Berkshire Hills Bancorp Files Q2 2024 10-Q

TL;DR

BHLB Q2 10-Q is in! Financials look solid, check the details.

AI Summary

Berkshire Hills Bancorp Inc. filed its 10-Q for the period ending June 30, 2024. The filing details the company's financial performance and position. Key financial data and disclosures relevant to investors and stakeholders are presented in this report.

Why It Matters

This 10-Q filing provides a detailed look at Berkshire Hills Bancorp's financial health and operational performance for the second quarter of 2024, crucial for understanding its current standing and future prospects.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing (10-Q) and does not inherently present new risks beyond those typically associated with public companies.

Key Players & Entities

• BERKSHIRE HILLS BANCORP INC (company) — Filer of the 10-Q
• 20240630 (date) — End of the reporting period
• 20240809 (date) — Filing date
• 60 STATE STREET (location) — Company's business and mailing address
• BOSTON (location) — Company's city
• MA (location) — Company's state
• 02109 (location) — Company's ZIP code

FAQ

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share BHLB The New York Stock Excha

Filing Documents

• bhlb-20240630.htm (10-Q) — 4846KB
• q22024ex311.htm (EX-31.1) — 16KB
• q22024ex312.htm (EX-31.2) — 16KB
• q22024ex321.htm (EX-32.1) — 7KB
• q22024ex322.htm (EX-32.2) — 7KB
• bhlb-20240630_g1.jpg (GRAPHIC) — 73KB
• 0001108134-24-000015.txt ( ) — 25995KB
• bhlb-20240630.xsd (EX-101.SCH) — 94KB
• bhlb-20240630_cal.xml (EX-101.CAL) — 214KB
• bhlb-20240630_def.xml (EX-101.DEF) — 767KB
• bhlb-20240630_lab.xml (EX-101.LAB) — 1192KB
• bhlb-20240630_pre.xml (EX-101.PRE) — 1006KB
• bhlb-20240630_htm.xml (XML) — 6944KB

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Note 1 Basis of Presentation 11 Note 2 Branch Sale 12 Note 3 Trading Securities 13 Note 4 Securities Available for Sale, Held to Maturity, and Equity Securities 14 Note 5 Loans and Allowance for Credit Losses 20 Note 6 Deposits 37 Note 7 Borrowed Funds 37 Note 8 Derivative Financial Instruments and Hedging Activities 39 Note 9 Leases 47 Note 10 Capital Ratios and Shareholders' Equity 49 Note 11 Earnings per Share 54 Note 12 Stock-Based Compensation Plans 55 Note 13 Fair Value Measurements 56 Note 14 Net Interest Income after Provision/(Benefit) for Credit Losses 66 Note 15 Tax Equity Investments 67 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 68

Selected Financial Data

Selected Financial Data 68 Average Balances and Average Yields/Rates 70 Non-GAAP Financial Measures 72 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 83 Item 4.

Controls and Procedures

Controls and Procedures 85 Table of Contents PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 86 Item 1A.

Risk Factors

Risk Factors 87 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 88 Item 3. Defaults Upon Senior Securities 88 Item 4. Mine Safety Disclosures 88 Item 5. Other Information 88 Item 6. Exhibits 89

Signatures

Signatures 90 Table of Contents PART I

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) BERKSHIRE HILLS BANCORP, INC. CONSOLIDATED BALANCE SHEET June 30, 2024 December 31, 2023 (In thousands, except share data) Assets Cash and due from banks $ 112,085 $ 148,148 Short-term investments 988,207 1,055,096 Total cash and cash equivalents 1,100,292 1,203,244 Trading securities, at fair value 5,699 6,142 Equity securities, at fair value 12,736 13,029 Securities available for sale, at fair value 611,711 1,022,285 Securities held to maturity (fair values of $ 443,769 and $ 476,228 ) 520,239 543,351 Federal Home Loan Bank stock 35,010 22,689 Total securities 1,185,395 1,607,496 Less: Allowance for credit losses on securities held to maturity ( 65 ) ( 68 ) Net securities 1,185,330 1,607,428 Loans held for sale 52,072 2,237 Total loans 9,228,526 9,039,686 Less: Allowance for credit losses on loans ( 112,167 ) ( 105,357 ) Net loans 9,116,359 8,934,329 Premises and equipment, net 55,893 68,915 Intangible assets 17,319 19,664 Cash surrender value of bank-owned life insurance policies 244,790 242,309 Other assets 371,092 341,757 Assets held for sale 76,307 10,938 Total assets $ 12,219,454 $ 12,430,821 Liabilities Demand deposits $ 2,222,012 $ 2,469,164 NOW and other deposits 766,641 858,644 Money market deposits 3,278,753 3,565,516 Savings deposits 1,004,320 1,053,810 Time deposits 2,349,733 2,686,250 Total deposits 9,621,459 10,633,384 Short-term debt 532,500 260,000 Long-term Federal Home Loan Bank advances and other 157,106 125,223 Subordinated borrowings 121,487 121,363 Total borrowings 811,093 506,586 Other liabilities 287,312 278,630 Liabilities held for sale 486,648 — Total liabilities $ 11,206,512 $ 11,418,600 (continued) June 30, 2024 December 31, 2023 Shareholders' equity Common stock ($ 0.01 par value; 100,000,000 shares authorized and 51,903,190 shares issued and 42,959,249 shares outstanding in 2024; 51,903,190 shares issued and 43,500,872 share

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION The Consolidated Financial Statements (the "financial statements") of Berkshire Hills Bancorp, Inc. and its subsidiaries (the "Company" or "Berkshire") have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company is a Delaware corporation, headquartered in Boston, Massachusetts, and the holding company for Berkshire Bank (the "Bank"), a Massachusetts-chartered trust company headquartered in Pittsfield, Massachusetts. These financial statements include the accounts of the Company, its wholly-owned subsidiaries and the Bank's consolidated subsidiaries. In consolidation, all significant intercompany accounts and transactions are eliminated. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly-owned and majority-owned subsidiaries are consolidated unless GAAP requires otherwise. The Company has evaluated subsequent events for potential recognition and/or disclosure through the date these financial statements were issued. These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted. The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and disclosures Berkshire Hills Bancorp, Inc. previously filed with the Securities and Exchange Commission in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. In management's opinion, all adjustments necessary for a fair statement are reflected in the interim periods. Reclassifications Certain items in prior financ

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Future Application of Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The ASU requires disclosure in the rate reconciliation table of additional categories of information and more details about the reconciling items in some categories if items meet a quantitative threshold. The ASU also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is still evaluating; however, the adoption is not expected to have a material impact on the Company's Consolidated Financial Statements. NOTE 2. BRANCH SALE The Company has entered into definitive agreements with three buyers to sell ten of its upstate and eastern New York branches, consisting of eight offices in Albany, Saratoga, Schenectady and Columbia counties, one office in Whitehall and one office in East Syracuse. The branch sale includes residential mortgages and consumer loans with a total balance of $ 55.4 million and deposit accounts with a total balance of $ 474.0 million as of June 30, 2024. The sales also include all branch premises, including leased properties, and equipment. These balances are included in assets held for sale and liabilities held for sale on the Consolidated Balance Sheet. The sales exclude Berkshire's commercial banking business. The buyers intend to offer employment to all associated staff. The sales are targeted for completion by the end of the third quarter of 2024 subject to customary regulatory approvals and associated system conversions. The following is a summary of the assets and liabilities associated with the branch sa

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3. TRADING SECURITIES The Company holds a tax-advantaged economic development bond accounted for at fair value. The security had an amortized cost of $ 5.8 million and $ 6.2 million, and a fair value of $ 5.7 million and $ 6.1 million, at June 30, 2024 and December 31, 2023, respectively. As discussed further in Note 8 - Derivative Financial Instruments and Hedging Activities, the Company entered into a swap contract to swap-out the fixed rate of the security in exchange for a variable rate. The Company does not purchase securities with the intent of selling them in the near term, and there were no other securities in the trading portfolio at June 30, 2024 or December 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND EQUITY SECURITIES The following is a summary of securities available for sale, held to maturity, and marketable equity securities: (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Allowance June 30, 2024 Securities available for sale U.S. Treasuries $ 7,981 $ — $ ( 1 ) $ 7,980 Municipal bonds and obligations 64,292 10 ( 3,045 ) 61,257 — Agency collateralized mortgage obligations 276,100 — ( 66,275 ) 209,825 — Agency mortgage-backed securities 282,228 — ( 53,230 ) 228,998 — Agency commercial mortgage-backed securities 87,202 — ( 18,903 ) 68,299 — Corporate bonds 38,709 61 ( 4,074 ) 34,696 — Other bonds and obligations 655 67 ( 66 ) 656 — Total securities available for sale 757,167 138 ( 145,594 ) 611,711 — Securities held to maturity Municipal bonds and obligations 237,511 100 ( 23,432 ) 214,179 45 Agency collateralized mortgage obligations 106,623 — ( 18,813 ) 87,810 — Agency mortgage-backed securities 45,538 — ( 8,539 ) 36,999 — Agency commercial mortgage-backed securities 128,947 — ( 25,729 ) 103,218 — Tax advantaged economic development bonds 1,343 — ( 57 ) 1,286 20 Other bonds and obligations 277 — — 277 — Total securities held to maturity 520,239 100 ( 76,570 ) 443,769 65 Equity securities 15,035 — ( 2,299 ) 12,736 — Total $ 1,292,441 $ 238 $ ( 224,463 ) $ 1,068,216 $ 65 (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Allowance December 31, 2023 Securities available for sale U.S. Treasuries $ 7,980 $ 1 $ — $ 7,981 $ — Municipal bonds and obligations 64,788 494 ( 1,429 ) 63,853 — Agency collateralized mortgage obligations 426,986 — ( 79,112 ) 347,874 — Agency mortgage-backed securities 492,633 2 ( 75,155 ) 417,480 — Agency commercial mortgage-backed securities 174,879 — ( 29,553 ) 145,326 — Corporate bonds 43,291 34 ( 4,210 ) 39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the activity in the allowance for credit losses for debt securities held to maturity by security type for the three and six months ended June 30, 2024 and 2023: (In thousands) Municipal bonds and obligations Tax advantaged economic development bonds Total Balance at March 31, 2024 $ 41 $ 20 $ 61 Provision for credit losses 4 — 4 Balance at June 30, 2024 $ 45 $ 20 $ 65 (In thousands) Municipal bonds and obligations Tax advantaged economic development bonds Total Balance at March 31, 2023 $ 49 $ 22 $ 71 Provision for credit losses — — — Balance at June 30, 2023 $ 49 $ 22 $ 71 (In thousands) Municipal bonds and obligations Tax advantaged economic development bonds Total Balance at December 31, 2023 $ 48 $ 20 $ 68 (Benefit)/provision for credit losses ( 3 ) — ( 3 ) Balance at June 30, 2024 $ 45 $ 20 $ 65 (In thousands) Municipal bonds and obligations Tax advantaged economic development bonds Total Balance at December 31, 2022 $ 66 $ 25 $ 91 (Benefit)/provision for credit losses ( 17 ) (

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