PR Newswire | Jul 29, 2020 04:16PM EDT

07/29 15:15 CDT

Berkshire Hills Announces Second Quarter Results BOSTON, July 29, 2020

BOSTON, July 29, 2020 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported a second quarter loss due to non-cash charges related to goodwill impairment and the provision for credit losses, both stemming from the COVID-19 pandemic. These charges had no material impact on cash flow, liquidity, or regulatory capital. Berkshire generated positive cash earnings before these charges and the Bank continued to strengthen its regulatory capital ratios and liquidity while growing its loans and deposits.

Due to the macroeconomic impacts of the pandemic and the related decline in the value of bank stocks, including the Company's stock, the Company wrote off the goodwill on its balance sheet, which was primarily related to past bank acquisitions. This resulted in the Company recording a $554 million non-cash goodwill impairment charge, or $11.02 per share, during the second quarter.

The Company also recorded a $30 million non-cash charge, or $0.59 per share, to provide for greater projected credit losses related to the pandemic, in accordance with the Current Expected Credit Losses ("CECL") accounting methodology. Through midyear, the Company's overall credit quality metrics remained within normal and historical industry ranges.

Reflecting the above charges totaling $584 million, the Company recorded a second quarter 2020 net loss of $549 million, or $10.93 per share. The Company's core earnings, a non-GAAP financial measure which includes the $30 million credit loss provision, was a loss of $6 million, or $0.13 per share.

Pre-tax pre-provision net revenue from continuing operations ("PPNR") was ($10.53). The Company's measure of Core PPNR was $0.47 per share. Core measures are non-GAAP financial measures of the Company's ongoing operations before impairment, discontinued operations and securities losses.

SECOND QUARTER FINANCIAL HIGHLIGHTS (Changes are compared to the prior quarter-end. Measures identified as non-GAAP are reconciled on pages F-9 and F-10)

* Total deposits up $704 million, or 7% * $706 million in PPP loans outstanding at quarter-end * Loans to deposits ratio improved to 87% from 92% * Book value per share of $22.79; tangible book value per share of $21.94 (non-GAAP) * Equity/assets ratio of 8.9%; tangible equity/tangible assets ratio of 8.6% (non-GAAP) * Allowance for credit losses on loans of 1.49% (1.61% excluding PPP loans) * 0.17% annualized net charge-offs/loans * 0.36% non-performing assets/assets

CEO Richard Marotta stated, "In a challenging environment for many of our employees, customers and the communities we serve and live in, Berkshire's ongoing transformation into an innovative 21st century community bank has never been more relevant to our stakeholders and the Bank's long-term opportunity. Guided by our Be FIRST principles, last quarter we continued to foster a more inclusive, innovative and supportive culture, which is positioning Berkshire to deliver a differentiated and compelling community banking experience to everyone in our communities, including those who have been traditionally underbanked.

"As we pursue this significant opportunity to realize our values and profitably grow, we remain diligently focused on day-to-day execution and strengthening the foundations of our business. While last quarter Berkshire recorded non-cash charges, including to write-off goodwill from past acquisitions, that were ultimately related to the pandemic, the Bank produced solid cash results in a challenging interest rate environment. We continued to strengthen our liquidity and regulatory capital metrics. We lowered our operating expenses even while incurring costs to expedite a substantial volume of PPP loans and to maintain our staff and compensation structure. We are well positioned to continue serving our communities in the current environment and to grow our core business results as public health and the economy begin to improve."

Last quarter, Berkshire was committed to safely supporting its communities, and its branches are mostly back to normal operating availability. Berkshire provided borrower assistance through the federal initiatives for Paycheck Protection Program ("PPP") loans and short-term loan payment modifications. The Bank continues to communicate closely with its borrowers, assessing the sensitivities of its exposures, and adjusting its underwriting, administration, and collections procedures as appropriate in the current environment.

FINANCIAL CONDITION

Total assets held level at $13.1 billion in the second quarter, as earning asset growth was generally offset by the impairment of goodwill. The balance of PPP loans increased to $706 million and is included in commercial and industrial loans. Net loans in other categories decreased due to elevated prepayments and decreased loan demand, reflecting the economic slowdown and higher customer liquidity including funds from government programs. Commercial loans totaling $43 million were recorded as held for sale at period-end. Reflecting higher customer liquidity, total deposits increased by $0.7 billion to $10.8 billion during the quarter, with growth concentrated in demand deposit accounts. As a result, the Company increased its holdings of short-term investments and decreased its use of borrowed funds. The Company's liquidity is well positioned and remains adequate for all anticipated uses in all modeled liquidity stress scenarios.

The majority of PPP loans were originated in the second quarter to existing borrowers to provide payroll support during the pandemic shutdown. Additionally, the Company provided loan modifications in accordance with government guidelines, generally consisting of three month deferrals of principal and interest payments. Including the benefit of these programs, most problem asset related metrics only changed modestly in the first half of the year and remained within historical industry ranges, including charge-offs, delinquencies, non-accruals, troubled debt restructurings, criticized assets, and classified assets.

The Company recorded a $30 million provision for credit losses in the second quarter. The allowance for credit losses on loans increased by $26 million to $139 million, measuring 1.49% of total loans, compared to 1.22% at the prior quarter-end. The allowance measured 1.61% of total loans excluding PPP balances at midyear. The increase in the allowance was mostly due to a more severe recession included in the national economic baseline forecast at midyear compared to the end of the first quarter. This took into account the progression of the COVID-19 disease as well as the benefit of government programs to support the economy.

As previously noted, the Company conducted a goodwill impairment assessment during the most recent quarter. The Company had a balance of $554 million in goodwill primarily from past bank acquisitions which generally consisted of an exchange of shares recorded based on stock market valuations at the time of acquisition. Due to the pandemic, industry-wide stock prices and earnings expectations have declined significantly, and the Company concluded that the goodwill balance was no longer supported by its estimate of the Company's fair value. The entire goodwill balance was therefore written off as a non-cash expense that was deemed non-core by the Company. This charge had no material impact on cash flows, liquidity, tangible equity, or regulatory capital.

The PPP loans are government guaranteed and the runoff of other loan balances contributed positively to the Company's regulatory capital ratios. The Company conducts equity stress analyses, including severe adverse pandemic loss scenarios provided by third parties, in addition to Dodd-Frank stress testing. The Company believes that its capital is well cushioned above the Well Capitalized metrics in the adverse modeling scenarios based on the assumptions utilized.

RESULTS OF OPERATIONS

Berkshire reported a second quarter 2020 GAAP net loss of $549 million, or $10.93 per share. This included an impairment charge of $554 million, or $11.02 per share, for the goodwill write-off. Pre-tax pre-provision net revenue from continuing operations ("PPNR") measured ($529) million, or ($10.53) per share. Second quarter Core PPNR totaled $24 million, or $0.47 per share, and excludes goodwill impairment and the loss on discontinued operations. Compared to the linked quarter, Core PPNR decreased by $7 million, or $0.14 per share, due to a $9 million, or 10%, decrease in net interest income. The net interest margin decreased to 2.62% from 3.04% in the prior quarter. This primarily reflected a 0.58% decrease in the yield on earning assets related to lower short-term rates, runoff of higher fixed rate assets, and growth in lower yielding short-term investments and PPP loans. The second quarter was the first full quarter to reflect the impact of the 1.5% general decrease in short-term interest rates that occurred in the first quarter. The decline in asset yields was partially offset by a 0.17% quarter-over-quarter decrease in average deposit costs to 0.79%. The balance of net deferred PPP loan origination fees was $19 million at midyear; much of this balance is expected to be recognized in net interest income during the second half of the year. The revenue impact of lower net interest income was partially offset by a $2 million increase in fee income over the first quarter due to $3 million in mark to market charges recorded in the first quarter. Second quarter fee income benefited from higher loan origination and swap volumes, which was offset by lower deposit fee revenue due to lower activity and waived charges. The provision for credit losses decreased quarter-over-quarter to $30 million from $35 million due a decrease in total loans excluding PPP loans, and to lower net loan charge-offs.

Non-interest expense increased quarter-over quarter by $553 million due to the $554 million non-cash goodwill impairment charge. Second quarter expense included $2 million in discretionary expense related to PPP loans which was mostly the result of a bonus accrual to compensate staff for expediting PPP loan processing. Full-time equivalent staff in continuing operations totaled 1,511 positions at midyear, compared to 1,550 positions at the start of the year. The Company recorded a second quarter $16 million income tax benefit from continuing operations which was mostly related to the tax-deductible portion of the goodwill write-off. The Company recorded a second quarter $6 million net after-tax loss on discontinued operations representing wind-down costs related to the sale and disposition of these operations. This loss was reduced from $8 million in the prior quarter. The Company plans to fully exit these operations by the end of 2020.

DIVIDEND UPDATE

Last quarter, the Board changed its procedure for declaring the payment of dividends. Going forward, the Company will now generally target the third month of the quarter to announce its determinations regarding dividend declarations, rather than concurrent with the earnings release.

BE FIRST CORPORATE RESPONSIBILITY UPDATE

Berkshire is committed to delivering purpose-driven performance. Learn more about the steps Berkshire is taking to be a values-based brand for all its stakeholders at www.berkshirebank.com/csr and in its most recent Corporate Responsibility Report.

Key developments in the quarter include:

* Supporting its People: Berkshire launched a series of employee engagement and wellness initiatives including a health and wellness resource group and is providing holistic support through its employee assistance program. In addition, the You FIRST Employee Assistance Fund, launched in May, is providing critical financial support to employees facing hardships. * Helping its Customers: As of June 30, Berkshire associates contacted over 16,000 customers to ensure they were healthy, safe and answer any financial questions. In addition, Berkshire continued to provide critical funding to small businesses, including black and brown owned enterprises and non-customers, through the Paycheck Protection Program helping nearly 5,000 organizations with approximately $706 million in loans. * Investing in Recovery & Resiliency: Berkshire Bank Foundation, the philanthropic arm of the bank, provided more than $1 million in COVID-19 support, exceeding its previously announced commitment in response to widespread need. Berkshire employees also came together to raise funds to support local non-profit organizations and continued providing virtual volunteer services to address community needs. * Fostering Dialogue on Racial Equity: The "Reimagining America Town Hall Series," hosted by Berkshire, featured The Future Of The Black Economy, The Future Of The Latinx Economy and How to be a Strong Ally. The town halls highlighted the significant racial injustices and economic inequities that exist in the country and affirmed Berkshire's commitment to serving and creating economic opportunities for all members of the community, especially those in the Black and Brown communities who have been traditionally underserved by banks. * Honoring Juneteenth: The Company dedicated June 19th, also known as Juneteenth - the oldest national commemoration of the ending of slavery in the United States, as a day for intentional learning, reflection and a holiday. Bank branches closed at 2PM and employees received a "floating" day off to be used during the year. The Company also hosted a conversation for its people managers on creating safe and inclusive spaces for their teams. * Launching ReevxLabs.com: Reevx Labs, powered by Berkshire Bank, announced the launch of its new online hub, ReevxLabs.com. Created for local communities and the people who live and work in them, ReevxLabs.com offers resources and support for emerging entrepreneurs, artists, and small non-profit organizations. The Labs operate with a commitment to banking the underbanked with dignity and a guiding belief that by disrupting the traditional barriers to resources, the Labs can build new economies that change communities and the world. The Reevx Labs ecosystem provides many ways to get involved and support movements. From utilizing the suite of socially responsible 21st century banking products, to unique programs allowing for direct contributions to local communities, Reevx Labs empowers everyone to be part of the solution. * ESG Ratings Updates: The Company enhanced its Environmental, Social & Governance (ESG) disclosure scores from prominent third parties, receiving an updated rating of 41.67 from Bloomberg and an Environmental Quality Score of 2 and a Social Quality Score of 1 from ISS. Both scores reflect above average performance compared to peers.

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Thursday, July 30, 2020 to discuss the results for the quarter and provide guidance about expected future results. Berkshire will also place an investor presentation at its website at ir.berkshirebank.com before the conference call. Participants are encouraged to pre-register for the conference call using the following link: http://dpregister.com/10146228. Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email. Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of our website at http://ir.berkshirebank.com. Those parties who do not have internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call. Participants are requested to dial-in a few minutes before the scheduled start of the call. A telephone replay of the call will be available through Thursday, August 6, 2020 by dialing 877-344-7529 and entering access number 10146228. The webcast will be available on Berkshire's website for an extended period of time.

ABOUT BERKSHIRE HILLS BANCORP

Berkshire Hills Bancorp is the parent of Berkshire Bank which is transforming into a 21st century community bank pursuing purpose driven performance based on its Be FIRST corporate responsibility culture. Headquartered in Boston, Berkshire operates 130 banking offices in seven Northeastern states, with approximately $13.1 billion in assets. Berkshire Bank serves the underbanked through the Reevx Labs(tm) platform.

FORWARD LOOKING STATEMENTS

This document contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov.

Further, given its ongoing and dynamic nature, it is difficult to predict what continued effects the COVID-19 pandemic will have on our business and results of operations. The pandemic and the related local and national economic disruption may result in a continued decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in our allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on our interest-earning assets than the decline in the cost of our interest-bearing liabilities; and increased cybersecurity risks, as employees increasingly work remotely.

Accordingly, you should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included on page F-9 in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.

The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude items which the Company does not view as related to its normalized operations. These items primarily include securities gains/losses, merger costs, restructuring costs, goodwill impairment, and discontinued operations. Discontinued operations are the Company's national mortgage banking operations which the Company is exiting pursuant to a sales agreement. Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees. Merger costs in 2019 were primarily related to the acquisition of SI Financial Group. Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales. Restructuring costs also include severance and consulting expenses related to the Company's strategic review. They also include costs related to the consolidation of branches, including eight branches for the full year of 2019.

The Company has introduced the measure of Core Pre-Provision Net Revenue ("Core PPNR") to which measures core income before credit loss provision and tax expense. Due to the non-cash projections introduced into the calculation of income by the new CECL accounting standard, the investment community is placing more emphasis on PPNR in order to measure the results of operations and to compare them across banks which may have widely varying estimates of future economic conditions that affect their provision expense and reported earnings. The Company also calculates core PPNR per share and core PPNR/assets in order to utilize the PPNR measure in assessing its comparative operating profitability.

Non-core adjustments are presented net of an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income. The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. References to organic growth and organic change exclude balances acquired in bank mergers.

CONTACTS

Investor Relations Contact David Gonci; Capital Markets Director; 413-281-1973

Media ContactJeffrey Mathews; Communications Contact; (646) 569-5711

TABLE INDEX CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES

F-1 Selected Financial Highlights

F-2 Balance Sheets

F-3 Loan and Deposit Analysis

F-4 Statements of Operations

F-5 Statements of Operations (Five Quarter Trend)

F-6 Average Yields and Costs

F-7 Average Balances

F-8 Asset Quality Analysis

F-9 Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Five Quarter Trend)

F-10 Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Year-to-Date)

BERKSHIRE HILLS BANCORP, INC.

SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)

At or for the Quarters Ended (1)

June 30, March 31, Dec. 31, Sept. 30, June 30,

2020 2020 2019 2019 2019 (2)

PER SHARE DATA

Net (loss)/ earnings per $ (10.93) $ (0.40) $ 0.51 $ 0.44 $ 0.52 common share, diluted

Core (loss)/ earnings per (0.13) (0.07) 0.70 0.46 0.65 common share, diluted (3)

Total book value per 22.79 33.90 34.65 34.36 34.05 common share

Tangible book value per 21.94 22.00 22.56 22.42 22.25 common share (3)

Market price 11.02 14.86 32.88 29.29 31.39 at period end

Dividends per 0.24 0.24 0.23 0.23 0.23 common share

Dividends per preferred 0.48 0.48 0.46 0.46 0.46 share

PERFORMANCERATIOS (4)

Return on (16.38) % (0.62) % 0.78 % 0.67 % 0.79 % assets

Core return on (0.19) (0.11) 1.08 0.71 1.01 assets (3)

Return on (131.17) (4.58) 5.90 5.12 6.07 equity

Core return on (1.54) (0.84) 8.09 5.35 7.67 equity (3)

Core return on tangible (2.05) (0.94) 13.12 8.74 12.21 common equity (3)

Net interest margin, fully taxable 2.62 3.04 3.11 3.22 3.19 equivalent (FTE) (5)(6)

Fee income/Net interest and fee income 18.45 15.46 18.11 17.61 16.20 from continuing operations

Efficiency 71.01 66.92 53.66 53.37 56.41 ratio (3)

CHANGE(Year-to-date)

Total commercial loans 12 % (5) % (7) % (9) % (10) % (organic, annualized)

Total loans (organic, (3) (8) (9) (9) (9) annualized)

Total deposits (organic, 9 (10) 0 2 6 annualized)

Total net revenues from continuing (14) (14) 4 4 1 operations (compared to prior year)

(Loss)/ earnings per common share (1,200) (178) (14) (26) (20) (compared to prior year)

Core (loss)/ earnings per common share (116) (112) (14) (18) (9) (compared to prior year)(3)

FINANCIAL DATA(in millions)

Total assets $ 13,063 $ 13,122 $ 13,216 $ 13,532 $ 13,653

Total earning 12,267 11,785 11,916 12,174 12,343 assets

Total 1,882 1,837 1,770 1,861 1,905 securities

Total loans 9,370 9,303 9,502 9,719 9,942

Allowance for 139 114 64 62 62 credit losses

Total intangible 42 598 599 602 603 assets

Total 10,776 10,072 10,336 10,423 10,566 deposits

Total shareholders' 1,164 1,722 1,759 1,772 1,779 equity

Net (loss)/ (549.4) (19.9) 25.8 22.6 25.4 income

Core (loss)/ (6.5) (3.6) 35.3 23.7 32.1 income (3)

Purchase accounting 2.1 3.1 5.1 4.8 3.2 accretion

Goodwill 553.8 - - - - impairment

ASSET QUALITYAND CONDITIONRATIOS

Net charge-offs (current 0.17 % 0.45 % 0.17 % 0.92 % 0.14 % quarter annualized)/ average loans

Total non-performing 0.36 0.40 0.31 0.28 0.27 assets/total assets

Allowance for credit losses/ 1.49 1.22 0.67 0.64 0.63 total loans

Loans/ 87 92 92 93 94 deposits

Shareholders' equity to 8.91 13.13 13.31 13.10 13.03 total assets

Tangible shareholders' equity to 8.61 8.98 9.19 9.05 9.01 tangible assets (3)

(1) Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on pages F-9 and F-10.

(2) The Company acquired SI Financial Group, Inc. on May 17, 2019.

(3) Non-GAAP financial measure. Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures.

(4) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(5) Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.

The effect of purchase accounting accretion for loans, time deposits,(6) and borrowings on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows beginning with the most recent quarter and ending with the earliest quarter: 0.07%, 0.11%, 0.17%, 0.16%, 0.11%.

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)

June 30, March 31, December 31,

(in thousands) 2020 2020 2019

Assets

Cash and due from $ 102,105 $ 90,280 $ 105,447banks

Short-term 942,047 515,140 474,382investments

Total cash andshort-term 1,044,152 605,420 579,829investments

Trading security 9,519 9,829 10,769

Marketable equitysecurities, at 33,263 32,283 41,556fair value

Securitiesavailable for 1,458,036 1,403,858 1,311,555sale, at fairvalue

Securities held tomaturity, at 334,895 336,802 357,979amortized cost

Federal Home LoanBank stock and 46,139 54,306 48,019other restrictedsecurities

Total securities 1,881,852 1,837,078 1,769,878

Less: Allowancefor credit losses (113) (141) -on investmentsecurities

Net securities 1,881,739 1,836,937 1,769,878

Loans held for 62,881 4,252 36,664sale

Total loans 9,370,271 9,303,177 9,502,428

Less: Allowancefor credit losses (139,394) (113,510) (63,575)on loans

Net loans 9,230,877 9,189,667 9,438,853

Premises and 118,722 120,667 120,398equipment, net

Other real estate 40 224 -owned

Goodwill - 553,762 553,762

Other intangible 42,477 44,035 45,615assets

Cash surrendervalue of 229,812 228,447 227,894bank-owned lifeinsurance

Other assets 430,592 398,038 288,945

Assets fromdiscontinued 21,692 140,064 154,132operations

Total assets $ 13,062,984 $ 13,121,513 $ 13,215,970

Liabilities andshareholders'equity

Demand deposits $ 2,573,786 $ 1,922,490 $ 1,884,100

NOW and other 1,453,397 1,546,626 1,492,569deposits

Money market 2,525,761 2,391,835 2,528,656deposits

Savings deposits 932,243 867,024 841,283

Time deposits 3,290,721 3,343,700 3,589,369

Total deposits 10,775,908 10,071,675 10,335,977

Senior borrowings 719,638 944,053 730,501

Subordinated 97,165 97,107 97,049borrowings

Total borrowings 816,803 1,041,160 827,550

Other liabilities 280,843 255,846 267,398

Liabilities fromdiscontinued 25,290 30,554 26,481operations

Total liabilities 11,898,844 11,399,235 11,457,406

Preferredshareholders' 20,325 20,325 40,633equity

Commonshareholders' 1,143,815 1,701,953 1,717,931equity

Totalshareholders' 1,164,140 1,722,278 1,758,564equity

Total liabilitiesand shareholders' $ 13,062,984 $ 13,121,513 $ 13,215,970equity

Net common shares 50,192 50,199 49,585outstanding

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3)

LOAN ANALYSIS

Annualized Growth %

(in June 30, 2020 March 31, 2020 December 31, 2019 Quarter ended Year to Date millions) Balance Balance Balance June 30, 2020

Totalcommercial $ 3,996 $ 3,986 $ 4,034 1 % (2) %real estate

Commercialand 2,222 1,812 1,841 90 42industrialloans

Totalcommercial 6,218 5,798 5,875 29 12loans

Totalresidential 2,320 2,604 2,685 (44) (27)mortgages

Home 364 378 381 (15) (9)equity

Auto and 468 523 561 (42) (33)other

Totalconsumer 832 901 942 (31) (23)loans

Total loans $ 9,370 $ 9,303 $ 9,502 3 % (3) %

DEPOSIT ANALYSIS

Annualized Growth %

(in June 30, 2020 March 31, 2020 December 31, 2019 Quarter ended Year to Datemillions) Balance Balance Balance June 30, 2020

Demand $ 2,574 $ 1,922 $ 1,884 136 % 73 %

NOW and 1,453 1,547 1,493 (24) (5)other

Money 2,526 2,392 2,529 22 (0)market

Savings 932 867 841 30 22

Time 3,291 3,344 3,589 (6) (17)deposits

Total $ 10,776 $ 10,072 $ 10,336 28 % 9 %deposits

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - (F-4)

Three Months Ended Six Months Ended

June 30, June 30,

(in thousands, except 2020 2019 2020 2019per share data)

Interest and dividendincome from continuingoperations

Loans $ 90,876 $ 113,990 $ 192,571 $ 219,641

Securities and other 12,812 15,248 27,312 30,706

Total interest and 103,688 129,238 219,883 250,347dividend income

Interest expense fromcontinuing operations

Deposits 20,552 28,273 44,390 54,895

Borrowings 5,546 9,370 11,475 18,398

Total interest 26,098 37,643 55,865 73,293expense

Net interest income from 77,590 91,595 164,018 177,054continuing operations

Non-interest income fromcontinuing operations

Mortgage banking 1,644 278 2,603 324originations

Loan related income 5,717 4,822 7,019 10,825

Deposit related fees 5,373 7,525 13,320 14,383

Insurance commissions 2,767 2,738 5,791 5,591and fees

Wealth management 2,057 2,348 4,627 4,789fees

Total fee income 17,558 17,711 33,360 35,912

Other (999) (216) (1,435) 754

Securities gains/ 822 17 (8,908) 2,568(losses), net

Total non-interest 17,381 17,512 23,017 39,234income

Total net revenue from 94,971 109,107 187,035 216,288continuing operations

Provision for credit 29,871 3,467 64,678 7,468losses

Non-interest expensefrom continuingoperations

Compensation and 39,403 34,779 76,312 68,279benefits

Occupancy and 10,195 9,449 21,327 18,895equipment

Technology and 7,755 6,715 15,836 12,972communications

Marketing and 902 1,155 2,067 2,422promotion

Professional services 2,565 3,953 5,285 6,228

FDIC premiums and 1,658 1,751 3,140 3,390assessments

Other real estate owned 14 (2) 41 -and foreclosures

Amortization of 1,558 1,475 3,138 2,675intangible assets

Goodwill impairment 553,762 - 553,762 -

Merger, restructuring - 11,155 - 18,170and other expense

Other 6,463 6,138 14,692 15,528

Total non-interest 624,275 76,568 695,600 148,559expense

(Loss)/income fromcontinuing operations $(559,175) $ 29,072 $(573,243) $ 60,261before incometaxes

Income tax (benefit)/ (16,130) 5,118 (18,126) 12,035expense

Net (loss)/income from $(543,045) $ 23,954 $(555,117) $ 48,226continuing operations

(Loss)/income fromdiscontinued operations $ (8,635) $ 2,082 $ (19,264) $ 1,228before income taxes

Income tax (benefit)/ (2,299) 588 (5,130) 371expense

Net (loss)/income from $ (6,336) $ 1,494 $ (14,134) $ 857discontinued operations

Net (loss)/income $(549,381) $ 25,448 $(569,251) $ 49,083

Preferred stock dividend 130 240 255 480

(Loss)/income available $(549,511) $ 25,208 $(569,506) $ 48,603to common shareholders

Basic (loss)/earningsper common share:

Continuing Operations $ (10.80) $ 0.49 $ (11.05) $ 1.01

Discontinued Operations (0.13) 0.03 (0.28) 0.02

Total $ (10.93) $ 0.52 $ (11.33) $ 1.03

Diluted (loss)/earningsper common share:

Continuing Operations $ (10.80) $ 0.49 $ (11.05) $ 1.01

Discontinued Operations (0.13) 0.03 (0.28) 0.02

Total $ (10.93) $ 0.52 $ (11.33) $ 1.03

Weighted average sharesoutstanding:

Basic 50,246 48,961 50,228 47,550

Diluted 50,246 49,114 50,228 47,700

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) - UNAUDITED - (F-5)

June 30, March 31, Dec. 31, Sept. 30, June 30,

(in thousands, except per share data) 2020 2020 2019 2019 2019

Interest and dividend income fromcontinuing operations

Loans $ 90,876 $ 101,695 $ 110,915 $ 118,371 $ 113,990

Securities and other 12,812 14,500 14,526 15,354 15,248

Total interest and dividend 103,688 116,195 125,441 133,725 129,238income

Interest expense from continuingoperations

Deposits 20,552 23,838 28,797 31,501 28,273

Borrowings 5,546 5,929 5,311 5,353 9,370

Total interest expense 26,098 29,767 34,108 36,854 37,643

Net interest income from continuing 77,590 86,428 91,333 96,871 91,595operations

Non-interest income from continuingoperations

Mortgage banking originations 1,644 959 172 292 278

Loan related income 5,717 1,302 7,056 6,493 4,822

Deposit related fees 5,373 7,947 8,264 8,705 7,525

Insurance commissions and fees 2,767 3,024 2,471 2,895 2,738

Wealth management fees 2,057 2,570 2,239 2,325 2,348

Total fee income 17,558 15,802 20,202 20,710 17,711

Other (999) (436) 75 609 (216)

Securities gains/(losses), net 822 (9,730) 1,734 87 17

Gain on sale of business operations - - 1,351 - -and assets, net

Total non-interest income 17,381 5,636 23,362 21,406 17,512

Total net revenue from continuing 94,971 92,064 114,695 118,277 109,107operations

Provision for credit losses 29,871 34,807 5,351 22,600 3,467

Non-interest expense from continuingoperations

Compensation and benefits 39,403 36,909 35,355 37,272 34,779

Occupancy and equipment 10,195 11,132 10,798 9,893 9,449

Technology and communications 7,755 8,081 6,702 6,849 6,715

Marketing and promotion 902 1,165 1,046 1,006 1,155

Professional services 2,565 2,720 2,288 2,282 3,953

FDIC premiums and assessments 1,658 1,482 471 - 1,751

Other real estate owned and 14 27 4 150 (2)foreclosures

Amortization of intangible 1,558 1,580 1,582 1,526 1,475assets

Goodwill impairment 553,762 - - - -

Merger, restructuring and other - - 5,713 4,163 11,155expense

Other 6,463 8,229 6,328 7,870 6,138

Total non-interest expense 624,275 71,325 70,287 71,011 76,568

(Loss)/income from continuing $ (559,175) $ $ $ $ operations before income taxes (14,068) 39,057 24,666 29,072

Income tax (benefit)/expense (16,130) (1,996) 6,421 4,007 5,118

Net (loss)/ income from continuing $ (543,045) $ $ $ $ operations (12,072) 32,636 20,659 23,954

(Loss)/income from discontinued $ $ $ $ $ operations before income taxes (8,635) (10,629) (9,514) 2,747 2,082

Income tax (benefit)/expense (2,299) (2,831) (2,629) 790 588

Net (loss)/income from discontinued $ $ $ $ $ operations (6,336) (7,798) (6,885) 1,957 1,494

Net (loss)/income $ (549,381) $ $ $ $ (19,870) 25,751 22,616 25,448

Preferred stock dividend 130 125 240 240 240

(Loss)/income available to common $ (549,511) $ $ $ $ shareholders (19,995) 25,511 22,376 25,208

Basic (loss)/earnings per commonshare:

Continuing Operations $ $ $ $ $ (10.80) (0.24) 0.65 0.40 0.49

Discontinued Operations (0.13) (0.16) (0.14) 0.04 0.03

Total $ $ $ $ $ (10.93) (0.40) 0.51 0.44 0.52

Diluted (loss)/earnings per commonshare:

Continuing Operations $ $ $ $ $ (10.80) (0.24) 0.65 0.40 0.49

Discontinued Operations (0.13) (0.16) (0.14) 0.04 0.03

Total $ $ $ $ $ (10.93) (0.40) 0.51 0.44 0.52

Weighted average sharesoutstanding:

Basic 50,246 50,204 50,494 51,422 48,961

Diluted 50,246 50,204 50,702 51,545 49,114

BERKSHIRE HILLS BANCORP, INC.

AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED -(F-6)

Quarters Ended

June 30, March 31, Dec. 31, Sept. 30, June 30,

2020 2020 2019 2019 2019

Earning assets

Loans:

Commercial real 3.78 % 4.41 % 4.80 % 4.92 % 5.01 %estate

Commercial and 4.02 5.03 5.35 5.58 5.79industrial loans

Residential mortgages 3.78 3.77 3.61 3.73 3.74

Consumer loans 3.72 4.28 4.38 4.55 4.52

Total loans 3.83 4.33 4.52 4.67 4.76

Securities 3.07 3.32 3.31 3.41 3.38

Short-terminvestments and loans 0.50 1.78 3.15 4.11 3.37held for sale

Total earning assets 3.50 4.08 4.27 4.45 4.51

Funding liabilities

Deposits:

NOW and other 0.30 0.46 0.54 0.61 0.66

Money market 0.58 0.98 1.18 1.27 1.27

Savings 0.10 0.13 0.14 0.13 0.15

Time 1.84 1.87 1.97 2.02 2.06

Totalinterest-bearing 1.01 1.18 1.35 1.43 1.44deposits

Borrowings 2.38 2.60 2.77 3.12 2.92

Totalinterest-bearing 1.16 1.33 1.48 1.57 1.66liabilities

Net interest spread 2.34 2.75 2.79 2.88 2.85

Net interest margin 2.62 3.04 3.11 3.22 3.19

Cost of funds (1) 0.92 1.11 1.23 1.32 1.41

Cost of deposits 0.79 0.96 1.11 1.18 1.18

(1) Cost of funds includes all deposits and borrowings.

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES - UNAUDITED - (F-7)

Quarters Ended

June 30, March 31, Dec. 31, Sept. 30, June 30,

(in thousands) 2020 2020 2019 2019 2019

Assets

Loans

Commercial real $ 4,005,018 $ 4,000,461 $ 4,056,244 $ 3,998,144 $ 3,716,130estate

Commercial and 2,152,820 1,795,813 1,768,039 1,951,205 2,056,384industrial loans

Residential 2,452,622 2,654,224 2,758,676 2,849,216 2,711,348mortgages

Consumer loans 865,318 921,810 974,889 1,035,893 1,064,579

Total loans (1) 9,475,778 9,372,308 9,557,848 9,834,458 9,548,441

Securities (2) 1,793,381 1,744,635 1,752,968 1,846,985 1,893,298

Short-terminvestments and 697,138 374,894 444,622 309,897 117,029loans held for sale

Total earning assets 11,966,297 11,491,837 11,755,438 11,991,340 11,558,768(3)

Goodwill and other 590,672 598,347 601,192 603,762 555,606intangible assets

Other assets 751,702 663,056 737,396 668,218 593,917

Assets fromdiscontinued 109,923 98,528 176,251 204,339 192,466operations

Total assets $ 13,418,594 $ 12,851,768 $ 13,270,277 $ 13,467,659 $ 12,900,757

Liabilities andshareholders' equity

Deposits

NOW and other $ 1,183,839 $ 1,159,388 $ 1,085,485 $ 1,111,637 $ 1,053,335

Money market 2,672,066 2,752,465 2,688,766 2,624,639 2,474,071

Savings 901,218 846,942 835,209 838,445 780,797

Time 3,399,222 3,333,070 3,827,175 4,158,688 3,593,022

Totalinterest-bearing 8,156,345 8,091,865 8,436,635 8,733,409 7,901,225deposits

Borrowings 942,033 949,316 853,911 805,035 1,415,614

Totalinterest-bearing 9,098,378 9,041,181 9,290,546 9,538,444 9,316,839liabilities

Non-interest-bearing 2,343,173 1,849,295 1,898,045 1,864,964 1,673,560demand deposits

Other liabilities 272,690 203,797 304,504 267,922 215,704

Liabilities fromdiscontinued 28,988 23,799 30,446 28,206 18,434operations

Total liabilities 11,743,229 11,118,072 11,523,541 11,699,536 11,224,537

Preferred 20,325 20,548 40,633 40,633 40,633shareholders' equity

Common shareholders' 1,655,040 1,713,148 1,706,103 1,727,490 1,635,587equity

Total shareholders' 1,675,365 1,733,696 1,746,736 1,768,123 1,676,220equity

Total liabilitiesand shareholders' $ 13,418,594 $ 12,851,768 $ 13,270,277 $ 13,467,659 $ 12,900,757equity

Supplementary data

Total averagenon-maturity $ 7,100,296 $ 6,608,090 $ 6,507,505 $ 6,439,685 $ 5,981,763deposits

Total average 10,499,518 9,941,160 10,334,680 10,598,373 9,574,785deposits

Fully taxableequivalent income 1,580 1,824 1,934 1,826 1,882adjustment

Total average 1,084,693 1,135,349 1,145,544 1,164,361 1,120,614tangible equity (4)

(1) Total loans include non-accruing loans.

(2) Average balances for securities available-for-sale are based on amortized cost.

Excludes discontinued operations for presentation purposes.(3) Performance ratios are calculated including the impact of discontinued operations.

(4) See page F-9 for details on the calculation of total average tangible equity.

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - UNAUDITED - (F-8)

At or for the Quarters Ended

June 30, March 31, Dec. 31, Sept. 30, June 30,

(in thousands) 2020 2020 2019 2019 2019

NON-PERFORMING ASSETS

Non-accruing loans:

Commercial real estate $ 12,486 $ 16,938 $ 20,119 $ 15,829 $ 19,366

Commercial and 15,045 18,370 11,373 12,224 9,256industrial loans

Residential mortgages 9,840 9,636 3,343 3,062 3,579

Consumer loans 7,513 6,172 4,805 5,191 3,570

Total non-accruing 44,884 51,116 39,640 36,306 35,771loans

Other real estate owned 517 224 - - 154

Repossessed assets 1,581 1,316 858 1,003 874

Total non-performing $ 46,982 $ 52,656 $ 40,498 $ 37,309 $ 36,799assets

Total non-accruing 0.48% 0.55% 0.42% 0.37% 0.36%loans/total loans

Total non-performing 0.36% 0.40% 0.31% 0.28% 0.27%assets/total assets

PROVISION AND ALLOWANCE FOR CREDITLOSSES ON LOANS

Balance at beginning of $ 113,510 $ 63,575 $ 62,230 $ 62,156 $ 62,038period

Adoption of ASU No. - 25,434 - - -2016-13 (1)

Balance after adoption 113,510 89,009 62,230 62,156 62,038of ASU No. 2016-13

Charged-off loans (7,274) (12,432) (4,485) (23,524) (3,966)

Recoveries on 3,259 1,958 479 998 617charged-off loans

Net loans charged-off (4,015) (10,474) (4,006) (22,526) (3,349)

Provision for loan 29,899 34,975 5,351 22,600 3,467credit losses

Balance at end of $ 139,394 $ 113,510 $ 63,575 $ 62,230 $ 62,156period

Allowance for credit 1.49% 1.22% 0.67% 0.64% 0.63%losses/total loans

Allowance for creditlosses/non-accruing 311% 222% 160% 171% 174%loans

NET LOAN CHARGE-OFFS

Commercial real estate $ $ $ $ $ (1,679) (5,990) (1,419) (2,759) (1,235)

Commercial and (1,059) (3,728) (1,495) (18,850) (995)industrial loans

Residential mortgages (966) (19) (351) (140) (139)

Home equity (10) (107) (67) (71) (300)

Auto and other consumer (301) (630) (674) (706) (680)

Total, net $ $ (10,474) $ $(22,526) $ (4,015) (4,006) (3,349)

Net charge-offs (QTDannualized)/average 0.17% 0.45% 0.17% 0.92% 0.14%loans

Net charge-offs (YTDannualized)/average 0.31% 0.45% 0.35% 0.41% 0.15%loans

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS

30-89 Days delinquent 0.37% 0.43% 0.25% 0.26% 0.20%

90+ Days delinquent and 0.14% 0.05% 0.29% 0.29% 0.28%still accruing

Total accruing 0.51% 0.48% 0.54% 0.55% 0.48%delinquent loans

Non-accruing loans 0.48% 0.55% 0.42% 0.37% 0.36%

Total delinquent and 0.99% 1.03% 0.96% 0.92% 0.84%non-accruing loans

(1) This balance includes $12 million of PCD confirmed losses as of January 1,2020.

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED- (F-9)

At or for the Quarters Ended

June 30, March 31, Dec. 31, Sept. 30, June 30,

(in thousands) 2020 2020 2019 2019 2019

Net (loss)/income $ (549,381) $ (19,870) $ 25,751 $ 22,616 $ 25,448

Adj: Net securities (gains)/losses (1) (822) 9,730 (1,734) (87) (17)

Adj: Goodwill impairment 553,762 - - - -

Adj: Merger and acquisition expense - - 3,611 3,802 9,711

Adj: Restructuring expense and other expense - - 2,102 361 1,444

Adj: Loss/(income) from discontinued operations before income taxes 8,635 10,629 9,514 (2,747) (2,082)

Adj: Income taxes (18,658) (4,134) (3,910) (281) (2,385)

Total core (loss)/income (2) (A) $ $ (3,645) $ 35,334 $ 23,664 $ 32,119 (6,464)

Total revenue from continuing operations $ 94,971 $ 92,064 $ 114,695 $ 118,277 $ 109,107

Adj: Net securities (gains)/losses (1) (822) 9,730 (1,734) (87) (17)

Total core revenue (2) (B) $ 94,149 $ 101,794 $ 112,961 $ 118,190 $ 109,090

Total non-interest expense from continuing operations $ 624,275 $ 71,325 $ 70,287 $ 71,011 $ 76,568

Less: Merger, restructuring and other expense (see above) - - (5,713) (4,163) (11,155)

Less: Goodwill impairment (553,762) - - - -

Core non-interest expense (2) (C) $ 70,513 $ 71,325 $ 64,574 $ 66,848 $ 65,413

Total revenue $ 90,383 $ 93,869 $ 116,860 $ 134,067 $ 123,109

Total non-interest expense 628,322 83,759 81,966 84,054 88,488

Pre-tax, pre-provision net revenue (PPNR) $ (537,939) $ 10,110 $ 34,894 $ 50,013 $ 34,621

Total revenue from continuing operations $ 94,971 $ 92,064 $ 114,695 $ 118,277 $ 109,107

Total non-interest expense from continuing operations 624,275 71,325 70,287 71,011 76,568

Pre-tax, pre-provision net revenue (PPNR) from continuing operations $ (529,304) $ 20,739 $ 44,408 $ 47,266 $ 32,539

Total core revenue (2) $ 94,149 $ 101,794 $ 112,961 $ 118,190 $ 109,090

Core non-interest expense (2) 70,513 71,325 64,574 66,848 65,413

Core pre-tax, pre-provision net revenue (PPNR) $ 23,636 $ 30,469 $ 48,387 $ 51,342 $ 43,677

(in millions, except per share data)

Total average assets (D) $ 13,419 $ 12,852 $ 13,270 $ 13,468 $ 12,901

Total average shareholders' equity (E) 1,675 1,734 1,747 1,768 1,676

Total average tangible shareholders' equity (2) (F) 1,085 1,135 1,146 1,164 1,121

Total average tangible common shareholders' equity (2) (G) 1,064 1,115 1,105 1,124 1,080

Total tangible shareholders' equity, period-end (2)(3) (H) 1,122 1,124 1,159 1,170 1,176

Total tangible common shareholders' equity, period-end (2)(3) (I) 1,101 1,104 1,119 1,130 1,136

Total tangible assets, period-end (2)(3) (J) 13,021 12,524 12,617 12,930 13,051

Total common shares outstanding, period-end (thousands) (K) 50,192 50,199 49,585 50,394 51,045

Average diluted shares outstanding (thousands) (L) 50,246 50,204 50,702 51,545 49,114

Core (loss)/earnings per common share, diluted(2) (A/L) $ $ $ $ $ (0.13) (0.07) 0.70 0.46 0.65

PPNR per common share, diluted (2) (10.71) 0.20 0.69 0.97 0.70

PPNR from continuing operations per common share, diluted (2) (10.53) 0.41 0.88 0.92 0.66

Core PPNR per common share, diluted (2) 0.47 0.61 0.95 1.00 0.89

Tangible book value per common share, period-end (2) (I/K) 21.94 22.00 22.56 22.42 22.25

Total tangible shareholders' equity/total tangible assets (2) (H)/(J) 8.61 8.98 9.19 9.05 9.01

Performance ratios (4)

GAAP return on assets (16.38) % (0.62) % 0.78 % 0.67 % 0.79 %

Core return on assets (2) (0.19) (0.11) 1.08 0.71 1.01

GAAP return on equity (131.17) (4.58) 5.90 5.12 6.07

Core return on equity (2) (A/E) (1.54) (0.84) 8.09 5.35 7.67

Core return on tangible common equity (2)(5) (A+O)/(G) (2.05) (0.94) 13.12 8.74 12.21

PPNR/assets (2) (16.04) 0.31 1.05 1.49 1.07

Core PPNR/assets (2) 0.71 0.96 1.48 1.55 1.37

Efficiency ratio (2)(6) (C-O)/(B+M+P) 71.01 66.92 53.66 53.37 56.41

Net interest margin 2.62 3.04 3.11 3.22 3.19

Supplementary data (in thousands)

Tax benefit on tax-credit investments (7) (M) $ $ $ $ $ 1,379 608 2,503 2,382 2,381

Non-interest income charge on tax-credit investments (8) (N) (1,097) (486) (1,996) (1,942) (1,938)

Net income on tax-credit investments (M+N) 282 122 507 440 443

Intangible amortization (O) $ $ 1,580 $ $ $ 1,558 1,582 1,526 1,475

Fully taxable equivalent income adjustment (P) 1,580 1,824 1,934 1,826 1,882

Net securities (gains)/losses include the change in fair value of(1) the Company's equity securities in compliance with the Company's adoption of ASU 2016-01.

(2) Non-GAAP financial measure.

Total tangible shareholders' equity is computed by taking total(3) shareholders' equity less the intangible assets at period-end. Total tangible assets is computed by taking total assets less the intangible assets at period-end.

Ratios are annualized and based on average balance sheet amounts,(4) where applicable. Quarterly data may not sum to year-to-date data due to rounding.

Core return on tangible equity is computed by dividing the total(5) core (loss)/income adjusted for the tax-effected amortization of intangible assets, assuming a 27% marginal rate, by tangible equity.

Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a(6) fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The Company uses this non-GAAP measure to provide important information regarding its operational efficiency.

The tax benefit is the direct reduction to the income tax provision(7) due to tax credits and deductions generated from investments in historic rehabilitation and low-income housing.

The non-interest income charge is the reduction to the(8) tax-advantaged investments, which are incurred as the tax credits are generated.

BERKSHIRE HILLS BANCORP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA -UNAUDITED - (F-10)

At or for the Six Months Ended

June 30, June 30,

(Dollars in thousands) 2020 2019

Net income $(569,251) $ 49,083

Adj: Net securities(gains)/losses (1) 8,908 (2,568)

Adj: Goodwill impairment 553,762 -

Adj: Merger and acquisition expenses - 11,320

Adj: Restructuring expense and other - 6,850

Adj: Loss from discontinued operations before income taxes 19,264 (1,228)

Adj: Income taxes (22,792) (3,608)

Total core income (2) (A) $ (10,109) $ 59,849

Total revenue from continuing operations $ 187,035 $ 216,288

Adj: Net securities(gains)/losses (1) 8,908 (2,568)

Total core revenue(2) (B) $ 195,943 $ 213,720

Total non-interest expense from continuing operations $ 695,600 $ 148,559

Less: Merger, restructuring and other expense (see above) - (18,170)

Less: Goodwill impairment (553,762) -

Core non-interest expense (2) (C) $ 141,838 $ 130,389

Total revenue $ 184,252 $ 239,563

Total non-interest expense 712,081 170,606

Pre-tax, pre-provision net revenue (PPNR) $(527,829) $ 68,957

Total revenue from continuing operations $ 187,035 $ 216,288

Total non-interest expense from continuing operations 695,600 148,559

Pre-tax, pre-provision net revenue (PPNR) from continuing operations $(508,565) $ 67,729

Total core revenue (2) $ 195,943 $ 213,720

Core non-interest expense (2) 141,838 130,389

Core pre-tax, pre-provision net revenue (PPNR) $ 54,105 $ 83,331

(in millions, except per share data)

Total average assets (D) $ 13,173 $ 12,546

Total average shareholders' equity (E) 1,705 1,630

Total average tangible shareholders' equity (2) (F) 1,110 1,077

Total average tangible common shareholders' equity (2) (G) 1,090 1,036

Total tangible shareholders' equity, period-end (2)(3) (H) 1,122 1,176

Total tangible common shareholders' equity, period-end (2)(3) (I) 1,101 1,136

Total tangible assets, period-end (2)(3) (J) 13,021 13,051

Total common shares outstanding, period-end (thousands) (K) 50,192 51,045

Average diluted shares outstanding (thousands) (L) 50,228 47,700

Core earnings per common share, diluted(2) (A/L) $ (0.20) $ 1.25

PPNR per common share, diluted (2) (10.51) 1.45

PPNR from continuing operations per common share, diluted (2) (10.13) 1.42

Core PPNR per common share, diluted (2) 1.08 1.75

Tangible book value per common share, period-end (2) (I/K) 21.94 22.25

Total tangible shareholders' equity/total tangible assets (2) (H)/(J) 8.61 9.01

Performance ratios (4)

GAAP return on assets (8.67) % 0.78 %

Core return on assets (2) (A/D) (0.15) 0.97

GAAP return on equity (66.79) 6.02

Core return on equity (2) (A/E) (1.19) 7.34

Core return on tangible common equity (2)(5) (A+O)/(G) (1.48) 11.84

PPNR/assets (2) (8.01) 1.10

Core PPNR/assets (2) 0.82 1.33

Efficiency ratio (2)(6) (C-O)/(B+M+P) 68.89 57.93

Net interest margin 2.82 3.18

Supplementary data

Tax benefit on tax-credit investments (7) (M) $ 1,987 $ 3,065

Non-interest income charge on tax-credit investments (8) (N) (1,583) (2,517)

Net income on tax-credit investments (M+N) 404 548

Intangible amortization (O) 3,138 2,675

Fully taxable equivalent income adjustment (P) 3,404 3,691

Net securities (gains)/losses include the change in fair value of the(1) Company's equity securities in compliance with the Company's adoption of ASU 2016-01.

(2) Non-GAAP financial measure.

Total tangible shareholders' equity is computed by taking total(3) shareholders' equity less the intangible assets at period-end. Total tangible assets is computed by taking total assets less the intangible assets at period-end.

Ratios are annualized and based on average balance sheet amounts, where(4) applicable. Quarterly data may not sum to year-to-date data due to rounding.

Core return on tangible equity is computed by dividing the total core(5) income adjusted for the tax-effected amortization of intangible assets, assuming a 27% marginal rate, by tangible equity.

Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a(6) fully taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments. The Company uses this non-GAAP measure to provide important information regarding its operational efficiency.

The tax benefit is the direct reduction to the income tax provision due(7) to tax credits and deductions generated from investments in historic rehabilitation and low-income housing.

(8) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.

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SOURCE Berkshire Hills Bancorp, Inc.