The stock market is in a period of great uncertainty right now, and banks are not immune. The banking sector has experienced a year-to-date loss of almost 40% through Monday's close, which is well off the S&P 500's losses of around 29%.
Banks, like other businesses, are temporarily closing locations for the sake of social distancing protocols. And banks have been affected by the Federal Reserve's decision to reduce interest rates to the 0% to 0.25% range, as lower interest rates reduce net interest income.
Berkshire Hills Bancorp (NYSE:BHLB) has felt the effects, with a stock price that's down about 64% year to date. But investing is about the long term, so it's critical to look beyond the current environment. Banks will bounce back when the coronavirus crisis subsides. But for now, Berkshire Hills has made some moves to provide relief for its customers and instituted initiatives that show its commitment to its communities.
The Boston-based bank -- with 170 branches throughout Massachusetts, New York, Connecticut, Vermont, New Jersey, and Pennsylvania -- had temporarily closed four branches as of March 20, including three in Connecticut and one in Massachusetts. But it has closed all of its branches to walk-in customers, which means you can only get service in the bank with a scheduled appointment. In all bank branches, social distancing protocols are in place, including making them handshake-free. In addition, the company has banking experts open to communicate with customers online, via text, and by phone.
However, drive-up services are still available to all customers, as are ATMs. Plus online/mobile banking remains open.
The bank is also providing relief to its customers. Starting March 18, the bank increased daily debit card limits for individual and small-business customers. It has also waived penalties for early CD withdrawals up to $20,000 for individuals and small businesses.
Further, Berkshire Hills has provided individuals with the option to forbear consumer and mortgage loan payments for one to three months. Small businesses may also be able to forbear their loans under certain circumstances. These measures are in place for an initial 30-day period.
Berkshire Bank has a strong commitment to corporate and social responsibility. The company was honored by the U.S. Chamber of Commerce Foundation as the 2019 winner of its Citizens Award for Best Corporate Steward among small and middle-market businesses. The chamber cited Berkshire Hills' $4.2 million in community contributions and $248 million to support small businesses.
In the coronavirus crisis, Berkshire Hills has made a couple of important moves to help local businesses. It has engaged with the Massachusetts LGBT Chamber of Commerce and the Black Economic Council of Massachusetts to provide roughly $3 million in funding assistance to small businesses most impacted financially by the pandemic.
The bank has also earmarked an additional $500,000 for small-business grants to help businesses that can't pay their bills.
"We also understand there will be situations where our customers find themselves or their businesses facing financial difficulties that are unique to them," CEO Richard Marotta said. "In those scenarios where hardship is not relieved by the above options, we are asking our customers to reach out to us to further discuss how we may be of assistance."
These are difficult times for everyone. These short-term relief efforts are the kinds of measures that generate long-term loyalty among customers -- and that's good business.
In the fourth quarter, Berkshire Hills posted earnings per share of $0.51, up from $0.31 in the fourth quarter of 2018. Deposits were up 15.7% in the quarter to $10.3 million, while net loans were up 5.6% to $9.4 million. Total assets have climbed 8.2% in 2019 to $13.2 billion. And its efficiency ratio (an important metric that shows operating costs in relation to net revenue) was a healthy 55.6%. The fundamentals look solid, and with the stock currently trading at less than 60% of its tangible book value per share, Berkshire Hills should be a company to look at once there's more visibility, post-coronavirus crisis.