Berkshire Hills Bancorp, Inc. (BHLB - Free Report) has slashed its quarterly cash dividend by 50%. The dividend of 12 cents per share will be paid out Sep 30 to shareholders of record as on Sep 22.
Considering last day’s closing price of $9.55, Berkshire Hills Bancorp’s dividend yield currently stands at 5.03%. The yield is still impressive when compared with the industry average of 2.90%.
The company’s acting CEO Sean Gray said, “This reduction of our dividend brings our yield and payout more in line with peers and with our historic ranges.”
Earlier in January, Berkshire Hills Bancorp had hiked its dividend by 4.3% to 24 cents per share. This was in line with the company’s policy of increasing payouts annually and indicated its “long-term plans for growth and profitability.”
The company had been increasing dividends since 2015. Even during the 2008 financial crisis, Berkshire Hills Bancorp didn’t announce any dividend cut.
Also, similar to other banks like Hilltop Holdings Inc. (HTH - Free Report) , Hancock Whitney Corp (HWC - Free Report) and Washington Federal (WAFD - Free Report) , the company had suspended share repurchases in the first quarter 2020 “as the pandemic emerged.” Berkshire Hills Bancorp had the authorization to buy back up to 2.4 million shares. Out of this, roughly 0.7 million remained to be repurchased, when the plan expired on Mar 31, 2020.
Concurrently, the company announced preferred stock dividend of 24 cents per preferred share. This also represents a 50% cut. The dividend will be paid out at the same time as cash dividend.
To further justify the current steps, Gray added, “It also positions us to accelerate shareholder distributions in the form of both dividends and stock buybacks when economic and public health conditions recover in the future.”
Amid the pandemic, Berkshire Hills Bancorp’s financials were significantly hurt. The company reported a net loss of $569.3 million or $11.33 per share for the first half 2020. This was largely due to substantial reserve build to tide over the uncertain times.
Shares of Berkshire Hills Bancorp have plunged 71% so far this year compared with 31.1% decline of the industry it belongs to.
Currently, Berkshire Hills Bancorp carries Zacks rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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