EX-99.1 2 tm2521563d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

Berkshire Hills Reports Strong Earnings Growth

 

Second Quarter 2025 GAAP EPS $0.66; Operating EPS $0.69

 

·15% increase in operating EPS linked quarter; 25% increase year-over-year
·3% increase in operating revenue linked quarter, 2% decrease in operating non-interest expense
·3.27% net interest margin, 3 bps increase linked quarter and 7 bps year-over-year
·56.7% efficiency ratio; improved from 59.5% linked quarter
·0.48% delinquent and non-performing loans to total loans

 

BOSTON, July 24, 2025 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the second quarter of 2025. These results along with comparison periods are summarized below:

 

($ in millions, except per share data)   Three Months Ended  
    June 30, 2025     Mar. 31, 2025     June 30, 2024  
Net income   $ 30.4     $ 25.7     $ 24.0  
Per share     0.66       0.56       0.57  
Operating earnings1     31.6       27.6       23.2  
Per share     0.69       0.60       0.55  
                         
Net interest income, non FTE   $ 91.9     $ 89.8     $ 88.5  
Net interest income, FTE     93.8       91.7       90.5  
Net interest margin, FTE     3.27 %     3.24 %     3.20 %
Non-interest income   $ 21.8     $ 20.7     $ 20.1  
Operating non-interest income1     21.8       20.7       20.1  
                         
Non-interest expense     68.1       70.4       70.9  
Operating non-interest expense1     66.7       67.9       71.3  
Efficiency ratio1     56.7 %     59.5 %     63.4 %
                         
Average balances                        
Loans   $ 9,484     $ 9,389     $ 9,157  
Deposits     9,817       9,847       9,296  
                         
Period-end balances                        
Loans     9,499       9,429       9,229  
Deposits     9,979       9,880       9,621  
                         
1. See non-GAAP financial measures and reconciliation to GAAP measures beginning on page 12.  

 

1

 

 

Berkshire CEO Nitin Mhatre stated, “Second quarter operating earnings grew 36% year-over-year due to revenue growth and lower expenses. Loans, deposits and the net interest margin increased over the linked quarter, boosting net interest income, and were accompanied by solid non-interest income growth. Quarterly operating revenue has increased sequentially over the last six quarters, growing 8% over this period, including 3% growth linked quarter. Quarterly operating income, operating EPS, and efficiency were the strongest since 2019. Second quarter 2025 operating return on tangible common equity advanced to 10.8%. TIME and Newsweek have once again honored Berkshire with national awards, the former for being one of the top-performing U.S. companies of our size and the latter for being one of the best workplaces in the financial services sector. Following months of preparation among our teams, we look forward to completing our transformative merger of equals with Brookline Bancorp and creating a powerful financial institution serving the Northeast.”

 

“As I reflect on our progress since we began our transformation program in early 2021, I want to express my deepest gratitude to every member of the Berkshire team, our clients and our board of directors. Our bankers’ dedication, resilience, and commitment to our clients have been the driving force behind our improved operating and financial performance. Together, we've navigated challenges, embraced change, and delivered results for our clients, shareholders and communities. I’m incredibly proud of what we’ve accomplished and excited to see what the combined company will achieve next,” added Mhatre. 

 

Berkshire CFO Brett Brbovic stated, “Second quarter net interest income increased 2% linked quarter and the net interest margin increased 3 basis points to 3.27%, benefiting from loan growth and lower deposit cost. Operating non-interest income increased $1.1 million linked quarter. Operating non-interest expense decreased $1.3 million linked quarter and $4.7 million year-over-year. The provision for credit losses decreased $1.5 million linked quarter and the allowance for credit losses on loans was unchanged at 1.24%. Quarterly results were very solid across the board.”

 

   As of and For the Three Months Ended 
   June 30, 2025   Mar. 31, 2025   June 30, 2024 
Asset Quality               
Net loan charge-offs to average loans   0.14%   0.15%   0.07%
Non-performing loans to total loans   0.27%   0.25%   0.23%
                
Returns10               
Return on average assets   1.03%   0.88%   0.82%
Operating return on average assets   1.07%   0.94%   0.79%
Return on tangible common equity   10.35%   9.02%   9.99%
Operating return on tangible common equity   10.76%   9.66%   9.65%
                
Capital1               
Tangible common equity/tangible assets   10.1%   9.9%   8.2%
Book value per share  $26.40   $25.81   $23.58 
Tangible book value per share  $26.12   $25.50   $23.18 
                
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.

 

Berkshire Hills Bancorp, Inc. (NYSE: BHLB) is the parent company of Berkshire Bank, a relationship-driven, community-focused bank with $12.0 billion in assets and 83 financial centers in New England and New York. Berkshire is headquartered in Boston and offers commercial, retail, wealth, and private banking solutions. Berkshire has a pending agreement to merge with Brookline Bancorp, Inc., a multi-bank holding company with $11.6 billion in assets and branches in Massachusetts, Rhode Island, and New York.

 

2

 

 

2Q 2025 Financial Highlights (comparisons are to the linked quarter unless otherwise noted).

 

Income Statement. Second quarter GAAP income was $30 million, or $0.66 per share. Operating earnings totaled $32 million, or $0.69 per share. GAAP results included $1.5 million in primarily merger-related non-operating expenses. Operating earnings increased $4.0 million, or 14%, linked quarter and 36% year-over-year, with ongoing positive operating leverage from operating revenue growth and expense reduction. Reflecting the merger-related share issuance in December 2024, quarterly operating EPS was up 25% year-over-year. The efficiency ratio was 56.7% in the second quarter, improving to the best quarterly result since 2019.

 

Quarterly net interest income increased linked quarter by $2.2 million to $92 million in 2Q25.

 

·The net interest margin increased 3 basis points to 3.27%.

 

○The earning asset yield increased 3 basis points to 5.38%.

 

·The loan yield increased 2 basis points to 5.82%.

 

○The cost of funds decreased 1 basis point to 2.29%

 

·The cost of deposits decreased 3 basis points to 2.15%.

 

·Provision for credit losses totaled $4.0 million, decreasing 1.5 million linked quarter.

 

○Net loan charge-offs totaled $3.3 million, compared to $3.5 million linked quarter.

 

○The annualized loan net charge-off ratio was 0.14% for the quarter and 0.15% year-to-date.

 

·GAAP and operating non-interest income was $22 million, increasing $1.1 million linked quarter primarily due to higher loan related fee income.

 

·Non-interest expense totaled $68 million on a GAAP basis and $67 million on an operating basis. The operating measure decreased $1.3 million linked quarter and $4.7 million year-over-year.

 

○Compensation and occupancy expense decreased $1.8 million from seasonally higher levels in the linked quarter.

 

·The effective tax rate was 27% in 2Q25 compared to 26% in the linked quarter.

 

Loans. Compared to the linked quarter, total loans increased $70 million, or 1%, to $9.5 billion. Growth was primarily in commercial and industrial loans which increased $56 million, or 4%.

 

·The quarter-end allowance for credit losses on loans was unchanged at 1.24% of total loans.

 

○The period-end allowance was 462% of non-performing loans.

 

·Non-performing loans were 0.27% of total loans at period-end.

 

·Delinquent and non-performing loans were 0.48% of total loans at period-end.

 

Deposits. Compared to the linked quarter, total end of period deposits increased $99 million, or 1%, to $10.0 billion. Total end of period deposits excluding payroll and brokered deposits increased $66 million, or 1%, linked quarter, and increased $541 million, or 7%, year-over year.

 

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Equity. Total shareholders’ equity increased $26 million, or 2%, linked quarter to $1.2 billion. The ratio of tangible common equity to tangible assets measured 10.1%, increasing from 9.9% linked quarter. Tangible book value per share grew 13% year-over-year to $26.12 at period-end.

 

Proposed Transaction with Brookline Bancorp, Inc. On December 16, 2024, Berkshire Hills Bancorp, Inc., Commerce Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Berkshire formed solely to facilitate the merger (“Merger Sub”) and Brookline Bancorp, Inc., a Delaware corporation (“Brookline”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Brookline, with Brookline as the surviving entity, and immediately thereafter, Brookline will merge with and into Berkshire, with Berkshire as the surviving entity (collectively, the “Merger”). As a result of the Merger, the separate corporate existence of Brookline will cease, and Berkshire will continue as the surviving corporation. Under the terms of the Merger Agreement, which was unanimously approved by the Boards of Directors of both companies, each outstanding share of Brookline common stock will be exchanged for the right to receive 0.42 shares of Berkshire common stock. Holders of Brookline common stock will receive cash in lieu of fractional shares of Berkshire common stock. As a result of the proposed transaction and a $100 million common stock offering completed by Berkshire to support the proposed transaction, Berkshire stockholders will own approximately 55% and Brookline stockholders will own approximately 45% of the outstanding shares of the combined company. The proposed transaction is expected to close in 2025, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals. Shareholders of both companies approved merger-related proposals in May 2025.

 

Conference Call and Investor Presentation. Berkshire will conduct a conference call/webcast at 9:00 a.m. Eastern time on Thursday, July 24, 2025 to discuss results for the quarter and the Company’s outlook. 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 the sections titled “Forward-Looking Statements” and “Risk Factors” in 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. These factors include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the right of Berkshire or Brookline to terminate the merger agreement; the outcome of any legal proceedings that may be instituted against Berkshire or Brookline; delays in completing the proposed transaction with Brookline; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction), or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all, including the ability of Berkshire and Brookline to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the impact of certain restrictions during the pendency of the proposed transaction on the parties’ ability to pursue certain business opportunities and strategic transactions; diversion of management’s attention from ongoing business operations and opportunities; and potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction. 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.

 

###

 

4

 

 

INVESTOR CONTACT

Kevin Conn

Investor Relations

617.641.9206

kaconn@berkshirebank.com

 

MEDIA CONTACT

Gary Levante

Corporate Communications

413.447.1737

glevante@berkshirebank.com

 

5

 

 

SELECTED FINANCIAL HIGHLIGHTS (1)
     
   At or for the Quarters Ended 
   June 30,   March 31,   Dec. 31,   Sept. 30,   June 30, 
   2025   2025   2024   2024   2024 
NOMINAL AND PER SHARE DATA                         
Net earnings/(loss) per common share, diluted  $0.66   $0.56   $0.46   $0.88   $0.57 
Operating earnings per common share, diluted (2)(3)   0.69    0.60    0.60    0.58    0.55 
Net income/(loss), (thousands)   30,366    25,719    19,657    37,509    24,025 
Operating net income, (thousands) (2)(3)   31,587    27,621    25,982    24,789    23,168 
Net interest income, (thousands) non FTE   91,921    89,771    86,855    88,059    88,532 
Net interest income, FTE (5)   93,761    91,655    88,798    90,082    90,545 
Total common shares outstanding, end of period (thousands)   46,303    46,377    46,424    42,982    42,959 
Average diluted shares, (thousands)   46,007    46,061    43,064    42,454    42,508 
Total book value per common share, end of period   26.40    25.81    25.15    24.90    23.58 
Tangible book value per common share, end of period (2)(3)   26.12    25.50    24.82    24.53    23.18 
Dividends declared per common share   0.18    0.18    0.18    0.18    0.18 
Dividend payout ratio (6)   27.54%   32.52%   39.40%   20.63%   32.74%
                          
PERFORMANCE RATIOS (4)                         
Return on equity   9.97%   8.63%   7.18%   14.29%   9.49%
Operating return on equity (2)(3)   10.37    9.28    9.49    9.44    9.15 
Return on tangible common equity (2)(3)   10.35    9.02    7.59    14.83    9.99 
Operating return on tangible common equity (2)(3)   10.76    9.66    9.93    9.91    9.65 
Return on assets   1.03    0.88    0.68    1.28    0.82 
Operating return on assets (2)(3)   1.07    0.94    0.90    0.85    0.79 
Net interest margin, FTE (5)   3.27    3.24    3.14    3.16    3.20 
Efficiency ratio (3)   56.73    59.45    62.43    63.74    63.40 
                          
FINANCIAL DATA (in millions, end of period)                         
Total assets  $12,035   $12,013   $12,273   $11,605   $12,219 
Total earning assets   11,346    11,334    11,523    10,922    11,510 
Total loans   9,499    9,429    9,385    9,212    9,229 
Total funding liabilities   10,565    10,564    10,813    10,285    10,907 
Total deposits   9,979    9,880    10,375    9,577    9,621 
Loans/deposits (%)   95%   95%   90%   96%   96%
Total accumulated other comprehensive (loss) net of tax, end of period  $(91)  $(95)  $(106)  $(89)  $(115)
Total shareholders' equity   1,222    1,197    1,167    1,070    1,013 
                          
ASSET QUALITY                         
Allowance for credit losses, (millions)  $117   $117   $115   $112   $112 
Net charge-offs, (millions)   (3)   (4)   (3)   (6)   (2)
Net charge-offs (QTD annualized)/average loans   0.14%   0.15%   0.14%   0.24%   0.07%
Provision (benefit)/expense, (millions)  $4   $6   $6   $6   $6 
Non-performing assets, (millions)   28    26    27    27    24 
Non-performing loans/total loans   0.27%   0.25%   0.26%   0.26%   0.23%
Allowance for credit losses/non-performing loans   462    501    469    467    525 
Allowance for credit losses/total loans   1.24    1.24    1.22    1.22    1.22 
                          
CAPITAL RATIO                         
Tangible common shareholders' equity/tangible assets (3)   10.1    9.9    9.4    9.1    8.2 

 

(1)All financial tables presented are unaudited.
(2)Reconciliation of non-GAAP financial measures, including all references to operating and tangible amounts, appear on page 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 page 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)Dividend payout ratio is based on dividends declared.

 

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CONSOLIDATED BALANCE SHEETS
 
   June 30,   March 31,   December 31,   June 30, 
(in thousands)  2025   2025   2024   2024 
Assets                    
Cash and due from banks  $131,970   $121,137   $182,776   $112,085 
Short-term investments   670,761    705,199    945,633    988,207 
Total cash and cash equivalents   802,731    826,336    1,128,409    1,100,292 
                     
Trading securities, at fair value   4,835    5,010    5,258    5,699 
Equity securities, at fair value   647    647    655    12,736 
Securities available for sale, at fair value   664,713    669,182    655,723    611,711 
Securities held to maturity, at amortized cost   476,756    494,242    507,658    520,239 
Federal Home Loan Bank stock   25,579    29,688    19,565    35,010 
Total securities   1,172,530    1,198,769    1,188,859    1,185,395 
Less: Allowance for credit losses on investment securities   (63)   (63)   (64)   (65)
Net securities   1,172,467    1,198,706    1,188,795    1,185,330 
                     
Loans held for sale   4,014    1,322    3,076    52,072 
                     
Commercial real estate loans   4,898,078    4,882,927    4,848,824    4,706,810 
Commercial and industrial loans   1,511,362    1,455,847    1,461,341    1,421,921 
Residential mortgages   2,720,363    2,721,885    2,701,227    2,674,611 
Consumer loans   369,046    368,226    373,602    425,184 
Total loans   9,498,849    9,428,885    9,384,994    9,228,526 
Less: Allowance for credit losses on loans   (117,344)   (116,678)   (114,700)   (112,167)
Net loans   9,381,505    9,312,207    9,270,294    9,116,359 
                     
Premises and equipment, net   58,439    57,680    56,609    55,893 
Other real estate owned   124    -    -    - 
Other intangible assets   12,809    13,936    15,064    17,319 
Other assets   596,140    596,082    604,231    615,882 
Assets held for sale   6,519    6,930    6,930    76,307 
Total assets  $12,034,748   $12,013,199   $12,273,408   $12,219,454 
                     
Liabilities and shareholders' equity                    
Non-interest bearing deposits  $2,296,268   $2,295,040   $2,324,879   $2,222,012 
NOW and other deposits   814,600    789,418    841,406    766,641 
Money market deposits   3,153,241    3,197,331    3,610,521    3,278,753 
Savings deposits   1,105,009    1,065,530    1,021,716    1,004,320 
Time deposits   2,609,913    2,532,558    2,576,682    2,349,733 
Total deposits   9,979,031    9,879,877    10,375,204    9,621,459 
                     
Federal Home Loan Bank advances   463,861    562,921    316,482    689,606 
Subordinated borrowings   121,736    121,674    121,612    121,487 
Total borrowings   585,597    684,595    438,094    811,093 
                     
Other liabilities   247,809    251,967    292,686    287,312 
Liabilities held for sale   -    -    -    486,648 
Total liabilities   10,812,437    10,816,439    11,105,984    11,206,512 
                     
Common shareholders' equity   1,222,311    1,196,760    1,167,424    1,012,942 
Total shareholders' equity   1,222,311    1,196,760    1,167,424    1,012,942 
Total liabilities and shareholders' equity  $12,034,748   $12,013,199   $12,273,408   $12,219,454 

 

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CONSOLIDATED STATEMENTS OF OPERATIONS
 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(in thousands, except per share data)  2025   2024   2025   2024 
Interest income  $151,469   $154,109   $299,799   $306,115 
Interest expense   59,548    65,577    118,107    129,443 
Net interest income, non FTE   91,921    88,532    181,692    176,672 
Non-interest income                    
Deposit related fees   8,193    8,561    16,142    16,866 
Loan related fees   5,100    2,364    8,887    5,027 
Gain on SBA loans   2,288    3,294    5,564    4,993 
Wealth management fees   2,657    2,613    5,612    5,497 
Fair value adjustments on securities   46    (42)   (6)   (157)
Other   3,468    3,343    6,225    5,217 
Total non-interest income excluding gains and losses   21,752    20,133    42,424    37,443 
(Loss) on sale of securities   -    -    -    (49,909)
Total non-interest income   21,752    20,133    42,424    (12,466)
Total net revenue   113,673    108,665    224,116    164,206 
                     
Provision expense for credit losses   4,000    6,499    9,500    12,499 
Non-interest expense                    
Compensation and benefits   39,303    40,126    79,938    80,861 
Occupancy and equipment   7,203    8,064    14,869    16,762 
Technology   9,756    10,236    19,821    20,140 
Professional services   961    2,757    2,675    5,433 
Regulatory expenses   1,648    1,848    3,275    3,693 
Amortization of intangible assets   1,128    1,140    2,256    2,345 
Marketing   1,541    532    2,808    1,648 
Merger, restructuring and other non-operating expenses   1,491    (384)   3,945    3,233 
Other expenses   5,113    6,612    8,923    12,836 
Total non-interest expense   68,144    70,931    138,510    146,951 
Total non-interest expense excluding non-operating expenses   66,653    71,315    134,565    143,718 
                     
Income before income taxes   41,529    31,235    76,106    4,756 
Income tax expense   11,163    7,210    20,021    919 
Net income   30,366    24,025    56,085    3,837 
                     
Basic earnings per common share  $0.66   $0.57   $1.23   $0.09 
Diluted earnings per common share  $0.66   $0.57   $1.22   $0.09 
                     
Weighted average shares outstanding:                    
Basic   45,764    42,437    45,731    42,602 
Diluted   46,007    42,508    46,042    42,763 

 

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CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend)
 
   June 30,   March 31,   Dec. 31,   Sept. 30,   June 30, 
(in thousands, except per share data)  2025   2025   2024   2024   2024 
Interest income  $151,469   $148,330   $150,555   $157,268   $154,109 
Interest expense   59,548    58,559    63,700    69,209    65,577 
Net interest income, non FTE   91,921    89,771    86,855    88,059    88,532 
Non-interest income                         
Deposit related fees   8,193    7,949    8,237    8,656    8,561 
Loan related fees   5,100    3,787    3,039    3,214    2,364 
Gain on SBA loans   2,288    3,276    4,635    3,020    3,294 
Wealth management fees   2,657    2,955    2,658    2,685    2,613 
Fair value adjustments on securities   46    (52)   (352)   516    (42)
Other   3,468    2,757    4,943    3,416    3,343 
Total non-interest income excluding gains and losses   21,752    20,672    23,160    21,507    20,133 
Gain on sale of business operations and assets, net   -    -    193    16,048    - 
Loss on sale of securities   -    -    (28)   -    - 
Total non-interest income   21,752    20,672    23,325    37,555    20,133 
Total net revenue   113,673    110,443    110,180    125,614    108,665 
                          
Provision expense for credit losses   4,000    5,500    6,000    5,500    6,499 
Non-interest expense                         
Compensation and benefits   39,303    40,635    38,929    40,663    40,126 
Occupancy and equipment   7,203    7,666    7,334    7,373    8,064 
Technology   9,756    10,065    10,241    10,014    10,236 
Professional services   961    1,714    2,765    2,109    2,757 
Regulatory expenses   1,648    1,627    1,851    1,851    1,848 
Amortization of intangible assets   1,128    1,128    1,128    1,128    1,140 
Marketing   1,541    1,267    2,013    861    532 
Merger, restructuring and other non-operating expenses   1,491    2,454    6,557    (297)   (384)
Other expenses   5,113    3,810    6,757    8,258    6,612 
Total non-interest expense   68,144    70,366    77,575    71,960    70,931 
Total non-interest expense excluding non-operating expenses   66,653    67,912    71,018    72,257    71,315 
                          
Income/(loss) before income taxes  $41,529   $34,577   $26,605   $48,154   $31,235 
Income tax expense/(benefit)   11,163    8,858    6,948    10,645    7,210 
Net income/(loss)  $30,366   $25,719   $19,657   $37,509   $24,025 
                          
Diluted earnings/(loss) per common share  $0.66   $0.56   $0.46   $0.88   $0.57 
                          
Weighted average shares outstanding:                         
Basic   45,764    45,684    42,661    42,170    42,437 
Diluted   46,007    46,061    43,064    42,454    42,508 

 

9

 

 

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS
 
   Quarters Ended 
   June 30, 2025   March 31, 2025   June 30, 2024 
(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  $4,903    76    6.19%  $4,865   $75    6.19%   4,649    77    6.52%
Commercial and industrial loans   1,501    27    6.99    1,446    25    7.00    1,384    27    7.62 
Residential mortgages   2,711    30    4.39    2,708    30    4.35    2,694    28    4.21 
Consumer loans   369    5    6.58    370    6    6.57    430    8    7.47 
Total loans   9,484    138    5.82    9,389    136    5.80    9,157    140    6.05 
Securities (2)   1,299    8    2.59    1,312    9    2.62    1,332    8    2.44 
Short-term investments and loans held for sale   540    5    4.31    534    6    4.19    597    8    5.07 
New York branch loans held for sale (3)   -    -    -    -    -    -    57    1    5.86 
Total earning assets   11,323    151    5.38    11,235    151    5.35    11,143    157    5.57 
Goodwill and other intangible assets   13              14              18           
Other assets   513              505              531           
Total assets   11,849             $11,754              11,692           
                                              
Non-interest-bearing demand deposits   2,281   $-    -%  $2,262   $-    -%   2,244   $-    -%
NOW and other   800    3    1.48    758    2    1.32    763    3    1.44 
Money market   3,095    23    2.92    3,247    23    2.87    2,909    24    3.32 
Savings   1,081    3    1.24    1,038    3    1.13    1,004    3    1.06 
Time   2,560    24    3.73    2,542    25    3.91    2,376    25    4.22 
Total deposits   9,817    53    2.15    9,847    53    2.18    9,296    55    2.35 
Borrowings (4)   590    7    4.65    463    6    4.90    610    9    5.55 
New York branch non-interest-bearing deposits held for sale (3)   -    -    -    -    -    -    97    -    - 
New York branch interest-bearing deposits held for sale (3)   -    -    -    -    -    -    386    3    2.80 
Total funding liabilities   10,407    60    2.29    10,310    59    2.30    10,389    67    2.53 
                                              
Other liabilities   224              253              290           
Total liabilities   10,631              10,563              10,679           
                                              
Common shareholders' equity (5)   1,218              1,191              1,013           
Total shareholders' equity   1,218              1,191              1,013           
Total liabilities and shareholders' equity   11,849             $11,754              11,692           
Net interest margin, FTE             3.27              3.24              3.20 
                                              
Supplementary data                                             
Net Interest Income, non FTE   91,921              89,771              88,532           
FTE income adjustment   1,840              1,884              2,013           
Net Interest Income, FTE   93,761              91,655              90,545           

 

(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)New York branch loans and deposits moved to held for sale on March 4, 2024.
(4)Average balances for borrowings includes the financing lease obligation which is presented under other liabilities on the consolidated balance sheet.
(5)Unrealized gains and losses, net of tax, are included in average equity.

 

10

 

 

ASSET QUALITY ANALYSIS
 
   At or for the Quarters Ended 
   June 30,   March 31,   December 31,   September 30,   June 30, 
(in thousands)  2025   2025   2024   2024   2024 
NON-PERFORMING ASSETS                         
Commercial real estate  $9,869   $9,742   $10,393   $10,270   $5,976 
Commercial and industrial loans   11,512    8,998    9,156    8,227    8,489 
Residential mortgages   3,289    3,684    3,830    4,348    5,491 
Consumer loans   734    856    1,068    1,124    1,392 
Total non-performing loans   25,404    23,280    24,447    23,969    21,348 
Repossessed assets   2,384    2,288    2,280    2,563    2,549 
Total non-performing assets  $27,788   $25,568   $26,727   $26,532   $23,897 
                          
Total non-performing loans/total loans   0.27%   0.25%   0.26%   0.26%   0.23%
Total non-performing assets/total assets   0.23%   0.21%   0.22%   0.23%   0.20%
                          
PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS                         
Balance at beginning of period  $116,678   $114,700   $112,047   $112,167   $107,331 
Charged-off loans   (4,348)   (6,256)   (4,553)   (7,091)   (3,246)
Recoveries on charged-off loans   1,014    2,734    1,206    1,471    1,583 
Net loans charged-off   (3,334)   (3,522)   (3,347)   (5,620)   (1,663)
Provision expense for loan credit losses   4,000    5,500    6,000    5,500    6,499 
Balance at end of period  $117,344   $116,678   $114,700   $112,047   $112,167 
                          
Allowance for credit losses/total loans   1.24%   1.24%   1.22%   1.22%   1.22%
Allowance for credit losses/non-performing loans   462%   501%   469%   467%   525%
                          
NET LOAN CHARGE-OFFS                         
Commercial real estate  $(338)  $(991)  $(121)  $(999)  $22 
Commercial and industrial loans   (3,232)   (1,518)   (2,309)   (1,009)   (711)
Residential mortgages   48    161    552    273    316 
Home equity   (13)   102    1    3    8 
Other consumer loans   205    (1,276)   (1,470)   (3,888)   (1,298)
Total, net  $(3,330)  $(3,522)  $(3,347)  $(5,620)  $(1,663)
                          
Net charge-offs (QTD annualized)/average loans   0.14%   0.15%   0.14%   0.24%   0.07%
Net charge-offs (YTD annualized)/average loans   0.15%   0.15%   0.16%   0.16%   0.13%

 

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  $15,263    0.16%  $9,783    0.10%  $17,591    0.19%  $18,526    0.20%  $18,494    0.20%
90+ Days delinquent and still accruing   4,675    0.05%   6,858    0.07%   6,417    0.07%   6,280    0.07%   11,672    0.13%
Total accruing delinquent loans   19,938    0.21%   16,641    0.17%   24,008    0.26%   24,806    0.27%   30,166    0.33%
Non-performing loans   25,404    0.27%   23,280    0.25%   24,447    0.26%   23,969    0.26%   21,348    0.23%
Total delinquent and non-performing loans  $45,342    0.48%  $39,921    0.42%  $48,455    0.52%  $48,775    0.53%  $51,514    0.56%

 

11

 

 

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 2025 were primarily related to the pending merger. Adjustments in 2024 were primarily related to the pending merger, branch sales and consolidations, and loss on sale of securities.

 

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.

 

12

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA
 
      At or for the Quarters Ended 
      June 30,   March 31,   Dec. 31,   Sept. 30,   June 30, 
(in thousands)     2025   2025   2024   2024   2024 
Total non-interest income     $21,752   $20,672   $23,325   $37,555   $20,133 
Adj: Net (gains) on sale of business operations and assets      -    -    (193)   (16,048)   - 
Adj: Loss on sale of securities      -    -    28    -    - 
Total operating non-interest income (1)     $21,752   $20,672   $23,160   $21,507   $20,133 
                             
Total revenue  (A)  $113,673   $110,443   $110,180   $125,614   $108,665 
Adj: Net (gains) on sale of business operations and assets      -    -    (193)   (16,048)   - 
Adj: Loss on sale of securities      -    -    28    -    - 
Total operating revenue (1)  (B)  $113,673   $110,443   $110,015   $109,566   $108,665 
                             
Total non-interest expense  (C)  $68,144   $70,366   $77,575   $71,960   $70,931 
Adj: Merger, restructuring and other non-operating expenses      (1,491)   (2,454)   (6,557)   297    384 
Operating non-interest expense (1)  (D)  $66,653   $67,912   $71,018   $72,257   $71,315 
                             
Pre-tax, pre-provision net revenue (PPNR)  (A-C)  $45,529   $40,077   $32,605   $53,654   $37,734 
Operating pre-tax, pre-provision net revenue (PPNR) (1)  (B-D)   47,020    42,531    38,997    37,309    37,350 
                             
Net income/(loss)     $30,366   $25,719   $19,657   $37,509   $24,025 
Adj: Net (gains) on sale of business operations and assets      -    -    (193)   (16,048)   - 
Adj: Loss on sale of securities      -    -    28    -    - 
Adj: Merger, restructuring expense and other non-operating expenses      1,491    2,454    6,557    (297)   (384)
Adj: Income taxes (expense)/benefit      (270)   (552)   (67)   3,625    (473)
Total operating income (1)  (E)  $31,587   $27,621   $25,982   $24,789   $23,168 
                             
(in millions, except per share data)                            
Total average assets  (F)  $11,849   $11,754   $11,596   $11,695   $11,692 
Total average shareholders' equity  (G)   1,218    1,191    1,095    1,050    1,013 
Total average tangible shareholders' equity (1)  (I)   1,205    1,177    1,080    1,034    995 
Total accumulated other comprehensive (loss) net of tax, end of period      (91)   (95)   (106)   (89)   (115)
Total tangible shareholders' equity, end of period (1)  (K)   1,210    1,183    1,152    1,054    996 
Total tangible assets, end of period (1)  (L)   12,022    11,999    12,258    11,588    12,202 
                             
Total common shares outstanding, end of period (thousands)  (M)   46,303    46,377    46,424    42,982    42,959 
Average diluted shares outstanding (thousands)  (N)   46,007    46,061    43,064    42,454    42,508 
                             
Earnings/(loss) per common share, diluted (1)     $0.66   $0.56   $0.46   $0.88   $0.57 
Operating earnings per common share, diluted (1)  (E/N)   0.69    0.60    0.60    0.58    0.55 
Tangible book value per common share, end of period (1)  (K/M)   26.12    25.50    24.82    24.53    23.18 
Total tangible shareholders' equity/total tangible assets (1)  (K/L)   10.06    9.86    9.40    9.10    8.16 
                             
Performance ratios (2)                            
Return on equity      9.97%   8.63%   7.18%   14.29%   9.49%
Operating return on equity (1)  (E/G)   10.37    9.28    9.49    9.44    9.15 
Return on tangible common equity (1)(3)      10.35    9.02    7.59    14.83    9.99 
Operating return on tangible common equity (1)(3)  (E+Q)/(I)   10.76    9.66    9.93    9.91    9.65 
Return on assets      1.03    0.88    0.68    1.28    0.82 
Operating return on assets (1)  (E/F)   1.07    0.94    0.90    0.85    0.79 
Efficiency ratio (1)  (D-Q)/(B+R)   56.73    59.45    62.43    63.74    63.40 
                             
Supplementary data (in thousands)                            
Effective tax rate      26.9%   25.6%   26.1%   22.1%   23.1%
Intangible amortization  (Q)  $1,128   $1,128   $1,128   $1,128   $1,140 
Fully taxable equivalent income adjustment  (R)   1,840    1,884    1,943    2,023    2,013 

 

(1)Non-GAAP financial measure.
(2)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.
(3)Amortization of intangible assets is adjusted assuming a 27% marginal tax rate.

 

13

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED
 
      At or for the Six Months Ended 
      June 30,   June 30, 
(in thousands)     2025   2024 
Total non-interest income     $42,424   $(12,466)
Adj: Loss on sale of securities      -    49,909 
Total operating non-interest income (1)     $42,424   $37,443 
              
Total revenue  (A)  $224,116   $164,206 
Adj: Net (gains) on sale of business operations and assets      -    - 
Adj: Loss on sale of securities      -    49,909 
Total operating revenue (1)  (B)  $224,116   $214,115 
              
Total non-interest expense  (C)  $138,510   $146,951 
Less: Merger, restructuring and other non-operating expenses      (3,945)   (3,233)
Operating non-interest expense (1)  (D)  $134,565   $143,718 
              
Pre-tax, pre-provision net revenue (PPNR)  (A-C)  $85,606   $17,255 
Operating pre-tax, pre-provision net revenue (PPNR) (1)  (B-D)   89,551    70,397 
              
Net income     $56,085   $3,837 
Adj: Loss on sale of securities      -    49,909 
Adj: Merger, restructuring expense and other non-operating expenses      3,945    3,233 
Adj: Income taxes (expense)/benefit      (822)   (12,877)
Total operating income (1)  (E)  $59,208   $44,102 
              
(in millions, except per share data)             
Total average assets  (F)  $11,802   $11,723 
Total average shareholders' equity  (G)   1,205    1,015 
Total average tangible shareholders' equity (1)  (I)   1,191    997 
Total accumulated other comprehensive (loss) net of tax, end of period      (91)   (115)
Total tangible shareholders' equity, end of period (1)  (K)   1,210    996 
Total tangible assets, end of period (1)  (L)   12,022    12,202 
              
Total common shares outstanding, end of period (thousands)  (M)   46,303    42,959 
Average diluted shares outstanding (thousands)  (N)   46,042    42,763 
              
Earnings/(loss) per common share, diluted (1)     $1.22   $0.09 
Operating earnings per common share, diluted (1)  (E/N)   1.29    1.03 
Tangible book value per common share, end of period (1)  (K/M)   26.12    23.18 
Total tangible shareholders' equity/total tangible assets (1)  (K/L)   10.06    8.16 
              
Performance ratios (2)             
Return on equity      9.31%   0.76%
Operating return on equity (1)  (E/G)   9.83    8.69 
Return on tangible common equity (1)(3)      9.69    1.11 
Operating return on tangible common equity (1)(3)  (E+Q)/(I)   10.22    9.19 
Return on assets      0.95    0.07 
Operating return on assets (1)  (E/F)   1.00    0.75 
Efficiency ratio (1)  (D-Q)/(B+R)   58.07    64.81 
Net interest margin, FTE      3.26    3.18 
              
Supplementary data (in thousands)             
Intangible amortization  (Q)  $2,256   $2,345 
Fully taxable equivalent income adjustment  (R)   3,724    4,019 

 

(1)Non-GAAP financial measure.
(2)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.
(3)Amortization of intangible assets is adjusted assuming a 27% marginal tax rate.

 

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