Beacon Financial achieves $23 billion in assets and $0.44 per share operating earnings despite $56 million GAAP loss; merger integration on track.

OPERATOR - (00:01:18)

Thank you for standing by. At this time, I would like to welcome everyone to the Beacon Financial Corporation third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Dario Hernandez, Corporate Counsel. You may begin.

Dario Hernandez - Corporate Counsel - (00:01:52)

Thank you Jean and good afternoon everyone. Yesterday we issued our earnings release presentation which is available on the investor relations page of our website beaconfinancial corporation.com and has been filed with the SEC. This afternoon's call will be hosted by Paul Peral and Carl Carlson. During the question and answer session they will be joined by Mark Micklejohn, Chief Credit Officer. This call may contain forward looking statements with respect to the financial condition results of operations and business of Beacon Financial Corporation. Please refer to page two of our earnings presentation for our forward looking statement disclaimer. Also, please refer to our other filings with the securities and Exchange Commission which contain risk factors that could cause actual results to to differ materially from these forward looking statements. Any references made during this presentation to non GAAP measures are only made to assist you in understanding Beacon financials results and performance trends and should not be relied on as financial measures of actual results or future prediction. For a comparison and reconciliation to GAAP earnings, please see our earnings release at this time. I'm pleased to introduce Beacon Financial's President and Chief Executive Officer Paul Pearl.

Paul Pearl - President and Chief Executive Officer - (00:03:08)

Thanks Dariel and good afternoon everyone and thank you for joining us for our first earnings call as Beacon Financial Corp. Let me start by welcoming the Brookline and Berkshire stockholders, employees and customers to the new Beacon Financial Corporation, the holding company for Beacon bank and Trust. This powerful combination between our two great legacy organizations will help position us as a leading Northeast financial institution that provides enhanced service capabilities for our clients, performance for our shareholders and resources for our communities. On September 1, the merger and consolidation of the bank charters was completed. However, until we finalize our core system integration in the first quarter of next year, we will continue to conduct business as Brookline Bank, Berkshire Bank, Rhode Island and PCSB bank operating as divisions of Beacon. We will formally introduce our Beacon bank brand to the market over the next few months as we get closer to finalizing our system integrations. The Beacon bank name represents guidance, strength and the promise of stability. The core principles the Legacy institutions have upheld for generations. With the combined strengths of Berkshire and Brookline, Beacon can help customers make financial decisions with clarity and confidence. The integration is moving ahead as expected. Our priority remains ensuring our customers and communities continue to experience the outstanding service and support our banks are known for, which is driven by the attitude and expertise of our employees and supported by our six regional presidents. I want to thank all of our Beacon bank employees for their hard work on this integration, their continued superior service to our customers and a commitment to ensuring a smooth transition. Beacon Financial finished the quarter with $23 billion in assets, $19 billion in deposits and $18 billion in loans. With third quarter operating earnings of approximately $38.5 million or $0.44 per share before merger expenses and special charges. We're already beginning to see the rationale for the merger play out with the addition of Berkshire's lower cost deposit base combined with Brookline's higher growth markets, creating opportunities to deepen relationships with clients. I'm particularly pleased with our strong retention of client facing talent through this and the excitement amongst the team. And I'm optimistic to see this excitement and energy translated to even more robust results. I will now turn you over to Carl who will review the company's third quarter.

Carl Carlson - (00:05:57)

Thank you, Paul. As Paul mentioned, we closed our merger on September 1st with Berkshire as the legal acquirer and Brookline as the accounting acquirer. As such, historical results reflect Brookline performance and the assets and liabilities of Berkshire were mark to market and combined with Brookline's as of September 1st on a combined basis. We finished the quarter with total assets of $22.8 billion. And on September 1st the fair value of Berkshire assets was 12.1 billion, of which we sold approximately 426 million 177 million in securities and $249 million in loans. The proceeds were used to reduce wholesale funding. Excluding the purchase accounting mark, the combined loan portfolio declined $484 million during the quarter, largely driven by the sale of $249 million of purchased residential mortgage loans and the reclass of $83 million in similar loans to help for sale. The sale of those loans closed in October, except for a small pool which closes next week. On the funding side, combined customer deposits increased 89 million, payroll deposits declined 186 million, while broker deposits and borrowings declined by 249 million and 74 million respectively. At the end of the quarter, the loan to deposit ratio was 96.5%. The allowance for loan losses finished at 254 million reflecting a coverage ratio of 139 basis points, the allowance includes 77 million in specific reserves on approximately 380 million of loans representing a coverage rate of 20%. The general reserve of 177 million represents a 99 basis point coverage on the balance of the portfolio. Given the strong coverage rate in the current environment, we expect that while charge offs may remain elevated as we continue to work through these substandard assets, we expect the run rate for the provision to be 5 to 9 million a quarter as the reserve coverage ratio trends lower. Net charge offs for the quarter were 15.8 million. All but 1.4 million of the charge offs were previously reserved for our quarterly results reflect 2 months of earnings for Brookline and 1 month of earnings on a combined basis. The quarter also included the merger charges and Purchase Accounting associated with the transaction. We will continue to have merger charges through the first quarter when our core systems integrations are completed and the remaining cost synergies realized. As we anticipated, we reported a GAAP loss for the third quarter of fifty six million or sixty four cents per share. The third quarter included pre tax charges of one hundred thirty million seventy eight million related to the initial provision expense and fifty two million in merger expenses. Excluding these charges, operating earnings were thirty nine million or forty four cents per share. The net interest margin was three hundred and seventy two basis points for the quarter which included a thirty basis point benefit from Purchase Accounting. We provided the performance for the month of September representing the first month of performance on a combined basis and adjusted for the one time merger related charges. This is provided on page 5 of the presentation. Net interest income for September was 72 million which included $10.7 million in purchase accounting accretion for the month and resulted in a net interest margin of 412 basis points for September. Of the $10.7 million, $3.8 million was related to the credit mark with the remaining $6.9 million related to the interest rate mark. Of the $6.9 million, $1.8 million is due to loan prepayments. We expect Financial Accounting Standards Board (FASB) to release the final rule on accounting for acquired loans and the credit mark to be reversed and in the fourth quarter increasing equity and no longer reflected in income going forward. We currently estimate Purchase Accounting accretion to be in the range of 15 to 20 million per quarter depending on loan prepayment activity. Non interest income was 8.5 million for the month reflecting a 25 to 26 million quarterly run rate. Non interest expense of 40.6 million for the month captured some of the day one synergies created by the merger and reflects a quarterly run rate of 122 million. Amortization of intangibles at 2.7 million for the month reflects an 8.1 million quarterly run rate. Provision for credit losses for September was 6.9 6.6 million, but as is typical, true up of reserves and provision requirements take place in the third month of the quarter. As I stated earlier, we anticipate quarterly provisions to be in the range of 5 to 9 million. The September operating performance of 129 basis points on assets and over 15% return on tangible equity illustrates the strong performance of the combined franchise and the potential opportunity going forward. Yesterday the Board approved increasing our quarterly dividend to 32 and a quarter cents per share to be paid on November 24th to stockholders of record on November 10th. This represents a 79% increase in the cash dividends previously received by Berkshire shareholders. It maintains the level of cash dividends previously received by Brookline stockholders. The quarterly dividend equates to an annual dividend of $1.29 per share, which was communicated when we announced the merger and currently represents a dividend yield of approximately 5.4%. Paul mentioned. The team is optimistic and excited as we continue to deliver on the merger benefits. This continues my formal comments and I'll turn it back to Paul.

Paul Pearl - President and Chief Executive Officer - (00:11:48)

Thanks Carl. We will now be joined by Mark Meiklejohn, our Chief Credit officer and we will open it up for questions.

OPERATOR - (00:11:59)

At this time I would like to remind everyone in order to ask a question press Star then the number one on your telephone keypad. Your first question comes from the line of Mark Fitzgibbon with Piper Sandler. Please go ahead.

Mark Fitzgibbon - Analyst at Piper Sandler - (00:12:16)

Hey guys, good afternoon and congratulations on the completion of the deal.

Paul Pearl - President and Chief Executive Officer - (00:12:21)

Thanks Mark.

Mark Fitzgibbon - Analyst at Piper Sandler - (00:12:23)

First question I had I guess for Carl. Carl, what should we expect for the Remaining deal related charges to be in 4Q and 1Q? Do you have a sense for a rough range on that?

Carl Carlson - (00:12:35)

I think it's going to be between 22 and 24 million in that range.

Mark Fitzgibbon - Analyst at Piper Sandler - (00:12:43)

Okay, great. And then I wonder if you could Share any color on that 12.4 million dollar office loan that you referenced in Boston. Any any color on that. And also was curious from which institution did this loan come from?

Mark Micklejohn - Chief Credit Officer - (00:12:58)

Mark, this is Mark Micklejohn. That loan is a downtown Boston office property. It's a retail first floor office above. At this point the retail is full and the otherwise the building is is largely vacant. We've got about a 25 to 30% reserve on that loan. Currently it's being marketed for a potential sale, so we feel like we're in a pretty good place on it.

Mark Fitzgibbon - Analyst at Piper Sandler - (00:13:29)

Okay, great. And then lastly, it looks like your capital ratios were stronger than we expected coming out of the deal. And it sounds like with the accounting adjustment, potentially in the fourth quarter, capital ratios get even a little bit better, I guess. I'm curious what your thoughts are on stock buybacks going forward.

Paul Pearl - President and Chief Executive Officer - (00:13:48)

We love the idea, particularly with the price where it is, but I think our first priority, well, our first priority was to get the dividend increased as we, as we promised in the, when we announced the transaction. And now it's really to, to get the concentration on the commercial real estate to where we all want it to be. And so right now we're targeting 300% by the end of 2027. Now we may, we may have an opportunity still to still be able to do dividend, you know, increases in dividends and stock buybacks while also, you know, maintaining our, our, our goal of getting to 300%.. So we'll continue to continue to explore that as, as we move forward. Thank you.

OPERATOR - (00:14:39)

Your next question comes from the line of Steve Moss with Raymond James. Please go ahead.

Steve Moss - Analyst at Raymond James - (00:14:46)

Good afternoon. Hey, Paul, maybe just starting off, following up on credit here with regard to potential for elevated charge offs. Just kind of, you know, curious you could size that up a little bit. It sounds like it's going to be Coming from the equipment finance portfolio, if I heard that correctly.

Paul Pearl - President and Chief Executive Officer - (00:15:05)

Yeah, I think just a comment, you know, to be a little repetitive to Carl, you know, we've got specific reserves of about almost $80 million on a population of about 380 million and what we consider troubled assets. Of that, I would say that, you know, a fair amount of that will come out of the, those problems as they resolve themselves will come out of the Eastern funding portfolio. There's really not much of that in office at this point.

Steve Moss - Analyst at Raymond James - (00:15:39)

Right. Okay, guy, I know that that's helpful. I just size that up a little bit. And then, you know, the other thing here in terms of the commentary, you know, sounds upbeat with regard to CNI lending. Just kind of curious, get a sense for the type of deals you guys are seeing and where loan pricing is these days. Well, to give you a sense, we put in the deck what the originations were, and of course, that's on a combined basis for the quarter. But you know, we had, we had coupons being added and just, just a little south of 7%. And that does include some eastern funding originations in there as well. But as far as, and then maybe just on the loan portfolio yields here in terms of the, Just curious, you know, it's a, probably a bigger step up than I was expecting. I realized the purchase count increase math there, but just kind of how you're thinking about what, where the loan portfolio yields shake out and how you guys are thinking about deposit betas as we go through these, these rate cuts on, on a combined basis. Well, of course the, the, the deposit betas. Right now we're modeling about a 57% beta for all, all of our interest bearing deposits. And it seems like the lines have been doing a little bit better job than that, than our modeling. Now sometimes that happens initially and then it slows down, but in the model that's what we're using is 57%. Okay. And one more housekeeping item here. Just curious how you guys are thinking about the core deposit intangible amortization expense going forward. Yeah, I think we provided some guidance on that. I think it was about $8.1 million a quarter. That'll come down over time. We're doing a 12 year, some of the years digits method on that. Okay, got you. Appreciate that. I'll step back on the queue.

Paul Pearl - President and Chief Executive Officer - (00:17:57)

Thank you.

Steve Moss - Analyst at Raymond James - (00:17:58)

Okay, Steve.

OPERATOR - (00:18:01)

Your next question comes from the line of David Bishop with Hobdigroup. Please go ahead.

David Bishop - (00:18:08)

Hey, good afternoon, gentlemen.

Paul Pearl - President and Chief Executive Officer - (00:18:10)

Hey, David.

David Bishop - (00:18:11)

Curious, within the legacy Berkshire Hills, they had some resilience and strength recently in the 44 business capital back, you know, small business line. Any impact this quarter in terms of their ability to get stuck to the finish line in terms of loan sales? And curious if there's a significant backlog or pipeline within that, within that segment.

Paul Pearl - President and Chief Executive Officer - (00:18:38)

That's an excellent question. I don't know if it really impacted September. I think September was fine. As you know, you're only seeing Berkshire's results for the month of September in this, and I think that's important to realize. So. But the fourth quarter, I, I would imagine there'll be a little bit of a shortfall in as far as timing and maybe even the level of gain on sale on the guaranteed portions of those, those, those SBA loans. So I, I do expect that, but I couldn't give you really guidance on how much that might or may or may not be.

David Bishop - (00:19:25)

Got it. Understood. And then appreciate the, the deck noting some of the divestitures. Any more repositioning or loan sales or security sales anticipated after this.

Paul Pearl - President and Chief Executive Officer - (00:19:39)

Thanks. Yeah, I put a note in there to keep my options open but I think I'm pretty much done with that. There may be a few, a few more securities that we're want we'd like to sell but it's nothing material. And in terms of the branches there's, there's four or five overlaps which will be dealt with post conversion. But I think that Berkshire had sort of cleaned up the footprint quite handily in the past couple years, maybe two or three years.

David Bishop - (00:20:11)

Right. And then Carl, just curious if you have it available the CRE concentration ratio at quarter end.

Carl Carlson - (00:20:18)

355% for I pre total risk based capital. And just I like to highlight that our construction portfolio is only 33%. It's quite low and it's nice to remind people of that.

David Bishop - (00:20:36)

Great. Appreciate the color.

OPERATOR - (00:20:41)

Your next question comes from the line of Carl Shepard with RBC Capital Markets. Please go ahead.

Carl Shepard - (00:20:47)

Hey, good afternoon and congrats on getting all this done.

Paul Pearl - President and Chief Executive Officer - (00:20:50)

Thanks, Carl.

Carl Shepard - (00:20:51)

Thanks. I guess I wanted to start with Carl. Thanks for all the help with slide five and I'm just thinking high level here. This feels like a pretty good starting point once we kind of right-size the provision and back out a little bit of the accelerated and credit related accretion this quarter?

Paul Pearl - President and Chief Executive Officer - (00:21:09)

Is that fair?

Carl Shepard - (00:21:10)

And then what's the message on the size of the balance sheet?

Carl Carlson - (00:21:17)

You're right on with that. That's right. That's why I spent so much time and almost all of my time on that. I think that gives you a good sense of the direction in the different categories and how that's, that's laying out. And September gives us a little snapshot of that as far as the size of the balance sheet. We basically reduce the balance sheet $500 million when you include the loans held for sale. I don't expect that to go down going forward we'll, we'll see exactly what, what kind of loan growth we're seeing on a combined basis as we move forward. But over time I think we'll, we're, we're targeting that probably mid single digit growth in the, in, in interest earning assets. And so I would, I would be taking, I want to be careful what a lot of ratios that people calculate and even when you look at the, the yield tables and things like that, you look at, look at our yield table in our press release and you'll see interest earning assets or loans might be $12 billion or something like that. It's a much higher number on you know when you look at just where we ended September.

Carl Shepard - (00:22:21)

Right.

Carl Carlson - (00:22:21)

Because that, that included Brookline for two Months and, and the combined organization for one month. So you got to be careful about averages and average balances and calculations like that. But you know, we, we expect to, to be able to get on it on a growth trajectory on interesting assets going forward in the low single digits to mid single digits.

Carl Shepard - (00:22:44)

Okay, yeah, I was trying to do the algebra on NII for September, but I guess then one for everyone. But maybe Paul in particular. Just can we get a few more.

Paul Pearl - President and Chief Executive Officer - (00:22:56)

Thoughts on how the first two months have gone as a combined organization and then what's the focus execution wise between now and in the systems integration for you? Well, I think it's gone exceptionally well. I mean, everybody has an important role to play. And my management committee works very well together and have been knocking off the kinds of things that are necessary to do in these kinds of mergers. Everything from employee benefits to consolidating contracts for services, all the technology stuff is well underway. That was done very early on. The selections were made. And so we're about execution at this point. And we've got the banking centers all set up under Chief banking officer Mike McCurdy. We have six regions given the footprint that we have. And so we have decentralized all of the support for those regions. And as I travel around the land, I feel very good about the people that I'm meeting and the enthusiasm that they're bringing to this new adventure for everybody. So this is, this is a lot different for everybody. But the optimism is there and the talent is there. And so I'm feeling very good about. Where we are here. A couple of months away from the conversion.

Carl Shepard - (00:24:16)

Okay, great. Thanks for all the help.

OPERATOR - (00:24:20)

Your next question comes from the line of David Conrad with kbw. Please go ahead.

David Conrad - (00:24:27)

Hey, good afternoon. Since you spent so much time on slide five, let's spend a little bit more time on it, I guess if we could. But I just looking at the, at this, you know, September expenses of, you know, 40.6 and then the amortization of 2.7 and if I kind of quarterize that, if you will, I get to about 130 million of expenses, kind of a run rate, I guess. Two questions. One, how much of the 68.9 cost saves has already been implemented in that number, if any?

Carl Carlson - (00:25:04)

I'd say quite a bit of the 68 has already been realized. Just to step through that a little bit, just since we announced the transaction. Even before we announced the transaction, both companies were being very thoughtful about expenses going into that. And so when we were looking at and just people weren't Getting hired. People who were leaving weren't positions weren't getting filled. There was a lot of, you know, a lot of double work going on, things getting done by additional folks. And so there's been a lot of control around expenses right up until the, the, the merger on, on September 1st. And both companies have done an excellent job of controlling those expenses and not, not spending a lot of money. Then you had September 1st come and there are a lot of senior, senior people and you know, even, even department leaders that, that were let go on on the first day so they exercised their change of control or contracts and, and they're gone. So quite a few people right. Day one. You know, it's, those are, those are pretty high salary numbers and bonuses and things of that nature. Benefits. And so those, those came right out of the run rate September 1st. So that's, that's a nice pickup. Now there's still some savings and synergies to be had on all the contracts and things of that nature. Vendors that we use, professional services that we use. And so those things are still going on and as we get through to conversion we'll be able to realize on those. And, and then there's another, you know, staffing, staffing reduction at that time.

Paul Pearl - President and Chief Executive Officer - (00:27:00)

Just, just to put some numbers around it for you, David, we're down almost a couple of hundred people in the combined company since a little bit before the combination actually came to fruition and scheduled to let go post conversion at some point is almost another hundred. And so we're being very methodical about it. And as Carl pointed out, there's a fair number of those people who have already left who are highly paid.

David Conrad - (00:27:30)

Right, right. And then so when we look at. The fourth quarter. The 130 is probably a good run rate maybe. I don't know if there's going to be more expenses, core expenses seasonally in the fourth quarter. So I'm just kind of wondering what the core number of the fourth quarter range would be. And then the last question would be on Slide 11, that 119.8 kind of 2Q expense number we should probably add in the 8,8 million of the amortization on top of that to get the all in expense.

Carl Carlson - (00:28:07)

That's correct. That's correct. What I want to add, I mean there's a million moving parts on this thing as you can imagine. And whether it's, it's aligning the benefits across the organization, it's aligning salaries across the organization, there's things of that nature. But there, there are, there are positions that needed to be filled that have been postponed and of course we've, we've postponed them even further because we're not hired anybody in December because we're doing, doing payroll conversion at that time. So there's a lot of things going on but there's some, there's positions that we're going to have to fill. And so that 1198 is something that the management team is committed to delivering on and we're working very hard to make sure that happens. And they might close and I think, I don't see a reason why we're not going to hit that and perhaps do better.

David Conrad - (00:28:59)

And then for the fourth quarter, should we, is 130 kind of a decent for that or should we, should we up that a little bit before it goes down?

Carl Carlson - (00:29:09)

No, I, I would, I think I would use that number for now. I, I, I, you know, I couldn't really give you, I don't see a real reason why it would vary too much off of September. I didn't really do a deep dive on that, but I think that's, that should be pretty accurate. Including, including the intangible amortization.

David Conrad - (00:29:29)

Right. Great. Okay, thank you. Very helpful.

OPERATOR - (00:29:34)

Your next question comes from the line of Lori Hunsicker with Seaport Research. Please go ahead.

Lori Hunsicker - Analyst at Seaport Research - (00:29:41)

Yeah, hi. Thanks. Good afternoon.

Paul Pearl - President and Chief Executive Officer - (00:29:43)

Yeah, hi Lori.

Lori Hunsicker - Analyst at Seaport Research - (00:29:46)

I just wanted to clarify this. The 119.8 million on page 11 there, that does or does not include the amortization expense?

Carl Carlson - (00:29:55)

It does not. It's operating cost.

Lori Hunsicker - Analyst at Seaport Research - (00:29:59)

Gotcha. Okay. I just wanted to double check. Okay. And then same thing. When we look at the margin, the 390 to 4% that you're guiding, that does include accretion income to the rate of an estimated 15 to 20 million per quarter.

Carl Carlson - (00:30:19)

Yes, it does.

Lori Hunsicker - Analyst at Seaport Research - (00:30:21)

Okay. Okay. And then just your comments here at the bottom of page 11. Can you expand a little bit on that, Paul and Carl, that management will continue to explore opportunities to optimize the balance sheet and capital structure over the next few quarters. Just help us think about that, expand.

Carl Carlson - (00:30:41)

On that a little bit. I think I said earlier I wanted to keep my options open here and I think for, and I want to get. This is something we will discuss with the board more fully and size it correctly. But as you know, both organizations had sub debt outstanding and it's something that we will probably look to refinance sometime during 2026. I don't want every single banker in the, in the world calling me, but that's Something that we will be looking to explore that. And I think we'd like to get a nice clean quarter behind us before we move forward with that.

Lori Hunsicker - Analyst at Seaport Research - (00:31:26)

Okay, and then just to clarify, no spot secondary anywhere in the future, is that correct?

Carl Carlson - (00:31:34)

We have nothing approved yet.

Lori Hunsicker - Analyst at Seaport Research - (00:31:37)

All right. And then on diluted income statement share count, I just want to make sure I have this right. It dropped $1,600,000 or so in September. It's going down another 3.6 million. Just the accounting. Right, so it takes diluted income statement share count will be about 84 million. Is that correct or is my math off on that?

Carl Carlson - (00:31:59)

No, I think, I think that's where folks got a little bit tricked up when, when it was Berkshire as the legal acquirer and, and Brookline as the, the accounting acquirer and they were using the, the Berkshire share count. And then, and then the combined was really, you know, two months of Brookline's share count and then the combined. So the combined share counts around $84 million. 84 million shares on a diluted basis. That's perfect.

Lori Hunsicker - Analyst at Seaport Research - (00:32:31)

Okay, good. And then by the way, I appreciate so much all of your detail. You kept everything that you had in there that we loved as Brookline and you added more stuff. So just great. But just going to slide 14, you helped us think a little bit about. This is a smaller line item, but Firestone that came over with Berkshire Hills. What are you doing with that? Is that discontinued all?

Carl Carlson - (00:32:57)

Yes, just go to runoff. It's about 23 million.

Lori Hunsicker - Analyst at Seaport Research - (00:33:02)

Okay, good, perfect. Just wanted to make sure you weren't growing it. Okay. And then obviously, obviously new here it looks like. So you're discontinuing the fitness and the Mac relief. That's down 150, so that's great. Okay. And then so your charge off this quarter, the 15, 18.1 million in charge offs, do you have a breakdown as to, you know, how much of that was vehicle and how much of that was the Mac release?

Carl Carlson - (00:33:32)

Yeah, actually there was two large eastern funding deals in that neither of them were vehicle or Mac release, they were both eastern funding. But I would say they were non core type businesses. One was a commercial laundry and the other was a grocery operator. So yeah, those are for both long term workouts and those reserves had been put up over the last year or so. So we thought now was the appropriate time, given where those deals are, to take those charge offs.

Lori Hunsicker - Analyst at Seaport Research - (00:34:13)

Okay, great. That's great. Yeah. And you talked historically about the grocery. Okay. And then the specialty vehicle. What is that non performing? And same question with the macro boost. So of your CNI equipment finance non performers of 42 million, how much is in those two buckets?

Carl Carlson - (00:34:35)

Specialty vehicles, about $4 million.

Lori Hunsicker - Analyst at Seaport Research - (00:34:38)

Okay.

Carl Carlson - (00:34:41)

That 42 is just made up of a handful of names. Largely.

Lori Hunsicker - Analyst at Seaport Research - (00:34:47)

Okay.

Carl Carlson - (00:34:47)

And the Mac release, do you have non performers for that one? I think that number is 11. 13. Sorry, 13.

Lori Hunsicker - Analyst at Seaport Research - (00:34:57)

Okay. Okay, that's great. And then the office detail, and I appreciate the detail that you added around that, but can you just talk a little bit more? So you have zero non performers and you're now at 22 million. And I think Mark asked the question earlier. Was this a Brookline or was this a Berkshire Hills credit? And not that it matters, just kind of curious. And then also, can you comment? You had a massive jump to the criticized office. It looks like that's now 134 million. Just any color on that would be great.

Carl Carlson - (00:35:35)

Yeah, the, the, the deal that we mentioned earlier, the downtown office that moved the non accrual number was, was a legacy Brookline account.

Lori Hunsicker - Analyst at Seaport Research - (00:35:48)

Okay. And so then you had, it looks like then you had another what, 10 million or so. So non performing from yearbook, is that right?

Carl Carlson - (00:36:01)

Yeah, that sounds about right.

Lori Hunsicker - Analyst at Seaport Research - (00:36:03)

Okay. Okay. And then the criticized there, the 134 million, is any of that coming due in the next couple quarters or any color on that?

Carl Carlson - (00:36:14)

In terms of office? We have two loans that are coming due over the next couple of quarters that are, that are in the criticized bucket. Those loans are on short term maturities at this point. We're well reserved on both of those loans and we expect some resolution of them over the coming quarters.

Lori Hunsicker - Analyst at Seaport Research - (00:36:37)

Okay, and what, what is the amount on those?

Carl Carlson - (00:36:41)

About 30 million.

Lori Hunsicker - Analyst at Seaport Research - (00:36:43)

In total?

Carl Carlson - (00:36:45)

In total. Great. Okay. And then do you happen to have the occupancies there on those?

Lori Hunsicker - Analyst at Seaport Research - (00:36:51)

I don't off the top of my head, no.

Carl Carlson - (00:36:54)

Sorry.

Lori Hunsicker - Analyst at Seaport Research - (00:36:55)

Okay. Okay. I think you hit all my questions. Thank you so much for all the details. I appreciate it.

Paul Pearl - President and Chief Executive Officer - (00:37:03)

Thanks. Laurie.

OPERATOR - (00:37:06)

Your next question comes from the line of David Conrad with kdw. Please go ahead.

David Conrad - (00:37:14)

Thank you for letting me jump back on. Just had a follow up on slide 11 with the purchase account increase in expected to be 15 to 20 per quarter. Just wanted to kind of clarify to make sure, like if you did adopt the new FASB rule, would we think of that range of being more like 11 to 16 or is that range contemplating the change of the accounting?

Carl Carlson - (00:37:39)

It does contemplate the change in accounting, but again, this is an estimate. It's the best. The best. Look, because just so you know, that's done at the loan level, the individual loan level. And so it can be very volatile based on prepayments and things of that nature.

David Conrad - (00:37:55)

Right. Right. Okay. Thank you.

OPERATOR - (00:38:01)

Your next question comes from the line of Mark Fitzgibbon with Piper Sandler. Please go ahead, Mr. Fitzgibbon. Your line is. There are no further questions at this time. I will now turn the call back over to Paul Peralt for closing remarks.

Paul Pearl - President and Chief Executive Officer - (00:38:30)

Thank you, Jean. And thank you all for joining us. And we look forward to talking with you again next quarter. Good day.

OPERATOR - (00:38:39)

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.