Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Q4 2021 Earnings Presentation
25 slides from Beacon Financial's earnings presentation, Jan 20, 2022
Slide 1: Berkshire Hills Bancorp 4Q 2021 Earnings Presentation
BERKSHIRE HILLS BANCORP 4 Q 2 0 2 1 E AR N I N G S P R E S E N TAT I O N January 20, 2022
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
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: 4Q21 and FY2021 Highlights
4Q21 AND FY2021 HIGHLIGHTS 4Q21 FY2021 • Adj EPS $0.42 (~ +50% YoY) • Adj Revenue of $89.8m (-6% YoY) • Adj EPS of $1.69 (vs. $.60 in 2020) Financial • Adj Expenses of $68.5m (-4% YoY) • Adj Revenue of $382.3m (vs. $389.4m in 2020) Performance • Adj ROTCE 7.34% (+184bps YoY) • Adj Expenses of $280.1
Slide 4: FY2020 vs FY2021 Financial Highlights - Income Statement
F Y 2 0 2 0 V S F Y 2 0 2 1 F I N A N C I A L H I G H L I G H T S - I N C O M E S TAT E M E N T HIGHLIGHTS On an adjusted basis for FY2021 vs. FY2020: • Revenues -2% YoY with lower NII partially offset by fee revenue growth o NII decline driven primarily by runoff of PPP and non-strategic loans, and
Slide 5: 4Q 2021 Financial Highlights - Income Statement
4 Q 2 0 2 1 F I N A N C I A L H I G H L I G H T S - I N C O M E S TAT E M E N T HIGHLIGHTS On an adjusted basis: • Revenues -6% YoY with lower NII partially offset by fee revenue growth o Lower NII driven primarily by runoff of non-strategic loan portfolios, PPP balances decline, loan attrition, and
Slide 6: 4Q 2021 Financial Highlights - Average Assets
4 Q 2 0 2 1 F I N A N C I A L H I G H L I G H T S – AV E R A G E A S S E T S ($M) -7% HIGHLIGHTS -3% 11,541 • Loan portfolio declined YoY 11,065 10,742 driven primarily by runoff of non-strategic loan portfolios, 2,945 3.62% 3.77% 3.76% loan attrition, and sale of Mid- 4,074 3,976 Atlantic portfolio
Slide 7: 4Q 2021 Financial Highlights - Average Liabilities
4 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% HIGHLIGHTS ($M) 0.60% -4% 11,295 • Significant improvement in 284 10,775 cost of funds 278 10,246 185 o 4Q21 cost of funds at 2,542 26bps; down 34bps YoY 2,901 and 5bps QoQ 0.47% 3,038 Other Liabilities • Sign
Slide 8: 4Q 2021 Financial Highlights - Funding Trends
4Q 2021 FINANCIAL HIGHLIGHTS - FUNDING TRENDS +2% +1% HIGHLIGHTS 9,370 9,284 9,506 9,494 9,590 DEPOSITS • Low cost NOW, Money Market and Savings ($M, AVG BAL)1 deposits +4% YoY 4,896 5,042 5,109 5,065 5,083 NOW, Money Market, Savings (N, M & S) • Customer CD yields Customer CDs continue repricing lo
Slide 9: 4Q 2021 Financial Highlights - Fee Revenue
4Q 2021 FINANCIAL HIGHLIGHTS – FEE REVENUE ($M) +4% HIGHLIGHTS -7% 21.9 • Adjusted non-interest 20.5 income +4% YoY and 19.7 -7% QoQ • YoY increase driven by strength in loan fees and revenue, and Wealth Adj Non-Interest Management fees; Revenue Partially offset by lack of insurance fees due to sale
Slide 10: 4Q 2021 Financial Highlights - Expenses
4Q 2021 FINANCIAL HIGHLIGHTS - EXPENSES ($M) HIGHLIGHTS • Continued expense discipline -4% resulting in adjusted expenses -4% +1% YoY and marginally higher QoQ 71.3 o Lower occupancy, equipment and 68.0 68.5 other miscellaneous expenses Adjusted Expenses o Lower professional services expenses; profe
Slide 11: 4Q 2021 Financial Highlights - Asset Quality
4Q 2021 FINANCIAL HIGHLIGHTS – ASSET QUALITY ($M) SIGNIFICANT IMPROVMENTS IN OVERALL ASSET QUALITY COVID Loan Modifications Delinquency Trends -96% 350 1.18% 1.14% 93 1.15% 91 4.33% 0.92% 214 0.87% 78 28 35 67 59 2.79% 19 43 -78% 98 22 65 65 56 48 37 1.36% 0.95% 14 0.21% 35 4Q20 1Q21 2Q21 3Q21 4Q21
Slide 12: 4Q 2021 - Capital and Liquidity
4 Q 2 0 2 1 – C A P I TA L A N D L I Q U I D I T Y HIGHLIGHTS • CET1 and Total Capital Ratio for 4Q21 at 15.0% and 17.3% respectively • Modest capital consumed in the quarter primarily driven by growth in balances and new commitments • Common stock dividend of $0.12 per share, or $6.1m, reflects ~30
Slide 13: 2022 Outlook
2022 OUTLOOK • Low to mid single digit loan growth Balance Sheet • Low single digit deposit growth • Opportunistic deployment of cash into securities • Up mid single digits on a reported basis using market implied forward Net Interest Income interest rates o Up high single digits adjusting for PPP a
Slide 14: 4Q 2021 - BEST Progress vs Goal
4Q 2021 – “BEST” PROGRESS VS GOAL BEST 3 YEAR TARGET for 2024 100-105 Top 25% 10-12% $180-200M Top 25% bps ROTCE ROA PPNR2 ESG NPS3 Increase ROTCE Increase ROA Increase PPNR Become top Become top quartile by 700-900bps* by 75-80bps* by $80-100M* quartile bank by Net Promoter Score leading ESG bank i
Slide 15: 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 – supporting loan growth & continued capital return to shareholders ▪ ABOVE AVERAGE ASSET SENSITIVITY - enabling improved financial performance and ROTCE ▪ ORGANIC GROWTH FOCUS - driven by combination of ini
Slide 16: Appendix
APPENDIX 16 >< BerkshireHillsBancorp
Slide 17: Non-GAAP Reconciliation
N O N - G A A P R E C O N C I L I AT I O N ( 2 0 2 0 - 2 0 2 1 ) Dec. 31, Dec. 31, (in thousands) 2020 2021 Total revenue from continuing operations (A) $ 383,089 $ 434,414 Adj: Net securities losses (1) 7,520 787 Adj: Net (gains) on sale of business operations and assets (1,240) (52,942) Total adju
Slide 18: Non-GAAP Reconciliation - Notes
GAAP return on assets (4.15) 0.97 Adjusted return on assets (2) 0.24 0.68 N O N - G A A P R E C O N C I L I AT I O N - N O T E S PPNR from continuing operations/assets (2) (3.55) 1.23 Adjusted PPNR/assets (2) 0.85 0.85 Efficiency ratio (2)(6) (D-Q)/(B+O+R) 68.53 69.96 Net interest margin, FTE 2.72 2
Slide 19: Non-GAAP Reconciliation (By Quarter)
N O N - G A A P R E C O N C I L I AT I O N ( B Y Q U A R T E R ) Dec. 31, March 31, June 30, Sept. 30, Dec. 31, (in thousands) 2020 2021 2021 2021 2021 Total revenue from continuing operations (A) $ 99,036 $ 101,286 $ 97,404 $ 145,003 $ 90,721 Adj: Net securities losses/(gains) (1) (2,405) 31 484 16
Slide 20: Non-GAAP Reconciliation - Notes
Adjusted return on assets (2) 0.24 N O N - G A A P R E C O N C I L I AT I O N - N O T E S PPNR from continuing operations/assets (2) (3.55) Adjusted PPNR/assets (2) 0.85 Efficiency ratio (2)(6) (D-Q)/(B+O+R) 68.53 6 Net interest margin, FTE 2.72 Supplementary data (in thousands) Tax benefit on tax-c
Slide 21: 4Q 2021 - Covid Sensitive Segments
4Q 2021 – COVID SENSITIVE SEGMENTS Covid sensitive segments include: Hospitality, Firestone, Restaurant & Nursing/Assisted Living loans ($M) SIGNIFICANT IMPROVEMENTS IN COVID SENSITIVE SEGMENT ASSET QUALITY (EOP basis) Loan Balances COVID Deferrals 276 868 840 -3% 822 51 735 710 321 310 298 249 176
Slide 22: 4Q 2021 - Hospitality & Firestone
4 Q 2 0 2 1 – H O S P I TA L I T Y & F I R E S T O N E HIGHLIGHTS HIGHLIGHTS • Travel and hospitality portfolio has responded positively to • Firestone segment exposure -11% QoQ and -36% YoY economic reopening; Average occupancy and room revenue have increased by 18% and 133%, respectively (Nov ‘21
Slide 23: 4Q 2021 - Restaurants & Nursing/Assisted Living
4 Q 2 0 2 1 – R E S TA U R A N T S & N U R S I N G / A S S I S T E D L I V I N G HIGHLIGHTS HIGHLIGHTS • Deferrals reduced to zero as states have lifted restrictions on • Deferrals have reduced to zero and original payment terms operations and capacity limits have resumed • Criticized levels -12% Qo
Slide 24: 4Q 2021 - PPP Impact
4 Q 2 0 2 1 - P P P I M PA C T Balance Sheet ($M) 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Avg Earning Assets $11,966 $11,843 $11,642 $11,710 $11,694 $11,220 $10,742 Avg Loans 9,476 9,203 8,596 7,869 7,416 $6,991 $6,766 Avg PPP Loans (in C&I) 461 707 685 546 321 $90 $37 Avg Loans Ex PPP Loans 9,015 8,496
Slide 25: Nina A. Charnley, New Independent Board Member
N I N A A . C H A R N L E Y, N E W I N D E P E N D E N T B O A R D M E M B E R Ms. Charnley, age 66, was Senior Managing Director, Enterprise Customer Experience Executive at TIAA, a Fortune 100 financial services company with over $1 trillion in assets under management and five million customers. I
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