Berkshire Hills Bancorp(BHLB)2023-10-20 17:34Financial Data and Key Metrics Changes - Operating earnings for Q3 2023 were 0.50 per fully diluted share, down 0.12 year-over-year [10] - Average loans increased by 62 million or 1% [11] - Net interest margin (NIM) was 3.18%, down 6 basis points linked quarter and down 30 basis points year-over-year [34] - Net interest income declined by 1.8 million or 2% year-over-year [34] Business Line Data and Key Metrics Changes - Average loan balances showed balanced growth across commercial and consumer loans [7] - Operating noninterest income was up 2% in the quarter and up 7% year-over-year [11] - Deposit-related fees increased by 310,000 [37] Market Data and Key Metrics Changes - Deposits were stable, up 1% linked quarter on an average balance basis, but down 1% on an end-of-period basis [4] - Noninterest-bearing deposits as a percentage of total average deposits decreased to 26% in Q3 from 27% in Q2 [13] - The deposit cost was 181 basis points, up 30 basis points from the second quarter [36] Company Strategy and Development Direction - The company is focused on rationalizing its real estate footprint, including the consolidation of four branches and the sale of one office building [31] - The company is committed to managing expenses with discipline and transparency, instituting biweekly meetings to review vendor expenses and hiring requests [16] - The company aims to improve its medium-term performance despite the current operating environment presenting headwinds [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the Northeast markets and acknowledged typical banking industry cyclicality issues such as NIM compression [20] - The company is focused on controlling its operational environment through opportunistic hiring and rigorous expense management [21] - Management expects credit costs to increase modestly but significantly lower than during the Global Financial Crisis [43] Other Important Information - The company repurchased 20.01, believing its stock is undervalued [42] - The company’s ESG score remains in the top quartile at the 19th percentile nationally [9] - The company has added a new ROTCE calculation to align its reporting with peers [32] Q&A Session Summary Question: Should we expect more branch consolidations and restructuring charges in coming quarters? - Yes, the company is constantly evaluating opportunities for consolidation while retaining clients and bankers [45] Question: Where would you expect the effective rate to settle out? - The company anticipates a mid single-digit decline in NIM due to competitive pressures around deposits [26] Question: What are your thoughts on growing or shrinking tax credit investments over time? - The company is still working through tax credit investments and will provide more clarity in January [47] Question: What is your outlook on loan growth for the second half of the year? - The company expects to be on the lower end of the 9.4 billion target due to a slowdown in pipelines [71] Question: Can you provide updates on the overall office portfolio and market conditions? - The company has not seen early signs of weakness in the office portfolio and is monitoring credit quality closely [110]