Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Q3 2021 Earnings Presentation
22 slides from Beacon Financial's earnings presentation, Oct 21, 2021
Slide 1: Berkshire Hills Bancorp 3Q 2021 Earnings Presentation
BERKSHIRE HILLS BANCORP 3 Q 2 0 2 1 E A R N I N G S P R E S E N TAT I O N October 21, 2021
Slide 2: Forward-Looking Statements
F O R WA R D - L O O K I N G S TAT E M E N T S 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, including statements regarding our outlook for earnings,
Slide 3: 3Q 2021 - Highlights of the Quarter
3Q 2021 - HIGHLIGHTS OF THE QUARTER • GAAP EPS of $1.31 (+$0.89 YoY and +$0.88 QoQ) Solid • Adjusted EPS of $0.53 unchanged YoY and +$0.09 QoQ Financials • Expenses excluding restructuring charges relatively flat; +1% YoY and -1% QoQ • Adjusted ROTCE 9.5% and adjusted ROA 0.86% • Loan portfolio deli
Slide 4: 3Q 2021 Financial Highlights - Income Statement
3 Q 2 0 2 1 F I N A N C I A L H I G H L I G H T S - I N C O M E S TAT E M E N T HIGHLIGHTS On an adjusted basis: • Net income -3% YoY and +16% QoQ • Revenues -5% YoY with NII weakness partially offset by fee revenue strength o NII decline driven primarily by runoff of PPP and non-strategic loan port
Slide 5: Financial Highlights - Average Assets
3 Q 2 0 2 1 F I N A N C I A L H I G H L I G H T S – AV E R A G E A S S E T S ($M) -7% HIGHLIGHTS -3% 11,843 11,425 11,065 • Loan portfolio declined 2,640 3.84% driven primarily by runoff of 3.68% 3.77% PPP and non-strategic loan 4,009 4,074 portfolios, sale of Mid- Atlantic business and continued at
Slide 6: Financial Highlights - Average Liabilities
3 Q 2 0 2 1 F I N A N C I A L H I G H L I G H T S – AV E R A G E L I A B I L I T I E S -7% ($M) HIGHLIGHTS -4% 11,527 277 11,243 0.73% 351 10,776 • Significant improvement in 279 cost of funds 2,559 2,787 o 3Q21 cost of funds at 0.61% 2,901 31bps; down 42bps YoY and 5bps QoQ Other Liabilities • Sign
Slide 7: 3Q 2021 Financial Highlights - Funding Trends
3Q 2021 FINANCIAL HIGHLIGHTS - FUNDING TRENDS +1% -0.13% HIGHLIGHTS 9,419 9,370 9,284 9,506 9,494 • Low cost NOW, Money DEPOSITS Market and Savings ($M, AVG BAL) 1 deposits +6% YoY 4,731 4,896 5,042 5,109 5,065 NOW, Money Market, Savings (N, M & S) • Customer CD yields continue repricing lower; Cust
Slide 8: 3Q 2021 Financial Highlights - Fee Revenue
3Q 2021 FINANCIAL HIGHLIGHTS – FEE REVENUE ($M) +4% HIGHLIGHTS -3% • Adjusted non-interest 22.5 21.9 income +4% YoY and 21.0 -3% QoQ o YoY increase driven by strength in deposit related fees, loan fees and wealth management fees o QoQ decline due to Non-Interest Revenue only 2 months of insurance re
Slide 9: 3Q 2021 Financial Highlights - Expenses
3Q 2021 FINANCIAL HIGHLIGHTS - EXPENSES ($M) +1% HIGHLIGHTS -1% 67.5 68.9 68.0 • Adjusted expenses essentially flat YoY and QoQ o Lower occupancy, equipment and other miscellaneous expenses 68% 69% Adjusted Expenses o Offsets were higher 65% compensation & benefits, Efficiency Ratio and professional
Slide 10: 3Q 2021 Financial Highlights - Asset Quality
3Q 2021 FINANCIAL HIGHLIGHTS – ASSET QUALITY ($M) SIGNIFICANT IMPROVMENTS IN OVERALL ASSET QUALITY COVID Loan Modifications Delinquency Trends -85% 447 Deferrals -96% 93 1.18% 91 4.98% from 2Q20 Peak 88 350 1.15% 0.92% 0.87% 28 4.33% 0.98% 35 67 214 41 59 19 2.79% -34% 22 98 65 65 47 56 48 1.36% 0.9
Slide 11: 3Q 2021 - Capital and Liquidity
3 Q 2 0 2 1 – C A P I TA L A N D L I Q U I D I T Y 1 Capital Ratios ($M) 2018 2019 2020 1Q21 2Q21 3Q21 HIGHLIGHTS Common equity tier 1 ratio 11.4% 12.1% 13.8% 14.2% 14.3% 15.3% • CET1 and Total Capital Ratio for 3Q21 at 15.3% and 17.7% Tier 1 capital ratio 11.6% 12.3% 14.1% 14.5% 14.6% 15.6% respect
Slide 12: 3Q 2021 - BEST Progress vs Goal
3Q 2021 – “BEST” PROGRESS VS GOAL BEST 3 YEAR TARGET for 2024 10-12% 100-105 bps $180-200M Top 25% Top 25% ROTCE ROA PPNR2 ESG NPS3 Increase ROTCE Increase ROA Increase PPNR Become top quartile Become top quartile by 700-900bps* by 75-80bps* by $80-100M* bank by leading ESG Net Promoter Score indexe
Slide 13: Strengthening Commitment to ESG & Community Impact
S T R E N G T H E N I N G C O M M I T M E N T T O E S G & C O M M U N I T Y I M PA C T Fueling Small Businesses Community Financing & Philanthropy Berkshire’s multi-year BEST Community Comeback Financial will help strengthen communities through lending and Access & investments in four key areas: fue
Slide 14: Berkshire Bank - A Unique Comeback Story
B E R K S H I R E B A N K – A U N I Q U E C O M E B A C K S T O RY ! Strong capital position that will enable loan growth & capital deployment to shareholders ! Combination of digitization, productivity growth & partnerships to drive originations growth ! Renewed focus on Customer Experience and NPS
Slide 15: Appendix
APPENDIX 15 >»«BerkshireHillsBancorp
Slide 16: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9) At or for the Quarters Ended Sept. 30, Dec. 31, March 31, June 30, Sept. 30, (in thousands) 2020 2020 2021 2021 2021 Total revenue from continuing operations (A) $ 97,01
Slide 17: Non-GAAP Reconciliation Notes
Efficiency ratio (2)(6) (D-Q)/(B+O+R) 65.39 71.03 71.32 67.82 6 Net interest margin, FTE N O N - G A A P R E C O N C I L I AT I2.61 O N - N 2.61 OTES 2.62 2.62 Supplementary data (in thousands) Tax benefit on tax-credit investments (7) (O) $ 1,377 $ 1,334 $ 41 $ 79 $ 2 Non-interest income charge on
Slide 18: 3Q 2021 - COVID Sensitive Segments
3Q 2021 – COVID SENSITIVE SEGMENTS Covid sensitive segments include: Hospitality, Firestone, Restaurant & Nursing/Assisted Living loans ($M) SIGNIFICANT IMPROVMENTS IN COVID SENSITIVE SEGMENT ASSET QUALITY Loan Balances COVID Deferrals -20% -81% -11% 273 276 912 868 840 822 51 51 324 734 321 310 298
Slide 19: 3Q 2021 - Hospitality & Firestone
3 Q 2 0 2 1 – H O S P I TA L I T Y & F I R E S T O N E HIGHLIGHTS HIGHLIGHTS • Travel and hospitality portfolio has responded positively to • Firestone segment exposure down 14% QoQ and 31% YoY economic reopening; Average occupancy and room revenue have increased by 37% and 76% respectively from Aug
Slide 20: 3Q 2021 - Restaurants & Nursing/Assisted Living
3 Q 2 0 2 1 – R E S TA U R A N T S & N U R S I N G / A S S I S T E D L I V I N G HIGHLIGHTS HIGHLIGHTS • Deferrals reduced to zero as states have lifted restrictions on • Deferrals have reduced to zero and original payment terms have operations and capacity limits resumed • Criticized and Nonaccrual
Slide 21: 3Q 2021 - PPP Impact
3 Q 2 0 2 1 - P P P I M PA C T 1 Includes interest income and net deferred fee income recognition 21 2 Started to refer PPP loans in 1Q21 3 BHLB Avg Funding Cost on Avg PPP loans ($ Millions)
Slide 22: Jeffrey W. Kip
J E F F R E Y W. K I P Mr. Kip, age 53, is Chief Executive Officer of Angi International which provides internet tools and resources for home improvement, maintenance, and repair projects. Angi International is a subsidiary of IAC/InterActive Corp (NASDAQ: IAC), which owns and manages popular online
Berkshire Hills Bancorp — Q3 2021 Earnings Presentation on 6ix