Berkshire Hills Reports Strong Fourth Quarter Operating Results

$0.46 GAAP EPS; $0.60 Operating EPS

  • Operating EPS growth of 3% quarter-over-quarter and 28% year-over-year; FY2024 Operating EPS of $2.22 up 4% year-over-year
  • Average deposit growth of 3% and Average loan growth of 0.4% quarter-over-quarter; Loans to deposits ratio improved further during the quarter
  • 0.52% delinquent and non-performing loans to total loans, lowest in nearly two decades
  • 7.6% return on tangible common equity; 9.9% operating return on tangible common equity
  • 13.0% common equity Tier 1 ratio

BOSTON, Jan. 30, 2025 /PRNewswire/ — Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the fourth quarter of 2024. These results along with comparison periods are summarized below:

($ in millions, except per share data)


 Three Months Ended 


Twelve Months Ended



Dec. 31,
2024


Sep. 30,
2024


Dec. 31,
2023


Dec. 31,
2024


Dec. 31,
2023












Net income (loss)

$

19.7

$

37.5

$

(1.4)

$

61.0

$

69.6

        Per share


0.46


0.88


(0.03)


1.43


1.60

Operating earnings1


26.0


24.8


20.2


94.9


93.2

         Per share


0.60


0.58


0.47


2.22


2.14












Net interest income, non FTE

$

86.9

$

88.1

$

88.4

$

351.6

$

369.0

Net interest income, FTE


88.8


90.1


90.4


359.6


376.9

         Net interest margin, FTE


3.14 %


3.16 %


3.11 %


3.16 %


3.27 %

Non-interest income


23.3


37.6


(8.4)


48.4


42.8

Operating non-interest income1


23.2


21.5


16.7


82.1


67.8












Non-interest expense

$

77.6

$

72.0

$

79.0

$

296.5

$

301.5

Operating non-interest expense1


71.0


72.3


75.3


287.0


295.2

Efficiency ratio1


62.4 %


63.7 %


67.8 %


63.9 %


63.9 %












Average balances











Loans

$

9,271

$

9,233

$

8,990

$

9,176

$

8,814

Deposits


9,659


9,360


9,936


9,536


9,704












Period-end balances











Loans


9,385


9,212


9,040


9,385


9,040

Deposits


10,375


9,577


10,633


10,375


10,633






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





1

Berkshire CEO Nitin Mhatre stated, “Berkshire continued its positive momentum and finished the year strong, highlighted by a year-over-year 28% increase in fourth quarter operating EPS and a 4% increase for full year operating EPS. This reflected the cumulative benefit of ongoing growth initiatives together with strategic optimization initiatives including the branch network sales and consolidations, and the sales of securities and targeted loan portfolios. Our results also benefited from strong credit discipline, rigorous expense management, investments in new client-facing bankers and enhancements to our digital platform and consumer product offerings. We achieved a 9.9% operating return on tangible common equity in the fourth quarter, and 9.6% for the full year, following a 10.1% result for the year 2023. Berkshire has been recognized by Newsweek as one of America’s Best Regional Banks for the third year in a row, and our positive impact in the community was recognized by the American Bankers Association.”

Mr. Mhatre continued, “In December we announced a definitive agreement with Brookline Bancorp, Inc. for a merger of equals to create a preeminent Northeast banking franchise positioned to deliver an exceptional client experience and create greater value for shareholders. We had a strong response from investors and successfully executed a capital raise of $100 million of common stock to support the merger, a reflection of confidence in our plans and accomplishments. I want to thank our teams for their continued dedication to transforming our franchise and for their service to our stakeholders as we work toward an exciting new chapter.”

Berkshire CFO Brett Brbovic added, “Quarter-over-quarter operating income increased 5% on higher fee revenue and lower operating expense. The efficiency ratio was 62.4%, an improvement over prior periods. We posted a solid 3% growth in average deposits improving our loans to deposits profile further. The 4Q24 net interest margin was 3.14%, down 2 basis points linked quarter and up 3 basis points year over year. Asset quality remained solid, and liquidity and capital strength improved. Tangible book value per share advanced 1% linked quarter and 9% year-over-year.”


As of and For the Three Months Ended


Dec. 31, 2024


Sept. 30, 2024


Dec. 31, 2023

Asset Quality






Net loan charge-offs to average loans

0.14 %


0.24 %


0.20 %

Non-performing loans to total loans

0.26 %


0.26 %


0.24 %







Returns






Return on average assets

0.68 %


1.28 %


(0.05) %

Operating return on average assets1

0.90 %


0.85 %


0.68 %

Return on tangible common equity1

7.59 %


14.83 %


(0.24) %

Operating return on tangible common equity1

9.93 %


9.91 %


8.90 %













Capital Ratios2






Tangible common equity/tangible assets1

9.4 %


9.1 %


8.0 %

Tier 1 leverage

11.0 %


9.9 %


9.6 %

Common equity Tier 1

13.0 %


11.9 %


12.0 %

Tier 1 risk-based

13.2 %


12.2 %


12.3 %

Total risk-based

15.4 %


14.4 %


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 December 31, 2024 and actual for the remaining periods.









2

Berkshire Hills Bancorp, Inc. (NYSE: BHLB) is the parent company of Berkshire Bank, a relationship-driven, community-focused bank with $12.3 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. Berkshire has a pending agreement to merge with Brookline Bancorp, Inc., a multi-bank holding company with $12 billion in assets and branches in Massachusetts, Rhode Island, and New York.

Q4 2024 Financial Highlights (comparisons are to the prior quarter unless otherwise noted).

Income Statement. Fourth quarter GAAP income was $20 million, or $0.46 per share. Operating earnings totaled $26 million, or $0.60 per share. GAAP results included $6.6 million in non-operating expenses related primarily to the pending merger. Operating earnings increased $1.2 million, or 5%, linked quarter primarily due to a $1.2 million decrease in operating non-interest expense. The fourth quarter was the first full quarter after the ten branch sale.  Fourth quarter operating EPS increased 3% linked quarter and 28% year-over-year, reflecting full year organic growth, improved efficiency, and lower provision expense.

For the full year 2024, GAAP income was $61 million, or $1.43 per share, compared to $70 million, or $1.60 per share, in 2023. Full year 2024 operating income was $95 million, or $2.22 per share, increasing from $93 million, or $2.14 per share, in 2023. The increase in operating income included the benefit of decreases in credit loss provision expense and in operating expenses, offset by the impact of a lower net interest margin.

The fourth quarter efficiency ratio improved to 62.4% from 63.7% linked quarter.

Quarterly net interest income decreased linked quarter by $1.2 million to $87 million in 4Q24.

  • The net interest margin decreased 2 basis points to 3.14%.
  • The earning asset yield decreased 20 basis points.
  • The loan yield decreased 23 basis points.
  • The cost of funds decreased 17 basis points.
    • The cost of deposits decreased 12 basis points.
  • Provision for credit losses totaled $6 million, increasing $0.5 million linked quarter.
    • Net loan charge-offs totaled $3.3 million, compared to $5.6 million linked quarter. 
    • The annualized loan net charge-off ratio was 0.14% for the quarter and 0.16% for the year.
  • GAAP and operating non-interest income was $23 million.
    • GAAP non-interest income decreased $14 million linked quarter due to a $16 million branch sale gain recorded in the prior quarter.
    • Operating non-interest income increased $1.7 million linked quarter due primarily to higher SBA loan sale gains. 
  • Non-interest expense totaled $78 million on a GAAP basis and $71 million on an operating basis.
    • GAAP non-interest expense increased $6 million linked quarter due to merger expenses recorded in the fourth quarter.
    • Operating non-interest expense decreased $1.2 million linked quarter.
  • The effective tax rate was 26% for the quarter and 23% for the year.
    • The tax rate on operating income was 21% for the quarter and 23% for the year.

    3

    Loans. Compared to the linked quarter, total loans increased $173 million, or 2% to $9.4 billion. For the year, total loans increased $489 million, or 5%, excluding $144 million in consumer and mortgage loans sold in the branch sale and other transactions.

    • Commercial real estate loans increased $107 million, or 2%, to $4.8 billion compared to the linked quarter.
    • Commercial and industrial loans increased $52 million, or 4%, to $1.5 billion.
    • Residential mortgage loans increased $13 million to $2.7 billion.
    • Consumer loans increased $1 million to $374 million.
    • The quarter-end allowance for credit losses on loans was unchanged linked quarter at 1.22% of total loans, and up from 1.17% at year-end 2023.
    • Non-performing loans to total loans was unchanged at 0.26% for the quarter.
    • Delinquent and non-performing loans were 0.52% of total loans, the lowest level in nearly two decades.

    Deposits. Compared to the linked quarter, total deposits increased $798 million to $10.4 billion. Total deposits excluding payroll and brokered deposits increased 3% linked quarter. For the year, total deposits increased $125 million, or 1%, excluding $383 million in deposits sold in the branch sale.

    • Non-interest bearing deposits increased linked quarter by $57 million, or 3%,to $2.3 billion.
    • Time deposits increased linked quarter by $57 million, or 2%, to $2.6 billion.

    Equity. Total shareholders’ equity increased linked quarter by $97 million, or 9%, to $1.2 billion including a successful $100 million common stock issuance. For the year, equity increased by $155 million, or 15%. The ratio of tangible common equity to tangible assets measured 9.4% at period end.

    Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. Eastern time on Thursday, January 30, 2025 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
    [email protected] 

    MEDIA CONTACT
    Gary Levante
    Corporate Communications
    413.447.1737
    [email protected]

    5

     

    BERKSHIRE HILLS BANCORP, INC.

    SELECTED FINANCIAL HIGHLIGHTS (1)




    At or for the Quarters Ended




    Dec. 31,


    Sept. 30,


    June 30,


    March 31,


    Dec. 31,





    2024


    2024


    2024


    2024


    2023
















    NOMINAL AND PER SHARE DATA













    Net earnings/(loss) per common share, diluted

    $        0.46


    $          0.88


    $         0.57


    $        (0.47)


    $        (0.03)




    Operating earnings per common share, diluted (2)(3)

    0.60


    0.58


    0.55


    0.49


    0.47




    Net income/(loss), (thousands)

    19,657


    37,509


    24,025


    (20,188)


    (1,445)




    Operating net income, (thousands) (2)(3)

    25,982


    24,789


    23,168


    20,934


    20,190




    Net interest income, (thousands) non FTE

    86,855


    88,059


    88,532


    88,140


    88,421




    Net interest income, FTE (5)

    88,798


    90,082


    90,545


    90,146


    90,442




    Total common shares outstanding, end of period (thousands) 

    46,424


    42,982


    42,959


    43,415


    43,501




    Average diluted shares, (thousands)

    43,064


    42,454


    42,508


    43,028


    43,101




    Total book value per common share, end of period

    25.15


    24.90


    23.58


    23.26


    23.27




    Tangible book value per common share, end of period (2)(3)

    24.82


    24.53


    23.18


    22.84


    22.82




    Dividends declared per common share

    0.18


    0.18


    0.18


    0.18


    0.18




    Dividend payout ratio (7)

    39.40

    %

    20.63

    %

    32.74

    %

     N/M 

    %

     N/M 

    %















    PERFORMANCE RATIOS (4)













    Return on equity

    7.18

    %

    14.29

    %

    9.49

    %

    (7.93)

    %

    (0.60)

    %



    Operating return on equity (2)(3)

    9.49


    9.44


    9.15


    8.23


    8.36




    Return on tangible common equity (2)(3)

    7.59


    14.83


    9.99


    (7.73)


    (0.24)




    Operating return on tangible common equity (2)(3)

    9.93


    9.91


    9.65


    8.73


    8.90




    Return on assets

    0.68


    1.28


    0.82


    (0.69)


    (0.05)




    Operating return on assets (2)(3)

    0.90


    0.85


    0.79


    0.71


    0.68




    Net interest margin, FTE (5)

    3.14


    3.16


    3.20


    3.15


    3.11




    Efficiency ratio (3)

    62.43


    63.74


    63.40


    66.26


    67.77
















    FINANCIAL DATA (in millions, end of period)













    Total assets

    $     12,273


    $      11,605


    $     12,219


    $      12,147


    $     12,431




    Total earning assets

    11,523


    10,922


    11,510


    11,430


    11,705




    Total loans

    9,385


    9,212


    9,229


    9,086


    9,040




    Total funding liabilities

    10,813


    10,285


    10,907


    10,826


    11,140




    Total deposits

    10,375


    9,577


    9,621


    9,883


    10,633




    Loans/deposits (%)

    90

    %

    96

    %

    96

    %

    92

    %

    85

    %



    Total accumulated other comprehensive (loss) net of tax, end of period

    $        (106)


    $           (89)


    $         (115)


    $         (114)


    $         (143)




    Total shareholders’ equity

    1,167


    1,070


    1,013


    1,010


    1,012
















    ASSET QUALITY













    Allowance for credit losses, (millions)

    $          115


    $           112


    $          112


    $           107


    $          105




    Net charge-offs, (millions)

    (3)


    (6)


    (2)


    (4)


    (4)




    Net charge-offs (QTD annualized)/average loans

    0.14

    %

    0.24

    %

    0.07

    %

    0.18

    %

    0.20

    %



    Provision (benefit)/expense, (millions)

    $              6


    $               6


    $              6


    $               6


    $              7




    Non-performing assets, (millions)

    27


    27


    24


    24


    24




    Non-performing loans/total loans

    0.26

    %

    0.26

    %

    0.23

    %

    0.24

    %

    0.24

    %



    Allowance for credit losses/non-performing loans

    469


    467


    525


    500


    492




    Allowance for credit losses/total loans

    1.22


    1.22


    1.22


    1.18


    1.17
















    CAPITAL RATIOS













    Risk weighted assets, (millions)(6)

    $       9,747


    $        9,651


    $       9,604


    $        9,615


    $       9,552




    Common equity Tier 1 capital to risk weighted assets (6)

    13.0

    %

    11.9

    %

    11.6

    %

    11.6

    %

    12.0

    %



    Tier 1 capital leverage ratio (6)

    11.0


    9.9


    9.6


    9.5


    9.6




    Tangible common shareholders’ equity/tangible assets (3)

    9.4


    9.1


    8.2


    8.2


    8.0





























    (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 December 31, 2024 and actual for the remaining periods.



    (7)

    Dividend payout ratio is based on dividends declared. 


    6

    BERKSHIRE HILLS BANCORP, INC.

    CONSOLIDATED BALANCE SHEETS

    December 31,

    September 30,

    December 31,

    (in thousands)

    2024

    2024

    2023

    Assets




    Cash and due from banks

    $               182,776

    $             134,056

    $             148,148

    Short-term investments

    945,633

    435,911

    1,055,096

    Total cash and cash equivalents

    1,128,409

    569,967

    1,203,244





    Trading securities, at fair value

    5,258

    5,560

    6,142

    Equity securities, at fair value

    655

    13,278

    13,029

    Securities available for sale, at fair value

    655,723

    661,740

    1,022,285

    Securities held to maturity, at amortized cost

    507,658

    512,277

    543,351

    Federal Home Loan Bank stock 

    19,565

    30,685

    22,689

    Total securities

    1,188,859

    1,223,540

    1,607,496

    Less: Allowance for credit losses on investment securities

    (64)

    (65)

    (68)

    Net securities

    1,188,795

    1,223,475

    1,607,428





    Loans held for sale

    3,076

    50,634

    2,237





    Commercial real estate loans

    4,848,824

    4,741,689

    4,527,012

    Commercial and industrial loans

    1,461,341

    1,409,538

    1,352,834

    Residential mortgages

    2,701,227

    2,688,709

    2,672,677

    Consumer loans

    373,602

    372,386

    487,163

    Total loans

    9,384,994

    9,212,322

    9,039,686

    Less: Allowance for credit losses on loans 

    (114,700)

    (112,047)

    (105,357)

    Net loans

    9,270,294

    9,100,275

    8,934,329





    Premises and equipment, net

    56,609

    54,667

    68,915

    Other intangible assets

    15,064

    16,192

    19,664

    Other assets

    604,231

    582,422

    584,066

    Assets held for sale 

    6,930

    6,930

    10,938

    Total assets

    $         12,273,408

    $        11,604,562

    $        12,430,821





    Liabilities and shareholders’ equity




    Non-interest bearing deposits

    $           2,324,879

    $          2,267,595

    $          2,469,164

    NOW and other deposits

    841,406

    748,737

    858,644

    Money market deposits

    3,610,521

    3,042,712

    3,565,516

    Savings deposits

    1,021,716

    998,549

    1,053,810

    Time deposits

    2,576,682

    2,519,896

    2,686,250

    Total deposits

    10,375,204

    9,577,489

    10,633,384





    Federal Home Loan Bank advances

    316,482

    585,542

    385,223

    Subordinated borrowings

    121,612

    121,549

    121,363

    Total borrowings

    438,094

    707,091

    506,586





    Other liabilities 

    292,686

    249,531

    278,630

    Total liabilities

    11,105,984

    10,534,111

    11,418,600





    Common shareholders’ equity

    1,167,424

    1,070,451

    1,012,221

    Total shareholders’ equity

    1,167,424

    1,070,451

    1,012,221

    Total liabilities and shareholders’ equity

    $         12,273,408

    $        11,604,562

    $        12,430,821

    7

    BERKSHIRE HILLS BANCORP, INC.

    CONSOLIDATED STATEMENTS OF OPERATIONS


    Three Months Ended


    Years Ended


    December 31,


    December 31,

    (in thousands, except per share data)

    2024


    2023


    2024


    2023

    Interest income    

    $       150,555


    $         150,537


    $         613,938


    $            576,299

    Interest expense    

    63,700


    62,116


    262,352


    207,252

    Net interest income, non FTE

    86,855


    88,421


    351,586


    369,047

    Non-interest income








    Deposit related fees

    8,237


    8,481


    33,759


    34,155

    Loan related fees

    3,039


    2,058


    11,280


    10,595

    Gain on SBA loans

    4,635


    2,382


    12,648


    10,334

    Wealth management fees    

    2,658


    2,394


    10,840


    10,197

    Fair value adjustments on securities

    (352)


    768


    7


    513

    Other

    4,943


    591


    13,576


    2,045

    Total non-interest income excluding gains and losses

    23,160


    16,674


    82,110


    67,839

    Gain on sale of business operations and assets, net

    193



    16,241


    (Loss) on sale of securities 

    (28)


    (25,057)


    (49,937)


    (25,057)

    Total non-interest income      

    23,325


    (8,383)


    48,414


    42,782

    Total net revenue

    110,180


    80,038


    400,000


    411,829









    Provision expense for credit losses   

    6,000


    7,000


    23,999


    31,999

    Non-interest expense 








    Compensation and benefits

    38,929


    40,095


    160,453


    159,281

    Occupancy and equipment     

    7,334


    8,553


    31,469


    35,718

    Technology

    10,241


    11,326


    40,395


    41,878

    Professional services

    2,765


    3,417


    10,307


    11,643

    Regulatory expenses

    1,851


    1,854


    7,395


    7,019

    Amortization of intangible assets     

    1,128


    1,205


    4,601


    4,820

    Marketing

    2,013


    1,107


    4,522


    5,377

    Merger, restructuring and other non-operating expenses

    6,557


    3,669


    9,493


    6,261

    Other expenses

    6,757


    7,766


    27,851


    29,511

    Total non-interest expense     

    77,575


    78,992


    296,486


    301,508

    Total non-interest expense excluding non-operating expenses

    71,018


    75,323


    286,993


    295,247









    Income before income taxes       

    $          26,605


    $           (5,954)


    $            79,515


    $              78,322

    Income tax expense

    6,948


    (4,509)


    18,512


    8,724

    Net income

    $          19,657


    $           (1,445)


    $            61,003


    $              69,598









    Basic earnings per common share

    $              0.46


    $             (0.03)


    $                1.44


    $                  1.61

    Diluted earnings per common share

    $              0.46


    $             (0.03)


    $                1.43


    $                  1.60









    Weighted average shares outstanding:      








    Basic

    42,661


    42,852


    42,508


    43,288

    Diluted

    43,064


    43,101


    42,761


    43,504









    8

    BERKSHIRE HILLS BANCORP, INC.

    CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) 



    Dec. 31,


    Sept. 30,


    June 30,


    March 31,


    Dec. 31,


    (in thousands, except per share data)


    2024


    2024


    2024


    2024


    2023


    Interest income    


    $    150,555


    $      157,268


    $      154,109


    $      152,006


    $      150,537


    Interest expense    


    63,700


    69,209


    65,577


    63,866


    62,116


    Net interest income, non FTE


    86,855


    88,059


    88,532


    88,140


    88,421


    Non-interest income 












    Deposit related fees


    8,237


    8,656


    8,561


    8,305


    8,481


    Loan related fees


    3,039


    3,214


    2,364


    2,663


    2,058


    Gain on SBA loans


    4,635


    3,020


    3,294


    1,699


    2,382


    Wealth management fees    


    2,658


    2,685


    2,613


    2,884


    2,394


    Fair value adjustments on securities


    (352)


    516


    (42)


    (115)


    768


    Other


    4,943


    3,416


    3,343


    1,874


    591


    Total non-interest income excluding gains and losses


    23,160


    21,507


    20,133


    17,310


    16,674


    Gain on sale of business operations and assets, net


    193


    16,048





    Loss on sale of securities 


    (28)




    (49,909)


    (25,057)


    Total non-interest income      


    23,325


    37,555


    20,133


    (32,599)


    (8,383)


    Total net revenue 


    110,180


    125,614


    108,665


    55,541


    80,038














    Provision expense for credit losses   


    6,000


    5,500


    6,499


    6,000


    7,000


    Non-interest expense












    Compensation and benefits


    38,929


    40,663


    40,126


    40,735


    40,095


    Occupancy and equipment     


    7,334


    7,373


    8,064


    8,698


    8,553


    Technology


    10,241


    10,014


    10,236


    9,904


    11,326


    Professional services


    2,765


    2,109


    2,757


    2,676


    3,417


    Regulatory expenses


    1,851


    1,851


    1,848


    1,845


    1,854


    Amortization of intangible assets     


    1,128


    1,128


    1,140


    1,205


    1,205


    Marketing


    2,013


    861


    532


    1,116


    1,107


    Merger, restructuring and other non-operating expenses


    6,557


    (297)


    (384)


    3,617


    3,669


    Other expenses


    6,757


    8,258


    6,612


    6,224


    7,766


    Total non-interest expense     


    77,575


    71,960


    70,931


    76,020


    78,992


    Total non-interest expense excluding non-operating expenses


    71,018


    72,257


    71,315


    72,403


    75,323


























    Income/(loss) before income taxes


    $       26,605


    $        48,154


    $        31,235


    $       (26,479)


    $         (5,954)


    Income tax expense/(benefit)


    6,948


    10,645


    7,210


    (6,291)


    (4,509)


    Net income/(loss)


    $       19,657


    $        37,509


    $        24,025


    $       (20,188)


    $         (1,445)


























    Diluted earnings/(loss) per common share


    $           0.46


    $            0.88


    $            0.57


    $           (0.47)


    $           (0.03)














    Weighted average shares outstanding:












    Basic


    42,661


    42,170


    42,437


    42,777


    42,852


    Diluted


    43,064


    42,454


    42,508


    43,028


    43,101


























    9

    BERKSHIRE HILLS BANCORP, INC.


    AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS 



    Quarters Ended




    December 31, 2024


    September 30, 2024


    December 31, 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


    $         4,772

    $         77

    6.32

    %


    $         4,717

    $         79

    6.54

    %


    $         4,469

    $         74

    6.45

    %

    Commercial and industrial loans


    1,435

    27

    7.24



    1,380

    27

    7.79



    1,367

    26

    7.60



    Residential mortgages


    2,690

    29

    4.32



    2,712

    30

    4.31



    2,656

    27

    4.06



    Consumer loans


    374

    6

    6.29



    424

    8

    7.43



    498

    9

    7.31



    Total loans 


    9,271

    139

    5.88



    9,233

    144

    6.11



    8,990

    136

    5.97



    Securities (2)


    1,347

    9

    2.66



    1,340

    8

    2.49



    2,080

    12

    2.40



    Short-term investments and loans held for sale


    466

    5

    4.25



    563

    7

    4.98



    350

    4

    4.22



    New York branch loans held for sale (3)




    31

    5.44





    Total earning assets


    11,084

    153

    5.42



    11,167

    159

    5.62



    11,420

    152

    5.26



    Goodwill and other intangible assets


    15





    17





    20





    Other assets


    497





    511





    422





    Total assets


    $         11,596





    $         11,695





    $         11,862






















    Liabilities and shareholders’ equity

















    Non-interest-bearing demand deposits


    $           2,293

    $            –

    %


    $         2,250

    $            –

    %


    $         2,488

    $            –

    %

    NOW and other


    764

    3

    1.44



    743

    3

    1.54



    833

    3

    1.38



    Money market


    3,046

    23

    3.02



    2,935

    25

    3.35



    2,995

    23

    3.08



    Savings


    1,003

    3

    1.09



    1,002

    3

    1.17



    1,062

    2

    0.90



    Time


    2,553

    27

    4.22



    2,430

    26

    4.31



    2,558

    25

    3.77



    Total deposits


    9,659

    56

    2.30



    9,360

    57

    2.42



    9,936

    53

    2.11



    Borrowings (4)


    602

    8

    5.20



    782

    11

    5.44



    668

    9

    5.45



    New York branch non-interest-bearing deposits
    held for sale (3)



    51





    New York branch interest-bearing deposits
    held for sale (3)




    207

    1

    2.87





    Total funding liabilities


    10,261

    64

    2.47



    10,400

    69

    2.64



    10,604

    62

    2.32




















    Other liabilities


    240





    245





    292





    Total liabilities


    10,501





    10,645





    10,896






















    Common shareholders’ equity (5)


    1,095





    1,050





    966





    Total shareholders’ equity


    1,095





    1,050





    966





    Total liabilities and shareholders’ equity


    $         11,596





    $         11,695





    $         11,862





    Net interest margin, FTE




    3.14





    3.16





    3.11




















    Supplementary data

















    Net Interest Income, non FTE


    86.855





    88.059





    88.421





    FTE income adjustment


    1.943





    2.023





    2.021





    Net Interest Income, FTE


    88.798





    90.082





    90.442







































    (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

    BERKSHIRE HILLS BANCORP, INC.

    ASSET QUALITY ANALYSIS 


    At or for the Quarters Ended


    Dec. 31,


    Sept. 30,


    June 30,


    March 31,


    Dec. 31,


    (in thousands)

    2024


    2024


    2024


    2024


    2023


    NON-PERFORMING ASSETS











    Commercial real estate 

    $          10,393


    $             10,270


    $              5,976


    $              4,762


    $               4,453


    Commercial and industrial loans

    9,156


    8,227


    8,489


    9,174


    8,712


    Residential mortgages

    3,830


    4,348


    5,491


    5,992


    6,404


    Consumer loans

    1,068


    1,124


    1,392


    1,526


    1,838


    Total non-performing loans

    24,447


    23,969


    21,348


    21,454


    21,407


    Repossessed assets

    2,280


    2,563


    2,549


    2,689


    2,601


    Total non-performing assets

    $          26,727


    $             26,532


    $            23,897


    $            24,143


    $             24,008













    Total non-performing loans/total loans

    0.26 %


    0.26 %


    0.23 %


    0.24 %


    0.24 %


    Total non-performing assets/total assets

    0.22 %


    0.23 %


    0.20 %


    0.20 %


    0.19 %













    PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS










    Balance at beginning of period

    $        112,047


    $           112,167


    $          107,331


    $          105,357


    $           102,792


    Charged-off loans

    (4,553)


    (7,091)


    (3,246)


    (5,636)


    (6,891)


    Recoveries on charged-off loans

    1,206


    1,471


    1,583


    1,610


    2,456


    Net loans charged-off

    (3,347)


    (5,620)


    (1,663)


    (4,026)


    (4,435)


    Provision (benefit)/expense for loan credit losses

    6,000


    5,500


    6,499


    6,000


    7,000


    Balance at end of period

    $        114,700


    $           112,047


    $          112,167


    $          107,331


    $           105,357













    Allowance for credit losses/total loans

    1.22 %


    1.22 %


    1.22 %


    1.18 %


    1.17 %


    Allowance for credit losses/non-performing loans

    469 %


    467 %


    525 %


    500 %


    492 %













    NET LOAN CHARGE-OFFS











    Commercial real estate

    $              (121)


    $                (999)


    $                   22


    $                 292


    $                  316


    Commercial and industrial loans

    (2,309)


    (1,009)


    (711)


    (1,772)


    (2,309)


    Residential mortgages

    552


    273


    316


    98


    55


    Home equity 

    1


    3


    8


    193


    83


    Other consumer loans

    (1,470)


    (3,888)


    (1,298)


    (2,837)


    (2,580)


    Total, net

    $           (3,347)


    $             (5,620)


    $             (1,663)


    $             (4,026)


    $             (4,435)













    Net charge-offs (QTD annualized)/average loans 

    0.14 %


    0.24 %


    0.07 %


    0.18 %


    0.20 %


    Net charge-offs (YTD annualized)/average loans 

    0.16 %


    0.16 %


    0.13 %


    0.18 %


    0.26 %
























    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

    $          17,591

    0.19 %

    $             18,526

    0.20 %

    $            18,494

    0.20 %

    $            27,682

    0.30 %

    $             22,140

    0.24 %

    90+ Days delinquent and still accruing

    6,417

    0.07 %

    6,280

    0.07 %

    11,672

    0.13 %

    5,882

    0.06 %

    5,537

    0.06 %

    Total accruing delinquent loans

    24,008

    0.26 %

    24,806

    0.27 %

    30,166

    0.33 %

    33,564

    0.36 %

    27,677

    0.30 %

    Non-performing loans

    24,447

    0.26 %

    23,969

    0.26 %

    21,348

    0.23 %

    21,454

    0.24 %

    21,407

    0.24 %

    Total delinquent and non-performing loans

    $          48,455

    0.52 %

    $             48,775

    0.53 %

    $            51,514

    0.56 %

    $            55,018

    0.60 %

    $             49,084

    0.54 %

    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 the pending merger, branch sales and consolidations, and loss on sale of 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

    BERKSHIRE HILLS BANCORP, INC.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA



    At or for the Quarters Ended




    Dec. 31,


    Sept. 30,


    June 30,


    March 31,


    Dec. 31,


    (in thousands)



    2024


    2024


    2024


    2024


    2023


    Total non-interest income



    $     23,325


    $       37,555


    $       20,133


    $     (32,599)


    $        (8,383)


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



    (193)


    (16,048)





    Adj: Loss on sale of securities



    28




    49,909


    25,057


    Total operating non-interest income (1)



    $     23,160


    $       21,507


    $       20,133


    $       17,310


    $       16,674















    Total revenue

    (A)


    $   110,180


    $     125,614


    $     108,665


    $       55,541


    $       80,038


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



    (193)


    (16,048)





    Adj: Loss on sale of securities



    28




    49,909


    25,057


    Total operating revenue (1)

    (B)


    $   110,015


    $     109,566


    $     108,665


    $     105,450


    $     105,095















    Total non-interest expense

    (C)


    $     77,575


    $       71,960


    $       70,931


    $       76,020


    $       78,992


    Adj: Merger, restructuring and other non-operating expenses



    (6,557)


    297


    384


    (3,617)


    (3,669)


    Operating non-interest expense (1)                                    

    (D)


    $     71,018


    $       72,257


    $       71,315


    $       72,403


    $       75,323















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

    (A-C)


    $     32,605


    $       53,654


    $       37,734


    $     (20,479)


    $         1,046


    Operating pre-tax, pre-provision net revenue (PPNR) (1)

    (B-D)


    38,997


    37,309


    37,350


    33,047


    29,772















    Net income/(loss)



    $     19,657


    $       37,509


    $       24,025


    $     (20,188)


    $        (1,445)


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



    (193)


    (16,048)





    Adj: Loss on sale of securities



    28




    49,909


    25,057


    Adj: Merger, restructuring expense and other non-operating expenses



    6,557


    (297)


    (384)


    3,617


    3,669


    Adj: Income taxes (expense)/benefit



    (67)


    3,625


    (473)


    (12,404)


    (7,091)


    Total operating income (1)

    (E)


    $     25,982


    $       24,789


    $       23,168


    $       20,934


    $       20,190















    (in millions, except per share data)













    Total average assets                                                

    (F)


    $     11,596


    $       11,695


    $       11,692


    $       11,755


    $       11,862


    Total average shareholders’ equity

    (G)


    1,095


    1,050


    1,013


    1,018


    966


    Total average tangible shareholders’ equity (1)            

    (I)


    1,080


    1,034


    995


    999


    946


    Total accumulated other comprehensive (loss) net of tax, end of period



    (106)


    (89)


    (115)


    (114)


    (143)


    Total tangible shareholders’ equity, end of period (1)

    (K)


    1,152


    1,054


    996


    991


    993


    Total tangible assets, end of period (1)

    (L)


    12,258


    11,588


    12,202


    12,128


    12,411















    Total common shares outstanding, end of period (thousands)               

    (M)


    46,424


    42,982


    42,959


    43,415


    43,501


    Average diluted shares outstanding (thousands)

    (N)


    43,064


    42,454


    42,508


    43,028


    43,101















    Earnings/(loss) per common share, diluted (1)



    $          0.46


    $           0.88


    $           0.57


    $         (0.47)


    $          (0.03)


    Operating earnings per common share, diluted (1)

    (E/N)


    0.60


    0.58


    0.55


    0.49


    0.47


    Tangible book value per common share, end of period (1)

    (K/M)


    24.82


    24.53


    23.18


    22.84


    22.82


    Total tangible shareholders’ equity/total tangible assets (1)

    (K/L)


    9.40


    9.10


    8.16


    8.17


    8.00















    Performance ratios (2)













    Return on equity



    7.18

    %

    14.29

    %

    9.49

    %

    (7.93)

    %

    (0.60)

    %

    Operating return on equity (1)

    (E/G)


    9.49


    9.44


    9.15


    8.23


    8.36


    Return on tangible common equity (1)(3)



    7.59


    14.83


    9.99


    (7.73)


    (0.24)


    Operating return on tangible common equity (1)(3)

    (E+Q)/(I)


    9.93


    9.91


    9.65


    8.73


    8.90


    Return on assets



    0.68


    1.28


    0.82


    (0.69)


    (0.05)


    Operating return on assets (1)

    (E/F)


    0.90


    0.85


    0.79


    0.71


    0.68


    Efficiency ratio (1)(6)                                                                          

    (D-Q)/(B+O+R)


    62.43


    63.74


    63.40


    66.26


    67.77




























    Supplementary data (in thousands)













    Tax benefit on tax-credit investments (4)

    (O)


     N/M 


     N/M 


     N/M 


     N/M 


    $         2,252


    Non-interest income tax-credit investments amortization (5)

    (P)


     N/M 


     N/M 


     N/M 


     N/M 


    (2,060)


    Net income on tax-credit investments

    (O+P)


     N/M 


     N/M 


     N/M 


     N/M 


    193


    Effective tax rate



    26.1

    %

    22.1

    %

    23.1

    %

    23.8

    %

    75.7

    %














    Intangible amortization

    (Q)


    $       1,128


    $         1,128


    $         1,140


    $         1,205


    $         1,205


    Fully taxable equivalent income adjustment 

    (R)


    1,943


    2,023


    2,013


    2,006


    2,021









































    (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. Excluding 


         the impact of tax credits in 2023, the efficiency ratio for the quarter ending December 31, 2023 was 69.19%.


    13

    BERKSHIRE HILLS BANCORP, INC.

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



    At or for the Years Ended




    December 31,


    December 31,


    (in thousands)



    2024


    2023


    Total non-interest income



    $                  48,414


    $                    42,782


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



    (16,241)



    Adj: Loss on sale of securities



    49,937


    25,057


    Total operating non-interest income (1)



    $                  82,110


    $                    67,839









    Total revenue 

    (A)


    $                400,000


    $                  411,829


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



    (16,241)



    Adj: Loss on sale of securities



    49,937


    25,057


    Total operating revenue (1)

    (B)


    $                433,696


    $                  436,886









    Total non-interest expense

    (C)


    $                296,486


    $                  301,508


    Less: Merger, restructuring and other non-operating expenses



    (9,493)


    (6,261)


    Operating non-interest expense (1)                                    

    (D)


    $                286,993


    $                  295,247









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

    (A-C)


    $                103,514


    $                  110,321


    Operating pre-tax, pre-provision net revenue (PPNR) (1)

    (B-D)


    146,703


    141,639









    Net income



    $                  61,003


    $                    69,598


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



    (16,241)



    Adj: Loss on sale of securities



    49,937


    25,057


    Adj: Merger, restructuring expense and other non-operating expenses



    9,493


    6,261


    Adj: Income taxes (expense)



    (9,319)


    (7,723)


    Total operating income (1)

    (E)


    $                  94,873


    $                    93,193









    (in millions, except per share data)







    Total average assets                                                

    (F)


    $                  11,683


    $                    11,838


    Total average shareholders’ equity

    (G)


    1,044


    984


    Total average tangible shareholders’ equity (1)            

    (I)


    1,027


    962


    Total accumulated other comprehensive (loss) net of tax, end of period



    (106)


    (143)


    Total tangible shareholders’ equity, end of period (1)

    (K)


    1,152


    993


    Total tangible assets, end of period (1)

    (L)


    12,258


    12,411









    Total common shares outstanding, end of period (thousands)               

    (M)


    46,424


    43,501


    Average diluted shares outstanding (thousands)

    (N)


    42,761


    43,504









    Earnings per common share, diluted (1)



    $                       1.43


    $                        1.60


    Operating earnings per common share, diluted (1)

    (E/N)


    2.22


    2.14


    Tangible book value per common share, end of period (1)

    (K/M)


    24.82


    22.82


    Total tangible shareholders’ equity/total tangible assets (1)

    (K/L)


    9.40


    8.00









    Performance ratios (2)







    Return on equity 



    5.84

    %

    7.07

    %

    Operating return on equity (1)

    (E/G)


    9.09


    9.47


    Return on tangible common equity (1)(3)



    6.27


    7.60


    Operating return on tangible common equity (1)(3)

    (E+Q)/(I)


    9.56


    10.05


    Return on assets



    0.52


    0.59


    Operating return on assets (1)

    (E/F)


    0.81


    0.79


    Efficiency ratio (1)(6)                                                                               

    (D-Q)/(B+O+R)


    63.94


    63.88


    Net interest margin, FTE



    3.16


    3.27
















    Supplementary data (in thousands)







    Tax benefit on tax-credit investments (4)

    (O)


     N/M 


    $                      9,863


    Non-interest income charge on tax-credit investments (5)

    (P)


     N/M 


    (8,018)


    Net income on tax-credit investments

    (O+P)


     N/M 


    1,845









    Intangible amortization

    (Q)


    $                    4,601


    $                      4,820


    Fully taxable equivalent income adjustment 

    (R)


    7,985


    7,870






    (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. Excluding the impact of tax credits in 2023, the efficiency ratio for the year ending December 31, 2023 was 65.30%.

    14

    SOURCE Berkshire Hills Bancorp, Inc.

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