EX-99.1 2 tm2328592d1_99-1.htm EXHIBIT 99.1

Exhibit 99.1

Berkshire Hills Reports Third Quarter Net Income of $20 Million,

or $0.45 Earnings per Share

Operating Income of $22 Million, or $0.50 per Share

●

Average loan growth of 2% linked quarter; average deposit growth of 1%

●

Operating expense flat linked quarter

●

Net loan charge-offs decreased $0.3 million linked quarter

●

TCE ratio of 7.7% and CET1 ratio of 12.1%; stock repurchases were $4 million

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

	Three Months Ended
($ in millions, except per share data)	Sep. 30, 2023			Jun. 30, 2023			Sep. 30, 2022
Net income	$	19.5		$	23.9		$	18.7
Per share		0.45			0.55			0.42
Operating earnings¹		21.5			23.9			27.9
Per share		0.50			0.55			0.62

Net interest income, non FTE	$	90.3		$	92.8		$	92.1
Net interest income, FTE		92.3			94.7			93.8
Net interest margin, FTE		3.18	%		3.24	%		3.48	%
Non-interest income		17.5			17.1			16.3
Operating non-interest income¹		17.5			17.1			16.7

Non-interest expense	$	76.5		$	74.0		$	81.7
Operating non-interest expense¹		73.9			74.0			70.2
Efficiency ratio¹		65.1	%		63.6	%		62.0	%

Average balances
Loans	$	8,952		$	8,791		$	7,888
Deposits		9,630			9,568			9,669

Period-end balances
Loans		8,984			8,882			7,943
Deposits		9,981			10,068			9,988

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

Berkshire CEO Nitin Mhatre stated, “We continue to make steady progress in a challenging interest rate environment. We posted modest balance sheet growth in the quarter and recorded higher year-to-date net income and operating earnings compared to last year. Economic activity continues to expand in our markets albeit at a slower pace, and our teams are generating attractive new business and improving the Bank’s market position. We maintained strong asset quality, liquidity and capital levels, and continued expense optimization initiatives. During the quarter, we continued to recruit experienced talent following the industry disruption, and we also welcomed Mary Anne Callahan to our Board of Directors. Mary Anne brings a deep industry knowledge and has close familiarity with our markets.”

CFO David Rosato added, “Third quarter operating earnings were $21.5 million, decreasing $2.4 million linked quarter. Net interest margin of 3.18 percent decreased 6 basis points linked quarter, which improved from the 34 basis point decrease posted in the prior quarter. Net interest income decreased $2.4 million, as funding cost increases outpaced loan yield expansion and average earning assets decreased 2%. Operating non-interest income advanced 2 percent quarter-over-quarter while operating non-interest expense was flat. GAAP non-interest expense included $2.6 million in non-operating restructuring charges primarily for branch consolidations. I’m pleased that several of the cost saving initiatives we’ve instituted to-date are starting to have an impact and will continue to provide benefits in 2024 and beyond.”

	As of and For the Three Months Ended
	Sep. 30, 2023			Jun. 30, 2023			Sep. 30, 2022
Asset Quality
Net loan charge-offs to average loans		0.24	%		0.26	%		0.30	%
Non-performing loans to total loans		0.30	%		0.32	%		0.48	%

Returns
Return on average assets		0.66	%		0.79	%		0.67	%
Return on tangible common equity, including unrealized losses on AFS securities ¹		8.45	%		10.09	%		7.88	%
Return on tangible common equity, excluding unrealized losses on AFS securities ¹		6.76	%		8.26	%		6.76	%

Capital Ratios²
Tangible common equity/tangible assets¹		7.7	%		7.9	%		8.1	%
Tier 1 leverage		9.8	%		9.6	%		10.1	%
Common equity Tier 1		12.1	%		12.1	%		12.7	%
Tier 1 risk-based		12.4	%		12.3	%		13.0	%
Total risk-based		14.4	%		14.4	%		15.1	%

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 September 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 total assets and a community-based footprint of 96 financial centers in Massachusetts, New York, Vermont, Connecticut and Rhode Island. Access more information about Berkshire Hills Bancorp at ir.berkshirebank.com.

3Q 2023 Financial Highlights

Income Statement

●

GAAP earnings totaled $19.5 million, or $0.45 per share.

Operating earnings totaled $21.5 million, or $0.50 per share.

●

Net interest income totaled $90.3 million in 3Q23 compared to $92.8 million in 2Q23.

One additional calendar day in 3Q23 (1% increase in net interest income).

●

Net interest margin decreased 6 basis points from 2Q23 to 3.18% reflecting:

Higher cost of funds (increase of 21 basis points).

●

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

Higher yields on the loan portfolio (increase of 11 basis points).

●

Provision for credit losses on loans totaled $8.0 million.

Allowance for credit losses on loans increased $2.6 million.

Net loan charge-offs totaled $5.4 million.

Net annualized loan charge-off ratio of 0.24%.

●

Non-interest income totaled $17.5 million in 3Q23 compared to $17.1 million in 2Q23.

Deposit related fee revenue increased $221 thousand.

Loan related non-interest revenue decreased $310 thousand.

Gain on SBA loan sales decreased $362 thousand.

Wealth management revenue decreased $102 thousand. At September 30, 2023, wealth assets under management were $1.4 billion.

Other non-interest income increased $1.4 million due primarily to lower tax credit amortization charges (offset by lower income tax benefit).

●

Non-interest expense in 3Q23 totaled $76.5 million on a GAAP basis and $73.9 million on an operating basis. Both GAAP and operating non-interest expense in 2Q23 totaled $74.0 million.

Non-operating expense totaled $2.6 million in 3Q23, and was primarily related to the consolidation of four Massachusetts branches.

Compensation and benefits expense increased $195 thousand.

Occupancy and equipment expense decreased $154 thousand.

Technology and communications expense increased $151 thousand.

Professional services expense decreased $103 thousand.

The efficiency ratio was 65.1% for 3Q23 compared to 63.6% for 2Q23.

●

The effective income tax rate was 16.1% for 3Q23 and 15.7% for the first nine months of 2023 compared to 18.7% for the full year of 2022.

Loans

●

Commercial real estate loans totaled $4.5 billion at September 30, 2023, a $138 million increase from June 30, 2023.

Average commercial real estate loans totaled $4.4 billion in 3Q23, a $102 million increase from 2Q23.

●

Commercial and industrial loans totaled $1.4 billion at September 30, 2023, an $81 million decrease from June 30, 2023.

Average commercial and industrial loans totaled $1.4 billion in 3Q23, a $60 million decrease from 2Q23.

●

Residential mortgage loans totaled $2.6 billion at September 30, 2023, a $55 million increase from June 30, 2023.

Average residential mortgage loans totaled $2.6 billion in 3Q23, a $129 million increase from 2Q23.

●

Consumer loans totaled $507 million at September 30, 2023, an $11 million decrease from June 30, 2023.

Average consumer loans totaled $513 million in 3Q23, an $11 million decrease from 2Q23.

●

Non-performing loans to total loans was 0.30% at September 30, 2023 compared to 0.32% at June 30, 2023.

●

The allowance for credit losses to total loans was 1.14% at September 30, 2023, compared to 1.13% at June 30, 2023

Deposits

●

Non-interest bearing deposits totaled $2.5 billion at September 30, 2023, a $64 million decrease from June 30, 2023.

Average non-interest bearing deposits totaled $2.6 billion in 3Q23, a $41 million decrease from 2Q23.

●

Time deposits totaled $2.4 billion at September 30, 2023, $10 million increase from June 30, 2023.

Average time deposits totaled $2.4 billion in 3Q23, a $154 million increase from 2Q23.

3Q 2023 ESG & Corporate Responsibility Highlights

Berkshire is a performance and purpose-driven, values-guided, community-centered bank. Berkshire’s corporate responsibility and sustainability activities are integral to its mission.

	●	Berkshire launched a new Down Payment Assistance Program to increase homeownership amongst low-to-moderate income and first-time homebuyers.
	●	Berkshire’s annual Xtraordinary Day of Service featured 47 volunteer events in which more than 1,000 employees contributed 4,000 hours of service to lift-up local communities.
	●	Berkshire maintained its top quartile ESG rating performance and was named a Top Charitable Contributor by the Boston Business Journal for the 11^th consecutive year.

Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. eastern time on Friday, October 20, 2023 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		MEDIA CONTACT
Kevin Conn		Gary Levante
Investor Relations		Corporate Communications
617.641.9206		413.447.1737
kaconn@berkshirebank.com		glevante@berkshirebank.com

###

SELECTED FINANCIAL HIGHLIGHTS (1)

	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
	2023			2023			2023			2022			2022
NOMINAL AND PER SHARE DATA
Net earnings per common share, diluted	$	0.45		$	0.55		$	0.63		$	0.69		$	0.42
Operating earnings per common share, diluted (2)(3)		0.50			0.55			0.63			0.64			0.62
Net income, (thousands)		19,545			23,861			27,637			30,505			18,717
Operating net income, (thousands) (2)(3)		21,516			23,878			27,608			28,254			27,928
Net interest income, (thousands) non FTE		90,334			92,759			97,533			102,092			92,084
Net interest income, FTE (5)		92,314			94,721			99,441			103,937			93,799
Total common shares outstanding, end of period (thousands)		43,822			44,033			44,411			44,361			45,040
Average diluted shares, (thousands)		43,347			43,532			44,036			44,484			45,034
Total book value per common share, end of period		21.70			22.11			22.42			21.51			20.93
Tangible book value per common share, end of period (2)(3)		21.23			21.60			21.89			20.95			20.36
Dividends per common share		0.18			0.18			0.18			0.18			0.12
Dividend payout ratio		40.56	%		33.47	%		28.98	%		26.59	%		29.35

PERFORMANCE RATIOS (4)
Return on equity, including unrealized losses on AFS securities		7.91	%		9.51	%		11.31	%		12.63	%		7.31
Return on equity, excluding unrealized losses on AFS securities		6.35			7.82			9.11			10.06			6.30
Operating return on equity, including unrealized losses on AFS securities (2)(3)		8.71			9.51			11.30			11.70			10.92
Operating return on equity, excluding unrealized losses on AFS securities (2)(3)		6.99			7.82			9.10			9.32			9.40
Return on tangible common equity, including unrealized losses on AFS securities (2)(3)		8.45			10.09			11.96			13.36			7.88
Return on tangible common equity, excluding unrealized losses on AFS securities (2)(3)		6.76			8.26			9.59			10.59			6.76
Operating return on tangible common equity, including unrealized losses on AFS securities (2)(3)		9.27			10.09			11.96			12.40			11.57
Operating return on tangible common equity, excluding unrealized losses on AFS securities (2)(3)		7.41			8.27			9.59			9.83			9.92
Return on assets		0.66			0.79			0.96			1.10			0.67
Operating return on assets (2)(3)		0.73			0.79			0.95			1.02			1.00
Net interest margin, FTE (5)		3.18			3.24			3.58			3.84			3.48
Efficiency ratio (3)		65.05			63.57			59.51			58.25			62.01

FINANCIAL DATA (in millions, end of period)
Total assets	$	12,140		$	12,090		$	12,320		$	11,663		$	11,317
Total earning assets		11,400			11,370			11,615			10,913			10,604
Total loans		8,984			8,882			8,682			8,335			7,943
Total deposits		9,981			10,068			10,068			10,327			9,988
Loans/deposits (%)		90	%		88	%		86	%		81	%		80
Total accumulated other comprehensive (loss) net of tax, end of period	$	(218	)	$	(186	)	$	(159	)	$	(181	)	$	(188	)
Total shareholders' equity		951			973			995			954			943

ASSET QUALITY
Allowance for credit losses, (millions)	$	103		$	100		$	98		$	96		$	96
Net charge-offs, (millions)		(5	)		(6	)		(7	)		(12	)		(6	)
Net charge-offs (QTD annualized)/average loans		0.24	%		0.26	%		0.32	%		0.58	%		0.30
Provision expense, (millions)	$	8		$	8		$	9		$	12		$	3
Non-performing assets, (millions)		29			31			29			33			40
Non-performing loans/total loans		0.30	%		0.32	%		0.31	%		0.37	%		0.48
Allowance for credit losses/non-performing loans		386			353			363			309			254
Allowance for credit losses/total loans		1.14			1.13			1.13			1.15			1.21

CAPITAL RATIOS
Risk weighted assets, (millions)(6)	$	9,581		$	9,523		$	9,454		$	9,151		$	8,823
Common equity Tier 1 capital to risk weighted assets (6)		12.1	%		12.1	%		12.1	%		12.4	%		12.7
Tier 1 capital leverage ratio (6)		9.8			9.6			9.9			10.2			10.1
Tangible common shareholders' equity/tangible assets (3)		7.7			7.9			7.9			8.0			8.1

(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 September 30, 2023 and actual for the remaining periods.

CONSOLIDATED BALANCE SHEETS

	September 30,			June 30,			December 31,			September 30,
(in thousands)	2023			2023			2022			2022
Assets
Cash and due from banks	$	120,634		$	120,285		$	145,342		$	128,509
Short-term investments		542,836			520,315			540,013			566,404
Total cash and cash equivalents		663,470			640,600			685,355			694,913

Trading securities, at fair value		6,171			6,405			6,708			6,812
Equity securities, at fair value		12,325			12,868			12,856			12,790
Securities available for sale, at fair value		1,260,391			1,340,331			1,423,200			1,470,949
Securities held to maturity, at amortized cost		552,981			563,765			583,453			592,503
Federal Home Loan Bank stock		38,912			34,714			7,219			7,264
Total securities		1,870,780			1,958,083			2,033,436			2,090,318
Less: Allowance for credit losses on investment securities		(69	)		(71	)		(91	)		(95	)
Net securities		1,870,711			1,958,012			2,033,345			2,090,223

Loans held for sale		2,342			8,708			4,311			4,124

Commercial real estate loans		4,453,573			4,315,202			4,095,079			3,902,422
Commercial and industrial loans		1,384,038			1,464,922			1,473,316			1,435,070
Residential mortgages		2,640,210			2,584,959			2,216,410			2,032,899
Consumer loans		506,556			517,319			550,504			573,090
Total loans		8,984,377			8,882,402			8,335,309			7,943,481
Less: Allowance for credit losses on loans		(102,792	)		(100,219	)		(96,270	)		(96,013	)
Net loans		8,881,585			8,782,183			8,239,039			7,847,468

Premises and equipment, net		70,042			76,903			85,217			86,809
Other intangible assets		20,869			22,074			24,483			25,761
Other assets		619,777			593,621			587,854			563,946
Assets held for sale		11,157			8,220			3,260			3,830
Total assets	$	12,139,953		$	12,090,321		$	11,662,864		$	11,317,074

Liabilities and shareholders' equity
Non-interest bearing deposits	$	2,530,441		$	2,594,528		$	2,852,127		$	2,896,659
NOW and other deposits		843,032			944,775			1,054,596			1,045,970
Money market deposits		3,075,307			3,005,081			3,723,570			3,388,932
Savings deposits		1,086,329			1,088,405			1,063,269			1,111,304
Time deposits		2,445,435			2,435,618			1,633,707			1,545,256
Total deposits		9,980,544			10,068,407			10,327,269			9,988,121

Federal Home Loan Bank advances		804,295			674,345			4,445			4,494
Subordinated borrowings		121,300			121,238			121,064			121,001
Total borrowings		925,595			795,583			125,509			125,495

Other liabilities		282,805			252,950			256,024			260,896
Total liabilities		11,188,944			11,116,940			10,708,802			10,374,512

Common shareholders' equity		951,009			973,381			954,062			942,562
Total shareholders' equity		951,009			973,381			954,062			942,562
Total liabilities and shareholders' equity	$	12,139,953		$	12,090,321		$	11,662,864		$	11,317,074

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands, except per share data)	2023			2022			2023			2022
Interest income	$	148,021		$	103,671		$	425,762		$	265,873
Interest expense		57,687			11,587			145,136			23,368
Net interest income, non FTE		90,334			92,084			280,626			242,505
Non-interest income
Deposit related fees		8,792			8,377			25,674			23,733
Loan fees and other		2,879			1,292			8,537			7,344
Gain on SBA loan sales		2,548			2,551			7,952			9,515
Wealth management fees		2,481			2,353			7,803			7,753
Other		1,232			2,154			1,454			7,132
Total non-interest income excluding (losses)/gains		17,932			16,727			51,420			55,477
Fair value adjustments on securities		(467	)		(476	)		(255	)		(2,194	)
Total non-interest income		17,465			16,251			51,165			53,283
Total net revenue		107,799			108,335			331,791			295,788

Provision expense/(benefit) for credit losses		8,000			3,000			24,999			(1,000	)
Non-interest expense
Compensation and benefits		40,155			39,422			119,186			114,773
Occupancy and equipment		8,816			8,702			27,165			28,207
Technology and communications		10,616			8,719			30,552			25,857
Professional services		2,423			3,285			8,226			8,890
Other expenses		11,896			10,076			34,795			29,449
Merger, restructuring and other non-operating expenses		2,607			11,473			2,592			11,526
Total non-interest expense		76,513			81,677			222,516			218,702
Total non-interest expense excluding merger, restructuring and other		73,906			70,204			219,924			207,176

Income before income taxes	$	23,286		$	23,658		$	84,276		$	78,086
Income tax expense		3,741			4,941			13,233			16,058
Net income	$	19,545		$	18,717		$	71,043		$	62,028

Basic earnings per common share	$	0.45		$	0.42		$	1.64		$	1.35
Diluted earnings per common share	$	0.45		$	0.42		$	1.63		$	1.34

Weighted average shares outstanding:
Basic		43,164			44,700			43,435			46,056
Diluted		43,347			45,034			43,640			46,396

CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend)

	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
(in thousands, except per share data)	2023			2023			2023			2022			2022
Interest income	$	148,021		$	145,425		$	132,316		$	121,384		$	103,671
Interest expense		57,687			52,666			34,783			19,292			11,587
Net interest income, non FTE		90,334			92,759			97,533			102,092			92,084
Non-interest income
Deposit related fees		8,792			8,571			8,311			8,293			8,377
Loan fees and other		2,879			3,189			2,469			2,123			1,292
Gain on SBA loan sales		2,548			2,910			2,494			2,979			2,551
Wealth management fees		2,481			2,583			2,739			2,255			2,353
Other		1,232			(137	)		359			(159	)		2,154
Total non-interest income excluding (losses)/gains		17,932			17,116			16,372			15,491			16,727
Fair value adjustments on securities		(467	)		(22	)		234			163			(476	)
Total non-interest income		17,465			17,094			16,606			15,654			16,251
Total net revenue		107,799			109,853			114,139			117,746			108,335

Provision expense for credit losses		8,000			8,000			8,999			12,000			3,000
Non-interest expense
Compensation and benefits		40,155			39,960			39,071			37,968			39,422
Occupancy and equipment		8,816			8,970			9,379			9,431			8,702
Technology and communications		10,616			10,465			9,471			9,729			8,719
Professional services		2,423			2,526			3,277			3,153			3,285
Other expenses		11,896			12,106			10,793			12,350			10,076
Merger, restructuring and other non-operating expenses		2,607			21			(36	)		(2,617	)		11,473
Total non-interest expense		76,513			74,048			71,955			70,014			81,677
Total non-interest expense excluding merger, restructuring and other		73,906			74,027			71,991			72,631			70,204

Income before income taxes	$	23,286		$	27,805		$	33,185		$	35,732		$	23,658
Income tax expense		3,741			3,944			5,548			5,227			4,941
Net income	$	19,545		$	23,861		$	27,637		$	30,505		$	18,717

Diluted earnings per common share	$	0.45		$	0.55		$	0.63		$	0.69		$	0.42

Weighted average shares outstanding:
Basic		43,164			43,443			43,693			44,105			44,700
Diluted		43,347			43,532			44,036			44,484			45,034

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS

	Quarters Ended
	September 30, 2023							June 30, 2023							September 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	$	4,385	$	71		6.32	%	$	4,283	$	67		6.16	%	$	3,926	$	46		4.53	%
Commercial and industrial loans		1,436		27		7.48			1,496		27		7.27			1,449		19		5.21
Residential mortgages		2,618		26		3.97			2,488		24		3.87			1,926		17		3.53
Consumer loans		513		9		7.33			524		9		7.28			587		9		6.24
Total loans		8,952		133		5.88			8,791		127		5.77			7,888		91		4.54
Securities (2)		2,171		13		2.40			2,236		13		2.27			2,400		13		2.13
Short-term investments and loans HFS		267		3		4.76			560		7		4.94			342		2		1.96
Total earning assets		11,390		149		5.19			11,587		147		5.05			10,630		106		3.91
Goodwill and other intangible assets		21							22							26
Other assets		449							448							494
Total assets	$	11,860						$	12,057						$	11,150

Liabilities and shareholders' equity
Non-interest-bearing demand deposits	$	2,553	$	0		-	%	$	2,594	$	0		-	%	$	2,913	$	0		-	%
NOW and other		858		2		1.15			1,055		4		1.35			1,362		2		0.48
Money market		2,697		18		2.69			2,555		14		2.13			2,737		3		0.46
Savings		1,082		2		0.77			1,077		-		0.50			1,129		0		0.03
Time		2,440		22		3.43			2,287		18		3.07			1,528		3		0.85
Total deposits		9,630		44		1.81			9,568		36		1.51			9,669		8		0.48
Borrowings (3)		1,010		14		5.32			1,288		17		5.14			251		4		5.46
Total funding liabilities		10,640		58		2.15			10,856		53		1.94			9,920		12		0.66

Other liabilities		232							197							206
Total liabilities		10,872							11,053							10,126

Common shareholders' equity (4)		988							1,004							1,024
Total shareholders' equity		988							1,004							1,024
Total liabilities and shareholders' equity	$	11,860						$	12,057						$	11,150
Net interest margin, FTE						3.18							3.24							3.48

Supplementary data
Net Interest Income, non FTE		90.334							92.759							92.084
FTE income adjustment		1.980							1.962							1.715
Net Interest Income, FTE		92.314							94.721							93.799

(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) As of September 30, 2023 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

	Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
(in thousands)	2023			2023			2023			2022			2022
NON-PERFORMING ASSETS
Commercial real estate	$	5,288		$	1,509		$	2,546		$	2,434		$	2,976
Commercial and industrial loans		11,028			15,597			12,155			17,023			21,008
Residential mortgages		8,060			8,722			9,442			8,612			10,407
Consumer loans		2,260			2,560			2,848			3,045			3,463
Total non-performing loans		26,636			28,388			26,991			31,114			37,854
Repossessed assets		2,548			2,549			2,462			2,209			2,175
Total non-performing assets	$	29,184		$	30,937		$	29,453		$	33,323		$	40,029

Total non-performing loans/total loans		0.30	%		0.32	%		0.31	%		0.37	%		0.48	%
Total non-performing assets/total assets		0.24	%		0.26	%		0.24	%		0.29	%		0.35	%

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period	$	100,219		$	97,991		$	96,270		$	96,013		$	99,021
Adoption of ASU No. 2022-02		-			-			(401	)		-			-
Balance after adoption of ASU No. 2022-02		100,219			97,991			95,869			96,013			99,021
Charged-off loans		(6,744	)		(7,686	)		(7,936	)		(12,995	)		(7,424	)
Recoveries on charged-off loans		1,317			1,914			1,059			1,252			1,416
Net loans charged-off		(5,427	)		(5,772	)		(6,877	)		(11,743	)		(6,008	)
Provision (benefit)/expense for loan credit losses		8,000			8,000			8,999			12,000			3,000
Balance at end of period	$	102,792		$	100,219		$	97,991		$	96,270		$	96,013

Allowance for credit losses/total loans		1.14	%		1.13	%		1.13	%		1.15	%		1.21	%
Allowance for credit losses/non-performing loans		386	%		353	%		363	%		309	%		254	%

NET LOAN CHARGE-OFFS
Commercial real estate	$	97		$	664		$	122		$	187		$	(854	)
Commercial and industrial loans		(3,345	)		(4,146	)		(5,695	)		(10,914	)		(4,931	)
Residential mortgages		23			(143	)		305			192			122
Home equity		208			126			16			(128	)		1
Auto and other consumer		(2,410	)		(2,273	)		(1,625	)		(1,080	)		(346	)
Total, net	$	(5,427	)	$	(5,772	)	$	(6,877	)	$	(11,743	)	$	(6,008	)

Net charge-offs (QTD annualized)/average loans		0.24	%		0.26	%		0.32	%		0.58	%		0.30	%
Net charge-offs (YTD annualized)/average loans		0.28	%		0.29	%		0.32	%		0.27	%		0.16	%

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	$	18,700		0.21	%	$	15,147		0.17	%	$	14,210		0.16	%	$	12,162		0.15	%	$	14,662		0.18	%
90+ Days delinquent and still accruing		5,744		0.06	%		7,812		0.09	%		6,937		0.08	%		7,038		0.08	%		6,285		0.08	%
Total accruing delinquent loans		24,444		0.27	%		22,959		0.26	%		21,147		0.24	%		19,200		0.23	%		20,947		0.26	%
Non-performing loans		26,636		0.30	%		28,399		0.32	%		26,991		0.31	%		31,114		0.37	%		37,854		0.48	%
Total delinquent and non-performing loans	$	51,080		0.57	%	$	51,358		0.58	%	$	48,138		0.55	%	$	50,314		0.60	%	$	58,801		0.74	%

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. Expense adjustments in 2023 and 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

		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
(in thousands)		2023			2023			2023			2022			2022
Total non-interest income		$	17,465		$	17,094		$	16,606		$	15,654		$	16,251
Adj: Fair value adjustments on securities (1)			-			-			-			(163	)		476
Total operating non-interest income (2)		$	17,465		$	17,094		$	16,606		$	15,491		$	16,727

Total revenue	(A)	$	107,799		$	109,853		$	114,139		$	117,746		$	108,335
Adj: Fair value adjustments on securities (1)			-			-			-			(163	)		476
Total operating revenue (2)	(B)	$	107,799		$	109,853		$	114,139		$	117,583		$	108,811

Total non-interest expense	(C)	$	76,513		$	74,048		$	71,955		$	70,014		$	81,677
Adj: Merger, restructuring and other non-operating expenses			(2,607	)		(21	)		36			2,617			(11,473	)
Operating non-interest expense (2)	(D)	$	73,906		$	74,027		$	71,991		$	72,631		$	70,204

Pre-tax, pre-provision net revenue (PPNR)	(A-C)	$	31,286		$	35,805		$	42,184		$	47,732		$	26,658
Operating pre-tax, pre-provision net revenue (PPNR) (2)	(B-D)		33,893			35,826			42,148			44,952			38,607

Net income		$	19,545		$	23,861		$	27,637		$	30,505		$	18,717
Adj: Fair value adjustments on securities (1)			-			-			-			(163	)		476
Adj: Restructuring expense and other non-operating expenses			2,607			21			(36	)		(2,617	)		11,473
Adj: Income taxes (expense)/benefit			(636	)		(4	)		7			529			(2,738	)
Total operating income (2)	(E)	$	21,516		$	23,878		$	27,608		$	28,254		$	27,928

(in millions, except per share data)
Total average assets	(F)	$	11,860		$	12,057		$	11,569		$	11,074		$	11,150
Total average shareholders' equity, including unrealized losses on AFS securities	(G)		988			1,004			978			966			1,023
Total average shareholders' equity, excluding unrealized losses on AFS securities	(H)		1,231			1,221			1,214			1,213			1,189
Total average tangible shareholders' equity, including unrealized losses on AFS securities (2)	(I)		967			981			954			941			998
Total average tangible shareholders' equity, excluding unrealized losses on AFS securities (2)	(J)		1,210			1,198			1,190			1,188			1,164
Total accumulated other comprehensive (loss) net of tax, end of period			(218	)		(186	)		(159	)		(181	)		(188	)
Total tangible shareholders' equity, end of period (2)	(K)		930			951			972			930			917
Total tangible assets, end of period (2)	(L)		12,119			12,068			12,297			11,638			11,291

Total common shares outstanding, end of period (thousands)	(M)		43,822			44,033			44,411			44,361			45,040
Average diluted shares outstanding (thousands)	(N)		43,347			43,532			44,036			44,484			45,034

Earnings per common share, diluted (2)		$	0.45		$	0.55		$	0.63		$	0.69		$	0.42
Operating earnings per common share, diluted (2)	(E/N)		0.50			0.55			0.63			0.64			0.62
Tangible book value per common share, end of period (2)	(K/M)		21.23			21.60			21.89			20.95			20.36
Total tangible shareholders' equity/total tangible assets (2)	(K/L)		7.68			7.88			7.91			7.99			8.12

Performance ratios (3)
Return on equity, including unrealized losses on AFS securities			7.91	%		9.51	%		11.31	%		12.63	%		7.31	%
Return on equity, excluding unrealized losses on AFS securities			6.35			7.82			9.11			10.06			6.30
Operating return on equity, including unrealized losses on AFS securities (2)	(E/G)		8.71			9.51			11.30			11.70			10.92
Operating return on equity, excluding unrealized losses on AFS securities	(E/H)		6.99			7.82			9.10			9.32			9.40
Return on tangible common equity, including unrealized losses on AFS securities (2)(4)			8.45			10.09			11.96			13.36			7.88
Return on tangible common equity, excluding unrealized losses on AFS securities (2)(4)			6.76			8.26			9.59			10.59			6.76
Operating return on tangible common equity, including unrealized losses on AFS securities (2)(4)	(E+Q)/(I)		9.27			10.09			11.96			12.40			11.57
Operating return on tangible common equity, excluding unrealized losses on AFS securities (2)(4)	(E+Q)/(J)		7.41			8.27			9.59			9.83			9.92
Return on assets			0.66			0.79			0.96			1.10			0.67
Operating return on assets (2)	(E/F)		0.73			0.79			0.95			1.02			1.00
Efficiency ratio (2)	(D-Q)/(B+O+R)		65.05			63.57			59.51			58.25			62.01

Supplementary data (in thousands)
Tax benefit on tax-credit investments (5)	(O)	$	1,979		$	2,735		$	2,897		$	3,068		$	620
Non-interest income tax-credit investments amortization (6)	(P)		(1,463	)		(2,210	)		(2,285	)		(2,355	)		(445	)
Net income on tax-credit investments	(O+P)		516			525			612			713			175

Intangible amortization	(Q)	$	1,205		$	1,205		$	1,205		$	1,277		$	1,285
Fully taxable equivalent income adjustment	(R)		1,980			1,962			1,908			1,845			1,715

(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.