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 ($0.30 per share after tax)
Operating revenue up 1% linked quarter and 2% year-over-year
14.8% return on tangible common equity; 9.9% operating return on tangible common equity
Branch sale and loan sale are expected to further improve long-term profitability
BOSTON, Oct. 24, 2024 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE:BHLB) today reported results for the third quarter of 2024. These results along with comparison periods are summarized below:
($ 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.
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.
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%.
The 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.
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.
INVESTOR CONTACTKevin ConnInvestor
MEDIA CONTACTGary LevanteCorporate
BERKSHIRE HILLS BANCORP, INC.
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.
CONSOLIDATED BALANCE SHEETSBERKSHIRE HILLS BANCORP, INC.
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
