Equibles

10-Q

Beacon Financial Corp (BBT)

10-Q 2025-05-12 For: 2025-03-31
View Original
Added on April 07, 2026

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

Commission File Number: 001-15781

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BERKSHIRE HILLS BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware 04-3510455
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
60 State Street Boston Massachusetts 02109
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (800) 773-5601, ext. 133773

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share BHLB The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý   No o

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    ý    Accelerated filer        o

Non-accelerated filer    o     Smaller reporting company    ☐

Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐  No ☒

As of May 7, 2025, the Registrant had 46,311,960 shares of common stock, $0.01 par value per share, outstanding.

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BERKSHIRE HILLS BANCORP, INC.

FORM 10-Q

INDEX

Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 4
Consolidated Statements of Income for the Three Months Ended March 31, 2025 and 2024 5
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024 6
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2025 and 2024 7
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 8
Notes to Consolidated Financial Statements (Unaudited)
Note 1 Basis of Presentation 10
Note2 Trading Securities 11
Note3 Securities Available for Sale, Held to Maturity, and Equity Securities 12
Note4 Loans and Allowance for Credit Losses 17
Note5 Deposits 31
Note6 Borrowed Funds 31
Note7 Derivative Financial Instruments and Hedging Activities 33
Note8 Leases 41
Note9 Capital Ratios and Shareholders' Equity 43
Note 10 Earnings per Share 47
Note 11 Stock-Based Compensation Plans 48
Note 12 Fair Value Measurements 49
Note 13 Net Interest Income after Provision/(Benefit) for Credit Losses 58
Note 14 Tax Equity Investments 59
Note 15 Pending Merger 60
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61
Selected Financial Data 61
Average Balances and Average Yields/Rates 63
Non-GAAP Financial Measures 64
Item 3. Quantitative and Qualitative Disclosures about Market Risk 72
Item 4. Controls and Procedures 74 PART II. OTHER INFORMATION
--- --- ---
Item 1. Legal Proceedings 75
Item 1A. Risk Factors 77
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 78
Item 3. Defaults Upon Senior Securities 78
Item 4. Mine Safety Disclosures 78
Item 5. Other Information 78
Item 6. Exhibits 79
Signatures 80

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PART I

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

March 31,<br>2025 December 31,<br>2024
(In thousands, except share data)
Assets
Cash and due from banks $ 121,137 $ 182,776
Short-term investments 705,199 945,633
Total cash and cash equivalents 826,336 1,128,409
Trading securities, at fair value 5,010 5,258
Equity securities, at fair value 647 655
Securities available for sale, at fair value 669,182 655,723
Securities held to maturity (fair values of $422,151 and $433,382) 494,242 507,658
Federal Home Loan Bank stock 29,688 19,565
Total securities 1,198,769 1,188,859
Less: Allowance for credit losses on securities held to maturity (63) (64)
Net securities 1,198,706 1,188,795
Loans held for sale 1,322 3,076
Total loans 9,428,885 9,384,994
Less: Allowance for credit losses on loans (116,678) (114,700)
Net loans 9,312,207 9,270,294
Premises and equipment, net 57,680 56,609
Intangible assets 13,936 15,064
Cash surrender value of bank-owned life insurance policies 247,328 245,789
Other assets 348,754 358,442
Assets held for sale 6,930 6,930
Total assets $ 12,013,199 $ 12,273,408
Liabilities
Demand deposits $ 2,295,040 $ 2,324,879
NOW and other deposits 789,418 841,406
Money market deposits 3,197,331 3,610,521
Savings deposits 1,065,530 1,021,716
Time deposits 2,532,558 2,576,682
Total deposits 9,879,877 10,375,204
Short-term debt 400,000 103,500
Long-term Federal Home Loan Bank advances 162,921 212,982
Subordinated borrowings 121,674 121,612
Total borrowings 684,595 438,094
Other liabilities 251,967 292,686
Total liabilities $ 10,816,439 $ 11,105,984
(continued)
March 31,<br>2025 December 31,<br>2024
Shareholders’ equity
Common stock ($0.01 par value; 100,000,000 shares authorized and 51,903,190 shares issued and 46,376,672 shares outstanding in 2025; 51,903,190 shares issued and 46,424,016 shares outstanding in 2024) 562 562
Additional paid-in capital - common stock 1,430,561 1,430,532
Unearned compensation (8,123) (10,106)
Retained earnings/(deficit) 14,276 (3,080)
Accumulated other comprehensive (loss) (95,019) (106,343)
Treasury stock, at cost (5,526,518 shares in 2025 and 5,479,174 shares in 2024) (145,497) (144,141)
Total shareholders’ equity 1,196,760 1,167,424
Total liabilities and shareholders’ equity $ 12,013,199 $ 12,273,408

The accompanying notes are an integral part of these consolidated financial statements.

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BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended<br>March 31,
(In thousands, except per share data) 2025 2024
Interest and dividend income
Loans $ 135,163 $ 136,560
Securities and other 13,167 15,446
Total interest and dividend income 148,330 152,006
Interest expense
Deposits 52,888 56,862
Borrowings and subordinated notes 5,671 7,004
Total interest expense 58,559 63,866
Net interest income 89,771 88,140
Non-interest income
Deposit related fees 7,949 8,305
Loan related fees 3,787 2,663
Gain on SBA loan sales 3,276 1,699
Wealth management fees 2,955 2,884
Total fee income 17,967 15,551
Other, net 2,757 1,874
Fair value adjustments on securities (52) (115)
(Loss) on sale of AFS securities, net — (49,909)
Total non-interest income 20,672 (32,599)
Total net revenue 110,443 55,541
Provision expense for credit losses 5,500 6,000
Non-interest expense
Compensation and benefits 40,635 40,735
Occupancy and equipment 7,666 8,698
Technology 10,065 9,904
Professional services 1,714 2,676
Regulatory expenses 1,627 1,845
Amortization of intangible assets 1,128 1,205
Marketing 1,267 1,116
Merger, restructuring and other non-operating expenses 2,454 3,617
Other 3,810 6,224
Total non-interest expense 70,366 76,020
Income/(loss) before income taxes $ 34,577 $ (26,479)
Income tax expense/(benefit) 8,858 (6,291)
Net income/(loss) $ 25,719 $ (20,188)
Basic earnings/(loss) per common share $ 0.56 $ (0.47)
Diluted earnings/(loss) per common share $ 0.56 $ (0.47)
Weighted average shares outstanding:
Basic 45,684 42,777
Diluted 46,061 43,028

The accompanying notes are an integral part of these consolidated financial statements.

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BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended<br>March 31,
(In thousands) 2025 2024
Net income $ 25,719 $ (20,188)
Other comprehensive income/(loss), before tax:
Changes in unrealized gain on securities available-for-sale 13,959 44,287
Changes in unrealized gain/(loss) on cash flow hedges 1,463 (5,524)
Income taxes related to other comprehensive income/(loss):
Changes in unrealized gain on securities available-for-sale (3,694) (11,664)
Changes in unrealized gain/(loss) on cash flow hedges (404) 1,502
Total other comprehensive income 11,324 28,601
Total comprehensive income $ 37,043 $ 8,413

The accompanying notes are an integral part of these consolidated financial statements.

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BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Additional<br>paid-in capital Unearned compensation Retained earnings (deficit) Accumulated<br>other<br>comprehensive (loss) Treasury stock
(In thousands, except per share data) Shares Amount Total
Balance at December 31, 2023 43,501 $ 528 $ 1,423,273 $ (10,109) $ (33,136) $ (143,016) $ (225,319) $ 1,012,221
Comprehensive income:
Net (loss) — — — — (20,188) — — (20,188)
Other comprehensive income — — — — — 28,601 — 28,601
Total comprehensive income — — — — (20,188) 28,601 — 8,413
Cash dividends declared on common shares (0.18 per share) — — — — (7,823) — — (7,823)
Treasury shares repurchased (182) — — — — — (4,045) (4,045)
Forfeited shares (49) — (195) 1,309 — — (1,114) —
Exercise of stock options — — — — — — — —
Restricted stock grants 186 — (369) (4,598) — — 4,967 —
Stock-based compensation — — — 2,101 — — — 2,101
Other, net (41) — — — — — (944) (944)
Balance at March 31, 2024 43,415 $ 528 $ 1,422,709 $ (11,297) $ (61,147) $ (114,415) $ (226,455) $ 1,009,923
Balance at December 31, 2024 46,424 $ 562 $ 1,430,532 $ (10,106) $ (3,080) $ (106,343) $ (144,141) $ 1,167,424
Comprehensive income:
Net income — — — — 25,719 — — 25,719
Other comprehensive income — — — — — 11,324 — 11,324
Total comprehensive income — — — — 25,719 11,324 — 37,043
Cash dividends declared on common shares 0.18 per share) — — — — (8,363) — — (8,363)
Treasury shares repurchased — — — — — — — —
Forfeited shares (26) — 30 699 — — (729) —
Exercise of stock options — — — — — — — —
Restricted stock grants 1 — (1) (5) — — 6 —
Stock-based compensation — — — 1,289 — — — 1,289
Other, net (22) — — — — — (633) (633)
Balance at March 31, 2025 46,377 $ 562 $ 1,430,561 $ (8,123) $ 14,276 $ (95,019) $ (145,497) $ 1,196,760

All values are in US Dollars.

The accompanying notes are an integral part of these consolidated financial statements.

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BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended<br>March 31,
(In thousands) 2025 2024
Cash flows from operating activities:
Net income/(loss) $ 25,719 $ (20,188)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Provision expense for credit losses 5,500 6,000
Net amortization of securities 161 568
Change in unamortized net loan origination costs and premiums (626) 799
Premises and equipment depreciation and amortization expense 1,499 1,939
Stock-based compensation expense 1,289 2,101
Accretion of purchase accounting entries, net (414) (221)
Amortization of other intangibles 1,128 1,205
Income from cash surrender value of bank-owned life insurance policies (1,539) (1,468)
(Gain) on SBA loan sales (3,276) (1,699)
Fair value adjustments on securities 52 115
Loss on sale of AFS securities, net — 49,909
Net change in loans held-for-sale 1,514 (4,108)
Amortization of interest in tax-advantaged projects (623) 134
Net change in other (7,125) (28,225)
Net cash provided by operating activities 23,259 6,861
Cash flows from investing activities:
Net decrease in trading security 235 222
Purchases of securities available for sale (21,151) (7,798)
Proceeds from sales of securities available for sale — 361,871
Proceeds from maturities, calls, and prepayments of securities available for sale 21,565 36,344
Proceeds from maturities, calls, and prepayments of securities held to maturity 13,405 11,415
Net change in loans (47,858) (107,435)
Purchase of Federal Home Loan Bank stock (68,542) (22,610)
Proceeds from redemption of Federal Home Loan Bank stock 58,419 24,777
Net investment in limited partnership tax credits (4,834) (4,675)
Purchase of premises and equipment, net (3,379) (235)
Proceeds from sales of seasoned consumer loan portfolio 5,001 —
Net cash (used)/provided by investing activities (47,139) 291,876

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)

Three Months Ended<br>March 31,
(In thousands) 2025 2024
(continued)
Cash flows from financing activities:
Net (decrease) in deposits (495,327) (265,882)
Proceeds from Federal Home Loan Bank advances and other borrowings 500,000 202,000
Repayments of Federal Home Loan Bank advances and other borrowings (253,561) (250,055)
Purchase of treasury stock — (4,045)
Common stock cash dividends paid (8,363) —
Settlement of derivative contracts with financial institution counterparties (20,941) 9,696
Net cash (used) by financing activities (278,192) (308,286)
Net change in cash and cash equivalents (302,072) (9,549)
Cash and cash equivalents at beginning of period 1,128,409 1,203,244
Cash and cash equivalents at end of period $ 826,337 $ 1,193,695
Supplemental cash flow information:
Interest paid on deposits $ 53,160 $ 57,719
Interest paid on borrowed funds 5,566 7,241
Income taxes paid, net 779 995
Other non-cash changes:
Other net comprehensive income $ 11,324 $ 28,601
Dividends declared not yet paid — 7,823
Reclassification of New York branch loans from portfolio loans to assets held-for-sale, net — 58,455
Reclassification of New York branch assets to assets held-for-sale — 13,936
Reclassification of New York branch deposits to liabilities held-for-sale, net — 484,530
Reclassification of New York branch liabilities to liabilities held-for-sale — 12,929
Reclassification of held-for-sale loans to held-for-investment, net 240 —

The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.           BASIS OF PRESENTATION

The Consolidated Financial Statements (the “financial statements”) of Berkshire Hills Bancorp, Inc. and its subsidiaries (the “Company” or “Berkshire”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company is a Delaware corporation, headquartered in Boston, Massachusetts, and the holding company for Berkshire Bank (the “Bank”), a Massachusetts-chartered trust company headquartered in Pittsfield, Massachusetts. These financial statements include the accounts of the Company, its wholly-owned subsidiaries and the Bank’s consolidated subsidiaries. In consolidation, all significant intercompany accounts and transactions are eliminated. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly-owned and majority-owned subsidiaries are consolidated unless GAAP requires otherwise.

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date these financial statements were issued.

These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and disclosures Berkshire Hills Bancorp, Inc. previously filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In management’s opinion, all adjustments necessary for a fair statement are reflected in the interim periods.

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements. Actual results could differ from those estimates.

Operating Segments

The Company's reportable segment is determined by the Chief Executive Officer, who is designated the chief operating decision maker ("CODM"), based upon information provided about the Company's products and services offered, primarily banking operations. Consolidated net income of the company is the primary performance metric utilized by the CODM. The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The CODM will evaluate the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Company's segment and in the determination of allocating resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. Loans, investments, and deposits provide the revenues in the banking operation. Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation. No other expenses meet the threshold of significant. While the Company has assigned certain management responsibilities by business lines, the Company’s CODM monitors and evaluates financial performance on a Company-wide basis. The majority of the Company’s revenue is from the business of banking. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable operating segment. All operations are domestic.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Future Application of Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU requires disclosure in the rate reconciliation table of additional categories of information and more details about the reconciling items in some categories if items meet a quantitative threshold. The ASU also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is still evaluating; however, the adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." The ASU requires additional interim and annual disclosures that further disaggregate certain expense captions into specified categories in a separate note to the financial statements, as well as certain qualitative information describing amounts not separately disaggregated. The ASU is effective in the annual period beginning on January 1, 2027 and interim periods beginning on January 1, 2028 and can be applied on either a prospective or retrospective basis, with early adoption permitted. The Company is evaluating the impact to the Company’s disclosures.

NOTE 2.           TRADING SECURITIES

The Company holds a tax-advantaged economic development bond accounted for at fair value. The security had an amortized cost of $5.1 million and $5.3 million, and a fair value of $5.0 million and $5.3 million, at March 31, 2025 and December 31, 2024, respectively. As discussed further in Note 7 - Derivative Financial Instruments and Hedging Activities, the Company entered into a swap contract to swap-out the fixed rate of the security in exchange for a variable rate. The Company does not purchase securities with the intent of selling them in the near term, and there were no other securities in the trading portfolio at March 31, 2025 or December 31, 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND

EQUITY SECURITIES

The following is a summary of securities available for sale, held to maturity, and equity securities:

(In thousands) Amortized  Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Fair Value Allowance
March 31, 2025
Securities available for sale
U.S. Treasuries $ 7,902 $ — $ (1) $ 7,901
Municipal bonds and obligations 63,631 8 (3,622) 60,017 —
Agency collateralized mortgage obligations 330,167 432 (59,073) 271,526 —
Agency mortgage-backed securities 272,245 6 (46,396) 225,855 —
Agency commercial mortgage-backed securities 84,722 — (17,510) 67,212 —
Corporate bonds 38,684 27 (2,040) 36,671 —
Total securities available for sale 797,351 473 (128,642) 669,182 —
Securities held to maturity
Municipal bonds and obligations 234,188 66 (25,342) 208,912 44
Agency collateralized mortgage obligations 99,207 — (16,158) 83,049 —
Agency mortgage-backed securities 42,703 — (7,485) 35,218 —
Agency commercial mortgage-backed securities 116,824 — (23,133) 93,691 —
Tax advantaged economic development bonds 1,043 — (39) 1,004 19
Other bonds and obligations 277 — — 277 —
Total securities held to maturity 494,242 66 (72,157) 422,151 63
Equity securities 647 75 (75) 647 —
Total $ 1,292,240 $ 614 $ (200,874) $ 1,091,980 $ 63 (In thousands) Amortized  Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Fair Value Allowance
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2024
Securities available for sale
U.S. Treasuries $ 6,986 $ 3 $ — $ 6,989 $ —
Municipal bonds and obligations 63,952 10 (3,098) 60,864 —
Agency collateralized mortgage obligations 328,569 146 (64,153) 264,562 —
Agency mortgage-backed securities 273,969 4 (53,733) 220,240 —
Agency commercial mortgage-backed securities 85,686 — (18,975) 66,711 —
Corporate bonds 38,689 30 (2,362) 36,357 —
Total securities available for sale 797,851 193 (142,321) 655,723 —
Securities held to maturity
Municipal bonds and obligations 235,883 129 (22,619) 213,393 44
Agency collateralized mortgage obligations 101,163 — (17,884) 83,279 —
Agency mortgage-backed securities 43,644 — (8,707) 34,937 —
Agency commercial mortgage-backed securities 125,547 — (25,153) 100,394 —
Tax advantaged economic development bonds 1,144 — (42) 1,102 20
Other bonds and obligations 277 — — 277 —
Total securities held to maturity 507,658 129 (74,405) 433,382 64
Equity securities 655 67 (67) 655 —
Total $ 1,306,164 $ 389 $ (216,793) $ 1,089,760 $ 64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the activity in the allowance for credit losses for debt securities held to maturity by security type for the three months ended March 31, 2025 and 2024:

(In thousands) Municipal bonds and obligations Tax advantaged economic development bonds Total
Balance at December 31, 2024 $ 44 $ 20 $ 64
Provision (benefit) for credit losses — (1) (1)
Balance at March 31, 2025 $ 44 $ 19 $ 63 (In thousands) Municipal bonds and obligations Tax advantaged economic development bonds Total
--- --- --- --- --- --- ---
Balance at December 31, 2023 $ 48 $ 20 $ 68
Provision (benefit) for credit losses (7) — (7)
Balance at March 31, 2024 $ 41 $ 20 $ 61

Credit Quality Information

The Company monitors the credit quality of held to maturity securities through credit ratings from various rating agencies. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions. Investment grade securities are rated BBB-/Baa3 or higher and generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade are considered to have distinctively higher credit risk than investment grade securities. For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying municipality, agency, or organization.

As of March 31, 2025, none of the Company's investment securities were delinquent or in non-accrual status.

The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities segregated by contractual maturity at March 31, 2025 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

Available for sale Held to maturity
Amortized Fair Amortized Fair
(In thousands) Cost Value Cost Value
Within 1 year $ 8,561 $ 8,558 $ 597 $ 594
Over 1 year to 5 years 21,331 21,144 2,628 2,588
Over 5 years to 10 years 49,946 47,298 64,432 62,450
Over 10 years 30,379 27,589 167,851 144,561
Total bonds and obligations 110,217 104,589 235,508 210,193
Mortgage-backed securities 687,134 564,593 258,734 211,958
Total $ 797,351 $ 669,182 $ 494,242 $ 422,151

During the three months ended March 31, 2025, purchases of AFS securities totaled $21.2 million. During the three months ended March 31, 2025, there were no sales of AFS securities. During the three months ended March 31, 2024, purchases of AFS securities totaled $7.8 million. During the three months ended March 31, 2024, proceeds from sales of AFS securities totaled $361.9 million. During the three months ended March 31, 2025, there were no gross gains or losses. During the three months ended March 31, 2024, gross gains totaled $5.1 million and gross losses totaled $54.9 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Securities available for sale and held to maturity with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

Less Than Twelve Months Over Twelve Months Total
Gross Gross Gross
Unrealized Fair Unrealized Fair Unrealized Fair
(In thousands) Losses Value Losses Value Losses Value
March 31, 2025
Securities available for sale
U.S. Treasuries $ 1 $ 7,901 $ — $ — $ 1 $ 7,901
Municipal bonds and obligations 831 28,580 2,791 27,376 3,622 55,956
Agency collateralized mortgage obligations 30 17,914 59,043 199,409 59,073 217,323
Agency mortgage-backed securities 90 7,018 46,306 218,099 46,396 225,117
Agency commercial mortgage-backed securities — — 17,510 67,212 17,510 67,212
Corporate bonds 188 8,162 1,852 27,698 2,040 35,860
Total securities available for sale $ 1,140 $ 69,575 $ 127,502 $ 539,794 $ 128,642 $ 609,369
Securities held to maturity
Municipal bonds and obligations $ 2,223 $ 69,953 $ 23,119 $ 114,554 $ 25,342 $ 184,507
Agency collateralized mortgage obligations — — 16,158 83,049 16,158 83,049
Agency mortgage-backed securities — — 7,485 35,218 7,485 35,218
Agency commercial mortgage-backed securities — — 23,133 93,691 23,133 93,691
Tax advantaged economic development bonds — — 39 1,004 39 1,004
Total securities held to maturity 2,223 69,953 69,934 327,516 72,157 397,469
Total $ 3,363 $ 139,528 $ 197,436 $ 867,310 $ 200,799 $ 1,006,838
December 31, 2024
Securities available for sale
Municipal bonds and obligations $ 773 $ 30,299 $ 2,325 $ 25,916 $ 3,098 $ 56,215
Agency collateralized mortgage obligations 403 45,954 63,750 200,038 64,153 245,992
Agency mortgage-backed securities 113 3,706 53,620 215,822 53,733 219,528
Agency commercial mortgage-backed securities — — 18,975 66,711 18,975 66,711
Corporate bonds — — 2,362 32,538 2,362 32,538
Total securities available for sale $ 1,289 $ 79,959 $ 141,032 $ 541,025 $ 142,321 $ 620,984
Securities held to maturity
Municipal bonds and obligations 1,614 73,453 21,005 111,228 22,619 184,681
Agency collateralized mortgage obligations — — 17,884 83,279 17,884 83,279
Agency mortgage-backed securities — — 8,707 34,937 8,707 34,937
Agency commercial mortgage-backed securities — — 25,153 100,394 25,153 100,394
Tax advantaged economic development bonds — — 42 1,102 42 1,102
Total securities held to maturity 1,614 73,453 72,791 330,940 74,405 404,393
Total $ 2,903 $ 153,412 $ 213,823 $ 871,965 $ 216,726 $ 1,025,377

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Securities

The Company expects to recover its amortized cost basis on all debt securities in its AFS and HTM portfolios. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of March 31, 2025, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios were not other-than-temporarily impaired at March 31, 2025:

AFS U.S Treasuries

At March 31, 2025, 1 of the 1 securities in the Company’s portfolio of AFS U.S Treasuries was in an unrealized loss position. Aggregate unrealized losses represents 0.0% of the amortized cost of the bond in an unrealized loss position. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities. The security is performing.

AFS municipal bonds and obligations

At March 31, 2025, 76 of the 90 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 6.1% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company has determined that the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

AFS collateralized mortgage obligations

At March 31, 2025, 39 of the 44 securities in the Company’s portfolio of AFS collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 21.4% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantee the contractual cash flows of all of the Company’s collateralized mortgage obligations. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS commercial and residential mortgage-backed securities

At March 31, 2025, 28 of the 28 securities in the Company’s portfolio of AFS mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 17.9% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS corporate bonds

At March 31, 2025, 13 of the 14 securities in the Company’s portfolio of AFS corporate bonds were in unrealized loss positions. Aggregate unrealized losses represents 5.4% of the amortized cost of the bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities. All securities are performing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HTM municipal bonds and obligations

At March 31, 2025, 140 of the 158 securities in the Company’s portfolio of HTM municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 12.1% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company has determined that the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

HTM collateralized mortgage obligations

At March 31, 2025, 12 of the 12 securities in the Company’s portfolio of HTM collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 16.3% of the amortized cost of the securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company's collateralized residential mortgage obligations. The securities are investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM commercial and residential mortgage-backed securities

At March 31, 2025, 17 of the 17 securities in the Company’s portfolio of HTM mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 19.2% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM tax-advantaged economic development bonds

At March 31, 2025, 2 of the 2 securities in the Company’s portfolio of tax-advantaged economic development bonds were in unrealized loss positions. Aggregate unrealized losses represented 3.8% of the amortized cost of securities in unrealized loss positions. The Company believes that more likely than not all the principal outstanding will be collected. All securities are performing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following is a summary of total loans by regulatory call report code with sub-segmentation based on underlying collateral for certain loan types:

(In thousands) March 31, 2025 December 31, 2024
Construction $ 715,046 $ 726,344
Commercial multifamily 695,246 636,805
Commercial real estate owner occupied 690,493 695,330
Commercial real estate non-owner occupied 2,756,335 2,769,447
Commercial and industrial 1,438,555 1,439,175
Residential real estate 2,791,265 2,771,769
Home equity 239,113 230,365
Consumer other 102,832 115,759
Total loans $ 9,428,885 $ 9,384,994
Allowance for credit losses (116,678) (114,700)
Net loans $ 9,312,207 $ 9,270,294

During the three months ended March 31, 2025, no loans were reclassified to loans held for sale on the Consolidated Balance Sheets. Held for sale loans are not contained in the balances within this note and are accounted for at the lower of carrying value or fair market value.

Risk characteristics relevant to each portfolio segment are as follows:

Construction - Loans in this segment primarily include real estate development loans for which payment is derived from sale of the property or long term financing at completion. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions.

Commercial real estate multifamily, owner occupied and non-owner - Loans in these segments are primarily owner-occupied or income-producing properties throughout New England and Northeastern New York. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy, which in turn, will have an effect on the credit quality in this segment. Management monitors the cash flows of these loans.

Commercial and industrial loans - Loans in this segment are made to businesses and are generally secured by assets of the business such as accounts receivable, inventory, marketable securities, other liquid collateral, equipment and other business assets. Repayment is expected from the cash flows of the business. Loans in this segment include asset based loans which generally have no scheduled repayment and which are closely monitored against formula based collateral advance ratios. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Residential real estate - All loans in this segment are collateralized by residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Home equity and other consumer loans - Loans in this segment are primarily home equity lines of credit, automobile loans and other consumer loans. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Credit Losses for Loans

The Allowance for Credit Losses for Loans (“ACLL”) is comprised of the allowance for credit losses, and the allowance for unfunded commitments is accounted for as a separate liability in other liabilities on the balance sheet. The level of the ACLL represents management’s estimate of expected credit losses over the expected life of the loans at the balance sheet date. The Company uses a static pool migration analysis method, applying expected historical loss trend and observed economic metrics. The level of the ACLL is based on management’s ongoing review of all relevant information, from internal and external sources, relating to past and current events, utilizing a 7 quarter reasonable and supportable forecast period with a 1 year reversion period. The ACLL reserve is overlaid with qualitative factors based upon:

•the existence and growth of concentrations of credit;

•the volume and severity of past due financial assets, including nonaccrual assets;

•the institutions lending and credit review as well as the experience and ability of relevant management and staff and;

•the effect of other external factors such as regulatory, competition, regional market conditions, legal and technological environment and other events such as natural disasters;

The allowance for unfunded commitments is maintained at a level by the Company to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit) and is included in other liabilities on the Consolidated Balance Sheets.

The Company’s activity in the allowance for credit losses for loans for the three months ended March 31, 2025 and March 31, 2024 was as follows:

(In thousands) Balance at Beginning of Period Charge-offs Recoveries Provision/(Benefit)<br><br>for Credit Losses Balance at End of Period
Three months ended March 31, 2025
Construction $ 4,463 $ — $ — $ 1,259 $ 5,722
Commercial multifamily 4,084 (853) — 1,484 4,715
Commercial real estate owner occupied 11,303 (73) 43 531 11,804
Commercial real estate non-owner occupied 38,520 (40) 3 (2,303) 36,180
Commercial and industrial 25,549 (2,821) 1,219 1,830 25,777
Residential real estate 22,479 (25) 186 5,601 28,241
Home equity 2,392 — 580 (197) 2,775
Consumer other 5,910 (2,444) 702 (2,704) 1,464
Total allowance for credit losses $ 114,700 $ (6,256) $ 2,733 $ 5,501 $ 116,678 (In thousands) Balance at Beginning of Period Charge-offs Recoveries Provision/(Benefit) for Credit Losses Balance at End of Period
--- --- --- --- --- --- --- --- --- --- ---
Three months ended March 31, 2024
Construction $ 2,885 $ — $ — $ (305) $ 2,580
Commercial multifamily 2,475 — — 174 2,649
Commercial real estate owner occupied 9,443 (107) 14 548 9,898
Commercial real estate non-owner occupied 38,221 — 81 (4,047) 34,255
Commercial and industrial 18,602 (2,442) 657 3,199 20,016
Residential real estate 19,622 (41) 186 2,644 22,411
Home equity 2,015 — 239 (262) 1,992
Consumer other 12,094 (3,046) 426 4,056 13,530
Total allowance for credit losses $ 105,357 $ (5,636) $ 1,603 $ 6,007 $ 107,331

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (other liabilities on the consolidated balance sheets), with adjustments to the reserve recognized in other noninterest expense in the Consolidated Statements of Income. The Company’s activity in the allowance for credit losses on unfunded commitments for the three months ended March 31, 2025 and 2024 was as follows:

Three Months Ended <br>March 31,
(In thousands) 2025 2024
Balance at beginning of period $ 9,821 $ 9,256
Expense for credit losses (750) —
Balance at end of period $ 9,071 $ 9,256

Credit Quality Information

The Company monitors the credit quality of its portfolio by using internal risk ratings that are based on regulatory guidance. Loans that are given a Pass rating are not considered a problem credit. Loans that are classified as Special Mention loans are considered to have potential weaknesses and are evaluated closely by management. Substandard, including non-accruing loans, are loans for which a definitive weakness has been identified and which may make full collection of contractual cash flows questionable. Doubtful loans are those with identified weaknesses that make full collection of contractual cash flows, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

For commercial credits, the Company assigns an internal risk rating at origination and reviews the rating annual, semiannually, or quarterly depending on the risk rating. The rating is also reassessed at any point in time when management becomes aware of information that may affect the borrower’s ability to fulfill their obligations.

The Company risk rates its residential mortgages, including 1-4 family and residential construction loans, based on a three rating system: Pass, Special Mention, and Substandard. Loans that are current within 59 days are rated Pass. Residential mortgages that are 60-89 days delinquent are rated Special Mention. Loans delinquent for 90 days or greater are rated Substandard and generally placed on non-accrual status.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s loans by risk category:

Term Loans Amortized Cost Basis by Origination Year
(In thousands) 2025 2024 2023 2022 2021 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
As of March 31, 2025
Construction
Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Risk rating
Pass $ 32,684 $ 28,269 $ 147,114 $ 385,726 $ 59,223 $ 1,286 $ — $ — $ 654,302
Special Mention — — — 21,790 — — — — 21,790
Substandard — — — 20,121 18,833 — — — 38,954
Total $ 32,684 $ 28,269 $ 147,114 $ 427,637 $ 78,056 $ 1,286 $ — $ — $ 715,046
Commercial multifamily:
Current period gross write-offs $ — $ — $ — $ — $ — $ 853 $ — $ — $ 853
Risk rating
Pass $ 34,463 $ 85,120 $ 17,521 $ 231,665 $ 50,604 $ 268,462 $ 1,315 $ — $ 689,150
Special Mention — — — — — 407 — — 407
Substandard — — — — — 5,689 — — 5,689
Total $ 34,463 $ 85,120 $ 17,521 $ 231,665 $ 50,604 $ 274,558 $ 1,315 $ — $ 695,246
Commercial real estate owner occupied:
Current period gross write-offs $ — $ — $ — $ — $ — $ 73 $ — $ — $ 73
Risk rating
Pass $ 23,857 $ 123,931 $ 81,672 $ 100,659 $ 93,253 $ 217,610 $ 2,694 $ — $ 643,676
Special Mention — 1,844 9,496 10,032 7,204 6,243 — — 34,819
Substandard — — 1,066 3,016 588 6,828 500 — 11,998
Total $ 23,857 $ 125,775 $ 92,234 $ 113,707 $ 101,045 $ 230,681 $ 3,194 $ — $ 690,493
Commercial real estate non-owner occupied:
Current period gross write-offs $ — $ — $ — $ — $ — $ 40 $ — $ — $ 40
Risk rating
Pass $ 22,318 $ 248,488 $ 408,335 $ 589,949 $ 411,560 $ 1,002,749 $ 8,459 $ — $ 2,691,858
Special Mention — — — — 1,028 33,561 — — 34,589
Substandard — — — 365 2,767 24,501 2,255 — 29,888
Total $ 22,318 $ 248,488 $ 408,335 $ 590,314 $ 415,355 $ 1,060,811 $ 10,714 $ — $ 2,756,335
Commercial and industrial:
Current period gross write-offs $ — $ — $ 160 $ 329 $ 164 $ 1,486 $ 682 $ — $ 2,821
Risk rating
Pass $ 45,049 $ 195,278 $ 91,277 $ 115,920 $ 91,224 $ 123,499 $ 682,400 $ 1,853 $ 1,346,500
Special Mention — 156 2,630 21,234 219 1,998 16,508 — 42,745
Substandard — — 2,567 3,743 9,422 13,069 20,509 — 49,310
Total $ 45,049 $ 195,434 $ 96,474 $ 140,897 $ 100,865 $ 138,566 $ 719,417 $ 1,853 $ 1,438,555

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Term Loans Amortized Cost Basis by Origination Year
(In thousands) 2025 2024 2023 2022 2021 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
Residential real estate
Current period gross write-offs $ — $ — $ — $ — $ 25 $ — $ — $ — $ 25
Risk rating
Pass $ 61,849 $ 289,016 $ 521,833 $ 894,092 $ 243,529 $ 770,454 $ 216 $ — $ 2,780,989
Special Mention — — — 829 — 498 — — 1,327
Substandard — — — 1,176 214 7,559 — — 8,949
Total $ 61,849 $ 289,016 $ 521,833 $ 896,097 $ 243,743 $ 778,511 $ 216 $ — $ 2,791,265

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Term Loans Amortized Cost Basis by Origination Year
(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
As of December 31, 2024
Construction
Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Risk rating
Pass $ 40,549 $ 138,925 $ 436,850 $ 74,718 $ — $ 1,336 $ — $ — $ 692,378
Special Mention — — 15,374 — — — — — 15,374
Substandard — — — 18,592 — — — — 18,592
Total $ 40,549 $ 138,925 $ 452,224 $ 93,310 $ — $ 1,336 $ — $ — $ 726,344
Commercial multifamily:
Current period gross write-offs $ — $ — $ — $ — $ — $ 1,164 $ — $ — $ 1,164
Risk rating
Pass $ 85,160 $ 17,598 $ 203,001 $ 52,235 $ 38,211 $ 233,145 $ 428 $ — $ 629,778
Special Mention — — — — — 421 — — 421
Substandard — — — — 2,477 4,129 — — 6,606
Total $ 85,160 $ 17,598 $ 203,001 $ 52,235 $ 40,688 $ 237,695 $ 428 $ — $ 636,805
Commercial real estate owner occupied:
Current period gross write-offs $ — $ — $ 45 $ 232 $ — $ 126 $ — $ — $ 403
Risk rating
Pass $ 122,082 $ 83,269 $ 112,718 $ 94,937 $ 67,652 $ 177,684 $ 2,947 $ — $ 661,289
Special Mention 1,852 9,637 1,839 7,215 221 5,207 — — 25,971
Substandard — — 411 595 37 7,027 — — 8,070
Total $ 123,934 $ 92,906 $ 114,968 $ 102,747 $ 67,910 $ 189,918 $ 2,947 $ — $ 695,330
Commercial real estate non-owner occupied:
Current period gross write-offs $ — $ — $ — $ — $ — $ 36 $ — $ — $ 36
Risk rating
Pass $ 246,619 $ 426,882 $ 591,563 $ 413,459 $ 142,739 $ 874,454 $ 5,961 $ 1,500 $ 2,703,177
Special Mention — — — 1,038 223 40,763 — — 42,024
Substandard — — 368 2,782 — 18,840 2,256 — 24,246
Total $ 246,619 $ 426,882 $ 591,931 $ 417,279 $ 142,962 $ 934,057 $ 8,217 $ 1,500 $ 2,769,447
Commercial and industrial:
Current period gross write-offs $ 324 $ 868 $ 1,564 $ 940 $ 816 $ 1,745 $ 1,563 $ — $ 7,820
Risk rating
Pass $ 205,831 $ 91,152 $ 126,327 $ 93,441 $ 18,613 $ 112,620 $ 689,036 $ 11,478 $ 1,348,498
Special Mention 164 1,122 22,091 1,305 1,705 2,957 16,723 100 46,167
Substandard — 2,422 1,740 10,825 929 12,075 16,314 205 44,510
Total $ 205,995 $ 94,696 $ 150,158 $ 105,571 $ 21,247 $ 127,652 $ 722,073 $ 11,783 $ 1,439,175

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Term Loans Amortized Cost Basis by Origination Year
(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
Residential real estate
Current period gross write-offs $ — $ — $ — $ — $ — $ 76 $ — $ — $ 76
Risk rating
Pass $ 291,826 $ 531,873 $ 908,916 $ 247,551 $ 77,706 $ 703,572 $ 136 $ — $ 2,761,580
Special Mention — — 649 468 — 1,501 — — 2,618
Substandard — — 124 188 374 6,885 — — 7,571
Total $ 291,826 $ 531,873 $ 909,689 $ 248,207 $ 78,080 $ 711,958 $ 136 $ — $ 2,771,769

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For home equity and consumer other loan portfolio segments, Berkshire evaluates credit quality based on the aging status of the loan and by payment activity. The performing or nonperforming status is updated on an ongoing basis dependent upon improvement and deterioration in credit quality. The following table presents the amortized cost based on payment activity:

Term Loans Amortized Cost Basis by Origination Year
(In thousands) 2025 2024 2023 2022 2021 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
As of March 31, 2025
Home equity:
Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Payment performance
Performing $ — $ — $ — $ — $ — $ 3,009 $ 235,632 $ — $ 238,641
Nonperforming — — — — — — 472 — 472
Total $ — $ — $ — $ — $ — $ 3,009 $ 236,104 $ — $ 239,113
Consumer other:
Current period gross write-offs $ — $ 1 $ 18 $ 2,154 $ 240 $ 31 $ — $ — $ 2,444
Payment performance
Performing $ 3,516 $ 28,621 $ 31,362 $ 15,282 $ 8,629 $ 5,747 $ 9,348 $ — $ 102,505
Nonperforming — 29 16 33 116 76 57 — 327
Total $ 3,516 $ 28,650 $ 31,378 $ 15,315 $ 8,745 $ 5,823 $ 9,405 $ — $ 102,832
Term Loans Amortized Cost Basis by Origination Year
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
(In thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
As of December 31, 2024
Home equity:
Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Payment performance
Performing $ — $ — $ — $ — $ 423 $ 2,529 $ 226,822 $ — $ 229,774
Nonperforming — — — — — — 591 — 591
Total $ — $ — $ — $ — $ 423 $ 2,529 $ 227,413 $ — $ 230,365
Consumer other:
Current period gross write-offs $ — $ 214 $ 9,723 $ 760 $ 2 $ 113 $ 214 $ — $ 11,026
Payment performance
Performing $ 30,524 $ 33,849 $ 23,397 $ 10,072 $ 3,718 $ 3,825 $ 10,066 $ — $ 115,451
Nonperforming — 1 43 121 — 107 36 — 308
Total $ 30,524 $ 33,850 $ 23,440 $ 10,193 $ 3,718 $ 3,932 $ 10,102 $ — $ 115,759

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of loans by past due status at March 31, 2025 and December 31, 2024:

(In thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans
March 31, 2025
Construction $ — $ — $ 594 $ 594 $ 714,452 $ 715,046
Commercial multifamily — — 3,232 3,232 692,014 695,246
Commercial real estate owner occupied 1,246 986 2,067 4,299 686,194 690,493
Commercial real estate non-owner occupied 89 2 3,590 3,681 2,752,654 2,756,335
Commercial and industrial 1,870 135 9,326 11,331 1,427,224 1,438,555
Residential real estate 4,178 684 8,949 13,811 2,777,454 2,791,265
Home equity 205 95 1,546 1,846 237,267 239,113
Consumer other 201 98 835 1,134 101,698 102,832
Total $ 7,789 $ 2,000 $ 30,139 $ 39,928 $ 9,388,957 $ 9,428,885 (In thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans
--- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2024
Construction $ — $ — $ 594 $ 594 $ 725,750 $ 726,344
Commercial multifamily 421 — 4,129 4,550 632,255 636,805
Commercial real estate owner occupied 484 456 2,330 3,270 692,060 695,330
Commercial real estate non-owner occupied 295 — 3,532 3,827 2,765,620 2,769,447
Commercial and industrial 2,613 1,116 9,823 13,552 1,425,623 1,439,175
Residential real estate 8,571 1,969 7,570 18,110 2,753,659 2,771,769
Home equity 629 519 1,491 2,639 227,726 230,365
Consumer other 884 327 1,395 2,606 113,153 115,759
Total $ 13,897 $ 4,387 $ 30,864 $ 49,148 $ 9,335,846 $ 9,384,994

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of loans on nonaccrual status and loans past due 90 days or more and still accruing as of March 31, 2025 and December 31, 2024:

(In thousands) Nonaccrual Amortized Cost Nonaccrual With No Related Allowance Past Due 90 Days or Greater and Accruing Interest Income Recognized on Nonaccrual
March 31, 2025
Construction $ 594 $ 594 $ — $ —
Commercial multifamily 3,232 3,232 — —
Commercial real estate owner occupied 2,067 2,063 — —
Commercial real estate non-owner occupied 3,587 3,587 3 —
Commercial and industrial 9,260 9,260 66 —
Residential real estate 3,741 3,648 5,208 —
Home equity 472 472 1,074 —
Consumer other 327 327 508 —
Total $ 23,280 $ 23,183 $ 6,859 $ —

The commercial and industrial loans nonaccrual amortized cost as of March 31, 2025 included medallion loans with a fair value of $0.3 million and a contractual balance of $6.5 million.

(In thousands) Nonaccrual Amortized Cost Nonaccrual With No Related Allowance Past Due 90 Days or Greater and Accruing Interest Income Recognized on Nonaccrual
December 31, 2024
Construction $ 594 $ 594 $ — $ —
Commercial multifamily 4,129 4,129 — —
Commercial real estate owner occupied 2,330 2,330 — —
Commercial real estate non-owner occupied 3,532 3,532 — —
Commercial and industrial 8,964 8,614 859 —
Residential real estate 3,999 3,999 3,571 —
Home equity 591 591 900 —
Consumer other 308 308 1,087 —
Total $ 24,447 $ 24,097 $ 6,417 $ —

The commercial and industrial loans nonaccrual amortized cost as of December 31, 2024 included medallion loans with a fair value of $0.3 million and a contractual balance of $6.5 million.

The following table summarizes information about total loans rated Special Mention or lower at March 31, 2025 and December 31, 2024. The table below includes consumer loans that are Special Mention and Substandard accruing that are classified as performing based on payment activity.

(In thousands) March 31, 2025 December 31, 2024
Non-Accrual $ 23,280 $ 24,447
Substandard Accruing 123,860 88,009
Total Classified 147,140 112,456
Special Mention 135,859 133,408
Total Criticized $ 282,999 $ 245,864

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Expected credit losses for collateral-dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. The following table presents the amortized cost basis of individually analyzed collateral-dependent loans by loan portfolio segment:

Type of Collateral
(In thousands) Real Estate Investment Securities/Cash Other
March 31, 2025
Construction $ 594 $ — $ —
Commercial multifamily 3,232 — —
Commercial real estate owner occupied 1,272 — —
Commercial real estate non-owner occupied 288 — —
Commercial and industrial 961 — 5,355
Residential real estate 1,302 — —
Home equity 46 — —
Consumer other — — —
Total loans $ 7,695 $ — $ 5,355
December 31, 2024
Construction $ 594 $ — $ —
Commercial multifamily 4,129 — —
Commercial real estate owner occupied 1,562 — —
Commercial real estate non-owner occupied 294 — —
Commercial and industrial 4,828 — 700
Residential real estate 1,243 — —
Home equity 49 — —
Consumer other — — —
Total loans $ 12,699 $ — $ 700

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Modified Loans

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. For the loans included in the "combination" columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at least two of the following: a term extension and principal forgiveness, an other-than-insignificant payment delay and/or an interest rate reduction.

The following tables present the amortized cost basis of loans at March 31, 2025 and March 31, 2024 that were both experiencing financial difficulty and modified during the three months ended March 31, 2025 and March 31, 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:

(In thousands) Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction Combination Term Extension and Principal Forgiveness Combination Term Extension and Interest Rate Reduction Total Class of Financing Receivable
Three months ended March 31, 2025
Construction $ — $ — $ — $ — $ — $ — — %
Commercial multifamily — — — — — — —
Commercial real estate owner occupied — — — — — — —
Commercial real estate non-owner occupied — — 12,102 — — — 0.44
Commercial and industrial — — 1,893 — — — 0.13
Residential real estate — — — — — — —
Home equity — — — — — — —
Consumer other — — — — — — —
Total $ — $ — $ 13,995 $ — $ — $ — 0.15 %

The Company has committed to lend additional amounts totaling $4.9 million to the commercial and industrial borrowers included in the previous table.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction Combination Term Extension and Principal Forgiveness Combination Term Extension and Interest Rate Reduction Total Class of Financing Receivable
Three months ended March 31, 2024
Construction $ — $ — $ — $ — $ — $ — — %
Commercial multifamily — — — — — — —
Commercial real estate owner occupied — — — — — — —
Commercial real estate non-owner occupied — — — — — — —
Commercial and industrial — 108 474 297 — — 0.06
Residential real estate — — — — — — —
Home equity — — — — — — —
Consumer other — — — — — — —
Total $ — $ 108 $ 474 $ 297 $ — $ — 0.01 %

The Company has not committed to lend additional amounts to the borrowers included in the previous table.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. As of March 31, 2025 and March 31, 2024, there were no loans that were modified to borrowers experiencing financial difficulty that were past due.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2025 and March 31, 2024.

(In thousands) Principal Forgiveness Weighted Average Interest Rate Reduction Weighted Average Term Extension (months)
Three months ended March 31, 2025
Construction $ — — % 0
Commercial multifamily — — 0
Commercial real estate owner occupied — — 0
Commercial real estate non-owner occupied — — 11
Commercial and industrial — — 10
Residential real estate — — 0
Home equity — — 0
Consumer other — — 0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) Principal Forgiveness Weighted Average Interest Rate Reduction Weighted Average Term Extension (months)
Three months ended March 31, 2024
Construction $ — — % 0
Commercial multifamily — — 0
Commercial real estate owner occupied — — 0
Commercial real estate non-owner occupied — — 0
Commercial and industrial — 10.75 56
Residential real estate — — 0
Home equity — — 0
Consumer other — — 0

The following table presents the amortized cost basis of loans that had a payment default during the three months ended March 31, 2025 and March 31, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

(in thousands) Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction
Three months ended March 31, 2025
Construction $ — $ — $ — $ —
Commercial multifamily — — — —
Commercial real estate owner occupied — — — —
Commercial real estate non-owner occupied — — — —
Commercial and industrial — — 50 —
Residential real estate — — — —
Home equity — — — —
Consumer other — — — —
Total $ — $ — $ 50 $ — (in thousands) Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction
--- --- --- --- --- --- --- --- ---
Three months ended March 31, 2024
Construction $ — $ — $ — $ —
Commercial multifamily — — — —
Commercial real estate owner occupied — — — —
Commercial real estate non-owner occupied — — — —
Commercial and industrial — — 202 —
Residential real estate — — — —
Home equity — — — —
Consumer other — — — —
Total $ — $ — $ 202 $ —

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5.               DEPOSITS

A summary of time deposits is as follows:

(In thousands) March 31,<br>2025 December 31,<br>2024
Time less than $100,000 $ 700,000 $ 707,936
Time $100,000 through $250,000 1,127,665 1,157,227
Time more than $250,000 704,893 711,519
Total time deposits $ 2,532,558 $ 2,576,682

NOTE 6.               BORROWED FUNDS

Borrowed funds at March 31, 2025 and December 31, 2024 are summarized as follows:

March 31, 2025 December 31, 2024
Weighted Weighted
Average Average
(Dollars in thousands) Principal Rate Principal Rate
Short-term debt:
Advances from the FHLB $ 400,000 4.47 % $ 103,500 5.33 %
Total short-term borrowings: 400,000 4.47 103,500 5.33
Long-term debt:
Advances from the FHLB and other borrowings 162,921 4.20 212,982 4.48
Subordinated borrowings 98,581 5.50 98,532 5.50
Junior subordinated borrowing - Trust I 15,464 6.44 15,464 6.63
Junior subordinated borrowing - Trust II 7,629 6.26 7,616 6.32
Total long-term borrowings: 284,595 4.83 334,594 4.92
Total $ 684,595 4.62 % $ 438,094 5.02 %

Short-term debt includes Federal Home Loan Bank (“FHLB”) advances with an original maturity of less than one year. The Bank also maintains a $3.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended March 31, 2025 and December 31, 2024. The Bank's available borrowing capacity with the FHLB was $2.3 billion and $2.5 billion for the periods ended March 31, 2025 and December 31, 2024.

The Bank is approved to borrow on a short-term basis from the Federal Reserve Bank of Boston as a non-member bank. The Bank has pledged certain loans and securities to the Federal Reserve Bank to support this arrangement. The Bank had no borrowings with the Federal Reserve Bank under this arrangement during the periods ended March 31, 2025 and December 31, 2024, respectively. The Bank's available borrowing capacity with the Federal Reserve Bank was $1.6 billion for both the periods ended March 31, 2025 and December 31, 2024.

Long-term FHLB advances consist of advances with an original maturity of more than one year and are subject to prepayment penalties. There were no callable advances outstanding at March 31, 2025. The advances outstanding at March 31, 2025 included amortizing advances totaling $5.9 million. There were no callable advances outstanding at December 31, 2024. The advances outstanding at December 31, 2024 included amortizing advances totaling $6.0 million. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of maturities of FHLB advances as of March 31, 2025 is as follows:

March 31, 2025
Weighted Average
(In thousands, except rates) Principal Rate
Fixed rate advances maturing:
2025 $ 505,000 4.52 %
2026 25,474 3.75
2027 25,145 3.65
2028 779 —
2028 and beyond 6,523 0.68
Total FHLB advances $ 562,921 4.39 %

The Company did not have variable-rate FHLB advances for the periods ended March 31, 2025 and December 31, 2024, respectively.

In June 2022, the Company issued ten year subordinated notes in the amount of $100.0 million. The interest rate is fixed at 5.50% for the first five years. After five years, the notes become callable and will bear interest at a floating rate per annum equal to a benchmark rate (which is expected to be Three-Month Term SOFR), plus 249 basis points. The subordinated note includes reduction to the note principal balance of $1.4 million for unamortized debt issuance costs as of March 31, 2025.

The Company holds 100% of the common stock of Berkshire Hills Capital Trust I (“Trust I”) which is included in other assets at a cost of $0.5 million. The sole asset of Trust I is $15.5 million of the Company’s junior subordinated debentures due in 2035. These debentures bear interest at a variable rate equal to 3-month CME Term SOFR plus 1.85% and had a rate of 6.44% and 6.63% at March 31, 2025 and December 31, 2024, respectively. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust I is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust I is not consolidated into the Company’s financial statements.

The Company holds 100% of the common stock of SI Capital Trust II (“Trust II”) which is included in other assets at a cost of $0.2 million. The sole asset of Trust II is $8.2 million of the Company’s junior subordinated debentures due in 2036. These debentures bear interest at a variable rate equal to 3-month CME Term SOFR plus 1.70% and had a rate of 6.26% and 6.32% at March 31, 2025 and December 31, 2024, respectively. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust II is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust II is not consolidated into the Company’s financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As of March 31, 2025, the Company held derivatives with a total notional amount of $5.2 billion. That amount included $0.5 billion in interest rate swap derivatives and $0.2 billion in interest rate collars that were designated as cash flow hedges for accounting purposes. The Company also had economic hedges totaling $4.4 billion and $14.6 million of non-hedging derivatives, which are not designated as hedges for accounting purposes with changes in fair value recorded directly through earnings. Economic hedges included interest rate swaps totaling $4.0 billion, risk participation agreements with dealer banks of $0.4 billion, and $2.2 million in forward commitment contracts.

As of December 31, 2024, the Company held derivatives with a total notional amount of $4.9 billion. That amount included $0.6 billion in interest rate swap derivatives and $0.2 billion in interest rate collars that were designated as cash flow hedges for accounting purposes. The Company had economic hedges and non-hedging derivatives totaling $4.1 billion and $10.5 million, respectively, which are not designated as hedges for accounting purposes and are therefore recorded at fair value with changes in fair value recorded directly through earnings. Economic hedges included interest rate swaps totaling $3.7 billion, risk participation agreements with dealer banks of $0.3 billion, and $3.0 million in forward commitment contracts.

As part of the Company’s risk management strategy, the Company enters into interest rate swap agreements to mitigate the interest rate risk inherent in certain of the Company’s assets and liabilities. Interest rate swap agreements involve the risk of dealing with both Bank customers and institutional derivative counterparties and their ability to meet contractual terms. The agreements are entered into with counterparties that meet established credit standards and contain master netting and collateral provisions protecting the at-risk party. The derivatives program is overseen by the Risk Management and Capital Committee of the Company’s Board of Directors. Based on adherence to the Company’s credit standards and the presence of the netting and collateral provisions, the Company believes that the credit risk inherent in these contracts was not significant at March 31, 2025.

The Company had no pledged collateral to derivative counterparties in the form of cash as of March 31, 2025. The Company had pledged securities to derivative counterparties with an amortized cost of $10.0 million and a fair value of $9.6 million as of March 31, 2025. The Company does not typically require its commercial customers to post cash or securities as collateral on its program of back-to-back economic hedges. However certain language is written into the International Swaps Dealers Association, Inc. (“ISDA”) and loan documents where, in default situations, the Bank is allowed to access collateral supporting the loan relationship to recover any losses suffered on the derivative asset or liability. The Company may need to post additional collateral in the future in proportion to potential increases in unrealized loss positions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information about derivative assets and liabilities at March 31, 2025, follows:

Weighted Weighted Average Rate Estimated
Notional Average Contract Fair Value
Amount Maturity Received pay rate Asset (Liability)
(In thousands) (In years) (In thousands)
Cash flow hedges:
Interest rate swaps on commercial loans (1) $ 525,000 0.7 3.68 % 4.34 % $ —
Interest rate collars on commercial loans 200,000 1.3 332
Total cash flow hedges $ 725,000 $ 332
Economic hedges:
Interest rate swap on tax advantaged economic development bond $ 5,063 4.7 4.82 % 5.09 % $ (114)
Interest rate swaps on loans with commercial loan customers 2,015,201 4.5 4.68 % 5.02 % (40,999)
Offsetting interest rate swaps on loans with commercial loan customers (1) 2,015,201 4.5 5.02 % 4.68 % 17,362
Risk participation agreements with dealer banks 383,923 5.2 274
Forward sale commitments 2,205 0.2 8
Total economic hedges $ 4,421,593 $ (23,469)
Non-hedging derivatives:
Commitments to lend $ 14,625 0.2 $ 93
Total non-hedging derivatives $ 14,625 $ 93
Total $ 5,161,218 $ (23,044)

(1) Fair value estimates included the impact of $22.3 million settled to market contract agreements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information about derivative assets and liabilities at December 31, 2024, follows:

Weighted Weighted Average Rate Estimated
Notional Average Contract Fair Value
Amount Maturity Received pay rate Asset (Liability)
(In thousands) (In years) (In thousands)
Cash flow hedges:
Interest rate swaps on commercial loans $ 600,000 0.9 3.64 % 4.53 % $ —
Interest rate collars on commercial loans 200,000 1.5 193
$ 800,000 $ 193
Economic hedges:
Interest rate swap on tax advantaged economic development bond $ 5,297 4.9 5.03 % 5.09 % $ (79)
Interest rate swaps on loans with commercial loan customers 1,859,480 4.5 4.65 % 5.35 % (72,911)
Offsetting interest rate swaps on loans with commercial loan customers (1) 1,859,480 4.5 5.35 % 4.65 % 41,501
Risk participation agreements with dealer banks 345,367 5.1 56
Forward sale commitments 2,991 0.2 34
Total economic hedges $ 4,072,615 $ (31,399)
Non-hedging derivatives:
Commitments to lend $ 10,512 0.2 $ 90
Total non-hedging derivatives $ 10,512 $ 90
Total $ 4,883,127 $ (31,116)

(1) Fair value estimates included the impact of $28.8 million settled to market contract agreements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash flow hedges

The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive income and subsequently reclassified to earnings in the same period or periods during which the hedged transaction is forecasted to affect earnings. Each quarter, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. The ineffective portion of changes in the fair value of the derivatives is recognized directly in earnings. All cash flow hedges are considered

highly effective.

As of March 31, 2025, the Company had seven interest rate swap contracts with a notional value of $525.0 million. The interest rate swaps mature during 2025 and 2026. This hedge strategy converts commercial variable rate loans to fixed interest rates, thereby protecting the Company from floating interest rate variability.

As of March 31, 2025, the Company had two interest rate collars. The first interest rate collar has a 3.00% floor and a 5.75% cap with a notional value of $100.0 million. The second interest rate collar has a 3.25% floor and a 5.75% cap with a notional value of $100.0 million. The interest rate collars mature during 2026 and 2027. The structure of these instruments is such that the Company pays the counterparty an incremental amount if the collar index exceeds the cap rate. Conversely, the Company receives an incremental amount if the index falls below the floor rate. No payments are required if the collar index falls between the cap and floor rates.

Amounts included in the Consolidated Statements of Income and in the other comprehensive income section of the Consolidated Statements of Comprehensive Income (related to interest rate derivatives designated as hedges of cash flows), were as follows:

Three Months Ended <br>March 31,
(In thousands) 2025 2024
Interest rate swaps on commercial loans:
Unrealized gain/(loss) recognized in accumulated other comprehensive loss $ 1,308 $ (5,681)
Less: Reclassification of unrealized (loss) from accumulated other comprehensive loss to interest expense (155) (157)
Net tax benefit on items recognized in accumulated other comprehensive income (404) 1,502
Other comprehensive gain/(loss) recorded in accumulated other comprehensive income, net of reclassification adjustments and tax effects $ 1,059 $ (4,022)
Net interest expense recognized on hedged commercial loans $ 1,144 $ 2,720

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Economic hedges

As of March 31, 2025, the Company had an interest rate swap with a $5.1 million notional amount to swap out the fixed rate of interest on an economic development bond bearing a fixed rate of 5.09%, currently within the Company’s trading portfolio under the fair value option, in exchange for a SOFR-based floating rate. The intent of the economic hedge is to improve the Company’s asset sensitivity to changing interest rates in anticipation of favorable average floating rates of interest over the 21-year life of the bond. The fair value changes of the economic development bond are mostly offset by fair value changes of the related interest rate swap.

The Company also offers certain derivative products directly to qualified commercial borrowers. The Company economically hedges derivative transactions executed with commercial borrowers by entering into mirror-image, offsetting derivatives with third-party financial institutions. The transaction allows the Company’s customer to convert a variable-rate loan to a fixed rate loan. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts mostly offset each other in earnings. There was no credit valuation loss adjustment arising from the difference in credit worthiness of the commercial loan and financial institution counterparties as of March 31, 2025. The interest income and expense on these mirror image swaps exactly offset each other.

The Company has risk participation agreements with dealer banks. Risk participation agreements occur when the Company participates on a loan and a swap where another bank is the lead. The Company gets paid a fee to take on the risk associated with having to make the lead bank whole on Berkshire’s portion of the pro-rated swap should the borrower default. Changes in fair value are recorded in current period earnings.

The Company utilizes forward sale commitments to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives with changes in fair value recorded in current period earnings.

The Company uses the following types of forward sale commitments contracts:

•Best efforts loan sales,

•Mandatory delivery loan sales, and

•To Be Announced (“TBA”) mortgage-backed securities sales.

A best efforts contract refers to a loan sale agreement where the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. The Company may enter into a best efforts contract once the price is known, which is shortly after the potential borrower’s interest rate is locked.

A mandatory delivery contract is a loan sale agreement where the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, the Company may enter into mandatory delivery contracts shortly after the loan closes with a customer.

The Company may sell TBA mortgage-backed securities to hedge the changes in fair value of interest rate lock commitments and held for sale loans, which do not have corresponding best efforts or mandatory delivery contracts. These security sales transactions are closed once mandatory contracts are written. On the closing date the price of the security is locked-in, and the sale is paired-off with a purchase of the same security. Settlement of the security purchase/sale transaction is done with cash on a net-basis.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-hedging derivatives

The Company enters into interest rate lock commitments (“IRLCs”), or commitments to lend, for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in non-interest income in the Company’s Consolidated Statements of Income. Changes in the fair value of IRLCs subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

Amounts included in the Consolidated Statements of Income related to economic hedges and non-hedging derivatives were as follows:

Three Months Ended <br>March 31,
(In thousands) 2025 2024
Economic hedges
Interest rate swap on industrial revenue bond:
Unrealized (loss)/gain recognized in other non-interest income $ (35) $ 88
Interest rate swaps on loans with commercial loan customers:
Unrealized gain/(loss) recognized in other non-interest income 31,940 (23,649)
Favorable change in credit valuation adjustment recognized in other non-interest income — —
Offsetting interest rate swaps on loans with commercial loan customers:
Unrealized (loss)/gain recognized in other non-interest income (31,940) 23,649
Risk participation agreements:
Unrealized gain recognized in other non-interest income 218 10
Forward commitments:
Unrealized (loss)/gain recognized in other non-interest income (26) 57
Non-hedging derivatives
Commitments to lend
Unrealized gain recognized in other non-interest income $ 3 $ 113
Realized gain in other non-interest income 236 157

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets and Liabilities Subject to Enforceable Master Netting Arrangements

Interest Rate Swap Agreements (“Swap Agreements”)

The Company enters into swap agreements to facilitate the risk management strategies for commercial banking customers. The Company mitigates this risk by entering into equal and offsetting swap agreements with highly rated third party financial institutions. The swap agreements are free-standing derivatives and are recorded at fair value in the Company’s Consolidated Statements of Income. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral generally in the form of marketable securities is received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds.

The Company had net asset positions with its financial institution counterparties totaling $31.6 million and $44.8 million as of March 31, 2025 and December 31, 2024, respectively. The Company had net asset positions with its commercial banking counterparties totaling $14.1 million and $3.1 million as of March 31, 2025 and December 31, 2024, respectively. The Company had net liability positions with its financial institution counterparties totaling $14.0 million and $3.1 million as of March 31, 2025 and December 31, 2024, respectively. The Company had net liability positions with its commercial banking counterparties totaling $54.7 million and $76.0 million as of March 31, 2025 and December 31, 2024.

The following table presents the assets and liabilities subject to an enforceable master netting arrangement as of March 31, 2025 and December 31, 2024:

Offsetting of Financial Assets and Derivative Assets

Gross<br>Amounts of Gross Amounts<br>Offset in the Net Amounts<br>of Assets<br>Presented in the Gross Amounts Not Offset in<br><br>the Consolidated Balance Sheets
Recognized Consolidated Consolidated Financial Cash
(In thousands) Assets Balance Sheets Balance Sheets Instruments Collateral Received Net Amount
March 31, 2025
Interest Rate Swap Agreements:
Institutional counterparties $ 55,248 $ (23,636) $ 31,612 $ — $ (18,000) $ 13,612
Commercial counterparties 14,137 — 14,137 — — 14,137
Total $ 69,385 $ (23,636) $ 45,749 $ — $ (18,000) $ 27,749

Offsetting of Financial Liabilities and Derivative Liabilities

Gross<br>Amounts of Gross Amounts<br>Offset in the Net Amounts<br>of Liabilities<br>Presented in the Gross Amounts Not Offset in<br><br>the Consolidated Balance Sheets
Recognized Consolidated Consolidated Financial Cash
(In thousands) Liabilities Balance Sheets Balance Sheets Instruments Collateral Pledged Net Amount
March 31, 2025
Interest Rate Swap Agreements:
Institutional counterparties $ (15,370) $ 1,327 $ (14,043) $ 9,592 $ — $ (4,451)
Commercial counterparties (54,738) — (54,738) — — (54,738)
Total $ (70,108) $ 1,327 $ (68,781) $ 9,592 $ — $ (59,189)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Offsetting of Financial Assets and Derivative Assets

Gross<br>Amounts of Gross Amounts<br>Offset in the Net Amounts<br>of Assets<br>Presented in the Gross Amounts Not Offset in<br><br>the Consolidated Balance Sheets
Recognized Consolidated Consolidated Financial Cash
(In thousands) Assets Balance Sheets Balance Sheets Instruments Collateral Received Net Amount
December 31, 2024
Interest Rate Swap Agreements:
Institutional counterparties $ 76,242 $ (31,410) $ 44,832 $ — $ (32,500) $ 12,332
Commercial counterparties 3,092 — 3,092 — — 3,092
Total $ 79,334 $ (31,410) $ 47,924 $ — $ (32,500) $ 15,424

Offsetting of Financial Liabilities and Derivative Liabilities

Gross<br>Amounts of Gross Amounts<br>Offset in the Net Amounts<br>of Liabilities<br>Presented in the Gross Amounts Not Offset in<br><br>the Consolidated Balance Sheets
Recognized Consolidated Consolidated Financial Cash
(In thousands) Liabilities Balance Sheets Balance Sheets Instruments Collateral Pledged Net Amount
December 31, 2024
Interest Rate Swap Agreements:
Institutional counterparties $ (5,741) $ 2,659 $ (3,082) $ 9,078 $ — $ 5,996
Commercial counterparties (76,003) — (76,003) — — (76,003)
Total $ (81,744) $ 2,659 $ (79,085) $ 9,078 $ — $ (70,007)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. LEASES

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space. Most of the Company’s leases are classified as operating leases. At March 31, 2025, lease expiration dates ranged from 1 month to 15 years.

The following table represents the Consolidated Balance Sheets classification of the Company’s right-of-use (“ROU”) assets and lease liabilities:

(In thousands) March 31, 2025 December 31, 2024
Lease Right-of-Use Assets Classification
Operating lease right-of-use assets Other assets $ 49,057 $ 50,195
Finance lease right-of-use assets Premises and equipment, net 616 629
Total Lease Right-of-Use Assets $ 49,673 $ 50,824
Lease Liabilities
Operating lease liabilities Other liabilities $ 54,720 $ 55,986
Finance lease liabilities Other liabilities 879 891
Total Lease Liabilities $ 55,599 $ 56,877

Supplemental information related to leases was as follows:

March 31, 2025 December 31, 2024
Weighted-Average Remaining Lease Term (in years)
Operating leases 7.9 8.1
Finance leases 12.8 13.0
Weighted-Average Discount Rate
Operating leases 3.53 % 3.53 %
Finance leases 5.00 % 5.00 %

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.

The Company does not have any material sub-lease agreements.

Lease expense for operating leases for the three months ended March 31, 2025 was $2.3 million. Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

Lease expense for operating leases for the three months ended March 31, 2024 was $2.2 million. Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information related to leases was as follows:

Three Months Ended
(In thousands) March 31, 2025 March 31, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 2,288 $ 2,194
Operating cash flows from finance leases 11 175
Financing cash flows from finance leases 12 149

The following table presents a maturity analysis of the Company’s lease liability by lease classification at March 31, 2025:

(In thousands) Operating Leases Finance Leases
2025 $ 6,692 $ 70
2026 9,308 93
2027 8,672 93
2028 7,620 93
2029 6,618 93
Thereafter 23,362 744
Total undiscounted lease payments 62,272 1,186
Less amounts representing interest (7,552) (307)
Lease liability $ 54,720 $ 879

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.           CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios were as follows:

March 31,<br>2025 December 31,<br>2024 Minimum Capital Requirement
Company (consolidated)
Total capital to risk-weighted assets 15.8 % 15.5 % 8.0 %
Tier 1 capital to risk-weighted assets 13.5 13.2 6.0
Common equity tier 1 capital to risk-weighted assets 13.2 13.0 4.5
Tier 1 capital to average assets 10.9 11.0 4.0 March 31,<br>2025 December 31,<br>2024 Regulatory Minimum to be Adequately Capitalized Regulatory<br>Minimum to be<br>Well Capitalized
--- --- --- --- --- --- --- --- ---
Bank
Total capital to risk-weighted assets 14.2 % 13.8 % 8.0 % 10.0 %
Tier 1 capital to risk-weighted assets 12.9 12.6 6.0 8.0
Common equity tier 1 capital to risk-weighted assets 12.9 12.6 4.5 6.5
Tier 1 capital to average assets 10.4 10.4 4.0 5.0

The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Failure to meet capital requirements can initiate regulatory action. At each date shown, the Company met the minimum capital requirements and the Bank met the conditions to be classified as “well capitalized” under the relevant regulatory framework. To be categorized as well capitalized, an institution must maintain minimum total risk-based, tier 1 risk-based, and tier 1 leverage ratios as set forth in the table above.

As of January 1, 2019, banking organizations must maintain a minimum common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5%, and a minimum Total risk-based capital ratio of 10.5%, including a 2.5% capital conservation buffer. Capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the capital conservation buffer is not met.

At March 31, 2025, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and the Bank's regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes. The capital levels of both the Company and the Bank at March 31, 2025 also exceeded the minimum capital requirements including the currently applicable capital conservation buffer of 2.5%.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated other comprehensive (loss)

Components of accumulated other comprehensive (loss) are as follows:

(In thousands) March 31,<br>2025 December 31,<br>2024
Other accumulated comprehensive income, before tax:
Net unrealized holding (loss) on AFS securities $ (128,168) $ (142,127)
Net unrealized (loss) on cash flow hedging derivatives (1,574) (3,037)
Net unrealized holding gain on pension plans 365 365
Income taxes related to items of accumulated other comprehensive income:
Net unrealized tax benefit on AFS securities 34,022 37,716
Net unrealized tax benefit on cash flow hedging derivatives 434 838
Net unrealized tax expense on pension plans (98) (98)
Accumulated other comprehensive loss $ (95,019) $ (106,343)

The following table presents the components of other comprehensive (loss) for the three months ended March 31, 2025 and 2024:

(In thousands) Before Tax Tax Effect Net of Tax
Three Months Ended March 31, 2025
Net unrealized holding gain on AFS securities:
Net unrealized gains arising during the period $ 13,959 $ (3,694) $ 10,265
Less: reclassification adjustment for (losses) realized in net income — — —
Net unrealized holding gain on AFS securities 13,959 (3,694) 10,265
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period 1,308 (361) 947
Less: reclassification adjustment for (losses) realized in net income (155) 43 (112)
Net unrealized gain on cash flow hedging derivatives 1,463 (404) 1,059
Other comprehensive income $ 15,422 $ (4,098) $ 11,324
Three Months Ended March 31, 2024
Net unrealized holding gain on AFS securities:
Net unrealized (losses) arising during the period $ (5,622) $ 1,891 $ (3,731)
Less: reclassification adjustment for (losses) realized in net income (49,909) 13,555 (36,354)
Net unrealized holding gain on AFS securities 44,287 (11,664) 32,623
Net unrealized loss on cash flow hedging derivatives:
Net unrealized (loss) arising during the period (5,681) 1,545 (4,136)
Less: reclassification adjustment for (losses) realized in net income (157) 43 (114)
Net unrealized (loss) on cash flow hedging derivatives (5,524) 1,502 (4,022)
Other comprehensive income $ 38,763 $ (10,162) $ 28,601

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the changes in each component of accumulated other comprehensive income/(loss), for the three months ended March 31, 2025 and 2024:

(In thousands) Net unrealized<br>holding loss<br>on AFS Securities Net loss on<br>effective cash<br>flow hedging derivatives Net unrealized<br>holding loss<br>on pension plans Total
Three Months Ended March 31, 2025
Balance at Beginning of Period $ (104,410) $ (2,199) $ 266 $ (106,343)
Other comprehensive income before reclassifications 10,265 947 — 11,212
Less: amounts reclassified from accumulated other comprehensive (loss) — (112) — (112)
Total other comprehensive income 10,265 1,059 — 11,324
Balance at End of Period $ (94,145) $ (1,140) $ 266 $ (95,019)
Three Months Ended March 31, 2024
Balance at Beginning of Period $ (139,525) $ (3,106) $ (385) $ (143,016)
Other comprehensive (loss) before reclassifications (3,731) (4,136) — (7,867)
Less: amounts reclassified from accumulated other comprehensive (loss) (36,354) (114) — (36,468)
Total other comprehensive income 32,623 (4,022) — 28,601
Balance at End of Period $ (106,902) $ (7,128) $ (385) $ (114,415)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the amounts reclassified out of each component of accumulated other comprehensive

income for the three months ended March 31, 2025 and 2024:

Affected Line Item in the
Three Months Ended March 31, Statement where Net Income
(In thousands) 2025 2024 is Presented
Realized (losses) on AFS securities:
$ — $ (49,909) Non-interest income
— 13,555 Tax benefit
— (36,354) Net of tax
Realized (losses) on cash flow hedging derivatives:
(155) (157) Interest expense
— — Non-interest expense
43 43 Tax benefit
(112) (114) Net of tax
Total reclassifications for the period $ (112) $ (36,468) Net of tax

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. EARNINGS/(LOSS) PER SHARE

Earnings per share have been computed based on the following (average diluted shares outstanding are calculated using the treasury stock method):

Three Months Ended March 31,
(In thousands, except per share data) 2025 2024
Net income (loss) $ 25,719 $ (20,188)
Average number of common shares issued 51,903 51,903
Less: average number of treasury shares 5,508 8,356
Less: average number of unvested stock award shares 711 770
Average number of basic shares outstanding 45,684 42,777
Plus: dilutive effect of unvested stock award shares 376 251
Plus: dilutive effect of stock options outstanding 1 —
Average number of diluted shares outstanding 46,061 43,028
Basic earnings/(loss) per common share: $ 0.56 $ (0.47)
Diluted earnings/(loss) per common share: $ 0.56 $ (0.47)

For the three months ended March 31, 2025, 335 thousand shares of unvested restricted stock and 43 thousand options outstanding were anti-dilutive and therefore excluded from the earnings per share calculation. For the three months ended March 31, 2024, 519 thousand shares of unvested restricted stock and 49 thousand options outstanding were anti-dilutive and therefore excluded from the earnings per share calculation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. STOCK-BASED COMPENSATION PLANS

A combined summary of activity in the Company’s stock award and stock option plans for the three months ended March 31, 2025 is presented in the following table:

Non-Vested Stock Awards Outstanding Stock Options Outstanding
(Shares in thousands) Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Exercise Price
December 31, 2024 796 $ 24.94 44 $ 26.65
Granted 1 29.13 — —
Acquired — — — —
Stock options exercised — — — —
Stock awards vested (91) 27.26 — —
Forfeited (26) 27.33 — —
Expired — — — —
March 31, 2025 680 $ 24.54 44 $ 26.65

During the three months ended March 31, 2025 and 2024, there were no stock option exercises. During the three months ended March 31, 2025 and 2024, there were 91 thousand and 167 thousand shares vested in connection with stock awards, respectively. All of these shares were issued from available treasury stock. Stock-based compensation expense totaled $1.3 million and $2.1 million during the three months ended March 31, 2025 and 2024, respectively. Stock-based compensation expense is recognized over the requisite service period for all awards.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. FAIR VALUE MEASUREMENTS

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

March 31, 2025
Level 1 Level 2 Level 3 Total
(In thousands) Inputs Inputs Inputs Fair Value
Trading securities $ — $ — $ 5,010 $ 5,010
Securities available for sale:
U.S Treasuries 7,901 — — 7,901
Municipal bonds and obligations — 60,017 — 60,017
Agency collateralized mortgage obligations — 271,526 — 271,526
Agency residential mortgage-backed securities — 225,855 — 225,855
Agency commercial mortgage-backed securities — 67,212 — 67,212
Corporate bonds — 32,748 3,923 36,671
Equity securities — 647 — 647
Loans held for investment at fair value — — 318 318
Loans held for sale — 1,322 — 1,322
Derivative assets — 45,756 101 45,857
Capitalized servicing rights — — 1,646 1,646
Derivative liabilities — 68,902 — 68,902 December 31, 2024
--- --- --- --- --- --- --- --- ---
Level 1 Level 2 Level 3 Total
(In thousands) Inputs Inputs Inputs Fair Value
Trading securities $ — $ — $ 5,258 $ 5,258
Securities available for sale:
U.S Treasuries 6,989 — — 6,989
Municipal bonds and obligations — 60,864 — 60,864
Agency collateralized mortgage obligations — 264,562 — 264,562
Agency residential mortgage-backed securities — 220,240 — 220,240
Agency commercial mortgage-backed securities — 66,711 — 66,711
Corporate bonds — 32,456 3,901 36,357
Equity securities — 655 — 655
Loans held for investment at fair value — — 325 $ 325
Loans held for sale — 3,076 — 3,076
Derivative assets — 47,799 124 47,923
Capitalized servicing rights — — 1,706 1,706
Derivative liabilities — 79,039 — 79,039

There were no transfers between levels during the three months ended March 31, 2025.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Trading Securities at Fair Value. The Company holds one security designated as a trading security. It is a tax-advantaged economic development bond issued to the Company by a local nonprofit which provides wellness and health programs. The fair value of this security is determined based on a discounted cash flow methodology. Certain inputs to the fair value calculation are unobservable and there is little to no market activity in the security; therefore, the security meets the definition of a Level 3 security. The discount rate used in the valuation of the security is sensitive to movements in the 3-month SOFR rate.

Securities Available for Sale and Equity Securities. Equity securities classified as Level 1 consist of publicly-traded equity securities for which the fair values can be obtained through quoted market prices in active exchange markets. Equity securities classified as Level 2 consist of securities with infrequent trades in active exchange markets, and pricing is primarily sourced from third party pricing services. AFS securities classified as Level 1 consist of U.S. Treasury securities. AFS securities classified as Level 2 include most of the Company’s debt securities. The pricing on Level 2 and Level 3 was primarily sourced from third party pricing services, overseen by management, and is based on models that consider standard input factors such as dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and condition, among other things. Level 3 pricing includes inputs unobservable to market participants.

Loans Held for Investment. The Company’s held for investment loan portfolio includes loans originated by Company and loans acquired through business combinations. The Company intends to hold these assets until maturity as a part of its business operations. For one acquired portfolio subset, the Company previously accounted for these purchased-credit impaired loans as a pool under ASC 310, as they were determined to have common risk characteristics. These loans were recorded at fair value on acquisition date and subsequently evaluated for impairment collectively. Upon adoption of ASC 326, the Company elected the fair value option on this portfolio, recognizing an $11.2 million fair value write-down charged to retained earnings, net of deferred tax impact, as of January 1, 2020. The fair value of this loan portfolio is determined based on a discounted cash flow methodology. Certain inputs to the fair value calculation are unobservable; therefore, the loans meet the definition of Level 3 assets. The discount rate used in the valuation is consistent with assets that have significant credit deterioration. The cash flow assumptions include payment schedules for loans with current payment histories and estimated collateral value for delinquent loans. All of these loans were nonperforming as of March 31, 2025.

Aggregate Fair Value
March 31, 2025 Aggregate Aggregate Less Aggregate
(In thousands) Fair Value Unpaid Principal Unpaid Principal
Loans held for investment at fair value $ 318 $ 6,533 $ (6,215)
Aggregate Fair Value
--- --- --- --- --- --- ---
December 31, 2024 Aggregate Aggregate Less Aggregate
(In thousands) Fair Value Unpaid Principal Unpaid Principal
Loans held for investment at fair value $ 325 $ 6,541 $ (6,216)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans Held for Sale. The Company elected the fair value option for all loans held for sale (HFS) originated for sale on or after May 1, 2012. Loans HFS are classified as Level 2 as the fair value is based on input factors such as quoted prices for similar loans in active markets.

Aggregate Fair Value
March 31, 2025 Aggregate Aggregate Less Aggregate
(In thousands) Fair Value Unpaid Principal Unpaid Principal
Loans held for sale $ 1,322 $ 1,297 $ 25 Aggregate Fair Value
--- --- --- --- --- --- ---
December 31, 2024 Aggregate Aggregate Less Aggregate
(In thousands) Fair Value Unpaid Principal Unpaid Principal
Loans held for sale $ 3,076 $ 3,015 $ 61

The changes in fair value of loans held for sale for the three months ended March 31, 2025, were losses of $36 thousand. During the three months ended March 31, 2025, originations of loans held for sale totaled $22.2 million. During the three months ended March 31, 2025, sales of loans originated for sale totaled $23.6 million.

The changes in fair value of loans held for sale for the three months ended March 31, 2024, were gains of $55 thousand. During the three months ended March 31, 2024, originations of loans held for sale totaled $27.8 million. During the three months ended March 31, 2024, sales of loans originated for sale totaled $24.3 million.

Interest Rate Swaps. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings.

Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2025, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Commitments to Lend. The Company enters into commitments to lend for residential mortgage loans intended for sale, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood that the loan in a lock position will ultimately close, and by the non-refundable costs of originating the loan. The closing ratio is derived from the Bank’s internal data and is adjusted using significant management judgment. The costs to originate are primarily based on the Company’s internal commission rates that are not observable. As such, these commitments are classified as Level 3 measurements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the commitments to lend and loans originated for sale. To Be Announced (“TBA”) mortgage-backed securities forward commitment sales are used as the hedging instrument, are classified as Level 1, and consist of publicly-traded debt securities for which identical fair values can be obtained through quoted market prices in active exchange markets. The fair values of the Company’s best efforts and mandatory delivery loan sale commitments are determined similarly to the commitments to lend using quoted prices in the market place that are observable. However, costs to originate and closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are considered factors that are not observable. As such, best efforts and mandatory forward commitments are classified as Level 3 measurements.

Capitalized Servicing Rights. The Company accounts for certain capitalized servicing rights at fair value in its Consolidated Financial Statements, as the Company is permitted to elect the fair value option for each specific instrument. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three months ended March 31, 2025 and 2024.

Assets (Liabilities)
Securities Loans Capitalized
Trading Available Held for Commitments Forward Servicing
(In thousands) Securities for Sale Investment to Lend Commitments Rights
Three Months Ended March 31, 2025
December 31, 2024 $ 5,258 $ 3,901 $ 326 $ 90 $ 34 $ 1,706
Unrealized gain/(loss), net recognized in other non-interest income (14) — 1 153 (26) (60)
Unrealized (loss) included in accumulated other comprehensive income — 22 — — — —
Paydown of asset (234) — (9) — — —
Transfers to held for sale loans — — — (150) — —
March 31, 2025 $ 5,010 $ 3,923 $ 318 $ 93 $ 8 $ 1,646
Unrealized (loss)/gain relating to instruments still held at March 31, 2025 $ (53) $ (77) $ — $ 93 $ 8 $ —
Assets (Liabilities)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Securities Loans Capitalized
Trading Available Held for Commitments Forward Servicing
(In thousands) Securities for Sale Investment to Lend Commitments Rights
Three Months Ended March 31, 2024
December 31, 2023 $ 6,142 $ 3,923 $ 374 $ 34 $ 21 $ 1,526
Unrealized (loss)/gain, net recognized in other non-interest income (11) — 48 261 57 (180)
Unrealized gain included in accumulated other comprehensive income — 6 — — — —
Paydown of asset (222) — (26) — — —
Transfers to held for sale loans — — — (148) — —
March 31, 2024 $ 5,909 $ 3,929 $ 396 $ 147 $ 78 $ 1,346
Unrealized (loss)/gain relating to instruments still held at March 31, 2024 $ (71) $ (71) $ — $ 147 $ 78 $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is as follows:

Fair Value SignificantUnobservable Input
(In thousands) March 31, 2025 Valuation Techniques Unobservable Inputs Value
Assets (Liabilities)
Trading Securities $ 5,010 Discounted Cash Flow Discount Rate 3.31 %
AFS Securities 3,923 Indication from Market Maker Price 98.07%
Loans held for investment 318 Discounted Cash Flow Discount Rate 25.00 %
Collateral Value 0.0 - 20.1
Commitments to lend 93 Historical Trend Closing Ratio 79.63 %
Pricing Model Origination Costs, per loan
Forward commitments 8 Historical Trend Closing Ratio 79.63 %
Pricing Model Origination Costs, per loan
Capitalized servicing rights 1,646 Discounted cash flow Constant Prepayment Rate (CPR) 7.41 %
Discount Rate 10.09 %
Total $ 10,998

All values are in US Dollars.

Fair Value SignificantUnobservable Input
(In thousands) December 31, 2024 Valuation Techniques Unobservable Inputs Value
Assets (Liabilities)
Trading Securities $ 5,258 Discounted Cash Flow Discount Rate 3.36 %
AFS Securities 3,901 Indication from Market Maker Price 97.53 %
Loans held for investment 325 Discounted Cash Flow Discount Rate 25.00 %
Collateral Value 0.0- 18.8
Commitments to lend 90 Historical Trend Closing Ratio 83.21 %
Pricing Model Origination Costs, per loan
Forward commitments 34 Historical Trend Closing Ratio 83.21 %
Pricing Model Origination Costs, per loan
Capitalized servicing rights 1,706 Discounted Cash Flow Constant Prepayment Rate (CPR) 7.21 %
Discount Rate 10.09 %
Total $ 11,314

All values are in US Dollars.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-Recurring Fair Value Measurements

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements. There are no liabilities measured at fair value on a non-recurring basis.

March 31, 2025 Fair Value Measurement Date December 31, 2024 Fair Value Measurement Date
Level 3 Level 3 Level 3 Level 3
(In thousands) Inputs Inputs Inputs Inputs
Assets
Individually evaluated $ 1,817 March 2025 $ 2,195 December 2024
Capitalized servicing rights 9,982 March 2025 10,084 December 2024
Total $ 11,799 $ 12,279

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is as follows:

Fair Value
(In thousands) March 31, 2025 Valuation Techniques Unobservable Inputs Range (Weighted Average) (1)
Assets
Individually evaluated $ 1,817 Fair Value of Collateral Discounted Cash Flow - Loss Severity (100.00)% to (0.02)% ((65.17)%)
Appraised Value $0 to $178 ($150)
Capitalized servicing rights 9,982 Discounted Cash Flow Constant Prepayment Rate (CPR) 5.22% to 19.10% (13.90%)
Discount Rate 10.47% to 12.31% (11.16%)
Total $ 11,799

(1)     Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

Fair Value
(In thousands) December 31, 2024 Valuation Techniques Unobservable Inputs Range (Weighted Average) (1)
Assets
Individually evaluated $ 2,195 Fair Value of Collateral Discounted Cash Flow - loss severity (100.00)% to (0.03)% ((66.97)%)
Appraised Value $0 to $180 ($153)
Capitalized servicing rights 10,084 Discounted Cash Flow Constant Prepayment Rate (CPR) 4.87% to 14.58% (13.33%)
Discount Rate 10.47% to 12.97% (11.56%)
Total $ 12,279

(1)     Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

There were no Level 1 or Level 2 nonrecurring fair value measurements for the periods ended March 31, 2025 and December 31, 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Individually evaluated loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

Loans Transferred to Held for Sale. Once a decision has been made to sell loans not previously classified as held for sale, these loans are transferred into the held for sale category and carried at the lower of cost or fair value. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. The choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

Capitalized loan servicing rights. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Estimated Fair Values of Financial Instruments

The following tables summarize the estimated fair values (represents exit price), and related carrying amounts, of the Company’s financial instruments. Certain financial instruments and all non-financial instruments are excluded. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

March 31, 2025
Carrying Fair
(In thousands) Amount Value Level 1 Level 2 Level 3
Financial Assets
Cash and cash equivalents $ 826,336 $ 826,336 $ 826,336 $ — $ —
Trading securities 5,010 5,010 — — 5,010
Equity securities 647 647 — 647 —
Securities available for sale 669,182 669,182 7,901 657,358 3,923
Securities held to maturity 494,242 422,151 — 421,147 1,004
Federal Home Loan Bank stock 29,688 N/A N/A N/A N/A
Net loans 9,312,207 9,050,597 — — 9,050,597
Loans held for sale 1,322 1,322 — 1,322 —
Accrued interest receivable 48,161 48,161 — 48,161 —
Derivative assets 45,857 45,857 — 45,756 101
Assets held for sale 6,930 6,930 — 6,930 —
Financial Liabilities
Total deposits $ 9,879,877 $ 9,873,633 $ — $ 9,873,633 $ —
Short-term debt 400,000 400,070 — 400,070 —
Long-term Federal Home Loan Bank advances and other 162,921 160,268 — 160,268 —
Subordinated borrowings 121,674 110,919 — 110,919 —
Accrued interest payable 9,134 9,134 — 9,134 —
Derivative liabilities 68,902 68,902 — 68,902 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024
Carrying Fair
(In thousands) Amount Value Level 1 Level 2 Level 3
Financial Assets
Cash and cash equivalents $ 1,128,409 $ 1,128,409 $ 1,128,409 $ — $ —
Trading securities 5,258 5,258 — — 5,258
Equity securities 655 655 — 655 —
Securities available for sale and other 655,723 655,723 6,989 644,833 3,901
Securities held to maturity 507,658 433,382 — 432,280 1,102
Federal Home Loan Bank stock 19,565 N/A N/A N/A N/A
Net loans 9,270,294 8,984,103 — — 8,984,103
Loans held for sale 3,076 3,076 — 3,076 —
Accrued interest receivable 49,410 49,410 — 49,410 —
Derivative assets 47,923 47,923 — 47,799 124
Financial Liabilities
Total deposits $ 10,375,204 $ 10,367,636 $ — $ 10,367,636 $ —
Short-term debt 103,500 103,635 — 103,635 —
Long-term Federal Home Loan Bank advances 212,982 209,736 — 209,736 —
Subordinated borrowings 121,612 110,447 — 110,447 —
Accrued interest payable 9,005 9,005 — 9,005 —
Derivative liabilities 79,039 79,039 — 79,039 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

Presented below is net interest income after provision for credit losses for the three months ended March 31, 2025 and 2024, respectively.

Three Months Ended March 31,
(In thousands) 2025 2024
Net interest income $ 89,771 $ 88,140
Provision for credit losses 5,500 6,000
Net interest after provision for credit losses $ 84,271 $ 82,140

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. TAX EQUITY INVESTMENTS

The Company typically accounts for tax equity investments using the proportional amortization method, if certain criteria are met. The election to account for tax equity investments using the proportional amortization method is done so on a tax credit program-by-tax credit program basis. Under the proportional amortization method, the Company amortizes the initial cost of the investment, which is inclusive of any delayed equity contributions, that are unconditional and legally binding or for equity contributions that are contingent on a future event, when that event becomes probable, in proportion to the income tax credits and other income tax benefits that are allocated to the Company over the period of the investment.

Under the proportional amortization method, the Company amortizes the initial cost of the investment, inclusive of delayed equity contributions, in proportion to the income tax credits and other income tax benefits that are allocated to the Company over the period of the investment. The net benefits of these investments, which are comprised of income tax credits and operating loss income tax benefits, net of investment amortization, are recognized in the Consolidated Statements of Income as a component of income tax expense. At March 31, 2025 and December 31, 2024 the carrying value of all tax equity investments was $44.9 million and $35.6 million, respectively, and were included in other assets on the Consolidated Balance Sheets.

The carrying value of the investments accounted for under the proportional amortization method (PAM) on March 31, 2025 included $24 million of delayed equity contributions described in the chart below.

As of March 31, 2025, the Company's delayed equity contributions were estimated to be paid as follows:

(In thousands) Delayed Equity Contributions
2025 $ 11,782
2026 7,294
2027 4,277
2028 258
Thereafter 237
Total delayed equity contributions $ 23,848

The following table presents income tax credits and other income tax benefits, as well as amortization expense, associated with investments where the proportional amortization method of accounting has been applied for the periods indicated.

Three Months Ended March 31,
(In thousands) 2025 2024
Provision for Income Taxes:
Amortization of tax credit investments $ (951) $ (639)
Tax credit and other tax benefit/(expense) 854 573
Total provision for income taxes $ (97) $ (66)

There was no material non-income tax related expense associated with these investments recorded outside of income tax expense for the three months ended March 31, 2025 and 2024. There were no impairment losses recorded on tax equity investments during the three months ended March 31, 2025 and 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. PENDING MERGER

On December 16, 2024, Berkshire Hills Bancorp, Inc., a Delaware corporation (“Berkshire”), Commerce Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Berkshire (“Merger Sub”), and Brookline Bancorp, Inc., a Delaware corporation (“Brookline”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Brookline, with Brookline as the surviving entity (the “Merger”), and immediately following the Merger, Brookline will merge with and into Berkshire, with Berkshire as the surviving entity (the “Holdco Merger”). The Merger Agreement further provides that immediately following the Merger, Berkshire Bank, a Massachusetts trust company and a wholly owned subsidiary of Berkshire, Bank Rhode Island, a Rhode Island-chartered bank and a wholly owned subsidiary of Brookline, and PCSB Bank, a New York-chartered bank and a wholly owned subsidiary of Brookline, each will merge with and into Brookline Bank, a Massachusetts trust company and a wholly owned subsidiary of Brookline, with Brookline Bank as the surviving bank (the “Bank Mergers” and, together with the Merger and the Holdco Merger, the “Proposed Transaction”).

Upon the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, $0.01 par value, of Brookline (“Brookline Common Stock”) outstanding immediately prior to the Effective Time, other than certain shares held by Brookline or Berkshire, will be converted into the right to receive 0.42 of a share (the “Exchange Ratio”) of common stock, par value $0.01 per share, of Berkshire (“Berkshire Common Stock”). Holders of Brookline Common Stock will receive cash in lieu of fractional shares of Berkshire Common Stock.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA

The following summary data is based in part on the consolidated financial statements and accompanying notes and other information appearing elsewhere in this Form 10-Q.

At or for the
Three Months Ended March 31,
2025 2024
NOMINAL AND PER SHARE DATA
Net earnings/(loss) per common share, diluted $ 0.56 $ (0.47)
Operating earnings per common share, diluted (1)(2) 0.60 0.49
Net income/(loss), (thousands) 25,719 (20,188)
Operating net income, (thousands) (1)(2) 27,621 20,934
Net interest income, non FTE 89,771 88,140
Net interest income, FTE (4) 91,655 90,146
Total common shares outstanding, (thousands) 46,377 43,415
Average diluted shares, (thousands) 46,061 43,028
Total book value per common share 25.81 23.26
Tangible book value per common share (2) 25.50 22.84
Dividends per common share 0.18 0.18
Dividend payout ratio 32.52 % N/M
PERFORMANCE RATIOS (3)
Return on equity 8.63 % (7.93) %
Operating return on equity (1)(2) 9.28 8.23
Return on tangible common equity (1)(2) 9.02 (7.73)
Operating return on tangible common equity (1)(2) 9.66 8.73
Return on assets 0.88 (0.69)
Operating return on assets (1)(2) 0.94 0.71
Net interest margin, FTE (4) 3.24 3.15
Efficiency ratio (1)(2) 59.45 66.26
FINANCIAL DATA (in millions, end of period)
Total assets $ 12,013 $ 12,147
Total earning assets 11,334 11,430
Total loans 9,429 9,086
Total deposits 9,880 9,883
Loans/deposits (%) 95 % 92 %
Total shareholders' equity 1,197 1,010
ASSET QUALITY
Allowance for credit losses, (millions) $ 117 $ 107
Net charge-offs, (millions) (4) (4)
Net charge-offs (QTD annualized)/average loans 0.15 % 0.18 %
Provision expense, (millions) $ 6 $ 6
Non-accruing loans/total loans 0.25 % 0.24 %
Allowance for credit losses/non-accruing loans 501 500
Allowance for credit losses/total loans 1.24 1.18
CAPITAL RATIOS
Common equity tier 1 capital to risk-weighted assets 13.2 % 11.6 %
Tier 1 capital leverage ratio 10.9 9.5
Tangible common shareholders' equity/tangible assets (2) 9.9 8.2

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(1)    Operating measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions and restructuring activities. Refer to "Reconciliation of Non-GAAP Financial Measures" for additional information.

(2)    Non-GAAP financial measure. Refer to "Reconciliation of Non-GAAP Financial Measures" for additional information.

(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.

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AVERAGE BALANCES AND AVERAGE YIELDS/RATES

The following table presents average balances and an analysis of average rates and yields on an annualized fully taxable equivalent basis for the periods included:

Three Months Ended March 31,
2025 2024
(Dollars in millions) Average<br>Balance Interest (FTE basis) Yield/Rate<br>(FTE basis) Average<br>Balance Interest (FTE basis) Yield/Rate<br>(FTE basis)
Assets
Loans:
Commercial real estate $ 4,865 $ 75 6.19 % $ 4,553 $ 75 6.53 %
Commercial and industrial loans 1,446 25 7.00 1,355 26 7.64
Residential mortgages 2,708 30 4.35 2,668 29 4.15
Consumer loans 370 6 6.57 465 8 7.24
Total loans (1) 9,389 136 5.80 9,041 138 6.04
Investment securities (2) 1,312 9 2.62 1,726 10 2.38
Short-term investments & loans held for sale (3) 534 6 4.19 489 6 5.07
New York branch loans held for sale (4) — — — 18 — 5.72
Total interest-earning assets 11,235 151 5.35 11,274 154 5.44
Intangible assets 14 x 19 X
Other non-interest earning assets 505 x 462
Total assets $ 11,754 $ 11,755
Liabilities and shareholders’ equity
Deposits:
Non-interest-bearing demand deposits $ 2,262 $ — — % $ 2,348 $ — — %
NOW and other 758 2 1.32 799 3 1.37
Money market 3,247 23 2.87 3,083 25 3.25
Savings 1,038 3 1.13 1,038 3 0.97
Time 2,542 25 3.91 2,561 26 4.07
Total deposits 9,847 53 2.18 9,829 57 2.29
Borrowings and notes (5) 463 6 4.90 504 7 5.52
New York branch non-interest-bearing deposits (4) — — — 30 — —
New York branch interest-bearing deposits (4) — — — 119 1 2.75
Total funding liabilities 10,310 59 2.30 10,482 65 2.45
Other non-interest earning liabilities 253 255
Total liabilities 10,563 10,737
Total common shareholders' equity 1,191 1,018
Total shareholders’ equity 1,191 1,018
Total liabilities and shareholders’ equity $ 11,754 $ 11,755
Net interest margin, FTE 3.24 % 3.15 %
Supplementary data
Net Interest Income, non FTE $ 89.8 $ 88.1
FTE income adjustment (6) 1.9 2.0
Net Interest Income, FTE $ 91.7 $ 90.1

(1)    The average balances of loans include nonaccrual loans and deferred fees and costs.

(2)    The average balance for securities available for sale is based on amortized cost.

(3)    Interest income on loans held for sale is included in loan interest income on the Consolidated Statements of Income statement.

(4)    New York branch loans and deposits moved to held for sale on March 4, 2024. The New York branch sales were completed in 2024.

(5)    The average balances of borrowings include the finance lease obligation presented under other liabilities on the Consolidated Balance Sheets.

(6)    Fully taxable equivalent considers the impact of tax advantaged investment securities and loans. The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 27%.

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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 are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures 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 provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP operating earnings can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP operating earnings information set forth is not necessarily comparable to non- GAAP information which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company’s GAAP financial information.

The Company utilizes the non-GAAP measure of operating earnings in evaluating operating trends, including components for operating revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations. These items primarily include restructuring costs. 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.

The Company also calculates operating earnings per share based on its measure of operating earnings and diluted common shares. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to merger and acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company’s performance. Adjustments in 2025 were primarily related to the pending merger. Adjustments in 2024 were primarily related to branch sales and consolidations, and loss on sale of securities.

Management believes that the computation of non-GAAP operating earnings and operating earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following table summarizes the reconciliation of non-GAAP items recorded for the periods indicated:

At or for the Three Months Ended March 31,
(In thousands) 2025 2024
GAAP Net income/(loss) $ 25,719 $ (20,188)
Adj: Loss on sale of AFS securities — 49,909
Adj: Merger, restructuring, and other expense 2,454 3,617
Adj: Income taxes (552) (12,404)
Total operating income (non-GAAP) (1) (A) $ 27,621 $ 20,934
GAAP Total revenue $ 110,443 $ 55,541
Adj: Loss on sale of AFS securities — 49,909
Total operating revenue (non-GAAP) (1) (B) $ 110,443 $ 105,450
GAAP Total non-interest expense $ 70,366 $ 76,020
Less: Total non-operating expense (see above) (2,454) (3,617)
Operating non-interest expense (non-GAAP) (1) (C) $ 67,912 $ 72,403
(In millions, except per share data)
Total average assets (D) $ 11,754 $ 11,755
Total average shareholders’ equity (E) 1,191 1,018
Total average tangible shareholders’ equity (1) (G) 1,177 999
Total tangible shareholders’ equity, period-end (2)(3) (I) 1,183 991
Total tangible assets, period-end (1) (J) 11,999 12,128
Total common shares outstanding, period-end (thousands) (K) 46,377 43,415
Average diluted shares outstanding (thousands) (L) 46,061 43,028
Earnings/(loss) per common share, diluted $ 0.56 $ (0.47)
Operating earnings per common share, diluted (1) (A/L) 0.60 0.49
Book value per common share, period-end 25.81 23.26
Tangible book value per common share, period-end (1) (I/K) 25.50 22.84
Total shareholders' equity/total assets 9.96 8.31
Total tangible shareholder's equity/total tangible assets (1) (I/J) 9.86 8.17
x
Performance ratios (3) x
Return on equity 8.63 % (7.93) %
Operating return on equity (1) (A/E) 9.28 8.23
Return on tangible common equity (1)(4) 9.02 (7.73)
Operating return on tangible common equity (1)(4) (A+O)/(G) 9.66 8.73
Return on assets 0.88 (0.69)
Operating return on assets (1) (A/D) 0.94 0.71
Efficiency ratio (1)(7) (C-O)/(B+M+P) 59.45 66.26
Supplementary data (In thousands)
Tax benefit on tax-credit investments (5) (M) N/M N/M
Non-interest income tax-credit investments amortization (6) (N) N/M N/M
Net income on tax-credit investments (M+N) N/M N/M
Intangible amortization (O) 1,128 1,205
Fully taxable equivalent income adjustment (P) 1,884 2,006

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(1)    Non-GAAP financial measure.

(2)    Total tangible shareholders’ equity is computed by taking total 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.

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

(4)    Operating return on tangible common equity is computed by dividing the total operating income adjusted for the tax-affected amortization of intangible assets, assuming a 27% marginal rate, by tangible equity.

(5)    The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in tax equity investments.

(6)    The non-interest income amortization is the reduction to the tax-advantaged investments and are incurred as the tax credits are generated.

(7)    As of January 1, 2024, the Company elected the proportional amortization method for certain tax credits eliminating the need to adjust the efficiency ratio for tax credit impacts.

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GENERAL

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing in Part I, Item 1 of this document and with the Company’s consolidated financial statements and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2024 Annual Report on Form 10-K. In the following discussion, income statement comparisons are against the same period of the previous year and balance sheet comparisons are against the previous fiscal year-end, unless otherwise noted. Financial results discussed herein are not necessarily indicative of the results for the year 2025 or any future period. In management’s discussion and analysis of financial condition and results of operations, certain reclassifications have been made to make prior periods comparable. Tax-equivalent adjustments are the result of increasing income from tax-advantaged loans and securities by an amount equal to the taxes that would be paid if the income were fully taxable based on a 27% marginal rate (including state income taxes net of federal benefit). In the discussion, unless otherwise specified, references to earnings per share and "EPS" refer to diluted earnings per common share.

Berkshire Hills Bancorp, Inc. (“Berkshire” or “the Company”) is a Delaware corporation headquartered in Boston and the holding company for Berkshire Bank (“the Bank”) which operates as a commercial bank under a Massachusetts trust company charter. Established in 1846, the Bank provides business and consumer banking, mortgage, wealth management, and investment services. Berkshire's stock is traded on the New York Stock Exchange. It has $12.0 billion in assets and operates 83 branch offices in New England and New York.

Proposed Transaction with Brookline Bancorp, Inc. On December 16, 2024, Berkshire Hills Bancorp, Inc., Commerce Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Berkshire formed solely to facilitate the merger (“Merger Sub”) and Brookline Bancorp, Inc., a Delaware corporation (“Brookline”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Brookline, with Brookline as the surviving entity, and immediately thereafter, Brookline will merge with and into Berkshire, with Berkshire as the surviving entity (collectively, the “Merger”). As a result of the Merger, the separate corporate existence of Brookline will cease, and Berkshire will continue as the surviving corporation. Under the terms of the Merger Agreement, which was unanimously approved by the Boards of Directors of both companies, each outstanding share of Brookline common stock will be exchanged for the right to receive 0.42 shares of Berkshire common stock. Holders of Brookline common stock will receive cash in lieu of fractional shares of Berkshire common stock. As a result of the proposed transaction and a $100 million common stock offering completed by Berkshire to support the proposed transaction, Berkshire stockholders will own approximately 55% and Brookline stockholders will own approximately 45% of the outstanding shares of the combined company. The proposed transaction is expected to close in the second half of 2025, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approvals from Berkshire and Brookline stockholders.

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,” “remain,” “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 the sections titled “Forward-Looking Statements” and “Risk Factors” in 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. These factors include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the right of Berkshire or Brookline to terminate the merger agreement; the outcome of any legal proceedings that may be instituted against Berkshire or Brookline; delays in completing the proposed transaction with Brookline; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction) or stockholder approvals, or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all, including the ability of Berkshire and

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Brookline to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the impact of certain restrictions during the pendency of the proposed transaction on the parties’ ability to pursue certain business opportunities and strategic transactions; diversion of management’s attention from ongoing business operations and opportunities; and potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction.

Because of these and other uncertainties, Berkshire’s actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, Berkshire’s past results of operations do not necessarily indicate Berkshire’s combined future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. Berkshire is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. Berkshire qualifies all of its forward-looking statements by these cautionary statements

OVERVIEW

First quarter earnings per share were $0.56 in 2025 compared to a loss of $(0.47) per share in 2024. The non-GAAP measure of operating earnings per share increased year-over-year by 22% to $0.60 from $0.49. This reflected positive operating leverage from revenue growth and expense reduction. This included the benefit of the Company’s 2024 strategic initiatives including the sale of ten New York branches, three branch consolidations, front line staff expansion, and enhanced digital banking tools. Per share results in 2025 include the impact of $100 million in common shares issued in December 2024 in connection with the planned merger with Brookline Bancorp. First quarter non-operating adjustments were primarily related to the pending merger in 2025 and to branch sales and consolidations and securities sales in 2024.

The Company’s first quarter return on tangible common equity was 9.02% in 2025 versus (7.73)% in 2024. The non-GAAP measure of operating return on tangible common equity was 9.66% and 8.73% in these respective periods, reflecting the benefit of five quarters of sequential quarterly growth in operating earnings. Return on assets has also improved over this interval, measuring 0.88% on a GAAP basis and 0.94% on an operating basis in the most recent quarter.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND MARCH 31, 2024

Summary. First quarter results were net income of $26 million in 2025 compared to a net loss of $20 million in 2024. Results in 2024 include a $50 million non-operating loss on the sale of securities. First quarter operating income increased year-over-year by $7 million, or 32%, to $28 million reflecting a $5 million increase in operating revenue and a $4 million decrease in operating expenses. Operating revenue increased due to a $2 million increase in net interest income and a $3 million increase in operating non-interest income. The efficiency ratio improved year-over-year to 59.5% from 66.3%, achieving the most favorable quarterly level in two years.

Net Interest Income. First quarter net interest income increased year-over-year by $2 million, or 2%, to $90 million due a 3% increase in the net interest margin to 324 basis points from 314 basis points. This increase was primarily due to the reinvestment of the proceeds of the $0.4 billion from sales of lower yielding securities in the first quarter of 2024 into higher yielding loans in subsequent periods. Additionally net income benefited from the investment of proceeds from the stock offering in December 2024. Both loan yields and deposit costs decreased year-over-year due to a 100 basis reduction in the federal funds rate in the second half of 2024. First quarter net interest income in 2025 did not include the contribution related to the ten branches, including $383 million in deposits, which were sold during the third quarter of 2024.

Non-Interest Income. First quarter non-interest income was $21million in 2025 compared to a $33 million loss in 2024. Excluding the $50 million non-operating loss on the 2024 securities sale, the non-GAAP measure of operating non-interest income increased $3 million, or 19%, year-over-year. Gain on SBA loan sales increased $1.6 million on higher business volumes and loan related fees increased $1.1 million.

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Provision Expense for Credit Losses. First quarter 2025 provision expense decreased year-over-year by $0.5 million to $5.5 million. In the most recent quarter, net loan charge-offs totaled $3.5 million and measured 0.15% of average loans. The ratio of the allowance to loans increased to 1.24% at period-end from 1.22% at the start of the year, including the qualitative impact of increased economic uncertainties on expected credit loss expense.

Non-Interest Expense. Non-interest expense decreased year-over-year to $70 million from $76 million. First quarter non-operating expense was $2.4 million in 2025 and $3.6 million 2024. This expense was primarily related to the pending merger in 2025 and to the pending New York branch sale in 2024. The non-GAAP measure of operating non-interest expense decreased $4.5 million, or 6%, year-over year. This included the impact from the sale of ten New York branches and the consolidation of three other branches, bringing the total branch count down to 83 offices. Most major categories of operating expense decreased year-over-year, with the largest decreases in occupancy and equipment ($1.0 million), professional services ($1.0 million), and loan servicing related costs in the category of other non-interest expense ($2.1 million).

Within compensation expense, a $1.5 million reduction in salary expense to $26.6 million was mostly offset by a $1.7 million increase in incentive expense to $7.9 million, reflecting the Company’s strategic initiatives. Full time equivalent staff totaled 1,186 positions at March 31, 2025, compared to 1,216 positions at year-end 2024 and 1,340 positions at March 31, 2024. There were 40 positions transferred in the branch sales in the third quarter of 2024.

Income Tax Expense. The first quarter effective tax rate was 26% in 2025 compared to 24% in 2024.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2025 COMPARED TO DECEMBER 31, 2024

General. Total assets decreased 2% to $12.0 billion at period-end from $12.3 billion at year-end 2024, primarily reflecting the impact on cash and equivalents from seasonal run-off of higher year-end overnight deposits. Total loans increased by 0.5% in the quarter. Measures of asset quality remained favorable; delinquent and non-performing loans were 0.42% of total period-end loans; this was the lowest quarterly level in nearly two decades. Loans/deposits measured 95% at period-end and tangible common equity/tangible assets measured 9.9%.

Loans. Total loans increased $44 million to $9.43 billion due to 1% increases in commercial real estate loans and residential mortgage loans. During the quarter, the Bank sold the remaining portfolio of Upstart-related consumer loans which totaled $7 million at year-end 2024. First quarter consumer loan net charge-offs included the net loss on this sale. The yield on average loans decreased by 8 basis points to 5.80% for the first quarter of 2025, compared to the fourth quarter of 2024. At period-end, 44% of loans repriced within three months.

Based on the supervisory definition of commercial real estate loans which excludes owner-occupied properties, the supervisory measure of commercial real estate loans to total bank regulatory capital measured 289% at period-end and was not materially changed from 292% at year-end 2024. The supervisory measure of construction loans to bank regulatory capital measured 52% and 54% at these respective dates.

Asset Quality and Allowance for Credit Losses on Loans. Loan performance indicators remained at historically favorable levels. Period-end non-performing loans measured 0.25% of total loans and accruing delinquent loans were 0.17% of total loans. The comparable measures at year-end 2024 were 0.26% for both of these measures.

Net charge-offs were 0.15% annualized compared to average loans, and measured 0.08% of average loans excluding Upstart-related loans. The ratio of the allowance to total loans increased to 1.24% at period-end from 1.22% at year-end 2024. The allowance related to residential mortgages and home equity loans increased primarily due to increases in qualitative factors related to economic, tariff, and recessionary concerns. This was partially offset by a decrease in the consumer loan reserve following the sale of the Upstart loan portfolio.

Criticized loans increased to 3.00% of total loans at period-end from 2.62% at year-end 2024. This was largely due to an increase in substandard loans to 1.56% of total loans from 1.20% for these respective dates. This primarily reflected two commercial real estate loans totaling $29 million which remained on accrual status. Potential problems loans, which are defined as accruing classified loans, increased to $124 million at period-end from $88 million at year-end 2024, primarily due to the above two loans.

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Deposits and Borrowings. Total end of period deposits decreased $495 million to $9.88 billion primarily due to runoff of seasonally high year-end payroll related balances. Total end of period deposits excluding payroll and brokered deposits increased $11 million during the quarter. Average deposits increased quarter-over-quarter by $188 million, or 2%, due to $179 million in higher average balances maintained by payroll clients during the quarter. The average cost of deposits decreased 12 basis points to 2.18% in the first quarter of 2025 compared to the fourth quarter of 2024. Total period-end borrowings increased $247 million during the quarter to $685 million due to the seasonal decline in deposits.

Derivative Financial Instruments. The notional amount of derivative financial instruments totaled $5.2 billion at period end, compared to $4.9 billion at year-end 2024. Cash flow hedges decreased by $75 million and interest rate swaps on commercial loans increased by $156 million, or 8%. The net fair value of these instruments at period-end was a liability of $23 million, decreasing from a liability of $31 million at year-end 2024. Included in derivative financial instruments are $725 million in cash flow hedges on commercial loans, of which $200 million mature in 2025, $425 million mature in 2026, and $100 million mature in 2027. The Company recorded a $155 thousand charge to interest expense for the realized loss on cash flow hedging instruments in the first quarter of 2025, compared to a charge of $157 thousand in the first quarter of 2024.

Shareholders’ Equity. Total shareholders’ equity increased $29 million, or 3%, to $1.2 billion during the quarter. This included the benefit of an $11 million decrease to $95 million in the accumulated other comprehensive loss due to improved securities prices. The common equity Tier 1 ratio increased to 13.2% at period-end from 13.0% at year-end 2024. Book value per share increased by $0.66, or 3%, to $25.81 per share during the quarter, and the non-GAAP measure of tangible book value per share increased by $0.68, or 3%, to $25.50.

Liquidity and Cash Flows

Liquidity is defined as the ability to generate sufficient cash flows to meet all present and future funding requirements at reasonable costs for the Company, including the Bank. Liquidity management addresses both the Company’s ability to fund new loans and investments pursuant to commitments and as opportunities arise, to meet customer deposit withdrawals and to repay borrowings and subordinated notes as they mature. The Company views its liquidity as satisfactory for current conditions as well as for stressed scenarios in its liquidity testing models.

At March 31, 2025, liquid assets totaling $1.5 billion included $0.8 billion in cash and equivalents and $0.7 billion in securities available for sale. Liquid assets declined from $1.8 billion at year-end 2024 due to the runoff of seasonally high overnight deposits at year-end. Similarly wholesale funds increased to $1.1 billion from $0.9 billion, and consisted of $0.7 billion in borrowings and $0.4 billion in brokered deposits at period-end. The ratio of loans to deposits increased to 95% at period end from 90% at year-end 2024.

Unused borrowing availability at period-end from the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston totaled $3.9 billion, compared to $4.1 billion at year-end 2024. Borrowings from these sources are supported by collateral, to the extent utilized. Cash balances at the holding company totaled $145 million at period-end, including the net proceeds from the $100 million capital placement in December 2024.

During the first quarter of 2025, seasonal deposit outflows were the primary use of funds which was funded from cash and equivalents and increased borrowings.

Capital Resources

Please see the “Shareholders’ Equity” section of the Comparison of Financial Condition for a discussion of shareholders’ equity together with the note on Shareholders' Equity in the consolidated financial statements. Additional information about capital resources and regulatory capital is contained in the notes to the consolidated financial statements and in the Company's most recent Form 10-K.

The Company’s goal is to maintain sound capitalization and use capital generation to support organic growth and shareholder distributions in the form of dividends and stock repurchases. The Company’s goal is to maintain a “well-capitalized” regulatory designation under projected and stressed financial projections.

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While the Company monitors the book value of equity and related metrics, it primarily manages capital based on regulatory capital measures, with a focus on the common equity Tier 1 capital ratio. This ratio measured 13.2% at period end, compared to 13.0% at year-end 2024.

In acting as a source of strength for the Bank, the Company relies in the long term on capital distributions from the Bank in order to provide operating and capital service for the Company, which in turn can access national financial markets to provide financial support to the Bank. Capital distributions from the Bank to the parent company presently require approval by the FDIC.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements

included in its most recent Annual Report on Form 10-K. Modifications to significant accounting policies made during the year are described in Note 1 to the consolidated financial statements included in Item 1 of this report. The preparation of the consolidated financial statements in accordance with GAAP and practices generally applicable to the financial services industry requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and to disclose contingent assets and liabilities. Actual results could differ from those estimates.

Management has identified the Company's most critical accounting policies as related to:

• Allowance for Credit Losses on Loans

• Fair Value Measurements

These policies are considered most critical in that they are important to the Company’s financial condition and results, and they require management’s subjective and complex judgment as a result of the need to make estimates about the effects of matters that are inherently uncertain. Both of these policies were significant in determining income and financial condition in the financial statements. There is further discussion of the application of these policies in the Company's most recent Form 10-K.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For additional discussion about the Company’s Quantitative and Qualitative Aspects of Market Risk, please review Item 7A of the most recent report on Form 10-K which sets forth the methodologies employed by the Company and the various aspects of its analysis of its interest rate sensitivity.

Market risk represents the risk of loss to earnings, capital and the economic values of certain assets and liabilities resulting from changes in interest rates and equity prices. The only significant market risk exposure for the Company is Interest Rate Risk (“IRR”). This is a result of the Company’s core business activities of making loans and accepting deposits, as well as investments and funding activities.

The effective management of IRR is essential to achieving the Company’s financial objectives. This responsibility resides with the Asset Liability Committee (“ALCO”). The ALCO’s role is to establish an effective asset/liability decision-making process to aid in managing risk exposures and achieving strategic objectives and corporate financial goals. The Company manages IRR by using two primary risk measurement techniques: simulation of net interest income and simulation of economic value of equity. These two measurements are complementary and provide both short-term and long-term risk profiles of the Company.

Net Interest Income (“NII”) at Risk Simulation is used to measure the sensitivity of net interest income to changes in market rates over a 12 month period assuming a static balance sheet. This simulation captures underlying product behaviors, such as asset and liability repricing dates, balloon dates, interest rate indices and spreads, rate caps and floors, as well as other behavioral attributes. The simulation of net interest income also requires a number of key assumptions such as (i) prepayment projections for loans and securities; (ii) new business loan spreads; and (iii) deposit pricing assumptions. Combined, these assumptions can be inherently uncertain, and as a result, actual results may differ from simulation forecasts due to the timing, magnitude and frequency of interest rate changes, future business conditions, as well as unanticipated changes in management strategies.

The Company uses two sets of standard scenarios to measure NII Sensitivity. Parallel shock scenarios assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario, while twist scenarios assume the shape of the curve flattens or steepens instantaneously.

The following tables set forth the estimated percent change in the Company’s NII Sensitivity compared to the flat rate scenario over one-year simulation periods beginning March 31, 2025 and December 31, 2024.

Estimated Percent Change in Net Interest Income
Parallel Interest Rate Shock (basis points) March 31, 2025 December 31, 2024
+200 5.4% 2.2%
+100 2.8 1.2
-100 (3.1) (1.4)
-200 (6.3) (2.9)
Estimated Percent Change in Net Interest Income
Yield Curve Twist Interest Rate Shock <br>(basis points) March 31, 2025 December 31, 2024
Short End +100 1.1% (0.4)%
Short End -100 (1.2) 0.3
Long End +100 1.7 1.6
Long End -100 (1.8) (1.7)

The Company’s NII sensitivity results at period-end demonstrate increased asset sensitivity to a one year parallel shock. This includes the impact of the reduction in cash flow hedges and increased variable rate commercial loans. Sensitivities to yield curve twists did not change significantly during the quarter.

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Economic Value of Equity (EVE) Sensitivity analysis is conducted to ascertain a longer-term view of the Company’s exposure to changes in interest rates. As with NII modeling, EVE Sensitivity captures product characteristics such as loan resets, repricing terms, maturity dates, rate caps and floors. Key assumptions include loan prepayment speeds, deposit pricing elasticity and non-maturity deposit attrition rates. These assumptions can have significant impacts on valuation results as the assumptions remain in effect for the entire life of each asset and liability. All key assumptions are subject to periodic review.

Base case EVE Sensitivity analysis is calculated by estimating the net present value of all future cash flows from existing assets and liabilities using current interest rates. The current spot interest rate curve is shocked up and down to generate new interest rate curves for parallel rate shock scenarios. These new curves are then used to recalculate EVE Sensitivity for rate shock scenarios.

The following table sets forth the estimated percent change in the Company’s EVE Sensitivity from the base case scenario, assuming various instantaneous parallel shocks in interest rates.

Estimated Percent Change in Economic Value of Equity
Parallel Shock Rate Change (basis points) March 31, 2025 December 31, 2024
+200 (3.4)% (1.4)%
+100 (1.7) (0.6)
-100 1.1 0.2
-200 2.1 (0.1)

Modeled EVE sensitivity became more liability sensitive in the first quarter primarily due to an update to the weighted average life of non-maturity deposits assumption.

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ITEM 4.           CONTROLS AND PROCEDURES

a)  Disclosure controls and procedures.

The principal executive officers, including the principal financial officer, based on their evaluation of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that the Company’s disclosure controls and procedures were effective.

b)  Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

ITEM 1.            LEGAL PROCEEDINGS

As of March 31, 2025, neither the Company nor the Bank was involved in any pending legal proceedings believed by management to be material to the Company’s financial condition or results of operations. Periodically, there have been various claims and lawsuits involving the Bank, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans, and other issues incident to the Bank’s business. A summary of certain legal matters involving unsettled litigation or pertaining to pending transactions are as follows:

On February 4, 2020, the Bank filed a complaint in the New York State Supreme Court for the County of Albany against Pioneer Bank (“Pioneer”) seeking damages of approximately $16.0 million. The complaint alleges that Pioneer is liable to the Bank for a credit loss of approximately $16.0 million suffered by the Bank in the third quarter of 2019 as a result of Pioneer’s breaches of a series of loan participation agreements executed in 2017, 2018 and 2019 in which it served as the lead bank, as well as constructive fraud, fraudulent concealment and/or negligent misrepresentation. Pioneer filed a motion to dismiss aspects of the Bank’s complaint, which motion was allowed in part by the court to dismiss the Bank’s negligent misrepresentation claim, and denied in part by the court to allow all other claims by the Bank to proceed. The Company wrote down the underlying credit loss in its entirety in the third quarter of 2019, but recognized a partial recovery of $1.7 million early in the second quarter of 2020. The Company has not accrued for any additional anticipated recovery at this time. Extensive discovery has taken place in this action. On November 30, 2022, the Bank filed an amended complaint in its action against Pioneer setting forth more detailed allegations of Pioneer’s breaches of the loan participation agreements and stating additional claims for fraudulent inducement to cause Berkshire to join the loan participation agreements, constructive fraud and fraudulent concealment. On January 30, 2023, as part of its response to the Bank’s amended complaint, Pioneer filed a counterclaim against the Bank alleging (i) certain breaches by the Bank of the 2019 loan participation agreement stemming from actions that the Bank took to protect its interests after it learned of the facts and circumstances that caused the underlying credit loss, and (ii) that as a result of accepting the partial recovery of approximately $1.7 million in the second quarter of 2020 the Bank should be deemed to have ratified the 2019 loan participation agreement and mooted its claims against Pioneer. Further discovery is continuing between the parties, and the Bank continues to actively build its case in this matter

On or about August 10, 2020, a former employee of the Bank’s subsidiary First Choice Loan Services Inc. (“FCLS”) filed a complaint in the Court of Common Pleas, Bucks County Pennsylvania against FCLS and two of its former senior corporate officers generally alleging wrongful termination as a result of purported whistleblower retaliation and other violations of New Jersey state employment law. The complaint also purports to name the Bank and the Company as additional defendants, even though neither entity ever employed, paid wages to or contracted with the plaintiff. On November 16, 2020, the plaintiff filed a First Amended Complaint reiterating the same claims against the same defendants. The Company's liability insurer has provided outside litigation counsel to defend the Company and the Bank in this matter, as well as FCLS and its former senior corporate officers. On December 7, 2020, defense counsel filed Preliminary Objections on behalf of the Company, the Bank, FCLS and FCLS’s former senior corporate officers denying the plaintiff’s claims and seeking dismissal of the case and an order that the plaintiff’s claims must proceed through arbitration in accordance with contractual obligations set forth in plaintiff’s previous employment agreement with FCLS. On June 30, 2021, the court dismissed the plaintiff’s complaint without prejudice in support of FCLS’s petition to compel arbitration. The parties are preparing for arbitration proceedings that are expected to occur no earlier than the second quarter of 2025. Discovery is continuing between the parties in preparation for final arbitration.

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On or about May 13, 2024, a complaint was filed against the Bank in the United States District Court for the Northern District of New York, Syracuse Division by an individual who claims to have filed the complaint on behalf of a purported class of victims of an alleged Ponzi scheme perpetrated by a former Berkshire Bank customer. On October 31, 2024, the court dismissed the plaintiff’s complaint with prejudice for failure to state a claim upon which relief could be granted under Federal Rules of Civil Procedure 12(b)(6) and 9(b). In connection with bankruptcy proceedings involving the former customer and his operating entities, the Bank has received a Rule 2004 subpoena from the bankruptcy trustee seeking information related to the Ponzi scheme. At this time, no claim has been asserted against the Bank in the bankruptcy proceedings, nor has the trustee threatened to pursue litigation.

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ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed herein and in Part I, “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K, which could materially affect the Company's business, financial condition, or future operating results. These risks include merger-related risks regarding the pending merger with Brookline Bancorp. The risks described in this report and in the Annual Report on Form 10-K are not the only risks presently facing the Company. Additional risks and uncertainties not currently known to the Company, or currently deemed to be immaterial, also may materially adversely affect the Company's business, financial condition, and/or operating results. There have been no material changes in risk factors from those identified in the Form 10-K.

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ITEM 2.               UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)                Recent Sales of Unregistered Securities

The Company occasionally engages in the practice of transferring unregistered securities for the purpose of completing business transactions. These shares are issued to vendors or other organizations as consideration for services performed in accordance with each contract. During the three months ended March 31, 2025 and 2024 there were no shares transferred.

(b)                 Not applicable.

(c)                 The following table provides certain information with regard to shares repurchased by the Company in the first quarter of 2025:

Total number of Average price Total number of shares<br>purchased as part of<br>publicly announced Maximum number of<br>shares that may yet<br>be purchased under
Period shares purchased paid per share plans or programs the plans or programs
January 1-31, 2025 — $ — — —
February 1-28, 2025 — — — —
March 1-31, 2025 — — — —
Total — $ — — —

ITEM 3.                DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.                  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.                OTHER INFORMATION

During the three months ended March 31, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

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ITEM 6.                   EXHIBITS

3.1 Amended and Restated Certificate of Incorporation of Berkshire Hills Bancorp, Inc.(1)
3.2 Amended and Restated Bylaws of Berkshire Hills Bancorp, Inc. (2)
4.1 Form of Common Stock Certificate of Berkshire Hills Bancorp, Inc. (3)
4.2 Certificate of Designations of Series B Non-Voting Preferred Stock of Berkshire Hills Bancorp, Inc. (4)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements tagged as blocks of text and including detailed tags.
104 The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL.

_______________________________________

(1)     Incorporated herein by reference from the Exhibits to the Form 10-Q as filed on August 9, 2018.

(2)    Incorporated herein by reference from the Exhibits to the Form 8-K as filed on June 26, 2017.

(3)    Incorporated herein by reference from the Exhibits to the Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No. 333-32146.

(4)    Incorporated herein by reference from the Exhibits to the Form 8-K as filed on October 16, 2017.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BERKSHIRE HILLS BANCORP, INC.
Dated: May 12, 2025 By: /s/ Nitin J. Mhatre
Nitin J. Mhatre
President and Chief Executive Officer
Dated: May 12, 2025 By: /s/ Brett Brbovic
Brett Brbovic
Executive Vice President and Chief Financial Officer

80

Document

Exhibit 31.1

CERTIFICATION

I, Nitin J. Mhatre, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Berkshire Hills Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
--- ---
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
--- ---
a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 12, 2025 /s/ Nitin J. Mhatre
--- ---
Nitin J. Mhatre
President and Chief Executive Officer

Document

Exhibit 31.2

CERTIFICATION

I, Brett Brbovic, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Berkshire Hills Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
--- ---
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
--- ---
a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 12, 2025 /s/ Brett Brbovic
--- ---
Brett Brbovic
Executive Vice President and Chief Financial Officer

Document

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Berkshire Hills Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, Nitin J. Mhatre, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
May 12, 2025 /s/ Nitin J. Mhatre
--- ---
Nitin J. Mhatre
President and Chief Executive Officer

Document

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Berkshire Hills Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, Brett Brbovic, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
May 12, 2025 /s/ Brett Brbovic
--- ---
Brett Brbovic
Executive Vice President and Chief Financial Officer

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