Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 20, 2023

BERKSHIRE HILLS BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

001-15781

04-3510455

(State or Other Jurisdiction)

of Incorporation)

(Commission File No.)

(I.R.S. Employer

Identification No.)

60 State Street, Boston, Massachusetts		02109
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (800) 773-5601, ext. 133773

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		BHLB		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02

Results of Operations and Financial Condition

On July 20, 2023, Berkshire Hills Bancorp, Inc. (the “Company”), the holding company for Berkshire Bank (the “Bank”), announced its financial results for the second quarter ended June 30, 2023. The news release containing the financial results is included as Exhibit 99.1 and shall not be deemed “filed” for any purpose.

The Company conducted a conference call/webcast on July 20, 2023, to discuss the financial results for the quarter and provide guidance about expected future results. A telephone replay of the call will be available through July 27, 2023. The webcast will be available on the Company’s website at ir.berkshirebank.com for an extended period of time.

Item 7.01

Regulation FD Disclosure

The Company made available slides for a presentation that the Company utilized in connection with its conference call. A copy of the presentation can be found on the Company’s website at ir.berkshirebank.com.

Item 9.01

Financial Statements and Exhibits

(a)	Financial Statements of Businesses Acquired. Not applicable.
(b)	Pro Forma Financial Information. Not applicable.
(c)	Shell Company Transactions. Not applicable.
(d)	Exhibits.

	Exhibit No.	Description

	99.1	News Release dated July 20, 2023
	104.1	Cover Page for this Current Report on Form 8-K, formatted in Inline XBRL

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

		Berkshire Hills Bancorp, Inc.


DATE: July 20, 2023	By:	/s/ Nitin J. Mhatre
		Nitin J. Mhatre
		President and Chief Executive Officer

Exhibit 99.1

Berkshire Hills Reports Second Quarter Net Income of $24 Million, or $0.55 Earnings per Share

10% EPS Growth Year-over-Year

Period-end loan growth of 2%; total deposits unchanged

Net loan charge-offs decreased $1.1 million; credit loss allowance increased $2.2 million commensurate with loan growth

TCE ratio of 7.9 percent and CET1 ratio of 12.1 percent

Repurchased $12 million of stock in 2Q23

BOSTON, July 20, 2023 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the second quarter of 2023. These results along with comparison periods are summarized below:

($ in millions, except per share data)	June 30, 2023			Mar. 31, 2023			June 30, 2022
Net income	$	23.9		$	27.6		$	$23.1
Per share		0.55			0.63			0.50
Operating earnings¹		23.9			27.6			23.6
Per share		0.55			0.63			0.51

Net interest income, non FTE	$	92.8		$	97.5		$	81.4
Net interest income, FTE		94.7			99.4			82.9
Net interest margin, FTE		3.24	%		3.58	%		3.11	%
Non-interest income		17.1			16.6			16.4
Operating non-interest income¹		17.1			16.6			17.3

Non-interest expense	$	74.0		$	72.0		$	68.5
Operating non-interest expense¹		74.0			72.0			68.4
Efficiency ratio¹		63.6	%		59.5	%		66.6	%

Average balances
Loans	$	8,791		$	8,515		$	7,492
Deposits		9,568			9,676			9,755

Period-end balances
Loans		8,882			8,682			7,803
Deposits		10,068			10,068			10,115

1. See non-GAAP financial measures and reconciliation to GAAP measures on page 12.

Berkshire CEO Nitin Mhatre stated, “I’m pleased with our progress, as we continue to grow the company strategically while posting higher earnings per share year-over-year. In this dynamic banking environment, Berkshire’s teams are serving clients and communities with focus and discipline. Reflecting the quality of our underwriting and business model, credit performance remains strong and deposits have been resilient. In the second quarter, we allocated our $100 million sustainability bond issuance to targeted social and environmental projects. We’re proud to be a leader promoting strong support to the communities in our footprint”

CFO David Rosato added, “Second quarter GAAP net income of $23.9 million increased 3% year-over-year, generating an 8.3 percent return on average tangible common equity. The cumulative impact of Federal Reserve Bank interest rate hikes has resulted in higher funding costs for Berkshire Bank and the industry, compressing net interest margins and operating profitability. Net income decreased 14 percent linked quarter, primarily reflecting lower net interest income. Net interest margin of 3.24 percent improved 13 basis points from a year ago, but declined 34 basis points linked-quarter. Further expansion of average loan yields was more than offset by higher deposit and borrowing costs. Period-end loan balances grew 2 percent while deposits were unchanged. The period-end loan to deposit ratio measured 88 percent and the ratio of tangible common equity to tangible assets stood at 7.9 percent. Common stock repurchases totaled $12 million for the quarter.”

	As of and For the Three Months Ended
		June 30, 2023			Mar. 31, 2023			June 30, 2022
Asset Quality
Net loan charge-offs to average loans			0.26	%		0.32	%		0.02	%
Non-performing loans to total loans			0.32	%		0.31	%		0.34	%

Returns
Return on average assets¹			0.78	%		0.94	%		0.82	%
Return on average tangible common equity¹			8.26	%		9.59	%		8.33	%

Capital Ratios²
Tangible common equity/tangible assets¹			7.9	%		7.9	%		8.5	%
Tier 1 leverage			9.6	%		9.9	%		10.2	%
Common equity Tier 1			12.1	%		12.1	%		12.9	%
Tier 1 risk-based			12.3	%		12.4	%		13.2	%
Total risk-based			14.4	%		14.4	%		16.1	%

1. See non-GAAP measures and reconciliation to GAAP beginning on page 12. All performance ratios are annualized and are based on average balance sheet amounts, where applicable. 2. Presented as projected for June 30, 2023 and actual for the remaining periods.

Headquartered in Boston, Berkshire Hills Bancorp is the parent of Berkshire Bank. Providing a wide range of financial solutions through its consumer banking, commercial banking and wealth management divisions, the Bank has approximately $12.1 billion in assets and a community-based footprint of 100 financial centers in Massachusetts, New York, Vermont, Connecticut and Rhode Island. Access more information about Berkshire Hills Bancorp at ir.berkshirebank.com.

2Q 2023 Financial Highlights

Income Statement

GAAP and operating earnings totaled $23.9 million, or $0.55 per share.

Net interest income totaled $92.8 million in 2Q23 compared to $97.5 million in 1Q23.

○

One additional calendar day in 2Q23 (1% increase in net interest income).

Net interest margin decreased 34 basis points from 1Q23 to 3.24% reflecting:

○

Higher cost of funds (increase of 58 basis points).

Includes higher deposit costs (increase of 41 basis points).

Includes $600 million increase in higher cost average borrowings.

○

Higher yields on the loan portfolio (increase of 20 basis points).

Provision for credit losses on loans totaled $8.0 million.

○

Allowance for credit losses on loans increased $2.2 million.

○

Net loan charge-offs totaled $5.8 million.

○

Net annualized loan charge-off ratio of 0.26%.

Non-interest income totaled $17.1 million in 2Q23 compared to $16.6 million in 1Q23.

○

Deposit related fees included $215 thousand in higher commercial cash management fees.

○

Loan related non-interest revenue included $754 thousand in higher interest rate swap income.

○

Gain on SBA loan sales increased $416 thousand.

○

Wealth management revenue seasonally decreased $156 thousand. At June 30, 2023, wealth assets under management were $1.4 billion.

Non-interest expense totaled $74.0 million in 2Q23, compared to $72.0 million in 1Q23.

○

Compensation and benefits expense increased $889 thousand.

○

Occupancy and equipment expense decreased $409 thousand.

○

Technology and communications expense increased $994 thousand.

○

The efficiency ratio was 63.6% for 2Q23 compared to 59.5% for 1Q23.

The effective income tax rate was 14.2% for 2Q23 and 15.6% for the first six months of 2023 compared to 18.7% for the full year of 2022.

Loans

Commercial real estate loans totaled $4.3 billion at June 30, 2023, an $84 million increase from March 31, 2023.

○

Average commercial real estate loans totaled $4.3 billion in 2Q23, a $117 million increase from 1Q23.

Commercial and industrial loans totaled $1.5 billion at June 30, 2023, an $88 million decrease from March 31, 2023.

○

Average commercial and industrial loans totaled $1.5 billion in 2Q23, a $31 million decrease from 1Q23.

Residential mortgage loans totaled $2.6 billion at June 30, 2023, a $215 million increase from March 31, 2023.

Average residential mortgage loans totaled $2.5 billion in 2Q23, a $205 million increase from 1Q23.

Consumer loans totaled $517 million at June 30, 2023, a $10 million decrease from March 31, 2023.

Average consumer loans totaled $524 million in 2Q23, a $15 million decrease from 1Q23.

Total non-performing loans to total loans was 0.32% at June 30, 2023 compared to 0.31% at March 31, 2023.

The allowance for credit losses to total loans was 1.13% at June 30, 2023, unchanged from March 31, 2023.

Deposits

Non-interest bearing deposits totaled $2.6 billion at June 30, 2023, a $56 million decrease from March 31, 2023.

○

Average non-interest bearing deposits totaled $2.6 billion in 2Q23, a $112 million decrease from 1Q23.

Time deposits totaled $2.4 billion at June 30, 2023, $323 million increase from March 31, 2023.

○

Average time deposits totaled $2.3 billion in 2Q23, a $479 million increase from 1Q23.

2Q 2023 ESG & CORPORATE RESPONSIBILITY HIGHLIGHTS

Berkshire is a performance and purpose-driven, values-guided, community-centered bank. Berkshire's ESG activities are central to its strategy. Key highlights in the quarter include:

The Company announced the allocation of its inaugural $100 million sustainability bond which helped create 330 units of affordable and workforce housing along with more than 200,000 square feet of green building development. Further details can be found in Berkshire’s Sustainability Bond Report which highlights how proceeds were allocated to support affordable housing, workforce housing, green building and financial access and inclusion projects in communities across New England and New York.

Berkshire maintained its top quartile ESG rating performance and was named the recipient of the LGBT Corporate Ally Award from the Boston Business Journal.

Forward Looking Statements: This document contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “remain,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.

INVESTOR CONTACT

Kevin Conn

Investor Relations

617.641.9206

kaconn@berkshirebank.com

MEDIA CONTACT

Gary Levante

Corporate Communications

413.447.1737

glevante@berkshirebank.com

###

SELECTED FINANCIAL HIGHLIGHTS (1)

	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
	2023			2023			2022			2022			2022
NOMINAL AND PER SHARE DATA
Net earnings per common share, diluted	$	0.55		$	0.63		$	0.69		$	0.42		$	0.50
Operating earnings per common share, diluted (2)(3)		0.55			0.63			0.64			0.62			0.51
Net income, (thousands)		23,861			27,637			30,505			18,717			23,115
Operating net income, (thousands) (2)(3)		23,878			27,608			28,254			27,928			23,562
Net interest income, (thousands) non FTE		92,759			97,533			102,092			92,084			81,358
Net interest income, FTE (5)		94,721			99,441			103,937			93,799			82,918
Total common shares outstanding, end of period (thousands)		44,033			44,411			44,361			45,040			45,788
Average diluted shares, (thousands)		43,532			44,036			44,484			45,034			46,102
Total book value per common share, end of period		22.11			22.42			21.51			20.93			22.15
Tangible book value per common share, end of period (2)(3)		21.60			21.89			20.95			20.36			21.56
Dividends per common share		0.18			0.18			0.18			0.12			0.12
Dividend payout ratio		33.47	%		28.98	%		26.59	%		29.35	%		25.24	%

PERFORMANCE RATIOS (4)
Return on equity		7.82	%		9.11	%		10.06	%		6.30	%		7.82	%
Operating return on equity (2)(3)		7.82			9.10			9.32			9.40			7.97
Return on tangible common equity (2)(3)		8.26			9.59			10.59			6.76			8.33
Operating return on tangible common equity (2)(3)		8.27			9.59			9.83			9.92			8.48
Return on assets		0.78			0.94			1.08			0.66			0.82
Operating return on assets (2)(3)		0.78			0.94			1.00			0.99			0.84
Net interest margin, FTE (5)		3.24			3.58			3.84			3.48			3.11
Efficiency ratio (3)		63.57			59.51			58.25			62.01			66.60

FINANCIAL DATA (in millions, end of period)
Total assets	$	12,090		$	12,320		$	11,663		$	11,317		$	11,579
Total earning assets		11,370			11,615			10,913			10,604			10,849
Total loans		8,882			8,682			8,335			7,943			7,803
Total deposits		10,068			10,068			10,327			9,988			10,115
Loans/deposits (%)		88	%		86	%		81	%		80	%		77	%
Total accumulated other comprehensive (loss) net of tax, end of period	$	(186	)	$	(159	)	$	(181	)	$	(188	)	$	(123	)
Total shareholders' equity		973			995			954			943			1,014

ASSET QUALITY
Allowance for credit losses, (millions)	$	100		$	98		$	96		$	96		$	99
Net charge-offs, (millions)		(6	)		(7	)		(12	)		(6	)		(0	)
Net charge-offs (QTD annualized)/average loans		0.26	%		0.32	%		0.58	%		0.30	%		0.02	%
Provision (benefit)/expense, (millions)	$	8		$	9		$	12		$	3		$	-
Non-performing assets, (millions)		31			29			33			40			29
Non-performing loans/total loans		0.32	%		0.31	%		0.37	%		0.48	%		0.34	%
Allowance for credit losses/non-performing loans		353			363			309			254			368
Allowance for credit losses/total loans		1.13			1.13			1.15			1.21			1.27

CAPITAL RATIOS
Risk weighted assets, (millions)(6)	$	9,518		$	9,454		$	9,151		$	8,823		$	8,718
Common equity Tier 1 capital to risk weighted assets (6)		12.1	%		12.1	%		12.4	%		12.7	%		13.0	%
Tier 1 capital leverage ratio (6)		9.6			9.9			10.2			10.1			10.2
Tangible common shareholders' equity/tangible assets (3)		7.9			7.9			8.0			8.1			8.5

(1)	All financial tables presented are unaudited.
(2)	Reconciliations of non-GAAP financial measures, including all references to operating and tangible amounts, appear on pages 12 and 13.
(3)	Non-GAAP financial measure. Operating measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions and restructuring activities. See pages 12 and 13 for reconciliations of non-GAAP financial measures.
(4)	All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(5)	Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
(6)	Presented as projected for June 30, 2023 and actual for the remaining periods.

CONSOLIDATED BALANCE SHEETS

	June 30,			March 31,			December 31,			June 30,
(in thousands)	2023			2023			2022			2022
Assets
Cash and due from banks	$	120,285		$	121,589		$	145,342		$	156,470
Short-term investments		520,315			884,973			540,013			714,547
Total cash and cash equivalents		640,600			1,006,562			685,355			871,017

Trading securities, at fair value		6,405			6,584			6,708			7,040
Equity securities, at fair value		12,868			13,072			12,856			14,154
Securities available for sale, at fair value		1,340,331			1,407,271			1,423,200			1,697,019
Securities held to maturity, at amortized cost		563,765			574,606			583,453			602,611
Federal Home Loan Bank stock		34,714			44,245			7,219			9,365
Total securities		1,958,083			2,045,778			2,033,436			2,330,189
Less: Allowance for credit losses on investment securities		(71	)		(71	)		(91	)		(94	)
Net securities		1,958,012			2,045,707			2,033,345			2,330,095

Loans held for sale		8,708			1,906			4,311			1,062

Commercial real estate loans		4,315,202			4,231,510			4,095,079			3,919,678
Commercial and industrial loans		1,464,922			1,553,340			1,473,316			1,471,446
Residential mortgages		2,584,959			2,369,614			2,216,410			1,819,341
Consumer loans		517,319			527,503			550,504			592,986
Total loans		8,882,402			8,681,967			8,335,309			7,803,451
Less: Allowance for credit losses on loans		(100,219	)		(97,991	)		(96,270	)		(99,021	)
Net loans		8,782,183			8,583,976			8,239,039			7,704,430

Premises and equipment, net		76,903			78,710			85,217			89,657
Other intangible assets		22,074			23,279			24,483			27,046
Other assets		593,621			571,616			587,854			550,275
Assets held for sale		8,220			8,220			3,260			5,386
Total assets	$	12,090,321		$	12,319,976		$	11,662,864		$	11,578,968

Liabilities and shareholders' equity
Non-interest bearing deposits	$	2,594,528		$	2,650,937		$	2,852,127		$	2,921,347
NOW and other deposits		944,775			959,417			1,054,596			2,247,544
Money market deposits		3,005,081			3,274,630			3,723,570			2,327,004
Savings deposits		1,088,405			1,069,915			1,063,269			1,143,352
Time deposits		2,435,618			2,112,646			1,633,707			1,475,417
Total deposits		10,068,407			10,067,545			10,327,269			10,114,664

Federal Home Loan Bank advances		674,345			904,395			4,445			58,542
Subordinated borrowings		121,238			121,176			121,064			195,659
Total borrowings		795,583			1,025,571			125,509			254,201

Other liabilities		252,950			231,380			256,024			196,053
Total liabilities		11,116,940			11,324,496			10,708,802			10,564,918

Common shareholders' equity		973,381			995,480			954,062			1,014,050
Total shareholders' equity		973,381			995,480			954,062			1,014,050
Total liabilities and shareholders' equity	$	12,090,321		$	12,319,976		$	11,662,864		$	11,578,968

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except per share data)	2023			2022			2023			2022
Interest income	$	145,425		$	87,379		$	277,741		$	162,202
Interest expense		52,666			6,021			87,449			11,781
Net interest income, non FTE		92,759			81,358			190,292			150,421
Non-interest income
Deposit related fees		8,571			8,005			16,882			15,356
Loan fees and other		3,189			1,113			5,658			6,052
Gain on SBA loan sales		2,910			3,619			5,404			6,964
Wealth management fees		2,583			2,775			5,322			5,400
Other		(137	)		1,812			222			4,978
Total non-interest income excluding (losses)/gains		17,116			17,324			33,488			38,750
Fair value adjustments on securities		(22	)		(973	)		212			(1,718	)
Total non-interest income		17,094			16,351			33,700			37,032
Total net revenue		109,853			97,709			223,992			187,453

Provision expense/(benefit) for credit losses		8,000			-			16,999			(4,000	)
Non-interest expense
Compensation and benefits		39,960			37,830			79,031			75,351
Occupancy and equipment		8,970			9,438			18,349			19,505
Technology and communications		10,465			8,611			19,936			17,138
Professional services		2,526			2,913			5,803			5,605
Other expenses		12,106			9,648			22,899			19,373
Merger, restructuring and other non-operating expenses		21			35			(15	)		53
Total non-interest expense		74,048			68,475			146,003			137,025
Total non-interest expense excluding merger, restructuring and other		74,027			68,440			146,018			136,972

Income before income taxes	$	27,805		$	29,234		$	60,990		$	54,428
Income tax expense		3,944			6,119			9,492			11,117
Net income	$	23,861		$	23,115		$	51,498		$	43,311

Basic earnings per common share	$	0.55		$	0.50		$	1.18		$	0.93
Diluted earnings per common share	$	0.55		$	0.50		$	1.18		$	0.92

Weighted average shares outstanding:
Basic		43,443			45,818			43,564			46,733
Diluted		43,532			46,102			43,780			47,074

CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend)

	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
(in thousands, except per share data)	2023			2023			2022			2022			2022
Interest income	$	145,425		$	132,316		$	121,384		$	103,671		$	87,379
Interest expense		52,666			34,783			19,292			11,587			6,021
Net interest income, non FTE		92,759			97,533			102,092			92,084			81,358
Non-interest income
Deposit related fees		8,571			8,311			8,293			8,377			8,005
Loan fees and other		3,189			2,469			2,123			1,292			1,113
Gain on SBA loan sales		2,910			2,494			2,979			2,551			3,619
Wealth management fees		2,583			2,739			2,255			2,353			2,775
Other		(137	)		359			(159	)		2,154			1,812
Total non-interest income excluding (losses)/gains		17,116			16,372			15,491			16,727			17,324
Fair value adjustments on securities		(22	)		234			163			(476	)		(973	)
Total non-interest income		17,094			16,606			15,654			16,251			16,351
Total net revenue		109,853			114,139			117,746			108,335			97,709

Provision expense/(benefit) for credit losses		8,000			8,999			12,000			3,000			-
Non-interest expense
Compensation and benefits		39,960			39,071			37,968			39,422			37,830
Occupancy and equipment		8,970			9,379			9,431			8,702			9,438
Technology and communications		10,465			9,471			9,729			8,719			8,611
Professional services		2,526			3,277			3,153			3,285			2,913
Other expenses		12,106			10,793			12,350			10,076			9,648
Merger, restructuring and other non-operating expenses		21			(36	)		(2,617	)		11,473			35
Total non-interest expense		74,048			71,955			70,014			81,677			68,475
Total non-interest expense excluding merger, restructuring and other		74,027			71,991			72,631			70,204			68,440


Income before income taxes	$	27,805		$	33,185		$	35,732		$	23,658		$	29,234
Income tax expense		3,944			5,548			5,227			4,941			6,119
Net income	$	23,861		$	27,637		$	30,505		$	18,717		$	23,115

Diluted earnings per common share	$	0.55		$	0.63		$	0.69		$	0.42		$	0.50

Weighted average shares outstanding:
Basic		43,443			43,693			44,105			44,700			45,818
Diluted		43,532			44,036			44,484			45,034			46,102

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS

	Quarters Ended
	June 30, 2023					March 31, 2023					June 30, 2022
(in millions)		Average Balance	Interest (1)	Average Yield/Rate			Average Balance	Interest (1)	Average Yield/Rate			Average Balance	Interest (1)	Average Yield/Rate
Assets
Commercial real estate		4,283	67	6.16	%		4,166	61	5.88	%		3,831	37	3.79	%
Commercial and industrial loans		1,496	27	7.27			1,527	26	6.92			1,447	16	4.46
Residential mortgages		2,488	24	3.87			2,283	21	3.70			1,652	15	3.57
Consumer loans		524	9	7.28			539	10	7.24			562	8	5.41
Total loans		8,791	127	5.77			8,515	118	5.57			7,492	75	3.99
Securities (2)		2,236	13	2.27			2,261	13	2.23			2,621	13	1.97
Short-term investments and loans HFS		560	7	4.94			313	3	4.24			476	1	0.57
Total earning assets		11,587	147	5.05			11,089	134	4.85			10,589	89	3.34
Goodwill and other intangible assets		22					24					27
Other assets		665					692					644
Total assets		12,274					11,805					11,260

Liabilities and shareholders' equity
Non-interest-bearing demand deposits		2,594	-	-	%		2,706	-	-	%		2,903	-	-	%
NOW and other		1,055	4	1.35			1,456	6	1.64			1,454	-	0.12
Money market		2,555	14	2.13			2,659	10	1.59			2,811	2	0.19
Savings		1,077	-	0.50			1,047	-	0.10			1,127	-	0.03
Time		2,287	18	3.07			1,808	10	2.13			1,460	2	0.64
Total cost deposits		9,568	36	1.51			9,676	26	1.09			9,755	4	0.17
Borrowings (3)		1,288	17	5.14			688	9	5.06			160	2	4.61
Total funding liabilities		10,856	53	1.94			10,364	35	1.36			9,915	6	0.24

Other liabilities		197					227					163
Total liabilities		11,053					10,591					10,078

Common shareholders' equity		1,221					1,214					1,182
Total shareholders' equity		1,221					1,214					1,182
Total liabilities and shareholders' equity		12,274					11,805					11,260
Net interest margin, FTE				3.24					3.58					3.11

Total average non-maturity deposits		7,281					7,868					8,295

Supplementary data
Net Interest Income, non FTE		92.759					97.533					81.358
FTE income adjustment		1.962					1.908					1.560
Net Interest Income, FTE		94.721					99.441					82.918

(1) Interest income and expense presented on a fully taxable equivalent basis.

(2) Average balances for securities available-for-sale are based on amortized cost.

(3) Average balances for borrowings includes the financing lease obligation which is presented under other liabilities on the consolidated balance sheet.

ASSET QUALITY ANALYSIS

	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
(in thousands)	2023			2023			2022			2022			2022
NON-PERFORMING ASSETS
Commercial real estate	$	1,509		$	2,546		$	2,434		$	2,976		$	8,277
Commercial and industrial loans		15,597			12,155			17,023			21,008			4,891
Residential mortgages		8,728			9,442			8,612			10,407			10,331
Consumer loans		2,565			2,848			3,045			3,463			3,385
Total non-performing loans		28,399			26,991			31,114			37,854			26,884
Repossessed assets		2,549			2,462			2,209			2,175			2,004
Total non-performing assets	$	30,948		$	29,453		$	33,323		$	40,029		$	28,888

Total non-performing loans/total loans		0.32	%		0.31	%		0.37	%		0.48	%		0.34	%
Total non-performing assets/total assets		0.26	%		0.24	%		0.29	%		0.35	%		0.25	%

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period	$	97,991		$	96,270		$	96,013		$	99,021		$	99,475
Adoption of ASU No. 2022-02		-			(401	)		-			-			-
Balance after adoption of ASU No. 2022-02		97,991			95,869			96,013			99,021			99,475
Charged-off loans		(7,686	)		(7,936	)		(12,995	)		(7,424	)		(1,593	)
Recoveries on charged-off loans		1,914			1,059			1,252			1,416			1,139
Net loans charged-off		(5,772	)		(6,877	)		(11,743	)		(6,008	)		(454	)
Provision (benefit)/expense for loan credit losses		8,000			8,999			12,000			3,000			-
Balance at end of period	$	100,219		$	97,991		$	96,270		$	96,013		$	99,021

Allowance for credit losses/total loans		1.13	%		1.13	%		1.15	%		1.21	%		1.27	%
Allowance for credit losses/non-performing loans		353	%		363	%		309	%		254	%		368	%

NET LOAN CHARGE-OFFS
Commercial real estate	$	664		$	122		$	187		$	(854	)	$	(76	)
Commercial and industrial loans		(4,146	)		(5,695	)		(10,914	)		(4,931	)		(237	)
Residential mortgages		(143	)		305			192			122			(30	)
Home equity		126			16			(128	)		1			33
Auto and other consumer		(2,273	)		(1,625	)		(1,080	)		(346	)		(144	)
Total, net	$	(5,772	)	$	(6,877	)	$	(11,743	)	$	(6,008	)	$	(454	)

Net charge-offs (QTD annualized)/average loans		0.26	%		0.32	%		0.58	%		0.30	%		0.02	%
Net charge-offs (YTD annualized)/average loans		0.29	%		0.32	%		0.27	%		0.16	%		0.08	%

DELINQUENT AND NON-PERFORMING LOANS	Balance		Percent of Total Loans			Balance		Percent of Total Loans			Balance		Percent of Total Loans			Balance		Percent of Total Loans			Balance		Percent of Total Loans
30-89 Days delinquent	$	15,147		0.17	%	$	14,210		0.16	%	$	12,162		0.15	%	$	14,662		0.18	%	$	36,184		0.46	%
90+ Days delinquent and still accruing		7,812		0.09	%		6,937		0.08	%		7,038		0.08	%		6,285		0.08	%		6,760		0.09	%
Total accruing delinquent loans		22,959		0.26	%		21,147		0.24	%		19,200		0.23	%		20,947		0.26	%		42,944		0.55	%
Non-performing loans		28,399		0.32	%		26,991		0.31	%		31,114		0.37	%		37,854		0.48	%		26,884		0.34	%
Total delinquent and non-performing loans	$	51,358		0.58	%	$	48,138		0.55	%	$	50,314		0.60	%	$	58,801		0.74	%	$	69,828		0.89	%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA

		June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
(in thousands)		2023			2023			2022			2022			2022
Total non-interest income		$	17,094		$	16,606		$	15,654		$	16,251		$	16,351
Adj: Fair value adjustments on securities (1)			-			-			(163	)		476			973
Total operating non-interest income (2)		$	17,094		$	16,606		$	15,491		$	16,727		$	17,324

Total revenue	(A)	$	109,853		$	114,139		$	117,746		$	108,335		$	97,709
Adj: Fair value adjustments on securities (1)			-			-			(163	)		476			973
Total operating revenue (2)	(B)	$	109,853		$	114,139		$	117,583		$	108,811		$	98,682

Total non-interest expense	(C)	$	74,048		$	71,955		$	70,014		$	81,677		$	68,475
Adj: Merger, restructuring and other non-operating expenses			(21	)		36			2,617			(11,473	)		(35	)
Operating non-interest expense (2)	(D)	$	74,027		$	71,991		$	72,631		$	70,204		$	68,440

Pre-tax, pre-provision net revenue (PPNR)	(A-C)	$	35,805		$	42,184		$	47,732		$	26,658		$	29,234
Operating pre-tax, pre-provision net revenue (PPNR) (2)	(B-D)		35,826			42,148			44,952			38,607			30,242

Net income		$	23,861		$	27,637		$	30,505		$	18,717		$	23,115
Adj: Fair value adjustments on securities (1)			-			-			(163	)		476			973
Adj: Restructuring expense and other non-operating expenses			21			(36	)		(2,617	)		11,473			35
Adj: Income taxes (expense)/benefit			(4	)		7			529			(2,738	)		(561	)
Total operating income (2)	(E)	$	23,878		$	27,608		$	28,254		$	27,928		$	23,562

(in millions, except per share data)
Total average assets	(F)	$	12,274		$	11,805		$	11,321		$	11,315		$	11,260
Total average shareholders' equity	(G)		1,221			1,214			1,213			1,189			1,182
Total average tangible shareholders' equity (2)	(H)		1,198			1,190			1,188			1,164			1,155
Total accumulated other comprehensive (loss) net of tax, end of period			(186	)		(159	)		(181	)		(188	)		(123	)
Total tangible shareholders' equity, end of period (2)	(J)		951			972			930			917			987
Total tangible assets, end of period (2)	(L)		12,068			12,297			11,638			11,291			11,552

Total common shares outstanding, end of period (thousands)	(M)		44,033			44,411			44,361			45,040			45,788
Average diluted shares outstanding (thousands)	(N)		43,532			44,036			44,484			45,034			46,102

GAAP earnings per common share, diluted (2)		$	0.55		$	0.63		$	0.69		$	0.42		$	0.50
Operating earnings per common share, diluted (2)	(E/N)		0.55			0.63			0.64			0.62			0.51
Tangible book value per common share, end of period (2)	(J/M)		21.60			21.89			20.95			20.36			21.56
Total tangible shareholders' equity/total tangible assets (2)	(J/L)		7.88			7.91			7.99			8.12			8.54

Performance ratios (3)
GAAP return on equity			7.82	%		9.11	%		10.06	%		6.30			7.82	%
Operating return on equity (2)	(E/G)		7.82			9.10			9.32			9.40			7.97
Return on tangible common equity (2)(4)			8.26			9.59			10.59			6.76			8.33
Operating return on tangible common equity (2)(4)	(E+Q)/(H)		8.27			9.59			9.83			9.92			8.48
GAAP return on assets			0.78			0.94			1.08			0.66			0.82
Operating return on assets (2)	(E/F)		0.78			0.94			1.00			0.99			0.84
Efficiency ratio (2)	(D-Q)/(B+O+R)		63.57			59.51			58.25			62.01			66.60


Supplementary data (in thousands)
Tax benefit on tax-credit investments (5)	(O)	$	2,735		$	2,897		$	3,068		$	620		$	595
Non-interest income tax-credit investments amortization (6)	(P)		(2,210	)		(2,285	)		(2,355	)		(445	)		(351	)
Net income on tax-credit investments	(O+P)		525			612			713			175			244

Intangible amortization	(Q)	$	1,205		$	1,205		$	1,277		$	1,285		$	1,286
Fully taxable equivalent income adjustment	(R)		1,962			1,908			1,845			1,715			1,560

(1) Starting March 31, 2023, fair value adjustments on securities are included in operating income.

(2) Non-GAAP financial measure.

(3) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.

(4) Amortization of intangible assets is adjusted assuming a 27% marginal tax rate.

(5) The tax benefit is the direct reduction to the income tax provision due to tax credit investments.

(6) The non-interest income amortization is the reduction to the tax-advantaged investments and are incurred as the tax credits are generated.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED