PR Newswire | Jul 21, 2021 06:56AM EDT

07/21 05:55 CDT

Berkshire Hills Reports Higher Second Quarter Earnings BOSTON, July 21, 2021

BOSTON, July 21, 2021 /PRNewswire/ -- Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today announced that second quarter 2021 delivered earnings per share of $0.43, compared to a loss in same quarter last year and an increase of 65% from $0.26 in the first quarter of 2021. Adjusted earnings per share, a non-GAAP measure, increased by 38% to $0.44 from $0.32 in the first quarter. Second quarter results featured year-over-year fee income growth due to higher consumer activity, disciplined expense control, credit improvement and resumption of share repurchases that were paused in 2020.

SECOND QUARTER FINANCIAL HIGHLIGHTS (Comparisons are to the prior year unless otherwise stated; non-GAAP measures are reconciled on pages F-9 and F-10).

* 27% increase in non-interest income * 89% decrease in non-interest expense; 2% decrease in adjusted non-interest expense (non-GAAP measure) * Stable net interest margin and net interest income over last four quarters * No provision for credit losses on loans, compared to $30 million in 2Q'20 * 53% reduction in net loan charge-offs from prior quarter, while relatively flat over 2Q'20 * 65% reduction in wholesale funding to 5% of assets * Deposit costs down to 25bps compared to 79bps in 2Q'20 and 36bps in the first quarter of 2021 * Stock repurchases of 745,000 shares (1.5% of outstanding stock) * Returned $26.8 million of capital to shareholders in 2Q'21 through buybacks and dividends amounting to 124% of 2Q'21 GAAP net income

CEO Nitin Mhatre stated, "We posted a solid quarter of improved earnings, with increased business activity and a stable margin. Efficiency improved and our return on tangible common equity advanced to 7.9%. Credit performance improved across the board as our customers return to more normalized operations."

Mr. Mhatre continued, "In May, we announced our new strategic plan which we call Berkshire's Exciting Strategic Transformation, or 'BEST'. Under this plan, we get better before we get bigger, as we target to earn in excess of our cost of capital on completion of the three-year plan. We're taking advantage of multiple merger-related market disruptions to add customers and to supplement our strong team with additional talent. Our BEST plan includes capital optimization and returning capital to shareholders, and in the second quarter we announced a stock repurchase program and initiated share buybacks."

RESULTS OF OPERATIONS

Earnings:Earnings per share (EPS) of $0.43 compared to a loss in the second quarter last year and represented a 65% increase over the previous quarter. Adjusted EPS, a non-GAAP measure, were $0.44, also compared to a year ago loss, and represented a 38% increase over the previous quarter. Stable net interest income, higher fee revenue, lower expenses and a decrease in the provision for credit losses on loans drove the positive results.

Adjusted earnings exclude items not viewed as related to ongoing operations. In 2020, these items were primarily a goodwill impairment change. In 2021, these items were primarily restructuring expenses recorded in the first quarter for the consolidation of branch offices.

GAAP pre-tax pre-provision net revenue ("PPNR") of $29 million compared to a loss in the second quarter last year and represented a 23% increase over the previous quarter. Adjusted PPNR increased by 23% over last year and by 9% over the prior quarter.

The efficiency ratio improved quarter over quarter to 67.8% from 71.3%, as non-interest expense decreased by 12% due to broad-based reductions in most categories.

The second quarter return on assets improved quarter over quarter to 0.70% from 0.42%, while adjusted return on assets improved to 0.71% from 0.51%. The second quarter return on tangible common equity was 7.9%, while the adjusted return on tangible common equity was 8.1%.

Revenue: Total net revenue increased by 3% year over year to $97 million from $95 million due to higher non-interest income resulting from increased customer activity.

Net interest income declined 3% year over year and rose modestly on a linked quarter basis. Due to the steady repricing of deposits and the reduction in higher cost wholesale funds, the net interest margin has been stable at approximately 2.62% over the last five quarters. The cost of deposits decreased year over year by 54 basis points to 0.25% and the total cost of funds decreased by 56 basis points to 0.36%.

Second quarter non-interest income increased year over year by $5 million, or 27%. This included a $2 million increase in deposit related fees reflecting increased customer activity. Additionally, SBA loan originations revenue increased by $3 million to a record $5.3 million, reflecting strong market conditions and expansion of the SBA team. Wealth management related revenue increased by 22%, reflecting account growth and improved market conditions.

Credit Loss Provision: There was no provision required for expected credit losses on loans in the second quarter. The provision expense is down from $30 million in the second quarter of 2020 and from $6.5 million linked quarter, reflecting much improved economic and credit conditions.

Expense: Non-interest expense decreased 89% year over year due to the goodwill write-off in the second quarter of 2020. Excluding this write-off, adjusted expense was down by $2 million, or 2%, due primarily to processing expenses in 2020 related to Paycheck Protection Program ("PPP") loans. Expenses improved quarter over quarter with broad based reductions in all categories. Total branches have been reduced to 115 offices from 130 at the start of the year. Full time equivalent staff totaled 1,417 positions at midyear, compared to 1,505 positions at the start of the year. The second quarter 2021 effective income tax rate was 24%. New tax credit investments recorded in July are targeted to benefit the effective rate in the second half of the year.

BALANCE SHEET

Loans: Total period end loans decreased in the second quarter by $426 million, or 6%, to $7.23 billion primarily due to $271 million in PPP loan forgiveness, bringing the remaining PPP loan balance down to $173 million. All other total commercial loans were stable, as growth in originations offset further paydowns in targeted COVID-19 sensitive portfolios. Residential mortgages decreased by $109 million due to ongoing rate-related refinancings. Included in assets held for sale are $253 million in Mid-Atlantic loan balances which are targeted to be sold as part of the previously announced planned branch sale.

Asset Quality.Asset quality metrics continued to improve toward pre-pandemic levels during the second quarter. Accruing delinquent loans decreased year over year by 61% to $19 million, or 0.26% of loans. Total COVID-19 related loan modifications decreased year over year by 94% to $98 million, and measured 1.4% of total loans at midyear. The allowance for credit losses on loans decreased by $5 million to $119 million primarily due to the decrease in loan balances. At period-end, the allowance measured 1.65% of total loans and 1.69% of total loans excluding PPP loans.

Deposit and Borrowings: Total deposits decreased from the prior quarter by $330 million primarily due to an $80 million paydown of maturing brokered deposits and a $190 million decrease in daily fluctuating payroll deposit balances. Average deposits increased, driven by a $250 million, or 10%, increase in average non-interest bearing demand deposits. The ratio of loans/deposits decreased to 73% from 75%. Higher cost wholesale funds, consisting of brokered deposits and borrowings, decreased by $213 million, or 24%, to $668 million and measured 5% of period-end total assets. Most of these balances are targeted to be repaid as they mature in the second half of the year. At period-end, liabilities held for sale included $633 million in Mid-Atlantic branch deposit balances which are targeted for sale in the third quarter.

Equity: During the second quarter, Berkshire announced a board authorization for the repurchase of 2.5 million shares. As of quarter end, the Company had repurchased 745 thousand shares, or 1.5% of outstanding shares, at an average price of $27.85, totaling $20.8 million. The Tier 1 common equity ratio increased to an estimated 14.3% from 14.2% in the prior quarter. Berkshire declared a regular quarterly dividend of $0.12 per share with a June 29 record date and July 8 payment date.

CORPORATE RESPONSIBILITY & ESG UPDATE

Berkshire is committed to purpose-driven, community-dedicated banking that enhances value for all its stakeholders in pursuit of its vision to be the leading socially responsible community bank in the markets it serves. 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:

* Launch of new socially responsible financial solutions: In support of Berkshire's Exciting Strategic Transformation (BEST), the Bank launched two new financial solutions which are now part of its socially responsible banking ecosystem. * MyCheck, Berkshire's new check cashing service helps individuals cash checks at any one of its branches or MyTeller ITM locations for a fraction of the cost of traditional services. The offering provides an on-ramp for underbanked consumers to access a full banking relationship with Berkshire. * MyFreedom, provides a safe, transparent, affordable, and accessible checking account as part of its socially responsible banking ecosystem. The account has no charges for overdrafts or monthly maintenance fees and offers free Mobile Banking with Mobile Deposit as well as access to Berkshire Bank's Greenpath Financial Wellness programs. MyFreedom recently received national certification from the Cities for Financial Empowerment Fund through their BankOn program.

* Continued Commitment to Equity, Inclusion & Culture: Berkshire's Be FIRST culture continues to play an important role in the Company's transformation. Its PRIDE LGBTQIA+ Employee Resource Group celebrated Pride Month and Berkshire joined the Human Rights Campaign's Business Coalition for the Equality Act. Its Health & Wellness and Multicultural Employee Resource Groups hosted programming for Mental Health awareness month and Berkshire came together again to celebrate the impactful significance of Black history in America on Juneteenth National Independence Day. Employees received a paid floating holiday to commemorate the day for the second consecutive year. The Company also recognized six of its employees for their commitment to volunteerism with its Volunteer Service X-ellence Awards while naming an additional 18 employees to its volunteering honor roll. * Awards & Recognition: Berkshire was honored for the fourth consecutive year with the Communitas Award for Leadership in Corporate Social Responsibility. In addition, the Company was named a finalist for the North American Inspiring Workplaces Award for culture and social responsibility and was named a leader in Diversity, Equity and Inclusion by the Albany Business Review. * Current ESG Performance: The Company continued to improve its Environmental, Social and Governance (ESG) ratings, generally outperforming peers. As of June 30, 2021 the Company received ratings of: MSCI ESG- BBB; ISS ESG Quality Score - Environment: 2, Social: 1, Governance: 2; and Bloomberg ESG Disclosure- 47.81. The company is also rated by Sustainalytics.

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 conduct a conference call/webcast at 10:00 a.m. Eastern Time on Wednesday, July 21, 2021 to discuss 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/10157983/ea164d8160. 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 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 for one week by dialing 877-344-7529 and entering access number 10157983. 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 what it means to bank its neighbors socially, humanly and digitally to empower the financial potential of people, families and businesses in its communities as it pursues its vision of being the leading socially responsible omni-channel community bank in the markets it serves. Headquartered in Boston, Berkshire has $12.3 billion in assets and operates 115 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 pages F-9 and F-10 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 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 adjusted gain was recognized on the sale of a specialty commercial insurance business line. In 2021, restructuring and other 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-GAAP 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 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: KAConn@berkshirebank.comTel: (617) 641-9206

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

Media Contact:

Gary Levante, SVP, Corporate Responsibility & CultureEmail: glevante@berkshirebank.comTel: (413) 447-1737

TABLE INDEXCONSOLIDATED 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 Balances and Average Yields and Costs

F-7 Asset Quality Analysis

F-8 Asset Quality Analysis (continued)

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)

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

2020 2020 2020 2021 2021

NOMINAL AND PERSHARE DATA

Net earnings/ (loss) per $ (10.93) $ 0.42 $ 0.30 $ 0.26 $ 0.43 common share, diluted

Adjusted earnings/(loss) per common (0.13) 0.53 0.28 0.32 0.44 share, diluted (2)

Net income/ (loss), (549,381) 21,225 15,009 13,031 21,636 (thousands)

Adjusted net income/(loss), (6,464) 26,424 14,062 16,015 22,104 (thousands)(2)

Total common shares outstanding, 50,192 50,306 50,833 50,988 50,453 period-end (thousands)

Average diluted shares, 50,246 50,329 50,355 50,565 50,608 (thousands)

Total book value per 22.79 23.03 23.37 23.05 23.30 common share, (end of period)

Tangible book value per common share, 21.94 22.22 22.68 22.39 22.66 (end of period) (2)

Dividends per 0.24 0.12 0.12 0.12 0.12 common share

Full-time equivalent staff, 1,511 1,507 1,505 1,467 1,417 continuing operations

PERFORMANCE RATIOS(3)

Return on (131.17) % 7.50 % 5.22 % 4.50 % 7.37 % equity

Adjusted return (1.54) 9.33 4.89 5.53 7.53 on equity (2)

Return on tangible common (206.08) 8.32 5.85 4.98 7.92 equity (2)

Adjusted return on tangible (2.05) 10.27 5.50 6.04 8.08 common equity (2)

Return on (16.38) 0.67 0.48 0.42 0.70 assets

Adjusted return (0.19) 0.84 0.45 0.51 0.71 on assets (2)

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

Efficiency 71.01 65.39 71.03 71.32 67.82 ratio (2)

FINANCIAL DATA (inmillions, end ofperiod)

Total assets $ 13,063 $ 12,614 $ 12,838 $ 12,757 $ 12,273

Total earning 12,267 11,832 12,090 12,071 11,571 assets

Total loans 9,370 8,982 8,082 7,659 7,233

Total deposits 10,776 10,467 10,216 10,244 9,914

Loans/deposits 87 % 86 % 79 % 75 % 73 % (%)

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

ASSET QUALITY

Allowance for credit losses, $ 139 $ 134 $ 127 $ 124 $ 119 (millions)

Net charge-offs, (4) (6) (17) (10) (5) (millions)

Net charge-offs (QTD 0.17 % 0.27 % 0.80 % 0.51 % 0.26 % annualized)/ average loans

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

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

Non-performing loans/total 0.48 % 0.53 % 0.80 % 0.73 % 0.66 % loans

Allowance for credit losses/ 311 284 196 222 250 non-performing loans

Allowance for credit losses/ 1.49 1.50 1.58 1.62 1.65 total loans

CAPITAL RATIOS

Common equity tier 1 capital to risk 12.7 % 13.2 % 13.8 % 14.2 % 14.3 % weighted assets (6)

Tier 1 capital leverage ratio 8.6 9.2 9.4 9.5 9.5 (6)

Tangible common shareholders' 8.5 8.9 9.0 9.0 9.3 equity/tangible assets (2)

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

(2) Non-GAAP financial measure. adjusted measurements are non-GAAP financial measures that are adjusted to exclude net non-adjusted charges primarily related to acquisitions and restructuring activities. See pages F-9 and F-10 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(5) borrowings on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows beginning with the earliest quarter and ending with the most recent quarter: 0.07%, 0.08%, 0.07%, 0.05%, 0.08%.

(6) Presented as projected for June 30, 2021 and actual for the remaining periods.

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)

June 30, December 31, March 31, June 30,

(in 2020 2020 2021 2021thousands)

Assets

Cash and due $ 102,105 $ 91,219 $ 81,285 $ 98,262from banks

Short-term 942,047 1,466,656 1,818,323 1,728,419investments

Total cashand 1,044,152 1,557,875 1,899,608 1,826,681short-terminvestments

Trading 9,519 9,708 9,350 8,853security

Marketableequity 33,263 18,513 15,801 15,709securities,at fair value

Securitiesavailable for 1,458,036 1,695,232 1,627,330 1,640,512sale, at fairvalue

Securitiesheld tomaturity, at 334,895 465,091 610,637 665,786amortizedcost

Federal HomeLoan Bankstock and 46,139 34,873 28,680 19,638otherrestrictedsecurities

Total 1,881,852 2,223,417 2,291,798 2,350,498securities

Less:Allowance forcredit losses (113) (104) (111) (130)on investmentsecurities

Net 1,881,739 2,223,313 2,291,687 2,350,368securities

Loans held 62,881 17,748 18,377 6,494for sale

Total loans 9,370,271 8,081,519 7,658,778 7,232,591

Less:Allowance for (139,394) (127,302) (123,800) (119,044)credit losseson loans

Net loans 9,230,877 7,954,217 7,534,978 7,113,547

Premises andequipment, 118,722 112,663 108,538 104,680net

Other real 40 149 149 85estate owned

Goodwill andother 42,477 34,819 33,500 32,203intangibleassets

Other assets 660,404 619,925 566,809 562,691

Assets held - 317,304 303,697 276,576for sale (1)

Assets fromdiscontinued 21,692 - - -operations

Total assets $ 13,062,984 $ 12,838,013 $ 12,757,343 $ 12,273,325

Liabilitiesandshareholders'equity

Demand $ 2,573,786 $ 2,484,249 $ 2,750,393 $ 2,819,012deposits

NOW and other 1,453,397 1,003,005 1,856,988 1,696,762deposits

Money market 2,525,761 3,371,353 2,486,261 2,398,256deposits

Savings 932,243 972,116 1,047,506 1,065,428deposits

Time deposits 3,290,721 2,385,085 2,103,222 1,934,442

Total 10,775,908 10,215,808 10,244,370 9,913,900deposits

Senior 719,638 474,357 351,354 217,847borrowings

Subordinated 97,165 97,280 97,338 97,396borrowings

Total 816,803 571,637 448,692 315,243borrowings

Other 280,843 232,730 229,832 222,105liabilities

Liabilitiesheld for sale - 630,065 659,310 646,688(1)

Liabilitiesfrom 25,290 - - -discontinuedoperations

Total 11,898,844 11,650,240 11,582,204 11,097,936liabilities

Preferredshareholders' 20,325 - - -equity

Commonshareholders' 1,143,815 1,187,773 1,175,139 1,175,389equity

Totalshareholders' 1,164,140 1,187,773 1,175,139 1,175,389equity

Totalliabilitiesand $ 13,062,984 $ 12,838,013 $ 12,757,343 $ 12,273,325shareholders'equity

(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 June 30, 2021 ended Yearmillions) Balance Balance Balance June to 30, Date 2021

Totalcommercial $ 3,647 $ 3,645 $ 3,652 - % - %real estate

Commercialand 1,326 1,297 1,286 (1) (6)industrialloans

PaycheckProtection 633 444 173 (61) (145)Program (PPP)Loans

Totalcommercial 5,606 5,386 5,111 (5) (18)loans

Totalresidential 1,813 1,668 1,559 (7) (28)mortgages

Home equity 295 280 270 (3) (17)

Auto and 368 325 293 (10) (41)other

Totalconsumer 663 605 563 (7) (30)loans

Total loans $ 8,082 $ 7,659 $ 7,233 (6) % (21) %

DEPOSIT ANALYSIS

Growth %

Quarter(in December 31, 2020 March 31, 2021 June 30, 2021 ended Yearmillions) Balance Balance Balance June to 30, Date 2021

Non-interest $ 2,484 $ 2,750 $ 2,819 3 % 27 %bearing

NOW and 1,003 1,857 1,697 (9) 138other

Money market 3,372 2,486 2,398 (4) (58)

Savings 972 1,048 1,065 2 19

Time 2,385 2,103 1,935 (8) (38)deposits

Total $ 10,216 $ 10,244 $ 9,914 (3) % (6) %deposits (1)

(1) Included in total deposits are brokered deposits of $358.4 million, $431.5million and $610.6 million at June 30, 2021, March 31, 2021, and December 31,2020, respectively.

BERKSHIRE HILLS BANCORP, INC.

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

Three Months Ended Six Months Ended

June 30, June 30,

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

Interest 85,364 103,688 173,517 219,883income

Interest 9,971 26,098 23,031 55,865expense

Net interestincome fromcontinuing 75,393 77,590 150,486 164,018operations, notFTE

Non-interestincome fromcontinuingoperations

Deposit related 7,508 5,373 14,634 13,320fees

Loan fees and 7,431 5,717 17,677 7,019revenue

Insurancecommissions and 2,292 2,767 5,422 5,791fees

Wealth management 2,519 2,057 5,291 4,627fees

Mortgage banking 534 1,644 1,336 2,603originations

Other 2,211 (999) 4,359 (1,435)

Total non-interestincome excluding 22,495 16,559 48,719 31,925gains/(losses)

Securities(losses)/gains, (484) 822 (515) (8,908)net

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

Total non-interest 22,011 17,381 48,204 23,017income

Total net revenuefrom continuing 97,404 94,971 198,690 187,035operations

Total net revenuefrom continuingoperations 97,888 94,149 199,205 195,943excluding (losses)/gains

Provision for - 29,871 6,500 64,678credit losses

Non-interestexpense fromcontinuingoperations

Compensation and 36,970 39,403 75,705 76,312benefits

Occupancy and 10,599 10,195 21,623 21,327equipment

Technology and 8,214 7,755 16,807 15,836communications

Professional 3,701 2,565 10,315 5,285services

Other expenses 9,382 10,595 19,084 23,078

Merger,restructuring andother 6 553,762 3,492 553,762non-operatingexpenses

Total non-interest 68,872 624,275 147,026 695,600expense

Total non-interestexpense excludingmerger, 68,866 70,513 143,534 141,838restructuring andother

Income/(loss) fromcontinuingoperations before $ 28,532 $ (559,175) $ 45,164 $ (573,243)incometaxes

Income tax expense 6,896 (16,130) 10,497 (18,126)/(benefit)

Net income/(loss)from continuing $ 21,636 $ (543,045) $ 34,667 $ (555,117)operations

(Loss) fromdiscontinued $ - $ (8,635) $ - $ (19,264)operations beforeincome taxes

Income tax - (2,299) - (5,130)(benefit)

Net (loss) fromdiscontinued $ - $ (6,336) $ - $ (14,134)operations

Net income/(loss) $ 21,636 $ (549,381) $ 34,667 $ (569,251)

Preferred stock - 130 - 255dividend

Income/(loss)available to $ 21,636 $ (549,511) $ 34,667 $ (569,506)commonshareholders

Basic earnings/(loss) per commonshare:

Continuing $ 0.43 $ (10.80) $ 0.69 $ (11.05)Operations

Discontinued - (0.13) - (0.28)Operations

Total $ 0.43 $ (10.93) $ 0.69 $ (11.33)

Diluted earnings/(loss) per commonshare:

Continuing $ 0.43 $ (10.80) $ 0.69 $ (11.05)Operations

Discontinued - (0.13) - (0.28)Operations

Total $ 0.43 $ (10.93) $ 0.69 $ (11.33)

Weighted averagesharesoutstanding:

Basic 50,321 50,246 50,327 50,228

Diluted 50,608 50,246 50,588 50,228



BERKSHIRE HILLS BANCORP, INC.

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

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

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

Interest 103,688 97,768 92,131 88,153 85,364income

Interest 26,098 20,713 16,422 13,060 9,971expense

Net interestincome fromcontinuing 77,590 77,055 75,709 75,093 75,393operations, notFTE

Non-interestincome fromcontinuingoperations

Deposit related 5,373 7,062 7,523 7,126 7,508fees

Loan fees and 5,717 4,988 4,833 10,246 7,431revenue

Insurancecommissions and 2,767 2,660 2,319 3,130 2,292fees

Wealth management 2,057 2,299 2,359 2,772 2,519fees

Mortgage banking 1,644 2,044 543 802 534originations

Other (999) 1,927 2,105 2,148 2,211

Total non-interestincome excluding 16,559 20,980 19,682 26,224 22,495(losses)/gains

Securities(losses)/gains, 822 (1,017) 2,405 (31) (484)net

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

Total non-interest 17,381 19,963 23,327 26,193 22,011income

Total net revenuefrom continuing 94,971 97,018 99,036 101,286 97,404operations

Total net revenuefrom continuingoperations 94,149 98,035 95,391 101,317 97,888excluding (losses)/gains

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

Compensation and 39,403 34,809 36,719 38,735 36,970benefits

Occupancy and 10,195 11,084 10,948 11,024 10,599equipment

Technology and 7,755 8,540 7,988 8,593 8,214communications

Professional 2,565 2,567 4,055 6,614 3,701services

Other expenses 10,595 10,527 11,563 9,702 9,382

Merger,restructuring andother 553,762 5,316 523 3,486 6non-operatingexpenses

Total non-interest 624,275 72,843 71,796 78,154 68,872expense

Total non-interestexpense excludingmerger, 70,513 67,527 71,273 74,668 68,866restructuring andother

Income/(loss) fromcontinuing $ (559,175) $ 22,975 $ 17,240 $ 16,632 $ 28,532operations beforeincome taxes

Income tax expense (16,130) (68) (1,659) 3,601 6,896/(benefit)

Net income/(loss)from continuing $ (543,045) $ 23,043 $ 18,899 $ 13,031 $ 21,636operations

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

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

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

Net income/(loss) $ (549,381) $ 21,225 $ 15,009 $ 13,031 $ 21,636

Preferred stock 130 58 - - -dividend

Income/(loss)available to $ (549,511) $ 21,167 $ 15,009 $ 13,031 $ 21,636commonshareholders

Diluted earnings/(loss) per commonshare:

Continuing $ (10.80) $ 0.46 $ 0.38 $ 0.26 $ 0.43Operations

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

Total $ (10.93) $ 0.42 $ 0.30 $ 0.26 $ 0.43

Weighted averagesharesoutstanding:

Basic 50,246 50,329 50,308 50,330 50,321

Diluted 50,246 50,329 50,355 50,565 50,608

BERKSHIRE HILLS BANCORP, INC.

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS - UNAUDITED - (F-6)

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

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

Assets

Commercial real 4,005 3.78 % 3,986 3.52 % 3,843 3.34 % 3,630 3.27 % 3,625 3.46 %estate

Commercial and 2,153 4.02 2,192 3.88 2,056 4.05 1,865 4.62 1,605 4.74industrial loans

Residential 2,453 3.78 2,224 3.78 1,971 3.78 1,740 3.71 1,604 3.79mortgages

Consumer loans 865 3.72 801 3.59 726 3.41 634 3.79 582 3.80

Total loans (1) 9,476 3.83 9,203 3.68 8,596 3.62 7,869 3.73 7,416 3.84

Securities (2) 1,793 3.07 1,874 2.78 1,968 2.69 2,195 2.36 2,259 2.17

Short-terminvestments and 697 0.50 766 0.21 977 0.14 1,351 0.13 1,750 0.10loans held for sale

Mid-Atlantic region - - - - 101 4.27 295 4.09 269 3.96loans held for sale

Total earning assets 11,966 3.50 11,843 3.31 11,642 3.17 11,710 3.07 11,694 2.96(3)

Goodwill and other 591 41 40 34 33intangible assets

Other assets 752 760 752 724 690

Assets fromdiscontinued 110 16 12 - -operations

Total assets 13,419 12,660 12,446 12,468 12,417

Liabilities andshareholders' equity

NOW and other 1,184 0.30 % 1,244 0.24 % 1,279 0.17 % 1,325 0.15 % 1,389 0.07 %

Money market 2,672 0.58 2,674 0.38 2,756 0.32 2,802 0.27 2,751 0.18

Savings 901 0.10 940 0.10 967 0.08 1,003 0.08 1,054 0.05

Time 3,399 1.84 3,056 1.63 2,629 1.35 2,266 1.12 2,013 0.94

Totalinterest-bearing 8,156 1.01 7,914 0.81 7,631 0.62 7,396 0.48 7,207 0.35deposits

Borrowings 942 2.38 777 2.36 658 2.50 500 2.78 381 3.12

Mid-Atlantic regioninterest-bearing - - - - 180 0.80 518 0.60 517 0.51deposits

Totalinterest-bearing 9,098 1.16 8,691 0.95 8,469 0.77 8,414 0.63 8,105 0.49liabilities

Non-interest-bearing 2,343 2,559 2,542 2,537 2,787demand deposits

Other liabilities 274 254 279 358 351(4)

Liabilities fromdiscontinued 29 23 6 - -operations

Total liabilities 11,744 11,527 11,296 11,309 11,243

Preferred 20 20 7 - -shareholders' equity

Common shareholders' 1,655 1,113 1,143 1,159 1,174equity

Total shareholders' 1,675 1,133 1,150 1,159 1,174equity

Total liabilitiesand shareholders' 13,419 12,660 12,446 12,468 12,417equity

Net interest spread 2.34 % 2.36 % 2.40 % 2.44 % 2.47 %

Net interest margin, 2.62 2.61 2.61 2.62 2.62FTE (5)

Cost of funds 0.92 0.73 0.60 0.48 0.36

Cost of deposits 0.79 0.61 0.47 0.36 0.25

Supplementary data

Net Interest Income, 78 77 76 75 75not FTE

Fully taxableequivalent income 2 2 1 1 2adjustment

Net Interest Income, 79 79 77 77 77FTE

Average PPP loans 461 707 685 546 321

Average loans 9,015 8,496 7,911 7,323 7,095excluding PPP loans

Total PPP loans, end 706 708 633 444 173of period

Total loansexcluding PPP loans, 8,664 8,274 7,448 7,215 7,059end of period

PPP interest income 3 4 6 7 5

Total averagenon-maturity 7,100 7,417 7,544 7,666 7,981deposits

Total average 10,500 10,473 10,173 9,932 9,994deposits

Purchased loan 2 3 2 1 2accretion

Total average 1,085 1,091 1,110 1,125 1,141tangible equity (6)

(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 ofJune 30, 2021 and December 31, 2020, the Mid-Atlantic region averagenon-interest bearing deposits were $125 million and $37 million, respectively.

(5) The effect of PPP loans on the quarterly net interest margin is shownsequentially as follows beginning with the earliest quarter and ending with themost recent quarter: 0.00%, (0.01%), 0.05%, 0.11%, 0.11%.

This calculation excludes gross interest income on PPP loans and average PPPloan balances.

(6) See page F-9 for details on the calculation of total average tangibleequity.

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - UNAUDITED - (F-7)

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

(in thousands) 2020 2020 2020 2021 2021

NON-PERFORMING ASSETS

Non-accruing loans:

Commercial real estate $ 12,486 $ 14,777 $ 35,581 $ 28,325 $ 22,799

Commercial and industrial loans 15,045 15,035 12,921 9,371 9,427

Residential mortgages 9,840 7,928 8,347 10,674 9,238

Consumer loans 7,513 9,650 8,099 7,447 6,141

Total non-accruing loans 44,884 47,390 64,948 55,817 47,605

Other real estate owned 517 401 149 149 85

Repossessed assets 1,581 1,646 1,932 1,701 1,666

Total non-performing assets $ 46,982 $ 49,437 $ 67,029 $ 57,667 $ 49,356

Total non-accruing loans/total loans 0.48% 0.53% 0.80% 0.73% 0.66%

Total non-accruing loans/total loans excluding PPP loans 0.52% 0.57% 0.87% 0.77% 0.67%

Total non-performing assets/total assets 0.36% 0.39% 0.52% 0.45% 0.40%

PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

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

Charged-off loans (7,274) (7,776) (18,314) (11,460) (7,248)

Recoveries on charged-off loans 3,259 1,580 1,209 1,465 2,492

Net loans charged-off (4,015) (6,196) (17,105) (9,995) (4,756)

Provision for loan credit losses 29,899 1,216 9,993 6,493 -

Balance at end of period $ 139,394 $ 134,414 $ 127,302 $ 123,800 $ 119,044

Allowance for credit losses/total loans 1.49% 1.50% 1.58% 1.62% 1.65%

Allowance for credit losses/total loans excluding PPP loans 1.61% 1.62% 1.71% 1.72% 1.69%

Allowance for credit losses/non-accruing loans 311% 284% 196% 222% 250%

NET LOAN CHARGE-OFFS

Commercial real estate $ (1,679) $ (635) $ (11,862) $ (6,959) $ (2,325)

Commercial and industrial loans (1,059) (5,551) (5,089) (2,662) (2,331)

Residential mortgages (966) 517 250 80 176

Home equity (10) (57) 141 (42) (136)

Auto and other consumer (301) (470) (545) (412) (140)

Total, net $ (4,015) $ (6,196) $ (17,105) $ (9,995) $ (4,756)

Net charge-offs (QTD annualized)/average loans 0.17% 0.27% 0.80% 0.51% 0.26%

Net charge-offs (YTD annualized)/average loans 0.31% 0.29% 0.41% 0.51% 0.39%



BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - UNAUDITED (F-8)

June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021 June 30, 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 $ 35,128 0.37% $ 27,626 0.31% $ 16,310 0.20% $ 28,565 0.37% $ 15,483 0.22%delinquent

90+ Days delinquent 13,056 0.14% 12,876 0.14% 11,450 0.14% 6,124 0.08% 3,129 0.04%and still accruing

Total accruing 48,184 0.51% 40,502 0.45% 27,760 0.34% 34,689 0.45% 18,612 0.26%delinquent loans

Non-accruing loans 44,884 0.48% 47,390 0.53% 64,948 0.80% 55,817 0.73% 47,605 0.66%

Total delinquent and $ 93,068 0.99% $ 87,892 0.98% $ 92,708 1.14% $ 90,506 1.18% $ 66,217 0.92%non-accruing loans



BERKSHIRE HILLS BANCORP, INC.

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

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

(in thousands) 2020 2020 2020 2021 2021

Total revenue from continuing operations (A) $ 94,971 $ 97,018 $ 99,036 $ 101,286 $ 97,404

Adj: Net securities losses/(gains) (1) (822) 1,017 (2,405) 31 484

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

Total adjusted revenue (2) (B) $ 94,149 $ 98,035 $ 95,391 $ 101,317 $ 97,888

Total non-interest expense from continuing operations (C) $ 624,275 $ 72,843 $ 71,796 $ 78,154 $ 68,872

Less: Merger, restructuring and other expense - (5,316) (523) (3,486) (6)

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

Adjusted non-interest expense (2) (D) $ 70,513 $ 67,527 $ 71,273 $ 74,668 $ 68,866

Pre-tax, pre-provision net revenue (PPNR) from continuing operations (A-C) $ (529,304) $ 24,175 $ 27,240 $ 23,132 $ 28,532

Adjusted pre-tax, pre-provision net revenue (PPNR) (2) (B-D) 23,636 30,508 24,118 26,649 29,022

Net income/(loss) $ (549,381) $ 21,225 $ 15,009 $ 13,031 $ 21,636

Adj: Net securities losses/(gains) (1) (822) 1,017 (2,405) 31 484

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 6

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

Adj: Income taxes benefit/(expense) (18,658) (3,611) (2,939) (533) (22)

Total adjusted income/(loss) (2) (E) $ (6,464) $ 26,424 $ 14,062 $ 16,015 $ 22,104

(in millions, except per share data)

Total average assets (F) $ 13,419 $ 12,660 $ 12,446 $ 12,468 $ 12,417

Total average shareholders' equity (G) 1,675 1,133 1,150 1,159 1,174

Total average tangible shareholders' equity (2)(3) (H) 1,085 1,091 1,110 1,125 1,141

Total average tangible common shareholders' equity (2)(3) (I) 1,064 1,071 1,103 1,125 1,141

Total tangible shareholders' equity, period-end (2)(3) (J) 1,122 1,138 1,153 1,142 1,143

Total tangible common shareholders' equity, period-end (2)(3) (K) 1,101 1,118 1,153 1,142 1,143

Total tangible assets, period-end (2)(3) (L) 13,021 12,574 12,803 12,724 12,241

Total common shares outstanding, period-end (thousands) (M) 50,192 50,306 50,833 50,988 50,453

Average diluted shares outstanding (thousands) (N) 50,246 50,329 50,355 50,565 50,608

GAAP earnings/(loss) per common share, diluted(2) $ (10.93) $ 0.42 $ 0.30 $ 0.26 $ 0.43

Adjusted earnings/(loss) per common share, diluted (2) (E/N) (0.13) 0.53 0.28 0.32 0.44

Tangible book value per common share, period-end (2) (K/M) 21.94 22.22 22.68 22.39 22.66

Total tangible shareholders' equity/total tangible assets (2) (J/L) 8.61 9.05 9.01 8.98 9.34

Performance ratios (4)

GAAP return on equity (131.17) % 7.50 % 5.22 % 4.50 % 7.37 %

Adjusted return on equity (2) (E/G) (1.54) 9.33 4.89 5.53 7.53

Return on tangible common equity (2)(5) (206.08) 8.32 5.85 4.98 7.92

Adjusted return on tangible common equity (2)(5) (E+Q)/(I) (2.05) 10.27 5.50 6.04 8.08

GAAP return on assets (16.38) 0.67 0.48 0.42 0.70

Adjusted return on assets(2) (0.19) 0.84 0.45 0.51 0.71

PPNR from continuing operations/assets (2) (15.78) 0.76 0.88 0.74 0.92

Adjusted PPNR/assets (2) 0.71 0.97 0.78 0.85 0.93

Efficiency ratio (2)(6) (D-Q)/ 71.01 65.39 71.03 71.32 67.82 (B+O+R)

Net interest margin, FTE 2.62 2.61 2.61 2.62 2.62

Supplementary data (in thousands)

Tax benefit on tax-credit investments (7) (O) $ 1,379 $ 1,377 $ 1,334 $ 41 $ 79

Non-interest income charge on tax-credit investments (8) (P) (1,097) (1,090) (971) (33) (175)

Net income on tax-credit investments (O+P) 282 287 363 9 (96)

Intangible amortization (Q) $ 1,558 $ 1,530 $ 1,513 $ 1,319 $ 1,297

Fully taxable equivalent income adjustment (R) 1,580 1,512 1,485 1,494 1,660

(1) Net securities losses/(gains) 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 taxcredit benefit of tax shelter investments. The Company uses this non-GAAPmeasure 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 inhistoric 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.



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,

(in thousands) 2020 2021

Total revenue from continuing operations (A) $ 187,035 $ 198,690

Adj: Net securities losses (1) 8,908 515

Total adjusted revenue (2) (B) $ 195,943 $ 199,205

Total non-interest expense from continuing operations (C) $ 695,600 $ 147,026

Less: Merger, restructuring and other expense - (3,492)

Less: Goodwill impairment (553,762) -

Adjusted non-interest expense (2) (D) $ 141,838 $ 143,534

Pre-tax, pre-provision net revenue (PPNR) from continuing operations (A-C) $ (508,565) $ 51,664

Adjusted pre-tax, pre-provision net revenue (PPNR) (2) (B-D) 54,105 55,671

Net income/(loss) $ (569,251) $ 34,667

Adj: Net securities losses (1) 8,908 515

Adj: Goodwill impairment 553,762 -

Adj: Restructuring expense and other expense - 3,492

Adj: Loss from discontinued operations before income taxes 19,264 -

Adj: Income taxes benefit/(expense) (22,792) (555)

Total adjusted income/(loss) (2) (E) $ (10,109) $ 38,119

(in millions, except per share data)

Total average assets (F) $ 13,173 $ 12,442

Total average shareholders' equity (G) 1,705 1,166

Total average tangible shareholders' equity (2)(3) (H) 1,110 1,133

Total average tangible common shareholders' equity (2)(3) (I) 1,090 1,133

Total tangible shareholders' equity, period-end (2)(3) (J) 1,122 1,143

Total tangible common shareholders' equity, period-end (2)(3) (K) 1,101 1,143

Total tangible assets, period-end (2)(3) (L) 13,021 12,241

Total common shares outstanding, period-end (thousands) (M) 50,192 50,453

Average diluted shares outstanding (thousands) (N) 50,228 50,588

GAAP earnings/(loss) per common share, diluted(2) $ (11.33) $ 0.69

Adjusted earnings/(loss) per common share, diluted (2) (E/N) (0.20) 0.75

Tangible book value per common share, period-end (2) (K/M) 21.94 22.66

Total tangible shareholders' equity/total tangible assets (2) (J/L) 8.61 9.34

Performance ratios (4)

GAAP return on equity (66.79) % 5.95 %

Adjusted return on equity (2) (E/G) (1.19) 6.54

Return on tangible common equity (2)(5) (104.08) 6.46

Adjusted return on tangible common equity (2)(5) (E+Q)/ (1.48) 7.07 (I)

GAAP return on assets (8.67) 0.56

Adjusted return on assets(2) (0.15) 0.61

PPNR from continuing operations/assets (2) (7.72) 0.83

Adjusted PPNR/assets (2) 0.82 0.89

Efficiency ratio (2)(6) (D-Q)/ 68.89 69.60 (B+O+R)

Net interest margin, FTE 2.82 2.62

Supplementary data (in thousands)

Tax benefit on tax-credit investments (7) (O) $ 1,987 $ 120

Non-interest income charge on tax-credit investments (8) (P) (1,583) (208)

Net income on tax-credit investments (O+P) 404 (88)

Intangible amortization (Q) $ 3,138 $ 2,616

Fully taxable equivalent income adjustment (R) 3,404 3,154

(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 taxcredit benefit of tax shelter investments. The Company uses this non-GAAPmeasure 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 inhistoric 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.