Q1 2025 Berkshire Hills Bancorp Inc Earnings Call
Speaker Change: [music].
Good morning, ladies and gentlemen, and welcome to the Berkshire Hills Bancorp first quarter 'twenty 25 earnings conference call. At this time all lines are in listen only mode.
Operator: Good morning, ladies and gentlemen, and welcome to the Berkshire Hills Bancorp First Quarter 2025 Earnings Conference Call. At this time, all lines are in listen only mode.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star followed by zero for the operator assistance. If you'd like to ask a question during the Q&A session, please press star followed by one on your telephone keypad.
During the presentation, we will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star followed by zero, where do your operator assistance, if you'd like to ask a question during the.
The Q&A session. Please press star followed by one on your telephone keypad.
Operator: This call is being recorded on April 24th, 2025.
Speaker Change: This call is being recorded on April 24th 2025, I would now like to turn the conference over to Kevin Kwan Investor Relations I'll be sure. Please go ahead.
Kevin Conn: I would now like to turn the conference over to Kevin Conn, Investor Relations Officer. Please go ahead.
Speaker Change: Good morning, and thank you for joining Berkshire Bank's first quarter earnings call. My name is Kevin Cohen Investor Relations and corporate development Officer here with me today are knitting Malhotra, Chief Executive Officer, Sean Gray, Chief operating Officer, Bret for Bobek, Chief Financial Officer, and Greg Lindenmuth, Chief Risk Officer, our remarks will include forward.
Kevin Conn: Good morning and thank you for joining Berkshire Bank's first quarter earnings call. My name is Kevin Conn, Investor Relations and Corporate Development Officer.
Kevin Conn: 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. Our remarks will include forward-looking statements and refer to non-GAAP financial measures. Actual results could differ materially from those statements. 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.
Speaker Change: Looking statements and refer to non-GAAP financial measures actual results could differ materially from those statements. Please see our legal disclosures on page two and three 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 newsrooms at this time I'll turn the call over to Nick.
Nitin Mhatre: 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.
Speaker Change: Ned.
Ned: Thank you Kevin Good morning, everyone and thank you all for joining us today.
Nitin Mhatre: I'll begin my comments on slide four, where you can see the highlights for the first quarter. We had a very strong quarter with operating net income of 27.6 million, up 6% linked quarter and up 32% year-over-year. Earnings per share of $0.60 was flat to the fourth quarter, including the full quarter impact of higher share count from our December equity raise and up 22% year-over-year. Our rigorous expense optimization initiatives continue to drive expenses lower with quarterly operating expense of about $68 million, down 4% length quarter and down 6% year-over-year. Ongoing momentum of improving revenues and declining expenses led to a positive operating leverage of 5% linked quarter and 11% year over year.
Speaker Change: I'll begin my comments on slide four where you can see the highlights for the first quarter.
Speaker Change: We had a very strong quarter with operating net income of $27 6 million up 6% linked quarter and up 32% year over year.
Speaker Change: Earnings per share of 60 cents was flat to the fourth quarter, including the full quarter impact of higher share count from our December equity raise and up 22% year over year.
Speaker Change: A rigorous expense optimization initiatives continued to drive expenses lower with quarterly operating expense of about 68 million down 4% linked quarter and down 6% year over year.
Speaker Change: Ongoing momentum of improving revenues and declining expenses led to a positive operating leverage of 5% linked quarter and 11% year over year.
Speaker Change: Operating ROTC of 9.66% was down 27 basis points linked quarter and up 93 basis points year over year.
Nitin Mhatre: Operating Roth C of 9.66% was down 27 basis points link quarter and up 93 basis points year over year. Overall, strong financial performance was primarily driven by improved net interest income, lower expenses, and disciplined credit management.
Speaker Change: Overall strong financial performance was primarily driven by improved net interest income lower expenses and disciplined credit management.
Nitin Mhatre: Brett will provide more details in a few moments. Asset quality and balance sheet matrix remain strong. Net charge-offs for 15 basis points of loans and our reserve to loans was up two basis points to 1.24%. Total loss reserves of 1.24% are now at about 500% of our total non-performing loans. Total delinquencies and non-performing loans were 42 basis points of loans, the lowest level in about 20 years. A solid testament to the strength of our collaborative risk culture across frontline bankers and risk teams. Liquidity remains solid with our loan-to-deposit ratio at 95% that is down 1% linked quarters.
Speaker Change: It will provide more details in a few moments.
Speaker Change: Asset quality.
Speaker Change: D and balance sheet metrics remain strong.
Speaker Change: Net charge offs were 15 basis points of loans and our reserve to loans was up two basis points to 1.24%.
Speaker Change: Total loss reserves of one point to 4% now at about 500% of our total nonperforming loans.
Speaker Change: Total delinquencies and nonperforming loans were 42 basis points of loans, the lowest level in about 20 years.
Speaker Change: Solid testament to the strength of our collaborative risk culture across frontline bankers and risk teams.
Speaker Change: Liquidity remains solid with a loan to deposit ratio at 95% that was down 1% linked quarter.
Speaker Change: On strategy front, we've made steady progress on our strategic initiatives in the first quarter.
Nitin Mhatre: On strategy front, we made steady progress on our strategic initiatives in the first quarter. Our focus on the deposits relationships across business lines continued, and a relatively new digital deposit initiative has gained momentum and delivered approximately $75 million of new deposits. We sold the remaining $7 million upstart book and further derest our balance sheet with total non-strategic runoff portfolios down by 76% year-over-year to just $34 million.
Speaker Change: Our focus on the deposit relationships across business lines continued in a relatively new digital deposit initiative has gained momentum and Delaware to approximately $75 million of new deposits.
Speaker Change: We sold the remaining 7 million upstart book and further Derisked, our balance sheet with total non strategic run off portfolio was down by 76% year over year to just $34 million.
Nitin Mhatre: Brett will share more details on the portfolio sale in a moment.
Speaker Change: Brett will share more details on the portfolio sale in a moment.
Speaker Change: As you know in December we announced a merger of equals with Brookline Bancorp to create a pre eminent northeast franchise.
Nitin Mhatre: As you know, in December we announced a merger of equals with Brookline Bancorp to create a preeminent Northeast franchise. This transaction improves scale and meaningfully improves profitability as reflected in the estimated 40% and 23% accretion to Berkshire's 2026 consensus estimate on GAAP and cash basis, respectively. Our team continues to work proactively on requisite integration planning for a seamless transition.
Speaker Change: This transaction improves scale and meaningfully improves profitability as reflected in the estimated 40% and 23% accretion to Berkshares 22, 86 consensus estimate on GAAP and cash basis, respectively.
Speaker Change: Our team continues to work proactively on requisite integration planning for a seamless transition with.
Brett Brbovic: With that, I'll turn over the call to Brett to cover our financials in more detail. Thank you, Nitin. I'll begin on slide five, which shows an overview of the first quarter metric. As Nitin mentioned, our operating earnings were $27.6 million, or $0.60 per share. Our net interest margin was $3.24, up 10 basis points linked quarter, and our net interest income was up $2.9 million, or 3% linked quarter. Operating expenses were down $3.1 million, or a 4% linked quarter, and our efficiency ratio was 59.5%.
Brad: With that I'll turn over the call to Brad to cover our financials in more detail bread.
Speaker Change: Thank you all.
Speaker Change: I'll begin on slide five which shows an overview of the first quarter metrics.
Speaker Change: Isn't it and mentioned our operating earnings were $27 6 million or <unk> 60 per share.
Speaker Change: Our net interest margin was $3 24 up 10 basis points linked quarter and our net interest income was up $2 9 million or 3% linked quarter.
Speaker Change: Operating expenses were down $3 1 million or 4% linked quarter and our efficiency ratio was 59, 5%.
Speaker Change: Slide six shows our average loan balances.
Brett Brbovic: Slide six shows our average loan balance. Average loans were up $118 million, or 1% linked quarter, and up $348 million, or 4% year-over-year.
Speaker Change: Average loans were up $118 million, or 1% linked quarter and up $348 million or 4% year over year.
Speaker Change: We've updated a page in the appendix, which shows data on the upstart in Firestone runoff portfolios.
Brett Brbovic: We've updated a page in the appendix which shows data on the Upstart and Firestone runoff portfolio. The combined runoff portfolios, including the upstart loan sales, are down $110 million, or 76% year-over-year, to $34 million, or just 40 basis points of loan.
Speaker Change: The combined runoff portfolios, including the upstart loan sales are down $110 million or 76% year over year to $34 million or just 40 basis points of loans.
Speaker Change: Slide seven shows average deposit balances.
Brett Brbovic: Slide seven shows average deposit balances. Average deposits increased $188 million, or 2% linked quarter, and were flat year over year. excluding payroll deposits and brokered CD balances, average deposits were flat linked quarter and flat year over year.
Speaker Change: Average deposits increased $188 million or 2% linked quarter and were flat year over year.
Speaker Change: Excluding payroll deposits and brokered CD balances average deposits were flat linked quarter and flat year over year.
Brett Brbovic: If you recall, our year-over-year deposits were impacted by the sale of 10 branches in upstate New York in the third quarter of 2024. Average non-interest bearing deposits as a percentage of total deposits was 23% down 1% linked quarter.
Speaker Change: If you recall our year over year deposits were impacted by the sale of 10 branches in upstate New York in the third quarter of 2024.
Speaker Change: Average noninterest bearing deposits as a percentage of total deposits was 23% down 1% linked quarter.
Speaker Change: Turning to slide eight net interest income was up 3% linked quarter and up 2% year over year.
Brett Brbovic: Turning to slide 8, net interest income was up 3% linked order and up 2% year over year. Net interest margin was up 10 basis points linked quarter to 3.24 and our March spot NIM was 3.31.
Speaker Change: Net interest margin was up 10 basis points linked quarter to $3 24, and our March spot NIM was 331.
Speaker Change: Slide nine shows operating noninterest income, which was down $2 5 million or 11% linked quarter and up $3 4 million or 19% year over year.
Brett Brbovic: Slide nine shows operating non-interest income, which was down 2.5 million or 11% linked quarter and up 3.4 million or 19% year over year. Other non-interest income was down compared to the prior quarter.
Speaker Change: Other noninterest income was down compared to the prior quarter.
Speaker Change: During the fourth quarter, we had strong SBA gains and unusually high bully income.
Brett Brbovic: During the fourth quarter we had strong SBA gains and unusually high BOLI income. In the near term, we expect SBA gains to be in line with our prior eight-quarter average of $2.9 million due to uncertainty from the impact of tariffs.
Speaker Change: In the near term, we expect SBA gains to be in line with our prior eight quarter average of $2 9 million due to uncertainty from the impact of tariffs.
Speaker Change: Slide 10 shows expenses operating expenses were down $3 1 million or 4% linked quarter to $68 million and down $4 5 million or 6% year over year.
Brett Brbovic: Slide 10 shows expenses. Operating expenses were down $3.1 million, or 4% linked quarter, to $68 million, and down $4.5 million, or 6% year-over-year. Year-over-year expense reductions were broad-based, including our other expenses, which are an assortment of smaller items. Non-operating expenses of $2.5 million were primarily related to the merger announced in December.
Speaker Change: Year over year expense reductions were broad based including our other expenses, which are an assortment of smaller items.
Speaker Change: Non operating expenses of $2 5 million were primarily related to the merger announced in December.
Speaker Change: Slide 11 shows our expense outperformance versus proxy peers over the last four years.
Brett Brbovic: Slide 11 shows our expense outperformance versus proxy peers over the last four years. This slide highlights the disciplined approach to expense management we've undertaken over that time.
Speaker Change: This slide highlights the disciplined approach to expense management, we've undertaken over that time.
Speaker Change: Slide 12 shows a summary of asset quality metrics.
Brett Brbovic: Slide 12 shows a summary of asset quality metrics. Non-performing loans as a percentage of total loans was 25 basis points. Total delinquencies and non-performing loans were 42 basis points of total loans. Net charge-offs of $3.5 million, we're up $200,000 linked quarter and down $500,000 year-over-year. We added $2 million to our loss reserve, increasing our coverage ratio to 124 basis points. Our loss reserves to non-performing loans are now about 500%.
Speaker Change: Nonperforming loans as a percentage of total loans was 25 basis points.
Speaker Change: Total delinquencies and nonperforming loans were 42 basis points of total loans.
Speaker Change: Net charge offs of $3 5 million were up 200000 linked quarter and down 500000 year over year.
Speaker Change: We added $2 million to our loss reserve, increasing our coverage ratio to 124 basis points.
Speaker Change: Our loss reserves to non performing loans are now about 500%.
Speaker Change: Our $5 5 million provision reflects the most recent Moody's baseline economic outlook in our ACL assumptions.
Brett Brbovic: Our $5.5 million provision reflects the most recent Moody's Baseline Economic Outlook in our ACL assumption.
Speaker Change: During the quarter, we sold the remaining $7 million of upstart loans for net proceeds of $5 3 million or <unk> 76 cents on the dollar.
Brett Brbovic: During the quarter, we sold the remaining $7 million of upstart loans for net proceeds of $5.3 million, or 76 cents on the dollar. With the sale of the Upstart book, we have significantly de-risked our balance 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.
Speaker Change: With the sale of the upstart book, we have significantly derisked our balance sheet.
Speaker Change: 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.
Speaker Change: Slide 13 shows that our pre book remains well diversified in terms of geography and collateral.
Brett Brbovic: Slide 13 shows that our Cree book remains well diversified in terms of geography and collateral. Our CRE concentration ratio was approximately 290% of risk based capital. and credit quality of the CRE portfolio remains solid with non-accrual loans at 19 basis points of period end loan.
Speaker Change: Our C. R E concentration ratio was approximately 290% of risk based capital.
Speaker Change: And credit quality of the <unk> portfolio remained solid with non accrual loans at 19 basis points of period end loans.
Speaker Change: Slide 14 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: Slide 14 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.
Speaker Change: We have very limited exposure to Boston financial District, and no exposure to high rise office buildings.
Brett Brbovic: We have very limited exposure to Boston's financial district and no exposure to high-rise office buildings.
Speaker Change: Turning to capital we have strong capital levels.
Brett Brbovic: Turning to capital, we have strong capital levels. Tangible book value per share was $25.50, our CET1 ratio was 13.3%, and our TCE ratio was 9.9%. Our AOCI bond mark improved modestly from a negative $106 million to a negative $95 million.
Speaker Change: Tangible book value per share was $25 50.
Speaker Change: Our CET one ratio was 13, 3% and our TCE ratio was nine 9%.
Speaker Change: Our a OCI bond mark improved modestly from a negative $106 million to a negative $95 million.
Speaker Change: Given the pending <unk> transaction in the second half of 2025, we did not provide line item income statement and balance sheet guidance for the upcoming year.
Brett Brbovic: Given the pending MOE transaction in the second half of 2025, we did not provide line item income statement and balance sheet guidance for the upcoming year. That said, we are encouraged by the momentum in our financial metrics and confirm comfort with consensus net income cited in the December 16th merger presentation for 2025.
Speaker Change: That said, we are encouraged by the momentum in our financial metrics and confirm comfort with consensus net income cited in the December 16th merger presentation for 2025.
Nick: And with that I'll turn it back over to Nick <unk> for further comments.
Nitin Mhatre: And with that I'll turn it back over to Nitin for further comments.
Nitin Mhatre: Nitin? Thank you, Brett. Overall, we had a very strong first quarter, driving a solid start to the year. Many of our multi-year initiatives are clearly bearing fruit. While the economic environment is uncertain given the volatility driven by tariffs and other policy initiatives, we continue to monitor the situation and communicate with clients to better understand potential impacts to their business. It's still very early and the fluidity of the news from Washington makes it difficult to predict the potential outcomes at this point, but our teams remain prepared to pivot as needed to maintain our momentum. We're excited about the potential for the combined Berkshire and Brookline franchise.
Speaker Change: Yes.
Nick: Thank you Brett.
Speaker Change: Overall, we had a very strong first quarter driving a solid start to the year.
Nick: Any of our multiyear initiatives are clearly bearing fruit.
Nick: While the economic environment is uncertain, given the volatility driven by data and other policy initiatives. We continue to monitor the situation and communicate with clients to better understand the potential impacts to their businesses.
Nick: It's still very early and the fluidity of the news from Washington, It makes it difficult to predict the potential outcomes at this point, but our teams remain prepared to pivot as needed to maintain our momentum.
Nick: We are excited about the potential for the combined Berkshire, Andrew client franchises.
Nitin Mhatre: The combined entity will provide growth opportunities for our employees, continued commitment to our communities, enhanced products for our customers, and significantly higher profitability and returns for our shareholders. 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.
Nick: The combined entity will provide growth opportunities for our employees continued commitment to our communities enhanced products for our customers and significantly higher profitability and returns for our shareholders.
Nick: 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.
Nick: On slide 15, we summarize our progress on the merger integration and next steps in chart everything is on or slightly ahead of plan.
Nitin Mhatre: On slide 15, we summarize our progress on the merger, integration, and next steps. In short, everything is on or slightly ahead of plan. We filed regulatory applications in March and a shareholder proxy with the SEC in early April. We anticipate stockholder approvals at our annual meeting on May 21st and our regulatory approvals sometime in the third quarter. So a lot of progress so far, but there's more work to do.
Nick: The regulatory obligations in March and our shareholder proxy with the SEC in early April.
Nick: We anticipate stockholder approvals that annual meeting on May 21, and our regulatory approval sometime in the third quarter.
Nick: So a lot of progress so far while there is more work to do.
Nick: In closing I am proud of what Moshe team has accomplished over the last four years in terms of financial performance improvement, while delivering exceptional client experience and positive impact on the communities that we operate in.
Nitin Mhatre: In closing, I'm proud of what Berkshire team has accomplished over the last four years in terms of financial performance improvement while delivering exceptional client experience and positive impact on the communities that we operate in. It is their hard work that continues to be recognized across various forums, including the most recent recognition by Newsweek magazine that listed Berkshire Bank amongst the most trustworthy banks in America for the fourth consecutive year. Thank you, Team Berkshire, for everything you do to serve our clients and earn their trust.
Nick: It is their hard work that continues to be recognized across various forums, including the most recent recognition by Newsweek magazine that lifted Berkshire bank amongst the most stressed worthy banks in America for the fourth consecutive year.
Nick: Thank you Dean Berkshire for everything you do to serve our clients and earn their trust with that I'll turn it over to the operator for questions operator.
Operator: With that, I'll turn it over to the operator for questions. Operator? Thank you.
Speaker Change: Thank you Mary now opening the floor for a question and answer session. If you'd like to ask a question. Please press star followed by one on your telephone keypad that star followed by one on your telephone keypad, we will pause for a brief moment to wait for questions to come in.
Operator: We are now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. We will pause for a brief moment to wait for the questions to come in.
Your first question comes from the line of Chris O'connell of K B W.
Chris O'connell: Your first question comes from the line of Chris O'Connell of KBW, your line is now open. Hey, good morning. Morning, Chris.
Speaker Change: <unk> is now open.
Chris O'connell: Hey, good morning.
Speaker Change: Good morning, Chris.
Speaker Change: And then.
Chris O'connell: End Just where I started off, you know, with the balance sheet side, you know, I appreciate No guidance from here. become a little bit more shaky economic environment. So, you know.
Speaker Change: So just wanted to start off with the balance sheet side, you know I appreciate it.
Speaker Change: No no no guidance from here.
Speaker Change: Yes.
Speaker Change: Become a little bit more shaky economic environment. So.
Speaker Change: I was hoping to get an update on the loan demand has that change as you guys have coming into the year and over the past couple of months.
Nitin Mhatre: was hoping to get an update on loan demand, you know, has that change as you guys have come into the year and over the past couple months, and how you guys are thinking about, you know, standalone growth, you know, going forward. Yeah, Chris, that's a good question. Like you said, there's a lot of uncertainty out there. And broadly speaking, what we're hearing from the clients, it's like three different themes that are emerging. One is where there's some clients, especially commercial clients that are loading up on the inventories, you know, in kind of anticipation of the prices going up.
Speaker Change: How you guys are thinking about.
Speaker Change: Stand alone growth.
Speaker Change: Going forward.
Speaker Change: Yes, Chris that's a good question like you said, there's a lot of uncertainty out there and broadly speaking what we are hearing from declined there's like three.
Speaker Change: Three different teams that are emerging one is where there is some clients, especially commercial clients that are loading up on the inventories below and in been kind of anticipation of the prices going up.
Speaker Change: There's the other group that kind of wait and watch approach and just kind of staying put where they are and there is a third group that is actually looking at rationalizing and.
Nitin Mhatre: There's the other group that's kind of wait and watch approach and just kind of staying put where they are. And there is a third group that is actually looking at rationalizing and, you know, reducing expenses and so on so forth.
Speaker Change: Reducing expenses and so on and so forth. So it's a mixed bag, but what we've what we've seen the pipeline is our pipeline has slowed down compared to the previous quarter and just like the origination slowed down. So I think there is a net indication of slowing demand.
Nitin Mhatre: So it's a mixed bag, but what we, what we see in the pipeline is our pipeline has slowed down compared to the previous quarter, just like the origination slowed down. So I think there's a net indication of slowing demand. I think we still, I think this quarter was about 5% annualized loan growth. I think we still probably expect to be in that range, but time will tell how the economy turns out. Great, it's helpful.
Speaker Change: We still I think this quarter was about 5% annualized loan growth of I think we still probably expect to be in that range, but time will tell how the economy turns out.
Speaker Change: Great.
Speaker Change: Helpful and then.
Nitin Mhatre: And then You know, on the expense side, you know, you said there's kind of a number of small items here. Just hoping to get your guys' thoughts about, you know, the how the expense. You know, base grows throughout the rest of the year on a standalone basis, or if it is able to remain pretty steady. Yeah, I think we're very pleased with with our expense momentum that we're seeing currently, and that we've seen over the last few quarters. I am expecting it to remain, you know, relatively stable, you know, consistent with with generally consistent with this order, I would say, you know, we do hope to continue that momentum as we move forward and progress towards the towards the merger.
Speaker Change: On the expense side.
Speaker Change: Yes, you said it is kind of a number of small items here.
Speaker Change: Just hoping to stay.
Speaker Change: Get your guys thoughts about.
Speaker Change: No.
Speaker Change: How the expense.
Speaker Change: Base grows throughout the rest of the year on a standalone basis or if it is able to remain pretty steady.
Speaker Change: Yes, I think we're very pleased with with our expense momentum that we're seeing currently and that we've seen over the last few quarters.
Speaker Change: I am expecting it to remain relatively stable.
Speaker Change: Consistent with generally consistent with this quarter I would say.
Speaker Change: We do hope to continue that momentum as we move forward and progress towards the towards the merger.
Speaker Change: Okay got it.
Nitin Mhatre: Okay, got it.
Nitin Mhatre: And then, you know, with the, you know, final upstart sale, between, you know, this quarter, last quarter, and just the overall progress on the runoff portfolios in general, you're talking about kind of normalizing that charge offs. Where do you think that range is now? Like, you know, now that you guys have kind of changed the balance sheet, do you think that, you know, that's a different level than it's been historically? Yep, Chris, in a normalized environment, that would have been the case. So if you look at our last five quarters, our charge-off rate has ranged between seven basis points and 24 basis points.
Speaker Change: And then west.
Speaker Change: The final upstart sale.
The training this quarter last quarter.
Speaker Change: And just today overall Prague.
Speaker Change: Progress on the runoff portfolios in general you're talking about kind of normalized net charge offs.
Speaker Change: Where do you think that range is now <unk>.
Speaker Change: Now that you guys have kind of changed the balance sheet.
Speaker Change: Do you think that.
Speaker Change: That's a different level than it's been historically.
Speaker Change: Yes, Chris in a normalized environment that would have been the case. So if you look at our last five quarters, our charge off rate has ranged between seven basis points and 24 basis points. This quarter was about 15.
Nitin Mhatre: This quarter was about 15. So I think on the last earnings call, we did say that we expect it to normalize to around 20 basis points level. And I think that's where we're staying at the moment, because there's so much uncertainty out there. So it's tough to say. I think Brett mentioned in his remarks that we expect it to normalize, and we believe that's the normalized level. Great.
Speaker Change: So I think on the last earnings call. We did say that we expect it to normalize to around 20 basis points level.
Speaker Change: That's where we're staying at the moment because there's so much uncertainty out there. So it's tough to say I think Brad mentioned in his remarks that we expect it to normalize and we believe that's the normalized level.
Speaker Change: Great.
Chris O'connell: I appreciate the time.
Speaker Change: I appreciate the time thank you.
Chris O'connell: Thank you. Thank you, Chris.
Speaker Change: Thank you Chris.
Speaker Change: Your next question comes from the line of Gregory Yang of Piper Sandler. Your line is now open.
Gregory Zingone: Your next question comes from the line of Gregory Zingone of Piper Sandler. Your line is now open.
Greg Yang: Hey, guys, it's Greg stepping in for Mark how are you.
Gregory Zingone: Hey guys, it's Greg stepping in for Mark. How are you? Hey Greg, good, how are you? Good. A quick clarifying question. Did you see the spot name in March was 3.31%? That's correct, yes.
Speaker Change: Hey, good how are you.
Speaker Change: A quick clarifying question did you say the spot name in March was 3.31%.
Speaker Change: That's correct yes.
Speaker Change: Okay Awesome and then is there any update you can give us on how you're managing employee retention ahead of the MLB closing, especially for some of your key producers.
Sean Gray: And is there any update you could give us on how you're managing employee retention ahead of the MOE closing, especially for some of your key... Sure, Sean here, we've identified all of those key producers, we've had those conversations, and both organizations have discussed, you know, meaningful retention and retention grants as they move towards the pro forma company. So we feel we've got a good handle, but a lot of work left to do.
Sean Gray: Sure Sean here.
Sean Gray: We've identified all of those key producers, we've had those conversations and both organizations have discussed meaningful retention and retention grants.
Sean Gray: As they move towards the pro forma company. So we feel we've got a good handle on but a lot of work left to do.
Speaker Change: Okay. Thank you and then is there any plan to align your product offerings your deposit related strategy the head of the legal close.
Gregory Zingone: Thank you.
Nitin Mhatre: And then is there any plans to align your product offerings or your deposit related strategies ahead of the legal closings? So I think we, in my remarks, I talked about the digital deposit initiative that we launched that's programmed to date about $75 million in deposits. And I think even more exciting outside of the absolute numbers is roughly one out of five new client relationships are coming through digital channels now, which was our, you know, original goal. So I think we're pleased with that. I don't think we're going to launch new products per se, but I think the team continues to fine tune the functionalities.
Sean Gray: So I think we are we are in.
Sean Gray: In my remarks, I talked about the digital deposit initiative that we launched that program to date about $75 million in deposits.
Sean Gray: I think the even more exciting outside of the absolute numbers is roughly one out of five new client relationships are coming through digital channels now which was our original goals. So I think we're pleased with that I don't think we're going to launch new products per se, but I think the team continues to fine tune the functionalities. So just.
Nitin Mhatre: So just as an example, last quarter, we launched what we call as the direct deposit API, whereby if you open a deposit relationship with Berkshire Bank and want to move your direct deposit from another bank, it's really a couple of clicks of buttons on your phone. And I think those kinds of functionalities will continue to be added to create that digital first type of experience.
Sean Gray: As an example last quarter, we launched what we call as the direct deposit API, whereby if you open a deposit relationship with Berkshire Bank and want to move your direct deposit from another bank. It's really a couple of clicks of buttons on your phone and I think those kind of functionality will continue to be added to create that.
Sean Gray: Digital first type of experience.
Speaker Change: Awesome. Thank you and last question for me is there a TCE ratio or create concentration level you guys are keeping in mind as you approach the MOV.
Gregory Zingone: Thank you.
Gregory Zingone: And last question for me, is there a TCE ratio or a CRE concentration level you guys are keeping in mind as you approach the MOE? For Cree, we've continued to stay below 300% mark. And I think this quarter we ended at about 290.
Speaker Change: All three of our we've continued to stay below 300% Mark and I think this quarter. We ended at about 290 <unk>.
Brett Brbovic: TCE, Brett, I don't know if you have a comment on that. Yeah, no, I would expect TCE to remain relatively stable from now basically to the merger. You know, just trying to make sure that we put ourselves in the best position possible for, you know, once the merger occurs, you know, to continue going forward and grow.
Speaker Change: BCE bread I don't know if you have a comment on that yeah, no I would expect TCE to remain relatively stable.
Speaker Change: From now basically to the merger.
Speaker Change: Just trying to make sure that that we've put ourselves in the best position possible for once the merger occurs.
Speaker Change: To continue going forward and grow.
Speaker Change: Awesome. Thanks, so much guys.
Gregory Zingone: Awesome. Thanks so much, guys.
Speaker Change: Thank you. Thank you.
Jean Marc: I'd now like to hand, the call back can you Jean Marc.
Nitin Mhatre: I would like to hand the call back to Nitin Mhatre for final remarks. Thank you, Ali, and thank you all for joining us today on our call and for your continued interest in Berkshire. Have a great day and be well.
Jean Marc: For final remarks.
Jean Marc: Thank you Allie and thank you all for joining us today on our call and for your continued interest in Berkshire have a great day and be well.
Operator: Sally, you can close the call now. Thank you for attending today's call. You may now disconnect. Goodbye.
Jean Marc: You can close the call now.
Jean Marc: Thank you for attending today's call you may now disconnect Goodbye.
Jean Marc: [music].
Jean Marc: Yeah.
Jean Marc: [music].
Jean Marc: Okay.
Jean Marc: Okay.