BHLB - Earnings call transcript Q1 2020 | Berkshire Hills Bancorp, Inc.

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Operator

Good day and welcome to the Berkshire Hills Bancorp, Inc First Quarter 2020 Earnings Release Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. David Gonci, Capital Markets Director. Please go ahead.

David Gonci

you. Thank thank this and quarter of for results. you morning discussion joining first Good

is investor at this to on our news in refer and available Our release to is response the ir.berkshirebank.com. information our berkshirebank.com included And will our may COVID Supplemental information website and remarks. relations website be in SEC. furnished presentation our the an about operations our at of section we

we hope our conducting from call in this audio goes any earnings and occur. We are We remote challenges smoothly today, apologize might for advance locations. that

include could will those remarks forward-looking materially Our statements, and results statements. differ actual from

detail most please recent For and see our on reports release Forms XX-K and factors, related SEC XX-Q. our on earnings

call. assist In only included trends results measures on addition, news projections. financial certain in financial you and will is relied as non-GAAP and our of GAAP to conference to measures provided should References are measures our to be release. measures in our this understanding A reconciliation actual results non-GAAP be comparison performance and future not on or discussed

turn call And I’ll Marotta. the that, over Richard to with CEO,

Richard Marotta

talking our Bacigalupo, response Officer; our Lazu, Culture Risk Experience Chief Chief Thank earnings are pandemic us start Melas, about With first Good our today Malia this for George COVID our and quarter our Chief and you, by our you CFO; Credit joining for I morning, everyone, and morning Sean Commercial our Leader; Jamie our David. Greg to Officer, Georgia Lindenmuth, situation. Moses, Officer. me Gray, call. the thank will President;

financial to and top bottom results. The changes pandemic is the of behind our most line

urgent to our customers and community. of business More and importantly, do our how I how needs we respond appreciate the we

remotely gave the our We now, flexibility of my have working and culture. them from our demonstration staff we worked health thanks quickly I face. with non-branch meet that XX% shifted Our X,XXX economic of their home. for and challenges employees dedication that and are to focus extraordinary through

We protect customer-facing our rules to staff. employees careful in-office have set and

well telecommunication Our needed. maintain systems computing current operations and have we’re as as us for well. positioned to And served long

materials markets. Our proud and our participation providing of support across the program, protection paycheck needed describe I’m funds paychecks, the our to role in

working current and we is on can, saw the this, more person were paying a to payment Meanwhile, our the all pandemic COVID disadvantaged where minimize, population. help to who to to borrowers to tempered our of responses from have there in most are release. attention And extra relief help our information harms we vulnerable

because strongly to our and position operating are of Century community strength, by and buttressed pandemic a the a We vision in financial to bank. culture respond as XXst our

point year improved We focused and As capital with customers touch partners, you service our our improving innovated on channels, we with our expanded know, our our liquidity our efficiency, urban community and last and financial company disciplines. to outreach community our under-banked automated strengthened credit further and strengthening focus. communities, maintained

given pressures that the be support We now to lower therefore, year Fed’s will It rates. expect profitability our up interest resources, actions we impacted. our margin our despite the are stepping from is, own current operating with

be we We quarter. giving responsibly, such I objectives. require won’t intend to financial to stakeholders. have previous to thoughtfully We our operating resulted our are for standard even all withdrawing projected or no and CECL and which comment on forward-looking statements of guidance of want The the accounting that loss quarterly the we large as in loan first any the about specific credit operate though we, losses earnings charge current new earnings a interest date. losses, for we loss provision, balance

on future a or it may capital no may not happen, material is loss non-cash impact ratio. loan charge has loss and total that provision loan for The and regulatory our

our and that solid, on. Also discipline credit commercial had during we the the loan problem, we previously our loan to real during resolved estate adhering quarter. performance a commented quarter, remained We’re

our have credit We age. management prior continue tightening of our gradually repositioning, cycle strategic been in to part credit quarters, as the as

borrowers, employment working provide and to appropriate as are from their support our the credit intended forbearance government borrowers are and during our regulators, We to are of short-term measures liquidity shutdown. helping operations and and and restrictions. impact as to by protect liquidity be to viewed actively the with lowering These this us risk maintain

to review Jamie With that, I our results. will ask financial

Jamie Moses

EPS a a in of excludes non-cash was impact losses. addition $X.XX of a reported for securities which is loss the which $X.XX loss a from for Core share, We Richard. to $X.XX net quarter loss, Thanks, the operations, loan provision. charge the discontinued

directly As Richard and due and noted, pandemic indirectly to it. the was our operations on to the impact response our much of

March which The in changes million in million and is resulted introduced PPNR PPNR. taxes. Our now $X income loan earnings new interest posted at or impact to point and environment million to million that decrease XXXX. release which XX during quarter mix included higher This impacts. allowance $X in was following points the the considerably A rate credit a implementation of provision looks impacts, accretion, basis information pre-provision our a core reduction income, CECL including discuss year-end net business the the the on in the and January the changes loss due presentation the have is XX, XXX that loans, and decreased $XX core basis we $X quarter-over-quarter, Core pandemic our the the At measure and volume, decrease on provision to the at of which of new accounting measured of business model, before compared loss CECL X quarter. from end. non-GAAP our as to allowance Due than remaining revenue under allowance. net by

that income on $X changes by the our related decreased credit was Our in $X million, of of core to book. impact non-interest million change spreads swap

value of taxi our loans. the a adjust fair also had $X to We million medallion charge

the SBA loan fees our were which insurance. Additionally, wealth of revenues seasonal in offset and down, swap and revenue benefit origination

non-interest occupancy, impact and expenses in and investment premiums. changes quarter-over-quarter along Our $X of $X to $X offerings. FDIC a to increase, the insurance core technology $X increased expense related regular increase a and loan million in There in further our increase million quarter the systems million by in with is payroll that quarter-over-quarter, million digital was seasonal of internal reinforce

We expect and the the levels dollars half our million a year. QX total expenses couple program back the to PPP two, of related moderate in of in to to back be quarter then higher

strategy the Our the institution. spending account future-proofing investments we takes are into long-term our appropriate of for feel

know, be for asset-sensitive. The reduction about third to will estimate impacts, sheet will be $XX SBA be decline pressure basis these program, the we due interest of the and is non-relationship We by the from and planned we margin response due our loans, expected X balance exception of further repaid net we rates $XXX the first to decreased funding process this CECL-related Our interest PPP lower-yielding you in the pandemic of X accounting into the from the of to The proceed quarter. monetary are in loan the sensitivity, points, near resulting end the loans occurred of to We million year. which balances including as interest loan that deferred as business. We asset runoff will our year quarter. loan receive main are are anticipate amortized where further by generally through The PPP approvals. in margin most there Phase pipeline them to is our fees of SBA income. that million expect

the and to and safety quarter our Deposits much markets loans steady are of this, when expect with the customers, trend due Mybankers branches platforms. recognize rates. lower are the provide expected year. to XX branches while to be margin, closed and will our by temporarily conjunction generally will steady We our about This quarter. repaid to through of but we the bump of continue to in well with most first through the short-term continue interest digital to We impacted the longer-term cover third XXX our were for the in remain compression a of employees

PPNR, discussion to us of of up things lot To sum the to a in this QX. core reported number bring combined

third the will depend will on health the business on in end. remained of the in unrealized anticipate quarter unpredictable net of expense public a and equity at and recovery expect were bump conditions. expense affected items quarter the non-core recovery further onetime in a forward, we this PPNR these provision area, recovery loss gain by at Most are overall impacts. or these The which market of for depend securities While We provision from a conditions, decline our further the will XX% too quarter, rate core future any translated going PPP will portfolio. tax time. this future loans unrealized our be the Stock the Similarly, in pandemic. into the also by although position two securities affected pace largely in be valuation-related a that

As are stock so far in the market quarter. you second improving know, conditions

non-core driven the as under we a to was well banking MSRs pandemic in as primarily, major staff by of transitioned other loss loss our sale as the item discontinued The This on agreement. QX national operations. was severance due mortgage write-down impact, accruals,

know, sale, sharply we narrow are be we operations related pandemic the targeting our the the in over second on end. on extra have the the then based off quarter end, will operations These that you year, these challenging. plans, this completion tail gone year by of last As of through working and been and sale loss sale made year the will and non-core and agreement

liquidity quarter. balance metrics first Returning for in the to our a moment, improve sheet, the to continued

fund second PPP expect. business support are we the We to and loans the the positioned that to well in quarter

by in PPNR. pandemic common our impact charges, the and our While the was from this CECL by internal reduced core quarter capital was first the moderated equity generation

quarter, the our positioned, capital time. at is stock the on extended buyback communities expired recognize support uncertain we the our March authorization these We preserving not strongly is in shares times. importance existing this While repurchase of through and XX not and being to first capital our did

The operations source declare dividend, Our our normal equity and supported is and quarterly by support pay dividend plans an important during to well of our the later for is our quarter. stakeholders. board

This remarks. call will the back And I turn Richard. my completes to

Richard Marotta

loss. PPNR To recovery We to our Thanks, that to to a then benefits long-run bottom Jamie. more on our charges, income and on in bank our to established. the the resulted to line opportunity we when strategies, provision, aim reduced the impact core Century the measure, our XXst include invest in loss moved communities to pandemic non-core firmly important review begin strongly GAAP continue markets community quarter, pressure is and capital PPNR our economic will advance Meanwhile, core metrics which continue to us. move further built our will helped to us have seen on toward give partner, loan reopen in an do that will We reduce reserve. and loss starting and our and and our to and spirit move responsible forward appreciate It’ll liquidity any our be our and we that we footprint, constructive cooperative as forward. the part to across we a pandemic

for This lines operator completes our to now invite any I the and questions. open remarks the prepared

Operator

our [Operator ahead. Please first Fitzgibbon instructions] from Sandler. Piper comes And from question go today Mark

Mark Fitzgibbon

morning. at of rate tax Hey, you forward. everybody. the to points effective Good one made Hello, on follow-up just XX%, going Jamie, on the

because I this think, else? investments rate operating tax Is would loss be effective quarter, something last you or quarter suggested had are of because doing or lower you it additional the XX%. credit the

Jamie Moses

Mark. the quarter. this thanks of It’s operating because loss Yes,

Mark Fitzgibbon

Okay.

right? of would stay the expect that remainder the you of at XX% that to so And year, is sort for

Jamie Moses

that’s Yes, right.

We XX% at are point, suggesting this yes.

Mark Fitzgibbon

then if the management quarter? start you were, great. what with at secondly, the under wanted, of of us assets the and And share end the quarter could Okay, I

Jamie Moses

in going Mark, to have due smaller, back get don’t can to on the Sean, I that of you be Mark, market. the to front there that? that. Otherwise, of if you handy. Obviously, info, have impacts I me,

Mark Fitzgibbon

of guess, curious your part I or concentrated Okay. you of forbearance of $X.X billion in the then was credit, to any geography? particular footprint gave, And turning that I was

Jamie Moses

Yes, Mark, that I am George going to question. answer to Bacigalupo to turn that over

George Bacigalupo

in. business I think, states we a spread I many geographically, throughout evenly would our that that, we say fairly no, do saw Mark,

If sectors shut In ones have the such required etc., to and entertainment, at many different sectors, clearly, are retail, foodservice, the as you look been impacted cases, hospitality obviously have etc. down, that businesses that severely. been

was. what communicated with and days. of We we it typically, deferments, to XX many relationship determine directly, through for modifications In appropriate our to our we So, cases, response short. managers keep fairly try provided customers the all

that a sense with have or for the remain could to operate closed continue beyond reassess are feel of but too over period. will top not of sense, tell happen, whether our like customers a to and the what’s situations, for or those normalcy, early those we get days see other relationship some and So, as process go those beyond weeks, XX be good will and businesses, we on to to we conversations sufficient staying it’s or allowed coming little back situation. that this to have our managers develops, are that the we current a But going pretty in have

Mark Fitzgibbon

likely think content, these you period? Do have for loss during yet which to feel are most the difficult sectors a you see time

George Bacigalupo

in Did you terms say loss, credit of losses?

Mark Fitzgibbon

Yes. ultimate credit greatest you likely that have you for segments I are mean loss do feel content? a losses the to think see the

George Bacigalupo

it’s I Yes. Melas Georgia that I pass mean, can tell. from standpoint, early on to I my But think, over credit. too to

conservative have underwriting. I we think, do

going and be would that? losses are have our have this or ultimate So, add to I like get you on been credit their having get who business. customers back But disruption to we – sectors, impacted to able Georgia, anything through we without think to resilient

Georgia Melas

keeping Yes. just the our three sectors, on. Those a starting close bit I that we It Thanks, we early. top higher hospitality, basically X ones George. little obviously very restaurants. the presentation, agree Slide with eye that and listed with Yes, look said. everything, at in are are Mark, leisure if George impact you is But a

Mark Fitzgibbon

I any And forecast, thinking know but this about question hard to even again, of to to it’s be lot second a but based our certainly I are and quarter? the it’s much a in on variables And say, So harder or perspective answer, you know what lastly there’s today, and provisioning, forecast? from then know, hard how guidance will you is appreciated.

Richard Marotta

Yes. I closer maybe perspective. Jamie, to a think, Mark, are you that from CECL

Jamie Moses

Richard. Yes. Thanks,

our so I is to way end the in about conditions we right it’s at can forecast say, here now, you we early moment far, than Obviously, we’re quarter. guess, looking of that the go right worse tough change as Mark. the saw projected As May it, think predict, the the that what forward. to at at

to based forecasts So, be $X.XX see we of the billion, be we build on $X.XX your that what expect billion. at would entirely what dependent there end At year And I that on look would of AUM the is kind to like, going today. were are we how much to some number, is, quarter. just get today, end, those

Mark Fitzgibbon

you. Great. Thank

Richard Marotta

Mark. Thanks

Operator

go Compass question next ahead. Laurie our Hunsicker from And comes with Point. Please

Laurie Hunsicker

Good hi. Yes, morning.

Richard Marotta

Good morning.

Laurie Hunsicker

guess, I directional outsized. two One, that want credit. looks I just But understand, to numbers, this income I’m accretion round of Obviously, the right pressure. thinking talk it, wondered about I X.X, if, it two, wanted well, on XX I saying, points I quickly, things. the just just margin, Jamie, just call what But your on the sure, to about was basis to way. you’re make like,

can guidance, half me that help the any theoretically, so you the And about in cut tracking that we in thinking if margin you have way, I further see do there? or XX, the could core am right low with

Jamie Moses

Yes, Laurie.

a at of thinking one. income difficult the right? loans, to it’s The of to and right because acceleration the the dependent of the it’s net you’re those be that repayment is the Overall, think, into margin of question of the way. predict amortized PPP fees complicated number. upon are interest going that effect about moment I timing So

sheet. on putting anticipating $XXX So, very we’re of balance low-yielding so loans million the or around

and into you pop think fees then we moderating in decline, of I one an in So as those see a are amortize sort quarter in QX QX. going big then all outsized and NIM, to back into QX pretty

quarter expect decrease see balance to a I then in based on to is that, some the of underlying. half full rates. back expansion QX, the sheet zero albeit small should in And of near of underlying on we expansion interest going another think, the see the year

Laurie Hunsicker

Got it.

XQ, And life fees I processing the you say to taken the the fee when over Okay. the income then, to was thought, loans. of pop

Jamie Moses

It is.

a great it’s So, question.

repaid will these of hereof forgiven the support portion off, period, loans So, be the these we loans of that most actually and QX, after forgiven. is in expect eight-week that of sort

Laurie Hunsicker

Got it. Perfect.

the Okay, I percentage, just Slide if the for out C&I, if real have category us line little wanted on great. with here, estate help share can Starting switch bit are not, and leisure different or you are secured? have maybe just with secured, with, just and more. on is to Do can then what or you offline. follow-up which with largely you LTVs, estate each the items, at If least hospitality, restaurants. maybe with Appreciate And the hoping And then us? X. real the the largely they these you detail to over I a it, they

Richard Marotta

Laurie, is Richard. Yes. this

So, to and/or be Greg. I think, Georgia would personal answer the best that

don’t So, why you start? Georgia,

Georgia Melas

go estate Okay, is thanks. order. them be can going hospitality, secured. just Laurie, that, bulk to million I them in through we of $XXX mean, this yes, and the take real

leisure $XXX is Moving Firestone-related. the million, million down to segment, approximately $XXX of that

piece that will The courses. secured obviously, recreation, So, equipment. be is by broken amusement, golf out, some among, really remaining

remaining how have of but will in don’t estate piece real is there. the real estate there I breakout for some that So, much secured, be

restaurants, book when secured. real is real bulk real living, combination exposure a of half a assets practices, amount, and of estate that’s XX% And as but the on equipment The be a and going estate secured. all is construction is real mix estate lastly, to which secured. bulk skilled secured. number, mix And all we of is as will our that that roughly half of probably roughly nursing of and that medical assisted of to estate retail then estate the and is and would Again, remaining real of that look is that it’s the goes, the have it exact – don’t healthcare I at Moving is be secured. Healthcare, exposure, be. far hospitals,

Laurie Hunsicker

you you it Slide helpful. if know much of out this of footprint? Yes. And then, X, on know Super, super your grouping how loan do is

Georgia Melas

Firestone, obviously, national Well, has footprint. a

of million, balances, $XXX will be at a probably portion, So, a the the their majority footprint.

else with So, that, primarily exception of is in everything footprint. the

Laurie Hunsicker

Okay, great.

Okay. that and And to any don’t Is oil gas have exposure. then you clarify, correct? just

Georgia Melas

about, to Oil commercial I say want of and gas minimal. is It’s X.X% the X%, portfolio.

Laurie Hunsicker

okay, so million, that’s so, around Okay, $XX okay. –

Georgia Melas

No.

Laurie Hunsicker

then… And

Georgia Melas

I ahead. go am sorry,

Laurie Hunsicker

Your million? gas around is that oil $XX Is correct? and

Georgia Melas

the no, commercial X.X% of No, book.

So, million. $XXX it’s about

Laurie Hunsicker

I’m sorry. okay. Oh,

Georgia Melas

Sorry. I clearly. apologize. hear you Yes, I didn’t

Laurie Hunsicker

And leasing? also transportation, then, slide. your can you within specifically Okay. Can think on guess, the didn’t exposure And see us if just which also help but then, know what I can that small, I net us help And about if the the about is update that, think on on is? then that pretty us you taxi, a basis. aircraft just you I is transportation where

Georgia Melas

I Aircraft at is front March. exact about Medallion in portfolio, to balances I the have million. space. of was exposure deck, $X.X don’t down $XXX minimal. in have the is think, as into end transportation Well, number million And that but we the me, minimal the are outlined of

Laurie Hunsicker

$X.X million.

Okay, you Leverage great. leverage last balance loans do have And on loans, then question. your are? just a what

Georgia Melas

$XXX Yes. That’s million. also That is roughly minimal.

Laurie Hunsicker

$XXX million.

it Thank great. you. there. I’ll leave Okay,

Georgia Melas

you. Thank

Richard Marotta

Thank you.

Operator

And question our D.A. go Bishop Please from ahead. with Dave next comes Davidson.

Dave Bishop

me of How rebound we rates versus by, light fee think, credit curious follow-up the – should just segments of I an on Quick fee gave and interest segment. – pulls some morning. quarter, think it, metrics. second how much Good on and how some you – of income Yes. should think versus that pushes occurred curious, Jamie, be a within just about the out of should about in on various the maybe, here would spreads the we other terms how income? within driven quarter I’m – and improvement this we

Jamie Moses

Dave. Thanks, Yes.

think in to is right upon and spreads So, BC, be ability conditions to back-to-back mark our The fair of of be XX swap to swaps, loans loans, ability fees, to business going way we health as dependent our fee about credit markets so is terms in our important, the the at which income operations. the those generate and overall highly generate economy. where is SBA I it think, part in to then, going of our the value. And are improvement

the see – are deterioration fee from those the don’t at the those any moment, the the things, quarter. of sort drivers rest that’s be in But for end goes think, of I I where of to year. going So, of the income

really it’s macro just think, I driven.

Dave Bishop

you operating Got then the the some of in expenses. noted it. And on increases flipside,

Just expenses. through size, and pressures, communication from detail? of might maybe that in as inflationary guess, walk have other technology well the missed really were I what as I more some the

Jamie Moses

Yes.

$X which in million So, the my But have like increases, little about seasonal QX, then the bit that. and FDIC also, things or occupancy don’t of we this. a We I is so benefit payroll talked it, remarks, taxes includes had, expense expense, rebates from anymore. call

of million to $X So, million as a $X loan had things. those that due We expenses, increase in is about quarter-over-quarter increase well.

have – workout are So, expense. type those we of things loan

that So, earlier driven the in a loan real was commercial large we that estate comments. chunk referenced our of by

things. normal that And a So, was the expenses, we also have then general chunk and just associated those with of insurance and of operations. sort just appraisals

$X.X So, million technology And we there’s of in had relative a then increase close $X to bit investment. million to so, there, or an QX.

to like think our continue and in important channels. that customers build help things internal channels our And to banking, we to had and online need we support service that, we expenses, systems – out to related that some also people. We order digital service to mobile support it’s

terms, – what say, – that’s expenses did quarter. those speaking general the broad I’d about during the So, general

Dave Bishop

what. noticed to – weather if Anything or per quarter? specific sort rate sort ticked the good don’t was about I of million that that, run occupancy, the Related that on seasonal at this and of a $XX just know, up. is I for

Jamie Moses

Yes.

decent a rate. run that’s think, I

$XX that right. there. You the It’s or seasonal should rate it exactly you right of pickup. – should run it a think I as million so think, And had as we

Dave Bishop

commercial that then how LIBOR – back to of is prime? and of portfolio, the with much And the floating in terms turning me remind or it. Got margin, short-term

Jamie Moses

Dave, billion, $X about just little That’s bit billion. a under $X.X

Operator

Gilbert Collyn go with KBW. question the comes And from Please next ahead.

Collyn Gilbert

morning, everyone. Good Thanks.

Richard Marotta

doing, are How you Collyn?

Collyn Gilbert

portfolios and with the you expecting kind And on kind loan just could kind are update – you are, grow give then in good. that just mode? could if what us in terms to like? Maybe of the organic are then, book. pipeline if rundown start looks Maybe what of of portfolios where And an we we of

Richard Marotta

that Georgia, do take one? you to want

George Bacigalupo

say on program, less spent, first, is so we has deferral of I working that primarily, customers important. once, our it the the were Sure. program pipeline was impacted. would then, which PPP been quarter, traditionally many worked than because our being on, became last And

And so, on we’ve focused been that.

continuing primarily, are with we we’ve focused as their and focus reset, to opportunities, on customers be say, we and opportunities the new situation year, in assisting markets not our for customers the later were to that get to our we’ll continue strengthening able hitting. But So, support place, more opportunities. I make this the market. looking in as been, aggressively on good commitments COVID on to prior would Hopefully,

Collyn Gilbert

Okay. And mode in what and books run then, intentionally what are runoff to about off? just that you’re kind of expecting

George Bacigalupo

to portfolios some the sale. over – it it’s of about talk turn Jamie to Well, for Yes. I’ll

grow, to as far lending. commercial continue resources put business feel, we into well great lot a of operations, as business, to As opportunity which our banking asset-based has we as organic our

like is Some not in in estate to I’d some the businesses of re-pricing Jamie. as volume aircraft, a But I’ll of it’s over say, growth that’s turn off. as that running And mode commercial much doing our terms of the well. is is, real C&I business

Jamie Moses

George. Thanks, Yes, Yes. Richard. okay, sorry, Thanks.

primarily million around the are at speaking and aircraft quarter-end. at we was indirect portfolio, $XXX of terms million the $XXX at quarter-end, the portfolio auto auto in as indirect So, and was portfolio aircraft here right the runoff of

And these right around down we auto, at last $XXX from or million down that’s the or XXX runoff sales So, when now. we down, aircraft, were started from $XX at indirect point. on portfolios talking XXX the the potential year, that are almost portfolios, so in about million we so of so

Richard Marotta

where ones are Collyn, pure the we also Jamie would I that highlighted relationships no that relationship the non-relationship But for a I look would book, those. – as some just the and indicate arises, sectors credit or we add that the participant. is we facility to is then those. is the a just as that And through are we putting serve. looking that only away Those George thing a of that are it’s And said opportunity the really with into there the is as with banking but business also, the in walking folks we where operate it truly that the the also you from company. holistic company, and owners and said, really the primarily not communities And relationship, George the ABL, as only build which

Collyn Gilbert

lines. Okay, just okay. And along then those

first So, agreement end. business, that you’re choice, to before sell year in

residential balance fees what curious then, see just thinking core also the we discontinued about and I on that the expenses, ops to that? just And So, but understand implications, then about sheet of want book your sure mortgage make forward? banking you’re kind and mortgage activity, going

Richard Marotta

and piece to of first then the I Jamie think, ask Sean get I second the question. question, part Collyn, your would think, that I would answer, So of into

you sheet FCLS. and off from basically, perspective why for a the So, scale for Jamie, don’t start balance it what the does perfect – with FCLS,

Jamie Moses

Yes. Thanks, Richard.

– sheet process of in balances because is associated you’ll what discontinued the QX, of of are of balance sale, winding So, Collyn, I the move we with impact operations non-core forward. virtually, down pipeline. in happen see There that that expenses that all going the we FCLS think some are see or you to are or that as that still all our

we through smaller associated get that salaries, as year. rest and to So, with the you’ll see leases and it smaller, in go still and things the of And QX. continues moderate expenses like

I how So, going that’s a to we generally forward. think be are thinking about go FCLS on

go in of over a Sean the it to residential And forward. mortgage lending now on – terms the I’ll so, kick or

Sean Gray

be Sure. Like Richard residential mortgage mentioned, to it’s relationship lending. going

pipeline about at we’re perspective, currently. Just from million, XX a

our customers, held-for-sale But for to depository relationships of purchase held in appropriate will be with working We to product banking. that our sale. will complementary mix customers, mud And target bankers a with the private XX% the be our folks and continue will mix. bank our XX% are it a

Collyn Gilbert

make to to sure, comment. then And gears just understand. okay. Okay, Jamie, I the fee want just shifting I

So, a it if core at we basis. on look

I think, and trend amount as I down. you low well? this were those a would going So, given, forward activity just down, SBA of fees quarter, continue to that presume, swap expect

Jamie Moses

Yes.

a right on to I loans. as way with lot only guess, back-to-back likely a relative And to that’s expect be think The I a be time, �� say about wouldn’t activity moment the to QX of on it. way. this think, in SBA generation, associated it’s credit not see different, to based that in book, there the expect environment, would thing our at that’s tough fair Without I to swaps I’ll swap loan there’s it I well. QX. depending wouldn’t hit market this business those value

don’t think, that I be we those conditions It’s comment stands. the it’s would negative I think back. I there. – But in the fees to think, to $X the general come still going the are economy allow hit So, have otherwise, things million that

Collyn Gilbert

then in kind okay. just Firestone Okay, us is, just million, the is just the terms And collateral – of remind equipment? of you of exposure, for can the shifting carnival that so credit a XXX what where minute, just the the so the

Richard Marotta

you that Yes, take Collyn. Georgia, one? why don’t

Georgia Melas

have fitness, of mean, component the they business to regards only vending. lines. have I their they Firestone, location-based they one carnival laundry In Collyn. have Yes, is

overall XXX So, maybe the XX%, is of say, would And that’s the a carnival I probably, guess. million.

Collyn Gilbert

maybe historical just Firestone have been, what I the know, their can Okay. were? it the given And you’ve where us, remind just before, levels you and peak within but then, losses loss also –

Georgia Melas

specifically, – charge-off information? you for historical like, say asking you When are

Collyn Gilbert

Yes.

Georgia Melas

XXX, for quarter. for have this versus quarter I this last Charge-offs Well, it quarter, at are XXX. Okay.

Collyn Gilbert

can kind offer And done. you of Okay. metrics that longer-term they’ve have anything, what do a you just for

Georgia Melas

again? as far As mean charge-off historical you

Collyn Gilbert

yes, Yes, yes.

Georgia Melas

the I number. probably do Yes. look. a take let’s I have – quick can

Collyn Gilbert

you’re mean, broadly, that because might asking – see just on exposures from If I you’re not differently? I be think, the question standpoint, one their the are. I collateral some should might just how and for it higher about we how looking you Georgia, given it, not the that’s risks I guess, guess that, and seeing while would I’m where welcome clarification segment, this be I’d a thinking that’s case, where

Georgia Melas

mean, I just you. but XXX,XXX. I No, quarter, I looking don’t this it’s historically, No. with absolutely. mean, back disagree

about quarter, a last Over quarters, January. it the in four was XXX, recovery in June. it third It was in actually and the back XXX,XXX was

Richard Marotta

Collyn, Richard. is this Hey,

the just touch I points. maybe of do guess, I not in front of have So, And a numbers couple me.

economic is way quickly. off So, of and well, were dramatic they lot actually One they pandemic it’s fared The in, to memory. very able in, – a is, a we’re last a This, a cheap couple the back things pretty I’m they’re the bounce going a of reasons. problematic. little of for entertainment, downturn, of

those We’re social when all and issues that that out. shake because and problematic figure, trying of starts how to of is stuff all to distancing

I things. world, and been we So, strange the them, and a phasing social out to could in, all come with be thing fall in climb strange, kind it’s very historic different, thing good, as for going through just the of not of it’s the all this distancing a charge-off those this for and back of anecdotically, It’s as their have it’s – This think, levels last only cycles. is cycle just couple everyone.

you So, will very obviously, get closely. historic numbers, we are watching but we that the

Collyn Gilbert

up there reserve provision is my as credit And segments? fell credit Jamie, – was – question. how this quarter, loan then any color among to sort okay. us give just to Okay, the your build how it allocated can any tie you of

Jamie Moses

Sorry, Collyn. Yes.

our have I slides think, we here. that in

Collyn Gilbert

okay? it Is

Jamie Moses

through Yes, can We talk give me second. it. just a

Collyn Gilbert

it’s pull think on will it. slide I I I just it in deck, the not see it. did I if

Jamie Moses

yes, You it’s know actually in actually, the what, not Collyn, we deck. –

maybe have. a was that in Sorry, version we different

detailed at out impacts those given not have we level. So, that

don’t I have guess give prepared – yes, that for are that So, we we guess. not And – will people. to consumption to That’s I there. I say public

Collyn Gilbert

taking much Okay, sounds with creep you the And company, expense that again just expenses I sort – of guiding discussion, expense the all are to stuff. at just business. the go and just I am that into So continued or – balance in sort book and how all and challenges obviously, I shrinkage economy, you the facing kind to thoughts are, continued understand of expected the other loan creep? back, expenses in the of worries. like are it expense right? than kind want continuing were around that the higher expecting projecting to of I then then get no it just was it. guess you mean, kind I I of curious quarter, up this least I invest

Richard Marotta

Yes. I’ll…

Jamie Moses

ahead, Go Richard.

Richard Marotta

and Jamie. it to going was then to kick I’ll I say – No, just over

I directly is program. going PPP be to initial think, the the pop off of because

and branches are a this is we are the or instead, either closing, year we last it investments in the limited, whatever. to things open, our a drive the on and it actually a from technology the that proof, even basis and had of One open branches beginning balancing through that has or close the act, year future of but as of company, perspective made the

clients. So, talk things the that and required that are from communities helped provide services, do our about. But the those we us

starting we’re as we we’re at so, to – at shrink from this perspective. what we’re all to – look bank, looking expense an And have

there or think, fourth short first quarter rebates PPP. we of So, by the the quarter driven again, then next walked what run, between Jamie and is the anticipate some and and the through or so and quarter it went I difference in really was driven seasonal and

So, more detail? Jamie, any

Jamie Moses

I that’s much The as Richard say Collyn, high points in same is exactly the in He QX PPP-related. increase there. Yes, pretty way hit the would expenses did.

to QX. to go those those away and in – then expect expenses We QX

back million, $XX So, to we expect $XX around QX would and to be number. QX million down the

Collyn Gilbert

curious, or is then expenses just of just is additional compensation is the Okay, that drivers okay. the And just related, that to mostly that tie – PPP, – what

Jamie Moses

Yes. it, Collyn. got Yes, you

the really a getting or working and on them system, So, getting of really, hard. chunk night getting really, working really bank, bank our applications together funded, in, pulled our entire large on entire day

other that some that the it compensation. there going right and that, it’s we bumps documentation to fees fees to like things things mostly from like compensation But So, just And had on well. be beginning, you there’s looking that. have outsource and we as based are that some at then, are

Collyn Gilbert

leave it very there. good. everyone. Thanks will Okay I

Richard Marotta

you. Thank

Operator

David And ahead. Davidson. D.A. our Please next returns go from Bishop question to

Dave Bishop

one question on is follow-up, now? A final in you Firestone, do you. quick thank just or Yes, happen much deferral to right modification how have

Georgia Melas

portfolio that. of do I David, XX% have in Roughly the Yes. their is process. about

Dave Bishop

XX%, I’m sorry?

Georgia Melas

roughly. XX%, Yes,

Dave Bishop

interest-only, Got specific just principal-only, the that is that curious how it it. on it about handled, is is P&I, And portfolio? being

Georgia Melas

for The days. that’s P&I, majority XX is

Dave Bishop

you. Thank Great.

Georgia Melas

Sure

Operator

and conference Marotta the to for conclude will any our question-and-answer turn this Richard gentlemen, session. like closing ladies to remarks. And back I’d over

Richard Marotta

your Thank all in interest you look joining in again thank to for here our I July. second We quarter you. forward organization. to results present our

Operator

now you attending The conference for today’s is presentation. concluded. Thank

at You a day. may great disconnect Have now your this lines time.

Berkshire Hills Bancorp (BHLB) 9 May 202020 Q1 Earnings call transcript