Beacon Financial Corporation · NYSE:BBT

Beacon Financial — Berkshire Hills Bancorp — Q2 2023 Earnings Presentation

21 slides from Beacon Financial's earnings presentation, Jul 20, 2023

  1. Slide 1: Berkshire Hills Bancorp 2Q 2023 Earnings Presentation

    BERKSHIRE HILLS BANCORP 2 Q 2 0 2 3 E AR N I N G S P R E S E N TAT I O N July 20, 2023

  2. Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures

    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,

  3. Slide 3: 2Q23 – Highlights of the Quarter

    2Q23 – HIGHLIGHTS OF THE QUARTER Improvement in Year-over-Year EPS in a dynamic operating environment1 • Net Income of $23.9M (-14% QoQ and +1% YoY) Financial • EPS of $0.55 (-13% QoQ and +8% YoY) Performance • ROTCE of 8.27% (-132 bps QoQ and -21 bps YoY) Maintained strong liquidity and capital pos

  4. Slide 4: 2Q 2023 – BEST Progress vs. Targets

    2 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% 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

  5. Slide 5: 2Q 2023 Overview

    2Q 2023 OVERVIEW GAAP NET INCOME OF $23.9M, or $0.55 PER COMMON SHARE • Operating Earnings: $23.9M, or $0.55 per common share (-$3.7M or -$0.08 QoQ; +$0.32M or +$0.04 YoY) • Net Interest Margin, FTE: 3.24% (-34 bps QoQ; +13 bps YoY) • Net Interest Income, non FTE1: $92.8M (-$4.8M or -5% QoQ; +$11.4M

  6. 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 +276 (+3%) 117 205 8,791 8,515 -15 524 539 -31 2,283 2,488 1,527 1,496 QoQ 4,166 4,283 1Q23 CRE C&I Resi Consumer 2Q23 +1,299 (+17%) 836 8,791 452 49 -38 524 7,492 562 2,488 1,652 1,496 YoY 1,447 3,831 4,283 2Q22 CRE C&I Resi Consum

  7. 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 -108 (-1%) 9,676 479 9,568 30 -112 1,808 -401 -104 2,287 1,047 1,077 2,659 QoQ 2,555 1,456 1,055 2,706 2,594 1Q23 Non-Interest NOW Money Market Savings Time 2Q23 Bearing -187 (-2%) 9,755 827 9,568

  8. Slide 8: Net Interest Income ($000s)

    NET INTEREST INCOME ($000S) -4,773 (-5%) 9,362 97,533 -9,883 3,747 92,759 -7,999 QoQ 1Q23 Loans Deposits Borrowings Investments 2Q23 +11,401 (+14%) 51,981 -31,796 6,066 92,759 81,358 -14,849 YoY 2Q22 Loans Deposits Borrowings Investments 2Q23 8 Note: NII on an FTE basis was $94.7M (-$4.7M or -5% QoQ

  9. 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) +488 (+3%) 416 720 -156 17,094 260 16,606 -752 QoQ 1Q23 Deposit Loan Fees Gain on SBA Wealth Other 2Q23 Related Fees and Other Loan Sales Management Fees +743 (+5%) 2,076 566 -709 17,094 16,351 -192 -998 YoY 2Q22 Deposit Loan Fees Gain on

  10. 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) +2,036 (+3%) 994 1,313 74,027 889 71,991 -409 -751 QoQ 1Q23 Compensation Occupancy and Technology and Professional Other 2Q23 and Benefits Equipment Communications Services +5,587 (+8%) 2,458 74,027 1,854 2,130 -387 68,440 -468 YoY 2Q22

  11. Slide 11: Asset Quality ($M)

    ASSET QUALITY ($M) NON-PERFORMING LOANS ANNUALIZED NET CHARGE OFFS 0.48% 0.58% 0.45% 0.37% 0.34% 0.32% 0.31% 0.32% 0.30% 37.9 0.27% 11.7 0.26% 31.1 6.9 27.0 28.4 0.02% 6.0 5.8 26.9 0.5 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 NPLs NPLs/Total Loans 10 Year Avg. NCOs NCO/Avg. Loans 10 Year Av

  12. Slide 12: Returns (%)

    RETURNS (%) ROAA Operating ROAA GAAP ROAA 1.08 0.99 1.00 0.94 0.84 0.94 0.82 0.78 0.78 0.66 2Q22 3Q22 4Q22 1Q23 2Q23 ROTCE Operating ROTCE GAAP ROTCE 10.59 9.92 9.83 9.59 8.48 9.59 8.27 8.33 8.26 6.76 2Q22 3Q22 4Q22 1Q23 2Q23 12 Note: See Appendix for discussion and reconciliation of non-GAAP financ

  13. 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 $674M as of 2Q23 (-$230M or -25% QoQ) ✓ Strong TCE / TA even if after-tax HTM mark is included ✓ Continued improvement in TBVPS excluding AOCI through retained earnings TCE / TA1 (%

  14. Slide 14: Capital Ratios

    C A P I TA L R AT I O S 1 June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Berkshire Hills Bancorp, Inc. Common Equity Tier 1 Capital Ratio (%) 13.0 12.7 12.4 12.1 12.1 Tier 1 Risk-Based Capital Ratio (%) 13.2 13.0 12.6 12.4 12.3 Total Risk-Based Capital Ratio (%) 16.2

  15. Slide 15: Updated Outlook

    U P D AT E D 2 0 2 3 O U T L O O K First Half ‘23 Actuals Second Half ‘23 Outlook Ending Balance Loans: $8.9B $9.2B to $9.4B Sheet Deposits: $10.1B $9.9B to $10.1B NII $190.3M $175M to $185M Non FTE Non-interest $33.7M $33.2M to $34.3M Income Credit Provision Expense: $17.0M $14M to $18M Expenses $1

  16. Slide 16: Appendix

    APPENDIX 16 »<BerkshireHillsBancorp

  17. Slide 17: Run-Off Portfolios

    RUN-OFF PORTFOLIOS EOP ($M) Lifetime % 2Q23 2Q23 1Q23 2Q23 1Q23 2Q23 Loss Portfolios 2Q22 3Q22 4Q22 1Q23 2Q23 Total Yield NCOs NCOs NPLs NPLs Rates1 Loans (%) ($M) ($M) ($M) ($M) (%) Upstart 152 152 140 127 115 1.3% ~11% 1.6 2.3 2.33 0.02 0.04 Firestone 166 153 133 117 103 1.2% ~8% 0.7 0.3 0.67 2.03

  18. Slide 18: Office Portfolio

    OFFICE PORTFOLIO Office Portfolio Metrics As of 2Q23, Office portfolio totals $523M or 5.9% of Total Loans ➢ Solid portfolio performance with no NPLs or NCOs ~94% of portfolio is within footprint and 69% is ➢ BHLB does not have exposure to any major metropolitan Suburban areas other than Boston • Bo

  19. 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

  20. 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 ) June 30, March 31, Dec. 31, Sept. 30, June 30, (in thousands) 2023 2023 2022 2022 2022 Total non-interest income $ 17,094 $ 16,606 $ 15,654 $ 16,251 $ 16,351 Adj: Fair value adjustments on securities (1) - - (163) 476 973 Total operati

  21. Slide 21: 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 June 30, March 31, December 31, June 30, 2023 2023 2022 2022 Tangible Common Equity (millions) 951 972 930 987 Total common shares outstanding, period-end (millions) 44.0 44.4 44.4 45.8 Tangible Book Value Per Share (Reported) 21.60

Berkshire Hills Bancorp — Q2 2023 Earnings Presentation on 6ix