Berkshire Hills Reports Second Quarter Results; Dividend Declared

BOSTON, July 23, 2019 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. BHLB reported GAAP net income of $25 million, or $0.52 per share, in the second quarter of 2019.  The non-GAAP measure of core earnings totaled $32 million, or $0.65 per share.  Net non-core charges were primarily related to the acquisition of Willimantic, CT based SI Financial Group, Inc. on May 17, 2019 and are net of discontinued operations.  GAAP EPS increased by 2% compared to the prior quarter, while core EPS increased by 8% due to the benefits of the Company's initiatives. 

(PRNewsfoto/Berkshire Hills Bancorp, Inc.)

SECOND QUARTER FINANCIAL HIGHLIGHTS (income statement metrics are compared to the prior quarter):

  • 2% increase in GAAP EPS; 8% increase in core EPS
  • 2% increase in net revenue from continuing operations
  • 3.19% net interest margin
  • 56.4% efficiency ratio, improved from 59.5%
  • 0.14% net loan charge-offs/average loans
  • 0.27% non-performing assets/assets

CEO Richard Marotta stated, "Our teams had a good quarter and contributed to improving the profitability of our operations based on revenue driven positive operating leverage.  Several critical initiatives were accomplished in the most recent quarter.  We completed the acquisition of SI Financial Group, which added the Savings Institute operations consisting of 23 branches and $1.7 billion in total assets in eastern Connecticut and Rhode Island.  This was completed on time and on plan, including the issuance of 5.7 million Berkshire shares as merger consideration.  The systems conversion remains targeted for early in the fourth quarter."

Mr. Marotta continued, "We completed our strategic review and moved forward on several fronts.  Our commercial aircraft portfolio is in the process of being sold, and our FCLS national mortgage banking operations are being marketed for sale.  We're seeing the benefits of our efficiency initiatives, and we're also investing in targeted areas, including our growing SBA lending team.   Repurchases of common stock have begun under our recent 2.4 million share repurchase authorization."

Mr. Marotta concluded with comments about recent governance and culture initiatives.  "We were pleased to add three new Board members in June:  Baye Adofo-Wilson, Rheo Brouillard, and William Hughes.  They represent our newer markets, enhance our diversity, and add new expertise in technology and community development finance.  Longtime community organizer and activist, Malia Lazu, was appointed as EVP/Chief Experience and Culture Officer, and SVP Jacqueline Courtwright was promoted to Chief Human Resources Officer.  In May, the Bank announced its Be FIRST values program, including initiatives for new community storefronts based around our MyBanker program, a new community deposit and loan product, and enhanced diversity and inclusion programs for employee recruitment and development.   In June, over 90% of our employees joined together in our fourth annual Xtraordinary Day of Service, donating more than 6,000 hours of service at 37 projects throughout our footprint.  Berkshire Bank was recently named as the winner of the 2019 North American Employee Engagement Award for Social Responsibility."

DIVIDEND DECLARED

The Board of Directors approved a quarterly cash dividend of $0.23 per common share to shareholders of record at the close of business on August 8, 2019, payable on August 22, 2019.  The dividend equates to a 3.1% annualized yield based on the $29.85 average closing price of Berkshire Hills Bancorp during the second quarter of 2019.  Effective on the same dates, the Board also approved a quarterly cash dividend on preferred stock totaling $0.46 per share.  The Board had approved a 5% increase in the common and preferred dividend following the start of the year.

ACQUISITION OF SI FINANCIAL GROUP

Berkshire completed the acquisition of SI Financial Group ("SIFI") on May 17, 2019.  At the acquisition date, SIFI had assets with a gross fair value totaling $1.7 billion and a net fair value of $140 million net of liabilities.  Berkshire recorded $176 million in total merger consideration, consisting primarily of the issuance of 5.69 million Berkshire common shares.   Goodwill was recorded in the amount of $35 million, and the core deposit intangible was recorded at $18 million.  For the first quarter of 2019, SIFI reported $57 million in annualized revenue and $39 million in annualized operating expense.  For that period, it recorded a 3.00% net interest margin, with a 4.35% loan yield and a 1.29% interest-bearing deposit cost.  Most Berkshire consolidated balance sheet and income statement categories increased as a result of the merger.

Berkshire targets to achieve cost savings related efficiencies totaling approximately $12 million, or 30% of SIFI annualized non-interest expense.  The Company continues to expect that it will remain within its target of approximately $23 million in total after-tax transaction costs.  Including all purchase accounting and targeted transaction costs the Company estimates that the transaction will be approximately $0.45 dilutive to tangible book value per share.  Projected dilution per share is less than originally anticipated due to changes in market conditions affecting purchase accounting. 

FINANCIAL CONDITION

Total assets were $13.7 billion at midyear 2019, increasing by $1.5 billion, or 12%, during the quarter and including the SIFI merger.  Investment securities increased by $24 million, or 1%.  The SIFI merger added $143 million and there were $119 million in net reductions as a result of the Company's strategic review, along with the integration of the SIFI securities.  Total loans increased in the second quarter by $1.0 billion, or 11%, to $9.9 billion including $1.3 billion in SIFI loans.  The $178 million portfolio of commercial aircraft loans was designated as held-for-sale.  The Company expects to complete the sale of these loans in the third quarter.  Total loans decreased organically in the quarter and year-to-date.  This reflects the Company's strategic review and emphasis on adjusting the level and mix of assets to improve capital returns and to integrate the acquired SIFI portfolio.  Total deposits increased by $1.4 billion, or 15%, in the second quarter to $10.6 billion including $1.3 billion in SIFI deposits.  Payroll related balances decreased by $82 million to $480 million in the second quarter.  Deposits increased organically before changes related to SIFI and payroll accounts.  Ratio metrics of capital, liquidity, and asset quality improved modestly during the most recent quarter.  The SIFI loans were recorded at a $42 million (or 3.1%) discount to gross carrying value, including a $31 million credit discount and an $11 million interest rate discount.  Near quarter-end, the Company initiated purchases of common stock under its recently approved 2.4 million share repurchase program.  The Company repurchased 110 thousand shares in the second quarter and repurchases are expected to continue.   Book value per common share increased by 1% to $34.05 from $33.75 in the most recent quarter, and the non-GAAP measure of tangible book value per common share increased by 3% to $22.25 from $21.66, more than offsetting the dilution from the acquisition.     

RESULTS OF OPERATIONS

GAAP earnings were $0.52 per share in the most recent quarter, compared to $0.51 in the prior quarter.  Results in the second quarter were reduced by non-core charges related to the SIFI acquisition, restructuring charges, and discontinued operations.  

The non-GAAP measure of core earnings totaled $0.65 per share in the most recent quarter, increasing by 8% from $0.60 in the prior quarter.  Revenue driven positive operating leverage contributed to improving core profitability.  This reflected initial benefits from the SIFI acquisition and the Company's strategic initiatives.  The return on equity measured 6.1% in the most recent quarter, and the non-GAAP metric of core return on tangible common equity measured 12.2%.

Compared to the prior quarter, total net revenue from continuing operations increased by $2 million, or 2%, and the non-GAAP measure of core revenue increased by $4 million, or 4%.  The net interest margin was 3.19% in the most recent quarter, increasing by 0.02% from the prior quarter, including the benefit of higher accretion related to the SIFI acquisition.   Fee income was down 3% from the prior quarter due to lower loan related revenue.  Non-interest income decreased due to higher tax credit amortization charges which were more than offset by the benefit to income tax expense from tax credits received on projects completed during the quarter.    

Non-interest expense increased quarter-over-quarter including the acquired SIFI operations and higher merger related charges.  Compared to the prior quarter, non- interest expense increased by $5 million, or 6%, while the non-GAAP measure of core expense increased by $400 thousand, or 1%.  The efficiency ratio improved to 56% from 60%.  Excluding SIFI and the FCLS operations, full time equivalent staff decreased to 1,391 at midyear, compared to 1,485 at the start of the year.  FCLS staff totaled 416 at midyear, compared to 432 at the start of the year.  Staff in the acquired SIFI operations totaled 230 at midyear.  The effective income tax rate decreased to 18% in the most recent quarter from 22% in the prior quarter due to higher tax credit benefits resulting from tax credit investment projects that came into service during the quarter.  Net of the related amortization charges to non-interest income previously mentioned, these projects contributed $0.01 to earnings per share during the quarter.

The FCLS national mortgage banking operations contributed $0.03 in non-core EPS during the most recent quarter, as industry business volumes improved following the decrease in long term interest rates that developed during the quarter.  These operations generated $15 million in fee revenue, which was an increase of 56% quarter-over-quarter and 47% year-over-year due to improved market conditions.  The Company generated $719 million in held-for-sale residential mortgages in the most recent quarter, compared to $398 million in the prior quarter and to $626 million in the second quarter of 2018.  Due to the decision to sell the FCLS operations, they are accounted for as discontinued in the financial statements, and most references to revenue and expense refer to continuing operations and exclude FCLS revenue and expense.

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Wednesday, July 24, 2019 to discuss the results for the quarter and provide guidance about expected future results.  Prior to the call, the Company will post a presentation at its website with updates on its strategic initiatives.   Participants are encouraged to pre-register for the conference call using the following link:  http://dpregister.com/10133134.  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.  A telephone replay of the call will be available through Wednesday, July 31, 2019 by dialing 877-344-7529 and entering access number 10133134.  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, a premier regional bank distinguished by its local responsiveness and engagement. With corporate headquarters in Boston, the Company operates in seven Northeastern states, with approximately $13.7 billion in assets and 132 banking offices.  Berkshire Bank is recognized for its entrepreneurial approach, relationship customer experience, and distinctive culture embracing and celebrating the diversity of all customers, employees and, suppliers.

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 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, and discontinued operations.  Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees.  Merger costs in 2018 and 2019 are primarily related to the acquisitions of Commerce Bancshares Corp. and 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.   Discontinued operations are the Company's national mortgage banking operations for which the Company is pursuing sale opportunities.  In 2018, the Company recorded $8 million in charges related to the restructuring of banking systems vendor relationships.  The Company recorded a $3 million cost for the settlement of an existing legal proceeding with a plaintiff claiming to be representing a class of depositors.  Non-core charges in 2018 also included a $1.5 million net charge related to the CEO transition. 

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

Erin E. Duggan; Investor Relations Manager; 413-236-3773

Media Contact

Cassandra Giovanni; Corporate Communications Manager; 860-428-9561

 

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



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)









June 30,



March 31,



Dec. 31,



Sept. 30,



June 30,











2019 (2)



2019



2018



2018



2018

































PER SHARE DATA

























Net earnings per common share, diluted

$          0.52



$          0.51



$          0.31



$          0.70



$          0.74







Core earnings per common share, diluted (3)

0.65



0.60



0.69



0.72



0.73







Total book value per common share

34.05



33.75



33.30



32.84



32.49







Tangible book value per common share (3)

22.25



21.66



21.15



20.68



20.28







Market price at period end

31.39



27.24



26.97



40.70



40.60







Dividends per common share

0.23



0.23



0.22



0.22



0.22







Dividends per preferred share

0.46



0.46



0.44



0.44



0.44

































PERFORMANCE RATIOS (4)

























Return on assets

0.79

%

0.78

%

0.47

%

1.08

%

1.17

%





Core return on assets (3)

1.01



0.92



1.07



1.12



1.18







Return on equity

6.07



5.97



3.61



8.27



8.88







Core return on equity (3)

7.67



7.00



8.09



8.49



8.81







Core return on tangible common equity (3)

12.21



11.44



13.21



14.02



14.68







Net interest margin, fully taxable equivalent (FTE) (5)(6)

3.19



3.17



3.41



3.32



3.50







Fee income/Net interest and fee income from continuing operations

16.20



17.56



15.59



18.06



17.21







Efficiency ratio (3)

56.41



59.54



54.88



52.20



52.42

































GROWTH (Year-to-date)

























Total commercial loans (organic, annualized)

(10)

%

(3)

%

6

%

5

%

5

%





Total loans (organic, annualized)

(9)



(4)



9



10



10







Total deposits (organic, annualized)

6



8



3



0



2







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

1



3



17



22



21







Earnings per common share (compared to prior year) 

(20)



(7)



65



28



33







Core earnings per common share (compared to prior year)(3)

(9)



(8)



32



37



36

































FINANCIAL DATA (in millions)

























Total assets



$      13,653



$      12,173



$      12,212



$      12,030



$      11,902







Total earning assets

12,343



11,039



11,140



10,957



10,827







Total securities

1,905



1,881



1,919



1,918



1,920







Total loans



9,942



8,947



9,043



8,905



8,710







Allowance for loan losses

62



62



61



58



56







Total intangible assets

603



551



552



553



555







Total deposits



10,566



9,166



8,982



8,766



8,839







Total shareholders' equity

1,779



1,577



1,553



1,532



1,516







Net income



25.4



23.6



14.3



32.2



34.0







Core income (3)

32.1



27.7



32.0



33.1



33.8







Purchase accounting accretion

3.2



1.3



8.2



4.6



7.3

































ASSET QUALITY AND CONDITION RATIOS 

























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

0.14

%

0.15

%

0.17

%

0.19

%

0.21

%





Total non-performing assets/total assets

0.27



0.26



0.28



0.30



0.20







Allowance for loan losses/total loans

0.63



0.69



0.68



0.66



0.64







Loans/deposits

94



98



101



102



99







Shareholders' equity to total assets

13.03



12.95



12.72



12.74



12.74







Tangible shareholders' equity to tangible assets (3)

9.01



8.83



8.59



8.53



8.47





























































(1)

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



(2)

The Company acquired SI Financial Group, Inc. on May 17, 2019.























(3)

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.



(4)

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









(5)

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





(6)

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: 0.11%, 0.05%, 0.30%, 0.17%, 0.27%.



 

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)



June 30,



March 31,



December 31,



(in thousands)

2019



2019



2018



Assets













Cash and due from banks

$            100,588



$              98,689



$                100,972



Short-term investments

128,718



68,930



82,217



Total cash and short-term investments

229,306



167,619



183,189

















Trading security

11,210



11,164



11,212



Marketable equity securities, at fair value

59,121



59,121



56,638



Securities available for sale, at fair value

1,410,535



1,386,768



1,399,647



Securities held to maturity, at amortized cost

364,463



369,331



373,763



Federal Home Loan Bank stock and other restricted securities

59,356



54,624



77,344



Total securities

1,904,685



1,881,008



1,918,604

















Loans held for sale

184,810



4,773



2,183

















Commercial real estate loans

4,005,347



3,388,139



3,400,221



Commercial and industrial loans

1,987,297



1,957,339



1,980,046



Residential mortgages

2,882,380



2,544,824



2,566,424



Consumer loans

1,066,804



1,057,193



1,096,562



Total loans

9,941,828



8,947,495



9,043,253



Less: Allowance for loan losses

(62,156)



(62,038)



(61,469)



Net loans

9,879,672



8,885,457



8,981,784

















Premises and equipment, net

121,619



105,651



106,500



Other real estate owned

154



-



-



Goodwill 

553,796



518,325



518,325



Other intangible assets

48,724



32,219



33,418



Cash surrender value of bank-owned life insurance

227,458



191,768



190,609



Deferred tax asset, net

51,118



38,783



42,434



Other assets

238,951



182,720



120,926



Assets from discontinued operations

212,745



165,078



114,259



Total assets 

$       13,653,038



$       12,173,401



$           12,212,231

















Liabilities and shareholders' equity













Demand deposits

$         1,827,016



$         1,526,584



$             1,603,019



NOW and other deposits

997,685



820,177



1,122,321



Money market deposits

2,811,158



2,743,448



2,245,195



Savings deposits

848,699



731,711



724,129



Time deposits

4,081,398



3,344,495



3,287,717



Total deposits

10,565,956



9,166,415



8,982,381

















Senior borrowings

904,814



1,120,189



1,428,298



Subordinated borrowings

96,927



89,562



89,518



Total borrowings

1,001,741



1,209,751



1,517,816

















Other liabilities 

280,155



204,725



149,519



Liabilities from discontinued operations

26,256



15,505



9,597



Total liabilities

11,874,108



10,596,396



10,659,313

















Preferred shareholders' equity

40,633



40,633



40,633



Common shareholders' equity

1,738,297



1,536,372



1,512,285



Total shareholders' equity

1,778,930



1,577,005



1,552,918



Total liabilities and shareholders' equity

$       13,653,038



$       12,173,401



$           12,212,231

















Net common shares outstanding 

51,045



45,522



45,417



 

 

BERKSHIRE HILLS BANCORP, INC.



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



LOAN ANALYSIS



















































































Organic Annualized Growth %(1)



(in millions)



June 30, 2019

Balance



Acquired Savings

Institute Balances (2)



March 31, 2019

Balance



December 31, 2018

Balance



Quarter ended

June 30, 2019



Year to Date  



































Total commercial real estate



$                      4,006



$                         624



$                      3,388



$                       3,400



(1)

%

(1)

%



Commercial and industrial loans 



1,987



244



1,957



1,980



(44)



(24)





Total commercial loans 



5,993



868



5,345



5,380



(17)



(10)



































Total residential mortgages



2,882



375



2,545



2,566



(6)



(5)



































Home equity 



404



58



365



377



(21)



(16)





Auto and other



663



2



692



720



(18)



(16)





Total consumer loans



1,067



60



1,057



1,097



(19)



(16)





Total loans



$                      9,942



$                      1,303



$                      8,947



$                       9,043



(14)

%

(9)

%



(1) Non-GAAP financial measure.

























(2) The acquired balances for Savings Institute are as of May 17, 2019.













































































































































DEPOSIT ANALYSIS



















































Organic Annualized Growth % (1)



(in millions)



June 30, 2019

Balance



Acquired Savings

Institute Balances (2)



March 31, 2019

Balance



December 31, 2018

Balance



Quarter ended

June 30, 2019



Year to Date





Demand



$                      1,827



$                         258



$                      1,527



$                       1,603



11

%

(4)

%



NOW and other



998



138



820



1,122



20



(47)





Money market



2,811



190



2,743



2,245



(18)



34





Savings



849



164



732



724



(26)



(11)





Time deposits



4,081



585



3,344



3,288



18



13





Total deposits 



$                    10,566



$                      1,335



$                      9,166



$                       8,982



3

%

6

%



(1) Non-GAAP financial measure.

























(2) The acquired balances for Savings Institute are as of May 17, 2019.



















 

 

BERKSHIRE HILLS BANCORP, INC.

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



Three Months Ended



Six Months Ended



June 30,



June 30,

(in thousands, except per share data)

2019



2018



2019



2018

Interest and dividend income from continuing operations    















Loans

$         113,990



$         100,254



$           219,641



$            191,995

Securities and other    

15,248



15,230



30,706



29,635

Total interest and dividend income    

129,238



115,484



250,347



221,630

Interest expense from continuing operations 















Deposits

28,273



17,768



54,895



33,093

Borrowings

9,370



7,424



18,398



13,488

Total interest expense    

37,643



25,192



73,293



46,581

Net interest income from continuing operations

91,595



90,292



177,054



175,049

Non-interest income from continuing operations 















Mortgage banking originations

278



334



324



472

Loan related income

4,822



6,003



10,825



10,822

Deposit related fees

7,525



7,605



14,383



15,671

Insurance commissions and fees    

2,738



2,549



5,591



5,574

Wealth management fees    

2,348



2,280



4,789



4,877

Total fee income    

17,711



18,771



35,912



37,416

Other

(216)



155



754



1,423

Securities gains/(losses), net     

17



718



2,568



(784)

(Loss)/gain on sale of business operations and assets, net

-



(21)



-



460

Total non-interest income      

17,512



19,623



39,234



38,515

Total net revenue from continuing operations

109,107



109,915



216,288



213,564

Provision for loan losses   

3,467



6,532



7,468



12,107

Non-interest expense from continuing operations















Compensation and benefits

34,779



33,499



68,279



67,346

Occupancy and equipment     

9,449



9,224



18,895



18,416

Technology and communications

6,715



7,053



12,972



13,537

Marketing and promotion     

1,155



1,084



2,422



2,306

Professional services

3,953



864



6,228



2,560

FDIC premiums and assessments

1,751



1,411



3,390



2,606

Other real estate owned and foreclosures

(2)



1



-



68

Amortization of intangible assets     

1,475



1,246



2,675



2,514

Merger, restructuring and other expense 

11,155



847



18,170



5,940

Other

6,138



6,298



15,528



11,600

Total non-interest expense     

76,568



61,527



148,559



126,893

















Income from continuing operations before income taxes       

$           29,072



$           41,856



$             60,261



$              74,564

Income tax expense

5,118



8,145



12,035



15,482

Net income from continuing operations

$           23,954



$           33,711



$             48,226



$              59,082

















Income from discontinued operations before income taxes

$             2,082



$                426



$               1,228



$                   264

Income tax expense

588



106



371



67

Net income from discontinued operations

$             1,494



$                320



$                  857



$                   197

















Net income

$           25,448



$           34,031



$             49,083



$              59,279

Preferred stock dividend

240



229



480



459

Income available to common shareholders

$           25,208



$           33,802



$             48,603



$              58,820

















Basic earnings per common share:















Continuing Operations

$               0.49



$               0.73



$                 1.01



$                  1.29

Discontinued Operations

0.03



0.01



0.02



-

Total

$               0.52



$               0.74



$                 1.03



$                  1.29

















Diluted earnings per common share:















Continuing Operations

$               0.49



$               0.73



$                 1.01



$                  1.28

Discontinued Operations

0.03



0.01



0.02



-

Total

$               0.52



$               0.74



$                 1.03



$                  1.28

















Weighted average shares outstanding:      















Basic

48,961



46,032



47,550



45,999

Diluted

49,114



46,215



47,700



46,206

















 

 

BERKSHIRE HILLS BANCORP, INC.

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







June 30,



March 31,



Dec. 31,



Sept. 30,



June 30,



(in thousands, except per share data)

2019



2019



2018



2018



2018



Interest and dividend income from continuing operations    





















Loans

$      113,990



$      105,651



$      111,576



$      102,651



$      100,254



Securities and other    

15,248



15,458



15,119



14,918



15,230



Total interest and dividend income    

129,238



121,109



126,695



117,569



115,484



Interest expense from continuing operations





















Deposits

28,273



26,622



23,811



21,460



17,768



Borrowings

9,370



9,028



10,118



7,724



7,424



Total interest expense    

37,643



35,650



33,929



29,184



25,192



Net interest income from continuing operations

91,595



85,459



92,766



88,385



90,292



Non-interest income from continuing operations





















Mortgage banking originations

278



46



148



15



334



Loan related income

4,822



6,003



5,087



7,246



6,003



Deposit related fees

7,525



6,858



7,131



7,004



7,605



Insurance commissions and fees    

2,738



2,853



2,479



2,930



2,549



Wealth management fees    

2,348



2,441



2,287



2,283



2,280



Total fee income    

17,711



18,201



17,132



19,478



18,771



Other

(216)



970



1,666



468



155



Securities gains/(losses), net     

17



2,551



(3,023)



88



718



(Loss) on sale of business operations and assets, net

-



-



-



-



(21)



Total non-interest income      

17,512



21,722



15,775



20,034



19,623



Total net revenue from continuing operations

109,107



107,181



108,541



108,419



109,915



Provision for loan losses   

3,467



4,001



6,716



6,628



6,532



Non-interest expense from continuing operations





















Compensation and benefits

34,779



33,500



34,927



31,746



33,499



Occupancy and equipment     

9,449



9,446



9,366



9,145



9,224



Technology and communications

6,715



6,257



6,103



7,507



7,053



Marketing and promotion  

1,155



1,267



1,224



1,167



1,084



Professional services

3,953



2,275



3,302



1,481



864



FDIC premiums and assessments

1,751



1,639



1,488



1,640



1,411



Other real estate owned and foreclosures

(2)



2



1



(1)



1



Amortization of intangible assets     

1,475



1,200



1,202



1,218



1,246



Merger, restructuring and other expense 

11,155



7,015



16,006



198



847



Other

6,138



9,390



6,754



5,526



6,298



Total non-interest expense     

76,568



71,991



80,373



59,627



61,527

























Income from continuing operations before income taxes

$        29,072



$        31,189



$        21,452



$        42,164



$        41,856



Income tax expense 

5,118



6,917



4,384



9,095



8,145



Net income from continuing operations

$        23,954



$        24,272



$        17,068



$        33,069



$        33,711

























Income/(loss) from discontinued operations before income taxes

$          2,082



$            (854)



$         (3,884)



$         (1,147)



$             426



Income tax expense/(benefit)

588



(217)



(1,075)



(305)



106



Net income/(loss) from discontinued operations

$          1,494



$            (637)



$         (2,809)



$            (842)



$             320

























Net income

$        25,448



$        23,635



$        14,259



$        32,227



$        34,031



Preferred stock dividend

240



240



229



230



229



Income available to common shareholders

$        25,208



$        23,395



$        14,030



$        31,997



$        33,802















































Basic earnings per common share:





















Continuing Operations

$            0.49



$            0.52



$            0.37



$            0.72



$            0.73



Discontinued Operations

0.03



(0.01)



(0.06)



(0.02)



0.01



Total

$            0.52



$            0.51



$            0.31



$            0.70



$            0.74

























Diluted earnings per common share:





















Continuing Operations

$            0.49



$            0.52



$            0.37



$            0.72



$            0.73



Discontinued Operations

0.03



(0.01)



(0.06)



(0.02)



0.01



Total

$            0.52



$            0.51



$            0.31



$            0.70



$            0.74

























Weighted average shares outstanding:      





















Basic

48,961



46,113



46,061



46,030



46,032



Diluted

49,114



46,261



46,240



46,263



46,215















































 

 

BERKSHIRE HILLS BANCORP, INC.

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





Quarters Ended





June 30,



March 31,



Dec. 31,



Sept. 30,



June 30,







2019



2019



2018



2018



2018



























Earning assets 























Loans:























Commercial real estate



5.01

%

4.91

%

5.40

%

4.67

%

5.08

%

Commercial and industrial loans



5.79



5.83



5.97



6.22



5.73



Residential mortgages



3.74



3.74



3.72



3.66



3.72



Consumer loans



4.52



4.45



4.52



4.27



4.13



Total loans



4.76



4.73



4.94



4.66



4.73



Securities



3.38



3.46



3.34



3.32



3.45



Short-term investments and loans held for sale



3.37



3.59



3.74



3.82



3.86



Total earning assets



4.51



4.49



4.64



4.41



4.48



























Funding liabilities























Deposits:























NOW and other



0.66



0.65



0.59



0.58



0.44



Money market



1.27



1.23



1.10



0.92



0.88



Savings



0.15



0.18



0.16



0.15



0.14



Time



2.06



2.07



1.93



1.76



1.54



Total interest-bearing deposits



1.44



1.44



1.31



1.18



1.02



Borrowings



2.92



2.85



2.67



2.42



2.29



Total interest-bearing liabilities



1.66



1.65



1.55



1.38



1.23



























Net interest spread



2.85



2.84



3.09



3.03



3.25



Net interest margin



3.19



3.17



3.41



3.32



3.50



























Cost of funds (1)



1.41



1.41



1.31



1.16



1.03



Cost of deposits 



1.18



1.19



1.07



0.96



0.83



























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









 

 

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - UNAUDITED - (F-7)



Quarters Ended



June 30, 



March 31, 



Dec. 31, 



Sept. 30, 



June 30, 



(in thousands)

2019



2019



2018



2018



2018



Assets





















Loans





















Commercial real estate

$            3,716,130



$            3,377,902



$            3,373,936



$            3,331,097



$            3,316,482



Commercial and industrial loans

2,056,384



1,986,792



1,921,361



1,824,369



1,773,722



Residential mortgages

2,711,348



2,556,299



2,539,592



2,459,943



2,268,886



Consumer loans

1,064,579



1,079,583



1,112,433



1,120,942



1,113,089



Total loans (1) 

9,548,441



9,000,576



8,947,322



8,736,351



8,472,179



Securities (2)

1,893,298



1,895,768



1,933,891



1,928,851



1,931,104



Short-term investments and loans held for sale

117,029



67,367



51,827



47,752



36,136



Total earning assets (3)

11,558,768



10,963,711



10,933,040



10,712,954



10,439,419



Goodwill and other intangible assets

555,606



550,966



552,206



554,359



554,591



Other assets

593,917



557,442



494,377



501,739



486,616



Assets from discontinued operations

192,466



115,721



101,464



141,443



130,392



Total assets

$          12,900,757



$          12,187,840



$          12,081,087



$          11,910,495



$          11,611,018

























Liabilities and shareholders' equity





















Deposits 





















NOW and other

$            1,053,335



$               963,043



$               920,225



$               844,888



$               819,166



Money market

2,474,071



2,378,496



2,339,699



2,348,516



2,524,713



Savings

780,797



736,707



728,853



740,765



749,995



Time

3,593,022



3,429,375



3,229,521



3,274,518



2,878,846



Total interest-bearing deposits

7,901,225



7,507,621



7,218,298



7,208,687



6,972,720



Borrowings

1,415,614



1,351,834



1,566,478



1,363,914



1,382,794



Total interest-bearing liabilities

9,316,839



8,859,455



8,784,776



8,572,601



8,355,514



Non-interest-bearing demand deposits

1,673,560



1,538,767



1,579,013



1,635,564



1,619,470



Other liabilities 

215,704



192,119



127,370



132,521



89,933



Liabilities from discontinued operations

18,434



13,962



8,854



11,880



12,650



Total liabilities

11,224,537



10,604,303



10,500,013



10,352,566



10,077,567

























Preferred shareholders' equity

40,633



40,633



40,633



40,633



40,633



Common shareholders' equity

1,635,587



1,542,904



1,540,441



1,517,296



1,492,818



Total shareholders' equity

1,676,220



1,583,537



1,581,074



1,557,929



1,533,451



Total liabilities and shareholders' equity

$          12,900,757



$          12,187,840



$          12,081,087



$          11,910,495



$          11,611,018















































Supplementary data





















Total average non-maturity deposits

$            5,981,763



$            5,617,013



$            5,567,790



$            5,569,733



$            5,713,344



Total average deposits 

9,574,785



9,046,388



8,797,311



8,844,251



8,592,190



Fully taxable equivalent income adjustment

1,882



1,809



1,763



1,807



2,033



Total average tangible equity (4)

1,120,614



1,032,571



1,028,868



1,003,570



978,860

























(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





June 30,



March 31,



Dec. 31,



Sept. 30,



June 30,



(in thousands)



2019



2019



2018



2018



2018



NON-PERFORMING ASSETS























Non-accruing loans:























Commercial real estate



$          19,366



$          18,513



$          20,372



$          22,639



$          10,338



Commercial and industrial loans



9,256



5,614



6,003



4,914



4,029



Residential mortgages



3,579



2,341



2,217



2,683



3,196



Consumer loans



3,570



4,038



3,834



4,401



5,466



Total non-accruing loans



35,771



30,506



32,426



34,637



23,029



Other real estate owned



154



-



-



-



-



Repossessed assets



874



742



1,209



1,069



1,241



Total non-performing assets



$          36,799



$          31,248



$          33,635



$          35,706



$          24,270



























Total non-accruing loans/total loans



0.36%



0.34%



0.36%



0.39%



0.26%



Total non-performing assets/total assets



0.27%



0.26%



0.28%



0.30%



0.20%



























PROVISION AND ALLOWANCE FOR LOAN LOSSES





















Balance at beginning of period



$          62,038



$          61,469



$          58,457



$          55,925



$          53,859



Charged-off loans



(3,966)



(4,579)



(4,029)



(4,471)



(5,714)



Recoveries on charged-off loans



617



1,147



325



375



1,248



Net loans charged-off



(3,349)



(3,432)



(3,704)



(4,096)



(4,466)



Provision for loan losses



3,467



4,001



6,716



6,628



6,532



Balance at end of period



$          62,156



$          62,038



$          61,469



$          58,457



$          55,925



























Allowance for loan losses/total loans



0.63%



0.69%



0.68%



0.66%



0.64%



Allowance for loan losses/non-accruing loans



174%



203%



190%



169%



243%



























NET LOAN CHARGE-OFFS























Commercial real estate



$          (1,235)



$             (752)



$          (1,357)



$          (3,074)



$          (2,079)



Commercial and industrial loans



(995)



(1,580)



(1,538)



(189)



(1,193)



Residential mortgages



(139)



(95)



(108)



61



(632)



Home equity 



(300)



(257)



(116)



(242)



108



Auto and other consumer



(680)



(748)



(585)



(652)



(670)



Total, net



$          (3,349)



$          (3,432)



$          (3,704)



$          (4,096)



$          (4,466)



























Net charge-offs (QTD annualized)/average loans 

0.14%



0.15%



0.17%



0.19%



0.21%



Net charge-offs (YTD annualized)/average loans 

0.15%



0.15%



0.18%



0.19%



0.19%



























DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS



















30-89 Days delinquent



0.20%



0.22%



0.27%



0.38%



0.22%



90+ Days delinquent and still accruing



0.28%



0.23%



0.22%



0.22%



0.40%



Total accruing delinquent loans



0.48%



0.45%



0.49%



0.60%



0.62%



Non-accruing loans



0.36%



0.34%



0.36%



0.39%



0.26%



Total delinquent and non-accruing loans



0.84%



0.79%



0.85%



0.99%



0.88%



 

 

BERKSHIRE HILLS BANCORP, INC.

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





At or for the Quarters Ended





June 30,



March 31,



Dec. 31,



Sept. 30,



June 30,



(in thousands)



2019



2019



2018



2018



2018



Net income



$       25,448



$       23,635



$       14,259



$       32,227



$       34,031



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



(17)



(2,551)



3,023



(88)



(718)



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

-



-



-



-



21



Adj: Merger and acquisition expense



9,711



1,609



2,792



198



847



Adj: Restructuring expense and other expense



1,444



5,406



1,822



-



-



Adj: Legal settlements



-



-



3,000



-



-



Adj: Systems vendor restructuring costs



-



-



8,379



-



-



Adj: (Income)/loss from discontinued operations before income taxes

(2,082)



854



3,884



1,147



(426)



Adj: Income taxes



(2,385)



(1,223)



(5,185)



(397)



-



Total core income (2)

(A)

$       32,119



$       27,730



$       31,974



$       33,087



$       33,755



























Total revenue from continuing operations



$     109,107



$     107,181



$     108,541



$     108,419



$     109,915



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



(17)



(2,551)



3,023



(88)



(718)



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

-



-



-



-



21



Total core revenue (2)

(B)

$     109,090



$     104,630



$     111,564



$     108,331



$     109,218



























Total non-interest expense from continuing operations



$       76,568



$       71,991



$       80,373



$       59,627



$       61,527



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



(11,155)



(7,015)



(4,614)



(198)



(847)



Less: Legal settlements



-



-



(3,000)



-



-



Less: Systems vendor restructuring costs



-



-



(8,379)



-



-



Core non-interest expense (2)                                    

(C)

$       65,413



$       64,976



$       64,380



$       59,429



$       60,680



























(in millions, except per share data)























Total average assets                                                

(D)

$       12,901



$       12,188



$       12,081



$       11,910



$       11,611



Total average shareholders' equity                         

(E)

1,676



1,584



1,581



1,558



1,533



Total average tangible shareholders' equity (2)                        

(F)

1,121



1,033



1,029



1,004



979



Total average tangible common shareholders' equity (2)                        

(G)

1,080



992



988



963



938



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

(H)

1,176



1,026



1,001



979



961



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

(I)

1,136



986



961



939



921



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

(J)

13,051



11,623



11,660



11,477



11,347



























Total common shares outstanding, period-end (thousands)               

(K)

51,045



45,522



45,417



45,420



45,420



Average diluted shares outstanding (thousands)

(L)

49,114



46,261



46,240



46,263



46,215



























Core earnings per common share, diluted(2)

(A/L)

$           0.65



$           0.60



$           0.69



$           0.72



$           0.73



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

(I/K)

22.25



21.66



21.15



20.68



20.28



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

(H)/(J)

9.01



8.83



8.59



8.53



8.47



























Performance ratios (4)























GAAP return on assets



0.79

%

0.78



0.47

%

1.08

%

1.17

%

Core return on assets (2)



1.01



0.92



1.07



1.12



1.18



GAAP return on equity 



6.07



5.97



3.61



8.27



8.88



Core return on equity (2)

(A/E)

7.67



7.00



8.09



8.49



8.81



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

(A+O)/(G)

12.21



11.44



13.21



14.02



14.68



Efficiency ratio (2)(6)                                                                                

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

56.41



59.54



54.88



52.20



52.42



Net interest margin



3.19



3.17



3.41



3.32



3.50



























Supplementary data (in thousands)























Tax benefit on tax-credit investments (7)

(M)

$         2,381



$            684



$         1,787



$         1,374



$         2,119



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

(N)

(1,938)



(579)



(1,610)



(1,112)



(1,594)



Net income on tax-credit investments

(M+N)

443



105



177



262



525



























Intangible amortization

(O)

$         1,475



$         1,200



$         1,202



$         1,218



$         1,246



Fully taxable equivalent income adjustment 

(P)

1,882



1,809



1,763



1,807



2,033



















































(1) Net securities (gains)/losses 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. 







 

 



BERKSHIRE HILLS BANCORP, INC.







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











At or for the Six Months Ended











June 30,



June 30,









(Dollars in thousands)



2019



2018









Net (loss)/income 



$                   49,083



$                   59,279









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



(2,568)



784









Adj: Net (gains) on sale of business operations



-



(460)









Adj: Merger and acquisition expenses



11,320



5,940









Adj: Restructuring expense and other



6,850



-









Adj: (Income) from discontinued operations before income taxes



(1,228)



(264)









Adj: Income taxes



(3,608)



(1,520)









Total core income (2)

(A)

$                   59,849



$                   63,759



























Total revenue 



$                 216,288



$                 213,564









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



(2,568)



784









Adj: Net (gains) on sale of business operations



-



(460)









Total core revenue(2)

(B)

$                 213,720



$                 213,888









Total non-interest expense



$                 148,559



$                 126,893









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



(18,170)



(5,940)









Core non-interest expense (2)                                    

(C)

$                 130,389



$                 120,953



























(in millions, except per share data)

















Total average assets                                                

(D)

$                   12,546



$                   11,567









Total average shareholders' equity                         

(E)

1,630



1,521









Total average tangible shareholders' equity (2)                        

(F)

1,077



965









Total average tangible common shareholders' equity (2)                        

(G)

1,036



925









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

(H)

1,176



961









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

(I)

1,136



921









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

(J)

13,051



11,347









Total common shares outstanding, period-end (thousands)               

(K)

51,045



45,420









Average diluted shares outstanding (thousands)

(L)

47,700



46,206









Core earnings per common share, diluted(2)

(A/L)

$                       1.25



$                       1.38









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

(I/K)

22.25



20.28









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

(H)/(J)

9.01



8.47



























Performance ratios (4)

















GAAP return on assets



0.78

%

1.03

%







Core return on assets (2)

(A/D)

0.97



1.12









GAAP return on equity 



6.02



7.79









Core return on equity (2)

(A/E)

7.34



8.38









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

(A+O)/(G)

11.84



14.13









Efficiency ratio (2)(6)                                                                               

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

57.93



53.72









Net interest margin



3.18



3.43



























Supplementary data

















Tax benefit on tax-credit investments (7)

(M)

$                     3,065



$                     2,715









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

(N)

(2,517)



(2,100)









Net income on tax-credit investments

(M+N)

548



615



























Intangible amortization

(O)

2,675



2,514









Fully taxable equivalent income adjustment

(P)

3,691



3,853











































(1) Net securities (gains)/losses 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-reports-second-quarter-results-dividend-declared-300889746.html

SOURCE Berkshire Hills Bancorp, Inc.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsDividendsPress ReleasesBanking/Financial ServicesConference Call Announcements
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!