Berkshire Hills Bancorp (BHLB) Q1 2025 earnings summary

Executive summary

• Operating net income reached $27.6 million, up 6% sequentially and 32% year-over-year, with GAAP net income at $25.7 million and EPS of $0.60 (operating) and $0.56 (GAAP), reflecting strong revenue growth and improved efficiency.

• Efficiency ratio improved to 59.5%, the best in two years, driven by a 6% year-over-year reduction in operating non-interest expense.

• Asset quality remained robust, with delinquent and non-performing loans at 0.25%–0.42% of total loans, a 20-year low.

• Progressed on strategic initiatives, including digital deposit growth, Upstart loan portfolio runoff, and branch consolidations.

• Integration planning for the pending merger with Brookline Bancorp is ongoing, with closing expected in the second half of 2025.

Financial highlights

• Net interest margin rose to 3.24%, up 10 basis points sequentially; net interest income increased to $91.7 million, up 3% sequentially and 2% year-over-year.

• Operating non-interest income was $20.7 million, up 19% year-over-year; operating non-interest expense declined 6% year-over-year to $67.9 million.

• Average loans grew to $9.4 billion, up 1% sequentially and 4% year-over-year; average deposits were $9.9 billion, up 2% sequentially and flat year-over-year.

• Provision for credit losses was $5.5 million, down $0.5 million sequentially; net charge-offs were $3.5 million, or 0.15% of average loans.

• Tangible book value per share increased to $25.50, up 3% sequentially.

Outlook and guidance

• The Brookline merger is expected to close in the second half of 2025, with core system conversions targeted for February 2026.

• Management targets maintaining strong capital ratios and using capital for organic growth and shareholder distributions.

• Identified cost savings of 12.6% of combined expense base; significant EPS accretion projected for 2026.

• Loan growth pipeline has slowed, with expectations for annualized loan growth around 5%.

• Charge-off rates expected to normalize around 20 basis points, reflecting macroeconomic uncertainty.