Berkshire Hills Reports Third Quarter Earnings; Dividend Declared
PITTSFIELD, Mass., Oct. 19, 2017 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported third quarter 2017 net income of $22.9 million, or $0.57 per share and core earnings of $23.6 million, or $0.59 per share. Net income was up 40% year-over-year, while core earnings grew 35% due to the benefit of business expansion. Net income per share increased by 8%, while core EPS increased by 4%. Net income was impacted by net non-core charges related primarily to acquisitions. Core earnings related measures are non-GAAP measures that exclude these charges and other non-ordinary items.
THIRD QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated):
- 9% annualized increase in commercial and industrial loans
- 14% annualized increase in demand deposit accounts
- 4% increase in net interest income
- 3.36% net interest margin
- 59.3% efficiency ratio
- 0.95% GAAP ROA; 0.98% Core ROA
- 0.23% non-performing assets/assets
- 0.19% net loan charge-offs/average loans
CEO Michael Daly stated, "Earnings advanced again in the third quarter and our return on assets continued to climb as our expanded teams generated solid volumes across our business lines. We fully absorbed the 7% linked quarter increase in average shares while also increasing our bottom line per share results. I'm proud of the work of our teams in serving more customers, as represented by our 31% year-over-year revenue growth."
"Our recent initiatives are transforming our company. Last week, we completed our acquisition of Worcester-based Commerce Bank. This acquisition has propelled us to approximately $11.6 billion in total assets, filling in our franchise across the length of Massachusetts, and moving us strategically over the $10 billion asset mark. We've gained the leading deposit share in New England's second largest city, and further cemented our position in the high growth Eastern Massachusetts market."
Mr. Daly concluded, "This month we also announced our new corporate headquarters location at 60 State Street in the heart of Boston, and brought on board several Boston area senior bankers to service the commercial, retail, and private banking markets, including the four Boston area branches that we presently operate. We are bringing our revolutionary brand of banking to Boston and look forward to the many business opportunities that we have in the nation's ninth largest metropolitan economy."
DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of $0.21 per common share to shareholders of record at the close of business on November 9, 2017, payable on November 22, 2017. The dividend equates to a 2.4% annualized yield based on the $35.26 average closing price of Berkshire Hills Bancorp common stock during the quarter. Effective on the same dates, the Board also declared a dividend of $0.42 per share for preferred stock issued in conjunction with the Commerce acquisition.
FINANCIAL CONDITION
Total assets measured $9.8 billion at September 30, 2017, increasing at a 9% annualized rate in the first nine months of the year. The 8% annualized loan growth for the year-to-date was driven by solid growth in all major loan categories, including a 9% annualized increase in commercial loans. Average loan yields increased in each successive quarter and included the benefit of higher short term interest rates. Deposit growth was 3% annualized over this period. The Commerce acquisition provides additional deposit funding sources, while adding to liquidity. Book value per share increased by 4% to $31.78 for the year-to-date, while tangible book value per share (a non-GAAP financial measure) grew by 14% to $21.38. Delinquent and non-accruing loans decreased to 0.74% of total loans, and quarterly annualized net loan charge-offs declined to 0.19% of average loans.
RESULTS OF OPERATIONS
The growth in earnings and earnings per share included first year results for the First Choice operations acquired at the end of 2016, along with the full period benefit of other 2016 acquisitions. Most measures of revenue and expense increased year-over-year due to these business combinations. Per share earnings included the impact of shares issued as merger consideration and in the May 2017 stock offering. Non-core charges in 2017 were mostly merger related, including First Choice and Commerce. Non-core activity in the first half of the year also included a loss on the termination of hedges and restructuring and other expense.
Compared to the prior quarter, third quarter net interest income increased by $2.5 million, or 4%, due to higher average balances. The third quarter net interest margin remained stable at 3.36% compared to the prior quarter and is up from 3.27% year-over-year, including the benefit of higher short term interest rates and higher purchased loan accretion. Total revenue decreased quarter-over-quarter due primarily to lower mortgage banking revenue, including changes related to seasonal and weather related impacts.
Third quarter non-interest expense decreased by 5% quarter-over-quarter, and the efficiency ratio improved to 59.3%. Mortgage banking expenses were reduced in line with related revenue. The Company also benefited from the integration of First Choice operations, as well as lower merger related costs. Full time equivalent staff totaled 1,788 positions at the end of the third quarter compared to 1,731 at the start of the year, reflecting growth and infrastructure investment. The third quarter effective income tax rate was 24% and included the benefit of tax credit investments related primarily to historic rehabilitation for residential housing. These investments contributed $0.01 to EPS in each quarter this year.
INVESTOR CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Friday, October 20, 2017 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: dpregister.com/10112415. Participants may pre-register at any time prior to the call. Additionally, investors may access the webcast at ir.berkshirebank.com. Investors may also participate at the above time by dialing 1-844-792-3726. A telephone replay of the call will be available through Friday, October 27, 2017 by dialing 877-344-7529 and entering access number 10112415. The webcast will be available on Berkshire's website for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank - America's Most Exciting Bank®. Including the acquired Commerce operations, Berkshire has approximately $11.6 billion in assets and 113 full service branches in Massachusetts, New York, Connecticut, Vermont, New Jersey, and Pennsylvania providing personal and business banking, insurance, and wealth management services. The Company also offers mortgages and specialized commercial lending services in targeted national markets.
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. Berkshire does not undertake any obligation to update forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included on page F-9 in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude items which the Company does not view as related to its normalized operations. These items primarily include securities gains/losses, merger costs, and restructuring costs. Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees. These charges are related to the following business combinations: First Choice Bank, 44 Business Capital, financial planning assets, and Commerce. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales. Additionally, the Company recorded charges for hedge terminations in the first quarter of 2017 and legal settlement costs during the year.
Non-core adjustments are presented net of an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income. The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. Of note, following systems upgrades, non-material revisions were made in the first quarter of 2017 to the calculations of the net interest margin and efficiency ratio and prior period measures were revised to include these changes.
CONTACTS
Investor Relations Contact
Allison O'Rourke; Executive Vice President, Investor Relations Officer; 413-236-3149
Media Contact
Elizabeth Mach; Senior Vice President, Marketing Officer; 413-445-8390
TABLE INDEX |
CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES |
F-1 | Selected Financial Highlights |
F-2 | Balance Sheets |
F-3 | Loan and Deposit Analysis |
F-4 | Statements of Income |
F-5 | Statements of 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 (Five Quarter Trend) and Supplementary Data |
F-10 | Reconciliation of Non-GAAP Financial Measures (Year-to-Date) and Supplementary Data |
BERKSHIRE HILLS BANCORP, INC. | ||||||||||||
At or for the Quarters Ended (2) | ||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||
PER SHARE DATA | ||||||||||||
Net earnings, diluted | $ 0.57 | $ 0.53 | $ 0.44 | $ 0.32 | $ 0.53 | |||||||
Core earnings, diluted (1) | 0.59 | 0.58 | 0.55 | 0.56 | 0.57 | |||||||
Total book value | 31.78 | 31.37 | 30.77 | 30.65 | 29.97 | |||||||
Tangible book value (1) | 21.38 | 20.96 | 18.97 | 18.81 | 18.78 | |||||||
Market price at period end | 38.75 | 35.15 | 36.05 | 36.85 | 27.71 | |||||||
Dividends | 0.21 | 0.21 | 0.21 | 0.20 | 0.20 | |||||||
PERFORMANCE RATIOS (4) | ||||||||||||
Return on assets | 0.95 | % | 0.84 | % | 0.68 | % | 0.50 | % | 0.82 | % | ||
Core return on assets (1) | 0.98 | 0.92 | 0.85 | 0.87 | 0.88 | |||||||
Return on equity | 7.26 | 6.80 | 5.71 | 4.29 | 7.29 | |||||||
Core return on equity (1) | 7.47 | 7.45 | 7.17 | 7.49 | 7.75 | |||||||
Core return on tangible equity (1) | 11.42 | 11.96 | 12.05 | 12.23 | 12.99 | |||||||
Net interest margin, fully taxable equivalent (FTE) (5) | 3.36 | 3.36 | 3.33 | 3.21 | 3.27 | |||||||
Fee income/Net interest and fee income | 29.96 | 32.23 | 30.04 | 24.99 | 23.81 | |||||||
Efficiency ratio (1) | 59.28 | 61.72 | 61.94 | 58.42 | 57.32 | |||||||
GROWTH (Year-to-date) | ||||||||||||
Total commercial loans (annualized) | 9 | % | 13 | % | 15 | % | 18 | % | 9 | % | ||
Total loans (annualized) | 8 | 10 | 6 | 14 | 7 | |||||||
Total deposits (annualized) | 3 | 3 | 2 | 18 | 4 | |||||||
Total net revenues (compared to prior year) | 37 | 40 | 39 | 11 | 13 | |||||||
Earnings per share (compared to prior year) | (2) | (8) | (15) | 9 | 31 | |||||||
Core earnings per share (compared to prior year)(1) | 4 | 5 | 2 | 4 | 6 | |||||||
FINANCIAL DATA (in millions) | ||||||||||||
Total assets | $ 9,767 | $ 9,627 | $ 9,298 | $ 9,163 | $ 7,931 | |||||||
Total earning assets | 8,944 | 8,807 | 8,486 | 8,340 | 7,229 | |||||||
Total investments | 1,853 | 1,796 | 1,740 | 1,670 | 1,162 | |||||||
Total loans | 6,947 | 6,864 | 6,656 | 6,550 | 6,047 | |||||||
Allowance for loan losses | 49 | 47 | 46 | 44 | 43 | |||||||
Total intangible assets | 420 | 421 | 422 | 423 | 348 | |||||||
Total deposits | 6,790 | 6,715 | 6,656 | 6,622 | 5,750 | |||||||
Total shareholders' equity | 1,285 | 1,268 | 1,100 | 1,093 | 933 | |||||||
Net income | 22.9 | 19.7 | 15.5 | 10.3 | 16.4 | |||||||
Core income (1) | 23.6 | 21.6 | 19.4 | 18.0 | 17.4 | |||||||
ASSET QUALITY AND CONDITION RATIOS | ||||||||||||
Net charge-offs (current quarter annualized)/average loans | 0.19 | % | 0.20 | % | 0.20 | % | 0.21 | % | 0.20 | % | ||
Total non-performing assets/total assets | 0.23 | 0.25 | 0.27 | 0.24 | 0.26 | |||||||
Allowance for loan losses/total loans | 0.71 | 0.69 | 0.69 | 0.67 | 0.71 | |||||||
Loans/deposits | 102 | 102 | 100 | 99 | 105 | |||||||
Shareholders' equity to total assets | 13.15 | 13.17 | 11.83 | 11.93 | 11.76 | |||||||
Tangible shareholders' equity to tangible assets (1) | 9.25 | 9.20 | 7.64 | 7.68 | 7.70 | |||||||
(1) | Non-GAAP financial measure. Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily | |||||||||||
related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures. | ||||||||||||
(2) | Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10. | |||||||||||
(3) | The Company acquired First Choice Bank on December 2, 2016. | |||||||||||
(4) | All performance ratios are annualized and are based on average balance sheet amounts, where applicable. | |||||||||||
(5) | Fully taxable equivalent considers the impact of tax advantaged investment securities and loans. | |||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||||
September 30, | June 30, | December 31, | ||||
(in thousands) | 2017 | 2017 | 2016 | |||
Assets | ||||||
Cash and due from banks | $ 62,827 | $ 78,407 | $ 71,494 | |||
Short-term investments | 29,219 | 23,426 | 41,581 | |||
Total cash and short-term investments | 92,046 | 101,833 | 113,075 | |||
Trading security | 12,603 | 12,837 | 13,229 | |||
Securities available for sale, at fair value | 1,341,013 | 1,329,993 | 1,209,537 | |||
Securities held to maturity, at amortized cost | 395,065 | 350,992 | 334,368 | |||
Federal Home Loan Bank stock and other restricted securities | 75,117 | 78,874 | 71,112 | |||
Total securities | 1,823,798 | 1,772,696 | 1,628,246 | |||
Loans held for sale, at fair value | 143,745 | 146,482 | 120,673 | |||
Commercial real estate | 2,671,237 | 2,689,522 | 2,616,438 | |||
Commercial and industrial loans | 1,254,947 | 1,227,936 | 1,062,038 | |||
Residential mortgages | 1,983,126 | 1,934,068 | 1,893,131 | |||
Consumer loans | 1,038,096 | 1,012,956 | 978,180 | |||
Total loans | 6,947,406 | 6,864,482 | 6,549,787 | |||
Less: Allowance for loan losses | (49,004) | (47,359) | (43,998) | |||
Net loans | 6,898,402 | 6,817,123 | 6,505,789 | |||
Premises and equipment, net | 94,729 | 94,354 | 93,215 | |||
Other real estate owned | 288 | 279 | 151 | |||
Goodwill | 403,106 | 403,106 | 403,106 | |||
Other intangible assets | 17,136 | 17,874 | 19,445 | |||
Cash surrender value of bank-owned life insurance | 161,290 | 140,135 | 139,257 | |||
Deferred tax asset, net | 39,467 | 40,948 | 41,128 | |||
Other assets | 92,696 | 92,441 | 98,457 | |||
Total assets | $ 9,766,703 | $ 9,627,271 | $ 9,162,542 | |||
Liabilities and shareholders' equity | ||||||
Demand deposits | $ 1,221,043 | $ 1,179,456 | $ 1,278,875 | |||
NOW deposits | 573,607 | 574,661 | 570,583 | |||
Money market deposits | 1,751,190 | 1,790,173 | 1,781,605 | |||
Savings deposits | 670,683 | 669,617 | 657,486 | |||
Time deposits | 2,573,623 | 2,500,947 | 2,333,543 | |||
Total deposits | 6,790,146 | 6,714,854 | 6,622,092 | |||
Senior borrowings | 1,399,354 | 1,382,974 | 1,224,836 | |||
Subordinated borrowings | 89,295 | 89,250 | 89,161 | |||
Total borrowings | 1,488,649 | 1,472,224 | 1,313,997 | |||
Other liabilities | 203,381 | 171,999 | 133,155 | |||
Total liabilities | 8,482,176 | 8,359,077 | 8,069,244 | |||
Total common shareholders' equity | 1,284,527 | 1,268,194 | 1,093,298 | |||
Total liabilities and shareholders' equity | $ 9,766,703 | $ 9,627,271 | $ 9,162,542 | |||
Net shares outstanding | 40,424 | 40,428 | 35,673 | |||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
Annualized Growth % | |||||||||||
(in millions) | September 30, 2017 | June 30, 2017 | December 31, 2016 | Quarter ended | Year to Date | ||||||
Commercial real estate - construction | $ 284 | $ 291 | $ 288 | (10) | % | (2) | % | ||||
Commercial real estate - other | 2,387 | 2,398 | 2,329 | (2) | 3 | ||||||
Total commercial real estate | 2,671 | 2,689 | 2,617 | (3) | 3 | ||||||
Commercial and industrial loans | 1,255 | 1,228 | 1,062 | 9 | 24 | ||||||
Total commercial loans | 3,926 | 3,917 | 3,679 | 1 | 9 | ||||||
Total residential mortgages | 1,983 | 1,934 | 1,893 | 10 | 6 | ||||||
Home equity | 386 | 388 | 394 | (2) | (3) | ||||||
Auto and other | 652 | 625 | 584 | 17 | 15 | ||||||
Total consumer loans | 1,038 | 1,013 | 978 | 10 | 8 | ||||||
Total loans | $ 6,947 | $ 6,864 | $ 6,550 | 5 | % | 8 | % | ||||
DEPOSIT ANALYSIS | |||||||||||
Annualized Growth % | |||||||||||
(in millions) | September 30, 2017 | June 30, 2017 | December 31, 2016 | Quarter ended | Year to Date | ||||||
Demand | $ 1,221 | $ 1,179 | $ 1,279 | 14 | % | (6) | % | ||||
NOW | 574 | 575 | 571 | (1) | 1 | ||||||
Money market | 1,751 | 1,790 | 1,782 | (9) | (2) | ||||||
Savings | 671 | 670 | 657 | 1 | 3 | ||||||
Time deposits | 2,573 | 2,501 | 2,333 | 12 | 14 | ||||||
Total deposits | $ 6,790 | $ 6,715 | $ 6,622 | 4 | % | 3 | % | ||||
BERKSHIRE HILLS BANCORP, INC. | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
(in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||
Interest and dividend income | |||||||
Loans | $ 76,024 | $ 61,571 | $ 216,950 | $ 179,716 | |||
Securities and other | 13,036 | 8,940 | 37,485 | 28,289 | |||
Total interest and dividend income | 89,060 | 70,511 | 254,435 | 208,005 | |||
Interest expense | |||||||
Deposits | 10,984 | 7,790 | 30,053 | 22,327 | |||
Borrowings | 6,078 | 4,750 | 15,953 | 12,569 | |||
Total interest expense | 17,062 | 12,540 | 46,006 | 34,896 | |||
Net interest income | 71,998 | 57,971 | 208,429 | 173,109 | |||
Non-interest income | |||||||
Mortgage banking originations | 13,374 | 1,862 | 42,333 | 4,018 | |||
Loan related income | 6,081 | 5,102 | 15,535 | 11,046 | |||
Deposit related fees | 6,445 | 6,278 | 19,294 | 18,678 | |||
Insurance commissions and fees | 2,581 | 2,601 | 8,305 | 8,154 | |||
Wealth management fees | 2,315 | 2,269 | 7,127 | 7,006 | |||
Total fee income | 30,796 | 18,112 | 92,594 | 48,902 | |||
Other | (2,255) | 188 | (2,438) | (440) | |||
Securities (losses) gains, net | (1) | 78 | 12,568 | 101 | |||
Gain on sale of business operations, net | 296 | 563 | 296 | 563 | |||
Loss on termination of hedges | - | - | (6,629) | - | |||
Total non-interest income | 28,836 | 18,941 | 96,391 | 49,126 | |||
Total net revenue | 100,834 | 76,912 | 304,820 | 222,235 | |||
Provision for loan losses | 4,900 | 4,734 | 14,884 | 13,262 | |||
Non-interest expense | |||||||
Compensation and benefits | 37,643 | 26,119 | 110,759 | 76,497 | |||
Occupancy and equipment | 8,267 | 6,650 | 25,971 | 19,900 | |||
Technology and communications | 6,644 | 4,902 | 19,614 | 14,573 | |||
Marketing and promotion | 2,128 | 671 | 7,304 | 2,081 | |||
Professional services | 2,247 | 1,744 | 6,888 | 4,533 | |||
FDIC premiums and assessments | 1,651 | 1,208 | 4,537 | 3,644 | |||
Other real estate owned and foreclosures | (23) | 46 | 35 | 702 | |||
Amortization of intangible assets | 739 | 749 | 2,310 | 2,355 | |||
Merger, restructuring and other expense | 1,420 | 2,170 | 16,005 | 3,828 | |||
Other | 5,104 | 4,585 | 16,246 | 14,099 | |||
Total non-interest expense | 65,820 | 48,844 | 209,669 | 142,212 | |||
Income before income taxes | 30,114 | 23,334 | 80,267 | 66,761 | |||
Income tax expense | 7,211 | 6,953 | 22,210 | 18,422 | |||
Net income | $ 22,903 | $ 16,381 | $ 58,057 | $ 48,339 | |||
Earnings per share: | |||||||
Basic | $ 0.57 | $ 0.53 | $ 1.55 | $ 1.58 | |||
Diluted | $ 0.57 | $ 0.53 | $ 1.54 | $ 1.57 | |||
Weighted average shares outstanding: | |||||||
Basic | 39,984 | 30,621 | 37,547 | 30,584 | |||
Diluted | 40,145 | 30,811 | 37,708 | 30,757 | |||
BERKSHIRE HILLS BANCORP, INC. | ||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||
(in thousands, except per share data) | 2017 | 2017 | 2017 | 2016 | 2016 | |||||
Interest and dividend income | ||||||||||
Loans | $ 76,024 | $ 71,983 | $ 68,943 | $ 62,884 | $ 61,571 | |||||
Securities and other | 13,036 | 12,683 | 11,766 | 9,550 | 8,940 | |||||
Total interest and dividend income | 89,060 | 84,666 | 80,709 | 72,434 | 70,511 | |||||
Interest expense | ||||||||||
Deposits | 10,984 | 9,971 | 9,098 | 8,556 | 7,790 | |||||
Borrowings | 6,078 | 5,150 | 4,725 | 4,720 | 4,750 | |||||
Total interest expense | 17,062 | 15,121 | 13,823 | 13,276 | 12,540 | |||||
Net interest income | 71,998 | 69,545 | 66,886 | 59,158 | 57,971 | |||||
Non-interest income | ||||||||||
Mortgage banking originations | 13,374 | 16,281 | 12,678 | 3,537 | 1,862 | |||||
Loan related income | 6,081 | 5,275 | 4,179 | 5,648 | 5,102 | |||||
Deposit related fees | 6,445 | 6,645 | 6,204 | 6,285 | 6,278 | |||||
Insurance commissions and fees | 2,581 | 2,588 | 3,136 | 2,323 | 2,601 | |||||
Wealth management fees | 2,315 | 2,286 | 2,526 | 1,911 | 2,269 | |||||
Total fee income | 30,796 | 33,075 | 28,723 | 19,704 | 18,112 | |||||
Other | (2,255) | (276) | 93 | (2,849) | 188 | |||||
Securities (losses) gains , net | (1) | (1) | 12,570 | (652) | 78 | |||||
Gain on sale of business operations, net | 296 | - | - | 522 | 563 | |||||
Loss on termination of hedges | - | - | (6,629) | - | - | |||||
Total non-interest income | 28,836 | 32,798 | 34,757 | 16,725 | 18,941 | |||||
Total net revenue | 100,834 | 102,343 | 101,643 | 75,883 | 76,912 | |||||
Provision for loan losses | 4,900 | 4,889 | 5,095 | 4,100 | 4,734 | |||||
Non-interest expense | ||||||||||
Compensation and benefits | 37,643 | 36,997 | 36,119 | 28,103 | 26,119 | |||||
Occupancy and equipment | 8,267 | 8,678 | 9,026 | 7,320 | 6,650 | |||||
Technology and communications | 6,644 | 6,883 | 6,087 | 5,310 | 4,902 | |||||
Marketing and promotion | 2,128 | 3,177 | 1,999 | 1,080 | 671 | |||||
Professional services | 2,247 | 2,190 | 2,451 | 1,666 | 1,744 | |||||
FDIC premiums and assessments | 1,651 | 1,588 | 1,298 | 1,422 | 1,208 | |||||
Other real estate owned and foreclosures | (23) | 30 | 28 | (11) | 46 | |||||
Amortization of intangible assets | 739 | 770 | 801 | 572 | 749 | |||||
Merger, restructuring and other expense | 1,420 | 2,903 | 11,682 | 11,633 | 2,170 | |||||
Other | 5,104 | 6,307 | 4,835 | 3,995 | 4,585 | |||||
Total non-interest expense | 65,820 | 69,523 | 74,326 | 61,090 | 48,844 | |||||
Income before income taxes | 30,114 | 27,931 | 22,222 | 10,693 | 23,334 | |||||
Income tax expense | 7,211 | 8,237 | 6,762 | 362 | 6,953 | |||||
Net income | $ 22,903 | $ 19,694 | $ 15,460 | $ 10,331 | $ 16,381 | |||||
Earnings per share: | ||||||||||
Basic | $ 0.57 | $ 0.53 | $ 0.44 | $ 0.32 | $ 0.53 | |||||
Diluted | $ 0.57 | $ 0.53 | $ 0.44 | $ 0.32 | $ 0.53 | |||||
Weighted average shares outstanding: | ||||||||||
Basic | 39,984 | 37,324 | 35,280 | 32,185 | 30,621 | |||||
Diluted | 40,145 | 37,474 | 35,452 | 32,381 | 30,811 | |||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
Quarters Ended | |||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||
2017 | 2017 | 2017 | 2016 | 2016 | |||||||
Earning assets | |||||||||||
Loans: | |||||||||||
Commercial real estate | 4.64 | % | 4.41 | % | 4.58 | % | 4.17 | % | 4.25 | % | |
Commercial and industrial loans | 5.09 | 5.30 | 4.86 | 4.88 | 5.06 | ||||||
Residential mortgages | 3.68 | 3.62 | 3.56 | 3.57 | 3.62 | ||||||
Consumer loans | 3.88 | 3.81 | 3.62 | 3.44 | 3.40 | ||||||
Total loans | 4.33 | 4.25 | 4.19 | 4.00 | 4.06 | ||||||
Securities | 3.43 | 3.45 | 3.38 | 3.58 | 3.47 | ||||||
Short-term investments and loans held for sale | 3.40 | 3.07 | 2.40 | 2.13 | 1.68 | ||||||
Total earning assets | 4.13 | 4.07 | 4.00 | 3.91 | 3.95 | ||||||
Funding liabilities | |||||||||||
Deposits: | |||||||||||
NOW | 0.26 | 0.23 | 0.22 | 0.16 | 0.12 | ||||||
Money market | 0.57 | 0.54 | 0.52 | 0.48 | 0.46 | ||||||
Savings | 0.14 | 0.14 | 0.13 | 0.12 | 0.12 | ||||||
Time | 1.20 | 1.13 | 1.08 | 1.14 | 1.10 | ||||||
Total interest-bearing deposits | 0.78 | 0.73 | 0.69 | 0.69 | 0.67 | ||||||
Borrowings | 1.65 | 1.46 | 1.38 | 1.63 | 1.52 | ||||||
Total interest-bearing liabilities | 0.96 | 0.88 | 0.83 | 0.87 | 0.85 | ||||||
Net interest spread | 3.17 | 3.19 | 3.17 | 3.04 | 3.10 | ||||||
Net interest margin (1) | 3.36 | 3.36 | 3.33 | 3.21 | 3.27 | ||||||
Cost of funds (2) | 0.82 | 0.75 | 0.70 | 0.73 | 0.72 | ||||||
Cost of deposits (3) | 0.64 | 0.60 | 0.56 | 0.56 | 0.54 | ||||||
(1) The effect of purchased loan accretion on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows | |||||||||||
beginning with the most recent quarter and ending with the earliest quarter: 0.14%, 0.12%, 0.18%, 0.10%, 0.12%. See page F-7 for purchased loan | |||||||||||
accretion. | |||||||||||
(2) Cost of funds includes all deposits and borrowings. | |||||||||||
(3) The average cost of deposits includes the deposits held for sale. | |||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||||||||
Quarters Ended | ||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||
(in thousands) | 2017 | 2017 | 2017 | 2016 | 2016 (2)(4) | |||||
Assets | ||||||||||
Loans | ||||||||||
Commercial real estate | $ 2,669,558 | $ 2,691,804 | $ 2,631,281 | $ 2,442,515 | $ 2,260,482 | |||||
Commercial and industrial loans | 1,183,980 | 1,130,384 | 1,072,716 | 998,543 | 1,009,581 | |||||
Residential mortgages | 1,977,538 | 1,871,329 | 1,906,457 | 1,833,530 | 1,839,364 | |||||
Consumer loans | 1,030,032 | 996,488 | 978,683 | 936,957 | 900,432 | |||||
Total loans (1) | 6,861,108 | 6,690,005 | 6,589,137 | 6,211,545 | 6,009,859 | |||||
Securities (3) | 1,779,379 | 1,701,443 | 1,625,769 | 1,255,207 | 1,197,760 | |||||
Short-term investments and loans held for sale | 167,724 | 148,276 | 118,537 | 83,057 | 40,259 | |||||
Total earning assets | 8,808,211 | 8,539,724 | 8,333,443 | 7,549,809 | 7,247,878 | |||||
Goodwill and other intangible assets | 420,853 | 421,601 | 422,331 | 362,641 | 349,059 | |||||
Other assets | 402,188 | 369,317 | 388,211 | 363,248 | 360,182 | |||||
Total assets | $ 9,631,252 | $ 9,330,642 | $ 9,143,985 | $ 8,275,698 | $ 7,957,119 | |||||
Liabilities and shareholders' equity | ||||||||||
Deposits | ||||||||||
NOW | $ 570,864 | $ 572,688 | $ 574,799 | $ 499,852 | $ 474,650 | |||||
Money market | 1,768,108 | 1,794,693 | 1,804,738 | 1,612,160 | 1,448,108 | |||||
Savings | 669,690 | 667,863 | 648,839 | 620,092 | 608,365 | |||||
Time | 2,587,702 | 2,472,990 | 2,351,183 | 2,171,325 | 2,095,269 | |||||
Total interest-bearing deposits | 5,596,364 | 5,508,234 | 5,379,559 | 4,903,429 | 4,626,392 | |||||
Borrowings | 1,445,700 | 1,398,653 | 1,374,620 | 1,144,846 | 1,235,065 | |||||
Total interest-bearing liabilities | 7,042,064 | 6,906,887 | 6,754,179 | 6,048,275 | 5,861,457 | |||||
Non-interest-bearing demand deposits | 1,196,451 | 1,155,533 | 1,178,790 | 1,178,308 | 1,084,786 | |||||
Other liabilities | 131,003 | 110,367 | 128,573 | 85,951 | 111,743 | |||||
Total liabilities | 8,369,518 | 8,172,787 | 8,061,542 | 7,312,534 | 7,057,986 | |||||
Total shareholders' equity | 1,261,734 | 1,157,855 | 1,082,443 | 963,164 | 899,133 | |||||
Total liabilities and shareholders' equity | $ 9,631,252 | $ 9,330,642 | $ 9,143,985 | $ 8,275,698 | $ 7,957,119 | |||||
Supplementary data | ||||||||||
Total non-maturity deposits | $ 4,205,113 | $ 4,190,777 | $ 4,207,166 | $ 3,910,412 | $ 3,615,909 | |||||
Total deposits | 6,792,815 | 6,663,767 | 6,558,349 | 6,081,737 | 5,711,178 | |||||
Fully taxable equivalent income adjustment | 2,950 | 2,644 | 2,511 | 2,228 | 2,004 | |||||
Purchased loan accretion | 3,066 | 2,550 | 3,687 | 1,886 | 2,214 | |||||
Total average tangible equity (5) | 840,881 | 736,254 | 660,112 | 600,523 | 550,074 | |||||
(1) Total loans include non-accruing loans. | ||||||||||
(2) The average balances of loans include loans associated with branch sales, which are presented under loans held for sale on the consolidated balance sheet. | ||||||||||
(3) Average balances for securities available-for-sale are based on amortized cost. | ||||||||||
(4) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated balance sheet. | ||||||||||
(5) See page F-9. | ||||||||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
At or for the Quarters Ended | |||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||
(in thousands) | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||
NON-PERFORMING ASSETS | |||||||||||
Non-accruing loans: | |||||||||||
Commercial real estate | $ 5,228 | $ 7,587 | $ 7,718 | $ 5,883 | $ 6,295 | ||||||
Commercial and industrial loans | 9,681 | 8,387 | 8,327 | 7,523 | 6,714 | ||||||
Residential mortgages | 3,092 | 3,245 | 3,971 | 3,795 | 4,374 | ||||||
Consumer loans | 4,350 | 4,977 | 5,109 | 5,039 | 3,281 | ||||||
Total non-accruing loans | 22,351 | 24,196 | 25,125 | 22,240 | 20,664 | ||||||
Other real estate owned | 288 | 279 | 71 | 151 | 80 | ||||||
Total non-performing assets | $ 22,639 | $ 24,475 | $ 25,196 | $ 22,391 | $ 20,744 | ||||||
Total non-accruing loans/total loans | 0.32% | 0.35% | 0.38% | 0.34% | 0.34% | ||||||
Total non-performing assets/total assets | 0.23% | 0.25% | 0.27% | 0.24% | 0.26% | ||||||
PROVISION AND ALLOWANCE FOR LOAN LOSSES | |||||||||||
Balance at beginning of period | $ 47,359 | $ 45,804 | $ 43,998 | $ 43,105 | $ 41,397 | ||||||
Charged-off loans | (3,796) | (3,431) | (3,623) | (3,488) | (3,441) | ||||||
Recoveries on charged-off loans | 541 | 97 | 334 | 281 | 415 | ||||||
Net loans charged-off | (3,255) | (3,334) | (3,289) | (3,207) | (3,026) | ||||||
Provision for loan losses | 4,900 | 4,889 | 5,095 | 4,100 | 4,734 | ||||||
Balance at end of period | $ 49,004 | $ 47,359 | $ 45,804 | $ 43,998 | $ 43,105 | ||||||
Allowance for loan losses/total loans | 0.71% | 0.69% | 0.69% | 0.67% | 0.71% | ||||||
Allowance for loan losses/non-accruing loans | 219% | 196% | 182% | 198% | 209% | ||||||
NET LOAN CHARGE-OFFS | |||||||||||
Commercial real estate | $ (1,425) | $ (1,474) | $ (633) | $ (676) | $ (547) | ||||||
Commercial and industrial loans | (573) | (625) | (1,634) | (1,148) | (1,610) | ||||||
Residential mortgages | 130 | (337) | (324) | (768) | (452) | ||||||
Home equity | (634) | (268) | (95) | (47) | (65) | ||||||
Auto and other consumer | (753) | (630) | (603) | (568) | (352) | ||||||
Total, net | $ (3,255) | $ (3,334) | $ (3,289) | $ (3,207) | $ (3,026) | ||||||
Net charge-offs (QTD annualized)/average loans | 0.19% | 0.20% | 0.20% | 0.21% | 0.20% | ||||||
Net charge-offs (YTD annualized)/average loans | 0.20% | 0.20% | 0.20% | 0.21% | 0.22% | ||||||
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | |||||||||||
30-89 Days delinquent | 0.25% | 0.23% | 0.24% | 0.35% | 0.25% | ||||||
90+ Days delinquent and still accruing | 0.17% | 0.12% | 0.16% | 0.15% | 0.09% | ||||||
Total accruing delinquent loans | 0.42% | 0.35% | 0.40% | 0.50% | 0.34% | ||||||
Non-accruing loans | 0.32% | 0.35% | 0.38% | 0.34% | 0.34% | ||||||
Total delinquent and non-accruing loans | 0.74% | 0.70% | 0.78% | 0.84% | 0.68% | ||||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
At or for the Quarters Ended | |||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||
(in thousands) | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||
Net income | $ 22,903 | $ 19,694 | $ 15,460 | $ 10,331 | $ 16,381 | ||||||
Adj: Net securities losses/(gains) | 1 | 1 | (12,570) | 652 | (78) | ||||||
Adj: Loss on termination of hedges | - | - | 6,629 | - | - | ||||||
Adj: Net (gains) on sale of business operations | (296) | - | - | (522) | (563) | ||||||
Adj: Merger and acquisition expense | 1,110 | 2,266 | 5,947 | 10,820 | 1,453 | ||||||
Adj: Restructuring expense and other expense | 310 | 637 | 5,735 | 1,113 | 717 | ||||||
Adj: Income taxes | (474) | (1,039) | (1,801) | (4,373) | (492) | ||||||
Total core income (4) | (A) | $ 23,554 | $ 21,559 | $ 19,400 | $ 18,021 | $ 17,418 | |||||
Total revenue | $ 100,834 | $ 102,343 | $ 101,643 | $ 75,883 | $ 76,912 | ||||||
Adj: Net securities losses/(gains) | 1 | 1 | (12,570) | 652 | (78) | ||||||
Adj: Net (gains) on sale of business operations | (296) | - | - | (522) | (563) | ||||||
Adj: Loss on termination of hedges | - | - | 6,629 | - | - | ||||||
Total core revenue (4) | (B) | $ 100,539 | $ 102,344 | $ 95,702 | $ 76,013 | $ 76,271 | |||||
Total non-interest expense | $ 65,820 | $ 69,523 | $ 74,326 | $ 61,090 | $ 48,844 | ||||||
Less: Merger, restructuring and other expense (see above) | (1,420) | (2,903) | (11,682) | (11,933) | (2,170) | ||||||
Core non-interest expense (4) | (C) | $ 64,400 | $ 66,620 | $ 62,644 | $ 49,157 | $ 46,674 | |||||
(in millions, except per share data) | |||||||||||
Total average assets | (D) | $ 9,631 | $ 9,331 | $ 9,144 | $ 8,276 | $ 7,957 | |||||
Total average shareholders' equity | (E) | 1,262 | 1,158 | 1,082 | 963 | 899 | |||||
Total average tangible shareholders' equity (4) | (F) | 841 | 736 | 660 | 601 | 550 | |||||
Total tangible shareholders' equity, period-end (1)(4) | (G) | 864 | 847 | 678 | 671 | 584 | |||||
Total tangible assets, period-end (1)(4) | (H) | 9,346 | 9,206 | 8,876 | 8,740 | 7,583 | |||||
Total common shares outstanding, period-end (thousands) | (I) | 40,424 | 40,428 | 35,729 | 35,673 | 31,122 | |||||
Average diluted shares outstanding (thousands) | (J) | 40,145 | 37,474 | 35,452 | 32,381 | 30,811 | |||||
Core earnings per share, diluted(4) | (A/J) | $ 0.59 | $ 0.58 | $ 0.55 | $ 0.56 | $ 0.57 | |||||
Tangible book value per share, period-end (4) | (G/I) | 21.38 | 20.96 | 18.97 | 18.81 | 18.78 | |||||
Total tangible shareholders' equity/total tangible assets (4) | (G)/(H) | 9.25 | 9.20 | 7.64 | 7.68 | 7.70 | |||||
Performance ratios (2) | |||||||||||
GAAP return on assets | 0.95 | % | 0.84 | % | 0.68 | % | 0.50 | % | 0.82 | % | |
Core return on assets (4) | (A/D) | 0.98 | 0.92 | 0.85 | 0.87 | 0.88 | |||||
GAAP return on equity | 7.26 | 6.80 | 5.71 | 4.29 | 7.29 | ||||||
Core return on equity (4) | (A/E) | 7.47 | 7.45 | 7.17 | 7.49 | 7.75 | |||||
Core return on tangible equity (3)(4) | (A/F) | 11.42 | 11.96 | 12.05 | 12.23 | 12.99 | |||||
Efficiency ratio (4)(5) | (C-M)/(B+K+N) | 59.28 | 61.72 | 61.94 | 58.42 | 57.32 | |||||
Net interest margin | 3.36 | 3.36 | 3.33 | 3.21 | 3.27 | ||||||
Supplementary data (in thousands) | |||||||||||
Tax benefit on tax-credit investments (6) | (K) | $ 3,905 | $ 1,696 | $ 1,624 | $ 4,918 | $ 1,852 | |||||
Non-interest income charge on tax-credit investments (7) | (L) | (3,347) | (1,453) | (1,329) | (4,428) | (1,525) | |||||
Net income on tax-credit investments | (K+L) | 558 | 243 | 295 | 490 | 327 | |||||
Intangible amortization | (M) | $ 739 | $ 770 | $ 801 | $ 572 | $ 749 | |||||
Fully taxable equivalent income adjustment | (N) | 2,950 | 2,644 | 2,511 | 2,228 | 2,004 | |||||
(1) 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. | |||||||||||
(2) 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. | |||||||||||
(3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, | |||||||||||
assuming a 40% marginal rate, by tangible equity. | |||||||||||
(4) Non-GAAP financial measure. | |||||||||||
(5) 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. | |||||||||||
(6) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic | |||||||||||
rehabilitation, low-income housing, new market projects, and renewable energy projects. | |||||||||||
(7) 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. | |||||
At or for the Nine Months Ended | |||||
September 30, | September 30, | ||||
(Dollars in thousands) | 2017 | 2016 | |||
Net income | $ 58,057 | $ 48,339 | |||
Adj: Net securities (gains) | (12,568) | (101) | |||
Adj: Loss on termination of hedges | 6,629 | - | |||
Adj: Net (gains) on sale of business operations | (296) | (563) | |||
Adj: Merger and acquisition expenses | 9,323 | 2,681 | |||
Adj: Restructuring expense and other | 6,682 | 1,147 | |||
Adj: Income taxes | (3,314) | (1,082) | |||
Total core income (4) | (A) | $ 64,513 | $ 50,421 | ||
Total revenue | $ 304,820 | $ 222,235 | |||
Adj: Net securities (gains) | (12,568) | (101) | |||
Adj: Net (gains) on sale of business operations | (296) | (563) | |||
Adj: Loss on termination of hedges | 6,629 | - | |||
Total core revenue(4) | (B) | $ 298,585 | $ 221,571 | ||
Total non-interest expense | $ 209,669 | $ 142,212 | |||
Less: Merger, restructuring and other expense (see above) | (16,005) | (3,828) | |||
Core non-interest expense (4) | (C) | $ 193,664 | $ 138,384 | ||
(Dollars in millions, except per share data) | |||||
Total average assets | (D) | $ 9,369 | $ 7,852 | ||
Total average shareholders' equity | (E) | 1,167 | 893 | ||
Total average tangible shareholders' equity (4) | (F) | 746 | 551 | ||
Total tangible shareholders' equity, period-end (1)(4) | (G) | 864 | 584 | ||
Total tangible assets, period-end (1)(4) | (H) | 9,346 | 7,583 | ||
Total common shares outstanding, period-end (thousands) | (I) | 40,424 | 31,122 | ||
Average diluted shares outstanding (thousands) | (J) | 37,708 | 30,757 | ||
Core earnings per common share, diluted(4) | (A/J) | $ 1.71 | $ 1.64 | ||
Tangible book value per common share, period-end (4) | (G/I) | 21.38 | 18.78 | ||
Total tangible shareholders' equity/total tangible assets (4) | (G/H) | 9.25 | 7.70 | ||
Performance ratios (2) | |||||
GAAP return on assets | 0.83 | % | 0.82 | % | |
Core return on assets (4) | (A/D) | 0.92 | 0.86 | ||
GAAP return on equity | 6.63 | 7.21 | |||
Core return on equity (4) | (A/E) | 7.37 | 7.53 | ||
Core return on tangible equity (3)(4) | (A/F) | 11.78 | 12.55 | ||
Efficiency ratio (4)(5) | (C-M)/(B+K+N) | 60.96 | 58.22 | ||
Net interest margin | 3.35 | 3.30 | |||
Supplementary data | |||||
Tax benefit on tax-credit investments (6) | (K) | $ 7,225 | $ 6,217 | ||
Non-interest income charge on tax-credit investments (7) | (L) | (6,129) | (4,564) | ||
Net income on tax-credit investments | (K+L) | 1,096 | 1,653 | ||
Intangible amortization | (M) | 2,310 | 2,355 | ||
Fully taxable equivalent income adjustment | (N) | 8,105 | 5,870 | ||
(1) 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. | |||||
(2) 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. | |||||
(3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of | |||||
intangible assets, assuming a 40% marginal rate, by tangible equity. | |||||
(4) Non-GAAP financial measure. | |||||
(5) 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. | |||||
(6) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in | |||||
historic rehabilitation, low-income housing, new market projects, and renewable energy. | |||||
(7) 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.
