Berkshire Hills Announces Fourth Quarter Results; Annual Meeting Date Announced

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BOSTON , Jan. 25, 2021 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today announced fourth quarter 2020 net income of $15 million , or $0.30 per share, compared to $21 million , or $0.42 per share, in the prior quarter.  The fourth quarter non-GAAP measure of core earnings totaled $14 million , or $0.28 per share, compared to $26 million , or $0.53 per share, in the prior quarter.  The change in earnings is primarily due to pandemic related impacts, including a $9 million increase in the noncash provision for expected credit losses.  

(PRNewsfoto/Berkshire Hills Bancorp, Inc.)
(PRNewsfoto/Berkshire Hills Bancorp, Inc.)

FOURTH QUARTER FINANCIAL HIGHLIGHTS  (non-GAAP measures are reconciled on pages F-9 and F-10)

  • 2.61% net interest margin

  • 71% efficiency ratio

  • 9.3% equity/assets

  • 79% loans/deposits

  • $23.37 book value per share; $22.68 tangible book value per share (non-GAAP measure)

  • 0.80% annualized net charge-offs/loans

  • 0.52% non-performing assets/assets

Acting CEO and President Sean Gray stated, "Fourth quarter results declined primarily due to higher noncash provisioning for expected credit losses reflecting the persistence of pandemic impacts on economic activity.  These impacts also contributed to lower operating revenue and higher operating expenses.  In this environment, the Bank adhered to its financial and operating disciplines.   Higher net charge-offs were primarily due to four hospitality relationships, including credits which were exited during the quarter.  Total criticized loans decreased, along with loans with payment deferrals.  The net interest margin was supported by a reduction in funding costs.   We managed down our staffing, as well as occupancy, and technology costs.  We continue to adjust operations to protect employees, customers and communities, including moving branch lobbies back to appointment-only access based on local conditions.  Management's actions are targeted to position the Bank for improved results as public health and economic conditions improve."

Mr. Gray continued, "We recently announced important strategic initiatives, starting with our best of breed digital account opening platform.  We've made the right technology investments to support customer preferences for electronic banking.  Consistent with these shifts, we announced the planned consolidation of 16 branches in the first half of 2021.   With the concierge banking offered by our growing team of MyBankers, we expect to smoothly transition customers to nearby branches.  Separately, we entered into an agreement to sell our eight mid-Atlantic branches and we are opening a new Providence commercial banking office.  When these initiatives are completed, we plan to have 106 branch offices located primarily in southern New England and eastern/central New York.  These actions are targeted to focus and deepen meaningful engagement with our communities as a 21 st century purpose-driven community bank that helps everyone access the services they need to live healthier financial lives." 

ANNUAL MEETING

The Board of Directors determined that the Annual Meeting of Shareholders will be held on Thursday, May 20, 2021 and may be convened as a virtual meeting.   The date of Thursday,March 25, 2021 was established as the record date for the determination of the shareholders entitled to notice of, and to vote at, the Annual Meeting.  Further information about the annual meeting will be available in early April at the Company's website at ir.berkshirebank.com.

FINANCIAL CONDITION

Total assets increased quarter-over-quarter by $224 million , or 2%, to $12.8 billion due to a $514 million increase in short-term payroll deposits at year-end, which resulted in higher short-term investments.  Excluding this increase, total assets decreased by $291 million , or 2%, due to ongoing loan runoff. Investment securities increased by $236 million as excess liquidity was reinvested into residential and commercial agency mortgage backed securities.

Total loans decreased by $901 million during the fourth quarter.  Due to the pending agreement for the sale of the Mid-Atlantic branches, Berkshire has reclassified $301 million in loans as assets held for sale.   Excluding this reclassification, total loans decreased by $600 million , or 7%, due to ongoing runoff in all major categories.  Paycheck Protection Program ("PPP") loans decreased by $75 million to $633 million as the SBA loan forgiveness program was initiated.

Total criticized loans decreased by $36 million , or 9%, to $359 million during the fourth quarter, including the sale of $22 million in criticized hospitality loans. Total loans with active and in-process deferrals decreased by $97 million , or 22%, to $350 million as conditions improved for commercial borrowers.    

Total delinquent and nonaccrual loans measured 1.14% of total loans at year-end, compared to 0.98% at the start of the quarter.   Accruing delinquent loans decreased to 0.34% of total loans from 0.45% during the quarter.  Total nonaccrual loans increased by $18 million to $65 million due primarily to two COVID sensitive commercial relationships which were rated as substandard prior to the pandemic, including one 2019 purchased credit deteriorated loan.  Net charge-offs totaled $17 million , or 0.80% annualized compared to average loans.  This included $12 million related to hospitality loans, of which $7 million was related to the above mentioned loan sale.  The allowance for credit losses on loans decreased quarter-over-quarter due to the decrease in total loans, including the impact of charge-offs.   The year-end ratio of the allowance to loans measured 1.58%.  Excluding PPP loans, this ratio measured 1.71% at year-end, and was not materially changed in the second half of the year.  

Total deposits decreased by $251 million during the fourth quarter.  Due to the branch sale, the Company has reclassified $617 million in deposits as liabilities held for sale.  Adjusting for this reclassification, total deposits increased by $367 million during the quarter, including the previously noted $514 million increase in short-term payroll deposits to $1.046 billion .  This was offset by a $209 million decrease in brokered time deposits to $605 million .  All other deposits increased by a total of $61 million , or 1%.  Total borrowings decreased by $131 million to $572 million .  The loans/deposits ratio measured 79% at year-end, decreasing from 86% at the start of the fourth quarter.

Year-end book value per share totaled $23.37 and the non-GAAP measure of tangible book value per share measured $22.68 .  Year-end equity/assets measured 9.3% and the non-GAAP measure of tangible equity/tangible assets was 9.0%.  During the fourth quarter, the remaining balance of preferred stock was converted to common shares in accordance with contractual terms. 

RESULTS OF OPERATIONS FOURTH QUARTER

Berkshire's earnings declined in the fourth quarter compared to the prior quarter, reflecting ongoing impacts of the pandemic on the Company's results of operations.  Most of the impact was due to the $9 million increase in the noncash provision for expected credit losses on loans.  Further, interest income was negatively impacted by non-accrual loans and expense was affected by higher loan workout expense.   GAAP earnings per share decreased by $0.12 , or 29%, and the non-GAAP measure of core earnings per share decreased by $0.25 or 47%.  The GAAP measure of pre-tax, pre-provision net revenue ("PPNR") increased quarter-over-quarter by $3 million to $27 million , while the non-GAAP measure of core PPNR decreased by $6 million to $24 million .  The Company focuses on this measure of operations as a key measure of operating performance before accounting for estimations of future pandemic related credit losses. This decrease was due to a $2.6 million decrease in core revenue and a $3.7 million increase in core expense. 

The revenue decrease included a $1 million decrease in net interest income as a result of lower earning assets and higher nonaccrual loans.   The net interest margin was stable at 2.61% and benefited from a 0.14% decrease in the cost of deposits, along with higher interest revenue related to PPP loan forgiveness.  Time deposit costs decreased including the impact of lower brokered deposits and maturities of higher rate CD's.   The unamortized balance of deferred PPP fees totaled $13 million at year-end.   Total fee income decreased by $1 million due to a seasonal decrease in mortgage banking revenue. 

The provision for expected credit losses increased quarter-over-quarter by $9 million to $10 million , primarily due to a qualitative assessment of credit migration in the loan portfolio.   The level of the year-end allowance is intended to absorb pandemic related expected credit losses over the next seven quarters based on information and third party forecasts at year-end. 

Non-interest expense decreased quarter-over-quarter by $1 million , due to higher noncore costs recorded in the third quarter related to the CEO separation.   The non-GAAP measure of core non-interest expense increased by $4 million due primarily to a lending operations project which was completed during the quarter.   Full time equivalent staff in continuing operations at year-end totaled 1,505, compared to 1,507 positions at the start of the fourth quarter and to 1,550 positions at the start of the year.  Occupancy and technology expense decreased quarter-over-quarter.   The fourth quarter effective tax rate on continuing operations was a benefit of 10%.

Net non-core adjustments to core income totaled $1 million in the fourth quarter.  A final loss was recorded on discontinued national mortgage banking operations as the Company completed the wind-down of these operations, with no further cost recognition expected.  This was partially offset by net securities gains and other non-core items.  The Company has announced strategic initiatives for the sale and consolidation of branches in the first half of 2021.   The Company expects to recognize a noncore net gain on the sale of these operations and non-core charges in conjunction through these consolidations.

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 and in its most recent Corporate Responsibility Report .

Key developments in the quarter and year include:

  • Continued Investment in Community Recovery & Resiliency: As people and small businesses in neighborhoods across the Company's footprint struggle through the impacts of the COVID-19 pandemic, Berkshire's Foundation is answering the call providing a record $3.8 million in grant funding to 502 organizations in 2020. These critical investments included recent contributions to local food banks to meet increasing demand for services across the Company's footprint. 

  • Enhancing Thirty Party ESG Ratings:  The Company continued to improve its Environmental, Social and Governance (ESG) ratings with third party agencies and as of December 31, 2020 the Company received ratings of: MSCI ESG- BBB, ISS ESG Quality Score - Environment: 2, Social: 1, Governance: 3 and Bloomberg ESG Disclosure- 41.67. The company is also rated by Sustainalytics.   Additionally, the Company is included in the Bloomberg Gender Equality Index. 

  • Awards & Recognition : Berkshire was named a recipient of the 2020 Communitas Award for Leadership in Corporate Social Responsibility recognizing its' continued performance through the Be FIRST Commitment, as well as the company's comprehensive corporate responsibility, social impact and sustainability strategy. In addition, the Bank was recognized by the American Bankers Association Community Commitment Awards for its Be FIRST Commitment in the Economic Inclusion category.

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

Berkshire will post an investor presentation at its website at ir.berkshirebank.com with additional financial information and other information about the quarter.

Berkshire will also conduct a conference call/webcast at 10:00 a.m. Eastern time on Tuesday, January 26, 2021 to discuss the results for the quarter and provide guidance about expected future results.  Participants are encouraged to pre-register for the conference call using the following link:  https://dpregister.com/sreg/10151338/e0b6214914 Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call.  Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email.  Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of Berkshire's website at http://ir.berkshirebank.com .  Those parties who do not have Internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call.  Participants are requested to dial-in a few minutes before the scheduled start of the call.    A telephone replay of the call will be available through Tuesday, February 2, 2021 by dialing 877-344-7529 and entering access number 10151338.  The webcast will be available on Berkshire's website for an extended period of time.

ABOUT BERKSHIRE HILLS BANCORP

Berkshire Hills Bancorp is the parent of Berkshire Bank , a 21 st century community bank pursuing purpose driven performance based on its Be FIRST corporate responsibility culture.  Headquartered in Boston , Berkshire operates 130 banking offices in seven Northeastern states, with approximately $12.8 billion in assets.

FORWARD LOOKING STATEMENTS

This document contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov .

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

Accordingly, you should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP").  These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition.  They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information.  A reconciliation of non-GAAP financial measures to GAAP measures is included on pages F-9 and F-10 in the accompanying financial tables.  In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. 

The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense.  These measures exclude items which the Company does not view as related to its normalized operations.  These items primarily include securities gains/losses, merger costs, restructuring costs, goodwill impairment, and discontinued operations.  Discontinued operations are the Company's national mortgage banking operations which the Company exited.  Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees.  Merger costs in 2019 were primarily related to the acquisition of SI Financial Group.  Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales.  Restructuring costs also include severance and consulting expenses related to the Company's strategic review.  They also include costs related to the consolidation of branches, including eight branches for the full year of 2019.  The Company recorded a full impairment of its goodwill in the second quarter of 2020, which was classified as noncore.  Noncore charges in the third and fourth quarters of 2020 included costs related to separation with the former CEO in the third quarter, and consulting for the CEO succession process in both quarters.   A non-core gain was recognized on the sale of a specialty commercial insurance business line in the fourth quarter.

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

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

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

Media Contacts:
John Lovallo
Email: jlovallo@levick.com
Tel: (917) 612-8419

Cate Cronin
Email: ccronin@levick.com
Tel: (202) 738-7302

TABLE

INDEX

CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES

F-1

Selected Financial Highlights

F-2

Balance Sheets

F-3

Loan and Deposit Analysis

F-4

Statements of Operations

F-5

Statements of Operations (Five Quarter Trend)

F-6

Average Yields and Costs

F-7

Average Balances

F-8

Asset Quality Analysis

F-9

Reconciliation of Non-GAAP Financial Measures


and Supplementary Data (Five Quarter Trend)

F-10

Reconciliation of Non-GAAP Financial Measures


and Supplementary Data (Year-to-Date)

 

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)



At or for the Quarters Ended (1)



Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,




2020


2020


2020


2020


2019














PER SHARE DATA












Net earnings/(loss) per common share, diluted

$     0.30


$     0.42


$ (10.93)


$     (0.40)


$     0.51



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

0.28


0.53


(0.13)


(0.07)


0.70



Total book value per common share

23.37


23.03


22.79


33.90


34.65



Tangible book value per common share (2)

22.68


22.22


21.94


22.00


22.56



Market price at period end

17.12


10.11


11.02


14.86


32.88



Dividends per common share

0.12


0.12


0.24


0.24


0.23



Dividends per preferred share

 NA 


0.24


0.48


0.48


0.46














PERFORMANCE RATIOS (3)












Return on assets

0.48

%

0.67

%

(16.38)

%

(0.62)

%

0.78

%


Core return on assets (2)

0.45


0.84


(0.19)


(0.11)


1.08



Return on equity

5.22


7.50


(131.17)


(4.58)


5.90



Core return on equity (2)

4.89


9.33


(1.54)


(0.84)


8.09



Core return on tangible common equity (2)

5.50


10.27


(2.05)


(0.94)


13.12



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

2.61


2.61


2.62


3.04


3.11



Fee income/Net interest and fee income from continuing operations

18.84


19.82


18.45


15.46


18.11



Efficiency ratio (2)

71.03


65.39


71.01


66.92


53.66














CHANGE (Year-to-date)












Total commercial loans (organic, annualized)

(1)

%

5

%

12

%

(5)

%

(7)

%


Total loans (organic, annualized)

(12)


(7)


(3)


(8)


(9)



Total deposits (organic, annualized)

5


2


9


(10)


0



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

(15)


(15)


(14)


(14)


4



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

(638)


(847)


(1,200)


(178)


(14)



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

(75)


(81)


(116)


(112)


(14)














FINANCIAL DATA (in millions)












Total assets

$ 12,838


$ 12,614


$ 13,063


$   13,122


$ 13,216



Total earning assets

12,090


11,832


12,267


11,785


11,916



Total securities

2,223


1,988


1,882


1,837


1,770



Total loans

8,082


8,982


9,370


9,303


9,502



Allowance for credit losses

127


134


139


114


64



Total intangible assets

35


41


42


598


599



Total deposits

10,216


10,467


10,776


10,072


10,336



Total shareholders' equity

1,188


1,179


1,164


1,722


1,759



Net income/(loss)

15.0


21.2


(549.4)


(19.9)


25.8



Core income/(loss) (2)

14.1


26.4


(6.5)


(3.6)


35.3



Purchase accounting accretion

2.2


2.5


2.1


3.1


5.1



Goodwill impairment

-


-


553.8


-


-














ASSET QUALITY AND CONDITION RATIOS












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

0.80

%

0.27

%

0.17

%

0.45

%

0.17

%


Total non-performing assets/total assets

0.52


0.39


0.36


0.40


0.31



Allowance for credit losses/total loans

1.58


1.50


1.49


1.22


0.67



Loans/deposits

79


86


87


92


92



Shareholders' equity to total assets

9.25


9.35


8.91


13.13


13.31



Tangible shareholders' equity to tangible assets (2)

9.01


9.05


8.61


8.98


9.19






(1)

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

(2)

Non-GAAP financial measure. Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures.

(3)

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

(4)

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

(5)

The effect of purchase accounting accretion for loans, time deposits, and borrowings on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows beginning with the most recent quarter and ending with the earliest quarter: 0.07%, 0.08%, 0.07%, 0.11%, 0.17%.

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)


December 31,


September 30,


December 31,

(in thousands)

2020


2020


2019

Assets






Cash and due from banks

$ 91,219


$ 90,537


$ 105,447

Short-term investments

1,466,656


844,755


474,382

Total cash and short-term investments

1,557,875


935,292


579,829







Trading security

9,708


9,525


10,769

Marketable equity securities, at fair value

18,513


31,993


41,556

Securities available for sale, at fair value

1,695,232


1,575,289


1,311,555

Securities held to maturity, at amortized cost

465,091


330,197


357,979

Federal Home Loan Bank stock and other restricted securities

34,873


40,520


48,019

Total securities

2,223,417


1,987,524


1,769,878

Less: Allowance for credit losses on investment securities

(104)


(96)


-

Net securities

2,223,313


1,987,428


1,769,878







Loans held for sale

17,748


15,854


36,664







Total loans

8,081,519


8,982,336


9,502,428

Less: Allowance for credit losses on loans

(127,302)


(134,414)


(63,575)

Net loans

7,954,217


8,847,922


9,438,853







Premises and equipment, net

112,663


117,116


120,398

Other real estate owned

149


40


-

Goodwill

-


-


553,762

Other intangible assets

34,819


40,947


45,615

Cash surrender value of bank-owned life insurance

232,695


231,217


227,894

Other assets

387,230


425,675


288,945

Assets held for sale

317,304


-


-

Assets from discontinued operations

-


12,966


154,132

Total assets

$ 12,838,013


$ 12,614,457


$ 13,215,970







Liabilities and shareholders' equity






Demand deposits

$ 2,484,249


$ 2,585,173


$ 1,884,100

NOW and other deposits

1,003,005


1,522,289


1,492,569

Money market deposits

3,371,353


2,516,168


2,528,656

Savings deposits

972,116


952,836


841,283

Time deposits

2,385,085


2,890,093


3,589,369

Total deposits

10,215,808


10,466,559


10,335,977







Senior borrowings

474,357


605,483


730,501

Subordinated borrowings

97,280


97,223


97,049

Total borrowings

571,637


702,706


827,550







Other liabilities

232,730


251,220


267,398

Liabilities held for sale

630,065


-


-

Liabilities from discontinued operations

-


14,947


26,481

Total liabilities

11,650,240


11,435,432


11,457,406







Preferred shareholders' equity

-


20,325


40,633

Common shareholders' equity

1,187,773


1,158,700


1,717,931

Total shareholders' equity

1,187,773


1,179,025


1,758,564

Total liabilities and shareholders' equity

$ 12,838,013


$ 12,614,457


$ 13,215,970







Net common shares outstanding

50,833


50,306


49,585

BERKSHIRE HILLS BANCORP, INC.

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

LOAN ANALYSIS




































Organic Annualized Growth %

(in millions)

December 31, 2020
Balance


December 31, 2020
HFS Balance


September 30, 2020
Balance


December 31, 2019
Balance


Quarter ended
December 31, 2020


Year to Date




























Total commercial real estate

$ 3,647


$ 188


$ 3,943


$ 4,034


(11)

%

(5)

%

Commercial and industrial loans

1,959


14


2,147


1,841


(32)


7


Total commercial loans

5,606


202


6,090


5,875


(19)


(1)















Total residential mortgages

1,813


63


2,122


2,685


(46)


(30)















Home equity

295


31


350


381


(27)


(14)


Auto and other

368


5


420


561


(45)


(34)


Total consumer loans

663


36


770


942


(37)


(26)


Total loans

$ 8,082


$ 301


$ 8,982


$ 9,502


(27)

%

(12)

%








































DEPOSIT ANALYSIS






















Organic Annualized Growth %

(in millions)

December 31, 2020
Balance


December 31, 2020
HFS Balance


September 30, 2020
Balance


December 31, 2019
Balance


Quarter ended
December 31, 2020


Year to Date


Demand

$ 2,484


$ 107


$ 2,585


$ 1,884


1

%

38

%

NOW and other

1,003


112


1,523


1,493


(107)


(25)


Money market

3,372


220


2,516


2,529


171


42


Savings

972


17


953


841


15


18


Time deposits

2,385


161


2,890


3,589


(48)


(29)


Total deposits

$ 10,216


$ 617


$ 10,467


$ 10,336


14

%

5

%

BERKSHIRE HILLS BANCORP, INC.

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


Three Months Ended


Years Ended


December 31,


December 31,

(in thousands, except per share data)

2020


2019


2020


2019

Interest and dividend income from continuing operations








Loans

$ 79,756


$ 110,915


$ 358,015


$ 448,927

Securities and other

12,375


14,526


51,767


60,586

Total interest and dividend income

92,131


125,441


409,782


509,513

Interest expense from continuing operations








Deposits

12,255


28,797


72,715


115,193

Borrowings

4,167


5,311


20,285


29,062

Total interest expense

16,422


34,108


93,000


144,255

Net interest income from continuing operations

75,709


91,333


316,782


365,258

Non-interest income from continuing operations








Mortgage banking originations

543


172


5,190


788

Loan related income

4,833


7,056


16,840


24,374

Deposit related fees

7,523


8,264


27,905


31,352

Insurance commissions and fees

2,319


2,471


10,770


10,957

Wealth management fees

2,359


2,239


9,285


9,353

Total fee income

17,577


20,202


69,990


76,824

Other

2,105


75


2,597


1,438

Securities gains/(losses), net

2,405


1,734


(7,520)


4,389

Gain on sale of business operations and assets, net

1,240


1,351


1,240


1,351

Total non-interest income

23,327


23,362


66,307


84,002

Total net revenue from continuing operations

99,036


114,695


383,089


449,260

Provision for credit losses

10,000


5,351


75,878


35,419

Non-interest expense from continuing operations








Compensation and benefits

36,719


35,355


147,840


140,906

Occupancy and equipment

10,948


10,798


43,359


39,586

Technology and communications

7,988


6,702


32,364


26,523

Marketing and promotion

634


1,046


3,703


4,474

Professional services

4,055


2,288


11,907


10,798

FDIC premiums and assessments

1,218


471


5,876


3,861

Other real estate owned and foreclosures

44


4


125


154

Amortization of intangible assets

1,513


1,582


6,181


5,783

Goodwill impairment

-


-


553,762


-

Merger, restructuring and other expense

523


5,713


5,839


28,046

Other

8,154


6,328


29,283


29,726

Total non-interest expense

71,796


70,287


840,239


289,857









Income/(loss) from continuing operations before income taxes

$ 17,240


$ 39,057


$ (533,028)


$ 123,984

Income tax (benefit)/expense

(1,659)


6,421


(19,853)


22,463

Net income/(loss) from continuing operations

$ 18,899


$ 32,636


$ (513,175)


$ 101,521









(Loss) from discontinued operations before income taxes

$ (5,114)


$ (9,514)


$ (26,855)


$ (5,539)

Income tax (benefit)

(1,224)


(2,629)


(7,013)


(1,468)

Net (loss) from discontinued operations

$ (3,890)


$ (6,885)


$ (19,842)


$ (4,071)









Net income/(loss)

$ 15,009


$ 25,751


$ (533,017)


$ 97,450

Preferred stock dividend

-


240


313


960

Income/(loss) available to common shareholders

$ 15,009


$ 25,511


$ (533,330)


$ 96,490









Basic earnings/(loss) per common share:








Continuing Operations

$ 0.38


$ 0.65


$ (10.21)


$ 2.06

Discontinued Operations

(0.08)


(0.14)


(0.39)


(0.08)

Total

$ 0.30


$ 0.51


$ (10.60)


$ 1.98









Diluted earnings/(loss) per common share:








Continuing Operations

$ 0.38


$ 0.65


$ (10.21)


$ 2.05

Discontinued Operations

(0.08)


(0.14)


(0.39)


(0.08)

Total

$ 0.30


$ 0.51


$ (10.60)


$ 1.97









Weighted average shares outstanding:








Basic

50,308


50,494


50,270


49,263

Diluted

50,355


50,702


50,270


49,421









BERKSHIRE HILLS BANCORP, INC.

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




Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,


(in thousands, except per share data)

2020


2020


2020


2020


2019


Interest and dividend income from continuing operations











Loans

$ 79,756


$ 85,688


$ 90,876


$ 101,695


$ 110,915


Securities and other

12,375


12,080


12,812


14,500


14,526


Total interest and dividend income

92,131


97,768


103,688


116,195


125,441


Interest expense from continuing operations











Deposits

12,255


16,070


20,552


23,838


28,797


Borrowings

4,167


4,643


5,546


5,929


5,311


Total interest expense

16,422


20,713


26,098


29,767


34,108


Net interest income from continuing operations

75,709


77,055


77,590


86,428


91,333


Non-interest income from continuing operations











Mortgage banking originations

543


2,044


1,644


959


172


Loan related income

4,833


4,988


5,717


1,302


7,056


Deposit related fees

7,523


7,062


5,373


7,947


8,264


Insurance commissions and fees

2,319


2,660


2,767


3,024


2,471


Wealth management fees

2,359


2,299


2,057


2,570


2,239


Total fee income

17,577


19,053


17,558


15,802


20,202


Other

2,105


1,927


(999)


(436)


75


Securities gains/(losses), net

2,405


(1,017)


822


(9,730)


1,734


Gain on sale of business operations and assets, net

1,240


-


-


-


1,351


Total non-interest income

23,327


19,963


17,381


5,636


23,362


Total net revenue from continuing operations

99,036


97,018


94,971


92,064


114,695


Provision for credit losses

10,000


1,200


29,871


34,807


5,351


Non-interest expense from continuing operations











Compensation and benefits

36,719


34,809


39,403


36,909


35,355


Occupancy and equipment

10,948


11,084


10,195


11,132


10,798


Technology and communications

7,988


8,540


7,755


8,081


6,702


Marketing and promotion

634


1,002


902


1,165


1,046


Professional services

4,055


2,567


2,565


2,720


2,288


FDIC premiums and assessments

1,218


1,518


1,658


1,482


471


Other real estate owned and foreclosures

44


40


14


27


4


Amortization of intangible assets

1,513


1,530


1,558


1,580


1,582


Goodwill impairment

-


-


553,762


-


-


Merger, restructuring and other expense

523


5,316


-


-


5,713


Other

8,154


6,437


6,463


8,229


6,328


Total non-interest expense

71,796


72,843


624,275


71,325


70,287













Income/(loss) from continuing operations before income taxes

$ 17,240


$ 22,975


$ (559,175)


$ (14,068)


$ 39,057


Income tax (benefit)/expense

(1,659)


(68)


(16,130)


(1,996)


6,421


Net income/(loss) from continuing operations

$ 18,899


$ 23,043


$ (543,045)


$ (12,072)


$ 32,636













(Loss) from discontinued operations before income taxes

$ (5,114)


$ (2,477)


$ (8,635)


$ (10,629)


$ (9,514)


Income tax (benefit)

(1,224)


(659)


(2,299)


(2,831)


(2,629)


Net (loss) from discontinued operations

$ (3,890)


$ (1,818)


$ (6,336)


$ (7,798)


$ (6,885)













Net income/(loss)

$ 15,009


$ 21,225


$ (549,381)


$ (19,870)


$ 25,751


Preferred stock dividend

-


58


130


125


240


Income/(loss) available to common shareholders

$ 15,009


$ 21,167


$ (549,511)


$ (19,995)


$ 25,511
























Basic earnings/(loss) per common share:











Continuing Operations

$ 0.38


$ 0.46


$ (10.80)


$ (0.24)


$ 0.65


Discontinued Operations

(0.08)


(0.04)


(0.13)


(0.16)


(0.14)


Total

$ 0.30


$ 0.42


$ (10.93)


$ (0.40)


$ 0.51













Diluted earnings/(loss) per common share:











Continuing Operations

$ 0.38


$ 0.46


$ (10.80)


$ (0.24)


$ 0.65


Discontinued Operations

(0.08)


(0.04)


(0.13)


(0.16)


(0.14)


Total

$ 0.30


$ 0.42


$ (10.93)


$ (0.40)


$ 0.51













Weighted average shares outstanding:











Basic

50,308


50,329


50,246


50,204


50,494


Diluted

50,355


50,329


50,246


50,204


50,702



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,



2020


2020


2020


2020


2019













Earning assets











Loans:











Commercial real estate

3.34

%

3.52

%

3.78

%

4.41

%

4.80

%

Commercial and industrial loans

4.05


3.88


4.02


5.03


5.35


Residential mortgages

3.78


3.78


3.78


3.77


3.61


Consumer loans

3.41


3.59


3.72


4.28


4.38


Total loans

3.62


3.68


3.83


4.33


4.52


Securities

2.69


2.78


3.07


3.32


3.31


Short-term investments and loans held for sale

0.57


0.21


0.50


1.78


3.15


Total earning assets

3.17


3.31


3.50


4.08


4.27













Funding liabilities











Deposits:











NOW and other

0.17


0.24


0.30


0.46


0.54


Money market

0.32


0.38


0.58


0.98


1.18


Savings

0.08


0.10


0.10


0.13


0.14


Time

1.35


1.63


1.84


1.87


1.97


Total interest-bearing deposits

0.62


0.81


1.01


1.18


1.35


Borrowings

2.50


2.36


2.38


2.60


2.77


Total interest-bearing liabilities

0.79


0.95


1.16


1.33


1.48













Net interest spread

2.38


2.36


2.34


2.75


2.79


Net interest margin

2.61


2.61


2.62


3.04


3.11













Cost of funds (1)

0.60


0.73


0.92


1.11


1.23


Cost of deposits

0.47


0.61


0.79


0.96


1.11













(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)

2020


2020


2020


2020


2019


Assets











Loans











Commercial real estate

$ 3,843,263


$ 3,986,424


$ 4,005,018


$ 4,000,461


$ 4,056,244


Commercial and industrial loans

2,055,978


2,191,749


2,152,820


1,795,813


1,768,039


Residential mortgages

1,971,366


2,224,132


2,452,622


2,654,224


2,758,676


Consumer loans

725,810


800,824


865,318


921,810


974,889


Total loans (1)

8,596,417


9,203,129


9,475,778


9,372,308


9,557,848


Securities (2)

1,967,527


1,873,533


1,793,381


1,744,635


1,752,968


Short-term investments and loans held for sale

977,375


766,447


697,138


374,894


444,622


Total earning assets (3)

11,541,319


11,843,109


11,966,297


11,491,837


11,755,438


Goodwill and other intangible assets

39,887


41,460


590,672


598,347


601,192


Other assets

852,810


759,534


751,702


663,056


737,396


Assets from discontinued operations

11,704


16,041


109,923


98,528


176,251


Total assets

$ 12,445,720


$ 12,660,144


$ 13,418,594


$ 12,851,768


$ 13,270,277













Liabilities and shareholders' equity











Deposits











NOW and other

$ 1,278,764


$ 1,243,487


$ 1,183,839


$ 1,159,388


$ 1,085,485


Money market

2,756,348


2,673,567


2,672,066


2,752,465


2,688,766


Savings

966,929


940,488


901,218


846,942


835,209


Time

2,628,608


3,056,419


3,399,222


3,333,070


3,827,175


Total interest-bearing deposits

7,630,649


7,913,961


8,156,345


8,091,865


8,436,635


Borrowings

657,622


777,369


942,033


949,316


853,911


Total interest-bearing liabilities

8,288,271


8,691,330


9,098,378


9,041,181


9,290,546


Non-interest-bearing demand deposits

2,541,916


2,558,981


2,343,173


1,849,295


1,898,045


Other liabilities

459,845


254,273


272,690


203,797


304,504


Liabilities from discontinued operations

5,666


22,805


28,988


23,799


30,446


Total liabilities

11,295,698


11,527,389


11,743,229


11,118,072


11,523,541













Preferred shareholders' equity

7,290


20,325


20,325


20,548


40,633


Common shareholders' equity

1,142,732


1,112,430


1,655,040


1,713,148


1,706,103


Total shareholders' equity

1,150,022


1,132,755


1,675,365


1,733,696


1,746,736


Total liabilities and shareholders' equity

$ 12,445,720


$ 12,660,144


$ 13,418,594


$ 12,851,768


$ 13,270,277
























Supplementary data











Total average non-maturity deposits

$ 7,543,957


$ 7,416,523


$ 7,100,296


$ 6,608,090


$ 6,507,505


Total average deposits

10,172,565


10,472,942


10,499,518


9,941,160


10,334,680


Fully taxable equivalent income adjustment

1,485


1,512


1,580


1,824


1,934


Total average tangible equity (4)

1,110,135


1,091,295


1,084,693


1,135,349


1,145,544













(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)

2020


2020


2020


2020


2019

NON-PERFORMING ASSETS










Non-accruing loans:










Commercial real estate (1)

$ 35,581


$ 14,777


$ 12,486


$ 16,938


$ 20,119

Commercial and industrial loans

12,921


15,035


15,045


18,370


11,373

Residential mortgages

8,347


7,928


9,840


9,636


3,343

Consumer loans

8,099


9,650


7,513


6,172


4,805

Total non-accruing loans

64,948


47,390


44,884


51,116


39,640

Other real estate owned

149


401


517


224


-

Repossessed assets

1,932


1,646


1,581


1,316


858

Total non-performing assets

$ 67,029


$ 49,437


$ 46,982


$ 52,656


$ 40,498











Total non-accruing loans/total loans

0.80%


0.53%


0.48%


0.55%


0.42%

Total non-performing assets/total assets

0.52%


0.39%


0.36%


0.40%


0.31%











PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at beginning of period

$ 134,414


$ 139,394


$ 113,510


$ 63,575


$ 62,230

Adoption of ASU No. 2016-13 (2)

-


-


-


25,434


-

Balance after adoption of ASU No. 2016-13

134,414


139,394


113,510


89,009


62,230

Charged-off loans

(18,314)


(7,776)


(7,274)


(12,432)


(4,485)

Recoveries on charged-off loans

1,209


1,580


3,259


1,958


479

Net loans charged-off

(17,105)


(6,196)


(4,015)


(10,474)


(4,006)

Provision for loan credit losses

9,993


1,216


29,899


34,975


5,351

Balance at end of period

$ 127,302


$ 134,414


$ 139,394


$ 113,510


$ 63,575











Allowance for credit losses/total loans

1.58%


1.50%


1.49%


1.22%


0.67%

Allowance for credit losses/non-accruing loans

196%


284%


311%


222%


160%











NET LOAN CHARGE-OFFS










Commercial real estate

$ (11,862)


$ (635)


$ (1,679)


$ (5,990)


$ (1,419)

Commercial and industrial loans

(5,089)


(5,551)


(1,059)


(3,728)


(1,495)

Residential mortgages

250


517


(966)


(19)


(351)

Home equity

141


(57)


(10)


(107)


(67)

Auto and other consumer

(545)


(470)


(301)


(630)


(674)

Total, net

$ (17,105)


$ (6,196)


$ (4,015)


$ (10,474)


$ (4,006)











Net charge-offs (QTD annualized)/average loans

0.80%


0.27%


0.17%


0.45%


0.17%

Net charge-offs (YTD annualized)/average loans

0.41%


0.29%


0.31%


0.45%


0.35%











DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS










30-89 Days delinquent

0.20%


0.31%


0.37%


0.43%


0.25%

90+ Days delinquent and still accruing

0.14%


0.14%


0.14%


0.05%


0.29%

Total accruing delinquent loans

0.34%


0.45%


0.51%


0.48%


0.54%

Non-accruing loans

0.80%


0.53%


0.48%


0.55%


0.42%

Total delinquent and non-accruing loans

1.14%


0.98%


0.99%


1.03%


0.96%

(1) This balance includes $17 million of PCD loans.

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

BERKSHIRE HILLS BANCORP, INC.

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



At or for the Quarters Ended



Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,


(in thousands)


2020


2020


2020


2020


2019


Net income/(loss)


$ 15,009


$ 21,225


$ (549,381)


$ (19,870)


$ 25,751


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


(2,405)


1,017


(822)


9,730


(1,734)


Adj: Goodwill impairment


-


-