Berkshire Hills Reports 63% Increase in First Quarter Earnings; Dividend Declared

April 23, 2018

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BOSTON, April 23, 2018 /PRNewswire/ — Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported first quarter 2018 net income of $25 million, which was a 63% increase over 2017 first quarter results of $15 million.  This reflected the ongoing benefit of the Company’s growth and expansion, together with the benefit of a lower federal tax rate resulting from federal tax reform near the end of 2017.     

FIRST QUARTER FINANCIAL HIGHLIGHTS (income statement comparisons are year over year and balance sheet growth is compared to prior quarter-end):

  • $0.55 GAAP EPS
  • $0.65 Core EPS
  • 13% increase in net revenue
  • 30% increase in loan and deposit related fee income
  • 4% annualized loan growth; 3% annualized C&I loan growth
  • 3% increase in average deposits
  • 3.36% net interest margin
  • 59.5% efficiency ratio
  • 0.27% non-performing assets/assets
  • 0.17% net loan charge-offs/average loans

CEO Michael Daly stated, “We had a solid start to the year, delivering ongoing growth while integrating our new Commerce operations.   With the benefit of greater efficiency, GAAP return on assets improved to 0.88% and core return on assets improved to 1.04%. We expect continued momentum in the second quarter where GAAP return on assets will improve to over 1.00% and core return on assets will improve to over 1.10%.  We formally opened our new Boston corporate headquarters, which also serves as a regional hub for Greater Boston relationship teams.  We added additional bankers both in Boston and in the Princeton, NJ area.  We also opened a new branch in Simsbury, CT, which uses a combination of virtual teller technology and MyBanker relationship professionals to provide enhanced customer support and product availability.”

DIVIDEND DECLARED

The Board of Directors declared a quarterly cash dividend of $0.22 per common share to shareholders of record at the close of business on May 10, 2018, payable on May 24, 2018.  The dividend equates to a 2.3% annualized yield based on the $37.88 average closing price of Berkshire Hills Bancorp common stock during the first quarter.  The Board also declared a quarterly cash dividend of $0.44 per share for the preferred stock issued in conjunction with the Commerce acquisition, with the same record and payment dates as above.  The quarterly common and preferred dividends were increased in the prior quarter by 5%. 

FINANCIAL CONDITION

Total assets ended the first quarter of 2018 at $11.5 billion.  Both commercial loans and residential mortgages contributed to the 4% annualized increase in total loans.  Period-end deposit balances are impacted by daily fluctuations related to payroll processing.  Average deposits increased by 3% compared to the prior quarter.  Asset quality metrics remained strong.  Delinquency metrics increased due to one commercial credit which is expected to remain accruing and is in the process of collection. Metrics related to capital, liquidity, and book value per share were generally stable compared to the start of the year.     

RESULTS OF OPERATIONS

First quarter revenue and expense included the full quarter impact of the Commerce operations acquired on October 13, 2017.   2018 first quarter net income totaled $25 million, which was a 63% increase over 2017 first quarter results of $15 million.  Earnings per share increased by 25% to $0.55, including the impact of additional shares issued in 2017.  First quarter core earnings per share improved by 18% to $0.65 per share in 2018 compared $0.55 in 2017.  The measure of core earnings per share excludes amounts viewed as not related to normalized operations.  In the most recent quarter these were primarily related to the integration of the Commerce operations.

Quarterly net revenue totaled $115 million in the most recent quarter, and included the impact of lower mortgage banking fees, which was partially offset by seasonal gains in wealth and insurance fee income compared to the prior quarter.  The net interest margin decreased to 3.36% from 3.50% in the prior quarter.  The contribution from purchased loan accretion decreased by 0.08%.   Additionally, the contribution of taxable equivalent securities yields decreased by 0.05% as a result of lower federal income taxes.  The cost of funds increased due to change in deposit mix and higher deposit and borrowings funding costs as a result of increases in short term market interest rates. The first quarter loan loss provision was $5.6 million and exceeded the net loan charge-offs recorded during the period.

Total first quarter non-interest expense decreased by 15% compared to the prior quarter, primarily due to lower non-core Commerce merger charges.  Total core expense increased by 1% including a full quarter of the new Commerce operations.  The efficiency ratio measured 59.5%, including the benefit of expense reductions in mortgage banking.  Total full-time equivalent staff measured 1,941 positions at quarter-end, compared to 1,992 positions at the start of the year.  The first quarter effective income tax rate was 22% in 2018 compared to 30% in 2017, reflecting the benefit of federal income tax reform which became effective in 2018. 

INVESTOR CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, April 24, 2018 to discuss the results for the quarter and provide guidance about expected future results.   Participants are encouraged to pre-register for the conference call using the following link:  http://dpregister.com/10118850.  Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call.  Participants may pre-register at any time prior to the call, and will immediately receive simple instructions via email.  Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of Berkshire’s website at http://ir.berkshirebank.com.  Those parties who do not have internet access or are otherwise unable to pre-register for this event, may participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call.  A telephone replay of the call will be available through Tuesday, May 1, 2018 by dialing 877-344-7529 and entering access number 10118850.  The webcast will be available on Berkshire’s website for an extended period of time.

BACKGROUND

Berkshire Hills Bancorp is the parent of Berkshire Bank – America’s Most Exciting Bank®. The Company has approximately $11.5 billion in assets and 114 full service branches in Massachusetts, New York, Connecticut, Vermont, New Jersey, and Pennsylvania providing personal and business banking, insurance, and wealth management services. The Company also offers mortgages and specialized commercial lending services in targeted national markets.

FORWARD LOOKING STATEMENTS

This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several 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. Berkshire does not undertake any obligation to update forward-looking statements.

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 provide supplemental perspectives on operating results, performance trends, and financial condition.  They 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 included on page F-9 in the accompanying financial tables.  In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. 

The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense.  These measures exclude items which the Company does not view as related to its normalized operations.  These items primarily include securities gains/losses, merger costs, and restructuring costs.  Securities gains/losses include unrealized gains/losses on equity securities beginning in the first quarter of 2018. Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees.  These charges in 2017 and 2018 are primarily related to business combinations with First Choice Bank and Commerce Bancshares Corp.  Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales.  Additionally, the Company recorded charges for hedge terminations in the first quarter of 2017 and legal settlement costs during the year. 

Non-core adjustments are presented net of an adjustment for income tax expense.  This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income.  The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items.  The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. 

CONTACTS

Investor Relations Contact

Allison O’Rourke; Executive Vice President, Investor Relations Officer; 413-236-3149

Media Contact

Elizabeth Mach; Senior Vice President, Marketing Officer; 413-445-8390

TABLE

INDEX

CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES

F-1

Selected Financial Highlights

F-2

Balance Sheets

F-3

Loan and Deposit Analysis

F-4

Statements of Income

F-5

Statements of Operations (Five Quarter Trend)

F-6

Average Yields and Costs

F-7

Average Balances

F-8

Asset Quality Analysis

F-9

Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend)
and Supplementary Data

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS – UNAUDITED – (F-1)

At or for the Quarters Ended (2)

March 31,

Dec. 31,

Sept. 30,

June 30,

March 31,

2018

2017 (3)

2017

2017

2017

PER SHARE DATA

Net earnings/(loss), diluted

$          0.55

$        (0.06)

$          0.57

$         0.53

$          0.44

Core earnings, diluted (1)

0.65

0.58

0.59

0.58

0.55

Total book value per common share

32.12

32.14

31.78

31.37

30.77

Tangible book value per common share (1)

19.86

19.83

21.38

20.96

18.97

Market price at period end

37.95

36.60

38.75

35.15

36.05

Dividends per common share

0.22

0.21

0.21

0.21

0.21

Dividends per preferred share

0.44

0.42

PERFORMANCE RATIOS (4)

Return on assets

0.88%

(0.10)%

0.95%

0.84%

0.68%

Core return on assets (1)

1.04

0.94

0.98

0.92

0.85

Return on equity

6.69

(0.77)

7.26

6.80

5.71

Core return on equity (1)

7.92

7.16

7.47

7.45

7.17

Core return on tangible common equity (1)

13.43

11.90

11.42

11.96

12.05

Net interest margin, fully taxable equivalent (FTE) (5)

3.36

3.50

3.36

3.36

3.33

Fee income/Net interest and fee income

25.51

25.91

29.96

32.23

30.04

Efficiency ratio (1)

59.54

57.43

59.28

61.72

61.94

GROWTH (Year-to-date)

Total commercial loans (annualized)

1%

38%

9%

13%

15%

Total loans (annualized)

4

27

8

10

6

Total deposits (annualized)

(3)

32

3

3

2

Total net revenues (compared to prior year)

13

41

37

40

39

Earnings per share (compared to prior year) 

25

(25)

(2)

(8)

(15)

Core earnings per share (compared to prior year)(1)

18

4

4

5

2

FINANCIAL DATA (in millions)

Total assets

$      11,519

$      11,571

$        9,767

$       9,627

$        9,298

Total earning assets

10,442

10,509

8,944

8,807

8,486

Total securities

1,932

1,899

1,824

1,773

1,714

Total loans

8,376

8,299

6,947

6,864

6,656

Allowance for loan losses

54

52

49

47

46

Total intangible assets

556

558

420

421

422

Total deposits

8,683

8,750

6,790

6,715

6,656

Total shareholders’ equity

1,498

1,496

1,285

1,268

1,100

Net income/(loss)

25.2

(2.8)

22.9

19.7

15.5

Core income (1)

29.9

26.3

23.6

21.6

19.4

ASSET QUALITY AND CONDITION RATIOS 

Net charge-offs (current quarter annualized)/average loans

0.17%

0.17%

0.19%

0.20%

0.20%

Total non-performing assets/total assets

0.27

0.21

0.23

0.25

0.27

Allowance for loan losses/total loans

0.64

0.62

0.71

0.69

0.69

Loans/deposits

96

95

102

102

100

Shareholders’ equity to total assets

13.00

12.93

13.15

13.17

11.83

Tangible shareholders’ equity to tangible assets (1)

8.59

8.52

9.25

9.20

7.64

(1)

Non-GAAP financial measure. Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily
related to acquisitions and restructuring activities. See page F-9 for reconciliations of non-GAAP financial measures.

(2)

Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on page F-9.

(3)

The Company acquired Commerce Bancshares Corp., the parent of Commerce Bank & Trust Company, on October 13, 2017.

(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.

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS – UNAUDITED – (F-2)

March 31,

December 31,

(in thousands)

2018

2017

Assets

Cash and due from banks

$              88,193

$          91,122

Short-term investments

35,694

157,641

Total cash and short-term investments

123,887

248,763

Trading security

11,795

12,277

Securities available for sale, at fair value

1,460,660

1,426,099

Securities held to maturity, at amortized cost

395,337

397,103

Federal Home Loan Bank stock and other restricted securities

64,038

63,085

Total securities

1,931,830

1,898,564

Loans held for sale, at fair value

98,440

153,620

Commercial real estate

3,266,737

3,264,742

Commercial and industrial loans

1,818,974

1,803,939

Residential mortgages

2,181,807

2,102,807

Consumer loans

1,108,899

1,127,850

Total loans

8,376,417

8,299,338

Less: Allowance for loan losses

(53,859)

(51,834)

Net loans

8,322,558

8,247,504

Premises and equipment, net

111,237

109,352

Other real estate owned

Goodwill 

519,128

519,287

Other intangible assets

37,085

38,296

Cash surrender value of bank-owned life insurance

192,379

191,221

Deferred tax asset, net

51,679

47,061

Other assets

131,024

117,083

Total assets 

$       11,519,247

$   11,570,751

Liabilities and shareholders’ equity

Demand deposits

$         1,575,243

$     1,606,656

NOW and other deposits

715,581

734,558

Money market deposits

2,749,763

2,776,157

Savings deposits

756,711

741,954

Time deposits

2,885,969

2,890,205

Total deposits

8,683,267

8,749,530

Senior borrowings

1,125,860

1,047,736

Subordinated borrowings

89,384

89,339

Total borrowings

1,215,244

1,137,075

Other liabilities 

123,079

187,882

Total liabilities

10,021,590

10,074,487

Total preferred shareholders’ equity

40,633

40,633

Total common shareholders’ equity

1,457,024

1,455,631

Total shareholders’ equity

1,497,657

1,496,264

Total liabilities and shareholders’ equity

$       11,519,247

$   11,570,751

Net common shares outstanding 

45,360

45,290

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED LOAN & DEPOSIT ANALYSIS – UNAUDITED – (F-3)

LOAN ANALYSIS

Annualized Growth % 

(in millions)

March 31, 2018
Balance

December 31, 2017
Balance

Quarter ended
March 31, 2018

Commercial real estate – construction

$                         347

$                          354

(8)%

Commercial real estate – other

2,920

2,910

1

Total commercial real estate

3,267

3,264

0

Commercial and industrial loans 

1,819

1,804

3

Total commercial loans 

5,086

5,068

1

Total residential mortgages

2,181

2,103

15

Home equity 

400

410

(10)

Auto and other

709

718

(5)

Total consumer loans

1,109

1,128

(7)

Total loans

$                      8,376

$                       8,299

4%

DEPOSIT ANALYSIS

Annualized Growth % 

(in millions)

March 31, 2018
Balance

December 31, 2017
Balance

Quarter ended
March 31, 2018

Demand

$                      1,575

$                       1,606

(8)%

NOW and other

715

735

(11)

Money market

2,750

2,776

(4)

Savings

757

742

8

Time deposits

2,886

2,890

(1)

Total deposits 

$                      8,683

$                       8,749

(3)%

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED – (F-4)

Three Months Ended

March 31,

(in thousands, except per share data)

2018

2017

Interest and dividend income    

Loans

$           92,835

$           68,943

Securities and other    

14,405

11,766

Total interest and dividend income    

107,240

80,709

Interest expense

Deposits

15,325

9,098

Borrowings

6,445

4,725

Total interest expense    

21,770

13,823

Net interest income

85,470

66,886

Non-interest income

Mortgage banking originations

10,147

12,678

Loan related income

5,438

4,179

Deposit related fees

8,066

6,204

Insurance commissions and fees    

3,025

3,136

Wealth management fees    

2,597

2,526

Total fee income    

29,273

28,723

Other

1,268

93

Securities (losses)/gains, net     

(1,502)

12,570

Gain on sale of business operations and assets, net

481

Loss on termination of hedges

(6,629)

Total non-interest income      

29,520

34,757

Total net revenue

114,990

101,643

Provision for loan losses   

5,575

5,095

Non-interest expense

Compensation and benefits

42,184

36,119

Occupancy and equipment     

10,082

9,026

Technology and communications

6,830

6,087

Marketing and promotion     

2,612

1,999

Professional services

2,053

2,451

FDIC premiums and assessments

1,195

1,298

Other real estate owned and foreclosures

67

28

Amortization of intangible assets     

1,268

801

Merger, restructuring and other expense 

5,093

11,682

Other

5,485

4,835

Total non-interest expense     

76,869

74,326

Income before income taxes       

32,546

22,222

Income tax expense

7,298

6,762

Net income 

$           25,248

$           15,460

Preferred stock dividend

230

Income available to common shareholders

$           25,018

$           15,460

Earnings per common share:

Basic

$               0.55

$               0.44

Diluted

$               0.55

$               0.44

Weighted average shares outstanding:      

Basic

45,966

35,280

Diluted

46,200

35,452

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) – UNAUDITED – (F-5)

March 31,

Dec. 31,

Sept. 30,

June 30,

March 31,

(in thousands, except per share data)

2018

2017

2017

2017

2017

Interest and dividend income    

Loans

$        92,835

$        91,149

$        76,024

$        71,983

$        68,943

Securities and other    

14,405

14,674

13,036

12,683

11,766

Total interest and dividend income    

107,240

105,823

89,060

84,666

80,709

Interest expense

Deposits

15,325

13,802

10,984

9,971

9,098

Borrowings

6,445

5,655

6,078

5,150

4,725

Total interest expense    

21,770

19,457

17,062

15,121

13,823

Net interest income

85,470

86,366

71,998

69,545

66,886

Non-interest income

Mortgage banking originations

10,147

11,918

13,374

16,281

12,678

Loan related income

5,438

5,866

6,081

5,275

4,179

Deposit related fees

8,066

7,871

6,445

6,645

6,204

Insurance commissions and fees    

3,025

2,284

2,581

2,588

3,136

Wealth management fees    

2,597

2,268

2,315

2,286

2,526

Total fee income    

29,273

30,207

30,796

33,075

28,723

Other

1,268

(939)

(2,255)

(276)

93

Securities (losses)/gains, net     

(1,502)

30

(1)

(1)

12,570

Gain on sale of business operations and assets, net

481

296

Loss on termination of hedges

(6,629)

Total non-interest income      

29,520

29,298

28,836

32,798

34,757

Total net revenue

114,990

115,664

100,834

102,343

101,643

Provision for loan losses   

5,575

6,141

4,900

4,889

5,095

Non-interest expense

Compensation and benefits

42,184

42,220

37,643

36,997

36,119

Occupancy and equipment     

10,082

9,451

8,267

8,678

9,026

Technology and communications

6,830

6,286

6,644

6,883

6,087

Marketing and promotion  

2,612

4,573

2,128

3,177

1,999

Professional services

2,053

2,277

2,247

2,190

2,451

FDIC premiums and assessments

1,195

1,920

1,651

1,588

1,298

Other real estate owned and foreclosures

67

9

(23)

30

28

Amortization of intangible assets     

1,268

1,183

739

770

801

Merger, restructuring and other expense 

5,093

15,553

1,420

2,903

11,682

Other

5,485

6,569

5,104

6,307

4,835

Total non-interest expense     

76,869

90,041

65,820

69,523

74,326

Income before income taxes

32,546

19,482

30,114

27,931

22,222

Income tax expense 

7,298

22,292

7,211

8,237

6,762

Net income/(loss)

$        25,248

$         (2,810)

$        22,903

$        19,694

$        15,460

Preferred stock dividend

230

219

Income/(loss) available to common shareholders

$        25,018

$         (3,029)

$        22,903

$        19,694

$        15,460

Earnings/(loss) per common share:

Basic 

$            0.55

$           (0.06)

$            0.57

$            0.53

$            0.44

Diluted 

$            0.55

$           (0.06)

$            0.57

$            0.53

$            0.44

Weighted average shares outstanding:      

Basic

45,966

45,122

39,984

37,324

35,280

Diluted

46,200

45,122

40,145

37,474

35,452

BERKSHIRE HILLS BANCORP, INC.

AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent – Annualized) – UNAUDITED – (F-6)

Quarters Ended

March 31,

Dec. 31,

Sept. 30,

June 30,

March 31,

2018

2017

2017

2017

2017

Earning assets 

Loans:

Commercial real estate

4.76%

4.73%

4.64%

4.41%

4.58%

Commercial and industrial loans

5.19

5.25

5.09

5.30

4.86

Residential mortgages

3.56

3.76

3.68

3.62

3.56

Consumer loans

4.01

3.94

3.88

3.81

3.62

Total loans

4.45

4.47

4.33

4.25

4.19

Securities

3.26

3.55

3.43

3.45

3.38

Short-term investments and loans held for sale

3.43

2.90

3.40

3.07

2.40

Total earning assets

4.21

4.27

4.13

4.07

4.00

Funding liabilities

Deposits:

NOW and other

0.28

0.25

0.26

0.23

0.22

Money market

0.73

0.66

0.57

0.54

0.52

Savings

0.14

0.14

0.14

0.14

0.13

Time

1.40

1.25

1.20

1.13

1.08

Total interest-bearing deposits

0.90

0.82

0.78

0.73

0.69

Borrowings

2.02

1.81

1.65

1.46

1.38

Total interest-bearing liabilities

1.08

0.97

0.96

0.88

0.83

Net interest spread

3.13

3.30

3.17

3.19

3.17

Net interest margin (1)

3.36

3.50

3.36

3.36

3.33

Cost of funds (2)

0.90

0.81

0.82

0.75

0.70

Cost of deposits 

0.73

0.66

0.64

0.60

0.56

(1)

The effect of purchased loan accretion on the quarterly net interest margin was an increase in all quarters, which is
shown sequentially as follows beginning with the most recent quarter and ending with the earliest quarter:  0.13%,
0.21%, 0.14%, 0.12%, 0.18%. See page F-7 for purchased loan accretion.

(2)

Cost of funds includes all deposits and borrowings.

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES – UNAUDITED – (F-7)

Quarters Ended

March 31, 

Dec. 31, 

Sept. 30, 

June 30, 

March 31, 

(in thousands)

2018

2017

2017

2017

2017

Assets

Loans

Commercial real estate

$            3,250,861

$            3,161,902

$            2,669,558

$            2,691,804

$            2,631,281

Commercial and industrial loans

1,811,433

1,645,719

1,183,980

1,130,384

1,072,716

Residential mortgages

2,138,544

2,081,548

1,977,538

1,871,329

1,906,457

Consumer loans

1,114,586

1,123,683

1,030,032

996,488

978,683

Total loans (1) 

8,315,424

8,012,852

6,861,108

6,690,005

6,589,137

Securities (2)

1,933,002

1,921,724

1,779,379

1,701,443

1,625,769

Short-term investments and loans held for sale

139,161

146,101

167,724

148,276

118,537

Total earning assets

10,387,587

10,080,677

8,808,211

8,539,724

8,333,443

Goodwill and other intangible assets

557,321

533,157

420,853

421,601

422,331

Other assets

521,745

516,802

402,188

369,317

388,211

Total assets

$          11,466,653

$          11,130,636

$            9,631,252

$            9,330,642

$            9,143,985

Liabilities and shareholders’ equity

Deposits 

NOW and other

$               712,181

$               702,353

$               570,864

$               572,688

$               574,799

Money market

2,518,920

2,371,203

1,768,108

1,794,693

1,804,738

Savings

743,944

733,157

669,690

667,863

648,839

Time

2,913,512

2,906,423

2,587,702

2,472,990

2,351,183

Total interest-bearing deposits

6,888,557

6,713,136

5,596,364

5,508,234

5,379,559

Borrowings

1,275,173

1,229,781

1,445,700

1,398,653

1,374,620

Total interest-bearing liabilities

8,163,730

7,942,917

7,042,064

6,906,887

6,754,179

Non-interest-bearing demand deposits

1,656,260

1,591,431

1,196,451

1,155,533

1,178,790

Other liabilities 

137,976

127,562

131,003

110,367

128,573

Total liabilities

9,957,966

9,661,910

8,369,518

8,172,787

8,061,542

Total preferred shareholders’ equity

40,633

34,892

Total common shareholders’ equity

1,468,054

1,433,834

1,261,734

1,157,855

1,082,443

Total shareholders’ equity

1,508,687

1,468,726

1,261,734

1,157,855

1,082,443

Total liabilities and shareholders’ equity

$          11,466,653

$          11,130,636

$            9,631,252

$            9,330,642

$            9,143,985

Supplementary data

Total average non-maturity deposits

$            5,631,305

$            5,398,144

$            4,205,113

$            4,190,777

$            4,207,166

Total average deposits 

8,544,817

8,304,567

6,792,815

6,663,767

6,558,349

Fully taxable equivalent income adjustment

1,820

3,122

2,950

2,644

2,511

Purchased loan accretion

3,433

5,507

3,066

2,550

3,687

Total average tangible equity (3)

951,366

935,569

840,881

736,254

660,112

(1)

Total loans include non-accruing loans.

(2)

Average balances for securities available-for-sale are based on amortized cost.

(3)

See page F-9 for details on the calculation of total average tangible equity.

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS – UNAUDITED – (F-8)

At or for the Quarters Ended

March 31,

Dec. 31,

Sept. 30,

June 30,

March 31,

(in thousands)

2018

2017

2017

2017

2017

NON-PERFORMING ASSETS

Non-accruing loans:

Commercial real estate

$          10,084

$            7,266

$            5,228

$            7,587

$            7,718

Commercial and industrial loans

7,430

7,311

9,681

8,387

8,327

Residential mortgages

5,777

2,883

3,092

3,245

3,971

Consumer loans

5,996

5,438

4,350

4,977

5,109

Total non-accruing loans

29,287

22,898

22,351

24,196

25,125

Other real estate owned

288

279

71

Repossessed assets

1,241

1,147

Total non-performing assets

$          30,528

$          24,045

$          22,639

$          24,475

$          25,196

Total non-accruing loans/total loans

0.35%

0.28%

0.32%

0.35%

0.38%

Total non-performing assets/total assets

0.27%

0.21%

0.23%

0.25%

0.27%

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$          51,834

$          49,004

$          47,359

$          45,804

$          43,998

Charged-off loans

(3,791)

(3,734)

(3,796)

(3,431)

(3,623)

Recoveries on charged-off loans

241

423

541

97

334

Net loans charged-off

(3,550)

(3,311)

(3,255)

(3,334)

(3,289)

Provision for loan losses

5,575

6,141

4,900

4,889

5,095

Balance at end of period

$          53,859

$          51,834

$          49,004

$          47,359

$          45,804

Allowance for loan losses/total loans

0.64%

0.62%

0.71%

0.69%

0.69%

Allowance for loan losses/non-accruing loans

184%

226%

219%

196%

182%

NET LOAN CHARGE-OFFS

Commercial real estate

$             (817)

$             (881)

$          (1,425)

$          (1,474)

$             (633)

Commercial and industrial loans

(972)

(960)

(573)

(625)

(1,634)

Residential mortgages

(406)

(759)

130

(337)

(324)

Home equity 

(588)

(123)

(634)

(268)

(95)

Auto and other consumer

(767)

(588)

(753)

(630)

(603)

Total, net

$          (3,550)

$          (3,311)

$          (3,255)

$          (3,334)

$          (3,289)

Net charge-offs (QTD annualized)/average loans 

0.17%

0.17%

0.19%

0.20%

0.20%

Net charge-offs (YTD annualized)/average loans 

0.17%

0.19%

0.20%

0.20%

0.20%

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS

30-89 Days delinquent

0.39%

0.35%

0.25%

0.23%

0.24%

90+ Days delinquent and still accruing

0.23%

0.20%

0.17%

0.12%

0.16%

Total accruing delinquent loans

0.62%

0.55%

0.42%

0.35%

0.40%

Non-accruing loans

0.35%

0.28%

0.32%

0.35%

0.38%

Total delinquent and non-accruing loans

0.97%

0.83%

0.74%

0.70%

0.78%

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED – (F-9)

At or for the Quarters Ended

March 31,

Dec. 31,

Sept. 30,

June 30,

March 31,

(in thousands)

2018

2017

2017

2017

2017

Net income/(loss)

$       25,248

$       (2,810)

$       22,903

$    19,694

$    15,460

Adj: Net securities losses/(gains) (1)

1,502

(30)

1

1

(12,570)

Adj: Loss on termination of hedges

6,629

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

(481)

(296)

Adj: Merger and acquisition expense

5,093

15,553

1,110

2,266

5,947

Adj: Restructuring expense and other expense

310

637

5,735

Adj: Employee and community investment

3,400

Adj: Deferred tax asset impairment

18,145

Adj: Income taxes

(1,481)

(7,963)

(474)

(1,039)

(1,801)

Total core income (2)

(A)

$       29,881

$       26,295

$       23,554

$    21,559

$    19,400

Total revenue 

$     114,990

$     115,664

$     100,834

$  102,343

$  101,643

Adj: Net securities losses/(gains) (1)

1,502

(30)

1

1

(12,570)

Adj: Net (gains) on sale of business operations

(481)

(296)

Adj: Loss on termination of hedges

6,629

Total core revenue (2)

(B)

$     116,011

$     115,634

$     100,539

$  102,344

$    95,702

Total non-interest expense

$       76,869

$       90,041

$       65,820

$    69,523

$    74,326

Less: Merger, restructuring and other expense (see above)

(5,093)

(15,553)

(1,420)

(2,903)

(11,682)

Less: Employee and community investment

(3,400)

Core non-interest expense (2)                                    

(C)

$       71,776

$       71,088

$       64,400

$    66,620

$    62,644

(in millions, except per share data)

Total average assets                                                

(D)

$       11,467

$       11,131

$         9,631

$      9,331

$      9,144

Total average shareholders’ equity                         

(E)

1,509

1,469

1,262

1,158

1,082

Total average tangible shareholders’ equity (2)                        

(F)

951

936

841

736

660

Total average tangible common shareholders’ equity (2)                        

(G)

911

901

841

736

660

Total tangible shareholders’ equity, period-end (2)(3)

(H)

941

939

864

847

678

Total tangible common shareholders’ equity, period-end (2)(3)

(I)

901

898

864

847

678

Total tangible assets, period-end (2)(3)

(J)

10,963

11,013

9,346

9,206

8,876

Total common shares outstanding, period-end (thousands)               

(K)

45,360

45,290

40,424

40,428

35,729

Average diluted shares outstanding (thousands)

(L)

46,200

45,383

40,145

37,474

35,452

Core earnings per share, diluted(2)

(A/L)

$           0.65

$           0.58

$           0.59

$        0.58

$        0.55

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

(I/K)

19.86

19.83

21.38

20.96

18.97

Total tangible shareholders’ equity/total tangible assets (2)

(H)/(J)

8.59

8.53

9.25

9.20

7.64

Performance ratios (4)

GAAP return on assets

0.88%

(0.10)%

0.95%

0.84%

0.68%

Core return on assets (2)

(A/D)

1.04

0.94

0.98

0.92

0.85

GAAP return on equity 

6.69

(0.77)

7.26

6.80

5.71

Core return on equity (2)

(A/E)

7.92

7.16

7.47

7.45

7.17

Core return on tangible common equity (2)(5)

(A+O)/(G)

13.43

11.90

11.42

11.96

12.05

Efficiency ratio (2)(6)                                                                                

(C-O)/(B+M+P)

59.54

57.43

59.28

61.72

61.94

Net interest margin

3.36

3.50

3.36

3.36

3.33

Supplementary data (in thousands)

Tax benefit on tax-credit investments (7)

(M)

$            596

$         2,957

$         3,905

$      1,696

$      1,624

Non-interest income charge on tax-credit investments (8)

(N)

(506)

(2,564)

(3,347)

(1,453)

(1,329)

Net income on tax-credit investments

(M+N)

90

393

558

243

295

Intangible amortization

(O)

$         1,268

$         1,183

$            739

$         770

$         801

Fully taxable equivalent income adjustment 

(P)

1,820

3,122

2,950

2,644

2,511

(1)

Net securities losses/(gains) for the period ending March 31, 2018 includes the change in fair value of the Company’s equity securities in compliance with the Company’s adoption of ASU 2016-01. There were no non-equity securities sold during the period ending March 31, 2018.

(2)

Non-GAAP financial measure.

(3)

Total tangible shareholders’ equity is computed by taking total shareholders’ equity less the intangible assets at period-end. Total tangible assets is computed by taking total assets less the intangible assets at period-end. 

(4)

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.

(5)

Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, assuming a 27.32% marginal rate, by tangible equity.

(6)

Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments.  The  Company uses this non-GAAP measure to provide important information regarding its operational efficiency.

(7)

The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation and low-income housing.

(8)

The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.

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SOURCE Berkshire Hills Bancorp, Inc.

Related Links

http://www.berkshirebank.com

Category: Precious Metals