Berkshire Hills Bancorp, Inc. (NYSE:BHLB) Q2 2023 Earnings Conference Call July 20, 2023 10:00 AM ET

Company Participants

Kevin Conn - SVP of IR & Corporate Development

Nitin Mhatre - President and CEO

David Rosato - CFO

Conference Call Participants

David Bishop - Hovde Group

Bill Young - RBC Capital Markets

Mark Fitzgibbon - Piper Sandler

Chris O'Connell - KBW

Operator

Good morning, ladies and gentlemen. And welcome to the Berkshire Hills Bancorp Second Quarter 2023 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded today, Thursday, July 20, 2023.

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

Kevin Conn

Good morning, and thank you for joining Berkshire Bank's second quarter earnings call. My name is Kevin Conn, Investor Relations and Corporate Development Officer. Here with me today are Nitin Mhatre, Chief Executive Officer; Sean Gray, Chief Operating Officer; David Rosato, Chief Financial Officer; and Greg Lindenmuth, Chief Risk Officer.

Our remarks will include forward-looking statements and refers to non-GAAP financial measures. Actual results could differ materially from those statements. Please see our legal disclosure on Page 2 of the earnings presentation, referencing forward-looking statements and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our news release.

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

Nitin Mhatre

Thank you, Kevin. Good morning, everyone. I'll begin my comments on Slide 3, where you can see the highlights for the second quarter. We continue to make steady progress and are thankful that the heightened market uncertainty, which began on March 8, has subsided significantly in the second quarter. We are encouraged by our deposit durability, strong liquidity and capital position. We'd also encourage by our continued disciplined credit management with charge-offs declining $1.1 million linked quarter, while we added $2.2 million to our loan loss allowance commensurate with loan growth. Fee revenues were up versus first quarter, providing a modest offset to the decline in net interest income from rising funding costs.

While we intend to provide our outlook once a year on our fourth quarter earnings call each January, we've included an updated 2023 outlook slide given the meaningfully different operating environment. David will review that in a few minutes.

Operating net income of $23.9 million, declined 14% linked quarter and was up 1% year-over-year. Operating earnings per share of $0.55 declined 13% versus first quarter and was up 8% year-over-year. Operating return on tangible common equity was 8.27%, a decline versus first quarter and down 21 basis points year-over-year.