BHLB - Earnings call transcript Q2 2020 | Berkshire Hills Bancorp, Inc.

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Operator

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

David Gonci

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

available and Investor the will is our section SEC. release berkshirebank.com, website, be news on Relations the of Our furnished to website remarks. Supplemental presentation may in provided to at our refer our information we ir.berkshirebank.com, in an this and is at information

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

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

call measures should on to to call. are financial Marotta. results GAAP non-GAAP as will discussed References or measures you to conference CEO, news actual understanding performance included non-GAAP reconciliation is relied the and provided our In in comparison results addition, certain that, over financial in measures with of only on release. be Richard assist projections. not measures to and this our And The trends turn I'll be and

Richard Marotta

me for Gray, us quarter Jamie Thanks, earnings you for Operating Chief CFO; Dave. joining Moses, With morning everyone, executive on thank Officer; our Good along our second With values. and with the of President and our this today pandemic, is of morning, call. the and doubling our employees live we and team. other confronting devastation customers, many of is corona's Berkshire our and members commitment communities down our serve Sean

stakeholders. our our investing are of ultimately, And customers. we to accessible to for are relevant all We make long-term more our more services capital and building value and

valuable approached as and seen This of so relationships. our be to provides first careful century across to wealth that our In customer-facing in struck, to into bank. challenges, to advance of our fact, pandemic community I we while including to the for shifted remote When respond believe of kind experience the we these and in-store most can transformation the employees the our our far protecting non-branch serve we've customers staff, community during build procedures authentic are actions how our drive-through while services. XXst doing banking and bank and pandemic, long-term in mitigate an support and transformation year we banking so the work a new branches this traffic customers, accelerating for maintaining set risks continue the closing ensuring safety quickly staff employees our bank

For phone as result as and those deeper these pay, presented benefits our leverage migrate we full in this well to MyBanker has also whose our and employees to help fact, But hours channels, added were with as resulting hardships traffic, a relationships customers. reduced an of address the opportunity online concierge and maintained services, pandemic. situation our build from actions, retail

I'm most rates but throughout digital team's century and we MyBanker of a relevant diligent community bank. declined and into channel, have to which work, addressable infection have retail in to using also gained as able we branches a have minable increases of transformation service XXst Berkshire's been an our critical As part area, our result reopen customers traffic optimistic is our

teams Program Protection effort were can available in The across from through made communities. of of markets. Paycheck all small as ensure our our our be Second, of Berkshire's our all loans accessible were funds all channels principles the seen $XX,XXX, under out PPP to our were to businesses across of our majority reached

Public an access connections, together our business in online responsible staff the to succeed. entrepreneurs, announced Labs, that Business online reevxlabs.com, built socially access organizations and manifestation advance a community co-working that banking to hub resources. the the continued inaugural we around quarter, our Marking nonprofit is Accelerated a Library we strategy the brand collaboration vision Century of expert provide opportunities, to last distancing which Innovation new will welcoming, is to Boston resources mandate. and response inclusive Reevxlabs.com launch, help XXst Center, social and brand's innovation space also launch an and Christian Third, and to small with library's Reevx Library's partnership banking. brings explore make of with to businesses, spaces

me In and second earnings core turn quarter, environment. results. the PPNR let our Berkshire Now solid to despite cash generated challenging positive

our ratios to to focus while continue renew strategy our relationship and businesses end been We strengthen growing loans to our support The profitability regulatory has improvement. and on capital our liquidity market deposits. and reduce long-term leverage

metrics, and regulatory strong release, scenarios stress our all we maintain and including earnings test, the to we adverse indicate margined noted As subject analysis that well-capitalized capital designation. scenario in severely liquidity in including well the our we're

As pandemic, deals now result credit did and loss of bank's Under the quarter. last losses unrelated tangible is write impairment value. a decade, over the book bank goodwill tangible capital, well cash or during the factors. flows. bank to stock based carried bank regulatory due the to strategy for noncash a value goodwill with macroeconomic market we the on accounting to are activity necessary to at a pandemic of of previous was the sheet our stock impact liquidity the acquisitions. recorded consequence excess balance book no equity, These number for provision on The time tangible market the trading The due off below valuations in to

loan for losses the shutdown. modifications our reserved second pandemic. regulatory therefore focused guidance. provision the common action. a and the of second borrowers estimate to is additional This The PPP believe request performance on rapid been large are provision the equity, further We with carefully based focus the economic unaffected incremental loan normal we've recorded losses. quarter downturn estimates. the current measures, this a the in includes due is in within credit, within moved Shifting including We metrics Any into our provision the underwritten. reflects remain on the ranges. return our historical the forecasted modifications relief on We're recovery tangible economy conditions. know, quarter core loans properly loan first for as in which excludes of as during our Northeast well on benefit The loss working future by goodwill closely current are loan from you As drop quarter federal the as the we

the total from to improve. PPP on as and here cash expect decrease out balance modified flows significantly We borrower of loans

work strong that weight and respond Officer have strong We since company decade workout borrowers we have to pandemic will ago. Risk teams lending, I through a these teams while built Chief confidence extraordinary about credit – manage to joined effectively I the have as its conditions. we with our these

includes more further details material to. that the we support than industries program investor sensitive Our lend our on borrower

and operations. shutdown second driven the Turning are which loans PPP to loan deposit by maintain quarter. originations overall were market. the included Loan industrial in in our We employment and recorded growth throughout the These originations helped during loans. strong loans, commercial

as those most geared year, borrowers We service apply up liquidity under to government both included for and forgiveness second and the expect the of receive that from of loans. will the during payment they balances, accounts we're during Deposit the shutdown retail program checking commercial these and guidelines half requests the PPP from growth through. come this accumulated was and in concentrated account amounts the

the highlights, at it comment on commercial our like our potentially turn to to of quarter's it social the initially to industries investor is more a identified and about also summarizes minute some information loans Before which our website. in provided deck, that to I'd includes I This pandemic. distancing deck take Jamie, as information about portfolio. on sensitive to We additional loan we the Slide X over

pandemic, properties or balances Excluding have to groceries, outstandings including our of materially these either comparatively PPP owner-occupied improvement the note loans, not are last home We which quarter. performed stores and since anchored retail changed have most during pharmacies, that well wholesale. by

note sensitivity. not as that our are also elevated pandemic loans have with generally and We build-out for construction having mostly properties viewed continued

our for XX. payments of are our financial billion, note expiring, underwritten CFO, information and on and that, market. basis. customer customer details modification expect are the our Jamie? on XX% shutdowns current them case-to-case modifications approved were were the total discuss the for conditions. some in XX% as scheduled Moses, to a Slide II causes being I'll outreach Any We spreading to to quarter. that These XX-day modifications Turning of field us the I round to our liquidity to and to currently from of over reflected based support return Phase to Phase XX-day call $X.X the requests Jamie turn another With through

Jamie Moses

Richard. Thanks,

to of quarter, was per the uncertainties estimates current last beyond discussed million loss which our the assessing measure we Due focusing GAAP situation. write-down, $XXX variability negative of pandemic continuing on looks we're based of of is operations PPNR million share. and $XX.XX or in and As $XXX loan on PPNR goodwill This the measure future a the events the provision, the operations.

linked part, net loan was or charges income, interest interest of Also, quarter. per and which Our some from the costs to down share. rate short-term or a PPNR variable This we PPP volumes is impact bonuses the on reflected benefit driver lower arising PPNR, flux, as expedite duration lower limited rate, decline million discontinued main the The loans per contributed loans, of higher core of $X.XX this extended to higher $XX from deposits downward quarter in due drivers the the excludes in several in PPP positive a were protect Core lower start goodwill in and runoff which risk markets deposit processing. and net $X which and to the about on There including near rates. of this accrued million by net liquidity which decision pandemic focus was decline, loans. the discretionary operations. decrease In rates $X main the the on million were in the rate margin. management $X.XX our of to from investments of was share was

our Demand loan We in have and for aircraft some our most planned net loans restructuring balances part other held in in $XX sale also mid-year, has of we soft PPP expect had flow quarter deferred runoff fourth much at down of this of the been to restructuring. this was The interest small of At as completed balance in piece million of The and a we and third week strategy. into fees commercial end. million on further in to the million as private portfolio earlier point, this our At for sale. $XX current of portfolio we of at environment, had we quarter. this sheet $XX small remaining midyear, income loan have closed premium. aircraft

commercial runoff and for investment rest the these of loans slow of Excluding PPP, with and securities. year. balances some that expect will the that replacing consumer will We're evaluating balances the we stabilize of mortgage

XX half funding we in year opportunity margin XX that in points back sources believe we PPP, as Excluding price the down. have the basis points basis to of

add to to accelerated quarter fee as recognized $XX and this are will in fees to In income fully rest the up PPP range. to margin will quarter, we income the million the addition forgiven per as and Addressing picked that, at the interest $XX million of loans normalize in see statement, second anticipated are in be time. that hope income and the

expense side, decreased On expense the goodwill impairment, by X%. excluding the noninterest

Excluding processing mentioned, PPP down expenses I that quarter-over-quarter. costs the X% were

so ways to will expense for trim where year. and current roughly the quarterly we expect remain look of back to We expenses half PPP during to to the level ex the continue we flat can,

of little. to about other XX% a of or balance a to loans books loans with the be On by expect be down all year-end off flat we of the PPP total sheet, the

commercial we're in mortgage expect see moderate pickup originations and downward trend the and We regular in to balances. to line some hoping loan usage,

deposit On on be to balances steady focused we costs. we expected side, had reducing deposit originally the as

depend surge on to liquid public the deposits midyear this health economy. conditions in will run down, expect and We in the but

as The expect charges to the PPP noncash wholesale anything provision did Like the is it goodwill not the does off funding quarter. books. first coverage in was due the baseline decrease goodwill included during loan Richard which the and bps, was as basis and loss loan midyear reducing to loan reduction provision, of we expense to quarter, loss excluding are conditions. for bottom charge, be to Due the related of pandemic line We discussed. and come loans net the loans, points reflect losses charge-offs, The a balances XXX provision loans the government guaranteed. was PPP XXX allowance from forecast but

second our in-line million charge-offs pre-pandemic of in normalized $X were the quarter net expectations. with Our

stimulus charge-offs, for year of most on we provisioning show on would currently how that up higher While from to expect here next are managed we depending is out.

tax the to line. Moving

the of goodwill tax record most deductible, benefit not write-off we was While the on deductible a tax did portion.

XX%. rate half second expecting the the we're For around of a year, tax

from I'll decreased and the charge the this anticipated, related over in plan the Richard. of as discontinued share Finally, quarter for prior charges that, quarter. when With call cents the we expect the fourth operations third these turn less than the quarter only in couple sale a to complete that to We sale. back to a

Richard Marotta

that wrap that bank, our Jamie. accessible, by I'll a we to of progress all Bank authentic with kind we up Thanks, continue make serve. Berkshire new reiterating long-term of community and transforming relevant to the for community strategy, members

Excluding maintain driven believe buffers we generated non-cash stresses expected. strongly as improved balance by income we in Strategies [plan]. sheet light PPNR to excess on charges system. severe well regulatory emphasis discussed, needed for We based second We're liquidity solid PPP see on from capital the suspended and PPNR to these expect against well of regulatory generation the to capital the earnings non-charges capital targeting we've as half, we maintaining are strength pandemic stock operations. second is beyond within – of and anticipated quarter continue core adverse discussed the in and banking and loans. that repurchases buffered and the impacts, capital in anticipated the the internal our part cash not generate we We in the stronger metrics, the

of half $XX first related taxes, charge-offs, PPNR dividends. our the million For cover the core year, and of generally

to plans call repurchases. for continue us return capital original this excess Our to through

internal would While our attractive value. comment our that of are being the suspended, repurchases projections would on and market repurchases to conditions I and analysis we own current based find

we in bank's results. more coordinate dividend determinations and regulators who the make have those in seamlessly allow and to release, As quarter assessing changed federal role procedure, the the now earnings in we'll us noted our later to have state a with

in the century us about management numerous as While view to community we're convincingly conduct off virtual standing, our XXst investors Jamie I believe kept of able recent strong credit our speak with has the the our franchise strategy meetings and our weeks. out and road, about bank. reached of to our our to pandemic capital environment, strong strengthen a I

strategies Our higher Bloomberg recognized scores have ESG also and from been with ISF.

Berkshire. stakeholders these to for opportunity are importantly, do things right the for tremendous offer business actions a and More our

on As the community the a Berkshire's long-term bank, serve. we depends of success success and in truly live communities

deliver our sustainable lines all operator remarks, and to foundation to long-term Thank commitment our for value I Our providing questions. performance. of This completes stakeholders the the for the creates prepared to invite you. open

Operator

is Mark Please [Operator from Fitzgibbon Sandler. from Instructions] ahead. go question First Piper

Mark Fitzgibbon

Hi guys, good morning.

Richard Marotta

How are you doing Mark?

Mark Fitzgibbon

what given Richard, likely provision of Hey but had provisioning, credit half back reserve expect elevated that will year? we Good. lower the the ratio and said levels should heard the in you I and about be

Richard Marotta

but of this to really on goes. in Mark, off is, – But pandemic this and reserves And pandemic chime again, be where you Jamie mean force think, a should as is stabilize, to think industry. driven different of right the to I'm turn, to this the a that I here. anything of the throughout kind depends I Jamie, going and add? really I lot of towards think if takes comfortable it now, economic year, going know, it that that's I forecast. have what built end banking we're when

Jamie Moses

Yes.

since that I we think, generally by we're at about it last or forecast on I'll our basis relatively economic say that is, at provision this this Mark, way stable. that this go-forward the forecasts. in a thinking way, worsening least was And quarter's looked models, driven is

you environment. perspective, in be what going provisioning broader – agree to So actually levels Again, determined I by happens could I the be lower. this macro from that don't with that is

losses to actual We of the potential any at through results moment. aren't flow seeing these

about that point, least think thinking that we're the provisioning at that this is going we realization losses it at levels, I these the – driven way by are be of at to forecasted. of so And any have

Mark Fitzgibbon

the will changing capacity? then I dividend, the think gears the and be how they bit think do Okay. look And guess dividend-paying you regulators curious you at on when determine little about your a charges dividend, non-cash I'd

Jamie Moses

part they're Mark, everything. at going results. to non-cash again, the I think of charges And look our are

dividend holistic that look I a to trying the perspective. we at from think are

also the will think at perspective. I regulators it a from holistic look

past, While the impact in we earnings. have capital those a we our we think continue well the guidelines, we'll evaluate that strong they that the projections to are have so capital in regulatory and base. the future And as our as do context results dividend strong of will and of sort of base

Mark Fitzgibbon

or runoff general, Okay. shrinking? sheet, it is look balance future, in all to significantly say, months continued if XX today? the see smaller XX And guess in of I and balance there, were the would to in so sheet portfolios here then that expect the we Do you than we, I it – be sale at keeps

Jamie Moses

way be generally restructuring do the I balance some think sheet or or be environment sheet Mark. for on we will see I set whether find to growth, macro going think speaking, right think, lending we're still the out in example, the rest is, now don't dependent I balance that our finished years so, of indirect is markets. book, not we The on auto had There good with but that the that. runoff, we our to ago, it and X.X opportunities largely markets so

that any the be more off concerted than moment. run going So, to at there's effort to where necessarily don't I we're think at,

So, that's that. would I think we think how about

Mark Fitzgibbon

the as of and a So it's to forward, would of for you place earnings balance decks sort getting company? characterize the and going where in position predictable a sheet sort in clearing start a more the we this of quarter a good see,

Jamie Moses

fair a that's would my That be there, think I Mark. assessment go-forward. a on expectation

Mark Fitzgibbon

you. Thank

Operator

D.A. from Please Bishop Dave go next The comes Davidson. question from ahead.

Dave Bishop

guys. morning good Hey

Richard Marotta

Hi, Dave.

Dave Bishop

of maybe I points basis in sort of so organic, XX could the can the Maybe sort have of the some basis points lay out through just speak, to sort expansion, that for half preamble, reached the of I on in year. you heard think second you asset core maybe you're to margin potential be seeing XX the of Jamie, the interim? walk yields think you here and drivers, floor things a

Jamie Moses

Yes.

quarter. Mark, is into sort probable, even We highly second – think of I fourth has further that down LIBOR the on third have from quarter re-priced quarter. will still

I think is the things. two going to we're on the benefit main margin the of driver going be to see that

towards the have investments get books that as is liquidity second year. those of here excess expect We many we One the – don't think in have we of we end a little bit to on quarter. as of our short-term the the

And that – that driver lower so the NIM. a of was of a was driver partial

We have is, of that less the then expect forward. thing the obviously, to going And costs. funding other

a the see driven our our to re-price year over continues costs deposit of by the significant time to costs, improvement time. back expect We funding book half in deposit in changes over as

Dave Bishop

Any to quarter? the the liquidity ring-fence way what was impact drag this from

Jamie Moses

just liquidity that excess about The X that piece, drag liquidity on points was liquidity. basis

Dave Bishop

And on sort then in it. Got the – portfolio. COVID-sensitive the terms the the disclosure of maybe of appreciate commercial segments

is Just rolls, rent and curious update an in seeing maybe some on maybe what efforts segments. what terms of terms rent across of of collection you're deferral in that part these of

can any segments, sort they're how of details Just of up. on some you those provide holding

Jamie Moses

Yes. Yes.

this that XX%. things hadn't that think seeing the dropping roll the really I these In in some things bounced again, yet seeing the XX%, the with is sectors start this field we're hospitality one a is trend back that sector. – we're – off, We're listed, as seeing conversations really Dave, clients. our of So these from by is were the to

of comfortable out. I is makes round there a of It's The flagged. going is really need So, kind deferrals. thing XX% that suburb-based that over portfolio. us It's think another to is

modification else, other that are either in sector still the strong only seems where materially significantly. retail the right and the be seen. that is now, So, Everybody the are sectors, all the or mods to metrics and very dropping that,

Dave Bishop

on it. game, you're a sounds bit second more looking bit the that like Got It for diligent little round, more in be a you said correct? little to is underwriting, skin the going

Jamie Moses

reach my I $X.X modifications our doing learned been not macro million, proactive long a issue, we And different in were I I've Yes. and very concern, you restructuring time out remember out. ago, one especially it's I it if of when to a entire work things many they and mean, as it's ways. career. the a that, their they client, reaching remember were mean

And out. so reaching very aggressive we were

round, to But start And individual things. and into by we're as things issues to those asking now, dropping we on individual going are of so at the we're now what types are asks we look to is get we're seeing starting potentially could second just basis, right that for materially. the other grab

Dave Bishop

color. Jamie, then, expense just good That's And circling outlook. think real it. to quick, Got back the I operating

down go-forward And to ex-PPP – I from basis? X% that is correct? core the expenses think expenses linked were sort you quarter, baseline of said a that's use

Jamie Moses

That's Yes. baseline. the

got it, You Dave.

Dave Bishop

it. Got Thanks Jamie.

Operator

question comes Please from The from KBW. Collyn ahead. next go Gilbert

Collyn Gilbert

good guys. Hi, morning

Did Jamie, quickly income million just the $XX make you $XX I heard sure right? on fee at just indicated correctly. Just, million you to – a I could quarter, fees. that running be is you that the

Jamie Moses

think Collyn. those year. the back where think, we in Yes, the that's That's, are of right, half going shake to out levels I

Collyn Gilbert

Okay.

So and wake we're this et just in what seeing that's of just et others. what quarter, a of compressed from improvement material not from kind cetera, activity, cetera, the

driving optimistic that, So kind view? that is what of

Jamie Moses

Yes.

have few the a fee deposit line. So, in see to going that more maybe million we're we

We stabilized. sort of also have that just general have economic conditions

income talked last about sort so And being again, quarter, fee nature. in of we macroeconomic drivers

see XX So, well, externally BC we're that way able I loan we to see team on our be gain reporting driver the we'll it – from to the large is more be you'll able deposit think, – but sales think going fees. on we'll the to some get as to, that

Collyn Gilbert

Okay.

can is side, expense broadly, there expense I it's it's I my I and of you're Oh, there – know longer-term And kind of you Okay. the there balance think a sheet I quarter. I but just and Obviously, that buzz that, obviously opportunities is considerably And are been, with this guys then structure? than mean question the – more is But last on – head. then do the know smaller more okay. That's asked in done helpful. you kind – okay. on

Jamie Moses

always I Collyn. think that evaluating that, we are

in are basis. through We a on consistent the going process that of

I are we opportunities I are we at things. looking think that. we're but don't – And side have. I expense the things. at the expenses that going at promise, anything that there At And to constantly can very vigilant on think we look that on we're that to be to of moment, we think the looking those have

Richard Marotta

we've right. Yes, Collyn, add, and reduce just we at I'll I that, we've expense. shown the look continue on bank, diligent the our ways moved mean ways you're and as looking expenses down. at very We're always to to we're core

Collyn Gilbert

Okay.

your Okay. comments, evaluating And so How you capital the repurchases. – the then kind on are the interest of in or it in repurchases thinking versus about potential mentioned general, Richard, dividend? sounded in you just dividend opening the

Richard Marotta

capital, I in obviously, dividend look suspended. our the that I trying have at when very uses to make this a attractive to Well, is stock, point guess point I at was I think, been comparison of repurchase Dividends it's paramount. the buy. are other

And we capital so the when to and in continuously be our buying stock. middle a the pandemic, were of will use of if back

So that comment. of was of kind point the the the

Collyn Gilbert

a the cash the an input, have Will Okay. of And be now issue holding Got basis? actual that has company, dividend, available is at issue? on go-forward is an obviously, that terms but an input, kind in so recognizing, Board what of then regulators your it. your on an

Richard Marotta

No.

Jamie Moses

that, issue No Collyn. on

Collyn Gilbert

helpful. I’ll Thanks there. leave That’s Okay. it guys.

Jamie Moses

Collyn. Thanks

Operator

go from from comes Point. Please question Laurie Compass Hunsicker ahead. next The

Richard Marotta

Laurie? doing you are How

Laurie Hunsicker

morning. thanks. Good Hi,

available wanted stay holding to cash Collyn is Just company? where what at your the was,

Jamie Moses

have can on. in Laurie, of I back up follow that that me with right later now. I you don't front on

Laurie Hunsicker

Okay.

similar And of question. sort Sounds good. then

watching can more your you're say, other words, think dividend-paying back," pull line that to approach help In would sand can where are loan about loss thinking maybe you your we In you capacity, to with in broadly? just the think about benchmarks terms to is the respect of where metrics broader help really credit closely about some where you "Hey, or us Board watching? you're provisioning us need that that

Jamie Moses

Laurie, have it terms. we So those not the lines I think that sand. any in about don't thinking We're in

I terms we charge-offs internal well about of we guess I really in a think it's through a loan it's generate expect what provisioning. a would our ability as not pandemic loss to time the discussion to to as it's capital, provision, see And over see holistic cycle. that expect

think those levels, it what are we we and are thinking So, levels at holistically, company us a really generating. as and of the Board around I about capital

So, there's then. no at the decision announcement we'll real the its on regulators, an make in I with quarter sand, line Board from will And this input don't the think in make point. and later

Laurie Hunsicker

out Jamie, it I as that leisure, on loan then can list stand about help we you great. your And where more would through of Okay. $X.X I [indiscernible] billion retail, or modification, categories, can restaurants, including it be you on such mean run sensitive so of us the think some Firestone, those, hotel, however yes, to want

Jamie Moses

that trending and of Firestone, Firestone. you the trending in the sector the is and all that now is think hospitality ones – and those I materially if down. with of ones you then that right even I So, listed, all categories think mentioned took And down, of itself, exception every are

indication. where back to step and it's a hospitality just about So, think the is and travel and lot not, seems be one kind business travel, there's vacations if really of it, importantly, you of and/or business driven more hospitality not by

up, to somewhere seems XX%, they is come Firestone. beyond. XX%, down still Everyone be one XX%, as is significantly else tracking were I. even these probably the – So there things Firestone that materially and above is of that where in and be seems Phase to in in

helps everybody see still above this sectors significantly that down but I you, where know we those don't overall is. So two again, if with else

Laurie Hunsicker

Okay.

it book modified? So of of $XXX your million, is much of hotel how

Jamie Moses

I Phase about XX%. was

And and that's asked so I you we for. think – hospitality the anticipate

not think but I going that material. so probably lower, be And slightly is to

that still of is anticipate driving that we our So a in modifications II. Phase lot

Laurie Hunsicker

Okay. as so you hospitality. June of and correct? XX, But or hotel that so Is were your XX% modified in

Jamie Moses

yes. In Phase I,

Laurie Hunsicker

specifically $XXX on then was modified? is modified. your I how of about XX% that? of think how was million, Okay. thinking then it modified? So that quarter, the that of we But the book, was last was And last quarter. how are $XXX much much that million And book? How leisure that Firestone much

Jamie Moses

So, for up you. we'll break that

the So, if the you look tracking like that. I so and XX%, I, of the was XX%, right other in Phase tracking, improvement – probably is piece there's that some than XX% would looks at it's tracking, about the $XXX last XX% been running I. that million, $XXX say, is – million, leisure, Firestone, we in about Firestone now was there. it's lower high modification That Phase which And in significantly in

XX%, those down. overall, is as we're range still to as sticking start coming with in for are our things seeing have what – That's conversations Phase II. lenders XX% and ask numbers Firestone them. So customers

So, is into normal sticky Firestone is their to the payment. the and most second is hospitality is most back probably sticky, down, coming trying get companies everything these

Laurie Hunsicker

Okay. XQ balance million. And a balance Firestone was of what the have of as XQ? I on $XXX

Jamie Moses

million. XXX

Laurie Hunsicker

Okay. And then do that's you have or delinquent noncurrent? the amount

Jamie Moses

going that of walk for can information. with through to kind ask you specific Georgia that Laurie? I'm Georgia,

Georgia Melas

was the at of about million. X.X second delinquency Laurie, end the Yes. quarter,

Laurie Hunsicker

Great. Okay.

$XXX million where on And your then stand Okay. modifications you there book? same do restaurants, question on on

Jamie Moses

the around. open trending XX% So in been starting We're the modified. for we're They’ve open are open They've most our takeout, all that as – they're open Again, Phase curbside. way to and I, now. seeing footprint, restaurants now much about lower. for been

that. So improving that be flow to seems cash in

the level delinquency end million. that the that at the quarter was we $X down being and of So, in anticipate

Richard Marotta

on book piece is other and on remember, about had level it. XX% you SBA components that if another of is self XX% some that And the touch guarantee of

booked So XX% Dunkin' Donuts between of guarantee. is SBA and restaurant the

Laurie Hunsicker

That's Okay. great.

you kind can same of provide Okay. million any and retail, on And update numbers $XXX on of exposure. mall question or maybe round then

from maybe billion, the how is $X what's modified and exposure? of much So, your [indiscernible] mall

Jamie Moses

Yes.

So It's roughly I'll the tenants, it's you is it's big $XXX it's These portfolio owner call the million, credit all national lump $XXX right, are grocery, retail million and you drugstore. at together. is, then and of that the at it, balance occupied. sector, anchors. When look investment, our box, investment kind look or

around we significantly were Phase XX%. closed exposure. be XXs, II, call high the portfolio. below And overall again, the tracking significant, You're now to in seems have piece XX% of don't it, that that. any XX%, deferrals The I'll of XX%, Phase I right mall

kind Big grocery this if many And because people of know, if pandemic, those the and traffic BJ's has of been as not one's those whereas out have the we've or grocery Box, Depot stores, are malls, no as stores anything, increased. and come traffic, going our out of Home they're you going eat. eat – out things, to to gangbusters So, kind going

are So And improvement projects lot doing because helps to else grocery home actually the what people got restaurant do. hurts store. the they of nothing a

are doing Lowe's fine. So, Depot and Home

of that's delinquency So kind the step and [indiscernible]. book

Laurie Hunsicker

So, thought or so just clarify, I just had to million exposure. or you of in $XXX in retail, clarify to your – billion so mall

is drug talking liquor that the talking about store, correct a not grocery, number? not that about store So Is anchors, correct?

Jamie Moses

But it's not XXX million exposure. of mall closed

Laurie Hunsicker

million Right. is just or exposure, that so XXX of mall But it's correct?

Jamie Moses

what's the the... for Georgia, exact number

Georgia Melas

it up break neighborhoods, malls and Laurie, It's we footage. basically $XXX million. differentiate by square we And between when

point, of not several other is Lowe's stores the bulk grocery the it's So Richard's is, with those or many between, That with Wal-Mart and malls own a It having or the each then in street. cases, in that the outdoor mall. exposure. their to from closed entrance again,

Laurie Hunsicker

Okay.

opposed that is of service-related of a mall? more, sort then sort to traditional So as

Jamie Moses

Yes.

Laurie Hunsicker

follow follow up. offline. up can you I can I with

million. you great. said Okay, $XX aircraft, sold That's you

Let $XX down let keep to What it with you doing are million. – to You're that's go going that? it run that going just So forward? off?

Jamie Moses

ahead, Richard. – Well, Laurie, go mean I

Richard Marotta

know – book don't was. the the book I mean I what Again, was original

to And issues so see in it off the there. in any sell We're sold looking credit don't We tranches. last tranche. actively we two

it. So, loss sell to going take a we're to that on not

on looking at premium taking So, this. we're

the at. it's last It's issue. at looked we and was actively looked so tranche took being price credit the We got like as it we don't right see And and a it.

Laurie Hunsicker

it. much million modified? Got $XX that of is And how

Richard Marotta

back Yes. to I on. have Laurie that you to get

Laurie Hunsicker

Okay.

about of $X Okay. just it's small, On two questions million. know on here And it's down credit. to then fee, I sort more probably tax

if have there. updated number an you wonder Just

Richard Marotta

It's X...

Georgia Melas

yes. Actually more – down about I was X, Richard. to to going say sorry, I'm it's

Richard Marotta

[X.X]. Yes.

Laurie Hunsicker

And that? much your book, how then is loan Okay. leverage

Jamie Moses

Our about is leveraged loan book XXX.

lot a is we syndication which So, secondary a that. in me it has liquidity market, it. purchased million let an give of breakdown deals $XXX on little active in Probably of that you

we that's of ago. point, X.X decided a bit the little we one when strategy the a that years of As started run touch off portfolios to

at XXXX, $XXX end So $XXX of probably was the million, it million.

We're down actually thing and overall with of very balance actively call those that moving look finance at of rest it, parent. other stays of we deals we the as by cash that it, acquisition the it run we've market And flows underwrote XXX. we is. So, about strong I'll the, finance things out we are where comfortable it the the things. customers The or existing to

but a do what's We an and of secondary so, was them, And in very them, purchased very the bulk of robust market. in accommodation. these do active liquid but we'll and we many do as here don't

Laurie Hunsicker

other Okay. just you have probably is of on do in modification some number that overall realize categories, And a snapshot. And we have I included but so book? the it an

Jamie Moses

is in modification the market, zero. there's that that, numbers book? is no any I Georgia, the think in and modifications I know in mean, this there secondary I

Georgia Melas

customers, In core in yes, $XX is but piece, number, have don't million the is in component. piece, I that but on some that exact there the larger the any. modification some there isn't there smaller

Laurie Hunsicker

helpful. That's Okay.

the And impairments. other for goodwill suggest But more taking everybody's banks doesn't you much Richard, mean across is Can would question, last of It I we're you. the then goodwill price little I paid the impact down; And appreciate on is non-event. I you Are something price tangible your talk stock impairment? country too not it's bit math? that you merger realize past Okay. down, missing guess, I a just generally acquisitions. your somewhat about book. for seeing a stock but

think about can you more So, Jamie help just or Any can you us provide. that? color broadly

Richard Marotta

give I'll Jamie Yes. backfill you and can I which mean my it, then there. my spin did in I on statement,

we the are right below goodwill book stock prices and think these above the deals price, the including now, tangible stock ours, sector's hence that bought, to need also what are stock I tangible.

So kind of we I banks, I this there are And us, it's stuff would second the an accounting lot view did first inquisitive puts don't some adjustment that we imagine have the in into in that of off the rear And probably like banks to but It say quarter. and again, quarter. mirror. a do.

nothing paying above to do So got anything for it's misreading stock work. and us add? where do acquisition not has with to to do. the It's an Jamie, or to an didn't – basically tangible acquisition, below, is was got what math you significantly it and an now you accounting function our

Jamie Moses

it and the Laurie, And before wanted XXX about that it's you you just cash, of – wholesale. number, there, just quarters then, just I think got holding company is you that coverage at about Richard. Laurie, company to get off, hop in six capital holding million

Laurie Hunsicker

much. Okay. Great. Thank so all you

Richard Marotta

Thanks Laurie.

Operator

from The a is ahead. KBW. follow-up go next from Please question Gilbert Collyn

Collyn Gilbert

we know sheet what Just in things. [accretable accretion all? quick more two stuff, Jamie, trajectory income didn't about – the think just that should how change the going and write-downs at and balance all forward? movement the should with I income] the does

Jamie Moses

Not really, Collyn.

on continues go-forward. it think number to a I be of a minimal sort

Collyn Gilbert

Okay.

million I this think, if quarter? $X was think it – I So

Jamie Moses

Yes, I think yes. that's right, about

Collyn Gilbert

Okay.

it don't that just left have hold So know there? Or what you should at we I – level?

Jamie Moses

going Yes, down. will keep that

speaking, runoff as that of about that, down of which generally accelerate of those it's straight-lining to of independent down. think of going sort but some may loans, kind can You go

Collyn Gilbert

Okay.

to Okay. you And heard I want make just sure correctly. then

that well, reserve, didn't maybe you question. On say said provision, guess that you you made, had we but provision the comment I my indicated – that's should expect you

terms trying if just So, to – in right. reconcile, of

we be that to So – reserve but reserve that to or charge-offs? that the to going provision, you drive likely you had to indicated are under charge-offs see is is what's CECL, levels expectation the it will start going match see decline, going is charge-offs, will the the

Jamie Moses

If level being need I'm trying for get charge-offs, we we environment driven on see macroeconomic That's there, continued the Yes. normal the the to and by forecast, No, to So, replenish there's a what we to don't if a would what is provision really see has the couple that. you right? reserve of have the would stabilize, the reserve macroeconomic right? things charge-offs, of just at. with going

Collyn Gilbert

Okay.

to going But So, down. ... is reserve the come still

Jamie Moses

that's right. Yes, Potentially. Yes.

Collyn Gilbert

talking charge-off Yes. But by part driven more about the reserve just macro net you're be of part. than methodology quantitative will the the

Jamie Moses

Yes. Yes.

Collyn Gilbert

Okay, got it.

wanted Just clarify. to

Okay, thanks.

Operator

turn This concludes over our like I the for question-and-answer Richard Marotta closing conference back any session. remarks. to to would

Richard Marotta

to I on thank you. seeing we in attending, and to just look October. forward Thank everybody everybody our call for want

Operator

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

disconnect. You may now

Berkshire Hills Bancorp (BHLB) 2 Aug 202020 Q2 Earnings call transcript