Core Insights - Berkshire Hills Bancorp reported a strong second quarter for 2025, with operating earnings increasing by 36% year-over-year, driven by revenue growth and lower expenses [2][6][10] - The company is preparing for a transformative merger with Brookline Bancorp, which is expected to enhance its market position in the Northeast [2][11] Financial Performance - Net income for Q2 2025 was $30.4 million, or $0.66 per share, compared to $25.7 million, or $0.56 per share in Q1 2025, and $24.0 million, or $0.57 per share in Q2 2024 [1][6] - Operating earnings reached $31.6 million, or $0.69 per share, reflecting a 14% increase linked quarter and a 36% increase year-over-year [1][6] - Net interest income increased to $91.9 million, up 2% from the previous quarter, with a net interest margin of 3.27%, a 3 basis point increase linked quarter [3][15] Asset Quality - Non-performing loans represented 0.27% of total loans, with delinquent and non-performing loans at 0.48% [3][15] - The provision for credit losses decreased by $1.5 million linked quarter, totaling $4.0 million for the quarter [3][15] Efficiency and Returns - The efficiency ratio improved to 56.7%, the best quarterly result since 2019, down from 59.5% linked quarter [5][6] - Operating return on tangible common equity advanced to 10.8%, with a return on average assets of 1.03% [2][3] Growth Metrics - Total loans increased by $70 million, or 1%, to $9.5 billion, primarily driven by a 4% increase in commercial and industrial loans [8][9] - Total deposits rose by $99 million, or 1%, to $10.0 billion, with a year-over-year increase of $541 million, or 7% [9][10] Merger and Future Outlook - The merger with Brookline Bancorp is expected to close in 2025, pending regulatory approvals, with Berkshire shareholders projected to own approximately 55% of the combined entity [11][12] - The merger aims to create a more powerful financial institution, enhancing service capabilities in the Northeast [2][11]

Company Overview - Berkshire Hills Bancorp, Inc. is the parent company of Berkshire Bank, which is a community-focused bank with $12.0 billion in assets and operates 83 financial centers in New England and New York [3]. Upcoming Earnings Release - The second quarter 2025 earnings release is scheduled for July 24, 2025, at approximately 7:30 a.m. (Eastern) [1]. - A conference call will follow the earnings release on the same day at 9:00 a.m. (Eastern) [1]. - Participants can register for the webcast and access the replay through the company's investor relations website [1]. Investor Relations - Kevin Conn serves as the Senior Managing Director of Investor Relations & Corporate Development, and can be contacted via email or phone for inquiries [4].

Financial Performance - Net income for Q1 2025 was $25.719 million, a significant improvement from a net loss of $20.188 million in Q1 2024[184]. - Operating earnings per common share increased to $0.60 in Q1 2025 from $0.49 in Q1 2024, reflecting a growth of approximately 22.45%[184]. - Operating income increased by $7 million, or 32%, year-over-year to $28 million, driven by a $5 million increase in operating revenue and a $4 million decrease in operating expenses[203]. - First quarter 2025 net income was $25.7 million compared to a net loss of $20.2 million in 2024, reflecting a significant turnaround[201]. - The first quarter return on tangible common equity was 9.02% in 2025, up from (7.73)% in 2024, indicating improved profitability[202]. Asset and Loan Management - Total loans rose to $9.429 billion in Q1 2025, up from $9.086 billion in Q1 2024, indicating a growth of about 3.77%[184]. - Total loans increased by $44 million to $9.43 billion, with a 1% rise in both commercial real estate loans and residential mortgage loans[211]. - Non-performing loans measured 0.25% of total loans at period-end, compared to 0.26% at year-end 2024, indicating favorable asset quality[213]. - Criticized loans increased to 3.00% of total loans at period-end, up from 2.62% at year-end 2024, largely due to an increase in substandard loans[214]. Efficiency and Operational Metrics - The efficiency ratio decreased to 59.45% in Q1 2025 from 66.26% in Q1 2024, showing improved operational efficiency[184]. - The efficiency ratio improved to 59.5% from 66.3% year-over-year, achieving the best quarterly level in two years[203]. - Non-interest expense decreased to $70 million from $76 million year-over-year, with a 6% reduction in operating non-interest expense[207]. Capital and Equity - The return on equity improved to 8.63% in Q1 2025, compared to a negative return of (7.93)% in Q1 2024[184]. - Common equity tier 1 capital to risk-weighted assets improved to 13.2% in Q1 2025 from 11.6% in Q1 2024, reflecting stronger capital position[184]. - Total shareholders' equity increased by $29 million, or 3%, to $1.2 billion during the quarter, with a common equity Tier 1 ratio of 13.2%[217]. Income and Revenue - First quarter net interest income rose by $2 million, or 2%, to $90 million, with a net interest margin increase to 324 basis points from 314 basis points[204]. - The net interest margin (FTE) increased to 3.24% in Q1 2025 from 3.15% in Q1 2024, indicating better profitability on interest-earning assets[184]. - Non-interest income for the first quarter was $21 million in 2025, compared to a $33 million loss in 2024, marking a substantial recovery[205]. Dividends and Payouts - The dividend payout ratio was 32.52% in Q1 2025, maintaining the dividend per common share at $0.18[184]. Mergers and Acquisitions - The company plans to merge with Brookline Bancorp, with Berkshire stockholders expected to own approximately 55% of the combined entity[197]. - The company issued $100 million in common shares in December 2024 to support the planned merger with Brookline Bancorp[201]. Tax and Regulatory - The first quarter effective tax rate was 26% in 2025, compared to 24% in 2024, reflecting changes in tax strategy[209]. Asset Management and Liquidity - Total assets decreased slightly to $12.013 billion in Q1 2025 from $12.147 billion in Q1 2024[184]. - Total assets decreased by 2% to $12.0 billion at March 31, 2025, from $12.3 billion at year-end 2024, primarily due to seasonal run-off of higher year-end overnight deposits[210]. - Liquidity management remains satisfactory, with liquid assets totaling $1.5 billion at March 31, 2025[219]. Interest Rate Sensitivity - Economic Value of Equity (EVE) sensitivity analysis indicated a shift to more liability sensitivity, with a -3.4% change for a +200 basis points shock at March 31, 2025[238].

Group 1 - Berkshire Hills Bancorp reported Q1 2025 results that exceeded expectations on both revenue and earnings [1] - Non-GAAP earnings were $0.60, which is 13% higher than anticipated and over 22% better than the same period last year [1]

Core Insights - Berkshire Hills Bancorp reported strong Q1 2025 results, with operating net income increasing by 6% quarter-over-quarter and 32% year-over-year, reaching $27.6 million [4][8] - Earnings per share remained flat at $0.60 quarter-over-quarter but increased by 22% year-over-year [2][4] - The company achieved a net interest margin of 3.24%, up 10 basis points from the previous quarter [2][9] Financial Performance - Operating expenses decreased to $68 million, down 4% quarter-over-quarter and 6% year-over-year, reflecting effective expense optimization efforts [2][4][9] - The loan-to-deposit ratio decreased to 5%, down 1% quarter-over-quarter, indicating improved liquidity management [2][9] - Asset quality remained strong, with net charge-offs accounting for 15 basis points of loans and total delinquencies at 42 basis points, the lowest level in about twenty years [4][9] Strategic Initiatives - The digital deposit initiative generated approximately $75 million in new deposits, with one out of five new client relationships originating through digital channels [5][6][10] - The merger with Brookline Bancorp is progressing, with regulatory applications filed and shareholder proxy submitted, aiming for stockholder approvals by May 21 [5][10] - The company sold the remaining $7 million in Upstart loans for net proceeds of $5.3 million, further de-risking the balance sheet [5][9] Capital and Ratios - The CET1 ratio stood at 13.3% and the TCE ratio at 9.9%, indicating strong capital levels [3][9] - The operating ROTCE was 9.66%, reflecting a year-over-year increase of 93 basis points despite a linked quarter decrease [2][4]

Financial Performance - The company reported operating net income of $27.6 million, up 6% linked quarter and up 32% year over year [5][6] - Earnings per share remained flat at $0.60 compared to the previous quarter but increased by 22% year over year [5] - Operating expenses were approximately $68 million, down 4% linked quarter and down 6% year over year, indicating effective expense optimization [6][18] - The operating ROTCE was 9.66%, down 27 basis points linked quarter but up 93 basis points year over year [6] Business Lines and Key Metrics - Net interest income increased by 3% linked quarter and 2% year over year, with a net interest margin of 3.24%, up 10 basis points linked quarter [12][16] - Average loans rose by $118 million or 1% linked quarter and $348 million or 4% year over year [13] - Average deposits increased by $188 million or 2% linked quarter but remained flat year over year [14] Market Data and Key Metrics - The loan to deposit ratio was at 5%, down 1% linked quarter, indicating solid liquidity [9] - Total delinquencies and nonperforming loans were at 42 basis points of loans, the lowest level in about twenty years [8][19] Company Strategy and Industry Competition - The company is focused on deposit relationships across business lines and has launched a digital deposit initiative that generated approximately $75 million in new deposits [10][53] - The merger with Brookline Bancorp is expected to enhance profitability and create a preeminent Northeast franchise, with an estimated 23% accretion to Berkshire's 2026 consensus estimates [11][27] Management Comments on Operating Environment and Future Outlook - Management noted a mixed demand environment with some clients increasing inventories while others adopt a wait-and-watch approach [36] - The company remains prepared to adapt to economic uncertainties and is optimistic about the merger's potential benefits [27][28] Other Important Information - The company sold the remaining $7 million of upstart loans, significantly derisking its balance sheet [21] - The tangible book value per share was $25.50, with a CET1 ratio of 13.3% and a TCE ratio of 9.9% [24] Q&A Session Summary Question: Update on loan demand and growth outlook - Management indicated a slowing demand in the pipeline, with a current annualized loan growth of about 5% expected to continue [36][37] Question: Expense base growth expectations - Management expressed confidence in maintaining stable expense momentum moving forward [39] Question: Clarification on spot NIM - The spot NIM in March was confirmed to be 3.31% [48][49] Question: Employee retention strategies ahead of merger - Key producers have been identified, and retention grants are being discussed to ensure stability during the transition [51] Question: Plans for aligning product offerings ahead of merger - The company is enhancing digital functionalities but does not plan to launch new products immediately [54][55] Question: TCE ratio and CRE concentration levels - The CRE concentration ratio remains below 300%, with a current level of approximately 290% [57]

Core Insights - Berkshire Hills Bancorp (BHLB) reported revenue of $110.44 million for Q1 2025, marking a year-over-year increase of 2.8% and an EPS of $0.60 compared to $0.49 a year ago, with a revenue surprise of -0.61% against the Zacks Consensus Estimate of $111.12 million and an EPS surprise of +11.11% over the consensus estimate of $0.54 [1] Financial Performance Metrics - Efficiency Ratio stood at 59.5%, significantly better than the average estimate of 66.6% based on three analysts [4] - Net interest margin was reported at 3.2%, matching the average estimate by three analysts [4] - Average balance of total earning assets was $11.24 billion, slightly below the estimated $11.35 billion by two analysts [4] - Total non-interest income was $20.67 million, underperforming the average estimate of $21.37 million from three analysts [4] - Net Interest Income was reported at $89.77 million, slightly below the estimated $89.98 million by two analysts [4] Stock Performance - Shares of Berkshire Hills have returned -9.1% over the past month, compared to a -5.1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Performance - First quarter 2025 GAAP EPS was $0.56, with operating EPS at $0.60, reflecting a 22% year-over-year increase[1][2] - Net income for Q1 2025 was $25,719, compared to a net loss of $20,188 in Q1 2024[26] - Diluted earnings per share improved to $0.56 from a loss of $0.47 in the previous year[26] - Operating net income rose to $27,621,000 for the quarter ended March 31, 2025, up from $25,982,000 in the previous quarter[20] - Return on equity improved to 8.63% for the quarter ended March 31, 2025, compared to 7.18% in the previous quarter[20] - Net income for March 31, 2025, reached $25,719 thousand, compared to $19,657 thousand for December 31, 2024, reflecting a growth of 30.4%[39] Revenue and Income - Total net revenue reached $110,443, significantly higher than $55,541 in Q1 2024, marking a 98.7% increase[26] - Total operating revenue for March 31, 2025, was $110,443 thousand, showing an increase from $110,180 thousand in December 31, 2024[39] - Total non-interest income was $20,672, a recovery from a loss of $32,599 in the same quarter last year[26] - Total non-interest income for March 31, 2025, was $20,672 thousand, a decrease from $23,325 thousand in December 31, 2024[39] Expenses and Efficiency - Total non-interest expense decreased to $70,366, down from $76,020 in Q1 2024, reflecting a 7.4% reduction[26] - Total non-interest expense for March 31, 2025, was $70,366 thousand, down from $77,575 thousand in December 31, 2024, representing a reduction of 9.5%[39] - The efficiency ratio improved to 59.5%, marking the best result in two years[3][9] - The efficiency ratio improved to 59.45% for the quarter ended March 31, 2025, down from 62.43% in the previous quarter[20] Loans and Deposits - Total loans increased by $44 million, or 0.5%, to $9.4 billion compared to the linked quarter[1][11] - Total loans increased to $9,429 million as of March 31, 2025, compared to $9,385 million in the previous quarter[24] - Total deposits at the end of the period decreased by $495 million to $9.9 billion, while deposits excluding payroll and brokered deposits increased by $11 million linked quarter[1][12] - Total deposits increased to $9,847 million, with a net interest expense of $53 million, compared to $9,659 million and $56 million respectively in the previous quarter[30] Credit Quality - The allowance for credit losses on loans increased by 2 basis points to 1.24% of total loans, with non-performing loans at 0.25%[4][15] - The allowance for credit losses increased to $117 million as of March 31, 2025, from $115 million in the previous quarter[21] - Non-performing loans as a percentage of total loans remained stable at 0.25% for the quarter ended March 31, 2025[20] - Non-performing loans as a percentage of total loans remained stable at 0.25% for the quarter ended March 31, 2025, compared to 0.26% in the previous quarter[33] Capital and Ratios - The tangible common equity ratio increased to 9.9% of assets, with tangible book value per share advancing 3% linked quarter to $25.50[4][13] - Common equity Tier 1 capital to risk-weighted assets increased to 13.3% for the quarter ended March 31, 2025, compared to 13.0% in the previous quarter[21] - Operating return on tangible common equity improved to 9.7% from 8.7% year-over-year[2][4] Mergers and Future Outlook - The proposed merger with Brookline Bancorp is expected to close in the second half of 2025, pending regulatory approvals[7][14]

Financial Performance - The company reported operating net income of $27.6 million, up 6% linked quarter and up 32% year over year [4] - Earnings per share were $0.60, flat to the fourth quarter but up 22% year over year [4] - Operating expenses were approximately $68 million, down 4% linked quarter and down 6% year over year [4][10] - The operating ROTCE was 9.66%, down 27 basis points linked quarter but up 93 basis points year over year [4] Business Line Performance - Net interest income increased by $2.9 million or 3% linked quarter [8] - Average loans rose by $118 million or 1% linked quarter and $348 million or 4% year over year [9] - Average deposits increased by $188 million or 2% linked quarter, remaining flat year over year [9] Market Data - The net charge-offs were 15 basis points of loans, with total delinquencies and non-performing loans at 42 basis points, the lowest level in about twenty years [5][12] - The loan to deposit ratio was 95%, down 1% linked quarter [6] Company Strategy and Industry Competition - The company is focused on deposit relationships across business lines and has launched a digital deposit initiative that has generated approximately $75 million in new deposits [6][38] - A merger of equals with Brookline Bancorp is expected to enhance profitability and create a preeminent Northeast franchise [7][19] Management Commentary on Operating Environment and Future Outlook - Management noted uncertainty in the economic environment due to tariffs and other policy initiatives but remains prepared to adapt as needed [18] - The company is optimistic about the merger's potential to provide growth opportunities and enhance profitability [19] Other Important Information - The company sold the remaining $7 million of Upstart loans, significantly derisking its balance sheet [13][14] - The tangible book value per share was $25.5, with a CET1 ratio of 13.3% [16] Q&A Session Summary Question: Update on loan demand and standalone growth - Management indicated a mixed response from clients, with some increasing inventories while others are taking a wait-and-see approach, leading to a slowdown in the loan pipeline [24][26] Question: Expense base outlook - Management expects expenses to remain stable and consistent with the current quarter as they continue to manage costs effectively [28][29] Question: Normalized net charge-offs - Management anticipates normalized charge-offs to be around 20 basis points, reflecting current economic uncertainties [30][31] Question: Employee retention ahead of merger - The company has identified key producers and is implementing retention strategies to ensure stability during the merger process [37] Question: Product offerings alignment ahead of merger - The digital deposit initiative has been successful, with a significant portion of new client relationships coming through digital channels [38] Question: TCE ratio and CRE concentration levels - The company maintains a CRE concentration below 300%, with a current level of approximately 290% [40]

Earnings Release Schedule - Berkshire Hills Bancorp, Inc. is set to release its first quarter 2025 earnings on April 24, 2025, at approximately 7:30 a.m. (Eastern) [1] - A conference call will follow the earnings release on the same day at 9:00 a.m. (Eastern) [1] - Participants can register for the webcast or join via a toll-free dial-in number [1][2] Company Overview - Berkshire Hills Bancorp, Inc. is the parent company of Berkshire Bank, which focuses on relationship-driven and community-oriented banking [3] - The company has $12.3 billion in assets and operates 83 financial centers across New England and New York [3] - Berkshire Bank offers a range of services including commercial, retail, private banking, and wealth solutions [3]