Berkshire Hills Announces First Quarter Results; Provides Update on Operations During Pandemic and Dividend Guidance
BOSTON, May 4, 2020 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported a first quarter 2020 net loss of $0.40 per share.   The non-GAAP measure of core EPS was a loss of $0.07.  First quarter results reflect a non-cash $0.69 per share pre-tax provision for projected future credit losses primarily related to the COVID-19 pandemic.  The company’s core pre-provision net revenue (“Core PPNR”), was $0.61 per share.  This is a non-GAAP financial measure of the Company’s ongoing operations before provision and tax expense, and before discontinued operations and securities losses.  Berkshire’s liquidity and regulatory capital metrics continued to strengthen during the quarter, supporting its 21st century community bank mission.
In response to the pandemic, Berkshire took decisive actions to protect the health and safety of its team, customers and the communities it serves during the first quarter, including adjusting its operations to ensure the continued availability of essential banking services for all customers, providing support and financial flexibility to customers potentially impacted by the pandemic, and providing funding to minority-owned small businesses through the Berkshire Bank Foundation and its community-based partners.  The company also processed $650 million in loan approvals under the first round of the Paycheck Protection Program (“PPP”).
FIRST QUARTER FINANCIAL HIGHLIGHTS
•
$0.40 GAAP net loss per share, including $0.69 pre-tax non-cash credit loss provision
•
$0.07 core loss per share
•
$0.61 Core PPNR per share (non-GAAP financial measure)
•
3.02% net interest margin
•
1.22% credit loss allowance/loans
•
92% loans/deposits
•
8.8% tangible equity/tangible assets (non-GAAP financial measure)
•
$33.72 book value per common share; $21.82 tangible book value per common share (non-GAAP financial measure)
COVID-19 RESPONSE
•
Servicing $650 million first round Paycheck Protection Program (“PPP”) loan approvals
•
Processing payment forbearances for $1.3 billion in loans to 4,000 customers


•

•

•
Providing $3 million to assist small businesses through The Futures Fund with BECMA and MALGBT Chamber

Providing $1 million in grants through Berkshire Bank Foundation, including $500,000 in small business assistance through non-profit partners

Supporting remote work from home for 86% of the non-branch workforce
•
Maintaining full pay for all staff

CEO Richard Marotta stated, “Our teams are working hard to safely and responsibly meet the needs of our customers during this pandemic, which has shined a light on community banks’ essential role in our economy.  Berkshire’s number one priority has been to help the communities we serve, especially minority ones, weather this storm and rebuild as soon as it is safe to do so.   We are proud to offer additional support and financial flexibility to our customers who may have been impacted, and are also funding significant programs to help small businesses.  We continue to maintain a strong balance sheet, with ample liquidity and regulatory capital to ensure we continue to perform our essential role.  We intend to continue to lead, supporting our customers and neighbors throughout this pandemic, because we know that in the long haul when our communities prosper, Berkshire does too.”
DIVIDEND GUIDANCE
The Board of Directors intends to declare and pay a regular quarterly cash dividend of $0.24 per common share in the second quarter.  In conjunction with changes in the regulatory reporting schedule this quarter, the Board plans to make the formal dividend declaration after the completion of regulatory reporting and other related regulatory actions regarding such declaration.   The Board also plans to declare and pay the regular preferred stock dividend as part of this intended future declaration.
FINANCIAL CONDITION
Total assets remained unchanged at $13.2 billion at the end of the first quarter of 2020, compared to year-end 2019.  Total loans declined by 2%, decreasing in all major categories, as the Company continued to implement its balance sheet restructuring program, focusing on its local markets and building short-term investments.  These funds are intended for the $650 million in Phase I PPP loans which are currently in process.  Total deposits decreased by 3% primarily due to changes in fluctuating payroll deposit balances and brokered deposits.  Organic deposits decreased by 1% before these changes, primarily due to some commercial accounts which utilized liquid funds for other business purposes in response to current conditions.   The period-end ratio of loans/deposits remained at 92% and liquid investments were increased during the quarter.
The allowance for credit losses on loans increased to 1.22% of loans from 0.67% at year-end 2019.  In accordance with changes in generally accepted accounting principles, the Company adopted the new credit loss accounting standard known as “CECL” on January 1, 2020.  The allowance was increased by $26 million to 0.94% of loans on this effective date.   Under CECL, the credit loss allowance is based on projected credit losses rather than on losses incurred.  At quarter-end, the Company projected additional future credit losses resulting primarily from an economic
contraction arising from the COVID pandemic.  As a result, the Company recorded a $35 million first quarter provision for credit losses, and the allowance increased to $114 million, or 1.22% of total loans at quarter-end.  Actual future credit losses may be more or less than the Company’s projections about pandemic related credit losses.  The first quarter increase in the credit loss allowance was a non-cash adjustment which had no significant impact on total regulatory risk-based capital.  The Company has a separate $8 million allowance for losses on unfunded credit commitments which is included in other liabilities.
The Company has granted loan modifications on more than 4,000 loans with balances of $1.3 billion as of April 21, representing approximately 21% of outstanding commercial loan balances, 3% of residential mortgages, and 2% of consumer loans.  Forbearances made in accordance with regulatory guidelines will not be reported as delinquencies or as troubled debts.  The increase in net loan charge-offs reflects the final resolution of one commercial real estate loan which had been in foreclosure for two years.  Nonperforming loans increased primarily due to a $13  million write-up under CECL of purchased  credit deteriorated loans.  This increase was offset by an increase in the credit loss allowance and had no impact on net loans or capital.  Loans delinquent over 90 days and accruing decreased primarily due to adjustments to purchased credit impaired loans at the time of the CECL adoption.   Also as part of this adoption, Company recorded an $8 million increase in the estimated liability for losses on unfunded loan commitments.
Total equity decreased in the first quarter due to the non-cash impacts of CECL on the January 1 adoption date and the credit loss provision recorded against income at the end of the quarter.   Most of these charges did not impact the Company’s regulatory risk-based capital.   Book value per share totaled $33.72 at quarter-end, compared to $34.65 at year-end 2019.  The non-GAAP measure of tangible book value per share measured $21.82, compared to $22.56 at those respective dates.  The Company projects the total risk-based capital ratio to be 13.9% at quarter-end, exceeding the 10% threshold for the highest regulatory “well capitalized” category.
RESULTS OF OPERATIONS
Berkshire reported a first quarter 2020 GAAP net loss of $20 million, or $0.40 per share, compared to net income of $26 million, or $0.51 per share, in the prior quarter.  Core earnings was a loss of $4 million, or $0.07 per share, compared to core earnings of $35 million, or $0.70 per share, in the prior quarter.  Core PPNR totaled $30 million, or $0.61 per share, in the first quarter compared to $48 million, or $0.95 per share, in the prior quarter.  Core PPNR measures operating results before the impact of the credit loss provision, which is a multiyear projection of future credit losses under the new CECL accounting standard.  As a core measure, it excludes net charges not viewed as related to ongoing operations.  In the most recent quarter, these net charges were primarily due to discontinued national mortgage banking operations and unrealized equity securities losses due to the stock market decline. Most of the Company’s $32 million equities portfolio remained in a net unrealized gain position at quarter-end.
The $18 million quarter-over-quarter decrease in Core PPNR was primarily due to the impact of the COVID pandemic on revenue and expense:
•
Net interest income decreased by $5 million including the impact of lower loan balances, low yield investments held for PPP funding, and lower interest rates resulting from federal monetary stimulus.  Also, the contribution from purchased loan accretion decreased by $2 million as the credit for accretion on recoveries was shifted to the credit loss allowance based on the new CECL accounting standard.
•
Non-interest income decreased, including $6 million due to noncash charges related to changes in valuations of credit related instruments as a result of pandemic related conditions.  This includes a $3 million decrease to loan fees related to interest rate swaps, and $2 million in charges to other non-interest income related to fair valued loans.  Additionally, volumes for fee based loan and deposit activities declined.  Loan fee revenue related to swaps and SBA loan originations decreased $3 million, more than offsetting seasonal increases in wealth and insurance revenues.
•
Despite the lower revenue sources, the Company maintained staffing levels and increased technology spending as it converted most operations to work-from-home and focused on responding to borrower needs.
Quarter-over quarter expense changes also included seasonal increases in benefits and occupancy costs, along with the expiration of FDIC insurance expense credits utilized in the prior quarter. Quarterly non-interest expense includes targeted increases in compensation, health benefits, technology costs, and social initiatives as the Company continues to pursue its goals for developing as a 21st century community bank.  Full-time equivalent staff in continuing operations was generally unchanged, and totaled 1,548 positions at quarter-end.  The Company maintained its employee compensation despite changes in workflows and schedules during the quarter, with no layoffs.    The Company recorded a $5 million tax benefit in the first quarter.  The effective tax benefit on continuing operations was 14% .
Berkshire moved forward with its planned exit from the origination of mortgages in its discontinued national mortgage banking operations in the first quarter and has entered into an agreement with a buyer to complete this exit and for other asset and license transfers to be completed by the end of the year.  The Company reported an $8 million after-tax net loss on these operations during the most recent quarter, consisting primarily of pre-tax charges of $4 million to write-down mortgage servicing rights and $4 million in severance costs.  The Company is targeting to reduce the net loss related to this business in successive quarters, with a complete exit by the end of the year.   These results are treated as non-core items in the Company’s statement of operations.
BE FIRST CORPORATE RESPONSIBILITY UPDATE
Berkshire is committed to delivering purpose-driven performance. Learn more about the steps Berkshire is taking to be a values-based brand for all its stakeholders at www.berkshirebank.com/csr.
COVID-19 Response- Faced with the unprecedented outbreak of the COVID-19 pandemic, Berkshire is harnessing its assets and Be FIRST culture to navigate and ensure the health, safety and economic resiliency of its employees, customers and communities.
•
Support for its People: Protecting the health and safety of Berkshire’s frontline workers, and supporting their ability to serve customers, is a top priority. As a result, the bank suspended non-essential business travel, reduced branch hours, increased safety precautions including enhanced cleaning, provided protective masks, and provided additional paid sick time. The company currently has 86% of non-branch staff working from home. The bank is also ensuring financial stability, protecting pay for those employees who are unable to work their normal scheduled hours and launched an employee assistance fund to help those facing hardships. The company is leveraging its employee networks including Employee Resource Groups and Regional Cultural Councils to collect feedback, maintain culture, morale and productivity.

•
Helping its Customers: Berkshire knows this pandemic has had a serious economic impact on most individuals and businesses. The bank took swift steps to provide additional financial flexibility to customers facing financial hardships including the launch of customer assistance programs that increase debit card limits, waive penalties for early CD withdrawals, waive foreign ATM fees and provide options for loan forbearance. The company participates in the Paycheck Protection Program to assist small businesses.  Berkshire continues to encourage customers to leverage its mobile, telephonic and digital banking solutions as well as its’ My Bankers to conduct business.
•
Investing in Community Recovery & Resiliency: Berkshire remains committed to the economic resiliency of its communities and engaging directly with stakeholders through virtual community conversations to inform its response. The bank is providing $3 million to assist small businesses through The Futures Fund with the Black Economic Council of Massachusetts and the Massachusetts LGBT Chamber of Commerce. Berkshire’s Foundation is providing $1 million in COVID-19 support, including $500,000 in small business assistance and offering flexibility for non-profits to redirect prior grant funding. The bank is evaluating strategic sponsorships and other advertising assets for re-deployment to community partners. In addition, Berkshire will harness its XTEAM volunteer program to raise funds and deploy employees through virtual skills based volunteer events with a focus on financial health, job training and other critical non-profit needs.
Corporate Responsibility Report- Earlier this month, the company released its 2019 Corporate Responsibility Report, Leading the Way Forward: Purpose-Driven Performance. The report highlights the company’s environmental, social, governance and cultural programs and serves as a guide for how Berkshire will navigate the current environment while supporting all its stakeholders and its vision of a 21st century community bank that delivers purpose-driven performance.
INVESTOR CONFERENCE CALL AND INFORMATION PRESENTATION
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, May 5, 2020 to discuss the results for the quarter and provide guidance about expected future results.  Berkshire will also place an information presentation at its website at
ir.berkshirebank.com before the conference call.  Participants are encouraged to pre-register for the conference call using the following link:  http://dpregister.com/10141779.  Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call.  Participants may pre-register at any time prior to the call, and will immediately receive simple instructions via email.  Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of our website at http://ir.berkshirebank.com.  Those parties who do not have internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call.  Participants are requested to dial-in a few minutes before the scheduled start of the call.   A telephone replay of the call will be available through Tuesday, May 12, 2020 by dialing 877-344-7529 and entering access number 10141779.  The webcast will be available on Berkshire's website for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank which is transforming into a 21st century community bank pursuing purpose driven performance based on its Be FIRST corporate responsibility culture.  Headquartered in Boston, Berkshire operates 130 banking offices in seven Northeastern states, with approximately $13.2 billion in assets.
FORWARD LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov.
Further, given its ongoing and dynamic nature, it is difficult to predict what effects the novel coronavirus (COVID-19) pandemic will have on our business and results of operations. The pandemic and the related local and national economic disruption may result in a decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in our allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on our interest-earning assets than the decline in the cost of our interest-bearing liabilities; and increased cybersecurity risks, as employees increasingly work remotely.
Accordingly, you should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.
NON-GAAP FINANCIAL MEASURES
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”).  These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition.  They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information.  A reconciliation of non-GAAP financial measures to GAAP measures is included on page F-9 in the accompanying financial tables.  In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense.  These measures exclude items which the Company does not view as related to its normalized operations.  These items primarily include securities gains/losses, merger costs, restructuring costs, and discontinued operations.  Merger costs consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, variable compensation expenses, and professional fees.  Merger costs in 2019 are primarily related to the acquisition of SI Financial Group.  Restructuring costs generally consist of costs and losses associated with the disposition of assets and liabilities and lease terminations, including costs related to branch sales.  Restructuring costs also include severance and consulting expenses related to the Company’s strategic review.  They also include costs related to the consolidation of branches, including eight branches for the full year of 2019.  Discontinued operations are the Company’s national mortgage banking operations for which the Company is pursuing sale opportunities.
The Company has introduced the measure of Core Pre-Provision Net Revenue (“Core PPNR”) to which measures core income before credit loss provision and tax expense.   Due to the non-cash projections introduced into the calculation of income by the new CECL accounting standard, the investment community is placing more emphasis on PPNR in order to measure the results of operations and to compare them across banks which may have widely varying estimates of future economic conditions that affect their provision expense and reported earnings.  The Company also calculates core PPNR per share and core PPNR return on assets in order to utilize the PPNR measure in assessing its comparative operating profitability.
Non-core adjustments are presented net of an adjustment for income tax expense.  This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income.  The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items.  The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. References to organic growth and organic change exclude balances acquired in bank mergers.




###
CONTACTS
Investor Relations Contact
David Gonci; Capital Markets Director; 413-281-1973
Media Contact
Jeffrey Mathews; Communications Contact; (646) 569-5711

TABLE
INDEX
 
CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES
F-1
Selected Financial Highlights
F-2
Balance Sheets
F-3
Loan and Deposit Analysis
F-4
Statements of Operations
F-5
Statements of Operations (Five Quarter Trend)
F-6
Average Yields and Costs
F-7
Average Balances
F-8
Asset Quality Analysis
F-9
Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Five Quarter Trend)


BERKSHIRE HILLS BANCORP, INC.
  
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED
 
       
At or for the Quarters Ended (1)
  
       
March 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
March 31,
  
       
2020
  
2019
  
2019
  
2019 (2)
  
2019
  
                           
 
PER SHARE DATA
                    
   
Net (loss)/earnings per common share, diluted
 $         (0.40)
  
 $          0.51
  
 $          0.44
  
 $          0.52
  
 $          0.51
  
   
Core (loss)/earnings per common share, diluted (3)
            (0.07)
  
             0.70
  
             0.46
  
             0.65
  
             0.60
  
   
Total book value per common share
           33.72
  
           34.65
  
           34.36
  
           34.05
  
           33.75
  
   
Tangible book value per common share (3)
           21.82
  
           22.56
  
           22.42
  
           22.25
  
           21.66
  
   
Market price at period end
           14.86
  
           32.88
  
           29.29
  
           31.39
  
           27.24
  
   
Dividends per common share
             0.24
  
             0.23
  
             0.23
  
             0.23
  
             0.23
  
   
Dividends per preferred share
             0.48
  
             0.46
  
             0.46
  
             0.46
  
             0.46
  
                           
 
PERFORMANCE RATIOS (4)
                    
   
Return on assets
            (0.62)
%
             0.78
%
             0.67
%
             0.79
%
             0.78
%
   
Core return on assets (3)
            (0.11)
  
             1.08
  
             0.71
  
             1.01
  
             0.92
  
   
Return on equity
            (4.61)
  
             5.90
  
             5.12
  
             6.07
  
             5.97
  
   
Core return on equity (3)
            (0.85)
  
             8.09
  
             5.35
  
             7.67
  
             7.00
  
   
Core return on tangible common equity (3)
            (0.95)
  
           13.12
  
             8.74
  
           12.21
  
           11.44
  
   
Net interest margin, fully taxable equivalent (FTE) (5)(6)
             3.02
  
             3.11
  
             3.22
  
             3.19
  
             3.17
  
   
Fee income/Net interest and fee income from continuing operations
           15.46
  
           18.11
  
           17.61
  
           16.20
  
           17.56
  
   
Efficiency ratio (3)
           66.92
  
           53.66
  
           53.37
  
           56.41
  
           59.54
  
                           
 
CHANGE (Year-to-date)
                    
   
Total commercial loans (organic, annualized)
                 (5)
%
                 (7)
%
                 (9)
%
               (10)
%
                 (3)
%
   
Total loans (organic, annualized)
                 (8)
  
                 (9)
  
                 (9)
  
                 (9)
  
                 (4)
  
   
Total deposits (organic, annualized)
(10)
  
0
  
2
  
6
  
8
  
   
Total net revenues from continuing operations (compared to prior year)
               (14)
  
                  4
  
                  4
  
                  1
  
                  3
  
   
(Loss)/earnings per common share (compared to prior year)
             (178)
  
               (14)
  
               (26)
  
               (20)
  
                 (7)
  
   
Core (loss)/earnings per common share (compared to prior year)(3)
             (112)
  
               (14)
  
               (18)
  
                 (9)
  
                 (8)
  
                           
 
FINANCIAL DATA (in millions)
                    
   
Total assets
  
 $      13,221
  
 $      13,216
  
 $      13,532
  
 $      13,653
  
 $      12,173
  
   
Total earning assets
         11,894
  
         11,916
  
         12,174
  
         12,343
  
         11,039
  
   
Total securities
           1,837
  
           1,770
  
           1,861
  
           1,905
  
           1,881
  
   
Total loans
  
           9,303
  
           9,502
  
           9,719
  
           9,942
  
           8,947
  
   
Allowance for credit losses
              114
  
                64
  
                62
  
                62
  
                62
  
   
Total intangible assets
              598
  
              599
  
              602
  
              603
  
              551
  
   
Total deposits
  
         10,072
  
         10,336
  
         10,423
  
         10,566
  
           9,166
  
   
Total shareholders' equity
1,713
  
1,759
  
1,772
  
1,779
  
1,577
  
   
Net (loss)/income
            (19.9)
  
             25.8
  
             22.6
  
             25.4
  
             23.6
  
   
Core (loss)/income (3)
              (3.6)
  
             35.3
  
             23.7
  
             32.1
  
             27.7
  
   
Purchase accounting accretion
               3.1
  
               5.1
  
               4.8
  
               3.2
  
               1.3
  
                           
 
ASSET QUALITY AND CONDITION RATIOS
                    
   
Net charge-offs (current quarter annualized)/average loans
             0.45
%
             0.17
%
             0.92
%
             0.14
%
             0.15
%
   
Total non-performing assets/total assets
             0.40
  
             0.31
  
             0.28
  
             0.27
  
             0.26
  
   
Allowance for credit losses/total loans
             1.22
  
             0.67
  
             0.64
  
             0.63
  
             0.69
  
   
Loans/deposits
                92
  
                92
  
                93
  
                94
  
                98
  
   
Shareholders' equity to total assets
           12.96
  
           13.31
  
           13.10
  
           13.03
  
           12.95
  
   
Tangible shareholders' equity to tangible assets (3)
             8.84
  
             9.19
  
             9.05
  
             9.01
  
             8.83
  
                           
                           
 
(1)
Reconciliations of non-GAAP financial measures, including all references to core and tangible amounts, appear on page F-9.
          
 
(2)
The Company acquired SI Financial Group, Inc. on May 17, 2019.
                    
 
(3)
Non-GAAP financial measure. Core measurements are non-GAAP financial measures that are adjusted to exclude net non-core charges primarily
      
   
 related to acquisitions and restructuring activities. See page F-9 for reconciliations of non-GAAP financial measures.
          
 
(4)
All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
              
 
(5)
Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
                  
 
(6)
The effect of purchase accounting accretion for loans, time deposits, and borrowings on the quarterly net interest margin was an increase in all quarters,
   
which is shown sequentially as follows beginning with the most recent quarter and ending with the earliest quarter: 0.11%, 0.17%, 0.16%, 0.11%, 0.05%.
      


F-1
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
 
March 31,
  
December 31,
  
(in thousands)
2020
  
2019
  
Assets
        
Cash and due from banks
 $               90,280
  
 $             105,447
  
Short-term investments
                624,064
  
                474,382
  
Total cash and short-term investments
                714,344
  
                579,829
  
         
Trading security
                    9,829
  
                  10,769
  
Marketable equity securities, at fair value
                  32,283
  
                  41,556
  
Securities available for sale, at fair value
             1,403,858
  
             1,311,555
  
Securities held to maturity, at amortized cost
                336,802
  
                357,979
  
Federal Home Loan Bank stock and other restricted securities
                  54,306
  
                  48,019
  
Total securities
             1,837,078
  
             1,769,878
  
Less: Allowance for credit losses on investment securities
                     (141)
  
                           —
  
Net securities
             1,836,937
  
             1,769,878
  
         
Loans held for sale
                    4,252
  
                  36,664
  
         
Commercial real estate loans
             3,985,856
  
             4,034,269
  
Commercial and industrial loans
             1,812,445
  
             1,840,508
  
Residential mortgages
             2,604,390
  
             2,685,472
  
Consumer loans
                900,486
  
                942,179
  
Total loans
             9,303,177
  
             9,502,428
  
Less: Allowance for credit losses on loans
              (113,510)
  
                (63,575)
  
Net loans
             9,189,667
  
             9,438,853
  
         
Premises and equipment, net
                120,667
  
                120,398
  
Other real estate owned
                       224
  
—
  
Goodwill
                553,762
  
                553,762
  
Other intangible assets
                  44,035
  
                  45,615
  
Cash surrender value of bank-owned life insurance
                228,447
  
                227,894
  
Deferred tax asset, net
                  44,575
  
                  51,017
  
Other assets
                344,470
  
                239,872
  
Assets from discontinued operations
                140,064
  
                152,188
  
Total assets
 $        13,221,444
  
 $        13,215,970
  
         
Liabilities and shareholders' equity
        
Demand deposits
 $          1,922,490
  
 $          1,884,100
  
NOW and other deposits
             1,546,626
  
             1,492,569
  
Money market deposits
             2,391,835
  
             2,528,656
  
Savings deposits
                867,024
  
                841,283
  
Time deposits
             3,343,700
  
             3,589,369
  
Total deposits
           10,071,675
  
           10,335,977
  
         
Senior borrowings
                944,053
  
                730,501
  
Subordinated borrowings
                  97,107
  
                  97,049
  
Total borrowings
             1,041,160
  
                827,550
  
         
Other liabilities
                364,770
  
                267,398
  
Liabilities from discontinued operations
                  30,554
  
                  26,481
  
Total liabilities
           11,508,159
  
           11,457,406
  
         
Preferred shareholders' equity
                  20,325
  
                  40,633
  
Common shareholders' equity
             1,692,960
  
             1,717,931
  
Total shareholders' equity
             1,713,285
  
             1,758,564
  
Total liabilities and shareholders' equity
 $        13,221,444
  
 $        13,215,970
  
         
Net common shares outstanding
                  50,199
  
                  49,585
  
F-2
BERKSHIRE HILLS BANCORP, INC.
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
LOAN ANALYSIS
               
               
           
Annualized Growth %

(in millions)
  
March 31, 2020
Balance
December 31, 2019
Balance
Quarter ended
March 31, 2020
               
Total commercial real estate
  
 $                   3,986
  
 $                    4,034
  
                           (5)
%
Commercial and industrial loans
  
                      1,812
  
                      1,841
  
                           (6)
  
Total commercial loans
  
                      5,798
  
                      5,875
  
                           (5)
  
               
Total residential mortgages
  
                      2,604
  
                      2,685
  
                          (12)
  
               
Home equity
  
                         378
  
                         381
  
                           (3)
  
Auto and other
  
                         523
  
                         561
  
                          (27)
  
Total consumer loans
  
                         901
  
                         942
  
                          (16)
  
Total loans
  
 $                   9,303
  
 $                    9,502
  
                           (8)
%
               
               
               
               
               
               
DEPOSIT ANALYSIS
  
               
         
Annualized Growth %
(in millions)
  
March 31, 2020
Balance
December 31, 2019
Balance
Quarter ended
March 31, 2020
Demand
  
 $                   1,922
  
 $                    1,884
  
                             8
%
NOW and other
  
                      1,547
  
                      1,493
  
                           14
  
Money market
  
                      2,392
  
                      2,529
  
                          (22)
  
Savings
  
                         867
  
                         841
  
                           12
  
Time deposits
  
                      3,344
  
                      3,589
  
                          (27)
  
Total deposits
  
 $                  10,072
  
 $                  10,336
  
                          (10)
%
               

F-3
BERKSHIRE HILLS BANCORP, INC.
  
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
 
Three Months Ended
  
 
March 31,
    March 31,
  
(in thousands, except per share data)
2020
  
2019
  
Interest and dividend income from continuing operations
        
Loans
 $          101,695
  
 $          105,651
  
Securities and other
               14,500
  
               15,458
  
Total interest and dividend income
             116,195
  
             121,109
  
Interest expense from continuing operations
        
Deposits
               23,838
  
               26,622
  
Borrowings
                 5,929
  
                 9,028
  
Total interest expense
               29,767
  
               35,650
  
Net interest income from continuing operations
               86,428
  
               85,459
  
Non-interest income from continuing operations
        
Mortgage banking originations
                    959
  
                      46
  
Loan related income
                 1,302
  
                 6,003
  
Deposit related fees
                 7,947
  
                 6,858
  
Insurance commissions and fees
                 3,024
  
                 2,853
  
Wealth management fees
                 2,570
  
                 2,441
  
Total fee income
               15,802
  
               18,201
  
Other
                  (436)
  
                    970
  
Securities (losses)/gains, net
               (9,730)
  
                 2,551
  
Total non-interest income
                 5,636
  
               21,722
  
Total net revenue from continuing operations
               92,064
  
             107,181
  
Provision for credit losses
               34,807
  
                 4,001
  
Non-interest expense from continuing operations
        
Compensation and benefits
               36,909
  
               33,500
  
Occupancy and equipment
               11,132
  
                 9,446
  
Technology and communications
                 8,081
  
                 6,257
  
Marketing and promotion
                 1,165
  
                 1,267
  
Professional services
                 2,720
  
                 2,275
  
FDIC premiums and assessments
                 1,482
  
                 1,639
  
Other real estate owned and foreclosures
                      27
  
                        2
  
Amortization of intangible assets
                 1,580
  
                 1,200
  
Merger, restructuring and other expense
                      —
  
                 7,015
  
Other
                 8,229
  
                 9,390
  
Total non-interest expense
               71,325
  
               71,991
  
         
(Loss)/income from continuing operations before income taxes
 $          (14,068)
  
 $            31,189
  
Income tax (benefit)/expense
               (1,996)
  
                 6,917
  
Net (loss)/income from continuing operations
 $          (12,072)
  
 $            24,272
  
         
(Loss)/income from discontinued operations before income taxes
 $          (10,629)
  
 $               (854)
  
Income tax (benefit)/expense
               (2,831)
  
                  (217)
  
Net (loss)/income from discontinued operations
 $            (7,798)
  
 $               (637)
  
         
Net (loss)/income
 $          (19,870)
  
 $            23,635
  
Preferred stock dividend
                    125
  
                    240
  
(Loss)/income available to common shareholders
 $          (19,995)
  
 $            23,395
  
         
Basic (loss)/earnings per common share:
        
Continuing Operations
 $              (0.24)
  
 $                0.52
  
Discontinued Operations
                 (0.16)
  
                 (0.01)
  
Total
 $              (0.40)
  
 $                0.51
  
         
Diluted (loss)/earnings per common share:
        
Continuing Operations
 $              (0.24)
  
 $                0.52
  
Discontinued Operations
                 (0.16)
  
                 (0.01)
  
Total
 $              (0.40)
  
 $                0.51
  
         
Weighted average shares outstanding:
        
Basic
               50,204
  
               46,113
  
Diluted
               50,204
  
               46,261
  
         

F-4
BERKSHIRE HILLS BANCORP, INC.
  
CONSOLIDATED STATEMENTS OF OPERATIONS (5 Quarter Trend) - UNAUDITED
                     
 
March 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
March 31,
  
(in thousands, except per share data)
2020
  
2019
  
2019
  
2019
  
2019
  
Interest and dividend income from continuing operations
              
Loans
 $     101,695
  
 $     110,915
  
 $     118,371
  
 $     113,990
  
 $     105,651
  
Securities and other
          14,500
  
          14,526
  
          15,354
  
          15,248
  
          15,458
  
Total interest and dividend income
        116,195
  
        125,441
  
        133,725
  
        129,238
  
        121,109
  
Interest expense from continuing operations
                    
Deposits
          23,838
  
          28,797
  
          31,501
  
          28,273
  
          26,622
  
Borrowings
            5,929
  
            5,311
  
            5,353
  
            9,370
  
            9,028
  
Total interest expense
          29,767
  
          34,108
  
          36,854
  
          37,643
  
          35,650
  
Net interest income from continuing operations
          86,428
  
          91,333
  
          96,871
  
          91,595
  
          85,459
  
Non-interest income from continuing operations
                  
Mortgage banking originations
              959
  
              172
  
              292
  
              278
  
                46
  
Loan related income
            1,302
  
            7,056
  
            6,493
  
            4,822
  
            6,003
  
Deposit related fees
            7,947
  
            8,264
  
            8,705
  
            7,525
  
            6,858
  
Insurance commissions and fees
            3,024
  
            2,471
  
            2,895
  
            2,738
  
            2,853
  
Wealth management fees
            2,570
  
            2,239
  
            2,325
  
            2,348
  
            2,441
  
Total fee income
          15,802
  
          20,202
  
          20,710
  
          17,711
  
          18,201
  
Other
             (436)
  
                75
  
              609
  
             (216)
  
              970
  
Securities (losses)/gains, net
          (9,730)
  
            1,734
  
                87
  
                17
  
            2,551
  
Gain on sale of business operations and assets, net
             —
 
            1,351
  
                  —
  
                    —
  
                    —
  
Total non-interest income
            5,636
  
          23,362
  
          21,406
  
          17,512
  
          21,722
  
Total net revenue from continuing operations
          92,064
  
        114,695
  
        118,277
  
        109,107
  
        107,181
  
Provision for credit losses
          34,807
  
            5,351
  
          22,600
  
            3,467
  
            4,001
  
Non-interest expense from continuing operations
                  
Compensation and benefits
          36,909
  
          35,355
  
          37,272
  
          34,779
  
          33,500
  
Occupancy and equipment
          11,132
  
          10,798
  
            9,893
  
            9,449
  
            9,446
  
Technology and communications
            8,081
  
            6,702
  
            6,849
  
            6,715
  
            6,257
  
Marketing and promotion
            1,165
  
            1,046
  
            1,006
  
            1,155
  
            1,267
  
Professional services
            2,720
  
            2,288
  
            2,282
  
            3,953
  
            2,275
  
FDIC premiums and assessments
            1,482
  
              471
  
                 -
  
            1,751
  
            1,639
  
Other real estate owned and foreclosures
                27
  
                  4
  
              150
  
                 (2)
  
                  2
  
Amortization of intangible assets
            1,580
  
            1,582
  
            1,526
  
            1,475
  
            1,200
  
Merger, restructuring and other expense
                 -
  
            5,713
  
            4,163
  
          11,155
  
            7,015
  
Other
            8,229
  
            6,328
  
            7,870
  
            6,138
  
            9,390
  
Total non-interest expense
          71,325
  
          70,287
  
          71,011
  
          76,568
  
          71,991
  
                     
(Loss)/income from continuing operations before income taxes
 $      (14,068)
  
 $       39,057
  
 $       24,666
  
 $       29,072
  
 $       31,189
  
Income tax (benefit)/expense
          (1,996)
  
            6,421
  
            4,007
  
            5,118
  
            6,917
  
Net (loss)/ income from continuing operations
 $      (12,072)
  
 $       32,636
  
 $       20,659
  
 $       23,954
  
 $       24,272
  
                     
(Loss)/income from discontinued operations before income taxes
 $      (10,629)
  
 $       (9,514)
  
 $         2,747
  
 $         2,082
  
 $          (854)
  
Income tax (benefit)/expense
          (2,831)
  
          (2,629)
  
              790
  
              588
  
             (217)
  
Net (loss)/income from discontinued operations
 $       (7,798)
  
 $       (6,885)
  
 $         1,957
  
 $         1,494
  
 $          (637)
  
                     
Net (loss)/income
 $      (19,870)
  
 $       25,751
  
 $       22,616
  
 $       25,448
  
 $       23,635
  
Preferred stock dividend
              125
  
              240
  
              240
  
              240
  
              240
  
(Loss)/income available to common shareholders
 $      (19,995)
  
 $       25,511
  
 $       22,376
  
 $       25,208
  
 $       23,395
  
                     
                     
Basic (loss)/earnings per common share:
                    
Continuing Operations
 $         (0.24)
  
 $           0.65
  
 $           0.40
  
 $           0.49
  
 $           0.52
  
Discontinued Operations
            (0.16)
  
            (0.14)
  
             0.04
  
             0.03
  
            (0.01)
  
Total
 $         (0.40)
  
 $           0.51
  
 $           0.44
  
 $           0.52
  
 $           0.51
  
           
Diluted (loss)/earnings per common share:
                    
Continuing Operations
 $         (0.24)
  
 $           0.65
  
 $           0.40
  
 $           0.49
  
 $           0.52
  
Discontinued Operations
            (0.16)
  
            (0.14)
  
             0.04
  
             0.03
  
            (0.01)
  
Total
 $         (0.40)
  
 $           0.51
  
 $           0.44
  
 $           0.52
  
 $           0.51
  
                     
Weighted average shares outstanding:
                    
Basic
          50,204
  
          50,494
  
          51,422
  
          48,961
  
          46,113
  
Diluted
          50,204
  
          50,702
  
          51,545
  
          49,114
  
          46,261
  
                     

F-5

BERKSHIRE HILLS BANCORP, INC.
 AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED
   
Quarters Ended
   
March 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
March 31,
  
   
2020
  
2019
  
2019
  
2019
  
2019
  
                       
Earning assets
                      
Loans:
                      
Commercial real estate
  
                   4.41
 %
                   4.80
 %
                   4.92
 %
                   5.01
 %
                   4.91
 %
Commercial and industrial loans
  
                   5.03
  
                   5.35
  
                   5.58
  
                   5.79
  
                   5.83
  
Residential mortgages
  
                   3.77
  
                   3.61
  
                   3.73
  
                   3.74
  
                   3.74
  
Consumer loans
  
                   4.28
  
                   4.38
  
                   4.55
  
                   4.52
  
                   4.45
  
Total loans
  
                   4.33
  
                   4.52
  
                   4.67
  
                   4.76
  
                   4.73
  
Securities
  
                   3.32
  
                   3.31
  
                   3.41
  
                   3.38
  
                   3.46
  
Short-term investments and loans held for sale
  
                   1.52
  
                   3.15
  
                   4.11
  
                   3.37
  
                   3.59
  
Total earning assets
  
                   4.05
  
                   4.27
  
                   4.45
  
                   4.51
  
                   4.49
  
                       
Funding liabilities
                      
Deposits:
                      
NOW and other
  
                   0.46
  
                   0.54
  
                   0.61
  
                   0.66
  
                   0.65
  
Money market
  
                   0.98
  
                   1.18
  
                   1.27
  
                   1.27
  
                   1.23
  
Savings
  
                   0.13
  
                   0.14
  
                   0.13
  
                   0.15
  
                   0.18
  
Time
  
                   1.87
  
                   1.97
  
                   2.02
  
                   2.06
  
                   2.07
  
Total interest-bearing deposits
  
                   1.18
  
                   1.35
  
                   1.43
  
                   1.44
  
                   1.44
  
Borrowings
  
                   2.60
  
                   2.77
  
                   3.12
  
                   2.92
  
                   2.85
  
Total interest-bearing liabilities
  
                   1.33
  
                   1.48
  
                   1.57
  
                   1.66
  
                   1.65
  
                       
Net interest spread
  
                   2.72
  
                   2.79
  
                   2.88
  
                   2.85
  
                   2.84
  
Net interest margin
  
                   3.02
  
                   3.11
  
                   3.22
  
                   3.19
  
                   3.17
  
                       
Cost of funds (1)
  
                   1.11
  
                   1.23
  
                   1.32
  
                   1.41
  
                   1.41
  
Cost of deposits
  
                   0.96
  
                   1.11
  
                   1.18
  
                   1.18
  
                   1.19
  
                       
(1) Cost of funds includes all deposits and borrowings.
                  
                       


F-6
BERKSHIRE HILLS BANCORP, INC.
AVERAGE BALANCES - UNAUDITED
 
Quarters Ended
                
 
March 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
March 31,
  
(in thousands)
2020
  
2019
  
2019
  
2019
  
2019
  
Assets
                    
Loans
                    
Commercial real estate
 $         4,000,461
  
 $         4,056,244
  
 $         3,998,144
  
 $         3,716,130
  
 $         3,377,902
  
Commercial and industrial loans
            1,795,813
  
            1,768,039
  
            1,951,205
  
            2,056,384
  
            1,986,792
  
Residential mortgages
            2,654,224
  
            2,758,676
  
            2,849,216
  
            2,711,348
  
            2,556,299
  
Consumer loans
               921,810
  
               974,889
  
            1,035,893
  
            1,064,579
  
            1,079,583
  
Total loans (1)
            9,372,308
  
            9,557,848
  
            9,834,458
  
            9,548,441
  
            9,000,576
  
Securities (2)
            1,744,635
  
            1,752,968
  
            1,846,985
  
            1,893,298
  
            1,895,768
  
Short-term investments and loans held for sale
               450,197
  
               444,622
  
               309,897
  
               117,029
  
                 67,367
  
Total earning assets (3)
          11,567,140
  
          11,755,438
  
          11,991,340
  
          11,558,768
  
          10,963,711
  
Goodwill and other intangible assets
               598,347
  
               601,192
  
               603,762
  
               555,606
  
               550,966
  
Other assets
               654,063
  
               737,396
  
               668,218
  
               593,917
  
               557,442
  
Assets from discontinued operations
                 98,528
  
               176,251
  
               204,339
  
               192,466
  
               115,721
  
Total assets
 $      12,918,078
  
 $      13,270,277
  
 $      13,467,659
  
 $      12,900,757
  
 $      12,187,840
  
                     
Liabilities and shareholders' equity
                    
Deposits
                    
NOW and other
 $         1,159,388
  
 $         1,085,485
  
 $         1,111,637
  
 $         1,053,335
  
 $            963,043
  
Money market
            2,752,465
  
            2,688,766
  
            2,624,639
  
            2,474,071
  
            2,378,496
  
Savings
               846,942
  
               835,209
  
               838,445
  
               780,797
  
               736,707
  
Time
            3,333,070
  
            3,827,175
  
            4,158,688
  
            3,593,022
  
            3,429,375
  
Total interest-bearing deposits
            8,091,865
  
            8,436,635
  
            8,733,409
  
            7,901,225
  
            7,507,621
  
Borrowings
               949,316
  
               853,911
  
               805,035
  
            1,415,614
  
            1,351,834
  
Total interest-bearing liabilities
            9,041,181
  
            9,290,546
  
            9,538,444
  
            9,316,839
  
            8,859,455
  
Non-interest-bearing demand deposits
            1,849,295
  
            1,898,045
  
            1,864,964
  
            1,673,560
  
            1,538,767
  
Other liabilities
               279,100
  
               304,504
  
               267,922
  
               215,704
  
               192,119
  
Liabilities from discontinued operations
                 23,799
  
                 30,446
  
                 28,206
  
                 18,434
  
                 13,962
  
Total liabilities
          11,193,375
  
          11,523,541
  
          11,699,536
  
          11,224,537
  
          10,604,303
  
                     
Preferred shareholders' equity
                 20,548
  
                 40,633
  
                 40,633
  
                 40,633
  
                 40,633
  
Common shareholders' equity
            1,704,155
  
            1,706,103
  
            1,727,490
  
            1,635,587
  
            1,542,904
  
Total shareholders' equity
            1,724,703
  
            1,746,736
  
            1,768,123
  
            1,676,220
  
            1,583,537
  
Total liabilities and shareholders' equity
 $      12,918,078
  
 $      13,270,277
  
 $      13,467,659
  
 $      12,900,757
  
 $      12,187,840
  
                     
                     
Supplementary data
                    
Total average non-maturity deposits
 $         6,608,090
  
 $         6,507,505
  
 $         6,439,685
  
 $         5,981,763
  
 $         5,617,013
  
Total average deposits
            9,941,160
  
          10,334,680
  
          10,598,373
  
            9,574,785
  
            9,046,388
  
Fully taxable equivalent income adjustment
                    1,824
  
                    1,934
  
                    1,826
  
                    1,882
  
                    1,809
  
Total average tangible equity (4)
            1,126,356
  
            1,145,544
  
            1,164,361
  
            1,120,614
  
            1,032,571
  
                     
(1) Total loans include non-accruing loans.
                  
(2) Average balances for securities available-for-sale are based on amortized cost.
          
(3) Excludes discontinued operations for presentation purposes. Performance ratios are calculated including the impact of discontinued operations.
(4) See page F-9 for details on the calculation of total average tangible equity.
            


F-7
BERKSHIRE HILLS BANCORP, INC.
ASSET QUALITY ANALYSIS - UNAUDITED
   
At or for the Quarters Ended
          
   
March 31,
  
Dec. 31,
  
Sept. 30,
  
June 30,
  
March 31,
  
(in thousands)
  
2020
  
2019
  
2019
  
2019
  
2019
  
NON-PERFORMING ASSETS
                      
Non-accruing loans:
                      
Commercial real estate
  
 $       16,938
  
 $       20,119
  
 $       15,829
  
 $       19,366
  
 $       18,513
  
Commercial and industrial loans
  
          18,370
  
          11,373
  
          12,224
  
            9,256
  
            5,614
  
Residential mortgages
  
            9,636
  
            3,343
  
            3,062
  
            3,579
  
            2,341
  
Consumer loans
  
            6,172
  
            4,805
  
            5,191
  
            3,570
  
            4,038
  
Total non-accruing loans
  
          51,116
  
          39,640
  
          36,306
  
          35,771
  
          30,506
  
Other real estate owned
  
              224
  
                   -
  
                   -
  
              154
  
                   -
  
Repossessed assets
  
            1,316
  
              858
  
            1,003
  
              874
  
              742
  
Total non-performing assets
  
 $       52,656
  
 $       40,498
  
 $       37,309
  
 $       36,799
  
 $       31,248
  
                       
Total non-accruing loans/total loans
0.55%
  
0.42%
  
0.37%
  
0.36%
  
0.34%
  
Total non-performing assets/total assets
0.40%
  
0.31%
  
0.28%
  
0.27%
  
0.26%
  
                       
PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
          
Balance at beginning of period
  
 $       63,575
  
 $       62,230
  
 $       62,156
  
 $       62,038
  
 $       61,469
  
Adoption of ASU No. 2016-13 (1)
          25,434
  
                 -
  
                 -
  
                 -
  
                 -
  
Balance after adoption of ASU No. 2016-13
          89,009
  
          62,230
  
          62,156
  
          62,038
  
          61,469
  
Charged-off loans
  
        (12,432)
  
          (4,485)
  
        (23,524)
  
          (3,966)
  
          (4,579)
  
Recoveries on charged-off loans
  
            1,958
  
              479
  
              998
  
              617
  
            1,147
  
Net loans charged-off
  
        (10,474)
  
          (4,006)
  
        (22,526)
  
          (3,349)
  
          (3,432)
  
Provision for loan credit losses
  
          34,975
  
            5,351
  
          22,600
  
            3,467
  
            4,001
  
Balance at end of period
  
 $     113,510
  
 $       63,575
  
 $       62,230
  
 $       62,156
  
 $       62,038
  
                       
Allowance for credit losses/total loans
1.22%
  
0.67%
  
0.64%
  
0.63%
  
0.69%
  
Allowance for credit losses/non-accruing loans
222%
  
160%
  
171%
  
174%
  
203%
  
                       
NET LOAN CHARGE-OFFS
                      
Commercial real estate
  
 $       (5,990)
  
 $       (1,419)
  
 $       (2,759)
  
 $       (1,235)
  
 $          (752)
  
Commercial and industrial loans
  
(3,728)
  
(1,495)
  
(18,850)
  
(995)
  
(1,580)
  
Residential mortgages
  
(19)
  
(351)
  
(140)
  
(139)
  
(95)
  
Home equity
  
(107)
  
(67)
  
(71)
  
(300)
  
(257)
  
Auto and other consumer
  
(630)
  
(674)
  
(706)
  
(680)
  
(748)
  
Total, net
  
 $      (10,474)
  
 $       (4,006)
  
 $      (22,526)
  
 $       (3,349)
  
 $       (3,432)
  
                       
Net charge-offs (QTD annualized)/average loans
0.45%
  
0.17%
  
0.92%
  
0.14%
  
0.15%
  
Net charge-offs (YTD annualized)/average loans
0.45%
  
0.35%
  
0.41%
  
0.15%
  
0.15%
  
                       
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
          
30-89 Days delinquent
  
0.43%
  
0.25%
  
0.26%
  
0.20%
  
0.22%
  
90+ Days delinquent and still accruing
0.05%
  
0.29%
  
0.29%
  
0.28%
  
0.23%
  
Total accruing delinquent loans
  
0.48%
  
0.54%
  
0.55%
  
0.48%
  
0.45%
  
Non-accruing loans
  
0.55%
  
0.42%
  
0.37%
  
0.36%
  
0.34%
  
Total delinquent and non-accruing loans
1.03%
  
0.96%
  
0.92%
  
0.84%
  
0.79%
  
(1) This balance includes $12 million of PCD confirmed losses as of January 1, 2020.
      


F-8
BERKSHIRE HILLS BANCORP, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED
            At or for the Quarters Ended
  
   
March 31,
Dec. 31,
  
Sept. 30,
  
June 30,
  
March 31,
(in thousands)
  
2020
  
2019
  
2019
  
2019
  
2019
  
Net (loss)/income
  
 $   (19,870)
  
 $     25,751
  
 $     22,616
  
 $     25,448
  
 $     23,635
  
Adj: Net securities losses/(gains) (1)
  
         9,730
  
        (1,734)
  
            (87)
  
            (17)
  
        (2,551)
  
Adj: Merger and acquisition expense
  
                -
  
         3,611
  
         3,802
  
         9,711
  
         1,609
  
Adj: Restructuring expense and other expense
  
                -
  
         2,102
  
            361
  
         1,444
  
         5,406
  
Adj: Loss/(income) from discontinued operations before income taxes
       10,629
  
         9,514
  
        (2,747)
  
        (2,082)
  
            854
  
Adj: Income taxes
  
        (4,134)
  
        (3,910)
  
          (281)
  
        (2,385)
  
        (1,223)
  
Total core (loss)/income (2)
(A)
 $     (3,645)
  
 $     35,334
  
 $     23,664
  
 $     32,119
  
 $     27,730
  
                       
Total revenue from continuing operations
  
 $     92,064
  
 $   114,695
  
 $   118,277
  
 $   109,107
  
 $   107,181
  
Adj: Net securities losses/(gains) (1)
  
         9,730
  
        (1,734)
  
            (87)
  
            (17)
  
        (2,551)
  
Total core revenue (2)
(B)
 $   101,794
  
 $   112,961
  
 $   118,190
  
 $   109,090
  
 $   104,630
  
                       
Total non-interest expense from continuing operations
 $     71,325
  
 $     70,287
  
 $     71,011
  
 $     76,568
  
 $     71,991
  
Less: Merger, restructuring and other expense (see above)
                -
  
        (5,713)
  
        (4,163)
  
      (11,155)
  
        (7,015)
  
Core non-interest expense (2)   
(C)
 $     71,325
  
 $     64,574
  
 $     66,848
  
 $     65,413
  
 $     64,976
  
                       
Total revenue
  
 $     93,869
  
 $   116,860
  
 $   134,067
  
 $   123,109
  
 $   116,454
  
Total non-interest expense
  
       83,759
  
       81,966
  
       84,054
  
       88,488
  
       82,118
  
Pre-tax, pre-provision net revenue
  
 $     10,110
  
 $     34,894
  
 $     50,013
  
 $     34,621
  
 $     34,336
  
                       
Total revenue from continuing operations
  
 $     92,064
  
 $   114,695
  
 $   118,277
  
 $   109,107
  
 $   107,181
  
Total non-interest expense from continuing operations
       71,325
  
       70,287
  
       71,011
  
       76,568
  
       71,991
  
Pre-tax, pre-provision net revenue from continuing operations
 $     20,739
  
 $     44,408
  
 $     47,266
  
 $     32,539
  
 $     35,190
  
                       
Total core revenue (2)
  
 $   101,794
  
 $   112,961
  
 $   118,190
  
 $   109,090
  
 $   104,630
  
Core non-interest expense (2)   
       71,325
  
       64,574
  
       66,848
  
       65,413
  
       64,976
  
Core pre-tax, pre-provision net revenue
  
 $     30,469
  
 $     48,387
  
 $     51,342
  
 $     43,677
  
 $     39,654
  
                       
(in millions, except per share data)
                      
Total average assets
(D)
 $     12,918
  
 $     13,270
  
 $     13,468
  
 $     12,901
  
 $     12,188
  
Total average shareholders' equity
(E)
         1,725
  
         1,747
  
         1,768
  
         1,676
  
         1,584
  
Total average tangible shareholders' equity (2)
(F)
         1,126
  
         1,146
  
         1,164
  
         1,121
  
         1,033
  
Total average tangible common shareholders' equity (2)
(G)
         1,106
  
         1,105
  
         1,124
  
         1,080
  
            992
  
Total tangible shareholders' equity, period-end (2)(3)
(H)
         1,115
  
         1,159
  
         1,170
  
         1,176
  
         1,026
  
Total tangible common shareholders' equity, period-end (2)(3)
(I)
         1,095
  
         1,119
  
         1,130
  
         1,136
  
            986
  
Total tangible assets, period-end (2)(3)
(J)
       12,624
  
       12,617
  
       12,930
  
       13,051
  
       11,623
  
                       
Total common shares outstanding, period-end (thousands)
(K)
       50,199
  
       49,585
  
       50,394
  
       51,045
  
       45,522
  
Average diluted shares outstanding (thousands)
(L)
       50,204
  
       50,702
  
       51,545
  
       49,114
  
       46,261
  
                       
Core (loss)/earnings per common share, diluted (2)
(A/L)
 $       (0.07)
  
 $        0.70
  
 $        0.46
  
 $        0.65
  
 $        0.60
  
                       
Pre-tax, pre-provision net revenue per common share, diluted (2)
           0.20
  
           0.69
  
           0.97
  
           0.70
  
           0.74
  
Core pre-tax, pre-provision net revenue per common share, diluted (2)
           0.61
  
           0.95
  
           1.00
  
           0.89
  
           0.86
  
                       
Tangible book value per common share, period-end (2)
(I/K)
         21.82
  
         22.56
  
         22.42
  
         22.25
  
         21.66
  
Total tangible shareholders' equity/total tangible assets (2)
(H)/(J)
           8.84
  
           9.19
  
           9.05
  
           9.01
  
           8.83
  
                       
Performance ratios (4)
                      
GAAP return on assets
  
         (0.62)
%
           0.78
%
           0.67
%
           0.79
%
           0.78
%
Core return on assets (2)
  
         (0.11)
  
           1.08
  
           0.71
  
           1.01
  
           0.92
  
GAAP return on equity
  
         (4.61)
  
           5.90
  
           5.12
  
           6.07
  
           5.97
  
Core return on equity (2)
(A/E)
         (0.85)
  
           8.09
  
           5.35
  
           7.67
  
           7.00
  
Core return on tangible common equity (2)(5)
(A+O)/(G)
         (0.95)
  
         13.12
  
           8.74
  
         12.21
  
         11.44
  
Pre-tax, pre-provision net revenue to average assets (2)
           0.08
  
           0.26
  
           0.37
  
           0.27
  
           0.28
  
Core pre-tax, pre-provision net revenue to average assets (2)
           0.24
  
           0.36
  
           0.38
  
           0.34
  
           0.33
  
Efficiency ratio (2)(6)  
(C-O)/(B+M+P)
         66.92
  
         53.66
  
         53.37
  
         56.41
  
         59.54
  
Net interest margin
  
           3.02
  
           3.11
  
           3.22
  
           3.19
  
           3.17
  
                       
Supplementary data (in thousands)
                      
Tax benefit on tax-credit investments (7)
(M)
 $         608
  
 $      2,503
  
 $      2,382
  
 $      2,381
  
 $         684
  
Non-interest income charge on tax-credit investments (8)
(N)
          (486)
  
        (1,996)
  
        (1,942)
  
        (1,938)
  
          (579)
  
Net income on tax-credit investments
(M+N)
            122
  
            507
  
            440
  
            443
  
            105
  
                       
Intangible amortization
(O)
 $      1,580
  
 $      1,582
  
 $      1,526
  
 $      1,475
  
 $      1,200
  
Fully taxable equivalent income adjustment
(P)
         1,824
  
         1,934
  
         1,826
  
         1,882
  
         1,809
  
                       
                       
                       
(1)  Net securities losses/(gains) include the change in fair value of the Company's equity securities in compliance with the Company's adoption of ASU 2016-01.
(2)  Non-GAAP financial measure.
                      
(3) 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.
      
(4) 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.
(5) Core return on tangible equity is computed by dividing the total core (loss)/income adjusted for the tax-effected amortization of intangible assets,
      assuming a 27% marginal rate, by tangible equity.
                    
(6) Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully
      taxable equivalent basis and total core non-interest income adjusted to include tax credit benefit of tax shelter investments.  The
      Company uses this non-GAAP measure to provide important information regarding its operational efficiency.
      
(7) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic
      rehabilitation and low-income housing.
                      
(8) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.

F-9