Berkshire Hills Bancorp is upbeat about its loan growth opportunities, executives said Thursday, after reporting a 22% jump in its loan book last year.
The Boston-based bank saw broad-based increases in loans during the fourth quarter of 2022, with commercial real estate balances jumping 14% from a year earlier, commercial and industrial loans soaring 11% and consumer credit rising 9%.
In the residential mortgage sector — which has been battered nationally thanks to a sharp rise in mortgage rates — Berkshire Hills' loans grew 59%. The company said the growth was largely due to the experienced loan officers it's hired in recent quarters.
The $11.7 billion-asset bank expects some deceleration in loan growth this year, but it still told shareholders to anticipate increases of 11% to 12% in 2023.
"We feel good about where we are," CEO Nitin Mhatre said on the company's fourth quarter earnings call. "We will continue to stay vigilant, but just the trajectory on the new originations remains strong."
An analyst asked Mhatre why the bank feels comfortable growing loans at such a strong pace during a seemingly "deteriorating economic environment," since a recession could make it difficult for borrowers to make their payments.
Mhatre responded that Berkshire Hills has not loosened its standards for underwriting loans and stretched into riskier territory.
"I think the reason why we're comfortable is because we haven't changed our credit box at all," Mhatre said. "In fact, we've tightened it a little bit in some pockets."
The bank's stock jumped Friday, rising 7.7% to $30.29 in afternoon trading.
Berkshire Hills, the parent company of Berkshire Bank, has gone through
The initial focus of the overhaul was "to get better before we get bigger," Mhatre said. Now it's transitioned to "getting bigger while getting better," he added. But he emphasized that the company's growth will be responsible and said that Berkshire "will not sacrifice credit or pricing" standards for the sake of growth.
The bank feels "reasonably good" about credit quality this year based on current indicators and the "high quality" of new loan originations in recent years, Mhatre said.
The bank's net charge-offs did rise to $12 million during the fourth quarter, up from $4 million a year earlier. But the bulk of that was due to one loan that was already partially charged off during the third quarter and "does not reflect any broad deterioration in credit," Mhatre said. The loan was to a corrugated box manufacturer that filed for bankruptcy after customers did not make payments.
Overall, just 0.6% of the company's total loans were marked as delinquent or non-accruing, which executives said is the lowest rate in more than a decade.
Berkshire also announced this week the hiring of David Rosato as its new chief financial officer. Rosato is the former CFO of People's United Financial, which was folded into Buffalo-based M&T Bank after their merger last year. He is also the former treasurer of Webster Financial.
Rosato, who will join the bank on Feb. 6, replaces Subhadeep Basu, who resigned in October.
Rosato is the latest in a recent set of hires from Berkshire. Last week, the company
