Berkshire Hills Bancorp, Inc. (NYSE:BHLB) Q4 2023 Earnings Conference Call January 25, 2024 9:00 AM ET

Company Participants

Kevin Conn - IR & Corporate Development Officer

Nitin Mhatre - CEO

David Rosato - CFO

Conference Call Participants

Bill Young - RBC Capital Markets

Christopher O'Connell - KBW

Mark Fitzgibbon - Piper Sandler

Laurie Hunsicker - Seaport Research

David Bishop - Hovde Group

Operator

Good morning, ladies and gentlemen, and welcome to the Berkshire Hills Bancorp Fourth Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Thursday, January 25, 2024.

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

Kevin Conn

Good morning, and thank you for joining Berkshire Bank's fourth 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 refer 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, and thank you for joining us today. I'll begin my comments on Slide 3, where you can see the highlights for the fourth quarter and the full year. While the rate environment remains challenging, we are encouraged by the early trends in deposit balances. We executed a security sale late in the fourth quarter and used those proceeds to pay down wholesale borrowings, eliminating the negative carry associated with those securities.

We also incurred a severance charge of $3.7 million related to a workforce reduction across the organization. For 2024, expense optimization, deposit growth and credit management will be our top priorities. We intend to self-fund investments in strategic priorities that support our vision to be a high performing relationship focused community bank. David will review these items and our 2024 guidance in more detail in a few minutes.

Operating net income for the quarter was $20.2 million, and operating EPS of $0.47 declined 6% linked quarter, primarily from a decline in net interest income. Full year 2023 EPS of $2.14 was down 2% year-over-year. We are encouraged by the trends in asset quality and deposit growth in the quarter. Our credit costs have trended down, and our loan books are performing well. Non-performing assets and net charge-offs declined 14% linked quarter and we increased our loan loss allowance by 3 basis points to 1.17% of loans.