Q4 2024 Berkshire Hills Bancorp Inc Earnings Call
The first time I've seen this video, I've been watching this video for a long time.
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Berkshire Hills Bancorp Fourth Quarter 2024 Earnings Conference Call.
Speaker Change: At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. And to ask a question, please press star 1 on your telephone keypad.
Speaker Change: If at any time during this call you require immediate assistance, please press star zero for the operator.
Speaker Change: This call is being recorded on January 30, 2025. I would now like to turn the conference over to Kevin Conn, Investor Relations Officer. Please go ahead.
Kevin Conn: Good morning, and thank you for joining Berkshire Bank's fourth quarter earnings call. My name is Kevin Conn, Investor Relations and Corporate Development Officer. Here with me today are Nitin Mhatre, Chief Executive Officer, Sean Gray, Chief Operating Officer, Brett Brbovic, Chief Financial Officer, and Greg Lindenmuth, Chief Risk Officer.
Kevin Conn: Our remarks will include forward-looking statements and refer to non-GAAP financial measures.
Actual results could differ materially from those statements.
Kevin Conn: Please see our legal disclosures on page 2 and 3 of the earnings presentation referencing forward-looking statements and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our news release. At this time I'll turn the call over to Nitin.
Nitin: Thank you, Kevin. Good morning, everyone. And thank you all for joining us today. I'll begin my comments on slide four, where you can see the highlights for the fourth quarter and for full year 2024.
Nitin: We had a strong quarter with robust improvement in the operating earnings, quarter over quarter and year over year.
Nitin: Operating EPS of $0.60 was up 3% link quarter and up 28% year-over-year.
Nitin: Operating net income of 26 million was up 5% link quarter and up 29% year-over-year.
Nitin: Operating Rod C was 9.93% up 2 basis points linked quarter and up 103 basis points year-over-year.
Nitin: The outperformance in the quarter was driven by strong fee revenues that were up 8% linked quarter coupled with stable credit provision expenses and lower operating expenses Which were down 2% linked quarter and down 6% year-over-year
Nitin: This is the fourth year in a row where we've outperformed our peer median in terms of year-over-year expense trend. We've included a slide in the appendix to show that expense trend data relative to our peers.
Nitin: Asset quality and balance sheet metrics remain strong. Net charge-offs were 14 basis points of loans, and our reserve to loans was flat to the third quarter at 122 basis points of loans.
Nitin: Delinquencies and non-performing loans were at 52 basis points of loans, the lowest level in almost 20 years. A solid testament to the strength of our collaborative risk culture across our frontline bankers and the risk teams.
Nitin: Capital ratios were up linked quarter with CET1 at 13.0% and TCE at 9.4%.
Nitin: Average deposits were up 3% and average loan balances were up 0.4% linked quarter.
Nitin: Liquidity remains solid with our loans-to-deposit ratio at 96% on an average basis.
Nitin: As anticipated, our focus on deposit gathering and associated strategic initiatives for the previous two quarters have gained traction in the second half of 2024.
Nitin: Total deposit costs were down 12 basis points linked quarter and total funding costs were down 17 basis points linked quarter.
Nitin: We expect funding costs to decline as the Fed cuts interest rates further, and like many banks, we continue to move deposit rates lower in the fourth quarter.
Nitin: On strategy front, we made steady progress on our strategic initiatives in 2024. We've successfully executed on a variety of expense optimization initiatives.
Nitin: Sold 10 branches in New York to tighten our network, further de-risked the balance sheet and invested in bankers and technology to further improve the client experience reflected in our Net Promoter Score that remained above 60 in the fourth quarter.
Nitin: As you know, in December, we announced a merger of equals with Brookline Bancorp to create a preeminent Northeast franchise.
Nitin: Turning to slide 5, you will see high-level overview of the combined bank.
Nitin: The transaction improves scale and meaningfully improves profitability as reflected in the estimated 40% and 23% accretion to Berkshire's 2026 consensus EPS estimate on GAAP and cash basis respective.
Nitin: Slide six shows the merger rationale. The merger combines Berkshire's stable, lower cost, more rural funding base with higher growth lending markets in Eastern Massachusetts and Rhode Island of Brookline.
Nitin: And with the expected 12.6% expense saves from the synergies of the two organizations, the combined efficiency ratio is expected to get below 50% in 2026.
Nitin: We announce this merger of equals in the fourth quarter and expect the closing in the second half of 2025, subject to requisite regulatory and shareholder approvals and closing conditions.
Nitin: I want to thank all of my Berkshire Bank colleagues for their continued hard work and commitment to the bank and our clients, and look forward to their continued support and commitment through this transition.
Nitin: We will be communicating an integration plan to our employees over the next several weeks and we continue to maintain Berkshire Bank's standalone performance during transitions through the transaction closing in the second half of 2025.
Nitin: With that, I'll turn it over to Brett Brbovic to talk through our financials in more detail. Brett. Thank you, Nitin.
Brett Brbovic: Slide 7 shows an overview of 2024 metrics versus 2023. Our operating earnings were $94.9 million, or $2.22 per share. On an annual basis, fees were up 21%, and operating non-interest expense was down 3%.
Brett Brbovic: Provision expense for credit losses were $24 million, down $8 million from 2023, all while increasing our allowance for credit losses to 122 basis points, up 5 basis points.
Brett Brbovic: Turning to slide 8, we show fourth quarter metrics. Operating earnings were $26 million or $0.60 per share, up $0.02 linked quarter, and $0.13 year over year.
Brett Brbovic: Net interest income of $86.9 million was down 1% linked quarter.
Operating interest income was $23.2 million, up 8% length quarter.
Brett Brbovic: Operating expenses were $71 million, down 2% last quarter, and down 6% year-over-year. Our fee, credit, and expense trends continue to be strong and compare favorably to peers.
Brett Brbovic: Net charge-offs were $3.3 million or 14 basis points of loans.
Brett Brbovic: Provision expense was $6 million and the reserve coverage ratio of 122 basis points was flat linked quarter.
RACL to non-performing loans increased to 469%.
Slide 9 shows our average loan balances.
Brett Brbovic: Average loans are up $38 million linked quarter and up $281 million or 3% year over year.
Brett Brbovic: Average growth was lighter this quarter as we sold $47 million of our upstart consumer portfolio, had higher paydowns in the multifamily portfolio, and a couple of commercial closings that were pushed to the first quarter.
Brett Brbovic: On an end-of-period basis, loans were up 2% linked quarter, with growth primarily in C&I and commercial real estate.
Brett Brbovic: We've updated a page in the appendix which shows the Upstart and Firestone runoff portfolios. The combined runoff portfolios are down 119 million or 71 percent year-over-year to 48 million or 50 basis points of loans.
Brett Brbovic: Excluding payroll and brokered CD balances, end-of-period deposits grew 3% quarter-over-quarter.
Brett Brbovic: Year-over-year deposits were down 3%, or $277 million, primarily from the New York branch sale, which closed in the third quarter. Adjusting for the $383 million of sold deposits from the branch sale, deposits were up 1% year-over-year.
Brett Brbovic: Average non-interest bearing deposits as a percentage of total deposits remained at 24%, consistent with the prior two quarters.
Brett Brbovic: Turning to slide 11, we show net interest income. Net interest income was down 1% linked quarter and down 2% year over year. Net interest margin was down two basis point linked quarter to 314, and December spot NIM was 318.
Brett Brbovic: While we have headwinds of floating rate loans repricing lower short term, we also have several tailwinds. We have 1.5 billion of CDs or 59% of that book maturing in the next six months.
Brett Brbovic: We have $600 million of wholesale funding that matures over the first half of 2025. And further, we have $600 million of low-yield received fixed swaps maturing over 2025 and 2026, with about half in 2025.
Brett Brbovic: Finally, we also have low-yield fixed-rate securities and loans that will mature and reprice at higher yields.
Brett Brbovic: Slide 12 shows our operating non-interest income up 1.7 million or 8% linked quarter and up 6.5 million or 39% year over year.
Brett Brbovic: Year-over-year comparisons reflect the change to PAM accounting for our tax credit investment business.
Brett Brbovic: The growth in fees quarter over quarter was primarily driven by higher gain on SBA loan sales.
Brett Brbovic: We also had higher BOLI revenues and seasonal revenue sharing fees this quarter, which came in about $1.5 million above normalized run rates.
Brett Brbovic: Deposit related fees declined linked quarter due to the New York branch sale.
Brett Brbovic: This was the fourth quarter in a row where we've seen solid growth in overall fees.
Brett Brbovic: Slide 13 shows expenses. Operating expenses were down 2% linked quarter to $71 million and down 6% year-over-year. Year-over-year expense declines were broad-based.
Brett Brbovic: Linked quarter, a decline in compensation and occupancy and equipment were offset by higher marketing and professional service expense.
Brett Brbovic: Slide 14 is a summary of asset quality metrics. Non-performing loans as a percent of loans were 26 basis points which were flat linked quarter and up to basis points year over year.
Brett Brbovic: As Nitin mentioned, total delinquencies and non-performing loans were 52 basis points of total loans, the lowest percentage in almost 20 years.
Brett Brbovic: Net charge-offs of $3.3 million were down $2.3 million linked quarter and down $1.1 million year-over-year.
Brett Brbovic: Slide 15 shows that our CRE book remains well diversified in terms of geography and collateral. Our CRE concentration ratio was approximately 294% and credit quality of the CRE portfolio remains solid with nonaccrual loans at 22 basis points of PFDN loans.
Brett Brbovic: Slide 16 shows details on our office portfolio. As noted last quarter, the weighted average loan-to-value ratios are about 60%, and a large majority of the portfolio is in suburban and Class A space.
Brett Brbovic: We have very limited exposure to Boston's financial district and no exposure to high-rise office buildings.
Brett Brbovic: Slide 17 shows details of our multifamily portfolio. The multifamily portfolio is $637 million or 6.8% of loans.
Brett Brbovic: The book is well diversified across our footprint with a weighted average loan-to-value of about 65 percent.
Brett Brbovic: While current credit quality metrics are strong, we recognize that economic uncertainties exist, and we are monitoring both new originations and existing portfolios carefully.
Turning to capital, we have strong capital levels.
Brett Brbovic: Tangible book value per share was $24.82, an increased 1% linked quarter, and 9% year-over-year.
Brett Brbovic: Our CET-1 ratio is up 110 basis points to 13%, and our TCE ratio rose 30 basis points to 9.4%, this due to the equity offering and higher retained earnings.
Brett Brbovic: As you know, we raised $100 million in equity in December as part of our MOE announcement. The raise improved our standalone capital ratios to support the merger, and we issued about 3.4 million shares.
Brett Brbovic: We were encouraged by the demand for the offering and the narrow 3.9% discount.
Brett Brbovic: Our top capital management priority remains supporting our organic loan growth. Year-to-date, we've repurchased $17.4 million of stock at an average cost of $21.94.
Brett Brbovic: All of our repo in 2024 was done in the first half of the year and was completed below tangible book value per share. Currently, we do not anticipate repurchasing shares going forward until our merger closes.
Brett Brbovic: Given the pending MOE transaction in the second half of 2025, we will not be providing line item income statement and balance sheet guidance for the upcoming year as we've done in the past.
Brett Brbovic: That said, we are encouraged by the momentum in our financial metrics and confirm comfort with the consensus net income cited in the December 16th merger presentation for 2025.
Brett Brbovic: and with that I'll turn it back to Nitin for further comments. Nitin? Thank you Brett. In summary we had a strong fourth quarter and a solid year in a challenging macroeconomic environment.
Brett Brbovic: Pre-revenues, expenses, and credit came in ahead of our expectations from a year ago.
Brett Brbovic: While net interest income was down, the yield curve is steepening and this will serve as a meaningful tailwind for our NII and operating leverage in the coming year.
Brett Brbovic: I'm truly proud of what our team has accomplished and how far we've come since I joined as CEO four years ago.
Brett Brbovic: We've streamlined our operations by exiting non-core businesses and processes, optimized our footprint through consolidation and pruning of our branch network, along with rationalization of legacy corporate real estate across the footprint.
Brett Brbovic: And we've gotten our loan growth and more recently our deposit growth engines running well.
Brett Brbovic: We've invested in technology and digitized our offerings to improve the client experience and relationship deepening.
Brett Brbovic: I'm excited about the potential for the combined Berkshire and Brookline franchises.
Brett Brbovic: The combined entity will provide more growth opportunities for our employees, continued commitment to our communities, enhanced products and services for our customers, and significantly higher profitability and returns for our shareholders.
Brett Brbovic: With that, I'll turn it over to the operator for questions. Operator?
Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please ensure you are not on speakerphone and that your phone is not on mute when called upon. Thank you.
Speaker Change: Your first question comes from the line of David Bishop with Hovde Group. Your line is open.
Hey, good morning, gentlemen.
Morning, Dave.
Hey, uh...
Speaker Change: and Brett and company. Just curious, you know, a really good quarter here on the on the loan growth side. Just curious, I don't know if you can ring-fest it, maybe how much of that, what percent, what contribution was maybe from some of the new hires that you guys have been adding over the past year or so?
Yeah, I think at a high level...
Speaker Change: To begin with, the bulk of the growth came in from our commercial book, and within that, the good news part was also it was pretty well-balanced, so it came on a broad-based.
Speaker Change: CNI grew actually faster than our Cree book. A lot of this production was, again, from both existing and new bankers, so I wouldn't give a specific mix for that, but I think it's all cylinders firing at the same time.
Speaker Change: Got it. And then just curious, as you've added these senior bankers, has the average loan size and relationship they're booking moved appreciably since the beginning of the year?
Speaker Change: No, it's been relatively steady. Our credit box and, you know, holding limits haven't changed, so it's pretty steady through the year.
Speaker Change: Got it. And then I know the end of the quarter, as you note, it can be impacted by payroll deposits. Give like a dollar amount, how much they were sort of elevated relative to norms.
Speaker Change: Yeah, I think, you know, on average, they were probably up about $500 million, you know, from, they usually are right around a billion dollars on average, and I think that year end we were up about half a billion.
Speaker Change: And Dave, that's been consistent. If you look at all three years, 24, 23, 22, the payroll ends up at about one and a half billion. So that's about 500 million higher, as Bert said, compared to the normal months.
Of course. Got it.
Speaker Change: And it looks like, you know, obviously, you know, with the Fed being aggressive here in the fourth quarter and the December margin at 318, sounds like there might be some tailwinds, not only on the.
Thank you very much, Kevin.
Speaker Change: You know, we definitely do. You know, we are expecting some modest expansion in the NIM as we move forward into Q1, you know, primarily through decreases on the funding side.
Great, I'll hop back in the queue.
Thank you, Dave.
Speaker Change: My apologies. The next question is from Billy Young of RBC. Your line is open.
Hey, good morning, guys. How are you?
Morning, Billy. Good, have you? Yes.
Speaker Change: Doing well, doing well, thank you. Just to follow up on David's question, just on...
under the posits.
understanding the seasonal lift from payrolls.
Speaker Change: The core growth still looked pretty good and it seems like you're getting some traction on it.
Speaker Change: Can you just maybe elaborate on kind of what you think the deposit opportunity this year is?
Speaker Change: You kind of mentioned some of the wholesale funding is maturing later this year. So do you think you'll be able to kind of generate enough core deposit growth to kind of offset some of that? It just feels like, you know, you're getting a lot of momentum here on the deposit side. Thanks.
Speaker Change: Yeah, Billy, I'll just give you a macro view of the growth itself. So the average growth, right? So that normalizes for the spikes at the end of the quarter. The average growth was three percent and then you could look at it two different ways, product view and the channel view. Products, pretty much across all products, there was growth including DDAs growing by about two percent.
and you know between
Speaker Change: DDA, savings, money market, CDs, the growth was about 2-5%, so that kind of blended to that 3%. So, broad-based product growth, and in terms of the channels, the biggest growth outside of payroll came from commercial and private bank.
Speaker Change: Retail and also the new digital channel that was launched that roughly contributed over 15% of retail deposit generation in the quarter. So very broad-based kind of growth and we're hoping that that momentum continues.
Thank you for that.
Speaker Change: Looking at loan growth drivers for the year, you mentioned a couple of modest headwinds this quarter, but underlying growth also looked pretty solid there.
Thank you.
Speaker Change: and some of the need to kind of control commercial real estate concentrations ahead of the
Kevin Conn: Yeah, I'll start off and Brett could provide more color on the forward look. So I think the growth again, broad based in the lending portfolio, CNI actually grew at a faster pace than pre. We did actually offload the part of the consumer portfolio in the quarter. So I think that kind of brought the growth rates down. So normalize it as about a percent or so, or 2%, closer to 2% growth in the quarter on an end of period basis. So
Kevin Conn: We do expect to see the momentum going. The pipeline was actually lower quarter over quarter but year over year it was about 20% higher so it feels like on a seasonal basis.
Speaker Change: There is momentum. Our teams are being very judicious. Our CREE team, that has done an exceptional job managing.
Speaker Change: serving our clients while managing the balance sheet judiciously. We continue to keep it at or below that 300% of risk-based capital, and I think that will remain to be our kind of the operating guideline and CNI, we're seeing some real good momentum between CNI and ABL teams. So I think that momentum should continue and Bret could give more color around how we expect that to expand the margins going forward.
Bret: Yeah and I think we do see that happening in the first quarter. I think we expect you know some decent balance sheet growth heading into into Q1 and 2025 allowing our NIM to expand in the first quarter.
Speaker Change: Great, thank you. And just one final question, any commentary on just kind of near-term expense expectations?
Speaker Change: Yeah, I think we've shown pretty good momentum on the expense side over the last few quarters. We expect to see that momentum continue into 2025 with no real significant changes in that as we move forward.
Great, thank you. I'll step back.
Speaker Change: The next question comes from Chris O'Connell with KBW. Your line is open.
Hey, morning.
Morning Chris
Speaker Change: So just wanted to start off on, you know, credit, obviously, you know, this quarter.
Speaker Change: ...came out really good and kind of, you know, below the recent trends, you know, given you know, disposal of the majority of the prosperity portfolio.
Speaker Change: and just kind of, you know, the recent progress here. Do you guys think?
Speaker Change: The normalized kind of net charge off rate going forward is down a bit than the past few quarters.
Speaker Change: I think the normalized charge-offs for us, we believe, should be in the range of 20 basis points. So we've had a couple of quarters better than that, but we believe it normalizes at around 20 basis points range, Chris.
Speaker Change: Okay, great. And then, you know, I know the office portfolio.
Speaker Change: has been performing very strong, and isn't too big for you guys, but it looks like about 22% and another 19% are maturing in 2025-2026.
Speaker Change: And I think the entire portfolio is about, you know, 4.7% criticized. Can you just give us a sense of how much of that criticized portion is within the 22, or the 25 and 26 maturities?
Greg, you want to give some color there?
Yes, actually none at all in 2025.
Okay, great. And nothing on 26 either?
Okay, thanks.
Speaker Change: And just, you guys mentioned the digital deposit, you know, efforts, I was wondering, you know,
what that overall balance is and then
Speaker Change: what the cost of that is, just compared to the overall deposit portfolio.
Speaker Change: We're very focused on pricing that portfolio similar to the offerings we have in both our retail and commercial bank.
Speaker Change: We're pleased that the average deposit size is also mirroring our retail account opening.
Speaker Change: and the average DDA size is also much better than national trends.
Speaker Change: So the program is relatively new. We are up over 60 million in digital deposits with some good, and Nitin mentioned that the good growth rates this quarter so
Speaker Change: We're pleased that we've got good momentum and we hope that pipeline continues into next year.
Speaker Change: And Chris, just to maybe add a little more color to this, I think some part of this program that was launched by the team also kind of leverages the investments that we made in our technology stack.
Speaker Change: And I think that allows us to do this more effectively. So, historically, you've seen most of the banks have struggled to keep
Speaker Change: And I think we addressed that. We took all those learnings, leveraged our tech stack, and have built a pretty robust program. As like Sean said, we feel pretty good about the momentum we're seeing across this matrix.
Okay, thanks!
Speaker Change: And then, just wanted to follow up, you know, I know...
Speaker Change: You know, there's, you know, no full year guidance, but, you know, just getting a little bit more granular into next quarter given, you know, branch shell and kind of the various moves over the past couple quarters. You know, I mean,
As far as just going into Q1
Speaker Change: how you guys are thinking about, you know, the expense run rate.
Speaker Change: Yeah I think we've had a lot of positive momentum with expenses over our recent history. I think we were going to continue that as we move forward.
Speaker Change: That's obviously a point of focus for us. We meet regularly to make sure that we're spending every dollar as effectively and efficiently as possible. So I would expect to see that momentum continue.
OK.
Speaker Change: The next question comes from Laura Hunziker with Seaport Research Partners. Your line is open.
Yeah, hi, thanks. Good morning. Good morning, Laurie.
Speaker Change: Maybe just starting over and your other, other income, the $4.9 million, how much of that was...
Bully death benefit there.
Speaker Change: I think Bolli was about almost a million dollars higher than our normal run rate, quarter over quarter.
OK, and was there anything else non-recurring in that?
Speaker Change: I would say those those are kind of the two pieces that that drove the increase but I wouldn't say anything. Bully was probably the most significant component of that.
Speaker Change: Okay, great. Thanks. And then, just going back to sort of normalized charge-offs and also F-stard and Firestone, which...
Speaker Change: I'm very happy you guys continue to provide the detail that's helpful. Can you just help us think about, though,
Speaker Change: You know this these two books have combined been half three quarters and some some quarters even more of your charge-offs, right? So after that your charge-offs have been actually tracking single digits. So I guess question on normalized charge-offs
Speaker Change: is that a stripping that out number or that's including that in when we're looking at 20 basis points and then ahead of ahead of the Brookline MOE
Speaker Change: Can you just refresh us, you know, what are the reserves on those two books and why not just write them off, sell them for whatever, get them done before you close so that that headache is completely in the rearview mirror? How are you thinking about that?
Greg: Greg, you want to start it off and I'll jump in as well?
www.microsoft.com.ca
Speaker Change: Sure, Lori, those are embedded in that expectation of normalized charge-offs. Firestone has been really performing better than expected, so we don't really see any issues in the Firestone book, and we actively are looking at...
Speaker Change: Okay, great. So basically, if we think about normalized charge-off, so that number...
It's still single digits, it's not 20 basis lines.
Thank you very much.
Speaker Change: Credit quality is stronger. So I think we don't expect, you know, continue to see 7 and 14 basis points type of charge-offs. So I think the normalized brand rate could be 20 basis points.
Speaker Change: Okay, I mean notwithstanding the fact Upstart has been like three-quarters of your charge-offs, quarter after quarter after quarter.
Okay. Okay. And then just last question...
Speaker Change: thinking about the closing and I don't know if this is a Paul and Carl question but you know we are seeing much much faster approvals rolling through the latest.
You know you the third largest merger announced in 2024
How should we be thinking about that?
Speaker Change: Hello, you have a good lens of this and we look at the same numbers and yes, I believe the general feeling is that the regulatory approvals might be faster, especially in the new administration compared to the previous one. It's just impossible to predict how much that is. I think
Speaker Change: Both our, you know, both of our combined parties estimated that to be the end of third quarter, but it very well could be sooner, but we just can't forecast that.
Okay, great. Thanks for taking my question.
Thank you, Laurie. My pleasure.
Speaker Change: The next question comes from Mark Fitzgibbon with Piper Sandler. Your line is open.
Speaker Change: Hey, guys, this is Greg Zagone stepping in for Mark. How are you?
Good, have you?
Speaker Change: Good. Quick questions. Could we see any other balance sheet actions that you guys might do to prepare for the MOE?
Speaker Change: Okay. And secondly, just looking for the next few quarters, I saw the tax rate was elevated in 4Q. Would you kind of be able to give us an idea on how we should be thinking about it for 1Q, 2Q, and 3Q?
Speaker Change: some non-deductible merger expenses that drove up the rate here in Q4. I think that's what pretty much drove it to the 26%. I believe we're still expecting to be around the 22, 23% tax rate for 2025 and going forward, so.
Awesome, thank you.
Speaker Change: The next question is a follow-up from David Bishop of Hovde Group. Your line is open.
Yes, just a couple follow-ups, either for Nitin or Greg.
Speaker Change: You alluded to the change in administration here, and obviously there's been a lot of stable rattling in terms of downsizing of the federal government, especially as it pertains to the real estate. Any exposure to the federal government or agencies that could be affected by the potential GSA downsizing within your footprint?
Greg.
Speaker Change: Now, that's a good question. I mean, we do have leases with government agencies. The positive part of the leases is that they're very long-term. The termination clause, in a lot of the cases, will equal the amount of payment. So, very steep termination clause.
Speaker Change: So we have that embedded protection built into the loans associated with any government leases.
Got it. And that's sticking on sort of the loan.
Speaker Change: Question, just curious, new originations this quarter versus last, and if they've moved appreciably either up or down post-quarter? Thanks, that's it for me.
Speaker Change: So new originations were about, let me just give you one second, the exact numbers there.
Speaker Change: Yeah, they were modestly higher in terms of commitments on the commercial side and as well as consumer side. So modestly higher in the fourth quarter compared to third quarter.
Speaker Change: And they've moved much, I know it's early in the first quarter, but has there been much movement post-quarter?
Speaker Change: No, but I think as Brett mentioned in the script, there were a couple of deals on the commercial side that got pushed into the first quarter. So there'll be a little bit of a head start there. But the pipeline, again, year over year was up 20%. So I think that's normal. We think it should be similar kind of trajectory as we saw in the first quarter of last year.
Great, thank you.
Speaker Change: This concludes the question and answer session. I'll turn the call to Nitin Mhatre for closing remarks.
Nitin Mhatre: Thank you all for joining us today on our call and your continued interest in Berkshire. Have a great day and be well.
This concludes the call.
Nitin Mhatre: Thank you. This concludes today's conference call. Thank you for joining. You may now disconnect.