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Business Combinations | 9 Months Ended
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Sep. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Business Combinations | Business Combinations On September 1, 2025 (the “Merger Date”), the Company completed its previously announced merger of equals with Brookline Bancorp, Inc., a Delaware corporation (“Legacy Brookline”), pursuant to the Agreement and Plan of Merger, dated as of December 16, 2024, by and among the Company, Commerce Acquisition Sub, Inc. and Legacy Brookline (the “Merger Agreement”). On September 1, 2025, Commerce Acquisition Sub, Inc. merged with and into Legacy Brookline (the “Merger”), immediately followed by the merger of Legacy Brookline with and into the Company (the “Holdco Merger”), with the Company as the resulting corporation. The Company also changed its name from Berkshire Hills Bancorp, Inc. to Beacon Financial Corporation (“Beacon”). Immediately following the closing of the Holdco Merger, the Company changed its New York Stock Exchange ticker symbol for its common stock, par value $0.01 per share, from “BHLB” to “BBT.” Pursuant to the terms of the Merger Agreement, as of the closing of the Holdco Merger, each share of Legacy Brookline common stock, par value $0.01 per share, was converted into the right to receive 0.42 shares (the “Exchange Ratio”) of Company Common Stock, with cash to be paid in lieu of fractional shares. Immediately following the Holdco Merger, Berkshire Bank, a wholly owned subsidiary of the Company, Bank Rhode Island, a wholly owned subsidiary of Legacy Brookline, and PCSB Bank, a wholly owned subsidiary of Legacy Brookline, each merged with and into Brookline Bank, a wholly owned subsidiary of Legacy Brookline, with Brookline Bank as the surviving bank (the “Bank Mergers” and, together with the Merger and the Holdco Merger, the “Transaction”). In connection with the Bank Mergers, Brookline Bank changed its name to Beacon Bank & Trust. The Transaction was treated as a business combination under ASC 805 and was accounted for as a reverse merger using the acquisition method of accounting. Therefore, Legacy Brookline was deemed the acquirer for financial reporting purposes even though the Company was the legal acquirer. As such, the historical financial statements of Legacy Brookline became the historical financial statements of the combined company. In addition, the assets acquired, including identified intangible assets, and assumed liabilities of the Company as of the Merger Date, have been recorded at their estimated fair value. As the legal acquirer, the Company issued approximately 37.7 million shares of common stock in connection with the merger, which represented approximately 45% of the voting interests upon completion of the merger. In accordance with U.S. GAAP, the purchase price in a reverse acquisition is determined based on the number of equity interests the legal acquiree would have had to issue to give the owners of the legal acquirer the same percentage equity interest in the combined entity that results from the reverse acquisition. Therefore, the first step in calculating the purchase price of the merger is to determine the ownership of the combined company following the merger. The following table summarizes the ownership of the combined Company, as well as the market capitalization of the combined company using shares of the Company and Legacy Brookline outstanding at August 31, 2025 and the Company’s closing price on August 31, 2025:
| Number of Company Outstanding Shares |  | Percentage Ownership |  | Market Value at $26.14 Company Share Price (in thousands)
Company Stockholders | 46,389,917 |  |  | 55.18 | % |  | $ | 1,212,169 |
Legacy Brookline Stockholders | 37,673,213 |  |  | 44.82 | % |  | 984,401 |
Total | 84,063,130 |  |  | 100.00 | % |  | $ | 2,196,570 |
The following table summarizes the hypothetical number of shares Legacy Brookline would have to issue to give the Company’s owners the same percentage ownership in the combined company (based on shares of Legacy Brookline common stock outstanding at August 31, 2025):
| Number of Legacy Brookline Outstanding Shares |  | Percentage Ownership
Company Stockholders | 110,452,183 |  |  | 55.18 | %
Legacy Brookline Stockholders | 89,698,126 |  |  | 44.82 | %
Total | 200,150,309 |  |  | 100.00 | %
The purchase price was calculated based on the number of hypothetical shares of Legacy Brookline common stock issued to Company stockholders multiplied by the share price, as summarized in the following table (amounts in thousands):
Number of hypothetical Brookline shares issued to Company Stockholders | 110,452,183 |
Brookline market price per share as of August 31, 2025 | $ | 10.95 |
Purchase price determination of hypothetical Brookline shares issued to Company Stockholders | 1,209,451 |
Value of Company stock options hypothetically converted to options to acquire shares of Brookline common stock | 1,147 |
Fraction share payments | 49 |
Purchase price consideration | $ | 1,210,647 |
The following table provides the purchase price allocation as of the Merger Date and the assets acquired and liabilities assumed at their estimated fair value as of the Merger Date as recorded by the Company. The Company recorded the estimate of fair value based on initial valuations available at the Merger Date and these estimates were considered preliminary as of September 30, 2025, and subject to adjustment for up to one year after the Merger Date. While the Company believes the information available on the Merger Date provided a reasonable basis for estimating fair value, the Company expects it may obtain additional information and evidence during the measurement period that would result in changes to the estimated fair value amounts. The measurement period ends on the earlier of one year after the Merger Date or the date the Company is able to determine all necessary information about the facts and circumstances that existed as of the Merger Date has been obtained. As of September 30, 2025, all of the fair value determinations are preliminary with the exception of those assets and liabilities where carrying value has been determined to reasonably represent fair value.
| (In Thousands)
Fair value of consideration transferred: |
Value of hypothetical legacy Brookline shares transferred | $ | 1,209,451 |
Conversion of Company stock options | 1,147 |
Cash paid for fractional shares | 49 |
Total purchase consideration | 1,210,647 |
Fair value of assets acquired: |
Cash and due from banks | 105,440 |
Short-term investments | 978,667 |
Investment securities available-for-sale | 1,102,464 |
Loans held for sale | 3,471 |
Loans held for investment | 9,078,979 |
Premises and equipment | 73,368 |
Bank owned life insurance | 246,979 |
Accrued interest receivable | 49,717 |
Core deposit intangible asset | 174,415 |
Customer relationships intangible asset | 14,000 |
Other assets | 314,956 |
Total assets acquired | 12,142,456 |
Fair value of liabilities assumed: |
Deposits | 10,287,573 |
Borrowings | 559,402 |
Accrued expenses and other liabilities | 197,082 |
Total liabilities assumed | 11,044,057 |
Net assets acquired | 1,098,399 |
Goodwill | $ | 112,248 |
The Company recorded approximately $112.2 million of goodwill in connection with the merger, none of which is deductible for tax purposes. The amount of goodwill recorded reflects the synergies and operational efficiencies that are expected to result from the Merger. The descriptions below describe the methods used to determine the fair value of significant assets acquired and liabilities assumed, as presented above: Cash and due from banks – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets. Short-term investments – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets. Investment Securities available-for-sale – Fair values for investment securities were based on the market value of the securities on the date of the merger and, for any securities that were sold shortly after the merger, the actual sales prices of the securities when they were sold. Loans held for sale – The loans held for sale portfolio was recorded at fair value based on quotes or bids from third party investors and/or recent sale prices. Loans, net – Inputs and assumptions used in the fair value estimate of the loan portfolio include interest rate, servicing, credit and liquidity risk, and required equity return. The fair value of loans was calculated using a discounted cash flow analysis based on the remaining maturity and repricing terms. Cash flows were adjusted by estimating future credit losses and the rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. Premises and equipmen t – The fair values of premises are based on a market approach, by obtaining third-party appraisals and broker opinions of value for land, office and branch space.For other assets included in premises and equipment, the carrying value of the assets was determined to approximate fair value. Core deposit intangible – Core deposit intangible represents the low cost of funding acquired Core deposits provide relative to the Company’s marginal cost of funds. The fair value was estimated based on a discounted cash flow methodology that gave consideration to expected customer attrition rates, net maintenance cost of the deposit base, interest costs associated with customer deposits, and the alternative cost of funds. The cash flows from estimated net cost savings derived from the acquired Core deposits were discounted to present value and summed to arrive at the fair value of the core deposit intangible. The intangible asset is being amortized over 12 years using the sum of years digits, based upon the period over which estimated economic benefits are estimated to be received. Customer relationship intangible – The customer relationship intangible asset was valued using the multi-period excess earnings method under the income approach. The intangible asset is being amortized over 12 years using the sum of years digits, based upon the period over which estimated economic benefits are estimated to be received. Other assets, bank owned life insurance, and accrued interest receivable – The carrying amount of these assets is a reasonable estimate of fair value. Deposits – The fair values used for the demand and savings deposits equal the amount payable on demand at the Merger Date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the contractual interest rates on such time deposits. Borrowings – The fair values of FHLB advances and long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments. Other liabilities – The carrying amount of these liabilities is a reasonable estimate of fair value. The following table provides a reconciliation between the unpaid principal balance of acquired Purchased-credit deteriorated loans (“PCD”) loans and the purchase price:
(In Thousands) |
Unpaid principal balance | $ | 595,614 |
PCD allowance for credit losses | (64,510) |
Non-credit (discount) premium on acquired loans | (15,761) |
Fair value of PCD loans | $ | 515,343 |
Loans acquired are recorded at fair value with no carryover of the related allowance for credit losses. PCD are loans that have experienced more than insignificant credit deterioration since origination. The allowance for credit losses is determined on a collective basis and is allocated to the individual loans. The sum of the loan’s purchase price and the allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Non-PCD loans have not experienced a more than insignificant deterioration in credit quality since origination. The difference between the fair value and outstanding balance of the non-PCD loans is recognized as an adjustment to interest income over the lives of the loan. In accordance with ASC 326, Financial Instruments – Credit Losses, immediately following the Merger, the Company established a $67.2 million allowance for credit losses on the $8.52 billion of acquired non-PCD loans through provision for credit losses in the Consolidated Statement of Income. The Company's operating results for three and nine months ended September 30, 2025 include the operating results of the acquired assets and assumed liabilities of the Company subsequent to the Merger Date. The Company recorded merger related expenses of $45.9 million and $47.3 million during the three and nine months ended September 30, 2025. The following table presents unaudited pro forma information as if the Merger had occurred on January 1, 2024. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount (premium) associated with the fair value adjustments to acquired loans, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustment to acquired interest-bearing deposits and long-term debt and the amortization of the core deposit intangible that would have resulted had the deposits been acquired as of January 1, 2024. The pro forma information is not indicative of what would have occurred had the merger occurred as of the beginning of the year prior to the Merger Date. The pro forma amounts below do not reflect the Company's expectations as of the date of the pro forma information of further operating cost savings and other business synergies expected to be achieved, including revenue growth as a result of the merger and the effects of the balance sheet repositioning completed subsequent to the merger. As a result, actual amounts differed from the unaudited pro forma information presented.
| Unaudited Pro Forma
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
| (In Thousands)
Net interest income | 204,894 |  |  | 190,362 |  |  | 599,918 |  |  | 565,505 |
Non-interest income | 25,453 |  |  | 43,903 |  |  | 79,507 |  |  | 44,117 |
Net income before income taxes | 61,816 |  |  | 65,266 |  |  | 111,280 |  |  | (43,115) |

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