Berkshire Hills Bancorp (BHLB) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income was $37.5 million ($0.88 per share), up from $19.5 million a year ago, driven by a $16 million gain from the sale of ten New York branches; operating EPS rose 5% sequentially and 16% year-over-year to $0.58.

• Asset quality remained strong, with delinquent and non-performing loans at 0.53% of total loans, the lowest in over 15 years.

• Branch and loan sales, including $47 million in Upstart-related loans, were completed to enhance network efficiency and de-risk the balance sheet.

• Continued rollout of digital deposit products, including Berkshire One, and investments in digital banking initiatives.

• Book value per share increased 7% to $24.90; tangible book value per share also up 7% to $24.53.

Financial highlights

• Q3 2024 net income: $37.5 million; operating net income: $24.8 million ($0.58 per share), up 7% quarter-over-quarter and 15% year-over-year.

• Net interest income was $88.1 million, down less than 1% sequentially and 3% year-over-year; net interest margin declined 4 basis points to 3.16%.

• Operating non-interest income rose 7% sequentially and 23% year-over-year, driven by higher swap fees and a $16 million branch sale gain.

• Operating expenses were $72.3 million, up 1% sequentially and down 2% year-over-year; efficiency ratio improved to 63.74%.

• Provision for credit losses was $5.5 million, down 31% year-over-year; net charge-offs were $5.6 million, including $1.9 million from the Upstart loan sale.

Outlook and guidance

• Management expects recent branch and loan sales to enhance long-term profitability and capital strength, with continued focus on expense discipline, loan growth, and digital product expansion.

• Fourth quarter net interest margin expected between 3.10% and 3.20%; revenue projected to be flat to slightly down, with expenses modestly down.

• Net charge-offs expected to remain stable, excluding Upstart sale impact; annual and midterm guidance to be provided in January.

• The recent Federal Reserve rate cut and projected further reductions may impact future net interest margins.

• Conference call scheduled to discuss results and provide future guidance.