PITTSFIELD — Berkshire Bank posted a second-quarter loss as the coronavirus pandemic affected the institution's bottom line.
The bank's holding company wrote off $584 million in noncash charges due to the pandemic, which caused Berkshire Hills Bancorp to post a net loss of $549 million, or $10.93 per share, during the second quarter that ended June 30.
Those figures are based on the bank's earnings statement, which was released last week. Core earnings dropped by $6 million, or 13 cents per share.
The noncash charges included a $554 million goodwill impairment charge ($11.02 per share), and an additional $30 million to provide for greater projected credit losses related to the COVID-19 pandemic, the bank disclosed. Goodwill impairment is an accounting charge that companies apply after the assets and liabilities they acquire are priced higher than their identifiable value at the time of purchase.
Most of the $554 million that the bank wrote off was related to the company's previous bank acquisitions, which generally consist of an exchange of shares based on the market value at the time of purchase.
The pandemic has caused industrywide stock prices and earnings expectations to decline significantly. The write-off of those noncash charges had no material impact on Berkshire's cash flow, liquidity or regulatory capital during the second quarter. The bank's holding company had generated positive cash earnings before these noncash charges were taken off the books, and continued to strengthen its regulatory capital ratios and liquidity, while growing loans and deposits, according to the earnings statement.
"It is not a reflection on anything the bank is doing right now," said Berkshire Bank spokesman Jeffrey Mathews, referring to the write-offs of the noncash charges. "It's solely based on the price of Berkshire and other bank stocks at the moment. As you know, they've all been driven down by the pandemic.
"No one should be worried about a run on the bank. All the capital that the bank is reported to have is there and the metrics are getting stronger on a cash basis."
The holding company's total assets remained at $13.2 billion during the second quarter, as earning assets growth generally was offset by the enactment of the goodwill assessment. Total deposits increased 7 percent during the second quarter, to $704 million. The balance of Berkshire's Paycheck Protection Program loans increased to $706 million during the second quarter, as loans have been granted to 5,000 customers. The Berkshire Bank Foundation, the bank's charitable arm, provided more than $1 million in COVID-19 support from March to June.
Berkshire Bank has changed its procedure for declaring the payment of dividends and now is expected to announce them during the third month of each quarter, rather than with the quarterly earnings release.
Tony Dobrowolski can be reached at firstname.lastname@example.org or 413-281-2755.