Berkshire Hills Bancorp, Inc.

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. If at any time during this call you require immediate assistance please press star zero for the operator. This call is being recorded today, Thursday, July the 20th, 2023. I would now like to turn the conference over to Kevin Kahn. Please go ahead, sir.

Good morning, and thank you for joining Berkshire Bank's second quarter earnings call. My name is Kevin Kahn, investor relations and corporate development officer. Here with me today are Nitin Mahatre, 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 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. Good morning, everyone. I'll begin my comments on slide three, 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 8th, has subsided significantly in the second quarter. We are encouraged by our deposit durability, strong liquidity, and capital position. We're also encouraged 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. Peer 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 55 cents 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. Deposits were stable in the second quarter. On an end-of-period basis, deposit balances were flat to first quarter and down 1% on an average balance basis. As a comparison, Fed HA data shows small banks ending deposit balances were down 1% and average deposit balances were down 3%. While we're not immune to the funding cost and mixed pressures facing the industry, we believe our deposit base is relatively stable, given our history and long-term relationships with clients in smaller cities across New England market. Average loan balances were up 3% link quarter, with commercial loan balance growth of 2% over that period. We recognize that while many banks may be pulling back or even cutting lending, we continue to serve our customers borrowing and banking needs prudently. And to that extent, we expect continued loan growth, albeit at a slower pace in the second half of the year. Longer term, we're targeting to have about 65 to 70% of our loans book in commercial and 30 to 35% in consumer loans. On an average balance basis, commercial loans were 66% of loans this quarter. Our balance sheet remains strong. We ended the quarter with a common equity tier one ratio of 12.1% and a tangible common equity ratio of 7.9%. Given macroeconomic trends, we remain vigilant on credit, even as our asset quality continues to remain strong. Provision expense for this quarter was $8 million. Our allowance to loans ended the quarter at 113 basis points in line with our guided range of 110 to 120 basis points. A year ago, we decided to de-risk the balance sheet and run off non-strategic loan books, including Upstart and Firestone. we continue to do so and have included updated data on those runoff books in an appendix page, which provides more details. We have also updated the appendix page that provides details on our office portfolio, which highlights how our portfolio mix is geographically diverse, granular, and resultantly less risky. David will cover some of these matrix in more detail in a few moments. On the best strategy front, This quarter marks the second year anniversary of our three year plan. I'll provide more details on the overall progress of the program on the next slide, but the couple of additional highlights to note are we completed the allocation of our 100 million sustainability bond in this past quarter, resulting in creation of 330 units of affordable housing with more than 200,000 square feet of green building development. A detailed report on this is available on our website. Slide four shows our best programs overall progress on five key performance matrix. As we've said in the past, the path to our targets will not be a straight line. We are near the low end of our target range on return on assets at 78 basis points and our return on tangible common equity at 8.3%. Our quarterly PPNR annualizes to 143 million. We've been tracking our customer Net Promoter Score through customer surveys that JD Power helped us design and administer. Our Net Promoter Score, or NPS, for the quarter came in at the highest ever level of 56.7 versus 52.8 in the first quarter and was significantly higher than our full year score of 44. I want to use this opportunity to thank all of my 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 over the past two years. With that, I'll turn the call over to David to discuss our financials in more detail. David. Thank you, Nitin.