Berkshire Hills (BHLB) AI Stock Analysis

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Berkshire Hills

(NYSE:BHLB)

68Neutral

Berkshire Hills Bancorp showcases strong financial performance with robust revenue growth and strategic moves, such as the merger with Brookline Bancorp, which are expected to enhance profitability and market position. However, liquidity concerns and bearish technical indicators present potential risks. The company's valuation remains attractive with a reasonable P/E ratio and solid dividend yield.

Berkshire Hills (BHLB) vs. S&P 500 (SPY)

Market Cap

$1.06B

Dividend Yield3.14%

Average Volume (3M)650.47K

Price to Earnings (P/E)16.1

Beta (1Y)0.93

Revenue Growth4.29%

EPS Growth-9.78%

CountryUS

Employees1,193

SectorFinancial

Sector Strength86

IndustryBanks - Regional

Share Statistics

EPS (TTM)1.43

Shares Outstanding46,378,258

10 Day Avg. Volume712,955

30 Day Avg. Volume650,470

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)3.22

Price to Cash Flow (P/CF)8.30

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$31.88

Price Target Upside39.21% Upside

Rating ConsensusHold

Number of Analyst Covering2

Berkshire Hills Business Overview & Revenue Model

Company DescriptionBerkshire Hills Bancorp, Inc. operates as the bank holding company for Berkshire Bank that provides various banking products and services. It offers various deposit accounts, including demand deposit, NOW, regular savings, money market savings, time certificates of deposit, and retirement deposit accounts; and loans, such as commercial real estate, commercial and industrial, consumer, and residential mortgage loans. The company also provides wealth management services comprising investment management, trust administration, and financial planning; and investment products, financial planning, and brokerage services. In addition, it offers electronic banking, commercial cash management, online banking, small business banking, asset based lending, and mobile banking services; and debit cards and other electronic fee producing payment services to transaction account customers. The company serves personal, commercial, non-profit, and municipal deposit customers. As of March 14, 2022, it operated 106 full-service branches in Massachusetts, New York, Connecticut, and Vermont. The company also has commercial banking offices in Providence, Rhode Island and New Haven, Connecticut. Berkshire Hills Bancorp, Inc. was founded in 1846 and is headquartered in Boston, Massachusetts.

How the Company Makes MoneyBerkshire Hills Bancorp makes money primarily through its subsidiary, Berkshire Bank, which earns revenue from interest income and non-interest income sources. Interest income is generated mainly from loans and investment securities, with the bank earning interest on loans provided to individuals and businesses. Non-interest income comes from fees and services, including wealth management, insurance services, and transaction fees. The bank also earns from service charges on deposit accounts, ATM fees, and other banking-related fees. Additionally, strategic partnerships and community engagement initiatives enhance its service offerings and customer base, contributing to its earnings.

Berkshire Hills Financial Statement Overview

Summary

Berkshire Hills has demonstrated robust revenue growth and operational efficiency improvements, as reflected by the income statement. The balance sheet shows reduced financial leverage and a solid equity base, but liquidity concerns persist due to decreased cash. Cash flow issues arise from a significant drop in operating cash flow, indicating potential cash management challenges.

Income Statement

Positive

Berkshire Hills has shown a steady increase in total revenue over the years, with a significant jump from 2022 to 2023. The gross profit margin has improved from prior years, indicating enhanced efficiency in operations. However, the net profit margin has declined from 2023 to 2024 due to a decrease in net income, which may signal rising costs or operational challenges. EBIT and EBITDA margins show improvement, suggesting operational strength despite net income fluctuations.

Balance Sheet

Positive

The balance sheet of Berkshire Hills reflects a solid equity base with an increasing trend in stockholders' equity, demonstrating growing investor confidence. The debt-to-equity ratio has significantly improved due to the reduction of total debt, indicating reduced financial leverage and risk. The equity ratio remains stable, ensuring a strong financial structure. However, the decrease in cash and cash equivalents could impact liquidity.

Cash Flow

Neutral

Berkshire Hills experienced a significant drop in operating cash flow in 2024 compared to 2023, indicating potential challenges in cash generation from core activities. While free cash flow in 2023 was robust, its absence in 2024 is concerning and suggests difficulties in sustaining capital expenditures without external financing. The lack of reported free cash flow and operating cash flow in the latest year raises red flags about cash management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
613.94M	576.30M	413.53M	381.47M	381.85M
	Gross Profit
438.58M	322.94M	171.76M	134.22M	381.85M
	EBIT
434.06M	317.57M	156.48M	149.02M	-552.87M
	EBITDA
434.06M	0.00	-513.17M	118.66M	-514.93M
	Net Income Common Stockholders
61.00M	69.60M	92.53M	118.66M	-513.17M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.13B	1.20B	2.11B	3.51B	3.25B
	Total Assets
12.27B	12.43B	11.66B	11.55B	12.84B
	Total Debt
103.50M	568.29M	125.51M	110.84M	571.64M
	Net Debt
-79.28M	-634.95M	-19.83M	1.49M	480.42M
	Total Liabilities
11.11B	11.42B	10.71B	10.37B	11.65B
	Stockholders Equity
1.17B	1.01B	954.06M	1.18B	1.19B
Cash Flow		Free Cash Flow
120.64M	153.26M	121.74M	103.87M	220.43M
	Operating Cash Flow
125.21M	155.08M	123.23M	105.48M	227.64M
	Investing Cash Flow
8.06M	-282.39M	-1.27B	600.55M	641.10M
	Financing Cash Flow
117.21M	645.19M	207.69M	-636.10M	109.30M

Berkshire Hills Technical Analysis

Technical Analysis Sentiment

Negative

Last Price22.90

Price Trends

50DMA

27.07

Negative

100DMA

28.07

Negative

200DMA

27.11

Negative

Market Momentum

MACD

-0.41

Negative

RSI

38.78

Neutral

STOCH

27.65

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BHLB, the sentiment is Negative. The current price of 22.9 is below the 20-day moving average (MA) of 25.36, below the 50-day MA of 27.07, and below the 200-day MA of 27.11, indicating a bearish trend. The MACD of -0.41 indicates Negative momentum. The RSI at 38.78 is Neutral, neither overbought nor oversold. The STOCH value of 27.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BHLB.

Berkshire Hills Risk Analysis

Berkshire Hills disclosed 44 risk factors in its most recent earnings report. Berkshire Hills reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Berkshire Hills Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BLX	75 Outperform	$1.28B	6.50	16.20%	5.84%	16.62%	23.05%
BY	70 Outperform	$1.04B	8.44	11.60%	1.59%	16.41%	3.09%
DCOM	69 Neutral	$1.05B	43.75	2.19%	4.15%	0.87%	-74.06%
BHLB	68 Neutral	$1.06B	16.05	5.60%	3.14%	4.29%	-9.78%
LOB	66 Neutral	$1.08B	14.05	8.15%	0.51%	16.48%	3.59%
Sector *	64 Neutral	$13.37B	9.30	9.39%	4.85%	16.11%	-8.85%
QCRH	63 Neutral	$1.08B	9.47	12.09%	0.38%	9.56%	-0.32%

* Financial Sector Average

Performance Comparison

BHLB

Berkshire Hills

22.90

2.58

12.70%

BLX

Banco Latinoamericano De Comercio

36.41

8.82

31.97%

DCOM

Dime Community Bancshares

24.07

6.44

36.53%

QCRH

QCR Holdings

63.60

8.33

15.07%

LOB

Live Oak Bancshares

23.48

-13.91

-37.20%

Byline Bancorp

23.25

3.36

16.89%

Berkshire Hills Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: -19.34% | Next Earnings Date: Apr 24, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong operating earnings growth, improved asset quality, and significant deposit growth, driven by successful strategic initiatives and a merger announcement. However, challenges remain with a decline in net interest income and modest loan growth, alongside an elevated tax rate due to merger expenses.

Highlights

Strong Operating Earnings Growth

Operating EPS of $0.60 was up 3% linked quarter and up 28% year-over-year. Operating net income of $26 million was up 5% linked quarter and up 29% year-over-year.

Improved Asset Quality Metrics

Delinquencies and non-performing loans were at 52 basis points of loans, the lowest level in almost 20 years. Net charge-offs were 14 basis points of loans.

Significant Deposit Growth

Average deposits increased $299 million or 3% linked quarter. Excluding payroll and brokered CD balances, end-of-period deposits grew 3% quarter over quarter.

Successful Strategic Initiatives

Completed the sale of 10 branches in New York, de-risked the balance sheet, and invested in bankers and technology. Net Promoter Score remained above 60 in the fourth quarter.

Merger with Brookline Bancorp

Announced a merger with Brookline Bancorp to create a Northeast franchise, expected to close in the second half of 2025, improving scale and profitability with estimated accretion to EPS.

Lowlights

Decline in Net Interest Income

Net interest income of $86.9 million was down 1% linked quarter and down 2% year-over-year. Net interest margin was down 2 basis points linked quarter to 3.14%.

Headwinds in Loan Growth

Average loan balances were up only 0.4% linked quarter, with growth primarily in C&I and commercial real estate. The pipeline was lower quarter over quarter.

Elevated Tax Rate

The tax rate was elevated in the fourth quarter due to non-deductible merger expenses, reaching 26% compared to the expected 22-23% in 2025.

Company Guidance

During the Berkshire Hills Bancorp Fourth Quarter 2024 Earnings Conference Call, the company provided robust guidance and financial metrics showcasing strong performance. The operating earnings per share (EPS) stood at $0.60, marking a 3% increase from the previous quarter and a 28% rise year-over-year. Operating net income was $26 million, up 5% linked quarter and 29% year-over-year. The operating return on tangible common equity (ROTC) was 9.93%, with an increase of 2 basis points from the prior quarter and 103 basis points year-over-year. Fee revenues increased by 8% quarter-over-quarter, while credit provision expenses remained stable and operating expenses decreased by 2% linked quarter and 6% compared to the previous year. Asset quality metrics were strong, with net charge-offs at 14 basis points of loans and reserve to loans ratio stable at 122 basis points. Delinquencies and non-performing loans were at their lowest in nearly two decades at 52 basis points. Capital ratios improved, with the common equity tier 1 (CET1) at 13.0% and tangible common equity (TCE) at 9.4%. Average deposits grew by 3%, and the loans to deposit ratio was a solid 96%. The company anticipated a decline in funding costs as deposit rates were adjusted following the Federal Reserve's interest rate cuts. Additionally, Berkshire Hills announced a merger with Brookline Bancorp, expected to enhance profitability with significant EPS accretion by 2026 and achieve an efficiency ratio below 50%.

Berkshire Hills Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures

Berkshire Hills Reports Strong Q4 and Announces Merger

Positive

Jan 30, 2025

On January 30, 2025, Berkshire Hills Bancorp reported strong fourth-quarter results for 2024, showcasing a 28% year-over-year increase in operating EPS and improvements in loan-to-deposit ratios. The company also announced a merger with Brookline Bancorp, aiming to create a leading Northeast banking franchise, supported by a successful $100 million capital raise. These strategic moves are expected to enhance shareholder value and improve the company’s market position.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.