Berkshire Hills Bancorp(BHLB) - 2024 Q4 - Annual Report

Loan Portfolio Growth - The total loan portfolio increased to $9,385 million in 2024, up from $9,039 million in 2023, representing a growth of 3.8%[22] - Commercial real estate non-owner occupied loans accounted for 29.5% of the total loan portfolio, totaling $2,770 million in 2024, compared to $2,607 million in 2023[22] - Residential real estate loans also represented 29.5% of the total loan portfolio, amounting to $2,772 million in 2024, slightly up from $2,760 million in 2023[22] - Construction loans grew to $726 million in 2024, a significant increase of 13.4% from $640 million in 2023[22] - Commercial and industrial loans totaled $1,439 million in 2024, reflecting a 5.9% increase from $1,359 million in 2023[22] Credit Losses and Risk Management - The allowance for credit losses increased to $115 million in 2024 from $105 million in 2023, indicating a rise in potential credit risk[22] - The allowance for credit losses on loans to total loans ratio increased to 1.22% in 2024 from 1.17% in 2023[48] - Nonaccrual loans as a percentage of total loans rose to 0.26% in 2024, compared to 0.24% in 2023[48] - The allowance for credit losses on nonaccruing loans was 469.18% in 2024, down from 492.47% in 2023[48] - Net charge-offs to average loans decreased to 0.16% in 2024 from 0.26% in 2023[48] - Total allowance for credit losses on loans was $114.7 million in 2024, consistent at 1.2% of total loans[50] - The Bank's management reported that it prefers to work with borrowers to resolve problems rather than proceeding to foreclosure[43] Interest Rate Risk Management - The effective management of interest rate risk is essential for achieving the Company's financial objectives, with the Asset Liability Committee overseeing this[346] - The estimated percent change in Net Interest Income for a +200 basis points shock is projected at 2.2% for December 31, 2024[350] - The Company's Economic Value of Equity sensitivity profile indicates a modest liability sensitivity at December 31, 2024, decreasing compared to December 31, 2023[355] Specialized Lending Operations - The Bank's commercial loan participations and interest rate swaps are part of its strategy to manage risk in commercial real estate lending[23] - The Bank's Asset Based Lending Group targets credit needs ranging from $2 million to $25 million, focusing on manufacturers and distributors[28] - The remaining portfolio of Firestone Financial LLC, which originated loans secured by business-essential equipment, totaled $41 million as of December 31, 2024[29] - The Bank's residential mortgage operations include fixed-rate and adjustable-rate loans with maturities of up to 30 years, primarily for investment purposes[31] Regulatory Measures - The supervisory measure of commercial real estate loans to total bank regulatory capital was 292% at period-end, up from 286% at year-end 2023[42]