Berkshire Hills Bancorp (BHLB) Q4 2024 earnings summary

Executive summary

• Q4 2024 operating EPS rose 3% sequentially and 28% year-over-year to $0.60; full-year operating EPS was $2.22, up 4% year-over-year.

• Q4 operating net income was $26 million, up 5% sequentially and 29% year-over-year; FY2024 operating net income was $94.9 million.

• Announced a merger of equals with Brookline Bancorp, expected to close in the second half of 2025, creating a $24B Northeast franchise and accelerating shareholder value creation.

• Completed a $100 million capital raise in December to support the merger.

• Recognized for strong credit discipline, efficiency improvements, and community impact.

Financial highlights

• Q4 net interest income was $86.9 million, down 1% sequentially; net interest margin was 3.14%.

• Q4 operating non-interest income was $23.2 million; operating non-interest expense was $71.0 million, down 2% sequentially and 6% year-over-year.

• Efficiency ratio improved to 62.4% in Q4 and 63.9% for FY2024.

• Average loans for Q4 were $9.3 billion; period-end deposits were $10.4 billion, up 4% year-over-year.

• Provision for credit losses was $6 million in Q4 and $24 million for 2024, down $8 million from 2023.

Outlook and guidance

• Merger with Brookline Bancorp expected to deliver 2026 ROAA of 1.28%, ROATCE of 16.5%, and efficiency ratio of 48%.

• Projected 2026 EPS accretion of 40% (GAAP) and 23% (cash), with tangible book value earnback in under 3 years.

• Funding costs are expected to decline as the Fed cuts rates, with further NIM expansion anticipated in Q1 2025.

• No line item guidance for 2025 due to the pending merger, but management is comfortable with consensus net income estimates.

• Tax rate expected to normalize at 22%-23% for 2025, down from 26% in Q4 due to non-deductible merger expenses.