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A Berkshire Bank storefront branch in Boston’s Brighton neighborhood. Photo by James Sanna | Banker & Tradesman Staff
After ending 2020 with more than $500 million in losses, Boston-based Berkshire Bank finished 2021 with $118 million in earnings and approved a share repurchase program that the bank said would return a significant amount of excess capital to shareholders.
The bank’s parent company, Berkshire Hills Bancorp, said in a statement yesterday that its board had approved a $140 million stock repurchase program that would see the company buy back approximately 9 percent of its stock.
The bank in 2021 had completed a 5 percent repurchase program that returned $92 million of capital to shareholders, Berkshire CEO Nitin Mhatre said in the bank’s earnings call today.
“We have ample capital to both fund expected loan growth and continue stock repurchases,” Mhatre said.
While prioritizing share repurchases, Mhatre added that the bank would also assess increasing its cash dividends in 2022. The bank had cut dividends in half in the third quarter of 2020 after making a $554 million goodwill impairment charge in the second quarter.
Berkshire Bank had 2021 net income of $118.6 million, or $2.39 per diluted share, compared to a loss in 2020 of $533 million, or a loss of $10.60 per diluted share.
The bank’s fourth quarter net income was $20.2 million, or $0.42 per diluted share, compared to net income of $15 million in the fourth quarter of 2020, or $0.30 per diluted share. The bank had positive earnings during each of the quarters in 2021.
While the bank’s total loans declined year-over-year by 21 percent, due in part to the sale of eight Mid-Atlantic branches in 2021, Mhatre said loan originations during the year increased approximately 200 percent.
Loan growth is part of the bank’s BEST strategy to improve performance, and the bank plans to increase customer-facing roles by about 40 percent as part of that strategy. In response to an analyst’s question, Mhatre said the bank is on pace to reach its hiring target and added more staff in the fourth quarter than in the other quarters of 2021.
Mhatre said new staff members have already added to the bank’s loan pipeline.
The bank also still plans to do $100 million in consumer loans in 2022. While these consumer loans would represent less than 3 percent of originations, Mhatre said the bank would benefit from what it learns about the technology that will be used to deploy those loans.
Last year also saw Berkshire sell its insurance division during the third quarter. Even without fee income from the insurance business during the fourth quarter, Berkshire did see fee income increase in the fourth quarter. Berkshire’s chief financial officer, Subhadeep Basu, said fee income increased in part from the sale of SBA loans and the bank’s wealth management division.
