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Berkshire Bank saw the impact of CECL implementation and the coronavirus pandemic in its earnings, as the Boston-based bank suffered losses in the first quarter. Berkshire had a net loss of $19.9 million in the first quarter compared to net income of $25.8 million in the fourth quarter. The net loss per diluted share was $0.40 in the first quarter compared to net earnings per diluted share of $0.51 in both the fourth and first quarters of 2019.
Berkshire CEO Richard Marotta said in a statement that Berkshire’s has prioritized helping communities during the current crisis, especially minority ones, “weather this storm and rebuild as soon as it is safe to do so.”
“We are proud to offer additional support and financial flexibility to our customers who may have been impacted, and are also funding significant programs to help small businesses,” Marotta said in the first quarter earnings statement. “We continue to maintain a strong balance sheet, with ample liquidity and regulatory capital to ensure we continue to perform our essential role. We intend to continue to lead, supporting our customers and neighbors throughout this pandemic, because we know that in the long haul when our communities prosper, Berkshire does too.”
Like several other Massachusetts stock banks, Berkshire Bank adopted the new current expected credit loss methodology the first quarter rather than deferring implementation of the accounting standard as allowed under the CARES Act.
Berkshire, with a total loan portfolio of $9.3 billion, raised its total allowance for credit losses to $113.5 million, 1.22 percent of the total loan portfolio. Under the previous accounting method, the total allowance was 0.67 percent at the end of 2019.
Berkshire Bank’s total assets were unchanged from the fourth quarter at $13.2 billion.
Another Massachusetts bank that adopted CECL in the first quarter, Rockland Trust, saw earnings drop compared to the fourth quarter but without Berkshire’s negative performance. Rockland Trust had first quarter net income of $26.8 million, or $0.78 per diluted share, compared to $47.5 million, or $1.38 per diluted share, in the fourth quarter.
Both banks had acquisitions in the second quarter last year, with Berkshire Bank acquiring Savings Institute and Trust Co. and Rockland Trust acquiring Blue Hills Bank.
Rockland Trust, which has $12 billion in total assets, had a first quarter provision for credit loss of $25 million. Using the previous accounting standard, the first quarter 2019 provision for credit losses was $1 million. The total loan portfolio was $8.9 billion in the first quarter. The total allowance for credit losses was 1.04 percent in the first quarter, up from 0.76 at the end of 2019.
Almost 30 percent of Berkshire’s commercial loan portfolio, about $2.681 billion, is exposed to industries most affected by the coronavirus crisis. Rockland Trust had about $1.678 billion of its commercial loan portfolio, 18.8 percent, exposed to industries most affected by the coronavirus crisis.
