
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June 30,
|
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Sept. 30,
|
|
|
|
|
|
2021
|
|
2021
|
|
2022
|
|
2022
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2022
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|
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|
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|
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|
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NOMINAL AND PER SHARE DATA
|
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Net earnings per common share, diluted
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$ 1.31
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|
$ 0.42
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|
$ 0.42
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|
$ 0.50
|
|
$ 0.42
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|
|
|
Adjusted earnings per common share, diluted
(2)
|
0.53
|
|
0.42
|
|
0.43
|
|
0.51
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|
0.62
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|
|
|
Net income, (thousands)
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63,749
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|
20,248
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|
20,196
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|
23,115
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|
18,717
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|
|
|
Adjusted net income, (thousands) (2)
|
25,695
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|
20,172
|
|
20,789
|
|
23,562
|
|
27,928
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|
|
|
Total common shares outstanding, end of period (thousands)
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48,657
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48,667
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|
47,792
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|
45,788
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|
45,040
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|
|
|
Average diluted shares, (thousands)
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48,744
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|
48,340
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|
48,067
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|
46,102
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|
45,034
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|
|
|
Total book value per common share, (end of period)
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24.21
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|
24.30
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|
22.89
|
|
22.15
|
|
20.93
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|
|
|
Tangible book value per common share, (end of period)
(2)
|
23.58
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|
23.69
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|
22.30
|
|
21.56
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|
20.36
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|
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Dividends per common share
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0.12
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|
0.12
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|
0.12
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|
0.12
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|
0.12
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|
Full-time equivalent staff
|
1,333
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|
1,319
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|
1,333
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|
1,322
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|
1,300
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|
|
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PERFORMANCE RATIOS
(3)
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Return on equity
|
22.18
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%
|
6.86
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%
|
6.79
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%
|
7.82
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%
|
6.30
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%
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|
|
Adjusted return on equity
(2)
|
8.94
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|
6.83
|
|
6.99
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|
7.97
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|
9.40
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|
|
|
Return on tangible common equity
(2)
|
23.14
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|
7.37
|
|
7.29
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|
8.33
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|
6.76
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|
|
|
Adjusted return on tangible common equity
(2)
|
9.53
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|
7.34
|
|
7.49
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|
8.48
|
|
9.92
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Return on assets
|
2.14
|
|
0.71
|
|
0.70
|
|
0.82
|
|
0.66
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|
|
|
Adjusted return on assets
(2)
|
0.86
|
|
0.71
|
|
0.72
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|
0.84
|
|
0.99
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|
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Net interest margin, fully taxable equivalent (FTE)
(4)(5)
|
2.56
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|
2.60
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|
2.61
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|
3.11
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|
3.48
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|
|
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Efficiency ratio
(2)
|
68.76
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|
71.98
|
|
72.61
|
|
66.60
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|
62.01
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FINANCIAL DATA (in millions, end of period)
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Total assets
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$ 11,846
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$ 11,555
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$ 12,097
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$ 11,579
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$ 11,317
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Total earning assets
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11,145
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|
10,899
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|
11,401
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|
10,849
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|
10,604
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Total loans
|
|
6,836
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|
6,826
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|
7,267
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|
7,803
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|
7,943
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Total deposits
|
|
10,365
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|
10,069
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|
10,699
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|
10,115
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|
9,988
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Loans/deposits
(%)
|
66
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%
|
68
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%
|
68
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%
|
77
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%
|
80
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%
|
|
|
Total shareholders' equity
|
$ 1,178
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|
$ 1,182
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|
$ 1,094
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|
$ 1,014
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|
$ 943
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ASSET QUALITY
|
|
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Allowance for credit losses, (millions)
|
$ 113
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|
$ 106
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|
$ 99
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|
$ 99
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|
$ 96
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Net charge-offs, (millions)
|
(2)
|
|
(4)
|
|
(3)
|
|
(0)
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|
(6)
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Net charge-offs (QTD annualized)/average loans
|
0.12
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%
|
0.23
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%
|
0.15
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%
|
0.02
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%
|
0.30
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%
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|
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Provision (benefit)/expense, (millions)
|
$ (4)
|
|
$ (3)
|
|
$ (4)
|
|
$ -
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|
$ 3
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|
|
Non-performing assets, (millions)
|
39
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|
37
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|
32
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|
29
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|
40
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|
|
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Non-performing loans/total loans
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0.54
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%
|
0.52
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%
|
0.41
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%
|
0.34
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%
|
0.48
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%
|
|
|
Allowance for credit losses/non-performing loans
|
304
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|
300
|
|
335
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|
368
|
|
254
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|
|
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Allowance for credit losses/total loans
|
1.65
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|
1.55
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|
1.37
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|
1.27
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|
1.21
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CAPITAL RATIOS
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|
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Common equity tier 1 capital to risk weighted assets
(6)
|
15.3
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%
|
15.0
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%
|
13.9
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%
|
12.9
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%
|
12.7
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%
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Tier 1 capital leverage ratio
(6)
|
9.9
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|
10.5
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|
10.3
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|
10.2
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|
10.1
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|
|
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Tangible common shareholders' equity/tangible assets
(2)
|
9.7
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|
10.0
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|
8.8
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|
8.5
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|
8.1
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|
|
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(1)
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Reconciliations of non-GAAP financial measures, including all references to adjusted and tangible amounts, appear on pages F-9 and F-10.
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(2)
|
Non-GAAP financial measure. adjusted measurements are non-GAAP financial measures that are adjusted to exclude net non-adjusted charges primarily
related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures.
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(3)
|
All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
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(4)
|
Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
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(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 earliest quarter and ending with the most recent quarter: 0.06%, 0.06%, 0.03%, 0.03%, 0.01%
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(6)
|
Presented as projected for September 30, 2022 and actual for the remaining periods.
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BERKSHIRE HILLS BANCORP, INC.
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CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)
|
|
September 30,
|
December 31,
|
June 30,
|
September 30,
|
(in thousands)
|
2021
|
2021
|
2022
|
2022
|
Assets
|
|
|
|
|
Cash and due from banks
|
$ 153,185
|
$ 109,350
|
$ 156,470
|
$ 128,509
|
Short-term investments
|
1,971,345
|
1,518,457
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714,547
|
566,404
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Total cash and cash equivalents
|
2,124,530
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1,627,807
|
871,017
|
694,913
|
|
|
|
|
|
Trading security
|
8,574
|
8,354
|
7,040
|
6,812
|
Marketable equity securities, at fair value
|
15,601
|
15,453
|
14,154
|
12,790
|
Securities available for sale, at fair value
|
1,643,965
|
1,877,585
|
1,697,019
|
1,470,949
|
Securities held to maturity, at amortized cost
|
651,863
|
636,503
|
602,611
|
592,503
|
Federal Home Loan Bank stock and other restricted securities
|
12,041
|
10,800
|
9,365
|
7,264
|
Total securities
|
2,332,044
|
2,548,695
|
2,330,189
|
2,090,318
|
Less: Allowance for credit losses on investment securities
|
(125)
|
(105)
|
(94)
|
(95)
|
Net securities
|
2,331,919
|
2,548,590
|
2,330,095
|
2,090,223
|
|
|
|
|
|
Loans held for sale
|
5,176
|
6,110
|
1,062
|
4,124
|
|
|
|
|
|
Total loans
|
6,836,235
|
6,825,847
|
7,803,451
|
7,943,481
|
Less: Allowance for credit losses on loans
|
(112,916)
|
(106,094)
|
(99,021)
|
(96,013)
|
Net loans
|
6,723,319
|
6,719,753
|
7,704,430
|
7,847,468
|
|
|
|
|
|
Premises and equipment, net
|
99,233
|
94,383
|
89,657
|
86,809
|
Goodwill and other intangible assets
|
30,907
|
29,619
|
27,046
|
25,761
|
Other assets
|
527,049
|
524,074
|
550,275
|
563,946
|
Assets held for sale
|
3,743
|
4,577
|
5,386
|
3,830
|
Total assets
|
$ 11,845,876
|
$ 11,554,913
|
$ 11,578,968
|
$ 11,317,074
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
Demand deposits
|
$ 3,022,821
|
$ 3,008,461
|
$ 2,921,347
|
$ 2,896,659
|
NOW and other deposits
|
1,982,089
|
976,401
|
2,247,544
|
1,045,970
|
Money market deposits
|
2,438,832
|
3,293,526
|
2,327,004
|
3,388,932
|
Savings deposits
|
1,095,959
|
1,111,625
|
1,143,352
|
1,111,304
|
Time deposits
|
1,825,714
|
1,678,940
|
1,475,417
|
1,545,256
|
Total deposits
|
10,365,415
|
10,068,953
|
10,114,664
|
9,988,121
|
|
|
|
|
|
Senior borrowings
|
13,369
|
13,331
|
58,542
|
4,494
|
Subordinated borrowings
|
97,454
|
97,513
|
195,659
|
121,001
|
Total borrowings
|
110,823
|
110,844
|
254,201
|
125,495
|
|
|
|
|
|
Other liabilities
|
191,563
|
192,681
|
196,053
|
260,896
|
Total liabilities
|
10,667,801
|
10,372,478
|
10,564,918
|
10,374,512
|
|
|
|
|
|
Common shareholders' equity
|
1,178,075
|
1,182,435
|
1,014,050
|
942,562
|
Total shareholders' equity
|
1,178,075
|
1,182,435
|
1,014,050
|
942,562
|
Total liabilities and shareholders' equity
|
$ 11,845,876
|
$ 11,554,913
|
$ 11,578,968
|
$ 11,317,074
|
BERKSHIRE HILLS BANCORP, INC.
|
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3)
|
LOAN ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth %
|
(in millions)
|
|
December 31, 2021 Balance
|
|
June 30, 2022 Balance
|
|
September 30, 2022 Balance
|
|
Quarter ended September 30, 2022
|
|
Year to Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate
|
|
$ 3,598
|
|
$ 3,920
|
|
$ 3,902
|
|
(0)
|
%
|
8
|
%
|
Commercial and industrial loans
|
|
1,330
|
|
1,471
|
|
1,435
|
|
(2)
|
|
8
|
|
Total commercial loans
|
|
4,928
|
|
5,391
|
|
5,337
|
|
(1)
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgages
|
|
1,392
|
|
1,819
|
|
2,033
|
|
12
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity
|
|
253
|
|
241
|
|
234
|
|
(3)
|
|
(7)
|
|
Auto and other
|
|
253
|
|
352
|
|
339
|
|
(4)
|
|
34
|
|
Total consumer loans
|
|
506
|
|
593
|
|
573
|
|
(3)
|
|
13
|
|
Total loans
|
|
$ 6,826
|
|
$ 7,803
|
|
$ 7,943
|
|
2
|
%
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSIT ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth %
|
(in millions)
|
|
December 31, 2021 Balance
|
|
June 30, 2022 Balance
|
|
September 30, 2022 Balance
|
|
Quarter ended September 30, 2022
|
|
Year to Date
|
|
Non-interest bearing
|
|
$ 3,008
|
|
$ 2,921
|
|
$ 2,897
|
|
(1)
|
%
|
(4)
|
%
|
NOW and other
|
|
976
|
|
2,248
|
|
1,046
|
|
(53)
|
|
7
|
|
Money market
|
|
3,294
|
|
2,327
|
|
3,389
|
|
46
|
|
3
|
|
Savings
|
|
1,112
|
|
1,143
|
|
1,111
|
|
(3)
|
|
(0)
|
|
Time deposits
|
|
1,679
|
|
1,476
|
|
1,545
|
|
5
|
|
(8)
|
|
Total deposits
(1)
|
|
$ 10,069
|
|
$ 10,115
|
|
$ 9,988
|
|
(1)
|
%
|
(1)
|
%
|
(1) Included in total deposits are brokered deposits of $163.6 million, $112.9 million, and $228.1 million at September 30, 2022, June 30, 2022, and December 31, 2021, respectively.
|
BERKSHIRE HILLS BANCORP, INC.
|
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
(in thousands, except per share data)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Interest income
|
$ 103,671
|
|
$ 79,688
|
|
$ 265,873
|
|
$ 253,205
|
Interest expense
|
11,587
|
|
8,320
|
|
23,368
|
|
31,351
|
Net interest income, not FTE
|
92,084
|
|
71,368
|
|
242,505
|
|
221,854
|
Non-interest income
|
|
|
|
|
|
|
|
Deposit related fees
|
8,377
|
|
7,657
|
|
23,733
|
|
22,291
|
Loan fees and revenue
|
3,785
|
|
8,285
|
|
16,673
|
|
25,962
|
Insurance commissions and fees
|
-
|
|
1,581
|
|
-
|
|
7,003
|
Wealth management fees
|
2,353
|
|
2,653
|
|
7,753
|
|
7,944
|
Mortgage banking fees
|
58
|
|
461
|
|
186
|
|
1,797
|
Other
|
2,154
|
|
1,279
|
|
7,132
|
|
5,638
|
Total non-interest income excluding (losses)
|
16,727
|
|
21,916
|
|
55,477
|
|
70,635
|
Securities (losses), net
|
(476)
|
|
(166)
|
|
(2,194)
|
|
(681)
|
Gain on sale of business operations and assets, net
|
-
|
|
51,885
|
|
-
|
|
51,885
|
Total non-interest income
|
16,251
|
|
73,635
|
|
53,283
|
|
121,839
|
Total net revenue
|
108,335
|
|
145,003
|
|
295,788
|
|
343,693
|
Total net revenue excluding (losses)
|
108,811
|
|
93,284
|
|
297,982
|
|
292,489
|
|
|
|
|
|
|
|
|
Provision expense/(benefit) for credit losses
|
3,000
|
|
(4,000)
|
|
(1,000)
|
|
2,500
|
Non-interest expense
|
|
|
|
|
|
|
|
Compensation and benefits
|
39,422
|
|
37,068
|
|
114,773
|
|
112,773
|
Occupancy and equipment
|
8,702
|
|
10,421
|
|
28,207
|
|
32,044
|
Technology and communications
|
8,719
|
|
8,397
|
|
25,857
|
|
25,204
|
Professional services
|
3,285
|
|
3,180
|
|
8,890
|
|
13,495
|
Other expenses
|
10,076
|
|
8,969
|
|
29,449
|
|
28,053
|
Merger, restructuring and other non-operating expenses
|
11,473
|
|
1,425
|
|
11,526
|
|
4,917
|
Total non-interest expense
|
81,677
|
|
69,460
|
|
218,702
|
|
216,486
|
Total non-interest expense excluding merger, restructuring and other
|
70,204
|
|
68,035
|
|
207,176
|
|
211,569
|
|
|
|
|
|
|
|
|
Income before income taxes
|
$ 23,658
|
|
$ 79,543
|
|
$ 78,086
|
|
$ 124,707
|
Income tax expense
|
4,941
|
|
15,794
|
|
16,058
|
|
26,291
|
Net income
|
$ 18,717
|
|
$ 63,749
|
|
$ 62,028
|
|
$ 98,416
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
$ 0.42
|
|
$ 1.32
|
|
$ 1.35
|
|
$ 1.98
|
Diluted earnings per common share
|
$ 0.42
|
|
$ 1.31
|
|
$ 1.34
|
|
$ 1.97
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
44,700
|
|
48,395
|
|
46,056
|
|
49,672
|
Diluted
|
45,034
|
|
48,744
|
|
46,396
|
|
49,963
|
|
|
|
|
|
|
|
|
BERKSHIRE HILLS BANCORP, INC.
|
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED - (F-5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept. 30,
|
|
Dec. 31,
|
|
March 31,
|
|
June 30,
|
|
Sept. 30,
|
|
(in thousands, except per share data)
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
2022
|
|
Interest income
|
|
$ 79,688
|
|
$ 75,860
|
|
$ 74,823
|
|
$ 87,379
|
|
$ 103,671
|
|
Interest expense
|
|
8,320
|
|
6,548
|
|
5,760
|
|
6,021
|
|
11,587
|
|
Net interest income, not FTE
|
|
71,368
|
|
69,312
|
|
69,063
|
|
81,358
|
|
92,084
|
|
Non-interest income
|
|
|
|
|
|
|
|
|
|
|
|
Deposit related fees
|
|
7,657
|
|
7,522
|
|
7,351
|
|
8,005
|
|
8,377
|
|
Loan fees and revenue
|
|
8,285
|
|
9,098
|
|
8,265
|
|
4,623
|
|
3,785
|
|
Insurance commissions and fees
|
|
1,581
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Wealth management fees
|
|
2,653
|
|
2,586
|
|
2,625
|
|
2,775
|
|
2,353
|
|
Mortgage banking fees
|
|
461
|
|
259
|
|
19
|
|
109
|
|
58
|
|
Other
|
|
1,279
|
|
993
|
|
3,166
|
|
1,812
|
|
2,154
|
|
Total non-interest income excluding (losses)/gains
|
|
21,916
|
|
20,458
|
|
21,426
|
|
17,324
|
|
16,727
|
|
Securities (losses), net
|
|
(166)
|
|
(106)
|
|
(745)
|
|
(973)
|
|
(476)
|
|
Gain on sale of business operations and assets, net
|
|
51,885
|
|
1,057
|
|
-
|
|
-
|
|
-
|
|
Total non-interest income
|
|
73,635
|
|
21,409
|
|
20,681
|
|
16,351
|
|
16,251
|
|
Total net revenue
|
|
145,003
|
|
90,721
|
|
89,744
|
|
97,709
|
|
108,335
|
|
Total net revenue excluding (losses)/gains
|
|
93,284
|
|
89,770
|
|
90,489
|
|
98,682
|
|
108,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)/expense for credit losses
|
|
(4,000)
|
|
(3,000)
|
|
(4,000)
|
|
-
|
|
3,000
|
|
Non-interest expense
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
37,068
|
|
37,816
|
|
37,521
|
|
37,830
|
|
39,422
|
|
Occupancy and equipment
|
|
10,421
|
|
9,738
|
|
10,067
|
|
9,438
|
|
8,702
|
|
Technology and communications
|
|
8,397
|
|
8,599
|
|
8,527
|
|
8,611
|
|
8,719
|
|
Professional services
|
|
3,180
|
|
2,365
|
|
2,692
|
|
2,913
|
|
3,285
|
|
Other expenses
|
|
8,969
|
|
10,025
|
|
9,725
|
|
9,648
|
|
10,076
|
|
Merger, restructuring and other non-operating expenses
|
|
1,425
|
|
864
|
|
18
|
|
35
|
|
11,473
|
|
Total non-interest expense
|
|
69,460
|
|
69,407
|
|
68,550
|
|
68,475
|
|
81,677
|
|
Total non-interest expense excluding merger, restructuring and other
|
|
68,035
|
|
68,543
|
|
68,532
|
|
68,440
|
|
70,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$ 79,543
|
|
$ 24,314
|
|
$ 25,194
|
|
$ 29,234
|
|
$ 23,658
|
|
Income tax expense
|
|
15,794
|
|
4,066
|
|
4,998
|
|
6,119
|
|
4,941
|
|
Net income
|
|
$ 63,749
|
|
$ 20,248
|
|
$ 20,196
|
|
$ 23,115
|
|
$ 18,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$ 1.31
|
|
$ 0.42
|
|
$ 0.42
|
|
$ 0.50
|
|
$ 0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
48,395
|
|
47,958
|
|
47,668
|
|
45,818
|
|
44,700
|
|
Diluted
|
|
48,744
|
|
48,340
|
|
48,067
|
|
46,102
|
|
45,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BERKSHIRE HILLS BANCORP, INC.
|
AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS - UNAUDITED - (F-6)
|
|
|
|
Sept. 30, 2021
|
|
Dec. 31, 2021
|
|
March 31, 2022
|
|
June 30, 2022
|
|
Sept. 30, 2022
|
|
|
|
|
|
|
|
(in millions)
|
Average Balance
|
Average Yield/Rate
|
|
|
Average Balance
|
Average Yield/Rate
|
|
|
Average Balance
|
Average Yield/Rate
|
|
|
Average Balance
|
Average Yield/Rate
|
|
|
Average Balance
|
Average Yield/Rate
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
3,577
|
3.40
|
%
|
3,569
|
3.49
|
%
|
3,651
|
3.35
|
%
|
3,831
|
3.79
|
%
|
3,926
|
4.53
|
%
|
Commercial and industrial loans
|
1,370
|
4.78
|
|
|
1,278
|
4.37
|
|
|
1,373
|
4.14
|
|
|
1,447
|
4.46
|
|
|
1,449
|
5.21
|
|
|
Residential mortgages
|
1,499
|
3.65
|
|
|
1,403
|
3.82
|
|
|
1,436
|
3.56
|
|
|
1,652
|
3.57
|
|
|
1,926
|
3.53
|
|
|
Consumer loans
|
545
|
3.95
|
|
|
516
|
3.96
|
|
|
514
|
4.24
|
|
|
562
|
5.41
|
|
|
587
|
6.24
|
|
|
Total loans
(1)
|
6,991
|
3.77
|
|
|
6,766
|
3.76
|
|
|
6,974
|
3.61
|
|
|
7,492
|
3.99
|
|
|
7,888
|
4.54
|
|
|
Securities
(2)
|
2,312
|
2.09
|
|
|
2,367
|
2.04
|
|
|
2,649
|
1.95
|
|
|
2,621
|
1.97
|
|
|
2,400
|
2.13
|
|
|
Short-term investments and loans held for sale
|
1,762
|
0.17
|
|
|
1,609
|
0.17
|
|
|
1,202
|
0.17
|
|
|
476
|
0.57
|
|
|
342
|
1.96
|
|
|
Mid-Atlantic region loans held for sale
|
155
|
3.82
|
|
|
-
|
-
|
|
|
-
|
-
|
|
|
-
|
-
|
|
|
-
|
-
|
|
|
Total earning assets
|
11,220
|
2.86
|
|
|
10,742
|
2.84
|
|
|
10,825
|
2.82
|
|
|
10,589
|
3.34
|
|
|
10,630
|
3.91
|
|
|
Goodwill and other intangible assets
|
31
|
|
|
|
30
|
|
|
|
29
|
|
|
|
27
|
|
|
|
26
|
|
|
|
Other assets
|
674
|
|
|
|
655
|
|
|
|
639
|
|
|
|
644
|
|
|
|
659
|
|
|
|
Total assets
|
11,925
|
|
|
|
11,427
|
|
|
|
11,493
|
|
|
|
11,260
|
|
|
|
11,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and other
|
1,316
|
0.05
|
%
|
1,331
|
0.05
|
%
|
1,456
|
0.04
|
%
|
1,454
|
0.12
|
%
|
1,362
|
0.48
|
%
|
Money market
|
2,716
|
0.16
|
|
|
2,731
|
0.16
|
|
|
2,871
|
0.16
|
|
|
2,811
|
0.19
|
|
|
2,737
|
0.46
|
|
|
Savings
|
1,112
|
0.04
|
|
|
1,100
|
0.04
|
|
|
1,117
|
0.03
|
|
|
1,127
|
0.03
|
|
|
1,129
|
0.03
|
|
|
Time
|
1,893
|
0.86
|
|
|
1,750
|
0.80
|
|
|
1,624
|
0.71
|
|
|
1,460
|
0.64
|
|
|
1,528
|
0.85
|
|
|
Total interest-bearing deposits
|
7,037
|
0.31
|
|
|
6,912
|
0.28
|
|
|
7,068
|
0.24
|
|
|
6,852
|
0.24
|
|
|
6,756
|
0.48
|
|
|
Borrowings
(3)
|
263
|
3.89
|
|
|
121
|
5.68
|
|
|
122
|
5.21
|
|
|
160
|
4.61
|
|
|
251
|
5.46
|
|
|
Mid-Atlantic region interest-bearing deposits
|
306
|
0.51
|
|
|
-
|
-
|
|
|
-
|
-
|
|
|
-
|
-
|
|
|
-
|
-
|
|
|
Total interest-bearing liabilities
|
7,606
|
0.43
|
|
|
7,033
|
0.37
|
|
|
7,190
|
0.32
|
|
|
7,012
|
0.34
|
|
|
7,007
|
0.66
|
|
|
Non-interest-bearing demand deposits
|
2,901
|
|
|
|
3,038
|
|
|
|
2,968
|
|
|
|
2,903
|
|
|
|
2,913
|
|
|
|
Other liabilities
(4)
|
269
|
|
|
|
175
|
|
|
|
146
|
|
|
|
163
|
|
|
|
206
|
|
|
|
Total liabilities
|
10,776
|
|
|
|
10,246
|
|
|
|
10,304
|
|
|
|
10,078
|
|
|
|
10,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders' equity
|
1,149
|
|
|
|
1,181
|
|
|
|
1,189
|
|
|
|
1,182
|
|
|
|
1,189
|
|
|
|
Total shareholders' equity
|
1,149
|
|
|
|
1,181
|
|
|
|
1,189
|
|
|
|
1,182
|
|
|
|
1,189
|
|
|
|
Total liabilities and shareholders' equity
|
11,925
|
|
|
|
11,427
|
|
|
|
11,493
|
|
|
|
11,260
|
|
|
|
11,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread
|
|
2.43
|
%
|
|
2.47
|
%
|
|
2.50
|
%
|
|
2.99
|
%
|
|
3.25
|
%
|
Net interest margin, FTE
(5)
|
|
2.56
|
|
|
|
2.60
|
|
|
|
2.61
|
|
|
|
3.11
|
|
|
|
3.48
|
|
|
Cost of funds
|
|
0.31
|
|
|
|
0.26
|
|
|
|
0.23
|
|
|
|
0.24
|
|
|
|
0.46
|
|
|
Cost of deposits
|
|
0.22
|
|
|
|
0.19
|
|
|
|
0.17
|
|
|
|
0.17
|
|
|
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income, not FTE
|
71.368
|
|
|
|
69.312
|
|
|
|
69.063
|
|
|
|
81.358
|
|
|
|
92.084
|
|
|
|
Fully taxable equivalent income adjustment
|
1.586
|
|
|
|
1.604
|
|
|
|
1.524
|
|
|
|
1.560
|
|
|
|
1.715
|
|
|
|
Net Interest Income, FTE
|
72.954
|
|
|
|
70.916
|
|
|
|
70.587
|
|
|
|
82.918
|
|
|
|
93.799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average PPP loans
(6)
|
90
|
|
|
|
37
|
|
|
|
27
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
Average loans excluding PPP loans
(6)
|
6,901
|
|
|
|
6,729
|
|
|
|
6,947
|
|
|
|
7,492
|
|
|
|
7,888
|
|
|
|
Total PPP loans, end of period
(6)
|
46
|
|
|
|
30
|
|
|
|
16
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
Total loans excluding PPP loans, end of period
(6)
|
6,790
|
|
|
|
6,796
|
|
|
|
7,251
|
|
|
|
7,803
|
|
|
|
7,943
|
|
|
|
PPP interest income
|
2.063
|
|
|
|
0.302
|
|
|
|
0.200
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average non-maturity deposits
|
8,045
|
|
|
|
8,200
|
|
|
|
8,412
|
|
|
|
8,295
|
|
|
|
8,141
|
|
|
|
Total average deposits
|
9,938
|
|
|
|
9,950
|
|
|
|
10,037
|
|
|
|
9,755
|
|
|
|
9,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting accretion
|
1.695
|
|
|
|
1.548
|
|
|
|
0.717
|
|
|
|
0.773
|
|
|
|
0.280
|
|
|
|
Total average tangible equity
(7)
|
1,118
|
|
|
|
1,151
|
|
|
|
1,160
|
|
|
|
1,155
|
|
|
|
1,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Total loans include non-accruing loans.
|
(2) Average balances for securities available-for-sale are based on amortized cost.
|
(3) Average balances for borrowings includes the financing lease obligation which is presented under other liabilities on the consolidated balance sheet.
|
(4) The average balance for September 30, 2021 includes the Mid-Atlantic region non-interesting bearing deposits.
|
(5) The effect of PPP loans on the quarterly net interest margin is shown sequentially as follows beginning with the earliest quarter and ending with the most recent quarter: (0.05%, 0.00%, 0.00%, 0.00%, 0.00%)
This calculation excludes gross interest income on PPP loans and average PPP loan balances.
|
(6) As of June 30, 2022, the PPP loan balances and interest are not considered material and will no longer be considered in adjusted metrics.
|
(7) See page F-9 for details on the calculation of total average tangible equity.
|
BERKSHIRE HILLS BANCORP, INC.
|
ASSET QUALITY ANALYSIS - UNAUDITED - (F-7)
|
|
|
|
Sept. 30,
|
|
Dec. 31,
|
|
March 31,
|
|
June 30,
|
|
Sept. 30,
|
|
(in thousands)
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
2022
|
|
NON-PERFORMING ASSETS
|
|
|
|
|
|
|
|
|
|
|
Non-accruing loans:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
$ 14,845
|
|
$ 13,954
|
|
$ 8,984
|
|
$ 8,277
|
|
$ 2,976
|
|
Commercial and industrial loans
|
7,140
|
|
6,747
|
|
5,618
|
|
4,891
|
|
21,008
|
|
Residential mortgages
|
9,763
|
|
9,825
|
|
11,079
|
|
10,331
|
|
10,407
|
|
Consumer loans
|
5,399
|
|
4,800
|
|
4,000
|
|
3,385
|
|
3,463
|
|
Total non-accruing loans
|
37,147
|
|
35,326
|
|
29,681
|
|
26,884
|
|
37,854
|
|
Other real estate owned
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Repossessed assets
|
1,664
|
|
1,736
|
|
2,004
|
|
2,004
|
|
2,175
|
|
Total non-performing assets
|
$ 38,811
|
|
$ 37,062
|
|
$ 31,685
|
|
$ 28,888
|
|
$ 40,029
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-accruing loans/total loans
|
0.54 %
|
|
0.52 %
|
|
0.41 %
|
|
0.34 %
|
|
0.48 %
|
|
Total non-accruing loans/total loans excluding PPP loans
|
0.55 %
|
|
0.52 %
|
|
0.42 %
|
|
0.38 %
|
|
0.54 %
|
|
Total non-performing assets/total assets
|
0.33 %
|
|
0.32 %
|
|
0.26 %
|
|
0.25 %
|
|
0.35 %
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
|
|
|
|
|
|
|
|
Balance at beginning of period
|
$ 119,044
|
|
$ 112,916
|
|
$ 106,094
|
|
$ 99,475
|
|
$ 99,021
|
|
Charged-off loans
|
(4,334)
|
|
(7,976)
|
|
(6,048)
|
|
(1,593)
|
|
(7,424)
|
|
Recoveries on charged-off loans
|
2,206
|
|
4,154
|
|
3,429
|
|
1,139
|
|
1,416
|
|
Net loans charged-off
|
(2,128)
|
|
(3,822)
|
|
(2,619)
|
|
(454)
|
|
(6,008)
|
|
Provision (benefit)/expense for loan credit losses
|
(4,000)
|
|
(3,000)
|
|
(4,000)
|
|
-
|
|
3,000
|
|
Balance at end of period
|
$ 112,916
|
|
$ 106,094
|
|
$ 99,475
|
|
$ 99,021
|
|
$ 96,013
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses/total loans
|
1.65 %
|
|
1.55 %
|
|
1.37 %
|
|
1.27 %
|
|
1.21 %
|
|
Allowance for credit losses/total loans excluding PPP loans
|
1.66 %
|
|
1.56 %
|
|
1.37 %
|
|
1.27 %
|
|
1.21 %
|
|
Allowance for credit losses/non-accruing loans
|
304 %
|
|
300 %
|
|
335 %
|
|
368 %
|
|
254 %
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOAN CHARGE-OFFS
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
$ (1,391)
|
|
$ (2,208)
|
|
$ (3,280)
|
|
$ (76)
|
|
$ (854)
|
|
Commercial and industrial loans
|
110
|
|
(1,649)
|
|
653
|
|
(237)
|
|
(4,931)
|
|
Residential mortgages
|
(677)
|
|
(2)
|
|
(50)
|
|
(30)
|
|
122
|
|
Home equity
|
106
|
|
106
|
|
135
|
|
33
|
|
1
|
|
Auto and other consumer
|
(276)
|
|
(69)
|
|
(77)
|
|
(144)
|
|
(346)
|
|
Total, net
|
$ (2,128)
|
|
$ (3,822)
|
|
$ (2,619)
|
|
$ (454)
|
|
$ (6,008)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs (QTD annualized)/average loans
|
0.12 %
|
|
0.23 %
|
|
0.15 %
|
|
0.02 %
|
|
0.30 %
|
|
Net charge-offs (YTD annualized)/average loans
|
0.30 %
|
|
0.29 %
|
|
0.15 %
|
|
0.08 %
|
|
0.16 %
|
|
|
|
|
|
|
|
|
|
|
|
|
BERKSHIRE HILLS BANCORP, INC.
|
ASSET QUALITY ANALYSIS - UNAUDITED (F-8)
|
|
|
|
September 30, 2021
|
December 31, 2021
|
|
March 31, 2022
|
|
June 30, 2022
|
|
September 30, 2022
|
|
(in thousands)
|
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
|
$ 18,365
|
0.27 %
|
|
$ 39,863
|
|
0.58 %
|
|
$ 13,517
|
|
0.19 %
|
|
$ 36,184
|
|
0.46 %
|
|
$ 14,662
|
|
0.18 %
|
|
90+ Days delinquent and still accruing
|
3,803
|
0.06 %
|
|
3,270
|
|
0.05 %
|
|
6,613
|
|
0.09 %
|
|
6,760
|
|
0.09 %
|
|
6,285
|
|
0.08 %
|
|
Total accruing delinquent loans
|
22,168
|
0.33 %
|
|
43,133
|
|
0.63 %
|
|
20,130
|
|
0.28 %
|
|
42,944
|
|
0.55 %
|
|
20,947
|
|
0.26 %
|
|
Non-accruing loans
|
37,147
|
0.54 %
|
|
35,326
|
|
0.52 %
|
|
29,681
|
|
0.41 %
|
|
26,884
|
|
0.34 %
|
|
37,854
|
|
0.48 %
|
|
Total delinquent and non-accruing loans
|
$ 59,315
|
0.87 %
|
|
$ 78,459
|
|
1.15 %
|
|
$ 49,811
|
|
0.69 %
|
|
$ 69,828
|
|
0.89 %
|
|
$ 58,801
|
|
0.74 %
|
|
BERKSHIRE HILLS BANCORP, INC.
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9)
|
|
|
|
|
|
Sept. 30,
|
|
Dec. 31,
|
|
March 31,
|
|
June 30,
|
|
Sept. 30,
|
|
(in thousands)
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
2022
|
|
Total revenue
|
(A)
|
$ 145,003
|
|
$ 90,721
|
|
$ 89,744
|
|
$ 97,709
|
|
$ 108,335
|
|
Adj: Net securities losses (1)
|
|
166
|
|
106
|
|
745
|
|
973
|
|
476
|
|
Adj: Net (gains) on sale of business operations and assets
|
|
(51,885)
|
|
(1,057)
|
|
-
|
|
-
|
|
-
|
|
Total adjusted revenue
(2)
|
(B)
|
$ 93,284
|
|
$ 89,770
|
|
$ 90,489
|
|
$ 98,682
|
|
$ 108,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest expense
|
(C)
|
$ 69,460
|
|
$ 69,407
|
|
$ 68,550
|
|
$ 68,475
|
|
$ 81,677
|
|
Less: Merger, restructuring and other expense
|
|
(1,425)
|
|
(864)
|
|
(18)
|
|
(35)
|
|
(11,473)
|
|
Adjusted non-interest expense
(2)
|
(D)
|
$ 68,035
|
|
$ 68,543
|
|
$ 68,532
|
|
$ 68,440
|
|
$ 70,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax, pre-provision net revenue (PPNR)
|
(A-C)
|
$ 75,543
|
|
$ 21,314
|
|
$ 21,194
|
|
$ 29,234
|
|
$ 26,658
|
|
Adjusted pre-tax, pre-provision net revenue (PPNR)
|
(B-D)
|
25,249
|
|
21,227
|
|
21,957
|
|
30,242
|
|
38,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ 63,749
|
|
$ 20,248
|
|
$ 20,196
|
|
$ 23,115
|
|
$ 18,717
|
|
Adj: Net securities losses
(1)
|
|
166
|
|
106
|
|
745
|
|
973
|
|
476
|
|
Adj: Net (gains) on sale of business operations and assets
|
|
(51,885)
|
|
(1,057)
|
|
-
|
|
-
|
|
-
|
|
Adj: Restructuring expense and other expense
|
|
1,425
|
|
864
|
|
18
|
|
35
|
|
11,473
|
|
Adj: Income taxes (expense)/benefit
|
|
12,240
|
|
11
|
|
(170)
|
|
(561)
|
|
(2,738)
|
|
Total adjusted income
(2)
|
(E)
|
$ 25,695
|
|
$ 20,172
|
|
$ 20,789
|
|
$ 23,562
|
|
$ 27,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Total average assets
|
(F)
|
$ 11,925
|
|
$ 11,427
|
|
$ 11,493
|
|
$ 11,260
|
|
$ 11,315
|
|
Total average shareholders' equity
|
(G)
|
1,149
|
|
1,181
|
|
1,189
|
|
1,182
|
|
1,189
|
|
Total average tangible shareholders' equity
(2)(3)
|
(H)
|
1,118
|
|
1,151
|
|
1,160
|
|
1,155
|
|
1,164
|
|
Total average tangible common shareholders' equity
(2)(3)
|
(I)
|
1,118
|
|
1,151
|
|
1,160
|
|
1,155
|
|
1,164
|
|
Total tangible shareholders' equity, period-end
(2)(3)
|
(J)
|
1,147
|
|
1,153
|
|
1,066
|
|
987
|
|
917
|
|
Total tangible common shareholders' equity, period-end
(2)(3)
|
(K)
|
1,147
|
|
1,153
|
|
1,066
|
|
987
|
|
917
|
|
Total tangible assets, period-end
(2)(3)
|
(L)
|
11,815
|
|
11,525
|
|
12,069
|
|
11,552
|
|
11,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common shares outstanding, period-end (thousands)
|
(M)
|
48,657
|
|
48,667
|
|
47,792
|
|
45,788
|
|
45,040
|
|
Average diluted shares outstanding (thousands)
|
(N)
|
48,744
|
|
48,340
|
|
48,067
|
|
46,102
|
|
45,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP earnings per common share, diluted
(2)
|
|
$ 1.31
|
|
$ 0.42
|
|
$ 0.42
|
|
$ 0.50
|
|
$ 0.42
|
|
Adjusted earnings per common share, diluted
(2)
|
(E/N)
|
0.53
|
|
0.42
|
|
0.43
|
|
0.51
|
|
0.62
|
|
Tangible book value per common share, period-end
(2)
|
(K/M)
|
23.58
|
|
23.69
|
|
22.30
|
|
21.56
|
|
20.36
|
|
Total tangible shareholders' equity/total tangible assets
(2)
|
(J/L)
|
9.71
|
|
10.00
|
|
8.83
|
|
8.54
|
|
8.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance ratios
(4)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP return on equity
|
|
22.18
|
%
|
6.86
|
%
|
6.79
|
|
7.82
|
%
|
6.30
|
%
|
Adjusted return on equity
(2)
|
(E/G)
|
8.94
|
|
6.83
|
|
6.99
|
|
7.97
|
|
9.40
|
|
Return on tangible common equity
(2)(5)
|
|
23.14
|
|
7.37
|
|
7.29
|
|
8.33
|
|
6.76
|
|
Adjusted return on tangible common equity
(2)(5)
|
(E+Q)/(I)
|
9.53
|
|
7.34
|
|
7.49
|
|
8.48
|
|
9.92
|
|
GAAP return on assets
|
|
2.14
|
|
0.71
|
|
0.70
|
|
0.82
|
|
0.66
|
|
Adjusted return on assets
(2)
|
|
0.86
|
|
0.71
|
|
0.72
|
|
0.84
|
|
0.99
|
|
PPNR from continuing operations/assets
(2)
|
|
2.53
|
|
0.75
|
|
0.74
|
|
1.04
|
|
0.94
|
|
Adjusted PPNR/assets
(2)
|
|
0.85
|
|
0.74
|
|
0.76
|
|
1.07
|
|
1.36
|
|
Efficiency ratio
(2)(6)
|
(D-Q)/(B+O+R)
|
68.76
|
|
71.98
|
|
72.61
|
|
66.60
|
|
62.01
|
|
Net interest margin, FTE
|
|
2.56
|
|
2.60
|
|
2.61
|
|
3.11
|
|
3.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary data
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit on tax-credit investments
(7)
|
(O)
|
$ 2,195
|
|
$ 2,057
|
|
$ 596
|
|
$ 595
|
|
$ 620
|
|
Non-interest income charge on tax-credit investments
(8)
|
(P)
|
(1,789)
|
|
(1,448)
|
|
(357)
|
|
(351)
|
|
(445)
|
|
Net income on tax-credit investments
|
(O+P)
|
406
|
|
609
|
|
239
|
|
244
|
|
175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization
|
(Q)
|
$ 1,296
|
|
$ 1,288
|
|
$ 1,286
|
|
$ 1,286
|
|
$ 1,285
|
|
Fully taxable equivalent income adjustment
|
(R)
|
1,586
|
|
1,604
|
|
1,524
|
|
1,560
|
|
1,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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) Adjusted return on tangible equity is computed by dividing the total adjusted 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 adjusted tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and
total adjusted 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)
|
|
|
At or for the Nine Months Ended
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
(in thousands)
|
|
|
2021
|
|
2022
|
|
Total revenue
|
(A)
|
|
$ 343,693
|
|
$ 295,788
|
|
Adj: Net securities losses (1)
|
|
|
681
|
|
2,194
|
|
Adj: Net (gains) on sale of business operations and assets
|
|
|
(51,885)
|
|
-
|
|
Total adjusted revenue
(2)
|
(B)
|
|
$ 292,489
|
|
$ 297,982
|
|
|
|
|
|
|
|
|
Total non-interest expense
|
(C)
|
|
$ 216,486
|
|
$ 218,702
|
|
Less: Merger, restructuring and other expense
|
|
|
(4,917)
|
|
(11,526)
|
|
Adjusted non-interest expense
(2)
|
(D)
|
|
$ 211,569
|
|
$ 207,176
|
|
|
|
|
|
|
|
|
Pre-tax, pre-provision net revenue (PPNR)
|
(A-C)
|
|
$ 127,207
|
|
$ 77,086
|
|
Adjusted pre-tax, pre-provision net revenue (PPNR)
|
(B-D)
|
|
80,920
|
|
90,806
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$ 98,416
|
|
$ 62,028
|
|
Adj: Net securities losses
(1)
|
|
|
681
|
|
2,194
|
|
Adj: Net (gains) on sale of business operations and assets
|
|
|
(51,885)
|
|
-
|
|
Adj: Restructuring expense and other expense
|
|
|
4,917
|
|
11,526
|
|
Adj: Income taxes benefit/(expense)
|
|
|
11,685
|
|
(3,469)
|
|
Total adjusted income/(loss)
(2)
|
(E)
|
|
$ 63,814
|
|
$ 72,279
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
Total average assets
|
(F)
|
|
$ 12,268
|
|
$ 11,355
|
|
Total average shareholders' equity
|
(G)
|
|
1,161
|
|
1,187
|
|
Total average tangible shareholders' equity
(2)(3)
|
(H)
|
|
1,128
|
|
1,159
|
|
Total average tangible common shareholders' equity
(2)(3)
|
(I)
|
|
1,128
|
|
1,159
|
|
Total tangible shareholders' equity, period-end
(2)(3)
|
(J)
|
|
1,147
|
|
917
|
|
Total tangible common shareholders' equity, period-end
(2)(3)
|
(K)
|
|
1,147
|
|
917
|
|
Total tangible assets, period-end
(2)(3)
|
(L)
|
|
11,815
|
|
11,291
|
|
|
|
|
|
|
|
|
Total common shares outstanding, period-end (thousands)
|
(M)
|
|
48,657
|
|
45,040
|
|
Average diluted shares outstanding (thousands)
|
(N)
|
|
49,963
|
|
46,396
|
|
|
|
|
|
|
|
|
GAAP earnings/(loss) per common share, diluted
(2)
|
|
|
$ 1.97
|
|
$ 1.34
|
|
Adjusted earnings per common share, diluted
(2)
|
(E/N)
|
|
1.28
|
|
1.56
|
|
Tangible book value per common share, period-end
(2)
|
(K/M)
|
|
23.58
|
|
20.36
|
|
Total tangible shareholders' equity/total tangible assets
(2)
|
(J/L)
|
|
9.71
|
|
8.12
|
|
|
|
|
|
|
|
|
Performance ratios
(4)
|
|
|
|
|
|
|
GAAP return on equity
|
|
|
11.30
|
%
|
6.97
|
%
|
Adjusted return on equity
(2)
|
(E/G)
|
|
7.33
|
|
8.12
|
|
Return on tangible common equity
(2)(5)
|
|
|
11.97
|
|
7.46
|
|
Adjusted return on tangible common equity
(2)(5)
|
(E+Q)/(I)
|
|
7.88
|
|
8.64
|
|
GAAP return on assets
|
|
|
1.07
|
|
0.73
|
|
Adjusted return on assets
(2)
|
|
|
0.69
|
|
0.85
|
|
PPNR from continuing operations/assets
(2)
|
|
|
1.38
|
|
0.91
|
|
Adjusted PPNR/assets
(2)
|
|
|
0.88
|
|
1.07
|
|
Efficiency ratio
(2)(6)
|
(D-Q)/(B+O+R)
|
|
69.32
|
|
66.75
|
|
Net interest margin, FTE
|
|
|
2.60
|
|
3.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary data
(in thousands)
|
|
|
|
|
|
|
Tax benefit on tax-credit investments
(7)
|
(O)
|
|
$ 2,315
|
|
$ 1,811
|
|
Non-interest income charge on tax-credit investments
(8)
|
(P)
|
|
(1,996)
|
|
(1,153)
|
|
Net income on tax-credit investments
|
(O+P)
|
|
319
|
|
658
|
|
|
|
|
|
|
|
|
Intangible amortization
|
(Q)
|
|
$ 3,912
|
|
$ 3,857
|
|
Fully taxable equivalent income adjustment
|
(R)
|
|
4,739
|
|
4,799
|
|
|
|
|
|
|
|
|
(1) Net securities 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 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) Adjusted return on tangible equity is computed by dividing the total adjusted 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 adjusted tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis
and total adjusted 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.