Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the first quarter of 2024. These results along with comparison periods are summarized below:
|
($ in millions, except per share data) |
Three Months Ended |
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|
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
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|
Net (loss) income |
$ |
($20.2) |
$ |
(1.4) |
$ |
27.6 |
|
|
Per share |
(0.47) |
(0.03) |
0.63 |
||||
|
Operating earnings1 |
20.9 |
20.2 |
27.6 |
||||
|
Per share |
0.49 |
0.47 |
0.63 |
||||
|
Net interest income, non FTE |
$ |
88.1 |
$ |
88.4 |
$ |
97.5 |
|
|
Net interest income, FTE |
90.1 |
90.4 |
99.4 |
||||
|
Net interest margin, FTE |
3.15 % |
3.11 % |
3.58 % |
||||
|
Non-interest income |
(32.6) |
(8.4) |
16.6 |
||||
|
Operating non-interest income1 |
17.3 |
16.7 |
16.6 |
||||
|
Non-interest expense |
$ |
76.0 |
$ |
79.0 |
$ |
72.0 |
|
|
Operating non-interest expense1 |
72.4 |
75.3 |
72.0 |
||||
|
Efficiency ratio1 |
66.3 % |
67.8 % |
59.5 % |
||||
|
Average balances2 |
|||||||
|
Loans |
$ |
9,059 |
$ |
8,990 |
$ |
8,515 |
|
|
Deposits |
9,978 |
9,936 |
9,676 |
||||
|
Period-end balances2 |
|||||||
|
Loans |
9,144 |
9,040 |
8,682 |
||||
|
Deposits |
10,368 |
10,633 |
10,068 |
||||
|
1. See non-GAAP financial measures and reconciliation to GAAP measures beginning on page 12. 1Q24 operating non-interest 2. Loans and deposits include balances held for sale in branch transaction of $18 million and $149 million respectively (average), |
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Berkshire CEO Nitin Mhatre stated, “We had a solid start to the year, increasing operating earnings, growing loans, and maintaining solid asset quality and capital strength. In March, we announced the planned sale of ten branches which will enhance efficiency and profitability, while strengthening our focus in core New York markets. In anticipation of completing the branch sale in the third quarter, we sold lower yielding investment securities, resulting in a non-operating charge. During the quarter, we announced key hires bolstering Berkshire’s commercial and private banking teams. Newsweek magazine also ranked Berkshire as one of the top 10 most trusted banks in America, recognizing our commitment to integrity, respect, and transparency as a trusted client advisor and financial partner.”
CFO David Rosato added, “First quarter operating earnings were $20.9 million, increasing $744 thousand linked quarter. We sold $362 million in securities, resulting in a $49.9 million non-operating charge ($38.3 million after-tax, or $0.89 per share). Net interest margin of 3.15 percent increased 4 basis points including the benefit of the 4Q23 securities sales. Operating non-interest income increased $636 thousand linked quarter. Reflecting our focus on expense management, non-interest expense decreased $3.0 million linked quarter on a GAAP basis and $2.9 million on an operating basis. Non-operating expenses of $3.6 million ($2.8 million after-tax, or $0.07 per share) were related to the branch sale. Total shareholders’ equity was not impacted by the securities sale and the common equity Tier 1 ratio remained a healthy 11.6 percent at period-end.”
|
As of and For the Three Months Ended |
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|
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
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|
Asset Quality |
|||||||
|
Net loan charge-offs to average loans |
0.18 % |
0.20 % |
0.32 % |
||||
|
Non-performing loans to total loans |
0.24 % |
0.24 % |
0.31 % |
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|
Returns |
|||||||
|
Return on average assets |
(0.69) % |
(0.05) % |
0.96 % |
||||
|
Operating return on average assets1 |
0.71 % |
0.68 % |
0.95 % |
||||
|
Return on tangible common equity1 |
(7.73) % |
(0.24) % |
11.96 % |
||||
|
Operating return on tangible common equity1 |
8.73 % |
8.90 % |
11.96 % |
||||
|
Capital Ratios2 |
|||||||
|
Tangible common equity/tangible assets1 |
8.2 % |
8.0 % |
7.9 % |
||||
|
Tier 1 leverage |
9.5 % |
9.6 % |
9.9 % |
||||
|
Common equity Tier 1 |
11.6 % |
12.0 % |
12.1 % |
||||
|
Tier 1 risk-based |
11.8 % |
12.3 % |
12.4 % |
||||
|
Total risk-based |
14.0 % |
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 2. Presented as estimated for March 31, 2024 and actual for the remaining periods. |
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Berkshire Hills Bancorp, Inc. (NYSE: BHLB) is the parent company of Berkshire Bank, a relationship-driven, community-focused bank with $12.1 billion in assets and 96 financial centers in New England and New York. Berkshire is headquartered in Boston and offers commercial, retail, wealth, and private banking solutions.
1Q 2024 Financial Highlights
Income Statement
- GAAP loss of $20.2 million, or $(0.47) per share.
- Operating earnings totaled $20.9 million, or $0.49 per share.
- Net interest income totaled $88.1 million in 1Q24 compared to $88.4 million in 4Q23.
- One less calendar day in 1Q24 (1% decrease in net interest income).
- Net interest margin increased 4 basis points from 4Q23 to 3.15% reflecting the benefit of securities sales and reduction of higher cost borrowings.
- The earning asset yield increased 18 basis points.
- The loan yield increased 7 basis points.
- The cost of funds increased 13 basis points.
- The cost of deposits increased 18 basis points.
- The earning asset yield increased 18 basis points.
- Provision for credit losses on loans totaled $6.0 million.
- Allowance for credit losses on loans increased $2.0 million.
- Net loan charge-offs totaled $4.0 million.
- Net annualized loan charge-off ratio of 0.18%, down sequentially for last five quarters.
- Operating non-interest income totaled $17.3 million in 1Q24 excluding the $49.9 million net loss on sale of AFS securities, compared to $16.7 million in 4Q23 excluding the $25.1 million loss on sale of AFS securities.
- The tax credit amortization charge included in other non-interest income decreased $1.9 million linked quarter due to a change in accounting method (with offsetting increase in income tax expense).
- Deposit related fee revenue decreased $176 thousand.
- Loan related fees increased $605 thousand primarily due to higher swap revenue.
- Gain on SBA loan sales decreased $683 thousand.
- Wealth management revenue increased $490 thousand. At March 31, 2024, wealth assets under management were $1.5 billion.
- Other non-interest income increased $1.3 million.
- Non-interest expense in 1Q24 totaled $76.0 million on a GAAP basis and $72.4 million on an operating basis. These measures were $79.0 million and $75.3 million in 4Q23.
- Non-operating expense totaled $3.6 million in 1Q24, and was related to the pending branch sale.
- Compensation and benefits expense increased $640 thousand.
- Occupancy and equipment expense increased $145 thousand.
- Technology and communications expense decreased $1.4 million.
- Professional services expense decreased $741 thousand.
- Other non-interest expense decreased $1.5 million.
- The efficiency ratio was 66.3% for 1Q24 compared to 67.8% for 4Q23.
- Income tax expense was a benefit of $6.3 million in 1Q24 and the effective tax rate was 23.8%.
Loans
- Commercial real estate loans totaled $4.6 billion at March 31, 2024, a $67 million increase from December 31, 2023.
- Average commercial real estate loans totaled $4.6 billion in 1Q24, an $84 million increase from 4Q23.
- Commercial and industrial loans totaled $1.4 billion at March 31, 2024, a $32 million increase from December 31, 2023.
- Average commercial and industrial loans totaled $1.4 billion in 1Q24, a $12 million decrease from 4Q23.
- Residential mortgage loans totaled $2.7 billion at March 31, 2024, a $4 million increase from December 31, 2023.
- Average residential mortgage loans totaled $2.7 billion in 1Q24, a $12 million increase from 4Q23.
- Consumer loans totaled $430 million at March 31, 2024, a $57 million decrease from December 31, 2023.
- Average consumer loans totaled $465 million in 1Q24, a $33 million decrease from 4Q23.
- Loans held for sale in conjunction with the planned branch sale totaled $58 million at March 31, 2024, and consisted primarily of consumer and residential mortgage loans.
- Average loans held for sale in conjunction with the planned branch sale totaled $18 million based on the March 4, 2024 branch sale agreement date.
- Non-performing loans to total loans was 0.24% at March 31, 2024, unchanged from December 31, 2023.
- The allowance for credit losses to total loans was 1.18% at March 31, 2024, compared to 1.17% at December 31, 2023.
Deposits
- Non-interest bearing deposits totaled $2.3 billion at March 31, 2024, a $207 million decrease from December 31, 2023.
- Average non-interest bearing deposits totaled $2.3 billion in 1Q24, a $140 million decrease from 4Q23.
- Time deposits totaled $2.4 billion at March 31, 2024, a $281 million decrease from December 31, 2024.
- Average time deposits totaled $2.6 billion in 1Q24, a $3 million increase from 4Q23.
- Deposits held for sale in conjunction with the planned branch sale totaled $485 million at March 31, 2024.
- Average deposits held for sale totaled $149 million in 1Q24 based on the March 4, 2024 sale agreement date.
1Q 2024 Corporate Responsibility and Sustainability Highlights
- Berkshire was named one of the Most Trustworthy Companies in America 2024 by Newsweek magazine.
- The Company released its 2023 Sustainability Report highlighting all that Berkshire is doing to be a responsible, equitable and sustainable bank while elevating its client experience and community impact.
- Berkshire maintained its top quartile environmental, social and governance performance in the banking sector
