In an activity-packed quarter that included a major acquisition, a stock offering, the relocation of its headquarters to Boston and the passing of the $10 billion asset threshold, Berkshire Hills Bancorp continued to produce major earnings growth.
The bank reported net income of $19.7 million in the second quarter, up more than 23 percent year-over-year. Core earnings totaled $21.6 million in the second quarter, an increase of 31 percent year-over-year, mainly due to the bank’s expansion.
Earnings per share for net income year-over-year, was up 2 percent to $0.53, while core earnings per share increased 7 percent to $0.58.
“We had a strong second quarter, extending the operating momentum from the first quarter. We also conducted a successful stock offering and completed an agreement to acquire Worcester-based Commerce Bancshares,” Berkshire CEO Michael Daly said in a statement. “These actions support our plan to cross the $10 billion asset threshold and provide the capital resources to accelerate our growth.”
The company raised $153 million in cash after issuing 4.6 million shares.
The recent share issuance, according to Berkshire executives, will keep earnings per share flat at $0.58 next quarter, before expecting to see full year core EPS growth in the range of 3 to 4 percent.
Total assets finished just over $9.6 billion in the second quarter, up from just over $8 billion at this time last year.
For the six months ending June 30, net interest income finished 0ver $136 million, up 18 percent from the same time last year.
Non-interest income for the six months ending June 30 was over $67 million, up from just over $30 million from the same period last year.
“Our net interest income advanced and fee income grew by 15 percent to 32 percent of total revenue [in the second quarter],” Daly said in a statement. “Our strong and diversified revenue sources produced a 42 percent year-over-year increase in total revenue, which now exceeds $400 million on an annualized basis.”
During an earnings conference call, Berkshire executives expressed excitement about the Commerce acquisition, first announced in May, and the relocation of its headquarters to Boston, a market in which the company seeks to accelerate business development.
So far, Berkshire’s first Boston branch, which opened earlier this year on Congress Street in the Seaport, has brought in $15 million in deposits.
Once Berkshire completes the Commerce Bank acquisition, it will have four branches and a headquarters in Boston that Berkshire executives expect will bring in $350 million worth of collective deposits and nearly $2 billion in loans.
Crossing the $10 billion asset threshold will also subject Berkshire to more stringent regulation from the Consumer Financial Protection Bureau.
“The team at Commerce has been terrific to work with,” said Daly, adding that Berkshire has been running stress tests of their own to prepare for CFPB oversight. “They are a great cultural fit and it will be a smooth transition for customers and employees.”
Berkshire executives declined to comment on Commerce’s $103 million commercial taxi medallion portfolio, loans that are of major concern due to the declining value of the medallions, citing pending negotiations.
Berkshire spent $2.9 million on merger, restructuring and other expenses in the second quarter, one-third on its first quarter acquisition of First Choice Bank and two-thirds on the Commerce acquisition.
Net loans at the end of the second quarter were valued over $6.8 billion, up more than $300 million since the end of 2016.
Commercial real estate, commercial and industrial, residential mortgages and consumer loans all increased their position in Berkshire’s portfolio since the end of 2016; residential mortgages, which tend to increase heavily in quarters two and three, were up more than $40 million.
