Subjects: ERN, CCA, DIV
Berkshire Hills Reports 40% Increase in Third Quarter Earnings; Dividends Declared
BOSTON, Oct. 17, 2018 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported third quarter 2018 net income of $32 million, a 40% increase over $23 million in the third quarter of 2017 due primarily to the benefit of business growth including expansion in Greater Boston through acquisition and business development.
THIRD QUARTER FINANCIAL HIGHLIGHTS (income statement comparisons are year over year and balance sheet growth is compared to prior quarter-end):
- $0.70 GAAP EPS and Non-GAAP Core EPS
- 6% annualized commercial loan growth
- 3.32% net interest margin
- 57.2% efficiency ratio
- 1.08% ROA
- 0.19% net loan charge-offs/average loans
- 0.30% non-performing assets/assets
CEO Michael Daly stated, "Our third quarter earnings came in as expected. Quarterly loan related fees reached a record high, supported by strong SBA lending activity and other commercial lending related fees. We once again moved up in the annual SBA rankings, breaking into the top 30 nationally based on dollar volume. Our profitability and efficiency have also improved over last year due to the positive operating leverage from our increased business scale and diversified revenues. We're seeing good growth in our Greater Boston and Mid-Atlantic markets, and steady business activity across the rest of our franchise. The Bank was recognized in the quarter by a United Nations IMPACT2030 Innovation Award for our support of volunteerism. This was our first full quarter following the completed integration of acquired operations and our teams are coordinating across our markets to engage our customers with our unique brand and culture promise."
DIVIDENDS DECLARED
The Board of Directors declared a quarterly cash dividend of $0.22 per common share to shareholders of record at the close of business on November 8, 2018, payable on November 21, 2018. The dividend equates to a 2.1% annualized yield based on the $41.57 average closing price of Berkshire Hills Bancorp common stock during the third quarter. The Board also declared a quarterly cash dividend of $0.44 per share of preferred stock, with the same record and payment dates as above. The quarterly common and preferred dividends were increased by 5% in the first quarter of the year.
FINANCIAL CONDITION
Total assets increased in the third quarter by $128 million, or 4% annualized, to $12.0 billion. Loan growth resulted from a 6% annualized increase in commercial loans and 19% annualized growth in residential mortgages. Average deposits increased over the prior quarter; period-end deposits decreased due to a $75 million decrease in payroll deposits, which fluctuate daily. The deposit mix shifted towards time deposits reflecting the impact of higher interest rates on customer demand. The average cost of deposits increased by 0.13% compared to the prior quarter, and the ratio of loans/deposit increased to 102% during the quarter. Capital measures were unchanged, with the ratio of equity/assets measuring 12.7%, while the non-GAAP measure of tangible equity/tangible assets measuring 8.5%. During the quarter, book value per share increased to $32.84 and tangible book value per common share increased to $20.68.
RESULTS OF OPERATIONS
Third quarter EPS increased by 23% year-over-year, propelled by higher revenues and positive operating leverage. There were negligible net non-core items during the most recent quarter, and both GAAP EPS and the non-GAAP core EPS measure totaled $0.70. The third quarter ROA measured 1.08%, while the efficiency ratio improved year-over-year to 57.2%. The third quarter return on equity was 8.3%, while the non-GAAP measure of core return on tangible common equity was 13.7%. Revenue and expense in 2018 include Commerce Bancshares Corp. operations acquired in the fourth quarter of 2017. Most categories of revenue and expense increased year-over-year due to this acquisition.
Third quarter net interest income increased by 24% year-over year due to growth in average earning assets. The net interest margin measured 3.32% in the most recent quarter, compared to 3.50% in the prior quarter and to 3.36% in the third quarter of 2017. The net interest margin includes purchased loan accretion, which varies each quarter primarily due to the impact of recoveries of purchased credit impaired loans. This accretion contributed 0.17%, 0.25%, and 0.14% to the margin in the above quarters, respectively. Excluding accretion, asset yields and funding costs generally trended higher in recent quarters due to the impact of Federal Reserve interest rate hikes. Non-interest income increased by 2% year-over-year. Growth in loan and deposit related fee income partially offset a decrease in mortgage banking revenue. Loan related income reached a record quarterly level due to strong SBA loan originations and related sale gains, together with other commercial lending related fees. The loan loss provision increased year-over-year, exceeding net loan charge-offs, and adding to the loan loss allowance in line with loan growth during the quarter.
Third quarter non-interest expense decreased from the prior quarter including lower mortgage banking related expense and completion of Commerce related cost savings. Total full-time equivalent staff decreased to 1,970 positions at quarter-end from 1,992 positions at the start of the year. The third quarter effective income tax rate was 21% in 2018 compared to 24% in 2017, including the benefit of federal income tax reform which became effective in 2018.
INVESTOR CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Thursday, October 18, 2018 to discuss the results for the quarter and provide guidance about expected future results. Participants are encouraged to pre-register for the conference call using the following link: http://dpregister.com/10125042. Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call, and will immediately receive simple instructions via email. Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of Berkshire's website at http://ir.berkshirebank.com. Those parties who do not have internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call. A telephone replay of the call will be available through Thursday, October 25, 2018 by dialing 877-344-7529 and entering access number 10125042. The webcast will be available on Berkshire's website for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank - America's Most Exciting Bank®. The Company has approximately $12.0 billion in assets and 115 full service branches in Massachusetts, New York, Connecticut, Vermont, New Jersey, and Pennsylvania providing personal and business banking, insurance, and wealth management services. The Company also offers mortgages and specialized commercial lending services in targeted national markets.
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. Berkshire does not undertake any obligation to update forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included on pages F-9 and F-10 in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude items which the Company does not view as related to its normalized operations. These items primarily include securities gains/losses, merger costs, and restructuring costs. Securities gains/losses include unrealized gains/losses on equity securities beginning in the first quarter of 2018. Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees. These charges in 2017 and 2018 are primarily related to the business combinations with First Choice Bank and Commerce Bancshares Corp. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales. Additionally, the Company recorded charges for hedge terminations in the first quarter of 2017 and legal settlement costs during the year.
Non-core adjustments are presented net of an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income. The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community.
CONTACTS
Investor Relations Contact
James M. Moses, Senior Executive Vice President & CFO; 413-236-3379
Media Contact
Elizabeth Mach; Senior Vice President, Marketing Officer; 413-445-8390
TABLE INDEX |
CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES |
F-1 | Selected Financial Highlights |
F-2 | Balance Sheets |
F-3 | Loan and Deposit Analysis |
F-4 | Statements of Income |
F-5 | Statements of Operations (Five Quarter Trend) |
F-6 | Average Yields and Costs |
F-7 | Average Balances |
F-8 | Asset Quality Analysis |
F-9 | Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Five Quarter Trend) |
F-10 | Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Year-to-Date) |
BERKSHIRE HILLS BANCORP, INC. | |||||||||||||
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1) | |||||||||||||
At or for the Quarters Ended (2) | |||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||||
2018 | 2018 | 2018 | 2017 (3) | 2017 | |||||||||
PER SHARE DATA | |||||||||||||
Net earnings/(loss) per common share, diluted | $ 0.70 | $ 0.74 | $ 0.55 | $ (0.06) | $ 0.57 | ||||||||
Core earnings per common share, diluted (1) | 0.70 | 0.74 | 0.65 | 0.58 | 0.59 | ||||||||
Total book value per common share | 32.84 | 32.49 | 32.12 | 32.14 | 31.78 | ||||||||
Tangible book value per common share (1) | 20.68 | 20.28 | 19.86 | 19.83 | 21.38 | ||||||||
Market price at period end | 40.70 | 40.60 | 37.95 | 36.60 | 38.75 | ||||||||
Dividends per common share | 0.22 | 0.22 | 0.22 | 0.21 | 0.21 | ||||||||
Dividends per preferred share | 0.44 | 0.44 | 0.44 | 0.42 | - | ||||||||
PERFORMANCE RATIOS (4) | |||||||||||||
Return on assets | 1.08 | % | 1.17 | % | 0.88 | % | (0.10) | % | 0.95 | % | |||
Core return on assets (1) | 1.08 | 1.17 | 1.04 | 0.94 | 0.98 | ||||||||
Return on equity | 8.27 | 8.88 | 6.69 | (0.77) | 7.26 | ||||||||
Core return on equity (1) | 8.28 | 8.89 | 7.92 | 7.16 | 7.47 | ||||||||
Core return on tangible common equity (1) | 13.67 | 14.82 | 13.43 | 11.90 | 11.42 | ||||||||
Net interest margin, fully taxable equivalent (FTE) (5) | 3.32 | 3.50 | 3.36 | 3.50 | 3.36 | ||||||||
Fee income/Net interest and fee income | 24.33 | 24.25 | 25.51 | 25.91 | 29.96 | ||||||||
Efficiency ratio (1) | 57.15 | 56.37 | 59.54 | 57.43 | 59.28 | ||||||||
GROWTH (Year-to-date) | |||||||||||||
Total commercial loans (annualized) | 5 | % | 5 | % | 1 | % | 38 | % | 9 | % | |||
Total loans (annualized) | 10 | 10 | 4 | 27 | 8 | ||||||||
Total deposits (annualized) | 0 | 2 | (3) | 32 | 3 | ||||||||
Total net revenues (compared to prior year) | 16 | 16 | 13 | 41 | 37 | ||||||||
Earnings per common share (compared to prior year) | 28 | 33 | 25 | (25) | (2) | ||||||||
Core earnings per common share (compared to prior year)(1) | 22 | 24 | 18 | 4 | 4 | ||||||||
FINANCIAL DATA (in millions) | |||||||||||||
Total assets | $ 12,030 | $ 11,902 | $ 11,519 | $ 11,571 | $ 9,767 | ||||||||
Total earning assets | 10,957 | 10,827 | 10,442 | 10,509 | 8,944 | ||||||||
Total securities | 1,918 | 1,920 | 1,932 | 1,899 | 1,824 | ||||||||
Total loans | 8,905 | 8,710 | 8,376 | 8,299 | 6,947 | ||||||||
Allowance for loan losses | 58 | 56 | 54 | 52 | 49 | ||||||||
Total intangible assets | 553 | 555 | 556 | 558 | 420 | ||||||||
Total deposits | 8,766 | 8,839 | 8,683 | 8,750 | 6,790 | ||||||||
Total shareholders' equity | 1,532 | 1,516 | 1,498 | 1,496 | 1,285 | ||||||||
Net income/(loss) | 32.2 | 34.0 | 25.2 | (2.8) | 22.9 | ||||||||
Core income (1) | 32.2 | 34.1 | 29.9 | 26.3 | 23.6 | ||||||||
ASSET QUALITY AND CONDITION RATIOS | |||||||||||||
Net charge-offs (current quarter annualized)/average loans | 0.19 | % | 0.21 | % | 0.17 | % | 0.17 | % | 0.19 | % | |||
Total non-performing assets/total assets | 0.30 | 0.20 | 0.27 | 0.21 | 0.23 | ||||||||
Allowance for loan losses/total loans | 0.66 | 0.64 | 0.64 | 0.62 | 0.71 | ||||||||
Loans/deposits | 102 | 99 | 96 | 95 | 102 | ||||||||
Shareholders' equity to total assets | 12.74 | 12.74 | 13.00 | 12.93 | 13.15 | ||||||||
Tangible shareholders' equity to tangible assets (1) | 8.53 | 8.47 | 8.59 | 8.52 | 9.25 | ||||||||
(1) | Non-GAAP financial measure. Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily | ||||||||||||
related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures. | |||||||||||||
(2) | Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10. | ||||||||||||
(3) | The Company acquired Commerce Bancshares Corp., the parent of Commerce Bank & Trust Company, on October 13, 2017. | ||||||||||||
(4) | All performance ratios are annualized and are based on average balance sheet amounts, where applicable. | ||||||||||||
(5) | Fully taxable equivalent considers the impact of tax advantaged investment securities and loans. | ||||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||||
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2) | ||||||
September 30, | June 30, | December 31, | ||||
(in thousands) | 2018 | 2018 | 2017 | |||
Assets | ||||||
Cash and due from banks | $ 93,038 | $ 90,964 | $ 91,122 | |||
Short-term investments | 42,696 | 48,093 | 157,641 | |||
Total cash and short-term investments | 135,734 | 139,057 | 248,763 | |||
Trading security | 11,179 | 11,483 | 12,277 | |||
Marketable equity securities, at fair value | 59,734 | 59,726 | 45,185 | |||
Securities available for sale, at fair value | 1,391,373 | 1,393,250 | 1,380,914 | |||
Securities held to maturity, at amortized cost | 379,404 | 379,905 | 397,103 | |||
Federal Home Loan Bank stock and other restricted securities | 76,184 | 75,530 | 63,085 | |||
Total securities | 1,917,874 | 1,919,894 | 1,898,564 | |||
Loans held for sale, at fair value | 91,639 | 149,182 | 153,620 | |||
Commercial real estate loans | 3,371,773 | 3,319,323 | 3,264,742 | |||
Commercial and industrial loans | 1,902,228 | 1,875,118 | 1,803,939 | |||
Residential mortgages | 2,509,324 | 2,397,192 | 2,102,807 | |||
Consumer loans | 1,121,188 | 1,118,333 | 1,127,850 | |||
Total loans | 8,904,513 | 8,709,966 | 8,299,338 | |||
Less: Allowance for loan losses | (58,457) | (55,925) | (51,834) | |||
Net loans | 8,846,056 | 8,654,041 | 8,247,504 | |||
Premises and equipment, net | 111,130 | 112,217 | 109,352 | |||
Other real estate owned | - | - | - | |||
Goodwill | 518,325 | 519,128 | 519,287 | |||
Other intangible assets | 34,620 | 35,838 | 38,296 | |||
Cash surrender value of bank-owned life insurance | 194,369 | 193,121 | 191,221 | |||
Deferred tax asset, net | 56,708 | 53,679 | 47,061 | |||
Other assets | 123,604 | 125,806 | 117,083 | |||
Total assets | $ 12,030,059 | $ 11,901,963 | $ 11,570,751 | |||
Liabilities and shareholders' equity | ||||||
Demand deposits | $ 1,563,845 | $ 1,553,039 | $ 1,606,656 | |||
NOW and other deposits | 844,210 | 858,014 | 734,558 | |||
Money market deposits | 2,447,184 | 2,619,943 | 2,776,157 | |||
Savings deposits | 737,682 | 747,722 | 741,954 | |||
Time deposits | 3,173,180 | 3,060,034 | 2,890,205 | |||
Total deposits | 8,766,101 | 8,838,752 | 8,749,530 | |||
Senior borrowings | 1,450,653 | 1,274,342 | 1,047,736 | |||
Subordinated borrowings | 89,473 | 89,429 | 89,339 | |||
Total borrowings | 1,540,126 | 1,363,771 | 1,137,075 | |||
Other liabilities | 191,517 | 183,199 | 187,882 | |||
Total liabilities | 10,497,744 | 10,385,722 | 10,074,487 | |||
Preferred shareholders' equity | 40,633 | 40,633 | 40,633 | |||
Common shareholders' equity | 1,491,682 | 1,475,608 | 1,455,631 | |||
Total shareholders' equity | 1,532,315 | 1,516,241 | 1,496,264 | |||
Total liabilities and shareholders' equity | $ 12,030,059 | $ 11,901,963 | $ 11,570,751 | |||
Net common shares outstanding | 45,420 | 45,420 | 45,290 | |||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3) | |||||||||||
LOAN ANALYSIS | |||||||||||
Annualized Growth % | |||||||||||
(in millions) | September 30, 2018 | June 30, 2018 | December 31, 2017 | Quarter ended | Year to Date | ||||||
Commercial real estate - construction | $ 374 | $ 406 | $ 354 | (31) | % | 8 | % | ||||
Commercial real estate - other | 2,998 | 2,915 | 2,910 | 11 | 4 | ||||||
Total commercial real estate | 3,372 | 3,319 | 3,264 | 6 | 4 | ||||||
Commercial and industrial loans | 1,902 | 1,875 | 1,804 | 6 | 7 | ||||||
Total commercial loans | 5,274 | 5,195 | 5,068 | 6 | 5 | ||||||
Total residential mortgages | 2,510 | 2,397 | 2,103 | 19 | 26 | ||||||
Home equity | 389 | 393 | 410 | (4) | (7) | ||||||
Auto and other | 732 | 725 | 718 | 4 | 3 | ||||||
Total consumer loans | 1,121 | 1,118 | 1,128 | 1 | (1) | ||||||
Total loans | $ 8,905 | $ 8,710 | $ 8,299 | 9 | % | 10 | % | ||||
DEPOSIT ANALYSIS | |||||||||||
Annualized Growth % | |||||||||||
(in millions) | September 30, 2018 | June 30, 2018 | December 31, 2017 | Quarter ended | Year to Date | ||||||
Demand | $ 1,564 | $ 1,553 | $ 1,606 | 3 | % | (3) | % | ||||
NOW and other | 844 | 858 | 735 | (7) | 20 | ||||||
Money market | 2,447 | 2,620 | 2,776 | (26) | (16) | ||||||
Savings | 738 | 748 | 742 | (5) | (1) | ||||||
Time deposits | 3,173 | 3,060 | 2,890 | 15 | 13 | ||||||
Total deposits | $ 8,766 | $ 8,839 | $ 8,749 | (3) | % | 0 | % | ||||
BERKSHIRE HILLS BANCORP, INC. | |||||||
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4) | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
(in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||
Interest and dividend income | |||||||
Loans | $ 104,273 | $ 76,024 | $ 298,757 | $ 216,950 | |||
Securities and other | 14,918 | 13,036 | 44,553 | 37,485 | |||
Total interest and dividend income | 119,191 | 89,060 | 343,310 | 254,435 | |||
Interest expense | |||||||
Deposits | 21,460 | 10,984 | 54,553 | 30,053 | |||
Borrowings | 8,390 | 6,078 | 22,825 | 15,953 | |||
Total interest expense | 29,850 | 17,062 | 77,378 | 46,006 | |||
Net interest income | 89,341 | 71,998 | 265,932 | 208,429 | |||
Non-interest income | |||||||
Mortgage banking originations | 8,971 | 13,374 | 29,313 | 42,333 | |||
Loan related income | 7,537 | 6,081 | 19,524 | 15,535 | |||
Deposit related fees | 7,004 | 6,445 | 22,675 | 19,294 | |||
Insurance commissions and fees | 2,930 | 2,581 | 8,504 | 8,305 | |||
Wealth management fees | 2,283 | 2,315 | 7,160 | 7,127 | |||
Total fee income | 28,725 | 30,796 | 87,176 | 92,594 | |||
Other | 468 | (2,255) | 1,891 | (2,438) | |||
Securities gains/(losses), net | 88 | (1) | (696) | 12,568 | |||
Gain on sale of business operations and assets, net | - | 296 | 460 | 296 | |||
(Loss) on termination of hedges | - | - | - | (6,629) | |||
Total non-interest income | 29,281 | 28,836 | 88,831 | 96,391 | |||
Total net revenue | 118,622 | 100,834 | 354,763 | 304,820 | |||
Provision for loan losses | 6,628 | 4,900 | 18,735 | 14,884 | |||
Non-interest expense | |||||||
Compensation and benefits | 39,923 | 37,643 | 123,241 | 110,759 | |||
Occupancy and equipment | 10,144 | 8,267 | 30,456 | 25,971 | |||
Technology and communications | 7,949 | 6,644 | 22,138 | 19,614 | |||
Marketing and promotion | 1,484 | 2,128 | 6,465 | 7,304 | |||
Professional services | 1,867 | 2,247 | 5,059 | 6,888 | |||
FDIC premiums and assessments | 1,640 | 1,651 | 4,246 | 4,537 | |||
Other real estate owned and foreclosures | (1) | (23) | 67 | 35 | |||
Amortization of intangible assets | 1,218 | 739 | 3,732 | 2,310 | |||
Merger, restructuring and other expense | 198 | 1,420 | 6,138 | 16,005 | |||
Other | 6,555 | 5,104 | 18,641 | 16,246 | |||
Total non-interest expense | 70,977 | 65,820 | 220,183 | 209,669 | |||
Income before income taxes | 41,017 | 30,114 | 115,845 | 80,267 | |||
Income tax expense | 8,790 | 7,211 | 24,339 | 22,210 | |||
Net income | $ 32,227 | $ 22,903 | $ 91,506 | $ 58,057 | |||
Preferred stock dividend | 230 | - | 689 | - | |||
Income available to common shareholders | $ 31,997 | $ 22,903 | $ 90,817 | $ 58,057 | |||
Earnings per common share: | |||||||
Basic | $ 0.70 | $ 0.57 | $ 1.99 | $ 1.55 | |||
Diluted | $ 0.70 | $ 0.57 | $ 1.98 | $ 1.54 | |||
Weighted average shares outstanding: | |||||||
Basic | 46,030 | 39,984 | 46,009 | 37,547 | |||
Diluted | 46,263 | 40,145 | 46,226 | 37,708 | |||
BERKSHIRE HILLS BANCORP, INC. | ||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) - UNAUDITED - (F-5) | ||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||
(in thousands, except per share data) | 2018 | 2018 | 2018 | 2017 | 2017 | |||||
Interest and dividend income | ||||||||||
Loans | $ 104,273 | $ 101,649 | $ 92,835 | $ 91,149 | $ 76,024 | |||||
Securities and other | 14,918 | 15,230 | 14,405 | 14,674 | 13,036 | |||||
Total interest and dividend income | 119,191 | 116,879 | 107,240 | 105,823 | 89,060 | |||||
Interest expense | ||||||||||
Deposits | 21,460 | 17,768 | 15,325 | 13,802 | 10,984 | |||||
Borrowings | 8,390 | 7,990 | 6,445 | 5,655 | 6,078 | |||||
Total interest expense | 29,850 | 25,758 | 21,770 | 19,457 | 17,062 | |||||
Net interest income | 89,341 | 91,121 | 85,470 | 86,366 | 71,998 | |||||
Non-interest income | ||||||||||
Mortgage banking originations | 8,971 | 10,195 | 10,147 | 11,918 | 13,374 | |||||
Loan related income | 7,537 | 6,549 | 5,438 | 5,866 | 6,081 | |||||
Deposit related fees | 7,004 | 7,605 | 8,066 | 7,871 | 6,445 | |||||
Insurance commissions and fees | 2,930 | 2,549 | 3,025 | 2,284 | 2,581 | |||||
Wealth management fees | 2,283 | 2,280 | 2,597 | 2,268 | 2,315 | |||||
Total fee income | 28,725 | 29,178 | 29,273 | 30,207 | 30,796 | |||||
Other | 468 | 155 | 1,268 | (939) | (2,255) | |||||
Securities gains/(losses), net | 88 | 718 | (1,502) | 30 | (1) | |||||
(Loss)/gain on sale of business operations and assets, net | - | (21) | 481 | - | 296 | |||||
(Loss) on termination of hedges | - | - | - | - | - | |||||
Total non-interest income | 29,281 | 30,030 | 29,520 | 29,298 | 28,836 | |||||
Total net revenue | 118,622 | 121,151 | 114,990 | 115,664 | 100,834 | |||||
Provision for loan losses | 6,628 | 6,532 | 5,575 | 6,141 | 4,900 | |||||
Non-interest expense | ||||||||||
Compensation and benefits | 39,923 | 41,134 | 42,184 | 42,220 | 37,643 | |||||
Occupancy and equipment | 10,144 | 10,230 | 10,082 | 9,451 | 8,267 | |||||
Technology and communications | 7,949 | 7,359 | 6,830 | 6,286 | 6,644 | |||||
Marketing and promotion | 1,484 | 2,369 | 2,612 | 4,573 | 2,128 | |||||
Professional services | 1,867 | 1,139 | 2,053 | 2,277 | 2,247 | |||||
FDIC premiums and assessments | 1,640 | 1,411 | 1,195 | 1,920 | 1,651 | |||||
Other real estate owned and foreclosures | (1) | 1 | 67 | 9 | (23) | |||||
Amortization of intangible assets | 1,218 | 1,246 | 1,268 | 1,183 | 739 | |||||
Merger, restructuring and other expense | 198 | 847 | 5,093 | 15,553 | 1,420 | |||||
Other | 6,555 | 6,601 | 5,485 | 6,569 | 5,104 | |||||
Total non-interest expense | 70,977 | 72,337 | 76,869 | 90,041 | 65,820 | |||||
Income before income taxes | 41,017 | 42,282 | 32,546 | 19,482 | 30,114 | |||||
Income tax expense | 8,790 | 8,251 | 7,298 | 22,292 | 7,211 | |||||
Net income/(loss) | $ 32,227 | $ 34,031 | $ 25,248 | $ (2,810) | $ 22,903 | |||||
Preferred stock dividend | 230 | 229 | 230 | 219 | - | |||||
Income/(loss) available to common shareholders | $ 31,997 | $ 33,802 | $ 25,018 | $ (3,029) | $ 22,903 | |||||
Earnings/(loss) per common share: | ||||||||||
Basic | $ 0.70 | $ 0.74 | $ 0.55 | $ (0.06) | $ 0.57 | |||||
Diluted | $ 0.70 | $ 0.74 | $ 0.55 | $ (0.06) | $ 0.57 | |||||
Weighted average shares outstanding: | ||||||||||
Basic | 46,030 | 46,032 | 45,966 | 45,122 | 39,984 | |||||
Diluted | 46,263 | 46,215 | 46,200 | 45,122 | 40,145 | |||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-6) | |||||||||||
Quarters Ended | |||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||
2018 | 2018 | 2018 | 2017 | 2017 | |||||||
Earning assets | |||||||||||
Loans: | |||||||||||
Commercial real estate | 4.67 | % | 5.08 | % | 4.76 | % | 4.73 | % | 4.64 | % | |
Commercial and industrial loans | 6.22 | 5.73 | 5.19 | 5.25 | 5.09 | ||||||
Residential mortgages | 3.66 | 3.72 | 3.56 | 3.76 | 3.68 | ||||||
Consumer loans | 4.27 | 4.13 | 4.01 | 3.94 | 3.88 | ||||||
Total loans | 4.66 | 4.73 | 4.45 | 4.47 | 4.33 | ||||||
Securities | 3.36 | 3.47 | 3.26 | 3.55 | 3.43 | ||||||
Short-term investments and loans held for sale | 3.82 | 3.86 | 3.43 | 2.90 | 3.40 | ||||||
Total earning assets | 4.41 | 4.48 | 4.21 | 4.27 | 4.13 | ||||||
Funding liabilities | |||||||||||
Deposits: | |||||||||||
NOW and other | 0.58 | 0.44 | 0.28 | 0.25 | 0.26 | ||||||
Money market | 0.92 | 0.88 | 0.73 | 0.66 | 0.57 | ||||||
Savings | 0.15 | 0.14 | 0.14 | 0.14 | 0.14 | ||||||
Time | 1.76 | 1.54 | 1.40 | 1.25 | 1.20 | ||||||
Total interest-bearing deposits | 1.18 | 1.02 | 0.90 | 0.82 | 0.78 | ||||||
Borrowings | 2.42 | 2.29 | 2.02 | 1.81 | 1.65 | ||||||
Total interest-bearing liabilities | 1.38 | 1.23 | 1.08 | 0.97 | 0.96 | ||||||
Net interest spread | 3.03 | 3.25 | 3.13 | 3.30 | 3.17 | ||||||
Net interest margin (1) | 3.32 | 3.50 | 3.36 | 3.50 | 3.36 | ||||||
Cost of funds (2) | 1.16 | 1.03 | 0.90 | 0.81 | 0.82 | ||||||
Cost of deposits | 0.96 | 0.83 | 0.73 | 0.66 | 0.64 | ||||||
(1) The effect of purchased loan accretion on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows | |||||||||||
beginning with the most recent quarter and ending with the earliest quarter: 0.17%, 0.25%, 0.13%, 0.21%, 0.14%. See page F-7 for purchased loan | |||||||||||
accretion. | |||||||||||
(2) Cost of funds includes all deposits and borrowings. | |||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||||||||
AVERAGE BALANCES - UNAUDITED - (F-7) | ||||||||||
Quarters Ended | ||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||
(in thousands) | 2018 | 2018 | 2018 | 2017 | 2017 | |||||
Assets | ||||||||||
Loans | ||||||||||
Commercial real estate | $ 3,331,097 | $ 3,316,482 | $ 3,250,861 | $ 3,161,902 | $ 2,669,558 | |||||
Commercial and industrial loans | 1,824,369 | 1,773,722 | 1,811,433 | 1,645,719 | 1,183,980 | |||||
Residential mortgages | 2,459,943 | 2,268,886 | 2,138,544 | 2,081,548 | 1,977,538 | |||||
Consumer loans | 1,120,942 | 1,113,089 | 1,114,586 | 1,123,683 | 1,030,032 | |||||
Total loans (1) | 8,736,351 | 8,472,179 | 8,315,424 | 8,012,852 | 6,861,108 | |||||
Securities (2) | 1,928,851 | 1,931,104 | 1,933,002 | 1,921,724 | 1,779,379 | |||||
Short-term investments and loans held for sale | 167,187 | 146,190 | 139,161 | 146,101 | 167,724 | |||||
Total earning assets | 10,832,389 | 10,549,473 | 10,387,587 | 10,080,677 | 8,808,211 | |||||
Goodwill and other intangible assets | 554,359 | 554,591 | 557,321 | 533,157 | 420,853 | |||||
Other assets | 523,747 | 506,954 | 521,745 | 516,802 | 402,188 | |||||
Total assets | $ 11,910,495 | $ 11,611,018 | $ 11,466,653 | $ 11,130,636 | $ 9,631,252 | |||||
Liabilities and shareholders' equity | ||||||||||
Deposits | ||||||||||
NOW and other | $ 844,888 | $ 819,166 | $ 712,181 | $ 702,353 | $ 570,864 | |||||
Money market | 2,348,516 | 2,524,713 | 2,518,920 | 2,371,203 | 1,768,108 | |||||
Savings | 740,765 | 749,995 | 743,944 | 733,157 | 669,690 | |||||
Time | 3,274,518 | 2,878,846 | 2,913,512 | 2,906,423 | 2,587,702 | |||||
Total interest-bearing deposits | 7,208,687 | 6,972,720 | 6,888,557 | 6,713,136 | 5,596,364 | |||||
Borrowings | 1,363,914 | 1,382,794 | 1,275,173 | 1,229,781 | 1,445,700 | |||||
Total interest-bearing liabilities | 8,572,601 | 8,355,514 | 8,163,730 | 7,942,917 | 7,042,064 | |||||
Non-interest-bearing demand deposits | 1,635,564 | 1,619,470 | 1,656,260 | 1,591,431 | 1,196,451 | |||||
Other liabilities | 144,401 | 102,583 | 137,976 | 127,562 | 131,003 | |||||
Total liabilities | 10,352,566 | 10,077,567 | 9,957,966 | 9,661,910 | 8,369,518 | |||||
Preferred shareholders' equity | 40,633 | 40,633 | 40,633 | 34,892 | - | |||||
Common shareholders' equity | 1,517,296 | 1,492,818 | 1,468,054 | 1,433,834 | 1,261,734 | |||||
Total shareholders' equity | 1,557,929 | 1,533,451 | 1,508,687 | 1,468,726 | 1,261,734 | |||||
Total liabilities and shareholders' equity | $ 11,910,495 | $ 11,611,018 | $ 11,466,653 | $ 11,130,636 | $ 9,631,252 | |||||
Supplementary data | ||||||||||
Total average non-maturity deposits | $ 5,569,733 | $ 5,713,344 | $ 5,631,305 | $ 5,398,144 | $ 4,205,113 | |||||
Total average deposits | 8,844,251 | 8,592,190 | 8,544,817 | 8,304,567 | 6,792,815 | |||||
Fully taxable equivalent income adjustment | 1,807 | 2,033 | 1,820 | 3,122 | 2,950 | |||||
Purchased loan accretion | 4,548 | 6,881 | 3,433 | 5,507 | 3,066 | |||||
Total average tangible equity (3) | 1,003,570 | 978,860 | 951,366 | 935,569 | 840,881 | |||||
(1) Total loans include non-accruing loans. | ||||||||||
(2) Average balances for securities available-for-sale are based on amortized cost. | ||||||||||
(3) See page F-9 for details on the calculation of total average tangible equity. | ||||||||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
ASSET QUALITY ANALYSIS - UNAUDITED - (F-8) | |||||||||||
At or for the Quarters Ended | |||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||
(in thousands) | 2018 | 2018 | 2018 | 2017 | 2017 | ||||||
NON-PERFORMING ASSETS | |||||||||||
Non-accruing loans: | |||||||||||
Commercial real estate | $ 22,639 | $ 10,338 | $ 10,084 | $ 7,266 | $ 5,228 | ||||||
Commercial and industrial loans | 4,914 | 4,029 | 7,430 | 7,311 | 9,681 | ||||||
Residential mortgages | 2,683 | 3,196 | 5,777 | 2,883 | 3,092 | ||||||
Consumer loans | 4,401 | 5,466 | 5,996 | 5,438 | 4,350 | ||||||
Total non-accruing loans | 34,637 | 23,029 | 29,287 | 22,898 | 22,351 | ||||||
Other real estate owned | - | - | - | - | 288 | ||||||
Repossessed assets | 1,069 | 1,241 | 1,241 | 1,147 | - | ||||||
Total non-performing assets | $ 35,706 | $ 24,270 | $ 30,528 | $ 24,045 | $ 22,639 | ||||||
Total non-accruing loans/total loans | 0.39% | 0.26% | 0.35% | 0.28% | 0.32% | ||||||
Total non-performing assets/total assets | 0.30% | 0.20% | 0.27% | 0.21% | 0.23% | ||||||
PROVISION AND ALLOWANCE FOR LOAN LOSSES | |||||||||||
Balance at beginning of period | $ 55,925 | $ 53,859 | $ 51,834 | $ 49,004 | $ 47,359 | ||||||
Charged-off loans | (4,471) | (5,714) | (3,791) | (3,734) | (3,796) | ||||||
Recoveries on charged-off loans | 375 | 1,248 | 241 | 423 | 541 | ||||||
Net loans charged-off | (4,096) | (4,466) | (3,550) | (3,311) | (3,255) | ||||||
Provision for loan losses | 6,628 | 6,532 | 5,575 | 6,141 | 4,900 | ||||||
Balance at end of period | $ 58,457 | $ 55,925 | $ 53,859 | $ 51,834 | $ 49,004 | ||||||
Allowance for loan losses/total loans | 0.66% | 0.64% | 0.64% | 0.62% | 0.71% | ||||||
Allowance for loan losses/non-accruing loans | 169% | 243% | 184% | 226% | 219% | ||||||
NET LOAN CHARGE-OFFS | |||||||||||
Commercial real estate | $ (3,074) | $ (2,079) | $ (817) | $ (881) | $ (1,425) | ||||||
Commercial and industrial loans | (189) | (1,193) | (972) | (960) | (573) | ||||||
Residential mortgages | 61 | (632) | (406) | (759) | 130 | ||||||
Home equity | (242) | 108 | (588) | (123) | (634) | ||||||
Auto and other consumer | (652) | (670) | (767) | (588) | (753) | ||||||
Total, net | $ (4,096) | $ (4,466) | $ (3,550) | $ (3,311) | $ (3,255) | ||||||
Net charge-offs (QTD annualized)/average loans | 0.19% | 0.21% | 0.17% | 0.17% | 0.19% | ||||||
Net charge-offs (YTD annualized)/average loans | 0.19% | 0.19% | 0.17% | 0.19% | 0.20% | ||||||
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | |||||||||||
30-89 Days delinquent | 0.38% | 0.22% | 0.39% | 0.35% | 0.25% | ||||||
90+ Days delinquent and still accruing | 0.22% | 0.40% | 0.23% | 0.20% | 0.17% | ||||||
Total accruing delinquent loans | 0.60% | 0.62% | 0.62% | 0.55% | 0.42% | ||||||
Non-accruing loans | 0.39% | 0.26% | 0.35% | 0.28% | 0.32% | ||||||
Total delinquent and non-accruing loans | 0.99% | 0.88% | 0.97% | 0.83% | 0.74% | ||||||
BERKSHIRE HILLS BANCORP, INC. | |||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9) | |||||||||||
At or for the Quarters Ended | |||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||
(in thousands) | 2018 | 2018 | 2018 | 2017 | 2017 | ||||||
Net income/(loss) | $ 32,227 | $ 34,031 | $ 25,248 | $ (2,810) | $ 22,903 | ||||||
Adj: Net securities (gains)/losses (1) | (88) | (718) | 1,502 | (30) | 1 | ||||||
Adj: Net losses/(gains) on sale of business operations and assets | - | 21 | (481) | - | (296) | ||||||
Adj: Merger and acquisition expense | 198 | 847 | 5,093 | 15,553 | 1,110 | ||||||
Adj: Restructuring expense and other expense | - | - | - | - | 310 | ||||||
Adj: Employee and community investment | - | - | - | 3,400 | - | ||||||
Adj: Deferred tax asset impairment | - | - | - | 18,145 | - | ||||||
Adj: Income taxes | (92) | (105) | (1,481) | (7,963) | (474) | ||||||
Total core income (2) | (A) | $ 32,245 | $ 34,076 | $ 29,881 | $ 26,295 | $ 23,554 | |||||
Total revenue | $ 118,622 | $ 121,151 | $ 114,990 | $ 115,664 | $ 100,834 | ||||||
Adj: Net securities (gains)/losses (1) | (88) | (718) | 1,502 | (30) | 1 | ||||||
Adj: Net losses/(gains) on sale of business operations and assets | - | 21 | (481) | - | (296) | ||||||
Total core revenue (2) | (B) | $ 118,534 | $ 120,454 | $ 116,011 | $ 115,634 | $ 100,539 | |||||
Total non-interest expense | $ 70,977 | $ 72,337 | $ 76,869 | $ 90,041 | $ 65,820 | ||||||
Less: Merger, restructuring and other expense (see above) | (198) | (847) | (5,093) | (15,553) | (1,420) | ||||||
Less: Employee and community investment | - | - | - | (3,400) | - | ||||||
Core non-interest expense (2) | (C) | $ 70,779 | $ 71,490 | $ 71,776 | $ 71,088 | $ 64,400 | |||||
(in millions, except per share data) | |||||||||||
Total average assets | (D) | $ 11,910 | $ 11,611 | $ 11,467 | $ 11,131 | $ 9,631 | |||||
Total average shareholders' equity | (E) | 1,558 | 1,533 | 1,509 | 1,469 | 1,262 | |||||
Total average tangible shareholders' equity (2) | (F) | 1,004 | 979 | 951 | 936 | 841 | |||||
Total average tangible common shareholders' equity (2) | (G) | 963 | 938 | 911 | 901 | 841 | |||||
Total tangible shareholders' equity, period-end (2)(3) | (H) | 979 | 961 | 941 | 939 | 864 | |||||
Total tangible common shareholders' equity, period-end (2)(3) | (I) | 939 | 921 | 901 | 898 | 864 | |||||
Total tangible assets, period-end (2)(3) | (J) | 11,477 | 11,347 | 10,963 | 11,013 | 9,346 | |||||
Total common shares outstanding, period-end (thousands) | (K) | 45,420 | 45,420 | 45,360 | 45,290 | 40,424 | |||||
Average diluted shares outstanding (thousands) | (L) | 46,263 | 46,215 | 46,200 | 45,383 | 40,145 | |||||
Core earnings per common share, diluted(2) | (A/L) | $ 0.70 | $ 0.74 | $ 0.65 | $ 0.58 | $ 0.59 | |||||
Tangible book value per common share, period-end (2) | (I/K) | 20.68 | 20.28 | 19.86 | 19.83 | 21.38 | |||||
Total tangible shareholders' equity/total tangible assets (2) | (H)/(J) | 8.53 | 8.47 | 8.59 | 8.53 | 9.25 | |||||
Performance ratios (4) | |||||||||||
GAAP return on assets | 1.08 | % | 1.17 | % | 0.88 | % | (0.10) | % | 0.95 | % | |
Core return on assets (2) | (A/D) | 1.08 | 1.17 | 1.04 | 0.94 | 0.98 | |||||
GAAP return on equity | 8.27 | 8.88 | 6.69 | (0.77) | 7.26 | ||||||
Core return on equity (2) | (A/E) | 8.28 | 8.89 | 7.92 | 7.16 | 7.47 | |||||
Core return on tangible common equity (2)(5) | (A+O)/(G) | 13.67 | 14.82 | 13.43 | 11.90 | 11.42 | |||||
Efficiency ratio (2)(6) | (C-O)/(B+M+P) | 57.15 | 56.37 | 59.54 | 57.43 | 59.28 | |||||
Net interest margin | 3.32 | 3.50 | 3.36 | 3.50 | 3.36 | ||||||
Supplementary data (in thousands) | |||||||||||
Tax benefit on tax-credit investments (7) | (M) | $ 1,374 | $ 2,119 | $ 596 | $ 2,957 | $ 3,905 | |||||
Non-interest income charge on tax-credit investments (8) | (N) | (1,112) | (1,594) | (506) | (2,564) | (3,347) | |||||
Net income on tax-credit investments | (M+N) | 262 | 525 | 90 | 393 | 558 | |||||
Intangible amortization | (O) | $ 1,218 | $ 1,246 | $ 1,268 | $ 1,183 | $ 739 | |||||
Fully taxable equivalent income adjustment | (P) | 1,807 | 2,033 | 1,820 | 3,122 | 2,950 | |||||
(1) Net securities (gains)/losses for the periods ending March 31, 2018, June 30, 2018, and September 30, 2018 include the change in fair value of the Company's | |||||||||||
equity securities in compliance with the Company's adoption of ASU 2016-01. | |||||||||||
(2) Non-GAAP financial measure. | |||||||||||
(3) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. | |||||||||||
Total tangible assets is computed by taking total assets less the intangible assets at period-end. | |||||||||||
(4) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due | |||||||||||
to rounding. | |||||||||||
(5) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, | |||||||||||
assuming a 27.32% marginal rate for 2018 and a 40% marginal rate for 2017, by tangible equity. | |||||||||||
(6) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully | |||||||||||
taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The | |||||||||||
Company uses this non-GAAP measure to provide important information regarding its operational efficiency. | |||||||||||
(7) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic | |||||||||||
rehabilitation and low-income housing. | |||||||||||
(8) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. | |||||||||||
BERKSHIRE HILLS BANCORP, INC. | ||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED - (F-10) | ||||||
At or for the Nine Months Ended | ||||||
September 30, | September 30, | |||||
(Dollars in thousands) | 2018 | 2017 | ||||
Net (loss)/income | $ 91,506 | $ 58,057 | ||||
Adj: Net securities losses/(gains) (1) | 696 | (12,568) | ||||
Adj: Loss on termination of hedges | - | 6,629 | ||||
Adj: Net (gains) on sale of business operations | (460) | (296) | ||||
Adj: Merger and acquisition expenses | 6,138 | 9,323 | ||||
Adj: Restructuring expense and other | - | 6,682 | ||||
Adj: Income taxes | (1,678) | (3,314) | ||||
Total core income (2) | (A) | $ 96,202 | $ 64,513 | |||
Total revenue | $ 354,763 | $ 304,820 | ||||
Adj: Net securities losses/(gains) (1) | 696 | (12,568) | ||||
Adj: Net (gains) on sale of business operations | (460) | (296) | ||||
Adj: Loss on termination of hedges | - | 6,629 | ||||
Total core revenue(2) | (B) | $ 354,999 | $ 298,585 | |||
Total non-interest expense | $ 220,183 | $ 209,669 | ||||
Less: Merger, restructuring and other expense (see above) | (6,138) | (16,005) | ||||
Core non-interest expense (2) | (C) | $ 214,045 | $ 193,664 | |||
(in millions, except per share data) | ||||||
Total average assets | (D) | $ 11,687 | $ 9,369 | |||
Total average shareholders' equity | (E) | 1,534 | 1,167 | |||
Total average tangible shareholders' equity (2) | (F) | 978 | 746 | |||
Total average tangible common shareholders' equity (2) | (G) | 937 | - | |||
Total tangible shareholders' equity, period-end (2)(3) | (H) | 979 | 864 | |||
Total tangible common shareholders' equity, period-end (2)(3) | (I) | 939 | - | |||
Total tangible assets, period-end (2)(3) | (J) | 11,477 | 9,346 | |||
Total common shares outstanding, period-end (thousands) | (K) | 45,420 | 40,424 | |||
Average diluted shares outstanding (thousands) | (L) | 46,226 | 37,708 | |||
Core earnings per common share, diluted(2) | (A/L) | $ 2.08 | $ 1.71 | |||
Tangible book value per common share, period-end (2) | (I/K) | 20.68 | 21.38 | |||
Total tangible shareholders' equity/total tangible assets (2) | (H)/(J) | 8.53 | 9.25 | |||
Performance ratios (4) | ||||||
GAAP return on assets | 1.05 | % | 0.83 | % | ||
Core return on assets (2) | (A/D) | 1.10 | 0.92 | |||
GAAP return on equity | 7.96 | 6.63 | ||||
Core return on equity (2) | (A/E) | 8.36 | 7.37 | |||
Core return on tangible common equity (2)(5) | (A+O)/(G) | 13.97 | 11.78 | |||
Efficiency ratio (2)(6) | (C-O)/(B+M+P) | 57.66 | 60.96 | |||
Net interest margin | 3.39 | 3.35 | ||||
Supplementary data | ||||||
Tax benefit on tax-credit investments (7) | (M) | $ 4,089 | $ 7,225 | |||
Non-interest income charge on tax-credit investments (8) | (N) | (3,212) | (6,129) | |||
Net income on tax-credit investments | (M+N) | 877 | 1,096 | |||
Intangible amortization | (O) | 3,732 | 2,310 | |||
Fully taxable equivalent income adjustment | (P) | 5,660 | 8,105 | |||
(1) Net securities losses/(gains) for the period ending September 30, 2018 includes the change in fair value of the Company's equity securities in | ||||||
compliance with the Company's adoption of ASU 2016-01. | ||||||
(2) Non-GAAP financial measure. | ||||||
(3) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. | ||||||
Total tangible assets is computed by taking total assets less the intangible assets at period-end. | ||||||
(4) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data | ||||||
due to rounding. | ||||||
(5) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of | ||||||
intangible assets, assuming a 27.32% marginal rate for 2018 and 40% marginal rate for 2017, by tangible equity. | ||||||
(6) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully | ||||||
taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The | ||||||
Company uses this non-GAAP measure to provide important information regarding its operational efficiency. | ||||||
(7) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in | ||||||
historic rehabilitation and low-income housing. | ||||||
(8) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated. | ||||||
SOURCE Berkshire Hills Bancorp, Inc.
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