PR Newswire | Apr 28, 2021 04:40PM EDT

04/28 15:39 CDT

Berkshire Hills Announces First Quarter Results BOSTON, April 28, 2021

BOSTON, April 28, 2021 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today announced first quarter 2021 net income of $13 million, or $0.26 per share, compared to $15 million, or $0.30 per share, in the prior quarter. The first quarter non-GAAP measure of adjusted earnings totaled $16 million, or $0.32 per share, compared to $14 million, or $0.28 per share, in the prior quarter. First quarter adjusted income excludes $3 million in restructuring and other expenses. Quarterly results benefited from higher revenues and lower credit loss provision expense.

FIRST QUARTER FINANCIAL HIGHLIGHTS (Comparisons are to the prior quarter unless otherwise stated; non-GAAP measures are reconciled on page F-8)

* 33% increase in total non-interest income excluding gains/(losses) * 13% decrease in GAAP income; 14% increase in adjusted income (non-GAAP measure) * 2.62% net interest margin, stable for last four quarters * 35% reduction in provision for credit losses on loans * 42% reduction in annualized net loan charge-offs to 0.51% of loans from 0.80% * 86% decrease in COVID-19 loan modifications compared to June 30, 2020 * 26% reduction in wholesale funding to 7% of assets * $23.05 book value per share; $22.39 tangible book value per share (non-GAAP measure)

CEO Nitin Mhatre stated, "Berkshire's operating results improved in the first quarter, driven primarily by higher loan-related fees and revenues. The quarter also benefited from growth in demand deposits and the paydown of higher cost wholesale funding. This increase in our lending and deposit activities reflected the benefit of our engagement with our customers in processing government lending and fiscal relief to support further economic recovery in our markets from pandemic conditions. We also consolidated nine of our branch offices during the quarter as part of our branch optimization plan. This resulted in restructuring charges which reduced our GAAP results."

Mr. Mhatre continued, "Public health and the economic outlook improved in our footprint during the quarter. Key measures of loan performance improved, resulting in reductions in net loan charge-offs, nonperforming loans, and loans with COVID-19 related modifications. Our loan loss provision decreased quarter-over-quarter, contributing to our improved operating results."

Mr. Mhatre concluded, "During the quarter we announced key appointments to further strengthen the Company, including welcoming Subhadeep Basu to the position of SEVP/Chief Financial Officer, and Kevin Conn, as SVP/Investor Relations and Corporate Development. We announced other senior hires supporting our financial planning and our diversity, equity, and inclusion program. We also recently recruited new senior hires in our growing asset based lending and private banking business lines and added to our business banking team. Consistent with our longstanding emphasis on diversity and replenishment, we are nominating two new directors to our board. Our management team and board are focused on the development of our transformational strategic plan, which we plan to announce on May 18, 2021. This plan will make our purpose-driven community-dedicated bank better and stronger, faster; with the goal of enhancing results for all stakeholders."

BALANCE SHEET

Total assets remained steady at $12.8 billion in the first quarter, and there was further progress in improving the structure and composition of the balance sheet.

Investments:Short-term investments increased by $352 million to $1.82 billion in the first quarter due to the funds inflows from loan paydowns. The Company is targeting to use some of these balances to settle the planned branch sale and also to fund payoffs of maturing wholesale funds. The portfolio of investment securities increased by $68 million to $2.29 billion.

Loans: Total loans decreased by $423 million, or 5%, including $189 million attributable to the forgiveness of SBA guaranteed Paycheck Protection Program ("PPP") loans. Through its relationship with a funding third party, Berkshire participated in the origination of $206 million of new PPP loans during the quarter, many of which provided further assistance to existing borrowers. Loan balances decreased in the other major loan categories reflecting targeted runoff and impacts from the pandemic and government relief programs. Included in assets held for sale are $284 million in Mid-Atlantic loan balances which are targeted to be sold as part of the planned branch sale.

Asset Quality: Most loan performance metrics improved during the first quarter. Total net loan charge-offs decreased by 42% to $10 million from $17 million in the prior quarter. Total non-performing loans decreased by 14% to $56 million due primarily to loans exited during the quarter. Total COVID-19 related loan modifications, including in-process modifications, decreased to $214 million, or 2.8% of total loans from $350 million, or 4.3% of total loans, at the start of the quarter.

The Company's estimate of expected credit losses at quarter-end resulted in a ratio of the allowance to total loans measuring 1.62%, which was little changed from 1.58% at the start of the quarter. Excluding the $444 million balance of PPP loans, the allowance was also little changed, measuring 1.72% of total loans at quarter-end.

Deposits and Borrowings: The Company continues to pay off maturing brokered deposits, which decreased by $179 million to $431 million during the quarter. Higher cost retail deposit accounts decreased by $102 million and daily fluctuating payroll balances decreased by $81 million to $965 million. Growth of other deposits was concentrated in non-interest bearing deposits, which increased by $266 million. Payroll balances shifted from money market accounts to NOW accounts due to calendar impacts related to payroll cycles. Due to deposit growth and the reduction in total loans, the ratio of loans/deposits decreased to 75% at quarter-end. Wholesale funds, which include brokered deposits and borrowings, decreased during the quarter by $303 million to $880 million, or 7% of total assets. At period-end, liabilities held for sale included $647 million in Mid-Atlantic branch deposit balances which are targeted for sale in the second quarter.

Equity: Quarter-end book value per share totaled $23.05 and the non-GAAP measure of tangible book value per share measured $22.39. Capital metrics remained strong, with equity/assets measuring 9.2% and the non-GAAP measure of tangible equity/tangible assets was 9.0%. Changes in shareholders' equity included the impact of lower unrealized bond gains on accumulated comprehensive income due to the increase in medium term interest rates during the quarter.

RESULTS OF OPERATIONS

Earnings:Berkshire reported $0.26 in GAAP EPS and $0.32 in the non-GAAP measure of adjusted EPS in the first quarter of 2021. GAAP EPS decreased by $0.04, or 13%, quarter-over-quarter primarily due to $3 million in charges related to the consolidation of nine branch offices during the quarter. Adjusted EPS increased by $0.04, or 14%, and benefited from the 6% increase in revenue before gains and losses. The impact of a higher tax rate was partially offset by the benefit of a lower credit loss provision. Adjusted earnings exclude restructuring and certain other expenses. GAAP Pre-tax Pre-Provision Net Revenue ("PPNR") totaled $23 million, while Adjusted PPNR totaled $27 million. The measure of ROTCE was 5.0%, and adjusted ROTCE was 6.0%. GAAP ROA was 0.42% and Adjusted ROA was 0.51%.

Revenue: First quarter results benefited from Berkshire's engagement with its markets in bringing federal pandemic support to customers. The Company processed nearly $200 million in PPP loan forgiveness requests to the SBA, resulting in recognition of deferred interest income. It handled more than $200 million in new PPP loan requests, which provided new fee income in the quarter. Funds from these loans and other support programs contributed to growth in non-interest bearing balances, which lowered funding costs and supported net interest income.

Total net revenue increased quarter-over-quarter by $2 million to $101 million. Total revenue excluding gains and losses increased quarter-over-quarter by $6 million to $101 million due primarily to a $5 million increase in loan fees and revenue. This included $1.5 million related to new PPP loan requests handled in the quarter. This also included a $3 million increase in revenue related to fair valued instruments as a result of the increase in medium term interest rates during the quarter. Net interest income decreased by $1 million due to the decrease in total loans. The first quarter net interest margin of 2.62% was little changed from 2.61% in the prior quarter. The cost of deposits was reduced by 0.11% to 0.36% due to the paydown of higher cost time deposits, including brokered deposits. First quarter gross interest income included $3.5 million in deferred PPP fees recognized from loan forgiveness, compared to $1.5 million in the prior quarter. The unamortized balance of deferred PPP fees decreased to $7 million from $13 million during the quarter.

Credit Loss Provision: The provision for expected credit losses on loans decreased to $6.5 million from $10 million in the prior quarter. The provision expense is an amount sufficient to maintain the allowance for expected credit losses on loans. The decrease in the provision primarily reflects the impact on the allowance of the decrease in the loan portfolio during the quarter. The allowance also reflects improvements in economic conditions and non-accruing loans.

Expense: Non-interest expense increased quarter-over-quarter by $6 million, or 9%, including a $3 million increase in restructuring expenses primarily related to branch consolidation. Excluding these expenses, the non-GAAP measure of adjusted non-interest expense increased by $3 million, or 5%. This was primarily due to a $3 million increase in professional services expense, including legal, financial, and other advisory services related to management and board matters during the quarter. During the first quarter, the Company completed the consolidation of nine branch offices, reducing its total branch count from 130 offices at the start of the quarter to 121 offices at the end of the quarter. Full-time equivalent staff decreased to 1,467 positions at quarter-end, compared to 1,505 positions at year-end 2020. The first quarter effective income tax rate was 22%.

CORPORATE RESPONSIBILITY UPDATE

Berkshire is committed to purpose-driven, community-dedicated banking that enhances value for all its stakeholders. Learn more about the steps Berkshire is taking at www.berkshirebank.com/csr and in its most recent Corporate Responsibility Report.

Key developments in the quarter include:

* Corporate Responsibility Report- Earlier this month, the Company released its 2020 Corporate Responsibility Report, Meaningful Moments: Answering the Call. The report highlights how the Company's 175 year heritage guided its response to the COVID-19 pandemic as well as its environmental, social, and governance performance. Berkshire seeks to enhance its purpose-driven, community-dedicated approach to banking to be the leading socially responsible bank in the communities it serves. * Chief Diversity Officer- As the Bank continues to build on its efforts to be a diverse, inclusive and equitable Company, it has appointed Angela Dixon, a 30-year veteran in the Human Resources and the Diversity, Equity, Inclusion space to the role of Chief Diversity Officer. As Chief Diversity Officer, Dixon will be responsible for driving the Company's diversity, equity and inclusion strategy in collaboration with executive management and each of Berkshire's business lines. She will also work to enhance the impact of Berkshire's existing diversity initiatives and programs. * Bloomberg Gender Equality Index - Berkshire Bank's focus on diversity, ensuring gender equality and pay equity was highlighted as Bloomberg announced the company would be included in the 2021 Bloomberg Gender-Equality Index (GEI) for the second consecutive year. The GEI tracks the performance of public companies committed to disclosing their efforts to support gender equality through policy development, representation and transparency and rewards the top performing companies with inclusion in the index. * Human Rights Campaign Best Places to Work for LGBTQ Equality- Berkshire received the top adjusted score of 100 on the Human Rights Campaign Foundation's 2021 Corporate Equality Index (CEI), the nation's foremost benchmarking survey and report measuring corporate policies and practices related to LGBTQ workplace equality. The CEI rates employers providing these crucial protections across four central pillars including non-discrimination policies; equitable benefits for LGBTQ workers and their families; supporting an inclusive culture; and corporate social responsibility

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

Berkshire will post an investor presentation at its website at ir.berkshirebank.com with additional financial information and other information about the quarter.

Berkshire will also conduct a conference call/webcast at 10:00 a.m. Eastern time on Thursday, April 29, 2021 to discuss the results for the quarter and provide guidance about expected future results. Participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10153685/e58f650abb.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 Berkshire's 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 Tuesday, May 6, 2021 by dialing 877-344-7529 and entering access number 10153685. 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 committed to purpose-driven, community-dedicated banking and to be the leading socially responsible omni-channel bank in the communities it serves. Headquartered in Boston, Berkshire operates 121 banking offices primarily in New England and New York.

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.

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-8 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 adjusted earnings in evaluating operating trends, including components for adjusted 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. In 2020, the Company recorded a full impairment of its goodwill and exited its discontinued national mortgage banking operations. Other non-adjusted expense in 2020 was primarily related to costs of the separation with the former CEO, as well as consulting for the CEO succession process. A 2020 non-adjusted gain was recognized on the sale of a specialty commercial insurance business line. In 2021, restructuring expense was primarily related to branch consolidation costs.

The Company measures of Adjusted Pre-Provision Net Revenue ("Adjusted PPNR") which measures adjusted income before credit loss provision and tax expense. PPNR is used by the investment community due to the volatility and variability across banks related to credit loss provision expense under the Current Expected Credit Loss accounting standard. The Company also calculates adjusted PPNR/assets in order to utilize the PPNR measure in assessing its comparative operating profitability.

Non-adjusted 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 adjusted income. The efficiency ratio is adjusted for non-adjusted 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.

CONTACTS

Investor Relations Contacts

Kevin Conn, SVP, Investor Relations & Corporate DevelopmentEmail: KAConn2@berkshirebank.comTel: (617) 641-9206

David Gonci, Capital Markets DirectorEmail: dgonci@berkshirebank.comTel: (413) 281-1973

Media Contacts:

John LovalloEmail: jlavollo@levick.comTel: (917) 612-8419

Cate CroninEmail: ccronin@levick.comTel: (202) 738-7302

TABLE CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES INDEX

F-1 Selected Financial Highlights

F-2 Balance Sheets

F-3 Loan and Deposit Analysis

F-4 Statements of Operations (Five Quarter Trend)

F-5 Average Balances and Average Yields and Costs

F-6 Asset Quality Analysis

F-7 Asset Quality Analysis (continued)

F-8 Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Five Quarter Trend)

BERKSHIRE HILLS BANCORP, INC.SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)

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

2020 2020 2020 2020 2021

NOMINAL AND PER SHARE DATA

Net earnings/ (loss) per $ (0.40) $ (10.93) $ 0.42 $ 0.30 $ 0.26 common share, diluted

Adjusted earnings/(loss) per common (0.07) (0.13) 0.53 0.28 0.32 share, diluted (2)

Net income/ (loss), (19,870) (549,381) 21,225 15,009 13,031 (thousands)

Adjusted net income/(loss), (3,645) (6,464) 26,424 14,062 16,015 (thousands)(2)

Total common shares outstanding, 50,199 50,192 50,306 50,833 50,988 period-end (thousands)

Average diluted shares, 50,204 50,246 50,329 50,355 50,565 (thousands)

Total book value per 33.90 22.79 23.03 23.37 23.05 common share, (end of period)

Tangible book value per common share, 22.00 21.94 22.22 22.68 22.39 (end of period) (2)

Dividends per 0.24 0.24 0.12 0.12 0.12 common share

Full-time equivalent staff, 1,548 1,511 1,507 1,505 1,467 continuing operations

PERFORMANCE RATIOS (3)

Return on (4.58) % (131.17) % 7.50 % 5.22 % 4.50 % equity

Adjusted return (0.84) (1.54) 9.33 4.89 5.53 on equity (2)

Return on tangible common (6.76) (206.08) 8.32 5.85 4.98 equity (2)

Adjusted return on tangible (0.94) (2.05) 10.27 5.50 6.04 common equity (2)

Return on (0.62) (16.38) 0.67 0.48 0.42 assets

Adjusted return (0.11) (0.19) 0.84 0.45 0.51 on assets (2)

Net interest margin, fully taxable 3.04 2.62 2.61 2.61 2.62 equivalent (FTE) (4)(5)

Efficiency 66.92 71.01 65.39 71.03 71.32 ratio (2)

FINANCIAL DATA (in millions, end of period)

Total assets $ 13,122 $ 13,063 $ 12,614 $ 12,838 $ 12,757

Total earning 11,785 12,267 11,832 12,090 12,071 assets

Total loans 9,303 9,370 8,982 8,082 7,659

Allowance for 114 139 134 127 124 credit losses

Total deposits 10,072 10,776 10,467 10,216 10,244

Loans/deposits 92 % 87 % 86 % 79 % 75 % (%)

Total shareholders' $ 1,722 $ 1,164 $ 1,179 $ 1,188 $ 1,175 equity

ASSET QUALITY

Allowance for credit losses, $ 114 $ 139 $ 134 $ 127 $ 124 (millions)

Net charge-offs, (10) (4) (6) (17) (10) (millions)

Net charge-offs (QTD 0.45 % 0.17 % 0.27 % 0.80 % 0.51 % annualized)/ average loans

Provision expense, $ 35 $ 30 $ 1 $ 10 $ 7 (millions)

Non-performing assets, 53 47 49 67 58 (millions)

Non-performing loans/total 0.55 % 0.48 % 0.53 % 0.80 % 0.73 % loans

Allowance for credit losses/ 222 311 284 196 222 non-performing loans

Allowance for credit losses/ 1.22 1.49 1.50 1.58 1.62 total loans

CAPITAL RATIOS

Common equity tier 1 capital to risk 12.0 % 12.7 % 13.2 % 13.8 % 14.0 % weighted assets (6)

Tier 1 capital leverage ratio 9.4 8.6 9.2 9.4 9.2 (6)

Tangible common shareholders' 8.8 8.5 8.9 9.0 9.0 equity/tangible assets(2)

(1) Reconciliations of non-GAAP financial measures, including all references to adjusted and tangible amounts, appear on page F-8.

Non-GAAP financial measure. adjusted measurements are non-GAAP financial (2) measures that are adjusted to exclude net non-adjusted charges primarily related to acquisitions and restructuring activities. See page F-8 for reconciliations of non-GAAP financial measures.

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

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

The effect of purchase accounting accretion for loans, time deposits, and borrowings on the quarterly net interest margin was an increase in all (5) quarters, which is shown sequentially as follows beginning with the earliest quarter and ending with the most recent quarter: 0.11%, 0.07%, 0.08%, 0.07%, 0.05%.

(6) Presented as projected for March 31, 2021 and actual for the remaining periods.

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)

March 31, December 31, March 31,

(in thousands) 2020 2020 2021

Assets

Cash and due from banks $ 90,280 $ 91,219 $ 81,285

Short-term investments 515,140 1,466,656 1,818,323

Total cash and short-term 605,420 1,557,875 1,899,608investments

Trading security 9,829 9,708 9,350

Marketable equity securities, at 32,283 18,513 15,801fair value

Securities available for sale, at 1,403,858 1,695,232 1,627,330fair value

Securities held to maturity, at 336,802 465,091 610,637amortized cost

Federal Home Loan Bank stock and 54,306 34,873 28,680other restricted securities

Total securities 1,837,078 2,223,417 2,291,798

Less: Allowance for credit losses on (141) (104) (111)investment securities

Net securities 1,836,937 2,223,313 2,291,687

Loans held for sale 4,252 17,748 18,377

Total loans 9,303,177 8,081,519 7,658,778

Less: Allowance for credit losses on (113,510) (127,302) (123,800)loans

Net loans 9,189,667 7,954,217 7,534,978

Premises and equipment, net 120,667 112,663 108,538

Other real estate owned 224 149 149

Goodwill and other intangible assets 597,797 34,819 33,500

Other assets 626,485 619,925 566,809

Assets held for sale(1) - 317,304 303,697

Assets from discontinued operations 140,064 - -

Total assets $ 13,121,513 $ 12,838,013 $ 12,757,343

Liabilities and shareholders' equity

Demand deposits $ 1,922,490 $ 2,484,249 $ 2,750,393

NOW and other deposits 1,546,626 1,003,005 1,856,988

Money market deposits 2,391,835 3,371,353 2,486,261

Savings deposits 867,024 972,116 1,047,506

Time deposits 3,343,700 2,385,085 2,103,222

Total deposits 10,071,675 10,215,808 10,244,370

Senior borrowings 944,053 474,357 351,354

Subordinated borrowings 97,107 97,280 97,338

Total borrowings 1,041,160 571,637 448,692

Other liabilities 255,846 232,730 229,832

Liabilities held for sale(1) - 630,065 659,310

Liabilities from discontinued 30,554 - -operations

Total liabilities 11,399,235 11,650,240 11,582,204

Preferred shareholders' equity 20,325 - -

Common shareholders' equity 1,701,953 1,187,773 1,175,139

Total shareholders' equity 1,722,278 1,187,773 1,175,139

Total liabilities and shareholders' $ 13,121,513 $ 12,838,013 $ 12,757,343equity

(1) Includes loans and deposits from planned branch sales in the Mid-Atlanticregion.

BERKSHIRE HILLS BANCORP, INC.

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

LOAN ANALYSIS

Growth %

Quarter(in December 31, 2020 March 31, 2021 endedmillions) Balance Balance March 31, 2021

Totalcommercial $ 3,647 $ 3,645 - %real estate

Commercialand 1,959 1,741 (11)industrialloans

Totalcommercial 5,606 5,386 (4)loans

Totalresidential 1,813 1,668 (8)mortgages

Home 295 280 (5)equity

Auto and 368 325 (12)other

Totalconsumer 663 605 (9)loans

Total loans $ 8,082 $ 7,659 (5) %

DEPOSIT ANALYSIS

Growth %

Quarter(in December 31, 2020 March 31, 2021 endedmillions) Balance Balance March 31, 2021

Demand $ 2,484 $ 2,750 11 %

NOW and 1,003 1,857 85other

Money 3,372 2,486 (26)market

Savings 972 1,048 8

Time 2,385 2,103 (12)deposits

Total $ 10,216 $ 10,244 - %deposits

BERKSHIRE HILLS BANCORP, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) - UNAUDITED - (F-4)

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

(in thousands,except per share 2020 2020 2020 2020 2021data)

Interest 116,195 103,688 97,768 92,131 88,153income

Interest 29,767 26,098 20,713 16,422 13,060expense

Net interestincome fromcontinuing 86,428 77,590 77,055 75,709 75,093operations, notFTE

Non-interestincome fromcontinuingoperations

Deposit related 7,947 5,373 7,062 7,523 7,126fees

Insurancecommissions and 3,024 2,767 2,660 2,319 3,130fees

Wealth management 2,570 2,057 2,299 2,359 2,772fees

Mortgage banking 959 1,644 2,044 543 802originations

Loan fees and 1,302 5,717 4,988 4,833 10,246revenue

Other (436) (999) 1,927 2,105 2,148

Total non-interestincome excluding 15,366 16,559 20,980 19,682 26,224(losses)/gains

Securities(losses)/gains, (9,730) 822 (1,017) 2,405 (31)net

Gain on sale ofbusiness - - - 1,240 -operations andassets, net

Total non-interest 5,636 17,381 19,963 23,327 26,193income

Total net revenuefrom continuing 92,064 94,971 97,018 99,036 101,286operations

Total net revenuefrom continuingoperations 101,794 94,149 98,035 95,391 101,317excluding (losses)/gains

Provision for 34,807 29,871 1,200 10,000 6,500credit losses

Compensation and 36,909 39,403 34,809 36,719 38,735benefits

Occupancy and 11,132 10,195 11,084 10,948 11,024equipment

Technology and 8,081 7,755 8,540 7,988 8,593communications

Professional 2,720 2,565 2,567 4,055 6,614services

Other expenses 12,483 10,595 10,527 11,563 9,702

Merger,restructuring andother - 553,762 5,316 523 3,486non-operatingexpenses

Total non-interest 71,325 624,275 72,843 71,796 78,154expense

Total non-interestexpense excludingmerger, 71,325 70,513 67,527 71,273 74,668restructuring andother

Income/(loss) fromcontinuing $ (14,068) $ (559,175) $ 22,975 $ 17,240 $ 16,632operations beforeincome taxes

Income tax expense (1,996) (16,130) (68) (1,659) 3,601/(benefit)

Net income/(loss)from continuing $ (12,072) $ (543,045) $ 23,043 $ 18,899 $ 13,031operations

(Loss) fromdiscontinued $ (10,629) $ (8,635) $ (2,477) $ (5,114) $ -operations beforeincome taxes

Income tax (2,831) (2,299) (659) (1,224) -(benefit)

Net (loss) fromdiscontinued $ (7,798) $ (6,336) $ (1,818) $ (3,890) $ -operations

Net income/(loss) $ (19,870) $ (549,381) $ 21,225 $ 15,009 $ 13,031

Preferred stock 125 130 58 - -dividend

Income/(loss)available to $ (19,995) $ (549,511) $ 21,167 $ 15,009 $ 13,031commonshareholders

Diluted earnings/(loss) per commonshare:

Continuing $ (0.24) $ (10.80) $ 0.46 $ 0.38 $ 0.26Operations

Discontinued (0.16) (0.13) (0.04) (0.08) -Operations

Total $ (0.40) $ (10.93) $ 0.42 $ 0.30 $ 0.26

Weighted averagesharesoutstanding:

Basic 50,204 50,246 50,329 50,308 50,330

Diluted 50,204 50,246 50,329 50,355 50,565

BERKSHIRE HILLS BANCORP, INC.AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS - UNAUDITED - (F-5)

Dec. 31, 2020 March 31, 2021 March 31, 2020 June 30, 2020 Sept. 30, 2020

(in millions) Average Average Yield/ Average Average Yield/ Average Average Yield/ Average Average Yield/ Average Average Yield/ Balance Rate Balance Rate Balance Rate Balance Rate Balance Rate

Assets

Commercial real estate 4,000 4.41 % 4,005 3.78 % 3,986 3.52 % 3,843 3.34 % 3,630 3.27 %

Commercial and industrial loans 1,796 5.03 2,153 4.02 2,192 3.88 2,056 4.05 1,865 4.62

Residential mortgages 2,654 3.77 2,453 3.78 2,224 3.78 1,971 3.78 1,740 3.71

Consumer loans 922 4.28 865 3.72 801 3.59 726 3.41 634 3.79

Total loans (1) 9,372 4.33 9,476 3.83 9,203 3.68 8,596 3.62 7,869 3.73

Securities (2) 1,745 3.32 1,793 3.07 1,874 2.78 1,968 2.69 2,195 2.36

Short-term investments and loans held for 375 1.78 697 0.50 766 0.21 977 0.57 1,351 0.13sale

Mid-Atlantic region loans held for sale - - - 101 295

Total earning assets (3) 11,492 4.08 11,966 3.50 11,843 3.31 11,642 3.17 11,710 3.07

Goodwill and other intangible assets 598 591 41 40 34

Other assets 663 752 760 752 724

Assets from discontinued operations 99 110 16 12 -

Total assets 12,852 13,419 12,660 12,446 12,468

Liabilities and shareholders' equity

NOW and other 1,159 0.46 % 1,184 0.30 % 1,244 0.24 % 1,279 0.17 % 1,325 0.15 %

Money market 2,753 0.98 2,672 0.58 2,674 0.38 2,756 0.32 2,802 0.27

Savings 847 0.13 901 0.10 940 0.10 967 0.08 1,003 0.08

Time 3,333 1.87 3,399 1.84 3,056 1.63 2,629 1.35 2,266 1.12

Total interest-bearing deposits 8,092 1.18 8,156 1.01 7,914 0.81 7,631 0.62 7,396 0.48

Borrowings 949 2.60 942 2.38 777 2.36 658 2.50 500 2.78

Mid-Atlantic region interest-bearing deposits - - - 180 518

Total interest-bearing liabilities 9,041 1.33 9,098 1.16 8,691 0.95 8,469 0.77 8,414 0.63

Non-interest-bearing demand deposits 1,849 2,343 2,559 2,542 2,537

Other liabilities (4) 204 274 254 279 358

Liabilities from discontinued operations 24 29 23 6 -

Total liabilities 11,118 11,744 11,527 11,296 11,309

Preferred shareholders' equity 21 20 20 7 -

Common shareholders' equity 1,713 1,655 1,113 1,143 1,159

Total shareholders' equity 1,734 1,675 1,133 1,150 1,159

Total liabilities and shareholders' equity 12,852 13,419 12,660 12,446 12,468

Net interest spread 2.75 % 2.34 % 2.36 % 2.40 % 2.44 %

Net interest margin (5) 3.04 2.62 2.61 2.61 2.62

Cost of funds 1.11 0.92 0.73 0.60 0.48

Cost of deposits 0.96 0.79 0.61 0.47 0.36

Supplementary data

Average PPP loans - 461 707 685 546

Average loans excluding PPP loans 9,372 9,015 8,496 7,911 7,323

Total PPP loans, end of period - 706 708 633 444

Total loans excluding PPP loans, end of 9,303 8,664 8,274 7,448 7,215period

Total average non-maturity deposits 6,608 7,100 7,417 7,544 7,666

Total average deposits 9,941 10,500 10,473 10,173 9,932

Fully taxable equivalent income adjustment 2 2 2 1 1

Total average tangible equity (6) 1,135 1,085 1,091 1,110 1,125

(1) Total loans include non-accruing loans.

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

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

(4) Includes the Mid-Atlantic region non-interesting bearing deposits. As ofMarch 31, 2021 and December 31, 2020, the Mid-Atlantic region averagenon-interest bearing deposits were $119 million and $37 million, respectively.

(5) The effect of PPP loans on the quarterly net interest margin as of March31, 2021 and December 31, 2020 was an increase and the effect was a decrease asof September 31, 2020. There was no impact as of June 30, 2020

and March 31, 2020. This is shown sequentially as follows beginning withthe earliest quarter and ending with the most recent quarter: 0.00%, 0.00%,(0.01%), 0.05%, 0.11%. This calculation excludes gross interest

income on PPP loans and average PPP loan balances.

(6) See page F-8 for details on the calculation of total average tangibleequity.

BERKSHIRE HILLS BANCORP, INC.ASSET QUALITY ANALYSIS - UNAUDITED - (F-6)

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

(in thousands) 2020 2020 2020 2020 2021

NON-PERFORMING ASSETS

Non-accruingloans:

Commercialreal estate $ 16,938 $ 12,486 $ 14,777 $ 35,581 $ 28,325(1)

Commercial andindustrial 18,370 15,045 15,035 12,921 9,371loans

Residential 9,636 9,840 7,928 8,347 10,674mortgages

Consumer loans 6,172 7,513 9,650 8,099 7,447

Totalnon-accruing 51,116 44,884 47,390 64,948 55,817loans

Other real 224 517 401 149 149estate owned

Repossessed 1,316 1,581 1,646 1,932 1,701assets

Totalnon-performing $ 52,656 $ 46,982 $ 49,437 $ 67,029 $ 57,667assets

Totalnon-accruing 0.55% 0.48% 0.53% 0.80% 0.73%loans/totalloans

Totalnon-accruingloans/total 0.55% 0.52% 0.57% 0.87% 0.77%loansexcluding PPPloans

Totalnon-performing 0.40% 0.36% 0.39% 0.52% 0.45%assets/totalassets

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance atbeginning of $ 63,575 $ 113,510 $ 139,394 $ 134,414 $ 127,302period

Adoption ofASU No. 25,434 - - - -2016-13 (2)

Balance afteradoption of 89,009 113,510 139,394 134,414 127,302ASU No.2016-13

Charged-off (12,432) (7,274) (7,776) (18,314) (11,460)loans

Recoveries oncharged-off 1,958 3,259 1,580 1,209 1,465loans

Net loans (10,474) (4,015) (6,196) (17,105) (9,995)charged-off

Provision forloan credit 34,975 29,899 1,216 9,993 6,493losses

Balance at end $ 113,510 $ 139,394 $ 134,414 $ 127,302 $ 123,800of period

Allowance forcredit losses/ 1.22% 1.49% 1.50% 1.58% 1.62%total loans

Allowance forcredit losses/total loans 1.22% 1.61% 1.62% 1.71% 1.72%excluding PPPloans

Allowance forcredit losses/ 222% 311% 284% 196% 222%non-accruingloans

NET LOAN CHARGE-OFFS

Commercial $ (5,990) $ (1,679) $ (635) $ (11,862) $ (6,959)real estate

Commercial andindustrial (3,728) (1,059) (5,551) (5,089) (2,662)loans

Residential (19) (966) 517 250 80mortgages

Home equity (107) (10) (57) 141 (42)

Auto and other (630) (301) (470) (545) (412)consumer

Total, net $ (10,474) $ (4,015) $ (6,196) $ (17,105) $ (9,995)

Netcharge-offs(QTD 0.45% 0.17% 0.27% 0.80% 0.51%annualized)/average loans

Netcharge-offs(YTD 0.45% 0.31% 0.29% 0.41% 0.51%annualized)/average loans

(1) This balance includes $17 million of PCD loans.

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

BERKSHIRE HILLS BANCORP, INC.ASSET QUALITY ANALYSIS - UNAUDITED (F-7)

March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021

Percent Percent Percent Percent Percent(in thousands) Balance of Balance of Balance of Balance of Balance of Total Total Total Total Total Loans Loans Loans Loans Loans

30-89 Days $ 39,583 0.43% $ 35,128 0.37% $ 27,626 0.31% $ 16,310 0.20% $ 28,565 0.37%delinquent

90+ Days delinquent 5,052 0.05% 13,056 0.14% 12,876 0.14% 11,450 0.14% 6,124 0.08%and still accruing

Total accruing 44,635 0.48% 48,184 0.51% 40,502 0.45% 27,760 0.34% 34,689 0.45%delinquent loans

Non-accruing loans 51,116 0.55% 44,884 0.48% 47,390 0.53% 64,948 0.80% 55,817 0.73%

Total delinquent and $ 95,751 1.03% $ 93,068 0.99% $ 87,892 0.98% $ 92,708 1.14% $ 90,506 1.18%non-accruing loans

BERKSHIRE HILLS BANCORP, INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED- (F-8)

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

(in thousands) 2020 2020 2020 2020 2021

Total revenue from continuing operations (A) $ 92,064 $ 94,971 $ 97,018 $ 99,036 $ 101,286

Adj: Net securities (gains)/losses (1) 9,730 (822) 1,017 (2,405) 31

Adj: Net (gains) on sale of business operations and assets - - - (1,240) -

Total adjusted revenue (2) (B) $ 101,794 $ 94,149 $ 98,035 $ 95,391 $ 101,317

Total non-interest expense from continuing operations (C) $ 71,325 $ 624,275 $ 72,843 $ 71,796 $ 78,154

Less: Merger, restructuring and other expense (see above) - - (5,316) (523) (3,486)

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

Adjusted non-interest expense (2) (D) $ 71,325 $ 70,513 $ 67,527 $ 71,273 $ 74,668

Pre-tax, pre-provision net revenue (PPNR) from continuing operations (A-C) $ 20,739 $ (529,304) $ 24,175 $ 27,240 $ 23,132

Adjusted pre-tax, pre-provision net revenue (PPNR) (B-D) 30,469 23,636 30,508 24,118 26,649

Net income/(loss) $ (19,870) $ (549,381) $ 21,225 $ 15,009 $ 13,031

Adj: Net securities (gains)/losses (1) 9,730 (822) 1,017 (2,405) 31

Adj: Goodwill impairment - 553,762 - - -

Adj: Net (gains) on sale of business operations and assets - - - (1,240) -

Adj: Restructuring expense and other expense - - 5,316 523 3,486

Adj: Loss from discontinued operations before income taxes 10,629 8,635 2,477 5,114 -

Adj: Income taxes benefit/(expense) (4,134) (18,658) (3,611) (2,939) (533)

Total adjusted income/(loss) (2) (E) $ (3,645) $ (6,464) $ 26,424 $ 14,062 $ 16,015

(in millions, except per share data)

Total average assets (F) $ 12,852 $ 13,419 $ 12,660 $ 12,446 $ 12,468

Total average shareholders' equity (G) 1,734 1,675 1,133 1,150 1,159

Total average tangible shareholders' equity (2)(3) (H) 1,135 1,085 1,091 1,110 1,125

Total average tangible common shareholders' equity (2)(3) (I) 1,115 1,064 1,071 1,103 1,125

Total tangible shareholders' equity, period-end (2)(3) (J) 1,124 1,122 1,138 1,153 1,142

Total tangible common shareholders' equity, period-end (2)(3) (K) 1,104 1,101 1,118 1,153 1,142

Total tangible assets, period-end (2)(3) (L) 12,524 13,021 12,574 12,803 12,724

Total common shares outstanding, period-end (thousands) (M) 50,199 50,192 50,306 50,833 50,988

Average diluted shares outstanding (thousands) (N) 50,204 50,246 50,329 50,355 50,565

GAAP earnings/(loss) per common share, diluted(2) $ (0.40) $ (10.93) $ 0.42 $ 0.30 $ 0.26

Adjusted earnings/(loss) per common share, diluted (2) (E/N) (0.07) (0.13) 0.53 0.28 0.32

Tangible book value per common share, period-end (2) (K/M) 22.00 21.94 22.22 22.68 22.39

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

Performance ratios (4)

GAAP return on equity (4.58) % (131.17) % 7.50 % 5.22 % 4.50 %

Adjusted return on equity (2) (E/G) (0.84) (1.54) 9.33 4.89 5.53

Return on tangible common equity (2)(5) (6.76) (206.08) 8.32 5.85 4.98

Adjusted return on tangible common equity (2)(5) (E+Q)/ (0.94) (2.05) 10.27 5.50 6.04 (I)

GAAP return on assets (0.62) (16.38) 0.67 0.48 0.42

Adjusted return on assets(2) (0.11) (0.19) 0.84 0.45 0.51

PPNR from continuing operations/assets (2) 0.65 (15.78) 0.76 0.88 0.74

Adjusted PPNR/assets (2) 0.96 0.71 0.97 0.78 0.85

Efficiency ratio (2)(6) (D-Q)/ 66.92 71.01 65.39 71.03 71.32 (B+O+R)

Net interest margin 3.04 2.62 2.61 2.61 2.62

Supplementary data (in thousands)

Tax benefit on tax-credit investments (7) (O) $ 608 $ 1,379 $ 1,377 $ 1,334 $ 41

Non-interest income charge on tax-credit investments (8) (P) (486) (1,097) (1,090) (971) (33)

Net income on tax-credit investments (O+P) 122 282 287 363 9

Intangible amortization (Q) $ 1,580 $ 1,558 $ 1,530 $ 1,513 $ 1,319

Fully taxable equivalent income adjustment (R) 1,824 1,580 1,512 1,485 1,494

(1) Net securities (gains)/losses include the change in fair value of theCompany's equity securities in compliance with the Company's adoption of ASU2016-01.

(2) Non-GAAP financial measure.

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

intangible assets at period-end.

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

(5) Adjusted return on tangible equity is computed by dividing the totaladjusted income/(loss) adjusted for the tax-effected amortization of intangibleassets,

assuming a 27% marginal rate, by tangible equity.

(6) Efficiency ratio is computed by dividing total adjusted tangiblenon-interest expense by the sum of total net interest income on a fully taxableequivalent basis and

total adjusted non-interest income adjusted to include tax credit benefitof tax shelter investments. The Company uses this non-GAAP measure to provide

important information regarding its operational efficiency.

(7) The tax benefit is the direct reduction to the income tax provision due totax 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-advantagedinvestments, which are incurred as the tax credits are generated.

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SOURCE Berkshire Hills Bancorp, Inc.