BERKSHIRE HILLS BANCORP INC

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 2024 were primarily related to branch sales and loss on sale of AFS securities. Adjustments in 2023 were primarily related to branch consolidations.

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.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

(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.

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 2023 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 2024 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, with a vision to be a high performing, relationship focused community bank. Berkshire has approximately $11.6 billion in assets and presently operates 83 branch offices in New England and New York.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (referred to as the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (referred to as the Securities Exchange Act), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements from the use of words such as “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment and inflation, access to cost effective funding, changes in the quality and composition of our loan portfolio, legislative, regulatory and accounting changes, breaches or failures of our information technology systems, the success of new business initiatives or integration of merged or acquired entities, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that Berkshire Hills Bancorp files with the Securities and Exchange Commission ("SEC"), including the Risk Factors set forth in Item 1A of the Company’s 10-K, as supplemented by its Quarterly Reports on Form 10-Q and other SEC filings.

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

Third quarter 2024 earnings per share increased 96% year-over-year to $0.88 from $0.45 due primarily to a non-operating gain of $0.30 per share after-tax recorded on the sale of ten branches in the state of New York. This sale was announced in the first quarter of 2024 and was completed on schedule in the third quarter. The non-GAAP measure of operating earnings per share increased 16% to $0.58 from $0.50 including the benefit of fee income growth, reduced operating expenses, and lower credit loss provision expense.

For the first nine months of the year, earnings per share decreased 40% year-over-year to $0.97 from $1.63 due primarily to a non-operating loss of $0.89 per share after-tax on the sale of investment securities in the first quarter of 2024. These securities were carried at fair value on the Company’s balance sheet and this loss therefore had no effect on shareholders’ equity. Year-to-date operating earnings per share, excluding the securities loss and branch sale gain, decreased 4% to $1.61 from $1.67 primarily due to a lower net interest margin reflecting ongoing impacts of rising deposit costs.

The Company’s return on tangible common equity was 14.83% for the third quarter and 5.80% for the first nine months of 2024. The non-GAAP measure of operating return on tangible common equity was 9.91% and 9.43% for the above respective periods. Sequential growth in quarterly operating earnings in 2024 has contributed to sequential improvements in the Company’s capital profile. The third quarter return on assets measured 1.28% in 2024, while the non-GAAP measure of operating return on assets reached a five quarter high of 0.85%.

Total assets decreased 7% to $11.6 billion at period-end from $12.4 billion at year-end 2023, primarily reflecting lower cash and equivalents used as consideration in the branch sale and a reduction from seasonally high overnight customer deposits at the end of 2023. Total loans increased 2% year-to-date, with growth in all major categories except consumer loans, which reflected the targeted runoff and sale of installment loans. Excluding the $383 million in deposits sold, average quarterly deposits decreased 2% in the third quarter of 2024 compared to the fourth quarter of 2023.

The branch sale was another step in the Bank’s efforts to create efficiencies in its branch network to support investment in its bankers and client experience. It was targeted to improve long-term operating earnings and profitability while avoiding layoffs and the costs of real estate dispositions. The sale concentrates the Bank’s overall geographic footprint and reduces certain expenses. With the sale of the ten branches, Berkshire’s total branch count was reduced to 83 offices in New England and New York, including 16 offices in its Albany and Rome/Utica markets.

Measures of asset quality remained favorable in the first nine months of 2024. Delinquent and non-performing loans were 0.53% of total period-end loans; this was the lowest quarterly level in more than 15 years.

Liquidity remained satisfactory in 2024. The ratio of loans to deposits measured 96% at period-end, compared to 85% at the start of the year. Capital further strengthened, with the ratio of equity to assets increasing to 9.2% from 8.1%. Period-end book value per share grew 7% to $24.90 and the non-GAAP measure of tangible book value per share also advanced 7% to $24.53.

In September 2024, the Federal Reserve Bank reduced the target Federal Funds rate by 50 basis points, with the effective rate decreasing to 4.83% from 5.33%. The target rate had been raised beginning in March 2022, with the effect of an increase from an effective rate of 0.08% and reaching 5.33% in August 2023. At the time when the target rate was reduced, the median projection by the Federal Reserve Board governors predicted a further 50 basis point reduction by year-end 2024, and an additional 100 basis point reduction by year-end 2025. This significant change in policy has contributed to focus in the banking industry about the future direction of bank net interest margins. The yield curve for treasury obligations has become less inverted following a prolonged period of inversion. Historically, industry revenues have responded positively to the normalization of the yield curve following periods of inversion.

In June 2024, Senior Managing Director and Chief Accounting Officer Brett Brbovic was promoted to Executive Vice President and Chief Financial Officer, replacing R. David Rosato. During 2024, the Company also announced the recruitment of commercial deposit relationship managers and private bankers. Additionally, it announced the planned move and expansion of a Boston branch to support the expanded commercial and private banking teams serving the Greater Boston market. In the most recent quarter, the Bank launched Berkshire One, its innovative suite of digital-first banking solutions to complement its branch and concierge banking channels.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND SEPTEMBER 30, 2023

Summary. Third quarter 2024 net income increased year-over-year $18 million, or 92%, to $38 million due primarily to a non-operating gain of $16 million recorded on the sale of ten branches in the state of New York. The non-GAAP measure of operating income increased year-over-year $3 million, or 15%, to $25 million due to the benefit of reduced operating expenses and lower credit loss provision expense.

For the first nine months of the year, net income decreased $30 million, or 42% to $41 million due primarily to a non-operating loss of $50 million on the sale of securities in the first quarter. These securities were carried at fair value on the Company’s balance sheet and this loss therefore had no effect on shareholders’ equity. Year-to-date operating income, excluding the securities loss and branch sale gain, decreased $4 million, or 6%, to $69 million.

Lower year-to-date operating results primarily reflected a lower net interest margin due to ongoing impacts of rising deposit costs. The Company has adjusted to these impacts with calibrated loan growth, improving credit quality, and continued expense management. Additionally, the securities sales in the fourth quarter of 2023 and first quarter of 2024 facilitated the reduction of higher costing funds with proceeds from the sale of lower yielding securities, as well as reinvestment in higher yielding short-term investments.

Nine month operating expenses were reduced through focused expense disciplines together with branch consolidations and the branch sale. Due to the margin pressures, the nine month efficiency ratio measured 64.45% in 2024 compared to 62.65% in 2023. The efficiency ratio improved to 63.74% in the most recent quarter, reflecting the cumulative benefit of the Company’s profitability initiatives. Earnings have also benefited from lower credit loss provision expense in 2024 even as the Company has increased the ratio of the allowance for credit losses to total loans.

Effective January 1, 2024, the Company elected the proportional amortization method for its tax credit equity investments in public welfare investment projects which consist of Affordable Housing and New Market tax credit

investments. This election had no impact on net income. As a result of this election, certain noncash charges which had been posted to non-interest income are now posted to income tax expense. As a result, non-interest income, total revenue, and tax expense are not comparable on a year-over-year basis. The amount charged against non-interest income and credited to tax expense in 2023 was $1.5 million in the third quarter and $6.0 million of the first nine months of the year.

Net Interest Income. Third quarter net interest income decreased year-over-year by $2 million, or 3%, to $88 million due to a 2% decrease in average earning assets and a 2 basis point reduction in the net interest margin to 3.16% from 3.18%. The decrease in average earning assets reflected the use of funds from securities sales to pay down higher cost borrowings. The net interest margin reached a recent low of 3.11% in the fourth quarter of 2023 and then increased to 3.20% in the second quarter of 2024 including the benefit of the sale of $362 million in lower yielding securities. The margin decreased to 3.16% in the most recent quarter including the impact of the sale of deposits in branches that were sold. Including deposits held for sale, total average deposits decreased $160 million, or 2%, linked quarter. Branches sold in the final week of the third quarter included deposits totaling $159 million which were included in average deposits in the quarter.

The third quarter 2024 yield on earning assets increased year-over-year by 43 basis points, while the cost of funds increased by 49 basis points. This differential was primarily driven by the differential between the yield on loans, which increased 23 basis points compared to the cost of deposits, which increased 61 basis points year-over-year. The Federal Reserve Bank shift in policy in the most recent quarter towards lowering interest rates was too late to result in lower quarter-over-quarter changes in yields and costs.

On a year-over-year basis in the third quarter, an $831 million decrease in lower yielding average investment securities funded a $281 million increase in average loans, a $296 million increase in average short-term investments, and a $228 million decrease in average borrowings. The 3% increase in average loans was primarily due to a $332 million increase in higher yielding average commercial real estate loans.

For the first nine months of the year, net interest income decreased year-over-year by $16 million, or 6%. This was primarily due to a decrease in the net interest margin to 3.17% from 3.33% primarily due to rising deposit costs, together with a 1% decrease in average earning assets.

Non-Interest Income. Third quarter non-interest income increased year-over-year by $20 million, or 115%, due primarily to the $16 million gain on the branch sale.

As previously noted, total non-interest income is not comparable year-over-year due to the change in tax accounting in 2024. Third quarter fee income increased year-over-year including a 12% increase in loan related fees, a 19% increase in SBA loan sale gains, and an 8% increase in wealth management fees. This growth generally represented increased business volume and benefited from the Company’s investment in front line staff and technology.

For the first nine months of the year, total non-interest income decreased $26 million, or 51%, due primarily to the $50 million first quarter loss on the sale of securities partially offset by the $16 million third quarter gain on the branch sale. The four fee income categories collectively were stable from year to year. Fee income increased sequentially in each of the quarters in 2024.

Provision Expense for Credit Losses. Provision expense decreased year-over-year by $2.5 million, or 31%, in the third quarter and by $7 million, or 28%, for the first nine months. Nine month net loan charge-offs decreased 37% to $11 million and measured 0.16% of average loans in 2024 compared to 0.28% in 2023. The 2024 provision resulted in a $7 million increase to $112 million in the allowance for credit losses on loans and an increase in the ratio of the allowance to total loans to 1.22% at period-end compared to 1.17% at the start of the year.

Non-Interest Expense. Non-interest expense decreased year-over-year by $5 million, or 6%, for the third quarter and by $4 million, or 2% for the first nine months of the year. The non-GAAP measure of operating non-interest expense decreased by 2% for both of these periods, declining $2 million for the third quarter and $4 million for the year-to-date.

For the year-to-date, the largest decrease in operating expense was occupancy, which decreased $3 million or 11%. This included the impact of four branch consolidations in 2023, three branch consolidations in 2024, and ten branches sold in 2024, together with dispositions of other excess properties. Of note, the sales of eight of the branches sold were completed near the end of the most recent quarter. Year-to-date marketing expense was reduced by $2 million, or 41%, primarily due to the streamlining of certain media contracts. Nine month compensation expense increased by $2 million, or 2%. Full time equivalent staff totaled 1,232 at period-end, compared to 1,340 at the start of the year. All staff related to the ten branches sold were offered employment by the branch buyers. FTE staff was reduced by 40 positions as a result of the branch sale, and staff count was reduced based on a workforce realignment in the first quarter of the year. The Company is focused on efficiencies to reduce overhead and to deepen its investment in frontline staff and customer engagement technology.

Operating non-interest expense decreased sequentially in recent quarters due to the Company’s initiatives. In the most recent quarter, the category of “other expenses” increased $2 million over the prior quarter due primarily to one commercial check fraud. Excluding this item, total operating expense decreased compared to the linked quarter.

Income Tax Expense. As previously noted, income tax expense in 2024 is not comparable to 2023 and prior years due to the change in the accounting method for certain equity tax credit investments. In 2024, the effective income tax rate was 22% for the third quarter and for the first nine months of the year.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

General. Total assets decreased $0.8 billion, or 7%, to $11.6 billion in the first nine months of 2024. Short-term investments and total deposits declined from elevated year-end 2023 levels. Investment securities declined in line with the deposits transferred in the sale of ten branches. Total loans increased from organic growth, net of balances sold, and there was a corresponding increase in borrowings. Loans/deposits increased to 96% from 85%. Equity/assets increased to 9.2% from 8.1%.

Investment Securities. Investment securities decreased by $0.4 billion, or 24%, to $1.2 billion during the first nine months of the year. This was primarily due to the sale of lower yielding securities near the end of the first quarter. This improved the Company’s liquidity in advance of the branch sale and benefited earnings as the sale proceeds were used to pay down higher cost funds. The yield on the securities portfolio was 2.49% in the third quarter of 2024 compared to 2.40% in the fourth quarter of 2023.

Loans. Total loans increased $0.2 billion, or 2%, to $9.2 billion in the first nine months of 2024, primarily reflecting balanced ongoing commercial originations. In 2024, the Company sold $47 million in seasoned residential mortgages early in the third quarter and transferred $47 million in consumer loans to held for sale at the end of the third quarter; this sale was completed in October. Additionally, the Company sold $50 million in residential mortgage and consumer loan balances as part of the branch sale. Adjusted for these balances sold, total loans increased 4% for the year-to-date. The yield on total loans was 6.11% in the most recent quarter, compared to 5.97% in the final quarter of 2023.

Commercial loans comprised 66% of total loans and increased $0.3 billion, or 5%, to $6.1 billion during the first nine months of 2024. Growth was recorded in all major categories of commercial loans, including an 11% increase in multifamily loans and a 22% increase in owner-occupied commercial real estate loans. 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 283% at period-end, compared to 286% at year-end 2023. The supervisory measure of construction loans to bank regulatory capital measured 50% and 51% at the above respective dates.

The Company has a diversified commercial real estate portfolio primarily located in suburban markets in its footprint. The commercial real estate loan portfolio increased $0.2 billion, or 6%, to $4.7 billion in the first nine months of 2024, and constituted 51% of the total loan portfolio at period-end. There were $1 million in net charge-offs of commercial real estate loans in the first nine months of 2024. Nonaccruing loans were 0.22% of total commercial real estate loans at period-end compared to 0.10% at year-end 2023. Period-end loans rated substandard were 1.41% of commercial real estate loans, compared to 1.95% at year-end 2023. At period-end, the largest property type concentrations (over 5% of the portfolio and excluding construction loans) were retail trade (20%), multifamily (14%), office (11%), healthcare (9%), and hospitality (7%). The largest category, retail trade, was primarily comprised of properties anchored by strong grocery and big box tenants in suburban areas – with no significant tenant concentrations, and negligible indoor mall exposure. The $502 million office portfolio was approximately 70% composed of Class A properties and approximately 76% of the office portfolio was maturing after 2025. Boston properties were 16% of the office portfolio, with no high-rise office buildings. Construction loans consisted primarily of multifamily (approximately 46%) and industrial (approximately 14%) at period-end.

Residential mortgage loans comprised 30% of loans and were unchanged at $2.8 billion in the first nine months of 2024. Consumer loans comprised 4% of loans and decreased $0.1 billion, or 23%, for the year-to-date. This was largely due to targeted run-off and sales of unsecured consumer installment loans.

Asset Quality and Allowance for Credit Losses on Loans

Loan performance indicators were little changed since year-end 2023 and remained at historically favorable levels. Total delinquent and non-performing loans measured 0.53% of loans at period-end, compared to 0.54% at the start of the year. This was the lowest quarterly level in more than 15 years. It included non-performing loans measuring 0.26% and 0.24% of total loans at the above respective dates.

Annualized year-to-date net loan charge-offs measured 0.16% of average loans compared to 0.26% for the year 2023. Criticized loans/total loans decreased to 2.51% of total loans from 2.71% in the first nine months of the year, including a reduction in classified loans to 1.38% of loans from 1.69% of loans. Potential problems loans, which are defined as accruing classified loans, decreased to $103 million from $132 million for the year-to-date. Improvements in borrower risk ratings have generally reflected borrowers adjusting operations to mitigate the impact of higher interest rates on variable rate loans and to the impact of changing supply/demand conditions.

The allowance for credit losses on loans increased by $7 million, or 6%, to $112 million during the first nine months of the year. In addition to reflecting the 2% loan growth, this also reflected an increase in the ratio of the allowance to total loans to 1.22% from 1.17%. The increase in reserve coverage reflected increases in all major loan categories except non-owner occupied commercial real estate, for which the ratio of the allowance to loans decreased to 1.41% from 1.47%. The largest increase was the reserve related to commercial and industrial loans, which grew by $5 million, increasing to 1.71% of loans from 1.37%. Due to the sale of consumer loans, the related reserve decreased by $5 million, while the coverage ratio increased to 6.08% from 5.46%. Consumer loans include home equity loans and installment loans. Factors contributing to higher reserves included longer expected loan lives and increased qualitative reserves related to macroeconomic and federal policy uncertainties.

Deposits and Borrowings. For the first nine months of the year, total deposits decreased by $1.1 billion, or 10%, to $9.6 billion. This included the sale of $0.4 billion in deposits due to the sale of ten branches in the third quarter. All categories of deposits decreased, including a reduction in short-term payroll related balances which vary daily and which were elevated at year-end 2023. Average deposits in the most recent quarter were $9.4 billion, decreasing $0.6 billion, or 6%, from the fourth quarter of 2023. Excluding deposits sold, average deposits decreased $0.2 billion, or 2%.

The branch sale included $383 million in deposits, consisting of $77 million of non-interest bearing deposits, $25 million of NOW deposits, $77 million of money market deposits, $45 million of savings deposits, and $159 million of time deposits. Approximately $224 million in deposits were sold early in the first month of the quarter and $158 million were sold near the end of the quarter. The average balance of deposits held for sale was $259 million in the third quarter and included some accounts which were not sold because client selected deposit retention exceeded expectations.

Non-interest bearing deposits were 24% of average deposits in the third quarter of 2024 compared to 25% in the fourth quarter of 2023. All major categories of average deposits decreased between these two periods, primarily in transaction deposits. The total cost of deposits increased to 2.42% in the most recent quarter compared to 2.11% in the fourth quarter of 2023. The cost of deposits held for sale in the most recent quarter was 2.30%.

Total borrowings increased year-to-date by $0.2 billion, or 40%, to $0.8 billion. The cost of borrowings was unchanged at 5.4% in the most recent quarter compared to the fourth quarter of 2023. Average borrowings increased by $0.1 billion, or 15%, to $0.7 billion in the most recent quarter compared to the fourth quarter of 2023.

Derivative Financial Instruments

The notional amount of derivative financial instruments totaled $4.8 billion at period-end, which was unchanged from year-end 2023. The net fair value of these instruments at period-end was a liability of $19 million, decreasing from a liability of 30 million at year-end 2023. Included in derivative financial instruments are $800 million in cash flow hedges on commercial loans, of which $275 million mature in 2025, $425 million mature in 2026, and $100 million mature in 2027. The Company recorded a $473 thousand charge to interest expense for the realized loss on cash flow hedging instruments in the first nine months of 2024.

Shareholders’ Equity. Capital measures remained strong and improved in the first nine months of 2024. Total shareholders’ equity increased $58 million, or 6%, to $1.1 billion. The $50 million loss on the first quarter sale of securities resulted in a credit to accumulated other comprehensive loss and an offsetting charge against earnings. Year-to-date net income totaled $41 million, dividends totaled $23 million, and share repurchases totaled $18 million. Excluding the securities loss, which had no impact on total equity, net income for the first nine months of 2024 totaled $80 million, which was the primary reason for the 6% increase in total equity.

Book value per share increased by $1.63, or 7%, to $24.90 in the first nine months of 2024. The non-GAAP measure of tangible book value per share increased by $1.71, or 7%, to $24.53. Share repurchases in 2024 were accretive to book value measures, based on the average repurchase price of approximately $21.94.

Reflecting the increase in equity and the decrease in total assets, the ratio of equity to assets increased to 9.2% from 8.1% and the non-GAAP measure of tangible common equity to tangible assets increased to 9.1% from 8.0%. The common equity Tier 1 capital ratio measured 12.0% at both period-end and year-end 2023.

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 September 30, 2024, liquid assets totaling $1.2 billion included cash and equivalents totaling $0.6 billion and securities available for sale totaling $0.6 billion. At year-end 2023 liquid assets were $2.2 billion, including $1.2 billion in cash and equivalents and $1.0 billion in securities available for sale.

At September 30, 2024, wholesale funds totaled $1.2 billion, including $0.7 billion in borrowings and $0.5 billion in brokered deposits. At year-end 2023, wholesale funds totaled $1.0 billion evenly split between borrowings and brokered deposits.

Unused borrowing availability at period-end from the Federal Home Loan Bank of Boston “FHLBB” and the Federal Reserve Bank of Boston (“FRB”) totaled $3.7 billion, compared to $4.0 billion at year-end 2023. Borrowings from these sources are supported by collateral, to the extent utilized. Cash balances at the holding company totaled $71 million at period-end.

During the first nine months of 2024, total cash and equivalents decreased to $0.6 billion from $1.2 billion as deposits decreased from elevated overnight levels at year-end 2023. For the year-to-date, the primary source of funds was securities sales totaling $0.4 billion and the primary additional uses of funds were the outflow of $0.3 billion due to the branch sale and $0.3 billion in net loan growth.

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.

In most recent periods, the Company has returned excess capital to shareholders through stock repurchases. The Company’s long-term goal is to maintain an efficient capital structure and to provide a return in excess of the cost of its common equity capital.

As a result of rising interest rates, available for sale bond portfolios in banks are generally subject to unrealized losses which result in charges against accumulated other comprehensive income (“AOCI”) and reduce the book value of shareholders’ equity. Like many of its peers, the Company utilizes an option in reporting its regulatory equity which excludes changes in AOCI in the calculation of regulatory capital. Reductions in bond valuations due to changes in market interest rates are reversed as bonds approach maturity. These reversals are accreted to AOCI over time, restoring the book value of equity. The balance of AOCI was a loss of $89 million at period-end, compared to a loss of $143 million at year-end 2023. This reduction was primarily due to the realization of $50 million in losses with the securities sale in the first quarter of 2024.

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 12.0% both at period-end and year-end 2023.

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 Form 10-K.

CORPORATE RESPONSIBILITY UPDATE

Berkshire Bank is a performance and purpose-driven, values-guided bank providing strength, stability and trusted advice to create a positive impact for its clients and communities while upholding equitable, ethical, responsible and sustainable business practices. Corporate responsibility highlights for the year-to-date include:

•Berkshire was named one of the Most Trustworthy Companies in America 2024 by Newsweek and received an Association of Marketing and Communication Professionals Communitas Award for leadership in corporate responsibility for the seventh consecutive year.

•The Company released its 2023 Sustainability Report highlighting all that Berkshire is doing to be a responsible, equitable and sustainable bank while elevating its client experience and community impact.

•Berkshire expanded its Down Payment Assistance Program to help qualifying buyers achieve their dream of homeownership.

•More than 1,000 Berkshire employees participated in 50 volunteer projects contributing more than 4,600 hours of service as part of Xtraordinary Day, the Bank’s annual day of service.

•Berkshire maintained its top quartile environmental, social and governance performance in the banking sector and was listed as an “Outperformer” in the R-Factor™ rating as of October 2024.

•The Company was recognized among TIME’s America’s Best Mid-Size Companies 2024.

•Berkshire was recognized as a Top Charitable Contributor by the Boston Business Journal for the 12th consecutive year and named to Newsweek’s list of America’s Greatest Workplaces.

•The Bank achieved targets for lending in low-moderate income communities, increasing minority homeownership, and support for green projects through its multi-year Community Comeback program.

•The American Bankers Association Foundation honored Berkshire Bank for its dedication to economic inclusion with the foundation’s Community Commitment Award, which recognizes banks for extraordinary corporate social responsibility activities.