Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Q1 2024 Earnings Presentation
24 slides from Beacon Financial's earnings presentation, Apr 18, 2024
Slide 1: Berkshire Hills Bancorp 1Q 2024 Earnings Presentation
Berkshire Hills Bancorp NYSE:BHLB 1Q 2024 Earnings Presentation APRIL 18, 2024
Slide 2: Forward-Looking Statements
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, including statements regarding our outlook for earnings, net interest margin
Slide 3: 1Q 2024 – Highlights of the Quarter
1Q 2024 – Highlights of the Quarter Improved operating earnings QoQ1 • Operating Net Income of $20.9M (+4% QoQ and -24% YoY) • Operating EPS of $0.49 (+4% QoQ and -22% YoY) Financial Performance • GAAP EPS of -$0.47 (Securities Sale after-tax loss $38.3M or -$0.89 / Non-Operating Expenses of $2.8M o
Slide 4: Sale of Select Upstate and Eastern NY Branches Summary
Sale of Select Upstate and Eastern NY Branches Summary Sale of Ten Branches in New York Enhances Efficiency and Profitability of BHLB’s Branch Network and Strengthens Focus in Core New York Markets BHLB New York Branches Pro Forma Summary • Announced sale includes ~$485M in deposits and ~$58M of rel
Slide 5: Securities Portfolio Sale
Securities Portfolio Sale Partially offset deposits to be sold in TRANSACTION RATIONALE New York Branch Transaction $361.8 million Market Value1 SECURITIES SOLD Weighted Avg. Book Yield 1.98% $49.9 million pre-tax in 1Q24 REALIZED LOSS $38.3 million post-tax / -$0.89 per share PORTFOLIO SIZE Post tr
Slide 6: 1Q 2024 Overview
1Q 2024 Overview GAAP NET INCOME OF -$20.2M, or -$0.47 PER COMMON SHARE • Operating Earnings: $20.9M, or $0.49 per common share (+$0.7M or +$0.02 QoQ; -$6.7M or -$0.14 YoY) • Net Interest Margin, FTE: 3.15% (+4 bps QoQ; -43 bps YoY) • Net Interest Income, non FTE1: $88.1M (-$0.3M or < -1% QoQ; -$9.4
Slide 7: Loans: Average Balances
($M) Loans: Average Balances CRE C&I Resi Consumer NY Branch Loans HFS +69 (+0.8%) 9,059 8,990 84 12 18 18 498 -12 -33 465 2,656 2,668 1,367 1,355 QoQ 4,469 4,553 4Q23 CRE C&I Resi Consumer NY Branch 1Q24 Loans HFS +544 (+6.4%) 9,059 387 385 18 18 8,515 465 -74 539 -172 2,668 2,283 1,355 1,527 YoY 4
Slide 8: Deposits: Average Balances
($M) Deposits: Average Balances Non-Interest Bearing Money Market Time NOW Savings NY Branch Deposits HFS +42 (+0.4%) 9,936 88 3 149 9,978 149 -140 -34 -24 2,558 2,561 1,062 1,038 QoQ 2,995 3,083 833 799 2,488 2,348 4Q23 Non-Interest NOW Money Market Savings Time NY Branch 1Q24 Bearing Deposits HFS
Slide 9: Net Interest Income
($000S) Net Interest Income -281 (0%) 1,216 88,421 2,256 254 88,140 -4,006 QoQ 4Q23 Loans Deposits Borrowings Investments 1Q24 -9,393 (-10%) 19,070 97,533 1,698 620 88,140 -30,780 YoY 1Q23 Loans Deposits Borrowings Investments 1Q24 9 Note: NII on an FTE basis was $90.1M (-$0.3M or < -1% QoQ; -$9.3M
Slide 10: Operating Non-Interest Income
($000S) Operating Non-Interest Income +636 (+4%) 1,283 17,310 605 490 16,674 -176 -683 -883 QoQ 4Q23 Deposit Loan Related Gain on Wealth FV Adj. on Other 1Q24 Related Fees Fees SBA Loans Management Securities Fees +704 (+4%) 1,515 17,310 16,606 194 145 -6 -795 -349 YoY 1Q23 Deposit Loan Related Gain
Slide 11: Operating Non-Interest Expense
($000S) Operating Non-Interest Expense -2,920 (-4%) 640 145 75,323 -1,422 -741 72,403 -1,542 QoQ 4Q23 Compensation Occupancy and Technology Professional Other 1Q24 and Benefits Equipment Services +412 (+1%) 1,664 433 71,991 72,403 -681 -601 -403 YoY 1Q23 Compensation Occupancy and Technology Profess
Slide 12: Asset Quality
($M) Asset Quality NON-PERFORMING LOANS NET CHARGE OFFS 0.41% 0.32% 0.27% 0.32% 0.26% 0.31% 0.30% 0.24% 0.20% 0.24% 0.24% 0.18% 27.0 28.4 26.6 6.9 21.4 21.5 5.8 5.4 4.4 4.0 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q23 4Q23 1Q24 NPLs NPLs/Total Loans 10 Year Avg. NCOs Annualized NCO/Avg. Loans 10 Year Avg
Slide 13: CRE is Well-Diversified by Property Type and Geography
C R E i s W e l l - D i v e r s i f i e d b y P r o p e r t y Ty p e a n d G e o g r a p h y Portfolio by Geography Portfolio Metrics ➢ CRE Portfolio is diversified across our markets, 7% with no exposure to NYC 7% Massachusetts 5% New York ➢ CRE portfolio is composed of diverse property 37% Connect
Slide 14: Office Portfolio
Office Portfolio Office Portfolio & Asset Quality Office Portfolio Metrics Rural, ➢ As of 1Q24, Office CRE portfolio totals $501M or 5.5% 6% of Total Loans ~94% of portfolio is within ➢ Solid portfolio performance with NPLs of ~0.7% and CBD, footprint and 68% is no NCOs 26% Suburban ➢ No exposure to
Slide 15: Multifamily Portfolio
Multifamily Portfolio Multifamily Portfolio Multifamily Portfolio Metrics ➢ Multifamily Portfolio is diversified across our markets, with no exposure to NYC properties ➢ As of 1Q24, Multifamily portfolio totals ~$618MM or ~7.0% of Total Loans ➢ Solid portfolio performance with no NPLs or NCOs ➢ No e
Slide 16: Returns
Returns ROAA 0.96 0.95 0.79 0.73 0.68 0.71 0.79 0.66 -0.05 Operating ROAA GAAP ROAA -0.69 1Q23 2Q23 3Q23 4Q23 1Q24 ROTCE 11.96 11.96 10.09 9.27 8.90 8.73 10.09 8.45 -0.24 Operating ROTCE GAAP ROTCE -7.73 1Q23 2Q23 3Q23 4Q23 1Q24 16 Note: See Appendix for discussion and reconciliation of non-GAAP fin
Slide 17: Sufficient Liquidity to Cover All Uninsured Deposits
Sufficient Liquidity to Cover All Uninsured Deposits Estimated Uninsured Deposits and Available Liquidity ($M) Available Liquidity 5,432 ($M) 12/31/2023 3/31/243 4,853 Uninsured Deposits¹ 3,993 3,819 1,540 Less: Collateralized Deposits² 278 189 1,308 Uninsured Deposits (after exclusions) 3,715 3,630
Slide 18: Capital Ratios
Capital Ratios 1 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Berkshire Hills Bancorp, Inc. Common Equity Tier 1 Capital Ratio (%) 12.1 12.1 12.1 12.0 11.6 Tier 1 Risk-Based Capital Ratio (%) 12.4 12.3 12.3 12.3 11.8 Total Risk-Based Capital Ratio (%) 14.4 14.4 14
Slide 19: Appendix
Appendix 19 »BerkshireHillsBancorp
Slide 20: 1Q 2024 – BEST Progress vs. Targets
1 Q 2 0 2 4 – “ 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% ROTCE ROA PPNR2 ESG NPS®3 Increase ROTCE Increase ROA Increase PPNR Become top quartile Become top quartile by 700-900bps* by 75-80bps* by $80-100M* bank by lea
Slide 21: Run-Off Portfolios
Run-Off Portfolios EOP ($M) Lifetime % 1Q24 1Q24 1Q24 4Q23 3Q23 1Q24 4Q23 3Q23 Loss Portfolios 1Q24 Total 4Q23 3Q23 2Q23 1Q23 Yield NCOs NCOs NCOs NPLs NPLs NPLs Rates1 Loans (%) ($M) ($M) ($M) ($M) ($M) ($M) (%) Upstart 78 0.9% 90 103 115 127 ~10% 2.8 2.4 2.3 4.5 0.06 0.08 0.07 Firestone 66 0.7% 77
Slide 22: Historical Net Charge-Offs
(%) Historical Net Charge -Offs Annualized NCO / Avg. Loans 3.0 2.5 2.0 1.5 1.0 0.81 0.57 0.5 0.37 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 ’23 All FDIC Banks All FDIC Banks Avg. FDIC Banks w/ Assets $1Bn - $10Bn FDIC Banks w/ Assets $1Bn - $10B
Slide 23: Non-GAAP Reconciliation (By Quarter)
Non-GAAP Reconciliation (By Quarter) At or for the Quarters Ended March 31, Dec. 31, Sept. 30, June 30, March 31, (in thousands) 2024 2023 2023 2023 2023 Total non-interest income $ (32,599) $ (8,383) $ 17,465 $ 17,094 $ 16,606 Adj: Loss on sale of AFS securities 49,909 25,057 - - - Total operating
Slide 24: Non-GAAP Reconciliation (By Quarter Continued and Notes)
Non-GAAP Reconciliation (By Quarter Continued and Notes) March 31, Dec. 31, Sept. 30, June 30, March 31, 2024 2023 2023 2023 2023 (in millions, except per share data) Total average assets (F) $ 11,754 $ 11,862 $ 11,860 $ 12,057 $ 11,569 Total average shareholders' equity (G) 1,018 966 988 1,004 978
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