Berkshire Hills Bancorp, Inc.

Hello everyone and welcome to the Berkshire Hills Bancorp first quarter 2023 earnings conference call. My name is Charlie and I'll be coordinating the call today. You will have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypad. I will now hand over to our host, Kevin Conn, Head of Investor Relations and Corporate Development to begin. Kevin, please go ahead.

Good morning and thank you for joining Berkshire Bank's first quarter earnings call. My name is Kevin Kahn, Investor Relations and Corporate Development Officer. Here with me today are Nitin Mahatre, President and Chief Executive Officer, David Rosado, 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 two 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? Thank you, Kevin, and good morning, everyone. I'll begin my comments on slide three, where you can see the highlights for the first quarter. Overall, we made steady progress despite the market turmoil and headwinds in March and remain on solid footing overall. EPS, or earnings per share, of 63 cents in the quarter was our highest ever GAAP EPS in any first quarter. Net income of 27.6 million declined 2% linked quarter and was up 33% year-over-year. Operating earnings per share of 63 cents declined 1% linked quarter and was up 45% year-over-year, highlighting the momentum of our franchise. Return on tangible common equity was 9.59% a modest decline linked quarter and up 210 basis points year-over-year. In response to the market events, we took many actions to prudently fortify our liquidity position further in March. Resultantly, our cash and borrowing capacity as a percentage of uninsured deposits at the end of the quarter closed at 117%. Average loan balances were up 5% linked quarter primarily driven by diversified organic growth and lower paydowns in the quarter. Average deposit balances were down by less than 1% in the quarter, and on end-of-period basis, total deposits were down less than 3% linked quarter, below our expectations at the beginning of the year, but in line with the total industry deposit outflows and relatively better than small bank deposit outflows of 4.6%, for the most recent Fed H8 report data for the quarter. The loan-to-deposit ratio was 86% up from 81% in the fourth quarter. Given macroeconomic trends, we remain vigilant on credit even as our asset quality continues to remain strong. Provision expense for this quarter was $9 million at the high end of our guidance range, primarily to build reserves for loan growth. Our allowance to loans ended the quarter at 113 basis points in line with our guidance range of 110 to 120 basis points. Our balance sheet remains strong. We ended the quarter with common equity tier one ratio of 12.1% and a tangible common equity ratio of 7.91%. We continue to de-risk the balance sheet and run off the non-strategic loan books, including Upstart and Firestone. Runoff and credit in both of these books is tracking as expected, and we've included data in an appendix page which provides more details. Given the market trend related to remote work and its associated impact on the commercial real estate office segment, we've also included two pages in the appendix. that provide more details on our CREE office portfolio, which highlights how our portfolio mix is relatively different and diversified and resultantly less risky. David will cover some of our matrix in more detail in a few moments. On the best strategy front, we made steady progress in the first quarter. Our ESG score in the quarter was at 19 percentile nationally. well above the best 2024 target of 25th percentile. A critical part of any transformation is how the employees and customers respond to it. We mentioned on our last call that we recorded our highest employee engagement scores in 2022. In the first quarter, we also received recognition by Newsweek as one of America's most trustworthy banks and by Forbes magazine that listed us amongst America's best mid-sized employers. Our customer net promoter score hit its highest point this quarter at 52.8. We hired several new executives in the first quarter, as highlighted in the last earnings call, and we continue to hire talented bankers across the bank as part of our best plan. We also continued our board enhancement with the addition of two prominent and well-respected board members. Karen Pulido joined the board in February and Eric Rosengren joined the board in April. Karen brings broad expertise from both public and private sector, including as the Lieutenant Governor for Commonwealth of Massachusetts and as principal of Pulido Development Corporation. Eric has been at the Federal Reserve Bank of Boston since 1985. most recently as the president and CEO from 2007 to 2021. Eric will bring us the insights on the banking industry, economic trends, and regulatory environment, and further strengthen our enterprise risk management program oversight. Welcome aboard, Karen and Eric. Slide four shows our best programs, North Star Chart, which details our progress on five key performance metrics. We are near the low end of our target range for return on assets and return on tangible common equity. Our quarterly PPNR annualizes to 169 million and was at low end of our 2024 best target of 180 to 200 million. Our ESG ranking nationally was at 19 percentile this quarter above our stated goal of reaching top 25% by mid 2024. We're still working with J.D. Power to get a competitive NPS score versus our peers in our footprint. In the meanwhile, we have been tracking our customer net promoter score through customer surveys that J.D. Power helped us design and administer. As I mentioned earlier, our NPS score in the first quarter came in at its highest ever level of 52.8, which was significantly higher than our full year 2022 score of 44. I would like to thank all of our Berkshire Bank colleagues for their continued hard work and commitment to our vision of becoming a high-performing, leading, socially responsible community bank. Their commitment to our strategy and dedication to our customers is what is driving our ongoing performance improvement and continued progress. With that, I'll turn the call over to David to discuss our financials in more detail. David? Thanks, Nitin.