BOSTON, Jan. 27, 2020 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. BHLB reported that fourth quarter GAAP earnings increased to $0.51 per share in 2019, compared to $0.31 in 2018. Core earnings per share improved to $0.70 from $0.69 for these respective periods. Quarterly results benefited from Berkshire's initiatives in 2019, including business repositioning strategies and completing an acquisition. Core earnings is a non-GAAP financial measure which excludes merger and restructuring charges, as well as results of discontinued operations.
FOURTH QUARTER FINANCIAL HIGHLIGHTS
- $0.51 GAAP EPS; $0.70 Core EPS
- GAAP ROA 0.78%; Core ROA 1.08%
- 3.11% net interest margin
- 53.7% efficiency ratio
- 0.17% net loan charge-offs/average loans
- 0.31% non-performing assets/assets
CEO Richard Marotta stated, "Berkshire's fourth quarter profitability measures were the best of the year. We completed the systems integration of acquired operations, further trimmed non-strategic assets, and reduced higher cost wholesale funds. Measures of liquidity, capital, and asset quality improved quarter-over quarter. Additional capital was returned to shareholders through stock repurchases and we are now announcing a 4% dividend increase beginning in 2020. Our shares produced a 26% total shareholder return for the year, based on the year-end stock price."
Mr. Marotta continued, "Our Be FIRST social responsibility commitment is at the heart of our efforts to transform our communities and future-proof the company. In November, we were recognized by the U.S. Chamber of Commerce with the 2019 Citizens Award, in the category of Top Corporate Steward- Small – Middle Market Business. Last week, for the first time, we announced our inclusion in the Bloomberg Gender Equality Index highlighting our commitment to human capital management, diversity, and ensuring gender equality. We recently opened our first Reevx Labs, a community co-working space in Boston's Roxbury neighborhood. In these Labs, entrepreneurs and non-profits connect with peers to pursue their missions and access our MyBankers for support of their financial needs. I'm proud of the recognition that our teams are earning as we evolve our company with a focus on purpose driven performance."
Mr. Marotta concluded, "We are announcing that eight of our proven leaders have been promoted to the new position of Regional President to serve our eight regional markets. In this role, they will drive our market positioning, enhance our performance, and maintain active community leadership roles. Reporting to Bank President Sean Gray, they will lead our top priority efforts around our Be FIRST values and commitment to being a 21st century community bank."
DIVIDEND INCREASED
The Board of Directors approved a quarterly cash dividend of $0.24 per common share to shareholders of record at the close of business on February 17, 2020 and payable on February 28, 2020. This is a 4% increase compared to the prior $0.23 dividend per common share. This dividend equates to a 3.1% annualized yield based on the $31.35 average closing price of Berkshire's common stock during the fourth quarter of 2019. Effective for the same dates, the Board also approved an increase in the quarterly cash dividend on preferred stock to $0.48 per share.
FINANCIAL CONDITION
Total assets decreased by $0.3 billion, or 2%, to $13.2 billion in the fourth quarter. The Company released targeted investments and loan balances in accordance with its strategic initiatives and its community focus. The sale of approximately $50 million of commercial aircraft loans was completed during the quarter, together with $30 million in other commercial balances which were held for sale at the previous quarter-end. Total deposits decreased by 1% primarily due to a decrease in retail time balances as interest rates declined. A $318 million year-end increase in payroll related balances offset a $256 million decrease in brokered time deposits. The measure of loans/deposits improved to 92% at year-end, the ratio of equity/assets improved to 13.3%, and the non-GAAP financial measure of tangible equity/tangible assets improved to 9.2%. Non-performing assets were 0.31% of total assets and accruing delinquent loans were 0.54% of total loans at year-end. The ratio of the loan loss allowance to total loans ended the year at 0.67% compared to 0.68% at the start of the year. Berkshire repurchased 815,628 common shares during the fourth quarter at an average price of $31.26 per share. Book value per share improved to $34.65 at year-end, increasing by 4% for the year. The non-GAAP financial measure of tangible book value per common share increased by 7% for the year to $22.56. Subsequent to year-end, 521,400 common shares were issued for the conversion of approximately half of the outstanding participating preferred shares in accordance with the contracted conversion terms. The common equivalent impact of these shares has previously been included in operating results per share.
RESULTS OF OPERATIONS
Fourth quarter GAAP earnings increased to $0.51 per share in 2019, compared to $0.31 in 2018. Core earnings improved to $0.70 per share compared to $0.69 for these respective periods. The non-GAAP measures of core earnings and earnings per share are reconciled to GAAP measures on pages F-9 and F-10 of the financial tables.
GAAP return on assets was 0.78% in the final quarter of the year, and GAAP return on equity was 5.9%. The non-GAAP financial measure of core earnings resulted in core ROA of 1.08%, and core return on tangible common equity of 13.1%. These core measures were the highest results for the year. The fourth quarter efficiency ratio improved to 53.7% in 2019 from 54.9% in 2018.
Many measures of revenue and expense, and average common shares, increased year-over-year due to the impact of the acquisition of SI Financial Group on May 17, 2019. Fourth quarter net revenue from continuing operations increased year-over-year by 6% to $115 million. The contribution from purchase accounting accretion decreased to $5 million from $8 million. Non-interest income in 2019 also benefited from seasonally higher loan sale gains on SBA loan originations and $1.4 million in gains on other commercial loan sales, as well as higher deposit related fees including the acquired SI Financial operations. The net interest margin decreased year-over-year by 30 basis points to 3.11% including a 13 basis point decrease in the contribution from purchase accounting accretion. The remaining decrease in the margin before accretion reflected the impact of lower interest rates on the Company's asset sensitive balance sheet, including increased prepayment activity. Other contributing factors included competitive spreads and recent changes in the Company's liquidity management. The fourth quarter provision for loan losses decreased year-over-year to $5 million from $7 million. Net loan charge-offs measured 0.17% in both of these periods, and the provision exceeded charge-offs in both periods.
Total fourth quarter non-interest expense decreased by 13% year-over-year due to lower non-core expenses. Core non-interest expense was essentially flat year-over-year, with most of the incremental cost of acquired operations offset by efficiency measures undertaken by the Company during the year. Core non-interest expense decreased by 3% compared to the linked quarter. Operations in the most recent period included a $1.4 million benefit from FDIC insurance expense rebates which were completed during the quarter. Full time equivalent staff in continuing operations totaled 1,550 positions at year-end 2019. Combined full time equivalent staff in continuing operations reported by both Berkshire and SI Financial totaled 1,769 positions at year-end 2018. The effective tax rate in 2019 declined from 2018 due to lower pre-tax income in 2019, along with other changes in the Company's operations. The full year tax rate declined year-over-year to 18% from 21%, and the fourth quarter effective tax rate declined to 13% from 19%. The core tax rate in the most recent quarter was 18%.
The total net after-tax adjustment to earnings for non-core items in the most recent quarter was $0.19 per share, including net charges of $0.14 from discontinued operations and $0.05 related to merger and restructuring charges, together with unrealized equity security gains. Discontinued operations comprise the Company's national mortgage banking operations which are held for sale. The Company recorded a fourth quarter pre-tax charge of $9.5 million for these operations, reflecting an operating loss due to seasonally lower revenue and a $4.5 million write-down of mortgage servicing rights at year-end. Fourth quarter mortgage banking fees totaled $7 million in 2019 compared to $6 million in 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.
REGIONAL PRESIDENTS
Berkshire has announced that the individuals below have been appointed to Regional President in each of its markets, leading its top priority efforts around its Be FIRST values and commitment to being a 21st century community bank.
- Jeannine Cimino – Mid Atlantic
- David (Matt) Emprimo – Berkshire County/VT
- Cristina Feden – Eastern CT/RI
- James Hickson – Pioneer Valley/ CT
- Paul Kelly – Central MA
- Malia Lazu – Eastern MA
- James Morris – Capital/Albany NY
- Christopher Papayanakos – Central NY
The Regional Presidents are proven Berkshire leaders in a variety of disciplines, including commercial, retail and executive management. In this role, they will report to Sean Gray, Berkshire Bank President, and they will drive Berkshire's market positioning, enhance its performance, and maintain active community leadership roles.
BE FIRST CORPORATE RESPONSIBILITY UPDATE
Berkshire is committed to delivering 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.
Responsible & Sustainable Business Policy – As part of Berkshire Bank's efforts to build a more socially responsible and values driven company, the Bank implemented a new Responsible & Sustainable Business Policy. The policy enhances the Company's risk management and social responsibility practices with a focus on long-term sustainable performance.
US Chamber of Commerce Foundation Citizens Award- The U.S. Chamber of Commerce Foundation honored Berkshire Bank with the 2019 Citizens Award, in the category of Top Corporate Steward- Small – Middle Market Business, for its Be FIRST Commitment, the company's comprehensive corporate responsibility, culture, social impact and sustainability strategy. The Citizens Awards honor businesses for their significant positive impact in communities around the world, making them one of the most prestigious honors in corporate citizenship.
Bloomberg Gender Equality Index – Berkshire Bank's focus on diversity, ensuring gender equality and pay equity was highlighted as Bloomberg announced the company would be included in the 2020 Bloomberg Gender-Equality Index (GEI). The GEI tracks the financial performance of public companies committed to supporting gender equality. Through disclosure of gender-related metrics, Berkshire Bank provided a comprehensive look at its investment in workplace gender equality reflecting a high level of overall performance.
Fostering Sustainable Communities & Reducing the Wealth Gap –The Company continued its commitment to closing the wealth gap so that all citizens, regardless of ethnicity, have equal opportunity for upward economic mobility, improving the business climate in communities where the bank operates. Berkshire Bank Foundation provided $2,886,558 in grant funding to support 612 organizations in 2019 and the company's XTEAM® employee volunteer program achieved a 100% participation rate for the fourth consecutive year impacting more than one million people with their volunteer efforts.
Reevx Labs- The Bank recently opened its first Reevx Labs in Boston's Roxbury neighborhood. Reevx Labs is part of the Bank's continued commitment to bettering the community and revolutionizing the banking experience. Reevx Labs feature a series of free co-working spaces for the community with the goal of creating spaces where entrepreneurs and non-profits can connect with their peers and access the bank's MyBankers for support of their financial needs, as they pursue their missions. Each Reevx Labs will take on a unique approach informed by the needs of the community, providing opportunities to build solutions together.
INVESTOR CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, January 28, 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: http://dpregister.com/10138046. 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 Tuesday, February 4, 2020 by dialing 1-877-344-7529 and entering access number 10138046. 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 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 $13.2 billion in assets.
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. They also include costs related to the consolidation of branches, including two branches in the fourth quarter of 2019 and eight branches for the full year of 2019. 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 in 2018 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. 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 Contact
Diana Pisciotta; Communications Contact; 617-784-5256
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 Income (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) | |||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||
2019 | 2019 | 2019 (2) | 2019 | 2018 | |||||||||
PER SHARE DATA | |||||||||||||
Net earnings per common share, diluted | $ 0.51 | $ 0.44 | $ 0.52 | $ 0.51 | $ 0.31 | ||||||||
Core earnings per common share, diluted (3) | 0.70 | 0.46 | 0.65 | 0.60 | 0.69 | ||||||||
Total book value per common share | 34.65 | 34.36 | 34.05 | 33.75 | 33.30 | ||||||||
Tangible book value per common share (3) | 22.56 | 22.42 | 22.25 | 21.66 | 21.15 | ||||||||
Market price at period end | 32.88 | 29.29 | 31.39 | 27.24 | 26.97 | ||||||||
Dividends per common share | 0.23 | 0.23 | 0.23 | 0.23 | 0.22 | ||||||||
Dividends per preferred share | 0.46 | 0.46 | 0.46 | 0.46 | 0.44 | ||||||||
PERFORMANCE RATIOS (4) | |||||||||||||
Return on assets | 0.78 | % | 0.67 | % | 0.79 | % | 0.78 | % | 0.47 | % | |||
Core return on assets (3) | 1.08 | 0.71 | 1.01 | 0.92 | 1.07 | ||||||||
Return on equity | 5.90 | 5.12 | 6.07 | 5.97 | 3.61 | ||||||||
Core return on equity (3) | 8.09 | 5.35 | 7.67 | 7.00 | 8.09 | ||||||||
Core return on tangible common equity (3) | 13.12 | 8.74 | 12.21 | 11.44 | 13.21 | ||||||||
Net interest margin, fully taxable equivalent (FTE) (5)(6) | 3.11 | 3.22 | 3.19 | 3.17 | 3.41 | ||||||||
Fee income/Net interest and fee income from continuing operations | 18.11 | 17.61 | 16.20 | 17.56 | 15.59 | ||||||||
Efficiency ratio (3) | 53.66 | 53.37 | 56.41 | 59.54 | 54.88 | ||||||||
CHANGE (Year-to-date) | |||||||||||||
Total commercial loans (organic, annualized) | (7) | % | (9) | % | (10) | % | (3) | % | 6 | % | |||
Total loans (organic, annualized) | (9) | (9) | (9) | (4) | 9 | ||||||||
Total deposits (organic, annualized) | 0 | 2 | 6 | 8 | 3 | ||||||||
Total net revenues from continuing operations (compared to prior year) | 4 | 4 | 1 | 3 | 17 | ||||||||
Earnings per common share (compared to prior year) | (14) | (26) | (20) | (7) | 65 | ||||||||
Core earnings per common share (compared to prior year)(3) | (14) | (18) | (9) | (8) | 32 | ||||||||
FINANCIAL DATA (in millions) | |||||||||||||
Total assets | $ 13,212 | $ 13,532 | $ 13,653 | $ 12,173 | $ 12,212 | ||||||||
Total earning assets | 11,912 | 12,174 | 12,343 | 11,039 | 11,140 | ||||||||
Total securities | 1,770 | 1,861 | 1,905 | 1,881 | 1,919 | ||||||||
Total loans | 9,502 | 9,719 | 9,942 | 8,947 | 9,043 | ||||||||
Allowance for loan losses | 64 | 62 | 62 | 62 | 61 | ||||||||
Total intangible assets | 599 | 602 | 603 | 551 | 552 | ||||||||
Total deposits | 10,336 | 10,423 | 10,566 | 9,166 | 8,982 | ||||||||
Total shareholders' equity | 1,759 | 1,772 | 1,779 | 1,577 | 1,553 | ||||||||
Net income | 25.8 | 22.6 | 25.4 | 23.6 | 14.3 | ||||||||
Core income (3) | 35.3 | 23.7 | 32.1 | 27.7 | 32.0 | ||||||||
Purchase accounting accretion | 5.1 | 4.8 | 3.2 | 1.3 | 8.2 | ||||||||
ASSET QUALITY AND CONDITION RATIOS | |||||||||||||
Net charge-offs (current quarter annualized)/average loans | 0.17 | % | 0.92 | % | 0.14 | % | 0.15 | % | 0.17 | % | |||
Total non-performing assets/total assets | 0.31 | 0.28 | 0.27 | 0.26 | 0.28 | ||||||||
Allowance for loan losses/total loans | 0.67 | 0.64 | 0.63 | 0.69 | 0.68 | ||||||||
Loans/deposits | 92 | 93 | 94 | 98 | 101 | ||||||||
Shareholders' equity to total assets | 13.31 | 13.10 | 13.03 | 12.95 | 12.72 | ||||||||
Tangible shareholders' equity to tangible assets (3) | 9.19 | 9.05 | 9.01 | 8.83 | 8.59 | ||||||||
(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: 0.17%, 0.16%, 0.11%, 0.05%, 0.30%. | ||||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||||
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2) | ||||||
December 31, | September 30, | December 31, | ||||
(in thousands) | 2019 | 2019 | 2018 | |||
Assets | ||||||
Cash and due from banks | $ 105,447 | $ 121,629 | $ 100,972 | |||
Short-term investments | 470,382 | 180,466 | 82,217 | |||
Total cash and short-term investments | 575,829 | 302,095 | 183,189 | |||
Trading security | 10,769 | 11,145 | 11,212 | |||
Marketable equity securities, at fair value | 41,556 | 59,596 | 56,638 | |||
Securities available for sale, at fair value | 1,311,555 | 1,369,604 | 1,399,647 | |||
Securities held to maturity, at amortized cost | 357,979 | 364,675 | 373,763 | |||
Federal Home Loan Bank stock and other restricted securities | 48,019 | 56,049 | 77,344 | |||
Total securities | 1,769,878 | 1,861,069 | 1,918,604 | |||
Loans held for sale | 36,664 | 204,900 | 2,183 | |||
Commercial real estate loans | 4,034,269 | 4,028,461 | 3,400,221 | |||
Commercial and industrial loans | 1,840,508 | 1,845,086 | 1,980,046 | |||
Residential mortgages | 2,685,472 | 2,838,657 | 2,566,424 | |||
Consumer loans | 942,179 | 1,006,437 | 1,096,562 | |||
Total loans | 9,502,428 | 9,718,641 | 9,043,253 | |||
Less: Allowance for loan losses | (63,575) | (62,230) | (61,469) | |||
Net loans | 9,438,853 | 9,656,411 | 8,981,784 | |||
Premises and equipment, net | 120,398 | 123,195 | 106,500 | |||
Other real estate owned | - | - | - | |||
Goodwill | 553,762 | 554,704 | 518,325 | |||
Other intangible assets | 45,615 | 47,198 | 33,418 | |||
Cash surrender value of bank-owned life insurance | 227,894 | 227,085 | 190,609 | |||
Deferred tax asset, net | 56,106 | 49,543 | 42,434 | |||
Other assets | 234,783 | 263,464 | 120,926 | |||
Assets from discontinued operations | 152,188 | 242,279 | 114,259 | |||
Total assets | $ 13,211,970 | $ 13,531,943 | $ 12,212,231 | |||
Liabilities and shareholders' equity | ||||||
Demand deposits | $ 1,884,100 | $ 1,887,621 | $ 1,603,019 | |||
NOW and other deposits | 1,492,569 | 1,267,057 | 1,122,321 | |||
Money market deposits | 2,528,656 | 2,478,947 | 2,245,195 | |||
Savings deposits | 841,283 | 831,972 | 724,129 | |||
Time deposits | 3,589,369 | 3,957,721 | 3,287,717 | |||
Total deposits | 10,335,977 | 10,423,318 | 8,982,381 | |||
Senior borrowings | 730,501 | 904,149 | 1,428,298 | |||
Subordinated borrowings | 97,049 | 96,991 | 89,518 | |||
Total borrowings | 827,550 | 1,001,140 | 1,517,816 | |||
Other liabilities | 261,559 | 301,647 | 149,519 | |||
Liabilities from discontinued operations | 28,320 | 33,614 | 9,597 | |||
Total liabilities | 11,453,406 | 11,759,719 | 10,659,313 | |||
Preferred shareholders' equity | 40,633 | 40,633 | 40,633 | |||
Common shareholders' equity | 1,717,931 | 1,731,591 | 1,512,285 | |||
Total shareholders' equity | 1,758,564 | 1,772,224 | 1,552,918 | |||
Total liabilities and shareholders' equity | $ 13,211,970 | $ 13,531,943 | $ 12,212,231 | |||
Net common shares outstanding | 49,585 | 50,394 | 45,417 | |||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||||
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3) | |||||||||||||
LOAN ANALYSIS | |||||||||||||
Organic Annualized Change %(1) | |||||||||||||
(in millions) | December 31, 2019 | September 30, 2019 | Acquired Savings | December 31, 2018 | Quarter ended | Year to Date | |||||||
Total commercial real estate | $ 4,034 | $ 4,029 | $ 624 | $ 3,400 | 0 | % | 0 | % | |||||
Commercial and industrial loans | 1,841 | 1,845 | 244 | 1,980 | (1) | (19) | |||||||
Total commercial loans | 5,875 | 5,874 | 868 | 5,380 | 0 | (7) | |||||||
Total residential mortgages | 2,685 | 2,839 | 375 | 2,566 | (22) | (10) | |||||||
Home equity | 381 | 394 | 58 | 377 | (13) | (14) | |||||||
Auto and other | 561 | 612 | 2 | 720 | (34) | (22) | |||||||
Total consumer loans | 942 | 1,006 | 60 | 1,097 | (25) | (20) | |||||||
Total loans | $ 9,502 | $ 9,719 | $ 1,303 | $ 9,043 | (9) | % | (9) | % | |||||
(1) Non-GAAP financial measure. | |||||||||||||
(2) The acquired balances for Savings Institute are as of May 17, 2019. | |||||||||||||
DEPOSIT ANALYSIS | |||||||||||||
Organic Annualized Change % (1) | |||||||||||||
(in millions) | December 31, 2019 | September 30, 2019 | Acquired Savings Institute Balances (2) | December 31, 2018 | Quarter ended | Year to Date | |||||||
Demand | $ 1,884 | $ 1,887 | $ 258 | $ 1,603 | (1) | % | 1 | % | |||||
NOW and other | 1,493 | 1,267 | 138 | 1,122 | 71 | 21 | |||||||
Money market | 2,529 | 2,479 | 190 | 2,245 | 8 | 4 | |||||||
Savings | 841 | 832 | 164 | 724 | 4 | (6) | |||||||
Time deposits | 3,589 | 3,958 | 585 | 3,288 | (37) | (9) | |||||||
Total deposits | $ 10,336 | $ 10,423 | $ 1,335 | $ 8,982 | (3) | % | 0 | % | |||||
(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 | Years Ended | ||||||
December 31, | December 31, | ||||||
(in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||
Interest and dividend income from continuing operations | |||||||
Loans | $ 110,915 | $ 111,576 | $ 448,927 | $ 406,222 | |||
Securities and other | 14,526 | 15,119 | 60,586 | 59,672 | |||
Total interest and dividend income | 125,441 | 126,695 | 509,513 | 465,894 | |||
Interest expense from continuing operations | |||||||
Deposits | 28,797 | 23,811 | 115,193 | 78,364 | |||
Borrowings | 5,311 | 10,118 | 29,062 | 31,330 | |||
Total interest expense | 34,108 | 33,929 | 144,255 | 109,694 | |||
Net interest income from continuing operations | 91,333 | 92,766 | 365,258 | 356,200 | |||
Non-interest income from continuing operations | |||||||
Mortgage banking originations | 172 | 148 | 788 | 635 | |||
Loan related income | 7,056 | 5,087 | 24,374 | 23,155 | |||
Deposit related fees | 8,264 | 7,131 | 31,352 | 29,806 | |||
Insurance commissions and fees | 2,471 | 2,479 | 10,957 | 10,983 | |||
Wealth management fees | 2,239 | 2,287 | 9,353 | 9,447 | |||
Total fee income | 20,202 | 17,132 | 76,824 | 74,026 | |||
Other | 75 | 1,666 | 1,438 | 3,557 | |||
Securities gains/(losses), net | 1,734 | (3,023) | 4,389 | (3,719) | |||
Gain on sale of business operations and assets, net | 1,351 | - | 1,351 | 460 | |||
Total non-interest income | 23,362 | 15,775 | 84,002 | 74,324 | |||
Total net revenue from continuing operations | 114,695 | 108,541 | 449,260 | 430,524 | |||
Provision for loan losses | 5,351 | 6,716 | 35,419 | 25,451 | |||
Non-interest expense from continuing operations | |||||||
Compensation and benefits | 35,355 | 34,927 | 140,906 | 134,019 | |||
Occupancy and equipment | 10,798 | 9,366 | 39,586 | 36,927 | |||
Technology and communications | 6,702 | 6,103 | 26,523 | 27,147 | |||
Marketing and promotion | 1,046 | 1,224 | 4,474 | 4,697 | |||
Professional services | 2,288 | 3,302 | 10,798 | 7,343 | |||
FDIC premiums and assessments | 471 | 1,488 | 3,861 | 5,734 | |||
Other real estate owned and foreclosures | 4 | 1 | 154 | 68 | |||
Amortization of intangible assets | 1,582 | 1,202 | 5,783 | 4,934 | |||
Merger, restructuring and other expense | 5,713 | 16,006 | 28,046 | 22,144 | |||
Other | 6,328 | 6,754 | 29,726 | 23,880 | |||
Total non-interest expense | 70,287 | 80,373 | 289,857 | 266,893 | |||
Income from continuing operations before income taxes | $ 39,057 | $ 21,452 | $ 123,984 | $ 138,180 | |||
Income tax expense | 6,421 | 4,384 | 22,463 | 28,961 | |||
Net income from continuing operations | $ 32,636 | $ 17,068 | $ 101,521 | $ 109,219 | |||
(Loss)/income from discontinued operations before income taxes | $ (9,514) | $ (3,884) | $ (5,539) | $ (4,767) | |||
Income tax (benefit)/expense | (2,629) | (1,075) | (1,468) | (1,313) | |||
Net (loss)/income from discontinued operations | $ (6,885) | $ (2,809) | $ (4,071) | $ (3,454) | |||
Net income | $ 25,751 | $ 14,259 | $ 97,450 | $ 105,765 | |||
Preferred stock dividend | 240 | 229 | 960 | 918 | |||
Income available to common shareholders | $ 25,511 | $ 14,030 | $ 96,490 | $ 104,847 | |||
Basic earnings per common share: | |||||||
Continuing Operations | $ 0.65 | $ 0.37 | $ 2.06 | $ 2.37 | |||
Discontinued Operations | (0.14) | (0.06) | (0.08) | (0.08) | |||
Total | $ 0.51 | $ 0.31 | $ 1.98 | $ 2.30 | |||
Diluted earnings per common share: | |||||||
Continuing Operations | $ 0.65 | $ 0.37 | $ 2.05 | $ 2.36 | |||
Discontinued Operations | (0.14) | (0.06) | (0.08) | (0.07) | |||
Total | $ 0.51 | $ 0.31 | $ 1.97 | $ 2.29 | |||
Weighted average shares outstanding: | |||||||
Basic | 50,494 | 46,061 | 49,263 | 46,024 | |||
Diluted | 50,702 | 46,240 | 49,421 | 46,240 | |||
BERKSHIRE HILLS BANCORP, INC. | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED - (F-5) | ||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||
(in thousands, except per share data) | 2019 | 2019 | 2019 | 2019 | 2018 | |||||
Interest and dividend income from continuing operations | ||||||||||
Loans | $ 110,915 | $ 118,371 | $ 113,990 | $ 105,651 | $ 111,576 | |||||
Securities and other | 14,526 | 15,354 | 15,248 | 15,458 | 15,119 | |||||
Total interest and dividend income | 125,441 | 133,725 | 129,238 | 121,109 | 126,695 | |||||
Interest expense from continuing operations | ||||||||||
Deposits | 28,797 | 31,501 | 28,273 | 26,622 | 23,811 | |||||
Borrowings | 5,311 | 5,353 | 9,370 | 9,028 | 10,118 | |||||
Total interest expense | 34,108 | 36,854 | 37,643 | 35,650 | 33,929 | |||||
Net interest income from continuing operations | 91,333 | 96,871 | 91,595 | 85,459 | 92,766 | |||||
Non-interest income from continuing operations | ||||||||||
Mortgage banking originations | 172 | 292 | 278 | 46 | 148 | |||||
Loan related income | 7,056 | 6,493 | 4,822 | 6,003 | 5,087 | |||||
Deposit related fees | 8,264 | 8,705 | 7,525 | 6,858 | 7,131 | |||||
Insurance commissions and fees | 2,471 | 2,895 | 2,738 | 2,853 | 2,479 | |||||
Wealth management fees | 2,239 | 2,325 | 2,348 | 2,441 | 2,287 | |||||
Total fee income | 20,202 | 20,710 | 17,711 | 18,201 | 17,132 | |||||
Other | 75 | 609 | (216) | 970 | 1,666 | |||||
Securities gains/(losses), net | 1,734 | 87 | 17 | 2,551 | (3,023) | |||||
Gain on sale of business operations and assets, net | 1,351 | - | - | - | - | |||||
Total non-interest income | 23,362 | 21,406 | 17,512 | 21,722 | 15,775 | |||||
Total net revenue from continuing operations | 114,695 | 118,277 | 109,107 | 107,181 | 108,541 | |||||
Provision for loan losses | 5,351 | 22,600 | 3,467 | 4,001 | 6,716 | |||||
Non-interest expense from continuing operations | ||||||||||
Compensation and benefits | 35,355 | 37,272 | 34,779 | 33,500 | 34,927 | |||||
Occupancy and equipment | 10,798 | 9,893 | 9,449 | 9,446 | 9,366 | |||||
Technology and communications | 6,702 | 6,849 | 6,715 | 6,257 | 6,103 | |||||
Marketing and promotion | 1,046 | 1,006 | 1,155 | 1,267 | 1,224 | |||||
Professional services | 2,288 | 2,282 | 3,953 | 2,275 | 3,302 | |||||
FDIC premiums and assessments | 471 | - | 1,751 | 1,639 | 1,488 | |||||
Other real estate owned and foreclosures | 4 | 150 | (2) | 2 | 1 | |||||
Amortization of intangible assets | 1,582 | 1,526 | 1,475 | 1,200 | 1,202 | |||||
Merger, restructuring and other expense | 5,713 | 4,163 | 11,155 | 7,015 | 16,006 | |||||
Other | 6,328 | 7,870 | 6,138 | 9,390 | 6,754 | |||||
Total non-interest expense | 70,287 | 71,011 | 76,568 | 71,991 | 80,373 | |||||
Income from continuing operations before income taxes | $ 39,057 | $ 24,666 | $ 29,072 | $ 31,189 | $ 21,452 | |||||
Income tax expense | 6,421 | 4,007 | 5,118 | 6,917 | 4,384 | |||||
Net income from continuing operations | $ 32,636 | $ 20,659 | $ 23,954 | $ 24,272 | $ 17,068 | |||||
(Loss)/income from discontinued operations before income taxes | $ (9,514) | $ 2,747 | $ 2,082 | $ (854) | $ (3,884) | |||||
Income tax (benefit)/expense | (2,629) | 790 | 588 | (217) | (1,075) | |||||
Net income/(loss) from discontinued operations | $ (6,885) | $ 1,957 | $ 1,494 | $ (637) | $ (2,809) | |||||
Net income | $ 25,751 | $ 22,616 | $ 25,448 | $ 23,635 | $ 14,259 | |||||
Preferred stock dividend | 240 | 240 | 240 | 240 | 229 | |||||
Income available to common shareholders | $ 25,511 | $ 22,376 | $ 25,208 | $ 23,395 | $ 14,030 | |||||
Basic earnings per common share: | ||||||||||
Continuing Operations | $ 0.65 | $ 0.40 | $ 0.49 | $ 0.52 | $ 0.37 | |||||
Discontinued Operations | (0.14) | 0.04 | 0.03 | (0.01) | (0.06) | |||||
Total | $ 0.51 | $ 0.44 | $ 0.52 | $ 0.51 | $ 0.31 | |||||
Diluted earnings per common share: | ||||||||||
Continuing Operations | $ 0.65 | $ 0.40 | $ 0.49 | $ 0.52 | $ 0.37 | |||||
Discontinued Operations | (0.14) | 0.04 | 0.03 | (0.01) | (0.06) | |||||
Total | $ 0.51 | $ 0.44 | $ 0.52 | $ 0.51 | $ 0.31 | |||||
Weighted average shares outstanding: | ||||||||||
Basic | 50,494 | 51,422 | 48,961 | 46,113 | 46,061 | |||||
Diluted | 50,702 | 51,545 | 49,114 | 46,261 | 46,240 | |||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-6) | |||||||||||
Quarters Ended | |||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||
2019 | 2019 | 2019 | 2019 | 2018 | |||||||
Earning assets | |||||||||||
Loans: | |||||||||||
Commercial real estate | 4.80 | % | 4.92 | % | 5.01 | % | 4.91 | % | 5.40 | % | |
Commercial and industrial loans | 5.35 | 5.58 | 5.79 | 5.83 | 5.97 | ||||||
Residential mortgages | 3.61 | 3.73 | 3.74 | 3.74 | 3.72 | ||||||
Consumer loans | 4.38 | 4.55 | 4.52 | 4.45 | 4.52 | ||||||
Total loans | 4.52 | 4.67 | 4.76 | 4.73 | 4.94 | ||||||
Securities | 3.31 | 3.41 | 3.38 | 3.46 | 3.34 | ||||||
Short-term investments and loans held for sale | 3.15 | 4.11 | 3.37 | 3.59 | 3.74 | ||||||
Total earning assets | 4.27 | 4.45 | 4.51 | 4.49 | 4.64 | ||||||
Funding liabilities | |||||||||||
Deposits: | |||||||||||
NOW and other | 0.54 | 0.61 | 0.66 | 0.65 | 0.59 | ||||||
Money market | 1.18 | 1.27 | 1.27 | 1.23 | 1.10 | ||||||
Savings | 0.14 | 0.13 | 0.15 | 0.18 | 0.16 | ||||||
Time | 1.97 | 2.02 | 2.06 | 2.07 | 1.93 | ||||||
Total interest-bearing deposits | 1.35 | 1.43 | 1.44 | 1.44 | 1.31 | ||||||
Borrowings | 2.77 | 3.12 | 2.92 | 2.85 | 2.67 | ||||||
Total interest-bearing liabilities | 1.48 | 1.57 | 1.66 | 1.65 | 1.55 | ||||||
Net interest spread | 2.79 | 2.88 | 2.85 | 2.84 | 3.09 | ||||||
Net interest margin | 3.11 | 3.22 | 3.19 | 3.17 | 3.41 | ||||||
Cost of funds (1) | 1.23 | 1.32 | 1.41 | 1.41 | 1.31 | ||||||
Cost of deposits | 1.11 | 1.18 | 1.18 | 1.19 | 1.07 | ||||||
(1) Cost of funds includes all deposits and borrowings. | |||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||||||||
AVERAGE BALANCES - UNAUDITED - (F-7) | ||||||||||
Quarters Ended | ||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||
(in thousands) | 2019 | 2019 | 2019 | 2019 | 2018 | |||||
Assets | ||||||||||
Loans | ||||||||||
Commercial real estate | $ 4,056,244 | $ 3,998,144 | $ 3,716,130 | $ 3,377,902 | $ 3,373,936 | |||||
Commercial and industrial loans | 1,768,039 | 1,951,205 | 2,056,384 | 1,986,792 | 1,921,361 | |||||
Residential mortgages | 2,758,676 | 2,849,216 | 2,711,348 | 2,556,299 | 2,539,592 | |||||
Consumer loans | 974,889 | 1,035,893 | 1,064,579 | 1,079,583 | 1,112,433 | |||||
Total loans (1) | 9,557,848 | 9,834,458 | 9,548,441 | 9,000,576 | 8,947,322 | |||||
Securities (2) | 1,752,968 | 1,846,985 | 1,893,298 | 1,895,768 | 1,933,891 | |||||
Short-term investments and loans held for sale | 444,622 | 309,897 | 117,029 | 67,367 | 51,827 | |||||
Total earning assets (3) | 11,755,438 | 11,991,340 | 11,558,768 | 10,963,711 | 10,933,040 | |||||
Goodwill and other intangible assets | 601,192 | 603,762 | 555,606 | 550,966 | 552,206 | |||||
Other assets | 737,396 | 668,218 | 593,917 | 557,442 | 494,377 | |||||
Assets from discontinued operations | 176,251 | 204,339 | 192,466 | 115,721 | 101,464 | |||||
Total assets | $ 13,270,277 | $ 13,467,659 | $ 12,900,757 | $ 12,187,840 | $ 12,081,087 | |||||
Liabilities and shareholders' equity | ||||||||||
Deposits | ||||||||||
NOW and other | $ 1,085,485 | $ 1,111,637 | $ 1,053,335 | $ 963,043 | $ 920,225 | |||||
Money market | 2,688,766 | 2,624,639 | 2,474,071 | 2,378,496 | 2,339,699 | |||||
Savings | 835,209 | 838,445 | 780,797 | 736,707 | 728,853 | |||||
Time | 3,827,175 | 4,158,688 | 3,593,022 | 3,429,375 | 3,229,521 | |||||
Total interest-bearing deposits | 8,436,635 | 8,733,409 | 7,901,225 | 7,507,621 | 7,218,298 | |||||
Borrowings | 853,911 | 805,035 | 1,415,614 | 1,351,834 | 1,566,478 | |||||
Total interest-bearing liabilities | 9,290,546 | 9,538,444 | 9,316,839 | 8,859,455 | 8,784,776 | |||||
Non-interest-bearing demand deposits | 1,898,045 | 1,864,964 | 1,673,560 | 1,538,767 | 1,579,013 | |||||
Other liabilities | 302,665 | 267,922 | 215,704 | 192,119 | 127,370 | |||||
Liabilities from discontinued operations | 32,285 | 28,206 | 18,434 | 13,962 | 8,854 | |||||
Total liabilities | 11,523,541 | 11,699,536 | 11,224,537 | 10,604,303 | 10,500,013 | |||||
Preferred shareholders' equity | 40,633 | 40,633 | 40,633 | 40,633 | 40,633 | |||||
Common shareholders' equity | 1,706,103 | 1,727,490 | 1,635,587 | 1,542,904 | 1,540,441 | |||||
Total shareholders' equity | 1,746,736 | 1,768,123 | 1,676,220 | 1,583,537 | 1,581,074 | |||||
Total liabilities and shareholders' equity | $ 13,270,277 | $ 13,467,659 | $ 12,900,757 | $ 12,187,840 | $ 12,081,087 | |||||
Supplementary data | ||||||||||
Total average non-maturity deposits | $ 6,507,505 | $ 6,439,685 | $ 5,981,763 | $ 5,617,013 | $ 5,567,790 | |||||
Total average deposits | 10,334,680 | 10,598,373 | 9,574,785 | 9,046,388 | 8,797,311 | |||||
Fully taxable equivalent income adjustment | 1,934 | 1,826 | 1,882 | 1,809 | 1,763 | |||||
Total average tangible equity (4) | 1,145,544 | 1,164,361 | 1,120,614 | 1,032,571 | 1,028,868 | |||||
(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 | |||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||
(in thousands) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||
NON-PERFORMING ASSETS | |||||||||||
Non-accruing loans: | |||||||||||
Commercial real estate | $ 20,119 | $ 15,829 | $ 19,366 | $ 18,513 | $ 20,372 | ||||||
Commercial and industrial loans | 11,373 | 12,224 | 9,256 | 5,614 | 6,003 | ||||||
Residential mortgages | 3,343 | 3,062 | 3,579 | 2,341 | 2,217 | ||||||
Consumer loans | 4,805 | 5,191 | 3,570 | 4,038 | 3,834 | ||||||
Total non-accruing loans | 39,640 | 36,306 | 35,771 | 30,506 | 32,426 | ||||||
Other real estate owned | - | - | 154 | - | - | ||||||
Repossessed assets | 858 | 1,003 | 874 | 742 | 1,209 | ||||||
Total non-performing assets | $ 40,498 | $ 37,309 | $ 36,799 | $ 31,248 | $ 33,635 | ||||||
Total non-accruing loans/total loans | 0.42% | 0.37% | 0.36% | 0.34% | 0.36% | ||||||
Total non-performing assets/total assets | 0.31% | 0.28% | 0.27% | 0.26% | 0.28% | ||||||
PROVISION AND ALLOWANCE FOR LOAN LOSSES | |||||||||||
Balance at beginning of period | $ 62,230 | $ 62,156 | $ 62,038 | $ 61,469 | $ 58,457 | ||||||
Charged-off loans | (4,485) | (23,524) | (3,966) | (4,579) | (4,029) | ||||||
Recoveries on charged-off loans | 479 | 998 | 617 | 1,147 | 325 | ||||||
Net loans charged-off | (4,006) | (22,526) | (3,349) | (3,432) | (3,704) | ||||||
Provision for loan losses | 5,351 | 22,600 | 3,467 | 4,001 | 6,716 | ||||||
Balance at end of period | $ 63,575 | $ 62,230 | $ 62,156 | $ 62,038 | $ 61,469 | ||||||
Allowance for loan losses/total loans | 0.67% | 0.64% | 0.63% | 0.69% | 0.68% | ||||||
Allowance for loan losses/non-accruing loans | 160% | 171% | 174% | 203% | 190% | ||||||
NET LOAN CHARGE-OFFS | |||||||||||
Commercial real estate | $ (1,419) | $ (2,759) | $ (1,235) | $ (752) | $ (1,357) | ||||||
Commercial and industrial loans | (1,495) | (18,850) | (995) | (1,580) | (1,538) | ||||||
Residential mortgages | (351) | (140) | (139) | (95) | (108) | ||||||
Home equity | (67) | (71) | (300) | (257) | (116) | ||||||
Auto and other consumer | (674) | (706) | (680) | (748) | (585) | ||||||
Total, net | $ (4,006) | $ (22,526) | $ (3,349) | $ (3,432) | $ (3,704) | ||||||
Net charge-offs (QTD annualized)/average loans | 0.17% | 0.92% | 0.14% | 0.15% | 0.17% | ||||||
Net charge-offs (YTD annualized)/average loans | 0.35% | 0.41% | 0.15% | 0.15% | 0.18% | ||||||
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | |||||||||||
30-89 Days delinquent | 0.25% | 0.26% | 0.20% | 0.22% | 0.27% | ||||||
90+ Days delinquent and still accruing | 0.29% | 0.29% | 0.28% | 0.23% | 0.22% | ||||||
Total accruing delinquent loans | 0.54% | 0.55% | 0.48% | 0.45% | 0.49% | ||||||
Non-accruing loans | 0.42% | 0.37% | 0.36% | 0.34% | 0.36% | ||||||
Total delinquent and non-accruing loans | 0.96% | 0.92% | 0.84% | 0.79% | 0.85% | ||||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9) | |||||||||||
At or for the Quarters Ended | |||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||
(in thousands) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||
Net income | $ 25,751 | $ 22,616 | $ 25,448 | $ 23,635 | $ 14,259 | ||||||
Adj: Net securities (gains)/losses (1) | (1,734) | (87) | (17) | (2,551) | 3,023 | ||||||
Adj: Merger and acquisition expense | 3,611 | 3,802 | 9,711 | 1,609 | 2,792 | ||||||
Adj: Restructuring expense and other expense | 2,102 | 361 | 1,444 | 5,406 | 1,822 | ||||||
Adj: Legal settlements | - | - | - | - | 3,000 | ||||||
Adj: Systems vendor restructuring costs | - | - | - | - | 8,379 | ||||||
Adj: Loss/(income) from discontinued operations before income taxes | 9,514 | (2,747) | (2,082) | 854 | 3,884 | ||||||
Adj: Income taxes | (3,910) | (281) | (2,385) | (1,223) | (5,185) | ||||||
Total core income (2) | (A) | $ 35,334 | $ 23,664 | $ 32,119 | $ 27,730 | $ 31,974 | |||||
Total revenue from continuing operations | $ 114,695 | $ 118,277 | $ 109,107 | $ 107,181 | $ 108,541 | ||||||
Adj: Net securities (gains)/losses (1) | (1,734) | (87) | (17) | (2,551) | 3,023 | ||||||
Adj: Net (gains) on sale of business operations and assets | - | - | - | - | - | ||||||
Total core revenue (2) | (B) | $ 112,961 | $ 118,190 | $ 109,090 | $ 104,630 | $ 111,564 | |||||
Total non-interest expense from continuing operations | $ 70,287 | $ 71,011 | $ 76,568 | $ 71,991 | $ 80,373 | ||||||
Less: Merger, restructuring and other expense (see above) | (5,713) | (4,163) | (11,155) | (7,015) | (4,614) | ||||||
Less: Legal settlements | - | - | - | - | (3,000) | ||||||
Less: Systems vendor restructuring costs | - | - | - | - | (8,379) | ||||||
Core non-interest expense (2) | (C) | $ 64,574 | $ 66,848 | $ 65,413 | $ 64,976 | $ 64,380 | |||||
(in millions, except per share data) | |||||||||||
Total average assets | (D) | $ 13,270 | $ 13,468 | $ 12,901 | $ 12,188 | $ 12,081 | |||||
Total average shareholders' equity | (E) | 1,747 | 1,768 | 1,676 | 1,584 | 1,581 | |||||
Total average tangible shareholders' equity (2) | (F) | 1,146 | 1,164 | 1,121 | 1,033 | 1,029 | |||||
Total average tangible common shareholders' equity (2) | (G) | 1,105 | 1,124 | 1,080 | 992 | 988 | |||||
Total tangible shareholders' equity, period-end (2)(3) | (H) | 1,159 | 1,170 | 1,176 | 1,026 | 1,001 | |||||
Total tangible common shareholders' equity, period-end (2)(3) | (I) | 1,119 | 1,130 | 1,136 | 986 | 961 | |||||
Total tangible assets, period-end (2)(3) | (J) | 12,613 | 12,930 | 13,051 | 11,623 | 11,660 | |||||
Total common shares outstanding, period-end (thousands) | (K) | 49,585 | 50,394 | 51,045 | 45,522 | 45,417 | |||||
Average diluted shares outstanding (thousands) | (L) | 50,702 | 51,545 | 49,114 | 46,261 | 46,240 | |||||
Core earnings per common share, diluted(2) | (A/L) | $ 0.70 | $ 0.46 | $ 0.65 | $ 0.60 | $ 0.69 | |||||
Tangible book value per common share, period-end (2) | (I/K) | 22.56 | 22.42 | 22.25 | 21.66 | 21.15 | |||||
Total tangible shareholders' equity/total tangible assets (2) | (H)/(J) | 9.19 | 9.05 | 9.01 | 8.83 | 8.59 | |||||
Performance ratios (4) | |||||||||||
GAAP return on assets | 0.78 | % | 0.67 | 0.79 | % | 0.78 | 0.47 | % | |||
Core return on assets (2) | 1.08 | 0.71 | 1.01 | 0.92 | 1.07 | ||||||
GAAP return on equity | 5.90 | 5.12 | 6.07 | 5.97 | 3.61 | ||||||
Core return on equity (2) | (A/E) | 8.09 | 5.35 | 7.67 | 7.00 | 8.09 | |||||
Core return on tangible common equity (2)(5) | (A+O)/(G) | 13.12 | 8.74 | 12.21 | 11.44 | 13.21 | |||||
Efficiency ratio (2)(6) | (C-O)/(B+M+P) | 53.66 | 53.37 | 56.41 | 59.54 | 54.88 | |||||
Net interest margin | 3.11 | 3.22 | 3.19 | 3.17 | 3.41 | ||||||
Supplementary data (in thousands) | |||||||||||
Tax benefit on tax-credit investments (7) | (M) | $ 2,503 | $ 2,382 | $ 2,381 | $ 684 | $ 1,787 | |||||
Non-interest income charge on tax-credit investments (8) | (N) | (1,996) | (1,942) | (1,938) | (579) | (1,610) | |||||
Net income on tax-credit investments | (M+N) | 507 | 440 | 443 | 105 | 177 | |||||
Intangible amortization | (O) | $ 1,582 | $ 1,526 | $ 1,475 | $ 1,200 | $ 1,202 | |||||
Fully taxable equivalent income adjustment | (P) | 1,934 | 1,826 | 1,882 | 1,809 | 1,763 | |||||
(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 Years Ended | ||||||
Dec. 31, | Dec. 31, | |||||
(Dollars in thousands) | 2019 | 2018 | ||||
Net income | $ 97,450 | $ 105,765 | ||||
Adj: Net securities(gains)/losses (1) | (4,389) | 3,719 | ||||
Adj: Merger and acquisition expenses | 18,733 | 8,930 | ||||
Adj: Restructuring expense and other | 9,313 | 1,362 | ||||
Adj: Legal settlements | - | 3,000 | ||||
Adj: Systems vendor restructuring costs | - | 8,379 | ||||
Adj: Loss from discontinued operations before income taxes | 5,539 | 4,767 | ||||
Adj: Income taxes | (7,799) | (7,102) | ||||
Total core income (2) | (A) | $ 118,847 | $ 128,820 | |||
Total revenue from continuing operations | $ 449,260 | $ 430,524 | ||||
Adj: Net securities(gains)/losses (1) | (4,389) | 3,719 | ||||
Adj: Net (gains) on sale of business operations and assets | - | (460) | ||||
Total core revenue(2) | (B) | $ 444,871 | $ 433,783 | |||
Total non-interest expense from continuing operations | $ 289,857 | $ 266,893 | ||||
Less: Merger, restructuring and other expense (see above) | (28,046) | (10,752) | ||||
Less: Legal settlements | - | (3,000) | ||||
Less: Systems vendor restructuring costs | - | (8,379) | ||||
Core non-interest expense (2) | (C) | $ 261,811 | $ 244,762 | |||
(in millions, except per share data) | ||||||
Total average assets | (D) | $ 12,961 | $ 11,769 | |||
Total average shareholders' equity | (E) | 1,694 | 1,546 | |||
Total average tangible shareholders' equity (2) | (F) | 1,116 | 991 | |||
Total average tangible common shareholders' equity (2) | (G) | 1,076 | 950 | |||
Total tangible shareholders' equity, period-end (2)(3) | (H) | 1,159 | 1,001 | |||
Total tangible common shareholders' equity, period-end (2)(3) | (I) | 1,119 | 961 | |||
Total tangible assets, period-end (2)(3) | (J) | 12,613 | 11,660 | |||
Total common shares outstanding, period-end (thousands) | (K) | 49,585 | 45,417 | |||
Average diluted shares outstanding (thousands) | (L) | 49,421 | 46,231 | |||
Core earnings per common share, diluted(2) | (A/L) | $ 2.40 | $ 2.79 | |||
Tangible book value per common share, period-end (2) | (I/K) | 22.56 | 21.15 | |||
Total tangible shareholders' equity/total tangible assets (2) | (H)/(J) | 9.19 | 8.59 | |||
Performance ratios (4) | ||||||
GAAP return on assets | 0.75 | % | 0.90 | % | ||
Core return on assets (2) | (A/D) | 0.93 | 1.12 | |||
GAAP return on equity | 5.75 | 6.84 | ||||
Core return on equity (2) | (A/E) | 7.01 | 8.33 | |||
Core return on tangible common equity (2)(5) | (A+O)/(G) | 11.35 | 13.84 | |||
Efficiency ratio (2)(6) | (C-O)/(B+M+P) | 55.63 | 53.64 | |||
Net interest margin | 3.17 | 3.40 | ||||
Supplementary data | ||||||
Tax benefit on tax-credit investments (7) | (M) | $ 7,950 | $ 5,876 | |||
Non-interest income charge on tax-credit investments (8) | (N) | (6,455) | (4,822) | |||
Net income on tax-credit investments | (M+N) | 1,495 | 1,054 | |||
Intangible amortization | (O) | 5,783 | 4,934 | |||
Fully taxable equivalent income adjustment | (P) | 7,451 | 7,423 | |||
(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. | ||||||
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SOURCE Berkshire Hills Bancorp, Inc.
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