Berkshire Hills Bancorp(BHLB)2024-10-24 18:08Financial Data and Key Metrics Changes - Operating EPS increased to 24.8 million, up 7% linked quarter and 15% year-over-year [3] - Operating ROTC improved to 9.91%, up 26 basis points linked quarter and 64 basis points year-over-year [3] - Net interest income decreased slightly to 72.3 million, up 1% linked quarter and down 2% year-over-year [12] Business Line Data and Key Metrics Changes - Average loan balances increased by 1% linked quarter and 3% year-over-year [5] - Average deposits rose by 1% linked quarter but decreased by 3% year-over-year [10] - Non-performing loans increased by 12% linked quarter but decreased by 10% year-over-year [13] - Net charge-offs were 1.9 million related to the Upstart loan sale [8][13] Market Data and Key Metrics Changes - The loan-to-deposit ratio remained solid at 96% [4] - Average noninterest-bearing deposits as a percentage of total deposits remained steady at 24% [4] - Deposit costs increased by 7 basis points to 242 basis points [10] Company Strategy and Development Direction - The company completed the sale of 10 branches in New York, enhancing efficiency and profitability [6] - Continued investment in digital banking and customer experience to accelerate growth in deposit-led client relationships [7] - Focus on organic loan growth and managing expenses while monitoring credit quality [15] Management's Comments on Operating Environment and Future Outlook - The operating environment for the banking industry is improving with expectations of lower funding costs and increased loan demand [16] - The company anticipates a more normal operating environment in the coming quarters as the Fed lowers interest rates [16] - Management is focused on accelerating deposit growth and improving client acquisition through enhanced digital offerings [17] Other Important Information - The company reported a tangible book value per share of $24.53, an increase of 6% linked quarter and 16% year-over-year [15] - The CET1 ratio increased to 11.9% and TCE ratio rose to 9.1% due to higher retained earnings [15] Q&A Session Summary Question: Is the guidance still valid for 2024? - Management expects NIM for Q4 to be between 3.10% and 3.20%, with revenue flat to slightly down and expenses modestly down [18] Question: Why is the deposit beta expected to be higher on the way down? - Management identified tailwinds such as significant CDs maturing and efforts to manage deposit pricing effectively [19][20] Question: What are the expectations for future Upstart or Firestone loan sales? - Management believes they will run off the portfolios rather than conduct further sales, as performance is exceeding expectations [31] Question: Can you provide details on the check fraud situation? - The fraud incident was related to commercial check washing, and management is implementing changes to prevent future occurrences [32][34] Question: What are the capital allocation priorities? - The first priority is organic growth, followed by dividends and buybacks, with M&A opportunities considered if they arise [35] Question: When can we expect an update on BEST goals? - Annual guidance will be provided in January, potentially including mid-term guidance [37]