Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Q1 2023 Earnings Presentation
22 slides from Beacon Financial's earnings presentation, Apr 20, 2023
Slide 1: Berkshire Hills Bancorp 1Q 2023 Earnings Presentation
BERKSHIRE HILLS BANCORP 1 Q 2 0 2 3 E AR N I N G S P R E S E N TAT I O N April 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: 1Q23 Highlights of the Quarter
1Q23 – HIGHLIGHTS OF THE QUARTER Solid 1Q profitability with significant improvement YoY 1 • Net Income of $27.6M (-2% QoQ and +33% YoY) Financial • EPS of $0.63 (-1% QoQ and +45% YoY) Performance • ROTCE of 9.59% (-24 bps QoQ and +210 bps YoY) Fortified liquidity position further in response to rec
Slide 4: 1Q 2023 BEST Progress vs. Goal
1Q 2023 – “BEST” PROGRESS VS. GOAL BEST 3 YEAR TARGET 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 leading Net Promoter Score ESG
Slide 5: 1Q 2023 Overview
1Q 2023 OVERVIEW GAAP NET INCOME OF $27.6M, or $0.63 PER COMMON SHARE • Operating Earnings: $27.6M, or $0.63 per common share (-$0.6M or -$0.01 QoQ; +$6.8M or +$0.20 YoY) • Net Interest Margin, FTE: 3.58% (-26 bps QoQ; +97 bps YoY) • Net Interest Income, non FTE1: $97.5M (-$4.6M or -4% QoQ; +$28.5M
Slide 6: Loans: Average Balances ($M)
L O A N S : AV E R A G E B A L A N C E S ($M) CRE C&I Resi Consumer +433 (+5%) 232 56 169 8,515 8,082 539 -24 563 2,283 2,114 1,527 QoQ 1,471 3,934 4,166 4Q22 CRE C&I Resi Consumer 1Q23 +1,541 (+22%) 847 25 8,515 154 539 515 6,974 514 2,283 1,436 1,527 YoY 1,373 4,166 3,651 1Q22 CRE C&I Resi Consume
Slide 7: Deposits: Average Balances ($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 -55 (-1%) 9,731 61 253 9,676 1,555 -170 -160 -39 1,808 1,086 1,047 2,819 2,659 QoQ 1,395 1,456 2,876 2,706 4Q22 Non-Interest NOW Money Market Savings Time 1Q23 Bearing -360 (-4%) 10,036 184 9,676 1
Slide 8: Net Interest Income ($000s)
NET INTEREST INCOME ($000S) -4,559 (-4%) 9,740 102,092 -9,154 1,194 97,533 -6,339 QoQ 4Q22 Loans Deposits Borrowings Investments 1Q23 +28,470 (+41%) 55,001 2,493 97,533 -21,908 -7,116 69,063 YoY 1Q22 Loans Deposits Borrowings Investments 1Q23 8 Note: NII on an FTE basis was $99.4M (-$4.5M or -4% 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) +1,115 (+7%) 752 16,606 346 484 15,491 18 -485 QoQ 4Q22 Deposit Loan Fees Gain on SBA Wealth Other 1Q23 Related Fees and Other Loan Sales Management Fees -4,820 (-22%) 960 21,426 114 -2,470 -851 16,606 -2,573 YoY 1Q22 Deposit Loan Fees Gai
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 ($000S) -640 (-1%) 1,103 124 72,631 71,991 -52 -258 -1,557 QoQ 4Q22 Compensation Occupancy and Technology and Professional Other 1Q23 and Benefits Equipment Communications Services +3,459 (+5%) 1,068 71,991 585 1,550 944 68,532 -688 YoY 1Q22 Com
Slide 11: Asset Quality ($M)
ASSET QUALITY ($M) NON-PERFORMING LOANS ANNUALIZED NET CHARGE OFFS 0.48% 0.58% 0.45% 0.41% 0.37% 0.34% 0.32% 0.31% 0.30% 37.9 0.27% 11.7 0.15% 6.9 31.1 6.0 29.7 27.0 2.6 0.02% 26.9 0.5 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 NPLs NPLs/Total Loans 10 Year Avg. NCOs NCO/Avg. Loans 10 Year Av
Slide 12: Returns (%)
RETURNS (%) ROAA Operating ROAA GAAP ROAA 1.08 0.99 1.00 0.94 0.84 0.94 0.72 0.82 0.66 0.70 1Q22 2Q22 3Q22 4Q22 1Q23 ROTCE Operating ROTCE GAAP ROTCE 10.59 9.92 9.83 9.59 8.48 9.59 7.49 8.33 6.76 7.29 1Q22 2Q22 3Q22 4Q22 1Q23 12 Note: See Appendix for discussion and reconciliation of non-GAAP financ
Slide 13: Liquidity and Capital
L I Q U I D I T Y A N D C A P I TA L ✓ No Borrowings from Fed Funds Market, Discount Window or BTFP ✓ FHLB Advances of $904M as of 1Q23 ✓ Cash & Cash Equivalents and borrowing capacity 117% of uninsured deposits as of 1Q23 ✓ Strong TCE / TA even if after-tax HTM mark is included ✓ Continued improvem
Slide 14: Capital Ratios
C A P I TA L R AT I O S 1 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 Berkshire Hills Bancorp, Inc. Common Equity Tier 1 Capital Ratio (%) 13.9 13.0 12.7 12.4 12.1 Tier 1 Risk-Based Capital Ratio (%) 14.1 13.2 13.0 12.6 12.4 Total Risk-Based Capital Ratio (%) 16.
Slide 15: Appendix
APPENDIX 15 »<BerkshireHillsBancorp
Slide 16: Bolstering Strong Board of Directors
BOLSTERING STRONG BOARD OF DIRECTORS Board of Directors Member Board of Directors Member Karyn Polito Eric S. Rosengren • Brings broad expertise in both the public and private sector • Currently, CEO of Rosengren Consulting and a Visiting including as Lieutenant Governor of the Commonwealth of Schol
Slide 17: Run-Off Portfolios
RUN-OFF PORTFOLIOS EOP ($M) Lifetime % 1Q23 1Q23 Yield 1Q23 NCOs 1Q23 NPLs Portfolios 2Q22 3Q22 4Q22 1Q23 Loss Rates1 Total Loans (%) ($M) ($M) (%) Upstart 152 152 140 127 1.5% ~11% 1.6 1.53 0.02 Firestone 166 153 133 117 1.3% ~8% 0.7 0.65 2.03 Total 318 305 273 244 2.8% $ Change - (13) (31) (29) %
Slide 18: Office Portfolio
OFFICE PORTFOLIO Office Portfolio Metrics As of 1Q23, Office portfolio totals $558M or 6.4% of Total Loans ➢ Solid portfolio performance with no NPLs or NCOs ~95% of portfolio is within footprint ➢ BHLB does not have exposure to any major metropolitan areas other than Boston and 70% is Suburban • Bo
Slide 19: Commercial Real Estate vs. Peers
C O M M E R C I A L R E A L E S TAT E V S . P E E R S SUPERVISORY CRE / TRBC CONSTRUCTION / TRBC 333% 333% 300% 100% 259% 223% 39% 38% 26% 26% 4Q21 4Q22 4Q21 4Q22 BHLB Peer Median Federal Monitoring Guideline CRE NCO / AVG. CRE LOANS CRE NPL / EOP CRE LOANS Annualized CRE NCO/ Avg. CRE Loans CRE NPL
Slide 20: Net Interest Income Sensitivity
NET INTEREST INCOME SENSITIVITY Year 1 NII Sensitivity Parallel Shifts Est. Change in NII (%) 3.00% December 31, 2022 March 31, 2023 2.72% 2.33% 1.79% 2.00% 1.58% 0.85% 0.76% 1.00% Sensitivity (%) 0.00% -1.00% -1.27% -2.00% -1.63% -3.00% Dn100 Up100 Up200 Up300 Year 1 NII Sensitivity Non-Parallel Sh
Slide 21: 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 ) March 31, Dec. 31, Sept. 30, June 30, March 31, (in thousands) 2023 2022 2022 2022 2022 Total non-interest income $ 16,606 $ 15,654 $ 16,251 $ 16,351 $ 20,681 Adj: Net securities (gains)/losses (1) - (163) 476 973 745 Total operating n
Slide 22: Non-GAAP Reconciliation – TBVPS / Notes
N O N - G A A P R E C O N C I L I AT I O N – T B V P S / N O T E S March 31, December 31, September 30, June 30, March 31, 2023 2022 2022 2022 2022 Tangible Common Equity (millions) 972 930 917 987 1,066 Total common shares outstanding, period-end (millions) 44.4 44.4 45.0 45.8 47.8 Tangible Book Va
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