Berkshire Hills Bancorp(US:BHLB)2025-04-24 14:00Financial 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]