BHLB - Earnings call 3 2023 | Berkshire Hills Bancorp, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Berkshire Hills Bancorp Third Quarter 2023 Earnings Conference Call. [Operator Instructions] This call is being recorded on Friday, October 20, 2023.

I would now like to turn the conference over to Kevin Conn. Please go ahead.

Kevin Conn

Good morning, and thank you for joining Berkshire Bank's third quarter earnings call. Conn, and Kevin Development is name Investor Corporate Relations Officer. My

and Mhatre, me David Officer; Officer; Risk today with Chief Rosato, Lindenmuth, Officer. are Financial Officer; Here Operating Nitin Executive Chief Chief Sean Chief Greg Gray,

non-GAAP statements remarks A X non-GAAP measures. GAAP to news presentation, of to from statements. the Actual and legal reconciliation our forward-looking materially financial Please differ earnings will see included include and could disclosure is Our measures. in statements those release. refer of non-GAAP forward-looking financial results on measures referencing Page our

over At this time, to I'll Nitin. turn the call Nitin?

Nitin Mhatre

Thank you begin my can Kevin. third comments where highlights morning, the the for X, you, everyone. see quarter. Good on I'll Slide

industry, margin While trends also by asset the and rate reflects remains that encouraged for in quality environment NIM durability. banking are deposit in by we the challenging compression. our Berkshire deceleration overall a in encouraged trends We're the the and

environment, quarter-over-quarter, will While flat expenses rationalizing heightened focus we have were given on challenging expenses. the macroeconomic

Some improvement. initiatives to long-term all sustained exploring create a and other efficiency begun, of we have avenues these are already

is David line will Operating declined $XX.X expectations. net declined X% and in from decline by discuss income. quarter primarily his increased year-over-year. a up linked $X.XX with reserves loan X% operating in and interest loss Charge-offs of net is trending EPS income detail $X.XX, both remarks. modestly. in Credit this of EPS in million more of linked quarter, Year-to-date

basis, Deposits end-of-period down an X% quarter X% basis. stable linked on an were the and average balance third in up quarter, on

our and our cities we believe in clients mix and funding long-term relatively industry, relationships immune across our stable, the not with is we're While the facing cost to deposit markets. history base given smaller pressures

up Average X% commercial consumer balanced and quarter, loans. across linked loan with growth were balances

is strong. the updated in less details appendix tangible remains quarter with portfolio, sheet on the and a the X.XX%. and which our equity We portfolio XX.X% page office of a ratio common estate real geographically commercial equity both on and portfolio Tier We've ratio provides resultantly added appendix X page overall ended our granular, of our diverse balance of that common how risky. highlight Our

David will moments. a cover in more few in these detail of some metrics

our this year BEST of program. BEST the On quarter marks strategy X the front, X-year start of

We mobile this branches platform footprint, continue past real sale to rationalize estate towards we the of including quarter. journey, banking of of our third online continuation and our In office app X banking the our consolidation the digitization new building quarter. launched X of and end

enabled Directors. in bio bankers. page Callahan us The our included to hire delighted the aboard opportunistically joined Board Anne. that Welcome appendix. relationship-focused deposit We've our disruption markets has Mary frontline with Mary a Anne and in We're of also has Mary Anne's

key on performance program's X shows Slide progress BEST X our metrics.

to the As said path in we've straight past, not will our targets be a the line.

consistent his the at We've our ROTCE ROTCE, of return end on which review more for We with points tangible or target range are added remarks. near low at operating our our calculation to XX will return basis on equity, peers, David X.XX%. new and a be in common operating assets

Our to percentile ESG XX nationally. in annualizes the and remains the quartile top million, quarterly our PPNR score at $XXX

XX. XX, significantly the our XXXX Promoter in of Net Our quarter Score third came NPS year in at score full higher than

and my vision dedication our their our Berkshire and work bank. continued to Bank us and our Their to strategy commitment customers use to to colleagues relationship-focused to and hard commitment for is thank what sets this community us be communities to high-performing a brings want I together opportunity of all apart.

in detail. to discuss David? David to more financials over call the turn I'll that, With our

R. Rosato

of overview an shows X Slide Nitin. you, the Thank quarter.

year-over-year. were diluted down and share, fully million $X.XX down per earnings linked operating quarter $XX.X mentioned, $X.XX $X.XX Nitin As or

down and was X% year-over-year. margin interest $X.X or was quarter year-over-year. Net million basis million $X.X XX or points X linked and linked income net down X% Our quarter points X.XX%, interest declined down basis

was $X.X loans X% million $XXX quarter last from average X% million X% the the versus income linked or year-over-year. X% were up Operating or noninterest increased and or up in quarter, million increased X% second quarter. up year-over-year. Average and expenses while deposits quarter $XX Operating flat

loans. second million Provision charge-offs $X.X expense million at to for July for or in our credit basis in and million were midpoint losses We quarter. expectations XX $X guidance the at the flat of allowance $X.X quarter with was of points our the Net line average the by increased quarter.

or consumer. estate balances and million declines our Slide X% X books which residential linked loan shows average had our up We in growth were with and mortgage C&I detail quarter. $XXX across balanced real more on commercial modest

our shows X in $XX deposits million the flat were X% Total average and quarter or increased deposit Slide essentially year-over-year. balances.

in QX. the in in time increase deposits Noninterest-bearing in the of versus quarter shifted deposits expected, deposit As percentage mix a deposits. modest as XX% with total average decline XX% an third and noninterest-bearing a were deposits

were basis Our points, up points second the deposit quarter. costs from XX XXX basis

X% deposit X% Our of the funding for XXX beta quarter quarter average balance an XX% on Fed of third XX% points XXXX. down our total and of through second is Borrowings from XXX% tightening. basis, cumulative third the up beta in in basis and was stood quarter from at

quarter, income loan we the the $X.X to third contributed volumes in net while X% interest decline provided borrowing or deposit interest net deposit interest decrease X, $X.X primarily Higher Slide by driven The costs to a or income. Turning net year-over-year in million lift higher was and million to higher show income. X% costs.

versus linked other were which second were quarter due higher, value $XXX,XXX second adjustment driven of a primarily negative credit amortization. reversal quarter. by in up to fees securities in lower Slide SBA the linked $XXX,XXX management $XXX,XXX $XXX,XXX the fees $XXX,XXX market. include down Loan Wealth of down fees, premiums fees Gain of X% X sale quarter. Other on the were tax the were fair loans Deposit-related down were quarter. and income, fee up $XXX,XXX. was shows which or

of are compensation and were lower technology Expenses of million occupancy and expenses. quarter. million $X.X guided up primarily and insurance GAAP the include Expenses equipment, year-over-year X%, charges, offset increase were largely was servicing end driven in quarter deposit increases to per and our closer expenses. million or in in of loan million $X.X consolidations. shows professional expenses driven $XX.X higher linked restructuring range higher and were and $XX branch of million Modest The premiums the expenses. by other declines expense. other primarily by expenses services to $XX flat XX Slide expenses technology driven by by compensation

spend the digital cost our platform. legacy quarter, over to As technology coming we reduce last we will normalize said quarters related as

expenses managing to committed discipline with are transparency. and We

meetings a every spent to biweekly of revenue to for strategy starting is efficiently new and instituted This approach will every have have grade thoughtfully This management base granular as desired vendor that well the We hires impact reducing above is to request and $XX,XXX every our ensure in replacement is level. preset as which expense grow bank expense run dollar of or more earnings. the necessary and expense our to or hires

down $XXX,XXX top industry we asset included Berkshire's the or million first Slide the quarter -- quality that level. with XX is XX XX net averages to and million. basis charge-off are chart, charge-offs charge-offs and rates XX-year million million the summary in since Net In $X.X charge-offs We've linked XXXX. year Net $XX.X $X.X a were charge-offs see basis charge-offs and million metrics. that loan Berkshire's currently $X.X operating down around Nonperforming second quarter. loans versus normalized points consumer second of in right year-over-year. the you of of points, average quarter were included appendix a commercial loan chart $X.X loans of the can the

basis CRE well collateral exposure. in Credit strong of diversified we've mentioned, overall a is geography type. Nitin appendix added on of book in quality As with portfolio nonaccrual points of the and loans. at page loans total this terms remains CRE XX The

also in office appendix the portfolio. We the page on updated the

As weighted and suburban majority noted in are quarter, A a XX%, office loan-to-value is Class last average space. and large the ratios approximately

our are portfolios benign, new While uncertainties that existing quality are we carefully. current recognize credit exist, both metrics originations monitoring we and economic

have our reserves commensurately. We increased modestly

shows past returns GAAP quarters basis. on an X XX Slide a operating over the and

current medium-term added on the highlight operating the focused we've you to beginning environment presenting is highly but our rows remain the of I new at several tables to we quarter. As financial want improving performance. this know, the headwinds, release earnings

tangible return a portfolio. equity common excludes denominator AOCI mark with have on negative reporting AFS our been that the We securities from

now proxy. an Most and also includes denominator apples-to-apples AOCI we'd peers ROTCE are figures calculate our equity the tangible consider basis. ROTCE return of that way, encourage denominator common mark, increases We you on lowers reporting which to on negative this and with the a

and peers part to with on larger We goalposts, are be reporting more not of our but aligning consistent both moving return simply banks. the are

XX Slide capital ratios. shows

deploy Our top loan to priority support organic management capital capital to is growth.

we towards biased $X.X million prices repurchases $XX.XX. stock below our In tangible remain of stock given book QX, stock repurchased we cost at average Secondly, an of value.

believe model. undervalued our stock potential growth and Berkshire business low-risk We given is

We will repurchase to continue opportunistically stock.

comments. back like for Nitin further With that, I'd turn to it to

Nitin Mhatre

with our David. positioning. economy, and remarks close I'll Thank industry my you, the on comments the

operating relatively industry footing. of typical remain Northeast, on inverted compression cycle. curve from which facing normalization to are credit We're We fortunate solid continue markets in to cyclicality the such banking the issues be yield stable NIM as the and in

few quarters. and to the margin expect next Banks do compression adjust, we over decline

cycle. significantly the While losses they we lower the be expect credit modestly, costs during to GFC increase will than

believe costs are will community banks increased much regulatory but center than likely Berkshire. more that impact also banks or impact industry, We like money to regional larger the banks

the opportunistic the hiring controlling expense and are we levers, operate several control While can rigorous we or on management. growth focused macro have for and we including balance can't sheet deposit environment, what de-risking

When we early into steadily declining that I we XXXX, turn balances started in loan loan CEO faced growth. as

bigger challenges, organic and better. that remain on we current and the deposits and selective, growth growth management. overcome We getting focused will responsible while profitable similarly will get We are especially expense confident

With the it for questions. Jerry? operator that, I'll over turn to

Operator

My comes will the we Billy Markets. from Instructions] Please session. have seem to question of begin an first We issue question-and-answer there. Capital ahead. and [Operator RBC Young Ladies go gentlemen, now apologies. Our

Sandler. Fitzgibbon next go to we'll of of the line So the question from Mark Piper

Mark Fitzgibbon

we had, and First coming associated more I branch in charges should restructuring consolidations with that quarters? question expect

Nitin Mhatre

I short bankers. We could for yes. while constantly clients retaining and answer, opportunities our geography Mark, be, our the consolidation think monitor and

And process So you that to should continue. to extent, expect that. continue will that

Mark Fitzgibbon

it that fourth Is while. to that given stay balance that looks Okay. the up how for contemplating? like sheet in And restructuring a you're here going about something are rates quarter, then

R. Rosato

thinking very little of are lengthened Mark, We're the is a it's out David. underwater. primarily securities, about the whole Yes, restructuring portfolio It's the mortgage-backed securities of have lot the constantly bit. durations portfolio. similar a where to logic we some of banks

of it's forward. think we're the interest happen better run that close much could large. point. clearly, a so to very know, going whether or and turn about the taking not you strategy path as we because the just rates; to mostly QX even at think But through the hit rate happen we're XXXX is could to create things equity that it not in and hit trying rates, So future in best constantly this that if it's is equity or into The probably

Mark Fitzgibbon

Okay. the time tax credit macro And you're can That's share effective a the forward? for be answer. how guess growing what going I thinking about investments at us rate over level, maybe a shrinking then with and either implications fair might the you or

R. Rosato

a question. that's Yes, good really

a rise amortization. going clear low-income amortize new credits, very then credits, the consists nice tables of to require longer It put of impact us change But market tax tax really the to credit high-quality which tax PAM financial So effective accounting. programs will to what's have the about few it, we We expense historic numbers of portfolio. know. tax important credits a economics tax called run. and is in has the The housing not thing the actually will be purchase and no But to in the the rate, interesting that drive those the do of we upon going accounting positive is the change, effective forward. the The credits. change up tax is our coming will of year the accounting will but tax which first solar rate

Mark Fitzgibbon

effective rate to So you expect where settle would the out?

R. Rosato

working that. still We're through

reside lot adoption when that PAM minor effective January state guidance. credits in which not January I'm which We will through clarity the working the allow only the final which rate. we're York, is, accounting, in means to more give may a our the issue, New still And some reason pushing tax of drive of have that will we of

Mark Fitzgibbon

I would lastly, the you you then And sort NIM year. said Okay. X.XX quarter, half bottom David, think the of in out second to the last the range thought of X.XX in

range reasonable do challenges, funding with that's the for like today feel see you you what still fourth Given a quarter?

R. Rosato

Yes.

point too this So XX is the short last again a talking let's stop point point NIM I would the much to about think to But though, the yes, relative what about basis quarter of XXXX. want broader, answer reduction quarter. NIM is reduction little X I in basis the out

real the is positive So news pressure. the message and

have well. the the quarter is but While this mid single-digit remains and What deposits, I around of at so variable this rate, about pressure mostly decline portfolio on half prime as we our as the point, in loan far characterize would NIM. competition

As we start look to that go forward, declines, single-digit as to to think is going number we XXXX. think I about low

into forward there's which half think other that rates, only that back easing nuance on to company. The in overall that's about of year. embedded really message margin I has course, today of for based next built a good So one the really is, the our

the which in news trying comments what an end are the tightening on But environment, has rate embedded to to I'm those there's cycle. prefaced good So say. current

Operator

the next of comes from RBC Young Capital Our Billy line question of Markets.

Bill Young

that Sorry difficulties. about technical

-- coming if that repricing that we we kind from David next start, of go to done to into -- of follow offset kind much close going think in why to assume NIM XXXX. kind that of on is you next guidance Fed's Mark's last for incremental kind to year? we -- low kind alluded But a Just asset guess done want opportunities declines I that of year. pressure single-digit you just I don't or as pricing give up is where the into just maybe will of if the know question.

R. Rosato

more on It's liability side. the

the takes a for think time book, of Just bit role little that of when the about roll you CD it of all over. to

half actually -- easing we've quarter, was of roll year. I of doesn't built I the beginning the have the occur the the most market into that's until next fourth mean, of what back was we got So and telegraphing

come almost the It market So way have had effect. more, that's pricing the a has the down earlier, lag of got CD on the economic out you've unless lag down. that sniffs essentially up, effect and lag full book weakness bit -- to of a forwards way a going a on will effect a

are it's in banks. still aggressive banks happens, interesting deposits. that see some that. for me, we and smaller Until The markets, competing fairly -- larger we our from pricing -- see so simply to And both

Bill Young

That That Understood. sense. makes makes sense.

maybe X-part just here. on loan Okay. a And then growth, maybe question

impact was kind in hearing you're mix XX%, what the I growth or where thinking for term How does you near on it thoughts on a from. then And your in quarters. think customers billion I of I the last pressure target? are from the gaining it that know back target terms year, $X.X here? the the whether couple of of under $X.X your the balances the billion growth that to on half guess First, -- is seeing have was commercial, your still in good been because number C&I, you XX% a was for for of

Nitin Mhatre

Yes.

give David specifics. and give Billy, high-level then overview So more could I'll a

number think that I billion to billion. $X.X pointed the So guidance, to, you specific $X.X

might lower end the lower we than on of end We point slowdown at see slightly even think in the across the I this be pipelines or the all books. time. lower

And So lower again, did will environment that's we of XX%. growth in guidance that's end to thing -- in. did are it that think a up David short be that. the I QX. provide for I in or And of even on going X% show that the I good the We second think the half of slightly to think of

residential that much teams XX% doing over ability are book we've time. and a question we goes market the last managing our from secondary slowed on book, down sales, do a pretty slowed than even job, third-party originations were which on down, and stopped is, sheet The to the balance we our do second commercial your yes, And fantastic more quarter. originations. the improved We've XX% to have XX% expect part of

So to mix environment. of activities accordance kind I the think market in a it's of

R. Rosato

under lower, I design, our by add have So The create slower commercial our to change to lend lending, a we're the we're says to in modest pipelines the ability in work that's we or -- Jim okay? repositioning is deposits, our than or would are Nitin only more Brown of and is which land that leadership philosophy. but thing when certainly a to

be So fuller high-quality of what sides very that. than relationships after both the we're is I think balance with sheet we'll rather extending going And credit. just successful

referenced commercial in comments we that. takes will time, do to time, Nitin disruption deposit-focused continue allowed hire original that it and has to to the us his bankers, Over try industry

what behind here. So real color that's trying we're achieve the to

Nitin Mhatre

Billy. helps, that Hope

Operator

next Our Hovde of from Group. the of Dave Bishop question line comes

David Bishop

year-over-year Just the curious, communication on platform. some digital you maybe obviously, of the banking of costs technology and pressure been sort revamp and the there's data noted processing

a Just that's maybe the what related been pressure initiative? year-over-year curious sort once what to maybe has -- of is enumerate of potential there savings are that how implemented to that much and

Nitin Mhatre

kind talk Yes. the Sean. of Dave, here, outlook to ask I'll technology Sean about

Sean Gray

Yes, there is cost lower going unit opportunity. It's a forward.

So we off are reduction where of low today. anticipate we very single-digit

Nitin Mhatre

again? is the question what Okay, second

David Bishop

bulk Yes. just second in you've question, portfolios, bulk the the sale, and for with Any attributed this expenses the Nitin, runoff environment. or maybe sale there And Firestone. make something obviously, and portfolios maybe potential maybe in appreciate and accelerate those noncore Upstart them? disclosures some thought just reduction of is the I crosshairs. or But around with that a the partial of current expenses sense And doesn't about pursued the

Nitin Mhatre

would right? you say, with at I we're I started So expenses. think looking Dave, the everything, --

So the org real discretionary. structures, procurement, on table, suppliers, estate, all options

your question, mix. have to at So optionality improve the yes, that's we balance on on to the the sheet Similarly, we're expense every side, balance sheet looking side.

is the everything table. yes, on So

R. Rosato

had thought quarter. said just last would go I Dave, back, this And I I

technology today because our out double were the reduction $X.X system. last [Indiscernible] I in And a deposit in that the conversion or that quarter, so million legacy we so. to So of expense, comments quarter calling mentioned talked the we about speak, our about That's about.

not we yet, quarter through this the always be And expenses, there's more that's to The will what corner. but around and the technology that with come diligent go rate So around. run out next it of we as has year. into have problem

David Bishop

Then one question. it. final Got

or David, you're new curious, onboarding yields where new Nitin commercial Just origination loans? commercial just

Nitin Mhatre

I they're about Yes, to X%. to think X%, closer X.XX%

Operator

of from O'Connell comes the KBW. of Chris question next Our line

Christopher O'Connell

So I the repurchases. wanted to talk about share

quarter, like of or than this little last repurchases believe it seems end the half And you're year. so. a that was at bit on this It plan the less of This quarter. I ends currently

Just wanted intend will into the it into you XQ fourth levels more plan your the whether as was to to know look bit we move XXXX. think XQ quarter, what a and little re-up appetite you whether going like or

R. Rosato

Sure.

So question. X-part

So the travel in little our quarter fell the whiffy that the to in us, sector approach equity third was, we especially a markets all in.

the the traded So our was in third $XX.XX. at average share price quarter

the We have a tangible quarter, $XX.XX. book value of end the at

quarter, So mostly price discipline. which around our third in was approach the

our our may comments, they stock is state time. that very -- peers, undervalued undervalued. The of we stock on our at of But I and a my price discipline. our of clearly lot and how is question period is, trading. about the stock that So in were a we did so bit it a focused And bought stay -- more for just sector all $XX.XX, our was concerned

have have of a So the to lot liked at quarter, available. more QX, that we think it doesn't bought stock wasn't you that price I color in would to third just give but

will would go yes. The socialize regulatory is does this of -- question the through to and we as answer our The with long program? come that our have supportive. protocols. is likely your still and that Yes, another was second normal this intention But we be most that the as part Board with Board expire up one to

Christopher O'Connell

or today. just you are loan historical the bit on reduce you to either the in fundings? a help opportunity higher-cost growth Do that some on And coming balance to kind an little guys out sheet think, see to cash quarters Great. fund elevated some down I of bring levels the levels. still,

R. Rosato

Yes, probably.

quite would government business, down little In As a were it the wanted in from bit half you through with have from to if again the the -- elevated mentioned, where that generally ability we levels balance going Who a year. there's be we knows shutdown liquid first bring down. concur aside or we going to dealing of were we're to the that, was a when brought more QX, But it not. cash sheet. generally we we

Christopher O'Connell

just you move bit then where or think the have to as a here or are Okay. targets. bigger opportunities, order do the X, guys those levers of Obviously, a targets, moving in year those trend Got stability expense into And you towards where both you thinking compression, but income spots? is and BEST little margin you picture it biggest sheet it. towards management about to do get pull growth, bright any and balance fee see we

Nitin Mhatre

Yes.

I think out spelled it's kind of a the different order, but components. X you

a think component I XX-year of think at look sheet, I be And be XX%. average, will to part. the Balance other it. used our you the be margins and mix if expenses big historically, will growth change

opportunity we believe there's much think to have margins. higher I an

for well. good bit get the next our -- the in deposit-oriented and there will as get constantly, that's a year. ability opportunities going as market accelerated I through we client is continue play with the relationships, and hire bankers books margin seen to that So we've And we of think that to success go into on disruption little and

R. Rosato

on scale. mean, They side. opportunities those take income the good fee businesses. I think have also are -- we to it's really I time

need have the the do the there opportunities think in people right But next right positions. over we You couple years. I

Christopher O'Connell

with Great. in regards any and or guys general lot areas? detail in this. thoughts conditions your the market on internal I And overall then just of to portfolio on updates the deck outlook you lastly, office just kind gave But a your of know the

Gregory Lindenmuth

will renew in for continue portfolio some the we opportunities but the in think performance or banks through we've outlook and our time still past. to the the or the renewal opportunities of the experience we the next overall good still to revisit look year with the very and to are X what it's Yes, some at future and rebalance risks of other what maturities remains a portfolio. to Obviously, industry, we familiar Sure. in portfolio decide solid, seen going the is credits with whether we're as we over not, consistent

Nitin Mhatre

And I a we're some Chris, of would portfolio, add in that, that part quarter-over-quarter. of the of we've down seen slowing roughly also, originations, also X% decline as that

performing is growing well, portfolio a the it's at and not So fast pace.

So I think that kind of in quality this bodes for well for us asset environment.

Operator

Our next Seaport of question of line Laurie the comes Hunsicker Research. from

Laura Havener Hunsicker

I you branches The they in located to wanted to branches your where in X go of were back that Massachusetts? fettered. any Or were Boston? those

Nitin Mhatre

not East and they Yes, footprint. were West X Boston, the in of X

Sean Gray

really west Massachusetts. in of Laurie, XXX

Laura Havener Hunsicker

Okay. about were footprint, as year think to that going branch XX How you And to how you you going XX do if you a your see think XX? that? then that? XX? XX Is look do Is out, about it to

Nitin Mhatre

question clients constantly well, better. number, can't as at serve we and foot specific Laurie, business constantly actually give branch her [Indiscernible] evaluate as we and those a is footprint earlier patterns customer team where and you could in but traffic also No, looking servicing we Yes. said the and our

to having We we to go are have client branch. that clients unique the us, MyBanker channels like opposed whereby to come the to as to

an out point. is number this that specific further consolidation. baked We equation. we at can't do that So I spell there just opportunity a We all what believe think for into based of the see on is

Laura Havener Hunsicker

Okay.

And with to onetime of of what you're of a that that are charges, drops million think franchise bottom $X.X do was cost about line XQ. any then closures? And And much these how how versus in reinvestment? Okay. the that reflected getting the savings you

R. Rosato

There's to the drops David. line -- Yes. Laurie, number modest a basis. it's go-forward that bottom a on it's

-- meaning of them -- were expenses. cleanup It branches. operating operating term closed think branch branches, closures they and as or were branch these an X I some there near these period current real of of operating two estate then was was were cleanup,

number. relatively it's modest a So

Laura Havener Hunsicker

hesitant the going And do think Or of fourth rationalizing it. see to but terms going of know you closures branch sort talk in further looking Got you're quarter? this Okay. we're about in you're out more I expenses? forward, to

R. Rosato

think more determined, to but be XXXX likely to yet be I fourth quarter. than it's into

Laura Havener Hunsicker

Got you. Got you.

helpful. That's Okay.

Okay, really drop to It and looks quarter. had linked here. you then nice office like going back a

You went from book should was? really $XXX to Or in there have any million. real the what $XXX that speak quarter. Was think sale? didn't How I investor there? about down mean million we was a a estate in to you the commercial that of reclassification charge-offs

trying understand So just I'm I'm just to trying understand movement. to that --

Nitin Mhatre

a Laurie. It's both, of combination

think actual space the office the supply to one was that reclassification of companies I part versus office space itself.

brought I our other it, think that went portfolio number mentioned down you I the earlier, by normalize for office and if the some balances as of million. the down. even But roughly to in question, X% or $XX

R. Rosato

suppliers included. first to the There portfolio. that were office our through iteration had buildings in going some were some We of

originally. not included that So should have been

It change through Nitin that So still not on it was as the charge-offs. we portfolio sales down was quarter. majorities. importantly, and says, X%, was simply this But for more made that normalizing or

Laura Havener Hunsicker

are very helpful. in Got Yes, you. the your in your deck slides Got office you. CRE

starting And weakness. concerning guess, seeing office, -- about is Or medical lapped. how number? on Lab XXX-some-odd is that you? portfolio see number, you that's anything up looking? Are to holding know, got you've very a specifically, I included there that's bit another, I little is Is just not there well. how better of that is little bit million you Can know a So that are the in a don't that right I number? talk

Nitin Mhatre

so Yes. No you concerns would more like Greg, that seen if far. we've to color? provide any

Gregory Lindenmuth

early on see some in NPL not the anything And you and the classified. portfolio, like no of rates we're even signs can seeing weakness portfolio criticized not and the of increases early of No, stage, we're or Laurie, any our in there. some seeing NCO

Laura Havener Hunsicker

is that the a number there Or better number? lab? million, is for Okay. right And $XXX then Office

Gregory Lindenmuth

No, you what Laurie, mean specifically? office lab.

Laura Havener Hunsicker

Yes, correct.

Unknown Executive

about asking education you Are and Laurie? medical

Laura Havener Hunsicker

know. firm got don't of had... last maybe I about with chatted impression million I lab you, you -- was had office incorrect, that but under I the I $XXX you

Unknown Executive

exposures third of $XXX the medical end quarter end million and quarter. X% to million dropped education and at Yes, were the $XXX at the the of the second

Laura Havener Hunsicker

sort you a Great. provided -- of of as then should just you of I your the and just haven't little you what plan can about would guess sort talk And priority. I realize about balance in bit a XXXX little high derisk When bit can we attack sheet thinking level, about that near-term be but quarters? talk you talk about very be How you that? guidance, first

Nitin Mhatre

bit. little broke a You up

balance said, first, Derisk of sheet? You your plan do the attack what? to

Laura Havener Hunsicker

you just -- mentioned is derisking your look there. about sort we -- balance talked -- quarters, for of Derisking of sheet what in you priority. strategy next of quarters the first plan that on was coming generally as Can the the attack Yes, very a couple

Nitin Mhatre

think pristine have teams leave sheet existing the we we're earlier, a think as But think as as meanwhile, think I the broadly it. embedded when looking because working with that, better are the we opportunities the forward. clients beyond go of and fantastic But Laurie. I the provide keep better speaking portfolios, answered job I'll and line we clarity have the at In guidance would doing I that balance can. all sight, credit I we'll of quality monitoring are the components we I the to question within that

Unknown Executive

in jump just second. could I if a And for

So think to were I in response really question. Nitin's comments Dave's

necessarily and Laurie, that we was As -- a sheet. wouldn't our just of before derisk that I would balance out impression derisking. us. brought there sheet balance that we look, see say I need feel to re-covering this newcomer you started I need in I the isn't think here, relative

company understand if initial probably said get I we organization, the I well of in have better I call, size we very about I still is the the developed, credit the reporting, -- impression, it risk think especially the -- to strong when quality really as and my process discussions first impressions a manage. that correctly, my risk my So conference of have, the around the take we the remember that

that not few -- runoff are portfolios runoff per of in there's they're there's credit So because but necessarily in say. mode a mode,

our the commercial are. core small ABL real practices the component loan residential When very our the trying estate business. about management are very numbers solid big you is where point portfolio, portfolios risk I'm and we to So the C&I the a of portfolio, convey of those mortgage have The portfolio. think portfolio, around

Operator

at questions proceed. time. further Please no are There this

Nitin Mhatre

Berkshire Thank in your Have for a good call and one. today you all for interest joining the Bank.

Operator

and ask your you gentlemen, concludes participating your disconnect call thank for Ladies conference and for We today. this you that lines.

Berkshire Hills Bancorp (BHLB) 20 Oct 232023 Q3 Earnings call transcript