Banker & Tradesman photo / file
Even with some economic turmoil to start the year, Berkshire Bank had a successful first quarter, seeing deposit and income growth.
After recording a loss in the first quarter of 2024, Berkshire recorded $25.7 in net income along with an 18 percent increase in deposits year-over-year.
“First quarter net interest income increased 3 percent linked quarter and the net interest margin increased 10 basis points to 3.24 percent, benefiting from a 12 basis point decrease in the cost of deposits to 2.18%,” Berkshire CFO Brett Brbovic told Wall Street analysts during the bank’s first-quarter earnings call. “Operating non-interest income decreased $2.6 million linked quarter and increased $3.4 million year-over-year due primarily to changes in loan related income. The provision for credit losses decreased $0.5 million linked quarter and operating non-interest expense decreased $3.1 million, with decreases in most categories except seasonally higher compensation and occupancy expense. The allowance for credit losses on loans increased 2 basis points to 1.24 percent. Capital remained stong, with the tangible common equity ratio increasing to 9.9 percent of assets. Tangible book value per share advanced 3 percent linked quarter to $25.50.”
Berkshire’s total loans increased $44 million, or 0.5 percent to $9.4 billion. This included the bank selling the remaining portfolio of Upstart related consumer loans which totaled $7 million. As a result, the bank recorded first quarter consumer loan net charge-offs of $1.3 million, which includes the net loss on the sale.
“With the sale of the upstart book, we have significantly de-risked our balance sheet,” Brbovic said. “Our other loan books are below normal net charge-off levels, and we do expect those to normalize over time based on the macroeconomic environment and outlook.”
Berkshire is also seeing success through its digital channels. In the first quarter earnings call, Berkshire CEO Nitin Mhatre highlighted how the bank’s digital deposit initiative has brought in $75 million in new deposits. Additionally, he noted that roughly 1 in 5 new clients were acquired through digital channels.
