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 2025 were primarily related to the pending merger. Adjustments in 2024 were primarily related to branch sales and consolidations, and loss on sale of securities.

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

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

(6) 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 2024 Annual Report on Form 10-K. In the following discussion, income statement comparisons are against the same period of the previous year and balance sheet comparisons are against the previous fiscal year-end, unless otherwise noted. Financial results discussed herein are not necessarily indicative of the results for the year 2025 or any future period. In management’s discussion and analysis of financial condition and results of operations, certain reclassifications have been made to make prior periods comparable. Tax-equivalent adjustments are the result of increasing income from tax-advantaged loans and securities by an amount equal to the taxes that would be paid if the income were fully taxable based on a 27% marginal rate (including state income taxes net of federal benefit). In the discussion, unless otherwise specified, references to earnings per share and "EPS" refer to diluted earnings per common share.

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

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

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “remain,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see the sections titled “Forward-Looking Statements” and “Risk Factors” in Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. These factors include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the right of Berkshire or Brookline to terminate the merger agreement; the outcome of any legal proceedings that may be instituted against Berkshire or Brookline; delays in completing the proposed transaction with Brookline; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction) , or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all, including the ability of Berkshire and Brookline to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the impact of certain restrictions during the pendency of the proposed transaction on the parties’ ability to pursue certain business opportunities and strategic transactions; diversion of management’s attention from ongoing business operations and opportunities; and potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction.

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

OVERVIEW

Second quarter earnings per share were $0.66 in 2025 compared to $0.57 in 2024. The non-GAAP measure of operating earnings per share increased year-over-year by 25% to $0.69 from $0.55. This reflected positive operating leverage from revenue growth and expense reduction. Second quarter 2025 operating earnings and earnings per share were the highest quarterly level since 2019.

First half earnings per share increased year-over-year to $1.22 from $0.09. Earnings in the first quarter of 2024 were impacted by a non-operating loss on the sale of investment securities. First half operating earnings per share increased by 25% to $1.29 from $1.03.

Return on assets improved to 1.03% on a GAAP basis and 1.07% on an operating basis in the second quarter of 2025. Return on tangible common equity improved to 10.35% and 10.76% on an operating basis for this period. Measures of asset performance have remained strong and the 10.1% ratio of tangible common equity to tangible assets included the benefit of the stock offering in December 2024. At period-end, book value per share was $26.40 and tangible book per share was $26.12.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024

Summary. Second quarter 2025 net income increased year-over-year by $6 million, or 26%, to $30 million. For the first half of the year, net income increased to $56 million from $4 million due to the impact in 2024 of a $50 million non-operating loss on the sale of investment securities in the first quarter.

Second quarter operating income increased year-over-year by $8 million, or 36%, to $32 million. For the first half of the year, operating income increased $15 million, or 34%, to $59 million.

First half growth in operating income reflected a $10 million increase in operating revenue, a $9 million decrease in operating expense, and a $3 million decrease in credit loss provision expense, partially offset by higher income tax expense. These results were due primarily to growth in loans and deposits, and reductions in operating expenses due to restructuring programs. Improvements in 2025 operations reflected these broadly diversified programs and resulted in the best quarterly operating metrics since 2019.

Net Interest Income. Net interest income increased year-over-year by $3 million, or 4%, for the second quarter and by $5 million, or 3%, for the first half of the year. This increase included the reinvestment of the $0.4 billion in proceeds from sales of lower yielding securities in the first quarter of 2024 into higher yielding loans in subsequent periods. Additionally net interest income benefited from the investment of proceeds from the $100 million stock offering in December 2024. The second quarter net interest margin improved year-over-year to 3.27% from 3.20%, and from 3.24% in the linked quarter. Both loan yields and deposit costs decreased year-over-year following a 100 basis reduction in the federal funds rate in the second half of 2024. The second quarter 2025 loan yield measured 5.82% and the cost of deposits measured 2.15%.

Non-Interest Income. Second quarter non-interest income increased year-over-year by $2 million in the second quarter and by $55 million for the first half of the year due to the $50 million non-operating loss on the sale of investment securities in the first quarter of 2024. Excluding this loss, operating non-interest income increased $5 million, or 13%, for the first half of the current year. This was primarily due to higher loan related fees which increased $3 million and $4 million for the above respective periods. The primary components of this growth were improved mortgage servicing rights values and higher volumes of commercial loan interest rate swaps.

Provision Expense for Credit Losses. Provision expense decreased $3 million year-over-year primarily in the second quarter. The Company recorded higher provisioning expense in the first half of 2024 as credit loss expectations were increasing, resulting in increased reserve coverage of total loans in that period..

Non-Interest Expense. Total non-interest expense decreased year-over-year by $3 million in the second quarter and $8 million for the first half of the year. Operating non-interest expense excludes amounts related to restructurings, the sale of ten branches, and the pending merger. Operating non-interest expense decreased year-over-year by $5 million, or 7%, in the second quarter and by $9 million, or 6%, in the first half of the year. This included the impact of lower operating expenses following the consolidation of three branches and sale of ten branches in 2024. Including the benefit of revenue growth, the efficiency ratio improved to 56.7% in the most recent quarter, which was the most favorable quarterly result since 2019.

For the first six months of the year, compensation expense decreased $1 million, or 1%, and occupancy expense decreased $2 million, or 11%. Full-time equivalent staff decreased to 1,158 positions at period-end, compared to 1,283 positions at midyear 2024 and 1,216 positions at year-end 2024. This includes the impact of 40 positions transferred as part of the branch sale. First half professional services expense decreased $3 million and the category of other expenses decreased $4 million primarily due to cost initiatives and as development initiatives were slowed ahead of the merger.

Income Tax Expense. The effective income tax rate was 27% in the second quarter of 2025, and 26% in the first half of the year. The full year 2024 effective tax rate was 23%. The higher rate in 2025 is primarily related to higher levels of taxable income.

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2025 COMPARED TO DECEMBER 31, 2024

General. Total assets decreased 2% to $12.0 billion at period-end from $12.3 billion at year-end 2024, primarily reflecting the impact on cash and equivalents from seasonal run-off of higher year-end overnight deposits. Total loans increased by 1% in the first half of the year. Measures of asset performance remained favorable; delinquent and non-performing loans were 0.48% of total period-end loans. Loans/deposits measured 95% at period-end and tangible common equity/tangible assets measured 10.1%.

Loans. Total loans increased $114 million to $9.5 billion due primarily to a $91 million, or 1%, increase in commercial loans. A $129 million increase in commercial multifamily loans included construction loans which were completed and converted to term; construction loans decreased by $105 million. Commercial and industrial loans increased $55 million. During the first half of the year, the Bank sold the remaining portfolio of Upstart-related consumer loans, which totaled $7 million at year-end 2024. Consumer loan net charge-offs in 2025 included the net loss on this sale. The yield on average loans decreased by 6 basis points to 5.82% for the second quarter of 2025, compared to the fourth quarter of 2024.

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 risk-based regulatory capital measured 283% at period-end, compared to 292% at year-end 2024. The supervisory measure of construction loans to bank regulatory capital measured 45% and 54% at these respective dates.

Asset Quality and Allowance for Credit Losses on Loans. Loan performance indicators remained favorable in 2025. Period-end non-performing loans measured 0.27% of total loans and accruing delinquent loans were 0.21% of total loans. The comparable measures at year-end 2024 were 0.26% for both of these measures. Net charge-offs for the first half of the year were 0.15% annualized compared to average loans, and measured 0.11% of average loans excluding consumer loans. The ratio of the allowance to total loans increased to 1.24% at period-end from 1.22% at year-end 2024. At period-end, the allowance measured 462% of non-performing loans. The allowance includes higher qualitative reserves related to macroeconomic uncertainties. The largest increase was a $5.1 million increase in the reserve for residential mortgages due to qualitative factors. The largest decrease was a $4.5 million reduction in the consumer loan reserve due to the sale of the Upstart loan portfolio.

Criticized loans increased $98 million to 3.62% of total loans at period-end from 2.62% at year-end 2024 including classified loans which increased $49 million to 1.70% of total loans from 1.20% for these respective dates. Potential problems loans, which are defined as accruing classified loans, increased by $48 million to $136 million at period-end from $88 million at year-end 202, which was primarily in construction loans and in commercial and industrial loans.

Deposits and Borrowings. Total end of period deposits decreased $396 million to $10.0 billion primarily due to runoff of seasonally high year-end payroll related balances. Total end of period deposits excluding payroll and brokered deposits increased $77 million, or 1%, during the first half of the year. The average cost of deposits decreased 15 basis points to 2.15% in the first quarter of 2025 compared to the fourth quarter of 2024. Total period-end borrowings increased $148 million to $586 million during the first half of the year due primarily to the seasonal decline in deposits.

Derivative Financial Instruments. The notional amount of derivative financial instruments increased $173 million to $5.1 billion at period end, compared to $4.9 billion at year-end 2024. Cash flow hedges decreased by $125 million and interest rate swaps related to commercial loans increased $248 million, or 7%. The net fair value of these instruments at period-end was a liability of $17 million compared to a liability of $31 million at year-end 2024. Included in derivative financial instruments are $675 million in cash flow hedges on commercial loans, of which $150 million mature in 2025, $425 million mature in 2026, and $100 million mature in 2027. The Company recorded a $321 thousand six month charge to interest expense for the realized loss on cash flow hedging instruments, compared to a charge of $314 thousand in the first half of 2024.

Shareholders’ Equity. Total shareholders’ equity increased $55 million, or 5%, to $1.2 billion during the first half of the year, including $39 million in retained first half earnings and $15 million in other comprehensive income reflecting the benefit of improved securities prices due to lower medium term interest rates. The common equity Tier 1 ratio increased to 13.4% at period-end from 13.0% at year-end 2024.Book value per share increased 5% on both a GAAP and a tangible basis to $26.40 and $26.12 respectively. The $0.18 quarterly dividend yielded 2.7% annualized compared to the period-end book value per share.

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 June 30, 2025, liquid assets totaling $1.5 billion included $0.8 billion in cash and equivalents and $0.7 billion in securities available for sale. Liquid assets declined from $1.8 billion at year-end 2024 due to the runoff of seasonally high overnight deposits at year-end. Wholesale funds increased to $1.0 billion from $0.9 billion, and consisted of $0.6 billion in borrowings and $0.4 billion in brokered deposits at period-end. The ratio of loans to deposits increased to 95% at period end from 90% at year-end 2024.

Unused borrowing availability at period-end from the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston totaled $3.9 billion, compared to $4.1 billion at year-end 2024. Borrowings from these sources are supported by collateral, to the extent utilized. Cash balances at the holding company totaled $157 million at period-end, including the net proceeds from the $100 million common stock placement in December 2024.

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

Capital Resources

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

The Company’s goal is to maintain sound capitalization and use capital generation to support organic growth and shareholder distributions in the form of dividends and stock repurchases. The Company’s goal is to maintain a “well-capitalized” regulatory designation under projected and stressed financial projections. The Company issued $100 million in common stock in December 2024 related to the agreement for a merger of equals with Brookline Bancorp. In May 2025, shareholders of both companies approved resolutions related to the merger. Proposals approved by Berkshire shareholders included the issuance of common shares as merger consideration and an increase in authorized common shares from 100 million shares to 200 million shares at the effective time of the merger.

While the Company monitors the book value of equity and related metrics, it primarily manages capital based on regulatory capital measures, with a focus on the common equity Tier 1 capital ratio. This ratio measured 13.4% at period end, compared to 13.0% at year-end 2024.

In acting as a source of strength for the Bank, the Company relies in the long term on capital distributions from the Bank in order to provide operating and capital service for the Company, which in turn can access national financial markets to provide financial support to the Bank. Capital distributions from the Bank to the parent company presently require approval by the FDIC. Under the terms of the merger agreement, the bank subsidiaries of the two companies will be consolidated into Brookline Bank, which will be renamed. This bank will operate under a different regulatory structure compared to Berkshire Bank.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

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

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

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

• Allowance for Credit Losses on Loans

• Fair Value Measurements

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