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Boston-based Berkshire Hills Bancorp Inc. (NYSE:BHLB) announced today the sale of approximately $46.5 million in consumer loans and the completion of its previously disclosed branch sale.
The consumer loans, related to Upstart (NASDAQ:UPST), were sold at 96% of their book value, resulting in a net charge-off of $1.9 million. These loans will be reflected as held for sale in the company's financial statement as of September 30, 2024.
The bank's operating subsidiary, Berkshire Bank, also finalized the sale of ten branches located in upstate and eastern New York during the third quarter of 2024. The transactions, which were part of a strategy announced on March 4, 2024, involved three separate buyers and were completed as scheduled.
The bank divested approximately $383 million in deposits and $50 million in residential mortgage and consumer loans, excluding its commercial banking business.
The move is expected to result in approximately $16 million in pre-tax non-operating income ($12 million after-tax) for the third quarter, as the company looks to streamline its operations. The downsizing will concentrate Berkshire's geographic footprint and is anticipated to reduce its expense run rate.
Following the branch sales, Berkshire will operate 83 branches in New England and New York, with a reduced total staff count by 40 full-time equivalent positions, all of whom were offered positions by the acquiring entities.
This strategic realignment is part of Berkshire's ongoing efforts to enhance efficiencies, invest in client experience, and improve long-term earnings and profitability. The information is based on a press release statement from Berkshire Hills Bancorp Inc. filed with the SEC.
In other recent news, Berkshire Hills Bancorp has reported a significant rise in its second-quarter earnings for 2024, with a 12% increase in operating earnings per share (EPS) to $0.55 and an 11% boost in operating net income to $23.2 million.
Furthermore, the company has announced the sale of 10 branches in New York, which is expected to reduce the total branches to 83 by the end of the third quarter.
Keefe, Bruyette & Woods recently adjusted its price target on Berkshire Hills Bancorp, raising it to $26 from $24, following the company's strong Q2 performance. However, the firm also noted that the company's net interest income did not meet expectations.
In other developments, Berkshire Hills Bancorp has seen a change in executive leadership and held a series of investor meetings in Boston. Piper Sandler has reaffirmed a neutral rating on the company's stock, maintaining a price target of $24.00.
The company has also launched Berkshire One, a new digital deposit product suite, emphasizing its commitment to improving digital client experiences. The company's future expectations include a stable net interest margin around 3.20%, lower deposits due to the branch sale, and provision expense and operating expenses projected to be below prior guidance.
These recent developments provide insight into Berkshire Hills Bancorp's current financial situation and future direction.
InvestingPro Insights
Berkshire Hills Bancorp's recent strategic moves align with several key insights from InvestingPro. The company's efforts to streamline operations and improve profitability are reflected in its current financial metrics and market performance.
InvestingPro data shows that Berkshire Hills Bancorp has a market capitalization of $1.19 billion and is trading near its 52-week high, with a significant price uptick of 39.81% over the last six months. This positive momentum suggests that investors are optimistic about the company's restructuring efforts.
Two InvestingPro Tips are particularly relevant to the recent developments:
1. Berkshire Hills Bancorp has maintained dividend payments for 25 consecutive years, indicating a commitment to shareholder returns even as it undergoes strategic changes.
2. Analysts predict the company will be profitable this year, which aligns with management's focus on improving long-term earnings and profitability through the recent branch and loan sales.
These insights, along with 5 additional tips available on InvestingPro, provide a more comprehensive view of Berkshire Hills Bancorp's financial health and market position. The company's P/E ratio of 55.39 suggests investors are pricing in future growth expectations, possibly influenced by the recent strategic moves.
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