Berkshire Hills Announces Third Quarter Results

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October 26, 2020 4:15 PM EDT

BOSTON, Oct. 26, 2020 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today announced third quarter net income of $21 million, or $0.42 per share, in 2020 compared to $23 million, or $0.44 per share, in 2019.  The non-GAAP measure of core earnings totaled $26 million, or $0.53 per share, in the third quarter of 2020 compared to $24 million, or $0.46, per share in the third quarter of 2019.  Compared to the linked quarter, results benefited from higher revenue and lower expense as the Company continues to adjust operations to improve operating profitability.

THIRD QUARTER FINANCIAL HIGHLIGHTS (Changes are compared to the prior quarter.  Measures identified as non-GAAP are reconciled on pages F-9 and F-10)

  • Revenue increased by 2%
  • Fee income increased by 9%
  • Non-interest expense decreased by 88%, while core non-interest expense decreased by 4% (non-GAAP measure which excludes second quarter goodwill impairment charge)
  • Efficiency ratio improved to 65% from 71% (non-GAAP measure)
  • Equity/assets ratio improved to 9.3% from 8.9%
  • Tangible equity/tangible assets ratio improved to 9.1% from 8.6% (non-GAAP measure)
  • 0.27% annualized net charge-offs/loans
  • 0.39% non-performing assets/assets

Acting CEO and President Sean Gray stated, "In the first half of the year, our priority was to quickly address the needs of our team members, customers, and communities being impacted by COVID-19.  Starting in the third quarter, we began normalizing our operations and nearly returning to regular retail hours, while continuing to support higher digital transaction volumes. During the quarter, we continued our focus on managing our expenses and further strengthening our capital and liquidity metrics.   We're working closely with our borrowers as they progress in normalizing their operations and meeting their credit obligations. This is reflected in our stable loan performance and resumption of regular payment schedules for most of the borrowers who initially requested deferrals at the outset of the pandemic."

Mr. Gray concluded, "Berkshire is evolving and adapting to the current environment, by having made investments that will support our customers and our Company today and into the future. We recently launched a best-in-class digital account opening experience that will extend our market outreach, improve customer experience, reduce fraud and allow us to operate more cost effectively.  This is another step in building a 21st-century community bank that provides everyone equal access to the products and services they need to bank with dignity, achieve upward economic mobility and live healthier financial lives."

In addition to introducing its new digital account opening experience, the Company promoted Jason White, a recent Boston area CIO of the Year winner, to EVP- Chief Information Officer.  The Company also announced the promotions of two leaders to the role of Regional President.  Wealth Management Director Kate Hersey now leads the Boston region and Foundation Director Lori Gazzillo Kiely now leads the Berkshire County region.  Now half of those holding the title of Regional President are women, furthering Berkshire's work in support of its Be FIRST Commitment. Berkshire Bank has also been recognized with the North American Inspiring Workplaces Award. 

FINANCIAL CONDITION

Berkshire's balance sheet continued to strengthen during the most recent quarter.  Total assets decreased by approximately $450 million, or 3%, to $12.6 billion in the third quarter of 2020.  This was primarily due to a $388 million, or 4%, decrease in total loans reflecting continued runoff in all major loan categories.  The biggest change was a $198 million, or 9%, decrease in residential mortgage balances due to accelerated prepayments in the low interest rate environment.  Commercial loans outstanding included $708 million in Paycheck Protection Program ("PPP") loans, which were stable from the prior quarter-end.  Total deposits decreased by $309 million, or 3%, to $10.5 billion primarily due to a $270 million decrease in brokered balances to $814 million.  Other deposit balances shifted from higher rate maturing time deposits into non-maturity products due to current low interest rates.  This contributed to a decrease in the cost of deposits to 0.61% from 0.79%.  Wholesale funds decreased to $1.5 billion from $1.9 billion during the quarter.  Retained earnings increased book value to $23.03 per common share and the non-GAAP measure of tangible book value to $22.22 per common share.  Capital metrics also improved due to the earnings benefit and reduction in total assets. The Company has received notice for the conversion of its remaining outstanding preferred stock to common stock, which is not expected to have a material impact on the Company's financial condition and per share metrics.

Total delinquent accruing loans decreased to 0.45% of loans from 0.51% of loans during the most recent quarter, while non-accruing loans increased to 0.53% from 0.48%.  Year-to-date net loan charge-offs measuring 0.29% of total loans remained below the levels recorded for the same period in 2019.   Middle market commercial loan modifications have included an underwriting review and assessment of accrual status.  Loans with payment modifications are expected to decrease further in the fourth quarter from levels previously reported.  The allowance for credit losses on loans was little changed, measuring 1.50% of total loans at quarter-end, and 1.62% of loans excluding government-guaranteed PPP loans. 

RESULTS OF OPERATIONS

Berkshire's operating profitability strengthened during the most recent quarter.  Berkshire reported third quarter 2020 GAAP EPS of $0.42 per share.  The Company's non-GAAP measure of core EPS totaled $0.53 per share.  Measures of pre-tax pre-provision net revenue ("PPNR") also improved.   Non-core charges primarily consisted of costs related to executive separation expense, together with losses on discontinued operations and securities. 

Operating results were improved from the prior quarter due to higher revenues and lower expenses.  Fee income growth of 9% primarily reflected higher deposit fees as transaction volumes increased.  Non-interest income also benefited from recovery in financial instrument fair value adjustments following negative pandemic impacts in the first half of the year.  Net interest income decreased by 1% in the third quarter due primarily to loan runoff.  The net interest margin was little changed at 2.61%, as loan yields and deposit costs both declined due to the ongoing low interest rate environment. 

Third quarter results benefited from lower operating expenses in part because second quarter expenses were elevated by $2.6 million in one-time awards accrued to compensate staff for expediting PPP loan processing to support businesses and paychecks during the economic lockdowns.  Other compensation costs were also reduced during the quarter.  The efficiency ratio, a non-GAAP financial measure, improved to 65% from 71% as a result of these improvements in revenue and expenses.  Full time equivalent staff in continuing operations totaled 1,507 positions at period-end, compared to 1,550 positions at the start of the year.  The credit loss provision decreased to $1 million, reflecting an improved economic outlook after the original pandemic downturn was recognized with high credit loss provisions in the first half of the year.   The effective tax rate was a benefit of 4% due primarily to the impact of first half of the year expenses lowering the taxable income for the year.

BE FIRST CORPORATE RESPONSIBILITY UPDATE

Berkshire is committed to purpose-driven performance. Learn more about the steps Berkshire is taking to be a values-based brand for all its stakeholders at www.berkshirebank.com/csr and in its most recent Corporate Responsibility Report.

Key developments in the quarter include:

  • Investing in Community Recovery & Resiliency: As people and small businesses in neighborhoods across the Company's footprint struggle through the impacts of the COVID-19 pandemic, Berkshire's Foundation is responding and has provided nearly $3 million in grant funding to more than 400 organizations through the end of the third quarter. These critical investments are ensuring access to resources for underserved populations to become college and career ready, ensuring quality affordable housing and supporting small business growth and entrepreneurship. In addition, 75% of Berkshire's employees, through its award-winning XTEAM volunteer program contributed more than 6,000 hours of service.  
  • Transitioning to a Low-Carbon Future: Berkshire is working towards transitioning its electricity to 100% renewable sources. The Company announced an agreement with Nexamp to subscribe to a community solar project in Massachusetts, lowering its carbon footprint and increasing the percentage of its energy supply procured from renewables while also reducing costs. 
  • Enhancing Environmental & Social Governance Practices: The Company completed updates to its Responsible & Sustainable Business Policy to improve the quality and clarity of its policy and disclosure. The update included new language to address Fraud Reporting & Suspicious Activity as well as Conflict of Interest. In addition, the Company enhanced its Social and Environmental Credit Risk Framework by incorporating new policy and procedure into the existing Commercial Loan Policy to more effectively mitigate the social and environmental risks associated with highly sensitive industries.  
  • Enhancing Protected Leave For Gender-Based Violence: Under the leadership of EVP, Chief Human Resources & Culture Officer Jackie Courtwright and through a unique collaboration with the non-profit FreeFrom, Berkshire enhanced protections for its employees experiencing gender-based violence by providing 15 days of paid leave a year to deal with the consequences of intimate partner violence, sexual assault, and human trafficking. This policy allows employees the ability to seek medical care, attend court proceedings, and relocate – all without missing a paycheck or depleting their accrued sick or vacation days. 
  • Recognizing Impact & Results: Berkshire was named the winner of the North American Inspiring Workplaces Award for its diversity and culture programming recognizing the efforts of its Be FIRST Commitment and internal diversity work. The Company was also named one of Massachusetts Most Charitable Companies by the Boston Business Journal for the eighth consecutive year.

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, October 27, 2020 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:  https://dpregister.com/sreg/10148654/da6d986a50.  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 still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call.  Participants are requested to dial-in a few minutes before the scheduled start of the call.   A telephone replay of the call will be available through Tuesday, November 3, 2020 by dialing 877-344-7529 and entering access number 10148654.  The webcast will be available on Berkshire's website for an extended period of time.

ABOUT BERKSHIRE HILLS BANCORP

Berkshire Hills Bancorp is the parent of Berkshire Bank which is transforming into a 21st century community bank pursuing purpose driven performance based on its Be FIRST corporate responsibility culture.  Headquartered in Boston, Berkshire operates 130 banking offices in seven Northeastern states, with approximately $12.6 billion in assets. Berkshire Bank serves the underbanked through the Reevx LabsTM platform.

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," "target" and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov.

Further, given its ongoing and dynamic nature, it is difficult to predict what continued effects the COVID-19 pandemic will have on our business and results of operations. The pandemic and the related local and national economic disruption may result in a continued decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in our allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on our interest-earning assets than the decline in the cost of our interest-bearing liabilities; and increased cybersecurity risks, as employees increasingly work remotely.

Accordingly, 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.

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 pages F-9 and F-10 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, restructuring costs, goodwill impairment, and discontinued operations.  Discontinued operations are the Company's national mortgage banking operations which the Company is exiting pursuant to a sales agreement.  Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees.  Merger costs in 2019 were primarily related to the acquisition of SI Financial Group.  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.  Restructuring costs also include severance and consulting expenses related to the Company's strategic review.  They also include costs related to the consolidation of branches, including eight branches for the full year of 2019.  The Company recorded a full impairment its goodwill in the second quarter of 2020, which was classified as noncore.  Noncore charges in the third quarter of 2020 were primarily related to executive separation expense, which was principally the result of the separation with the CEO. 

The Company has introduced the measure of Core Pre-Provision Net Revenue ("Core PPNR") which measures core income before credit loss provision and tax expense.  Due to the non-cash projections introduced into the calculation of income by the new CECL accounting standard, the investment community is placing more emphasis on PPNR in order to measure the results of operations and to compare them across banks which may have widely varying estimates of future economic conditions that affect their provision expense and reported earnings.  The Company also calculates core PPNR/assets in order to utilize the PPNR measure in assessing its comparative operating profitability.

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. References to organic growth and organic change exclude balances acquired in bank mergers. 

CONTACTS Investor Relations Contact  David Gonci; Capital Markets Director; 413-281-1973

Media Contacts: John Lovallo Email: [email protected]  Tel: (917) 612-8419

Cate Cronin Email: [email protected]  Tel: (202) 738-7302

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 Operations

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 and Supplementary Data (Five Quarter Trend)

F-10

Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Year-to-Date)

 

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)

At or for the Quarters Ended (1)

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

2020

2020

2020

2019

2019

PER SHARE DATA

Net earnings/(loss) per common share, diluted

$          0.42

$      (10.93)

$        (0.40)

$          0.51

$          0.44

Core earnings/(loss) per common share, diluted (2)

0.53

(0.13)

(0.07)

0.70

0.46

Total book value per common share

23.03

22.79

33.90

34.65

34.36

Tangible book value per common share (2)

22.22

21.94

22.00

22.56

22.42

Market price at period end

10.11

11.02

14.86

32.88

29.29

Dividends per common share

0.12

0.24

0.24

0.23

0.23

Dividends per preferred share

0.24

0.48

0.48

0.46

0.46

PERFORMANCE RATIOS (3)

Return on assets

0.67

%

(16.38)

%

(0.62)

%

0.78

%

0.67

%

Core return on assets (2)

0.84

(0.19)

(0.11)

1.08

0.71

Return on equity

7.50

(131.17)

(4.58)

5.90

5.12

Core return on equity (2)

9.33

(1.54)

(0.84)

8.09

5.35

Core return on tangible common equity (2)

10.27

(2.05)

(0.94)

13.12

8.74

Net interest margin, fully taxable equivalent (FTE) (4)(5)

2.61

2.62

3.04

3.11

3.22

Fee income/Net interest and fee income from continuing operations

19.82

18.45

15.46

18.11

17.61

Efficiency ratio (2)

65.39

71.01

66.92

53.66

53.37

CHANGE (Year-to-date)

Total commercial loans (organic, annualized)

5

%

12

%

(5)

%

(7)

%

(9)

%

Total loans (organic, annualized)

(7)

(3)

(8)

(9)

(9)

Total deposits (organic, annualized)

2

9

(10)

0

2

Total net revenues from continuing operations (compared to prior year)

(15)

(14)

(14)

4

4

(Loss)/earnings per common share (compared to prior year) 

(847)

(1,200)

(178)

(14)

(26)

Core earnings/(loss) per common share (compared to prior year)(2)

(81)

(116)

(112)

(14)

(18)

FINANCIAL DATA (in millions)

Total assets

$      12,614

$      13,063

$      13,122

$      13,216

$      13,532

Total earning assets

11,832

12,267

11,785

11,916

12,174

Total securities

1,988

1,882

1,837

1,770

1,861

Total loans

8,982

9,370

9,303

9,502

9,719

Allowance for credit losses

134

139

114

64

62

Total intangible assets

41

42

598

599

602

Total deposits

10,467

10,776

10,072

10,336

10,423

Total shareholders' equity

1,179

1,164

1,722

1,759

1,772

Net income/(loss)

21.2

(549.4)

(19.9)

25.8

22.6

Core income/(loss) (2)

26.4

(6.5)

(3.6)

35.3

23.7

Purchase accounting accretion

2.5

2.1

3.1

5.1

4.8

Goodwill impairment

-

553.8

-

-

-

ASSET QUALITY AND CONDITION RATIOS 

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

0.27

%

0.17

%

0.45

%

0.17

%

0.92

%

Total non-performing assets/total assets

0.39

0.36

0.40

0.31

0.28

Allowance for credit losses/total loans

1.50

1.49

1.22

0.67

0.64

Loans/deposits

86

87

92

92

93

Shareholders' equity to total assets

9.35

8.91

13.13

13.31

13.10

Tangible shareholders' equity to tangible assets (2)

9.05

8.61

8.98

9.19

9.05

(1)

Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10.

(2)

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 pages F-9 and F-10 for reconciliations of non-GAAP financial measures.

(3)

All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(4)

Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.

(5)

The effect of purchase accounting accretion for loans, time deposits, and borrowings 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: 0.08%, 0.07%, 0.11%, 0.17%, 0.16%.

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)

September 30,

June 30,

December 31,

(in thousands)

2020

2020

2019

Assets

Cash and due from banks

$           90,537

$       102,105

$        105,447

Short-term investments

844,755

942,047

474,382

Total cash and short-term investments

935,292

1,044,152

579,829

Trading security

9,525

9,519

10,769

Marketable equity securities, at fair value

31,993

33,263

41,556

Securities available for sale, at fair value

1,575,289

1,458,036

1,311,555

Securities held to maturity, at amortized cost

330,197

334,895

357,979

Federal Home Loan Bank stock and other restricted securities

40,520

46,139

48,019

Total securities

1,987,524

1,881,852

1,769,878

Less: Allowance for credit losses on investment securities

(96)

(113)

-

Net securities

1,987,428

1,881,739

1,769,878

Loans held for sale

15,854

62,881

36,664

Total loans

8,982,336

9,370,271

9,502,428

Less: Allowance for credit losses on loans 

(134,414)

(139,394)

(63,575)

Net loans

8,847,922

9,230,877

9,438,853

Premises and equipment, net

117,116

118,722

120,398

Other real estate owned

40

40

-

Goodwill 

-

-

553,762

Other intangible assets

40,947

42,477

45,615

Cash surrender value of bank-owned life insurance

231,217

229,812

227,894

Other assets

425,675

430,592

288,945

Assets from discontinued operations

12,966

21,692

154,132

Total assets 

$    12,614,457

$  13,062,984

$   13,215,970

Liabilities and shareholders' equity

Demand deposits

$      2,585,173

$    2,573,786

$     1,884,100

NOW and other deposits

1,522,289

1,453,397

1,492,569

Money market deposits

2,516,168

2,525,761

2,528,656

Savings deposits

952,836

932,243

841,283

Time deposits

2,890,093

3,290,721

3,589,369

Total deposits

10,466,559

10,775,908

10,335,977

Senior borrowings

605,483

719,638

730,501

Subordinated borrowings

97,223

97,165

97,049

Total borrowings

702,706

816,803

827,550

Other liabilities 

251,220

280,843

267,398

Liabilities from discontinued operations

14,947

25,290

26,481

Total liabilities

11,435,432

11,898,844

11,457,406

Preferred shareholders' equity

20,325

20,325

40,633

Common shareholders' equity

1,158,700

1,143,815

1,717,931

Total shareholders' equity

1,179,025

1,164,140

1,758,564

Total liabilities and shareholders' equity

$    12,614,457

$  13,062,984

$   13,215,970

Net common shares outstanding 

50,306

50,192

49,585

 

BERKSHIRE HILLS BANCORP, INC.

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

LOAN ANALYSIS

Annualized Growth %

(in millions)

September 30, 2020Balance

June 30, 2020Balance

December 31, 2019Balance

Quarter ended September 30, 2020

Year to Date  

Total commercial real estate

$                      3,943

$                      3,996

$                       4,034

(5)

%

(3)

%

Commercial and industrial loans 

2,147

2,222

1,841

(14)

22

Total commercial loans 

6,090

6,218

5,875

(8)

5

Total residential mortgages

2,122

2,320

2,685

(34)

(28)

Home equity 

350

364

381

(15)

(11)

Auto and other

420

468

561

(41)

(34)

Total consumer loans

770

832

942

(30)

(24)

Total loans

$                      8,982

$                      9,370

$                       9,502

(17)

%

(7)

%

DEPOSIT ANALYSIS

Annualized Growth %

(in millions)

September 30, 2020Balance

June 30, 2020Balance

December 31, 2019Balance

Quarter ended September 30, 2020

Year to Date

Demand

$                      2,585

$                      2,574

$                       1,884

2

%

50

%

NOW and other

1,523

1,453

1,493

19

3

Money market

2,516

2,526

2,529

(2)

(1)

Savings

953

932

841

9

18

Time deposits

2,890

3,291

3,589

(49)

(26)

Total deposits 

$                    10,467

$                    10,776

$                     10,336

(11)

%

2

%

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands, except per share data)

2020

2019

2020

2019

Interest and dividend income from continuing operations    

Loans

$           85,688

$         118,371

$           278,259

$            338,012

Securities and other    

12,080

15,354

39,392

46,060

Total interest and dividend income    

97,768

133,725

317,651

384,072

Interest expense from continuing operations 

Deposits

16,070

31,501

60,460

86,396

Borrowings

4,643

5,353

16,118

23,751

Total interest expense    

20,713

36,854

76,578

110,147

Net interest income from continuing operations

77,055

96,871

241,073

273,925

Non-interest income from continuing operations 

Mortgage banking originations

2,044

292

4,647

616

Loan related income

4,988

6,493

12,007

17,318

Deposit related fees

7,062

8,705

20,382

23,088

Insurance commissions and fees    

2,660

2,895

8,451

8,486

Wealth management fees    

2,299

2,325

6,926

7,114

Total fee income    

19,053

20,710

52,413

56,622

Other

1,927

609

492

1,363

Securities (losses)/gains, net     

(1,017)

87

(9,925)

2,655

Total non-interest income      

19,963

21,406

42,980

60,640

Total net revenue from continuing operations

97,018

118,277

284,053

334,565

Provision for credit losses   

1,200

22,600

65,878

30,068

Non-interest expense from continuing operations

Compensation and benefits

34,809

37,272

111,121

105,551

Occupancy and equipment     

11,084

9,893

32,411

28,788

Technology and communications

8,540

6,849

24,376

19,821

Marketing and promotion     

1,002

1,006

3,069

3,428

Professional services

2,567

2,282

7,852

8,510

FDIC premiums and assessments

1,518

-

4,658

3,390

Other real estate owned and foreclosures

40

150

81

150

Amortization of intangible assets     

1,530

1,526

4,668

4,201

Goodwill impairment

-

-

553,762

-

Merger, restructuring and other expense 

5,316

4,163

5,316

22,333

Other

6,437

7,870

21,129

23,398

Total non-interest expense     

72,843

71,011

768,443

219,570

Income/(loss) from continuing operations before income taxes       

$           22,975

$           24,666

$         (550,268)

$              84,927

Income tax (benefit)/expense

(68)

4,007

(18,194)

16,042

Net income/(loss) from continuing operations

$           23,043

$           20,659

$         (532,074)

$              68,885

(Loss)/income from discontinued operations before income taxes

$           (2,477)

$             2,747

$           (21,741)

$                3,975

Income tax (benefit)/expense

(659)

790

(5,789)

1,161

Net (loss)/income from discontinued operations

$           (1,818)

$             1,957

$           (15,952)

$                2,814

Net income/(loss)

$           21,225

$           22,616

$         (548,026)

$              71,699

Preferred stock dividend

58

240

313

720

Income/(loss) available to common shareholders

$           21,167

$           22,376

$         (548,339)

$              70,979

Basic earnings/(loss) per common share:

Continuing Operations

$               0.46

$               0.40

$             (10.58)

$                  1.41

Discontinued Operations

(0.04)

0.04

(0.32)

0.06

Total

$               0.42

$               0.44

$             (10.90)

$                  1.47

Diluted earnings/(loss) per common share:

Continuing Operations

$               0.46

$               0.40

$             (10.58)

$                  1.40

Discontinued Operations

(0.04)

0.04

(0.32)

0.06

Total

$               0.42

$               0.44

$             (10.90)

$                  1.46

Weighted average shares outstanding:      

Basic

50,329

51,422

50,256

48,846

Diluted

50,329

51,545

50,256

48,987

 

BERKSHIRE HILLS BANCORP, INC.

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

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

(in thousands, except per share data)

2020

2020

2020

2019

2019

Interest and dividend income from continuing operations    

Loans

$        85,688

$        90,876

$      101,695

$      110,915

$      118,371

Securities and other    

12,080

12,812

14,500

14,526

15,354

Total interest and dividend income    

97,768

103,688

116,195

125,441

133,725

Interest expense from continuing operations

Deposits

16,070

20,552

23,838

28,797

31,501

Borrowings

4,643

5,546

5,929

5,311

5,353

Total interest expense    

20,713

26,098

29,767

34,108

36,854

Net interest income from continuing operations

77,055

77,590

86,428

91,333

96,871

Non-interest income from continuing operations

Mortgage banking originations

2,044

1,644

959

172

292

Loan related income

4,988

5,717

1,302

7,056

6,493

Deposit related fees

7,062

5,373

7,947

8,264

8,705

Insurance commissions and fees    

2,660

2,767

3,024

2,471

2,895

Wealth management fees    

2,299

2,057

2,570

2,239

2,325

Total fee income    

19,053

17,558

15,802

20,202

20,710

Other

1,927

(999)

(436)

75

609

Securities (losses)/gains, net     

(1,017)

822

(9,730)

1,734

87

Gain on sale of business operations and assets, net

-

-

-

1,351

-

Total non-interest income      

19,963

17,381

5,636

23,362

21,406

Total net revenue from continuing operations

97,018

94,971

92,064

114,695

118,277

Provision for credit losses   

1,200

29,871

34,807

5,351

22,600

Non-interest expense from continuing operations

Compensation and benefits

34,809

39,403

36,909

35,355

37,272

Occupancy and equipment     

11,084

10,195

11,132

10,798

9,893

Technology and communications

8,540

7,755

8,081

6,702

6,849

Marketing and promotion  

1,002

902

1,165

1,046

1,006

Professional services

2,567

2,565

2,720

2,288

2,282

FDIC premiums and assessments

1,518

1,658

1,482

471

-

Other real estate owned and foreclosures

40

14

27

4

150

Amortization of intangible assets     

1,530

1,558

1,580

1,582

1,526

Goodwill impairment

-

553,762

-

-

-

Merger, restructuring and other expense 

5,316

-

-

5,713

4,163

Other

6,437

6,463

8,229

6,328

7,870

Total non-interest expense     

72,843

624,275

71,325

70,287

71,011

Income/(loss) from continuing operations before income taxes

$        22,975

$     (559,175)

$       (14,068)

$        39,057

$        24,666

Income tax (benefit)/expense

(68)

(16,130)

(1,996)

6,421

4,007

Net income/(loss) from continuing operations

$        23,043

$     (543,045)

$       (12,072)

$        32,636

$        20,659

(Loss)/income from discontinued operations before income taxes

$         (2,477)

$         (8,635)

$       (10,629)

$         (9,514)

$          2,747

Income tax (benefit)/expense

(659)

(2,299)

(2,831)

(2,629)

790

Net (loss)/income from discontinued operations

$         (1,818)

$         (6,336)

$         (7,798)

$         (6,885)

$          1,957

Net income/(loss)

$        21,225

$     (549,381)

$       (19,870)

$        25,751

$        22,616

Preferred stock dividend

58

130

125

240

240

Income/(loss) available to common shareholders

$        21,167

$     (549,511)

$       (19,995)

$        25,511

$        22,376

Basic earnings/(loss) per common share:

Continuing Operations

$            0.46

$         (10.80)

$           (0.24)

$            0.65

$            0.40

Discontinued Operations

(0.04)

(0.13)

(0.16)

(0.14)

0.04

Total

$            0.42

$         (10.93)

$           (0.40)

$            0.51

$            0.44

Diluted earnings/(loss) per common share:

Continuing Operations

$            0.46

$         (10.80)

$           (0.24)

$            0.65

$            0.40

Discontinued Operations

(0.04)

(0.13)

(0.16)

(0.14)

0.04

Total

$            0.42

$         (10.93)

$           (0.40)

$            0.51

$            0.44

Weighted average shares outstanding:      

Basic

50,329

50,246

50,204

50,494

51,422

Diluted

50,329

50,246

50,204

50,702

51,545

 

BERKSHIRE HILLS BANCORP, INC.

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

Quarters Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

2020

2020

2020

2019

2019

Earning assets 

Loans:

Commercial real estate

3.52

%

3.78

%

4.41

%

4.80

%

4.92

%

Commercial and industrial loans

3.88

4.02

5.03

5.35

5.58

Residential mortgages

3.78

3.78

3.77

3.61

3.73

Consumer loans

3.59

3.72

4.28

4.38

4.55

Total loans

3.68

3.83

4.33

4.52

4.67

Securities

2.78

3.07

3.32

3.31

3.41

Short-term investments and loans held for sale

0.21

0.50

1.78

3.15

4.11

Total earning assets

3.31

3.50

4.08

4.27

4.45

Funding liabilities

Deposits:

NOW and other

0.24

0.30

0.46

0.54

0.61

Money market

0.38

0.58

0.98

1.18

1.27

Savings

0.10

0.10

0.13

0.14

0.13

Time

1.63

1.84

1.87

1.97

2.02

Total interest-bearing deposits

0.81

1.01

1.18

1.35

1.43

Borrowings

2.36

2.38

2.60

2.77

3.12

Total interest-bearing liabilities

0.95

1.16

1.33

1.48

1.57

Net interest spread

2.36

2.34

2.75

2.79

2.88

Net interest margin

2.61

2.62

3.04

3.11

3.22

Cost of funds (1)

0.73

0.92

1.11

1.23

1.32

Cost of deposits 

0.61

0.79

0.96

1.11

1.18

(1) Cost of funds includes all deposits and borrowings.

 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - UNAUDITED - (F-7)

Quarters Ended

Sept. 30, 

June 30, 

March 31, 

Dec. 31, 

Sept. 30, 

(in thousands)

2020

2020

2020

2019

2019

Assets

Loans

Commercial real estate

$            3,986,424

$            4,005,018

$            4,000,461

$            4,056,244

$            3,998,144

Commercial and industrial loans

2,191,749

2,152,820

1,795,813

1,768,039

1,951,205

Residential mortgages

2,224,132

2,452,622

2,654,224

2,758,676

2,849,216

Consumer loans

800,824

865,318

921,810

974,889

1,035,893

Total loans (1) 

9,203,129

9,475,778

9,372,308

9,557,848

9,834,458

Securities (2)

1,873,533

1,793,381

1,744,635

1,752,968

1,846,985

Short-term investments and loans held for sale

766,447

697,138

374,894

444,622

309,897

Total earning assets (3)

11,843,109

11,966,297

11,491,837

11,755,438

11,991,340

Goodwill and other intangible assets

41,460

590,672

598,347

601,192

603,762

Other assets

759,534

751,702

663,056

737,396

668,218

Assets from discontinued operations

16,041

109,923

98,528

176,251

204,339

Total assets

$          12,660,144

$          13,418,594

$          12,851,768

$          13,270,277

$          13,467,659

Liabilities and shareholders' equity

Deposits 

NOW and other

$            1,243,487

$            1,183,839

$            1,159,388

$            1,085,485

$            1,111,637

Money market

2,673,567

2,672,066

2,752,465

2,688,766

2,624,639

Savings

940,488

901,218

846,942

835,209

838,445

Time

3,056,419

3,399,222

3,333,070

3,827,175

4,158,688

Total interest-bearing deposits

7,913,961

8,156,345

8,091,865

8,436,635

8,733,409

Borrowings

777,369

942,033

949,316

853,911

805,035

Total interest-bearing liabilities

8,691,330

9,098,378

9,041,181

9,290,546

9,538,444

Non-interest-bearing demand deposits

2,558,981

2,343,173

1,849,295

1,898,045

1,864,964

Other liabilities 

254,273

272,690

203,797

304,504

267,922

Liabilities from discontinued operations

22,805

28,988

23,799

30,446

28,206

Total liabilities

11,527,389

11,743,229

11,118,072

11,523,541

11,699,536

Preferred shareholders' equity

20,325

20,325

20,548

40,633

40,633

Common shareholders' equity

1,112,430

1,655,040

1,713,148

1,706,103

1,727,490

Total shareholders' equity

1,132,755

1,675,365

1,733,696

1,746,736

1,768,123

Total liabilities and shareholders' equity

$          12,660,144

$          13,418,594

$          12,851,768

$          13,270,277

$          13,467,659

Supplementary data

Total average non-maturity deposits

$            7,416,523

$            7,100,296

$            6,608,090

$            6,507,505

$            6,439,685

Total average deposits 

10,472,942

10,499,518

9,941,160

10,334,680

10,598,373

Fully taxable equivalent income adjustment

1,512

1,580

1,824

1,934

1,826

Total average tangible equity (4)

1,091,295

1,084,693

1,135,349

1,145,544

1,164,361

(1) Total loans include non-accruing loans.

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

(3) Excludes discontinued operations for presentation purposes. Performance ratios are calculated including the impact of discontinued operations. 

(4) 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

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

(in thousands)

2020

2020

2020

2019

2019

NON-PERFORMING ASSETS

Non-accruing loans:

Commercial real estate

$          14,777

$          12,486

$          16,938

$          20,119

$          15,829

Commercial and industrial loans

15,035

15,045

18,370

11,373

12,224

Residential mortgages

7,928

9,840

9,636

3,343

3,062

Consumer loans

9,650

7,513

6,172

4,805

5,191

Total non-accruing loans

47,390

44,884

51,116

39,640

36,306

Other real estate owned

401

517

224

-

-

Repossessed assets

1,646

1,581

1,316

858

1,003

Total non-performing assets

$          49,437

$          46,982

$          52,656

$          40,498

$          37,309

Total non-accruing loans/total loans

0.53%

0.48%

0.55%

0.42%

0.37%

Total non-performing assets/total assets

0.39%

0.36%

0.40%

0.31%

0.28%

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at beginning of period

$        139,394

$        113,510

$          63,575

$          62,230

$          62,156

Adoption of ASU No. 2016-13 (1)

-

-

25,434

-

-

Balance after adoption of ASU No. 2016-13

139,394

113,510

89,009

62,230

62,156

Charged-off loans

(7,776)

(7,274)

(12,432)

(4,485)

(23,524)

Recoveries on charged-off loans

1,580

3,259

1,958

479

998

Net loans charged-off

(6,196)

(4,015)

(10,474)

(4,006)

(22,526)

Provision for loan credit losses

1,216

29,899

34,975

5,351

22,600

Balance at end of period

$        134,414

$        139,394

$        113,510

$          63,575

$          62,230

Allowance for credit losses/total loans

1.50%

1.49%

1.22%

0.67%

0.64%

Allowance for credit losses/non-accruing loans

284%

311%

222%

160%

171%

NET LOAN CHARGE-OFFS

Commercial real estate

$             (635)

$          (1,679)

$          (5,990)

$          (1,419)

$          (2,759)

Commercial and industrial loans

(5,551)

(1,059)

(3,728)

(1,495)

(18,850)

Residential mortgages

517

(966)

(19)

(351)

(140)

Home equity 

(57)

(10)

(107)

(67)

(71)

Auto and other consumer

(470)

(301)

(630)

(674)

(706)

Total, net

$          (6,196)

$          (4,015)

$        (10,474)

$          (4,006)

$        (22,526)

Net charge-offs (QTD annualized)/average loans 

0.27%

0.17%

0.45%

0.17%

0.92%

Net charge-offs (YTD annualized)/average loans 

0.29%

0.31%

0.45%

0.35%

0.41%

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS

30-89 Days delinquent

0.31%

0.37%

0.43%

0.25%

0.26%

90+ Days delinquent and still accruing

0.14%

0.14%

0.05%

0.29%

0.29%

Total accruing delinquent loans

0.45%

0.51%

0.48%

0.54%

0.55%

Non-accruing loans

0.53%

0.48%

0.55%

0.42%

0.37%

Total delinquent and non-accruing loans

0.98%

0.99%

1.03%

0.96%

0.92%

(1) This balance includes $12 million of PCD confirmed losses as of January 1, 2020.

 

BERKSHIRE HILLS BANCORP, INC.

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

At or for the Quarters Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

(in thousands)

2020

2020

2020

2019

2019

Net income/(loss)

$       21,225

$   (549,381)

$     (19,870)

$       25,751

$       22,616

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

1,017

(822)

9,730

(1,734)

(87)

Adj: Goodwill impairment

-

553,762

-

-

-

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

-

-

-

-

-

Adj: Merger and acquisition expense

-

-

-

3,611

3,802

Adj: Restructuring expense and other expense

5,316

-

-

2,102

361

Adj: Loss/(income) from discontinued operations before income taxes

2,477

8,635

10,629

9,514

(2,747)

Adj: Income taxes

(3,611)

(18,658)

(4,134)

(3,910)

(281)

Total core income/(loss) (2)

(A)

$       26,424

$       (6,464)

$       (3,645)

$       35,334

$       23,664

Total revenue from continuing operations

$       97,018

$       94,971

$       92,064

$     114,695

$     118,277

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

1,017

(822)

9,730

(1,734)

(87)

Total core revenue (2)

(B)

$       98,035

$       94,149

$     101,794

$     112,961

$     118,190

Total non-interest expense from continuing operations

$       72,843

$     624,275

$       71,325

$       70,287

$       71,011

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

(5,316)

-

-

(5,713)

(4,163)

Less: Goodwill impairment

-

(553,762)

-

-

-

Core non-interest expense (2)                                    

(C)

$       67,527

$       70,513

$       71,325

$       64,574

$       66,848

Total revenue

$       96,752

$       90,383

$       93,869

$     116,860

$     134,067

Total non-interest expense

75,054

628,322

83,759

81,966

84,054

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

$       21,698

$   (537,939)

$       10,110

$       34,894

$       50,013

Total revenue from continuing operations

$       97,018

$       94,971

$       92,064

$     114,695

$     118,277

Total non-interest expense from continuing operations

72,843

624,275

71,325

70,287

71,011

Pre-tax, pre-provision net revenue (PPNR) from continuing operations 

$       24,175

$   (529,304)

$       20,739

$       44,408

$       47,266

Total core revenue (2)

$       98,035

$       94,149

$     101,794

$     112,961

$     118,190

Core non-interest expense (2)                                    

67,527

70,513

71,325

64,574

66,848

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

$       30,508

$       23,636

$       30,469

$       48,387

$       51,342

(in millions, except per share data)

Total average assets                                                

(D)

$       12,660

$       13,419

$       12,852

$       13,270

$       13,468

Total average shareholders' equity                         

(E)

1,133

1,675

1,734

1,747

1,768

Total average tangible shareholders' equity (2)                        

(F)

1,091

1,085

1,135

1,146

1,164

Total average tangible common shareholders' equity (2)                        

(G)

1,071

1,064

1,115

1,105

1,124

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

(H)

1,138

1,122

1,124

1,159

1,170

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

(I)

1,118

1,101

1,104

1,119

1,130

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

(J)

12,574

13,021

12,524

12,617

12,930

Total common shares outstanding, period-end (thousands)               

(K)

50,306

50,192

50,199

49,585

50,394

Average diluted shares outstanding (thousands)

(L)

50,329

50,246

50,204

50,702

51,545

Core earnings/(loss) per common share, diluted(2)

(A/L)

$           0.53

$         (0.13)

$         (0.07)

$           0.70

$           0.46

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

(I/K)

22.22

21.94

22.00

22.56

22.42

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

(H)/(J)

9.05

8.61

8.98

9.19

9.05

Performance ratios (4)

GAAP return on assets

0.67

%

(16.38)

%

(0.62)

%

0.78

%

0.67

%

Core return on assets (2)

0.84

(0.19)

(0.11)

1.08

0.71

GAAP return on equity 

7.50

(131.17)

(4.58)

5.90

5.12

Core return on equity (2)

(A/E)

9.33

(1.54)

(0.84)

8.09

5.35

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

(A+O)/(G)

10.27

(2.05)

(0.94)

13.12

8.74

PPNR/assets (2)

0.69

(16.04)

0.31

1.05

1.49

Core PPNR/assets (2)

0.97

0.71

0.96

1.48

1.55

Efficiency ratio (2)(6)                                                                                

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

65.39

71.01

66.92

53.66

53.37

Net interest margin

2.61

2.62

3.04

3.11

3.22

Supplementary data (in thousands)

Tax benefit on tax-credit investments (7)

(M)

$         1,377

$         1,379

$            608

$         2,503

$         2,382

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

(N)

(1,090)

(1,097)

(486)

(1,996)

(1,942)

Net income on tax-credit investments

(M+N)

287

282

122

507

440

Intangible amortization

(O)

$         1,530

$         1,558

$         1,580

$         1,582

$         1,526

Fully taxable equivalent income adjustment 

(P)

1,512

1,580

1,824

1,934

1,826

(1) Net securities losses/(gains) include the change in fair value of the Company's equity securities in compliance with the Company's adoption of ASU 2016-01.

(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/(loss) adjusted for the tax-effected amortization of intangible assets, assuming a 27% 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. 

 

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED - (F-10)

At or for the Nine Months Ended

Sept. 30,

Sept. 30,

(Dollars in thousands)

2020

2019

Net (loss)/income 

$  (548,026)

$    71,699

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

9,925

(2,655)

Adj: Goodwill impairment

553,762

-

Adj: Merger and acquisition expenses

-

15,122

Adj: Restructuring expense and other

5,316

7,211

Adj: Loss/(income) from discontinued operations before income taxes

21,741

(3,975)

Adj: Income taxes

(26,403)

(3,889)

Total core income (2)

(A)

$      16,315

$    83,513

Total revenue from continuing operations

$    284,053

$  334,565

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

9,925

(2,655)

Total core revenue(2)

(B)

$    293,978

$  331,910

Total non-interest expense from continuing operations

$    768,443

$  219,570

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

(5,316)

(22,333)

Less: Goodwill impairment

(553,762)

-

Core non-interest expense (2)                                    

(C)

$    209,365

$  197,237

Total revenue

$    281,004

$  373,630

Total non-interest expense

787,135

254,660

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

$  (506,131)

$  118,970

Total revenue from continuing operations

$    284,053

$  334,565

Total non-interest expense from continuing operations

768,443

219,570

Pre-tax, pre-provision net revenue (PPNR) from continuing operations 

$  (484,390)

$  114,995

Total core revenue (2)

$    293,978

$  331,910

Core non-interest expense (2)                                    

209,365

197,237

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

$      84,613

$  134,673

(in millions, except per share data)

Total average assets                                                

(D)

$      13,001

$    12,857

Total average shareholders' equity                         

(E)

1,513

1,677

Total average tangible shareholders' equity (2)                        

(F)

1,104

1,106

Total average tangible common shareholders' equity (2)                        

(G)

1,083

1,066

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

(H)

1,138

1,170

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

(I)

1,118

1,130

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

(J)

12,574

12,930

Total common shares outstanding, period-end (thousands)               

(K)

50,306

50,394

Average diluted shares outstanding (thousands)

(L)

50,290

48,987

Core earnings per common share, diluted(2)

(A/L)

$          0.32

$        1.70

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

(I/K)

22.22

22.42

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

(H)/(J)

9.05

9.05

Performance ratios (4)

GAAP return on assets

(5.63)

%

0.74

%

Core return on assets (2)

(A/D)

0.17

0.88

GAAP return on equity 

(48.26)

5.70

Core return on equity (2)

(A/E)

1.44

6.64

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

(A+O)/(G)

2.39

10.74

PPNR/assets (2)

(5.19)

1.23

Core PPNR/assets (2)

0.87

1.40

Efficiency ratio (2)(6)                                                                               

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

67.72

56.30

Net interest margin

2.75

3.19

Supplementary data

Tax benefit on tax-credit investments (7)

(M)

$        3,364

$      5,447

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

(N)

(2,673)

(4,459)

Net income on tax-credit investments

(M+N)

691

988

Intangible amortization

(O)

4,668

4,201

Fully taxable equivalent income adjustment

(P)

4,917

5,517

(1) Net securities losses/(gains) include the change in fair value of the Company's equity securities in compliance with the Company's adoption of ASU 2016-01.

(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% 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. 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/berkshire-hills-announces-third-quarter-results-301159871.html

SOURCE Berkshire Hills Bancorp, Inc.


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