Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Q4 2023 Earnings Presentation
26 slides from Beacon Financial's earnings presentation, Jan 25, 2024
Slide 1: Berkshire Hills Bancorp 4Q 2023 Earnings Presentation
BERKSHIRE HILLS BANCORP 4 Q 2 0 2 3 E AR N I N G S P R E S E N TAT I O N January 25, 2024
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: 4Q23 and FY2023 Highlights
4Q23 AND FY2023 HIGHLIGHTS 4Q23 FY2023 Rate environment weighed on earnings1 • Net Income $20.2M (-6% QoQ) • Net Income $93.2M (-7% YoY) Financial Performance • EPS of $0.47 (-6% QoQ) • EPS of $2.14 (-2% YoY) • ROTCE (including unrealized losses on AFS • ROTCE (including unrealized losses on AFS sec
Slide 4: FY2023 BEST Progress vs. Targets
F Y 2 0 2 3 – “ B E S T ” P R O G R E S S V S . TA R G E T S BEST 3 YEAR TARGETS for JUNE 2024 10-12% 100-105 bps $180-200M Top 25% Top 25% ROTCE2 ROA PPNR3 ESG NPS®4 Increase ROTCE Increase ROA Increase PPNR Become top quartile Become top quartile by 700-900bps* by 75-80bps* by $80-100M* bank by le
Slide 5: FY 2023 Overview
FY 2023 OVERVIEW GAAP NET INCOME OF $69.6M, or $1.60 PER COMMON SHARE • Operating Earnings: $93.2M, or $2.14 per common share (-$7.3M or -$0.05 YoY) • Net Interest Margin, FTE: 3.27% (+1 bps YoY) • Net Interest Income, non FTE1: $369.0M (+$24.5M or +7% YoY) • Operating Non-Interest Income: $67.8M (-
Slide 6: 4Q 2023 Overview
4Q 2023 OVERVIEW GAAP NET INCOME OF -$1.4M, or -$0.03 PER COMMON SHARE • Operating Earnings: $20.2M, or $0.47 per common share (-$1.3M or -$0.03 QoQ; -$8.1M or -$0.17 YoY) • Net Interest Margin, FTE: 3.11% (-7 bps QoQ; -73 bps YoY) • Net Interest Income, non FTE1: $88.4M (-$1.9M or -2% QoQ; -$13.7M
Slide 7: Loans: Average Balances ($M)
L O A N S : AV E R A G E B A L A N C E S ($M) CRE C&I Resi Consumer +38 (+0.4%) 8,952 84 38 8,990 513 -69 -15 498 2,618 2,656 1,436 1,367 QoQ 4,385 4,469 3Q23 CRE C&I Resi Consumer 4Q23 +908 (+11%) 542 8,990 535 8,082 -65 498 -104 563 2,656 2,114 1,367 YoY 1,471 4,469 3,934 4Q22 CRE C&I Resi Consume
Slide 8: Securities Portfolio Sale
SECURITIES PORTFOLIO SALE SECURITIES SOLD $267 million Market Value1 Weighted Avg. Book Yield 2.14% REALIZED LOSS $25.1 million pre-tax in 4Q23 $19.0 million post-tax PORTFOLIO SIZE Post trade Portfolio is 13% of Total Assets ESTIMATED EARNBACK ~3.0 Years Pay down wholesale funding USE OF PROCEEDS W
Slide 9: Deposits: Average Balances ($M)
D E P O S I T S : AV E R A G E B A L A N C E S ($M) Non-Interest Bearing NOW Money Market Savings Time +306 (+3%) 298 118 9,936 9,630 -65 -25 -20 2,440 2,558 1,082 1,062 QoQ 2,995 2,697 858 833 2,553 2,488 3Q23 Non-Interest NOW Money Market Savings Time 4Q23 Bearing +205 (+2%) 9,731 1,003 9,936 176
Slide 10: Net Interest Income ($000s)
NET INTEREST INCOME ($000S) -1,913 (-2%) 2,566 90,334 4,420 88,421 -50 -8,849 QoQ 3Q23 Loans Deposits Borrowings Investments 4Q23 -13,671 (-13%) 27,594 102,092 1,560 88,421 -35,928 -6,897 YoY 4Q22 Loans Deposits Borrowings Investments 4Q23 10 Note: NII on an FTE basis was $90.4M (-$1.9M or -2% QoQ;
Slide 11: Operating Non-Interest Income ($000s)
O P E R AT I N G N O N - I N T E R E S T I N C O M E ($000S) -791 (-5%) 17,465 -311 594 16,674 -821 -166 -87 QoQ 3Q23 Deposit Loan Related Fees Gain on SBA Wealth Other 4Q23 Related Fees Loan Sales Management Fees +1,020 (+7%) 1,355 16,674 15,654 188 139 -65 -597 YoY 4Q22 Deposit Loan Related Fees G
Slide 12: Operating Non-Interest Expense ($000s)
O P E R AT I N G N O N - I N T E R E S T E X P E N S E ($000S) +1,417 (+2%) 994 36 75,323 73,906 710 -60 -263 QoQ 3Q23 Compensation Occupancy and Technology and Professional Other 4Q23 and Benefits Equipment Communications Services +2,692 (+4%) 1,597 264 75,323 2,127 -418 72,631 -878 YoY 4Q22 Compen
Slide 13: Asset Quality ($M)
ASSET QUALITY ($M) NON-PERFORMING LOANS NET CHARGE OFFS 0.58% 0.42% 0.37% 0.31% 0.32% 0.30% 0.32% 0.24% 0.27% 31.1 28.4 27.0 26.6 0.26% 11.7 0.24% 0.20% 6.9 5.8 21.4 5.4 4.4 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 NPLs NPLs/Total Loans 10 Year Avg. NCOs Annualized NCO/Avg. Loans 10 Year Av
Slide 14: CRE Is Well Diversified by Property Type and Geography
CRE IS WELL DIVERSIFIED BY PROPERTY TYPE AND GEOGRAPHY Portfolio by Geography Portfolio Metrics ➢ CRE Portfolio is diversified across our markets, 7% with no exposure to NYC 8% Massachusetts 5% New York ➢ CRE portfolio is composed of diverse property 36% types; Retail and Multifamily properties are
Slide 15: Office Portfolio
OFFICE PORTFOLIO Office Portfolio & Asset Quality Office Portfolio Metrics Rural, ➢ As of 4Q23, Office CRE portfolio totals $493M or 5.5% 7% of Total Loans ~95% of portfolio is within ➢ Solid portfolio performance with NPLs of ~0.7% and footprint and 68% is CBD, no NCOs in 2023 25% Suburban ➢ No exp
Slide 16: Returns (%)
RETURNS (%) ROAA 1.10 0.96 1.02 0.95 0.79 0.73 0.79 0.68 0.66 Operating ROAA GAAP ROAA -0.05 4Q22 1Q23 2Q23 3Q23 4Q23 ROTCE 12.40 11.96 10.59 10.09 9.59 9.27 8.90 9.83 9.59 8.27 7.41 8.26 6.91 6.76 Operating ROTCE, including unrealized losses on AFS securities Operating ROTCE, excluding unrealized l
Slide 17: Capital Ratios
C A P I TA L R AT I O S 1 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Berkshire Hills Bancorp, Inc. Common Equity Tier 1 Capital Ratio (%) 12.4 12.1 12.1 12.1 12.0 Tier 1 Risk-Based Capital Ratio (%) 12.6 12.4 12.3 12.3 12.3 Total Risk-Based Capital Ratio (%)
Slide 18: 2024 Outlook
2024 OUTLOOK FY‘23 Actuals FY‘24 Outlook Loans: $9.0B $9.5B to $9.7B Ending Balance Deposits: $10.6B Sheet Adj. Deposits: $10.0B1 Adj. Deposits $10.2B to $10.3B NII $369.0M $362.0M to $364.0M Non FTE Non-interest $67.8M $76.0M to $78.0M2 Income FY’23 Adj. for PAM: $75.9M Credit Provision Expense: $3
Slide 19: Appendix
APPENDIX 19 >< BerkshireHillsBancorp
Slide 20: Run-Off Portfolios
RUN-OFF PORTFOLIOS EOP ($M) Lifetime % 4Q23 4Q23 2Q23 3Q23 4Q23 2Q23 3Q23 4Q23 Loss Portfolios 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Total Yield NCOs NCOs NCOs NPLs NPLs NPLs Rates1 Loans (%) ($M) ($M) ($M) ($M) ($M) ($M) (%) Upstart 152 140 127 115 103 90 1.0% ~10% 2.3 2.3 2.4 3.58 0.04 0.07 0.08 Firestone
Slide 21: Historical Net Charge-Offs (%)
HISTORICAL NET CHARGE -OFFS (%) Annualized NCO / Avg. Loans 3.0 2.5 2.0 1.5 1.0 0.83 0.58 0.5 0.38 0.0 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 All FDIC Banks All FDIC Banks Avg. FDIC Banks w/ Assets $1Bn - $10Bn FDIC Banks w/ Assets $1Bn - $10Bn Av
Slide 22: Sufficient Liquidity to Cover All Uninsured Deposits
SUFFICIENT LIQUIDITY TO COVER ALL UNINSURED DEPOSITS Estimated Uninsured Deposits and Available Liquidity ($M) Available Liquidity 5,432 ($M) 12/31/2023 Uninsured Deposits¹ 3,993 1,540 Less: Collateralized Deposits² 278 Uninsured Deposits (after exclusions) 3,715 Total Deposits 10,633 2,500 Uninsure
Slide 23: Non-GAAP Reconciliation (1-3)
N O N - G A A P R E C O N C I L I AT I O N ( 2 0 2 2 - 2 0 2 3 ) At or for the Years Ended Dec. 31, Dec. 31, (in thousands) 2023 2022 Total non-interest income $ 42,782 $ 68,937 Adj: Fair value adjustments on securities (1) - 2,037 Adj: Loss on sale of AFS securities 25,057 (6) Total operating non-i
Slide 24: Non-GAAP Reconciliation - Notes
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 (1) Starting March 31, 2023, fair value adjustments on securities are included in operating income. (2) Non-GAAP financial measure. (3) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not su
Slide 25: 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 ) At or for the Quarters Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, (in thousands) 2023 2023 2023 2023 2022 Total non-interest income $ (8,383) $ 17,465 $ 17,094 $ 16,606 $ 15,654 Adj: Fair value adjustments on securities (1) -
Slide 26: Non-GAAP Reconciliation - Notes
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 (1) Starting March 31, 2023, fair value adjustments on securities are included in operating income. (2) Non-GAAP financial measure. (3) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not su
Berkshire Hills Bancorp — Q4 2023 Earnings Presentation on 6ix