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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): October 24, 2024

 

BERKSHIRE HILLS BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   001-15781   04-3510455

(State or Other Jurisdiction)

of Incorporation)

  

(Commission File No.)

  

(I.R.S. Employer

Identification No.)

 

60 State Street, Boston, Massachusetts   02109
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (800) 773-5601, ext. 133773

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)   Name of each exchange on which registered
Common stock, par value $0.01 per share   BHLB   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition

 

On October 24, 2024, Berkshire Hills Bancorp, Inc. (the “Company”), the holding company for Berkshire Bank (the “Bank”), announced its financial results for the third quarter ended September 30, 2024. The news release containing the financial results is included as Exhibit 99.1 and shall not be deemed “filed” for any purpose.

 

The Company conducted a conference call/webcast on October 24, 2024, to discuss the financial results for the quarter and provide guidance about expected future results. A telephone replay of the call will be available through October 31, 2024. The webcast will be available on the Company’s website at ir.berkshirebank.com for an extended period of time.

 

Item 7.01Regulation FD Disclosure

 

The Company made available slides for a presentation that the Company utilized in connection with its conference call. A copy of the presentation can be found on the Company’s website at ir.berkshirebank.com.

 

Item 9.01Financial Statements and Exhibits
  
(a) Financial Statements of Businesses Acquired.  Not applicable.
(b) Pro Forma Financial Information.  Not applicable.
(c) Shell Company Transactions.  Not applicable.
(d) Exhibits.

 

  Exhibit No. Description
     
  99.1 News Release dated October 24, 2024
  104.1 Cover Page for this Current Report on Form 8-K, formatted in Inline XBRL

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

    Berkshire Hills Bancorp, Inc.
     
     
DATE: October 24, 2024 By: /s/ Nitin J. Mhatre
    Nitin J. Mhatre
    President and Chief Executive Officer

 

 

 

 

Exhibit 99.1

 

 

Berkshire Hills Reports Higher Third Quarter Net Income of $37.5 million, or $0.88 Per Share

Operating EPS of $0.58 increased 5% linked quarter and 16% year-over-year

 

·$16 million non-operating gain on branch sale ($0.30 per share after tax)
·Operating revenue up 1% linked quarter and 2% year-over-year
·14.8% return on tangible common equity; 9.9% operating return on tangible common equity
·Branch sale and loan sale are expected to further improve long-term profitability

 

BOSTON, October 24, 2024 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the third quarter of 2024. These results along with comparison periods are summarized below:

 

($ in millions, except per share data)  Three Months Ended 
   Sept. 30, 2024   June 30, 2024   Sept. 30, 2023 
Net income  $37.5   $24.0   $19.5 
Per share   0.88    0.57    0.45 
Operating earnings1   24.8    23.2    21.5 
Per share   0.58    0.55    0.50 
                
Net interest income, non FTE  $88.1   $88.5   $90.3 
Net interest income, FTE   90.1    90.5    92.3 
Net interest margin, FTE   3.16%   3.20%   3.18%
Non-interest income   37.6    20.1    17.5 
Operating non-interest income1   21.5    20.1    17.5 
                
Non-interest expense  $72.0   $70.9   $76.5 
Operating non-interest expense1   72.3    71.3    73.9 
Efficiency ratio1   63.7%   63.4%   65.1%
                
Average balances2               
Loans  $9,233   $9,157   $8,952 
Deposits   9,360    9,296    9,630 
                
Period-end balances2               
Loans   9,212    9,229    8,984 
Deposits   9,577    9,621    9,981 

 

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

2. Loans and deposits in 2Q24 exclude balances held for sale in branch transaction of $57 million and $483 million respectively (average), and $55 million and $474 million (end of period). The branch sale was completed in 3Q24. End of period loans in 3Q24 exclude $46.5 million in Upstart-related consumer loans held for sale. This sale was completed on October 16, 2024.

 

1

 

 

Berkshire CEO Nitin Mhatre stated, “We are pleased to report a robust quarter reflecting accelerating momentum across key business drivers. Quarterly operating income has increased sequentially throughout this year driven by calibrated loan growth, improving credit quality and continued expense management. Third quarter operating income per share increased 16% year over year. This quarter also saw approximately 1% growth in average deposit balances. During the quarter, we completed the sale of ten branch offices. Including branch consolidations, the total branch count has been reduced by 14% this year to 83 offices. Also, after quarter-end, the Company’s balance sheet was further strengthened through the sale of $46.5 million in consumer loans.”

 

Berkshire CFO Brett Brbovic added, “Operating revenue grew 1% linked quarter and benefited from loan growth and increased loan related fees.The net interest margin decreased modestly to 3.16% from 3.20% linked quarter and 3.18% year-over-year. The provision for credit losses decreased $1.0 million reflecting lower recent loss trends. Operating expense increased $0.9 million, with lower occupancy and technology costs offset by higher miscellaneous expenses. The allowance for credit losses on loans remained steady at 1.22% of total loans. Capital strength improved, with the tangible common equity ratio improving to 9.1% from 8.2%.”

 

   As of and For the Three Months Ended 
   Sept. 30, 2024   June 30, 2024   Sept. 30, 2023 
Asset Quality               
Net loan charge-offs to average loans   0.24%   0.07%   0.24%
Non-performing loans to total loans   0.26%   0.23%   0.30%
                
Returns               
Return on average assets   1.28%   0.82%   0.66%
Operating return on average assets1   0.85%   0.79%   0.73%
Return on tangible common equity1   14.83%   9.99%   8.45%
Operating return on tangible common equity1   9.91%   9.65%   9.27%
                
Capital Ratios2               
Tangible common equity/tangible assets1   9.1%   8.2%   7.7%
Tier 1 leverage   9.9%   9.6%   9.8%
Common equity Tier 1   11.9%   11.6%   12.1%
Tier 1 risk-based   12.2%   11.9%   12.3%
Total risk-based   14.4%   14.1%   14.4%

 

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

2. Presented as estimated for September 30, 2024 and actual for the remaining periods.

 

Berkshire Hills Bancorp, Inc. (NYSE: BHLB) is the parent company of Berkshire Bank, a relationship-driven, community-focused bank with $11.6 billion in assets and 83 financial centers in New England and New York. Berkshire is headquartered in Boston and offers commercial, retail, wealth, and private banking solutions.

 

2

 

 

3Q 2024 Financial Highlights (comparisons are to the prior quarter unless otherwise noted).

 

Income Statement. GAAP income was $37.5 million, or $0.88 per share. Operating earnings totaled $24.8 million, or $0.58 per share. GAAP results included the gain on the completion of the sale of ten New York branches. Operating income advanced 7% linked quarter including the benefit of higher operating revenue and a lower provision for credit losses.

 

•Net interest income totaled $88.1 million in 3Q24 compared to $88.5 million in 2Q24.
•Net interest margin decreased 4 basis points linked quarter to 3.16%.
oThe earning asset yield increased 5 basis points.
•The loan yield increased 6 basis points.
○The cost of funds increased 11 basis points.
•The cost of deposits increased 7 basis points.
•Provision for credit losses totaled $5.5 million, a decrease of $1.0 million linked quarter.
○Net loan charge-offs totaling $5.6 million included $3.9 million in consumer losses which included a $1.9 million charge-off recorded for the Upstart-related consumer loan sale.
○The net annualized loan charge-off ratio was 0.24%. Excluding the impact of consumer loans sold, annualized net loan charge-offs were 0.16% of average third quarter loans.
•GAAP non-interest income of $37.6 million included a $16.0 million non-operating gain on the New York branch sale. Operating non-interest income totaled $21.5 million, an increase of 7% linked quarter.
○Linked quarter growth was primarily in loan related fees which increased 36% including higher interest rate swap income and commercial loan servicing fees.
○All other fee income categories increased except gains on SBA sales, which remained strong following a recent high in the linked quarter.
•Non-interest expense totaled $72.0 million on a GAAP basis and $72.3 million on an operating basis. Operating non-interest expense increased 1% linked quarter and decreased 2% year-over-year.
○Compensation and benefits expense increased $0.5 million linked quarter.
○Occupancy, equipment, and technology expense decreased $0.9 million.
○The category of other expense increased $1.6 million primarily due to one commercial check fraud.
○The efficiency ratio was 63.7% compared to 63.4% linked quarter.
•The effective tax rate was 22% for the quarter and the year-to-date.

 

Loans. Total loans decreased $16 million linked quarter to $9.21 billion due to the $46.5 million transfer of Upstart-related consumer loans to held for sale. Adjusted for this transfer, total loans increased by $30 million.

 

·Commercial real estate loans increased $35 million to $4.74 billion.
·Commercial and industrial loans decreased $12 million to $1.41 billion.
·Residential mortgage loans increased $14 million to $2.69 billion.
·Consumer loans decreased $53 million to $372 million due to the pending Upstart loan sale. This sale was completed on October 16, 2024. The remaining balance of Upstart-related loans was $10 million at quarter-end.
·The allowance for credit losses on loans to total loans was 1.22% at September 30, 2024, unchanged from the prior quarter-end.
·Non-performing loans to total loans was 0.26% at September 30, 2024, compared to 0.23% at prior quarter-end.

 

3

 

 

Deposits. Total deposits decreased $44 million to $9.58 billion. Total average deposits increased $64 million, or 1%, to $9.36 billion. Deposits decreased year-over-year due to the branch sale.

 

·Non-interest bearing deposits increased $46 million to $2.26 billion, increasing to 24% of total deposits from 23%.
·Non-maturity interest bearing deposits decreased $260 million to $4.79 billion.
·Time deposits increased $170 million to $2.52 billion.

 

Equity. Total shareholders’ equity increased $58 million to $1.07 billion. Book value per share increased 6% to $24.90 and tangible book value per share increased 6% to $24.53. Accumulated other comprehensive income increased $25 million, reflecting lower market interest rates at period-end.

 

3Q 2024 Corporate Responsibility and Sustainability Highlights

 

·Berkshire was recognized as a Top Charitable Contributor by the Boston Business Journal for the 12th consecutive year and named to Newsweek’s list of America’s Greatest Workplaces. 
·Berkshire maintained its top quartile environmental, social and governance performance in the banking sector and was listed as an “Outperformer” in the R-Factor™ rating as of October 2024.
·The Bank achieved targets for lending in low-moderate income communities, increasing minority homeownership, and support for green projects through its multi-year Community Comeback program.

 

Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. eastern time on Thursday, October 24, 2024 to discuss results for the quarter and provide guidance about expected future results. Instructions for listening to the call may be found at the Company’s website at ir.berkshirebank.com. Additional materials relating to the call may also be accessed at this website. The call will be archived at the website and will be available for an extended period of time.

 

Forward Looking Statements: This document contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “remain,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see the sections titled “Forward-Looking Statements” and “Risk Factors” in Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.

 

###

 

4

 

 

INVESTOR CONTACT

 

Kevin Conn

Investor Relations

617.641.9206

kaconn@berkshirebank.com

 

MEDIA CONTACT

 

Gary Levante

Corporate Communications

413.447.1737

glevante@berkshirebank.com

 

5

 

 

SELECTED FINANCIAL HIGHLIGHTS (1)

 

   At or for the Quarters Ended 
   Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30, 
   2024   2024   2024   2023   2023 
NOMINAL AND PER SHARE DATA                         
Net earnings/(loss) per common share, diluted  $0.88   $0.57   $(0.47)  $(0.03)  $0.45 
Operating earnings per common share, diluted (2)(3)   0.58    0.55    0.49    0.47    0.50 
Net income/(loss), (thousands)   37,509    24,025    (20,188)   (1,445)   19,545 
Operating net income, (thousands) (2)(3)   24,789    23,168    20,934    20,190    21,516 
Net interest income, (thousands) non FTE   88,059    88,532    88,140    88,421    90,334 
Net interest income, FTE (5)   90,082    90,545    90,146    90,442    92,314 
Total common shares outstanding, end of period (thousands)    42,982    42,959    43,415    43,501    43,822 
Average diluted shares, (thousands)   42,454    42,508    43,028    43,101    43,347 
Total book value per common share, end of period   24.90    23.58    23.26    23.27    21.70 
Tangible book value per common share, end of period (2)(3)   24.53    23.18    22.84    22.82    21.23 
Dividends declared per common share   0.18    0.18    0.18    0.18    0.18 
Dividend payout ratio (7)   20.63%   32.74%    N/M %    N/M%   40.56%
                          
PERFORMANCE RATIOS (4)                         
Return on equity   14.29%   9.49%   (7.93)%   (0.60)%   7.91%
Operating return on equity (2)(3)   9.44    9.15    8.23    8.36    8.71 
Return on tangible common equity (2)(3)   14.83    9.99    (7.73)   (0.24)   8.45 
Operating return on tangible common equity (2)(3)   9.91    9.65    8.73    8.90    9.27 
Return on assets   1.28    0.82    (0.69)   (0.05)   0.66 
Operating return on assets (2)(3)   0.85    0.79    0.71    0.68    0.73 
Net interest margin, FTE (5)   3.16    3.20    3.15    3.11    3.18 
Efficiency ratio (3)   63.74    63.40    66.26    67.77    65.05 
                          
FINANCIAL DATA (in millions, end of period)                         
Total assets  $11,605   $12,219   $12,147   $12,431   $12,140 
Total earning assets   10,922    11,510    11,430    11,705    11,400 
Total loans   9,212    9,229    9,086    9,040    8,984 
Total funding liabilities   10,285    10,907    10,826    11,140    10,906 
Total deposits   9,577    9,621    9,883    10,633    9,981 
Loans/deposits (%)   96%   96%   92%   85%   90%
Total accumulated other comprehensive (loss) net of tax, end of period  $(89)  $(115)  $(114)  $(143)  $(218)
Total shareholders' equity   1,070    1,013    1,010    1,012    951 
                          
ASSET QUALITY                         
Allowance for credit losses, (millions)  $112   $112   $107   $105   $103 
Net charge-offs, (millions)   (6)   (2)   (4)   (4)   (5)
Net charge-offs (QTD annualized)/average loans   0.24%   0.07%   0.18%   0.20%   0.24%
Provision (benefit)/expense, (millions)  $6   $6   $6   $7   $8 
Non-performing assets, (millions)   27    24    24    24    29 
Non-performing loans/total loans   0.26%   0.23%   0.24%   0.24%   0.30%
Allowance for credit losses/non-performing loans   467    525    500    492    386 
Allowance for credit losses/total loans   1.22    1.22    1.18    1.17    1.14 
                          
CAPITAL RATIOS                         
Risk weighted assets, (millions)(6)  $9,638   $9,604   $9,615   $9,552   $9,594 
Common equity Tier 1 capital to risk weighted assets (6)   11.9%   11.6%   11.6%   12.0%   12.1%
Tier 1 capital leverage ratio (6)   9.9    9.6    9.5    9.6    9.8 
Tangible common shareholders' equity/tangible assets (3)   9.1    8.2    8.2    8.0    7.7 

 

 

(1)All financial tables presented are unaudited.
(2)Reconciliations of non-GAAP financial measures, including all references to operating and tangible amounts, appear on pages 13 and 14.
(3)Non-GAAP financial measure. Operating measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions and restructuring activities. See pages 13 and 14 for reconciliations of non-GAAP financial measures.
(4)All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(5)Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
(6)Presented as projected for September 30, 2024 and actual for the remaining periods.
(7)Dividend payout ratio is based on dividends declared.

 

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CONSOLIDATED BALANCE SHEETS

 

   September 30,   June 30,   December 31,   September 30, 
(in thousands)  2024   2024   2023   2023 
Assets                    
Cash and due from banks  $134,056   $112,085   $148,148   $120,634 
Short-term investments   435,911    988,207    1,055,096    542,836 
Total cash and cash equivalents   569,967    1,100,292    1,203,244    663,470 
                     
Trading securities, at fair value   5,560    5,699    6,142    6,171 
Equity securities, at fair value   13,278    12,736    13,029    12,325 
Securities available for sale, at fair value   661,740    611,711    1,022,285    1,260,391 
Securities held to maturity, at amortized cost   512,277    520,239    543,351    552,981 
Federal Home Loan Bank stock   30,685    35,010    22,689    38,912 
Total securities   1,223,540    1,185,395    1,607,496    1,870,780 
Less: Allowance for credit losses on investment securities   (65)   (65)   (68)   (69)
Net securities   1,223,475    1,185,330    1,607,428    1,870,711 
                     
Loans held for sale   50,634    52,072    2,237    2,342 
                     
Commercial real estate loans   4,741,689    4,706,810    4,527,012    4,453,573 
Commercial and industrial loans   1,409,538    1,421,921    1,352,834    1,384,038 
Residential mortgages   2,688,709    2,674,611    2,672,677    2,640,210 
Consumer loans   372,386    425,184    487,163    506,556 
Total loans   9,212,322    9,228,526    9,039,686    8,984,377 
Less: Allowance for credit losses on loans   (112,047)   (112,167)   (105,357)   (102,792)
Net loans   9,100,275    9,116,359    8,934,329    8,881,585 
                     
Premises and equipment, net   54,667    55,893    68,915    70,042 
Other intangible assets   16,192    17,319    19,664    20,869 
Other assets   582,422    615,882    584,066    619,777 
Assets held for sale   6,930    76,307    10,938    11,157 
Total assets  $11,604,562   $12,219,454   $12,430,821   $12,139,953 
                     
Liabilities and shareholders' equity                    
Non-interest bearing deposits  $2,267,595   $2,222,012   $2,469,164   $2,530,441 
NOW and other deposits   748,737    766,641    858,644    843,032 
Money market deposits   3,042,712    3,278,753    3,565,516    3,075,307 
Savings deposits   998,549    1,004,320    1,053,810    1,086,329 
Time deposits   2,519,896    2,349,733    2,686,250    2,445,435 
Total deposits   9,577,489    9,621,459    10,633,384    9,980,544 
                     
Federal Home Loan Bank advances   585,542    689,606    385,223    804,295 
Subordinated borrowings   121,549    121,487    121,363    121,300 
Total borrowings   707,091    811,093    506,586    925,595 
                     
Other liabilities   249,531    287,312    278,630    282,805 
Liabilities held for sale   -    486,648    -    - 
Total liabilities   10,534,111    11,206,512    11,418,600    11,188,944 
                     
Common shareholders' equity   1,070,451    1,012,942    1,012,221    951,009 
Total shareholders' equity   1,070,451    1,012,942    1,012,221    951,009 
Total liabilities and shareholders' equity  $11,604,562   $12,219,454   $12,430,821   $12,139,953 

 

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CONSOLIDATED STATEMENTS OF OPERATIONS

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
(in thousands, except per share data)  2024   2023   2024   2023 
Interest income  $157,268   $148,021   $463,383   $425,762 
Interest expense   69,209    57,687    198,652    145,136 
Net interest income, non FTE   88,059    90,334    264,731    280,626 
Non-interest income                    
Deposit related fees   8,656    8,792    25,522    25,674 
Loan related fees   3,214    2,879    8,241    8,537 
Gain on SBA loans   3,020    2,548    8,013    7,952 
Wealth management fees   2,685    2,481    8,182    7,803 
Fair value adjustments on securities   516    (467)   359    (255)
Other   3,416    1,232    8,633    1,454 
Total non-interest income excluding gains and losses   21,507    17,465    58,950    51,165 
Gain on sale of business operations and assets, net   16,048    -    16,048    - 
(Loss) on sale of AFS securities   -    -    (49,909)   - 
Total non-interest income   37,555    17,465    25,089    51,165 
Total net revenue   125,614    107,799    289,820    331,791 
                     
Provision expense for credit losses   5,500    8,000    17,999    24,999 
Non-interest expense                    
Compensation and benefits   40,663    40,155    121,524    119,186 
Occupancy and equipment   7,373    8,816    24,135    27,165 
Technology   10,014    10,616    30,154    30,552 
Professional services   2,109    2,423    7,542    8,226 
Regulatory expenses   1,851    1,905    5,544    5,165 
Amortization of intangible assets   1,128    1,205    3,473    3,615 
Marketing   861    1,552    2,509    4,270 
Merger, restructuring and other non-operating expenses   (297)   2,607    2,936    2,592 
Other expenses   8,258    7,234    21,094    21,745 
Total non-interest expense   71,960    76,513    218,911    222,516 
Total non-interest expense excluding non-operating expenses   72,257    73,906    215,975    219,924 
                     
Income before income taxes  $48,154   $23,286   $52,910   $84,276 
Income tax expense   10,645    3,741    11,564    13,233 
Net income  $37,509   $19,545   $41,346   $71,043 
                     
Basic earnings per common share  $0.89   $0.45   $0.97   $1.64 
Diluted earnings per common share  $0.88   $0.45   $0.97   $1.63 
                     
Weighted average shares outstanding:                    
Basic   42,170    43,164    42,456    43,435 
Diluted   42,454    43,347    42,658    43,640 

 

8

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend)

 

   Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30, 
(in thousands, except per share data)  2024   2024   2024   2023   2023 
Interest income  $157,268   $154,109   $152,006   $150,537   $148,021 
Interest expense   69,209    65,577    63,866    62,116    57,687 
Net interest income, non FTE   88,059    88,532    88,140    88,421    90,334 
Non-interest income                         
Deposit related fees   8,656    8,561    8,305    8,481    8,792 
Loan related fees   3,214    2,364    2,663    2,058    2,879 
Gain on SBA loans   3,020    3,294    1,699    2,382    2,548 
Wealth management fees   2,685    2,613    2,884    2,394    2,481 
Fair value adjustments on securities   516    (42)   (115)   768    (467)
Other   3,416    3,343    1,874    591    1,232 
Total non-interest income excluding gains and losses   21,507    20,133    17,310    16,674    17,465 
Gain on sale of business operations and assets, net   16,048    -    -    -    - 
Loss on sale of AFS securities   -    -    (49,909)   (25,057)   - 
Total non-interest income   37,555    20,133    (32,599)   (8,383)   17,465 
Total net revenue   125,614    108,665    55,541    80,038    107,799 
                          
Provision expense for credit losses   5,500    6,499    6,000    7,000    8,000 
Non-interest expense                         
Compensation and benefits   40,663    40,126    40,735    40,095    40,155 
Occupancy and equipment   7,373    8,064    8,698    8,553    8,816 
Technology   10,014    10,236    9,904    11,326    10,616 
Professional services   2,109    2,757    2,676    3,417    2,423 
Regulatory expenses   1,851    1,848    1,845    1,854    1,905 
Amortization of intangible assets   1,128    1,140    1,205    1,205    1,205 
Marketing   861    532    1,116    1,107    1,552 
Merger, restructuring and other non-operating expenses   (297)   (384)   3,617    3,669    2,607 
Other expenses   8,258    6,612    6,224    7,766    7,234 
Total non-interest expense   71,960    70,931    76,020    78,992    76,513 
Total non-interest expense excluding non-operating expenses   72,257    71,315    72,403    75,323    73,906 
                          
Income/(loss) before income taxes  $48,154   $31,235   $(26,479)  $(5,954)  $23,286 
Income tax expense/(benefit)   10,645    7,210    (6,291)   (4,509)   3,741 
Net income/(loss)  $37,509   $24,025   $(20,188)  $(1,445)  $19,545 
                          
                          
Diluted earnings/(loss) per common share  $0.88   $0.57   $(0.47)  $(0.03)  $0.45 
                          
Weighted average shares outstanding:                         
Basic   42,170    42,437    42,777    42,852    43,164 
Diluted   42,454    42,508    43,028    43,101    43,347 

 

9

 

 

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS 

 

   Quarters Ended 
   September 30, 2024   June 30, 2024   September 30, 2023 
(in millions)  Average
Balance		   Interest (1)   Average
Yield/Rate		   Average
Balance		   Interest (1)   Average
Yield/Rate		   Average
Balance		   Interest (1)   Average
Yield/Rate		 
Assets                                             
Commercial real estate  $4,717   $79    6.54%  $4,649   $77    6.52%  $4,385   $71    6.32%
Commercial and industrial loans   1,380    27    7.79    1,384    27    7.62    1,436    27    7.48 
Residential mortgages   2,712    30    4.31    2,694    28    4.21    2,618    26    3.97 
Consumer loans   424    8    7.43    430    8    7.47    513    9    7.33 
Total loans   9,233    144    6.11    9,157    140    6.05    8,952    133    5.88 
Securities (2)   1,340    8    2.49    1,332    8    2.44    2,171    13    2.40 
Short-term investments and loans held for sale   563    7    4.98    597    8    5.07    267    3    4.76 
New York branch loans held for sale (3)   31    0    5.44    57    1    5.86    -    -    - 
Total earning assets   11,167    159    5.62    11,143    157    5.57    11,390    149    5.19 
Goodwill and other intangible assets   17              18              21           
Other assets   511              531              449           
Total assets  $11,695             $11,692             $11,860           
                                              
Liabilities and shareholders' equity                                             
Non-interest-bearing demand deposits  $2,250   $-    -%  $2,244   $-    -%  $2,553   $0    -%
NOW and other   743    3    1.54    763    3    1.44    858    2    1.15 
Money market   2,935    25    3.35    2,909    24    3.32    2,697    18    2.69 
Savings   1,002    3    1.17    1,004    3    1.06    1,082    2    0.77 
Time   2,430    26    4.31    2,376    25    4.22    2,440    22    3.43 
Total deposits   9,360    57    2.42    9,296    55    2.35    9,630    44    1.81 
Borrowings (4)   782    11    5.44    610    9    5.55    1,010    14    5.32 
New York branch non-interest-bearing deposits held for sale (3)   51    -    -    97    -    -    -    -    - 
New York branch interest-bearing deposits held for sale (3)   207    1    2.87    386    3    2.80    -    -    - 
Total funding liabilities   10,400    69    2.64    10,389    67    2.53    10,640    58    2.15 
                                              
Other liabilities   245              290              232           
Total liabilities   10,645              10,679              10,872           
                                              
Common shareholders' equity (5)   1,050              1,013              988           
Total shareholders' equity   1,050              1,013              988           
Total liabilities and shareholders' equity  $11,695             $11,692             $11,860           
Net interest margin, FTE             3.16              3.20              3.18 
                                              
Supplementary data                                             
Net Interest Income, non FTE   88.059              88.532              90.334           
FTE income adjustment   2.023              2.013              1.980           
Net Interest Income, FTE   90.082              90.545              92.314           

 

 

(1)Interest income and expense presented on a fully taxable equivalent basis.
(2)Average balances for securities available-for-sale are based on amortized cost.
(3)New York branch loans and deposits moved to held for sale on March 4, 2024.
(4)Average balances for borrowings includes the financing lease obligation which is presented under other liabilities on the consolidated balance sheet.
(5)Unrealized gains and losses, net of tax, are included in average equity. Prior period balances and financial metrics have been updated to reflect the current presentation.

 

10

 

 

ASSET QUALITY ANALYSIS

 

   At or for the Quarters Ended 
   Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30, 
(in thousands)  2024   2024   2024   2023   2023 
NON-PERFORMING ASSETS                         
Commercial real estate  $10,270   $5,976   $4,762   $4,453   $5,288 
Commercial and industrial loans   8,227    8,489    9,174    8,712    11,028 
Residential mortgages   4,348    5,491    5,992    6,404    8,060 
Consumer loans   1,124    1,392    1,526    1,838    2,260 
Total non-performing loans   23,969    21,348    21,454    21,407    26,636 
Repossessed assets   2,563    2,549    2,689    2,601    2,548 
Total non-performing assets  $26,532   $23,897   $24,143   $24,008   $29,184 
                          
Total non-performing loans/total loans   0.26%   0.23%   0.24%   0.24%   0.30%
Total non-performing assets/total assets   0.23%   0.20%   0.20%   0.19%   0.24%
                          
PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS                         
Balance at beginning of period  $112,167   $107,331   $105,357   $102,792   $100,219 
Charged-off loans   (7,091)   (3,246)   (5,636)   (6,891)   (6,744)
Recoveries on charged-off loans   1,471    1,583    1,610    2,456    1,317 
Net loans charged-off   (5,620)   (1,663)   (4,026)   (4,435)   (5,427)
Provision (benefit)/expense for loan credit losses   5,500    6,499    6,000    7,000    8,000 
Balance at end of period  $112,047   $112,167   $107,331   $105,357   $102,792 
                          
Allowance for credit losses/total loans   1.22%   1.22%   1.18%   1.17%   1.14%
Allowance for credit losses/non-performing loans   467%   525%   500%   492%   386%
                          
NET LOAN CHARGE-OFFS                         
Commercial real estate  $(999)  $22   $292   $316   $97 
Commercial and industrial loans   (1,009)   (711)   (1,772)   (2,309)   (3,345)
Residential mortgages   273    316    98    55    23 
Home equity   3    8    193    83    208 
Other consumer loans   (3,888)   (1,298)   (2,837)   (2,580)   (2,410)
Total, net  $(5,620)  $(1,663)  $(4,026)  $(4,435)  $(5,427)
                          
Net charge-offs (QTD annualized)/average loans   0.24%   0.07%   0.18%   0.20%   0.24%
Net charge-offs (YTD annualized)/average loans   0.16%   0.13%   0.18%   0.26%   0.28%

 

DELINQUENT AND NON-PERFORMING LOANS  Balance   Percent
of Total
Loans		   Balance   Percent
of Total
Loans		   Balance   Percent
of Total
Loans		   Balance   Percent
of Total
Loans		   Balance   Percent
of Total
Loans		 
30-89 Days delinquent  $18,526    0.20%  $18,494    0.20%  $27,682    0.30%  $22,140    0.24%  $18,700    0.21%
90+ Days delinquent and still accruing   6,280    0.07%   11,672    0.13%   5,882    0.06%   5,537    0.06%   5,744    0.06%
Total accruing delinquent loans   24,806    0.27%   30,166    0.33%   33,564    0.36%   27,677    0.30%   24,444    0.27%
Non-performing loans   23,969    0.26%   21,348    0.23%   21,454    0.24%   21,407    0.24%   26,636    0.30%
Total delinquent and non-performing loans  $48,775    0.53%  $51,514    0.56%  $55,018    0.60%  $49,084    0.54%  $51,080    0.57%

 

11

 

 

NON-GAAP FINANCIAL MEASURES

 

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

 

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

 

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

 

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

 

12

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA

 

      At or for the Quarters Ended 
      Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30, 
(in thousands)     2024   2024   2024   2023   2023 
Total non-interest income     $37,555   $20,133   $(32,599)  $(8,383)  $17,465 
Adj: Net (gains) on sale of business operations and assets      (16,048)                    
Adj: Loss on sale of AFS securities      -    -    49,909    25,057    - 
Total operating non-interest income (1)     $21,507   $20,133   $17,310   $16,674   $17,465 
                             
Total revenue  (A)  $125,614   $108,665   $55,541   $80,038   $107,799 
Adj: Net (gains) on sale of business operations and assets      (16,048)   -    -    -    - 
Adj: Loss on sale of AFS securities      -    -    49,909    25,057    - 
Total operating revenue (1)  (B)  $109,566   $108,665   $105,450   $105,095   $107,799 
                             
Total non-interest expense  (C)  $71,960   $70,931   $76,020   $78,992   $76,513 
Adj: Merger, restructuring and other non-operating expenses      297    384    (3,617)   (3,669)   (2,607)
Operating non-interest expense (1)   (D)  $72,257   $71,315   $72,403   $75,323   $73,906 
                             
Pre-tax, pre-provision net revenue (PPNR)  (A-C)  $53,654   $37,734   $(20,479)  $1,046   $31,286 
Operating pre-tax, pre-provision net revenue (PPNR) (1)  (B-D)   37,309    37,350    33,047    29,772    33,893 
                             
Net income/(loss)     $37,509   $24,025   $(20,188)  $(1,445)  $19,545 
Adj: Net (gains) on sale of business operations and assets      (16,048)   -    -    -    - 
Adj: Loss on sale of AFS securities      -    -    49,909    25,057    - 
Adj: Restructuring expense and other non-operating expenses      (297)   (384)   3,617    3,669    2,607 
Adj: Income taxes (expense)/benefit      3,625    (473)   (12,404)   (7,091)   (636)
Total operating income (1)  (E)  $24,789   $23,168   $20,934   $20,190   $21,516 
                             
(in millions, except per share data)                            
Total average assets  (F)  $11,695   $11,692   $11,755   $11,862   $11,860 
Total average shareholders' equity  (G)   1,050    1,013    1,018    966    988 
Total average tangible shareholders' equity (1)  (I)   1,034    995    999    946    967 
Total accumulated other comprehensive (loss) net of tax, end of period      (89)   (115)   (114)   (143)   (218)
Total tangible shareholders' equity, end of period (1)  (K)   1,054    996    991    993    930 
Total tangible assets, end of period (1)  (L)   11,588    12,202    12,128    12,411    12,119 
                             
Total common shares outstanding, end of period (thousands)  (M)   42,982    42,959    43,415    43,501    43,822 
Average diluted shares outstanding (thousands)  (N)   42,454    42,508    43,028    43,101    43,347 
                             
Earnings/(loss) per common share, diluted (1)     $0.88   $0.57   $(0.47)  $(0.03)  $0.45 
Operating earnings per common share, diluted (1)  (E/N)   0.58    0.55    0.49    0.47    0.50 
Tangible book value per common share, end of period (1)  (K/M)   24.53    23.18    22.84    22.82    21.23 
Total tangible shareholders' equity/total tangible assets (1)  (K/L)   9.10    8.16    8.17    8.00    7.68 
                             
Performance ratios (2)                            
Return on equity      14.29%   9.49%   (7.93)%   (0.60)%   7.91%
Operating return on equity (1)  (E/G)   9.44    9.15    8.23    8.36    8.71 
Return on tangible common equity (1)(3)      14.83    9.99    (7.73)   (0.24)   8.45 
Operating return on tangible common equity (1)(3)  (E+Q)/(I)   9.91    9.65    8.73    8.90    9.27 
Return on assets      1.28    0.82    (0.69)   (0.05)   0.66 
Operating return on assets (1)  (E/F)   0.85    0.79    0.71    0.68    0.73 
Efficiency ratio (1)(6)  (D-Q)/(B+O+R)   63.74    63.40    66.26    67.77    65.05 
                             
Supplementary data (in thousands)                            
Tax benefit on tax-credit investments (4)  (O)    N/M      N/M      N/M    $2,252   $1,979 
Non-interest income tax-credit investments amortization (5)  (P)    N/M      N/M      N/M     (2,060)   (1,463)
Net income on tax-credit investments  (O+P)    N/M      N/M      N/M     193    516 
Effective tax rate      22.1%   23.1%   23.8%   75.7%   16.1%
                             
Intangible amortization  (Q)  $1,128   $1,140   $1,205   $1,205   $1,205 
Fully taxable equivalent income adjustment  (R)   2,023    2,013    2,006    2,021    1,980 

 

 

(1)Non-GAAP financial measure.
(2)Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(3)Amortization of intangible assets is adjusted assuming a 27% marginal tax rate.
(4)The tax benefit is the direct reduction to the income tax provision due to tax credit investments.
(5)The non-interest income amortization is the reduction to the tax-advantaged investments and are incurred as the tax credits are generated.
(6)As of January 1, 2024, the Company elected the proportional amortization method for certain tax credits eliminating the need to adjust the efficiency ratio for tax credit impacts.

 

13

 

 

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

 

      At or for the Nine Months Ended 
      September 30,   September 30, 
(in thousands)     2024   2023 
Total non-interest income     $25,089   $51,165 
Adj: Net (gains) on sale of business operations and assets      (16,048)     
Adj: Loss on sale of AFS securities      49,909    - 
Total operating non-interest income (1)     $58,950   $51,165 
              
Total revenue  (A)  $289,820   $331,791 
Adj: Net (gains) on sale of business operations and assets      (16,048)   - 
Adj: Loss on sale of AFS securities      49,909    - 
Total operating revenue (1)  (B)  $323,681   $331,791 
              
Total non-interest expense  (C)  $218,911   $222,516 
Less: Merger, restructuring and other non-operating expenses      (2,936)   (2,592)
Operating non-interest expense (1)                                      (D)  $215,975   $219,924 
              
Pre-tax, pre-provision net revenue (PPNR)  (A-C)  $70,909   $109,275 
Operating pre-tax, pre-provision net revenue (PPNR) (1)  (B-D)   107,706    111,867 
              
Net income     $41,346   $71,043 
Adj: Net (gains) on sale of business operations and assets      (16,048)   - 
Adj: Loss on sale of AFS securities      49,909    - 
Adj: Restructuring expense and other non-operating expenses      2,936    2,592 
Adj: Income taxes (expense)      (9,252)   (633)
Total operating income (1)  (E)  $68,891   $73,002 
              
(in millions, except per share data)             
Total average assets  (F)  $11,713   $11,830 
Total average shareholders' equity  (G)   1,027    990 
Total average tangible shareholders' equity (1)              (I)   1,009    967 
Total accumulated other comprehensive (loss) net of tax, end of period      (89)   (218)
Total tangible shareholders' equity, end of period (1)  (K)   1,054    930 
Total tangible assets, end of period (1)  (L)   11,588    12,119 
              
Total common shares outstanding, end of period (thousands)                 (M)   42,982    43,822 
Average diluted shares outstanding (thousands)  (N)   42,658    43,640 
              
Earnings per common share, diluted (1)     $0.97   $1.63 
Operating earnings per common share, diluted (1)  (E/N)   1.61    1.67 
Tangible book value per common share, end of period (1)  (K/M)   24.53    21.22 
Total tangible shareholders' equity/total tangible assets (1)  (K/L)   9.10    7.67 
              
Performance ratios (2)             
Return on equity      5.37%   9.57%
Operating return on equity (1)  (E/G)   8.94    9.83 
Return on tangible common equity (1)(3)      5.80    10.16 
Operating return on tangible common equity (1)(3)  (E+Q)/(I)   9.43    10.43 
Return on assets      0.47    0.80 
Operating return on assets (1)  (E/F)   0.78    0.82 
Efficiency ratio (1)(6)  (D-Q)/(B+O+R)   64.45    62.65 
Net interest margin, FTE      3.17    3.33 
              
              
Supplementary data (in thousands)             
Tax benefit on tax-credit investments (4)  (O)    N/M    $7,611 
Non-interest income charge on tax-credit investments (5)  (P)    N/M     (5,959)
Net income on tax-credit investments  (O+P)    N/M     1,652 
              
Intangible amortization  (Q)  $3,473   $3,615 
Fully taxable equivalent income adjustment  (R)   6,042    5,850 

 

 

(1)Non-GAAP financial measure.
(2)Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(3)Amortization of intangible assets is adjusted assuming a 27% marginal tax rate.
(4)The tax benefit is the direct reduction to the income tax provision due to tax credit investments.
(5)The non-interest income amortization is the reduction to the tax-advantaged investments and are incurred as the tax credits are generated.
(6)As of January 1, 2024, the Company elected the proportional amortization method for certain tax credits eliminating the need to adjust the efficiency ratio for tax credit impacts.

 

14

 

v3.24.3
Cover
Oct. 24, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Oct. 24, 2024
Entity File Number 001-15781
Entity Registrant Name BERKSHIRE HILLS BANCORP, INC.
Entity Central Index Key 0001108134
Entity Tax Identification Number 04-3510455
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 60 State Street
Entity Address, City or Town Boston
Entity Address, State or Province MA
Entity Address, Postal Zip Code 02109
City Area Code 800
Local Phone Number 773-5601
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, par value $0.01 per share
Trading Symbol BHLB
Security Exchange Name NYSE
Entity Emerging Growth Company false
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