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. Operating 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 $12.1 billion in assets and operates 96 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 the words “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, legislative and regulatory change, 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 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.

FINANCIAL OVERVIEW

Berkshire reported a net loss of $20.2 million, or ($0.47) per share, for the three months ended March 31, 2024, compared to net income of $27.6 million, or $0.63 per share, for the year-ago period. In the most recent quarter, Berkshire sold $362 million of investment securities and entered into an agreement for the sale of ten New York branches.

Included in the results for the three months ended March 31, 2024 are net non-operating charges totaling $53.5 million ($41.1 million, or $0.96 per share, after-tax) including a $49.9 million loss on the sale of securities and $4 million in expenses related to the pending branch sale.

The Company’s non-GAAP measure of operating income totaled $20.9 million, or $0.49 per share, for the three months ended March 31, 2024, compared to $27.6 million, or $0.63 per share, for the three months ended March 31, 2023. Compared to the year-ago period, operating income decreased primarily due to a lower net interest margin reflecting higher funding costs arising from competitive market conditions for deposit accounts in the ongoing environment of higher interest rates.

Berkshire’s return on average assets was (0.69%) for the three months ended March 31, 2024. The operating return on average assets was 0.71%. For the three months ended March 31, 2023, the return on assets was 0.96% (0.95% on an operating basis). Return on average tangible common equity was (7.73%) for the three months ended March 31, 2024. The operating return on average tangible common equity 8.73%. For the three months ended March 31, 2023, the return on tangible common equity was 11.96% on both a GAAP and an operating basis. Per share results and equity returns have included the benefit of ongoing share repurchases.

Compared to the first quarter of 2023, FTE net interest income decreased $9.3 million to $90.1 million and the net interest margin decreased 43 basis points to 3.15%. First quarter 2024 average total earning assets increased $185 million compared to the first quarter of 2023, primarily reflecting increases of $526 million in average loans and $177 million in average short-term investments and loans held for sale offset by a $535 million decrease in average securities. First quarter 2024 average total funding liabilities increased $119 million compared to the prior year quarter, reflecting a $303 million increase in average deposits (including deposits held for sale) offset by a $185 million decrease in average borrowings.

First quarter non-interest income excluding sales of AFS securities increased $704 thousand year-over-year and total non-interest expense increased $4.1 million including $3.6 million in non-operating expenses in the most recent quarter. The efficiency ratio was 66.3% for the first quarter of 2024 compared to 59.5% for the prior year quarter.

The provision for credit losses in the first quarter of 2024 totaled $6.0 million compared to $9.0 million in the prior year quarter. The allowance for credit losses on loans was $107.3 million, or 1.18% of total loans, at March 31, 2024 compared to $105.4 million, or 1.17% of total loans at December 31, 2023.

Berkshire’s total shareholders’ equity was $1.01 billion at March 31, 2024 and December 31, 2023. The common equity Tier 1 capital ratio was 11.6% and 12.0% at March 31, 2024 and December 31, 2023, respectively. Tangible common equity as a percentage of tangible assets was 8.2% at March 31, 2024 compared to 8.0% at December 31, 2023.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023

Net Interest Income

Net interest income and net interest margin may be affected by many factors, including: changes in average balances; interest rate fluctuations and the slope of the yield curve; sales of loans and securities; residential mortgage loan and mortgage-backed security prepayment rates; product pricing; competitive forces; the relative mix, repricing characteristics and maturity of interest-earning assets and interest-bearing liabilities; non-interest-bearing sources of funds; hedging activities; and asset quality.

In response to persistent high inflation, the Federal Reserve Board increased the target federal funds rate during 2022 and 2023. The average maximum target Federal Funds rate increased from 0.25% in the first quarter of 2022 to 5.50% in the first quarter of 2024.

The net interest margin decreased by 43 basis points to 3.15% in the first quarter of 2024 compared to the prior year quarter, reflecting increased cost of funds partially offset by increased earning asset yield. First quarter net interest income decreased year-over-year by $9.4 million due to the lower margin which was partially offset by the impact of a $185 million increase in average earning assets funded by higher deposits. Total interest income increased $19.7 million and total interest expense increased $29.1 million. The FTE interest adjustment increased $98 thousand.

First quarter 2024 average total earning assets increased $185 million compared to the first quarter of 2023, primarily reflecting increases of $526 million in average loans and $177 million in average short-term investments and loans held for sale offset by a $535 million decrease in average securities. The increase in average loans was primarily due to a $386 million increase in average commercial real estate loans and a $385 million increase in average residential mortgages, reflecting growth in originations staff and expansionary economic conditions supporting market demand for commercial loans.

Average total loans, average securities and average short-term investments and loans held for sale comprised 81%, 15% and 4%, respectively, of average total earning assets in the first quarter of 2024, compared to 77%, 20% and 3%, respectively, in the first quarter of 2023. In the current quarter, the yields on these portfolios were 6.04%, 2.38%, and 5.07% respectively, compared to 5.57%, 2.23%, and 4.24% in the same quarter of 2023.

The 59 basis point year-over-year increase in the first quarter yield on average earning assets reflected higher market interest rates and a mix shift towards higher yielding loans. The loan yield increased by 47 basis points, the securities yield increased by 15 basis points, and the yield on short-term investments and loans held for sale increased 83 basis points. Higher loan yields included increases of 65 basis points in commercial real estate, 72 basis points in commercial and industrial loans, and 45 basis points in residential mortgages.

First quarter 2024 average total funding liabilities increased $119 million compared to the prior year quarter, reflecting a $303 million increase in average deposits (including deposits held for sale) offset by a $185 million decrease in average borrowings. The increase in average deposits was primarily due to growth in average time deposits and money market deposits.

Compared to the prior year quarter, first quarter average non-interest bearing deposits decreased $358 million, average NOW and other interest-bearing transaction accounts decreased $657 million, average money market deposits increased $423 million, and average savings deposits decreased $9 million. Average time deposits increased $753 million. Deposit shifts reflected the migration of some balances from lower yielding accounts to higher yielding accounts in and out of the Bank, as well as the spend-down of liquidity by customers. Time deposit growth included higher utilization of brokered deposits.

Average total deposits comprised 95% and 93% of average total funding liabilities in the first quarters of 2024 and 2023, respectively. As a percentage of average deposits, in the first quarter of 2024, average non-interest bearing deposits measured 24%, average NOW and other interest-bearing transaction accounts measured 8%, average money market deposits were 31%, average savings accounts were 11%, and average time deposits were 26%. The comparable percentages in the prior year quarter were 28%, 15%, 27%, 11%, and 19% respectively.

The 109 basis point increase to 2.45% in the rate paid on average total funding liabilities in the first quarter of 2024 compared to 2023 primarily reflects higher deposit costs. The rate paid on average total deposits increased 120 basis points, reflecting higher interest rates paid and the shift in the mix of deposits. Changes in deposit costs included a decrease of 27 basis points in the cost of NOW and other interest-bearing transaction deposits and increases in the cost of other deposits, including 87 basis points in the cost of savings deposits, 166 basis points in the cost of money market deposits, and 194 basis points in the cost of time deposits.

Non-Interest Income

Total non-interest income was ($32.6 million) in the first quarter of 2024 compared to $16.6 million in the same quarter of the prior year. In the first quarter of 2024, the Company recorded a $49.9 million loss on the sale of AFS securities. Total non-interest income excluding loss on sales of AFS securities in the first quarter of 2024 increased $704 thousand compared to the same quarter of 2023 due to a $2.2 million decrease in net amortization charges related to tax credit investments. The non-interest income benefit of this change was partially offset by $795 thousand in lower SBA loan sale gains and a $349 unfavorable impact of fair value adjustments on investment securities.

Provision for Credit Losses

The provision for credit losses was $6.0 million in the first quarter of 2024 compared to $9.0 million in the same period of the prior year. Provision expense primarily reflected growth in the loan portfolio.

Non-Interest Expense

Total non-interest expense increased year-over year in the first quarter by $4.1 million due primarily to $3.6 million in non-operating expenses related to the pending sale of branches. Total operating non-interest expense increased $412 thousand year-over-year, including increases in compensation and benefits expense and technology and communications expense reflecting the strategic priorities of investing in frontline bankers and enhancing the customer digital experience. These increases were partially offset by reductions in occupancy, professional services and other expenses and included the benefit of ongoing branch consolidations and the reduction of excess premises.

The first quarter efficiency ratio increased year-over-year to 66.3% from 59.5% due primarily to the decrease in operating revenue as a result of the tightening of the net interest margin.

Income Tax Expense

The Company’s first quarter income tax was a benefit of $6.3 million due to the loss on the sale of AFS securities, compared to an expense of $5.5 million in the same period of the prior year. The first quarter effective tax rate was 24% in 2024 compared to an effective rate of 17% in the same period of the prior year. Differences arising between Berkshire’s effective income tax rate and the U.S. federal statutory rate of 21% are generally attributable to tax-exempt interest earned on certain investments and BOLI, as well as state income taxes. Prior to 2024, the effective tax rate also included tax credit investment benefits which are no longer recorded to income tax expense.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2024 AND DECEMBER 31, 2023

General

Total assets at March 31, 2024 were $12.1 billion, a $284 million decrease from December 31, 2023, primarily reflecting a $411 million decrease in total securities. Total liabilities at March 31,2024 were $11.1 billion, a $282 million decrease from December 31, 2023, primarily reflecting a $266 million decrease in total deposits and deposits held for sale. In March 2024, the Company announced an agreement to sell ten New York branches. As a result, loans totaling $58 million and deposits totaling $485 million were recorded as held for sale at March 31, 2024.

Nonaccrual loans totaled $21.5 million at March 31, 2024, a $47 thousand increase from December 31, 2023. The allowance for credit losses on loans totaled $107.3 million at March 31,2024, compared to $105.4 million at December 31, 2023. At March 31, 2024, the allowance as a percentage of total loans was 1.18% and as a percentage of nonaccrual loans was 500%, compared to 1.17% and 492%, respectively, at December 31, 2023.

Berkshire’s total shareholders’ equity was $1.01 billion at March 31, 2024, a $3 million decrease from December 31, 2023. As a percentage of total assets, shareholders’ equity was 8.3% and 8.1% at March 31, 2024 and December 31, 2023, respectively. Tangible common equity equaled 8.2% of tangible assets at March 31, 2024 compared to 8.0% at December 31, 2023.

Berkshire’s (consolidated) Tier 1 Leverage capital ratio and its Common Equity Tier 1 (“CET 1”), Tier 1 and Total risk-based capital ratios were 9.5%, 11.6%, 11.8% and 14.0%, respectively, at March 31, 2024, compared to 9.7%, 12.0%, 12.3% and 14.4%, respectively, at December 31, 2023. The Bank’s Tier 1 Leverage capital ratio and its CET 1, Tier 1 and Total risk-based capital ratios were 9.6%, 11.9%, 11.9% and 13.0%, respectively, at March 31, 2024, compared to 9.6%, 12.2%, 12.2% and 13.3%, respectively, at December 31, 2023.

Loans

Total loans at period-end are categorized in the financial statement in accordance with regulatory reporting.

Total loans measured $9.1 billion at March 31, 2024, increasing $46 million during the first quarter of 2024. Commercial loans measured 65% of total loans and retail loans measured 35% of total loans at both March 31, 2024 and December 31, 2023.

Total commercial loans increased $100 million to $5.9 billion during the first quarter of 2024 and were comprised of commercial real estate loans and commercial and industrial loans. Commercial real estate loans (which include construction loans and multifamily loans) totaled $4.5 billion and increased $74 million during the first quarter of 2024. Commercial and industrial loans totaled $1.4 billion and increased $26 million. Nonaccrual commercial loans totaled $13.9 million at March 31, 2024, and measured 0.23% of total commercial loans. At December 31, 2023, nonaccrual commercial loans totaled $13.1 million, measuring 0.22% of total commercial loans. Potential problem loans, which are adversely classified loans which remain in an accrual status, totaled $127 million, or 2.14% of total commercial loans at March 31, 2024, compared to $132 million, or 2.26% of total commercial loans at December 31, 2023.

Total retail loans decreased $53 million to $3.2 billion during the first quarter of 2024. Retail loans include residential mortgage loans and consumer loans. At March 31, 2024, residential mortgages totaled $2.8 billion and decreased $8 million during the first quarter of 2024. Consumer loans totaled $400 million at March 31, 2024 and decreased by $46 million in the first quarter of 2024 due primarily to planned run-off of unsecured consumer balances. Nonaccrual retail loans totaled $7.5 million at March 31, 2024, measuring 0.24% of total retail loans. At December 31, 2023, nonaccrual retail loans totaled $8.3 million, measuring 0.26% of total retail loans.

Allowance for Credit Losses on Loans

The allowance totaled $107.3 million at March 31, 2024, an increase of $2.0 million from December 31, 2023, reflecting growth in the loan portfolio. The ratio of the allowance to total loans increased to 1.18% from 1.17% for these respective dates.

For the commercial loan portfolio, the allowance for credit losses as a percentage of commercial loans was 1.17% at March 31, 2024, compared to 1.23% at December 31, 2023. The commercial allowance for credit losses represented 498% of nonaccrual commercial loans at March 31, 2024 compared to 548% at December 31, 2023.

For the retail loan portfolio, the allowance for credit losses as a percentage of retail loans was 1.20% at March 31, 2024 compared to 1.05% at December 31, 2023. The retail allowance for credit losses represented 504% of nonaccrual retail loans at March 31, 2024 compared to 404% at December 31, 2023.

Deposits and Borrowings

Total deposits were $9.9 billion at March 31, 2024, a $750 million decrease from year-end 2023. This decrease included a $485 million reclassification of deposits to liabilities held for sale in conjunction with the pending sale of ten branches. The rest of the deposit decrease was $265 million and was spread across most categories of deposits. Non-interest bearing deposits totaled $2.3 billion at March 31, 2024, a $207 million decrease from December 31, 2023. Non-maturity interest-bearing deposits totaled $5.2 billion, a $262 million decrease during the first quarter of 2024. Period-end time deposits totaled $2.4 billion, decreasing $281 million during this period. Borrowings totaled $459 million at period-end, decreasing $48 million from year-end 2023.

Derivative Financial Instruments

The notional amount of derivative financial instruments totaled $4.9 billion at period-end, increasing $68 million from year-end 2023. The net fair value of these instruments at March 31, 2024 was a liability of $38 million, increasing $8 million from December 31, 2023.

Shareholders’ Equity and Dividends

Total shareholders’ equity was $1.01 billion at March 31, 2024, a $3 million decrease from December 31, 2023, which includes the impact of $8 million in common stock dividends declared during the first quarter of 2024. The realization of the $50 million loss on the sale of AFS investment securities did not impact shareholders’ equity since these securities were held at fair value.

Liquidity and Cash Flows

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

At March 31, 2024, cash and equivalents totaled $1.2 billion and securities available for sale were $626 million. Unused borrowing availability at that date from the Federal Home Loan Bank of Boston “FHLBB” and the Federal Reserve Bank of Boston (“FRB”) totaled $3.5 billion. Borrowings from these sources are supported by collateral, to the extent utilized. Cash balances at the holding company totaled $87 million at period-end.

During the first quarter of 2024, the sale of investment securities was the primary source of funds and reductions in total deposits was the primary use of funds. At period-end, the Company had $485 million in deposits held for sale which were expected to be sold in the third quarter of 2024, using the Company’s liquid assets and liquidity sources as the source of funds to complete the sale.

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 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 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.

Tangible common equity totaling $991 million at period-end was net of an accumulated other comprehensive loss totaling $114 million. 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.

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 and the Massachusetts Division of Banks. The shareholder dividend requires non-objection from the Federal Reserve 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 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. First quarter corporate responsibility highlights 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 maintained its top quartile environmental, social and governance performance in the banking sector.

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

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

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

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

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

The following tables set forth the estimated percent change in the Company’s NII Sensitivity over one-year simulation periods beginning March 31, 2024 and December 31, 2023.