PR Newswire
BOSTON, Oct. 20, 2023
Operating Income of $22 Million, or $0.50 per Share
- Average loan growth of 2% linked quarter; average deposit growth of 1%
- Operating expense flat linked quarter
- Net loan charge-offs decreased $0.3 million linked quarter
- TCE ratio of 7.7% and CET1 ratio of 12.1%; stock repurchases were $4 million
BOSTON, Oct. 20, 2023 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the third quarter of 2023. These results along with comparison periods are summarized below:
($ in millions, except per share data) | Three Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Sep. 30, 2022 | ||||
Net income | $ | 19.5 | $ | 23.9 | $ | $18.7 |
Per share | 0.45 | 0.55 | 0.42 | |||
Operating earnings1 | 21.5 | 23.9 | 27.9 | |||
Per share | 0.50 | 0.55 | 0.62 | |||
Net interest income, non FTE | $ | 90.3 | $ | 92.8 | $ | 92.1 |
Net interest income, FTE | 92.3 | 94.7 | 93.8 | |||
Net interest margin, FTE | 3.18 % | 3.24 % | 3.48 % | |||
Non-interest income | 17.5 | 17.1 | 16.3 | |||
Operating non-interest income1 | 17.5 | 17.1 | 16.7 | |||
Non-interest expense | $ | 76.5 | $ | 74.0 | $ | 81.7 |
Operating non-interest expense1 | 73.9 | 74.0 | 70.2 | |||
Efficiency ratio1 | 65.1 % | 63.6 % | 62.0 % | |||
Average balances | ||||||
Loans | $ | 8,952 | $ | 8,791 | $ | 7,888 |
Deposits | 9,630 | 9,568 | 9,669 | |||
Period-end balances | ||||||
Loans | 8,984 | 8,882 | 7,943 | |||
Deposits | 9,981 | 10,068 | 9,988 | |||
1. See non-GAAP financial measures and reconciliation to GAAP measures beginning on page 12. | ||||||
Berkshire CEO Nitin Mhatre stated, "We continue to make steady progress in a challenging interest rate environment. We posted modest balance sheet growth in the quarter and recorded higher year-to-date net income and operating earnings compared to last year. Economic activity continues to expand in our markets albeit at a slower pace, and our teams are generating attractive new business and improving the Bank's market position. We maintained strong asset quality, liquidity and capital levels, and continued expense optimization initiatives. During the quarter, we continued to recruit experienced talent following the industry disruption, and we also welcomed Mary Anne Callahan to our Board of Directors. Mary Anne brings a deep industry knowledge and has close familiarity with our markets."
CFO David Rosato added, "Third quarter operating earnings were $21.5 million, decreasing $2.4 million linked quarter. Net interest margin of 3.18 percent decreased 6 basis points linked quarter, which improved from the 34 basis point decrease posted in the prior quarter. Net interest income decreased $2.4 million, as funding cost increases outpaced loan yield expansion and average earning assets decreased 2%. Operating non-interest income advanced 2 percent quarter-over-quarter while operating non-interest expense was flat. GAAP non-interest expense included $2.6 million in non-operating restructuring charges primarily for branch consolidations. I'm pleased that several of the cost saving initiatives we've instituted to-date are starting to have an impact and will continue to provide benefits in 2024 and beyond."
As of and For the Three Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Sep. 30, 2022 | |||||
Asset Quality | |||||||
Net loan charge-offs to average loans | 0.24 % | 0.26 % | 0.30 % | ||||
Non-performing loans to total loans | 0.30 % | 0.32 % | 0.48 % | ||||
Returns | |||||||
Return on average assets | 0.66 % | 0.79 % | 0.67 % | ||||
Return on tangible common equity, including unrealized losses on AFS securities 1 | 8.45 % | 10.09 % | 7.88 % | ||||
Return on tangible common equity, excluding unrealized losses on AFS securities 1 | 6.76 % | 8.26 % | 6.76 % | ||||
Capital Ratios2 | |||||||
Tangible common equity/tangible assets1 | 7.7 % | 7.9 % | 8.1 % | ||||
Tier 1 leverage | 9.8 % | 9.6 % | 10.1 % | ||||
Common equity Tier 1 | 12.1 % | 12.1 % | 12.7 % | ||||
Tier 1 risk-based | 12.4 % | 12.3 % | 13.0 % | ||||
Total risk-based | 14.4 % | 14.4 % | 15.1 % | ||||
1. See non-GAAP measures and reconciliation to GAAP beginning on beginning on page 12. | |||||||
Headquartered in Boston, Berkshire Hills Bancorp is the parent of Berkshire Bank. Providing a wide range of financial solutions through its consumer banking, commercial banking and wealth management divisions, the Bank has approximately $12.1 billion in total assets and a community-based footprint of 96 financial centers in Massachusetts, New York, Vermont, Connecticut and Rhode Island. Access more information about Berkshire Hills Bancorp at ir.berkshirebank.com.
3Q 2023 Financial Highlights
Income Statement
- GAAP earnings totaled $19.5 million, or $0.45 per share.
- Operating earnings totaled $21.5 million, or $0.50 per share.
- Net interest income totaled $90.3 million in 3Q23 compared to $92.8 million in 2Q23.
- One additional calendar day in 3Q23 (1% increase in net interest income).
- Net interest margin decreased 6 basis points from 2Q23 to 3.18% reflecting:
- Higher cost of funds (increase of 21 basis points).
- Includes higher deposit costs (increase of 30 basis points).
- Higher yields on the loan portfolio (increase of 11 basis points).
- Provision for credit losses on loans totaled $8.0 million.
- Allowance for credit losses on loans increased $2.6 million.
- Net loan charge-offs totaled $5.4 million.
- Net annualized loan charge-off ratio of 0.24%.
- Non-interest income totaled $17.5 million in 3Q23 compared to $17.1 million in 2Q23.
- Deposit related fee revenue increased $221 thousand.
- Loan related non-interest revenue decreased $310 thousand.
- Gain on SBA loan sales decreased $362 thousand.
- Wealth management revenue decreased $102 thousand. At September 30, 2023, wealth assets under management were $1.4 billion.
- Other non-interest income increased $1.4 million due primarily to lower tax credit amortization charges (offset by lower income tax benefit).
- Non-interest expense in 3Q23 totaled $76.5 million on a GAAP basis and $73.9 million on an operating basis. Both GAAP and operating non-interest expense in 2Q23 totaled $74.0 million.
- Non-operating expense totaled $2.6 million in 3Q23, and was primarily related to the consolidation of four Massachusetts branches.
- Compensation and benefits expense increased $195 thousand.
- Occupancy and equipment expense decreased $154 thousand.
- Technology and communications expense increased $151 thousand.
- Professional services expense decreased $103 thousand.
- The efficiency ratio was 65.1% for 3Q23 compared to 63.6% for 2Q23.
- The effective income tax rate was 16.1% for 3Q23 and 15.7% for the first nine months of 2023 compared to 18.7% for the full year of 2022.
Loans
- Commercial real estate loans totaled $4.5 billion at September 30, 2023, a $138 million increase from June 30, 2023.
- Average commercial real estate loans totaled $4.4 billion in 3Q23, a $102 million increase from 2Q23.
- Commercial and industrial loans totaled $1.4 billion at September 30, 2023, an $81 million decrease from June 30, 2023.
- Average commercial and industrial loans totaled $1.4 billion in 3Q23, a $60 million decrease from 2Q23.
- Residential mortgage loans totaled $2.6 billion at September 30, 2023, a $55 million increase from June 30, 2023.
- Average residential mortgage loans totaled $2.6 billion in 3Q23, a $129 million increase from 2Q23.
- Consumer loans totaled $507 million at September 30, 2023, an $11 million decrease from June 30, 2023.
- Average consumer loans totaled $513 million in 3Q23, an $11 million decrease from 2Q23.
- Non-performing loans to total loans was 0.30% at September 30, 2023 compared to 0.32% at June 30, 2023.
- The allowance for credit losses to total loans was 1.14% at September 30, 2023, compared to 1.13% at June 30, 2023
Deposits
- Non-interest bearing deposits totaled $2.5 billion at September 30, 2023, a $64 million decrease from June 30, 2023.
- Average non-interest bearing deposits totaled $2.6 billion in 3Q23, a $41 million decrease from 2Q23.
- Time deposits totaled $2.4 billion at September 30, 2023, $10 million increase from June 30, 2023.
- Average time deposits totaled $2.4 billion in 3Q23, a $154 million increase from 2Q23.
3Q 2023 ESG & Corporate Responsibility Highlights
Berkshire is a performance and purpose-driven, values-guided, community-centered bank. Berkshire's corporate responsibility and sustainability activities are integral to its mission.
- Berkshire launched a new Down Payment Assistance Program to increase homeownership amongst low-to-moderate income and first-time homebuyers.
- Berkshire's annual Xtraordinary Day of Service featured 47 volunteer events in which more than 1,000 employees contributed 4,000 hours of service to lift-up local communities.
- Berkshire maintained its top quartile ESG rating performance and was named a Top Charitable Contributor by the Boston Business Journal for the 11th consecutive year.
Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. eastern time on Friday, October 20, 2023 to discuss results for the quarter and provide guidance about expected future results. Instructions for listening to the call may be found at the Company's website at ir.berkshirebank.com. Additional materials relating to the call may also be accessed at this website. The call will be archived at the website and will be available for an extended period of time.
Forward Looking Statements: This document contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "remain," "target" and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.
INVESTOR CONTACT
Kevin Conn
Investor Relations
617.641.9206
[email protected]
MEDIA CONTACT
Gary Levante
Corporate Communications
413.447.1737
[email protected]
BERKSHIRE HILLS BANCORP, INC | ||||||||||||||
SELECTED FINANCIAL HIGHLIGHTS (1) | ||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||
2023 | 2023 | 2023 | 2022 | 2022 | ||||||||||
NOMINAL AND PER SHARE DATA | ||||||||||||||
Net earnings per common share, diluted | $ 0.45 | $ 0.55 | $ 0.63 | $ 0.69 | $ 0.42 | |||||||||
Operating earnings per common share, diluted (2)(3) | 0.50 | 0.55 | 0.63 | 0.64 | 0.62 | |||||||||
Net income, (thousands) | 19,545 | 23,861 | 27,637 | 30,505 | 18,717 | |||||||||
Operating net income, (thousands) (2)(3) | 21,516 | 23,878 | 27,608 | 28,254 | 27,928 | |||||||||
Net interest income, (thousands) non FTE | 90,334 | 92,759 | 97,533 | 102,092 | 92,084 | |||||||||
Net interest income, FTE (5) | 92,314 | 94,721 | 99,441 | 103,937 | 93,799 | |||||||||
Total common shares outstanding, end of period (thousands) | 43,822 | 44,033 | 44,411 | 44,361 | 45,040 | |||||||||
Average diluted shares, (thousands) | 43,347 | 43,532 | 44,036 | 44,484 | 45,034 | |||||||||
Total book value per common share, end of period | 21.70 | 22.11 | 22.42 | 21.51 | 20.93 | |||||||||
Tangible book value per common share, end of period (2)(3) | 21.23 | 21.60 | 21.89 | 20.95 | 20.36 | |||||||||
Dividends per common share | 0.18 | 0.18 | 0.18 | 0.18 | 0.12 | |||||||||
Dividend payout ratio | 40.56 | % | 33.47 | % | 28.98 | % | 26.59 | % | 29.35 | % | ||||
PERFORMANCE RATIOS (4) | ||||||||||||||
Return on equity, including unrealized losses on AFS securities | 7.91 | % | 9.51 | % | 11.31 | % | 12.63 | % | 7.31 | % | ||||
Return on equity, excluding unrealized losses on AFS securities | 6.35 | 7.82 | 9.11 | 10.06 | 6.30 | |||||||||
Operating return on equity, including unrealized losses on AFS securities (2)(3) | 8.71 | 9.51 | 11.30 | 11.70 | 10.92 | |||||||||
Operating return on equity, excluding unrealized losses on AFS securities (2)(3) | 6.99 | 7.82 | 9.10 | 9.32 | 9.40 | |||||||||
Return on tangible common equity, including unrealized losses on AFS securities (2)(3) | 8.45 | 10.09 | 11.96 | 13.36 | 7.88 | |||||||||
Return on tangible common equity, excluding unrealized losses on AFS securities (2)(3) | 6.76 | 8.26 | 9.59 | 10.59 | 6.76 | |||||||||
Operating return on tangible common equity, including unrealized losses on AFS securities (2)(3) | 9.27 | 10.09 | 11.96 | 12.40 | 11.57 | |||||||||
Operating return on tangible common equity, excluding unrealized losses on AFS securities (2)(3) | 7.41 | 8.27 | 9.59 | 9.83 | 9.92 | |||||||||
Return on assets | 0.66 | 0.79 | 0.96 | 1.10 | 0.67 | |||||||||
Operating return on assets (2)(3) | 0.73 | 0.79 | 0.95 | 1.02 | 1.00 | |||||||||
Net interest margin, FTE (5) | 3.18 | 3.24 | 3.58 | 3.84 | 3.48 | |||||||||
Efficiency ratio (3) | 65.05 | 63.57 | 59.51 | |||||||||||
