Exhibit 99.1

 

 

Berkshire Hills Announces Third Quarter Results

 

BOSTON, October 26, 2020 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today announced third quarter net income of $21 million, or $0.42 per share, in 2020 compared to $23 million, or $0.44 per share, in 2019. The non-GAAP measure of core earnings totaled $26 million, or $0.53 per share, in the third quarter of 2020 compared to $24 million, or $0.46, per share in the third quarter of 2019. Compared to the linked quarter, results benefited from higher revenue and lower expense as the Company continues to adjust operations to improve operating profitability.

 

THIRD QUARTER FINANCIAL HIGHLIGHTS (Changes are compared to the prior quarter. Measures identified as non-GAAP are reconciled on pages F-9 and F-10)

 

·

Revenue increased by 2%

·

Fee income increased by 9%

·

Non-interest expense decreased by 88%, while core non-interest expense decreased by 4% (non-GAAP measure which excludes second quarter goodwill impairment charge)

·

Efficiency ratio improved to 65% from 71% (non-GAAP measure)

·

Equity/assets ratio improved to 9.3% from 8.9%

·

Tangible equity/tangible assets ratio improved to 9.1% from 8.6% (non-GAAP measure)

·

0.27% annualized net charge-offs/loans

·

0.39% non-performing assets/assets

 

Acting CEO and President Sean Gray stated, “In the first half of the year, our priority was to quickly address the needs of our team members, customers, and communities being impacted by COVID-19. Starting in the third quarter, we began normalizing our operations and nearly returning to regular retail hours, while continuing to support higher digital transaction volumes. During the quarter, we continued our focus on managing our expenses and further strengthening our capital and liquidity metrics. We’re working closely with our borrowers as they progress in normalizing their operations and meeting their credit obligations. This is reflected in our stable loan performance and resumption of regular payment schedules for most of the borrowers who initially requested deferrals at the outset of the pandemic.”

 

Mr. Gray concluded, “Berkshire is evolving and adapting to the current environment, by having made investments that will support our customers and our Company today and into the future. We recently launched a best-in-class digital account opening experience that will extend our market outreach, improve customer experience, reduce fraud and allow us to operate more cost effectively. This is another step in building a 21^st-century community bank that provides everyone equal access to the products and services they need to bank with dignity, achieve upward economic mobility and live healthier financial lives.”

 

 

In addition to introducing its new digital account opening experience, the Company promoted Jason White, a recent Boston area CIO of the Year winner, to EVP- Chief Information Officer. The Company also announced the promotions of two leaders to the role of Regional President. Wealth Management Director Kate Hersey now leads the Boston region and Foundation Director Lori Gazzillo Kiely now leads the Berkshire County region. Now half of those holding the title of Regional President are women, furthering Berkshire’s work in support of its Be FIRST Commitment. Berkshire Bank has also been recognized with the North American Inspiring Workplaces Award.

 

FINANCIAL CONDITION

 

Berkshire’s balance sheet continued to strengthen during the most recent quarter. Total assets decreased by approximately $450 million, or 3%, to $12.6 billion in the third quarter of 2020. This was primarily due to a $388 million, or 4%, decrease in total loans reflecting continued runoff in all major loan categories. The biggest change was a $198 million, or 9%, decrease in residential mortgage balances due to accelerated prepayments in the low interest rate environment. Commercial loans outstanding included $708 million in Paycheck Protection Program (“PPP”) loans, which were stable from the prior quarter-end. Total deposits decreased by $309 million, or 3%, to $10.5 billion primarily due to a $270 million decrease in brokered balances to $814 million. Other deposit balances shifted from higher rate maturing time deposits into non-maturity products due to current low interest rates. This contributed to a decrease in the cost of deposits to 0.61% from 0.79%. Wholesale funds decreased to $1.5 billion from $1.9 billion during the quarter. Retained earnings increased book value to $23.03 per common share and the non-GAAP measure of tangible book value to $22.22 per common share. Capital metrics also improved due to the earnings benefit and reduction in total assets. The Company has received notice for the conversion of its remaining outstanding preferred stock to common stock, which is not expected to have a material impact on the Company’s financial condition and per share metrics.

 

Total delinquent accruing loans decreased to 0.45% of loans from 0.51% of loans during the most recent quarter, while non-accruing loans increased to 0.53% from 0.48%. Year-to-date net loan charge-offs measuring 0.29% of total loans remained below the levels recorded for the same period in 2019. Middle market commercial loan modifications have included an underwriting review and assessment of accrual status. Loans with payment modifications are expected to decrease further in the fourth quarter from levels previously reported. The allowance for credit losses on loans was little changed, measuring 1.50% of total loans at quarter-end, and 1.62% of loans excluding government-guaranteed PPP loans.

 

RESULTS OF OPERATIONS

 

Berkshire’s operating profitability strengthened during the most recent quarter. Berkshire reported third quarter 2020 GAAP EPS of $0.42 per share. The Company’s non-GAAP measure of core EPS totaled $0.53 per share. Measures of pre-tax pre-provision net revenue (“PPNR”) also improved. Non-core charges primarily consisted of costs related to executive separation expense, together with losses on discontinued operations and securities.

 

 

Operating results were improved from the prior quarter due to higher revenues and lower expenses. Fee income growth of 9% primarily reflected higher deposit fees as transaction volumes increased. Non-interest income also benefited from recovery in financial instrument fair value adjustments following negative pandemic impacts in the first half of the year. Net interest income decreased by 1% in the third quarter due primarily to loan runoff. The net interest margin was little changed at 2.61%, as loan yields and deposit costs both declined due to the ongoing low interest rate environment.

 

Third quarter results benefited from lower operating expenses in part because second quarter expenses were elevated by $2.6 million in one-time awards accrued to compensate staff for expediting PPP loan processing to support businesses and paychecks during the economic lockdowns. Other compensation costs were also reduced during the quarter. The efficiency ratio, a non-GAAP financial measure, improved to 65% from 71% as a result of these improvements in revenue and expenses. Full time equivalent staff in continuing operations totaled 1,507 positions at period-end, compared to 1,550 positions at the start of the year. The credit loss provision decreased to $1 million, reflecting an improved economic outlook after the original pandemic downturn was recognized with high credit loss provisions in the first half of the year. The effective tax rate was a benefit of 4% due primarily to the impact of first half of the year expenses lowering the taxable income for the year.

 

BE FIRST CORPORATE RESPONSIBILITY UPDATE

 

Berkshire is committed to purpose-driven performance. Learn more about the steps Berkshire is taking to be a values-based brand for all its stakeholders at www.berkshirebank.com/csr and in its most recent Corporate Responsibility Report.

 

Key developments in the quarter include:

 

·

Investing in Community Recovery & Resiliency: As people and small businesses in neighborhoods across the Company’s footprint struggle through the impacts of the COVID-19 pandemic, Berkshire’s Foundation is responding and has provided nearly $3 million in grant funding to more than 400 organizations through the end of the third quarter. These critical investments are ensuring access to resources for underserved populations to become college and career ready, ensuring quality affordable housing and supporting small business growth and entrepreneurship. In addition, 75% of Berkshire’s employees, through its award-winning XTEAM volunteer program contributed more than 6,000 hours of service.

 

 

·

Transitioning to a Low-Carbon Future: Berkshire is working towards transitioning its electricity to 100% renewable sources. The Company announced an agreement with Nexamp to subscribe to a community solar project in Massachusetts, lowering its carbon footprint and increasing the percentage of its energy supply procured from renewables while also reducing costs.

 

·

Enhancing Environmental & Social Governance Practices: The Company completed updates to its Responsible & Sustainable Business Policy to improve the quality and clarity of its policy and disclosure. The update included new language to address Fraud Reporting & Suspicious Activity as well as Conflict of Interest. In addition, the Company enhanced its Social and Environmental Credit Risk Framework by incorporating new policy and procedure into the existing Commercial Loan Policy to more effectively mitigate the social and environmental risks associated with highly sensitive industries.

 

·

Enhancing Protected Leave For Gender-Based Violence: Under the leadership of EVP, Chief Human Resources & Culture Officer Jackie Courtwright and through a unique collaboration with the non-profit FreeFrom, Berkshire enhanced protections for its employees experiencing gender-based violence by providing 15 days of paid leave a year to deal with the consequences of intimate partner violence, sexual assault, and human trafficking. This policy allows employees the ability to seek medical care, attend court proceedings, and relocate – all without missing a paycheck or depleting their accrued sick or vacation days.

 

·

Recognizing Impact & Results: Berkshire was named the winner of the North American Inspiring Workplaces Award for its diversity and culture programming recognizing the efforts of its Be FIRST Commitment and internal diversity work. The Company was also named one of Massachusetts Most Charitable Companies by the Boston Business Journal for the eighth consecutive year.

 

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

 

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, October 27, 2020 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: https://dpregister.com/sreg/10148654/da6d986a50. 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. Participants are requested to dial-in a few minutes before the scheduled start of the call. A telephone replay of the call will be available through Tuesday, November 3, 2020 by dialing 877-344-7529 and entering access number 10148654. The webcast will be available on Berkshire's website for an extended period of time.

 

 

ABOUT BERKSHIRE HILLS BANCORP

 

Berkshire Hills Bancorp is the parent of Berkshire Bank which is transforming into a 21^st century community bank pursuing purpose driven performance based on its Be FIRST corporate responsibility culture. Headquartered in Boston, Berkshire operates 130 banking offices in seven Northeastern states, with approximately $12.6 billion in assets. Berkshire Bank serves the underbanked through the Reevx Labs^TM platform.

 

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. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions. There are many 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.

 

Further, given its ongoing and dynamic nature, it is difficult to predict what continued effects the COVID-19 pandemic will have on our business and results of operations. The pandemic and the related local and national economic disruption may result in a continued decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in our allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on our interest-earning assets than the decline in the cost of our interest-bearing liabilities; and increased cybersecurity risks, as employees increasingly work remotely.

 

Accordingly, you should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. 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, restructuring costs, goodwill impairment, and discontinued operations. Discontinued operations are the Company’s national mortgage banking operations which the Company is exiting pursuant to a sales agreement. Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees. Merger costs in 2019 were primarily related to the acquisition of SI Financial Group. 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. Restructuring costs also include severance and consulting expenses related to the Company’s strategic review. They also include costs related to the consolidation of branches, including eight branches for the full year of 2019. The Company recorded a full impairment its goodwill in the second quarter of 2020, which was classified as noncore. Noncore charges in the third quarter of 2020 were primarily related to executive separation expense, which was principally the result of the separation with the CEO.

 

The Company has introduced the measure of Core Pre-Provision Net Revenue (“Core PPNR”) which measures core income before credit loss provision and tax expense. Due to the non-cash projections introduced into the calculation of income by the new CECL accounting standard, the investment community is placing more emphasis on PPNR in order to measure the results of operations and to compare them across banks which may have widely varying estimates of future economic conditions that affect their provision expense and reported earnings. The Company also calculates core PPNR/assets in order to utilize the PPNR measure in assessing its comparative operating profitability.

 

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. References to organic growth and organic change exclude balances acquired in bank mergers.

 

###

 

 

 

CONTACTS

 

Investor Relations Contact  

David Gonci; Capital Markets Director; 413-281-1973

  

Media Contacts: 

John Lovallo 

Email: jlovallo@levick.com 

Tel: (917) 612-8419

  

Cate Cronin 

Email: ccronin@levick.com 

Tel: (202) 738-7302

 

 

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 Operations
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 (1)
		Sept. 30,				June 30,				March 31,				Dec. 31,				Sept. 30,
		2020				2020				2020				2019				2019
PER SHARE DATA
Net earnings/(loss) per common share, diluted		$	0.42			$	(10.93	)		$	(0.40	)		$	0.51			$	0.44
Core earnings/(loss) per common share, diluted (2)			0.53				(0.13	)			(0.07	)			0.70				0.46
Total book value per common share			23.03				22.79				33.90				34.65				34.36
Tangible book value per common share (2)			22.22				21.94				22.00				22.56				22.42
Market price at period end			10.11				11.02				14.86				32.88				29.29
Dividends per common share			0.12				0.24				0.24				0.23				0.23
Dividends per preferred share			0.24				0.48				0.48				0.46				0.46
PERFORMANCE RATIOS (3)
Return on assets			0.67	%			(16.38	)%			(0.62	)%			0.78	%			0.67	%
Core return on assets (2)			0.84				(0.19	)			(0.11	)			1.08				0.71
Return on equity			7.50				(131.17	)			(4.58	)			5.90				5.12
Core return on equity (2)			9.33				(1.54	)			(0.84	)			8.09				5.35
Core return on tangible common equity (2)			10.27				(2.05	)			(0.94	)			13.12				8.74
Net interest margin, fully taxable equivalent (FTE) (4)(5)			2.61				2.62				3.04				3.11				3.22
Fee income/Net interest and fee income from continuing operations			19.82				18.45				15.46				18.11				17.61
Efficiency ratio (2)			65.39				71.01				66.92				53.66				53.37
CHANGE (Year-to-date)
Total commercial loans (organic, annualized)			5	%			12	%			(5	)%			(7	)%			(9	)%
Total loans (organic, annualized)			(7	)			(3	)			(8	)			(9	)			(9	)
Total deposits (organic, annualized)			2				9				(10	)			0				2
Total net revenues from continuing operations (compared to prior year)			(15	)			(14	)			(14	)			4				4
(Loss)/earnings per common share (compared to prior year)			(847	)			(1,200	)			(178	)			(14	)			(26	)
Core earnings/(loss) per common share (compared to prior year)(2)			(81	)			(116	)			(112	)			(14	)			(18	)
FINANCIAL DATA (in millions)
Total assets		$	12,614			$	13,063			$	13,122			$	13,216			$	13,532
Total earning assets			11,832				12,267				11,785				11,916				12,174
Total securities			1,988				1,882				1,837				1,770				1,861
Total loans			8,982				9,370				9,303				9,502				9,719
Allowance for credit losses			134				139				114				64				62
Total intangible assets			41				42				598				599				602
Total deposits			10,467				10,776				10,072				10,336				10,423
Total shareholders' equity			1,179				1,164				1,722				1,759				1,772
Net income/(loss)			21.2				(549.4	)			(19.9	)			25.8				22.6
Core income/(loss) (2)			26.4				(6.5	)			(3.6	)			35.3				23.7
Purchase accounting accretion			2.5				2.1				3.1				5.1				4.8
Goodwill impairment			-				553.8				-				-				-
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans			0.27	%			0.17	%			0.45	%			0.17	%			0.92	%
Total non-performing assets/total assets			0.39				0.36				0.40				0.31				0.28
Allowance for credit losses/total loans			1.50				1.49				1.22				0.67				0.64
Loans/deposits			86				87				92				92				93
Shareholders' equity to total assets			9.35				8.91				13.13				13.31				13.10
Tangible shareholders' equity to tangible assets (2)			9.05				8.61				8.98				9.19				9.05

 

(1)

Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10.

(2)

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.

(3)

All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(4)

Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.

(5)

The effect of purchase accounting accretion for loans, time deposits, and borrowings 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: 0.08%, 0.07%, 0.11%, 0.17%, 0.16%.

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)

 

		September 30,				June 30,				December 31,
(in thousands)		2020				2020				2019
Assets
Cash and due from banks		$	90,537			$	102,105			$	105,447
Short-term investments			844,755				942,047				474,382
Total cash and short-term investments			935,292				1,044,152				579,829
Trading security			9,525				9,519				10,769
Marketable equity securities, at fair value			31,993				33,263				41,556
Securities available for sale, at fair value			1,575,289				1,458,036				1,311,555
Securities held to maturity, at amortized cost			330,197				334,895				357,979
Federal Home Loan Bank stock and other restricted securities			40,520				46,139				48,019
Total securities			1,987,524				1,881,852				1,769,878
Less: Allowance for credit losses on investment securities			(96	)			(113	)			-
Net securities			1,987,428				1,881,739				1,769,878
Loans held for sale			15,854				62,881				36,664
Total loans			8,982,336				9,370,271				9,502,428
Less: Allowance for credit losses on loans			(134,414	)			(139,394	)			(63,575	)
Net loans			8,847,922				9,230,877				9,438,853
Premises and equipment, net			117,116				118,722				120,398
Other real estate owned			40				40				-
Goodwill			-				-				553,762
Other intangible assets			40,947				42,477				45,615
Cash surrender value of bank-owned life insurance			231,217				229,812				227,894
Other assets			425,675				430,592				288,945
Assets from discontinued operations			12,966				21,692				154,132
Total assets		$	12,614,457			$	13,062,984			$	13,215,970
Liabilities and shareholders' equity
Demand deposits		$	2,585,173			$	2,573,786			$	1,884,100
NOW and other deposits			1,522,289				1,453,397				1,492,569
Money market deposits			2,516,168				2,525,761				2,528,656
Savings deposits			952,836				932,243				841,283
Time deposits			2,890,093				3,290,721				3,589,369
Total deposits			10,466,559				10,775,908				10,335,977
Senior borrowings			605,483				719,638				730,501
Subordinated borrowings			97,223				97,165				97,049
Total borrowings			702,706				816,803				827,550
Other liabilities			251,220				280,843				267,398
Liabilities from discontinued operations			14,947				25,290				26,481
Total liabilities			11,435,432				11,898,844				11,457,406
Preferred shareholders' equity			20,325				20,325				40,633
Common shareholders' equity			1,158,700				1,143,815				1,717,931
Total shareholders' equity			1,179,025				1,164,140				1,758,564
Total liabilities and shareholders' equity		$	12,614,457			$	13,062,984			$	13,215,970
Net common shares outstanding			50,306				50,192				49,585

 

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3)

 

LOAN ANALYSIS

 

														Annualized Growth %
(in millions)		September 30, 2020 Balance				June 30, 2020 Balance				December 31, 2019 Balance				Quarter ended September 30, 2020				Year to Date
Total commercial real estate		$	3,943			$	3,996			$	4,034				(5	)%			(3	)%
Commercial and industrial loans			2,147				2,222				1,841				(14	)			22
Total commercial loans			6,090				6,218				5,875				(8	)			5
Total residential mortgages			2,122				2,320				2,685				(34	)			(28	)
Home equity			350				364				381				(15	)			(11	)
Auto and other			420				468				561				(41	)			(34	)
Total consumer loans			770				832				942				(30	)			(24	)
Total loans		$	8,982			$	9,370			$	9,502				(17	)%			(7	)%

 

 

DEPOSIT ANALYSIS
														Annualized Growth %
(in millions)		September 30, 2020 Balance				June 30, 2020 Balance				December 31, 2019 Balance				Quarter ended September 30, 2020				Year to Date
Demand		$	2,585			$	2,574			$	1,884				2	%			50	%
NOW and other			1,523				1,453				1,493				19				3
Money market			2,516				2,526				2,529				(2	)			(1	)
Savings			953				932				841				9				18
Time deposits			2,890				3,291				3,589				(49	)			(26	)
Total deposits		$	10,467			$	10,776			$	10,336				(11	)%			2	%

 

 

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands, except per share data)		2020				2019				2020				2019
Interest and dividend income from continuing operations
Loans		$	85,688			$	118,371			$	278,259			$	338,012
Securities and other			12,080				15,354				39,392				46,060
Total interest and dividend income			97,768				133,725				317,651				384,072
Interest expense from continuing operations
Deposits			16,070				31,501				60,460				86,396
Borrowings			4,643				5,353				16,118				23,751
Total interest expense			20,713				36,854				76,578				110,147
Net interest income from continuing operations			77,055				96,871				241,073				273,925
Non-interest income from continuing operations
Mortgage banking originations			2,044				292				4,647				616
Loan related income			4,988				6,493				12,007				17,318
Deposit related fees			7,062				8,705				20,382				23,088
Insurance commissions and fees			2,660				2,895				8,451				8,486
Wealth management fees			2,299				2,325				6,926				7,114
Total fee income			19,053				20,710				52,413				56,622
Other			1,927				609				492				1,363
Securities (losses)/gains, net			(1,017	)			87				(9,925	)			2,655
Total non-interest income			19,963				21,406				42,980				60,640
Total net revenue from continuing operations			97,018				118,277				284,053				334,565
Provision for credit losses			1,200				22,600				65,878				30,068
Non-interest expense from continuing operations
Compensation and benefits			34,809				37,272				111,121				105,551
Occupancy and equipment			11,084				9,893				32,411				28,788
Technology and communications			8,540				6,849				24,376				19,821
Marketing and promotion			1,002				1,006				3,069				3,428
Professional services			2,567				2,282				7,852				8,510
FDIC premiums and assessments			1,518				-				4,658				3,390
Other real estate owned and foreclosures			40				150				81				150
Amortization of intangible assets			1,530				1,526				4,668				4,201
Goodwill impairment			-				-				553,762				-
Merger, restructuring and other expense			5,316				4,163				5,316				22,333
Other			6,437				7,870				21,129				23,398
Total non-interest expense			72,843				71,011				768,443				219,570
Income/(loss) from continuing operations before income taxes		$	22,975			$	24,666			$	(550,268	)		$	84,927
Income tax (benefit)/expense			(68	)			4,007				(18,194	)			16,042
Net income/(loss) from continuing operations		$	23,043			$	20,659			$	(532,074	)		$	68,885
(Loss)/income from discontinued operations before income taxes		$	(2,477	)		$	2,747			$	(21,741	)		$	3,975
Income tax (benefit)/expense			(659	)			790				(5,789	)			1,161
Net (loss)/income from discontinued operations		$	(1,818	)		$	1,957			$	(15,952	)		$	2,814
Net income/(loss)		$	21,225			$	22,616			$	(548,026	)		$	71,699
Preferred stock dividend			58				240				313				720
Income/(loss) available to common shareholders		$	21,167			$	22,376			$	(548,339	)		$	70,979
Basic earnings/(loss) per common share:
Continuing Operations		$	0.46			$	0.40			$	(10.58	)		$	1.41
Discontinued Operations			(0.04	)			0.04				(0.32	)			0.06
Total		$	0.42			$	0.44			$	(10.90	)		$	1.47
Diluted earnings/(loss) per common share:
Continuing Operations		$	0.46			$	0.40			$	(10.58	)		$	1.40
Discontinued Operations			(0.04	)			0.04				(0.32	)			0.06
Total		$	0.42			$	0.44			$	(10.90	)		$	1.46
Weighted average shares outstanding:
Basic			50,329				51,422				50,256				48,846
Diluted			50,329				51,545				50,256				48,987

 

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)		2020				2020				2020				2019				2019
Interest and dividend income from continuing operations
Loans		$	85,688			$	90,876			$	101,695			$	110,915			$	118,371
Securities and other			12,080				12,812				14,500				14,526				15,354
Total interest and dividend income			97,768				103,688				116,195				125,441				133,725
Interest expense from continuing operations
Deposits			16,070				20,552				23,838				28,797				31,501
Borrowings			4,643				5,546				5,929				5,311				5,353
Total interest expense			20,713				26,098				29,767				34,108				36,854
Net interest income from continuing operations			77,055				77,590				86,428				91,333				96,871
Non-interest income from continuing operations
Mortgage banking originations			2,044				1,644				959				172				292
Loan related income			4,988				5,717				1,302				7,056				6,493
Deposit related fees			7,062				5,373				7,947				8,264				8,705
Insurance commissions and fees			2,660				2,767				3,024				2,471				2,895
Wealth management fees			2,299				2,057				2,570				2,239				2,325
Total fee income			19,053				17,558				15,802				20,202				20,710
Other			1,927				(999	)			(436	)			75				609
Securities (losses)/gains, net			(1,017	)			822				(9,730	)			1,734				87
Gain on sale of business operations and assets, net			-				-				-				1,351				-
Total non-interest income			19,963				17,381				5,636				23,362				21,406
Total net revenue from continuing operations			97,018				94,971				92,064				114,695				118,277
Provision for credit losses			1,200				29,871				34,807				5,351				22,600
Non-interest expense from continuing operations
Compensation and benefits			34,809				39,403				36,909				35,355				37,272
Occupancy and equipment			11,084				10,195				11,132				10,798				9,893
Technology and communications			8,540				7,755				8,081				6,702				6,849
Marketing and promotion			1,002				902				1,165				1,046				1,006
Professional services			2,567				2,565				2,720				2,288				2,282
FDIC premiums and assessments			1,518				1,658				1,482				471				-
Other real estate owned and foreclosures			40				14				27				4				150
Amortization of intangible assets			1,530				1,558				1,580				1,582				1,526
Goodwill impairment			-				553,762				-				-				-
Merger, restructuring and other expense			5,316				-				-				5,713				4,163
Other			6,437				6,463				8,229				6,328				7,870
Total non-interest expense			72,843				624,275				71,325				70,287				71,011
Income/(loss) from continuing operations before income taxes		$	22,975			$	(559,175	)		$	(14,068	)		$	39,057			$	24,666
Income tax (benefit)/expense			(68	)			(16,130	)			(1,996	)			6,421				4,007
Net income/(loss) from continuing operations		$	23,043			$	(543,045	)		$	(12,072	)		$	32,636			$	20,659
(Loss)/income from discontinued operations before income taxes		$	(2,477	)		$	(8,635	)		$	(10,629	)		$	(9,514	)		$	2,747
Income tax (benefit)/expense			(659	)			(2,299	)			(2,831	)			(2,629	)			790
Net (loss)/income from discontinued operations		$	(1,818	)		$	(6,336	)		$	(7,798	)		$	(6,885	)		$	1,957
Net income/(loss)		$	21,225			$	(549,381	)		$	(19,870	)		$	25,751			$	22,616
Preferred stock dividend			58				130				125				240				240
Income/(loss) available to common shareholders		$	21,167			$	(549,511	)		$	(19,995	)		$	25,511			$	22,376
Basic earnings/(loss) per common share:
Continuing Operations		$	0.46			$	(10.80	)		$	(0.24	)		$	0.65			$	0.40
Discontinued Operations			(0.04	)			(0.13	)			(0.16	)			(0.14	)			0.04
Total		$	0.42			$	(10.93	)		$	(0.40	)		$	0.51			$	0.44
Diluted earnings/(loss) per common share:
Continuing Operations		$	0.46			$	(10.80	)		$	(0.24	)		$	0.65			$	0.40
Discontinued Operations			(0.04	)			(0.13	)			(0.16	)			(0.14	)			0.04
Total		$	0.42			$	(10.93	)		$	(0.40	)		$	0.51			$	0.44
Weighted average shares outstanding:
Basic			50,329				50,246				50,204				50,494				51,422
Diluted			50,329				50,246				50,204				50,702				51,545

 

 

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,
		2020				2020				2020				2019				2019
Earning assets
Loans:
Commercial real estate			3.52	%			3.78	%			4.41	%			4.80	%			4.92	%
Commercial and industrial loans			3.88				4.02				5.03				5.35				5.58
Residential mortgages			3.78				3.78				3.77				3.61				3.73
Consumer loans			3.59				3.72				4.28				4.38				4.55
Total loans			3.68				3.83				4.33				4.52				4.67
Securities			2.78				3.07				3.32				3.31				3.41
Short-term investments and loans held for sale			0.21				0.50				1.78				3.15				4.11
Total earning assets			3.31				3.50				4.08				4.27				4.45
Funding liabilities
Deposits:
NOW and other			0.24				0.30				0.46				0.54				0.61
Money market			0.38				0.58				0.98				1.18				1.27
Savings			0.10				0.10				0.13				0.14				0.13
Time			1.63				1.84				1.87				1.97				2.02
Total interest-bearing deposits			0.81				1.01				1.18				1.35				1.43
Borrowings			2.36				2.38				2.60				2.77				3.12
Total interest-bearing liabilities			0.95				1.16				1.33				1.48				1.57
Net interest spread			2.36				2.34				2.75				2.79				2.88
Net interest margin			2.61				2.62				3.04				3.11				3.22
Cost of funds (1)			0.73				0.92				1.11				1.23				1.32
Cost of deposits			0.61				0.79				0.96				1.11				1.18

 

(1)

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)		2020				2020				2020				2019				2019
Assets
Loans
Commercial real estate		$	3,986,424			$	4,005,018			$	4,000,461			$	4,056,244			$	3,998,144
Commercial and industrial loans			2,191,749				2,152,820				1,795,813				1,768,039				1,951,205
Residential mortgages			2,224,132				2,452,622				2,654,224				2,758,676				2,849,216
Consumer loans			800,824				865,318				921,810				974,889				1,035,893
Total loans (1)			9,203,129				9,475,778				9,372,308				9,557,848				9,834,458
Securities (2)			1,873,533				1,793,381				1,744,635				1,752,968				1,846,985
Short-term investments and loans held for sale			766,447				697,138				374,894				444,622				309,897
Total earning assets (3)			11,843,109				11,966,297				11,491,837				11,755,438				11,991,340
Goodwill and other intangible assets			41,460				590,672				598,347				601,192				603,762
Other assets			759,534				751,702				663,056				737,396				668,218
Assets from discontinued operations			16,041				109,923				98,528				176,251				204,339
Total assets		$	12,660,144			$	13,418,594			$	12,851,768			$	13,270,277			$	13,467,659
Liabilities and shareholders' equity
Deposits
NOW and other		$	1,243,487			$	1,183,839			$	1,159,388			$	1,085,485			$	1,111,637
Money market			2,673,567				2,672,066				2,752,465				2,688,766				2,624,639
Savings			940,488				901,218				846,942				835,209				838,445
Time			3,056,419				3,399,222				3,333,070				3,827,175				4,158,688
Total interest-bearing deposits			7,913,961				8,156,345				8,091,865				8,436,635				8,733,409
Borrowings			777,369				942,033				949,316				853,911				805,035
Total interest-bearing liabilities			8,691,330				9,098,378				9,041,181				9,290,546				9,538,444
Non-interest-bearing demand deposits			2,558,981				2,343,173				1,849,295				1,898,045				1,864,964
Other liabilities			254,273				272,690				203,797				304,504				267,922
Liabilities from discontinued operations			22,805				28,988				23,799				30,446				28,206
Total liabilities			11,527,389				11,743,229				11,118,072				11,523,541				11,699,536
Preferred shareholders' equity			20,325				20,325				20,548				40,633				40,633
Common shareholders' equity			1,112,430				1,655,040				1,713,148				1,706,103				1,727,490
Total shareholders' equity			1,132,755				1,675,365				1,733,696				1,746,736				1,768,123
Total liabilities and shareholders' equity		$	12,660,144			$	13,418,594			$	12,851,768			$	13,270,277			$	13,467,659
Supplementary data
Total average non-maturity deposits		$	7,416,523			$	7,100,296			$	6,608,090			$	6,507,505			$	6,439,685
Total average deposits			10,472,942				10,499,518				9,941,160				10,334,680				10,598,373
Fully taxable equivalent income adjustment			1,512				1,580				1,824				1,934				1,826
Total average tangible equity (4)			1,091,295				1,084,693				1,135,349				1,145,544				1,164,361

 

(1)

Total loans include non-accruing loans.

(2)

Average balances for securities available-for-sale are based on amortized cost.

(3)

Excludes discontinued operations for presentation purposes. Performance ratios are calculated including the impact of discontinued operations.

(4)

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)		2020				2020				2020				2019				2019
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate		$	14,777			$	12,486			$	16,938			$	20,119			$	15,829
Commercial and industrial loans			15,035				15,045				18,370				11,373				12,224
Residential mortgages			7,928				9,840				9,636				3,343				3,062
Consumer loans			9,650				7,513				6,172				4,805				5,191
Total non-accruing loans			47,390				44,884				51,116				39,640				36,306
Other real estate owned			401				517				224				-				-
Repossessed assets			1,646				1,581				1,316				858				1,003
Total non-performing assets		$	49,437			$	46,982			$	52,656			$	40,498			$	37,309
Total non-accruing loans/total loans			0.53	%			0.48	%			0.55	%			0.42	%			0.37	%
Total non-performing assets/total assets			0.39	%			0.36	%			0.40	%			0.31	%			0.28	%
PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period		$	139,394			$	113,510			$	63,575			$	62,230			$	62,156
Adoption of ASU No. 2016-13 (1)			-				-				25,434				-				-
Balance after adoption of ASU No. 2016-13			139,394				113,510				89,009				62,230				62,156
Charged-off loans			(7,776	)			(7,274	)			(12,432	)			(4,485	)			(23,524	)
Recoveries on charged-off loans			1,580				3,259				1,958				479				998
Net loans charged-off			(6,196	)			(4,015	)			(10,474	)			(4,006	)			(22,526	)
Provision for loan credit losses			1,216				29,899				34,975				5,351				22,600
Balance at end of period		$	134,414			$	139,394			$	113,510			$	63,575			$	62,230
Allowance for credit losses/total loans			1.50	%			1.49	%			1.22	%			0.67	%			0.64	%
Allowance for credit losses/non-accruing loans			284	%			311	%			222	%			160	%			171	%
NET LOAN CHARGE-OFFS
Commercial real estate		$	(635	)		$	(1,679	)		$	(5,990	)		$	(1,419	)		$	(2,759	)
Commercial and industrial loans			(5,551	)			(1,059	)			(3,728	)			(1,495	)			(18,850	)
Residential mortgages			517				(966	)			(19	)			(351	)			(140	)
Home equity			(57	)			(10	)			(107	)			(67	)			(71	)
Auto and other consumer			(470	)			(301	)			(630	)			(674	)			(706	)
Total, net		$	(6,196	)		$	(4,015	)		$	(10,474	)		$	(4,006	)		$	(22,526	)
Net charge-offs (QTD annualized)/average loans			0.27	%			0.17	%			0.45	%			0.17	%			0.92	%
Net charge-offs (YTD annualized)/average loans			0.29	%			0.31	%			0.45	%			0.35	%			0.41	%
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent			0.31	%			0.37	%			0.43	%			0.25	%			0.26	%
90+ Days delinquent and still accruing			0.14	%			0.14	%			0.05	%			0.29	%			0.29	%
Total accruing delinquent loans			0.45	%			0.51	%			0.48	%			0.54	%			0.55	%
Non-accruing loans			0.53	%			0.48	%			0.55	%			0.42	%			0.37	%
Total delinquent and non-accruing loans			0.98	%			0.99	%			1.03	%			0.96	%			0.92	%

 

(1)

This balance includes $12 million of PCD confirmed losses as of January 1, 2020.

 

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)				2020				2020				2020				2019				2019
Net income/(loss)				$	21,225			$	(549,381	)		$	(19,870	)		$	25,751			$	22,616
Adj: Net securities losses/(gains) (1)					1,017				(822	)			9,730				(1,734	)			(87	)
Adj: Goodwill impairment					-				553,762				-				-				-
Adj: Net (gains) on sale of business operations and assets					-				-				-				-				-
Adj: Merger and acquisition expense					-				-				-				3,611				3,802
Adj: Restructuring expense and other expense					5,316				-				-				2,102				361
Adj: Loss/(income) from discontinued operations before income taxes					2,477				8,635				10,629				9,514				(2,747	)
Adj: Income taxes					(3,611	)			(18,658	)			(4,134	)			(3,910	)			(281	)
Total core income/(loss) (2)		(A)		$	26,424			$	(6,464	)		$	(3,645	)		$	35,334			$	23,664
Total revenue from continuing operations				$	97,018			$	94,971			$	92,064			$	114,695			$	118,277
Adj: Net securities losses/(gains) (1)					1,017				(822	)			9,730				(1,734	)			(87	)
Total core revenue (2)		(B)		$	98,035			$	94,149			$	101,794			$	112,961			$	118,190
Total non-interest expense from continuing operations				$	72,843			$	624,275			$	71,325			$	70,287			$	71,011
Less: Merger, restructuring and other expense (see above)					(5,316	)			-				-				(5,713	)			(4,163	)
Less: Goodwill impairment					-				(553,762	)			-				-				-
Core non-interest expense (2)		(C)		$	67,527			$	70,513			$	71,325			$	64,574			$	66,848
Total revenue				$	96,752			$	90,383			$	93,869			$	116,860			$	134,067
Total non-interest expense					75,054				628,322				83,759				81,966				84,054
Pre-tax, pre-provision net revenue (PPNR)				$	21,698			$	(537,939	)		$	10,110			$	34,894			$	50,013
Total revenue from continuing operations				$	97,018			$	94,971			$	92,064			$	114,695			$	118,277
Total non-interest expense from continuing operations					72,843				624,275				71,325				70,287				71,011
Pre-tax, pre-provision net revenue (PPNR) from continuing operations				$	24,175			$	(529,304	)		$	20,739			$	44,408			$	47,266
Total core revenue (2)				$	98,035			$	94,149			$	101,794			$	112,961			$	118,190
Core non-interest expense (2)					67,527				70,513				71,325				64,574				66,848
Core pre-tax, pre-provision net revenue (PPNR)				$	30,508			$	23,636			$	30,469			$	48,387			$	51,342
(in millions, except per share data)
Total average assets		(D)		$	12,660			$	13,419			$	12,852			$	13,270			$	13,468
Total average shareholders' equity		(E)			1,133				1,675				1,734				1,747				1,768
Total average tangible shareholders' equity (2)		(F)			1,091				1,085				1,135				1,146				1,164
Total average tangible common shareholders' equity (2)		(G)			1,071				1,064				1,115				1,105				1,124
Total tangible shareholders' equity, period-end (2)(3)		(H)			1,138				1,122				1,124				1,159				1,170
Total tangible common shareholders' equity, period-end (2)(3)		(I)			1,118				1,101				1,104				1,119				1,130
Total tangible assets, period-end (2)(3)		(J)			12,574				13,021				12,524				12,617				12,930
Total common shares outstanding, period-end (thousands)		(K)			50,306				50,192				50,199				49,585				50,394
Average diluted shares outstanding (thousands)		(L)			50,329				50,246				50,204				50,702				51,545
Core earnings/(loss) per common share, diluted (2)		(A/L)		$	0.53			$	(0.13	)		$	(0.07	)		$	0.70			$	0.46
Tangible book value per common share, period-end (2)		(I/K)			22.22				21.94				22.00				22.56				22.42
Total tangible shareholders' equity/total tangible assets (2)		(H)/(J)			9.05				8.61				8.98				9.19				9.05
Performance ratios (4)
GAAP return on assets					0.67	%			(16.38	)%			(0.62	)%			0.78	%			0.67	%
Core return on assets (2)					0.84				(0.19	)			(0.11	)			1.08				0.71
GAAP return on equity					7.50				(131.17	)			(4.58	)			5.90				5.12
Core return on equity (2)		(A/E)			9.33				(1.54	)			(0.84	)			8.09				5.35
Core return on tangible common equity (2)(5)		(A+O)/(G)			10.27				(2.05	)			(0.94	)			13.12				8.74
PPNR/assets (2)					0.69				(16.04	)			0.31				1.05				1.49
Core PPNR/assets (2)					0.97				0.71				0.96				1.48				1.55
Efficiency ratio (2)(6)		(C-O)/(B+M+P)			65.39				71.01				66.92				53.66				53.37
Net interest margin					2.61				2.62				3.04				3.11				3.22
Supplementary data (in thousands)
Tax benefit on tax-credit investments (7)		(M)		$	1,377			$	1,379			$	608			$	2,503			$	2,382
Non-interest income charge on tax-credit investments (8)		(N)			(1,090	)			(1,097	)			(486	)			(1,996	)			(1,942	)
Net income on tax-credit investments		(M+N)			287				282				122				507				440
Intangible amortization		(O)		$	1,530			$	1,558			$	1,580			$	1,582			$	1,526
Fully taxable equivalent income adjustment		(P)			1,512				1,580				1,824				1,934				1,826

 

(1)

Net securities losses/(gains) 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/(loss) adjusted for the tax-effected amortization of intangible assets, assuming a 27% marginal rate, 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
				Sept. 30,				Sept. 30,
(Dollars in thousands)				2020				2019
Net (loss)/income				$	(548,026	)		$	71,699
Adj: Net securities losses/(gains) (1)					9,925				(2,655	)
Adj: Goodwill impairment					553,762				-
Adj: Merger and acquisition expenses					-				15,122
Adj: Restructuring expense and other					5,316				7,211
Adj: Loss/(income) from discontinued operations before income taxes					21,741				(3,975	)
Adj: Income taxes					(26,403	)			(3,889	)
Total core income (2)		(A)		$	16,315			$	83,513
Total revenue from continuing operations				$	284,053			$	334,565
Adj: Net securities losses/(gains) (1)					9,925				(2,655	)
Total core revenue (2)		(B)		$	293,978			$	331,910
Total non-interest expense from continuing operations				$	768,443			$	219,570
Less: Merger, restructuring and other expense (see above)					(5,316	)			(22,333	)
Less: Goodwill impairment					(553,762	)			-
Core non-interest expense (2)		(C)		$	209,365			$	197,237
Total revenue				$	281,004			$	373,630
Total non-interest expense					787,135				254,660
Pre-tax, pre-provision net revenue (PPNR)				$	(506,131	)		$	118,970
Total revenue from continuing operations				$	284,053			$	334,565
Total non-interest expense from continuing operations					768,443				219,570
Pre-tax, pre-provision net revenue (PPNR) from continuing operations				$	(484,390	)		$	114,995
Total core revenue (2)				$	293,978			$	331,910
Core non-interest expense (2)					209,365				197,237
Core pre-tax, pre-provision net revenue (PPNR)				$	84,613			$	134,673
(in millions, except per share data)
Total average assets		(D)		$	13,001			$	12,857
Total average shareholders' equity		(E)			1,513				1,677
Total average tangible shareholders' equity (2)		(F)			1,104				1,106
Total average tangible common shareholders' equity (2)		(G)			1,083				1,066
Total tangible shareholders' equity, period-end (2)(3)		(H)			1,138				1,170
Total tangible common shareholders' equity, period-end (2)(3)		(I)			1,118				1,130
Total tangible assets, period-end (2)(3)		(J)			12,574				12,930
Total common shares outstanding, period-end (thousands)		(K)			50,306				50,394
Average diluted shares outstanding (thousands)		(L)			50,290				48,987
Core earnings per common share, diluted (2)		(A/L)		$	0.32			$	1.70
Tangible book value per common share, period-end (2)		(I/K)			22.22				22.42
Total tangible shareholders' equity/total tangible assets (2)		(H)/(J)			9.05				9.05
Performance ratios (4)
GAAP return on assets					(5.63	)%			0.74	%
Core return on assets (2)		(A/D)			0.17				0.88
GAAP return on equity					(48.26	)			5.70
Core return on equity (2)		(A/E)			1.44				6.64
Core return on tangible common equity (2)(5)		(A+O)/(G)			2.39				10.74
PPNR/assets (2)					(5.19	)			1.23
Core PPNR/assets (2)					0.87				1.40
Efficiency ratio (2)(6)		(C-O)/(B+M+P)			67.72				56.30
Net interest margin					2.75				3.19
Supplementary data
Tax benefit on tax-credit investments (7)		(M)		$	3,364			$	5,447
Non-interest income charge on tax-credit investments (8)		(N)			(2,673	)			(4,459	)
Net income on tax-credit investments		(M+N)			691				988
Intangible amortization		(O)			4,668				4,201
Fully taxable equivalent income adjustment		(P)			4,917				5,517

  

(1)

Net securities losses/(gains) 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% marginal rate, 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.