EX-99.1 2 tm2313279d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Berkshire Hills Reports First Quarter Net Income of $27.6 Million, or $0.63 per Share

	·	Diversified 5 percent growth in average loans; relatively flat (-1%) average deposits
	·	Cash and borrowing capacity at 117 percent of uninsured deposits
	·	Tangible book value per share +4 percent to $21.89
	·	TCE ratio of 7.9 percent and CET1 ratio of 12.1 percent
	·	Added two prominent and well-respected board members – Karyn Polito and Eric Rosengren

BOSTON, April 20, 2023 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the first quarter of 2023. These results along with comparison periods are summarized below:

	Three Months Ended
($ in millions, except per share data)	Mar. 31, 2023			Dec. 31, 2022			Mar. 31, 2022
Net income	$	27.6		$	30.5		$	20.2
Per share		0.63			0.69			0.42
Operating earnings¹		27.6			28.3			20.8
Per share		0.63			0.64			0.43
Net interest income, non FTE	$	97.5		$	102.1		$	69.1
Net interest income, FTE		99.4			103.9			70.6
Net interest margin, FTE		3.58	%		3.84	%		2.61	%
Non-interest income		16.6			15.7			20.7
Operating non-interest income¹		16.6			15.5			21.4
Non-interest expense	$	72.0		$	70.0		$	68.6
Operating non-interest expense¹		72.0			72.6			68.5
Efficiency ratio¹		59.5	%		58.3	%		72.6	%

Average balances
Loans	$	8,515		$	8,082		$	6,974
Deposits		9,676			9,731			10,036

Period-end balances
Loans		8,682			8,335			7,267
Deposits		10,068			10,327			10,699

1. See non-GAAP financial measures and reconciliation to GAAP measures on page 11

Berkshire CEO Nitin Mhatre stated “We continued to make steady progress on our BEST plan, while responding prudently to recent market turbulence in the quarter. Our teams continued to provide exceptional service to our clients, generating diversified loan growth and managing shifting deposit demand. Key financial metrics improved year-over-year driven by ongoing execution of BEST strategic initiatives. We welcomed new executives – David Rosato as Chief Financial Officer, James Brown as Head of Commercial Banking and Philip Jurgeleit as Chief Credit Officer in first quarter. We also bolstered our board further through addition of two prominent, well-respected board directors - Karyn Polito, former Massachusetts Lieutenant Governor, and Eric Rosengren, retired President of the Federal Reserve Bank of Boston. During the quarter, we were recognized as “America’s Best Mid-sized Employers in 2023” by Forbes, and “America’s Most Trustworthy Companies” in 2023 by Newsweek.”

“We are pleased with our financial performance in the first quarter,” stated CFO David Rosato. “Operating income of $27.6 million decreased by two percent linked-quarter and generated an operating return on average tangible common equity of 9.6 percent. These results included modestly higher non-interest income and a lower provision for credit losses on loans, which mostly offset lower net interest income. Net interest margin of 3.58 percent was 26 basis points lower than the fourth quarter due to higher funding costs which were only partially offset by higher loan yields. The loan-to-deposit ratio ended the quarter at 86 percent as loans increased $347 million or four percent from December 31, while deposits declined by $260 million or three percent at period-end, quarter-over-quarter. The increase in period-end loans was largely driven by $216 million in higher commercial balances and $153 million in higher residential mortgage balances. The reduction in deposits reflected a $179 million decrease in payroll deposits and an $81 million decrease in all other deposit balances. Capital generation supported both organic growth and four percent growth in tangible book value per share. Cash and equivalents increased $321 million to support more on-balance sheet liquidity in the current environment.”

	As of and For the Three Months Ended
	Mar. 31, 2023			Dec. 31, 2022			Mar. 31, 2022
Asset Quality
Net loan charge-offs to average loans		0.32	%		0.58	%		0.15	%
Non-performing loans as a percentage of total loans		0.31	%		0.37	%		0.41	%

Returns
Return on average assets¹		0.94	%		1.08	%		0.70	%
Return on average tangible common equity¹		9.59	%		10.59	%		7.29	%

Capital Ratios
Tangible common equity/tangible assets		7.9	%		8.0	%		8.8	%
Tier 1 leverage		9.9	%		10.2	%		10.3	%
Common equity Tier 1		12.1	%		12.4	%		13.9	%
Tier 1 risk-based		12.4	%		12.6	%		14.1	%
Total risk-based		14.4	%		14.6	%		16.1	%

1. See non-GAAP measures and reconciliation to GAAP beginning on page 11. All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

Headquartered in Boston, Berkshire Hills Bancorp is the parent of Berkshire Bank. Providing a wide range of financial solutions through its consumer banking, commercial banking and wealth management divisions, the Bank has approximately $12.3 billion in assets and a community-based footprint of 100 financial centers in Massachusetts, New York, Vermont, Connecticut and Rhode Island. Access more information about Berkshire Hills Bancorp at ir.berkshirebank.com.

1Q 2023 Financial Highlights

Income Statement

	·	GAAP and operating earnings totaled $27.6 million, or $0.63 per share.
	·	Net interest income totaled $97.5 million in 1Q23 compared to $102.1 million in 4Q22.

Two fewer calendar days in 1Q23 (2% reduction in net interest income).

Net interest margin decreased 26 basis points from 4Q22 to 3.58% reflecting:

Higher cost of funds (increase of 59 basis points).

	·	Includes higher deposit costs (increase of 40 basis points).
	·	Includes $519 million increase in higher cost average borrowings.

Higher yields on the loan portfolio (increase of 29 basis points).

Provision for credit losses on loans totaled $9.0 million.

	o	Allowance for credit losses on loans increased $1.7 million.
	o	Net loan charge-offs totaled $6.9 million.
	o	Net loan charge-off ratio of 0.32%.

Non-interest income totaled $16.6 million in 1Q23 compared to $15.7 million in 4Q22.

	o	Wealth management revenue increased $484 thousand. At March 31, 2023, wealth assets under supervision totaled $1.9 billion, including $1.4 billion under management.
	o	Gain on SBA loan sales decreased $485 thousand.

Non-interest expense totaled $72.0 million in 1Q23, compared to $70.0 million in 4Q22.

	o	Operating non-interest expense totaled $72.0 million in 1Q23 and $72.6 million in 4Q22.
	o	Compensation and benefits expense increased $1.1 million, primarily reflecting seasonally higher payroll and benefit-related costs in 1Q23.
	o	Technology and communications expense decreased $258 thousand.
	o	Non-interest expense includes non-operating amounts totaling ($36) thousand in 1Q23 and ($2.6) million in 4Q22.
	o	The efficiency ratio was 59.5% for 1Q23 compared to 58.3% for 4Q22 and 72.6% for 1Q22.

The effective income tax rate was 16.7% for 1Q23 compared to 14.6% in 4Q22 and 18.7% for the full-year of 2022.

Loans

Commercial real estate loans totaled $4.2 billion at March 31, 2023, a $136 million increase from December 31, 2022.

Average commercial real estate loans totaled $4.2 billion in 1Q23, a $232 million increase from 4Q22.

Commercial and industrial loans totaled $1.6 billion at March 31, 2023, an $80 million increase from December 31, 2022.

Average commercial and industrial loans totaled $1.5 billion in 1Q23, a $56 million increase from 4Q22.

Residential mortgage loans totaled $2.4 billion at March 31, 2023, a $153 million increase from December 31, 2022.

Average residential mortgage loans totaled $2.3 billion in 1Q23, a $169 million increase from 4Q22.

Consumer loans totaled $528 million at March 31, 2023, a $23 million decrease from December 31, 2022.

Average consumer loans totaled $539 million in 1Q23, a $24 million decrease from 4Q22.

Deposits

Non-interest bearing deposits totaled $2.7 billion at March 31, 2023, a $201 million decrease from December 31, 2022.

Average non-interest bearing deposits totaled $2.7 billion in 1Q23, a $170 million decrease from December 31, 2022.

Time deposits totaled $2.1 billion at March 31, 2023, a $479 million increase from December 31, 2022.

Average time deposits totaled $1.8 billion in 1Q23, a $253 million increase from December 31, 2022.

ESG & CORPORATE RESPONSIBILITY UPDATE

Berkshire is a purpose-driven, values-guided, community-centered bank. Berkshire’s ESG activities are central to its strategy. Key highlights in the quarter include:

The Company released its 2022 ESG Report, Purpose & Performance that Matters which highlights Berkshire’s environmental, social, and governance dimensions of its business.

Berkshire was again listed in the Bloomberg Gender Equality Index, named by Newsweek as one of America’s Most Trustworthy Companies, and Forbes’ America’s Best Midsize Employers. Berkshire also received a 2023 Communitas Award for Leadership in Corporate Responsibility, and the Company maintained its top quartile ESG rating performance.

Forward Looking Statements: This document contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “remain,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.

INVESTOR CONTACT
Kevin Conn
Investor Relations
617.641.9206
kaconn@berkshirebank.com

MEDIA CONTACT
Gary Levante
Corporate Communications
413.447.1737
glevante@berkshirebank.com

###

SELECTED FINANCIAL HIGHLIGHTS (1)

	March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
	2023			2022			2022			2022			2022
NOMINAL AND PER SHARE DATA
Net earnings per common share, diluted	$	0.63		$	0.69		$	0.42		$	0.50		$	0.42
Operating earnings per common share, diluted (2)(3)		0.63			0.64			0.62			0.51			0.43
Net income, (thousands)		27,637			30,505			18,717			23,115			20,196
Operating net income, (thousands) (2)(3)		27,608			28,254			27,928			23,562			20,789
Net interest income, non FTE		97,533			102,092			92,084			81,358			69,063
Net interest income, FTE (5)		99,441			103,937			93,799			82,918			70,587
Total common shares outstanding, end of period (thousands)		44,411			44,361			45,040			45,788			47,792
Average diluted shares, (thousands)		44,036			44,484			45,034			46,102			48,067
Total book value per common share, end of period		22.42			21.51			20.93			22.15			22.89
Tangible book value per common share, end of period (2)(3)		21.89			20.95			20.36			21.56			22.30
Dividends per common share		0.18			0.18			0.12			0.12			0.12
Dividend payout ratio		28.98	%		26.59	%		29.35	%		25.24	%		30.46	%

PERFORMANCE RATIOS (4)
Return on equity		9.11	%		10.06	%		6.30	%		7.82	%		6.79	%
Operating return on equity (2)(3)		9.10			9.32			9.40			7.97			6.99
Return on tangible common equity (2)(3)		9.59			10.59			6.76			8.33			7.29
Operating return on tangible common equity (2)(3)		9.59			9.83			9.92			8.48			7.49
Return on assets		0.94			1.08			0.66			0.82			0.70
Operating return on assets (2)(3)		0.94			1.00			0.99			0.84			0.72
Net interest margin, FTE (5)		3.58			3.84			3.48			3.11			2.61
Efficiency ratio (3)		59.51			58.25			62.01			66.60			72.61

FINANCIAL DATA (in millions, end of period)
Total assets	$	12,320		$	11,663		$	11,317		$	11,579		$	12,097
Total earning assets		11,615			10,913			10,604			10,849			11,401
Total loans		8,682			8,335			7,943			7,803			7,267
Total deposits		10,068			10,327			9,988			10,115			10,699
Loans/deposits (%)		86	%		81	%		80	%		77	%		68	%
Total shareholders' equity	$	995		$	954		$	943		$	1,014		$	1,094

ASSET QUALITY
Allowance for credit losses, (millions)	$	98		$	96		$	96		$	99		$	99
Net charge-offs, (millions)		(7	)		(12	)		(6	)		(0	)		(3	)
Net charge-offs (QTD annualized)/average loans		0.32	%		0.58	%		0.30	%		0.02	%		0.15	%
Provision (benefit)/expense, (millions)	$	9		$	12		$	3		$	-		$	(4	)
Non-performing assets, (millions)		29			33			40			29			32
Non-performing loans/total loans		0.31	%		0.37	%		0.48	%		0.34	%		0.41	%
Allowance for credit losses/non-performing loans		363			309			254			368			335
Allowance for credit losses/total loans		1.13			1.15			1.21			1.27			1.37

CAPITAL RATIOS
Risk weighted assets, (millions) (6)	$	9,447		$	9,151		$	8,823		$	8,718		$	8,386
Common equity Tier 1 capital to risk weighted assets (6)		12.1	%		12.4	%		12.7	%		13.0	%		13.9	%
Tier 1 capital leverage ratio(6)		9.9			10.2			10.1			10.2			10.3
Tangible common shareholders' equity/tangible assets (3)		7.9			8.0			8.1			8.5			8.8

(1)	All financial tables presented are unaudited.
(2)	Reconciliations of non-GAAP financial measures, including all references to operating and tangible amounts, appear on page 11.
(3)	Non-GAAP financial measure. Operating measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions and restructuring activities. See page 11 for reconciliations of non-GAAP financial measures.
(4)	All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(5)	Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
(6)	Presented as projected for March 31, 2023 and actual for the remaining periods.

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,			March 31,
(in thousands)	2023			2022			2022
Assets
Cash and due from banks	$	121,589		$	145,342		$	151,814
Short-term investments		884,973			540,013			1,455,437
Total cash and cash equivalents		1,006,562			685,355			1,607,251

Trading securities, at fair value		6,584			6,708			7,798
Equity securities, at fair value		13,072			12,856			14,719
Securities available for sale, at fair value		1,407,271			1,423,200			2,032,575
Securities held to maturity, at amortized cost		574,606			583,453			612,174
Federal Home Loan Bank stock		44,245			7,219			10,829
Total securities		2,045,778			2,033,436			2,678,095
Less: Allowance for credit losses on investment securities		(71	)		(91	)		(99	)
Net securities		2,045,707			2,033,345			2,677,996

Loans held for sale		1,906			4,311			300

Commercial real estate loans		4,231,510			4,095,079			3,763,951
Commercial and industrial loans		1,553,340			1,473,316			1,397,193
Residential mortgages		2,369,614			2,216,410			1,567,299
Consumer loans		527,503			550,504			538,880
Total loans		8,681,967			8,335,309			7,267,323
Less: Allowance for credit losses on loans		(97,991	)		(96,270	)		(99,475	)
Net loans		8,583,976			8,239,039			7,167,848

Premises and equipment, net		78,710			85,217			92,971
Other intangible assets		23,279			24,483			28,332
Other assets		571,616			587,854			518,322
Assets held for sale		8,220			3,260			3,988
Total assets	$	12,319,976		$	11,662,864		$	12,097,008

Liabilities and shareholders' equity
Non-interest bearing deposits	$	2,650,937		$	2,852,127		$	3,020,568
NOW and other deposits		959,417			1,054,596			2,546,799
Money market deposits		3,274,630			3,723,570			2,469,042
Savings deposits		1,069,915			1,063,269			1,133,877
Time deposits		2,112,646			1,633,707			1,528,922
Total deposits		10,067,545			10,327,269			10,699,208

Federal Home Loan Bank advances		904,395			4,445			14,563
Subordinated borrowings		121,176			121,064			97,569
Total borrowings		1,025,571			125,509			112,132

Other liabilities		231,380			256,024			191,807
Total liabilities		11,324,496			10,708,802			11,003,147

Common shareholders' equity		995,480			954,062			1,093,861
Total shareholders' equity		995,480			954,062			1,093,861
Total liabilities and shareholders' equity	$	12,319,976		$	11,662,864		$	12,097,008

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	March 31,
(in thousands, except per share data)	2023			2022
Interest income	$	132,316		$	74,823
Interest expense		34,783			5,760
Net interest income, non FTE		97,533			69,063
Non-interest income
Deposit related fees		8,311			7,351
Loan fees and other		2,469			4,939
Gain on SBA loan sales		2,494			3,345
Wealth management fees		2,739			2,625
Other		359			3,166
Total non-interest income excluding gains/(losses)		16,372			21,426
Securities gains/(losses), net		234			(745	)
Total non-interest income		16,606			20,681
Total net revenue		114,139			89,744

Provision expense/(benefit) for credit losses		8,999			(4,000	)
Non-interest expense
Compensation and benefits		39,071			37,521
Occupancy and equipment		9,379			10,067
Technology and communications		9,471			8,527
Professional services		3,277			2,692
Other expenses		10,793			9,725
Merger, restructuring and other non-operating expenses		(36	)		18
Total non-interest expense		71,955			68,550
Total non-interest expense excluding merger, restructuring and other		71,991			68,532

Income before income taxes	$	33,185		$	25,194
Income tax expense		5,548			4,998
Net income	$	27,637		$	20,196

Basic earnings per common share	$	0.63		$	0.42
Diluted earnings per common share	$	0.63		$	0.42

Weighted average shares outstanding:
Basic		43,693			47,668
Diluted		44,036			48,067

CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend)


	March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
(in thousands, except per share data)	2023			2022			2022			2022			2022
Interest income	$	132,316		$	121,384		$	103,671		$	87,379		$	74,823
Interest expense		34,783			19,292			11,587			6,021			5,760
Net interest income, non FTE		97,533			102,092			92,084			81,358			69,063
Non-interest income
Deposit related fees		8,311			8,293			8,377			8,005			7,351
Loan fees and other		2,469			2,123			1,292			1,113			4,939
Gain on SBA loan sales		2,494			2,979			2,551			3,619			3,345
Wealth management fees		2,739			2,255			2,353			2,775			2,625
Other		359			(159	)		2,154			1,812			3,166
Total non-interest income excluding gains/(losses)		16,372			15,491			16,727			17,324			21,426
Securities gains/(losses), net		234			163			(476	)		(973	)		(745	)
Total non-interest income		16,606			15,654			16,251			16,351			20,681
Total net revenue		114,139			117,746			108,335			97,709			89,744

Provision expense/(benefit) for credit losses		8,999			12,000			3,000			-			(4,000	)
Non-interest expense
Compensation and benefits		39,071			37,968			39,422			37,830			37,521
Occupancy and equipment		9,379			9,431			8,702			9,438			10,067
Technology and communications		9,471			9,729			8,719			8,611			8,527
Professional services		3,277			3,153			3,285			2,913			2,692
Other expenses		10,793			12,350			10,076			9,648			9,725
Merger, restructuring and other non-operating expenses		(36	)		(2,617	)		11,473			35			18
Total non-interest expense		71,955			70,014			81,677			68,475			68,550
Total non-interest expense excluding merger, restructuring and other		71,991			72,631			70,204			68,440			68,532

Income before income taxes	$	33,185		$	35,732		$	23,658		$	29,234		$	25,194
Income tax expense		5,548			5,227			4,941			6,119			4,998
Net income	$	27,637		$	30,505		$	18,717		$	23,115		$	20,196

Diluted earnings per common share	$	0.63		$	0.69		$	0.42		$	0.50		$	0.42

Weighted average shares outstanding:
Basic		43,693			44,105			44,700			45,818			47,668
Diluted		44,036			44,484			45,034			46,102			48,067

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS

	Quarters Ended
	March 31, 2023							Dec. 31, 2022							March 31, 2022
	Average				Average			Average				Average			Average				Average
(in millions)	Balance		Interest (1)		Yield/Rate			Balance		Interest (1)		Yield/Rate			Balance		Interest (1)		Yield/Rate
Assets
Commercial real estate		4,166		61		5.88	%		3,934		55		5.46	%		3,651		31		3.35	%
Commercial and industrial loans		1,527		26		6.92			1,471		25		6.62			1,373		14		4.14
Residential mortgages		2,283		21		3.70			2,114		19		3.56			1,436		13		3.56
Consumer loans		539		10		7.24			563		10		7.00			514		5		4.24
Total loans		8,515		118		5.57			8,082		109		5.28			6,974		63		3.61
Securities (2)		2,261		13		2.23			2,294		13		2.20			2,649		13		1.95
Short-term investments and loans HFS		313		3		4.24			267		2		3.05			1,202		-		0.17
Total earning assets		11,089		134		4.85			10,643		123		4.56			10,825		76		2.82
Goodwill and other intangible assets		24							25							29
Other assets		692							653							639
Total assets		11,805							11,321							11,493

Liabilities and shareholders' equity
Non-interest-bearing demand deposits		2,706		-		-	%		2,876		-		-	%		2,968		-		-	%
NOW and other		1,456		6		1.64			1,395		4		1.11			1,456		-		0.04
Money market		2,659		10		1.59			2,819		8		1.16			2,871		1		0.16
Savings		1,047		-		0.10			1,086		-		0.03			1,117		-		0.03
Time		1,808		10		2.13			1,555		5		1.21			1,624		3		0.71
Total cost deposits		9,676		26		1.09			9,731		17		0.69			10,036		4		0.17
Borrowings (3)		688		9		5.06			169		2		5.56			122		2		5.21
Total funding liabilities		10,364		35		1.36			9,900		19		0.77			10,158		6		0.23

Other liabilities		227							208							146
Total liabilities		10,591							10,108							10,304

Common shareholders' equity		1,214							1,213							1,189

Total shareholders' equity		1,214							1,213							1,189
Total liabilities and shareholders' equity		11,805							11,321							11,493
Net interest margin, FTE						3.58							3.84							2.61

Total average non-maturity deposits		7,868							8,176							8,412

Supplementary data
Net Interest Income, non FTE		97.533							102.092							69.063
FTE income adjustment		1.908							1.845							1.524
Net Interest Income, FTE		99.441							103.937							70.587

	(1)	Interest income and expense presented on a fully taxable equivalent basis.
	(2)	Average balances for securities available-for-sale are based on amortized cost.
	(3)	Average balances for borrowings includes the financing lease obligation which is presented under other liabilities on the consolidated balance sheet.

ASSET QUALITY ANALYSIS

	March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
(in thousands)	2023			2022			2022			2022			2022
NON-PERFORMING ASSETS
Commercial real estate	$	2,546		$	2,434		$	2,976		$	8,277		$	8,984
Commercial and industrial loans		12,155			17,023			21,008			4,891			5,618
Residential mortgages		9,442			8,612			10,407			10,331			11,079
Consumer loans		2,848			3,045			3,463			3,385			4,000
Total non-performing loans		26,991			31,114			37,854			26,884			29,681
Repossessed assets		2,462			2,209			2,175			2,004			2,004
Total non-performing assets	$	29,453		$	33,323		$	40,029		$	28,888		$	31,685

Total non-performing loans/total loans		0.31	%		0.37	%		0.48	%		0.34	%		0.41	%
Total non-performing assets/total assets		0.24	%		0.29	%		0.35	%		0.25	%		0.26	%

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period	$	96,270		$	96,013		$	99,021		$	99,475		$	106,094
Adoption of ASU No. 2022-02		(401	)		-			-			-			-
Balance after adoption of ASU No. 2022-02		95,869			96,013			99,021			99,475			106,094
Charged-off loans		(7,936	)		(12,995	)		(7,424	)		(1,593	)		(6,048	)
Recoveries on charged-off loans		1,059			1,252			1,416			1,139			3,429
Net loans charged-off		(6,877	)		(11,743	)		(6,008	)		(454	)		(2,619	)
Provision (benefit)/expense for loan credit losses		8,999			12,000			3,000			-			(4,000	)
Balance at end of period	$	97,991		$	96,270		$	96,013		$	99,021		$	99,475

Allowance for credit losses/total loans		1.13	%		1.15	%		1.21	%		1.27	%		1.37	%
Allowance for credit losses/non-performing loans		363	%		309	%		254	%		368	%		335	%

NET LOAN CHARGE-OFFS
Commercial real estate	$	122		$	187		$	(854	)	$	(76	)	$	(3,280	)
Commercial and industrial loans		(5,695	)		(10,914	)		(4,931	)		(237	)		653
Residential mortgages		305			192			122			(30	)		(50	)
Home equity		16			(128	)		1			33			135
Auto and other consumer		(1,625	)		(1,080	)		(346	)		(144	)		(77	)
Total, net	$	(6,877	)	$	(11,743	)	$	(6,008	)	$	(454	)	$	(2,619	)

Net charge-offs (QTD annualized)/average loans		0.32	%		0.58	%		0.30	%		0.02	%		0.15	%
Net charge-offs (YTD annualized)/average loans		0.32	%		0.27	%		0.16	%		0.08	%		0.15	%

			Percent					Percent					Percent					Percent					Percent
			of Total					of Total					of Total					of Total					of Total
DELINQUENT AND NON-PERFORMING LOANS	Balance		Loans			Balance		Loans			Balance		Loans			Balance		Loans			Balance		Loans
30-89 Days delinquent	$	14,210		0.16	%	$	12,162		0.15	%	$	14,662		0.18	%	$	36,184		0.46	%	$	13,517		0.19	%
90+ Days delinquent and still accruing		6,937		0.08	%		7,038		0.08	%		6,285		0.08	%		6,760		0.09	%		6,613		0.09	%
Total accruing delinquent loans		21,147		0.24	%		19,200		0.23	%		20,947		0.26	%		42,944		0.55	%		20,130		0.28	%
Non-performing loans		26,991		0.31	%		31,114		0.37	%		37,854		0.48	%		26,884		0.34	%		29,681		0.41	%
Total delinquent and non-performing loans	$	48,138		0.55	%	$	50,314		0.60	%	$	58,801		0.74	%	$	69,828		0.89	%	$	49,811		0.69	%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA

		March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
(in thousands)		2023			2022			2022			2022			2022
Total non-interest income		$	16,606		$	15,654		$	16,251		$	16,351		$	20,681
Adj: Net securities (gains)/losses (1)			-			(163	)		476			973			745
Total operating non-interest income (2)		$	16,606		$	15,491		$	16,727		$	17,324		$	21,426

Total revenue	(A)	$	114,139		$	117,746		$	108,335		$	97,709		$	89,744
Adj: Net securities (gains)/losses (1)			-			(163	)		476			973			745
Total operating revenue (2)	(B)	$	114,139		$	117,583		$	108,811		$	98,682		$	90,489

Total non-interest expense	(C)	$	71,955		$	70,014		$	81,677		$	68,475		$	68,550
Adj: Merger, restructuring and other expense			36			2,617			(11,473	)		(35	)		(18	)
Operating non-interest expense (2)	(D)	$	71,991		$	72,631		$	70,204		$	68,440		$	68,532

Pre-tax, pre-provision net revenue (PPNR)	(A-C)	$	42,184		$	47,732		$	26,658		$	29,234		$	21,194
Operating pre-tax, pre-provision net revenue (PPNR) (2)	(B-D)		42,148			44,952			38,607			30,242			21,957

Net income		$	27,637		$	30,505		$	18,717		$	23,115		$	20,196
Adj: Net securities (gains)/losses (1)			-			(163	)		476			973			745
Adj: Restructuring expense and other expense			(36	)		(2,617	)		11,473			35			18
Adj: Income taxes (expense)/benefit			7			529			(2,738	)		(561	)		(170	)
Total operating income (2)	(E)	$	27,608		$	28,254		$	27,928		$	23,562		$	20,789

(in millions, except per share data)
Total average assets	(F)	$	11,805		$	11,321		$	11,315		$	11,260		$	11,493
Total average shareholders’ equity	(G)		1,214			1,213			1,189			1,182			1,189
Total average tangible shareholders’ equity (2)(3)	(H)		1,190			1,188			1,164			1,155			1,160
Total accumulated other comprehensive (loss) net of tax, end of period			(159	)		(181	)		(188	)		(123	)		(78	)
Total tangible shareholders’ equity, end of period (2)(3)	(J)		972			930			917			987			1,066
Total tangible assets, end of period (2)(3)	(L)		12,297			11,638			11,291			11,552			12,069

Total common shares outstanding, end of period (thousands )	(M)		44,411			44,361			45,040			45,788			47,792
Average diluted shares outstanding (thousands )	(N)		44,036			44,484			45,034			46,102			48,067

GAAP earnings per common share, diluted (2)		$	0.63		$	0.69		$	0.42		$	0.50		$	0.42
Operating earnings per common share, diluted (2)	(E/N)		0.63			0.64			0.62			0.51			0.43
Tangible book value per common share, end of period (2)	(K/M)		21.89			20.95			20.36			21.56			22.30
Total tangible shareholders’ equity/total tangible assets (2)	(J/L)		7.91			7.99			8.12			8.54			8.83

Performance ratios (4)
GAAP return on equity			9.11	%		10.06	%		6.30			7.82	%		6.79	%
Operating return on equity (2)	(E/G)		9.10			9.32			9.40			7.97			6.99
Return on tangible common equity (2)(5)			9.59			10.59			6.76			8.33			7.29
Operating return on tangible common equity (2)(5)	(E+Q)/(I)		9.59			9.83			9.92			8.48			7.49
GAAP return on assets			0.94			1.08			0.66			0.82			0.70
Operating return on assets (2)			0.94			1.00			0.99			0.84			0.72
Efficiency ratio (2)(6)	(D-Q)/(B+O+R)		59.51			58.25			62.01			66.60			72.61

Supplementary data (in thousands)
Tax benefit on tax-credit investments (7)	(O)	$	2,897		$	3,068		$	620		$	595		$	596
Non-interest income tax-credit investments amortization (8)	(P)		(2,285	)		(2,355	)		(445	)		(351	)		(357	)
Net income on tax-credit investments	(O+P)		612			713			175			244			239

Intangible amortization	(Q)	$	1,205		$	1,277		$	1,285		$	1,286		$	1,286
Fully taxable equivalent income adjustment	(R)		1,908			1,845			1,715			1,560			1,524

(1)	As of March 31, 2023, securities gains/(losses) are included in operating income. Net securities (gains)/losses for prior periods include the change in fair value of the Company’s equity securities in compliance with the Company’s adoption of ASU 2016-01.
(2)	Non-GAAP financial measure.
(3)	Total tangible shareholders’ equity is computed by taking total shareholders’ equity less the intangible assets at end of period. Total tangible assets is computed by taking intangible assets at end of period.
(4)	Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(5)	Operating return on tangible equity is computed by dividing the total operating income/(loss) adjusted for the tax-effected amortization of intangible assets, assuming a 27% marginal rate, by tangible equity.
(6)	Efficiency ratio is computed by dividing total operating tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total operating non-interest income adjusted to include tax credit benefit of tax shelter investments. The Company uses this non-GAAP measure to provide important information regarding its operational efficiency.
(7)	The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new markets and solar.
(8)	The non-interest income amortization is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.