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24.04.2017 22:10:00
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Berkshire Hills Reports First Quarter Earnings; Dividend Declared
PITTSFIELD, Mass., April 24, 2017 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported first quarter 2017 earnings of $15.5 million, or 44 cents per share. Core earnings totaled $19.4 million, or $0.55 per share. Net income increased by 50% over the prior quarter and core earnings increased by 8% including the first full quarter benefit of the acquired First Choice operations. Non-core after-tax merger charges totaled $0.12 per share for the quarter.
FIRST QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated):
- 34% increase in total net revenue
- 46% increase in fee income
- 15% annualized commercial loan growth
- 6% annualized total loan growth
- 2% annualized deposit growth
- 3.33% net interest margin, increased from 3.21% in the prior quarter
- 0.27% non-performing assets/assets
- 0.20% net loan charge-offs/average loans
CEO Michael Daly stated, "Berkshire is off to a strong start for the year, having delivered double-digit commercial loan growth, an expanded NIM, and a successful systems integration of First Choice on time and on plan. The First Choice operations drove our revenue gains while organic business development contributed to balance sheet growth. We opened our first Boston branch which will support our growing commercial business in Greater Boston. During the quarter we completed the consolidation of three branches and identified a fourth branch, along with other leasehold reductions, for further consolidation. We remain focused on delivering on the disciplined expansion of our business model. Across our regions, our teams have solid momentum for business growth and profitability improvement in 2017."
DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of $0.21 per share to shareholders of record at the close of business on May 11, 2017, payable on May 25, 2017. The dividend equates to a 2.4% annualized yield based on the $35.38 average closing price of Berkshire Hills Bancorp common stock during the quarter.
FINANCIAL CONDITION
Total assets measured $9.3 billion at March 31, 2017. The 6% annualized loan growth was concentrated in 15% annualized commercial loan growth. The largest gain was in commercial and industrial loans, which benefited from improved activity across several regions. Deposit growth was concentrated in time account growth, providing additional protection in the event of further interest rate increases, while transaction account balances decreased seasonally. Berkshire terminated its $300 million in fixed rate interest rate swaps during the quarter in conjunction with the integration of acquired First Choice Bank assets and liabilities. The Company continues to maintain a modestly asset sensitive profile for net interest income.
At quarter-end, the ratio of loans/deposits stood at 100%. The ratio of equity/assets was 11.8% and the ratio of tangible equity/assets was 7.6%. At quarter-end, book value per share increased to $30.77 and tangible book value per share increased to $18.97. Tangible equity/assets and tangible book value are non-GAAP financial measures. Delinquent and non-accruing loans decreased to 0.78% of total loans, and annualized net loan charge-offs decreased to 0.20% of average loans during the quarter.
RESULTS OF OPERATIONS
The 50% increase in GAAP earnings and 8% increase in core earnings compared to the prior quarter primarily reflected the impact of the acquired First Choice operations. Per share results included the impact of the 4.4 million shares issued as merger consideration. GAAP earnings per share increased by $0.12 to $0.44, while core earnings per share decreased by $0.01 to $0.55. The First Choice acquisition is targeted to be accretive to earnings per share after integration is completed including targeted cost saves from combined efficiencies. During the most recent quarter, the GAAP return on assets measured 0.68% and core return on assets measured 0.85%.
Core earnings is a non-GAAP financial measure excluding non-core items viewed as not related to normalized operations. The $0.11 difference between core and GAAP EPS in the first quarter included $0.12 per share in after-tax merger related charges. Other net non-core gains/losses and expense restructuring items were mostly offsetting. Non-core gains of $13 million were realized on the sale of equity securities, and were offset by a $7 million loss recorded on the termination of the interest rate swaps and $6 million in other non-core costs primarily related to restructuring charges.
Most categories of revenue and expense increased over the prior quarter due to the full period impact of the First Choice acquisition. Total revenue increased by 34% and core revenue increased by 26%. The first quarter 2017 net interest margin increased to 3.33% and measured 3.15% excluding purchased loan accretion. The comparable measures in the prior quarter were 3.21% and 3.11%, respectively. The improvement in the margin included the benefit of the December rate hike and a decrease in funding costs following the First Choice acquisition. Fee income increased to 30% of total interest and fee revenue from 25% in the prior quarter, including the benefit of the acquired First Choice mortgage origination operations.
First quarter non-interest expense increased by 22% over the prior quarter including the costs of newly acquired operations, while core non-interest expense increased by 27%. The efficiency ratio measured 62%, compared to 58% in the prior quarter, reflecting the lower operating margin associated with mortgage originations. Full time equivalent staff totaled 1,728 positions at quarter-end, compared to 1,731 at the start of the year.
The effective GAAP income tax rate was 30% and the core income tax rate was 31% in the most recent quarter. The Company received $0.01 per share in net earnings benefit from its investment in tax credit related projects during the quarter, compared to $0.02 in the prior quarter.
INVESTOR CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, April 25, 2017 to discuss its 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/10104927. 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. Participants may also reach the registration link and access the webcast by logging in through the investor section of our website at ir.berkshirebank.com. Participants may also participate at the above time by dialing 1-844-792-3726 and asking the Operator to be joined to the Berkshire Hills Bancorp (BHLB) earnings call. A telephone replay of the call will be available through Tuesday, May 2, 2017 by dialing 877-344-7529 and entering access number 10104927. 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®. Berkshire has approximately $9.3 billion in assets and 97 full-service branch offices in Massachusetts, New York, Connecticut, Vermont, Pennsylvania and New Jersey providing personal and business banking, insurance, and wealth management services. The Company also offers mortgages and specialized commercial lending services in targeted national markets. For more information, visit www.berkshirebank.com.
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 include securities gains/losses, merger costs, restructuring costs, and systems conversion costs. 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. 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 2016 combinations: First Choice Bank, 44 Business Capital, and RNLPC. 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. Non-core items recorded in the first quarter of 2017 included gains realized on the sale of equity securities and costs related to the termination of the Company's interest rate swaps. Of note, following systems upgrades, non-material revisions were made 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 |
BERKSHIRE HILLS BANCORP, INC. | |||||||||||||
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1) | |||||||||||||
At or for the Quarters Ended (2) | |||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||
2017 | 2016 (3) | 2016 | 2016 (4) | 2016 | |||||||||
PER SHARE DATA | |||||||||||||
Net earnings, diluted | $ 0.44 | $ 0.32 | $ 0.53 | $ 0.52 | $ 0.52 | ||||||||
Core earnings, diluted (1) | 0.55 | 0.56 | 0.57 | 0.54 | 0.54 | ||||||||
Total book value | 30.77 | 30.65 | 29.97 | 29.64 | 29.18 | ||||||||
Tangible book value (5) | 18.97 | 18.81 | 18.78 | 18.44 | 18.44 | ||||||||
Market price at period end | 36.05 | 36.85 | 27.71 | 26.92 | 26.89 | ||||||||
Dividends | 0.21 | 0.20 | 0.20 | 0.20 | 0.20 | ||||||||
PERFORMANCE RATIOS (6) | |||||||||||||
Return on assets | 0.68 | % | 0.50 | % | 0.82 | % | 0.82 | % | 0.82 | % | |||
Core return on assets (1) | 0.85 | 0.87 | 0.88 | 0.85 | 0.85 | ||||||||
Return on equity | 5.71 | 4.29 | 7.29 | 7.17 | 7.19 | ||||||||
Core return on equity (1) | 7.17 | 7.49 | 7.75 | 7.42 | 7.40 | ||||||||
Core return on tangible equity (1) | 12.05 | 12.23 | 12.99 | 12.45 | 12.20 | ||||||||
Net interest margin, fully taxable equivalent (FTE) (7)(8) | 3.33 | 3.21 | 3.27 | 3.32 | 3.33 | ||||||||
Net interest margin (FTE), excluding purchased loan accretion (5)(8) | 3.15 | 3.11 | 3.15 | 3.21 | 3.22 | ||||||||
Fee income/Net interest and fee income | 30.04 | 24.99 | 23.81 | 21.16 | 21.04 | ||||||||
Efficiency ratio (5)(8) | 61.94 | 58.42 | 57.32 | 58.11 | 59.27 | ||||||||
GROWTH (Year-to-date) | |||||||||||||
Total commercial loans (annualized) | 15 | % | 18 | % | 9 | % | 11 | % | 6 | % | |||
Total loans (annualized) | 6 | 14 | 7 | 10 | 0 | ||||||||
Total deposits (annualized) | 2 | 18 | 4 | 2 | 0 | ||||||||
Total net revenues (compared to prior year) | 39 | 11 | 13 | 14 | 26 | ||||||||
Earnings per share (compared to prior year) | (15) | 9 | 31 | 48 | 49 | ||||||||
Core earnings per share (compared to prior year)(1) | 2 | 4 | 6 | 5 | 8 | ||||||||
FINANCIAL DATA (in millions) | |||||||||||||
Total assets | $ 9,298 | $ 9,163 | $ 7,931 | $ 8,044 | $ 7,808 | ||||||||
Total earning assets | 8,486 | 8,340 | 7,229 | 7,327 | 7,142 | ||||||||
Total investments | 1,740 | 1,670 | 1,162 | 1,304 | 1,399 | ||||||||
Total loans | 6,656 | 6,550 | 6,047 | 6,000 | 5,727 | ||||||||
Allowance for loan losses | 46 | 44 | 43 | 41 | 40 | ||||||||
Total intangible assets | 422 | 423 | 348 | 349 | 334 | ||||||||
Total deposits | 6,656 | 6,622 | 5,750 | 5,657 | 5,584 | ||||||||
Total shareholders' equity | 1,100 | 1,093 | 933 | 923 | 906 | ||||||||
Net income | 15.5 | 10.3 | 16.4 | 16.0 | 16.0 | ||||||||
Core income (1) | 19.4 | 18.0 | 17.4 | 16.5 | 16.5 | ||||||||
ASSET QUALITY AND CONDITION RATIOS | |||||||||||||
Net charge-offs (current quarter annualized)/average loans | 0.20 | % | 0.21 | % | 0.20 | % | 0.22 | % | 0.23 | % | |||
Total non-performing assets/total assets | 0.27 | 0.24 | 0.26 | 0.26 | 0.28 | ||||||||
Allowance for loan losses/total loans | 0.69 | 0.67 | 0.71 | 0.69 | 0.70 | ||||||||
Loans/deposits | 100 | 99 | 105 | 106 | 103 | ||||||||
Shareholders' equity to total assets | 11.83 | 11.93 | 11.76 | 11.48 | 11.60 | ||||||||
Tangible shareholders' equity to tangible assets (5) | 7.64 | 7.68 | 7.70 | 7.46 | 7.66 | ||||||||
(1) | Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily related to acquisitions and | ||||||||||||
restructuring activities. See page F-9 for reconciliations of non-GAAP financial measures. | |||||||||||||
(2) | Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on page F-9. | ||||||||||||
(3) | The Company acquired First Choice Bank on December 2, 2016. | ||||||||||||
(4) | The Company acquired certain assets and operations related to 44 Business Capital on April 29, 2016. | ||||||||||||
(5) | Non-GAAP financial measure. See page F-9 for reconciliations of non-GAAP financial measures. | ||||||||||||
(6) | All performance ratios are annualized and are based on average balance sheet amounts, where applicable. | ||||||||||||
(7) | Fully taxable equivalent considers the impact of tax advantaged investment securities and loans. | ||||||||||||
(8) | Revisions were made to the calculations of the net interest margin, efficiency ratio, and yields for the interest annualization and the fully | ||||||||||||
taxable equivalent calculations. Prior period measures were revised to include these changes. | |||||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2) | ||||
March 31, | December 31, | |||
(in thousands) | 2017 | 2016 | ||
Assets | ||||
Cash and due from banks | $ 67,580 | $ 71,494 | ||
Short-term investments | 25,763 | 41,581 | ||
Total cash and short-term investments | 93,343 | 113,075 | ||
Trading security | 12,966 | 13,229 | ||
Securities available for sale, at fair value | 1,293,683 | 1,209,537 | ||
Securities held to maturity, at amortized cost | 331,179 | 334,368 | ||
Federal Home Loan Bank stock and other restricted securities | 76,407 | 71,112 | ||
Total securities | 1,714,235 | 1,628,246 | ||
Loans held for sale, at fair value | 89,741 | 120,673 | ||
Commercial real estate | 2,673,363 | 2,616,438 | ||
Commercial and industrial loans | 1,146,125 | 1,062,038 | ||
Residential mortgages | 1,850,684 | 1,893,131 | ||
Consumer loans | 985,761 | 978,180 | ||
Total loans | 6,655,933 | 6,549,787 | ||
Less: Allowance for loan losses | (45,804) | (43,998) | ||
Net loans | 6,610,129 | 6,505,789 | ||
Premises and equipment, net | 95,203 | 93,215 | ||
Other real estate owned | 71 | 151 | ||
Goodwill | 403,106 | 403,106 | ||
Other intangible assets | 18,644 | 19,445 | ||
Cash surrender value of bank-owned life insurance | 139,914 | 139,257 | ||
Deferred tax asset, net | 42,403 | 41,128 | ||
Other assets | 91,119 | 98,457 | ||
Total assets | $ 9,297,908 | $ 9,162,542 | ||
Liabilities and shareholders' equity | ||||
Demand deposits | $ 1,194,633 | $ 1,278,875 | ||
NOW deposits | 562,743 | 570,583 | ||
Money market deposits | 1,819,403 | 1,781,605 | ||
Savings deposits | 660,007 | 657,486 | ||
Time deposits | 2,419,268 | 2,333,543 | ||
Total deposits | 6,656,054 | 6,622,092 | ||
Senior borrowings | 1,294,721 | 1,224,836 | ||
Subordinated borrowings | 89,206 | 89,161 | ||
Total borrowings | 1,383,927 | 1,313,997 | ||
Other liabilities | 158,374 | 133,155 | ||
Total liabilities | 8,198,355 | 8,069,244 | ||
Total common shareholders' equity | 1,099,553 | 1,093,298 | ||
Total liabilities and shareholders' equity | $ 9,297,908 | $ 9,162,542 | ||
Net shares outstanding | 35,729 | 35,673 | ||
BERKSHIRE HILLS BANCORP, INC. | |||||||
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3) | |||||||
LOAN ANALYSIS | |||||||
Annualized Growth % | |||||||
(in millions) | March 31, 2017 | December 31, 2016 | Quarter ended | ||||
Commercial real estate - construction | $ 306 | $ 288 | 26 | % | |||
Commercial real estate - other | 2,367 | 2,329 | 7 | ||||
Total commercial real estate | 2,673 | 2,617 | 9 | ||||
Commercial and industrial loans | 1,146 | 1,062 | 32 | ||||
Total commercial loans | 3,819 | 3,679 | 15 | ||||
Total residential mortgages | 1,851 | 1,893 | (9) | ||||
Home equity | 390 | 394 | (4) | ||||
Auto and other | 596 | 584 | 8 | ||||
Total consumer loans | 986 | 978 | 3 | ||||
Total loans | $ 6,656 | $ 6,550 | 6 | % | |||
DEPOSIT ANALYSIS | |||||||
Annualized Growth % | |||||||
(in millions) | March 31, 2017 | December 31, 2016 | Quarter ended | ||||
Demand | $ 1,195 | $ 1,279 | (26) | % | |||
NOW | 563 | 571 | (6) | ||||
Money market | 1,819 | 1,782 | 8 | ||||
Savings | 660 | 657 | 2 | ||||
Total non-maturity deposits | 4,237 | 4,289 | (5) | ||||
Total time deposits | 2,419 | 2,333 | 15 | ||||
Total deposits | $ 6,656 | $ 6,622 | 2 | % | |||
BERKSHIRE HILLS BANCORP, INC. | ||||
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4) | ||||
Three Months Ended | ||||
March 31, | ||||
(in thousands, except per share data) | 2017 | 2016 | ||
Interest and dividend income | ||||
Loans | $ 68,943 | $ 58,442 | ||
Securities and other | 11,766 | 10,034 | ||
Total interest and dividend income | 80,709 | 68,476 | ||
Interest expense | ||||
Deposits | 9,098 | 7,159 | ||
Borrowings | 4,725 | 3,620 | ||
Total interest expense | 13,823 | 10,779 | ||
Net interest income | 66,886 | 57,697 | ||
Non-interest income | ||||
Mortgage banking originations | 12,678 | 821 | ||
Loan related income | 4,179 | 3,046 | ||
Deposit related fees | 6,204 | 6,109 | ||
Insurance commissions and fees | 3,136 | 2,893 | ||
Wealth management fees | 2,526 | 2,502 | ||
Total fee income | 28,723 | 15,371 | ||
Other | 93 | 223 | ||
Securities gains, net | 12,570 | 36 | ||
Loss on termination of hedges | (6,629) | - | ||
Total non-interest income | 34,757 | 15,630 | ||
Total net revenue | 101,643 | 73,327 | ||
Provision for loan losses | 5,095 | 4,006 | ||
Non-interest expense | ||||
Compensation and benefits | 36,119 | 25,714 | ||
Occupancy and equipment | 9,026 | 6,690 | ||
Technology and communications | 6,087 | 4,857 | ||
Marketing and promotion | 1,999 | 673 | ||
Professional services | 2,451 | 1,280 | ||
FDIC premiums and assessments | 1,298 | 1,233 | ||
Other real estate owned and foreclosures | 28 | 263 | ||
Amortization of intangible assets | 801 | 819 | ||
Merger, restructuring and conversion expense | 11,682 | 780 | ||
Other | 4,835 | 4,791 | ||
Total non-interest expense | 74,326 | 47,100 | ||
Income before income taxes | 22,222 | 22,221 | ||
Income tax expense | 6,762 | 6,220 | ||
Net income | $ 15,460 | $ 16,001 | ||
Earnings per share: | ||||
Basic | $ 0.44 | $ 0.52 | ||
Diluted | $ 0.44 | $ 0.52 | ||
Weighted average shares outstanding: | ||||
Basic | 35,280 | 30,511 | ||
Diluted | 35,452 | 30,688 | ||
BERKSHIRE HILLS BANCORP, INC. | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED - (F-5) | ||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||
(in thousands, except per share data) | 2017 | 2016 | 2016 | 2016 | 2016 | |||||
Interest and dividend income | ||||||||||
Loans | $ 68,943 | $ 62,884 | $ 61,571 | $ 59,703 | $ 58,442 | |||||
Securities and other | 11,766 | 9,550 | 8,940 | 9,315 | 10,034 | |||||
Total interest and dividend income | 80,709 | 72,434 | 70,511 | 69,018 | 68,476 | |||||
Interest expense | ||||||||||
Deposits | 9,098 | 8,556 | 7,790 | 7,378 | 7,159 | |||||
Borrowings | 4,725 | 4,720 | 4,750 | 4,199 | 3,620 | |||||
Total interest expense | 13,823 | 13,276 | 12,540 | 11,577 | 10,779 | |||||
Net interest income | 66,886 | 59,158 | 57,971 | 57,441 | 57,697 | |||||
Non-interest income | ||||||||||
Mortgage banking originations | 12,678 | 3,537 | 1,862 | 1,335 | 821 | |||||
Loan related income | 4,179 | 5,648 | 5,102 | 2,898 | 3,046 | |||||
Deposit related fees | 6,204 | 6,285 | 6,278 | 6,291 | 6,109 | |||||
Insurance commissions and fees | 3,136 | 2,323 | 2,601 | 2,660 | 2,893 | |||||
Wealth management fees | 2,526 | 1,911 | 2,269 | 2,235 | 2,502 | |||||
Total fee income | 28,723 | 19,704 | 18,112 | 15,419 | 15,371 | |||||
Other | 93 | (2,849) | 188 | (851) | 223 | |||||
Securities gains (losses), net | 12,570 | (652) | 78 | (13) | 36 | |||||
Gain on sale of business operations, net | - | 522 | 563 | - | - | |||||
Loss on termination of hedges | (6,629) | - | - | - | - | |||||
Total non-interest income | 34,757 | 16,725 | 18,941 | 14,555 | 15,630 | |||||
Total net revenue | 101,643 | 75,883 | 76,912 | 71,996 | 73,327 | |||||
Provision for loan losses | 5,095 | 4,100 | 4,734 | 4,522 | 4,006 | |||||
Non-interest expense | ||||||||||
Compensation and benefits | 36,119 | 28,103 | 26,119 | 24,664 | 25,714 | |||||
Occupancy and equipment | 9,026 | 7,320 | 6,650 | 6,560 | 6,690 | |||||
Technology and communications | 6,087 | 5,310 | 4,902 | 4,814 | 4,857 | |||||
Marketing and promotion | 1,999 | 1,080 | 671 | 737 | 673 | |||||
Professional services | 2,451 | 1,666 | 1,744 | 1,509 | 1,280 | |||||
FDIC premiums and assessments | 1,298 | 1,422 | 1,208 | 1,203 | 1,233 | |||||
Other real estate owned and foreclosures | 28 | (11) | 46 | 393 | 263 | |||||
Amortization of intangible assets | 801 | 572 | 749 | 787 | 819 | |||||
Merger, restructuring and conversion expense | 11,682 | 11,633 | 2,170 | 878 | 780 | |||||
Other | 4,835 | 3,995 | 4,585 | 4,723 | 4,791 | |||||
Total non-interest expense | 74,326 | 61,090 | 48,844 | 46,268 | 47,100 | |||||
Income before income taxes | 22,222 | 10,693 | 23,334 | 21,206 | 22,221 | |||||
Income tax expense | 6,762 | 362 | 6,953 | 5,249 | 6,220 | |||||
Net income | $ 15,460 | $ 10,331 | $ 16,381 | $ 15,957 | $ 16,001 | |||||
Earnings per share: | ||||||||||
Basic | $ 0.44 | $ 0.32 | $ 0.53 | $ 0.52 | $ 0.52 | |||||
Diluted | $ 0.44 | $ 0.32 | $ 0.53 | $ 0.52 | $ 0.52 | |||||
Weighted average shares outstanding: | ||||||||||
Basic | 35,280 | 32,185 | 30,621 | 30,605 | 30,511 | |||||
Diluted | 35,452 | 32,381 | 30,811 | 30,765 | 30,688 | |||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-6) | |||||||||||
Quarters Ended | |||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||
2017 | 2016 | 2016 | 2016 | 2016 | |||||||
Earning assets (1) | |||||||||||
Loans: | |||||||||||
Commercial real estate | 4.58 | % | 4.17 | % | 4.25 | % | 4.42 | % | 4.14 | % | |
Commercial and industrial loans | 4.86 | 4.88 | 5.06 | 4.85 | 4.96 | ||||||
Residential mortgages | 3.55 | 3.57 | 3.62 | 3.61 | 3.84 | ||||||
Consumer loans | 3.62 | 3.44 | 3.40 | 3.39 | 3.43 | ||||||
Total loans | 4.24 | 4.03 | 4.08 | 4.11 | 4.10 | ||||||
Securities | 3.38 | 3.58 | 3.47 | 3.45 | 3.42 | ||||||
Short-term investments and loans held for sale | 2.71 | 2.13 | 1.68 | 1.29 | 0.91 | ||||||
Total earning assets | 4.00 | 3.91 | 3.95 | 3.97 | 3.94 | ||||||
Funding liabilities(1) | |||||||||||
Deposits: | |||||||||||
NOW | 0.22 | 0.16 | 0.12 | 0.13 | 0.13 | ||||||
Money market | 0.52 | 0.48 | 0.46 | 0.47 | 0.49 | ||||||
Savings | 0.13 | 0.12 | 0.12 | 0.11 | 0.13 | ||||||
Time | 1.08 | 1.14 | 1.10 | 1.06 | 0.99 | ||||||
Total interest-bearing deposits | 0.69 | 0.69 | 0.67 | 0.65 | 0.63 | ||||||
Borrowings | 1.38 | 1.63 | 1.52 | 1.37 | 1.18 | ||||||
Total interest-bearing liabilities | 0.83 | 0.87 | 0.85 | 0.80 | 0.75 | ||||||
Net interest spread | 3.17 | 3.04 | 3.10 | 3.17 | 3.19 | ||||||
Net interest margin | 3.33 | 3.21 | 3.27 | 3.32 | 3.33 | ||||||
Cost of funds (2) | 0.70 | 0.73 | 0.72 | 0.68 | 0.63 | ||||||
Cost of deposits (3) | 0.56 | 0.56 | 0.54 | 0.53 | 0.51 | ||||||
(1) | Revisions were made to the calculations of the net interest margin, efficiency ratio, and yields for the interest annualization and the fully taxable equivalent calculations. Prior period measures were revised to include these changes. | |||||||||||
(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. | ||||||||||
AVERAGE BALANCES - UNAUDITED - (F-7) | ||||||||||
Quarters Ended | ||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||
(in thousands) | 2017 | 2016 | 2016 (2)(4) | 2016 (2)(4) | 2016 (2)(4) | |||||
Assets | ||||||||||
Loans | ||||||||||
Commercial real estate | $ 2,631,281 | $ 2,442,515 | $ 2,260,482 | $ 2,173,539 | $ 2,079,001 | |||||
Commercial and industrial loans | 1,072,716 | 998,543 | 1,009,581 | 1,047,866 | 1,027,257 | |||||
Residential mortgages | 1,886,734 | 1,833,530 | 1,839,364 | 1,759,193 | 1,798,034 | |||||
Consumer loans | 978,683 | 936,957 | 900,432 | 844,759 | 807,888 | |||||
Total loans (1) | 6,569,414 | 6,211,545 | 6,009,859 | 5,825,357 | 5,712,180 | |||||
Securities (3) | 1,625,769 | 1,255,207 | 1,197,760 | 1,247,357 | 1,342,590 | |||||
Short-term investments and loans held for sale | 137,619 | 83,057 | 40,259 | 41,449 | 56,042 | |||||
Total earning assets | 8,332,802 | 7,549,809 | 7,247,878 | 7,114,163 | 7,110,812 | |||||
Goodwill and other intangible assets | 422,331 | 362,641 | 349,059 | 344,832 | 333,948 | |||||
Other assets | 388,852 | 363,248 | 360,182 | 349,816 | 346,327 | |||||
Total assets | $ 9,143,985 | $ 8,275,698 | $ 7,957,119 | $ 7,808,811 | $ 7,791,087 | |||||
Liabilities and shareholders' equity | ||||||||||
Deposits | ||||||||||
NOW | $ 574,799 | $ 499,852 | $ 474,650 | $ 492,901 | $ 484,334 | |||||
Money market | 1,804,738 | 1,612,160 | 1,448,108 | 1,403,629 | 1,417,068 | |||||
Savings | 648,839 | 620,092 | 608,365 | 612,261 | 602,414 | |||||
Time | 2,351,183 | 2,171,325 | 2,095,269 | 2,047,020 | 2,063,712 | |||||
Total interest-bearing deposits | 5,379,559 | 4,903,429 | 4,626,392 | 4,555,811 | 4,567,528 | |||||
Borrowings | 1,374,620 | 1,144,846 | 1,235,065 | 1,223,629 | 1,222,288 | |||||
Total interest-bearing liabilities | 6,754,179 | 6,048,275 | 5,861,457 | 5,779,440 | 5,789,816 | |||||
Non-interest-bearing demand deposits | 1,178,790 | 1,178,308 | 1,084,786 | 1,032,951 | 1,026,447 | |||||
Other liabilities | 128,573 | 85,951 | 111,743 | 105,948 | 84,042 | |||||
Total liabilities | 8,061,542 | 7,312,534 | 7,057,986 | 6,918,339 | 6,900,305 | |||||
Total shareholders' equity | 1,082,443 | 963,164 | 899,133 | 890,472 | 890,782 | |||||
Total liabilities and shareholders' equity | $ 9,143,985 | $ 8,275,698 | $ 7,957,119 | $ 7,808,811 | $ 7,791,087 | |||||
Supplementary data | ||||||||||
Total non-maturity deposits | $ 4,207,166 | $ 3,910,412 | $ 3,615,909 | $ 3,541,742 | $ 3,530,263 | |||||
Total deposits | 6,558,349 | 6,081,737 | 5,711,178 | 5,588,762 | 5,593,975 | |||||
Fully taxable equivalent income adjustment | 2,511 | 2,228 | 2,004 | 1,972 | 1,894 | |||||
Purchased loan accretion | 3,687 | 1,886 | 2,214 | 1,981 | 2,069 | |||||
Total average tangible equity (5) | 660,112 | 600,523 | 550,074 | 545,640 | 556,834 | |||||
(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. | |||||||||||
ASSET QUALITY ANALYSIS - UNAUDITED - (F-8) | |||||||||||
At or for the Quarters Ended | |||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||
(in thousands) | 2017 | 2016 | 2016 | 2016 | 2016 | ||||||
NON-PERFORMING ASSETS | |||||||||||
Non-accruing loans: | |||||||||||
Commercial real estate | $ 7,718 | $ 5,883 | $ 6,295 | $ 4,808 | $ 5,001 | ||||||
Commercial and industrial loans | 8,327 | 7,523 | 6,714 | 7,590 | 7,480 | ||||||
Residential mortgages | 3,971 | 3,795 | 4,374 | 4,882 | 4,732 | ||||||
Consumer loans | 5,109 | 4,833 | 3,281 | 3,376 | 3,588 | ||||||
Total non-accruing loans | 25,125 | 22,034 | 20,664 | 20,656 | 20,801 | ||||||
Other real estate owned | 71 | 151 | 80 | 595 | 1,440 | ||||||
Total non-performing assets | $ 25,196 | $ 22,185 | $ 20,744 | $ 21,251 | $ 22,241 | ||||||
Total non-accruing loans/total loans | 0.38% | 0.34% | 0.34% | 0.34% | 0.36% | ||||||
Total non-performing assets/total assets | 0.27% | 0.24% | 0.26% | 0.26% | 0.28% | ||||||
PROVISION AND ALLOWANCE FOR LOAN LOSSES | |||||||||||
Balance at beginning of period | $ 43,998 | $ 43,105 | $ 41,397 | $ 40,055 | $ 39,308 | ||||||
Charged-off loans | (3,623) | (3,488) | (3,441) | (3,393) | (3,704) | ||||||
Recoveries on charged-off loans | 334 | 281 | 415 | 213 | 445 | ||||||
Net loans charged-off | (3,289) | (3,207) | (3,026) | (3,180) | (3,259) | ||||||
Provision for loan losses | 5,095 | 4,100 | 4,734 | 4,522 | 4,006 | ||||||
Balance at end of period | $ 45,804 | $ 43,998 | $ 43,105 | $ 41,397 | $ 40,055 | ||||||
Allowance for loan losses/total loans | 0.69% | 0.67% | 0.71% | 0.69% | 0.70% | ||||||
Allowance for loan losses/non-accruing loans | 182% | 200% | 209% | 200% | 193% | ||||||
NET LOAN CHARGE-OFFS | |||||||||||
Commercial real estate | $ (633) | $ (676) | $ (547) | $ (534) | $ (1,043) | ||||||
Commercial and industrial loans | (1,634) | (1,148) | (1,610) | (1,720) | (847) | ||||||
Residential mortgages | (324) | (768) | (452) | (568) | (774) | ||||||
Home equity | (95) | (47) | (65) | (164) | (221) | ||||||
Auto and other consumer | (603) | (568) | (352) | (194) | (374) | ||||||
Total, net | $ (3,289) | $ (3,207) | $ (3,026) | $ (3,180) | $ (3,259) | ||||||
Net charge-offs (QTD annualized)/average loans | 0.20% | 0.21% | 0.20% | 0.22% | 0.23% | ||||||
Net charge-offs (YTD annualized)/average loans | 0.20% | 0.21% | 0.22% | 0.22% | 0.23% | ||||||
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | |||||||||||
30-89 Days delinquent | 0.24% | 0.35% | 0.25% | 0.25% | 0.26% | ||||||
90+ Days delinquent and still accruing | 0.16% | 0.15% | 0.09% | 0.08% | 0.07% | ||||||
Total accruing delinquent loans | 0.40% | 0.50% | 0.34% | 0.33% | 0.33% | ||||||
Non-accruing loans | 0.38% | 0.34% | 0.34% | 0.34% | 0.36% | ||||||
Total delinquent and non-accruing loans | 0.78% | 0.84% | 0.68% | 0.67% | 0.69% | ||||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9) | |||||||||||
At or for the Quarters Ended | |||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||
(in thousands) | 2017 | 2016 | 2016 | 2016 | 2016 | ||||||
Net income | $ 15,460 | $ 10,331 | $ 16,381 | $ 15,957 | $ 16,001 | ||||||
Adj: Net securities (gains) losses | (12,570) | 652 | (78) | 13 | (36) | ||||||
Adj. Loss on termination of hedges | 6,629 | - | - | - | - | ||||||
Adj: Net (gains) on sale of business operations | - | (522) | (563) | - | - | ||||||
Adj: Merger and acquisition expense | 5,947 | 10,820 | 1,453 | 701 | 527 | ||||||
Adj: Restructuring expense and other expense | 5,735 | 1,113 | 717 | 177 | 253 | ||||||
Adj: Income taxes | (1,801) | (4,373) | (492) | (334) | (256) | ||||||
Total core income | (A) | $ 19,400 | $ 18,021 | $ 17,418 | $ 16,514 | $ 16,489 | |||||
Total revenue | $ 101,643 | $ 75,883 | $ 76,912 | $ 71,996 | $ 73,327 | ||||||
Adj: Net securities (gains) losses | (12,570) | 652 | (78) | 13 | (36) | ||||||
Adj: Net (gains) on sale of business operations | - | (522) | (563) | - | - | ||||||
Adj. Loss on termination of hedges | 6,629 | - | - | - | - | ||||||
Total core revenue | (B) | $ 95,702 | $ 76,013 | $ 76,271 | $ 72,009 | $ 73,291 | |||||
Total non-interest expense | $ 74,326 | $ 61,090 | $ 48,844 | $ 46,268 | $ 47,100 | ||||||
Less: Total non-core expense (see above) | (11,682) | (11,933) | (2,170) | (878) | (780) | ||||||
Core non-interest expense | (C) | $ 62,644 | $ 49,157 | $ 46,674 | $ 45,390 | $ 46,320 | |||||
(in millions, except per share data) | |||||||||||
Total average assets | (D) | $ 9,144 | $ 8,276 | $ 7,957 | $ 7,809 | $ 7,791 | |||||
Total average shareholders' equity | (E) | 1,082 | 963 | 899 | 890 | 891 | |||||
Total average tangible shareholders' equity | (F) | 660 | 601 | 550 | 546 | 557 | |||||
Total tangible shareholders' equity, period-end (1) | (G) | 678 | 671 | 584 | 574 | 572 | |||||
Total tangible assets, period-end (1) | (H) | 8,876 | 8,740 | 7,583 | 7,695 | 7,474 | |||||
Total common shares outstanding, period-end (thousands) | (I) | 35,729 | 35,673 | 31,122 | 31,156 | 31,039 | |||||
Average diluted shares outstanding (thousands) | (J) | 35,452 | 32,381 | 30,811 | 30,765 | 30,688 | |||||
Core earnings per share, diluted | (A/J) | $ 0.55 | $ 0.56 | $ 0.57 | $ 0.54 | $ 0.54 | |||||
Tangible book value per share, period-end | (G/I) | 18.97 | 18.81 | 18.78 | 18.44 | 18.44 | |||||
Total tangible shareholders' equity/total tangible assets | (G)/(H) | 7.64 | 7.68 | 7.70 | 7.46 | 7.66 | |||||
Performance ratios (2) | |||||||||||
GAAP return on assets | 0.68 | % | 0.50 | % | 0.82 | % | 0.82 | % | 0.82 | % | |
Core return on assets | (A/D) | 0.85 | 0.87 | 0.88 | 0.85 | 0.85 | |||||
GAAP return on equity | 5.71 | 4.29 | 7.29 | 7.17 | 7.19 | ||||||
Core return on equity | (A/E) | 7.17 | 7.49 | 7.75 | 7.42 | 7.40 | |||||
Core return on tangible equity (3) | (A/F) | 12.05 | 12.23 | 12.99 | 12.45 | 12.20 | |||||
Efficiency ratio (4)(5)(6) | (C-M)/(B+K+N) | 61.94 | 58.42 | 57.32 | 58.11 | 59.27 | |||||
Net interest margin(6) | 3.33 | 3.21 | 3.27 | 3.32 | 3.33 | ||||||
Supplementary data (in thousands) | |||||||||||
Tax benefit on tax-credit investments (7) | (K) | $ 1,624 | $ 4,918 | $ 1,852 | $ 2,777 | $ 1,588 | |||||
Non-interest income charge on tax-credit investments (8) | (L) | (1,329) | (4,428) | (1,525) | (1,938) | (1,101) | |||||
Net income on tax-credit investments | (K+L) | 295 | 490 | 327 | 839 | 487 | |||||
Intangible amortization | (M) | $ 801 | $ 572 | $ 749 | $ 787 | $ 819 | |||||
Fully taxable equivalent income adjustment (6) | (N) | 2,511 | 2,228 | 2,004 | 1,972 | 1,894 | |||||
(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) Revisions were made to the calculations of the net interest margin, efficiency ratio, and yields for the interest annualization and the fully | |||||||||||
taxable equivalent calculations. Prior period measures were revised to include these changes. | |||||||||||
(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, low-income housing, new market projects, and renewable energy projects. | |||||||||||
(8) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. | |||||||||||
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/berkshire-hills-reports-first-quarter-earnings-dividend-declared-300444523.html
SOURCE Berkshire Hills Bancorp, Inc.
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