Berkshire Hills Bancorp(US:BHLB)2021-05-02 05:35Financial Data and Key Metrics Changes - GAAP EPS was $0.26 compared to a loss of $0.40 in the year-ago period [15] - Core or adjusted EPS was $0.32 in the first quarter, with non-interest bearing deposits up 37% year-over-year [16] - Cost of funds decreased to 48 basis points from 111 basis points in Q1 2020, representing a 59% reduction [36] Business Line Data and Key Metrics Changes - Loan balances decreased due to paydowns and portfolio runoff exceeding new originations [16] - Mortgage balances were down 34% year-over-year and 12% quarter-over-quarter, primarily driven by prepayments [32] - Commercial and industrial loan balances declined due to PPP forgiveness, accounting for approximately $190 million [33] Market Data and Key Metrics Changes - Overall trends in credit and asset quality were encouraging, with loan modifications down by 86% from their peak [17] - Non-performing assets increased modestly year-over-year but improved sequentially, down 14% quarter-over-quarter [17] - Digital banking users increased by 11% and 14% year-over-year, with mobile app ratings improving significantly [19] Company Strategy and Development Direction - The company is focused on a new strategic plan aimed at improving financial performance and stakeholder value [9] - The strategic plan, branded as BEST, has three pillars: optimize, digitize, and enhance [68] - The company plans to return capital to shareholders through share buybacks, with an authorization of up to 2.5 million shares [22] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about economic recovery, with a projected 6.5% GDP growth in 2021 [49] - However, they expect weaker loan trends to persist, estimating a modest decline in loan balances for the remainder of the year [50] - Credit provisions and charge-offs are expected to trend toward pre-pandemic levels over the next year [52] Other Important Information - The company completed a comprehensive credit review of COVID-sensitive portfolios [18] - The capital levels remained strong, with a common equity Tier one ratio of 14% [21] - The company is undergoing branch optimization, reducing its overall branch footprint by 18% [58] Q&A Session Summary Question: Insights on the buyback and credit details - Management acknowledged the buyback and discussed the impact of PPP loans on net interest income, expecting core NII to be flat to modestly down [74][75] Question: Future balance sheet size under the new plan - Management indicated that the balance sheet will improve before it grows, with a focus on rebalancing initially [80] Question: Consideration of selling other geographies - Management confirmed ongoing evaluations of branch optimization but did not specify particular geographies [82] Question: Future buyback programs - Management expressed that the current buyback is a step in the right direction and future buybacks may follow as a means to absorb excess capital [83] Question: Tax rate guidance - Management clarified that the increase in tax rate was due to the timing of tax credits and that the tax credit program will continue [84]