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): January 25, 2024

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 January 25, 2024, Berkshire Hills Bancorp, Inc. (the “Company”), the holding company for Berkshire Bank, announced its financial results for the fourth quarter and year ended December 31, 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 January 25, 2024, 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 February 1, 2024. 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 8.01

Other Events

The Company also announced that its Board of Directors has approved a stock repurchase program pursuant to which the Company may repurchase shares of Company common stock at a total cost of up to $40 million through December 31, 2024. The Company may conduct the repurchases through open market purchases, block trades, unsolicited negotiated transactions, pursuant to a trading plan that may be adopted in accordance with Securities and Exchange Commission Rule 10b5-1, or in any other manner that complies with the provisions of the Securities Exchange Act of 1934, as amended. The news release containing information about the stock repurchase program is included as Exhibit 99.1 and shall not be deemed "filed" for any purpose.

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 January 25, 2024
	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: January 25, 2024	By:	/s/ Nitin J. Mhatre
		Nitin J. Mhatre
		President and Chief Executive Officer

Exhibit 99.1

Berkshire Hills Reports Fourth Quarter 2023 Results

Announces $40 Million Share Repurchase Authorization

Fourth quarter loss of $1 million, ($0.03) per share; operating income of $20 million, $0.47 per share

$267 million securities sale resulting in $25.1 million pre-tax non-operating loss

Net loan charge-offs and non-performing assets decreased 18% linked quarter

TCE ratio of 8.0% and CET1 ratio of 12.0%

Tangible book value per share of $22.82, up $1.57, or 7%, in the quarter

BOSTON, January 25, 2024 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the fourth quarter of 2023. These results along with comparison periods are summarized below:

	Three Months Ended									Twelve Months Ended
($ in millions, except per share data)	Dec.31, 2023			Sep. 30, 2023			Dec. 31, 2022			Dec.31, 2023			Dec. 31, 2022
Net (loss) income	$	(1.4	)	$	19.5		$	30.5		$	69.6		$	92.5
Per share		(0.03	)		0.45			0.69			1.60			2.02
Operating earnings¹		20.2			21.5			28.3			93.2			100.5
Per share		0.47			0.50			0.64			2.14			2.19

Net interest income, non FTE	$	88.4		$	90.3		$	102.1		$	369.0		$	344.6
Net interest income, FTE		90.4			92.3			103.9			376.9			351.3
Net interest margin, FTE		3.11	%		3.18	%		3.84	%		3.27	%		3.26	%
Non-interest income		(8.4	)		17.5			15.7			42.8			68.9
Operating non-interest income¹		16.7			17.5			15.5			67.8			71.0

Non-interest expense	$	79.0		$	76.5		$	70.0		$	301.5		$	288.7
Operating non-interest expense¹		75.3			73.9			72.6			295.2			279.8
Efficiency ratio¹		67.8	%		65.1	%		58.3	%		63.9	%		64.3	%

Average balances
Loans	$	8,990		$	8,952		$	8,082		$	8,814		$	7,612
Deposits		9,936			9,630			9,731			9,704			9,797

Period-end balances
Loans		9,040			8,984			8,335			9,040			8,335
Deposits		10,633			9,981			10,327			10,633			10,327

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

Berkshire CEO Nitin Mhatre stated, “Through the final quarter of the year, we continued to strengthen our balance sheet while maintaining strong credit performance, cost discipline and capital. Despite industry turbulence earlier in the year, full year operating EPS was relatively unchanged from 2022. Our year-end securities sale reduced wholesale borrowings, improving our funding profile as we move into 2024. We continue to benefit from disruption in the competitive landscape and have recruited experienced bankers to further support deposit gathering activities. Our Board has authorized additional share repurchases in 2024 to balance return of capital while supporting franchise growth. I’m confident that Berkshire is well positioned to deliver the benefits of our strategic initiatives to our shareholders and communities.”

CFO David Rosato added, “Fourth quarter operating earnings were $20.2 million, decreasing $1.3 million linked quarter. Net interest margin of 3.11 percent decreased 7 basis points as funding cost increases outpaced loan yield expansion. However, our full year margin was steady at 3.27%. Operating non-interest income decreased by 5 percent linked quarter and increased 8 percent year-over-year. Non-interest expense increased 3 percent linked quarter on a GAAP basis and 2 percent on an operating basis. We continue to improve oversight of our operating costs and are pursuing further efficiency improvements in 2024 while reinvesting in front-line revenue generating teams. Non-operating expenses of $3.7 million were primarily severance charges related to a workforce reduction. We sold lower-yielding securities with a market value of $267 million near period-end and proceeds were used to reduce borrowings by a similar amount. The securities sale resulted in a $25.1 million ($19.0 million after-tax) non-operating loss. Total shareholders’ equity was not impacted by the securities sale and our common equity Tier 1 ratio remained a healthy 12.0% percent at year-end.”

The Board of Directors has authorized the repurchase of $40 million of common stock through December 31, 2024. This would result in the repurchase of approximately 4% of outstanding shares based on the current share price.

	As of and For the Three Months Ended
	Dec. 31, 2023			Sep. 30, 2023			Dec. 31, 2022
Asset Quality
Net loan charge-offs to average loans		0.20	%		0.24	%		0.58	%
Non-performing loans to total loans		0.24	%		0.30	%		0.37	%

Returns
Return on average assets		(0.05	)%		0.66	%		1.10	%
Return on tangible common equity, including unrealized losses on AFS securities ¹		(0.24	)%		8.45	%		13.36	%
Return on tangible common equity, excluding unrealized losses on AFS securities ¹		(0.18	)%		6.76	%		10.59	%

Capital Ratios²
Tangible common equity/tangible assets¹		8.0	%		7.7	%		8.0	%
Tier 1 leverage		9.6	%		9.8	%		10.2	%
Common equity Tier 1		12.0	%		12.1	%		12.4	%
Tier 1 risk-based		12.3	%		12.3	%		12.6	%
Total risk-based		14.4	%		14.4	%		14.6	%

1.	See non-GAAP measures and reconciliation to GAAP beginning on beginning on page 12. All performance ratios are annualized and are based on average balance sheet amounts, where applicable. 2. Presented as estimated for December 31, 2023 and actual for the remaining periods.

Berkshire Hills Bancorp, Inc. (NYSE: BHLB) is the parent company of Berkshire Bank, a relationship-driven, community-focused bank with $12.4 billion in assets and 96 financial centers in New England and New York. Berkshire is headquartered in Boston and offers commercial, retail, wealth, and private banking solutions.

4Q 2023 Financial Highlights

Income Statement

GAAP loss of $1.4 million, or $(0.03) per share.

Operating earnings totaled $20.2 million, or $0.47 per share.

Net interest income totaled $88.4 million in 4Q23 compared to $90.3 million in 3Q23.

Net interest margin decreased 7 basis points from 3Q23 to 3.11% reflecting:

Higher cost of funds (increase of 17 basis points).

Includes higher deposit costs (increase of 30 basis points).

Higher yields on the loan portfolio (increase of 9 basis points).

Provision for credit losses on loans totaled $7.0 million.

Allowance for credit losses on loans increased $2.6 million.

Net loan charge-offs totaled $4.4 million.

Net annualized loan charge-off ratio of 0.20%.

Non-interest income excluding the $25.1 million loss on sale of AFS securities totaled $16.7 million in 4Q23 compared to $17.5 million in 3Q23.

Deposit related fee revenue decreased $311 thousand.

Loan related fees decreased $821 thousand primarily due to lower swap revenue.

Gain on SBA loan sales decreased $166 thousand.

Wealth management revenue decreased $87 thousand. At December 31, 2023, wealth assets under management were $1.4 billion.

Other non-interest income decreased $641 thousand due to higher tax credit amortization.

Non-interest expense in 4Q23 totaled $79.0 million on a GAAP basis and $75.3 million on an operating basis. These measures were $76.5 million and $73.9 million in 3Q23.

Non-operating expense totaled $3.7 million in 4Q23, and was primarily severance charges related to a workforce reduction.

Compensation and benefits expense decreased $60 thousand.

Occupancy and equipment expense decreased $263 thousand.

Technology and communications expense increased $710 thousand.

Professional services expense increased $994 thousand.

The efficiency ratio was 67.8% for 4Q23 compared to 65.1% for 3Q23.

Income tax expense was a benefit of $4.5 million in 4Q23, including a $7.1 million credit related to net non-operating items. The effective tax rate was 11.1% for the year 2023 compared to 18.7% for the year 2022.

Loans

Commercial real estate loans totaled $4.5 billion at December 31, 2023, a $73 million increase from September 30, 2023.

Average commercial real estate loans totaled $4.5 billion in 4Q23, an $84 million increase from 3Q23.

Commercial and industrial loans totaled $1.4 billion at December 31, 2023, a $31 million decrease from September 30, 2023.

Average commercial and industrial loans totaled $1.4 billion in 4Q23, a $69 million decrease from 3Q23.

Residential mortgage loans totaled $2.7 billion at December 31, 2023, a $32 million increase from September 30, 2023.

Average residential mortgage loans totaled $2.7 billion in 4Q23, a $38 million increase from 3Q23.

Consumer loans totaled $487 million at December 31, 2023, a $19 million decrease from September 30, 2023.

Average consumer loans totaled $498 million in 4Q23, a $15 million decrease from 3Q23.

Non-performing loans to total loans was 0.24% at December 31, 2023 compared to 0.30% at September 30, 2023.

The allowance for credit losses to total loans was 1.17% at December 31, 2023, compared to 1.14% at September 30, 2023.

Deposits

Non-interest bearing deposits totaled $2.5 billion at December 31, 2023, a $61 million decrease from September 30, 2023.

Average non-interest bearing deposits totaled $2.5 billion in 4Q23, a $65 million decrease from 3Q23.

Time deposits totaled $2.7 billion at December 31, 2023, a $241 million increase from September 30, 2023.

Average time deposits totaled $2.6 billion in 4Q23, a $118 million increase from 3Q23.

4Q 2023 Corporate Responsibility Highlights

Berkshire was named one of America’s Best Regional Banks by Newsweek and listed in the Human Rights Campaign’s Corporate Equality Index.

Berkshire maintained its top quartile ESG rating performance and announced an innovative new partnership between Berkshire Bank’s Center for Women, Wellness & Wealth and the Massachusetts General Hospital’s Dementia Care Collaborative.

Berkshire implemented a climate risk management program to strengthen governance of climate matters and achieved 100% renewable electricity use at its premises as of year-end.

Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. eastern time on Thursday, January 25, 2024 to discuss results for the quarter and provide guidance about expected future results. Instructions for listening to the call may be found at the Company’s website at ir.berkshirebank.com. Additional materials relating to the call may also be accessed at this website. The call will be archived at the website and will be available for an extended period of time.

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)

	At or for the Quarters Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
	2023			2023			2023			2023			2022
NOMINAL AND PER SHARE DATA
Net (loss)/earnings per common share, diluted	$	(0.03	)	$	0.45		$	0.55		$	0.63		$	0.69
Operating earnings per common share, diluted (2)(3)		0.47			0.50			0.55			0.63			0.64
Net (loss)/income, (thousands)		(1,445	)		19,545			23,861			27,637			30,505
Operating net income, (thousands) (2)(3)		20,190			21,516			23,878			27,608			28,254
Net interest income, (thousands) non FTE		88,421			90,334			92,759			97,533			102,092
Net interest income, FTE (5)		90,442			92,314			94,721			99,441			103,937
Total common shares outstanding, end of period (thousands)		43,501			43,822			44,033			44,411			44,361
Average diluted shares, (thousands)		43,101			43,347			43,532			44,036			44,484
Total book value per common share, end of period		23.27			21.70			22.11			22.42			21.51
Tangible book value per common share, end of period (2)(3)		22.82			21.23			21.60			21.89			20.95
Dividends per common share		0.18			0.18			0.18			0.18			0.18
Dividend payout ratio		(543.94	)%		40.56	%		33.47	%		28.98	%		26.59	%

PERFORMANCE RATIOS (4)
Return on equity, including unrealized losses on AFS securities		(0.60	)%		7.91	%		9.51	%		11.31	%		12.63	%
Return on equity, excluding unrealized losses on AFS securities		(0.47	)		6.35			7.82			9.11			10.06
Operating return on equity, including unrealized losses on AFS securities (2)(3)		8.36			8.71			9.51			11.30			11.70
Operating return on equity, excluding unrealized losses on AFS securities (2)(3)		6.51			6.99			7.82			9.10			9.32
Return on tangible common equity, including unrealized losses on AFS securities (2)(3)		(0.24	)		8.45			10.09			11.96			13.36
Return on tangible common equity, excluding unrealized losses on AFS securities (2)(3)		(0.18	)		6.76			8.26			9.59			10.59
Operating return on tangible common equity, including unrealized losses on AFS securities (2)(3)		8.90			9.27			10.09			11.96			12.40
Operating return on tangible common equity, excluding unrealized losses on AFS securities (2)(3)		6.91			7.41			8.27			9.59			9.83
Return on assets		(0.05	)		0.66			0.79			0.96			1.10
Operating return on assets (2)(3)		0.68			0.73			0.79			0.95			1.02
Net interest margin, FTE (5)		3.11			3.18			3.24			3.58			3.84
Efficiency ratio (3)		67.77			65.05			63.57			59.51			58.25

FINANCIAL DATA (in millions, end of period)
Total assets	$	12,431		$	12,140		$	12,090		$	12,320		$	11,663
Total earning assets		11,705			11,400			11,370			11,615			10,913
Total loans		9,040			8,984			8,882			8,682			8,335
Total deposits		10,633			9,981			10,068			10,068			10,327
Loans/deposits (%)		85	%		90	%		88	%		86	%		81	%
Total accumulated other comprehensive (loss) net of tax, end of period	$	(143	)	$	(218	)	$	(186	)	$	(159	)	$	(181	)
Total shareholders' equity		1,012			951			973			995			954

ASSET QUALITY
Allowance for credit losses, (millions)	$	105		$	103		$	100		$	98		$	96
Net charge-offs, (millions)		(4	)		(5	)		(6	)		(7	)		(12	)
Net charge-offs (QTD annualized)/average loans		0.20	%		0.24	%		0.26	%		0.32	%		0.58	%
Provision (benefit)/expense, (millions)	$	7		$	8		$	8		$	9		$	12
Non-performing assets, (millions)		24			29			31			29			33
Non-performing loans/total loans		0.24	%		0.30	%		0.32	%		0.31	%		0.37	%
Allowance for credit losses/non-performing loans		492			386			353			363			309
Allowance for credit losses/total loans		1.17			1.14			1.13			1.13			1.15

CAPITAL RATIOS
Risk weighted assets, (millions)(6)	$	9,549		$	9,594		$	9,523		$	9,454		$	9,151
Common equity Tier 1 capital to risk weighted assets (6)		12.0	%		12.1	%		12.1	%		12.1	%		12.4	%
Tier 1 capital leverage ratio (6)		9.6			9.8			9.6			9.9			10.2
Tangible common shareholders' equity/tangible assets (3)		8.0			7.7			7.9			7.9			8.0

(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 13 and 14.
(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 13 and 14 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 December 31, 2023 and actual for the remaining periods.

CONSOLIDATED BALANCE SHEETS

	December 31,			September 30,			December 31,
(in thousands)	2023			2023			2022
Assets
Cash and due from banks	$	148,148		$	120,634		$	145,342
Short-term investments		1,055,096			542,836			540,013
Total cash and cash equivalents		1,203,244			663,470			685,355

Trading securities, at fair value		6,142			6,171			6,708
Equity securities, at fair value		13,029			12,325			12,856
Securities available for sale, at fair value		1,022,285			1,260,391			1,423,200
Securities held to maturity, at amortized cost		543,351			552,981			583,453
Federal Home Loan Bank stock		22,689			38,912			7,219
Total securities		1,607,496			1,870,780			2,033,436
Less: Allowance for credit losses on investment securities		(68	)		(69	)		(91	)
Net securities		1,607,428			1,870,711			2,033,345

Loans held for sale		2,237			2,342			4,311

Commercial real estate loans		4,527,012			4,453,573			4,095,079
Commercial and industrial loans		1,352,834			1,384,038			1,473,316
Residential mortgages		2,672,677			2,640,210			2,216,410
Consumer loans		487,163			506,556			550,504
Total loans		9,039,686			8,984,377			8,335,309
Less: Allowance for credit losses on loans		(105,357	)		(102,792	)		(96,270	)
Net loans		8,934,329			8,881,585			8,239,039

Premises and equipment, net		68,915			70,042			85,217
Other intangible assets		19,664			20,869			24,483
Other assets		584,066			619,777			587,854
Assets held for sale		10,938			11,157			3,260
Total assets	$	12,430,821		$	12,139,953		$	11,662,864

Liabilities and shareholders' equity
Non-interest bearing deposits	$	2,469,164		$	2,530,441		$	2,852,127
NOW and other deposits		858,644			843,032			1,054,596
Money market deposits		3,565,516			3,075,307			3,723,570
Savings deposits		1,053,810			1,086,329			1,063,269
Time deposits		2,686,250			2,445,435			1,633,707
Total deposits		10,633,384			9,980,544			10,327,269

Federal Home Loan Bank advances		385,223			804,295			4,445
Subordinated borrowings		121,363			121,300			121,064
Total borrowings		506,586			925,595			125,509

Other liabilities		278,630			282,805			256,024
Total liabilities		11,418,600			11,188,944			10,708,802

Common shareholders' equity		1,012,221			951,009			954,062
Total shareholders' equity		1,012,221			951,009			954,062
Total liabilities and shareholders' equity	$	12,430,821		$	12,139,953		$	11,662,864

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Years Ended
	December 31,						December 31,
(in thousands, except per share data)	2023			2022			2023			2022
Interest income	$	150,537		$	121,384		$	576,299		$	387,257
Interest expense		62,116			19,292			207,252			42,660
Net interest income, non FTE		88,421			102,092			369,047			344,597
Non-interest income
Deposit related fees		8,481			8,293			34,155			32,026
Loan related fees		2,058			2,123			10,595			9,467
Gain on SBA loan sales		2,382			2,979			10,334			12,494
Wealth management fees		2,394			2,255			10,197			10,008
Other		591			(159	)		2,045			6,973
Total non-interest income excluding (losses)/gains		15,906			15,491			67,326			70,968
Fair value adjustments on securities		768			163			513			(2,037	)
(Loss)/gain on sale of AFS securities		(25,057	)		-			(25,057	)		6
Total non-interest income		(8,383	)		15,654			42,782			68,937
Total net revenue		80,038			117,746			411,829			413,534

Provision expense for credit losses		7,000			12,000			31,999			11,000
Non-interest expense
Compensation and benefits		40,095			37,968			159,281			152,741
Occupancy and equipment		8,553			9,431			35,718			37,638
Technology and communications		11,326			9,729			41,878			35,586
Professional services		3,417			3,153			11,643			12,043
Other expenses		11,932			12,350			46,727			41,799
Merger, restructuring and other non-operating expenses		3,669			(2,617	)		6,261			8,909
Total non-interest expense		78,992			70,014			301,508			288,716
Total non-interest expense excluding merger, restructuring and other		75,323			72,631			295,247			279,807

Income before income taxes	$	(5,954	)	$	35,732		$	78,322		$	113,818
Income tax (benefit)/expense		(4,509	)		5,227			8,724			21,285
Net (loss)/income	$	(1,445	)	$	30,505		$	69,598		$	92,533

Basic (loss)/earnings per common share	$	(0.03	)	$	0.69		$	1.61		$	2.03
Diluted (loss)/earnings per common share	$	(0.03	)	$	0.69		$	1.60		$	2.02

Weighted average shares outstanding:
Basic		42,852			44,105			43,288			45,564
Diluted		43,101			44,484			43,504			45,914

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend)

	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
(in thousands, except per share data)	2023			2023			2023			2023			2022
Interest income	$	150,537		$	148,021		$	145,425		$	132,316		$	121,384
Interest expense		62,116			57,687			52,666			34,783			19,292
Net interest income, non FTE		88,421			90,334			92,759			97,533			102,092
Non-interest income
Deposit related fees		8,481			8,792			8,571			8,311			8,293
Loan related fees		2,058			2,879			3,189			2,469			2,123
Gain on SBA loan sales		2,382			2,548			2,910			2,494			2,979
Wealth management fees		2,394			2,481			2,583			2,739			2,255
Other		591			1,232			(137	)		359			(159	)
Total non-interest income excluding (losses)/gains		15,906			17,932			17,116			16,372			15,491
Fair value adjustments on securities		768			(467	)		(22	)		234			163
Loss on sale of AFS securities		(25,057	)		-			-			-			-
Total non-interest income		(8,383	)		17,465			17,094			16,606			15,654
Total net revenue		80,038			107,799			109,853			114,139			117,746

Provision expense for credit losses		7,000			8,000			8,000			8,999			12,000
Non-interest expense
Compensation and benefits		40,095			40,155			39,960			39,071			37,968
Occupancy and equipment		8,553			8,816			8,970			9,379			9,431
Technology and communications		11,326			10,616			10,465			9,471			9,729
Professional services		3,417			2,423			2,526			3,277			3,153
Other expenses		11,932			11,896			12,106			10,793			12,350
Merger, restructuring and other non-operating expenses		3,669			2,607			21			(36	)		(2,617	)
Total non-interest expense		78,992			76,513			74,048			71,955			70,014
Total non-interest expense excluding merger, restructuring and other		75,323			73,906			74,027			71,991			72,631


Income before income taxes	$	(5,954	)	$	23,286		$	27,805		$	33,185		$	35,732
Income tax (benefit)/expense		(4,509	)		3,741			3,944			5,548			5,227
Net (loss)/income	$	(1,445	)	$	19,545		$	23,861		$	27,637		$	30,505

Diluted (loss)/earnings per common share	$	(0.03	)	$	0.45		$	0.55		$	0.63		$	0.69

Weighted average shares outstanding:
Basic		42,852			43,164			43,443			43,693			44,105
Diluted		43,101			43,347			43,532			44,036			44,484

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS

	Quarters Ended
	December 31, 2023							September 30, 2023							December 31, 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	$	4,469	$	74		6.45	%	$	4,385	$	71		6.32	%	$	3,934	$	55		5.46	%
Commercial and industrial loans		1,367		26		7.60			1,436		27		7.48			1,471		25		6.62
Residential mortgages		2,656		27		4.06			2,618		26		3.97			2,114		19		3.56
Consumer loans		498		9		7.31			513		9		7.33			563		10		7.00
Total loans		8,990		136		5.97			8,952		133		5.88			8,082		109		5.28
Securities (2)		2,080		12		2.40			2,171		13		2.40			2,294		13		2.20
Short-term investments and loans HFS		350		4		4.22			267		3		4.76			267		2		3.05
Total earning assets		11,420		152		5.26			11,390		149		5.19			10,643		123		4.56
Goodwill and other intangible assets		20							21							25
Other assets		422							449							406
Total assets	$	11,862						$	11,860							11,074

Liabilities and shareholders' equity
Non-interest-bearing demand deposits	$	2,488	$	0		-	%	$	2,553	$	0		-	%	$	2,876	$	0		-	%
NOW and other		833		3		1.38			858		2		1.15			1,395		4		1.11
Money market		2,995		23		3.08			2,697		18		2.69			2,819		8		1.16
Savings		1,062		2		0.90			1,082		2		0.77			1,086		-		0.03
Time		2,558		25		3.77			2,440		22		3.43			1,555		5		1.21
Total deposits		9,936		53		2.11			9,630		44		1.81			9,731		17		0.69
Borrowings (3)		668		9		5.45			1,010		14		5.32			169		2		5.56
Total funding liabilities		10,604		62		2.32			10,640		58		2.15			9,900		19		0.77

Other liabilities		292							232							208
Total liabilities		10,896							10,872							10,108

Common shareholders' equity (4)		966							988							966
Total shareholders' equity		966							988							966
Total liabilities and shareholders' equity	$	11,862						$	11,860							11,074
Net interest margin, FTE						3.11							3.18							3.84

Supplementary data
Net Interest Income, non FTE		88.421							90.334							102.092
FTE income adjustment		2.021							1.980							1.845
Net Interest Income, FTE		90.442							92.314							103.937

(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.

(4) Unrealized gains and losses, net of tax, are included in average equity. Prior period balances and financial metrics have been updated to reflect the current presentation.

ASSET QUALITY ANALYSIS

	At or for the Quarters Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
(in thousands)	2023			2023			2023			2023			2022
NON-PERFORMING ASSETS
Commercial real estate	$	4,453		$	5,288		$	1,509		$	2,546		$	2,434
Commercial and industrial loans		8,712			11,028			15,597			12,155			17,023
Residential mortgages		6,404			8,060			8,722			9,442			8,612
Consumer loans		1,838			2,260			2,560			2,848			3,045
Total non-performing loans		21,407			26,636			28,388			26,991			31,114
Repossessed assets		2,601			2,548			2,549			2,462			2,209
Total non-performing assets	$	24,008		$	29,184		$	30,937		$	29,453		$	33,323

Total non-performing loans/total loans		0.24	%		0.30	%		0.32	%		0.31	%		0.37	%
Total non-performing assets/total assets		0.19	%		0.24	%		0.26	%		0.24	%		0.29	%

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period	$	102,792		$	100,219		$	97,991		$	96,270		$	96,013
Adoption of ASU No. 2022-02		-			-			-			(401	)		-
Balance after adoption of ASU No. 2022-02		102,792			100,219			97,991			95,869			96,013
Charged-off loans		(6,891	)		(6,744	)		(7,686	)		(7,936	)		(12,995	)
Recoveries on charged-off loans		2,456			1,317			1,914			1,059			1,252
Net loans charged-off		(4,435	)		(5,427	)		(5,772	)		(6,877	)		(11,743	)
Provision (benefit)/expense for loan credit losses		7,000			8,000			8,000			8,999			12,000
Balance at end of period	$	105,357		$	102,792		$	100,219		$	97,991		$	96,270

Allowance for credit losses/total loans		1.17	%		1.14	%		1.13	%		1.13	%		1.15	%
Allowance for credit losses/non-performing loans		492	%		386	%		353	%		363	%		309	%

NET LOAN CHARGE-OFFS
Commercial real estate	$	316		$	97		$	664		$	122		$	187
Commercial and industrial loans		(2,309	)		(3,345	)		(4,146	)		(5,695	)		(10,914	)
Residential mortgages		55			23			(143	)		305			192
Home equity		83			208			126			16			(128	)
Auto and other consumer		(2,580	)		(2,410	)		(2,273	)		(1,625	)		(1,080	)
Total, net	$	(4,435	)	$	(5,427	)	$	(5,772	)	$	(6,877	)	$	(11,743	)

Net charge-offs (QTD annualized)/average loans		0.20	%		0.24	%		0.26	%		0.32	%		0.58	%
Net charge-offs (YTD annualized)/average loans		0.26	%		0.28	%		0.29	%		0.32	%		0.27	%

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	$	22,140		0.24	%	$	18,700		0.21	%	$	15,147		0.17	%	$	14,210		0.16	%	$	12,162		0.15	%
90+ Days delinquent and still accruing		5,537		0.06	%		5,744		0.06	%		7,812		0.09	%		6,937		0.08	%		7,038		0.08	%
Total accruing delinquent loans		27,677		0.30	%		24,444		0.27	%		22,959		0.26	%		21,147		0.24	%		19,200		0.23	%
Non-performing loans		21,407		0.24	%		26,636		0.30	%		28,399		0.32	%		26,991		0.31	%		31,114		0.37	%
Total delinquent and non-performing loans	$	49,084		0.54	%	$	51,080		0.57	%	$	51,358		0.58	%	$	48,138		0.55	%	$	50,314		0.60	%

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP operating earnings can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP operating earnings information set forth is not necessarily comparable to non- GAAP information which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company’s GAAP financial information.

The Company utilizes the non-GAAP measure of operating earnings in evaluating operating trends, including components for operating revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations. These items primarily include restructuring costs. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch consolidations.

The Company also calculates operating earnings per share based on its measure of operating earnings and diluted common shares. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to merger and acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company’s performance. Adjustments in 2023 were primarily related to branch consolidations, severance charges related to a workforce reduction, and loss on sale of AFS securities. Expense adjustments in 2022 were primarily related to branch consolidations. For 2022, fair value adjustments on securities were primarily due to unrealized equity securities losses due to changes in market conditions. Starting March 31, 2023 fair value adjustments on securities are included in operating income.

Management believes that the computation of non-GAAP operating earnings and operating earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA

		At or for the Quarters Ended
		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
(in thousands)		2023			2023			2023			2023			2022
Total non-interest income		$	(8,383	)	$	17,465		$	17,094		$	16,606		$	15,654
Adj: Fair value adjustments on securities (1)			-			-			-			-			(163	)
Adj: Loss on sale of AFS securities			25,057			-			-			-			-
Total operating non-interest income (2)		$	16,674		$	17,465		$	17,094		$	16,606		$	15,491

Total revenue	(A)	$	80,038		$	107,799		$	109,853		$	114,139		$	117,746
Adj: Fair value adjustments on securities (1)			-			-			-			-			(163	)
Adj: Loss on sale of AFS securities			25,057			-			-			-			-
Total operating revenue (2)	(B)	$	105,095		$	107,799		$	109,853		$	114,139		$	117,583

Total non-interest expense	(C)	$	78,992		$	76,513		$	74,048		$	71,955		$	70,014
Adj: Merger, restructuring and other non-operating expenses			(3,669	)		(2,607	)		(21	)		36			2,617
Operating non-interest expense (2)	(D)	$	75,323		$	73,906		$	74,027		$	71,991		$	72,631

Pre-tax, pre-provision net revenue (PPNR)	(A-C)	$	1,046		$	31,286		$	35,805		$	42,184		$	47,732
Operating pre-tax, pre-provision net revenue (PPNR) (2)	(B-D)		29,772			33,893			35,826			42,148			44,952

Net (loss)/income		$	(1,445	)	$	19,545		$	23,861		$	27,637		$	30,505
Adj: Fair value adjustments on securities (1)			-			-			-			-			(163	)
Adj: Loss on sale of AFS securities			25,057			-			-			-			-
Adj: Restructuring expense and other non-operating expenses			3,669			2,607			21			(36	)		(2,617	)
Adj: Income taxes (expense)/benefit			(7,091	)		(636	)		(4	)		7			529
Total operating income (2)	(E)	$	20,190		$	21,516		$	23,878		$	27,608		$	28,254

(in millions, except per share data)
Total average assets	(F)	$	11,862		$	11,860		$	12,057		$	11,569		$	11,074
Total average shareholders' equity, including unrealized losses on AFS securities	(G)		966			988			1,004			978			966
Total average shareholders' equity, excluding unrealized losses on AFS securities	(H)		1,240			1,231			1,221			1,214			1,213
Total average tangible shareholders' equity, including unrealized losses on AFS securities (2)	(I)		946			967			981			954			941
Total average tangible shareholders' equity, excluding unrealized losses on AFS securities (2)	(J)		1,220			1,210			1,198			1,190			1,188
Total accumulated other comprehensive (loss) net of tax, end of period			(143	)		(218	)		(186	)		(159	)		(181	)
Total tangible shareholders' equity, end of period (2)	(K)		993			930			951			972			930
Total tangible assets, end of period (2)	(L)		12,411			12,119			12,068			12,297			11,638

Total common shares outstanding, end of period (thousands)	(M)		43,501			43,822			44,033			44,411			44,361
Average diluted shares outstanding (thousands)	(N)		43,101			43,347			43,532			44,036			44,484

Earnings per common share, diluted (2)		$	(0.03	)	$	0.45		$	0.55		$	0.63		$	0.69
Operating earnings per common share, diluted (2)	(E/N)		0.47			0.50			0.55			0.63			0.64
Tangible book value per common share, end of period (2)	(K/M)		22.82			21.23			21.60			21.89			20.95
Total tangible shareholders' equity/total tangible assets (2)	(K/L)		8.00			7.68			7.88			7.91			7.99

Performance ratios (3)
Return on equity, including unrealized losses on AFS securities			(0.60	)%		7.91	%		9.51	%		11.31	%		12.63	%
Return on equity, excluding unrealized losses on AFS securities			(0.47	)		6.35			7.82			9.11			10.06
Operating return on equity, including unrealized losses on AFS securities (2)	(E/G)		8.36			8.71			9.51			11.30			11.70
Operating return on equity, excluding unrealized losses on AFS securities	(E/H)		6.51			6.99			7.82			9.10			9.32
Return on tangible common equity, including unrealized losses on AFS securities (2)(4)			(0.24	)		8.45			10.09			11.96			13.36
Return on tangible common equity, excluding unrealized losses on AFS securities (2)(4)			(0.18	)		6.76			8.26			9.59			10.59
Operating return on tangible common equity, including unrealized losses on AFS securities (2)(4)	(E+Q)/(I)		8.90			9.27			10.09			11.96			12.40
Operating return on tangible common equity, excluding unrealized losses on AFS securities (2)(4)	(E+Q)/(J)		6.91			7.41			8.27			9.59			9.83
Return on assets			(0.05	)		0.66			0.79			0.96			1.10
Operating return on assets (2)	(E/F)		0.68			0.73			0.79			0.95			1.02
Efficiency ratio (2)	(D-Q)/(B+O+R)		67.77			65.05			63.57			59.51			58.25


Supplementary data (in thousands)
Tax benefit on tax-credit investments (5)	(O)	$	2,252		$	1,979		$	2,735		$	2,897		$	3,068
Non-interest income tax-credit investments amortization (6)	(P)		(2,060	)		(1,463	)		(2,210	)		(2,285	)		(2,355	)
Net income on tax-credit investments	(O+P)		193			516			525			612			713

Intangible amortization	(Q)	$	1,205		$	1,205		$	1,205		$	1,205		$	1,277
Fully taxable equivalent income adjustment	(R)		2,021			1,980			1,962			1,908			1,845

(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