Beacon Financial Corporation · NYSE:BBT
Beacon Financial — Berkshire Hills Bancorp — Investor Presentation (February 2017)
32 slides from Beacon Financial's investor presentation, Feb 9, 2017
Slide 1: Berkshire Hills Bancorp Investor Presentation
February 2017 Berkshire Hills Bancorp Investor Presentation
Slide 2: Who We Are
Assets: $9.2 billion Loans: $ 6.5 billion Deposits: $ 6.6 billion Wealth AUM: $1.4 billion Revenue : $298 million (LTM) Branches: 98 Footprint: Northeast Market Capitalization: $ 1.3 billion NYSE: BHLB 2 Note: All data as of 12/31/16 Who We Are Full service regional bank with a distinctive brand and
Slide 3: Why Berkshire?
Why Berkshire? Strong momentum and improving profitability Diversified revenue drivers and controlled expenses Footprint positioned in attractive markets AMEB culture – results driven Acquisition disciplines a strength in a consolidating market 3
Slide 4: 4Q16/FY16 Strategic Highlights
4 4Q16/FY16 Strategic Highlights • FY16: CORE EPS $2.20 ; GAAP EPS $1.88 • 4Q16: Core EPS $0.56 ; GAAP EPS $0.32 • Record Annual Earnings of $59 million in 2016 • Net income increase: 18% FY16 • Continued to diversify revenue streams • 19% increase in fee income FY16 • Commercial loan growth: 18% FY
Slide 5: Strong Earnings Momentum
5 Strong Earnings Momentum $226 $268 $298 $1.80 $2.09 $2.20 $1.36 $1.73 $1.88 $1.25 $1.45 $1.65 $1.85 $2.05 $2.25 $2.45 $100 $120 $140 $160 $180 $200 $220 $240 $260 $280 $300 2014 2015 2016 Revenue Core EPS EPS $ Millions 17 % EPS CAGR 11% Core EPS CAGR 15% Revenue CAGR Note: All CAGR comparisons ar
Slide 6: Improving Profitability
6 Improving Profitability 2014 2015 2016 0.55% 0.68% 0.74% 0.73% 0.82% 0.86% Return on Assets Core Return on Assets Note: A reconciliation of GAAP measures can be found in the Appendix 2014 2015 2016 4.9% 6.2% 6.4% 11.5% 12.5% 12.5% Return on Equity Core Return on Tangible Equity • Focused on profit
Slide 7: Diversified Loan Mix
7 Diversified Loan Mix Note: Loan growth and specialty lending as of 12/31/16 2,416 3,108 3,679 1,496 1,815 1,893 769 802 978 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2014 2015 2016 Commercial Residential Consumer $ Millions 14% loan growth in 2016 $426 million of new loans brought on through ac
Slide 8: Diversified Deposit Mix
8 Diversified Deposit Mix 1,295 1,593 1,849 1,904 2,010 2,439 1,456 1,986 2,334 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2014 2015 2016 DDA/Now MM/Savings Time $ Millions 18% increase in total deposits 18% DDA growth 27% Money Market growth $893 million of new deposits brought on through acquisi
Slide 9: Focused on Diversifying Fee Revenue
9 Loan 24% Mortgage Banking 11% Deposit 37% Insurance 15% Wealth Management 13% Focused on Diversifying Fee Revenue Fee Revenue Mix • Total fee income up 19% Y/Y • Focused on revenue diversification • Well positioned for expanded opportunities across lines of business • 44 Business Capital SBA team
Slide 10: Driving Fee Income Growth
10 Driving Fee Income Growth $6.3 $8.3 $16.7 $2.6 $4.1 $7.5 $24.6 $25.1 $25.0 $10.4 $10.3 $10.5 $9.5 $9.7 $8.9 $0 $10 $20 $30 $40 $50 $60 $70 2014 2015 2016 Loan Related Mortgage Banking Deposit Related Insurance Wealth Management $ Millions Fee Revenue Mix • Fee revenue as a percentage of total net
Slide 11: Controlled Expenses
11 Controlled Expenses Efficiency ratio of 58.9% 36 branches closed, consolidated or sold in last 5 years Includes 3 branches consolidated in early 2017 Ongoing Six Sigma initiatives including Mortgage, SBA and Equipment lending business lines Balancing operating costs and infrastructure i nvestment
Slide 12: Strong Credit Quality
12 Strong Credit Quality 0.29% 0.25% 0.21% 0.37% 0.29% 0.24% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 2014 2015 2016 NCO/Avg Loans NPA/Assets • Disciplined credit standards driving pristine asset quality metrics • Favorable credit trends continue to demonstrate improvement in overall credit q
Slide 13: AMEB Culture – Results Driven
13 AMEB Culture – Results Driven RIGHT core values – Respect, Integrity, Guts, Having Fun and Teamwork Talent recruitment drives growth Engaging and innovative customer experience Driven to make a difference Community focused People, Attitude and Energy
Slide 14: Acquisition history timeline
14 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Acquired Woronoco Bancorp, Inc. 6/1/2005 Assets: $898MM MA Acquired 6 independent insurance agencies 2006 MA Acquired Factory Point Bancorp, Inc. 9/21/2007 Assets: $339MM VT Acquired Rome Bancorp, Inc. 4/1/2011 Assets: $330MM NY Acquired
Slide 15: FY17 Guidance
15 FY17 Guidance 2017 – Driving Profitability and Fee Revenue » Continued progress towards 1% ROA » Deepening and diversifying revenue sources 5 - 7% Core EPS growth Revenue growth driven by balance sheet expansion and fee sources » Minimal margin compression expected, assuming a flat rate environme
Slide 16: Why Invest in Us
16 Why Invest in Us Strong momentum and improving profitability Diversified revenue drivers and controlled expenses Footprint positioned in attractive markets AMEB culture – results driven Acquisition disciplines a strength in a consolidating market Source: SNL Financial a/o 01.31.2017 and BHLB 4Q16
Slide 17: Appendix
17 Loan and Deposit Mix Redefining Customer Experience Preparing for $10 Billion Tax Credit Program Acquisition Discipline and Integration Experience Berkshire Franchise Overview Non - GAAP Reconciliation Disclosures Appendix
Slide 18: Loan and Deposit Mix
18 Loan and Deposit Mix Deposit Mix DDA 19% NOW 9% MM 27% Savings 10% Time 35% CML Construction 4% Investment CRE 27% Owner Occ CRE 9% C&I 16% Residential 29% Consumer 15% Loan Mix Total Loans: $6.5 billion Total Deposits: $6.6 billion Note: Data as of 12/31/2016
Slide 19: Redefining Customer Engagement
19 Redefining Customer Engagement Engaging Branches o Friendlier pods replace teller lines o Automated cash handling – lowers cost and improves customer engagement o Community rooms bring in traffic o Universal bankers create one stop shop for personal banking and insurance needs o Real time interac
Slide 20: Preparing for $10 Billion
20 Preparations Made: • Implemented and scaled a full service Enterprise Risk Management system, compliance systems, new ALM system • Implementation cost: ~$5mm in last 3 years • Ongoing cost: ~$0.5mm/year • Added 40 people to compliance and risk departments • Accounts for over $3.5mm of current exp
Slide 21: Historic Tax Credit Program
21 Risks: • Primary risk is construction/project completion » Risk is managed by the Bank as the construction lender. » Tail risk of tax recapture for five years if project is not successful » Berkshire has a strong credit track record Overview: • Investments made in local community development proj
Slide 22: Acquisition Discipline and Integration Experience
22 Rome (NY) Legacy (MA) CBT (CT) Beacon (NY) Hampden (MA) First Choice (NJ) Combined Date closed 4/2011 7/2011 4/2012 10/2012 4/2015 12/2016 Assets ($millions) 330 970 280 1,025 690 1,100 4,395 (Total) Price/TBV (%) 120 110 140 111 133 109 121 (average) EPS accretion ($ ) 0.10 0.10 0.04 0.22 0.08 0
Slide 23: Eastern MA – Greater Boston
23 Eastern MA – Greater Boston • Two branches and three lending offices located in Eastern MA • Commercial Lending headquarters in Burlington MA • Congress St, Boston branch to open early 2017 • Boston is the Capital of MA and a port city • Boston accounts for 45% of New England GDP • Berkshire depo
Slide 24: Hartford/Springfield
24 Hartford/Springfield • Twenty - four branches located in Hartford/Springfield footprint • Commercial Lending headquarters located in Hartford and Springfield • Hartford is the Capital of CT • Berkshire deposits in Region increased 6% year - over - year to $ 1.4 billion • Primary industries operat
Slide 25: Western New England
25 Western New England • Twenty - four branches located in Berkshire’s Western New England • Commercial Lending headquarters in Pittsfield MA • Berkshire deposits in Region increased 15% year - over - year to $ 2.5 billion • Western NE is the home of Berkshire’s corporate office as well as Wealth Ma
Slide 26: Capital District - Albany
26 Capital District - Albany • Thirty - three branches are located in the Capital District footprint • Commercial Lending headquarters located in Albany • Albany is the Capital of NY and a port city • Berkshire deposits in Region increased 11% year - over - year to $ 800MM • Primary industries opera
Slide 27: Central New York
27 Central New York • Seven branches are located in the Central New York footprint • Commercial Lending headquarters located in Syracuse • Berkshire deposits in Region increased 2% year - over - year to $900MM • Central NY is home of Berkshire’s indirect auto operations • Primary industries operatin
Slide 28: Princeton and Philadelphia
28 Princeton and Philadelphia • Eight branches are located in the Princeton and Philadelphia footprint • Acquisition of First Choice Bank closed 12/2/2016 • Berkshire deposits in Region $873MM as of 06/30/2016 • Philadelphia area is home to 44 Business Capital , BHLB’s SBA lending team • Princeton a
Slide 29: Non-GAAP reconciliation
29 (Dollars in thousands) 2014 2015 2016 Net income $ 33,744 $ 49,518 $ 58,670 Non - core revenue (net) 9,691 (2,110) (534) Non - core expense (net) 8,492 17,611 15,761 Income taxes (7,185) (5,409) (5,455) Total core income (A) $ 44,742 $ 59,610 $ 68,442 Amortization of intangible assets (after tax)
Slide 30: Forward Looking Statements
30 FORWARD LOOKING STATEMENTS This document contains forward - looking statements as defined in the Private Securities Litigation Reform Act of 1995 . There are several factors that could cause actual results to differ significantly from expectations described in the forward - looking statements . F
Slide 31: Non-GAAP Financial Measures
31 NON - GAAP FINANCIAL MEASURES This document contains certain non - GAAP financial measures in addition to results presented in accordance with Generally Accepte d Accounting Principles (“GAAP”). These non - GAAP measures provide supplemental perspectives on operating results, performance tren ds,
Slide 32: Contact
32 If you have any questions, please contact : Allison O’Rourke 99 North Street Pittsfield, MA 01202 Investor Relations Officer (413) 236 - 3149 [email protected]
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