Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Q3 2023 Earnings Presentation
21 slides from Beacon Financial's earnings presentation, Oct 20, 2023
Slide 1: Berkshire Hills Bancorp 3Q 2023 Earnings Presentation
BERKSHIRE HILLS BANCORP 3 Q 2 0 2 3 E AR N I N G S P R E S E N TAT I O N October 20, 2023
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: 3Q23 – Highlights of the Quarter
3Q23 – HIGHLIGHTS OF THE QUARTER Rate environment continues to weigh on earnings1 • Net Income of $21.5M (-10% QoQ and -23% YoY) Financial • EPS of $0.50 (-9% QoQ and -19% YoY); YTD EPS of $1.67 (+7% YoY) Performance • ROTCE of 9.27% including unrealized loss on AFS Securities (-83 bps QoQ and -230
Slide 4: 3Q 2023 – BEST Progress vs. Targets
3 Q 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: 3Q 2023 Overview
3Q 2023 OVERVIEW GAAP NET INCOME OF $19.5M, or $0.45 PER COMMON SHARE • Operating Earnings: $21.5M, or $0.50 per common share (-$2.4M or -$0.05 QoQ; -$6.4M or -$0.12 YoY) • Net Interest Margin, FTE: 3.18% (-6 bps QoQ; -30 bps YoY) • Net Interest Income, non FTE1: $90.3M (-$2.4M or -3% QoQ; -$1.8M or
Slide 6: Loans: Average Balances ($M)
L O A N S : AV E R A G E B A L A N C E S ($M) CRE C&I Resi Consumer +161 (+2%) 8,791 102 130 8,952 524 -60 -11 513 2,488 2,618 1,496 1,436 QoQ 4,283 4,385 2Q23 CRE C&I Resi Consumer 3Q23 +1,064 (+13%) 692 8,952 459 -74 513 7,888 -13 587 2,618 1,926 1,436 YoY 1,449 3,926 4,385 3Q22 CRE C&I Resi Consu
Slide 7: Deposits: Average Balances ($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 +62 (+1%) 9,568 142 5 153 9,630 -41 -197 2,287 2,440 1,077 1,082 QoQ 2,555 2,697 1,055 858 2,594 2,553 2Q23 Non-Interest NOW Money Market Savings Time 3Q23 Bearing -39 (0%) 9,669 912 9,630 1,528 -3
Slide 8: Net Interest Income ($000s)
NET INTEREST INCOME ($000S) -2,426 (-3%) 5,926 92,759 3,021 90,334 -8,042 -3,331 QoQ 2Q23 Loans Deposits Borrowings Investments 3Q23 -1,751 (-2%) 42,496 92,084 1,853 90,334 -35,844 -10,256 YoY 3Q22 Loans Deposits Borrowings Investments 3Q23 8 Note: NII on an FTE basis was $92.3M (-$2.4M or -3% QoQ;
Slide 9: 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) +371 (+2%) 221 924 17,465 17,094 -310 -362 -102 QoQ 2Q23 Deposit Loan Fees Gain on SBA Wealth Other 3Q23 Related Fees and Other Loan Sales Management Fees +1,214 (+7%) 1,587 128 17,465 16,251 415 -3 -913 YoY 3Q22 Deposit Loan Fees Gain on
Slide 10: 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 ($000S) -121 (0%) 74,027 195 151 73,906 -154 -103 -210 QoQ 2Q23 Compensation Occupancy and Technology and Professional Other 3Q23 and Benefits Equipment Communications Services +3,702 (+5%) 1,820 73,906 1,897 733 114 70,204 -862 YoY 3Q22 Compens
Slide 11: Asset Quality ($M)
ASSET QUALITY ($M) NON-PERFORMING LOANS NET CHARGE OFFS 0.48% 0.58% 0.43% 0.37% 0.31% 0.32% 0.30% 0.32% 0.30% 37.9 11.7 0.27% 31.1 0.26% 27.0 28.4 0.24% 6.0 6.9 5.8 26.6 5.4 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 NPLs NPLs/Total Loans 10 Year Avg. NCOs Annualized NCO/Avg. Loans 10 Year Av
Slide 12: Returns (%)
RETURNS (%) ROAA 1.10 1.00 1.02 0.96 0.95 0.79 0.73 0.79 0.67 0.66 Operating ROAA GAAP ROAA 3Q22 4Q22 1Q23 2Q23 3Q23 ROTCE 11.57 12.40 11.96 10.59 9.92 9.59 10.09 9.83 9.59 9.27 8.27 8.26 7.41 6.76 6.76 Operating ROTCE, including unrealized losses on AFS securities Operating ROTCE, excluding unreali
Slide 13: Capital Ratios
C A P I TA L R AT I O S 1 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Berkshire Hills Bancorp, Inc. Common Equity Tier 1 Capital Ratio (%) 12.7 12.4 12.1 12.1 12.1 Tier 1 Risk-Based Capital Ratio (%) 13.0 12.6 12.4 12.3 12.4 Total Risk-Based Capital Ratio (%)
Slide 14: Appendix
APPENDIX 14 »BerkshireHillsBancorp
Slide 15: Bolstering Strong Board of Directors
BOLSTERING STRONG BOARD OF DIRECTORS Mary Anne Callahan • Ms. Callahan brings more than 35 years of investment banking expertise most recently as a Managing Director in the Financial Services Group at Piper Sandler Companies where her responsibilities included advising bank management and boards of
Slide 16: Run-Off Portfolios
RUN-OFF PORTFOLIOS EOP ($M) Lifetime % 3Q23 3Q23 1Q23 2Q23 3Q23 1Q23 2Q23 3Q23 Loss Portfolios 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Total Yield NCOs NCOs NCOs NPLs NPLs NPLs Rates1 Loans (%) ($M) ($M) ($M) ($M) ($M) ($M) (%) Upstart 152 152 140 127 115 103 1.0% ~10% 1.6 2.3 2.3 2.98 0.02 0.04 0.07 Fireston
Slide 17: CRE is Well Diversified by Collateral 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 C O L L AT E R A L T Y P E A N D GEOGRAPHY Portfolio by Geography Portfolio Metrics ➢ CRE Portfolio is diversified across our markets, 7% with no exposure to NYC 7% Massachusetts 5% New York 37% ➢ CRE portfolio is composed of diverse property Connecticut 7
Slide 18: Office Portfolio
OFFICE PORTFOLIO Office Portfolio Metrics As of 3Q23, Office CRE portfolio1 totals $479M or 5.3% of Total Loans ➢ Solid portfolio performance with NPLs of ~0.8% and no NCOs ~95% of portfolio is within footprint ➢ BHLB does not have exposure to any major metropolitan and 67% is Suburban areas other t
Slide 19: 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 20: 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 ) Sept. 30, June 30, March 31, Dec. 31, Sept. 30, (in thousands) 2023 2023 2023 2022 2022 Total non-interest income $ 17,465 $ 17,094 $ 16,606 $ 15,654 $ 16,251 Adj: Fair value adjustments on securities (1) - - - (163) 476 Total operatin
Slide 21: 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 — Q3 2023 Earnings Presentation on 6ix