Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Q2 2024 Earnings Presentation
22 slides from Beacon Financial's earnings presentation, Jul 18, 2024
Slide 1: Berkshire Hills Bancorp 2Q 2024 Earnings Presentation
Berkshire Hills Bancorp NYSE:BHLB 2Q 2024 Earnings Presentation JULY 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: 2Q 2024 – Highlights of the Quarter
2Q 2024 – Highlights of the Quarter Solid improvement in operating earnings QoQ1 • Operating EPS of $0.55 (+12% QoQ and flat YoY) • Operating Net Income of $23.2M (+11% QoQ and -3% YoY) Financial Performance • Net Interest Margin of 3.20% (+5 bps QoQ and -4 bps YoY) • Non-Interest Expenses of $71.3M
Slide 4: 2Q 2024 Overview
2Q 2024 Overview GAAP NET INCOME OF $24.0M, or $0.57 PER COMMON SHARE • Operating Earnings: $23.2M, or $0.55 per common share (+$2.3M or +$0.06 QoQ; -$0.7M or flat YoY) • Net Interest Margin, FTE: 3.20% (+5 bps QoQ; -4 bps YoY) • Net Interest Income, non FTE1: $88.5M (+$0.4M or < +1% QoQ; -$4.2M or
Slide 5: Loans: Average Balances
($M) Loans: Average Balances CRE C&I Resi 1 Consumer +155 (+2%) 9,059 96 29 26 4 9,214 483 487 2,668 2,694 1,355 1,384 QoQ 4,553 4,649 1Q24 CRE C&I Resi Consumer 2Q24 +423 (+5%) 366 206 9,214 8,791 487 524 -112 -37 2,694 2,488 1,384 1,496 YoY 4,283 4,649 2Q23 CRE C&I Resi Consumer 2Q24 Notes: Balanc
Slide 6: Deposits: Average Balances
($M) Deposits: Average Balances 1 Non-Interest Bearing 1 Money Market Time NOW Savings -199 (-2%) 9,978 93 9,779 -37 -36 -34 -185 2,561 2,376 1,038 1,004 QoQ 3,202 3,295 799 763 2,378 2,341 1Q24 Non-Interest NOW Money Market Savings Time 2Q24 Bearing +211 (+2%) 9,568 740 89 9,779 -73 -253 2,287 -292
Slide 7: Net Interest Income
($000S) Net Interest Income +392 (+0.4%) 2,853 88,140 -174 88,532 -1,536 -751 QoQ 1Q24 Loans Deposits Borrowings Investments 2Q24 -4,227 (-5%) 12,562 92,759 8,160 88,532 -3,878 -21,070 YoY 2Q23 Loans Deposits Borrowings Investments 2Q24 7 Note: NII on an FTE basis was $90.5M (+$0.4M or < +1% QoQ; -$
Slide 8: Operating Non-Interest Income
($000S) Operating Non-Interest Income +2,823 (+16%) 1,469 20,133 1,595 73 256 -271 17,310 -299 QoQ 1Q24 Deposit Loan Related Gain on Wealth FV Adj. on Other 2Q24 Related Fees Fees SBA Loans Management Securities Fees +3,039 (+18%) 3,480 20,133 17,094 384 30 -10 -20 -825 YoY 2Q23 Deposit Loan Related
Slide 9: Operating Non-Interest Expense
($000S) Operating Non-Interest Expense -1,088 (-2%) 72,403 332 81 71,315 -609 -634 -258 QoQ 1Q24 Compensation Occupancy and Technology Professional Other 2Q24 and Benefits Equipment Services -2,712 (-4%) 74,027 166 231 -906 -229 71,315 -1,974 YoY 2Q23 Compensation Occupancy and Technology Profession
Slide 10: Asset Quality
($M) Asset Quality NON-PERFORMING LOANS NET CHARGE OFFS 0.40% 0.26% 0.26% 0.32% 0.24% 0.30% 0.20% 0.24% 0.24% 0.23% 0.18% 28.4 26.6 21.4 21.5 21.3 5.8 5.4 0.07% 4.4 4.0 1.7 2Q23 3Q23 4Q23 1Q24 2Q24 2Q23 3Q23 4Q23 1Q24 2Q24 NPLs NPLs/Total Loans 10 Year Avg. NCOs Annualized NCO/Avg. Loans 10 Year Avg
Slide 11: 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 New York ➢ CRE portfolio is composed of diverse property 5% 38% Connect
Slide 12: Office Portfolio
Office Portfolio Office Portfolio & Asset Quality Office Portfolio Metrics Rural, ➢ As of 2Q24, Office CRE portfolio totals $506M or 5.5% 6% of Total Loans ~94% of portfolio is within footprint and 66% is ➢ Solid portfolio performance with NPLs of ~0.7% and CBD, Suburban no NCOs 28% Suburban, ➢ No e
Slide 13: Multifamily Portfolio
Multifamily Portfolio Multifamily Portfolio Multifamily Portfolio Metrics ➢ Multifamily Portfolio is diversified across our markets, with no exposure to NYC properties ➢ As of 2Q24, Multifamily portfolio totals ~$665MM or ~7.2% of Total Loans ➢ Solid portfolio performance with no NPLs or NCOs ➢ No e
Slide 14: Solid Liquidity to Cover All Uninsured Deposits
Solid Liquidity to Cover All Uninsured Deposits Estimated Uninsured Deposits and Available Liquidity ($M) Available Liquidity 4,853 ($M) 3/31/243 6/30/243 4,446 Uninsured Deposits¹ 3,819 3,645 1,308 Less: Collateralized Deposits² 189 183 1,324 Uninsured Deposits (after exclusions) 3,630 3,463 Total
Slide 15: 2024 Updated Outlook
2024 Updated Outlook FY‘23 Actuals FY‘24 Outlook (January) FY‘24 Outlook (Updated) Loans: $9.0B $9.5B to $9.7B Loans: $9.4B to $9.6B Ending Deposits: $10.6B Deposits: $9.4B to $9.6B Balance Sheet Adj. Deposits: $10.0B1 Adj. Deposits $10.2B to $10.3B Adj. Deposits: $9.7B to $9.9B1 NII $369.0M $362.0M
Slide 16: Appendix
Appendix 16 »BerkshireHillsBancorp
Slide 17: Run-Off Portfolios
Run-Off Portfolios EOP ($M) Lifetime % 2Q24 2Q24 2Q24 1Q24 4Q23 2Q24 1Q24 4Q23 Loss Portfolios 2Q24 Total 1Q24 4Q23 3Q23 2Q23 Yield NCOs NCOs NCOs NPLs NPLs NPLs Rates1 Loans (%) ($M) ($M) ($M) ($M) ($M) ($M) (%) Upstart 67 0.7% 78 90 103 115 ~10% 1.3 2.8 2.4 4.7 0.05 0.06 0.08 Firestone 57 0.6% 66
Slide 18: 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 19: Kansas City Federal Reserve CRE Study
Kansas City Federal Reserve CRE Study ➢Kansas City Fed found that “expected default rates on office properties are correlated with the size of the office buildings” ➢As of 2Q24, a majority of BHLB’s properties (~80%) are smaller (< 150,000 s.f.), with a weighted average size under 100,000 s.f. Expec
Slide 20: Yield Curve Normalization a Tailwind for the Industry
Yi e l d C u r v e N o r m a l i z a t i o n a Ta i l w i n d f o r t h e I n d u s t r y ➢ Since 1976, yield curve has been normal ~83% and inverted ~17% of the time ➢ On average, ~$145 billion in industry revenue recovery when curve normalizes ➢ Longest consecutive yield curve inversion in recorde
Slide 21: Non-GAAP Reconciliation (By Quarter)
Non-GAAP Reconciliation (By Quarter) At or for the Quarters Ended June 30, March 31, Dec. 31, Sept. 30, June 30, (in thousands) 2024 2024 2023 2023 2023 Total non-interest income $ 20,133 $ (32,599) $ (8,383) $ 17,465 $ 17,094 Adj: Loss on sale of AFS securities - 49,909 25,057 - - Total operating n
Slide 22: Non-GAAP Reconciliation (By Quarter Continued and Notes)
Non-GAAP Reconciliation (By Quarter Continued and Notes) June 30, March 31, Dec. 31, Sept. 30, June 30, 2024 2024 2023 2023 2023 (in millions, except per share data) Total average assets (F) $ 11,692 $ 11,755 $ 11,862 $ 11,860 $ 12,057 Total average shareholders' equity (G) 1,013 1,018 966 988 1,004
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